Macau Business Daily Feb 16, 2016

MOP 6.00 Closing editor: Joanne Kuai

‘Abenomics’ suffers another setback as Japan’s economy shrinks

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Year IV

Number 981 Tuesday February 16, 2016

Publisher: Paulo A. Azevedo

Jetstar suspends all Macau-Vietnam flights from February 22 Page 3

Mainland developers grab land opportunities in Hong Kong

Mixed Retail Results for CNY

Increased visitation. The MSAR welcomed 1.22 mln tourists over the Chinese New Year holiday period.

From Feb. 7 to 14, a 4.04 pct increase y-o-y. But local retailers say the increase hasn’t translated into sales. With a jewellery chain claiming business was down 20 to 30 pct in the city centre. The suspension of Wanzai port is blamed along with inclement weather. A major food souvenir chain claims a 10 pct decline. Although Taipa Village traders seem content enough Page 2

Taxing times Plenty to object to. Casino operator Crown Resorts Ltd. says it has received a 250 mln Australian dollar (US$179 mln) bill. From the tax man for extra payments and swingeing penalties. Related to its investments in Cannery Casino Resorts and other enterprises in N. America. The Melbourne-based company says it will pursue all avenues of objection, including court proceedings if necessary

China’s foreign trade slumped in January. With both exports and imports slowing at a faster than expected rate. Due to weak global demand, Customs data showed yesterday.

Total foreign trade value in January edged down 9.8 pct y-o-y to 1.88 tln yuan

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Brought to you by

HSI - Movers

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February 15

Cambodia courts Chinese

Name

Opening the door. Cambodia has approved legislation for foreign investors to step into the gaming sector. Mainland Chinese are the major targeted customers. With Macau investors sought to bridge the markets

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www.macaubusinessdaily.com

Global trade rout

%Day

Galaxy Entertainment

+8.17

China Merchants Holdi

+6.50

Problems piling up for Bridge

CNOOC Ltd

+6.42

Ping An Insurance Gro

+6.37

Bank of Communicatio

+5.39

CLP Holdings Ltd

+0.83

Seven faulty underground pilings. Delaying completion of the Hong Kong-Zhuhai-Macau Bridge. Hong Kong authorities say replacement costs, borne by the unnamed construction company, will amount to HK$14 mln

Want Want China Hold

+0.74

Sino Land Co Ltd

+0.40

MTR Corp Ltd

0.00

Li & Fung Ltd

-1.08

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Source: Bloomberg

Banking

FTZ opportunities

I SSN 2226-8294

Diversification. Now it’s the turn of Bank of East Asia Macau Branch. Seeking to ‘target local professionals and new businesses launches in Hengqin and Nansha’. The bank wants to increase its proportion of retail deposits

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2 | Business Daily

February 16, 2016

Macau

Retailers: CNY business down despite increased visitation The total tourist number was up by some four per cent year-on-year over the Chinese New Year Holiday. But local retailers of jewellery and food souvenirs told us that they did not enjoy any corresponding benefits Kam Leong

kamleong@macaubusinessdaily.com

business is due to several factors.

“For example, the change in visitor structure and tourists’ sentiments to consume,” he claimed.

He added that the company had actually expected the business for the Chinese New Year to not be as good as the previous ones, adding it was time for the group to develop other markets.

Adjusting marketing strategies

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ocal retailers claim that the increase in number of tourists for Chinese New Year did not benefit their business – which, instead, dropped compared to the same period of last year, Business Daily has learned.

The latest official data released yesterday by the Public Security Police Force (PSP) revealed that the Special Administrative Region welcomed 1.22 million tourists over the CNY holiday period from February 7 to 14, which represents a year-on-year increase of 4.04 per cent.

The general manager of local jewellery chain Seng Fung Jewellery Co., Lee Koi Ian, told Business Daily in a phone interview yesterday that the company’s business did not mirror the jump in visitor numbers in the past week; although it was affected by the recent closure of the Wanzai Border.

“Our company’s outlet stores are primarily located in the Nam Van District and Avenida de Almeida Ribeiro. Frankly, the business in Nam Van for this CNY hovered at a similar level as the previous one as tourist footfall was mainly in that area. Yet, our sales in Avenida de Almeida Ribeiro plunged for the period due to the closure of the Wanzai Border,” Mr. Lei claimed.

According to the jewellery group general manager, the company’s sales in the city’s most famous road registered a year-on-year slump of 20 to 30 per cent, causing the retailer to post overall sales of a single-digit drop year-on-year for the holiday period.

“Some Chinese visitors used to reroute themselves to the Wanzai Border and the Hengqin Border as visiting the city by the Border Gate is too busy. However, after the Wanzai

Border has recently been shut down we noticed that footfall had plunged in Avenida de Almeida Ribeiro to Senado Square,” the retailer explained.

Same pain for food souvenir business

The jewellery company was not the only tourist-focused retailer not to get the chance to enjoy the fruits of the tourist increase. One of the city’s largest food souvenir stores, Choi Heong Yuen Bakery, also felt the same pain, its managing director, Alan Wong Yeuk Lai, told us yesterday.

“Our sales were not driven up by the increase in visitors. The business performance for this CNY is not so good – we’ve registered a decline of 10 per cent compared to the same period last year,” Mr. Wong said.

The food souvenir chain boss believes that the downturn in

“The current adjustment phase is a good timing for us to adjust our strategies in order to seize business opportunities in the future. In addition to studying new products and adjusting our structure, we are aiming to develop overseas markets such as the United States and Canada,” Mr. Wong told us.

“After all, we didn’t have enough time to look for other markets when Macau was developing rapidly in the past. Amid the current downturn, we think now it’s time to put more focus and resources into developing overseas markets,” he added.

Meanwhile, the local gold jewellery retailer is repositioning its targeted customers in the business downturn.

“We’ve shifted our business focus from the high-end market to the middle–end as this segment’s tourists have been increasing. Looking at the rest of the year, we believe our business will continue to be affected by the downturn,” he said, anticipating that the number of transactions may increase but total turnover would drop.

On the other hand, the president of the Industry and Commerce Federation of the Islands of Macau, Yeong Keng Hoi, told reporters yesterday that the average business in the Rua da Cunha in Taipa registered a year-on-year increase of some 10 per cent on average for CNY, driven by the increase in Mainland Chinese tourists travelling under the Individual Visit Scheme (IVS).

Business Daily | 3

February 16, 2016

Macau

Flawed pilings threaten further delay of Bridge The contractor will have to bear the cost of the reconstruction of the pilings which amounts to HK$14 million João Santos Filipe

Jetstar to suspend Macau-Vietnam flights from February 22

jsfilipe@macaubusinessdaily.com

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even faulty underground pilings of the Hong Kong-ZhuhaiMacau Bridge need to be reconstructed. The news was revealed yesterday by Hong Kong tabloid Apple Daily, which quoted ‘sources with knowledge of the matter’.

The local contractor, which has already manufactured over 1,000 pilings of the bridge, will have to bear the cost of the reconstruction, the Hong Kong Government has confirmed. The cost amounts to HK$14 million (US$1.80 million) or HK$2 million per pile.

While the official body confirmed the news, it did not name the contractor involved, the areas affected or the reasons for the decision to reconstruct the pilings.

The Bridge is slated for completion in 2017 but the sources contacted by Apple Daily question if this date can be achieved because of the problem with the pilings.

Varied impact

However, the former president of the Hong Kong Institution of Engineers, Greg Wong Chak-yan, told the Hong

Kong newspaper The Standard that the impact of rebuilding the pilings will vary according to the location and solution adopted.

“Rebuilding a new pile is the last resort. Extra pilings may be added near the pilings involved to support the Bridge. The former can take a month, while the latter can be completed within two to three weeks,” Wong said, as quoted by The Standard.

Mr. Wong also considered that the fact that only seven of 1,000 pilings have to be reconstructed is

“not unsatisfactory” as it represents less than one per cent of the pillars constructed by the contractor.

Initially the Hong Kong-ZhuhaiMacau Bridge was supposed to be completed by the end of this year.

However, construction problems have delayed the target date to 2017.

Last month, China Radio International reported that a total of 3.3 kilometres of the Bridge connecting north Hengqin interchange to Hongwan interchange had already opened to traffic.

ow-cost carrier Jetstar Pacific Airlines is suspending its Macau-Vietnam routes from February 22, as confirmed by the local aviation authority.

In a written email to Business Daily, the Civil Aviation Authority of Macao (AACM) revealed that it has received notice from the Vietnam head office of Jetstar Pacific Airlines that all of its flights between Macau and Vietnam will be suspended from February 22 due to ‘business concerns’.

There is no information on when or whether the service will be resumed.

According to AACM, the airline has indicated that it would inform all affected passengers and repay ticket charges.

Flights between Macau and three Vietnam cities – namely, Da Nang, Hai Phong and Ho Chi Minh City are offered by the airline, as these tickets can currently be selected from its official website. But no ticket price or information is available, indicating no flights are available from today.

Business Daily has tried to reach the airline but received no reply by the time the story went to press.

B.L.

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February 16, 2016

Macau

Local Bank of East Asia branch focused on Hengqin and Nansha The Macau branch of the Hong Kong-based bank wants to diversify the source of clients from the gaming sector this year João Santos Filipe

jsfilipe@macaubusinessdaily.com

KEY POINTS New targets - Hengqin and Nansha in Guangdong Diversify from gaming sector amid sharp slowdown Volume of loans fell 20.8 pct y-o-y in 2015

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he Macau branch of Bank of East Asia is focused on targeting local professionals and the new businesses being launched in the regions of Guangdong Province, Hengqin and Nansha. The strategy was revealed yesterday by the group in a filing with the Hong Kong Stock Exchange with its annual results.

In 2016, the local branch of Bank East of Asia will also try to diversify its services from the shrinking gaming sector and attract a larger base of retail deposits.

‘Going forward, BEA Macau aims to diversify from the gaming sector by targeting local professionals and new businesses launching in Hengqin and Nansha’, the section on the local branch

reads. ‘BEA Macau will also look to diversify its deposit base to increase the proportion of retail deposits’.

Setback in gaming slump

Yesterday, the Bank of East Asia announced its annual results for 2015.

Regarding Macau, while talking about a drop in terms of performance in the territory, the exact figures were not revealed. However, the Macau sector results are expected to be published soon in the SAR Government’s Official Gazette.

‘After several years of rapid growth, the performance of BEA Macau suffered a setback following the sharp slowdown in Macau's gaming industry. Asset quality

‘The Mermaid’s US$276 mln tops China Lunar New Year box office

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hree locally-made films led box office receipts over the China’s Lunar New Year holiday week, with director Stephen Chow’s romantic comedy “The Mermaid” topping the list with gross revenue of 1.79 billion yuan (US$276 million).

“The Man From Macau 3,” an action comedy starring Chow Yun Fat, ranked second at about US$120 million, according to figures from researcher EntGroup Inc. covering the Feb. 7 to 15 period across China.

“The Monkey King 2” came third with about US$117 million, followed by “Kung Fu Panda 3,” at US$26 million.

Zhuhai exports a ton of flowers to MSAR during Chinese New Year

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bout 1.036 tons of flowers, worth some HK$13,960, were exported from Zhuhai to Macau during the Chinese New Year, according to state-owned news agency China News Services.

Zhuhai Customs officials arrived in Wanzai Haotong Port at 5:30am on Sunday morning to inspect the flowers. After half an hour, a fleet of boats carrying the flowers set sail for Macau.

Zhuhai authorities said the inspection of export flowers usually starts at 7:00am every day but due to the surging demand for flowers in this festive season, the schedule was advanced one and a half hours.

In order to keep the flowers fresh by the time they arrive in Macau, Zhuhai Customs adopted a ‘centralised declaration’ mechanism in order to facilitate a smooth delivery process.

Wanzai in Zhuhai has long enjoyed the reputation of being the ‘Home of Flowers’, boasting a history of over one hundred years of producing them.

According to Zhuhai Customs, in 2015 around 234 tons of flowers were exported to Macau through Wanzai Port, an increase of 5.63 per cent year-on-year.

remained sound but the volume of loans fell by 20.8 per cent year-onyear,’ the report reads.

In 2014, the Macau branch reported in the annual results a total of MOP10.09 billion (US$1.26 billion) in ‘Loans and Advances’, meaning that by the end of 2015 loans have declined to roughly MOP7.99 billion according to Business Daily’s calculations.

As for the results of the group, including operations in Hong Kong and Mainland China, in 2015 the Bank of East Asia recorded a net profit of HK$5.52 billion (US$709.05 million), representing a 16.6 per cent year-on-year decline from HK$6.62 billion according to the filing.

Corporate

The results show China is on track to replace the U.S. as the largest movie market in the world by 2017. The market in Asia’s biggest economy grew about 48 per cent last year to US$6.8 billion, with locally-made films accounting for more than 61 per cent. U.S.-made films generated about US$11 billion in revenue in 2015, according to data from boxoffice. com and SNL Kagan.

The U.S. hit “Star Wars: The Force Awakens” slumped to No. 12 in the holiday film rankings, just behind “Alvin and the Chipmunks: The Road Chip.”

Bloomberg

‘Macau Hunt’: Golden Monkey welcomes in New Year MOME introduces the ‘Macao Hunt’ throughout February, with prizes including a lucky monkey gold figurine, iPhone6s, coupons from selected merchants from the Quality Tourism Services Accreditation Scheme, and so forth. Participants can login to the game via MOMEplay or MGTO’s Wechat account. By initiating the

shake function on Wechat or scanning the QR code on the ‘Lucky Monkeys’ in the designated area, the chance of winning will be enhanced. Moreover, participants will be able to collect more lucky draw chances by sharing the game link with friends on Wechat and completing the in-game survey.

Business Daily | 5

February 16, 2016

Macau

Sands China starts year grabbing market share lead

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ands China was the dominating force in terms of market share in the first month of the year, according to a report issued by asset management firm Sanford Bernstein.

In January, the American company seized 23.2 per cent of the market in terms of gross gaming revenue, which for the overall industry stood at MOP18.67 billion (US$2.33 billion). In comparison to the preceding month, Sands China share decreased from 23.7 per cent.

The second place in January was occupied by Galaxy, which recorded a market share of 22 per cent.

However, the company’s share declined from 23.1 per cent vis-a-vis December.

Third place was taken by SJM, the company that controls casino Lisboa. The group grabbed 19.1 per cent market share, down 1.2 percentage points from December.

In the bottom half of the league, Melco Crown took fourth position with a share of 16.7 per cent, an increase

from the 16.2 per cent posted in December, according to the Sanford Bernstein report.

During January, all the operators in the bottom half of the league increased

market share. Wynn took the fifth position with a share of 9.8 per cent, up from 9.1 per cent in December.

MGM China ranked sixth with a share of 9.2 per cent,

Macau Gaming Revenue Market Share – January 2016

recording the highest increase in terms of percentage points in comparison with the previous month, when its share stood at 7.5 per cent.

J.S.F.

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February 16, 2016

Macau

Cambodia approves legislation to attract MSAR investors The government of the Southeast Asian kingdom wants to increase the number of Chinese tourists, with Macau investors perceived as a major catch João Santos Filipe

jsfilipe@macaubusinessdaily.com

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ambodia is after Macau a n d A m er i ca n investors for the gaming sector and last week approved legislation for foreign investors to step into the gaming sector.

The Southeast Asian country is expecting such investors to attract more Mainland Chinese gamblers to the country.

“When the law is enacted, we will not only be able to double revenue from the industry but also open the market to direct investment from major investors”, the Cambodia deputy director general of the ministry’s finance industry department, Ros Phearun, said, as quoted by the local Khmer Times newspaper.

According to the Cambodian publication, the deputy director also explained that in the past investors from Macau and the US had been deterred

from directly investing in the local gaming sector due to the lack of appropriate legislation. Referring to “major investors from Macau and Las Vegas”, no specific names were given.

Mr. Ros Phearun explained as well that the bill had been checked by both the Ministry of the Interior and the Ministry of Economy and Finance. A joint working group of officials from both ministries will set a timeframe to present the bill to both ministers before submitting it to the Cabinet and then the Council of Ministers, Mr. Phearun said. “[The legislation] is not only good for tax revenue but also for attracting more foreign visitors,” Mr. Phearun said, as quoted by the Khmer Times.

National strategy

Cambodian officials and travel agencies

are expecting that with foreign investors, the number of Chinese visitors to the territory will also increase. This was explained by the president of travel agency World Express Tour, Ho Vandy, according to the Khmer Times.

The focus on attracting more and more Mainland Chinese visitors is one of the goals of the Cambodian Government strategy. The country has defined a new fiveyear plan to draw 7.5 million international tourists a year by 2020, which includes 2 million Chinese tourists a year.

Last year, there were 75 casinos in Cambodia, according to the Cambodian newspaper, which combined generated about US$34.7 million (MOP278.2 million) in taxes, up 33 per cent from 2014.

Crown Resorts disputes amended tax bill The gaming operator says it does not agree to the amended assessments and may pursue legal proceedings if necessary

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rown Resorts Ltd., the gaming operator in Australia with investments in Asia, says it would object to an amended tax bill and penalties issued by the Australian tax authorities according to two filings with the Australian Securities Exchange issued on Monday.

Crown Resorts announced that it has received amended assessments from the Australian Taxation Office (ATO) for a total of approximately 250 million Australian dollars (US$179 million) comprising primary tax and interest.

In addition, the Office has issued a separate notice of penalties of about 112 million Australian dollars, making a total claim of approximately 362 million Australian dollars.

‘Crown is a significant taxpayer in Australia and disputes the amended assessments,’ the company said in the filings.

The Melbourne-based company said the amended assessments are in respect of income tax paid for financial years ending 30 June 2009 to 30 June 2014 (inclusive).

The amended assessments relate to the tax treatment of some of the financing for Crown’s investment in Cannery Casino Resorts and other investments in North America.

‘Crown considers that is has paid the correct amount of tax and intends

to pursue all available avenues of objection, including, if necessary, court proceedings, to the amended assessments,’ said the company in the filings.

Globetrotter

Australian billionaire James Packer, who owns 53 per cent of Crown, botched an attempt to capture a slice of the US market nearly a decade ago. In 2007, he acquired Cannery Casino Resorts for US$1.75 billion, a portfolio of four casinos in Nevada and western Pennsylvania, but the global financial crisis hit and crushed US gambling revenues. Crown was subsequently forced into billions of dollars of write-downs.

James Packer’s casino empire Crown Resorts has a 34 per cent stake in Asian casino developer and operator Melco Crown Entertainment Ltd., which has been hit by lower earnings from its Macau interests, with the Asian gaming hub recording a revenue slump for the 20th straight month.

The market has been keeping a close eye on the company since Mr. Packer announced in December that he was stepping down from the board of Crown Resorts. However, Mr. Packer remains co-chairman of Melco Crown.

J.K.

James Packer

Business Daily | 7

February 16, 2016

Hong Kong

HSBC Headquarters at Canary Wharf, in London, U.K.

HSBC keeps London headquarters in victory over Hong Kong HSBC began debating a shift last April, assessing factors such as taxation, financial regulations and the risk of Britain exiting the EU

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SBC Holdings Plc recommitted its future to London, ending 10 months of deliberations over whether to move its headquarters, after securing concessions from the U.K. government on regulation and taxes. The shares rose.

Europe’s largest bank said it will continue its 23-year stay in the U.K. capital after its board, led by Chief Executive Officer Stuart Gulliver and Chairman Douglas Flint, convened there on Sunday. The decision was unanimous, according to a statement from the bank.

“As we evaluated jurisdictions against the specified criteria, it became clear that the combination of our strategic focus on Asia and maintaining our hub in one of the world’s leading international financial centers, London, was not only compatible, but offered the best outcome for our customers and shareholders,” Flint said in the statement.

The shares increased 1 per cent to 445.6 pence at 8:01 a.m in London, bringing the loss this year to 17 per cent.

The decision is a victory for U.K. Chancellor of the Exchequer George Osborne, who made tax and regulatory concessions to large banks despite their poor standing among voters following the 2008 financial crisis. It also underscores London’s status as a global financial hub at at time when it’s being undermined by debate over whether the U.K. will quit the European Union.

Default position

“Their default position was always to stay in the U.K.,” said Chris Wheeler, a London-based analyst at Atlantic Equities, a U.S. brokerage firm. “They would have needed very strong arguments to leave given the mountain of legal and regulatory work involved in a move, as well as the political pressure.”

The loser is Hong Kong, which Bloomberg Intelligence estimates accounts for 22 per cent of HSBC’s assets and generated almost half of the company’s pretax profit in 2014. A slowdown in China, which administers the former British colony, and fresh questions over the economic

management of the world’s most populous country would have counted against Hong Kong.

The Hong Kong Monetary Authority said it respects the bank’s decision. “The HKMA appreciates that for a large international bank such as HSBC, relocation of domicile is a very major and complicated undertaking,” Chief Executive Norman Chan said in a statement.

The bank’s review was “exhaustive” and looked at the regulatory regime, future growth, and existing scale in several countries, including Canada, the U.S., China, Australia, Singapore, France and Germany. The final two markets considered were Hong Kong and the U.K., the bank said. A move would have cost as much as US$1.5 billion, according to an analysis by Sanford C. Bernstein.

In a sign the board struggled to make a decision, it missed a selfimposed deadline to make its mind up by the end of 2015. It also sought strategic advice from former U.S. secretaries of state Henry Kissinger and Condoleezza Rice, a spokeswoman for the bank said.

HSBC is giving investors a clear message that it will remain an international bank based in Europe, while developing the Asian business at the same time Ronald Wan, CEO at Partners Capital International Ltd.

The decision was “much as expected,” Hugh Young, Singaporebased managing director of top10 shareholder Aberdeen Asset Management Plc, said in an e-mailed response to questions. The bank gained concessions and clarity from the U.K. government so a move wasn’t worth the “huge legal effort,” he said.

Founded in 1865 as the Hongkong and Shanghai Banking Corp., HSBC began debating a shift last April, assessing factors such as taxation, financial regulations and the risk of Britain exiting the EU.

‘Banker bashing’

London’s appeal grew after last May’s election handed full power to the Conservative Party, allowing Osborne to loosen pressure on the finance industry after years when “banker bashing” was a popular political stance. The 2008 crisis threw the economy into recession and required about 1 trillion pounds (US$1.45 trillion) of government support to stop the banking system from collapsing, though HSBC didn’t require any state assistance.

Keen to keep HSBC, which employs 45,000 across the U.K. and paid US$2.4 billion in British taxes in 2014, Osborne declared a “new settlement,” cutting a proposed levy on banks that would have disproportionately hurt the lender and refocusing it on domestic balance sheets rather than global assets. He eased regulatory scrutiny and curtailed the era of huge fines, pushing out the combative Martin Wheatley from the Financial Conduct Authority.

“It’s a vote of confidence in the government’s economic plan, and a boost to our goal of making the U.K. a great place to do more business with China and the rest of Asia,” a spokeswoman for the U.K. Treasury said in an e-mailed statement.

Not complacent

Also working in London’s favor was the deceleration in China’s economy to its slowest rate since 1990, threatening growth in other parts of Asia. Even with the “One Country, Two Systems” principle under which China governs Hong Kong, concerns about encroachment on the territory’s

autonomy also mounted following the disappearance of a publisher based in the former colony.

Hong Kong’s attraction lay in access to Asia, and a 16.5 per cent corporate tax rate versus Britain’s 20 per cent. Analysts also speculate its regulators would be more lenient than those in the U.K., where the bailouts led authorities to zero in on dangers from the size of banks.

Even though HSBC will remain in London, Gulliver is still counting on Asia to drive growth. The CEO has said half of the US$180 billion to US$230 billion in risk-weighted assets he plans to redeploy under a revised strategy will be invested in Asia, as HSBC adds some 4,000 jobs in China’s Pearl River Delta region over the next three to four years.

Asia accounted for 62 per cent of HSBC’s pretax profit in the nine months to Sept. 30, according to its latest set of results. Profit in Asia fell 4.4 per cent to US$3.5 billion in the third quarter, while in Europe earnings dropped 44 per cent to US$969 million.

“HSBC is giving investors a clear message that it will remain an international bank based in Europe, while developing the Asian business at the same time,” said Ronald Wan, chief executive officer at Partners Capital International Ltd. in Hong Kong.

This wasn’t the first time HSBC had threatened to leave since its relocation to London in 1993, which followed its acquisition of Midland Bank Plc ahead of 1997’s return of Hong Kong to Chinese sovereignty.

The bank complained about its tax bill in 2006 and reviewed the issue again in 2010 after then-CEO Michael Geoghegan transferred his office to Hong Kong to focus on expansion in Asia. HSBC has decided that the practice of reviewing its domicile every three years is unnecessary and will end, according to the statement.

“We want to have truly global companies, major employers like HSBC, headquartered here so this announcement is good news,” Carolyn Fairbairn, director general of the Confederation for British Industry, the country’s biggest business lobby, said in an e-mailed statement.

Bloomberg

8 | Business Daily

February 16, 2016

Greater China

Hong Kong land price plunges nearly 70% in government tender Recent land sales have been dominated by mainland developers Frederik Balfour

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n the latest sign that Hong Kong’s property correction is deepening, a parcel of land sold by the government in the New Territories went for nearly 70 percent less per square foot than a similar transaction in September.

The 37,696 square meter site in Tai Po sold for HK$2.13 billion (US$274 million) or HK$1,904 per square foot, in a tender that closed on Feb. 12, according to the Hong Kong Lands Department website.

The buyer was Asia Metro Investment Ltd., a subsidiary of China Overseas Land & Investment Ltd. The plunge in the price of land comes amid weaker appetite from Hong Kong developers against the backdrop of a nearly 11 percent drop in housing prices since their September high, according to the Centaline Property Centa-City Leading Index. In January, sales of new and secondary homes reached their lowest monthly level since Centaline started tracking data in January 1991.

Hong Kong home prices surged 370 percent from their 2003 trough through the September peak before the correction began, spurred by a rising supply of housing and a slowdown in China. Lower prices paid for land could eventually lead

Hong Kong Chief Executive Leung Chun Ying has introduced a raft of measures to cool the property market since 2012 after a rally in home prices fuelled complaints of a widening wealth gap

to cheaper home prices down the road, and are viewed as a leading indicator of the negative sentiment on the market.

Downward pressure

Adding to the downward pressure on prices was the government on January 13 raising its five-year target for new housing supply to 97,100 new homes, up from a previous estimate of 77,100 units.

The Tai Po sale came on the heels of a parcel of land sold by the government in Kowloon on February 3 for HK$4,249 per square foot in Sham Shui Po district to a

subsidiary of Vanke Property (Hong Kong) Company Ltd., according to Bloomberg Intelligence.

Recent land sales have been dominated by mainland Chinese developers. Hong Kong property companies have been less active, as they’re struggling to sell existing units in their inventories and offering discounts of more than 12 percent to entice new buyers.

Nicole Wong, head of property research at CLSA Ltd. said mainland companies are outbidding their Hong Kong counterparts because they expect lower margins and are also anxious to park money offshore given the devaluation of the yuan.

Renminbi depreciation

“You see more Chinese developers for these lower entry sites because they are better than their projects in China in terms of profitability,” she said in a phone interview. “And because of the renminbi depreciation, some want to get money out.”

Still, Wong cautioned against drawing conclusions on the basis of two land transactions, as it’s impossible to find two sites that are identical. She estimates land prices overall have fallen about 15 percent since their peak, based on the assumption that housing prices

Biggest yuan rally since 2005 as Zhou voices support The People’s Bank of China raised its daily fixing against the greenback by 0.3 percent

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hina’s central bank handed investors a confidence booster, strengthening the yuan’s fixing by the most in three months and talking up the currency as markets reopened after the week-long Lunar New Year break.

The yuan had its biggest one-day advance since a peg to the dollar was scrapped more than a decade ago, as the currency caught up with a decline in the greenback during the holiday. China’s balance of payments position is good, capital outflows are normal and the exchange rate is basically stable against a

basket of currencies, People’s Bank of China Governor Zhou Xiaochuan said in an interview published in Caixin magazine over the weekend.

The currency appreciated 1.25 percent, the most since July 2005, to 6.4954 a dollar as of 4:36 p.m. in Shanghai, according to data compiled

by Bloomberg. The offshore yuan rose 0.14 percent to 6.4991, broadly in line with the onshore rate. The People’s Bank of China raised its daily fixing against the greenback by 0.3 percent, the most since November. A gauge of dollar strength declined 0.8 percent last week, while the

yen climbed 3 percent and the euro advanced 0.9 percent.

“In the near term, the stronger fixing and Zhou’s comments reflect the PBOC’s consistent view of stabilizing the yuan,” said Ken Cheung, a Hong Kong-based strategist at Mizuho Bank Ltd. “Containing yuan depreciation expectations and capital outflows remain top-priority tasks. Mild depreciation could be allowed, but that would be done only after stabilizing depreciation expectations.”

Governor’s backing

The nation’s foreignexchange reserves shrank by

have fallen about 10 percent and land accounts for about 60 percent of overall development costs.

Hong Kong Chief Executive Leung Chun Ying has introduced a raft of measures to cool the property market since 2012 after a rally in home prices fuelled complaints of a widening wealth gap. Now that prices are finally starting to fall, property analysts including Raymond Ngai of Bank of America Corp.’s Merrill Lynch unit expect the government will ease the measures.

Ratings company Standard & Poor’s issued a report yesterday projecting a 10 percent to 15 percent decline in property prices, and said that they would need to fall 30 percent before triggering a ratings downgrade on Hong Kong developers.

Hong Kong ranked as the most expensive housing market among 87 major metropolitan regions, according to the annual Demographia International Housing Affordability Survey, which used data from the third quarter of 2015. The median home in Hong Kong costs 19 times the median annual pre-tax household income, the highest multiple Demographia has measured, and up from 17 in last year’s report, according to the company’s website.

US$99.5 billion in January, the second-biggest decline ever, as the central bank sold dollars to fight off yuan depreciation pressure. An estimated US$1 trillion of capital left China last year, according to Bloomberg Intelligence.

The Group of 20 finance ministers and central bank governors meet in Shanghai on February 26-27. China will likely keep the yuan stable before the gathering, but allow the currency to drop mildly against the dollar in the medium to long term due to weak fundamentals and capital outflows, said Qi Gao, a Hong Kong-based strategist at Scotiabank.

Yen, euro

“The PBOC more or less judged the movements of the yen and the euro and saw that as a risk-off situation and fixed accordingly,” said Tommy Ong, managing director for treasury and markets at DBS Hong Kong Ltd. “They also probably

Bloomberg News

continue to see capital outflows as well, which is why they fixed stronger.”

Some of the onshore yuan’s gains are catching up with those of the dollar and the offshore rate during the holiday, said Sue Trinh, Hong Kong-based head of Asia foreign-exchange strategy at Royal Bank of Canada.

The currency traded in Hong Kong rose 0.9 percent last week.

A Bloomberg replica of the CFETS RMB Index, which is composed of 13 currencies, advanced 1.3 percent to a two-week high of 100.66. The official index was unveiled in December and the dollar has the largest weighting of 26.4 percent, followed by the euro and the yen with 21.4 percent and 14.7 percent, respectively.

The exports data “hint that the Chinese currency is still under pressure to weaken,” Zhou Hao, senior economist at Commerzbank AG in Singapore, wrote in a research note.

Bloomberg News

Business Daily | 9

February 16, 2016

Greater China

January exports, imports shrink much faster than expected

Guizhou slashes overcapacity

The customs office said it expected downward pressure on China’s exports will ease, starting in the second quarter of this year Winni Zhou and Kevin Yao

C

hina’s January trade performance was worse than expected as tepid demand persisted both at home and abroad, raising expectations of further government measures to arrest the slowdown and to quell market jitters.

January exports fell 11.2 percent from a year earlier - the seventh straight month of decline, while imports tumbled 18.8 percent - the 15th month of decline, both far worse than expected, data released by the General Administration of Customs showed yesterday.

Exports declined even though China has allowed the yuan to weaken nearly 6 percent against the U.S. dollar since last August, underlining the extent to which global demand has weakened.

China posted a record trade surplus of US$63.3 billion in January - partly due to soft demand and falling commodities prices, versus US$60.09 billion in December.

“Overall, we believe the sharp drop of trade in January was a reflection of weak external demand, especially given the weak exports of neighbouring economies such as Korea and Taiwan,” ANZ economists Li-Gang Liu and Louis Lam wrote in a research note.

“The record level trade surplus indicates that China continued to run a large current account surplus, and this should help offset some of the capital outflow and alleviate some depreciation pressure on the renminbi (yuan).”

Analysts polled by Reuters had expected exports to fall 1.9 percent, after slipping 1.4 percent in December, while imports had been expected to drop only 0.8 percent, following a 7.6 percent slide in December. The poll forecast a trade surplus of US$58.85 billion.

China will keep the yuan basically stable against a basket of currencies

and it will not allow speculators to dominate market sentiment regarding China’s foreign exchange reserves, central bank governor Zhou Xiaochuan was quoted as saying on Saturday.

Premier Li Keqiang has said Beijing will not promote exports through currency depreciation, although some policy advisers have been calling for sharper yuan falls.

“Today’s numbers hint that Chinese currency is still under pressure to weaken. That said, recent strength in onshore and offshore yuan is largely due to the central bank’s effort to dampen speculative positions,” said Zhou Hao, Commerzbank Asia senior emerging markets economist in Singapore.

Uncertain outlook

China’s exports to the United States, the country’s biggest market, fell 9.9 percent in dollar terms in January from a year earlier, while exports to the European Union - the second biggest market, fell 12 percent, the customs data showed.

The customs office said it expected downward pressure on China’s exports will ease, starting in the second quarter of this year.

A source at the Commerce Ministry also said the government would not set an annual target for foreign trade this year.

Some economists, such as those at ANZ suspected false trade invoicing, often used to hide speculation in the yuan, may have distorted the January numbers even further, pointing to big swings in trade with Hong Kong. Fake transactions were widely suspected to be one reason behind a much milder drop in December trade than markets had expected.

The customs data showed Hong Kong’s exports to mainland China fell 2.6 percent year-on-year in dollar terms while its imports from the mainland jumped 108.1 percent.

For 2015, China’s total trade tumbled 8 percent from 2014, well below the government’s target of 6 percent growth and the worst performance since the global financial crisis.

Trends in January and February can also be distorted by the long Lunar New Year holidays, with business slowing down weeks ahead of time and many firms scaling back operations or closing.

China’s commerce ministry has warned that the country’s external trade is facing relatively severe pressure in 2016, and few analysts expect a sudden improvement in global demand.

China is expected to target economic growth in a range of 6.5 percent to 7 percent this year, sources have said, setting a range for the first time because policymakers are uncertain on the economy’s prospects.

The world’s second-largest economy grew an annual 6.9 percent in 2015, the poorest showing in a quarter of a century.

Reuters

KEY POINTS Jan exports -11.2 pct y/y, vs f’cast -1.9 pct Jan imports -18.8 pct y/y, vs f’cast -0.8 pct Trade surplus US$63.3 bln, vs f’cast US$58.85 bln Govt may not set trade growth target for 2016 Weak trade data could put pressure on yuan -analysts

Guizhou, one of the country’s major coal-producing provinces, shut down 183 mines in 2015 in a bid to cut obsolete capacity, according to local authorities.

Through closures, mergers and acquisitions, Guizhou has reduced its number of collieries in operation and under construction to less than 800 from about 1,700 since 2013, said a spokesman with the provincial energy administration. It aims to close more than 80 others this year, said the spokesman. Guizhou is the largest coal producer in southern China, with the country’s fifth largest proven reserves.

UnionPay transactions surge China UnionPay transactions soared to yet another record high in the Spring Festival, the operator revealed Sunday. The total volume of transactions at home and abroad through China UnionPay cards amounted to 312.1 billion yuan (US$47.6 billion), up 31 percent year on year, during the seven-day holiday ending on February 13.

Cross-border UnionPay card transactions saw remarkable growth in Japan, the Republic of Korea, the United States and other UnionPay-friendly markets.

China UnionPay is responsible for all bank card transactions on the Chinese mainland and has extended its reach to more than 100 countries and regions.

Developers to withstand 30 pct price drop Hong Kong developers could withstand a 30 percent drop in sales prices with no impact to their credit ratings, S&P said yesterday, adding that a drop of more than 50 percent would have an impact. S&P is forecasting an average home price drop of 10 percent to 15 percent in Hong Kong this year, but it said the industry could withstand much worse. Average home prices have dropped 9.5 percent since a recent peak in September. Sun Hung Kai Properties and Nan Fung International have the biggest buffer in the case of a sales price drop, S&P said.

BEA rejects activist investor Elliott’s demand Bank of East Asia, a family-run Hong Kong lender, rejected a call by activist investor Elliott Management Corp to put the bank up for sale, saying the challenging economic and business environment would bode ill for such a process. Elliott, which owns an about 7 percent stake in Bank of East Asia (BEA), had earlier this month heaped pressure on the bank to sell itself, saying its executives had serially mismanaged the business, leading to weak performance and poor returns for minority shareholders.

Government to consolidate drug market China plans to consolidate its huge and fragmented drug market and will support a greater role for traditional Chinese medicines (TCM), the central government said in a statement on Sunday following a meeting of the State Council. China will also strengthen safety controls and traceability of domestic drugs, the statement said, part of an ambitious programme of healthcare reforms to improve homemade medicines and reduce reliance on generic and more innovative drugs from overseas. China’s near 1.4 billion potential patients are a major lure for drug firms.

10 | Business Daily

February 16, 2016

Asia

Japanese economy shrinks more than expected Leika Kihara and Tetsushi Kajimoto

KEY POINTS Q4 GDP shrinkage annualised 1.4 pct vs f’cast -1.2 pct Private consumption falls 0.8 pct vs f’cast -0.6 pct Capex rises 1.4 pct vs f’cast -0.2 pct PM Abe warns against excessive FX volatility

Japanese Prime Minister Shinzo Abe

J

apan’s economy shrank more than expected in the final quarter of last year as consumer spending and exports slumped, adding to headaches for policymakers already wary of damage the financial market rout could inflict on a fragile recovery.

Gross domestic product contracted by an annualised 1.4 percent in October-December, bigger than a market forecast for a 1.2 percent decline and matching a fall marked in the second quarter of last year, Cabinet Office data showed yesterday.

It followed a revised 1.3 percent increase in the previous quarter.

The data underscores the challenges premier Shinzo Abe faces in dragging the world’s thirdlargest economy out of stagnation, as exports to emerging markets fail to gain enough momentum to make up for soft domestic demand.

Abe sought to reassure markets that Tokyo is ready to stem excessive market volatility that could undermine the wealth effect delivered by his stimulus policies.

“As we have agreed at G7 and G20, sudden currency moves are undesirable. I want the finance minister to closely monitor the situation and

respond with appropriate measures as needed,” he told parliament on Monday.

Market speculation of additional monetary easing simmers, although the Bank of Japan’s (BOJ) policy ammunition appears to be dwindling, analysts say.

“Private consumption is especially weak. The economy is at a standstill,” said Junko Nishioka, chief economist at Sumitomo Mitsui Banking.

“It’s a matter of time before the BOJ and the government will take additional stimulus measures,” she said, predicting the central bank will

New Zealand Inc on M&A radar after US$1.33 bln deals Analysts and fund managers said they expected to see more offers for New Zealand assets this year Rebecca Howard

A

pair of diverse New Zealand firms said they received takeover offers worth US$1.33 billion in total, as low interest rates and the weak Kiwi dollar

combine to put a range of companies in a low-flying market firmly on the radar for global dealmakers.

With one offer for an industrial manufacturer

and another bid - already agreed - for a software maker, New Zealand watchers said yesterday the deals may be the start of a broad wave of interest, tipping cash-rich

ease policy again as early as next month.

Running out of ammunition?

With his stimulus policies that gave big manufacturers windfall profits, Abe had hoped to generate a positive cycle in which companies raise wages and help boost household spending.

Instead the data showed that private consumption, which makes up 60 percent of GDP, fell 0.8 percent, exceeding market forecasts of a 0.6 percent decline.

Since Abe took power three years ago, private consumption has shrank by roughly 1.5 trillion yen to 306.5 trillion yen (US$2.7 trillion).

The economy grew an average 0.68 percent since Abe’s administration took office in 2013, below a 1.8 percent increase during the opposition Democratic Party’s three-year reign.

Offering some hope for policymakers, capital expenditure rose 1.4 percent, confounding market expectations for a 0.2 percent decrease.

But analysts doubt whether the economy will gain momentum in coming months, with the recent market turbulence and slowing Chinese growth clouding the outlook for corporate profits.

Exports fell 0.9 percent in OctoberDecember after rising 2.6 percent in the previous quarter, underscoring the pinch companies are already feeling from soft emerging market demand.

Domestic demand shaved 0.5 percentage point off GDP growth, while external demand - or net exports - added just 0.1 point.

Last month the BOJ cut a benchmark interest rate below zero, stunning investors with another bold move to stimulate growth.

But the shock move has failed to boost Tokyo stock prices or weaken the yen as Japanese markets remained at the mercy of a global equity sell-off.

private equity houses as future potential asset buyers.

In the larger of the two deals, resins and coating company Nuplex Industries Ltd said Belgian rival Allnex Belgium SA/NV, backed by private equity firm Advent International Corp, made a bid valuing the company at around NZ$1.05 billion (US$695 million). Nuplex said it’s in “advanced discussions” with the bidders.

S ep a r a t e l y s o f t w a r e company Diligent Corp said its board had agreed a NZ$941 million buyout offer from U.S. investment firm Insight Venture Partners.

Diligent said its board has recommended shareholders accept the deal.

“There’s been a lot of talk that there’s potential for

KEY POINTS US$695 mln offer for resins maker Nuplex Industries Software maker Diligent agrees US$624 mln buyout Low interest rates, weak Kiwi dollar seen stoking deals Private equity firms among buyers, more expected

Reuters

mergers and acquisitions in the market as a whole and we are only now really starting to see it,” said Philip Hunter, a broker with First NZ Capital.

Low interest rates combined with a weak New Zealand dollar create “a conducive environment,” Hunter said.

Shares in both Nuplex and Diligent surged on the deal news.

Nuplex said it had first entered talks with Allnex last October, and that after three revisions on deal terms it now considers the offer to be “attractive” for shareholders.

The price represents a 44 percent premium to last Friday’s close, and Nuplex stock closed 30 percent higher on Monday.

Meanwhile the deal for Diligent offers a 31 percent premium to the shares’ Friday close, and the stock finished 27 percent higher yesterday.

Analysts and fund managers said they expected to see more offers for New Zealand assets this year, though they weren’t immediately able to predict what might be next on the block, nor how much in offers assets might attract.

“Market conditions are perfect for this type of merger and acquisition activity. It could be a year where we see a lot more of it,” said Hamilton Hindin Greene Investment Advisor Grant Williamson.

Reuters

Business Daily | 11

February 16, 2016

Asia Indonesia export, import slump deepens Economists say the country must transition to stronger manufacturing as commodity exports stay under pressure

Bank household loan growth in South Korea slowed in January as housing transactions declined during a winter season, central bank data showed yesterday. Outstanding loans owed by households to banks reached 641.3 trillion won (US$531 billion) in January, up 2.2 trillion won from the previous month, according to the Bank of Korea (BOK). The monthly growth was down from an increase of 6.9 trillion won in December last year, marking the slowest rise in 12 months. Mortgage loans stood at 479.9 trillion won in January, up 2.8 trillion won from a month earlier.

I

ndonesia posted a small trade surplus in January, confounding expectations for a third monthly deficit, due largely to a slump in imports from persistently weak domestic consumption.

Sliding prices for oil, gas and other commodities have led to a sharp drop in export earnings for Southeast Asia’s largest economy, and deteriorating global demand could push the central bank to cut rates again this week, some economists said.

Exports plunged 20.72 percent in January to US$10.50 billion, the weakest shipment by value since September 2009 and the 16th straight month of decline. Economists surveyed had expected a 15.40 percent drop.

Imports fell 17.15 percent, sharper than economists’ estimates of 8.14 percent, data from the statistics bureau showed. Imports of raw material and capital goods were all down, the bureau said, but imports of consumer goods rose.

Weaker than forecast exports and imports led to a US$50.6 million surplus in January. A Reuters poll of analysts had expected a US$360 million deficit for the month, following a revised US$161 million deficit in December.

Indonesia’s trade balance moved back into surplus in 2015, after three years of deficits, largely due to a fall in imports as consumption and investment stayed weak.

The government is targeting 5.3

Myanmar ready to join global supply chain

Bank Indonesia cut interest rates for the first time in nearly a year at its most recent meeting in January and is scheduled to meet again on February 17-18

percent GDP growth this year after the economy grew at its slowest since the 2009 financial crisis last year.

Optimism on imports

Some economists expect bigger government spending on infrastructure to lead to a recovery in imports this year while pressure on its exports from sliding commodity and oil prices will continue to hamper a turnaround in the economy.

Economists say the country must transition to stronger manufacturing

as commodity exports stay under pressure amid weak global demand and weak currencies.

ANZ said Indonesia will face more downward pressure from falls in commodity prices and Monday’s data reinforces its view for a rate cut this week.

Bank Indonesia cut interest rates for the first time in nearly a year at its most recent meeting in January and is scheduled to meet again on February 17-18.

Reuters

Obama, Southeast Asia leaders eye China and trade at California summit The first day was focused on economic issues and trade, including discussion of the Trans-Pacific Partnership deal

U

.S. President Barack Obama will press leaders from Southeast Asia to boost trade and back common goals for the South China Sea during a summit that started yesterday that the White House hopes will solidify U.S. influence in the region.

Obama will also discuss curbing North Korea and plans to fight the Islamic State group during the twoday meeting with Association of Southeast Asian Nations (ASEAN) at Sunnylands, a California resort.

The visit, at the same location where Obama once hosted Chinese President Xi Jinping, is designed to demonstrate Washington’s commitment both as a counterweight to Beijing and as an eager trading partner with ASEAN nations.

It also helps cement a legacy issue for Obama, who has championed a U.S. pivot to Asia during his presidency and is determined to present the United States as a Pacific power.

“We want to make very clear that the United States is going to be at the table and a part of setting the agenda in the Asia-Pacific in the decades to come,” White House deputy national

S.Korea’s bank household loan growth slows

security adviser Ben Rhodes told reporters last week.

The first day was focused on economic issues and trade, including discussion of the Trans-Pacific Partnership deal, which includes four of the ASEAN members: Vietnam, Singapore, Brunei and Malaysia.

Others are interested in joining, and the White House wants to make sure the pact goes into effect.

Today, the leaders will discuss

Myanmar is preparing for a discussion on Myanmar’s role on creating job opportunities in the global supply chain at a meeting of the International Labour Organization (ILO) in June, official media reported yesterday. A two-day tripartite meeting among employers, employees and the government on fair global supply chain issue, which began yesterday, suggested improving human resources of labour sector in the country, calling for cooperation between the three groups to prevent danger at work places. Experts urged the government to assist in producing skilled labourers and building infrastructure in the labour sector.

Snapdeal raises US$200 mln Indian online marketplace Snapdeal has raised a US$200 million, giving it a valuation of around US$6.5 billion, as the firm looks to ramp up investments in logistics and infrastructure in the fast-growing domestic e-commerce sector. The fundraising, led by Canada’s Ontario Teachers’ Pension Plan and funds advised by Iron Pillar, comes at a time when there are increasing worries about incremental funding among Indian start-ups. In December, Snapdeal co-founder had told Reuters the company is looking to increase spending on logistics and technology to better compete with rivals.

SoftBank to repurchase up to US$4.4 bln shares

maritime issues including the South China Sea, where China and several Southeast Asian states have conflicting and overlapping claims.

Rhodes said Obama would deliver a tough message to China that disputes over the area must be resolved peacefully.

The challenge at the summit may be to get all ASEAN countries to agree on a strong statement on the issue.

Reuters

Japanese telecoms conglomerate SoftBank Group said yesterday it will purchase up to 500 billion yen ($4.4 billion) worth or as much as 14.2 percent of its own shares, in its biggest buyback to date.

The shares have fallen around 28 percent since the start of the year. The company said it will repurchase the shares over a year starting on Wednesday. The move follows its buyback of around US$1 billion worth of shares in August, which CEO Masayoshi Son had said was a response to its lacklustre share price. Investors have been worried about SoftBank’s outlook.

Singapore REITs ride to 5-year yield high

ASEAN members flags

Dividend yields at the top Singapore-listed property trusts are at their highest in at least five years, a glittering attraction as global investors seek refuge from the slump in oil prices and jitters over China’s weakest economic prospects in 25 years.

A Thomson Reuters analysis of 14 real estate investment trusts (REITs), using comparable month-end data available for the last five years, shows the median dividend yield was 6.7 percent at end-January - the highest since at least April 2011.

12 | Business Daily

February 16, 2016

Asia

Thai Q4 quarterly growth misses forecast The global picture makes many gloomy on Thai exports, which are worth about two-thirds of gross domestic product Orathai Sriring and Kitiphong Thaichareon

But the global picture makes many gloomy on Thai exports, which are worth about two-thirds of gross domestic product.

Exports have contracted three straight years, and the NESDB yesterday cut its 2016 estimate for shipments to grow 1.2 percent from its previous forecast of 3 percent.

NESDB chief Porametee Vimolsiri said it revised growth and export forecasts “as global risks have increased”.

Sluggish private demand

T

hailand reported economic growth of 2.8 percent in 2015, compared with 0.8 percent the previous year, but its recovery remains fragile as exports and domestic consumption are weak and political uncertainties linger.

Fourth-quarter and full-year data released yesterday about Southeast Asia’s second-largest economy was a mix of good and bad news.

And the state planning agency cut its forecast for 2016 growth to 2.83.8 percent from the 3.0-4.0 percent range it saw in November.

With the traditional growth pillars of exports and consumption still shaky long after the military seized power in May 2014, government investment - up 41 percent on the year in the fourth quarter - has helped lift the economy.

“While fiscal spending should help prop up the economy in 2016, the pace of recovery will be gradual, given the backdrop of continued political uncertainty and high household debt,” Krystal Tan of Capital Economics in Singapore said in a note.

Weiwen Ng, economist at ANZ, said that “fiscal therapy” has helped, “but the risk is that domestic demand could be derailed after expiration of

KEY POINTS Q4 GDP +0.8 pct q/q, vs +0.9 pct in poll Q4 GDP +2.8 pct y/y, poll saw +2.7 pct Planning agency cuts 2016 forecast to 2.8-3.8 pct 2015 GDP +2.8 pct vs revised +0.8 pct in 2014 Last month, the ruling military junta approved a 35 billion baht programme for the grassroots economy

tax incentives, which largely propped up Q4.”

In October-December, the economy grew 0.8 percent from the previous quarter on a seasonally-adjusted basis, less than the 1.0 percent in July-September and the 0.9 percent expected in a Reuters poll.

On an annual basis, growth was 2.8 percent, between the Reuters

Exports, domestic demand still weak – economists

poll’s 2.7 percent forecast and thirdquarter’s 2.9 percent, the National Economic and Social Development Board (NESDB) said.

Barnabas Gan of OCBC in Singapore said that despite the global slowdown, Thailand posted “a rather robust growth print”.

Gundy Cahyadi, economist at DBS in Singapore, said while it’s good that government spending is supporting the economy, this “underscores the sluggishness of private demand”.

The reduced export forecast “clearly indicates that the authorities are not expecting any boost from external demand,” he said.

Bank of Thailand (BOT) Governor Veerathai Santiprabhob warned on Thursday there were great downside risks to the recovery, which he described as still gradual and uneven.

The BOT has predicted 3.5 percent GDP growth this year, with flat exports.

That puts the burden on the junta, which has boosted state spending, to aid growth. In an attempt to lift activity, it changed its economic team in August and introduced stimulus measures, including ones worth 136 billion baht (US$3.81 billion) aimed at helping rural areas.

Last month, it approved a 35 billion baht programme for the grassroots economy.

But billions of dollars in public spending aimed at reviving the ailing rural economy have failed to reach farmers, fuelling disaffection with the junta ahead of elections expected next year.

Asian property giants sidestep Australia’s foreigner rules Australia’s two largest cities, Sydney and Melbourne, have seen double-digit price rises in recent years

A

loophole in Australian property rules has helped overseas developers invest what industry executives believe were record levels in the country in 2015, casting doubt over the efficacy of curbs intended to keep a lid on soaring prices.

Newly built properties are exempt from rules on existing homes that restrict sales to foreigners, creating an opportunity for overseas investors to get into one of the world’s fastest growing housing markets.

That has left a thorny problem for Australia, grappling with the politically sensitive issue of unaffordable homes and a surge of cash from wealthy Chinese that has prompted regulators to consider tighter anti-money laundering rules.

A Reuters review of the last 20 Foreign Investment Review Board annual reports shows foreign-financed residential “off the plan” construction approvals hit a record total value of A$16.4 billion (US$11.6 billion) in 2014, triple the previous year.

In an indication of demand, National Australia Bank Ltd has extended its largest Islamic financing to date for a A$160 million real estate purchase in Brisbane by Singaporebased firm AEP Investment Management (AEPiM), part of Saudi Arabian conglomerate Al Rajhi Holding Group.

TH Properties Sdn Bhd, the real estate arm of Malaysia’s pilgrims fund Tabung Haji, completed a A$220 million Sydney development in November.

Chinese buyers are also key, fuelling demand for companies like Land & Homes, which had its market debut last month, becoming the first listed developer to target predominantly overseas buyers.

Australia’s two largest cities, Sydney and Melbourne, have seen double-digit price rises in recent years. Big Asian investors like Land & Homes are now turning their attention to Brisbane, left relatively unaffected as a stalling economy kept land values in check.

Reuters

That city’s economy has since rebounded, attracting buyers to a subtropical city of 2 million people about 1,000 km closer to Asia than Sydney.

As a result, from 2013 to 2014, the average land value of residential development sites in Brisbane doubled.

The average value of offshore-originating development site purchases quadrupled while purchases from Australian developers were flat, according to agent CBRE. Guangzhou R&F Properties Co Ltd in 2015 paid Brisbane-based Metro Property Development A$46 million for a site for which that group paid A$24 million six months earlier.

World Class Land, owned

by Singapore conglomerate Aspial Corp, paid Australian developer Cornerstone A$36 million for a Brisbane apartment site, more than double what Cornerstone paid Metro in 2013.

Reuters

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Business Daily | 13

February 16, 2016

Asia Japanese banks rush to cut deposit rates before central bank goes negative Major financial institutions are asking some large big corporate clients to refrain from making large deposits at their banks Taiga Uranaka

J

apanese lenders rushed to cut deposit rates before the start of the Bank of Japan’s (BOJ) negative interest rates today, following sharp falls in benchmark bond yields.

Sumitomo Mitsui Banking Corp said it cut the interest rate on ordinary deposits to 0.001 percent a year, from 0.02 percent, the bank’s first reduction on ordinary deposits since September 2010.

The rate, effective from today, means a depositor will be paid an annual interest of 100 yen (US$0.88) on 10 million yen (US$88,000).

The bank, a core unit of Japan’s third-largest lender Sumitomo Mitsui Financial Group, and its biggest rivals Bank of Tokyo-Mitsubishi UFJ (BTMU) and Mizuho Bank have already cut rates on time deposits, though those remain in positive territory.

But bank executives said further cuts in loan interest rates are unlikely to give a boost to loan demand.

“Our corporate clients are saying the BOJ’s negative interest rates won’t lead to an increase in capital spending,” said a senior executive at one of the megabanks.

“With global markets this volatile,

they are taking wait-and-see stance.

One client told me his company is even putting a project on hold to rebuild its own office building,” said the person, who declined to be identified given the sensitivity of the matter.

“On a macro level, businesses and households have surplus funds.

Further falls in interest rates are unlikely to lead to a surge in loan demand,” said Ryoji Yoshizawa, director at Standard & Poor’s in Tokyo.

Simply put, banks make money from the gap between what they pay for deposits and what they receive from loans.

The Bank of Japan unexpectedly cut a benchmark interest rate below zero late last month -- effectively charging financial institutions which

S.Korea says time for more G20 policy coordination The comments echoed those made by Japanese Finance Minister Taro Aso last week

S

outh Korea will push for more policy cooperation from G20 nations at the group’s upcoming summit in response to current challenges in global financial markets, an official from the country’s finance ministry said.

“The G20 members need to show greater policy coordination regarding issues like interest rates and foreign exchange rates. Right now everyone tends to do their own thing,” Hwang Kunil, director general of the ministry’s international financial policy bureau, told Reuters in an interview on Friday.

Hwang, who was referring to the meeting of finance ministers at the end

of February in Shanghai in China, was appointed to his spot which oversees international financial movements early this month in a regular ministry shuffle.

The comments echoed those made

by Japanese Finance Minister Taro Aso last week, who hopes the meeting participants will consider a global policy response in the wake of recent market turmoil.

The South Korean won and local shares have experienced severe volatility from the start of the year after a U.S. rate hike in December, rocky stock markets in China and the adoption of negative interest rates in Japan.

park money with it -- as it struggles to the stimulate the economy.

But even before the introduction of negative interest rates, banks have little more room to cut deposit rates, while loan interest rates are likely to fall further amid tepid demand.

Bank officials said it is difficult to charge fees or negative interest rates on clients’ deposits given a possible public backlash. A massive withdrawal of cash from the banking system is also a possibility.

Short of such measures, major banks are asking some large big corporate clients to refrain from making large deposits at their banks, people with direct knowledge of the matter said.

A senior money manager at a major life insurer said his company has a large vault in the basement for keeping important documents.

“Half jokingly, my colleagues and I checked how much cash it could hold, if necessary,” said the person, who was not authorised to discuss the matter publicly.

“As it turned out, it could hold only several billion yen (several tens of millions of dollars).”

Reuters

Local bond prices have soared with treasury bond yields skidding to new record lows as investors seek safe-haven assets.

South Korean Finance Minister Yoo Il-ho is also planning to attend the meeting in Shanghai and seek greater coordination between member countries, Hwang said.

As for measures inside the country against excessive financial turbulence, Hwang said policymakers are in the process of fine-tuning contingency plans that may be used in times of a financial crisis.

He stated the government is also considering tweaking its existing capital controls, which were established in previous years to curb capital inflows, but said there are no announcements of changes imminent.

Up until recently, market conditions have not been severe enough to activate the government’s contingency plans, the director general added, although foreign exchange officials are watching the situation very closely.

“In case of severe turbulence in markets we are ready to act firmly,” Hwang said.

Reuters

India to strengthen BRICS cooperation India will focus on strengthening financial cooperation framework of BRICS countries during its presidency this year, said a local newspaper yesterday. The local daily The Pioneer quoted official sources here as saying that New Delhi, which took over the BRICS presidency this year from Russia yesterday, will be “carrying the New Development Bank (NDB) agenda forward… In line with the PM (Narendra Modi)’s thinking we will take BRICS to people and to the provinces through trade fair, film festival, wellness festival, yoga, youth and people.

That will be the key focus during India’s presidency,” the report quoted the sources as saying.

Singapore retail sales up Singapore’s retail sales increased 2.9 percent in December on a yearon-year basis, mainly due to retail sales of motor vehicles, said the Department of Statistics Singapore (SingStat) yesterday. On a month-onmonth basis, retail sales decreased 2.1 percent in December 2015, SingStat added. Excluding motor vehicles, retail sales decreased 3.6 percent.

The total retail sales value in December was estimated at 4.1 billion Singapore dollars (US$2.93 billion), higher than 4 billion Singapore dollars in December 2014. Sales of food and beverage services decreased 1.8 percent in December 2015 over the previous month.

Indonesia’s motorbike sales drop Motorcycle sales in Indonesia in January slumped 17.21 percent from a year earlier, following a decline of 6.5 percent the month before, an industry association said yesterday. On a monthly basis, sales fell 20.01 percent from December. Total sales in Southeast Asia’s biggest economy, where motorbikes are hugely popular, were 416,263 units in January. Sales were led by Honda Motor Co Ltd, Yamaha Motor Co Ltd and Kawasaki, the data showed.

Australian gov’t popularity dives Prime Minister Malcolm Turnbull’s ‘honeymoon period’ with Australian voters has truly ended, after the latest Newspoll showed public approval of the government had taken a sharp dive since three-year highs in November. In September last year, Turnbull staged a party coup to oust embattled former PM Tony Abbott, but the new premier’s fortunes in the poll shave slumped sharply following weeks of cabinet scandals and poor voter response to new policies. In the Fairfax-Ipsos two-party preferred poll the coalition maintained a slender lead at 52-48 percent.

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February 16, 2016

International ECB in talks with Italy over buying bad loans The European Central Bank is in talks with the Italian government about buying bundles of bad loans as part of its asset-purchase programme and accepting them as collateral from banks in return for cash, the Italian Treasury said. The move could give a big boost to a recently approved Italian scheme aimed at helping banks offload some of their 200 billion euros (US$225 billion) of soured credit and free up resources for new loans. Nonetheless, it would likely fuel a debate in other countries about whether the ECB is taking on too much risk by buying such ABS.

Shell pursues transition plan after sealing deal

Nigerian oil head believes OPEC keen to end oil glut OPEC has declined to trim output without help from non-members Julia Payne

T Royal Dutch Shell yesterday sealed the US$53 billion (36 billion pounds) acquisition of British rival BG Group to form the world’s top liquefied natural gas company, even as slumping oil prices cast a shadow on the upcoming years of transition. The success or otherwise of the complex merger will define the legacy of Shell Chief Executive Ben van Beurden, seeking to transform Shell into a more specialised group focused on the rapidly growing LNG market and deepwater oil production. Van Beurden’s vision won overwhelming support from shareholders.

An “extraordinarily safe year” for airline business The year of 2015 has been “an extraordinarily safe year” for airline business with less air accidents and fatalities, said the International Air Transport Association (IATA) yesterday, one day before the Singapore Airshow. There have been 68 accidents last year, less than 77 in 2014, among which four were fatal, also well below the number of 12 a year earlier, according to IATA’s latest annual report on aviation safety. “In terms of the number of fatal accidents, it was an extraordinarily safe year,” said Tony Tyler, IATA’s director general and chief executive officer.

Haitian parliament elects interim president Former Haitian Interior Minister Jocelerme Privert was elected on Sunday as the provisional president of the National Assembly, pending new elections in no more than 120 days. Privert, 62, was voted as the interim leader at 03:33 a.m. local time and sworn 10 minutes later, Haitian daily Haiti Libre reported. His transitional government is to organize general elections beginning on April 24. The winner will then start a five-year term on May 14. Haiti’s Provisional Electoral Council suspended a scheduled presidential runoff just two days before voters would start going to the polls on January 24.

he mood inside the Organization of the Petroleum Exporting Countries (OPEC) is shifting from mistrust to a growing consensus that a decision must be reached on how to end the global oil price rout, Nigeria’s oil minister told Reuters.

Oil prices have slumped by more than 70 percent to near US$30 a barrel over the past 18 months as OPEC, led by top producer Saudi Arabia, sought to drive higher-cost producers out of the market by refusing to cut production despite a supply glut.

The price crash has crippled some economies that depend heavily on oil sales for income, such as Nigeria and Venezuela, and even Saudi Arabia is shoring up its resources to withstand the painful revenue drop.

“There’s increased conversation going on. I think when we met in December ... they (OPEC members) were hardly talking to one another.

Everyone was protecting their own positional logic,” Nigerian oil minister Emmanuel Ibe Kachiwku told Reuters in an interview.

“Now I think you have cross-logic

... they are looking at what are the deficiencies, what is the optimum.”

Struggling oil producers have made repeated calls for an emergency OPEC meeting, but Kachikwu said that the timing had not been right.

The cartel’s next regular meeting is in June.

“We haven’t been sure that if we held those (emergency) meetings that we could actually walk away with some consensus,” Kachikwu said.

“A lot of barrels are tumbling out of the market from non-OPEC members, so the Saudi philosophy is obviously working. But it’s not influencing the price higher, which means that whether we like it or not some barrels are coming in from ... members and non-members to cover whatever is dropping out.”

IEA warning

The International Energy Agency said on January 19 that oil markets could be oversupplied by as much as 1.5 million barrels per day in the first half of 2016 and warned that prices could decline further as Iran’s emergence from economic

Bosnia submits EU membership application The country has been deeply divided along ethnic lines since the bitter 1992‑1995 war following the break-up of Yugoslavia

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osnia yesterday formally submitted an application to join the EU, hoping to catch up with its Balkan neighbours after years lost following the bloody breakup of Yugoslavia.

In the early 2000s, Bosnia appeared set to join the now 28-nation European Union but deep divisions between its Serb, Croat and Muslim communities blocked the political and civil society reforms demanded

by Brussels for membership until last year.

Dutch Foreign Minister Bert Koenders, whose country holds the

six-month EU rotating presidency, said the EU was happy to see “Bosnia back on the reform path.”

“It is urgent to maintain the positive momentum by continuing to implement reforms,” Koenders said, stressing that the EU would look carefully at what is would likely take some years.

Dragon Covic, the chairman of Bosnia’s tripartite presidency, said: “It is a great pleasure to be able to (submit this application) on behalf of the people of Bosnia-Hercegovina ...

Croats, Serbs and Bosniaks.”

Covic noted how Croatia had

sanctions brings more crude to the market.

OPEC has declined to trim output without help from nonmembers, which so far have refused to participate. Russia, the world’s biggest oil producer, has played coy by floating the idea of a cut without saying whether it would participate.

In an attempt to find a compromise, Venezuela’s oil minister recently proposed a freeze on new production to place a cap on the growing glut while not requiring countries to surrender market share.

Kachikwu said that he would meet his Qatari and Saudi counterparts next week to discuss the situation.

“Have we got to the point where we can say there is a definite strategy?

In terms of production reduction or freezing, no, I don’t think we have got there. But there is a lot of energy (behind the idea),” Kachikwu said.

“As you get closer to the statutory (OPEC) meeting dates ... you are going to see a lot more people get active in those conversations and try to find solutions.”

Reuters

joined the bloc in 2013, while Serbia and Montenegro were now making progress towards membership too.

Facing “years of many challenges ahead,” Bosnia needed to improve its economy and show that it could be a “credible” member of the EU, he said.

EU foreign affairs head Federica Mogherini and EU Enlargement Commissioner Johannes Hahn said in a statement that the Yugoslav wars of the 1990s “were one of the most awful pages of European history.”

The fact that Bosnia now wanted to join the EU, even when the European project was being tested to the limits, showed how important it was to the future, they said in a joint statement.

“Today we celebrate another step towards a united and peaceful continent. And we need unity in challenging times,” it said.

“As some forces across our continent are questioning the very existence of our Union, Bosnia and Herzegovina’s application shows that the need of a united European continent is still strong among our peoples.”

Bosnia has been deeply divided along ethnic lines since the bitter 1992-1995 war following the breakup of Yugoslavia.

AFP

Business Daily | 15

February 16, 2016

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Desperately seeking alternatives to negative rates

THE KOREA HERALD

James Saft

South Korea will actively remove administrative red tape and help companies invest in new energy industries that can generate long-term growth, the trade and industry minister said yesterday. Large companies have announced plans to invest some 8.2 trillion won (US$6.7 billion) into the so-called new energy sectors by 2017, calling for government assistance. The new energy sectors, which cover such areas as energy storage systems, electric vehicles, renewable energy, and technologies to improve energy efficiency have all become big business in recent years, as countries around the world try to cut back on greenhouse gases.

Reuters columnist

VIETNAM NEWS Vietnamese companies face integration pressure with a series of trade deals signed in 2015 and early 2016, including the Trans-Pacific Partnership (TPP) and a slew of free trade agreements, and the establishment of the ASEAN Economic Community (AEC). Viet Nam News asks company chiefs and business groups to do some crystal gazing about opportunities, challenges and economic prospects in 2016.

Samsung has so far invested US$14.8 billion in Viet Nam, making it the largest foreign direct investor and employer.

Besides, 30 per cent of Samsung Electronics Corporation’s workforce is in Viet Nam.

THE AGE The Australian Taxation Office (ATO) spent a total of A$7.84 million on advertising, media planning and market research in 2014-15, most of which was focused on improving its perception among small business and individuals. The spending on external consultants - which was slightly down on the year before when the agency spent A$7.4 million in total - comes amid thousands of job losses.

In 2014-15, 2,364 people took a redundancy from the ATO, compared with 860 the year before. In 2014-15, 2,364 people took a redundancy from the ATO, compared with 860 the year before.

THE PHNOM PENH POST As Prime Minister Hun Sen attends the US-ASEAN Summit in California, government officials are in the midst of on-going negotiations with their American counterparts to formulate a trade and investment agreement, which analysts say could be a stepping stone towards one day joining the Trans-Pacific Partnership.

At a meeting in Phnom Penh last week, representatives from both countries, headed by Secretary of State for Commerce Pan Sorasak and Assistant US Trade Representative for Southeast Asia and the Pacific Barbara Weisel, focused on expediting a bilateral investment treaty, said Ken Ratha, spokesman for the Commerce Ministry.

Bank of Japan headquarters in Tokyo

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ight about now would be the time to be considering alternatives to negative interest rates.

First off, let’s take stimulus spending off the table, at least in the United States. A fiscal boost may well be warranted, but so are peace, love and understanding and this is a presidential election year.

Global markets have entered something resembling a tailspin, with the impetus most likely being the introduction of negative rates in Japan and further moves below zero in Europe. Financials have been particularly hard-hit, sending many bank shares deep into bear market territory and leaving shares of Credit Suisse at levels not seen in 27 years.

Fed Chair Janet Yellen told Congress on Thursday that regarding negative rates, “I wouldn’t take those off the table,” though she also allowed that the legal position was unclear. Investor bets now place only a 3 percent chance of the Fed raising interest rates this year, and at times earlier in the day were showing a cut to be more likely than a hike.

Japan can hardly be happy with the reaction to its own step into negative rates: the yen has strengthened and Tokyo stocks, particularly financials, have fallen. So extreme has the move been in the yen that financial markets are now jittery in anticipation of an intervention by the Bank of Japan to drive down the yen.

The basic problem with negative interest rate policy is that it gelds the banking system

Sweden on Thursday, in cutting rates yet again, this time to -0.50 percent, said it may seek to intervene in currency markets, hardly a testament that the cut will work.

The basic problem with negative interest rate policy is that it gelds the banking system, undermining and in instances destroying institutions’ ability to make money from borrowing short and lending long.

Negative rates are also crazily negative for institutions with long-term obligations, like pension funds. Because pension funds do something not dissimilar to borrowing short and lending long, falling interest rates make their

future liabilities larger. Britain’s Pension Protection Fund said earlier this week that plunging UK rates had ballooned the deficit of its member funds by 37 percent in January alone.

William White, a well-known economist and policy maker, argues that economic managers are suffering under the delusion that the economy is like a machine they can manipulate and tightly control. “What we do know is that the health of many financial institutions is now under threat,” says White, who works for the Organization for Economic Co-operation and Development.

“Bank profits, needed for capital accumulation, are being reduced by low credit and term spreads.

Pension funds and insurance companies are threatened even more. Everywhere, there is the temptation to ‘gamble for resurrection,’ again with unknown consequences. The global economy could now be even more vulnerable than it was in 2007”

Disparate alternatives White argues for a humble and fundamental re-think of the wisdom of easy money policies that seem to encourage the accretion of debt and the rise of asset prices. Both of these trends may well be reaching their limits, at least if you look at equity markets and bank bond prices. Don’t be fooled by the spike in gold. It isn’t asking for easier money, but for a stable store of value in the

face of dislocation in financial intermediation.

Others are advocating hugely disparate other policies.

Macro hedge fund manager Eric Lonergan is one of those advocating direct cash transfers from central banks to individuals, an idea sometimes called “QE for the people.” Cash transfers would presumably be more likely to be re-circulated in the real economy than money laid out by central banks for financial assets in QE, and thus might push inflation higher and obviate the need for negative rates.

Scott Mather, of fund manager Pimco, also took aim at negative rates in a recent client letter, blaming them for volatility and the tightening of financial conditions.

Mather suggests having central banks buy equities or lowerquality bonds as a means to boost financial markets. He also suggests raising central bank inflation targets, a sort of shock and awe means of getting inflation going by acting as if you don’t care if it takes off.

Certainly the Bank of Japan has for some time been buying equities, and thus far the impact of this has not proven to be what an economy in demographic decline requires.

As for looser inflation targeting or direct cash transfers, the odds seem stacked against either, especially in the United States. We may be left in the position of doing the same thing over and over again and hoping for different results.

Reuters

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February 16, 2016

Closing Heilongjiang’s winter tourism booms despite warmth

Railway passenger trips hit record high as holiday ends

Northeast China’s Heilongjiang saw business boom during its globally-renowned winter festival during the Chinese Lunar New Year holiday, despite challenges from unexpectedly warm weather. As a centrepiece of the annual Harbin International Ice and Snow Festival (pictured) that opened on January 5, the “Ice and Snow World 2016” theme park received 169,000 visitors during the holiday from February 7 to 13, up nearly 17 percent year on year, according to statistics from the organizer. The park, China’s largest ice park, was even bigger this year, covering more than 800,000 square meters and using a record 330,000 cubic meters of ice and snow.

Chinese passengers made a record number of trips by train on Sunday as people returned to work after a week-long lunar New Year holiday, according to China Railway Corporation (CRC) yesterday. Railway passenger trips reached 10.3 million on February 14, up 9.7 percent from last year, CRC data showed. The official seven-day Spring Festival holiday ended on February 13.

This year, the Chinese are expected to make 2.91 billion passenger trips across the country during the 40-day lunar New Year travel rush, or “Chunyun”, which lasts from January 24 to March 3 and is the world’s largest annual human migration for family reunions.

Disney’s Hong Kong park posts loss as mainland visitor numbers skid The park saw revenues of HK$5.1 billion in 2015, a decrease of 6 percent against a year earlier

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alt Disney Co’s Hong Kong theme park posted its first net loss in four years in 2015 as Chinese visitor numbers slumped, a potential headache for the U.S. firm as it prepares to open its first mainland Chinese park in June.

The park posted a net loss of HK$148 million (US$19 million) for the year, dropping into the red after three straight years of profits, Hong Kong’s Legislative Council Panel on Economic Development said in a report released yesterday.

Hong Kong has been hit hard by slowing economic growth in China, which has battered the number of bigspending Chinese tourists travelling to the city. Its retail sales saw their worst annual decline last year since 2002.

Hong Kong tourist arrivals fell 2.5 percent in 2015 to 59.32 million, the first decline since 2003 when the city lifted travel restrictions for some mainland Chinese.

Mainland visitors account for about three quarters of visitors.

Lower visitation from mainland China and the region largely contributed to softer overall theme park attendance Disney statement

“The tourism industry of Hong Kong was greeted with great challenges due to external factors as well as overall market condition and sentiment,” the report, posted on China’s Tourism Commission website, said.

The Hong Kong Disney

park saw revenues of HK$5.1 billion in 2015, a decrease of 6 percent against a year earlier, the report said, the first revenue drop for the park since 2009. Visitor numbers also fell nearly 10 percent, the first decline since at least 2008, driven by a steep drop in mainland guests.

“Lower visitation from mainland China and the

region largely contributed to softer overall theme park attendance,” Disney said in a statement emailed to Reuters.

The opening of the larger Shanghai resort could dent the fortunes of the Hong Kong park further, the panel said in the report, adding the park was looking at how to stay competitive in light of “intensifying competition”

and “the opening of the Shanghai Disney Resort in June this year”.

Disney’s US$5.5 billion Shanghai resort, a joint venture between the U.S. entertainment giant and Chinese state-backed consortium Shanghai Shendi Group, is slated to open on June 16. It had previously been set to open in late 2015.

Reuters

Toyota plants start again after six-day parts shortage

S.Korea’s ICT exports fall for 4 months on slowing demand

Australia plans new interbank rate-setting scheme

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S

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oyota said yesterday it had resumed operations at all vehicle assembly and parts plants in Japan after its longest domestic production suspension since the March 2011 earthquake and tsunami.

The world’s top automaker said earlier this month that it would temporarily stop all domestic vehicle production from February 8 through 13 due to a components shortage following an explosion at supplier and affiliate Aichi Steel.

Additionally, Toyota said production at its “directly owned and operated” plants in Japan that make parts and components would also stop on February 8 for one day, but later extended the stoppage to February 13.

“Toyota would like to confirm that production recommenced today as scheduled,” it said in a statement yesterday.

A total of 29 vehicle assembly and parts plants resumed operation yesterday as components were obtained from other steel manufacturers as well as other Aichi Steel production lines, company spokeswoman Kayo Doi told AFP. It expects to return to full operation in March.

AFP

outh Korea’s exports of information and communications technology (ICT) products, key export items of the export-driven economy, declined for four straight months in January, boosting worries about overall economic growth, a government report showed yesterday.

The ICT exports tumbled 17.8 percent from a year earlier to US$11.86 billion in January, according to the Ministry of Science, ICT and Future Planning. It posted the fourth straight month of reduction since October last year.

The falling pace became faster from 1.6 percent in October to 7 percent in November and 14.7 percent in December. It posted a 17.8 percent slide in January.

Global demand for overall ICT products, including smartphones, weakened amid economic slump, resulting in lower product prices.

Handset exports dipped 7.3 percent from a year earlier to US$1.9 billion in January, with chip shipments plunging 13.9 percent to US$4.53 billion.

Display panel exports tumbled 30.7 percent to US$2.01 billion, and those for computer and related gadgets slipped 10.1 percent to US$590 million.

Xinhua

he country will move to a new process by the end of this year for setting its credit market reference rate, even as the corporate regulator reportedly prepares to launch its first civil action for attempted rate rigging.

The changes, contained in a discussion paper from the Council of Financial Regulators (CFR), are intended to minimise the risk of manipulation facing Australia’s BBSW bank bill swap rate, which sets the price of money market funds.

The CFR is a consortium of the Australian Securities and Investments Commission (ASIC), the Australian Prudential and Regulatory Authority (APRA) and the Reserve Bank of Australia.

Global regulators have been reforming ratesetting practices after Barclays Plc, UBS AG, RBS and others were fined billions of dollars for rigging the globally used London Interbank Offered Rate, known as Libor.

Australia overhauled its BBSW rate-setting mechanism in 2013 after an exodus of banks from its panel of participating money market institutions.

Reuters