Macau Business Daily November 25, 2016

Services satisfaction at record level Gaming industry Page 6

Friday, November 25 2016 Year V Nr. 1181 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Oscar Guijarro

www.macaubusinessdaily.com

Supporting measures

Trade

Local data

Monetary Authority

GDP

OECD recommends increasing public spending Page 16

China closer to leading global commerce deals Page 8

Insurance sector demonstrates healthy growth Page 2

Domestic financial sector in search of skilled personnel Page 4

Singapore’s weak growth triggers recession alarms Page 11

Calm After The Storm Legislative Assembly

A cathartic exercise. Yesterday’s Legislative Assembly session shone a light on the territory’s most controversial topics. Notably, housing, diversification, the Canidrome, taxes, MICE, SMEs . . . all were scrutinised.

Secretary for Economy and Finance Lionel Leong Vai Tac assured the Assembly that 2017 will usher in a period of stabilisation. Page 3

Hooray for hospitality

Hotel occupancy Cause for celebration. October heralded encouraging growth for the hospitality industry vis-a-vis 2015 data. Consolidating the upward trend observed in September. With 5-star hotels enjoying 92.7 pct occupancy during Golden Week month. Page 4

Loan shark infested waters

A vast pool of talent. And every finalist a winner, said organiser Paulo Azevedo. The 4th Annual Business Awards of Macau gala ceremony sparkled yesterday at Grand Lisboa. With renowned business leaders, society’s movers and shakers, and media witnessing the event. Underscoring the dynamism of diverse sectors in the entrepreneurial fabric of the city.

Business Awards Page 6

HK Hang Seng Index November 24, 2016

Public figures released

Central account The Financial Services Bureau unveiled the public accounts this week. Confirming the current recorded surplus for the past ten months already exceeded the estimated fiscal surplus of the year. Gaming is still the main contributor in the territory. Page 2 22,608.49 -68.20 (-0.30%)

Worst Performers

China Life Insurance Co Ltd

+3.07%

Want Want China Holdings

+0.62%

AAC Technologies Holdings

-1.86%

Henderson Land Develop-

Sands China Ltd

+1.98%

China Mengniu Dairy Co Ltd

+0.52%

Hang Lung Properties Ltd

-1.26%

Tencent Holdings Ltd

-1.08%

Galaxy Entertainment Group

+1.91%

Li & Fung Ltd

+0.30%

Hengan International Group

-1.24%

New World Development

-1.05%

16° 18° 15° 19° 15° 20° 16° 20° 16° 20°

-1.16%

Hang Seng Bank Ltd

+0.75%

BOC Hong Kong Holdings

+0.17%

China Merchants Port Hold-

-1.24%

China Petroleum & Chemical

-0.92%

Link REIT

+0.67%

Bank of East Asia Ltd/The

+0.16%

Wharf Holdings Ltd/The

-1.17%

Sino Land Co Ltd

-0.86%

Today

Source: Bloomberg

Best Performers

SAT

sUN

I SSN 2226-8294

Mon

Tue

Source: AccuWeather

Celebrating excellence

Law enforcement Secretary for Security Wong Sio Chak revealed gaming delinquency had grown 16 pct y-o-y. Adding this was entering a flatter trend. Loan sharking and illegal detainment remain the most prevalent crimes associated with the industry. Page 5

2 Business Daily Friday, November 25 2016

Macau Insurance

Local insurance market expands by half Life insurers saw their total premiums soar by 61 per cent year-on-year for the first three quarters of the year Kam Leong kamleong@macaubusinessdaily.com

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he city’s insurance sector generated gross premiums of MOP16.5 billion (US$2.1 billion) for the first three quarters of the year, surging 52 per cent year-on-year, driven up by a notable increase in premiums derived from the life insurance sector.

According to the latest official data

released by the Monetary Authority of Macau (AMCM), the city’s life insurance sector raked in MOP14.8 billion in gross premiums for the first nine months, soaring 61 per cent compared to MOP9.2 billion for the same period last year.

Meanwhile, total gross claims totalled MOP2.1 billion, an increase of only 5.4 per cent compared to MOP1.95 billion one year ago. Of the total claims, those for death amounted

to MOP633.2 million, accounting for 30.8 per cent of the total, followed by those of dividends to policyholders, amounting to MOP523.5 million, representing 25.6 per cent of the total.

Meanwhile, non-life insurers saw their gross premium increase by 2.33 per cent to MOP1.75 billion for the nine months, while total gross claims totalled MOP549.5 million, a marginal decrease of 0.4 per cent from MOP551.6 million one year ago.

Some 41.3 per cent of the premium of the non-life sector was generated by the all risk insurance of property, amounting to MOP724.2 million, followed by insurance of employees’ compensation and autos, totalling

MOP360.9 million and MOP226.2 million, respectively.

Market players

For the period, China Life Insurance (Overseas) Co. Ltd. retained its dominance in the life insurance market, with total gross premiums surging 82.9 per cent to MOP10.1 billion from MOP5.5 billion one year ago, accounting for 68.2 per cent of the sector.

The second biggest player in the life insurance market was AIA International Ltd., which saw its total gross premiums jump 20.8 per cent year-on-year to MOP2.4 billion compared to MOP1.97 billion.

‘China Life Insurance (Overseas) Co. Ltd. retained its dominance in the life insurance market’ AXA China Region Ins. Co. (Bermuda) Ltd. reached the third highest amount of premiums in the market at MOP793 million, a yearon-year growth of 46.7 per cent from MOP540 million one year ago.

Meanwhile, the non-life insurance market was led by China Taiping Insurance (Macau) Company Ltd. and Luen Fung Hang Insurance Company Ltd., which registered premiums of MOP494.8 million and MOP474.1 million, accounting for 28.2 per cent and 27.1 per cent of the sector total, respectively.

Politics

Budget under control dropped 9 per cent year-on-year to MOP64 billion.

According to official data posted by the Gaming Inspection and Co-ordination Bureau (DICJ), the city’s total accumulative gaming revenues from January to October dipped 5.8 per cent year-on-year.

The official data also shows that indirect taxes from property and sales of services and non-durable goods dropped 46.2 per cent and 44.6 per cent, respectively. That indicates they represented the biggest decrease in annual income.

In terms of general indirect taxes, the MSAR authorities received 15.3 per cent less revenue of MOP2.9 billion.

As at October, the MSAR Government had exceeded forecast revenue of MOP72 billion for the entirety of 2016 by 13.8 per cent.

Decreased revenue

Increased expenditure

The MSAR Government has managed to generate more surplus than expected as October passes Cecilia U cecilia.u@macaubusinessdaily.com

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his week, the city’s Financial Services Bureau (DSF) released the latest central account. The figures show the fiscal surplus generated by the government’s operations (excluding specific institutions) for the past ten months fell by 32.2 per cent year-on-year. That means a decrease of MOP23 billion (US$2.9 billion).

‘The government’s total revenue saw a drop of 9.7 per cent year-on-year to MOP82 billion to October’ According to DSF data, the current recorded surplus for the past ten months has exceeded the estimated fiscal surplus of the year – MOP 5.6 billion.

Direct taxes from the gaming industry remain the biggest contributor to the government’s income for the past ten months, although the amount

The government’s total revenue saw a drop of 9.7 per cent year-on-year to MOP82 billion during the months from January to October this year, the data reveals.

Meanwhile, local public expenditure increased 4.2 per cent year-onyear from the first month to October, amounting to MOP58 billion.

DSF data shows that 93.7 per cent

or MOP55 billion went on current expenditure, which had increased 4.8 per cent compared to the MOP52 billion posted for the same period in 2015.

PIDDA or investment plan made by the government for the past ten months increased 7.4 per cent yearon-year to MOP3.3 billion, representing 29.8 per cent of the MOP11 billion planned for overall investments this year.

DSF data reveals that capital transfers within the government expenses saw the highest increase of 554.5 per cent year-on-year.

The official MSAR forecast shows its authorised expenses might reach MOP88.6 billion for the whole of 2016, while the current first ten month’s expenses occupied 68 per cent of budgeted expenses.

Business Daily Friday, November 25 2016 3

Macau

The Secretary for Economy and Finance Mr Leong at yesterday’s session. GCS AL

Government states CAM debt still amounts to MOP1.4 billion

Calm after the storm Secretary Lionel Leong believes 2017 will be a year of stabilisation for the local economy Nelson Moura nelson.moura@macaubusinessdaily.com

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he Secretary for Economy and Finance Lionel Leong Vai Tac believes that after 2016 being an adjustment period, 2017 will be a period of stabilisation for the economy, with priorities being set in supporting local residents, SME’s and the (Meetings, Incentives, Conventions and Exhibitions) MICE sector.

The statements were made as the Secretary responded to legislators’ questions on the Governance Action Lines (LAG) for the economy in 2017.

Projects for 2017

“We will redouble our efforts to accelerate preparatory work for the two fairs promoted under the support of the Central Government - the China Expo Forum For International Co-operation, which will take place for the first time in Macau, and the Global Tourism Economy Forum,” stated the Secretary.

He also said the government was considering the participation of Macau in China’s Silk Road Fund, a US$40 billion (MOP319.5 billion) investment fund managed by the Chinese government Legislators mentioned how a report, released by the Small & Medium Enterprises Association of Macao, stated that the city’s latest

Entrepreneurship Environment Index has reached 46.2 points out of 100, below the average of 50 points, asking what measures would be taken to support business creation and entrepreneurs in order to prevent SME bankruptcy and educate young entrepreneurs.

“We are studying implementing a minimum wage gradually over a three-year period” Wong Chi Hong, Director of the Labour Affairs Bureau (DSAL)

Secretary Leong said business volume created by deals created by procurement programmes between gaming operators and local small and medium enterprises (SMEs) had amounted to MOP900 million (US$112.6 million) since 2001.

The creation of an export credit insurance mechanism is also to be created “as soon as possible” by the government, with a financial support plan enabling Macau and Mainland China companies involved in trade with Lusophone countries to “maximise their advantages”.

Airport debts

Bureau (DSF), Iong Kong Leong, stating CAM had repaid MOP86 million so far and still owed MOP1.4 billion, with 30 per cent of the debt to be repaid between 2017 and 2022, and the remaining after 2023.

Canidrome workers to receive help changing jobs

Co. - regarding an update on whether the racing operations will be continued and should they be relocated that the new area would meet international standards for greyhound racing. The concession for the greyhound racing track operator expires on December 31, with Yat Yuen having until July 21, 2018 to decide whether to move or shut the operation down.

Legislator Jose Pereira Coutinho also questioned if the government would recover the debt contracted by Macau International Airport Co. Ltd. (CAM), with the director of the Financial Services

The situation of Canidrome personnel was also mentioned by the Secretary stating that the DSAL has contacted the greyhound track workers in order to assist them in job changing.

The Secretary also said the government has contacted the greyhound racing track operator - Macau (Yat Yuen) Canidrome

The Secretary also stated contacts were already made with companies and entities that could provide this insurance service.

Export credit insurance is an i n s u ra n c e p o l i c y o f f e r e d b y private insurance companies and governmental export credit agencies to business entities seeking to protect their accounts receivable from loss due to credit risks such as protracted defaults, insolvency or bankruptcy.

Helping the middle class

Legislators also questioned Secretary Leong on what measures would be taken to help middle class residents purchase affordable private housing and adjust their salaries to rising inflation.

The Secretary claimed that with the current economy adjustment it was already “fortunate” that the

average salary has been maintained at MOP18,000 and announced the middle class would receive a 25 per cent tax reduction and a maximum of MOP12,000 could be refunded to taxpayers at the end of the fiscal year.

“We are studying implementing a minimum wage gradually over a three-year period,” said the Director of the Labour Affairs Bureau (DSAL), Wong Chi Hong.

Legislator Ella Lei Cheng I questioned if there would be any increase in the maternity and paternity leave provided by employers and what measures would be enforced to decrease the number of illegal nonresident workers and support local workers.

In response, the DSAL Director said an increase of three to seven days for paid paternity leave and 15 non-remunerated days for maternity leave was being considered, adding that there would also be an increase to 101 of inspectors looking out for illegal non-residents workers.

Legislation

AL sub-committee concerned about rent control bill The third standing committee of the Legislative Assembly is still concerned about the feasibility of the bill proposing a new rental regime that caps rent increases, said committee president Cheang Chi Keong yesterday.

The bill, which passed its first reading last November, proposes to enable the Chief Executive to set a cap on rent increase rates based on a coefficient scheme.

But the sub-committee head told reporters yesterday after a closed door meeting that committee members are worried about the viability of the scheme, as well as its future execution and impacts on the local real estate market – despite the fact that the

committee has agreed to establish such a regime to control the city’s property rentals, said Mr. Cheang in April this year.

Meanwhile, the AL committee has agreed that future property leasing contracts in the city should at least carry a tenure of three years, the president said.

He believes the discussion of the bill could be completed by the end of this tenure of the Legislative Assembly in mid-August.

The bill, passed with 29 votes in favour at the Assembly last year, also proposes to establish an arbitration body to mediate conflicts between landlords and tenants. K.L.

4 Business Daily Friday, November 25 2016

Macau Opinion

Tourism

Pedro Cortés*

October hotel occupancy increases to 88.5 pct

The news is no news

Average room rate for the month dropped year-on-year but rose month-on-month.

Some of you may recall that last year, when writing about the Policy Address of the Chief Executive, there was an almost empty space in this column. It was not an error of the publisher or of the editor. Nothing new really came out of the speech of our Chief Executive last year. This year - in MS-DOS language – it is “ ”; that is, we are at the same position as nothing new was stated by the Chief.

Is it good news?

Not at all. Macau is at a decisive moment of its existence. At almost eighteen years of age it is in the last stage of its adolescence status and will be an adult in about one year. Such adulthood should bring more concrete measures and plans. Real plans for the future of our city.

Are we going to have a fourth cross-river construction, be it a bridge or a tunnel? Are we prepared for what is happening in Hengqin? Is the city aware that new hotels will be opening soon, with loads more tourists?

Are officials sufficiently prepared for the 2020/22 conclusion of the gaming concessions? Will we have a real policy for education? Is public housing something generations can count on? Will the Macau Government follow the role envisaged by Beijing and make Macau once and for all a platform between China and the Portuguesespeaking countries? Will we have new policies for transportation? Are we going to have a hospital, which can better serve the population? Are civil rights and freedoms endangered?

Is the justice sector going to be enhanced by foreign judges? Are we going to see pollution decreasing?

Are we going to witness greater transparency in government decisions? Is our airport going to serve our population even better?

Can we trust in our public servants? Will we have a sovereign fund that can help diversify our economy? Can we see a future in this tiny rich city?

Well, as evidenced by the Portuguese radio broadcaster one thing is for sure: “The pataca will continue to be pegged to the Hong Kong dollar.” And the sun will rise every single day, even if overshadowed by the clouds and humidity.

It is really hard to understand what The Plan is, what the policies are, what our governors think besides being elected to a different office.

In the end, we must trust that it’s going to be fine - even if the news is no news. *lawyer and frequent contributor to this newspaper.

Cecilia U cecilia.u@macaubusinessdaily.com

percentage points, reaching 88 per cent and 91.1 per cent, respectively.

ocal hotels saw their occupancy increase by 4.8 percentage points year-onyear to 88.5 per cent for the month of October, which also represents a slight increase month-on-month of 1.9 percentage point, the latest data from Macao Government Tourist Office (MGTO) reveals.

Similar to previous months, 5-star hotels in the city registered the highest growth in occupancy throughout October, with an occupancy of 92.7 per cent, an increase of 6.4 percentage points year-on-year compared to 87.3 per cent recorded in the same month last year.

Y ea r- o n - y ea r i n c r ea s e s i n occupancy also appeared in both 4-star and 3-star hotels, increasing by 1.2 percentage points and 4.9

Golden Week boosts room prices

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Meanwhile, the general hotel room rate dropped 10.2 per cent to MOP1,335.4 (US$ 167) compared to the same month last year at MOP1,486.9.

Rooms of 5-star, 4-star and 3-star establishments all saw declines in price of 9.6 per cent, 12.7 per cent and 18.9 per cent, amounting to MOP1,676, MOP822.1 and MOP853.1, respectively.

However, given the National Golden Week at the beginning of October, average hotel prices in the month registered an increase compared to prices posted in September.

MGTO data shows that general hotel room prices had thus increased 10.1 per cent month-on-month in October.

Rooms in local 4-star hotels posted the highest increase of 15 per cent when compared to September, whilst

5-star and 3-star hotel room prices increased 8.6 per cent and 13 per cent month-on-month, respectively.

The MGTO data was provided by the Macau Hotel Association, which collects the data of 41 3-star to 5-star hotels in the territory.

For the first ten months of the year, the city’s average hotel occupancy rate saw a slight year-on-year increase of 1.1 percentage points, reaching 84.1 per cent compared to 83 per cent for the same period in 2015.

Local 4-star and 3-star hotels posted year-on-year increases in occupancy, which respectively went up by 2.1 percentage points and 2.4 percentage points in the ten months, whilst 5-star hotels enjoyed the slightest increase at 0.7 percentage points.

Meanwhile, average room prices decreased 13.4 per cent to MOP1,297.9 for the ten months. The room rates of 5-star hotels recorded the highest decline, down 17.6 per cent year-onyear to MOP1,872, whilst 3-star and 4-star hotels dipped 12 per cent and 16 per cent year-on-year, amounting to MOP771 and MOP849, respectively.

Finance

Skilled personnel necessary for financial development AMCM says it’s striving to obtain more financially skilled professionals for the development of financial leasing businesses in the city Cecilia U cecilia.u@macaubusinessdaily.com

The Monetary Authority of Macau (AMCM) has revealed that it has formed a taskforce with Macao Trade and Investment Promotion Institute

and the Labour Affairs Bureau to conduct surveys in order to seek the best approach to obtain more skilled personnel for the financial development of the city.

In response to the enquiry filed by legislator Si Ka Lon, the President

of the Administrative Committee of AMCM, Anselmo Teng Lin Seng, said the Macau Government is considering increasing the number of specialised personnel by obtaining them from overseas in the short term, and improving self-education for local residents for long term development.

Legislator Si opined in his enquiry that the “high threshold” of entering the financial leasing businesses such as the requirements of having at least two local residents on the board of directors of a company would limit the development of the city’s financial industry, given the limited number of skilled workers in the city.

But AMCM stressed that it is necessary for a leasing company to have at least two members of management who obtain legal stay or work approval in the MSAR. The AMCM President also revealed the Authority’s plan to amend the law relating to the leasing business of categorising financial leasing companies as other regular financial institutions.

The current law, according to AMCM, considers financial leasing companies as credit institutions - which are to be monitored by the banks.

Business Daily Friday, November 25 2016 5

Macau Security

Gaming-related crimes on the increase The number of illegal detainment cases, in particular, surged 45 per cent year-on-year for the first nine months of the year Kam Leong kamleong@macaubusinessdaily.com

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aming-related crimes totalled 1,298 cases for the first nine months of the year, a growth of 16 per cent year-on-year, the Secretary for Security Wong Sio Chak announced yesterday whilst stressing the increases are slowing down and are not impacting public security.

According to the Secretary, gaming-related crimes for the period are primarily loan sharking and illegal detainment, of which total cases amounted to 348 and 349, respectively, increasing 13.3 per cent and 45 per cent year-on-year.

“Despite the two types of crime registering increases, growth rates have both been slowing down throughout the quarters,” said the Secretary in a press briefing yesterday morning.

He indicated that the year-on-year growth of illegal detainment cases has slowed from 32.8 per cent for the first quarter and 27.1 per cent for the first half of the year, whilst that of loan sharking has narrowed from the increase of 55.9 per cent for the first quarter and the 52.3 per cent for the first six months.

“Since the majority of

[gaming-related] cases happen in casinos, public security outside the casinos has not been affected by the two types of crime,” the Secretary said, indicating the growth in the types of case are due to police taking the initiative to open files on the cases.

Security stable

On the other hand, the official claimed local security forces have not received any intelligence indicating unusual movement by triad gangs.

He stressed that the city’s gaming adjustment has not impacted the city’s security situation.

However, the Secretary said the departments would strengthen their deployments near local gaming venues in order to prevent gaming debt disputes or other related criminal

Aviation

China Airlines absorbing TransAsia Airways flights China Airlines will take over the flights operated by TransAsia Airways after the Taiwan-based airline shut down on November 22 due to heavy losses, the Taipei Times announced.

The Taiwanese Government’s executive body, the Executive Yuan, announced that China Airlines will take over domestic and international routes previously operated by the company on December 1, flying passengers who have already purchased flights with TransAsia Airways.

According to the newspaper, a TW$1.2 billion (US$37.64 million) trust fund belonging to TransAsia has been frozen, with TW$600 million of the fund to be used for the airline company employees’ severance pay and another NTD600 million to refund customers and travel agencies The decision to shut down was taken after two airplanes from the

airline crashed within seven months of each other - between 2014 and 2015 - with the company stating it had not been able to turn around losses in the order of TW$2.2 billion from the first three quarters of 2016, according to aviation intelligence publication ch-aviation.

“It was a painful decision to dissolve the company. We kept trying to find domestic and international professional bodies, partners, or even a new operational team to help TransAsia.

It’s a pity that the hope was not fulfilled,” company Chairman Vincent Lin told the publication.

The company halted its flights to and from Macau on October 30 after claiming to be evaluating the route’s operating benefits. Company share trading was suspended on Tuesday, while shareholders will vote on the decision on January 11 of next year. N.M.

activities tumbling [onto the streets] outside local casinos.

During the nine months, the city’s Judiciary Police transferred 1,443 suspects in gaming-related cases to the Prosecutor’s Office, up 12.5 per cent year-on-year from 1,283, Secretariat data reveals.

The Secretary pointed out yesterday that the majority of suspects were not local residents, perceiving the increase in the number of suspects also reflects the effectiveness of [various] departments’ enforcement against gaming-related crimes.

Taxi violations

For the three quarters, local security bodies opened files on 10,826 crimes, up 479, or 4.6 per cent, compared to the same period of last year.

Of the total, taxi violations amounted

to 3,038 cases, a decrease of 24.9 per cent from 4,050 cases one year ago.

Some 35.6 per cent of the violations involved taxi drivers refusing to take passengers - amounting to 1,081 cases - whilst some other 1,125 cases, 37 per cent, involved drivers overcharging passengers.

‘The majority of suspects were not local residents’ In addition, local police prosecuted 663 individuals for providing unlicensed taxi services for the fist nine months of the year, of whom 513 used car-hailing application Uber.

6 Business Daily Friday, November 25 2016

Macau

Macau Business Awards

Winners of 4th Business Awards announced The organisers strive to continue to bring recognition to individuals’ and organizations’ contributions to society, hosting an event rewarding their efforts

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leven Gold Award winners as well as 30 Excellence Award Winners were recognised and received their trophies at the 4th Annual Business Awards of Macau gala ceremony that took place at the Grand Lisboa last night. Nearly 300 of the city’s leading business figures convened at the gathering, representing the plethora of sectors and industries that contribute to the city’s ongoing growth.

A jury of 30 distinguished members

awarded the winners in the eleven categories, choosing from a selection of more than 150 entries representing wide swathes of the city’s industries and individuals.

Grand Merit Award

This year’s edition celebrated a new category - the Grand Merit Award paying homage to an organisation or individual’s contributions to the local community.

Marking its first appearance in the Business Awards, and winner of this

year’s Grand Merit Gold award, is the Institute for Tourism Studies (IFT) – the higher education institute whose students continue to supply talent to the city’s hospitality and gaming sector.

“We are extremely honoured to receive this award and we are very grateful for the recognition given by the judging panel and the organiser,” said Vice-President of IFT, Florence Ian Mei Kun. “We are seeing lots of community support for this event, from the

members of the panel and the participants of the competition. We can see this award is a positive encouragement for the (business) community to do a good job. It’s a recognition,” said the Vice-President. “IFT has grown with Macau […] and we are confident that we as IFT can (continue to) do a better job for the community,”

Continued excellence

Organiser Paulo A. Azevedo, Business Awards Chairman, congratulated the 41 winners on their perseverance and in striving to achieve excellence, despite a challenging global economy.

“All of you finalists are deserving winners,” observed Mr. Azevedo.

“We hope that these Awards will continue to bestow upon the recipients the recognition we thought, from the beginning, you all deserved to have from Macau’s society”.

For the full list of awardees please see Page 7

Gaming

Report: Gaming service quality at record high However the service performance of local casino staff engaged in the security and slot machine field slipped slightly in the second half of 2016 The city’s gaming service quality has reached a record high, scoring 132 points this year from the base of 100 points in 2013, reveals the 2016 Gaming Service Index released yesterday by the Macau Gaming Research Association.

The index, supported by SGS Hong Kong Ltd., collected 1,818 items of data from 14 local selected casinos, with the majority belonging to the city’s six gaming major operators; namely, Grand Lisboa, Wynn Palace, MGM Macau, The Venetian, Galaxy and Studio City.

Association research covers nine frontline casino departments of security, dealers, slot machines, cashier, membership, cloakroom, free F&B, toilets and shuttle bus services, analysing - in principle – the acts of smiling, proactive attitude and tolerance of the casino workers.

The survey shows that the proactive

attitude index of casino frontline workers demonstrated the highest growth to 156 points for the year

whilst the smiling index grew to 128 points and the tolerance index rose to 122 points - all based upon the base of 100 points in 2013.

In particular, the Association noted that the average gaming service index of local dealers had reached the historical high of 144 points in the second half of the year from

100 points in 2013 whilst customer service staff and cashiers also posted improvement in service quality.

The service performance of local casino staff engaged in the security and slot machine field, however, slipped slightly in the second half of 2016.

‘Macau Gaming Research Association said the average gaming service index of local dealers had reached the historical high’ Meanwhile, the Association said it is to expand its research scope in 2017 by increasing the same size to some 4,288 items of data given the new openings of casinos in the city.

It added it would also segregate the index for casinos on the Macau Peninsula and those in Cotai due to the new openings primarily located in the latter district. K.L.

Business Daily Friday, November 25 2016 7

8 Business Daily Friday, November 25 2016

Greater China In Brief Infrastructure

Investment in rural transport to help poverty reduction The Chinese government has promised more spending on transport improvements in poor regions for the next few years in the latest effort to realize its ambitious poverty reduction goals.

Vice Minister of Transport Dai Dongchang said yesterday that over half of vehicle purchase tax funds, estimated at more than RMB840 billion (about US$120 billion), will be earmarked for rural road construction during the 13th Five-Year Plan (2016-2020).

The figure marks a huge increase from the RMB550 billion of tax funds used in the area during the past five years.

Commodities

Sugar imports drop high prices China’s October sugar imports dropped around 70 per cent from the year before to their lowest level since February at 110,000 tonnes, as high global prices curbed purchases. That was also down sharply on arrivals of 500,000 tonnes in the previous month, customs data showed yesterday. China is the world’s top buyer of sugar, but this year’s imports have fallen from year-ago levels after tight global supplies saw benchmark global prices more than double since the third quarter of last year, reaching almost 24 cents per pound in early October.

Trade deal

Government wants quick close on regional agreement Securing a deal would further enmesh the world’s second-largest economy in the region and help cement China’s role as a geopolitical leader

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hina wants to seal the deal on a trade agreement with Southeast Asian countries as soon as possible with a U.S.-led pact now in doubt, a Ministry of Commerce official said yesterday.

The country will work with the Association of Southeast Asian Nations to negotiate the Regional Comprehensive Economic Partnership (RCEP), spokesman Shen Danyang said in a briefing in Beijing, echoing President Xi Jinping’s Saturday speech to the Asia-Pacific Economic Cooperation meeting.

China will actively participate in multilateral or bilateral trade and work closely with World Trade Organization members to foster “freer and more convenient” global trade regardless of how the Asean-backed RCEP or American-led Trans-Pacific Partnership fare, Shen said.

China’s bid to assert its economic

leadership is gaining traction in its push for the Asia-wide trade pact in the wake of Donald Trump’s surprise election victory, which dashed hopes for the U.S.-led TPP deal that would have taken in about 40 per cent of the global economy.

The TPP excludes China and RCEP excludes the U.S. Securing a deal would further enmesh the world’s second-largest economy in the region and help cement China’s role as a geopolitical leader. It would boost China’s clout in a region where it has territorial disputes with neighbors including Japan, Vietnam, Malaysia and the Philippines and is looking to displace decades of U.S. strategic dominance.

Next round

The U.S. withdrawal from the 12-nation TPP - reaffirmed by Trump in a videotaped speech Monday - has focused attention on a competing

Investment

Sansha island draws world’s largest companies Sansha, China’s southernmost island city, has drawn 16 of the world’s 500 largest companies to register on the island, according to Feng Wenhai, deputy mayor of Sansha, while giving a presentation on the city’s government work report recently. With a registered capital of over RMB3 billion (US$434 million), 157 registered enterprises in Sansha paid taxes totalling more than RMB1.53 billion yuan (US$221 million), Feng said.

The companies operating on the island cover a range of sectors, including agriculture, tourism, aviation, transport and culture.

Telecom

Huawei launches programme in Laos to train talent China’s information and communications technology (ICT) giant Huawei has launched a program in Vientiane to nurture ICT talents for Laos. Speaking at the launching ceremony Wednesday, Lao Minister of Education and Sports Sengdeuane Lachanthaboun said the “Seeds for Future” program is a great opportunity for Lao students to study in China and learn cutting-edge technologies. Chief Executive Officer of Huawei Technologies (Lao) Sole Co., Ltd., Zhang Dongya said this is the first of such program launched in the Southeast Asian country. Ten students from four well-known universities in Laos have been selected to take part in a twoweek ICT study trip in China.

Asean countries’ flags in a past meeting in Myanmar

set of trade talks. The next round of RCEP negotiations will be Dec. 2-10 in Bumi Serpong Damai city, near Jakarta.

Xi told APEC members gathered Saturday in Lima, Peru that China pledges to boost global trade and cooperation by opening up further and giving greater access to foreign investors. Beijing wants a level playing field for foreign and local companies so that they can share in the country’s growth, Xi said.

‘The next round of RCEP negotiations will be Dec. 2-10 in Bumi Serpong Damai city, near Jakarta’ Leaders of the 21 APEC nations at the forum pledged to expand economic integration and continue work on establishing the Free Trade Area of the Asia-Pacific. In a statement following the gathering, the group said it will resist all forms of protectionism and roll back any trade-distorting measures.

China made its case at the gathering for the 16-nation RCEP. Other nations wanted to preserve the TPP, with Peruvian President Pedro Pablo Kuczynski saying leaders discussed using it as one possible pathway to creating the FTAAP, which is APEC’s ultimate goal.

Shen said China appreciates the commitments leaders of Pacific Rim nations reached to push for the pact.

“This is the first actual move to materialize the concept of the FTAAP,” he said. Bloomberg News

Commerce hurdles

Beijing will defend WTO rights if Trump moves on tariffs-official The global trading body prohibits members from unilaterally raising tariffs above levels that they have committed to maintain David Lawder

China will defend its rights under World Trade Organization tariff rules if U.S. President-elect Donald Trump moves toward executing his campaign threats to levy punitive duties on goods made in China, a senior trade official said on Wednesday.

Zhang Xiangchen, China’s deputy international trade representative, also told a news conference that a broad consensus of academics, business people and government officials have concluded that China is not manipulating its yuan currency to gain an unfair trade advantage as Trump has charged.

“I think after Mr. Trump takes office, he will be reminded that the United States should honour its obligations as a member of the World Trade Organization,” Zhang said through an interpreter. “And as a member of the WTO, China also has the right to ensure its rights as a WTO member.”

Trump has said China is “killing us” on trade and that he would take steps to reduce the large U.S. goods trade deficit with China, including labelling Beijing as a currency manipulator soon after he takes office on Jan. 20, 2017, and levying duties of up to 45

per cent on Chinese goods to level the playing field for U.S. manufacturers.

Zhang, who spoke at the closing news conference for a two-day technical meeting of U.S. and Chinese trade officials in Washington, was not specific on what steps that China would take to protect its rights under WTO. The global trading body prohibits members from unilaterally raising tariffs above levels that they have committed to maintain.

China’s state-run Global Times newspaper last week warned that a 45 per cent Trump tariff would paralyze U.S.-China bilateral trade.

“China will take a tit-for-tat

approach then. A batch of Boeing orders will be replaced by Airbus.

U.S. auto and (Apple) iPhone sales in China will suffer a setback, and U.S. soybean and maize (corn) imports will be halted,” the newspaper warned.

During the U.S.-China Joint Commission on Commerce and Trade meetings, officials from both countries said that China agreed to treat imported and domestic medical devices equally in procurement policies.

‘China’s state-run Global Times newspaper last week warned that a 45 per cent Trump tariff would paralyze U.S.-China bilateral trade’ U.S. Commerce Secretary Penny Pritzker said Chinese officials confirmed that state semiconductor investment funds would not require technology transfers as part of their investments in foreign firms.

In the past, economists had widely viewed the yuan as artificially undervalued, but China during the past year has spent hundreds of billions of dollars in foreign currency reserves to keep the yuan from falling further - prompting the U.S. Treasury to ease its warnings on Beijing’s currency practices. Reuters

Business Daily Friday, November 25 2016 9

10 Business Daily Friday, November 25 2016

Greater China

Venezuela deal

Government puts oil over politics Financing oil infrastructure helps China ensure a long-term presence in a country that hosts the world’s largest proven crude reserves Ting Shi

C

hina’s move to invest US$2.2 billion in Venezuela for a share of increased crude production shows a desire to extract itself from the country’s political fights while securing access to its vast oil reserves.

The deal, which represents China’s first economic support this year for the beleaguered South American country, would help Venezuela reverse declining oil output by improving its infrastructure. In exchange, Venezuela would promise to send its largest creditor even more oil - 800,000 barrels a day compared with about 550,000 in September. The deal will be finalized in mid-December.

As low oil prices ravage Venezuela’s economy and President Nicolas Maduro struggles to maintain his grip on power, China is paying greater attention to things like fiscal stability and political risk in its overseas lending. The increased scrutiny could complicate its pledge to deploy US$60 billion across Africa over the next three years, much of it preferential loans and state-backed investments in countries that are heavily reliant on commodity exports.

While Maduro hailed the Venezuela pact as proof of China’s commitment, its focus on oil production illustrates a wariness in Beijing against assuming more risk with a socialist government that’s struggling to avoid default.

Financing oil infrastructure helps

China ensure a long-term presence in a country that hosts the world’s largest proven crude reserves and sits in the U.S.’s strategic backyard.

Oil flow

“The imperative is to ensure no disruption of oil flow,” said Mei Xinyu, a senior researcher with China’s Ministry of Commerce. “The political situation takes a back seat to the importance of oil production.

Even if the opposition party takes power in the future, they’ll still need Chinese loans to pump out oil.”

Subsequent agreements between the two countries would probably follow the same model, with China providing assistance to improve oil facilities and maintain exports, Mei said.

Similarly, the state-run China National Petroleum Corp. has ordered local units to cut non-oilproducing investments, according to the company’s account of a meeting held in Caracas on Friday

by Chairman Wang Yilin. He told the meeting that Latin America retained strategic importance despite the “unstable investment environment” and “growing default risk.”

Hedging bets

The moves come as runaway inflation and a shrinking economy push Venezuela closer to default and fuel criticism of Maduro, whose late predecessor, Hugo Chavez, fostered strong ties with Beijing. In recent months, China has been hedging its

bets and communicating with the opposition, which controls congress and wants a referendum to recall the president.

At stake is almost US$19 billion of debt that Venezuela is projected to owe China by year’s end, according to Barclays Capital Inc. The InterAmerican Dialogue, a Washingtonbased research group, estimated that China lent about US$65 billion to

“Even if the opposition party takes power in the future, they’ll still need Chinese loans to pump out oil” Mei Xinyu, a senior researcher with China’s Ministry of Commerce

the country between 2007 and 2015, which has been paid back largely with oil shipments.

Meeting those commitments has proved challenging for Venezuela, which has seen oil production slide to a six-year low amid a prolonged slump in crude prices. The agreements between CNPC and Venezuela’s state-owned Petroleos de Venezuela SA include increasing production at three joint ventures, rehabilitating oil wells in Venezuela and building a refinery in China.

The 800,000-barrel target falls short of a 1 million-barrel goal that

was under discussion in August, according to Chinese state media.

China imported an average of 424,000 barrels a day from Venezuela in the first nine months of the year, an increase of about 30 per cent over last year, according to data from the General Administration of Customs.

‘Older sister’

“We are going to reach 800,000 barrels a day with China,” Maduro said at Nov. 17 news conference with CNPC’s Wang in Caracas. “Our older sister China has not left Venezuela alone in hard times.”

CNPC issued a statement on Monday confirming the deal and describing Wang’s conversations with Maduro as “candid, effective and fruitful.” The Chinese Ministry of Foreign Affairs didn’t reply to a faxed request for comment.

Chinese President Xi Jinping has been stressing his country’s commitment to Latin America w hi l e vi si ti n g th e r egi o n t o attend the Asia-Pacific Economic Cooperation summit in Lima, Peru.

Xi is expected to conclude the weeklong trip yesterday without a stop in Venezuela.

Matt Ferchen, head of the China and the Developing World Program at the Carnegie–Tsinghua Center for Global Policy in Beijing, said the low-key treatment of the deal suggested that China saw it as just another long-term investment, not a game-changer.

“If it were really a big deal the Chinese were proud of, they would make diplomatic hay out of this,” Ferchen said. “My guess is this is just a ploy by Maduro to grab some of the attention and headlines surrounding Xi’s trip, which obviously doesn’t include Venezuela.” Bloomberg News

Business Daily Friday, November 25 2016 11

Asia Quarterly data

Singapore GDP contraction reinforces recession risk Domestic consumption in the affluent city-state has also remained anaemic Masayuki Kitano and Jongwoo Cheon

S

ingapore’s government slashed its economic growth and exports forecasts for 2016 after the economy contracted in the third quarter, reinforcing the risk of a recession amid fresh uncertainty around global trade under U.S. President-elect Donald Trump.

Exports in much of Asia’s trade-reliant economies have crumbled in the past year due to stubbornly weak external demand, with Singapore’s manufacturers one of the hardest hit as growth in regional locomotive China cooled.

chance of fiscal or monetary stimulus over the near term, analysts said. The central bank held its exchange-rate based policy unchanged in its October meeting, though some analysts say a deteriorating growth outlook could force it to ease again at its next review in April 2017.

ANZ economist Weiwen Ng said the risk of a recession in the current quarter cannot be ruled out, though that is not ANZ’s core view at this stage.

The higher U.S. yields and stronger dollar seen after the U.S. election could divert capital flows away from Asia and lead to higher domestic interest rates and tighter financial conditions in Singapore, he said.

“Therein lies the risk of a possible sharp downturn in Q4.”

MTI’s central view is that the economy will avoid a technical recession in the fourth quarter, its Permanent Secretary Loh Khum Yean told reporters, adding that GDP is expected to grow 1.0 to 3.0 per cent in 2017.

No light at end of tunnel?

All the same, there are few signs of a pick up in Singapore.

With Trump’s Nov. 8 election victory and his campaign promise to tear up international trade deals threatening to shatter a fragile global recovery, Singapore’s open economy remains among some of the most vulnerable markets to U.S. protectionism.

Domestic consumption in the affluent city-state has also remained anaemic, with entire floors at some central shopping malls empty.

Nomura economist Brian Tan said an added risk is that Trump’s policies would boost fiscal spending and prompt the Federal Reserve to raise U.S borrowing costs at a faster pace than previously expected.

Higher U.S. rates “feeds through into domestic interest rates in Singapore,” Tan said. “So obviously that’s going to raise debt servicing burdens, and that’s clearly not great for the economy at this stage,” said Tan, who expects Singapore’s economy to grow 1 per cent in 2017.

Activity in the manufacturing sector declined 9.1 per cent in the third quarter from the prior three months, the latest data showed, better than an initial estimate of a 17.4 per cent contraction.

The sector’s outlook remained bearish with exports in October sharply down. Reuters

Key Points Singapore sees 2016 GDP growth 1-1.5 pct vs 1-2 pct prev f’cast Q3 GDP -2.0 pct qtr/qtr annualised vs initial estimate -4.1 pct, Reuters poll -2.5 pct Q3 GDP +1.1 pct y/y vs initial estimate +0.6 pct The trade-reliant economy is expected to grow 1.0-1.5 per cent this year, compared with the previous projection of 1.0-2.0 per cent, the Ministry of Trade and Industry said in a statement yesterday.

The economy shrank 2.0 per cent in the July-September period from the previous three months on an annualised and seasonally adjusted basis, the ministry said, better than the government’s initial estimate on Oct. 14 of a 4.1 per cent contraction.

The external and domestic headwinds have raised the risk of a recession in Singapore, and heightened the

Energy

S. Korea proposes plans to revamp residential power prices The ministry is not planning to increase power charges for industrial users at the moment Jane Chung

South Korea’s energy ministry submitted three different proposals to parliament yesterday for new electricity tariffs as it seeks to simplify a complex price banding system and ease the burden on household consumers during peak usage periods.

The government faced a public backlash in summer after the existing pricing system, comprising six tariff

bands, landed residential users with heavy bills as they as cranked up air conditioning use.

In a temporary measure responding to the criticism, Korea’s energy ministry cut residential electricity tariffs in August for the JulySeptember quarter by 420 billion won (US$355 million) in total.

Under each of the ministry’s new proposals, customers will be bracketed in three bands, reducing

the difference in price between how much residential and industrial users pay. Jumps in prices during seasonal demand spikes will be kept to a minimum, the ministry said.

“We will make sure to not increase the burden on Korean people by Korea Electric Power Corp (KEPCO) cushioning price hikes as much as possible during winter and summer seasons,” Joo Hyung-hwan, Minister of Trade, Industry and Energy told lawmakers in a parliament session.

“We will hold a public hearing on Nov. 28 and will finalise all administrative procedure before

mid-December and apply the change from Dec. 1 retroactively,” Joo said.

The energy ministry will hold a public hearing next Monday with state-run KEPCO before finalising details.

Under the six-band system in place currently, residential customers face higher rates during heavy usage, while industrial users buy electricity at fixed prices. That can mean the highest prices paid are 11.7 time more per kilowatt/hour than the lowest charges.

Key Points Plans before parliament; change to be applied from Dec 1 Goal to reduce price differential, ease load on households Comes after public backlash over bills for peak summer use Under each of the three-stage systems up for consideration, that price gap would be narrowed to a factor of about three times, according to the ministry.

Industrial electricity consumption accounted for more than 56 per cent of total usage and household consumption made up about 13 per cent. Schools, agriculture and commercial users made up the rest.

The ministry is not planning to increase power charges for industrial users at the moment as their tariffs are higher than generation costs, minister Joo said. Reuters

12 Business Daily Friday, November 25 2016

Asia In Brief South Korea crisis

Investigators raid Lotte and SK offices South Korean investigators raided the offices of Lotte Group, SK Group and government agencies yesterday, officials said, as part of a widening probe into alleged influence-peddling that has engulfed President Park Geunhye. The businesses are suspected of providing money to two foundations controlled by Choi Soon-sil, a close friend of Park who is at the centre of a growing scandal, to win government favours in relation to duty free licenses, Yonhap News Agency reported.

Spokesmen at Lotte Group and SK Group confirmed the raid without elaboration.

Financing

Vietnam’s SMEs have limited access to credit Small and medium-sized enterprises (SMEs) in Vietnam continue to grapple with limited access to credit even though they play an important role in the economy and account for 62 per cent of total employment, according to Vietnam Chamber of Commerce and Industry (VCCI). Only 30 per cent of private SMEs in Vietnam have managed to secure bank loans, local VNExpress online newspaper quoted the latest data from VCCI as saying yesterday. Statistics also showed that the amount of credit provided to SMEs only accounted for three per cent of all outstanding loans at local banks.

Finmin official

Thai economy can grow 3.3-3.4 pct this year Thailand’s economy can still grow around 3.3-3.4 per cent this year thanks to government stimulus measures, a senior finance ministry official said yesterday. Growth is expected to pick up to 4.4-4.5 per cent next year, also driven by public infrastructure projects, Somchai Sujjapongse, the finance ministry’s permanent secretary, told reporters. The government has said it will introduce additional measures in a bid to boost year-end spending and activity. Southeast Asia’s second-largest economy expanded 2.8 per cent last year.

Results

Maybank profit falls on weak loan growth Malaysia’s biggest lender Malayan Banking Berhad (Maybank) posted a fall in third-quarter profit on higher provisioning for bad debt and as margins come under pressure from slowing loan growth. Net profit for July-September was 1.795 billion ringgit (US$402.9 million), the fourth quarterly decline in a row, and 5.4 per cent lower than 1.898 billion ringgit a year earlier. Net interest income for the quarter declined 2.4 per cent to 2.83 billion ringgit. The group clocked a quarterly revenue of 11.3 billion ringgit. Analysts polled by Reuters had estimated net income of 1.08 billion ringgit and revenue of 5.42 billion ringgit for the quarter.

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Currencies

Asia’s accelerating currency rout set to sideline central banks International investors sold more than US$12 billion-worth of equities and bonds in Asia’s emerging markets after Donald Trump won the U.S. presidential election Yumi Teso and Lilian Karunungan

A

sian currencies’ drop to the weakest this decade w i l l p r o bab l y d e t e r regional central banks from easing monetary policies as the prospects of higher U.S. rates spurred capital outflows.

Indeed, they are more likely to be stepping in to smooth declines in their currencies - the rupee’s drop yesterday reportedly prompted intervention from the Reserve Bank of India. The Bloomberg-JPMorgan Asia Dollar Index has tumbled to the weakest since 2009, the Philippine peso cracked 50 per dollar for the first time since the global financial crisis and forwards traders are expecting Malaysia’s ringgit will drop within a week to levels last seen in 1998.

Bank Negara Malaysia on Wednesday kept its benchmark interest rate unchanged at 3 per cent, signalling policy makers are focused on protecting the ringgit rather than spurring growth. It has said it intervened in foreign-exchange markets. Bank Indonesia Governor Agus Martowardojo said last week the monetary authority sees narrowing room for further easing. His central bank also sold dollars this month.

“Depreciating currencies are making it very hard for the regional central banks to ease monetary policy as falling FX rate raises concerns about inflationary pressure and acceleration of fund outflows,” Toru Nishihama, an emerging-market economist in Tokyo at Dai-ichi Life Research Institute Inc., said in a phone interview. “Most regional central banks will probably have to stay on hold for quite some time.”

International investors sold more than US$12 billion of equities and bonds in Asia’s emerging markets after Donald Trump won the U.S. presidential election, which spurred higher Treasury yields and a dollar rally on expectations of his fiscal plans.

The Bloomberg-JPMorgan Asia

Dollar Index reached 103.29, the lowest level since March 2009, as futures traders see a 100 per cent chance that the Federal Reserve will raise U.S. interest rates in December.

That’s up from about 70 per cent at the end of October. One-month implied volatility for 10 major Asian currencies excluding the yen climbed to the highest level this month since February, deterring investors from taking risks in developing economies.

‘Greater uncertainties’

Before the market volatility triggered

by Trump’s victory, Bank Indonesia was on an aggressive strategy to boost an economy that’s growing well below the government’s target of 7 per cent. The central bank had cut interest rates six times this year. In Malaysia, new Governor Muhammad Ibrahim surprised markets with a cut in July to spur growth.

“Depreciating currencies are making it very hard for the regional central banks to ease monetary policy” Toru Nishihama, an emerging-market economist in Tokyo at Dai-ichi Life Research Institute

Bank of Thailand said capital flow and foreign-exchange volatility are set to increase and the monetary authority needs to preserve policy space as Thai economy “would still be facing greater uncertainties,” according to minutes of Nov. 9 meeting released Wednesday.

Malaysia’s central bank said it will continue to provide liquidity for the nation’s currency market.

“Based on domestic economic developments, we see fundamental justification for policy rate cuts in Thailand, Indonesia and Malaysia, but they are likely to be deferred as weaker currencies place a constraint on policy,” said Mark Baker, portfolio manager for emerging-markets fixed income in Hong Kong at Standard Life Investments.

Korea, Philippines

Among regional central banks that delivered interest-rate cuts this year are Bank of Korea and Bangko Sentral ng Pilipinas. Both central banks have said they stand ready to act if volatility becomes excessive.

The Philippines central bank is probably watching the peso, which pulled back after breaching 50 for the first time since June 2008, though it is hard to say if policy makers stepped in, Manila-based chief market strategist Jonathan Ravelas.

The rupee dropped as much as 0.4 per cent to an unprecedented 68.865. State-run banks sold dollars, probably on behalf of the Reserve Bank of India, three Mumbai-based traders said, asking not to be named.

That came as the rupee halted its opening slide, before resuming its decline to fall past the 68.8450 reached in August 2013.

Those keenest to ease, such as Indonesia and Malaysia, may be less able to do so under external and foreign-exchange stress, while those that were reluctant, like South Korea, Taiwan and Singapore, perhaps will need more easing, according to a Deutsche Bank AG note dated Nov. 18.

For Masakatsu Fukaya, a Tokyobased emerging-markets trader at Mizuho Bank Ltd., Malaysia is the most vulnerable with a possibility of not being able to halt fund outflows that will keep the option of a rate cut “so far away.” Bank Indonesia will also struggle to lower the benchmark rate when the rupiah is sold-off and outlook is uncertain, he said.

By contrast, Fukaya expects the Bank of Korea to ease policy in the first half of next year despite the market volatility.

“Korea may even welcome certain weakness in the won and they don’t probably worry so much about fund outflows,” he said. Bloomberg News

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Business Daily Friday, November 25 2016 13

Asia Holding companies

Thailand evokes Temasek as junta tries to revive state firms There were 52 state enterprises with total assets of 13.5 trillion baht and liabilities of 10.6 billion baht as of June 2016 Suttinee Yuvejwattana

Thailand is seeking to set up an investment holding company next year for government shareholdings, part of a wider effort to improve the performance of state-controlled enterprises.

A law to boost the governance of such firms and enable the creation of the holding company may be enacted by March, according to Ekniti Nitithanprapas, the director general of the State Enterprise Policy Office.

“We’d like the holding company to work in an efficient way like Temasek or Khazanah,” Ekniti said in an interview in Bangkok on Wednesday, referring respectively to Singapore’s state-owned investment firm Temasek Holdings Pte and Malaysia’s sovereign fund Khazanah Nasional Bhd. State enterprises are planning 446 billion baht (US$12.5 billion) of investment in 2017, according to the policy office. That’s equivalent to about 3 per cent of Thailand’s gross domestic product, underlining the importance of ensuring the companies are managed well. The new law is supposed to create a policy committee and a master plan for the sector, as well as boost transparency, formalize the way directors are appointed and evaluate corporate performance.

“This reform is crucial for longterm economic development,” said Santitarn Sathirathai, head of emerging Asia economics at Credit Suisse Group AG in Singapore. “Ministries are in charge of state enterprises and

often wear too many hats as shareholders, rule setters and referees, which sometimes breeds conflict of interest and inefficiencies.”

The stock market signals there’s scope for government businesses to be better managed.

The State Enterprise Policy Office’s website lists six companies as publicly traded state enterprises: oil explorer PTT Pcl, Krung Thai Bank Pcl, Thai Airways International Pcl, Airports of Thailand Pcl, MCOT Pcl and PTT Exploration & Production Pcl. An index of those companies has climbed 23 per cent in the past five years, less than the 54 per cent advance in the benchmark SET index, according to data compiled by

Bloomberg.

The Thai administration said a number of listed and unlisted businesses will go into the holding company. Details haven’t been finalized yet. There were 52 state enterprises with total assets of 13.5 trillion baht and liabilities of 10.6 billion baht as of June 2016, according to the State Enterprise Policy Office’s website.

While the proposed law is a welcome initial step, the key will be how well it’s implemented and whether directors have enough independence and power, according to Santitarn.

Thailand initially proposed an investment holding unit more than a decade ago. The reform is a priority for the military-run government of Prime Minister Prayuth Chan-Ocha, according to Ekniti.

State firms were asked to frontload investment outlays planned for the fiscal year ending September 2017 to the current quarter to support

economic growth, according to a statement from the policy office on Thursday.

The comparison with Temasek evokes the earlier phases of Singapore’s investment firm, which was founded in 1974. Temasek originally owned shares in former state-owned companies and began directly investing in foreign equities in 2002.

It doesn’t direct the decisions and operations of its portfolio companies, according to its charter, and the Singapore government isn’t involved in Temasek’s investment decisions.

Annual growth in Thailand - Southeast Asia’s second-largest economy - decelerated to 3.2 per cent last quarter, one of the slowest expansions in the region. The junta is leaning on increased public investment, subsidies for farmers and cash handouts for low-income earners to bolster an economic outlook clouded by political flux. Bloomberg News

Lending

S. Korea’s household debts keep record-breaking trend Banks tightened standards for lending in accordance with the government’s guideline, triggering the so-called balloon effect Household debts in South Korea kept a record-breaking trend on the back of the so-called balloon effect, under which borrowers move to higher-rate loans in non-bank institutions from bank loans demanding tighter standards for lending, central bank data showed yesterday.

Household credit, which includes loans from banks and non-bank institutions as well as purchase on credit, reached 1,295.8 trillion won (US$1.1 trillion) as of the end of September, up 38.2 trillion won from three months earlier, according to the Bank of Korea (BOK).

It was the largest quarterly increase since the bank began to compile the data in 2002.

The third-quarter increase of 38.2 trillion won is faster than a 33.9-trillion-won expansion in the previous quarter. From a year ago, the household credit rose 130.9 trillion won, marking the fastest-ever yearly growth.

Debts owed by households to non-bank lenders, including savings banks, credit unions and community cooperatives, reached 277.7 trillion won as of end-September, up 11.1 trillion won from three months ago.

It was the biggest quarterly growth in loans from non-bank lenders, caused by households which moved to non-bank institutions demanding higher lending rates but applying loosened standards for borrowers.

Banks tightened standards for lending in accordance with the government’s guideline, triggering the so-called balloon effect. It would raise debt-servicing burden especially among low-credit households

if market rates rise down the road.

Market rates recently began reflecting an expected rate increase in the United States. The U.S. Federal Reserve is widely forecast to hike interest rates in December.

‘Bank loans to households expanded 17.2 trillion won from three months earlier’ Bank loans to households expanded 17.2 trillion won from three months earlier to reach 603.9 trillion won as of end-September. Among them, home-backed debts jumped 13.4 trillion won to 433.6 trillion won.

The BOK cut its benchmark interest rate from 3.25 percent in July 2014 to an all-time low of 1.25 percent in June this year, while the government eased regulations on mortgage financing.

Households rushed to purchase new apartments with borrowed money, boosting worries about the bubble forming in the real estate market. Xinhua

14 Business Daily Friday, November 25 2016

International In Brief Imports

French PM urges taxes on countries snubbing climate pact Europe should impose tariffs on imports from countries that do not implement a global agreement for fighting climate change, French Prime Minister Manuel Valls said in an opinion piece published on Wednesday. Valls’ position puts him at odds with Germany and the European Commission which rejected a call from former French president Nicolas Sarkozy for a tax on U.S. imports if a Trump administration quits the 2015 Paris Agreement.

U.S. President-elect Donald Trump has pledged to pull out of the Paris Agreement for cutting greenhouse gas emissions, mainly from fossil fuels.

Instead, he says he will push ahead and develop cheap coal, shale and oil.

U.S.-Greece

Tsipras, Trump talk about cooperation Greek Prime Minister Alexis Tsipras spoke by telephone to U.S. President-elect Donald Trump on Wednesday, his office said, congratulating him on his election victory and underlining the strong ties between the two countries. Trump and Tsipras discussed Greece’s role for peace and stability in the region, its efforts to tackle the economic and refugee crises and the importance of boosting strategic cooperation between the two countries. “The two leaders agreed to maintain steady communication channels,” Tsipras’ office said in a statement, without providing further details.

Energy

IEA expects oil investment to fall for third year in 2017 The Organization of the Petroleum Exporting Countries meets next week to try to finalise output curbs Osamu Tsukimori

I

nvestment in new oil production is likely to fall for a third year in 2017 as a global supply glut persists, stoking volatility in crude markets, the head of the International Energy Agency (IEA) said yesterday.

“Our analysis shows we are entering a period of greater oil price volatility (partly) as a result of three years in a row of global oil investments in decline: in 2015, 2016 and most likely 2017,” IEA director general Fatih Birol said, speaking at an energy conference in Tokyo.

“This is the first time in the history of oil that investments are declining three years in a row,” he said, adding that this would cause “difficulties” in global oil markets in a few years.

Oil prices have risen to their highest

in nearly a month, as expectations grow among traders and investors that OPEC will agree to cut production, but market watchers reckon a deal may pack less punch than Saudi Arabia and its partners want.

The Organization of the Petroleum Exporting Countries meets next week to try to finalise to output curbs.

“Our analysis shows that when prices go to US$60, we’ll make a big chunk of U.S. shale oil economical and within the nine months to 12 months of time, we may see a response coming from the shale oil and other high-cost areas,” Birol told Reuters, speaking in an interview on the sidelines of the conference.

“And this may again put downward pressure on the prices.”

Brent crude stood around US$49 a barrel yesterday.

Birol said that level would be

enough for many U.S. shale companies to restart stalled production, although it would take around nine months for the new supply to reach the market.

The IEA director general said it is still early to speculate what Donald Trump’s presidency in the United States will have on energy policies.

Key Points ‘Entering period of greater price volatility’ -IEA’s Birol U.S. shale oil ‘economical’ if prices go to US$60 per barrel ‘This may again put downward pressure on prices’ - Birol “Having said that, both U.S. shale oil and U.S. shale gas have a very strong economic momentum behind them,” Birol said.

“Shale gas has significant economic competitiveness today, and we think it will be so in the next years to come.” Reuters

Mozambique

Banks say solvency rumours false Mozambique banks have denied rumours of bankruptcies, blaming the press and social networks and said they were stable after the central Bank of Mozambique declared the system was sound. BCI, Banco Mais and United Bank for Africa Moçambique all denied that their solvency ratios were close to the red line defined by BM, while BancABC, owned by the Atlas Mara group said it was increasing its capital.

The BCI chairman said that its solvency ratio as published on 30 June, was 14 per cent, well above the 8 per cent that BM demanded.

Public health

EU back new national caps on pollutants The European Union (EU) on Wednesday decided to adopt plans for more ambitious national caps on emissions of key pollutants by 2030, including nitrogen oxides, particulates and sulphur dioxide.

These plans won the support of members of European Parliament (MEPs). The new legislation sets out national emission reduction commitments for sulphur dioxide, nitrogen oxides, non-methane volatile organic compounds, ammonia, and fine particulates (less than 2.5 micrometres in diameter). Air pollution causes about 400,000 premature deaths in the EU per year. The proposed pollution cuts would reduce health impacts of air pollution by around 50 per cent by 2030.

Government forecast

Cost of Brexit to UK economy is 58 billion pounds Potential GDP growth is also depressed by a weaker outlook for net inward migration The cost of Brexit to the UK economy will be 58 billion pounds (about US$72 billion), according to figures released on Wednesday in the wake of the government’s annual autumn financial statement.

The OBR, the economic forecaster set up by the UK government, unveiled the full range of the statistics and data that UK Chancellor of the Exchequer Philip Hammond based Wednesday’s autumn statement on.

It is the first major economic announcement since the referendum vote to leave the European Union (EU) on June 23, and shows the expected negative impact of that vote on future economic growth and government revenue.

The UK government will need to borrow an additional 122 billion pounds up to April 2021 above the borrowing total in the March Budget, according to the OBR. About half of this amount, OBR director Robert Chote told journalists on Wednesday afternoon, will be down to the Brexit effect.

“The economy has not slowed as sharply as some forecasters feared in the wake of the referendum vote to leave the EU. But it has slowed.

And the outlook is weaker than at the time of the Budget,” said Chote.

“We expect the quarterly growth rate of GDP to continue slowing into next year, as uncertainty over the UK’s future trade and migration regime delays business investment and as the fall in the pound squeezes real consumer spending by pushing up inflation. But growth remains positive,” Chote said.

“We expect the quarterly growth rate of GDP to continue slowing into next year” Robert Chote, OBR director

Chote said that cumulative growth potential of the economy will be weaker than thought in March, largely because weaker business investment

depresses trend productivity growth by slowing capital deepening.

Potential GDP growth is also depressed by a weaker outlook for net inward migration, and by 2020/21 the economy will be between 2 and 2.5 per cent smaller than it would have been based on the March forecast.

The outlook for the public finances is also weaker than expected in March. Borrowing was already overshooting the OBR forecast ahead of the referendum, said Chote, because of weak income tax receipts and higher local authority spending.

“Looking forward, the income tax shortfall increases as the downward revision to our trend productivity forecast slows the growth of average earnings,” he said.

The negative impact of Brexit will be felt sharply next year with a squeeze on real consumer spending as the fall in the pound since the referendum pushes up import prices and Consumer Price Inflation.

However, there is a positive from Brexit.

Chotes said: “These two negative effects are partially offset by a nearterm boost to GDP from stronger net trade volumes, as the weaker pound encourages exports and discourages imports and as weaker consumer and investment spending mean less demand for imports.” Xinhua

Business Daily Friday, November 25 2016 15

Opinion

Don’t let short-sellers do all the talking, China Christopher Langner a Bloomberg Gadfly columnist

C

hina’s embrace of capitalism often appears half-hearted. One thing is becoming clear, though: Unless its publicly traded companies start taking transparency and investor communications more seriously, they may as well give up being listed offshore.

Two Chinese companies traded in Hong Kong were targets of short-seller reports this week: China Hongqiao Group Ltd., the world’s largest aluminium producer, and CT Environmental Group Ltd., a small wastewater treatment firm.

Their diverging paths following the attacks are a testament to the value of opening up.

After a blip, Hongqiao’s stock recovered losses prompted by an anonymous report that contained allegations about the company’s business and financial operations. CT Environmental, meanwhile, plunged 20 per cent minutes after Glaucus Research questioned its accounting, pushing the company to suspend trading of its shares.

Hongqiao has been here before. When the company first tried to access bond markets in 2012, it was met with scepticism from creditors who doubted the 20 per cent net margins reported by the commodity producer, which far exceeded those of peers.

I n r e s p o n s e, Hongqiao hired an investor relations professional who could speak good English to explain its business model to global money managers. The company, based in the eastern province of Shandong, also m a d e m e etin g with investors a regular part of m a n ag e m e n t’ s schedule. Not only did the firm go on to sell two bonds but its stock has gained more than 50 per cent in the past three years.

The reservoir of trust and goodwill built up by such exercises looks to have served Hongqiao well. After slumping as much as 4.3 per cent on Wednesday, the shares finished 2.5 per cent higher on the day. (Hongqiao called the allegations one-sided and misleading speculation, and said it’s preparing a detailed clarification.)

Such is the benefit of experience. CT Environmental has yet to respond to the Glaucus report and doesn’t even list an investor relations officer in its annual report. Given that few companies in China bother to engage with shareholders, executives may have felt there was no need. Once they have sold stock, Chinese companies generally restrict their communications with investors to issuing semi-annual reports and other required filings.

Of the nine companies that scored lowest in organizational transparency in in this year’s Transparency International corporate report, eight were Chinese. Most of the firms included are multinationals, which are subject to stricter disclosure requirements. If the blue chips don’t do a good job of informing investors, why would the smaller companies?

That’s why China has been a playground for short-sellers. While in some cases they have been proved right and frauds have been exposed, attacks aren’t always justified. But as long as companies regard communicating with investors as a nuisance, they will continue to make easy targets. Bloomberg Gadfly

‘Of the nine companies that scored lowest in organizational transparency in this year’s Transparency International corporate report, eight were Chinese’

Sanctions and the risk to the dollar

H

ow can the US respond to cyber attacks by foreign powers or their proxies?

It is an issue that has faced President Barack Obama in the wake of reports of Russian hacking during the United States’ recent election cycle. But it’s not just about Russia or Obama. President-elect Donald Trump will face the same problem. And he won’t have very good options, either.

“Naming and shaming” is pretty unsatisfying, because hackers rarely feel any actual shame.

Similarly, criminal indictments – a measure previously taken against Chinese hackers – probably won’t bring anyone to trial. US Vice President Joseph Biden has put counterattacks against Russian computer networks on the table, but that could trigger an escalation, while ceding the moral high ground.

Economic sanctions may seem like a simple and inexpensive way to register disapproval for foreign hacking; in Russia’s case, existing sanctions against its largest banks and Russian President Vladimir Putin’s closest associates could be tightened. But resorting to sanctions too frequently can have farreaching consequences that eventually diminish the US’s role in the global economy.

Two-thirds of all global reserves are in dollars, and 88 per cent of all foreign-exchange transactions worldwide include dollars. So, America’s most powerful sanctions instrument is its ability to block a criminal or rogue bank from making US-dollar transactions. But every time the US unilaterally tightens sanctions against another country, it risks undermining the dollar’s status as the world’s principal reserve currency, which could also make future sanctions less effective.

To be sure, the US can strike a severe blow against terrorist o rga n i z a t i o n s a n d d r u g kingpins by preventing them from transacting in dollars, and legitimate banks’ managers turn pale at the mere thought of losing dollar access. But when sanctions target a country, their effectiveness depends much more on other countries’ participation, which can cost political capital to secure.

For example, US sanctions eventually brought Iran to the table to negotiate a nuclear deal; but sanctions were effective only because a broad international coalition, ultimately backed by the United Nations Security Council, isolated Iran financially. US sanctions against Russia after the latter’s annexation of Crimea in 2014 were amplified by a coincidental oil-price drop, and by the deployment of similar measures by the European Union, Russia’s largest trading partner.

Without EU participation, US sanctions would have been far less effective.

But, while international coalitions lend credibility to US sanctions, they are fragile and temporary at best. Just a year after the Iran deal was reached, it is already hard to imagine that China or Russia would back further joint action against Iran, even if the agreement began to unravel. Likewise, European leaders must renew their sanctions against Russia every six months, which means they are unlikely to survive long enough to change Kremlin policy.

Notwithstanding Trump’s evident rapport with Putin, US sanctions will be far more durable. Even

“

Christopher Smart Special Assistant to the President for International Economics, Trade & Investment (2013-15) and Deputy Assistant Secretary of Treasury (2009-13)

when Obama was actively supporting Russia’s accession to the World Trade Organization earlier in his presidency, he had to expend considerable political capital just to repeal the 1974 JacksonVanik Amendment, which secured freer Jewish emigration from the Soviet Union as a condition for normal trade relations. At this stage, pulling off another diplomatic reset would be difficult, if not impossible.

Beyond building sanctions coalitions, the US must ensure that it is using its disproportionate influence in the global financial system to advance truly global interests. Few people would argue that punishing criminals and terrorists is illegitimate, even if there are disagreements about specific cases. And while using financial sanctions to boost widely agreed global efforts such as nuclear nonproliferation, or to defend shared principles such as border sovereignty, may not always work, it is a widely accepted tactic.

But the difference between global principles and key national interests is often in the eye of the beholder: what the US considers an outrage may be viewed by other countries as a parochial American interest.

For example, there was little sympathy for North Korea when Obama imposed sanctions against it last year in response to cyber attacks against Sony Pictures. But there were grumbles about American overreach when the US slapped the French bank BNP Paribas with an US$8.9 billion fine in 2014, and temporarily denied it certain dollar transactions, for violating sanctions against Sudan, Iran, and Cuba.

Similarly, hacking US political organizations in an effort to disrupt the American democratic process arguably qualifies as behaviour all respectable countries should abhor. But some observers will undoubtedly characterize it as yet another chapter in the great-power rivalry between Russia and the US. There are clear risks for the US if it is too easily tempted to block access to the dollar in defence of interests that appear selfish or parochial. Would the US respond with sanctions if the cyber attack on Sony had come from a foreign competitor in a commercial dispute? Or if an attack were carried out ostensibly to protest controversial US policies in the Middle East?

These are all difficult calls to make, which is why any US administration should pause before shutting individuals, firms, and countries out of the dollartrading system. Over time, even legitimate actors will find alternative commercial and financial channels if they come to feel that dollar access is conditional on not running afoul of US interests.

Imposing sanctions seems like an easy, costless response to a global outrage, but it is no such thing. The US should scrutinize each sanctions deployment carefully, and make sure it is reinforcing trust in American leadership – and in the dollar – rather than raising doubts. Project Syndicate

... any US administration should pause before shutting individuals, firms, and countries out of the dollartrading system

”

16 Business Daily Friday, November 25 2016

Closing Expansion

Jacobson Pharma to broaden presence in MSAR

Pharma, Derek Sum. The release also stated the company was looking for products that could Hong Kong generic drug company Jacobson Pharma stated it was seeking complement its current portfolio and to use its presence in the city as leverage technologies that would bring synergies to enter the Macau market, according to with its businesses.

According to the report Jacobson the company’s interim results report.

Pharma has owned 30 per cent share ‘We will leverage our pre-eminent of the Hong Kong generic drug market position in Hong Kong to facilitate since 2012, with its gross profit in the our business development plans first six months of 2016 increasing 11 per in China, Macau and strategically cent year-on-year to HK$244.6 million selected markets in Asia Pacific (US$31.5 million). N.M. region,’ stated the CEO of Jacobson

Supporting measures

OECD calls for more public spending on growth-friendly policies The OECD estimated that increasing budget deficits by half a per cent of GDP to finance investment could increase output by 0.4-0.6 per cent in the first year Leigh Thomas

G

overnments need to get over the fixation with debt levels and ramp up spending on growthfriendly policies while cutting tax burdens where possible, the OECD said yesterday.

The message in the OECD’s Economic Outlook to be published on Monday could offer support to a growing number of governments, starting with the upcoming Donald Trump-led U.S. administration, looking to fire up growth with tax

the Paris-based Organisation for Economic Cooperation and Development said.

Pre-releasing a special chapter in its biannual Economic Outlook, the OECD said that letting deficits rise to finance investment and ease tax burdens could raise economic output more than it increases debt.

That in turn could ultimately reduce debt as a per cent of gross domestic product (GDP) without the economic pain that comes with reducing the debt through fiscal austerity.

“When we think about why many

countries have been reluctant to deploy fiscal initiatives it’s because of debt to GDP ratios and their concerns about not being able to borrow,” Mann told Reuters.

The OECD estimated that increasing budget deficits by half a per cent of GDP to finance investment could increase output by 0.4-0.6 per cent in the first year on average across the organisation’s 35 member countries.

“What we are saying is that by borrowing at very low interest rates and investing in the right initiatives you can improve your growth rate,” Mann said.

However, it was crucial extra public spending went to productivityboosting policies like infrastructure, education and research while fiscal

easing should target specific taxes holding back growth.

Competition is picking up among major economies to cut tax rate, which was part of Trump’s election platform. The British government has also flagged cuts in corporate taxes while frontrunners in high-tax France’s presidential election have promised taxpayer relief.

Mann warned against broadbased corporate tax cuts such as those envisaged by Trump without anything to support overall demand.

“Cutting corporate taxes in an environment where many companies are flush with cash does not create that impetus to get us out of the low growth trap because there’s plenty of cash already on firms’ balance sheets,” she said. Reuters

Key Points Extra spending and tax relief must focus on growth - OECD Looser fiscal stance could boost growth 0.4-0.6 pct Low borrowing costs means extra growth keeps down debt cuts.

However, OECD chief economist Catherine Mann insisted that it was a not call for blind deficit spending and across the board corporate tax cuts.

After years of low growth in most developed economies, governments could scarcely afford to ignore the opportunity presented by record low interest rates for financing growth-boosting investments,

M&A

Protests

Biz mood

Ctrip acquires Skyscanner for 1.4 bln pounds

Chinese Coca-Cola workers German confidence holds strike over asset sale at highest level since 2014

China’s top online travel service provider Ctrip. com International will acquire flight comparison site Skyscanner for 1.4 billion British pounds (about US$1.74 billion) and become its majority share-holder, sources with the companies said yesterday.

Nasdaq-listed Ctrip said the purchase, to be concluded by the end of this year, will be mainly in cash with the balance in shares and loan notes.

A Ctrip statement quoted chairman James Jianzhang Liang as saying that the acquisition will strengthen both companies: Ctrip will consolidate its global position and Skyscanner will get a boost in experience, technology and booking capability.

Skyscanner CEO Gareth Williams said in another statement that the company will remain operationally independent.

Founded in 1999, Ctrip is China’s top online travel service provider. In 2015, Ctrip bought its rival Qunar and became the top online travel agency in China.

Ctrip made net revenue of RMB5.6 billion (US$820 million) in the third quarter of 2016, up 75 per cent from a year earlier, according to the company’s latest financial report. Xinhua

Coca-Cola workers in three Chinese cities have gone on strike after the US soft drinks giant announced it was selling its bottling interests in the country.

Strikes and other labour protests have surged in recent years in China, where growth is slowing and parts of the economy are moribund.

The beverage giant announced last week it was selling all its bottling assets in mainland China to Hong Kong conglomerate Swire Pacific and COFCO Corporation, one of China’s state-owned food giants.

The Swire transaction would cost RMB5.87 billion (US$850 million), the Hong Kong company said. COFCO did not disclose the size of its deal.

Workers at three Coca-Cola plants called coordinated strikes on Monday, with pictures posted online appearing to show workers outside a factory in Chongqing with a banner that read: “We worked hard for over a decade but were sold in less than a second. Compensate! Compensate!

Compensate!”

Another proclaimed: “Give back my youth, compensate my time”. AFP

German business sentiment held at the highest level in more than two years in November, signalling that the recovery in Europe’s largest economy remains on track.

The Munich-based Ifo institute’s business climate index stayed at 110.4, unchanged from a revised reading for October. That’s the strongest since April 2014 and compares with a median estimate in a Bloomberg survey of economists of 110.5.

The report adds to signs that Germany’s economy is gathering pace after a slowdown in the third quarter. That chimes with the Bundesbank’s view that growth has been strengthening “considerably” in the last three months of the year, driven by industrial output and consumption amid record-low unemployment.

A separate report published yesterday showed German government spending last quarter climbed 1 per cent and private consumption rose 0.4 per cent, while exports contracted 0.4 per cent. Capital investment stagnated as spending on machinery fell. Gross domestic product rose by a seasonally-adjusted 0.2 per cent in the three months through September, in line with a Nov. 15 estimate and the weakest pace in a year. Bloomberg News