Macau Business Daily October 7, 2016 by Business Daily

Golf fever sweeps China Sports Page 16

Friday, October 7 2016 Year V Nr. 1147 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Oscar Guijarro Monetary authority

www.macaubusinessdaily.com

APEC meeting

MOP supply expanding

Borrowing in Mainland

Beijing set to expand economic influence in Pacific Page 10

Page 2

Easy loans in China fuelling real estate Page 10

Macau Rolls A Six VIP Gaming

The gurus say that VIP gaming is back on track. With last month’s figures suggesting a return of high rollers to the city’s casinos. Analysts highlight the increase of Chinese high stakes gamblers all over the world, suggesting Macau is no exception. Page 7

Burning rubber

Changing of the guard

A new Secretary-General of the UN. The appointment of former Portuguese Prime Minister Antonio Guterres has been well received in many quarters. His strong suit is initiating dialogue between parties. But the world will reserve judgement until actions match words.

Racing The 63rd Macau Grand Prix is just around the corner. With new management. World Cup status. And Pirelli tyres - as Yokohama runs out of road after 33 years. Page 3

New biz in the hood

Start-ups StartUP Macau Forum kicks off next week. Assembling companies from the Mainland, Macau and Portugal. The Prime Ministers of China and Portugal will grace an event designed to attract investors and promote entrepreneurialism. Pages 8 & 9

The difference is Macau

United Nations Pages 5 & 14

HK Hang Seng Index October 6, 2016

23,952.50 +164.19 (+0.69%)

PetroChina Co Ltd

Worst Performers

+4.11%

China Merchants Port Hold-

+2.10%

Hengan International Group

-1.85%

Wharf Holdings Ltd/The

-1.04%

CNOOC Ltd

+3.94%

Belle International Holdings

+2.04%

Sino Land Co Ltd

-1.70%

China Overseas Land &

-0.98%

China Life Insurance Co Ltd

+3.87%

Sands China Ltd

+1.72%

China Resources Land Ltd

-1.68%

Henderson Land Develop-

-0.64%

Galaxy Entertainment Group

+3.76%

China Petroleum & Chemical

+1.71%

MTR Corp Ltd

-1.51%

New World Development

-0.59%

China Shenhua Energy Co

+3.26%

Bank of Communications

Cheung Kong Infrastructure

-1.12%

CK Hutchison Holdings Ltd

-0.55%

+1.66%

26° 30° 24° 32° 24° 29° 24° 27° 24° 28° Today

Source: Bloomberg

Best Performers

SAT

sUN

I SSN 2226-8294

Mon

Tue

Source: AccuWeather

Golden Week Quite a relief. Chinese visitors flooded into local venues once again after five days of National Day Golden Week holiday. The numbers confirm it. The territory can still pull Mainland visitors. Page 2

2 Business Daily Friday, October 7 2016

Macau In Brief Taxis

Police apprehend 29 unlicensed taxi drivers in Golden Week During the first four days of National Day Golden Week, local police nabbed 29 unlicensed taxi drivers, of which 26 were related to car-hailing application Uber, according to official data released by the Public Security Police Force (PSP). The police said it also prosecuted 96 cases of taxi drivers overcharging and rejecting passengers, which accounted for 86.5 per cent of total taxi violations during the four days. Last month, the two aforementioned types of taxi violation totalled 193 cases, or 77.8 per cent of total taxi violations detected by local police. In addition, the number of prosecuted cases of unlicensed taxi services reached 127 in September, of which 113 were related to the use of Uber. Local police noted in its press release that the high number of violations for the first four days of the holiday was due to its enhanced combat of illegal taxi services given the increase of tourists in the period. A.L.

Monetary

Money supply continues to expand in August The banking sector saw a month-on-month drop in the overall loan-to-deposit ratio during the month. Cecilia U cecilia.u@macaubusinessdaily.com

acau’s money supply continued to increase in August, reveals the latest data released yesterday by the Monetary Authority of Macao (AMCM). Meanwhile, local banks’ overall loan-to-deposit ratio dropped in the month as total deposits grew at a faster pace than total loans. In August, the currency in circulation fell by 0.1 per cent month-onmonth whereas demand deposits grew by 4.2 per cent. As a result, the money supply (M1) increased

by 3.2 per cent month-on-month while quasi-monetary liabilities rose 2.4 per cent. The sum of the two items, known as M2, thus rose by 2.5 per cent month-on-month, totalling MOP503.7 billion (US$63.4 billion). On a year-on-year comparison, M1 and M2 represented a year-on-year increase of 9.9 per cent and 5.3 per cent, respectively. Meanwhile, deposits by residents and non-residents both registered month-on-month increases in the month, up 2.6 per cent and 1.2 per cent to MOP490.5 billion and MOP279 billion, respectively. The public sector’s deposits with local

banks, however, dropped 0.5 per cent month-on-month to MOP156.3 billion. Total deposits with the banking sector thus increased 1.7 per cent month-on-month, amounting to MOP925.8 billion. On the other hand, the AMCM data indicated that domestic loans to the private sector totalled MOP408.4 million in the month, up 1.6 per cent month-on-month. Of the total, MOP119 billion was MOP-denominated and Mop265 billion was denominated in Hong Kong dollars, accounting for 29.1 per cent and 64.9 per cent, respectively. In the month of August, the loan-to-deposit ratio for the resident sector slightly decreased by 0.1 percentage points to 63.1 per cent compared to July. The ratio for both the resident and non-resident sectors was 84.1 per cent, a decrease of 0.6 percentage points.

Tourism

Tourist numbers continue to surge as Golden Week progresses Aviation

Tigerair Taiwan to increase flights to MSAR Low-cost carrier Tigerair Taiwan - a joint venture between Taiwan’s China Airlines (CAL) and Singapore’s Tiger Airways – is planning to increase its flights to Macau next year, according to an announcement on its official website. The same announcement indicated that it would cease its current flights connecting Taipei to Singapore and Kota Kinabalu in Malaysia from January 3 next year. ‘In its place, it will add more frequencies to Macau, Okinawa and Tokyo . . . providing more services to consumers,’ it wrote. The airline added that affected passengers would get a full refund in one month. A.L.

Visitations are up 8 pct y-o-y during the first five days of the holiday. The city continued to see visitor arrivals increase on the fifth day of the National Day Golden Week for two consecutive days following an overall decrease for the first three days, according to official data released yesterday by the Macao Government Tourism Office (MGTO). On Wednesday, the city attracted 182,457 visitors, up 15.9 per cent visa-vis the same day one year ago. In particular, those from the Mainland jumped 19.5 per cent year-on-year to 159,041, accounting for 87 per cent of the total. Some 852,755 total visitor arrivals were recorded for the first five days of Golden Week, an increase of 8 per cent year-on-year. Of which, 85 per cent, or 723,544 visitors, were from Mainland China. The Border Gate posted the greatest number of visitor arrivals during the fifth day of Golden Week when compared to other ports of entry to the city, with a total of 125,907 entries recorded, accounting for 69 per cent of the total, which amounted to 182,457 visitors total during the day. Most of the Mainland Chinese visitors - 119,391 - arrived in the city via the Border Gate during the day, accounting for 75 per cent of total Mainland Chinese visitor arrivals. The second most popular entry

point for Mainland Chinese visitors was the Lotus Bridge border crossing in Cotai, with 15,318 arrivals recorded, accounting for 9.6 per cent of the total. MGTO data also includes the arrivals of non-resident workers and

students, the Office noted. As of 6:00PM yesterday, the Public Security Police Force said 154,694 border crossings were recorded at the city’s different checkpoints, of which 85,641 were registered at the Border Gate. A.L.

Business Daily Friday, October 7 2016 3

Macau Motor racing

Complete makeover for 63rd Macau Grand Prix MGP organizers say this year’s event won’t be affected by organization and supply changes Nelson Moura nelson.moura@macaubusinessdaily.com VR Photo by: Aivi Remulla

he Macau Grand Prix will continue as usual despite organizational and supplier changes, an International Automobile Federation (FIA) representative stated in this year’s race tournament presentation event. Following the presentation details of this year’s Macau Grand Prix, questions were raised if the exit of Barry Bland’s company Motor Race Consultants, which has organized the Formula 3 races for the city’s Macau Grand Prix for the past 33 years, would have an impact on this year’s competition. Recently, Bland blamed the exit on delays in the race organization, raci ng p ubli cation A ut o sp ort reported. The departure follows a restructuring of the Macau Grand Prix Organizing Committee (MGPOC), now formed by the Macau Sports Bureau and the Automobile General Association Macau-China (AAMC), with the FIA assuming the role of motor race consultants. “Concerning the organization, I think the Macau Sports Federation and the AAMC are all trained to do this event; we changed the way to

organize it and this is our decision. From the FIA side we will try to make sure everything goes smoothly,” FIA Director Frederic Bertrand told the press. Regarding the replacement of Japanese tyre supplier Yokohama by Italian company Pirelli after 33 years, Bertrand said the change resulted from a normal tender process. “The FIA is linked to a very fair process of tenders to choose suppliers. Pirelli won the tender process; Yokohama also bid but it

was less interesting for the drivers. It’s a one-year contract,” said Bertrand.

World Cup Central

This year’s Macau Grand Prix - the 63rd edition - is scheduled to take place over four days from November 17 to 20. With the FIA promoting the Formula 3 Macau Grand Prix to FIA F3 World Cup status, including the FIA GT World Cup, Macau will be the only city in the world simultaneously hosting two World Cups competitions, the MGPOC announced. This year’s Grand Prix welcomes back Swedish pilot Felix Rosenqvist who

will try to break the record and win the Formula 3 World Cup for the third time. European champion Lance Stroll will not take part in the competition, the organization has announced. Local Macau driver Andy Chang Wing Chung will drive in the FIA Formula 3 World Cup and the FIA GT World Cup. The major sporting event will comprise seven races; namely, the Formula 3 Macau Grand Prix - FIA Formula 3 World Cup; Macau GT Cup; Macau Guia Race 2.0T; 50th Macau Motorcycle Grand Prix; Macau Road Sport Challenge; Macau Touring Car; and Chinese Racing Cup. One of the city’s biggest junket operators, Suncity Group, will be the main sponsor of the Macau Grand Prix for the third consecutive year, while local gaming operator SJM Holdings Ltd. will sponsor the Title Race and local telco Companhia de Telecomunicações de Macau (CTM) will sponsor the Macau Touring Car Cup Race.

http://photography.aiviremulla.com/mGP

4 Business Daily Friday, October 7 2016

Macau Opinion

Pedro Cortés*

God bless Manny Pacquiao I am all for national security. In Macau, I am all for regional security. Thus, all inspections revolving round relatively grounded reasons are welcome and part of the routine of the Immigration services. What I tend to have difficulty in understanding is when an Iranian beauty is barred and questioned just because she has an Iranian passport and has arrived from the Philippines, even if she was there for the Miss Global 2016 competition. It is, in my humble layman’s view, behaviour that, if it continues, may have bad consequences for the international image of Macau. Are other foreign passport holders being questioned about their financial capabilities upon arrival in Macau? We know that this is par for the course in some countries and regions. But it has never been used in Macau before and it’s not still used for some nationalities. In this sense, the criteria should be disclosed and I’m sure that the nationality one is not on the books. Otherwise, we could do irreparable damage - even kill the goose that lays our golden eggs. On the one hand, the Macao Government Tourism Office (MGTO) is willing to diversify the source of tourists in order to make our industry less dependent upon PRC tourists. On the other, the Immigration services may be taking measures – I’m not saying that it is unlawful – which may affect such efforts of the MGTO. Fortunately, Miss Melika Razavi was able to produce a photo with the famous Manny Pacquiao, which saved her more embarrassment with Macau officials, according to this week’s news. So, from now on if someone barred from entering Macau can produce a simple photo with an international celebrity such action may magically open doors and present evidence to the authorities that such person is not intending to put in jeopardy national/ regional security. To play it safe, therefore, I resolve to always keep my photo with football legend Eusébio in my mobile phone gallery. Come to think of it, I’m sure that will get me more visa days and a great time wherever I go. *lawyer and frequent contributor to this newspaper.

Legal

Sanum: ‘Very pleased’ with Singapore court decision Kelsey Wilhelm Kelsey.wilhelm@macaubusinessdaily.com

ollowing a decision earlier this week by a Singaporean court ruling in favour of local company Sanum Investments in an appeal against the Laos Government, the company told Business Daily that although content with the outcome it is still ‘unclear what the implications might be’ with regard to the Savan Vegas property it formerly operated. The case in question stems from the Laos Government’s seizure of the Savan Vegas Hotel and Casino, located in Savannakhet Province in Laos, from Sanum Investments allegedly due to a retroactive assessment of over US$70 million in taxes that the government claimed Sanum owed. Following the seizure the complex was sold to local hotel and casino operator Macau Legend, headed by

businessman David Chow. The sales price was estimated by Sanum to be just 16.8 per cent of the value attributed to it by the former operator. “Sanum is very pleased that the Singapore courts saw through the subterfuge that Laos was attempting, and Sanum can now continue forward with its ICSID (International Centre for Settlement of Investment Disputes) action against the Government of Laos for its unlawful expropriation of Sanum’s assets,” stated representatives of Sanum Investments in response to Business Daily enquiries.

What next?

With regard to further proceedings, including one case against an interim manager of the Savan Vegas property and organiser of the sale, Kelly Gass and San Marco Capital, Sanum notes that there has been ‘no change’ and that it is ‘awaiting decisions by the

U.S. Court.’ For the remaining legal proceedings the company notes it ‘will continue to take all legal avenues to pursue its claims and to receive fair compensation.’ In the wake of the sale, Sanum – according to its agreements with the Laos Government – was set to receive a large percentage of the sales proceeds from the Savan Vegas complex sale; however, this has yet to happen. ‘Sanum has not received any proceeds from the sale of the Savan Vegas property, in spite of our clear agreement and deed of settlement with the Laos Government which required that Sanum, as 80 per cent owner of the property, be paid 80 per cent of the sales proceeds,’ Sanum told Business Daily. ‘Sanum and its principals built Savan Vegas from the ground up, and had many dreams for the future of the property, and would welcome the opportunity to once again operate the property’.

Culture

Lusofonia cuts budget to MOP3 million A 9 pct saving in this year’s budget was reached by utilising online media to promote the Festival and by cutting down on printed materials. Annie Lao annie.lao@macaubusinessdaily.com

This year’s Lusofonia Festival budget was set at MOP3 million (US$375,451), a decrease of 9 per cent or MOP300,000 year-on-year, said head of the Department of Cultural Events of the Cultural Affairs Bureau, Kent Ieong Chi Kin, yesterday during a press conference. “The saving was achieved mainly due to greater use of online media and by reducing printed materials to promote the Festival this year,” Mr. Ieong explained. H e ex p ec ts th e n u m b e r o f participants in the Festival to be around 20,000 as roughly as last year. More public buses will operate during the Festival period - from October 21 to 23 – in the environs of the Taipa Houses-Museum. “Frequency of public transport will be added during the Festival for the public to get to the Festival,” the head of the Division of Recreational Activities, Cheang Kai Meng, said during the press conference. The Festival acts as a Portuguese and Chinese cultural exchange platform and features gastronomic delights, music, dance and games. Ten Portuguese-speaking countries or regions will participate in the cultural booths during the Festival to introduce an array of cultural

products. The participants are Angola, Brazil, Cape Verde, Guinea-Bissau, Goa, Daman, Diu, Mozambique,

Portugal, São Tomé, Príncipe and East Timor. The highly popular annual event is organised by the Cultural Affairs Bureau (IC), Macao Government Tourism Office (MGTO) and the Civic and Municipal Affairs Bureau (IACM). The first edition of the Festival was held in 1998.

Business Daily Friday, October 7 2016 5

Macau Politics

Tough road ahead for Guterres Local community members note that the newly elected Secretary-General of the United Nations has a tough job ahead although the appointment helps elevate Portugal’s international status. Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

ollowing the election of Antonio Guterres as the United Nations’ SecretaryGeneral, announced yesterday, members of the community expressed expectations of increased international recognition of the former Prime Minister’s home country, Portugal, although no large impact is predicted on Macau, and in some cases, elsewhere. Portuguese Consul General to Macau Vitor Sereno told Business Daily that in such a difficult international political arena - now “more unpredictable than ever” - the position being filled by a Portuguese national is a mark of pride to himself, to his fellow diplomats, for Portugal and the rest of the world to have such an “exceptional man” as the Secretary-General, adding that “never has a Portuguese national

gone so far”. “It is a post of high international prestige, as we’ve seen, sought after by people from various parts of the globe,” commented the Consul General. “Portugal has marked its presence in the world”. “The resulting image of Portugal, because of this, benefits equally from this nomination which is, at the same time, historical for our country,” he said. Sereno, however, also noted that now the new Secretary-General will have to commit himself as a “global player . . . God knows the difficult role that awaits him”. However, he applauds Guterres as a “person of recognised merit and with unique capacities to establish dialogues”.

Macau link

This position was echoed by Rita Santos, President of the General Assembly of the Macau Civil Servant’s Association, who was also quick

to express her admiration of the new Secretary-General, given that Guterres “knows the balance of different interests between all the countries” and “masters international politics” – including those with China. “Myself and [local legislator] Jose Pereira Coutinho had the opportunity to meet with him in Portugal to resolve the problems of the transition from the Portuguese administration to the People’s Republic of China,” said Santos, describing Guterres as “sensible, direct and intelligent . . . It’s an honour for the Portuguese community in Macau to have a Portuguese national occupy such an important global role”.

Tough times ahead

For lawyer and president of the board of the Macanese Association (ADM) Miguel de Senna Fernandes, Guterres’ new position will benefit Portugal, although how much depends upon his actions in office. “This is very important in terms of symbolism regarding a new view of Portugal. From an overall perspective I think it’s beneficial. Whether this will have a physical impact we’ll see, but in terms of prestige, for the elevation of the title of Portugal I

think this will happen,” commented Senna Fernandes. With regard to actions in office, the lawyer said it’s not all rosy. “We are in a different world in which it’s not completely logical to have a viewpoint of the West and the East as existed 30 years ago, I wouldn’t call this a new cold war but there is a certain tension increasing, without forgetting the powers of the Middle East,” he said, observing that all eyes are on the new Secretary-General. “Much is expected. They’re not my words but the world is expecting this capacity of dialogue and not only dialogue but the initiative for dialogue,” said Senna Fernandes.

No change

Dr. Rui Rocha, Director of Portuguese Programmes for the City University of Macau, also sees the worldwide arena as difficult to change. “International organisations are places of interest lobbying and interest convergence and because of that he is not a person who will change that,” notes Rocha, commenting that: “It’s not the international organisations which will effectively resolve these problems because there’s no effective interest in creating a new worldwide economic order.” In addition, Rocha has little confidence in how Guterres will be able to handle global problems and doubts that the change in office will have any impact upon Macau. “I’m a bit apprehensive as to how a man who was the Prime Minister of the country [who left the political arena] of a small country will be able to solve conflicts on a global scale,” said Rocha, adding that the change will not do much to elevate Portugal’s position on the international stage. “We have bad experiences with leaders that held high international positions,” commented Rocha, r ef e r ri n g t o J o a o Ba r r o s o , a former Portuguese Prime Minister and president of the European Commission, recently recruited by Goldman Sachs. “The question is not of one man; it’s about the countries themselves,” observed Rocha. Still, as Consul General Vitor Sereno notes, come what may, “It’s the first time a Portuguese national will undertake such an important role”.

Greyhound racing To move or quit - that’s still the question for Canidrome

Canidrome hopes to maintain operations Local greyhound racing track operator Macau (Yat Yuen) Canidrome Co. hopes to continue its dog racing activities despite the company yet concluding a plan for its future, its managing director and deputy president Angela Leong On Kei said yesterday. In July, the local gaming regulator ordered the operator to relocate its greyhound racing track within the next two years, in addition to deciding whether it is to continue its dog racing business or not. “We haven’t come to a decision. We will announce to the public once we have one. But we’re still studying [the issue]. Of course, we hope to continue the operation,” Leong told reporters on the sidelines of gaming operator SJM’s cocktail reception for National Day. According to the businesswoman, the company will consider future development prospects for the business, as well as the government’s regulations regarding animal protection. The MD also noted the difficulty of the company finding a new site to

relocate the business. “It’s not easy to obtain a plot of land in Macau. That’s also the reason we haven’t come to a conclusion,” she claimed.

The current concession for the Canidrome was set to expire by the end of last year, then to the end of this year before it was granted

an additional two years to decide whether to move or shut down. For 2015, the annual profits of the company plummeted 82 per cent to MOP4.8 million (US$600,600) vis-avis MOP26.7 million for 2014, according to its previous annual financials reported in the Official Gazette.

6 Business Daily Friday, October 7 2016

Macau In Brief Property

Zhuhai imposes new home purchase restrictions Zhuhai has imposed new measures restricting the purchase of residential properties, its government announced early yesterday morning. Accordingly, three categories of potential buyer would be temporarily prohibited from purchasing residential units of 144 square metres or less in the Chinese city. The restrictions are applied to Zhuhai citizens who own three or more properties in the city; non-Zhuhai citizens who possess one or more properties there; as well as those non-Zhuhai citizens who cannot prove they have paid income tax or contributed to social insurance for one year. The new restrictions also increase the minimum down payment that home buyers need to pay – now no less than 30 per cent of the total cost. Zhuhai is the fourteenth Mainland Chinese city to impose home-purchasing restrictions during the National Day Golden Week, following Beijing, Tianjin, Guangzhou and Shenzhen. A.L.

Science

Automatic translation Macau Polytechnic Institute will collaborate with Portuguese and Mainland China universities to create an automatic language translator Nelson Moura nelson.moura@macaubusinessdaily.com

he Macao Polytechnic Institute (MPI) is currently collaborating with Portuguese and Mainland Ch i n a e d u c a t i o n a n d research entities to create automatic translation software, the MPI told Business Daily. The software will be developed in a laboratory with the collaboration of the Guangdong University of Foreign Studies and Beijing translation software company Global Tongue Communication Co-operation Limited, with an opening ceremony scheduled for October 11. “Macau is aiming to be the bridge between Lusophone countries and China, so we have a large need for translation between English, Chinese and Portuguese (…) but the current

human resources for translation can’t correspond with the current translation needs,” Victor Cheong Sio Tai, Assistant Professor of Computing Programming at MPI, told Business Daily. According to Cheong, MPI will be responsible for the laboratory’s daily operations by making use of the “education experience its 100-year old school currently possesses” and resorting to its technical institute computing system to make automatic translation more efficient. “We won’t just focus on pioneer research in this field but also aim to raise more translation professionals,” said the Assistant Professor.

Portuguese aid

In order to better develop efficient speech recognition for the Portuguese language in the translation software, the laboratory is collaborating with

Portuguese education centres University of Coimbra and the Leiria Polytechnic Institute, which will provide professional and technological support. MPI currently possesses a prototype of the system, in the testing phase, and according to Victor Cheong it will be used “partially” for translation assistance for the 5th Ministerial Conference of the Forum for Economic and Trade Co-operation between China and Portuguesespeaking Countries taking place on October 11 and 12. Cheong stated that the Secretary for Social Affairs and Culture Alexis Tam is supporting the project by providing research funds and hiring experts in the translation and information technologies (IT) fields. However, when questioned about the budget for the project he did not state a specific amount, saying only that it was “huge and quite enough”. Ac c o r d i n g t o t h e M SA R Government Policy Address for Fiscal Year 2016, MPI has a proposed budget of MOP749.8 million (US$93.8 million).

Labour rights

SJM announces holiday compensation for personnel Local gaming operator Sociedade de Jogos de Macau S.A. (SJM) announced on Wednesday that it would compensate its personnel with a oneday holiday from 2017 when their weekly days off overlap a mandatory holiday. According to the announcement, the new holiday policy would apply to workers serving on the frontline and support operations. Angela Leong, the company’s executive director, claimed in the announcement that the new measure seeks to improve the company’s work environment and employee benefits.

Technology

‘12-5’ Technological expo rings up MOP9 mln Logistics have devoured most of the budget Cecilia U cecilia.u@macaubusinessdaily.com

The chairman of the Macau Science and Technology Fund (FDCT), Ma Chi Ngai, yesterday unveiled the costs of organising the National ‘12-5’ Technological Innovation Achievements Exhibition. The chairman revealed that apart from the rental of the venue, the delivery of exhibits accounted for most of the MOP9 million budget, saying the delivery cost also included insurance. “Some of the exhibits are real therefore the delivery has higher requirements […] some exhibits need a special box such as temperature control for delivery,” said Mr. Ma. The FDCT chairman added that the total expenditure also includes expenses incurred for inviting specialists to the exhibition plus expenses for transportation and accommodation. The exhibition, said Mr. Ma, seeks to encourage education on technology and innovation – in particular, for the younger population – in addition to

strengthening the national confidence of the general public. The Committee indicated that around 4,000 students have already applied to attend talks held during the exhibition. The majority of the exhibits have their own guide to be introduced to the public, some of which provide virtual experiences to demonstrate the current technological achievements of Mainland China. The exhibition will opens today at The Venetian Macao for six days and displays some 60 elements of

the latest technology. Th e t ech n o l o g y exhi bi ti o n , organised by the Science and Technology Committee, is also supported by the Chinese Ministry of Science and Technology and FDCT. The exhibition was held in Beijing last June. Entry to the exhibition is free and a shuttle bus between the venue and the Peninsula will be provided, according to an announcement made recently by the Technology Committee during the press conference.

Business Daily Friday, October 7 2016 7

Gaming Gaming

Analysts bearish on VIP prospects Brokerages are exercising caution on the city’s VIP prospects as junkets eye overseas opportunities. Kam Leong kamleong@macaubusinessdaily.com

he city’s VIP gaming sector may have returned to year-on-year growth in September, analysts believe, but they are still not really that positive about projecting the sector’s outlook. Last month, the city’s total casino revenue posted a second consecutive month of growth following a 27-month slump, with figures up by 7.4 per cent year-on-year to MOP18.4 billion (US$2.3 billion), official data from the Gaming Inspection and Coordination Bureau reveals. Union Gaming Securities Asia Ltd. analyst Grant Govertsen indicated in his latest research note that gaming markets should start seeing growth in Chinese VIP volume, given South Korean gaming operator Paradise Co. has posted a year-on-year increase of one per cent in its September Chinese VIP volume – the first growth in 24 months. “While not exactly apples-withapples given that Chinese VIP gamblers in Korea tend to be of much lower value than Chinese VIPs in Macau, we are encouraged that any established market is beginning to see growth in Chinese VIPs,” the analyst wrote in a note on Wednesday. He believes VIP revenue in Macau should also have much improved and could be on the verge of posting growth again. “It’s possible that September saw very modest yearon-year VIP growth on the heels of new property openings,” he stated. Official data on the breakdown of VIP casino revenue for the third quarter will only be announced by the local gaming regulator in the middle of this month. But Mr. Govertsen is not the only analyst estimating the high-roller sector has started to posted year-on-year increases in revenue. In a research note released earlier this week, analysts at Morningstar Asia Ltd shared a projection that the increase in September gaming revenue “appears to be broad-based across the VIP and mass segments.” “Without an official breakdown between VIP and mass revenue, we estimate that both mass and VIP revenue increased by at least midsingle digit rates on a year-over-year basis,” the firm’s analyst Chelsey Tam wrote.

Softly, softly

Nevertheless, Grant Govertsen of Union Gaming said his firm still remains cautious about the outlook of the local VIP gaming segment. “Even more so than other jurisdictions,” he stated. ‘[It is due to] the ongoing dynamic of junket operators seeking to not only take customers out of Macau to jurisdictions that offer better economics, but also given that certain Macau junkets are attempting to transition to the principal model and become casino operators themselves in other jurisdictions,” he opined. The firm is maintaining its forecast that Macau’s VIP gaming revenue will drop another four per cent year-onyear in 2017, although modest growth is expected to during the second half of next year. Meanwhile, analysts at Morningstar say they have turned “slightly more positive” on the junket business given the continuous improvement in the segment’s liquidity.

“ Ac c o r d i n g t o o u r c h e c k s confidence in the safety of the deposits in the junket system has continuously improved since the New Year, helping liquidity and thus VIP rolling in the junket market,” the firm’s analyst, Chelsey Tam, wrote.

“Without an official breakdown between VIP and mass revenue, we estimate that both mass and VIP revenue increased by at least mid-single digit rates on a year-overyear basis” Chelsey Tam, Morningstar Asia analyst

“The funding is coming from various individuals instead of just one or two big depositors, which leads us to think that it is more broad-based and more sustainable,” she added. But the analyst also noted that confidence in deposits in the junket system could erode again if there is another theft incident occurs. “However, as junket consolidation continues, smaller junkets with poorer resources, infrastructure, and compliance systems have been going out of business. This should reduce the likelihood of another theft in the junket system,” she reckons. Morningstar also maintains its prediction that VIP revenue will post an annual year-on year decrease of 16 per cent for this year.

Suncity going from strength to strength

On the other hand, the research note of Union Gaming indicated that junket operator Suncity Group might have been one of the few to experience a significant increase in volume during the first few days of Golden Week. “We’re hearing that Suncity, Macau’s no.1 junket by market share, has experienced a significant increase in volume that has translated into an even greater share,” Govertsen wrote, adding that other junkets in the market,

on the contrary, have experienced much quieter levels of business. “This is not overly surprising to us as we expect Suncity to keep getting bigger . . . It’s difficult, however, to extrapolate Suncity’s success this Golden Week to any particular casino operator given that of all the operators Suncity has a significant presence,” the analyst concluded. By contrast, junket promoter Iao Kun Group has shut down five of its six VIP rooms in Macau in the space

of a month, a tend the Union Gaming analyst anticipates to “be repeated endlessly” by other smaller junkets in the city. But he added that the visit of China’s Premier Li Keqiang to the Special Administrative Region next week might potentially drive a sharp yearon-year decline in VIP revenues for the week, unwinding the monthto-date casino revenue growth for October that has benefited from Golden Week.

8 Business Daily Friday, October 7 2016

Greater China

Biz Forum The event will count with the presence of Portuguese and Mainland prime ministers

Portugal’s start-up expedition heads East A closer look at the Portuguese start-ups taking part in the StartUP Macau Forum between October 10 and 11. Nelson Moura nelson.moura@macaubusinessdaily.com

ortugu e s e s t a r t- u p s participating in the StartUP Macau Forum on October 10 and 11 see the event as an opportunity to test their business models in the southeast China market and to attract possible local investors. StartUP Macau Forum will be organised mainly by the Macau China Thinktank for FinTech Industries, which describes the forum as a two-day event aimed at promoting entrepreneurialism in Mainland China, Portugal and Macau by supporting the development of new start-ups, and engaging people in fostering new ideas and innovative business solutions. ‘If it turns out to be a success, in the near future Macau will be targeted as a start-up platform outside the People’s Republic of China and Portugal, pushing forward the establishment of an offshore start-up and innovation base in Macau,’ a Thinktank release states. The event, which will host workshop sessions and a pitch competition, will be organised by Fábrica de Startups - a Portuguese start-up incubator and CESL Asia - a local services and technology solutions company. “The event can promote a larger

Making the pitch

Local entities and government departments organising and sponsoring the StartUP Macau Forum between October 10 and 11 see the event as a strong complement to the 5th Ministerial Conference and a great opportunity to connect start-ups from Mainland China, Macau and Portugal. “IPIM is [enthusiastically] supporting the StartUP Macau Forum because we want to support young entrepreneurs in developing new businesses that can create

diversification in Macau, and the creation of a support infrastructure for start-ups from Macau, Mainland China and Portugal,” António Trindade, the President and CEO of CESL Asia, told Business Daily. Although the names of the participating Mainland China and Macau start-ups have yet to be revealed when this newspaper went to print, Business Daily contacted the Portuguese startups to understand what to expect from the upcoming forum.

Personal physiotherapist

Sword Health is a Portuguese startup that has developed a digital physiotherapist enabling users to undergo physiotherapy without the physical presence of a medical professional. The system facilitates a daily check-up that informs the patient if its physiotherapy exercises are being well executed, and the start-up’s CEO, Virgilio Bento, believes the service will be perfect for China. “The motivation behind developing this technology is the fact that at the moment there is a lack of human resources. In China, statistics show that there is a ratio of 13,000 physiotherapists per one million people, so we’re working to implement our technology and provide more hours of physical rehabilitation for the Chinese population without the presence of

new job opportunities. Start-up forums are very popular in Portugal and its government is planning to create a department solely for the development of start-ups,” Macau Trade and Investment Promotion Institute (IPIM) Executive Director Gloria Ung told Business Daily. She highlighted that this was an event organised by private institutions, responsible for bringing entrepreneurial and investment experts for counselling to the 20 start-ups attending the event’s workshops and pitch competition.

the number of medical professionals registered in the Western world,” Bento told Business Daily. The start-up, based in the Portuguese city of Porto, has already raised 1.7 million euros via three investment rounds in the last two years, mainly from two groups of private investors and with capital obtained through an award of one million euros (MOP8.9 million/US$1.1 million) from the European Commission for the most innovative companies in Europe.

“If it turns out to be a success, in the near future Macau will be targeted as a start-up platform outside the People’s Republic of China and Portugal.” Macau China Thinktank for FinTech Industries Now that it has been invited to the event in Macau by Fábrica de Startups, Sword Health plans to use the two days to divulge its services to local investors and introduce the technology to the local market. “Until now, 95 per cent of investors contacted are mostly from Europe and the United States, but we’re trying to expand our contact book. We’ve already had some interest by Mainland China investors since our service is particularly attractive to the country’s situation as it can resolve a very significant problem which is the lack of qualified medical human resources,” says Bento.

An Uber for doctors

Also in the medical field, Knock connects general practitioners with patients through an application that shows doctors available near the user - showing their profile, experience, and feedback from previous patients

in addition to allowing the user to book an appointment. “It’s like an Uber for doctors. We offer basic medical services for children and adults but we developed it thinking mainly of elderly people in home care,” Knock CEO Jose Bastos told Business Daily. After initially establishing a system that allowed doctors to decide their own prices, Knock later redirected, establishing a fixed fee of 49 euros for every appointment, so that users wouldn’t only use the lowest priced options. So far, the start-up has more than 60 doctors registered in its service, currently only available in Portugal, and while it has been self-financed it recently finished a seed round investment with the objective of reaching 450,000 euros. Most of the funding has come from a London-based investment fund but the Knock team has space for another investor that could eventually be found in Macau. An economics major, Bastos has undertaken plenty of macroeconomic research, and a study made for Knock - taking into account social and demographic factors to reach what would be the most attractive markets for the start-up - put China in second place. “One of our objectives is to go international and our trip to Macau has two main objectives: to present our project to local residents and understand the reception our project could have in southeast China; and finding a local investor that could be interested in joining our project and help our entry into that attractive market that is the axis between Guangdong, Macau and Hong Kong,” he told Business Daily.

Climbing to the right prices

In a city with as many hotels as Macau, Climber Hotel should be like a fish in water, with the Portuguese startup offering a revenue management software that helps hotels optimise their costs and decide on best prices. In order to get to the perfect price, the app collects data such as the history of hotel bookings, future and planned reservations and competition prices, together with the effect of weather conditions, macroeconomic factors, behavioural analysis of customers on the hotel website and the online reputation of the hotel. The start-up, based in Lisbon, has so far raised 100,000 euros through Seeders, a British crowdfunding platform, and will now join the expedition to Macau.

Business Daily Friday, October 7 2016 9

Greater China Finance

“We’re curious to know about the ecosystem of entrepreneurship and start-ups in Macau, engage any investors, prepare a possible expansion for that market and maybe meet with some hotels that we could possibly co-operate with. If there’s any interest, a second trip to Macau becomes easier,” Mario Mouraz, cofounder and CEO of Climber Hotel, told Business Daily.

Airbnb with a twist

Created this year by an international team of real estate, lifestyle and finance experts, Tripwix offers a luxury rental version of Airbnb for a more high-end crowd looking for unique experiences. The young company already has a large offer of destinations in Mexico, Portugal and Spain, enabling the rental of a luxury stay in places like Puerto Vallarta on Mexico’s west coast or in the World Heritage area of the Douro River in Portugal. “The luxury tourism market has doubled in the last five years. However, nowadays the luxury tourist doesn’t choose the destination just for the name but because he wants a unique experience,” Francisco Bessa, CEO of Tripwix, told Business Daily. In order to provide that unique experience Tripwix tries to offer a rented house with the same quality of a 5-star hotel, providing a homecooked meal and a concierge service for clients. “In this sector, there are a lot of platforms but we offer the client the same experience as if he was a local. We also offer a higher standard by providing a local host who represents us and receives the clients, and we personally inspect all properties,” said Bessa. Recently, Tripwix developed its project at the Portuguese start-up

incubator Fábrica de Startups, winning an award in a programme for technology and tourism projects that brought together 21 international start-ups.

“One of our objectives is to go international, and our trip to Macau has two main objectives: to present our project to local residents and understand the reception our project could have in Southeast China” Jose Bastos, CEO of Portuguese start-up Knock

Currently, only the founders have provided investment but the Tripwix CEO expects that with the invitation to participate in the StartUP Macau Forum, it will be able to try and find local investors and maybe even local hosts. “Most of our clients are Canadian, American or English and the two biggest markets for luxury tourism are the U.S. and China, so we’d be very interested in finding a Chinese investment partner who can help handle the distribution of our service in the region,” Bessa told Business Daily.

AMCM: Internal report on sovereign fund completed The internal assessment report on establishing the MSAR Investment and Development Fund is basically complete, said the president of the Monetary Authority of Macau (AMCM), Anselmo Teng Lin Seng, in his reply to legislator Si Ka Lon’s written enquiry. According to the AMCM head, the assessment report encapsulates suggestions from international organisations as well as experiences of managing sovereign funds from over 70 jurisdictions. In addition, the report proposes policy objectives, establishments of institutes, management principles as well as risks and benefits of different investment

strategies for the fund, in addition to suggesting necessary legislation and law amendments. The legislator questioned in his enquiry whether the government would make the internal report public soon, as well as whether it would speed up its preparatory works on setting up the fund. The AMCM director revealed that the government has already kicked off internal legal analysis on the legislation that may be needed for the fund. He added that the fund would be set up by 2019 as stated in the city’s Five-Year Development Plan in order to diversify the city’s financial economy. A.L.

10 Business Daily Friday, October 7 2016

Greater China APEC meeting

Beijing eyes progress for free trade area

hina hopes to see progress at next month’s summit in Peru of the Asia Pacific Economic Cooperation (APEC) bloc in pushing ahead with a Chinese-backed trade liberalisation framework, China’s foreign minister said while on a trip to Lima. At an APEC summit in Beijing two years ago, Chinese President Xi Jinping urged members to speed up talks on the Free Trade Area of the Asia Pacific (FTAAP) being pushed by Beijing.

“The rules of international trade should be decided via equal consultations of all parties, not just one or two parties having the final say”

meeting and that the next steps can be jointly agreed on upon this basis”, the ministry cited Wang as saying. “China hopes that the negotiations process for FTAAP can start in due course.” APEC needs to send a positive signal against a tide of rising protectionism and anti-globalisation and so China would like APEC to reach consensus on FTAAP, Wang said. Some see FTAAP as a way to divert attention from the 12-nation Trans-Pacific Partnership (TPP) trade agreement backed by the United States. China is not part of the TPP and has not been enthusiastic about it.

China fears the TPP is being used by the United States to either force it to open markets by signing up or else isolate it from other regional economies as trade is diverted to TPP signatories. The TPP is seen as the economic backbone of U.S. President Barack Obama’s “pivot” to Asia, which some experts view as an attempt to balance China’s rise by establishing a larger U.S. presence in the region. Wang said the various trade proposals on the table should be “open, not closed, and inclusive, not exclusionary”. China is also keen on the Regional Comprehensive Economic

Partnership (RCEP), which groups the 10 members of the Association of South East Asian Nations plus China, Japan, South Korea, India, Australia and New Zealand. “No matter whether it’s TPP or RCEP, they all lead to the path of FTAAP,” Wang said. “The rules of international trade should be decided via equal consultations of all parties, not just one or two parties having the final say.” Trade rules should not be politicised or have some political aim, he added. “This neither helps the normal development of international trade nor accords with the joint interests of the various economies.” Reuters

Wang Yi, China’s Foreign Minister

APEC approved work towards the establishment of FTAAP, which Xi said then was a “historic step”. Foreign Minister Wang Yi said a feasibility study on FTAAP had been basically completed and China hoped to present it at this APEC summit, his ministry said in a statement. China “hopes it’s approved by the

Wang Yi, China’s Foreign Minister

M&A

Lenovo in talks to take over Fujitsu’s PC business China’s Lenovo Group Ltd is in talks to bring Fujitsu Ltd’s personal computer business under its control, allowing the Japanese company to focus on IT services and other businesses, a source with direct knowledge of the talks said. The two companies aim to reach a deal this month, with some 2,000 Fujitsu workers likely move to Lenovo, the Nikkei business daily said yesterday, without saying where it got the information.

The deal, if realized, will make Fujitsu the second Japanese PC assembler after NEC Corp to seek the help of the world’s largest PC maker to stay competitive in the thin margin market. Lenovo and NEC set up a PC joint venture in 2011. Fujitsu may transfer its design, development and manufacturing operations to a joint venture led by Lenovo or Lenovo may opt to buy a majority stake in the Japanese company’s PC unit, the Nikkei said. It

did not mention potential financial terms. Fujitsu said in a statement it was considering various options for the PC unit but had not yet made a decision on its future. Lenovo declined to comment. Fujitsu had initially negotiated with Toshiba Corp and unlisted Vaio Corp, which was spun off from Sony Corp, for a three-way merger of their PC businesses. But the talks fell through earlier this year as the companies

were unable to agree on the details. Global demand for PCs has been squeezed by sales of smartphones and tablet computers. Smaller makers less able to benefit from large scale production face an uncertain future. In the second quarter of this year, worldwide shipments of PCs were stronger than expected, but nonetheless shrank 4.5 per cent from a year earlier to 62.4 million units, according to technology research company IDC.

‘Fujitsu said in a statement it was considering various options for the PC unit but had not yet made a decision on its future’ Lenovo accounted for 21.2 per cent of those shipments, followed by HP Inc with 20.8 per cent, and Dell Inc with 16 per cent. Asustek computers Inc had a 7.2 per cent share while Apple Inc held 7.1 per cent. Fujitsu shipped 4 million units in the year ended in March, mostly for the Japanese market, the company said. It did not appear in IDC’s top five rankings. Reuters

Business Daily Friday, October 7 2016 11

Greater China Property

Easy loans expected to drive home prices In some second-tier cities property agents said the price rises reflected a rush to buy in anticipation that new restrictions would be introduced. Clare Jim

eadily available, cheap mortgages and strong demand are likely to keep China’s property market rising, even if restrictions announced in more than a dozen cities over the past week dampen sales and prices over the short term, real estate agents said. The overheated market is worrying authorities who want to stop price bubbles in higher tier cities, but need to stimulate an economy that is sliding toward its slowest growth since 2009. In the past six days, 14 Chinese cities imposed administrative restrictions on home purchases to curb property speculation. The commercial capital Shanghai and Shenzhen, dubbed “China’s Silicon Valley” and home to the most expensive property in the country, had led the way in March, bringing in stricter rules that marked the first tightening measures since 2013. The form and strength of the new restrictions varied from city to city, but included higher mortgage downpayments for second and third time home buyers, in a bid to stem the flow of cash into the red-hot property market. Central bank data showed that banks in August made 529 billion yuan in household loans, with mortgages accounting for 55.7 per cent

of that, and policymakers have expressed concerns over rising debt and banks’ exposure to mortgages. Still, market observers, say the measures taken so far were less severe than those seen in 2013, as it remained easy to raise a cheap mortgage. “Compared to restrictions imposed in 2013, there’s still no tightening on mortgage rates this time. The buying cost for home buyers is still at a historical low,” Andy Lin, market research director of Hopefluent Real Properties (China) based in Shenzhen, said.

Lin said his company’s clients are not first-time homebuyers and can easily afford higher downpayments so the impact was expected to be limited. The most recent measures also included limiting divorced adults to buying one home in the cities of Shenzhen and Nanjing, after policies saw couples scrambling to divorce on paper at least - in the hope they could buy a second home. Speculators searching for the next property hot spot have turned to smaller, inland cities like Changsa during the past few months as prices in major cities became more frothy. China’s average new home price climbed 9.2 per cent in August, up from 7.9 per cent in July, official data showed. But big cities such as Shenzhen and Xiamen posted much bigger gains at 37 per cent and 44 per cent,

respectively. Property agents said the immediate impact of the new restrictions had not yet been reflected as many people were travelling during the Golden Week holiday. In some second-tier cities, such as Hefei where home prices rose 40 per cent in August, property agents said the price rises reflected a rush to buy in anticipation that new restrictions would be introduced.

Key Points 14 cities impose cooling measures in past six days Tightening steps not as severe as those in 2013 Panic buying may subside but further gains expected -agents “Panic buying may subside now that the measures are imposed,” said Luo Fang Fang, a researcher at property agent Centaline in the city of Hefei, capital of Anhui province. Analysts said smaller cities that are showing signs of overheating are likely to tighten rules next, but they did not expect a nationwide tightening as the stock of unsold homes in most lower-tier cities remain high. “Nationwide policy should remain accommodative, because in the next six months the heat in the market must be transferred from ...(major cities) to broader Tier-3 cities,” Citi analyst Oscar Choi said in a report this week. Choi said the market strength needed to spread the smaller cities if the government was to achieve its goal of boosting construction activity, whittling down the stock of unsold homes and developing the satellite cities. Reuters

12 Business Daily Friday, October 7 2016

Asia Monetary strategy

Investors dump Japanese government bonds Investors in Japan’s debt markets are betting through the options markets that the central bank will succeed in containing government bond yields within its desired ranges Hideyuki Sano

hat strategy involves selling options on Japanese government bonds (JGBs), earning income from any buyers who want the right to buy or sell JGBs at a later date. Traders are selling both kinds of options - call options to buy bonds and put options to sell them - on the view that the price, or premium, will collapse as JGB yields get boxed into a tight range.

That was a major shift for a central bank that has tried in vain for years to reflate the economy and escape deflation through quantitative easing. The BOJ said its aim was to anchor the yield curve so that inflation expectations are also lifted. While the market was initially unsure exactly what the BOJ meant by “around zero per cent,” its market operations since then have led many players to believe the BOJ’s rough target band for 10-year JGBs

would be between zero and minus 0.10 per cent. The price of JGB options, which gives holders the right to buy or sell JGBs at a pre-fixed level, has fallen sharply after the BOJ rebooted its policy last month. As investors rushed to sell options, implied volatilities, a measure of investors’ expectation of future volatility which is derived from option prices, have fallen sharply over the last several days. The volatility for 10-year bonds is now quoted around 1.2 per cent, compared to around 6 per cent before the BOJ’s meeting, said a bond option trader at a major Japanese brokerage. “Options traders are now in heavy demand from investors. Everyone

wants to sell options to us,” the trader said. Market players say the volatilities are now at one of the lowest levels in recent years. The implied volatility on the 10-year JGB futures also fell below 1.3 per cent, falling near lows touched in June. That is almost a half of the market’s actual volatility of 2.3 per cent over the past year, indicating investors expect the market’s volatility will drop almost by a half in coming months. Trying to control the 10-year bond yields, which tend to be influenced by several factors including the global economic outlook, is an unprecedented approach, and analysts are not sure whether the BOJ will be able to achieve its objective. But the BOJ is the dominant player in the JGB market because of the massive amounts of bonds it buys under its stimulus programme, which is why options market participants are betting yields will stay contained for now. Reuters

‘The volatility for 10-year bonds is now quoted around 1.2 per cent, compared to around 6 per cent before the Bank of Japan’s meeting’ At its September 21 policy review, the Bank of Japan set a new target of keeping the 10-year JGB yield at around zero per cent, while dropping its explicit 3-1/2-year-old target for the amount of bonds it would buy from the markets.

Banking inquiry

Australia set to pave way for more consumer-friendly lenders Opposition Leader Bill Shorten said he would continue to call for a Royal Commission to undertake an investigation into bank activities Jamie Freed

An Australian parliamentary inquiry into the nation’s Big Four banks this week is likely to usher in a slew of consumer-friendly changes - steps the lenders hope will stave off the threat of a wide-ranging investigation into their activities. The committee of 10 lawmakers indicated recommendations could include the formation of a customer complaints tribunal, measures to make it easier for consumers to switch banks and an easing of requirements for new banks. The inquiry is the first time the banks’ CEOs have been summoned in what is set to be regular testimony at least once a year as politicians responded to public anger over a series of scandals and the lenders’ failure to pass on rate cuts to mortgage customers in full. At pains to take a conciliatory stance, the bank chiefs of Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), Westpac and National Australia

Business Daily is a product of De Ficção – Multimedia Projects

Bank all agreed to in principle to the proposals as they were questioned for three hours each. “In recent years it is clear a trust gap has opened up. We are working hard to improve,” Westpac Chief Executive Brian Hartzer told the committee yesterday. In other moves aimed at deflecting criticism, NAB Chief Executive Andrew Thorburn said the bank had decided in May to stop donating to political parties while ANZ also told the committee earlier it may change its donations policy. Westpac and CBA do not make cash donations to political parties but do pay to attend political events. The hearings did not placate Opposition Leader Bill Shorten, who yesterday said he would continue to call for a Royal Commission to undertake an investigation into bank activities. “If all of these bank CEOs keep saying we stuffed up, we got it wrong, we have caused problems for our customers, haven’t they just made the final argument in favour of

a banking Royal Commission?” he told reporters in Melbourne. A Royal Commission is the most powerful investigative body in Australia, with the power to recommend prosecutions and new legislation. Shorten’s calls for a commission, however, have been opposed by the banks and the government which has said it that it doesn’t plan to change its mind. Dr Rob Nicholls, a lecturer at the University of New South Wales Business School, said the bank

executives had clearly come to the committee prepared to make concessions. “Ironically, I think it is the demands for the Royal Commission that have led to the compromises,” Nicholls told Reuters in a phone interview. The banks, which account for 80 per cent of lending in Australia, have been under fire for abuse of market power following a series of scandals involving misleading financial advice, insurance fraud and interest-rate rigging. Reuters

Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Nelson Moura; Annie Lao; Kelsey Wilhelm; Matthew Potger; Cecilia U 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

Business Daily Friday, October 7 2016 13

Asia Monetary Authority

In Brief

Singapore central bank seen on hold for now In April, the central bank unexpectedly eased policy by setting the rate of appreciation of the Singapore dollar’s policy band at zero per cent Masayuki Kitano

ingapore’s central bank is expected to keep policy steady at this month’s review, but some analysts say that external risks and sluggish growth may prompt a further easing in 2017. Sixteen of 18 analysts in a Reuters survey predicted the Monetary Authority of Singapore (MAS) will keep its exchange-rate based policy on hold at the October policy review, given that economic growth and inflation both seem to be evolving in line with official projections. “Singapore’s growth outlook is mediocre but has not deteriorated enough to warrant further easing,” said Sim Moh Siong, FX strategist for Bank of Singapore. “If political risk events such as U.S. elections, Italian referendum and European elections roil financial markets for a sustained period, this will heighten the case for MAS easing in 2017,” he added. The two analysts in the easing camp expect the MAS to recenter the policy band lower, which would effectively be a one-off depreciation of the Singapore dollar. The MAS policy review and the government’s advance estimate of third-quarter gross domestic product (GDP) are both expected to be released on the same day late next week.

Since trade flows dwarf the city state’s economy, the MAS manages monetary policy by letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band based on its nominal effective exchange rate (NEER). If the MAS passes the chance to ease next week, some analysts say it could do so next year. Vaninder Singh, Asia economist for RBS said in a recent research note that the likelihood of an easing in April next year is high, citing weak trade performance and soft domestic consumption. In a Reuters poll on third-quarter GDP, the median forecast among 12 economists was for growth of 1.7

per cent from a year earlier. GDP probably grew an anaemic 0.3 per cent from the previous quarter on an annualised basis, the poll showed, as weak global demand crunched Singapore’s exports. In the second quarter, GDP grew 2.1 per cent year-on-year and 0.3 per cent from the previous quarter. Analysts say the April easing was a pre-emptive move and limits the need for further policy easing, especially with the economy still growing, albeit at a sluggish pace and seen in line with the official 2016 growth forecast of 1-2 per cent. “Both growth and inflation outlook is within MAS expectations,” said Edward Lee, head of ASEAN economic research for Standard Chartered Bank, who expects the MAS to stand pat. “Two risk events which could have swung our core scenario to a change was Brexit and Zika but so far both events turned out to have milder effect than feared,” Lee said. Reuters

Vietnam, Iran pledge US$2 billion trade boost

Vietnam and Iran pledged yesterday to boost future trade to US$2 billion, as Tehran seeks to jump-start its sputtering economy after crippling international sanctions were lifted this year. Iran’s moderate President Hassan Rouhani, in Vietnam on a three-country swing through Southeast Asia, has come under fire from conservative critics who say the nuclear deal signed with world powers has failed to bring a hoped-for economic boom. Rouhani, who was elected on a promise to normalise relations with the outside world, praised ties with Vietnam Thursday after both sides signed several deals. “The two sides agreed to increase bilateral trade turnover to US$2 billion,” the Iranian president told reporters in Hanoi. Trade between Iran and Vietnam hit

US$350 million last year, according to Iran’s official IRNA news agency. “In economics, cooperation opportunities are still large... but the scale of cooperation and bilateral trade are still modest,” Vietnam’s President Tran Dai Quang said. The landmark nuclear deal - which was reached in July 2015 and came into force in January - saw sanctions against Iran lifted in exchange for curbing Tehran’s nuclear programme, opening up one of the world’s last untapped markets for global business. Analysts say Hanoi and Tehran, which have both had strained relations with the United States in the past, are keen to bolster alliances beyond regional diplomatic spheres. For Rouhani, the visit marks a “turning to the East, seeing what’s there, caucusing, carving out some strong economic relations, which Iran

Thai consumer mood improves Thai consumer confidence rose for a third straight month in September, a university survey showed yesterday. Consumers hope that the government will focus on investment and stimulate the economy in the last quarter of the year, the University of the Thai Chamber of Commerce said. The military, which seized power in May 2014 to end months of political unrest, has struggled to revive Southeast Asia’s second-largest economy, with exports and domestic demand still sluggish. The Bank of Thailand last month marginally raised its 2016 growth forecast to 3.2 per cent from 3.1 per cent. Corporate bond sales

S.Korea’s post double-digit fall on expected Fed rate hike Corporate bond sales in South Korea posted a double-digit decline in August on rising expectations for the U.S. Federal Reserve’s interest rate hike, financial watchdog data showed yesterday. Bonds issued by industrial companies amounted to 340 billion won (US$306 million) in August, all of which was sold by one company, according to the Financial Supervisory Service (FSS). The figure was down 75.6 per cent from the previous month’s 1.39 trillion won on expectations that the Fed would raise its policy rate within this year.

Commodities

For mineral-rich Vietnam, Iran offers a key partnership in the oil and gas industry and for health and technology exchanges

Confidence

Malaysia’s attorney-general

needs,” said Vanessa Newby, international relations research fellow at ANU’s College of Asia-Pacific Affairs. For mineral-rich Vietnam, Iran offers a key partnership in the oil and gas industry and for health and technology exchanges. Closer ties to Iran also offers the communist nation a powerful alliance in the Middle East. “Being under Iran’s auspices is prestigious, they’re an important country and because of the sanctions they’ve been punching way below their weight,” Newby added. “You can expect to see Iran really coming to the fore, they want a seat at the top table internationally and they’ve got the resources and frankly the workforce to get one.” Vietnam and Iran established diplomatic relations in 1973 and two Iranian presidents have previously visited Vietnam - Mahmoud Ahmadinejad in 2012 and Akbar Hashemi Rafsanjani in 1995. After Vietnam, Rouhani heads to Malaysia and Thailand before returning home, Iranian state media said. AFP

Iran’s President Hassan Rouhani

No new request from Swiss on 1MDB

Malaysia’s attorney-general’s office said yesterday it had yet to receive any request for additional assistance from Switzerland in probing state fund 1Malaysia Development Berhad (1MDB). The office said in a short statement that it remained committed to international cooperation and “will appropriately consider” such a request once received through diplomatic channels and in line with local laws. Switzerland’s Office of the Attorney General said on Wednesday it was seeking further help from Malaysia in its investigation. Central bank survey

Indonesia consumer confidence slips Bank Indonesia’s consumer confidence index declined in September, the central bank said yesterday. The fall to 110 from 113.3 in August reflected less optimistic views of economic conditions and reduced consumer expectations, said Hendy Sulistiowati, executive director of statistics at the central bank. “Consumers’ expectations about their income slowed,” Sulistiowati said, adding that pessimism about availability of work caused some Indonesians “to put the brakes on purchases of durable goods a little bit.” The survey also said the consumers expected economic conditions to weaken over the next six months.

14 Business Daily Friday, October 7 2016

International In Brief Higher imports

U.S. trade deficit widens The U.S. trade deficit rose more than expected in August as a rise in imports offset higher exports. The Commerce Department said the trade gap widened 3 per cent to US$40.73 billion. Imports hit their highest level since September 2015 while exports were the highest since July of last year. The July trade deficit was revised to US$39.55 billion from a previous US$39.47 billion. Economists polled by Reuters had forecast the trade gap decreasing to US$39.3 billion in August. When adjusted for inflation, the deficit fell to US$57.48 billion from a revised US$58.23 billion in July. Official data

German industry orders rise Strong demand from euro zone countries and domestic customers drove a bigger-than-expected rise in German industrial orders in August, suggesting factories will contribute to growth in Europe’s biggest economy in coming months. Contracts for goods ‘Made in Germany’ were up by 1.0 per cent on the month, the Economy Ministry said yesterday. That compared with a Reuters consensus forecast for a rise of 0.2 per cent. Domestic demand rose by 2.6 per cent while foreign orders inched down by 0.2 per cent. The data for July was slightly revised up. IMF

Global debt tops US$152 trillion The world is swimming in a record US$152 trillion in debt, the IMF said, even as the institution encourages some countries to spend more to boost flagging growth if they can afford it. Global debt, both public and private, reached 225 per cent of global economic output last year, up from about 200 per cent in 2002, the IMF said in its new Fiscal Monitor report. The IMF said about two thirds of the 2015 total, or about US$100 billion, is owed by private sector borrowers, and noted that rapid increases in private debt often lead to financial crises. New financial rule

BlackRock cuts ETF fees

BlackRock Inc said it would cut prices on some U.S. iShares exchange-traded funds (ETFs) before a new U.S. Labour Department rule governing retirement products takes effect. The world’s largest asset manager lowered fees on 15 funds in its “Core” U.S. ETF line-up, touting the move as a boon for financial advisers and brokers who will soon be governed by regulations seen favouring inexpensive investments. The change, which affects 23 per cent of iShares US$937 billion in U.S. assets, brings some fees down by 2 to 5 basis points.

UN General Assembly

Portugal’s Guterres wins unanimous backing to lead the UN Guterres presented himself during the campaign as “an honest broker”. Kambiz Foroohar

ormer Portuguese Prime Minister Antonio Guterres is the unanimous choice of the United Nations Security Council to serve as the world body’s next secretary-general. The 67-year-old former head of the UN’s refugee agency was set to be “acclaimed” yesterday as the candidate recommended to the General Assembly, Russian Ambassador Vitaly Churkin, the council’s president this month, announced. U.S. Ambassador Samantha Power added on Twitter that the council had united around the choice. The Assembly’s approval is considered a formality. Guterres secured 13 “yes” votes in the 15-member council, with two members undecided, ending nine months of cocktail-party campaigning, formal and informal interviews and visits to capitals. In January, Guterres will succeed Ban Ki-moon of South Korea as leader of the 71-year-old institution with 105,000 peacekeepers deployed around the world and an annual budget of more than US$13 billion. “Guterres faces very serious challenges especially the Syrian civil war and the humanitarian consequences of refugees fleeing that war,” said Michael Doyle, a Columbia University professor and a former UN assistant secretary-general. “The international community is divided on important issues and that limits what he can get done.” The former UN high commissioner for refugees emerged as the choice despite the organization’s penchant for tradition - it was argued that it was Eastern Europe’s “turn” to lead the UN - and an active campaign to name

the first female secretary-general. The organization has had eight leaders since its founding in 1945.

‘Honest broker’

“I cannot change what I am,” Guterres, who has said he has solid track record of promoting gender equality, said in an interview last month with Bloomberg News. “If the decision is that the symbolic value of having a woman is what matters, then choose another person.” Guterres presented himself during the campaign as “an honest broker” who will come down hard on UN peacekeepers accused of rape, a recurring problem that has stained the world body’s reputation. He said that fixing the organization requires the protection of whistle-blowers who expose sexual misconduct,

corruption and other illegal activity. During the sixth round of informal voting, the breakthrough was “the performance and experience of the candidate,” said Power. “People united around a person who impressed throughout the process and has impressed on multiple axes in his service in Portuguese politics and then, of course, at the helm of UNHCR.” His strongest challenger entered the race at the last possible moment, when Bulgaria nominated Kristalina Georgieva, a European Commission vice president, last week in a lastditch attempt to derail Guterres. In the end, it was too late. Georgieva received five votes for and eight against, including two from vetowielding countries. Guterres will be the first Portuguese secretary-general. Previous UN chiefs have come from Norway, Sweden, Myanmar, Austria, Peru, Egypt, Ghana and South Korea. Bloomberg News

Venture capitalists

Investment in start-ups in 2016 reaches US$56 bln Late-stage venture rounds have spiked most significantly, with the median round size at about US$10 million, up from a little more than US$6 million in 2013. Heather Somerville

Venture capitalists poured US$15 billion into start-ups in the third quarter, putting this year on pace to be the third largest ever for investment activity, according to a report released yesterday. So far this year, venture-backed companies have raised US$56 billion across nearly 6,000 funding deals, according to a report from venture capital database PitchBook Data Inc and the National Venture Capital Association. At that pace, venture investment is projected to hit US$74 billion by year’s end, falling short only of the investment levels in 2000 and 2014. The data shows that despite longheld fears of a contraction in venture capital that would force start-ups out of business, investors continue to enthusiastically back promising technology companies. “The rounds keep getting bigger,” said Adley Bowden, vice president of analysis for PitchBook. “As valuations

go up and (venture) firms are trying to get a certain ownership percentage, the check size goes up as well.” “The Airbnbs and the established unicorns ... are not having trouble raising capital and very large rounds,” Bowden said. Mutual funds, hedge funds and sovereign wealth funds - contrary to widely held expectations that they would flee venture capital amid the slowing IPO market - continue to invest heavily in “unicorns,” the term for venture-backed companies valued at US$1 billion or more. Uber Technologies Inc, for instance, raised US$3.5 billion from Saudi Arabia’s sovereign wealth fund in June. Unicorns appear to be gobbling up most of the venture capital, with angel and seed financing falling about 18 per cent to US$1.7 billion in the third quarter compared with a year ago, the result of more accelerators such as Y Combinator replacing seed investors as startups’ first stop for cash, the report shows. Venture capitalists appear to be

spending money as fast as they are raising it. Firms have raised US$32 billion so far this year, compared with US$36 billion for all of last year.

“As valuations go up and (venture) firms are trying to get a certain ownership percentage, the check size goes up as well.” Adley Bowden, vice president of analysis for PitchBook.

Although money continues to flow into technology companies, little is flowing back to venture capital firms. The report takes a dour view on the IPO market, saying the “slump is unlikely to reverse.” The third quarter saw 162 exits - IPOs and M&A deals - compared with 237 a year ago. “A lot of unrealized gains are in the venture funds right now,” Bowden said. Reuters

Business Daily Friday, October 7 2016 15

Opinion Business Wires

Taipei Times Handset chip designer MediaTek Inc yesterday said that a chip supply constraint is likely to persist through the end of the year. While the company did not elaborate on how the issue is likely to affect its business this quarter, vice chairman and president Hsieh Ching-jiang said that it would be a slower season than the third quarter, citing seasonal factors and weakening growth momentum in China. The Hsinchu-based company has a long list of Chinese clients, including Oppo Mobile Telecommunications Corp, Vivo Electronics Corp and Xiaomi Corp.

Federal Reserve Chair Janet Yellen

Is the Fed playing politics?

The Korea Herald South Korean lenders are expected to be more picky in extending loans in the fourth quarter of 2016 amid concerns about the growing credit risks of firms and households, the central bank said Thursday citing a related survey. The lending attitude index for banks stood at -18 for the September-December period, the same for the previous quarter, according to the Bank of Korea. It conducted the poll of 15 major banks and 184 non-bank lenders here from August 29 till September 9. The index ranges between -100 and 100.

Jakarta Globe Some debtors may be taking on too many small loans beyond their ability to pay back, contributing to the rising number of bad loans and posing major risks for unprepared financial institutions, warns the Indonesian Access to Finance Association, or Pakindo. Over the past few years, encouraged by the government, banks have been keen to disburse micro and small loans, ranging from Rp 1 million (US$77) to Rp 1 billion. Customers respond in droves, attracted by low collateral requirements. Bad small and medium sized loans increased 4.44 per cent of the total outstanding, almost double from 2.4 per cent a year ago.

Viet Nam News Việt Nam’s economic growth this year is expected to hit 6 per cent, lower than was forecast in June, according to the World Bank (WB) report on East Asia and Pacific economies, released on Wednesday. However, growth was predicted to hit 6.3 per cent next year thanks to an increase of consumption and credit demands, said the Chief Economist of the World Bank’s East Asia and Pacific Region, Sudhir Shetty. Exports would also increase following the signing of free trade agreements, he said. According to the report, Việt Nam’s economy has proven resilient amidst slower global growth.

n his recent debate with his opponent Hillary Clinton, Republican presidential candidate Donald Trump pressed his claim that US Federal Reserve Chair Janet Yellen is politically motivated. The Fed, Trump claims, is applying overdoses of monetary stimulus to hypnotize voters into believing that economic recovery is underway. It’s not a completely crazy idea, but I just don’t see it. If Yellen is so determined to keep interest rates in a deep freeze, why has she been trying in recent months to talk up longer-term rates by insisting that the Fed is likely to hike rates faster than the market currently believes? Central bankers have of course been known to help incumbents before elections, by allowing inflation to drift up and keep employment booming. During US President Richard Nixon’s 1972 re-election campaign, he sternly lectured Fed chair Arthur Burns on the need for pumppriming the economy to help him defeat his Democratic challenger, George McGovern. Nixon won resoundingly, but Burns’ policies helped set off the worldwide inflation of the 1970s and brought forward the breakup of the post-war system of fixed exchange rates. The long-term effects were catastrophic. Will Yellen launch a rerun of the bad old 1970s, when US inflation hit double digits? I doubt it. Although it is not hard to imagine that Yellen privately holds Trump in the same low regard he holds her, most observers see no signs that inflation is just around the corner. True, some people still insist that if the Fed doesn’t urgently raise interest rates and rein in the money supply, the US economy will go the way of Zimbabwe (where inflation far exceeded 25,000 per cent in late 2008). But the argument that Fed balance-sheet expansion will translate into high inflation has been colossally wrong for the past six years. Inflation in the US has been consistently below target and, even today, bond yields reflect deep scepticism about whether the Fed has the will or the capacity to sustain price growth at the official 2 per cent target on a consistent basis. Indeed, those central banks that have tried raising interest rates prematurely, including the European Central Bank and the Swedish National Bank, have been forced to reverse course, and the Fed wants to avoid that fate. The US economy is performing far better these days, and the moment for raising rates further is likely near. But to infer that an immediate start to further hikes is a no-brainer is ludicrous. In fact, there is still a worldwide downward draft on interest rates, with the ECB and the Bank of Japan still very much in easing mode, as are many smaller central banks. The Fed is already allowing some

“

Kenneth Rogoff a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University.

tightening simply by not playing along, and letting the US dollar appreciate. To be fair, central banks are not immune to manipulation, and fighting off political pressures is an endless battle. During the financial crisis, the monetary authorities were called on to assume temporary emergency powers, including massive purchases of government and private-sector bonds. For most, including the Fed, there is still no clean exit in sight, and this has made the problem of political insulation more difficult, with or without an election. Some believe the only salvation is a return to the gold standard era of the late 1800s, when governments fixed the price of their currency in gold, leaving little scope for political interference. Unfortunately, gold bugs seem surprisingly – or perhaps willfully – ignorant of the chronic financial crises and deep recessions of that era. Ultimately, the gold standard collapsed, after governments were forced to abandon it during World War I and thereafter were never able fully to reestablish public trust. More forward-looking thinkers point to private cryptocurrencies like Bitcoin as the future of money, arguing that they take politics out of the equation entirely. But this, too, is very naive. Governments already can block cryptocurrencies from circulating in the legal economy by restricting bank access, imposing tax laws, and by also impeding retail stores’ ability to accept it. (And, as I explain in my new book The Curse of Cash, Bitcoin can hardly be considered a long-term substitute for large-denomination bills.) Yes, blockchain technology is very exciting and will likely have many applications in banking, finance, and across the economy. But it is no guarantee against political influence on inflation. In the long history of currency, from coinage to the advent of paper money, the private sector may innovate, but ultimately the public sector appropriates. At the end of the day, the government will always be able to control the rules. Ironically, the best way to insulate central banks from political pressure would be to expand their toolkit to allow for effective negative-interestrate policy, though this will take time (as I also discuss in my book). In the meantime, the Fed and other central banks will have to keep walking a tightrope that leaves them especially vulnerable to outside pressure. Fortunately, the Fed has a chair right now who is able and willing to stand up to it. Project Syndicate

To be fair, central banks are not immune to manipulation, and fighting off political pressures is an endless battle.

”

16 Business Daily Friday, October 7 2016

Closing Portuguese wines

Industry concerned at rumours of higher tax

president, Ana Isabel Alves, said it would be “very serious” if the intention went ahead. The president of the Wine and Daily newspaper “Correio da Spirit Association of Portugal said Manhã” said on Wednesday that the yesterday that the government’s government was studying putting intention to put up the taxes on up the tax on wine as a way of wines would cause company bankruptcies in the sector and a fall getting more revenue. Ms Alves said the sector was already in consumption. Speaking to Lusa yesterday, the day having problems because of the crises in Angola and Brazil, two very seven sector associations issued a communiqué protesting against the important markets for Portuguese producers, and that are shrinking. Lusa possible tax hike, the association’s

Sports

China golf out of the rough? PGA, club maker Honma bet on post-Olympic boom Golf was officially banned for members of the Chinese Communist Party in October last year. China has since softened its position. Donny Kwok

year after China ordered public officials off the fairways in a crackdown on graft, the business of golf is betting hunger for the game among middle class fans and an Olympic medal for a homegrown star can drive the sport back to growth. The PGA Tour, organiser of golf’s flagship events, says it wants to more than double the number of events on the Chinese mainland as Beijing basks in the glow of a bronze medal in Rio for Feng Shanshan - also a multi-millionaire winner on the international Ladies PGA Tour. Meanwhile Honma Golf Ltd, maker of the world’s most expensive clubs, made its debut on the Hong Kong stock exchange yesterday after a HK$1.26 billion (US$162 million) listing, touting the chance of China growth as a key attraction in its prospectus. Feng, sponsored by Honma, also appears in the document - and helped out in road show presentations. “Double-digit or triple-digit growth in the population (of golfers) is very achievable,” said Gregory Gilligan, Beijing-based head of the PGA Tour’s Chinese affiliate, speaking in a recent interview at the Clearwater Bay Golf and Country Club in Hong Kong,

where the China PGA Tour will hold its first event outside the mainland from October 31 to November 6. After years of being unofficially tolerated, golf was officially banned for members of the Chinese Communist Party in October last year during a draconian anti-corruption drive. The sport’s popularity took a severe hit, and over a hundred courses closed. China has since softened its position, arguing earlier this year that golf itself was “not a

wrongdoing”, according to a report in China Daily, as long as officials pay their way and stick to playing outside working hours, rather than stroll the fairways while during work time on the public dime.

Retail sales seen jumping

In the meantime, according to Frost & Sullivan, China is primed to be one of the fastest-growing markets for golf products, driven by its growing middle class and rise in disposable income. Frost & Sullivan estimates the China golf products markets will jump by more than a third to US$646 million in retail sales value in 2019 from US$469 million last year. Still, Honma shares fell sharply on

their first day of trading amid doubts about its ability to attract buyers for its high-end clubs on the mainland. The hopes for growth in China come at a time when the sport has seen player numbers dropping globally, prompting some international sporting goods maker to cut back on golf and focus on other areas. German sportswear maker Adidas said in May it aimed to sell most of its money-losing golf business including TaylorMade and Adams, while Nike in August said it was looking to the exit golf equipment business. But for Honma, the time was right to prepare for expansion in China. Based in Japan but controlled by Chinese businessman and chairman Liu Jianguo, Honma’s clubs can fetch as much as nearly US$5,000 for a top-of-the-range set, with celebrities including Donald Trump reported to be fans. “We have to prepare to capture the market in case the demand explodes one day,” said Honma’s Liu, speaking at a pre-IPO event. But if Honma’s market debut was any indication, that explosion in demand for its clubs could take some time. Its shares were down 8.5 per cent in afternoon trade to give it a market capitalisation of HK$5.5 billion (US$710 million). “I doubt if golfers are still going to want to be so showy with expensive clubs when concern over the crackdown on graft is still haunting every industry,” said Alex Wong, Hong Kong-based director at Ample Finance Group. Reuters

Trade

Algerian official

Public vs. private

Indonesian central bank to support exports

OPEC could cut output more if needed

EU launches new ethics probe into ex-commissioner

Indonesian central bank will maintain rupiah at a level which can support exports following the appreciation of the currency against U.S. dollar, deputy at the bank said yesterday. Deputy Governor of Central Bank Mirza Aditswara made the statement as rupiah has strengthened around 6 per cent against the greenback this year while the shipment of the country’s commodities and other products overseas remains subdued. “Rupiah which keeps appreciating is not a good thing. Should exports be weak, so we have to take measures to boost exports. Rupiah should reflect its fundamental value,” Mirza said at the bank headquarters. Last week rupiah gained 1 per cent a U.S. dollar and was at the level of 12,992 per one U.S. dollar yesterday, according to the bank’s website. Indonesia’s inflation has been in check, giving rooms to the monetary policy maker to continue implementing easing policy after it trimmed a seven-day reverse repo rate 25 basis points to 5.00 per cent last month. A huge inflow of capitals following the implementation of tax amnesty program in July partly helps strengthening rupiah against the U.S. dollar. Xinhua

OPEC could cut production at its late-November meeting in Vienna by another 1 per cent more than the amount agreed in Algiers last month if producers reckon it is needed, Algerian Energy Minister Nouredine Bouterfa told local Ennahar TV. He also told Ennahar that OPEC and non-OPEC members would hold an informal meeting in Istanbul on October 8-13 to discuss how to implement the Algiers deal, though he did not give details about who would attend. OPEC producers agreed in Algiers in September to reduce output by around 700,000 barrels per day to a range of 32.5 million to 33.0 million barrels per day, its first cut since 2008. OPEC estimates its current output at 33.24 million bpd. “We will evaluate the market in Vienna by the end of November and if 700,000 barrels are not enough, we will go up. Now that OPEC is unified and speaks in one voice everything is much easier and if we need to cut by 1 per cent, we will cut by 1 per cent,” Bouterfa told. Algeria is one of OPEC’s price hawks, and this was the first suggestion of a possible further decrease in output. Before the Algiers meeting Bouterfa had been pressing for a 1 million bpd OPEC production cut to stabilize prices. Reuters

The EU said yesterday it has launched a new ethics probe after revelations that former competition commissioner Neelie Kroes failed to declare an interest in a Bahamas-based firm when in office. It comes just weeks after the European Commission announced an investigation into former chief Jose Manuel Barroso after he accepted a high-profile job with investment bank Goldman Sachs. “I can confirm that the ad hoc ethics committee is looking at both situations, concerning the one of former prime minister Barroso and former commissioner Kroes,” Alexander Winterstein, a commission spokesman, told a press conference in Brussels. Barroso, a former prime minister of Portugal, served as chief of the European Commission, the EU executive, from 2004 until 2014, when Kroes served under him as the anti-trust commissioner. Winterstein said he could not elaborate about the committee’s probe into Kroes nor say when Barroso might appear before the body because it acts independently of the commission. The Commission said Kroes has already responded to a letter Commission chief Jean-Claude Juncker sent to her last month following revelations that showed she had been a director of Mint Holdings Ltd in the Bahamas between 2000 and 2009. AFP