MOP 6.00 Closing editor: Joanne Kuai
Sino-Luso trade volume plummets by a quarter in January
Bearish hedge funds change approach to yuan following PBOC defence Page 10
Year IV
Number 996 Tuesday March 8, 2016
Publisher: Paulo A. Azevedo
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Finance Minister Lou Jiwei says China still has room to increase government debt Page 8
Gaming Industry Puts Brake On Hiring
It’s a different game now. Only 376 employees were hired by the gaming sector in Q4 2015. An 80.9 pct decline from the 1,968 taken on board in the same period in 2014. Job vacancies were also down 45.1 pct to 379, with none for dealers. Wages, however, have crept up. Earnings for residents in directorial and managerial positions averaged MOP48,470 in December 2015, a 4 pct y-o-y increase. Earnings for non-residents in like positions increased 13.8 pct for the same month – to MOP82,880 or 41.5 pct more than residents Page 5
1,000 Talent Plan
Carbon peak controversy China’s carbon dioxide emissions. Likely to peak by 2025, and may even have done so already. According to a study co-authored by leading British economist Lord Stern. The PRC’s special representative on climate change said it still aims to hit peak carbon dioxide emissions by 2030
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Local youngsters are to be granted student loans to study abroad. To enhance language skills. And prepare them for business and creative projects. Secretary for Social Affairs and Culture Alexis Tam expects students to master English, Mandarin or Portuguese in two years
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Anachronism prism
The presence of Portugal in Macau is now an anachronism. So says historian, political analyst and politician José Pacheco Pereira. However, the Portuguese says the Iberian presence gives an international dimension to the region
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%Day
China Shenhua Energy
+3.54
China Mengniu Dairy C
+2.73
Want Want China Hold
+2.70
China Resources Land L
+2.48
China Petroleum & Che
+2.07
China Merchants Holdi
-1.10
China Mobile Ltd
-1.23
Galaxy Entertainment
-1.29
Power Assets Holdings
-1.37
Hang Seng Bank Ltd
-4.86
www.macaubusinessdaily.com
Source: Bloomberg
Aviation
New HK runway in the wings
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Overlapping air space. A potential issue for Shenzhen and Macau flights. Due to the possibility of a proposed third runway at Hong Kong Airport. The Macau Airport operator says the plan is not economically viable. And could pose safety hazards
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March 8, 2016
Macau
Renminbi real time gross settlement operational
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he Macau Renminbi Real Time Gross Settlements (RMB RTGS) System with participation of 28 financial institutions was formally put into
operation on 7 March, according to a statement issued yesterday by the Monetary Authority of Macau (AACM). AACM says the system will provide
real-time settlement services for bank customers’ renminibi remittances and interbank transfers of renminbi funds. It added that the system came to realisation with the co-operation
of Macau’s banking sector, the assistance of the Macau renminbi clearing bank, the assistances rendered by the People’s Bank of China’s (PBOC) Shenzhen Central Sub-branch Immediate and Zhuhai Central Sub-branch Immediate. ‘Putting the RMB RTGS System into operation marks a further enhancement of Macau’s financial infrastructure,’ the AACM statement reads. ‘It not only helps improve the risk management and clearing efficiency of RMB funds but also further promotes the intensification of regional financial co-operation.” The authorities added they believe the new system now in place will facilitate the expansion of crossborder use of the renminbi and foster the development of Macau into a renminbi clearing platform for trade settlement between Mainland China and Portuguese-speaking countries. The Monetary Authority added that following the launch of the MOP (pataca) RGTS System on 28 January 2013, the AMCM initiated preparations for the establishment of the Macau RMB RGTS System and formally started building the system in January 2015. The system was launched yesterday after 15 months of development, integration, testing, simulation and drilling.
Agile Property pre-sales jump 18.6 pct m-o-m in February
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uangzhou-based property developer Agile Property Holdings Ltd. said it had generated a total of 3.45 billion yuan (MOP4.23 billion/US$528.7 million) for February, a month-onmonth jump of 18.6 per cent compared to some 2.91 billion yuan in January. According to the company’s filing with the Hong Kong Stock Exchange yesterday, the Chinese property developer presold a total gross floor area of 337,000 square metres with an average selling prices of 10,251 yuan per square
metre. For the first two months of this year, the company’s accumulated pre-sales values reached 6.37 billion yuan, with total gross floor area of 640,000 square metres sold at some 9,949 yuan per metre. In fact, the growth of presales value of the developer outperformed its major rival in the market -Country Garden Holdings Company Ltd. Both of these two Mainland Chinese companies are popular with Macau and Hong Kong investors for their residential projects on the Mainland. Last Friday, Country
Garden said in a filing that the company’s contracted sales for the first two months of the year totalled 23.65 billion yuan, suggesting its contracted sales for last month was some 11.15 billion yuan, a drop of 10.8 per cent compared to 12.5 billion yuan in January. According to the developer, a total of 18.19 billion yuan of the total contracted sales for the two months would be attributable to its owners. The company pre-sold a total of 3.23 million square metres of gross floor area during the period. K.L.
Uber vows to triple number of female drivers
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i d e - s h a r i n g application Uber claims that currently approximately 200 women drivers partner with Uber Hong Kong and Uber Macau. In celebration of International Women’s Day today Uber says they are committing to tripling this number by the end of this year. “At Uber, we are committed to offering new, flexible ways for women to earn an income while balancing other responsibilities, such as family, work, and education. Globally, we’ve pledged to economically empower one million women as drivers with Uber by 2020,” said Trasy
Lou Walsh, general manager of Uber Macau. “We’re proud of our diverse driver-partner base in Macau and Hong Kong, which includes many women driver-partners who appreciate the flexible economic opportunity Uber presents – including moms who drive with Uber for a few hours a day while their kids are at school, those with primary jobs with irregular hours such as music tutors who drive between classes or casino workers who drive between shifts, and those whose main income is from driving with Uber,” she said.
Business Daily | 3
March 8, 2016
Macau
CAM: Hong Kong’s planned third runway not economically viable Some 1,667 or 97.72 pct of Macau flights could potentially overlap departures from Hong Kong’s north runway, a study finds Annie Lao
annie.lao@macaubusinessdaily.com
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planned third runway for Hong Kong International Airport (HKIA) has caused more controversy as a study finds that nearly 43 per cent of flights landing at Shenzhen Airport and over 90 per cent of departures from Macau could be affected by regional air space issues caused by the system. The Macau Airport operator says that a new runway in Hong Kong may even pose safety hazards to the region’s air space. “I doubt building the third runway (at HKIA) will be economically viable to fly as many flights as needed as the air space will be shared by limited resources which can cause ‘air traffic jams’ which in turn will pose a safety risk in the Pearl River Delta region,” the Deputy Chief
of the Executive Committee Office of Macau International Airport Co. Ltd. (CAM), Vicki Mou, told Business Daily yesterday. “Whether or not the third runway can handle 100,000 aircraft per year [per] the same capacity as the first runway at Hong Kong Airport is still questionable since the air space will become more crowded by adding another runway in Hong Kong,” she added.
Macau flights affected
Some 1,667 or 97.22 per cent of Macau’s departure flights could be affected by regional air space issues with the Hong Kong Airport Authority’s (HKAA) proposed third runway system, Hong Kong environmental institution
Green Sense’s Chief Executive Roy Tam Hoi Pong told Business Daily yesterday. The analysis of the effect of the new Hong Kong runway in Macau and Shenzhen was undertaken by Hong Kong-based environmental group Green Sense and Airport Development Concern Network using data from FlightAware and Flightradar24, which shows Macau’s departing flights could potentially clash with departures from Hong Kong’s north runway. “The total of 3,369 flights in Macau when divided by the total of departure flights from Macau in January 2016, which accounts for 1,536 or 45.61 per cent, could be affected by the new runway,” Airport
Chu Kong Shipping to buy Cotai Shipping
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hu Kong Shipping Enterprises (Group) Co., Ltd. has announced that it is to acquire 100 per cent of the shares of Cotai Chu Kong Shipping Management Services (Macau) Company Ltd. for a consideration of MOP88.9 million (US$11.1 million) from its parent company Chu Kong Shipping Enterprises (Holdings) Company Ltd., according to its filing with the Hong Kong Stock Exchange last week. Cotai Shipping primarily engages in the operations and management of car parks, shops in the ferry terminal and ferry services, the operation and management of and provision of agency services for waterway passenger transportation, freight transportation and water transportation, and the provision of ticketing agency services in the Macau Special Administrative Region. Chu Kong said in the filing that its board believes that upon the Completion of Acquisition, the company’s business chain structures
will be perfected, covering high-speed waterway passenger transportation, ticketing agency service, provision of diesel and oil for vessels and water tourism. ‘The board considers that the acquisition brings synergies derived through integration in sales and marketing, resources allocation, technology development and customer services, which complements the company’s businesses, increases the company’s competitiveness and further expands the company’s market share, hence improving profitability of the company,’ reads the filing. Chu Kong Shipping Enterprises and its subsidiaries are mainly engaged in the provision of management and other related services for high-speed waterway passenger transportation in Guangdong, Hong Kong and Macau, the operation and management of river trade cargo terminals in Mainland China and Hong Kong, and cargo transportation, warehousing and storage businesses.
Development Concern Network spokesman Michael Mo Kwan Tai told Business Daily. “A vertical distance of 1,000 feet is required between two paths according to international civil aviation standards, and it cannot be attained by the current plan,” Mo explained.
Air traffic management
Air traffic management in the Pearl River Delta (PRD) Region is one of the most complicated systems in the world, according to a spokesperson of the Civil Aviation Authority of Macao SAR (AACM). For this reason, the aeronautical authorities of Mainland China, Hong Kong SAR and Macao SAR have a tripartite meeting mechanism
to discuss issues about the use of air space in the region. Macau aviation authorities told us that the flight procedures for the third runway of Hong Kong International Airport are under study and development and will be discussed via the above mentioned mechanism in due time. “Any flight procedure changes and development in the PRD should be discussed and agreed by the aeronautical authorities of Mainland China, the Hong Kong SAR and the Macao SAR. Any development of the airports in the region should not jeopardise the development of other airports,” Euphemia Lam, Senior Officer of Public Relations at AACM told Business Daily yesterday.
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March 8, 2016
Macau
DSEJ to offer new student loans for local youths to study abroad The new loan scheme seeks to enhance local students’ language skills. Starting a business and creativity are also emphasised Bami Lio
bami.lio@macaubusinessdaily.com
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new loan scheme is being mulled for local youngsters to improve their foreign language abilities, Alexis Tam Chon Weng, Secretary for Social Affairs and Culture, and Chairman of the Youth Affairs Committee, told reporters following a meeting at the Education and Youth Affairs Bureau (DSEJ) yesterday. “Around 300 students from secondary schools and around 300 students from universities, as well as some members from communities will join the ‘1,000 Talent Plan’ starting this year. They will also have the opportunity to visit cities like Shanghai and Beijing,” said Alexis Tam. He stated that the loans would help graduates improve their abilities in foreign languages in countries like
England, Canada, the United States, or Australia, saying he believed that two years at most would be enough for students to have a strong ability. He complemented the plan by allowing students to learn Portuguese in Portugal. “We have discussed starting businesses and the creativity of youths in this city. We think that although youths have a professional background from universities their ability in foreign languages may not be good enough,” he said. Secretary Tam added that other Macau students studying overseas may also be granted student loans for them to enhance their Mandarin language skills in Mainland China. However, he added that details of the scheme, such as amount of
loan and interest had yet to be discussed. He added that he believes a concrete plan may be ready in a few months, so that the scheme can be put in place this year.
One Belt, One Road
‘One Belt, One Road’ was also one of the main topics. Un Hoi Cheng, Head of the Department of Youth under the DSEJ, said the opportunities for cooperation between China and Macau are to be increased in the press conference following the meeting of the Youth Affairs Committee. He added that the content, purpose and meaning of the scheme are to be disseminated more to youths in order to clarify the messages. Leong Vai Kei, Head of the Department of Education, added that schools can apply
for the academic year of 20162017 starting in September to study history and living in the provinces and cities related to the scheme. Leong stated that project learning and field observation are included as well. Wai Tong Kuan, Functional Head of the Department of Youth, also spoke about interim evaluation of the Macao Youth Policy, saying “we emphasise more youth involvement in society and their abilities to start a business and creativity. And we’re having interim evaluation in our policies for youths in 2016.” The Centre for Studies of Hong Kong, Macau and the Pearl River Delta from the Sun Yat-Sen University has been invited to join the evaluation, with the ‘Social
Survey on Youth Index’ providing information on implementing policies. Mr. Wai explained that the concept of social classes are added in the ‘Social Survey on Youth Index’ which indicates if youths have improved their vertical positions since embarking upon their studies. Another concept about the family is also introduced, with great differences in social classes examined when comparing youths with their mothers and fathers. Some 31 members attended the plenary meeting of the Youth Affairs Committee at the DSEJ. They discussed issues concerning interim evaluation of the ‘Macau Youth Policy 20122020’ and ‘Youth Awards 2015’.
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March 8, 2016
Macau
Slowdown in demand for gaming sector manpower Wages increase overall but vacancies and miniscule wage rises stifle demand Kelsey Wilhelm
kelsey.wilhelm@macaubusinessdaily.com
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nly 376 employees were hired in the gaming sector in the fourth quarter of 2015, an 80.9 per cent decline from the 1,968 of the same period in 2014 and 1,586 less than in the second quarter of last year, according to a survey released yesterday by the Statistics and Census Service. Employee turnover rate was 1.8 per cent, which was 0.8 percentage points lower than the same quarter of last year, with 32.8 per cent fewer employees – 1,016 in
the fourth quarter of 2015 - leaving employment as compared to 1,512 the same quarter of the previous year. Job vacancies were also down 45.1 per cent – to 379 - in the last quarter of 2015, at 462, as compared to 507 in the second quarter, which also lost 1,022 as compared to the second quarter of 2014. Of the fourth quarter vacancies, 219 were clerical, with none for dealers, as compared to 515 in the same period of 2014, when 180 dealers were sought. There
376 Number of employees hired in gaming sector in 2015 Q4 – 0 vacancies for dealers.
were 24,619 dealers in the fourth quarter of 2015, a 4.4 per cent drop year-on-year despite a 4.3 per cent wage rise year on year, earning them an average MOP18,780 in December 2015, only MOP200 more than in June of the same year. Of the vacancies in the fourth quarter of 2015, some 88.7 per cent required knowledge of Mandarin, while 55.8 per cent required knowledge of English, down 6.6 per cent and 2.7 per cent, respectively. Some 70.6 per cent of the vacancies in the fourth quarter required senior secondary education or higher, a 12.8 per cent increase compared to the second quarter of 2015. Full-time employees in the fourth quarter of 2015 totalled 56,217 – a decrease of 1,540 year-on-year and 1,204 since June of the same year. Of the fourth quarter full-time employees, shift workers in the gaming sector accounted for 92.6 per cent of the total. Average wages rose 4.9 per cent in the fourth quarter of 2015 for men, and 4.4 per cent for women as compared to the same period in 2014.
Managerial non-residents earn more
Earnings for residents in directorial and managerial
Iao Kun: 2016 still a tough year for local VIP segment The junket operator expects its rolling chip turnover to continue posting drops for the rest of the year
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ocal gaming promoter Iao Kun Group Holding Co. Ltd. believes that the city’s VIP gaming industry will continue to face headwinds this year. “With a difficult 2015 behind us and with the expectation that 2016 will also be a challenging year for VIP gaming in Macau, we continue to prudently manage our capital to ensure we will be appropriately positioned when the market turns
around,” the company’s chairman, Lam Man Pou, stated in the company’s annual results released last week. The NASDAQ-listed junket operator generated a total of US$6.4 billion (MOP51.2 billion) of rolling chip turnover for the whole year of 2015, a plunge of 61 per cent year-onyear compared to the US$16.6 billion of 2014. However, the company recorded a net income of US$5.1
million from a net loss of US$60.1 million one year ago. Currently, Iao Kun has five VIP gaming rooms in the Macao Special Administrative Region, respectively located in the StarWorld Hotel, the Galaxy Macau, Sands Cotai Central, City of Dreams and Le Royal Arc Casino, apart from its operations in Crown Perth Casino and Crown Melbourne Casino in Australia. Expecting the year would be
positions averaged MOP48,470 in December of 2015, a 4 per cent increase from the same month of the previous year. Non-residents in the same positions gained an average earnings boost of 13.8 per cent for the same month – to MOP82,880 or 41.5 per cent higher than residents. The second highest average earnings in the sector for December 2015 were for technicians and associate professionals, at an average of MOP25,740, a 5 per cent increase on the previous year, as compared to the 7.8 per cent increase in non-resident salaries the previous December, earning them on average MOP36,220 in the final month of 2015. With the city undergoing a gaming downturn, monthly gross gaming revenue continued to fall throughout 2015, from MOP 23.7 billion in January to MOP18.3 billion in December, a 17.4 per cent and 21.2 per cent drop, respectively. Accumulated gross revenue for 2015 was MOP230 billion – down 34.3 per cent compared to 2014. In the first month of 2016, the downward trend continued, with a 21.4 per cent drop compared to the previous year, at MOP 18.6 billion.
“challenging”, the gaming promoter estimated in its guidance to investors that its total VIP rolling chip turnover in the local market may total between US$3.5 billion and US$4.5 billion this year – suggesting a slump of between 29.6 per and 45.3 per cent year-on-year. In fact, the group’s rolling chip turnover of US$1.44 billion for the first two months of the year are in line with such an expectation as the amount fell by 44 per cent compared to the same period of 2015. “We continue to source additional VIP opportunities in overseas markets to allow us to further diversify our revenue streams,” Mr. Lam claimed. Nevertheless, Alvin Chau Cheok Wa, chairman of the city's largest junket operator, Suncity Group, told reporters in Hong Kong yesterday that he expected Macau’s overall gaming revenues to improve in the second half of this year. K.L.
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March 8, 2016
Macau
Portuguese presence survives because of cultural and historical value Portuguese political analyst and historian José Pacheco Pereira says Macau has a lot to profit from with the Portuguese presence and that it adds an international dimension to the city João Santos Filipe
jsfilipe@macaubusinessdaily.com
Some cases where Chinese companies are controlling strategic sectors in Portugal… may create some problems José Pacheco Pereira, Portuguese political analyst, historian and politician
José Pacheco Pereira
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ortuguese political analyst, historian and politician José Pacheco Pereira said yesterday that the presence of his home country nowadays in Macau is an anachronism, a misplacement in time. However, in a conversation with local media at the University of Macau he explained that this brings many benefits to the city. “It is very clear that the Portuguese presence in Macau is an anachronism in a certain sense, which is not a problem even if we use the word in a pejorative way. It is an anachronism as it is attached to a certain period of time and it survives because of the cultural and historical value”, the former Vice President of the European Parliament said. “Of course, this presence adds value even in economic terms to Macau; but also in many other ways. We cannot look at the Portuguese presence in the territory as something
The Portuguese presence in Macau provides an international dimension to the region José Pacheco Pereira, Portuguese political analyst, historian and politician
it is not anymore. But we have to face it as it really is”, he added. “This anachronism also happens in other places where there’s a Portuguese presence such as Goa or Malacca, where people kept Portuguese names or the law system”. However, Pacheco Pereira said that this Portuguese presence can be very useful for the region and make it more international. “This is very useful for the Macau Government because one government that has conscience values difference. Of course, the main difference for Macau is the fact that it is the capital of gambling and it provides a lot of money for the region. Still, the Portuguese presence in Macau provides an international dimension to the region”, he said. “Of course, there’s also the tourism side which is profitable to the region.”
Sino-Portuguese relations
The politician also commented on Portugal’s Golden Visa policy, which became very popular for Chinese citizens, which, in exchange for an investment of 500,000 euros on a property would give them the right to live in the country. However, the scheme was suspended for some time following a major corruption scandal involving top Portuguese officials. “Eventually, the Golden Visa scheme will be normalised and there will be no problems in terms of the relationships between Portugal and China,” the politician said. “Still, the scheme got a bad reputation in Portugal because it was linked to a corruption scandal. In fact, it had never had a good reputation because the scheme was launched during an economic crisis when people are more sensitive to inequalities. At that moment, it seemed that everything could be bought with money, including nationality,” he said.
On another note, José Pacheco Pereira believes that tensions between Portugal and China may arise from other deals involving the Chinese ownership of Portuguese companies that control strategic sectors in the country such as the power network. “In some cases where Chinese companies are controlling strategic sectors in Portugal such as REN (company managing the Portuguese National Electric System where State Grid Corporation of China is a
major shareholder) may create some problems”, he stated. “This agreement was reached because of pressure from the European Union. But this is a problem for the Portuguese Government not for the Chinese buyer, who naturally looked after its interests”, he said. José Pacheco Pereira was in Macau for the second time to participate in the Script Road event. He first visited the territory during the Portuguese Administration, when he attended the opening ceremony of the Cultural Centre.
Corporate GEG hold third annual ‘GEG Soccer Fun Day’ Galaxy Entertainment Group (‘GEG’) encourages its team members to exercise more outdoors and frequently rolls out sporting activities to stimulate team bonding and promote work-life balance among team members; the GEG Staff Social Club held the GEG Soccer Fun Day on Sunday for the third consecutive year with 250 team members and their families and friends joining the event. The event featured friendly soccer matches as well as the first soccer carnival where team members’ families and friends enjoyed a lively and exciting
day together. The GEG Soccer Fun Day saw the greatest number of participants with 160 players forming 8 teams from different departments of StarWorld Hotel, Galaxy Macau, Broadway Macau and City Clubs as well as other invitational teams. Following a warm-up exercise, a friendly match began with players skilfully controlling the ball and manoeuvring it to the opponent’s goal. The crowd congratulated the winning team of the Engineering Department with roars of cheers and applause in the Workers Stadium.
Business Daily | 7
March 8, 2016
Macau
Trade between China and Portuguese-speaking countries slows 24.38 per cent loss in overall trade in January compared to previous year Kelsey Wilhelm
kelsey.wilhem@macaubusinessdaily.com
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rade between China and Portuguese-speaking countries fell 24.38 per cent in January to US$6.15 billion (MOP49.22 billion) compared to the same period last year. The information from China’s Customs Bureau was published on the Forum for Economic Trade and Co-operation between China and Portuguese-speaking countries, also known as Forum Macau. Exports of China to Portuguesespeaking countries suffered the greatest reduction with a 43.9 per cent drop year-on-year, at US$2.35 billion, a 15.1 per cent drop compared to the previous month. Imports from Portuguese-speaking countries to China also slowed, with a 20.7 per cent decrease compared to the previous month, at US$3.8 billion, a 3.69 per cent slowdown compared to January of last year.
Brazil, the biggest partner
Brazil continues to be China’s largest trading partner amongst the Portuguese-speaking countries, despite a 44.36 per cent reduction in exports from China compared to January 2015, at US$1.68 billion. Imports from Brazil to China increased 26.8 percent compared to the same month
AIIB bridges Sino-Portuguese relations
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ortugal should take advantage of the cultural potential of the Asian Infrastructure Investment Bank (AIIB), according to the President of the Observatory for China, Rui Lourido, who was in Macau to participate in the Script Road – the Macau Literary Festival. The Observatory for China is an association intent on spreading knowledge about China in Portugal. “I believe this Chinese project will present good conditions for Portugal not only to intensify its relations with China but also to take advantage of this project in terms of its cultural potential”,
last year for an overall US$US$2.73 billion, compared to the same month last year. Overall, there was a 14.7 per cent reduction in trade between the two countries compared to January last year and a 20.6 per cent overall reduction compared to December 2015. Trade between the two countries in January was US$4.41 billion. Angola ranked second among the Portuguese-speaking countries, with overall trade of US$1.1 billion, a 50.8 per cent reduction compared to January last year, with a 76.6 per cent reduction in exports to China, totaling US$1.56 billion and 39.7 per cent reduction in imports from China totalling US$9.4 billion.
Portugal ranks third
Portugal came in at a not-so-close third in overall trade with China, at US$490 million in January. A 34.7 per cent increase in Portugal’s exports to China compared to January last year helped push the country to US$410 million, while a 51.1 per cent drop in imports from China as compared to the same month in 2014 equalled only US$80 million. Exports from Portugal showed a 64.5 per cent increase in January and a 21.1 per
Lourido said in an interview with public broadcaster TDM Radio Macau. The President of the Observatory for China also believes that commerce can help develop peaceful and harmonious relationships between the different countries in a more efficient way than the multinational corporations do. “This bank will allow the countries taking part and investing in the project to be rewarded. This reward is not only economic but, and this is the most essential part, it is in terms of commercial dynamism and support”, he explained, going on to say, “Many independent entities believe that China’s growth will account for 20 per cent of the world’s economic growth in the coming 10 years, including the IMF [International Monetary Fund]. This is impressive and it takes into account that the growth of China will have a slower place, which should be around five to four point five per cent”.
Exports of China to Portuguese-speaking countries suffered 43.9 per cent reduction in January compared to previous year
cent drop in exports compared to the previous month. A 44.8 per cent drop in overall trade between Mozambique and China in January 2016 compared to the same month last year left the trading partners with an overall US$1.29 billion, divided between
US$86.3 million in exports to China, nearly double the US$43.4 million imported from China to the African nation. This equalled a 50.9 per cent drop in exports and a 26.56 per cent drop in imports comparing January 2015 with January 2016.
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March 8, 2016
Greater China
Fiscal income to slow but room for more government debt Central bank vice governor Yi Gang said that he is confident that China has adequate foreign exchange reserves
The longer the Chinese economy continues to add debt, the more risky we will perceive the situation to be Chinese Finance Minister Lou Jiwei reacts during a press conference on the sidelines of the Fourth Session of the 12th National People's Congress (NPC)
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rowth in China’s fiscal income will slow in future, but the country still has room to increase government debt, Finance Minister Lou Jiwei said in Beijing yesterday. China could moderately increase its fiscal deficit ratio to gross domestic product (GDP), although not by too much, Lou Jiwei said at a news conference during the annual session of parliament. “Our fiscal income is in a severe situation. We need to expand the fiscal deficit, but it is hard to say how much room is appropriate,” Lou said. “We have some room, but cannot increase too much,” added, noting that China’s fiscal income accounts for around 30 percent of GDP, “which is relatively low compared with other countries and far lower than that in
developed countries.” China has budgeted a 2016 deficit of 3 percent of gross domestic product, the finance ministry said on Saturday, compared with an actual fiscal deficit ratio of 2.4 percent in 2015. Some analysts say that target is too conservative to actually stabilise sliding economic growth, while others warn of the impact it could have on the government’s balance sheet. “This points to a further increase in leverage in the economy which risks raising contingent liabilities for the government,” said Marie Diron, a senior vice president at Moody’s in emailed comments on the new deficit target. Moody’s downgraded its outlook on Chinese government debt to “negative” from “stable” on Wednesday, citing uncertainty over
Andrew Colquhoun, head of AsiaPacific sovereign rating, Fitch
authorities’ capacity to implement economic reforms, rising government debt and falling reserves. HSBC estimates central and local government budgeted bond issuance together will increase by nearly 35 percent this year to 2.18 trillion yuan (US$334.76 billion). The 3 percent deficit target disappointed some analysts, who had hoped for more aggressive measures to prop up growth in the world’s second-largest economy. However, Chinese regulators
Local authorities defend response to failed Metal Exchange The head of the Exchange was arrested last month, along with 15 other suspects Ben Blanchard
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hinese officials yesterday defended their response to the failed Fanya Metal Exchange, which came under the spotlight last year following protests by angry investors who allegedly lost US$6 billion, saying they reacted fast and responsibly. Last July, hundreds of people protested outside the Fanya Metal Exchange in Kunming in southwestern Yunnan province, alleging the exchange had lost investments of more than 40 billion yuan (US$6.14 billion) and complaining of government inaction. Investors also held protests outside
the offices of China’s financial regulators in Beijing and Shanghai. The Fanya case highlights rising risks posed to China’s economy from its US$2.6 trillion wealth management industry and the challenges it presents to regulators as well as potential threats to the ruling Communist Party’s cherished social stability. The head of the exchange was arrested last month, along with 15 other suspects. Fanya, though privately-run, relied on the endorsement of the Yunnan provincial government to attract investors. After irregularities first emerged
last April, the Yunnan government supported the exchange, issuing a statement in June reassuring investors that it remained a legal entity engaged in legal operations. Answering a question from Reuters on the side-lines of China’s annual parliament meeting as to whether the government had failed investors, Kunming Mayor Wang Xiliang said authorities had done their job well. “Under the strong leadership of the provincial party committee and government, we took vigorous measures, investigated in accordance with the law ... and protected the majority of investors’ legal rights
have also said they will increase the efficiency of government investment, which would theoretically produce better economic gains without aggravating China’s already massive stockpile of underperforming loans. However, whether central government has gotten better at precisely targeting lending, as opposed to spurring overinvestment in industries seen as favoured by Beijing that results in asset bubbles, is a major question. Lou said that if state-owned banks see profitability fall thanks to increased levels of non-performing loans, the finance ministry would give them “appropriate help”. But he denied this support would constitute special treatment for banks in which the government is a major shareholder. Chinese officials are still incentivised to drive economic growth, and quick investment projects in infrastructure, airports or commercial real estate is generally the easiest way to do so, regardless of whether the project actually meet a market need or not. “The longer the Chinese economy continues to add debt, the more risky we will perceive the situation to be,” said Andrew Colquhoun, head of Asia-Pacific sovereign rating at Fitch. Central bank vice governor Yi Gang said in a separate conference that he is confident that China has adequate foreign exchange reserves, pointing out they are the largest in the world. China’s sharp drawdown of reserves in recent months to alleviate downward pressure on its yuan currency have unnerved global financial markets, though it continues to have the most reserves in the world. Reuters
to the greatest extent,” said Wang, reading from a handwritten preprepared statement. Police have been carrying out an “energetic” investigation, arresting people, freezing and seizing assets and trying to “recover the investors’ losses to the greatest degree”, he added. The probe is continuing and details will be announced in due course, Wang said. Yunnan governor Chen Hao added that they had ensured the scandal had not “spread further” by mobilising officials to get involved to “clean up and rectify” the situation as soon as it happened. “We have handled this with a high degree of responsibility towards consumers and investors.” The Fanya Metals Exchange was launched to increase China’s control over the prices of several rare but important metals including indium and bismuth. Prices for the metals traded on the exchange rose sharply and became out of sync with world prices. Last April, investors placed a wave of sell orders, which the exchange later admitted caused liquidity problems. Looking to make good on the promise of instant redemption, investors wanted to switch their money into a stock market rally. Reuters
Business Daily | 9
March 8, 2016
Greater China
Goldman says iron ore rally to be short-lived
FX reserves fall to US$3.20 trillion
The rally followed losses of around 70 percent in the past three years Manolo Serapio Jr
T
he rally in iron ore prices will not last in the absence of a significant improvement in steel demand from top consumer China, Goldman Sachs said, as the investment bank stuck to its bearish take on one of this year’s biggest commodity comebacks. Iron ore has risen more than 22 percent this year, making it the best performing commodity so far in 2016, in a rally fuelled by stronger Chinese steel prices as market participants looked to brisk seasonal demand from March. Those gains could extend as iron ore futures in Asia soared yesterday. The rally followed losses of around 70 percent in the past three years as iron ore was hit by a global glut and weaker Chinese steel demand. “We expect the current rally to be short-lived in the absence of a material increase in Chinese steel demand, and steel raw materials will once again drive steel prices rather than the other way around,” Goldman said in a report yesterday. Goldman has kept its iron ore price forecast for 2016 at US$38 a tonne and US$35 for the next two years. Iron ore reached US$52.40 a tonne
However, our analysis of freight activity indicates that export volumes recovered in February and we expect further supply growth in the quarters ahead Christian Lelong and Amber Cai, analysts, Goldman Sachs
Reuters
Foxconn, Sharp “on the right track” in deal talks Terry Gou, chief executive of Foxconn, is in Bangkok to participate in a business expansion meeting sponsored by Sharp J.R. Wu and Makiko Yamazaki
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alks for Taiwan’s Foxconn to acquire a majority stake in Japan’s Sharp Corp are “on the right track”, people familiar with the matter said on Monday, after a last-minute hitch over contingent liabilities caused delays last month.
on Friday, based on the latest available data, its highest since October 19. The steelmaking raw material has recovered more than 40 percent from December’s low of US$37, its weakest since at least 2008. Apart from the surge in steel prices, Goldman said disruptions in top exporters Australia and Brazil impacted iron ore supply in January, also stoking the price rally. “However, our analysis of freight activity indicates that export volumes recovered in February and we expect further supply growth in the quarters ahead to pressure inventory levels and prices,” wrote Goldman analysts Christian Lelong and Amber Cai. The analysts, who see Chinese steel production declining this year, said the bullish sentiment in China’s steel market was not supported by hard data. “We are yet to find evidence of higher-than-expected steel demand - whether in the order books of individual steel producers or in the official data for new orders,” they said. “Based on the information currently available, the seasonal increase in demand appears only marginally stronger than last year.”
Discussions are set to conclude this week, one person said, adding that most of the due diligence is done. Foxconn late last month suspended the signing of a deal to take over the loss-making Japanese
electronics firm, citing the emergence of new material information. The announcement came after Sharp’s board voted in favour of Foxconn’s offer, estimated at nearly US$6 billion. Terry Gou, chief executive of Foxconn, is in Bangkok to participate in a business expansion meeting sponsored by Sharp, the Taiwanese firm, formally known as Hon Hai Precision Industry Co, said yesterday, adding that he was invited to attend by Sharp. His attendance signals Gou has begun to participate in Sharp’s activities, said a separate source familiar with Foxconn’s thinking. “It is not important when an official signing will take place, but that Gou, who thinks 2-3 steps ahead of everyone, is already going into action by being in Thailand today,” the person said. Sources declined to be identified as they were not authorised to talk to the media. Sharp and Foxconn declined to comment yesterday on the state of progress of the discussions. Foxconn said in a statement on the weekend that there was no firm date to sign a deal with Sharp as both sides continued to make progress towards an agreement. The hitch to Foxconn’s takeover of Japan’s struggling Sharp centred on information that listed around 300 billion yen (US$2.7 billion) in contingent liabilities at Sharp, sources have previously said. These were worst-case scenario risks that might happen in the future, but not liabilities that required formal disclosure, they added. Reuters
China’s foreign exchange reserves, the world’s largest, fell by US$28.57 billion in February to US$3.20 trillion, the lowest since December 2011, central bank data showed yesterday. The decline was slightly less than the $30 billion decrease that economists polled by Reuters had expected, and compared with a drop of US$99.5 billion in January. China’s reserves have now fallen four months in a row as the central bank dumps dollars to ease depreciation pressure on the yuan and prevent an increase in capital outflows.
Gold reserves rise
China’s gold reserves stood at 57.5 million fine troy ounces at the end of February, up from 57.18 million at the end of January, the central bank said yesterday. China began updating its reserve figures on a monthly basis in June 2015. Prior to that, the reserve figures were not updated regularly
Carry trades at heart of capital outflows Heavy outflows of capital from China have mainly been a result of the unwinding of carry trades aimed at benefiting from rising interest rates and an appreciating yuan, the Bank of International Settlements said. The study in the regular quarterly report by the central banks’ central bank also said that capital flight from the yuan, also known as renminbi, had tended to be about the repayment of dollar-denominated debt by Chinese companies rather than widespread sales of mainland assets.
Authorities to search for monetary balance China will try hard to find a balance between a stable yuan, monetary policy adjustments and capital flows when setting its macro policies, the statistics bureau said yesterday. Expectations of a U.S. Federal Reserve rate hike and inclusion of the yuan in the IMF’s Special Drawing Rights basket would add volatility to the yuan, it said. China was seeing more cross-border capital flows with larger impacts on the balance of payments, the statistics bureau said in an online statement. It noted that China would closely watch capital flows and Fed policy decisions.
Regulators plan crackdown on loans Chinese regulators plan to impose new rules to end the practice of homebuyers taking out loans to cover down-payments, as they step up financing risk in the property market, according to people familiar with the matter. The rules will bar lenders including developers, housing agencies, small-loan companies and peer-to-peer networks from offering loans for down-payments, said the people, who asked not to be named because the matter isn’t yet public. Regulators including the central bank and the China Banking Regulatory Commission will also ask commercial banks to scrutinize mortgage applications.
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March 8, 2016
Greater China
Hedge funds exploit yuan proxies to beat the PBOC’s meddling Intervention by China’s central bank has helped the yuan recover from a five-year low struck in January, with the currency up 0.8 percent in the past month Saijel Kishan and Bei Hu
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edge funds with a bearish view on China’s currency are increasingly betting against yuan proxies instead, after the central bank stepped up efforts to stabilize the exchange rate. Colorado’s Crescat Capital is shorting U.S. exchange-traded funds that track Chinese and South Korean stocks, while the won and Taiwan’s dollar are among those favoured by Hong Kong-based Bright Stream Capital Management. The exchange rates tend to decline on negative China sentiment because the nation is their biggest export market. The need for alternatives to direct bets on the yuan intensified after China’s central bank burned speculators earlier this year. The monetary authority drove offshore borrowing costs to record levels by choking the flow of funds out of the nation, mopping up yuan supplies and intervening to support the currency. Crescat Capital returned 4.4 percent in January as its bearish ETF bets paid off, while Bright Stream said its macro fund gained 2.8 percent, helped by short wagers on the Taiwan dollar and the Korean won. “These currencies have decent liquidity and relatively low interest rates, so the negative carry in shorting
with the currency up 0.8 percent in the past month. That pared its decline since an August 11 devaluation to 4.7 percent. The nation’s leaders have signalled support for the currency of late, with PBOC Deputy Governor Yi Gang saying last week that the yuan and monetary policies will remain stable. Persistent capital outflows from China since mid-2014 were probably driven more by local companies paying down their dollar-denominated debt -- in anticipation of a stronger U.S. currency -- than investors ditching Chinese assets, according to the Bank for International Settlements. The PBOC’s foreign-exchange reserves include the euro, yen, pound and developing nations’ assets, in addition to U.S. dollars, Yi Gang said at a news briefing in Beijing on Sunday. This is the first time that a central bank official is disclosing the sources of non-dollar assets in the stockpile.
Sharpe ratio
these currencies is not that bad,” said Ka-hay Yip, a former SAC Capital manager who oversees Bright Stream’s US$36 million. “The central banks there also do not intervene as heavily as the People’s Bank of China, and the risk of having new capital control rules regarding these currencies is lower.”
Short bets
Crescat Capital’s short bets include Deutsche X-trackers Harvest CSI 300 China A-Shares, the largest U.S. ETF that tracks domestic Chinese stocks, and iShares China Large-Cap ETF. Short interest in the Deutsche X-Trackers ETF has fallen to 2.8 percent of shares outstanding, from 17 percent at the start of the year. That measure of bearish wagers on
the iShares ETF has halved to 2.3 percent this year. “With these, you also get exposure to Chinese equities and particularly banks, which is what we want as long as China tries to defend its currency,” said Kevin Smith, founder of the US$72 million Crescat Capital in Denver. Other alternatives to shorting the yuan include Sweden’s Atlas Copco AB, the world’s biggest maker of compressors. Popular proxies have included U.S. machinery maker Caterpillar Inc., mining companies Rio Tinto Group and Fortescue Metals Group Ltd., and the Canadian and Australian dollars. Intervention by China’s central bank has helped the yuan recover from a five-year low struck in January,
The Sharpe ratio, which measures returns adjusted for price swings to gauge carry trade appeal, was 0.77 to short the Taiwan dollar in 2015, and 0.62 for the won. It was 0.1 for the yuan. Even though China is slowing down, they have the tools to deal with the flagging economy, said Bright Stream’s Yip. The PBOC on March 1 lowered banks’ reserve-requirement ratio by 0.5 percentage point, releasing an estimated 685 billion yuan ($105 billion) into the financial system and keeping a tight rein on interbank borrowing costs. The rate on overnight yuan loans in Hong Kong was 1.93 percent on Friday, compared with an unprecedented 66.82 percent on January 12. China’s large foreign reserves also help, with the latest tally due to be published on Monday. “Other countries which rely on strong China growth may not have the policy flexibility,” said Yip. “That’s why I would rather long dollar against other Asian currencies than long dollar against the yuan directly.” Bloomberg News
Government prepares regulation for low-speed EVs Setting standards for these vehicles would give them legitimacy, boosting prospects for manufacturers and battery suppliers
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hina is working on regulations for lowspeed electric vehicles, including possibly classifying them as motorcycles, according to Minister of Industry and Information Technology Miao Wei. Electric vehicles that have a maximum speed of 70 kilometres per hour are currently exempt from registration, which has spawned a class of cheap battery-powered cars popular in China’s rural areas and smaller towns and cities. Crash-testing and other safety standards also don’t apply to these mini vehicles. Most of China’s larger cities have strict regulations for allowing motorcycles on their roads, meaning that classifying low-speed EVs as two-wheelers would effectively restrict them to the lesser-developed areas
where they’re popular. Setting standards for these vehicles would also give them legitimacy, boosting prospects for manufacturers and battery suppliers such as Loncin Motor Co. and Tianneng Power International Ltd. Miao, who was speaking on Saturday after a meeting at the National People’s Congress in Beijing, didn’t give a timeline for when the regulations will be introduced. Delegates to the annual legislative meetings that opened in the past week have proposed that low-speed EVs be regulated as they are popular with consumers and represent an upgrade from battery-powered bicycles. Loncin, a manufacturer of low-speed EVs, rose 2.4 percent in Shanghai trading, outpacing the benchmark Shanghai Composite Index’s 0.8 percent gain. Tianneng
Power, the biggest supplier of batteries for low-speed EVs in China, rose as much as 2.8 percent in Hong Kong trading.
The government should set rules instead restricting low-speed EVs because they’re affordable for the public, especially in rural
EVs represent an upgrade from battery-powered bicycles
areas, Tianneng Power Chairman Zhang Tianren said in an interview in Beijing yesterday. Bloomberg News
Business Daily | 11
March 8, 2016
Asia
Singapore bourse to boost freight derivatives with pursuit of Baltic Exchange The Baltic is owned by around 380 shareholders, many from the shipping industry Anshuman Daga
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ingapore Exchange’s (SGX) bid to buy London’s Baltic Exchange is aimed at burnishing its derivatives credentials among ship brokers and commodity merchants, fitting hand in glove with its efforts to develop Asian pricing benchmarks for bulk commodities. The bourse has struggled in recent years, losing out to Hong Kong as the main destination for large IPOs in the region and the proposed acquisition is one of several
efforts by new CEO Loh Boon Chye to revive its fortunes. Despite a deep rout in global commodities markets, the long-term market for freight derivatives and clearing holds promise, sources familiar with SGX’s strategy said, adding that it is keen to increase the appeal of its Asian pricing benchmarks for commodities such as iron ore, liquefied natural gas and coking coal. “This will give SGX deeper coverage with many large clients with whom they
already deal at some level,” said one of the sources. The sources declined to be identified as they were not authorised to speak to the media on the matter. SGX declined to comment. Singapore is the world’s second-busiest container port with over 130 international shipping groups based in the city-state and the government has positioned the sector as a key industry. And despite recent economic wobbles, long-term demand for bulk materials like iron ore and
coal is expected to be strong as India, Indonesia and Central Asia follow China in targeting infrastructure development. As such, gaining control of the Baltic, which is seeking to boost membership in Asia, would be a natural step for SGX. The Baltic is owned by around 380 shareholders, many from the shipping industry. It produces daily benchmark rates and indices used globally to trade and settle freight contracts as
well as data used in freight derivatives. “Instead of trying to be a regional or global market, just be a sector-specific market where you seem to be able to price better, rather than try and be a competitor to Hong Kong” said Kevin Scully, executive chairman of equities research firm NRA Capital. In addition to the bid for the Baltic, SGX’s Loh, who is just seven months in the job, is expanding the bourse’s non-freight derivatives offerings, has launched a bond trading platform and is conducting a supervisory crackdown on errant firms. The Baltic Exchange said last month it had received a number of “exploratory approaches” after SGX confirmed it was seeking to buy the business which has been the hub of the global shipping market for centuries. Sources had previously pegged the Baltic’s valuation at just below US$120 million. The SGX is valued at US$5.9 billion. The Baltic has previously rebuffed approaches from the London Metal Exchange. Reuters
Singapore is the world's second-busiest container port with over 130 international shipping groups based in the city-state
Japan’s central bank to cut next fiscal year’s growth Governor Haruhiko Kuroda maintains his optimism on Japan’s economic recovery Leika Kihara
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apan’s central bank is expected to cut its economic and price forecasts for next fiscal year at a quarterly review in April, sources familiar with its thinking say, as weak global demand hits growth and yen rises weigh on imported fuel costs. The gloomy assessment comes even after the Bank of Japan (BOJ) attempted to forestall risks of an economic downturn by adopting negative interest rates in January, underscoring the fragile nature of Japan’s recovery. A change in the BOJ’s baseline expectations for the fiscal year ending March 2017 may prompt the central bank to offer a bleaker view on exports, output and the economy when its board meets next week than it did in January. While many BOJ officials remain optimistic about domestic demand, some fret the global market turbulence
and sluggish emerging market demand are taking a heavier than expected toll on exports and factory output. “Risks are clearly tilted toward the downside both in terms of the economy and prices,” said one of the sources, a view echoed by two other officials familiar with the BOJ’s thinking. Pessimists in the BOJ warn that if market turbulence persists, the bank’s baseline expectation of a moderate economic recovery could come under threat. Reflecting weak external demand, the board members may also cut their growth and price projections at a quarterly review to be conducted at a more critical policy meeting on April 27-28, the sources said. A rise in the yen, which is now around 115 to the dollar compared with 120 in January, will also weigh on inflation by pushing down the cost of imported goods and fuel, they said.
KEY POINTS Some in BOJ worried about weakness in exports, output Rising yen pushing down import costs, weigh on inflation BOJ may offer bleaker view on exports, output next week BOJ to cut growth, price f’casts at crucial April meeting
Under its forecasts made in January, the BOJ expects the economy to expand 1.5 percent and core consumer inflation to hit 0.8 percent in the coming year beginning in April. Revised GDP data due out today is likely to show Japan’s economy contracted slightly more than initially estimated in the final quarter of 2015, keeping the BOJ under pressure to deploy additional monetary stimulus. But BOJ Governor Haruhiko Kuroda maintained his optimism on Japan’s economic recovery yesterday and said now was the time to scrutinise the effect of the January easing on the economy, dispelling speculation of immediate easing. In January, the BOJ said Japan’s economy continues to recover moderately and while output was moving sideways, exports were picking up albeit with some weaknesses. Reuters
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March 8, 2016
Asia
Fitch says Japan’s sales tax hike delay could be credit-negative Japan’s ample domestic savings have helped the country finance most of the debt so far
A
delay in Japan’s planned increase to its sales tax could have negative implications for the country’s sovereign debt rating, an official at Fitch Ratings said yesterday. There have been discussions in Japan’s parliament recently over whether to delay the sales tax hike scheduled for April 2017. “We’re not in the business of giving policy advice,” Andrew Colquhoun, head of Asia-Pacific sovereign rating at Fitch, said in a phone interview. “But what I would say is that if
the sales tax increase didn’t happen, without other equivalent fiscal consolidation measures, the deficit would be higher, the debt would be rising faster than we currently expect, and that would be credit-negative, and could result in a negative rating action.” In April 2015, Fitch cut its rating on Japan after the government failed to take steps to offset a delay in a sales tax increase. It cut by one notch to A, which is five notches below the top AAA rating, with a stable outlook. Japanese Finance Minister Taro
KEY POINTS Fitch says Japan sales tax delay would be credit negative Fiscal stabilisation still within reach for Japan Funding flexibility supports Japan’s credit profile
Aso said on Friday that Prime Minister Shinzo Abe will implement the planned hike next year unless Japan were to experience a financial crisis or a natural disaster. Abe’s decision in late 2014 to delay a sales tax hike to 10 percent from 8 percent that had been scheduled for 2015 made it more difficult for Japan to eliminate the primary budget deficit in fiscal 2020, an important fiscal consolidation target. The Japanese government is also laying the groundwork for new stimulus spending, which would add to the country’s already heavy debt burden. The country’s debtto-GDP ratio is the highest among industrialised countries. Despite the risks, Colquhoun said it remains possible for Japan to get its fiscal act together. “We think that Japan is only around 2 percentage points or so away from a deficit that would stabilise the debt-to-GDP ratio, in our baseline, but there’s a lot of moving parts in our forecasts,” he said, adding, “fiscal stabilisation is not out of reach.” Japan’s ample domestic savings have helped the country finance most of the debt so far. “The sovereign’s exceptional funding flexibility has long been one of the strengths in the credit profile despite high level of government debt and the deficit,” Colquhoun said. Japanese government bond yields through 10-year maturities have sunk to record lows below zero percent since the Bank of Japan unveiled its negative interest rate policy on Jan. 29, potentially lightening the government’s debt-servicing cost in the short-term. However, Colquhoun said neither Fitch nor Japanese policymakers expect artificially low yields to play an integral part of Japan’s fiscal stabilisation. Reuters
Mongolia ends fight over US$100 mln mining licence arbitration Investors turned cold on the country’s once-booming mining sector partially because of public disputes with miners such as giant Rio Tinto and Khan Resources Terrence Edwards
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ongolia has settled a dispute over an arbitration award that required it to pay more than US$100 million last year to a Canadian miner for revoking a uranium mining license, just as it launches a push this week to attract new exploration interest. “The Government of Mongolia and Khan Resources
Inc. successfully reached an agreement that effectively resolves all outstanding issues in regards to the international arbitration awards,” Mongolian Finance Minister Bolor Bayarbaatbar said in a statement released by Khan late on March 6. “The settlement demonstrates the Government’s on-going commitment to
improving the investment climate,” he said. Mongolian finance ministry officials could not be reached for comment on the settlement while in Toronto for the annual Prospectors & Developers Association of Canada conference, where the Mineral Resources Authority said it will pitch mining and infrastructure projects and
auction off exploration licenses. Khan Resources’ statement did not say how much the government paid. Mongolian Prime Minister Chimed Saikhanbileg has been touting the minerals-rich country as “Open for Business” in the wake of sharp declines in foreign investment since 2012 and plummeting prices for its top exports of copper and coal.
A Paris tribunal last March ordered Mongolia to pay Toronto-listed Khan Resources damages for revoking Dornod uranium mining license in 2009 and transferring it to Russian partner ARMZ. Mongolia refused to make the payment, and last week Khan said it would press the Canadian government to suspend aid to the country if no settlement was reached for the US$106 million, including interest, it was owed as of February. Saikhanbileg’s Democratic Party may take heat for the decision to settle the dispute from opposition and resource nationalist campaigners ahead of parliamentary elections on June 29. The prime minister survived a no-confidence in January for his role in signing an agreement with Rio Tinto to push forward a US$5 billion underground mining project at its Oyu Tolgoi copper mine. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Óscar Guijarro, Kam Leong, Joanne Kuai, Bami Lio, Annie Lao GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Business Daily | 13
March 8, 2016
Asia
Authorities say South Korea not fretting over U.S. FX rule U.S. Treasury Secretary Jack Lew had expressed concerns over South Korea’s forex policies to Finance Minister Yoo Il-ho
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outh Korea’s vice finance minister said yesterday the country is not worried about new U.S. laws that allow Washington to bar countries from U.S. trade deals and government procurement contracts if they keep currencies artificially low. “Our foreign exchange officials are currently carrying out their tasks in a balanced manner and offshore parties have agreed on this as well. We are not hugely concerned (about the legislation,” Vice Finance Minister Choi Sang-mok said in a regular meeting with reporters in Sejong, south of Seoul. “We are explaining ourselves as much as we can through a number of ways.” The vice finance minister’s comments came a few hours after the finance ministry said in a statement the government will conduct closer bilateral communication with the U.S. on macro-economic policies. Subjects of communication include foreign exchange, which was discussed between the two nations during a recent meeting of finance ministers from the Group of 20. The ministry’s explanatory statement was released to address a local media report that cited an unnamed South Korean government official as saying U.S. Treasury Secretary Jack Lew had expressed
concerns over South Korea’s forex policies to Finance Minister Yoo Ilho. The finance ministry statement said this was untrue. Currency dealers have suspected foreign exchange authorities have been stepping into the market frequently since late last year as turbulence in global markets increased after the U.S. decided to raise interest rates for the first time in a decade in December. The South Korean government and central bank’s basic stance on foreign exchange rates is that authorities will take action via “market smoothing” measures in times of extreme price action, while leaving the general flow in line with global market movements.
We are explaining ourselves as much as we can through a number of ways Choi Sang-mok, South Korea’s Vice Finance Minister
Reuters
Indonesia’s forex reserves rise
Philippines signs new GMO rules The Philippines has approved a new set of rules on genetically modified organisms after a top court demanded an overhaul of previous regulations, providing relief to farmers and importers worried that any delay would spark a food crisis. The five ministers that needed to sign the rules had done so as of yesterday, Merle Palacpac, chief of the plant quarantine service at the Bureau of Plant Industry, told Reuters. The new rules will now be forwarded to the Department of Agriculture, with Palacpac saying they would likely take effect by April.
Vissan raises US$41 mln in IPO
The island nation’s total outstanding debt rose 12 percent to 8.27 trillion rupees in the first nine months of 2015 Shihar Aneez
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New wells are being drilled in Myanmar’ offshore M-5 and M-6 blocks of the Yadana Gas Field to explore more gas and keep its production on track until 2020, official media reported yesterday. The Yadana Gas field is a jointventure project established in 1992 between the Myanmar Oil and Gas Enterprises and France-based Total E & P Myanmar Company. Myanmar Oil and Gas Enterprise is running under the Ministry of Energy. The project exports more than 500 million cubic feet of gas per day while supplying 200 million cubic feet of gas for domestic consumption every day.
Indonesia’s foreign exchange reserves rose to US$104.5 billion by the end of February, from US$102.1 billion at the end of January, the central bank said on its website yesterday. It gave no reason for the increase of more than US$2 billion during February.
Sri Lanka to get IMF loan to avert balance of payments woes
ri Lanka will receive a loan of US$1.5 billion from the International Monetary Fund (IMF) to boost foreign exchange reserves and avert a balance of payments problem, a government minister said yesterday. Sri Lanka’s finances are under scrutiny after ratings agency Fitch last week downgraded its sovereign rating by a notch, to “B+”, spurred by a ballooning fiscal deficit, rising foreign debt and sluggish growth prospects. The government was originally looking for a loan of US$2 billion from the global lender, said junior finance minister Lakshman Yapa Abeywardena. “But now we will get about US$1.5 billion in a number of disbursements,” Abeywardena told Reuters. “This is to boost foreign exchange reserves.” The loan conditions, such as revising taxes to increase the government revenue, have yet to be finalised, however, he added. Talks with the IMF are due to begin this month, but could drag on, as both
Myanmar drills new wells in offshore gas field
sides have to agree on the conditions tied to the assistance programme. “We continue to believe that negotiations will be slowed by the government’s unwillingness to accept unpopular IMF conditionalities,” Sasha Riser-Kositsky, Eurasia Group’s South Asia analyst, said in a note. There would be no flexibility on reducing the fiscal deficit, said a source at the global lender who has knowledge of Sri Lanka’s loan discussions, but who declined to be identified in the absence of authorisation to speak to the media. Sri Lanka’s reserves have fallen by a third, to US$6.3 billion by January, from their October 2014 peak, mainly because of outflows of US$1.3 billion in government bonds since January 2015. Last week, Finance Minister Ravi Karunanayake said an IMF programme by which the government commits itself to taking steps to fix its finances would help lure back investors. “What we are trying to do is to get minimum cover from the IMF,” he said. “It is important for investor confidence.”
The IMF gave Sri Lanka a US$2.6billion bailout package in 2009, when it faced a balance-of-payments crisis soon after the end of a 26-year war. The IMF has long urged the government to cut the fiscal deficit, estimated to have shot up to 7.2 percent of GDP last year, as well as add tax payers and spruce up the tax system. Central bank Governor Arjuna Mahendran told Reuters last week an IMF loan could help drive down the cost of borrowing for the government to between 6 percent and 7 percent from 8.5 percent, as investors would interpret it as a vote of confidence in the US$79-billion economy. The island nation’s total outstanding debt rose 12 percent to 8.27 trillion rupees in the first nine months of 2015, while foreign debt increased around 5 percent to 3.27 trillion. The government has promised farmers tax cuts and subsidies, to help consolidate its position since taking office last year. Reuters
State-run Vissan Co, Vietnam’s leading foodstuff processor raised 906.84 billion dong (US$41 million) in an initial public offering on Monday for 14 percent of its shares, beating its own projection. Vissan sold all 11.33 million shares on offer at an average price of 80,053 dong (US$3.60) per share, compared with a starting price of 17,000 dong set by the firm, the Ho Chi Minh Stock Exchange said in a statement. It was not immediately clear when Vissan’s shares would debut in Vietnam, where IPOs and listing are separate processes.
Fuji Heavy to use production platform for Subaru Fuji Heavy Industries yesterday said it would develop Subaru auto models on a new, single platform to create stronger vehicles and streamline its production. The Japanese automaker said it would develop gasoline, hybrid, plug-in hybrid and electric vehicles using a common chassis under the new global platform, beginning with the next Impreza model to be released later this year. The company said it would create a common chassis for all of its models, from its Legacy sedan to its Forester SUV crossover, which will improve steering and suspension.
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March 8, 2016
International Pipeline outage almost halves northern Iraq oil exports Oil exports from northern Iraq fell by almost half to an average of 350,067 barrels per day (bpd) in February as a result of an on-going outage of the pipeline to Turkey, the Kurdistan region’s Ministry of Natural Resources said yesterday. The pipeline, which carries crude from fields in the autonomous Kurdistan region and Kirkuk to the Mediterranean port of Ceyhan has been idle since Feb. 17 due to “circumstances” inside Turkey, the ministry said. The nearly three-week outage is a major blow to Kurdistan, which depends on revenue from its exports through the pipeline.
Euro zone Sentix index falls unexpectedly in March Sentiment in the euro zone deteriorated in March for the third month running, hitting the lowest level in more than a year, a survey showed yesterday, as investors worried about weaker growth prospects for the world economy. The Frankfurt-based Sentix research group’s index, tracking morale among investors and analysts in the euro zone, inched down to 5.5 from 6.0 in February. The reading was the lowest since January 2015 and came in below expectations. Analysts polled by Reuters had expected a rise to 8.0.
Ecopetrol reports 2015 losses of US$1.2 billion Colombian state-run oil concern Ecopetrol has reported losses of US$1.23 billion (1.12 billion euros) in 2015, driven largely by low crude prices on the international market. Ecopetrol said in a statement Sunday that as a result of the losses it would not be handing out dividends to its shareholders. The company’s profits for 2015 “were affected principally by the international price of crude and by the application of international accounting standards,” Ecopetrol said. These new standards meant that a “line by line” comparison cannot be made with profits and losses of previous years, the company said.
Bolivia, Russia ink deal on nuclear research lab Bolivia signed a US$300 million deal with Russia on Sunday to build a worldclass nuclear research lab in the South American nation, President Evo Morales (pictured) announced. “Now we are able to deliver major cooperative projects -- in this case with Russia as well as with China and Europe sometimes,” the president said at a ceremony signing documents for the deal. “How nice that some partners come here with investment and cooperation -- not just aggression and provocation,” Morales said in an apparent jab at the Unites States, which he often accuses of undermining efforts of his leftist government.
German factory orders fall less than expected in January Domestic demand fell 1.6 percent while foreign orders rose 1.0 percent, with orders from the euro zone up 7.5 percent Michael Nienaber
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erman industrial orders fell less than expected in January with a spike in orders from euro zone countries cushioning a drop in demand from domestic customers, data showed yesterday. The figures gave some relief after surveys had painted a gloomy outlook for manufacturing in Europe’s largest economy as exporters face trouble in major markets, such as an economic slowdown in China and recession in Russia and Brazil. “This could have been worse in light of the bad news and turbulence on stock markets at the beginning of the year,” said Dirk Schlotboeller, economist at Germany’s DIHK Chambers of Commerce. Orders for ‘Made in Germany’ goods were down 0.1 percent on the month, the Economy Ministry said. That compared with a Reuters consensus forecast for a decline of 0.3 percent. Domestic demand fell 1.6 percent while foreign orders rose 1.0 percent, with orders from the euro zone up 7.5 percent. The figure for December was revised up to a drop of only 0.2 percent from a previously reported fall of 0.7 percent. “Over the two months, the impulses are from abroad,” the ministry said, adding that strong foreign demand showed the German industrial sector’s competitiveness. “However, expectations in industry have become considerably overcast and signal only a modest economic upswing.”
KEY POINTS Industrial orders dip 0.1 pct, Forecast was -0.3 pct Euro zone bookings surge, domestic demand slows
Reuters
World’s food-import bill shrank to five-year low Lower food costs are benefiting large importers in the Middle East and Africa Isis Almeida
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he world’s food bill just fell US$9 billion from a previous estimate as a glut of oil and ships cut transportation costs, adding to an oversupply of everything from grains to sugar, according to the United Nations. Countries around the globe probably spent US$1.076 trillion importing food in 2015, a five-year low, the UN’s Food & Agriculture Organization estimated. That’s 0.8 percent less than the Rome-based agency had forecast in October and marks the first drop since 2009. The cost was 20 percent less than a record US$1.345 trillion in 2014 as bumper harvests boosted global
Caution among buyers of German goods around the world has been forcing some manufacturers to postpone investments, threatening to drag German growth below the government’s 1.7 percent forecast for this year. Schlotboeller ascribed the strong rise in orders from euro zone countries to the drop in oil prices, which had had the effect of a stimulus package. “The real disappointment is the further decline of domestic orders,” Schlotboeller added. In 2015, robust private consumption and higher state spending on infrastructure and refugees drove an economic expansion of 1.7 percent.
supplies, helping bring down costs, FAO data showed. Oil prices declined for a third year in 2015 as nations from Saudi Arabia to Iraq decided against curbing supply, adding to a glut from a U.S. boom in production of shale energy deposits. That cut shipping costs, with the Baltic Dry Index sliding to a record low in February. “Cereal and livestock bills, both in terms of a decline in prices and a fall in trade volumes, are again culpable for the lower cost of food imports,” said Adam Prakash, an FAO economist. “Freight costs also plummeted making unit costs of importing cheaper.”
A gauge of agricultural commodities finished 2015 at the lowest year-end level since 2006. Reduced energy prices also cut fertilizer costs.
Six years
Lower food costs are benefiting large importers in the Middle East and Africa region, said Cole Martin, a senior commodities analyst at BMI Research, a unit of Fitch Ratings Ltd. Nations from Egypt, the largest wheat buyer, to Ethiopia are gaining as they run large food deficits or have had poor harvests due to the El Nino weather pattern, he said. While lower prices can benefit consumers, the strength of the U.S. dollar may mean a “severe burden” on currency reserves for others, Prakash said. Because commodities are priced in dollars, consumers in some nations where the local currency depreciated may be paying more, said Hamish Smith, an economist at Capital Economics Ltd. “Low international food prices are beneficial so long as their currencies do not fall sufficiently to wipe out the gains of low prices,” Prakash said. A strong dollar “can prove onerous to many of the most vulnerable countries, which are net importers of necessities, notably of foodstuffs.” Bloomberg News
Business Daily | 15
March 8, 2016
Opinion Business
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Leading reports from Asia’s best business newspapers
Ever closer union or common market?
THE AGE
Joschka Fischer
Australian job advertisements in newspapers and on the internet slipped in February, a sign that firms were unsettled by turbulence in financial markets and a gloomy global outlook. A monthly survey by Australia and New Zealand Banking Group showed total job advertisements fell 1.2 per cent to 154,748 per week on average in February, from January when they increased by 0.9 per cent. Ads were still 8.2 per cent higher on February last year. Internet ads dropped by 1.3 per cent in February, while newspaper ads rose 6.9 per cent.
Germany’s foreign minister and vice chancellor from 1998 to 2005
JAKARTA GLOBE The Indonesia Stock Exchange (IDX) plans to speed up market flotations this year by letting companies avoid a laborious paper-based process by registering their initial public share offers online instead, its president said. “We are discussing how to ease this. We are talking to [the financial services authority] OJK to digitize the registration process,” Tito Sulistio told Reuters. Sulistio said by moving part of the IPO process online companies can cut at least two weeks off the 13 weeks it usually takes to get from registration to launching the offer.
INQUIRER.NET Big banks (in Philippines) remain adequately capitalized and buffered from possible losses, with their capital adequacy ratio (CAR) on solo basis improving to 15.55 percent as of the third quarter of last year, the Bangko Sentral ng Pilipinas (BSP) said. In a statement, the BSP said universal and commercial banks’ capital ratios grew on the back of “profitable operations and issuance of new shares as well as the infusion of foreign bank capital.” Universal and commercial banks’ CAR on solo basis as of end-September last year rose from 15.48 percent at as of the end of June.
THE PHNOM PENH POST Rubber producers said yesterday the government’s decision to amend the export tax scheme on natural rubber fell short of expectations and would do little to stem the losses of farmers as rubber prices hover near a six-year low. Prime Minister Hun Sen issued a sub-decree on March 4 to revise the sliding tax scale tax on exports of natural rubber, previously set at US$50 per tonne where the export price is below US$2,000 per tonne. Under the new scheme, rubber shipments will not be taxed when the export price is below US$1,000 per tonne.
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t stake in the United Kingdom’s upcoming referendum on whether to remain a member of the European Union is the nature of the EU itself. The UK wants a different kind of Europe than the one that the EU currently represents. Its preference is a Europe that essentially consists solely of a common market. Even though Britain has long been able to opt out of the euro and much else (and thus is not forced in any way to participate in the process of deepening Europe’s political union), this is the ideological essence of the controversy. It is a question that transcends the UK’s “Brexit” debate. The growing strength of eurosceptics forces in many EU member states has raised the same issue on the continent, where many believe that the goal of a political union might overburden member states’ citizens and should be abandoned. Like the British, many Continental Europeans are asking whether transnational regulation by Brussels-based institutions and a political union are actually necessary. Wouldn’t a loose association of sovereign nation-states, sharing the hard economic core of a continental common market – the British model – be enough? Why bother with all that complicated integration involving the Schengen Agreement, a monetary union, and EU regulations, which in the end don’t work properly and only weaken the member
states’ global competitiveness? Looking at European post-war history, it becomes clear that this debate has been with us almost from the very beginning. The UK’s focus in the 1950’s and 1960’s was still mainly on the Commonwealth. The European integration process – aimed at overcoming Franco-German enmity and reconciling West Germany’s industrial potential with European stability (and thus, under the US and NATO security umbrella, excluding the recurrence of war in Europe) – was marginal to its concerns. After the Treaty of Rome in 1957 established the European Economic Community (EEC), the European Free Trade Association was established under British leadership a few years later. EFTA’s aims were a straightforward customs union and a common market, and it was designed from the outset to compete with the EEC, particularly in northern Europe and among the neutral countries. But it never caught on. The reason EFTA failed to take hold is instructive: It was based only on economic interests and pursued no further idea. EFTA had no soul, and that absence rendered it unable to compete with the incipient EU. Of course, economic interests have been paramount in sustaining the EU’s progress; but the idea of uniting Europe clearly transcended mere economic unification. It was and still is about overcoming European fragmentation via an integration process beginning
The idea of uniting Europe clearly transcended mere economic unification
with the economy and ending in political integration. Winston Churchill knew that, as can be seen in his 1946 Zurich speech – well worth reading today – in which he called for a “United States of Europe.” The EU is Europe’s main historical project. It has attempted, so far successfully, to learn from centuries of seemingly unending wars, by building a new pan-European system of states that is no longer based on a balance
of power alone, but also on overcoming national rivalries by institutionalizing common interests and shared values. The EU has achieved great things, and this should not be forgotten amid its current crises. The British error is to assume that one goal, a common market for Europe, can be had without the other, greater political integration, over the long term. In order to function, a common market requires a substantial delegation of sovereignty and extensive European regulation. In fact, the EU can ignore neither the nation-states nor the common institutions and policies without putting itself at risk. Both are its cornerstones. The EU was characterized by this duality from the very beginning: a confederation with strong integrated federal elements and institutions. Whoever questions this duality calls the entire system into question, all the more so given that the EU’s current status quo is anything but conducive to enduring stability. The EU will achieve that only when it has taken the critical step toward a genuine federation. This is why the majority of EU member states must never abandon the aim of an “ever closer union.” The UK doesn’t share this aim, and it doesn’t have to share it. But the future of the EU hinges on pursuing it. Everything else is a question of pragmatic compromises, for which a good deal of leeway exists. Project Syndicate
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March 8, 2016
Closing Beijing angered by planned U.S. export restrictions on ZTE
Li Ka-shing’s Eversholt signs US$693 million deal for new trains
China’s Foreign Ministry expressed anger yesterday at the U.S. Commerce Department’s plans to place export restrictions on Chinese telecoms equipment-maker ZTE Corp for allegedly violating U.S. export controls on Iran. The restrictions will take effect today, Reuters has learned, and apply to any company worldwide that wants to ship American-made products to ZTE Corp in China. Those companies are not the target of the export curbs on ZTE. “China is opposed to the U.S. citing domestic laws to place sanctions on Chinese enterprises,” Chinese Foreign Ministry spokesman Hong Lei told a daily news briefing.
Cheung Kong Infrastructure Holdings Ltd’s Eversholt Rail Group has inked a deal worth 490 million pounds (US$693 million) to manufacture, procure and lease new trains, its second major deal since Hong Kong billionaire Li Ka-shing acquired the British rail lessor last April. The deal would involve an order for 281 vehicles with Spain’s CAF. The trains will be leased to Deutsche Bahn Arriva Rail North and will enter service by December 2019 on routes in the north of England. Li Ka-shing’s flagship CK Hutchison Holdings Ltd., along with CKI, formed UK Rail Group to acquire Eversholt for an equity value of about 1.1 billion pounds last April.
China CO2 emissions may have peaked in 2014 In response to the report, China’s senior climate change envoy said yesterday the country’s emissions were still growing David Stanway
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hina’s carbon emissions, by far the world’s highest, may have peaked in 2014, according to a study published yesterday, potentially putting Beijing under pressure to toughen climate pledges perceived as too lax.
China has promised to bring greenhouse gas emissions to a peak by “around 2030” as part of its commitments to a global pact to combat global warming, signed in Paris last year. Any evidence that the country has peaked much earlier could
Taiwan exports suffer double-digit fall again
lead to concerns that its existing targets are too easy. The study, however, by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics, said the 2030 peak was a very conservative estimate. “It is quite possible that emissions will fall modestly from now on, implying that 2014 was the peak,” said the report, noting that recent data already showed that China’s emissions fell in 2015. “If emissions do grow above 2014 levels ... that growth trajectory is likely to be relatively flat, and a peak would still be highly likely by 2025,” the authors said. Asked about the report during a press briefing yesterday, Xie Zhenhua, the climate change envoy, said the target of “around
2030” was based on national conditions, with China still in the process of industrialisation and urbanisation. “You asked whether our emissions had peaked in 2014 - certainly not,” he said. “In fact, our carbon dioxide emissions are still increasing.” While total energy consumption rose 0.9 percent to 4.3 billion tonnes of standard coal in 2015, coal consumption fell 2.2 percent on a year earlier, according to Reuters calculations based on official data. Chinese carbon experts said any fall in emissions in 2015 would be mainly due to a slowdown in China’s economy, and it was unlikely that emissions had peaked so early. “I would like to believe that the peak will be around 2030, and if stricter policies
Mainland’s inflation to rise further
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for carbon reduction and some reforms in the way local leaders are evaluated on GDP growth, the peak will come in 2025,” said Xi Fengming, a carbon researcher with the China Academy of Sciences. “But I do not think China has reached peak emissions in 2014,” he said. The government said on Saturday that it would cap total energy consumption at 5 billion tonnes of standard coal by 2020, amounting to an increase of 16.3 percent from 2015. It also said that it would cut carbon intensity - or the amount of CO2 emissions per unit of economic growth - by 18 percent over the 20162020 period. The 2030 peak pledge was made in a joint declaration with the United States in late 2014. China also agreed it would make its best efforts to peak earlier. One of the main bones of contention during the Paris climate talks was a regular five-year “stocktaking” process that would compel countries to adjust their targets in light of new economic or technological circumstances, with China arguing that any such adjustments must be voluntary. U.S. climate change envoy, Todd Stern, said in Beijing last week that China could come under pressure to draw up tougher targets if it became clear that the existing goals were too easy. Reuters
MH370 flight relatives file suit in Beijing
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xports shrank for a 13th straight month in February on weak global demand, indicating recovery for Asia’s exporters is some way off and increasing pressure on the island’s central bank to cut interest rates again. The February export numbers, which were slightly better than forecast, came shortly after the government slashed its 2016 economic growth outlook to 1.47 percent, projected a quarterly shrinkage for January-March and warned exports this year will contract again. February exports fell 11.8 percent on year, the finance ministry said yesterday, compared with 13 percent in January. A Reuters poll forecast a 12.75 percent drop. But the outlook, already gloomy with projected 0.64 percent shrinkage in gross domestic product in the first quarter, is not brighter for coming months. Taiwan’s trade-dependent economy has been hurt by soft demand, particularly from its biggest trading partner China. The January-February trade figures tend to be distorted by the week-long Lunar New Year holiday. The festival began on February 8 this year.
nflation in China will likely rise in February over higher prices for food, housing and industrial products, a leading Chinese investment firm said yesterday. The consumer price index (CPI), a main gauge of inflation, is likely to grow by more than 2 percent year on year in February, accelerating from 1.8 percent in January, according to a research note from China International Capital Corp. (CICC). Food prices jumped around the Spring Festival, which fell in early February, and did not drop much after the holiday, keeping consumer inflation up in the next two or three months, the CICC explained. Housing prices also rose faster, especially in first-tier cities, driving inflation higher, it said. Industrial products such as steel and coal have seen prices rebound, which will significantly narrow the decline in the producer price index (PPI), a measure of wholesale inflation, for February, the CICC predicted. The official CPI and PPI figures are scheduled to be released on Thursday. The higher inflation will reduce real interest rates and help consumption demand recover, the CICC said.
elatives of a dozen Chinese passengers aboard missing flight MH370 filed suits against Malaysia Airlines, Boeing, Rolls Royce and others yesterday, a day before the second anniversary of its disappearance and a legal deadline to do so. Packed into a small office at the Beijing Rail Transportation Court, which has been designated to handle MH370 cases, they held manila folders with litigation papers in their hands. Several wiped away tears, turning to borrow tissues from neighbours, before depositing their documents with court officials. Gao Xianying, 65, who lost her daughter, son-in-law and three-year-old granddaughter on the flight, said: “Successfully filing the case is the next step in finding my family. We’re a step closer to demanding the truth from Malaysia Airlines; there’s more hope than before.” The Boeing 777 aircraft, with 239 people -- including 153 Chinese citizens -- on board, vanished en route from Kuala Lumpur to Beijing on March 8, 2014, and authorities said it went down in the southern Indian Ocean. Under international agreements, families have two years to sue over air accidents.
Reuters
Xinhua
AFP