MOP 6.00 Closing editor: Joanne Kuai
Taiwanese parliament VP campaigns in Macau Page 4
Year IV
Number 954 Tuesday January 5, 2016
Publisher: Paulo A. Azevedo
Shun Tak to run Macau – Tuen Mun ferry service by end of January Page 3
Border crossings reach 1.45 million during New Year Holiday Page 3
China stock shock
China’s stock market closed its doors at 1:33 p.m. yesterday after shares fell 7 per cent, triggering the new Paradise Entertainment “circuit breaker” mechanism on the first trading day of 2016. The mechanism follows the Hushen 300 Index, warns of likely loss for 2015 which reflects the performance of both Shanghai and Shenzhen traded stocks. When trading closed, the Page 6 Shanghai Composite Index was down 6.85 per cent, and the smaller Shenzhen index down 8.16 per cent Imperial Pacific VIP Pages
8-9
rolling chips reach US$1.44 bln in Saipan
Page 6
Long winter The value of Hong Kong retail sales fell for a ninth consecutive month in November to HK$38.1 billion (US$4.92 billion), the longest period of decline in 13 years. A government spokesman indicated this was mainly dragged by a further slowdown in inbound tourism. The increased downside risks to economic outlook and recent stock market corrections might also have resulted in more cautious local consumption sentiment
Page 7
Private index shows persisting factories’ weak performance
Page 8 Singapore starts the year beating forecasts
Page 11
HSI - Movers January 4
CEPA exports decrease
The city’s exports of zero-tariff goods to Mainland China under the Closer Economic Partnership Arrangement (CEPA) experienced a slight drop of 3.83 per cent in December 2015 to MOP12 million (US$1.5 million) compared to November in that year. Nevertheless, such value is the third highest of last year, following January’s MOP15.3 million and November’s MOP12.2 million
Page 2
www.macaubusinessdaily.com
Gaming
Name
%Day
New World Developme
0.00
Galaxy Entertainment
-0.20
Henderson Land Devel
-0.32
Sun Hung Kai Propertie
-0.43
CNOOC Ltd
-0.74
Lenovo Group Ltd
-5.21
Li & Fung Ltd
-5.31
Belle International Ho
-5.33
China Resources Powe
-5.70
China Shenhua Energy
-5.91
Source: Bloomberg
Further impact
I SSN 2226-8294
Analyst predicts VIP will face an even tougher 2016, forecasting a VIP gross gaming revenue decline of 12 per cent. “Our estimates contemplate continued demand weakness, which will likely be exacerbated by pressures on the regulatory front,” said Grant Govertsen, an analyst with Union Gaming Group, referring to possible tougher restrictions on smoking and junkets, as well as liquidity concern in the industry
Page 5
2016-1-5
2016-1-6
2016-1-7
18˚ 22˚
17˚ 22˚
17˚ 22˚
2 | Business Daily
January 5, 2016
Macau Group dismissed on sustainable development of property market The government has disbanded a working group on facilitating the sustainable development of the local property market, according to yesterday’s Official Gazette. The official announcement indicates that the dismissal is due to the fact that the working group had basically completed their assigned tasks. The group, established in June 2010, aimed to analyse and collect social opinions on facilitating the sustainable development of the city’s real estate market – as well as suggesting political measures for the city’s realtor activities, off-plan sales, rental market and property taxation. The working group was led by the Secretary for Transport and Public Works.
CEPA exports decrease 3.8 pct in December
T
he city’s exports of zero-tariff goods to Mainland China under the Closer Economic Partnership Arrangement (CEPA) experienced a slight drop of 3.83 per cent in December 2015 compared to November in that year, the latest official data released by the Macau Economic Services
(DSE) shows. Last month, the export value of CEPA zero-tariff goods to the Mainland amounted to MOP12 million (US$1.5 million), which decreased by some MOP479,648 from the month before. Nevertheless, such value is the third highest of last year, following
January’s MOP15.3 million and November’s MOP12.2 million. For the whole year of 2015, local exports of CEPA goods to China reached MOP101.4 million, while accumulated exports of goods under such agreement totalled MOP667.1 million since it became effective in January 2004.
In December, the number of “Macau Service Supplier” certificates climbed to 592, suggesting the local authorities had granted one new document for a local firm. The certificates allow local companies and enterprises to operate their businesses on the Mainland and enjoy zero tariff treatments. According to the official data, half of the issued certificates were granted to local firms engaging in transport industry, such as those operating freight forwarding agencies, and businesses related
to logistics, storage and warehouse as well as transport. In addition, some 147 of these certificates were given to companies providing medical and dental services, which accounted for 25 per cent of the total. In fact, the Mainland authorities have opened up a total of 153 sectors for the city’s service providers since last Friday, compared to the previous 91 sectors, following a new CEPA agreement on trade in services signed by the two governments at the end of November, 2015. K.L.
Completion for new wholesale market put off to 2017
T
he government has allotted an extra year for the construction of the city’s new wholesale market in Ilha Verde, which was supposed to be completed this year, according to an official dispatch by the Chief Executive Fernando Chui Sai On last week. The dispatch shows that the total cost for the project remains at MOP860 million (US$107.5 million), while the contractor, Guangdong Nam Yue Group, will get the sum in four instalments paid between 2014 and 2017 following the contract amendments. For this year and next, the construction company will receive some MOP210 million and MOP180
million from the government, respectively, while the government would pay the company some MOP350 million and MOP120 million for 2014 and 2015, respectively. In fact, this is not the first time that the government has given a nod to extending the construction period for the new wholesale market. In November 2014, the government put off the completion date of the project to 2016 from the first proposed 2015. The delay in the new wholesale market may also lead to a delay for the infrastructure of the new passageway between Macau and Guangdong, as the local part of the passageway will locate at the site of the current wholesale market.
Business Daily | 3
January 5, 2016
Macau Border crossings reach 1.45 million during New Year Holiday Local border checkpoints recorded a total of 1.45 million of border crossings during the New Year Holiday between January 1 and 3. According to the official data released yesterday by Public Security Police Force (PSP), arrivals during the period reached 720,867 while departures recorded 728,974. Meanwhile, visitor arrivals for the three-day holiday amounted to 471,948, which increased by 2.62 per cent compared to the same period of last year. Most of the border crossings were registered at Border Gate, which saw a total of 1.06 million passengers arriving and leaving the local territory.
Shun Tak to run Macau – Tuen Mun ferry service by end of January TurboJET, a ferry service brand operated by Shun Tak, is soon to launch the Macau – Tuen Mun route by the end of the month. This is to be coupled with a shuttling service to the Hong Kong airport
F
erry service operator Shun Tak – China Travel Ship Management Ltd, which operates under the brand of TurboJET, is soon to launch the ferry service between Macau’s Outer Harbour Ferry Terminal and Tuen Mun of Hong Kong by the end of this month, a trip that would only take 35 minutes to 40 minutes, Hong Kong’s Chinese-language media reported. The reports, which cited a notice published by TurboJET at the Tuen Mun Ferry Terminal, noted that Macau and Tuen Mun would each see four ferry trips depart from the terminal every day.
On the notice, TurboJET said it would launch the Macau-Tuen Mun scheduled ferry service between the daily time of 7:00 am to 10:00 pm in the first three months of the initial operation. The frequency of the ferry trips would then be gradually adjusted to one trip for every half hour. TurboJET has also noted that there will be a shuttling service available at the Tuen Mun Ferry Pier for passengers that are departing for Hong Kong International Airport from Macau. Business Daily has asked Shun Tak – China Travel of the proposed fares for the Macau – Tuen Mun
route, but did not receive a reply by the time the story went to press. By the local regulations, ferry service operators have to announce the fares at least five days before they are selling the ferry tickets for the route, Marine and Water Bureau of Macau explained. The bureau also told Business Daily that it has already approved Shun Tak – China Travel to run the Macau – Tuen Mun route in October last year. Hongkong Macao Hydrofoil Company Ltd, a subsidiary of the shipping and property conglomerate Shun Tak Group, has signed a
tenancy agreement with the Hong Kong government for the Tuen Mun Ferry Terminal in October last year. The tenancy, which commenced on November 16, will last for seven years with a monthly rent of HK$4.68 million. Under the agreement, Hongkong Macao Hydrofoil will use the Tuen Mun Ferry Terminal to operate a minimum of 14 round trips between the Tuen Mun Ferry Terminal and Macau every week. The company can also roll out ferry services from Hong Kong to Mainland Chinese cities in the Pearl River Delta. S.L.
4 | Business Daily
January 5, 2016
Macau Chou Kam Chon new vice head of SAFP Former deputy director of Legal Affairs Bureau, Chou Kam Chon, officially assumed his new position as a deputy director of the Public Administration and Civil Service Bureau (SAFP) yesterday. The term of the official, started from January 1 this year, will last for two years. His inauguration ceremony was hosted by the Secretary for Public Administration and Justice Sonia Chan Hoi Fan yesterday. Besides Mr. Chou, the government department has had another deputy director, Joana Maria Noronha. Mr. Chou had been the vice head of Legal Affairs Bureau since 2011.
Taiwanese parliament VP Hung Hsiu-chu campaigns for ruling party’s votes in SARs
V
ice-president of Taiwanese parliament Ms Hung Hsiuchu has visited Hong Kong and Macau in the past two days campaigning for voters’ support for the ruling Nationalist chairman Eric Chu for the upcoming presidential election on January 16, saying that only
Taiwan’s vote for the Nationalist party will help stabilise cross-strait relations. Upon arriving in Macau yesterday, Ms Hung, who said she was speaking as a consultant of Chu’s campaign headquarters, acknowledged to media that the ruling Nationalist party was facing a “critical prospect” for
the upcoming presidential election. Taiwan votes for a new president and parliament on January 16. People have not been happy with the Nationalist performance, but the party has the capacity to reflect on why it has lost popular support, Ms Hung stressed yesterday.
Prior to her Macau visit, Hung has also sought Taiwanese voters’ support in a campaign event in Hong Kong on Sunday, an occasion where she stressed that voting for the Nationalist party would help stabilise relations between Taiwan and China. Hung, the incumbent vicepresident of Taiwan’s parliament Legislative Yuan, was replaced by Eric Chu as the presidential candidate for the Nationalist party (or known as Kuomintang) following an emergency party meeting in October last year. Eric Chu is one of three presidential contenders, who also include the opposition Democratic Progressive Party (DPP) chairwoman Tsai Ingwen and chairman of the People First Party James Soong. In a televised debate amongst the presidential candidates on Saturday, Tsai said the DPP, which leans toward independence for Taiwan, hopes to continue the “spirit” of using risk management and control to manage Taiwan’s economic and trade exchanges with China. Ms Tsai’s remarks came weeks after she called a plan by Chinese state-backed technology company Tsinghua Unigroup’s investing around US$2.6 billion in three Taiwanese chip companies a “huge threat” to the island’s semiconductor industry. Tsai’s party has historically favoured the island’s formal independence and says it believes only Taiwan’s people can decide its future. Beijing takes this to mean it wants independence.
Govt’: contingency plans for minimum wage law in property management sector
T
he SAR government says it has prepared contingency plans relating to implementation of the Law on Minimum Wage for Cleaning and Security Workers of the Property Management Industry, which came into force on 1 January, according to a press release issued by the Government Information Bureau. The Government has been giving great attention to the management of private buildings following the implementation of a minimum wage for cleaning
and security workers, which might lead to a salary increase for some of these workers. Property management companies have been urged to table as soon as possible any update in their 2016 charges in order that the owners of flats in such managed private buildings can discuss them. If such tabled proposals are not accepted by flat owners, they are advised either: to seek to negotiate relevant revisions in fees; or hire a new management company; or form a commission of
apartment owners to manage the building. A Housing Bureauadministered subsidy scheme for management of private residential property would provide support for things such as the holding of general meetings by apartment owners. In addition, the Housing Bureau would assist flat owners to form such a management commission if they decided to manage independently such private buildings. The Bureau would also, if required, provide
support for negotiations between those newly formed commissions and the former management companies, so as to ensure the buildings’ common areas remain under proper management. In cases where no management entity exists, flat owners are reminded they are collectively responsible for waste management and the provision of water and electricity in common areas of the building. The Environmental Protection Bureau and the Civic and Municipal Affairs Bureau
S.L. with Reuters
would allocate more recycling facilities and waste removal services in the vicinity of such buildings to meet temporarily their management needs. The police authorities are also paying close attention to the risk of crime or of accidents in any private buildings lacking security staff. The Law on Minimum Wage for Cleaning and Security Workers of the Property Management Industry was enacted by the Legislative Assembly on 3 July, 2015. It sets the hourly minimum wage for cleaners and security workers at 30 patacas; and their daily and monthly salary at MOP240 and MOP6,240 respectively. The Law aims to provide better protection for low-income workers, thus enhancing their quality of life.
Business Daily | 5
January 5, 2016
Macau
Casinos gain on better-than-expected December revenue Analyst predicts an even tougher time for VIP segment in 2016, while being more upbeat for mass market gambling
M
acau casino shares mostly rose in Hong Kong trading after the world’s largest center of gambling reported gaming revenue for December that was better than most analysts’ expectations. Gross gaming revenue fell 21.2 per cent in December for a 19th straight month of declines, while representing the smallest year-on-year fall since last January. The result was better than most market expectations of a 20 per cent to 28 per cent decline, according to DS Kim, an analyst at JPMorgan Chase & Co. Galaxy Entertainment Group Ltd. rose as much as 3.5 per cent to HK$25.30, the highest intraday level in almost two months, while Sands China Ltd. climbed as much as 2.5 per cent. MGM China Holdings Ltd. and Wynn Macau Ltd. posted small gains, while SJM Holdings Ltd. fell 1.5 per cent. The benchmark Hang Seng Index fell 1.5 per cent as of 9:50 a.m. local time yesterday.
December figure was “about the best we could hope for in terms of finishing the year,” said Grant Govertsen, an analyst with Union Gaming Group. The last two weeks of the year were better than industry expectations including for the mass market and VIP segments, he said, citing conversations with casino industry insiders.
Further impact
For the full year, gross gaming revenue fell 34.3 per cent to MOP231 billion (US$29 billion), compared with the median estimate of a 35 per cent decline from nine analysts surveyed by Bloomberg, which ranged from 34 per cent to 36 per cent. Macau’s six gambling houses have seen about US$45 billion in market value wiped out this year amid a free-fall in casino receipts, as China’s corruption crackdown scared off high-stake players or VIP players and a slowing economy hurt massmarket gambling. Stricter government
policies and key personnel changes, including a new regulator and adviser to oversee gambling, could further impact the hard-hit industry.
Our estimates contemplate continued demand weakness, which will likely be exacerbated by pressures on the regulatory front Grant Govertsen, analyst with Union Gaming Group
Even tougher
Still, Govertsen said VIP will face an even tougher 2016 than 2015 and is forecasting a VIP gross gaming revenue decline of 12 per cent. “Our estimates contemplate continued demand weakness, which will likely be exacerbated by pressures on the regulatory front,” he said, referring to possible tougher restrictions on smoking and junkets, as well as liquidity concern in the industry. Macau’s casino industry, which raked in gambling revenue about seven times more than the Las Vegas Strip in 2014, has seen its lead on the U.S. casino district narrow to about 4.6 times in the first 11 months of last year amid the slump. Bloomberg
6 | Business Daily
January 5, 2016
Gaming Imperial Pacific VIP rolling chips reach US$1.44 bln in Saipan Hong Kong-listed casino operator Imperial Pacific International Holdings Ltd generated US$1.44 billion (MOP11.52 billion) of VIP table games rolling from its ‘temporary casino’ on the island of Saipan last month, it told Hong Kong Stock Exchange yesterday. Compared to US$1.63 billion of VIP rolling chips earned in November 2015, the amount represents a decline of 11.7 per cent. The ‘temporary casino’ of the operator, soft opened in July last year, was only officially launched on November 27. Nevertheless, its VIP gaming operation started to run from November 1 last year. The casino property has some 45 gaming tables and 106 electronic gaming machines.
Paradise Entertainment said it could slip into red for 2015
G
aming equipment maker Paradise Entertainment Ltd has warned that the company is likely to record a loss for the financial year ending December 31, 2015 due to a decrease in gross gaming revenue derived from its
casino management business, as well as higher operating expenses, especially on labour. The company has indicated this in a profit warning notice filed to the Hong Kong stock exchange last week. Apart from manufacturing and selling electronic gaming
machines under the brand of LT Game, Paradise Entertainment also provided gaming management services at Casino Kam Pek Paradise, Casino Waldo, Casino Macau Jockey Club and a multi-live table game area in Casino Lisboa. For the first half of 2015,
Paradise Entertainment has made a net loss of nearly HK$23.9 million (US$3.08 million). The company has already seen its profit slide by 35.9 percent year-on-year to HK$66.54 million in the financial year of 2014. In its latest filing to the
Genting HK acquires remaining shares in German shipbuilding firm
G
enting Hong Kong Ltd, an operator of casino cruise ships and also a gaming operator in the Philippines, said on Sunday that it has exercised a call option to purchase the entire interest in a German shipbuilding firm. In an announcement filed to the Hong Kong bourse on Sunday, Genting Hong Kong said it has exercised a call option of purchasing the remaining 30 percent of shares in German shipyard owner Lloyd Werft Bremerhaven AG (LWB), as well as a remaining 50
percent of shares in German company Lloyd Investitionsund Verwaltungs GmbH (LIV), which provides letting
and leasing services for real estate and operating facilities. The exercise of this call option is worth a total
consideration of 16.47 million euros (HK$140.9 million), according to Genting Hong Kong’s filing. The purchase is funded by the internal resources of Genting Hong Kong and its subsidiaries. Genting Hong Kong has in November completed the acquisition of 70 percent of shares in LWB and 50 percent of shares in LIV at a consideration of 17.5 million euros, a transaction that the company has noted, in a previous filing, that would aid its fleet expansion and brand development plan. The sellers of the deal are
bourse last week, Paradise Entertainment said it would optimise its cost structure to “remain lean” in Macau. The company also expected to ramp-up its overseas gaming system market with machine installations this year. S.L.
German companies Petram Beteiligungs GmbH, Ehlerding Beteiligungs GmbH and BLG Logistics Group AG and Co. In Genting Hong Kong’s latest filing, the company said the acquisition of the entire interest in the German firms “will place the company in a better position to leverage on the technical know-how and expertise of the shipyard, thus allowing the company to expedite its business plans through timely and priority access to newbuilding slots at competitive pricing”. Genting Hong Kong, a member of the Malaysian travel and resort conglomerate Genting Berhad, is known for its operation of the Star Cruises and Norwegian Cruise Line, and is a substantial shareholder of Filipino casino Resorts World Manila. S.L.
Business Daily | 7
January 5, 2016
Hong Kong
Hong Kong Nov retail sales dive, string of falls the longest in 13 yrs This slump was mainly dragged by a further slowdown in inbound tourism
T
he value of Hong Kong retail sales fell for a ninth consecutive month in November, the longest period of decline in 13 years, hit by a slide in the number of Chinese tourists coming to the city and by weak consumer spending. Retail sales plunged 7.8 per cent from a year earlier, the biggest percentage drop since January 2015, to HK$38.1 billion (US$4.92 billion). In volume terms, November sales fell 6.0 per cent. "This was mainly dragged by the further slowdown in inbound tourism," the government said in a statement. "The increased downside risks to economic outlook and recent stock market corrections might also have resulted in more cautious local consumption sentiment." Retail sales will likely be "still constrained" by weak tourism, it said, adding that local sentiment could be impacted by the uncertain economic outlook following the U.S. interest rate hike. Hong Kong is bracing for greater economic challenges as the prospect of a cycle of interest rate rises drives fears of capital outflows that could pressure the Asian financial hub. The economy is struggling as fewer
KEY POINTS Longest period of decline since 2002 Govt says weak inbound tourism hits retail sector Nov sales of jewellery, watches down 20.6 pct y/y Nov mainland tourist arrivals fall 15.5 pct cash-rich mainland tourists stream across the border on shopping sprees.
Expensive destination
The strong Hong Kong dollar, which is pegged to the U.S. dollar, has made the city an expensive destination and China's cash-rich tourists are heading for more exotic destinations. Total tourist arrivals dropped 10.4 per cent in November from a year ago, the sixth consecutive month of decline. Mainland visitors, who accounted for 74 per cent of November visitors, fell 15.5 per cent
in the month, the biggest percentage drop so far in 2015, according to Hong Kong Tourism Board data. December numbers are not available yet. Hong Kong's comparatively high rents and wages also hurt companies as fewer mainland Chinese tourists have come to the city to buy handbags, watches and designer clothing. November sales of jewellery, watches, clocks and valuable gifts in value terms were down 20.6 per cent, a 15th consecutive month of decline. There was a 17 per cent drop
in October and 22.9 per cent fall in September. Department store sales slid an annual 4.8 per cent, against a 2.2 per cent drop in previous month, while clothing and footwear fell 8.5 per cent, against a 4.6 per cent slide in October. Last month, Italian fashion house Prada SpA reported a 38 per cent fall in August-October profit, due to slumping sales in Greater China while a weaker Chinese yuan discouraged mainland tourist spending in Hong Kong. Reuters
8 | Business Daily
January 5, 2016
Greater China
Markets halt trading after 7% tumble
Under the circuit breaker rules finalized last month, a move of 5 percent in the CSI 300 halt for stocks, options and index futures, while a move of 7 percent closes the market fo
T
he worst-ever start to a year for Chinese shares triggered a trading halt in more than US$7 trillion of equities, futures and options, putting the nation’s new market circuit breakers to the test on their first day.
Trading was halted at about 1:34 p.m. local time yesterday after the CSI 300 Index dropped 7 percent, according to data compiled by Bloomberg. An earlier 15-minute suspension at the 5
percent level failed to stop the retreat, with shares extending losses as soon as the market re-opened. Traders said the halts took effect as anticipated without any major technical problems.
The world’s second-largest stock market began the year on a down note after data showed manufacturing contracted for a fifth straight month and investors anticipated the end of a ban on share sales by major
Chinese investors look at a screen showing stock movements at a stock brokerage house in Beijing yesterday
December factory activity shrinks for 10th month-Caixin PMI The government is expected to increase its budget deficit to about 3 percent of gross domestic product in 2016 to help boost activity
C
hina’s factory activity contracted for the 10th straight month in December, and at a sharper pace than in November, a private survey showed, dampening hopes that the world’s second-largest economy will enter 2016 on steadier footing. The Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) slipped to 48.2 in December, below market expectations for a slight pick-up to 49.0 and down from November’s 48.6. The reading was the lowest since September, remaining well below the 50-point level which demarcates
contraction from expansion on a monthly basis. The survey focuses more on small and medium-sized private firms. An official survey on Friday, which looks at larger state-owned companies, showed a fifth month of contraction though at a slightly more modest pace of 49.7. Both surveys pointed to a continued albeit gradual loss of momentum, not a sharper deterioration or “hard landing” which has been feared by global investors. Plus, a stronger services sector is cushioning some of the downdraft from factories. Still, economists expect more
interest rate cuts, reductions in banks’ reserve requirements and other stimulus in 2016 as the economy has been unusually slow to respond to a year-long flurry of support measures, suggesting it is facing deeper-rooted cyclical and structural challenges than in the past. The government is expected to increase its budget deficit to about 3 percent of gross domestic product in 2016 to help boost activity. Weighed down by weak demand at home and abroad, factory overcapacity and cooling investment, China is expected to post its weakest economic growth
KEY POINTS Factory activity contracts for 10th, pace of fall quickens Caixin factory PMI falls to 48.2 in Dec vs Nov’s 48.6 Output drops to 48.7 after neutral reading in Nov Employment contracts for 26th month
in 25 years in 2015, with growth seen cooling to around 7 percent from 7.3 percent in 2014. Some market watchers suspect real growth is actually much lower than official data suggest. “We are reviewing our 7.0 percent forecast for fourth-quarter 2015 GDP growth for downward revision,” ING said in a research note yesterday ahead of the PMI survey. “Absent vibrant external demand, we think it’s a consensus view that China’s GDP growth is poised to slow further to ‘about’ 6.5 percent in 2016.” Beijing’s progress on reforms may also be a key risk factor this year, after its surprise yuan devaluation in August and heavy handed stock market rescue in summer raised questions about its ability to enact market liberalisation steps that are a centrepiece of its economic agenda. After picking up for the first time in seven months in November, the Caixin PMI output sub-index dropped to 48.7 in December, its lowest in three months, with anecdotal evidence suggesting firms had cut output due to weaker demand. As companies cut costs and downsized, employment was also hit, falling to 47.3 in December, the 26th month in a row that employment has contracted. New export orders contracted after two months of expansion, pointing to a weak start in 2016. Total new orders shrank for a sixth month, highlighting weak domestic demand as well. Top leaders at the recent annual Central Economic Work Conference pledged to make monetary policy more flexible and expand the budget deficit in 2016 to support the economy as they seek to push “supply-side reform”. Reuters
Business Daily | 9
January 5, 2016
Greater China
triggers a 15-minute or the rest of the day stakeholders at the end of this week. Chinese policy makers, who went to unprecedented lengths to prop up stock prices during a summer rout, are trying to prevent financial-market volatility from weighing on economy
Some investors may have been unwinding their positions when trading volumes were light. That could have exaggerated the moves. The market has been very difficult to predict Khiem Do, head of multi‑asset strategy, Baring Asset Management, Hong Kong
set to grow at its weakest annual pace since 1990. “This is a pretty dramatic start of trading for the year,” said Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management, which manages about US$45 billion.
Ripple effect
Yesterday’s selloff rippled through regional equity markets, with Asian shares and U.S. equity-index futures extending losses. Chinese stocks’ influence on global markets has increased after the nation’s US$5 trillion equity market rout, from mid-June through August, rattled investor confidence in the world’s second-largest economy. Brokerages were prepared for the circuit breakers after conducting tests on the new mechanism last month, according to William Wong, the head of sales trading at Shenwan Hongyuan Group Co. in Hong Kong. About 595 billion yuan (US$89.9 billion) of shares changed hands on mainland exchanges before the suspension, versus a full-day average of about 1 trillion yuan over the past year, according to data compiled by Bloomberg.
Herd behaviour
Under the circuit breaker rules finalized last month, a move of 5 percent in the CSI 300 triggers a 15-minute halt for stocks, options and index futures, while a move of 7 percent closes the market for the rest of the day. The CSI 300, comprised of large-capitalization companies listed in Shanghai and Shenzhen, fell as much as 7.02 percent before trading was suspended. The Shanghai Composite Index lost 6.9 percent. Individual investors in China, who drive more than 80 percent
of trading, may have rushed to sell after the first circuit breaker took effect to avoid getting stuck in positions by the 7 percent suspension, according to Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong. It took just seven minutes for the second halt to come into effect as shares tumbled after the first suspension ended, according to data compiled by Bloomberg.
Vulnerable stocks
Goldman Sachs Group Inc. estimates the sales ban -- imposed at the height of last year’s equity rout -- kept US$185 billion of shares off the market. Technology companies are the most vulnerable to a sell-off once the restriction is removed after they led a rebound since the benchmark index’s August low, according to Baptized Capital. The China Securities Regulatory Commission announced July 8 that investors with holdings exceeding 5 percent, along with corporate executives and directors, would be prohibited from selling stakes for six months. The rule, which followed the suspension of initial public offerings and curbs on short-selling, was intended to stabilize capital markets amid an “unreasonable plunge” in share prices, according to the securities regulator. The CSRC hasn’t yet specified whether the ban will be lifted. “There will be greater pressure from institutional investors once the ban on share sales is lifted,” Pang said. The government probably didn’t intervene to prop up shares today “as it needs to see how the market will cope with new changes in trading system.” Bloomberg News
New World said to plan buyout bid for US$7 billion Mainland unit
N
ew World Development Co., controlled by the family of 90-year-old Hong Kong billionaire Cheng Yu-tung, is planning an offer to take its US$7 billion China unit private, a person with knowledge of the matter said. New World Development could make an announcement as soon as this week on a bid to buy the shares it doesn’t already own in New World China Land Ltd., the person said, asking not to be identified as the information is private. The stock not already controlled by Cheng’s companies is worth about US$2.1 billion based on New World China’s last closing price, data compiled by Bloomberg show. Minority investors, helped by a regulation giving each investor the same voting right, rejected a 2014 attempt by New World Development to take the China unit private for US$2.4 billion, forcing Cheng to wait at least 12 months for another try.
Hong Kong billionaire Cheng Yu-tung
New World Development, holding about HK$31 billion (US$4 billion) in cash as of June 30, has more than enough money for the offer this time after a rights issue and last year’s strong sales, according to Bocom International Holdings Co.
Evergrande deals
Shares of New World Development and New World China were halted from trading yesterday, pending an announcement related to a takeover or merger, according to separate statements to the Hong Kong stock exchange. The China unit closed on December 31 at HK$6.21, or about 8.7 percent lower than the 2014 buyout offer of HK$6.80 per share. Any offer would come after New World China agreed last month to sell 7.3 billion yuan (US$1.1 billion) of properties in two Chinese cities to Evergrande Real Estate Group Ltd., controlled by billionaire Hui Ka-yan.
Taiwan’s exports in December likely fell for an 11th straight month, according to the median forecasts of 12 analysts polled by Reuters. Taiwan is one of Asia’s major exporters, especially of technology goods, and its export trends are a key gauge of global demand for tech gadgets worldwide. Exports in November slumped by a worse-than-expected 16.9 percent year-on-year, the biggest annual fall for any month since August 2009. The inflation rate likely dipped to 0.49 percent in December from a year earlier, compared with 0.53 percent in November.
Express deliveries booming in 2015 China’s express delivery sector has grown steadily in 2015 despite a slowing economy, data showed yesterday. In 2015, businesses made 20.65 billion deliveries, 48 percent up from 2014, according to the State Post Bureau (SPB). The total revenue of the courier market hit 276 billion yuan (US$42.44 billion) in 2015, up 35 percent year on year, the SPB data showed. Over the past five years, the amount of express packages and the business revenue have increased 7.8 times and 3.8 times respectively.
29,000 officials punished in 2015 frugality campaign
Shares of New World Development and New World China were halted from trading in Hong Kong market Vinicy Chan
Taiwan exports seen falling for 11th month
New World Development and companies associated with Cheng already own about 70 percent of New World China, exchange filings show. A representative for New World Development said she couldn’t immediately comment, while a spokeswoman for New World China declined to comment.
Rearranging holdings
The 2014 proposal was rejected by New World China shareholders due to a regulation known as the “headcount test.” The China unit, which listed on the Hong Kong stock exchange in 1999 at HK$9.50 a share, has residential, retail, office, and hotel projects in more than 20 Chinese cities, including Beijing and Shanghai, according to its website. Cheng transferred his shares in six Hong Kong-listed companies valued at about HK$3.8 billion to a family holding firm, almost four years after announcing retirement from his main business, according to company filings last month. Bloomberg News
The Communist Party of China (CPC)’s top anti-graft body yesterday said some 29,000 officials were reprimanded for violating austerity rules in the first 11 months of 2015, bringing the total number of those punished since late 2012 to more than 130,000. Those punished from January to November last year were involved in over 32,000 cases, the CPC Central Commission for Discipline Inspection (CCDI) said in a report posted on its website. The figures represent a significant drop from the year before, when more than 71,000 officials were reprimanded in more than 53,000 cases.
Environmental inspection in northern province starts A one-month environmental protection inspection of north China’s Hebei Province began yesterday, at the behest of central authorities. The inspection will continue till Feb. 4, examining implementation of Party and state environment policy by the provincial Communist Party of China (CPC) committee and local government, including their handling of environmental problems and what they are doing to improve the situation. The inspection team has set up a hotline and a mail box for public consultation. Inspectors nationwide are focused on how provincial-level Party committees and governments carry out their environmental duties, according to the Ministry of Environment.
10 | Business Daily
January 5, 2016
Greater China
Beijing challenge: getting poor migrant workers to buy vacant homes Senior leaders have said China will step up efforts to tackle property inventories Xiaoyi Shao and Umesh Desai
R
attled by the potential economic fallout from millions of unsold homes, China wants migrant workers to buy properties in smaller cities and ease the burden on a real estate sector that makes up about 15 percent of the country's economic growth. The move underscores Beijing's concerns over a stock of some 1 billion square metres of vacant housing around 13 million homes or enough to house the population of Australia - and the broader knock-on effect of any defaults by struggling property developers as the world's secondlargest economy grows at its slowest pace in a quarter of a century. While encouraging migrants to buy homes in lower-tier cities seems like a remedy to boost demand, making money available to them will prove tougher. Many of China's more than 270 million migrants earn below 3,000 yuan (US$462) a month, less than half the cost per square metre needed for a home in a lower-tier city such as Changzhou, in eastern Jiangsu province. With low incomes and few assets, migrant labourers are not obviously attractive loan candidates, and the authorities will need to find property developers willing to sell homes at a discount and local governments ready to subsidize purchases. "Conditions are not mature for migrant workers to buy unsold homes. You can't count on a certificate for housing ownership to resolve
everything," said Jason Hu, head of research at Chinese property consultant Holdways in Beijing. "Everyone wants to settle in the city, but where's the money?" said Hu, adding other issues need to be resolved such as giving migrant workers equal access to social security and public services.
Distant dream
Senior leaders have said China will step up efforts to tackle property inventories this year, including helping migrant workers buy or rent homes in cities, and encouraging developers to cut prices. Authorities aim to get 100 million migrants to settle in cities by 2020, and officials in small-and mediumsized cities have pledged to give permanent resident status, or hukou, to more rural people, although access to welfare remains a concern. Another potential obstacle is that more than 70 percent of migrant workers already living in cities prefer to rent, according to National Health and Family Planning Commission data. "If I can earn enough I'd go back to the city near my hometown and buy a home there," said a restaurant worker in Beijing who gave just his surname of Long. "Prices here are too high, it's impossible for me to settle here," added the 26-year-old who left his village in central Hunan province five years ago. With home ownership still a
distant dream for most low-income migrant workers, the challenge is to make homes more affordable. "The hurdle is very clear: how to encourage the low income group to purchase property - to improve affordability," said Zhou Hao, economist at Commerzbank in Singapore. In a bid to prevent struggling developers from defaulting if they have to cut prices - and the impact this could have on the underground financial system that funds many of them - local authorities have launched a plan to pilot rural land collateral loans in 291 selected counties.
Urbanisation
It is not yet clear whether property developers and local governments -
KEY POINTS Vast stock of unsold homes Beijing to encourage migrant workers to buy Key will be to make homes affordable to low-income labour Pilot plan for rural land collateral loans
which earn much of their revenue through land sales - will be willing to support Beijing's attempts to clear bloated housing inventory. "I'm not sure what the government could do to 'encourage price cuts' unless it's going to subsidize them," said Yin Chin Cheong, a Singaporebased analyst at CreditSights. Some developers welcomed the move, saying the proposal is part and parcel of China's urbanisation process. "It would stimulate demand for housing. But these are not temporary measures to run down inventory, they are part of a long-term urbanisation," said Fan Xiaochong, vice president of Sunshine 100, a developer focused on second- and third-tier cities. Beijing also wants low-income city residents and those living in dilapidated housing to buy cheaper unsold homes. While parallels have been drawn with the U.S. subprime crisis, which was also preceded by excess housing inventory, risky mortgages and aggressive lending, some experts shrugged off such a scenario. "Mortgage penetration levels are lower and down-payments are higher compared with the U.S., and household debt is much lower. So it's unlikely to snowball into a sub-prime like situation," said Christopher Yip, Hong Kong-based analyst at Standard & Poor's. Reuters
Business Daily | 11
January 5, 2016
Asia
Singapore’s economic growth beats forecasts with headwinds ahead GDP grew 2 percent in the fourth quarter from a year earlier, compared with a median survey estimate for 1.2 percent Sharon Chen
S
ingapore provided a report card on its economy that beat analyst forecasts in one of Asia’s earliest growth estimates, as improving services and construction countered faltering exports. It may be too early to celebrate. Gross domestic product rose an annualized 5.7 percent in the three months to December 31 from the previous quarter, when it expanded a revised 1.7 percent, the trade ministry said in an advance estimate yesterday. The median of nine estimates in a Bloomberg News survey was for a 1 percent expansion. The economy grew 2.1 percent last year, the slowest pace in six years. Singapore’s exportoriented economy, always vulnerable to global swings in demand, reflects the threat China’s slowdown poses for the region. The island’s largest export destination is tipped to expand at the slowest pace in 25 years, and the first Chinese economic reports of 2016 signalled manufacturing weakened for a fifth straight month. Domestically, home prices posted their longest losing streak in 17 years last quarter and a labour crunch could cap further gains in services. "There could be high odds of a downward revision come February," said Weiwen Ng, a Singapore-based economist at Australia & New Zealand Banking Group Ltd.,
referring to final GDP figures due next month. "Given that the outperformance for this quarter happens to be in the services sector, it could be rather transient. Singapore remains confronted with twin headwinds externally and domestically."
Advance Figures
Yesterday’s data are advance estimates computed largely from figures in the first two months of the quarter and may be revised later, according to the trade ministry. There has been a difference of 4.3 percentage points on average between the advance and final readings of Singapore’s GDP growth since the start of 2010, based on annualized quarter- onquarter data compiled by Bloomberg. The difference is a narrower 1 percentage point for U.S. GDP and 1.6 percentage points for Japan’s. Singapore faces challenges including fiercer competition in a globalized world, Prime Minister Lee Hsien Loong said in his New Year message on December 31. The economy is "slowing down and undergoing transition," he said. GDP grew 2 percent in the fourth quarter from a year earlier, compared with a median survey estimate for 1.2 percent.
Services support
Singapore’s manufacturing fell 3.1 percent last quarter from the previous three
months, the trade ministry said. The services industry grew 6.5 percent in the same period, while construction expanded 7 percent. The Southeast Asian nation has relied on its position as an Asian financial hub to bolster services as overseas demand for its goods faltered. While industrial production fell for a 10th straight month in November, retail sales rose for a ninth month in October. “Once again, the service sector is in the driving seat,” Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, wrote in a note. “However, while this sector is known to be a resilient and stable engine of growth for Singapore, performance of the sector going forward will
continue to be affected by the existing domestic manpower crunch and drag from the manufacturing sector.”
Easing expectations
The Monetary Authority of Singapore eased its exchange rate policy for a second time last year in October, saying weakening prospects for global growth would pose "headwinds" in the coming months. Singapore’s consumer prices fell in November from a year earlier for a 13th straight month in the longest streak of declines as a renewed slump in oil prices threatens to delay a recovery in inflation. The island’s home prices dropped for a ninth quarter in the three months ended
December 31 as tighter mortgage curbs cooled demand in Asia’s secondmost expensive housing market. An index tracking private residential prices fell 0.5 percent last quarter from the previous period, according to preliminary data released yesterday, taking the annual decline to 3.7 percent. “I think the bar for further easing has been set quite high by MAS," said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. “However, if I’m right that the headwinds to growth will intensify as we move into 2016, I think market expectations for easing will rise as we move into the next few months.” Bloomberg News
Samsung Electronics warns of tough 2016 amid Q4 outlook concerns CEO Kwon also warned of greater competition in the firm's main businesses
S
outh Korean tech giant Samsung Electronics Co Ltd said it expects a difficult business environment in 2016 due to weak global economic conditions and heightened competition in key businesses including memory chips and smartphones. In a statement yesterday, Samsung said Chief Executive Kwon Oh-hyun told employees in a New Year's address that low global growth will persist this year, with greater uncertainty stemming from issues such as financial risks for emerging countries. The comments, which didn't disclose specific forecasts, come
KEY POINTS CEO warns staff of weak global growth in New Year message Shares sink to 3-month low on Q4 profit concerns Firm expected to issue Oct-Dec earnings guidance on Friday
amid growing concerns that OctoberDecember results for the world's biggest maker of smartphones and chips may be weaker than previously expected. "Negative impact from weak demand and falling sales prices for semiconductor and liquid crystal display industries was likely bigger than initially anticipated," brokerage Korea Investment said in a report issued separately yesterday. Korea Investment lowered its estimate for Samsung's fourth-quarter operating profit to 6.4 trillion won (US$5.41 billion) from 6.8 trillion
won previously. The mean estimate of 36 analysts' forecasts compiled from a survey by Thomson Reuters I/B/E/S is for operating profit of 6.8 trillion won, 8.1 percent lower than the 7.4 trillion won booked in the third quarter. Samsung CEO Kwon also warned of greater competition in the firm's main businesses, Samsung said in its statement, without offering detailed financial forecasts. The firm is expected to issue official earnings guidance for the October-December period on Friday. It already said in late October that operating profit for the quarter will be lower than July-September earnings, citing seasonally weaker demand for its component businesses. Reuters
12 | Business Daily
January 5, 2016
Asia
Japan leadership pledges bolder steps to hit price growth target Central bank now expects to meet its 2 percent price target some time around the second half of fiscal 2016 Stanley White and Tetsushi Kajimoto
J
apan’s political and economic leadership announced a New Year resolve yesterday to stoke consumer prices, a campaign that could fuel expectations of yet more monetary stimulus to meet the central bank’s 2 percent price target. Bank of Japan (BOJ) Governor Haruhiko Kuroda said he was ready to take bolder steps to accelerate inflation, joining in with Prime Minister Shinzo Abe, who said yesterday the government would work with the BOJ to eliminate the risk of a return to deflation. Finance Minister Taro Aso joined the premier and Kuroda in the new year drive to press their economic agenda, stressing that Japan was shaking off deflation three years after Abe swept to power pledging to revive the economy with his “Abenomics” stimulus policies. “As I’ve always said, we are prepared to take even bolder steps if we judge necessary,” Kuroda said. “We will do whatever it takes, and I want to strongly say we will absolutely meet our 2 percent price target” Their comments come as Japan faces a commodities sell-off that may
KEY POINTS Kuroda signals willingness to act if needed PM Abe also says govt will work with BOJ to end deflation BOJ price target looks distant due to oil slump Lingering speculation about whether BOJ will ease again Finmin Aso sees Japan exiting “deflationary slump” force the BOJ to yet again lower its consumer price forecasts when it meets later this month, which would bolster the argument that extra stimulus is needed to prevent the price trend from worsening. Since Kuroda launched quantitative easing in April 2013
the BOJ has three times extended the timing by when it would achieve its price target. The BOJ now expects to meet its 2 percent inflation target some time around the second half of fiscal 2016, but even this time frame may not survive the BOJ’s review of its long-term forecasts at a meeting on January 28-29. Japan has been in grinding deflation since the late 1990s after a property bubble burst earlier that decade. Massive pump priming by the government and monetary stimulus by the central bank have failed to reflate the economy or generate much growth as Japan suffered two socalled “lost decades”.
No longer in deflation
Abe said whether inflation accelerates depends on major capital expenditure and wage growth, maintaining his moral suasion on companies to invest more to sustain a virtuous cycle of consumption and growth. “We are still half-way but we have created a situation that is no longer seen as deflation,” Abe told a news conference.
When later asked whether such statement may be taken as hasty judgment on deflation, Abe said Japan has still not completely conquered deflation and that the government and the BOJ will work as one to defeat deflation. Aso echoed Abe’s view, saying “Japan is exiting the deflationary slump.” “We’ll ensure steps towards achieving a strong economy while responding to downside economic risks as appropriate,” Aso told parliament as he presented Abe’s supplementary budget plan to add extra economic stimulus. Japan’s core consumer inflation was 0.1 percent in the year to November, rising for the first time in three months, underlining Japan’s uphill struggle to foster price growth in the face of tumbling oil prices. A separate BOJ index that excludes oil and fresh food - but includes processed food prices - showed consumer prices rose 1.2 percent in the year to November, an outcome some economists say is still too far away from the BOJ’s 2 percent price target to warrant much optimism.
Lowest Indonesia inflation in 6 years widens room for a rate-cut The December inflation rate will increase the chance that central bank will reduce its benchmark rate to lift growth Nilufar Rizki and Hidayat Setiaji
I
ndonesia’s annual inflation rate cooled to the lowest in six years in December, which might pave the way for the central bank to cut a benchmark rate held at 7.50 percent since February 2015. High inflation has been one of the issues keeping Bank Indonesia (BI) from cutting its policy rates. Annual inflation topped 8 percent in December 2014, after a fuel price hike, and stayed above 6 percent most of 2015. The rate cooled to 3.35
percent in December, Indonesia’s statistics bureau said on Monday, from 4.89 percent in November. But it was higher than analysts’ forecast of 3.00 percent in a Reuters poll.
The December inflation rate will increase the chance that BI will reduce its benchmark rate to lift growth, which has fallen to its lowest level since 2009. BI’s January meeting is scheduled tentatively for January 13 or 14, according to its website. “There is indeed room for BI to cut rates,” said OCBC economist Wellian Wiranto in Singapore. “As long as global market sentiment remains relatively calm, we see it
cutting by 25 basis points this month.” On December 17, when BI had a meeting right after the Federal Reserve raised U.S. interest rates, it said the room to ease monetary policy was “more open”.
Rupiah holds the key
BI officials cited easing inflation, a shrinking current account deficit and less uncertainty in global markets after the first Fed hike in nearly a decade as
Reuters
factors improving the chance of easing. But they would not confirm when the rate would be cut. The key is the rupiah, which was often fragile during 2015. In the last two weeks of the year, after the Fed hike, it gained about 2 percent. Gundy Cahyadi, economist at DBS, think BI will wait longer before cutting rates. “BI remains focused on managing volatility of the rupiah. Despite the rupiah recouping some grounds at the end of 2015, the unit remains at the mercy of the broad USD tone for now.” Even with eased inflation, “we don’t think that BI will jump the gun and rush to lower its policy rate as yet.” he said. The central bank has relaxed some lending rules in 2015 in an effort to loosen monetary policy without moving key rates and jump start economic growth, expected at the slowest since 2009 for full-year 2015. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 editor editor@macaubusinessdaily.com newsroom newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
Business Daily | 13
January 5, 2016
Asia Thailand facing disinflation fight on oil, weak domestic demand
Indonesia’s tourist arrivals rise Indonesia’s foreign tourist arrivals rose 1.70 percent in November from a year earlier, compared to a 2.11 percent annual increase in October, the statistics bureau said yesterday. There were 777,500 tourists visiting Indonesia in November, down from 825,800 in October, the bureau said, because volcanic eruptions disrupted some flight schedules. In order to attract more tourists, President Joko Widodo has removed visa requirements for visitors from 84 countries making a short visit to Southeast Asia’s largest economy, and the government is working to give visa-free entry to more nationalities.
The country relies on oil imports for more than 80 percent of its energy needs Suttinee Yuvejwattana and Yumi Teso
T
hailand’s government warned that consumer prices may not turn positive as early as expected this year after slumping crude oil costs pushed down the country’s inflation index for a 12th straight month in December. An index of consumer prices fell 0.85 percent last month from a year earlier, exceeding the 0.76 percent drop expected by economists, according to data released Monday by the Ministry of Commerce in Nonthaburi outside Bangkok. “The oil price is a key risk factor for inflation,” Somkiat Triratpan, the ministry’s head of trade policy and strategy, said at a media briefing. “Inflation should be back to positive in 1Q, but there’s uncertainty because oil prices are lower than our estimate.” Crude oil futures slid 11 percent in December and some forecasters expect prices to fall as low as US$15 a barrel amid slowing economic growth in China. Thailand relies on oil imports for more than 80 percent of its energy needs, according to state-controlled PTT Exploration & Production Pcl. “Disinflationary pressures will
Hyundai see 2016 sales lagging auto industry growth
Warorot market in Chiang Mai
likely persist into early 2016 on account of structurally lower oil prices and soft domestic demand,” Weiwen Ng, a Singapore-based economist at Australia & New Zealand Banking Group Ltd. said Monday in an interview, adding that inflation should bottom out in Thailand in the coming months. Thailand’s core inflation, which excludes energy costs, fell to 0.68 percent in December from 0.88
percent in the previous month. In Indonesia, inflation slowed to 3.35 percent in December, the country’s statistics office said yesterday. That’s the lowest level since at least January 2010, according to data compiled by Bloomberg. Thai inflation should average 1 percent to 2 percent this year if oil prices range from US$48 to US$54 per barrel, the commerce ministry said. Bloomberg News
Vietnam changes dollar/ dong rate setting frequency
Pakistan PM embarks on 3-day visit to Sri Lanka
The dong fell 4.94 percent against the dollar last year on the interbank market Ho Binh Minh
V
ietnam allowed its currency to ease yesterday as it resumed a more flexible foreign exchange policy for interbank dollar/ dong transactions, a move that could trigger a gradual devaluation in the local currency. The State Bank of Vietnam (SBV) set the mid-point rate at 21,896 dong to the dollar, down from 21,890 dong it had kept unchanged since August 12, 2015, when it let the currency ease 1 percent. The SBV said it will set the midpoint rate on a daily basis to allow more flexibility. “With the new FX methodology, instead of one-off devaluations as seen in the past, we could see the central bank guiding dollar/dong gradually higher over time,” ANZ said in a report yesterday. V iet nam’s US $ 1 8 6 -billion economy, among Southeast Asia’s fastest growing economies, is driven by construction and manufacturing, dominated by textiles, footwear and electronics production for brands such as Samsung, Canon, Nike, Mango and Lacoste.
KEY POINTS Vietnam starts daily FX rate setting Step is in line with market expectations ANZ expects dong to fall 4 pct this year Trade deficit forecast at US$6 bln in 2016 The central bank lowered the midpoint rate three times in 2015, and widened the dollar/dong trading band to +/- 3 percent of the mid-point to protect exports from a surprise devaluation of the Chinese yuan. Exports last year grew just 8 percent, below the 10 percent growth target on falling global commodities prices including crude oil and coffee. By the end of 2015, the dong
Hyundai Motor and affiliate Kia Motors expect their vehicle sales to rise 1.5 percent this year, lagging industry growth forecasts, after missing their target in 2015 for the first time since the 2008 global financial crisis. The once out-performers in the global industry have been losing momentum in recent years, with demand slowing in China and other emerging markets, while Japanese and U.S. rivals making a comeback in the United States. The South Korean pair are expected to see China sales bounce back thanks to tax cuts on small cars this year.
had several times bottomed out as Vietnam faced the first trade deficit since 2012, estimated at $3.17 billion. The gap is forecast to jump to US$6 billion this year. ANZ said Vietnam’s lower foreign reserves will limit SBV’s ability to sell dollar when needed, thus raising “the risk of dong weakness especially in the near term”. It cited the International Monetary Fund’s estimate that the country had US$31 billion in foreign reserves as of September 2015, down from a government estimate of US$37 billion at the end of July. ANZ said it kept unchanged its forecast that the dong would depreciate 4 percent to 23,450 per dollar at the end of this year. The dong fell 4.94 percent against the dollar last year on the interbank market, faster than a decline of 1.38 percent the previous year, based on Reuters data. In December 2009, the SBV replaced the policy of adjusting the mid-point rate on daily basis by setting the rate for a longer period. Reuters
Prime Minister Nawaz Sharif embarked on a three-day official visit to Sri Lanka yesterday at the invitation of the President of Sri Lanka, state television said. During the visit, the prime minister will hold official talks with the President of Sri Lanka Maithripala Sirisena on bilateral matters. Both countries are to sign an agreement on countering money laundering and terrorism, the Pakistan High Commission in Colombo has said. The Pakistan High Commission said that several other bilateral instruments are envisaged to be signed during the visit.
South Korea to review safety of budget airlines South Korea’s transport ministry will carry out a safety review of all the country’s low-cost airlines, after an aircraft was forced to make an emergency return after taking off from the Philippines on Sunday. The Boeing 737-800 belonging to Jin Air, a budget airline operated by South Korea’s top carrier Korean Air, was carrying 163 passengers to Busan from Cebu, when it turned back shortly after take-off after a door was found to be leaking air. “All low-cost carriers will undergo an overall inspection of their safety management to prevent similar accidents,” the transport ministry said in a statement following the incident.
14 | Business Daily
January 5, 2016
International Euro-Area factories reach strongest growth in 20 months Manufacturing in the euro area accelerated at the fastest pace in 20 months in December as rising new orders propelled output. A Purchasing Managers’ Index for the industry rose to 53.2 from 52.8 in November, exceeding a December 16 estimate for an increase to 53.1, Markit Economics said yesterday. For the first time since April 2014, manufacturing expanded in all nations covered including Greece, according to the report. The economic recovery in the 19-nation euro area is picking up as unprecedented stimulus by the European Central Bank is reaching companies and households.
Throaty engines roar as Ferrari shares make Milan debut The sale aims to raise much-needed cash for Fiat Chrysler, to help it tackle its high debt level
Nokia bid for AlcatelLucent goes through France’s stock market regulatory body said yesterday that Finnish telecom group Nokia’s all-share offer for French-American rival Alcatel-Lucent had been successful. Nokia now holds around 76 percent of shares and voting rights in Alcatel, the French financial market authority, AMF, said in a provisional report. It said the “minimal condition” for Nokia to control at least 50 percent of shares and voting rights had been “satisfied”. “The offer therefore is proceeding positively,” the French regulator said, adding that its final report was due Tuesday at the latest.
Fidelity drops credit card partners Fidelity Investments said yesterday it is dropping long-time credit card partners American Express Co and Bank of America Corp, ending a 12-year partnership that has generated billions of dollars in fees. Boston-based Fidelity, which has 24 million customers, said its new partners will be U.S. Bancorp and Visa Inc, effective yesterday. The exclusive alliance will provide Visa branded credit-card products to U.S. consumers, including Fidelity customers. The new alliance will feature cards with chip security technology, with access to digital wallets that include Apple Pay, Samsung Pay and Android pay.
U.K. PMI disappoints Manufacturing unexpectedly cooled in December, suggesting it made little contribution to the economy in the final quarter of 2015. Markit Economics in London said yesterday its factory index fell to a three-month low of 51.9 from a revised 52.5 in November. Economists had forecast an increase to 52.8 from an initially reported 52.7. The weaker Purchasing Managers Index (PMI) followed a report from China showing that manufacturing there shrank for a fifth month in December. That sent global stocks lower, with China’s CSI 300 Index dropping 7 percent, setting off a circuit-breaker that suspended trade.
Tesla meets 4th-qtr estimate Tesla Motors Inc, the pioneering electric car maker, said yesterday it delivered 17,400 vehicles during the fourth quarter of 2015, in line with its forecasts, and a total of 50,580 for the year. The Palo Alto, California-based company headed by Chief Executive Elon Musk delivered about 75 percent more of its Model S than during the same period of the previous year, Tesla said. Tesla’s total fourth-quarter deliveries were consistent with its November 2015 projection to ship between 17,000 and 19,000 vehicles during the period.
L
egendary carmaker Ferrari completed its spinoff from Fiat Chrysler Automobiles with a debut on the Milan stock exchange yesterday, its shares opening at 43 euros before slipping in early trading. Eight gleaming sports cars lined up in front of Milan’s “Midnight Palace” -- including the latest F12 Tdf model -- and the throaty roar of Ferrari engines could be heard throughout the listing ceremony, attended by Prime Minister Matteo Renzi. Trading under the RACE ticker saw shares drop to 41.75 euros in a broadly depressed market, before being briefly suspended and then climbing to 42.37 euros. The share sale came two and a half months after the legendary mark of the prancing horse roared onto Wall Street.
“From the moment we announced the split from FCA, a journey came to an end,” said Ferrari Chairman Sergio Marchionne, referring to the racer’s emergence as an independent company for the first time in 47 years. “But the truth is that today another big chapter is beginning. This listing marks Ferrari’s independence, which is essential in maintaining its development and potential,” he said, promising customers “ever-more exclusive models”. Ferrari, known for its high-price sports cars, is the biggest and most glamorous name in Formula One racing and the team’s logo of a black stallion against a red background is instantly recognised by motorsport fans around the world. As a unit of Fiat Chrysler, the supercar maker was a cash generator.
Global ETF industry grabs record cash in 2015 ETFs, generally a basket of stocks, bonds or other assets, grew at a record rate despite markets struggling in 2015 to deliver the broad gains Trevor Hunnicutt
I
nvestors poured US$347 billion into exchange-traded funds globally during 2015, fundmanager BlackRock Inc said on Sunday, setting a new record for the industry. BlackRock said its own haul of US$130 billion in new money also set a record in global flows for its iShares ETF business, surpassing the previous annual record set in 2014, when investors added US$103 billion in new money to the funds. ETFs, generally a basket of stocks, bonds or other assets, grew at a record rate despite markets struggling in 2015 to deliver the broad gains they
have posted since rebounding from the financial crisis in 2009. Global ETF assets now total about US$3 trillion. In the United States, inflows of US$228 billion last year were not enough to top the record US$246 billion brought in during 2014, according to the BlackRock data. A third-party data provider, ETFGI LLP, said its estimates for the year also showed a similar increase in new assets for global ETFs over 2014 and a decrease in U.S. flows. It was a year of slim returns. The largest U.S. ETF, SPDR S&P 500 ETF, delivered 1.34 percent in total returns in 2015. The iShares
In 2014 it reported net revenues of 2.76 billion euros (US$3.13 billion), and a net profit of 265 million euros. Revenues grew seven percent a year between 2005 and 2014, and margins increased strongly over the same period. The sale aims to raise muchneeded cash for Fiat Chrysler, to help it tackle its high debt level. At the end of June, the carmaker had net debt of US$10.8 billion due to a combination of the costs of its Chrysler takeover and on-going loss making activities in Europe. Fiat Chrysler plans to invest some US$48 billion to expand its total worldwide sales to seven million vehicles per year, largely through the development of its Jeep, Alfa Romeo and Maserati brands. AFP
Core U.S. Aggregate Bond ETF, the largest U.S. bond ETF, eked out 0.48 percent, according to Morningstar Inc. Investors looked to ETFs tracking stocks in places like Europe and Japan, hoping shares of companies there would be boosted by stimulus from central bankers. New York-based BlackRock, with more than US$1 trillion in global ETF assets, is the largest provider of such funds, as well as the world’s largest money manager overall. The funds have benefited, as they offer an alternative to bonds, mutual funds, futures and other financial products. BlackRock also set new records for growth in the United States, where its US$97 billion in 2015 intake topped the US$82 billion brought in year prior. In Europe, the company’s US$34 billion in cash flows were also a record, ahead of the US$20 billion collected in 2014. Vanguard Group Inc estimated its U.S. ETFs took in US$76 billion during the year, also a record, lifting the company to second among ETF providers by total assets in 2015 for the first time. The two top managers, iShares and Vanguard, account for threequarters of the new cash brought into the U.S. ETF market, according to Morningstar data. BlackRock is to report its fourth-quarter results on January 15. Reuters
Business Daily | 15
January 5, 2016
Opinion Business
wires
A year of sovereign defaults?
Leading reports from Asia’s best business newspapers
Carmen Reinhart
Professor of the International Financial System at Harvard University’s Kennedy School of Government
THE AGE Major (Australian) banks have lopped tens of thousands of dollars off how much they are prepared to lend homebuyers, according to new figures that highlight the toughening in mortgage lending standards. A couple with combined income of A$120,000 purchasing an investment property can now borrow up to A$80,000 less from a major bank than they could a year ago, calculations from mortgage broker Homeloanexperts.com.au found. Tighter lending policies are also affecting owner-occupiers. The maximum loan size for the same hypothetical couple buying a home to live in has fallen by up to A$65,000, the broker says.
THANH NIEN NEWS Vietnamese telecom operators reported combined sales of VND520 trillion (US$22.69 billion) in 2015, up 70.4 percent year-on-year. Military-run Viettel accounted for 42.8 percent of the amount, and state-owned VNPT and MobiFone for 15.5 and 7 percent, figures released by the Ministry of Information and Communication Thursday show. Vietnam has around 122 million mobile subscribers, down nearly 12 percent from 2014, as local network operators stepped up action against prepaid SIM cards used by spammers, the ministry said. About 52 percent of the population uses the Internet, it added.
THE TIMES OF INDIA Realtors (in India) are beginning to focus on warehousing, pinning their hopes on the implementation of the goods and services tax, a boom in the e-commerce industry and a spurt in manufacturing on account of the ‘Make in India’ campaign. Warehousing has been an unorganized and fragmented sector in India. But now demand for high-quality — Grade A and Grade B in industry parlance — warehouses has risen considerably. Property consultancy CBRE says the market for modern industrial and warehousing spaces is expanding and is estimated to touch about 125 million sq ft in the next five years.
THE ASAHI SHIMBUN Aeon Bank will start a trial run of ATM services operated through fingerprints in February, a potential boon to people who are absentminded about their bank cards, passbooks or four-digit codes. The system, developed by Liquid, a venture-capital firm that specializes in technology related to fingerprint recognition, will be introduced at the Aeon Bank branch in Tokyo’s Chiyoda Ward. Under the system, users first register prints on two fingers.
W
hen it comes to sovereign debt, the term “default” is often misunderstood. It almost never entails the complete and permanent repudiation of the entire stock of debt; indeed, even some Czarist-era Russian bonds were eventually (if only partly) repaid after the 1917 revolution. Rather, non-payment – a “default,” according to credit-rating agencies, when it involves private creditors – typically spurs a conversation about debt restructuring, which can involve maturity extensions, coupon-payment cuts, grace periods, or face-value reductions (so-called “haircuts”). If history is a guide, such conversations may be happening a lot in 2016. Like so many other features of the global economy, debt accumulation and default tends to occur in cycles. Since 1800, the global economy has endured several such cycles, with the share of independent countries undergoing restructuring during any given year oscillating between zero and 50%. Whereas one- and twodecade lulls in defaults are not uncommon, each quiet spell has invariably been followed by a new wave of defaults. The most recent default cycle includes the emerging-market debt crises of the 1980s and 1990s. Most countries resolved their external-debt problems by the mid-1990s, but a substantial share of countries in the lowest-income group remain in chronic arrears with their official creditors. Like outright default or the restructuring of debts to official creditors, such arrears are often swept under the rug, possibly because they tend to involve low-income debtors and relatively small dollar amounts. But that does not negate their eventual capacity to help spur a new round of crises, when sovereigns who never quite got
a handle on their debts are, say, met with unfavourable global conditions. And, indeed, global economic conditions – such as commodityprice fluctuations and changes in interest rates by major economic powers such as the United States or China – play a major role in precipitating sovereign-debt crises. As my recent work with Vincent Reinhart and Christoph Trebesch reveals, peaks and troughs in the international capital-flow cycle are especially dangerous, with defaults proliferating at the end of a capital-inflow bonanza. As 2016 begins, there are clear signs of serious debt/ default squalls on the horizon. We can already see the first white-capped waves. For some sovereigns, the main problem stems from internal debt dynamics. Ukraine’s situation is certainly precarious, though, given its unique drivers, it is probably best not to draw broader conclusions from its trajectory. Greece’s situation, by contrast, is all too familiar. The government continued to accumulate debt until the burden was no longer sustainable. When the evidence of these excesses became overwhelming, new credit stopped flowing, making it impossible to service existing debts. Last July, in highly charged negotiations with its official creditors – the European Commission, the European Central Bank, and the International Monetary Fund – Greece defaulted on its obligations to the IMF. That makes Greece the first – and, so far, the only – advanced economy ever to do so. But, as is so often the case, what happened was not a complete default so much as a step toward a new deal. Greece’s European partners eventually agreed to provide additional financial support, in exchange for a pledge from
Lately, many emerging-market currencies have slid sharply, increasing the cost of servicing external dollar debts
Greek Prime Minister Alexis Tsipras’s government to implement difficult structural reforms and deep budget cuts. Unfortunately, it seems that these measures did not so much resolve the Greek debt crisis as delay it. Another economy in serious danger is the Commonwealth of Puerto Rico, which urgently needs a comprehensive restructuring of its $73 billion in sovereign debt. Recent agreements to restructure some debt are just the beginning; in fact, they are not even adequate to rule out an outright default. It should be noted, however, that while such a “credit event” would obviously be a big problem, creditors may be overstating its potential external impacts. They like to warn that although Puerto Rico is a commonwealth, not a state, its failure to service its debts would set a bad precedent for US states and municipalities. But that precedent was set a long time ago. In the 1840s, nine
US states stopped servicing their debts. Some eventually settled at full value; others did so at a discount; and several more repudiated a portion of their debt altogether. In the 1870s, another round of defaults engulfed 11 states. West Virginia’s bout of default and restructuring lasted until 1919. Some of the biggest risks lie in the emerging economies, which are suffering primarily from a sea change in the global economic environment. During China’s infrastructure boom, it was importing huge volumes of commodities, pushing up their prices and, in turn, growth in the world’s commodity exporters, including large emerging economies like Brazil. Add to that increased lending from China and huge capital inflows propelled by low US interest rates, and the emerging economies were thriving. The global economic crisis of 20082009 disrupted, but did not derail, this rapid growth, and emerging economies enjoyed an unusually crisis-free decade until early 2013. But the US Federal Reserve’s move to increase interest rates, together with slowing growth (and, in turn, investment) in China and collapsing oil and commodity prices, has brought the capital inflow bonanza to a halt. Lately, many emergingmarket currencies have slid sharply, increasing the cost of servicing external dollar debts. Export and public-sector revenues have declined, giving way to widening currentaccount and fiscal deficits. Growth and investment have slowed almost across the board. From a historical perspective, the emerging economies seem to be headed toward a major crisis. Of course, they may prove more resilient than their predecessors. But we shouldn’t count on it. Project Syndicate
16 | Business Daily
January 5, 2016
Closing Hong Kong stocks post biggest fall in 3 months
Sri Lanka sees greater tourist arrivals fuelled by Chinese
Hong Kong stocks posted their biggest fall in three months yesterday, marking a gloomy start for 2016, pulled lower by slumping mainland shares and weak global markets. The Hang Seng index fell 2.7 percent, to 21,327.12, registering its biggest one-day percentage fall since September 29. The China Enterprises Index lost 3.6 percent, to 9,311.18 points. The panic on the mainland, triggered by sluggish factory activity surveys, fears of a share supply glut and a weaker yuan, spread to Hong Kong as well. Shares fell across the board, with commodity, financial and industrial stocks among the biggest losers.
Sri Lanka received almost 1.8 million tourists in 2015, up 17.8 percent from the previous year, largely due to a strong growth from China, statistics from the Sri Lanka Tourism Development Authority showed yesterday. December arrivals grew 15.4 percent to 206,114 from 178,672 in 2014, totalling to an overall tourist arrival of 1,798,380 in the year compared to the 1,527,153 in the previous year. China was the second highest country with the most number of tourist arrivals following India, and it recorded the highest growth by any country of 67.6 percent compared to the previous year with 214,783 tourist arrivals in 2015.
Biggest economies face US$7 trillion debt refinancing tab in 2016 The drop in bond redemptions, plus quantitative-easing programs and subdued inflation, will continue to underpin demand for government bonds
T
he amount of debt that the governments of the world’s leading economies will need to refinance in 2016 will be little changed from last year as nations make strides in cutting budget deficits to a third of the highs seen during the financial crisis. The value of bills, notes and bonds coming due for the Group-of-Seven nations plus Brazil, China, India and Russia will total US$7.1 trillion, compared with US$7 trillion in 2015 and down from US$7.6 trillion in 2012. Japan, Germany, Italy and Canada will all see redemptions fall, while the U.S., China and the U.K. face increases, data compiled by Bloomberg show. The amount of maturing debt has gradually fallen since Bloomberg began collating the data in 2012. The decline may bring some support to the bond market as the U.S. Federal Reserve gradually raises interest rates, pushing yields up from record lows.
Budget deficits are forecast by economists to narrow for a seventh straight year in 2016 as governments continue to cut back on the extra spending put in place to combat the global financial meltdown.
Migrant influx
While the decline shows there’s less pressure on governments to borrow, it doesn’t necessarily mean they will issue less -that depends on their overall funding requirements. Germany plans to boost its bond and bill sales to 203 billion euros (US$221 billion) this year from about 175 billion euros in 2015, partly to finance expenses caused by a record influx of migrants. Russia and Brazil will see the biggest proportional declines in debt redemptions, with securities coming due tumbling by 38 percent and 26 percent, data compiled by Bloomberg show. Including interest payments, the amount of debt that needs to be refinanced by the G-7 and BRIC nations will total
US$7.8 trillion this year, also little changed from 2015. Government bonds eked out a 1.2 percent gain for investors in 2015, compared with 8.4 percent in 2014 and an average 4.4 percent return over the past five years, according to Bank of America Merrill Lynch indexes. Yields, which move inversely to prices, are now starting to rise as the fallout from recession fades, reducing demand for the securities as a haven, and as the U.S. central bank predicts four rate increases before the year is out.
More compensation
U.S. 10-year Treasury yields will climb to 2.75 percent by the end of 2016 from 2.25 percent as of 2 p.m. in Tokyo, according to the median forecast of 65 analysts surveyed by Bloomberg. This may prompt investors to demand more compensation to hold other bonds, too, including those from countries such as Germany and Japan, where yields are currently being kept down by their
central banks expanding the money supply through debt purchases. The average sovereign yield in Bank of America Merrill Lynch’s Global Government Index climbed to 1.1 percent, from an all-time low of 0.82 percent reached in January last year.
U.S. increase
In the U.S., the world’s largest debtor nation with US$13.1 trillion of marketable debt obligations, the amount of government securities coming due will rise 14 percent from last year to US$3.5 trillion, according to data compiled by Bloomberg. China faces the biggest percentage increase in refinancing needs in 2016, with a 41 percent jump to US$254 billion. The drop in bond redemptions across most of the world’s leading economies, plus quantitative-easing programs and subdued inflation, will continue to underpin demand for government bonds, even as higher U.S. interest rates put upward pressure on yields,
Potential Malaysia bauxite ban Ant Financial said to seek to chip away at China stockpiles at least US$1.5 billion
A
China faces the biggest percentage increase in refinancing needs in 2016, with a 41 percent jump to US$254 billion
according to Rabobank International. Slower inflation boosts the appeal of the fixed payments that bonds offer. Economists surveyed by Bloomberg estimate consumer prices in developed countries rose just 0.5 percent in 2015, a fraction of the 3.5 percent increase in 2008. Bloomberg News
Myanmar discovers large offshore gas reserve
A
A
potential suspension on bauxite mining in Malaysia, the world’s top exporter of the aluminium-making ingredient, could dent stockpiles in China but is unlikely to curb breakneck output in the aluminium sector there, industry and analysts said yesterday. The Southeast Asian nation is pushing to suspend bauxite output due to concerns over its impact on the environment, threatening to interrupt supply to No.1 aluminium producer China, a cabinet source said at the weekend. World prices for aluminium sank to their lowest in more than six years last November as China grapples with oversupply fuelled by its slowing economy. That forced China’s loss-making industry to band together to pledge production cuts, with markets looking out for any other signs output could ease. Malaysia accounted for over 40 percent of China’s 49 million tonnes of bauxite imports across January to November last year. The country’s largely unregulated bauxite mining industry has grown rapidly since Indonesia banned exports of the material in early 2014, forcing China to seek supplies elsewhere. The cabinet wants to temporarily halt bauxite mining until regulations, licensing and environmental protection can be put in place.
libaba Group Holding Ltd.’s finance affiliate is seeking at least 10 billion yuan (US$1.5 billion) in a second round of fundraising ahead of a planned initial public offering, a person familiar with the matter said. Zhejiang Ant Small & Micro Financial Services Group Co., controlled by Alibaba’s billionaire chairman Jack Ma, plans to issue stock to existing and new investors, according to the person, who asked not to be identified as the details are private. The firm, known as Ant Financial, is speaking to potential investors including insurers and other financial institutions, as well as private equity funds and venture capital firms, the person said. Challenging bricks-and-mortar banks, the Internet-based Ant Financial runs China’s biggest online payment service, Alipay, and controls the company which manages Yu’E Bao, the nation’s largest money-market fund with more than 600 billion yuan of assets. It also holds a stake in MYBank, a private online lender. Ant Financial was valued at about US$45 billion after completing an initial round of fundraising in June 2015, the person said. The company may sell shares in an IPO as early as this year, according to the person.
Myanmar local company has discovered a large offshore gas reserve off Ngwesaung Beach, Pathein in southwestern Ayeyawaddy region, an official report said yesterday. At a location about 48 kilometres off the beach, the MPRL E and P Pte Ltd found the gas reserve in a test well known as Shwe Yee Htun-1 at a depth of 5.3 kilometres below rotary table and 2 kilometres below the surface of the water. The local company, the only independent energy company led by Myanmar nationals, began drilling the well in November last year. The country’s oil and natural gas export earned over US$4.6 billion in the fiscal year 2014-15, ranking first sectoral in the year. The gas, produced from the Yadana, Shwe, Yetagun and Zawtika gas fields, were mainly exported to China and Thailand. A number of companies from Britain, Australia, Japan, Italy and India last year signed production sharing contracts with Myanmar to explore oil and gas. Foreign investment in Myanmar’s oil and gas sector amounted to US$19.641 billion as of the end of September 2015 since late 1988 when the country opened to such investment, accounting for 34.16 percent of the total.
Reuters
Bloomberg News
Xinhua