Renovation plan of affected building ready in 10 days Tour bus accident update Page 2
Friday, August 12 2016 Year V Nr. 1107 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Joanne Kuai Gaming
Amax mulls lawsuit against Greek Mythology casino Page 7
www.macaubusinessdaily.com
Video game industry
Chinese cinemas
Figures in China point to a flourishing future marked by expansion Page 8
Movie sector carefully observes recent data as Mainland theatres welcome fewer audiences Page 16
Land Swap Solution Society
Secretary for Transport and Public Works Rosário has a solution. Saying the government’s land debts will be repaid by reclaimed idle land. The Chief Executive recently revealed that the gov’t still owes private entities some 88,806 square metres of terra firma. Page 2
Moratorium on bricks & mortar
New approvals of residential mortgage loans fell 12.8 pct m-on-m to MOP4.7 bln (US$587.5 mln) in June. Equitable mortgages plummeted 88.2 pct. New residential mortgage loans collateralised by uncompleted units shrank to MOP244.4 mln vis-a-vis MOP2.08 bln a month ago.
Double-edged sword
Tourism Local SMEs and residents haven’t really benefited. So say gurus apropos the city’s burgeoning tourism industry. They urge fairer distribution of the increasing revenues. Page 5
Limited privatisation
Mortgages Page 3
HK Hang Seng Index August 11, 2016
22,580.55 +88.12 (+0.39%) Worst Performers
Hong Kong Exchanges and
+2.92%
Wharf Holdings Ltd/The
+2.01%
Henderson Land Develop-
-2.03%
Sun Hung Kai Properties Ltd
-1.17%
China Construction Bank
+2.17%
Belle International Holdings
+1.50%
Sands China Ltd
-1.54%
Sino Land Co Ltd
-1.17%
Industrial & Commercial
+2.16%
China Resources Land Ltd
+0.95%
China Merchants Holdings
-1.53%
Link REIT
-1.16%
Ping An Insurance Group Co
+2.15%
AIA Group Ltd
+0.81%
China Mengniu Dairy Co Ltd
-1.33%
China Unicom Hong Kong
-0.97%
Bank of China Ltd
+2.12%
Bank of Communications
+0.72%
Cheung Kong Property
-1.30%
China Shenhua Energy Co
-0.94%
26° 30° 26° 30° 26° 32° 27° 30° 27° 31° Today
Source: Bloomberg
Best Performers
Sat
Sun
I SSN 2226-8294
Mon
Tue
Source: AccuWeather
Protectionism Australia has blocked the sale of its biggest energy grid. The interested parties are State Grid Corp. of China and Hong Kong’s Cheung Kong Infrastructure Holdings. Australian Treasurer Scott Morrison cited risks to the national interest. Page 10
2 Business Daily Friday, August 12 2016
Macau Land
Rosário: Land debts to be repaid by reclaimed idle land The MSAR Government plans to use reclaimed idle land to repay land debts in the order of 88,806 square metres. Annie Lao annie.lao@macaubusinessdaily.com
T
he reclaimed idle land of the MSAR Government will be used to repay its land debts although “We don’t have a timetable for which reclaimed land [can] be used to recover the city’s land debts,” Secretary for Transport and Public Works Raimundo Arrais do Rosário said after attending a meeting of the follow-up committee for land and pubic concession affairs at the Legislative Assembly (AL) yesterday regarding the issues surrounding the handling of idle land in the city. The Macau SAR Government acknowledges a total land debt of 88,806 square metres, as revealed by Chief Executive Chui Sai On in the AL last month. It was the first time he had confirmed how much land the government still owes to private companies. These plots include Seac Pai Van public housing, Ilha Verde Public Housing, Golden Lotus Square, the expansion of the Taipa incineration centre, MGM and Galaxy land, etc. The purpose of these lands was to develop public facilities and the gaming industry. Mr. Rosário stressed yesterday that the process of reclaiming land from Zone C and D from the Nam Van
Development Company Ltd. will still take some time, as legal procedures are currently being undertaken in the courts.
No timetable
Legislator Ho Ion Sang, also the
president of the AL follow-up committee for land and pubic concession affairs, said that the reclaimed land of Zone C and D at Nam Van, and the new reclaimed land, may be used to recover the city’s land debts of plots involving Wynn, MGM, and some public housing units. He indicated that government officials had no confirmed timetable for this action. The legislator also revealed that apart from the land debts of 88,806
square metres there are questions whether another two plots of land were subject to ‘compensation’ or not. These two plots are leased out by the government for the temporary storage of fuel in Ilha Verde and parking space for casino shuttle buses at the Border Gate. However, as the 25-year lease of the two plots expires soon the government now needs to consider ways on how to deal with them, he added.
Tour bus accident update
Renovation plan of affected building ready in 10 days DSSOPT head says majority of units of affected building are safe but some fail to meet safety requirements and need to be repaired. Cecilia U cecilia.u@macaubusinessdaily.com
Some units of the building affected by the recent tour bus accident fail to meet safety standards and have to be repaired before being reoccupied, said Li Can Feng, Director of the Land, Public Works and Transport Bureau (DSSOPT). He made the comments on the sidelines of a meeting with the follow-up committee for land and pubic concession affairs at the Legislative Assembly yesterday. The plan for renovation is expected to be made within 10 days. DSSOPT said yesterday in a statement that the Bureau has inspected the building. The inspection report shows that most of the building is safe for the evacuated families to return home. However, the ground floor in particular is more seriously damaged, with the structural pillar affected. The ground floor shop and five units, namely Block C on the first to
fifth floor, are deemed unsafe. An inspection committee has been formed to follow up on the situation of the impacted building. Mr. Li said the renovation will focus on the structure of the building to achieve the safety requirements laid down by the General Regulation of Urban Construction. Emergent reinforcements of the building are also ongoing to prepare for next week’s expected typhoon. Mr. Li also indicated that the case involves public security and that as such all expenditure on building reinforcement and inspection will be met for the moment by the government. The money will be recovered from the responsible party in the future. A tourist bus crashed into the building on Rua da Entena on Monday, injuring at least 30 Mainland Chinese tourists, ten of whom remain hospitalised with one of them in intensive care after undergoing craniocerebral surgery.
Business Daily Friday, August 12 2016 3
Macau Infrastructure
Deadline pushed back for Zone B bids
been revised to September 6 from the previous August 17. The Land, Public Works and Transport The land will be developed into a temporary parking area for buses and Bureau (DSSOPT) has extended the heavy vehicles, between the Macauperiod for accepting public tenders Taipa Bridge and Kun Iam Ecumenical for the new land on reclaimed Zone Centre. Construction on the project B area on the Macau Peninsula, will begin during the first quarter of according to a dispatch published 2017. The tender’s opening date has in the Official Gazette issued by the also been pushed to September 7. Bureau yesterday. The deadline has
Loans
New residential mortgages down 13 pct in June But new approvals of commercial real estate loans soared in the same month. Kam Leong kamleong@macaubusinessdaily.com
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ew approvals of residential mortgage loans fell 12.8 per cent month-on-month to MOP4.7 billion (US$587.5 million) in June, with equitable mortgages plummeting by 88.2 per cent, revealed yesterday’s latest official data released by the Monetary Authority of Macau (AMCM). In the month, new residential mortgage loans collateralised by uncompleted units shrank to MOP244.4 million compared to MOP2.08 billion one month ago. The authority explained the significant decrease was due to the higher comparison base of May. Of the total new residential loans granted by local banks, those to residents fell by 31.1 per cent monthon-month to MOP3.6 billion, which accounted for 77.4 per cent of the total.
However, those to non-residents jumped eightfold month-on-month to MOP1.06 billion, attributable by the larger loan amounts recorded for a fewer number of approvals to enterprises, AMCM said. On a year-on-year comparison, new approvals of residential mortgage loans represent a jump of 19.7 per cent compared to the same month of last year. Despite total new residential mortgages decreasing, the banking sector approved MOP6.5 billionworth of commercial real estate loans in the same month, up 126.5 per cent month-on-month. In particular, those granted to non-residents jumped by 829.7 per cent month-on-month to MOP2.07 billion driven by new loans approved to enterprises collateralised by land, while those to local residents increased 67.3 per cent to MOP4.4 billion. As at the end of June, the outstanding
value of residential mortgage loans amounted to MOP176.6 billion, up 0.7 per cent month-on-month, or 6.7 per cent year-on-year. Of the total, local residents made up 93.6 per cent to MOP165.2 billion. Meanwhile, the outstanding value of commercial mortgages rose by 1.8 per cent month-to-month or 20.1 per cent year-on-year to MOP169.1 billion. The value owed by local
residents accounted for 87.6 per cent of the total, amounting to MOP148.2 billion. The delinquency ratio for residential mortgage loans dropped 0.01 percentage points month-on-month to 0.1 per cent as at the end of the month, whilst that for commercial real estate loans increased 0.01 percentage points month-on-month to 0.02 per cent.
4 Business Daily Friday, August 12 2016
Macau Opinion
Pedro Cortés The land of phenomena In Portugal there is a small but well known municipality in Santarém District called Entroncamento. The city is known as the ‘Land of Phenomena’. There are reports of cabbages with carnations, trees with three different types of fruit, white blackbirds, sheep with four horns, a giant pumpkin, and chicks with three legs among other phenomena. Despite it being near my hometown, I have never seen any of these phenomena. Well, sometimes I think Macau could be a twin town of Entroncamento in addition to Lisbon, Oporto and Coimbra. That’s because we experiment here with phenomena that are similar to those of that Ribatejo city. The last one took place a few days ago when, unfortunately, a bus had an accident that left people with serious injuries. Instead of trying to understand the reasons for the accident - human error, brake failure, etc. - the simple solution was announced immediately in the form of the egg of Columbus: let’s prohibit big buses from crossing the street where the accident occurred. Well, one day we will not have people in Macau. Unfortunately, there are accidents every single day in Macau and in all cities in the world. Normally they are due to human error. And I’ve never heard in my entire almost forty-one years of life that traffic should be forbidden in order to prevent accidents. What I hear is that the education of drivers should be a priority. Periodic checks of vehicles another priority. In Macau, whenever we talk about traffic, it seems we are more worried about the motorcycle lane on Sai Van Bridge (which will become definitive as from today) than in the behaviour of uncivilised drivers of buses, taxis, private cars and all other types of vehicle. I will not include the rickshaw drivers in this list because, unfortunately, they are becoming rarer every single day. The Association that came out with the simple solution should instead ask what the traffic policy of the city should be. Shall we finally follow our motherland and rule on the car hailing which seem to be inevitable in the near future? Shall the government finally subsidise electric cars, given some manufacturers are already installing charging stations in city shopping centres? Shall we make periodic tests of the drivers and vehicles? Shall we have professional qualified drivers who know what the responsibilities are of transporting 60 to 70 people? Well, it seems that one day if we have a plane accident in Macau (hopefully not) I guess that this Association will plea that air traffic be forbidden in the skies of Macau.
Pedro Cortés is a lawyer and frequent contributor to this newspaper.
Banking
Caixa Geral de Depósitos posts H1 losses
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aixa Geral de Depósitos (CGD), the parent company of BNU Macau, has filed losses of 205.2 million euros (MOP1.8 billion/US$229.2 million) for the first half of 2016 compared to profits of 47.1 million euros made in the same period last year, according to a group filing with the Portuguese Securities Market Commission (CMVM). According to the release, the state owned Portuguese bank saw its banking income fall by 34.6 per cent to 754.7 million euros between January and June, with the public bank justifying the break in the results of financial operations as being ‘influenced by high volatility felt in international financial markets, including public debt associated with the UK referendum on staying in the European Union’.
The two biggest international contributors to the group were CGD’s branch in France, with 77.1 million euros and BNU Macau, contributing 36.9 million euros to the group’s consolidated results. The group’s statement also praised its Macau unit’s performance. BNU
Macau’s business volume increased 16.9 per cent in the first half of this year to MOP91 billion compared to the same period last year according to the bank’s interim result released earlier this month, despite an increase of competition in the territory’s banking sector. N.M.
BNU Macau can’t save the day
CGD stated that its international operations continued to have positive results in the first six months of this year, with 205.3 million euros of gross income from consolidated operating.
E-payments
Processing pays Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
Payment processing solutions company Hi Sun Technology (China) Limited saw a nearly 3.5 times increase in profits for the first half of the year, as announced on the Hong Kong Stock Exchange. The group - which operates in five main segments including finance, telecoms, payment platforms, payment processing and electronic power meters - made a total of HK$120.1 million (US$15.49 million/MOP123.7 million) during the six months ended June 30, additionally seeing a 41 per cent year-on-year increase in consolidated turnover during the period to reach HK$675.5 million.
The group operates domiciles in Macau and Hong Kong as well as Mainland China and Japan. The group’s primary activity its payment processing segment - attracted over one million accumulated domestic merchants during the six month period, with monthly transactions in June exceeding RMB60 billion (US$9 billion/MOP72.17 billion). Profit from the segment saw a 160 per cent increase, amounting to HK$61.8 million in the first half of 2016, compared to a HK$9.5 million loss in the same period last year. The group explained the increase as ‘mainly due to improved margin with increased scale of transaction operations,’ notes the filing.
Medical
Diversity through detection Gaming and apparel company invests in Guangzhou-based cancer detection company. Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
Tack Fiori International Group Limited, a company that operates primarily in education software products and apparel retail, has announced the completion of a 30 per cent acquisition of Guangzhou-based Manrui Biotech, in a filing on the Hong Kong Stock Exchange. Tack Fiori distributes two mobile games in Macau through both the Android and iOS platforms, namely Neon Genesis Evangelion and Sakura Wars, for which it paid RMB10 million (US$1.5 million /MOP12 million) in the last fiscal year, ended 31 March, in prepayment for rights to 75 per cent of income from the apps. Man Rui Biotech specialises in highthroughput sequencing [used to determine entire genome sequences in organisms] and genetic testing technologies, in particular non-invasive cancer screening and diagnosis; and has developed diagnostic technologies for detecting circulating
tumour cells. The acquisition of the Guangzhou-based company amounts to a total group consideration of RMB60 million and falls in line with the group’s diversification into the health field, as announced in its annual report, noting that the group has ‘identified the healthcare industry as a specific area of focus for the Group’s investments’. The cash portion of the investment will come out of the group’s internal resources while nearly 246 million shares have been allotted and issued by the company in relation to the purchase. The acquisition intends to diversify the group’s position in the Mainland, with Man Rui Biotech seen as possessing a ‘unique position within the cancer screening and diagnostics industry due to its strong intellectual property particular and its close working relationships with hospitals and universities in the PRC [People’s Republic of China],’ notes the filing.
The group’s other segments saw turnover increases and decreases, with the financial segment and the combined segment of telecom and payment platform solutions both seeing a fall during the period of 5 per cent and 32 per cent, respectively. The electronic power meters saw a 13 per cent increase in turnover during the period, generating a HK$5.5 million loss.
Banking
BOC Macau and UnionPay Int’l ink memorandum A memorandum regarding strategic co-operation was signed on Tuesday in the Bank of China Building by three parties - the Bank of China Macau Branch, the Bank Card Centre of Bank of China (BOC), and UnionPay International - according to Macau Daily. The Chief Co-operation Officer of UnionPay International, David Lee, stated that BOC has always been an important partner of UnionPay’s and that this signed memorandum produces two major advantages: the allocation of resources from the three parties provides more exclusive UnionPay card advantages and preferences for firms in Macau; and the incorporation of each connection will strengthen the cross-border marketing of China UnionPay to create a wider impact of each brand.
Business Daily Friday, August 12 2016 5
Macau
Tourism Study argues tourism growth in the city harming SMEs
Fighting the growth machine Authors of a study on Macau tourism believe the MSAR still needs to do more to correct the distribution of income created by tourism growth, with a bigger focus on developing the city as a creative and cultural hub. Nelson Moura nelson.moura@macaubusinessdaily.com
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xperts in a Macau tourism study told Business Daily that anti-corruption m e a s u r e s h av e b e e n crucial in diversifying the territory’s tourism offering as it has helped the city to turn its focus of the tourism industry from gaming to family oriented entertainment. However, they said that the territory still has issues with the underground economy and uneven distribution of tourism revenues, which has been hurting local small and mediumsized enterprises (SMEs) and residents alike.
Key Points Threats to Macau’s healthy tourism development according to the study Narrow industrial base Growing competition from other locations Dependence upon China’s tourism market Community apathy of residents regarding city changes Effect upon local environment A study published earlier this year titled ‘Reinventing Macau tourism: gambling on creativity’ argues that rapid tourism growth registered in Macau has only benefited a core group and a ‘political elite’ in the territory, while the local tourism industry faces many threats to its sustainable development. At the time, one of the proposals in the study was that the local government should create a tourism plan focused on diversifying the local economy and develop Macau as a ‘creative city’. Now that the ‘Macao Tourism Industry Development Plan’ has been presented by the Macao Government Tourism Office
(MGTO), the researchers involved in the study - Financial Crime and Tourism expert Verity Greenwood and Larry Dwyer, President of the International Association for Tourism Economics - told Business Daily that investing in culture and diversifying the tourism offer is the way to go for the city, while many of the threats to this development still exist. “Macau’s future is quite uncertain, as the paper argues. We think that Macau tourism has the best chance of developing in a sustainable way towards [its aspirational] status as a World Centre of Tourism and Leisure if it attempts to develop the types of features that characterise creative cities worldwide,” Dwyer told Business Daily.
Growth machine
One of the key issues presented in the study was if the development of Macau as a World Centre is not compatible with the territory’s ‘growth machines’, the main sectors that drive the city’s growth
- in Macau’s case, the gaming and tourism industry – but nevertheless monopolises its development. The authors argued that ‘growth machines’ usually only directly profit ‘landowners, speculators or investors’ that form local growth coalitions with service providers such as ‘realtors, bankers and local media to promote capital investment’. This group then directly supports local politicians, who then promote this growth at the expense of competing groups such as the local community and SMEs. In their study, Greenwood and Dwyer argued the way to counter the challenge the local tourism development faces is by investing in Macau as a ‘creative city’ per the parameters created by UNESCO and invest in its unique traits. In this way it would be possible to ‘dilute’ the effects of the tourism ‘growth machine’, whilst empowering residents to participate more deeply in the desired development of the tourism/gaming industry. “Macau has a number of fantastic attributes but other issues related to the casino industry are holding it back,” Greenwood told Business Daily.
Strained SMEs
The study also stated that tourism growth is also causing strains with
local SME’s in manufacturing, the civil service and public utilities, which were said not to be able to ‘survive the escalating competition and costs of business operation and ordinary wages’. For Larry Dwyer, more effort has to be made to ensure that the benefits of tourism growth are as widely dispersed as possible, something depending on industry structure. “It’s important that Macau ensures that its small business sector remains strong and viable, and greater community involvement can help,” he told Business Daily.
Shadow economy
Greenwood stated that anticorruption policies pursued by the Chinese Government have helped turn the focus of the tourism industry from gaming to family oriented entertainment. “People are coming longer, and not just for 24 hours of gambling; and if people stay longer they’ll spend more money in Macau” Greenwood told Business Daily. However, even with the positive effects on local tourism Greenwood believes there are still a lot of problems in relation to the junket operators and how they operate. In the Financial Crime expert’s view anti-corruption measures pushed illegal gaming related activities in the territory to a “shadow economy” that could tarnish the city’s image as a tourist destination.
6 Business Daily Friday, August 12 2016
Macau
Retail
Giordano interim profit dips 2 pct The group’s sales in Greater China dropped while those in the rest of Asia Pacific jumped. Kam Leong kamleong@macaubusinessdaily.com
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lothing retailer Giordano International Ltd. posted a net profit of HK$204 million (US$25.4 million) for the first half of the year, which represents a decline of 2 per cent year-on-year, driven by the fall in general group sales. According to the retailer’s filing with the Hong Kong Stock Exchange yesterday, group sales dropped by 7.5 per cent to HK$2.53 billion for the six
months, compared to HK$2.73 billion during the same period of last year as those in Greater China recorded a notable decrease. ‘Slower economic growth, an unreasonably cool Spring, and closure of non-performing stores contributed to the reduction of reported sales by 10 per cent in [the Region],’ the company noted. During the six months, the retailer’s sales in Hong Kong and Macau declined by 5 per cent year-on-year to HK$457 million. It explained that the decrease is mainly due to ‘closure
of high rent stores during 2015’. As at the end of June, 70 stores were operated by Giordano in the two Special Administrative Regions, four less than a year ago. M e a n w h i l e, t o t a l s a l e s i n Mainland China dropped 16 per c e n t t o H K $ 637 m i l l i o n f r o m HK$762 million one year ago. ‘In the past 12 months, we had a net closure of 32 stores [to 896], affecting total sales comparison,’ the retailer explained. Its business in Taiwan also decreased - by 5 per cent yearon-year in terms of sales – thus it reported HK$323 million for the first half of the year. Sales in the rest of Asia Pacific,
however, registered an increase of 5 per cent year-on-year, amounting to HK$658 million. ‘Management holds the view that regional economic environments are not conducive to profitable l a rg e-sca l e ex p a n si o n i n th e medium term. We will focus on efficiencies by operational improvements and prudent investments,’ the company wrote in its outlook. For the six months, Giordano has proposed an interim dividend of HK12.5 cents, which is the same amount for the same period of last year. The total amount of dividend will amount to HK$196 million, it said in the filing.
while its first half fiscal year net sales hit US$228.3 million, a 4.8 per cent drop compared to the same period last fiscal year. Watches dominated the group’s sales, accounting for US$517.6 million of the US$685.4 million in total net sales in the period, while leather and jewellery accounted for US$93.2 million and US$56.8 million, respectively. The group’s Americas operation accounted for the lion’s share of sales, at US$345.2 million during the period, and US$681 million during the first half fiscal year. “We’re pleased that our sales trends, though still challenging,
remained relatively stable considering the disruptive e n v i r o n m e n t, ” n o t e d K o s t a Kartsotis, Chief Executive Officer of Fossil. “We believe that growth in Fossil and Skagen [brands], strong performance from leathers and progress in wearables are solid indicators that we are on the right track, have the right long-term strategies in place and their performance reinforces our commitment to investing in these strategies to drive future growth.” Retail sales of watches, clocks and jewellery in the SAR hit MOP3.06 million in the first quarter of this year, an 18.3 per cent drop year-on-year in the wake of the crackdown by the central government aimed at combating corruption.
Retail
Fossil sales slump in Q2 Declining of sales in Macau, Hong Kong and Japan contribute to 6 per cent drop in net sales for Fossil in second quarter. Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
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etail giant Fossil Group saw a 6 per cent slump in its net sales for the second quarter of this year, with increased sales in India, Malaysia, Singapore and Australia offset by the group’s declines in the Macau, Hong Kong and Japanese markets, the group reported in a press release. Fossil operates a store located in The Venetian under Fossil (Macau) Limited, a subsidiary of the group’s Hong Kong branch. Second quarter net sales fell by 6 per cent, or US$47.8 million (MOP381.9 million) year-on-year, with the group citing a gain derived from an increase in leathers and jewellery sales offset by a decline in watches, compared to the last fiscal year. Net sales in Asia were ‘flat’ yearon-year, expressing the same overall product increase and offset by leathers, jewellery and watches seen overall. The company accumulated operating expenses for the period amounting to US$340.3 million, ‘roughly flat’ when compared year-on-year and attributed to ‘an increase in expenses’ linked to the group’s Misfit line. These were offset by a ‘favourable impact of changes in foreign currency, lower store expenses’ and the legacy of restructuring charges from the previous fiscal year. The group’s predictions for the future operations expect a continuance of the decline, with net
sales estimates predicting a 1.5 to 5 per cent decrease for the 2016 fiscal year, with an expected 2 to 6 per cent drop in net sales in the third quarter of the fiscal year.
Watch out
Net sales from the group’s Asia segment amounted to US$124.3 million during the second quarter, a 1.3 per cent drop year-on-year,
Business Daily Friday, August 12 2016 7
Macau Sting
Recruitment scam rumbled
An alleged illegal recruiter was caught by Philippines authorities in a sting operation after deceiving over 100 Filipinos seeking work abroad, according to Philippines news outlet GMA. Authorities apprehended the suspect in Quezon City, Philippines after complaints were filed when the recruiter failed to send the workers abroad despite them
having paid a placement fee. An officer says that the suspect offered her victims jobs as cleaners and security personnel at a casino-hotel, for 7,000 peso to 25,000 peso (US$150 – US$535/MOP1,196 MOP4,272). The publication notes that 10 workers processed by the alleged recruiter were prevented from boarding their flight to the SAR having failed to submit a letter from a Macau resident.
Gaming
Amax mulls lawsuit against Greek Mythology casino The company says that once again the casino operator has not submitted its financial accounts. Kam Leong kamleong@macaubusinessdaily.com
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asino investor Amax International Holdings said it may consider taking legal action against the operator of Greek Mythology Casino as the latter has again failed to submit its annual financial accounts to the company.
‘The company has yet to obtain 2015 & 2016 management accounts from Greek Mythology. The company has been advised by its Macau lawyer to take further legal action against Greek Mythology and its management,’ wrote the investor in a filing with the Hong Kong Stock Exchange yesterday. Amax, chaired by local businessman Ng Man Sun, holds 24.8 per cent
SJM
Jai Alai to open by year-end The Jai Alai space belonging to Sociedade de Jogos de Macau (SJM) will open by the end of the year, with the works completed in Autumn according to SJM chairman Ambrose So Shu Fai, TDM radio reports. Renovation works were announced at the end of 2012 but were interrupted between February 2014 and May 2015. Regarding the SJM project in Cotai, Grand Lisboa Palace, So said that according to the company schedule “construction works should be completed by end-2017” and that SJM hoped it would open in 2018. Ambrose So, on the sidelines of a public event on Wednesday, also commented that gaming revenue of SJM has decreased year-on-year in the first half but the second quarter has seen better performance than in the first quarter. He added that for the first half year, mass market and VIP has shown comparable performance and the
gaming revenues from the mass market have surpassed the ones from the VIP sector. With regard to the decrease in net profits he said that the company is unable to cut expenses related to human resources. “The decrease in gross gaming revenues has been narrowed. Mass and VIP sectors have seen comparable performance. We’ve also witnessed for the first time that the mass market has surpassed the VIP market,” said So. When asked about the competition arising from the two new casino resorts of other gaming operators to be opened later this year, Mr. So said that the market share may face some changes but hopes the city’s gross gaming revenues will see better returns due to the new attractions. He added that the opening of Grand Lisboa Palace is expected to diversify SJM’s portfolio and enhance its nongaming offerings extensively. A.L.
equity interest in Greek Mythology (Macau) Entertainment Group Corporation Ltd., which ran the casino inside the Beijing Imperial Palace Hotel in Taipa under the gaming license of Sociedade de Jogos de Macau S.A. (SJM). Since 2014, the Hong Kong-listed company has said in its financial reports that Greek Mythology had declined to submit financial accounts to the company. According to yesterday’s filing, Greek Mythology needs to pay monthly fees to the investor under their slot machine rights agreement and the gaming table rights agreement. ‘The board has been taking possible steps to recover the indebted amount from Greek Mythology…However, no response has been obtained from Greek Mythology and no concrete solution has been agreed between both parties,’ it said. The investor added that it would try to liaise with the casino operator to ‘materialise the repayment schedule’
and ‘may consider initiating legal action against Greek Mythology’. ‘However, from past experience, obtaining a court order and the management accounts from Greek Mythology will take at least nine months,’ the company indicated. Greek Mythology ceased operations at the beginning of this year for renovation purposes. In addition, the hotel property housing the casino was also closed by Macao Government Tourism Office in July for at least six months due to serious administrative irregularities. ‘The Company has been observing the business operation of Greek Mythology until it was suspended for renovation. The board is of the view that no irregularity of the business operation of Greek Mythology has been found during this period,’ Amax stated. In July, the casino investor claimed in a filing that the shutdown of the hotel would not affect the re-opening of the casino in the future but ‘a negative impact on the number of visitors and its business plan’ would ensue. It also indicated that it had ‘no intention of terminating the agreements [on the casino], notwithstanding the disputes between the company and [the casino operator]’.
8 Business Daily Friday, August 12 2016
Greater China In Brief Results
China Mobile net profit rises China’s largest telecom service provider, China Mobile Ltd, said its first-half net profit edged up 5.6 per cent, its first interim profit rise in three years, as growth from lucrative 4G services helped it fend off stiff competition. In a securities filing, Beijing-based China Mobile said yesterday net profit for January-June rose to 60.6 billion yuan (US$9.12 billion) from 57.3 billion yuan in the same period a year earlier. Meanwhile revenue climbed 7.1 per cent from a year earlier to 370.4 billion yuan. Online sales
Sun Art to invest in e-commerce development Hypermarket operator Sun Art Retail Group Ltd said yesterday it plans to invest 1 billion yuan (US$150.6 million) in e-commerce development over the next two years. Executive director Peter Huang, speaking at an earnings briefing, also said he expects the company’s e-commerce business to break even in 2020-2021. Sun Art, which competes with China Resources and Wal-Mart Stores Inc on the mainland, posted a 2.7 per cent decline in first-half profit as it faced intense competition from fast growing e-commerce platforms. Defective pedals
Porsche vehicles recalled in mainland A car company started a recall of over 1,200 imported Porsche refitted vehicles yesterday, due to defective brake pedals, the top quality watchdog said. The recall affects 1,236 Porsche cars manufactured between July 2013 and February 2016, according to the website of the General Administration of Quality Supervision, Inspection and Quarantine. The snap spring of the brake pedals, of the affected vehicles, may loosen during driving, posing serious safety risks. The Dalian-based car import and export company asked dealers to check all affected vehicles and replace the defective parts free of charge, the statement said. Results
Li Ning maintains recovery momentum Chinese sportswear maker Li Ning Co Ltd said it returned to profit in the first half of 2016 helped by a surge in online sales and an expanded sales network, maintaining momentum for a longsought recovery. China’s best-known homegrown sports brand said it made a net profit of 113.4 million yuan (US$17.1 million) for January-June, compared with a 29.4 million yuan loss in the same period a year ago. Li Ning, whose investors include private equity firm TPG Capital Management and Singapore sovereign wealth fund GIC, had spent three years in the red.
Stock markets
Wanda founder likely to gain shareholder support for delisting After the deal, set to be Hong Kong’s biggest buyout to date, Wang aims to relist on the mainland within two years. Clare Jim and Saikat Chatterjee
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hinese tycoon Wang Jianlin appears likely to win backing on Monday for a US$4.4 billion Hong Kong delisting of Dalian Wanda Commercial Properties, several shareholders said - part of a grand scheme to reap higher valuations by going public on the mainland. The HK$52.80 per share offer by China’s richest man for shares in the flagship firm of his Wanda empire represents only a 10 per cent premium to pricing for its IPO that took place less than two years ago, and some analysts were initially sceptical that it would be enough. But it is 30 per cent above the stock’s trading price prior to news of the buyout. Also helping bring many investors on side was Wang’s decision to term the offer as final, as well as slower profit growth for Wanda Commercial and bleaker prospects for the Chinese property sector, shareholders said. Influential proxy advisors ISS and Glass Lewis have voiced their support. Glass Lewis called the offer price “fair and reasonable to independent shareholders.” “Most of the comments so far have been positive. There’s no reason for other investors to act differently and pull the rug out from everyone else,” said an official at Kuwait Investment Authority, a major shareholder owning 7.4 per cent of the company. “There will be a lot of opportunities to cooperate with Wanda in the future as it is expected to do well in the next 10 years, so why jeopardise the relationship?” he added, declining to be identified as he was not authorised to speak to the media. After the deal, set to be Hong Kong’s biggest buyout to date, Wang aims to
relist on the mainland within two years. That will allow him to tap a huge pool of enthusiastic investors in mainland China, where valuations for commercial property firms are generally three times greater than those in Hong Kong. Higher valuations could allow Wanda Commercial to reduce potential funding costs, either through new share issues or if it were to acquire firms through share swaps. The buyout could spur other Chinese firms to abandon the Hong Kong bourse, tarnishing its image as a major financial centre.
Stars align for Wang
Wanda Commercial, which has a market value of some US$30 billion, has a 14 per cent free float. Three quarters of independent shareholders need to agree to the proposal for it to pass and it can be blocked if 10 per cent do not agree. China Life Insurance, which also owns 7.4 per cent, and Timing Investment, another cornerstone investor with 2.5 per cent, have said they plan to approve.
Some other shareholders collectively owning 4 per cent plan to vote in favour, their representatives told Reuters. They too declined to be identified as they were not authorised to speak to the media. Wanda Group declined to comment for this article. Two of biggest investors in Wanda Commercial, BlackRock and Vanguard which together own around 7 per cent, also declined to comment. If Wang were to fail to garner sufficient votes, some investors and analysts predict Wanda Commercial’s stock would promptly slide back to pre-buyout offer levels given that foreign investors have mostly gone cold on a troubled Chinese property sector. For while there have been some signs of recovery in the real estate market, the soaring cost of land is squeezing margins for developers, and in smaller cities where Wanda has been focusing its projects, sales are still declining as supply outstrips demand. “If shareholders don’t vote for the deal, the stock will drop by 20-30 per cent and in light of the headwinds facing the property market and the slowing economy, the offer is not a bad one for investors to take,” said Crispin Francis, an analyst at research platform smartkarma.com. Reuters
Chinese tycoon Wang Jianlin
Entertainment
Domestic video game biz a bright spot even without Pokemon China’s gaming population was an estimated 534 million players last year. If you want an example of China’s rising consumer class, take a look at the burgeoning demand to play video games. Sales will jump an average 7.4 per cent a year from 2016 to 2020, according to PricewaterhouseCoopers LLP. That’s higher than the 4.8 per cent rate forecast for the industry worldwide, PwC said in its global entertainment and media outlook. While in absolute terms games contribute a tiny sliver of gross domestic product, they’re part of the bigger tectonic shift led by consumers who are cushioning the drag from a factory slowdown. China’s gaming population was an estimated 534 million players last year - that’s one out of every 14 humans. Boosting the world’s third-largest video game market - after the U.S. and Japan - are sales of streaming video games and e-sports competitions this year, PwC said. In other words, gaming is increasingly social, not solo. The rising popularity of competitions helps the appeal of both PC and mobile games in China, which boosts advertising revenue and will
enlarge the “fan economy,” PwC analysts said in the report. Games should get a lift from government policies that favour boosting innovation as well as generous spending for state-run firms to boost wireless network speeds, Wilson Chow, the Shenzhen-based industry leader for tech, media and telecom in China and Hong Kong at PwC, said in an interview. Tencent Holdings Ltd. also will speed up the development of the country’s game industry, he said. China’s largest internet company is leading an
US$8.6 billion acquisition of Finnish game maker Supercell Oy. By 2020, China’s gaming sales will climb to US$12.85 billion, up from US$8.98 billion last year, PwC estimates, outpacing a global revenue increase to US$90.07 billion from US$71.27 billion in 2015. Shanghai, Beijing and Guangdong are the main hubs of video game publication, according to PwC. While Pokémon Go has just landed in Hong Kong, the locationbased augmented reality game isn’t available in the mainland because it relies on Google Maps, which China’s internet censors block. So the gaming market won’t get a lift from Pikachu chasers just yet. Bloomberg News
10 Business Daily Friday, August 12 2016
Greater China Protectionism drive
Australia rejects mainland bids for Ausgrid If State Grid’s bid is ultimately blocked, Australia risks straining ties with its most important trading partner. Perry Williams, Prudence Ho and Aibing Guo
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ustralia m a d e a preliminary decision to reject bids for its Ausgrid electricity network from Hong Kong billionaire Li Ka-shing and State Grid Corp. of China amid growing local opposition toward selling domestic infrastructure assets to overseas investors. Treasurer Scott Morrison said it would be contrary to national security to allow the sale to proceed in its current form. He stressed it was a preliminary decision and the bidders, which he didn’t name, had been advised they had a week to respond. “Ausgrid’s footprint includes critical power and communication services provided to businesses and government,” Morrison told reporters. “National security concerns are not country-specific and relate to the transaction structure and the nature of the assets.” The move is the latest sign that protectionism is on the rise in Australia, where the government earlier this year blocked the sale of a cattle company to a Chinese-led group, saying it could be against the national interest. Li’s Cheung Kong Infrastructure Holdings Ltd. and State Grid made competing binding bids for Ausgrid last month, people familiar with the matter have said. State Grid didn’t immediately respond to a request for comment yesterday, while CKI couldn’t immediately be reached. “I’ve informed the Ausgrid bidders of my preliminary view that their foreign investment proposals are
contrary to the national interest and I have provided them with the opportunity to respond to my concerns,” Morrison said. “That will require a final decision to be made once I have received those responses from the bidders and considered them.” Morrison’s announcement comes as Australia balances the need for foreign investment to drive economic growth against mounting public opposition to sales of farmland, real estate and strategic infrastructure, particularly to Chinese investors. Despite overseas capital being vital to Australia’s future expansion, the government is arguably making it harder for foreigners to invest. Last
year, it tightened scrutiny of sales of farmland to Chinese, Japanese and Korean buyers. The government board that vets investments now includes a former spy chief. When the Obama administration last year raised concerns that a Chinese company had bought a port in the northern city of Darwin, where U.S. Marines are based, Morrison beefed up oversight of the sale of state assets. He’s also blocked the sale of the iconic S. Kidman & Co. cattle station to a Chinese-led group saying it could be against the national interest. State Grid, which distributes electricity to 1.1 billion people, is bidding for energy assets globally as President Xi Jinping seeks to overhaul the country’s bloated state-owned businesses. Earlier this year, it bought a stake in Brazilian power distributor CPFL Energia SA for US$1.8 billion, and
it already owns parts of electricity networks in South Australia and Victoria states. The company missed out last year when New South Wales electricity transmission network TransGrid was sold to a group of investors from Canada, the Middle East and Australia’s Hastings Funds Management Ltd. for about A$10.3 billion. CKI owns stakes in electricity grids that service cities including Melbourne, Wellington and London. The prospects for Chinese suitors haven’t improved since the July 2 election saw a swag of protectionist i n d e p e n d e n t o r m i n o r p a rt y lawmakers elected to the upper house Senate. The National Party, the junior partner in Prime Minister Malcolm Turnbull’s coalition which has been a vocal critic of investment by Chinese state-owned companies, also now has a bigger voice in the government. Bloomberg News
‘Despite overseas capital being vital to Australia’s future expansion, the government is arguably making it harder for foreigners to invest’
Chris Hunkeler via Foter.com / CC BY-SA
M&A
COSCO acquires Greece’s Piraeus Port Parliament ratified the sale in June, overcoming some last-minute snags George Georgiopoulos
China’s COSCO Shipping , owner of the world’s fourth largest container fleet, took a 51 per cent stake in Greece’s largest port on Wednesday. The sale of Piraeus Port had been suspended by the leftist-led government when it won elections in January 2015 but talks resumed after Greece agreed an 86 billion euro bailout deal with its euro zone partners.
‘Last month COSCO said it would invest up to 500 million euros in Piraeus Port to upgrade cruise and shipping container facilities’
COSCO agreed to buy 51 per cent of Piraeus Port (OLP) in April for 280.5 million euros (US$312.51 million) under a deal signed with the HRADF, Greece’s privatisation agency. COSCO bought 51 per cent of Piraeus Port (OLP) for 280.5 million euros (US$312.51 million), acquiring a block of 12.75 million shares in OLP. COSCO Shipping executive Wan Min rang the opening bell at the Athens bourse at a ceremony to mark the agreement.
Privatisation has been a priority of Greece’s bailouts since 2010, but political foot-dragging and a highly unionised public sector workforce have slowed progress. Shares in Piraeus Port, which has a current market value of 350 million euros, were down 0.4 per cent to 13.90 euros as of 1016 GMT lagging a Athens share index up 0.46 per cent. COSCO is expected to increase its stake in Piraeus Port to 67 per cent over the next five years, HRADF said. “Should Cosco fulfil certain conditions set out in the agreement, including the successful completion of the mandatory investments up to
300 million euros, it will pay HRADF an additional 88 million euros and increase its stake by 16 per cent to 67 per cent,” it said. Greece’s parliament ratified the sale in June, overcoming some last-minute snags which triggered complaints from the local COSCO representative. Last month COSCO said it would invest up to 500 million euros in Piraeus Port to upgrade cruise and shipping container facilities. Operator of one of Piraeus’s container terminals since 2009, COSCO has boosted the port’s competitiveness. The port’s container throughput stood at 3.36 million 20-foot equivalent units (TEUs) last year, up from 880,000 TEUs in 2010. Reuters
Business Daily Friday, August 12 2016 11
Asia Monetary policy
New Zealand cuts rates, powerless in global easing race Central bank governor left the door wide open for additional stimulus. Charlotte Greenfield and Rebecca Howard
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he Reserve Bank of New Zealand cut interest rates a quarter point to a record low of 2.0 per cent yesterday and flagged the need for more cuts as it struggles to head off the dangers of deflation at home. The central bank’s policy challenges became immediately apparent after the decision with investors lifting the local dollar to a one-year peak despite the easing, threatening to depress both exports and inflation in the small open economy of 4.7 million. “Central banks are ‘reluctant cutters’ as they head towards lower bounds,” said Jarrod Kerr, a senior interest rate strategist at Commonwealth Bank of Australia. “Frustrations over currency strength and inflation expectations eventually overpower policymakers because it is a global theme and a theme the RBNZ cannot escape,” said Kerr, predicting rates might have to halve to 1 per cent in time. Yesterday’s quarter point cut from the Reserve Bank of New Zealand (RBNZ) looked like weak beer compared with the recent drastic easing from the Bank of England. RBNZ Governor Graeme Wheeler indicated countries accounting for a quarter of the world’s economic
output now have negative interest rates. In such an environment, the RBNZ had to ease just to stop its currency from rising and further depress inflation, said Wheeler. Consumer price inflation is already running at just 0.4 per cent, well below the RBNZ’s central target of 2 per cent.
Not normal times
A further slowdown would risk dislodging inflation expectations and tipping the economy into the sort of deflationary spiral that has plagued Japan in recent years. Seeking to head this off, Wheeler
left the door wide open for additional stimulus. “Our current projections and assumptions indicate that further policy easing will be required to ensure future inflation settles near the middle of the target range,” he said in the bank’s August policy statement. Assistant Governor John McDermott told Reuters one more rate cut was likely with another possible. “The market has figured out appropriately that we have a big chance in November to assess where we’ve got to,” McDermott added. Markets have fully priced in a cut to 1.75 per cent with a further cut to
1.5 per cent an evens chance. “With the focus firmly on inflation expectations, we are adding a further 50 basis points of easing into our forecasts,” said Michael Turner, a strategist at RBC Capital Markets. “Risks are skewed that more, rather than less, is ultimately delivered.” Wheeler himself acknowledged the bank had “very limited” influence over the exchange rate in a forex market that traded trillions of dollars a day. Indeed, he said that in more normal times New Zealand - which has solid economic growth and an overheated housing market - would be looking to hike interest rates. But these are not normal times. “We are in the most extraordinary financial market situation globally that the world has seen for decades, or possibly ever,” said Wheeler. Reuters
Reserve Bank of New Zealand Governor Graeme Wheeler
World Gold Council
Indian gold demand to revive on surplus monsoon rains The quarter ending in December typically accounts for about a third of India’s gold sales. Rajendra Jadhav
India’s gold demand may rise in the second half of 2016 after falling to the lowest in seven years in the first half as beneficial monsoon rains will spur rural demand during the peak festive season, the World Gold Council said. Two-thirds of demand in India, the world’s second-biggest gold consumer, comes from villages, where jewellery is a traditional investment. Consumption of the yellow metal should rise as farmers reap the benefit of this year’s monsoon and that should further support the global bullion price that is trading near the highest since March 2014. “We anticipate gold demand to return to normalcy during the peak season of weddings and festivals closer to Diwali, supported by good monsoons that will positively impact rural demand,” Somasundaram PR, managing director of the WGC’s Indian operations, said yesterday. Rural demand has fallen in the past few quarters after the first
back-to-back drought in nearly three decades squeezed farmers’ earnings. The south Asian country is forecast to receive surplus rainfall during the June to September monsoon season.
The quarter ending in December typically accounts for about a third of India’s gold sales since it includes the start of the wedding season and festivals like Dhanteras and Diwali, when buying gold is considered auspicious. Diwali falls in the last week of October in 2016. Gold demand in the first half of 2016 fell 30 per cent from a year ago to 247.4 tonnes, the lowest since 2009, due to a jewellers strike, higher prices and as government measures to bring transparency disturbed trading, Somasundaram said. He estimates second half demand
to rise to between 503 to 603 tonnes despite a 26 per cent rally in local prices. In the quarter ending in June, India’s jewellery demand dropped 20 per cent from a year ago, while investment demand fell 12 per cent, the WGC said in a report released on Thursday.
‘Gold demand in the first half of 2016 fell 30 per cent from a year ago’ As a result, the WGC lowered its 2016 demand forecast to between 750 to 850 tonnes, from earlier projections of 850 to 950 tonnes. In 2015 Indian demand stood at 864.3 tonnes. Gold in India has been trading at a heavy discount to global prices due to rising supplies from unofficial channels, leading Indian refiners to suspend operations, Somasundaram said. Supplies from unofficial channels could rise to up to 160 tonnes in 2016, from nearly 120 tonnes a year ago, he said. In neighbouring China, the world’s biggest consumer of the gold, demand dropped 14 per cent in the second quarter to 183.7 tonnes, the WGC said in the report. Bloomberg News
12 Business Daily Friday, August 12 2016
Asia In Brief Environmental crackdown
Philippines suspends two more mines
The Philippine government has suspended the operations of two more mines, one of them producing nickel, due to environmental violations, amid an on-going audit of mining businesses across the Southeast Asian country, officials said yesterday. The latest action raises the number of suspended mines to 10, eight of them nickel ore producers, since the state launched a review of all mines on July 8. The nickel miner, Emir Mineral Resources in the central Samar province, produced 150,000 tonnes of nickel ore last year and exported it to China, Environment and Natural Resources Secretary Leo Jasareno said. The other mine is a chromite producer. Port acquisition
Australian bidders cleared for port privatisation Australia’s competition regulator cleared the two domestic investors bidding for the country’s biggest general cargo terminal, Port of Melbourne, paving the way for a privatisation the government hopes will raise A$5.3 billion (US$4 billion). Australian Competition and Consumer Commission Chairman Rod Sims said yesterday that after inquiries with stakeholders he “formed the view that neither acquisition would result in a substantial lessening of competition”. The decision clears a significant hurdle for the state of Victoria to sell the port. Automotive scandal
VW Korea head apologises, questioned on emission fraud The head of Volkswagen’s South Korean unit apologised yesterday as he presented himself to state prosecutors for questioning over the German carmaker’s emissions fraud scandal. Johannes Thammer, CEO of Volkswagen Korea, was summoned by the Seoul Central District Prosecutors’ Office a week after South Korea banned the sale of 80 Volkswagen AG models. “Fist of all, I want to say that I am sorry for the situation and we will do everything, faithfully, to cooperate with the prosecutor,” Thammer was quoted as saying by the Yonhap news agency as he arrived at the office. Oil industry
Vietnam’s PV Oil continues to market Song Doc crude Vietnamese state-owned PV Oil is continuing to market its light sweet Song Doc crude, said an industry source and a trader familiar with the matter. The move comes after the company said in April that a cargo loading in June would likely be the last from the field. The industry source said that supply and marketing of Song Doc crude would continue as the lease on the project’s floating production storage and offloading (FPSO) unit was recently extended. A PV Oil spokesman did not immediately reply to requests for comment.
Global weakness
Singapore cuts GDP forecast The financial services sector was a significant drag on the economy in the last quarter. Jongwoo Cheon and Masayuki Kitano
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ingapore cut its economic growth forecast on concerns over Brexit and weakening global demand, leaving the door open for additional policy stimulus, after the contracting financial services sector hurt the economy in the second quarter. The trade-dependent economy is expected to expand 1-2 per cent this year, the Ministry of Trade and Industry said yesterday, downwardly revised from its previous forecast of 1-3 per cent growth. “The biggest factor affecting our growth outlook is global demand,” Loh Khum Yean, the ministry’s permanent secretary, told reporters, adding the new forecast reflects the
The financial heart of the city
prudence - would they indeed be prudent to do so? After Brexit we think there is a small possibility.” The MAS in April unexpectedly eased policy by setting the rate of appreciation of the Singapore dollar’s policy band at zero per cent. Central banks in Asia and other regions have cut interest rates and pumped in fresh money to protect their economies from the fallout from Brexit.
Financial services hit
Visible signs of faltering have emerged in Singapore’s economy with entire floors at some central shopping malls empty as domestic demand slumps. The city’s wealth management sector has come under particularly intense pressure from tougher compliance rules amid a money laundering scandal. The financial services sector was a significant drag on the economy in the last quarter, contracting 11.2 per cent on a quarter-on-quarter seasonally-adjusted annualised basis. The central bank’s Loh said regional headwinds have continued to weigh on lending activity, with trade financing activity to China subdued. Business loans have slowed significantly as a result of an economic slowdown and banks are also turning cautious after they were hit by souring loans from the oil and gas sector. DBS Group Holdings, Singapore’s biggest lender, this week reported a 6 per cent drop in quarterly profit due partly to a jump in provisions for oil services firm Swiber, and flagged large exposure to the struggling oil and gas sector. Reuters
GDP
Thai growth momentum cools The government hopes private sector activity will pick up. Orathai Sriring
Thailand’s economic growth likely slowed in the second quarter from the first as private sector activity eased and exports contracted even as the junta accelerated investment spending in a bid to lift Southeast Asia’s second-largest economy. The army took power in May 2014 to end prolonged political unrest but has since struggled to lift the economy, which has lagged regional peers due to sluggish domestic demand and falling orders for Thai exports. In a Reuters poll, the median for quarterly growth in April-June was a seasonally-adjusted 0.5 per cent, down from the first quarter’s pace of 0.9 per cent. On an annual basis, growth was forecast at 3.2 per cent in the latest quarter, the same as in the JanuaryMarch period, which was the fastest annual rate in three years. Both the central bank and the finance ministry have predicted higher growth in the second quarter than the first. Exports, worth about two-thirds of Thai GDP, have long been weak due to soft global demand and structural problems at home. Private investment has also stayed low, while high household debt has restrained consumption.
That puts the onus on public spending and infrastructure projects as growth drivers. “Private consumption won’t be as strong as it has been in previous quarters and also exports will continue to be a drag,” said Jack Chambers, economist of Moody’s Analytics in Sydney. “The main positive will probably continue to be government spending,” he said. Tourism has also helped, with the number of foreign arrivals up by 8 per cent in April-June from a year earlier.
Stronger growth ahead?
The government hopes private sector activity will pick up following the August 7 referendum “yes” vote on a new constitution, intended to pave the way for an election in 2017.
“From now on, consumption and investment will improve, even as the world’s economy won’t,” Deputy Prime Minister Somkid Jatusripitak told reporters yesterday. “It’s time for the private sector to invest to help Thailand.” In April-June, annual exports shrank 3.1 per cent from a year earlier, according to the central bank, which expects a 2.5 per cent fall for 2016. In the quarter, public expenditure rose 18.2 per cent on-year while the bank’s indexes on private investment and consumption rose 1.3 per cent and 4.3 per cent, respectively. The National Economic and Social Development Board, which has forecast 2016 growth of 3.0-3.5 per cent, will give a new projection on Monday. The Reuters poll put 2016 growth at 3.0 per cent. The economy grew 2.8 per cent last year, up from 0.8 per cent in 2014. Reuters
Tourism is one of the bright spots in Thailand’s economic panorama
Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Joanne Kuai; Nelson Moura; Annie Lao; Kelsey Wilhelm Group Senior Analyst José I. Duarte Design Aivi N. Remulla 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 Founder & Publisher
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government’s current assessment of global economic outlook. The economy expanded 0.3 per cent in the April-June period from the previous three months on an annualised and seasonally adjusted basis, according to the ministry data. That compared with the government’s advance estimate of 0.8 per cent. Economists polled by Reuters expected there would be no change to the advanced estimate. After the GDP data release, Monetary Authority of Singapore deputy managing director Jacqueline Loh said current monetary policy stance remains appropriate for 2016. Still, economists see possibilities for further monetary stimulus at the central bank’s October meeting. “Global demand continues to be weak and for a country like Singapore that is open, it shows very, very quickly and rapidly,” said Vishnu Varathan, an economist at Mizuho Bank in Singapore. “They certainly have room to tweak the policy but the question is one of
14 Business Daily Friday, August 12 2016
International In Brief Government forecast
Portuguese debt higher than expected Portugal’s budget support unit (UTAO) estimates that the government debt as a percentage of Gross Domestic Product (GDP) went up to 131.6 per cent in the first half of this year and is now higher than the government forecast for the entire year. In its monthly note about government debt in July, seen by Lusa, the UTAO estimates that the government debt in the first half of the year was €240.1 billion, €2.4 billion more than the previous months and €8.7 billion more than at the beginning of the year. Public spending
Angola’s draft revised budget sees more borrowing Angola’s revised 2016 General State Budget calls for an extra 560.4 billion kwanzas (€3.031 billion) in borrowing, 19.2 per cent more than originally foreseen in the government’s initial plans. The information is contained in the explanatory report attached to the revised budget, which the government has drafted in the wake of the slump in revenues from oil exports in the first half. The new plan is to be given its first reading by parliament on 15 August. According to the report, which Lusa has seen, projected fiscal revenue (excluding borrowing) this year is 0.8 per cent less than in the government’s original projection.
Monthly report
IEA sees oil markets slowly tightening Lower prices have forced high-cost producers such as the United States to slash spending and reduce drilling. Dmitry Zhdannikov
O
il markets will begin to tighten in the second half of 2016 but at a slow pace as global demand growth declines and non-OPEC supplies rebound, the International Energy Agency said yesterday. The IEA, in its monthly report, forecast a healthy draw in global oil stocks in the next few months that would help ease a glut that has persisted since 2014 on the back of rising OPEC and non-OPEC supply. Oversupply helped send oil prices from US$115 a barrel in June 2014 to as low as US$27 in January this year. Crude later recovered to around US$50 but fell again towards US$40 in July. “Oil’s drop ... has put the “glut” back into the headlines even though our balances show essentially no oversupply during the second half of the year. Moreover, our crude oil balance indicates a hefty draw in the
third quarter after a lengthy stretch of uninterrupted builds,” the Paris-based IEA said. “The resulting product stock draw will increase refiners’ appetite for crude oil and help pave the way to a sustained tightening of the crude oil balance,” the IEA added. It forecast global refinery throughput to rise by 2.2 million barrels per day (bpd) to a record 80.6 million bpd in the third quarter of 2016. But that would still lag expected demand growth, eroding some of the product stock cushion built since mid-2015. The rebalancing will be slow, with inventories in developed economies reaching a record-high 3.093 billion barrels in June. Meanwhile, global demand growth is expected to decline from 1.4 million bpd in 2016 to 1.2 million bpd in 2017, the IEA said. The forecast for 2017 - although still above trend - was cut by 0.1 million bpd from last month’s report following a revision to the global economic
outlook by the International Monetary Fund after Britain voted in June to leave the European Union. Lower oil prices have forced highcost producers such as the United States to slash spending and reduce drilling, resulting in an expected drop in non-OPEC output of 0.9 million bpd this year. But next year, the IEA said, output from producers that are not part of the Organization of the Petroleum Exporting Countries will rebound by 0.3 million bpd - an upward revision of 0.2 million bpd from last month’s report. It cited the start-up of the giant Kazakh Kashagan field as a factor. As a result of lower demand growth and higher non-OPEC output, the IEA cut its call on OPEC crude for 2017 by 0.2 million bpd to 33.5 million bpd. That is close to OPEC’s production of 33.39 million bpd in July when output from Saudi Arabia, Kuwait and the United Arab Emirates reached record levels, pushing total OPEC supply to an eight-year high. Post-sanctions Iran and Iraq have made the biggest gains so far this year, adding 560,000 and 500,000 bpd to their output respectively, the IEA said. Cash-strapped Venezuela and Nigeria - beset by militant attacks have each racked up year-to-date declines of roughly 150,000 bpd versus 2015. Reuters
Key Points IEA sees no oversupply in second half of 2016 Trims 2017 oil demand growth, ups non-OPEC supply estimate Call on OPEC crude in 2017 close to current output
Official report
U.S. jobs openings increase U.S. job openings increased in June and layoffs dropped to their lowest in nearly two years as labour market conditions tightened further, according a government report on Wednesday. The Labour Department’s monthly Job Openings and Labour Turnover Survey (JOLTS) report also suggested a growing skill shortage, which has been highlighted by independent surveys. Job openings, a measure of labour demand, rose 110,000 to a seasonally adjusted 5.6 million, the JOLTS report showed. That raised the jobs openings rate one-tenth of a percentage point to 3.8 per cent. Fiscal inclusion
Argentina sees tax amnesty boosting economy A tax amnesty in Argentina covering undeclared assets could provide as much as US$80 billion to help kickstart the economy while also reducing the government’s need to issue debt, policymakers and bankers told Reuters. The amnesty allows Argentines to disclose previously undeclared funds held abroad or at home and be taxed at a preferable rate if they invest them in the country. The amnesty runs to the end of 2016. That could lower the amount of debt the country needs to issue, Finance Minister Alfonso Prat-Gay told a Reuters Summit on Argentina on Wednesday.
President replacement
World Bank suffering ‘leadership crisis,’ staff say The letter called for the selection process to consider men and women on the basis of clear criteria in a transparent manner. Jeremy Tordjman
Staff at the World Bank delivered a broadside against its sitting president this week, saying the global lender faced a “crisis of leadership” and risked irrelevance on the world stage. The rebuke, made in an open letter from the Bank’s staff association, came as informal talks have reportedly begun on choosing the Bank’s next president. Jim Yong Kim, the current president, whose term ends in less than a year, has not officially declared whether he wishes to stay on. Since taking office in 2012, Kim has undertaken a cross-cutting structural reform which has left some staff members uneasy. Internal surveys have shown that large proportions of Bank staff feel distrustful of senior management. “At the World Bank Group, we preach principles of good governance, transparency, diversity, international competition and merit-based selection,” said the letter from the staff
association, which represents more than 15,000 employees. “Unfortunately, none of these principles have applied to the appointment of past World Bank Group Presidents.” “Instead, we have accepted decades of backroom deals which, twelve times in a row, selected an American male,” the letter said. Following an unwritten rule, European governments choose the head of the International Monetary Fund while the United States names the president of the World Bank. The Bank is also facing competition from other actors in the development world, such as China. The annual internal employee surveys show the Bank is “experiencing a crisis of leadership,” the letter said. “Only one in three (staff members) understand where the senior management team is leading us,” the letter said. “Even fewer believe that our senior management creates a culture of openness and trust.” The letter called for the selection
process to consider men and women on the basis of clear criteria in a transparent manner. “The world has changed and we must change with it,” the letter said. “Unless we revisit the rules of the game, the World Bank Group faces the real possibility of becoming an anachronism on international stage.”
“The world has changed and we must change with it” World Bank staff open letter
Contacted by AFP, the World Bank said its board of directors, which represents 189 members states, had in 2011 adopted rules that guaranteed and open, merit-based process. “These principles were used in the 2012 selection and will govern the upcoming presidential selection process,” the Bank said in an email. In 2012, Kim was chosen by the Bank’s largest shareholder, the United States, but, in a first, faced competition from Nigerian Finance Minister Ngozi Okonjo-Iweala. AFP
Business Daily Friday, August 12 2016 15
Opinion Business Wires
China Daily A way to help develop a multilateral trading system, promote green financing and build a global e-commerce platform－a proposed electronic world trade platform, or eWTP－is the main initiative of a policy advice report going to the G20 summit to be held in Hangzhou next month, said China’s B20’s chief representative on Wednesday. After the earlier B20 meetings, involving a group of companies advising the G20, the policy report was completed that will now be discussed by the G20 leaders, said Yu Ping. Yu is China’s B20 sherpa, a post defined as the representative of the government at the international summit.
Ahmad Nawawi via Foter.com / CC BY-NC-ND
Your active manager: better, cheaper, less successful
Taipei Times The Ministry of Finance is planning to impose a business tax on cross-border e-commerce operators starting next year in a bid to close a loophole that has allowed foreign e-commerce providers to dodge taxes in Taiwan. The ministry said it would invite representatives of foreign e-commerce operators — such as ride-hailing provider Uber Technologies; online hotel booking sites Agoda.com and Booking.com; and even US consumer electronics giant Apple — to a meeting on Thursday next week to discuss the tax. The ministry will also invite accountants and tax experts from the academic sector.
Philstar Elections likely caused investor jitters in May, pulling down foreign direct investments (FDI) by nearly a 10th, the Bangko Sentral ng Pilipinas (BSP) reported. FDI recorded a net inflow of US$364 million, 9.6 per cent down from US$403 million in the same period a year ago. A net inflow indicates more investments entered the country than left. The BSP did not provide any explanation, but Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said the national elections last May 9 could be the reason.
The Asahi Shimbun Japan Post Co. is honouring all Japanese gold medallists at the Olympic and Paralympic Games in Rio de Janeiro with commemorative postage stamps. The first set of stamps was issued August 8 to mark Kosuke Hagino’s (pictured) victory in the 400-meter individual medley race on August 6, the first day of the swimming competition. A total of 1,000 sheets of commemorative stamps went on sale at Tokyo Central Post Office on August 8. A sheet of five 82-yen stamps is priced at 1,400 yen (US$13.73), including tax. The stamps are also available via the Japan Post website.
E
very year your active fund manager gets smarter, better trained and cheaper and every year she has a tougher and tougher time beating the market. It isn’t so much that alpha is dying but that the suckers are all leaving the table. As more money flows into passive strategies the sum of gains to be had at the expense of dumb money diminishes, making alpha, or outperformance, harder and harder to achieve. As many poker players have learned, but some never do, the fewer weak players at a table the more difficult it becomes to win something from the sharks who remain. A look at the performance of hedge and mutual fund performance shows that underperformance is a long-term trend following what may be a steepening slope. Over the 10 years to 2016, 82 per cent of all U.S. large-cap managers, 87 per cent of mid-cap managers and 88 per cent of small-cap managers trailed their benchmarks, according to Standards & Poor’s Spiva analysis. Morningstar’s Active/Passive Barometer, which weeds out funds which did not survive, also paints a dire picture of the health and prowess of the industry. Over 10 years only 17 per cent of large-cap growth funds managed to successfully beat the passive alternative. Only one of 22 Morningstar active categories - U.S. MidGrowth - managed to record a success, or outperformance, rate above 50 per cent. As for hedge funds, they too are failing, in aggregate, to create value. Hedge funds in the HFRI Fund Weighted Composite Index are down 0.18 per cent over the past 12 months and have only logged 2.68 per cent in annualized returns over the past five years, a period during which the S&P 500 has more than doubled in total return terms. Of the more than 60 HFRI indices, not a single one has managed to provide even half the total return of the S&P 500 over the same period. Many will argue, rightly, that the past decade has been unusual, partly because of the bubble and then because central bank intervention have indiscriminately raised valuations of a host of financial assets. That’s true, but cold comfort to people who could have done better by paying less, and often done so while taking considerably less risk.
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James Saft a Reuters columnist
Alpha is a zero-sum game
Michael Mauboussin of Credit Suisse noted this month in a piece for clients he wrote on his 30th anniversary in investment that the percentage of assets managed passively has risen in that time from less than one to about 35 per cent. His argument, that of the poker table, is that relative skill matters rather than absolute skill in investment management. “The difference between the best and the average is less today than it was a generation or two ago. We see this clearly when we examine the standard deviation of excess returns for mutual funds, which has declined steadily for a half century,” Mauboussin wrote. “The massive shift in asset allocation away from active investing toward passive investing exacerbates this effect. Think of it this way: For you to have positive alpha, the industry’s term for risk-adjusted excess return, someone has to have negative alpha of the same amount. By definition, alpha for the market must equal zero (before fees). The truth is that weak players, whom the strong players require to generate excess returns, are fleeing at a record pace.” The clear implication is that more money will flow to passive strategies, more poor managers will be driven out of business, and, crucially, fees will remain under pressure. Technology will only make this process faster and smoother, giving clients more opportunities of bailing out more easily and to ever cheaper alternatives. Of course alpha still exists, and of course, people will continue to both chase it and attempt to pay up for it. Some of them, and the managers they hire, will even be successful. In some ways the best medium-term hope for active managers is a massive multi-asset selloff, the kind in which passive strategies suffer retirementdelaying losses. Active managers will too, but some will outperform and may find it easier to market after a severe bear market. This wouldn’t change the alpha zero sum math, but might reverse the trend, at least temporarily. Reuters
More money will flow to passive strategies, more poor managers will be driven out of business, and, crucially, fees will remain under pressure.
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16 Business Daily Friday, August 12 2016
Closing Punishing distraction
Taiwan police take aim at Pokemon gamers
game,” said Yen San-lung, head of law enforcement in the traffic division of Taipei’s police department. The launch of the Pokemon GO game in Police have warned gamers against Taiwan has sparked a sharp rise in traffic playing in traffic, issuing fines of NTD violations by commuters using their 3,000 (US$95) for car drivers, while smartphones to play while driving. scooter riders face a NTD 1,000 (US$32) Authorities have issued 1,210 tickets for ticket, according to media reports. smartphone use in traffic between last Saturday, when the game was released in Authorities in Taiwan have urged Taiwan, and Monday. More than 1,100 of the gamers to resist the urge to play in certain locations, most notably Taiwan’s tickets were dished out to scooter riders. presidential palace and the National Palace “The whole country is using their smart Museum. Reuters phones like crazy playing this internet
Cinema industry
China’s stalling box office points to consumer slowdown The dip could also be short-lived, with some saying there had simply been a lack of recent blockbuster hits. Adam Jourdan
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hina’s cinemas are showing signs of weakness, a concern for policymakers who had looked to stellar box office receipts over the last half-decade as a sign consumers were picking up some of the slack from ailing exports and manufacturing. Ticket sales dropped 10 per cent in the second quarter of the year versus 2015, the first dip in around five years and a far cry from stellar growth at the start of the year. July sales slumped further, data from box office tracker EntGroup showed. Stalling sales suggest belt-tightening by China’s consumers is hitting even small luxuries and everyday discretionary spending, a concern for the Hollywood producers wooing China and for Beijing as it struggles to stoke domestic demand. “Cinema tickets are expensive and now there are lots more places to find movies, so everyone is choosing to stay at home and watch films online,” said Zhang Fuling, 25, a service worker at a state-owned firm in Shanghai. Zhang is not alone: visits to cinemas fell 15 per cent in July, after growing more than 50 per cent last year and at the start of 2016. Average ticket prices have also dropped to the lowest level in more than five years. Some analysts point to a recent crackdown on producers subsidizing or buying up unsold tickets to inflate box office sales as also weighing on the sector, though similar campaigns
failed to dent growth in 2014 or 2015. With China’s official data viewed with scepticism by some economists, any indicators that may offer a snapshot of the state of the real economy are eagerly watched. Increasing domestic consumption is key to Beijing’s efforts to rebalance the world’s second biggest economy away from its long-running reliance on trade and government spending.
Staying home
Stalling cinema ticket sales are not the only red flag that consumers might be feeling the pinch. Outbound tourist numbers are also set to flat line this year, according to China National Tourism Administration (CNTA) data. Outbound tourists - another bellwether of consumer strength - had risen steeply for years and were up 16 per cent in 2015. “If you can rule out other drivers then you’d have to say it’s a sign that
consumers are becoming more cautious,” said Matthew Hassan, senior economist at Westpac, referring to the weaker box office and tourist numbers. Westpac’s own China consumer sentiment index fell in July. “Aspects of the survey around job security, around savings behaviour do look a lot more conservative, and it may be that there has been a budgetary tightening in the consumer sector,” said Hassan. Chinese retailers have also cut staff and seen inventories pile up, luxury sector growth has dried up, and fastfood giants such as KFC-parent Yum Brands Inc and McDonald’s Corp are grappling for growth.
Box office bubble?
Cinema ticket sales have a history of resilience even in the face of slowing economic growth. The U.S. box office boomed in 2009 after the financial crisis as people looked to the silver screen for an affordable two-hour escape. In China, even as the country faced its slowest growth in a quarter of a century, cinema ticket sales shot up
reynermedia via Foter.com / CC BY
at the start of the year, with record numbers flocking to see movies like quirky romantic comedy “The Mermaid”, driving it to break China’s all-time box office record. Industry insiders, however, said some of that growth was artificial, driven by cut-price deals and producers buying up or subsidizing tickets. “Local film investors had been buying up lots of tickets for their own films, stoking a film market bubble,” said Song Yuxing, an academic and independent film maker. He added slower economic growth was also a drag on domestic films getting made. Cinema operators such as Wanda Cinema Line Corp, China’s largest, have seen the impact. Wanda’s box office sales were up 12.8 per cent in the second quarter of the year, versus 61.4 per cent growth in the first three months. To be sure, the Chinese box office has raked in US$4.5 billion so far this year and is expected to soon challenge the U.S. market for the crown of the world’s biggest. The United States has five times as many cinema screens per person as China - leaving plenty of room for growth. “The Mermaid”, car-chase action flick “Furious 7”, local hit “Monster Hunt” and Walt Disney Co’s animation “Zootopia” have seen big returns in China over the last two years. The dip could also be short-lived, with some saying there had simply been a lack of recent blockbuster hits. “A lot of domestic films lately haven’t really gone down well and lots of viewers feel there isn’t much worth watching,” said Wang Xin, a box office worker at the Stellar International Cineplex in central Shanghai. She added many people were also bringing ticket coupons to get discounts. “The trouble is, if there aren’t any good films on offer then getting a discount doesn’t really make a difference.” Reuters
Results
Dim sum bond
Central bank
Li Ka-Shing’s main companies deliver higher profits
China City Construction International confirms default
Philippines hold rates despite global backdrop
Billionaire Li Ka-shing’s two main companies, CK Hutchison Holdings Ltd. and Cheung Kong Property Holdings Ltd., saw higher earnings in the first half of the year, thanks to growth from the European telecommunications business and Chinese property sales. Profit, excluding earnings from discontinued operations, rose 1.9 per cent from a year earlier to HK$15.2 billion (US$2 billion) at CK Hutchison, Li’s main holding company. Cheung Kong Property saw underlying profit climb 51 per cent to HK$8.3 billion. Yet headwinds abound. Li, who had urged Britons to vote in favour of staying in the European Union before the June 23 vote, is now bracing for the economic fallout from Brexit as CK Hutchison counts the U.K. as its biggest earnings contributor. In the Hong Kong property market, the tycoon is seeing prices and transactions drop amid a slowing economy and government efforts to make housing more affordable. “The withdrawal of the U.K. from the European Union will bring with it considerable challenge both for the U.K. and for Europe for at least the next two to three years,” Li said in the CK Hutchison earnings statement. Bloomberg News
China City Construction International Co Ltd, an unlisted Hong Kong subsidiary of a mainland construction and development firm, confirmed it has defaulted on a portion of an outstanding yuan denominated “dim sum” bond traded in Hong Kong. The firm posted the notice on the website of the Hong Kong exchange yesterday. China City Construction first ran into trouble in April when a change in ownership in its Chinese parent company, China City Construction Holding Group Co, triggered an early redemption clause for the 2.5 billion yuan (US$376.51 million) offshore yuan bond maturing in 2017. City Construction originally planned to redeem the bond in late June, but Chinese mainland capital controls meant that the onshore parent company faced difficulties transferring capital offshore on short notice to repay the bond. The parent firm asked investors in July to extend a grace period while it attempted to arrange the cross-border transaction. Nonetheless yesterday’s exchange posting, China City Construction International said 1.5 billion yuan still remained unpaid, meaning that a default had occurred under the terms of the bond. Investors holding 1.96 billion yuan of the bonds had exercised their right to early redemption following April’s change of control. Reuters
The Philippine central bank held its benchmark interest rate steady, as expected, saying prudent monetary policy is needed given global headwinds and actions by other policymakers. The policy-making Monetary Board yesterday voted to keep the overnight borrowing rate unchanged at 3.0 per cent. It also kept the upper and lower band of its interest rate corridor at 3.5 per cent and 2.5 per cent, respectively. “Increased uncertainty over prospects for growth and monetary action in major advanced economies requires prudence in policy settings,” Bangko Sentral ng Pilipinas Governor Amando Tetangco told a media briefing. All 15 analysts polled by Reuters expected the central bank to leave interest rate corridor settings steady, due to the country’s strong growth and tame inflation. “In short, the central bank is under no pressure to cut rates to support the economy,” Capital Economics said, noting that it “remains in good shape” and growth likely accelerated in the second quarter. The monetary policy stance has not been changed since a 25 basis point rate hike in September 2014. Reuters