MOP 6.00 Closing editor: Joanne Kuai
Adelson to meet with Raiders owner about NFL move to Las Vegas Page 6
Year IV
Number 973 Monday February 1, 2016
Publisher: Paulo A. Azevedo
Macau’s external merchandise trade dips 4.5 pct in 2015 Page 3
Pearl Horizon land concession officially declared invalid Page 4
GDP Forecast to Drop
University of Macau (UM) academics forecast 13.6 pct decline in Macau’s Gross Domestic Product (GDP) in 2016. Regarding the gaming industry, UM predicts a decline of 15 to 20 pct for the whole year. With gross gaming revenue likely to bring in MOP196.21 bln (US$24.48 bln) to MOP184.67 bln. The gloomy prediction is attributable to Beijing’s ongoing anti-graft campaign and the valuation of the US dollar. Meanwhile, consumers are expected to adopt a conservative stance. With consumption expected to slow despite wage hikes Page 5 Interview
Upbeat Starwood
Nearly 90 pct of Wynn Macau’s purchases from local companies, it says. The casino operator is the latest to launch a procurement partnership programme. Seeking to support local SMEs with the Macao Chamber of Commerce. Sands China and MGM Macau led the way. Responding to the administration’s call for concessionaires to fulfil their social responsibilities
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HSI - Movers January 29
Name
%Day
CNOOC Ltd
+9.60
Kunlun Energy Co Ltd
+8.22
China Resources Powe
+6.34
Cheung Kong Property
+6.11
Hong Kong Exchanges
+4.99
China Mengniu Dairy C
0.00
Want Want China Hold
-1.17
Hang Lung Properties L
-1.66
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Henderson Land Devel
-1.75
Fuel surcharge scrapped
China Resources Beer H
-2.06
Bridging the gap
Hong Kong lawmakers have given the green light. For an extra HK$5.4 bln (US$636.9 mln) funding for the super bridge connecting Hong Kong, Zhuhai and Macau. Despite construction delays, the bridge should be completed by end-2017
www.macaubusinessdaily.com
Prospects for Starwood’s Sheraton Grand Macao Hotel & The St. Regis Macau are looking good. Given the former’s positive growth. And the latter’s full occupancy for its recent X’mas launch and CNY bookings. In an interview with Business Daily, Janet McNab, MD for the two properties, waves the flag for Macau’s competitiveness. In hosting largescale events. And the latent potential of its developing infrastructure. Whilst plugging the Group’s diversification strategy. Relating to leisure, familyfriendliness, and MICE
Procuring kudos
At last. Air Macau has announced the cancellation of the MOP208 (US$26) fuel surcharge. Effective March 1. Hard on the heels of Hong Kong’s aviation regulator’s scrapping of fuel surcharges due to collapsing oil prices. Air Macau also plans to commence flights to Fukuoka in Japan
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Prices down, sales up Macau Peninsula is still the cheapest place to acquire an apartment. With average prices in December 2015 at MOP75,152 per square metre, an 11.9 pct decrease y-o-y. Transactions are heating up, with 375 deals, a 15 pct increase y-o-y. On average, Macau property prices fell 18.5 pct to MOP78,541 per square metre. While transactions increased 19.9 pct to 501
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February 1, 2016
Macau Gov’t to launch tender for international bidders for fourth Macau-Taipa link The Macau Government will launch an open tender for international bids for the construction of the fourth link between Macau Peninsula and Taipa, the Co-ordinator of the Infrastructure Development Office (GDI), Chau Vai Man, said in a written reply to legislator Chan Meng Kam’s enquiry. The official did not mention when this open tender was expected to be launched. Currently, three bridges connect the Peninsula to Taipa. The government has decided to build an additional link to alleviate traffic pressure between Macau and Taipa, and has already ruled out an underwater tunnel after conducting technical analyses.
Air Macau Fukuoka service lifting off on March 28
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ocal flag carrier Air Macau is commencing flights to Fukuoka, in Japan, starting on March 28. There will be four weekly flights, on Monday, Tuesday, Friday and Saturday. Flights from Macau
are scheduled to depart at 8:55pm, arriving in Fukuoka at 11:25pm (local time), while departures from Fukuoka will take off at 3:30pm and arrive at 8:00pm (Macau Time). Tickets are already on sale,
with prices ranging from MOP2,200 to MOP19,080, excluding airport taxes and fuel surcharge. On Friday, during the baptism ceremony for Air Macau’s new aircraft, Executive Director and
General Manager Chen Hong is quoted by public broadcaster TDM as saying that in effect from March 1 all flights departing from Macau will have the US$26 or MOP208 fuel surcharge cancelled.
Earlier this month, Hong Kong’s aviation regulator announced that the fuel levy for passengers on outbound flights was to be scrapped from February 1. Passengers travelling from Hong Kong will no longer need to pay fuel surcharges as fuel costs have been greatly reduced with the collapse in oil prices. In addition to Fukuoka, Air Macau flies to the Japanese cities of Tokyo and Osaka; Chen Hong is expecting the number of passengers in 2016 to grow between 10 and 13 per cent.
HK-Zhuhai-Macau Bridge operating on Mainland Meanwhile, Hong Kong legislators have agreed to pay an extra HK$5.4 bln funding request after Finance Committee chairman cuts short pan-democrat filibustering
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3.3 kilometre stretch of the Hong Kong-Zhuhai-Macau Bridge, connecting north Hengqin interchange to Hongwan interchange, has opened to the traffic, according to China Radio International (CRI). “The connection line of the Hong Kong-Zhuhai-Macau Bridge starts from an artificial island in the Zhuhai-Macau port and ends at Hongwan, via the Gongbei Port and through Qianshanhe big bridge and Jiangjunshan, totalling 13.4 kilometres. The section now opened to traffic is
3.3 kilometres from north Hengqin interchange to Hongwan interchange. It’s at the end of the connection line,” the senior engineer responsible for the construction of the section, Li Jian, is quoted by CRI as saying. The section linking north Hengqin interchange with Hongwan interchange enables vehicles to enter and exit the Hengqin area of the Guangdong Free Trade Zone in a shorter period of time.
Green light for extra budget
In addition, following 22 hours of debate, Hong Kong legislators voted
29 to 13 to approve an extra HK$5.4 billion (US$693.9 million) funding request for the project over the weekend by Hong Kong Legislative Council’s Finance Committee, according to Hong Kong media reports. Pro-government committee chairman Chan Kin-por blocked pandemocrat filibustering by reducing the time for questions, leading to accusations that he had acted in an “arbitrary” manner. According to local newspaper South China Morning Post’s report
Chan admitted after the vote that transport officials had failed to provide satisfactory answers to lawmakers’ questions on the project, but he said he had to cut the debate time “to strike a balance” between his colleagues’ right to ask questions and “public interest”. Funding was first approved in 2011. The government says the extra money is necessary because of surging labour and material costs. The whole project estimate is now HK$35.9 billion (US$4.61 billion). Hong Kong officials have also said construction will not be completed this year as scheduled because of various difficulties, including an unstable supply of materials, labour shortages, restrictions on airport height and constraints brought about by environmental protection requirements. The Bridge is expected to be completed in the fourth quarter of 2017 according to the Hong Kong Highways Department.
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February 1, 2016
Macau
Property market pain continues as prices plunge 18.5 pct in December By contrast, the number of transactions increased 19.9 per cent to 501 deals João Santos Filipe
jsfilipe@macaubusinessdaily.com
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verage housing prices fell 18.5 per cent year-on-year in December to MOP78,541 (US$9,791) per square metre from MOP96,411 per square metre a year before, according to the latest data published by the Financial Services Bureau (DSF) on Friday. Regarding the number of home transactions, the property market in Macau recorded an increase to 501 during December 2015, up 19.9 per cent from 418 deals in December 2014. The cheapest place to acquire an apartment in the territory continues to be the Macau Peninsula, where the average price in December stood at MOP75,152 per square metre, down 11.9 per cent year-on-year, or MOP10,111, from MOP85,263. Meanwhile, Coloane continues to be the most high-end location of Macau with an average price of MOP94,903 per square metre, down 31.5 per cent year-on-year, or MOP43,684, from MOP138,587. However the price in this area of Macau was also affected by a decrease in terms of average size of the area of the properties transacted, which decreased to 80 square metres from 115 square metres in the last month of 2014.
In Taipa, the price in December was recorded at MOP81,928, which is MOP38,013 or 31.7 per cent less than in December 2014, when the average price per square metre stood at MOP119,941.
Peninsula hot spot for transactions
In the previous month, the majority of unit transactions took place on
the Macau Peninsula with a total of 375 house deals. This represents an increase of 15 per cent year-onyear, or 49 transactions, in relation to December 2014, when the number of transactions was 326. In Taipa, the increase in transactions was the most middling of all Macau regions, accounting for 8 transactions, or 8.75 per cent, to a total of 87 from 80 in the previous year.
During the same period, Coloane recorded an increase of 225 per cent year-on-year in the number of transactions to a total of 39 transactions from 12. Nevertheless, the size of the properties transacted decreased on average some 35 square metres. The property market has been declining following the decrease in gaming revenues and this trend is expected to continue.
External merchandise trade dips 4.5 pct in 2015
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acau’s external merchandise trade for the whole year of 2015 reached MOP95.36 billion (US$11.9 billion) in 2015, registering a 4.5 per cent year-on-year decline, according to figures released by the Statistics and Census Service (DSEC) on Friday. For the whole year of 2015, total value of merchandise exports grew by 7.8 per
cent to MOP10.69 billion, of which value of re-exports increased by 12.4 per cent, while that of domestic exports decreased by 10.0 per cent, office data said. Owing to the diminished demand for consumer goods, such as gold jewellery, motor cars and watches, the total value of merchandise imports fell by 5.9 per cent to MOP84.66 billion. The
merchandise trade deficit totalled MOP73.97 billion in 2015. Analyzed by destination, merchandise exports to Hong Kong and the Chinese Mainland increased by 8.8 per cent and 18.2 per cent yearon-year in 2015, while exports to the European Union and the United States decreased by 27.0 per cent and 33.0 per cent, respectively.
Exports of non-textiles increased by 8.0 per cent to MOP9.86 billion, of which value clocks & watches and electronic components rose by 40.9 per cent and 48.7 per cent, respectively, while that of machines, apparatus & parts dropped by 36.9 per cent. Exports of textiles & garments totalled MOP831 million, up by 6.4 per cent. By place of origin,
merchandise imported from the Chinese Mainland increased by 6.8 per cent year-on-year in 2015, while imports from the EU fell by 13.8 per cent. Imports of consumer goods dropped by 9.7 per cent to MOP50.56 billion, while imports of fuels & lubricants and construction materials declined by 13.7 per cent and 9.1 per cent, respectively. Xinhua
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February 1, 2016
Macau FSS: Gov’t to hike Social Security Fund contribution this year The President of the Administrative Committee of the Social Security Fund (FSS), Iong Kong Io, said the government would make the decision to increase the contribution paid by employers and employees to MOP90 (US$11.3) from the current MOP45 this year, even if the two parties do not agree on the contribution ratio. The FSS head told reporters on Saturday that employees insist that the contribution ratio remain 2:1 - with employers paying MOP60 while employees pay MOP30 - following the increase despite employers agreeing to contribute MOP52.5 of MOP90. Nevertheless, Mr. Iong believes that the two parties may still possibly reach consensus on the ratio.
Pearl Horizon land concession officially declared invalid This, following the site’s developer, a local arm of Hong Kong-listed property company Polytec Asset Holding Ltd., failing to complete its project before the expiry date of its temporary concession Kam Leong
Kamleong@macaubusinessdaily.com
T
he local government has officially declared the land concession for the high-end residential project Pearl Horizon invalid following the project’s developer - Polytex Corporation Ltd. - failing to complete the project before the expiry date of its temporary concession terms for the plot.
According to the Official Gazette released last Friday, the plot, located in Lote P in Novos Aterros da Areia Preta on the Macau Peninsula, will be listed as national private property following the SAR Government’s recovery of the land plot, whilst the developer has no right to demand any compensation.
The disputes over the plot, which occupies a total of 68,001 square metres, broke out during the fourth quarter of last year as the government claimed the city’s new land law mandates that a temporary land concession, of a 25-year term, could not be renewed if Polytex failed to complete its project by the concession
expiry date – December 25 last year. The developer’s Hong Konglisted parent company Kowloon Development Company Ltd. blames the delay in the development of the project on the delay of the Macau Government in granting related approvals and permits for the construction. According to the company, it was only issued a construction permit for the project in the summer of 2014 having spent three years completing an environmental assessment report of the project. Friday’s official dispatch indicates that the developer could still file an appeal with the city’s Court of Second Instance within 30 days of the announcement. The plot, originally an industrial site, was granted to the developer by the then-Portuguese Government in 1990. It was approved by the SAR Government for rezoning to residential use in 2006. The city’s Secretary for Administration and Justice, Sonia Chan Hoi Fan, said recently that some 3,020 units of the project were sold off-plan. These home buyers have also staged various protests related to this land issue.
DSSOPT: Gov’t reclaims 57 illegally occupied land plots
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cting head of Land, Public Works and Transport Bureau (DSSOPT) Shin Chung Low Kam Hong said the SAR Government had reclaimed 57 illegally occupied land plots since 2009 to December last year. In a reply to legislator Chan Meng Kam’s enquiry, the DSSOPT official said the 57 land plots occupy a total of 235,000 square metres.
Meanwhile, 14 plots of the total, occupying some 64,200 square metres, are allocated for building public housing, including the Seac Pai Van public housing in Coloane, the completed Edificio do Lago, and the public housing project in Estrada Nordeste in Taipa. Another 18 plots of reclaimed land, occupying some 40,500 square metres, are to be used for road
projects, Mr. Low said. He added that a further 14 plots of nearly 43,500 square metres, primarily located in Coloane, are for greening and open spaces. Moreover, two other land plots of some 5,400 square metres are for government facilities. However, the DSSOPT acting head indicated that the purposes for four other land plots located in the
Concordia Industrial Park in Coloane have not yet been determined. He said that the authorities would decide on their purposes depending upon the city’s future social development. These four plots occupy 16,600 square metres. In fact, Mr. Low stressed in the written reply that the government would consider building public housing first as long as the land plots
it reclaims in the future are appropriate for such purposes. He added that the government had already enhanced its inspections of the remote parts of the city in order to combat illegal occupation of government land, warning that any illegal occupants of public land are liable to fines of up to MOP3 million (US$375,000). K.L.
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February 1, 2016
Macau
UM forecasts local economy will shrink 13.6 pct this year The prediction assumes that gaming revenue will likely drop between 15 and 20 per cent this year João Santos Filipe
jsfilipe@macaubusinessdaily.com
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he Department of Economics of the University of Macau (UM) expects the local economy to contract 13.6 per cent this year. The forecast was announced last Friday in a forum titled ‘2016 Economic
Analysis and Forecast for Macau’. “For the whole economy, Macau’s GDP is expected to decline at a rate of 13.6 per cent, which ranges from a pessimistic rate of minus 21.1 per cent to an optimistic rate of minus
6.2 per cent”, posited Professor Fung Kwan. Regarding the gaming industry, the model used by the University of Macau predicts a decline of 15 to 20 per cent for the whole year,
ranging between MOP196.21 billion (US$24.48 billion) and MOP184.67 billion. Last year, gaming took in MOP230.84 billion. Among the factors influencing the local economy, UM economists expect local GDP to continue to be negatively affected by the Central Government’s anti-graft campaign and the valuation of the US dollar (to which the Macau pataca is indirectly pegged) against other currencies and mainly the renminbi. As such, they are expecting the export of services to decline 15.6 per cent and the export of goods growth to slow to 0.3 per cent. Likewise, the importation of goods is expected to slow to a growth of 0.2 per cent and the importation of services is forecast to decline 22.5 per cent.
Private consumption slowing
As for private consumption, spending is expected to slow in 2016 to an increase of 2.8 per cent. This will happen in spite of a prediction of a 5 per cent increase in median monthly employment earnings. “Local residents will have more money but will be more cautious in their spending. They’re less likely to buy durable goods, such as cars or home appliances”, said Professor Chun Wah Liu. Concerning unemployment, the impact on the Macau economy will be soft. According to the economists, unemployment will hit 2.3 per cent in 2016. In the worst case scenario the number may be as high as 2.9 per cent. Finally, gross fixed capital formation, or broadly investment, is forecast to be cut 22.1 per cent, with inflation growing 3.6 per cent.
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February 1, 2016
Macau
Union Gaming: Number of junkets to drop further
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he VIP sector will continue to struggle in Macau during this year and as a result the number of gaming promoters will continue do diminish in comparison with past years, according to the latest report from the brokerage firm Union Gaming. “Given the trajectory of the VIP story in Macau we would expect the
number of licensed junkets to continue to drop over 2016 in conjunction with our forecast for a VIP Gross Gaming Revenue [GGR] decline of around 12 per cent”, the report by analyst Grant Govertsen reads. From 2015 to 2016, less than 42 junkets were licensed by the Gaming Inspection and Co-ordination Bureau (DICJ), as the number of companies
in the list declined from 183 to 141. “There are likely more risks to the downside as we think about the junket VIP GGR story over the coming twelve months than to the upside, including: the prospects of a VIP smoking ban, further currency (RMB) devaluation relative to the HKD, the general softening China macro [economy], junkets leaving
for (presumably) greener pastures”, the report notes about the negative influences affecting Macau’s highend segment. Regarding the junket companies that were not licensed for the current year, Union Gaming explained that this is for the most part explained by these companies’ financial health. “We had speculated these junkets weren't necessarily trying to avoid accountability but rather were on their way to closure anyway. We still think this is the case, particularly as these junkets were said to have only accounted for 0.76 per cent of the junket VIP market last year (presumably as measured by GGR)”, Union gaming said. J.S.F.
Adelson to meet with Raiders owner about NFL move to Las Vegas
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illionaire casino mogul Sheldon Adelson is scheduled to meet Friday with Oakland Raiders owner Mark Davis about a possible move of the football team to Las Vegas. Adelson, the chairman of Las Vegas Sands Corp. and one of the world’s richest men, wants to build a US$1 billion stadium in Las Vegas that would be home to University of Nevada sporting events, concerts and possibly a professional football team, according to his spokesman Ron Reese. The stadium proposal is part of a broader call for ideas to promote travel in the state by Governor Brian Sandoval’s Southern Nevada Tourism Infrastructure Committee. The committee is expected to submit a report to the governor at the end of July. A National Football League stadium would bring more visitors to the city, filling its hotels and casinos, Reese said. Davis, who inherited the team from his father Al in 2011, was rebuffed this month by the league’s owners in his attempt to move the Raiders back to the Los Angeles area. The franchise doesn’t have a lease for a home stadium for the 2016 season.
Adelson’s plan would put a 65,000seat domed stadium on 42 acres of land north of McCarran International Airport and east of the city’s famous Strip. UNLV’s football team plays in the smaller Sam Boyd Stadium in Whitney, Nevada, further east of the Strip. The new stadium could be financed with a combination of public and private money, Reese said. It could include Adelson’s personal money as well as financing secured by hotel taxes, he said. Sands and the university are working with Majestic Realty Co.’s Ed Roski, who had previously sought an NFL team for land he owns east of Los Angeles. Brian McCarthy, a spokesman for the NFL, declined to comment. The location of NFL franchises must be approved by team owners on a threequarters vote. The league doesn’t have a policy against locating franchises in any specific locations, nor does it have a ban on particular cities like Las Vegas. Spokespeople for the Oakland Raiders didn’t return calls seeking comment. Bloomberg
Business Daily | 7
February 1, 2016
Macau
Wynn Macau partners Macao Chamber of Commerce in buy-local initiative Following Sands China and MGM Macau, Wynn Macau has now partnered with the influential trade chamber to launch an SME procurement programme that answers the government’s call to buy local
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ynn Macau is the third of the city’s casino operators, after Sands China and MGM Macau, to work with the Macao Chamber of Commerce in launching a procurement partnership programme that seeks to support local small and medium enterprises (SMEs), a move that responds to the MSAR Government’s call for gaming companies to fulfil their social responsibilities. In a joint press conference held with the trade chamber on Friday, Wynn Macau announced that they will release a list of 36 types of procurement project for local companies under its new ‘Local SME Procurement Partnership Programme’, alongside a quarterly business matching session that aims to support purchases in major categories such as food and beverages and hotel facilities. A similar initiative to Wynn Macau’s procurement programme was launched by fellow Macau casino operators Sands China and MGM Macau with Macao Chamber of Commerce last year. These procurement programmes worked out under the collaboration with the trade chamber for local suppliers all emphasise the support
for local micro enterprises (employing 15 or less employees), young entrepreneurs (under the age of 45) and enterprises producing ‘Made in Macau’ products.
Cotai chances
Speaking at the press conference, Executive Director of Wynn Resorts (Macau) S.A. Linda Chen remarked that with the upcoming opening of the company’s Cotai property Wynn Palace, more co-operation opportunities are now presented to local companies. “Wynn Macau has always been cooperating with local enterprises. And, of course, with Wynn Palace there are more chances for co-operation with them,” said Ms. Chen. “Macau’s current economy is in an adjustment phase, which [means] not only are the big companies like us feeling it, but the smaller firms are feeling the impact of it even more,” Ms Chen remarked at the launch of the programme. “So, we think now is a good time for us to emphasise the support for SMEs more.” The casino operator’s executive noted that over 89 per cent of the company’s purchases are from local companies.
Corporate
CEM holds ‘Guangdong-Macau Economic Co-operation Seminar’ In a bid to enhance employees’ understanding of national conditions, as well as the economy and development policies of Guangdong-Macau co-operation, Companhia de Electricidade de Macau CEM, S.A. (CEM), with the assistance of the Liaison Office of the Central People’s Government in the Macau SAR, recently held the ‘Guangdong-Macau Economic Cooperation Seminar’ again for its staff. The half-day seminar was conducted by Derek Meun, Assistant of the
Co-ordination Department of the Liaison Office of the Central People’s Government in the Macau SAR, with contents including the significant role of the Silk Road in the past and present, the Belt and Road Initiative, the close ties between the 13th Five-Year Plan and the economic and social development of Macau, as well as the influence brought to bear by the establishment of the Asian Infrastructure Investment Bank on future global development.
Mr Chui Yuk Lam, vice-president at Macao Chamber of Commerce, noted at the press conference that the chamber is now negotiating with the rest of the six gaming companies here to launch a buy-local initiative that aims at supporting local small companies. Although prioritising purchases from local companies is not required by the concession contract signed with the gaming companies here, Secretary for Economy and Finance Lionel Leong Vai Tac told legislators
in July last year that the city’s Gaming Inspection and Co-ordination Bureau (DICJ) was collecting data about the companies’ local purchases to gauge their fulfilment of social responsibilities. The Secretary also noted before that this assessment of the social responsibilities fulfilled by the casinos is part of the government’s mid-term review of the gaming industry and gaming concessions here. S.L.
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February 1, 2016
Macau
Sheraton & St. Regis MD: “The slump hasn’t brought our occupancy down” Contrary to the market trend, Sheraton Grand Macao Hotel, a brand under Starwood Hotels and Resorts, saw its business in the city post positive growth for 2015, whilst the Group’s newly opened The St. Regis Macao also reached full occupancy for the recent Christmas holiday, according to the Managing Director of the two hotel properties, Ms. Janet McNab. She told Macau Business in an interview that the key for the company to outpace the market is its diversification of products from the get-go – relating to leisure, family-friendliness, and MICE Kam Leong
kamleong@macaubusinessdaily.com Photos by: Cheong Kam Ka
Latest official data shows that both the city’s visitor arrivals and hotel occupancy posted year-on-year declines for last year compared to annual growth for the previous few years. How has the downturn affected Starwood’s two hotel properties here – the Sheraton and St. Regis?
Janet McNab Ms. Janet McNab was appointed Managing Director of Sheraton Grand Macao Hotel and The St. Regis Macao last October to oversee 4,400 hotel rooms in the two properties. She reports directly to the company’s Vice President of Operations for Hong Kong, Taiwan, Macau and Korea, Mr. Josef Dolp. The Australian-born McNab began her career with Starwood 25 years ago out of Brisbane in Australia, and has spent more than 13 of those years in Asia, working in properties throughout Thailand, China and Indonesia before coming to Macau. Prior to her current appointment, Ms. McNab served dual roles as both Area General Manager of the company in South Thailand and General Manager of The Westin Siray Bay Resort & Spa from 2013 to 2015. She worked with eight Starwood hotels throughout Thailand to position South Thailand as a key resort destination in her role as Area General Manager.
It’s interesting that we haven’t felt the downturn in occupancy so much. However, we feel it more in the rates that people are paying. In fact, our cash business is in the best [situation] that it has ever been. I tend to perceive that there are always opportunities when markets change. Meanwhile, Starwood is such a strong company that the distribution channel is so strong. We very much address [the question] as to what we are going to do as a market changes - in order to aggressively meet that challenge. We see that some of our sectors are really positive. But, of course, there are some sectors that we need to sacrifice, which is our daily rates. Our room rates are a little bit less than what they were before.
You mentioned at a public event recently that the business performance of Sheraton actually posted annual growth for 2015 amid the city’s downturn… Yes, for some of the segments.
What are the factors boosting Sheraton’s growth, in contrast to the general trend of the market?
As you look at the company Starwood, we have very good programmes appealing to our MICE customers and our leisure customers. We have very strong retail channels; we have good people and we have good relationships with our customers. That’s why developers signed with Starwood because we have all these things in our toolbox. That’s also why some of our cash segments have performed better than before because we have the relationships and we’re always ready to go.
The St. Regis was launched last December. How has the performance been; does it meet your expectations?
Sure. As you know, there’s always a ramp-up period in the opening of any hotel. If it comes with 100 per cent [occupancy] from day one, you’re in a very special market place which doesn’t happen anywhere in the world. I think we’ve opened well. We had a fantastic opening event. We had the ballroom filled with 340 people. We had the whole
After all, you’re competing against many other destinations in Asia. Hence, sell Macau first then fill our own hotels
Christmas period running with 100-per cent occupancy. So it’s a real start with fire. For now, it’s just about ramping up and getting the relationships, not just those we enjoy with Sheraton, but also others coming over with St. Regis. That’s the beauty of working in Starwood, as we’re brothers and sisters both working together handin-hand. Hence, our interests are in both of the properties.
Both of the properties are located on the Cotai Strip, facing competition from nearby hotels plus those on the Peninsula. What are the marketing strategies of Starwood projecting the brands vis-a-vis other operators?
One of the things that Sheraton did very well when it opened quite a few years ago was saying ‘yes’ to staying with the gaming business. But we don’t control it. It’s controlled by others. What we did is to come up with a very comprehensive marketing plan [revolving] around the family market, the meetings market, as well as the leisure market. Even though the market has changed, we’ve been doing this since we opened. And I think we’ve done a very good job. The benefits from doing that are now shining on our cash business, compared to the rest of the market. And I think that will continue. In my opinion, the family products will just grow. Meanwhile, with more new competitors coming into the city, it is very good. It’s because what it does is that they give us
opportunities to sell Macau as a destination first. After all, you’re competing against many other destinations in Asia. Hence, sell Macau first then fill our own hotels. It has to be a little bit of collaboration amongst all the hotels; not only those on the Cotai Strip but all those on the Macau side as well. We’ll all benefit from that eventually.
From what you say, you believe there will be more demand if there’s more supply? However, our annual visitor arrivals still posted drops for last year…
That’s only a one-year statistic, right? What goes down must come back up. I’m not a predictor. I can’t predict when it will happen. However, if you have the right strategies, you can attract the market. If you do nothing, you get nothing. With the new ferry terminal opening, coupled with the plans of [LRT] and the bridge to Hong Kong – there are a lot of activities and a lot of things offered for the family market. Consistently, our marketing team must have something to say. For all businesses, competition exists. It’s about how you try to attract the visitors here to this destination, which is the most important thing. There are some new highlights coming to the Cotai Strip this year, there will
Business Daily | 9
February 1, 2016
Macau
be new attractions coming, and I think they will bring people in, anyway, which is the good thing. In addition, it’s a good thing for us working with Macao Government Tourism Office (MGTO), and attracting the meeting business to the destination, which is another good segment.
MICE boost What are the advantages of developing MICE in the city?
The meeting business can fill our restaurants; it can get people to go to the attractions and stay in our hotels. As such, I think it’s very important that we work collaboratively as a destination to attract people and big meetings. There are very few destinations globally that can accommodate one meeting in such a close surrounding with no traffic, which is the key advantage for Macau. For example, just within the Sands Group on the Cotai Strip, there will be 13,000 rooms by the end of this year. Within the Starwood hotels alone, we have some 4,500 rooms. As such, we can certainly accommodate a big piece of business. I met with a very key meeting planner that uses Sheraton and one of the properties on the Cotai Strip. They said that [if you want] an international forum Macau is your only destination in Asia if your event is over 3,000 people as it’s so easy to deal with. I’ve worked in a lot of destinations in Asia and I need to say it’s not that easy in all those [other] places.
Price War Many competitors, hotel operators, have released different accommodation packages in order to attract more visitors. Is this one of the strategies of Starwood, as well, amid the economic downturn? It depends on who you are talking to. We don’t want to do that but the market is driving [rates] down. I think this is not a good strategy
and all that kind of stuff we will see a change. Besides, new supply will probably double the current 12,500 hotel rooms to 24,000 by 2017. Hopefully, I don’t see it taking more dips or dives.
Directions
There are very few destinations globally that can accommodate one meeting in such a close surrounding with no traffic, which is the key advantage for Macau
ultimately. It’s because customers are getting a lot of good value for their money here. But that’s competition, no? You have to [accommodate] the market and to move in the way the market pushes you. At the same time, you need to make sure you’re well differentiated so that customers will choose St. Regis or Sheraton over our competitors. And that’s what we do internally as a team.
How do you see the trend for the city’s hotel rates for the rest of the year if competition intensifies?
I think 2015 was a quite difficult year because of the change. It has been talked to death and printed to death. I actually think 2016 will be very similar. I don’t think you will see many major decreases or major increases. But I think when all the new supplies come in, in 2017, and depending on what’s happening on the macro-level with the government’s legislation on visas
How are hotel bookings for the Sheraton and St. Regis for Chinese New Year?
Very strong. We’re looking at 100 per cent occupancy over the whole period for both properties – St. Regis and Sheraton. We’re very proud of that. So that means a busy time. It looks like it’s going to be a very positive Year of the Monkey. We hope that good luck will stay close to us!
Sheraton has recently updated to Sheraton Grand. What are the directions for the grand hotel as well as St. Regis for this year?
We’ve just launched the Sheraton Grand. We opened up another 105 new rooms, 80 of which are suites. The Monkey King [a theatrical acrobatic show based on a Chinese fable] will potentially be launched in June this year. We’re looking to do more packaging and make them more interesting in order to attract more customers with families. We
will definitely be looking at that segment and we will definitely be looking at the MICE segment as well. On the other hand, for St. Regis it’s a bit different as it’s a luxury product. We’re building its reputation which may take a bit longer to do. Hence, for St. Regis it’ll be more about communicating to the market that they have choices of these two fantastic brands side by side. For the meeting market, these two properties will work together. They jointly have a total of 21,000 square feet of meeting space. In addition, one planner would be able to enjoy the benefits of both St. Regis and Sheraton, which is fantastic as not many operators can offer this. There are really a lot of exciting things ahead for us this year.
You’ve been in Macau for a few months now. What do you think of the city?
I like Macau. It’s a very dynamic destination. I worked in Thailand - a place that is really different from Macau. It’s actually quite lucky here as it blends Portuguese culture and Chinese culture. It’s a really dynamic destination that’s got a lot to offer tourists.
Downturn for the tourism & hospitality sector For 2015, the city registered its first annual decrease in tourist numbers since 2009, with total visitor arrivals down 2.6 per cent year-on-year to 30.7 million, following a drop in the number of Mainland Chinese visitors - who accounted for 66 per cent of the total – of 4 per cent year-on-year to 20.4 million, according to the Statistics and Census Service (DSEC). The bureau’s latest data also reveals that there was a year-on-year 2.1 per cent drop in the number of guests at local hotels and guesthouses last year, amounting
to 10.5 million. In addition, the average occupancy rate fell 6 percentage points to 80.5 per cent for the whole year of 2015, with 5-star hotels leading at 82.2 per cent, down 5.3 percentage points year-on-year For hotel rates, Macao Government Tourism Office’s latest data has revealed that the average room rate for the city’s 3 to 5-star hotels dropped 7.8 per cent yearon-year to MOP1,491 (US$186.4) per night last year. The price drop in 5-star hotels was the least at 4.6 per cent year-on-year, amounting on average to some MOP1,840 per night.
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February 1, 2016
Greater China
Government set to adopt 6.5-7 pct growth target Guangdong and Zhejiang provinces have set a growth target of 7-7.5 percent this year Kevin Yao
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hina’s leaders are expected to target economic growth in a range of 6.5 percent to 7 percent this year, sources familiar with their thinking said, setting a range for the first time because policymakers are uncertain on the economy’s prospects. The proposed range, which would follow a 2015 target of “around 7 percent” growth, was endorsed by top leaders at the closed-door Central Economic Work Conference in mid-December, according to the sources with knowledge of the meeting outcome. The world’s second-largest economy grew 6.9 percent in 2015, the weakest in 25 years, although some economists believe real growth is even lower. “They are likely to target economic growth of 6.5-7 percent this year, with 6.5 percent as the bottom line,” said one of the sources, a policy adviser. Policymakers, worried by global uncertainties and the impact on growth of their structural economic reforms, struggled to reach a consensus at the December meeting,
The floor of 6.5 percent reflects the minimum average rate of growth needed over the next five years to meet an existing goal of doubling gross domestic product and per capita income by 2020
the sources said. The State Council Information Office, the public relations arm of the government, had no comment on the growth forecast when contacted by Reuters. The floor of 6.5 percent reflects the minimum average rate of growth needed over the next five years to meet an existing goal of doubling gross domestic product and per capita income by 2020 from 2010. The 2016 growth target and the country’s 13th Five-Year Plan, a blueprint covering 2016-2020, will be announced at the annual meeting of the National People’s Congress, the country’s parliament, in early March. Although the target range was endorsed by the leadership in December, it could still be adjusted before parliament convenes. “The government will not be too nervous about growth this year and will focus more on structural adjustments,” said a government economist. “Growth may still slow in the first and second quarter and people are divided over the third and fourth
quarter. The full-year growth could slow to 6.5-6.6 percent.”
Policy support
A string of cuts in interest rates and bank reserve requirements since November 2014 have failed to put a floor under the slowing economy. Beijing is expected to put more emphasis on fiscal policy to support growth, including tax cuts and running a bigger budget deficit of about 3 percent of GDP. China’s leaders have flagged a “new normal” of slower growth as they look to shift the economy to a more sustainable, consumption-led model. About half of China’s 30 provinces and municipalities have lowered their growth targets for 2016, while nearly a third kept targets unchanged from last year, according to local media. Guangdong and Zhejiang provinces have set a growth target of 7-7.5 percent this year, while Jiangsu and Shandong are aiming for growth of 7.5-8 percent.
Taiwan’s 2015 economic growth weakest in 6 years With Apple last week forecasting lower sales for the first time in more than a decade, analysts flag more uncertainty for local manufacturers Faith Hung and Jeanny Kao
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aiwan’s economic growth in 2015 slowed to its weakest pace since the global financial crisis, as ebbing world demand took a heavy toll on the island’s exports and maintained pressure on the central bank to further cut rates. The preliminary figures released on Friday showed the economy barely emerged from a recession, and early indications suggested a bumpy outlook as slackening global demand and cooling growth in Asia’s locomotive China sucked the oxygen out of Taiwan’s all-important tech sector. Gross domestic product in the final three months of 2015 contracted 0.25 percent from a year ago, according to the Directorate-General of Budget, Accounting and Statistics. That extended a 0.63 percent slump in the June-September quarter and was below expectations of a 0.25 percent contraction. Growth for 2015 slowed
to 0.85 percent - the worst since the depths of the global financial crisis in 2009 from 3.92 percent in 2014. The weak data and equally gloomy outlook will test the incoming government of Tsai Ing-wen, who led her independence-leaning Democratic Progressive Party to a landslide election victory last month. “Exports are the big drag here given the big slowdown in China...There is definitely more easing in the cards,” said Emily Dabbs, economist with Moody’s Analytics in Australia. Taiwan slipped into recession in the third quarter after GDP shrank for two consecutive quarters based on a seasonally adjusted annualized rate (SAAR). GDP in the OctoberDecember period bounced 3.22 percent on SAAR basis, compared to the third quarter when it shrank 1.2 percent, indicating the economy managed to recover slightly from the recession.
The government will release final GDP numbers and details in two to three weeks. Analysts say some of the quarterly bounce appeared to come from private consumption thanks to short-term government stimulus late in 2015 and tourism-related spending. However, with the administration in transition, “there won’t be any significant fiscal impulse from the government side, so we think monetary policy has to play a role now,” said Angela Hsieh, an economist for Barclays Bank in Singapore. Taiwan’s central bank eased policy for the second successive time in December, and with the external environment showing no signs of improving, many analysts see another 12.5 basis point cut at its March review to spur growth.
China, Apple effect
Taiwan, a major supply chain hub for global titans such as Apple Inc, has been knocked
hard by the downturn in global demand. With Apple last week forecasting lower sales for the first time in more than a decade, analysts flag more uncertainty for local manufacturers. “Taiwan’s growth prospect will continue to be subject to significant downside risks in the near term,” ANZ bank economist Raymond Yeung said in a note to clients.
The slowdown in China has had a ripple effect across many trade-reliant economies, including Asian powerhouse exporters Japan and South Korea which are struggling to stay afloat amid a slump in shipments. Taiwan’s exports in December fell for the 11th straight month, with sales to China taking a tumble. Reuters
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February 1, 2016
Greater China In 2015, growth in Chongqing municipality was 11 percent, the fastest in the country, while growth in Liaoning province in the rustbelt northeast, was 3 percent, the country’s lowest. For this year, Chongqing is eyeing 10 percent growth and Liaoning is aiming for 6 percent. At the enclave in December, leaders pledged to make monetary policy more flexible, expand the budget deficit to support the economy, and push forward “supply-side reform”. The central bank may be reluctant to cut interest rates or banks’ reserve requirement ratios in the near term because of concerns over the impact on the yuan, but it remains under pressure to loosen policy further, policy insiders said. “We think the central bank should ease policy, because China is a big economy and its monetary policy should focus on its own economic conditions,” said the government economist. Reuters
Hon Hai CEO says Sharp to decide on investment within week Gou said he expected Sharp’s board will make a final decision before Friday J.R. Wu
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aiwan’s Hon Hai Precision Industry Co said yesterday that it was confident of its offer for Sharp Corp and expected the struggling Japanese electronics maker to come to a decision on the issue within the week. The comments by Terry Gou, chief executive of the world’s largest contract electronics manufacturer, came after he met with Sharp’s board on Saturday in Japan. “I am not just bringing capital. I am bringing an entrepreneurial spirit. I am bring a culture of sharing with employees. Those board members thought this was a rather fresh (idea),” Gou told reporters at a company event in Taipei. He said Hon Hai wanted the Japanese to be part of the management, and that it would keep employees. Hon Hai, which goes by the trade name Foxconn, would retain the Sharp brand and would not seek to integrate Sharp into other companies, Gou said, adding that the Japanese government welcomes Hon Hai to help stimulate its industry. “We don’t want to destroy this company. We want to keep this
EU sets duties on steel rebar imports from mainland The European Commission launched its anti-dumping investigation into imports of HFP rebar from China last April Philip Blenkinsop and Maytaal Angel
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he European Union will impose duties on imports from China of steel bar used to reinforce concrete while its investigation into dumping by Chinese producers continues, the EU’s official journal said on Friday. The bloc will impose provisional duties of between 9.2 and 13.0 percent on imports of high fatigue performance (HFP) steel reinforcement bars. Steel industry representatives in the UK, where the vast majority of Chinese ‘rebar’ sales are directed, slammed the move. “The Commission’s decision ... clearly shows that the scale of the crisis affecting the European steel sector has not yet fully registered with Brussels,” said Gareth Stace, director of UK Steel. Bankruptcies and capacity closures have picked up pace in the UK industry, where some 5,000 jobs
have been lost in the past four month - equivalent to about a quarter of the workforce. Steelmakers pin much of the blame on China, which produced half the world’s 1.6 billion tonnes of steel last year and exported a record 112 million tonnes of its excess output.
company for another 100 years,” Gou said. “Working together with us is the right decision.” While his comments on the potential deal were the most detailed to date from Hon Hai, Gou declined to talk about specific figures of Hon Hai’s investment proposal due to non-disclosure pacts that the parties have signed. Gou said he expected Sharp’s board will make a final decision before Friday. When asked about whether Hon Hai could succeed, Gou said: “Yes, I am very confident. We think our terms and conditions are much much better than our competitors.” Hon Hai’s rival in the bid for Sharp, a Japanese state-backed fund, said on Friday it had yet to decide on its potential rescue plan for Sharp. Innovation Network Corp of Japan (INCJ) officials have been discussing a capital injection of more than 300 billion yen (US$1.7 billion) into Sharp and up to 350 billion yen of financial assistance from the company’s two main lenders, sources have told Reuters. Reuters
According to UK Steel, China accounts for more than 45 percent of the UK rebar market, up from zero four years ago. Kathleen Walker Shaw, European Officer for UK union GMB, said: “The UK Government bears a lot of responsibility for this failure of the EU to act by placing a higher priority on not upsetting the Chinese government than on protecting UK steel jobs.” Several EU member states including the UK are leaning towards granting China market economy status after December 2016, a move that would make it harder for Europe to impose anti-dumping duties on cheap Chinese goods. European steel association Eurofer says that status would put most of the 330,000 EU steel sector jobs at risk. The European Commission launched its anti-dumping investigation into imports of HFP rebar from China last April following a complaint from Eurofer. EU rebar producers include Spain’s Celsa Group, Italy’s Gruppo Riva SpA and ArcelorMittal.
Budget deficit to reach 3 pct of GDP China’s proactive fiscal policy will continue in 2016 and its general public budget deficit will expand, the China International Capital Corp. (CICC) has said in an analysis note. CICC analysts expect the deficit this year to reach 2.2 trillion yuan (about US$336 billion), or 3 percent of the country’s gross domestic product (GDP). The note came after a national fiscal work conference statement said last month that China would increase its budget deficit in 2016, gradually raise its fiscal deficit ratio.
Sinosteel says will extend bond redemption Sinosteel said it will extend until February 29 the registration period for early redemption on a putable bond that investors could originally elect to redeem last October. The statement posted on the website of one of China’s main bond clearinghouses on Friday marked the fifth time Sinosteel has extended the redemption period. The repeated extensions come after Sinosteel had asked bondholders of its 2 billion yuan (US$309 million) October 2017 bond not to exercise a put option on October 20, because the company would not be able to make a full payment.
Taiwan c.bank guides interbank rate lower Taiwan’s central bank on Saturday guided the overnight interbank rate down, a move that came a day after government data showed the economy remained weak in the fourth quarter of last year. Traders said the overnight interbank rate was lowered to 0.20 percent from Friday’s 0.23 percent. The last time the central bank began guiding market rates lower it followed the moves by cutting the official policy rate. The central bank cut the discount rate in late December, the second rate cut it made in 2015 in a bid to revive flagging economic growth.
QFII quota falls to US$80.80 bln The outstanding amount of China’s dollar-denominated Qualified Foreign Institutional Investor (QFII) programme fell to US$80.80 billion as of January 29, the country’s foreign exchange regulator said in a statement on Friday. China reported its end-December QFII quota, which stood at US$81.1 billion as of December 25. The QFII scheme was created to allow foreigners to invest in Chinese capital markets.
Services trade deficit widens
Reuters
China’s trade deficit in services widened to US$18.6 billion in December from US$$15.6 billion in November, the foreign exchange regulator said on Friday. It did not release the figure for all of 2015. A US$17.6 billion gap in spending between Chinese and foreign tourists has led to December’s deficit. A main factor for the deficit is that Chinese travelling overseas spent US$17.6 billion more than foreigners spent in China, a statement from the regulator said. China had a US$50.4 billion surplus on trade of goods in December, according to the same statement.
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February 1, 2016
Asia
Bank of Japan shocks herald return of currency war The surprise move prompted Morgan Stanley to remove its yen trading strategies for now, according to a research note from the bank Rachel Evans and Anchalee Worrachate
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he yen dropped the most in more than a year after Bank of Japan Governor Haruhiko Kuroda unexpectedly adopted negative interest rates, risking another round of competitive devaluations. The currency fell against all 16 of its major peers after Japan’s central bank voted 5-4 to apply an interest rate of minus 0.1 percent to current accounts held at the central bank.
The Bank of Japan’s (BOJ) decision halted a yen rally that threatened to be the strongest since Kuroda took office in 2013, and sent shock waves through currency markets. The move raises the spectre of further easing by other central banks that also stand to benefit from weaker domestic currencies as they battle to stimulate growth and inflation. Officials in the euro area, Switzerland and Sweden have already
lowered their deposit rates below zero, and the European Central Bank has promised to reconsider monetary policy again in March. “The BOJ has rejoined the global currency war with a bang,” said Valentin Marinov, head of Group-of-10 currency research at Credit Agricole SA’s corporate and investment banking unit in London. “The ECB may have to ease again
Bank of Japan Governor Haruhiko Kuroda attends a press conference following a monetary policy meeting on Friday
in March, given that further upside correction in euro-yen will push the euro effective exchange rate above the levels that last year spurred the Governing Council into action.”
Economists blindsided
Draghi last week signalled he was ready to amp up stimulus in the euro area, saying policy makers would reconsider their stance in March after extending the bank’s quantitativeeasing program in December. “Draghi and the Bank of Japan will continue to act until they see better economic growth,” said Kate Warne, a St. Louis-based investment strategist at Edward D. Jones & Co. “For Europe and Japan, which are big exporters, part of that is a lower currency, but it’s really how do we get economic growth strong enough that we’re no longer worried that it’s just going to stay right around zero.” Negative rates will push down borrowing costs and don’t preclude further bond purchases, Kuroda said at a news conference. The BOJ retained its target for an annual expansion of 80 trillion yen (US$662 billion) in the monetary base at this meeting. Six of 42 economists surveyed predicted policy makers would expand already-record stimulus, with Citigroup Inc., JPMorgan Chase & Co. and UBS Group AG analysts among those giving additional stimulus at this meeting a more than 30 percent chance. None projected a move to negative rates. Kuroda said January 21 the central bank wasn’t considering negative rates. The U.S. will also have to take note, according to John Vail, chief global strategist at Nikko Asset Management. The Federal Reserve kept its interestrate target unchanged this week as policy makers monitor the economy. A report Friday showed economic growth cooled in the fourth quarter. Bloomberg News
South Korea to allow foreign investors to use omnibus accounts Officials have said foreign investors also demanded a higher convertibility of the country’s won currency
S
outh Korea said yesterday it plans to introduce next year the omnibus account system that it hopes will help save the cost while enhancing convenience for foreign investors in the local stock markets. The government also hopes the move will help the country’s stocks be reclassified into the developed market category by index compiler MSCI from the current emerging market status, a goal the country has been pursuing for a long time.
An asset management company will be able to conduct transactions of South Korean stocks through one omnibus account on behalf of multiple foreign investors, compared to the current system requiring each investor to open an account. “Index-tracking passive funds are taking an increasing share of the local stock market and they are sensitive to transaction costs,” Kim Haksoo, head of the capital markets bureau at the Financial Services Commission, told
an embargoed briefing. South Korean officials have said reclassification of South Korea into the developed market group by the MSCI
would help the country’s financial markets avoid unnecessary turmoil at times of increased volatility mainly involving emerging markets.
The country’s economy is estimated to be the world’s 11th largest in 2015 with annual gross domestic product of US$1.4 trillion, and is already classified as an advanced economy by many organisations including the International Monetary Fund. The commission said it would conduct a test run for the omnibus account system from May before formally introducing it from the beginning of 2017. Along with the omnibus account system, South Korean officials have said foreign investors also demanded a higher convertibility of the country’s won currency, which currently trades within the country. Kim at the commission said South Korean authorities were looking into various options aimed at making the currency more freely convertible, while declining to elaborate. 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.
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February 1, 2016
Asia Thai December spending picks up but recovery patchy Official 2015 gross domestic product data is due on February 15 Orathai Sriring and Kitiphong Thaichareon
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hailand’s December private consumption and investment rose but exports tumbled again, according to central bank data published on Friday, showing the economy is still making little headway after 20 months of military rule. The Bank of Thailand’s (BOT) index for private consumption, which makes up half of the economy, gained 0.7 percent in December from November, while investment climbed 0.3 percent. Private consumption was lifted by an acceleration in car purchases prior to a hike in the vehicle excise tax starting this month, as well as year-end tax deductions for shoppers. In the final quarter of 2015, overall economic activity “continued to recover at a gradual pace”, the BOT said in a statement. “As economic recovery was not broad-based, overall private investment stayed at a low level,” the central bank added. The junta seized power in May 2014 to end months of political
KEY POINTS December consumption index +0.7 pct m/m, investment +0.3 pct - c.bank December exports -9.09 pct y/y Economic recovery was “not broad-based” - c.bank December factory output +1.33 pct y/y - industry ministry unrest, but has struggled to revive the economy. Soft global demand has crimped shipments, while high household debt and low farm prices have curbed consumption. Growth was at 0.9 percent last year. Kelvin Chen, owner of a factory
India’s Jaitley can let deficit slip, go for growth Senior sources in the government and nationalist ruling party have said Jaitley may move to the defence department after this budget Krishna Eluri and Douglas Busvine
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ndian Finance Minister Arun Jaitley would get away with letting his borrowing targets slip when he presents his annual budget this month, according to the overwhelming majority of economists in a Reuters poll. Half the 30 economists surveyed also said the most pressing priority for Jaitley’s third budget was to invest in infrastructure - endorsing the progrowth course he set a year ago. That was more than the combined share of votes in favour of consolidating the budget or overhauling the tax system, two issues that have dominated the headlines in India but carry less weight with the financial community. The findings raise questions over whether Prime Minister Narendra Modi would be well advised to force the pace on austerity at a time of weakening nominal growth, soft revenues and slumping export demand. “We’ll take a longer route to consolidation; otherwise the economy would be negatively affected,” said Rishi Shah, an economist at Deloitte who took part in the poll and forecast upward revisions in the deficit.
A poll conducted before last year’s budget also highlighted growth as the top priority, while a slim majority saw the government meeting high hopes for economic reforms. Jaitley, under fire for what some critics call his lacklustre stewardship of India’s US$2 trillion economy, should keep his job for at least another year, according to 18 of 27 respondents to a question about his future. Only one-third expect this to be the last budget for the 63-year-old finance minister, the government’s chief policy spokesman and point person for dealing with foreign investors. Jaitley has so far failed to win cross-party support for a groundbreaking Goods and Services Tax that would transform India into a common market for the first time. Senior sources in the government and nationalist ruling party have said Jaitley may move to the defence department after this budget, with power and coal minister Piyush Goyal one contender to take over at finance.
Slipping and sliding
Contrary to advice from Modi’s top economic adviser, Arvind Panagariya,
in Chonburi making processed paper mostly for auto parts and textiles, said business was tough. “Our sales and production have fallen by 30 percent since 2014 as the economy and exports are not running,” he said. “Our clients can’t sell our goods because of no orders. Some of our clients have moved to Vietnam and I’ve never heard back from them since.” Last month, the central bank cut its 2016 economic growth estimate to 3.5 percent from 3.7 percent, with flat exports. It predicted 2015 growth at 2.8 percent. Official 2015 gross domestic product data is due on February 15. BOT Governor Veerathai Santiprabhob told Reuters last week that Thailand had no need to cut the policy rate, now at 1.50 percent, as fiscal spending was supporting growth. The central bank next reviews policy on February 3 Reuters
that the government should avoid “tinkering” with the fiscal deficit, analysts expect the shortfall to be revised up from the trajectory set a year ago. The consensus view was for the 2016/17 fiscal deficit to be raised to 3.7 percent of gross domestic product (GDP) from a previous goal of 3.5 percent. Gross borrowing is predicted at 6.49 trillion rupees (US$95.2 billion). In the following year, the deficit would be revised up to 3.5 percent from 3 percent, the poll showed. Twenty-six of 29 respondents said markets and ratings agencies would accept some slippage in the deficit to allow the government to invest in growth and jobs. But there’s not much wiggle room, with India’s shortfall on the high side compared to emerging markets like China and Russia. “A typical solution to weak growth and comfortable inflation would be a loose fiscal policy and a tight monetary policy,” said Abhishek Upadhyay at ICICI Securities. “The trouble in India is that you don’t have the fiscal space.” Although India is growing in real terms by over 7 percent - having overtaken China to become the world’s most dynamic economy - it is creating too few jobs for a workforce growing by a million people every month. While most economists expect Jaitley to stay, those ready to countenance the idea he might be replaced would prefer a technocrat to fill the role. They outnumbered those backing a professional politician by about two to one. A narrow majority said Reserve Bank of India Governor Raghuram Rajan would make a suitable finance minister, outnumbering sceptics by 14 to 11. Unconfirmed speculation has ebbed and flowed on financial markets that Rajan, whose term expires this autumn, might be in line for a move to the finance ministry. Reuters
Toyota may halt car output due to steel shortage The company said on Saturday it may halt production at its domestic plants early this month due to a steel shortage, following an explosion at a steel plant operated by one of its affiliates. The blast an Aichi Steel plant has curbed production of steel parts, which may impact output at the world’s best-selling automaker which produces around 40 percent of its global output in Japan. “At the moment, there is enough supply inventory to keep our domestic plants running until February 6,” a Toyota spokesman said, adding that overtime and weekend shifts for next week had been cancelled.
Indian deputy finance minister optimistic on growth The Indian economy can grow by 8 percent in the coming fiscal year as long as there is a favourable monsoon after two years of drought, deputy finance minister Jayant Sinha said on Saturday. Speaking on the sidelines of the Economic Times Global Business Summit, Sinha said that a favourable rainy season could add between 0.5 and 1 percentage point to growth in Asia’s third-largest economy.
Myanmar 3G to cover 95 pct of population in March Myanmar Post and Telecommunication (MPT) will provide its 3G network to cover 90 percent of the country during February, with over 95 percent of country to receive coverage by the end of March, official media reported Saturday. At present, only 60 percent of Myanmar is covered by the 3G network, said the Global New Light of Myanmar. MPT is working towards expanding network of phone, towers for the coming 4G network, according to U Thein Hote, deputy chief of MPT’s business department.
Cambodia urges diplomats to attract tourists, investors Cambodian Deputy Prime Minister and Foreign Minister Hor Namhong on Saturday advised the country’s ambassadors and consuls-general to focus on attracting foreign tourists and investors. “To attract more tourists to Cambodia, the issuance of visas (to tourists) entering Cambodia must be done as soon as possible and overcharging the formal visa fees must be avoided,” he said during a meeting here with 26 ambassadors and eight consuls-general to countries. He instructed them to promote Cambodia’s investment potential and favourable law and regulation to foreign investors.
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February 1, 2016
International Russia eases risk concentration rules for banks Russia’s central bank said on Friday it had relaxed rules governing banks’ exposure to one borrower or a group of related borrowers, shielding them from recent volatility in the rouble. All Russian banks will be able to use more favourable exchange rates for the period January 1 to March 31 when assessing whether they comply with rules on their risk concentrations, the bank said in a statement. Banks will be able to use the central bank’s exchange rate as of January 1 for operations in U.S. dollars, euros, British pounds, Swiss francs and Japanese yen, it said.
German regulator investigates possible tractor cartel Germany’s anti-trust regulator said on Friday it was investigating a possible cartel of companies making agricultural machinery, particularly tractors. It did not name any targets of the probe. German agricultural trading group Baywa said the cartel office had searched its headquarters earlier this week on suspicion that some of its employees were involved in anti-competitive agreements. Baywa said a court order showed several companies from the industry were being investigated, adding it was cooperating with the cartel office. Deere & Co, the maker of John Deere tractors, said late on Friday it was not involved.
Argentina seals US$5 bln loan
U.S. economic growth slows to a 0.7 percent rate in Q4 The economy grew 2.4 percent in 2015 after a similar expansion in 2014 Lucia Mutikani
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.S. economic growth braked sharply in the fourth quarter as businesses stepped up efforts to reduce an inventory glut and a strong dollar and tepid global demand weighed on exports. Gross domestic product increased at a 0.7 percent annual rate, the Commerce Department said on Friday, also as lower oil prices continued to undermine investment by energy firms and unseasonably mild weather cut into consumer spending on utilities and apparel. The growth pace was in line with economists’ expectations and followed a 2 percent rate in the third quarter. The economy grew 2.4 percent in 2015 after a similar expansion in 2014. But some of the impediments to growth - inventories and mild temperatures - are temporary and the economy is expected to snap back in the first quarter. Excluding inventories and trade, the economy grew at a 1.6 percent pace. Nevertheless, the GDP report could spark a fresh wave of selling on the stock market, which has been roiled by fears of anaemic growth in both the United States and China.
Small inventory build
In the fourth quarter, businesses accumulated US$68.6 billion worth of inventory. While that is down from US$85.5 billion in the third quarter, it was a bit more than economists had expected, suggesting inventories could remain a drag on growth in the first quarter.
Argentina’s central bank said on Friday it had sealed a deal for a US$5 billion, one-year loan from international private banks, bolstering its low foreign reserves as the country heads into talks with creditors suing over unpaid debt. The South American country is virtually shut out of global credit markets because of its long-running legal dispute in U.S. courts with creditors over debt it defaulted on in 2002. President Mauricio Macri (pictured), who took office last month, has said he hopes to reach an agreement early this year, enabling Argentina to regain access to capital markets.
Pakistan’s central bank keeps interest rate Pakistan’s central bank kept its benchmark policy rate unchanged at 6 percent on Saturday, the State Bank of Pakistan governor told a news conference, citing lower inflationary pressures and improved economic indicators. The central bank has kept the rate at 6 percent since September after a series of cuts to the benchmark over the previous year. Tumbling commodity and oil prices have helped ease inflation in Pakistan, allowing the bank to cut rates as it tries to revive an economy still struggling with low levels of capital investment, falling exports and severe power shortages.
The small inventory build subtracted 0.45 percentage point from the first estimate of fourthquarter GDP growth. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.2 percent rate. That marked a step-down from the 3.0 percent pace notched in the third quarter. Unusually mild weather hurt sales of winter apparel in December and undermined demand for heating through the quarter. With gasoline prices around US$2 per gallon, a tightening labour market gradually lifting wages and house prices boosting household wealth, economists believe the slowdown in consumer spending will be shortlived. The dollar, which has gained 11 percent against the currencies of the United States’ trading partners since last January, likely remained a drag on exports, leading to a trade deficit that subtracted 0.47 percentage point from GDP growth in the fourth quarter. The downturn in energy sector investment put more pressure on business spending on non-residential structures. Spending on mining exploration, wells and shafts plunged at a 38.7 percent rate after dropping at a 47.0 percent pace in the third quarter. Investment in mining exploration, wells and shafts fell 35 percent in 2015, the largest drop since 1986. Oil prices have dropped more than
KEY POINTS U.S. fourth-quarter GDP rises at a 0.7 percent rate Inventory investment slices 0.45 percentage point off GDP Consumer spending slows to a 2.2 percent rate Trade, business investment also drag on growth
60 percent since mid-2014, forcing oil field companies such as Schlumberger and Halliburton to slash their capital spending budgets. Business spending on equipment contracted at a 2.5 percent rate last quarter after rising at a 9.9 percent pace in the third quarter. Investment in residential construction remained a bright spot, rising at a 8.1 percent rate. With consumer spending softening, inflation likely retreated in the fourth quarter. A price index in the GDP report that strips out food and energy costs increased at a 1.2 percent rate, slowing from a 1.4 percent pace in the third quarter. Reuters
IMF changes debt sustainability rules for large bailouts The aim is to get a debtor country back on its feet more quickly while instilling confidence in the loan program David Lawder
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he International Monetary Fund said on Friday it is leaving the door open to large bailout loans for countries with questionable ability to repay debt, but has revised its rules for such rescues. Last week, the IMF ended the 2010 lending exemption that allowed major bailout loans to Greece, Ireland and Portugal and helped to ease a European sovereign debt crisis. In a press release detailing changes in its lending practices, the IMF said it will allow larger loans to countries that do not have a “high probability” of debt sustainability if they are also able to maintain private-sourced credit on terms that allow gradual improvement of their fiscal situation. IMF officials said doing so may
require a reprofiling of existing debt by extending maturities or other terms, but it would be less than a full restructuring that cut interest payments or principal, which they said could disrupt markets. The aim is to get a debtor country back on its feet more quickly while instilling confidence in the loan program. If private creditors are simply paid off with IMF money, there is less incentive for a country to pursue reforms needed to improve its debt profile. The changes allow the IMF to still handle debt crises like the one that engulfed Greece in 2010, in which a country’s debt falls in between the Fund’s previous categories of being clearly unsustainable and having a “high probability” of being repaid.
In 2010, the IMF created a “systemic exemption” that allowed it to make a 30 billion euro loan to Greece as part of a wider 110 billion euro bailout that also included the European Union and European Central Bank. The exemption, intended partly to keep the debt crisis from spreading, was later invoked for loans to Ireland and Portugal and has been used dozens of time since. Republicans in the U.S. Congress required efforts to remove the exemption before they supported legislation in December to implement a long-delayed reform of the Fund’s quota system to give more voting power to emerging markets including China and Brazil. Reuters
Business Daily | 15
February 1, 2016
Opinion Business
wires
Leading reports from Asia’s best business newspapers
The three fears sinking global markets Anatole Kaletsky
THE KOREA HERALD
Chief Economist and Co-Chairman of Gavekal Dragonomics and the author of Capitalism 4.0, The Birth of a New Economy
South Korea’s national debt is expected to surpass the 600 trillion won (US$498.1 billion) mark for the first time ever this week after growing steadily over the years, official data showed yesterday. The total will mark a 4.9 trillion won increase from the estimated 595.1 trillion won in debt accumulated by Asia’s fourth-largest economy as of late 2015, the National Assembly Budget Office said. Based on this year’s budget spending plan, the national debt could reach 644.9 trillion won by the end of 2016, it added.
PHILSTAR Nomura Securities Co. Ltd. sees the economic growth of the Philippines picking up to 6.5 percent this year after slowing down last year due to weak global demand and lack of government spending. Euben Paracuelles, economist at Nomura, said the presidential and national elections in May would boost the country’s gross domestic product (GDP) growth that slowed down to 5.8 percent last year from 6.1 percent in 2014. Aside from election-related spending boosting private consumption, he pointed out investments would pick up with the implementation of infrastructure projects.
THE TIMES OF INDIA The government will soon exploit economically unviable coal mines for gasification to produce cheaper urea to cut down on huge Rs 55,000 crore annual subsidy on the fertilizer, Union Minister Nitin Gadkari said on Saturday. “We cannot extract coal from 40 per cent coal mines in the country, which are not economically viable. The idea is to use these soon for coal gasification by which we can get urea at a cost of only Rs 8,000 to Rs 10,000 a tonne,” the Road Transport and Highways Minister said at Economic Times Global Business Summit here.
THANH NIEN NEWS PetroVietnam Southern Gas JSC has announced plans to sell its 55.2 percent stake in gas producer and distributor CNG Vietnam by April 30. With the CNG share selling at VND31,500 on the stock market now, the sale is expected to fetch PVGas South, as the company is better known, VND469 billion (US$20.83 million). Incorporated in 2007 as a producer, transporter and distributor of compressed natural gas, liquefied natural gas, and liquefied petroleum gas products, CNG Vietnam reported a net profit of VND118 billion (US$5.24 million) last year, up 40 percent year-on-year.
Chinese investors check the share prices on computers at a securities brokerage house in Beijing last week
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anuary is usually expected to be a good month for stock markets, with new money gushing into investment funds, while tax-related selling abates at the end of the year. Although the data on investment returns in the United States actually show that January profits have historically been on only slightly better than the monthly norm, the widespread belief in a bullish “January effect” has made the weakness of stock markets around the world this year all the more shocking. But the pessimists have a point, even if they sometimes overstate the January magic. According to statisticians at Reuters, this year started with Wall Street’s biggest first-week fall in over a century, and the 8% monthly decline in the MSCI world index made January’s performance worse than 96% of the months on record. So, just how worried about the world economy should we be? Three fears now seem to be influencing market psychology: China, oil and the fear of a US or global recession. China is surely a big enough problem to throw the world economy and equity markets off the rails for the rest of this decade. We saw this in the first four days of the year, when the sudden fall in the Chinese stock market triggered January’s global financial mayhem. But the Chinese stock market is of little consequence for the rest of the world. The real fear is that the Chinese authorities will either act aggressively to devalue the renminbi or, more likely, lose control of it through accidental mismanagement, resulting in devastating capital flight. Such a scenario seemed quite plausible for a few weeks last
summer, and it re-emerged as a threat in the first two weeks of this year. By the end of January, however, market sentiment had moved back in favour of stability in China. This calm could be disrupted again if China’s foreign-exchange reserves show another huge monthly loss, and the authorities’ efforts to manage an orderly economic slowdown will remain the biggest source of legitimate concern for financial markets for many years ahead. But, judging by market behaviour in the second half of January, the fear about China has subsided, at least for now. That cannot be said about the market’s second great worry: collapsing oil prices. From the moment investors stopped panicking about China, in the second week of January, stock markets around the world started falling (and occasionally rebounding) in lockstep with the price of oil. Unlike the reasonable concern about China, market sentiment seems simply to have gotten the relationship between oil and the world economy wrong. In anything but the very short term, the correlation between oil prices and stock markets should be negative, not positive – and will almost certainly turn out that way in the years ahead. When oil prices plunge by 10% daily, this is obviously disruptive in the short term: credit spreads in resources and related sectors explode, and leveraged investors are forced into asset fire sales to meet margin calls. Fortunately, market panic now seems to be subsiding, as oil prices reach the lower part of the US$25-50 trading range that always seemed appropriate in today’s political and economic conditions. Now that oil prices
are stabilizing at a reasonable long-term level, the world economy and non-commodity businesses should benefit. Low oil prices increase real incomes, stimulate spending on non-resource goods and services, and boost profits for energy-using businesses. Yet, despite these obvious benefits, most investors now seem to believe that falling oil prices point to a collapse in economic activity, which brings us to the third fear haunting financial markets this winter: a recession in the global economy or the US. Past experience suggests that oil prices are not a useful leading indicator of economic activity. In fact, if oil-price movements have any relevance at all in economic forecasting, it is as a contrary indicator. Every global recession since 1970 has been preceded by a big increase in oil prices, while almost every decline greater than 30% has been followed by accelerating growth and higher equity prices. The widespread view that plunging oil prices augur recession is a clear case of the belief that this time is different – a belief that typically takes hold in financial markets at the peaks and troughs of boom-bust cycles. Finally, what about the falling stock market itself as an indicator of recession risks? One could quote the great economist Paul Samuelson, who famously quipped in the 1960s that the stock market had “predicted nine of the last five recessions.” There is, however, a less reassuring answer. While markets are often wrong in predicting economic events, financial expectations can sometimes influence those events. As a result, reality can sometimes
be forced to converge towards market expectations, not vice versa. This process, known as “reflexivity,” is a powerful force in financial markets, especially during periods of instability or crisis. To the extent that reflexivity works through consumer and business confidence, it should not be a problem now, because the oil-price collapse is a powerful antidote to the stock-market decline. Consumers are gaining more from cheap oil than they are losing from falling stock prices, so the net effect of recent financial turmoil on consumption should be positive – and stronger consumption should feed through to business revenues. A greater worry is the workings of reflexivity within the financial system itself. Bankruptcies among small energy-sector companies, which are of limited economic importance themselves, are creating pressures in global banking and reducing the availability of credit to healthy businesses and households that would otherwise be beneficiaries of cheaper oil. Fears of a Chinese devaluation that has not happened (and probably never will) are having the same chilling effect on credit in emerging markets. Meanwhile, banking regulators are continuing to tighten lending standards, even though economic conditions suggest they should be easing up. In short, nothing about the condition of the world economy suggests that a major slowdown or recession is inevitable or even likely. But a lethal combination of self-fulfilling expectations and policy errors could cause economic reality to bend to the dismal mood prevailing in financial markets. Project Syndicate
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February 1, 2016
Closing China Life reports sharp drop in profit growth
iQiyi secures distribution rights for 20th Century Fox films
China Life Insurance Co., Ltd, the country’s largest insurer, said on Friday that its preliminary net profit in 2015 grew between five to 10 percent. The growth was sharply lower than the 30.1-percent growth posted in 2014, with a net profit of 32.2 billion yuan (US$4.9 billion). China Life attributed the profit growth last year to higher investment returns, it said in a statement filed to the Shanghai Stock Exchange. It cited changes in the discount rate in traditional types of insurances as reason for the decline in profit growth.
Mid-tier Chinese banks piling up trillions of dollars in shadow loans The size of this ‘shadow loan’ is equivalent to 16.5 percent of all commercial loans in China Shu Zhang and Matthew Miller
Online streaming site iQiyi has signed a deal with 20th Century Fox that will give the company exclusive rights to the studio’s blockbusters to serve China’s online movie viewing market. A brief statement posted on the verified account of 20th Century Fox on Weibo, a Twitter-like platform, said that subscribers to iQiyi will be able to stream the likes of “The Martian” and “Maze Runner: The Scorch Trials,” which have already been screened in China, as well films set for release including “X-Men: Apocalypse.” The financial terms of the deal was not disclosed.
banking system, filings showed. Industrial Bank declined to comment for this story. Investment receivables may include such benign assets as government bonds, but increasingly they include TBRs and DAMPs at mid-tier lenders. At Evergrowing Bank, investment receivables reached 397 billion yuan in September, surpassing its loan book of 290 billion yuan. The bank said last year practically all of its investment receivables were DAMPs and TBRs.
Regulator on alert
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id-tier Chinese banks are increasingly using complex instruments to make new loans and restructure existing loans that are then shown as low-risk investments on their balance sheets, masking the scale and risks of their lending to China’s slowing economy. The size of this ‘shadow loan’ book rose by a third in the first half of 2015 to an estimated US$1.8 trillion, equivalent to 16.5 percent of all commercial loans in China, a UBS analysis shows. For smaller banks, the rate is much faster. This growing practice, which involves financial structures known as Directional Asset Management Plans (DAMPs) or Trust Beneficiary Rights (TBRs), comes at a time
when some mid-tier lenders, under pressure from China’s slowest economic growth in 25 years, are already delaying the recognition of bad loans. “These are now the fastest growing assets on the balance sheets of most listed banks, excluding the Big Five, not just in percentage terms but absolute terms,” said UBS financial institutions analyst Jason Bedford, a former bank auditor in China who focuses on the issue. “The concern is that the lack of transparency and miscategorization of credit assets potentially hide considerable non-performing loans.” To provide a buffer against tough times, banks are required to set aside capital against their credit assets - the riskier the asset, the more capital must be set aside, earning them nothing.
Cyclone misses major Australian ore port
Loans typically carry a 100 percent risk weighting, but these investment products often carry a quarter of that, so banks can keep less money in reserve and lend more. Banks must also make provision of at least 2.5 percent for their loan books as a prudent estimate of potential defaults, while provisions for these products ranged between just 0.02 and 0.35 percent of the capital value at the main Chinese banks at the end of June, Moody’s Investors Service said in a note last month. At China’s mid-tier lender Industrial Bank Co, for example, the volume of investment receivables doubled over the first nine months of 2015 to 1.76 trillion yuan (US$267 billion). This is equivalent to its entire loan book - and to the total assets in the Philippine
China Zheshang Bank, another smaller lender, also saw its investment receivables double over the same period, the bank’s prospectus to sell shares in Hong Kong shows. Zhang Changgong, the bank’s deputy governor, said banks were increasingly becoming return-seeking asset managers, not mere lenders. “In the past banks (made loans and) held assets. Now banks manage assets,” he said. The rapid growth of investment receivables, from less than US$300 billion in 2012, comes despite a decision in 2014 by China’s banking regulator to restrict purchase of TBRs and DAMPs under repurchase agreements in the interbank market, in a move to restrict the growth of these assets. But DAMPs and TBRs soon reappeared on bank balance sheets under the line ‘investment receivables’. The China Banking
Reuters
Lack of paediatricians in the time of two-child policy
Beijing tops Chinese cities in spending
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Regulatory Commission (CBRC) is paying close attention to investment receivables, officials told Reuters. China Guangfa Bank’s Tianjin branch was fined last year for using its own funds to invest in a structured product that was providing US$1.5 billion yuan in financing to a real estate company to avoid loan recognition and proper provisioning, the CBRC said in a note on its website. The listing of Bank of Jinzhou, another small Chinese lender, nearly derailed last year when it revealed in documents prepared for the share sale that it was exposed to troubled solar company Hanergy Group, primarily through such products. The bank subsequently sold off the bulk of its risk. To structure these deals, a bank typically engages a friendly trust, securities, or asset management company to set up a financing arrangement for a bank client. The bank then buys the beneficiary rights to the investment product using a special purpose vehicle. Typically, the originating bank assumes all risk should the borrower default. “If the originating bank does not promise to pay from its own pocket should any default happens, no trust company would agree to collaborate,” said a senior executive at a Chinese mid-tier bank, who declined to be named due to the sensitivity of the issue.
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HP Billiton Ltd., Rio Tinto Plc and other iron-ore producers in northwest Australia evaded the worst of Cyclone Stan after the weather system missed major export hubs and weakened as it moved inland. The cyclone made landfall early yesterday with less force than expected east of Port Hedland, the world’s largest bulk-export terminal, the Bureau of Meteorology said on its website. While the bureau expects heavy rain, potential flooding and gusts of up to 90 kilometres an hour in some places, it said Stan has faded to a category 1 cyclone and will gradually lose power. Port Hedland is the maritime gateway to Asia for miners hunting for iron ore in the Pilbara region of Western Australia. BHP, which had evacuated workers as Stan approached, reopened sites at the port early yesterday, Matthew Nette, a spokesman for the company, said in an e-mail. Rio, which had sent ships to safe anchorages, said in an e-mail yesterdayits facilities west of Port Hedland at Dampier and Cape Lambert were back to normal. “The cyclone danger has passed,” the weather bureau said in an advisory to residents in Port Hedland.
eijing retained its crown as China’s biggest shopping city in 2015, as online shopping fever continued to buoy retail sales and drove more old brands to open online stores. According to a report by Beijing Statistics Bureau, retail sales of consumer goods in the Chinese capital surpassed 1 trillion yuan (US$152 billion) in 2015, up 7.3 percent year on year. It is the eighth straight year that the metropolis has led Chinese cities in terms of consumer spending. Online sales contributed 82.6 percent of sales. Online sales have prompted traditional stores, including 13 of Beijing’s 77 “time-honoured brands” from snack stores to shoes sellers, to move their goods online. The city of 21 million people recorded 1.86 trillion yuan in total consumption in 2015, marking a yearly rise of 8.7 percent. Consumption contributed over 70 percent to the city’s GDP growth. Retail sales of consumer goods, a key indicator of consumption, rose 10.7 percent year on year in China last year, contributing 66.4 percent to the country’s GDP, the Ministry of Commerce said earlier this month.
hina’s introduction of the two-child policy this year has caused worry that the change will further aggravate a current shortage of paediatricians. The number of paediatricians in China dropped from 105,000 to around 100,000 within five years, according to China’s public health statistical yearbook in 2015. On average, there are only 43 doctors per 100,000 children. Wang Baoxi, a paediatrician with the Shaanxi branch of Chinese Medical Doctor Association, told Xinhua that situation was even worse in smaller cities and counties. In Weinan city, which is about 70 kilometres away from Shaanxi’s capital Xi’an, they only had 17 doctors to care for 100,000 children. The Lingnan branch of No. 3 hospital affiliated with Sun Yat-sen University posted a notice telling people emergency treatment services in the paediatric department were cancelled due to lack of doctors. “Since the department was established in 2011, we have employed eight doctors. Four left in the following years,” said Shan Yutao, who works in the hospital’s medical management office.
Bloomberg News
Xinhua
Xinhua