MOP 6.00 Closing editor: Joanne Kuai
Chinese banks in need of hiring currency traders Page 10
Bank of China could be fined by U.S. court Page 9
Year IV
Number 928 Thursday November 26, 2015
Publisher: Paulo A. Azevedo
Chow Tai Fook declares first special dividend even after profit plunges Page 4
2016 Government Budget Approved A conservative start to the New Year. The 2016 budget presented by the Secretary for Economy and Finance forecasts gov’t revenue will drop 13.9 pct y-o-y to MOP103.25 bln (US$12.93 bln). While expenses are expected to increase to MOP85.04 bln from MOP83.76 bln. The budget was unanimously approved by the Legislative Assembly yesterday. Lionel Leong added that the gov’t plans to save on rent by constructing a building to accommodate civil servants Page
Boomerang business Fair dinkum. Australian slot machine manufacturer Aristocrat is back in the black. Posting a net profit after tax of AU$186.4 million (MOP1.08 billion) for the fiscal year ended September 2015. Revenue increased 89 pct y-on-y to AU$1,576 mln from AU$833 mln, mainly due to its acquisition of Video Gaming Technologies Inc.
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www.macaubusinessdaily.com
Indexing anxiety November’s figures about to be released. But early signs seem to show an extension of the disappointing trend of recent months. Probably generating more anxiety. And fuelling further stimulant measures
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Another 4G provider
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One more player in the market. China Telecom (Macau) Co. Ltd. launched 4G telecom services yesterday. Heavy leased line costs, however, weigh on operating costs, said the company. Adding it has already achieved 95 pct of the city’s outdoor network coverage for its 4G services
Residential rethink
A 30 pct y-o-y drop in residential prices for 2015. As forecast by Midland Realty Macau. The trend has even extended to older neighbourhoods, with homes costing below MOP5 mln. Plunging gaming revenues have triggered weakened buying sentiment. Resulting in fewer transactions as well
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HSI - Movers November 25
Name
%Day
CNOOC Ltd
+3.28
Sands China Ltd
+1.33
Galaxy Entertainment
+0.64
China Life Insurance Co
+0.53
Bank of Communicatio
+0.36
China Resources Powe
-2.09
China Mengniu Dairy C
-2.25
China Merchants Holdi
-2.29
Want Want China Hold
-2.35
Power Assets Holdings
-2.89
Source: Bloomberg
I SSN 2226-8294
2015-11-26
2015-11-27
2015-11-28
15˚ 20˚
15˚ 21˚
16˚ 20˚
2 | Business Daily
November 26, 2015
Macau
Government budget for 2016 passes on first reading The Legislative Assembly has unanimously approved the government budget for 2016 in its first reading. Lionel Leong explained that the Executive is also feeling the pain of increasing rents João Santos Filipe
jsfilipe@macaubusinessdaily.com
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esterday, the Legislative Assembly approved the budget for 2016 in its first reading, with votes in favour by all 31 members attending the session. The new budget presented by the Secretary for Economy and Finance, Lionel Leong Vai Tac, forecasts that government revenue will drop 13.9 per cent year-on-year to MOP103.25 billion (US$12.93 billion) from MOP119.97 billion, while expenses are expected to increase by MOP1.28 billion, or 1.5 per cent yearon-year, to MOP85.04 billion from MOP83.76 billion. Among the changes introduced by the new budget, the Public Investment Plan (PIDDA) is going to be reduced by 24.6 per cent year-on-year to MOP11.07 billion from MOP14.68 billion. “There is a decrease in the overall amount because we want to be more pragmatic and realistic. After talking with Secretary Raimundo de Rosário, we agreed that we would be more pragmatic for the execution level of the budget to be higher. This is why we have this reduction”, Lionel Leong explained in reply to legislators’ questions. He also said that government investment is not a priority in maintaining the vitality of the local economy. “For the economy to grow healthily, first we want to rely on exports, then on the income from the land granted, and lastly on internal consumption. We hope these solutions will revitalise our economy”, he said. Another hot topic of the debate was the rental contracts signed by the government to rent the offices from which its services operate. While the government was slammed by José Pereira Coutinho because of competing
in the rental market and increasing prices, Lionel Leong admitted that the government plans to have its own facilities. These questions were also brought up by legislator Song Pek Kei, who expressed concern about the amount paid for rentals. “If we have the land for it, we’re going to construct a building to accommodate the public services. But of course it depends on meeting with the different services to reach an agreement. However, from a financial perspective, it is obvious that we would like to have this building to accommodate our services”, Mr. Leong said.
Government feels rental pain
Regarding this point, Lionel Leong predicted that in the coming years the rental contract of the government amounts will increase. “In 2015, rental amounted to MOP700 million, but we are hoping that this amount will decrease [next] year”, he said. The Secretary also commented on the rental costs which are not only affecting local residents but the government as well. “We are hoping to construct our own building to host the services, so we are able to avoid these costs. At this moment, when the rental costs increase we only have two options: move out or pay more. Given this situation, this common building is a very [good] solution to controlling our economic spending”, he explained. Also during the plenary session, the new regulations for the IACM were approved, with 30 votes cast for it. At the time of voting, Leonel Alves had left the Legislative Assembly and as such there was one less vote than when the budget was approved.
Ng Kuok Cheong requests Macau join TPP Legislative Assembly member Ng Kuok Cheong requested Macau join the Trans-Pacific Partnership (TPP), the economic free trade agreement which is expected to involve the United States, Singapore, New Zealand, Australia and Japan, among others. “The Free Trade Zone [to be created by TPP] will have mutual benefits for the 12 participant countries that together account to 40 per cent of the world’s economy. In spite of being the second largest economy, Mainland China will not be a part of it. However, the Macau SAR should not neglect the opportunity to participate in the world free trade market nor underestimate the advantages of this agreement. Macau should contribute to China’s involvement in world development”, Ng Kuok Cheong said. Mainland China has been tipped as a potential member of the agreement in the future but the existing trade barriers represent obstacles that have yet to be overcome, should the Central Government decide to join the agreement. “Macau needs to analyse the requirements for joining the agreement, mainly concerning the lowering of trade and nontrade barriers, in order to see what it needs to do to meet those requirements. The government needs to study the viability of joining this
agreement and start the procedures with the Central Government in terms of diplomatic relations”, he added. Local talent jettisoning careers to focus on property Legislator Lau Veng Seng shared his concerns yesterday in the Legislative Assembly that the younger generation are giving up on their careers to focus on well-paid jobs that enable them to buy apartments. “According to a local study, only 9.2 per cent of the young people [polled] are working in areas related to their academic qualifications. At the same time, many of them consider that buying their own house is a major step in planning their life. All in all, in order to buy a house, many of the youngsters have decided to work in a well-paid job giving up on their dreams and opportunities of developing a career”, he said. While the AL member stressed that many youngsters had invested all their money in acquiring an apartment he said that if this trend did not change “the reserves of talent in Macau will hardly contribute to benefiting Macau society in the long term”. Lau Veng Seng appealed to the government to provide local students with better education in terms of career planning. In his view, this education should fully harness the full ‘One belt, One Road, and One Centre, One Platform’ policies.
Business Daily | 3
November 26, 2015
Macau
China Telecom Macau launches 4G services The telco says that the heavy leased line costs here weigh on its operating expenses regarding the launch of its 4G services Stephanie Lai
sw.lai@macaubusinessdaily.com
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he heavy leased line costs in the city weigh on the operating costs of China Telecom (Macau) Co. Ltd. in its launch of fourth-generation wireless (4G) telecommunications services, although the telco has already leased lines from both Companhia de Telecomunicações de Macau (CTM) and fixed-line telecommunications
operator MTEL Telecommunication Co. Ltd. Following the launch of 4G services by competitor and major telco CTM in October, China Telecom Macau launched its 4G services for its MacauChina 1 Card 2 Numbers users yesterday. According to China Telecom Macau,
the company has already achieved 95 per cent of the city’s outdoor network coverage for its 4G services. By government requirement, the successful 4G bidders must achieve 100 per cent network coverage in 2016. Samuel Chan, assistant general manager of China Telecom Macau, told Business Daily after the launch
ceremony that the company was still pressured by operating costs regarding its launch of the 4G services, mainly due to the heavy leased line cost here. Companies providing mobile services have to use the leased line service to run their operations. CTM currently holds a dominant position in the city’s fixed landline network, as the only other competitor MTEL Telecommunication Co. Ltd., only received its fixed-line licence in 2013 and is now still laying its underground network throughout the city. “The government hoped to introduce competition to influence the leased line cost here, which has not yet happened,” Mr. Chan told us, “We’re still quite pressured in terms of operating costs on top of the capital expenditure [invested in launching 4G services].” “We’ve leased lines from both CTM and MTEL but as CTM has richer resources – inclusive of its underground network coverage – more of the lines we’ve leased are from them,” Mr. Chan added. As announced by the Official Gazette in June, China Telecom Macau has a committed investment of MOP471 million in 4G services for 2015-2018. The licence for providing 4G services to the city, issued earlier this year, is valid for eight years. Alongside CTM and China Telecom Macau, the local arms of Hong Kong telcos Smartone and Hutchison were also successful in bidding for 4G licences. “This new service [4G services] could attract more high-end consumers, and in that respect we’ll be observing how the plans can pull in more subscribers,” Mr. Chan said, noting that the company is still optimistic that the 4G service could exert a positive influence on its average revenue per user (ARPU).
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November 26, 2015
Macau opinion
Missing bits
José I. Duarte Economist
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s is usual following the Policy Address by the Chief Executive the Legislative Assembly is now listening to the various Secretaries. The major topics in the last couple of days related to the reform or reorganisation of the public administration. It is not a new theme, but some specific operational objectives have been emphasised. Such was the case of the fusion of several services or the review of the Institute for Civil and Municipal Affairs (IACM) functions. All with the promise to keep the jobs of those affected by the restructurings and to increase the number of public servants. The restructuring of the municipal council has been a laboured process, which seems to be reaching the end now. The result appears less impressive than hinted at in earlier times. This is not some re-creation of the municipal bodies that existed before, which would suggest a kind of recognition that the setup of IACM and the extinction of those previous councils were possibly less than a full success. Also, if the current proposal under discussion at the Legislative Assembly is kept, as is likely to happen, the new functions will differ minimally from those set in the present version. One function will be eliminated, and another one will be added. The first and more political function will disappear: “To promote and execute cultural, leisure and sports policies”. If this is what developing municipal services without policy-setting powers means, then this is a positive development. Why an administrative municipal body should have powers that obviously duplicated those of other public bodies never seemed a neat or beneficial arrangement. The added function – the possibility of “providing services” to other government departments – is less obvious in its purpose. Wasn’t it already possible, is that express mention needed? Some may conclude that the added item may open the door for a less straightforward process than was originally intended. Restructuring issues aside, most of the talk is on administrative simplification and online services. One cannot be against that. But the details are wanting, the specific targets have not been stated unambiguously. Also, it was claimed that more public servants were needed; but the supporting arguments were not wholly persuasive. Absent was a mention of some of the most commonly heard complaints about a number of public services: first, that procedures are often obscure, not well defined and serve no discernible purpose; second, that internal regulations and procedural requests are sometimes contradictory and, at times, fail to comply with the applicable laws. There is anecdotal evidence of that, and several public bodies have, one time or another, mentioned the subject: the Public Procurator, the Audit Commission and the Commission Against Corruption, for example. Should not a proper audit of internal regulations and related procedures – plus the organizational arrangements that engender and sustain them – precede any assessment of the actual human resources’ needs of the administration?
Chow Tai Fook rises after company declares surprise dividend Analyst says the special dividend is only a short-term stimulus because the share price still depends on the long term earnings outlook
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how Tai Fook Jewellery Group Ltd. gained the most in close to two years after the world’s largest publicly traded jewelry chain declared a special dividend even as it posted the steepest decline in semiannual profit since listing. The stock climbed 6 per cent to HK$6.23 by the close of trading in Hong Kong, the biggest advance since January 2014. The benchmark Hang Seng Index lost 0.4 per cent. The company said Tuesday it will pay a special dividend of 42 Hong Kong cents per share, the first since it went public in 2011, in order to return excess cash to shareholders. Net income fell 42 per cent to HK$1.56 billion (US$201 million) for the six months ended September, the jeweler said Tuesday, in line with its profit warning issued Nov. 10. The special dividend is only “a short-term stimulus because the share price still depends on the long term earnings outlook,” while Hong Kong’s retail outlook remained challenging as mainland visitors’ purchasing power has declined, Albert Yip, an analyst at Guangfa Securities Co. said. Chow Tai Fook’s shares have plummeted 41 per cent year to
date, compared with the 4.7 per cent decline in the benchmark Hang Seng Index, as China’s economic slowdown hurt luxury retailers. The company is also proposing an interim dividend of 8 Hong Kong cents per share.
Earnings stabilizing
Capital expenditure for the fiscal year to March 2016 is expected to fall to less than HK$1.5 billion, from its previous forecast of HK$2 billion, Finance Director Hamilton Cheng said in Hong Kong after the results were announced. The chain plans to open about 60 stores in the period, and won’t attempt to meet its target of adding 150 to 200 new stores each fiscal year, he added. “We expect its fundamentals to remain weak in the second half of 2016, but see earnings stabilizing next year,” Jefferies Group LLC analysts led by Kevin Chee wrote in a report.
China focus
The chain will shut outlets that do not perform well, but doesn’t plan to lay off workers, said Chairman Henry Cheng. “The retail market is soft now, but I think it’s just shortterm. I don’t have any plans on
expanding overseas,” he said, adding it will instead focus on the Hong Kong, Macau and Mainland China businesses. The company last year said it’ll explore other markets as it follows Chinese customers traveling overseas. Chow Tai Fook reported sales in the six months through September fell 4.1 per cent to HK$28.1 billion, while same store sales, referring to outlets open at least a year, slumped 18 per cent in Hong Kong and Macau. Same store sales in mainland China rose 0.1 per cent. Chow Tai Fook’s retail network expanded to 2,286 points of sales as of end-September, with a net addition of 29 during the period, it said Tuesday. About one-third of the chain’s Hong Kong stores renew their lease agreements each year, and the company may request rental reductions for those outlets of 30 per cent on average, or more in some cases, Hamilton Cheng said. The company had shut three outlets in Hong Kong in the six months to September, and may “make adjustments” to as many as eight outlets in the city in the latter half of the fiscal year, he added. Bloomberg
Business Daily | 5
November 26, 2015
Macau Ten exhibits damaged in Macau Science Centre The areas most affected by the fire in the Macau Science Centre last Friday were the window on top of the Exhibition Centre’s atrium and the aluminum cladding panels surrounding it, the management of the Centre revealed in a press release. According to the document, 10 exhibits were slightly damaged by pooled water used by firemen to extinguish the blaze. These 10 items are said to represent about 3 per cent of the total number of exhibits. The Macau Science Centre also explained that all exhibits and facilities are insured. The museum is open as usual and for the time being only the Exhibition Centre has been closed.
Midland Realty Macau forecasts 30 pct drop in residential prices High-end homes here have so far seen prices drop 30 per cent or more due to weakened buying sentiment, the agency says Stephanie Lai
sw.lai@macaubusinessdaily.com
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he city could see its average residential price drop by 30 per cent year-on-year for 2015 with transactions shrinking by about one-fifth as the buying sentiment for homes has remained weak amid the economic slowdown here, Midland Realty (Macau) says. A radical drop in the price of high-end homes in Macau has so far led the continuous
fall in the average residential cost, a trend that could persist into the first quarter of next year, the Chief Executive of Midland Realty, Macau Ronald Cheung Iat Fai, told Business Daily. “In some of the high-end homes we see in Taipa and the northern district of Macau Peninsula, namely Areia Preta, their average price has dropped by some 30 per cent or more so far,” Mr. Cheung
said. “But the fall has also happened to homes costing below MOP5 million located in the old neighbourhoods, although the extent of the decrease is smaller at about 20 per cent.” Weakened purchasing sentiment in the economic slowdown, led by reduced casino earnings here, is a factor contributing to the drop in home prices, Mr. Cheung remarked.
“The economic slowdown seen here so far has also affected sectors like tourism, catering and retail,” the agent said. “And we have seen more cash-in activity [from people disposing of property].” The average residential price in Macau has dropped by a quarterly 11.5 per cent and an annual 15.7 per cent to MOP84,342 per square metre to the three months ended September, according
to data from the Statistics and Census Service. Home transactions have also shrunk by 13 per cent year-on-year to a total of 1,537 cases in the third quarter of this year, official data reveals. Midland Realty Macau forecasts a total of 6,020 home transactions for 2015, which, if proven correct, means that the city would see home transactions decline 21 percent year-on-year.
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November 26, 2015
Macau
Aristocrat generates MOP1.08 billion profit for fiscal 2015
Group retracts allegation Sands’ Adelson tolerated prostitution
The Australian slot-machine manufacturer has swung to full‑year profit, attributed to its newly-acquired Video Gaming Technologies (VGT) business
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lot-machine maker Aristocrat recorded a net profit after tax of AU$186.4 million (MOP1.08 billion) for the fiscal year ended September 2015, representing a recovery from the previous year when losses accounted for AU$16.4 million. Revenue increased 89 per cent year-on-year to AU$1,576 million from AU$833 million. “Revenue increased due largely to the sustained performance in North American Gaming Operations across both Class III and Class II with the acquisition of Video Gaming Technologies Inc (‘VGT’)
completed on 20 October 2014, outstanding growth in the Australian outright sales market and strengthening performance in Digital”, the group said. “In Australia, Aristocrat’s total unit sales increased 43.6 per cent compared to the prior period – well over three times the rate of market growth, and the business regained share lost in earlier years of the Group’s turnaround,” said the company in a filing with the Australian Securities Exchange. “Digital revenues and segment profit increased almost three-fold compared to the PCP, in constant currency. This result was again delivered through the sustained growth
of the flagship Heart of Vegas application, which launched on iPhone and Android during the reporting period.”
Asia Pacific market
The Australia businesses delivered significant share gains across key markets driven by its Helix cabinet machine and strong performing new games, according to the company. “Asia Pacific performance improved with strong sales into new Macau openings during the period,” Aristocrat said. Regarding the Class III games segment, the company report indicates that it managed to secure
the largest market share in new Macau casinos, namely those of Galaxy Phase II and Studio City. CEO and managing director Jamie Odell anticipates further growth in daily active user numbers and in overall revenue from digital and average revenue per daily active users The company expects margins to moderate over 2016 as Aristocrat hits scale and grows into new channels. The directors have authorized a final dividend for the six months ended September 30 of 9 cents per share resulting in total dividends for the full year of 17.0 cents per share.
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he Campaign for Accountability, a group that accused casino billionaire Sheldon Adelson earlier this month of tolerating prostitution at his Las Vegas Sands Corp. empire, has retracted that allegation, saying the information has been repudiated. “Based on evidence provided by Mr. Adelson to CfA after its announcement, the allegation that Mr. Adelson tolerated and possibly promoted prostitution has since been repudiated,” the group said Tuesday in a statement. “CfA therefore retracts any statement asserting or implying that Mr. Adelson tolerated prostitution in any way.” The Campaign for Accountability on Nov. 3 asked the U.S. Senate Committee on Homeland Security and Governmental Affairs and the Federal Election Commission to investigate Adelson, the 82-year-old founder, chairman and chief executive officer of Las Vegas Sands, the world’s biggest casino company with operations in Singapore, China’s Macau, and the U.S. The group said it sought to determine the extent of the company’s connection to organized crime in China and whether funds tied to Chinese organized crime may be reaching American campaign committees. Bloomberg
Corporate
Wynn donates to Tung Sin Tong for ten consecutive years
MGM China offers career development talk to UMAC students
Wynn is committed to giving back to the community and contributing to the efforts of local charitable organizations. Wynn donated MOP 500,000 to Tung Sin Tong to support their provision of charitable services to the people in need in Macau, including the elderly, the disabled and the underprivileged children.
Organized by the Alumni and Development Office of University of Macau (UMAC), over 30 students with outstanding performance were invited to attend a guided hotel tour and career development talk at MGM MACAU. Five of the students are the recipients of “MGM MACAU Elite Scholarship”, a scholarship program that
The partnership between Wynn and Tung Sin Tong dates back to 2006. Wynn has been supportive of the benevolent initiatives of Tung Sin Tong for the past 10 years. In addition, Wynn continues to support the annual charity event “Walk for a Million” and donated another MOP500,000 to the Charity Fund from the Readers of Macao Daily News.
MGM has extended to UMAC students since 2011 to help nurture local youths and talents. MGM China has been consistently supportive to youth development initiatives, offering support to various educational training programs by arranging hotel visits to provide an opportunity and platform for the students to broaden their horizons.
Business Daily | 7
November 26, 2015
Macau Paulo Martins Chan appointed gaming regulator head for one year Paulo Martins Chan, an assistant Public Prosecutor-General in Macau, will head the Gaming Inspection and Co-ordination Bureau (DICJ) for a one-year tenure effective December 1, according to a dispatch published in the Official Gazette yesterday. Chan was appointed as a prosecutor in 1998, rising to the position of assistant Public Prosecutor-General in December 2009. He replaces outgoing DICJ head Manuel Joaquim das Neves, who has headed the Bureau since 1997.
Macau’s house of cards topples as investors lose big on junkets The recent Dore scandal has left the junket industry’s reputation in tatters and sped up the Chinese territory’s shift away from VIP gamblers to the mass‑market segment of less wealthy Chinese tourists
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he theft of millions of dollars from investors in a Macau junket operator has sparked months of protests and hastened the demise of a business model that greased the wheels of the US$44 billion global gambling hub for over a decade. Brandishing banners and loudspeakers, dozens of investors have protested outside Wynn Macau Ltd’s casino for two months, demanding the return of money stolen by an employee of junket operator Dore Entertainment Co Ltd and accusing Dore’s head of dodging responsibility. The crime has left the junket industry’s reputation in tatters and sped up the Chinese territory’s shift away from VIP gamblers - who used to account for more than 80 per cent of its gaming revenues - to the mass-market segment of less wealthy Chinese tourists. “We do see stabilisation in mass, unlike in VIP where it continues to drop like a rock,” Nomura analyst Richard Huang said in Hong Kong. Macau’s shift towards the mass market plays into Beijing’s overall strategy to make the former Portuguese colony a world-class tourism hub rather than a playground for corrupt officials and businessmen.
In a first for the territory, Melco Crown Entertainment Ltd., a venture co-owned by Macau mogul Lawrence Ho and Australian tycoon James Packer, opened a US$3.2 billion Hollywood-themed casino in October with no VIP gaming tables. Speaking to investors after the opening, Ho said Macau’s VIP sector had been “permanently and structurally changed”.
Bad luck
The Dore scandal could not have come at a worse time for Macau’s junkets, the companies or individuals who loan credit to gamblers, mainly VIPs, on behalf of Macau’s casinos. Revenues have dried up due to China’s economic slowdown and an anti-corruption campaign that has targeted the flight of illicit capital from the mainland. Analysts estimate the number of junket tables has fallen by a third since the start of 2015, and about 100 junket operators have gone out of business. Dore, which operated 3 VIP gaming rooms in Wynn Macau, reported in late September that an employee had pocketed money that was meant to open new credit lines to big-spending gamblers.
Police say more than HK$500 million (US$64.52 million) was stolen, although investors say the sum is closer to HK$2 billion. Steve Vickers, former head of the Hong Kong’s criminal intelligence bureau and founder of a risk consultancy, said about 50 prominent members of Hong Kong’s entertainment industry were among those defrauded. “This is not surprising; the triads have long had symbiotic links with both the junkets and the entertainment sector,” he said. Many investors say Dore’s boss, Charles Heung Wah Keung, an alleged triad crime gang member, should stand up and be accountable for their losses. “Dore’s boss Charles Heung has taken the victims’ blood and sweat ... Heung is devoid of a conscience,” said protester Lydia Chen, 40, who lost millions of dollars she loaned to Dore earlier this year. Heung - who was named in a 1992 U.S. Senate subcommittee probe and a 2007 Nevada Gaming Control Board hearing as a member of a triad crime gang - has strongly denied involvement in organised crime and has not been formally implicated in any wrongdoing. He could not be reached for comment.
KEY POINTS Number of junket operators down almost 50 pct Casinos’ share of revenue from junkets plummets Angry investors focus on alleged triad boss Junkets’ demise clears path for mass market
Macau’s government has offered little comfort to Dore investors, saying only that an investigation is ongoing. While many junket operators have gone out of business, top firms like Suncity and Tak Chun are likely to weather the storm, analysts said. Both firms have used slick marketing and sponsorships of highprofile events like the Macau Grand Prix to present a more sophisticated image than their peers. Reuters
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November 26, 2015
Greater China
Earliest monthly economic indicators flash a warning Overcapacity and weakness in old drivers like manufacturing and residential construction weigh on the world’s second-biggest economy
Consumers still supporting shifting Chinese economy
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hina’s economy is still showing a muted response to waves of monetary and fiscal easing as of the half- way mark for the last quarter of the year, some of the earliest indicators suggest. A privately compiled purchasing managers’ index and a gauge based on search engine interest in small and medium-sized businesses deteriorated this month, while a sentiment indicator dropped sharply from October. Combined, the
reports make gloomy reading ahead of official releases, the earliest of which will be manufacturing and services PMI reports due December 1. Here’s a look at what the economy’s earliest tea leaves show:
Minxin PMI
The unofficial purchasing managers indexes for manufacturing and services sectors both declined, snapping increases in the two previous months.
The manufacturing PMI declined to 42.4 in November from 43.3 in October, while the nonmanufacturing reading fell to 42.9 from 44.2, according to reports jointly compiled by China Minsheng Banking Corp. and the China Academy of New Supply-side Economics. Numbers below 50 signal deteriorating conditions. The Minxin PMIs are based on a monthly survey covering more than 4,000 companies, about 70 percent of which are smaller enterprises. The private gauges have shown a more volatile picture than the official PMIs in the past year.
Baidu SME Index
An index based on search interest in the products and services of small- and medium-sized enterprises edged down this month, showing weaker momentum in SMEs, which contribute about 60 percent of China’s economy. The preliminary reading of an index from Beijingbased Baidu Inc., which
handles more than 6 billion searches a day, slipped to 98.2 this month from 98.4, the final reading of October. Readings below 100 signal deterioration. Sub-indexes for sectors such as electronic engineering, commercial services and chemical raw materials declined from last month, while those for software and home appliances picked up.
MNI Business Sentiment Index
The gauge, released by Market News International in New York, slumped to 49.9, a five-month low, in November from 55.6 in October. It is based on a monthly poll of Chinese business executives at companies listed on either the Shanghai or Shenzhen stock exchanges.
World Economics Sales Managers Index
Slightly better news: An index based on a monthly survey of sales managers for medium and large private sector companies was unchanged at 51.6 in November, according
More aid to Africa ahead of Xi’s trip A summit in December will be the second such high-level forum following one held in Beijing in 2006 Sui-Lee Wee
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hina is set to announce new aid to African nations when President Xi Jinping visits Zimbabwe and South Africa next month, a senior Chinese official said yesterday. The trip is likely to boost China’s relations with Africa, which supplies oil and raw materials such as copper and uranium to the world’s secondlargest economy. China is Africa’s largest trading partner and the trade volume between them amounted to US$220 billion in 2014, according to China state news agency Xinhua. Zhang Ming, one of China’s vice foreign minister, said President Xi will provide further details in his keynote speech on December 4. “As for whether China will continue to provide support and aid, there will be no doubt about it,” Zhang said, declining to provide further details on the aid amount and its purpose. Xi is scheduled to meet Zimbabwe’s 91-year-old President Robert Mugabe on December 1-2, Zhang said. He will also meet South Africa’s President Jacob Zuma on December 2-3 and co-chair a two-day summit between China and African countries in Johannesburg after the meeting. The summit in December will be
the second such high-level forum following one held in Beijing in 2006, Zhang said. “This African trip by President Xi Jinping will be the most important, comprehensive and valuable visit in recent years,” Zhang said. Xi visited Africa in 2013 shortly after he took office as president.
Xi is scheduled to meet Zimbabwe's 91-year-old President Robert Mugabe (pictured) on December 1-2
Mugabe reciprocated with a visit to China in 2014 in an attempt to seek loans and investments to lift Zimbabwe’s struggling economy. Beijing’s focus on growing trade and aid in Africa leaves it open to charges by the West of turning a blind eye to conflicts and rights abuses in the continent.
to report from London- based World Economics. Yet reflecting the rebalancing theme that has marked much of China’s data this year, the manufacturing SMI declined slightly from the previous month, while the services SMI held up, showing a similar trend to official PMI reports.
Westpac-MNI Consumer Sentiment
It’s not all bad news. A consumer sentiment report produced by MNI and Westpac Banking Corp. released Wednesday showed an improvement to 113.1 in November, from 109.7 a month earlier. Readings on current and expected personal finances improved, as did gauges on business conditions for the next 12 months and next 5 years. Consumers were also a rare bright spot in October’s official data, with retail sales growth rising while investment, industrial output and credit growth all remained sluggish. Bloomberg News
Trade with resource-rich Africa has exploded in the last decade as China feeds its industrial machine amid African demand for cheap Chinese products. The EU has rejected what they call China’s “cheque book” approach to doing business with Africa, saying it would continue to demand good governance and the transparent use of funds from its trading partners. Chinese firms in Africa also face criticism for using imported labour to build government-financed projects like roads and hospitals, while pumping out raw resources and processing them in China, leaving little for local economies. China’s friendship with Africa dates back to the 1950s, when Beijing backed liberation movements in the continent fighting to throw off Western colonial rule. Reuters
Business Daily | 9
November 26, 2015
Greater China U.S. judge holds Bank of China in contempt for withholding records
Bank chief stresses financial security
The U.S. Public Accounting Oversight Board has similarly sought to inspect Chinese audit firms for years, but China has blocked its requests on national sovereignty grounds Brendan Pierson
China must build a more effective financial security system to cope with possible overseas attacks or sanctions, according to the governor of the country’s central bank. Financial security is essential to a national security, and the success of financial reform hinges on stability in the sector, Zhou Xiaochuan said in an article published in the People’s Daily yesterday. He called for a mechanism to be put in place to monitor and counter risks, and for better regulations against money laundering and terrorism financing.
Phony Disney hotels fined China has fined five knock-off Disney hotels for infringing on the iconic U.S. entertainment company’s trademarks, state-run Xinhua news agency said on Wednesday in the run-up to the opening of a Walt Disney Co theme park in Shanghai. The news comes less than a month after Chinese authorities announced that they would give unprecedented special trademark protection to Disney in a year-long campaign around the park’s opening. The Shanghai Municipal Administration for Industry and Commerce (AIC), a business regulator, found that the hotels were all owned by the Shenzhen Vienna Hotels Group.
Dalian Wanda may list filmmaking
Bank of China New York branch office
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U.S. judge held Bank of China Ltd in contempt on Tuesday for refusing to turn over account information of Chinese entities accused of selling counterfeit luxury goods. U.S. District Judge Richard Sullivan in Manhattan, firing off the latest salvo in the battle between China and the United States over financial transparency and national sovereignty, held that the bank must pay a fine for withholding its customers' records. Sullivan said he would likely decide on the amount of the penalty by Monday. The records sought involve Chinese entities that were sued in 2010 by subsidiaries of luxury goods conglomerate Kering SA, including Gucci Group, Bottega Veneta and Yves Saint Laurent. Bank of China itself is not a defendant in that lawsuit. The companies subpoenaed the Bank of China seeking records of the alleged counterfeit sellers' accounts, but the state-owned bank argued that it could not turn over the records without violating Chinese privacy law. The bank also said the New York court had no jurisdiction over it. Bank of China's attorney, Laura Hall, said at Tuesday's hearing that the bank had no choice but to refuse to turn over the records and be held in contempt so that it would have a right to appeal to the 2nd U.S. Circuit Court of Appeals. "We're bound by conflicting systems of law," she said. Sullivan, however, said the bank seemed to be prioritizing Chinese law. "What desire is there to comply with U.S. law?" he asked. "It doesn't seem terribly deep."
The plaintiffs asked Sullivan either to order the bank to pay US$12 million they said they lost due to the counterfeiters, or to order it to pay a daily fine until it turns over the records. Sullivan said he would consider both options, but was leaning toward the latter. The dispute is part of a larger conflict between China's opaque, state-dominated economic system and the disclosure-based U.S. regulatory regime. Clashes have grown more frequent as Chinese companies have sought to expand overseas or tap international capital by listing in the United States.
The thing that banks are worried about - both U.S. and foreign - is that they don’t want to be subjected to a worldwide jurisdiction just because they have an outpost in New York James Feinerman, Georgetown University, law professor
Earlier this year, the U.S. Securities and Exchange Commission settled a long-running dispute with the China units of the Big Four audit firms over their failure to turn over documents about U.S.-listed Chinese clients. The audit firms had argued that compliance with the SEC would violate Chinese state secrecy laws. In the Bank of China case, Sullivan had ordered the Bank of China to turn over the records in August 2011. An appeals court ordered him to reconsider last year, but he once again ordered the bank to turn over the records in September and October. "We are disappointed by Judge Sullivan's decision, but it will clear the way for a review of the issues by the United States Court of Appeals for the Second Circuit," Bank of China's law firm, Allen & Overy, said in a statement. The firm said the dispute should be settled through international agreements. William Overholt, a senior fellow at the Harvard University Asia Centre and former head of strategy with Nomura in Hong Kong, said such cases could help push China more toward international norms of financial transparency. "Opening that up is a crucial step forward in having a normal capital market in China," he said. But James Feinerman, a Georgetown University law professor who has served as an expert witness for Bank of China in the past, said Chinese banks' privacy concerns were not that different from other international banks, and such cases could have implications for New York's future as a global financial hub. Reuters
Chinese property and investment firm Dalian Wanda Group may list its film production and distribution unit on a domestic bourse by the end of 2016, its company founder was quoted as saying. The company is also considering the option of making the unit part of another listed subsidiary, Wang Jianlin was quoted as saying in an interview with Caixin Weekly financial magazine. China’s largest commercial property developer is keen to expand its entertainment empire, purchasing the U.S. movie-theatre chain AMC Entertainment Holdings in 2012 and listing Wanda Cinema Line in Shenzhen this year.
Standard Chartered to issue panda bond Standard Chartered Bank Hong Kong Ltd will issue up to one billion yuan (US$156 million) of renminbi denominated bonds in China’s interbank market on December 7, the bank said in a statement yesterday. The so-called “panda bond” (as yuan denominated, onshore debt issued by foreign borrowers is known) will be underwritten by Citic Securities and carry a AAA rating from Shanghai Brilliance Credit Rating Co Ltd. In 2005, the International Finance Corp issued a panda bond worth 1.13 billion yuan (US$182.14 million), becoming the first foreign issuer in the domestic market along with the ADB.
Beijing likely to invest over US$1 trln overseas China is likely to invest over US$1 trillion overseas and import more than US$10 trillion in commodities over the next five years, the state-backed China Daily quoted Premier Li Keqiang as saying. Speaking to heads of Central and Eastern European nations at a summit in Suzhou on Tuesday, Li also said China could help provide more flexible funding conditions to those countries to upgrade their infrastructure, as long as they use Chinese equipment and products, according to the state paper.
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November 26, 2015
Greater China
Currency traders wanted by Shanghai banks as London desks clear Chinese lenders are scrambling to strengthen their trading desks as the IMF prepares to include the yuan in its reserves basket
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rom London to New York, currency traders are clearing their desks as business evaporates. In Shanghai, new positions stay unfilled for weeks and prized experts are encouraged to put in overtime. Frank Zhang, head of foreignexchange trading at China Merchants Bank Co. in the nation’s financial capital, has been trying to hire three traders since October 16. The local talent pool is too small, he says. His counterpart at Industrial Bank Co., Ye Yuzhang, is sweetening the deal with extra money for those who work late. “It’s not easy finding people with a strong foreign-exchange trading background here,” said Zhang, whose desk now comprises of 15 people. “The yuan was stable for such a long time, and the foreignexchange business was much simpler. Traders now have to learn to deal with the increased movements of today’s markets.” Chinese lenders are scrambling to strengthen their trading desks as the International Monetary Fund prepares to include the yuan in its reserves basket, a move that Standard Chartered Plc estimates could draw as much as US$1.1 trillion into Chinese assets in the next five years. The hiring efforts became more urgent following a report that authorities will double the currency’s trading hours in Shanghai, and after China’s August 11 yuan devaluation pushed its volatility to a record high.
Opposing trends
Shanghai Pudong Development Bank Co. is hiring three traders to cover both currency and fixed-income, Bank of Nanjing Co. plans to add two to its currency desk and Bank of Ningbo Co. wants another 30 people for its financial markets department. By contrast, Credit Suisse Group AG
“We are seeing more business opportunities driven by corporate clients’ hedging needs,” said Zhang of China Merchants Bank, the nation’s fifth-largest lender. “The market has now become more sophisticated and demand has become more diverse.”
The industry was very much closed previously, and now there’s the need to internationalize the talent. We are very optimistic about the opportunities Bai Rui, partner at PXC Consulting, a human resources adviser
is laying off 200 traders in London. Deutsche Bank AG, Societe Generale SA and Standard Chartered are trimming staff in New York, France and Dubai. Demand for foreign-exchange traders in China is being driven by the nation’s efforts to open its capital markets, increase the yuan’s global use and push for its inclusion in the IMF’s Special Drawing Rights. The very volatility that unnerved global markets after the August devaluation is making traders with experience and international exposure a prized commodity as clients turn to banks to hedge risks.
Yuan decline
The People’s Bank China kept the yuan at about 6.2 to the dollar from mid-March before the August devaluation triggered the biggest one-day drop in two decades. The currency will weaken 5.1 percent to 6.73 a dollar by the end of 2017, according to the median estimate in a Bloomberg survey. The forecast on Aug. 10 was for a 1.5 percent gain. “There are only about 200-250 licensed currency traders in China,” said Jackie Wang, Shanghai-based associate director at recruitment consultancy Michael Page. “Local lenders can hire foreigners, but they have to pass a test conducted by the China Foreign Exchange Trade System. It takes about six months to a year’s time to study the regulations and then take the exam. Banks also need to explain to the government why they need to hire foreigners instead of Chinese.”
Pay raise
Big banks in China on average raise salaries by 6-7 percent every year, while those in the U.S., Singapore or Australia usually offer only 2-3 percent, according to Michael Page. Demand for traders will continue to be robust at least in the short term, said Thomas de Mendonca, regional director for the consultancy’s east China services. Even as profit growth at banks slowed and bad loans climbed, China’s industry expanded its assets to 193 trillion yuan as of September, almost twice that in the U.S. Industrial
& Commercial Bank of China Ltd., the world’s most profitable lender, alone made a net income of US$11.4 billion in the third quarter of this year, more than the combined earnings of Wells Fargo & Co. and Bank of America Corp. Bid-offer spreads of the world’s major currencies declined as trade shrank. The mean spreads of the kiwi and krone are at levels unseen since the 2008 global financial crisis.
London hiring
Chinese lenders have recently increased efforts to extend their operations, including to London, which accounts for 40 percent of global foreign-exchange trading and is seeking to become Europe’s offshore yuan hub. Bank of China Ltd. set up a trading centre in the British capital in October during President Xi Jinping’s first state visit to the nation. The lender, China’s third-largest, says it plans to form a network connecting Beijing, Shanghai, Hong Kong, London and New York to prepare for roundthe-clock trading. ICBC’s London unit posted a recruitment notice for foreign-exchange traders on its website at the end of May, with one of the requirements a willingness to work early shifts starting at 6 a.m. This comes as China moves to fulfil the IMF’s demand that there be a suitable yuan exchange rate during London trading hours to determine the SDR’s daily value against the dollar. The central bank is planning to extend the yuan’s trading hours by end-November to 11:30 p.m. in Shanghai from the current 4:30 p.m., according to people familiar with the matter. That means the Chinese onshore market will be open after the noon SDR valuation in London. Bloomberg News
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November 26, 2015
Asia
Singapore sharply revises up Q3 growth In the second quarter, GDP contracted a revised 2.6 percent quarter-on-quarter Masayuki Kitano and Jongwoo Cheon
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ingapore economy grew much faster than initially estimated in the third quarter thanks to a solid service sector, data showed yesterday, but the government softened its growth outlook for the year amid sluggish global demand. Gross domestic product (GDP) rose an annualised 1.9 percent in the third quarter from the prior quarter on a seasonally adjusted basis, the Ministry of Trade and Industry (MTI) said. That was far better than the government's advance
estimate issued in October of 0.1 percent growth. The median forecast in a Reuters survey was for a flat quarter. Francis Tan, an economist at UOB Bank, said the sharp upward revision in the third quarter did not change the outlook for modest growth. "Downside risks remain. The key risk is still oil prices pulling prices down. And when prices remain low, central banks will continuously adopt a fairly dovish policy in order to support the economic growth," he said. In the second quarter, GDP contracted a revised 2.6
percent quarter-on-quarter. The city-state's service sectors grew 3.5 percent in the July-September period from the previous three months on an annualised basis with a 5.3 percent expansion in wholesale and retail trade. "Sectors such as wholesale trade and finance & insurance are likely to continue to post modest growth, even as the manufacturing sector is expected to remain weak," the MTI said in a statement. An uneven and sluggish global recovery has weighed on Singapore's manufacturing
sector, which has been a drag on growth this year. The GDP data showed that the manufacturing sector contracted 4.6 percent in July-September from the previous quarter. The MTI revised its fullyear growth forecast for 2015 to "close to 2.0 percent" from 2.0-2.5 percent previously. That would make growth lower than last year's 2.9 percent and the weakest since 2009, when Singapore's economy was hit by the global financial crisis and contracted 0.6 percent.
Japan’s central banker says institution can stand pat The BOJ has stood pat on policy since expanding its massive stimulus programme in October last year Leika Kihara
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ank of Japan (BOJ) board member Sayuri Shirai said the central bank can hold off on expanding stimulus to reach its inflation target as robust consumption makes firms more confident about raising prices, and will help offset the drag caused by weak oil prices. Shirai, considered to be one of the more pessimistic of the nine members on the board on the outlook for the economy, said the central bank may consider easing policy if the uptrend in inflation expected by the BOJ fails to materialise “at all.”
Shirai said she personally expects inflation to hit the BOJ’s 2 percent target by around June 2017, three months later than the central bank board’s official forecast. But, she said, the BOJ did not need to respond to the delay with additional easing because it is blamed largely on renewed falls in energy prices. Meantime, falling energy costs will give companies more room to raise wages, allowing households to boost spending, she said, giving the BOJ room to hold off on additional stimulus. “Some households are gradually feeling the benefits of higher wages,”
Shirai told reporters after meeting with business leaders in Matsue, western Japan, yesterday. Business confidence is holding up and companies are becoming more keen to raise prices as households become more accepting of higher prices, underpinning the economic recovery, she said. Trying to hit the inflation target quickly could backfire by dampening household spending, as Japanese consumers became sensitive to price hikes during nearly two decades of deflation, she said. “The BOJ must achieve its price target with speed. But it also needs to
The ministry forecast growth in 2016 of 1.0-3.0 percent. A slowdown in China's economy and tepid global growth have softened exportreliant economies in the region including Singapore, where the economy is seen heading towards its slowest full-year growth in six years. Against a backdrop of low inflation and weak global growth, Singapore's central bank has eased monetary policy twice this year, most recently in October. Reuters
be mindful of the burden households feel when wages aren’t rising enough to make up for the rising cost of living,” Shirai said. Her views contrast with those of BOJ Governor Haruhiko Kuroda and his two deputy governors, who argue that setting a timeframe for the target is necessary to show the bank’s determination of eradicating deflation. Kuroda has said the BOJ won’t abandon its pledge to hit 2 percent inflation “in roughly two years,” even though inflation is sliding once again, nearly three years into that commitment. Several other BOJ policymakers besides Shirai have also advocated making the time frame for achieving the inflation target more flexible. Other policymakers, including Kuroda and his deputies, believe a more rigid time frame is needed in order to judge the success of the BOJ’s radical stimulus programme. The BOJ has stood pat on policy since expanding its massive stimulus programme in October last year, even as consumer prices slide on renewed declines in energy costs and weak exports push the economy into recession. Reuters
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November 26, 2015
Asia
Minister says Malaysia’s ruling party faces trust deficit Former Prime Minister Mahathir Mohamad has been on a public campaign to get Najib out even before the donations scandal Manirajan Ramasamy
Malaysia’s Prime Minister Najib Razak
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alaysia’s biggest political party faces a trust deficit, a government minister warned, highlighting the impact of a months long political scandal surrounding Prime Minister Najib Razak. Members are losing their connection to the United Malays National Organisation, which
leads the ruling coalition, Hishammuddin Hussein-one of the party’s vice presidents -- told reporters Tuesday in Kuala Lumpur. Hishammuddin, who called for unity, is also defence minister. “UMNO is now facing a trust test, which is very complicated and worrying,” Hishammuddin said. “But I
am confident we will come out of this and strive to be better for our survival, the party and country.” Hishammuddin was speaking ahead of the party’s annual general assembly in December. More than 700 resolutions were submitted by 191 divisions for the meeting, ranging from education to religion and the economy, he said. The comments reflect the risk that the imbroglio that’s embroiled Najib erodes support for a party that has been in power since independence in 1957 but won re-election in 2013 with its narrowest margin yet -it lost the popular vote for the first time. UMNO has its power base in the country’s ethnic Malay population. Najib, who is UMNO’s president, has faced criticism after it was disclosed that hundreds of millions of dollars ended up in his
private accounts before the 2013 vote. He has removed detractors from cabinet including his deputy premier and a minister, even as they remained senior leaders in the party.
Middle East
The premier, 62, has said the funds in accounts that have since been closed were political donations from the Middle East rather than public money, an initial conclusion also reached by the Malaysia Anti-Corruption Commission. The funds were to meet the needs of the party and the community and not a new practice, he has been cited as saying. Former Prime Minister Mahathir Mohamad, 90, has been on a public campaign to get Najib out even before the donations scandal and allegations of financial irregularities at debt-ridden state investment company
1Malaysia Development Bhd. led to political tensions and prompted thousands of antigovernment protesters to rally in the capital. He said over a year ago he was withdrawing support, citing worsening race relations and a tougher business environment after Najib took office in 2009. He warned that UMNO risked losing the next election -- due by 2018 -- if Najib stays as leader. During his weekend visit to Malaysia, U.S. President Barack Obama used a meeting with Najib to express concern about governance more broadly in the country. Najib has cracked down on dissenters while using sedition laws to detain media executives. In his remarks after meeting Obama, Najib said Malaysia is “taking into account some of” the president’s views. “Malaysia is committed to reforms,” he said. “And we are committed to ensuring at the same time there is peace and stability.” Hishammuddin declined to say if any of the resolutions submitted referenced 1MDB and the donations. Najib chairs the advisory board of 1MDB. “There are many other channels for people” to discuss 1MDB and the funds that appeared in Najib’s accounts, he said. “We have more important things to discuss during the assembly like the future of UMNO.” Bloomberg News
Official debate on Indonesian rates heats up Government and monetary authority reveal differing views on rate policy Yudith Ho and Chris Brummitt
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ndonesia Vice President Jusuf Kalla has challenged the country’s central bank in person to stop using the U.S. Federal Reserve as an excuse not to cut interest rates, which he said are too high and impeding investment. Indonesia has higher interest rates than in its neighbours, which is one of the country’s weaknesses, along with infrastructure and bureaucracy, Kalla said in a speech in front of Bank of Indonesia Governor Agus Martowardojo in Jakarta on Tuesday. In response, Martowardojo told reporters the central bank is committed to stability and has held rates steady because of the Fed,
China and commodity prices. The remarks highlight differing views over rate policy in Indonesia that spilled into public comments this year, with Kalla and other ministers putting varying degrees of pressure on the central bank to cut rates to stimulate a sluggish economy. Bank Indonesia this month compromised by cutting the primary reserve requirement for lenders and keeping its main rate unchanged, providing some support for the economy while guarding against currency weakening. “If interest rates are high then investment is low,” Kalla said in a speech following Martowardojo’s address.
Indonesia Vice President Jusuf Kalla (R) with President Widodo
Central bank policies need to support growth, while the government needs to make sure its policies don’t lift inflation, Kalla said. The vice president said in May that the authorities would gradually cut borrowing costs
and would do so without deterring people from putting money in the bank. Yet the central bank pledged then to keep monetary policy tight and has held steady its reference rate at 7.5 percent since February.
Bank Indonesia flagged last month that there was room to ease monetary policy because of softening inflation, though most economists expect the authority to wait until after the Fed’s December meeting. Martowardojo yesterday also called for action from the government to improve the country’s economic resilience, saying it needed to bolster manufacturing, infrastructure and power supply. Indonesia’s efforts to keep a lid on price inflation have been hampered by poor roads and strained ports in the sprawling archipelago that make it expensive to move goods. Bloomberg News
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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November 26, 2015
Asia Japan lowers assessment of capex as business spending wanes
S.Korea’s trade terms rise again on cheap oil
Economy has likely recovered from a technical recession in the middle of this year as consumer spending gains momentum
The economy is in a gradual recovery trend, but there are some pockets of weakness… Capital expenditure has stalled Cabinet Office, monthly economic report
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apan’s government lowered its assessment of capital expenditure in November for the first time in more than a year, as machinery orders and the production of capital goods weakened in a sign that companies are delaying investment. The government’s monthly economic report released yesterday said capital expenditure is flat in November, downgrading its assessment from October, when capital expenditure was said to be recovering.
The government left unchanged its overall assessment that there are some weak spots in the economy. “The economy is in a gradual recovery trend, but there are some pockets of weakness,” the Cabinet Office said in its monthly economic report yesterday. “Capital expenditure has stalled.” The downbeat assessment comes one day after Prime Minister Shinzo Abe’s government said it would ease regulations to spur corporate investment.
Abe’s government will announce a raft of policies this week to encourage higher wages, more capital expenditure and slow the decline in Japan’s population, but some economists have said structural reforms are not moving fast enough to raise the potential growth rate. Policymakers in the government and the Bank of Japan (BOJ) are counting on an increase in capital expenditure to raise productivity and create new jobs. Initially, economists were optimistic because the BOJ’s closely watched tankan survey showed companies planned to aggressively increase capital expenditure. However, the capital expenditure component of gross domestic product, data on machinery orders and capital goods shipments have struggled, which suggests companies are still not confident enough about the economy to carry out their investment plans. The government left unchanged its assessment that consumer spending is holding firm and that exports are weak. Japan’s economy has likely recovered from a technical recession in the middle of this year as consumer spending gains momentum, but there are lingering concerns that Abe’s economic policies are not having enough impact. Reuters
Australia-led group wins US$7 bln electricity deal over China bid State Grid’s loss comes just days after national Treasurer Scott Morrison blocked the sale of one of the world’s largest cattle estates to Chinese entities
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n Australia-led consortium of investment funds from Canada and the Middle East won the bid for electricity transmission network TransGrid yesterday, beating a Chinese challenger in a deal worth A$10 billion (US$7.3 billion). China’s State Grid was considered a frontrunner but the New South Wales state government said the strongest bid belonged to the locally led NSW Electricity Networks consortium. “The transaction will deliver gross proceeds of A$10.258 billion which will help fund a raft of infrastructure projects across the state,” NSW Premier Mike Baird said in a statement. The winning consortium includes Canadian pension fund Caisse de depot et placement du Quebec (CDPQ), the Abu Dhabi Investment Authority’s Tawreed Investments Limited, and a wholly owned subsidiary of the Kuwait Investment Authority, Wren House Infrastructure. The consortium is led by investment fund Hastings as manager of Utilities Trust of Australia, while locally listed Spark Infrastructure, which owns and manages energy assets, is also part of the group. The Chinese bid had generated concerns given TransGrid is a critical
piece of national infrastructure underpinning the NSW economy and a key part of the country’s electricity market. State Grid’s loss comes just days after national Treasurer Scott Morrison blocked the sale of one of the world’s largest cattle estates to foreign entities, ruling it was not in the national interest. Chinese companies Genius Link Group and Shanghai Pengxin had reportedly been in a bidding war to secure the S. Kidman and Co Ltd. pastoral empire for up to A$350 million ahead of that ruling. And last week a decision by the Northern Territory to lease the Port of Darwin to a Chinese firm prompted a review of the rules that allow Australian states to sell strategic assets to foreign firms without federal scrutiny. Morrison welcomed the awarding of the 99-year lease for TransGrid to the consortium. “The Foreign Investment Review Board has been in extensive consultation with the NSW government for over 12 months to ensure that national interest considerations are addressed,” he said. “This consultation has also included relevant... agencies that have an interest in the acquisition of critical infrastructure.”
South Korea’s terms of trade improved for 14 straight months thanks to low crude oil prices, central bank data showed yesterday. The net termsof-trade index for goods, which gauges how many goods can be imported with a unit export, was 101.72 in October, up 12.4 percent from a year earlier, according to the Bank of Korea (BOK). The figure marked the highest since April 2012, maintaining an upward trend for 14 months in a row. The improvement came as import prices declined at a faster pace than export ones amid cheaper crude oil.
Modi returns to India after Malaysia, Singapore tour
Indian Prime Minister Narendra Modi returned home after his four-day tour of Malaysia and Singapore. Modi flew back to the Indian capital from Singapore, where he went during the last leg of his two-nation tour. His first stop was Malaysia, where he attended the ASEAN-India Summit in Kaula Lumpur. At the ASEAN-India Summit, the Indian Prime Minister pitched for his country as a destination of immense opportunities in a bid to attract investors. In Malaysia, Modi also held delegation-level talks with his Malaysian counterpart Najib Razak and both countries signed key pacts on cyber security, culture and public administration.
Thai auto sales fall Thai domestic auto sales posted their smallest rate of decline in more than two years in October, with sales set to pick up next year on an improving outlook, the Federation of Thai Industries said on Tuesday. Southeast Asia’s second-largest economy has yet to get back on track since an army coup ended months of political unrest last May as exports have long been soft and domestic consumption has been crimped by low farm prices and high household debt. Auto sales in October fell 4.2 percent from a year earlier.
Once the transaction is finalised, the state government will retain significant influence over TransGrid, including as regulator. Morrison said he had asked for further safeguards that were “more stringent than any previous conditions imposed on acquisitions of critical infrastructure”. These include an insistence that foreign consortium members hold no more than a 50 percent share in TransGrid and that 50 percent of TransGrid’s boards comprise Australian citizens and residents. “Australia continues to be open for business and we welcome foreign investment when it is not contrary to the national interest,” Morrison said. AFP
Deutsche S.Korean units to pay damages A South Korean court has finalised a mediation settlement for two Deutsche Bank AG South Korean units to pay about 28 billion won (US$24.5 million) in damages to five local financial firms in a market manipulation case, a judge said yesterday. The five South Korean financial firms claimed damages after share prices plummeted when Deutsche Bank units sold about 2.4 trillion won worth of stocks on the Seoul bourse just before the market closed on November 11, 2010, Lim Kwang-ho, a judge in the Seoul Central District Court told Reuters yesterday.
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November 26, 2015
International Russia’s biggest bank detects signs of recovery State-controlled Sberbank said yesterday that it sees signs of recovery in the financial sector which has been in deep crisis. Reporting the bank’s “best quarterly results of the year” for the three months to September, finance director Alexander Morozov said Sberbank had booked higher interest earnings, and mortgage lending was also on the rise. Net profit for Sberbank came in at 65.4 billion roubles (US$993 million), down 8 percent from a year earlier but ahead of forecasts from analysts’ polled by the Interfax agency. Interest income rose 25 percent and commission earnings by 33 percent.
Nigeria faces separatist pressure over oil wealth sharing Recent weeks have seen a wave of protests calling for an independent state of Biafra Joel Olatunde Agoi
EU strikes deal to prevent rigging benchmarks European Union negotiators reached a deal yesterday on new rules to prevent the rigging of market benchmarks, after banks’ attempted manipulation of the Libor and Euribor interest rates indexes. The deal struck yesterday between EU lawmakers, the European Commission and representatives of EU states “will allow third country indices to continue being used in the European Union ... while ensuring that European benchmark administrators will not be disadvantaged”, a statement from the Luxembourg government said.
Gazprom halts Ukraine gas deliveries over non-payment Russian state giant Gazprom yesterday said it had halted gas deliveries to Ukraine after Kiev failed to make upfront payments for more supplies. Gazprom chief Alexei Miller said Naftogaz had used up all the gas it had paid for and “no new upfront payment has been made”. “As such, deliveries have been stopped until the receipt of new payments from the Ukrainian company,” Miller said in a statement. “The refusal to buy Russian gas will create serious risks for the reliable transit of gas to Europe,” Miller warned.
World’s banks may halve jobs and branches Banks across the world may cut up to half their jobs and branches in the next 10 years as they fight to stay relevant and profitable in the face of sweeping technological change, the former head of British bank Barclays said on Tuesday. “The number of branches and people employed in the financial services sector may decline by as much as 50 percent over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20 percent,” Antony Jenkins, who was ousted as chief executive in July, said in a speech.
Rwandan president calls for addressing challenges Rwandans President Paul Kagame urged the East Africa Community (EAC) to address challenging issues, such as insecurity, bad governance and corruption, while concerting its integration efforts. Kagame’s remarks were contained in a speech read for him by Rwandan Senate President Bernard Makuza in Kigali at the opening of the sessions of the East African Legislative Assembly (EALA), a legislative organ of the EAC. Kagame reiterated that all East Africans must eradicate the “business as usual” mind-set and strive towards strengthening integration, according the speech.
President Muhammadu Buhari is facing another potential headache with the revival of separatist sentiment
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hen Boko Haram captured territory in Nigeria’s northeast last year and declared a caliphate, there were real fears for the sovereignty of Africa’s most populous nation. A deadline is looming for the military to end the six years of violence, with signs that troops have wrested back control of most of the towns and villages lost to the Islamists. But now President Muhammadu Buhari is facing another potential headache with the revival of separatist sentiment in the country’s southeast and renewed debate over the sharing of oil wealth. Recent weeks have seen a wave of protests calling for an independent state of Biafra, 45 years after the end of the brutal civil sparked by a previous declaration of independence. Now, campaigners in the oilproducing Niger delta are demanding total control of resources to develop the region, which remains underdeveloped despite billions of dollars earned from crude. Last Friday, the Niger Delta SelfDetermination Movement (NDSDM) lobby group, declared the current agreement, whereby oil revenue is divided among Nigeria’s 36 states, was unfair. “The 13 percent (share for the Niger Delta) enshrined in the 1999 constitution by the military is depriving us of our God-given resources,” the group’s convener Annkio Briggs told reporters in Lagos. “We want 100 percent control and ownership of our oil so that we can control our future.”
Northern ‘dominance’
Nigeria’s crude-reliant economy has been battered by the fall in global oil prices, hampering government spending and even the payment of state-sector salaries. Crude accounts for 90 percent of Nigeria’s export earnings and 70 percent of government overall revenue. In 2014, the country earned US$77 billion from oil exports, according to the US Department of Energy,
down from US$84 billion in 2013 and US$94 billion in 2012. How much each state in the federation gets from the sector has long been a thorny issue, exposing barely concealed regional and ethnic rivalries. Demands for a greater share of oil revenue were a factor in the violence that gripped the delta in the 2000s until a government amnesty programme, which ends this year, bought off militants. Briggs’ group argues Nigeria’s political architecture, with 19 states classed as northern and 17 in the south, unfairly penalises the southern states where oil is found. “Of the 774 local government areas (administrative divisions within each state), the north is given almost 70 percent,” she said, calling it “manipulations for... socio-economic and political dominance”. She blamed a succession of northern-dominated military governments for forcing through the revenue-sharing agreement down the barrel of a gun “without our free, prior and informed consent”. Briggs denied calling for a break away from the federation but argued every region instead should use its own natural resources to develop itself. The NDSDM was founded last year during a national conference convened by former president Goodluck Jonathan at which delegates recommended the delta region received 18 percent of oil revenue. The recommendation was not implemented before Jonathan left office.
‘Politically motivated’
Nigeria is almost evenly split between a Muslim-majority north and largely Christian south and the sharp division informs most aspects of political debate. But the argument for so-called “fiscal federalism” is seen by some as unrealistic, with sectors such as agriculture and manufacturing not sufficiently developed yet to be sustainable.
Those who lost out in the power equation are behind the crisis Anyakwee Nsirimovu, Niger Delta Civil Society Coalition pressure group
Anyakwee Nsirimovu, of the Niger Delta Civil Society Coalition pressure group, said demands from southern pressure groups were predictable now Buhari, a northern Muslim, was in power. “Why is it after the defeat of Jonathan you see the likes of Annkio Briggs, MASSOB (Movement for the Actualisation of the Sovereign State of Biafra) and IPOB (Indigenous Peoples of Biafra) asking for resource control and self-determination?” he asked. The complaints in fact exposed the failure of Jonathan, from the oil-producing Bayelsa state, to help his southern kinsmen during his six years in power, he argued. “Those who lost out in the power equation are behind the crisis,” he claimed. But Tony Nnadi, of the Movement for New Nigeria, said every ethnic group had the right to either belong to or pull out of Nigeria, nearly 102 years after the country was formed. “In 1914, the so-called Nigeria came into being through an amalgamation of southern and northern protectorates by the British colonial power,” he said. “By the provisions of the amalgamation, we have the right since 2014 to renegotiate the basis of our continued existence. The experiences of various ethnic groups “in the last 100 years have shown we cannot continue in the marriage”, he added. AFP
Business Daily | 15
November 26, 2015
Opinion
The trouble with international wires policy coordination Business
Leading reports from Asia’s best business newspapers
Jeffrey Frankel
THE JAKARTA POST
Professor of Capital Formation and Growth at Harvard University
The Jakarta-Bandung bullet train project is set to begin construction at the beginning of the second quarter in 2016, according to president director Hanggoro of the state enterprises consortium PT Pilar Sinergi BUMN Indonesia. “We are currently waiting for the issuance of the Environmental Impact Analysis permit; the process is still underway at the Environment and Forestry Ministry,” said Hanggoro in Bandung on Tuesday as quoted by Antara news agency. Other project requirements that were still in process, he added, included project implementation recommendations from the West Java governor and Jakarta governor.
GLOBAL TIMES
A worldwide shift to healthier diets that contain less meat consumption could help close the gap between current emissions reduction plans and what is needed to prevent dangerous climate change, according to a report released Tuesday by a British think tank. The main goal of the upcoming Paris climate change conference is to limit the rise of global temperature by two degrees Celsius by the end of this century. Researchers believe that governments around the world still have much to do to achieve that goal. The livestock sector is already responsible for 15 percent of global greenhouse gas emissions.
THE PHNOM PENH POST After months of negotiations between the government and fuel retailers, a proposed pricing mechanism aimed at ensuring that prices at the pump correspond to fluctuations in global petrol prices has been submitted to Prime Minister Hun Sen for his approval. The Ministry of Commerce forwarded the flexible pricing mechanism to the prime minister after conferring with other concerned ministries and holding oneon-one consultations with fuel retailers, Commerce Ministry spokesman Ken Ratha said. “The formula is already submitted, but we don’t know when the PM will call for the next meeting,” he said.
VIETNAM NEWS Foreign investors who buy shares in or contribute capital to economic organisations won’t have to deal with procedures involved in investment certification. This is in accordance with Decree No 118/2015/ND-CP, which was issued on November 12 and takes effect on November 27, providing guidelines for the Investment Law 2014. Quach Ngoc Tuan, the deputy head of the Ministry of Planning and Investment’s (MPI’s) legal department, said the decree would ease procedures for foreign direct investment (FDI) enterprises.
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fter a 30-year hiatus, international coordination of macroeconomic policy seems to be back on policymakers’ agendas. The reason is understandable: growth remains anaemic in most countries, and many fear the US Federal Reserve’s impending interest-rate hike. Unfortunately, the reasons why coordination fell into abeyance are still with us. The heyday of international policy coordination, from 1978 to 1987, began with a G-7 summit in Bonn in 1978 and included the 1985 Plaza Accord. But doubts about the benefits of such cooperation persisted. The Germans, for example, regretted having agreed to joint fiscal expansion at the Bonn summit, because reflation turned out to be the wrong objective in the inflation-plagued late 1970s. Similarly, the Japanese came to regret the appreciated yen after the Plaza Accord succeeded in bringing down an overvalued dollar. Moreover, emerging-market countries’ representation in global governance did not keep pace with the increasingly significant role of their economies and currencies. These countries’ very success thus became an obstacle to policy coordination. The effort to revive international coordination began in response to the 2008 global financial crisis. The larger emerging-market countries acquired more representation when the G-20 succeeded the G-7 as the preeminent global economic grouping. G-20 leaders agreed on coordinated expansionary policies at their London summit in April 2009. Then they agreed in Seoul in 2010 to give emerging-market countries quota shares in the
International Monetary Fund that would be more commensurate with their economic weight. (The US Congress, to its shame, has yet to pass the necessary legislation.) Since then, many calls for coordination have lamented the outbreak of “currency wars,” otherwise known as competitive depreciation – an old phenomenon that recalls the tit-for-tat devaluations of the 1930s. Now, as then, the fear is that if all countries try to depreciate their currency to gain export competitiveness and boost their economies, all will fail. This concern has been reflected, for example, in complaints about intervention by China and other emerging markets to prevent currency appreciation. Likewise, successive rounds of quantitative easing by the US Federal Reserve in 2009-2014, the Bank of Japan since 2013, and the European Central Bank since earlier this year, resulted in depreciations of the dollar, yen, and euro, respectively. The most recent set of calls for coordination arise from fears – articulated, for example, by Raghuram Rajan, Governor of the Reserve Bank of India – that the Fed will not adequately take into account the adverse impact on emerging-market economies when it raises interest rates. The US has led some international attempts to address competitive depreciation, including an agreement among G-7 ministers in February 2013 to refrain from foreign-exchange intervention and a November 2015 side agreement to the Trans-Pacific Partnership to address currency manipulation. But critics are agitating for a stronger agreement backed up by the threat of trade sanctions.
Attempting to use game theory to interpret the various calls for coordination is revealing, though not in the way that game theorists assume. The players often do not think they are playing the same game. For example, when the US urges German fiscal stimulus – as at it did in Bonn in 1978, in London in 2009, and at the G-20’s Brisbane summit in 2014 – it has in mind the “locomotive game,” in which fiscal stimulus has positive “spill over effects” on its trading partners. The global economy will do better if the major countries – each afraid to undertake fiscal expansion on its own, for fear of worsening its trade balance – agree to act together to pull it out of recession and up to speed. Germans, by contrast, think they are playing a “discipline game.” They view budget deficits as creating negative spillovers effects for neighbours, owing, for example, to the moral hazard of bailouts. Their idea of a cooperative equilibrium is the European Union’s 2013 “fiscal compact,” under which euro members agreed yet again to rules for limiting their budget deficits. The most recent example of this “dialogue of the deaf” occurred in Europe, from January to July 2015. Month after month, the Greek government and its eurozone partners sat at the board, one side thinking the game was checkers and the other thinking it was chess. Interpretations vary no less when it comes to monetary policy. Some believe that monetary expansion in one country shifts the trade balance against its partners, owing to the exchange-rate effect; others believe that any adverse effect on trade balances is offset by
higher spending. Some argue that the problem is competitive depreciation or too-low interest rates; others maintain that the real problem is overvalued currencies or too-high interest rates. Some believe that the way to overcome competitive depreciation for good is to fix exchange rates, as the architects of the Bretton Woods arrangements did in 1944; others, including some US politicians today, advocate the opposite approach: an agreement against seeking to influence exchange rates at all. Yes, regular meetings of officials can be useful. Consultation can minimize surprises. Exchanges of views might help narrow differences in perceptions. But some calls for international coordination are less useful, particularly when the aim is to blame foreigners in order to distract attention from domestic constraints and disagreements. Consider the Brazilian officials who coined the phrase “currency wars” in 2010. Their country’s budget deficit was too large, causing its economy to overheat. Private demand was going to be crowded out one way or another, if not via currency appreciation, then via higher interest rates. Yet officials blamed the US and others for the strong real. Likewise, US politicians’ on-going efforts to ban currency manipulation in trade agreements may be an effort to scapegoat Asians for US workers’ stagnant real incomes. Officials would often be better advised to improve their own policies, before they tell others what to do. Otherwise, calls for international cooperation may do more harm than good. Project Syndicate
16 | Business Daily
November 26, 2015
Closing Mainland banks’ assets, liabilities grow
Li Ka-Shing’s firms drop as investors spurn deal
Total assets and liabilities of Chinese banking institutions increased in October, according to data released yesterday by the country’s top banking regulator. As of the end of October, onshore assets of China’s banking institutions, including commercial banks, policy banks and rural credit cooperatives, climbed 15 percent from one year earlier to 188.6 trillion yuan (US$29.5 trillion), according to the China Banking Regulatory Commission. Total liabilities of these institutions reached 174 trillion yuan at the end of last month, a 14.3-percent increase over the same period last year.
Billionaire’s Power Assets Holdings Ltd. and Cheung Kong Infrastructure Holdings Ltd. fell in Hong Kong trading after shareholders rejected a US$12.4 billion deal from the city’s richest man. Power Assets shares fell 2.9 percent, the steepest decline in three months, to close at HK$70.55. CKI slipped 0.4 percent to HK$68.80. On Tuesday, minority shareholders blocked a proposal for CKI to buy out Power Assets. Earlier this month, influential proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. recommended investors vote against Li’s proposal, saying the offer was too low.
Hong Kong office market on record streak led by Chinese Mainland companies are prepared to pay a premium based on the view that owning a marquee property will help them boost their brand
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s analysts start turning bearish on Hong Kong home prices, the commercial property market is showing no signs of cooling, with Chinese companies shelling out record amounts for trophy buildings. Sellers have reached out to potential buyers including Industrial & Commercial Bank of China Ltd., Bank of Communications Co.
and Fosun International Ltd., according to brokers who asked not to be named because the information is private. AIA Group Ltd. is among bidders for a Swire Properties Ltd. commercial building in Kowloon Bay that may fetch HK$8 billion (US$1 billion), Hong Kong Economic Times reported yesterday, citing unidentified people.
Hong Kong, which boasts the most expensive office rents in the world, has become a sought-after destination for Chinese companies seeking to boost their global brands. They are also drawn by the prospect of higher returns and the potential for further currency appreciation on signs that the mainland economy is slowing. Evergrande Real
Estate Group Ltd. and China Life Insurance Co. bought office blocks in separate transactions worth a combined HK$18.35 billion (US$2.4 billion) in mid-November, breaking previous price records. Buying a property is also a way for international companies to eliminate the risk of costly rent increases in the future, real estate analysts said.
Constrained supply
“I expect this to continue as major occupiers in Hong Kong see a lack of future office supply and are concerned their rents will increase,” said John Davies, executive director for Institutional Investment Properties at CBRE Group Inc. “I still think major occupiers will look to buy their own buildings in Hong Kong -- to satisfy occupancy needs and manage future costs and limit exposure to what will be office rental growth.” Wheelock & Co., which sold One HarbourGate West
Hong Kong financial district
Securities body finds billionaire Mainland firm targets baby error in CITIC Sec accounts formula with Australian IPO
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Tower to China Life earlier this month, has started a sale of the East Tower, an adjacent unfinished office building it’s developing in the Hung Hom area of Kowloon, people with knowledge of the matter said. It could fetch about HK$4 billion (US$516 million), attracting interest from several Chinese financial firms, the people said.
Bright spot
Prices of Grade-A office space in Hong Kong’s Central district are up 78 percent since the beginning of 2010, and 121 percent in the Kowloon East district over that period. The gains come against the backdrop of weakness in other parts of the property market. On the residential property side, prices could decline by as much as 20 percent in the next three to six months Bocom International Holding Co Ltd said. Retail rents are also falling as the city’s appeal as a shopping paradise for mainland tourists has waned, with Jones Lang LaSalle Inc. expecting street rents in Central to drop a further 10 percent in 2016 after falling about 20 percent to 30 percent this year. Sigrid Zialcita, managing director of research for Asia-Pacific at Cushman & Wakefield Inc. in Singapore, says Chinese insurers will become major investors in Hong Kong commercial real estate as part of their global portfolio diversification. Bloomberg News
Philippine imports up in September
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hina’s securities association said yesterday CITIC Securities had inaccurately inflated its derivative business by 1.06 trillion yuan (US$165.92 billion) in a report submitted in September. The news comes after probes into China’s largest brokerage led four of its senior executives to confess to insider trading. In its monthly report to the securities association, CITIC reported inaccurate numbers on its overthe-counter derivative business, the Securities Association of China said in a statement posted on its official website. According to the statement, both new and terminated swap business between April and Sept were inflated by an accumulated 1.06 trillion yuan, although the error did not affect the month-end net size of the business. The SAC did not accuse CITIC of any illegal behaviour and is investigating the matter. Beijing has been intensifying its probes into brokerage misdemeanours since stocks swooned in mid-June. Citic, along with several other Chinese brokerages, has been the subject of investigations.
privately owned Chinese milk producer is planning a A$20 million (US$14.5 million) partial listing in Australia, using the funds raised to buy a local dairy processor to produce and export infant baby formula. China Dairy Corporation plans to list about 13 percent of a Hong Kong subsidiary on the Australian Stock Exchange on January 15, chief executive Youliang Wang told Reuters, aiming to capitalise on demand for Australian-branded formula. Harbin-based China Dairy Corp, one of the country’s largest milk producers, owns about 18,000 hectares of land in the Heilongjiang province, providing grazing for about 40,000 dairy cows. “The first step is the IPO and the second is the acquisition,” said Wang, who is visiting Australia to talk to potential investors. “The Australian branding will be taken back to China to develop in the local market.” The move comes as Australian suppliers struggle to keep up with demand, with reports that Australian produce is being sold at mark-ups as high as 500 percent following previous safety scandals in China over adulterated baby formula.
hilippine merchandise imports rose by 6.7 percent year-on-year to US$6.17 billion in September, the National Economic Development Authority said yesterday. Trade data released by the Philippine Statistics Authority indicate that significant increases in the importation of raw materials and intermediate goods, capital and consumer goods buoyed up merchandise imports to US$6.2 billion in September 2015 from US$5.8 billion in the same month last year. Seven of the top 10 major imported commodities showed positive performance during the month. These include metal products (115.4%); iron and steel (59.7%); industrial machinery and equipment (56. 2%); transport equipment (43.0%); telecommunication equipment and electrical machinery (34.7%); electronic products (34.7%); and miscellaneous manufactured articles (4.6%). Imports for the first nine months to September reached US$49.915 billion, 2.3 percent higher from US$48.803 billion during the same period last year. Philippine Economic Planning Secretary Arsenio Balisacan expressed belief that imports will continue to increase.
Reuters
Reuters
Xinhua