New wholesale market operational in Q2 Municipal affairs Page 2
Tuesday, February 7 2017 Year V Nr. 1228 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kam Leong Gaming
Analysts: gaming stocks in limbo Page 6
Monetary
Total deposits with Macau banks up slightly Page 6
Gaming
Paradise appoints new CFO Page 7
www.macaubusinessdaily.com
Investors
Foreign institutions shrink their positions in China’s government bonds Page 9
Markets
Chinese insurers lead national markets rise amid pension fund speculation Page 9
Fewer newly incorporated companies Registrations
The number of new companies registered in the territory dropped for the second year in a row in 2016. The total value of their registered capital also slumped by nearly half compared to 2015. The majority were small-scale companies with capital under MOP50,000. Page 5
Following orders
The Macau Federation of Trade Unions said yesterday that a notable number of labour rights cases it handled last year were about labour affairs, in particular, those related to unreasonable lay-offs and back-pay in the construction industry. It is urging the gov’t to develop better regulations to oversee construction contracts and workers’ benefits.
Labour affairs Page 3
HK Hang Seng Index February 6, 2017
Ho Chio Meng trial Incumbent assistant prosecutor-general Vong Vai Va took the stand yesterday, testifying that the city’s ex-top prosecutor had ordered local prosecutors to request and keep the contraband agar wood confiscated by Macau Customs, adding that the former official only returned the wood after an investigation into his alleged appropriation was initiated. Page 4
Mainland services robust
PMI China’s service sector slowed marginally last month, the Caixin General Services Purchasing Managers’ Index shows. However, the data indicates that the service sector remains strong and is increasingly important in the evolved economic model of China. Page 8 23,348.24 +219.03 (+0.95%)
Worst Performers
China Life Insurance Co Ltd
+7.48%
China Resources Power
+1.37%
Wharf Holdings Ltd/The
-1.20%
Hang Lung Properties Ltd
-0.21%
Ping An Insurance Group Co
+4.59%
CLP Holdings Ltd
+1.32%
Galaxy Entertainment Group
-0.42%
Cathay Pacific Airways Ltd
-0.19%
+2.13%
Tencent Holdings Ltd
+1.17%
CNOOC Ltd
-0.41%
Sino Land Co Ltd
-0.16%
BOC Hong Kong Holdings
+1.81%
Bank of China Ltd
+1.14%
China Shenhua Energy Co
-0.37%
Swire Pacific Ltd
-0.13%
Belle International Holdings
+1.63%
New World Development
+1.11%
Sands China Ltd
-0.33%
CK Hutchison Holdings Ltd
-0.11%
China Mobile Ltd
17° 19° 12° 20° 12° 18° 13° 17° 14° 17° Today
Source: Bloomberg
Best Performers
WED
THU
I SSN 2226-8294
FRI
SAT
Source: AccuWeather
Construction sector tops labour issues
2 Business Daily Tuesday, February 7 2017
Macau Police
PJ appoints new gaming crime division head
yesterday. Mr. Leong joined the PJ in 1993. He was assigned as the Director of the Special Investigation The Judiciary Police (PJ) has appointed Luís Leong as the director Division in 2011 and was appointed as the vice director of GCD last year. of its Gaming-related Crimes Meanwhile, Mr. Suen joined the PJ in Division (GCD) and Suen Kam Fai as the new principal of the Judiciary 1990 and previously served as the director of GCD until 2016, when Police School. Chau Wai Kuong, the Director of PJ, administered the he was assigned to be the viceprincipal of the police school. C.U. inaugurations of the two officials
Municipal affairs
IACM: new wholesale market hopefully opening in Q2 Cecilia U cecilia.u@macaubusinessdaily.com
T
he city’s new wholesale market is expected to start operations within the second quarter of this year, said president of the Civic and Municipal Affairs Bureau (IACM), José Tavares, in his response to legislator Kwan Tsui Hang’s enquiry. The IACM president said the Bureau is currently negotiating the details of the market with the Infrastructure Development Office, the Transport Bureau, and the market operator as well as wholesalers, in order to ensure the smooth relocation of the market and to organize the operational procedures. In the interpellation, the legislator enquired about the progress of the allocation of berths at the new market. According to Mr. Tavares, all berths at the current wholesale market are being rented. But he added that applicants on the waiting list for berth rentals would be offered a berth in order, once there is availability in either the current or the new market. The legislator also questioned the effectiveness of the Bureau’s ‘single-entry mechanism’ for wholesalers without a berth to operate wholesale activities inside the market, stating that the mechanism is
actually limiting the business of these types of wholesalers since they are only allowed to run their businesses after eleven o’clock each morning. But the IACM president said the
government would continue running this mechanism in the new wholesale market, claiming adjustments could be made to the policy at that time based on the situation.
The government department stressed the importance of introducing new wholesalers in order to encourage competition to stabilize prices.
Business
Pollution
Capitol Theatre expected to reopen mid-year
80 pct of diesel vehicles pass inspections
Local property investor and developer William Kuan Vai Lam expects the Capitol Theatre could be reopened in the middle of this year after renovation works are completed, local broadcaster TDM English News reported yesterday. The businessman told the outlet that judicial proceedings for the old cinema-mall complex in the city centre are likely to be complete soon, following years of disputes between property investors and alleged illegal vendors. “The litigation among the shop owners on the ground floor is finishing. After it finishes there will be a large-scale and comprehensive renovation project. Then we’ll have a base for the cultural and creative sector,” said Mr. Kuan, as quoted by the broadcaster. “With the water and electricity supply in place, it’ll only take two to three months to finish the work. We’re hoping to reopen the cinema in the middle of this year,” he added. In a previous interview with Business Daily, the businessman revealed the renovation works of the property would cost between MOP20 million (US$2.5 million) and MOP30 million. In addition to a 380-seat cinema on the fourth and highest floor, there are also around 100-plus shop spaces inside the property, of which most are currently vacant.
Nearly 80 per cent of the diesel vehicles inspected for the whole year of 2016 met the current standards for gas emissions, according to a statement released by the Transport Bureau (DSAT) last week. A total of 709 vehicles were randomly inspected during 95 joint road checks conducted by DSAT and the Public Security Police Force (PSP) in 20 different locations around the city last year. Of the total vehicles inspected, 562 passed inspection, representing an increase of 4 per cent, or 41 vehicles, compared to one year ago. Among the 147 vehicles that did not pass the test, 118 were light trucks and 14 were heavy trucks. Eleven taxis were also found to be in violation of
the standard emission requirements. The city’s laws currently regulate the maximum value for emissions of polluting exhaust gases of vehicles at 60 HSU (Hartridge Smoke Units), a figure which will be tightened to 45 HSU this July. According to DSAT, owners of diesel vehicles that fail inspections conducted after the implementation of the new limit, will have to pay a fine of MOP600 and will be required to submit their vehicles for an extraordinary inspection that will cost MOP2,000. HSU is a measure of smoke opacity on a scale from 0 to 100, in which 0 is invisible smoke (zero opacity), and 100 is thick, dense smoke (total absorption or complete opacity). S.Z.
Business Daily Tuesday, February 7 2017 3
Macau
Labour Rights
FOAM receives 1,014 labour rights cases in 2016 The majority of the cases were related to labour affairs, according to the association Cecilia U cecilia.u@macaubusinessdaily.com
T
he Macau Federation of Trade Unions (FOAM) handled some 1,014 cases related to labour rights in 2016, of which cases regarding labour affairs took up the majority, the union said yesterday in its annual review. Legislator Ella Lei Cheng I, who is also the vice-president of FOAM, remarked that the number of cases registered a slight decrease compared to 2015. According to the FOAM data, the number of cases related to labour affairs accounted for 40 per cent of the total, or 408 cases, involving 805 labourers. In particular, a significant number of cases were to do with construction workers, suggesting that many workers were unreasonably dismissed or owed payment, said Ms. Lei. She also addressed the issue of unfair treatment between local and non-resident workers, with local workers being dismissed or requested to cease work. “Last September or October, there was a group of over 100 local construction workers who had worked for a large-scale construction project at Cotai and whose jobs were halted by the subcontractor within a day,” the FOAM vice-director
claimed. She added that the issue of back pay in the construction industry was common last year, claiming that some workers also found their wages had been unreasonably deducted after finishing their work. “There are many issues in which workers don’t know which contractor has actually hired them,” said Ms. Lei. “For instance, the major contractor claims they have paid the wages but the subcontractor says they haven't received it.” The unionist legislator thus suggests that the MSAR government develop regulations to discern and manage construction contracts, and consider implementing regulations to mandate that major contractors pay workers hired by subcontractors when there is a delay in wage payment. She believes such a proposal would encourage workers to lodge complaints when issues arise and compel the main contractors to manage these situations better.
Job seeking difficulties
Meanwhile, Ms. Lei said that some job seekers are experiencing difficulty in finding jobs. She claimed her labour group had dealt with cases where the job seekers received no reply from the Labour Affairs Bureau after months of applications. “There were cases in which the applicants didn’t receive any referral
to other agencies after they applied at the government department,” said Ms. Lei, adding there were also cases where the applicants were referred to a job that offered a much lower salary than the market rate. She claimed that many employees have also been forced to look for new jobs as many companies have shut down amid the city’s economic adjustment phase. Following the completion of major construction projects in the near future, the union’s vice-president expects more construction workers will face unemployment in the year ahead.
Occupational injuries
On the other hand, Ms. Lei pointed out
that disputes relating to occupational injuries were also a significant issue last year. Despite the implementation of the revised law on occupational injuries, the union vice-head said there had been many complaints about employers delaying payment of compensation to workers because of insufficient documentation. “For example, an injured worker was advised to rest for 300 days, but the insurance company appointed another doctor and evaluated that the injury rate of the worker was not as high as the employee had previously reported,” said Ms. Lei. “And so there are disputes on the days allowed for recovery.”
4 Business Daily Tuesday, February 7 2017
Macau Opinion
Albano Martins* 2016 / 2017 GDP and inflation Forecasting is an “artistic” exercise that does not always go well. A long time ago, a local university predicted the growth of Macau’s economy to be 18 per cent for 2012! Well, it was not the only one to get this figure wrong. For the same year, another renowned European institution advanced a growth of 15 per cent for Macau! In fact, GDP grew 9.2 per cent in 2012! Two weeks ago, I commented in a Portuguese newspaper, before Macau’s inflation figures for 2016 were released by DSEC, that there was a 99 per cent chance of inflation in Macau being 2.37 per cent in 2016! Which is what happened, as we now know! Interestingly, according to the same newspaper, on the same day DSEC disclosed the data for 2016 inflation, the same local university released its forecast of 2.6 per cent for the inflation of Macau in 2016! There are days that start badly! Let’s put it this way: it is not too difficult to forecast the final value of inflation in the final stage of the year. Throughout 2016, until November, the monthly average growth of the CPI, in absolute value, was only 0.124! In order for inflation to be 2.6 in December, this increase would have to have risen to 3.1 in that month! Well, the increase in absolute value of the CPI stood at 0.19 in December! For 2016, my predictions point to a real GDP fall of 1.6 per cent! By 2017, GDP could grow back to around 4.2 per cent, ranging from 3.5 to 4.5 per cent. Regarding inflation, it could be between 2.19 and 2.55 percentage points, and in a worst- case scenario, if real estate and gaming see double-digit growth, it could reach values of around 2.66 per cent! If the CPI is to evolve in absolute terms the way it did in 2016, inflation would be much lower, at around 1.43 per cent! Mathematically, it is expected that until May 2017, inflation will tend to go down and from then on to increase gradually. We are at the beginning of the year and the world economy will be in so much trouble with Trump’s election and his suicidal policies. We have two ways in Portuguese to refer to the actual US President and his policies: “trampa” and “tra(m)palhice” - the last word being my view of his nonsense policy. I will not be so impolite as to translate the first word! So, forecasts will be an even more “artistic” exercise in 2017! * an economist and contributor to this newspaper
Ho Chio Meng trial
For a few pieces of wood Witnesses testified that former Prosecutor-general Ho Chio Meng had kept the confiscated agar wood Nelson Moura nelson.moura@macaubusinessdaily.com
was initiated by the incumbent Prosecutor-general Ip Song Sang.
ormer Prosecutor-general Ho Chio Meng had ordered local prosecutors to request and keep the valuable confiscated agar wood for his personal use, said the assistant prosecutor-general Vong Vai Va yesterday. The trial of the corruption case of the former official resumed yesterday after the Chinese New Year holiday, hearing four more witnesses regarding the ex-official’s alleged appropriation of parts of the agar wood confiscated by Macau Customs between 2013 and 2014. According to Mr. Vong, the ex-top prosecutor had instructed officers of the Prosecutor’s Office to move the apprehended wood from the Customs’ warehouse to a deposit room on the 5th floor of his office in the Hotline Building. Claiming he found the decision of Mr. Ho “unusual and not common” at that time, the assistant prosecutorgeneral added that these pieces of wood kept by Mr. Ho were only returned to the Office after an investigation into the issue
The investigation
F
Ac c o r d i n g t o M r . V o n g , a separate investigation into illegal appropriations of public material was started by the incumbent prosecutor-general in January 2015, as the prosecutors were investigating the disappearance of 90 bags of confiscated agar wood and found some pieces inside the resting room on the 16th floor of the Hotline Building, together with various personal belongings of Mr. Ho. Mr. Vong added that the former prosecutor-general delivered the pieces personally on February 5, 2015 after he was invited for questioning by the Commission Against Corruption (CCAC) on the same day and was requested to return the pieces. In addition, on February 9, Mr. Ho returned another bag of six smaller wood pieces – said to be the most valuable - said Mr. Vong and two other witnesses. However, the former top prosecutor yesterday denied his appropriation of the wood, saying the purpose of storing the apprehended wood was for “inspection purposes only,”
adding that all the wood had been returned on the same day when he was requested. M r . V o n g c l ai m e d that th e investigation against the former official’s alleged appropriation was dropped later on as there wasn’t enough evidence to prove the pieces had been moved out of the building.
Personal checks
On the other hand, a former evidence officer of the Office, Chen Ka Kia, and a current employee of evidence registration at the Office, were also questioned yesterday. They confirmed that Mr. Ho had entered the deposit room at least two times alone, and that experts from the Civic and Municipal Affairs Bureau and from Mainland China had also entered the room twice to inspect the wood. Claiming that they had spoken to their superiors after pieces of the agar wood found missing from the room, the two witnesses said they were told the disappearance was because “Mr. Ho wanted to see the wood”. Leong Weng Tak, former chief of the technicians department of the Office also testified yesterday that on two occasions Mr. Ho had directly requested him to move the “best and most beautiful” pieces of the wood from the storage room to the resting room on the 16th floor. The trial will continue tomorrow.
Tourism
CNY visitor arrivals jump Hotels in the city enjoyed higher occupancy rates than one year ago, except five-star hotels Total visitor arrivals for the past Chinese New Year holiday registered a nearly double-digit increase yearon-year, but local five-star hotels saw their average occupancy slightly down compared to one year ago, according to the Macao Government Tourism Office (MGTO). For the seven-day period between January 27 and February 2, the city welcomed a total of 930,000 visitors, excluding non-resident employees and students, a improvement of 9.9 per cent over the corresponding period last year. Of the total, 71 per cent, or 660,000, were from Mainland China, a significant increase of 13.8 per cent yearon-year, while those from Hong Kong also jumped by 5 per cent year-onyear to some 200,000. However, the number of visitors from Taiwan plunged by 15.9 per cent year-on-year to 20,000 and international visitor arrivals also dropped by 3 per cent year-on-year to 50,000. Meanwhile, the average occupancy rate of local five-star hotels fell slightly by 0.7 percentage points
year-on-year to 95.5 per cent during the period, but four-star and threestar hotels both recorded increases, up by 0.2 percentage points and 4.8 percentage points to 92.8 per cent and 96.2 per cent, respectively. On the other hand, the average
room rate of hotels during the seven-day period amounted to some MOP1,800 (US$225), a decline of 3.1 per cent compared to one year ago. In fact, local five star hotels were the only class of hotel to see their room rates go down during the holiday, decreasing by 3.6 per cent yearon-year to MOP2,080 per night on average. However, room rates of fourstar hotels grew 2.4 per cent yearon-year to MOP1,520, while those of three-star hotels also went up slightly by 0.4 per cent to MOP1,460. K.L.
Business Daily Tuesday, February 7 2017    5
Macau
Business
Fewer new company registrations in 2016 The number of newly registered companies in the MSAR recorded a second consecutive year-on-year decrease Kam Leong kamleong@macaubusinessdaily.com
T
he number of new incorporations in the MSAR declined for a second consecutive year in 2016, whereas the number of companies dissolved jumped for the fourth consecutive year, official data from the Statistics and Census Service (DSEC) showed yesterday. In 2016, a total of 4,392 new companies were incorporated in the territory, decreasing by 631 from 2015. In addition, the total value of registered capital
reached MOP743 million, plunging by 44.1 per cent year-on-year. In terms of the amount of registered capital, 72.1 per cent of the new companies registered in the MSAR had capital under MOP50,000 last year, with their total value of capital accounting for 11.2 per cent of the total, or MOP82 million. Meanwhile, only 84 new companies were registered with capital of MOP1 million or above, however their total capital value reached some MOP492 million. According to DSEC, the origin of capital for 686 of the new companies
registered last year was Mainland China, totalling MOP105.9 million. Of this total, some MOP53.4 million for 505 companies came primarily from the nine provinces of the Pan-Pearl River Delta. The other two major sources were Beijing and Shanghai, which provided capital of MOP31.3 billion and MOP7.3 million to the city’s new companies, respectively. Analysed by industry, there were 1,416 new companies operating in the wholesale & retail industry, and 1,159 providing business services, with the value of registered capital amounting to MOP135 million and MOP334 million, respectively. Of the new companies, 2,943 were set up with solely local shareholders, while 915 were by foreign shareholders of just one country. Some 460 new companies had a combination of
shareholders from Macau and other countries, and 74 had other combinations of shareholders.
Dissolution
On the other hand, the number of companies dissolved in 2016 jumped by 31.1 per cent year-on-year to 780, the fourth consecutive annual increase, with the value of registered capital of these companies totalling MOP651 million. Of these companies, 270 were businesses related to the wholesale & retail trade, with total capital amounting to MOP62.8 million, while some 207 companies providing business services were also dissolved in the year, with total capital of MOP20.2 million. In addition, some 76 real estate firms were closed during the year, with total capital reaching MOP479.9 million. At the end of 2016, the number of registered companies in the city had increased by 3,619 year-on-year to 56,676. Meanwhile the number of commercial offshore companies went down by 19 year-on-year to 453, according to DSEC.
6 Business Daily Tuesday, February 7 2017
Macau
Monetary
Total bank deposits
marginally up in December
Deposits with local banks from residents and the public sector both increased, while those from non-residents dropped Kam Leong kamleong@macaubusinessdaily.com
T
he city’s total deposits with the local banking sector amounted to MOP942.1 billion (US$177.8 billion) in December 2016, a slight increase of 0.7 per cent month-onmonth despite the decline in deposits from non-residents. According to the latest official data released yesterday by the Monetary Authority of Macau (AMCM), deposits from residents and the pubic sector both recorded month-on-month increases, up by 2.7 per cent and 6.2 per cent, amounting to MOP518.9 billion and MOP174.8 billion, respectively. H o w ev e r, l o c a l ba n ks s a w
deposits by non-residents decrease 6.2 per cent to MOP248.3 billion, compared to MOP264.7 billion one month ago. Of the total deposits, nearly half, 47.4 per cent, were denominated in Hong Kong Dollars (HKD), followed by U.S. Dollars (USD) and Macau Patacas (MOP), accounting for 23.2 per cent and 21.7 per cent, respectively. Meanwhile, the share of total deposits in Renminbi (RMB) only amounted to some 4.5 per cent.
Loans
On the other hand, local banks approved a total of MOP422.7 billion in domestic loans to the local private sector during the month of December, an increase of 1.8 per cent compared to MOP415 billion one month ago.
According to AMCM, total loans granted to the gaming sector increased by 1.3 per cent quarter-to-quarter for the fourth quarter of 2016, while those to the sector of electricity, gas and water also jumped slightly by 0.7 per cent from one quarter ago. However information technology and manufacturing industries saw their approved loans by local banks drop by 9.1 per cent and 8.4 per cent quarter-to-quarter respectively, while loans to restaurants, hotels and similar establishments also declined by 5.7 per cent from the third quarter of 2016. Of the total domestic loans in the month of December, 65.6 per cent, or some MOP277.3 billion, was denominated in HKD, while some MOP123.9 billion were MOPdenominated loans, accounting for 29.3 per cent of the total. For the same month, external loans approved by the banking sector, however, decreased by 2.6 per cent month-on-month, of which
more than half, 53.4 per cent, were denominated in USD, amounting to MOP193.1 billion, followed by those denominated in HKD, accounting for 27.6 per cent of the total or some MOP99.8 billion. As at the end of the month, the loan-to-deposit ratio for the resident sector fell by one percentage point from the previous month to 60.9 per cent, while the non-performing loan ratio was 0.2 per cent, virtually unchanged from one month earlier, but up slightly by 0.1 percentage point from one year ago, according to AMCM.
Money supply
M ea n w h i l e, th e c u r r e n c y i n circulation increased by 1 per cent month-on-month to MOP13.6 billion in December, whereas demand deposits declined 8 per cent, leading M1 to decrease by 6.2 per cent monthon-month to MOP63.7 billion. As quasi-monetary recorded a month-on-month growth of 3.8 per cent, M2, the sum of quasimonetary and M1, increased 2.5 per cent month-on-month to MOP532.4 billion in December, of which 30.6 per cent was patacas. The shares of HKD, RMB and USD were 54.3 per cent, 4.2 per cent and 8.6 per cent, respectively.
Gaming
Doing the limbo Stocks of Macau gaming operators are in limbo pending the release of gross gaming revenue results for February, after a soft January and mixed results for CNY Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com
In the wake of January’s gross gaming results - with Chinese New Year beginning at the end of the month, contrary to previous years - analysts at Wells Fargo are noting that operators’ stocks are ‘in limbo’, as the first month’s results came in ‘below expectations’, and ‘mixed checks’ during the Chinese New Year period are muddying the waters for February’s gross gaming revenue figures. Contributing to the confusion are ‘softer than expected’ room rates during the aforementioned period, add the analysts. According to the analysts, rates were 40 per cent down year-on-year for the ‘larger’ hotels in the MSAR, contrary to the survey results from the analysts, which had seen rates ‘improving’ since the first of last year’s two new properties came online in August. Regarding the first month of the year, the group notes that the ‘results remain choppy’. Pointing to
year-on-year comparisons, the group sees that three of the six months saw results down, noting that due to a ‘disappointing January and mixed signals on Chinese New Year, we think stocks are in limbo and could turn on checks of Chinese New Year’.
Lucky?
Results for the first month of the year saw the MSAR rake in MOP19.25 billion (US$2.4 million) in gross gaming revenue, a 3.1 per cent increase yearon-year, and the sixth consecutive month of year-on-year revenue increases seen in the territory since the beginning of the downturn. In a previous report, analysts at Wells Fargo pointed out that despite overall results having shown that mass market revenue had generally overtaken that of VIP, ‘we expect the VIP segment to continue driving market growth in 2017, […] we estimate VIP drove 85 per cent of 4Q revenue growth’ noted the analysts, pointing out that this could be a ‘temporary phenomenon, dependent on
a number of factors including: ‘the impact of tighter capital controls on individual, premium mass customers and the liquidity and wealth effects of credit growth and the Chinese housing boom flowing through the economy’.
Raided
In regards to the withdrawal of Las Vegas Sands founder Sheldon Adelson from a deal to partially finance a new stadium for the American football team the Oakland Raiders, for which Adelson was set to contribute US$650 million of the now-US$1.9
billion stadium to be located in Las Vegas, the analysts note that the move is leading to ‘uncertainty’ as to whether the team’s move to the city will go through. ‘The Governor (of the U.S. state of Nevada) has signed off on a bill to raise the hotel tax to finance US$750 million of the stadium and the Raiders have committed $500 million. At this point, it’s unclear how the Raiders will finance the remaining US$650 million,’ notes the group. The state of Nevada has indicated that it will not provide further financing beyond its current commitment.
Business Daily Tuesday, February 7 2017 7
Gaming Resignation
Paradise Entertainment appoints new CFO
G
aming machines manufacturer and casino service provider Paradise Entertainment Limited has a new Chief Financial Officer, effective yesterday, according to a filing with the Hong Kong Stock Exchange. The group’s announcement notes that Ms. Stella Ho, the outgoing Chief Financial Officer and Company Secretary for the company, will be replaced by Mr. Chan Kin Man in both capacities. The group notes that Ms. Ho has no disagreements with the company’s board and her resignation is ‘due to personal reasons’.
Mr. Chan joins the group after previously acting as Chief Financial Officer for Hong Kong-listed Imperial
Pacific Holdings up until this month, having started in July of last year. Prior to his stint at the Saipan
temporary casino operator, Mr. Chan served as CFO and company secretary for local casino operator Macau Legend Development Limited, beginning in March 2012. Paradise issued a profit warning regarding its 2016 financials on December 2 of last year, noting the group will ‘record a substantial loss’ for the year when compared to 2015. For the third quarter of 2016, total revenue of the company increased 38.6 per cent quarter-to-quarter to HK$352 million, which was ‘mainly attributable to the increase in sales of live multi game terminals’, according to its last unaudited results. K.W.
Gaming
PAGCOR reportedly closes down another casino in Clark Hard times for the casino business in the Philippines as the Casablanca Casino shuts down Sheyla Zandonai sheyla.zandonai@macaubusiness.com
Last Friday, the Philippine Amusement and Gaming Corporation (PAGCOR) ordered the closure of another gaming parlour situated in the Clark Freeport Zone in Luzon, the main island of the Philippines, according to local media reports. The Casablanca Casino, located at the Stotsenberg Hotel, was reportedly shut down due to its inability to fulfill its escrow requirements. Andrea Domingo, PAGCOR’s Chair was quoted as saying: “though the
company was granted several extensions, the operator was not able to meet the escrow requirements.” Casablanca fell short by about P255 million (MOP41 million), according to local media. Escrow refers to a financial instrument or asset held by a third-party – the escrow agent – on behalf of two other parties that are in the process of completing a transaction, until predetermined contractual obligations have been fulfilled. Frontier Capital Group Ltd., a company headquartered in Sydney, Australia, and primarily engaged in
the exploration of mineral deposits, acquired the Casablanca Casino and the hotel in February 2016, from the Stotsenberg Leisure Park & Hotel Corporation for a consideration of US$26 million (MOP20.7 million). The casino operated 36 table games and 190 slot machines, and its name
was said to be a reference to the classic American movie starring Ingrid Bergman and Humphrey Bogart, according to the company. Jack Lam’s Fontana Leisure Park and Casino, which shut down last year, was also located in the Clark Freeport Zone. The CEO of the Hong Kong-listed Jimei Group was accused of conducting illicit online gambling and illegally employing some 1,300 Chinese nationals. The tycoon is said to have fled to Macau before his casino was shut down on December 2 last year. He reportedly met with the Macau gaming authorities last month. According to SunStar Pampanga, four casinos continue to operate in Clark: the Casino Filipino, Widus Casino, Royce Casino and Midori Casino.
8 Business Daily Tuesday, February 7 2017
Greater China Caixin PMI
Services sector extends strong growth but pace eases The strong reading mirrored improvements in manufacturing surveys last week Elias Glenn
G
rowth in China’s services sector remained robust in January as companies reported a solid increase in orders, though the pace of expansion eased from the previous month, a private business survey showed. The services PMI fell marginally to 53.1 in January on a seasonally adjusted basis, from 53.4 in December, the Markit/Caixin services purchasing managers’ index (PMI) showed. But it remained well above the 50-mark that separates expansion in activity from contraction on a monthly basis.
rebalance the economy toward services and consumption, which are the biggest drivers of growth in the world’s second-largest economy. Expansion in new business for services firms slowed slightly from December but remained robust. And service firms remained strongly positive about the business outlook for the next 12 months, citing planned company expansions, new product developments and forecasts of strengthening client demand. A sub-index for business expectations matched an 18-month high with a reading of 60.8. However, input prices rose the fastest in nearly four years. And w hi l e c o m p a n i es a l s o rai s e d
their output prices the most since August 2015, companies said tough competition held back their ability to raise prices, suggesting a squeeze in profit margins. Caixin’s composite PMI covering both the manufacturing and services sectors showed a similar pattern of solid but slightly easing growth, falling to 52.2 in January from the previous month’s near 4-year high of 53.5. A number of economists have predicted a loss of growth momentum this year as a property boom cools and the boost from previous stimulus starts to wear off. Chinese firms are also facing the prospect of higher borrowing costs. The central bank has begun to raise key short-term rates in a sign that policymakers will focus on controlling high debt levels and
cooling down overheated property and commodities markets. But the rate increases so far have been modest, suggesting authorities remain wary about tapping the brakes too hard and stunting economic growth. “The economy continued to recover, but the expansion rate has slowed. Meanwhile, inflationary pressures continued to build up as prices increased further,” said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, in a note with the PMI data. “The economy is unlikely to maintain the pace of expansion seen in the fourth quarter of last year given that the manufacturing sector’s willingness to restock has declined. China’s economic growth may decelerate after the first quarter of this year.” Reuters
Key Points China factory, services surveys point to further solid growth Some analysts say signs of easing momentum need to be watched Stable growth would give gov’t more room to tackle debt risks Improving business conditions prompted service companies to hire staff at the fastest pace in 20 months. The strong reading mirrored improvements in manufacturing surveys last week, giving China’s policymakers more room to focus on containing the financial risks from a sharp rise in debt. Though activity in services slowed slightly from December, strong growth looks set to continue, in line with policymakers efforts to
Investors
Foreign holdings of bonds fall for first time since 2015 Beijing opened up its interbank bond market to more types of foreign investors in February 2016 Foreign investors reduced their holdings of China’s government bonds in January for the first time in more than a year, official data showed yesterday. Foreign institutions’ holdings of Chinese treasury bonds fell RMB1.9 billion (US$276.71 million) last month, bringing the total to RMB421.8 billion, according to Reuters calculations based on data from the official bond clearing house. It was the first drop in foreign buying since October 2015. In December, foreigners raised their holdings of Chinese treasury bonds by RMB6.9 billion. And their holdings at the end of 2016 were 70 per cent higher than at end-2015. Overall, foreign institutions decreased their holdings of all types of Chinese debt by RMB25.9 billion in January to RMB753.0 billion, data from the Central Depository and Clearing Co. showed. In 2016, foreigners purchased RMB176.3 billion of all types of Chinese bonds. Traders said they were not so surprised by the fall in foreign holdings of Chinese debt and noted it was hard to tell if one month’s data would mark a change in trend. They saw the rise in the holdings last year as a result of Beijing’s attempt to attract foreign investment by easing the restrictions. Beijing opened up its interbank bond market to more types of foreign
investors in February 2016 and relaxed foreign exchange repatriation rules in May. China’s official inclusion in the International Monetary Fund’s reserve basket, known as Special Drawing Rights, on Oct. 1, also boosted foreign interest. “The rise last year was not that dramatic, given the base number was quite small,” said a trader at a Chinese bank in Shanghai. Holdings by foreign institutions account for less than 2 per cent of the Chinese bond market, according
to Reuters calculations, but capital inflows have been welcome for policymakers as falls in the yuan fuel worries about capital flight. Signals from China’s central bank that it is moving to tighten policy this year may also dissuade foreign investors, the trader said. The People’s Bank of China surprised financial markets on Friday by raising short-term interest rates on the first day back from a long holiday. While the rate increases were modest, they reinforced views that Chinese authorities are intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fuelled stimulus.
Volatility in China’s yuan currency was another concern, traders said. The yuan fell nearly 7 per cent against the dollar last year, and is widely expected to recoil further in 2017, though emerging currencies generally regained some ground in January as the dollar lost steam. Low-risk government bonds have long among the favourites by overseas investors, and government-backed Chinese policy banks bonds have been gradually included in foreigners’ portfolios.
‘Holdings by foreign institutions account for less than 2 per cent of the Chinese bond market, according to Reuters calculations’ However, foreign buying of policy bank bonds in January also decreased by RMB20.9 billion from December, when it increased by RMB12.6 billion from the previous month, data showed. Chinese policy bank bonds are issued by the China Development Bank, the Agricultural Development Bank of China, and the Export-Import Bank of China. Reuters
Business Daily Tuesday, February 7 2017 9
Greater China In Brief Ranking
Banks, dot-com among most valuable brands
Hong Kong Stock Exchange trading lobby
Markets
Insurers jump in Hong Kong amid pension fund speculation Investors have been waiting for the country’s local retirement savings managers to put their money into equities Jeanny Yu
Chinese stocks in Hong Kong posted their biggest gain in a month as insurers rallied. The Hang Seng China Enterprises Index climbed 1.6 per cent to 9,840.26 at close. Insurers accounted
for five of the seven biggest gainers on the gauge, with China Life Insurance Co. having its largest one-day advance since August 2015. Analysts had a range of reasons for the sudden rally, from speculation Chinese pension funds are about to enter the stock market to bets
higher borrowing costs would boost investment yields. Investors have been waiting for the country’s local retirement savings managers to put their money into equities after policy makers announced rule changes in 2015. China last week raised the interest rates it charges in open-market operations and on funds lent via its Standing Lending Facility. “H shares are rallying as investors are speculating that pension funds will be allowed to invest in the stock market soon,” said Linus Yip, First Shanghai Securities strategist in Hong Kong. “It’s a big positive catalyst for insurers, who are managers of most of those funds, as they will be able to diversify their portfolios and investment yields will get boosted.” Chinese investors are returning from the week-long Lunar New Year holiday that ended on Feb. 2 after turnover on the nation’s exchanges slid Friday to the lowest for full-day trading since August 2014.
“The central bank’s rate hike moves have improved market confidence” Jerry Li, analyst with China Merchants Securities Hong Kong
The Hang Seng Index rose 1 per cent, while the Shanghai Composite Index added 0.5 per cent. China Life surged 7.5 per cent in Hong Kong, while New China Life Insurance Co. gained 6.8 per cent.
Possible Inflows
The country’s pension fund managers have been handing over some of their cash to the National Council for Social Security Fund, which will oversee their investments in securities including equities. The pension system has long suffered low returns by limits on its investments to deposits and government bonds. China’s 10-year sovereign bond yield was at 3.5 per cent yesterday, matching its highest level this year. The central bank has been tightening cash supply since August to curb leverage in the financial system and support the exchange rate. “The central bank’s rate hike moves have improved market confidence,” said Jerry Li, analyst with China Merchants Securities Hong Kong. “The uptrend in government bond yields is beneficial to insurers as their valuations are based on assumptions of long-term investment yields.” Bloomberg News
Most of the top 10 valuable Chinese brands in 2017 are owned by state-owned banks and Internet powerhouses, according to a report by Britain-based consulting firm Brand Finance. The Industrial and Commercial Bank of China, one of the five banking heavyweights in China, edges China Mobile to top the chart with a brand value estimated at US$47.8 billion, gaining over US$10 billion from 2016 and earning it the 10th place globally. Alibaba, China’s top e-commerce firm, boasts the most valuable brand among Chinese Internet companies, having the value surging by 48.5 per cent year on year to reach US$34.8 billion. Sectorial data
Cultural industry expands faster in 2016 China’s cultural industry saw more rapid growth last year, thanks, in part, to a boom in information transmission services, official data showed yesterday. The sector’s combined revenue amounted to RMB8.03 trillion (US$1.17 trillion) in 2016, up 7.5 per cent from a year ago, the National Bureau of Statistics (NBS) said in a statement. The growth rate was higher than the 6.9 per cent achieved in 2015. The NBS tracks some 50,000 companies across 10 cultural sectors -- six that offer cultural services and four involved in the manufacturing of cultural products. Cultural services saw robust growth. Monetary policy
PBOC to skip open market operations China’s central bank said it would skip open market operations yesterday. “The overall liquidity in the banking system is staying at a relatively high level,” the People’s Bank of China (PBOC) said in a statement on its website. In order to “keep liquidity basically stable in the banking system”, the central bank decided to skip the reverse repurchase agreement operations on Feb.6, it added. In early trade yesterday, the volume weighted average of the seven-day repo rate was at 2.35 per cent, down 14.64 basis points from the previous closing average rate. Disappearance
Posts deleted about missing Chinese billionaire Scores of China social media postings about a well-connected billionaire who went missing from a Hong Kong hotel have been deleted, pointing to what appears to be heightened sensitivity in Beijing over the case of Xiao Jianhua. Mystery surrounds the whereabouts of Xiao, one of China’s richest men who has close ties to some of its leaders and their relatives. He was last seen at Hong Kong’s Four Seasons hotel in late January. Authorities in Beijing have declined to comment on Xiao’s case.
10 Business Daily Tuesday, February 7 2017
Greater China Commodities
Elastic band: Domestic speculators ping global rubber prices to 5-year high Over the past four months, rubber prices have more than doubled in a wild swing propelled by China’s cash-rich investors Yuka Obayashi
F
irst, Chinese speculators came for coking coal and iron ore, catapulting markets into orbit. Now, they’re carpetbagging a different commodity, pushing it to its fastest price rise in more than a quarter of a century - rubber. Traders say Chinese investors are punting on global rubber demand surging on revived growth in China stoking the auto sector, allied with hope a President Trump stimulus will stoke the U.S. economy. The world’s biggest tyre maker, Bridgestone, has already warned it may have to lift product prices. These bets are likely to continue once China is fully back in business after the Lunar New Year break, traders say. They come just as output in key Southeast Asia producer countries enters a seasonal drop exacerbated by recent floods in Thailand - and have made rubber an even
hotter property than top-demand commodities like lead and steel. Asia benchmark rubber futures at the Tokyo Commodity Exchange (TOCOM) hit their highest levels in more than five years last week and climbed 26 per cent in January before giving up some gains during the Chinese New Year holiday - their biggest monthly leap since at least 1990. That’s already stoked interest in new production in places like India. “There was a round of speculation on rubber in China in January,” said Quan Shuwen, an analyst at the Shanghai office of Japanese brokerage Okachi. “Supplies are quite tight, demand from downstream enterprises is gradually getting stronger in China, which will very likely further push up prices.” Over the past four months, rubber prices have more than doubled in a wild swing propelled by China’s cash-rich investors, underlining their ability to move markets after similar surges in commodities like coking
coal and iron ore. While uncertainties shroud what President Trump plans to do to boost the U.S. economy, the bet isn’t a blind wager as far as China is concerned. Beijing recently renewed incentives to boost demand for smaller, environment-friendly cars in what is the world’s biggest auto market. It also introduced tighter rules on how much freight trucks can carry, a move likely to increase demand for trucks - and their tyres.
Prices high for months
The rally has been further fuelled by concerns over output in Thailand, the world’s biggest rubber producer. After flash floods that affected the country’s main rubber growing region, the Rubber Authority of Thailand estimated it would cut the country’s rubber output in 2017 by 7.6 per cent. Thai rubber exporters say they have enough of the commodity stockpiled to ensure only minimal disruption to scheduled shipments. Still supply concerns linger, dealers said, as the industry moves into its ‘wintering season’ - the dry winter season from February to May in Thailand, Malaysia and Indonesia when output drops.
“With wintering season approaching and healthy tyre demand in China, prices will likely stay at high levels until March or April,” said Shinichi Kato, president of rubber material dealer Shinichi Kato Office. The spike in rubber prices hasn’t gone unnoticed by farmers elsewhere in Asia.
Key Points Jan Tokyo rubber futures rose most in a month since 1990 Investors bet on China growth, Trump demand hike in US Rubber rise after China money lifted coking coal, iron ore Amid Thai supply concerns, prices seen high for months Tyre makers warn of price hikes to reflect higher costs In India, industry officials told Reuters rubber output is likely to jump 15 per cent in 2017-2018, its highest in four years, as the higher prices prompt farmers to start tapping trees they had previously abandoned. The rally, however, is bad news for tyre makers as it eats into profits and trims margins - a hit that tyre makers in Japan and South Korea warn that they may pass on to customers. “It’s our basic policy to raise tyre prices to reflect higher raw material costs, but decisions will be made after taking market conditions, including rivals’ moves, into account,” said Fusamaro Iijima, a Bridgestone spokesman. At a major Korean tyre maker, a person with knowledge of the matter - speaking on condition of anonymity - said raw materials price increases are typically reflected in end-product prices two or three months down the line. Reuters
IPO
Mainland educational-technology company to enter Aussie share market ReTech has 30 per cent or more of its shareholders based outside China, making it ineligible for the Chinese exchange Chinese educational-technology firm, ReTech, looks to the Australian Securities Exchange index with an initial public offering set for March.
“One of the reasons we’re listing in Australia is its great reputation for education and training. We intend to do more collaborations with content producers here” Calvin Cheng, ReTech co-chair
Seeking A$22.5 million (US$17.2 million) to make the listing a reality, the figure would represent 20 per cent of the group’s A$112 million (US$86 million) value.
The Shanghai-based company operates by digitizes training material for organizations across China and is contracted by state-owned groups like Ping An Insurance and Bank of China. ReTech has also modernized training programs for multinationals like McDonalds, Mercedes Benz and Sephora. “We can gamify it, build quizzes around it or even make it teachable
through a virtual reality headset,” ReTech co-chair Calvin Cheng told The Australian Financial Review. “It’s very expensive sending trainers to address large workforces all over China. We can build a cartoon character to deliver the syllabus online and replace them all.” ReTech plans to license course material for Australian colleges and already has a deal in place with Queensland TAFE to begin remodelling food handling and mining safety courses for Chinese workers, once its listing goes ahead. “One of the reasons we’re listing in Australia is its great reputation for education and training. We intend to
do more collaborations with content producers here,” Cheng said. The major consideration for targeting the Australian market concerns regulation within China. ReTech has 30 per cent or more of its shareholders based outside China, making it ineligible for the Chinese exchange. “We’re a tad small for Hong Kong, so the best option outside that in terms of liquidity and P/E ratios turned out to be the ASX,” Cheng said. Chinese companies do face higher costs to join the list however and their prospectus discloses are expected to cost around A$3.6 million (US$2.76 million). Reuters
Business Daily Tuesday, February 7 2017 11
Asia Consumption
Australia retail sales hit two-year high However Data showed price gains remained very muted with the retail deflator rising just 0.3 per cent in the quarter Swati Pandey
A
ustralian retailers boasted their best quarter of sales in two years, a sign that the economy had likely averted its first recession in 25 years, though shoppers turned frugal into the Christmas holiday season. Data from the Australian Bureau of Statistics (ABS) out yesterday showed real retail sales for the quarter-ended December matched expectations to rise 0.9 per cent, from a flat July-Sept. Retail contributes about 17 per cent to Australia’s A$1.6 trillion annual economic output, and is the second-biggest employer after healthcare. Data on Australia’s gross domestic
product for the December quarter is due March 1 and economists generally expect the pace of growth to have rebounded after a shock contraction in the July-September period. Cementing that view, figures out last week showed Australia posted a record trade surplus in December while measures of business confidence and conditions had bounced too. However, yesterday’s data showed price gains remained very muted with the retail deflator rising just 0.3 per cent in the quarter, a worrying sign for underlying inflation which is below the central bank’s target band of 2-3 per cent. “The Q4 result shores up our expectations for the Q4 national accounts but suggests that for many retail businesses conditions are more difficult
than the volume data indicates,” said Matthew Hassan, senior economist at Westpac.
Losing momentum
Sales actually fell 0.1 per cent in December, upsetting forecasts of a 0.3 per cent increase and revealing a disappointing lack of momentum heading into 2017. It was the first monthly decline since December 2015 and only the third in about as many years. The increases in October and November were revised lower too. In another worrying trend, homeware sales tumbled 2.3 per cent in December, the first drop since mid2016 and the biggest in more than four years. While retailers shipped more household goods over the fourth quarter they had to discount prices to do it. “While consumption growth is unlikely to collapse, we suspect it will slow...this year due to persistently low wage growth and modest employment growth,” said Kate Hickie,
economist at Capital Economics. “It could be an early sign that the housing market won’t support consumption as much this year.” Household consumption accounts for 56 per cent of GDP, versus the less than 9 per cent produced by Australia’s emblematic mining industry.
“While consumption growth is unlikely to collapse, we suspect it will slow... this year due to persistently low wage growth and modest employment growth” Kate Hickie, economist at Capital Economics
The A$300 billion retail industry has been suffering in the face of intense foreign competition and as Australians become more cost-conscious. Yet, people are spending on other things, such as healthcare, education and foreign travel - none of which shows up in the retail sales data. The data also excludes sales of vehicles, fuel or even purchases made online. The ABS’s experimental estimate of online retail sales jumped 14.1 per cent in December, enjoying a fifth month of solid gains to reach A$1.3 billion. Reuters
Salaries
Japan real wages drop boding ill for consumer spending Nearly two-thirds of Japanese firms are considering no wage hikes this year, a Reuters poll showed last month Japanese wages, on an annual inflation-adjusted basis, dropped in December for the first time in a year, government data showed yesterday, a setback for hopes that consumer spending can increase and help lift economic growth.
0.7 per cent 2016 inflation-adjusted real wages rise
The decline was caused by a rise in the cost of living, which outpaced nominal pay hikes, officials said. Higher prices for items such as fresh vegetables have increased living costs. The labour ministry data showed
inflation-adjusted real wages dropped 0.4 per cent in December from a year earlier, following a revised flat reading in November. In nominal terms, wage earners’ cash earnings rose 0.1 per cent yearon-year in December, following a 0.5 per cent gain in November. Special payments - most of which consist of winter bonus - fell 0.1 per cent. The data came as labour unionists and business leaders kick off the annual spring wage negotiations. These are expected to produce smaller wage gains than last year due to increased uncertainty on the global outlook. Prime Minister Shinzo Abe has called on business leaders to support a sustainable economic recovery by raising employee wages, but it remains a struggle to accelerate pay hikes despite the tight job market and high corporate profits. Nearly two-thirds of Japanese firms
are considering no wage hikes this year, a Reuters poll showed last month. For the whole of 2016, inflation-adjusted real wages rose 0.7 per cent, up for the first time in five years, thanks in part to declines in consumer prices, the labour ministry data showed. Regular pay, which accounts for the
bulk of total pay and determines base salaries, increased an annual 0.5 per cent in December from a year earlier, rising for a sixth straight month. Overtime pay, a barometer of strength in corporate activity, fell 1.9 per cent in the year to December, down for a seventh consecutive month. Reuters
12 Business Daily Tuesday, February 7 2017
Asia Growth
Indonesia GDP below 5 pct on cooled consumption Near the end of the year officials said 2016 growth might only be 5 per cent Nilufar Rizki, Hidayat and Setiaji
I
ndonesia’s gross domestic product grew 4.94 per cent in the fourth quarter to mark the slowest pace since the opening three months of last year, as household consumption cooled and government spending contracted, data showed on Monday. Southeast Asia’s largest economy also faces uncertainty surrounding U.S. policies under President Donald Trump and in one of its other main trading partners China, even as a spate of interest rate cuts last year should start to pay dividends by supporting investment. Indonesia’s economy grew 4.94 per cent on an annual basis in October-December, data from the statistics bureau showed, compared with 5.01 per cent in the preceding quarter. GDP expanded 5.02 per cent during 2016, up from a revised 4.88 per cent in 2015, the bureau also said. The poll had expected a full-year growth rate of 5.03 per cent. The government originally set a 5.3 per cent growth target for last year.
Reduced state spending
Growth in the fourth quarter was helped by firmer commodity prices that increased exports, while
government spending and investment contracted. Meanwhile, the government spent 223.4 trillion rupiah (US$16.72 billion) less than planned during 2016, taking a toll on GDP expansion. “While we think the worst is now over, with commodity prices likely to remain depressed and policymakers running out of scope to stimulate the economy further, we expect growth to remain stuck at around 5 per cent
Key Points Q4 GDP growth at 4.94 per cent y/y, vs 5.01 per cent in Q3 2016 GDP growth at 5.02 per cent y/y, vs 4.88 per cent in 2015 Q4 growth q/q on non-seasonably adjusted basis -1.77 per cent over the next couple of years,” Gareth Leather, an economist at Capital Economics, said in a report The central bank, which has cut key interest rates six times last year to help growth, may have limited room to boost growth this year as it expects inflationary pressure at home amid global uncertainties, mainly from the United States. BI cut its benchmark rate by a total
of 150 basis points to 4.75 per cent. The government set its 2017 economic growth target at 5.1 per cent, though is describing this as
conservative. Ten analysts in a Reuters poll conducted last week gave a median forecast of 5.2 per cent for growth this year. Reuters
Survey
Malaysia palm oil stocks seen falling to 5-month low India and China, the world’s top two buyers and consumers of palm, switch to soy oil when palm becomes too expensive Emily Chow
Malaysia’s palm oil inventories likely fell to the lowest level in five months at end-January, led by a sharp fall in production and firmer exports, underpinning prices already tracking near more than four-year highs. Palm oil futures on the Bursa Malaysia Derivatives exchange have dipped 3.5 per cent since the start of the year, but remain not far off the 3,202 ringgit (US$724.11) per tonne touched on Dec. 19. January end-stocks in Malaysia, the world’s
number two producer of the tropical oil, fell 10.7 per cent to 1.49 million tonnes from a month ago, according to the median forecast of seven planters, traders and analysts in a Reuters poll. This would be steepest fall in five months and put stocks at the lowest since August, as the lingering effects of a crop damaging El Niño curb production. Output is expected to fall 9.1 per cent on-month to 1.34 million tonnes, the lowest since April. January’s output was also affected by monsoon rains across the east
coast of Peninsular Malaysia and in Johor, Malaysia’s third largest palm producing state, with floods disrupting fruit harvesting and shutting road access to plantations. Lunar New Year public holidays at the end of the month also contributed to lower production, which is expected to dip further in February in line with seasonal trends, said Kenanga Investment Bank plantations analyst Voon Yee Ping. “If we look at historical patterns, February production tends to be the lowest for the year, and we think with the recent wet weather, this year’s February production may see the same downtrend,” said Voon. The survey pegged Malaysia’s palm oil exports in January at 1.29 million tonnes, up just 1 per cent. It would
be the first month-on-month gain since August. The forecast rise in January exports is below the estimates of cargo surveyors of a 4 per cent to 8 per cent increase. Prices of the tropical oil remain high due to tight market supplies, making palm less competitive than related oils, traders said. “Other oils have been cheap in contrast. Palm nearby is very tight,” said a futures trader from Kuala Lumpur.
Key Points January inventories seen down over 10 pct m/m at 1.49 mln T Production forecast to decline 9.1 pct to 1.34 mln T from Dec Exports likely rose 1 pct in January to 1.29 mln T Malaysian Palm Oil Board data due Feb. 10, after 0430 GMT “Exports for February are going to be bad as the crude palm oil to bean oil band is too narrow. I feel that India and China might not buy much.” India and China, the world’s top two buyers and consumers of palm, switch to soy oil when palm becomes too expensive. The median figures from the Reuters survey imply Malaysian consumption of 269,088 tonnes in January. Official data will be released by the Malaysian Palm Oil Board on Feb. 10. Reuters
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Business Daily Tuesday, February 7 2017 13
Asia Property
Australia’s home market boom may be starting to crumble One big concern is the drop off in the number of Chinese buyers, following a crackdown by Beijing on capital outflows and Australia’s tightened restrictions on lending to foreigners After a long pause, the auctioneer commissioned to sell a northern Sydney beach-side apartment for in excess of A$800,000 (US$614,391) puts his gavel away, unable to entice a single bid. Across town, in the city’s trendy inner western suburbs, the owner of a warehouse converted into a three-level home drops his reserve price for the property’s sale. There are just two potential buyers at the auction, and they have declined to enter the kind of bidding war that has caused home prices in Australia’s two biggest cities, Sydney and Melbourne, to double since 2009. The auction stand-offs may indicate that the Sydney market, which has been defined by researcher Demographia as the second most unaffordable in the world after Hong Kong, has finally hit a peak. As the buyers have drifted off, the sellers have also started to back away and the number of home listings is down 25 per cent from a year ago, according to CoreLogic RP Data. This is all yet to show up in a decline in prices in Australia. In the nation’s eight biggest cities, home prices surged a further 0.7 per cent in January even as the volume of transactions was lower. But some real estate experts and hedge fund investors say that it may be only a matter of time before prices also start to crumble. A sharp correction would heap stress on those who have paid a high price to enter the big east coast property markets, while damaging the country’s financial institutions as home loans account for up to 60 per cent of the major banks’ total loan books. The property sector is also a major employer and generator of demand, a particularly important pillar of the economy during a subdued period for the mining sector. One big concern is the drop off in the number of Chinese buyers, following a crackdown by Beijing on capital outflows and Australia’s tightened restrictions on lending to foreigners. Individuals taking the maximum US$50,000 a year out of China now have to commit to not spending it on real estate and risk being investigated by the Chinese authorities if they break that pledge.
And the impact isn’t only being felt in Australia. In Canada’s Vancouver, which has been a big target market for Chinese buyers for some years, the number of transactions dropped 40 per cent last month, compared to the same month a year earlier. A sudden increase in the number of sales agents splitting off from the big realtors to set up their own firms, and the arrival of new online players, is being seen by some in the industry as a contrarian signal of an overheated market.
Chinese tour numbers halve
Hong Kong-based hedge fund manager Apt Capital Management has shorted Australian banks because of their exposure to a property market it believes is out of step with Australia’s economic strength. It is forecasting a severe correction. Apt Capital strategist Amy Reynolds said interest rate rises or a drying up of foreign investment were the most likely triggers for a future downturn in prices. Esther Yong, director at Chinese language property portal AC Advertising, said the curbs on lending to foreigners and Beijing’s restrictions had quelled interest, leaving only the most committed buyers. She said numbers on Chinese property tours - on which part of a holiday is dedicated to looking at property are half what they were a year ago. Australia’s foreign investment rules guide overseas investors to buy new properties, such as “off-the-plan” apartments that are yet to be constructed or through sales at auctions of new homes. At one new apartment auction on Sydney’s North Shore attended by Reuters, it took 50 minutes for the price to be bid up by US$50,000, with two foreign investors reverting to small incremental bid rises. That sober behaviour is in contrast to the buying frenzies of the past three years that saw hopeful bidders queuing up to take part. Among the new entrants into the market are British online realtor Purplebricks, which launched in Sydney in January, and BRICKX, which allows investors to trade small stakes in properties in well known locations, such as Bondi Beach and Port
In Brief Melbourne. The BRICKX properties advertise an estimated annual return on equity of up to 19 per cent but that would largely be reliant on the boom years repeating themselves.
“Just deserts”
Not everyone is bearish. Realtor Ausnet Financial Services Ltd, which plans a backdoor listing using the corporate shell of a dormant copper explorer, has hired six former agents from listed realtor McGrath Ltd and says it is hoping to build to a sales force of 600 while opening a storefront on Sydney’s Bondi Beach. Its prospectus shows two years of losses and no forecasts. The number of sales agents vying for the business in Australia’s east coast, home to most of the country’s population including the major cities of Sydney and Melbourne, has jumped 10 per cent. But in Australia’s most populous states, New South Wales and Victoria, the number of homes listed for sale per registered real estate agent dropped to just under 1 property per agent in 2016 from 1.3 per agent in 2015, according to Reuters analysis of publicly available data.
“Our models indicate that house prices would need to fall by around 30 per cent to come back into line with Australia’s economic fundamentals and their own long-term averages” Amy Reynolds, Apt Capital strategist If the heat continues to seep out of the market, agents will be among the first to be hit. McGrath has suffered from the departure of about three dozen agents in recent months, resulting in an earnings downgrade and a share price tumble to about one-third its issue price almost 14 months ago. In an explosive internal email reviewed by Reuters, which a spokesman said was authentic, McGrath founder and major shareholder John McGrath said agents who had left his firm had “no loyalty, gratitude or style and will get their just deserts when the dust settles”. Reuters
Funds
S.Korea sees foreign inflows to stocks Foreigners poured funds into South Korea’s stock and bond markets in January, official data showed yesterday, signalling a halt for now to the sell-off seen before and after the U.S. Federal Reserve raised interest rates in December. Offshore investors boosted their bond holdings by a net 1.7 trillion won (US$1.5 billion) worth in January while they snapped up a net 1.8 trillion won worth of shares, the Financial Supervisory Service (FSS) said in a statement. It was the first month of bond inflows since July last year and compared with outflows of 0.5 trillion won worth in December. Property
Australia forces foreign owners to sell Australia has forced the foreign owners of 15 illegally bought properties to sell, as the government tries to placate voters unhappy about a lack of affordable housing. The government is ramping up enforcement of overseas investment rules that have until last year been rarely applied. The latest round, announced by Treasurer Scott Morrison yesterday, takes the total number of forced property sales to 61 since May last year with a combined value of A$107 million (US$82 million), the government said. The latest 15 properties were owned by nationals of China, India, Indonesia, Iran, Malaysia, the United Kingdom and Germany. Environment
Philippine mining industry says closures “illegal, unfair” The Philippine mining minister’s decision to close over half of the country’s mines and suspend others is “illegal and unfair,” and jeopardises an industry that has paid a large amount in taxes and fees to the government, the country’s mining industry body said yesterday. “She violated due process - which is an inherent part of the rule of law - and did not give proper notice by consistently refusing to release the results of the audit to the affected parties,” the Chamber of Mines of the Philippines said in a statement. Laos
ADB to support health in Mekong region The Asian Development Bank (ADB) and Lao government have signed an agreement for a US$12 million loan and grant package from 2017 to 2022, to bolster health security in 12 provinces of Laos and the Greater Mekong Subregion (GMS). The package will support the government’s efforts to improve the control of emerging infectious diseases such as SARS and bird flu, as well as hospital services, reported Lao state-run Vientiane Times. Speaking at the signing ceremony, OfficerIn-Charge at ADB’s Laos Resident Mission Steven Schipani said that effective infectious disease control and prevention is a regional priority.
14 Business Daily Tuesday, February 7 2017
International In Brief Iran
Sanctions stop American oil firms taking part in projects Iran has imposed no restrictions on U.S. oil firms willing to participate in energy projects in the country but American sanctions make such cooperation impossible, Iran’s deputy oil minister said yesterday. “Iran has not imposed any restrictions on the U.S. companies, but they cannot participate in our (oil and gas) tenders due to the U.S. laws,” Amir Hossein Zamaninia, deputy oil minister for trade and international affairs, was quoted as saying by state news agency IRNA. “Based on the U.S. Congress sanctions, the American oil companies cannot work in Iran,” he added. Election
French presidency candidates go on offensive With former front-runner Francois Fillon’s French presidential bid in turmoil, rival candidates stepped in to seize the initiative in the most unpredictable election campaign in decades. The pollsters’ new favourite, independent Emmanuel Macron, is due to unveil more details of his platform for the presidency at a rally in Paris after hosting a sell-out event in Lyon on Saturday. His main challenger, the National Front’s Marine Le Pen, was also in Lyon at the weekend, where she unveiled a 144-point program advocating an exit from the euro zone, a referendum on European Union membership and immigration limits.
Industry data
Strong orders set Germany up for buoyant 2017 start The overall increase was driven by a jump in demand for capital goods for production rather than consumption
H
igher demand at home and abroad for goods needed in production drove the biggest monthly increase in German industrial orders in around 2-1/2 years in December, suggesting the first quarter of 2017 may be getting off to a strong start. The much stronger-than-expected data, released by the Economy Ministry in Berlin yesterday, gave some reassurance that Germany’s economic upswing will carry into 2017 despite growing political uncertainties that include the potentially protectionist U.S. trade agenda. In a sign that private consumption will continue to boost German growth, nominal wages rose 2.3 per cent in 2016, separate data from the Federal Statistics office showed
yesterday. With national inflation at 0.5 per cent last year, real wages increased by 1.8 per cent, the office said. This was less than the 2.4 per cent in 2015 and 1.9 per cent in 2014. Orders for “Made in Germany” goods were up by 5.2 per cent on the month, the Economy Ministry said. That was the biggest monthly increase since July 2014 and was far stronger than the Reuters consensus forecast for a rise of 0.5 per cent. Domestic demand jumped by 6.7 per cent while foreign orders increased by 3.9 per cent, with bookings from euro zone countries soaring by 10.0 per cent. The overall increase was driven by a jump in demand for capital goods for production rather than consumption of 9.7 per cent, helped by strong
Privatization
27 Saudi airports to be operated by private firms The 27 Saudi airports will be fully privatize by the middle of 2018 to make airports independent bodies, Al Sharq Al Awsat newspaper reported yesterday. Saudi Civil Aviation highlighted to the newspaper that the privatization plan will increase the asset values of these airports and attract huge foreign investments. Deputy Chairman of the Civil Aviation, Dr Faisal Al Saqeer, expected that the foreign investments are expected to represent 75 per cent in some of the airports. Saudi Arabia announced last week a plan to privatize 16 government authorities as part of the economic vision 2030. Somalia
Preparation for presidential polls complete Somalia’s electoral committee said preparations for Wednesday’s presidential polls which has been postponed four times, are complete and the election will take place as scheduled. Chairperson of the 17-member Presidential Election Committee Abdirahman Beileh said on Sunday night the elections will take place on Feb. 8 and gave an undertaking that the elections will be free and fair. Somalia’s newly inaugurated Parliament comprising of 275 lower house seats and 54-member senate will vote for the president in a secret ballot. The newly elected president will be installed immediately after the announcement of the final results.
bookings from both domestic customers and euro zone countries. The data for November was revised down to a fall of 3.6 per cent from a previously reported drop of 2.5 per cent. Still, over the full fourth quarter, industrial orders rose by 4.3 per cent on the quarter, the economy ministry said. “This signals a continued upswing in the industrial sector over the winter,” the ministry said.
Key Points Orders jump 5.2 pct m/m in December Forecast was rise of 0.5 pct Data points to strong first quarter Rising wages also to support growth Separate data from the VDMA in dustry association sh ow ed yesterday that engineering orders fell 15 per cent on the year in real terms in December, driven by weaker demand from abroad. The overall strong orders figures followed mixed data after German business morale unexpectedly fell in January, signalling a more downbeat assessment of the outlook for Europe’s largest economy. A survey among German purchasing managers showed last week that private sector growth slowed slightly in January, with weaker activity among services firms limiting overall economic expansion. Strong private consumption, increased state spending on refugees and higher construction investment helped the German economy to grow by 1.9 per cent in 2016 - the strongest rate in half a decade. For this year, the government expects an economic slowdown to 1.4 per cent due to fewer work days and weaker exports. Reuters
Survey
U.K. business says Brexit is already having a negative effect Despite on-going uncertainty, the majority of business leaders were confident their company can adapt to life outside the EU Tim Ross
Brexit has already damaged businesses even before Prime Minister Theresa May triggers the start of Britain’s withdrawal from the European Union, according to a survey of the country’s largest companies. More than half -- 58 per cent -- of top executives at Britain’s biggest firms said the vote to quit the bloc has had a negative impact on their businesses, the Ipsos MORI “Captains of Industry” poll found. Two-thirds of the chief executives, chairmen and directors interviewed for the survey said they believed the business situation would worsen in the next 12 months. “Business in this country is already feeling the pain of the economic upheaval of leaving the EU,” said Ben Page, CEO of Ipsos MORI. “According to respondents there is no sign that this is likely to ease this year.” The research, conducted between September and December 2016, involved interviews with 114 chief executives, chairmen, managing directors and others from the FTSE 500
companies. It revealed the extent of business leaders’ underlying concerns over Brexit, despite positive economic data since the referendum vote last June.
Parliament debate
The results could embolden lawmakers as they scrutinize the prime minister’s plan for Brexit negotiations in Parliament this week. May is facing a rebellion from Conservative members of Parliament who fear she will deny them a vote on her final Brexit deal until it is too late to negotiate better terms. Senior Conservatives are also unhappy about May’s stance on migrants’ rights, calling on her to make a unilateral promise to EU nationals living and working in the U.K. that they will not be thrown out of the country after Brexit. Movement of workers was a key concern of those who took part in the Ipsos MORI study. When asked to state their priorities for the Brexit negotiations, 54 per cent cited access to skilled labour. Almost half -- 47 per cent -- called for securing
free trade and access to the EU single market, with so-called passporting rights for financial services named by 16 per cent. Some 11 per cent of executives questioned said they felt Brexit has made a positive impact on their businesses, but 66 per cent said the situation of their companies would get worse. The government’s skill in negotiating the final agreement with the EU will be key to mitigating the impact of leaving the bloc, they said. Half of those interviewed were not confident in May’s ability to get the best deal possible.
‘66 per cent executives said the situation of their companies would get worse’ Despite on-going uncertainty, the majority of business leaders -- 96 per cent -- were confident their company can adapt to life outside the EU. More than two-thirds have already taken steps, with 10 per cent choosing to move business outside the U.K. Almost one-third said they thought their business would start to feel the positive effects of leaving the EU in five years’ time. “Businesses are also ready to adapt in order to survive, and thrive,” Page said. Bloomberg News
Business Daily Tuesday, February 7 2017 15
Opinion Business Wires
Taipei Times Minister of Economic Affairs Lee Chihkung said that the ministry is working to transform coal-fired power plants into natural gas-powered plants to ensure economic growth is not undermined by power shortages. One of the measures intended to ensure a stable power supply is the transformation of two coal-fired power plants — in Taichung and Keelung — into natural gas-powered plants. Taiwan Power Co, the nation’s main power supplier, is working on a project to build gas storage facilities at the two power plants, Taipower chairman Chu Wen-chen said.
Lusa
The end of Trump’s market honeymoon
W Viet Nam News The State Securities Commission has issued new regulations on which Unlisted Public Company Market (UPCoM) shares on the Premium list will be allowed for margin trading from April this year. This decision will replace existing regulations on securities margin transactions. Margin trading allows investors to buy more stock than they would be able to normally. Under the new rules, shares on the UPCoM (under the UPCoM Premium list) will be eligible for margin trading purchases. The old regulations defined securities on the UPCoM as unapproved for margin trading.
Jakarta Globe The Financial System Stability Committee, or KSSK, keeps a positive outlook on both Indonesia’s economic condition and the stability of the local financial sector, amid challenges posed by uncertain global economic conditions, Finance Minister Sri Mulyani Indrawati said. Established at the height of the 2008 financial crisis, KSSK gathers top policymakers from the ministry, Bank Indonesia, Financial Services Authority and the Deposit Insurance Corporation to prevent and mitigate the consequences of financial crises in the country. She said that organizations under KSSK will create an exchange program for their employees to set up better cooperation in crisis response.
The Japan News Toshiba Corp. is asking companies that want to contribute capital to a semiconductor firm that will be spun off to also provide financial support for Toshiba itself, according to sources. The company is seeking hundreds of billions of yen in assistance. Toshiba is likely considering such options as giving preferential shares to those who provide capital — holders of such shares can be paid dividends on a preferential basis in exchange for not having voting rights — or having the companies contribute funds to Toshiba’s other businesses.
hen Donald Trump was elected President of the United States, stock markets rallied impressively. Investors were initially giddy about Trump’s promises of fiscal stimulus, deregulation of energy, health care, and financial services, and steep cuts in corporate, personal, estate, and capital-gains taxes. But will the reality of Trumponomics sustain a continued rise in equity prices? It is little wonder that corporations and investors have been happy. This traditional Republican embrace of trickle-down supply-side economics will mostly favour corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers’ incomes. According to the nonpartisan Tax Policy Centre, almost half of the benefits from Trump’s proposed tax cuts would go to the top 1 per cent of income earners. Yet the corporate sector’s animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trump’s honeymoon with investors might be coming to an end. There are several reasons for this. For starters, the anticipation of fiscal stimulus may have pushed stock prices up, but it also led to higher long-term interest rates, which hurts capital spending and interest-sensitive sectors such as real estate. Meanwhile, the strengthening dollar will destroy more of the jobs typically held by Trump’s blue-collar base. The president may have “saved” 1,000 jobs in Indiana by bullying and cajoling the air-conditioner manufacturer Carrier; but the US dollar’s appreciation since the election could destroy almost 400,000 manufacturing jobs over time. Moreover, Trump’s fiscalstimulus package might end up being much larger than the market’s current pricing suggests. As Presidents Ronald Reagan and George W. Bush showed, Republicans can rarely resist the temptation to cut corporate, income, and other taxes, even when they have no way to make up for the lost revenue and no desire to cut spending. If this happens again under Trump, fiscal deficits will push up interest rates and the dollar even further, and hurt the economy in the long term. A second reason for investors to curb their enthusiasm is the spectre of inflation. With the US economy already close to full employment, Trump’s fiscal stimulus will fuel inflation more than it does growth. Inflation will then force even Janet Yellen’s dovish Federal Reserve to hike up interest rates sooner and faster than it otherwise would have done, which will drive up long-term interest rates and the value of the dollar still more. Third, this undesirable policy mix of excessively loose fiscal policy and tight monetary policy will tighten financial conditions, hurting blue-collar workers’ incomes and employment prospects. An already protectionist Trump administration will then have to pursue additional protectionist measures to maintain these workers’ support, thereby further hampering economic growth and diminishing corporate profits. If Trump takes his protectionism too far, he will undoubtedly spark trade wars. America’s trading
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Nouriel Roubini CEO of Roubini Macro Associates and Professor of Economics at the Stern School of Business, New York University
partners will have little choice but to respond to US import restrictions by imposing their own tariffs on US exports. The ensuing tit-for-tat will hinder global economic growth, and damage economies and markets everywhere. It is worth remembering how America’s 1930 Smoot-Hawley Tariff Act triggered global trade wars that exacerbated the Great Depression. Fourth, Trump’s actions suggest that his administration’s economic interventionism will go beyond traditional protectionism. Trump has already shown his willingness to target firms’ foreign operations with the threat of import levies, public accusations of price gouging, and immigration restrictions (which make it harder to attract talent). The Nobel laureate economist Edmund S. Phelps has described Trump’s direct interference in the corporate sector as reminiscent of corporatist Nazi Germany and Fascist Italy. Indeed, if former President Barack Obama had treated the corporate sector in the way that Trump has, he would have been smeared as a communist; but for some reason when Trump does it, corporate America puts its tail between its legs. Fifth, Trump is questioning US alliances, cozying up to American rivals such as Russia, and antagonizing important global powers such as China. His erratic foreign policies are spooking world leaders, multinational corporations, and global markets generally. Finally, Trump may pursue damage-control methods that only make matters worse. For example, he and his advisers have already made verbal pronouncements intended to weaken the dollar. But talk is cheap, and open-mouth operations have only a temporary effect on the currency. This means that Trump might take a more radical and heterodox approach. During the campaign, he bashed the Fed for being too dovish, and creating a “false economy.” And yet he may now be tempted to appoint new members to the Fed Board who are even more dovish, and less independent, than Yellen, in order to boost credit to the private sector. If that fails, Trump could unilaterally intervene to weaken the dollar, or impose capital controls to limit dollar-strengthening capital inflows. Markets are already becoming wary; full-blown panic is likely if protectionism and reckless, politicized monetary policy precipitate trade, currency, and capital-control wars. To be sure, expectations of stimulus, lower taxes, and deregulation could still boost the economy and the market’s performance in the short term. But, as the vacillation in financial markets since Trump’s inauguration indicates, the president’s inconsistent, erratic, and destructive policies will take their toll on domestic and global economic growth in the long run. Project Syndicate
If former President Barack Obama had treated the corporate sector in the way that Trump has, he would have been smeared as a communist; but for some reason when Trump does it, corporate America puts its tail between its legs
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16 Business Daily Tuesday, February 7 2017
Closing State Council
China to further open up development zones
1,500 national and provincial development zones, which enjoy preferential policies to help China will continue to open up its development nurture technological innovation, free trade, tourism and other key drivers of economic zones to attract foreign investment and growth. promote international cooperation, according The guideline said that China would support to the State Council yesterday. qualified multinational companies based in the The government will support the country’s development zones to improve their capability development zones to conduct two-way crossborder RMB cash pooling business. to facilitate foreign trade and encourage international business, according to a guideline It also said that companies in the development zones would be allowed to borrow RMB and released by the State Council. other currencies from abroad by loans or bonds Development zones are pioneer areas in as long as they met certain regulations. Xinhua China’s opening up campaign. China has over
Smartphones
Apple is getting pushed around in Mainland by local brands Oppo, Huawei and Vivo took advantage of vast store networks as online handset sales plateaued
C
hinese s m a r t p h o n e brands Oppo and Huawei are tightening their grip on the world’s largest market, grabbing local share and squeezing out Apple Inc. and Samsung Electronics Co. After including Vivo, Chinese vendors held the top three slots and accounted for 48 per cent of shipments in the country during 2016, research firm IDC said. With a line-up of flexible- and curved-screen devices, they look set to dominate the market in 2017. A decline in Apple shipments in the fourth quarter highlighted how the iPhone 7 failed to make as big a splash in the face of escalating competition. Apple and Samsung have steadily ceded ground in China to aggressive local manufacturers since Xiaomi Corp. came on the scene around 2011. Xiaomi itself was ranked fifth in 2016, as Oppo, Huawei Technologies Co. and Vivo phones were the top three sellers, accounting for 48 per cent of shipments last year and relegating the U.S. company to fourth spot, IDC said in a report released yesterday. “Even though the new black coloured iPhones caught the attention of consumers, overall, the new launches did not create as much of a frenzy compared to the past,” IDC said in its report, a regular and closely watched release. Chinese vendors are marketing higher-end gadgetry that appeals to consumers seeking Apple-like quality and innovation. IPhone shipments
plummeted 23.2 per cent in 2016, shrinking Apple’s market share to just 9.6 per cent -- the lowest in about two years. Samsung didn’t even figure in the top five. China had for years driven Apple’s spectacular growth even as smartphone demand elsewhere faltered. But the country’s slowdown, regulatory tangles and -- critically -the ascendancy of cheaper but justas-good local alternatives took its toll. The country remains pivotal to the company’s business, especially with developed markets saturated and Apple still exploring promising countries such as India, where price is king and the U.S. company barely registers in market rankings. Apple may regain ground with the next iPhone later this year, the 10th anniversary of the device that
Aviation
ushered in the modern smartphone industry. Apple is expected to showcase the best features it can bring to bear in an increasingly commoditized market. “Apple’s 10-year anniversary iPhone will also likely attract some of the high-end Android users in China to convert to an iPhone,” IDC said.
467.3 million units smartphones were moved in China last year
In the meantime, local brands hold sway. Oppo, Huawei and Vivo took advantage of vast store networks as online handset sales plateaued. Along with improved customer service and a push to open their own retail stores, especially in smaller cities, Chinese
Employment
smartphone makers have moved away from budget devices. Frontrunner Oppo saw shipments grow from a little more than 35 million units in 2015 to 78.4 million last year, IDC estimates. Vivo also nearly doubled its annual shipments. Overall, 467.3 million units smartphones were moved in China last year, up 8.7 per cent from 2015. Now local vendors are setting their sights overseas. Huawei, which sells about half its smartphones abroad, is targeting US$33 billion in 2017 revenue for its consumer electronics division, which sells smartphones, wearable devices and tablets. Chinese brands, led by Vivo, have already muscled out local rivals in India and are increasingly challenging Samsung, the leader there. “We expect these vendors to increase their shipments in the international market, with India as a key target for these top Chinese vendors,” IDC said its report. Bloomberg News
Poll
Made-in-China large passenger Beijing to create over plane targets 2017 debut 50 mln new urban jobs
Singapore’s presidential election to be held in September
China’s first home-grown big passenger plane will make its maiden voyage in the first half of this year, state media said yesterday, as the country seeks to challenge foreign giants Airbus and Boeing. The C919 narrow-body jet is expected to “realise its blue-sky flight dream” in the first six months of 2017, the People’s Daily newspaper reported, with the installation of on-board systems almost completed. The plane, produced by the state-owned Commercial Aircraft Corp of China (COMAC), was originally scheduled to make its debut journey in 2015, but the date was repeatedly pushed back as it underwent additional testing and certification. For China, the aircraft represents at least eight years of effort in a state-mandated drive to reduce the country’s reliance on European plane maker Airbus and Boeing of the United States and compete directly against them for market share. It is hoped the plane will take market share in the lucrative segment from the Boeing 737 and Airbus A320. In November COMAC said it had received 570 orders from 23 customers. China is one of the Western manufacturers’ key battlegrounds, with its travellers taking to the skies in ever-growing numbers. AFP
Singapore’s presidential election will be held in September, said Minister in Prime Minister’s Office Chan Chun Sing at the Parliament yesterday. During the second reading of Presidential Elections (Amendment) Bill, the minister outlined a series of amendments made to improve election procedures. Chan announced the next presidential election, which has been reserved for Malay candidates, will be held in September rather than in August, so that campaigning period will not coincide with the country’s National Day celebrations. The minister stressed that the current laws allow for changes to the timing of the polls, and the government will issue the writ for the election later in August, before the term of President Tony Tan Keng Yam expires on Aug. 31. “This resets the clock, so that, in future, presidential elections campaigning will take place outside of the National Day period, assuming presidents serve their full six-year terms,” Chan expounded in his speech. Besides the change of date, Chan revealed the government will no longer designate specific sites for presidential candidates to hold rallies. Xinhua
China will create over 50 million new urban jobs by 2020, the State Council announced yesterday. The government will improve employment structure and quality, and keep the urban headline unemployment rate under 5 per cent by 2020, according to the employment facilitation plan for the 2016-2020 period released by the State Council. The plan pointed out that employment was key to affecting standards of living and supporting for economic growth, and that China would make proactive employment policies. China will support sectors that create lots of jobs and promote entrepreneurship, such as businesses related to the sharing economy. The plan also stresses the importance of improving the efficiency of the human resource market and enhancing workers’ professional skills and overall quality. Latest figures from the Ministry of Human Resources and Social Security show that the country managed to create jobs for more than 13 million urban residents in 2016, and the registered unemployment rate in Chinese cities stood at 4.02 per cent at the end of 2016. Xinhua