Business Daily #1190 December 8, 2016

Foxconn confirms ‘preliminary discussions’ to invest in US Expansion Page 11

Thursday, December 8 2016 Year V Nr. 1190 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Recession

Australian economy contracting Page 12

Gaming

Jack Lam’s Philippines operations closed Page 6

Society

New Patane market to be completed in Q4 next year Page 2

www.macaubusinessdaily.com

Manpower

Transport

Occupational Skills Recognition System awards 21 Page 5

Taxi violations hit 306 in November Page 5

Gov’t Pursues Sin Fong Contractors Lawsuit

The gov’t is chasing four construction companies for compensation.

In order to replenish the public purse.

Depleted by the Sin Fong incident.

In which the structure of a residential building was severely damaged.

A civic action was filed with the Court of First Instance last year, the Public Prosecutor’s Office said yesterday. Page 2

Enhanced connection with Europe

Suspicious transactions on the rise

A total of 1,118 reports on suspicious transactions were filed with the Financial Intelligence Office during H1. A jump of 22.9 pct y-o-y.

Nearly 70 pct were reported by local gaming operators.

Followed by financial institutions and insurers.

Co-operation Two research projects collaborated upon by the MSAR and the European Union. And likely eligible for the EU’s Horizon 2020 Fund.

Research collaboration was addressed in Secretary Lionel Leong’s meeting with the Europeans in Belgium. Page 5

Costly currency

Anti-money laundering Page 4

HK Hang Seng Index December 7, 2016

22,800.92 +125.77 (+0.55%) Worst Performers

HSBC Holdings PLC

+3.31%

Hang Lung Properties Ltd

+1.74%

Hong Kong Exchanges &

-1.43%

Power Assets Holdings Ltd

-0.48%

Belle International Holdings

+3.30%

Link REIT

+1.70%

CK Hutchison Holdings Ltd

-1.33%

AIA Group Ltd

-0.33%

China Shenhua Energy Co

+2.29%

Kunlun Energy Co Ltd

+1.57%

China Unicom Hong Kong

-1.27%

MTR Corp Ltd

-0.26%

China Merchants Port Hold-

+2.08%

Ping An Insurance Group Co

+1.21%

CLP Holdings Ltd

-0.74%

China Overseas Land &

-0.23%

BOC Hong Kong Holdings

+1.90%

Sun Hung Kai Properties Ltd

+1.08%

Hengan International Group

-0.50%

Want Want China Holdings

-0.20%

16° 21° 17° 22° 17° 22° 18° 21° 17° 21° Today

Source: Bloomberg

Best Performers

FRI

SAT

I SSN 2226-8294

SUN

MON

Source: AccuWeather

Forex China’s foreign exchange reserves fell US$69.1 billion in November. To US$3.05 trillion.

Primarily due to the PBOC injecting foreign-exchange funds into the market. Plus non-dollar currencies falling against the U.S. dollar after the election. And falling bond prices. Page 16

2 Business Daily Thursday, December 8 2016

Macau Opinion

José I. Duarte*

To be continued…

In many social and political circumstances, the most revealing aspects are not those that are mentioned but those that are absent. Surprisingly or otherwise, the focus is put on some aspects; others, arguably no less important, are kept at the margins or plainly ignored. The discussion about the Light Rail is an unlimited source of both conversation themes and missing questions.

This week it was the turn of the Secretary for Public Works to take the stand in the session of answers to the legislators, customarily associated with the Policy Address and Budget approval procedures. What were we told – and not told?

The promise to wrap up the Taipa line by 2019 was reiterated. It is plausible if we think about the track and stations. At this point, most of the heavy work seems to have been done or very close to it; and the government has certainly the means to stimulate faster construction. Whether the quality of the works will be guaranteed, finished in haste or not, is a related but separate issue. It is a wider topic left aside here.

Wisely, the Secretary has already admitted that maybe it will be finished but not running by 2019. The main culprit - possibly, just possibly - is the lack of management capabilities for such kind of transportation system. That is somewhat surprising.

The project was not launched, to be very polite, yesterday. We could think in all the intervening years that someone would have realised the need to develop some endogenous capabilities on which one could, today, build and develop the required management and operational skills. Further, we are at least two years away. There is time enough to try to recover some of the lost time. In two years, talented and committed people can learn a lot. And, fortunately, the region has the means to import technical and managerial know-how of quality without a hint of budget stress.

The argument appears lighter than the train.

Last year, we were already promised that the Taipa part of the track would be operational by 2019, which implicitly suggested the line would start operating. Well, not so fast, some argued at the time, unless the technical and parking areas are operational by then. It is hard to see how one can operate train services if the maintenance, repair and parking areas for rolling stock are not functioning.

Will they be? Oddly, nobody seems interested in enquiring or getting an answer. *economist and permanent contributor to this newspaper.

Sin Fong incident

Gov’t sues four construction companies for Sin Fong expenses The Macau gov’t is trying to claw back the money it has paid for the emergency measures taken for the Sin Fong incident Cecilia U cecilia.u@macaubusinessdaily.com

I

n October 2015, the Public Prosecutor’s Office (MP) filed a civil action with the Court of First Instance against four construction companies related to the Sin Fong Garden incident, a press release from the Office announced yesterday.

The Office, on behalf of the MSAR Government, is suing the developer of Sin Fong Garden Companhia de construcao e Investimento Ho Chun

Kei,Lda; the developer of Macau SOHO next to Sin Fong Garden, Tak Nang – Sociedade de Investimento E Desenvolvimento, Lda; the engineering company responsible for the construction of Macau SOHO and former building’s demolition, Lai Si Construction & Engineering Co. Ltd; and the company which performed the pile-drilling of Macau SOHO, Companhia de Construcao e Engenharia Kin Sun (Macau), Lda. The objective of the lawsuit is to reclaim the advance expenditure made by the MSAR Government

related to the incident, according to the release.

The government maintains it had conducted certain emergency measures including assigning specialists to examine and design protection procedures following the incident, which were paid for out of the public coffers.

In 2012, at least 140 homes in the Sin Fong Garden residential building in Patane were evacuated after one of its supporting pillars collapsed, threatening the whole edifice. The residences have been sealed off ever since.

The Land, Public Works and Transport Bureau (DSSOPT) was informed earlier this year that the affected homeowners had come to the consensus of demolishing and reconstructing the damaged building and the Bureau has approved the proposal.

In order not to affect the progress of reconstruction, the Office said in yesterday’s release that it had requested and had accepted by the local court advanced appraisal works of the sector where Sin Fong Garden and Macau SOHO are located for the collection of evidence.

The Office advises that insiders in the case are welcome to approach the government to provide further evidence for fair judgement.

The Social Welfare Bureau revealed earlier this year that MOP24.5 million (US$3.1 million) had been disbursed to support affected homeowners as at August.

Transport

New shelters for Amaral bus stations The government will cap the bus interchange stations in Praça de Ferreira do Amaral with shelters, the Director of the Transport Bureau (DSAT), Kelvin Lam Hin San, said in a reply to legislator Chan Meng Kam’s enquiry.

According to Mr. Lam, the new design work on the bus interchange stations on the Peninsula has already kicked off. The plan includes constructing larger shelters and adjusting the lanes of the bus stations in order to improve current traffic conditions as well as optimising waiting platforms for passengers, Mr. Lam said.

The legislator queried what plans and measures were in place to improve the waiting environment at the bus interchange stations at Praça de Ferreira do Amaral. He also asked how the government could manage the high volume of passengers during peak hours at the bus station.

Mr. Lam said the city’s bus companies have been required to dispatch officers to assist passengers boarding buses at the stations during peak hours. In addition, he said the Bureau encourages the bus companies to set up rooms for drivers to rest during their breaks. A.L.

Society

Patane Provisional Market operational in 2017 Q4 The major works for the reconstruction of Patane Provisional Market is slated for completion during the fourth quarter of next year, José Maria da Fonseca Tavares, head of the Civic and Municipal Affairs Bureau (IACM) said.

The official was replying to legislator Si Ka Lon’s written enquiry about current progress on the renovation of Patane Provisional Market, which will replace the current temporary

Patane Provisional Market once completed.

The legislator queried in its interpellation how the Bureau could protect the interests of the current stall owners at the temporary market after the completion of the new market.

Mr. Tavares claimed the Bureau would arrange a meeting with stall owners to understand the current situations they face and collect their

opinions after the completion of the main works of the Patane Provisional Market.

Mr. Tavares added that stall owners’ opinions can help optimise the use of facilities and equipment in a more practical way at the new market After relocating current stall owners to the new market, vacant stalls will be arranged for interested operators in accordance with existing laws and regulations, the official added. A.L.

Business Daily Thursday, December 8 2016 3

Macau

4 Business Daily Thursday, December 8 2016

Macau Opinion

Ashley Sutherland-Winch* Hidden cost of messaging apps While messaging apps like WeChat, What’s App and Telegram offer a free service to millions of customers around the world, the hidden fee may be censorship and geo-location. This week, a study by the University of Toronto’s Citizen Lab cited that WeChat accounts registered with a Mainland China-based phone number are censored regardless of where in the world the owner may travel.

Regardless of location, keywords are filtered out of messages as long they keep the same user name. Accounts created abroad, such as through carriers in the United States, Europe or Hong Kong, do not face the same restrictions, the report said. With over 846 million active users on WeChat, Tencent Holdings Ltd., the company responsible for WeChat, has stated that they comply with local regulations in the countries where the app operates.

The research study tested 26,821 keywords blocked previously on other websites, including Weibo Corp. and YY Inc. The researchers found 174 words and expressions like ‘Free Tibet’, the banned spiritual movement ‘Falun Gong’ and ‘ISIS Crisis’ triggered censorship. If these words are detected by WeChat servers in China, the message will not be sent. The report also went on to say that ‘keyword censorship is no longer transparent; in the past, users received notifications when their message was blocked [but] now censorship or chat messages happen without any user notice.’

In recent months, a notable crackdown on other secure messaging apps like WhatsApp and Telegram have been observed. WhatsApp, with proclaimed end-to-end encryption, was blocked or restricted in 12 countries in 2016 including in Bahrain, Bangladesh, and Ethiopia demonstrating that China is not the only country with stringent censorship policies. A recent report by the pro-Democracy think tank, Freedom House stated that ‘two-thirds of the world’s Internet users live under regimes of government censorship’ – as well as China, the group cited Syria and Iran.

Along with censorship, some groups believe that messaging apps also reveal locations.

Islamic state newspaper AlNaba wrote: ‘As long as it has power, the phone is spying on you’. According to Reuters, ISIS has told members to stop using messaging apps like WhatsApp and Telegram for fear of being tracked by the United States.

At the end of the day, is it realistic to expect complete privacy with any ‘free’ app that offers worldwide communication? I am not so sure that freedom of expression is a global gift - but with Christmas just around the corner, it’s anyone’s guess.

*Marketing and Public Relations Consultant and frequent contributor to this newspaper.

Crime Most filed from the gaming sector

More suspicious transactions reported in H1 The number of suspicious transaction reports surged 22.9 per cent year-onyear for the first half of the year

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he Financial Intelligence Office received a total of 1,118 suspicious transaction reports during the first half of the year, a surge of 22.9 per cent compared to the same period of last year.

According to the latest official data released by the Office, 135 of the cases had already been sent to the Public Prosecutor’s Office for further investigation during the period.

Meanwhile, 780 of these suspicious transaction reports were filed by the city’s gaming operators, accounting for 69.7 per cent of the total, an increase of 13.4 per cent from 682 cases year-on-year.

In addition, those filed by financial institutions and insurance companies amounted to 305, representing 27.3 per cent of the total, a growth of 39.3 per cent compared to 219 reports from the same sector during the first half of 2015.

These sectors are mandated to report to local authorities

transactions equal to or higher than MOP500,000 (US$62,588). During the whole year of 2015, some 1,807 complaints were received by local authorities regarding suspected money laundering transactions or the financing of terrorism activities.

Following advice

The United States State Department recently proposed in reports on Macau that the MSAR authorities alter the minimum transaction amount for reports to US$3,000, in order to be more in line with international standards.

I n fac t, i n o r d e r t o f o l l o w international standards, the Macau Government has decided to revise the city’s regulations on money laundering and terrorism financing i m p o s e d i n 2006 , ex p a n di n g the scope of crimes related to money laundering operations such as covering election-related corruption.

These alterations were performed in order to better ‘respond to recognised deficiencies’ in the MSAR, pinpointed by an evaluation conducted by the Asia/Pacific Group on Money Laundering (APG) in 2007, and in order to adhere to 40 recommendations on money laundering and terrorism financing prevention provided by the Financial Action Task Force on

Money Laundering (FATF) in 2012 and updated in October of this year.

Keeping up

Besides the revision of the two laws which are currently under committee analysis after being approved by the Legislative Assembly in November the MSAR Government has enforced other measures this year.

A measure for establishing a mechanism for asset freezing was enforced in August after the absence of an efficient system to follow directives proposed by the United Nations Security Council.

This absence was corroborated by a Mutual Evaluation Report in 2007, which gave a ‘negative’ grade to Macau with regard to preventing money laundering and terrorism financing, considering that the MSAR only ‘partly adhered’ to the Security Council directives.

The asset freezing mechanism was enforced after a new evaluation on the MSAR planned for the end of November, with no results having yet been revealed.

Last week, a law proposal mandating that any live cash amount equal or superior to MOP120,000 would have to be declared upon crossing the MSAR’s borders, a proposal also following the 40 recommendations submitted by the (FATF). Lusa

Dispute

No agreement, no pay Pearl Horizon homeowners have announced they will stop repaying their mortgage loans Some three hundred homebuyers of the Pearl Horizon residential project have announced they will

stop repaying their bank mortgages for their uncompleted home units, Portuguese newspaper Tribuna de

Correction In Monday’s edition, we mistakenly reported that a Singapore Government-led 3D digital model initiative titled Virtual Singapore cost US$73 million. In fact, the project cost S$73 million. Business Daily apologies to the parties involved and to our readers for any inconvenience caused.

Macau has reported.

In a press conference on Tuesday, the President of the Pearl Horizon Homeowners Association, Kou Meng Pok, stated that many buyers had continued their monthly repayments of the mortgage loans but decided to stop the repayments having “lost hope” on the completion of the residential project.

Mr. Pok claimed some of the homebuyers who are simultaneously repaying several mortgages loans are facing many difficulties after the government declared the invalidity of the project’s developer Polytex Corporation Limited’s land grant for the plot without warning.

Homeowners now say they will only resume repayments once a resolution is reached between the government and the developer.

Secretary for Transport and Public Works Raimundo do Rosário said last week during his portfolio’s Policy Address debates at the legislature that "any solution for the Pearl Horizon issue would have to be found in agreement with the current Land Law". N.M.

Business Daily Thursday, December 8 2016 5

Macau Macau-EU

The European connection Resolutions for local labour shortage and research co-operation were addressed during Secretary Lionel Leong’s visit to Europe, EU representatives in the region told Business Daily Nelson Moura nelson.moura@macaubusinessdaily.com

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he Secretary for Economy and Finance, Lionel Leong Vai Tac insists upon the government’s priority of local employment despite the European Union suggesting the MSAR allow the free flow of professionals to the territory to deal with the labour shortage, Business Daily has learned.

On Monday, the Secretary attended the 21st meeting of the European Union-Macau Joint Committee in Brussels and returns today.

Speaking to Business Daily on the sidelines of an event organised yesterday by the Macao European Chamber of Commerce, Carmen Cano, Head of the European Union Office to Hong Kong and Macao, said the resolutions of labour shortage in Macau were addressed during the meetings between the two parties in Europe.

“We addressed the issue of the labour shortage and the fact that having the human resources required for diversifying your economy will be useful to strengthening our companies,” Ms. Cano said.

However, while EU representatives believed the city could allow free flow of professionals to the city, Secretary Leong said that Macau authorities wanted to look for solutions that prioritise local workers, such as intensifying vocational training for locals.

Horizon 2020 with MOP5 million per project and an annual ceiling of MOP1 million.

Solid trade

Meanwhile, according to Ms. Cano, trade relations between Macau and the European Union are “healthy and strong” with the European Union currently the second largest trading partner of the MSAR. “Total trade between the two r e g i o n s r ea c h e d a r o u n d 70 0 million euros in the full year of 2015. There was a microscopic decrease form 2014 but mainly because Macau’s economy has gone through a difficult patch,” Alessandro Paolicchi, Head of the Trade Section of the European

Union Office to Hong Kong and Macao told Business Daily.

Brexit not scary for now

Asked how the United Kingdom’s referendum decision to leave the EU - or ‘Brexit’ - could impact Macau, Ms. Cano stated that the decision left the whole global economy facing a period of “uncertainty”.

However, Ms. Cano said “the situation remains unchanged” with the UK Government yet to launch Article 50 of the Treaty of Lisbon, which formally notifies the intention of an EU state member to withdraw membership.

“The negotiations for Brexit haven’t started yet, and as for now the UK remains one of the 28 EU member states, bound by its treaties,” Ms. Cano said.

UK Prime Minister Theresa May has stated she would only initiate Article 50 in March 2017, with the withdrawal process planned to take two years to complete.

Transport

306 taxi violations in November The city’s Public Security Police Force (PSP) and Transport Bureau (DSAT) recorded a total of 306 taxi violations in the month of November, according to a press release yesterday. Of the total, drivers overcharging (149 cases) and refusing to take passengers (99 cases) were the two major types of violation, contributing 48.7 per cent and 32.4 per cent to the total, respectively.

Meanwhile, 153 cases of unlicensed taxi services were prosecuted in the month, of which 138 were related to car-hailing application services. The PSP said in the release it would continue combating taxi violations and unlicensed taxi services in the city. C.U.

Financial aid

IPIM disburses MOP9.8 millionworth of subsidies in Q3 The Macao Trade and Investment Promotion Institute (IPIM) handed out a total of MOP9.8 million (US$1.2 million) in subsidies during the third quarter of this year, according to the calculations of Business Daily based upon the latest data published yesterday in the Official Gazette. Some 246 local firms and associations benefited, with Macao Convention & Exhibition Association (MCEA) the largest beneficiary - receiving MOP6.8 million accounting for nearly 70 per cent of the total. The amount disbursed to MCEA was used to sponsor its event expenses for ‘Dynamic Macao Business and Trade Fair’ in Xianmen and Jiangmen.

Macau Textile Merchants Association (MTMA) was the second biggest recipient of the IPIM subsidies, collecting MOP625,000 for the Association’s expenses on participating in the 21st edition of the Macao International Trade & Investment Fair. C.U.

Enjoying the fund

Ms. Cano added seeking more collaboration between the two regions under the Horizon 2020 Fund was also discussed in Brussels.

Although no project between the two parties has been initiated under the Fund, Ms. Cano expects at least two projects - focused on Traditional Chinese Medicine, and macrocomputing - could be accepted for the next group of proposals.

The 80 million euros (MOP683.6 million/US$85.5 million) Horizon 2020 Fund of the European Union was established in 2014 as a mechanism for funding research between Europe and the rest of the world, with the full amount expected to be used by 2020.

In March this year, the city’s Science and Technology Development Fund (FDCT) announced it would sponsor local researchers to participate in

Graft

Ho Chio Meng in dock tomorrow

Occupational skills

MORS salutes 21 award winners A total of 21 winners were awarded in the Macao Occupational Skills Recognition System (MORS) 2016 at the Gold Pin Competition Award Presentation Ceremony yesterday held at the Institute for Tourism Studies (IFT).

Some 281 participants from 33 organisations participated in this year’s competition, which examined contestants on their practical skills in their related industry.

All the winners received a MORS Gold Pin, a cash award of MOP8,000 (US$1,000) and a scholarship of MOP2,000 for training courses.

The winners are from Galaxy Macau, Le Lapin Restaurant, Starworld Hotel, Altira Macau, Grand Lisboa Hotel, Hotel Okura Macau, MGM Macau, Grand Emperor Hotel, Hotel Beverly Plaza and Sheraton

In Brief

Grand Macao Hotel.

MORS was launched in 2001 with the objective of upgrading human resources in the city’s hospitality industry through the introduction of a certification scheme for a number of professions including cooks, bartenders, customer relations officers, travel consultants, security officers, room attendants, etc.

The final round of the competition was held on November 28 and 30 at IFT and Grand Lisboa Hotel, respectively.

Macao Light Festival

On the sidelines of the event, Macao Government Tourism Office (MGTO) Director Maria Helena de Senna Fernandes said the Office is open for public feedback on this year’s Macao Light Festival regarding adjusting

the brightness of the lighting for next year.

“Some lighting installations in this year’s Macao Light Festival have been adjusted because we r e c e i v e d c o m m e n t s th at th e lighting installations in last year’s Festival were too bright,” she said.

“The official Office continues listening to different feedback and discusses opinions with the lighting companies in order to do the right adjustment.”

In addition, the MGTO Director encourages local organisations a n d i n st i t u t i o n s t o o rga n i s e more different types of activity to promote Macau tourism via different avenues.

“We support projects and activities that can attract visitors coming to Macau, such as study exchanges or seminars that can add value to promoting Macau tourism,” the official said. A.L.

The Court of Final Appeal is to hear the corruption case involving ex-Prosecutor-general Ho Chio Meng tomorrow after the hearing was postponed last Monday, according to a press release from the top court. The former Prosecutor had made a declaration requesting the President of the Court of Final Appeal, Justice Sam Hou Fai, not be involved in the hearing, causing the postponement of the trial.

The request has been rejected. The former official has been charged with 1,970 illegal activities involving 13 types of crime, including 646 instances of fraud, 434 instances of abuse of power, and another 434 instances of illegally sharing economic benefits. N.M.

6 Business Daily Thursday, December 8 2016

Gaming In Brief Gaming

PokerStars to host March Championship in Macau Online poker gaming operator will hold the PokerStars Championship in Macau between March 30 and April 9 at the City of Dreams operated by Melco Corwn Entertainment Ltd. The eleven-day event will feature 10 tournaments offering prizes of from HK$2,200 up to HK$400,000. The company’s 2017 championship will also take place in Panama in March, Monte Carlo in April and in Barcelona in August.

In addition, the company will hold PokerStars Festivals in London in January and in Rozvadov in March.

“The PokerStars Championship and PokerStars Festival events are an enhancement of the existing PokerStars sponsored live tours, helping to take our vision for live poker to a whole new level,” said PokerStars’ Director of Live Events Edgar Stuchly in a press release.

Closure

Jack Lam’s Philippines operation shut down

P

hilippines g a m i n g commission Pagcor and other local authorities have shut down the casino operations of Jack Lam in Laoag City, Philippines. The closure occurred early this week by order of Philippine President Rodrigo Duterte, who authorised the arrest of Lam on charges of economic sabotage and bribery after more than 1,300 illegal workers were discovered in a raid on the Fort Llocandia Resort.

In addition, Clark Development Corp has suspended Lam’s certificate of registration and tax exemption for the 300-hectare casino. The suspension order on Lam’s gaming operations covers both land-based and online casino operations, according to Philippine news outlet the Inquirer.

The authorities, however, have confirmed that they are not taking over the estate. Lam allegedly not only hired illegal Chinese workers but his online casino business in the country was being conducted w i th o u t a l i c e n c e, n o t es th e publication.

Awards

UMAC professor to judge International Gaming Awards 2017 The International Gaming Awards 2017, to be held in London on February 17, will welcome a professor from the University of Macau as one of the judges. Dr. Desmond Lam will share his academic perspectives with the judging panel and is joined by the likes of Playtech CEO Mor Weizer, whose expertise lies in software, notes gaming publication Online Casino Reports.

The annual awards honour the achievements of companies in the global gaming industry for both land-based and digital sectors. This year marks the 10th anniversary of the event, which awards prizes in various segments including iGaming Software Supplier, Innovator, Mobile, Online Operators and Payment and Security, among others.

A shortlist of the finalists for the major categories was released last week. The event will take place at the InterContinental London Park Lane in London, UK. Saipan

Ministry of Foreign Affairs speaks up on Saipan A spokesperson for the Chinese Ministry of Foreign Affairs has shed light on the Mainland’s stance towards the gaming operations on the island of Saipan. When queried about whether the central government is worried about increasing numbers of Chinese tourists gambling on the island, the spokesperson noted that the central government has an ‘explicit stance’ requesting ‘all Chinese citizens going abroad to abide by local laws and regulations and refrain from engaging in gambling or other activities that may undermine their own rights and interests.

The most recent figures by Imperial Pacific, a Hong Kong listed company that operates a temporary casino on the island, showed US$1.7 billion (MOP13.56 billion) in VIP rolling chips for the month of November alone.

Cotai Strip

Up and away Gross gaming revenues for the whole year of 2016 are estimated to post a 3.1 per cent year-on-year dip, according to an analyst at Deutsche Bank, continuing the trend since the 18.6 per cent year-on-year increase for 2013, followed by negative growth for two consecutive years. The spell is set to be broken in full in 2017, according to analysts’ estimates, with a 10.3 per cent year-on-year increase, a trend set to continue in full-2018 with a more moderate 5.9 per cent year-on-year increase.

Given the continual growth in mass, as noted by analysts at Wells Fargo, who believe the trend will be supported by ‘improved infrastructure, additional hotel room inventory on the Cotai Strip, and improvements in mass gaming table technology’.

New additions in the pipeline are estimated to top out the city’s room supply at 38,000 hotel rooms by the end of 2017, a 5 per cent year-onyear increase compared to the 36,200 estimated by year-end, according to Deutsche Bank analysts. A further 5.3 per cent year-on-year increase is expected for full-2018, topping out supply at 40,000 rooms, say the

analysts.

Estimates for table growth are predicting new properties MGM Cotai, SJM Cotai and The 13 will all get table allocations, despite authorities claiming that The 13 has yet to apply for gaming tables. Estimates place The 13 with 66 tables, MGM Cotai

with 150 tables and SJM Cotai with 100 tables, offering 528, 2,700 and 1,800 gaming positions, respectively, to the properties.

No mention was made by the analysts of potential table allocations for Macau Legend’s new properties to come to market. K.W.

New opening

MGM’s National Harbor opens doors MGM’s newest property to join the family, located outside the capital of the United States, Washington D.C., in the state of Maryland, is a ‘well anticipated’ property, according to analysts at Wells Fargo, who’ve classified the latest member of the MGM family as a ‘destination property in [a] regional market’.

The group notes that the property has ‘many ingredients for success’, namely a ‘deep and affluent local customer base’ as well as pulling from a ‘shared database’ of the group’s Vegas and Atlantic City operations. The group notes that today’s opening has been ‘extremely well flagged’ and predictions are for a very quick ramp up, identifying January 5 as a ‘key date’ for the

operator, given the expectation for December’s results, the first of operation, to be released.

O v e ra l l , US $ 2 2 0 ( M O P 27 . 5 million) annual earnings before interest, taxation, depreciation and amortization (EBITA) could be ‘possible’, note the analysts, pointing out that this is 30 per cent above consensus. However, the analysts restrain themselves to a US$170 million EBITDA, based upon predictions of US$300 million in gaming revenue ‘from reaching a new population base’, US$100 million from the nearby Charles Town gaming property (not run by MGM), US$375 from the Maryland Live and Horseshoe Baltimore nearby properties and US$45 million in

gaming revenue from tourists and a ‘tie-in’ to MGM’s other properties.

Net non-gaming revenue is predicted to reach US$25 million, while daily operating expenses are expected to circle around US$810,000.

‘National Harbor draws from a large and wealthy local population in the broader Washington D.C. area […] and within National Harbor’s addressable market [the average per capita income] is 15 per cent higher than the existing market average’.

In addition the group notes that three counties registering the highest household income are within a 60-minute drive of the property and ‘there is also a large Asian population,’ comprising roughly 11 per cent of the surrounding population. K.W.

2016 7 Business Daily Thursday, December 8 2016

Macau MACAU

LET THE SHOW BEGIN!

The 1st International Film Festival & Awards Macao (IFFAM) opens tonight with the Asian premiere of “Polina” starring Anastasia Shevtsova, Niels Schneider and with a special appearance by renowned French actress Juliette Binoche.

Directors Angelin Preljocaj and Valérie Müller, cast members Anastasia Shevtsova, Niels Schneider, Guskov Aleksei and producer Dider Creste are expected to hit the red carpet at tonight’s opening gala, taking place at Macau Cultural Centre, by 20h30.

Over the next five days the Festival will showcase more than 50 films from over 20 countries and regions across the globe, screened in four different locations throughout the city.

There are 12 films in the Macau Film Festival Competition line-up.

Local movie director Tracy Choi is competing at the event with Sisterhood, starring Hong Kong actress Gigi Leung.

The IFFAM jury, presided over by acclaimed director Shekhar Kapur, will announce the winners at the Closing Ceremony and Announcement of Award Winners on 13 December.

The IFFAM’s organisers - Macao Government Tourism Office (MGTO) and the Macau Films & Television Productions and Culture Association (MFTPA) - have six consecutive days to impress the world with its inaugural event. For now, let the show begin!

8 Business Daily Thursday, December 8 2016

Greater China MACAU INTERNATIONAL FILM FESTIVAL & AWARDS

INTERVIEW WITH THE ACTING FESTIVAL DIRECTOR, MARIA HELENA DE SENNA FERNANDES

Going beyond the glamour of the film industry The debut edition of the International Film Festival & Awards Macao (IFFAM) is bringing together the international movie industry, the city’s Mainland China counterparts and local filmmakers.

Cláudia Aranda

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HE 1st International Film Festival & Awards Macao (IFFAM) seeks to connect film industry professionals from all over the world with local filmmakers to promote Macau’s cultural and creative industries.

“The government has [made] a very concerted effort wanting to give more possibilities to different kind of creative industries in Macau to eventually grow and flourish.

Cinema is one of the industries that has this potential in terms of giving more opportunities to local persons aspiring to engage in the film industry,” Acting Festival Director Ms. Maria Helena de Senna Fernandes said in an interview with Business Daily.

Senna Fernandes - who is also the Director of Macao Government Tourism Office (MGTO) and the president of the IFFAM Organizing Committee - took up the role f o l l o w i n g th e r esi g n ati o n i n November of Marco Müller from the position of Festival Director of the IFFAM. The film industry in Macau has to be gradually created, with the Festival one of the ways to contribute to this end, Senna Fernandes said.

Along the way, the Festival has to carve its own niche, gain a foothold and build a global reputation by serving as a new platform devoted to the worldwide film industry, bringing together international film professionals, their Chinese counterparts and local filmmakers.

“It´s not only about having the Festival by itself but also being able to serve as a platform to [enable] an

exchange for film [producers and directors] around the world who would like to find their working partners and possibilities to reach this part of the world,” she said, as well as “local youngsters who want to be engaged in this industry being able to get in touch with their Chinese counterparts and learn about the international film industry.”

Macau as a working platform to Mainland China

The tourism industry will also benefit from this new international event by using the Festival to expose Macau to different audiences: filmmakers, producers and even to others who want to be more active in the industry. “We want to showcase Macau as a place for the movie

industry to consider bringing their films here, to be shot here or to use it as a working platform to China.

For our local people, we’ve been talking with some of our Chinese counterparts as well on how to engage more of our local youngsters in the Chinese film industry,” Senna Fernandes said.

The world industry is watching to see whether the event can establish itself as a notable addition to the international festival calendar, but there are challenges that need to be overcome, admits the Acting Festival Director.

For the organisers - MGTO and the Macau Films & Television Productions and Culture Association (MFTPA) - the main mission in this inaugural edition is to establish the Festival’s credibility and to be regarded as a serious entity, Senna Fernandes stressed. “If we’re able to establish this credibility then I think it will be easier in the upcoming editions. People will start to take us as a serious film festival and then in

the future we will be able to get a wider participation and even more variety of films and industry persons coming in,” she said.

Ms. Senna Fernandes emphasised that the government is not promoting a film festival just “for the glamour of the industry . . . It needs to be able to serve a practical use because without that it’s not going to survive into the future.”

Engaging people to go to the cinema and watch the movies that are not their usual kind of commercial film is the other challenge the Festival has to prove to be able to overcome.

Senna Fernandes added she will only consider her task accomplished if the Festival succeeds in attracting local and nearby regions’ audiences to attend the movie screenings. “In the future, when we will be able to make the film festival as the time everybody is looking forward to seeing different kinds of film, that will be for us what I can consider a job well done.”

2016 9 Business Daily Thursday, December 8 2016

Greater China MACAU INTERNATIONAL FILM FESTIVAL & AWARDS

FESTIVAL COMPETITION LINE-UP

All eyes on Macau as film festival debuts The 1st International Film Festival & Awards Macao will screen 12 films in its competition section, which will be judged by a jury headed by two-time Academy

Award-winning director Shekhar Kapur. The inaugural movie event includes a red-carpet competition section plus extensive additional programming.

Britain’s Trespass Against Us by Adam Smith, Asian Premiere, 9th December, Cultural Centre, 4:30pm.

Trespass Against Us, Adam Smith’s thriller starring Michael Fassbender and Brendan Gleeson, had its world premiere at the Toronto International Film Festival. The film follows three generations of an outlaw family living in Britain’s countryside.

India’s Gurgaon by Shanker Raman, World Premiere, 9th December, Cultural Centre, 7:00pm.

Shanker Raman’s noir drama starring Aamir Bashir and Pankaj Tripathi spotlights gender prejudice in a town of the film’s title located close to New Delhi. Raman described its directorial debut as “a cautionary tale about social fragmentation that disintegrates first the community, then the family, and ultimately our sense of humanity.”

Brazil’s Elon Doesn’t Believe in Death by Ricardo Alves Jr., International Premiere, 9th December, Cultural Centre, 9:30pm

The first feature film of Brazilian Ricardo Alves Jr., it features Elon’s search for his missing wife. A number of figures get involved in the investigation, sometimes disrupting more than helping.

Britain’s Free Fire by Ben Wheatley, Asian Premiere, 10 December, Cultural Centre, 7:00pm.

Ben Wheatley’s action thriller is set in the late seventies and stars Oscar-winning Room actress Brie Larson in the lead as Justine. The film had its world premiere at the Toronto International Film Festival in September 2016.

China’s Hide and Seek by Liu Jie, International Premiere, 10th December, Cultural Centre, 9:30pm.

Hide and Seek, by Golden Horse winner Liu Jie, is a Chinese adaptation of the 2013 Korean suspense thriller directed by Huh Jung. A strange urban myth has spread in cities, speaking of those without a home of their own finding their way into the abodes of others, hiding in dark corners to live out their lives in secret. The movie stars Wallace Huo Chien-hwa, a popular actor on China television.

France’s 150 Milligrams (La Fille de Brest) by Emmanuelle Bercot, Asian Premiere, 10th December, Cultural Centre, 4:00pm.

Director, screenwriter and actor Emmanuelle Bercot adapts Irène Frachon’s bestselling memoir ‘Médiator 150mg, La Fille de Brest’ for this story of a dedicated doctor whose investigation into recent patient deaths leads to a crusade against a powerful drug company.

Russia’s Queen of Spades by Pavel Lungin, Asian Premiere, 11th December, Macau Tower, 7:00pm.

Lungin’s eleventh feature as a director, ‘Queen of Spades’ takes as its inspiration a short story by Alexander Pushkin, which itself was adapted to Tchaikovsky’s opera of the same name. Lungin’s first movie – ‘Taxi Blues’ - earned him the Best Director accolade at Cannes in 1990.

Portugal’s Saint George (‘São Jorge’) by Marco Martins, Asian Premiere, 11th December, Macau Tower, 10:00pm.

Marco Martins’ ‘Saint George’ got its world premiere at the 2016 Venice Film Festival, starring Nuno Lopes who picked up the Best Actor Award in the Horizons (Orizzonti) section. In ‘Saint George’ Marco Martins casts his ‘Alice’ star, Nuno Lopes, as a boxer forced to become a debt collector. ‘Jorge’ represents many Portuguese families unable to repay their loans in the time of European troika bailout measures.

Japan’s Survival Family by Shinobu Yaguchi, World Premiere, 12th December, Macau Tower, 10:00pm.

This is the latest film from director Shinobu Yaguchi (‘Waterboys’; ‘Swing Girls’; and ‘Robo-G’). One day, the world loses all electrical power all at once.

Heading West on a journey of survival, a family meets difficulties en route.

Hong Kong’s Shining Moment by Fruit Chan, World Premiere, 11th December, Macau Tower, 4:00pm.

This is a children’s dance drama by veteran Hong Kong filmmaker and scriptwriter Fruit Chan. After being sidelined by his gymnastics team, Yu (Hins Cheung) quits and reinvents himself as a Latin dance instructor, assembling a group of children to compete in a Latin dance competition.

Macau’s Sisterhood by Tracy Choi, World Premiere, 12th December, Macau Tower, 7:30pm.

‘Sisterhood’, starring Hong Kong actress Gigi Leung, is the first feature film by 28-year old local up-and-comingmovie director Tracy Choi. ‘Sisterhood’ is based upon Choi’s experience growing up in Macau and witnessing the city’s rapid changes.

Argentina’s El Invierno by Emiliano Torres, Asian Premiere, 12th December, Macau Tower, 5:00pm.

After years of working on an ‘estancia’ (an Argentine rural property) in Patagonia, the old foreman is forced to retire and a younger man takes his place. The change is difficult and challenging for both men. Each must survive the oncoming winter.

10 Business Daily Thursday, December 8 2016

Greater China MACAU INTERNATIONAL FILM FESTIVAL & AWARDS

FESTIVAL HIGHLIGHTS

Twelve films entered into official competition Nine awards: Best Film, Jury Prize, Best Director, Best Actor Award, Best Actress Award, Award for Best New Young Actor or Actress, Best Screenplay, Award for Best Technical Contribution and Macao Audience Choice Award.

Gala:

A selection of three of the competition’s most important works from 2016. Japanese director Takashi Miike’s The Mole Song – Hong Kong Capriccio gets its world premiere in Macau.

Korean director Park Jung Woo’s Pandora will get its international premiere. The newly restored Immortal Story by Hong Kong director Yonfan will also be screened at a gala premiere to commemorate the 30th anniversary of its initial release. The film was shot in Macau in 1986.

Hidden Dragons:

Nine films representing the latest trends in contemporary Asian genre cinema.

Best of Fest Panorama:

Nine award-winning feature films from major international festivals.

Crossfire:

12 classic titles from Italy, Spain, Britain, France and India were chosen by major East Asian directors John Woo, Tsui Hark, Ann Hui, Johnnie To, Sono Sion, Kiyoshi Kurosawa, Park Chan Wook, Choi Dong Hoon and Lu Chuan.

Actress in Focus:

The festival will shine a light on Taiwanese actress Gwei Lun-mei and will hold a threefilm retrospective of her work, including the new Forêt Debussy; Secret (2007) and The Flying Swords of Dragon Gate (2011).

Special Presentation:

Two films from movie director Clemens Klopfenstein

Industry Hub for film industry professionals.

Crouching Tigers Project Lab: Twelve directors and/or producers have been invited to participate in the event to launch their ideas to the international film industry and to find the right connections to get their projects financed.

Other activities:

- Macao Audience Choice Award - Creative Tee Competition, British Film Academy Project (BFI) - CINEFANTASY International Short Film Screenwriting Competition 2016 - Macao Short Film Competition.

SCREENING LOCATIONS Macau Cultural Centre

This contemporary concrete structure, founded in 1999, is the territory’s prime venue for cultural performances - from dance to theatre to multimedia shows - and is one of the largest public buildings projects, located on the Macau Peninsula. Occupying a total area of 45.000 m², the structure includes a five-storey building of 11.920 m² featuring a complex with two auditoriums, an art museum and Handover Gifts Museum. The auditoria comprise two performance venues: The Grand Auditorium, with capacity for 1,076 spectators and the Small Auditorium for smaller shows and movies, with 389 seats.

UA Galaxy

UA Galaxy Cinemas, located in Galaxy Macau, in Cotai, are Macau’s biggest 10 screen 3D cineplex featuring 10 theatres with up to 1,000 seats. UA Galaxy Cinemas is equipped with 3D technology. The Grand Theatre features four exclusive balcony boxes providing a luxurious movie experience. Moviegoers can also enjoy 5-star dining and service in the five premium Director’s Clubs.

Macau Tower Convention and Entertainment Centre

Designed by architect Gordon Moller, Macau Tower opened on December 2001. It is 338 metres in height and offers panoramic views of Macau and much of the Pearl River Delta from its observation deck and revolving restaurant, 223 metres high. Construction started in 1998, following a visit by Macau casino mogul Stanley Ho to the Sky Tower in Auckland, New Zealand who was reportedly so impressed he decided to build a similar one in Macau. It is owned by SJM Holdings and operated by Shun Tak Holdings.

The Venetian Theatre

The 1.800-seat luxury Venetian Theatre is located in The Venetian Macao, in Cotai.

Business Daily Thursday, December 8 2016 11

Greater China

Markets

Beijing closer to investing in pension funds Initial investment would be limited in the short-term and is not expected to have a significant impact on the stock market, according to Securities Daily

C

hina has selected 21 investment management institutions for its pension insurance fund, bringing it one step closer to investing up to US$290 billion in its financial markets.

The investment management institutions include some of the country’s biggest asset managers,

insurers and investment banks, such as China Asset Management Co., Ping An Insurance, and CITIC Securities, the National Council for Social Security Fund (NCSSF) said on its website on Tuesday.

The announcement came just days after it appointed four custodian banks as custodians of the pension insurance fund, which was seen

as signs that the government was speeding up on pension fund investment.

Former Chinese finance minister Lou Jiwei was appointed chairman of the NCSSF in late November, as China is working to reform the fund as the population ages and obligations are set to rise.

Before investment can start, those management institutions would need to submit applications and get approval on what financial products can qualify, state newspaper the Securities Daily reported yesterday, citing an unidentified NCSSF staff

member.

“How long that will take depends on the overall arrangement,” the person was quoted as saying, without elaborating.

The NCSSF is expected to sign the first investing contracts with an initial batch of provincial governments before the end of this year, China’s Ministry of Human Resources and Social Security said during a briefing earlier in October.

In August last year China said it would, for the first time, allow pension funds to be invested in stocks and other assets. widening a scope until then restricted to lower-yielding bank deposits and treasuries.

The paper estimated RMB2 trillion (US$290 billion) is available for investment by the fund, which had a massive reserve of RMB3.99 trillion (US$579 billion) by the end of 2015. Reuters

12 Business Daily Thursday, December 8 2016

Asia GDP

Australian economy slams into reverse Ratings agency S&P Global has repeatedly cautioned that it might downgrade the country if the promised path to a surplus by 2020 were to slip again

A

ustralia’s economy shrank last quarter as businesses, consumers and government all cut back on spending, a shock result that threatens both the first recession in a quarter of a century and the country’s vaunted triple-A credit rating.

The 0.5 per cent contraction was the largest since 2008 and a major embarrassment to the conservative government of Malcolm Turnbull which won an election in July on a pledge to deliver growth and jobs.

It was also a chastening outcome for the Reserve Bank of Australia (RBA) which has recently been beating the drum of economic optimism for the future.

The bank conceded growth would slow when it held rates at 1.5 per cent this week, but also predicted an eventual pick up.

The Australian Bureau of Statistics reported gross domestic product (GDP) rose 1.8 per cent compared to the same quarter last year to reach A$1.67 trillion (US$1.24 trillion).

The pace of growth was down sharply from 3.1 per cent in the second quarter and the slowest in seven years.

It just outpaced the United States at 1.6 per cent and the EU at 1.7 per cent, but lagged Britain’s 2.3 per cent.

Likely to dodge recession

Analysts warned the slowdown in growth badly undercuts the government’s budget forecasts, making it harder to deliver an eventual surplus and aggravating the risk of a cut to Australia’s triple A credit rating.

Treasurer Scott Morrison lays out his mid-year economic review on Dec. 19 and will be hard pressed to placate the agency, risking a downgrade that would increase borrowing costs for banks and mortgage holders.

It was ironic, then, that it was a pullback in government spending that weighed heavily on growth last quarter. Business investment was another drag with miners still unwinding a decade-long spending boom, while home building retreated after a very strong run.

One silver lining was a 4.5 per cent jump in the terms of trade as prices for Australia’s major commodity exports rebounded following a couple of years of steady decline.

That should be just a taster as prices have surged this quarter. The country’s

biggest export earner, iron ore, has now doubled since the start of the year.

The RBA’s own index of commodity prices jumped 10 per cent in November alone, and when measured by spot prices was 61 per cent higher on the same month last year.

That should boost export earnings and company profits and help cushion the tax take from record-low growth in wages.

Consumer demand is also showing signs of life, with retail sales boasting a third month of solid growth in

October, while tourism is booming.

Chinese visitors alone are pumping over A$9 billion annually into a sector that is also a big employer.

Even the farmers are joining in as Australia’s wheat crop is set to break all records, making a timely contribution to GDP. All of which is why most analysts felt Australia would dodge two successive quarters of negative GDP - the technical definition of recession - and extend its remarkable run of 25 years of uninterrupted growth. Reuters

Monetary stance

Japanese central banker policy comments spurs contradiction The gap in view between Governor and Deputy may complicate the BOJ’s task of communicating its policy intentions to markets Leika Kihara

Bank of Japan (BOJ) Deputy Governor Kikuo Iwata said the central bank has not shifted its focus away from the pace of money printing, contradicting the governor’s view and exposing a rift in the board on how best to break the country’s deflation shackles.

BOJ Governor Haruhiko Kuroda has said the central bank may slow the pace of money printing if it can hit its interest rate targets, set under a policy revamp in September, with fewer asset purchases.

But Iwata, who is among advocates of aggressive money printing in the nine-member board, shrugged off the view the BOJ was now putting less emphasis on pumping money, stressing the bank remained committed to using both rate cuts and asset purchases as key tools to revive the economy.

“I would like to emphasise that the BOJ will continue expanding the monetary base in the future under its new policy framework,” Iwata told business leaders in Nagasaki, southern Japan, yesterday.

Business Daily is a product of De Ficção – Multimedia Projects

“Some argue that the BOJ’s policy focus has shifted from quantity (of asset purchases) to interest rates under the new policy framework. But such an understanding is inappropriate.”

The gap in view between Kuroda and Iwata, one of his two deputy governors, may complicate the BOJ’s task of communicating its policy

intentions to markets as it struggles to reflate growth with its dwindling policy options.

The BOJ shifted its policy target to interest rates from base money, or the pace of money printing, in September after three years of aggressive asset purchases failed to accelerate inflation to its 2 per cent target.

Under a new yield curve control (YCC) policy, the BOJ guides shortterm interest rates to minus 0.1 per cent and the 10-year government bond yield around zero per cent.

The BOJ abandoned its base money target that was the core of its “quantitative and qualitative easing” (QQE) programme, put in place in 2013 to drive up inflation with huge asset buying.

The move was a setback for Iwata, a former academic regarded as an architect of QQE. But the BOJ maintained as a loose goal to keep buying bonds at the current pace, a compromise to advocates of heavy money printing in the board.

“The BOJ has been consistently pursuing powerful monetary easing both in terms of quantity and interest rates. There is no change to this stance,” said Iwata, who voted for September’s policy revamp.

Iwata said Japan’s economy was on track to expand moderately as consumption emerge from the doldrums.

But he said the BOJ was vigilant of risks, including how the economic policies of a new U.S. administration affects global markets.

“The BOJ will take additional easing measures without hesitation if judged necessary to maintain the momentum toward achieving 2 per cent inflation,” Iwata added.

The BOJ pushed back the timeframe of hitting its ambitious inflation target in October, as weak consumption and falling import costs from a strong yen weigh on price growth. Reuters

Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Kam Leong; Nelson Moura; Annie Lao; Kelsey Wilhelm; Matthew Potger; Cecilia U Group Senior Analyst José I. Duarte Design Aivi N. Remulla Web & IT Janne Louhikari Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani Assistant to the Publisher Lu Yang, lu.yang@‌projectasiacorp.‌com Office Manager Elsa Vong, elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily.com Advertising advertising@‌macaubusinessdaily.‌com Subscriptions sub@‌macaubusinessdaily.‌com Online www.‌macaubusinessdaily.com

Business Daily Thursday, December 8 2016 13

Asia IPO

In Brief

India’s NSE listing on track after resignation of CEO The NSE has previously stated it would file draft paperwork to start an IPO process by January

Malaysia’s exports suffer sharp drop Malaysia’s exports in October fell 8.6 per cent from a year earlier, the biggest drop since April 2015, government data showed yesterday. The government said the drop was “due to the high-base effect of October 2015”. October is the second straight month exports fell on an annual basis.

In September, they declined 3.0 per cent. Annual exports of manufactured goods fell by 6.7 per cent in October, data from the International Trade and Industry Ministry showed. Shipments of mining goods declined 34.8 per cent, due to lower exports of liquefied natural gas and crude oil.

Abhirup Roy and Rafael Nam

India’s National Stock Exchange will pursue plans to raise up to US$1 billion via a public listing after Chief Executive Chitra Ramkrishna’s decision to step down last week, said four sources familiar with the matter.

Two of those sources said the initial public offering (IPO) plans are now likely to move faster after Ramkrishna resigned over differences with the board about the IPO process.

The IPO, potentially India’s biggest in six years, ran into internal hurdles last month after Ramkrishna told the NSE board she would not take part in a pre-listing investor road show due to start some time next year, the two sources said.

All four sources declined to be named because they have not been authorised to discuss the matter publicly.

Ramkrishna’s resignation was accepted by the NSE board on Friday, because her lack of participation would have cast a shadow over the IPO process, two of the sources said.

“She did not want to be the face of the IPO to the outside world,” one source told Reuters. “She had told a lot of people that she wasn’t keen on continuing.”

Some of the board members were already unhappy with aspects of her tenure, including her hiring of Chief Operating Officer Subramanian

Trade

Residency

New Zealand raises price for investor migrants

Anand, who was asked to leave after the board took issue with his hiring process and remuneration, said two sources.

Reuters could not reach Ramkrishna or Anand for comment on the matter.

A spokesman for the NSE denied she had stepped down over the IPO process.

“Ramkrishna resigned on personal grounds and it had nothing to do with her participation in IPO road shows,” said the NSE’s head of communications Arindam Saha, adding that the NSE stood by its stated IPO timeline.

The NSE has previously stated it would file draft paperwork to start an IPO process by January.

The sources Reuters spoke with were unclear as to why Ramkrishna had objected to taking part in the road shows. The NSE has yet to outline a timeline around the road shows.

Reuters had previously reported differences over the timing of the IPO had been causing friction between Ramkrishna and some of NSE’s foreign shareholders.

The exchange on Monday named a new CEO search panel and one of the sources said the exchange wants to find a new CEO fast.

Bankers had previously said the NSE could raise as much as US$1 billion in a listing that could be the biggest since Coal India’s listing in 2010. Reuters

The New Zealand government will be asking migrant investors to shell out more money before giving them residency under new rules announced yesterday.

The changes included doubling the funds Investor 2 category migrants must invest to NZ$3 million (US$2.14 million), while removing the need for them to hold NZ$1 million (US$713,800) in settlement funds. “There’s no doubt the migrant investor categories are performing well with NZ$2.9 billion (US$2.07 billion) invested since they were launched in July 2009 and a further NZ$2.1 billion (US$1.49 billion) in funds committed,” Immigration Minister Michael Woodhouse said in a statement.

14 Business Daily Thursday, December 8 2016

International In Brief Industry

German production rises less than forecast German industrial production rose less than analysts forecast in October, signalling that Europe’s largest economy took a slow start to the final quarter of the year.

Production, adjusted for seasonal swings, gained 0.3 per cent from the previous month, when it declined a revised 1.6 per cent, data from the Economy Ministry in Berlin showed yesterday. The reading, which is typically volatile, compares with a median estimate for a 0.8 per cent increase in a Bloomberg survey. Output was up 1.2 per cent from a year earlier.

Diplomacy

Cuba welcomes EU decision to end “common position” Cuba on Tuesday welcomed a decision by the European Union (EU) to end its socalled “common position” on the island country, which paves the way for the signing of a political and economic cooperation agreement between Havana and the EU. Deputy Foreign Minister Abelardo Moreno issued a statement, which said that Cuba “welcomes with satisfaction the decisions adopted by the European Union’s Economic and Financial Affairs Council.”

The European Commission has adopted proposals on the signing of the Political Dialogue and Cooperation Agreement (PDCA) with Cuba, and repealing the EU’s 1996 Common Position on Cuba.

Nigeria oil min

OPEC deal will go ahead even if only Russia commits Fourteen non-OPEC countries have been invited to meet with the Organization of the Petroleum Exporting Countries in Vienna on Saturday to cement the pact Maha El Dahan and Stanley Carvalho

OPEC’s deal to cut oil production will go ahead even if Russia becomes the only non-OPEC country to commit to reduce output at a meeting this week, Nigeria said yesterday, while the UAE voiced optimism that other producers would participate.

OPEC agreed last week to slash output by around 1.2 million barrels per day beginning in January in an effort to reduce global oversupply and prop up oil prices. It hopes nonOPEC countries will contribute a further 600,000 bpd of cuts. Russia has said it will reduce output by around 300,000 bpd.

“Yes, we will go ahead, but we will continue to work on the rest to come on-board,” Nigerian Oil Minister

Emmanuel Ibe Kachikwu said when asked whether OPEC was ready to go ahead with the production agreement even if only Russia committed to cut.

“We did clearly say we would like to see non-OPEC participate, but we did not say we would not go ahead when they don’t,” Kachikwu told reporters on the side-lines of a Bloomberg Markets summit in Abu Dhabi.

Nigeria, which is exempt from output cuts under the deal because of militant attacks on its oil infrastructure, hopes to boost production to 2.1 million bpd next month, the minister said.

Fourteen non-OPEC countries including Russia have been invited to meet with the Organization of the Petroleum Exporting Countries in Vienna on Saturday to cement the pact.

The United Arab Emirates’ energy minister said he was optimistic that non-OPEC producers would pledge cuts.

“I think it’s reasonable what we set for them. It’s half of what OPEC committed to,” Suhail bin Mohammed al-Mazroui told reporters.

Mazroui said the oil market needs prices that provide an incentive to invest in production. Investment was declining even at US$50 a barrel, he said.

“We have tested US$40 and US$50 prices and it hasn’t worked,” he said, adding that six months could be enough to correct the market to reasonable levels.

“We will see in six months what will be the requirement and take the right measures.”

Venezuelan Oil Minister Eulogio Del Pino told Russia’s TASS news agency in Caracas that the oil market would rebalance within six to nine months and that OPEC aimed for moderate prices within a range of US$60-70 a barrel. Reuters

Watchdog head

Ex-U.S. attorney Yang being considered for SEC chair Former U.S. Attorney Debra Wong Yang is being considered to chair the Securities and Exchange Commission in the Trump administration, a source familiar with the situation said on Tuesday.

Yang is a partner at Gibson Dunn & Crutcher in Los Angeles where she represents corporate defendants in white-collar crime investigations and compliance matters. Previously, Yang served as the first female Asian-American U.S. attorney. She was appointed to the Central District of California by Republican President George W. Bush in 2002 and left in 2006 to join Gibson Dunn.

Mozambique

Peace negotiators without consensus to talk to press The mixed commission in the peace negotiations in Mozambique between the government and Renamo did not manage to reach a consensus on Tuesday to speak to the press and the talks ended with the usual silence of the past days.

“There is no consensus for a press declaration and, as defined in the terms of reference, we can therefore not say more than this”, said Angelo Romano, one of the international mediators. The main point of discussion in this phase of the dialogue continues to be the international mediators’ proposal about decentralisation.

Trade

US business lobby warns Trump tariffs could backfire A survey showed 35 per cent of chief executives expected higher employment compared with 27 per cent in the third quarter A top US business lobby Tuesday praised President-elect Donald Trump’s emphasis on boosting US manufacturing jobs, but warned it could backfire if he provokes a trade war.

“I am at this point optimistic, although I am little bit worried about some of the rhetoric,” said Doug Oberhelman, chief executive of Caterpillar and chairman of the Business Roundtable.

Oberhelman echoed other business groups that have broadly praised some of the early signals from the incoming Trump administration, including its emphasis on lower taxes and regulatory reform, as well as several cabinet picks who come from the private sector.

But groups like the Chamber of Commerce and many business leaders have expressed concern over Trump’s threats of protectionism, against trading partners like China and Mexico, as well as companies that offshore jobs.

Oberhelman said in a conference call with reporters that threats by Trump to enact 35 per cent punitive tariffs on imports could harm

companies like Caterpillar, which employs thousands of workers at midwestern plants who produce heavy equipment that are sold in Brazil, China, India or other overseas markets.

Some of Caterpillar’s plants export as much as 80 per cent of the goods made here, said Oberhelman, who will step down from the iconic American manufacturer in March.

“There’s a lot of hourly jobs and production jobs for our company and our country that are contingent on that” trade, Oberhelman said. “So I do worry about retaliation for a 35 per cent tariff or some kind of unilateral action against a trade partner.”

However, he was more positive about Trump’s expressed goal of improving free trade agreements to get a better deal for America.

“I think the better way is if there’s a positive engagement between the administration and business and those foreign countries to figure out how we can all win and I think that’s exactly the debate that President-elect Trump spurred,” he said. “Because if he thinks he can negotiate better, we ought to.”

The comments came as the Business

Roundtable released its quarterly survey of 142 chief executives that showed 67 per cent expected an increase in sales over the next six months, compared with 59 per cent with that view in the prior quarter.

The survey also showed 35 per cent of chief executives expected higher employment compared with 27 per cent in the third quarter.

However, just 35 per cent expect higher capital spending, down from 38 per cent in the third quarter.

“I do worry about retaliation for a 35 per cent tariff or some kind of unilateral action against a trade partner” Doug Oberhelman, chief executive of Caterpillar and chairman of the Business Roundtable Business Roundtable President John Engler predicted the group’s next survey would show bigger jumps in the components if CEOs believe “all this talk (from Trump) is being converted into reality.” AFP

Business Daily Thursday, December 8 2016 15

Opinion Business Wires

Inquirer.net Inflation (in Philippines) rose 2.5 per cent year-on-year in November, the fastest in almost two years. Philippine Statistics Authority (PSA) data released on Tuesday showed that last November’s headline inflation was the highest since December 2014’s. Inflation last month was also faster than the 2.3 per cent last October as well as 1.1 per cent posted in November last year. In a report, the PSA attributed the increase in the inflation rate in November to “higher annual increments registered in the indices of alcoholic beverages and tobacco; housing, water, electricity, gas, and other fuels, and transport.”

Japan strikes lucky in deflation fight

The Times of India India’s economic growth rate is likely to fall to 6.5 per cent in the on-going quarter and remain subdued at around 7 per cent in the January-March period as cash shortage is expected to last at least until next month, says a report. According to Nomura, demonetisation of high value notes last month is affecting the growth numbers. “We expect GDP growth to slow from 7.3 per cent year-on-year in the third quarter to around 6.5 per cent in the fourth quarter and to remain subdued at around 7 per cent in the first quarter of 2017,” Nomura said.

The Star Prime Minister Datuk Seri Najib Tun Razak (pictured) has announced special tax incentives for global business services (GBS) operating in Iskandar Malaysia.

Under the tax incentives, companies that qualify can apply for special Medini tax support packages while employees, who qualify, can enjoy a personal income tax rate of 15 per cent in Iskandar Malaysia.

The GBS sector is expected to attract some RM6.5 billion in investments and create over 14,000 job opportunities, mostly high-income employments, by 2020.

“I hope this tax benefit will help turn Iskandar Puteri into a hub for GBS,” he said during the Iskandar Malaysia’s 10th year anniversary celebration.

The Korea Herald The US Supreme Court ruled Tuesday that Samsung may not have to disgorge all profits from smartphone sales even if some designs of the phones were copied from Apple’s iPhone, officials said. The decision is a victory for Samsung, which has sought to get some of the damages it already paid Apple reimbursed. Samsung paid Apple US$548 million in damages awarded by a lower court for copying designs of the iPhone. Last December, Samsung took the case to the highest court, asking it to reconsider the scope of design patents and how damages are calculated, in an effort to get up to US$399 million reimbursed.

J

apan, long a hard-luck case when it came to the impact of fiscal and monetary policy, these days is catching break after break.

Prime Minister Shinzo Abe and the Bank of Japan’s long-running quest to rekindle inflation to a sustainable 2 percent rate and with it fan growth have suffered a variety of insults and injuries, many of the latter self-inflicted.

Abenomics, the combination of fiscal stimulus, extraordinary monetary policy and hoped-for structural reform, has not performed as advertised.

Wages rises have remained stubbornly low and the decision in early 2016 to take interest rates into negative territory only served to undermine financial intermediation.

Things lately, however, have been looking up.

Firstly, or should I say “bigly”, is the Trump effect on the dollar. Whatever the ultimate result for America, Trump’s advent has made the dollar great again, as markets bet he’ll deliver fiscal stimulus, stoking inflation and interest rates. That’s driven a more than 9 percent rise in the value of the dollar against the yen since just before the election, a move which helps to import inflation and improve the competitiveness of Japanese exports.

The yen’s move downward has been accentuated by the Bank of Japan’s decision in September to pin 10-year interest rates at zero, just above its short-term rate of -0.1 percent in a policy it calls yield curve control.

“Hats off to the BOJ for its sense of timing. Pegging 10-year Japanese government bonds at zero percent in September, while global bond yields were still close to their lows, has proved a brilliant idea,” Societe Generale strategist Vincent Chaigneau wrote in a note to clients.

“The surge in global bond yields is now causing a sharp widening in rates differentials, pushing the yen much lower.”

The second break, though only in the sense of an inflationary push, is the rise in the price of oil, aided most recently by the Organization of the Petroleum Exporting Countries’ production cut agreement last week. This has sent Brent crude 19 percent higher since last week, to above US$55 per barrel, the highest in 15 months.

“The BOJ’s task in reaching its inflation target may well begin to appear less hopeless than it has in recent times. While there may be widespread recognition that any such rise in reported inflation is to be attributed to once-off factors, there is likely to be an improvement in sentiment that could help to lift growth in the economy,” Stephen Lewis, chief economist at ADM Investor Services, wrote to clients.

“

James Saft a Reuters columnist

Japan’s core consumer inflation, including oil products but excluding fresh food, fell 0.4 percent in October.

Cargo cult or homeopathy?

“Less hopeless” is high praise so far as BOJ actions go, though their fight to try to effect rising prices as the population declines is likely unwinnable.

It is hard to decide which accusation to hurl at the Bank of Japan’s policy of controlling the yield curve. Is it a cargo cult or is it homeopathy?

Cargo cults confuse those things which accompany the desired outcome with the thing itself. Thus having a jungle air strip is believed to make planes and cargo appear. So it is with positive yield curves, which go along very often with growth and inflation, but which by no means assure or cause them. At best it may have established a firebreak against damage to institutions like banks and insurers which depend on positive yield curves to survive.

And like homeopathy, in which supposedly medicinal substances are diluted to infinitesimal levels, a 10-basis-point slope between short and 10-year rates is too tiny to inspire much of a reaction.

The more immediate question is whether the effect of Trump policies remains benign for Japan. Markets’ first move has been to price in the impact of Trump’s promised stimulus while largely overlooking his previous fighting words on trade.

Trump’s Twitter-delivered attack on Chinese currency management and trade policy over the weekend, combined with his phone call with Taiwan’s president is enough to raise reasonable expectations of a tariff battle. That would be terrible news not just for world economic growth, but generally for Asia and more specifically for Japan.

Even if somehow Japan can avoid trade strains with the U.S. directly, it is part of a complex web of intra-Asian trade which is highly exposed to the U.S.-China economic bargain. China is Japan’s largest trade partner, and a substantial percentage of that is goods ultimately bound for the U.S. That would overwhelm the impact of a weaker yen, leaving the BOJ grappling once again with the unhappy demographic fundamentals.

Japan can enjoy its unexpected lucky break only so long as Trump delivers on his stimulus promises but not his trade threats. Reuters

The more immediate question is whether the effect of Trump policies remains benign for Japan

”

16 Business Daily Thursday, December 8 2016

Closing Forex

Reserves fall more than expected to lowest in nearly 6 years The PBOC sold a net US$39.2 billion-worth of foreign exchange in October Kevin Yao

C

hina’s foreign exchange reserves fell far more than expected in November to the lowest level in nearly six years, as authorities struggled to stem capital outflows and shore up the sliding yuan in the face of a relentlessly rising dollar.

Reserves fell by US$69.06 billion last month, the fifth straight month of declines, to US$3.052 trillion, levels not seen since March 2011, central bank data showed yesterday.

Some traders believe the US$3 trillion mark is a key psychological level for the People’s Bank of China, but it risks rapidly churning through its still massive stockpile if the U.S. dollar continues to rise against other currencies.

Last month’s drop was the largest since January, when a sharp fall in the yuan and worries about China’s slowing economy raised fears that Beijing would devalue its currency, roiling global financial markets.

Economists polled by Reuters had expected reserves to drop US$30 billion to US$3.091 trillion in November, after a decline of $45.7 billion in October.

The central bank is widely believed to have sold U.S. dollars to support the yuan currency as it sunk to more than 8-1/2 year lows last month.

China’s foreign exchange regulator said the decline in reserves was partly due to the dollar’s 3 per cent rally versus major currencies in November.

But the yuan’s more than 5 per cent slide so far this year has sparked a flurry of bets that the currency will weaken further, leaving traders wondering how long China can maintain its yuan defence and withstand a prolonged drain on reserves if the U.S. dollar continues to rally.

The yuan fell 1.6 per cent in November alone, its worst month since August 2015 when Beijing shocked global markets by devaluing the currency by almost 2 per cent overnight.

Adding to pressure on the currency, U.S. President-elect Donald Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened

to impose huge tariffs on imports of Chinese goods.

Though the composition of China’s reserves is a state secret, analysts say the falling value of other currencies it holds against the rising U.S. dollar likely accounted for some of the fall in reserves.

But China also has announced a string of measures in recent weeks to tighten controls on money moving out of the country, adding to market speculation that potentially destabilising capital outflows are on the rise.

“The capital control tightening that Chinese authorities announced at end-November is a very good indicator that capital outflows continue from China and are turning threatening,” analysts at Bank of Tokyo-Mitsubishi UFJ said in a note this week.

The PBOC had sold a net US$39.2 billion worth of foreign exchange in October, indicating continued official intervention to support the yuan.

To be sure, the yuan is falling alongside other emerging market currencies in the face of the strong dollar, which is being buoyed by hopes that President-elect Donald Trump will be able to shift the U.S. economy into faster gear.

It has been more steady lately

against a basket of currencies of major trading partners.

But China, with its huge trade surplus with the United States, is firmly in Trump’s sights. He has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to impose huge tariffs on imports of Chinese goods.

A senior central bank researcher told Reuters last week that Beijing needs to break a potentially destructive feedback loop, where expectations of further yuan weakness spur outflows, and fresh capital flight in turn puts more pressure on the currency.

Key Points Nov forex reserves fall by US$69.06 bln, vs f’cast US$30 bln Nov reserves fall to US$3.052 trln, lowest since March 2011 Indicates c.bank interventions to support weakening yuan Yuan has weakened to more than 8 year lows vs dollar The central bank is also likely to worry about a faster drawdown of its reserves, which are approaching the closely watched US$3 trillion level, analysts said.

French bank Societe Generale said earlier this year that International Monetary Fund guidelines put US$2.8 trillion as the minimum prudent level for China, which is not far away if reserves keep falling at the current pace.

Since mid-2014, China’s forex reserves, which include a hefty amount of U.S. government bonds, have shrunk by more than the gross domestic product of Switzerland.

“Our baseline is that tightened capital controls enable the authorities to stay the course during the Trump dollar rally, which on ING’s forecasts will persist through the first quarter of 2017,” Tim Condon, ING’s chief Asia economist, wrote in a note.

But he warned that capital outflows during the dollar rally could become “excessive”.

The State Administration of Foreign Exchange (SAFE) has begun vetting transfers abroad worth US$5 million or more and is increasing scrutiny of major outbound deals, even those with prior approval, sources told Reuters last week.

Currency analysts polled by Reuters expect the yuan to plumb its lowest level in nearly a decade next year on sustained capital outflows and further gains in the dollar.

China’s gold reserves fell to US$69.785 billion at end- November from US$75.348 billion at end-October. Reuters

Monetary policy

Moody’s

Child labour

India unexpectedly keeps rates unchanged

Mainland’s deleveraging positive for companies

Bangladesh child workers toil 64 hours a week

India’s central bank unexpectedly kept its policy repo rate unchanged at 6.25 per cent yesterday, despite calls for action as an intense cash shortage threatens to slam the brakes on the world’s fastest growing large economy.

The Reserve Bank of India’s monetary policy committee voted 6-0 to leave the repo rate unchanged, after cutting it by 25 basis points (bps) at its last review in October, also unanimously.

A majority of the 56 analysts polled by Reuters had expected a rate cut of at least 25 bps, though 18 had forecast policy would remain unchanged.

Pressure on the RBI and Governor Urjit Patel to act has grown since Modi stunned the country on Nov. 8 with a drastic plan to abolish 500 and 1,000 rupee notes (US$7.35-14.70), removing 86 per cent of the currency in circulation in a bid to crack down on India’s “shadow economy.”

Although consumer inflation eased in October to 4.20 per cent, the slowest pace in 14 months, prices in India have traditionally been dependant on volatile food and fuel prices. Global crude oil prices have spiked in the last week. Reuters

The Chinese government’s deleveraging measures are broadly credit positive for companies, but the implementation of the plan will prove critical, international rating agency Moody’s Investors Service said yesterday.

Chinese banks are expected to benefit from improving corporate fundamentals and profitability, provided the measures are carried out in a market-based manner, Moody’s said in its latest report.

The central government in October announced steps to reduce companies’ leverage by encouraging mergers and acquisitions, and through debt-for-equity swaps.

“The proposed deleveraging measures, if implemented effectively, will help lower leverage in the corporate sector, and will, in particular, benefit commercially viable companies with strong business profiles, as reflected by leading market positions and technology,” said Kai Hu, a Moody’s senior vice president.

However, fundamentally unviable companies will be cut off from credit supply and be forced to close, resulting in an increase in defaults in the short term, Hu added.

Other hurdles include misaligned objectives and interests among different levels of governments, and investors and stakeholders, it cautioned. Xinhua

Bangladeshi child labourers who live in slums work for an average of 64 hours a week, many of them in textile factories making clothes for top world brands, a major study said yesterday.

The new report from the London-based Overseas Development Institute has found that 15 per cent of Dhaka slum-dwellers aged between six and 14 did not go to school and worked full-time.

The report, entitled “Child labour and education - a survey of slum settlements in Dhaka”, found that two-thirds of girls from slum areas who are working full-time were employed in the booming garment sector.

The findings raised concern over Bangladesh’s US$30 billion clothes manufacturing industry, which is one of the world’s biggest despite a dreadful safety record.

The manager of one unnamed garment factory told researchers that while he was aware children aged 11-14 should not be working, he did not regard their employment as illegal.

The study also found that child labour levels rise from around eight per cent at the age of 10 to 45 per cent at the age of 14, with 36.1 per cent of boys and 34.6 per cent of girls saying they had experienced extreme fatigue. AFP