MOP 6.00 Closing editor: Joanne Kuai
Top officials blame radical separatist forces behind mobs
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Year IV
Number 980 Monday February 15, 2016
Publisher: Paulo A. Azevedo
New SME credit limit in H2 down 17.9 pct y-o-y Page 3
European Union imposes duties on Chinese steel sector
CNY Visitor Arrivals Good Start to Year Visitor arrivals to Macau perked up during CNY. The 2016 Chinese New Year Golden Week holiday period posted a 4.7 pct increase from a year earlier. Official data shows Macau welcomed some 1.08 mln visitors from Sunday to last Saturday. The city recorded around 794,000 Mainland Chinese visitor arrivals. An increase of 4.3 pct vis-a-vis the equivalent period in 2015. Arrivals from Mainland China made up 73.7 pct of total arrivals during the week Page 3
Wynn Macau’s 4Q profits plunge It’s in the post A merger is announced. Between Macau Post and the Telecommunication Regulation Bureau. It’s now expected to be completed in Q1. Bureaucracy has delayed amalgamation says the Macau Post director. Lau Wai Meng pledges, nevertheless, to maintain stable postal service charges
www.macaubusinessdaily.com
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Million dollar question The gov’t is paying MOP910,000/ month to MUST Hospital. Renting space for its Island Emergency Station. Legislator Au Kam San questioned why the government is not using public housing facilities. Because MUST is better prepared for emergencies, responded the Health Bureau director. Thus, there is no intention to relocate
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Casino operator Wynn Macau Ltd. reported a 54.5 pct y-o-y decline in net profit in 4Q. Profit for the three months ended December 31, 2015 was US$63.5 million. Chairman Steve Wynn expressed optimism, however, regarding Wynn Macau’s performance so far this year. Saying January had been the company’s “best month in a long time”
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Don’t rock the boat It’s been a bumpy start to the year. Prompting China’s central bank governor Zhou Xiaochuan to elaborate on the yuan’s evolution. Speculators should not be allowed to dominate market sentiment, he said. Referring in particular to China’s foreign exchange reserves
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Brought to you by
HSI - Movers February 12
Name
Interview
The medium is the message Construction is underway. On its Phase II campus. Giving The International School (TIS) more study elbow room and greater capacity of up to 1,600 students. Better facilities and preparation for international universities have paid dividends says Howard Stribbell. With the school head citing the Alberta High School Diploma curricula as the bedrock of TIS access to over 230 universities worldwide. With English the primary language of instruction for students from 40 different countries and regions, language fluency is the first challenge, he says
Pages 6&7
%Day
Galaxy Entertainment
+3.10
Kunlun Energy Co Ltd
+2.28
Tingyi Cayman Islands
+2.06
Sands China Ltd
+2.06
Cathay Pacific Airways
+1.97
China Unicom Hong Ko
-2.89
CITIC Ltd
-3.07
Bank of China Ltd
-3.40
Ping An Insurance Gro
-4.23
Hengan International
-4.95
Source: Bloomberg
I SSN 2226-8294
2016-2-15
2016-2-16
2016-2-17
10˚ 15˚
9˚ 15˚
11˚ 16˚
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February 15, 2016
Macau Taxi! 283 drivers prosecuted for violations over CNY Public Security Police Force (PSP) prosecuted driver for a total of 283 taxi violations during the Chinese New Year Holiday between February 6 and February 13, according to local broadcaster TDM Radio. Of the violations, 108 cases were related to drivers overcharging passengers whilst 74 other cases involved drivers refusing to take passengers. Meanwhile, local police also prosecuted 21 cases of unlicensed taxi services during the same period, of which two involved the perpetrators of unnamed taxi-hailing mobile applications.
Gov’t spends MOP910,000 per month for Island Emergency Station rental
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he government said it is spending some MOP910,000 (US$113,750) per month to rent space at the Macau University of Science and Technology Hospital for the Island Emergency Station. However, it claimed that it has no intention of relocating the emergency station from the private hospital to its self-owned health centre in Taipa. The director of the Health Bureau, Lei Chin Ion, revealed in replying to legislator Au Kam San’s written interpellation that the government’s expenditure on renting the venue for the island emergency station has remained unchanged since the leasing contract between the University Hospital and the government began in 2011.
“The amount of rent was almost the cheapest in Macau back then. And it has never been increased for five years since we rented the space,”
the Bureau director claimed. According to Mr. Lei, the government’s round-the-clock emergency station in Taipa,
implemented in November 2011, occupies some 37,000 square feet, while the government is charged MOP24.6 per square feet for renting the space from University Hospital. Legislator Au Kam San, however, doubted whether it is necessary for the government to continue renting the private hospital space for its public medical emergency service. “The Nossa Senhora do Carmo – Lago Health Centre in Edificio do Lago in Taipa has been completed and is running services. It is the largest in the city but only opens until eight o’clock every night. Hence, if the government could relocate the Island Emergency Station to the Health Centre, saving nearly one million per month,” the legislator said. Nevertheless, the Health Bureau head stressed that the orientation of the Carmo-Lago Health Centre is for community health care services and dealing with patients displaing mild illnesses. “Hence, the facilities at the Health Centre have no condition to provide medical emergency service like the University Hospital,” Mr. Lei indicated.
DSRT and Macau Post to merge in Q1 Director of the Macau Post also pledges to keep the service charge stable during this year Bami Lio
bami.lio@macaubusinessdaily.com
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he Bureau of Telecommunications Regulation (DSRT) is expected to merge with Macau Post within the first
quarter, said Macao Post Director Lau Wai Meng on local broadcaster TDM Radio programme Forum. The merger was supposed
to take effect on January 1 this year. It was part of a streamlining scheme announced last year by Secretary for Transport and
Public Works Raimundo Rosário. Ms. Lau explained that the plan didn’t proceed on time as too many departments and procedures were involved. She said that the final merging progress should be passed to the Executive Council after receiving formal opinions from related departments and approvals from all affected sides. She expects the merger to be completed within the first quarter. Prior to the establishment of DSRT in 2000, as the Office for the Development of Telecommunications and Information Technology, the city’s telecommunications were supervised by the then-Bureau of Telecommunications and
K.L.
Postal Services (CTT) - the predecessor to Macau Post.
Stable fee
The director of Macau Post pledged to keep post service fees stable this year. Lau Wai Meng claimed that Macau Post meant to adjust its service charge in 2015, but kept it stable as last year’s revenues were satisfactory. She indicated that the postal service is an international service and a labour intensive industry and that “there are aviation fees, fuel surcharges, and delivery fees from the other side”. As a department that has financial independence - which means at the same time it is responsible for its own profit and loss – the Post Office will pay great attention to cost effectiveness as both the global and Macau economy is in a period of adjustment, said Ms. Lau. She added that there is an increasing usage of parcels and Express Mail Service (EMS) which she credits to online shopping. She added that the Post Office has already launched a selfpickup kiosk and enhanced training as well as adding new equipment in order to improve its services.
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February 15, 2016
Macau New SME credit limit in H2 down 17.9 pct y-o-y
MSAR welcomes 1.08 mln visitors from CNY Eve to Saturday
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he city received some 1.08 million tourists for Chinese New Year (CNY) as at Saturday, jumping 4.7 per cent yearon-year, according to the latest official data released by the Public Security Police Force (PSP). The data, published on the official website of the Macao Government Tourism Office (MGTO), indicates that 793,598 of the total visitors to the Special Administrative Region from CNY Eve (February 7, Sunday) to last Saturday were from Mainland China, which accounted for 73.7 per cent of the total and a year-on-year growth of 4.3 per cent. However, the authorities noted that the visitor data includes arrivals of the city’s non-resident workers and students. For the seven-day period, the third, fourth and fifth day of the CNY were the busiest days for the Special Administrative Region, which welcomed some 182,878, 180,911 and 178,900 visitors in one day, respectively. But the city also saw a significant increase in the tourist numbers for CNY Eve, the first day and the second day of CNY, which were up 8.2 per cent, 7.5 per cent and 7 per cent
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year-on-year to 93,758, 120,950 and 150,950, respectively. According to the data, the growth in visitor numbers for the first and the second day of CNY was attributable to the number of Mainland tourists, which climbed 9.9 and 9.7 per cent year-on-year, respectively. Meanwhile, 57.6 per cent of tourists
visited the territory via the city’s Border Gate during the seven days, amounting to 619,817 of the total. In addition, some 193,923 visitors entered the Special Administrative Region via the Outer Harbour Ferry Terminal, while some 63,963 landed at the city’s airport. K.L.
ccording to the latest statistics released by the Monetary Authority of Macao (AMCM) the new SME credit limit approved by Macau banks amounted to MOP20.6 billion (US$ 2.6 billion) in the second half year ended December 31 2015, increasing MOP2 billion or 14.5 per cent compared to the first half year, while decreasing 17.9 per cent yearon-year. The collateralised ratio was 83.7 per cent, up 5.2 per cent compared to the first half year and by 1.7 per cent year-on-year. The loans outstanding balance amounted to MOP66.7 billion, up 2.3 per cent from the first half year and 11.3 per cent year-on-year. Share in domestic loans to the private sector is 17.2 per cent, down 0.2 per cent from six months ago and 0.5 per cent year-on-year. The utilisation rate was 61.2 per cent, down 3.5 per cent from the first half year and 5.5 per cent year-on-year. The outstanding balance of delinquent loans amounted to MOP366.2 million, increasing 87 per cent from the first half year and 168.6 per cent year-on-year. The delinquency ratio was 0.6 per cent, up 0.3 per cent from six months ago and a year ago.
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February 15, 2016
Macau SJM’s Cotai project renamed Grand Lisboa Palace Local gaming operator SJM Holdings Ltd’s new Cotai project has been re-branded Grand Lisboa Palace from its previous title of Lisboa Palace, according to its Chief Executive, Ambrose So Shu Fai. “SJM has also maintained its strong position, finishing the year with a solid balance sheet, and achieving great progress on the construction of our integrated resort Lisboa Palace, now renamed the Grand Lisboa Palace,” Mr. So said in a speech during the company’s CNY gala dinner. He commented to broadcaster Rádio Macau that the company’s new project is built on the “very strong branding” of the Lisboa. The casino operator owns Grand Lisboa Hotel and Hotel Lisboa on the Peninsula.
Wynn Resorts shares surge on Vegas growth, Macau stabilization Billionaire founder Steve Wynn said Macau’s business in January had been the company’s “best month in a long time”
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ynn Resorts Ltd. shares jumped after fourthquarter earnings beat analysts’ estimates, with revenue growth in Las Vegas partially offsetting a decline in the Macau business. Earnings excluding some items fell to US$1.03 a share, the Las Vegas-based company said Thursday in a statement, compared with the 76-cent average of estimates compiled by Bloomberg. January was the Macau business’s “best month in a long time,” billionaire founder Steve Wynn said in a post-earnings conference call. Wynn Resorts, like other Macau casino operators, has
suffered through a two-year slump in betting by highrollers. Betting revenue in the Chinese enclave fell 27 per cent to MOP54.8 billion (US$6.8 billion) in the fourth quarter. Still, that was smallest quarterly decline of 2015, leaving some analysts to suggest the market may be bottoming out. Shares of Wynn Resorts surged as much as 13 percent. Other casino companies shares also rallied, with Las Vegas Sands Corp. climbing as much as 7.3 per cent, its highest intraday rise since Oct. 5, and MGM Resorts International soaring as much as 6.1 per cent. The company is seeing some pickup in hotel occupancy and
stabilization of some retailers as well as visits to its Macau casino, said Wynn Resorts President Matt Maddox. Shares of Wynn Macau rose 3.6 per cent to HK$7.77 at the close in Hong Kong. The other four casino companies listed in the city also climbed, with MGM China Holdings Ltd. up 3.4 per cent and Sands China Ltd. up 2.1 per cent. The benchmark Hang Seng Index lost 1.2 pe rcent. Wynn said he expects the number of junket operators, which bring in high rollers to its Macau casino, will drop to as low as four, about half of the current number because of weakness in some operators. Still, there’s no shortage of wealthy gamblers in China and he expects to draw them to his casino, the gambling mogul said. The company said it’s working with its contractor in Macau and still hopes its new casino in the developing Cotai district will open on June 25. The US$4.1 billion Wynn Palace is one of three new casinos expected to open in 2016 from the U.S. basedcompanies operating there. Bloomberg
Macau Literary Festival confirms attendance of Pulitzer Prize winner Adam Johnson Portuguese Director Ivo M. Ferreira’s newest venture, Letters from War, will also receive its Asian premiere at the Macau Literary Festival, hard on the heels of its 66th Berlin Film Festival world premiere
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he Script Road has announced that Letters from War, receiving its world premiere today at the 66th Berlin Film Festival, will be screened on the opening day of the Macau Literary Festival (March 5, 7.30pm, UA Galaxy Cinemas), marking the Asian Premiere of this latest production from director Ivo M. Ferreira. Letters from War (Cartas da Guerra) is based on a
Adam Johnson
book published in 2005 by renowned Portuguese author António Lobo Antunes. The epistolary book compiles letters the young doctor and aspiring author wrote to his wife in 1971 upon being drafted into the Portuguese Army and posted to Angola during the Colonial War. The film is presently in competition for the Golden Bear at the Berlinale. The venue for the film screening at the Macau Literary Festival
is sponsored by Galaxy Entertainment Group. Also featuring in this year’s edition of the Festival is author Adam Johnson, winner of the 2015 U.S. National Book Award for Fiction for his collection of short stories Fortune Smiles and the 2013 Pulitzer Prize for Fiction for his novel
‘Letters from War’ movie still
The Orphan Master’s Son (2012), an epic tour de force in which the writer provides a riveting portrait of North Korea. The New York Times described the book as ‘a daring and remarkable novel, a novel that not only opens a frightening window on the mysterious kingdom of North Korea, but one
that also excavated the very meaning of love and sacrifice’. The Orphan Master’s Son is a New York Times Bestseller and was chosen as one of the Best Books of the Year (2013) by the Financial Times, The New Yorker and the Washington Post, among others.
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February 15, 2016
Macau Hyatt appoints Patrick J. Grismer new CFO Global hotel group Hyatt Hotels Corporation has appointed Patrick J. Grismer as the company’s new Chief Financial Officer (CFO) effective March 14, it announced last week. The new CFO of the hotel group will report to company President and CEO Mark Hoplamazian. “Pat is a highly respected leader with strong financial acumen. His considerable experience in building global brands will serve us well at Hyatt,” said Mr. Hoplamazian. Mr. Grismer was a CFO at fast food chain operator YUM! Brands before joining Hyatt. “Hyatt’s portfolio of premier hotel brands and its commitment to quality and outstanding service truly differentiates it from the competition,” he said.
Wells Fargo: Gaming revenues likely down The firm claims that the city’s mass tables remained quiet during the holiday period although more tourists visited the city last week
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ven though overall visitor arrivals posted year-on-year growth for the Chinese New Year (CNY) holiday, analysts at Well Fargo Securities perceive that the tourist increase is not likely to have boosted the city’s gaming revenues for the period. ‘Our latest channel checks suggest mass tables remain quiet. In particular, we are hearing this Chinese New Year is notable for the number of (middle-class) families present in Macau, and their higher propensity to enjoy
non-gaming amenities and lower propensity to gamble,’ the firm wrote in its latest research note last week. ‘Given everything we are seeing and hearing in the market and in China, we are not sure what the catalyst is for 18 months of trend decline to suddenly turn around in February,’ it said. The research house is now expecting the city’s gaming revenue to post a year-onyear drop of 14 per cent for this month, estimating the local gaming industry is generating around MOP580
million per day for the month. Nevertheless, the firm’s analysts see that the city’s gaming industry may still have the opportunity to rebound in the near term following China’s foreign currency reserve posting drops in January. ‘Given the strong correlation between bank reserves and both VIP (74 per cent correlation) and Mass (62 per cent correlation) revenues, the latest drop in reserves could be another indication that Macau revenues are likely to spring
back in the near term,’ it explained. But the firm also added that it ‘firmly believe we won’t see another V-shaped recovery as the huge liquidityinduced ‘Macau bubble’ of the past five years continues deflating.’
Union Gaming: “Wynn’s stability good news”
As local gaming operator Wynn Macau’s management has noted, the company’s local market has been stabilising, it said, in the conference call of its 2015 fourth-quarter results. Research firm Union Gaming perceives this may mean good news for the casino company’s operations for this year. “Management indicated that they’ve seen stabilisation in trends since November of last year, and that January 2016 was the best month they’ve had in recent history. With this in mind, we’ve now heard from two of the Big 6 Macau operators that despite focusing on opposite ends
of the customer spectrum [they] have been clear about stabilisation seen in their businesses,” the firm’s analyst Grant Govertsen wrote. He claimed that the firm has seen solid mass visitation to Wynn Macau last week bolstered by higher minimum bets. Contrary to Wells Fargo’s estimation, the Union Gaming analyst said, “We’ve heard similar commentary from both Peninsula and Cotai operators as it relates to solid mass trends during CNY”. However, the analyst claimed that the performance of the VIP segment for the holiday period is still unknown due to “the typical delay to the start of big VIP betting during CNY”. Meanwhile, Wells Fargo analysts reckon Wynn’s tone in announcing its fourth quarter result was ‘noticeably upbeat and significantly more deferential to the Macau Government than last quarter’. K.L.
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February 15, 2016
Macau TIS head: “The next step for The International School is to have multiple campuses” The International School of Macau is preparing for the future, with the expansion of its existing campus is a catalyst for that, Howard Stribbell, the head of the school, tells Business Daily João Santos Filipe
jsfilipe@macaubusinessdaily.com Photos by Cheong Kam Ka
Macau students’ first struggle is with the English language and so we need to bring them to a certain level of fluency
The International School (TIS) of Macau is constructing Phase II of its campus. How do you perceive the future of the institution?
We have always been surprised by how successful TIS has been and how quickly the school enrolment has grown. At this stage, we have way too many students for our space and that is why we have been planning Phase II for a number of years. Our plan right now is to cap the students at 1,600. We won’t be looking to expand it more than that but I suspect we will be at that number very quickly. Maybe we will need to look at other alternatives.
Of those alternatives, is there any possibility of creating a new campus to take more students?
We haven’t had discussions with the government about that, but opening a new campus is something we are beginning to consider. We definitely sense a need for that. But we have to deal with the number one obstacle in Macau, which is space and land. However, we’re very interested in talking with the government about opening another campus, whether in Hengqin or in Macau. The next step for the International School is to have multiple campuses.
Will the expansion of the existing campus allow the directors to implement structural changes to the school?
You mentioned that the number of students is to be capped at 1,600. How many applications do you receive per year?
We have always been surprised by how successful TIS has been
It’s going to allow us to continue to be a leader in technology and we are going to continue implementing more cutting-edge and innovative technology. It’s going to allow us to meet students’ needs and to know that our students are achieving their goals successfully. We will use it to expand our Fine Arts programme as we have the Black Box Theatre.
When do you expect the new facilities to open?
We hope to have these facilities ready for the next school year. We had hoped it would be finished this year already. However, this Phase II took more time to plan and define than we expected because we wanted to make sure we would follow Macau’s laws and guidelines and have everything approved according to the existing regulations.
Last year, we limited our March 1st entries to 300 because we like to do individual interviews for every student up to Grade 3. This year, because the Education Department (DSEJ) changed the regulations, we can’t say no to anyone. We’re actually anticipating over 1,000 students will apply for the coming school year. But we’re only opening 90 vacancies, which means we will have to reject 910 applicants.
What is the profile of the students of TIS?
There are 44 nationalities at this school. Forty-five per cent of our students are from Macau, Hong Kong or China. The other 55 per cent come from 41 countries. The profile of our students is a very broad spectrum, and is more related to parents that want their children to study at an English language university, which can be anywhere in the world. We have a large number of Australian students that come to us, the same for North American and UK parents that want us to prepare their children for university.
Is it fair to say that many TIS students are associated with families working in the gaming industry?
The gaming industry is definitely a bedrock and we’re close to them to make sure we have facilities to provide education for their children, mainly related in these cases to expat families. When the operators are recruiting, the families are worried about housing, healthcare and education. If any of those three pieces is missing, then it’s very hard for a family to relocate to Macau. We’re seeing all three of these areas increasing, so families are more interested in coming to Macau. That notwithstanding, it isn’t only gaming; we have all the spin-off industries from gaming to construction to technology. Also, we’re seeing more and more government employees’ children coming to our school.
In Mainland China, there’s a trend among the middle-class to try to have their children study in English-speaking universities. Is this common to Macau? Macau families do the same and they want to have this choice. We’re seeing many different cultures, Eastern and Western, emphasising the desire to have their children attend university education. In Macau, there’s also a growing interest in foreign universities.
How do you perceive the potential of local students, especially when government policy is keen to develop and maintain local talent?
Every culture has students that want to achieve their goals and others that are not interested in achieving certain goals. First, we need to identify the local needs and try to meet them. Macau students’ first struggle is with the English language and so we need to bring them to a certain level of fluency. Once they do that, the battle is not over because to be successful in high school and university you have to go beyond the fluency level. You need to be fluent in
Business Daily | 7
February 15, 2016
Macau TIS The International School of Macau was established in 2002 to provide a Canadian curriculum and accreditation to local and expatriate students. English is the primary language of instruction. The school has an enrolment of 1,150 students representing around 40 different countries. The construction of Phase II of the campus will increase overall capacity to 1,600 students.
academic English and that can be a big challenge. We are talking about exams that the average adult would not be able to pass. This level requires classes and a lot of study.
Macau has many job opportunities for local talent, many of which don’t require much study. Do you feel local students have the ambition to have a career or do all these opportunities make them feel lost?
This is something we discuss a lot with our students. They are fluent in Chinese, English; they understand Easter and Western culture, and they are very sought after by gaming enterprises and other companies. As they graduate, they can probably go directly to the job market and get very high paid jobs. I’m pleased to see our students are not doing that and are more focused on going to university. After university, they know they can come back and the opportunities, which were already good before, are much better.
But is this local talent interested in returning to Macau after studying abroad?
We’re now starting to see these students from Macau after completing graduation coming back and getting involved in the community. This will happen more and more in the coming years and I’m looking forward to seeing the impact of this on Macau society. This happens because Macau is full of opportunities. For those students that are ambitious and get the skills, Macau is a fantastic place for them. They can be very successful here. You also see expats coming to Macau, staying for a long time, and their children start to identify Macau as home. My daughter is a very good example of that. She came to Macau in Grade 1 and she’s now in Grade 10. Her intention is to go to university and come back, because she feels Macau is her home.
Is the fact you provide students with an Alberta Diploma recognised in English-speaking countries the main advantage of TIS?
Definitely. The Alberta High School Diploma is the foundation for this school. In the beginning, our board looked at different Canadian provinces to use their curriculum and they chose the Alberta High School Diploma. This happened because of the standardised exam that allows students to be offered access to universities around the world. Another reason was the fact that students in Alberta tend to outperform all the students in the other Canadian provinces. We know it is a very rigorous programme. The proof is that 97 per cent of our students get offers of admission to universities
or colleges around the world. Today, we have over 230 different universities giving offers of admission to our students.
Who are your main competitors in attracting students?
Actually, we don’t see it as competition at all and we try to cooperate with them. It all depends on parental decision. We work very closely with Macau Anglican College and the School of Nations – which are some of the other English language schools – because the challenges we face are the same and we’re interested in increasing the level of English in the territory.
What is your opinion of the Macau school system?
I’ve been here for ten years and seen a lot of good changes. I think the Education Department is heading in the right direction. They increasingly want their teachers to be trained as teachers, not only as subject specialists. They want students to be more involved in extracurricular activities. All of those things are things that deserve to be applauded.
What are the main challenges in Macau in terms of the system? The challenges that we usually have with DSEJ are related to the way they try to achieve their goals. Sometimes they make laws
on subjects when they should make guiding principles to give schools more freedom. I think DSEJ is trying to standardise the system but we have to be careful in doing so to preserve the good aspects of such a diverse system. Standardisation should be about minimum requirements and implemented to increase the level of the weaker schools to make sure that all students reach a decent level. But schools should have a lot of freedom to go above and beyond the minimal level.
In November last year, there were problems detected by the subsidies paid to private schools, which were said by the Commission of Audit to amount to MOP32.46 million. What is your view on the bureaucracy surrounding these processes? Were you surprised at this?
Yes, I was surprised about some discrepancies because the Education Department has always been very clear about its expectations and has always been very rigid about what you can or cannot use the money for. If you say you’re going to buy ten blue basketballs and you buy only nine blue balls and a red one, then the red one is not going to count for them. They’ve been very strict that way and the report is very diligent. From my experience, the checks and balances are already there, so
[Next year] we are only opening 90 vacancies, which means we will have to reject 910 applicants
I was surprised to learn about gaps in such areas.
How do you accrue the budget for the year?
The bulk of our budget comes from parents’ schools fees. Our tuition is the highest in Macau but we are half of that of Hong Kong and a third of Shanghai or Beijing. We also receive some funding from the government, which is helpful. And parents also receive help from the government to pay for tuition. Tuition usually follows the inflation rate of Macau and ranges from MOP67,000 to MOP101,000 per year. Next year it will go up a little. Then we have a small donor programme where we work with some of the local partners such as resorts and casinos who sponsor the school as well.
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February 15, 2016
Greater China
Central bank says no basis for continued yuan slide The comments come as Chinese financial markets prepare to reopen today after the week-long Lunar New Year holiday
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hina’s central bank governor said there’s no basis for continued depreciation of the yuan because the balance of payments is good, capital outflows are normal and the exchange rate is basically stable against a basket of currencies, according to an interview published Saturday in Caixin magazine. Zhou Xiaochuan dismissed speculation that China plans to tighten capital controls and said there’s no need to worry about a short-term decline in foreign-exchange reserves, adding that the country has ample holdings for payments and to defend stability. The country’s foreign-exchange reserves shrank in January to their lowest level since 2012, signalling that the central bank sold dollars to prop up the yuan as it fell to a fiveyear low. The weakening exchange rate and declining share markets in China have fuelled global turmoil and helped send world stocks to their lowest level in more than two years. “Zhou’s remarks are timely, filling a void in the market’s understanding of China’s strategy on the exchange rate at a critical moment,” said Tom Orlik, Bloomberg Intelligence’s Chief Asia Economist. “Zhou appears to signal that a shift to a more flexible exchange rate may go on hold through the current period of market stress.” China is committed to making progress with exchange-rate reform during its 13th Five-Year Plan, relying
more on the market to determine prices, Zhou said in the interview.
Combating speculation
The draw-down of China’s reserves has continued since the devaluation of the currency in August, with holdings falling by US$99.5 billion in January to US$3.23 trillion, the central bank said February 7. The stockpile slumped by more than a half-trillion dollars in 2015. “Zhou has effectively ruled out any devaluation,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “If they do, it’s effectively acceding to speculators who want the yuan to weaken further.” Shen said Zhou’s reference to the 13th Five-Year plan, which starts this year and ends in 2020, points to the time horizon for China to move toward exchange-rate policy reforms. China has no incentive to depreciate the currency to boost net exports, and there’s no direct link between the nation’s gross domestic product and its exchange rate, Zhou said in the interview. Capital outflows need not be capital flight, and tighter controls would be hard to implement because of the size of global trade, the movement of people and the number of Chinese living abroad, Caixin quoted him as saying.
The critical tension is between allowing the market to play a greater role, and maintaining basic stability in the exchange rate Tom Orlik, Chief Asia Economist, Bloomberg Intelligence
Capital outflows
Capital outflows from China are estimated to have hit US$133 billion in
January, the 22nd consecutive month of outflows from the world’s second-largest economy, the Institute of International Finance said in an e-mailed note February 10. Capital outflows increased to US$158.7 billion in December -- the most since September -- and were US$1 trillion last year, according to estimates from Bloomberg Intelligence. That’s more than seven times the amount of cash that left the country in 2014. The PBOC has stepped up efforts to stem the exodus, warning speculators they’ll be punished. It intervened in the Hong Kong market last month after the yuan’s offshore exchange rate sank to a record 2.9 percent discount to the onshore rate. Apart from selling dollars, the monetary authority also gave guidance to some Chinese lenders in the city to suspend yuan lending to curb short selling, a move that contributed to the surge in the overnight interbank lending rate to 66.8 percent on January 12, an all-time high. The bank will not let “speculative forces dominate market sentiment,” Zhou told Caixin. The country will not peg the yuan to a basket of currencies but will seek to rely more on a basket for reference, while managing daily volatility versus the dollar, Zhou said in the interview. The bank will use a wider range of macro-economic data to determine the exchange rate, Caixin quoted him as saying. Bloomberg News
Alibaba gets stake in Groupon Groupon has exited 17 countries and now operates in 28 as it continues to streamline its operations internationally
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libaba Group Holding Ltd. bought 33 million shares of Groupon Inc., making it the fourth-largest shareholder in the online deals website that has lost 86 percent of its value since going public more than four years ago. The Chinese e-commerce giant owned 5.6 percent of Chicago- based Groupon as of December 31, according to
a regulatory filing on Friday. Alibaba has also accumulated stakes in online retailer Jet. com Inc., augmented-reality provider Magic Leap Inc. and car-booking company Lyft Inc. The purchases are part of the Chinese company’s strategy to learn more about the U.S. market as it expands internationally, said Gil Luria, an analyst at Wedbush Securities Inc.
“They don’t want to have their own operations, so they are investing in other companies to help them learn and pave the way for more robust activity down the road,” Luria said. A spokesman for Hangzhou, China-based Alibaba declined to immediately comment on the filing. Bill Roberts, a Groupon spokesman, said
the company hadn’t been aware of Alibaba’s stake until Friday’s filing. “Alibaba has a reputation as a long-term holder, and we’re pleased that they take the same view of Groupon’s opportunity and execution as we do,” Roberts said.
Results boost
Alibaba’s stake was reported hours after Groupon had its best day with investors in more than four years. Groupon surged 29 percent to US$2.89 at the close Friday in New York, the biggest single-day increase since November 4, 2011 -- the day after its initial public offering at US$20 a share. Groupon on Thursday reported fourth-quarter results that beat analysts’ estimates, driven by purchases in North America. The company said profit excluding some costs was 4 cents a share, compared with the average analyst estimate for a break- even quarter. Having struggled since its IPO to spur growth and profits, Groupon replaced
Chief Executive Officer Eric Lefkofsky in November. Since Williams took over, he increased the marketing budget in an effort to revive and reinvent the former Internet darling. Williams said his efforts are starting to bear fruit. “If we do our jobs really well, we’ll beat our plan,” CEO Rich Williams said in an interview. “The reality is we have a lot of work to do.” Even with Friday’s gains, the shares are down 61 percent over the past 12 months. On Bloomberg Television Friday, Williams said his company’s stock was undervalued, but that it wasn’t looking to make any deals. “Our focus as a team just isn’t on things like acquisitions, or being acquired,” Williams said. “Our focus is on building a great business.” Groupon said adjusted earnings before interest, taxes, depreciation and amortization would be US$80 million to US$130 million in 2016, compared with analysts’ projection for US$105.1 million. Revenue in the period rose 3.8 percent to US$917.2 million, beating estimates for US$845.9 million. Groupon is continuing its search for a permanent chief financial officer and is interviewing internal and external candidates, Williams said. Bloomberg News
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February 15, 2016
Greater China Central bank Governor Zhou Xiaochuan said the institution will not let “speculative forces dominate market sentiment”
Loans to industrial, service sectors growth slower Medium and long-term loans to the industrial and service sectors grew at slower pace in 2015, the central bank said on Friday. By the end of last year, outstanding medium and long-term loans to the industrial sector grew 5 percent year on year to 7.49 trillion yuan (US$1.15 trillion), down 3 percentage points from the rate seen in 2014, the People’s Bank of China (PBOC) said. Outstanding medium and long-term loans to the service sector grew 14.4 percent to 23.4 trillion yuan, compared to a 15.7 percent-growth in 2014, the PBOC said.
Baidu gets offer for its stake in Qiyi Chinese Internet search company Baidu Inc said it received an offer for its 80.5 percent stake in online video company Qiyi.com Inc from the chief executives of the two firms. Shares of Baidu, sometimes referred to as China’s Google, rose 4.1 percent to US$147.21 in premarket trading on Friday. Qiyi has an enterprise value of US$2.8 billion, Baidu said in statement. Baidu said its board had formed a special committee to evaluate the offer. The search company bought the majority stake in the then loss-making Qiyi in 2012, a push into the highly competitive Chinese digital media market.
Spring Festival tourism revenue rises in Beijing
EU hits mainland steel with duties as industry demands action The EU can impose duties on imports if it finds they are sold at below fair market prices and damage European producers Barbara Lewis and Foo Yun Chee
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uropean Union regulators opened three anti-dumping investigations into Chinese steel products on Friday and imposed new duties on imports, following calls for action from industry that says thousands of jobs are at stake. Britain, France and Germany are among the countries to have asked the European Commission to help Europe’s steel industry, which is suffering from falling prices and cheap imports from China and Russia. On Friday, the European Commission announced investigations into whether seamless pipes, heavy plates and hot-rolled flat steel are sold into Europe at unfairly low prices. The EU already has nine ongoing investigations and nearly 40 trade defence measures in place on steel imports.
It also announced provisional antidumping duties on cold-rolled flat steel from China and Russia. The duties range from 13.8 percent to 16 percent for the Chinese companies and from 19.8 percent to 26.2 percent for the Russian ones. “We cannot allow unfair competition from artificially cheap imports to threaten our industry,” EU Trade Commissioner Cecilia Malmstrom said in a statement. “I am determined to use all means possible to ensure that our trading partners play by the rules.” EU steelmakers pin much of the blame on China, which produces half of the world’s 1.6 billion tonnes of steel, for the bankruptcies and capacity closures that have gathered pace. European steel association Eurofer said the new duties on cold-rolled flat
steel reflect the full dumping margin for Russia, but those for China could be too low to the imports. “The EU must therefore urgently remove the lesser-duty rule to effectively address the Chinese steel trade distortion as the root cause of the EU steel crises,” Eurofer Director General Axel Eggert said. Europe has lost 85,000 steel jobs since 2008, more than 20 percent of the workforce, Eurofer says. Britain’s largest steelmaker Tata Steel said last month it would cut 1,050 British jobs, adding to 4,000 job losses in the British steel industry last October. Steel workers are expected to march through Brussels on Monday, calling for protection from China, as Commissioners, EU ministers and representatives of industry attend a day of talks on trade and competitiveness. China’s Ministry of Commerce has said any dumping claims should be put to the World Trade Organization. In addition, the Commission on Friday announced the extension of duties to prevent imports of dumped and subsidised Chinese solar panel components via Taiwan and Malaysia. An investigation concluded Chinese-made solar modules and cells were trans-shipped via Taiwan and Malaysia and to prevent the practice continuing, existing anti-dumping and anti-subsidy duties were being extended to those two countries, just for Chinese solar products. Industry body Solar PowerEurope said it supported moves to stop companies breaking the law through trans-shipment, but called for duties to be lifted as the rate of solar installations in Europe has slowed. Reuters
Tourism revenue in Beijing rose 2.9 percent year on year during the week-long Spring Festival holiday, according to the municipal tourism commission. Tourism revenue reached 4.92 billion yuan (US$753 million) during the holiday, which began on February 7, according to a statement released by the commission on Saturday. The number of tourists during the Spring Festival holiday topped 9.19 million in the city, up 1.9 percent from the same period last year, the statement said. Historical sites, including the Forbidden City and the Great Wall as well as ski resorts and traditional temple fairs attracted most of the visitors, it said.
Farm waste recycling boosted China has set goals for recycling farm waste such as crop stalks and plastic film by 2020 to prevent further pollution in agricultural production and support recycling farming. In addition, the use of pesticides is to be capped as of 2020, according to a policy document jointly released by the National Development and Reform Commission, Ministry of Agriculture and State Forestry Administration. Pesticides and fertilizers have done much damage to the country’s ecosystem and are liable to bring food safety issues.
Mainland’s tourist spending in Japan slows A couple living in east China’s Hangzhou city just came back from their second visit to Japan, with much lighter baggage this time. According to the Japan Tourism Agency, spending of Chinese tourists increased by 2.2 times in the fourth quarter of last year, slower than the chain growth of 3.2 times in the second quarter. Experts said the emergence of cross-border shopping platforms, which guarantee both authenticity and reasonable prices, have prompted Chinese tourists to spend less money and time on shopping.
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Greater China
Hong Kong finance chief urges activists to ‘retreat’ Chinese Foreign Ministry spokesman Hong Lei attributed the events to a “local radical separatist organization” Natasha Khan
Lunar New Year period. Zhang Xiaoming, director of the Chinese government’s liaison office in Hong Kong, said yesterday he was shocked and saddened by the incident, which he said contained “terrorist tendencies.” In a statement posted on the liaison office’s website, Zhang said he believed “justice will prevail over evil” and that the Hong Kong government would handle the situation in accordance with the law. Benny Tai, a leader of the Occupy Central With Love and Peace movement, said in an open letter Saturday that Hong Kong Chief Executive Leung Chun-ying bears the most responsibility for the events. While denouncing the violence and saying peaceful protest is the way to achieve political goals, Tai said Leung was accountable for discontent among the people he governs. Speaking to reporters yesterday, Leung said many of those charged for the violence were unemployed or involved in extremist political organizations, and as such “don’t reflect society’s opinions.” He wasn’t responding directly to Tai’s comments.
’Radical separatists’
Pedestrians walk past debris from a night of clashes between police and protesters in Mongkok district in Hong Kong
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he perpetrators of violent clashes in Hong Kong last week shattered its values in one night, the city’s financial secretary said, urging those involved to “turn their horses back from the cliff.” The “small group of people who lost rationality” marred the city’s interests and tarnished its image, and their actions are a departure from Hong Kong people’s respect for the law, John Tsang said in a blog post yesterday. He referred to the biblical story “The Judgment of Solomon,” where two women who claim to be the mother of a baby were advised to cut the infant in two. “A mother who truly loves her son would not saw him in half, and would never themselves be the executioner,” Tsang wrote. Addressing those
involved in the clashes, he said, “if you continue wading deeper into the mud, it’s the Hong Kong you claim to protect that will lose in the end.” Tsang’s comments come a week after attempts by government officials to clear illegal food stalls escalated into a violent face-off between police and protesters, resulting in injuries on both sides. Officers used batons and pepper spray to disperse the protesters, some of whom threw bricks and started fires in the city’s Mong Kok district. On Friday, police said they would charge more than 30 people for rioting, while continuing to detain others.
Feeling a sense of love for Hong Kong is normal… We still hope to see Hong Kong thrive and won’t accept it being damaged John Tsang
Riots’ fallout
Coverage of the fallout has dominated newspapers during the
Chinese Foreign Ministry spokesman Hong Lei attributed the events to a “local radical separatist organization,” according to a February 11 statement from the foreign ministry. The stronger language sparked speculation that security laws could be strengthened. Asked yesterday whether the Mong Kok incident would be used to revive so-called Article 23 anti-sedition laws -- shelved after massive protests against their implementation in 2003 -- Zhang said, “right now these two issues aren’t linked,” according to a broadcast of his comments on the local Cable News channel. Tsang noted in his post that tourism is an anchor of Hong Kong’s economy. The number of tourists from the mainland declined 2.5 percent last year, he said, citing tourism department data, but the number of visitors from Southeast Asia has grown. He said the city must continue to improve itself. Bloomberg News
Beijing urges investors’ claims against shut P2P lender Claimants were invited to submit their information electronically given the large number of investors spread over a wide geographical area and involving a massive amount of data
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hinese authorities have urged investors to register their claims against a now shut peer-topeer (P2P) lender allegedly behind the country’s biggest ever Ponzi scheme, according to a statement, raising hopes of compensation. The Ministry of Public Security, or police, on Saturday called on investors in the financial products of Ezubao -- which allegedly bilked 900,000 people out of 50 billion yuan (US$7.6 billion) -- to provide their personal information through a newly established online platform. The ministry would collect the information until May 13, using it to assist in
the investigation and as a “reference for return of funds”, according to the statement. Police shut down the company in December and state media earlier this month paraded some of the 21 arrested executives involved with Ezubao and its parent firm Yucheng, saying their platform was a fraud. The scandal has highlighted poor regulation in the world’s biggest P2P market but also how Chinese investors fail to recognise financial risk. Claimants were invited to submit their information electronically given the large number of investors spread over a wide geographical
area and involving a massive amount of data, the statement said. But some investors voiced scepticism about the government’s motives, with one saying she feared authorities might use any information against her for participating in what the police statement called “illegal fund-raising”. “They called it illegal fund-raising and if I register, I’m the one who was doing that,” Wang Dehong, who lost 180,000 yuan, told AFP. Police said the government would “protect the legal rights of investors”. The collapse of the company has already sparked protests, which the
2,600 P2P businesses platforms in China
government typically fears out of worries over social unrest. China has nearly 2,600 platforms described as P2P businesses, according to one industry estimate, with transactions valued at around US$150 billion last year. AFP
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February 15, 2016
Greater China
Japan's machinery orders to rise modestly Exports in January were expected to have dropped 11.3 percent from a year earlier
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apan’s leading indicator of capital spending probably rebounded only modestly in December and exports likely dropped in January at its fastest pace in almost five years, a Reuters poll showed, indicating the pace of recovery may be slower than expected. Core machinery orders, a highly volatile data series regarded as a useful leading indicator of capital spending in the coming six to nine months, likely rose 4.7 percent in December from the previous month, the Reuters poll of 17 economists showed. They fell 14.4 percent in November, the fastest pace of month-on-month decline since May 2014. Compared with a year earlier, core orders, which exclude those of ships and
electricity, fell 3.1 percent in December, after a 1.2 percent gain in November, the poll showed. Exports in January were
expected to have dropped 11.3 percent from a year earlier, the fastest pace of decline since April 2011, and imports seen falling 16.0 percent, down for
13 straight months. This would result in a trade deficit of 680.2 billion yen (US$6.06 billion) after a 140 billion yen surplus in December. “The impact from China’s economic slowdown is spreading to other Asian nations such as Taiwan and ASEAN nations,” said Takumi Tsunoda, senior economist at Shinkin Central Bank. “The recent currency market move has been quite sharp. If this trend lasts longer, it could dampen business sentiment and
corporations may postpone their capital spending plans.” The Cabinet Office will announce machinery orders at 8:50 a.m. on Wednesday (2350 GMT, Tuesday) and the finance ministry will release trade data on Thursday. Japan’s gross domestic product will likely show the economy contracted in the final quarter last year dragged down by weakness in consumer spending and capital spending, a separate poll showed. Reuters
KEY POINTS Dec core machinery orders fcast +4.7 pct m/m vs -14.4 pct in Nov Jan exports seen -11.3 pct yr/ yr, down for 4th month in row Core orders due at 2350 GMT on Tues, trade data on Wed
Modi urged to make reality match 'Make in India' hype The initiative has scored major wins, including a pledge by Taiwan's Foxconn to invest US$5 billion in a new electronics manufacturing facility Promit Mukherjee and Rafael Nam
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housands of people and mascots of lions swarmed the weekend opening of a "Make in India" drive to attract foreign direct investment, pitched by Prime Minister Narendra Modi as "the biggest brand that India has ever created". The week-long event, the boldest since Modi launched the initiative to emulate China's export miracle back in 2014, seeks to "spark a renewed sense of pride in India's manufacturing", its marketing blurb says. But even as the Make in India hype scales new heights, some bosses question Modi's delivery on promises to make it easier to do business, while marketing experts caution against
KEY POINTS Biggest brand India has ever created - Modi Branding experts warn of over-promising and under-delivering On the ground, scant signs of better business environment Execution on tax, land reforms key, bosses say
creating unrealistic expectations. "When you over-communicate and you under-deliver, the biggest risk is that you begin to lose trust," said Chandramouli Nilakantan, CEO of Blue Lotus Communications, a branding and public relations consultancy. On buzz alone the effort got off to a great start, with the prime ministers of Sweden and Finland attending Saturday's gala opening hosted by Modi. Yesterday, delegates thronged the 10 pavilions erected for the event in Mumbai, India's financial capital. Around 2,500 foreign companies and 8,000 domestic companies were expected to attend, organisers said. Yet on the ground, the experience of businesses is more prosaic: Twenty months after Modi swept to power with a promise of growth and jobs for India's 1.3 billion people, executives say more needs to be done, including improving infrastructure. More pressingly, key legislation such as a goods and services tax and land acquisition bill are stuck in parliament, just as global competitors such as Vietnam step up their own reform efforts. "Make in India is a great initiative and has created a lot of positive sentiments," Vikas Agarwal, general manager of mobile phone maker OnePlus in India, told Reuters. "Now the government needs to follow up with policies. That includes providing custom duty and export
incentives, tax rationalisation and removal of ambiguous land acquisition policies."
Major wins
Make In India has scored major wins, including a pledge by Taiwan's Foxconn to invest US$5 billion in a new electronics manufacturing facility. That has helped foreign direct investment to nearly double to US$59 billion last year, the seventh most in the world, according to the United Nations Conference on Trade and Development. Yet in critical aspects, India remains far behind its goals. The proportion of manufacturing to gross domestic product has been stuck at around 17 percent for five years, below the government's goal to ramp
it up to 25 percent, according to the Boston Consulting Group. India has only created 4 million manufacturing jobs since 2010, according to Boston Consulting. At the current rate, India may only create 8 million jobs by 2022, well below the government's goal of 100 million. Professor Ravi Aron, a U.S.-based expert in manufacturing, said India was ill-suited for a Chinese-style export boom, because it lacked the infrastructure and the skills for its exports to compete internationally. "It should not be called 'Make in India' but 'Make In Spite of India'," said Aron, of Johns Hopkins University, advising the Indian government to scale back its ambitions and focus on its growing domestic market. Reuters
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Asia
Australian PM in second revamp of ministry ahead of elections The major change sees Australia’s trade minister Andrew Robb become a special trade envoy Morag MacKinnon
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ustralian Prime Minister Malcolm Turnbull on Saturday announced more than a dozen changes to his ministry, the second major reshuffle in the five months he has been leader and ahead of national elections expected later this year. Turnbull was forced into the major cabinet reshuffle by the resignation of one minister, the retirement of two long-standing senior ministers and the sacking of two others over their involvement in political scandals. The new cabinet line-up represents “a dynamic team which combines youth, new talent, experience, continuity, and a real sense of innovation and enterprise,” Turnbull told a news conference in Sydney. “Change offers opportunity... there comes a time when you need to transition from older leadership to newer leadership,” he said. Turnbull’s Liberal-National coalition is the frontrunner to win elections expected in October - his first poll as Liberal party leader and prime minister. A victory would secure Turnbull a popular mandate and secure his position as party leader. Turnbull ousted former Liberal leader Tony Abbott in a leadership coup last September and is under
Turnover, change, is good...is a revitalised government and it is revitalised because of new blood coming in Malcolm Turnbull, Prime Minister, Australia
Australian Prime Minister Malcolm Turnbull
pressure to unite his divided government. The retirement of Australia’s deputy prime minister on Thursday saw Turnbull inherit a National party political rival, hard-right, climate change sceptic as his deputy, an appointment that could block any
revamp of an emissions trading scheme and give farmers a greater say in government policy. Agriculture Minister Barnaby Joyce became deputy prime minister when he was voted to lead the coalition’s minor partner, the Nationals.
Turnbull appointed eight new ministers and boosted the number of women in his cabinet from five to six on Saturday. The major change sees Australia’s trade minister Andrew Robb, who led negotiations for landmark free trade agreements with China, Japan and Korea and the multinational TransPacific Partnership, become a special trade envoy. He will be replaced as trade minister by Steven Ciobo. Australia is in the midst of several trade negotiations, including free trade deals with India and Singapore. The coalition government won a landslide election in 2013 but Abbott saw his popularity plummet in the wake of a hugely unpopular 2014 austerity budget. Plummeting commodity prices have depleted the government’s coffers, a major financial stumbling block for Turnbull, whose rise was sparked partly by his image as a prudent financial manager based on his background in the private sector. Australia in December forecast its budget deficit would swell to A$37.4 billion (US$26.48 billion) in the year to June as falling prices for key resource exports open a gaping hole in tax revenue. Reuters
Bank of Korea expected to stand pat in February The Bank of Korea last cut rates in its easing cycle in June last year
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outh Korea’s central bank is expected to leave rates untouched this month, but could cut soon as external uncertainties such as China’s slowing growth and global financial market turmoil undermine an on-going but fragile recovery at home. Twenty-five out of 27 analysts polled by Reuters said they expected the Bank of Korea (BOK) would keep interest rates unchanged next week as it monitors recent global market turbulence in the wake of Japan adopting negative interest rates and a spreading belief that the U.S. Federal Reserve will have difficulty hiking rates again. The remaining two saw a cut.
Of the 27 analysts, 18 said they saw the BOK bank probably cutting interest rates at least once before yearend, including this month, as inflation is heading back down while exports show no sign of a rebound. A majority of the respondents who expected a cut said the BOK would move in March. “To respond aggressively to global downside risks to growth and shore up consumption and investment, a rate cut in March would be most timely,” said Lee Sur-bee, a fixed-income analyst at Kyobo Investment Trust. Nine analysts in the poll saw rates unchanged for some time, a considerable shift from
January’s survey which had a majority of 30 analysts seeing rates on hold for an extended period. Annual inflation cooled to its lowest in four months in January, adding to worries over the health of domestic consumption which has had to prop up growth after exports started falling last year. Exports last month slumped over 18 percent on-year as sales to China collapsed, adding urgency to a government push for the development of new export markets and products as key performers lose ground. Dwindling bets that the Fed will hike interest rates steadily may also create some room for the BOK to cut them at home, analysts said.
“Capital flight and higher U.S. rates were key factors in blocking the BOK from further easing, but it is growing unlikely the Fed will raise in March. And that will be the BOK’s opportunity for a cut,” said Shin Dongsoo, a fixed-income analyst at Eugene Investment & Securities. South Korean bond yields dipped to new record lows on
Thursday after Fed Chair Janet Yellen told U.S. lawmakers earlier this week that tighter credit markets, volatile financial markets and uncertainty over Chinese economic growth had magnified the risks facing the U.S. economy. The Bank of Korea last cut rates in its easing cycle in June last year. It will review policy on February 16. 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, Bami Lio 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 15, 2016
Asia Indonesia swings into US$1.1 billion payments deficit The deficit leaves the country needing foreign capital to meet its external financing requirements without running down its international reserves
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ndonesia’s balance of payments swung to a deficit of US$1.1 billion in 2015 from a surplus of US$15.2 billion in 2014, though its current account deficit narrowed last year, Bank Indonesia said on Friday. Less positively for current account, the fourth quarter deficit of US$5.11 billion was the largest quarterly deficit for the year, as exports from Southeast Asia’s largest economy dropped by
19.66 percent from the same period a year earlier. For the whole of 2015, the current account deficit narrowed to US$17.76 billion, or 2.06 percent of GDP, from $27.5 billion, or 3.09 percent of GDP, in 2014. “Bank Indonesia will continue to be aware of global developments, particularly the risks related to the economic slowdown in China and
continued decline in commodity prices, which could affect the overall balance of payments,” the central bank said in a statement. Indonesia’s current account deficit was seen as a major source of vulnerability when foreign funds retreated from emerging markets in anticipation of higher interest rates in the United States. Last year, the rupiah was Asia’s second-worst performing currency after Malaysia’s ringgit, dropping by 10.26 percent against the dollar, and reserves tumbled by US$5.9 billion. Still, the current account deficit has been narrowing since mid-2012, when it reached 4.2 percent of GDP, and this year the rupiah has rallied by 2.45 percent against the dollar. At its most recent meeting in January, Bank Indonesia cut interest rates for the first time in nearly a year to revive the economy, in a sign that it is more comfortable with the rupiah’s exchange rate. The current account is the broadest measure of a country’s foreign trade in both goods and services. It is part of the balance of payments, which summarise an economy’s transactions with the rest of the world. Reuters
KEY POINTS Indonesia Q4 c/a deficit biggest in 2015, 2.39 pct of GDP Exports down nearly 20 pct from a year earlier in Q4 C/A deficit fell to 2.06 pct of GDP in 2015
North Korea took 70 pct of money paid for Kaesong workers The minimum wage for North Korean workers was about US$70 a month
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outh Korea said yesterday 70 percent of the U.S. dollars paid as wages and other fees for the now-suspended Kaesong industrial project run jointly with the North had been diverted for use in Pyongyang’s weapons programme and luxury goods for its leader. It is the first formal acknowledgement by the South that the 55,000 North Korean workers at the Kaesong complex saw little of the US$160 they were paid on average a month. South Korea on Wednesday suspended the project as punishment for the North’s long-range rocket launch on February 7 saying it would no longer allow the funds paid to Kaesong to be used in the North’s missile and nuclear programmes. The North conducted its fourth nuclear test last month. The North called the South’s move to suspend operations “a declaration of war” and kicked out all South Korean workers on Thursday and froze the assets of the South Korean firms.
“The wages for the North’s workers and other fees were paid in cash in U.S. dollars to the North’s authorities and not to the workers,” South Korea’s Unification Ministry said. “This is believed to be channelled in the same way as other foreign currency it earned.” The cash is then kept and managed by the ruling Workers’ Party’s Office 39 and other agencies, the ministry said. The ministry said it had confirmed the movement of the
money through various sources but did not specify them. Kaesong’s North Korean workers were given a taste of life in the South, working for the 124 mostly small and medium sized manufacturers that operated there, about 54 km northwest of Seoul. The minimum wage for North Korean workers was about US$70 a month, although the companies paid more than double that amount after overtime and bonuses, although that payment is low compared to the cost of labour in the South. The Kaesong project was borne out of the first summit meeting of the rival Koreas in 2000, where their leaders pledged reconciliation and cooperation. It was the last remaining symbol of that effort in the volatile North-South ties over the years. Kaesong had been shut only once before, for five months in 2013, amid heightened tensions following North Korea’s third nuclear test, although its continuing existence often seemed tenuous. Reuters
A vehicle of the Kaesong industrial complex moves its load near the border checkpoints at the Military Demarcation Line (MDL) near the demilitarized zone (DMZ) in Gyeonggi province, South Korea
Indonesia gets development loan from ADB Indonesia Friday got US$10-billion loan from the Asian Development Bank (ADB) for the next five years to support the government’s development goals. Indonesian President Joko Widodo and Vice President Jusuf Kalla met with ADB President Takehiko Nakao, discussing about ADB’s funding for the country’s infrastructure. National Development Planning Minister Sofyan Djalil said the government would optimize the cash loans for its plans. “We need to make the best use of this loan because ADB only offers lending to special countries,” said Djalil.
Brunei’s trade balance surges Brunei’s trade balance showed an impressive growth in December 2015, increasing month-on- month by 12.9 percent to US$248.88 million, local media reported on Saturday. According to the latest statistics released by the Department of Economic Planning and Development of the Prime Minister’s Office, Brunei’s exports grew in December 2015, with increased exports of mineral fuels and chemicals pushing total exports up. The country’s major exports of crude oil recorded an increase of 3.8 percent in December. However, the average export price of crude oil decreased in December.
BlackRock strategist says Japanese markets ‘oversold’ The global chief investment strategist for BlackRock Inc, the world’s largest asset manager, on Friday described Japanese stocks as cheap and “arguably the most oversold” in financial markets. The strategist, Russ Koesterich, told CNBC a move by the Bank of Japan to move to lower negative rates would likely lead to a weaker Yen and strength in many Japanese stocks, even if banks suffer under such a policy.
U.S. Congress passes tougher North Korea sanctions The U.S. House of Representatives overwhelmingly passed legislation on Friday broadening sanctions to punish North Korea for its nuclear program, human rights record and cyber crimes, and sent the measure to President Barack Obama to sign into law. Lawmakers said they wanted to make Washington’s resolve clear to Pyongyang, but also to the United Nations and other governments, especially China, North Korea’s lone major ally and main business partner. The package includes sanctions targeting North Korea and “secondary sanctions” against those who do business with it.
Thai BJC to seek loan for Big C purchase Thailand’s Berli Jucker PCL (BJC) said it would seek a short term loan and may consider an equity issue to fund a planned US$6.2 billion acquisition of hypermarket operator Big C Supercenter PCL , sending its shares down 5 percent. Berli, controlled by Thai tycoon Charoen Sirivadhananbhakdi’s TCC Group, said on Friday it would seek a short term loan of up to 220 billion baht (US$6.2 billion) and may later aim to repay some of the debt with funds raised from an equity offering. The loan amount is about four times BJC’s market cap of 56 billion baht.
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International German court to examine ECB’s bond-buying Germany’s constitutional court will from Tuesday examine whether the ECB overstepped its mandate through a scheme to potentially buy unlimited amounts of government debt, as the bank prepared to ramp up its bond purchase programme. The OMT -- or Outright Monetary Transactions -- programme was unveiled in 2012, at the height of the eurozone sovereign debt crisis, as the ECB’s weapon to warn off investors from speculating on government bonds. The programme was never implemented, and has since been superseded by a far bigger bond purchasing programme known as QE.
U.S. consumer spending counters recession fears Growth in consumer spending moderated in the fourth quarter of 2015
KEY POINTS Core retail sales increase 0.6 percent in January Retail sales rise 0.2 percent; December sales revised up
Cuba-U.S. to resume direct flights The Cuban government confirmed Saturday that it will sign a memorandum of understanding with the United States on February 16 to formally re-establish direct flights. “On Tuesday, February16, the signing ceremony will take place in the National Hotel of Cuba,” said a press release by the Cuban Ministry of Foreign Affairs. After the agreement is signed, airlines will have 15 days to submit their proposals to the U.S. Department of Transportation for routes. At least five major American airlines, United, Delta, American, Southwest and JetBlue, have shown an interest in establishing formal links to the island.
Cyprus’s economy grew by 1.6 pct in 2015 The economy of Cyprus grew by 1.6 percent in 2015 as the eastern Mediterranean island is preparing to exit a three-year austerity program next month, Finance Minister Harris Georgiades said on Friday. He said in a statement after meetings of the Eurogroup and the Economic and Financial Affairs Council in Brussels that the growth rate announced earlier on Friday for last year was the highest in seven consecutive years. Cyprus’s economy had actually been in a deep recession before it was bailed out in March 2013.
Rousseff vows Rio Olympics will happen Brazilian President Dilma Rousseff said on Saturday that the 2016 Olympic Games in Rio de Janeiro would take place despite the Zika virus, at a time when various athletes have expressed their fears about competing. “We are aware of one thing. There will be Olympic Games and we are focused on that goal,” said Rousseff during a speech in Rio de Janeiro, which is waging a broad campaign against the virus. “Zika will not compromise the organization of the Games. Certain cities, like Rio de Janeiro, will be given priority (in the fight against the disease),” she added.
U.S., UK likely to charge multiple banks in Libor rigging American and British regulators are likely to charge several banks with rigging interest rates, including Citigroup, the third-largest U.S. bank, and London-based HSBC Holdings, the Wall Street Journal reported on Friday. The U.S. Commodity Futures Trading Commission and the U.K. Financial Conduct Authority were preparing a final round of civil charges against the banks for rate manipulation in the Libor scandal, the newspaper reported, citing people close to the investigation.
Import prices fall 1.1 percent in January
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.S. consumer spending regained momentum in January as households ramped up purchases of a variety of goods, in a hopeful sign that economic growth was picking up after slowing to a crawl at the end of 2015. But the outlook for consumer spending was tempered by another report on Friday showing sentiment among households ebbed in early February. Still, the increase in consumer spending last month underscored the
Consumer sentiment dips; inflation expectations fall economy’s resilience and challenged the view that a recession was looming. The Commerce Department said retail sales excluding automobiles, gasoline, building materials and food services increased 0.6 percent last month after an unrevised 0.3 percent decline in December. Growth in consumer spending
EU in final push for difficult ‘Brexit’ deal UK Prime Minister has indicated he wants an agreement at this summit to allow time to arrange a referendum in June Danny Kemp
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he quest to prevent Britain crashing out of the European Union faces its moment of truth this week, with EU chief Donald Tusk touring key capitals in a final push for a deal at a crucial Brussels summit. Many of Prime Minister David Cameron’s demands for reforms ahead of a referendum on Britain’s membership of the crisis-hit bloc still face opposition just days before the meeting on Thursday-Friday. Tusk cleared his diary in the runup to the summit for last-ditch talks in Berlin, Paris, Athens and other capitals to press key leaders for an agreement despite what he called a “very fragile” situation. If Britain becomes the first country to leave the 28-nation EU it would further inflame a firestorm of problems so perilous that Tusk warned recently that the situation felt like “the day before World War I.” The EU already faces questions about the bloc’s future as it struggles with the continent’s biggest migration crisis in 70 years, and with renewed fears about the health of the euro currency. Those worries go beyond Europe, with US Secretary of State John Kerry saying on Saturday that Washington backs a “strong UK staying in a strong EU.”
Cameron, who met German Chancellor Angela Merkel in Hamburg on Friday, said he was confident of a deal although “I rule nothing out” if he does not get an agreement. Merkel meanwhile said that her “wish” was to avoid a so-called “Brexit” in a referendum that is expected to be held in June. Three years after Cameron first demanded reforms and announced a referendum, the issue has come down to quibbles over a few words and sets of brackets in proposals that Tusk unveiled last month. Tusk’s meetings with Merkel, French President Francois Hollande, Greek Prime Minister Alexis Tsipras and others today and tomorrow are meant to solve what EU sources told AFP were “outstanding issues” after negotiators in Brussels failed to reach a breakthrough.
‘Emergency brake’
A key sticking point is an “emergency brake” that would allow Britain to limit welfare benefit payments for four years to newly-arrived citizens of other EU countries who are working in Britain. Eastern European countries in particular say the plan could discriminate against them as many of their nationals work in Britain, and that it would breach the EU’s
moderated in the fourth quarter. That, together with weak export growth due to the strong dollar, efforts by businesses to sell inventory and cuts in capital goods spending by energy firms, restrained GDP growth to a 0.7 percent annual pace. However, weak reports on inventories, factory orders and construction spending suggest the economy grew at about a 0.2 percent rate in the last three months of 2015. A separate report showed the University of Michigan’s consumer sentiment index fell to a reading of 90.7 in early February from 92 in January as households worried about the economic outlook. Consumers expect inflation to average 2.4 percent over the next five years, down from 2.7 percent in the January survey and the lowest reading since the question was added to the monthly survey in 1990. The Labour Department reported on Friday that import prices dropped 1.1 percent in January after a similar decrease in December. Reuters
principle of freedom of movement. The main unresolved issue is how long Britain could keep the brake in place -- London wants seven years. Keen to tackle this problem, Tusk’s meetings this week include Czech Prime Minister Bohuslav Sobotka, the current head of the “Visegrad Group” of his country with Poland, Hungary and Slovakia, all of which are sceptical about the “brake” plan. But it is Cameron’s demands for protection for countries that do not use the euro that have recently emerged as the biggest possible hurdle to a deal, due to opposition from France in particular. Paris insists that the “euro-outs” like Britain cannot have a veto over any decisions in the 19-country eurozone as it struggles with the fallout from its debt crisis, and that the City of London financial hub should not get special treatment. The possibility that Greece’s Tsipras or Italian Prime Minister Matteo Renzi might try to extract concessions for their own countries’ struggles with migration and the economy in exchange for backing a British deal is also on EU officials’ minds. Cameron also wants assurances that the goal of “ever closer union” will not apply to Britain, reflecting a historic split between London’s view of the EU as a free trade area and the continental idea of a political project aimed at ending centuries of European wars. Cameron has pledged to hold the referendum by the end of 2017. But he has indicated he wants a deal at this summit to allow time to arrange a referendum in June, before the migration crisis flares up again over the summer and eurosceptics both within and outside his centre-right Conservative party become restive. Opinion polls are roughly split on whether Britons would vote to remain in the EU or leave. It last voted on the issue in 1975, two years after joining what was then the European Economic Community. AFP
Business Daily | 15
February 15, 2016
Opinion Business
wires
China’s crisis of miscommunication
Leading reports from Asia’s best business newspapers
Zhang Jun
Professor of Economics and Director of the China Centre for Economic Studies at Fudan University
TAIPEI TIMES Tainan Mayor William Lai announced that the searchand-rescue operation at the Weiguan Jinlong complex in Tainan, which collapsed in an earthquake on February 6, has come to an end, after the body of the last missing resident was found. According to Central Emergency Operations Centre statistics, the death toll from the magnitude 6.4 earthquake yesterday rose to a total of 116, of which 114 occurred at the Weiguan Jinlong complex, with one person who lived near the complex still missing.
PHILSTAR Capital Economics believes the country’s strong manufacturing and business process outsourcing sectors will more than make up for the slackening growth in remittances. Gareth Leather, senior Asia economist at Capital Economics, said the recent slowdown in remittances is not a major cause of concern. The investment bank has pencilled a four percent growth in cash remittances from Filipinos abroad both in peso and US dollar terms. He pointed out the Philippines could finally be reaching a stage where it no longer needs to send people abroad in order to grow quickly.
THE KOREA HERALD South Korea is unlikely to get back 3 trillion won (US$2.5 billion) in outstanding loans and interest payments it provided North Korea in the past with the freezing up of relations following Pyongyang’s recent nuke test and long-range missile launch, observers said Saturday. According to data provided by the finance ministry and Export-Import Bank of Korea, the country provided 2.5 trillion won worth of direct funds and indirect assistance to its northern neighbour over the years comprising of food shipments; money used to build up roads and railways linking the two Koreas.
THE STAR Tun Dr Mahathir Mohamad has taken his campaign against Malaysia’s Prime Ministers Najib Razak a step further by becoming the patron of the Coalition of Umno party Branch Chiefs that is working to oust the prime minister and Umno president. The group, which claimed to be represented by Umno branch leaders from all over the country, was formed last November to press Najib to step down so that Umno would be saved from ruin. It said Dr Mahathir had agreed to become its patron during a meeting held at the former prime minister’s office in Yayasan Al Bukhari on Friday
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t a forum in Canberra last year, Andrew Sheng quipped, “China is transparent, but only in the Chinese sense.” The statement provoked laughter among those who view China’s decision-making processes as opaque; but it was laughter born of the recognition that Sheng was right. In the runup to a major policy decision in China, editorials by highranking authorities in major publications, as well as reports and communiqués from official forums and meetings, almost always provide clues about what will happen. You just have to know how to read them. That is easier said than done, at least for foreign media, whose struggle to anticipate China’s policy moves has fuelled much frustration – and even accusations that Chinese decision-making is secretive and unpredictable. This struggle is perhaps most apparent today in discussions about China’s exchange rate. Many investors interpreted last August’s unexpected devaluation of the renminbi by 1.9% against the US dollar – the first decline following years of steady appreciation – as a last ditch effort by the People’s Bank of China (PBOC) to stave off an economic crash. They thus assumed that it was just the beginning of a protracted policy-induced depreciation. As a result, a wave of investors shorted the renminbi, fuelled exchange-rate volatility and drove a sharp increase in capital outflows. But China is not really on the verge of a currency crisis at all. Given that all of this activity is taking place in the offshore renminbi market, which is small in scale and has only limited connections to mainland China’s financial system – the result of China’s hesitancy about financial-market
China’s leaders have plenty of challenges ahead, and improved communication with markets could help to overcome them
liberalization and capital-account convertibility – the situation remains controllable. Add to that China’s other strengths – annual GDP of over US$10 trillion, a growth rate at least four percentage points higher than the global average, US$3 trillion in foreign-exchange reserves, a savings rate of 40% of GDP, and a massive trade surplus – and an exchange-rate crisis seems highly unlikely. But that does not mean that there are no risks. On the contrary, China has a strong interest in curbing the volatility – and, given China’s centrality to the global economy, so does the rest of the world. The key will be to get markets and policymakers on the same page. So far, China’s leadership has been quite forthcoming about
its plans, declaring publicly that substantial devaluation of the renminbi is not part of its plan. Given the enduring strength of China’s economic position, their words should be taken at face value. Moreover, Chinese policymakers have shown a clear commitment to minimizing government intervention and promoting a market-oriented approach for setting interest and exchange rates. And the authorities – particularly those at the PBOC – have made significant progress toward this end. In fact, the devaluation last August was accompanied by the announcement of a more market-oriented mechanism for setting the renminbi’s exchange rate in the interbank market, with the daily fixing rate based on the previous day’s closing price. That move, an important step in the internationalization process, was a prerequisite for the addition of the renminbi to the basket of currencies that determine the value of the International Monetary Fund’s reserve asset, the Special Drawing Right. But even when China attempted to create a more reliably marketbased system, investors’ responses were skewed, with unfounded expectations of a substantial and consistent devaluation fuelling speculation in international markets. The subsequent attempt by China’s State Administration of Foreign Exchange to stabilize expectations by declaring that the renminbi would be valued against an undisclosed basket of currencies, instead of just the US dollar, failed to convince them. Short trades continued to rage offshore, putting the renminbi under increasing pressure. No doubt, China could have communicated its new exchange-rate policy more
clearly, a point that Fang Xinghai, Vice President of the China Securities Regulatory Commission, has admitted. But that does not mean that the authorities, especially the PBOC, were being secretive or opaque in their decision-making. The real problem was, as Sheng suggested, a difference in communication style. Recognizing this disconnect, the PBOC has been working vigorously to prevent further misunderstandings by designing policies that will safeguard exchange-rate stability, while taking care not to transmit any signal that monetary easing is in the cards. Even with interbank liquidity strained, the PBOC is refusing to lower the deposit reserve rate to release liquidity – in defiance of market expectations. Instead, the PBOC is employing unconventional regulatory tools – such as short-term liquidity operations, standing lending facilities, and reverse repurchase agreements – to boost the money supply, driving the repurchase rate to a ten-year low. Clearly, even with external speculators breathing down its neck, the PBOC remains committed to stabilizing the exchange rate, while advancing its market-oriented goals. Investors should take note. China’s leaders have plenty of challenges ahead, and improved communication with markets could help to overcome them. Fortunately, it seems that China’s leaders recognize this imperative, and are working to meet it. Nonetheless, it is reasonable to wonder whether, if the current currency turmoil endures, Chinese policymakers’ commitment to financial liberalization and currency internationalization will wane. One hopes that it does not come to that. Project Syndicate
16 | Business Daily
February 15, 2016
Closing China to approve its first sound trademark
Singapore Airshow to highlight aerospace equipment
A state-owned radio station’s signature tune is about to be approved as China’s first sound trademark. The State Administration for Industry and Commerce (SAIC) said yesterday that it has reviewed the application from China Radio International and plans to approve it. A sound trademark is a sound that is used to perform the trademark function of uniquely identifying the commercial origin of products or services. Famous examples include the Nokia tune and the “I’m lovin’ it” jingle of McDonald’s. China’s top legislature revised the Trademark Law to allow sound to be registered as a trademark in 2013. The SAIC had received 450 applications for sound trademarks by the end of January.
Two days ahead of the opening of the Singapore Airshow, members of media were given a glimpse of the aerial display of Asia’s largest aerospace and defence exhibition yesterday. This year’s areal display include the French Air Force’s Dassault Rafale, the U.S. Air Force’s F-16C/D Fighting Falcon, the Royal Malaysia Air Force’s Su-30MKM as well as the Singapore Air Force’s integrated aerial display team. In addition, the Black Eagles from South Korea Air Force (pictured) thrilled the crowds with three more manoeuvres added to their 2014 repertoire. The airshow is only for trade professionals on February 16-19 while it will be open to the public on February 20-21. In 2014, almost 10,000 people attended the Singapore Airshow.
Oil bosses upbeat on market rebound Prices have slumped by about 70 pct since mid-2014 with the market awash with crude Juliette Rabat
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overs and shakers from the oil industry descended on London last week and expressed optimism over a sharp rebound in the beleaguered crude market later this year. Bob Dudley, chief executive of British energy major BP, forecast at the International Petroleum Week industry conference on Wednesday that “the daily (oil) supply and demand” will be balanced in the second half. “Every storage tank and swimming pool will be full of oil,” Dudley told delegates, acknowledging the vast global supply glut that sent prices plunging close to 13year lows under US$27 (24 euros) per barrel last week. “And then... the market starts to pull the plug.” “And I think we will begin to see the fundamentals (of supply and demand) take over,” he said, indicating prices would pull higher in the third or fourth quarter. Dudley cautioned however that US$100 oil would not return any time soon. World oil prices meanwhile rose Friday, with US crude rebounding from a 2003 low
to reach almost US$30 per barrel, on reports OPEC was willing to organise output cuts that could curb global oversupply. However, prices have nevertheless slumped by about 70 percent since mid2014 with the market awash with crude. Patrick Pouyanne, chief executive of French oil and gas giant Total, agreed that prices would charge higher towards the end of the year.
‘It’s quite a crisis’
The recent slump in the cost of oil has slashed the profits of energy companies, prompting them to cut or defer investment and axe thousands of jobs. Total also revealed it would invest up to US$2 billion less in 2016 than originally planned, as it grapples with ultra-low prices. “It’s quite a crisis that this industry is facing,” added Pouyanne. Dudley meanwhile estimated that about “US$400 billion of projects have been deferred or cancelled” by the global energy sector in response to the market’s recent collapse.
He warned: “That’s going to lead to another reaction” in the oil market. BP recently posted the group’s biggest annual loss in at least 20 years, ravaged by tumbling oil prices. Energy companies tended to over-invest in times of high price levels in the commodity cycle, according to Pouyanne. “When the prices are high we over-invest, when the prices are high we have an impact on the demand
(but) when the prices are low we under-invest and we have a positive (impact) on demand,” he told delegates. Pouyanne added: “Clearly we are today in a crisis of an excess of supply, an excess of capacity, and also because the demand was lower than expected.” The Total boss said excess capacity stood at two million barrels per day (bpd), which he added was “not so big” compared to a total market of 90 million bpd.
However, he estimated that about 25 million bpd of new capacity was required between now and 2020, and cited the impact of declining production from existing oil fields and increasing energy demand. Pouyanne warned there would be an estimated shortfall of between five and 10 million bpd by 2020, which he added would also push prices higher in the longer term. AFP
U.A.E. interbank rate drops to 2-month low
Express delivery market slows in holiday
Sparkling wines seen driving world consumption growth
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key interest rate in the United Arab Emirates fell to the lowest in almost two months after bank deposits in the second-biggest Arab economy swelled and as the prospect of rate increases in the U.S. fades. The three-month Emirates Interbank Offered Rate, a benchmark used to price loans, fell 1.2 basis points yesterday to 1.01786 percent, its lowest since December 17, according to data compiled by Bloomberg. The rate rose or remained unchanged in each of the 12 months in 2015 before falling less than one basis point in January. “The addition in bank deposits in November and December has helped support liquidity in the banking system and stabilize the Eibor,” Apostolos Bantis, a credit analyst at Commerzbank AG, said by phone from Dubai. “The expectation for another rate hike in the U.S. as early as March has now faded which also provides support to local rates.” Bank deposits in the U.A.E. climbed 22.1 billion dirhams (US$6.02 billion) in December. Bloomberg News
he explosive growth of the Chinese express delivery market slowed during the Spring Festival holiday, as many couriers followed the tradition of taking time off to return to their hometowns. Couriers delivered more than 10 million parcels between February 6 and 12, up 25 percent year on year, the State Post Bureau (SPB) said yesterday. State-run EMS and private S.F. Express accounted for over 90 percent of the total. However, the growth pace was slower than the 48 percent registered in the whole of 2015. The seven-day Spring Festival holiday, which started on February 7 this year, is usually a slack period for express delivery. The SPB said the sector will soon return to more rapid growth, helped by a Valentine’s Day shopping spree. The business volume rose to 2.9 million deliveries on February 12. The express delivery sector has boomed thanks to the rise of e-commerce. In 2015, courier companies delivered 7.8 times more packages and made 3.8 times more revenue than they did in 2010. Xinhua
parkling wines are poised to lead growth in the global wine market from 2015 to 2019, with rose wines and premium labels also driving expansion, according to the Bordeaux-based international wine and spirits exhibition Vinexpo. While worldwide wine consumption looks set to rise 1.4 percent over the period, sparkling wines, which account for 8 percent of the total, will advance 7.4 percent, according to an e-mailed study released this week from Vinexpo. Rose wine consumption, which accounts for 9 percent of still light wines consumed, will grow by 2.2 percent and premium still light wines are forecast to rise 12 percent, Vinexpo said. The prediction for renewed growth comes after global consumption of still light wine fell 1.2 percent in 2014 to 2.4 billion 9-liter cases, led by declining consumption in Europe and the Asia-Pacific region, according to Vinexpo, which drew on International Wine and Spirit Research data. North America remains a growing market. Sluggish growth in world economies, combined with stricter laws against drinking and driving in many regions and broader publicity over health issues, have contributed to the decline. Bloomberg News