MOP 6.00
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Angela Leong: “I’m not afraid of criticism”
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Year IV
Number 945 Tuesday December 22, 2015
Publisher: Paulo A. Azevedo
Closing editor: Paulo A. Azevedo
China eases monetary policy
Hyundai set to miss year’s goals
Holiday Hiccup for Hospitality Industry Down 10 pct y-o-y. To 70 or 80 pct. The city’s anticipated occupancy rate for 3 to 5-star hotels this Christmas doesn’t give much cause for cheer. So says the president of Macau Hoteliers & Innkeepers Association. Chan Chi Kit told Business Daily that strong competition between hotels and more available rooms, despite cheaper prices, were the main culprits. Casino-hotels have continuously offered various kinds of promotional packages, he says. Comprising accommodation, ferry tickets and other entertainment services discounts Page
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Familiar refrain Access to housing. The right to be reunited with Mainland children. More democracy. These were the main demands by seven associations who took to the streets on the MSAR’s 16th anniversary
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Brought to you by
HSI - Movers December 21
Name
Buoyant expectations The city finally has jurisdiction. Of 85 sq kms of territorial waters. Time to launch legislation to regulate yacht leasing, says Andy Wu Keng Kuong. The Macau
Travel Industry Council president says it’s imperative if the city wants to develop maritime tourism
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%Day
China Merchants Holdi
+3.83
Galaxy Entertainment
+3.40
China Shenhua Energy
+3.33
China Resources Powe
+2.72
Tingyi Cayman Islands
+2.16
HSBC Holdings PLC
-0.65
Tencent Holdings Ltd
-0.66
China Unicom Hong Ko
-1.04
Cheung Kong Property
-1.08
Sino Land Co Ltd
-1.72
Source: Bloomberg
www.macaubusinessdaily.com
Politics
Line in the sand
I SSN 2226-8294
Non-negotiable. This is the stance the Chief Executive has adopted on Macau’s current land law. Making it clear the gov’t will follow the letter of the law. Thus declaring the invalidity of the land concession for the Pearl Horizon residence project. But the CE left the door slightly ajar. Should legislators want to propose amending legislation . . .
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2 | Business Daily
December 22, 2015
Macau
No Christmas cheer for hotel occupancy rate The 3-star to 5-star hotels here may see their occupancy rate wallow in the range of 70 to 80 pct amid heightened competition amongst operators and a downtrend in visitor arrivals, a trade rep says Stephanie Lai
sw.lai@macaubusinessdaily.com
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he city’s occupancy rate for 3-star to 5-star hotels may decline by around 10 per cent year-on-year in December despite the average room rate being downwardly adjusted because of the heightened competition amongst hotel operators and more hotel room inventory available, the Macau Hoteliers & Innkeepers Association has told Business Daily. Mr. Chan Chi Kit, president of the Association, estimated that the
occupancy rate for 3-star to 5-star hotels here for December would fall to 70 to 80 per cent, about 10 per cent less when compared to a year ago. “From December 1 to 20, we saw that the occupancy rate here had declined by about 10 per cent year-on-year,” he said. “And we expect that the occupancy rate for the Christmas holiday will be around 70 to 80 per cent, at a time when we mostly receive Hong Kong clients rather than those from China
because in Mainland China there is no Christmas holiday.” Speaking to media on Saturday, Macau Government Tourist Office director Maria Helena de Senna Fernandes estimated that the occupancy rate for 5-star hotels here would be maintained at around 80 per cent. She also expected that the city would receive no less than 30 million visitors for the whole of this year, although posting a decline when compared to 2014.
Mr. Chan deems the expected occupancy rate to be at a level that is still “healthy” for the hotel operators given that the city has seen an addition of inventory in Cotai of over 3,500 rooms when compared to December last year. The latest addition of inventory comes from the opening of St. Regis Macao, Cotai Central on December 18, which comprises 400 rooms; this year, the city has also seen its room inventory boosted by the opening of Galaxy Phase II and its sister property Broadway Macau in late May (comprising 1,585 rooms in total), and Melco Crown Entertainment Ltd’s 1,600-room Studio City in late October. The Macau Hoteliers & Innkeepers Association head also estimated that the turnover of room rates from the 3-star to five-star hotels here for December may decrease by 20 per cent year-on-year, given that the average room rate has seen a decrease of some 10 per cent. “With more competition amongst the hotel operators now, more room inventory is available while at the same time there’s not much growth in visitor arrivals [thus] it’s definite that the room rate is going down,” Mr. Chan remarked, noting that the casino-hotels here have continuously offered various kinds of promotional packages comprising accommodation, ferry tickets and other entertainment services discounts. “Now even the non-casino hotels are cutting their prices in order to attract more people to stay; the room rate has more room to go down in the near future,” Mr. Chan added. In the first ten months of this year, the number of hotel and guesthouse guests has dropped 4.8 per cent year-on-year to 8.5 million, while the average occupancy rate stood at 79.8 per cent – 6.4 percentage points less when compared to a year ago, the latest available data from the Statistics and Census Service reveals.
After the desert crossing Raymond Tam to return to IACM as senior officer
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ormer president and vice-president of Civic and Municipal Affairs Bureau (IACM) Raymond Tam Vai Man and Lei Wai Nong will return to IACM next year, after the Court of Second Instance upheld the decision that the two officials are innocent in the city’s infamous burial plot case, the Secretary for Administration and Justice Sonia Chan Hoi Fan has revealed. The Secretary told reporters that the government is considering bringing Mr. Tam back to IACM as a senior officer, while Mr. Lei could be able to resume his initial position as vice head of the Bureau.
“We are considering Lei Wai Nong for the post of vice president. However, no final decision has been made. Meanwhile, as Raymond Tam Vai Man’s initial position as the president [of IACM] is currently taken by Alex Wong Iao Lek, we are considering placing him as a senior technician in the Bureau,” the Secretary said on Sunday. Ms. Chan added that there is no other position in her secretariat appropriate for Mr. Tam at the moment, hoping the former IACM head would understand the government’s new arrangement for him. In 2010, lawyer Paulina
Santos filed a high profile complaint with the Public Prosecutor’s Office, alleging that Tam, Lei and two IACM subordinates had intentionally delayed the transfer of documents in order to prevent prosecutors from investigating a case involving the alleged illegal granting of 10 permanent cemetery plots in 2001. At the end of last month, the Court of Second Instance turned down Santos’ appeal on the ruling by the Court of First Instance acquitting the four defendants of misfeasance charges in the burial plot case last July. K.L.
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December 22, 2015
Macau
Chief Executive: New land law will be strictly enforced Chui Sai On says the government would not amend the law itself but would respect legislators if they propose amendments to the law Kam Leong
kamleong@macaubusienssdaily.com
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hief Executive Fernando Chui Sai On has stressed that his government would not take the initiative to amend the city’s current land law, saying in addition
that he had not yet received any proposed amendments to such law from legislators. Voices urging the government to amend the land law were raised
CE paying duty visit to Beijing The Chief Executive, Fernando Chui Sai On, is paying a duty visit to Beijing until this Thursday. According to the Government Spokesperson’s Office, Mr. Chui will meet with state leaders and brief them on the SAR Government’s work in the previous year, as well as the policy highlights for the coming year.
The city’s Secretary for Security Wong Sio Chak, Secretary for Administration and Justice Sonia Chan Hoi Fan and Secretary for Transport and Public Works Raimundo Arrais do Rosário will take up as the acting CE role during Mr. Chui’s four-day duty visit to the country’s capital city
after the authorities announced at the beginning of this month that it would take back the site for high-end residence project Pearl Horizon in Areia Preta as its developer, a local arm of Hong Kong-listed Polytec Asset Holding Ltd., was failing to complete the project by this Friday - when its temporary concession for the site expires. The city’s top official said on Sunday that the government would strictly obey the current land law in declaring the invalidity of the land concession for Pearl Horizon. However, he declined to comment upon whether the city’s current land law, which came into force in 2013, is perfect or needs amendments. “I’m not a legal expert. As the Chief Executive, I dare not say
whether there is a law in this world that is totally perfect. The decision to declare the invalidity of the land concession [for the Pearl Horizon land plot] on December 26, as the Secretary for Administration and Justice Sonia Chan Hoi Fan has said, is based upon the new land law,” Mr. Chui told reporters on the sidelines of a reception celebrating the 16th anniversary of the handover on Sunday. According to the new land law, no extension is allowed for a temporary or conditional land concession which carries a validity of 25 years if developers fail to complete their projects on their sites. Thus, such sites will be reclaimed by the government. Recently, several CE-appointed legislators - including Vong Hin Fai, Tong Io Cheng, Fong Chi Keong and Lau Veng Seng - expressed their intention of proposing a bill amending the land law to the government. The Chief Executive told reporters on Sunday, however, that no legislator had submitted any bill proposing amending the land law. He added that the government would respect future proposed bills, while Secretaries would study such proposals following current administrative procedures. Secretary for Transport and Public Works Raimundo Arrais do Rosário also said in a debate session on the Policy Address earlier this month that there is no other way to interpret Article 48 of the Land Law, which prohibits temporary or conditional land concessions from renewal. On Sunday, some 1,600 off-plan buyers of Pearl Horizon took to the streets, urging the government to freeze Polytec’s assets in case the developer declares bankruptcy.
Economy “remains healthy” despite recession, says CE
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he head of the Macau Government, Fernando Chui Sai On, said that the local economy, currently in recession, will again be influenced by the “external complex and changing environment” in 2016, but that “in general, it remains healthy.” “Although the economy is currently in an adjustment phase, its operation, in general, remains healthy. Public
finances are stable and firm, the unemployment rate is at a relatively low level, the economy presents new dynamism and Macau maintains a stable and harmonious setting”, he said in a speech at a ceremony marking the 16th anniversary of Macau’s administration handover from Portugal to China. “We must cherish and protect this invaluable stability that we
currently enjoy”, stressed the leader of Macau’s Government, adding that it is necessary to “identify and write off” some “shortcomings” and take steps to diversify the economy, nowadays dependent upon casino gaming, in order to ensure “proper development”. Gaming revenues are down after 18 consecutive months and, given the dependence of Macau's economy
upon this sector, the region's GDP fell 25 per cent in the first nine months of this year. “The experience of these 16 years [of Chinese sovereignty] clearly tells us that to ensure the prosperity and long-term stability of Macau it is essential that the development of the Macau SAR is closely allied to the development of the country”, he said.
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December 22, 2015
Macau More ferries for Christmas and New Year Ferry company TurboJET is to increase its number of ferries for Hong Kong- Macau routes by up to 40 per cent between December 23 and January 3 to accommodate the surging demand over the Christmas and New Year holidays, it announced yesterday. According to the ferry operator, the city’s Macau Maritime Ferry Terminal and Macau Taipa Temporary Ferry Terminal will implement crowd control measures for arriving passengers during the period. It encourages passengers to purchase return tickets in advance due to ‘the tight supply of ferry tickets during the festive season’.
Demonstrators maintain same political agenda Demonstrations in Macau call for more democracy and access to housing
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even associations mobilised dozens of people for demonstrations in Macau on the 16th anniversary of the passage of the administration to China, demanding more democracy, better access to housing, and the right to family reunion. Demonstrations and these claims by protesters are par for the course on the day marking the creation of the Macau Special Administrative Region. The largest group that took to the streets on a rainswept day was
the Association for Family Reunion, comprising almost exclusively of elderly people demanding the right to have repatriated with them the children they left behind in Mainland China. In most cases, the children, already adults, have been waiting for years for the right to meet their parents, who live in Macau, where they settled in the past to work. Fewer but younger, were protesters from New Macau, the largest pro-democracy association
in the territory and the closest to a political party here. New Macau demand “more democracy”, still a “fringe topic” in Macau and “less popular than others”, one of the protest organisers told Lusa, stressing, however, that this is a “fundamental element” to resolving and addressing issues in various fields, including social issues. For the Association, “behind” the city problems is a government that “isn’t representative of its people”, so protesters insist once again on universal suffrage in order to elect the Chief Executive of Macau. Associations as Macau Community Development Initiative, Workers Force, Macau People, Macau People's Power
and Workers Federation of Macau were other entities that called protests and paraded in the streets with posters and banners and slogans. Izzie, 23, and a group of friends chose to protest with the Macau Development Initiative, responding to a call on Facebook. As he explained to Lusa, it was to protest against favouring builders and the “rich” on the issue of housing. Their demand is for more public construction of affordable housing, explaining that the wages of young people today do not facilitate the purchase of a home. All demonstrations concluded in front of Macau Government Headquarters, where representatives of all associations delivered their petitions.
Business Daily | 5
December 22, 2015
Macau Final conclusion: Suicide The Public Prosecutor of Macau, Ip Son Sang, has determined that the judicial investigation into the death of the director of Customs has finished and concluded that it was a suicide. In response to questions from journalists, Ip Son Sang said the investigation did not find “additional circumstances” to change what was the preliminary conclusion regarding the case of Lai Man Wa (pictured), who held high office in the administration of Macau and was found dead on 30 October in a public toilet.
Overhaul of laws necessary to galvanise marine tourism With the territory’s territorial waters now clearly demarcated, the administration needs to examine supporting laws that manage yacht tourism to realise its initiative of developing more tourism highlights, say the travel industry council and a legislator Stephanie Lai
sw.lai@macaubusinessdaily.com
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hile Macau now has clear jurisdiction of the coastal waters it governs, the government should move on to examine and perfect the regulation of yachts and leasing rules in addition to seeking co-operation with Mainland China to further encourage yacht tourism, the Macau Travel Industry Council and a legislator told Business Daily. On Sunday, the Macau Government gazetted the demarcation of the city’s 85 square kilometres of territorial waters as approved by Beijing. The coastal waters MSAR governs now cover six sections, namely the Inner Harbour section, the waterway of Cotai, the waters south and east of the Macau Peninsula, a section of the artificial island and the waters north of the Macau Peninsula. “An important task that the government should look at is the law regulating yacht leasing, which is now totally absent,” remarked Macau Travel Industry Council president Andy Wu Keng Kuong, “Before [Macau’s coastal waters were demarcated] the city had no conditions to set up the related rules but now the government should do so especially when it wishes to develop maritime tourism and sightseeing activities on water.” “Foreign companies have eyed running a yacht leasing business here but so far we have no supporting regulations or [understand] how the insurance terms should be defined,” Mr. Wu added. According to the Marine and Water Bureau, most of the yachts that come here are from Hong Kong as Mainland China has strict regulations governing outbound yachts that head for Macau. Macau has an open policy for incoming yachts and the entry and clearance procedures for yachts entering here is “simple”, as normally only two days are needed for the report of
the yacht and its personnel data and approval for yacht berthing at Macau piers, the Bureau explained. “But Macau has yet to improve the law on the registry of ships [to facilitate marine tourism], which is an issue that the government has not dealt with when the city did not have its own territorial waters,” legislator and businessman Dominic Sio Chi Wai remarked to Business Daily, “The law needs to be overhauled, while at the same time the government can also look at how to encourage more incoming yachts from the Mainland to berth in the city.”
Marine tourism
The administration from Macau and Zhongshan City in Guangdong are mulling launching the so-called ‘individual visit scheme’ for yachts travelling between the two territories by the end of this month, Marine and
Water Bureau director Susana Wong Soi Man told media on December 3. The scheme is an initiative for yachts from Macau to be able to berth at the marina in Zhongshan and vice versa, as well as a plan from both the Mainland and local governments to implement a simpler Customs clearance procedure for yacht owners and crew members. The number of passengers travelling on each yacht under this scheme is restricted to 12 persons only. Apart from co-operating further with the Mainland on running yacht tourism, Mr. Sio believes that Macau has better conditions to develop cruises for visitors given the jurisdiction of its own waters. “Before the demarcation of the waters, for any cruising vessels to undergo maintenance or sailing [in the city’s customary waters], such matters had to be applied for from
the Zhuhai marine authorities as well,” said Mr. Sio. “But as this administrative trouble can now be saved, the idea mentioned by the Secretary for Social Affairs and Culture, Alexis Tam, [during the Policy Address debate] to develop some coastal tours for visitors can be put into practice more easily,” the legislator said. “And this definitely benefits Macau’s non-gaming offering.” During the Policy Address debate, Secretary for Social Affairs and Culture Alexis Tam spoke of the creation of cruises travelling between the Inner Harbour or Barra pier to Coloane, and setting up piers at the Gate of Understanding, Macau Tower, Kun Iam Statue, Macau Fisherman’s Wharf (all located on the Macau Peninsula) as well as the new urban Zone A currently undergoing reclamation.
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December 22, 2015
Macau
James Packer gives up his crown Australian billionaire quits board of Crown Resorts as Macau woes deepen
James Packer
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ustralian billionaire James Packer quit the board of casino giant Crown Resorts Ltd, four months after stepping down as chairman, as it grapples with falling revenue in Macau. In a statement yesterday, Packer, who owns 53 percent of the A$9 billion (US$6.5
billion) company, did not give a reason for stepping down but said he planned to devote his energy to development projects in Sydney, Melbourne and Las Vegas. The move cuts Packer’s influence over the firm he said “represents the vast majority of my net wealth”
as it weathers a slump in Macau, where gambling revenue has fallen for 18 straight months because of a Chinese government graft crackdown. Crown has a one-third stake in Hong Kong-based Melco Crown Entertainment Ltd, which recently opened a
420,000 square foot casino in Macau. Crown shares rose as much as 5 percent in a flat overall market yesterday. The statement added that Packer’s private investment vehicle, Consolidated Press Holdings Ltd, “recently concluded a major transaction in my family’s business and
this also has assisted the timing of my decision”. It gave no further details of the Consolidated Press transaction but added that “Gretel and I have never been closer”. In October, Australian media reported that Packer’s sister, Gretel Packer, would receive a portion of James’s wealth following a confidential settlement. James Packer took over the running of Crown, then a media conglomerate called Publishing and Broadcasting Ltd, following his father’s death in 2005, and transformed it into one of the world’s biggest casino developers and operators. In August, he surprised investors by quitting as Crown chairman the same day the company reported a one-fifth decline in annual net profit because of lower Macau earnings. A week ago, Crown shares rallied after Australian media reported Packer was in talks with private financiers about a possible proposal to take the company private, a move Packer said was not imminent the following day. Reuters
Manila attraction Int’l Entertainment renews lease on gaming premises to Pagcor
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ong Kong-listed casino lessor International Entertainment Corp. said an indirect non-wholly owned subsidiary will renew its current lease on the Philippine Amusement and Gaming Corporation (Pagcor) gaming premises in Manila for up to 15 years. International Entertainment told the Hong Kong Stock Exchange that the premises, located in a hotel complex in the Philippines’ capital city, are ‘for gaming and support functions for gaming and office space for Pagcor’s executive headquarters and other general office administration functions.’ The current lease agreement between the subsidiary, Marina Square Properties Inc., and the Philippine state-owned operator is due to expire on March 31 next year. According to last week’s filing, the renewal of the agreement will come into effect from April 1, 2016 and expire in March, 2031, or when the total rent accruing against or payable by Pagcor reaches an aggregate of 24 billion Philippine pesos (nearly HK$4 billion/US$497.9 million). International Entertainment is controlled by the family of Hong Kong businessman Cheng Yu Tung. Cheng’s family also controls Hong Kong property developer New World Development Co. Ltd. and jewellery chain Chow Tai Fook Jewellery Group Ltd. The casino lessor expressed interest in buying a 70 per cent
economic share in the city’s major VIP gaming investor Suncity International Holdings Ltd. in January, 2014. However, at the end of last year the company said it had not reached any ‘definitive agreement’ with Suncity on the possible acquisition. K.L.
Business Daily | 7
December 22, 2015
Macau
Lessons from Angela Leong How to survive Macau’s gambling downturn Stephanie Wong with Shai Oster
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he Las Vegas Strip has characters like billionaire tycoons Sheldon Adelson and Steve Wynn. In the world’s largest gambling market of Macau, there’s Angela Leong. A lawmaker, business executive and mother-of-five, Leong has been a prominent figure in the former Portuguese colony since meeting her spouse, 94-year-old casino baron Stanley Ho, about three decades ago. In a recent interview, the 54-year-old shared her approach to adversities, the most recent of which is a 18-month-long slump in Macau’s gaming revenue that, she says, must be met by the government with faster infrastructure completion. Her motto, which she learned from Ho: "pee with eyes wide open.” Speaking in her native Cantonese, Leong repeats a saying that’s not in regular use in the southern Chinese dialect, let alone easily translated into English. “It means, you know someone is going to trip you up, and you pretend you don’t notice and let it go,” says Leong, who is executive director of SJM Holdings Ltd., Asia’s largest casino company. “Let’s be very direct,” she continues, her voice raspy from a respiratory infection. “You come and interview me today. If your article isn’t in line with my views, I’ll let it go.” But there won’t be another interview, she said on October 26.
Family fight
Success for Leong, the mother of the youngest five of Ho’s 17 children, hasn’t come easily. The former dancer successfully fended off a messy family dispute in 2011 that was mounted by women Ho also regards as wives, and his children. “She can be quite feisty,” says Allan Zeman, a Hong Kong- based businessman and vice chairman of Wynn Macau Ltd., who has known Leong socially for 20 years. “She absolutely says what’s on her mind, no matter who she’s with, no matter where she is. That’s what gains her respect from most people. She’s not afraid.” That forthrightness comes through when outlining the changes Leong says Macau’s government needs to make to facilitate the city’s economic recovery: faster decision-making and better infrastructure planning.
“Not afraid”
“I’m not afraid of criticism,” she said. “I do what I believe is right.” Leong joined a dance troupe in the southern Chinese province of Guangdong and traveled in 1982 to Macau, where she met Ho four years later through his brother, then taking a dance class she was teaching at
Angela Leong
the time. By then, the daughter of a Chinese army officer already owned several apartments, according to a report in the Wall Street Journal in April 2011. And by the early 1990s, Leong was spearheading property deals for Ho’s business in Guangdong, according to the report.
“Very good entrepreneur”
“Ho got her started, but she was able to take it to another level,” Zeman said. “She’s a very good entrepreneur. She’s done a lot of things on her own.” Today, she owns more than 30 apartments in Macau, according to a document filed in 2013 by Leong, who reported her assets as required as a legislator there. In Hong Kong, Leong is chairwoman of Master Land (HK) Ltd., owner of the 21-story BOC Group Life Assurance Tower whose value more than doubled to HK$2 billion since its purchase seven years ago, according to data from Centaline Property Agency Ltd. Local newspaper Ming Pao reported that Leong also owns the retail and office development Entertainment Building in the heart of the city’s financial district whose value has appreciated more than five-fold to
as much as HK$14 billion since it was bought in 2005, Centaline said. Leong’s office declined to comment on her assets. Her investments also span from a local canidrome operator to massage services. She’s also a vice chairwoman of Macau Jockey Club, head of a gaming promoter association, chairs a local dance and sports association, and is involved in local charities. Leong, whom Ho called his “fourth wife,” emerged as a winner when the elderly Ho split his fortune among his family members. Today, she controls a US$315 million interest with a 8.1 percent stake in SJM Holdings, which owns 20 out of Macau’s 36 casinos, the most for one company in the city. SJM shares have fallen 57 percent in Hong Kong trading this year, compared with the 7.8 percent decline in benchmark Hang Seng Index.
China advisory body
A member of China’s top political advisory body, she also owns a 6.86 percent stake in SJM’s unlisted parent, Sociedade de Turismo e Diversões de Macau SA, a company whose assets include hotels, real estate, financial services and infrastructure development.
That fortune is being shaken by President Xi Jinping’s anti-corruption crackdown and a slowing Chinese economy, which are keeping away the high rollers whose wagers generate more than half Macau’s casino revenue. It’s the city’s worst downturn since authorities in the Special Administrative Region ended Ho’s four decade-old gambling monopoly in 2001 by opening up the market to competitors such as Wynn Resorts Ltd. and Adelson’s Las Vegas Sands Corp.
Not dismayed
Not dismayed, Leong says she continues to enjoy the support and advice of wheelchair-bound Ho, whom she describes as an “enlightener, friend and a mentor” and who has said that Macau’s casinos have been developing too fast. “I wouldn’t be where I am today without his help,” she said. Before dashing to her next appointment, Leong reflects on her busy schedule that she says has meant wearing the same pair of dark blue, loose-fitting trousers two days in a row. “You have to manage your time well, you have to work hard,” Leong says. Bloomberg
8 | Business Daily
December 22, 2015
Greater China
Alibaba heads into 2016 struggling with k Jack Ma’s company needs to clean up its image to achieve the goal of generating abroad Lulu Yilun Chen
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ash-strapped Star Wars fans can pick up Darth Vader figurines and light sabers for as little as US$4.59. Tom Brady jerseys go for about a 10th of those on the National Football League’s store. A pair of red Beats Solo headphones can be had for just US$107 -- about half its official price. It’s bargains galore at Alibaba Group Holding Ltd.’s Taobao: the EBay-like bazaar where buyers meet up with sellers. Billionaire Chairman Jack Ma is struggling to shake the company’s reputation as a haven for cheap knock-offs and unauthorized merchandise, 21 months after calling counterfeits cancerous. He heads into 2016 after a bruising year that saw more than US$50 billion wiped off its market value amid lawsuits and criticism from Chinese and U.S. regulators. Cleaning up its image next year is crucial to Alibaba’s goal of winning the trust of merchants and shoppers overseas, from where Jack Ma wants to get more than half the company’s revenue within a decade. A cooling Chinese economy makes that effort even more pressing. At home, JD.com Inc. is winning customers partly because
Cleaning up its image next year is crucial to Alibaba’s goal of winning the trust of merchants and shoppers overseas, from where Jack Ma wants to get more than half the company’s revenue within a decade. A cooling Chinese economy makes that effort even more pressing
it holds the inventory itself and sells directly to consumers, similar to Amazon, a business model easier to police and regulate, said Michelle Ma, an analyst with Bloomberg Intelligence. “By now, management should have eliminated this problem,” said Cyrus Mewawalla, managing director of London-based CM Research. “The fact that they haven’t is a worrying sign for investors.
Mainland’s stocks rise to three-week high as consumer shares rally Investors are betting that the Government will accelerate reform of the state-owned enterprises
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hina’s stocks rose to a threeweek high, extending a weekly gain, as consumer companies rallied and investors bet the government will accelerate reform of state-owned enterprises. The Shanghai Composite Index added 1.8 percent to 3,642.47 at the close. The measure climbed 4.2 percent last week, led by property developers, after data showed home prices increased in more cities. Inner Mongolia Yili Industrial Group Co., the nation’s biggest dairy producer, and Henan Shuanghui Investment & Development Co., a pork processor, rallied to lead gains among consumer staple groups.
The Shanghai gauge has rebounded 24 percent from an August low after the government took unprecedented measures to prop up equities and speculation grew policy makers will take more measures to bolster the economy. China’s power industry plans to bring in more investors in a pilot program of mixed-ownership reform next year, the Economic Information Daily reports, without citing anyone. “There are expectations that the SOE reforms may see an acceleration or breakthrough at the ongoing central economic work conference,” said Wu Kan, a fund manager at JK Life Insurance Co. in Shanghai. He’s adding to his stocks holdings to about 60
percent of the overall allocation. “The market is expecting an improvement in the SOE efficiency.” The CSI 300 Index added 2.6 percent. Hong Kong’s Hang Seng China Enterprises Index advanced 1.4 percent toward the highest close since December 7. The H-share index posted its first weekly increase in four weeks after valuations on the benchmark gauge fell to their lowest level relative to global peers in 12 years. PetroChina Co., which sank 6.4 percent this month, paced gains among energy companies in Hong Kong with a 1.2 percent gain. China Cinda Asset Management Co. rose 3.3 percent after agreeing to buy Nanyang Commercial
Alibaba’s struggle with fakes and questionable products is part of a larger issue in China, where piracy is rampant and knock-offs of everything from DVDs to appliances flourish. Yet over time, the country’s growing middle class will demand higher-quality goods, placing the onus on Alibaba to clean up its act. Alibaba makes money from Taobao through advertising revenue, with
Bank Ltd. The Hang Seng Index added 0.3 percent. A measure tracking consumerstaples stocks on the CSI 300 surged 5.3 percent on Monday, the most among the 10 industry groups. It has advanced 27 percent this year, lagging a 52 percent gain on the topperforming technology stocks. Consumer Rally Yili Industrial and Henan Shuanghui each surged 10 percent, the most in five months. Kweichow Moutai Co., the nation’s biggest maker of baijiu liquor, climbed 4.7 percent. “It’s possibly insurance funds’ buying that spurred the rally as overall valuations of consumer stocks are very low,” said Li Xiaolu, an analyst at Capital Securities Co. “Insurance funds are taking a steady approach toward their long-term investment.” Brokerages gained as China and Hong Kong regulators approved the first cross-border mutual funds after the summer stock-market rout set back the start of the program. Citic Securities Co. advanced 4.1 percent, while Haitong Securities Co. gained 2.6 percent. Four China funds and three Hong Kong funds were registered, China Securities Regulatory Commission spokesman Zhang Xiaojun said at a briefing on Friday. Regulators received 17 applications to register Hong Kong funds and 30 for China funds, Zhang said. Margin traders reduced holdings of shares purchased with borrowed money for a second day on Friday, with the outstanding balance of margin debt on the Shanghai Stock Exchange falling to 685 billion yuan (US$105.7 billion). Chinese listed companies may report a 14 percent decline in profits for 2015 from a year earlier, the Chinese Academy of Social Science said in an article published in the China Securities Journal. Bloomberg News
Business Daily | 9
December 22, 2015
Greater China
knock-off reputation half of its revenue
third-party merchants holding the products for sale, from toys and food to medical equipment. Since the goods aren’t in Alibaba’s possession, it’s harder to verify if they are legitimate. Still, Alibaba says it’s trying to crack down.
Fakes Taskforce
Alibaba “is committed to the protection of intellectual property rights and
the fight against counterfeiting,” the company said in an e-mailed statement Friday. “Counterfeiting is an issue all global e-commerce companies face, and we are doing all we can to address and fight it.” The company has a task-force of more than 2,000 monitoring for fraud and removed 90 million product listings before its 2014 initial public offering. Brand owners can use an online complaint platform to report infringements while those accused of selling frauds have three days to refute allegations with evidence or face delisting, according to Alibaba’s website. Alibaba has also worked with brands including Nike and Adidas to remove fake athletic shoes, watches and bags on Taobao and thousands of sellers have been penalized.
‘Notorious Markets’
That hasn’t stopped criticism. Last week, the U.S. Office of the Trade Representative warned the company it had to do better to stay off the “Notorious Markets” blacklist it escaped only in 2012. The federal agency issued a stern warning that Alibaba’s efforts to fight piracy and
respond to complaints would be monitored in the coming year. The regulator reported that rights holders have criticized Alibaba’s enforcement program as too slow, difficult to use, and lacking transparency. While it didn’t re-list Taobao, the USTR’s recommendations included simpler processes to register and request enforcement and reduced timelines for taking down listings and issuing penalties. Re-joining the name-andshame list would damage Alibaba’s reputation in the U.S., where its shares trade and the company is trying to cultivate relationships with retailers and entertainment companies. While Alibaba is the biggest operator in China, that’s also made it highly dependent on its home market, which generates more than 80 percent of revenue. With the domestic economy slowing, the ability to grow in the rest of the world will be critical. Foreign Expansion “In the next 10 years, they’re not just satisfied with the China market. They want to attract foreign merchants to sell to China,” Michelle Ma said. The company co-founded by Jack Ma headed into 2015 the toast of Wall Street after a record September IPO. Four months later, China’s State Administration of Industry and Commerce issued a so-called “white paper” accusing Alibaba of allowing merchants to co-opt famous brands and sell fake wine and handbags. While the company protested and the agency ultimately said the paper didn’t have “judicial effect,” the impact on its shares was dramatic.
Landslide devastates Chinese industrial park, 91 missing Premier Li Keqiang ordered an official investigation into Sunday’s landslide in the southern boomtown of Shenzhen, as 91 people are missing Paul Carsten
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t least 91 people were missing after a huge mound of mud and construction waste collapsed at a business park
in southern China and buried 33 buildings in the country's latest industrial disaster. Premier Li Keqiang ordered an official
investigation into Sunday's landslide in the southern boomtown of Shenzhen, just across the border from Hong Kong, which comes four
The stock slumped by more than 40 percent between the SAIC criticism and a record low in September.
‘Whack-a-mole’
An old headache resurfaced when Kering SA, the owner of brands like Gucci and Yves Saint Laurent, sued Alibaba for allowing copyright infringement -- after withdrawing a similar complaint in 2014. The Chinese company said the lawsuit had no merit. Then came the USTR report, which echoed criticism by the American Apparel & Footwear Association, which counts Levi Strauss & Co. and Under Armour Inc. among its members. Alibaba’s reluctance to stamp out counterfeiters may stem from a fear of losing customers who seek out such products to other platforms, said AAFA President Juanita Duggan. The sheer volume of listings on e-commerce websites makes policing fakes trickier. Amazon.com Inc. and EBay Inc. struggled with similar issues early on, said Sage Chandler, Senior Director, International Trade at the Consumer Technology Association. Amazon’s anti-counterfeit policies include immediate suspension of selling privileges and the destruction of inventory held in its fulfillment centers. EBay says it proactively removes suspicious items, enforces selling limits and works with law enforcement and rights holders. “It’s whack-a-mole, they pop right back up,” Chandler, said. “These guys are always going to have these problems as long as there are counterfeiters out there.”
months after huge chemical blasts at the northern port of Tianjin killed more than 160 people. The mudslide smashed into multi-storey buildings at the Hengtaiyu industrial park in the city's northwestern Guangming New District, toppling them in collisions that sent rivers of earth skyward. Villager Peng Jinxin said the mud came like "huge waves", as residents ran out of the way. "At one point the running mud was only ten metres away from me," Peng told the official Xinhua news agency. State television showed scenes of devastation, with crumpled buildings sticking up from heaps of brown mud which stretched out across the edge of the industrial park. The mud had covered an area of more than 380,000 square metres (94 acres) and was 10 metres (11 yards) deep in parts, Shenzhen Vice Mayor Liu Qingsheng told reporters, according to Xinhua. Almost 3,000 rescuers were at the scene, Xinhua said, with sniffer dogs and drones. Rescuers were focusing on several areas where sensors had detected signs of life, it added. The Ministry of Land Resources blamed the landslide on a mountain of waste construction mud in the vicinity. Provincial authorities sent a team to investigate and said the accumulation of a large amount of waste meant that mud was stacked too steep, "causing instability
Bloomberg News
and collapse, resulting in the collapse of buildings", the ministry said in a statement. A nearby section of China's major West-East natural gas pipeline also exploded, state television added, though it was not clear if this had any impact on the landslide. Xinhua said the pipeline was owned by PetroChina, China's top oil and gas producer, that the 400-meter-long ruptured pipe "has been emptied" and a temporary pipe will be built. PetroChina wrote on its microblog the pipeline blast had hit at least one industrial user, a Hong Kong power plant operated by Castle Peak Power Co Ltd, a company majority owned by a subsidiary of CLP Holdings, that has now switched to coal for power generation. Chinese President Xi Jinping ordered provincial authorities to do everything possible to minimize casualties, treat the injured and comfort family members, Xinhua said. Fourteen factories, 13 low-rise buildings and three dormitories were among the buildings flattened. Xinhua said 14 people had been rescued and more than 900 people had been evacuated from the site by Sunday evening. State television said that of the 91 missing, 59 were men and 32 women. The frequency of industrial accidents in China has raised questions about safety standards following three decades of breakneck economic growth. Reuters
10 | Business Daily
December 22, 2015
Greater China
Beijing tells U.S. to stop flexing military muscle in Asia The Chinese Foreign Minister Wang Yi has asked the American Secretary of State to respect China’s core interests David Tweed
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he U.S. should cease sending ships and planes to China’s South China Sea islands, stop showing off its military might and respect China’s core interests, Foreign Minister Wang Yi told Secretary of State John Kerry. “The world is facing multifaceted challenges and needs multi-party cooperation to handle that,” Wang said in a phone conversation Sunday with Kerry, according to a foreign ministry statement. “While the U.S. is seeking Chinese cooperation, it also should respect China’s core interests and major concerns.” Wang’s comments follow a report in the Wall Street Journal that a U.S. B-52 bomber mistakenly flew within two nautical miles of Cuarteron Reef in the disputed Spratly Island group in the South China Sea. China dumped tons of dredged sand onto the reef, turning it into an artificial island in the summer of 2014, according to the Asia Maritime Transparency Initiative, a website devoted to tracking maritime security issues in Asia. The U.S. and China have been at loggerheads since October when the U.S. sailed a warship within 12
nautical miles of an island China built on a previously semi-submerged reef. China’s claim to more than 80 percent of the waters is contested by Vietnam, the Philippines, Malaysia, Brunei and Taiwan. China’s foreign ministry in a statement urged the U.S. “to reflect upon and correct its mistake, take effective measures to prevent similar dangerous and provocative actions from happening and stop doing anything that hurts China’s sovereignty and security interests.” Bad weather had contributed to the pilot of the B-52 flying off course and into the area claimed by China, the Wall Street Journal reported, citing Pentagon spokesman Bill Urban. The Pentagon is investigating why one of two B-52s on a routine patrol unintentionally flew into the airspace, he said. China’s Defense Ministry said Dec. 19 that both B-52s had flown into Chinese airspace on Dec. 10, in a “serious military provocation” that prompted troops on the island to go into high alert, and warn the planes to leave. Wang also requested that the U.S. stop selling arms to Taiwan, an island China regards as a province. The U.S. last week said it would sell $1.83 billion in arms to Taiwan, its first such sale in four years. The Wang-Kerry conversation followed the unanimous adoption Saturday by the United Nations Security Council of a resolution endorsing a political transition to end Syria’s civil war. Wang said China hopes this will be a good opportunity to press ahead with a political solution to the Syrian issue. The U.S. State Department hasn’t yet published an account of the conversation. Bloomberg News
Diesel exports slow as Mexico seeks local sales more profitable agricultural cooperation Chinese refiners have been flooding opportunities with China regional markets with diesel this year as they raised crude processing to meet gasoline demand, leading to swelling diesel stockpiles
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hina’s diesel exports may fall further from last month’s drop as domestic sales gain appeal following the government’s move to maintain prices in a slumping crude market. The nation shipped 910,373 metric tons of diesel in November, or about 227,600 barrels a day, according to data from the General Administration of Customs on Monday. That’s down 1 percent from about 920,444 tons of exports in the previous month and about four times more than a year earlier. Chinese refiners have been flooding regional markets with diesel this year as they raised crude processing to meet gasoline demand, leading to swelling diesel stockpiles. The government’s decision not to cut prices makes domestic sales more profitable than exports, according to ICISChina, a Shanghai-based commodity consultant, and SCI International, a Shandong-based researcher. “For early next year, if crude price continues to extend declines, refiners won’t be active selling oil products
overseas,” Lin Jiaxin, an analyst with ICIS China, said by phone from Guangzhou. “Dieselexports for this month may remain steady from November as most shipments had already been arranged when the decision to suspend fuel price cuts was announced.” Keeping domestic fuel rates stable can help curb petroleum consumption from “increasing too fast” and contributing to automobile emissions, a reason for worsening air pollution, National Development and Reform Commission, the country’s top economic planner, said in a statement dated December 15. “It is now more attractive for the oil companies to sell gasoline and diesel locally with the artificiallyhigh prices,” Zhang Bin, a senior analyst with SCI International, said by phone before the data was released. The nation’s kerosene exports rose 20 percent from October to a record 1.37 million tons, the data showed. Gasoline shipments increased 34 percent from the previous month to 569,967 tons. Bloomberg News
The Mexican and Chinese Government have signed two protocols for the export of baby formula and tobacco products
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exico was seeking agricultural cooperation with China with more related trade protocols signed in 2015 than any other country, local media reported on Sunday. Raul Urteaga Trani, the Agriculture Ministry’s general coordinator for international affairs, said those agreements included a protocol signed in September on the export of white corn to China with a supplementary accord on beef, and a second protocol on electronic certification. During a recent promotion visit to China, he said, two additional protocols were signed for baby formula and tobacco exports. In 2016, Senasica (Mexico’s agency to assure agri-food quality) will begin a risk analysis study with its Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine, to pave the way for protocols on other exports, including blueberries, avocados from Jalisco state, sorghum, banana and alfalfa. Juan Barrio Aguirre, vice president
of legislative liaison at the Mexican Association of Supreme Quality, underscored China’s market of 1.35 billion people, the world’s largest food importer. In 2015 Mexican agri-food exports to China grew 25 percent compared with 2014, he said, amounting to nearly US$150 million. The new protocols are expected to push the figure to US$300 million in 2016. “We are very proud to see how Mexico has succeeded in being recognized as a producer of excellentquality foods, backed by dependable sanitary and safety systems few countries have,” said Barrio. President of the National Agricultural Council Benjamin Grayeb Ruiz noted that over 12 years, China’s market had opened to only two Mexican products: avocados and grapes. Yet in the past three years, seven products have been accepted, and three are yet to come in 2016, said Grayeb. Xinhua
Business Daily | 11
December 22, 2015
Asia
Korea’s Park chooses lawmaker Yoo as new Finance Minister Yoo Il Ho is the third finance chief of Park Geun Hye and faces challenges that include slowing economic growth and lagging exports Cynthia Kim and Jiyeun Lee
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outh Korean President Park Geun Hye Monday nominated ruling partly lawmaker Yoo Il Ho (pictured) to be the country’s next finance minister in a reshuffling of the cabinet as Choi Kyung Hwan prepares to step down to run for election. Yoo, 60, served as Park’s chief of staff for the transition committee when she was president-elect. He was a former land minister before stepping down in November to return to his previous role as lawmaker. Yoo also formerly served as the head of a research institute on public finance.
As Park’s third finance chief, Yoo would face challenges including slowing economic growth and lagging exports amid pressure to restructure struggling companies. Curbing potential capital outflows also will be a task for the new chief as
the U.S. Federal Reserve last week raised its benchmark interest rate for the first time since 2006. Choi drafted a record national budget for 2016 that will raise the government’s debt above 40 percent of gross domestic product for the first time. Yoo told reporters Monday after the nomination that his policies won’t be too different from those under current minister. “The fact that a current lawmaker was named shows the president wants the new finance minister to work with politicians to push through pending legislation including labor reform,” said Kim
Hyeon Wook, an economist at the SK Research Institute in Seoul. “Yoo is known to be a public finance expert, and it could mean that the president is emphasizing a more active role in government spending.” In Monday’s announcement, Park also nominated Vice Finance Minister Joo Hyung Hwan as trade minister.
‘Invigorating the Economy’
Yoo “is the right person to push for invigorating the economy,” presidential press secretary Kim Sung Woo said in a televised briefing, describing the lawmaker as someone with “abundant insight in economic policy
and real economy” and a knack for handling political affairs. The Finance Ministry cut its growth estimates for 2015 and 2016 earlier this month and said it will start monitoring nominal domestic product, a gauge that isn’t adjusted for price changes. The ministry expects the economy to grow 2.7 percent this year and 3.1 percent in 2016, supported by domestic demand and stronger exports. President Park doesn’t need parliamentary approval to appoint a new finance minister, who also serves as deputy prime minister. Bloomberg News
Nomura said to seek stake in American Century for US$1 billion
Toshiba to cut 7,000 jobs in PC and TV units, sees year loss
The acquisition of the 40 percent stake in the American company would be Nomura’s biggest overseas investment since it acquired Instinet Inc. in 2007
The cut in jobs comes after a US$1.3 billion accounting scandal, but the restructuring also includes the sale of its Indonesian TV plant
Takahiko Hyuga
Makiko Yamazaki
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omura Holdings Inc., Japan’s biggest brokerage, plans to pay about US$1 billion for a stake of around 40 percent in U.S. money manager American Century Investments, according to a person familiar with the matter. The purchase from Canadian Imperial Bank of Commerce would take place early next year, the person said on Monday, asking not to be identified because the matter was confidential. Details could be announced as early as the same day if an agreement is reached, the person said. Buying the stake would be Nomura’s biggest overseas investment since it acquired Instinet Inc. for US$1.2 billion in 2007. The Japanese firm is seeking to expand its capabilities to sell products to pension funds and insurers, and enter private banking and retail markets in the U.S., Chief Executive Officer Koji Nagai said in materials for an investor presentation on December 1. Kenji Yamashita, Nomura’s Tokyo-based spokesman, declined to comment. No comment was immediately available from American Century Investments or CIBC.
CIBC agreed in 2011 to buy 41 percent of Kansas City, Missouribased American Century Investments from JPMorgan Chase & Co. for US$848 million. The money manager was founded in 1958 by the late Jim Stowers Jr. and channels more than 40 percent of its profits to research to help cure geneticallybased diseases, according to its website. It had about US$141 billion of assets under management as of February 2014. Nomura plans to sell investment trusts incorporating Japanese and Asian shares to individual investors in the U.S. through American Century Investments’ nationwide sales network, the Nikkei newspaper reported earlier. To bolster profitability, the Tokyobased brokerage is seeking to expand in faster-growing businesses outside of its home country. It bought ING Groep NV’s Taiwanese investment unit last year, becoming the first Japanese asset manager to operate in the market. Nomura also established a fund-management venture with China’s Shenzhen Hua Xia Ren He Capital Management last year. Bloomberg News
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apan's Toshiba Corp said on Monday it will cut nearly 7,000 consumer electronics jobs after a US$1.3 billion accounting scandal, in an overhaul that will streamline the sprawling conglomerate into a company focused on chips and nuclear energy. Toshiba also said it would sell its television manufacturing plant in Indonesia, and that eventual job cuts spanning the entire PC-to-nuclear company could be over 10,000 including previously announced cuts and those seeking voluntary early retirement. Due to restructuring costs, which include the sale of its Indonesian TV plant, Toshiba said it expected a net loss of around 550 billion yen (US$4.53 billion) in this fiscal year ending in March. "By implementing this plan, we would like to regain the trust of all stakeholders including shareholders and transform ourselves into a robust business," it said in a statement. Toshiba confirmed in August that it overstated profits going back to fiscal 2008/09 by 155 billion yen. It also reported a 37.8 billion yen net loss for the last financial year to
reflect more costs and conservative estimates on operations, including the South Texas Project, a U.S. power plant project. An independent accounting probe said in July that the company suffered from dysfunction in governance and a culture of discouraging employees from questioning their superiors. Toshiba's stock has fallen about 40 percent since news of its accounting problems began to emerge in early April. The scandal and subsequent earnings restatements highlighted weaknesses in a range of Toshiba's businesses. Analysts have said restructuring was long overdue. The company launched the world's first massmarket laptop in 1985 but has seen its consumer electronics business dwindle amid price competition with Asian rivals. The change in fortune highlights the decline of the 140-year-old conglomerate, which remains highly influential in the Japanese business community. Over the years, its former executives often played key policy advisory roles in government. Reuters
12 | Business Daily
December 22, 2015
Asia
Hyundai set to miss sales target for first time since 2008 The sales of the company have been hit by an economic slowdown sapping demand in China Rose Kim
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yundai Motor Co. is poised to sell fewer vehicles than it projected for the first time since the global financial crisis, after an economic slowdown sapped demand in China and emergingmarket earnings slumped due to unfavorable exchange rates. South Korea’s largest automaker will have to sell at least 50 percent more than its monthly average this year in December to reach its fullyear target of 5.05 million vehicles. Such a feat is unlikely, according to five analysts surveyed by Bloomberg. They also predict that Hyundai’s 2016 sales will be lower than the target set for this year given the absence of new best-selling models and continued weakness in Russia and Brazil. Hyundai has benefited in recent years from the surge in demand for automobiles in China, which became the largest market for the carmaker in 2009. The increasing reliance turned into a drag after economic growth moderated this year and a summer stock-market rout dented consumer confidence. Hyundai’s push into emerging markets has also met with a slump in the real and ruble this year.
“I don’t think anyone expected sales in China to plummet as it did this year because we were all used to China being the white knight,” said Lee Sang Hyun, an analyst at IBK Securities Co. “Although sales in China may improve in 2016, from how the market situation is expected to play out, things don’t look all that exciting.” The last time Hyundai missed its sales target was in 2008, when the company fell about 327,000 units short of its 3.11 million goal as U.S. demand tanked in the wake of the financial crisis that led to a global recession. The automaker didn’t issue a target the following year. Hyundai declined to comment and plans to report its full- year sales figures on January 4. The company’s shares fell 1.3 percent to 152,000 won in Seoul, their biggest decline since December 11. Kia dropped 3 percent while the benchmark Kospi index rose 0.3 percent. U.S. sales have been a bright spot for Hyundai this year. Deliveries outpaced the industry and rose 5.6 percent to 698,202 units in the first 11 months, spurred by sales of the
Kirin to cut pay as first-ever loss forecast on Brazil slump Monami Yui
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irin Holdings Co. will impose temporary pay-cuts on senior executives, including reducing the salaries of its chairman and president by 30 percent, after the Japanese beermaker predicted its first annual loss since 1949 after its Brazil unit was hurt by an economic slump. Tokyo-based Kirin forecast a net loss of 56 billion yen (US$461 million) for 2015, reversing its expectations of 58 billion yen in profit made in October, it said Monday. Its Brazil
Kirin unit is expected to result in special losses about 114 billion yen, after deducting 27.2 billion yen in goodwill from the 2011 acquisition, citing deteriorating Brazilian economic conditions and stagnated consumption, as well as a drop in the local currency. “Assumptions we made upon the acquisition were optimistic,” Kirin Senior Executive Officer Ryosuke Mizouchi said in a media briefing held in Tokyo. “The Brazilian economy was strong when the takeover happened
Tucson and Santa Fe SUVs amid a decline in gasoline prices. In China, Hyundai’s sales fell 6.9 percent through November to 934,806 units, dragged down by the economy and a shift by consumers from sedans to small crossovers. Deliveries rebounded in October after a government tax cut on smaller vehicles. There are also plans to introduce a new round of subsidies for auto purchases in the country’s rural areas, people familiar with the matter said this month. Even with a recovery in China, Hyundai will struggle in Russia and Brazil, where a plunge in the ruble and real have lowered the value of repatriated earnings, according to KTB Securities Co., which expects the two currencies to remain weak against the won in 2016. “It’s unlikely that the situation in Russia and Brazil will turn around next year,” said Moon Yong Kwon, an analyst at KTB Securities. “In 2016, the key will be to take advantage of the tax break in China to recover sales and production rate in the country.”
Panasonic to pay US$1.5 bln for fridge maker Hussmann The Japanese company is looking to move further away from consumer electronics and the deal is expected to be completed in April Pavel Alpeyev
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in 2011 and we thought it would last for a long time.” The company said it would lower the salaries of 11 senior executives for the months of January to March 2016. Kirin has been among Japanese beermakers seeking acquisitions abroad to offset falling consumption at home. Kirin in 2011 acquired Brazil’s Schincariol Participacoes e Representacoes in a deal valuing the brewer at about US$3.62 billion at the time. The company bought a controlling stake in Myanmar Brewery Ltd. for US$560 million in August. While it will strive to rebuild Brazil Kirin so it will turn a profit from 2018, the company doesn’t exclude the option of selling off the unit, Director of Group Finance Akihiro Ito said at the briefing. Myanmar Brewery will also become the pillar of Kirin’s overseas operations, he said. Kirin shares rose 3.1 percent to 1,771 yen by the close of trading in Tokyo, reversing from a decline of as much as 3.8 percent after the Nikkei newspaper reported the potential loss earlier.
anasonic Corp. agreed to pay 186.6 billion yen (US$1.5 billion) for U.S.-based maker of refrigeration systems Hussmann to bolster its housing operations and move further away from consumer electronics. The company will purchase the parent of Hussmann Corp. from private equity fund Clayton, Dubilier & Rice and make it a wholly owned subsidiary, Panasonic said in a statement in Tokyo on Monday. The deal is expected to close in April. President Kazuhiro Tsuga has steered a recovery in the past three years after record losses by moving away from TVs and smartphones to focus on housing, information systems for cars and making batteries with Tesla Motors Inc. Tsuga has said the Osaka-based company plans 200 billion yen in strategic investments this fiscal year, part of a push to spend 1 trillion yen to reach a goal of 10 trillion yen in revenue by fiscal 2018. Hussmann makes refrigerators used by supermarkets, including display cases, doors and lighting systems. After Panasonic posting combined net losses of 1.5 trillion yen in fiscal 2012 and 2013, the company is expecting its third straight annual profit. Operating income will probably be 430 billion yen in the year to March 2016, the highest profit since 2008, the company said in October. Panasonic has said it expects sales of 2.5 trillion yen in its business that includes avionics and security systems, about 2.1 trillion yen for automotive components, 2 trillion yen for housing and 2.3 trillion yen for household appliances in the year ending March 2018. Clayton, Dubilier, one of the industry’s oldest private equity firms, bought control of Hussmann in 2011 from Ingersoll- Rand Plc. Reuters reported the Panasonic deal earlier Monday.
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editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Business Daily | 13
December 22, 2015
Asia
Kuroda sparks a bond-market rally and keeps his powder dry, too The decline in sovereign note yields will help reduce long- term borrowing costs for Japanese companies Chikako Mogi, Yumi Ikeda and Shigeki Nozawa
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ank of Japan Governor Haruhiko Kuroda’s (pictured) latest tweak to monetary policy is proving a boon for bond- market bulls. Two-year yields dropped to a record of minus 0.055 percent on Friday while 20-year yields fell below 1 percent for the first time since January on Monday after the BOJ board lengthened on Friday the average maturities of Japanese government bonds it buys to as long as 12 years from the current limit of 10. Rates dropped even as the BOJ kept its main monetary stimulus target unchanged, a move Nomura Research Institute Ltd.’s Tetsuya Inoue says keeps the door open for further easing next year. The decline in sovereign note yields will help reduce long- term borrowing costs for Japanese companies as the central bank struggles to fuel inflation and growth in the world’s third- largest economy. Before the policy meeting, analysts were almost evenly split on whether the central bank would add to its asset- purchase program next year or stand pat. “The move suggests there is still an option for further easing amid speculation of limits,” said Inoue, the chief researcher for financial technology and markets at Nomura Research Institute and a former BOJ official. After the BOJ’s decision, 10-year JGB futures rose above 149 yen for the first time while the two-year yield plunged to minus 0.055 percent, blowing past the prior record of minus 0.04 percent. The 40-year JGB yield fell to the least since April and the 30-year yield dropped to levels last seen in March. Yields on shorter maturities have faced strong downward pressure on demand from overseas investors taking advantage of cheap funding costs.
The central bank said Friday it will need to boost JGB buying by about 10 trillion yen (US$82 billion) in 2016 compared with this year because of an increase in the redemption of the notes it holds. Around 40 trillion yen of its holdings will mature next year, according to an estimate by Bank of America Merrill Lynch. “Because maturing JGBs held by the BOJ will rise from next year, the bank needs to increase bond buying even without expanding monetary stimulus,” said Makoto Suzuki, the senior bond strategist at Okasan Securities Group Inc.
The decline in sovereign note yields will help reduce long- term borrowing costs for Japanese companies as the central bank struggles to fuel inflation and growth in the world’s thirdlargest economy
“There’s pressure on the yield curve to flatten.” The yield premium 30-year JGBs offer over five-year notes shrank to the least since May on Friday. Hard to Understand Kuroda, who acknowledged in a news conference Friday that some of the adjustments would be hard for people to understand, said they were designed to make it easier for the BOJ to maintain its current policy and didn’t constitute additional easing. “Additional easing is when the BOJ expands its monetary base target,” said Mari Iwashita, chief market economist at SMBC Friend Securities Co. in Tokyo. “That action will likely be saved until prices start to slip or it becomes clear that reaching not only 2 percent but even 1 percent will be difficult.” Forty-eight percent of respondents in a December 9-16 Bloomberg poll said they don’t expect additional stimulus for the foreseeable future. Market players see increasing difficulty and technical limits for the BOJ to meet its target of expanding the monetary base by 80 trillion yen a year, as it is already buying a bulk of bonds issued to markets. ETF Purchases The central bank also said Friday it will spend 300 billion yen a year from April buying exchange-traded funds that track companies which are “proactively making investment in physical and human capital,” to offset the market impact as it resumes selling stocks purchased earlier from financial institutions. The BOJ still expects to meet its 2 percent inflation target around the six months through March 2017, but that timing could change because of the slump in oil prices, Kuroda said. In October, the central bank delayed the deadline for the second time this year.
The 40-year JGB yield fell to the least since April and the 30-year yield dropped to levels last seen in March. Yields on shorter maturities have faced strong downward pressure on demand from overseas investors taking advantage of cheap funding costs
“The BOJ wanted to deliver a message particularly to overseas investors that the bank has not changed its easing stance,” said Yunosuke Ikeda, the head of Japan foreignexchange research at Nomura Securities Co. in Tokyo. “The timing was good because the BOJ ’s delaying the period of achieving inflation target was spurring speculation that the bank was not serious about the target.” Bloomberg News
14 | Business Daily
December 22, 2015
International
FIFA bans Blatter and Platini from soccer for eight years The ban comes after allegations of an unauthorized 2 million-Swiss franc (US$2 million) payment Hugo Miller
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IFA banned president Joseph “Sepp” Blatter (pictured) and European soccer boss Michel Platini for eight years over an unauthorized 2 million-Swiss franc (US$2 million) payment, ending Platini’s chances of taking over the sport’s governing body. Blatter was unable to demonstrate any “legal basis” for the payment in 2011, while Platini’s assertion of an oral agreement was rejected, the adjudicatory chamber of FIFA’s
Ethics Committee said Monday in an e-mailed statement. Blatter was fined 50,000 francs and Platini 80,000 francs and the bans take effect immediately. The actions of neither Blatter nor Platini showed a “commitment to an ethical attitude, failing to respect all applicable laws and regulations,” the chamber said in its ruling. Both men demonstrated an “abusive execution” of their respective roles, it said.
Blatter, who oversaw FIFA for 17 years, and UEFA President Platini were suspended from all soccer activities October 8 after Swiss prosecutors opened an investigation into the payment. The move essentially ended Blatter’s presidency and delivered a blow to Platini’s chances in February 26 elections for FIFA president. Platini was handed another setback December 11 when the Court of Arbitration for Sport
rejected the appeal of his 90-day suspension, saying it saw no need to overturn it. Blatter and Platini have denied any wrongdoing, saying Blatter was fulfilling an oral contract between the two for services the Frenchman provided to FIFA between 1998 and 2002. The final payment on the contract was made in 2011. Blatter plans to appeal the decision to the Lausanne, Switzerland-based Court of Arbitration for Sport, his spokesman Klaus Stoehlker said on Monday in Zurich, before a press conference that the former FIFA president has scheduled for 11 a.m. A lawyer and spokesman for Platini did not immediately return calls seeking comment. The French weekly Journal Du Dimanche reported in a December 6 issue that it had documents that showed FIFA and UEFA officials knew about the contract. Thibaud D’Ales, Platini’s lawyer, said that supported Platini’s contention that he had done nothing wrong or had been trying to hide the agreement. The newspaper report “is the written proof of the oral contract between Michel Platini and FIFA, as well as the amount and it also confirms that the contract was no secret because it was known about by executives at UEFA and FIFA,” D’Ales said at the time.
Zurich Arrests
FIFA’s problems began with the arrest of seven soccer officials in Zurich in May, part of the U.S. Department of Justice’s indictment of 14 people for bribery, racketeering and money laundering. Two FIFA vice presidents were arrested in Zurich on December 3 as U.S. and Swiss prosecutors widened their investigations into corruption in the sport and more specifically, allegations of bribery in the selection of Russia and Qatar to host the 2018 and 2022 World Cups. FIFA will hold elections in Zurich on February 26 to choose its next president. Issa Hayatou, who became acting president of FIFA with Blatter’s suspension, said in a December 18 open letter that the election is the chance “to start a new chapter” following a “crisis that has shaken football governance to its core.”
Templeton’s Hasenstab says global deflation fear unwarranted The Chief Investment Officer of the Templeton Global Macro, Michael Hasenstab, sees Treasury yields climbing and expects U.S. growth of 2 percent to 3 percent next year Benjamin Purvis
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oncerns about global deflation are overblown and the growing U.S. economy will help bolster financial markets in 2016, according to Franklin Templeton Investments. The fund manager, which had about US$790 billion in assets at the end of November, sees Treasury yields climbing and expects U.S. growth of 2 percent to 3 percent next year, according to Michael Hasenstab, chief investment
officer of the Templeton Global Macro team. He forecasts U.S. consumer price gains will return to the pace targeted by Federal Reserve policy makers as the effects of recent commodityprice moves dissipate. “Fears of global deflation are unwarranted,” Hasenstab said in an e-mailed statement Monday. “The belief that inflation has become structurally lower has made some investors complacent on taking interest-rate risk, in
what we believe is a dangerous part of the yield cycle.”
Continued Divergence
Plunging commodity prices have helped fuel worldwide concerns about deflation, with policy makers in Europe and Japan adding to stimulus measures this year even as the U.S. central bank announced its first interest-rate increase in almost a decade. Hasenstab expects that policy divergence to continue in the coming year
with both the Bank of Japan and the European Central Bank ramping up so-called quantitative easing, while the Fed will tighten again following its initial move last week. The 10-year Treasury yield was at 2.21 percent as of 6 a.m. on Monday in London, having climbed from a low of 1.90 percent on October 2, according to Bloomberg Bond Trader data. Futures contracts indicate that there will be at least one increase in
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the Fed’s benchmark rate in the coming year, according to data compiled by Bloomberg. The Fed’s preferred inflation gauge is running at 0.2 percent and last exceeded the central bank’s target level of 2 percent in April 2012.
Fundamentally Undervalued
China, the world’s secondlargest economy, is not likely to suffer a “hard landing” and the recent moderation in growth there is “an inevitable normalization,” according to Franklin Templeton. In foreign-exchange markets, there should be continued declines in the euro and the yen, while some emerging-market currencies are “fundamentally undervalued,” Hasenstab said. “We selectively added to our strongest convictions in emerging markets during the recent periods of volatility,” he said. “Apprehensions about risks in places like Mexico, South Korea and Malaysia are likely to abate as these countries prove their resilience to Fed rate hikes.” Bloomberg News
Business Daily | 15
December 22, 2015
Opinion Business
wires
Unaccountable China
Leading reports from Asia’s best business newspapers
Brahma Chellaney
Professor of Strategic Studies at the New Delhi-based Center for Policy Research and Fellow at the Robert Bosch Academy in Berlin
TAIPEI TIMES Siliconware Precision Industries Co (SPIL) yesterday gave the cold shoulder to a NT$129 billion (US$3.9 billion) takeover bid by Advanced Semiconductor Engineering Inc (ASE). SPIL’s announcement came on the eve of the deadline set by ASE, the world’s largest chip packager and tester, for the Taiwanese firm to reply to its proposal. ASE said it plans to fund the buyout deal by using its own capital and by borrowing. ASE bought a 25 percent stake in SPIL in September, which SPIL, the world’s No. 3 chip packager and tester, considered a hostile takeover bid.
THE KOREA HERALD Four entities have placed bids to buy the country’s second-largest brokerage house Daewoo Securities Co. in a deal that could be a possible game changer for at least three of the four prospective buyers. The prospective buyers are KB Financial Group Inc., the largest banking giant by assets; the country’s leading asset management expertise firm Mirae Asset Group; Korea Investment Holdings Co.; and the employee stock ownership association led by Daewoo’s labor union. The four also submitted preliminary bids to take over a 43-percent stake in Daewoo Securities from the state-run Korea Development Bank.
THE STRAITs TIMES Singapore Airlines (SIA) responded on Monday to a call for it to improve its buyout offer for Tiger Airways, reiterating that its offer was “fair” and “compelling”. Citing a report from the independent financial adviser, SIA added that the offer price also represents a premium of 42.6 per cent over the average share price target estimates of research brokers on November 5, the day before the offer was announced. SIA, which already owns 55.8 per cent of Tiger Airways, made a S$453 million (US$321 million) takeover offer for the rest of the airline on November 6.
THE PHILIPPINE STAR The Bangko Sentral ng Pilipinas (BSP) has lowered the projected growth of cash remittances from overseas Filipinos due to the global economic slowdown as well as the weakening of other currencies against the US dollar. BSP deputy governor Diwa Guinigundo said the growth of cash sent home by Filipinos to their loved ones in the Philippines is slightly lower at four percent, instead of the earlier projection of five percent. The BSP was earlier looking at a five-percent growth target for cash remittances from Filipinos abroad to US$25.6 billion this year.
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ince late 2013, China has been engaged in the frenzied creation of artificial islands and the militarization of the South China Sea. This amounts to an alarming quest for control over a strategically crucial corridor through which US$5.3 trillion in trade flows each year. But what is even more shocking – not to mention dangerous – is that China has incurred no international costs for its behavior. Of course, the international community has a lot on its plate nowadays, not least a massive refugee crisis fueled by chaos in the Middle East. But the reality is that, as long as China feels free to maneuver without consequence, it will continue to do so, fueling tensions with its neighbors that could easily turn into all-out conflict, derailing Asia’s rise. A key component of China’s strategy in the South China Sea is the dredging of low-tide elevations to make small islands, including in areas that, as China’s deputy foreign minister for Asian affairs, Liu Zhenmin, recently acknowledged, “are far from the Chinese mainland.” In China’s view, that distance makes it “necessary” to build “military facilities” on the islands. And, indeed, three of the seven newly constructed islets include airfields, from which Chinese warplanes could challenge the US Navy’s ability to operate unhindered in the region. By militarizing the South China Sea, China is seeking to establish a de facto Air Defense Identification Zone like the one that it formally – and unilaterally – declared in 2013 in the East China Sea, where it claims islands that it does not control. China knows that,
under international law, its claim to sovereignty over virtually all of the resource-endowed South China Sea, based on an “historic right,” is weak; that is why it has opposed international adjudication. Instead, it is trying to secure “effective control” – which, under international law, enhances significantly the legitimacy of a country’s territorial claim – just as it has done in the Himalayas and elsewhere. But China’s ambitions extend beyond the South China Sea: It aims to create a strongly Sino-centric Asia. Thus, the country recently established its first overseas military base – a naval hub in Djibouti, on the Horn of Africa – and it has repeatedly sent submarines into the Indian Ocean. Moreover, China is engaging in far-reaching economic projects – such as the “One Belt, One Road” initiative, which entails the construction of infrastructure linking Asia to Europe – that will strengthen its presence in, and influence over, a number of countries, thereby recasting regional geopolitics in its image. Meanwhile, US President Barack Obama’s administration remains hesitant to back up its much-publicized “pivot” toward Asia with meaningful action – especially action to constrain China. Instead of, say, imposing sanctions or exerting localized military pressure on China, the Obama administration has attempted to pass the buck. Specifically, it has stepped up military cooperation with other Asia-Pacific countries, encouraged other claimants to territory in the South China Sea to shore up their defenses, and supported a more active role in regional security for democratic powers like Australia, India, and even Japan.
Since late 2013, China has been engaged in the frenzied creation of artificial islands and the militarization of the South China Sea. This amounts to an alarming quest for control over a strategically crucial corridor through which US$5.3 trillion in trade flows each year
To put it bluntly, that is not enough. Under the United Nations Convention on the Law of the Sea, unlike natural islands, China’s constructed islands – which were built on top of natural features that did not originally rise above the water at high tide – do not have sovereignty over 12 nautical miles of surrounding sea. Yet it was not until recently that the United States sent a warship within 12 nautical
miles of an artificial island. And even then, it was just a sail-through that an official Chinese mouthpiece dismissed as a “political show.” The US did not challenge China’s territorial claims directly, or demand that China halt its island-building program. In fact, even as China persists with its fast-paced dredging, which has already created more than 1,200 hectares of artificial land, US officials insist that the South China Sea issue should not be allowed to hijack Sino-American relations. This feckless approach to China’s quietly emerging hegemony in the South China Sea has heightened concerns of the region’s smaller countries. They know that when two great powers bargain with each other, it is countries like them that usually lose. Some already have. In 2012, China seized the disputed Scarborough Shoal, located well within the Philippines’ exclusive economic zone. The US, which had just brokered an agreement requiring Chinese and Filipino vessels to withdraw from the area, did nothing, despite its mutual-defense treaty with the Philippines. But Asia’s smaller countries are not the only ones that should be worried. Given the South China Sea’s strategic importance, disorder there threatens to destabilize the entire region. Moreover, if China gets its way, it will become more assertive in the Indian Ocean and the western Pacific. Perhaps most important, if Chinese bullying enables it to ignore international rules and norms, a very dangerous precedent will have been set. One can easily think of other countries that would be sure to embrace it.
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December 22, 2015
Closing Investors petition Beijing on halted online finance company
Taiwan export orders show ailing demand persisting into 2016
Hundreds of anxious Chinese investors who said they spent money for products from one of China’s biggest online finance companies petitioned the government on Monday to speed up investigations into the firm whose operations have been halted. Ezubao, which grew into the country’s biggest peerto-peer (P2P) lending platform before it was shut earlier this month, is being probed for suspected illegal activities. Police have sealed offices as well as seized assets of Ezubao and related companies. The Ezubao case underscores the risks created by China’s fast-growing $2.6 trillion wealth management product industry. Many products are sold through loosely regulated channels, including online financial investment platforms and privately run exchanges. Early on Monday, more than 300 investors gathered at the central government petitions office in Beijing, watched by dozens of police.
Taiwan’s export orders fell for the eighth straight month in November, with prospects expected to stay bleak in coming months as the trade-dependent economy grapples with recession., The downtrend in Taiwan’s export orders - a leading indicator of demand for Asia’s exports and for hi-tech gadgets - contrasts with what is usually a peak holiday season of demand-driven cheer as a slowdown in China and weak global demand depresses the island’s key technology shipments. The economics ministry, which issued the data on Monday, said the value of orders in December could be lower than November, which was the steepest yearon-year fall since August. “December export orders are likely to reach around US$40 billion, which would be an on-year decline of around 10 percent,” Lin Li-jen, chief of the statistics department of the economics ministry, told a news conference.
China to make monetary policy more flexible in 2016 to support reform The intention of the Central Government is to create conditions for structural reforms, while expanding its budget deficit Xiaoyi Shao and Kevin Yao
Chinese Premier Li Keqiang
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hina will make its monetary policy more flexible next year to create conditions for structural reforms, while expanding its budget deficit, Xinhua news agency said on Monday, citing decisions made at a top-level meeting. The annual Central Economic Work Conference is keenly watched by investors for clues on policy priorities and main economic targets for the year ahead. “The prudent monetary policy needs to be more flexible
so as to create appropriate monetary conditions for structural reforms,” Xinhua said, citing a statement after the conference. China’s proactive fiscal policy needs to be more forceful, Xinhua said, adding that the top-level meeting called for an expansion of China’s fiscal deficit ratio gradually. The Xinhua report came after a source with direct knowledge of the meeting, which began on Friday, said China would keep its economic
Japan to cut FY2016 deficit-covering bond issuance to 8-yr low -sources
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apan plans to reduce its deficit-financing bond issuance for fiscal 2016 to below 30 trillion yen (US$246.99 billion) to rein in the country’s massive public debt, its lowest level in eight years, government sources said. Overall new bond issue for the fiscal year ending March 31, 2017 is expected to be reduced to 34.43 trillion yen, also the lowest since fiscal 2008, from 36.9 trillion yen planned for the current fiscal year. The smaller debt programme is thanks to hefty tax revenue on the back of rising company profits, the sources told Reuters on condition of anonymity because the plan has not been finalised. Deficit-financing bonds are seen as a barometer of fiscal discipline because they are issued to fill budget gaps. Cuts in such bond issuance indicate Japan will depend less on debt financing, which would help ease future debt obligations. Reuters
policies accommodative in 2016 to help support the slowing economy. The government will take steps to expand aggregate demand while pushing forward “supply-side reform” next year, said the source who briefed a small group of reporters about the meeting. “We need the economy to grow at a certain pace in order for structural reform to be carried out,” said the source, who requested anonymity. The People’s Bank of China has maintained a
prudent monetary policy since 2011, raising or cutting interest rates in line with shifts in the economy. The pro-active fiscal policy has been in place since the depths of the global crisis. The PBOC has cut interest rates six times since November last year and reduced the amount of cash that banks must set aside as reserves, while the government has stepped up spending on infrastructure projects and eased restrictions on home buying to boost the sluggish property market.
“Supply-side reform”
The source said both China’s and the world’s economic recoveries are expected to be “L-shaped”, implying a sustained period of modest growth that follows a sharp slowdown. “Because we realise that will be an ‘L-shape’, you cannot only use demand-side policy to drive the economy,” the source said. Chinese leaders have pledged to keep the country’s economic growth
Lotte unit to file likely largest Korea IPO in recent years
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in a “reasonable range” in 2016 by expanding domestic demand and making supplyside improvements. The government will expand its budget deficit next year and cut tax to help reduce burdens on companies, said the source. Steps will be taken to reduce overcapacity and property inventories, the source added. The government has been struggling to reach its economic growth target of about 7 percent this year, despite a raft of policy easing steps in recent months. President Xi Jinping has said China must keep annual average growth of no less than 6.5 percent over the next five years to hit a goal of doubling gross domestic product and per capita income by 2020 from 2010. Premier Li Keqiang recently pledged to step up “supply-side” reforms to generate new growth engines in the economy while tackling factory overcapacity and socalled zombie firms. Reuters
Zimbabwe says China to cancel US$40 mln debt, increase yuan use
otel Lotte Co., a duty-free sales unit of retail conglomerate Lotte Group, filed an application for what could be the largest South Korean largest public offering in recent years. Hotel Lotte submitted the application Monday, the Korea Stock Exchange said in an e-mailed statement. Lotte Group didn’t comment on the size or timing of the offering in an earlier statement on the filing. The exchange typically takes 20 to 45 business days to process such applications. While financial terms weren’t provided, MoneyToday reported in October that Hotel Lotte is seeking to sell a 35 percent stake for 7 trillion won. That indicates a total valuation of 20 trillion won, which would be more than 100 times the profits that Hotel Lotte reported for 2014. The last time a Korean initial public offering exceeded $2 billion was in 2010, when Samsung Life Insurance Co. raised $4.3 billion, according to data compiled by Bloomberg.
hina will cancel about US$40 million worth of Zimbabwe’s debt due to mature this year and Harare hopes to facilitate use of the yuan currency in its economy as bilateral trade increases, the Southern African country’s finance minister said on Monday. China has become the largest investor in Zimbabwe, which has been shunned by the West over its human rights record and is struggling to emerge from a deep 1999-2008 recession that forced the government to ditch its own currency in 2009. Finance Minister Patrick Chinamasa said China and Zimbabwe were negotiating the final amount of debt to be cancelled. “They (China) said they are cancelling our debts that are maturing this year. Right now, preliminarily, we are coming up with a figure of US$40 million,” Chinamasa said in a statement.
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