Summit Ascent enters partnership with Kangwon Land GAMING Page 7
Tuesday, August 16 2016!YEAR V NR. 1109 MOP 6.00 PUBLISHER PAULO A. AZEVEDO CLOSING EDITOR JOANNE KUAI PBOC
China’s M1, M2 gap does not indicate a “liquidity trap” Page 8
www.macaubusinessdaily.com
MICE
DELISTING
Asia Pacific Conference on Giftedness takes places in Macau Page6
Wanda Commercial says shareholders approve delisting plan Page 16
CE: IDLE LAND PLOTS CAN COVER ‘LAND DEBT’ LAND
Chief Executive Chui Sai On says he has confidence the Government will be able to cover the city’s ‘land debt’ - the amount of land owing to those developers that gave up land concession plots in order to help public-sector building projects. The ‘land debts’ can be settled as long as all the city’s expired and undeveloped land concessions are reverted back to the Government, as is required. Such plots could then form part of the Government’s reserves of land, said Mr Chui. Page 2
Table games
GAMING Page 7
HK Hang Seng Index August 15, 2016
Taipa rebound
PROPERTY The city’s average home prices jumped by 24.5 pct in July when compared to the previous month, or 15.2 pct y-o-y, amounting to MOP97,681 (US$12,210) per square metre for July. The increase was boosted by growth in the prices of Taipa units, DSF’s latest data shows. Page 3
Costly water
UTILITIES Water charges will rise starting from November and will vary for different sectors. In principle, the more you use, the higher average price you will pay, says the Marine and Water Bureau, in order to promote local water conservation. Page 4 22,932.51 +165.60 (+0.73%)
Worst Performers
Ping An Insurance Group Co
+3.84%
CK Hutchison Holdings Ltd
+2.14%
Tingyi Cayman Islands
-3.19%
Belle International Holdings
-0.90%
China Life Insurance Co Ltd
+3.54%
Tencent Holdings Ltd
+1.76%
Sands China Ltd
-2.75%
Sun Hung Kai Properties Ltd
-0.90%
Li & Fung Ltd
+3.36%
Industrial & Commercial
+1.67%
Want Want China Holdings
-2.59%
New World Development
-0.75%
China Resources Land Ltd
+2.82%
CNOOC Ltd
+1.56%
Galaxy Entertainment Group
-1.96%
Sino Land Co Ltd
-0.73%
Bank of China Ltd
+2.35%
Lenovo Group Ltd
+1.30%
Hang Lung Properties Ltd
-1.05%
China Resources Power
-0.60%
26° 29° 26° 30° 26° 30° 26° 30° 26° 30° TODAY
WED
THU
I SSN 2226-8294 Source: Bloomberg
Best Performers
FRI
SAT
Source: AccuWeather
Casino operator Wynn Macau Ltd confirmed in a statement on Friday that it had received approval from Macau’s gaming regulator to transfer 250 gaming tables from its property on the peninsula to Wynn Palace, due to open on August 22 in Cotai. Investment analysts are now examining the implications of Wynn Palace’s table allocation for other Macau operators with large projects opening this year and next year.
2 Business Daily Tuesday, August 16 2016
MACAU LAND
CE: Idle plots enough to repay land debts The top official is confident about winning lawsuits to recover the idle land plots in the city. Kam Leong kamleong@macaubusinessdaily.com
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HIEF Executive Fernando Chui Sai On is confident that the idle plots of land the SAR government is to recover will be sufficient to repay the city’s land debts. “Many of the cases are currently under lawsuits. Even though I can’t give you more details on the progress,
the government is very confident in winning the cases as it has taken the initiative to recover the plots based on the new land law,” the top official told reporters yesterday at the local airport before departing for a threeday official visit to Beijing. Asked whether the government had a back-up plan, such as using plots in the new land reclamation areas to repay the debts if the size of idle plots to be recovered is inadequate,
Mr. Chui rejected this possibility. “I absolutely believe the idle plots will be enough to repay the land debts,” the Chief Executive reassured. “But first of all, I need to emphasize that we need to respect the legal system and the law. If we win all the lawsuits [regarding the idle plots], we will have sufficient parcels to repay the debts”. Recently, the Chief Executive told the Legislative Assembly that the government is involved in six cases of outstanding land debts, relating to a total of 88,806 square metres. “The land debts are owed due to the government’s previous favorable policies [to the gaming industry], and [for the purposes of] public facilities and benefits,” the top official said yesterday, claiming that all idle plots will be prioritized for public housing and government facilities when they are officially reclaimed. The plots involved in the land debts include the two parcels of land housing three gaming projects, namely, Wynn Macau, MGM Macau and Galaxy Macau; another two plots
Chui: Tam is a good worker
Meanwhile, the Chief Executive said he would examine the criticisms against the Secretary for Social Affairs and Culture, Alexis Tam Chon Weng when he returns from Beijing. The top official was asked about his thoughts on the Secretary, following the latter being criticized for his policies regarding the Hotel Estoril and the Infectious Disease Building.
for the public housing projects in Ilha Verde and in Coloane; and two for the Golden Lotus Square and the expansion of the Incineration Plant in Pac On, Taipa. According to the Secretary for Transport and Public Works, Raimundo do Rosario the SAR government has declared that land grants for some 40 idle plots in the territory are invalid, as their developers failed to develop the plots before the expiry of their 25-year concessions. Most of the land awardees, meanwhile, have filed judicial appeals against the government’s decisions, the Secretary said. “It will take us a while to handle the issue due to the heavy workload and the [high number] of plots involved,” the Chief Executive said. Mr. Chui will stay in the capital city for three days until this Thursday to discuss the city’s first Five-year Development Plan. During the trip, he will meet with officials from several ministries and departments of the central government.
“I have been working with him for many years and I think he is a very hardworking and motivated public servant. As a leader and a secretary, we should always listen humbly to opinions from the society and the legislature, especially criticisms,” he said. “When I come back, I will analyze with him…I would not presume he is a bad kid. Instead, he is a very good colleague of the team”.
CRIME
17 men arrested for loan sharking ring The police have arrested 17 suspects working for a loan sharking criminal group. Cecilia U cecilia.u@macaubusinessdaily.com
The Judiciary Police (PJ) arrested 17 males from Mainland China working for a loan sharking group. The police launched a raid on two flats in a residential building in the
ZAPE district on the Macau Peninsula yesterday. According to the PJ spokesman, the men arrested range from 24 to 47 years old. They come from different parts of Mainland China including Fujian, Guangdong, Anhui and Heilongjiang provinces. One of those
arrested also held a Macau blue card working permit. The police say the arrested men revealed that they did not receive wages or salaries in Macau, but instead made money by granting loans and charging interest. They charged interest at a rate of 10 per cent of each winning game played by the borrower. “ T h e s u s p e c t s h av e t h e i r source of customers around the
ZAPE district, who are mainly gamblers from nearby casinos, and every issued loan stands at around MOP30,000 (US$3,755) to MOP50,000,” the PJ spokesman said. Cards and receipts for loans were found inside both flats and the total amount of the issued loans is still being determined. The PJ are continuing to investigate the case.
Business Daily Tuesday, August 16 2016
3
MACAU MONETARY
Forex reserves jump to MOP155.2 bln at July-end
Macau’s foreign exchange reserves totalled MOP155.2 billion (US$19.4 billion) as at the end of July, a jump of 2.6 per cent monthon-month, a preliminary estimate by the Monetary Authority of Macao (AMCM) indicated. The amount surged by 18 per cent compared to MOP144.6 billion one year ago. As at the
end of last month, the city’s foreign exchange reserves represented 12 times the currency in circulation, or 106.2 per cent of Pataca M2. The trade-weighted effective exchange rate index for the pataca rose 0.87 points monthto-month, and 1.64 points year-on-year, to 106.39 in July. The increases suggest that the local currency generally appreciated against the currencies of the city’s major trading partners in the period.
PROPERTY
Housing prices surge 24.5 pct in July Taipa saw both home transactions and prices increase as new projects began selling in the month. Kam Leong kamleong@macaubusinessdaily.com
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HE city’s average home prices jumped by 24.5 per cent month-on-month, or 15.2 per cent year-on-year, amounting to MOP97,681 (US$12,210) per square metre for July. The increase was boosted by growth in the prices of Taipa units, the latest official data released yesterday by the Financial Services Bureau (DSF) shows. L a st m o n t h, t o t a l h o u s i n g transactions amounted to 739, representing a decrease of 6.9 per cent compared to 794 transactions in June, but a hike of 39.4 per cent from 529 home sales during the same month last year. Home transactions in Taipa recorded an increase of 7.6 per cent month-on-month to 278. Compared to just 92 transactions one year ago, the number soared by 202 per cent. In addition, the average housing prices
in Taipa surged by 40 per cent monthon-month, or 17.9 per cent year-onyear, to MOP117,771 per square metre. DSF explained that the increases were due to the sales of new residential projects there. ‘The housing transactions in Taipa were primarily on [units] in the Old Taipa area and in the Jockey Club area. Of the total, nearly 52 per cent of the transactions were made on new residential units with relatively
high prices, which also drove up the average housing prices in the month,’ the financial department wrote. According to official data, 146 of the units in Taipa were sold off-plan in the month, with the average cost amounting to MOP120,834 per square metre, while the average prices for the other 132 completed homes transacted in the month totaled MOP114,062 per square metre.
Lower home prices on Peninsula and Coloane
Meanwhile, housing prices on the Macau Peninsula registered a slight
increase of 0.9 per cent month-onmonth to MOP76,184 per square metre. Compared to MOP77,971 per square metre one year ago, the amount represented a decrease of 1.48 per cent. There were 448 home transactions on the peninsula during the month, dropping by 27.2 per cent monthon-month, yet growing by 12.3 per cent year-on-year. Only 13 housing transactions on housing units in Coloane were recorded in July, a decline of 23.5 per cent month-on-month, or 65.8 per cent year-on-year. These 13 homes were sold for an average of MOP90,140 per square metre, a decrease of 9.5 per cent month-onmonth, or 3.6 per cent year-on-year. The average cost for buying a completed residential unit amounted to MOP87,422 per square metre last month, falling by 23.3 per cent month-on-month but jumping by 22.4 per cent year-on-year. Meanwhile, the average prices of off-plan sales surged by 167.6 per cent month-on-month to MOP119,201 per square metre.
4 Business Daily Tuesday, August 16 2016
MACAU OPINION
José I. Duarte Flotsam unnoticed In early July, Hong Kong newspapers were talking about the vast amounts of rubbish arriving on the region’s shores in the previous couple of weeks. Such a situation raised obvious health, environmental and economic concerns. The media were openly debating the causes and possible ways to deal with the situation, described at the time as an environmental disaster. By then, the possible source of the spill – I suppose we can call it this – was identified. A huge rubbish dump, apparently illegal, located on one of Zhuhai’s outlying islands, was collapsing and refuse was flowing into the sea. Civil society organizations and individual volunteers started mobilizing to clean up the beaches. The government promised both remedial actions and to address the problem with the mainland authorities. The Hong Kong Chief Executive made a point of participating in the cleanup operations. The subject is still on the public agenda and pressure is being kept on the government to deal with the issue. As we might expect, it was (and is) likely that Macau faced (and will keep facing) similar problems, but we have to look hard to find the subject on anybody’s list of concerns. In early July, a daily paper made a brief reference to the significant amount of waste visible on Hac Sa beach. The subject has been virtually absent from the local media since then. Searches for the subject on local media websites return empty or unrelated hits. Only last Friday did the topic surface – prominently, it must be said – on the front page of a Macau newspaper. Until then, it seems, nobody considered the issue important enough. The Government websites provide even less information or guidance. The Municipal Council oversees the region's beaches, but you will basically find not a word or any reference to this problem on their website. Since the middle of June they have posted 11 news releases online. The most popular theme was related to the pandas, with four releases. There is no reference to any abnormal amounts of rubbish or any associated health or environmental concerns. The government information office follows a similar pattern with no reference to the issue in the releases made during the last two months. Searches using the keywords ‘rubbish”, “beach” or “Hac Sa” return just a few posts on unrelated topics. It seems that no government offices thought the issue was important enough to deserve attention, or were pressured by organizations or residents who thought otherwise.
José I. Duarte is an economist and permanent contributor to this newspaper.
UTILITIES
Water bills to rise in November
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ATER charges will rise starting from November 1 according to an Official Gazette dispatch. For household water usage, the price for the first 28 cubic metres used will increase from MOP4.39 (U$0.54) to MOP4.48 per cubic metre, a two per cent rise. Above 32 cubic metres, tariffs will increase by four per cent from
POLITICS
MOP4.98 to MOP5.18 per cubic metre; and in cases of special water usage, a 16 per cent increase will be applied, with a rise from MOP6.68 per cubic metre to MOP7.75. For non-household usage, the price will increase to MOP6.04 reflecting a rise of eight per cent. The last change in water charges was in November 2014. Last week the Marine and Water Bureau indicated that the city’s
water fees would be adjusted as a way of keeping the local water-tariff mechanism running effectively, as well as strengthening local water conservation, as reported by Business Daily. The bureau also stated that the latest raw-water tariff that it needs to pay to Guangdong Province for the 2017 - 2019 period, would be determined by the end of this year. N.M.
LAST PORTUGUESE GOVERNOR OF THE MSAR CURRENTLY RECEIVING 13,607 EUROS IN LIFETIME MONTHLY PENSION
Golden retirement Former MSAR administrators are currently receiving the highest amounts in lifetime pensions from the Portuguese government. Nelson Moura nelson.moura@macaubusinessdaily.com
Two former Macau governors and one former Deputy Secretary for Administration, Education and Youth are currently receiving the highest amounts in lifetime pensions from the Portuguese government, according to a list revealed by the Portuguese civil servants retirement fund, Caixa Geral de Aposentações (CGA). A department under the Portuguese Ministry of Labour, Solidarity and Social Security, the CGA has for the first time released the list of all 332 recipients of the fund scheme ‘in compliance with the state’s
transparency obligation in respect of income earned in the exercise of public functions’.
Lifetime pension
The list, which includes many former legislators and politicians, includes former Macau governors Vasco Rocha Vieira and Carlos Melancia, and former Deputy Secretary for Administration, Education and Youth, Jorge Rangel. Of the names included on the list, Vasco Rocha Vieira, governor of Macau between 1991 and 1999, was revealed to be receiving the highest amount. With a non-disclosed partial reduction, he has received a total of
13,607 euros (MOP121,277/US$15,179) per month since 2000. Carlos Melancia, governor of Macau from 1987 to 1991, has been receiving the second highest amount of those on the list, with a total of 9,727 euros per month since 1998. Former Macau Portuguese administration Deputy Secretary for Administration, Education and Youth, Jorge Rangel has been receiving a monthly pension of MOP6,633 since 2000. The Monthly Lifetime Grant is a right of former political appointees by the Portuguese administration that have performed their duties for eight consecutive or interpolated years. The scheme entitles the recipients to a monthly lifetime pension after they cease their functions as public servants. The pension can reach as much as 80 per cent of their former monthly salaries, but if the recipient is currently working for the private sector and earning a monthly salary higher than 1,257 euros, they can only receive a partial amount.
Business Daily Tuesday, August 16 2016
5
MACAU
INFRASTRUCTURE
Waiting on the train Legislators are not convinced of a 2019 finish date for the Taipa LRT segment, a new state-owned company will replace GIT, and authorities are in talks regarding the Hengqin, Zone A and Portas do Cerco connections. Kelsey Wilhelm Kelsey.wilhelm@macaubusinessdaily.com
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OVERNMENT representatives affirmed yesterday that the Taipa portion of the Light Rail Transit system (LRT) would be completed in 2019, however members of the follow-up committee for land and pubic concession affairs stated that they are in doubt 'as it’s unknown whether this will be completed within the three and a half years remaining,’ as noted in the commission’s report. The commission added that if the Taipa portion of the transit system were to suffer further delays, it could ‘dash the anxious expectations of the population’ and cause them to lose faith in the government. Government representatives at yesterday’s committee meeting admitted their lack of experience in the infrastructure construction, saying ‘this is a novelty […] in terms of the number of workers, technical experience and professional capacity [and] administrative efficiency,’ claiming they are ‘facing various difficulties’. To compensate for these difficulties, the government is opting to contract more specialists, stating that there is a necessity to find ‘new solutions’ as well as ‘extinguish’ the Transportation Infrastructure Office (GIT), replacing it with a government-owned company ‘similar to the Airport Administration [ADA]’. The committee noted that it ‘believes this corporate model is more adequate for the future operation of the Light Rail’. The government representatives also assured the committee that they would offer more detailed information about the creation and functioning of the company in the future.
New mechanism
Another way the government hopes to accelerate the LRT construction process is through a “new mechanism of awards and penalties,” noted Legislator Ho Ion Sang, speaking to the press after the committee meeting. “We will try to see if we can actually
– through these [measures] – resolve the problems of the construction works in terms of time and the problem of cost,” said Ho. The commission report notes that ‘the government is fighting to create new ideas, adopting new forms,’ referring to the new award/penalty system. The new system, to be implemented in the new tender for the superstructure of the machinery and repair works of the LRT, divides the building works into 14 milestones. If a contractor can achieve all the milestones, ‘to encourage it to complete the works early,’ it can win a ‘prize’ equivalent to eight per cent of the tender. If it is unable to do this, ‘all prizes will be cancelled,’ notes the report. The committee noted that private construction projects are concluded ‘often within the deadlines or even early’, while public projects are ‘repeatedly’ finalised ‘past the deadlines and with an excess of expenditure’.
Macau connection
Pointing out the difficulties in starting the LRT construction work on the peninsula, the government representatives affirmed that it would be necessary to divide the project into segments based on their importance and urgency, concentrating first on finalizing the Taipa line – 9.3 kilometers and 11 stations – before moving on to the connection to the Barra station, and then on to the works on the Seac Pai Van line – two kilometers and two stations. In addition, the representatives noted that the government is currently in talks with its counterparts in Mainland China regarding the Lotus Border Gate LRT station and a possible connection to Hengqin Island. The representatives however could not yet provide ‘more detailed information’. In regards to the peninsula portion of the LRT, the government will conduct a ‘general consideration’ involving Zone A of the reclaimed land areas, the artificial island for the border crossing of the Hong Kong-Macau-Zhuhai bridge. Decisions will be made within this year, as well as on a ‘respective financial budget’, with the ‘next step’ being
an analysis of a plan to connect the line to the Gongbei border crossing. The government also assured that for the Seac Pai Van line, it would no longer use a phased tender process, and would adjust the committee-suggested ‘guiding line of the tender’. Additionally, in a separate committee report, the group noted that the
probability that the first two phases of the Island Hospital complex would be completed on time, respectively in 2019 and 2020, was ‘minimal’, with legislator Ho noting that “there’s a lack of coordination between the entities [involved]”. The government representatives noted that there was ‘margin for improvement’ and that in neighboring regions, hospital construction projects took around 10 years to complete.
6 Business Daily Tuesday, August 16 2016
MACAU
MICE ASIA PACIFIC CONFERENCE ON GIFTEDNESS TAKES PLACES IN MACAU
New page in talent development IPIM says hosting the ICCA-recognised event advances Macau’s profile as a MICE destination.
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HROUGH its “One-Stop Service” for MICE [Meetings, Incentives, Conferences and Exhibitions] Bidding and Support in Macau, the Macau Trade and Investment Promotion Institute (IPIM) has successfully attracted and introduced to the city a number of high-profile, international conventions and meetings. Examples of international MICE events held in Macau during the first half of the year included the business meeting Herbalife (China)
Extraordinary Tour 2016, and the event Jeunesse 14th Hong Kong University. Earlier last month, Macau welcomed the 14th Asia-Pacific Conference on Giftedness (14th APCG). The APCG is officially recognised by the International Congress and Convention Association (ICCA) as a MICE event of international stature. IPIM says the successful hosting in Macau of the 14th APCG clearly demonstrated that MICE activities can play an important role in promoting academic exchanges and
communication, including in the humanities and social sciences. The hosting of the event also highlighted the versatility of Macau’s MICE-related hardware and software in catering for the needs of a variety of events. IPIM adds that the hosting of MICE activities plays an important role in attracting professional visitors and business delegations to Macau, thus enhancing economic development. It can also promote academic exchanges and communication, including in the fields of humanities and social sciences.
MICE destination
The four-day 14th APCG was held in mid-July at the University of Macau. The conference attracted approximately 350 experts and scholars from 20 countries and regions including: Mainland China, the United States, Australia, the United Kingdom, Japan, Russia, Singapore, Taiwan, and Hong Kong. Under its positioning as a “Mega Events City”, Macau continues to
welcome new ICCA recognisedevents. This further helps to improve the standard and level of service offered by Macau in the field of event organisation. It also further promotes the city as a top global destination for MICE events promoted by international associations. The Macau Convention and Exhibition Association began assessing – as long ago as 2010 – the value of putting forward bids to bring ICCA-recognised events to Macau. The recent 14th APCG was the ninth ICCA-recognised event for which the Macau Convention and Exhibition Association had bid. M aca u i s t o h o st s ev e ra l international, large-scale events in the second half of 2016. These include: the 11th Worldwide Chinese Life Insurance Congress and the Annual Conference of the International Dragon Award (IDA), an ICCA-recognised event which is expected to attract more than 7,200 delegates; and “SIGGRAPH Asia 2016”, which hopes to attract more than 5,000 participants. The city will also welcome a range of other events, each one expected to involve more than 7,000 people.
RETAIL
I.T posted stable growth in Q1 The comparable store sales growth of I.T Ltd. in Hong Kong remained unchanged in the first quarter of 2016, ended May 31, 2016, despite fluctuations in the economy. Sales in Mainland China and Japan, on the other hand, posted considerable growth, according to the company’s filing with the Hong Kong Stock Exchange last Friday. The company enjoyed 6.6 per cent and 32.9 per cent increases in comparable store sales quarter-on-quarter in Mainland China and Japan respectively. The growth for Mainland China was attributable to further enhancements in their brand equity and a broadening of their brand awareness,
while the rise in tourist flow favoured the performance of the segment in Japan, according to the unaudited fiscal year 2016/2017 first quarter trading update. Exact figures are not supplied by the quarterly report, but the total retail sales of the company for the first half ended August 31, 2015 were HK$3.4 billion (US$400 million), with an increase of six per cent in the Macau segment, but a decline of four per cent in Hong Kong half-onhalf. As of February 28, 2015, I.T Ltd owned 11 stores in Macau and 266 stores in Hong Kong, according to the annual report for the fiscal year 2015/2016. C.U.
Business Daily Tuesday, August 16 2016
7
MACAU GAMING ANALYSTS BELIEVE THE PARISIAN AND MGM COTAI WILL BE ABLE TO RECEIVE MORE THAN 150 TABLES
Non-gaming pays Wynn Macau Ltd. confirmed it will transfer 250 tables from its Wynn Macau property to Wynn Palace at its opening, to add to the available 100 tables allocated by the government. Nelson Moura nelson.moura@macaubusinessdaily.com
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YNN Macau Ltd. has confirmed it will transfer 250 tables from its Wynn Macau property to Wynn Palace after its planned opening on August 22, according to a company filing yesterday with the Hong Kong Stock Exchange. Last week, the Secretary for
Economy and Finance, Lionel Leong Vai Tac announced that the new gaming project is authorized to run 150 tables - 100 new gaming tables after opening, with the other 50 gaming tables only becoming available in the following two years. ‘The Gaming Inspection and Coordination Bureau (DICJ) authorised 100 new table games for operation at Wynn Palace effective 22 August 2016, 25 new table games for operation on January 1 of 2017 and 25 new table
games for operation on January 1 of 2018’, the gaming group stated in its release. The gaming operator had applied for 400 tables, but the government decided on 150 according to a principle of compound annual growth rate in new gaming tables of no more than three per cent until 2023. Wynn Macau Ltd. told Business Daily it is “satisfied with the allocation we’ve received”. With the table transfer, Wynn Palace will have 350 operational tables available upon opening, in addition to 1,145 slot machines, with Wynn Macau seeing its table number reduced to 270.
Not family oriented
According to analyst Grant Govertsen from Union Gaming, the decision to allocate only 150 tables to Wynn Palace, rather than the 250 tables Galaxy Macau Phase II / Broadway and Studio City received, was justified by the MSAR Government because the “projects that opened last year had a greater focus on family entertainment and non-gaming offerings, and - importantly in our view - a nod to the local community with on-property support for SMEs”. According to the analyst, the onproperty support for local companies was demonstrated by the opening of many local Macau restaurants at Broadway and Studio City. In Govertsen’s view, the next projects to open in Cotai - Las Vegas Sands’ The Parisian on September 13, and MGM Cotai in the second quarter of 2017 - are in a better position to receive more than 150
PARTNERSHIP
Summit Ascent enters deal with South Korean gaming operator Cecilia U cecilia.u@macaubusinessdaily.com
Summit Ascent Holdings Ltd. (SAH) stated their participation in a nonlegally binding memorandum of understanding for a strategic partnership with Kangwon Land
(KWL), according to the SAH filing with the Hong Kong Stock Exchange last Friday. The highlights of this partnership include KWL or its designated hotel management company providing the potential hotel management and operations of Tigre de Cristal in the Russian Far East. It also involves KWL supplying possible Korean contractors and Korean project finance for Phase 2 of Tigre de Cristal. Cruise line routing and charter flights between KWL Casino in South Korea and Tigre de Cristal are included as well. The memorandum of understanding also covers potential investment in future investment projects of KWL by SAH. Other programs, such as a gaming staff exchange program and further development of recreational facilities and shops are also included. KWL is known as the largest gaming operator by revenue in the Republic of Korea, and the operator of High1 Resort. Lawrence Ho Yau Lung is Chairman and Non-executive Director of SAH, as well as the Chairman, Executive Director and Chief Executive Officer of Melco Crown Entertainment.
tables, due to their focus on nongaming activities. “As it relates to Parisian, and in the context of the government’s explanation above, no operator has historically focused more on non-gaming and family-style entertainment than Sands China and we think Parisian will be no different. As it relates to MGM Cotai, we don’t know what’s planned as far as the total package of non-gaming amenities and local SME support is concerned, but we do recognize that the company has a few quarters to get everything buttoned down before applying for a table grant when they open,” Govertsen stated. The allocation of a larger number of tables at Grand Lisboa Palace, scheduled to open in early 2018, was also considered a possibility by the analyst.
Leftover tables
Ac c o r d i n g t o t h e a n a l y s t ’ s calculations, the Macau government will have 947 table games available to distribute, when taking into account all the tables allocated since 2012, including Wynn Palace. “Under the assumption that The Parisian Macau, MGM Cotai, and Grand Lisboa Palace each get 250, this would leave the government with 197 tables in its pocket that could be granted,” Govertsen stated. In the analyst’s opinion, in the case that Wynn Palace checks “more boxes as it relates to family-style non-gaming and on-property SME support” the government could maybe change its decision in regard to the number of allocated tables after 2018. As of June, Macau had 5,998 gaming tables spread over 36 casinos according to DICJ.
8 Business Daily Tuesday, August 16 2016
GREATER CHINA PBOC
China’s M1, M2 gap does not indicate a “liquidity trap” China’s central bank said July new credit growth slowing to a two-year low was a distortion and that money supply data for August and September will show a rebound.
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HE growing gap between M1 and M2 cannot be used as an indicator to evaluate whether the economy is entering a “liquidity trap,” the People’s Bank of China (PBOC) said on Monday. Growth in M1 money supply, which includes cash and short-term deposits, accelerated to 25.4 per cent in July from a year earlier while M2 money supply, which includes longer-term deposits, grew only 10.2 per cent, its weakest growth in 15 months, raising concerns a “liquidity trap” is forming in China.
August and September as the base effects of last year’s injections fade, the statement added, and it is normal to see some fluctuations in monthly money supply and credit data. The central bank said accelerating M1 growth was due to a rise in corporate deposits, caused by low interest rates, a revival of the property
market and local government debt swaps. The gap between M1 and M2 growth “primarily reflects the change in monetary distribution among different sectors and there is direct connection with the ‘liquidity trap’ hypothesis,” the central bank said. “It cannot be a measure that indicates (the economy) is entering a ‘liquidity trap’.” Sheng Songcheng, director of the Survey and Statistics Department at the PBOC, said last month that China has already fallen into a “liquidity trap” where increased money supply
is being absorbed by firms that are not in turn investing cash. Bank lending in July indicated a “seasonal slowdown” after banks doled out a record 7.53 trillion yuan (US$1.13 trillion) in new loans in the first half of 2016, the central bank said, adding that credit data was also affected by loans extended by largeand medium-sized commercial banks for local government debt swaps, totalling 800 billion yuan so far this year. China’s banking system has ample liquidity, the statement added, and the PBOC will fine-tune monetary policy in a pre-emptive way. The PBOC will maintain prudent monetary policies with some flexibility, the statement also said, adding the interest rate is running at a low level. REUTERS
Key Points M2 growth distorted by a higher base of comparison M2 growth likely to rebound in August and September Rise in corporate deposits boost M1 growth “M2 growth was distorted by a higher base of comparison boosted by money injections to calm stock market volatility in the second and third quarter of last year,” the central bank said in a statement posted on its website. M2 growth is likely to rebound in
SUMMIT
China signals growth, not political disputes, should dominate G20 Chinese Central Bank management believes this would be the first G20 to discuss foreign exchange markets in such detail. Sue-Lin Wong and Ben Blanchard
China expects next month’s summit of the G20 which it is hosting will focus on boosting economic growth and other financial issues rather than disputes like the South China Sea, senior officials said on Monday. The summit of the world’s 20 biggest economies in the eastern city of Hangzhou will be the highlight of President Xi Jinping’s diplomatic agenda this year, and the government is keen to ensure it proceeds smoothly. The September 4-5 leaders’ meeting comes as clouds continue to hover over global growth prospects and worries about China’s own slowing economy. Last month’s meeting of G20 policymakers was dominated by the impact of Britain’s exit from Europe
and fears of rising protectionism. Yi Gang, a vice governor of the People’s Bank of China, said the summit will focus on how to stimulate sluggish global economic growth through open, inclusive trade and the development of robust financial markets. “We need to instil market confidence and ensure there are no competitive devaluations but rather let the market determine exchange rates,” Yi told a news briefing, adding this would be the first G20 to discuss foreign exchange markets in such detail. The G20 will also discuss how to better monitor and respond to risks presented by global capital flows, he said.
Different agendas
Despite increasingly protectionist rhetoric around the world, the G20 is strongly opposed to anti-trade and
anti-investment sentiment, Vice Finance Minister Zhu Guangyao said. “We really do need to make sure that the people, the public, benefit from economic development and growth. If people don’t feel like they are beneficiaries of economic development, if they don’t think their
“We need to instil market confidence and ensure there are no competitive devaluations but rather let the market determine exchange rates” Yi Gang, a vice governor of the People’s Bank of China
lot in life is improving, that’s when they start getting all kinds of ideas.” But meetings between Xi and the leaders of countries including the United States, Japan, South Korea and Australia are all also expected to touch upon tricky subjects such as China’s increasingly assertive moves in the South China Sea, diplomats say. China has refused to recognise an international court ruling over its claims there in a case brought by the Philippines. Vice Foreign Minister Li Baodong did not directly answer a question about whether the G20 was the right place to discuss the South China Sea, saying various countries always had their own agendas to push on issues of concern at such meetings. “This meeting, this G20 summit in Hangzhou, has as its theme economic growth,” Li said. “How can we have sustainable, balanced and inclusive growth. This is what everyone is focused on and is the consensus. We believe that member states will discuss this important subject and find a resolution.” REUTERS
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MACAU
10 Business Daily Tuesday, August 16 2016
GREATER CHINA AUTOMOTIVE
TESLA: THE SYSTEM WAS NOT SELF-DRIVING BUT MERELY ASSISTIVE
Tesla removes ‘autopilot’ from China website after Beijing crash The crash is another hiccup for Tesla in the Chinese auto market, the world’s largest, after it initially struggled with distribution and charging issues. Jake Spring and Alexandria Sage
T
ESLA removed the word “autopilot” and a Chinese term for “self-driving” from its China website after a driver in Beijing who crashed in “autopilot” mode complained that the car maker overplayed the function’s capability and misled buyers. The Tesla driver crashed earlier this month while on a Beijing commuter highway after the car failed to avoid a vehicle parked on the left side, partially in the roadway, damaging both cars but causing no injuries. It was the first known such crash in China, though it follows a fatal accident in Florida earlier this year that put pressure on the auto executives and regulators to tighten rules for automated driving. “At Tesla we are continuously making improvements, including to translations,” a Tesla spokeswoman
said in an emailed statement to Reuters. “We’ve been in the process of addressing any discrepancies across languages for many weeks. Timing had nothing to do with current events or articles.” References to autopilot and the term “zidong jiashi”, which most literally translates as self-driving although also means autopilot, were taken off the webpage for the Model S sedan by late Sunday, according to a comparison with an archived version of page. Both terms previously appeared several times on the site. Instead a phrase that translates as ‘self-assisted driving’ is used. Tesla China staff have additionally undergone training in response to the Aug. 2 crash to re-emphasize that employees must always keep two hands on the wheel when demonstrating the autopilot function, according to a Tesla employee who was
not authorised to speak to the media. Reuters was first to report last week that Tesla said it downloaded data from the Beijing car and confirmed it was in autopilot mode at the time of the crash, although the driver was not detected to have his hands on the wheel. The spokeswoman for the U.S. automaker issued a statement saying that the system was not self-driving but merely assistive and that drivers were responsible for always maintaining control of the vehicle. Other Tesla drivers interviewed
by Reuters said China sales staff took their hands off the wheel while demonstrating the function. Under Chinese law, drivers are required to keep two hands on the wheel at all times. The crash is another hiccup for Tesla in the Chinese auto market, the world’s largest, after it initially struggled with distribution and charging issues. Various Chinese government ministries did not respond to requests for comment on the Tesla crash and self-driving policies. REUTERS
Securities Ltd. in Hong Kong. “There’s much talk about mergers and acquisitions” in the real estate industry, he said. The China Securities Regulatory Commission is pushing ahead with preparations for the link between Hong Kong and Shenzhen, which expands on an existing connect with Shanghai, and the program will start this year when appropriate, the regulator’s spokesman Deng Ge said at a briefing in Beijing on Friday. Billionaire Hui Ka Yan’s Evergrande has boosted stakes in both China Vanke Co. and Langfang Development Co.
The aggregate quota for the Hong Kong-Shanghai link will be abolished, while only daily caps will be imposed on the Shenzhen program, the Hong Kong Economic Journal reported, citing unidentified funds briefed by exchange officials. Gains came as China’s broadest measure of new credit rose the least in two years. Aggregate financing was 487.9 billion yuan (US$73.4 billion) in July, compared with the median estimate of 1 trillion yuan in a Bloomberg survey of economists, data showed Friday after markets closed. The credit growth data “weren’t great, but the market is expecting there will be more policies coming out to help the economy, and that’s helping the A-share market as well as Chinese companies in Hong Kong,” Yip said.
EXCHANGE LINK
China stocks jump to seven-month high on Shenzhen link optimism Shares in Shenzhen rallied after a report said details of an exchange link with Hong Kong will be announced shortly. Kana Nishizawa
Chinese stocks climbed to a sevenmonth high on surging turnover as takeover speculation buoyed property developers and shares in Shenzhen rallied after a report said details of an exchange link with Hong Kong will be announced shortly. The Shanghai Composite Index gained 2.4 per cent at the close, with about 90 stocks rising for each that fell. A gauge of real estate companies capped its steepest two-day rally in almost a year after stake purchases by China Evergrande Group fueled optimism of more mergers. The ChiNext Index rose 3.3 percent after the Hong Kong Economic Journal said small-cap shares in Shenzhen will be included in the link and the start date may be announced as soon
as this week. Chinese stocks in Hong Kong rose for an eighth day. “The market is expecting the connect will be open shortly,” Linus Yip, a strategist at First Shanghai
Volumes jump
M&A
Tencent said to market US$3.5 bln Supercell acquisition loan Tencent Holdings Ltd. has started marketing a US$3.5 billion loan to lenders to back its purchase of a majority stake in Supercell Oy from SoftBank Group Corp., people familiar with the matter said. Asia’s biggest internet company is offering the facility, which has an average life of 4.3 years, at an interest rate of 212 basis points more than the London interbank offered rate, according to the people, who asked not to be identified because they aren’t authorized to speak publicly. The five-year non-recourse financing is split into a US$3 billion term loan and a US$500 million revolving credit, they said. Tencent is leading a US$8.6 billion deal for control of Supercell, the Finnish maker of mobile games including Hay Day, Clash Royale and Boom Beach. China’s Internet
giants have been tapping demand for “new economy” investments and raising more funds in debt markets, with the nation’s biggest e-commerce company Alibaba Group Holding Ltd. getting a US$4 billion loan earlier this year. Calls to Canny Lo, a spokeswoman for Tencent, went unanswered. There was no immediate reply to e-mailed
questions. The mandated lead arrangers and underwriters for the loan are Australia & New Zealand Banking Group Ltd., Bank of America Corp., Bank of China Ltd., China Merchants Bank Co., Deutsche Bank AG, HSBC Holdings Plc and Shanghai Pudong Development Bank Co., according to the people. BLOOMBERG
The Shanghai Composite Index rose to 3,125.20, sending the measure above its 200-day moving average for the first time in a year. Trading volumes on the gauge surged 63 per cent above the 30-day average, while turnover was the highest in four months. Even with the Shanghai Composite rising 4.1 per cent since Thursday’s close, the measure ranks among the world’s worst performers this year. Shares have been buffeted as the slowest economic expansion in more than two decades weighs on corporate earnings and the memory of 2015’s US$5 trillion summer rout deters new investors. A measure of property companies jumped 5.2 per cent, taking its rally from Thursday’s close to more than 10 per cent. Vanke and Langfang both soared by the 10 per cent limit to record highs on Monday. The Hang Seng China Enterprises Index added 1.6 per cent at the close, taking its gains over the eight-day period to 8.1 per cent. The gauge’s 14-day relative strength index rose to 75.6, above the threshold of 70 some traders see as a signal that a rally is about to reverse. The Hang Seng Index increased 0.7 per cent. AAC Technologies Holdings Inc. jumped 3.8 per cent to a record high after Hang Seng Indexes Co. said the company will join Hong Kong’s equity benchmark on Sept. 5. Tingyi (Cayman Islands) Holding Corp., due to be removed from the gauge, slumped 3.2 per cent. BLOOMBERG
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ASIA ABENOMICS PREMIER PRESSURED TO MAINLAND SUSTAINABLE GROWTH
Japan’s economy stalls in April-June, casts doubts on Abe’s policies The weak reading underscores the challenges policymakers face in ending two decades of crippling deflation, as an initial boost from Abe’s stimulus programmes, dubbed “Abenomics”, appears to be quickly fading. Leika Kihara and Tetsushi Kajimoto
J
APAN’S economic growth ground to a halt in April to June as weak exports and shaky domestic demand prompted companies to cut spending, putting fresh pressure on premier Shinzo Abe to come up with policies that will produce more sustainable growth. The weak reading underscores the challenges policymakers face in ending two decades of crippling deflation, as an initial boost from Abe’s stimulus programmes, dubbed “Abenomics”, appears to be quickly fading. The world’s third-largest economy expanded by an annualised 0.2 per cent in the second quarter, less than the 0.7 per cent increase markets had expected and a sharp slowdown from a revised 2.0 perent increase in January-March, Cabinet Office data showed on Monday. “Overall it looks like the economy is stagnating. Consumer spending is weak, and the reason is low wage gains. There is a lot of uncertainty about overseas economies, and this is holding back capital expenditure,” said Norio Miyagawa, senior economist at Mizuho Securities. “The government has already announced a big stimulus package, so
the next question is how the Bank of Japan will respond after its comprehensive policy review, which is sure to lead to a delay in its price target.”
Housing investment booms
On a quarter-on-quarter basis, gross domestic product showed no growth in April-June, compared with market expectations for a 0.2 per cent rise. Private consumption, which accounts for roughly 60 per cent of GDP, rose 0.2 per cent, slowing from a 0.7 per cent increase in the previous quarter. Capital expenditure declined 0.4 per cent after a 0.7 per cent drop in the first quarter, suggesting that uncertainty over the global economic outlook and weak domestic markets are keeping firms from boosting spending. Overseas demand shaved 0.3 percentage point off GDP, subtracting from growth for the first time in four quarters and underscoring the pain that stubbornly weak global demand is inflicting on the export-reliant economy. “The breakdown of the data shows that gains in consumer spending lacked strength and exports fell a lot,” Finance Minister Taro Aso told reporters, adding the government
will pursue structural reforms to address low potential growth. In a glimmer of hope, housing investment jumped 5.0 per cent, the fastest rise since 2011, due in part to the BOJ’s ultra-loose monetary policy that has pushed down mortgage rates, a Cabinet Office official told reporters. Abe’s cabinet this month announced an economic package with 13.5 trillion yen (US$133 billion) in fiscal measures, hoping it would help the economy deflect external headwinds and sustain a moderate recovery. But the plan will take time to pay dividends and sceptics say there is not enough new spending. The BOJ also expanded stimulus last month via a modest increase in
purchases of risky assets, and it remains under pressure to do more in September, when it conducts a thorough assessment of the effects of its stimulus programme. With prices still sliding despite three years of massive asset buying, the Bank of Japan’s policy review could put up for debate its target for expanding base money, sources say, which could mark an overhaul of its existing policy framework. But the central bank has already gobbled up a third of Japan’s government bond market, and some analysts doubt whether printing money more aggressively would spur growth or accelerate inflation to its long-elusive 2 per cent target. REUTERS
Japanese Prime Minister Shinzo Abe
TOURISM NO GROUP HAS CLAIMED RESPONSIBILITY FOR THE ATTACKS
Thailand risks losing 200,000 visitors after blasts The Southeast Asian country’s tourism authority said Thailand could lose up to 200,000 foreign visitors and US$293 million in tourism revenue this year. Patpicha Tanakasempipat and Pracha Hariraksapitak
Thailand could lose up to 200,000 foreign visitors and US$293 million in tourism revenue this year, the head of its tourism authority said on Monday, after a series of deadly blasts in tourist towns last week. The wave of attacks in places including the seaside town of Hua Hin and the island of Phuket, is the biggest challenge to an industry that has weathered more than a decade of instability and bounced back from violence over recent years. Yuthasak Supasorn, governor of the state Tourism Authority of Thailand, said the attacks could result in long-term losses in terms of tourist revenue and arrivals, mainly from other Asian countries. “By the year end, there could be about 100,000 to 200,000 travel cancellations,” he said in a statement. “That would cost about 5.08 billion baht (US$146 million) to 10.16 billion baht (US$293 million).”
Tourism accounts for 10 per cent of Thai gross domestic product and is one of the few bright spots in an economy that has struggled under the stewardship of a military government
that seized power in a bloodless coup two years ago. The Southeast Asian nation had been expecting a record 32 million visitors in 2016, with expected revenue of 2.41 trillion baht (US$70 billion). Narongchai Wongthanavimok, chief financial officer at national carrier Thai Airways, Thailand’s national carrier, said on Friday the bombings would hurt business and consumer confidence.
No group has claimed responsibility for the Thursday and Friday attacks that killed four people and wounded dozens, some of them tourists. Police said on Monday said they had arrested one man for arson. Embassies in Thailand have warned their citizens to stay vigilant and some have warned that there could be more attacks. A bomb attack on a Bangkok shrine on August 17 last year, killed 20 people, more than half of them Asian tourists, but it did not seriously undermine the industry. REUTERS
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ASIA IN BRIEF YANGON
Myanmar forms central committee for special economic zones The Myanmar government has formed a central committee and related central working committee to govern and develop the country’s special economic zones (SEZ), according to an announcement of the president’s office on Monday. The 15-member SEZ central committee was formed with the Second Vice President as Chairman and the Minister of the State Counselor’ s office as Vice Chairman, while its members involve some ministers. The central committee will allow foreign investment undertakings in the SEZ for raising the momentum of economic development under the framework of safeguarding the country’s sovereign power. JAKARTA
Indonesia in bid to boost industry competitiveness The Indonesian government plans to reduce gas prices for industry in an effort to rise competitiveness at the international market. Economic Chief Minister Darmin Nasution disclosed on Monday that the country’s gas prices are currently more expensive than those in other foreign countries which hampered the domestic industries to compete with other global competitors. Currently, the level of domestic gas prices is about three-times higher than those in other foreign countries, such as Japan and South Korea.
PHILIPPINE
UBS makes a bugle call for nickel bulls on crackdown, demand
R
ISING demand, deficits and a crackdown in the Philippines are combining to make nickel one of its most-preferred commodities, according to UBS Group AG, which said the full impact of mine shutdowns in the Southeast Asia nation may be felt only next year when exports fail to ramp up as usual. The government’s audit of standards in the mining sector is a front-ofmind risk that’s already shut down about 2 per cent of world supply, analysts including Daniel Morgan wrote in a note. Ore shipments from the top supplier could fall to 314,000 metric tons next year from 410,000 tons last year, it said. Nickel has been the best-performing base metal in the second half, rallying to its highest level in a year Aug. 10, on speculation that the Philippine crackdown led by President Rodrigo Duterte will crimp supplies. Prices have also been supported as rising
stainless-steel output boosts consumption, the UBS analysts said in the Aug. 12 report. As Philippine supply usually drops from July to January each year, “the real impact may not be felt until early 2017, when exports fail to ramp up as they normally would,” the analysts said. “Our price forecast is a bullish trajectory and nickel remains one of our most-preferred commodity exposures.”
Price Outlook
Nickel rose as much as 0.9 per cent to US$10,400 a ton on the London Metal Exchange and was at US$10,310 at 8:23 a.m. in London. UBS sees prices at US$11,023 next year, US$13,228 in 2018 and US$19,621 by 2020 after the market flipped from a surplus last year to what’s expected to be a run of shortages. President Duterte has pledged to shut any mines that don’t comply with international standards, telling miners that “ we will survive as a
nation without you” if they are closed. The Philippines accounts for about a fifth of world nickel supply, and became China’s main source of ore after Indonesia banned shipments of unprocessed raw materials at the start of 2014. Signs of the crackdown’s impact are mounting. DMCI Mining Corp. said on Monday that it’s laying off hundreds of seasonal workers from operating companies in Palawan and Zambales provinces that have been suspended by the government. The company said it’s cooperating fully with authorities to facilitate the audit and lift the suspension order. In China, production of stainless steel, used in kitchen equipment and chemical plants, expanded 7 per cent to 11.6 million tons in the first half, according to Beijing Antaike Information Development Co. Stainless-steel output accounts for about 65 per cent of nickel first use, according to UBS. BLOOMBERG
HANOI
Vietnam sees sharp increase in fruit, vegetable exports to China in H1 Vietnam saw a sharp increase of over 218 per cent in fruit and vegetable exports to China in the first half of 2016, according to Vietnam General Department of Customs on Monday. During the period, Vietnam sold some 803.808 million U.S. dollars worth of fruits and vegetables to China. China remained the biggest importer of Vietnamese fruits and vegetables, accounting for nearly 70 percent of Vietnam’s total market share in the six-month period. Vietnam’s watermelon, dragon fruit and longan are among major exported fruits to China. MANILA
Philippine remittances up by 4.8 pct in June Philippine remittances from overseas Filipinos rose by 4.8 per cent year-on-year to US2.6 billion in June, the local central bank said Monday. The June level brought the first semester remittances to 14.6 billion U.S. dollars, 3.1 percent higher compared to the same period last year, said Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. Personal remittances from land-based workers with work contracts of one year or more reached US$11.3 billion while compensation of sea-based workers and landbased workers with short-term contracts amounted to US$3.1 billion.
POLITICS
Sri Lanka arrests son of former leader Rajapaksa Sri Lankan financial crime police arrested the eldest son of former president Mahinda Rajapaksa on Monday on suspicion of laundering money, his lawyer said, the latest legal difficulty for the once-powerful family. S ri La n ka’ s n e w p r esi d e n t, Maithripala Sirisena, faces pressure to act on allegations of corruption dating back to the Rajapaksa era, especially from civil society organisations who backed his successful bid to oust Rajapaksa last year. The son, Namal Rajapaksa, who is also a member of parliament, had been questioned by officers from the Financial Crimes Investigations Division investigating some money he had invested in two companies, the lawyer said.
development ministry, has also been arrested three times - twice over suspicion of misuse of anti-poverty funds and a once over suspicion of laundering money. He too has denied any wrongdoing. Since he took power in January 2015 after winning a presidential election, President Sirisena has launched a series of investigations into deals cleared by his predecessor and several members of his family. Mahinda Rajapaksa was president for a decade until January 2015 and is now an opposition legislator. He is popular among ethnic majority Sinhala Buddhists who credit him with ending a 26-yearwar against ethnic minority Tamil separatist rebels in 2009. He is trying to rally opposition to the government. REUTERS
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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“He was arrested by police under the anti-money laundering act,” lawyer Premanath C. Dolawatta told Reuters. He later appeared in court and was remanded for a week, Dolawatta said. Neither Namal Rajapaksa nor family members were immediately available for comment but they have in the past all publicly denied wrongdoing. It was the second time he had been arrested. In July, he was arrested in connection with a separate case on suspicion of misappropriating of funds in a $650-million apartment project and was released on bail after seven days in detention on remand. Na m a l ’ s u n c l e, th e f o r m e r president’s brother, Basil Rajapaksa, who headed the economic
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ASIA
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INTERNATIONAL ENERGY
Oil rises to three-week high on OPEC supply freeze speculation Oil has rebounded more than 10 per cent since closing below US$40 a barrel and tumbling into a bear market earlier this month. Ben Sharples and Grant Smith
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IL climbed above US$45 a barrel in New York for the first time in three weeks amid speculation that crude producers will revive talks to stabilize prices. Futures rose as much as 1.4 per cent after climbing 6.4 per cent last week as Saudi Arabia signaled it’s prepared to discuss stabilizing markets at informal OPEC discussions next month. Russia is open to talks for a joint output freeze “if necessary,” Energy Minister Alexander Novak told Saudi Arabian newspaper Asharq AlAwsat. U.S. producers added rigs for a seventh week, the longest run since 2014, according to Baker Hughes Inc. data on Friday.
Oil has rebounded more than 10 per cent since closing below US$40 a barrel and tumbling into a bear market earlier this month. Saudi Arabian Energy Minister Khalid Al-Falih said in a statement last week that talks with Organization of Petroleum Exporting Countries members and other producers may result in action to stabilize the market, according to the state-run Saudi Press Agency. “A freeze would only be a boost to market sentiment,” Mike Wittner, head of oil market research at Societe Generale SA, said in a report. “A freeze would not have any impact on actual crude supply.” West Texas Intermediate for September delivery rose as much as 64 cents to US$45.13 a barrel on
the New York Mercantile Exchange, the highest since July 21, and was at US$45.08 at 9:03 a.m. in London. Prices advanced US$1 to settle at US$44.49 a barrel on Friday, the highest since July 21. Total volume traded was about 28 per cent below the 100-day average.
U.S. rigs
Brent for October settlement added as much as 64 cents, or 1.4 per cent, to US$47.61 a barrel on the
Oil-market news
The current cycle of low oil prices will end by late-2017, while a balancing of the market will take place next year, Russia’s Novak said in an interview with newspaper Asharq AlAwsat. Venezuela has begun coordinating efforts among OPEC members and producers outside of the group including
London-based ICE Futures Europe exchange. The contract increased 2 per cent to close at US$46.97 on Friday. The global benchmark crude traded at a US$1.76 premium to WTI for October delivery. Rigs targeting crude in the U.S. increased by 15 to 396, the highest level since February, according to data from Baker Hughes. Explorers have now added 66 rigs since June 24, led by rising activity in the Permian Basin. BLOOMBERG
Russia, Venezuelan President Nicolas Maduro said on state television. Nigeria will pump no more than 1.5 million barrels a day of oil this year as sustained attacks by militants have damaged infrastructure including its biggest export terminal, Minister of State for Petroleum Emmanuel Kachikwu said in an interview Friday.
EQUITIES
European stocks back at place where old rallies went to die Euro-area equities, trapped in a long-term bearish trend, are testing a level that they have struggled to hold for nearly a year. Justin Villamil
The Euro Stoxx 50 Index rose to meet its 200-day moving average for the first time since November, after erasing losses spurred by the U.K.’s decision to leave the European Union. Th e l a st t i m e a r o u n d, t h e benchmark of the region’s blue-chip firms failed to hold out above the level after briefly surpassing it, and lost almost a quarter of its value in just over two months. While clearing the hurdle could lead to short-term gains, the gauge is more likely to decline from here on, according to Roelof-Jan van den Akker, head of technical analysis at ING Bank NV. The equity benchmark is hampered by a longerterm downward trend since a record reached in April 2015, and could lose as much as 4 per cent in the coming weeks, he said. “The risk is to the downside,” said Amsterdam-based van den Akker. “On a short-term basis, moving above the 200-day average is a bullish sign, but I would say the movement will be very limited. This pullback towards
the 200-day moving average line is a textbook selling opportunity.” The Euro Stoxx 50 has fallen 20 per cent since its 2015 peak, when it was boosted by a weaker euro amid the European Central Bank’s bond-purchase program.
C o n c e r n s ab o u t th e r egi o n ’ s economic growth, profitability at its banks and the efficacy of the stimulus have weighed on investor sentiment since then, making the gauge’s declines sharper than its advances. The gauge added 0.6 per cent at 9:42 a.m. in London. The index could fall toward its 50-day moving average of around 2,920 in the coming weeks, according to van den Akker. While the euroarea gauge is back near its pre-Brexit
levels, its recovery was slower than for U.S., U.K. and Asian benchmarks, which recouped their declines in about two weeks or less following the referendum. The index fell below its 200-day level after briefly surpassing it last November as worries about global growth resurfaced. Banks led the decline in the selloff through February, and continue to be the year’s worst-performing industry group. BLOOMBERG
“On a short-term basis, moving above the 200-day average is a bullish sign, but I would say the movement will be very limited” Roelof-Jan van den Akker, head of technical analysis at ING Bank NV
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OPINION BUSINESS WIRES
Bangkok Post Thai Airways International Plc cut its losses for the second quarter, helped by a decline in fuel expenses and gains from an ongoing restructuring programme at the Thailand flag carrier. The state-controlled carrier made a net loss of 2.92 billion baht for the April to June quarter, versus a 12.8 billion bath loss a year earlier. That compared with the average loss estimate of 2.1 billion baht, according to three analysts surveyed by Reuters. Thai is one of several state-controlled companies undergoing reform in the Southeast Asian nation since the military seized power in May 2014.
The Star Faster and cheaper Internet access services are in the offing once a multimillion submarine fiber optic cable linking the peninsula, Sabah and Sarawak is completed next year. Deputy Communications and Multimedia Minister Datuk Jailani Johari said the completion of the 1Malaysia submarine cable system would boost bandwidth capacity between the peninsula, and the two states, to four Terabytes per second. “This will be eventually scaled up to 12 Terabytes per second compared to the existing 25-year-old undersea cable with a capacity of just 600 to 700 Gigabytes per second,” he said when witnessing the landing of the new undersea cable at Tanjung Aru near here on Monday.
Taipei Times Asustek Computer Inc, the world’s fourth-largest PC vendor, is accelerating the development of its robotic and virtual reality (VR) segments to offset the continued weakness in the PC and tablet businesses. Asustek’s tablet unit used to contribute more than 20 percent of the company’s total revenue, and the employees of the unit account for more than 10 percent of the firm’s total headcount, but the tablet business is declining faster than the company’s estimate, Asustek chief executive officer Jerry Shen said. “We have been reallocating resources, engineers and software developers from our tablet unit to the robotics, VR and AR [augmented reality] teams to enhance the new businesses,” Shen told reporters after an investors’ conference last week.
The Korea Herald South Korea’s national budget for next year is expected to exceed 400 trillion won (US$362 billion) for the first time, as the government plans to spend more to generate jobs as well as tackle the low birthrate and rapidly aging population. As the government and the ruling Saenuri party have recently agreed to raise the 2017 budget by 3 to 4 per cent, the annual budget is likely be around 398 trillion won to 402 trillion won next year, according to government officials. This year, the government’s overall spending plans have increased to 395.3 trillion won due to its extra budget plan aimed at stimulating lackluster domestic demand and slowing growth. If the government continues to inject cash to support growth next year, the total budget will exceed 400 trillion won, said the officials.
Air pollution’s true costs
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IR POLLUTION TAKES YEARS OFF people’s lives. It causes substantial pain and suffering, among adults and children alike. And it damages food production, at a time when we need to feed more people than ever. This is not just an economic issue; it is a moral one. Air pollution can be produced both outdoors and indoors. For the poorest families, indoor smog from coal- or dung-fired cooking stoves is typically the more serious problem. As economies develop and start to electrify, motorize, and urbanize, outdoor air pollution becomes the bigger issue. Cleaner technologies are available, with the potential to improve air quality considerably. But policymakers tend to focus myopically on the costs of action, rather than the costs of inaction. With economic growth and rising energy demand set to fuel a steady rise in emissions of air pollutants and rapidly rising concentrations of particulate matter (PM) and ozone in the coming decades, this approach is untenable. A new OECD report, The Economic C o n s e q u e n c es o f O u t d o o r Air Pollution, estimates that outdoor air pollution will cause 6-9 million premature deaths annually by 2060, compared to three million in 2010. That is equivalent to a person dying every 4-5 seconds. Cumulatively, more than 200 million people will die prematurely in the next 45 years as a result of air pollution. There will also be more pollution-related illness. New cases of bronchitis in children aged 6-12 are forecast to soar to 36 million per year by 2060, from 12 million today. For adults, we predict ten million new cases per year by 2060, up from 3.5 million today. Children are also being increasingly affected by asthma. All of this will translate into more pollution-related hospital admissions, projected to rise to 11 million in 2060, from 3.6 million in 2010. These health problems will be concentrated in densely populated areas with high PM concentrations, especially cities in China and India. In per capita terms, mortality is also set to reach high levels in Eastern Europe, the Caucasus region, and other parts of Asia, such as South Korea, where aging populations are highly vulnerable to air pollution. The impact of air pollution is often discussed in dollar terms. By 2060, 3.75 billion working
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Simon Upton Director for the Environment, OECD.
days per year could be lost due to the adverse health effects of dirty air – what economists call the “disutility of illness.” The direct market impact of this pollution in terms of lower worker productivity, higher health spending, and lower crop yields, could exceed 1 per cent of GDP, or US$2.6 trillion, annually by 2060. Massive as they are, however, the dollar figures do not reflect the true costs of air pollution. Premature deaths from breathing in small particles and toxic gases, and the pain and suffering from respiratory and cardiovascular diseases, do not have a market price. Nor does the experience of constantly inhaling foul-smelling air, or forcing your child to wear a face mask just to play outside. These burdens weigh far more heavily on people than any price tag can represent. Nonetheless, the truth remains that policymakers tend to respond more to hard figures than to abstract experiences. So the OECD examined myriad economic studies on air pollution to quantify what people’s health is worth to them. On average, individuals would be prepared to pay around US$30 to reduce their annual risk of dying prematurely by one in 100,000. Using well-established techniques, these “willingness-to-pay” figures were converted into an overall value of premature deaths caused by outdoor air pollution, as illustrated, for example, in the OECD’s Mortality Risk Valuation in Environment, Health and Transport Policies. By that measure, the global cost of premature deaths caused by outdoor air pollution would reach a staggering US$18 trillion to US$25 trillion a year by 2060. Arguably, this is not “real” money, as the costs are not related to any market transactions. But it does reflect the value people put on their very real lives – and the value they would put on policies that would help to delay their very real deaths. It is time for governments to stop fussing about the costs of efforts to limit air pollution and start worrying about the much larger costs of allowing it to continue unchecked. Their citizens’ lives are in their hands.
ON AVERAGE, INDIVIDUALS WOULD BE PREPARED TO PAY AROUND US$30 TO REDUCE THEIR ANNUAL RISK OF DYING PREMATURELY BY ONE IN 100,000.
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16 Business Daily Tuesday, August 16 2016
CLOSING AVIATION
Flights restart at New gave the all-clear at 12:15 York’s JFK after false a.m., an airline spokesman said by phone. Seven gunshot alert Flights restarted at New York’s John F. Kennedy International Airport on Monday after police determined reports of gunshots at the airport had been baseless. American Airlines restarted operations at its hub shortly after police
of the carrier’s flights into JFK were diverted, with one plane from Miami redirected to its starting destination while others landed at airports including Chicago and Boston. Deutsche Lufthansa AG canceled a flight to Frankfurt.
DELISTING THE DEAL IS HONG KONG’S BIGGEST-EVER PRIVATIZATION
Wanda commercial shareholders approve Wang’s US$4.4 bln buyout The decision sets the stage for the chairman of Dalian Wanda Group Co. to relocate the property developer’s listing to Mainland China, where companies are fetching higher valuations than in Hong Kong.
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ILLIONAIRE Wang Jianlin won shareholders’ approval to buy out his property unit for HK$34.5 billion (US$4.4 billion), clearing the way for the biggest-ever privatization deal in Hong Kong. The HK$52.80-a-share bid for all of Dalian Wanda Commercial Properties Co.’s Hong Kong-listed shares received the necessary support of minority investors at an extraordinary meeting of shareholders in Beijing on Monday, the developer said in a statement on Monday. The decision sets the stage for the
chairman of Dalian Wanda Group Co. to relocate the property developer’s listing to Mainland China, where companies are fetching higher valuations than in Hong Kong. The victory is a relief for the Chinese tycoon, one of Asia’s most prolific dealmakers, who’s recently been facing difficulties completing transactions at home and abroad. Wanda Commercial shares were suspended from trading pending the announcement of the vote. They closed at HK$51.20 on Friday, or 3 per cent below the buyout offer. The company said it has requested the
exchange to resume trading of the stock on Tuesday. Aside from being the biggest goingprivate deal on the Hong Kong stock exchange, the transaction is poised to be the largest acquisition to date for a tycoon who’s already having his biggest year ever in terms of mergers and acquisitions, according to data compiled by Bloomberg. Ahead of the vote, Wang clinched the endorsement of the two largest minority investors in Wanda Commercial and the two most influential proxy advisory firms -Institutional Shareholder Services Inc. and Glass Lewis & Co.
Business empire
Last month, Wanda Commercial made the rare move of issuing statements that the two biggest investors in the listed shares, China Life Insurance Co. and Kuwait Investment Authority, would vote for the deal after
Wang Jianlin, Chairman of Dalian Wanda Group Co.
Bloomberg News reported that the US$483 billion asset-management arm of APG Groep NV balked at the offer as being too low. A failed bid for Wanda Commercial would have added to what’s been a tough few months for Wang. This month, the tycoon scrapped a US$5.6 billion reorganization of his entertainment assets and in July, one of his units was forced to raise its offer for Carmike Cinemas Inc. after minority investors opposed the bid. Beyond M&As, Wang’s Chinese movie-theater chain operator, Wanda Cinema Line Co., has been losing market share amid a slowing domestic box office and he recently shut a theme park in Wuhan for renovation, less than two years since the park’s opening. Only 14 pe rcent of Wanda Commercial’s shares are available to trade on an exchange. The rest are unlisted, registered in China and mainly controlled by Wang. Of the listed shares, about half are owned by 11 shareholders including OZ Management LP. Wanda is among the companies seeking to take advantage of higher valuations in the mainland. Since 2015, dozens of Chinese companies have announced more than $50 billion of so-called goingprivate deals and Wanda would be the largest one involving a Hong Kong-listed company, according to Bloomberg data. Still, listing in the mainland’s A-share market will require the approval of the China Securities Regulatory Commission. “It makes sense for Wanda Commercial to relocate its listing to A-share market,” said Raymond Cheng, an analyst at CIMB Securities Ltd.” But getting CSRC’s approval will be a key issue for such a move.” Comparable mainland property companies trade at an average of 29 times estimated full-year earnings, according to Wanda Group. Wanda Commercial trades in Hong Kong at about ten times estimated earnings. A jump in Wanda Commercial’s value could help further enrich Wang, who vies with Alibaba Group Holding Ltd. Chairman Jack Ma for the top slot among Asia’s richest people on the Bloomberg Billionaires Index. Wang has said he plans his business empire to have a market value of US$200 billion by 2020. BLOOMBERG
IPO
CURRENCY
OIL
Australia’s Aura Energy to float shares in London by end September
Brazil’s real advances as growth outlook offsets interventions
Rosneft profit falls 34pct in Q2 as oil recovery stalls
Australian uranium miner Aura Energy Ltd plans to list shares on the AIM market of the London Stock Exchange by the end of September and aims to raise 2.85 million pounds (US$3.7 million), it said on Monday. The company is already listed on the Australian Stock Exchange with a market capitalisation of A$9.6 million at the close on Friday and said in a statement it would issue new shares in London. It will use the proceeds from the London listing to fund a potential Mauritania project, which is in the process of a feasibility study that is expected to finish in late 2017, and to develop its mine in Sweden.
Brazil’s real climbed amid signs investors are growing more confident in the new administration’s ability to revive the economy, outweighing efforts by the central bank to weaken the currency. The government may boost its growth forecast for next year to 1.5 per cent from 1.2 per cent now as economic indicators point to a recovery, Folha de S. Paulo newspaper reported on Saturday, citing a presidential aide whom it didn’t name. Credit Suisse on Monday also raised its estimate for next year to 0.8 per cent, and said the economy may contract 3 per cent this year, less than it had previously expected.
Rosneft PJSC’s second-quarter profit decreased about 34 per cent, coming in better than analysts estimated, even as a recovery in oil prices sputtered out at below last year’s price levels. Net income fell to 89 billion rubles (US$1.4 billion) in the second quarter from 134 billion rubles a year earlier, according to the Moscow-based company. That was higher than the 83 billion-ruble average estimate of nine analysts surveyed by Bloomberg News. Revenue dropped 7.9 per cent to 1.23 trillion rubles. Earnings before interest, taxes, depreciation and amortization were 348 billion rubles, according to the statement. That compared with an analyst estimate of 307 billion rubles.