Business Daily #1377 September 6, 2017

Typhoon Hato further delays airport business hangar Delay Page 2

Wednesday, September 6 2017 Year VI Nr. 1377 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm Court

Universal investigation report finds Okada committed fraudulent acts Page 7

Funding

SME funding through three schemes plummets 92 pct m-o-m in July Page 2

PMI

Mainland services speed up Page 8

www.macaubusiness.com Blockchain

Tougher legislation expected for bitcoin’s peers Page 11

Season of Discontent Protest

300 Galaxy Entertainment Group employees took to the streets around the Cotai property yesterday. Carrying signs and yelling slogans.

Demanding 14 months remuneration per year. With a bonus offered this month a major bone of contention. Along with requested changes to dealer policy. And perceived lack of transparency in the promotion of employees. Page 4

Eye on Cambodia

Casino investor Amax International is mulling a VIP room in a Cambodian casino. With exclusive rights for the 13-baccarat table room for two years under a monthly payment scheme. Meanwhile, Greek Mythology remains a thorn in the company’s side.

Resolution and communication Elections Transparent open-door meetings. 3,000 public housing units a year. Plus a coastal leisure area running from Barra to Macau Science Center.

Increased dialogue and more direct contact with the gov’t are key, says Legislative Assembly elections candidate group Synergy of Power. Page 3

All the world’s a stage Results Page 6

HK Hang Seng Index September 5, 2017

27,741.35 +1.09 (+0.00%) Worst Performers

Wharf Holdings Ltd/The

+3.58%

Industrial & Commercial

+0.52%

China Shenhua Energy Co

-1.94%

Want Want China Holdings

-0.75%

Henderson Land Develop-

+0.93%

Hengan International Group

+0.45%

Galaxy Entertainment Group

-1.26%

AIA Group Ltd

-0.66%

Link REIT

+0.78%

CNOOC Ltd

+0.43%

Cheung Kong Property

-1.12%

WH Group Ltd

-0.60%

China Construction Bank

+0.74%

Ping An Insurance Group Co

+0.41%

China Mengniu Dairy Co Ltd

-0.82%

MTR Corp Ltd

-0.54%

China Resources Land Ltd

+0.62%

China Merchants Port Hold-

+0.40%

AAC Technologies Holdings

-0.76%

Kunlun Energy Co Ltd

-0.54%

27° 31° 26° 31° 27° 29° 26° 30° 26° 30° Today

Source: Bloomberg

Best Performers

THU

FRI

I SSN 2226-8294

SAT

SUN

Source: AccuWeather

BRICS Chinese President Xi Jinping said downward risks and uncertainties for the global economy are on the rise.

Whilst pledging to boost the power of emerging markets on the world stage.

Page 9

2 Business Daily Wednesday, September 6 2017

Macau Entrepreneurialism

Retrieving hands The government granted MOP10.6 million in subsidies via SME and Young Entrepreneur aid schemes in August, 92.4 per cent less than in the previous month Nelson Moura nelson.moura@macaubusinessdaily.com

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total of MOP10.6 million (US$1.3 million) in subsidies was granted to young entrepreneurs and small and medium enterprises (SMEs) during the month of August, according to the most recent information from the Macau Economic Services (DSE).

This represented a considerable month-to-month decrease of 92.5 per cent, from the MOP64.6 million disbursed in July.

The support is divided into three SME aid schemes and one Young Entrepreneur Aid Scheme.

Total loans approved so far this year under all SME and Young Entrepreneur

schemes, until end-August, amounted to MOP255.1 million divided between 466 approved applications.

Falling down

The SME Aid Scheme which offers interest-free loans of up to MOP600,000 per applicant - awarded only MOP840,000 during the month, a 98.2 per cent month-to-month decrease.

In August only two applications were approved for funding under the scheme, with 427 applications having been approved in the first eight months of this year.

Meanwhile, the SME Credit Guarantee Scheme granted MOP4 million during the period, divided between four applicants, 61.8 per cent less than in July.

The SME Credit Guarantee Scheme for Special Projects

did not grant any loans or subsidies last month, having so far this year granted only one, a MOP2 million loan in April to two approved applicants.

The largest recipients of the SME schemes were largely grouped in the retail trade sector, with MOP57.5 million attributed in this year so far, while the Construction and Public Works sector saw the second largest contribution, with some MOP42.3 million.

Luckier young entrepreneurs

On the other hand, in August MOP588,300 more was provided through the Young Entrepreneurs scheme than in July, for a total of MOP5.7 million awarded to three applicants. In the first eight months of the year almost MOP33.2 million in funding

was provided through the scheme to 139 applicants.

The scheme offers interest-free loans of up to MOP300,000 for applicants aged 21 to 44, with repayment for the loan starting after 18 months.

The major recipients of the

scheme so far this year were still the retail sector, with 46.5 per cent of the funding, or MOP15.4 million, with the next largest recipient the education, medical services and social assistance sector at MOP3.8 million.

Recovery

DSAT urges speedy removal of damaged vehicles Cecilia U cecilia.u@macaubusinessdaily.com

The city’s Transport Bureau (DSAT) urges car owners to remove their damaged vehicles from the three affected underground car parks - Maritime Terminal car park, the car park of Fai Tat Building, and Portas do Cerco car park.

The Bureau has completed the basic cleanup of the car parks, which are currently open for owners to remove their vehicles.

The parking fee of the

affected car owners will be exempted, noted DSAT in the press release.

From September 4 to 10, Bureau staff will be stationed

at the entrances to the car parks in question to assist car owners to follow the basic procedures of disposing of the damaged vehicles.

Owners who are planning to dispose of their vehicles are requested to complete procedures with the Bureau to allow related departments to handle the disposal.

Others who are intending to repair their vehicles are required to arrange with the towing company to remove the vehicles from the car parks.

DSAT warns that vehicles that are not removed before September 10 will be handled accordingly by the Bureau.

Aviation

City

Jet hangar not yet in business

Nature vs. nurture

The recent typhoons have damaged the new business aviation jet hangar, further delaying its opening The new business jet hangar at Macau International Airport has been damaged by the recent typhoons, with its opening being further delayed, Macau International Airport Company Ltd. (CAM) told Business Daily.

According to CAM, the passage of Typhoon Hato and Pakhar on August 23 and 27, in addition to disrupting flight operations, damaged facilities at the Macau International Airport including the business jet hangar.

Expected to be operational in the second quar­ter of this year, the new business avi­ation jet hangar has yet to open, with CAM telling Business Daily the space had still to complete

the Fire Services Bureau’s required fire inspections.

A new deadline for the hangar opening was not provided by CAM to Business Daily.

Swiss airline company Jet Aviation was granted a 10-year concession to operate the new maintenance, repair and operations (MRO) facilities, which are expected to help alleviate congestion at other airports in the region.

The contract requires the company lease half of the new 8,000 square metre hangar in addition to 1,000 square metres of workshop and office space. N.M.

Earlier last week, DSAT had discussed the temporary fee arrangement with four towing companies coping with the typhoon catastrophe, with the price set at MOP1,200 (US$149) per vehicle to be removed from underground car parks, MOP700 for vehicles on public roads and MOP300 for motor vehicles from car parks or public roads.

Four public car parks were affected by the super storm, with some 700 light vehicles and 200 motor vehicles affected.

The passage of Typhoon Hato damaged 20,000 trees in the city More than 20,000 trees in urban areas in Macau were damaged by the passage of Typhoon Hato, local authorities have stated.

The typhoon was the worst to hit the city in 53 years, causing 10 fatalities and leaving more than 240 injured.

Of the more than 20,000 tress damaged in public spaces, around 10,000 were uprooted by the wind, while 4,000 suffered serious damage and 9,500 suffered minor damage, a Civic and Municipal Affairs Bureau (IACM) spokesperson confirmed.

Among the fallen trees, around 20 were considered very old. The

full impact of the damage to ‘mountainous’ trees on Taipa and Coloane is still not fully known nearly two weeks after Typhoon Hato passed Macau, on August 23.

Meanwhile, the work of removing trees from public roads has been completed with road circulation resumed 100 per cent, with a source stating that “the priority is to treat parks and gardens in the city . . . [where] . . . there’s still much to do”.

Asked about whether there is a plan to replace the trees destroyed

by Hato, IACM said that “these cases are being monitored . . . In this typhoon period it is also not advisable to plant trees”. Lusa

Business Daily Wednesday, September 6 2017 3

Macau Election

Synergy of Power to seek new way Group says previous AL did not make use of its power to monitor government Cecilia U cecilia.u@macaubusinessdaily.com

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on Lam U Tou, the first candidate of campaigning group Synergy of Power, said during yesterday’s press conference that they are sticking with the notion of resolving problems and issues instead of making any particular standpoint their major focus.

“As long as policies are feasible and effective, we will support them,” said Lam. “But if policies from the government don’t consider the welfare of residents, we will disagree,” he emphasised.

However, the group said communication is key, saying that their aim is to approach and understand the needs of different parties and to utilise communication skills to suggest proposals that could be agreed upon by the majority.

Apart from the use of interpellations to understand situations and follow-up cases, Lam advocated direct contact with government departments.

“If there are problems, we are more willing to schedule meetings with the government to discuss matters and to understand matters by our own investigations,” said Lam. Most of the group’s candidates are journalists; Lam said having held this role previously has enabled him to understand things from different perspectives.

Whilst working as an assistant to a legislator and as a member of the

association, he realised that there was more to be done and many difficulties that need to be overcome, saying he hopes to become a legislator in order to roll out more beneficial policies to the city.

Weak supervision

Having worked as a journalist in politics for over a decade, Johnson Ian Heng Ut, the second candidate of the group, opines that the supervisory power of the Legislative Assembly (AL) has so far been too weak.

“Most of these follow-up groups in AL were only concluded with very

fragmented information,” said Ian. “It seems the aim is to hold a meeting rather than to hold a meeting to resolve issues.”

As such, part of the group’s plan is to allow for the public to have access to the follow-up groups meetings at the AL.

Revolutions

The group suggests the government improve the coastline from Barra to the Macau Science Center as their first goal. Lam explained that transportation and housing issues have been the main topics for the past decade and that the problems

remain unresolved, conceding that they are not easy tasks to be tackled. With that in mind, as well as opinions from the public, the group realised that residents need a place to relax and to reduce stress levels, hence the plan to create a coastline for leisure purposes aimed at satisfying that need.

The group also suggests point-topoint bus services in order to better distribute passengers. Moreover, the group proposes the regular supply of public housing, with 3,000 more public housing units and 2,000 more private flats per year over the coming ten years. advertisement

4 Business Daily Wednesday, September 6 2017

Macau Protests

Galaxy workers take to the streets Hundreds of Galaxy Entertainment Group employees protested in the streets yesterday, demanding 14 months salary Cecilia U cecilia.u@macaubusinessdaily.com

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orkersfromtheGalaxy Entertainment Group (GEG) protested near the Galaxy property in Cotai yesterday to voice their demands.

Carrying signs and yelling slogans, workers demanded a full-14 months salary, claiming that the bonus to be offered this month is merely an advance on the offer of a bonus set to be received in December.

According to a company notice revealed by the workers, the company is planning to give out bonuses to qualified workers in two separate tranches, with the first to be granted in September and the other before Chinese New Year next year.

The bonus amount of the former tranch is equivalent to 75 per cent of a month’s salary, while the amount of the latter tranch would be no less than 65 per cent of a month’s salary.

One of the protesters claimed that the company should offer 14 months salary given that the company is making profits, referring to the conditions offered by other gaming operators such as Wynn.

Meanwhile, the protesters demanded the cancellation of a policy requesting dealers to redistribute cards in baccarat games every minute despite there being no clients. Dealers complained that the aforementioned policy is causing neck and shoulder problems.

Protesters also demanded GEG cancel its rating system of employees in raising salaries and giving out bonuses, and called for the company to make promotion procedures more transparent.

Organised by the New Macau Gaming Professionals Association, the president of the Association, Cloee Chao, said some 300 workers involved in the protest, which started at 4:00pm, with protesters walking outside the property of Galaxy for around half an hour.

GEG later sent a representative

to receive the petition from the protesters.

Chao announced that the workers would allow a week’s time for the company to respond to the petition, while the group claimed it would further protest if the company fails to make an appropriate reply.

GEG made an immediate response after the protest yesterday, stating that the company would not comment upon the incident, but ‘GEG reaffirms that the Company is always willing to listen to its employees, and is committed to following up on any

reasonable suggestions and making any necessary improvements.’

Last week, some 200 GEG workers approached the Labour Affairs Bureau (DSAL) to lodge complaints about working hour arrangements during the recent typhoon incidents.

The Gaming Inspection and Co-ordination Bureau, together with the DSAL, had held a meeting with representatives of the six gaming operators to help gaming workers express demands and understand their rights with regard to when typhoons hit the city. advertisement

Business Daily Wednesday, September 6 2017 5

Macau Monetary data

Circulation of pataca increases moderately Money supply maintained an upward trend while loans and deposits also increased in July

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ccording to the monetary institution, the currency in circulation grew 1.6 per cent month-to-month in July while demand deposits fell 1.8 per cent when compared to June. Money supply (M1) decreased 1.2 per cent from a month earlier, while quasi-monetary liabilities rose 2.6 per cent.

‘On an annual basis, M1 and M2 grew 11.7 per cent and 15.7 per cent, respectively’ The sum of the two items, known as M2, increased 2.1 per cent to MOP568.3 billion, while on an annual basis, M1 and M2 grew 11.7 per cent and

15.7 per cent, respectively, the Macao Monetary Authority (AMCM) explains.

The shares of pataca (MOP), Hong Kong dollar (HKD), renminbi (RMB) and United States dollar (USD) in M2 were 31.6 per cent, 53.7 per cent, 3.9 per cent and 8.9 per cent, respectively, the data indicated.

Savings & loans

The AMCM data also showed that resident deposits rose 2.1 per cent from the previous month, to MOP554.0 billion, while non-resident deposits grew by 5.6 per cent to MOP271.8 billion during the month.

Deposits with the banking sector from the public sector dropped 1.4 per cent, reaching MOP187.3 billion. Total deposits with the banking sector rose 2.4 per cent from a month earlier to MOP1,013.2 billion.

The shares of MOP, HKD,

RMB and USD in total deposits were 20.4 per cent, 50.9 per cent, 3.9 per cent and 22.0 per cent, respectively, the data showed.

AMCM also said that domestic loans to the private sector increased 0.4 per cent from a month prior, reaching MOP434.8 billion. Of these loans, MOP130.4 billion was MOP-denominated, MOP280.8 billion was denominated in HKD, MOP1.4 billion was denominated in RMB and MOP19.7 billion was denominated in USD, representing 30.0 per cent, 64.6 per cent, 0.3 per cent and 4.5 per cent of the total, respectively.

External loans dropped 0.9 per cent to MOP424.2 billion; of which loans denominated in MOP, HKD, RMB and USD accounted for 1.8 per cent (MOP7.7 bi l l i o n ) , 29 . 5 p e r c e n t (MOP125.2 billion), 10.5 per cent (MOP44.7 billion)

and 50.4 per cent (MOP213.6 billion), respectively, the Authority announced.

Ratios

The Authority also noted that the loan-to-deposit ratio for the resident sector dropped from 59.1 per cent at endJune to 58.6 per cent. The ratio for both resident and

non-resident sectors also fell from 87.0 per cent to 84.8 per cent. Both the one-month and three-month current assets to liabilities ratios stayed at relatively high levels of 55.3 per cent and 57.0 per cent, respectively.

The non-performing loan ratio remained at 0.3 per cent.

Typhoon

Hato flooding in Barra area reached 1.62 metres Typhoon Hato registered wind speeds of 165 kilometres per hour at its peak at noon on August 21, with the number 10 typhoon signal hoisted at 11:30am that day, rising from signal 8 at 9:00am the same morning, up from signal 3 at 3:00am the same day. The data was supplied by the

Meteorological and Geophysical Bureau (SMG).

Maximum wind gusts registered on the day were detected by the Taipa Grande meteorological station, reaching 217.4 kilometres per hour at 11:06am that day, breaking the record previously held by Typhoon

Mainland honour

UM communications professor awarded top recognition again This is the second time the professor receives China’s highest award in international communication studies Oscar Guijarro oscar.g@macaubusinessdaily.com

Professor Wu Mei of the Department of Communication of the University of Macau (UM) received the Outstanding Paper Award at the Fifth National Conference on International Communication Theories, organised by the State Council Information Office hosted by the Centre for International Communication Studies (CICS), according to a note published by the official information service GCS. The paper, co-authored by Professor Wu and Zhu Wenbo - a UM Master’s student graduate of 2014 and an assistant research fellow at CICS - presents innovative approaches in international communication studies. It is also part of the result of a National Social Sciences Fund

Major Project promoting innovative studies of international dissemination of Chinese culture, the release says.

Prestige

The biennial National Conference on International Communication Theories is considered the most authoritative and influential conference in China in the field of international communication. Held in Yantai, Shandong Province, with the theme of ‘Telling the China Story, and letting the voice of China be heard’, this year’s conference was attended by more than 400 experts, scholars and industry practitioners from central government departments, media organisations, think tanks, higher education institutions both at home and abroad, and information offices from various provinces and cities, notes GCS.

Ruby which occurred in 1964 and saw wind speeds reach 211 kilometres per hour.

Flooding levels reached their

highest in the Largo do Pagode measuring station in Barra on the Macau Peninsula, at 1.62 metres, registered at 12:05pm that day. advertisement

6 Business Daily Wednesday, September 6 2017

Macau Opinion

José I. Duarte* The rain has gone When disaster strikes – and the last two weeks are not easily forgotten – all kinds of theories pop up. When we talk about typhoons, one particular assertion keeps resurfacing without ever being elucidated. I’m talking about the oft repeated ‘claim’ that particular private interests, especially those associated with the casino industry, would be behind, or in some way help to explain the decisions of the authorities concerning the timing of hoisting of typhoon signals.

Contrariwise, some might claim that the arguments habitually invoked are not especially cogent. Against the supposed advantages accruing to the casino industry one could line up no less plausible disadvantages, and they are extensible to other activities.

Of course, they must be dealt with, if such pressure exists.

But even assuming it is true unless someone steps forward saying “I did it,” or an intrepid journalist finds a local ‘Deep Throat’, a final verdict on the matter is unlikely, to say the least. Regardless, in many ways, it is a sideshow.

I believe the excessive focus on that topic is misplaced and distracts us from the issues that matter.

The prevention or avoidance of undue pressures from private interests on the services that our security depends upon, if and when they exist, can be achieved only by clear and transparent plans and procedures. Before being a matter for the criminal police, it is a question of proper administrative practice. It is there that our effort should be concentrated, and that is our best defence against improper influences or any actions that endanger all for the benefit of the few.

We have legislation on civil protection; we have procedures and duties assigned to various public services.

We must start by identifying accurately what and why things went wrong, as the mechanisms we presumed would come to the rescue failed so spectacularly.

There is a command hierarchy; there is a structure that involves more than two dozen public services and private companies. It is critical to evaluate how they did perform before, during and after the event. How were risks assessed and monitored in the hours before the storm? When were the various services alerted and what instructions did they receive? How well equipped and trained were they for that type of emergency?

These are the kind of questions we would do well to keep in focus. Only then can we be more confident that the next time we need them – God forbid – the human and material costs are minimised. *Economist and permanent contributor to this newspaper.

Casinos

Diversifying and pursuing Casino investor Amax International Holdings Limited announced on the same day that it had entered into an agreement to obtain exclusive operating rights for a VIP room in an unknown Cambodian casino that it is divulging more information on its decision to request a court order from a Macau court to obtain access to and control of the books and records of Greek Mythology Nelson Moura nelson.moura@macaubusinessdaily.com

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asino investor Amax International Holdings Limited entered into a non-legally binding agreement on September 4 to obtain the exclusive operating rights for a VIP room in an unknown Cambodian casino, a company release with the Hong Kong Stock Exchange has announced.

The decision was made in order to diversify the company’s income stream and to expand its gaming business, the release informed.

The VIP room includes 13 baccarat tables; Amax will pay a monthly fee for a period of two years to the owner for the rights to operate the room.

The VIP room owner is only described as a Chinese national and an ‘independent third party with the Company and its connected persons’, with Amax granted exclusive rights to negotiate the proposed transaction until October 30 of this year.

The company also added that the deal’s completion will only be reached after completing a review of the VIP room; after receiving a legal opinion from Cambodian lawyers on the legality of the operation of the casino and the operating rights agreement and the ‘existence of an effective AntiMoney Laundering programme which complies with the relevant

laws and regulations of Cambodia’.

Still pursuing

In another filing, Amax added information in regard to its decision to submit a request to a Macau court on June 19 to issue a court order appointing the group’s Chairman and Chief Executive Officer, Ng Man Sun, as administrator of Greek Mythology (Macau) Entertainment Group Corp.

Ltd., in order to get access to and control of the books and records of Greek Mythology.

Amax International holds 24.8 per cent of Greek Mythology (Macau) Entertainment Group Corporation Limited which operates and manages the Greek Mythology casino in Beijing Imperial Palace Hotel - previously named New Century Hotel - in Macau, the group’s 2017 annual report informed.

Beijing Imperial Palace Hotel is currently shut after its operating licence was given back to the MSAR Government at the beginning of the year, while Greek Mythology casino was shut down by the Gaming Inspection and Co-ordination Bureau (DICJ) in 2015.

Amax auditors revealed in its interim report for 2017 that Greek Mythology management have denied access to the company’s audited financial statements since March 31, 2010 and management accounts since March 31, 2012.

This led Amax International’s to submit the court order, with the company’s lawyers believing a

response to the court order application could take nine to 12 months.

In the most recent filing, Amax stated that in the event that the court order is granted, the group expects to liaise with the principal bank of Greek Mythology and relevant government authorities to retrieve all bank statements, copies of cheques issued and banking instructions and applications made by Greek Mythology plus all documents filed by the then management of the company.

The group would also attempt to ‘rebuild all accounting schedules and financial statements of Greek Mythology . . . [and] . . . discuss and agree with the Company’s auditors on the scope, procedures and timeline for the audit of Greek Mythology’.

If the court order is not issued, Amax International will consider filing an ‘appeal application or taking possible legal action as a debtor of Greek Mythology’.

In the filing Amax International ca l c u l at e d th e l o ss f r o m i ts involvement in Greek Mythology casino at HK$943.1 million (US$120.5 million) as of March 31 this year.

Despite the losses, the company still stated it ‘remained positive about the future prospects of Macau gambling industry and considers that the gambling licence possessed by Greek Mythology is a valuable asset to the Company’.

Greek Mythology operated gaming tables in the hotel’s casino under SJM Holdings Ltd’s gaming licence.

Business Daily Wednesday, September 6 2017 7

Gaming Fraud

Universal: Okada committed three acts of fraud

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he investigation by gaming group Universal Entertainment Corp. has found that its former Chairman and Director, Kazuo Okada, conducted a number of ‘fraudulent acts’ while in his role, according to a company report.

The report scrutinised three acts conducted by the former Chairman relating to a subsidiary of the company, Tiger Resorts Asia Limited, involving a HK$135 million loan, a HK$16 million cheque and US$80 million Okada borrowed, all of which ‘Okada led and conducted,’ the report points out.

Mr. Okada ‘committed these acts for his own personal benefit, and it can only be said that this is an extreme

intermingling of private and public affairs and that there was a lack of a sense of ethics that one should naturally have as a director of a listed company,’ the report notes, pointing out that ‘the Company will proceed to examine the measures that it should take against Mr. Okada’ as well as the Director and General Manager of the Administrative Division at the time of the incident.

The repercussions for the other individual could be more lenient, however, given that ‘there is room for doubt about the extent to which he could have stopped Mr. Okada’ as well as the fact that ‘Mr. Okada paid a visit to the home of the Director and General Manager of Administrative Division at the Time to violently intimidate

and threaten him with respect to the subject matter of the investigation’.

Going forward, the company notes that it will ‘proceed

to formulate and execute concrete measures to prevent that reoccurrence. Said concrete measures will be disclosed by the Company once they have

been decided on’.

The investigation was conducted from June 8 to August 29. Okada previously denied any wrongdoing. K.W.

Russia

Passing the torch The Chief Operating Officer of Russian Operations at Summit Ascent Holdings Limited has resigned the position and will occupy an undisclosed position at Melco International Development Limited Nelson Moura nelson.moura@macaubusinessdaily.com

The Chief Operating Officer of Russian Operations at Summit Ascent Holdings Limited, Craig Robertson Ballantyne, has resigned the position in the company and will join Melco International Development Limited, a filing with the Hong Kong Stock Exchange reveals.

Summit Ascent is a subsidiary of Melco International and operates the casino-resort Tigre de Cristal in the Integrated Entertainment Zone of the Primorye Region near Vladivostok in Russia.

Both companies are owned by local businessman Lawrence Ho Yau Lung, Chairman and CEO of local gaming operator Melco Resorts & Entertainment.

The release did not announce which position Ballantyne will hold at Melco International, with the handover of his current duties and responsibilities to the Acting Chief Operating Officer – Russian Operations to take place ‘in the next weeks’.

Business Daily contacted Summit Ascent and Melco International apropos Mr. Ballantyne’s new position but no response was provided by the time this newspaper went to print.

The Chief Operating Officer position will be assumed by Stylianos Tsifetakis, previously Mr. Ballantyne’s deputy at Tigre de Cristal. Mr.

Casinos

Stylings also worked previously in Greece as Director of Operations at Regency Casino Mont Parnes and as a Director with the Hyatt Regency Casino.

In the first half of this year Summit Ascent posted a 20 per cent yearon-year increase in revenues from the same period last year to reach

HK$204.6 million (US$26.1 million).

However, the company registered losses of HK$5.4 million in the first six months after seeing HK$5.5 million in profit in the same period last year.

Reshuffling the board

Summit Ascent has also announced the appointment of Eric Daniel Landheer as the company’s new Executive Director, with the new appointee starting his position after September 4.

Mr. Landheer held the position of Director - Corporate Finance and Strategy at Summit Ascent, being responsible for the company’s fundraising and other capital markets activities, strategic planning and execution, as well as investor and media relations.

Before joining Lawrence Ho’s company in 2014, Landheer held several positions in financial markets, as Senior Vice President and Head of Issuer Marketing at Hong Kong Exchanges and Clearing Limited and as Head of Asia Pacific for the NASDAQ OMX Group, Inc.

OBOR

Silver Heritage appoints new CFO On the road Gaming operator and developer Silver Heritage Group Ltd. has appointed Basil Jong as its Chief Financial Officer (CFO) starting from November 6, a company filing with the Australian Securities Exchange has announced.

Mr. Jong will replace Martin Wright, who has worked for Silver Heritage since 2006 and will stay in the company until December of this year to assist with the transition and the ‘opening of Tiger Palace Resort’.

The Tiger Palace casino-resort in the city of Bhairahawa, in Nepal, is

expected to open in the third quarter of this year.

According to the release, prior to the appointment Jong was the CFO at the Brisbane Racing Club, an Australian horse racing organisation that owns two racecourses and with revenues from operating Electronic Gaming Machines (EGM).

Silver Heritage’s headquarters are located in Hong Kong, but the company is listed in Australia. The company currently runs casinos in Nepal’s capital of Kathmandu, as well as Vietnam and Laos. N.M.

MGM China recently hosted a two-day seminar on the One Belt, One Road initiative and Greater Bay Area plan Local gaming operator MGM China Holdings Limited hosted a two-day Seminar on the One Belt, One Road initiative and on the Greater Bay Area plan with the support of the MSAR Liaison Office of the Central People’s Government, a company release has announced.

“The [One Belt, One Road initiative] is one of our generation’s opportunities that we should all grasp, taking on both large and small initiatives at regional tourism and destination levels (…) This seminar enables our management staff to understand more details of the events and activities that will affect our future, so that we can play a role in achieving the best outcomes for Macau and the Greater China Region,” MGM China CEO Grant Bowie stated in the release.

The event hosted at MGM Macau

- which finished yesterday - involved more than 300 management team members from the gaming operator, with the main speaker being the Director General of the Centre for Regional Economic Co-operation from the Chinese Academy of International Trade and Economic Co-operation (CAITEC). N.M.

8 Business Daily Wednesday, September 6 2017

Greater china Caixin PMI

Services sector expands by most in 3 months in August Government statistics show the services sector is easily outpacing overall GDP growth of 6.9 per cent

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hina’s services sector expanded at a faster clip in August as new business orders picked up, a private business survey showed yesterday, pointing to renewed strength in a key part of the world’s second-largest economy.

An official gauge of the non-manufacturing sector published last week also showed continued expansion in the services sector, though the pace was slower than in July, bolstering views that China’s economy remains on solid footing.

The Cai xi n/M a r ki t s e rvic es

purchasing managers’ index (PMI) rose to 52.7 in August - the highest reading in three months - from 51.5 in July.

New business expanded at the fastest pace in three months with a reading of 53.1 in August, while companies also hired the most workers in four months.

A reading above 50 indicates growth, and any lower than that signals contraction.

The Caixin index for factory activity in August was 51.6, the highest in six months.

China is counting on services,

particularly high value-added services in finance and technology, to lessen the economy’s traditional reliance on heavy industry and investment.

Government statistics show the services sector, accounting for just over one-half of China’s economy in the first half of 2017, grew 7.7 per cent in that period from a year earlier, easily outpacing overall GDP growth of 6.9 per cent.

But in a sign of a potential price squeeze on service companies, prices charged fell for the first time since March 2016 while input price

inflation picked up in August from July as companies said competition intensified.

Caixin’s composite manufacturing and services PMI, also released yesterday, rose to 52.4 in August from 51.9 in July and was the highest in six months.

‘But we need to closely watch whether the recent rises in input costs will weigh on corporate profits and fuel inflation’ “The recovery in both manufacturing and services has led the economic outlook to continue to improve,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the data release.

“But we need to closely watch whether the recent rises in input costs will weigh on corporate profits and fuel inflation,” Zhong added.

The uptick in China’s economy over the past few months bodes well for the country’s leadership ahead of a once-every-five-years congress of the Communist Party, which will open on Oct. 18.

Economic data to be released over the next few weeks is expected to show momentum will largely hold up through to the end of the year, despite tighter monetary policy. Reuters

Commodities

Coal crunch sees rustbelt exposed to risk of winter power Being’s war on pollution can roil key industries while sending coal prices sharply higher Meng Meng and Josephine Mason

China’s north-eastern industrial heartland may face winter power and heating cuts after authorities in Beijing spurned requests from provincial providers for help securing coal supplies after two major mines were forced to halt output, utilities warned.

Key Points Heilongjiang, Liaoning, Jilin hit by coal mine closures Inner Mongolia mines suspended in anti-smog drive Authorities reject utilities’ plea for coal supply help China, Asia benchmark coal prices jump on tighter supply Coal-dependent power in the major manufacturing province of Heilongjiang issued their plea to the National Development and Reform Commission (NDRC) via the state power grid after

authorities suspended work at mines in neighbouring Inner Mongolia last month, according to documents posted on the website of coal publication sxcoal.com.

The authenticity of documents was confirmed by a person familiar with the matter, who declined to be identified because he wasn’t authorised to speak to media. The NDRC and state grid were not immediately available for comment.

The mines halt is part of concerted efforts by China to tame increasingly severe winter smog in industrial centres. But it also shows Being’s war on pollution can roil key industries while sending coal prices sharply higher, both in China and across Asia.

In its response to the request, the NDRC acknowledged the coal shortage but did not offer more supplies, the documents showed, instead calling on the provincial government to ramp up clean fuel output while cutting coal-fired generation from inland power plants.

“We believe Inner Mongolia coal mines cannot restart immediately,” the NDRC said

in its response. “We kindly ask you(local state grid and power companies) to prepare as early as possible and make sure to send enough electricity to the grid.”

It wasn’t immediately clear whether the northeast has enough alternative sources of energy to fill the looming supply crunch, but a utility executive said winter supplies could fall short of demand. An electricity and heating shortage in these provinces - with a joint population of over 100 million - would have severe consequences in an area where

temperatures can plunge in winter, with an average of minus 14 to minus 30 degrees Celsius.

“Our power plants in northern provinces of Heilongjiang, Liaoning and Jilin have the worst shortages among all of utilities,” a senior executive at Datang Group, which has seven power plants in the region, told Reuters in a phone interview.

“In the worst scenario, we might look to curb power production in the winter,” the said, speaking on condition of anonymity because he wasn’t authorised to discuss

the matter publicly. “Both private and large state-run power plants have difficulties finding supply.”

While the shortage is regional, its impact is being felt in both Chinese and global coal markets.

Zhengzhou thermal coal futures prices have jumped by 12 per cent since July to RMB635.4 (US$97.19) per tonne.

Meanwhile Australian Newcastle thermal coal cargo prices, a benchmark for Asia, have jumped by more than 20 per cent since July, to over US$100 per tonne. Reuters

Business Daily Wednesday, September 6 2017 9

Greater China Summit

In Brief

Xi says global economy improving, urges resistance to protectionism The President said the country will contribute US$500 million for a SouthSouth cooperation assistance fund to help other developing countries deal with famine, refugees, climate change and public health challenges Chinese President Xi Jinping told an international summit yesterday that although the global economy had improved, risk factors had also increased.

Addressing the “Dialogue of Emerging Market and Developing Countries”, Xi appeared to rebuke the United States’s recent resistance to international agreements - including the Paris climate accord.

He said emerging and developing markets had been the primary engine of global growth and that such countries needed to work closely to build an open world economy.

The leaders of BRICS states and other developing countries are meeting in the south-eastern Chinese city of Xiamen.

“Recently, the world economy has taken a turn for the better. International trade and investment has picked up,” Xi said. “At the same time, we must take note that risk and uncertainty in the world economy are also increasing.”

China used the meeting of the BRICS countries - Brazil, Russia, India, China and South Africa and other developing economies to stress the need to promote trade liberalisation and an open world economy.

The summit has also given China, the host, its latest chance to position

itself as a bulwark of globalisation in the face of U.S. President Donald Trump’s “America First” agenda.

“Multilateral trade negotiations make progress only with great difficulty and the implementation of the Paris Agreement has met with resistance,” Xi said.

“Some countries have become more inward-looking, and their desire to participate in global development cooperation has decreased.”

President Trump has called for improved terms for the United States in ongoing North American Free Trade Agreement (NAFTA) negotiations under threat of leaving the pact, and has said he will withdraw his country from the Paris climate accord.

Xi said yesterday that China will contribute US$500 million for a South-South cooperation assistance fund to help other developing countries deal with famine, refugees, climate change and public health challenges.

The BRICS leaders are joined by observer nations Thailand, Mexico, Egypt, Guinea and Tajikistan, and officials will discuss a “BRICS Plus” plan to possibly expand the bloc to new members.

Xi said developed nations needed to provide more assistance to developing countries, while the BRICS nations and their developing country partners should oppose protectionism. Reuters

Chinese President Xi Jinping speaks during a press conference at the 2017 BRICS Summit in Xiamen. Source: Lusa

Markets

HKEX CEO says talks to win Saudi Aramco listing “will never stop”

Real estate

Hubei to halt some new property investments The state assets regulator in China’s Hubei province has asked companies backed by the province and their subsidiaries to suspend new property investments from Sept. 5 amid a push to reduce financial risks, according to people familiar with the matter. The State-owned Assets Supervision and Administration Commission in Hubei has also asked province-backed companies to accelerate the construction or sales of current property projects and get money back as soon as possible, said the people, who asked not to be named because they weren’t authorized to comment on the matter publicly.

Renewables

Beijing to call on Denmark to help build offshore wind farm China will tap Denmark, home to some of the world’s largest offshore energy companies, to help it build a wind farm, Denmark’s energy minister said yesterday. Speaking after meeting the head of China’s National Energy Administration (NEA), minister Lars Christian Lilleholt said that size, timing and suppliers for the wind farm had not yet been decided but he was convinced it would be built.

China, the world’s biggest emitter of greenhouse gases, plans to raise its non-fossil fuel portion of primary energy consumption to 15 per cent from 12 per cent by 2020.

Diplomacy

Saudi Arabia favours New York for the main foreign listing Anne Marie Roantree

Hong Kong Exchanges & Clearing Ltd (HKEX) is still in talks with oil giant Saudi Aramco, with the bourse’s planned IPO investment link with China key to clinching the potential listing, Chief Executive Charles Li told Reuters yesterday.

In February, Li said the stock exchange would bank on its role as a gateway to mainland China’s deep-pocketed investors to win the coveted listing of state oil firm Saudi Arabian Oil Co .

Addressing a Reuters Newsmaker event, Li, who has previously worked with JPMorgan and Bank of America Merrill Lynch in China, said “the talk will never stop” in trying to woo Aramco, with China now one of the largest importers of Saudi crude.

Li said, however, that a so-called primary stock connect, which would allow mainland Chinese investors to participate in Hong Kong initial public offerings (IPOs), would be pivotal in convincing Aramco to list in the Asian financial hub.

He did not give a timeline for the start of the primary connect programme, the talks for which are on-going.

Saudi authorities plan to list up to 5 per cent of the world’s largest oil producer on the Saudi stock exchange in Riyadh, the Tadawul, and also one or more international markets, potentially raising as much as US$100 billion.

Saudi Arabia favours New York for the main foreign listing, even though some financial and legal advisers have recommended London as a less problematic and risky option, sources told Reuters last month.

“Having a rival liquidity pool that is supported by domestic Chinese

liquidity that trades and invests at a very different valuation ... allows them to walk on two legs globally at different clocks of trading,” Li said.

New trading board

Li also said he expects to conclude final recommendations “in the coming weeks” on rules for a new trading board, aimed at luring secondary listings from Chinese firms such as Baidu Inc , as well as “new-economy” startups in sectors such as the Internet and bio-technology.

HKEX started public consultation in June on the possibility of a board allowing listings of companies with dual-class share structures, such as Alibaba Group Holding Ltd. Alibaba was unable to list in Hong Kong under current rules, so the e-commerce firm took its US$25 billion IPO to New York instead.

Asia’s third-biggest equity bourse by market value is eager to increase its exposure to new, high-growth sectors to remain among the world’s top destinations to list shares.

Public consultation for the new board ended last month, with financial industry professionals still divided over the matter.

Li said there might be a need for another round of consultation to decide how the new board and weighted voting rights would be implemented.

Scandals

Hong Kong’s government and regulators are increasingly concerned that a series of scandals, many centred on mainland Chinese companies listed in Hong Kong, has tarnished the territory’s reputation as a financial centre.

Hong Kong gained unwanted international attention from scandals at firms including Hanergy Thin Film Power Group Ltd and China Huishan

Dairy Holdings Co Ltd, while a penny stocks crash earlier this year impacted the Growth Enterprise Market.

The bourse’s second trading board - which has less stringent listing criteria than the main board - has seen high levels of volatility due to very concentrated shareholdings and concerns have grown over the quality of companies listed there.

Addressing concerns about listing criteria being even less strict on the new board, Li said HKEX would not compromise public interest for its own profitability. He also downplayed the likelihood of the financial regulator being given more powers.

“The key is the market will understand that the bulk of the listing rule regulation is still going to be (policed) at the exchange, but the SFC will take a proactive role whenever they see fit,” he said, referring to the Securities & Futures Commission.

Discussions over a new board come as trading by overseas investors is growing after the start of the Hong Kong-Shenzhen and Hong Kong-Shanghai stock connects, which allow non-Chinese investors to buy mainland-listed shares via Hong Kong.

HKEX is now working on setting up a commodities trading link with China. Li said progress was at an early stage and that the link would be an extension of HKEX’s 2012 acquisition of the London Metal Exchange and bid to diversify into commodities.

“We would love to have a commodities connect. That would be a natural extension of the connect program, but ... we need to work with the domestic (Chinese) commodities exchange partners,” he said. “They need to feel that they can get something out of it.” Reuters

Hyundai Motor hit again by supply disruption Hyundai Motor said it had suspended production at one of its China factories yesterday after a supplier refused to provide parts due to delays in payment - its second such incident in as many weeks. Frayed relations with suppliers to its joint venture with BAIC Motor Corp Ltd have become a fresh headache for the South Korean automaker in China, which has seen sales slump in the wake of diplomatic tensions between the two nations.

The Hyundai-BAIC venture had only just resumed production at four China plants on Aug. 30 after supply problems halted production for about a week.

Regional tensions

Gov’t urges North Korea to ‘stop taking actions that are wrong’ China’s U.N. Ambassador Liu Jieyi urged North Korea to “stop taking actions that are wrong” and called on all parties to “seriously consider” Beijing’s proposal for a joint suspension of Pyongyang’s ballistic missile and nuclear programs and military drills by the United States and South Korea. “We strongly urge (North Korea) ... stop taking actions that are wrong, deteriorating the situation and not in line with its own interests either and truly return to the track of resolving the issue through dialogue,” Liu told the U.N. Security Council.

10 Business Daily Wednesday, September 6 2017

Greater China Politics

All the president’s men: politburo line-up a measure of Xi’s power President Xi Jinping of China is expected to place trusted allies in the Communist Party’s key decision-making Politburo during a leadership reshuffle at the 19th party Congress this autumn, according to multiple Chinese sources and foreign diplomats Benjamin Kang Lim and Philip Wen

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key measure of Xi’s power will be how many of his allies are installed on the 25-member committee.

At least 10 Politburo members are slated to retire due to an unwritten rule that politicians step down if they are 68 or older when they take on a new five-year term.

And the youngest Politburo member, Sun Zhengcai, 53, is out of the running. He served as Chongqing party boss before being put under investigation in July for disciplinary violations, Communist Party jargon for corruption.

The fate of the top corruption watchdog, Wang Qishan, 69, is also the subject of widespread conjecture. It is unclear if he will retain his seat in the elite seven-member Politburo Standing Committee, despite his age, and therefore his spot on the wider Politburo.

The State Council Information Office, which doubles as the spokesman’s office for the cabinet and party, declined to comment on Politburo candidates when reached by telephone and fax. Possible newcomers to the Politburo among Xi’s allies (surnames in alphabetical order): Cai Qi, 61, has enjoyed a meteoric rise under Xi and is considered a shoo-in after he was named party boss of Beijing in May, despite not being a full or alternate member of the wider Central Committee.

Since 1987, whoever holds the office of Beijing party chief has also been a Politburo member. Cai overlapped with Xi during the future president’s 17-year stint in the southeastern province

of Fujian, and in the eastern coastal province of Zhejiang, where Xi was party boss from 2002 to 2007. Cai is a native of Fujian.

Chen Miner, 56, was seen to have performed strongly as the leader of Guizhou province before being named party boss of the south-western metropolis of Chongqing on July 15, replacing Sun. Chen, a native of Zhejiang, is also virtually assured of a seat in the Politburo given his position in Chongqing, the sources said.

Chen is a dark horse candidate to catapult straight onto the Standing Committee.

Chen Quanguo, 61, was promoted to party chief of the restive far-western region of Xinjiang, bringing along with him the tough ethnic management policies he implemented at his previous post in Tibet. Chen has never worked closely with Xi. Chen Xi, 64 this month, a native of Fujian, is tipped to be promoted to minister of the party’s organisation department, overseeing the promotion and deployment of party officials. He is currently vice-minister at the department. Chen shared a dormitory with Xi when the two attended the prestigious Tsinghua University in the late 1970s.

Ding Xuexiang, 55 this month, is likely to become director of the General Office of the Central Committee. He is currently No 2 in the General Office, which oversees day-to-day operations of the Politburo. Ding worked for Xi when the latter was party boss in Shanghai.

He Lifeng, 62, chairman of the cabinet’s National

Development and Reform Commission, is a strong candidate to become one of five state councillors, a rank above cabinet minister but below vice premier.

If he is named one of four vice premiers next March, he would be a favourite for the Politburo. He worked in Fujian from 1984 to 2009, overlapping with Xi, who was governor from 2000 to 2002.

Huang Kunming, 60, a native of Fujian, is the front-runner to become the party’s propaganda minister. He is currently No 1 vice-minister. He followed Xi from Fujian to Zhejiang.

Li Hongzhong, 61, is party secretary of the northern port city of Tianjin. He never worked under Xi previously, but has been an ardent supporter of Xi’s policies.

Li Qiang, 58, a native of Zhejiang, is currently party boss of the eastern coastal province of Jiangsu. Li was Xi’s right-hand man when Xi was party boss of Zhejiang.

Li Xi, 60, currently party chief of the north-eastern

province of Liaoning, is seen to be in line for promotion to head a bigger province. He once worked in Xi’s home province, Shaanxi, in China’s northwest.

Liu He, 65, is Xi’s key economic advisor and a strong candidate to become a state councillor or vice premier.

When then-U.S. National Security Adviser Tom Donilon visited Beijing in 2013, Xi introduced Liu as “very important to me”, according to the Wall Street Journal. Liu holds a master’s degree in public administration from Harvard University’s Kennedy School of Government.

Ma Xingrui, 57, was once the chief engineer of China’s lunar programme. Now the governor of Guangdong province, he is one of two candidates for party secretary, the top post, in the booming southern region.

If successful, he would be assured of a Politburo seat.

Wang Xiaohong, 60, is a candidate to lead either the police or the national security apparatus. He is currently a vice minister of public security and a vice mayor of Beijing. Wang cut his teeth

in his home province Fujian, overlapping with Xi. Xia Baolong, 64, once touted to take over as security tsar, stepped down as party boss of Zhejiang province in April. In a surprise move, he was sidelined to the No 2 position in parliament’s environmental protection and resources conservation committee, which may hurt his chances to join the Politburo. Xia, who ordered the tearing down of hundreds of church crosses in Wenzhou city in 2015, was Xi’s deputy in Zhejiang.

Ying Yong, 59, a native of Zhejiang, is currently mayor of Shanghai and a candidate to become party boss of the country’s financial capital.

He worked under Xi in Zhejiang as deputy police chief, the No 2 corruption watchdog and an appeals court acting chief judge.

You Quan, 63, has been the Communist Party secretary of coastal Fujian province since December 2012. A native of Hebei province with a background in economics, he is a former chairman of the State Electricity Regulatory Commission. Reuters

Business Daily Wednesday, September 6 2017 11

Greater China Cryptocurrency

Virtual coin fundraising ban just the start of tighter regulations Some members of a chat group on the social networking platform WeChat set up for an ICO last week complained about the strict regulation China is poised to further tighten rules on virtual currencies after regulators on Monday banned virtual coin fundraising schemes, Chinese financial news outlet Yicai reported citing sources.

China banned and deemed illegal the practice of raising funds through launches of token-based digital currencies, targeting so-called initial coin offerings (ICO) in a market that has exploded since the start of the year.

Yicai’s report late Monday cited a source close to decision-makers as saying the announcement on the ban was just the start of further follow-up regulations of virtual currencies.

In total, US$2.32 billion has been raised through ICOs globally, with US$2.16 billion of that being raised since the start of 2017, according to

cryptocurrency analysis website Cryptocompare.

The rapid ascent of ICOs prompted the U.S. Securities and Exchange Commission (SEC) to warn in July that some ICOs should be regulated like other securities. Singapore and Canada followed with similar warnings.

Bitcoin rival Ethereum, which token-issuers usually ask to be paid in and which has seen dramatic growth this year, fell sharply on the news.

It was down almost 20 per cent on Monday and fell a further 5 per cent yesterday, according to trade publication Coindesk.

Bitcoin was also down another 4.6 per cent yesterday after falling 8 per cent on Monday.

Major virtual currency trading platforms BTCC and Huobi had no comment on the ICO ban when contacted by Reuters.

Chinese ICO platform ICOINFO (www.ico.info) said in a notice yesterday that it has stopped all ICO services and is working with groups that issued virtual tokens on its platform to return funds to investors.

ICOINFO said several projects had already returned funds to investors’ accounts and that users would be able to begin withdrawing funds from the

platform at 10:00 am local time yesterday.

Another Chinese exchange, Binance, said in a statement on its website that it is “working around the clock on a solution that will fully satisfy the new regulations in China”.

However, it was looking at “preserving and enhancing features that are valuable to our western community, which

accounts for more than 81 per cent of our user base,” the statement said.

Some members of a chat group on the social networking platform WeChat set up for an ICO last week complained about the strict regulation, and wondered when they would get their funds back.

Some users commenting on the website QQ.com welcomed the regulation, saying it would help the Bitcoin ecosystem in the long-run.

“Regulation of ICOs is the best thing that could have happened to Bitcoin. From now on there won’t be any reckless issuance of virtual currencies” wrote one user, who saw a bright future for the currency.

“For the past eight years, each time Bitcoin has declined in value has been a great buying opportunity.” Reuters

Generational apathy

For national millennials, despondency has a brand name While China’s roughly 380 million millennials have opportunities that earlier generations would have found unimaginable, they also have expectations that are becoming harder to meet Yawen Chen and Tony Munroe

Chinese millennials with a dim view of their career and marriage prospects can wallow in despair with a range of teas such as “achieved-absolutely-nothing black tea”, and “my-ex’s-life-is-betterthan-mine fruit tea”.

While the drink names at the Sung chain of tea stalls are tongue-in-cheek, the sentiment they reflect is serious: a significant number of young Chinese with high expectations have become discouraged and embrace an attitude known on social media as “sang”, after a Chinese character associated with the word “funeral” that describes being dispirited.

“Sang” culture, which revels in often-ironic defeatism, is fuelled by internet celebrities, through music and the popularity of certain mobile games and TV shows, as well as sad-faced emojis and pessimistic slogans.

It’s a reaction to cut-throat competition for good jobs in an economy that isn’t as robust as it was a few years ago and when home-ownership - long seen as a near-requirement for marriage in China - is increasingly unattainable in major cities as apartment prices have soared.

“I wanted to fight for socialism today but the weather is so freaking cold that I’m only able to lay on the bed to play on my mobile phone,” 27 year-old Zhao Zengliang, a “sang” internet personality, wrote in one post. “It would be great if I could just wake up to retirement tomorrow,” she said in another.

Such ironic humour is lost on China’s ruling Communist Party.

In August, Sung Tea was called out for peddling “mental opium” by the Communist Party’s official People’s Daily, which described sang culture in an editorial as “an extreme, pessimistic and hopeless attitude that’s worth our concern and discussion”.

“Stand up, and be brave. Refuse to drink ‘sung tea’, choose to walk the right path, and live the fighting spirit of our era,” it said.

China’s State Council Information Office did not reply to a request for comment for this story.

While “sang” can be a pose or affectation, despondency among a segment of educated young people is a genuine concern for President Xi Jinping and his government, which prizes stability.

The intensifying censorship

clampdown on media and cyberspace in the run-up to autumn’s Communist Party congress, held once every five years, extends even to negativity, with regulations issued in early June calling for “positive energy” in online audio-visual content.

Later that month, some young netizens were frustrated when Bojack Horseman, an animated American TV series about a half-man/half-horse former sitcom star, and popular among the “sang” generation for his self-loathing and cynicism, was pulled from Chinese streaming site iQiyi.

“Screw positive energy,” Vincent, a 27-year old Weibo user, commented under a post announcing the news.

A spokesperson at iQiyi said the decision to remove Bojack Horseman was due to “internal process issues” but declined to give further details.

Social media and online gaming giant Tencent Holdings Ltd has even gone on the counterattack against “sang” culture.

It has launched an ad campaign around the Chinese word “ran” – which literally means burning and conveys a sense of optimism - with slogans such as “every adventure is a chance to be reborn.”

Only-child blues Undermining “sang” may take some doing.

“Sang” is also a rebellion against the striving of contemporary urban China, no matter the cost or hopes of achieving a goal. Tied to that is intense social and family pressure to succeed, which typically comes with the expectation that as members of the one-child generation people will support ageing parents and grandparents.

Zhao’s online posts, often tinged with dark humour, have attracted almost 50,000 fans on microblogging site Weibo.

Zhao turned the subject into a book last year: “A Life Where You Can’t Strive for Success All The Time”.

While China’s roughly 380 million millennials - or those aged about 18 to 35 - have opportunities that earlier generations would have found unimaginable, they also have expectations that are becoming harder to meet.

The average starting salary for college graduates dropped by 16 per cent this year to RMB4,014 (US$608) per month amid intensifying competition for jobs as a record 8 million graduate from Chinese universities - nearly ten times the number in 1997.

Even among elite “sea turtles” - those who return after studying overseas, often at great expense - nearly half of 2017 graduates earned less than RMB6,000 per month, a Zhaopin.com survey found, with 70 per cent of respondents saying their pay is “far below” expectations.

Home-ownership is a nearly universal aspiration in China, but it is increasingly difficult to get on the property ladder in big cities such as Beijing, Shanghai and Shenzhen.

An average two-bedroom home in Beijing’s resale market costs around RMB6 million (US$909,835) after prices surged 36.7 per cent in 2016, according to Fang. com, China’s biggest real estate website.

That’s about 70 times the average per capita disposable income in the city; the ratio is less than 25 times for New York City.

Median per person rent in Beijing, where most of the estimated 8 million renters are millennials, according to Ziroom.com, has risen 33 per cent in the past five years to RMB2,748 a month in June, equivalent to 58 per cent of median income in the city, a survey by E-House China R&D Institute found. The costs often mean that young Chinese workers have to live on the edges of cities, with long, stressful journeys to work.

Financial pressures also contribute to young Chinese waiting longer to get married.

In Nanjing, a major eastern city, the median age for first marriages rose to 31.6 last year, from 29.9 in 2012, official data showed.

Rising expectations “Sang” contrasts with the optimism of those who entered adulthood during the years of China’s double-digit economic growth in previous decades. That generation was motivated by career prospects and life quality expectations that their parents and grandparents, who had learned to “eat bitter” during tougher times, could only dream of.

“Our media and society have shoved too many success stories down our throat,” said Zhao. “’Sang’ is a quiet protest against society’s relentless push for achieving the traditional notion of success. It is about admitting that you just can’t make it,” she told Reuters.

It is also a symptom of the lack of channels for frustrated young adults to vent frustration, a survey of 200 Chinese

university students by researchers at state think tank Chinese Academy of Social Sciences (CASS) found in June.

“The internet itself is a channel for them to release pressure but due to censorship it’s impossible to do so by openly venting,” Xiao Ziyang, a CASS researcher, told Reuters.

“It’s necessary for the government to exercise public opinion control to prevent social problems.”

Sung Tea founder Xiang Huanzhong, 29, said he expects pressure on young Chinese adults only to grow, citing the aging of the population as a particular burden for the young.

‘Even among elite “sea turtles” - those who return after studying overseas, often at great expense - nearly half of 2017 graduates earned less than RMB6,000 per month’ Xiang has capitalised on the trend with products named after popular “sang” phrases. The chain has single locations in 12 cities after opening its first permanent tea stall in July in Beijing, where a best-selling “sitting-aroundand-waiting-to-die” matcha milk tea costs RMB18.

Xiang said he chose tame names for his products so as not to attract censure from authorities, leaning towards the self-deprecating.

He took issue with the People’s Daily’s critical editorial.

“It didn’t try to seriously understand at all,” he said.

Wang Hanqi, 21, a student at Nanjing Audit University, sought out Sung Tea after hearing about it on social media.

“I’m a bit disappointed that the names for the tea are not ‘sang’ enough,” he said in an interview outside the Beijing stall. Reuters

12 Business Daily Wednesday, September 6 2017

Asia In Brief Money-laundering

Commonwealth Bank slapped with class-action suit Commonwealth Bank of Australia was hit yesterday with potentially Australia’s biggest class-action lawsuit over a money-laundering scandal that has already smashed its share price and exposed it to billions of dollars in fines. Litigation financier IMF Bentham Ltd said it would fund the lawsuit against Australia’s biggest bank, accusing it of making false and misleading statements and failing to disclose breaches of anti-money laundering rules for years. A second lawsuit against the A$128 billion (US$102 billion) lender, on top of one filed on Aug 3. by financial intelligence agency AUSTRAC alleging breaches of the Anti-Money Laundering and CounterTerrorism Financing Act, is fuelling investor concerns that the scandal may still have more shocks in store.

Shareholders

Noble Group in talks to extend credit deadline Noble Group is in discussions with its North American lenders to extend an October deadline for a US$2 billion credit facility, while also taking steps to sell parts of its business to cut debt, its chairman said yesterday.

Paul Brough, a board member and restructuring veteran, who took over as the commodity trader’s chairman in May, told shareholders in Singapore that Noble’s U.S. lenders had been very supportive of the company’s plans to sell assets. Once Asia’s largest commodities trading house, Noble is slashing jobs and selling assets to cut debt after a crisis-wracked two years.

Energy

Indonesia’s changes to oil, gas deals “positive” for investors Indonesia’s revisions to new oil and gas production-sharing contracts are positive for investors, the leading energy industry association said, amid waning interest in energy exploration and declining oil output from the former OPEC member. The archipelago overhauled its oil and gas production-sharing contract scheme earlier this year to reduce the burden of energy exploration on government finances, but analysts said the changes were still not enough to make Indonesia attractive for energy investors. Under a new revision of the rules that was released on the energy ministry’s website on Sunday, the government still takes a base split of 52 per cent for gas and 57 per cent for oil.

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Monetary policy

Australia’s central bank holds fire as economy on the rebound Most analysts polled by Reuters expect no change in policy until late 2018 Wayne Cole and Swati Pandey

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ustralia’s economy likely rebounded sharply last quarter as exports and public spending proved surprisingly upbeat, an outcome that would cheer the country’s central bank which left interest rates at record lows yesterday.

The Reserve Bank of Australia (RBA) has kept rates at 1.50 per cent since last easing in August 2016 as it bets on a pick up in economic growth this year and next.

The flow of data is favouring the bank’s optimism. Figures yesterday showed Australia managed to export more goods last quarter even as falling commodity prices widened the country’s current account deficit.

Government spending also ran faster-than-expected in the June quarter as states splashed out on infrastructure, tilting the risks to the upside for growth.

“Exports came in on the higher side, and government spending was also very strong in the quarter,” said Su-Lin Ong, chief economist at RBC Capital Markets.

“The risk to GDP growth is now on the upside. We will get an upward revision to where everyone is on GDP.” Ong nudged up her forecast for growth in gross domestic product (GDP) to 0.9 per cent, from an initial 0.7 per cent. Analysts at CBA also predicted growth of 0.9 per cent, while Westpac tipped a 1.0 per cent increase.

That would be a marked improvement on the first quarter’s pedestrian 0.3 per cent pace, and faster than what the United States managed.

Growth for the year was seen edging up to around 2 per cent.

The RBA is confident economic activity will reach around 3 per cent in coming months.

“The recent data have been

consistent with the Bank’s expectation that growth in the Australian economy will gradually pick up over the coming year,” RBA Governor Philip Lowe said in a statement following the bank’s monthly meeting.

“The outlook for non-mining investment has improved recently and reported business conditions are at a high level.”

Most analysts polled by Reuters expect no change until late 2018 as the RBA remains worried about the outlook for consumer spending, which account for around 57 per cent of GDP.

Adding to growth

Yesterday’s data from the Australian Bureau of Statistics showed the country’s current account deficit widened to A$9.6 billion (US$7.66 billion), from A$4.7 billion in the first quarter, mostly due to a pullback in commodity prices.

Australia’s terms of trade, the ratio of export to import prices, duly fell 6 per cent in the quarter.

Yet the volume of exports sold rebounded in the quarter to add 0.3 percentage points to GDP growth, when most analysts had expected a small subtraction.

Also helping was a robust rise in government spending, which

analysts at Westpac estimated would alone add half a percentage point to growth in the quarter.

The outlook for exports is also upbeat as an acceleration in global factory output and unexpectedly brisk demand from China has recently boosted prices for a range of commodities.

Key Points Upbeat exports, government spending seen boosting Q2 GDP Many analysts revise up forecasts for growth data due Wed RBA leaves interest rates at a record low 1.50 pct Recent data consistent with expectations of a pick up - RBA Copper hit its highest in three years this week, while steel prices in China reached levels not seen since 2013 supporting iron ore in the process.

The RBA index of commodity prices, which mirrors the country’s export mix, climbed 1 per cent in August to be up 16.6 per cent on the same month last year. All of which is a boon to the country’s hard-pressed miners. Reuters

Privatisation

Vietnam moves one step closer to sale of majority stake in brewer Sabeco The country’s second-biggest listed firm by market value, is a key plank of a broader privatisation effort, which includes dairy firm Vinamilk, Vietnam Airlines and rival brewer Habeco Mai Nguyen

Vietnam’s prime minister has approved a plan to sell a majority stake in brewer Sabeco, a government committee said in a document seen

by Reuters yesterday, taking the state-controlled brewer one step closer to a long-awaited sale.

Vietnam has one of the world’s most attractive beer markets and the biggest in Southeast Asia, thanks to a young population that consumed nearly 4 billion litres in 2016.

Foreign brewers from Kirin to Heineken have been looking at a possible investment in the maker of the Bia Saigon and 333 brews since it was earmarked for privatisation.

But long-stated plans for the government, which still owns about

90 per cent, to sell a majority stake have met with repeated delays.

A meteoric rise in Sabeco’s share price due to high demand and a small float has complicated matters, making it difficult for industry buyers - including Heineken which already owns a 5 per cent share - or other investors to step in.

The stock listed at 110,000 dong but is now trading at around 255,000 dong, a more than 130 per cent increase.

The document did not mention a timeline for the sale or how much the government wants to raise.

Sabeco, the country’s second-biggest listed firm by market value, is a key plank of a broader privatisation effort, which includes dairy firm Vinamilk, Vietnam Airlines and

rival brewer Habeco.

The Vietnamese government also plans to sell a further sliver of Vinamilk, around 3 per cent, at 154,000 dong each, higher than the previous estimate, according to a government document seen

by Reuters yesterday.

The divestment out of Vinamilk, Vietnam’s top firm by value, is expected to bring in 7.443 trillion dong ($328 million) to the state, Vietnam’s Steering Committee for Enterprise Innovation and Development said in a statement dated Aug. 30.

The State Capital Investment Corp, the government’s representative in Vinamilk, said it estimated the stake sale would fetch 6.5-7 trillion dong. Reuters

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Business Daily Wednesday, September 6 2017 13

Asia Korean crisis

Trump and Moon agree to flex muscles after North Korea nuke U.S. Ambassador to the U.N. said the nation would circulate new draft sanctions and wants the Security Council to vote on them Sept. 11 Shinhye Kang, Seyoon Kim and Erik Wasson

U.S. President Donald Trump agreed to support billions of dollars in new weapons sales to South Korea after North Korea’s largest nuclear test, while his ambassador to the United Nations said the U.S. would seek the strongest possible sanctions against Kim Jong Un’s regime.

Ambassador Nikki Haley said Monday at a meeting of the UN Security Council that Kim was “begging for war” after testing what he claimed was a hydrogen bomb. “Only the strongest sanctions will enable us to resolve this problem through diplomacy,” she said.

Hours after Haley spoke, the Seoulbased Asia Business Daily reported that North Korea was preparing to launch an intercontinental ballistic missile before Saturday. In a phone conversation with South Korean President Moon Jae-In on Monday, Trump said he would support “in principle” the U.S. ally fitting its missiles with heavier warheads, boosting its deterrence against North Korea.

Trump and Moon “agreed to maximize pressure on North Korea using all means at their disposal,” according to the White House statement. Trump “provided his conceptual approval” for South Korea to buy “many billions of dollars’ worth of military weapons and equipment” from the U.S. Haley said the U.S. would circulate new draft sanctions and wants the Security Council to vote on them Sept.

11. Those sanctions faced resistance from veto-wielding members China and Russia, with Vladimir Putin saying he opposed levelling more “useless and ineffective” sanctions on the North Koreans.

“They’ll eat grass, but they won’t abandon their program unless they feel secure,” Putin told reporters while attending an emerging markets summit in Xiamen, China, which was hosted by Chinese counterpart Xi Jinping.

‘They’ll eat grass, but they won’t abandon their program unless they feel secure’ South Korea has detected “continued activities” related to North Korea missile tests in the aftermath of its sixth and most powerful nuclear detonation, according to a government official who asked not to be named in line with government policy. Meanwhile, the country’s defense ministry declined to comment on the Asia Business Daily report saying the isolated state was observed moving an ICBM to a launch site, and there’s a high chance of a launch before the Sept. 9 national foundation day.

The standoff between North Korea and the U.S. has become the most dangerous foreign crisis facing Trump, eclipsing continued military operations in the Middle East and Afghanistan.

Chang Kyung-soo, acting chief of the Defense Ministry’s policy planning office, told lawmakers in Seoul on Monday that North Korea was readying a missile firing, but didn’t give a timeframe. The Yonhap News Agency cited the South Korea’s spy agency as saying there is a chance Pyongyang could fire an ICBM into the Pacific Ocean. North Korea has previously threatened to launch missiles toward Guam.

South Korea’s Defence Ministry will review “various possible options” to

U.S. Ambassador to the United Nations Nikki Haley (R) speaks with Russian Ambassador to the United Nations Vasily Nebenzya (L) and UN Chinese Ambassador Liu Jieyi after the Security Council meeting on the situation in North Korea at United Nations headquarters in New York on Monday. Source: Lusa

find a “realistic” solution to North Korea’s threats, spokesman Moon Sang-gyun told reporters in Seoul yesterday. He was clarifying Defence Minister Song Young-moo’s comment yesterday that redeployment of U.S. tactical nuclear weapons could be an option.

South Korea has removed the final administrative hurdle for the full deployment of a U.S. missile defence system known as Thaad, which China views as a threat to the region’s “strategic equilibrium.”

South Korea’s military also conducted a live-fire drill on Monday, firing a surface-to-surface ballistic missile and air-to-ground rocket into the sea between the Korean peninsula and Japan, with North Korea’s nuclear test site the virtual target.

Haley reinforced Trump’s threat on Twitter to cut off trade with nations that do business with North Korea, though many observers say that would be an unlikely step. While the U.S. has often threatened a China trade war, Trump is yet to follow through, in part given the risk that would create for his own economy.

China is North Korea’s main ally and trading partner. It is also the U.S.’s biggest trading partner. Foreign Ministry spokesman Geng Shuang said Trump’s trade comments were “neither objective nor fair.”

“What is definitely unacceptable to us is a situation in which on the one hand we work to resolve this issue peacefully but on the other hand our own interests are subject to sanctions and jeopardized,” Geng said at a regular briefing in Beijing.

Trump, who reportedly threatened over the weekend to pull out of the U.S.-South Korea trade agreement, had taken aim on Sunday at President Moon’s administration. South Korea is finding its “talk of appeasement with North Korea will not work,” he said on Twitter.

In response, Moon’s office said war shouldn’t be repeated and that South Korea and its allies “will pursue the denuclearization of the Korean peninsula through peace.”

Moon took power in May pledging to seek talks with Kim’s regime. He initially opposed the early deployment of Thaad though has shifted in recent months as North Korea advanced its push for an ICBM that could strike the U.S. The tensions between the allies comes as Trump’s administration looks to convince China and Russia to support stronger sanctions against North Korea. While Trump didn’t rule out an attack on the regime when

asked by a reporter on Sunday, the focus of his tweets and remarks by Treasury Secretary Steven Mnuchin were on sanctions. China and Russia oppose using military force against Kim. Moon said in a phone call with Russian President Vladimir Putin that it is time for the UN to “seriously consider to fundamentally block North Korea’s foreign currency sources by cutting off crude oil supplies and banning its

overseas labour,” according to a text message Monday from Moon’s office.

Sunday’s test, North Korea’s first since Trump took office, was a “perfect success” and confirmed the precision and technology of the bomb, the regime said. Energy from the underground explosion was about six times stronger than the last test a year ago, South Korea’s weather agency said. Bloomberg News advertisement

14 Business Daily Wednesday, September 6 2017

International In Brief Auto industry

Merkel urges automakers to develop cleaner cars more quickly Chancellor Angela Merkel said yesterday Germany should do all it can to avoid a ban on diesel vehicles in cities, adding that her government was willing to help car manufacturers make the change to cleaner models with low-emissions engines.

“We’ll need combustion engines for years and decades - and still at the same time we’ll have to take the bridge, the path towards new mobility and new engines,” Merkel told lawmakers in the Bundestag lower house of parliament. The centre-right chancellor said there was a collective social responsibility in Germany to admit and fix the mistakes made in the auto industry, whose reputation has been hit by a diesel emissions scandal.

Portugal

Experts put H1 deficit at 2.5 per cent The Portuguese budget support technical unit (UTAO) estimates that the deficit was 2.5 per cent of GDP in the first half of the year, better than in the same period last year but higher than the government target of 1.5 per cent for the year as a whole.

The experts who give support to MPs on the Budget, Finance and Administrative Modernisation Commission also said that this figure does not include any fallout from the recapitalisation of state-owned Caixa Geral de Depósitos (CGD) bank in the first quarter that may affect the national accounts.

Monetary meeting

ECB to play for time as pressure grows on easy money August figures from statistics agency Eurostat showed inflation at 1.5 per cent, well short of the central bank’s goal Tom Barfield

T

he E u r o p ea n C e n t ra l Bank will prefer to play for time and seek to calm financial markets than sketch out the exit from its easy-money policy at its tomorrow meeting, analysts agree.

Conflicting pressures are squeezing the ECB: a stronger euro and still-sluggish inflation could justify prolonging its “quantitative easing” bond-buying programme, but it is approaching the legal limits of the scheme and may be forced to wind it down.

“The big question for this week’s meeting is whether (ECB President Mario) Draghi will shed some light on the ECB’s game plan for tapering,” or winding down its quantitative easing QE (programme), economist Carsten Brzeski of ING Diba bank said.

Draghi deliberately left the date of the decision vague after the last meeting, promising an update in the “autumn” -- which most analysts have taken to mean September or October.

Along with low interest rates and cheap loans to banks, the ECB’s 60 billion euros (US$71.5 billion) of bond purchases per month are designed to encourage growth in the 19-nation eurozone, pushing inflation towards its target of just

below 2.0 per cent.

Data that will feed into the ECB staff’s September forecasts for the coming years have yet to show price growth on track.

The projections will reflect the accelerating economic growth of 0.6 per cent seen in the single currency area between April and June.

But August figures from statistics agency Eurostat showed inflation at 1.5 per cent, well short of the central bank’s goal.

Meanwhile, the “core” measure highlighted by ECB policymakers, which excludes volatile food and energy prices, reached just 1.2 per cent.

One reason is that the euro has appreciated against other currencies as the recovery gathers pace, braking price growth as imports become cheaper.

Nevertheless, “euro strength is unlikely to derail the eurozone recovery, leaving the ECB on track for a tapering announcement relatively soon,” said economist Marco Valli of UniCredit.

Why now?

“Regardless of the exact timing of the announcement, what really matters is the final outcome,” Valli added. “Expect the ECB to reduce stimulus next year, but in a very gradual and open-ended fashion.”

Following July’s meeting of the

Brexit

May aims to speed talks Prime Minister Theresa May is to use a speech in late September to try to force the pace of Brexit negotiations as an October showdown with her European counter­ parts looms. She will explain how a raft of British position papers offer a vision of a “deep and special partner­ ship” with the European Union, and make the case for continuous talks with a view to injecting urgency into the discussion and tilt the direction towards trade.

This much has been said by her team in the lead-up to an address that will unveil her latest thinking on Britain’s exit from the EU. GDP

governing council, Draghi emphasised the need to be “persistent and patient” in the face of unresponsive inflation, suggesting that an end to QE will be drawn out.

Policymakers still see slack in the eurozone economy, and have pointed to slow wage growth linked to still-high unemployment and underemployment in some member countries as the biggest factor holding back inflation.

Prolonging the ECB’s intervention could support growth and inflation for longer, making a withdrawal without major upsets more certain.

But the bank is running up against the limits set in its own rules and insisted on by European and German courts, which bar it from buying more than 33 per cent of any one country’s debt.

Coveted German bonds have also become scarce on the market, making it difficult for the ECB to buy in proportion to the “capital key”, or the share of its capital contributed by each eurozone nation.

“Technical constraints are already biting, and will get worse,” said Valli.

“Due to bond scarcity, some kind of tapering in 2018 is unavoidable,” ING’s Brzeski agreed.

Softly softly

Policymakers would look for a way to make tapering as painless as possible for the economy, he added.

Almost 80 per cent of respondents in a Bloomberg News survey of economists agreed that the ECB would reduce its monthly purchases from January.

A large majority of analysts also expect the bank to announce only one tapering “step” at a time, leaving its options open to boost QE again if the impact on the economy and the inflation outlook is too severe.

For September, though, “we expect that Thursday’s meeting will again be about what Draghi did not say, rather than what he did,” Brzeski said, leaving central bank watchers to sift the president’s words for hints about the decision day. Reuters

GDP

South Africa exits recession in second quarter The central bank halved its economic growth forecast for this year to 0.5 per cent and trimmed the outlook for 2018 to 1.2 per cent from 1.5 per cent

Nigeria’s economy expands again

Arabile Gumede and Thembisile Dzonzi

Economy expanded in the second quarter, ending its worst slump in 25 years.

Gross domestic product of Africa’s largest oil producer grew 0.55 percent in the three months through June from a year earlier compared with a revised 0.9 percent contraction in the first quarter, the Abuja-based National Bureau of Statistics said on its Twitter account yesterday. The median of 10 economists’ estimates in a Bloomberg survey was for growth of 1.3 percent. This ends five straight quarters of contractions that also saw the economy decline 1.6 percent last year, the first such drop since 1991.

South Africa’s economy exited its second recession in almost a decade in the three months ended June 30 after agricultural output surged.

Gross domestic product increased an annualized 2.5 per cent in the second quarter compared with a revised decline of 0.6 per cent in the previous three months, the statistics office said in a report released yesterday in the capital, Pretoria. The median of 21 estimates compiled

by Bloomberg was for growth of 2.3 per cent. The economy expanded 1.1 per cent from a year earlier.

Low demand for the country’s exports and political turmoil that’s caused instability have weighed on output by Africa’s most-industrialized economy. S&P Global Ratings and Fitch Ratings Ltd. cut the nation’s international debt to junk in April after President Jacob Zuma

fired Pravin Gordhan as finance minister, with the changes roiling markets and battering business and consumer confidence. The central bank cut its benchmark rate for the first time in five years in July, citing concern about the growth outlook.

“Higher commodity prices likely continued to catalyse growth in the mining sector,” Mamello Matikinca, an economist at FirstRand Ltd.’s First National Bank unit, said in an emailed note from Johannesburg before the release of the data. “While a shallow rate-cutting cycle may provide some relief to the consumer going forward, we nonetheless expect the recovery to be short-lived given just how weak consumer confidence and real wage growth is.”

Agricultural output surged 34 per cent, the agency said.

The central bank halved its

economic growth forecast for this year to 0.5 per cent and trimmed the outlook for 2018 to 1.2 per cent from 1.5 per cent. GDP expanded at the lowest annual rate since a 2009 recession last year.

The inflation rate dropped to an almost two-year low in July, reaching 4.6 per cent.

The government will probably cut its output forecast in October, when Finance Minister Malusi Gigaba delivers his first medium-term budget policy statement.

In the February budget review, the National Treasury left its growth estimates unchanged from the midterm budget in October, with the economy forecast to expand 1.3 per cent this year, 2 per cent next year and 2.2 per cent in 2019. Annual growth has slumped since 2011, which has hampered the government’s ability to reduce the 27.7 per cent jobless rate. Bloomberg News

Business Daily Wednesday, September 6 2017 15

Opinion

Asia’s taxi companies give banks real competition Adam Minter a Bloomberg View columnist

I

n Southeast Asia, mobile banking is taking on a whole new meaning. Last week, Grab, one of the region’s top ride-hailing companies, announced that users of its app can start sending credits -- used to pay for rides -- to each other. By the end of the year, they’ll be able to use those credits at more than 1,000 restaurants and retailers. If all goes well, Grab will one day be known as an e-payment platform that just happens to offer a taxi service.

That’s a radical evolution, but hardly illogical. As many as 2 billion people lack access to traditional financial services worldwide. Most are concentrated in developing countries with cash-based economies, where banks have long resisted offering services such as loans, checking accounts and credit cards. As incomes in these countries rise, technology is helping entrepreneurs leapfrog old ways of doing business. In particular, mobile phones have enabled a parallel financial system to evolve, with some intriguing results.

The trend began in Kenya. In 2007, Safaricom Ltd. introduced M-Pesa, a service that allowed users to move money via text message. In short order, M-Pesa evolved into a full-fledged payment-and-banking system that runs on the region’s dominant feature phones. In 2016, M-Pesa processed 6 billion transactions for 30 million customers in 10 countries. Africa now has more “mobile money” accounts than it has bank accounts.

In Asia, the transformation has been just as dramatic.

China’s leading e-commerce and social-media services -- Alibaba and WeChat -- have created payment platforms that are so ubiquitous that cash has all but disappeared in some places. In 2016, people in China made about US$5.5 trillion in e-payments. In India, about a fifth of the population now uses such payments, mostly through startups such as Paytm E-commerce Pvt. Southeast Asia is the next frontier, and in some ways the most interesting. With 640 million people, and growing access to the internet and mobile phones, it’s certainly fertile ground for financial start-ups. Over the past three years, they’ve started to emerge from a surprising source: the innovative local ride-hailing industry. That’d be an unusual business model in places where credit cards and bank accounts are common -- Uber Technologies Inc., for one, would have little incentive to try something similar in the U.S. But in countries such as Indonesia, where only 36 per cent of people have a bank account, and fewer than 5 per cent have a credit card, it’s a great way to lure users and lock them into a convenient payments platform. The more than 200,000 drivers who work for Go-Jek, Indonesia’s leading ride-sharing service, can use their e-wallets to store their earnings or spend them on other services.

Customers can use the wallets to pay for everything from food delivery to massages to house-cleaning.

In more affluent Singapore, Grab has much the same idea, expanding the use of its e-wallet to small businesses such as coffee shops, hawkers and wet markets. By allowing vendors to accept money without the hassle or expense of renting a payment terminal, and giving customers the convenience of paying with an app they’re already comfortable with, it may have a significant advantage.

Its ability to collect vast amounts of data from users -combining location and traveling habits with purchase histories, say -- could become a game-changer. It’s no surprise that the company wants to move into insurance and lending.

Taxi companies going to war with banks for the chance to offer e-payments would’ve sounded implausible just a few years ago. Today, it’s great news for consumers, particularly those left out of the traditional financialservices market. Competition should reduce the cost of joining the digital economy, make tasks like paying bills easier, force banks to pay attention to lower-income customers, and put pressure on credit card companies to lower fees and penalties. In Singapore and elsewhere, banks are rallying to set up their own e-payments standards. They may be in for a wild ride. Bloomberg View

‘As many as 2 billion people lack access to traditional financial services worldwide’

Prime Minister Narendra Modi

Flaws in India’s growth model are becoming clear Mihir Sharma a Bloomberg View columnist

I

ndia has a way of confounding expectations. Analysts agreed that, months after Prime Minister Narendra Modi’s ill-fated decision to withdraw 86 per cent of currency from circulation overnight, growth would bounce back. Economists polled by Bloomberg expected growth in the April to June quarter to be 6.5 per cent; other estimates were even higher. So when the government’s official statisticians released the real number last week -- 5.7 per cent over the equivalent quarter of the previous year -- there was general surprise, even shock.

From the outside, it may seem puzzling that Indian growth is stuttering, given the benign macroeconomic environment: easy money flowing in, global growth reviving, solid government revenues and deep foreign exchange reserves, oil that’s still not too pricey, and decent monsoons that have kept food prices and thus overall inflation low. This is a very different scenario than India faced the last time growth began to stutter, when the government had to deal with high oil prices sending inflation, fuel subsidies and the import bill through the roof, not to mention 2013’s socalled taper tantrum. So what could India be doing wrong, given that everything seems to be going right?

In fact, no one should be shocked. India’s economy has been growing less and less healthy for awhile.

GDP growth has now declined steadily for six straight quarters. This is a slowdown caused by factors deeper than the cash ban or any other temporary phenomenon. Something is broken in the Indian government’s policy mix.

Growth is unlikely to revive till it’s fixed. It’s true there might be a bit of a dead cat bounce in the medium term: For example, manufacturers who were running down inventories in anticipation of India’s new indirect tax regime, the goods and services tax or GST, might expand output a bit more. Imports might fall a bit as a consequence of subdued domestic demand.

But none of that will change the fact that government spending and low oil prices have deceptively boosted the growth numbers, masking the true state of the economy. In fact, if public spending is excluded, growth in the past quarter barely topped 4 per cent. Export growth is terrible and industrial growth is the lowest in five years. And the government will struggle to keep investing

“

at these levels; it started spending big unusually early in India’s financial year, which starts in April, and has already run through 93 per cent of its budgeted fiscal deficit.

This has been Modi’s preferred policy mix: government spending, including on infrastructure, combined with seeking heavy foreign exchange inflows to stimulate the stock market and fund the private sector. The model worked -- just about -- as long as oil and commodity prices were falling. That global phenomenon led to low inflation in India -- a big importer of oil -- and kept government revenues buoyant and costs low. Now it’s clear that this model is broken and has been for some time -- since at least the beginning of 2016.

Last year, just as the effects of the oil bonanza were wearing off, Modi introduced “demonetization,” insisting that “the best time for surgery is when the patient is healthy.” It turns out that the Indian economy wasn’t that healthy at all. Worse, the cash ban -- poorly conceived and executed -- has greatly damaged Modi’s reputation as an economic manager.

Nor can anyone explain why, if Modi wanted to expend his considerable political capital on a big and disruptive move, he would pick an untested policy with few benefits and big risks, one that his best economists warned him against -- instead of, say, spending that political capital on cleaning up the bad debts that are choking India’s financial system, or on reform to India’s archaic, socialist-era factor markets. Now that the failure of the policy is generally accepted, it’s hard to see how his government can be trusted to introduce effective policy changes.

Yet, effective reform -- and political will -- is precisely what’s needed now. The government’s first task should be to clean up bad debts far quicker than it has so far -- even if powerful people, including company owners, lose money in the process. Second: The government needs to stop chasing after foreign capital to replace shy domestic capital, if it means that the rupee stays high and exports struggle. And third: Officials must quickly fix those parts of the GST that are putting small companies and exporters out of business. It may take Modi some time to recover his reputation as an economic manager.

That’s all the more reason to start the process now. Bloomberg View

Now that the failure of the policy is generally accepted, it’s hard to see how his government can be trusted to introduce effective policy changes

”

16 Business Daily Wednesday, September 6 2017

Closing Aviation

20 years amid increased competition that Budget airline Hong Kong Express expects to add wide body aircraft to fleet lowered fares.

Low-cost airline Hong Kong Express Airways, part-owned by Chinese conglomerate HNA Group, plans to add wide body aircraft to its fleet eventually to make use of limited airport slots and allow for growth to longer-range destinations, its chief executive said yesterday.

The airline and sister carrier Hong Kong Airlines have been expanding rapidly in a challenge to Hong Kong’s dominant airline, Cathay Pacific Airways, which last month reported its worst first-half loss in at least

“I think we will certainly progress to wide bodies,” HK Express Chief Executive Officer Andrew Cowen told Reuters. “One solution to the slots constraints is to perhaps do fewer frequencies but with wide bodies. Obviously wide bodies would also allow us to go further afield.”

HK Express flies to 28 destinations in mainland China and other countries such as Japan, Thailand and Vietnam with a fleet of 20 A320 family narrow body aircraft. Reuters

Leadership

Want to be an entrepreneur?

Leave politeness at the door People in Asian, Middle Eastern and Latin American countries were likely to say they valued selfprotectiveness in leaders Chris Stokel-Walker

M

aybe Travis Kalanick and Steve Jobs were onto something.

There are more entrepreneurs in countries where ruthless business traits are held in higher esteem—even after controlling for gender, education level, and gross domestic product per capita, according to a review by researchers at Aston Business School in the U.K. and Kansas State University in the U.S.

“You need to be a bit guarded, competitive and hardnosed” Ute Stephan, a professor at Aston Business School

About one in eight people in the U.S. have set up their own business. In places like Belize, Burkina Faso and Peru, that figure is closer to one in four, according to data gathered by the Global Entrepreneurship Monitor consortium, a study

group coordinated out of the Aston Business School and the University of Strathclyde Business School.

In most areas of the world, charisma is seen as a desirable trait. Think of bosses such as Richard Branson, who has brokered audacious deals for his Virgin group of companies—including plans for space travel—by dint of his personality. But characteristics vital to self-preservation are more highly valued in countries with more entrepreneurs, surveys showed.

“You need to be a bit guarded, competitive and hard-nosed” “You need to be able to elicit co-operation from others, but at the same time, you can’t give too much away, so you need to be a bit guarded, competitive and hardnosed,” said Ute Stephan, a professor at Aston Business School. “When these two things come together in a culture, that’s when you have the highest entrepreneurship rates.”

People in Asian, Middle Eastern and Latin American countries were likely to say they valued self-protectiveness in leaders—characterized by face-saving behaviour that could spark conflict—as well as charisma, defined as demonstrating

integrity and inspiration to employees, highly valued in places such as Denmark, Finland and South Korea.

“I see a lot more collaboration in the U.K.” Consider Chile, where around a third of adults in the country are entrepreneurs.

At US$24,000, it has a similar GDP per capita as Croatia (US$22,400), but double the proportion of entrepreneurs.

Its people prefer

strong-willed leaders, while Croatians tend more towards “nice” bosses, according to the review. Chile also has a similar GDP growth rate to the U.S., though its proportion of entrepreneurs is around 10 percentage points higher than the U.S., where people put less of a premium on strong-willed leaders.

Sarat Pediredla, 36, was born in India but moved to the U.K.—which has similar

rates of entrepreneurship— in the late 1990s. Now, as chief executive of app developer Hedgehog Lab, he has experienced life working in offices in the U.K., U.S., and India.

“In the west, we’re a lot more diplomatic,” he said.

“In India, it’s very cut-throat in terms of the competition. I see a lot more collaboration in the U.K. than in other cultures.” Bloomberg News

Politics

Summit

PMI

Taiwan’s Tsai names rising star as Premier

President Xi wants to put relations Euro Area poised for fastest with India on “right track” economic expansion in a decade

President Tsai Ing-wen named a popular southern Taiwan mayor to lead her government, as she seeks to rebuild support ahead of next year’s local elections.

Tsai yesterday appointed Tainan Mayor William Lai to take over as premier, a move that had been widely expected after Lin Chuan resignation’s a day earlier.

Lai will be tasked with reorganizing the cabinet after a series of bruising policy fights to push through key pieces of Tsai’s agenda.

“Lai is the right person as our focus now turns from planning to execution,” Tsai said. “As mayor, he knows how to handle public opinion and how to respond quickly.”

Tsai’s ruling Democratic Progressive Party’s is preparing for its first electoral test at the end of next year, when more than 20 cities and counties hold leadership elections. A cabinet reshuffle will give Tsai’s party the opportunity to put aside disputes surrounding her government’s labour and pension reforms and focus on bolstering an approval rating that has sunk below 30 percent.

“It remains to be seen whether Lai can complete the tasks Tsai has given him, as he lacks experience in central government,” said Chang Ling-chen, an emeritus professor in National Taiwan University’s political science department. Bloomberg News

China wants to put its relationship with India on the “right track”, President Xi Jinping told Prime Minister Narendra Modi yesterday, as the two countries sought to mend ties damaged by a recent tense Himalayan border standoff.

The meeting was the first between the two leaders since Chinese and Indian troops ended a standoff in the Doklam border region about a week ago that was the neighbours’ most serious military confrontation in decades.

Talks between Xi and Modi had been in question before the de-escalation, which came just in time for China to host the BRICS summit of emerging economies, which also includes Brazil, Russia and South Africa, in the south-eastern city of Xiamen.

Healthy, stable ties were in the interests of both countries, Xi told Modi in a meeting on the sidelines of the summit, according to a statement from China’s foreign ministry.

“China is willing to work with India ... to increase political trust, advance mutually beneficial cooperation and promote the further development of China-India relations along the correct path,” Xi said. Reuters

Euro-area economic growth remained solid in August even as services activity slowed, according to IHS Markit.

A composite Purchasing Managers’ Index held at 55.7 last month, slightly below an Aug. 23 flash estimate of 55.8. IHS Markit said yesterday that although the region’s services sector expanded at the weakest pace since January, gross domestic product is poised to increase 0.6 percent in the third quarter, setting the stage for the best annual performance in a decade.

“There’s good reason to be optimistic that the current spurt of growth has further to run,” said Chris Williamson, chief business economist at the London-based company. “Forward-looking indicators such as new-order inflows and future expectations have dipped to levels seen back at the turn of the year, but remain sufficiently elevated to suggest that any potential slowdown in growth in coming months will be only very modest.”

The generally robust economic trend should come as good news to officials at the European Central Bank, who meet later this week to update policy. Economists surveyed by Bloomberg predict the Governing Council will unwind asset purchases over nine months starting early next year. Bloomberg News