Suncity claims illegal political donations “a tall tale”. Philippines election Page 4
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Wednesday, March 16 2016 Year IV Nr. 1002 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Joanne Kuai
Oil on troubled waters Commodities Angola has tied up more of its output. In pre-financed deals to bridge a drop in income. Resulting from the 70 pct plunge in oil prices over the past 18 months. Debts to China have climbed to an estimated US$25 bln. Pages 8-9
Bribes sully U.N. Corruption A U.N. deputy from the Dominican Republic has been suspended. Francis Lorenzo, is expected to appear in court for a plea hearing. One of six individuals charged for the U.N. bribery scandal, the case also involves Macau Businessman Ng Lap Seng. Page 7
Five-Year Plan Diversification, e-commerce and more. These are the keys to the kingdom of the much vaunted World Centre of Tourism & Leisure Macau aspires to be, says Professor Hu Angang. During a special seminar about China’s 13th Five-Year Plan. Page 2
Alamy
Gaming
Imperial Pacific posts losses but anticipates Saipan salvation. Page 5
China
Anbang moving into global real estate and finance. Page 16
BOC Hong Kong Holdings
+1.62%
Hengan International
+1.08%
Tingyi Cayman Islands
+0.81%
MTR Corp Ltd
+0.80%
Galaxy Entertainment
+0.75%
Sino Land Co Ltd
+0.51%
Want Want China Hold-
-4.40%
China Merchants Holdings
-2.91%
CNOOC Ltd
-2.86%
Belle International Hold-
-1.92%
China Petroleum & Chem-
-1.84%
CITIC Ltd
-1.67%
Legal
Birmingham International and Carson Yeung reach agreement. Page 6
Seeking listing Club Cubic operator Luk Hing Entertainment Group Holdings Ltd. has applied for listing on the Growth Enterprise Market (GEM) of the Hong Kong Stock Exchange. I SSN 2226-8294
HKEX Page 3
Bloomberg / Google
HK HSI March 15, 2016 20,288.77 -146.57 (0.72%)
Society
2 Business Daily Wednesday, March 16 2016
Macau Society
world standards must be met under new Five-year Plan
In Brief
Professor Hu Angang: People at heart of 13th Five-year Plan Macau to acquire international standards and cultural diversification under Central Government’s new strategies, says Professor Hu Angang. Bami Lio bami.lio@macaubusinessdaily.com
Sights continue to be set on transforming Macau into a World Centre of Tourism & Leisure, Professor Hu Angang of Tsinghua University’s Sch o o l o f P u b l i c P o l i c y a n d Management explained in a special topic seminar yesterday. Prof. Hu reinforced the view that economic growth on the Mainland and the over 100 million visitors the Mainland exports worldwide could benefit the SAR more if the city pushes itself to develop its tourism industry to international quality standards. In the lecture, titled ‘Strategic planning and the road to sustainable development in Macau’ Hu also focused on the city’s industrial structure, explaining that the diversification of Macau’s industries could benefit from a move towards trade liberalisation and further exploitation of Free Trade Zones. E-commerce should be a further avenue in strengthening ties with the Mainland, said the professor,
pointing out that 238 countries were involved in cross-regional trading last year, with a specific mention of the ‘2015 Singles’ Day’ shopping event which hit a record high in transaction amounts last year. In addition, Professor Hu mentioned cultural industries as a necessary upcoming focal point in the interests of economic diversification. Hu stated that the people should be at the heart of the government’s development and strategies and said that to create, to build and to accumulate wealth are important factors in the lives of citizens of Macau and Hong Kong, especially those who wish to work and conduct trade on the Mainland.
Main topics
Seven main topics and their associated sub-topics are discussed in the 13th Five-year Plan; namely, maintaining stable economic growth; optimising the structure of industries; building a city with an international standard of tourism quality; improving citizens’ livelihoods; improving educational standards; building green environmental protections; and improving the structure of government. Sub-topics include prioritising local residents for employment opportunities; investing in new and developing industries; diversifing and internationalising tourism products; improving the medical system; strengthening manpower through continued education; and enhancing
Investment
China Investment Policy Seminar
the consultation mechanism of the government. Main constructions in the coming five years include the Macau Light Rail Transit, the 4th connection (bridge) between the Macau Peninsula and Taipa, a construction to optimise the Macao Refuse Incineration Plant and construction of the new health service complex.
Consultation
The Macau Government received 564 opinions on 2,492 specific topics during the consultation period concerning the Five-year Plan – to take effect from 2016 to 2020, according to the Policy Research Centre of the Macau SAR. The opinions were collected over a three-month period. Primary topics included enhancing long-term plans for the city’s societal and economic development; improving citizens’ livelihood’ traffic facilities and road conditions; maintaining economic diversification and development; and continuing in line with the party’s ‘One Belt, One Road’ initiatives as well as following the plans set forth for the 13th Five-year Plan. Other topics included enhancing educational standards; enlarging the city’s tourism markets with international customers and products; increasing aid to small and medium enterprises (SMEs) and industries other than gambling; improving the efficiency of the government’s officials; and evaluating the effectiveness of green environmental protection efforts.
The 2016 China Investment Policy Seminar, co-hosted by the Ministry of Commerce of the People’s Republic of China and the Secretariat for Economy and Finance, will be held on March 17 at Macau Tower. Assistant to the Minister Liu Hai Quan and SAR Secretary for Economy and Finance Lionel Leong Vai Tac will present. The aim of this seminar is to introduce an update on Mainland China’s economic situation, macro development strategy, and utilisation of outsourcing policy in order to let Macau investors understand the change of investment environment in Mainland China. The seminar also focuses on ‘Strengthening Business and Trade Cooperation’, ‘Free Trade Trail Area and Development’, ‘CEPA Trade Agreement’ and ‘Financial Reform Direction in Mainland China’. Film
FILMART to foster exchange The 20th Hong Kong International Film & TV Market (FILMART) will be held in Hong Kong from 14 to 17 March. Macao Government Tourism Office (MGTO) and the Cultural Affairs Bureau (IC) have made their joint debut at FILMART by submitting 12 entities from Macau’s film and television industry to the event, helping explore business opportunities with worldwide industry professionals in the ‘Macau Pavilion’ jointly run by the two offices. MGTO invited media from Macau to inspect FILMART and visit the Macau Pavilion yesterday. MGTO Director Maria Helena de Senna Fernandes also joined Macau industry delegates.
IBS
Professor Hu Angang meets with Chief Executive Chui Sai On.
Hengqin
MOP8.6 mln-worth of consumer complaints in Hengqin by Macau residents Hengqin has received about 270 complaints, including 27 cases lodged by Macau consumers, totalling some MOP8.6 million, said Mr. Peng Jiu Ru, president of the Hengqin Association of Consumers, as reported by local broadcaster TDM Chinese Radio. Mr. Peng said 22 cases involved Hengqin properties bought by Macau residents last year, while the remainder related to tourism and F&B issues, he told reporters while attending an event for the International Day for Protecting Consumers’ Rights held by the Hengqin Association of Consumers and the Administration of Industry and Commerce yesterday in Hengqin. “In China, a property has to be over 70 per cent completed after getting approval for sales then it can be sold, but some Macau consumers don’t
understand the policy of buying pre-ordered properties in Hengqin,” said Mr. Peng. He urges Macau residents to first understand the differences in the law and regulations between Macau and Mainland China before purchasing properties in Mainland China. The inauguration ceremony of a Consumers Arbitration Centre was held along way. “It is free for consumers to lodge complaints to the Consumers Arbitration Centre and they need only submit their bank account numbers and relevant evidence. The Centre will then deal with the case,” he said. If less than MOP5,000 is involved in relation to a consumer complaint issue in Hengqin, the Consumers Arbitration Centre will resolve it. A.L.
Business Daily Wednesday, March 16 2016 3
Macau
Listing
Club Cubic operator mulls listing on GEM An application document has already been filed with the Growth Enterprise Market by Luk Hing Entertainment Group Holdings. Kam Leong kamleong@macaubusinessdaily.com
T
he operator of Club Cubic, Luk Hing Entertainment Group Holdings Ltd, has submitted an application proof to get a listing on the Growth Enterprise Market (GEM) of the Hong Kong Stock Exchange. The application proof, released on the GEM website on Monday, indicated that China Everbright Capital Ltd. is the company’s sole sponsor for the intended listing. However, the listing timetable, as well as share capital of the company, is redacted on the document. Club Cubic, opened in 2011, is located in the City of Dreams (COD) controlled by local gaming mogul
9.4 Million HKD Luk Hing net profit for the whole year of 2015
Lawrence Ho Yau Lung. The clubbing venue occupies a total gross floor area of 25,780 square feet cross two levels inside the Cotai casino-resort property. According to the application proof, Luk Hing generated HK$9.4 million (US$1.7 million) net profit for the whole year of 2015, up 7 per cent from HK8.8 million one year ago. Meanwhile, its revenues totalled HK$125.6 million, a year-on-year increase of 4.3 per cent from 2014’s HK$120.3 million. The company said in the document that 77 per cent of its revenues for last year were earned from the sales of beverages, food and tobacco products, at HK$96.7 million, while other sources of income derived mainly from sponsorship, entrance fees, events rental and cloakroom. GEM serves to bridge the gap for companies which are unqualified to obtain a listing on the main board of the Exchange due to unfulfilled profitability or track requirements, to seek fund-raising opportunities.
High reliance upon COD
In fact, Club Cubic is the intended listing company’s only business. It also admitted in the application proof that its high reliance upon Club Cubic and COD may bring risks to its operations. ‘The Operation Agreement with COD will last for a term until 31 March 2020. Upon expiry, COD may not opt to renew the Operation Agreement, or may impose harsher or unfavourable terms and our Group will have to negotiate the
Reserves
Foreign exchange reserves dip 1.4 pct in February The city’s foreign exchange reserves decreased slightly by 1.4 per cent to MOP153.2 billion (US$19.13 billion) as at the end of February, compared to MOP155.3 billion for the first month of the year, according to a preliminary estimate by the Monetary Authority of Macao (AMCM). On a year-on-year comparison, the foreign exchange reserves that the city had as at last month-end posted a jump of 14.4 per cent from MOP133.9 billion. In addition, the amount represented 12 times the currency in circulation, or 101.7 per cent of Pataca M2, for the period.
‘M2’ refers to that part of the money supply that includes physical coins and currency, as well as readily liquid assets such as on-demand bank deposits and money held in cheque accounts plus all time-related deposits, savings deposits, and non-institutional money market funds. Meanwhile, the trade-weighted effective exchange rate index for the local official currency rose by 0.71 points month-on-month, or 7.05 points year-on-year, to 103.67 in the month. The index is a gauge of the domestic currency’s exchange rates against the currencies of the city’s major partners. As a result, the increases in the index suggest the pataca had generally appreciated against the currencies of Macau’s major trading partners in February. K.L.
terms of renewal,’ the company said in the application document. ‘If it is not renewed or terminated in advance due to whatever reason, our Group may not be able to obtain alternative premises on comparable terms on a timely basis, if at all. In such event, our Group will need to close down the club, and our business may be disrupted,’ it noted.
Meanwhile, the listing seeker also alerted that the upcoming closure of its current show-in-residence, Taboo, on March 31 means the company would not receive any events rental income from COD afterwards. However, the operator claimed that it is planning to expand and diversify its businesses to reduce the high reliance. ‘We are in the process of preparing for the expansion of our Club Cubic and extending the club venue to a premise adjacent to the venue of Club Cubic. We expect to incur a capital expenditure of not less than HK$15 million for the expansion,’ it said, adding new clubs in the city are possible if new opportunities arise.
4 Business Daily Wednesday, March 16 2016
Macau Opinion
José I. Duarte Diversification blues The development of Hengqin Island is bound to be both an opportunity and a threat for Macau. The plan is clearly ambitious. Even if it is only partially fulfilled, it will move the centre of gravity of Zhuhai westwards and re-direct the physical and economic flows between the two cities. Whatever path our future development follows, by design or accident, is inevitably bound to theirs. In itself, that is not bad; it is the ‘natural’ way of things. Hengqin has become, de facto, an unavoidable factor in the Macau equation of development. What we get from it and how we get there, however, are not irrelevant matters. That only makes more glaring the unavailability of a clear understanding of the role Hengqin - and by extension Zhuhai - can play, or how we would like them to fit into the plans, objectives, and needs of the Macau community. Hengqin can also become the competitor that will progressively void Macau of most of its economic functions. But these are issues we seldom see openly discussed. The development of Macau is first of all constrained by its geographical limits. The two possible approaches to deal with such limitation are land reclamation, which seems to be reaching its limits, or land cessions, which the present development of Hengqin removed from the list of options. That sets more stringent bounds to our range of choices, without any obvious ways around them. Such limitation is compounded by the apparent helplessness of the local polity to generate a shared vision about the feasible, let alone desirable, future for this community, and to identify alternative paths to achieving the social and economic objectives implied by that vision. Without an operational blueprint on this side, and the necessary actions and tools to back it, Hengqin will become progressively everything Macau always wanted to be and never was able to make happen. Exhibitions and other big events; hotels across the full range of categories to cater to a varied customer base; luxury condos and residences for the common citizens; shopping and entertainment facilities; transportation networks and leisure amenities – you name it, they will have it. That diversification can be backed by a cheaper, more adaptable and renewable labour force, and more flexible land arrangements. What will Macau then become besides being the neighbourhood where one can gamble freely? Possibly a financial haven, until the evolution of Mainland capital markets makes it obsolete. Procrastination is not without cost. José I. Duarte is an economist and frequent contributor to this newspaper.
Philippines election
Suncity claims illegal political donations “a tall tale” Kam Leong kamleong@macaubusinessdaily.com
L
ocal junket operator Suncity Group denies it illegally made political donations to Philippines independent presidential candidate Grace Poe, saying the related allegation is untrue. On Monday, Philippines newspaper The Tribune Daily reported that it had obtained documents
indicating that Ms. Poe’s campaign had accepted 150 million pesos (MOP25.7 million/US$3.21 million) in political donations from a company called Sun City Holiday Resort controlled by the Macau junket group, alleging the two parties may have violated the country’s election laws. However, a spokesperson of Suncity told Business Daily yesterday that this was “a false report”, adding the company is following up on the issue
and that no additional comments could be made. The female presidential candidate has already denied to Philippine media on Monday that she had received campaign contributions from the junket promoter. Suncity currently owns at least six VIP clubs in the Philippines; namely, two in the City of Dreams Manila; three in Solaire, Manila; and another in Cagayan, according to its official website.
Grace Poe, Philippines independent presidential candidate
F&B
Future Bright posts net loss of HK$45.9 mln for 2015
Dimmed brightness The company hopes the city’s economy can recover so that it can improve its business for this year. Local restaurant operator and caterer Future Bright Holdings Ltd. plunged into the red for 2015, posting a net loss of HK$45.9 million (US$5.74 million) from a net profit of HK$168.8 million one year before, attributing the business downturn to the city’s
softened economy. In a filing with the Hong Kong Stock Exchange on Monday night, the company claimed that the annual loss was ‘the first time for many years, with its operating environment being competitive and tough during that year’. It explained the net loss as mainly due to the losses in its food souvenir business, its restaurants and food court in Zhuhai as well as the slowdown in its restaurants in the Special Administrative Region. In terms of turnover, the Hong Konglisted company actually generated a total of HK$824.2 million, which is only a slight decrease of 4 per cent compared to HK$858.9 million for 2014. In particular, its turnover deriving from its restaurants dropped by 11.2 per cent year-on-year to HK$663.3 million, accounting for 80.5 per cent of the total.
Nevertheless, its ‘unprofitable’ food souvenir business posted a jump of 210.1 per cent in turnover, amounting to HK$45.9 million compared to HK$14.8 million in 2014. In addition, the industrial catering, food wholesale and property investment business of the group all registered year-on-year growth turning over 21.4 per cent, 9.6 per cent and 26.8 per cent, and amounting to HK$48.3 million, HK$36.4 million and HK$30.3 million, respectively. ‘Management hopes that Macau will have a better economic condition in 2016 so as to lead to a better performance of the Group’s business,’ the company wrote in the filing. Despite the net loss, the restaurant operator proposed declaring a special final divided of HK1 cent for the year of 2015. K.L.
Business Daily Wednesday, March 16 2016 5
Macau
Gaming
Imperial Pacific posts losses but anticipates Saipan salvation The VIP gaming company is using its expertise from Macau to develop a VIP model in the Northern Mariana Islands. João Santos Filipe jsfilipe@macaubusinessdaily.com
I
mperial P a c i f i c International posted a net loss of HK$84.37 m i l l i o n ( US $ 1 0 . 87 million) during 2015, which is an improvement compared to the net loss of HK$1,558 million in the previous year. But the company is now prioritising its investment in Saipan,
where it is betting on VIP gaming. The revenue of the group increased 67 per cent to HK$931.92 million from HK$558.27 million, according to the filing sent by the company to the Hong Kong Stock Exchange on Monday night. At the same time, the cost of sales also increased but at a slower pace, amounting to 32.0 per cent, to HK$710.99 million
from HK$538.81 million. The future of the company is now oriented towards the Northern Mariana Islands, where it is slated to open a resort by the end of this year. This strategy is reinforced by the decision of the group to terminate its sharing of the profit stream from the gaming business with the Macau junket Hang Seng Sociedade Unipessoal Limitada.
Business
Lawrence Ho offloads tiles and engineering business Summit Ascent Holdings, controlled by Lawrence Ho, has decided to sell the tiling and engineering Easy Market Group for HK$200,000 (US$25,770), it was announced late on Monday night in a filing with the Hong Kong Stock Exchange. The deal involves the sale of the Easy Market Group, comprising the holding Easy Market and the subsidiary Arnhold Trading, to the investment holding Anagram Company Limited, which is incorporated in the British Virgin Islands. ‘Having regard to the increasingly challenging business environment in the construction sector and the lack of scale of the group’s [Summit Ascent] trading of tiles and engineering operations business, the board considers that it is in the interests of
Lawrence Ho
the company and its shareholders to focus the group’s time and resources on the development of the group’s gaming and hotel operations business’, the board explained about the decision. Summit Ascent is the company used by Lawrence Ho to invest in the Russian gaming industry and more specifically in Vladivostok (Russia) via the integrated and casino resort named Tigre de Cristal. During the fiscal year of 2015, and according to the company filing sent on Monday to the Hong Kong Stock Exchange, Easy Market Group recorded a net loss amounting to HK$2.08 million. ‘The transaction represents an opportunity to dispose of the loss-making business and be released from the indebtedness and other obligations associated with that business’, the company explained. However, and based on the company’s annual report of 2014, Summit Ascent is still involved in the trade of tiles and engineering operations products via another subsidiary based in Hong Kong named Worth Apex Limited. J.S.F.
Imperial Pacific also revealed that it has already invested HK$465 million in the design, consulting, engineering, construction material and labour related to the Saipan resort, which will be named Grand Mariana Casino and Hotel Resort. For this purpose, it opened an office in Macau, ‘where an abundance of human resources, gaming expertise and client base can be tapped’.
Temporary casino running
For the time being, however, Imperial Pacific has been authorised to run a temporary casino on the islands. This venue, according to the company, has generated VIP revenue of HK$622.98 million, while VIP rolling chip
volume stands at HK$24.20 billion. ‘Our VIP customers primarily consist of cash players and credit players. Geographically, most of our direct VIP patrons are from China, Hong Kong, Macau, Korea and Saipan’, the company explained. ‘Against an anaemic gaming environment around the world, we have been more than happy with the results of the Temporary Casino, particularly the VIP programme where significant monthly rolling numbers were achieved’. On the other hand, the company is downsizing its food processing and trading business, which operates mainly on the Mainland; in order to focus its attention on gaming it is willing to sell the whole business.
6 Business Daily Wednesday, March 16 2016
Macau Results
China Star Entertainment anticipates profit decline
The decrease was explained by a decline of 26 per cent to 32 per cent in terms of gross profit, which in 2014 stood at HK$650.14 million, China Star Entertainment Limited, which caused by the ‘recession in the gaming industry’. controls Hotel Lan Kwai Fong, issued a profit The other factor mentioned was share-based warning yesterday to the effect that the profit payment expenses of approximately HK$52 for the year 2015 will decrease 46 per cent to million, which were related to share options 52 per cent year-on-year. In 2014 the company granted in 2015. recorded a profit of HK$210.01 million, which means the profit in 2015 will range from between The results of China Star Entertainment are expected to be published on 29 March. HK$113.41 million and HK$100.80 million.
Carson Yeung Yeung Ka Si Business
Birmingham International and Carson Yeung reach agreement Birmingham International Holdings Limited (BIHL), Birmingham City and the former owner of the company Carson Yeung Yeung Ka Si reached an agreement on March 8 that can solve the ownership situation of the group. According to a filing sent by BIHL to the Hong Kong Stock Exchange, the company and its football team, Birmingham City, have agreed to
drop all their claims against Carson Yeung. The claims involved around £9 million (MOP101 million; US$12.8 million) for ‘various breaches of duties’ whilst acting as director of the company. As part of this settlement agree ment, the former Hong Kong hair dresser puts an end to his challenge to the appointment of Ernst & Yeung as company receivers.
Birmingham International has been under receivership since February 2015, because of internal disputes between different factions on the company’s board. However, the problems for the group started at the beginning of 2014 when former Chairman and Executive Director Carson Yeung Ka Si was convicted on five counts of money laundering and sentenced
to six years imprisonment. He is the holder of 27.89 per cent of the issued share capital of BIHL. In 2015, Birmingham International recorded a net loss of HK$4 million, an improvement on the net loss of HK$156 million posted in the previous year. The trading in shares of the company has been halted since December 2014 at the request of the company. J.S.F.
Corporate
Shun Tak Holdings named IR Manager of the Year in Conglomerates
Shun Tak Holdings Ltd. won the title of IR Manager of the Year in Conglomerates from the 6th Annual Edition of IAIR Awards. The Awards is organised by global financial magazine International Alternative Investment Review (IAIR) and focuses on the global economy and sustainability. Shun Tak perceives its commitment to excellence
in investor relations practices as well as its effort in maintaining responsible and responsive communications were recognised by the Awards. “In this dynamic and forward-thinking company, our IR team is blessed to have the remarkable opportunity to bring the most exciting news to the market and translate it into real tangible values for our investors,” said Catherine Szeto, Director of Investor Relations at Shun Tak.
Wynn Macau to hold SME Procurement Partnership Meeting
Wynn Resorts (Macau), S.A is teaming up with the Macao Chamber of Commerce to organise the ‘2016 First Quarter Wynn Local SME Procurement Partnership Meeting – Food & Beverage Session’ on April 14 from 2:00pm to 6:00pm in the Grand Ballroom of Wynn Macau. The meeting will focus on the major procurement category of ‘Food
& Beverages’. Participating companies will have 10 to 15 minutes to introduce their products and services. The operator said its partnership with the Chamber seeks to target the city’s small and micro enterprises, Made-in-Macau enterprises, and youth enterprises. Meanwhile, it will provide procurement items in 36 categories through this year-long programme.
Business Daily Wednesday, March 16 2016 7
Macau Corruption
Suspended U.N. diplomat to plead guilty in U.S. bribery case Prosecutors said bribes included more than US$500,000 from Macau businessman Ng Lap Seng.
A
suspended deputy United Nations ambassador from the Dominican Republic accused of participating in a scheme to bribe a former U.N. General Assembly president is expected to plead guilty on Wednesday, according to a court filing. Francis Lorenzo, 48, is scheduled to appear in Manhattan federal court for a plea hearing, according to
“Ambassador Lorenzo is remorseful and has chosen to accept full responsibility for his participation in his criminal conduct with his codefendants” Brian Bieber, Francis Lorenzo’s lawyer
a docket entry on Monday. A lawyer for Lorenzo confirmed he would plead guilty at the hearing to charges including conspiracy to commit bribery. “Ambassador Lorenzo is remorseful and has chosen to accept full responsibility for his participation in his criminal conduct with his co-defendants,” said Brian Bieber, Lorenzo’s lawyer. Lorenzo is one of six individuals charged in October in connection with a scheme to pay more than Us$1.3 million in bribes to John Ashe, a former U.N. ambassador from Antigua and Barbuda and who served as General Assembly president from 2013 to 2014.
“Engaged in conspiracies”
Prosecutors said those bribes included more than US$500,000 that Ng Lap Seng, a billionaire real estate developer in Macau, paid through intermediaries to Ashe to seek U.N. support of a U.N.-sponsored conference center in Macau. Authorities said the intermediaries included Lorenzo, who prosecutors said also received bribes from Ng, and Jeff Yin, Ng’s assistant. Ashe also received more
than US$800,000 from Chinese businessmen to support their interests within the United Nations and Antigua, prosecutors said. Those bribes were arranged through Sheri Yan, who was the Global Sustainability Foundation’s chief executive, and Heidi Hong Piao, the foundation’s finance director, prosecutors said. Both women pleaded guilty in January. Lorenzo, who was appointed deputy U.N. ambassador from the Dominican Republic in 2004, had previously sought to dismiss the charges against him on diplomatic immunity grounds. But U.S. District Judge Vernon Broderick in February rejected his motion, saying that as a naturalized U.S. citizen, Lorenzo was not entitled to immunity due to his diplomatic role. At Wednesday’s hearing, Lorenzo will plead guilty to charges including that he engaged in conspiracies to commit bribery and money laundering and filed false tax returns, Bieber said. A spokesman for Manhattan U.S. Attorney Preet Bharara confirmed the plea hearing was scheduled but declined further comment. Reuters
Francis Lorenzo, Suspended deputy United Nations ambassador from the Dominican Republic.
8 Business Daily Wednesday, March 16 2016
Greater China Commodities
70 per cent fall in oil prices in Growing Chinese debt leaves Angola with little spare oil. Libby George
A
ngola has found itself with a dwindling amount of crude to sell as more of its oil flows to China for debt repayment, leaving little revenue for anything from oil sector development to health care in one of Africa’s largest oil exporting nations. Following a trend also seen in Iraq, Kazakhstan, Russia and Venezuela, Angola has tied up more of its output in pre-financed deals to bridge a drop in income due to the 70 per cent fall in oil prices in the past 18 months. The price slump means the Western oil majors which manage the fields and platforms that help Angola export 1.8 million barrels per day are also taking more oil in return for their investment and services. Countries with oil often use it as collateral for loans, and during a previous oil price collapse, in 2008, the process helped to tide many over until better times. But this time most experts say the rout will continue until at least next year. As recently as five years ago, just over half of Angola’s 50-60 monthly cargoes went toward paying oil majors, with as few as four to five cargoes going to pay back prefinanced deals, leaving the country’s state oil company, Sonangol, with as many as two dozen to sell on the market or to term buyers with ongoing contracts. Through a series of conversations with at least six oil traders, Reuters found the number had been cut by more than half, to fewer than ten. Part of that was because more has been going to Western oil majors such as Total, Chevron and BP due to the price fall. No one foresaw the price collapse when the contracts were written, said Readul Islam, analyst with Rystad Energy.
“There were no clauses in the contract about what happens to the profit sharing when prices dropped so low.” But another drain on Angola’s oil was a fresh round of prefinancing from China that more than doubled the number of cargoes sailing east as repayment from February. The deal, struck with China’s state-run Sinochem Group in December, involved as many as six cargoes per month, on top of three to five already earmarked for fellow Chinese firm Unipec. The deals with China by the MPLA party that has ruled Angola for almost four decades financed infrastructure and also helped secure an important new outlet to make up for declining U.S. demand due to the shale revolution.
“There were no clauses in the contract about what happens to the profit sharing when prices dropped so low.” Readul Islam, Analyst with Rystad Energy
But its oil-backed debts are now estimated to have ballooned to US$25 billion. The December agreement was shrouded in secrecy; traders said it involved at least US$5 billion in advance financing to be repaid with oil, while some said it could have aimed at restructuring older debt. Roderick Bruce, principal energy analyst for West Africa with IHS, said in principle the lower the oil price, the more crude it costs to service debt. “That’s an increasing amount of crude that can’t be sold to directly fill government coffers,” Bruce said.
Little Free Oil
Existing contracts meant Angola had only one cargo to sell on the spot market
in February, traders said, crimping its ability to generate cash when needed and ability to set prices for its term buyers. A source close to Sonangol said it still had some flexibility to sell oil directly on the market. It could get other loans, or refinance
deals to limit the amount of crude paid to lenders, the source said, and had already dropped some contracts with term buyers who had not prefinanced them to keep back three to six cargoes each month. In March, it got two or three and in April six, but some of that may
Stocks
China’s stocks fall as commodity slump weighs on mining shares State steps up intervention in financial markets. Kyoungwha Kim
Chinese stocks fell, led by commodity producers, after energy prices declined and policy makers were seen planning a tax on foreign-exchange transactions.
The Shanghai Composite Index retreated 1.2 per cent. Gauges of energy and materials producers slid at least 1.6 per cent after crude extended Monday’s decline and copper fell. China’s central bank has drafted rules for a levy on foreign-exchange trading that would help curb currency speculation, according to people with knowledge of the matter. The offshore yuan
headed for its biggest twoday drop in a month. China is stepping up intervention in its financial markets after stocks extended last year’s US$5 trillion selloff and the yuan fell to a five-year low in February. The Shanghai Composite rose 6.4 per cent this month through Monday’s close amid suspected buying in some of the nation’s biggest companies by state-backed funds.
“The market’s pullback is following some strong rebound in recent days,” said Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong. “State funds may step in if losses widen further.” The Shanghai equity gauge traded at 2,825.71 at 1:35 p.m. local time yesterday. The Hang Seng China Enterprises Index retreated 1.1 per cent in Hong Kong, while the Hang Seng Index fell 0.9 per cent. Yanzhou Coal Mining Co. paced losses for energy-related shares in Shanghai. Jiangxi Copper Co. lost 4.3 percent, while Shandong Gold Mining Co. slumped 7 per cent.
Oil, Metals
West Texas Intermediate crude fell 0.7 per cent to US$36.93 a barrel, extending Monday’s 3.4 per cent slide. U.S. stockpiles probably expanded last week, keeping supplies at the most since 1930, analysts predicted ahead
“State funds may step in if losses widen further.” Castor Pang, Head of research at CorePacific Yamaichi Hong Kong
of data due today. Copper slid 0.4 per cent, while gold lost 0.5 per cent after sliding more than 1 per cent on both Monday and Tuesday. The yuan traded in Hong Kong fell 0.10 percent to 6.5006 a dollar, heading for its biggest two-day retreat in four weeks. The monetary authority has drafted rules for a socalled Tobin tax in an effort to curb currency speculation, according to people with knowledge of the matter. The levy isn’t designed to disrupt hedging or other genuine foreign-exchange transactions undertaken by companies, they said. The People’s Bank of China cut the yuan’s daily fixing by 0.26 percent, the most since Jan. 7 after a gauge of dollar strength rose 0.4 percent overnight. Poly Real Estate Group Co. fell 4.1 per cent to pace losses by developers. China’s central bank called officials from the nation’s biggest commercial lenders to a meeting in the southern city of Shenzhen last week to stress a close adherence to rules on mortgage lending, people familiar with the matter said. The meeting came as Shenzhen experiences the biggest boom in residential home prices in China, with prices rising 52 per cent in January from a year earlier. Bloomberg
Business Daily Wednesday, March 16 2016 9
Greater China In Brief
n 18 months
Energy
Key Points • Debts to China climb to an estimated $25 billion • Angola has less oil to sell to plug budget holes • Other nations which borrowed using crude also face problems
reflect delays in meeting commitments under continuing contracts which it will have to make up for later in the year. Traders and analysts said between Sonangol’s preexisting problems and the precipitous drop in oil prices, the situation looked difficult.
“They should be hearing alarm bells,” Islam said. The company did not respond to a request for official comment. Last month it said its net debt to foreign oil companies had risen 41 per cent year-on-year in 2015 to US$7.8 billion and it expected this year to be “very difficult”.
President Jose Eduardo dos Santos, who has ruled Angola for 36 years since shortly after independence from Portugal, asked China for a debt repayment freeze late last year, as the debt-to-gross domestic product ratio hit around 46 per cent. The finance ministry is negotiating a new loan with the World Bank, but spending is already 40 per cent lower than two years ago and cuts to rubbish collection and water sanitation have spread disease in a country six places from the bottom of the World Bank’s index of inequality. The government forecasts a budget deficit of around 5.5 per cent of gross domestic product in 2016, based on oil prices of US$45 per barrel; Brent crude this year has thus far peaked at US$41.48 and analysts say it could be subdued all year. Last week, ratings agency Moody’s placed the country’s credit rating under review, threatening a downgrade further into junk territory. Angola’s oil woes are not unique: Iraq has built up debts of over US$2 billion to oil majors after it said budget needs meant it could not hand over increasing volumes of crude; Venezuela has billions of dollars in oil-backed Chinese loans while Russia and Kazakhstan borrowed heavily from oil traders Vitol and Glencore. With a limited amount of other assets to leverage, there is little room for manoeuvre. “Probably, there is no way out of this dilemma for many countries,” one source familiar with the situation said, adding they would have to learn to live with less oil to sell. Reuters
China’s Areva-designed nuclear reactors to start up in 2017 Two Areva SA-designed nuclear reactors in Taishan will begin operating next year, about three years behind schedule. Construction of the No. 1 reactor is complete and testing has begun in preparation for commercial operations in the first half of next year. The No. 2 reactor is in the ”equipment installation” stage and is expected to enter commercial operations in the second half of 2017. The startup of the units, about 145 kilometers from Hong Kong, was delayed while Areva conducted tests on a reactor being built in France that had weaker-than-expected steel in part of the reactor vessel. Appliances
With US$10 billion funds, Midea goes shopping for M&A targets Midea Group Co., China’s biggest maker of home appliances, is looking for acquisition targets as part of its global expansion plan. The company is seeking deals that can help it improve its technology, brand and global distribution channels so it can become more competitive. The manufacturer has about 70 billion yuan (US$10.8 billion) in cash and notes receivable. Midea joined competitors including China’s Haier Group seeking technology by making overseas acquisitions. Midea had a 17.1 percent market share in 2015, Euromonitor International data show.
Real Estate
China’s divergent housing markets pose challenges, Minister says Widening gap between top cities and lower-tier regions. China’s top housing official has warned that the nation’s severely divergent housing markets are posing challenges to government regulations, after stimulus intended to boost sluggish real estate investment led to a home-buying frenzy in first-tier cities. The “substantial gap” between the nation’s top cities and lower-tier regions is widening, challenging the government’s regulation, Chen Zhenggao, head of the Ministry of Housing and Urban-Rural Development, said Tuesday at a press conference during annual legislative meetings in Beijing. While home sales nationwide have stabilized and started to rebound, the inventory issue is “still serious,” mainly in the third- and fourth-tier areas, Chen said. Residential home prices in top hubs including Beijing, Shanghai and Shenzhen have surged amid central bank monetary stimulus since November 2014 and an easing of housing curbs. New-home prices in the southern business hub Shenzhen jumped 52 per cent in January from a year earlier, while they surged 18 per
cent in Shanghai, in contrast to some smaller cities where continued to drop, according to latest official data. “The divergence is severe between first-tier cities and those in the third and fourth tiers, and it is worsening,” Chen said. “This brings challenges to our regulation, and remains a huge issue in front of us.” The ministry is making every effort to stabilize home prices in first-tier and some second-tier cities, which rose “too fast” after the Chinese Lunar New Year holiday last month, he said. Home inventory nationwide was 739 million square meters (7.96 billion square feet) at the end of February, up 15.7 per cent from a year earlier and widening from 718 million square meters at the end of 2015, Chen said. Chen on Tuesday reiterated the central government’s pledge to help
rural residents buy residences in urban areas as part of measures to trim the supply of unsold homes. China’s rural population migrating to urban areas for work has a “huge potential” to buy homes, Chen said, adding that local governments are implementing preferential policies to encourage migrant workers to purchase residential properties. Bloomberg
Key Points • Shenzhen home prices jumped 52 ppct in January y-o-y • Home prices rose “too fast” after Chinese Lunar New Year • Home inventory nationwide up 15.7 pct y-o-y in February
Space
China plans first commercial rocket-launch company China plans to set up a commercial rocket-launch company in view of the market’s potential, Xinhua news agency reported. China Sanjiang Space Group Co. is preparing to enter the commercial-rocket business with a launch slated for 2017, Xinhua reported yesterday, citing the company’s chief engineer Hu Shengyun. Some Internet companies have expressed interest in collaborating on commercial launches, Hu said. The Kuaizhou-11, translated as “fast vessel,” rocket is being developed by the Fourth Academy of China Aerospace Science & Industry Corp., a major missile supplier to the People’s Liberation Army, according to China Daily.
10 Business Daily Wednesday, March 16 2016
Greater China Manufacturing
Hedge funds look to outer space for new China economy gauge The index is calculated by comparing industrial sites, assigning values for visual changes over time that indicate activity such as visible inventory or new construction
Here’s the latest way to get a read on China’s economic pulse: view it from space. Jeff Kearns
S
an F r a n c i s c o based SpaceKnow Inc. has launched the China Satellite Manufacturing Index, or SMI, based on analysis of thousands of photos taken from commercial satellites. The index works like a purchasing managers index, one of the main gauges economists use to assess the health of manufacturing or
services. These are based on surveys of managers, who are asked if conditions are getting better or worse, and the result is a 0-100 scale where 50 separates expansion and contraction. SpaceKnow calculates the index with an algorithm that compares photos of more than 6,000 industrial sites across China and assigns values for visual changes over time that indicate activity, such as visible inventory or new construction. The index comes from 2.2 billion individual satellite observations over 500,000 square kilometers spanning 14 years. “What we have is an independent third look at the facilities in China using a completely different methodology,” Chief Executive
Officer Pavel Machalek says. “We don’t conduct a survey, and our index is completely objective and automated, over thousands of sites in China.” Machalek, who has never been to China, says he’s seeing the most intense interest from hedge fund and private equity investors, who want more granular data for specific facilities and to create their own custom models. Feeding that hunger for information is skepticism over official data. Compared with the official manufacturing PMI from China’s National Bureau of Statistics, the SMI is on the same downward trend. It rose to 48.2 in February, up from a four-year low the month before. Monthly
Key Points • SMI evaluates health of manufacturing services • Compares photos of more than 6,000 industrial sites • SMI on same downward trend as official manufacturing PMI estimates are updated each Wednesday, with a 10-day lag, so the first look at a month will come in its second week, and then weekly numbers are refined into a final monthly number. The official PMI fell to 49 in February, signalling conditions deteriorated for a record seven months, while a private factory PMI from
Caixin Media and Markit Economics was at 48, and has signalled deterioration for 12 months. The official PMI also includes other data such as new orders, inventories, employment and prices that purchasing managers pay and charge. Such numbers are based on varying methodologies and can’t be directly compared, and they confirm something even casual observers know: China factories are mired in a deflationary slowdown. The backdrop is a bigger move toward using new sources of data plus big data machine learning to identify trends. The World Bank sees satellite images as a way to help gauge economies in the least developed nations. It’s using Sri Lanka as a test case, working with Orbital Insight, a Palo Alto, California-based startup. Orbital has received funding from Bloomberg Beta, a venture-capital unit of Bloomberg LP. Baidu Inc., operator of China’s biggest search engine, has also begun publishing new economic indicators based on what kind of information people are looking for. And its researchers used location data gathered from its users’ mobile phones to pinpoint the country’s biggest ghost cities. Machalek says he’s working on rolling out the index to other countries too, such as India. That might help central bank Governor Raghuram Rajan, who has lamented publicly that indicators aren’t good enough. SpaceKnow is also building indexes to track infrastructure development and urban growth, starting with China and India. Bloomberg
Industry
Chinese coal miners strike over wages, layoffs Area governor says that the mining company owes employees no back pay. Thousands of miners in China’s coalrich north have gone on strike over months of unpaid wages and fears that government calls to restructure their state-owned employer will lead to mass layoffs. Video obtained by AFP Monday showed protesters marching through the streets of Shuangyashan city in Heilongjiang province, venting their frustration at Longmay Mining Holding Group, the biggest coal firm in northeast China. Pictures showed enormous crowds filling the streets. “I’m on my knees, my family can’t eat,” an elderly woman pleaded with a man who appeared to be a government official. “Tell me, how can we live?” she shouted, before collapsing and being rushed away by fellow protesters. The situation in Heilongjiang exemplifies the dilemma faced by Chinese authorities, who say they want to reform the world’s second-largest economy and at the same seek to avoid unrest. China’s state-owned enterprises
(SOEs) are plagued by overcapacity and many are unviable, but the government has been loathe to kill off such “zombie” companies, fearing unemployment could lead to instability. But it plans to lay off about 1.8 million workers in the steel and coal industries, a human resources and social security ministry official said last month. I n th e v i d e o f o o tag e f r o m Heilongjiang, dozens of police cars, lights flashing, lined the streets, and protesters complained of violence by authorities as tensions mounted. “Traffic in the centre of Shuangyashan city was halted,” a witness told AFP, adding “some people were hurt.” Pictures from the scene showed what appeared to be police tussling with protesters, with one woman apparently thrown to the ground. Striking miners held large banners demanding back pay. “Their main request is to get the delayed incomes from the past several months,” the witness said.
The miners’ anger spilled into street action after Heilongjiang’s governor Lu Hao said that the company owed employees no back pay. At the weekend the provincial government admitted that workers’ compensation was in “arrears” following “many years of accumulated problems”.
As a result, “not a few workers have encountered difficulties in their lives”, it said. Earlier this month Premier Li Keqiang again pledged to encourage “structural adjustments” in his opening speech to the annual session of China’s Communist-controlled parliament. AFP
Business Daily Wednesday, March 16 2016 11
Asia
Philippines
Chinese man in Manila given millions from Bangladesh heist‑lawmaker Over 780,000 banknotes delivered over several days. Karen Lema
M
ore than US$30 mill i o n o f th e m o n e y hackers stole from the Bangladesh central bank’s account at the New York Fed was handed over in cash to an ethnic Chinese man in Manila, a Philippines senator looking into the suspected laundering scheme said. The cash deliveries over several days from a foreign exchange broker were made up of 600 million pesos (US$12.87 million) and around US$18 million, which altogether would have meant a haul of at least 780,000 banknotes. “Obviously this is not one bang, it was done in instalments,” Teofisto Guingona, head of the Philippine Senate’s anti-corruption committee, told Reuters ahead of a panel hearing on the case that is due to open later on Tuesday. The details he gave shine a partial light on the money trail after last
month’s cyber-heist of Bangladesh Bank’s account at the Federal Reserve Bank of New York, which netted hackers more than US$80 million. The hackers tried to withdraw about US$951 million from the account but the other transactions were blocked after a typo in one of the instructions raised red flags. Bangladesh Bank suspects the money that was transferred out was sent to the Philippines in four tranches and, once there, was diverted to casinos. It has said it is working with the anti-money laundering authorities in the Philippines to recover the funds. Bangladesh Bank officials say the money may have ended up in Hong Kong, but have not given any details. The Philippines’ Rizal Commercial Banking Corp (RCBC) said last week it was investigating an US$81 million deposit at one of its branches. Guingona said the transfers into RCBC were consolidated into one account and some of the money was converted to pesos.
CCTV cameras at the branch were not operating when the money was withdrawn, he said, but investigations have shown that it then went via a foreign exchange broker called Philrem Service Corp to the Chinese man and two casinos. It was not immediately clear if the man was of mainland Chinese or Taiwanese nationality, Guingona said. The senator said US$29 million ended up in an account of Solaire, a casino resort owned and operated by Bloombery Resorts Corp. Bloombery
“The paper trail ends there. That is the problem. Right now we are at a dead end.” Teofisto Guingona, Head of the Philippine Senate’s anti-corruption committee
is controlled by Enrique Razon, the Philippines’ fifth-richest man in 2015, according to Forbes. Senator Guingona said a further US$21 million went to an account of Eastern Hawaii Leisure Co., a gaming firm in northern Philippines. Reuters tried several phone numbers to seek comment from Eastern Hawaii officials but was unable to reach any. State prosecutors said a complaint has been lodged by the Anti-Money Laundering Council (AMLC) against the manager of the RCBC branch and the holders of the dollar accounts in her bank into which the money was originally deposited. Guingona said that because casinos are not covered by the country’s anti-money laundering laws it was not clear if the stolen funds could be recovered. “The paper trail ends there. That is the problem,” he said. “Right now we are at a dead end.” Reuters
Japan
Foxconn reportedly delaying Sharp deal for clarity on quarterly result Foxconn Technology Group is delaying finalization of its deal for Sharp Corp. to get a clear understanding of the Japanese company’s performance in the current quarter, increasing the chances an agreement won’t be reached this month, according to people familiar with the matter. Foxconn, which agreed to pay more than 600 billion yen (US$5.3 billion) for control of Sharp, has asked the Osaka-based company and its auditor for the latest financial results, said the people, who wouldn’t be identified because the matter is private. Sharp had forecast an operating profit of 10 billion yen for the fiscal year that ends this month, though analysts estimated the company will have an operating loss of about 24 billion yen. Sharp’s board last month
voted to accept Foxconn’s offer over a competing bid from Innovation Network Corp. of Japan, a government-backed investment fund that planned to pay about 300 billion yen. Just hours after the board decision, Foxconn said it would postpone finalizing the agreement until it could work through material new information it had received from Sharp. That information included about 300 billion yen in potential liabilities for restructurings and layoffs, people familiar with the matter said. Foxconn is negotiating with Sharp’s banks to mitigate the costs of those liabilities. Under certain circumstances, Foxconn may seek to reduce the 100 billion yen it had planned to pay Mizuho Financial Group and Mitsubishi UFJ Financial Group for preferred stock
they hold in Sharp, according to a different person familiar with the matter. “Sharp and Foxconn have not set a signing date. Both companies are working hard to reach a satisfactory agreement as soon as practically possible,” said Toyodo Uemura, a spokesman for Sharp. The company’s cash totalled 208.5 billion yen at the end of December, according to data compiled by Bloomberg. Sharp faces the expiration of 510 billion yen in credit lines and loans on March 31. The company’s banks have pushed for a bailout agreement before those loans are renewed, people familiar with the matter have said. Sharp shares fell 1.9 percent today in Tokyo trading and have climbed 22 per cent this year. Bloomberg
Sharp headquarters in Osaka prefecture
Takaaki Hamai / Yomiuri / The Yomiuri Shimbun
12 Business Daily Wednesday, March 16 2016
Asia Japan
Bank of Japan scrambles to find positives in negative rates Sources said the central bank is set to cut its growth and price forecasts again at a quarterly review in April. Leika Kihara
B
ank of Japan (BOJ) officials have been scurrying to commercial banks to explain and apologise for its surprise adoption of negative interest rates in January, while Prime Minister Shinzo Abe has distanced himself from a decision that is proving unpopular with the public. Some officials close to the premier say it could cause a rift in his once close relationship with BOJ Governor Haruhiko Kuroda, whose radical stimulus measures have so far failed to lift Japan clear of two decades of deflation and stagnation. A government press relations official said there was nothing to add beyond remarks made publicly by Chief Cabinet Secretary Yoshihide Suga that no such rift exists. A BOJ spokesman declined to comment. With the economy shrinking again and prices flat, Abe has already announced he will set up a panel to consider fresh budget spending to provide the stimulus that monetary policy has struggled to achieve. The controversy over the negative rates move, which unlike his previous eye-catching policy steps was not welcomed by Japan’s stock market, comes even as Kuroda is on the verge of gaining greater control of the bank’s nine-member board. Two sceptics of his stimulus programme are stepping down in the coming months. The diminishing returns from his preferred modus operandi of market-shocking measures will leave him little option but to revert to the drip-feed easing he derided in his predecessor Masaaki Shirakawa if inflation fails to pick up, some analysts say. “Given the confusion caused by the January move, I don’t think the BOJ will be able to cut rates again for the time being,” said Hideo Kumano, a
Bank of Japan Headquarters
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former BOJ official who is now chief economist at Dai-ichi Life Research Institute. “The BOJ may instead expand asset purchases in small instalments. That would be returning to the incremental approach of easing Kuroda dismissed in the past as ineffective.”
Tabloid warnings
Mandated by Abe to transform the risk-shy BOJ, Kuroda delighted markets and silenced sceptics within the bank by deploying a massive money-printing programme, dubbed “quantitative and qualitative easing” (QQE), in April 2013. The Tokyo stock market soared and the yen tumbled, giving exporters a boost, and Japanese growth and inflation registered a pulse. He struck again in October 2014 with a big expansion of QQE, though the market boost was smaller, price rises were already moderating and the economy was taking a step back for every step forward. But the late-January rates decision failed to reverse a rise in risk-aversion that was hitting stocks and forcing up the yen, traditionally a safe haven in times of market stress. Bank shares fell sharply. Like Shirakawa, who faced frequent grilling by lawmakers for doing too little too late to beat deflation, Kuroda is now summoned to parliament almost daily. Opposition lawmakers
Key Points • Negative interest rate move unpopular, critics say confusing • PM Abe distanced himself from the policy in parliament • BOJ branch officials apologising to banks for confusion • Critics say it damaged BOJ credibility, cuts policy options
brand negative rates a policy failure that confused, rather than calmed, jittery financial markets. Tabloids warned people to defend their deposits from the risk of a bank run, while talk shows ran features on the threat to family savings. Abe, who used to praise Kuroda’s BOJ for taking bold steps to eradicate deflation, distanced himself from the policy, telling parliament on March 7 that the decision was “of the bank’s own making”. Masahiko Shibayama, an adviser to Abe, said there had been “quite a bit of confusion” in markets. “I hope the BOJ calmly analyses the impact negative interest rates have had, which should feed into their decision about the next steps to take,” he told Reuters this month, signalling the administration’s distaste for further cuts. Sources told Reuters the BOJ was set to discuss exempting some funds from the negative rates, after the securities industry warned that investment money would be driven into bank deposits, which would not help Abe’s hopes of getting cash put to more productive use to boost the economy.
Apologies
Except for an elite handful, even BOJ officials were left in the dark about the January decision. Many officials are now being kept busy defending the policy to lawmakers and private banks furious that Kuroda deployed the “shock and awe” tactic just days after denying such a move was a possibility. Top BOJ executives are visiting the big banks to brief them on negative rates, a reversal of the normal course of events, which would usually see private bankers visiting BOJ headquarters, say officials with direct knowledge of the matter. Outside of Tokyo, BOJ branch managers are holding meetings with
regional banks to calm executives angered by the impact that negative rates are having on their already slim lending margins. “The first thing we do is to apologise for the confusion,” said one BOJ branch manager. “The scene isn’t nice.” Banks, brokers and officials say some financial institutions are having to manually enter orders as their computer systems can’t yet handle negative-rate transactions. While many BOJ officials are wary of expanding monetary stimulus again soon, their hands may be forced as soft domestic consumption and global demand threaten to derail a fragile economic recovery. The BOJ is set to cut its growth and price forecasts again at a quarterly review in April, sources have told Reuters, which would heighten calls for more stimulus. Kuroda has said that negative rates combined with QQE give the BOJ more powerful weaponry, but the likelihood is that he will be unable to deliver much of a blast from either barrel. January’s action has queered the pitch for further rate cuts, and his scope for stimulating the economy by acting in the bond markets - the main mechanism for QQE - is limited, analysts say, because the central bank is already gobbling up a quarter of the entire Japanese government bond (JGB) supply. “QQE was intended to deliver all available steps in a single blow, which means the BOJ really doesn’t have many tools left in the first place,” said Izuru Kato, chief economist at Totan Research and a long-time BOJ watcher. “The BOJ will probably keep saying that there’s plenty of room to ease more,” said one source familiar with the bank’s thinking. “But there are clearly limits to what monetary policy alone can do.” Reuters
Lusa
Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk João Santos Filipe; Michael Armstrong; Óscar Guijarro; Kam Leong; Joanne Kuai; Bami Lio; Annie Lao; Kelsey Wilhelm Group Senior Analyst José I. Duarte Design Francisco Cordeiro Web & IT Janne Louhikari Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani 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. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily. com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com Online www.macaubusinessdaily.com
Business Daily Wednesday, March 16 2016 13
Asia Singapore
App Annie Bets on Southeast Asia, India to Capture Phone Surge Yoolim Lee
A
Singaporean shophouse may seem an unlikely symbol of Asia’s mobile boom. Yet one muggy evening in March, about a hundred people packed App Annie Ltd.’s new and larger offices to mark its plan to capture data on millions of new smartphone users. The startup will triple staffing at its office in Singapore to 25 people this year as it targets new customers in India and Southeast Asia for the data it compiles on apps, how often they are used and the revenue generated. That’s being bankrolled by a recent US$63 million funding, which also helped pay for the soiree attended by executives from the industry’s biggest names: Google Inc., Sequoia Capital and Zalora among them. App Annie is going where the demand is. Spending on mobile apps in Asia is expected to surge 24 percent to US$28.3 billion this year -double that of the Americas -- as rising incomes spur smartphone use in markets
such as Indonesia. With more than 150 workers in China, where the company got its start before relocating to San Francisco, the Singapore expansion will help it measure the users around the region who’re bypassing earlier technologies. “Devices are getting cheaper and many consumers are experiencing their first Internet experience through an app in smartphone,” said Bertrand Schmitt, the company’s bespectacled 39-year-old founder. “Asia Pacific is already big and it keeps getting bigger. For us, that makes the region very exciting as a market. Revenue and downloads, growth are expected to be big.” App Annie expects China to overtake the U.S. this year to become the largest single app market with an estimated US$11.8 billion in revenue. China is already the world’s biggest smartphone market while India has passed the U.S. for second place. The surging number of mobile devices and people going online through apps for the first time are fuelling Asia’s mobile software arena, said Avinash Sundaram,
a research manager for enterprise mobility at IDC in Singapore. “Asia is a clean slate and there are no legacy systems people have to worry about,” he said. “So they have the freedom to create new business models, which is helping to drive this app economy in Asia.” He cited Tencent Holdings Ltd.’s paymentsto-voice messaging service WeChat as an example.
App Annie -- derived from App Nanny, to imply it takes care of all things app -- is mostly unknown outside of tech circles yet counts the biggest names in the industry among its customers. It competes with Yahoo Inc.’s Flurry and Apptopia, making money by collating data from different sources and then signing up clients for subscriptions of US$10,000 to
more than US$1 million a year. Game developers to sharing-economy players rely on its data and analytics to keep track of their businesses as well as their competitors’. Google uses App Annie’s services, as does Chinese search rival Baidu Inc. while other customers include Samsung Electronics Co., LinkedIn Corp. and Amazon.com. Inc. Bloomberg
14 Business Daily Wednesday, March 16 2016
International In Brief
Italy
Italy recovery from slump seen continuing slowly but surely Renewed slump avoidable says Bloomberg survey. Lorenzo Totaro and Andre Tartar
Italy
Campari to acquire Grand Marnier Italy’s Campari, the world’s sixth largest spirits company, said on Tuesday it would launch a friendly takeover bid for Grand Marnier valuing the French liqueur maker at 684 million euros (US$759 million). Campari said it would offer to buy shares in Grand Marnier in cash for 8,050 euros each, a 60 per cent premium to the stock value, having agreed to buy shares representing 17.2 per cent of the company from controlling family shareholders. Campari, best known for its Spritz cocktail containing the orange aperitif Aperol, has grown through a slew of acquisitions since 1995 and it hopes the French brand will help it cash in on a classic cocktail renaissance, especially in the United States. Ukraine
Passed bill could open visafree travel to EU countries
I
taly’s economy will keep recovering from recession slowly but surely and avoid a renewed slump this year and next, a Bloomberg survey of analysts showed. The euro region’s third-biggest economy will extend the expansion that started last year, said 19 of 25 respondents in the poll published Tuesday. Still, the pace of growth in 2016 and 2017 will be slower than previously anticipated, according to the median forecast of economists, strategists and portfolio managers. The recovery “will consolidate but at a slow process, with Italy under-performing both Spain and Portugal,” Alan McQuaid, chief economist at Merrion Capital in Dublin, said in his survey response. “Lack of real economic and structural reform will hamper the recovery, with much depending on whether Prime Minister Matteo Renzi manages to inject some meaningful fiscal stimulus into the economy.” Gross domestic product is seen increasing 1.1 per cent in 2016 and 1.2 percent next year, the survey showed. That’s down from 1.2 per cent and 1.4 per cent respectively in a poll last month. The economy grew last year at a slower pace than it did after the previous slump in 2009 under then-Premier Silvio Berlusconi. In January industrial production
increased more than twice the economists’ forecast, signalling that the recovery from the longest recession since World War II may continue. Output rose 1.9 per cent from December, marking the biggest monthly increase since August 2011, national statistics bureau Istat said. On the same day as the report, employers lobby Confindustria warned that production might have fallen again in February, recording an estimated 1 per cent drop.
‘Near Term’
“We do not expect any recession in the near term,” said Thomas Gitzel, chief economist at Liechtenstein’s VP Bank AG. Recent data and leading indicators “signal a solid development of GDP growth rates.” The Bloomberg survey was conducted from March 4-11. Italian executives have grown pessimistic about the economic outlook. Business confidence fell last month amid concerns GDP may fail to pick up after rising last year at a progressively slower pace amid weakness in global demand. “Italy is, and has always been, a play on the global cycle, given the relative importance of its export sector,” Gianluca Sanna, senior economist at Banca Monte dei Paschi di Siena SpA in Milan, said last month as part of a related Bloomberg survey. “Wherever the global economy goes, Italy will follow.” The country’s unemployment rate was unchanged in the fourth quarter from the previous three months at 11.5 per cent, the statistics bureau said March 10. That compares with
a high of 12.8 per cent at the start of 2014, but it is still almost twice the rate it was in mid-2007, when the country entered the previous recession. In January, Italy’s public debt rose to 2.19 trillion euros (US$2.43 trillion), the country’s central bank said on Tuesday. Lower than expected growth and weak price dynamic would make it difficult for Renzi and his government to start reducing the ratio of debt to GDP this year, a target he and his Finance Minister Pier Carlo Padoan agreed on with the European Union. In 2015 the debt ratio increased to 132.6 per cent, remaining the euro region’s second-biggest after Greece. Bloomberg
“Lack of real economic and structural reform will hamper the recovery, with much depending on whether Prime Minister Matteo Renzi manages to inject some meaningful fiscal stimulus into the economy.” Alan McQuaid Chief economist at Merrion Capital
Ukraine’s parliament on Tuesday approved a vital anti-corruption bill that Kiev hopes will open the way for visa-free travel to EU countries this year. The legislation establishes public oversight over the assets of high-ranking officials and their relatives. They now have to file electronic declarations of their income and holdings and face criminal liability for any inaccurate or falsified information. The data will be available for public scrutiny online. Ukrainian President Petro Poroshenko on Saturday vetoed an earlier version of the bill that pushed back the asset declarations until 2017. Ukraine’s 2014 pro-EU revolution was driven in part by widespread discontent over the corruption that enriched senior officials of a succession of previous governments. Russia
Carmaker Avtovaz hires new CEO Renault executive Nicolas Maure, who heads Romanian carmaker Dacia, will take over as CEO of struggling Russian automobile giant Avtovaz next month, the owners said in a statement Tuesday. Frenchman Maure will take over on April 4, after the departure of outgoing head Bo Andersson as the carmaker grapples with major losses in a Russian auto industry struggling with recession. Russia’s biggest carmaker Avtovaz said on March 7 its Swedish chief executive Bo Andersson is to step down after major losses as the country’s auto industry struggles with recession.
U.S.
U.S. futures drop with focus set on central banks as Fed to meet Sofia Horta e Costa
U.S. index futures fell, with stocks near their highest levels of the year, as investors considered the capacity of central banks to boost global growth. Standard & Poor’s 500 Index contracts expiring in June declined 0.6 per cent to 1,997 at 6:31 a.m. yesterday in New York, tracking losses in Asia after the Bank of Japan refrained from adding more stimulus. U.S. equities closed little changed in light trading on Monday after a fourth straight
week of gains, the longest streak since November. Dow Jones Industrial Average futures fell 83 points, or 0.5 per cent, to 17,045, yesterday. “All the concerns we had at the beginning of the year are still pretty much there,” said Kully Samra, who manages U.K. clients for Charles Schwab Corp. in London. “It’s all about how much central banks can reassure investors. Language has become a policy tool in itself -- the way the Fed communicates with the market is going to be very important.
The rebound has basically sent markets back to neutral territory.” Central banks around the world have indicated a willingness to continue measures to support economic growth and stabilize markets, helping U.S. stocks rebound in the past month. The Federal Reserve’s twoday meeting kicks off today, with traders pricing in little chance of a rate increase. Still, bets for a hike later in the year have risen, with probability of a June move now seen at 52 per cent, from 2 per cent a month ago. Reports on retail sales yesterday, as well as data on industrial production and housing starts on Wednesday, will also be assessed for signs of strength in the world’s biggest economy. Bloomberg
Business Daily Wednesday, March 16 2016 15
Opinion Business Wires
The Straits Times The Monetary Authority of Singapore (MAS) and the People’s Bank of China (PBOC) announced yesterday the renewal of an existing bilateral currency swap arrangement (BCSA) for another three years. The original facility was established in 2010 and first renewed in 2013. MAS said the BCSA is a key pillar of co-operation with the PBOC to strengthen regional economic resilience and financial stability. It aims to enhance banks’ confidence in carrying out their business in the two markets, and enables both central banks to provide foreign currency liquidity to stabilise financial markets. Under the arrangement, eligible financial institutions operating in Singapore can tap up to 300 billion yuan (S$63.6 billion) of liquidity.
Reuters
Confronting the fiscal bogeyman The Bangkok Post Tough new international accounting rules are poised to hit balance sheets, and not just those of banks and financial institutions, says the president of the Federation of Accounting Professions (FAP). The changes will also affect airlines, retailers, shipping firms, property developers and telecom providers, Prasarn Chuaphanich said. The new set of International Financial Reporting Standards (IFRS) will require financial institutions to make larger provisions for financial instruments and credit losses. Companies will also have to put lease activities on balance sheets and recognise sales as income only when their customers pay the entire amount.
Times of India The benchmark BSE Sensex on Tuesday fell about 61 points in early trade on profit-booking by investors in recent gainers, even as retail inflation fell to a threemonth low in February. The 30-share barometer, which gained 180.94 points in the past two sessions, was trading down 60.95 points or 0.25 per cent at 24,743.33 with healthcare, FMCG, power, oil&gas and metal sector stocks leading the losses. The NSE Nifty too shed 31.25 points or 0.41 per cent to 7,507.50 points. Brokers said sentiment turned weak despite retail inflation falling to a three-month low of 5.18 per cent in February after rising for five months in a row as food prices including vegetables, pulses and fruits became less costly.
Philistar The central banks of the Philippines and Malaysia have signed an agreement aimed at greater financial integration and economic development among members of the Association of Southeast Asian Nations. Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said both the BSP and the Bank Negara Malaysia have agreed on the guidelines regarding the entry of qualified ASEAN banks between the Philippines and Malaysia under the ASEAN Banking Integration Framework (ABIF). “By signing this agreement, the BSP manifests its commitment to support greater regional financial integration and economic development through the ABIF,” Tetangco said. Tetangco and Bank Negara Governor Zeti Akhtar Aziz signed the Heads of Agreement (HOA) in Kuala Lumpur yesterday.
T
he world economy is visibly sinking, and the policymakers who are supposed to be its stewards are tying themselves in knots. Or so suggest the results of the G-20 summit held in Shanghai at the end of last month. The International Monetary Fund, having just downgraded its forecast for global growth, warned the assembled G-20 attendees that yet another downgrade was pending. Despite this, all that emerged from the meeting was an anodyne statement about pursuing structural reforms and avoiding beggar-thy-neighbour policies. Once again, monetary policy was left – to use the now-familiar phrase – as the only game in town. Central banks have kept interest rates low for the better part of eight years. They have experimented with quantitative easing. In their latest contortion, they have moved real interest rates into negative territory. The motivation is sound: someone needs to do something to keep the world economy afloat, and central banks are the only agents capable of acting. The problem is that monetary policy is approaching exhaustion. It is not clear that interest rates can be depressed much further. Negative rates, moreover, have begun to impair the health of the banking system. Charging banks for the privilege of holding reserves raises their cost of doing business. Because households can resort to safe-deposit boxes, it’s hard for banks to charge depositors for safekeeping their funds. In a weak economy, moreover, banks have little ability to pass on their costs via higher lending rates. In Europe, where experimentation with negative interest rates has gone furthest, bank distress is clearly visible. The solution is straightforward. It is to fix the problem of deficient demand not by attempting to further loosen monetary conditions, but by boosting public spending. Governments should borrow to invest in research, education, and infrastructure. Currently, such investments cost little, given low interest rates. Productive public investment would also enhance the returns on private investment, encouraging firms to undertake additional projects. Thus, it is disturbing to see the refusal of policymakers, particularly in the US and Germany, to even contemplate such action, despite available fiscal space (as record-low treasury-bond yields and virtually every other economic indicator show). In Germany, ideological aversion to budget deficits runs deep. It is rooted in the post-World War II doctrine of “ordoliberalism,” which counselled that government should enforce contracts and ensure adequate competition but otherwise avoid interfering in the economy. Adherence to this doctrine prevented post war German policymakers from being tempted by excesses like those of Hitler and Stalin. But the cost
Barry Eichengreen Professor at the University of California, Berkeley, and the University of Cambridge
was high. The ordoliberal emphasis on personal responsibility fostered an unreasoning hostility to the idea that actions that are individually responsible do not automatically produce desirable aggregate outcomes. In other words, it rendered Germans allergic to macroeconomics. The aging of the German population then made it seem urgent to save collectively for retirement by running surpluses. And an exceptional spate of budget deficits following German reunification in 1990 appeared only to aggravate, not solve, reunified Germany’s structural problems. Ultimately, hostility to the use of fiscal policy, as with many things German, can be traced to the 1920s, when budget deficits led to hyperinflation. The circumstances today may be entirely different from those in the 1920s, but there is still guilt by association, as every German schoolboy and girl learns at an early age. The US did not experience hyperinflation in the 1920s – or at any other time in its history. But for the better part of two centuries, its citizens have been suspicious of federal government power, including the power to run deficits, which is fundamentally a federal prerogative. From independence through the Civil War, that suspicion was strongest in the American South, where it was rooted in the fear that the federal government might abolish slavery. In the mid-twentieth century, during the civil rights movement, it was again the Southern political elite that opposed the muscular use of federal power. Starting in 1964, in conjunction with Democratic President Lyndon Baines Johnson’s “New Society,” the government threatened to withhold federal funding for health, education, and other state and local programs from jurisdictions that resisted legislative and judicial desegregation orders. The result was to render the South a solid Republican bloc and leave its leaders antagonistic to all exercise of federal power except for the enforcement of contracts and competition – a hostility that notably included countercyclical macroeconomic policy. Welcome to ordoliberalism, Dixie-style. Wolfgang Schäuble, meet Ted Cruz. Ideological and political prejudices deeply rooted in history will have to be overcome to end the current stagnation. If an extended period of depressed growth following a crisis isn’t the right moment to challenge them, then when is? Project Syndicate
“Governments should borrow to invest in research, education, and infrastructure”
16 Business Daily Wednesday, March 16 2016
Closing Economy
IMF head presses Laos to deepen reforms
Communist-ruled Laos must deepen reforms to maintain its rapid expansion, the IMF chief said Tuesday at the end of a rare visit to one of the world’s fastest growing economies. Resource-rich Laos has an annual growth rate of around 7.4 per cent, but gains have not been evenly distributed and poverty remains widespread among its 6.8 million people, the majority of whom work in agriculture. Much of the boom has been driven by huge foreign investment since Communist authorities began a very slight
opening up of the economy. China in particular has led that investment, capitalising on the landlocked country’s mineral, forestry and water resources. “Economic prospects for Lao PDR remain favourable,” said the head of the International Monetary Fund Christine Lagarde (pictured) . “However, to safeguard macroeconomic stability during the transition out of low-income country status in the medium-term, it will be important to strengthen the economy’s resilience to external shocks and put in place the conditions for sustainable growth.” AFP
Anbang
China’s Anbang: from auto insurance roots to global buyer of luxury hotels Anbang is looking to use its 1.65 trillion yuan in assets to transform into a worldwide investor. Matthew Miller and Michelle Price
C
hina’s Anbang Insurance Group Co has emerged from near obscurity 18 months ago to sign deals worth more than Us$30 billion, moving into the big league of global real estate and finance. The Beijing-based firm has offered US$12.8 billion for U.S. hotel operator Starwood and also agreed this month to pay Blackstone Group US$6.5 billion for Strategic Hotels & Resorts Inc, whose 16 luxury properties include the Four Seasons Washington D.C. Established in 2004 as an automotive and property insurer by chairman Wu Xiaohui, a native of China’s entrepreneurial coastal city Wenzhou, Anbang is looking to use its 1.65 trillion yuan (UU$253 billion) in assets to transform into a worldwide investor. “Anbang will have a global footprint. In 10 years, Anbang will have companies on all the world’s continents,” Wu, who is 49 and married to Deng Zhuorui, a granddaughter of Chinese patriarch Deng Xiaoping, told students at Harvard University last year. Business associates describe Wu as passionate, impatient and very ambitious. He often travels by private jet accompanied by a retinue of assistants. His acquisition strategy is underpinned by an aggressive pursuit of yield-producing companies, those business associates say, funded by
cash from selling insurance products and other sources. In October 2014, Anbang agreed to pay US$1.95 billion for the Waldorf Astoria Hotel in New York, a move Wu said brought the insurer “extra brand recognition” and business opportunities. Last year, Anbang agreed to buy U.S. insurer Fidelity & Guaranty Life for US$1.6 billion, and paid around Us$1 billion for South Korea’s Tong Yang Life Insurance Co . It has also bought control of Fidea, a Belgium based insurer, and the Belgian banking operations of Dutch insurer Delta Lloyd. It is in talks to buy Allianz’s South Korean operations. At home, Anbang has a leading stake in China Minsheng Banking Corp Ltd , the country’s biggest private lender, and is a significant shareholder in China Vanke Co , the largest residential property developer.
Automotive Industry Group Corp, the parent of a government-owned automaker that has ventures with General Motors and Volkswagen. State-owned China Petrochemical Corp later bought a stake. Anbang’s original board included Levin Zhu, former CEO of China International Capital Corp and son
of former premier Zhu Rongji, and Long Yongtu, China’s chief negotiator when it joined the World Trade Organization. Wu also turned to Chen Xiaolu, a son of Chinese Marshal Chen Yi, for support. Anbang holds licenses for selling property, life and health insurance, and operates an annuity insurance business and asset management arm. It doesn’t publish group finances, but says its assets have more than doubled since December 2014. Two subsidiaries, Anbang Life Insurance and Anbang Annuity Insurance, raised 49 billion yuan (US$7.53 billion) in investment funds last year, mainly through selling high-yielding universal life insurance policies. Reuters
Connections
When he set up Anbang, Wu enlisted a small consortium of private and state investors led by Shanghai
“Anbang will have a global footprint. In 10 years, Anbang will have companies on all the world’s continents” Wu Xiaohui, Chairman of Anbang Insurance Group Co.
Inflation
Wu Xiaohui, Chairman of Anbang Insurance Group Co.
Court
Co-operation
Britain drops nightclub entrance fees from inflation basket
Hong Kong court upholds freeze on businessman’s HSBC accounts
Cambodia, Switzerland sign agreement
A decline in Britain’s clubbing scene has prompted the statistics agency to drop nightclub entrance charges from the basket of goods and services it uses to calculate inflation -- and instead add refill pods for home espresso machines. Britain’s consumer prices index is based on the cost of more than 700 goods and services, a handful of which are changed each year as shoppers’ tastes change. “With the number of nightclubs charging entry declining, we can no longer justify keeping these fees in the basket,” ONS statistician Phil Gooding said. After a heyday in the 1990s and early 2000s, many nightclubs have closed as more relaxed licensing laws allowed pubs to compete by selling alcohol until the early hours of the morning. Refills for home espresso machines join the inflation index for the first time, as do computer game downloads, replacing earlier technology such as CD-ROMs and rewritable DVDs.mWomen’s leggings, nail varnish, lemons and cream liqueur were also added to the inflation basket for 2016. Reuters
A Hong Kong court rejected an attempt by a businessman to have his HSBC Holdings Plc accounts unfrozen, pending an investigation by the lender. Pa Sam Nang and Veronica Fung said the bank had frozen their accounts since March last year, according to a Hong Kong high court filing dated March 7. One of the accounts had a sum of close to US$87 million. HSBC believes Fung to be Pa’s wife, the filing showed. Citing a statement made to the court by HSBC last month, the filing said the bank had discovered that Pa and Fung are associated with a “highly complex” network of more than 30 companies including in Africa and Latin America, which it said are part of a firm identified as Queensway Group. One of the companies is an energy firm that -- along with Pa -- had recently been implicated in a corruption investigation by Chinese authorities, the filing cited HSBC as saying. “The alleged wrongdoings and criminal acts committed by Pa involve serious financial crimes including corruption involving foreign governments,” the court filing said. Bloomberg
Cambodia and Switzerland signed a cooperation agreement on Tuesday, under which Switzerland will provide technical, financial and economic cooperation as well as humanitarian aid to Cambodia, officials said. The deal was inked here between Cambodian Deputy Prime Minister and Foreign Minister Hor Namhong and Swiss Ambassador to Cambodia Ivo Sieber. “This agreement provides the overall terms and provisions under which the government of Switzerland engages in its development and technical partnership with Cambodia,” Sieber said during the signing ceremony. “By signing this agreement, Switzerland reaffirms its commitment to supporting the government and the citizens of Cambodia on their path towards equitable, sustainable and inclusive development,” he said. Currently, Switzerland’s annual financial engagement in Cambodia amounts to 12 million U.S. dollars, focusing on local governance, agriculture and food security, skill development and employment, and Kantha Bopha Hospitals, the statement said. Xinhua