Business Daily #1277 April 18, 2017

ANZAC Day observance in Macau Tue, 25 April 2017 │ 7:30am - 9:30am │ MGM Macau C DAY ANZA

Followed by breakfast from 8:30am

Gov’t recovers one illegally-occupied plot Land Page 2

Tuesday, April 18 2017 Year VI Nr. 1277 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Society

Local team wins world’s largest business management contest Page 4

Gaming

www.macaubusinessdaily.com M&A

Wells Fargo expects April’s revenue growth from 10 to 15 pct Page 6

Ant Financial raises MoneyGram bid 36 pct Page 9

Global politics

Erdogan follows slim referendum win by warning opponents Page 14

ZHUHAI HOME PURCHASES MORE DIFFICULT Real estate

It has become even more difficult for MSAR residents to buy a new home in Zhuhai, following the mainland city’s recent tightening of its housing purchase regulations. Some capital may thus return to the MSAR, but not a lot, say realtors, explaining that most residents who bought houses in Zhuhai did so for self-use rather than for speculation. Page 5

Japan has the potential to become the world’s next biggest gaming hub, says a report by Global Market Advisors. The report projects the country could generate as much as US$24.2 bln in gaming revenue by 2030, if it allows gaming developments in at least six of its major regions.

Gaming Page 7

HK Hang Seng Index April 13, 2017

Investment, retail drives up mainland economy Growth China’s economy accelerated for a second-straight quarter, up by 6.9 pct y-o-y in Q1, its first back-to-back acceleration in seven years, as investment picked up, retail sales rebounded and factory output strengthened, amid robust credit growth and stronger property markets. Page 8

The watchdog now barks louder

Politics President of the Legislative Assembly, Ho Iat Seng believes local legislators have done a better job in terms of monitoring the MSAR Government, although they are facing some limitations including a lack of manpower. While some legislators are also assisting the policy making of the gov’t in the Executive Council, the legislature’s leader hopes that the number can be reduced in the future. Page 3 24,261.66 -51.84 (-0.21%)

Worst Performers

Belle International Holdings

+2.13%

China Resources Power

+0.97%

Kunlun Energy Co Ltd

-1.59%

Bank of East Asia Ltd/The

-0.94%

New World Development

+1.84%

Cheung Kong Property

+0.91%

Hang Seng Bank Ltd

-1.33%

Geely Automobile Holdings

-0.93%

Swire Pacific Ltd

+1.40%

AAC Technologies Holdings

+0.69%

HSBC Holdings PLC

-1.32%

Lenovo Group Ltd

-0.78%

Sun Hung Kai Properties Ltd

+1.36%

China Mengniu Dairy Co Ltd

+0.67%

Link REIT

-1.24%

CK Hutchison Holdings Ltd

-0.73%

China Unicom Hong Kong

+1.33%

Hengan International Group

+0.51%

China Merchants Port Hold-

-1.09%

China Life Insurance Co Ltd

-0.65%

23° 27° 23° 27° 22° 26° 19° 25° 18° 21° Today

Source: Bloomberg

Best Performers

WED

THU

I SSN 2226-8294

FRI

SAT

Source: AccuWeather

A new gaming hub in production

2 Business Daily Tuesday, April 18 2017

Macau Politics

HK pan-democrat legislator banned entry to MSAR Another legislator from Hong Kong was refused entry to Macau as local police consider him “a threat” to the city’s security Sheyla Zandonai sheyla.zandonai@macaubusiness.com

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ong Kong pan-democrat legislator, Kenneth Leung, was refused entry to the Macau SAR on Sunday, according to South China Morning Post (SCMP). Local immigration officers claimed Leung was barred on the grounds of being considered a ‘threat to the city’s internal security’.

Unconvinced by the reasons provided for his denied entry, the legislator, who had never been refused entry to Macau previously, has requested further explanations from the Macau authorities. He further claimed that he would pledge to

raise the case with Hong Kong’s Security Bureau.

“This is utterly strange and totally beyond comprehension. I have done nothing related to Macau recently,” Leung, whose last visit to Macau took place in April 2016, is quoted as saying by SCMP. In addition, the pan-democrat explained to the Hong Kong media outlet that he was more surprised by the Macau authorities’ reaction given that he had no problem entering China on a trip to Foshan in Guangdong last month.

“There is definitely a blacklist of pan-democrats in Macau ... I do not understand why I would be turned away from Macau when I could actually enter the mainland,”

Leung commented.

Macau officials were unable to be reached yesterday to reply to Business Daily’s enquiries about the case.

Leung, who had travelled to the city with his family for a holiday break, was barred from entering when he reached the border checkpoint at the Macau Outer Harbour Ferry Terminal. He was detained for about an hour before authorities sent him and his family back to Hong Kong on a ferry, news agency Lusa reported.

In a conference held by the Office of the Secretary for Security in late February, immigration officials claimed they would not disclose information on any cases related to entry refusal, such as the country of origin of those who are barred, or the reasons why the local security forces would block someone trying to come to Macau.

Wong Sio Chak, the Secretary for Security, argued at that time that the police have the authority to decide who they evaluate as being a security risk, based on their own discretion.

Land

Gov’t recovers one illegally-occupied plot The Macau SAR Government has reclaimed a 2,900-square-metre plot of land in Taipa that was illegally occupied. The parcel will now be developed into a police department building for the Islands, according to a press release from the Land, Public Works, and Transport Bureau (DSSOPT) yesterday.

Located between the Avenida de Guimarães, Avenida Dr. Sun Yat Sen and Rua Siu Kuan, the plot had been fenced off and was being used as a storage area for containers, construction material and machinery when the Bureau initiated the case.

Despite not being able to identify the occupants of the land, DSSOPT reached a final decision in December 2016, ordering the land to be returned to the government and requesting that the property be evacuated.

The Bureau noted that no entity or individual had claimed right of ownership over the plot during the period it had allocated for

the occupants to vacate the plot.

But it added that the majority of the objects in the plot had been cleared away when it visited the

site following the deadline for the clearance.

DSSOPT added in the announcement that it has recovered a total

of 63 illegally occupied plots so far, occupying a total of 336,000 square metres.

It claimed that it will carry out further studies to determine the purpose of the latest reclaimed plot in accordance with the city’s social and economic development. S.Z.

Public Administration

The dream job While many are interested in working in the government, observers believe the public recruitment schemes still need further improvements More than 20,000 residents participated in the first round of examinations this month, to secure one of 183 vacancies for the post of senior technician in the government, with a monthly salary of over MOP34,000 (US$4,250).

This fierce competition, or nearly 110 people vying for one position, is not uncommon in a city where being a civil servant is regarded as an ‘iron rice bowl’ - a stable job paying a high salary.

But what some of those 20,000 candidates might not have contemplated is that there are other ways of landing a job in the government

- as long as you have personal connections with certain officials, as highlighted by a recent scandal unfolding in the Cultural Affairs Bureau (CAB) and the ongoing trial of the territory’s former Public Prosecutor.

The Commission Against Corruption, which also conducts the functions of Ombudsman here, released a hard-hitting report on the Cultural Affairs Bureau last month, slamming illegal hiring practices which avoid employing workers via the central recruitment system that the Bureau says is too time consuming.

Legislator Au Kam San

said his office had received similar complaints about the government in the past, believing such illegal hiring practices also exist in some other government departments.

“The current central recruitment mechanism is c u m b e rs o m e a n d ti m e consuming, but this should not serve as an excuse for government departments to circumvent the system,” he emphasised.

The legislator has urged authorities to further streamline procedures and reduce the time needed for central recruitment.

Cheong Koc Iun, president of the Chinese Civil Servants Association of Macau, thinks authorities could further unify various means to hire workers.

The 2016 by-law lists public bodies that can employ workers via central recruitment, as well as reviews of

resumes and knowledge tests like training or body tests.

“The key is that the efficiency of central recruitment should be enhanced so that government departments can get workers they need in time to fill their vacancies,” he added.

The full story can be read in this month’s issue of Macau Business magazine, available at newsstands or online at www.magzter.com

Business Daily Tuesday, April 18 2017 3

Macau Politics

President: Local legislature now a better watchdog Ho Iat Seng says the legislature’s supervision of the MSAR Government has ‘improved’ during its tenure, rejecting opinions that legislators are “passive” to government-backed bills

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resident of the Legislative Assembly (AL), Ho Iat Seng, believes local legislators have performed better supervision of the MSAR Government despite some limitations.

“Currently we have much more supervision, that’s a fact,” the AL President said, adding that a large portion of the government’s work is a “target of supervision”.

However, Mr. Ho said the AL could only focus on what it considers fundamental issues such as matters related to Finance, Administration, and Land and Public Concessions, due to limited human resources.

Mr. Ho considers legislators have “considerably large powers to take legislative initiative” given the fact that they have presented many law proposals. But he also admits getting an approval from the legislature on a bill is “a different issue as it depends a lot on lobbying”, especially in Macau where no political parties exist.

“Every legislative initiative being evaluated in the plenary session has to pass by a period of clash of forces,” he said, citing the current union law proposal that is facing opposition from the employer sector.

President of the Legislative Assembly, Ho Iat Seng

This “clash of forces,” according to Mr. Ho, is one of the reasons why sometimes law proposals are changed substantially between their first and second readings.

But the AL President noted that changes in law proposals “happen in all parliaments,” defending that “most bills remain faithful to their initial proposal” as any reasons for the changes or any opinions on the proposals by legislators are always recorded.

The AL President also rejected the criticism that the legislature has a passive attitude towards law proposals brought up by the government.

“There is a whole evaluation process so that different interests involved can have a debate. They can’t

say they were misled. Nobody placed a gun to their head and threatened them to vote in a certain way… They can abstain or vote against…or use the right to make a vote declaration,’ he added.

Multiple roles

Mr. Ho also admitted that the percentage of legislators in the Executive Council is “quite high,” believing the number could be reduced, although he doesn’t see that there is “any conflict of interest” for an individual taking up double roles, which is covered in the city’s Basic Law. Mr. Ho believes the reason why the Basic Law allows this situation is because “plenary voices could be transmitted to the Executive Council”

while “government opinions and policies could be transmitted to the plenary.”

The AL President also pointed out that the current system of the Executive Council should be “better analysed and studied”. He opined that the government should limit the number of legislators in the Executive Council to two or three, even though the Basic Law doesn’t require such limitations.

Currently, the Executive Council consists of 11 members, of whom four are legislators, namely: Cheang Chi Keong, Chan Meng Kam, Chan Chak Mo and Leonel Alves.

The incumbent AL president was also a member of the Council for five years until 2009. Lusa

4 Business Daily Tuesday, April 18 2017

Macau Opinion

Business education

Bringing home the gold medal Albano Martins*

The laws we have!

A few days ago I was invited to a police station because of a video that I was alleged to have put on Facebook, showing a community member violently mistreating a small animal.

The truth is that the document didn’t come from me, but because it was “shared” by me, it made the difference.

I left there accused.

A central question, for me, seems to be the old problem of sources and the need to protect them, which is also part of the code of ethics of the Societies for the Protection of Animals!

Sharing this video has caused a real local earthquake!

Of course, I was well received by the authorities. They were impeccable and very sympathetic. Some of them even came over to me and apologized!

I learned in the past that “A man alone can not carry out any important enterprises.

A man has to walk with no embarrassment, in a firm, safe and free step!”

Embarrassment is what I would have felt if I had failed to share this video - capable of having much more far-reaching consequences than a simple complaint that would be lost at any police station - due to a fear of confrontation.

The truth is that when someone assumes a cause with soul and heart, he is sometimes in that gray zone between scrupulously abiding by the law and the necessity to violate it minimally to protect another more valuable asset or principle.

All of us in life have the right and the duty to make decisions, and to accept the risks that may arise from them.

Freedom is one of the most precious things we have in life, though its value is often overlooked, perhaps because only in its absence does it become evident.

But she does not always bring us roses and miracles!

I learned that nobody can publicly denounce anyone who violates a law, because the law protects the privacy of those who commit the crime.

A sense of personal dignity requires us to protect the weakest, especially those who have no voice!

Anyone who violates a law and in doing so threatens the life of another being, whether human or animal, or treats them violently with extreme gratuitous cruelty, can not expect that an organization entrusted with a document showing evidence of such cruelty against a defenseless being, will be fearful of having a confrontation with gray zones of the law.

Whoever does not know how to behave according to the ethical values that should guide their life or professional activity, especially in such an important local institution, please move, far away, if possible! * an economist and contributor to this newspaper

A team of Macau University of Science and Technology students managed to win the world’s largest business management competition held in Qatar. The Dean of the university’s School of Business believes the victory should raise the prestige of local business education Nelson Moura nelson.moura@macaubusinessdaily.com

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local Macau team has brought home the top trophy from the 34th Global Management Challenge (GMC) International Finals. The Dean of the Macau University of Science and Technology (MUST), Lin Zhijun, believes the victory should be an incentive for the city to place “more value” on business management education.

The international finals of the world’s largest strategic management competition, held between April 10 and April 12 in the capital of Qatar,

saw a team from the MSAR come out victorious for the second time, after the city’s first victory at the 2007 edition held in Romania.

The team representing Macau, nicknamed ‘twilight’, comprised of four students from MUST, who won the regional finals from among 111 teams in January.

“The last time Macau won this competition was 10 years ago, by a team composed of MUST students and local business representatives …

This is a worldwide competition with teams coming from 23 countries and a final [with] eight teams. I believe this award will give some prestige to Macau’s business education and

the quality of the city’s business students,” Mr. Lin told Business Daily.

The team from Russia - winners of the last year’s GMC International Finals held in Macau - only managed to achieve second place this time, followed by a team from Mainland China in third.

Established in 1980 by Portuguese simulator and model company SDG, in partnership with the weekly Portuguese newspaper Expresso, the GMC tournament places participating teams in charge of a simulated company to manage different aspects of a simulated business environment.

The teams have to make management decisions based on a simulated company history and the world’s financial situation in the preceding five years.

Since the founding of the competition, Portugal, having won eight editions of the GMC, is the country with the largest number of wins under its belt, followed by Mainland China and Russia, both with five wins, and Spain with four wins.

Aviation

Taking to the skies Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

As the business aviation market continues to expand throughout Asia, with China being the largest driver regionally, partnerships are increasing between Western and regional companies in the aviation industry. Such is the case of the recent strategic alliance between Business Aviation Asia Ltd (BAA) and Luxaviation Group.

BAA manages ‘high-level aircraft management services for business jet owners’ – within the Macau, Hong Kong, Taiwan and China segment, as well as further abroad. Through the partnership, the group aims to deliver its ‘expertise in integrating advanced western experience of business jet management to China’s new and burgeoning private aviation sector,’ according to a company release.

Luxaviation, ‘one of the world’s largest private aviation operators,’ runs a fleet of about 260 aircraft with 1,600 employees globally, with 25 fixed-based operator facilities and 15 maintenance centres, and caters to ‘some of the world’s most respected private jet operators’.

BAA is fully owned by the China Minsheng Investment Group, who also runs CMIG Aviation. The group’s president, Zhu Yimin, notes that the

new partnership ‘will undoubtedly help play a highly important role in the further growth and development of China’s business aviation market’, noting that it will ‘bring the combined private and business aviation expertise of East and West in one unified service offering’.

The CEO of Luxaviation Group, Patrick Hansen notes the group is ‘proud to have the opportunity’ to work with the ‘fast-growing Asian

and specifically Chinese business jet market, and supports BAA to further improve its client services in the region’.

China is the largest regional driver of the business jet industry, with 477 aircraft at the end of last year, according to a report by aviation group Asian Sky. A total of 11 business jets were based in Macau, a two-jet reduction from the previous year, while in China a 4.2 per cent year-on-year growth was seen in the fleet size, similar to Hong Kong, which saw a 4.8 per cent increase in fleet size year-on-year in 2016.

By Aivi N. Remulla

Business Daily Tuesday, April 18 2017 5

Macau

Property

Realtors: Zhuhai's latest home curbs have limited impact The Chinese city’s latest restrictions on home purchases may not bring that many positive effects to the MSAR’s home market – such as capital return - as MSAR residents were primarily self-use buyers there Kam Leong kamleong@macaubusinessdaily.com

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he latest expansion of Zhuhai’s housing curbs may not significantly drive up capital in the Macau housing market despite the fact that it is now more difficult for local residents to purchase a housing unit there.

Earlier this month, Zhuhai imposed tighter restrictions stipulating that a residential unit can only be resold three years after the property certificate is obtained, while non-Zhuhai citizens are only allowed to make residential purchases after they

have paid government taxes or contributed to the social security fund there for five years, up from the previous requirement of one year.

“Following the restrictions, I do believe it would be very difficult for Macau residents to buy a residential unit there as I don’t see many Macau residents could have contributed to the social security fund there for five years, except for those who work there,” the head of residential at Jones Lang LaSalle (JLL) Macau, Jeff Wong Chi Wai, told Business Daily yesterday.

Adding that MSAR residents may still buy commercial units in the Mainland Chinese

city, the realtor noted that capital in Zhuhai’s housing market is largely from other Chinese provinces rather than from the MSAR. “As such I don’t see the latest restrictions will shift a large amount of capital back to Macau from Zhuhai, as Zhuhai’s housing market is more driven up by mainland buyers from other provinces,” Mr. Wong said.

He explained that many MSAR residents buy houses in Zhuhai as their “second-home,” which they will use for vacations and weekends, or for retirement.

Investors may also now see returns in the Zhuhai housing

market as less attractive than in the MSAR, taking the mainland city’s taxation laws into account, he added.

Jennifer Un, senior regional director of Ricacorp Macau Properties Ltd, had a slightly different perspective, reckoning Zhuhai’s stricter housing curbs will more or less benefit the local home market.

“We have seen that the housing prices in Zhuhai have hit some RMB30,000 per square feet. For first-time buyers, they can buy a unit in Macau with similar prices.

So of course they will choose Macau,” she said.

Stabilizing

While the city’s gaming industry is on a path to recovery, posting year-on-year growth in revenues in the past eight months, both of the property agents believe housing prices in the city will stabilize this

year without registering any notable adjustments.

“Compared to the lowest point, housing prices have rebounded by some 10 per cent,” Ms. Un said. “How much it will grow further this year…it will really depend on the macroeconomic factors and the supply of new units.”

Mr. Wong from JLL, meanwhile, notes the home market lacks an incentive to boost its prices at the moment.

“The market is recovering, but we don’t see there will be any significant increase in capital values this year as the city’s economic transformation needs more time,” he said.

But a more significant change in home prices may become evident next year, he added.

“Maybe in 2018,” he said.

“After the opening of the Hong Kong-Zhuhai-Macau Bridge… The project may help the city to transform its economy, such as attracting more MICE events, especially those that have never been held in Macau, to take place here,” he said.

Corporate

Macau Business Readers kicks off Conference on the Intellectually Disabled

The Conference on Intellectually Disabled People in Asia organized by the Charity Association of Macau Business Readers kicked off yesterday. The Conference, sponsored by several private and public institutions, including MGM China Holdings Limited and held at MGM MACAU’s Grand Ballroom, is the beginning of a series of activities planned to further promote social inclusion through art workshops and sporting events within the month of April.

A number of international speakers were invited to share ideas and insights at the Conference on the topic of social inclusion for 300 audience members from various fields, including Special Olympics athletes and coaches from all over the world, government officials, representatives from local community associations, school students and teachers, as well as MGM’s management team members and Volunteer Team.

One of the speakers, Program Specialist from UNESCO Institute, Dr. Natalia Amelina, gave a presentation on the digital inclusion of the intellectually disabled.

Mr. Emmanuel Bishop, a 20-year-old athlete with Down syndrome, was invited to deliver a keynote speech on the topic of My Abilities – The Story of a Special Champion. “Down syndrome is a part of me, and it is with my disability that makes me who I am,” he said. “This is a great opportunity for me to show my full-self through this conference.”

Mr. Grant Bowie, Chief Executive Officer and Executive Director of MGM China, also delivered a speech on Social Inclusion in the Workplace: It Begins with Understanding and Respect.

“As an employer, we understand that no individual is perfect, and only together can we create perfection,” he said at the event. “At MGM, we strive to foster an environment where we embrace people of different backgrounds and we make sure they are treated with equality, respect and dignity.”

MGM has been a keen supporter of the Macau Special Olympics Golf Masters, ever since its inaugural tournament in 2012. In addition to sponsoring the Golf Masters taking place from April 19 to 21, Mr. Bowie will once again be one of the officiating guests.

The Special Olympics athletes, accompanied by MGM’s Volunteer Team members and artists from Art For All Society, collectively created unique, colourful designs on a plain lion sculpture and a real motorcycle.

International speakers, Special Olympics athletes and coaches from all over the world, organizers, representatives from local community associations, together with MGM’s management team members and Volunteer Team kick off the art workshop and pose for a photo after completion of the Conference on Intellectually Disabled People in Asia yesterday afternoon.

6 Business Daily Tuesday, April 18 2017

Macau

Trade

Meaty charges Brazilian authorities charged 63 people suspected of being involved in a tainted meat scandal that led to international restrictions on meat imports from the South American country Nelson Moura* nelson.moura@macaubusinessdaily.com

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ederal authorities in Brazil have pressed charges against 63 people suspected of being involved in the tainted meat scandal that led a number of places, including the MSAR, to impose restrictions on meat imports from the South American country.

According to Spanish news agency EFE, the accused are now facing charges of corruption, influence peddling, access to prohibited substances, falsifying documents, links to criminal associations and embezzlement.

The charges were authorised yesterday by Brazil Federal Police

Investigator, Mauricio Morcardi Grillo, and the country’s Public Prosecution Office is expected to issue a statement in the coming five days.

“The committed crimes have directly affected public health due to the lack of [supervision] from officers, and that of the interests of food product companies,” the Inspector said, as quoted by the agency.

An action named ‘Weak Meat’ took place on March 17, hitting many companies in the sector, such as JBS - one of the world’s largest meat exporters and BRF Brazil Foods, which together with 21 other local companies in the sector were put under investigation and had their export licenses temporarily suspended.

The scandal broke out after some meat producers were found to have bribed the country’s health officers in exchange for the sale of bad or tainted meat adulterated with chemical products.

Global ripples

The action led to an international crisis, as around 20 countries imposed restrictions on the import of Brazilian meat afterwards, such as Hong Kong, Mainland China, Chile and Egypt.

On March 20, the European Commission guaranteed that it was following up the investigation on infractions involving Brazilian meat, and would block all meat from companies involved in the scandal from entering the European Union.

On March 21, Macau’s Civic and Municipal Affairs Bureau (IACM) announced that it would block the importation of all frozen or refrigerated meat from Brazil to the MSAR. The Bureau later reduced the ban

to products from the 21 companies under investigation and meat authorised by sanitary officers involved in the case.

In 2016, the MSAR imported 3.2 million kilograms of frozen Brazilian bovine meat worth MOP291.5 million (US$36.4 million), while Hong Kong was the third largest importer of Brazilian bovine meat in the world, having imported US$1.5 billion-worth in 2016, according to the Brazilian Ministry of Industry, Foreign Trade and Services (MDIC).

Brazilian meat is exported to more than 150 countries.

In the whole year of 2016, Brazil’s poultry meat sales reached US$5.9 billion, while beef sales reached US$4.3 billion, according to official data. Meanwhile, the Brazilian Government has estimated the scandal could result in losses in the country’s external market of around US$1.5 billion.

Brazil’s Minister of Agriculture, Blairo Maggi, has announced he will make official visits to Mainland China, Hong Kong, the U.A.E, Saudi Arabia and Europe in May, to “intensify negotiations with Brazilian meat importers”. * with Lusa

Gaming

Wells Fargo: April’s revenue growth up to 15 pct But the firm notes the industry may be affected

by China’s continuous housing curbs and slowing of credit this year Kam Leong kamleong@macaubusinessdaily.com

Analysts at Wells Fargo Securities, LLC are expecting the city’s gaming revenues will grow by as much as 15 per cent year-on-year this month, according to the firm’s latest research note published yesterday.

‘We expect April growth to track at around 10 per cent to 15 per cent year-on-year,’ wrote the firm’s analysts led by Cameron McKnight.

‘Our estimate roughly implies daily revenues of MOP635 million (US$79.3 million) to [MOP]665 million, and is based on the average 7 per cent month-on-month decrease from March to April over the past five years,’ they explained.

In March, the local gaming industry raked in MOP21.2 billion in revenue, an 18.1 per cent year-on-year increase, and also representing eight months of consecutive year-on- year

growth.

Wells Fargo’s estimate for this month’s revenue growth compares to consensus expectations of 12 per

cent year-on-year, the firm notes.

‘In our view, VIP growth is rebounding back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013/14,’ they wrote.

According to the firm, China’s continuous housing curbs and slowing of

credit may impact the city’s gaming revenue this year.

‘We continue to think loose credit and housing have been driving the market recovery,’ the analysts said in the note. ‘We think continued curbs on housing speculation and slowing of credit will impact revenues later in the year.’

On the other hand, the firm perceives China’s plan to integrate the MSAR, Hong Kong and Guangdong – with the Guangdong - Hong Kong -Macao Bay Area project – will benefit Macau.

‘The integration would leverage the strength of each region (tourism/ gaming, financial services, manufacturing) and compete with areas such as New York, Los Angeles, and Tokyo,’ the analysts suggest.

‘While challenging to quantify, this would be an obvious positive for Macau, but there is opposition to the plan and it would be years away from coming to fruition even in an optimistic scenario,’ they added.

The firm also stressed that the future Hong Kong-Zhuhai-Macau Bridge will potentially drive more visitations to the MSAR given that the city’s link with the Hong Kong International Airport would be shortened following the opening of the super bridge.

Business Daily Tuesday, April 18 2017 7

Gaming Gaming

Report: Japan potentially the next largest gaming hub A report from Global Market Advisors believes Japan may generate as much as US$24.2 billion in gross gaming revenue by 2030 Nelson Moura nelson.moura@macaubusinessdaily.com

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f integrated resorts are developed in at least six regions in Japan, the country has the potential to be one of the largest gaming markets in the world, with an estimated revenue of US$24.2 billion (MOP193.74 billion) by 2030, according to a report by market research group Global Market Advisors (GMA).

An executive summary of the GMA report ‘White Paper: Japan Integrated Resorts’, predicts the first integrated resort in Japan will only open in 2023, setting different projections depending on the number

of regions where integrated resorts are allowed.

“While the number of sites has not officially been determined, it is widely viewed that there will be an initial one to three integrated resorts in the first round of Request for Proposal (RFP), with a second round not beginning until after initial integrated resorts have opened and demonstrated their benefits to Japan,’ the report indicates.

The report’s projections vary from a possible US$10.9 billion in revenue if only the Osaka region sees gaming market development, to a possible US$24.2 billion in revenues if six regions - Tokyo, Osaka, Sasebo, Sendai, Yokohama and Hokkaido

– are all allowed integrated resorts development.

The Osaka Strip

Analysts cited by the report advise that if the purpose for the development of integrated resorts is to develop tourism, in a similar to the Singapore model, then multiple properties should be developed in an area such as Yumeshima artificial island in Osaka Bay in order to create what the report named the ‘Osaka Strip’.

‘Three or more operators would create critical mass and a full tourist destination, allowing the Osaka Strip market to compete with destinations such as Las Vegas, Macau, and Singapore,’ reads the report.

The report believes that the possible scenario of multiple gaming operators being allowed on the Osaka Strip by 2025, would generate at least 47 per cent of the total estimate of US$10.9

billion in gaming revenues to come from international tourists.

‘These numbers further confirm that Japan has the capacity to be one of the largest gaming markets in the world, providing substantial economic and social benefits for the local population. This is assuming that legislators follow best practices in the integrated resorts industry,’ the report points out.

Depending on regulations

However, the report also considers that the country’s development of integrated resorts will depend on whether the future regulations will ‘constrain operators by mandating an investment floor or specific space allocation requirements for gaming and non-gaming amenities.’

The report also highlighted the necessity to ‘improve the overall perception of integrated resort style casino gaming amongst the general [Japanese] public,’ suggesting operators and the local government highlight how integrated resorts can contribute to the local economy in terms of ‘tourism, investment, job creation, and additional revenue’.

Gaming

S. Korea generates US$54.6 bln in gaming tax so far The Korea Taxpayer Association estimates the South Korean Government has collected US$54.56 billion (MOP436.84 billion) from gaming taxes over the past 15 years, Gaming Today reported.

Horseracing has brought in the largest part of the revenue, representing 37.5 per cent of the total, followed by lotteries (25.4 per cent) and casinos

(12.3 per cent).

Casinos in Korea are supervised by the Ministry of Culture and Tourism and allowed under the Tourism Promotion Act, according to which licensed hotels - currently in Seoul, Incheon and Jeju Island - can operate casinos for foreign nationals only.

In January 2017, Landing International Development Ltd., a Chinese

real estate developer, became the sole owner of Shinhwa World, a casino-resort project on Jeju, previously co-owned by Genting Singapore PLC, a Singapore-listed gaming operator.

Genting’s exit from South Korea’s market was said to be part of the company’s strategy to re-focus on Japan’s recently liberalized gaming market, according to a company announcement.

Forbes has said recently that the competition in the regional gaming market is expected to increase and the stakes set to rise, given signs of recovery in Macau, Japan’s soonto-open coveted gaming market, and the increasing success of gaming operations in the Philippines, despite political instability and regulatory constraints. S.Z.

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8 Business Daily Tuesday, April 18 2017

Greater China Growth

Mainland economy accelerates as retail, investment pick up The expansion further cements a rebound as producer prices surge, industrial output picks up and soaring credit fuels investment

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hina’s economy accelerated for a second-straight quarter as investment picked up, retail sales rebounded and factory output strengthened amid robust credit growth and further strength in property markets.

Gross domestic product increased 6.9 per cent in the first quarter from a year earlier, compared with a 6.8 per cent median estimate in a Bloomberg survey. It was the first back-to-back acceleration in seven years.

Other indicators released Monday by the National Bureau of Statistics showed:

*Fixed-asset investment excluding rural areas expanded 9.2 per cent for the first three months, accelerating from 8.1 per cent growth last year *Retail sales increased 10.9 per cent from a year earlier in March, compared with a median estimate of 9.7 per cent in a Bloomberg survey *Industrial output rose 7.6 per cent last month from a year earlier, compared with an estimated 6.3 per cent rise “For the first time in the recent years, China starts a year with a strong headline GDP,” said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, who correctly forecast the growth pace. “Thanks to strong investment and property, the economy is performing well.”

The expansion further cements a rebound as producer prices surge, industrial output picks up and soaring credit fuels investment. Policy makers have shifted to a more neutral monetary stance as they seek to ease financial risk and reduce excess industrial capacity.

“The first quarter growth is mainly driven by reflation and very strong property sales and investment,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “This strong data would give more confidence to maintain a tightening stance.”

The broadest measure of new credit rose more than estimated last month amid strong growth in shadow banking. Aggregate financing grew RMB2.12 trillion (US$308 billion).

Nominal surge

In current-price terms, the economy expanded 11.8 per cent from a year earlier, according to Bloomberg Intelligence estimates.

“That’s making the problem of excess leverage look a little more manageable – at least as long as factory reflation stays strong,” BI economists Tom Orlik and Fielding Chen wrote in a report.

The labour market has been holding up too: The surveyed jobless rate fell in March from February, while the level in big cities was below 5 per cent at end of last month, the NBS said. China added 3.34 million new jobs in the

first quarter.

Other data pointed to further rebalancing away from the old industrial growth drivers. Consumption contributed 77.2 per cent to growth in the first quarter, an NBS spokesman said at a briefing in Beijing. Last year, 64.6 per cent of growth came from consumption.

“The rebound in retail sales growth was particularly important as it indicates that consumer spending remains strong,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit in Singapore. “The upturn in Chinese growth is a very positive indicator for the Asia Pacific and world growth in 2017, as well as underpinning the near-term outlook for global commodities.”

One measure of consumer earnings slowed. Growth of median per-capita disposable income decelerated to 6.7 per cent in the first quarter, down from 8.3 per cent last year and slower than GDP expansion for the first time since NBS began releasing the gauge in March 2014.

Investment momentum

Despite recent property tightening measures, investment momentum is likely to stay strong in coming months amid heavy infrastructure investment.

The April 1 announcement of the new Xiongan economic zone portends massive construction spending and suggests authorities are likely to remain reliant on investment to help support longer-term growth.

The Xiongan New Area will “hugely” promote economic development, an NBS spokesman said at a briefing in Beijing.

Elsewhere in data released Monday:

*China, which produces half the world’s steel, churned out a record quantity in March as production of crude steel expanded 1.8 per cent from a year earlier *Coal production rebounded in March after the government said it doesn’t intend to reintroduce widespread restrictions this year as long as prices remain acceptable to regulators *Oil production stagnated in the first quarter, averaging 3.91 million barrels a day Investment in property development rose 9.1 per cent in the first three months from a year earlier, compared with 8.9 per cent in the first two months and 6.9 per cent in 2016. Yet developers may find 2017 more challenging, as about a dozen cities have imposed tighter restrictions on purchases to curb a frenzy of speculation.

“Growth remained strong on the back of continued strength in housing activity, resilient infrastructure investment, and better external demand,” said Robin Xing, chief China economist at Morgan Stanley in Hong Kong. “The strong growth and better external demand has provided room for a faster pace of countercyclical monetary policy tightening.” Bloomberg News

Business Daily Tuesday, April 18 2017 9

Greater China M&A

In Brief

Ant Financial raises MoneyGram bid 36 pct to fend off Euronet

Labour

3.34 mln new jobs created in first quarter

The new deal, which has the backing of MoneyGram’s board, values all the common and preferred stock at US$1.2 billion Ant Financial raised its agreed offer for MoneyGram International Inc. by 36 per cent as the financial-services company controlled by Chinese billionaire Jack Ma tries to top a competing offer and overcome security concerns.

The revised bid is worth US$18 a share in cash, up from a previous offer of US$13.25, the companies said in a joint statement. The new deal, which has the backing of MoneyGram’s board, values all the common and preferred stock at US$1.2 billion, it said. Euronet Worldwide Inc. last month offered US$15.20 a share for the Dallas-based payments company.

By raising its bid such a large amount, Ant Financial is making clear its intention of completing a deal, said Doug Feagin, Ant’s international president. But the Chinese company could still face potential political obstacles, with American lawmakers urging the powerful Committee on Foreign Investment in the U.S. to conduct a “full and thorough” review of the deal.

“You have two issues; what are MoneyGram shareholders going to receive? And that’s what Ant Financial is addressing with a revised bid,” said Kirk Boodry, an analyst at New Street Research. “Politics is the other issue that really stands out here and Chinese companies have struggled to get deals done in the U.S.” Euronet has said its offer has a better chance at regulatory approval.

The Leawood, Kansas-based company didn’t immediately respond to calls and emailed requests for comment outside normal business hours. Shares of MoneyGram closed Thursday at US$16.51.

President Donald Trump has taken a hard stance on China since assuming

office, increasing the chance Ant Financial’s bid will be closely scrutinized by CFIUS, an inter-agency panel that examines acquisitions of companies by foreign investors. The White House can stop the deal, and Treasury Secretary Steven Mnuchin is the chairman of the panel.

Shots fired

Ant Financial’s bid is a clear shot across the bow against Euronet, which directly raised security concerns with Mnuchin and has said doubts around approval are a key reason why MoneyGram shareholders should reject its Chinese rival’s offer.

“We wanted to speak with conviction that this is something strategic for us,” Feagin told Bloomberg News.

“We intend to move to get closed and to be successful here.”

The company expects the deal to close in the second half of 2017. While Feagin said the regulatory approval process had been “constructive” so far, it couldn’t provide a more specific time frame on when it would be completed. Some provisions, such as fees to be paid if the deal falls apart, have changed to match the increased value of the new offer.

MoneyGram Chief Executive Officer Alex Holmes said Euronet’s binding bid came in on Friday, allowing his board to consider it alongside Ant Financial’s improved offer.

“It made lot of sense to us at US$13.25 and certainly it makes the same amount of sense, if not more now, for shareholders now at US$18,” he said. “If Euronet chooses to continue forward or make another offer it’s really entirely up to them.”

Holmes said price and approval risk were the key points of contention for both bids. While CFIUS approval is

more of an issue for Ant Financial, antitrust regulators from the US and Europe could slow or scuttle Euronet’s offer.

Anchoring expansion

Ant Financial first announced its move in January as it steps up an international expansion to build on its strength in China. Formally known as Zhejiang Ant Small & Micro Financial Services Group Co., it has hundreds of millions of users and provides wealth management, insurance, credit checks and consumer loans.

It also owns Alipay, the dominant payments platform on China’s largest e-commerce operator.

MoneyGram would help anchor a global expansion for Ant Financial and enjoy strong growth once integrated with its pool of over 600 million Chinese users, Feagin said.

Ant Financial used to be a part of Jack Ma’s Alibaba Group Holding Ltd. but is now a separately owned business. It was valued at US$75 billion

by CLSA Ltd. in September and is said to be considering an initial public offering as soon as this year.

Euronet has a network of more than 35,000 ATMs and 800,000 point-ofsale terminals and has twice bid for MoneyGram, with offers in 2007 and again in 2013.

MoneyGram will hold a special stockholder meeting on May 16 to vote on Ant Financial’s latest bid.

Bloomberg News

Real estate

China March home sales buoyant even as curbs start to bite Policy makers are seeking to clear a glut of unsold homes in smaller urban centres, while pledging to enforce strict curbs in most firstand second-tier cities to prevent a housing bubble The value of China’s home sales remained buoyant in March, though volume figures indicated that curbs in a number of cities may be slowing the recent buying frenzy.

New home sales by value rose 18 per cent to RMB1 trillion (US$145 billion) last month from a year earlier, according to Bloomberg calculations based on data released Monday by the National Bureau of Statistics. The increase compares with a 23 per cent surge in the first two months of the year.

But the value of sales partly reflected surging home prices. By volume, home sales grew only 11 per cent in March to 130 million square metres, according to Bloomberg calculations, below the 24 per cent growth in the first two months of 2017.

“The curbs are showing their effects,” said Liu Feifan, an analyst at Guotai Junan Securities Co. in Shenzhen, who predicted that sales growth will continue to slow.

Policy makers are seeking to clear a glut of unsold homes in smaller urban centres, while pledging to enforce strict curbs in most first- and second-tier cities to prevent a housing

bubble. In a month when at least 64 cities announced new or stricter property-buying restrictions, some of the growth in home sales reflected buyers flocking into the market fearing they’d be ruled ineligible for future purchases.

Property investment

Investment in real estate development gained 9.4 per cent in March from a year earlier, up from 8.9 per cent in the first two months, according to Bloomberg calculations. Strong

property investment helped China’s fixed-asset investment excluding rural areas expand 9.2 per cent in the first quarter, accelerating from 8.1 per cent growth last year.

Some of the growth represented a “delayed effect” from an earlier property boom, and the rate is likely to decelerate soon, Zhou Hao, a Singapore-based economist at Commerzbank AG., wrote in a note after the data release.

Liu at Guotai Junan said the increasingly high leverage that Chinese households have taken on for home purchase is “not sustainable.”

New medium and long-term loans to households, made up mostly of mortgages, picked up again last month to RMB450.3 billion according to official data last Friday. Bloomberg News

China created 3.34 million new jobs in the first quarter of the year, an official said Monday.

“The figure was 160,000 higher than the number created in the same period last year,” said Mao Shengyong, spokesperson for the National Bureau of Statistics, at a press conference. China’s employment situation was generally good in the first quarter this year, with the unemployment rate in 31 major Chinese cities staying under 5 per cent at the end of March, according to Mao. “Meanwhile, more workers from rural areas found jobs in urban areas in the first two months, an increase of 2.7 per cent year on year,” Mao said. China aims to create more than 11 million jobs this year, 1 million more than last year’s target, according to this year’s government work report.

The country added 13.14 million jobs in 2016, and the registered urban jobless rate stood at 4.02 per cent at the end of the year.

Energy

March coal output up 1.9 pct, first year-on-year gain in two years China’s coal output rose 1.9 per cent in March compared with the same month a year earlier, its first year-on-year gain in at least two years, suggesting miners are ramping up production to take advantage of rising prices.

Miners produced 300 million tonnes of coal in March, the National Bureau of Statistics said on Monday, though for the first quarter output dipped 0.3 per cent from a year earlier to 809.23 million tonnes. “Coal production will grow faster in following months as policy makers put a strong emphasis on securing supplies,” said Zhang Min, Zibo-based coal analyst with ChinaSublime Information Group said. Supply tightened last year amid a mounting crackdown on illegal mining as work safety regulators reported an increasing number of accidents from coal mines. China’s top coal producing region Shanxi province launched a new campaign against illegal mining last month. Prices have gained more than 25 per cent since the start of this year. The most active thermal coal futures prices hit a five-month high of RMB644.8 on April 6.

Production

Shanghai aluminium surges after output cuts Shanghai aluminium soared to nearly a four-year high on Monday after fresh capacity cuts in top producer China, while the country’s robust first-quarter growth underpinned its demand outlook for most metals. Three new aluminium projects with a capacity of 2 million tonnes have been halted in Xinjiang in western China for violating rules aimed at curbing capacity, stateowned China Securities Times reported on Sunday. Shanghai Futures Exchange aluminium jumped more than 4 per cent on the news, with solid growth from China’s factories brightening the outlook for the complex.

China’s economy grew 6.9 per cent in the first quarter from a year earlier, slightly faster than expected, supported by a government infrastructure spending spree and a frenzied housing market that is showing signs of overheating.

10 Business Daily Tuesday, April 18 2017

Greater China

Economy

Steel, stimulus drive China’s strongest economic growth since 2015 But most analysts say the first quarter may be as good as it gets for China this year Kevin Yao and Yawen Chen

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hina’s economy expanded faster than expected in the first quarter as higher government infrastructure spending and a gravity-defying property boom helped boost industrial output by the most in over two years.

Growth of 6.9 per cent was the fastest in six quarters, with forecast-beating March investment, retail sales and exports all suggesting the economy may carry solid momentum into spring.

But most analysts say the first quarter may be as good as it gets for China this year, and worry Beijing is still relying too heavily on stimulus and “old economy” growth drivers, primarily the steel industry and a property market that is showing signs of overheating.

“The Chinese government has a tendency to rely on infrastructure development to sustain growth in the long term,” economists at ANZ said in a note.

“The question we need to ask is whether this investment-led model is sustainable as the authorities have trouble taming credit. We need to watch closely whether China’s top leadership will send a stronger signal to tighten monetary policy shortly.”

Even as top officials vowed to crack down on debt risks, China’s total social financing, a broad measure of credit and liquidity in the economy, reached a record RMB6.93 trillion (US$1 trillion) in the first quarter -- roughly equivalent to the size of Mexico’s economy.

At the same time, spending by the central and local governments rose 21 per cent from a year earlier.

That helped goose the pace of growth in the first quarter well above the government’s 2017 target of around 6.5 per cent, and pipped economists’ forecasts of 6.8 per cent year-on-year.

Such a strong bolt from the gate could see Beijing once again meet its annual growth target, even if activity starts to fade later in the year, as many analysts widely expect.

“Main indicators were better than expected...which laid a good foundation for achieving the full-year growth goals,” statistics spokesman Mao Shengyong said at a news conference.

Same old growth drivers?

Once again, China’s policymakers leaned on infrastructure and real estate investment to drive expansion in the first quarter. Growth in both areas has accelerated from last year and helped offset slightly weaker growth in the services sector.

“Faster growth in industrial output is the primary factor in the first quarter surprise, and due mostly to higher value-added growth related to supply-side consolidation in heavy industry,” said Brian Jackson, China economist at IHS Global Insight.

Real estate investment also remained robust in the first quarter, expanding by 9.1 per cent on-year, and the pace of new construction quickened despite intensifying government measures to cool soaring prices.

Most analysts agree the heated property market poses the single biggest risk to China’s economic growth, but predict the cumulative weight of property curbs will eventually temper activity, not produce an outright crash.

“Sales have started falling, which means tightening measures are starting to take effect,” said Shen Jianguang, an analyst at Mizuho Securities in Hong Kong, noting that will start to drag on both the services and construction sectors.

More than two dozen cities announced new or additional property cooling measures in March and early April, after curbs late last year appeared to have little lasting effect.

Buoyed by a near 12 per cent increase in housing starts, China produced a record amount of steel in March, Reuters data showed, though analysts say warning signs are flashing.

Key Points GDP grows fastest in 6 quarters on factory output, retail sales Record steel output, stimulus shows reliance on same old drivers Analysts see growth fading later in year if gov’t pushes reforms Clampdown on heated home prices could also brake GDP growth Rising inventory levels and recent falls in steel prices suggest output has been growing faster than China’s actual demand, raising worries of a glut later in the year, which could heighten trade tensions with the U.S. and its other major trading partners.

Income growth picks up

There were also positive signs on the consumer front in Monday’s data dump.

After slowing for five quarters, disposable income growth picked up to 7.0 per cent in the first quarter, the fastest since the end of 2015.

March retail sales rebounded 10.9 per cent on-year as consumers shelled out more for home appliances, furniture and decorations for new homes.

Auto sales also showed signs of recovering after weakening in the first two months of the year after the government reduced subsidies on small cars.

Analysts are closely watching for signs that consumption is accounting for a greater share of China’s economy, which would not only make growth more resilient and broader based but also reduce the need for more debt-fuelled stimulus and reliance on “smokestack” industries.

Focus on stability, then reforms

Though policymakers have pledged repeatedly to push reforms to head off financial risks and asset bubbles, the government is seeking to keep the economy on an even keel ahead of a major leadership transition in later this year.

China’s central bank has gingerly shifted to a tightening policy bias in recent months, and is using more targeted measures to contain risks in the financial system, after years of ultra-loose settings.

It has bumped up interest rates on money market instruments and special short- and medium-term loans several times already this year and further modest increases are expected, especially if U.S. rates continue to rise.

“I think China should be directing the economy to slow down its growth in the long term...but on the contrary, growth is accelerating,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute in Tokyo.

“This is good for now but it makes it difficult to see how China’s economic slowdown will land in the future.

Uncertainties remain high.” Reuters

Business Daily Tuesday, April 18 2017 11

Asia Pressures

Korea Inc’s China troubles rattle local workers, suppliers The dispute over the THAAD missile defence system has prompted calls for boycotts in Chinese media and increased regulatory scrutiny for South Korean firms Muyu Xu and Adam Jourdan

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outh Korean companies in China have been clobbered

by Beijing’s angry response to Seoul’s decision to deploy a U.S. anti-missile system, but the boycotts and regulatory pressure on firms like Hyundai and Lotte are rebounding on their Chinese workers and suppliers.

South Korean businesses are a major employer in China, with firms such as Hyundai Motor Co, smartphone manufacturer Samsung Electronics Co, and retail giant LotteGroup directly creating some 700,000 jobs in China, according to a Korea trade promotion agency, and there are many more down the supply chain.

Hyundai, which says its Chinese affiliates and suppliers alone create a total of 90,000 jobs, has responded

to falling sales by cutting production.

In Beijing’s industrial suburb of Shunyi, where Hyundai has its biggest overseas manufacturing base, its suppliers, workers and local retailers who depend on them are feeling the pinch.

“We haven’t worked weekends since a month ago and don’t know when it will get back to normal,” said a supplier of hub caps to Hyundai.

“We can do nothing but wait while losing money.”

Hyundai’s Beijing plants, which used to run 24 hours, seven days a week, are now running just 8am to 5pm on a four-day week, its workers say, and concerns of further output cuts are unnerving those working in its supply chain and local stores.

Couriers complain deliveries to Hyundai’s main plant have dropped by between a half and two-thirds,

while the owner of a nearby convenience store said his business had been hit because salaries at the plant were down.

The chief executive of a South Korean auto parts supplier employing over 100 Chinese employees said his factory’s utilisation rate had dropped by 30 per cent. He had not laid anyone off yet, but said the future was uncertain.

“We have no choice but to reduce Chinese workers if the situation is prolonged. There are no signs that the situation would get better anytime soon,” he said.

Hyundai itself said there was “no current impact on employment in China”, that it was fully committed to the Chinese market, and would “continue to do our utmost to protect our employees in the region”.

Collateral damage

The dispute over the THAAD missile defence system, which South Korea and the United States say is needed to contain the threat from North Korea, has prompted calls for boycotts in Chinese media and increased

regulatory scrutiny for South Korean firms.

Lotte Group, which has suffered a local boycott of its products since it agreed to provide land for the U.S. missile defence system, closed 75 of its 99 hypermarkets in China in recent weeks after regulatory inspections by authorities. It said workers at affected stores were being paid in full as per Chinese law.

This could drop to 60-70 per cent in the second month of closure, but the firm would “pay the most it can”, a Lotte Mart spokesman said. Lotte Group employs 20,000 people in China.

Reuters spoke to five Lotte employees in stores around China who said they were still being paid and that workers were still coming into closed stores to check expiry dates and handle inventory.

Corporate risk analysts said China was willing to accept some “tolerable collateral damage”, and it was being strategic in the areas it targeted, avoiding, for now, big employers like tech giant Samsung.

“They’ve pretty carefully targeted Lotte in terms of what the government has orchestrated, as well as tourism, flights and duty free,” said Andrew Gilholm, director of analysis for China and North Asia at risk consultancy Control Risks.

He said the stand-off could go on at least until South Korea has new leadership, following the impeachment last month that ended the presidency of Park Geun-hye.

“Beijing is likely to keep the pressure on until the new government is set up in Seoul and has made its position (on THAAD) clear,” he said.

For now, Korean firms are keeping their heads down waiting for the row to blow over.

But workers and dealers remain anxious, with sales showing no signs of recovery and no idea when things might return to normal.

“The recent slide has been very serious. Normally we sell more than 100 vehicles in a month. Now we can only shift 30,” said a Hyundai dealer in Beijing.

“Anti-Korean sentiment has soared, and lots of consumers aren’t willing to buy South Korean cars,” he said. Reuters

Politics

South Korea’s former president Park charged in corruption probe Park’s indictment follows months of street protests as the corruption scandal unfolded Kanga Kong

South Korea’s former President Park Geun-hye was charged with bribery and abuse of power, setting the stage for a trial that could result in a lengthy prison term.

Park is also accused of coercion and leaking state secrets, according to a report released by prosecutors on Monday. Lotte Group Chairman Shin Dong-bin was also indicted on charges of giving 7 billion won (US$6.2 million) in bribes to Park and her friend Choi Soon-sil.

Park’s indictment follows months of street protests as the corruption scandal unfolded, culminating in her ouster and arrest last month. Park, who denies wrongdoing, faces allegations that she abused her powers and colluded with Choi and former aides to get bribes and seek favors from top businesses.

The 65-year-old daughter of former dictator Park Chung-hee was the nation’s first female president.

Prosecutors argue that she pressured top business executives to donate tens of millions of dollars to foundations run by her confidante in return for government favors.

She is also alleged to have colluded with Choi to seek bribes from Samsung Group’s heir apparent Jay Y. Lee in exchange for government backing of a 2015 merger. Lee and Choi are both on trial and deny wrongdoing.

Park’s dismissal on March 10 has

left South Korea in the hands of a caretaker government at a time when tensions over North Korea’s nuclear program are mounting. Leading

candidates in the May 9 election to replace her include Moon Jae-in, the runner-up to Park in 2012, and centrist Ahn Cheol-soo. Bloomberg

Former South Korean president Park Geun-hye

12 Business Daily Tuesday, April 18 2017

Asia Investment

A US$161 bln manager says the Japanese stock gloom is overdone His reasoning is that the solid global economy will support profits, and wellmanaged firms can address currency risks Tom Redmond and Min Jeong Lee

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apanese stocks have been battered so badly that they’re too cheap to ignore, says the US$161 billion investor Pictet Asset Management Ltd., after the Topix index tumbled to its fifth straight weekly loss.

“It’s a buying opportunity,” Hiroshi Matsumoto, head of Japan investment at the money manager, said in a phone interview from Tokyo.

Matsumoto gave two reasons why he’s bullish: The market is undervalued because investors are overly pessimistic about the next round of quarterly earnings starting in two weeks, and about the risks associated with North Korea. Once people realize they’re being too negative, Tokyo stocks should rise, he said.

The Topix fell 7.5 per cent from a 15-month high on March 13 through the end of last week. That left it down almost 4 per cent for 2017, the second-worst performance among 24 developed stock markets tracked by Bloomberg. Shares have been buffeted by overseas factors, everything from fears about nuclear tests and missile strikes by Kim Jong-Un to U.S. President Donald Trump’s comments on the dollar being too strong. The Topix added 0.5 per cent on Monday.

Even though the yen has gained more than 7 per cent against the greenback this year, Matsumoto is betting that when companies announce earnings forecasts for the fiscal year that started on April 1, investors are going to get a positive surprise. His reasoning is that the solid global economy will support profits, and well-managed firms can

address currency risks.

“If they show relatively stable guidance for fiscal 2017, it’s going to be a catalyst for people to start thinking that the market is cheap, and earnings aren’t so terribly bad,” Matsumoto said. Pictet had 162.2 billion francs (US$161 billion) in assets under management as of December.

The Topix traded at 13.2 times estimated 12-month earnings at Friday’s close, a 24 per cent discount to the S&P 500 Index in the U.S. There are signs Japanese stocks are oversold. The Topix’s 14-day Relative Strength Index fell to 29.3 on Friday, below the 30 level that indicates to some investors that shares have fallen too far, too fast. The Tokyo Stock Exchange short selling ratio was above 40 per cent for 12 straight days through Thursday, despite only rising above that level nine times earlier in the year.

concerned, especially after Chinese President Xi Jinping’s summit with his American counterpart.

“Of course, who knows what’s going to happen?” Matsumoto said last week before the missile launch. “But Xi and Trump had a meeting. We don’t see any evidence yet but based on Trump’s tweet there is a certain possibility that Xi is cooperating with the U.S.” to put pressure on North Korea, he said.

An index of South Korean geopolitical volatility rose last week to the highest level in a month. The Topix fell 2.1 per cent for its worst week since February, sending a measure of stock volatility to its highest since the aftermath of Trump’s election.

By contrast, the Kospi index of South Korean equities has mostly shrugged off the tensions, climbing 5.4 per cent this year through Friday.

Rising tensions

“Perhaps Japan’s hypersensitivity to geopolitics reflects the fact that it is the easiest market to trade in Asia,” Jonathan Allum, a strategist at SMBC Nikko Capital Markets Ltd. in London, wrote in a note to clients last week.

“If everyone decides to take risk off

As investors watch the rising tensions around North Korea, with the Asian country’s failed ballistic missile launch on Sunday drawing a muted response from the Trump administration, Matsumoto says he’s not that

Thin skin

the table, Japan is the table that is easiest to reach.”

Despite the North Korea situation, Japanese stock investment flows are showing signs of changing sentiment.

While individuals, who tend to purchase on downturns, have been net buyers for each of the past four weeks, speculative traders also turned positive over the last two weeks, driving big inflows to the nation’s giant leveraged exchange-traded fund.

Foreigners, meanwhile, returned to the Japanese market as net buyers in the week ended April 7 after seven straight weeks of selling, according to Tokyo Stock Exchange data. The Topix is up this year when you factor in the yen’s gains: In dollar terms, the benchmark stock gauge has risen 3.9 per cent in 2017.

Naoki Murakami, a Tokyo-based market strategist at AllianceBernstein Japan Ltd., says he’s just waiting for the diplomatic tensions to subside.

Once they do, he says, investors can get back to focusing on companies’ fundamentals.

“Investors are only looking at geopolitical risk at the moment,” Murakami said. “If that abates, it’s only natural that stocks will go up.” Bloomberg

M&A

Bain Makes US$816 Million Botox Bet in Deal for Hugel Control The deals would give Bain control of a supplier with an estimated 30 percent of the botulinum toxin (botox) market in South Korea Shinhye Kang and Seyoon Kim

Bain Capital agreed to invest about US$816 million in Hugel Inc. to gain control of the South Korea-based maker of beauty products, including botox. Hugel shares rose by the most this year, pacing gains by a rival maker of the anti-wrinkle treatment.

Bain will pay 354.7 billion won (US$312 million) for 985,217 new shares in Hugel and 100 billion won in convertible bonds, according to regulatory filings and an emailed statement from Hugel. Hugel shares jumped as much as 7.1 percent, the most intraday since Dec. 8, to 389,800 won as of 1:56 p.m. in Seoul trading.

Medy-Tox Inc. climbed 6.9 percent, compared with a 1.6 percent advance for the Kosdaq index.

The deals would give Bain control of

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a supplier with an estimated 30 percent of the botulinum toxin market in South Korea, a global leader in cosmetic procedures and surgery. The Boston-based private equity investor agreed to buy Stada Arzneimittel AG, Hugel’s European sales partner, last week in a US$5.6 billion deal in partnership with London-based rival Cinven Ltd. The new stock is priced at about 360,000 won a share, 1.1 percent less than the April 14 closing price. Bain, which is also in talks to buy Hugel’s largest shareholder Tongyang HC for 472.8 billion won, will own 45.3 percent of Hugel if the transactions are completed as planned.

Hugel operating profit will probably rise 32 percent to 83.5 billion won this year, based on the average of analyst estimates, as sales surge 30 percent to 161.3 billion won. Profit

was 63.3 billion won last year, triple the 2015 total.

South Korea, which has about 51 million people, had 1.2 million cosmetic procedures in 2015, the highest total after Brazil and the United States, International Society of Aesthetic

Plastic Surgery figures for 2015 show.

Botulinum toxin, marketed under names including Botox, Dysport and Xeomin, was ranked as the world’s most popular cosmetic procedure in 2015, tallying 4.6 million cases, according to the ISAPS. Bloomberg

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Business Daily Tuesday, April 18 2017 13

Asia Salaries

Seven in 10 Australians support minimum wage rise: poll Only 20 per cent of voters said the minimum wage was “about right” Almost 70 per cent of all Australians believe the government should raise the nation’s minimum wage, including a majority of conservative, government voters, the results of a new poll showed on Monday.

Australia is currently under the leadership of a conservative Liberal-National Party (LNP) coalition government, led by Prime Minister Malcolm Turnbull, but even right-leaning voters would like to see an increase in Australia’s minimum wage, an Essential Research poll found.

The poll, commissioned by the nation’s biggest union body, the Australian Council of Trade Unions (ACTU), found that 69 per cent of voters wanted a higher minimum wage, while a third (33 per cent) of voters said it needed to be “much higher.”

Only 20 per cent of voters said the minimum wage was “about right.”

Minimum

Currently, the minimum wage in Australia is AU$17.70 (US$13.45) per hour, but the ACTU wants it raised by AU$45 per week (US$34).

ACTU Secretary Sally McManus said while the government was currently focused on its business tax cuts plan, Australia’s underpaid and struggling workers were continuing to suffer. “(Prime Minister) Malcolm Turnbull

has been listening to his corporate friends in the business lounge for too long. He won’t support a real wage increase for low-paid workers, yet more people are working casual and part-time jobs and finding it harder to make ends meet,” McManus told Fairfax Media on Monday.

“The ACTU’s submission that we should increase the minimum wage

by AU$45 (US$34) per week would not only boost family budgets, it would flow on to substantial growth across the whole economy.”

Business bodies agree with the minimum wage increase, but not to the same extent; the Australian Chamber of Commerce and Industry has asked for a 1.2-per cent increase of AU$8.10 per week (US$6.15) - below the inflation rate. Xinhua

In Brief Currency

Japan says it’s committed to G20 agreement on FX policy Japan is committed to the G20 agreement on foreign-exchange policy and is not manipulating its currency, Chief Cabinet Secretary Yoshihide Suga, the country’s top government spokesman, said on Monday.

The U.S. Treasury issued its semiannual currency report on Friday and Japan was one of the U.S. trading partners who were on a currency “monitoring list”.

Suga told reporters the report did not require a response as the list was mechanically created based on data such as current account and trade surpluses with the United States. The report did not label any major trading partner as a currency manipulator.

Real estate

Singapore private home sales in March highest in nearly 4 years Sales in Singapore of private homes by developers more than doubled in March from a year earlier, rising to their highest in almost four years, government data showed on Monday.

The Urban Redevelopment Authority said developers sold 1,780 units in March, up from 979 units in February and 843 units in March 2016. Last month’s sales were the highest since June 2013 when 1,806 units were sold.

Exports

Indonesian export climbs in March on increasing overseas shipment of oil, gas

Crops

World’s No. 2 urea user seeks an end to imports in 5 years The goal also ties in with Prime Minister Narendra Modi’s push to boost domestic manufacturing, as he seeks to create more jobs in the world’s second-most populated nation Debjit Chakraborty and Rajesh Kumar Singh

India, the world’s second-biggest consumer of urea, is boosting production of the crop nutrient seeking to end imports in the next five years.

The South Asian nation, where agriculture makes up about 14 per cent of the economy, produced 24.5 million tonnes of urea in the year ended March 2016, compared with consumption of around 32 million tonnes during the period, according to data from the fertilizer ministry.

The country imported more than a quarter of what it consumed from Oman, China and Iran.

“We are in the process of reviving ailing plants, restart closed units, expand existing projects and build new ones,” Dharam Pal, joint secretary at India’s fertilizer ministry, said in an interview in New Delhi. “The target is to wipe out urea imports completely by 2022.”

Increasing local supplies of the nitrogen fertilizer will help shield farmers against global price fluctuations and limit government subsidies, allowing for greater spending to spur the rural economy. The goal also ties in with Prime Minister Narendra Modi’s push to boost domestic manufacturing, as he seeks to create more jobs in the world’s second-most populated nation.

Imports surged from near negligible

levels in the fiscal year ended March 2001, as consumption outpaced domestic supplies, according to a report

by Projects & Development India Ltd., a state-run consultant. Urea imports stood at 68,000 tonnes in the year ended March 2001, the fertilizer ministry told parliament in 2003.

Revival Blueprint

The ministry is studying proposals to revive loss-making Madras Fertilizers Ltd. and Fertilisers & Chemicals Travancore Ltd., Pal said. The plans, which seek to make both companies profitable by end of March, will need the cabinet’s backing, he said.

The government is also planning to restart five idle facilities owned

by The Fertilizers Corp. of India and Hindustan Fertiliser Corp. State-run

energy firms Indian Oil Corp., Coal India Ltd. and power producer NTPC Ltd. will together execute a 180-billion rupees turnaround plan for three of these factories located in the eastern part of the country.

Madras Fertilizers rose as much as 5.4 per cent to 30.25 rupees in Mumbai, gaining for the sixth trading session in a row. National Fertilizers Ltd. added as much as 4.9 per cent to 77.80 rupees, while Rashtriya Chemicals & Fertilizers Ltd. advanced as much as 1.6 per cent to 84.85 rupees.

Another plant in India’s north-eastern state of Assam, among the oldest in India, will be shut down and replaced with a modern facility, Pal said. The Brahmaputra Valley Fertilizer Corp. will be able to produce more using the same amount of natural gas. A new urea plant of 864,600 tonnes per year will be built to replace the two existing units of 220,000 tonnes and 270,000 tonnes each.

The global demand for nitrogen fertilizers is expected to grow 5.6 per cent to 119.4 million tonnes in four years through 2018, according to the Food and Agriculture Organization of the United Nations. Asian nations, led by China and India, are expected to account for 58 per cent of this increase, the agency said. Bloomberg

Shipment of Indonesia’s products overseas rose significantly in March from a year earlier as exports of oil and gas accelerated at a faster pace. The national statistical bureau announced on Monday that the country’s export grew 23.55 per cent to US$14.59 billion in March compared with the same period last year, the biggest growth in six years. Shipment of oil and gas jumped 23.56 per cent to US$1.48 billion in March from a year earlier, head of the bureau Kecuk Suhariayanto said. “This is certainly a good news,” he told a press conference at the bureau headquarters. The cumulative of the export by March expanded 14.83 per cent to US$40.61 billion, Suhariayanto said. Meanwhile, the import grew 18.19 per cent to US$13.36 billion in March on the yearly basis, Suhariyanto said.

Tourism

Singapore’s airport, airline, tourism authority jointly invest to promote inbound travel Singapore’s Changi Airport Group (CAG), Singapore Airlines (SIA) and Singapore Tourism Board (STB) will jointly invest 33.75 million Singapore dollars (US$24.17 million) to promote inbound travel, said CAG on Monday in a press release. The partnership among the three parties will focus on promoting Singapore as a stopover or twinning destination to travellers globally. This augments the previous approach of only targeting travellers from specific longhaul markets such as the United States and Europe, the release added. CAG said the partnership will also focus on the broadening of a marketing program to woo business and Meetings, Incentives, Conventions and Exhibitions (MICE) visitors.

14 Business Daily Tuesday, April 18 2017

International Referendum

Erdogan follows slim referendum win by warning opponents The success of a package of 18 changes to the constitution was narrow, with about 51.4 per cent of Turks approving it Benjamin Harvey

A

n emboldened Recep Tayyip Erdogan followed his win in a referendum that ratified the supremacy of his rule by taking aim at political opponents at home and abroad.

At his victory speech late on Sunday, supporters chanted that he should bring back the death penalty -- a move that would finish off Turkey’s bid to join the European Union -- and Erdogan warned opponents not to bother challenging the legitimacy of his win. He told them to prepare for the biggest overhaul of Turkey’s system of governance ever, one that will result in him having even fewer checks on his already considerable power.

“Today, Turkey has made a historic decision,” he said. “We will change gears and continue along our course more quickly.” The lira surged as much as 2.5 per cent against the dollar in early trading on Monday in Istanbul before gains moderated.

The success of a package of 18 changes to the constitution was narrow, with about 51.4 per cent of Turks approving it. It came at the end of a divisive two-month campaign during which Erdogan accused opponents of the vote of supporting “terrorists” and denounced as Nazi-like the decision of some EU countries to bar his ministers from lobbying the diaspora.

“The referendum campaign was dominated by strongly anti-Western rhetoric and repeated promises to bring back the death penalty,” said Inan Demir, an economist at Nomura Holdings Inc. in London.

“One hopes that this rhetoric will be tempered now that the vote is over,” but recent steps by the Turkish government do“not bode well for the hoped-for moderation in international relations.”

Most of the changes won’t take effect until after the next presidential election in November 2019, unless parliament calls an early vote.

The lira was up 0.8 per cent to 3.6384 per dollar at 9:11 a.m. yesterday as investors thought the victory would usher in a period of greater predictability and might lure back a bit of the foreign investment that’s fled the country in recent years.

EU Rift

“It looks like the best outcome for financial markets because it gives the mandate, but not a strong mandate,” said Ozgur Altug, the chief economist at BGC Partners in Istanbul, who predicts stocks in Istanbul will rally about 7 per cent.

While markets looked favourably on the result as a sign political turmoil in the majority Muslim nation of 80 million people may settle down and help jumpstart the economy, Turkey’s biggest political party alleged fraud, demanding a recount after election officials accepted ballots without official stamps.

The EU’s rapporteur on Turkey, Kati Piri, said given the “unfair election environment,” EU accession talks will be suspended if the constitution is passed in its current form. The European Commission, in a statement, said the constitutional amendments, and their implementation “will be assessed in light of Turkey’s obligations” as an accession candidate and as a member of the Council of Europe.

French presidential candidate Emmanuel Macron predicted Turkey’s EU membership won’t progress in coming years.

“You saw how the West attacked.

But despite this, the nation stood tall, didn’t get divided,” Erdogan told his supporters, while calling on Turks who opposed him to “stop tiring themselves out” and accept the course the country is headed on.

Striking Opponents

“Likewise, we want other countries and institutions to respect the decision of our people. We expect those states that we call allies in particular to develop their relations with our country in line with our sensitivities,

especially on the fight against terror,” he said at a palace in Istanbul.

A majority of voters there and in Turkey’s other big cities voted against the switch from a parliament-led system of government to an executive presidency. Police dispersed dozens of people who protested election results in Ankara, Istanbul and Izmir, detaining fewer than 10 people overnight, according to Anadolu.

The result is a remarkable turnaround for a president who just nine months ago faced down an attempted military coup. The uprising was quickly crushed and, armed with a popular mandate to consolidate his rule, Erodgan now has room to crack down further on his opponents.

In the nine months since imposing a state of emergency, he’s already fired more than 100,000 people and jailed 40,000, among them academics, journalists and judges.

Prime Minister Binali Yildirim called the win the ‘‘the best answer’’ to foes including the Kurdistan Workers Party (PKK), which is waging an insurgency in south-east Turkey, and sympathizers of Fethullah Gulen, an influential U.S.-based Islamic preacher Erdogan blames for orchestrating the coup attempt.

The struggle against “internal and external enemies will intensify,” Yildirim said.

Polarized Country

The referendum highlighted the divisions in Turkey. Voters in the small towns that dot the Anatolian heartland approved it overwhelmingly, although the major cities that power Turkey’s economy, including the capital, Ankara, and the coastal city and secular stronghold of Izmir, opposed it. Istanbul, where the ruling Justice and Development (AK) party Erdogan founded has never lost a general election, rejected it by 51.4 per cent.

“At least 50 per cent of the society is saying ‘no’ to this. So this constitutional change and the constitution it forms has largely lost its credential as a social contract,” said Kemal Kilicdaroglu, leader of the main opposition party, CHP. The constitutional changes mean Erdogan could potentially hold the reins until 2029, a decade longer than

the rule of Ataturk, the father of the modern secular nation whose legacy he’s sought to roll back. He will have authority to appoint ministers and top judges at his discretion and call elections at any time. It will also give him much greater sway over fiscal policy and may deepen investors’ concerns about the independence of the central bank.

The amendments approved Sunday: Abolish the post of prime minister Remove the requirement for presidential neutrality, which allows Erdogan to reinstate his affiliation with the ruling AK party Enable the president to stand in two five-year election cycles, and a third with parliamentary backing Allow the president to appoint six of a whittled-down panel of 13 top judges, with others chosen by lawmakers Opposition politicians worry the new system will threaten the separation of powers on which liberal democracies traditionally rely -something the Council of Europe’s legal watchdog flagged last month when it warned there aren’t enough checks and balances to safeguard against Turkey becoming an authoritarian regime.

By channeling nationalist sentiment and slamming segments of Turkey’s older political elite, Erdogan tapped into the same forces that powered Donald Trump to the White House, pushed Britain out of the EU and put Marine Le Pen within shouting distance of the French presidency.

In his expanded role, Erdogan will become one of the G-20’s most powerful elected leaders. His win is also part of a trend toward a more authoritarian style of politics mirroring Vladimir Putin’s Russia, where more and more power is accumulated around one person.

Authoritarian Turn

Erdogan’s triumph “represents a blow to the assumption that liberal or even in some cases hybrid democracies are structured to prevent authoritarian figures from hijacking the political system,” Anthony Skinner, a director with U.K.-based forecasting company Verisk Maplecroft, said before the results were declared.

Beyond Turkey’s Black Sea shores, Erdogan’s next task will be to reassess political alliances. While Erdogan’s EU attacks during the campaign appealed to nationalists at home, they may have inflicted damage that won’t be easy to repair. The bloc, which Turkey has been trying to join since the 1960s, accounts for almost half of Turkey’s exports.

Several Turkish officials said they’d press the EU harder for things like visa-free travel to citizens in exchange for upholding a critical deal on halting the flow of migrants to Europe.

Ankara’s ties with the Washington have also deteriorated as the U.S. backed Kurds in Syria that Turkey considers terrorists. Turkey, a NATO member, has been trying to persuade the Trump administration that if it’s serious about taking on Islamic State, it needs the nation’s support.

Erdogan will probably try to start a “charm offensive” toward the EU and U.S. to validate the legitimacy of the new political system, said Ozgur Unluhisarcikli, the office director in Ankara for German Marshall Fund of the United States, a global think tank. “If reciprocated he may reverse some of the democratic backsliding we have seen recently.

However, if the charm offensive is not reciprocated, we could see decisions such as reinstating of death penalty.” Bloomberg

Business Daily Tuesday, April 18 2017 15

Opinion Business Wires

Bangkok Post Siam Park Bangkok Co, an amusement and theme park operator, will allocate 3 billion baht to build a retail and entertainment project in Bangkok this year in a bid to expand its customer base. Noppagarn Luangamornlert, the company’s deputy managing director, said the budget will be used to develop “Bangkok City”, a retail and entertainment project on 70 rai of land near Siam Park City amusement and water park. The project will be developed from this year. The idea is to reproduce Bangkok’s famous old towns and trade districts such as Chinatown, Sampheng and Khlong Thom. It will comprise 13 buildings, each one simulating an old town or trade district. It is expected to be completed by 2020. Bangkok City is the brainchild of Chaiwat Luangamornlert, 79, who founded and managed Siam Park City over the past 37 years.

Powering Africa’s transformation

Philstar The enactment of key measures in the first package of the Comprehensive Tax Reform Program is among the most important measures the Philippines needs this year to further perk up its economy, according to foreign business groups. “We would like to see key reforms passed this year, such as the tax reform proposals. Coupled with this we are hoping that the government in partnership with the private sector is able to identify action points to level the playing field. If the objective is to collect more taxes, this can be done only when we have achieved a level playing field,” said Rex Daryanani, president of the Federation of Indian Chambers of Commerce Philippines Inc. European Chamber of Commerce of the Philippines president Guenter Taus, for his part, said his group, which comprises over 700 member firms, acknowledges that the Comprehensive Tax Reform Program is imperative in making the Philippine business environment more competitive.

Straits Times Developers’ sales of new private homes surged to a near four-year high in March, the month when the Government tweaked some property cooling measures. The 1,780 units sold last month was 81.8 per cent higher than the 979 units booked in February and more than double the 843 homes sold in the same month last year, figures released by the Urban Redevelopment Authority (URA) on Monday (April 17) showed. There were also 578 executive condominium (EC) units taken up in March - a 75.7 per cent jump from the 329 ECs sold in February.

Developers launched 1,527 units for sale in March, 16.7 per cent more than the 1,308 in February. “These are very strong numbers, indicative of the latent buying demand that is still very much prevalent in the market today,” said Eugene Lim, ERA Realty Network key executive officer.

A

frica has a bright future ahead of it. Productivity and growth will improve as African economies continue to place more emphasis on services and manufacturing, pursue commodity production, and achieve quick gains in agriculture and light industry.

But African countries’ success presupposes that they generate and manage energy sustainably to keep up with increasing demand. In the next 35 years, Africa’s population will continue to rise, with a projected 800 million people across the continent moving to cities. And Africans are already disproportionately exposed to the adverse effects of climate change, even though they are collectively responsible for less than 4 per cent of global greenhouse-gas emissions.

Urban areas will have to reduce environmental stresses by promoting low-carbon energy systems, electric mass transportation, and energy-efficiency initiatives, as well as the use of cleaner cooking fuels. And rural areas can create new opportunities that reduce the need for urban migration, by expanding renewable energy systems and energy access.

But even with these measures, providing enough energy for a modern, inclusive economy will not be easy. Africa already experiences frequent power outages, even though more than 600 million people there do not have access to electricity, and current demand is relatively modest.

To avoid the harmful spillover effects of high-carbon economic growth, Africa will have to undergo a “climate smart” energy revolution. African countries will need to build climate-resilient infrastructure and tap into the continent’s abundant renewableenergy resources. Doing so will broaden access to energy, create green jobs, reduce environmental pollution, and enhance energy security by diversifying sources.

At the same time, Africa’s energy revolution will itself be challenged by some of the worst effects of climate change.

For example, as rainfall becomes more erratic, hydropower production and revenues may decline.

This risk can be managed by modifying existing investment plans to account for large climate swings. Still, for the region to adapt, the United Nations Environment Programme estimates that it will need annual investments of about US$7-15 billion by 2020, and $50 billion by 2050.

Rather than treating new climate-related risks as hurdles to overcome, we should view them as opportunities for investment and innovation. We are standing on the threshold of an exciting new era in which technological progress allows us to use a range of conventional and unconventional energy options (excluding nuclear energy).

African countries can now combine energy sources to adapt to realities on the ground. Unlike in past decades, they no longer need be tied to a single energy source. And, because much of Africa’s energy infrastructure remains to be built, governments have a chance to get their energy and infrastructure policies right the first time, thereby maximizing returns on investment.

Policymakers should take a few key steps to help

“

Carlos Lopes Professor at the University of Cape Town

Tony Elumelu Chairman of Heirs Holdings and United Bank for Africa (UBA)

Aliko Dangote owner of the Dangote Group and Co-Founder of the African Energy Leaders Group

transform Africa’s energy sector and boost longterm economic growth. For starters, making it easier, safer, and more financially attractive for private investors to enter power markets would boost competition, thereby spurring innovation and lowering costs. Moreover, African countries should seek opportunities to share infrastructure and create cross-border power pools.

Another important step is to invest in renewable energy. Africa has an exceptionally rich portfolio of clean-energy assets, including almost nine terawatts of solar capacity, more than 350 gigawatts of hydropower capacity, and more than 100 GW of windpower potential. This is more than enough to meet the continent’s future demand.

At the same time, renewableenergy sources are becoming less expensive, making them increasingly competitive with fossil-fuel alternatives. For example, the price of utilityscale photovoltaic solar energy in Africa fell by 50 per cent between 2010 and 2014, and continues to decrease today. And South Africa’s Renewable Energy Independent Power Producer Procurement Programme has seen an overall decline in bid prices and oversubscription rates.

Innovative off-grid and mini-grid electricitydistribution systems, meanwhile, are already transforming Africa’s energy landscape and multiplying the ways to exploit clean-energy sources and expand electricity access for the poor, particularly in areas where consumers are widely dispersed. Companies such as M-kopa and Mobisol have made small solar-energy systems available to thousands of African homes, by allowing their customers to pay in installments on their mobile devices.

Still, to accelerate a market shift on the scale that Africa needs will require increased financing from export credit agencies, development banks, commercial financial institutions, and other crossborder sources.

Africa has a chance to bring hundreds of millions of people without electricity into the modern economy; and we have an opportunity to pioneer the next investment frontier. Getting Africa’s energy transformation right, by pursuing a mix of policies and investments that boost diversity and strengthen resilience, will ensure a brighter future for us all.

Rather than treating new climaterelated risks as hurdles to overcome, we should view them as opportunities for investment and innovation

”

16 Business Daily Tuesday, April 18 2017

Closing EU

China firmly supports European integration process

China firmly supports the European integration process and positively views the development prospects of Europe and the European Union (EU), a Chinese Foreign Ministry spokesperson said Monday.

Lu Kang said at a routine press briefing that China and the EU, as two important global powers, are comprehensive strategic partners, and stable development of bilateral ties is very important.

China’s policy toward Europe remains consistent, and China hopes that Europe can maintain prosperity, stability and opening up, Lu said.

He said China-EU relations have maintained sound development, with the creation of four partnerships of peace, growth, reform and

civilization moving ahead steadily.

Both sides have attached more importance to strengthening strategic communication and coordination on major global issues, he added.

China and the EU will hold their seventh round of high-level strategic dialogues on Wednesday in Beijing, and Chinese State Councilor Yang Jiechi will co-chair the dialogue with Federica Mogherini, EU high representative for foreign affairs and security policy, as well as vice president of the European Commission.

Lu said both sides will take advantage of the dialogue to plan for the development of bilateral ties in the next stage and exchange in-depth views on global and regional hotspot issues of common concern in order to deepen mutual trust, promote cooperation and maintain the development momentum of China-EU relations. Xinhua

Bailout

Daewoo Shipbuilding bondholders accept bailout plan after pension fund’s agreement Joyce Le

S

outh Korea’s Daewoo Shipbuilding & Marine Engineering Co Ltd on Monday won near unanimous approval for a debt-to-equity swap plan in the first three of five bondholder meetings, as the world’s largest shipbuilder battles to stay afloat.

The votes were held hours after Daewoo’s biggest bondholder, the National Pension Service (NPS), said it had agreed to the proposal. That move made it likely other bondholders would follow suit, creditor bank officials said, allowing the shipbuilder to meet conditions of a US$2.6 billion bank bailout.

Key Points Debt-to-equity swap plan is condition of US$2.6 bln bailout

“Accepting the debt restructuring will be more advantageous to improve the fund’s returns,” NPS, the world’s third-largest pension fund, said in a statement earlier on Monday.

Holders of about 1.5 trillion won (US$1.32 billion) worth of Daewoo bonds must agree to swap half of debt owed to them for equity, and allow Daewoo to suspend repayment of the rest for three years, so Daewoo can meet conditions for US$2.6 billion worth of financial assistance from state banks.

Five meetings have been planned for Monday and Tuesday to discuss the proposal. Agreement came from 99.99 per cent of bondholders present at the first meeting where attendance reached 80 per cent, 98.99 per cent at the second with 89 per cent attendance, and 96 per cent at the third with 81 per cent attendance.

The proposal is likely to be approved

at all meetings as large bondholders such as Korea Post are likely to follow the lead of the NPS due to the fund’s size and influence, creditor bank officials said.

The officials declined to be identified due to the sensitivity of the matter. Korea Post told Reuters it decided to agree to the proposal after the NPS agreement was made public.

Sharing the pain

The NPS is Daewoo’s largest bondholder, with about 390 billion won worth of bonds, Yonhap reported.

It accepted the proposal after Korea Development Bank (KDB) and Export-Import Bank of Korea (KEXIM) agreed to store bond payments in an escrow account before bonds mature, and after they effectively pledged to pay bondholders before pursuing their own claims, creditor bank officials said.

“We decided to approve the proposal after considering KDB and KEXIM’s measures reinforcing the repayment of bonds whose maturity will be extended,” an NPS spokesman told Reuters.

The two banks have supported Daewoo with 4.2 trillion won since October 2015, adding to a state bailout in the late 1990s during the Asian financial crisis. To justify more, “all stakeholders must share the pain”, the Financial Services Commission said when setting the debt-to-equity condition.

The government plans to sell its stake in Daewoo after shrinking the shipbuilder over two years to a company generating revenue of 7 trillion won from about 13 trillion won last year, KDB Chairman Lee Dong-geol said at a news briefing on Sunday.

Daewoo reported a net loss of 2.8 trillion won last year. Reuters

Bondholders at three of five meetings agree to plan Biggest bondholder earlier said would support plan Other bondholders likely to follow suit -bank officials The shipbuilder has been pushed to the brink by the impact of historically low oil prices, which caused delays in payments for complex offshore facilities. At risk is an estimated 50,000 jobs and an economic hit of tens of billions of dollars.

Its predicament follows the bankruptcy and liquidation of compatriot Hanjin Shipping Co Ltd after creditors declined further support last year for what was the world’s seventh-largest container shipper.

Relations

Privatisation

Income

Russia seeks meeting with U.S., HSBC predicts 100 Saudi Arabian UN on Syria next week in Geneva listings in privatisation drive

Disposable income growth outpaces GDP growth in China

Russia plans to hold talks with the U.S. and the United Nations next week in Geneva aimed at breathing new life into the Syrian peace process, state media reported, in what would mark the first such contacts since the new administration of Donald Trump took office.

UN Special Envoy for Syria Staffan de Mistura has agreed to attend and Russia is awaiting confirmation from U.S. officials, Deputy Foreign Minister Mikhail Bogdanov said, the TASS news service reported Monday. Russia will be represented at the April 24 talks by Deputy Foreign Minister Gennady Gatilov, TASS reported, citing an unidentified Russian diplomat.

Russia and the U.S. have been at loggerheads since Trump ordered a missile strike on Syria earlier this month in retaliation for a chemical attack blamed on Syrian President Bashar al-Assad’s forces. Russian President Vladimir Putin and U.S. Secretary of State Rex Tillerson failed to resolve the tensions at talks last week, which came hours before Russia vetoed a UN Security Council resolution that demanded Assad’s government cooperate with an investigation. The long-running UN-sponsored Syria peace talks are due to resume in May. Bloomberg

Chinese people’s disposable income expanded at a faster pace than economic growth in the first quarter of this year, the National Bureau of Statistics (NBS) said Monday.

Per capita nominal disposable income of Chinese nationwide rose 8.5 per cent in the first three months from a year ago, and per capita real disposable income after taking into consideration the effects of inflation increased 7 per cent, outpacing the gross domestic product (GDP) growth rate of 6.9 per cent in the period, NBS figures showed.

Breakdown figures showed that urban residents’ per capita real disposable income grew 6.3 per cent year on year in the first quarter to RMB9,986 (about US$1,452), while per capita disposable income of rural residents rose at a faster pace of 7.2 per cent in the period to RMB3,880.

Other indicators released by the NBS on Monday, including fixed-asset investment and industrial production, pointed to stabilization in the world’s second-largest economy.

NBS spokesperson Mao Shengyong said the economy had achieved a rosy start this year and the income gap between rural and urban residents narrowed, laying a solid foundation to realizing its full-year economic target.

The government trimmed this year’s growth goal to around 6.5 per cent from a range of 6.5 to 7 per cent for 2016. Xinhua

Saudi Arabia’s privatisation drive is likely to result in around 100 new stock market listings in sectors including mining, healthcare and retail, a top HSBC executive said on Monday.

Georges Elhedery, HSBC’s chief executive for the Middle East and North Africa, did not give a time frame for the listings but said they were part of Saudi plans to diversify its economy beyond oil by 2030.

Close to 180 companies are already listed on the Saudi market and HSBC is advising the stock exchange on its planned listing of its own shares, while industry sources have told Reuters that the bank will play a key advisory role in the upcoming listing of national oil giant Saudi Aramco.

“We are talking, up to possible 100 IPOs (or) 100 entities to be listed on the stock exchange in Saudi Arabia,” Elhedery said at an event marking the 150th anniversary of Thomson Reuters in the region.

Elhedery said the planned listing of a “jewel” like Aramco is a strong example of Saudi Arabia’s commitment to the privatisation programme.

Aramco is gearing up for a 5 per cent share listing next year, aiming to get a valuation of up to US$2 trillion in what could be the world’s biggest initial public offering. Reuters