41 finalists for Golden & Excellence Awards announced Macau Business Awards Page 5
Wednesday, November 23 2016 Year V Nr. 1179 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Public Administration
Gaming
13 public Tak Chun departments to launches be restructured VIP rooms in Page 2 Studio City Page 2
M&A
Shun Tak to buy new property in Shanghai Page 5
www.macaubusinessdaily.com
Aviation
TransAsia Airways shuts down, suspends all flights Page 8
Leisure offer
Disney to undertake US$1.4 bln Hong Kong theme park expansion Page 16
Economy Turns Corner Economy
Good news from the Statistics and Census Service. The city has experienced its first q-o-q growth in real GDP in over two years. Up 4 pct in Q3. Boosted by increased external demand. With private consumption growing and investment rebounding. Page 3
Trump kills TPP
The United States President-elect dealt a deadly blow to the Trans Pacific Partnership agreement this week. The Donald released a video laying out actions he would take on his first day in office. Including withdrawing from the free trade pact, boosting local gas and oil consumption.
Space for all
Investment Fifty new local projects recommended for the Guangdong-Macau Co-operation Industrial Park in Hengqin. Requiring some 4.8 square kilometres of land. But no worries, says administrative committee head Niu Jing. Claiming the island has enough land for investments from the MSAR. Page 6
More in Timor
Sino-Luso East Timor has become a hot destination for Macau and Mainland Chinese businessmen. Local gaming tycoon Stanley Ho’s third wife, Ina Chan Un Chan, also senses business opportunities. Especially as the economies in other parts of the African Lusophone world decline. Page 4
Glass ceiling still there
Global trade Page 14
HK Hang Seng Index November 22, 2016
22,678.07 +320.29 (+1.43%) Worst Performers
CNOOC Ltd
+5.24%
China Resources Land Ltd
+2.58%
Sands China Ltd
-1.05%
China Mobile Ltd
+0.24%
PetroChina Co Ltd
+3.85%
Industrial & Commercial
+2.45%
AAC Technologies Holdings
-0.76%
Cheung Kong Infrastructure
+0.31%
China Shenhua Energy Co
+3.69%
China Resources Power
+2.38%
Galaxy Entertainment Group
-0.14%
Belle International Holdings
+0.45%
China Life Insurance Co Ltd
+2.86%
China Construction Bank
+2.18%
Hong Kong & China Gas Co
+0.00%
Wharf Holdings Ltd/The
+0.54%
China Petroleum & Chemical
+2.84%
BOC Hong Kong Holdings
+2.14%
Li & Fung Ltd
+0.00%
Link REIT
+0.61%
15° 21° 16° 19° 17° 20° 15° 21° 15° 21° Today
Source: Bloomberg
Best Performers
THU
FRI
I SSN 2226-8294
SAT
SUN
Source: AccuWeather
Banking Male workers in the local banking sector earn more than their female colleagues on average. Especially non-resident female workers. Whose salary is only 66 pct of male workers. Page 6
2 Business Daily Wednesday, November 23 2016
Macau In Brief Earthquake
No Macau residents affected by Fukushima earthquake The Tourism Crisis Management Office (GGCT) said yesterday it had not received any requests for information or assistance by Macau residents after an earthquake hit Fukushima in Japan yesterday morning. GGCT added that there was no indication that tours or tourist groups from the city had been affected by the earthquake, according to information provided by the local tourism industry. The 7.4 magnitude earthquake that hit northeastern Japan yesterday morning injured at least 12 people, and was described by the Japan Meteorological Agency as an aftershock of 2011’s nine magnitude earthquake that caused the Fukushima nuclear power plant disaster. N.M.
Smoking ban
Curtains for smokers? The city’s Health Bureau has uncovered a possible violation of smoking ban law in The Venetian Macao. Two VIP rooms in the casino-resort - Pit387 and Pit388 were approved as smoking areas in 2012 but the Bureau said it had received complaints about the areas violating the smoking ban law. During yesterday’s inspection, the Bureau discovered that an accounts office for the areas is separated from the smoking areas by curtains despite smoking ban notices being posted in the office. The situation has been recorded by an inspector for future investigation, the Bureau said. C.U.
Public Administration
Sonia Chan: 13 public departments to be restructured The Secretary has revealed no new progress on the MSAR’s discussion on regional judicial co-operation with Hong Kong and the Mainland Kam Leong kamleong@macaubusinessdaily.com
S
ecretaryforAdministration and Justice Sonia Chan Hoi Fan said yesterday that the government’s second phase of restructuring of public departments would involve 13 bodies, of which six fall under the field of transport and public works. According to the Secretary, the public works departments will see their functions integrated or adjusted, including the Land, Public Works and Transport Bureau, the Infrastructure Development Office, the Transportation Infrastructure Office, the Environmental Protection Bureau and the Office for the Development of the Energy Sector and the Cartography and Cadastre Bureau. In addition, Macao Economic Services, Macau Government Tourism Office and the Macao Trade and Investment Promotion Institute will see adjustments in their functions or alternations in their organisation regulations. Secretary Chan added that some of the functions of the Civic and Municipal Affairs Bureau (IACM) would be integrated with public works departments, claiming the future of IACM – to be disbanded or to remain – will depend upon public opinion.
Ms. Chan was presenting the major works of her field in the 2017 Policy Address to the Legislative Assembly yesterday, in addition to answering questions from legislators. The government’s first phase of public department restructuring includes the merger of the Bureau of Telecommunications with Macau Post, the intehgration of which Ms. Chan expected to be completed this year. She added that the government would submit a bill to the legislature to integrate the Unitary Police Service and the Security Forces Co-ordination Office next year
No progress on regional judicial co-operation
On the other hand, the Secretary said yesterday that there is no new progress on the city’s discussion on judicial co-operation with Hong Kong and China due to the differences in the law systems of the parties. She added that the government is planning to follow up on its deals for judicial co-operation in criminal matters with South Korea and Mongolia in 2017, indicating discussion on such co-operation with Portuguese-speaking countries will also be initiated next year.
Retail
Retail sales dip 7.4 pct in Q3 The city’s total value of retail sales reached MOP13.6 billion (US$1.7 billion) for the third quarter of the year, down 7.4 per cent year-on-year due to the continuing decreased sales of
luxury products, according to the latest official data released yesterday by the Statistics and Census Service (DSEC). In the three months, the retail sales of Motor Vehicles plunged 38.7 per
Transport
Two new vehicle inspection centres operational soon The city’s Transport Bureau (DSAT) unveiled two new vehicles inspection centres yesterday, with one located in Cotai and the other in Areia Preta for solely inspecting motorbikes. According to local broadcaster TDM Radio, the two new inspection centres will start operations next week. The new inspection centres have a total of 17 inspection lanes, with an estimated 650 vehicles able to be inspected every day, twice current inspection numbers. DSAT also revealed that some 60,000 vehicles are obliged to take the periodic inspections in the city. The Bureau expects the number of vehicles obliged to take regular inspections to rise to 120,000 following the mandatory inspection age being reduced to eight years old. C.U.
The official believes sector integrations between public departments would make their functions clearer to residents and reduce situations where public departments pass the buck between each other.
Gaming
Tak Chun opens VIP Club in Studio City Yesterday, junket operator Tak Chun Group opened its VIP operation in Studio City with nine gaming tables, according to a press release by the company. According to the release, its VIP operation in the Melco Crown Entertainment property is named Studio City Tak Chun VIP Club and occupies some 1,000 square metres with four VIP rooms. “With this new VIP operation, the group now operates 15 VIP clubs, including 13 in Macau and 2 overseas with over 200 gaming tables,” said group CEO Levo Chan. Melco Crown management recently
announced that two-thirds of the 33 VIP tables located in Studio City would be allocated to junket operators Tak Chun Group and Suncity Group. The release also announced that the group would continue focusing on setting up new outlets in 5-star hotels and resorts in both Taipa and Cotai in order to ‘actively renew the group’s visibility, market position, and premium services’. Tak Chun Group recently launched its VIP operation in Wynn Palace and The Parisian Macao - the latest integrated resorts in the city - with 15 VIP tables and 9 tables, respectively. N.M.
cent year-on-year to MOP489 million whilst those of Watches, Clocks & Jewellery slumped 21.2 per cent year-on-year to MOP2.71 billion. However, sales of Leather Goods jumped by 14.7 per cent year-on-year to MOP1.54 billion in the quarter, in addition to the sales growth for Automotive Fuels, which increased 10.5 per cent year-on-year to MOP352 million. On a quarter-to-quarter comparison, the city’s total retail sales value for the past quarter represents an increase of 3.2 per cent from MOP13.15 billion for the second quarter. Meanwhile, total value of retail sales for the first three quarters of 2016 amounted to MOP41.53 billion, down 9.4 per cent year-on-year. In terms of business prospects, 46.5 per cent of surveyed retailers anticipate sales volume will remain stable year-on-year for the fourth quarter of the year whereas 80 per cent of retailers anticipate stable retail prices in the fourth quarter of 2016 compared to the same quarter of 2015, according to DSEC. K.L.
Business Daily Wednesday, November 23 2016    3
Macau
Economy GDP sees first q-to-q expansion in over two years
Economy turning around Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
R
ebounds in the export of services and investment have led to the first quarter growth in real gross domestic product (GDP) in over two years, according to the most recent third quarter data from the Statistics and Census Service (DSEC). GDP expanded by 4 per cent in real terms year-on-year in the quarter, driven by an increase in external demand while private consumption resumed growth, in part driven by increases in employee compensation, and a rebound in investment.
Exports and imports
A pickup in exports was most evident in the 6.5 per cent year-onyear increase in non-gaming tourism services, while the export of gaming services increased 0.2 per cent year-on-year in the third quarter,
contrasting the 9.9 per cent and 6 per cent decreases in the sectors seen in the second quarter, respectively. Overall, the export of goods declined 15.6 per cent year-on-year in the third quarter, in contrast to the 24.7 per cent fall seen in the previous quarter. Additionally contributing to the merchandise trade decline was a continuation of a decline in the import of goods, which moderated to a 7.3 per cent fall year-on-year vis-Ă -vis 17 per cent recorded in the second quarter. Meanwhile, driven by increased visitor arrivals and spending, the export of services grew 3.3 per cent year-on-year in the same period, the first year-on-year growth seen since the 1.6 per cent growth recorded in the second quarter of 2014. The import of services reversed the 2016 trend, with a 6.2 per cent year-on-year growth in the third quarter, contrasting declines of 3.1 per
cent and 6.3 per cent in the previous quarters.
Reversing the trend
Private consumption increased 0.3 per cent year-on-year in the quarter, reaching MOP23.8 billion (US$3 billion), reversing the previous yearon-year declines seen so far this year. Expenditure on non-durable household goods fell 17.3 per cent year-on-year, demonstrating cautious household spending, with a 5.5 per cent fall in consumer goods consumption year-on-year. Food, beverages and tobacco, however, saw a 2.3 per cent increase year-on-year in private consumption spending. Private consumption abroad picked up 4.5 per cent year-on-year in the third quarter. Government expenditure fell by 1.3 per cent year-on-year, lower than the 6.1 per cent registered in the second quarter, however, driven in part by a 4.9 per cent year-on-year decrease
in the net purchase of goods and services. Government compensation of employees increased 2.2 per cent year-on-year. Investment, gauged by gross fixed capital formation, grew 2.3 per cent year-on-year, rebounding from a 20 per cent year-on-year drop seen in the previous quarter. Increases in private investment in construction and equipment saw year-on-year increases of 1.3 per cent and 11.2 per cent, while government investment in the same categories fell 0.1 per cent and increased 17.5 per cent, respectively. For the first three quarters of the year, the local economy contracted 5.4 per cent in real terms. In terms of major components of expenditure, only government final expenditure consumption registered growth during the three quarters, while investment fell 18.1 per cent, private consumption expenditure fell 1.6 per cent, exports of goods fell 22 per cent, imports of goods fell 15.4 per cent and the export and import of services decreased 5.8 per cent and 1 per cent, respectively, year-on-year.
4 Business Daily Wednesday, November 23 2016
Macau Opinion
José I. Duarte*
Policy Address Every year, as the period for the presentation and discussion of the Policy Address and the approval of the Budget approaches, the same questions pop up in the media. People are asked about their expectations. They are challenged to present their views on the priority areas. They may even venture a word on which new topics will be introduced or they would like to see showing up there. Most people can be quite assertive in stating their preferences but their expectations will usually be low. That is a reasonable stance. Experience shows there are seldom remarkable changes in either the contents or the approaches laid by the successive policy addresses presented to the Legislative Assembly. Many will still state disappointment at the lack of clarity or novelty in the actual Policy Address, once it is made public. Conceivably, such a reaction is more a statement of disappointment than an expression of genuine surprise. Let us be fair: the Policy Address represents a substantial effort to provide what in other jurisdictions would be called a government programme or action plan. But the local circumstances diminish its scope in many ways. There is no real political competition or tradition for substantial debate. Proper power checks and balances are either absent or are mostly formal, with little actual bite. The result could hardly be other than what we get. The contents are in many ways condemned to keep repeating themselves, sometimes with just the same words, year after year – as if time had not passed. Future promises are conveniently indefinite and general. Specific commitments, objectives and details are mostly absent; so are criteria for objective evaluation. Past promises are occasionally mentioned, only to underscore that they have been wholly or largely fulfilled. Their vagueness and the absence of proper assessment tools makes it as easy to proclaim their accomplishment, as it makes it difficult to show they were missed. The result is a laborious and at times grandiose-looking document – wordy, overloaded with adjectives, yet more bent on sloganeering than on rational argument, richer in ornament than in substance. It is not easy reading, not for the impatient or easily bored. Yet, one has to feel some sympathy for those who write it. They are bound to produce a text that must appear to promise a lot while committing to little. The real power plays take place – and are settled – elsewhere. *economist and permanent contributor to this newspaper.
Investment Stanley Ho’s third wife also interested in business opportunities in East Timor
Going to East Timor As the economy of Portuguese-speaking countries in Africa declines, Macau and Mainland China businessman look for business opportunities in East Timor Nelson Moura nelson.moura@macaubusinessdaily.com
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hile the economy and trade falls in African Lusophone countries, East Timor is stepping up as the newest hot destination for investment by Macau and Mainland China companies looking to explore business opportunities in the only Portuguese-speaking country in Asia. “It’s like a football game; now we defend in Africa and attack in Asia. East Timor will have a new image and new investments, especially after the economic crisis that affects African countries at the moment such as Mozambique and Angola,” the Vice-President of local company Charlestrong Engineering Technology and Consulting Limited, Afonso Chan, told Business Daily. Charlestrong is currently developing a resort in the Special Autonomous Region of Oecusse Ambeno (RAEOA) created in 2014 as the first special economic region of East Timor. “It is a small project with 60 rooms expected to be completed around the first quarter of 2017 but in Macau we try and make use of this strategy while looking for business opportunities in Portuguese-speaking countries; we start with a small project that might lead to bigger ones,” Mr. Chan said. Created in 2014, the RAEOA was destined by the East Timor Government as a Special Social Market Economy Zone (ZEESM), with the purpose of promoting regional development through the creation of strategic zones that could attract domestic and foreign investors. “Oecusse is a special area like Macau, separated from the area under Indonesian control. The area is in big need of infrastructure and an international airport is currently being constructed there,” he added. According to data from the East
Timor Finance Ministry, the Oecusse special region was expected to create more than US$5 million (MOP40 million) in domestic revenue in 2017; the East Timor Government has disbursed US$123 million for infrastructure development and maintenance, with US$33 million for the construction of the new Oecusse International Airport.
East Timor opportunities
For the first nine months of 2016, trade between China and its two largest African Lusophone countries, Angola and Mozambique, fell yearon-year by 24.3 per cent and 25.7 per cent, respectively; however, its trade with East Timor doubled during the period from one year ago. Ac c o r d i n g t o n e w s ag e n c y Bloomberg, Mozambique is also currently facing a crisis created by US$1.16 billion of external debts that led the International Monetary Fund (IMF) to suspend its funding to the country this year, while Angola’s economy has suffered the impact of price decreases on its biggest export - oil. On the other hand, the IMF has stated that East Timor’s gross domestic product (GDP) is expected to grow 5.5 per cent in 2017, according to the Asian Development Bank albeit mainly driven by oil reserves and government expenditure, the agency said. The small Asian country has even recently attracted the attention of Ina Chan Un Chan, Director of Sociedade de Turismo e Diversões de Macau, SA (STDM) and Chairman of Hong Kong company UNIR (HK) Management Limited, local Portuguese-language newspaper Ponto Final reported yesterday. Ms. Ina Chan is also the third wife of local magnate Stanley Ho Hung Sun. “Ms. Chan and some of her relatives have expressed interest in visiting East Timor and investigating possibilities of investment in different
sectors such as hotels and tourism, and working with East Timor youth education,” Danilo AfonsoHenriques, representative of TimorLeste of the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries (Macao) told Business Daily. According to Mr. Afonso-Henriques, the conversations between the East Timor Government representatives and Ms. Chan and her family are still in a preliminary stage, with a visit to the country possibly occurring before the end of this year.
A bridge to East Timor
Even if not investing directly in East Timor, some Macau companies have worked as intermediaries between Mainland China investors and the Asia country. Companies like Perfeição Companhia Limitada, a local consultancy company specialising in bridging Chinese businesses with Lusophone countries, created in 2015 by former President of the Legislative Assembly of Macau, Susana Chou Vaz da Luz. The company has recently finished a co-operation project for fishing companies from the city of Zhoushan in the Chinese Province of Zhejiang to explore fishing activities in East Timor’s capital of Dili. “The government of Zhoushan was interested in promoting businesses in East Timor but didn’t have any knowledge of East Timor, where it is, how many people it has, how to buy the tickets to get there. So they came to Macau last year and Forum Macao recommended us as intermediaries,” Tony Hoi, Project Manager of Perfeição, told Business Daily. According to Perfeição, the fishing areas of East Timor are still vastly unexplored and have very little competition, with Chinese interests in the region having grown with the ‘One Road, One’ policy, with the Macau company working as a bridge between the regions. “East Timor is rich in unexplored resources and in need of infrastructure development, something local businesses can explore,” the Perfeição Project Manager told Business Daily.
Business Daily Wednesday, November 23 2016 5
Macau Macau Business Awards
Rewarding business excellence The Business Awards of Macau has announced the finalists for this year’s edition, with a gala ceremony to be held on tomorrow Nelson Moura nelson.moura@macaubusinessdaily.com
A
total of 41 finalists were announced for the fourth edition of the Business Awards of Macau yesterday whilst an award ceremony gala will be held tomorrow, according to the organiser. “Most business award events are organised by the government so the goal behind creating this event is to create an opportunity for members of society to recognise business exc e l l e n c e b et w e e n th ei r peers,” said Paulo Azevedo, proprietor of Project Asia Corporation and founder of the Business Awards. Created in 2013, the Business Awards of Macau seek to
recognise and salute business excellence whilst promoting corporate social responsibility in the MSAR. According to Mr. Azevedo, the Awards receive between 120 to 150 applications every year, with the organisation this year picking 41 finalists to be awarded Golden and Excellence Awards in 11 categories. The winners, chosen through voting by a jury panel of 30 distinguished members of local society, will be announced during the gala event to take place on November 24, with Mr. Azevedo observing that the “41 candidates are all winners and the difference between the Excellence and Golden awards is very small”. The 11 categories are: Leading by Example, Entrepreneur,
Young Entrepreneur, New Talent, Most Valuable Brand, Innovation, Corporate Social Responsibility, Environmental Performance, Small and Medium Enterprise and Non-Profit Organisation plus the addition of a new category - the Grand Merit Award - granted to a corporation or individual which the Business Awards selection board considers has made a considerable contribution to the local community. The Grand Merit Award single winner will only be revealed at the event’s gala ceremony. “Macau is a very international city and in every edition of the Business Awards we’ve had a large number of international candidates for the awards,” said event organizer Victoria Man. “This year, we’re happy to see that a large number of local candidates have applied and that many local companies and entrepreneurs have succeeded in expanding their businesses outside of Macau to different markets.”
2016 BUSINESS AWARDS OF MACAU FINALISTS Corporate Social Responsibility Bank of China Macau Branch Macau Design Centre Nam Kwong (Group) Company Limited Environmental Performance Sofitel Macau at Ponte 16 Hotel Okura Macau New Talent Lei Kai Seng, Kalas Kelvin Wong Winnie Wong Wong Weng Ian, Yonnie Kathy Chen Innovation BringBuys LT Game Macau Food Company Limited Good Media Production Company Limited Leading by Example Sheraton Grand Macao Hotel Sociedade de Jogos de Macau, S.A. (‘SJM’) Melco Crown Entertainment Limited Moon Chun Memorial College Non-Profit Organisation Macau Deaf Association The Lighthouse Club Macau Dream Project Association Badi Foundation Most Valuable Brand Scientific Games DFS Group The St. Regis Macao Louis Vuitton Macau Company Limited The Eight, Grand Lisboa, Macau Small and Medium Enterprise (SME) AES Group Original Technology Limited Elysée Bakery Company Limited Anzac Group Company Limited Milton Exhibits & Engineering (Macau) Limited Entrepreneur Afonso Chan Kevin Ho Sunny Ip Young Entrepreneur David Leung Jasmina Leong Joe Liu Nuno Veloso Chan Kam Tat Grand Merit Award To be announced at Business Awards of Macau Gala Ceremony tomorrow
M&A
Shun Tak to purchase HK$2.2 bln property in Shanghai
New digs in Shanghai Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
Local developer and operator of the TurboJET ferry company, Shun Tak Holdings Ltd., has announced that via a joint venture the group plans to purchase a property in the Pudong New Area of Shanghai for RMB1.95 billion (HK$2.24 billion/US$282,500), according to a filing with the Hong Kong Stock Exchange. The property occupies 26,707 square metres with a gross floor area of 133,536 square metres and is set to be developed into a commercial and hotel facility as well as an ‘integrated art and cultural facility’. The plot will also hold an office
component, which the joint venture - formed by a wholly owned subsidiary of Shun Tak with a subsidiary of Shanghai Lujiazhui – has the rights to sell 10 years after completion of its government inspection. Of the total development, the largest component – the office space – will take up 70,000 square metres, while retail will occupy 14,000 square metres, the hotel will take up 20,000 square metres and the integrated art and culture facility will occupy 30,000 square metres, with the hotel to be managed by a Shun Tak subsidiary – the Artyzen Hospitality Group. ‘It is expected that the project will benefit from its superior location,’ notes the filing, as the land, located in
An expensive affair
Dr. Yvonne Lui Lai-kwan - fugitive billionaire Joseph Lau’s ex-girlfriend and mother of two children by him has announced that she has no desire to “initiate court proceedings against Mr. Lau” and prefers to “live her life without the ongoing involvement of lawyers”, according to the South China Morning Post. The statements came on Monday following a notice of intended marriage displayed at the marriage
Strategic change
‘The Group has strategically expanded its investment portfolio in the PRC (People’s Republic of China) with a number of mixed-use development projects culminating in Beijing, Shanghai and Hengqin,’ notes the filing. ‘Under the current economic environment, the Group shall continue to stay vigilant and adopt a pragmatic approach in our core businesses, while executing new projects along the pipeline to build new impetus for growth into the future,’ states the group regarding future expansion. This comes as it faces ‘challenges’ in its hotel division in both the MSAR
and HKSAR ‘as tourist arrivals have declined and price competition intensified’. Regarding the group’s local operations ‘the opening of a pipeline of integrated resorts has further exacerbated the problem,’ causing the hotel to adjust their sales strategy and ‘target markets to drive new revenue sources’. However the group notes it still remains ‘cautiously optimistic’ about its long-term value returns. For the group’s property and transportation divisions, the filing mentions that Shun Tak is concentrating its efforts on the pre-sales preparation of Nova City Phase 5 as well as transitioning current routes from the Pac On Temporary Ferry Terminal to the newly built terminal, coupled with plans ‘to increase sailing frequencies to enhance capacities, subject to government approval’.
Corporate
Fugitive
Joseph Lau to marry girlfriend; ex-girlfriend says she won’t sue
the south-eastern part of the Qiantan business district, belongs to the China (Shanghai) Pilot Free Trade Zone.
registration office in Hong Kong last Friday which showed Lau intends to marry long-time partner Chan Hoi-wan, with whom Lau also has two children. Last week, Mr. Lau announced in a full-page statement published in Hong Kong newspapers that his relationship with Dr. Lui had ended in 2014 plus statements to Apple Daily regarding his fiancée’s position, saying “She is not greedy […] she has been taking good care of me and my children”. Lau told the publication he had given “billions” to Chan in the case of Lui wanting to take his family members to court after his death.
Anima launching new cat shelter on Saturday
The Society for the Protection of Animals (Macau), also known as Anima, is launching a new space for cats called Anima Cat’s Paradise at 4:00pm this Saturday. The new Anima cat’s shelter
is located at the entrance to Coloane Village, immediately after the Police Academy Field. Anima said it had decided to have an area totally dedicated to cats, concentrating all their dogs in the Shelter in Altinho de Ka-Ho, in order to increase the quality of life of both types of animal.
6 Business Daily Wednesday, November 23 2016
Macau Industrial Park
More local projects apply for land in Hengqin The president of Hengqin’s administrative committee says the island will provide enough land for local developments Cecilia U cecilia.u@macaubusinessdaily.com
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he MSAR Government has endorsed 50 more local projects to be involved in the Guangdong-Macau Co-operation Industrial Park, which are applying for 4.8 square kilometres of land for developments on the island. During an exchange session between these projects and the Park yesterday, the President of the
Administrative Committee of the Macao Trade and Investment Promotion Institute (IPIM), Cheong Chou Weng, stated that these 50 local projects were part of the city’s recommendations to the Park in 2014. The 50 projects are primarily related to the tourism leisure industry, logistics, cultural and creative industries, scientific education and research, information technology plus medical and health development. In addition, according to the IPIM president, 16 of the 33 local projects
recommended to the Park in 2014 have already obtained land for their developments, whilst some 12 of the 16 projects initiated construction this year, with completion expected in two years time. Speaking during the exchange session, the head of Hengqin Administrative Committee, Niu Jing, revealed that some 25,235 enterprises have applied to enter the industrial park in Hengqin as at the end of October, of which 669 are Macau businesses, indicating a year-on-year increase of 102.1 per cent. Mr. Niu also said that 345 local enterprises have newly entered the development park in Hengqin, demonstrating a year-on-year increase of 89.56 per cent.
Asked whether a second batch of recommendations of local projects would be proposed for the Industrial Park, Mr. Niu said on the sidelines of the event that the Hengqin authorities are still in discussions with IPIM. But he emphasised that the island’s co-operation with Macau enterprises is not confined to the Industrial Park, noting that the project constructed by local gaming operator Macau Legend was located outside the Industrial Park Area. He noted that the co-operation between Hengqin and Macau investors is generally smooth, although small difficulties are inevitable now and then, such as the construction of the University of Macau. Mr. Niu also said the Chinese city would provide enough land for SAR investors, emphasising that they should focus on business operations instead of worrying about whether there ie enough land for development.
Macau-licensed car entry to Hengqin
Mr. Niu also indicated to reporters that the law approving Macau-licensed vehicles would be passed by the end of the year. However, the exact schedule for announcing the policy has yet to be revealed. He added that the discussion on the free flow of Renminbi between the regions is in progress with the financial departments, claiming the discussion panels hope to enable Macau banks to operate in the Chinese city. On the other hand, the vice-chairman of Similan Group Maximiliano, Lou Jun Iong, revealed that construction of its Macau Arcade Plaza is running smooth and that he is confident that construction can meet the completion date stated in the contract. The vice-chairman also said that Hengqin town provides one-to-one services and holds regular meetings, expressing that the services enable the smoothness of the construction and development. Construction started on Macau Arcade Plaza on May 8 this year.
The President of the Administrative Committee of the Macao Trade and Investment Promotion Institute (IPIM), Cheong Chou Weng, speaks at yesterday’s exchange session.
Banking On average, female workers make less than their male colleagues
Unequal funding Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
Female non-resident workers in the banking sector made only 66 per cent of what their male colleagues made in average earnings during the month of September, according to the most recent data from the Statistics and Census Service (DSEC). Female non-residents made an average of MOP22,420 for the month, while their male colleagues made MOP33,530. In addition, female residents in the sector received only 78 per cent of what their male colleagues received during the month, at MOP22,840, whilst their male colleagues made MOP29,170 for the month. Overall, female workers within the sector outweigh their male colleagues by 30 per cent, with a total of 3,591 female workers as compared to 2,481 male workers. Female workers outweigh male workers in three of four main employment categories in the data, in some cases with up to 50 per cent more female workers than male. However, they also make less on average than their male counterparts in the same three out of four categories – both for residents and non-resident workers. Female workers comprise 59.1 per cent of the full-time employees in a sector which employed 6,072 in September – an increase of 144
year-on-year – and which saw an average rise in earnings of 3 per cent year-on-year during the month.
Earnings
Average earnings for both residents and non-residents saw a year-onyear rise for the month, with a 5.2 per cent increase for non-resident workers and a 2.6 per cent raise for residents overall. This was most
pronounced for clerks, who saw a 5.3 per cent increase in average earnings for non-residents, year-on-year in September, while residents saw a 4.3 per cent increase. Clerks make up the largest percentage of workers in the sector, accounting for 33.6 per cent, of which 12.3 per cent are bank tellers – the occupation with the highest job vacancy rate among the provided categories in the third quarter, at 6.5 per cent, followed by technicians and associate professionals, which saw a job vacancy rate of 3.3 per cent in
the same period. Technicians and associate professionals made up the secondlargest occupation category in the sector for September, at 33.3 per cent, profiting from a year-on-year increase in the workforce of 7.4 per cent. Meanwhile, directors and managers made up 27.5 per cent of the workforce in September, with a job vacancy rate of 1.4 per cent during the third quarter, the lowest amongst the data provided and less than half the overall 3.8 per cent recorded in the third quarter.
Business Daily Wednesday, November 23 2016 7
Gaming Online gaming Wynn and Adelson could block Trump’s online gaming liberalisation aspirations
A wall of opposition
Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
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tatements by United States President-elect Donald Trump made five years ago place him firmly in favour of the development of online gaming. However, one of the major roadblocks in liberalising the sector could be two of his supporters, and recently named finance vice chairs of the Presidential Inaugural Committee – Sheldon Adelson, Chairman and CEO of Las Vegas Sands and Sands China Ltd., and Steve Wynn, Chairman and CEO of Wynn Resorts and Wynn Macau Ltd. “This has to happen because many other countries are doing it and like usual the U.S. is just missing out,” Trump told Forbes in October 2011,
noting that “we’ve been looking at this for a while”. The statements came five years after the Unlawful Internet Gambling Enforcement Act of 2006 came into play, which ‘prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law,’ according to the Act’s overview. At the time he made the statements, Trump had formed a partnership, which gaming publication US Poker names as Poker Ventures LLC, incorporated in Nevada and Delaware in 2012, and in New Jersey in 2013. The venture received a vendor licence to operate in the interactive gaming industry in New Jersey and
the company lists Donald Trump as the director, with the company address being the same as the Trump Corporation. The group has yet to launch a product, however. In addition, Trump Entertainment partnered with Ultimate Gaming and Betfair under Atlantic City resorts, but couldn’t get licensed for gaming over the Internet.
Wynn-ing over Adelson
Trump’s position towards online gaming is clear, as are those of his two recently named vice chairs to his transition committee, one of whom is a staunch opponent of online gaming - Sheldon Adelson - and one who had previously applied for, and received, licences for online gaming yet now believes it to not worth the bother – Steve Wynn.
“I’m not going to get into it . . . for sure,” Wynn told television show Ralston Live, despite deals with 888 Holdings and Caesars Entertainment which Wynn chose to never act upon, as noted by Pa Online Casino. Both men were named to Trump’s transition committee and both would predictably block his moves to liberalise regulations on online gaming, which Trump has openly stated would benefit governments at both state and federal level due to increased tax revenues. “The U.S. is missing out and New Jersey is missing out and everyone else is getting it,” Trump told Forbes, noting “It seems inevitable, but with this country you never know if it’s inevitable”. Adelson’s opposition is stronger than words, as he’s pushing the Restoration of America’s Wire Act, which seeks ‘prohibition against using a wire communication facility for the transmission of bets or wagers, wagering information, or wagering proceeds’, according to the bill summary, a bill supported by United States Senator Mitch McConnell - a Republican who, given the party’s majority in the Senate, has more power to push the billthrough. The last time Republicans controlled both houses and the presidency, under George W. Bush, they passed the Unlawful Internet Gambling Enforcement Act – the same bill predating Trump’s pro-online gaming statements by five years. As such, Trump, instead of building, will have to scale a wall of opposition, not only from his own party but also against some of his party’s largest donors and his own transition committee members if he wants to move forward on online gaming in the U.S.
8 Business Daily Wednesday, November 23 2016
Greater China Currency
Ex PBOC official says new yuan fix ‘encourages capital flight’ The yuan has fallen 6.1 per cent against the dollar so far this year
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he new way China fixes the yuan exchange rate “ e n c o u rag e s ” c a p i t a l flight and has led to a gradual depreciation of the currency, a former member of the central bank’s Monetary Policy Committee said yesterday. Y u Y o n g d i n g w r o t e i n th e Shanghai Securities News that the new mechanism adopted by the People’s Bank of China to set the yuan’s midpoint rate did not allow for “true two-way volatility” in the exchange rate, and had hurt foreign exchange reserves as a result.
mechanism to fix the yuan midpoint is based on the closing price from a day earlier and by reference to a basket of currencies. International Monetary Fund Deputy Managing Director David Lipton said at a forum in Beijing yesterday that over the past several years the PBOC decided to give more weight to the basket rather than think about yuan parity just with the dollar. “The main point is that more and more the PBOC is allowing flexibility and market forces to be the determining factor and what we’re seeing is that the RMB tends to move
more with the basket rather than any particular currency,” said Lipton. The yuan has fallen 6.1 per cent against the dollar so far this year, and hovered near an 8-1/2 year low yesterday. So far this month it has lost around 1.6 per cent against the greenback. Reuters reported last week that Chinese policymakers were prepared to slow the yuan’s decline because they feared rapid capital flight if the currency fell too quickly, and especially if it fell through the psychologically important 7-perdollar level. A commentary yesterday in the official Economic Daily newspaper said that China must rely on structural reforms to reverse expectations for
yuan depreciation. The yuan was trading around 6.89 per dollar yesterday. Yu, an academic at the Chinese Academy of Social Sciences state think tank, wrote yesterday that the independence of monetary policy had been affected by the new yuan fixing mechanism and it had worsened the market distortions caused by capital controls. However, Yu also noted that Chinese economic fundamentals did not support a sharp depreciation in the yuan. “We have capital controls as the last line of defence. It is not necessary for us to worry too much about the short-term and volatile depreciation in the yuan,” Yu said. Reuters
Key Points New yuan fixing mechanism has led to gradual depreciation - Yu Says doesn’t allow “true two-way volatility” in exchange rate New mechanism has hurt foreign exchange reserves - Yu
“Preventing the yuan from reaching market equilibrium is objectively a rejection of raising the cost of capital flight,” wrote Yu, a former advisor to the PBOC and one-time member of its monetary policy committee. “It even encourages capital flight.” Before the changes adopted in August, the PBOC set the daily fix by asking currency market makers for price quotations. The new
Dissolution
Taiwan’s TransAsia closes down after fatal air crashes Despite moves to combat safety fears, it incurred losses of US$34.38 million last year Taiwan’s troubled TransAsia Airways said yesterday the company would be dissolved in the wake of two deadly plane crashes, massive financial losses and an insider trading probe. Board members reached the decision to close the struggling airline during a hastily called board meeting, with all flights immediately axed.
“I’m sorry that our recent efforts could not meet public expectations” Liu Tung-ming, chief executive officer of TransAsia Chief executive officer Liu Tungming bowed in a sign of contrition as he told reporters of the “painful” decision. “I’m sorry that our recent efforts could not meet public expectations,” Liu said. “The board meeting convened today has approved the decision to dissolve the company and suspend all flights from today.” The dramatic crash of flight GE235 in February 2015 grabbed global headlines as car dashcam footage showed the jet clipping a road bridge and careering into a river shortly after take-off from Taipei, killing 43 people.
An investigation blamed a catalogue of pilot errors, with one found to have mistakenly switched off the only functioning engine after the other had failed. It came just seven months after another jet slammed into trees and houses near Magong city on Taiwan’s scenic Penghu island, leaving 48 dead. The pilots were flying below the minimum altitude required in poor visibility caused by a typhoon in a procedural mistake widespread
among TransAsia’s pilots at the time, the Aviation Safety Council said in its investigation report. TransAsia - Taiwan’s first private airline, set up in 1951 - said it had introduced six training programmes following the two fatal incidents. But despite moves to combat safety fears, it incurred losses of Tw$1.1 billion (US$34.38 million) last year. Those losses widened to Tw$2.2 billion in the first three quarters of this year, and in October its budget airline V Air folded. Its woes were exacerbated by a slump in Chinese tourists as relations deteriorated with Beijing under
Taiwan’s new president Tsai Ingwen, who took office in May. TransAsia is also now mired in a probe over shares trading. Chairman Vincent Lin and two executives were questioned by prosecutors early yesterday after the Taiwan Stock Exchange warned of “apparent” insider trading in Monday’s session, as rumours began to swirl that the firm was going under. Its trading volume on Monday was nearly 27 times higher than on Friday. TransAsia currently operates a fleet of 16 passenger aircraft serving 27 international and domestic locations. It has a staff of 1,795. AFP
Business Daily Wednesday, November 23 2016 9
Greater china Restructure debt
In Brief
CCB seeks foreign investors for debt-for-equity swaps Debts that CCB has agreed to swap into equity are normal loans mainly held by leading state firms in industries grappling with over-capacity Shu Zhang and Matthew Miller
China Construction Bank Corp (CCB), the country’s second-biggest lender, has started discussions with foreign investors to take part in a handful of recently announced debt-for-equity swap deals, a senior banker told Reuters yesterday. The discussions potentially open the way for the first foreign investor involvement in Beijing’s debt-for-equity swap scheme as the government looks to salvage loss-making state-owned enterprises (SOEs) and cut US$18 trillion in corporate debt, equivalent to 169 per cent of domestic output.
“Foreign investors would be much more interested if they could obtain controlling stakes in companies poised for future growth”
billion). The rapid rise in debt, particularly among inefficient SOEs, poses one of the biggest risks to the world’s second-largest economy, some economists said. Debts that CCB has agreed to swap into equity are normal loans mainly held by leading state firms in industries grappling with over-capacity, including the likes of the world’s biggest tin producer Yunnan Tin Group Co and China’s fourth-largest coal producer Shandong Energy Group Co. Alternative investment firms, including Oaktree Capital Group LP and KKR & Co LP, have been on the hunt for restructuring and distressed opportunities in China. Ted Osborn, a restructuring partner at PwC, said foreign appetite for Chinese debt-for-equity swaps could be limited. “Ascertaining value in an SOE will be very difficult. And even if that can be agreed what is their exit,
particularly for a minority stake?” said Osborn. “Foreign investors would be much more interested if they could obtain controlling stakes in companies poised for future growth,” he added. Deloitte and KPMG didn’t immediately respond to requests for comment. CCB has said earlier that it is looking to raise funds for those swap deals from institutional investors, such as insurance asset management companies and pension funds, along with individual investors through wealth management products. CCB’s Zhang said the bank is only swapping normal loans into equity at the moment, rather than non-performing loans (NPLs), partly due to investors’ unfamiliarity and more conservative attitude toward NPL-related products. Compared with normal loans, the process of swapping bad loans into equity is also “more complicated” in the pricing process and due diligence, he added. CCB also doesn’t have an asset management corporation (AMC) license that could allow the bank to directly conduct debt-for-equity swaps of NPLs. “If China’s bank regulator and the State Council grant us to set up a specialized AMC-like execution institution, we will have the license to do NPL business,” Zhang said. Reuters
Ted Osborn, a restructuring partner at PwC “We very much welcome the participation of foreign investors,” Zhang Minghe, head of CCB’s debt-for-equity work team and deputy general manager of credit approval department, told Reuters by phone. CCB is working with advisory services firms, including KMPG, PwC and Deloitte, to get in touch with interested potential investors, he said. Since October, CCB has announced seven debt-reduction deals with a total value of RMB83 billion (US$12.05
Australian and national chambers sign MOUs Twelve Memoranda of Understanding (MOUs) to promote Sino-Australia trade cooperation were inked in Shanghai. The MOUs, signed between the Australian Business Chamber and 12 different Chinese entities - two business chambers and 10 importers - aim to promote mutual exports and bilateral investments. The MOUs will work as an information sharing platform to expand cooperation and provide trade information for companies from both countries. A B2B platform will also be set up soon to lower trade costs for domestic and overseas companies, said Han Quanbao, president of China Chamber of Commerce of Foodstuffs and Native Produce. Innovation
Spending on R&D rises China’s spending on research and development (R&D) increased to 2.07 per cent of GDP last year, up by 0.05 percentage points, as policy to promote more innovation led companies to up their investment in research, said a report published by the Ministry of Science and Technology on Monday. China spent a total of RMB1.42 trillion (US$206.05 billion) on R&D in 2015, up 8.9 per cent over the previous year. Of that, companies spent RMB1.09 trillion, showed the report, up by 8.2 per cent year on year. China this year revised up the size of its economy by adding R&D spending into its calculations for GDP. Reform
First SOEs to be restructured named by year-end
Trading partners
State media tells Trump that ties with U.S. are ‘too big to fail’ The editorial of People’s Daily stressed common interests and noted the similarity between Trump’s promise to “make America great again” and Xi’s own “Chinese dream” slogan The China-U.S. relationship is “too big to fail” and President-elect Donald Trump shares an obligation to make sure ties between the world’s two largest economies improve and never worsen, the Communist Party’s People’s Daily newspaper said. The party’s flagship newspaper said in an editorial yesterday that the importance of China’s relationship with the U.S. was self-evident and any breakdown in ties could result in global “disaster.” The piece reiterated President Xi Jinping’s message in a post-election telephone call with Trump last week that cooperation was the only correct choice for managing ties. “It’s not hard to predict that a cooperative China-U.S. relationship will bring huge benefits across the globe,” the paper said. “However, if the two nations became entangled in friction, and even in confrontations, it will be a disaster to the two countries and the world.” The editorial represented China’s
Bilateral trade
latest effort to shore up ties with its largest trading partner in the wake of the surprise election win by Trump, who frequently accused the country during his campaign of victimizing the U.S. The billionaire real estate developer has promised to label China a currency manipulator, bring trade complaints against the nation, and impose tariffs if it doesn’t halt what he sees as unfair trading practices. The editorial stressed common interests and noted the similarity between Trump’s promise to “make America great again” and Xi’s own “Chinese dream” slogan, which calls for a “great renaissance of the Chinese nation.” The paper said that agreements with the Obama administration had increased investment and “laid the foundation for future China-U.S. relations,” without mentioning the climate change deal Trump has vowed to tear up. The paper characterized the first
exchange between Xi and Trump as productive. “The two leaders had a good chat, a positive atmosphere and reached important consensus,” the paper said, adding that the conversation provided ties with a “key theme and direction.”
China may name the first of its state-owned enterprises (SOE) to be restructured under a mixed-ownership system by the year-end, the business paper China Securities Journal reported yesterday, citing unnamed sources. Beijing has made reform of its huge, uncompetitive SOEs a priority as weak global demand weighs on economic growth and excess capacity and idle workers bleed what precious resources companies have at their disposal. The paper said that the Stateowned Assets Supervision and Administration Commission plans to hold a meeting with SOEs to advise on restructuring plans and the next steps. Language offence
“It’s not hard to predict that a cooperative China-U.S. relationship will bring huge benefits across the globe” People’s Daily editorial
Xi said ahead of a meeting with outgoing President Barack Obama in Lima, Peru, over the weekend that China and the U.S. were at a “juncture point.” Obama had said he expected to discuss areas of disagreement at the pair’s ninth encounter, including on human rights and the “creation of a more level playing field for our businesses to compete.” Bloomberg News
Chicken chain investigated over suggestive name Authorities are investigating a Shanghai-based fried chicken chain for possible violations of social order over its sexually suggestive name - “Call a Chick” - and menu items, the Shanghai Daily reported yesterday. Chick, or chicken, is slang for prostitute in Chinese. The newspaper said the restaurant offered menu items that included “virgin chick” (spring chicken) and “chick’s sex partner” (beverages), among others. It also ran a suggestive promotion slogan titled “Satisfying all your expectations over chicks”. The newspaper said Call a Chick first came under fire when a woman complained to the media after her 8-year-old son kept asking her its meaning.
10 Business Daily Wednesday, November 23 2016
Greater China Official trip
Xi’s visit to stimulate more cooperation with Peru The Chinese President kicked off his first state visit to the Latin American country after attending the annual Asia-Pacific Economic Cooperation Economic Leaders’ Meeting in Lima
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isiting Chinese President Xi Jinping met President of Peruvian Congress Luz Salgado on Monday on boosting legislative cooperation and exchanges in various fields. Xi recalled the smooth development of China-Peru ties since they forged diplomatic relations 45 years ago, saying the two countries are good friends with mutual trust, and good partners with common development.
Noting that the Chinese side has full confidence in a bright future for bilateral ties, the president said China stands ready to work with the Peruvian side to implement the important consensuses and results reached during the visit, lift bilateral relations to a new stage and better serve the well-being of both peoples. Xi also said the friendly exchanges and cooperation between China’s
National People’s Congress (NPC) and the Peruvian Congress have effectively promoted comprehensive development of bilateral ties. He called on both countries to improve communication mechanisms between their legislative bodies, enhance friendly exchanges at all levels, boost experience sharing in such fields as legislature, supervision and governance, and enhance communication and coordination in the Inter-Parliamentary Union, an international organization of parliaments of sovereign states, in order to contribute to the healthy and steady development of China-Peru relations. For her part, Salgado welcomed Xi’s
visit to Peru while highlighting the two countries’ traditional friendship. Expressing admiration for China’s development achievements, Salgado said the Peruvian Congress attaches great importance to nurturing Peru-China relations and is willing to strengthen communication and cooperation with China’s NPC. She also vowed to enhance cooperation with China on infrastructure construction, knowledge and technology transfer and youth, so as to advance the development of Peru-China comprehensive strategic partnership. Xi also delivered a speech at the Peruvian Congress. Xinhua
‘President of Peruvian Congress Luz Salgado said the Peruvian Congress attaches great importance to nurturing Peru-China relations’ The China-Peru comprehensive strategic partnership, which has been enjoying close high-level exchanges, deepening political mutual trust, fruitful practical cooperation and increasing people-to-people communication, continues to grow with new vitality, said Xi.
Peruvian President Pedro Pablo Kuczynski (2R) and his wife Nancy Lange (R) receive Chinese counterpart Xi Jinping (2L) and his wife Peng Liyuan (L), at their arrival to the Palacio de Gobierno in Lima, Peru, on 21 November 2016, for a bilateral meeting. Lusa
M&A
U.S. fears over sensitive compound hits bid for Aixtron A German economy ministry spokeswoman said its review of the Aixtron deal was ongoing and independent of the United States Harro Ten Wolde and Sabine Siebold
Concerns over China gaining access to the secrets of producing a little known material used in military equipment appear to be behind the U.S. block on a 670 million-euro (US$713 million) Chinese bid for German chip equipment maker Aixtron. Gallium nitride, a powdery yellow compound used in light-emitting diodes (LED), radar, antennas and lasers, is grown using Aixtronmanufactured technology, which has in the past been sold to U.S. military equipment maker Northrop Grumman. Aixtron said on Friday that the Committee on Foreign Investment in the United States (CFIUS) would recommend that its takeover by China’s Fujian Grand Chip Investment Fund (FGC) be blocked. CFIUS never gives reasons for its decisions. But sources have previously told Reuters it blocked the US$3.3 billion sale of Philips’ lighting business, Lumileds, to a consortium of Chinese investors last January over gallium nitride concerns. Experts suggest the United States would want to stop China and Russia getting hold of gallium nitride technology, which can boost the
power and sensitivity of weapons systems while reducing their cost as it requires less electricity. The technology is being used to upgrade the radars of both U.S. and foreign-owned Patriot missile defence systems - which are key to defeating air and missile attacks by enemy countries. Colin Humphreys, a physics professor at Cambridge University, said the technology enabled military radars to operate at much higher frequencies and are used in jammers that allow fighter jets and other aircraft to fly undetected. In order to sense such radar waves, potential enemies such as Russia or China would have to have access to military technology using gallium nitride, he said. “I’m not aware that the Chinese or the Russians have such weapons systems at the moment,” said Humphreys, an expert on gallium nitride. Another European expert, who did not wish to be named, said he believed fewer than 10 countries had access to the technology, including the United States, Germany, France, Britain and Japan. The global gallium nitride market is expected to grow to US$1.1 billion in 2020 from an estimated US$518
million last year, according to research firm Technavio. Th e U . S . r e si sta n c e t o th e Aixtron deal shows concern is rife in Washington about a leading manufacturer of the gallium nitride technology coming under Chinese ownership. “The Americans’ big problem is not Moscow, but Beijing - in economic terms and maybe also in military terms,” the European expert said, adding he would expect U.S. President-elect Donald Trump to significantly raise export restrictions for the technology. A German economy ministry spokeswoman said its review of the Aixtron deal was on-going and independent of the United States. The German government withdrew its approval for Fujian Grand Chip Investment Fund LP (FGC), a Chinese investment fund controlled by businessman Zhendong Liu, to take over Aixtron last month, citing security concerns.
Aixtron’s decision to stick to the plan marks the first time that companies involved in such a takeover have tried to press ahead with a planned merger despite CFIUS objections. After concerns were raised over the Lumileds sale, the parties walked away from that deal. Aixtron is seen as having a bleak future as a standalone company as it struggles with overcapacity in a market dominated by Chinese buyers.
Out of options?
The decision will now be referred to U.S. President Barack Obama, who must block or allow the transaction within 15 days. “What Aixtron needs is a white knight from Europe or the U.S. (e.g. Applied Materials) as the company has no viable future as a standalone business, in our view,” said analyst Tim Wunderlich at German brokerage Hauck & Aufhaeuser in a client note, sticking to its “sell” recommendation. Reuters
Aixtron on Monday defied calls to scrap the sale, saying it had “objective arguments” to overcome U.S. and German concerns about it being bought by Fujian, without elaborating. “We are in close contact with the authorities in the USA and Germany,” a spokesman said. He added it was up to customers to decide to what use they would put Aixtron equipment.
Key Points Aixtron in close contact with U.S., German authorities First time companies have resisted CFIUS objection Experts say concerns hinge on gallium nitride technology Aixtron shares down 6.6 pct after hitting 6-month low
Business Daily Wednesday, November 23 2016 11
Asia Real estate
These Asian cities offer the best property bargains of 2017 Chinese buyers have been piling into bargain London property in the wake of Brexit, and scouring the globe for any available real-estate investment opportunity David Roman
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ot only is India the world’s fastest-growing major economy, it may also offer Asia’s best real-estate investments next year. A survey has ranked Bangalore and Mumbai as the region’s top picks, vaulting both cities to lead a table of 22 Asian markets. Commercial property is key. The survey, compiled by the Urban Land Institute with input from PricewaterhouseCoopers LLP, cited a boom in business process outsourcing, or BPO, and IT firms that are driving demand for new office space. “There is little doubt that catering to the expansion requirements of the Indian BPO industry has delivered big profits to investors who arrived early on the scene,” according to a report summarizing the findings of the survey. “Today it remains a compelling story.” The two cities only ranked 12th and 13th last year and were close to the bottom as recently as 2014. The survey was conducted before India’s government on Nov. 8 announced plans to scrap 86 per cent of currency notes in circulation. PwC didn’t say whether the plans
may have an effect on the real estate market. Tokyo fell from first place in the 2016 rankings to the 12th position for next year, a reflection of growing discontent with the effect of Abenomics on a long-stagnant market. Declining economic prospects are hurting short-term prospects for office rental growth, despite low vacancy rates,
the survey found. Negative interest rates are also a factor, as they lead to a lack of willing sellers. Singapore, which ranked first in the survey in 2011 and 2012, fell to 21st for next year, down from 11th, the result of what PwC calls a “perfect storm” for the local property market. That includes 12 straight quarters of declining prices in the residential market, as well as a sputtering economy that contracted in the third quarter. Singapore’s government has been steadfast in its commitment to cool the housing market, maintaining real-estate curbs rolled out since 2009.
Still, it’s not all good news for India. The survey highlights that Asian investors are looking to diversify their property exposure outside of the region, especially into New York and London, driven by demand from China. Chinese buyers have been piling into bargain London property in the wake of Brexit, and scouring the globe for any available real-estate investment opportunity. They are motivated by a weakening yuan, surging domestic housing costs and the desire to secure offshore footholds. This applies not only to individual investors, but also to corporations, PwC says. The consultancy estimates that Chinese insurers would need to spend US$240 billion to increase their foreign property allocation from 1 per cent to 15 per cent, which is the average that their U.S. counterparts hold. Bloomberg News
Shenzhen is the highest ranked Chinese city
Political scandal
S. Korean lawmaker raises suspicions about Lockheed Martin’s link to President’s confidante Local media speculated that confidante Choi may have engaged in South Korea’s weapons procurement projects as well as the THAAD deployment decision A South Korean lawmaker yesterday raised suspicion on U.S. weapons manufacturer Lockheed Martin’s link to Choi Soon-sil, President Park Geun-hye’s confidante who has been indicted on multiple crimes including abuse of power and extortion. Rep. Ahn Min-seok of the biggest opposition Minjoo Party appeared in a radio program of local broadcaster MBC, saying he received internal information from the military last weekend about a possible link between the president’s decades-long friend and the U.S. arms supplier. Lockheed Martin financially supported the child of a “core figure” in charge of South Korea’s security policy when the child was studying abroad several years ago, said Ahn, who didn’t elaborate on whether the child was staying in the United States. The opposition lawmaker raised a possibility for the core figure to introduce Choi to the Lockheed Martin side, saying he will try to find a truth when the National Assembly launches its own investigation into
the scandal next month. Ahn has claimed a collusive link between Choi and the U.S. arms company to peddle undue influence on the South Korean government’s weapons procurement contracts. In an emergency parliamentary session on Nov. 11, Ahn inquired Defence Minister Han Min-koo about whether the defence chief was informed of the contacts of Jeong Yoonhoe, Choi’s ex-husband, with arms lobbyist Linda Kim and the Lockheed Martin side. Lockheed Martin is a manufacturer of Terminal High Altitude Area Defence (THAAD), a U.S. military defence system which South Korea agreed in July with the U.S. to deploy in its soil by the end of next year. It was a surprising decision given that Seoul had refrained from the issue and seemingly felt uncomfortable with even mentioning it. Choi had reportedly maintained an acquaintance with the arms lobbyist at least since 2000. The lobbyist has been detained in October for
drug-administering charges. Asking to see Linda Kim at the detention centre has recently been banned, said the Minjoo Party lawmaker who described the arms lobbyist as one of “key men” that can tell the truth about the collusive link. Local media speculated that Choi may have engaged in South Korea’s weapons procurement projects as
well as the THAAD deployment decision. Boeing’s F-15 Silent Eagles were supposed to be selected as Seoul’s next-generation fighter jets in 2013, but the widespread expectation was overturned in September of the year as the defence ministry’s arms procurement committee voted it down. About two months later, Lockheed Martin’s F-35 fighter jets were offered as a sole candidate and finally picked to replace South Korea’s decrepit combat planes. Park took office in February 2013. Xinhua
South Koreans in a candlelight procession marching toward the presidential house during a rally against South Korean President Park Geun-Hye on a main street in Seoul, South Korea, 19 November 2016. Lusa
12 Business Daily Wednesday, November 23 2016
Asia NZ promotion
Business leaders back bipartisan approach to trade The New Zealand International Business Forum described the delegations as a welcome return to bipartisanship of trade
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awmakers from both sides of the New Zealand parliament will be working to promote trade in Europe and Iran this week, Trade Minister Todd McClay said yesterday. A trade mission to three European countries would include leader of the opposition New Zealand First party Winston Peters, while trade spokesperson for the main opposition Labour Party David Clark would join the Iraq delegation.
Business leaders have hailed the cross-party delegations as a return to a “political consensus” on New Zealand’s trade policy, after the controversial Trans-Pacific Partnership (TPP) caused it to rupture. McClay said New Zealand needed to engage more broadly in trade-related activities in Europe and the mission would offer a valuable opportunity to promote New Zealand goods and services in lucrative markets. “Italy, France and Britain are
collectively worth more than NZ$9.2 billion (US$6.51 billion) of two-way trade and are home to 190 million consumers. That is significant,” McClay said in a statement. “The mission will engage directly with New Zealand businesses and their counterparts in these three countries and we will look to open doors to further enhance our high quality reputation and trade presence.” McClay would then travel to Iran with a delegation of 17 New Zealand companies. “Iran has traditionally been a very important market for our sheep meat and butter,” said McClay. New Zealand officially lifted its
United Nations sanctions against Iran in February and Iranian Foreign Minister Dr. Mohammad Javad Zarif visited in March. McClay said Zarif had presented New Zealand with trade prospects with an estimated value of NZ$1 billion (US$707.6 million). “This mission will be an important first step towards delivering on this exciting opportunity,” said McClay.
“This mission will be an important first step towards delivering on this exciting opportunity” Todd McClay, New Zealand Trade Minister McClay would also visit Warsaw to lobby the Polish government on the planned European Union-New Zealand free trade agreement. The New Zealand International Business Forum described the delegations as a welcome return to bipartisanship of trade. The forum had expressed concern that consensus had broken down as both the Labour and New Zealand First parties vowed to oppose the 12-nation TPP deal, which has seemingly died with the election of Donald Trump as U.S. President. “In these uncertain times for the global economy we are heartened to see political parties working together to grow New Zealand’s exports and secure our trade interests,” forum chairman Malcolm Bailey said in a statement. Xinhua
Dairy is a main industry in New Zealand and top exporter
Currencies
Emerging Asia sees US$11 billion outflow as dollar rises on Trump Capital flight trims year-to-date inflow into India, Indonesia, the Philippines, South Korea, Taiwan and Thailand to around US$55 billion David Finnerty and Yumi Teso
Global funds sold about US$11 billion of equities and bonds in Asia’s emerging markets after Donald Trump’s victory in the U.S. presidential
election as expectations for his economic policies sent Treasury yields higher and sparked the dollar’s strongest rally in eight years. India suffered the biggest outflows between Nov. 9 and Nov. 18, followed
by Thailand, according to calculations by Bloomberg using official data. The capital flight trims the year-to-date inflow into India, Indonesia, the Philippines, South Korea, Taiwan and Thailand to around US$55 billion. “Fund outflows from emerging markets will probably continue for a while and then investors will see if Trump will carry out some policies he has mentioned before the election, such as fiscal stimulus and protectionist-type trade policies,” Masakatsu Fukaya, an emerging markets trader with Mizuho Bank Ltd., said in a phone interview. “Many of his policies may lead to a stronger dollar and are negative on the emerging markets.”
India:
Foreign investors have been net sellers of US$1.5 billion in bonds and US$1.4 billion in equities from Nov. 9-17
Thailand:
Global funds were net sellers of 80.5 billion baht (US$2.3 billion) in bonds and US$534.3 million in stocks from Nov. 9-18
Indonesia:
Overseas investors sold a net total of 13.9 trillion rupiah (US$1 billion) in local debt from Nov. 9-16 and US$444.2 million in equities from Nov. 9-18
South Korea:
Global funds were net sellers of 30 million won (US$25,500) in listed
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bonds in Nov. 9-17, and US$949.1 million in Nov. 9-18
Philippines:
Investors were net sellers of US$170.6 million in stocks in Nov. 9-18. No comparable data is available for bonds
Taiwan:
Global funds were net sellers of US$2.75 billion in stocks in Nov. 9-18. No comparable data is available for bonds
“Many of his policies may lead to a stronger dollar and are negative on the emerging markets” Masakatsu Fukaya, an emerging markets trader with Mizuho Bank Ltd.
Bloomberg’s dollar index climbed the most since 2008 in the two weeks just past amid speculation that President-elect Trump’s reflationary policies will trigger higher interest rates. By contrast, South Korea’s won has dropped 3.4 per cent since the U.S. election, Indonesia’s rupiah has weakened 2.7 per cent and the Philippine peso has fallen 2.5 per cent. Bloomberg News
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 Wednesday, November 23 2016 13
Asia In Brief Foreign visitors
Vietnam adopts resolution on e-visa Some 91.08 per cent of Vietnamese lawmakers agreed yesterday to adopt a resolution on issuing electronic visas (e-visa) for foreign tourists to enter Vietnam on trial basis. The resolution was passed at the on-going second session of Vietnam’s 14th National Assembly (NA) in capital Hanoi. The trial implementation period will last for two years, starting from Feb. 1, 2017. The Vietnamese government is assigned to report the implementation result to the NA during the year-end session in 2018. E-visa will be granted via an electronic transaction system, used for one single entry and will not last for more than 30 days.
Production
India seeks manufacturing jobs as phone market takes off The smartphones and feature phones sold in India over the next five years will together require more than US$80 billion worth of components Saritha Rai
Prime Minister Narendra Modi has struggled in his campaign to bring more manufacturing jobs to India. But he now has an alluring incentive for technology companies to build more plants in his country: the fastestgrowing smartphone market in the world. India currently contributes only about 6 per cent of the value of phones sold in the country through local manufacturing or assembly, but that contribution could rise to more than 30 per cent in the next five years, according to a joint study by Counterpoint Research and India’s leading management school, the Indian Institute of Management in Bangalore. The government should use the surging domestic demand to draw manufacturers that will make higher-value components, such as batteries, cameras and semiconductors, the study said. India overtook the U.S. this year to become the world’s second-largest smartphone market by users and is projected to generate a billion smartphone sales in the next five years. Yet the value added through local manufacturing is paltry compared with other countries like China and South Korea, where 70 per cent and 50 per cent of the work is done domestically, according to the research. Modi, who has made the
Make in India program a centrepiece of his economic policy, wants more of those jobs if his country is providing such a lucrative market. “India can potentially be world leader in mobile phone manufacturing ecosystem and this has to be done in a phased manner,” said Aruna Sundararajan, secretary at India’s ministry of electronics and information technology. She said the government is sending close to 100 design engineers to Taiwan to learn about product design and customer needs. Apple Inc., Samsung Electronics Co. and Xiaomi Corp. have been stepping up their efforts in India as growth in the U.S., China and other markets slows. Apple CEO Tim Cook made his first trip to India in May and his company has been lobbying for the right to set up its own retail stores. Under current rules, companies such as Apple need to procure 30 per cent of their components in India if they want to operate their own retail outlets. The smartphones and feature phones sold in India over the next five years will together require more than US$80 billion worth of components, up from the current US$11 billion. If the country can move up the value chain from simple assembly to more complex manufacturing, it could take the domestic contribution to 32 per cent by 2020, the researchers said.
“The greater amount of localization and investment in R&D encouraged with good government policies will significantly boost the Indian economy and our global brand equity,” said Amitabh Kant, chief executive officer of the government think tank Niti Aayog, in a statement. India is also encouraging local manufacturing of components b y ra i si n g i m p o r t l ev i e s o n components and devices. Apple is still contemplating India’s retail requirements and has so far not committed to local manufacturing. However, Foxconn Technology Group, its leading manufacturing partner, has been exploring factories in India for Apple, according to local media.
“India can potentially be world leader in mobile phone manufacturing ecosystem and this has to be done in a phased manner” Aruna Sundararajan, secretary at India’s ministry of electronics and information technology The government’s next set of policy reforms will encourage greater local work to meet smartphone growth numbers, said Ajay Kumar, additional secretary at the ministry of electronics and information technology, in a release at the unveiling of the report. “The final goal is to cut down on the value of imports,” he said. The country has made progress in attracting more assembly plants. Before the launch of Make in India, the country had only two phone assembly facilities and that number has now increased to about 50 facilities. Eighty per cent of those are local companies and 10 per cent are each Chinese and Taiwanese. The plants assemble phones for the world’s leading brands including Samsung and Huawei Technologies Co. Counterpoint estimated that over 180 million mobile phones will be assembled in India in 2016, accounting for 67 per cent of the total 267 million sold. This is a rise from 14 per cent in 2014. India is unlikely to challenge China as exporter of phones any time soon however, because the local market is growing so quickly. “Domestic demand in India should be enough to consume products manufactured there,” said Anthea Lai, an analyst with Bloomberg Intelligence. “India would pose no threat yet.” Bloomberg News
Investment
Japan to form US$900 mln fund with Russia Japanese and Russian statebacked lenders will create a fund to jointly invest in Moscow’s “priority development projects”, as the two countries look to promote business and diplomatic ties, the Nikkei reported. The Japan Bank for International Cooperation and the Russian Direct Investment Fund will form an about 100 billion yen (US$901 million) fund, and each will contribute roughly half of the total amount to launch the development projects in 2017, the report said. The fund will invest in projects in fields of medicine, urban development and involve upgrades to manufacturing facilities, the Japanese daily reported. Oil industry
India gets muted response to field auction India’s first auction of small discovered fields drew a tepid response with local firms dominating the auction for operating assets estimated to hold 625 million barrels of oil and oil equivalent gas. India has received 134 bids from 42 companies, including five foreign bidders, for 34 contract areas, according to a government statement issued on Monday. No bids were received for 12 areas. India, the world’s third biggest oil consumer, conducted foreign roadshows and eased rules to lure foreign investment and tap the nation’s vast energy resources. India launched the auction after a gap of six years. Disaster
Tsunami hits Japan after strong quake A powerful earthquake rocked northern Japan early yesterday, briefly disrupting cooling functions at a nuclear plant and generating a small tsunami that hit the same Fukushima region devastated by a 2011 quake, tsunami and nuclear disaster. The magnitude 7.4 earthquake, which was felt in Tokyo, sent thousands of residents fleeing for higher ground as dawn broke along the north-eastern coast. There were no reports of deaths or serious injuries several hours after the quake hit. It was centred off the coast of Fukushima prefecture at a depth of about 10 kilometres, the Japan Meteorological Agency (JMA) said.
14 Business Daily Wednesday, November 23 2016
International In Brief Visa report
EU rules may disrupt e-commerce The European Union’s planned rules to reduce fraud by forcing the use of passwords or codes to authenticate electronic payments above 10 euros (US$10.60) risk disrupting online shopping and may not increase security, Visa said yesterday. As cybercrime and online fraud are on the rise, the European Banking Authority, the EU’s banking regulator, proposed in August draft technical standards to prevent illegal activities, including the passwords. “These new proposals threaten to seriously disrupt the way we all shop online,” Visa’s chief risk officer for Europe, Peter Bayley, said. Financing
U.S. business borrowing for equipment rises Borrowings by U.S. companies for capital investment rose 6 per cent in October from a year earlier, the Equipment Leasing and Finance Association (ELFA) said on Monday. Companies signed up for US$8.2 billion in new loans, leases and lines of credit last month, the Washington-based trade group said. The ELFA reports economic activity for the US$1 trillion equipment finance industry in the United States. “The equipment finance sector continues to benefit from the Fed’s favorable monetary policy, keeping long-term interest rates low,” ELFA Chief Executive Ralph Petta said. Political threat
Fitch says populist election could bring downgrades Election victories for populist parties could lead to credit downgrades in euro zone countries, ratings agency Fitch said on Monday in a warning with particular resonance for Italy and France. “Countries that become more closed to international trade risk experiencing weaker medium-term growth rates,” Fitch said in a report on the rise of populist politics. “For countries that are highly integrated internationally, such as those in a currency union, there would be very high economic and financial costs associated with a populist change to the status quo.”
Program tips
Trump vows to withdraw from TPP ‘on day one’ On energy, the president-elect has pledged to boost the oil and gas sector and bring back coal, reversing Obama’s efforts to encourage renewables Emma Charlton
D
onald Trump on Monday announced the United States would signal its withdrawal from the Trans-Pacific Partnership (TPP) trade deal on his first day in the White House, as one of six immediate steps aimed at “putting America first.” The Republican billionaire - who for 10 days has been sounding out cabinet picks at his Trump Tower offices in New York - made the pledge in a short video message. The 70-year-old property tycoon outlined a list of priorities for his first 100 days and executive actions to be taken “on day one” - on half a dozen issues from trade to immigration, national security and ethics - in a push to “reform Washington and rebuild our middle class.” “My agenda will be based on a simple core principle: putting America first,” said the president-elect, whose victorious campaign tapped the anger of working-class Americans who feel left behind by globalization, singling out trade deals such as the TPP as key culprits. “On trade, I am going to issue our notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country,” said Trump, who takes office January 20. “Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores,” he said. Both the 12-nation TPP and the North American Free Trade Agreement featured heavily in the brutal White House race - accused of harming the US economy and jobs - and many see Trump’s victory as a repudiation of ever-deeper commercial ties.
Six priorities
Trump’s populist election platform called for scuttling the TPP - President
Barack Obama’s signature trade initiative which still needs approval from the Republican-dominated Congress - as well as for renegotiating NAFTA. Asian leaders have been scrambling to save the TPP, and US Trade Representative Michael Froman warned last week that scrapping it would have “serious” strategic and economic costs. Trump’s pledge to pull out of the deal was one of six points on which he promised immediate executive action - which he can take without Congressional approval - all of which broadly echoed his campaign positions. Sticking to his theme of protecting US jobs, Trump said he would direct the Department of Labour to investigate abuses of visa programs “that undercut the American worker.”
“Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores” Donald Trump, U.S.A. president-elect On energy, the president-elect has pledged to boost the oil and gas sector and bring back coal, reversing Obama’s efforts to encourage renewables. In the video message he promised to “cancel job-killing restrictions on the production of American energy - including shale energy and clean coal - creating many millions of high-paying jobs.” Regarding national security, Trump said he would ask the Department of Defence and the Chairman of the Joint Chiefs of Staff to “develop a comprehensive plan to protect America’s
vital infrastructure from cyber-attacks, and all other form of attacks.” On cutting government red tape another central pledge - he promised “a rule which says that for every one new regulation, two old regulations must be eliminated.” And on the subject of ethics - the Republican has vowed to “drain the swamp” in Washington, although his own transition team includes several lobbyists - he promised “a five-year ban on executive officials becoming lobbyists after they leave the administration.”
‘Mad Dog’ Mattis
There was no mention in the message of some of Trump’s biggest campaign promises - notably his pledge to build a wall along the Mexican border, deport millions of immigrants, restrict Muslim immigration, or repeal the Obamacare healthcare law. The video was issued as the stream of would-be appointees continued at his New York headquarters, with the day’s talk focusing on retired general James “Mad Dog” Mattis being nominated as secretary of defence. Despite the 66-year-old Marine’s renowned frankness - “Be polite, be professional, but have a plan to kill everyone you meet” - he enjoys warm support in Washington and should sail through confirmation. Trump’s camp has said no new nomination announcements were imminent. “It could come this week. It could come today but we’re not in a rush to publish names just because everybody is looking for the next story,” campaign manager Kellyanne Conway said. After Mattis, Trump’s other choices may prove more complicated, such as that for secretary of state, reportedly between former Massachusetts governor Mitt Romney and former New York mayor Rudy Giuliani, both of whom met Trump over the weekend at his golf club in New Jersey. After meeting potential hires, Trump hosted private talks with a group of top US news anchors and executives - with whom he repeatedly feuded during the campaign - for what Conway described as a chance to “hit the reset button.” AFP
Bank of America
Global monetary easing to end in 2017 Next year will be the first since 2006 that there will be no big monetary policy easing across the world’s leading industrialized nations, signifying the end of the 35-year bull market in bonds, Bank of America Merrill Lynch said on Monday. Having driven interest rates to their lowest ever levels and lifted purchases of financial assets to over US$25 trillion this year, central banks are finally maxed out, BAML said in its 2017 outlook. Any stimulus to the world economy will now come from governments, who will use fiscal policy to wage a “war on inequality”, according to BAML.
US President-elect Donald Trump listens to a question from the media at the clubhouse of Trump International Golf Club, in Bedminster Township, New Jersey, USA, 20 November 2016. Lusa
Business Daily Wednesday, November 23 2016 15
Opinion
Uniting for an Asian century
Foxconn holds ominous history lesson for Apple shares Tim Culpan a Bloomberg Gadfly columnist
T
o those trying to figure out whether last week’s little rebound in Apple Inc. shares has legs, let me introduce some historical dot points for you to mull over. Thanks to the marvels of Taiwanese securities law, companies there must publish monthly sales figures. That includes Hon Hai Precision Industry Co., the Taipei-listed flagship of Foxconn T e c h n o l o g y G r o u p a n d t h e m aj o r assembler of Apple’s iPhones. While Hon Hai is the world’s largest contract assembler of electronics and has a very long customer list, annual reports show that it consistently gets over half its sales from just o n e c l i e n t . That m ea n s that H o n per cent Hai r ev e n u e i s Apple’s largest single day the best proxy for post-earnings drop Apple you’re ever going to get. In October, Hon Hai sales dropped 6.2 per cent from a year earlier. As a reminder, iPhone 7 was released in late September. The last time Hon Hai’s sales fell in the month immediately after an iPhone release was back in 2012 following the launch of iPhone 5. Prior to last Tuesday’s rebound, Apple shares had been falling since midOctober with down days exceeding up days by a two-to-one ratio. Something similar happened back in 2012 when a two-month decline started in September before a late November rally. That rebound didn’t last and the slide resumed. By the time Apple stock hit bottom in April 2013, it had lost almost 45 per cent. Then there are earnings and market reaction. Hon Hai’s October sales occur during Apple’s fiscal first quarter, which ends in December. When Apple reported on Jan. 23, 2013, its sales fell short of estimates - a rare miss for the company, though by less than 1 per cent, narrower than the few other times it came a cropper. Still, Apple’s shares dropped 12 per cent, the largest single-day postearnings decline in the decade since the iPhone was first released, Bloomberg data show. Past results don’t guarantee future performance, as the customary disclaimer goes. There have been a few black swan moments recently, including the election of Donald Trump as U.S. president and Apple’s first sales decline in 15 years, so events may unfold differently this time. Yet there’s also the trope that those who don’t learn from history are bound to repeat it. Bloomberg Gadfly
12
T
here is no question that Asia’s standing in the global economy is stronger than ever. The region now produces about 40 per cent of the world’s GDP, measured according to purchasing power parity. During the recent economic crisis, Asia accounted for more than half of global GDP growth. Add to that a massive population and growing political influence, and Asia finally appears ready to lead on a world stage long dominated by the West. But it is too early to open the champagne. The United States and Europe maintain an advantage, in terms of global strategic influence, while Asian countries are facing major political, economic, and security challenges. In fact, Asia’s growth momentum is declining. China is working overtime to achieve an economic soft landing, following decades of breakneck expansion. Japan is preoccupied with escaping slow growth and coping with population aging. Asia’s other economic powerhouses – India, Indonesia, and South Korea – each face their own set of economic and political problems. Across the region, rising income inequality, financial instability, and environmental degradation are hampering development. More problematic, despite being deeply interdependent, the region’s countries struggle to act collectively. The persistence of power rivalries, historical resentments, and territorial disputes, together with pronounced disparities in economic and military might, create substantial obstacles to unity. A recent surge in coercive behaviour by China, a nationalist revival in India, and a shift toward conservatism in Japan have exacerbated these challenges. But, at a time when Western countries are moving toward isolationism – exemplified by the Brexit vote in the United Kingdom and the election of Donald Trump as US president – intra-regional trade and investment are more important than ever. Beyond the economic benefits, integration would yield important political benefits, with an integrated Asia enjoying more influence on the international stage. To reap those benefits, Asia must mitigate regional military and political conflicts and develop a long-term vision for regional integration. Asia is home to some of the world’s most dangerous flashpoints. There is a risk of armed clashes in the East and South China Seas, and North Korea continues to develop nuclear weapons and ballistic missiles, despite tougher sanctions pushed by the United States and the United Nations. Stronger cooperation among Asian countries, together with the international community, could ease regional tensions and lead North Korea to abandon its nuclear weapons programs. Some regional institutions have already been established, including the Association of Southeast Asian Nations (ASEAN), ASEAN+3 (the ten members of the ASEAN plus China, Japan, and South Korea) and the East Asia Summit (EAS). Such institutions will be critical to resolving conflicts and establishing a framework for peace that can support regional prosperity and global leadership.
“
Lee Jong-Wha Professor of Economics and Director of the Asiatic Research Institute at Korea University
But that is only the first step. And whether Asian leaders share a common vision for regional integration remains unclear. Judging by Europe’s experience – from the creation of the European Coal and Steel Community in 1951 to the establishment of the European Union in 1993 – there is no need to rush the integration process. But it will take a lot of time and effort. Perhaps the best way to kick-start this process is to identify areas where the region can gain the most from integration, and take steps that will bring quick returns. For example, Asian countries can move toward a single market with common rules governing trade and free movement of workers, especially skilled ones. Launching the Regional Comprehensive Economic Partnership, a freetrade agreement currently being negotiated by ASEAN and six partners (Australia, China, India, Japan, South Korea, and New Zealand), would be an important step in this direction. Given the vulnerability of crossborder capital flows, Asia must also pursue joint action on financial supervision, surveillance, and regulatory issues to prevent and manage crises. One specific goal should be to improve the Chiang Mai Initiative Multilateralization, a US$240 billion currencyswap arrangement, and its surveillance unit, the ASEAN+3 Macroeconomic Research Office. Another should be to establish a de facto Asian Monetary Fund with a broader membership. It should be noted that none of these efforts would aim to supplant existing sub-regional, regional, and global institutions. Rather, by making Asia a more effective and united actor, new regional trade and financial measures would complement and strengthen current arrangements. For any of this to work, bureaucracies and the private sector, including business leaders and academics, must actively support high-level political commitments to integration. Such support should not be too difficult to muster. After all, integration would facilitate the exchange of valuable knowledge, from effective economic and social policies to technological and scientific insight. Forums and dialogues on regional public goods could also prove valuable by promoting cooperation on cross-border challenges, including epidemics, natural disasters, and environmental degradation. Person-to-person connections would help to highlight for Asian societies their cultural commonalities and shared values, fostering progress in areas where particular countries might lag. At a time when the global order is increasingly uncertain, Asia should take its fate into its own hands, by pursuing closer economic and political regional cooperation. If Asian countries can develop a shared vision for an economic community and a political association, this century could be theirs. Project Syndicate
But, at a time when Western countries are moving toward isolationism ... intra-regional trade and investment are more important than ever
”
16 Business Daily Wednesday, November 23 2016
Closing Public health
China to control public smoking nationwide by year-end
In June 2015 Beijing municipality adopted the toughest anti-smoking legislation in the country, banning smoking in offices, restaurants, hotels and China, the world’s biggest cigarette producer and consumer, aims to impose national smoking-control hospitals. Venues that flout the ban can face fines of up to regulations by the end of this year, authorities said 10,000 yuan (US$1,450). yesterday. Last week Shanghai also amended its tobacco The Asian giant has the world’s largest smoking population, with 28 per cent of all adults and half of regulations to ban indoor smoking and also outdoor smoking at public areas such as bus stops, schools its adult men estimated to regularly use cigarettes. The World Health Organization (WHO) says a million and stadiums. At a WHO conference in the commercial hub, people in China die of tobacco-related illnesses government health spokesman Mao Qunan indicated annually, with second-hand smoke contributing to measures would be rolled out across the country. AFP some 100,000 deaths each year.
Theme park
Disney adding ’Frozen’ in US$1.4 bln Hong Kong expansion Attendance dipped in 2015 and the park slipped back into a money-losing position after three years of profitability Christopher Palmeri and Crystal Tse
W
alt D i s n e y C o . i s e m ba r ki n g o n a US $ 1 . 4 b i l l i o n expansion of its Hong Kong Disneyland resort, which reported a loss last year, with features that include the first “Frozen” and Marvel-themed lands in its parks.
“We are more excited than ever about the future of Hong Kong Disneyland”
“Hong Kong tourism is in an adjustment period,” the city’s commerce secretary Gregory So said at a joint briefing with Disney in Hong Kong that featured actresses posing as the main “Frozen” characters “Elsa” and “Anna.” The expansion is a strategic development to attract tourists who would stay overnight and spend more, he said. The move adds to planned growth at Disney’s parks division, its secondlargest business after TV networks. The company opened its US$5.5 billion Shanghai resort in June and
announced on Saturday a summer 2017 opening date for its “Avatar” themed land in Orlando, Florida. Parks division revenue climbed 5 per cent to almost US$17 billion last year, while profit rose 9 per cent to US$3.3 billion. “We are more excited than ever about the future of Hong Kong Disneyland,” Bob Chapek, chairman of Walt Disney Parks and Resorts, said in a statement.
Magic fades
Hong Kong Disneyland is the smallest of the company’s six resorts worldwide. The property was criticized after its 2005 opening as lacking the breadth of attractions at other Disney parks. Hong Kong has seen a series of expansions since that include an
Iron Man Experience ride opening in January and a third hotel, the Explorers Lodge, in the first half of next year. Att e n da n c e di p p e d i n 2015 and the park slipped back into a money-losing position after three years of profitability. The park is 47 per cent-owned by Disney with the rest held by the Hong Kong government. Financing for the capital investment will be proportional to the ownership, Disney said, and is still subject to approval by the company’s board of directors and Hong Kong legislators. “Frozen,” released in 2013, is the highest-grossing animated film of all time with worldwide box office sales of almost US$1.3 billion, according to the research site Box Office Mojo. Bloomberg News
Bob Chapek, chairman of Walt Disney Parks and Resorts The six-year construction project, which will begin in 2018, will include two attractions based on the animated film “Frozen” and a related dining area, new rides tied to Marvel’s superheroes as well as entertainment additions to the existing Sleeping Beauty Castle. The park recorded a loss of HK$148 million (US$19 million) in the fiscal year ended last October amid a slower Chinese economy and political unrest in Hong Kong. Figures for the latest fiscal year are not yet available.
M&A
Payments
Survey
Jin Jiang seeking more luxury hotels in Europe
Portuguese merchants to accept UnionPay
WeChat accounts are new channel for individual expression
China’s Jin Jiang International, is looking to buy hotels in major European cities, including Paris, to expand its luxury portfolio, the chief executive of its Louvre Hotels Pierre-Frederic Roulot told Reuters yesterday. Roulot, who oversees state-owned Jin Jiang’s expansion in Europe, said the close ties with China enjoyed by Louvre Hotels had helped it to weather an overall decline in Chinese visitors to France in 2016 due to security fears. Jin Jiang’s strength as a powerful tour operator is also helping when foreign tourists, notably from China, have avoided France after a wave of militant Islamist attacks and repeated robberies against Asian tourists, Roulot said. “There were 2.2 million Chinese visitors in France in 2015, this could fall to 1.8 million this year but we are seeing a rise of between 8 per cent and 10 per cent in nightly Chinese stay...We are less impacted than others,” he said. China has been the world’s largest outbound tourism market since 2012, according to the United Nations World Tourism Organization (UNWTO), with spending on travel abroad growing double-digits in the first nine months of 2016. Reuters
About 40 per cent of the merchants in Portugal will accept China UnionPay cards, UnionPay International announced. UnionPay International, a subsidiary of China UnionPay, announced that it reached an agreement with Unicre on enabling all the merchants in Unicre’s network to accept UnionPay cards. An increasing number of Chinese tourists are visiting Portugal and UnionPay cards are the most convenient payment method for them. In 2015, the number of Chinese tourists in Portugal saw a year-on-year growth of about 40 per cent. China UnionPay Chairman Ge Huayong said the Chinese company plans to enable all POS terminals in Portugal to accept UnionPay cards by the end of 2017 and make breakthroughs in mobile QuickPass acceptance, local card issuance and online payment. Unicre CEO Luis Flores said Unicre will deepen cooperation with UnionPay International to let more local merchants accept UnionPay cards in order to offer more convenient financial services to Chinese visitors. Accepting UnionPay also helps Portuguese merchants attract more customers, and thus realize a win-win result, Flores added. Xinhua
Running individual official accounts on social-networking app WeChat has become a new channel for Chinese people to express themselves, according to a survey. At present many media organizations, companies and individuals in China have launched official accounts on WeChat, striving to attract more subscribers to expand their reach. Over 66 per cent of 2,001 respondents said they are willing to set up individual official WeChat accounts, while 27.2 per cent said they have already started such accounts. The survey, published yesterday by the China Youth Daily, also said expressing feelings and views, as well as gaining popularity, are the top three reasons people want individual official accounts. More than half of individual official accounts offer content concerning personal views and feelings, as well as entertainment and recreation information, the survey said. Of more than 540 respondents that have individual public accounts on WeChat, 5 per cent claimed that they have built popular “self-media” brands using their accounts, while 12.2 per cent said they had made money from the accounts through advertising. Xinhua