MOP 6.00 Closing editor: Joanne Kuai Year IV
Number 937 Wednesday December 9, 2015
Publisher: Paulo A. Azevedo
China auto sales to maintain growth rate in 2016 Page 8
Intellectual property rights applications surge 22 pct in November
UK sides with China on IMF reform veto by U.S. Congress
Page 2
Page 8
Litigation Looming on Land Law Case
The lines are being drawn. Owner and developer of residential project Pearl Horizon, Polytex Corporation Ltd., insists the gov’t is liable. Pointing a finger at the MSAR authorities over the delay in developing the residential project. Approvals of environmental assessment and construction permit consumed years, they say. The gov’t has declared the land concession will be void on December 25. Legal experts say Pearl Horizon off-plan buyers could consider launching a joint litigation against the developer Page
3
Expanding land resources Hengqin authorities are upbeat. Revealing a further 27.9 sq. km. plot of land is to be reclaimed on the southern tip of the island. Almost the size of the existing construction land on Hengqin Island. And approximately the size of Macau. To ‘appropriately directionally supply’ Hong Kong and Macau
HSI - Movers December 8
Name
%Day
Power Assets Holdings
+0.22
New World Developme
+0.13
China Resources Beer H
-0.40
MTR Corp Ltd
-0.55
China Unicom Hong Ko
-0.75
China Shenhua Energy
-3.37
CNOOC Ltd
-3.49
Li & Fung Ltd
-3.58
Galaxy Entertainment
-4.18
Belle International Ho
-4.45
Source: Bloomberg
I SSN 2226-8294
Page 4
Trade decline contracts China’s foreign trade. Down 4.5 pct y-o-y to 2.16 trillion yuan (US$337 billion) in November. The ninth consecutive monthly decline, official data showed yesterday. The level of decline significantly eased compared with the 9 pct y-o-y plunge registered in October, helped by increased electrical exports
Page 10
Holiday bonus
Macau International Airport passenger volume grew 6.5 pct y-o-y in November to 480,000. Taiwan is the main reason for the surge, with 34 pct more passengers flying the route. The newly-launched 8 flight routes will provide more options for X’mas and New Year holiday travel
Page 2
www.macaubusinessdaily.com
Gaming
Gloomy Fitch forecast No respite. Fitch Ratings forecasts Macau’s gaming revenue will decline some 34 pct in 2015. And by roughly 5 pct in 2016. On top of a 3 pct decline in 2014. The firm remains positive on the city’s long-term prospects, it says. Citing the potential of gaming in Asia Pacific
Page 5
2015-12-9
2015-12-10
2015-12-11
14˚ 17˚
15˚ 20˚
15˚ 20˚
2 | Business Daily
December 9, 2015
Macau
Passenger volume up 6.5 pct in local airport Increase has been boosted by growth of Taiwan market and that of transfer passengers Kam Leong
kamleong@macaubusinessdaily.com
However, the company said passenger numbers for the Mainland China market posted a slight drop while Southeast Asia and North Asia flights saw passenger numbers remain stable. For the first eleven months of the year, the airport welcomed 5.3 million passengers, up 5.5 per cent compared to the same period last year. Meanwhile, more than 50,000 aircraft used the local airport during the eleven months, representing a year-on-year increase of 6.5 per cent.
Optimistic outlook
T
he local airport saw its passenger volume register a year-on-year increase of 6.5 per cent last month, driven by significant growth in
the number of passengers on MacauTaiwan flights, as well as the lift in the number of transfer passengers, according to the latest data released
by the Macau International Airport Company Ltd. (CAM). In November, Macau International Airport (MIA) received a total of 480,000 passengers. Meanwhile, some 4,600 aircraft movements were recorded during the month. The airport operator said the number ‘surpassed the same month of last year,’ but did not release the related growth rate. According to CAM, passenger volume for flights connecting to the city and Taiwan surged 34 per cent year-on-year during the month. In addition, the traffic of transfer passengers posted a year-on-year growth of 55 per cent.
Meanwhile, the company’s Director of Marketing, Eric Fong, told local broadcaster TDM Radio yesterday that total passenger volume at the local airport is expected to reach 5.7 million for the whole year of 2015, which will represent a yearon-year growth of 5 per cent: total aircraft movement may increase 6 per cent year-on-year. The company believes that this year’s newly launched 8 flight routes will provide more options for local residents and visitors for holiday travel during Christmas and New Year. These new flight routes connect the city to Haikou and Wanzhou of China, Ho Chi Minh City and Haiphong in Vietnam, Phnom Penh in Cambodia, the Maldives, Palau and Pattaya in Thailand. ‘As the demand for air travel is forecast to increase, it is expected to bring further growth to MIA. The related entities are well prepared to provide high quality, safe and efficient services to satisfy different passenger needs,’ the operator claimed.
Intellectual property rights applications surge 22 pct in November
L
ast month, the number of applications for intellectual property registration registered an increase of 22 per cent compared to the same period last year due to the growth in the number of trademark applications, the latest data released by the Economic Service Bureau (DSE) reveals. The government department received a total of 1,266 applications for intellectual property registration in November, up by 229 compared to November 2014. On a month-onmonth comparison, the application number surged 38.4 per cent from 915 in October. In fact, 95.1 per cent of the applications were to register trademark in the city, which amounted to 1,204 of the total. It also represents a surge of 21.6 per cent compared to 990 applications last year, or an increase of 38.9 per cent from 867 in October.
There were no new applications for invention patents last month but the number applying for an extension of current invention patent soared 35 per cent year-on-year to 42. Compared to October, the number increased 27.2 per cent. In addition, the Bureau received some 5, 13 and 2 applications for registering utility patent, industrial design or model and name, and emblem of establishment last month, respectively. Cumulatively, a total of 12,836 applications were filed with DSE for intellectual property registration during the first eleven months of the year, of which 12,170 were for trademark, 343 were for extension of invention patent, and 213 were for industrial design and model. The number of applications for registering invention patent and name and emblem of establishment, meanwhile, amounted to 61 and 30, respectively. K.L.
Business Daily | 3
December 9, 2015
Macau
Pearl Horizon developer mulls response to expiry of land grant The developer, who has kept the construction running on the project site, insists the government is to blame for the delays in building the 18 residential towers Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he owner and developer of residential project Pearl Horizon, Polytex Corporation Ltd., said that it would make a public announcement in ‘one or two days’ regarding the imminent expiry of the land concession for the project, while construction on the site will continue until the concession expiry date of December 25. Mr. Chan Sai Tin, general manager of Polytex, told Business Daily that his company believed that the government was accountable for compensating [the company] for delays in the residential project, located at Lote P in Novos Aterros da Areia Preta on the Macau Peninsula. Mr. Chan’s company said recently that it is suing the government for remedies in all respects to continue and complete the project. “It took us seven years to obtain government approval for the construction of the whole project. For the [approval] of the environmental assessment alone, three years have been spent,” Mr. Chan said. The plot for the project, originally an industrial site, was approved by the government for rezoning to residential use in 2006. “It was in 2013 that the public works department greenlighted the whole Pearl Horizon project, and then we were only able to file for a
Pearl Horizon Project location Lote P in Novos Aterros da Areia Preta on Macau Peninsula Number of residential units: 5,220 units
construction permit in that year,” Mr. Chan noted. “And in August 2014, we were finally approved to get the construction permit.” The Macau Government is declaring the land concession for the Pearl Horizon site invalid on December 25 as the land use will miss the deadline, Secretary for Administration and Justice Sonia Chan Hoi Fan announced on Monday. The plot has been granted to the developer on temporary concession terms, with a validity that expires on December 25 this year; a temporary concession is not renewable, the Land Law stated. Pearl Horizon, occupying 68,001 square metres, is designed to house 18 towers of 5,000-plus residential units. Off-plan sales of the project started in 2011 before a brick was laid; the developer said at the time that the units could be ready for occupation in 2015. When asked whether Polytex had informed Pearl Horizon buyers of the permit issuance delays it claimed to
have encountered and the subsequent risk of missing the project completion deadline, Mr Chan said: “We did not. Because in our experience, there was usually not much problem with the application for the extension of land use – at least before the Land Law came into effect [on March 1, 2014]. But now clearly this is not the case anymore, and the answer from the government is not what we expected,” the Polytex general manager said. The government has rejected the developer’s application to extend the land use by five years to December 25, 2020.
Legal battles
Secretary for Administration and Justice Sonia Chan Hoi Fan reiterated to media yesterday that the government is definitely taking back the Pearl Horizon site as the developer will have failed to complete the land use terms before their temporary land concession expires. “As to whose responsibility it is for the fact that the
Macau still in talks with HK, PRC on judicial assistance matters
T
he administration has already missed the target of signing an agreement with Hong Kong and Mainland China on interregional judicial assistance matters within this year as talks are still ongoing on operational details,
the Secretary for Administration and Justice, Sonia Chan Hoi Fan, informed media yesterday after attending a seminar. The intended co-operation on judicial assistance with Hong Kong and the Mainland involves the handing
Number of residential units sold: 3,020 units Registered local owner and developer of project: Polytex Corporation Ltd. (The Hong Kong-listed Kowloon Development Company, a member of the Hong Kong-based developer Polytec Group, owns 73.4 per cent of the listed subsidiary and developer Polytec Asset Holdings Ltd. that controls the Pearl Horizon project.)
land use is not completed before the expiry date, the government and the developer have different views on the subject. And the developer has the right to sue,” Ms. Chan told media on the sidelines of a seminar yesterday. “But we don’t think that the government is the liable party in this case.” The Secretary suggested on Monday that Pearl Horizon buyers can file a lawsuit against the developer for failure to exercise the presales contract, which can entail the return of double the deposit they paid for the unfinished flat. Some of the distressed Pearl Horizon buyers assembled at Polytex’s office yesterday demanding compensation for the money
over of fugitives, the senior official said on previous public occasions. “We cannot realise our target set earlier that judicial assistance can be signed with the Mainland and Hong Kong within this year,” Ms. Chan briefly told media, “But we’re definitely signing this arrangement with the Mainland next year.” However, the Secretary did not pledge a date when the administration can seal the agreement with Hong Kong on judicial assistance matters. Speaking to media yesterday, Ms. Chan did not give details of the judicial assistance arrangement to be signed with Hong Kong and Mainland China but said that the administration was still negotiating operational issues
they had paid Pearl Horizon for the unfinished flats. As the government announced on Monday, some 3,020 units of the project have been sold via off-plan sales. Law scholar Gabriel Tong Io Cheng and lawyer Miguel Senna Fernandes told Business Daily that Pearl Horizon buyers could consider launching a joint litigation against the developer, although such a format may not guarantee that the case can be handled faster than one filed individually. “This type of civil lawsuit will have to take at least a year from the filing of the case to judgment, and one year is a very optimistic count for our courts’ workings,” Mr. Fernandes said.
on the arrangement with these two jurisdictions. Within this month, the government could deliver the bill on interregional judicial assistance to the Legislative Assembly for deliberation, the Secretary said. Macau signed an agreement with Hong Kong in 2005 on the transfer of sentenced persons, which means that Hong Kong persons in jail here or Macau persons imprisoned in Hong Kong can be repatriated to their home city to serve their sentence. But it is only since 2013 that both jurisdictions have embarked upon discussions about the transfer of fugitives. S.L.
4 | Business Daily
December 9, 2015
Macau opinion
MICE lessons?
Hengqin to reclaim more land to supply SARs Hengqin authorities have confirmed that a further 27.9 square kilometre plot of land would be reclaimed on the southern tip of the island
José I. Duarte Economist
O
ver the course of the last few years, the debate on diversification has been consolidating around three main industries or areas: MICE (Meetings, Incentive, Conferences, Exhibitions) events, traditional Chinese medicine (TCM) and creative industries. MICE events are the ones that have moved faster and where further human and financial investment has been made. The assessment of MICE industry development under public auspices might provide valuable lessons and guidance for the development of the other two. Comparatively, we can say those are still very much in the definition process. The statistical department has since 2009 provided separate data for the MICE sector, and the public commitment to the development of the industry has been clear and often restated. A specific web portal was created for the sector, and various supporting mechanisms are available for organisers and participants in MICE events. Results, however, seem to be below what the level of priority and support granted to the sector, including direct public funding, would lead us to expect. Unfortunately, the portal has no information about the actual use and distribution of financial or other types of support. Also, information on past events is not available, which, to say the least, is surprising. The sole information available relates to events scheduled for the current and future months. Cancelled events are not identified. In other words, information is more limited than would be appropriate for a specialised portal. Regardless, the data available suggests that the results achieved were less than stellar. The figures published by the statistical department only provide a limited amount of information concerning the sector’s financial data. But they raise the suspicion that without public support many activities would not be carried out, and fewer operators would possibly survive. The weight of the sector in the overall economy is negligible. Moreover, last year the sector managed two somewhat ambiguous results. On the one hand, the number of companies increased, which would suggest a growing dynamism; on the other hand, its total contribution to the economy’s gross added value declined. That is, less wealth was created by a larger number of firms. Such a result does not bode well for the future of the industry, and should be the target of a proper enquiry. Was it a fortuitous result? Or the unintended outcome of public policies? More than a lively and competitive industry, are these policies contributing to consolidating a possibly inefficient system, dependent and surviving upon public assistance? Instead of a new driver of economic growth, are public policies helping to create a ‘clientele’, reliant on the public budget for most or a significant part of their undertakings? Should that be the case, the outcome would in fact be antagonistic to the intended one. The dependence of the economy and the public budget upon gambling might even be exacerbated. In the end, the taxes that feed the public purse must come from somewhere.
T
he Methods on Promoting Hengqin New Area as China Guangdong Free Trade Zone (FTZ) Pilot Zone by Zhuhai Special Economic Zone were released on Monday. A series of supporting policies, including supporting Hengqin having more reclamation land scientifically and appropriately – to ‘directionally supply’ to Hong Kong and Macau - were part of the measures proposed. The Director of the Administrative Committee of Hengqin New Area, Niu Jing, revealed at a press conference announcing the first municipallevel guidelines supporting the development of an FTZ, that the size of the land reclamation can be up to 27.9 square kilometre, which is almost the size of the existing construction land on Hengqin Island of 28 square kilometre, which is also approximately the size of the Macau SAR. Mr. Niu said that the State Council of the People’s Republic of China has approved the reclaimed land
zone proposal of Hengqin Island, according to Chinese media reports. The proposal is still undergoing evaluation by experts as well as waiting for environmental impact reports by marine scientists. Next, the land reclamation plan will be handed to the State Oceanic Administration. After its authorisation, the exact location, size and use of the plot will be announced. The municipal policy also mandates that in terms of Zhuhai’s annual land use plan target, Hengqin area will be prioritised.
Benefiting SARs
Different rules will apply to Hengqin, said Niu Jing, who indicated that in order to better facilitate companies from Hong Kong and Macau, a new list of legal responsibilities would be drawn up to deal with situations where some operations may be deemed legal in the SARs but deemed illegal in Mainland China. The Methods also mention supporting high-end medical service co-operation between Guangdong and
Macau; supporting SARs-financed travel agencies to provide services for Mainland Chinese to travel abroad; and encouraging the establishment of companies that specialise in foreign equity investment in order to support cross-border renminbi business, among other measures that benefit the SARs. Mr. Niu also said that currently Hengqin has a plan to borrow up to 1.6 billion renminbi from Macau. Companies registered in Hengqin can directly go to Macau financial institutions for cross-border loans. In addition, Mr. Liu said that the discussion pertaining to Macau cars entering Hengqin has been proceeding smoothly and has entered the final stage. He believes the policy will be launched soon. Meanwhile, following the 24-hour border crossing in Cotai/Hengqin launched last year, more innovative measures are on the way, such as ‘one spot, two inspections’ to shorten the border crossing time for Macau residents.
Business Daily | 5
December 9, 2015
Macau
Fitch: Gaming revenues continue to slump in 2016 The rating agency estimates that local gaming revenues may still decrease by some 5 per cent next year Kam Leong
kamleong@macaubusinessdaily.com
R
ating firm Fitch expects the city’s gaming industry to continue its downward spiral next year, saying gaming revenues may post their third consecutive annual drop due to ‘the tough firsthalf of 2015 comparison’. ‘Fitch Ratings projects Macau’s gaming revenues to decline by 34 per cent to 35 per cent in 2015 and by roughly 5 per cent in 2016 on top of a 3 per cent decline in
2014,’ the firm forecast in its 2016 outlook report on the local gaming industry. ‘Fitch’s 2016 forecast assumes stabilisation in the mass market segment, continued, albeit moderating, declines in the VIP segment and modest growth driven by the new capacity coming online on Cotai,’ the agency explained. But it added that the forecast for the sector would be downgraded if
Corporate BNU issues 330,000 Asia Miles to BNU Asia Miles Visa Card holders BNU held the BNU Asia Miles Visa Card Grand Lucky Draw - the prize presentation ceremony of which was held on 4th December, 2015 - at BNU’s main branch. Prizes include 17 prizes of 10,000 Asia Miles, as well as three grand prizes of 30,000, 50,000 and 80,000 Asia Miles. All BNU Asia Miles Visa Card holders who
spent MOP5,000 with the card from 1st March to 31st August were eligible for the lucky draw. Mr. Ronald Kan, Executive Director of BNU, and Ms. Mercedes Ho, Head of Partnership & Business Development of Asia Miles, co-hosted the ceremony to present the prizes to the lucky winners.
there are further disruptions related to the junket business, cash transfer mechanisms and policies affecting people travelling to Macau, as well as the implementation of a universal smoking ban. The official data of the Gaming Inspection and Co-ordination Bureau shows that the accumulated gross gaming revenue for the first eleven months of 2015 was MOP212.50 billion, down 35.3 per cent from one year ago. Although more casino resorts are slated to open next year the rating agency believes that these new projects will not translate into immediate positive effects on the local gaming market. ‘Fitch believes it will take two to three years for Cotai projects to show their full potential and the first full year returns on investment will be disappointing by historical standards,’ it claimed.
Positive in long term
For the long term, the firm said its positive outlook for the city remains intact as the Asia Pacific gaming market remains underpenetrated in general. ‘Pending infrastructure projects such as the bridge to Hong Kong and the light rail project, despite delays, should make Macau more accessible. Operators’ balance sheets are generally in good shape and can withstand nearterm underperformance of their new projects and cannibalisation from competitors’ projects,’ the agency reported. “Investors in Macau’s gaming sector are playing the long game. As Macau’s gaming revenues begin to stabilise next year, we’re starting to see its long-term potential on the horizon,” said the firm’s director of Gaming, Lodging and Leisure, Alex Bumazhny.
But the firm indicated that the prospects for the city’s major industry will remain dependent upon the central government’s travel policies and corruption crackdown, as well as the local government’s decision on a universal smoking ban in casinos.
Trend continues
Investment house Wells Fargo also believes that the local gaming market remains in decline, claiming gaming revenues would continue to be weak for the rest of the month. ‘Our preliminary checks on the ground suggest December is off to a slow start. This comes despite new supply growth, including the late October opening of Studio City as we’re hearing foot traffic in the new property is tracking lower than expected,’ the firm’s analysts Cameron McKnight and Robert J. Shore wrote in their latest report on the market. The two analysts added in the report that the mass gaming market had also reached a new low for the year, saying, ‘We note that despite a lot of hype around resilient grind mass demand, we believe grind mass trends, as evidenced by slot demand, was down 6 per cent year-on-year in November’. According to Deutsche Bank analyst Carlo Santarelli, the city’s daily gross gaming revenues amounted to HK$530 million (US$66.3 million) for the first six days of this month, which is down 28 per cent compared to some HK$738 million daily for the first eight days of December 2014. The investment bank estimates that gaming revenues for the last month of the year will total some MOP17.8 billion, representing a decrease of 23.5 per cent compared to the same period last year.
6 | Business Daily
December 9, 2015
Macau
Mahjong masters clack tiles in glitzy Macau casino Similar to the Western card game rummy, mahjong is a game of skill, strategy, and calculation and involves a degree of chance
I
n a ballroom of a glitzy casino hotel, the clatter of plastic tiles turned into roaring applause as the winner was determined for an international mahjong competition late Sunday following a weekendlong wrangling over square tables.
Zhao Jian was among some 200 players who had crowded the corner of Macau’s Venetian Hotel, vying for a cash prize and a golden mahjong tile-shaped necklace for coming top at the “World Series of Mahjong” competition.
“Sweetheart, we got money,” said the 36-year-old from Mainland China’s Jiangsu province as he hugged his wife after he was crowned champion for accumulating the most points, at the end of some 20 hours of gaming inside the casino hotel.
“I just feel I am lucky. I don’t think I’m much better... It’s just my hobby,” the lawyer told reporters as he was awarded HK$400,000 (US$51,600), the necklace, and guaranteed lifetime entry to all of the contest’s future events. He celebrated the victory by waving a tiny Chinese red flag that he had brought to the venue. Mahjong, China’s answer to poker, is played both locally and abroad. Games are played with a set of up to 144 tiles engraved with Chinese characters and symbols. While rules may vary across countries, it requires four players who take turns to draw tiles to compose a complete set to win a “hand”. Despite defeat, other participants said they were also going home delighted. A Japan-based player, who gave her name as Jenn, told AFP: “I play almost everyday. I feel really at home at the Mahjong table. It’s my favourite place to be. So I love being a pro.” Sun Yuexian, an 80-year-old player also from Mainland China, said he thought playing the game could help stimulate his brain: “I think playing mahjong could prevent my brain from deregulating,” he said. Despite claims linking it back to Confucius, there is no consensus on the definitive origin of mahjong, but many historians believe the modern version of the game dates back to 19th century China. But it is also a mode of gambling, so rampant that state-run media warned officials last year to “stop” playing, a message seen as part of the Chinese president’s crackdown on corruption. AFP
Business Daily | 7
December 9, 2015
Macau
World’s biggest gamblers can’t halt Aussie casino bond risk jump As Melco constitutes a significant portion of Crown’s overall earnings profile, researcher believes Macau’s malaise is being reflected in expectations for Crown’s future profits
C
rown Resorts Ltd.’s local market may be home to the world’s biggest gamblers, but debt investors are less eager to bet on Australia’s largest casino operator as its Macau business suffers. With China’s corruption crackdown and a slowing economy weighing on revenue at its Melco Crown Entertainment Ltd. venture, bond risk for the company controlled by billionaire James Packer has risen the most in Australia apart from commodity giants Rio Tinto Group and BHP Billiton Ltd. Melbournebased Crown has boosted its debt burden to finance the development of Australian attractions. It’s also considering a new venue in Las Vegas. “Melco constitutes a significant portion of Crown’s overall earnings profile, so given the weakness in the market there, that certainly is being reflected in expectations for future profits,” said Michael Bush, Melbourne-based head of credit research at National Australia Bank Ltd. The cost of protecting Crown Resorts debt against non- payment has risen 43 basis points over the past three months to 214 basis points as of Monday, the third-worst performance in the 25-member iTraxx Australia index of credit default swaps. Its CDS last month touched the highest versus the benchmark gauge since 2009, according to data compiled by Bloomberg.
Macau malaise
Casino operators in the Chinese gambling hub of Macau saw a 32 per cent slump in revenue in November
from a year earlier and it’s fallen for 18 straight months, data from the city show. Fernando Chui, chief executive for the special administrative region, said last month he expects further declines. Crown’s net income after adjusting for one-time items and an unusual rate of winnings was A$526 million (US$382 million) for the year ended June 30, down 18 per cent from a year earlier. Although so-called normalized revenue for the company’s Australian resorts increased 14 per cent to A$3.21 billion, the profit received from its stake in Macaufocused Melco Crown slumped 45 per cent to A$129.9 million.
The thing that has changed is that the risks in the Melco investments are rising further Michael Bush, Melbourne-based head of credit research at National Australia Bank Ltd.
In Australia, the local penchant for wagering has shown little sign of abating, with Aussies frittering away A$24.1 billion on gambling in the 12 months through September, government data show. That equates to about A$1,000 for every man, woman and child. The country’s punters are the world’s biggest spenders on gambling, with per person losses exceeding the likes of Hong Kong and Canada, according to the latest figures from Global Betting and Gaming Consultants. In addition to home-market developments such as Barangaroo in Sydney, Crown is also contemplating plans for a new resort in Nevada and earlier this year acquired a stake in restaurant and hotel owner Nobu for US$100 million. Crown’s net debt increased 47 per cent to A$2.5 billion in the last financial year. “The development pipeline, they’ve added a few things here and there to it, but in essence the development pipeline now isn’t that much different to what it looked like three or six months ago,” said NAB’s Bush. “The thing that has changed is that the risks in the Melco investments are rising further.” The yield premium over the swap rate on Crown’s November 2019 Australian dollar bonds widened to 219 points as of 12 p.m. on Tuesday in Sydney, up from 168 a year earlier, based on Commonwealth Bank of Australia pricing. Crown’s credit-default swaps last month reached as much as 104 basis points more than the benchmark iTraxx index, while the gap was at 90 on Monday.
The company’s shares have also slipped this year, although they’ve rebounded 14 per cent from the almost three-year low they touched in September. Ken Barton, Crown’s chief financial officer, didn’t immediately reply to a message left at his office seeking comment on the company’s bond risk.
Exciting market
“Macau is currently experiencing a difficult period which has adversely affected all casino operators,” Crown Chief Executive Officer Rowen Craigie said at the company’s annual meeting in October. “However, MCE believes that through the strong leadership from the Macau and Chinese governments, the ongoing build-out of significant local and regional infrastructure, together with an expanding and increasingly affluent Chinese middleto-upper-class, Macau remains the world’s most important and exciting gaming market over the longer term.” Crown is rated two steps above junk by Standard & Poor’s, Fitch Ratings and Moody’s Investors Service. Fitch Ratings this week said the outlook for Australia’s gaming operators was stable, while noting that Australia’s economy has slowed and that both Crown and its biggest rival Star Entertainment Group Ltd. are embarking on debt-funded projects. “Robust operating cash flows should allow them to expand successfully despite a weakening broader economy,” Fitch wrote. “Crown’s leverage is likely to be under pressure during the construction phase.” Bloomberg
8 | Business Daily
December 9, 2015
Greater China
UK Chancellor sides with Beijing on U.S. Congress veto of IMF reform Last month, China’s vice finance minister said the world’s second biggest economy had urged Congress to adopt reforms as soon as possible Jonathan Spicer
B
ritish Chancellor of the Exchequer George Osborne strongly criticised the U.S. Congress’s approach to China during a visit to New York, calling its decision to oppose a greater Chinese role in the International Monetary Fund a “tragedy”. Britain had a rare diplomatic rift with the United States this year when it became the first Western nation to support China’s Asian Infrastructure Investment Bank, which Washington sees as a rival to Western-led bodies such as the World Bank. British Prime Minister David Cameron then gave a warm welcome to China’s President Xi Jinping on a state visit to Britain. Domestic and foreign critics have accused Britain’s government of prioritising short-term commercial gains over human rights and security issues. Osborne -- who himself toured China earlier this year and is a strong contender to succeed Cameron as leader of Britain’s Conservatives -rebuffed this criticism at an event in New York and hit back at U.S. politicians he said wanted to isolate China. “In my view it is overwhelmingly in our interests - in Britain’s
British Chancellor of the Exchequer George Osborne called US Congress decision to oppose a greater Chinese role in the International Monetary Fund a “tragedy”. Osborne toured China earlier this year
interests, in America’s interests - to bring China into and bind China into a multilateral world,” he told the Council on Foreign Relations, a U.S. think tank. The U.S. Congress has so far not approved reforms agreed in 2010 that would put Brazil, China, India and Russia among the IMF’s top 10 shareholders and give emerging markets more influence. The White
House supports the move but Congress, controlled by Republicans, must also back it. “It is a tragedy that an agreement reached across all the members of the IMF, including by the U.S. administration, is being blocked by one legislature in the world, the U.S. Congress,” Osborne said. Last month, China’s vice finance minister said
the world’s second-biggest economy had urged the Congress to adopt the reforms as soon as possible. Osborne also said the United States, Britain and other countries should focus on implementing a July deal on Iran’s nuclear programme under which sanctions against Tehran will be lifted, rather than seek to unpick it as proposed by some Republican presidential candidates.
November auto sales surge 18% as tax cut bolsters demand But Chinese automakers reported mixed results
P
assenger-vehicle deliveries in China increased at the fastest pace in nine months amid demand for small cars after the government cut a tax to boost sales in the world’s largest auto market. Retail sales of cars, SUVs and multipurpose vehicles climbed 18 percent to 2.02 million units in November, the biggest monthly gain since February, according to the China Passenger Car Association. Retail deliveries this year through last month gained 7.5 percent to 18.2
million vehicles. China cut the tax levied on vehicles with engines 1.6 litres or smaller by half starting October, benefiting automakers with popular compact models. Nissan Motor Co. and Toyota Motor Corp. posted sales of 22 percent and 14 percent respectively last month, while General Motors Co. and Ford Motor Co. registered gains of 14 percent and 9 percent. “The tax cut helped the Japanese automakers as they have quite a few popular models that are 1.6 litters and
below,” said Lin Huaibin, Shanghaibased analyst at IHS Automotive. “They’re also in new model cycles, with vehicles such as the recently introduced compact SUVs from Honda and sedans from Toyota and Nissan and these qualify for the tax break.” Nissan, the largest Japanese automaker in China by sales, is set to sell more than one million passenger vehicles in a year for the first time in the country, with “healthy growth” expected in 2016, Jun Seki, the
Last week Cameron won support from Britain’s parliament to bomb Islamic State insurgents in Syria, after a defeat two years ago when he proposed air strikes on Syrian President Bashar al-Assad. Osborne said this vote, combined with higher defence spending, showed how Britain was “reasserting itself on the world stage”. But neither Britain nor the United States should deploy ground troops to fight Islamic State, Osborne said. Instead they should seek Assad’s departure and work with other Syrian leaders. Osborne’s visit to the United States came with the Federal Reserve preparing to raise interest rates, and he warned of potential ructions in emerging markets when this occurs. “The exit from loose monetary policy in the United States and in Britain ... will pose some big challenges for the emerging markets. Although (the policy changes) have been quite well advertised and foreshadowed, that doesn’t mean they are going to be particularly easy to deal with when they come.” Reuters
company’s head in China, said last month. Honda Motor Co., which posted a 33 percent growth in sales in China last month, has said it will be able to achieve its full-year target of selling a record 950,000 cars in the country this year, bucking an industry wide slowdown. Chinese automakers reported mixed results in November. While the country’s largest SUV maker Great Wall Motor Co. reported deliveries climbed 21 percent, state-owned Dongfeng Automobile Co. posted a 9.9 percent drop in sales. Total vehicle sales, including trucks and buses, may increase 3 percent this year, according to Dong Yang, secretary general of the state-backed China Association of Automobile Manufacturers. That contrasts with the average 36 percent growth in the past decade, according to data compiled by Bloomberg Intelligence. Bloomberg News
Business Daily | 9
December 9, 2015
Greater China
With domestic GMO sector in limbo, local seed firm targets U.S.
De-stocking measures for property sector
The company will meet with potential partners at December’s American Seed Trade Association conference in Chicago Dominique Patton
A
Chinese biotech seed firm is aiming to launch the country’s first genetically modified corn products overseas on the home turf of the world’s top agricultural companies, as Beijing’s reticence over GMO food keeps the domestic market off limits. The plan by Beijing-based Origin Agritech to test its technology in the United States, which has dominated the sector with GMO giants such as Monsanto, is the latest effort by a Chinese firm to enter the global industry. Earlier this year, China National Chemical Corp sought to skirt obstacles at home and acquire a triedand-tested GMO pipeline by bidding for the world’s top agrichemicals firm Swiss-based Syngenta. Beijing’s GMO policy has at times appeared inconsistent - billions of dollars have been spent on developing technology it hopes will ensure supplies for its 1.4 billion people, while no major food crops have been approved for cultivation given deepseated anti-GMO sentiment in the country. Bumper harvests in the past decade have also reduced the urgency for new technologies. “Consumer attitude is one thing, but the government attitude is even more important,” said Huang Dafang, professor at the Biotechnology Research Institute under the Chinese Academy of Agricultural Sciences. That leaves firms like Origin with few options to earn revenues from GMO products in China, he added. U.S.-listed Origin has invested more than 300 million yuan (US$46.90 million) in biotech since 2005 and, without an opportunity to market its product at home, it now
plans to enter the United States in 2016, according to a presentation on the Securities and Exchange Commission website. Entering the U.S. market could take several paths from licensing its technology to setting up a unit there, Origin’s chief financial officer, James Chen, told Reuters. But getting a foothold in such a highly competitive market will not be easy, experts warn.
Tough competition
Origin’s most advanced product is a corn with two special characteristics, or “traits”, that resist pests while top seed firm Monsanto already markets a GMO corn that combines or “stacks” as many as eight traits to combat pests. “The only way they might be able to break into the market is if their technology fees are going to
KEY POINTS Origin plans to enter U.S. for its GMO technology in 2016 Beijing’s reticence over GMO food keeps its market off limits May license its technology or set up U.S. unit -Origin CFO But getting a foothold in U.S. GMO market not easy – Experts
be cheaper than Monsanto,” said Carl Pray, professor at Rutgers University’s agricultural, food and resource economics department. Referring to seed firm Beijing Dabeinong Technology Group’s agreement to test its technology in Argentina, Pray said competition was tougher in the United States. “It’s one thing to do this in Argentina, and another to go into the U.S.” But Origin’s Chen sees a market for its products there. “We think the technology has a fundamental value. Farmers are looking for alternatives to current products on offer,” Chen said, adding that Origin would likely seek partners interested in licensing its traits to stack alongside others. The company will meet with potential partners at December’s American Seed Trade Association conference in Chicago. But even with a local partner, the Chinese product would need U.S. regulatory approval, which could take years. A successful U.S. test could, however, boost confidence in Chinese technology and pave the way for Beijing to roll out its products. For Origin, it could mean a better valuation than the current US$33.9 million. The company, which is looking to sell a majority stake in its conventional seed business, says it is undervalued due to the lack of a viable biotech market. “Our valuation on Nasdaq is much lower than the valuation of seed production companies in China. If we attract investment, our valuation will shoot up,” said CFO Chen. Reuters
It is expected that during an upcoming key economic meeting Chinese officials will introduce measures to cut housing inventories. De-stocking the property market will likely be discussed at the upcoming Central Economic Working Conference, which sets economic targets for the coming year, a source told China Business News. The measures are not expected to boost the real estate market nor set quantitative de-stocking targets for specific regions. “The most important thing is to reactivate the property sector to help with its liquidity,” the source said.
Hong Kong’s property cooling measures to stay
Hong Kong Chief Executive Leung Chunying said yesterday that property cooling measures will stay despite recent signs of a fall in property prices. Speaking ahead of the weekly Executive Council meeting, Leung said it was not the government’s responsibility to make sure home prices do not fall. “We are seeing in recent months a slight dip in rent and prices, this is sort of bucking the trend,” he said, adding that the government was determined to tackle the housing shortage by increasing land supply. Hong Kong’s property prices have more than doubled since 2009.
Didi Kuaidi taps Yahoo co-founder Ride hailing service Didi Kuaidi, Uber Technologies Inc’s chief rival in China, said on Tuesday it had appointed Yahoo Inc co-founder and Alibaba Group Holdings Ltd investor Jerry Yang as a board observer and senior adviser. Yang’s new positions at Didi Kuaidi add a new link in the cobweb of relations between the Chinese ride hailing company and its investors, Alibaba and Japan’s SoftBank Group Corp. Yang, Alibaba founder and executive chairman Jack Ma and SoftBank CEO Masayoshi Son all sit on the board of Alibaba. SoftBank was also an early investor in both Yahoo and the Chinese e-commerce behemoth, and the three men maintain close ties.
Emergency response on worst smog pollution day
Chinese firms have to face fierce competition from GMO company Monsanto. A protest against the company is pictured in San Francisco
At least two million private cars were taken off the road in the Chinese capital as Beijing rolled out its emergency response plan following its first-ever red alert for smog. A grey haze hung heavy over Beijing yesterday, after it announced the most severe smog warning under its four-tier system. The alert is active from 7 a.m. yesterday until noon on Thursday. On Tuesday morning, the average density of PM2.5 exceeded 234 micrograms per cubic meter in the downtown areas. Under the alert, schools have been closed, work at outdoor construction sites suspended, and factories have been ordered to halt operations. Beijing also closed several highway sections to reduce traffic.
10 | Business Daily
December 9, 2015
Greater China
November exports weaker but sweetened by import easing Premier Li Keqiang said last week that China was on track to reach its economic growth target of about 7 percent this year Sue-Lin Wong
C
hina’s trade performance remained weak in November, casting doubt on hopes that the world’s second-largest economy would level off in the fourth quarter and spelling more pain for its major trading partners. The sluggish readings will reinforce expectations of economists and investors that the government will have to do more to stimulate domestic consumption in coming months given persistent weakness in global demand. Exports fell a worse-than-expected 6.8 percent from a year earlier, their fifth straight month of decline, while imports tumbled 8.7 percent, their 13th drop in a row. Imports did not slide as much as some economists had feared, but analysts were unsure if that signalled a possible improvement in soft Chinese domestic demand, which has been a key factor in driving world commodity prices to multi-year lows. “The big picture hasn’t really changed that much. The U.S. is doing okay, but the problems with emerging markets are really quite big,” said Kevin Lai, chief economist Asia ExJapan at Daiwa Capital Markets in Hong Kong. “Imports have been slumping for more than a year now, so the yearon-year figures are benefiting from a much lower base, which statistically we should expect. But I’m not so sure the number today reflects a real fundamental change for the better in import demand.” Analysts polled by Reuters had
expected exports to fall by 5.0 percent, moderating slightly from October’s 6.9 percent decline, while imports had been forecast to decline 12.6 percent after an alarming 18.8 percent slide in October. To be sure, China imported more copper, iron ore, crude oil, coal and soybeans in November by volume than in the preceding month, preliminary data from the General Administration of Customs showed on Tuesday. But analysts said opportunistic Chinese buyers may have merely been taking advantage of a fresh slump in commodity prices, and will likely continue to export large quantities of finished products such as steel and diesel fuel because demand is not strong enough at home. By value, China’s imports from the United States, the European Union and Japan all dropped, and in the case of Australia by a double-digit rate.
Export weakness
While some market watchers have pointed the blame squarely on China for this year’s global trade slowdown, the latest data highlighted weak demand globally, with China’s shipments to every major destination, except South Korea, declining yearon-year. “China’s trade performance remains weak, as the trade value is likely to drop 8 percent for the whole year of 2015, versus an increase of 3.7 percent in 2014, clearly reflecting a de-leveraging process in the manufacturing sector that has dragged down demand for
commodities,” Zhou Hao, economist at Commerzbank in Singapore, said in a note. But some analysts took comfort in the country’s still hefty trade surplus, which was US$54.10 billion for November, although down from October’s record high of US$61.64 billion. “China’s trade surplus has remained sizeable in November, which should offset capital outflows and fend off depreciation pressure on the yuan,” ANZ economists LiGang Liu and Louis Lam wrote in a research note. China has allowed the yuan to slowly weaken to near four-month lows against the dollar, but few believe its exporters will be significantly helped by anything short of a drastic devaluation.
More gloom?
In a bid to avert a sharper economic slowdown, China’s central bank has already cut interest rates six times since last November and reduced the amount of cash that banks must set aside as reserves, while the government has eased restrictions on home buying to boost the sluggish property market and is trying to ramp up infrastructure spending. China also announced a number of policies last month to encourage foreign trade and help exporters, admitting that the picture for foreign trade was “complicated and grim”. Economic growth dipped to 6.9 percent in the third quarter, dropping below the 7 percent mark for the first
KEY POINTS Weak global, domestic demand clouds hopes for Q4 stabilisation Reinforces views that more stimulus, policy easing needed Exports fall more than expected 6.8 pct, drop for 5th month Imports fall for 13th month, but decline less than expected Economists unsure if China’s import demand is improving
time since the global financial crisis. Premier Li Keqiang said last week that China was on track to reach its economic growth target of about 7 percent this year, and the economy was going through adjustments to maintain reasonable medium- to long-term growth. But that would still mark China’s weakest economic expansion in a quarter of a century, and some analysts believe real growth levels are much weaker than official data suggest. Reuters
Business Daily | 11
December 9, 2015
Asia
Survey shows most Japanese firms see no business expansion in China next year But 63 pct of surveyed companies said they expect to build their business in the US Tetsushi Kajimoto and Izumi Nakagawa
J
apanese firms are deeply pessimistic about near-term growth prospects in China, with 79 percent saying they do not expect to expand business there next year, a Reuters poll showed. The poll points to mounting concern about the outlook for Japan’s biggest trading partner as it heads for its weakest growth in a quarter of a century, as well as the fallout for an export-reliant Japanese economy seeking to stage a gradual recovery. “The Chinese economy may lose a lot of steam in 2016 as economic anomalies, particularly in inland areas, suddenly come to the fore,” wrote a manager at a wholesale firm in the monthly Reuters Corporate Survey. “China is in much worse shape than the media reports,” commented another manager at a services company. The survey, conducted November 20-December 2 for Reuters by Nikkei Research, also showed Japanese firms were upbeat about business expansion in the United States and Asia’s emerging economies next year although sentiment was mixed about domestic prospects. Separately, Japanese companies look set to resist calls from Prime Minister Shinzo Abe to actively use up some of their cash piles to boost wages and capital spending, the survey showed, with 74 percent saying their pay and investment plans will be in line with what has been done in previous years. The survey polled 514 big and medium-sized firms, of which most questions garnered between 230 and 250 responses. Managers respond on condition of anonymity.
Overly pessimistic?
The results on China flesh out views in last month’s survey in which threequarters of Japanese firms said they
expect the slowdown in the world’s second-largest economy to persist for more than a year. At that time, 44 percent of manufacturers also said they were undershooting their business targets due to China’s economy. But Hidenobu Tokuda, senior economist at Mizuho Research Institute, said he thought that Japanese firms were being overly pessimistic about China’s near-term outlook. “Over time, there will be a correction in sentiment,” said Tokuda, who reviewed the survey results. “China must demonstrate its ability to manage the shift towards enhanced manufacturing productivity and a consumption-led economy to win confidence.” More Japanese firms were downbeat about prospects for Europe which is struggling with its biggest refugee crisis since World War Two and has been hit with Islamic State attacks.
Eighty-three percent of companies said they did not expect to expand business there next year. But 63 percent of companies said they expect to build their business in the United States, set to be the main engine of global growth in 2016, while 65 percent said they expect to expand in developing Asian economies. “ Dem a n d fo r a g r i c u l t u r a l machinery in Asia remains high and we expect demand to strengthen,” wrote a manager at a machinery maker. On Japan, 57 percent of firms said they did not expect to expand their business, although nonmanufacturers were more upbeat, with close to half saying they expect to grow domestically. For 2016, the IMF has forecast 6.3 percent economic growth for China, 2.8 percent growth in the United States, 1.6 percent growth for the euro zone and 1 percent growth in Japan.
KEY POINTS Nearly 80 pct downbeat on China business expansion prospects Firms upbeat on business prospects in U.S., emerging Asia Sentiment mixed about business growth opportunities in Japan Japan Inc resisting Abe’s calls to splurge on capex, wages
Reuters
South Korea to boost environment‑friendly car production The domestic market share of such cars will rise to 20 percent of new vehicles sold by 2020 from 2 percent in 2015, the Ministry of Trade, Industry and Energy said
S
outh Korea plans to boost annual production of environment-friendly cars by more than ten-fold by 2020 to cut carbon emissions and tap into a new export market, the country’s trade ministry said yesterday. The Ministry of Trade, Industry and Energy said
in a statement it aims to boost annual production of environmentally friendly vehicles - including electric and hybrid vehicles - to 920,000 by 2020 from 78,000 in 2015. The domestic market share of such cars will rise to 20 percent of new vehicles sold by 2020 from 2 percent
in 2015, the ministry said. The push comes as efforts around the world to reduce greenhouse gas emissions spur demand for eco-friendly vehicles. Ministers from nearly 200 nations are currently meeting in Paris to hammer out a binding deal to brake rising world temperatures this
week. Hyundai Motor Co and Kia Motors Corp, South Korea’s top automakers, are already trying to break into the market by developing their own environment-friendly cars. Hyundai said on Monday it is launching a hybrid version of its new Ioniq model in South
Korea in January, with plug-in hybrid and electric versions to follow at a later date. Usually when the South Korean government announces such initiatives it is done after discussions with the private sector. The government will invest 150 billion won (US$127.72 million) over the next five years for research and development of key technologies. It will also offer subsidies for buyers of environmentally friendly cars and increase the number of charging stations for such vehicles to spur adoption. South Korea’s trade ministry said its plan will reduce greenhouse gas emissions by 3.8 million tons of CO2 and create 93,000 jobs between 2016 and 2020. It also said environmentfriendly cars could amount to 18 trillion won (US$15.32 billion) in exports for the country by 2020. Reuters
12 | Business Daily
December 9, 2015
Asia
Bank of Korea to keep rates on hold After cutting interest rates twice this year, with the latest cut in June, Bank of Korea Governor Lee Ju-yeol has grown increasingly hesitant to lower rates
S
outh Korea’s central bank is expected to keep interest rates unchanged at this week’s policy meeting as it will want to observe the outcome of the U.S. Federal Reserve’s monetary policy decision next week, when the Fed is highly expected to hike rates. All 31 analysts polled by Reuters forecast the Bank of Korea (BOK) would keep the base rate unchanged at 1.50 percent for a sixth straight month in December. When queried over the central bank’s next policy move, 18 of the 31 analysts said they believed the
BOK would keep rates unchanged for a prolonged period of time. The remaining 13 predicted a rate cut, probably in the first three months of next year. “I expect the BOK will likely keep rates on hold through the first half of 2016 as domestic demand grows steadily, supported by monetary easing earlier in 2015 and government spending plans,” said Emily Dabbs, economist at Moody’s Analytics. “Rate cuts earlier in the year have also spurred household demand for credit, and this will make the central bank hesitant to ease monetary policy
further. As inflation rises in the second half of 2016, the central bank will likely increase rates but at a fairly slow pace.” After cutting interest rates twice this year, with the last cut in June, Bank of Korea Governor Lee Ju-yeol has grown increasingly hesitant to lower rates much more as the expected Fed rate hike looms and consumption has been steadily on the mend. Although the central bank says South Korea is unlikely to be directly affected by a Fed rate hike thanks to its strong fundamentals, the BOK has not ruled out the possibility of
a crisis in another country causing jitters at home. Third-quarter GDP growth was revised up to 1.3 percent in sequential terms earlier this month, mainly helped by domestic consumptionrelated factors, which was the fastest growth since the June quarter of 2010. As consumption has grown headline inflation has also been creeping up, with data out early this month showing inflation in November reached its highest in a year. The finance ministry has said inflation is bound to increase in coming months. Household debt continues to snowball, putting pressure on the central bank and other policymakers as housing prices rose for a 27th straight month in November, and marked the fastest annual growth since March 2012. Reuters
KEY POINTS All 31 analysts see base rate unchanged Slim majority view no change for prolonged period Most cut views see rates lowered in Q1 2016
Bank of Korea headquarters in Seoul
Australia trims beef exports, cuts slaughter rates The fall in beef exports comes as the United States, Australia’s biggest red meat buyer, is expected to slow its demand for imports after rebuilding its herds Colin Packham
A
ustralia trimmed its forecast for beef exports yesterday as farmers reduce slaughter rates, with better weather triggering a slow-down in a run of record culling expected to push the country’s herd to a 20-year low. Beef exports are expected to total 1.19 million tonnes in the year to July 1, 2016, the Australian Bureau of Agriculture, Resource Economics and Rural Sciences (ABARES) said, down from its September forecast of 1.225 million tonnes. The bureau trimmed slaughter numbers during the
2015/16 season by just over 2 percent from its September estimate to 9 million head of cattle, as farmers reacted to better-than-expected weather in September and the forecast end to an El Niño weather event early in 2016. The forecast would see cull numbers drop to a three-year low after the worst El Niño in 20 years wilted pasture and dried out dams in Australia’s largest cattle producing state of Queensland, pushing slaughter numbers to record highs. Australia’s national herd is still expected to fall to a
two-decade low, according to industry body, Meat and Livestock Australia, with the bureau pegging the herd at 26.7 million head of cattle at the end of the 2015/16 season. The fall in beef exports comes as the United States, Australia’s biggest red meat buyer, is expected to slow its demand for imports after rebuilding its herd. The bureau forecast Australian exports to the U.S. during the 2015/16 season of 325,000 tonnes - down from its September estimate of 420,000 tonnes.
Exports to Japan were revised down to 275,000 tonnes during the 2015/16 season, from a previous forecast of 315,000 tonnes, as high local prices, drive consumers to eat more pork. Live cattle exports were seen unchanged at 1.1 million head of cattle, as increased demand from Vietnam offsets reduced exports to Indonesia. The first shipment of 150 head of cattle was exported to China in October, after a July deal to allow live exports, with small additional orders expected at the end of 2015, ABARES said.
Wheat exports from the world’s fourth-largest seller of the grain were pegged at 16.948 million tonnes, down 3.4 percent from a previous estimate of 17.53 million tones. Australian milk production was seen at 9.75 million litres, ABARES said, down on its September estimate of 9.8 million litres. Sugar production during the 2015/16 season was seen at 4.8 million tonnes, down from a September estimate of 5 million tonnes. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 editor editor@macaubusinessdaily.com newsroom newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
Business Daily | 13
December 9, 2015
Asia Thai govt approves merger of subway, tollway operators The Thai cabinet on yesterday approved a merger plan between toll way operator Bangkok Expressway Pcl and subway firm Bangkok Metro Pcl, government spokesman Sansern Kaewkamnerd said. “The proposed merger should help strengthen the economy because private companies will be in a stronger position,” Sansern told reporters. The merger is part of a restructuring of construction firm Ch Karnchang but needed government approval as both firms receive contracts from state agencies to operate toll way and subway networks, mostly in Bangkok.
Japan’s watchdog recommends punishing Deutsche Securities
Retail sales rose 1.8 percent in the year to October
Japan’s securities watchdog yesterday recommended administrative punishment against the Tokyo branch of Deutsche Securities for improperly providing information about a Japanese company to its clients. The Securities and Exchange Surveillance Commission said officials at Deutsche Securities recommended their clients trade shares of the unidentified company after an analyst obtained details about the company’s pre-announced earnings.
Feel-good figures belie Japan’s phantom recession The labour market is near full employment, with just 3.1 percent out of work, the lowest level in two decades
Australia’s central bank gets new board member
Leika Kihara and Kaori Kaneko
E
ven bef ore ye sterd ay’s revised figures banished what preliminary data said was Japan’s fourth recession in five years, it was an unlikely downturn, complete with high employment, heaving hotels and tinkling cash tills. After the economy shrank in the second quarter, preliminary figures for a 0.8 percent contraction in the third quarter fitted the definition of a recession - two consecutive quarters of negative growth - but final figures for the July-September period put the economy back on the front foot with growth of 1 percent. Though exports have taken a hit from China’s slowdown, and wage growth is lacklustre, the world’s thirdlargest economy hadn’t been behaving like it was on the ropes. The labour market is near full employment, with just 3.1 percent out of work, the lowest level in two decades. Hotel occupancy rates are also high. They recently averaged 90 percent in Nagoya, the central Japanese city that carmaker Toyota calls home. “When there’s a big conference, hotel rooms become fully booked. We’re seeing a construction rush of high-rise buildings with plans to build some new hotels,” said Hiroyasu Naito, deputy chairman of Nagoya’s chamber of commerce. “There’s a shortage of construction workers, security guards and truck drivers. In some sectors, we’re seeing wages rise.” For now at least, it is part-time workers who are seeing most of the benefit, both in hiring and pay. Parttime pay has jumped 3.8 percent since the Bank of Japan adopted a massive stimulus programme in April 2013. That is leading to a steady gain in household income, which is working its way into spending. Department store sales rose for the fourth straight month in October
on brisk demand for jewellery and luxury goods, helping operators like Isetan Mitsukoshi Holdings revise up its earnings forecasts for the year to March 2016. Overall retail sales rose 1.8 percent in the year to October, with supermarket sales up for the seventh straight month. “I think the economy is getting better,” said a smartly dressed woman waiting for a dinner partner in Tokyo’s business district. “When the economy gets better, I tend to spend more.”
Short cycle, long road
And it’s not just a big-city phenomenon. Izumi Co, a midsize supermarket operator in Hiroshima, western Japan, is also not feeling the pinch of recession. “High-end products are selling well, such as the most premium ‘wagyu’ beef sold on our shelves,” said spokesman Ikuo Goto. Capital expenditure is showing signs of life, too, with a government survey finding investment rose at the fastest pace in more than eight years in the third quarter. Indeed, capital expenditure accounted for much of the swing in the revised third-quarter figures, flipping from a 1.3 percent preliminary drop to a 0.6 percent rise. Despite concerns over soft Chinese demand, 80 percent of firms polled by Reuters said they were sticking to their spending plans for the second half of the fiscal year. Some analysts say Japan’s economic cycle has become shorter as companies adjust inventory more quickly to fluctuations in demand, which means the economy tends to contract more frequently but the downturns are fairly shallow and short-lived. So instead of responding to these short-term fluctuations, the
KEY POINTS Revised Q3 figures show Japan not in recession after all Unemployment at just 3.1 percent, a two-decade low Hotel occupancy high, retail sales picking up Capital investment also showing signs of life Long-term demographic trend still hangs over economy
government ought to take a longer view, says Hideo Kumano, chief economist at Dai-ichi Life Research Institute. “What the government really needs to do is to implement steps to strengthen Japan’s potential growth,” he said. But there is no quick fix for the long-term structural problem of Japan’s dwindling working-age population. So when companies like Hakuhodo Co, which produces brushes for traditional Japanese calligraphy and for make-up, think ahead, they aren’t putting all their eggs in the Japanese basket. For now, Hakuhodo’s general manager Ko Takamoto says domestic sales are very strong, but the company has wider horizons for the plant it opened in May. “Our new plant is aimed at boosting production to meet overseas demand ... We see growth prospects in Asia and the Middle East,” he said. Reuters
Australian Treasurer Scott Morrison yesterday named the former head of investment bank Macquarie to be a member of the central bank’s policy-setting board for a five-year term. Allan Moss joins the Reserve Bank of Australia’s (RBA) nine-member board to replace businessman Roger Corbett, who recently finished his second term. Moss was managing director and CEO of Macquarie Group Limited until 2008. Moss currently runs his own investment company and is an advisor at Evans and Partners and the investment firm Anchorage Capital Partners.
Japan poised to win India’s bullet train deal Japan is expected to win the right to construct India’s first bullet train, after losing an Indonesian high-speed rail deal to China, the Nikkei business daily reported yesterday. Japan will offer more than 1 trillion yen (US$8.11 billion) in loans to construct India’s 980 billion rupee fast train, according to the report. Japan recently lost the bid to build Indonesia’s first fast-train because Beijing provided a US$5 billion loan without guarantees. Japanese Prime Minister Shinzo Abe, due to visit India this week, and his counterpart Narendra Modi are expected to issue a joint statement on the deal, the Nikkei said.
Myanmar to promote private jetty services Myanmar Ports Authority (MPA) will promote private sector ownership in jetty services, according to MPA yesterday. The ownership ratio of private sector in jetty services accounted for 82 percent so far. The master plan for development of Yangon jetty, which can handle 70 percent of cargoes, was drafted to upgrade and extend it to the international level. Among the six cargo-handling jetties in Yangon, Myanmar Industrial Port can handle 35 percent of cargo handling. Since 1995, the MPA granted private sector, giving the permits to five jetties including Asia World Jetty via BOT system.