Business Daily #1406 October 20, 2017

Season for crabs, reason for records, and getting smart on art Consigliere Pages 8 & 9 Friday, October 20 2017 Year VI Nr. 1406 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Oscar Guijarro MIF

Angolan Businessmen’s Confederation sees MSAR role as mainly politics Page 6

Legislation

Bill to promote casino safety on the way Page 2

www.macaubusiness.com

Gaming

Canada presses charges in casino money-laundering case Page 7

Results

Chow Tai Fook glows again following 13-month decline Page 4

LRT plans speeding up Infrastructure

In spite of the slow pace of construction works for the LRT plans are in hand to extend its reach. With authorities mulling linking Taipa Ferry Terminal to the Border Gate. Page 3

A report has been produced by the Commission Against Corruption. Focusing on the performance of the Meteorological and Geophysical Bureau and how the city dealt with Typhoon Hato.

It doesn’t make for pleasant reading. Leaving few unscathed. And highlighting the need to undertake big changes.

Hato report Page 5

Human rights in need of help EU-MSAR The annual report by the European Union titled Human Rights and Democracy in the World 2016.

Making for gloomy reading on the human trafficking situation. The study spotlights Macau’s rejection of how to deal with the issue. Page 4

China returns to FX purchases

Reserves PBOC purchased foreign exchange reserves again after 23 months. Moderation in capital outflow during the year enabled monetary authorities to purchase a net RMB850 million-worth of foreign exchange in September. Page 10

HK Hang Seng Index October 19, 2017

28,159.09 -552.67 (-1.92%) Worst Performers

Cathay Pacific Airways Ltd

+0.62%

CLP Holdings Ltd

-0.37%

Geely Automobile Holdings

-7.45%

AAC Technologies Holdings

-2.85%

Link REIT

+0.08%

Swire Pacific Ltd

-0.52%

New World Development Co

-4.05%

China Mengniu Dairy Co Ltd

-2.80%

CK Infrastructure Holdings

+0.07%

Hong Kong & China Gas Co

-0.54%

Henderson Land Develop-

-3.61%

China Construction Bank

-2.73%

Bank of East Asia Ltd/The

-0.14%

Hang Seng Bank Ltd

-0.58%

Industrial & Commercial

-3.16%

Galaxy Entertainment Group

-2.47%

Want Want China Holdings

-0.33%

Hengan International Group

-0.60%

China Shenhua Energy Co

-3.03%

China Resources Land Ltd

-2.44%

22° 28° 20° 27° 20° 26° 21° 26° 22° 26° Today

Source: Bloomberg

Best Performers

Sat

Sun

I SSN 2226-8294

Mon

TUE

Source: AccuWeather

Signal 10 report

2 Business Daily Friday, October 20 2017

Macau Law

Overall revised draft of principles on militarising security force completed soon The government has also announced the introduction of a mechanism for social housing applications

Courts

Court of Second Instance rules against Pearl Horizon appeal The Court of Second Instance has ruled against an appeal by developer Polytex regarding the land plot on which property development Pearl Horizon was to be located, according to a court release.

The developer was seeking to reverse a dispatch published in the Official Gazette in January of last year declaring the expiration of the group's land concession. The group's original land concession lasted 25 years, expiring in December 2015. The plot in question, located in the Areia Preta district on the

Macau Peninsula, measured 67,536 square metres and was set to house an 18-tower, 47-floor development.

Over 3,000 of the units of the housing development were sold off-plan. One of the groups running for a seat in this year's Legislative Assembly elections was comprised of purchasers of these off-plan units.

The government has said it will attempt to seek a solution that can balance the general interests and benefits of society regarding the case.

Cecilia U cecilia.u@macaubusinessdaily.com

Forces Affairs Bureau and Academy of Public Security Forces.

The overall revision of the principles of militarising the city’s security force will soon be completed, said Executive Council spokesperson Leong Heng Teng yesterday while announcing the revisions of three other bills at Government Headquarters.

Judiciary Police recently released a statement about a future ‘attack’ drill on the city’s casinos involving the six gaming operators on account of the recent terrorist incidents occurring in the Philippines and Las Vegas.

Secretary for Security Wong Sio Chak stressed on Wednesday that arrangements with gaming operators in terms of providing ‘protective equipment’ or other strategies to prevent terrorism could only be planned once there is legal support.

Yesterday’s announcement about the revision of the principles of militarising Macau’s security forces was confined to clause 43 of the expansion of range in selecting officials for the Macao Customs by the Public Security

Constant mechanism for social housing applications

Mr. Leong also introduced a bill regarding social housing with the presentation of a constant mechanism for social housing applications. However, the bill removed the allowance of applications made by full-time students.

Arnaldo Ernesto dos Santos, President of the Housing Bureau, said applications will be available before year-end, while noting that the next round of applications will not implement the new arrangement of the bill given that time would be required for legislative procedures when the bill is sent to the Legislative Assembly.

However, requirements regarding applicants’ income and owned assets would be soon adjusted prior to the bill becoming law.

Leong remarked that the constant mechanism for social housing application would allow a clearer understanding of the most up to date demands for housing. advertisement

Business Daily Friday, October 20 2017 3

Macau LRT

LRT still not moving… but its blueprint is New LRT segment via water is pondered. The office responsible for research and development of the local metro line told Business Daily that it is currently conducting a study to propose a new link between the Peninsula and Taipa on the east-end side of the MSAR territory Sheyla Zandonai sheyla.zandonai@macaubusiness.com

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he Macau SAR Government is pondering the construction of a new segment of the Light Rail Transport (LRT) to connect the Ferry terminal in Taipa – also known as Pac On – to the Border Gate, in the north of Macau Peninsula, according to information provided to Business Daily by the Office for Transport Infrastructure (GIT).

“It would not necessarily be a tunnel. It could also be a bridge,” GIT’s spokesperson told us.

According to the agency created to oversee the research and development of all matters related to the construction of the MSAR’s LRT, the authorities are presently contemplating different ways of connecting Taipa and Macau on the east-end side of the MSAR territory.

“Currently, [the segment] is only at research and planning stage. It may not become a project. When we finish the research, we will suggest it to the government,” the GIT spokesperson said.

For a similar reason, GIT claimed that submitting the development of the potential new segment both for public consultation and public tender, in addition to being a decision that concerns the MSAR Government, “might only be considered” if GIT’s ongoing research becomes an approved project.

LRT via bridge

As for the previously announced LRT connection between the Peninsula and Taipa, planned to link the Barra station to the Ocean station, progress is currently pending completion of the Barra station, according to GIT. “The under-tunnel in Sai Van Bridge has already been planed with the development of the LRT in mind. But we currently need to do some improvements,” said the GIT spokesperson.

The 2.2 kilometre cable-stayed bridge opened in 2004 has a two-lane channel underneath which is only opened under extreme weather conditions, such as typhoons, to enable road communication between the Peninsula and the island.

However, GIT says the Office’s priority is the completion of the LRT line and network in Taipa.

Source: GIT

“We are now working on installing the train systems within the different stations,” and expect “to launch the services in Taipa in 2019,” GIT claimed.

As for the LRT’s development on the Macau side, the Office spokesperson explained that it will follow once the Taipa sub-system is completed.

“We will then move on to the Barra station and Sai Van [station], and other remaining steps on Macau side,” GIT clarified.

The LRT’s Barra segment involves two different projects - namely, the Public Transport Interchange (PTI) station, currently under construction, and Barra station, on which construction has yet to begin.

“There is no date established yet for the beginning of the construction of the Barra station,” GIT confirmed to Business Daily.

The LRT construction site at Barra has been singled out as one of the reasons leading to the ‘temporary’ closing of Pousada de São Tiago, located in the vicinity, nearly seven months ago.

According to previous comments by the Executive Director of SJM Holdings Limited, Angela Leong On Kei, in charge of the property, the hotel had experienced trouble receiving guests since the PTI construction began.

On the ‘missing’ link between the inland inter-stations segment currently named Outer Harbour Ferry Terminal and Border Gate – which came under fire during previous public consultation – GIT highlighted it is “not yet confirmed,” pending further consideration on the part of the authorities, with the option of launching a new public consultation “not yet being considered.”

Fifth bridge?

Contacted by Business Daily, the Office for the Development of Infrastructure (GDI) did not confirm if GIT’s study proposal for an extension of the LRT line on the east side of the MSAR would be connected to the fourth bridge project already approved by the government – although currently suspended – or would rather entail the construction of a fifth bridge.

The project for the fourth bridge linking the artificial island of the Hong Kong-Zhuhai-Macau Bridge reclaimed on the outer shore of the Macau Peninsula (linked to Zone A) to land reclaimed near the Macau International Airport in Taipa (Zone E1), was halted in mid-August after the proposal was slammed by the central government and put on hold pending further studies on the safety conditions of its waterways.

Beijing’s decision came after the MSAR Government had already granted a contract worth MOP189 million to Ove Arup & Partners Limited to oversee and manage the project and the budget for the construction of the bridge.

In September 2016, the MSAR Government announced that it had inked a contract with CCCC Highway Consultants Co., Ltd., a Mainland China-based infrastructure design company, for the initial design of the fourth Macau-Taipa connection project.

The project involves a 3.5 kilometre bridge with a total cross-sea section of 2.87 kilometres, per GDI. The Office for the Secretary of Land, Public Works, and Transport Bureau (DSSOPT) has received our questions and pledged to issue a response “soon.”

4 Business Daily Friday, October 20 2017

Macau Opinion

Oscar A. Madureira*

NO MORE BULLIES, please With the exception of a few cases, Macau’s population (allow me to avoid using the usual resident/non-resident terminology that doesn’t apply in this context) has generally respected the autonomy and independence of local lawyers.

Despite the colour of their skin, origin or nationality, lawyers have been seen as independent technicians without any commercial or financial interests in the result of clients’ pleadings, their participation in the disputes restricted to the representation of the said clientele. Thus, lawyers’ neutrality is usually respected even by the parties they do not represent, as common citizens do understand not only the lawyer’s role in pleading but also, and more significantl, the importance of lawyers in the rule of law system applicable in the Macau SAR. However, this common sense seemed to be forgotten last week by the 50 members of an association that organised a demonstration in front of a local law firm. First of all, according to the information reported by media the following day, the negotiations for the settlement of the issue involving the said association were still ongoing and was timely reported to the association leadership.

Besides, and assuming that the law firm had effectively caused a loss, the association should have lodged court proceedings against the law firm and eventually informed Macau Lawyers Association of the potential breach of the applicable regulations of one (or more) attorneys of the said law firm. These are the instruments under Macau’s rule of law in which a claim for any potential losses suffered may be made.

Demonstrations like the one we saw last week do not qualify as such.

Actually, demonstrations like that do not have any effect at that level.

They’re basically an instrument of bullying others. It reminds me of those groups of (cowardly) teenagers that gather to intimidate youngsters who refuse to follow their steps or to act as they want.

A group of 50 people shouting in front of a building would never grant the association any compensation rights, but it served to show others – that is, Macau society - that those who do not please such a group of people will have to face a similar reactionary strategy. This type of behaviour has a name and it is also a breach of Macau’s Criminal Code provisions.

Macau authorities should pay attention to this sort of behaviour and put in place measures to protect citizens against bullies who feel protected by the number of effectives they purport to represent. First of all, the PSP should consider not authorising this sort of (nonsense) demonstration as they are not motivated by or defending any relevant issue and or the lawful rights of its participants.

Secondly, the Macau courts should continue treating the practitioners of this sort of action as criminals, punishing them in the same measure they’ve recently punished similar actions. Macau is a harmonious and tolerant society which has learned to live in peace under very unique historical circumstances because its authorities and populations understand the idiosyncrasies and the uniqueness of its political and legal system.

The stability and maintenance of that system depends upon those who trust local institutions to resolve and decide upon disputes in which they’re involved without taking justice into their own hands.

*lawyer and contributor to this newspaper.

Checks and balances

EU report points finger at human trafficking in Macau The European Union (EU) annual report on Human Rights and Democracy in the World 2016 highlights that ‘the major issues challenging human rights’ in the city are ‘trafficking in human beings, the lack of a framework for greater democratic participation, and the failure to enforce laws regarding collective bargaining.’

The report also pointed the finger at the Macau SAR Government’s opposition to a suggestion by the United Nations Committee against Torture (UN CAT) to establish an independent human rights

body, which argued the recommendation ‘was not applicable to Macao as a Special Administrative Region of the People’s Republic of China.’

On the other hand, the report suggested that the city continued to enjoy ‘a high level of civil liberties and respect for human rights and fundamental freedoms.’

It further stated that ‘the rights and fundamental freedoms’ of the people of Macau ‘continued to be respected and the rule of law was upheld’ in the light of principles defined within the framework of

‘one country, two systems’, enshrined in the Basic Law of Macao.

In 2016, the EU continued to support activities of, exchange information with, and strengthen the capacity of local human rights defenders and Non-Governmental Organizations (NGOs) through seminars and online campaigns.

Following the joint workshop on trafficking in human beings which was held in January 2016, the report claimed that the ‘EU and Macao look forward to reinforcing their co-operation in this area.’ S.Z.

HKEX

Chow Tai Fook sales pick up in Q3 Cecilia U cecilia.u@macaubusinessdaily.com

Luxury retailer Chow Tai Fook Jewellery Group Limited saw double-digit growth in its third quarter results in the Special Administxzrative Regions.

The latest filing posted by the Group with the Hong Kong Stock Exchange revealed a year-onyear increase of 13 per cent in the SARs’ same store sales for the quarter, while same store sales volume growth experienced an uptick of 12 per cent year-on-year.

Sales growth in Mainland China, meanwhile, was comparatively slower, with same store sales up 9 per cent year-on-year and 3 per cent volume growth in same store sales.

After 13 consecutive quarters of decline since the first quarter of fiscal 2015 in the sales of gemset jewellery in Macau and Hong

Kong, sales posted an increase of 7 per cent year-on-year for the third quarter.

‘The improvement was primarily attributable to the remarkable volume growth during the quarter,’ the group wrote in the filing.

By contrast, the sales of gem-set jewellery on the Mainland dipped 1 per cent year-on-year. Nevertheless, sale store average selling price improved to HK$6,500 (US$809) from HK$6,100.

Shining sales

The filing disclosed that same store sales of gold products in the SARs and Mainland China had registered growth, with both volume and average sales price up.

Both SARs saw a rise in same store sales of 21 per cent year-onyear, with average sales price hitting MOP7,100 in the third quarter compared to MOP6,800.

Meanwhile, same store average sales price was HK$3,600, up from

HK$3,300 the previous quarter in Mainland China. Same store sales of gold products registered an increase of 15 per cent year-on-year.

The average international gold price dropped 4 per cent in the last quarter when compared to the same period last year.

‘The increase in average sales price was primarily attributable to the gain in average weight per gold product sold,’ stated the group, which further wrote that a decline of 41 per cent was posted during the third quarter regarding the retail sales volume settled by China UnionPay or Chinese Yuan regarding total retail sales in Hong Kong and Macau.

The growth of sales volume in Mainland China was attributable to ‘strengthened co-operation with major online platform partners,’ with the retail sales value of e-commerce jewellery on the Mainlanddoubling (104 per cent) in the second quarter.

Business Daily Friday, October 20 2017 5

Macau

Flooded zone at ponte 16 after Typhoon Hato battered the city

CCAC

A one-man decision made at home The latest CCAC report has exposed the many flaws of the SMG’s internal administration as well as the procedures for forecasting typhoons. The Commission stated that the former SMG head is to be held responsible for the previous incorrect decisions on hoisting typhoon signals during the hit of Typhoon Nida last year and Typhoon Hato in August Cecilia U cecilia.u@macaubusinessdaily.com

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he previous decision of hoisting typhoon signals in the city was highly dependent upon decisions made by the former head of the Meteorological and Geophysical Bureau (SMG), Fong Soi Kun, without the so-called meeting that was to be held with other related heads and technicians whenever a typhoon hit the city, the latest report conducted by the Commission Against Corruption (CCAC) divulged.

After nearly a month of investigation, the city’s corruption watchdog exposed the many flaws of the weather department, including the absence of a special group to handle works regarding typhoon forecasting.

‘When there is the potential for a signal 3 or 8 typhoon to land in the city, the former Director would call the Deputy Director and the head of the meteorology department to discuss whether to put up any typhoon signals, without any frontline weather forecasting staff’ during working hours, the report wrote.

When potential typhoons could hit the city during non-working hours or holidays, the former Director would examine online data and information at home and deliver his decision via phone calls.

According to the investigation, CCAC revealed that the regular ‘weather

meeting’ at the department, which is usually hold at 4:00 pm every day to discuss the weather forecast for the coming week, and which the former Director would not attend, lasted only five minutes before the day Typhoon Hato hit the city without discussing the typhoon at all. Deputy Director Leong Ka Cheng informed meeting participants that the decision about Hato had already been made by the then Director.

Absence of standards in decision-making

Staff responsible for forecasting typhoons told CCAC that they were uncertain about the standards the Director would consider when making decisions.

Although Fong said he would consider the criteria of ‘extensiveness, representativeness and persistence’ when making a judgement, there were different interpretations existing among staff. For instance, the former Director would consider the extensiveness of the city affected by strong winds, whereas the Deputy Director would base his decision on the results of monitoring stations set on the bridges ‘Standards to consider when to hoist typhoon signals should not be confined to the use of the Director and they should not be ‘secretive’ or ‘hidden, slammed the corruption watchdog. ‘If weather forecast staff are uncertain [about the details], it would be even [more] impossible for the public to know.’

Zero consultancy from frontline forecasters

Fong replied to CCAC’s doubts on not consulting frontline technicians that the responsibilities of technicians are only confined to monitoring and forecasting, saying that any opinions about the hoisting of signals should be reported to the meteorology department head and that it was not necessary for the Director to consult frontline staff.

The CCAC report quoted Fong’s explanation that ‘technicians for sure are less experienced than Directors and analysis might not be accurate.’

Poor internal management

In light of the online rumours about the Deputy Director’s religious beliefs, although CCAC could not confirm whether it is a fact, staff working for SMG disclosed that everyone in the department knew and some particular staff who were on duty during the night time felt anxious about Leong’s behaviour.

Although citizens can enjoy the freedom to have religious beliefs,the Commission opined that rituals or activities should be avoided in a working environment in order to prevent psychological impact upon colleagues and departments.

The Commission further criticised the former head for remaining indifferent to the matter.

The report reads that Leong had rejected the request made by the technician for arranging to have more staff working during the hit of Typhoon

Hato, insisting that technicians should only observe the wind speed, not make decisions on hoisting signals.

Special consultation mechanism needed

A special consultation mechanism, including the participations of technicians to discuss typhoons, should be set up, suggested the watchdog.

A forecast emergent mechanism as well as a strong roster system should also be created.

CCAC further advised the initiation of standards for deciding the hoisting of typhoon signal publicised.

An improvement should also be made in terms of facilities and personnel management and a management panel should be responsible for resolving issues when they arise.

However, the report does not specify the accountability arrangement for the former SMG head.

Secretariat to follow up on case

The Chief Executive (CE) had instructed the Secretariat for Transport and Public Works to follow up on the SMG case, and was greatly concerned about the report submitted by CCAC, with the MSAR Government reiterating the safety of citizens. After the experience of the super typhoon, the government will lay out plans to improve the legal system, strengthen fundamental infrastructure and enhance personnel training in orde to improve the ability to prevent and reduce the destruction caused by such catastrophes.

6 Business Daily Friday, October 20 2017

Macau

The Secretary for Economy and Finance, Mr Leong Vai Tac, presides over the opening ceremony of the Angola Pavilion at the 22nd Macao International Trade and Investment Fair (MIF) and the 2017 Portuguese-speaking Countries Products and Services Exhibition (2017 PLPEX). Source: GCS Sino-Luso

Speculate to accumulate, says Angolan business leader According to the President of the Angola Businessmen’s Confederation, the MSAR’s role in bilateral trade and business between Mainland China and Portuguese-speaking countries was still mainly as a “political and institutional” platform, with local businessmen having to be willing to “take more risks” abroad Nelson Moura nelson.moura@macaubusinessdaily.com

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ocal businessmen and companies have to take more risks and get out of their comfort zone like their Mainland counterparts in order

to establish businesses in Portuguese-speaking countries, the President of the Angola Businessmen’s Confederation (CEA), Francisco Viana, told Business Daily.

Mr. Viana made the remarks on the sidelines of the Angola, Guangdong and Macau Trade and advertisement

Investment Forum held yesterday at the 22nd Macau International Fair (MIF).

“Macau business spirit is changing and a change of attitude is essential because until now local businessman have had a comfort zone that is hard to get out of, while Mainland entrepreneurs take more risks and go for it,” he added.

However, Mr. Viana considered that although currently Macau’s role in Sino-Luso business relations was more “political and institutional” he was seeing more local companies in sectors such as information technologies that could adopt a more proactive role.

Main guest

As this year’s MIF main partner country, Angola has brought a delegation of 50 companies and over 800 entrepreneurs, with neighbouring Guangdong bringing a delegation of 250 people.

In yesterday’s forum the Vice-Governor of Guangdong, Chen Yunxian, stated that in 2016 imports and exports between the Chinese province and Portuguese-speaking countries totalled US$9.2 billion (MOP73.93 million).

In the first eight months of this year, Angola was China’s second largest Lusophone trading partner after Brazil, with bilateral trade between the two countries increasing 47.77 per cent yearly to US$15.06 billion.

“Between January and August of this year trade between Angola and Guangdong reached US$520 million, a 110 per cent increase yearly which [reflects] the level of trade between the regions,” Mr. Chen stated.

The CEA President told Business Daily that although his delegation was not planning to sign agreements in this year’s MIF, the event would serve to prepare future structural agreements between Angola and the Greater Bay Area.

These agreements will be focused on establishing industrial parks in Luanda for Guangdong companies; protocols between universities in Macau, Guangdong and Angola; and establishing a direct route between Guangzhou and Luanda.

Building up

According to Mr.Viana a co-operation agreement is being prepared between the China Council for the

promotion of international trade Guangdong Committee (CCPIT) and the CEA of the construction of a large industrial park with 2,000 hectares named the Luanda-Guangdong Business park in the Viana Special Economic Zone, where Guangdong companies could set up.

Future protocols would also seek to establish a 150,000 hectares agriculture business condominium for agriculture companies and a 200-hectare Recycle Business Park for the recycling sector.

Previously, African country representative at the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries (Forum Macao), Belarmino Barbosa, stated the country’s bank BIC had requested MSAR authorities open a local branch, with Mr. Viana stating the deal was still being negotiated.

“We intend to bring African and Lusophone banks with a presence in Africa to co-operate with Chinese banks. They know the market and can be an advantage for Chinese businessmen. Regardless of Mainland China’s financial power, financial co-operation shouldn’t just include Chinese banks but also banks from Portuguese-speaking countries,” he added.

Reshuffle and deal

According to the business delegation leader, the lack of concrete agreements signed in this year’s MIF was due to “rushed preparations” and the reshuffling in government created by the recent Presidential elections in the country.

However, Mr. Viana stated that with Angola the third largest country in terms of Chinese direct investment, new President João Manuel Gonçalves would attempt to tackle some issues of lack of transparency, monopolisation and corruption that had occurred in the past, with the country’s investment ecosystem becoming “more transparent and up to international standards”.

“We’re looking to develop selective investment in the manufacturing sector and the services that support it, so agriculture, mining, fishing, food production, minerals, wood, infrastructure for health, energy, harbours and other essential structures for economic development,” Mr. Viana added.

Business Daily Friday, October 20 2017 7

macau Crime

Beaching the whales Official charges have been laid by the Canadian Government against a company and two individuals suspected of running a money laundering scheme which enticed VIP gamblers from Macau to launder drug money through casinos in Canada Nelson Moura nelson.moura@macaubusinessdaily.com

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he Public Prosecution Service of Canada has pressed charges against a company believed to be involved in a money laundering scheme using drug deal money, Chinese VIP gamblers recruited in Macau and betting in casinos in the Canadian state of British Columbia (B.C.), the Canadian newspaper Vancouver Sun reported.

At the beginning of the month it was revealed that a large scale investigation by the Royal Canadian

Mounted Police (RCMP) federal organised crime unit and China’s national police service had revealed that criminal groups used a company based in the B.C. city of Richmond named Silver International Investments Ltd. as an illegal bank to wash drug money.

According to an RCMP investigator, the primary target for the Canadian authorities was a man involved in ‘generating whales’ or ‘high-rollers’ going to Macau to identify rich Chinese men and attract them to Canada to gamble, using Silver International as a bank account.

Sometimes, the money would

even be provided as ‘hockey bags full of cash’, according to the report, with the VIP gamblers using the scheme to circumvent China’s strict capital outflow laws, the report indicated.

Canadian investigators believe the Chinese VIP gamblers would then buy betting chips with live cash in C$20 (US$16/MOP128) bills, mostly at a local casino named Richmond’s River Rock Casino, and later cash out with C$100 bills considered ‘more suitable’ for investment in B.C. The gamblers would then pay back the money via transfer to underground bank accounts in Mainland

China.

The money laundering operation is said to have handled up to C$1.5 million a day, with Canadian authorities seizing more than C$500 million during the police operation.

The Canadian Public Prosecutor has now officially pressed charges against Silver International, its Director, Caixuan Qin, and a man named Jian Jun Zhu, with the company and both suspects facing five counts, including laundering the proceeds of a crime, possession of property obtained by crime, and failing to ascertain the identity of a client. N.M.

Casinos

Tour tailored to Japanese calendar

Japanese gaming group Universal Entertainment Corp. is considering an initial public offering (IPO) of its wholly owned subsidiary Tiger Resort Leisure & Entertainment, Inc. (TRLEI), which operates the Okada Manila integrated resort in the Philippines The information was revealed in a company release denying a report by website Philippine Daily Inquirer stating that the group’s former Chairman and Director, Kazuo Okada, would attempt to acquire the management rights of a listed company in the Philippines

in order to attempt to merge it with Okada Manila.

According to the release, the group is ‘not aware of any such actions by him’, stating at the same time that Universal Entertainment owned 99.9 per cent of TRLEI’s shares and that Mr. Okada had resigned as both Director

of TRLEI and the group on June 16 and June 29 of this year, respectively.

In September, Universal Entertainment announced that an internal investigation had revealed Mr. Okada had conducted three fraudulent acts whilst Chairman, and that it would ‘formulate’ detailed measures

Caesars Palace resort

suggested by the report to ‘prevent the reoccurrence of the investigated acts’.

Universal Entertainment recently denied a report by news agency Reuters that Mr. Okada had been reinstalled as a representative or director of the group’s parent company Okada Holdings Ltd. N.M.

8 Business Daily Friday, October 20 2017

Consigliere

A

Best crab feasts in Macau

s the temperature drops, gourmands know it is the season to enjoy the delicious hairy crab.

Also known as the Chinese mitten crab, hairy crabs are only available during the Autumn, starting from around late September to early October, and ending around November.

Supplies are limited and Chinese gourmands pay hefty sums for premium crabs sourced from particular rivers and estuaries.

The hairy crab’s flesh is renowned for its sweetness. Also of value is the crab’s golden roe, which is creamy and buttery. Female crabs are more expensive than male crabs because they contain much more roe and are believed to taste sweeter. In Chinese tradition, the most common and delicious way to cook the hairy crab is to steam it with Perilla leaf. This is because people believe that hairy crab is cold in Chinese medicine and the Perilla leaf can perfectly get rid of the cold and the smell of the crab.

One more tip, the Chinese also have their own wine pairing rules.

Yellow wine has been the traditional accompaniment to hairy crabs for centuries, not just for its ability to

coax the delicate flavours out of the dish, but for its traditional Chinese medicinal properties. Yellow wine is also believed to keep the body’s Cold and Heat in balance.

In order to bring this precious delicacy to Macau diners during this golden period, restaurants in Macau are beginning to launch varieties of seasonal crab menus.

Mistral at Sofitel Macau at Ponte 16 is providing an exciting all-youcan-eat crabfest from now to the end of November. Here, you can order unlimited fresh hairy crab steamed on site. As well as hairy crab, there is a large range of fresh seafood for you to choose from including bread crab and Alaska crab legs.

The feast continues with an array of

hot crab dishes. Cooked by talented chefs, you’ll be wowed by the spicy Singapore chilli crab, savoury fried crab with black pepper, and baked crab in Japanese style and other hot dishes. What is even more exciting is that the restaurant offers poolside alfresco dining in a beautiful garden setting filled with lush tropical plants and foliage. This crabfest and one-ofa-kind environment will definitely satiate the senses!

If you’re looking for a place to savour crabs in Taipa, no worries.

Okura 28F Chinese Restaurant in Hotel Okura has also launched two extraordinary seasonal crab feast set menus. In addition to steamed hairy crab, you can enjoy the appetizer-marinated jelly fish and cucumber with mashed garlic garnished with roasted pork belly Macanese style as well as classic Chinese dishes such as Buddha Jumps Over the Wall, braised turnip topped with crab roe and diced seafood, grilled pea shoots with conpoy and crab roe, plus steamed pork dumpling with crab roe.

The view of the restaurant is also stunning. Situated atop the hotel, Okura 28F Chinese Restaurant showcases a glitzy, glittering bird’s eye view of the Grand Resort Deck.

Edwina Liu, Essential Macau Editor

Sound collectors Oscar Guijarro oscar.g@macaubusinessdaily.com

I

f you are a regular reader of our newspaper, you probably have the essential characteristics of becoming a collector, if you are not one already. And if you are a regular reader of our newspaper you are probably constantly on the lookout for new ways to invest your savings to protect them from the wild effects that the passage of time has on our money if you do not properly take care of it.

In addition, you probably possess a remarkable amount of liquidity to spend on those little whims that sweeten life. And in addition, as a businessperson, I can intuit that perseverance and insight are inherent parts of your personality. With all these ingredients, the outcome cannot be other than a potential collector.

But in addition to it all, as a reader of our newspaper, you surely have the right level of sophistication to become a vinyl collector.

Yes, I am talking about those plastic records with colorful covers that a few decades ago could be found stacked in the dining rooms of a large number of middle-class homes around the world.

And now you are probably wondering why you should start collecting vinyl instead of collecting cars, antiques, art, wine, or commemorative pins. Well, first of all, they are not incompatible things. Collecting is not an exclusionary activity. In fact, probably collecting one type of object will lead you to collecting others. It happens often.

And yet collecting vinyl is not for everyone. If you want to collect art or cars you will need advisers and contacts to introduce you to those worlds. Forget about it in the vinyl world. In addition to some books and many surfing sessions on the Internet, the only thing you really need is a passion for music and a lot of friends with whom to share the hobby.

If you only want to own vinyl as a valuable commodity, you are making a mistake and should become an antique collector. It is not that they are bad objects to invest in. In fact, their value has grown steadily in the last decades as can be seen in the box showcasing some great examples Digital Trends website provides.

Some expensive examples # 1 White Album - The Beatles

The limited edition numbered 0000001 owned by Beatle Ringo Starr was auctioned in 2015 for US$790,000. # 2 The Velvet Underground

and Nico

An early version of the famous record with the banana cover designed by Andy Warhol. Purchased for US$75 cents in 2002, it was later sold for US$25,200. # 3 Musique pour super marche Jean Michel Jarre

The French author turned a single into an art object.

There is only one copy whose current value is estimated at US$33,500. Jarre destroyed the masters to invest more value in the single.

# 4 That'll be the Day

In Spite of Anger acetate The Quarrymen

This band counted among its members Beatles Paul McCartney and John Lennon.

This first vinyl of a recording by the duet is valued at US$250,000 and is owned

by McCartney. Paul made 50 copies, the price of which ranges from US$10,000 to US$13,000. # 5 My Happiness acetate

Elvis Presley

This vinyl, recorded before Elvis became The King, was sold for US$300,000 to Jack White, a member of White Stripes. But instead of locking it in a safe, he reissued it.

Probably the album lost some value but White gained the admiration of everyone.

Source: Digital Trends

Business Daily Friday, October 20 2017 9

Consigliere

Macau Military Club hosting major painting exhibition

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n exhibition of painters f rom Por tuguese-speaking countries opened yesterday in the Ho Yin Gallery at the Macau Military Club. Some 27 original works will be on display until November 5.

T he selection i ncludes th ree works of a contemporary plastic artist from each of eight Portuguese-speaking countries - namely, Angola, Brazil, Cape Verde, Guinea Bissau, Mozambique, Portugal, Sao Tome and Principe, and East Timor, in addition to an artist from Macau, represented this year by Ung Vai Meng, the former head of Macau’s Cultural Affairs Bureau.

“Essentially, it is an exhibition showing various works from artists with different sensibilities and techniques, presented as an ensemble that is harmonic within

such diversity,” said José Isaac Duarte, the head of the Association for the Promotion of Cultural Activities (APAC), the organiser of the exhibition.

Mr. Duarte added that every year APAC seeks to strike a balance between “already known and emergent artists, with potential for development . . . [so that] . . . different themes and creative approaches” are offered to the public.

It is the third time APAC has organised and curated the exhibition, which is further presented as part of the series of exhibitions ‘Meeting Bridges.’

For the first time, the show is being sponsored by the Permanent Secretariat of the Forum for Economic and Trade Co-operation between China and the Portuguese-speaking Countries (Macao), known as Forum Macao. S.Z.

Rock ‘n roll is here to stay

unlimited amount of accessories to help you enjoy your collection: cabinets and furniture to store records, cleaning systems, players, amps, gadgets to manipulate records . . .

Got your attention?

However, devoting to collecting vinyl based solely on its commercial value is like collecting cars and not driving them, wine and not drinking or art to store in a loft. If you want to protect your investment, go ahead, vinyls are a good market. But if rock music flows through your veins, collecting vinyl is tailor made for you.

Yes, you'll probably think there are interesting vinyls from other genres of music, too, and you’d be right.

But only the popular 20th Century Western music records drag a legion of faithful collectors. If you do not know where to start, we recommend you go to any store that sells vinyls and ask.

If there is something vinyl collectors love more than listening to music, it is talking about music. Chatting with store clerks about vinyls you can learn countless details. From which music equipment is the best to play vinyls on and how to preserve them and, of course, the latest news from the sector.

Keep in mind that there is an

Food for the soul An especially interesting website for beginners in vinyl collecting is www. turntablekitchen.com. The site defines itself as a connection between food and music.

The authors of the page say they want to introduce food lovers to music and vice versa. The website presents offers that combine cooking recipes and ingredients with music recorded on vinyl.

From versions of classics to new groups, this website is a starting point to have a collection that includes discs out of the usual.

Conventions Another element to catch up on is conventions. Mainly in the United States and Europe, the two largest vinyl markets. Of course they are a great opportunity to travel if you have the required spare time.

In November you can plan a trip to Holland. In addition to the attractions of Amsterdam, Haarlem and Rotterdam, the historic city of Utrecht hosts the 48th edition of the Mega Record & CD Fair. Everything you need to dive into this world can be found at the Fair.

So go to a record store, buy David Bowie's Ziggy Stardust, Led Zeppelin's II, The Clash’s London Calling and Sergeant Peppers’ Lonely Hearts Club Band and let yourself go wild. I promise you will not be able to stop.

10    Business Daily Friday, October 20 2017

Greater China

Forex

Mainland's c.bank records first net FX purchases for 23 months in Sept With the strong rebound in the yuan, some analysts believe China may be close to seeing its first sustained net capital inflows in years, albeit at modest levels Adam Jourdan

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hina's central bank recorded a net purchase of foreign exchange for the first time in nearly two years in September, as capital outflows taper off and the yuan strengthens.

Capital flight had been seen as a major risk for China at the start of the year, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy.

The People's Bank of China purchased a net RMB850 million (US$128.21 million) worth of foreign exchange in September, according to Reuters calculations based on central bank data released yesterday.

That would mark its first monthly

net purchase since October 2015, and suggest a major policy victory for authorities after a long battle to stabilise the country's currency.

The figure compares with sales of RMB821 million in foreign exchange in August and reverses trends in recent years of large foreign exchange sales as China sought to backstop the yuan against large depreciation pressure.

China's commercial banks also turned to net purchases in September, buying a net US$300 million of foreign exchange during the month, compared with a net sale of US$3.8 billion in August, the foreign exchange regulator said yesterday.

It was the first month commercial banks' recorded net foreign exchange purchases in 28 months, according to a Reuters calculation.

"We think net capital inflows were above US$20 billion in September," said Iris Pang, Greater China economist at ING in Hong Kong. ING estimates inflows turned

Key Points C.bank purchased RMB850 million in Sept Commercial banks' first net FX purchase in 28 months China recorded US$20 bln in net inflow in Sept - analyst positive in August at about US$2 billion. "We think net capital inflows will not be a one-off; it will be continuous," said Pang, citing government controls on outflows

and yuan appreciation as factors contributing to inflows.

Beijing burned through nearly US$320 billion of reserves last year and the yuan still fell about 6.5 per cent against the surging dollar, its biggest annual drop since 1994.

But market sentiment has flipped in recent months and the yuan has gained nearly 5 per cent against the dollar so far this year.

Pan Gongsheng, chief of China's forex regulator, said yesterday on the sidelines of a Communist Party congress that the foreign exchange market is currently stable. With the strong rebound in the yuan, some analysts believe China may be close to seeing its first sustained net capital inflows in years, albeit at modest levels. Reuters

IPO preparation

Sinochem taps banks for Hong Kong IPO of oil assets - sources Beijing has been working towards creating bigger, stronger state firms, and building enterprises capable of competing globally Chen Aizhu, Julie Zhu and Matthew Miller

China's Sinochem Group has tapped three banks, including Morgan Stanley, to work on the possible Hong Kong listing of its key oil assets, as it seeks to raise capital and revive the company, said four people with knowledge of the matter.

Citic Securities and BOC International are also advising China's fourth-largest oil company on the planned initial public offering, which will likely take place in the second half of next year, the people said.

No formal mandate for the IPO has been awarded yet, they said, adding preparations for the market float are at an early stage, and unlisted Sinochem has yet to decide the size of the public offering.

The IPO plan also comes amid Beijing's latest push to revive its bloated state-owned enterprise sector via the so-called mixed-ownership reforms by injecting private capital into state enterprises.

"Our people are preparing for it (IPO) ... but it's still far away," Sinochem Chairman Ning Gaoning told Reuters on the sidelines of the Communist Party Congress.

The planned listing will likely include Sinochem's refining, fuel marketing,

trading and storing assets, but not its struggling upstream business - mostly overseas oil and gas production - three of the people said.

"These assets are considered the best under the company," said one person who was briefed by Sinochem management, referring to the businesses likely to be part of the listing.

"Sinochem is looking to offload its upstream business to the government rather than to investors."

All the people declined to be named as details of the listing process are not yet public. Sinochem did not respond to a request for comment. Morgan Stanley, Citic and BOCI declined to comment.

Hit by low oil prices, Sinochem has aimed to shift from oil exploration and production to the more value-added refining and retailing businesses. It has been looking to sell a stake in Brazil's Peregrino offshore oilfield.

Mixed-ownership

Beijing has been working towards creating bigger, stronger state firms, and building enterprises capable of competing globally. It is also weeding out excessive capacity in bloated sectors, but wants to avoid any risk of mass layoffs or a blow to economic growth.

China will prevent the loss of state assets, deepen reforms of state firms and

develop a mixed-ownership economy, President Xi Jinping said at the opening of the twice-a-decade congress on Wednesday.

Sinochem's IPO plans have been pushed ahead by Ning, who joined the firm last year from food group COFCO, where he was well known for aggressive restructuring and M&A, said two of the people.

Under his leadership, several Sinochem units have been given more leeway in their expansion plans and more support for tapping capital markets for fundraising, said another person.

Beijing-based Sinochem controls the 240,000 barrel-per-day Quanzhou refinery in the coastal province of Fujian, a major source of group profits in the past two years. Sinochem has said it wants to boost investment at the refinery to

diversify into petrochemicals.

It also runs nearly 10 crude and oil products terminals, and more than 700 retail stations across China, its website showed.

The group's annual turnover of crude and products is about 150 million tonnes, while the combined annual capacity of its three refineries is nearly 25 million tonnes.

In 2011, Sinochem Corp, in which Sinochem Group holds a 98 per cent stake, planned to raise up to US$5.3 billion via a Shanghai IPO, and use the proceeds to fund the Quanzhou refinery. The plan was dropped due to unfavourable market conditions.

The group currently controls three listed units, including Sinochem International Corp, Sinofert Holdings Ltd and China Jinmao Holdings Group. Reuters

Business Daily Friday, October 20 2017 11

Greater China In Brief

Party units

Beijing says foreign firms welcome benefits from internal Communist Party cells Foreign companies operating in China have welcomed the ruling Communist Party to set up cells in their firms, as a way of helping them understand Chinese policies and resolve disputes, a senior party official said yesterday. President Xi Jinping's efforts to strengthen the party's role throughout society have reached the China operations of foreign companies, some of whose executives have expressed concern about the resulting demands they face. The presence of party units has long been a fact of doing business in China, where the law requires companies, including foreign firms, to set up a party organisation, though many executives long saw the measure as symbolic, rather than a real concern. Party cells in foreign firms have been well received, said Qi Yu, a deputy head of the Communist Party's Organisation Department.

Output

Investment

Beijing's big ball of money may be headed back to stock market The government’s campaign to curb financial risks has intensified over the past year, targeting many of the nation’s most popular investment channels Adam Jourdan

Property, overseas investments and shadow-banking products have all been targeted by China’s campaign to curb financial risks over the past year. What’s left?

Some analysts are betting that restrictions on other popular investment channels will lure what’s often called China’s giant ball of money back into stocks, which, despite steady gains, have seen a slow take up in volumes since a spectacular boom and bust in 2015. Chinese equity holdings will swell by up to RMB11 trillion (US$1.7 trillion) in the 2 1/2 years through end-2019 amid policies to clean up the financial system, Morgan Stanley predicts.

For China, a reinvigorated stock market has the benefit of reducing the economy’s reliance on debt -while also creating the risk of another speculative frenzy. This time around, however, there’s a stronger fundamental case for stocks: economic data and earnings have improved, and the government has had some success in lowering leverage in the financial system.

“Economic fundamentals are improving, valuations are OK and there’s a global phenomenon of low volatility -- that’s why stocks are in an ideal environment to heal,” said Hao Hong, chief strategist at Bocom International Holdings Co., who predicted the market’s peak and trough in 2015. “But to speak of frenzies in stocks again, only two and a bit years away from 2015, it’s probably a little too early.”

China’s growing wealth has been known to whip up periodic manias in various assets from stocks and homes to commodities and bitcoin, as investors seek to dodge the regulatory whack-amole. The government’s campaign to curb financial risks has intensified over the past year, targeting many of the nation’s most popular investment channels. People’s Bank of China Governor Zhou Xiaochuan warned on Sunday about excessive corporate debt, signaling such efforts are unlikely to ease.

Investment Latest restrictions:

› Property Curbs on home resales in some cities › Money-market funds › Limits on investment concentration and low-grade assets › Insurance › Crackdown on short-term, highyield offerings › Asset-management products › Implicit government guarantees weakened; banks asked to lower rates on wealth-management products › Overseas investments Curbs on buying insurance in Hong Kong, stricter disclosure requirements for exchanging currencies › Cryptocurrencies Exchange trading and token sales banned

Priorities

In a speech kicking off the 19th Party Congress on Wednesday, President Xi Jinping said China will continue to strengthen financial regulation and defend against systemic risk. He reiterated that housing is for living in, not speculation.

Yet despite the curbs, Chinese people who don’t own homes are still likely to prioritize property purchases, and the wealthy to seek overseas investments, said Thomas Deng, chief China strategist at UBS Wealth Management. Domestically, equities are a good choice for wealth growth, while bonds’ appeal is their liquidity, Deng added.

Caricatured in the 2015 bust as “aunties” who ignore data and merely follow headlines, China’s retail investors are also taking more notice of improving fundamentals, said Bocom’s Hong. Data released on Thursday showed third-quarter economic growth as well as September’s retail sales and industrial production were close to estimates.

Small caps

“Attention is being paid more to earnings quality and also good companies,” he said. “At the end of the day, the incentive to invest in the stock market is driven by not so much

by liquidity but by the prospect of economic growth, which has kind of stabilized.”

He predicts both onshore and offshore Chinese markets will keep rallying, and buying will spread to small caps.

Onshore equities remain are far from the heady days of 2015. The Shanghai Composite Index has risen 8.5 per cent this year, lagging a long way behind gains in Asian and offshore Chinese stocks. While the balance of margin debt has climbed back toward RMB1 trillion, it’s been roughly flat as a percentage of market capitalization for most of this year. New investors have not rushed in.

And with the deleveraging campaign slowing money supply growth, stocks may not be entirely insulated either. Bonds and small-cap shares slumped this week after Zhou’s comments, with the 10-year sovereign yield jumping to the highest since December 2014 and the ChiNext index of smaller companies falling 3 per cent over three days.

Undramatic flows

“You can say the equity market is one of the only channels through which you can really absorb significant redirected flows,” said Logan Wright, Hong Kong-based director of China markets research at Rhodium Group LLC. “But at the same time if you’re seeing a monetary aggregates slowdown, it’s hard to see why equities are necessarily supported in that environment.”

To Morgan Stanley, a combination of solid market fundamentals and curbs on alternatives will lure money back into equities. But the inflows will be less dramatic -- which is probably what policy makers prefer.

“Rebound in corporate profit growth and still-high savings rate will support fund flows to quality equity names,” analysts led by Richard Xu wrote in a report. “This will be a lasting but somewhat gradual process, unlike the boom in 2015.” Bloomberg news

Mainland's aluminium production slips in September -stats bureau China's aluminium output fell a third straight month in September, official data showed yesterday, although it remains on track to hit a record high in 2017 despite capacity cuts. The world's top aluminium producing country churned out 2.61 million tonnes of the metal last month, down 1.1 per cent from 2.64 million tonnes in August and 5.6 per cent from 2.751 million tonnes in September 2016, according to the National Bureau of Statistics (NBS). Year-to-date aluminium production still came in at 24.66 million tonnes, up 5 per cent year-on-year, the NBS said.

Production has been falling since June's record high of 2.93 million tonnes, following the closure of illegal smelters. It is set to dip further in the coming months as China imposes its first-ever restrictions on winter aluminium output. Smelters in 28 northern Chinese cities must reduce production by at least 30 per cent, although it appears top producer China Hongqiao Group will be allowed to cut by much less.

Retirement

Central bank Governor Zhou says likely to retire soon China's central bank governor Zhou Xiaochuan said yesterday that he is likely to retire soon, confirming an earlier Reuters report. "Either way it'll be soon," Zhou said on the sidelines of the Communist Party Congress, when asked whether he would retire this year or next. Sources with ties to the leadership and close the central bank had told Reuters that Zhou is likely to retire around the time of the annual session of parliament next March.

China's top banking regulator Guo Shuqing and veteran banker Jiang Chaoliang are front runners to succeed Zhou Xiaochuan, the country's longest-serving central bank head, according the sources.

Regulators around the world are grappling with how to make sure finance-industry employees meet record-keeping obligations as technology makes it easier to communicate and conduct business on private platforms. Earlier this year, a former Jefferies Group LLC banker was fined in the UK for sharing confidential data on WhatsApp.

12 Business Daily Friday, October 20 2017

GREATER CHINA Fuel

Mainland's bold gas plan may threaten winter power supplies The country has only 8 bcm of gas storage capacity, or about 4 per cent of its demand Josephine Mason and Chen Aizhu

While long-range forecasts point to a slightly warmer-than-average winter in the major cities of Beijing and Shanghai, the forecasts show that conditions until December are likely to be unusually cold.

Colder weather later in the season would be more challenging because it is harder to pull gas from storage when the tanks are emptier, Shanks said.

Specifically, the NDRC said yesterday that Sinopec and PetroChina

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hina has ordered state oil companies to speed up the construction of pipelines to move natural gas to homes and factories, underscoring worries that the country's insufficient infrastructure could cause power outages during the peak winter demand period.

This winter, millions of homes across the colder northern regions of the world's second-largest economy will be heated for the first time by gas rather than coal, as part of Beijing's effort to boost clean fuel use.

But with just a month before newly installed radiators get switched on, the National Development & Reform Commission (NDRC) warned yesterday that supply and demand conditions could be "serious" this winter.

The alert shows Beijing is trying to head off supply disruptions during the peak demand period from November until March. Residential users with their radiators will have supply priority over industrial users, increasing the possibility of power losses during gas shortages.

"We are all quite concerned with supply shortages this winter ... as we may not have the infrastructure capacity to catch up with the demand growth," said Li Wei, a vice president of Kunlun Energy, which operates liquefied natural gas (LNG) terminals and gas production plants.

Wood Mackenzie estimates the heating needs alone will add 10 billion cubic metres (bcm) to China's gas demand, the equivalent of Vietnam's annual consumption. The country is expected to use about 230 bcm this year.

Small industrial users like hospitals have also had to switch to gas

Key Points Underlines growing concerns about pipeline capacity Millions of homes to be heated by gas for first time Fraction of long-term storage needed has been built

this winter.

China will either need to ramp up imports, offering a boon for major exporters like Russia, or big industrial consumers may get interrupted, warned Kerry Anne Shanks, head of Asia gas and LNG research at consultants Wood Mackenzie.

"This depends on weather. (But) we worry that China doesn't have enough storage," she said.

China has only 8 bcm of gas storage

capacity, or about 4 per cent of its demand. That is much lower than other gas-using regions like the United States and Europe, which typically store about 15 per cent to 25 per cent of their annual needs, she said.

It's all about the weather

Winter weather will be the main factor for demand and forecast models are not yet clear.

should be injecting gas into their storage facilities ahead of the peak demand season. Their facilities should be running at full capacity.

The government also called on Sinopec to speed up the construction of four pipeline projects: a Tianjin to Beijing pipeline; a Qingdao to Nanjing project; an Inner Mongolia to Hebei development and one from Xinjiang to other regions.

It has also urged top pipeline operator China National Petroleum Corp to complete the fourth leg of its Shaanxi to Beijing line by the end of October.

China expects that gas demand will rise to between 320 and 360 bcm per year by 2020, meaning more long-term infrastructure investment is needed.

The increase is the equivalent of the annual consumption of Japan, Asia's second-largest gas consumer after China. Reuters

Finance

Top Mainland bank regulator Guo endorses reform of finance industry The country will deepen reforms of its banks, which will help prevent risks, says the regulator

China’s top banking regulator reiterated the country’s commitment to reforming its finance industry, including easing ownership and business

Shuqing said at the Communist Party’s twice-a-decade congress in Beijing.

The country will give overseas banks “more room” in equity ownership and business scope, he said, without providing details.

restrictions for foreign banks.

The market share of foreign banks in China is falling, which isn’t good for competition, China Banking Regulatory Commission Chairman Guo

For foreign investors, the comments offer a welcome commitment to financial liberalization, at a time when Guo is overseeing a campaign to curtail risks from shadow banking and

Darren Boey

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excessive leverage. JPMorgan Chase & Co.’s Chief Executive Officer Jamie Dimon earlier this year said that the bank is seeking structures that would eventually give it full control.

The CBRC unveiled plans in April to tighten its scrutiny of shareholders in banks, though it didn’t reveal who it would target. The country will deepen reforms of its banks, which will help prevent risks, said Guo, who was appointed to his post in late February and has been touted as central bank Governor Zhou Xiaochuan’s possible successor. China will increase the disposal of its bad loans, he said.

China sent a signal it plans to press ahead with opening up the $40 trillion financial sector when Zhou said in June that too much protection for domestic institutions weakens the industry and can lead to financial instability.

HSBC’s venture

About two weeks later, HSBC Holdings Plc became the first foreign

bank to win permission for a majority-owned securities joint venture in China, raising optimism among other foreign investment banks that have struggled for years to challenge local rivals.

Regulations limiting them to minority stakes in their joint ventures have reduced their sway over key decisions and they’ve been largely excluded from lucrative businesses such as secondary-market trading in Chinese debt and equities, as well as from managing money for wealthy clients.

JPMorgan’s Dimon, who last year decided to exit a minority-owned Chinese investment-banking joint venture, said in June that the U.S. bank is patiently negotiating with Chinese regulators to fulfil a “longerterm dream” to eventually gain 100 per cent control.

China’s central bank is drafting a package of reforms which would give foreign investors greater access to the nation’s financial services industry, people familiar with the matter told Bloomberg last month. Bloomberg news

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

Business Daily Friday, October 20 2017 13

Asia In Brief

Demise

Taizo Nishimuro, ex-head of Toshiba, Japan Post, TSE, dies at 81

Politics

Jacinda Ardern takes power in New Zealand in generational shift With the additional support of Labour’s ally the Green Party, the new government will control 63 of the 120 seats in parliament Tracy Withers and Matthew Brockett

J

acinda Ardern (pictured) will become New Zealand’s youngest prime minister in more than 150 years after winning the backing of a minor nationalist party to form a coalition government.

After 12 days of negotiations, New Zealand First leader Winston Peters threw his support behind the 37-year-old, saying an economic slowdown was looming and that capitalism needed to regain its “human face.”

The announcement caps a stunning rise for Ardern, who became Labour leader less than two months before the Sept. 23 election and will now take it into office for the first time in nine years. The local currency plunged on concern the new government’s policies, such as a potential cut in immigration, may curb economic growth.

“In terms of political risks, we’ve

gone from zero-out-of-10 to fouror-five-out-of-10,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore.

“Given that Peters is on the record for slashing immigration, reducing offshore ownership, changing the RBNZ’s mandate, until we get clarity on all of those policies, we’re going to have a lot of jitters and political and economic risk.”

Peters, who argued on the campaign trail that the New Zealand dollar has been persistently overvalued and is a long-term critic of the Reserve Bank of New Zealand’s inflation-targeting mandate, had proposed a system in which the central bank could directly control, and devalue, the currency.

Labour has proposed a Fed-style dual mandate for the central bank of full employment and price stability.

The local currency plunged as much as 1.6 per cent amid concerns that policy changes may curb economic growth.

Ardern’s rise has drawn comparisons with the generational change in leadership seen in countries like Canada and France. Even though New Zealand’s economy is growing strongly, she has argued that too many people have been left behind during nine years of conservative government and pledged to tackle social issues such as child poverty and housing affordability.

With the additional support of Labour’s ally the Green Party, the new government will control 63 of the 120 seats in parliament. The National Party, led by Bill English, won 56 seats.

New Zealand’s proportional representation electoral system has favoured coalitions since it was introduced in 1996, but today’s decision is the first time the party with the most votes hasn’t led the government.

Labour got 36.9 per cent of the vote while National, which was seeking a rare fourth consecutive term, secured 44.4 per cent. Bloomberg news

Policy

Labour productivity, reforms top tasks for S.Korea - OECD chief A panel already raised next year's minimum wage by 16 per cent and the government plans to sharply increase spending on hiring public workers Increasing labour productivity and reforming labour practices are among the top challenges facing South Korea as it grapples with a rapidly ageing population and high youth unemployment, the head of the OECD said yesterday.

South Korea ranks near the bottom in labour productivity within the Organisation for Economic Co-operation and Development (OECD) as South Koreans work long hours even while creating little value added, OECD data shows.

"You need more investment in skills, more flexibility in the labour market, more flexibility in the products market," OECD Secretary-General Angel Gurria told Reuters in an interview, adding South Korea's

labour productivity is about 50 per cent of that for the best members within the OECD. South Korea's gross domestic product value per hour worked stood at US$31 in 2015, 48 per cent of the United States and the fifth-lowest among the OECD members.

Liberal President Moon Jae-in has promised to create more jobs while at the same time cancelling his predecessor's labour reform measures.

Moon took office in May in an election held ahead of the schedule after his predecessor's impeachment.

Moon has also promised to put a policy priority on narrowing the widening income inequality. A panel already raised next year's minimum wage by 16 per cent and the

government plans to sharply increase spending on hiring public workers.

In response to criticism that Moon was leaning too much toward labour unions and income redistribution, Gurria said it was important for the government to take a balanced approach in policy between income inequality and economic growth.

"If you are trying to favour the unions by having more rigid labour market and keeping wages very high, you could be blocking people from getting new jobs," he said, adding the young people are more likely to suffer.

"The young (suffer more) because the older people already have jobs, they belong to the unions and they are better protected," he said. Reuters

Taizo Nishimuro, who yielded enormous influence over corporate Japan for decades as head of Toshiba Corp., Japan Post Holdings Co. and the nation’s stock exchange, has died. He was 81. His death was confirmed by Toshiba spokesman Hirokazu Tsukimoto Wenesday, though the cause and date weren’t disclosed.

Nishimuro had a four-year stint as president of Toshiba, and also served as chairman and then as an adviser to the company, a position he held until his death. He became chairman of Tokyo Stock Exchange, and took over as president of the bourse in 2005 after the previous president resigned to take responsibility for multiple computer breakdowns, including one that halted trading for more than four hours. Nishimuro then oversaw the listing of Japan Post Holdings as its president, until he stepped down last year for health reasons.

Labour

Australia jobs grow at fastest pace since 2008, inflation still lags Australia enjoyed another month of solid jobs growth in September, with the annual pace of gains sprinting ahead to the fastest in almost a decade and nudging the unemployment rate lower.

Data out yesterday showed the unemployment rate slipped to 5.5 per cent, compared with analysts' expectations for a steady 5.6 per cent. That was the lowest reading since May, which itself was the lowest since early 2013.

Employment climbed a seasonally adjusted 19,800 in September, again topping forecasts for a 15,000 rise, and marking 12 straight months of gains. Annual jobs growth zoomed ahead to 3.1 per cent from an already rapid 2.7 per cent. Such a pace would be equivalent to an annual rise of 4.5 million in U.S. payrolls. That took jobs gains for the year so far to 371,500, led largely by strength in the healthcare, construction and education sectors.

Profit

Thailand's Bank of Ayudhya Q3 profit rises 3.2 pct y/y Bank of Ayudhya Pcl, Thailand's fifth-largest lender, reported its third-quarter net profit rose 3.2 per cent from a year ago, driven by an improvement in net interest income. Bank of Ayudhya, controlled by Japan's Mitsubishi UFJ Financial Group Inc, yesterday posted a net profit of 6.01 billion baht (US$181.41 million) for the quarter ended September, versus 5.83 billion baht a year ago. This was slightly lower than an average estimate of 6.1 billion baht from three analysts polled by Thomson Reuters.

14 Business Daily Friday, October 20 2017

International In Brief

LSE

London Stock Exchange CEO Rolet to step down by end of 2018 Rolet took over at LSE from Clara Furse in May 2009, ending a prolonged period of fending off takeover attempts and questions about the exchange's future Shops

UK retail-sales growth slumps to weakest in four years UK retail sales fell more than forecast in September, leaving growth in the third quarter at its weakest in four years.

Sales dropped 0.8 per cent from August, far more than the 0.1 per cent estimated in a Bloomberg survey. Over the third quarter, annual growth slowed to 1.5 per cent, the worst performance since October 2013, according to data from the Office for National Statistics in London. “That is a disappointing end to the third quarter,” said Alan Clarke, an economist at Scotiabank in London. It’s “not great for the prospects for 25 October when we get that first estimate of third-quarter GDP.” In the three months through September, retail sales rose 0.6 per cent, which means the sector probably made a minimal contribution -- just 0.03 percentage point -- to GDP. Expectation

Airbus says A320neo delivery goal is tough but within reach Airbus plane-making chief Fabrice Bregier said the company still expects to deliver "around 200" A320neo aircraft in 2017, but added that reaching this existing target would be "tough" in the wake of delayed engine deliveries.

Bregier said Pratt & Whitney, whose industrial problems have delayed deliveries of jets at Airbus plants, was testing re-designed parts for its engines and expected to start delivering the improved versions at the end of this year. Bregier was speaking to reporters after the maiden take-off of the A330neo, an upgraded version of the company's most profitable wide-body jet that is aimed at challenging the latest version of Boeing's 787 Dreamliner.

Cinema

'Catastrophic' Brexit hit awaits UK film and TV, lobby says Britain’s film and TV industry faces a potentially “catastrophic” loss of talent and skills with the threat of an end to free movement between the UK and the European Union, according to lobby group the Creative Industries Federation. Brexit is causing actors, directors and production workers specializing in a variety of areas such as visual effects to relocate abroad and risks creating a “disastrous skills shortage,” the group said in its Global Talent report yesterday. Creative industries contributed more than 87 billion pounds (US$115 billion) in gross value in 2015, according to the government. That’s 5.3 per cent of the UK economy and comparable to the contribution from the construction or information sectors. The creative sector employs about 2 million people, or 6 per cent of all UK jobs, according to the Department for Digital, Culture, Media and Sport.

avier Rolet, chief executive of the London Stock Exchange Group, will step down at the end of next year, just under a decade after he took charge and transformed the company with a string of deals.

Rolet has broadened the exchange's focus beyond share trading into de-

a few moves, sometimes they could be qualified as bold moves in order to broaden the spectrum of our products, achieve global relevance," Rolet told an analyst call on the LSE's third-quarter results, published yesterday.

The Frenchman, at the helm of what had been a quintessentially English club in the City of London for much of its 300-year history, said he was "completely committed"

say in its running, a model that led to strong growth in volumes and one that rival Deutsche Boerse is now trying to mimic.

"Overall his legacy is one of many good deals which entirely transformed LSE as a group, albeit with the concern that he never really integrated any of his purchases adequately," exchanges expert Patrick Young said.

rivatives and data through these acquisitions, including clearing house LCH and global indexes firm Russell.

Under his leadership, the LSE's market value has risen from less than 1 billion pounds to almost 14 billion pounds, helped by the diversification.

But his efforts to push through the exchange's third attempt to merge with Deutsche Boerse to create a global markets' behemoth ended in failure.

Rolet, who joined the group from Lehman Brothers, said last year that he would leave if a merger with Deutsche Boerse went through. But the collapse of that deal in March meant he opted to stay on for longer.

"At times we took risks, we made

to ensuring a smooth transition to a new CEO by the time he leaves in December 2018.

One critical area remains what Rolet called an "inherited weakness" - the lack of a major futures trading footprint, leaving it trailing rivals CME, ICE and Deutsche Boerse in this area.

But Rolet is seen as being shrewd in making sure his main customers, the big investment banks, are always listened to. When the LSE took over cross-border trading platform Turquoise and later on LCH, the investment banks remained shareholders.

Rolet, a former investment banker himself, ensured that the banks had a large minority stake in LCH and a

Rolet took over at LSE from Clara Furse in May 2009, ending a prolonged period of fending off takeover attempts and questions about the exchange's future.

His banking background made him a popular choice among the exchange's largest customers.

LSE said in a separate statement yesterday that group income for the quarter ended Sept rose 17 per cent to 1.66 billion pounds (US$2.19 billion), with revenue up 14 per cent to 486 million pounds as its clearing and FTSE Russell businesses grew strongly.

Thirteen analysts had forecast total income of 477.5 million pounds, according to consensus estimates provided by the company. Reuters

Noor Zainab Hussain and Huw Jones

X

Renewables

Vestas to build first large-scale battery storage project for wind, solar The cost of renewable energy has dropped significantly in recent years with solar leading the way, while Tesla is leading the way in battery storage Jacob Gronholt-Pedersen

Denmark's Vestas will help to build the world's first utility-scale project that uses battery technology to store power from both wind and solar sources, it said yesterday.

The project in Australia aims to bring down the cost of renewable energy production and help secure a steady supply of renewable power to the grid regardless of weather conditions.

It will use batteries supplied by U.S. electric carmaker Tesla Inc and is expected to generate enough power to supply more than 35,000 average Australian homes.

"Hybrid solutions combining wind, solar and storage hold a huge potential for Australia," said Clive Turton, head of Vestas in the Asia Pacific.

The Danish wind turbine maker said it had teamed up with project developer Windlab and Quanta Services.

Vestas will deliver the technology for the 60.2 megawatt (MW) Kennedy Energy Park phase I that will be built in Flinders Shire in central north Queensland.

With years of rapid growth in demand in the wind industry fading, Vestas is positioning itself as

a provider of broader renewable energy.

The cost of renewable energy has dropped significantly in recent years with solar leading the way, while Tesla is leading the way in battery storage.

Vestas has said it expects wind power to be profitable even without government subsidies in the next decade. Goldman Sachs analysts predict renewable energy in Europe will be cheaper than fossil fuels by 2023.

The Australian project will consist

of 43.2 MW of wind power capacity using twelve of Vestas' V136-3.6 MW turbines, 15 MW of solar and 2 MW of battery storage.

Vestas Chief Executive Anders Runevad told Reuters in June he aimed to bring such hybrid projects, which are currently small and few in number, up to utility-scale.

The Kennedy project is owned by a joint venture between Windlab and Eurus Energy Holdings Corp. of Japan. Reuters

Business Daily Friday, October 20 2017 15

Opinion Business Wires

Straits Times From 2018, it will be faster for buyers and sellers of HDB resale flats to complete the transaction process.

The Housing Board is upgrading its resale portal to make it easier to file applications and conduct eligibility checks, it said in a statement yesterday. As a result, only one appointment with the HDB - instead of two - will be required. The entire transaction time will be shortened by up to eight weeks, from 16 weeks currently. The change, which was promised during March's debate on the National Development Ministry's budget, will kick in on Jan 1, 2018.

Japan News The (Japanese) government is considering equipping planned ground-based Aegis Ashore systems with the capacity to intercept cruise missiles, in addition to the ability to defend against ballistic missiles. With Chinese bombers making repeated flights in areas around Japan, the government believes it should also prepare for attacks by cruise missiles, multiple government sources said.

The government intends to introduce two Aegis Ashore systems in Japan by around fiscal 2023 as part of the effort to boost the nation’s missile defences.

These would be equipped with SM-3 Block IIA missiles, a new interceptor being jointly developed by Japan and the United States with the capacity to intercept ballistic missiles at altitudes exceeding 1,000 kilometres.

The government is also considering equipping the systems with SM-6 antiair missiles, which are multifunction interceptors that also can take down cruise missiles.

EBay's got some survival skills retailers can emulate

Bangkok Post The Bank of Thailand plans to allow quick response (QR) payment technology tested by more than two banks to exit from the regulatory sandbox once the banks agree on mutual conditions as practical guidelines after the service is commercially rolled out. Even though QR code payment trials, including interbank payment transactions under the Bank of Thailand's regulatory sandbox, have yielded satisfactory results, the central bank needs more time to ensure operators' readiness, said Siritida Panomwan Na Ayudhya, Bank of Thailand deputy governor for payment system policy and financial technology group.

Sarah Halzack a Bloomberg Gadfly columnist

T

he marketplace model of e-commerce is getting quite a bit more competitive.

Wal-Mart Stores Inc. has roughly quadrupled its online assortment in the past year, largely by expanding offerings from third-party sellers.

Amazon.com Inc. saw a 70 per cent increase last year in the number of active sellers in its "fulfilled by Amazon" program.

And yet EBay Inc. is handling the pressure from these giants and making steady progress on a turnaround. It reported on Wednesday that its gross merchandise volume was up 7 per cent in the latest quarter over the previous year on a currency-adjusted basis. Executives said this was the fastest volume growth in more than three years.

EBay y-o-y increase in gross merchandise volume, currency-adjusted: 7 per cent.

Investors may not have liked the profit forecast EBay delivered on Wednesday.

But many retailers could take a lesson from the work it has done to hold its own against growing competition.

F o r o n e, E B a y h a s aggressively invested in marketing this year. In a June TV spot, the company showed a sad stream of cardboard boxes coming down a conveyor belt, with text asking, "When did shopping become so beeeeeeeeeeige?"

The ad is not-so-subtly suggesting shoppers should think of EBay as a vibrant alternative to Amazon. And that's a smart play, because it attacks one of EBay's core problems: Many people don't know exactly what the site is these days.

When EBay burst into our cultural consciousness in the '90s, it was as an auction site -- a place where desperate parents overpaid for Furbies and nerds trawled for rare kitsch and collectibles.

But now, 87 per cent of transactions on EBay are not auction-style purchases. The company is wisely trying to retrain consumers to think of it as a full-service shopping destination.

There are early hints its latest branding efforts -- which also include a big push around fashion -- are helping. Executives in July said they had resulted in a bump in web traffic from new-toEBay visitors.

“

Philstar The Philippine Chamber of Commerce and Industry (PCCI) wants the government to revive the push for a pure public-private partnership (PPP) scheme to accelerate the implementation of infrastructure projects. “We are aware that there are ongoing infrastructure projects but one area that they have to review is maybe revive the PPP,” PCCI president George Barcelon said on the sidelines of the 43rd Philippine Business Conference on Wednesday. “You can do different models, there is ODA (official development assistance), PPP, and there is hybrid. But we should continue with the PPP. We should be aware of the factors that can make things happen faster,” he added.

Meanwhile, EBay has also been on a multi-year quest to get its pages more visibility in searchengine results. This may sound simple -- and maybe even a little outdated, given that much of the e-commerce world has moved on to obsessing about reaching customers via social media. But I think it's a worthwhile undertaking.

Yes, it is true that a staggeringly large share of online shopping searches start on Amazon.

But millions of searches are conducted via search engine, and those are up for grabs. If EBay is to acquire new customers -- especially when its business remains misunderstood -- this is a good way to do it. And this quest for search-engine relevance seems to be helping, as EBay's base of active buyers rose 5 per cent in the latest quarter from the same period last year.

Like EBay, and perhaps even more so, many legacy retailers must convince c o n s u m e r s t h e y h av e reinvented themselves.

They'd do well to take EBay's approach: clear messaging combined with nitty-gritty technical work.

Still, not all aspects of the current EBay playbook are worth emulating. The company said Wednesday it had repurchased US$907 million of its shares in the latest quarter. Its board has authorized an additional US$2.6 billion in buybacks.

It seems a business that wants to crank up the growth machine as EBay does could benefit from deploying that cash in other ways. For example, EBay in March announced a program that guarantees three-day shipping on 20 million items. That's nice, but two-day shipping has become commonplace. Why not invest in logistical support or incentives to get more of its sellers up to that standard?

Or as Gadfly's Shelly Banjo has argued, it could look to acquisitions to fortify itself.

These considerations are important because, while things are moving in the right direction at EBay, the company still has plenty to worry about. Its gross merchandise volume may be accelerating, but is still much slower than that of many e-commerce businesses these days.

If EBay is to keep thriving, that rate must kick into higher gear. Bloomberg Gadfly

When EBay burst into our cultural consciousness in the '90s, it was as an auction site. But now, 87 per cent of transactions on EBay are not auction-style purchases

”

16 Business Daily Friday, October 20 2017

Closing Economy

China's central bank warns of 'Minsky moment' as economy powers ahead Analysts and global economic bodies such as the International Monetary Fund warn Beijing is stimulating credit too heavily in its aim to meet fixed growth targets growth in September.

In the opening speech of congress this week, President Xi Jinping said China will deepen economic and financial reforms and further open its markets to foreign investors as it looks to move from highspeed to high-quality growth.

However, while expressing support for market reform and private firms, Xi also called for stronger, bigger state firms.

Kevin Yao and Elias Glenn

C

hina's central bank chief yesterday issued a stark warning about asset bubbles in the world's second-largest economy, which looks set to clock its first acceleration in annual growth since 2010, driven by public spending and record bank lending.

Speaking on the sidelines of the closely-watched, twicea-decade Communist Party Congress, People's Bank of China Governor Zhou Xiaochuan spoke of the risks of a "Minsky moment" in the economy, referring to a sudden collapse in asset prices after long periods of growth, sparked by debt or currency pressures.

Zhou's comments refer to a theory on prices derived by American economist Hyman Minsky and follow official data that showed China's economic growth slowed in the third quarter from a year earlier, as expected, but remained on track to post the first full-year pickup in seven years.

Coming on the 30th anniversary of the Black Monday Wall Street crash, the comments from the governor, who is likely to retire soon, echo concerns expressed in the past by international economic bodies about relative levels of corporate and household debt in the economy.

But while hedge funds sometimes refer to Minsky in warnings about a China credit bubble threatening the global economy, China has so far proven doomsayers wrong.

"I would doubt they really think China is in for a Minsky Moment, but maybe he is tying to impress (other leaders in Beijing) on the need to start reining in credit growth," said Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong.

Room for more

"It's not really up to (the central bank)... We would have to look at what the leadership says about these things."

Key Points Central bank governor warns of "Minsky moment" China Q3 GDP growth at 6.8 pct, as expected, down from Q2 Factories, domestic demand power ahead but property sales drop Concerns remain about state investment Strong activity gives room for reforms after party congress Recent efforts to curb financial risks and cool the property market are beginning to weigh. While the economy grew a solid 6.8 per cent from the previous year in the third quarter as expected, growth in new construction slowed and property sales dropped for the first time in more than twoand-half years in September.

In all, growth was still on track to comfortably beat the government's target of around

6.5 per cent for this year and 2016's rate of 6.7 per cent, which was a 26-year low.

'Urgent' reform needed

Analysts and global economic bodies such as the International Monetary Fund warn Beijing is stimulating credit too heavily in its aim to meet fixed growth targets. Rating agencies estimate the overall debt burden at almost three times economic output.

Data on Saturday showed Chinese banks extended more loans than expected in September, backed by demand from home buyers and companies.

While household loans accounted for a smaller percentage of total new loans, their value jumped more than 10 per cent to RMB734.9 billion last month from August, according to Reuters calculations.

"China's high debt burden is an area where reform is most urgently needed but progress has been the slowest," said Chi Lo, senior economist at BNP Paribas Asset Management.

There are, however, signs that policymakers are making needed changes in other parts of the economy.

Beijing's push to consolidate and restructure its industrial sector has paid dividends as factory output beat expectations, while strong fiscal spending and sustained public investment helped boost domestic demand.

The economy slowed slightly from 6.9 per cent in the second quarter, however, and analysts say it could ease further due to an expected softening in property investment and construction as more cities try to cool housing prices, while a government campaign against riskier lending pushes up borrowing costs.

"Unequivocally, the property boom has peaked," said Rosealea Yao, a property analyst at Gavekal Dragonomics.

China's economy has surprised global financial markets and investors with robust growth so far this year, driven by a renaissance in long-ailing "smokestack" industries such as steel and strong demand from Europe and the United States.

At the same time, there are concerns about the state's growing role in the economy: the acceleration in year-onyear state investment growth outstripped private investment

While policymakers' efforts to curb property market speculation and cut debt are hurting growth in some parts of the economy, activity has been supported by better-than-expected expansion in trade and bank lending.

Beijing has set a modest growth target of around 6.5 per cent for 2017, theoretically allowing policymakers more room for structural reforms.

China's factory output grew 6.6 per cent year-on-year in September, beating expectations, while fixed-asset investment expanded 7.5 per cent in January-September, missing forecasts.

Retail sales rose 10.3 per cent in September from a year earlier, beating expectations. Disposable income grew 7.5 per cent in the first nine months of the year, the fastest rate in two years.

Data last week showed China's import and export growth accelerated in September, suggesting healthy momentum in trade. China's banks also extended more loans than expected last month, buoyed by demand from home buyers and companies.

"Given that the growth outcome is above the government's target, there is room for some more reforms and it might come after the politburo meeting," said Besa Deda, chief economist at St George Bank in Sydney. Reuters

Profit forecast

Real estate

LNG

Corporate-jet maker Textron tightens 2017 profit forecast

Billionaire Lau's Chinese Estates can't get enough of Evergrande

Indonesia to extend Inpex's Masela LNG contract by 27 years from 2028 -statement

Textron Inc, the maker of Beechcraft and Cessna airplanes, lowered the upper end of its full-year profit forecast amid weak demand for business jets.

The maker of Bell Helicopter said it expects an adjusted profit of US$2.40 to US$2.50 per share in 2017, compared with its previous forecast of US$2.40 to US$2.60.

Textron said it expected total pension contributions to be US$355 million this year, up from its previous forecast of US$55 million.

Sales in the company's aviation business, which services the Hawker brand of business jets, decreased 3.7 per cent to US$1.15 billion in the third quarter, due to lower deliveries of its King Air turboprops and Beechcraft T-6 trainers.

Two quarters of soaring U.S. corporate profits have not yet produced the "Trump bump" in orders for new business jets that some industry executives had been hoping for, analysts have said.

However, sales in Textron's Bell helicopter unit rose 10.6 per cent to US$812 million in the quarter, boosted by higher deliveries of commercial helicopters.

The company said income from continuing operations fell to US$159 million, or 60 cents per share, in the quarter ended Sept. 30, from US$299 million, or US$1.10 per share, a year earlier.

The year-earlier results included a tax benefit of US$206 million. Reuters

Billionaire Joseph Lau’s Chinese Estate’s Holdings Ltd. just can’t seem to get enough shares of property developer China Evergrande Group -- whose shares have soared more than 500 per cent this year.

To get a sense for the scale of Chinese Estate’s buying spree of Evergrande shares, consider this: The firm has spent HK$12 billion on the purchases since April, representing more than 18 times its free cash and more than three times 2016 revenue.

The shares aren’t cheap, trading at 11.3 times estimated earnings, compared with the average ratio of 9.5 times for a Bloomberg Index of 22 mainland developers.

Hong Kong tycoon Lau’s wife Chan Hoi-wan personally held 100 million Evergrande shares as of the end of September, making her a wealthy woman in her own right. That may well be cash well spent for the Lau family, as Evergrande has been the best performing MSCI China member this year, with its sixfold gain eclipsing Chinese Estate’s 13 per cent increase.

Short sellers, meanwhile, have gotten squeezed.

After mounting an attack in the earlier part of the year, bears have now retreated, with short interest falling to 8.5 per cent from 21 per cent of free float in early May, according to IHS Markit Ltd. Bloomberg news

Indonesia has agreed with Japan's Inpex to extend the company's contract to operate the Masela natural gas field in the country's east by up to 27 years once it expires in 2028, the energy ministry said in a statement yesterday.

"This decision ... will give a 20-year extension to Inpex because their contract is almost over, with an additional seven years as compensation for changing the refinery development scheme from floating to land-based," Energy and Mineral Resources Minister Ignasius Jonan said in the statement.

An Inpex spokesman in Jakarta confirmed Jonan met Inpex CEO Toshiaki Kitamura in Japan on Tuesday, and said the company was aware of media reports on the decision to extend the Masela contract.

"We continue to be engaged in discussions with the Indonesian government regarding the extension of the Masela PSC," Inpex media relations specialist Moch N. Kurniawan told Reuters, declining to provide further details.

Indonesian President Joko Widodo in March 2016 rejected a US$15 billion plan by Inpex and its partner Royal Dutch Shell to develop what would have been the world's largest floating LNG facility to process gas from Masela, saying an onshore plant would benefit the local economy more. Reuters