Business Daily #1315 June 12, 2017

Authorities increase control on yuan Currency Page 9

Monday, June 12 2017 Year VI Nr. 1315 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm Logistics

OBOR dominates logistics convention as companies find out ‘how they can fit in’ Page 6

Construction

New deals for China State Engineering in MSAR down 44 pct y-o-y in first five months of this year Page 7

www.macaubusinessdaily.com

Trade

Cryptocurrency

CE says PortugalMSAR relationship ‘fundamental and integral’ Page 6

Hong Kong and Singapore rival to grab biggest piece of the fintech cake Page 10

Getting the ticket Entrepreneur

The monopolies are here to stay.

But if you can’t beat them, start your own, says CEO of e-commerce platform iFood, Aesom Lei. Despite rising rents, the HKZM bridge bringing more competition and the central gov’t giving the green light to e-commerce startups, increasing competition is not a problem if you’re a market leader he says.

And while less than 15 pct of new restaurants survive past the first two years, iFood is here for the long haul. Pages 4 & 5

Rising in the ranks

The top 10 in Asia-Pacific. That’s what the gov’t and the MICE sector are striving for, says a member of the Committee on the Development of Conventions and Exhibitions. For now the focus is on conferences, due to fewer logistical issues, and also trying to resolve visa issues to improve exhibitor access to open up the market to further abroad.

Every square metre

Real estate Commercial real estate loans were up 77 pct y-o-y in April, at nearly MOP4 bln, almost all of which was made to residents, with a near-100 pct uptick as non-resident CRELs fell 81 pct. Residential mortgage loans were up 20 pct y-o-y, to MOP3.4 bln, while dropping 19 pct m-o-m.

Page 3

Producer prices in China signal moderation

MICE Page 2

HK Hang Seng Index June 9, 2017

26,030.29 -32.77 (-0.13%) Worst Performers

AAC Technologies Holdings

+3.38%

AIA Group Ltd

+0.90%

China Resources Power

-3.60%

Hengan International Group

-1.55%

Bank of East Asia Ltd/The

+2.42%

BOC Hong Kong Holdings

+0.86%

China Merchants Port Hold-

-2.45%

Industrial & Commercial

-1.51%

Geely Automobile Holdings

+2.25%

Hang Seng Bank Ltd

+0.68%

CK Infrastructure Holdings

-2.07%

Wharf Holdings Ltd/The

-1.42%

Tencent Holdings Ltd

+1.46%

Cathay Pacific Airways Ltd

+0.64%

China Resources Land Ltd

-1.92%

Sino Land Co Ltd

-1.31%

Link REIT

+1.04%

New World Development

+0.38%

Hong Kong & China Gas Co

-1.79%

China Mobile Ltd

-1.29%

28° 33° 28° 30° 28° 31° 27° 31° 26° 30° Today

Source: Bloomberg

Best Performers

Tue

Wed

I SSN 2226-8294

Thu

Fri

Source: AccuWeather

Inflation Mainland’s PPI gains have moderated, pointing to a weaker overall inflation pressure in the pipeline. Regulatory measures to curb financial leverage might have impacted on property and infrastructure investment.

Page 8

2 Business Daily Monday, June 12 2017

Macau MICE

Striving for higher ranking Five years to make it into ICCA’s Top 10 in Asia-Pacific for MICE, says committee member Cecilia U cecilia.u@macausbuinessdaily.com

T

he MSAR Government and the MICE (Meetings, incentives, conferences and exhibitions) sector in the city are striving to position Macau in the top 10 ranking for the Asia-Pacific region within five years, according to one of the members of the Committee on the Development of Conventions and Exhibitions (CDCE).

The ranking is conducted by the International Congress and Convention Association (ICCA), pointed out Kuan Vai Lam, a committee member and representative of the Macao Convention & Exhibition Association, who noted that the MSAR is currently ranked 17th in Asia-Pacific and 72nd worldwide in the 2016 ranking.

The CDCE meeting, held last Thursday, focused on prioritizing the development of conferences in the city over exhibitions, Kuan noted.

“There are fewer problems and issues when holding conferences [which require] less technical aspects,” explained Kuan. “Exhibitions require many constructions, advertisements and planning [...] we are progressing from easy to difficult in order to cater to Macau’s current condition,” said Kuan.

Support from IPIM will also be key in continuing the push he pointed

out, also coupled with government initiatives. In particular, Kuan said that loosening visa regulations for foreign exhibitors was an issue raised during the group’s last meeting.

“Resolving many of the visa issues would make it easier for exhibitors coming from mainland China to enter Macau, using policies such as extending their visa usage,” revealed Kuan, noting that the related policy has not yet been decided nor confirmed.

According to IPIM, some 69 events were held with the support of its ‘one stop’ MICE support service during the first quarter of 2017, with 45 exhibitions confirmed or conducted.

By introducing the service, Kuan believes that international events from a wide range of areas could be attracted, however noting that advertisement

promotions to international associations are also necessary.

The six conference ambassadors

The government has also recently announced the programme launch of six ‘conference ambassadors’ to help boost MICE in Macau.

These six experts from different fields originate in mainland China and further abroad and specialise in areas including medicine, construction, sport, information technology and chemistry.

The CDCE meeting held on Thursday also discussed the new programme.

“We different associations invited these specialists, and of course it depends on the government’s evaluation on assigning them as ambassadors,” said Kuan, adding that all six are volunteers.

Given their positions and status within their respective areas, Kuan believes that these experts will have enough influence to get the attention of related international associations to organise conferences and exhibitions in the city.

Benefiting SMEs

According to Kuan, the government is also currently implementing tactics to attract overseas MICE participants to travel to other areas of the city, through measures such as subsidising transportation fees or transporting exhibitors to other parts of the city.

“We also suggested holding exhibitions or conferences in the central area, but we need to see if the government can provide a venue,” said Kuan. “These exhibitors would then be gathered in the central area, but obviously we know that there are not many venues in the city centre, where there are many historical structures located.”

In regards to bringing MICE participants to the local communities, IPIM

pledged to co-operate with the federation of industry and commerce of the northern, southern, central and island districts to introduce different measures such as drawing up tour guide routes and recommendations to encourage participants to explore the city.

Strengths and weaknesses

For Kuan, the strength that Macau poses has to develop MICE is the support offered by the government, given that the MSAR holds a strategic position in relation to the central government. He added that the setting up of the CDED is a good example of how the government puts weight on the development of MICE. “With members from different government departments [in the committee] more time is saved to coordinate,” remarked Kuan.

The current CDED is composed of representatives of government departments including IPIM, the Macao Customs, Macao Government Tourism Office, Macao Economic Services as well as other associations.

The committee is headed by the Secretary for Economy and Finance, Lionel Leong Vai Tac. Kuan also noted that the many hotels and venues in the city are also an advantage for the MICE industry’s development. However, the shortage of personnel and specialists is a significant shortcoming for Macau, he said.

According to the Statistics and Census Services (DSEC) data, a total of 366 MICE events were held in the first quarter of this year, an increase of 56 year-on-year.

The number of participants ticked up 111.9 per cent when compared to the same quarter last year.

“In recent years, Macau’s growth [in MICE development] is fast among other neighbouring cities,” concluded Kuan.

One Belt, One Road

Get ready for the finance leasing business Chairman of the state-owned enterprise China Huarong Asset Management Co., Ltd, Lai Xiaomin urged that instructions should be drawn up and policies encouraged for the development of the finance leasing business in Macau, to allow Chinese enterprises to have clearer directions to be involved the market, local broadcaster TDM Radio reported.

Speaking on the last day of the International Conference on Belt and Road and Macau’s Development, Lai stated that Macau provides numerous business opportunities despite being a small city, and indicated that the city could unleash its potential through collaborating with enterprises from the Mainland.

Lai noted that the free port and the

offshore renminbi clearing centre are some of the many advantageous characteristics that Macau enjoys.

The chairman further suggested the need to develop local legislation and related policies, as well as enhancing the quality of local specialists.

On Friday, the conference was officially closed with a signing ceremony between Chen Dingding, associate dean of 21st Century Silk Road Research Institute of Jinan University and Ma Chi Seng, the president of Grand Thought Think Tank.

The agreement between the two parties confirms the preliminary stage of the co-operation focusing on studying the development of “One Belt, One Road”. C.U.

Business Daily Monday, June 12 2017 3

Macau Real estate

Buyer’s pain Commercial real estate loans and residential mortgage loans both increased in April this year by 76.7 per cent and 19 per cent y-o-y, respectively, however on a monthly comparison both indicators saw decreases Nelson Moura nelson.moura@macaubusinessdaily.com

C

ommercial Real Estate Loans (CRELs) approved by the Macau banking sector rose 76.7 per cent year-on-year in April when compared to the same month last year, according to official data released by the Monetary Authority of Macau (AMCM).

However, loans granted for commercial real estate hit MOP3.96 billion (US$492.9 million) in April, a 26.6 per cent month-on-month fall.

Of the overall commercial real estate loans, MOP3.91 billion, or 98.7 per cent of the total, was allocated to residents, rising by almost 100 per cent per cent year-on-year, while

only MOP49.8 million worth of loans was allocated to non-residents, a considerable decrease of 81.2 per cent compared to the same month last year.

On a monthly comparison, CRELs granted to residents and non-residents both fell by 18.5 per cent and 91.7 per cent month-on-month in April, respectively.

Residential mortgage loans down monthly

Meanwhile, Residential Mortgage Loans (RMLs) saw a hike of 19 per cent year-on-year in April of this year, reaching MOP3.36 billion, however experienced a fall of 18.8 per

cent compared to March.

The amount of loans granted to residents in April went down by 18.8 per from March to April , reaching MOP3.27 billion, while loans granted to non-residents fell by 11.8 per cent month-on-month to MOP89.4 million.

The ratio of mortgage loans for the acquisition of real estate was readjusted in May for four housing price categories, with the AMCM stating the measure was enacted to control real estate speculation.

The largest cut was made to the purchase of residential units costing up to MOP3.3 million by residents, with the ratio dropping from 90 per cent to 70 per cent, with non-residents seeing the loan cap reduced from 70 per cent to 60 per cent.

At the end of April this year, the gross balance of new loans for commercial real estate activities amounted to MOP169.52 billion, representing an annual increase of 1.7 per cent, while the gross balance of mortgage loans of MOP183.3 billion grew by 4.8 per cent year-on-year.

Election

Two more on board Cecilia U cecilia.u@macaubusinessdaily.com

Two more groups have submitted their candidate lists for the upcoming legislative assembly election in September. The Association for the Promotion of Citizen’s Rights (APDC) and the Macau-Guangdong Union turned in their lists on Friday, with Hong Weng Kuan, a representative of APDC, disclosing that around five to

six candidates from the legal, medical and civil servant sectors will take part in the election.

A solicitor who participated in the last election, Hong opined that the current societal problems “originate from [the city’s] political system”.

He stated that the number of directly elected legislators is inadequate, which as resulted in the stagnation of the political system.

“We wish to get involved in, and

gradually change, the system,” said the solicitor, pointing out that change needs to be gradual, as one legislator can only have so much effect.

Hong revealed that the group had received slightly over 500 signatures, noting that repeat signatures from voters were erased.

Meanwhile, Yen Soi Kun, the trustee of the Macau-Guangdong Union announced that current legislators Mak Soi Kun and Zhen Anting will be leading the group for the election.

When asked whether they would feel pressure given that certain groups have divided and submitted their

respective candidate lists, Yen said each has their own method and it is more important to focus on their own tasks.

“Because we are here to serve the citizens,” said Yen. “[We work] for the ‘one country, two systems’ and the development of Macau, therefore, it is important to do our own part.”

He also revealed that the group had gathered almost 500 signatures from voters, however the list of nominees was still being deliberated.

“We will announce when we confirm the list,” said Yen.

4 Business Daily Monday, June 12 2017

Macau

Aesom Lei, the CEO of iFood Macau

Interview | Entrepreneur

Getting a ticket Having set up in 2011, and now celebrating six years with its pioneer platform in the MSAR, Aesom Lei, the CEO of iFood Macau. iFood Macau, an e-commerce platform for restaurants in the city with over 380,000 downloads of its app, tells Business Daily about working in the MSAR, holding your ground, what being an entrepreneur is all about and the iFood Awards Kelsey Wilhelm Kelsey.wilhelm@macaubusinessdaily.com

H

ow has the progression been? Has it been difficult at certain points?

Every time, in different situations and with different challenges, every day is very hard.

How has the Internet changed your business?

In the beginning, we just worked like an advertising company, and continued with the development, arriving at e-commerce. In the beginning, we just worked with the restaurants to provide them a service, making menus, helping to update their information on our apps and so on.

Now that we’re doing e-commerce we’ve made a platform - iFood app is a platform, to help restaurants to actually get business from our apps.

Not only a B2B (business to business), it’s also B2C (business to customer) now.

Anybody, a citizen, a visitor, can make an order from our app. It will go through the Internet to the restaurant, they receive the bill, make the dish and have it ready for the customer, and the user makes the payment through the platform. That’s the difference between before and now.

For the user to make the payment, do you accept all cashless payment forms?

At this moment, we do everything we need to in order to follow the government policy 100 per cent. At the beginning of September we’ll accept Visa, Mastercard, UnionPay, Macau Pass, Alipay, WeChat Pay and so on. September this year.

Is there more competition in the market now than when you launched iFood?

I think it’s not more difficult, because last year some of the officials from the Chinese government visited Macau to give Macau advice or orders. They said – okay now you can make e-commerce, and then

we followed the structure to do that.

Before Macau was a gambling and travel city, because the money transport (laundering) is a very sensitive issue here.

So before last year, e-commerce in Macau was not very active. The banks would keep the controls very tight.

So the government departments and the banks opened the door.

Now, how often do you talk with the government?

I think we talked to every department this year. We also like to visit each other about every three months.

Do they give you guidelines based on what they’re doing?

Not really, they just try to help and we sometimes visit them to tell them what we’re planning to launch and ask what they think. They say ‘good, keep going on and do you need any help?’

“In this society, in every generation the power and the money have changed a little bit. And this generation is e-commerce” Will Macau becoming a smart city help your business?

It will help and we also joined this project, because we have another project with CTM to set up the public WiFi for the city. So when we’re talking about Smart City – a Smart City must have WiFi. No matter whether it’s a restaurant, on the street and in public places like the airport, the ferry terminal – it must have WiFi for the citizens or travellers.

How does the agreement work?

Because iFood Macau has over 1,300 merchant members, we set

up a program called CTM iFood WiFi. Then we go to the restaurants to talk to the owners and the management to explain the Smart City concept, the differences between public WiFi and company WiFi. We need to give them the information - how, why – because some restaurants say ‘Oh I have WiFi, I’ll share the WiFi with our guests’. That is not safe. We need to explain the hardware needed to support the public mass.

Especially for safety – so internal is for their operations and public WiFi is for the guests. We go to the restaurants, as our daily routine of talking to the restaurant owners and management about the project, and when they agree, we communicate with CTM for CTM to help them set it up.

Does the restaurant get a discount then on WiFi fees? Is it free?

CTM will offer them a very reasonable price to help them to separate the private and public WiFi. Is there any limit on the agreement, say for one year or two years?

I think there’s no end because the agreement is automatically continued.

The iFood awards, how is it working?

We use WeChat, so you can go and vote on Restaurant – press the button and vote. It has the restaurant’s name, for example ‘I love foreign restaurants’ so say a Hong Kong restaurant or U.S. brand comes and opens in Macau. Then there’s one for a Chinese dish, dim sum, noodles, congee, barbeque pork chop, hotpot, Japanese dish, Korean dish. They can vote on each one. And then there are categories of the special dishes, because every restaurant has their signature dish. You can vote on that.

Is it by points or by how many people vote?

By the number of people.

Why did you decide to do it by category instead of just people voting for restaurants?

Because this year we would like to

choose 12 of the most famous dishes of Macau to tell the world about.

Does the dish have to be from Macau?

Or can it originate somewhere else but is being made in Macau?

Dishes that are being made in Macau, the original recipe doesn’t have to be from Macau. Mainly it’s the signature dish of the particular restaurant.

With the awards, what can the companies win and how do you promote them after they win?

We have many ways to do it. After they win, we have the ceremony which we’ll hold at MFE (Macao Franchise Expo), July 29. Then we’ll give them award certificates and post on our social network and like last year, the companies show up in the media. They post the certificates in their venues. We also bring the merchants to different kinds of exhibitions to take them out of Macau, so they can promote themselves outside of Macau.

For those exhibitions, how often do you participate normally and how do you decide which companies to take?

We join the exhibitions that we think have potential, like the government ones: MFE, MIF (Macau International Trade and Investment Fair). And some of the private companies which make exhibitions that are large, we attend.

What about the SME business matching activities that the gaming operators are holding? Do you encourage companies to participate in those also?

We do.

Does iFood have a physical product?

Yes, the club card. There’s more than 400 restaurants that give us the largest in-store discount, so you take the card with you for the discount. The digital version of the card we’ll connect together with our app very soon, so no matter whether you’re using the card or the app, it’s the same.

How many downloads of the app do you have so far?

About 380,000 downloads in Macau.

Almost everybody.

How soon are you thinking to make an English language version?

We are already planning to do the English version, but there’s one main challenge. You have to use the specific names of the dishes, which aren’t directly translatable. So for our English version we cannot translate the real meaning of the restaurant’s

Business Daily Monday, June 12 2017 5

Macau name or dish, otherwise nobody will understand.

Of the restaurants that you partner with, how many already have English menus?

I think no more than 10 per cent.

The reason is that it depends on the owner’s business strategy. For example, if I have a restaurant in Taipa, of course I’m looking for foreign clients.

So many foreigners are working in casinos or big companies that don’t understand Chinese and need a menu.

So when I set up a restaurant I need this type of customer, and need to make an English menu.

But on Macau peninsula, some of them they haven’t thought about it yet and haven’t made English menus.

Especially in the old areas.

We also help the restaurants to design menus, so if the company needs English we help them to translate.

We have this service, but we won’t tell them ‘hey you need to make an English menu’.

Translating dishes into English is also quite difficult. We can’t just randomly translate on Google, it needs to be done by a professional.

With a menu that isn’t translated by a professional it’s always a joke.

For example there’s a dish that is a salty egg that’s blended and mixed with pork rib. If you directly translate it it’s ‘gold sand bone’. Gold, sand and bone together, what the hell?

“With a menu that isn’t translated by a professional it’s always a joke” You see the amount of restaurants that open and that close. Are there as many opening as closing? How long can a restaurant stay open in Macau?

Actually every day there are restaurants opening and restaurants closing.

I think maybe not more than 15 per cent can stay more than two years in operation, for new companies.

They close because of many reasons.

I think the government by itself can’t help everything.

I always go to the universities to talk about this topic. I think to be a young entrepreneur depends on your DNA. Not everybody can do it.

Some entrepreneurs, we work many years to gather some money to try to start up a business. This is a kind of entrepreneur. The other one – goes back to their company, says ‘father, papa, mama give me money’. ‘Okay I’ll give you 3 billion, try to do it.’

This is also an entrepreneur. Both of them are entrepreneurs but they’re very different.

Like so many young people in Macau, they put their money together to make a restaurant and have many problems.

First, market research. Second, not many people know about how to manage relationships and work.

Whether the business is going up or going down, the founders are friends, they have to understand ‘oh this month we didn’t make money, you’re always not in the office, you have your own job, you’re not always helping. I’m in the restaurant everyday I work very hard, where are you guys?’

They need training, they need to have a meeting at the beginning and divide the roles and the management.

They don’t know how to separate who is in charge of what. They just say ‘you’re the boss, I’m the boss, you’re the boss’.

Are university graduates here prepared for the workforce?

No. There are so many things you can’t learn at school. Even the professors maybe haven’t started their own businesses before. How can they learn? They can only learn from practice, from real life.

I would really suggest for them to go work first. If you don’t know how to be a solider, how can you be a general? If you’ve never used your weapon before, you can’t go to war. So go to work first to understand.

If you understand how to be an employee then you understand how to be an employer. Work first, don’t just leave school and say ‘oh I learned many things from school, I’ll ask my papa to give me money’ (laughs).

How many of the restaurants that you were with are family owned businesses?

Ten years ago many were family style restaurants. But nowadays they’re more like company style. But family style still exist, just not many now.

Do you think the family restaurants are primarily in restaurants they own?

Yes, some of them yes. For example on the street you see some companies and think ‘how can they stay alive on this street?’ You’re selling nails, on this main street you’re selling nails? You’re selling iron? You can stay here because 30 years ago they already owned the properties. That’s the reason why. Maybe 30 years they have owned the property; they’re a very happy, family business. If you talk to them, tell them that if they would move back to their home and rented the property out, they would earn more. But they say ‘No, I need to work, I need to work in this way.

This is my life. Not because of money.’

With the rising rents, family businesses are being replaced by large chains like Chow Tai Fook. As a business person, do you think that this change is good or bad for Macau?

I don’t think it’s good or bad. Because this is the evolution of Macau. You have no choice to say yes or no. You cannot stop it no matter whether you like it or not. It’s still going to happen.

Like Senado Square, of course family businesses, small businesses got kicked out and then some property owners rented the stores to Swarovsky or Koi Kei to rent to someone to conduct their business.

You cannot stop it. You cannot stop the property going from very cheap to very expensive. The light must go on, society must go on, to develop like this. Like in a family in Tokyo – the grandfather buys the house, the grandson finally pays off the mortgage of the house loan. What do they feel? They feel nothing, it’s normal.

It’s natural.

Compare Macau and Hong Kong, Hong Kong people are like this also.

Macau and Zhuhai, Zhuhai people are the same as this.

If you’re powerful enough, you stay in the city. If you’re not powerful enough, you leave the city to go to another place.

“I hope to be the next generation of monopoly.

Or play together with the monopoly.

We hope to get a ticket” A lot of the population has already moved to Zhuhai. Do you think Macau is going to become just for tourists and business people?

I think some of the local people love their place. No matter what they will try their best to stay in their own place. Like me, like many people.

‘Can’t you just go to Zhuhai, go to China to buy a cheaper house to move?’ No. Because we are Macau people. Our children need to study here, so we need to have a house here. We need to stay here.

For iFood, will the new Hong KongZhuhai-Macau bridge change your business model? Will you need to focus more on incoming tourists, in particular from Hong Kong?

I think no matter what changes to the city, no matter whether it’s the bridge or what, the only thing that’s needed is to be a leader of this industry.

That’s how we’re always thinking.

We need to keep our company as a leader in this industry.

Do you think the bridge will bring more competition from Hong Kong?

I think so. Yes. Are you worried?

No. Never.

What other online strategies do you apply?

We also have a game, which in Macau is very popular. We do this game almost every week. For this one we offer 300 cocktails for free, if you win you can use the coupon for a free drink. You take that to

the restaurant, show the coupon and win a cocktail. They input the password, redeem the coupon and give you the free cocktail.

There’s a lot of footwork involved in establishing and maintaining the restaurant network. How many people do you have working for you?

In this office, in Macau we have 15 people. Every day. They’re in different departments, some making menus, some doing the editorial, some doing interviews, some with customer service and promotion.

Are you thinking about Zhuhai and Hong Kong?

Yes, we have a company in Zhuhai but we must focus on Macau, because there are so many things that we can develop. Online ordering, we connected to the banks so we’re doing e-commerce.

I’ll try and explain: You have a restaurant and your restaurant has many end users that order the food from iFood. Then I charge them a certain amount of money, but I’m not paying straight out to the company, maybe I’ll give it to you 10 days later. And the money will stay in my group, accumulating in the bank account.

Why are we doing this? Because one day we can go to the stock market. I collect money in the group, then give back to the thousand restaurants ten days later, and collect interest.

That is only one type of the business.

The other is I give you business, design the menu, update it for you. If you don’t have enough employees, I’ll find them for you. We offer many paid services to you and we also cooperate with so many companies like CTM, Macau Pass, Coca-Cola, and they give you commission. So we have this income.

And later, your restaurant needs supply: chicken, beef, many things. I cooperate with the supplier to connect it together. And the supplier gives you a commission. For example, I introduce 500 restaurants to this store to buy the chicken, so I sign the contract with them as iFood.

In Macau, the market is still very deep, very deep, especially in Macau.

“When we’re talking about Smart City – a Smart City must have WiFi” Tell us about Macau.

Macau is a very dark place. Monopolies owning electricity, water, transportation. If you are a foreigner you think ‘oh transportation is transportation.

The car transport in Macau is a car company.’ No, so many things are controlled by a few people. But, I think these few hundred years in Macau, I studied the history, I know it’s changed little by little. Three hundred years ago in Macau they only had toy manufacturing, gambling, fireworks and sex. Twenty years ago, Sands comes to Macau in 2002 and the gambling industry is more competitive. Property goes up.

So, in this society, in every generation the power and the money have changed a little bit. And this generation is e-commerce.

Do you think this generation will change more quickly because of the Internet? Will it change quicker than it has in the past 300 years?

In Macau? No. Monopolies will still exist. Because they will build up a firewall.

Look at Uber. International, every country, even China, Macau says they cannot. They started to call the phone for the taxi, now they have made the app and bought new taxis.

So what am I waiting for? I hope to be the next generation of monopoly.

Or play together with the monopoly.

We hope to get a ticket.

6 Business Daily Monday, June 12 2017

Macau Logistics

Calling all transports Smart Technology and the One Road, One Belt policy will be the main topics at the Chartered Institute of Logistics and Transport International Convention 2017 held in the MSAR until June 14 Nelson Moura nelson.moura@macaubusinessdaily.com

M

arking its debut in the MSAR, the Chartered Institute of Logistics and Transport (CILT) International Convention 2017 debuted yesterday at the Sheraton Grand Macao Hotel, bringing together 200 delegates of the logistics and transport industry from more than 30 countries. The event, which runs until June 14, has chosen the theme ‘Smart Journey, Belt and Road’ and will focus on Smart Technology and the One Belt, One Road (OBOR) policy.

“We think that for logistics professionals in this region, OBOR is a very important topic. We wanted to allow our members to get more knowledge and understanding of the policy,” Michael Lam, founder of CILT Macao told Business Daily.

According to Rory J. Doyle, the Managing Director of Transport Events Management Limited - a Malaysian transport event organising company that will be responsible

for next year’s CILT to be held in Malaysia - OBOR is a “hot topic” in the logistics industry at the moment.

“The initiative has been raised in almost all of our conferences. Everyone wants to talk about it and be a part of it. It’s still at an early stage so

people don’t quite know how they can fit into it, but everyone wants to get on to that bandwagon,” Mr. Doyle told Business Daily.

MICE honey

Created in 2001, CILT is a global organisation with 34 member countries that looks to assist the logistics and transport industry in exchanging information and networking.

For the CILT Secretary General, Keith Newton, the city’s hotels and venues make it a “great place to run a convention” with its geographical

location allowing Asian members to easily take part.

According to Mr. Lam, the MSAR Government has also provided “very generous support to this international event” with its organisation receiving assistance from the International Meeting and Trade Fair Support Programme provided by the Macau Trade and Investment Promotion Institute (IPIM).

The IPIM plan provides MICE events with different types of financial support, such as a grants of 50 per cent of the promotion and marketing costs up to a maximum amount of MOP100,000 (US$12,452), or subsidies to bring overseas keynote speakers.

Gaming

Success Universe: Ponte 16 renovations completed Cecilia U cecilia.u@macaubusinessdaily.com

The renovation of Ponte 16’s hotel has been completed, according to statements by the executive director and deputy chairman of the property’s operator Success Universe Group ltd, Hoffman Ma Ho Man, as reported

by Apple Daily.

According to the deputy chairman, the renovation of rooms in the hotel began two years ago, with investment per room under HK$100,000 (US$12,827).

A total of 400 rooms were refitted.

Ma also disclosed that the recent occupancy rate of the hotel remains at 70 to 80 per cent.

With the growing hotel room supply in the city, Ma said Ponte 16 has implemented a progressive pricing strategy, lowering prices when the occupancy rate is below 50 per cent and raising prices when the rate exceeds 50 per cent.

Currently, the average room price is lower than in previous years, but has not dropped more than 10 per cent, Ma noted.

Following the addition of a children’s playground in the hotel, aimed at attracting more families, the hotel operator will introduce a simulation racing game which the group has invested HK$10 million in.

For the gaming sector, Ma revealed that the performance for both VIP and

mass market in Ponte 16 are similar to the general market, but added that plans will be rolled out to accompany changes.

Plans to renovate and integrate high betting areas and VIP rooms will also be carried out.

Ma remarked that the recent growth in the VIP market was due to the continuous decline in the past months.

Ma expects a 10 per cent increase in gaming revenues for 2017, when compared to the previous year, and remains cautious as to whether the VIP market will see substantial growth.

Success Universe suffered a HK$31 million loss last year, a substantial

increase from the HK$6.7 million loss registered in 2015.

The company explained in previous filings that the significant downturn in revenue and profits was mainly due to a decrease in profits from its local casino.

On the same occasion, the Portuguese Consul General to Macau, Vitor Sereno, highlighted that the “friendship between the Portuguese and Chinese people” is “an example worldwide on how to create consensus and bridges”.

“For Portugal, the relationship with the People’s Republic of China is a strategic priority, now more important than ever. It is without a doubt a friendship for life,” he highlighted.

Mr. Sereno also spoke about the ‘One Belt, One Road’ policy,

underlining the “great potential of the Sines harbour (Portugal)” and the creation of a “railway connection between Madrid and Sines” which will allow the unification of the “Atlantic Maritime Route to the Silk Road Trans-Asian Railway”.

“Portugal wants to give a contribution so that the MSAR can perform a relevant role in the development of this strategic policy, as an effective bridge of economic and commercial cooperation between China and Portuguese-speaking countries,” he stated.

Trade

Here to stay During the Day of Portugal, Camões, and the Portuguese Communities celebration of June 10, the Chief Executive Fernando Chui Sai On highlighted the contribution of the local Portuguese community to the socio-economic development of the MSAR Nelson Moura with Lusa nelson.moura@macaubusinessdaily.com

The MSAR Chief Executive (CE) Fernando Chui Sai On highlighted on Saturday, the close relationship between the region and Portugal, mentioning that Portuguese are a “fundamental and integral” part of local society, in a speech full of references to the ‘One Belt, One Road’ policy.

“As an integral and fundamental part of the multicultural social configuration of Macau, the Portuguese and Macanese residing here have shown their effort and have contributed largely to the socio-economic development of Macau,” the CE said, in the annual reception taking place at

the residence of the Portuguese Consul on the Day of Portugal, Camões, and the Portuguese Communities.

The majority of the speech was dedicated to the ‘One Belt, One Road’ policy - the international infrastructure plan developed by China to symbolically revive the ancient Silk Road economic corridor that connected East and West - which has “received great attention from the international community, including Portugal”.

“Macau has had an important status as an international commerce centre for the old Maritime Silk Road, with several Chinese products such as silk, porcelain and tea exported to the rest of the world through Macau,” stated the CE.

Business Daily Monday, June 12 2017 7

Macau Construction

China State Construction’s development slows New deals awarded to the Macau SAR Government’s ‘biggest contractor’ down 44 pct y-o-y, totalling nearly MOP2.51 billion for the five first months of 2017 Sheyla Zandonai sheyla.zandonai@macaubusiness.com

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ew contracts awarded to China State Construction International Holdings Limited for construction projects in Macau totalled HK$2.51 billion (US$321.92 million/ MOP2.58 billion) for the first five months of the year, according to a company filing with the Hong Kong Stock Exchange.

The amount of new contracts awarded represents a drop of 43.7 per cent from the same period in 2016, when new deals signed in the city totalled HK$4.46 billion.

As for cash construction and related projects in progress in Macau up to May 31, the company announced they were valued at HK$25.48 billion, with a backlog amounting to HK$4.58 billion – similar to the same period a year earlier, when cash projects and related projects in progress were valued at HK$22.75 billion, with a backlog of HK$11.41 billion.

In addition to several contracts awarded to China State Construction in the past by local casino operators and hotels – such as Wynn Resorts, MGM, Melco and The 13 – the group has also been awarded contracts for public works and urban development projects in the city.

According to previous reports, the company claims that it has been ‘the biggest contractor for the [Macau SAR] government.’

Past contracts awarded to the group locally include the 228 Project, for the Liason Office of the Central People’s Government (2008), the Macau MSR Drinking Treatment Plant Extension Project, for Macau Water

Supply Company Limited (2006), and the Commercial & Residential Development at Lot U, for Nova Taipa Urbanization Ltd. (2006).

The company is also working on Nova Grand, a residential and commercial complex in Taipa, scheduled for completion in the fourth quarter of 2018, according to its developer Shun Tak Holdings.

Other operating information

New contracts for China State in Hong Kong amounted to HK$10.98 billion during the five months of the year ended May 31, while cash construction and related projects on-hand were valued at HK$66.57 billion plus a backlog of HK$27.57 billion.

In terms of new contracts awarded to the group as a whole, these amounted to an accumulated value of HK$43.43 billion over the five months ended May 31, with the company noting that it had achieved 48.3 per cent completion of the full year target for 2017, established at no less than HK$90 billion.

The total value of projects in progress by the company was valued at some HK$290.44 billion as of May 31, 2017, with a backlog of nearly HK$174.8 billion.

New contracts and contracts onhand include infrastructure projects in mainland China, and cash construction and related projects in Macau, Hong Kong and others, as well as deals with Far East Global, a subsidiary of China State Construction, which the company acquired in March 2012.

New major contracts in May 2018

China State Construction also highlighted in the filing, major new contracts awarded to the group for the month of May 2017 to be developed in mainland China, including the investment and construction project of relocation housing and infrastructure, in Linyi city in Shandong province, with a contract value to the group of about HK$3.16 billion.

Other projects include the investment and construction project of municipal infrastructure, in Zibo city in Shandong province, with an attributable contract value to the group of HK$1.9 billion; and the investment and construction project of relocation housing, Xuzhou, in Jiangsu Province, with a HK$520 million contract.

Gaming regulations

PAGCOR on the line The deadly attack on Resorts World Manila on June 2 has fired up political discussions in the Philippines that may lead to divesting the state gaming agency of its licensing powers Sheyla Zandonai sheyla.zandonai@macaubusiness.com

The Philippine Amusement and Gaming Corporation (PAGCOR) may lose its licensing powers over casino operators after the deadly attack at Resorts World Manila on June 2, the Rappeler reported.

Acting lawmakers were said to be considering the option of filing a bill seeking to transfer PAGCOR’s current

power to grant licenses to casinos to the House of Representatives.

The proposal was disclosed by Majority leader Rodolfo Fariñas during a joint committee probe held at the House, into the shooting and arson attack perpetrated by a lone gunman, Jessie Carlos, at Resorts World.

The attack left 38 dead in the casino operated by Travellers International Hotel Group.

Fariñas argued that local casino

operators should be required to obtain franchises, or licenses, from the country’s legislative body instead of PAGCOR. The Majority leader was also quoted as saying that they will review the Republic Act (RA) 9487, ‘with a view of amending it and repealing altogether’ Presidential Decree (PD) 1869, which first formalized PAGCOR’s charter.

Passed in 2007, RA 9487 extended PAGCOR’s franchise for yet another 25 years, while further granting the state regulator the authority to operate and license casinos as well as gaming and entertainment clubs in the country.

License revoked

The license granted to Resorts World Manila to operate casinos in the country was suspended by Pagcor on Friday, pending the results of the investigation into the potential liability of the company, regional media reported.

“The said suspension will remain until RWM rectifies its serious security lapses and deficiencies – which caused not only the loss of lives and damaged properties but also placed the Philippine gaming, tourism and hospitality industries in bad light,” Pagcor stated, as published

by Philstar.

Resorts World Manila is reviewing its security procedures and protocols, a measure Macau operators have also implemented in the wake of the attacks.

Opinion

Sheyla Zandonai*

Internet realm The role the Internet can play in fostering small and medium enterprises (SMEs) in Macau is apparently being underestimated.

In a series of comments by industry insiders speaking at the One Belt, One Road Conference held last week, the unexplored potential of using cyberspace to launch new businesses in the city was highlighted a few times.

Startup companies are usually small-sized, knowledge-intensive ventures, which should be able to make the most they can out of new technologies – and wild, innovative ideas – with little resources, financial and human, in order to be successful.

The target market of young entrepreneurs should not be limited to the boundaries of their hometowns. They should think globally and embrace the World Wide Web. Although reaching out is the way to go, there are a few elements that have to be well-developed at the basis, the physical location, so to speak, where those companies set up shop.

First, there is a need for a qualified workforce in areas such as foreign languages and coding.

Coding is the language of the future. And there is a reason for that. Services are increasingly more sophisticated and explore the edges of technologies available and emerging everyday around the world.

Grappling with this idea, several high schools in Europe and in parts of Asia have already included coding in their basic curriculum.

The premise is simple. If you don’t have enough trained people, you cannot move ahead.

And that leads us to the second matter. Red tape.

Currently in Macau, improving education and training is as much an issue as making foreign qualified staff promptly available. And for business, this also means having the choice to opt for imported labour, if they deem the options available locally do not meet their requirements.

Finally, there is a crucial matter, which has been partly covered here. Raising funds.

The Macau SAR Government has set up quite a generous scheme of aids and loans for SMEs. Just last week, the Macau Science and Technology Fund also increased the offer, by launching a bid to provide financial support up to MOP500,000 for candidates that present practical and interesting solutions to help develop Macau as a Smart City.

So the options are seemingly expanding as the virtual world continues to open yet more chapters for those willing to make a difference.

And change, in this case, should begin with the mindset.

* Journalist.

8 Business Daily Monday, June 12 2017

Greater China Inflation

Easing factory gate prices hint at broader economic slowdown Analysts expect China’s economy to cool in coming months after a strong first quarter

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hina’s producer price inflation eased for the third straight month in May on tumbling prices of raw materials, signalling a broader cooling in economic activity as profits are squeezed by slackening domestic demand and rising financing costs.

Moderating factory gate inflation in the world’s second-biggest economy could be a further worry for global central banks like the U.S. Federal Reserve and European Central Bank, which are puzzling over why domestic prices have remained sluggish despite improving economic growth.

China’s producer price index (PPI) rose 5.5 per cent in May from a year earlier, the National Bureau of Statistics said on Friday, versus an expected gain of 5.7 per cent and slower than the 6.4 per cent increase in April.

“Declines in non-food inflation and producer price inflation still point to an easing of broader price pressures,” said Julian Evans-Pritchard, China economist at Capital Economics, in a note to clients.

“More importantly, however, we expect price pressures elsewhere to continue to ease as economic activity slows, disappointing hopes

for a sustained period of reflation that would help erode corporate debt burdens.”

A renaissance in China’s steel industry has been a major driver of the world’s second-largest economy in recent quarters, helping to generate the strongest profit growth in years and adding to a reflationary pulse across the global manufacturing sector.

Now, however, the opposite may be true as cooling factory gate prices in China appear to be filtering through to benign inflation readings in the United States and Europe.

“Given the strong relation between raw materials PPI and import prices (available later this month), the dip in raw materials PPI indicates the reflation trade is at least stalling, if not outright dying for Asia (and the world),” Vaninder Singh, Asia economist at NatWest Markets, wrote in a note.

Slow demand, profit squeeze

Analysts are also worried that market demand won’t be strong enough to absorb the surging supplies of steel from the world’s top producer.

“There was an improvement in demand,” said CRU analyst Richard Lu. “But we don’t think it will be sustainable because we’re approaching summer when construction usually slows down.”

China’s biggest steelmaker, Baoshan Iron & Steel cut its main steel products prices for May and June after a long series of increases.

Factory gate prices had only turned positive on a year-on-year basis last

September, after falling for nearly five years, leaving many industrial firms saddled with idle capacity and less cash flow to service their debts.

Analysts expect China’s economy to cool in coming months after a strong first quarter, with recent factory activity data also indicating a gradual slowdown is underway.

A flurry of official measures targeting financial deleveraging is expected to further squeeze financing costs, eroding profits and broad economic activity over the remainder of the year.

Key Points China May PPI +5.5 pct y/y (poll +5.7 pct), slows for 3rd month PPI -0.3 pct m/m in May vs -0.4 pct Apr Raw material prices tumble, signals broader cooling in economy China May CPI +1.5 pct y/y (poll +1.5 pct) May CPI faster than April’s +1.2 pct The consumer price index (CPI) in May rose 1.5 per cent from a year earlier, accelerating from April’s 1.2 per cent increase, and in line with market expectations.

Food prices, the biggest component of the consumer price index (CPI), fell at a slower 1.6 per cent pace from the previous year, after sliding 3.5 per cent in April.

China has set its inflation target at 3 per cent in 2017, the same as the year before, suggesting policy makers still have room to tighten financial conditions after years of debt-fueled stimulus. Reuters

Currency

Beijing tightens grip on yuan to head off economic risks The central bank denied suggestions that it’s tightening control on the yuan via the counter-cyclical factor Kevin Yao

In rapid fire moves that have stunned investors, Chinese authorities have begun tightening control over the yuan, lifting it sharply in a concerted effort to restore market confidence and forestall risks of capital outflows and slower growth, policy insiders say.

Caught off-guard last month by a ratings downgrade by Moody’s Investors Service that gave fresh momentum to bearish yuan bets, traders said Beijing has reverted to its old play book - intervening in markets to bend them to its will.

The key priority for authorities was maintaining market confidence ahead of a leadership transition later this year, policy insiders said, as growing debt risks, higher U.S. interest rates, capital outflows and possible trade tensions with the United States threatened to knock the economy.

The policy insiders say last month’s introduction of a mysterious ‘counter-cyclical factor’ that increases the central bank’s influence over the yuan’s reference rate showed how serious authorities are about flushing out bearish bets and heading off any slide towards RMB7 to the dollar.

The move highlighted the challenge China faces between safeguarding economic and currency stability and speeding up capital market reforms - important steps in its quest to internationalise the yuan.

“They (authorities) are clearly tightening their grip (on the yuan), which is related to politics and diplomacy,” said a policy adviser.

“From monetary authorities’ perspective, they definitely do not want to see the yuan falling past 7 - a landmark move that could affect market expectations,” the adviser said.

The People’s Bank of China (PBOC), responding to Reuters’ request for comment, denied suggestions that it’s tightening control on the yuan via the counter-cyclical factor.

“Such a statement is not true,” the PBOC said in a rare email response, and reiterated the official explanation that changes to the way the mid-point is calculated were geared to better reflect macroeconomic fundamentals and temper “irrational” market expectations.

Beijing is especially sensitive to any renewed criticism of its currency policy by the United States, and a

weaker yuan could play into President Donald Trump’s protectionist proclivities as Washington engages in 100 days of trade talks with China.

A second adviser said that with the Federal Reserve set to raise rates further at this week’s policy review, authorities are worried that capital outflows could drive persistent weakness in the yuan - the last thing Chinese leaders want before the closely-watched leadership transition in the autumn.

In 2015, a botched stock market rescue attempt tarnished Beijing’s reform and broad policy-making credentials.

The yuan has gained 2.2 per cent versus the dollar this year, including 1.3 per cent since May 24 - when Moody’s downgraded China’s credit ratings for the first time in nearly 30 years, citing its mounting debt risks.

A Reuters poll predicted the yuan to slip toward 7.05 per dollar in 12 months.

Countering bears

Policy insiders believe authorities had been experimenting with the new mid-point regime and may have been forced to introduce it early after the Moody’s downgrade. The central bank meanwhile has also aggressively strengthened the mid-point since the start of the month.

Authorities are also concerned that rapid falls in the yuan, which is allowed to trade two per cent above or below the mid-point rate, could undermine Beijing’s bid to boost the Chinese currency’s global clout.

“The central bank will use various means to intervene if the yuan falls to 7 - this is a so-called red line,” another policy adviser said, underscoring unease that a destabilising fall in the yuan could sap confidence and hurt the economy.

China burned through nearly US$320 billion of reserves last year but the yuan still fell about 6.5 per cent against the dollar, its biggest annual drop since 1994. Latest data showed foreign exchange reserves rose to a seven-month high of US$3.054 trillion in May, as stringent capital control measures helped staunch outflows.

Controversial

Policy insiders say the central bank will combine the ‘counter-cyclical factor’, with its regular currency interventions and existing curbs on capital outflows to support the yuan.

The change will make it harder to speculate on the yuan, but critics say the move undermines transparency of China’s currency regime - a goal of recent market-based reforms.

“The central bank’s mid-point move is a step closer to the previous fixed exchange rate,” said one of the advisers. “The move is controversial as it’s a retreat in reform.” Reuters

Business Daily Monday, June 12 2017 9

Greater China Trade

In Brief

EU sets steel import duties to counter Chinese subsidies The EU had already set in place anti-dumping duties, to counter excessively low prices Philip Blenkinsop

The European Union has set duties of up to 35.9 per cent on imports of hotrolled flat steel from China to counter what it says are unfair subsidies in a finding challenged by Beijing.

The European Commission (EC), which conducted an investigation on behalf of the 28 EU members, found a number of Chinese companies had benefited from preferential lending from state-owned banks, grants, tax deductions and the right to use industrial land.

“We are continuing to act, when necessary, against unfair trading conditions in the steel sector, and against foreign dumping,” EU Trade Commissioner Cecilia Malmstrom said in a statement.

She added that she hoped global

discussions on steel overcapacity would eventually convince China to end unfair schemes to ensure a level playing field for all steel producers.

China’s Commerce Ministry said it “strongly” questioned the legitimacy of the EU decision, adding the European Commission had ignored the fact China’s steel exports to Europe had declined in 2016. It said it would take all necessary measures to protect the interests of Chinese firms.

The EU had already set in place anti-dumping duties, to counter excessively low prices, which it has now adjusted to a range of between zero and 31.3 per cent.

“Today’s announcement marks a notable shift in the EC’s policy stance by taking into account the ‘threat of injury’,” investment bank Jefferies

said in a note.

Jefferies said the case could have positive implications for imports of other types of steel, adding that it expected European steel industry group Eurofer to ask the Commission to launch more anti-subsidy investigations.

The bank noted that while Chinese hot rolled coil imports have fallen 89 per cent in the year to March, and cold rolled coil imports, also protected by duties, have declined 46 per cent, other product categories like coated sheet have soared.

Key Points Anti-subsidy duties add to existing anti-dumping tariffs Beijing “strongly” questions decision Hot-rolled steel used for ships, gas containers, pipes Hot-rolled flat steel is used in shipbuilding, gas containers, pressure vessels, tube and energy pipelines.

The targeted companies include Benxi Group, with overall anti-dumping and anti-subsidy duties of 28.1 per cent, Hesteel Group, with a rate of 18.1 per cent, and Jiangsu Shagang at 35.9 per cent.

The duties, applicable for five years, took effect from Saturday, the EU’s official journal said.

The EU has taken over 40 anti-dumping decisions to aid European steel producers, with measures on cold-rolled flat steel and stainless steel from China. It also has an ongoing investigation into hot-rolled steel imports from Brazil, Iran, Russia, Serbia and Ukraine. Reuters

Markets

In Mainland, some firms ask workers to buy shares in a bid to raise stock price There were similar efforts during the 2015 China stock market crash Samuel Shen and John Ruwitch

Around two dozen mainly small listed Chinese companies have taken the unusual step of urging their employees to buy shares in a bid to prop up stock prices and help fend off collateral calls on stock-backed loans.

In many cases, workers are stepping up, attracted in part by guarantees that their principal is safe.

It’s far from clear how these guarantees would work, with employees in some cases being asked to buy shares and hold them for at least 12 months.

The Shenzhen Stock Exchange where all but one of the companies are listed - has taken notice, and has issued guidelines requiring companies to provide details on their guarantee plans, the Securities Times reported.

Wu Kan, head of equity trading at Shanshan Finance, says that however well intentioned these efforts are, usually by the companies’ founders or big shareholders, there is a question mark over their financial ability to make such guarantees.

“It could be driven by the genuine belief that the stocks are worth investing in. But it could be a desperate move to prop up share prices to avoid margin calls,” he said.

“The promise to take any losses isn’t legally binding and largely depends on big shareholders’ virtue.

And you can’t rule out insider trading during the process, which is why regulators are demanding better disclosure,” he added.

There were similar efforts during the 2015 China stock market crash,

but then it was the government appealing to major shareholders’ patriotism to buy and hold shares in what Beijing framed as a battle against speculators, both domestic and foreign.

The scramble to raise share prices highlights the risks in using securities as loan collateral, a practice that by some estimates has quadrupled in China over the past two years.

For the most part, the companies involved are private, small, and have seen their founders or major shareholders post large batches of stock as loan collateral in recent months.

But falling share prices have eroded the value of that collateral, raising the spectre of forced liquidation where lenders, often Chinese brokerages, make borrowers sell the pledged shares. Selling the stock can further dent share prices, triggering a downward spiral.

Share bounce

Shenzhen Fenda Technology Co, which makes speakers and electronic

accessories, was among the first to issue a statement, a week ago, encouraging staff to buy shares.

At the end of March, Xiao Fen, the company’s chairman and top shareholder with a 44.5 per cent stake, or 416.4 million shares, had put up 84 percent of his holding as collateral for a loan, the company said. It did not say what the loan was for.

Trading in the company’s shares was suspended in late December pending a reorganisation, but resumed in mid-April, when the stock price slumped to near their 2015 market crash low.

Last Friday, Xiao promised any employee who bought shares in the company by June 6 and held them for at least a year would be shielded from losses.

“A lot of colleagues I know have bought shares. I have too,” said one worker, who gave only his family name, Li. “The company is quite good and the chairman has guaranteed principal, so, of course, we’re interested. I know some colleagues even bought shares with borrowed money.”

Shenzhen Fenda Technology shares jumped by a tenth after the announcement, but have since edged back down.

The price of Guangdong Biolight Meditech Co Ltd stock fell by a quarter this year, undercutting the value of the 14.6 million shares that its chairman Yan Jinyuan posted as collateral as of the end of the first quarter.

Last Monday, Yan made a promise like Fenda’s Xiao, and the share price also rose.

Sun Xishan, a sales worker at Biolight, said he missed the chance to buy stock on the day of the announcement, but would try to get in on the shares later.

“I know the company well, it’s in pretty good shape and its performance is growing. The chairman promised to cover losses if any, so it’s hard not to be interested if one has money,” Sun said. Reuters

M&A

Shenzhen Metro becomes Vanke’s largest shareholder Shenzhen Metro Group has acquired more shares in China Vanke for RMB29.2 billion (US$4.3 billion), making it the largest shareholder in the developer, surpassing financial conglomerate Baoneng Group. The latest move by the state-owned subway operator will affirm its control over Vanke, China’s second largest property developer, and essentially ends the struggle for boardroom control. Shenzhen Metro has acquired 1.55 billion A-shares in Vanke, equivalent to around a 14 per cent stake, from another developer China Evergrande Group’s Hengda Real Estate and its subsidiaries at RMB18.80 a share, Evergrande said in separate filings to the Shenzhen and Hong Kong stock exchanges.

Liquidity

Primary money rates slip last week China’s primary money rates edged lower for the week after the central bank injected fresh funds through medium-term loans, but traders said they still expected pressure on liquidity from seasonal factors including coming tax payments. The volume-weighted average rate of the benchmark seven-day repo traded in the interbank market, considered the best indicator of general liquidity in China, closed at 2.9136 per cent on Friday, more than eight basis points lower than the previous week’s closing average rate at 2.9981 per cent. Traders said there were few signs of liquidity stress last week after central bank injections.

Diplomacy

Xi tells India’s Modi issues should be managed “appropriately” Chinese President Xi Jinping on Friday told Indian Prime Minister Narendra Modi that the two countries should work to “appropriately” manage their differences, the Chinese foreign ministry said in a statement online. “(China and India) should strengthen multilateral communication and consultation, and appropriately control and manage differences and sensitive issues,” Xi said, according to the post. Xi also congratulated India on becoming an official member state of the Shanghai Cooperation Organization (SCO) security bloc, jointly led

by Russia and China.

Markets

HK’s Man Wah rejects Muddy Waters’ allegations Hong Kong-listed furniture maker Man Wah Holdings Ltd rejected on Friday short-seller Muddy Waters’ accusations about financial irregularities at the firm, calling them groundless and false. In a statement to the Hong Kong bourse, Man Wah said it has no undisclosed debt and stands by its 2017 annual report. Its controlling shareholder holds 63.51 per cent of the company and none of those shares have been pledged to third parties, it said.

Man Wah said it had instructed its legal advisers to make a formal complaint against Muddy Waters to the regulator, the Securities and Futures Commission.

10 Business Daily Monday, June 12 2017

Greater China Cryptocurrency

Hong Kong, Singapore rivalry hobbling Asia in US$100 bln fintech race Investors poured US$19 billion worldwide into fintech in 2016 alone Michelle Price

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sia’s competitiveness in fintech is being undermined by the rivalry among the region’s financial centres that has created regulatory complexity and uncertainty, a financial lobby group has warned.

Governments across Asia - most notably Hong Kong and Singapore - have launched a raft of initiatives to grab a slice of the US$100 billion invested in financial technology globally but the regulatory hotch-potch is making it tough for firms to scale up, the Asia Securities Industry and Financial Markets Association (ASIFMA) said in a report on Friday.

“The regulatory landscape is very fragmented and a lot of the initiatives, though well-intentioned, are not necessarily well thought through,” said Mark Austen, CEO of ASIFMA. The lobby group, which represents global banks and asset managers such as Goldman Sachs and BlackRock, has called on Asian regulators to coordinate better and to adopt a consistent set of best practices for fostering fintech in the region.

“By not cooperating on fintech, Asian financial centres are putting themselves at a real disadvantage relative to the rest of the world: that traditional competitive dynamic and rivalry between the likes of Hong Kong and Singapore may actually

in this case be a disadvantage,” said Hannah Cassidy, partner at Herbert Smith Freehills in Hong Kong, which contributed to the report.

Investors poured US$19 billion worldwide into fintech - including P2P lenders, distributed ledger technology and crowdfunding platforms - in 2016 alone and thousands of fintech start-ups continue to proliferate, according to a February report by global regulatory body the International Organization of Securities Commissions (IOSCO).

Hong Kong, Singapore, Australia, Japan, South Korea and Malaysia have launched a range of special programmes to attract and foster fintech ventures, from incubators and grants, to temporary license waiver schemes,

with competition fiercest between Hong Kong and Singapore.

While all these markets operate well-defined licensing and supervisory regimes for traditional financial firms including banks, brokers, insurance companies and funds, regulators are still struggling to establish clear and consistent regimes for fintech firms because they often operate innovative business models.

Cryptocurrency exchanges, for example, are licensed as money changers and regulated by the customs authority in Hong Kong but they are licensed as online shopping malls, akin to clothes retailers, in South Korea. In Singapore, the central bank has proposed regulating bitcoin exchanges as payment firms.

This makes it very expensive for fintech firms based in places with small domestic markets like Hong Kong, Singapore and Australia to expand

into the broader region because they are more or less starting from scratch each time they enter a new country, said Aurelien Menant, CEO of Hong Kong bitcoin exchange Gatecoin.com.

“This is a very important issue for fintech firms in Asia,” he said, adding he would welcome tougher standardised rules for alternative currency exchanges across the region.

The lack of regulatory clarity has meant some aspiring fintech firms have struggled to gain licenses in markets like Hong Kong, Reuters reported last year.

“We are open to cooperation with regional and global regulators on fintech,” the Hong Kong Securities and Futures Commission (SFC) said in a statement, adding it would be entering into new regulatory cooperations shortly.

The SFC added it has taken a leading role in discussions around fintech within IOSCO and conducts dialogue with other watchdogs through a dedicated fintech liaison officer.

A spokeswoman for the Monetary Authority of Singapore said the regulator has signed fintech cooperation agreements with 10 counterparties, including in Australia, India, Japan and South Korea.

“These agreements create frameworks for information sharing on fintech trends and regulatory issues, and potential joint innovation projects. They also help to create greater understanding between fintech players in different markets, with the ultimate goal of benefiting consumers and businesses,” the spokeswoman said in an email. Reuters

Markets

Mainland investors flood into Hong Kong stocks as policy tightens at home Chinese are increasingly seeking companies with better valuations and the opportunity to diversify into non-yuan assets Luoyan Liu and John Ruwitch

Chinese money has helped Hong Kong stocks power to near two-year highs just when Mainland markets appear to have stalled on China’s slowing economic growth and policy tightening.

The divergence in flows via the “Connect” schemes between the two markets became prominent in recent months with the Hong Kong leg seeing much greater usage compared with China-bound traffic. “(Mainland) investors have been worried about economic growth, which possibly peaked in the first quarter, and also tighter financial regulations as the government stepped up deleveraging efforts,” said Yan Kaiwen, an analyst with China Fortune Securities.

Lopsided equity flows put the spotlight on Beijing’s efforts to attract investments and the progress it is making in reforms that have promised to open up its capital markets. They also come at a time when China has imposed tighter restrictions on taking funds out of the country to staunch outflows.

From January to May, a total of RMB168 billion (US$24.7 billion) flowed into Hong Kong via the pipelines, while northbound usage in the same period was RMB86 billion.

The southbound leg of the Shanghai-Hong Kong connect dominated, recording a net flow of RMB133 billion (US$19.6 billion) in the first five months of the year, up nearly 80 per cent from the same period in 2016.

The benchmark Hang Seng Index, meanwhile, has jumped about 18 per cent since the start of the year, in stark contrast to a gain of about 1.8 per cent in the Shanghai Composite Index.

China kicked off the landmark scheme connecting Shanghai and Hong Kong stock markets in November 2014 and the long-awaited link between Shenzhen and Hong Kong went live in December.

Analysts say demand for Hong Kong shares will likely continue as Mainland markets come under greater

regulatory scrutiny from a crackdown on risky lending practices and as the authorities tighten credit to ward off debt bubbles.

Chinese investors are also increasingly seeking companies with better valuations and the opportunity to diversify into non-yuan assets.

“Hong Kong stocks are favoured for their lower valuations and higher dividend payments compared with Mainland peers, as institutional investors who emphasize fundamentals and valuations participate more in the southbound legs,” said

Linus Yip, Hong Kong-based chief strategist at First Shanghai Securities.

The Shanghai stock market trades at a price-to-earnings multiple of around 16 times and the Shenzhen market at 34 times. In contrast, the Hang Seng index trades at 14 times earnings.

Hong Kong exchange data shows investors prefer largecap dual-listed financial firms and industry leaders, including Bank of China, New China Life Insurance, Tencent Holdings and China Evergrande.

The index measuring price differences between dual-listed companies in Shanghai and Hong Kong stood at 122.23, 2.7 per cent lower than the peak of 125.58 early this year.

Yip said investors should be wary of sharp gains in Hong Kong.

“If Hong Kong stocks go higher too rapidly, there could be a chance of a short-term correction and the (southbound) Connect flows could scale back.” Reuters

Business Daily Monday, June 12 2017 11

Greater China In Brief E-commerce

JD.com plans expansion into Thailand JD.com Inc, China’s second-largest e-commerce company, plans to enter the Thai market later this year in a move to expand its overseas business beyond Indonesia, its founder and chief executive said on Friday. Richard Liu also told Reuters in an interview the company planned to use Thailand as a hub for servicing other Southeast Asian countries such as Vietnam and Malaysia. “Thailand will come soon, before the end of the year. We will invest a lot and also find the best local partners to work together with. Everyone could be possible, but not Lazada,” Liu said.

M&A

Lawmakers urge U.S. Treasury to reject Aleris sale

Trial

Exiled tycoon fraudulently obtained big loans, employees tell court The businessman has made it clear that he wants to disrupt a key five-yearly congress to be held this autumn Philip Wen

Exiled billionaire businessman Guo Wengui instructed his employees to fraudulently obtain hundreds of millions of dollars in loans, senior employees of his real estate company told a court in China’s northeastern Liaoning province.

Appearing in the Dalian Xigang People’s Court on Friday, the three staff from Guo’s Beijing Pangu Investment confessed in a four-hour trial to obtaining RMB3.2 billion (US$470.5 million) from the Agricultural Bank of China in 2010 by using falsified company contracts, official seals and receipts. The loan was repaid in full in 2014. Two of the defendants also admitted to the false purchase of foreign currency.

In an online video posted on Friday, Guo said the facts were “completely different” to the charges, while suggesting any wrongdoing may have been due to his ambitious employees chasing higher pay and bonuses. “(They) want the loan to go through, want to impress their boss,” he said, adding that China’s banking regulations sometimes forced people to do things that they wouldn’t otherwise do.

Guo has emerged in recent months as a political threat to the Chinese government in an acutely sensitive year, after unleashing a deluge of corruption allegations against high-level Communist Party officials through Twitter posts and video blogs. The businessman has made it clear that he wants to disrupt a key five-yearly congress to be held this autumn.

Guo, who resides in a sprawling US$68 million apartment overlooking New York’s Central Park, has provided scant evidence to back up his claims. But his standing as a former billionaire insider, and his close ties with one of China’s most senior intelligence officials, the disgraced former state security vice-minister Ma Jian, have tantalised a large online following and made him a centre of attention in Beijing political circles.

While Guo was not named as a defendant in Friday’s trial, he featured prominently in the prosecution’s line of questioning, with the three employees repeatedly asked to confirm that Guo was the ultimate controller of Pangu and made all major business decisions, including to go ahead with the alleged loan fraud.

Foreign media allowed access

The Chinese government has been engaged in a sustained effort to discredit and tighten pressure on Guo. In a highly unusual move showing the Chinese government’s determination in countering Guo’s damaging allegations online, foreign media were granted access to watch a live feed of proceedings from a media room established in the courthouse.

Often foreign media are barred from getting access to such events.

“As long as they given back their freedom, they can say they committed murder and arson that’s fine, as long as they go home” Guo Wengui, Beijing Pangu Investment head

Transcripts and footage of proceedings were also posted on the court’s official Weibo account, an increasingly common practice used for politically sensitive cases where the government and party-controlled judiciary wants to get its narrative out.

The trial on Friday is the first criminal case brought against his company since Beijing requested Interpol issue a global ‘red notice’ in April for Guo’s arrest.

One of Guo’s chief demands has been that his employees, who have been held indefinitely since they were first detained in early 2015, be freed or at least have a trial in accordance with Chinese law.

“As long as they given back their freedom, they can say they committed murder and arson that’s fine, as long as they go home,” Guo told Reuters on Friday in a conversation through a messaging service, adding that new “leaders” handling the case had expedited the hearing.

“It’s practical, this long-term detention is too unfair to them.”

The court prosecution summary said Guo would be dealt with “in another case”.

“Finances at the time were tight and we needed funds so Guo Wengui already contacted the bank, we were just instructed to prepare documents,” Pangu’s former finance director Yang Yin told the court. “All the decisions are made by him.”

In closing statements, the defendants expressed regret, pleaded tearfully for leniency, and spoke of the impact their lengthy detention had on their families.

The court said a verdict would be handed down at an unspecified later date.

The head of Agricultural Bank of China at the time of the loans, Xiang Junbo, who went on to head China’s insurance regulator, was investigated for corruption in April.

Guo has previously suggested that he has been engaged in negotiations with unnamed Chinese officials, and has pointed to the fact his wife and daughter were allowed to visit him in New York as an outcome of those talks.

The legal backlash in the case has not just been felt in China. Other high-profile figures caught in the crossfire of Guo’s online allegations have filed defamation suits against him in New York, including the Chairman of property developer SOHO China, Pan Shiyi, and prominent journalist and founder of Caixin Media, Hu Shuli.

Australian designer Yuge Bromley also told Reuters she is considering suing Guo, after he said she was an illegitimate child of a senior Communist Party official. Reuters

More than two dozen U.S. lawmakers have urged U.S. Treasury Secretary Steven Mnuchin to reject the proposed sale of U.S. aluminium products maker Aleris Corp to China Zhongwang Holdings Ltd to protect U.S. security interests. In a June 9 letter to Mnuchin shared with Reuters, the 27 lawmakers said it would be a “strategic misstep” to allow the US$2.33 billion sale to go ahead. “It is critical that CFIUS (Committee on Foreign Investment in the United States) exercise extreme caution when a foreign investment transaction includes the transfer of military proficiencies and sensitive technology to China,” the lawmakers wrote.

Real estate

Public protest in Shanghai over property rule change Hundreds of demonstrators have marched through a shopping district in the Chinese city of Shanghai protesting against changes to housing regulations, in a rare show of public dissent in the financial hub. Footage of the late Saturday protests shared on social media showed hundreds, if not thousands, of demonstrators holding placards and shouting slogans while marching along Nanjing Road, a glitzy shopping strip in the city centre.

One video seen by Reuters showed police setting up blockades and dragging a demonstrator away.

Expansion

WH Group targets beef and poultry assets in U.S. and Europe Smithfield Foods Inc’s owner, China-based WH Group Ltd, is scouting for U.S. and European beef and poultry assets to buy, in a move that would sharpen its rivalry with global meat packers Tyson Foods Inc and JBS SA. Expanding into beef and poultry would bring U.S.based Smithfield, the world’s largest pork producer, more in line with competitors Tyson, JBS and BRF SA, which each process pork, chicken and beef.

Smithfield Chief Executive Ken Sullivan told Reuters he is interested in the potential of diversifying into other meats to broaden the company’s product portfolio, though no deals were imminent.

12 Business Daily Monday, June 12 2017

Asia Trade

Philippines’ exports rise for 5th month Shipments to Hong Kong and China rose 36.8 per cent and 26.4 per cent, respectively

P

hilippine exports expanded for a fifth straight month in April, in line with strength in shipments elsewhere in Asia and giving an extra boost to one of the world’s fastest-growing economies.

Improving global trade could complement robust domestic demand as the government aims to lift growth to as much as 7.5 per cent this year from 6.9 per cent in 2016.

April exports rose 12.1 per cent from a year earlier to US$4.81 billion, while imports dropped 0.1 per cent, the first fall in 14 months, data showed on Friday.

That produced a trade deficit of US$2.05 billion, narrower than a year ago.

Demand for eight of the country’s top export items remained firm.

Shipments of electronics products, which accounted for 51 per cent of total exports in April, rose 6.8 per cent from last year, slower than the previous month’s 19 per cent annual climb.

But economists were unfazed by the apparent slowdown, saying that an electronics “super-cycle” which has boosted global hi-tech companies this year still has legs.

“I am not too worried about fading

in electronics demand this year,” said Vaninder Singh, economist at NatWest Markets, as several important consumer and business devices have been launched and announced in the last few months.

South Korea’s exports grew at a double-digit pace in May, expanding for the seventh consecutive month on strong world demand, while Taiwan’s

exports in May expanded for the eighth straight month as factories churned out supplies for Apple Inc’s new iPhone.

China’s exports expanded by a better-than-expected 8.7 per cent, data showed on Thursday.

“For electronics, the cycle is still going strong,” Singh said.

Philippine exports to Japan and the United States, its two biggest markets, shrank 16.6 per cent and 6.7 per cent from a year earlier, respectively. But to Hong Kong and China rose 36.8 per

cent and 26.4 per cent, respectively.

Philippine President Rodrigo Duterte’s economic managers are hopeful that the government’s efforts to expand trade relations with other markets, such as China and Russia, would eventually give the export sector a further boost.

The government’s economic and fiscal targets were largely maintained after a review by economic managers on Friday, but revisions were made to trade assumptions.

The country’s 2017 growth target for exports was raised to 5 per cent from 2 per cent, and next year’s goal was increased to 7 per cent from 5 per cent.

For imports, the government pencilled in growth of 10 per cent this year until 2019 and 11 per cent for 2020 to 2022. Reuters

Social security

Japan gov't scraps proposals for drug-price cuts in policy guidelines The government said it would review official pricing every year Japan has dropped proposals on price cuts for prescription drugs aimed at boosting the use of generic drugs, underscoring the government’s struggle to rein in bulging social security costs for a rapidly ageing nation.

The step comes as Japan looks to boost the use of generics to 80 per cent by September 2020 from about 56 per cent now, thus saving the government hundreds of billions of yen every year.

To ease the burden on the national health insurance system, the government last month said it would consider having patients who prefer expensive advance prescription drugs pay the difference in cost over generic drugs.

In an annual draft of policy guidelines that incorporated the change, the government also floated the idea of lowering the prices of these prescription drugs to the levels of generic drugs.

But the proposals were missing from the final version of the annual

Business Daily is a product of De Ficção – Multimedia Projects

policy guidelines approved by Prime Minister Shinzo Abe’s cabinet on Friday.

“These proposals serve as materials for consideration but should not be taken as a certain course of direction,” a Cabinet Office official told reporters on condition of anonymity.

‘Japan looks to boost the use of generics to 80 per cent

by September 2020’

In December, the government said it would review official pricing every year, instead of every two years, and would widen the review to cover all prescription drugs, following drastic price cuts for two blockbuster drugs.

Previously the government only reviewed cases of a large discrepancy between the official price, which determines how much the National Health Insurance system reimburses medical providers, and the actual price charged to wholesalers.

On the fiscal front, the government’s policy guidelines set a new

fiscal goal, the ratio of debt to gross domestic product, along with its primary budget surplus target, in what investors view as a shift towards diluting fiscal reform.

The government’s guidelines made no mention of a twice-delayed sales tax hike to 10 per cent from 8 per cent now, a measure now planned for October 2019, fuelling speculation that it is preparing to further put it off.

Separately, Abe’s cabinet also approved the government’s economic growth plans, which target package delivery by drone sometime in the 2020s. advertisement

A decision made by the end of year would weigh up various factors, he added, without elaborating.

The change followed deliberations on the draft by ruling party officials, including those voicing the interests of drugmakers worried about hits to revenues.

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

Business Daily Monday, June 12 2017 13

Asia Environment

In Brief

Australian review calls for “fuel-neutral” clean energy target The energy crisis has crept up on Australia as states have promoted rooftop solar and wind power in the absence of stable carbon policy at a federal level Sonali Paul

Australia should adopt a “fuel-neutral” clean energy target to cut carbon emissions, cap soaring power prices and keep the lights on, the nation’s chief scientist said in a report on Friday.

Recommendations in the highly-anticipated review, aimed at ending a decade of political warfare over climate policy, mean that coal-fired power generation using carbon-capture technology could potentially be used alongside gas and renewable sources such as wind and solar.

The blueprint for energy security, presented to federal and state leaders, is expected to drive a compromise on carbon and energy policy, urgently needed to curb power price volatility and end outages that have hurt manufacturers.

It was commissioned last October after tornadoes triggered a state-wide blackout in South Australia that came as a wake-up call to politicians as it left homes in the dark for up to eight hours and crippled industry for nearly two weeks.

“The lack of a transparent, credible and enduring emissions reduction mechanism for the electricity sector is now the key threat to system reliability,” the review said.

The energy crisis has crept up on Australia, despite its rich endowment of coal and gas, as states have promoted rooftop solar and wind power in the absence of stable carbon policy at a federal level, and coal- and gasfired plants have shut.

“More of the same is not an option, we need to aim higher,” Chief Scientist Alan Finkel, the head of the

review panel, said in a statement.

Finkel called for the government to set a clean energy target to encourage investment in “reliable generation”, including coal with carbon capture and storage or gas.

Prime Minister Malcolm Turnbull said such a target would work, adding that the recommendation had the virtue of being technology-agnostic.

“We are looking at it, giving it very favourable consideration,” he told reporters.

Finkel said the recommendation would help cut power prices by 10 per cent for households and 20 per cent for industry by 2050 compared to if policy was left unchanged.

The review advised making new generators have “fast response” capabilities to deal with peak demand, meaning that variable sources like

wind farms would need to be teamed with sources such as gas-fired power.

It also suggested large generators should give three years’ notice before closing to avoid shocking the market.

Defying state bans on gas drilling and green group calls for no new gasfired power, Finkel said gas would be essential for providing reliable electricity.

Based on the current energy mix and expected growth, Australia’s emissions in 2030 are projected to be about 57 per cent higher than its target of 290 million tonnes under the Paris climate accord, the nation’s top research body has said.

Gas retailers, generators, and industry groups said they hoped the blueprint would provide the certainty needed to drive billions of dollars of investment into new generation.

“This blueprint is the last, best hope that Australian energy customers have for a secure, reliable and affordable energy transition,” said Energy Networks Australia head John Bradley. Reuters

India’s market regulator on Friday approved the appointment of Vikram Limaye, head of infrastructure lender IDFC Ltd, as the next managing director and chief executive of National Stock Exchange (NSE), subject to his resignation from a cricket committee.

The conditional approval from the Securities and Exchange Board of India (SEBI), announced by the NSE on Friday, comes four months after the country’s largest bourse nominated Limaye for the post, an unusually

India has complained to the World Trade Organization that the United States has failed to drop anti-subsidy duties on certain Indian steel products after losing an earlier ruling, a document published by the WTO said on Friday. India said the United States had failed to meet an April 2016 deadline to comply with a WTO ruling that faulted it for imposing countervailing duties on hot-rolled carbon steel flat products from India. The non-compliance complaint, effectively a new trade dispute, could lead to India asking to impose trade sanctions if the United States is found not to have complied.

Monetary policy

Japan’s lobby calls for debate on stimulus exit plan The head of Japan’s life insurance lobby called on the Bank of Japan (BOJ) to begin debating as soon as possible a future exit strategy for its ultra-easy monetary policy, even though an actual withdrawal of stimulus could be some time away. Growing signs of life in Japan’s economy have presented the BOJ with a communication challenge, pushing it to be clearer with markets on how it might dial back its stimulus without scaring investors that such a move is imminent. BOJ officials say they hope to convince markets they have a credible exit strategy in mind.

S.Korea’s potential growth rate to stay below 3 pct

Indian regulator conditionally approves new head of NSE bourse

Abhirup Roy

India takes U.S. to WTO

Central bank

HR

NSE has been operating under an acting CEO

Duties

long time.

Sources familiar with the matter have told Reuters SEBI had been concerned the executive’s time would be split if he were to remain a member of a Supreme Court appointed committee to supervise the country’s cricket body after a 2013 fixing scandal.

“SEBI has approved the appointment of Mr. Vikram Limaye as the MD and CEO of the National Stock Exchange of India Ltd, subject interalia to his being relieved from his BCCI (Board of Control for Cricket in India) assignment,” NSE said in a statement.

No specific date was provided for when Limaye would take over as CEO.

The appointment of Limaye removes one of the key hurdles as NSE pursues a long-awaited initial public offering (IPO) that bankers say could raise as much as US$1 billion.

NSE applied for the IPO in December, but SEBI has delayed that approval as well, as it probes the NSE’s disclosure that some brokers may have been given unfair access to its servers.

Sources familiar with the matter told Reuters the exchange is pursuing a settlement of the probe, in hopes for winning SEBI’s approval of the IPO. NSE has been operating under an acting CEO after former head Chitra Ramkrishna unexpectedly resigned in December, citing personal reasons.

Ramkrishna’s exit has been followed by a spate of resignations from board members and other senior executives, including former CEO Ravi Narain.

NSE Chairman Ashok Chawla said this week he expected the exchange to go public before the end of 2017.

Limaye, a 50-year-old finance industry veteran, will be the first head of NSE to come from outside the ranks of the founding team of the exchange, which was set up in 1992.

A chartered accountant with an MBA in finance from the Wharton School, Limaye has worked in a variety of roles in investment banking, capital markets and structured finance and has been part of various government committees and industry associations. He had been with IDFC since 2005. Reuters

A board member of South Korea’s central bank said on Friday the nation’s potential annual growth rate will stay below 3 per cent due to a shrinking workforce and the high-level of household debt among the elderly. In a lecture to university students in Seoul, Bank of Korea board member Cho Dong-chul said the South Korean economy is walking a similar path to that of Japan in terms of demographic changes and nominal growth rate. Cho said South Korea’s economy won’t be able to sustain an annual growth rate of 3 per cent for the foreseeable future as recovery in private consumption remains weak.

Industry

Malaysia April factory output up Malaysia’s industrial production in April rose 4.2 per cent from a year earlier, government data showed on Friday, supported by strong growth in the manufacturing and food and beverage sectors.

However, output growth for April was below a 4.8 per cent annual rise forecast by a Reuters poll and slower than the 4.6 per cent increase in March. Manufacturing output rose 6.7 per cent year-on-year in April, on strong demand for electrical and electronic products, food and beverage and tobacco, and petroleum, chemical, rubber and plastic products, data from the Statistics Department showed.

14 Business Daily Monday, June 12 2017

International In Brief Middle East

Gulf leaders trade barbs as Qatar dispute shows no let-up Gulf states traded public barbs on Saturday, showing little sign of resolving the region’s deepest rift in years, five days after Arab nations severed diplomatic, trade and transport ties with the tiny Gulf kingdom of Qatar. Foreign leaders expressed growing concern over the dispute, which pits Qatar against Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt. With backing from U.S. President Donald Trump, they accuse Qatar of supporting their regional arch-rival Iran as well as Islamist militants.

Kuwait has led a regional effort to mediate, but the four states intensified the pressure on Friday by placing dozens of people with alleged links to Qatar on terrorism blacklists.

New economy

Germany’s Merkel says digital world needs global rules German Chancellor Angela Merkel said on Saturday that the digital world needs regulations like those that exist for financial markets in the G20 and for trade under the World Trade Organization.

Global policymakers are facing uncharted territory as emerging technologies open new frontiers for regulation with the inter-networking of smart devices and trends in the automation of factories, dubbed Industry 4.0

by German politicians. “We still have no international rules,” Merkel said alongside Mexican President Enrique Peña Nieto during a visit to Mexico City.

Profits

Costs of bank cyber thefts hit SWIFT Dealing with cyber hacks on banks ate into profit last year at the SWIFT messaging system, which financial institutions use to move trillions of dollars each day. Hackers stole US$81 million from the Bangladesh central bank in February last year after gaining access to its SWIFT terminal and the emergence of other successful and unsuccessful hacks rocked faith in a system previously seen as totally secure. Despite this, traffic increased on the network last year, hitting an all time peak in June of over 30 million messages.

Charity

Warren Buffett lunch sells for US$2.68 million An anonymous fan of Warren Buffett agreed to pay US$2,679,001 at an online charity auction to have lunch with the billionaire chairman of Berkshire Hathaway Inc. The winning bid came in the closing seconds of the five-day eBay auction, which drew 41 bids before ending on Friday night. It was lower than the record US$3,456,789 bid in similar auctions in 2012 and 2016.

Money will go to Glide, a San Francisco charity that provides food, health care and other services to the homeless, the impoverished, and people struggling with substance abuse.

A billboard shows the currency exchange rate of pound to the dollar in New York, New York, USA, 09 June 2017. Lusa

Politics

UK’s May seals deal to prop up government, but loses key aides Newspapers said foreign minister Boris Johnson and other leading party members were weighing leadership challenges.

But Johnson said he backed May Alistair Smout and Amanda Ferguson

B

ritish Prime Minister Theresa May secured a deal on Saturday to prop up her minority government but looked increasingly isolated after a botched election gamble plunged Britain into crisis days before the start of talks on leaving the European Union.

Her Conservatives struck an outline deal with Northern Ireland’s Democratic Unionist Party (DUP) for support on key legislation. It was a humiliating outcome after an election that May had intended to strengthen her ahead of the Brexit push.

Instead, voters stripped the Conservatives of their parliamentary majority. As May struggled to contain the fallout, her two closest aides resigned.

May called the early election in April, when opinion polls suggested she was set for a sweeping win.

May’s aides, Nick Timothy and Fiona Hill quit on Saturday following sustained criticism within the party of the campaign.

Gavin Barwell was named new chief of staff. The Conservative lawmaker who lost his seat on Thursday and has experience working as a party enforcer in parliament.

The change was unlikely to significantly quell unrest within the party.

Most of May’s cabinet members have kept quiet on the issue of her future, adding to speculation that her days as prime minister are numbered.

A YouGov poll for the Sunday Times newspaper found 48 per cent of people felt May should quit while 38 per cent thought she should stay.

More complicated

The DUP, whose 10 seats in the new parliament give May just enough support to pass legislation, agreed in principle to a “confidence and supply” arrangement, Downing Street said.

That means it will support a Conservative minority government on key votes in parliament without a formal coalition deal.

A source close to the DUP said the party was seeking more funding for the province and concessions for former British soldiers in exchange for supporting May. Still the deal with the DUP risks upsetting the political balance in Northern Ireland. It aligns London more closely with the pro-British side in the divided province, where a power-sharing government with Irish nationalists is suspended.

The Observer newspaper said the DUP arrangement fell short of a full coalition agreement because of concerns among some Conservative lawmakers about the socially conservative DUP’s positions on gay rights, abortion and climate change.

The turmoil engulfing May has increased the chance that Britain will fall out of the EU in 2019 without a deal. Previously, she said she wanted to take Britain out of the EU’s single market and customs union in order to cut immigration.

Her party is deeply divided over what it wants from Brexit. The election result means businesses still have no idea what trading rules they can expect in the coming years.

EU Budget Commissioner Guenther Oettinger said it may now be possible to discuss closer ties between Britain and the EU than May had initially planned, given her election flop.

“For instance, if London were to stay in the customs union, then it would not have to renegotiate all trade agreements,” he told the Frankfurter Allgemeine Sonntagszeitung newspaper.

Key Points May’s failure to win majority attacked by party Prime minister’s top two aides quit Reports say senior Conservatives ready to ditch May, but not yet Reliance on DUP risks destabilising N.Ireland peace Merkel wants quick Brexit talks The pound on Friday fell 1.7 per cent against the U.S. dollar and 1.4 per cent against the euro.

After confirming on Friday that her top five ministers, including finance minister Philip Hammond, would keep their jobs, May must name the rest of her team, who will take on one of the most demanding jobs in recent British political history.

May has said Brexit talks will begin on June 19 as scheduled, the same day as the formal reopening of parliament. She confirmed this to German leader Angela Merkel in a phone call on Saturday.

She also reiterated that she would seek a reciprocal agreement early in the talks on rights of EU and British citizens, Downing Street said.

Elmar Brok, a German conservative and the European Parliament’s

top Brexit expert, told the Ruhr Nachrichten newspaper that the two-year talks would now be more complicated.

“May won’t be able to make any compromises because she lacks a broad parliamentary majority,” he said.

“She’s staying - for now”

Britain’s largely pro-Conservative press questioned whether May could remain in power.

The Sun newspaper said senior members of the party had vowed to get rid of May, but would wait at least six months because they feared a leadership contest could propel the Labour party into power under Jeremy Corbyn, who supports renationalisation of key industries and higher taxes for business and top earners.

Survation, the opinion polling firm that came closest to predicting correctly the election’s outcome, said a new poll it conducted for the Mail on Sunday newspaper showed support for Labour now 6 percentage points ahead of the Conservatives.

“She’s staying, for now,” one Conservative Party source told Reuters.

Former Conservative cabinet minister Owen Paterson, asked about her future, said: “Let’s see how it pans out.”

May had repeatedly ruled out the need for a new election before changing her mind. Labour stunned even its own supporters by taking enough seats from the Conservatives to deny them a majority.

The Times newspaper’s front page declared that Britain was “effectively leaderless” and the country “all but ungovernable”.

“The Conservatives have not yet broken the British system of democracy, but through their hubris and incompetence they have managed to make a mockery of it,” it said in an editorial.

If May is to honour the wish of the 52 per cent of voters who opted last year to take Britain out of the EU, she must find a way to bridge the differences within her party.

Its eurosceptic wing has long been a thorn in the side of Conservative prime ministers. On the other hand, pro-Europe Scottish Conservative leader Ruth Davidson said she wanted to be involved in “looking again” at Britain’s aims for Brexit.

Davidson was one of the few Conservative success stories in the election as the Scottish wing of the party won 13 seats.

She has said she favours retaining the greatest possible level of access to Europe’s single market. Davidson also said she had received reassurances from May that the party’s deal with the DUP would not involve a rollback of gay rights. Reuters

Business Daily Monday, June 12 2017 15

Opinion Business Wires

Philstar The (Philippine) government is retaining its economic growth targets over the medium term as it expects the country’s macroeconomic fundamentals to remain stable, the inter-agency Development Budget Coordination Committee (DBCC) said Friday. Budget Secretary and DBCC chairman Benjamin Diokno said gross domestic product (GDP) growth forecast remains unchanged at 6.5 per cent to 7.5 per cent in 2017, and 7 per cent to 8 per cent from 2018 to 2022. “The DBCC forecasts sustained economic growth in the Philippines as macroeconomic fundamentals including imports remain stable, while exports are expected to improve,” the DBCC said.

The Times of India The (Indian) organised pharma retail market witnessed a decent growth of over 7 per cent in May, debunking fears of a slower growth with GST around the corner. In fact, the market continued with its trend of steady growth this year, starting in January with 10 per cent, then 7 per cent in February, nearly 10 per cent in March, and 8.3 per cent in April.

The growth was buoyed by 10 therapies including gastrointestinal drugs, which outgrew the market, and anti-diabetic drugs showing strong double-digit growth.

Election officials at the Magnet Leisure Centre count votes cast in the constituency of Maidenhead, Britain, 08 June 2017. Lusa

Soft, hard or no deal, there will be no good Brexit

J The Straits Times A deal to sell one of Sydney’s most famous buildings - the 19th-century General Post Office building - to Singaporean property developers has caused a backlash and prompted appeals to the federal government to block the move. The 1874 building in Sydney’s Martin Place has been sold by Australia Post, a state-owned company, to Singapore’s Far East Organization and its affiliate, Hong Kong-based developer Sino Group. The firms are owned by Singapore’s Ng family and together comprise one of Asia’s largest property groups.

The Korea Herald Samsung Electronics Co.’s second quarter operating profit is forecast to reach record high levels, with most estimates around the “low” 12 trillion won (US$10.6 billion) to upwards of over 13 trillion won, local brokerages said yesterday.

Reports coming out of securities firms showed market consensus for a very strong performance for the world’s No. 1 smartphone and memory chip manufacturer, with keen interest even being shown on operating profits surpassing the 13 trillion-won mark.

The South Korean tech giant reported its largest operating profit ever in the third quarter of 2013, when numbers reached 10.16 trillion won.

ust as there probably never was any such beast as a ‘soft’ Brexit, Theresa May’s coalition government will get a chance to demonstrate there is also no such thing as a good Brexit, at least as an economic proposition.

Conservative leader May, who managed to blow an election she herself called as Prime Minister sitting on a 20-point lead, will now try to form a coalition “government of certainty” with Northern Ireland’s Democratic Unionist Party.

Having bluffed before the vote that “no deal is better than a bad deal,” May will now find herself in a yet weaker position, vulnerable to losing her leadership or being forced to go yet again to the country for a general election, and just as negotiations over the terms of Britain’s exit from the European Union begin on June 19.

That “no deal” would have been a disaster, with 10-to-14 per cent tariffs for many British exports to Europe helping to catapult the economy into recession.

Many are now clinging to hopes that May’s drubbing makes moderate ‘remain’ Conservatives more powerful, or that it allows Labour, which made a hard Brexit part of its election manifesto, to backtrack towards something more ‘soft,’ retaining rights and privileges for Britain’s economy in Europe.

Th e o n l y ‘c e r t a i n t y ’ t h i s government can truthfully promise is that the economic, industrial and competitive position of Britain will be worse in two years than it is today. Hopes that a weaker or stronger May might lead to a better or worse deal are misplaced and, worse, mislead those doing the hoping in where the motive force lies.

The problem, as ever, is the anglocentric slant of the narrative. Once Britain voted for Brexit it was no longer in the driving seat, no longer the prime actor, and decades of behaving, against all evidence, that it was will now hit a hard wall.

Britain, to use the metaphor of markets, is not a price maker in Brexit negotiations; it is a price taker. It does not get to set the price; that privilege and right belong to its EU negotiating partners, who are united and who hold most of the cards.

Britain’s main power is in the right to pass on the price being offered, a decision, in the case of Brexit, with some particularly unpleasant consequences.

“This doesn’t make the Brexit negotiations any easier,” Robeco Chief Economist Léon Cornelissen wrote to clients.

“With a hung parliament it’s difficult to see how they’ll be able to make an upfront deal on the up to

“

James Saft a Reuters columnist

GBP 100 billion of divorce payments that are being demanded by the EU. What’s most likely now is a coalition between the Conservatives and the Ulster Unionists, but it would be an unworkable razorthin majority. So a collapse of the government is likely, with perhaps new elections in October.”

Would you like a recession with that, sir?

A so-called Norway-style deal, with access to the European Economic Area allowing for UK financial services to be ‘passported’ in to Europe, sounds attractive but is almost certainly a pipe dream, one German politicians have already explicitly rejected. It also implies continued commitment to the EU four freedoms of movement of goods, services, labour and capital.

“We do not see that happening, unless the new Parliament votes to defy referendum results and reverse the course of Brexit. We do not see that happening either,” Carl Weinberg of High Frequency Economics wrote to clients.

“So Britain’s exporters will export to Europe at a disadvantage and the City will be gutted of core businesses.”

This will happen, of course, only after long and destabilizing negotiations and very possibly further changes of government. The chances that investment in Britain is deferred or diverted are high.

Already the signs are not entirely great for the British economy. British GDP growth in the first quarter, at 0.2 per cent from the fourth quarter, was the weakest in Europe. Data out on Friday showed construction sector output is in recession, down 0.6 per cent from a year ago, very likely due to slowing flows of capital from abroad.

Two surveys of consumer spending released this week, from the British Retail Consortium and Barclaycard, both showed consumer spending growth has all but halted. Like-for-like spending fell 0.4 per cent last month, according to BRC data. Demand for new vehicles also fell by 8.5 per cent.

All of this is no surprise: living standards are being hit; pinched between stagnant wages and rising prices, some of it due to a slump in the pound.

Brexit, from conception to execution, will stay true to its form as a great miscalculation. Reuters

Britain, to use the metaphor of markets, is not a price maker in Brexit negotiations; it is a price taker

”

16 Business Daily Monday, June 12 2017

Closing Environment

Seventy per cent of Chinese companies fail air pollution checks

The inspections found 13,785 companies - or 70.6 per cent of those inspected - violated standards, with problems ranging from excessive More than 70 per cent of companies emissions to insufficient pollution checked by Chinese authorities failed control equipment. environmental standards during the latest round of air pollution inspections, The government has thrown its weight behind an ambitious “Jing-jin-ji” plan state media reported yesterday. to integrate the three neighbouring The findings came after two months cities, in part to alleviate the strain on of inspections across 28 cities in the the capital, Beijing, and relocate heavy notoriously smoggy Beijing-Tianjinindustry away from major population Hebei region and other nearby areas, hubs. Reuters the official Xinhua news agency said.

Luxury

Spain’s ‘jamon’ conquers China A leg of “pata negra” ham, the most sought-after, can go for up to 3,000 euros in Hong Kong Emmanuelle Michel

T

he aroma is so extraordinary it’s like “a punch in your mouth” says Luqi Wu, one of several Chinese businessmen standing in a cellar in south-western Spain surrounded by thousands of hanging ham legs.

While he samples the product, three of his colleagues learn to cut the ham as finely as possible -- a crucial detail that they will put into practice back in Shanghai at tasting events for their own customers.

The world’s top pork consumer, China has started getting a serious taste for Spain’s world-famous “jamon” which is sold there as a luxury product and is getting one over on its French and Italian competitors.

“At the beginning, customers were just looking for elegant products because they’re rich,” says Wu, a sales manager at Jiarui Fine Foods, a Chinese company that specialises in importing luxury gastronomy products.

“But more and more they want to learn more and educate themselves... to know why it’s so good and why it’s got such a high price.”

authorisation to sell ham in China compared to 13 in Spain.

So it was that in March, several Jiarui Fine Foods employees travelled to the village of Jabugo in the southern hills of Andalusia, invited by the Cinco Jotas brand that specialises in high-quality ham.

‘The sector is working on creating a certification along the lines of Europe’s protected designation of origin’ In pasturelands covered in oak trees, herds of purebred black Iberian pigs gobble the last acorns of winter -- the very food product that gives the ham its unique hazelnut

taste after a three-year maturing period.

There, Cinco Jotas workers give the Chinese sales managers a run-down of how the dry-cured ham is made.

They will use this knowledge to attract customers in China where classic dry-cured ham sells for 10 to 20 per cent more than in Spain, and the highest quality ones command even fatter margins.

A leg of “pata negra” ham, the most sought-after, can go for up to 3,000 euros in Hong Kong.

Forced to diversify

Like 12 other Spanish ham makers, Cinco Jotas got authorisation to sell its ham in China at the beginning of the decade, and the world’s most populous country has now become its number one market after Spain.

According to Jialin Shen, head of Jiarui Fine Foods, the overall market for high-quality ham in China is between 20,000 and 30,000 units a year.

Rene Lemee, head of Cinco Jotas’ international department, travelled to China 16 times last year and has a dozen sales managers working there.

In his office hangs a world map with China at the centre, “to understand

3,000 euros a ham leg

The Italians got into the Chinese market early on with their Parma ham.

But Spain soon caught up and is now leading sales of dry-cured ham in the Asian powerhouse, making 1.8 million euros (US$2 million) in sales last year excluding Hong Kong, according to the French Federation of Pork Industries (FICT).

By comparison, Italy made 1.4 million euros in 2016 and France tailed far behind with just 30,000 euros, as there is only one producer in the country equipped with the necessary

their point of view.”

And the effort has paid off as sales of Spanish dry-cured ham in China have doubled between 2012 and 2016, says Jesus Perez Aguilar, spokesman for the Inter-professional Association of Iberian Pork.

“China has become the second foreign market for Spain’s porcine sector, after France,” he says.

He adds that sales abroad took off after Spain suffered a crippling economic crisis in 2008 when a domestic property bubble burst, compounding the global financial crisis, pushing the companies to seek new export markets.

Risk of copycats

But for Ibericos Torreon, a medium-sized company based in Salamanca in the northwest -- another major producing region -- success was not immediate.

The firm was forced to patiently go from trade fair to trade fair to introduce their product to the Chinese, who were more used to adding pork in soups or fragrant dishes rather than eating it on its own.

But “in the last two years, sales have taken off,” says Laura Garcia Hernandez who manages exports for the company, refusing to reveal specific figures.

The risk of being copied in a country infamous for creating counterfeits does not appear to worry Spanish producers who say their dry-cured ham is the fruit of a specific climate, vegetation and animal.

“What is made in Spain is very exclusive to the peninsula,” says Santiago Martin, chief executive of Embutidos Fermin, another producer of dry-cured ham.

Still, the sector is working on creating a certification along the lines of Europe’s protected designation of origin, to try and avoid any future problems. AFP

Diplomacy

Murder

Oil industry

Qatar denies that charities fund terrorism

Kim Jong Nam had US$120,000 in cash when killed

Russia sees market balancing in first quarter as prices slip

Qatar’s official overseer of charities denied yesterday that philanthropic groups in the country backed terrorism, days after U.S. President Donald Trump backed a move by some Arab states to pressure Doha over alleged militant financing.

Saudi Arabia, Bahrain, the United Arab Emirates and Egypt have tightened their squeeze on Qatar by putting dozens of figures and charities they link to the country on terrorism blacklists.

Saudi Arabia and its allies imposed an economic and diplomatic boycott on Qatar last week over what they say is the gas-rich Gulf nation’s support for Iran and militant groups - charges which Doha has denied.

“The Regulatory Authority for Charitable Activities deplores the accusation that Qatari humanitarian organisations support terrorism,” the body said in an official statement.

The authority has succeeded in protecting NGOs based in Doha “from the risk of being exploited to launder money and finance terrorism,” it said.

Trump on Friday accused Qatar of being a “high level” sponsor of terrorism. Reuters

The half-brother of North Korean dictator Kim Jong Un was in possession of US$120,000 when he was killed at a Kuala Lumpur airport in February, the Asahi reported, adding that he met with an American suspected of connections with a U.S. intelligence agency four days before his death.

Kim Jong Nam is believed to have met the U.S. citizen for two hours at a hotel in Malaysia and picked up the money while in the country, the newspaper said, citing unnamed officials from the country’s investigation authorities. The Asahi said Malaysian authorities believe he may have been paid for information, and there was no record of any such withdrawal from banks in the country.

The eldest son of late leader Kim Jong Il was killed at the airport by two women who swiped VX nerve agent on his face, according to Malaysian authorities.

Malaysian authorities found four bundles of US$100 bills tied together in stacks of 300 mostly new notes in his bag, the paper said. Kim Jong Nam held a diplomatic passport so his luggage wasn’t subject to thorough searches when entering and leaving the country, the Asahi said. Bloomberg News

A deal among oil-producing countries to curb production and balance an oversupplied market will achieve its objective in the first quarter of next year, Russian Energy Minister Alexander Novak said, after prices slipped on news of a build-up in U.S. inventories.

The Organization of Petroleum Exporting Countries and other crude producers including Russia agreed on May 25 to extend the deal, which they reached last year, until the end of the first quarter. Prices slumped on the news that they would not cut any deeper and fell further on June 7 as U.S. stockpiles unexpectedly grew. Benchmark Brent crude closed at US$48.15 a barrel on Friday.

The agreement is working and crude inventories are decreasingly gradually at a global level, Novak said yesterday in Astana, a day after meeting his Saudi counterpart Khalid Al-Falih. Demand will recover in the first quarter, reducing stockpiles, and Russia is committed to doing everything to balance the market, he said.

OPEC’s biggest producer Saudi Arabia also weighed in on Saturday, as Al-Falih said the market would stabilize in the next few months. There is no need for producers to cut more than they’re doing already, Al-Falih said, according to the Interfax news agency. Bloomberg News