Woman files complaint after being scammed out of MOP4 mln Crime Page 5
Wednesday, August 9 2017 Year VI Nr. 1357 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm Real estate
Residential price index posts fifth consecutive quarter of growth Page 5
IP
www.macaubusiness.com
Private report
HK, Guangdong and MSAR working together on intellectual property rights Page 2
Forecast
Chinese outbound buyout increasing over next decade Page 8
Hong Kong improving in every chapter Page 9
Macau’s Management Company Charade Continues Housing
Cheoc Van residents are up in arms. Blocking a proposal to transform their ‘clubhouse’ into a budget hotel. Citing right to the space. And decrying two decades of management company inactivity. Residents are demanding any change should include a mall or restaurant as zoned. Page 3
Okada investigation ongoing No final report yet. As investigation by Universal Entertainment Corporation into founder and chairman Kazuo Okada continues. Enquiries into ‘alleged improper activities’ have found ‘no facts confirmed’. Although the company expects to ‘recover money’ from transfers of a subsidiary to third parties.
Disbursing largesse
Entrepreneurs Subsidies to SMEs and young entrepreneurs skyrocketed in July – posting the highest values attributed so far this year. The MOP64.6 mln handed out via four subsidy schemes is a 142 pct y-o-y increase and 54 pct jump m-o-m. Total loans and subsidies disbursed in 2017 have reached MOP244.5 mln. Page 4
Mainland trade moderates
Dispute Page 7
HK Hang Seng Index August 8, 2017
27,854.91 +164.55 (+0.59%) Worst Performers
Geely Automobile Holdings
+6.04%
AIA Group Ltd
+1.40%
CLP Holdings Ltd
-2.03%
Wharf Holdings Ltd/The
-0.99%
Tencent Holdings Ltd
+2.50%
CNOOC Ltd
+1.38%
China Mengniu Dairy Co Ltd
-1.69%
New World Development
-0.95%
Galaxy Entertainment Group
+2.42%
Hong Kong Exchanges &
+1.32%
Cathay Pacific Airways Ltd
-1.31%
Hengan International Group
-0.91%
AAC Technologies Holdings
+1.63%
Cheung Kong Property
+1.23%
China Resources Land Ltd
-1.24%
Henderson Land Develop-
-0.85%
China Overseas Land &
+1.53%
China Mobile Ltd
+1.02%
Want Want China Holdings
-1.13%
China Merchants Port Hold-
-0.79%
28° 32° 28° 32° 28° 32° 28° 32° 28° 32° Today
Source: Bloomberg
Best Performers
THU
FRI
I SSN 2226-8294
SAT
SUN
Source: AccuWeather
Commerce The Mainland surplus widened for a fifth month in July. As export growth remained solid and imports moderated. Demand for Chinese products has remained resilient as growth in major trading partners continues to recover. Page 8
2 Business Daily Wednesday, August 9 2017
Macau Intellectual property
Co-operation on multiple fronts The local bureau overseeing intellectual property matters - Macao Economic Services - is reaching out to Guangdong, Hong Kong, and Hengqin to enhance regional IP co-operation Sheyla Zandonai sheyla.zandonai@macaubusiness.com
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he Macau SAR is strengthening mechanisms of bilateral and multilateral co-operation on intellectual property (IP) matters with Guangdong Province and the Hong Kong SAR, according to information provided to Business Daily by Macao Economic Services (DSE). In October 2017, the relevant local administrative department will participate in a symposium organised by intellectual property authorities from the three regions, according to DSE. The initiative plans ‘to allow entrepreneurs from the three regions and professionals working on the field to better understand the concept, development, and the latest trends on intellectual property rights operating in the region.’ The bureau added that the goal of the symposium is to ‘strengthen exchange between relevant departments, scholars, specialists, legal professionals and companies.’ Last week, IP experts from the Hong Kong SAR and Guangdong Province announced they intend to intensify co-operation in IP trading between the two regions, Xinhua reported. The agreement came at the 16th
meeting of the Guangdong/Hong Kong Expert Group on the Protection of Intellectual Property Rights held last Wednesday. Some 28 co-operation projects covering seven different areas are planned to take off during the 20172018 period, within the framework of the Belt and Road Initiative and the Greater Bay Area, according to Xinhua. Macau Government confirmed to Business Daily that no local experts or officials took part in the initiative although DSE claims it has established bilateral co-operation agreements with both Hong Kong and Guangdong in the field.
Bilateral threads
According to DSE, a working group on IP rights involving Guangdong and Macau was established on May 10, 2012, ‘setting up the co-operation platform and the mechanism for the joint protection of intellectual property.’ Concerted efforts between the two governments, the DSE claims, ‘have further improved the mechanism for intellectual property work, steadily increasing the level of co-operation, and continuously deepening the content of co-operation.’ The economic services said that advertisement
co-operation between the parties is evolving through the development of seminars, cross-border protection policies, collaboration on law enforcement, information sharing, and training. The Intellectual Property Database for Guangdong, Hong Kong and Macau is one of the mechanisms enabling the sharing of information, and Pearl River Delta to become a knowledge-based economy.
Co-operation between local authorities and the Intellectual Property Department of the Hong Kong SAR Government is enabled through a ‘mechanism of permanent communication and exchange’ via which competent authorities raise and discuss ‘opinions on topics of management of intellectual property activity that deserve more attention from both territories,’ DSE claimed.
Hengqin co-operation
Service Cooperation Agreement on Trademark Intellectual Property Rights between Hengqin and Macau was signed on this occasion. The agreement seeks to enable the construction of registration procedures, safeguarding of rights, alliances, arbitration mechanisms, and publicity.
Local IP range
From June to July of this year the DSE has received: 7,397 applications for trademark registration; 51 applications for invention patent registration; and 95 applications for industrial design/model registration
During the Macao Franchise Expo 2017 (MFE 2017) held a week ago the governments of the Macau SAR and the Hengqin New Area established a co-operative mechanism to protect exclusive trademark rights and facilitate trademark registration. The Cross-Border Protection &
The services portfolio under the Intellectual Property Department of the Macao Economic Services includes the registration of trademarks, patents, designs and copyright matters.
Infrastructure
More car parks for Taipa Ferry Terminal Sixty-three two-hour parking lots for light vehicles and 94 five-hour lots for heavy vehicles are being added near the Taipa Ferry Terminal, according to an announcement by the Transport Bureau (DSAT). Given the completion of the flattening of the area near the terminal, DSAT stated that it was able to produce extra parking spaces for public use in order to meet demand. The new Taipa ferry Terminal
officially started operations on June 1 following 10 years of development and an announced cost of MOP3.8 billion (US$475 million) according to statements by the Secretary of Land and Public Works. It currently has no functioning commercial areas. The Terminal has registered an average of 20,000 passengers and 125 sailings daily, according to information provided by the Marine and Water Bureau (DSAMA) to Business Daily at the end of June.
Business Daily Wednesday, August 9 2017 3
Macau Land
Cheoc Van owners veto hotel proposal Owners of properties in Cheoc Van Hou Yuen oppose the idea of turning the clubhouse area into a budget hotel Cecilia U cecilia.u@macaubusinessdaily.com
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group of owners of properties in Cheoc Van Hou Un have posted a public letter to voice their opposition to the recent proposal to develop the clubhouse area of the complex into a 2 or 3-star hotel. The proposal was made during the 5th meeting of the Urban Planning Committee, while the public letter of opposition was published by residents’ lawyer Ho Kam Meng in Chinese newspaper Macao Daily yesterday. During the committee meeting last month, it was revealed that in 2016 the owner of the 2,001 square metre complex in Rua Três dos Jardins de Cheoc Van had requested the government to change the current property use from the commercial operation of a restaurant and clubhouse, its listed use since 1992, to a 2 or 3-star hotel. Many members of the committee urged the Land, Public Works and Transport Bureau (DSSOPT) to approve the change of clubhouse classification owing to a current lack of affordable budget hotel rooms in Macau.
Cheoc Van Hou Un complex
The owners revealed that the developer of Cheoc Van Hou Yuen - Companhia de Investimento Imobiliario Nissan, Limitada - signed the contract of the land concession in 1991 with the then-Financial Services Secretariat , with the contract finalised in 1992 approving the development of a complex comprising commercial buildings, a yacht club, swimming pool, tennis court, restaurants and a port. ‘During the sale of the 78 residential units made by the developer, the promotion material clearly stated that
residents in [Cheoc Van Hou Yuen] can enjoy all leisure and recreational facilities,’ wrote the public letter, while the owners stated that the developer had failed to provide the aforementioned facilities for the past two decades. Several members of the Urban Planning Committee said neighbourhood residents had been unable to use the complex for more than 20 years, advocating that the complex’s functions be changed to something that better suited its location. According to the property registration document
acquired by Business Daily, the complex is currently owned by Best May Limited, with ownership registration of the property made in 2012. The land was concessioned in 2016 for a term of 10 years.
Taxes paid
The group also disclosed in the public letter that they had been paying taxes related to the complex every year to the management company, set up by the developer since 1995 for the allocation of the clubhouse complex land rental, while declaring that they have the
right to the facilities of the complex. Given the position of the owners of the area, the group said the approval of the proposal in question should consider their opinions, while also pointing out that any proposed use unrelated to a ‘mall’ or a ‘restaurant’ for the entrance area of the complex would be a violation of the right of reasonable expectation of the development of the area. The group also stated that they plan to meet the Urban Planning Committee as well as DSSOPT. advertisement
4 Business Daily Wednesday, August 9 2017
Macau Opinion
José I. Duarte*
Voice and happiness There is no dearth of studies and surveys on Macau, its society and economy. All kinds of associations and research organisations regularly publicise the results of this or that enquiry. More often than not, little or no information is provided concerning its objectives, the methodologies, the sample characteristics or the specific content of the questions asked. These are issues that limit our ability to distinguish between reliable or at least properly conducted attempts to understand social phenomena, and those that possibly amount to no more than veiled lobbying or campaigning. It is not the first time I touch on these issues here, but the purpose today is not to come back to them. For the sake of the argument set out below, let us leave these ‘technical’ issues aside. The results of a survey concerning the coming legislative election were recently made public at a press conference. The promoters revealed some of the general conclusions they reached - and even without discussing their particular merits they provide some food for thought. Let us focus on the findings related to the desired profiles of the legislators and, by extension, the issue of representation. According to press reports, most respondents would like to see – I quote from various media sources – legislators that are ‘closer to the people / independent’ or, as framed in one instance, ‘of lower class’ origin. In the latter case, that would be a characteristic favoured by more than 70 per cent of respondents. Conversely, among the less desired candidates were those with links to the public administration or the legal professions. Other considerations apart, the latter are baffling outcomes. We are talking about a political body destined to produce laws and define or influence public policies, activities in which both categories are heavily involved. If we take these results as a fair reflection of popular sentiment, they suggest a manifest misfit between the representatives and the represented. Or, to put it another way, they indicate that many residents seem to feel they are not represented or are under-represented in the political system. Very recently, in the Legislative Assembly, the Chief Executive showed great concern about the low level of satisfaction or happiness displayed by the local population and vouched to look for its causes. The considerations made above suggest that political representation matters may not be the lesser of them, and may even provide a good starting point in that quest. *economist and permanent contributor to this newspaper.
Crime
Look before you leap Canadian-Chinese woman files a complaint in the MSAR after being scammed for MOP4 million by a man claiming to be the manager of a non-existent local casino Nelson Moura nelson.moura@macaubusinessdaily.com
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Canadian-Chinese woman living in Canada lost MOP4 million in a scam perpetrated by someone pretending to be the financial manager of a non-existent local casino, Judiciary Police [PJ] told Business Daily. According to information provided by the PJ, the woman was contacted through a messaging app in May when she was in Toronto by a man claiming to be the manager of a local casino called ‘Running Horses’, who told her she could obtain a 1.25 per cent return every three months if she made a MOP2 million investment in the non-existent casino. From June 19 to July 15 the woman was persuaded to transfer MOP2 million with the help of a relative in
Mainland China to a Chinese bank account, later transferring another MOP2 million from Canada to another Mainland account. A week after the transfer the woman realised the scam after conducting research that revealed that the ‘Running Horses’ casino did not exist and finding that she could no longer establish contact with the man who had contacted her. The woman then travelled to the MSAR to file a complaint in the territory, with the PJ noting it is currently investigating the case.
Rising scam tide
The PJ also informed Business Daily that since July 20 there has been a ‘huge spike’ in the number of phone scams, with 30 residents affected for a recorded loss of approximately MOP5 million. On August 2 several phone scams led
to the overload of the central line of public hospital Hospital Conde de São Januário (CHCSJ), causing delays to phone appointments for the hospital. According to authorities, the modus operandi of the scam has changed, with scammers now claiming to be Customs officers, Immigration department officials and even Judiciary Police employees. The PJ stated that government departments will ‘never’ contact residents by voice recording messages or ask them to remit or transfer money over the phone. The increase in phone scams was so substantial from last month that the PJ conducted an emergency meeting with the Macao Post and Telecommunications Bureau and with local telecommunications provider Companhia de Telecomunicaçōes de Macau (CTM) to reinforce the protection of the public from such scams.
Entrepreneurship
Summertime, and the giving is easy The government disbursed MOP64.6 million in subsidies through its SME and Young Entrepreneur aid schemes in July, the largest amount granted in one month so far this year Nelson Moura nelson.moura@macaubusinessdaily.com
Almost MOP64.6 million (US$8 million) in subsidies was disbursed to young entrepreneurs and small and medium enterprises (SMEs) during the month of July - the largest amount this year handed out during a month - according to the most recent information from the Macao Economic Services (DSE). This represents a 54.4 per cent jump month-to-month, and a 142 per cent increase from the same month of last year. The support is divided between three SME aid schemes and one
Young Entrepreneur Aid Scheme. Total loans approved so far this year under all SME and Young Entrepreneur schemes, until end-July, reached MOP244.5 million. The SME Aid Scheme, offering interest-free loans of up to MOP600,000 per applicant, awarded MOP48.8 million during the month, the highest value attributed so far this year, and a 138.3 per cent increase month-on-month. This support was divided between 123 approved applications for funding under the scheme in July, with 425 applications approved in the first seven months of this year. Meanwhile, the SME Credit Guarantee
Scheme granted MOP10.6 million during the period, divided between seven applicants and 43 per cent less than in June. The SME Credit Guarantee Scheme for Special Projects did not grant any loans or subsidies last month, having still so far this year only granted one, a MOP2 million loan in April to two approved applicants. The largest recipients of the SME credit schemes were largely grouped in the retail trade sector, with MOP56.8 million attributed so far, while the Construction and Public Works sector saw the second largest amount of funding disbursed, with a total of MOP42.3 million so far this year.
Aiding the young
The Young Entrepreneurs scheme provided MOP5.1 million in funding in July and MOP27.4 million in funding during the first seven months of the year. The scheme offers interest-free loans of up to MOP300,000 for applicants aged 21 to 44, with repayment for the loan starting after 18 months. The major recipients of the scheme so far this year were in the retail sector, accounting for 48.3 per cent of the funding, or MOP13.2 million, while the next largest recipient was the companies sector at MOP2.9 million.
Business Daily Wednesday, August 9 2017 5
Macau Real estate
Residential price index confirms health of sector Overall index shows highest yearly and quarter-to-quarter growth in Taipa and Coloane Oscar Guijarro oscar.g@macaubusinessdaily.com
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he residential price index saw its fifth consecutive quarter of growth in the second quarter of the year, as prices across the board increased during the period, according to data from the Statistics and Census Service (DSEC). The index saw a 3.7 per cent quarter-to-quarter increase, reaching 253.0, according to the data. The index highlights a higher evolution in units with a usable floor area of 50 to 74.9 square metres (281.7) - as they increased by 5.7 per cent quarter-to-quarter – rather than in units with a floor area
of 100 square metres or more (232.1), which only rose 4.3 per cent when compared to the previous quarter.
Peninsula outperformed
DSEC also signalled how, overall, Coloane and Taipa prices grew more than those of residential units on the Peninsula. Overall indices for the
Macau Peninsula (253.7) and Taipa and Coloane (249.9) rose by 3.6 per cent and 4.3 per cent, respectively. The index for existing residential units (259.6) saw the opposite trend, as the index on the Peninsula increased 4.5 per cent, to 246.7, while that of Taipa and Coloane increased just 4.0 per cent, to 318.2. Year-on-year,
however the Peninsula’s existing residential units saw a 14.3 per cent uptick, while those of Taipa and Coloane saw a 21.7 per cent increase.
Age matters
DSCE data indicates that the pre-sale residential units index (247.2) increased by 6.0 per cent quarter-to-quarter,
also seeing a 28.2 per cent year-on-year increase. Units under five years of age saw a 22.3 per cent year-on-year and a 6.6 per cent increase in the index, reaching 241.0, while those between 11 and 20 years saw a 17 per cent year-on-year increase and a 4.9 per cent increase in the index, to 236.6.
Greater Bay Area
SARs students participate in Tencent camp A hundred high school students from Hong Kong, Macau and Guangdong participated in a camp held by Chinese Internet company Tencent Holdings Ltd. boosting and cultivating the interest of young people in technology and innovation, China News reported. Twenty of the youths in question hailed from Macau.
As part of the Tencent Greater Bay Area Youth Plan, the Tencent Youth Camp is also aimed at the future creation of talent for the development of the Bay Area. The camp is also held to promote the understanding and exchange of ideas between regions in order to strengthen cultural integration. The students started the camp by
boarding sailboats in Shenzhen; the tour will last a week. During the tour, students will visit the headquarters of Tencent, Dà-Jiāng Innovations Science and Technology Co., Ltd., China Vanke Co., Ltd., Yachang (Shenzhen) Artistic Centre and other significant enterprises and art centres in the Greater Bay Area. Senior executive vice-president
of Tencentk, Liu Shengyi, remarked during the tour launch that creativity is more important than knowledge, given the surge in new technology and business models, noting that talent from the Greater Bay Area would benefit from being connected to other regions, being transboundary in different industries, and in their creativity. C.U. advertisement
6 Business Daily Wednesday, August 9 2017
Macau Housing
Legislative Assembly shoots down ‘Negligence Article’
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he Legislative Assembly has failed to pass an Article of the law regulating the management of condominiums, under debate yesterday, according to local broadcaster TDM. With 14 votes in favour of the Article, 13 against and three abstentions, the Article failed to pass. The Article - proposing new owners be liable for debts left by a property owner relating to the property for a period of up to three
years - was strongly opposed by five legislators; in particular, Legislator Leonel Alves. The legislator noted that as it was the Article would let the “administrative body of the building not assume its responsibility of pursuing legal action against the debtor and instead ask for that debt to be paid by a third party – the purchaser […] I think this is troubling [given that the] administrative body was negligent”.
Premium markets
Economic diversification of junket business A rise in junket operations by smaller companies targeting the newly rich suggests the sector is competitive and diversifying, although a proper regulatory system is the best way to keep the activity under control, according to specialists Sheyla Zandonai sheyla.zandonai@macaubusiness.com
Smaller upscale junket operators are picking up steam in the MSAR, says gaming publication GGRAsia. New VIP operators have opened rooms in the L’Arc, a casino in NAPE run by Angela Leong, as well as in David Chow’s Legend Palace Hotel, while another decade-old junket, David Group, has started operations in the newly opened Macau Roosevelt Hotel, as well as in Studio City and Galaxy.
Ricardo Chi Sen Siu, Associate Professor in Business Economics at the University of Macau, said in a response to Business Daily that he perceives this as “a new business model to approach more upper middle-class clients with different social networks and characters.” David Group, for instance, just launched its WeChat platform a month ago, while social media platforms have also become popular tools to operate proxy betting schemes in the city. advertisement
Several raids by local Judiciary Police against illegal VIP rooms connected to casinos in town – of which the most recent took place last week, when a ring in ZAPE was busted on August 2 – have been using social media channels to connect clients with operators. Tencent-owned WeChat is often the preferred platform for this type of activity. Smallers cale junket operators targeting upper middle class clients have existed to some extent before but suffered a series of drawbacks
when Xi Jinping launched a national anti-graft campaign in 2014, making the junket business a preferred target in Macau. Accordingly, smaller junket companies such as David Group shrank their operations in 2015. One major advantage of running smaller scale junket operations, when compared to big groups such as Suncity and Neptune, “could be diversifying the sources of contacting and marketing, hence lowering the traditional risks as the market [is] dominated by a few large junkets with [non-transparent] transactions,” Siu opines. Another advantage of a pickup in the smaller junket business is that they signal there is more competition, which “could be a good sign for the industry’s development,” the professor said. “However, due to the nature of this business, benefits from running more smaller scale junkets are largely subject to an effective regulatory system. Otherwise, the downsides may be high, because irregular activities in competition may be hardly controlled/supervised,” he told Business Daily.
Gaming business
PAGCOR’s e-games business being privatised A Philippine-listed gaming technology provider has acquired another e-games site from the Philippine Amusement and Gaming Corporation (PAGCOR) earlier this week, according to ABS-CBN. In a filing with the Philippine Stock Exchange on Monday, PhilWeb Corporation announced it had bought I-3 Gamers, Inc.’s site in Cagayan de Oro through its subsidiary BigGame Inc. BigGame operates e-Games Cafés, and owns and operates fifteen casinos in the Philippines, according to the company. It is the third e-games site PhilWeb has acquired from the state corporation and gaming regulator this year, Business World online reported. In July, BigGame acquired an e-games site in Mandaue City, having acquired a similar business in Lapu-Lapu City, Cebu, in June. Earlier this year, PhilWeb disclosed plans to acquire 15 Internet cafes over the year, dedicated to casino games from independent operators, by using 7.5 million
shares currently kept in treasury. PhilWeb had provided PAGCOR the software and associated facilities for the e-games network until August 10, 2016 under an intellectual property licence and management agreement. PAGCOR had, however, terminated the contract with the company following declarations by Philippines President Rodrigo R. Duterte regarding online gambling and then PhilWeb Chairman Roberto V. Ongpin. S.Z.
Business Daily Wednesday, August 9 2017 7
Macau Universal Entertainment
Jury out on Okada The internal investigation conducted by Universal Entertainment into its former chairman, Kazuo Okada, continues with a conclusion yet to be finalised Nelson Moura nelson.moura@macaubusinessdaily.com
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final report of the internal investigation on the dealings of Japanese gaming group Universal Entertainment Corporation founder and chairman Kazuo Okada has not yet been finalised with the investigation still ongoing, the company said yesterday in its latest financial report. According to the release, the Special Investigation Committee, set up on June 8 of this year to investigate ‘alleged improper activities at an overseas subsidiary associated with former directors of the company’, has yet to submit its final report. The group also said ‘no facts have been confirmed’ that the alleged improper transfers had any effect upon Universal Entertainment’s operations and that the group expected ‘to recover money that the overseas subsidiary transferred to third parties’. Universal Entertainment registered 6.78 billion yen (MOP494.25 billion/US$61.3 million) in net loss attributable to its owners in the first quarter of this year, having made 6.89 billion yen in net
income in the same period of last year. The company primarily engages in the sale of pachinko gaming equipment for the Japanese market. Universal Entertainment also owns Aruze, a pachinko and slot machine company that distributes mass floor Electronic Gambling Machines (EGM) and Electronic Table Games (ETG) in the MSAR via Aruze Macau Gaming Limited.
Slowly growing
After initiating its internal investigation, Universal Entertainment initially stated there were suspicions regarding a HK$135 million loan from Tiger Resort Asia Limited (TRA) - a Hong Kong subsidiary of Universal in which Okada was the sole director at the time - in 2015 to an unnamed third party. On June 16, Mr. Okada was removed as company chairman, and in an investigation update on June 19 Universal Entertainment announced that two more suspicious transactions were being investigated. These regard an alleged withdrawal in 2015 by Okada of HK$16 million from the bank account of TRA, and a separate transfer pertaining
to a US$170,000 security interest provided by Universal Entertainment that Okada Holdings Limited - ‘a company entirely owned by Mr. Okada and his relatives’ allegedly did not pay to a financial institution that had provided US$80 million to finance a land transaction deal in South Korea. The final report was initially intended to be published by June 30; however, Universal Entertainment
announced three days before the deadline that since ‘all of these activities took place overseas and thus require more time to investigate, it would be difficult to submit an interim investigative report’ in the proposed time. In statements made to news agency Reuters in July, Mr. Okada described the allegations made by his former company as “nonsense” claiming one of the transactions in question was
a loan not due until November, purportedly to be used to expand junket operations aimed at attracting VIP players to Universal’s casino in the Philippines. He also described the investigation as an attempt by the company’s President, Jun Fujimoto, to gain control of Universal Entertainment, noting that Fujimoto had been handpicked to run the company Okada had founded over 50 years ago. advertisement
8 Business Daily Wednesday, August 9 2017
Greater china Trade
July exports, imports weaker than expected Exports to the United States rose 8.5 per cent in July on-year Elias Glenn and Stella Qiu
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hina’s exports and imports grew much less than expected in July, raising concerns over whether global demand is starting to cool even as major Western central banks consider scaling back years of massive stimulus support. China and Europe have been driving an increasing share of global growth this year as political conflict stymies stimulus policies being pushed by U.S. President Donald Trump. But while China’s overall trade continued to grow at a healthy clip in July, at 8.8 per cent it was the slowest rate this year. Some analysts chalked up the softer readings to seasonal or one-off factors, but others said weaker import growth could be the first tangible sign of a long-expected slowdown in the world’s second-largest economy after a surprisingly strong first half. “External demand is not really worrying in terms of the outlook,” said Raymond Yeung, chief economist for Greater China at ANZ in Hong Kong. “But we have to be cautious about the import outlook,” said Yeung, while noting that bad weather may have been a factor. China’s export growth slowed to 7.2 per cent in July from a year earlier, the weakest pace since February and cooling from an 11.3 per cent rise in June, official data showed yesterday. Analysts had expected a 10.9 per cent gain. By contrast, neighbouring South Korea saw its export growth accelerate in July while Taiwan’s held roughly steady.
China’s imports rose 11.0 per cent, the slowest growth since December and down from a 17.2 per cent rise in the previous month. That also missed expectations of 16.6 per cent growth. That left the country with a trade surplus of US$46.74 billion for the month, the highest since January, compared with forecasts for US$46.08 billion and June’s US$42.77 billion. The July trade figures are preliminary. The disappointing China data came a day after ratings agency Fitch upgraded its outlook for the world economy for this year and next, citing recoveries in China and other emerging markets. “Despite an uptick at the end of the second quarter, (China’s) trade growth now appears to be on a downward trend. In particular, the sharp decline in import growth since the start of the year suggests that domestic demand is softening,” Capital Economics said in a note. Improving global demand, particularly for electronics, has boosted exports for China and other trade-reliant Asian economies in recent months after several lean years of declining shipments. But investors have been more focused on its strong appetite for imports, particularly industrial commodities such as iron ore and coal, which have sparked a global price rally and fuelled higher earnings and share prices for many resource-related companies. China’s iron ore imports in July fell from 2.4 per cent from a year earlier as a recent buying spree eased, even though higher steel prices and a year-long construction boom have spurred mills in the world’s biggest steel producer to ramp up output.
Despite a sharp rebound in the value of the yuan versus the dollar in recent months -- the yuan has gained 3.5 per cent so far this year -- analysts downplayed its impact on trade flows. In yuan terms, growth in exports and imports also downshifted markedly, to 11.2 and 14.7 per cent, respectively.
Trade frictions
Yesterday’s data also showed China’s exports to the United States rose 8.5 per cent in July on-year, the slowest pace since February, while imports from the U.S. rose 24.2 per cent. But that is unlikely to ease trade tensions between Washington and Beijing, which have escalated in recent months as Trump has pressed China to cut steel production to ease global oversupply and rein in North Korea’s missile programme. China reported a trade surplus with the U.S. of US$25.2 billion for July, down only slightly from June, which was a near two-year high.
For the first seven months of the year, China’s trade surplus with the U.S., its largest export market, rose 5.9 per cent to US$142.75 billion, even as China’s overall trade surplus has fallen. China may have more at stake than past years if relations with Washington sharply deteriorate. Its surplus with the U.S. accounted for 61.5 per cent of China’s total trade surplus in the first seven months of the year, compared to just 44 per cent in the year-ago period. The United State and China failed last month to agree on major new steps to reduce the U.S. trade gap. Trump had been expected to unveil new measures last week, as Washington prepares to launch an inquiry into Beijing’s intellectual property and trade practices. But an announcement on Friday was postponed. The White House said on Saturday that Trump appreciated China’s cooperation on new sanctions against North Korea that were passed over the weekend. Reuters
Report
Beijing to spend US$1.5 trillion on outbound M&A in a decade A rebound in M&A will also rely on a softening of the Chinese state’s stance toward large, overseas deals, according to a report Sarah Syed
Chinese acquirers will spend US$1.5 trillion buying companies abroad in the next decade, 70 per cent more than the previous 10 years, even as regulators at home and abroad block deals, Linklaters LLP said in a report yesterday. Government policies encouraging Chinese companies to invest in manufacturing capabilities, particularly for advanced technology, and international trade will help maintain deal flow, the law firm, which specializes in advising on mergers and acquisitions, said in the report. Chinese buyers have spent about US$880 billion on assets in other countries in the last 10 years, according to the data. The success of China’s bidders will depend on their ability to overcome foreign countries’ concerns about national security and interest, which contributed to the failure of as much as US$75 billion in announced outbound deals last year, Linklaters said in the report. China may also have to bow to international pressure to liberalize its markets, it said. “While the pace of outbound deals has declined in 2017, China’s longterm aspirations” mean that overseas “investment and acquisitions from China will continue to be a significant
force over the long term,” Linklaters said. Regulators have generally blocked Chinese businesses’ bids for companies in industries seen as critical to their economies or national security, such as infrastructure and technology. Aixtron SE, the German semiconductor equipment maker, saw its planned sale to a Chinese-backed company collapse in December after the U.S. government opposed the deal. Push-back from the same group, the Committee on Foreign
Investment in the U.S., led to the termination of Chinese firm GO Scale Capital’s US$2.8 billion bid for Royal Philips NV’s lighting unit, Lumileds. A rebound in M&A will also rely on a softening of the Chinese state’s stance toward large, overseas deals, which some in the government see as a threat to the country’s growth. Its regulators are assessing the dangers that these prolific acquirers, and the debt they’ve run up, pose to China’s banking system and economy. HNA Group Co., the Chinese
aviation and shipping giant that’s behind some of the biggest overseas deals, is among acquisitive companies under increased government scrutiny. Several major Chinese banks that have helped fund HNA’s deal spree have stopped issuing new loans to the company, people familiar with the matter said last month.
‘Chinese buyers have spent about US$880 billion on assets in other countries in the last 10 years’ “Despite potentially increased scrutiny by Chinese regulators and banks of some of the deals underlying these flows, we expect China to remain ‘open for business’ with respect to genuine strategic overseas acquisitions,” Linklaters said in the report. “If such investments are blocked in some jurisdictions, this may redirect Chinese players’ interest towards other jurisdictions.” Bloomberg News
Business Daily Wednesday, August 9 2017 9
Greater China Forecast
In Brief
Hong Kong Q2 GDP seen solid, retail spending recovers A strong first-half performance means the economy is more likely to meet the government’s 2-3 per cent GDP estimate for 2017 Donny Kwok and Anne Marie Roantree
Hong Kong’s economic growth in the second quarter probably cooled from its fastest annual pace in six years but the city will still post a solid performance due to recovering domestic demand, a buoyant stock market and booming property sector. The Chinese-ruled city started 2017 on a strong footing and economists are optimistic about the near-term outlook, boding well for Hong Kong’s new leader, Carrie Lam.
Key Points Hong Kong Q2 GDP forecast to grow 3.48 pct y/y vs 4.3 pct in Q1 Booming property and stock markets make consumers feel wealthy Economy expected to remain strong in second half - economist
who expects growth to remain solid in the second half of the year. A strong first-half performance means the economy is more likely to meet the government’s 2-3 per cent GDP estimate for 2017. Second quarter GDP data is due on Friday at 0830 GMT. In comments that could signal a policy shift for the financial hub, Chief Executive Lam said this month that she supported a call by Executive Councillor Joseph Yam, Hong Kong’s former central bank chief, to adopt a less rigid fiscal regime to allow for budget deficits in a bid to boost the economy. Yam, a top adviser to Lam during the leadership race this year, said in his blog that the government should not be afraid to ramp up spending, even if it meant going into deficit. The territory, which returned to Chinese rule in 1997, has been grappling with prolonged weakness in retail sales due mainly to a drop in mainland Chinese tourists. The
trade-dependent city has also been hit by China’s slowdown due to close trade, tourism and financial links. But retail sales in June rose for the fourth straight month after two years of decline, while the drag from tourism receded. Meanwhile, property prices have continued to scale fresh peaks in spite of a series of tightening measures by the government to cool the market, making homeowners feel more wealthy and in turn boosting consumer sentiment. Hong Kong’s stock market has also been on a tear, rising nearly 30 per cent so far this year to hover around its highest in more than two years. Other indicators also show the city is holding up well. The private sector grew at its fastest rate in nearly 3-1/2 years in July, driven by stronger output and new orders, an industry survey showed. Hong Kong’s June exports also rose 11.1 per cent on year, marking the fifth consecutive month of growth. Reuters
The US$270 billion trade-reliant economy was forecast to expand 3.48 per cent in the April-June quarter from a year earlier, according to the average estimate of six analysts surveyed by Reuters. The economy grew 4.3 per cent in the first quarter - its fastest pace since the second quarter of 2011. The economy would grow a seasonally adjusted 0.8 per cent, according to the average of three forecasts, compared with 0.7 per cent in the March quarter. “The economy is strong across the board with exports doing quite well. Consumer spending remains strong, while property and the stock market have been strong,” said Paul Tang, chief economist at Bank of East Asia,
Car sales rise on fading tax impact China’s passenger-vehicle sales rose for a third consecutive month in July with General Motors Co. and Nissan Motor Co. selling more automobiles as the impact of higher sales tax waned. Retail sales of cars, SUVs and multipurpose vehicles climbed 5.5 per cent to 1.7 million units last month, the China Passenger Car Association said in a statement yesterday. Deliveries rose 0.6 per cent to 12.5 million units in the first seven months this year, according to the association. Chinese consumers brought forward car purchases after the government announced it would raise the levy on small-engine cars to 7.5 per cent from 5 per cent from the start of 2017. Expansion
McDonald’s to open 2,000 more mainland stores McDonald’s Corp will increase its number of stores in mainland China to 4,500 by the end of 2022, up from 2,500 currently, as part of a strategic partnership with Citic Ltd and the Carlyle Group, it said yesterday. The global fast-food chain said it aimed to achieve double-digit sales growth in mainland China every year for the next five years. McDonald’s completed a deal at the end of July giving Citic a controlling interest in its mainland China and Hong Kong businesses. Markets
Tencent, Alibaba’s rocketing valuations may augur a pullback
Hospitality
Marriott set to woo mainland tourists with Alibaba deal Tourists will be able to pay for bookings using the Chinese e-commerce company’s online payments platform, Alipay Marriott International Inc said on Monday it would partner with China’s Alibaba Group Holding Ltd to tap into the growing number of Chinese citizens who travel abroad. The world’s biggest hotel chain said the joint venture with Alibaba would allow Chinese travellers to book rooms at Marriott hotels via Alibaba’s travel service platform, Fliggy. Travellers will be able to sign up for Marriott’s rewards program and receive special member-only rates through Fliggy, Marriott’s global chief commercial officer, Stephanie
Auto industry
Linnartz, said in an interview. Alibaba will eventually run Marriott’s websites and apps, Linnartz said. Tourists will be able to pay for bookings using the Chinese e-commerce company’s online payments platform, Alipay, the companies said. The long-term market opportunity in China is huge for companies targeting both domestic and outbound Chinese travellers, according to Rich Hightower, an equity analyst with Evercore ISI. Over the next five years, Chinese travellers will take an estimated 700 million trips, the companies said in
a statement. Marriott’s focus with the joint venture is mostly outbound Chinese travellers, Linnartz said. Marriott owns the JW Marriott, Ritz-Carlton, Renaissance and Autograph Collection hotel brands, among others. It has nearly 300 hotels in China and around 300 hotels in the pipeline. Twenty-two of its 30 brands have a presence in China.
‘Over the next five years, Chinese travellers will take an estimated 700 million trips, the companies said in a statement’ China’s importance to Marriott was heightened after the company’s acquisition of Starwood Hotels, which had a larger presence in the country than Marriott, Linnartz said. Shares of Marriott closed up 1.1 per cent on Nasdaq on Monday but fell 1.8 per cent after the close following the company’s release of second-quarter earnings. Shares of Alibaba ended up 3.6 per cent at US$158.84 on Nasdaq. Reuters
Asia’s much-vaunted tech stocks could be getting ahead of themselves. Projected price-to-earnings multiples for companies like Tencent Holdings Ltd. are re-valuing at a much faster pace than profit estimates, which could weigh on share prices, according to Northern Trust Capital Markets LLP. Chinese e-commerce giant Alibaba Group Holding Ltd.’s 2017 projected 12-month P/E has risen 38 per cent since the start of the year, while earnings-per-share for the current year have climbed by just 10 per cent, North Trust said in a note Monday. For Shenzhen-based Tencent, the projected P/E has advanced 32 per cent as estimated EPS added 2 per cent. Commodities
Coal imports at 5-mth low on tightening import curbs China’s coal imports in July fell to their lowest in five months as Beijing’s efforts to combat pollution curbed utilities’ ability to buy cheaper foreign fuel and caused backlogs in ports, customs data showed yesterday. Arrivals of China’s favourite fuel totalled 19.46 million tonnes in July, data from the General Administration of Customs showed. That’s down nearly 10 per cent from June and 8.3 per cent lower than July last year, according to Reuters calculations. Customs does not provide per centage changes for the monthly data.
10 Business Daily Wednesday, August 9 2017
Greater China Traders
Mainland buyers resell soybeans as crushers lose cash, glut grows The resales may have been triggered by a tightening of credit Dominique Patton and Naveen Thukral
T
wo major Chinese soybean buyers have resold more than 500,000 tonnes of product in recent weeks, sources familiar with the deals said, amid growing concerns about losses among crushers and congestion at a major port in the world’s top oilseed buyer. The resales appear to be isolated, but they stir worries about possible contract defaults as crushers incur big losses due to a supply glut and a logjam in the port of Rizhao, China’s major crushing hub in eastern Shandong province. Three years ago, during a similar period of high stocks and loss-making margins, contract defaults swept the market and traders dumped hundreds of millions of dollars of beans back onto the market to avoid losses. In the recent resales, Shandong Sunrise Group, a major importer, flipped four to five cargoes back to the market, said three China-based traders and one Singapore-based trader familiar with the issue. The sources all declined to be identified as they are not authorised to speak to the press. Rapidly expanding crusher Shandong Sanwei Oil & Fat Group has also resold three cargoes, said two of the traders. Eight cargoes would be equal to 520,000 tonnes of soybeans, worth around US$210 million, based on June customs data. Sunrise and Sanwei, however, resold the cargoes at much below market rates, said the Singapore-based trader, who works for a global trading company that has oilseed processing plants in China. The identity and location of the
buyers are not known, and staff in the international trading departments of Sunrise and Sanwei declined to comment. The resales may have been triggered by a tightening of credit, said the four traders. Cargoes are sometimes shipped before the buyer has received a letter of credit (LCs). “Some importers are facing credit issues and have been unable to get LCs,” said the Singapore-based trader. It was not clear if Chinese banks were tightening credit for the sector or if it is part of a wider clampdown on lending across the economy. Beijing has pledged to curb some types of financing after a rapid build-up in debt last year.
Key Points Chinese soybean buyers resell around eight cargoes Resales come after huge imports in recent months Import surge causes logjam, 17 vessels anchored in Rizhao The trend will fuel worries that China’s demand for more bean imports may fall. Shipping data from Thomson Reuters Eikon shows 17 dry-bulk carriers anchored off Rizhao port waiting to deliver their cargo. Traders said most of them were carrying soybeans. Adelante has been waiting unable to berth and discharge cargoes since late May, while Great Victory has been moored there since middle July, as huge arrivals overwhelmed facilities. The two vessels are carrying an estimated 130,000 tonnes of beans, worth about US$45 million based on Monday’s prices.
Crushers in Shandong have been losing money per tonne crushed since late February, swinging to a profit for only four days in the first half of July before returning to the red.
They are currently losing RMB83 on each tonne of soybeans processed, with margins pressured by soymeal stocks that are at their highest on data going back six years. Reuters
Bribery case
Domestic-owned oil firm Addax shuts offices Prosecutors for the Swiss canton of Geneva had investigated the company over several tens of millions of dollars in payments to a company and several lawyers in Nigeria Chinese-owned oil firm Addax Petroleum is shutting its offices in Geneva, Houston and Aberdeen, it said on Monday, a month after it agreed to pay 31 million Swiss francs (US$31.85 million) to settle charges of suspected bribery of foreign officials. Confirming a report in the Tribune de Geneve newspaper, Addax said its parent firm Sinopec International Petroleum Exploration and Production Corporation (SIPC) would integrate the three offices into a new technical centre in Beijing. SIPC was streamlining its business model in response to low oil prices, the Addax statement said. “This rationalisation, designed to reduce management duplication, improve efficiency and secure longterm business sustainability, will see Addax Petroleum’s Geneva office integrated with SIPC’s headquarters in Beijing, and the Geneva office closed by the end of this year.” Addax’s operating companies will start reporting directly to SIPC headquarters from August 9, and Addax will run a consultation process for its 174 affected staff in Geneva to mitigate the impact of the organisation change, it said. The newspaper said Geneva-based staff were informed of the closure on
Monday afternoon. Addax says on its website that it has more than 1,000 employees, and operations in Nigeria, Gabon and Cameroon, as well as joint ventures with Genel in Iraqi Kurdistan and with
Repsol in the British North Sea. Prosecutors for the Swiss canton of Geneva had investigated the company, whose chief executive officer and legal director were also charged, over several tens of millions of dollars in
payments to a company and several lawyers in Nigeria. A four-month investigation found the payments were not sufficiently documented and doubts remained on their legality, but no criminal intent was established, the prosecutor’s office said.
‘Addax said its parent firm Sinopec International Petroleum Exploration and Production Corporation would integrate the three offices into a new technical centre in Beijing’ With that settlement, cases against the CEO and legal director were also closed, a spokesman for the prosecutor said at the time. Reuters
Business Daily Wednesday, August 9 2017 11
Asia Debt
1MDB gets another extension from Abu Dhabi for missed payment The state fund, founded by Malaysian Prime Minister Najib Razak, is the subject of money-laundering investigations in at least six countries
A
bu Dhabi has given scandal-plagued 1Malaysia Development Berhad (1MDB) until August 31 to make a US$603 million debt settlement payment that was originally due in end-July, an Abu Dhabi based source with knowledge of the matter said. Under an agreement struck in April with Abu Dhabi state fund International Petroleum Investment Company (IPIC), the 1MDB fund agreed to pay US$1.2 billion in two instalments to IPIC, with the first of about US$600 million to be paid by July 31. But 1MDB failed to honour its commitment, forcing Abu Dhabi’s sovereign wealth fund to give 1MDB a grace period of five days to make the payment. That deadline was to expire yesterday. Missed payments by 1MDB, which is owned by the Malaysian finance ministry, are a matter of concern for foreign investors, who own a significant share of outstanding government bonds in the Southeast Asian nation. Allegations of fraud involving 1MDB have already spooked investors by weighing on Malaysia’s economy and its currency. Yesterday, after the news of the extension, 1MDB’s 4.4 per cent US$3 billion bonds due 2023 gained by a point to trade around 93.25/94.45 cents on the U.S. dollar.
Malaysian Prime Minister Najib Razak
IPIC is due to make a regulatory disclosure about the latest deadline extension later today, the source said, declining to be named as the matter is not yet public. Abu Dhabi’s Mubadala, into which IPIC was merged earlier this year, declined to comment. Malaysia’s Treasury Secretary General for the finance ministry, Mohammad Irwan Serigar Abdullah, was quoted in state news agency Bernama as saying that 1MDB has got an extension to pay IPIC. Abu Dhabi said last week that 1MDB
and Malaysia’s finance ministry will be subject to “additional obligations” if no payment was made at the end of the five-day deadline. 1MDB declined to comment when contacted by Reuters. The Malaysian firm said in its statement last week that it was committed to paying Abu Dhabi but there were delays due to “regulatory approvals” needed to get its funds. It was unclear what approvals were pending for the payment. 1MDB, founded by Prime Minister Najib Razak, is the subject of
money-laundering investigations in at least six countries, including the United States, Switzerland and Singapore. In civil lawsuits, the U.S. Justice Department alleged that about US$4.5 billion was misappropriated from 1MDB. 1MDB has denied any wrongdoing and Najib has denied all allegations of corruption against him. Malaysia dissolved 1MDB’s advisory board last year, and its assets were either shifted to the government or sold off as part of the rationalisation programme. Reuters
Survey
Australian business conditions, confidence bloom NAB says that a poll outcome was consistent with annual job creation of around 240,000 A measure of Australian business conditions hit its highest since early 2008 in July as sales and profits stayed strong, while firms turned more confident the purple patch would last for some time yet. National Australia Bank surveyed more than 400 firms to compile its index of business conditions which rose 1 point to +15 in July, triple its long-run average of +5. After lagging behind, the survey’s measure of business confidence jumped 4 points to +12 and back to levels seen before the global financial crisis. The run of upbeat surveys holds out hope for a bounce in economic activity after bad weather kept growth to just 0.3 per cent in the first quarter. The Reserve Bank of Australia (RBA) argued at a policy meeting last week that growth would revive and held interest rates steady at 1.5 per cent The survey’s measure of sales edged back a point in July to a still strong +20, while business profits rose another 4 points to +18. Its measure of employment held firm at +7, again above average. NAB said that outcome was
consistent with annual job creation of around 240,000, or around 20,000 per month, and was enough to nudge the unemployment rate lower from the current level of 5.5 per cent.
“The persistent strength in employment conditions has made us a little more optimistic about the nearterm outlook for the labour market” Alan Oster, NAB group chief economist “The persistent strength in employment conditions has made us a little more optimistic about the nearterm outlook for the labour market,” said NAB group chief economist Alan Oster. “While that will be a welcome
sign for the RBA, signs of inflation pressures remain elusive,” he added. “Price and wage measures in the survey generally weakened again in the month, partly a reflection of elevated rates of underemployment.”
The quarterly pace of growth in labour and purchase costs, and for final product prices all slowed in July. Retail prices actually slipped by 0.1 per cent, underlining the intense competitive pressure in the sector. Reuters
12 Business Daily Wednesday, August 9 2017
Asia Investors
Japanese buy French bonds, sell German debt in June Japanese investors sold a net 65.7 billion yen of British bonds in June after buying a net 188.3 billion in May Shinichi Saoshiro
J
apanese investors were net buyers of French bonds and sellers of German bonds in June, data from Japan’s Ministry of Finance showed yesterday, attracted by the higher yields on French securities. Monthly portfolio investment data showed Japanese investors bought a net 327.3 billion yen (US$2.95 billion) of French bonds in June, after buying 646.8 billion yen in May.
Key Points Japanese investors buy net 1.242 trn yen of U.S. debt in June vs 1.610 trn in May Sell net 65.7 bln yen of British bonds in June vs net buy of 188.3 bln in May Offload largest amount of Aussie debt since December 2014 They sold a net 51 billion yen of German debt in June after buying a net 305.1 billion the previous month. In May Japanese investors had bought a variety of European bonds, including those from Germany, France and Britain as they began allocating new funds for the financial year that began in April. But in June investors appeared to have become more selective following the surge in global debt yields that originated in Europe. European debt yields climbed
sharply towards the end of June after European Central Bank President Mario Draghi’s comments were seen to have signalled a prospective end to the euro zone’s easy monetary policy. “Some investors likely reduced their German bond holdings in June following the ECB’s hawkish message,” said Shin Kadota, senior strategist at Barclays in Tokyo. “On the other hand, it is relatively easier for Japanese investors to keep buying French bonds as they yield more and with the country’s
political events out of the way,” Kadota added, referring to June’s French presidential election. The German 10-year bund yield ranged between 0.225 per cent and 0.480 per cent in June, while its French counterpart spanned 0.578 per cent and 0.840 per cent. Japanese investors sold a net 65.7 billion yen of British bonds in June after buying a net 188.3 billion in May. The 10-year British gilt yield sank to an eight-month trough below 1 per cent in June after going as high
as 1.22 per cent in May. Elsewhere, Japanese investors bought a net 1.242 trillion yen of U.S. debt in June after buying a net 1.610 trillion yen in May. They sold a net 188.9 billion yen of Australian bonds in June, following 11 consecutive months of net buying. The net selling amount in June was the largest since December 2014. High-yielding Australian debt has found steady demand from Japanese investors, but the 10-year yield declined to a seven-month low of 2.33 per cent in June. Reuters
GDP
Singapore Q2 revised slightly higher on buoyant manufacturing Singapore and other trade-reliant Asian economies have gained a boost this year from an improvement in global demand Singapore’s economy may have grown slightly more than previously estimated in the second quarter due to strength in manufacturing, but questions remain about whether the pick-up will broaden to other sectors in the second half. The median forecast in a Reuters survey of 10 economists predicted that gross domestic product in the April-June quarter expanded by 0.5 per cent from the previous three months on an annualised and seasonally adjusted basis.
That would be marginally higher than the government’s advance estimate of 0.4 per cent growth, which was released on July 14. The economy contracted in the first quarter. Some economists say the chances of an upward revision have increased after June industrial production exceeded expectations. The revised data will be released on Friday at 8 a.m. local time. Singapore and other trade-reliant Asian economies have gained a boost this year from an improvement in
global demand, particularly for electronics products and components such as semiconductors.
“Growth is quite narrowly based. We’re talking about semiconductors, the precision engineering segment... The rest of the economy really looks quite anaemic.” Brian Tan, an economist at Nomura
The MAS kept policy unchanged at its last policy decision in April
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Growth in other parts of the citystate’s economy has been uneven, however, and the revised data is seen as unlikely to drastically alter that picture. Retail sales have been largely tepid this year while construction has been sluggish, weighing on the services sector. “Growth is quite narrowly based.
We’re talking about semiconductors, the precision engineering segment,” said Brian Tan, an economist at Nomura. “The rest of the economy really looks quite anaemic.” On an annual basis, GDP growth for the second quarter is expected to be revised to 2.6 per cent year-onyear, again up only marginally from the advance estimate of 2.5 per cent. With Singapore’s economy not firing on all cylinders, and lingering external risks such as a possible flare-up in trade protectionism, most economists expect the central bank to keep its exchange-rate based monetary policy unchanged at its next policy decision due in October. “They (MAS) can afford to wait, even if the medium-term bias is to revert to a more hawkish stance,” said Selena Ling, head of treasury research and strategy for OCBC Bank. The MAS may take time to assess how financial markets react after the U.S. Federal Reserve announces, possibly in September, its plans for reducing its balance sheet, and will also be monitoring risks such as signs of escalating U.S.-China trade tensions, Ling said. The MAS kept policy unchanged at its last policy decision in April, saying a “neutral” stance is appropriate for an extended period. Reuters
Founder & Publisher Paulo A. Azevedo, pazevedo@macaubusinessdaily.com Editorial Council Paulo A. Azevedo; José I. Duarte; Mandy Kuok Newsdesk Mike Armstrong; Óscar Guijarro; Nelson Moura; Kelsey Wilhelm; Matthew Potger; Cecilia U; Sheyla Zandonai Group Senior Analyst José I. Duarte Design Aivi N. Remulla Photography Cheong Kam Ka, Ruka Borges, Gonçalo Lobo Pinheiro, António Mil-Homens, Carmo Correia Contributors Albano Martins; James Chu; João Francisco Pinto; José Carlos Matias; Larry So; Pedro Cortés; Ricardo Siu; Rose N. Lai; Zen Udani Assistant to the Publisher Lu Yang, lu.yang@projectasiacorp.com Office Manager Elsa Vong, elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd. Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 E-mail newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com Online www.macaubusinessdaily.com
Business Daily Wednesday, August 9 2017 13
Asia Outlook
IMF cuts Philippine 2017 growth forecast The Fund pointed mainly to external risks including slower growth in China, U.S. monetary tightening and worries over the global economy Enrico Dela Cruz
The International Monetary Fund trimmed its 2017 growth forecast for the Philippines to 6.6 per cent from 6.8 per cent, citing slower than expected first quarter expansion, but was optimistic the economy would grow strongly in the medium term. There is no evidence that investor confidence in one of Asia’s fastest-growing economies has been hit by security worries, an IMF official said yesterday. However, he warned that rapid credit growth and strong private investment could lead to overheating. “The Philippines really stands out as a place that continues to do very well economically,” Luis Breuer, who
led an IMF mission that just completed a review of the economy, told reporters. “Growth is very strong. At the same time, inflation is very low,” he said. While the new 2017 forecast was lower than the 6.8 per cent the IMF estimated in February, Breuer said he expects growth to be at 6.8 per cent in the medium term, supported by robust domestic demand and a recovery in exports. “We have no evidence that confidence has been weakened because of any regional security events,” he said, citing buoyant investment numbers. The IMF team, during its review, spoke to banks and conglomerates and asked them their outlook for investments and the economy in the
near term, said Breuer. That was amid concerns that more than two months of fighting between the Philippine military and Islamist militants in the southern city of Marawi could dent economic growth. IMF pointed mainly to external risks including slower growth in China, U.S. monetary tightening and worries over the global economy. For the Philippines, Breuer said “the combination of rapid credit growth, buoyant private investment and fiscal expansion could lead to overheating.” Lending by Philippine banks has been increasing rapidly. In May, loans were 18.7 per cent larger than a year earlier, and in April the growth pace was 19.2 per cent. Reuters
In Brief Sentiment
Thai consumer confidence declines again Thailand’s consumer confidence in July dropped for a third straight month, hitting a 7-month low, due to concerns about flooding in parts of the country, low commodity prices and a slow economic recovery, a private survey showed yesterday. The index of the University of the Thai Chamber of Commerce fell to 73.9 in July from 74.9 in June. Consumers felt the economy had not recovered much, so the government should ramp up investments to lift consumer spending, especially in the provinces, which was softening, the university said in a statement. Financial breaches
Commonwealth Bank scraps CEO bonus Commonwealth Bank of Australia yesterday scrapped its chief executive’s bonus for damaging the bank’s reputation amid allegations it broke money-laundering and counter-terrorism financing laws, but said he retained the board’s confidence. Australia’s financial intelligence agency last week accused the bank of roughly 53,700 breaches, launching a civil court action that could see the country’s biggest lender fined several billion dollars. The case is the largest of its kind in Australian corporate history, and sent Commonwealth Bank shares sliding for their biggest oneday decline in 18 months on Friday.
Monetary stance
Official says S.Korea house prices cannot be sole cause to hike interest rates The government last week announced its most stringent measures to date on property speculation and borrowing House prices are only one input to South Korean monetary policy decisions, policymaking sources said yesterday, after new government measures to curtail house prices sparked market speculation on interest rate rises. The Bank of Korea’s base rate currently is a record-low 1.25 per cent, and most analysts see the bank raising rates sometime next year, as any hike sooner could put already-high households’ debt burden at risk, the officials said. The policy rate has been kept
unchanged since it was lowered by 25 basis points in June 2016. “It’s not favourable to change interest rates just by looking at house prices when there are so many variables in the economy,” said a senior official knowledgeable about interest rate changes. “Even the International Monetary Fund advises asset market issues be dealt with through micro-economic measures due to global uncertainties,” he said. One official at the presidential Blue House said if interest rates are advertisement
raised to stabilise property prices, “the household debt issue could become serious”. At the end of March, total household debt was equivalent to 83 per cent of the country’s gross domestic product, according to the central bank.
‘At the end of March, total household debt was equivalent to 83 per cent of the country’s gross domestic product’ The Bank of Korea is independent from the government and Blue House but it still makes efforts to harmonize monetary policy changes with the government, for maximum effect. The government last week announced its most stringent measures to date on property speculation and borrowing. It raised capital gains taxes on owners of multiple homes and imposed fresh mortgage curbs to rein in speculators who policymakers blame for stoking a housing bubble in main regions across South Korea. Another senior administrative official said if a sharp rise in housing prices affects inflation, that could influence rate policy, but before then, interest rates cannot be used to resolve the housing price issue alone. Reuters
Monetary meeting
Philippine rate hike expectations fade The Philippine central bank will likely stand pat on interest rates at its policy meeting on Thursday, the first under its new governor, Nestor Espenilla, with inflation not a worry while economic growth stays solid this year. Annual inflation has probably eased from a peak in April, due in part to easing fuel prices. That has led some economists to roll back their forecasts of at least two rate hikes, by 25 basis points each, from now till the end of 2018. Annual inflation has averaged 3.1 per cent in the seven months to July, well within the central bank’s 2-4 per cent target this year. Funding
Japan Display may seek outside investor for turnaround Japan Display Inc is considering seeking funds from an outside investor to help finance an overhaul of its ailing smartphone screen-making business, including 3,500 job cuts, the Nikkei business daily reported yesterday. The liquid crystal display (LCD) maker is exploring capital tie-ups with strategic investors and buyout funds, the report said, without citing sources. Japan Display said in a statement it planned to discuss restructuring at a board meeting today. The company has been hurt by its late entry into organic light-emitting diode screens (OLED) and fluctuating demand for Apple’s iPhones.
14 Business Daily Wednesday, August 9 2017
International In Brief Portugal
Estoril Sol gets three-year online betting licence Estoril Sol has been given a three-year licence to run online odds-type betting where the players play against the operator, it said on Monday. The licence covers the internet site www.estorilsolcasinos.pt/ and is valid until 3 August 2020 unless it is renewed in the meantime. Odd-type bets are bets where the gambler bets an amount of money against the operator based on preset odds. On 29 April 2015, the Portuguese government approved the law for online gambling in Portugal. Two years after the law came into force, Turismo de Portugal, which is responsible for this activity, had received 19 applications and attributed six licences. Angola
Govt. borrows from home and abroad Angola wants to repeat the 2015 ‘eurobonds’ issue in foreign currency to get up to US$2 billion from the foreign market. Angola’s first eurobond issue in November 2015, sold about US$1.5 billion (€1.27 billion) through a Consortium led by Goldman Sachs International along with Deutsche Bank and Chinese bank ICBC International. Angola’s 2017 borrowing plan did not initially foresee any more eurobonds, but the Debt Management Unit directors, Osvaldo João, said back in January that the plan depended on outsider influences. The 2017 borrowing plan anticipates raising 4.667 trillion kwanzas (€23.8 billion), with 75 per cent coming from the domestic market.
Trade
Drop in German activity feeds into global stimulus debate Chancellor Angela Merkel, expected to win a fourth term in a national election next month, is campaigning on a platform of economic stability Joseph Nasr
G
erman trade activity slowed abruptly in June, adding to signs that demand in leading economies may be starting to flag just as central banks consider scaling back years of stimulus. Exports from Europe’s biggest economy fell by 2.8 per cent, the biggest drop since August 2015 and one that ended five straight months of growth. Imports sank by 4.5 per cent, the biggest drop since January 2009, the Federal Statistics Office said. Exports and imports in China, which along with Europe has been driving an increasing share of global growth this year, grew much less than expected in July, data from Beijing showed earlier yesterday. Weaker import growth in the world’s second-largest economy could be the first tangible sign of a long-expected slowdown there. “We have to be cautious about the import outlook,” said Raymond Yeung, chief economist for Greater China at ANZ in Hong Kong, while noting that bad weather may have been a factor. The global growth equation has shifted with political ructions in Washington and beyond that have stymied stimulus policies being pushed by U.S. President Donald
Trump. Meanwhile further rate hikes remain on the Federal Reserve’s horizon as debates intensify among European Central Bank and Bank of Japan policymakers about whether to rein in their stimulus programmes. The German data, which contrasted with expectations in a Reuters poll for a 0.3 per cent drop in exports and a 0.2 per cent gain in imports, drove the country’s seasonally adjusted trade surplus to a 10-month high. That figure of 21.2 billion euros is likely to lead to pressure on the government in Berlin to boost spending on investments as a way to support the economic recovery in other countries - a call made by the International Monetary Fund last month. Germany’s wider current account surplus, which measures the flow of goods, services and investments, rose to 23.6 billion euros after a downwardly revised reading of 16.0 billion euros in May, unadjusted data showed.
Economic stability
Chancellor Angela Merkel, expected to win a fourth term in a national election next month, is campaigning on a platform of economic stability, and her conservatives promised tax cuts worth some 15 billion euros annually as well as increased
spending on infrastructure, defence and security. The government expects the economy to grow 1.5 per cent this year, down from 1.9 per cent in 2016, which was the strongest rate in five years. Construction and state spending have already, along with consumption, provided most of the growth impulse, supported by the low interest rate environment created by the ECB. “Even though this morning’s trade data add to a disappointing month for German industry, we don’t think that the German economy has suddenly passed its peak,” ING Bank economist Carsten Brzeski said. “Instead, strong confidence indicators point to a continuation of the recovery. Also, some kind of investment boost after the elections combined with the gradual recovery of private investment already this year should extend an already mature business cycle of the German economy well into 2018.” The Ifo institute said yesterday it expected the economy to grow 0.8 per cent in the second quarter. Industrial orders rose twice as much as expected in June, supported by strong domestic demand, and while industrial output fell in June, they grew in the second quarter overall. Reuters
Oil industry
Saudi Arabia to cut crude allocations State oil company Saudi Aramco will cut crude oil allocations to its customers worldwide in September by at least 520,000 barrels per day, an industry source familiar with the matter told Reuters yesterday. The cuts in allocations are in line with Saudi Arabia’s commitments with the OPECled supply reduction pact, under which the top oil exporter is required to cut 486,000 bpd. Saudi Arabia will cut supplies to most buyers in Asia by up to 10 per cent in September, multiple sources with knowledge of the matter have said. Mozambique
Former transport minister accused of corruption Mozambique’s Central AntiCorruption Office has accused former transport and communications minister Paulo Zucula of paying €31,000 in undue wages, Notícias newspaper wrote. The paper said that in 2009, Paulo Zucula gave instructions to pay early wages to the members of the board of directors of the country’s civil aviation institute, without consulting the finance minister as the law demands. Paulo Zucula’s predecessor as transport minister, António Munguambe, was sentenced to four years in jail in 2010 for receiving money from Mozambique Airports, a company he oversaw, to pay his children’s education.
Markets
Euronext bourse to renew clearing contract with LSE unit The bourse said the deal avoids customers facing added costs of switching from one clearing house to another Huw Jones
Pan-European bourse Euronext said yesterday it would extend its contract with Britain’s LCH in a surprise move that could defuse tension over where clearing of euro-denominated transactions should take place after Brexit. Euronext’s contract with LCH, a unit of the London Stock Exchange Group, was due to expire in 2018. Euronext had previously announced that it planned to use Intercontinental Exchange in the Netherlands for clearing, but those plans have now been scrapped. Euronext and LCH said yesterday they have signed binding terms for a 10-year clearing deal they expect to complete in the fourth quarter of this year. Euronext said the deal avoids customers facing added costs of switching from one clearing house to another at a time when they already face major challenges like new European
Union securities rules, and adapting to Britain being outside the EU from 2019. Under the deal, Euronext will swap its 2.3 per cent stake in LCH Group in London for an 11.1 per cent share in LCH’s Paris unit, giving Euronext a financial incentive to increase clearing volumes in France. Euronext and LCH will “work together” to cut clearing fees by 5 per cent to 15 per cent from January 2019, Euronext said. Clearing ensures that a stock, bond or derivatives transaction is completed safely and smoothly, even if one side of the deal goes bust. An arcane part of financial plumbing, it has become highly politicised, with EU policymakers saying that clearing of euro denominated derivatives, which LCH’s London unit dominates, should move to the euro zone after Brexit. Euronext said the deal would allow clearing in a wider range of products, but did not say what those products
would be. It could mean LCH effectively shifting enough of its euro clearing to Paris to satisfy euro zone demands.
“Euronext and LCH will “work together” to cut clearing fees by 5 per cent to 15 per cent from January 2019” Euronext
The deal could also make it harder for Deutsche Boerse owned rival Eurex in Frankfurt to pick up euro clearing business that shifts to the single currency area. Euronext will have to pay ICE an undisclosed break-up fee. Reuters
Business Daily Wednesday, August 9 2017 15
Opinion
That whoosh? It’s the great Chinese property pullback Nisha Gopalan a Bloomberg Gadfly columnist
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hat whoosh you just heard? It’s Chinese money pulling back from property in London to New York. Capital centres globally should brace for tumbling real-estate prices as Beijing manages to do what Brexit and higher interest rates haven’t. Reflecting tighter regulations, China overseas direct property investment could drop 84 per cent to US$1.7 billion this year and about another 15 per cent to US$1.4 billion in 2018, according to Morgan Stanley. Mainland money began piling into offshore commercial property in 2013. Land prices were expensive at home, and investors wanted to find a hedge against a weakening yuan. Another draw was the prospect of higher returns in cities such as Sydney where yield spreads -- the difference between rental yields and what government bonds pay -- are higher. A slumping pound post June 2016’s Brexit vote helped, too. While some marquee transactions are still being inked -- think the purchase earlier this year of London’s “Cheesegrater” tower by Chongqing-based, Hong Kong-listed CC Land Holdings Ltd. -- their numbers are dwindling. A strengthening yuan, along with China’s One Belt One per cent Road initiative that Yuan’s rise against needs funding, will the dollar, YTD see many property deals dry up. Over the past few months, Beijing has made it tougher to get money out, clamped down on more fanciful transactions such as the buying of football clubs and luxury hotels, and is now going after some of the country’s most prolific acquirers. Dalian Wanda Group Co., Anbang Insurance Group Co., HNA Group Co. and Fosun International Ltd. have all included real estate in their global buying binges. Against that backdrop, and with increasing foreign-government scrutiny thrown into the mix, it’s hard to see how Chinese offshore real estate acquisitions can continue at such a pace. Domestic developers are already finding it harder to tap international debt markets, and have been resorting to shortterm securities instead. This matters because Chinese capital accounted for one-quarter of commercial property transactions in central London last year, up from 1 per cent a decade ago. China is now the second-largest foreign investor in the U.S. after Canada, and is responsible for between 12 and 25 per cent of all office transactions by value in Australia over the last two to three years. In Hong Kong, Chinese firms have bought about 80 per cent of the residential land sold so far in 2017, and have spent around US$6.5 billion on office space from 2012 through 2016. One sliver of good news -- some Chinese companies have capital already stashed offshore with which they can keep buying, plus there are other interested Asian parties around. London’s “Walkie Talkie” tower was sold last month to Hong Kong’s LKK Health Products Group Ltd. And Sunac China Holdings Ltd., now the most indebted developer after buying assets from Dalian Wanda Group Co., last week issued US$1 billion of dollar bonds. Whether that’s enough to offset the amount of money going the other way, however, is questionable. Investors would be wise to stand well back. Bloomberg Gadfly
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Xi Jinping, President of China. Source: Lusa
Why China’s snatched away the punch bowl from some Andrew Polk a Bloomberg View columnist
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iven how opaque decision-making in China can be, it’s tempting to see all manner of conspiracies behind the government’s recent crackdown on companies that have expanded rapidly abroad. In fact, the reasoning behind the campaign is straightforward. The real problem is that it’s likely to damage China in the long run. According to Bloomberg, Chinese regulators’ increased scrutiny of formerly high-flying companies Dalian Wanda Group Co., Anbang Insurance Group Co., HNA Group Co. and Fosun International Ltd. may have been sparked by an internal government report warning of parallels between China’s situation and Japan’s just before its bust. One similarity: a slew of flashy and possibly foolish overseas acquisitions. China’s financial officials appear to have concluded that such “irrational” deals created vulnerabilities for the Japanese economy -- weaknesses they’re keen to avoid. This explanation makes sense, given Chinese leaders’ fear of repeating others’ mistakes. Still, the fact that the dragnet has pulled in some of China’s most politically connected firms has left many China watchers sea rchi ng for a l t e rnati ve motivations. There are four main theories. Some believe the crackdown is political. This is a critically important year for China and its leader Xi Jinping, with a Politburo reshuffle this fall set to cement his hold on power. In such a charged environment, Chinese leaders could be looking to settle scores by targeting companies linked to their political rivals. Others see more personal forces at work. Despite his speeches in defence of free trade and globalization, Xi hasn’t been the most business-friendly Chinese leader. He comes from a family with a stellar revolutionary pedigree; it’s possible he just doesn’t like China’s tycoons, whom some Chinese officials believe have gotten rich off the backs of the Chinese state. Or currency could be the decisive factor. The pace of capital outflows reached alarming proportions in 2016, and only a tightening of capital controls around the turn of the year staved off downward pressure on the renminbi. Regulators might feel they need to continue such tightening to prevent depreciation pressure from reemerging, so they’re monitoring every channel by which capital might leave China. Finally, some analysts wonder if a debt bomb may be lurking in one or more of these companies. Regulators could be undertaking a forced deleveraging while they assess the companies’ financial linkages to the Chinese banking system. These explanations aren’t mutually exclusive. Yet neither do they get to the fundamental purpose of the recent crackdown. Effectively, the Chinese state is trying to assert greater control over where
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and how the country’s assets are managed. That, apparently, is what the Japanese didn’t properly do. As far back as March, for instance, People’s Bank of China Governor Zhou Xiaochuan warned that overseas investments in sports, leisure and entertainment were no longer in favour as they had no “national benefit.” The buying of sports clubs particularly sticks in regulators’ craws. Not only are they seen as vanity projects, but the valuations for such assets are difficult to assess properly, let alone justify, which adds to the sense Chinese companies are simply spiriting assets overseas. Even as regulators tighten the screws in those areas, the government is actively encouraging both private and state-owned firms to undertake investments in line with its industrial and geopolitical policies. Funding for and acquisitions of businesses that undertake research on artificial intelligence are welcome, as is anything that can be conceivably linked to Xi’s ballyhooed Belt and Road infrastructure push. That’s why China’s US$1.1 billion lease on the Sri Lankan port of Hambantota could be inked in recent days even as the government reportedly pressured Anbang to sell its overseas assets, which include New York’s Waldorf Astoria hotel. Given how much the state’s influence over the domestic economy has expanded under Xi, the assertion of control over foreign investment is hardly surprising. The fact that these companies are nominally private entities has no bearing on the leadership’s desire to manage their spending. In fact, it may well make officials more eager to stymie deals. Once private entities have successfully moved assets abroad, it’s hard for Chinese regulators to force them to bring money back. Underpinning all of these efforts is a genuine desire among officials to better enforce existing laws. The challenge, of course, is that suddenly enforcing the rules has the same effect as overt capital controls. Instead of inspiring confidence among the foreign business and investment communities, these policies have done the opposite. More importantly, while the government’s efforts to calibrate outbound investment flows may alleviate short-term financial risks, they will only exacerbate China’s fundamental problem: the misallocation of capital. Politically motivated investment decisions are what have brought China to the point of fearing a Japan-style bust in the first place. China’s main economic challenge is weak productivity growth, an issue that can only be solved by deploying the country’s resources more efficiently. The government may well be right that purchases of European soccer teams don’t count as productivity-boosting investments. But that doesn’t mean rail lines to Kazakhstan do. Bloomberg View
Given how much the state’s influence over the domestic economy has expanded under Xi, the assertion of control over foreign investment is hardly surprising
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16 Business Daily Wednesday, August 9 2017
Closing Heritage pillage
Thieves target historic Portuguese decorative tiles Tile thefts reached peaks of around 10,000 per year in 2001, 2002 and 2006 Brigitte Hagemann
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aping holes on the crumbling walls of an abandoned palace in the heart of Lisbon mark where decorative ceramic tiles have been yanked off, to the displeasure of passing tourists. Thieves are swiping the elaborately painted tiles, which cover buildings across Portugal, to sell them on the black market. Just one of these tiles, called azulejos, can fetch thousands of euros. And abandoned buildings like the 17th century Pombal Palace, are especially vulnerable. This was once the family home of the Marquis de Pombal, the statesman who rebuilt Lisbon after a massive earthquake devastated the city in 1755. Owned by Lisbon’s cashstrapped city hall for the last five decades, it has fallen into ruin due to lack of maintenance. And since a cultural association, Carpe Diem, moved out at the end of July, the palace has been empty. “SOS Azulejo”, a project set up by police in 2007 to stop antique dealers from selling stolen Portuguese tiles, includes it on its list of “high risk” buildings. Tile thefts have plunged by 80 per cent since the project was set up, said Leonor Sa, the head of Portugal’s police museum which displays recovered stolen tiles. But a huge amount of thefts go unreported, she added. “The Portuguese do not file complaints because for them they are the most banal thing in the world. They live surrounded by tiles since their birth until their death,” Sa told AFP.
“Foreign tourists who discover these ceramics love them because they don’t have them at home.” Sa, who has a doctorate in cultural studies, gave birth to her two daughters, Rita and Joana, at a Lisbon hospital decorated in azulejos, where she herself was born 59 years ago.
Churches pillaged
Azulejos first came to Portugal in the early middle ages when Portugal was under Moorish rule. Although many assume the word is a derivation of azul -- Portuguese for “blue”, the
colour of most tiles -- the word is Arabic in origin and comes from az-zulayj, which roughly translates as “polished stone”. Disgusted at the loss of this unique Portuguese treasure, Sa set up an internet site, www.sosazulejo.com, that displays photos of tiles stolen from churches, hospitals, train stations and other buildings. It makes it easy to check if a tile on sale at a street market or antique dealer was stolen. “It’s very dissuasive,” said Sa, who is full of energy and has an intense gaze.
Tile thefts reached peaks of around 10,000 per year in 2001, 2002 and 2006 but “now there are significantly fewer” thefts, she said. Since 2013 it is illegal in Lisbon to demolish a facade decorated with tiles without the authorisation of city officials. Parliament plans to extend the rule to the entire country shortly. At Lisbon’s rambling Feira da Ladra flea market, or “Thieves’ Market”, old azulejos are on sale for between five euros and 100 euros (US$118). A giant 18th-century panel made up of brown, gold and green tiles depicting exotic animals and flowers was on sale for 500 euros. Prices at antique dealers can go even higher, with some azulejos fetching up to 10,000 euros.
‘I don’t steal’
Saturday flea market at Igreja da São Vicente de Fora, Lisboa with tiles exhibit
Anne Typhagne, a 43-yearold French tour guide, lingers before a display of tiles at the flea market which overlooks the Tagus river. “Before I bought a lot of them, then I stopped because I am against the theft of Portugal’s heritage,” she said. Police inspections of tile vendors at the market are frequent. “When they come, I show all the papers. I sell, I don’t steal,” said Maria Santos, 28, whose small stand teems with ceramic tiles from the 18th and 19th centuries. While some tiles are recovered from building demolitions, Santos said “often, we don’t really know where they come from.” Oscar Pinto, the head of the national police division dedicated to crimes involving art, said the majority of tiles that are sold have a “legitimate” origin.
“Sometimes it is the landlords themselves that get rid of them to renovate their homes,” he said at his sparsely decorated office. “But lets not kid ourselves. A drug addict who sells you 20 azulejos in a plastic bag at one euro a piece, there is a strong chance that it was a theft.” Pinto had gone to the flea market the day before to try, in vain, to recover over one thousand 18th-century ceramic tiles pulled down overnight from an abandoned building in Lisbon’s riverside Baixa district. The Portuguese capital’s tourism boom “could contribute to an upsurge in thefts,” he said.
‘At Lisbon’s rambling Feira da Ladra flea market, or “Thieves’ Market”, old azulejos are on sale for between five euros and 100 euros’ Ceramics maker Cristina Pina, 55, thinks she has found a solution to stop tourists from buying old tiles -- she has set up a small shop near the market that sells reproductions of azulejos made in the 18th century. “I prefer it if tourists buy beautiful reproductions of azulejos as souvenirs of Lisbon, which will allow the originals to remain in the country,” she said. AFP
EuroFX
Expansion
Auto industry
Alleged British pyramid scheme goes into liquidation
China ride-hailing firm DiDi Mazda announces breakthrough backs Uber rival Careem in long-coveted engine tech
An alleged million-dollar pyramid scheme which is registered in Britain has gone into liquidation, the first step in the process of recovering its assets and distributing them to creditors. Reuters reported last year how the venture, known as EuroFX, allegedly scammed thousands of investors in China and other countries. EuroFX had a British CEO and headquarters. Euro Forex Investment Limited, the registered name for EuroFX, was wound up last month, according to documents filed with the companies registrar. The liquidation follows a petition to the courts by creditor Sun Yao, the documents showed. Grant Thornton has been appointed as liquidator. “The liquidators are currently working to establish the remaining value of any recoverable assets associated with the company, and will be launching a portal for creditors to register their claims shortly,” a Grant Thornton spokesman said. Reuters reported earlier this year that prosecutors in Anshan, northern China, dropped an investigation into David Byrne, the British chief executive of the scheme, and allowed him to leave the country, a year after he was apprehended in a citizen’s arrest by an investor. Reuters
DiDi Chuxing, China’s largest ride-hailing firm, has invested in Middle East online taxi service Careem in a new partnership deal that marks Didi’s latest international expansion against rival Uber. DiDi is seeking to turn up the heat on ride-sharing pioneer Uber via a string of partnerships with regional players in Southeast Asia, Europe and Africa and now the Middle East. It has previously done similar deals in Latin America as well as with Uber’s U.S. rival Lyft. DiDi said yesterday it would invest in Careem to strengthen its market position across the region. The two companies said they would cooperate on smart transportation technology, product development and operations. Careem and DiDi declined to comment on the size of the Chinese company’s investment in Careem. Founded five years ago, Dubai-based Careem has 12 million customers in 80 cities ranging from Pakistan to Turkey, Lebanon, Saudi Arabia, Jordan, Egypt and Morocco. It is ahead of Uber in Pakistan and a strong second player to Uber in other regional markets, according to research firm SimilarWeb, which tracks consumer mobile and web usage habits. Reuters
Mazda Motor Corp said it would become the world’s first automaker to commercialize a petrol engine using technology that deep-pocketed rivals have been trying to engineer for decades, a twist in an industry that is increasingly going electric. The Japanese automaker, with a research and development (R&D) budget a fraction of those of major peers, plans to sell cars from 2019 with compression ignition engines - a type of cleaner, more fuel efficient petrol engine that has eluded the likes of Daimler AG and General Motors Co. “It’s a major breakthrough,” said Ryoji Miyashita, chairman of automotive engineering company AEMSS Inc. The announcement places traditional engines at the centre of Mazda’s strategy and comes just days after Mazda said it will work with Toyota Motor Corp to develop electric vehicles. “We think it is an imperative and fundamental job for us to pursue the ideal internal combustion engine,” Mazda R&D head Kiyoshi Fujiwara told reporters. “Electrification is necessary but... the internal combustion engine should come first.” A homogeneous charge compression ignition (HCCI) engine ignites petrol through compression, eliminating spark plugs. Reuters