Business Daily #1413 October 31, 2017

China’s bureau of statistics to unify data from 2019 Regional figures Page 9

Tuesday, October 31 2017 Year VI Nr. 1413 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Kelsey Wilhelm IPO

Asia Pioneer Entertainment lists on HK Stock Exchange Page 5

See you… tomorrow!

It is with a mixture of sadness and joy that we say goodbye to this newspaper, a project that has made a difference for five years in the Macau media landscape. But times change and so do societies. Macau is no different.

The written press, especially the daily press, does not go untouched by technological advances and by the need for faster information, closer to us, just a click away, the push of a button. And that is why tomorrow we all welcome the Macau News Agency, the first independent news agency in the city. From now on, information will not take 24 hours to reach you. It's going to take minutes.

Project Asia Corp. has made a strong investment in a new online news portal, which will start operating tomorrow, designed by us and built

by Amazon, featuring all the contents of this media group. Starting with the Macau News Agency, which will report the most important events in town, but also in the region and in the world, thanks to partnerships with other news agencies. And everything for free.

The group's magazines will soon have their current content available on the portal, and MB.tv will strengthen its local production of news, documentaries and events, while also including regional and international news.

Closer to online TV from A to Z. Transformations are massive. And they must be, if this small media group wants to continue to resist in a land where occult interests continue to perpetuate, also in the media.

Obscure businesses that seek to disrupt the scales of balance, preventing a more transparent access to the truth of the facts, facilitating the overlap of institutional "truths”. It’s the perpetuation of a more effective and camouflaged type of censorship, by occupying media spaces with highly subsidized products in a non-transparent, immoral – if not illegal - way, and thus trying to cover up the most independent voices.

In the macaubusiness.com portal you will find everything at your fingertips: up-to-the-minute news by MNA, television products that will be extended to reports and talk shows on MB.tv, in addition to the group's magazines with more in-depth reporting.

So we will meet again with our clients and readers on a much more powerful and interactive highway.

Very soon. Tomorrow.

Tourism

Zhuhai aims to up tourist numbers to 75 mln by 2025 Page 3

www.macaubusiness.com AL

Cross-strait

Legislative Assembly proposes budget decrease Page 2

Taiwan's Tsai bets on military development Page 10

Looking to London Investment

Brexit has led to a rush of real estate investors from the Greater Bay Area and mainland China.

London calls and investors respond, due to the lower value of the pound, a transparent and robust legal system and historical data to benchmark property values. Some cases include legislator Angela Leong On Kei and Lai Sun development group. Page 6

Keep on rolling

A proposal for a mutual recognition system for driving licenses between the MSAR and the Mainland might not create a better system than currently exists, says Synergy Macao director. A small increase in drivers, if constantly on the roads, could mean a large increase in traffic locally, while demand for Mainland drivers to drive locally has in fact gone down in recent years. However, MSAR demand for driving in the Mainland is going up.

HK Hang Seng Index October 30, 2017

28,336.19 -102.66 (-0.36%) Worst Performers

China Mengniu Dairy Co Ltd

+4.91%

Want Want China Holdings

+1.71%

China Overseas Land &

-0.78%

Cathay Pacific Airways Ltd

-0.64%

China Shenhua Energy Co

+4.12%

Kunlun Energy Co Ltd

+1.62%

AIA Group Ltd

-0.68%

HSBC Holdings PLC

-0.53%

Tencent Holdings Ltd

+3.91%

China Merchants Port Hold-

+1.29%

MTR Corp Ltd

-0.67%

Cheung Kong Property

-0.48%

Swire Pacific Ltd

+2.52%

Hengan International Group

+1.27%

Hong Kong & China Gas Co

-0.67%

Bank of East Asia Ltd/The

-0.45%

Geely Automobile Holdings

+1.98%

Galaxy Entertainment Group

+1.09%

Power Assets Holdings Ltd

-0.65%

BOC Hong Kong Holdings

-0.40%

21° 24° 20° 26° 21° 27° 22° 28° 21° 25° Today

Source: Bloomberg

Best Performers

WED

THU

I SSN 2226-8294

FRI

SAT

Source: AccuWeather

Transportation Page 3

2 Business Daily Tuesday, October 31 2017

Macau

Ann O'Dea, CEO and co-founder of Silicon Republic

Science-technology

The revolution is online and more than ready for diversity The head of Silicon Republic, a sci-tech media publisher headquartered in Dublin, Ireland, paid a visit to the MSAR on her way to Hong Kong to promote her company and the role of women in the field Sheyla Zandonai sheyla.zandonai@macaubusiness.com

I

t is “high time” to redress the question of the gender imbalance and skills gap that have been “historically” shaping many organizations and the sci-tech field in particular, states Ann O’Dea, CEO and co-founder of Silicon Republic, in an exclusive interview with Business Daily.

Back in 2001, the Ireland-born journalist by training, co-founded an online media company specializing in science, technology, engineering, and mathematics (STEM) content at a time when “technology was exploding, becoming huge,” Ms. O’Dea highlighted.

“All our competitors were in print, but all our readers were online. We were the only people that were very active online, and took off very quickly,” she explained to Business Daily.

At the same time, while the big companies “born on the Internet,” such as Google and Facebook, were developing quickly, Ireland was taking a leading role in hosting such companies.

“Ireland has always punched above its weight when it came to science and technology. We have all of the top ten technology companies, all of the top ten ‘born on the Internet’ companies, and we have nine out of ten of the top med-tech companies. And now we are getting a growing number of fintech companies coming to Ireland,” argued Ms. O’Dea. According to her, Silicon Republic is currently “one of the leading science and technology

news services in Europe,” publishing stories with international scope – “not only parochially local content” – also with a large readership in the U.S. The readership base of the niche publication accounts for about one quarter of a million readers, according to its co-founder.

Although Ms. O’Dea believes Silicon Republic is “new” to Macau, she claims that people who have a link to Ireland, and who are based here, have heard about it.

First-time Asian reach

This trip marks the first time the Irish sci-tech media entrepreneur has come to Asia for business, invited by the Consul General of Ireland, Peter Ryan.

In Macau, Ms. O’Dea was toured around and met individuals in the fields of media and creative industries, as well as fellow Irish nationals.

She headed to Hong Kong yesterday afternoon, where she is holding the Inspirefest salon.

“Maybe we’ll do one in Macau next year. It booked out immediately [in Hong Kong]. I think that there is a hunger for strategies around diversifying your talents and your workforce,” explained Ms. O’Dea. Ms. O’Dea explained to Business Daily that Inspirefest had another impact on the outreach of Silicon Republic, by enabling the publisher to commence internationalizing “more and very quickly.”

The first salon taking place in Hong Kong tomorrow, November 1st, is a one-evening event bringing together some 150 participants in a combination of entrepreneurs,

academics, and media.

Bridging a community

Ann O’Dea is a pioneer in many fields. Inspirefest was born out of smaller events that the publisher had been regularly organizing for leaders, when they would invite visiting speakers. In 2015, they decided to change the strategy, by concentrating efforts into one large annual event held in Dublin, sided by ‘salons,’ such as that being held in Hong Kong tomorrow.

From January to March of next year, Inspirefest salons will be held in major worldwide cities and capitals, in San Francisco, New York, London, Berlin, and Paris.

Inspirefest’s mandate is to promote women as role models in the industry.

As such, the media sci-tech guru is also leading a gender revolution in the field, having assigned herself the mission of gathering leading women in STEM, such as scientists, technologists, astronauts, physicists, and putting them in the spotlight to show their work and inspire new generations.

It is about building a community, and “trying to build bridges and ensure that remarkable women in particular are connected,” she told Business Daily.

Inspirefest’s mandate is, thus, to reverse what Ms. O’Dea claims is a male-dominated field, while aiming to generate more diverse input in the knowledge industries.

“It is that diversity, and cognitive diversity, a diversity of thought that you get with different backgrounds that we believe creates more innovative services and

products,” she argued.

“I travel around the world going to technology and science events, and they tend to be 90 to 95 per cent […] men on stage, which I found very frustrating, and my co-founder is a man, and he finds it very frustrating,” she points out.

Marking the trends

Reflecting more specifically on the Chinese case, Silicon Republic’s CEO said there is no doubt that e-payments are one of the most obvious and massive trends.

“We are heading towards a cashless society. At its most basic level, that is huge, but then the other big trend is data analytics and data science, and customer profiling,” she added.

To Ms. O’Dea, the types of technology leading the “ongoing fintech revolution,” and worth keeping an eye on, are those related to “very sophisticated data science tools.”

The big trends that matter in that regards “all relate,” according to her, to blockchain, fintech itself, artificial intelligence and robotics.

In order to allow those developments to continue, she argued that there is a constant need for “incredible software developers that will work with financial experts, so that you have the technology and the financial experts coming together and creating phenomenal products we will all be using in five year’s time.”

“You really need people with backgrounds in anthropology, in physics, in mathematics, they are the kinds of talents you need,” she pointed out.

Politics

AL proposed budget slightly lower Th e p r o p o s e d L eg i s l at i v e As s e m b l y b u d g e t for the 2018 financial year is set at MOP184.63 million (US$22.98 million), a decrease of 0.71 per cent year-on-year, or MOP1.32 million less, when c om p ar ed t o th e

initial proposed AL budget for 2017.

When the new proposed budget - which will be debated at the AL on November 6 - is compared to the revised 2017 AL budget, the amount is 0.84 per cent lower year-on-year.

The new proposed budget f o r p e r s o n a l ex p e n s e s was reduced by 0.69 per cent, to MOP139 million, whi l e expe nses for the p u rchas e o f g o o ds a n d services were reduced by 10 per cent to MOP27.53 million, with the proposal

document stating that this lower amount was d u e t o f e w e r c o n t racts for ‘studies, consultancy and translation’ and for ‘technical and specialized publications’.

M ea n w hi l e, th e l a rgest increase was for the

proposed budget for capital expenses, which was increased by 106.2 per cent to MOP5.98 million in order to ‘in 2018 replace air conditioning equipment in use for more than ten years, and for some smaller re-works’. N.M.

Business Daily Tuesday, October 31 2017 3

Macau Tourism

Cuisine

Blowing up

Eating well, on a budget

Zhuhai has approved a plan to better integrate the city's tourism with Hong Kong and the MSAR, with the goal of seeing the Chinese city’s tourism numbers go from 39 million last year to 90 million by 2030

A total of nine restaurants in the MSAR received the Michelin Bib Gourmand award

The Zhuhai Government has approved a plan to better integrate its tourism with Macau and Hong Kong and develop the city into a coastal tourism destination with around 90

accelerating efforts to build a system of tourism transporta-tion, facilities, and information; implementing collaborative communication about tourism policies, institutions, and management; and increasing the flow and integration of talent, technology, and capital.

Nine restaurants in the MSAR and 73 in Hong Kong have received Michelin’s Bib Gourmand award, provided to restaurants offering a quality three-course menu for a maximum of HK$400 (MOP410/US$51), the company revealed yesterday.

This is a drop from the 12 local

restaurants: Cheong Kei and Luk Kei Noodle; one Shanghainese restaurant: Din Tai Fung at City of Dreams; one Portuguese style restaurant: Castiço; and the Macanese style Institute for Tourism Studies (IFT) Educational Restaurant.

“The selection highlights the richness of the local culinary scene and the quality of Cantonese cuisine […]

Our inspectors have discovered more

million visitors and RMB110 billion (US$16.6 billion) in tourism revenue by 2030, the city’s government has revealed.

The Zhuhai Tourism Development Overall Plan Revision (2016-30) approved by the city’s government on October 25 - will look to enhance the city’s characteristics of urban leisure, sports, cultural, countryside, and hot springs tourism, integrating them with its existing marine islands, theme parks, festivals, contest events and MICE (Meetings, Incentives, Conventions and Exhibitions) services.

In order to integrate the city’s tourism with the Greater Bay Area, the city will attempt to implement the plan in four steps, including: focusing on the joint development of tourism resources, products, and markets;

These measures will be enacted in stages defined by tourist numbers, with 50 million tourists expected by 2020 and 75 million by 2025, and with tourism revenue expected to reach RMB45 billion and RMB80 billion respectively in these two periods.

According to the Zhuhai government numbers, the city received around 39 million tourists last year, an increase of nearly 50 per cent when compared to numbers seen in 2011, but with the average annual growth rate in domestic tourist numbers being just over 10 per cent.

A Framework Agreement on Cooperation in Tourism was signed in July of last year between Zhuhai, Hong Kong and Macau in order to integrate regional tourism development.

Macau restaurants that received the award last year, but an increase from the 63 Hong Kong restaurants awarded in the previous edition. The maximum price set for last year was HK$300.

The awarded Macau establishments this year include four Cantonese style restaurants: Chan Seng Kei, Hou Kong Chi Kei, Lou Kei at Fai Chi Kei and Tou Tou Koi; two noodle

local gourmet offerings including Cantonese stir fried, congee & noodles and dim sum at attractive prices,” stated Michael Ellis, the International Director in charge of the Michelin Guides.

The Michelin Guide Hong Kong Macau 2018 will be revealed on November 30 of this year, with last year’s editions having starred 19 restaurants in the MSAR. N.M.

Nelson Moura nelson.moura@macaubusinessdaily.com

Nelson Moura nelson.moura@macaubusinessdaily.com

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4 Business Daily Tuesday, October 31 2017

Macau

Transportation

Mutual imbalance Director of local association questions actual demand for mutual recognition of driving licenses between MSAR and Mainland drivers Cecilia U cecilia.u@macaubusinessdaily.com

R

ather than altering the current methods for obtaining driving licenses in the MSAR and on the Mainland, keeping the same measures would be more appropriate, according to Ron Lam U Tou, director of local association Synergy Macao. The director also noted that the government has yet to provide solid numbers indicating growing demand for drivers from both regions wanting to be allowed to drive in both regions.

“In my opinion, it is more appropriate to maintain it as it is now, with MSAR drivers to take the driving test in Mainland to get the Chinese driving license,” said Lam. Last Thursday, the Transportation Bureau (DSAT) head Kelvin Lam Hin Sang said the government is studying the potential implementation of a mutual recognition system for driving licenses between the city and mainland China.

Drivers could obtain car licences from the Mainland without needing to take any driving test, while Mainland drivers would be allowed to drive in Macau with Mainland driving licenses and a stay permit.

The DSAT head cited that the number of Macau residents taking the driving test in the Mainland has been increasing since 2014, from 3,000 in 2014 to potentially 6,000 this year.

However, Ron Lam pointed out that the government should provide more solid data.

“Most importantly is how many Chinese drivers have obtained a Macau license and how often do they drive in Macau [...] what is the percentage of the total driving population in the city [and] vice versa for Macau drivers,” said Lam. Lam remarked that he does not see an urgency to roll out the policy, given the declining number of Mainland drivers applying for Macau driving licenses, as revealed earlier by the DSAT head.

M ea n w h i l e, i n l i g h t o f th e advertisement

s o o n -t o -b e-c o m p l e t e d H o n g Kong-Zhuhai-Macau Bridge, as well as the integration of the city into the Greater Bay Area development plan, Lam said the development of the Greater Bay Area is not aimed at attracting more Chinese nationals to come to Macau, but it will if the mutual recognition of licenses is implemented.

“People can still take the driving test in China,” said Lam. “People don’t have big objections to taking the test.”

On the other hand, while the DSAT head stated that the driving test in the Mainland is getting stricter, Lam refuted that “it is not a supporting point if the policy is to be rolled out because the recognition will be implemented to any of those who had obtained the license anytime.”

Risks

The association head said it is necessary to take the test, given that the driving conditions and requirements in the Mainland are different from those in Macau.

“It would be safer to take the test for me,” remarked Lam. “Since China is not included in the [international] Convention on Road Traffic, I would feel worried […] because the driving habits between the two regions are very different.”

Mutual recognition of driving licenses has already been in place for over a decade in Hong Kong, with Lam citing that there was a 0.5 per cent increase in car accidents that involved Mainland drivers in Hong Kong during the period from 2013 to 2015.

“In Hong Kong, the number of accidents involving Mainland drivers went up 0.5 per cent in three years [...] in that sense would even just a 1 per cent change in Macau be too big when compared to Hong Kong?” questioned Lam. According to the information provided by the Hong Kong Secretary for Transport and Housing of the neighbouring MSAR during 2013, there were between 10 to 35 Mainland driving license holders

who had applied for Hong Kong’s full driving license per year under the direct issue, equivalent to an average rate of 0.34 per 1,000 of such licence holders.

Meanwhile, legislator Zheng Anting suggested the introduction of short preparation courses in hourly blocks, for Macau residents who are interested in driving in the Mainland, if feasible. However, he pointed out that “other regions which are also implementing similar mutual recognition of licenses do not have similar training”.

More traffic

Although the DSAT head said the traffic in the city is under control, citing that the number of vehicles on the road is declining, many are still skeptical about whether the city can accommodate more drivers from the Mainland.

Although perceiving that the number of Mainland drivers coming to Macau would not see significant growth, Lam said the impact would be notable despite only being a small increase.

“Although the number [of Mainland drivers applying to drive in Macau] might not be significant, these people might be constant drivers and this would then affect the city’s overall traffic conditions,” argued Lam. With the government encouraging citizens to prioritise the use of public transportation and green commuting, it is even more unnecessary to implement the policy, said Lam. The association head also remarked that the driving behaviour in Macau in recent years has deteriorated.

“Actually, I think that it is more important to re-sort the city’s traffic order first, and later to proceed to other plans, so I don’t see the urgency,” said Lam. Legislator Zheng also agreed that there are heavy traffic conditions in Macau, while suggesting rolling out some restrictions, such as different time periods to allow Mainland drivers to drive in the city.

Macau-China

Train ticket vending machines for SAR passengers in Guangdong By the end of this year residents of the SARs will be able to purchase train tickets from vending machines at all high-speed rail stations within Guangdong Province, according to Xinhua.

Prior to the new arrangements, Macau and

Hong Kong residents will still have to queue at ticket windows both for purchase and pick up, if tickets are purchased online.

Currently, vending machines from several major train stations in Guangdong allow SAR residents with Chinese mainland travel permits

to purchase tickets, according to Chen Xiaomei, deputy director of passenger traffic at Guangzhou Railway Group Corporation.

There are currently 48 ticket vending machines in Shenzhen providing the service, while 35 more will be opened before year-end.

Business Daily Tuesday, October 31 2017 5

Macau Ng Lap Seng

Lawyer for Ng continues to claim he acted out of philanthropy Gaming equipment

Going public Local gaming equipment company Asia Pioneer Entertainment Holdings Limited made its listing on the Hong Kong Stock Exchange yesterday Nelson Moura nelson.moura@macaubusinessdaily.com

Local Electronic Gaming Equipment supplier Asia Pioneer Entertainment Holdings Limited (APE) started its initial public offering (IPO) in the Growth Enterprise Market (GEM) of the Hong Kong Stock Exchange yesterday, the company told Business Daily.

According to its filing, APE will offer a total of 250 million shares, comprising 25 million Public Offer Shares and 225 million Placing Shares, at an offer price of between HK$0.24 and HK$0.36 per Offer Share.

With corporate finance firm Southwest Securities (HK) Capital Limited as its sole sponsor, the public offer was opened at 9am today and will stay open until 12 noon of November 3.

“Through our listing on GEM of the Hong Kong Stock Exchange, we will tap into the international capital markets, which will not only broaden our capital and shareholder base, but also provide us with capital to fund our expansion plan to continue

strengthening our leading position in the industry and further enhancing our competitive advantages, thereby driving the Company’s long-term development,” the Chairman of APE, Allen Huie, said yesterday.

According to the company’s release, APE registered HK$52.58 million in revenue for the financial year of 2016, with its net profit, excluding listing expenses, reaching HK$13.89 million.

The company claimed that in terms of revenue, APE, was the fourth largest Electronic Gaming Equipment supplier in Macau in 2016, but the largest Electronic Table Games (ETG) supplier in the city.

“Looking forward, with the proceeds from the Share Offer, we are poised to leverage on our leading position in Macau to continue to capitalize on the potential growth of the gaming market in Macau. With our competitive edges and business plans in place, we are well-positioned to benefit from the enormous market opportunities,” the company’s CEO, Herman Ng, said.

The company’s stock code is 8400.

The attorney for local billionaire businessman Ng Lap Seng continues to claim that Ng’s efforts to have his company build a United Nations conference centre in Macau were based on philanthropy, as reported by the Associated Press.

Ng’s lawyer, Tai Park, stated last Thursday that “Mr. Ng acted in good faith at all times […] He did not bribe anyone, not a single cent,” the publication states.

Assistant U.S. Attorney Douglas

Annually, Lorenzo was paid about US$240,000 when working for a media company run by Ng during the same period, which Ng’s lawyer described as "wages, ladies and gentlemen, not bribes".

A separate payment, made to John Ashe, of US$200,000 was allegedly used for Ashe’s UN presidency, while payments made to Ashe’s wife were allegedly for a book on climate change. The lawyer also claimed that the centre itself would not have

Zolkind stated that Ng had paid out at least US$1.7 million in bribes to ambassadors including former UN General Assembly president John Ashe, who died in his home during a weightlifting accident while awaiting trial. The bribes were allegedly made through Francis Lorenzo, who was paid US$1.5 million during his time as the ambassador to the UN from the Dominican Republic, lasting five years.

made any money for Ng, stating “If he breaks even before he's dead, he's a lucky man,” the publication quotes Park as saying. Park also claimed that the local billionaire’s actions were consistent with how public-private partnerships were formed with the UN. Assistant Attorney Zolkind stated that Lorenzo would still be brought in to testify. advertisement

Day 1 - 14 November 2017 (Tuesday)

Belt & Road, Smart City, Smart Economy Day 2 - 15 November 2017 (Wednesday)

Mobile Game Entrepreneur Alliance & E-Sports Association Sina Asia Esports Session Day 3 - 16 November 2017 (Thursday)

Next Generation of Gaming

6 Business Daily Tuesday, October 31 2017

Macau

Property

London Calling The lower value of the pound sterling and stable long-term returns, together with London’s strong status as a cultural and financial world centre, are some of the reasons that the city is attracting more real estate investment from Greater China, real estate experts told Business Daily Nelson Moura nelson.moura@macaubusinessdaily.com

I

nstead of scaring away potential purchasers, Brexit has led to a rush of investors from mainland China, Hong Kong and Macau into real estate in London, moved by drops in the value of the pound sterling and the unchangeable cultural and financial appeal the city maintains, real estate experts told Business Daily.

The United Kingdom government is currently negotiating its withdrawal from the European Union (EU) after a referendum on the issue held in June of last year saw 51.9 per cent of voters in favour of the country’s exit.

"After the vote, we saw the quarterly number of Chinese buyer inquiries approximately double. We had buyers calling selling agents in London and asking to be given the chance to take up at a discount any transactions that had fallen through due to a local buyer getting Brexit-related cold feet,” stated Carrie Law, CEO of Chinese real estate website Juwai.

According to data provided to Business Daily by real estate consultancy firm Sniper Capital Limited, in 2016, investors from mainland China and Hong Kong represented 25 per cent of total central London transaction volumes, purchasing around 3.15 billion pounds (MOP33.31 billion/US$4.14 billion) worth of central London commercial assets. These numbers made Chinese investors the second biggest investors in London’s commercial real estate after U.S. investors. This same investor group represented just 1 per cent of that investment in 2006.

Meanwhile, Juwai stated that according to its surveys, London topped it’s top-five list of UK cities that sparked more interest from Chinese investors, with the remaining places on the ranking held by Manchester, York, Cambridge and Sheffield.

Safe long-term

According to the Juwai CEO, the fall in the value of the British currency after the Brexit vote – when in August it reached its lowest level in eight years - encouraged Chinese investors to invest in the UK capital.

“The pound is not today at its lowest point, but it is still far below the exchange rate that prevailed on the day before the Brexit referendum.

This has created what many Greater China investors consider to be a buying opportunity,” she added.

The same argument was reflected

by Martin Tacon, Principal of Sniper Capital, who told Business Daily that “uncertainties created by Brexit combined with the softening of the pound sterling against the U.S. dollar”

provided investors from mainland China and Hong Kong with a golden opportunity to invest in London real estate for a discounted price.

“Many have been motivated to move quickly because they perceive the depreciation to be temporary,” he added.

Real estate experts also considered that Chinese investors still see London and New York as the two worldwide markets with the best long-term investment potential - being two renowned financial hubs – while London is leading at the moment.

According to Mr. Tacon, with fundamental drivers for real estate market selection being a transparent and robust legal and tax system, together with “hundreds of years of historical data against which to benchmark real estate property value”, the fundamentals of the London market were “very solid”.

“London also benefits from a broad base of corporate demand across all sectors. All of these factors give investors a certain level of confidence that they will see a stable return over the long term,” he added.

A family investment

In September of this year, news agency Bloomberg reported that Angela Leong, a local legislator and Executive Director of Macau gaming operator Sociedade de Jogos de Macau, S.A. (SJM) had purchased Aldwych House, a 16,200 square-metre building near Covent Garden, from Rowan Asset Management and GI Partners LLC, for 250 million pounds.

Business Daily attempted to confirm with Ms. Leong if the investment had indeed been formalized, but had not received a response by the time this went to print. According to Kwan-Yee Tam, responsible for Corporate Finance and Investor Relations of Hong Kong property development and media group Lai Sun Group, the majority of interest in real estate investment in the centre of London has actually come from “private family names more than institutions or funds”, an interest also noted with other real estate sources.

“When looking to establish a global investment portfolio, most wealthy Asian families are attracted to prime London commercial real estate. Adding to that is the strong legacy that the decision-making class in Hong Kong has with the UK. Many of these investors are educated in the UK and have a strong attachment to London,” Mr. Tacon told Business Daily.

The real estate consultancy expert considered that these buyers “may be planning for their children’s education, looking at legacy planning or retirement and, hence, taking the

opportunity of a dip in values to enter the market,” he stated.

Information from Juwai revealed that 16 per cent of Chinese buyers stated education as one of their main drivers for buying real estate in the country.

"Brexit hasn’t caused Greater China buyers to lose confidence in London’s long-term prospects. Chinese are big believers in London and UK property investment. They tend to believe it will also be a world capital, an appealing place to live, and a centre for prestigious educational institutions,” the Juwai CEO added.

Location, location, location

Asian investors in London commercial properties are “typically very location sensitive” with their primary focus being two core prime areas: the City of London - known as the UK’s traditional financial centre - and the city’s West End, where the traditional retail shopping district and high-end residential districts are located. The West End area now houses many toptier commercial investment properties catering to financial operations, fund management, family offices and other high-end tenants.

“Some investors have more recently, in search of higher yields, started to look outside these two core areas [to those] such as Canary Wharf and developments in Nine Elms and Battersea as well as the Northern Powerhouse,” the Principal of Sniper Capital Limited told Business Daily.

Currently the Lai Sun Group owns three properties in London’s financial district, in Leadenhall Street and another at Queen Street, with a total of 36,957 square metres in gross floor area that provided the group with HK$136.3 million (US$17.47 million) in office rental for the financial year ending July 31.

Despite rental income from its London properties having decreased by 9 per cent yearly from the previous year due to ‘lower contributions’ caused by Brexit, Mr. Kwan told Business Daily that investments in London “provided great long-term returns”.

“Our properties are all adjacent to each other, so they have a large redevelopment potential. In fact we’re in the process of applying to redevelop them all together, which could triple the amount of floor space and the price for square foot on rental,” he told Business Daily.

Mr. Kwan added that, with the group lease lasting until 2023, there was “plenty of time” to assess the redevelopment option and that “even if nothing is done, there’s going to be positive cash generated”.

Although he agreed that after Brexit several banks were looking to relocate

their staff from their London offices back to their respective home countries, such as the Netherlands and Germany, he believed that “as a city, London is very hard to replicate”.

The Lai Sun Group representative stated that the return of interest by Chinese groups could already be seen in the area near Leadenhall Street, with the commercial skyscraper Leadenhall Building - known as the Cheesegrater - having been bought in March of this year for 1.15 billion pounds by Hong Kong-listed company CC Land, the second-largest sale ever for a UK building.

Meanwhile “just diagonally opposite” from the Lai Sun Group property, there is the headquarters of British insurance company Lloyd’s, which was sold to Chinese insurance company Ping An for 260 million pounds.

Market dangers and future

When asked about the risks of real estate investment in London, experts told Business Daily that the city’s market continued to experience low property vacancies, with its rigorous planning process limiting potential new supply to prime London areas.

“Without a doubt, there are some uncertainties in the London market as the Brexit consequences have yet to play out. Although there have been an array of positive moves from financial institutions, a large number are still wary about potentially having to move employees and offices to provide their services across the EU,” Mr. Tacon considers.

However, the real estate consultant believes the risk of London losing a large numbers of jobs to other EU cities has been “significantly overplayed”, with the short-term outlook for the market being more connected to its “late cycle characteristics” than the changes that “may or may not occur due to Britain leaving the EU come 2019”.

Meanwhile, Ms. Law expects longºterm Chinese investment in the UK, to reach “high investment flows, similar to recent years, for the foreseeable future”.

“There will be years that are bigger and those that are smaller, but the underlying trend will remain,” she told Business Daily.

To justify the expected increase in investment, the Juwai CEO reiterated Chinese President Xi Jinping’s statement at the World Economic Forum in Davos this year that Chinese outbound investment will total US$750 million over the next five years.

“That averages out at about US$150 million (MOP6.02 billion) per year, which is roughly equal to the level in 2016, the largest year on record,” she added.

Business Daily Tuesday, October 31 2017 7

Macau

8 Business Daily Tuesday, October 31 2017

Greater China

Real estate

As home prices cool, some property companies seek to reduce risks Some of the major property companies have been diversifying into other businesses to hedge their bets Umesh Desai and Clare Jim

A

s the froth comes off China’s home prices, there are increasing signs that some property developers, particularly those with a heavy debt load, are becoming less aggressive.

They are reducing balance sheet leverage, buying land through joint ventures with other property companies to reduce risk, or diversifying into other businesses.

Their concern is that they can no longer bank on paying ever richer prices for land if the value of the apartments they build on that land isn't also still surging. The risk is that if apartment prices drop the developers will be left with expensive unsold properties and suffer losses at a time when their debt levels are already dangerously high.

A minority, such as Tianjin-based Sunac Holdings, are planning to reduce their land purchases and focus instead on selling more of the apartments they have already built. The nation’s sixth-largest real estate developer, based on sales, won’t grow as fast as before but it may be in a position to cut its debt ratio.

"We have been developing too fast in the past," said Gao Xi, vice president at Sunac, which in July bought 91 per cent of 13 tourism projects from conglomerate Dalian Wanda Group for US$6.5 billion. "Our next step is to slow down the land bank and increase sales. We will unlock profitability and then the gearing will come down," Gao said at an earnings conference.

The company aims to cut net gearing – total borrowings less cash divided by shareholders' equity - to 70 per cent by the end of 2019 from 260 per cent at the end of June.

Evergrande, which has China's second biggest pile of corporate debt on its books behind energy giant CNPC Capital , said it aimed to cut the ratio to 70 per cent by the end of the decade from 240 per cent at the end of June.

"China's property market has moved from a golden era to a stable one, so we need to transform," said Evergrande Vice Chairman and CEO Xia Haijun at an earnings conference.

Share prices climb

China's new home prices registered a second straight month of weak growth in September, with prices in the biggest markets slipping and gains in smaller cities slowing as government measures to cool a long property boom take hold.

Over the last year, more than 45 major cities have imposed restrictive policies of varying severity to curb fast-rising prices, with some forced into several rounds of tightening measures.

Investors have applauded the more conservative approach of Sunac and Evergrande, sending their share prices to record highs this month.

Credit markets also gave a thumbs up. Evergrande's US$4.7 billion bonds due 2025 which had been trading below offer price since their June issuance rallied to trade at a premium. The bond, carrying an 8.75 per cent coupon, is trading at its highest level in price terms which has sent its yield to 8 per cent.

"We like the sector on expectations of high contracted sales after a phase of negative cashflows when they were in their growth phase," said Dhiraj Bajaj, fund manager at Lombard Odier’s asset management business. "Developers have been accumulating assets in the form of land banks and now it is time for these assets to bear fruit.”

His fund has stepped up purchases of bonds issued

by Sunac and Evergrande since their last earnings announcements.

"This cycle is different as developers have taken advantage of the strong demand and are destocking," said Alexander Wolf, Standard Life Aberdeen senior emerging markets economist. The firm does not have any holdings in Sunac or Evergrande.

Still, the more sober approach isn’t universal.

S&P Global Ratings said in September the sector would see only a moderate improvement in financial leverage over the next 12 months and that any significant deleveraging was unlikely.

"Whether the credit improvement is sustainable or not depends on the sales going forward, but some of the revenue

will be offset by the strong appetite in land by developers," said S&P analyst Cindy Huang on a conference call.

Debt building up

Property developers' leverage movement varies across the sector depending on their land bank positions, but some companies stand out due to their aggressive debt build up. This phenomenon is predominant among the smaller developers.

Guorui Properties' net gearing ratio rose to 196 per cent in mid-2017 from 156 per cent at the end of 2016. Oceanwide's gearing ratio rose to 40.9 per cent from 27.6 per cent.

Record land prices and fierce competition, especially in bigger cities, have pushed developers to join hands to bid for

land so that they can afford a higher price and share the risks.

Country Garden has raised the amount of its land bank purchased via joint ventures to 50 per cent from 28 per cent, according to CLSA estimates.

"Growth is in their DNA. We will see more joint ventures as the battle for land banks becomes fierce. This will not only see smaller stakes for companies but will also make debt disappear from some balance sheets," said Macquarie's property analyst David Ng. "It helps balance sheets look a bit better."

Other property companies are also making moves to improve their balance sheets with the result that the property sector index, which includes

many of the major real estate stocks from mainland China and Hong Kong, recently hit levels not seen since December 2007.

Some of the major property companies have been diversifying into other businesses to hedge their bets.

Vanke, the country's second largest developer has been getting into logistics and education, Beijing-based Sino-Ocean Group into overseas ventures and investments and Sunac has acquired a smart TV manufacturer.

Agile Group said it is now looking to its main business to be "supported by a diversified range of businesses" which now include environmental protection and hotel operations. Reuters

Business Daily Tuesday, October 31 2017    9

Greater China Energy

Factories across industrial heartland struggle with soaring gas costs Factories in China's industrial heartland making everything from steel sheet to tofu and ceramics are struggling with soaring costs or facing closure as they wait for authorities to approve new gas-powered boilers, five industry executives told Reuters Muyu Xu and Dominique Patton

Statistics bureau

Beijing to publish unified GDP data in fraud crackdown The statistics office said it would push forward inclusion of research and development spending into regional GDP data

C

hina’s National Bureau of Statistics will take over data collection at the regional level from 2019, a government official said, replacing the current system in which the combined economic output of China's provinces has long exceeded national output measured by the NBS. National Bureau of Statistics Deputy Head Li Xiaochao said yesterday there had been significant improvement in the long-standing discrepancy between national and regional GDP data.

The government had stepped up inspections of potentially fraudulent data and was working towards unifying the accounting systems used by national and local authorities.

"The problem of discrepancy between regional and national GDP data has significantly improved, but (the gap) is still large," Li said in an interview with China Information News that was published on the statistics bureau's website on Monday.

"This situation is not conducive to accurately understanding regional

economic trends, scientifically implementing macroeconomic controls, and impacts the credibility of government statistics," Li said.

The gap has been narrowing, but the discrepancy between provincial GDP and the national figure was still RMB2.76 trillion (US$401billion) last year, roughly equal to the GDP of Thailand, according to Reuters calculations.

Several cases of falsified government data have been publicised over the last year, with high-level officials pledging harsh penalties for making fraudulent submissions.

Li said the NBS will work with regional statistics agencies to compile regional data, with national and regional data to be released together once the new system is in place. The statistics office said it would push forward inclusion of research and development spending into regional GDP data, and would research methods for calculating service output from owner-occupied housing as part of improving its statistical methods. Reuters advertisement

The problems illustrate the burden that is falling on China's small- and medium-sized manufacturers because of Beijing's radical shift from coal to natural gas and will raise concerns of insufficient power supply for industry.

China's central government has ordered regions near the capital to shut 44,000 coal-fired boilers that provide steam and energy for factories, including steel rolling mills, ceramics and chemical manufacturers, and convert or replace them with gas-fired boilers or switch to electricity by the end of October.

The change is part of the government's push to wean the country off coal and reduce the amount of smog emitted by its industries. Other measures include cutting steel and aluminium output and curbing construction in northern regions.

The city of Tangshan, in the province of Hebei which surrounds Beijing, set an earlier deadline of Oct. 9 for the conversions and said it would shut companies that did not comply. Tanghsan is China's biggest steel-producing city.

"The price increases everyday. It is hard to say how long we can bear to run the operation," said a sales manager at Xinyiyuan Steel Corp, a small steel rolling factory in Tangshan. She declined to give her name as she is not authorised to talk to the media.

An average 10-tonne natural gas boiler costs about RMB2,531 (US$381) per hour to run versus RMB909 per hour for the same capacity of coal boiler, according to Reuters calculations based on spot gas and coal prices in China.

Rising demand for natural gas because of the switch has pushed prices higher, the sources said.

China meets some of its natural gas

demand domestically but the country is importing more liquefied natural gas (LNG) to make up the shortfall.

The spot price of LNG in Asia was at US$9 per million British thermal units

Key Points Costs soar after coal-to-gas switch in factories Asian gas prices jumped 49 per cent in two months China to eliminate 44,000 coalfired boilers by end-Oct on Oct. 27, up 49 percent from Aug. 25, according to Reuters assessments.

However, even completing the conversion to gas in time has not prevented delays to resuming production.

Tangshan Ruilong Steel Corp may have a prolonged closure after its newly installed gas-fired boiler failed an inspection, said a Ruilong manager who gave his surname as Wang.

"It has been a month and we are still waiting for approvals from local the environmental bureau to reopen our business," he said. He does not know the reason for failing the inspection.

In Henan province, another manufacturing centre south of Hebei, a source at a tofu factory said his costs have jumped 12.5 per cent to RMB18,000 per tonne since switching to gas.

Residential users who are heating their homes for the first time with gas this winter will have supply priority over industrial users, increasing the possibility of power losses during gas shortages, experts and analysts have warned.

"It is wonderful from a social perspective, but from a business perspective, not so much," said an Australian trader who buys ceramic tiles from Shandong. Reuters

10 Business Daily Tuesday, October 31 2017

Greater China

Taiwan's President Tsai Ing-wen (C) waving to reporters before departing to visit three South Pacific allies at the Taoyuan International Airport.

Source: Lusa

Tsai in U.S.

Taiwan understands need to spend more on defence Tsai said Taiwan has raised defence spending considerably this year and will continue to do so David Stanway

T

aiwan understands the need to spend more on its defence and will continue to increase its military spending, President Tsai Ing-wen said during a visit to Hawaii that has provoked anger from Beijing.

Tsai visited Hawaii at the weekend on her way to three of Taiwan's diplomatic allies in the Pacific despite China calling on the United States to stop the trip.

China has increased the pressure on Taiwan since Tsai took office last year, suspecting she wants to push for its formal independence, by conducting more military drills around the island and slowly peeling away its few remaining diplomatic allies.

Tsai described Taiwan-U.S. relations as being "unprecedentedly friendly" in comments released by Taiwan's presidential office yesterday.

"We are happy to see U.S. promises of peace and stability for the Asia-Pacific region, and from meetings with the United States understand the necessity to increase investment in defence," it quoted her as saying.

Taiwan has raised defence spending considerably this year and will continue to do so, she said while meeting two U.S. think tanks.

The United States and Taiwan have not had formal diplomatic relations since Washington established ties with Beijing in 1979, but the United States is bound by law to provide Taiwan with the means to defend itself.

Taiwan is well armed with mostly

U.S.-made weapons but has been pushing for sales of more advanced equipment, such as fighter jets, to deal with what Taipei sees as a growing threat from China and its own rapidly

‘Her trip comes less than two weeks before President Donald Trump visits Beijing’ modernising armed forces.

China regularly calls Taiwan the most sensitive and important issue between it and the United States and has been

upset by U.S. moves to expand military exchanges with Taiwan and continued U.S. arms sales to the island.

Tsai's stopover in Hawaii included a tour of a Pearl Harbor memorial, a banquet with the overseas Taiwan community, and joint speeches with Ambassador James Moriarty, the chairman of the U.S. Mission in Taiwan, also known as the American Institute in Taiwan.

It was her second U.S. visit this year.

In January, Tsai stopped in Houston and San Francisco on her way to and from Latin America.

Tsai moves on to visit the Marshall Islands, Tuvalu, and the Solomon Islands from yesterday during a weeklong trip and will stop over in the U.S. territory of Guam on her way back to Taiwan. Reuters

Results

BYD sees 2017 profit down as much as 20 pct China's overall car market has also slowed this year after a tax break for smaller cars was cut back Chinese automaker BYD Co Ltd, backed by Warren Buffett's Berkshire Hathaway Inc, said on Sunday that its annual profit would likely fall by as much as a fifth amid rising competition in the hybrid and electric car markets.

China has set strict targets for carmakers to shift to socalled new-energy vehicles (NEVs), triggering a rush of companies looking to tap into potential demand for less-polluting cars in the world's biggest auto market.

BYD, which has invested heavily in hybrid and electric vehicles, forecast full-year net profit would fall by between 15.1 per cent to 20 per cent to a range of RMB4.04 billion (US$607.54 million) to RMB4.29 billion, it said in

filings on the Hong Kong and Shenzhen stock exchanges.

Net profit in 2016 rose 80 per cent to RMB5 billion.

Key Points BYD forecasts 2017 profit to drop 15.1-20 pct Shenzhen, Hong Kong shares fall more than 5 pct China forcing carmakers towards EVs, hybrids BYD an early mover in new-energy vehicles BYD's performance will be closely watched by other local and foreign automakers which are now scrambling to bring out new hybrid and electric models for China and creating joint ventures

focused on electric cars for the market.

China has signalled a longterm aim to shift towards new-energy vehicles, but has also been phasing out subsidies, raising concerns from some automakers that consumer demand alone will not be enough to drive sales.

China's overall car market has also slowed this year after a tax break for smaller cars was cut back.

BYD's shares fell sharply yesterday, with its Shenzhen-listed and Hong Kong stock both down more than 5 per cent in morning trading.

The carmaker said in its

filing that sales of new-energy vehicles would "continue to grow rapidly" in the fourth quarter, while investments in other transport technologies such as its sky rail business would "bring sound revenue and profit".

BYD said January-September net profit fell 23.8 per cent to RMB2.79 billion. In August it had forecast a drop of roughly 20 per cent to 25 per cent. Third-quarter net profit fell 23.9 per cent from a year earlier to RMB1.07 billion.

Sales of new-energy vehicles in the wider China market in January-September totalled 398,000, up 37.7 per cent from 2016, industry data showed. The country is on track to meet a sales target of 700,000 NEVs this year. Reuters

Asia

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12 Business Daily Tuesday, October 31 2017

Asia

Conglomerates

Changes in chaebol governance culture could diminish the 'Korea discount' New President Moon Jae-in has signalled support for a stewardship code in South Korea Dahee Kim

G

lobal demand for tech products has helped Samsung Electronics' shares surge about 50 per cent this year, outpacing gains in the wider market, but the Korean conglomerate's rally has another, more esoteric driver: its new focus on minor shareholders.

Analysts say Samsung is among a handful of firms tackling the so-called "Korea discount" in stock markets, a consequence of some of the lowest dividend pay-outs in major equity markets and the dominance of opaque conglomerates known as chaebols.

In addition to favourable cyclical drivers, a push for a "stewardship code" could give the market a structural boost by encouraging big investors to agitate for better governance and shareholder returns.

"Governance concerns have historically resulted in a cheap market remaining cheap," said Matthew Vaight, a global emerging markets portfolio manager in

London's M&G Investment.

"The chaebols have a history of being run primarily in the interests of the controlling shareholders, be that evidenced by low dividend pay-outs or the circular shareholder structures and resultant intra-group transactions."

A stewardship code adopted in the United Kingdom in 2010 aimed to improve the relationship between investors and firms by lifting long-term risk-adjusted returns to shareholders.

New President Moon Jaein has signalled support for a stewardship code in South Korea, which, though not legally binding, would encourage institutional investors to more actively engage in corporate governance issues on behalf of smaller shareholders.

A possible move by Korean's National Pension Service, the world's third-biggest pension fund, to implement it would help convince other companies to get on board.

About 40 investment companies in South Korea are set to join this year, according

to Korea Corporate Governance Service, the organisation that introduced the code to the country.

From the corporate side, the Korea Stock Exchange adopted a governance code this year and about 70 listed firms are on board, including majors Samsung Electronics, Hyundai Motor Co, POSCO, Kia Motors Corp and LG Chem.

"Such actions from large conglomerates will all improve the stockholder value, which is the goal of the stewardship code, and the movement is likely to spread widely," said Park Jung-hoon, a fund manager at HDC Asset Management.

In its bid to boost its governance profile, particularly in relation to shareholder returns, Samsung says it has increased its dividend and reduced treasury stocks.

Wider moves to give investors a greater voice and improve corporate governance, if they materialise, could promote a sustained structural shift higher in the Seoul market in coming years.

The Korea Composite

Stock Price Index (KOSPI) has risen 22.5 per cent so far this year, hitting record highs and breaking out of long-held ranges, despite risks with North Korea.

Yet the market's return on equity (ROE) of 8.17 is still one of the lowest among the countries covered by MSCI. The average ROE is 11.85, while the United States stands at 16.66, according to data compiled by Reuters as of mid-October.

The country's dividend pay-out ratio is also very low at 16.43, less than half the MSCI average of 38.95.

"If South Korea's dividend pay-out ratio is pulled up to Japan's 27.6 per cent, which is currently at the bottom 25 per cent of those included in MSCI, the KOSPI is very likely to have another big leap," said Cho Byung-hyun, a stock analyst at Yuanta Securities in Seoul.

Big players need to lead

While initiatives to bolster Korea Inc's governance profile are progressing, the shift is modest in a country dominated by chaebols and when compared with similar

moves in Japan.

"It's key to have some big companies and big investors leading the way," said Michael Herskovich, head of corporate governance at BNP Paribas Asset Management in Paris.

As an example, Herskovich said Toyota Motor Corp's decision to incorporate external oversight changed the game for smaller and midcap Japanese companies.

In 2015, Japan introduced a corporate governance code to encourage investors to voice concerns and force companies to be more responsive to them. Combined with a stewardship code that made fund managers more accountable for their votes, it was seen as making companies more focused on improving returns.

M&G Investment's Vaight said Samsung Electronics had been leading the way in South Korea with higher dividends and a better approach to share buybacks.

"Korea is home to some very profitable and successful companies who are now beginning to share their cash flows with minority investors," he said. Reuters

Labour

Singapore unveils plan to create 4,000 finance sector jobs Singapore is projecting a 4.3 per cent annual growth rate for the financial sector through 2020 Singapore wants to bolster its status as a wealth management and foreign-exchange centre as part of plans to create more financial-sector jobs and mitigate the effect of rapid changes in technology.

In a plan unveiled yesterday, the Monetary Authority of Singapore said it aims to create 4,000 net new jobs in financial services and financial technology, and achieve real growth in the sector of 4.3 per cent annually, faster than the overall economy.

“With technology transforming the way financial

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services are produced, delivered, and consumed, it is critical that Singapore’s financial sector also transforms, to stay relevant and competitive,” the MAS said in a statement.

Banks around the world are cutting jobs as the industry is transformed by digital technology, and the application of artificial intelligence and robotics. Vikram Pandit, who ran Citigroup Inc., has predicted some 30 per cent of banking jobs will disappear over the next five years.

Singapore is projecting a 4.3 per cent annual growth rate for the financial sector through 2020, higher than the planned overall economic growth of 2 per cent to 3 per cent included in a set of national strategies unveiled

in February. The financial sector accounts for about 13 per cent of Singapore’s gross domestic product and employs around 200,000 people.

Assets under management grew 7 per cent last year to

S$2.7 trillion (US$1.9 trillion), according to MAS data published in September.

It’s a good time to set financial sector priorities because the macro-economic environment is improving, said Oversea-Chinese Banking Corp.’s Chief Executive Officer Sam Tsien. “That being the case, it is even more important for us to get the infrastructure ready, so that we have the people, the technology and the regulatory-facilitating facilities,” Tsien said in an interview yesterday. Bloomberg News

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

Business Daily Tuesday, October 31 2017    13

Asia In Brief Markets

S.Korea c.bank says will buy gov't bonds this week

Consumption

Japan's retail sales show strength in consumer spending Core consumer prices rose 0.7 per cent in September from a year ago Stanley White

J

apan's retail sales rose in September at the fastest pace in three months as shoppers spent more on clothes and daily goods in a sign that consumer spending remains strong due to a tight labour market.

The 2.2 per cent annual increase in retail sales in September was less than the median estimate for a 2.5 per cent annual increase and follows a revised 1.8 per cent annual increase in August.

Strong consumer spending makes it more likely that consumer prices will accelerate in the future, which supports the Bank of Japan's (BOJ) argument that it can afford to keep its monetary easing unchanged as inflationary pressure gradually builds up.

"Consumption in July-September is likely to be a little bit weaker than the previous quarter, but the

outlook remains healthy," said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

"Consumer spending is still in moderate recovery. The labour market will support spending in the future."

Spending on clothes rose 5.0 per cent in September from a year ago, the fastest increase in three months, data from the trade ministry showed yesterday. Spending on daily goods like soap and shampoo rose an annual 1.2 per cent, versus a 0.4 per cent annual decline in the previous month.

The BOJ is expected to signal that it will hold off on expanding stimulus for the time being at a policy meeting ending today.

The policy meeting comes after Prime Minister Shinzo Abe's victory in a lower house election, which heightened expectations the BOJ's ultra-loose policy - a key pillar of

his "Abenomics" stimulus policies - will continue.

Core consumer prices rose 0.7 per cent in September from a year ago, which is distant from the BOJ's 2 per cent inflation target, although

Key Points Growth seen at 3.4 per cent next year, flat in 2019 Policy uncertainty looms large in Nigeria, South Africa Inflation pressures easing especially in East Africa Public debt rising, IMF urges fiscal reforms the central bank argues that consumer prices will eventually pick up because of the tight labour market and wage growth, albeit slow.

Reuters

Property

New Zealand PM wants foreign home ownership ban finalised before APEC meeting The ban is designed to overcome a politically sensitive housing crunch that has priced many New Zealanders out of the market Ana Nicolaci da Costa

New Zealand Prime Minister Jacinda Ardern said yesterday she would like to finalise the details of a ban on foreigners buying established homes before a key trade deal meeting next week.

The new Labour-led government wants to ban foreign buyers from purchasing existing homes in the country as it tackles what it says is a housing crisis left unresolved by the previous government.

The ban is at odds with the Trans-Pacific Partnership, to which New Zealand belongs, and Ardern has said she would seek to renegotiate the deal to allow for the ban.

New Zealand has been a vigorous backer of the TPP since the United States withdrew in January. The 11 TPP members had set a goal of reaching broad agreement on the pact on the side-lines of the Asia-Pacific Economic Cooperation meeting in Vietnam next week.

"We've always said that we would undertake measures to make sure

that people who were based overseas and had no interest in New Zealand were not able to buy existing homes and that hasn't changed," Ardern told local media, noting that the mechanism to enforce the ban would be the key issue.

"I am finalising some details around it. I am hoping to have it squared away before we travel to APEC." The ban is designed to overcome a politically sensitive housing crunch that has priced many New Zealanders out of the market, with prices up more than 50 per cent nationally in the last decade. Foreign investors could still buy new houses and apartments, however.

The TPP requires member states to treat foreign investors no less favourably than nationals with respect to the establishment and operation of investments, according to Daniel Kalderimis, lawyer at Wellington-based firm Chapman Tripp.

This requirement is subject to exceptions negotiated by each state but New Zealand has no carve-out allowing it to restrict investors from

other TPP states from investing in New Zealand housing on terms other than those that apply to nationals.

This has led the Labour-led government to seek to renegotiate the deal, which some fear may unravel an agreement which already suffered a blow this year with the U.S. withdrawal.

The New Zealand Herald newspaper said the new trade minister, David Parker, was now considering advice that an explicit ban could be acceptable under the TPP if it passed into domestic law before the deal came into force.

"We must find a solution to allow us to ban overseas buyers of existing New Zealand homes for us to proceed with TPP11," the newspaper quoted Parker as saying.

John Ballingall, deputy chief executive of the New Zealand Institute of Economic Research, said "even if we can technically make that change, I can't imagine that that would be welcomed by the other TPP members as a sign of good faith and commitment to the agreement". Reuters

South Korea's central bank plans to buy government bonds in an auction this week as part of measures to stabilize the local bond market, a Bank of Korea official said yesterday. "We plan to purchase government bonds this week," a BOK official said, without elaborating on the amount or tenures. The yield on the three-year government bond had risen to 2.164 per cent as of Friday's close, from 1.935 per cent on Oct. 18, as the central bank gave a strong signal that an interest rate hike may be imminent.

Forecast

Thai finance ministry raises growth outlook Thailand's finance ministry yesterday raised its economic growth forecast for this year to 3.8 per cent from 3.6 per cent, and upgraded its estimate for export gains, a senior official said. Exports, a key driver of Thai growth, should increase 8.5 per cent this year, compared with the 4.7 per cent projected in July, Suwit Rojanavanich, director general of the ministry's Fiscal Policy Office, told a news conference. Southeast Asia's second-largest economy this year will mainly be driven by stronger exports and tourism amid improved private investment, he said.

Investment

FDI into Indonesia inches up in Q3 Indonesia, whose president has been trying to attract more overseas investors, saw foreign direct investment (FDI) increase at a slightly faster pace in July-September than in the previous quarter, according to data released yesterday.

FDI rose 12 per cent in the third quarter from a year earlier in rupiah terms, the investment board said. That compared with the 10.6 per cent annual increase in April-June. Board deputy chief Azhar Lubis said the FDI total in the latest quarter was 111.7 trillion rupiah, which the board converts to US$8.3 billion.

Sales

Nintendo lifts annual profit outlook Japanese videogames maker Nintendo Co Ltd yesterday raised its full-year operating profit forecast as supply shortages on the Switch console began to ease. It forecast profit of 120 billion yen (US$1.06 billion) for the year ending March, up from 65 billion yen estimated three months ago. That compared with a Thomson Reuters Starmine SmartEstimate of 133.60 billion yen drawn from the forecasts of 22 analysts.

SmartEstimates give greater weight to recent estimates by the more consistently accurate analysts. Nintendo raised its Switch sales forecast for the financial year through March to 14 million units from 10 million units.

14 Business Daily Tuesday, October 31 2017

International In Brief Currency

Croatia wants to adopt euro within 7-8 years Croatia aims to become a euro zone member within the next seven to eight years, Prime Minister Andrej Plenkovic said yesterday.

"We don't want to specify the exact dates, but we want Croatia to become a euro zone member within two government terms in office," Plenkovic told an economic conference devoted to the introduction of the euro in Croatia. The centre-right government came to power a year ago. Plenkovic said Croatia wanted to enter the European exchange rate mechanism II (ERM-2) within the next three years, before the country takes the presidency of the European Union in 2020.

M&A

Akzo Nobel seeks US$30 billion merger with Axalta Dutch paints maker Akzo Nobel, under pressure after rejecting a lucrative takeover offer and two profit warnings, has confirmed merger talks with smaller U.S. rival Axalta Coating Systems Ltd to create a US$30 billion company. Akzo, the maker of Dulux paint, announced it was in "constructive talks" about a "merger of equals" in what would be the first major deal by Chief Executive Thierry Vanlancker, who took over in July after Akzo spurned a 26 billion euro (US$30.2 billion) takeover offer from U.S. rival PPG Industries.

Reforms

Saudi Arabia to let women enter sports stadiums in 2018 Saudi Arabia will for the first time allow women to attend sports events in three selected stadiums from early next year, the General Sports Authority said in a statement. The stadiums in Jeddah, Dammam and Riyadh are being prepared to accommodate families in early 2018, said the statement, carried by the state-run Saudi Press Agency late on Sunday.

Last month Saudi Arabia announced that, from June, women would be allowed to drive cars, ending the world's only ban on female driving.

Crown Prince Mohammed bin Salman's Vision 2030 reform program aims to open up Saudis’ cloistered lifestyles.

Retail

German Sept sales rise German retail sales rose slightly less than expected on the month in September and posted a big increase on the year, data showed yesterday, adding to signs that consumption will continue to support growth this year. The volatile indicator, which is often subject to revision, showed retail sales in Europe's largest economy rose by 0.5 per cent on the month in real terms, the Federal Statistics Office said.

That compared with the Reuters consensus forecast for a 0.7 per cent rise. On the year, retail sales jumped by 4.1 per cent, overshooting a Reuters consensus forecast for an increase of 3.0 per cent.

Economic outlook

IMF says rising debt, political risk dims sub-Saharan Africa Economic growth is expected to rise to 3.4 per cent in sub-Saharan Africa next year from 2.6 per cent in 2017, the IMF said in a report yesterday, but warned that rising debt and political risks in larger economies would weigh down future growth MacDonald Dzirutwe

N

igeria and South African are the biggest economies in Africa south of the Sahara, but both nations have been clouded by political uncertainty linked to the tenure of their leaders.

The IMF said a good harvest and recovery in oil output in Nigeria would contribute more than half of the growth in the region this year while an uptick in mining and a better harvest in South Africa as well as a rebound in oil production in Angola will add to growth.

But political uncertainty loomed large in Nigeria, where President Muhammadu Buhari is afflicted by illness, causing speculation about whether he is well enough to run Africa's biggest economy.

South Africa has been clouded by the rule of Jacob Zuma, who has battled scandals, including corrupt allegations ahead of his ANC party's conference in December to elect a new party leader.

"Key downside risks to the region's growth outlook emanate from the larger economies, where elevated political uncertainty could

delay needed policy adjustments and dampen investor and consumer confidence," the IMF said in a report launched in Harare.

"A further pickup in growth to 3.4 per cent is expected in 2018, but

Key Points Growth seen at 3.4 per cent next year, flat in 2019 Policy uncertainty looms large in Nigeria, South Africa Inflation pressures easing especially in East Africa Public debt rising, IMF urges fiscal reforms momentum is weak, and growth will likely remain well below past trends in 2019."

To help maintain growth, countries should diversify from dependence on commodities and oil, implement fiscal reforms to stimulate growth and attract private investment.

The IMF said public debt would rise to 53 per cent of GDP this year from 48 per cent in 2016. More worryingly, most countries were now borrowing

from local banks, which could destabilise the domestic financial sector and fuel inflation.

Debt servicing costs were also up, but high debt levels were in particular complicating the economic outlook for six nations, including Zimbabwe, which is gripped by a crunch forex shortage.

"Debt servicing costs are becoming a burden, especially in oil-producing countries ... and are expected to absorb more than 60 per cent of government revenues in 2017," IMF said.

While some countries had made progress in reducing their fiscal deficits, others, like Africa's most advanced economy South Africa would see the deficit widen.

South Africa last week raised its estimate for this year's budget deficit, saying the country faced sluggish economic growth, shortfalls in revenue and costly bailouts of struggling state-owned companies.

Inflation pressures are easing especially in east Africa, which was hit by drought and the governments there increased maize imports to cut food prices. But in other places like Zimbabwe the high cost of imports is raising price pressures. Reuters

Results

Asia pivot helps HSBC post jump in Q3 pretax profit HSBC saw return on equity almost double to 8.2 per cent in the first nine months of the year Sumeet Chatterjee and Lawrence White

HSBC yesterday signalled its pivot to Asia was paying rich dividends as quarterly profits leapt five-fold, laying a foundation for its new leadership to plan for growth after a tough period of post-crisis restructuring.

HSBC earlier this month chose veteran John Flint as its next chief executive, with its newly arrived chairman promoting an insider to drive revenue growth. Flint will take over as CEO in February 2018.

With Flint, who spent much of his early career in Asia, and regional veteran Chairman Mark Tucker at the helm, analysts expect the London-based bank's shift toward its second home market of Asia to accelerate.

HSBC has been able to grow its revenue again following a period of wider restructuring after the 2008 global financial crisis, that included scaling back its empire and shifting its focus eastwards.

"We've got good momentum, we're seeing good investor appetite for new business coming through not only in Hong Kong but further afield in Asia," Group Finance Director Iain Mackay told Reuters.

Pretax profit was US$4.6 billion in the September quarter, up from US$843 million in the same period a year ago, HSBC said in a stock exchange filing. The profit was roughly in-line with analyst estimates of US$4.7 billion.

The year-ago profit was significantly impacted by a one-off loss of US$1.7 billion from the sale of its Brazilian unit, and adverse foreign currency

movements.

Reported pretax profit for the Asia operations rose 10 per cent during the third quarter to US$4 billion.

"Our international network continued to deliver strong growth ... and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong," HSBC Group Chief Executive Stuart Gulliver said in the statement.

HSBC saw return on equity, a key

The bank makes more than half of its profits in Asia, and its regional pivot is centred around China's Pearl River Delta region with billions in investment commitments and plans to bolster its retail and wealth management business.

Its customer base for retail banking and wealth management in mainland China had expanded by more than 70 per cent so far this year, it said.

HSBC's common equity tier 1 ratio -

measure of profitability, almost double to 8.2 per cent in the first nine months of the year but it did not give a timeframe for achieving its long-term goal of 10 per cent.

"We won't achieve 10 per cent by the end of 2017, but we are heading in the right direction," Mackay said.

a measure of financial strength - was 14.6 per cent at the end of September, slightly lower than 14.7 per cent at end-June this year, but in-line with analyst expectations.

The ratio is set to increase in the medium term, as the bank repatriates about US$8 billion stuck at its U.S. subsidiary, following approval last year from the U.S. Federal Reserve.

HSBC posted a 5 per cent drop in adjusted revenue in fixed income, currencies and commodities business during the quarter. Some of its European rivals such as Barclays saw the same business fall by more than 20 per cent in the period. Reuters

Pearl River pivot

HSBC has been able to boost its capital buffer despite rolling out share buybacks, the latest of up to US$2 billion in July, and sustaining dividends, showing it is ahead on its turnaround strategy that includes expanding in Asia.

Business Daily Tuesday, October 31 2017 15

Opinion

China's state-owned cash cows must beware cap-in-hand Xi Shuli Ren a Bloomberg Gadfly columnist

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here are many things to like about China Life Insurance Co., but helping President Xi Jinping build a new aircraft carrier isn't one of them.

Under the guise of state-owned-enterprise reform, China Shipbuilding Industry Co. said on Friday it plans to buy the stakes it doesn't already own in two subsidiaries via a RMB22 billion (US$3.3 billion) share swap. The transaction will bring in bad-debt manager China Cinda Asset Management Co. and China China Shipbuilding Life as investors, the latter share swap subscribing for RMB2 billion of stock in shipbuilding units in Dalian and Wuhan.

China Shipbuilding says recapitalizing the two units will unleash their hidden va l u e, c o n si d e r i n g th e i r stat u s as "world renowned" marine equipment manufacturers responsible for the nation's aircraft carriers and destroyers. The main selling point here is the operations' military value.

But does China Life really know what it's buying into?

China Shipbuilding doesn't disclose the revenue or profit it earns from the navy because military trade is a state secret. A look at the company's financials, however, shows it can't be that large. Gross profit margins in the second quarter rose just 1.32 percentage points to 9.3 per cent. Total revenue fell 38 per cent from a year earlier, due to declines in the less-profitable civilian segment -- think businesses such as Hyundai Heavy Industries Co. and Mitsubishi Heavy Industries Ltd. China Life's own earnings couldn't look more different. In the nine months through September, net profit almost doubled to RMB27 billion, buoyed by a recovery in the nation's stock market.

Life insurers in China are also benefiting from soaring bond yields. It means they don't need to put as much away in cash reserves to cover long-term policy liabilities. In the three months through Sept. 30, China Life tipped RMB4.6 billion into its reserve bucket versus RMB13 billion in the first half.

This China Shipbuilding deal is simply another case of a state-owned cash cow being enlisted for national service. I said back in August that China Life has a much safer investment portfolio than rival Ping An Insurance Group Co. But what's the point of crafting a safe house when the government can chip away at it?

Perhaps that's why China Life in its latest financial filing revealed it's been actively engaged in alternative investment projects.

According to Daiwa Capital Markets, the group increased its allocation to longterm fixed income assets during the third quarter, boosting non-standard assets with an average maturity of more than 10 years by RMB40 billion.

If there's one lesson to be learned here it's this: State-owned enterprises should deploy their cash quickly before cap-inhand Xi comes knocking. Bloomberg gadfly

Dollar tailwinds intensify with key levels ahead

RMB22 billion

Jason Schenker a Bloomberg Prophets columnist

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fter getting pummelled all year by the euro, the dollar is having a moment.

In Wall Street parlance, it may be more than just a dead-cat bounce, as politics, economic fundamentals and technicals have converged to give the greenback a boost.

The U.S. currency surged in the immediate aftermath of Donald Trump's election victory before suffering a long descent that lasted from December until last month. That's when the political viability of U.S. fiscal policy reform in the shape of -- as yet to be detailed -- tax cuts (and maybe even tax reform) became increasingly likely. Although equity markets have reflected optimism all year that tax cuts would come, the dollar has conveyed doubt along with gold and bonds.

The Bloomberg Dollar Index is up more than 4 per cent from its low for the year on Sept. 8, partially rebounding from the more than 10 per cent drop since the end of December. There could be more to come in the short term if tax cuts happen, because the legislation is likely to contain a provision that would allow U.S. companies to repatriate significant foreign profits and further bolster the economy. That could spark more inflation and put U.S. monetary policy on a more aggressive path.

In terms of the euro, the political situation in Europe has been a distraction. After the election of the far-right Alternative for Germany party to the Bundestag on Sept. 24, the independence movement in the Spanish autonomous region of Catalonia has devolved into a political rat’s nest. Uncertainty, regionalism and the risk of escalating discord in Spain are adding to the political dissonance -- a stark contrast to the apparent acceptance of U.S. Senate Republicans of higher national debt levels in exchange for tax cuts.

As th e d o l l a r-b u l l i sh a n d e u r o -b ea ri sh political dynamics played out, monetary policy expectations have provided a more direct leitmotiv to currency moves. Although expectations for Federal Reserve interest-rate hikes dimmed throughout the year, solid U.S. economic growth and a tight labour market will allow the central bank to continue to tighten policy, despite low rates of inflation. Note that the Fed announced the normalization of its balance-sheet policy at its September meeting -- a time that roughly coincided with this year’s lows for the dollar against the euro, and the

“

beginning of political concerns in Europe as well as political optimism in the U.S. The ECB didn't do the euro any favours last week by announcing an extension of its quantitativeeasing program. Although monthly bond purchases were cut in half, there is no target end date. The ECB failed miserably at removing monetary accommodation between 2012 and 2014, when a one-third reduction in the size of its balance sheet pushed the euro zone to the edge of recession.

But that lesson seems to have been learned, and the ECB is taking a page from the Fed’s playbook: Reduce the pace of accommodation gradually and test the waters, then remove it entirely and test the waters again before tightening monetary policy.

Although the prospect of endless QE could keep the euro under pressure for longer, it's likely to pop once expectations for an eventual tightening rise. With euro zone CPI at only 1.5 per cent, the inflation-sensitive ECB has some wiggle room, but not a lot. That makes the CPI the data point to watch. The euro is under pressure on all sides: The political story is bearish for the euro, as are U.S. economic conditions and monetary policy, and ECB monetary policy -- for now.

Technicals have also shifted against the euro in the past month and could continue to weigh on the currency in the immediate term as it has fallen below both its 30- and 100-day moving averages.

Stochastic, Relative Strength Index, and On Balance Volume indicators are all flashing bearish signals.

But these are minor compared with the fact that the euro is near a critical level of 1.1607 that served as a ceiling from January 2015 to July 2017, when the euro rose above that level. If the euro closes back below that support, it could weaken further in the immediate term. After all, a level of resistance that held for two and a half years is not one markets are likely to ignore.

The U.S. Dollar Index has seen technical dynamics strengthen, having risen above its 30and 100-day moving averages. Plus, the dollar is back above a floor that held from January 2015 until August 2017, when it fell below that floor for around a month. This bounce back above an important technical support means that either a sharp acceleration in euro zone inflation or the failure of U.S. tax cuts would likely be required to upend the recent trends in the euro-dollar exchange rate -- at least in the near term. Bloomberg Prophets

The ECB didn't do the euro any favours last week by announcing an extension of its quantitativeeasing program

”

16 Business Daily Tuesday, October 31 2017

Closing Report

Beijing breaks up plot to kill Kim Jong Un's nephew

issues.

Some agents are being interrogated in special facilities on the outskirts of Beijing, the paper said, without elaborating Chinese police arrested several North Koreans dispatched on whether the other five were arrested. China’s foreign to Beijing on suspicion of plotting to murder Kim Jong ministry didn’t immediately respond to a faxed request for Un’s 22-year-old nephew, South Korea’s JoongAng Ilbo comment. newspaper reported.

Two women are currently on trial in Malaysia on charges Two of seven North Korean agents were arrested over the alleged plot to kill Kim Han Sol, whose father Kim Jong Nam of murdering Kim Jong Nam (pictured) at a Kuala Lumpur was assassinated in Malaysia earlier this year, the newspaper airport in February. Kim Han Sol identified himself as Kim said, citing an unidentified person familiar with North Korean Jong Nam’s son in a YouTube clip in March. Bloomberg News

Markets

Mainland benchmark treasury yields jump to 3-year high The PBOC injected RMB150 billion into money markets yesterday Andrew Galbraith and Winni Zhou

C

hina's 10-year treasury bond yields jumped to their highest level in more than three years yesterday as expectations of a further government clampdown on risky lending triggered panic selling by institutions which scrambled to limit their losses.

Yields on 10-year treasury bonds rose as much as 9.3 basis points (bps) to 3.917 per cent, their highest since mid-October 2014, and the biggest oneday rise since Jan. 5.

Traders said yields on highly liquid 10-year bonds issued by China Development Bank, a policy bank, also spiked, rising as much as 10 basis points in the afternoon.

"Bonds were under selling pressure for almost a month, and now that the Party Congress is over, market stability maintenance (has) stopped.

Institutions now have 'freedom' to sell," said a trader at an asset management firm in Shanghai.

Chinese authorities typically encourage "stability" in the country's financial markets during high profile, politically sensitive events such as the twice-a-decade Communist Party Congress which ended last week.

But the benchmark yield has now climbed 28.5 basis points since the end of September,

supported by persistent liquidity worries, strong Chinese economic data and rising U.S. treasury yields.

Chinese bond futures also fell yesterday, with the most-traded 10-year contract for December delivery sliding 1 per cent.

Traders said selling was concentrated in the 10-years, which are easily traded and therefore favoured by institutions playing short-term strategies.

"If you look at credit bonds, (there are) almost no bids today," said the Shanghai-based trader. "But today's sell-off will eventually spread to the credits, especially to the primary market."

Top policymakers at the congress last week said that efforts to contain excessive risk-taking in the financial system will

continue next year, with hints of more regulations in areas such as interbank borrowing and wealth management products.

"Tough love"

Beijing's "de-risking" campaign has pushed China's money market and shortterm rates gradually higher so far this year, but also triggered periodic fears of liquidity squeezes and spikes in financing costs.

While the People's Bank of China (PBOC) has generally not responded as quickly to such market fears as in the past -perhaps to teach more aggressive risk takers a lesson -- it has still stepped in frequently and added funds if rate moves appeared too volatile and threatened to roil financial markets

or curb economic growth.

The PBOC injected RMB150 billion (US$22.56 billion) into money markets yesterday and RMB140 billion on Friday in an apparent attempt to soothe concerns over liquidity and falling bond prices.

But yields have continued to rise, indicating traders and banks remain on edge heading into month- and year-end, when liquidity traditionally tightens.

"Market expectations for easing have fallen through," said Xie Yaxuan, an analyst at China Merchants Securities.

"We think tight regulation is the big trend, but the tempo will still remain moderate," he added.

Highlighting its growing efforts to calm markets, the pace of the PBOC's net injections

has increased since summer, largely offsetting much of the money it slowly drained from markets earlier in the year as part of its tightening campaign.

Julian Evans-Pritchard, China Economist at Capital Economics, said: "The deleveraging and financial risk campaign ... was paused for a couple of months before the Party Congress. It looked like the bias had tilted slightly towards easing, if anything, on the part of the central bank."

With the party congress out of the way, that temporary easing bias has now shifted back, with clear signals that authorities intend to put a new emphasis on reducing risk.

That renewed emphasis may come alongside weakening economic prospects.

While China's growth has been surprisingly strong so far this year at around 6.9 per cent, property and construction activity is slowing under the weight of measures to cool heated housing prices and higher borrowing costs.

Stricter pollution measures over winter are also likely to curb industrial production in coming months.

"As it becomes clear that the current strength of the economy is going to be short-lived, I think that expectations for further tightening are going to be reduced ... so I don't expect to see that much further upward pressure on bond yields," Evans-Pritchard said. Reuters

Environment

Forecast

Survey

Carbon dioxide levels grew at record pace in 2016

Economists press pause on China slowdown

Apple Q3 iPhone shipments surge 40 pct in Mainland

The amount of carbon dioxide in the earth's atmosphere grew at record rate in 2016 to a level not seen for millions of years, potentially fuelling a 20-metre rise in sea levels and adding 3 degrees to temperatures, the United Nations said yesterday.

Atmospheric concentrations of carbon dioxide (CO2), the main man-made greenhouse gas, hit 403.3 parts per million (ppm), up from 400.0 in 2015, the U.N. World Meteorological Organization said in its annual Greenhouse Gas Bulletin.

That growth rate was 50 per cent faster than the average over the past decade, driving CO2 levels 45 per cent above pre-industrial levels and further outside the range of 180-280 ppm seen in recent cycles of ice ages and warmer periods.

"Today’s CO2 concentration of ~400 ppm exceeds the natural variability seen over hundreds of thousands of years," the WMO bulletin said.

The latest data adds to the urgency of a meeting in Bonn next month, when environment ministers from around the world will work on guidelines for the Paris climate accord backed by 195 countries in 2015. Reuters

China’s multi-year slowdown is on hold for now, according to economists. They’ve ratcheted up their full-year 2017 forecasts and now expect the first acceleration in seven years.

The world’s second-largest economy will post an expansion of 6.8 per cent this year, according to a Bloomberg News survey that closed last week. The consensus forecast has been rising steadily this year and is up from the 6.5 per cent that was predicted as of the end of last year, when the economy expanded by 6.7 per cent. The economy’s last full-year acceleration was 2010.

One-fifth -- or 11 of 55 -- of economists raised their estimates in the survey that closed last week versus the previous survey. Among optimists were Berenberg Bank, which raised its forecast 0.3 point to 6.9 per cent, and Germany’s Landesbank Hessen-Thueringen, or Helaba, which lifted its projection 0.3 point to 6.8 per cent. Goldman Sachs Group Inc. and Bank of America Corp. also lifted theirs.

They are catching up with an economy that has defied pessimists by posting 6.8 per cent growth in the third quarter after notching 6.9 per cent in the first and second. That puts policy makers on a glide path to easily reaching their full-year target of at least 6.5 per cent. Bloomberg News

Apple has ended an 18-month slump in iPhone sales in China with a 40 per cent surge in shipments in the third quarter, according to a private survey released yesterday.

About 11 million iPhones were sold in China from July to September compared to eight million in the same period last year, research firm Canalys said in a report.

Apple had negative year-on-year growth in China for the previous six quarters.

The uptick in deliveries came even though the country's overall market declined five per cent in the same quarter.

"The high sell-in caters to the pent-up demand of iPhone upgraders in the absence of the iPhone X," said Canalys analyst Mo Jia, adding that price cuts on earlier models after the announcement of the iPhone 8 also helped.

But Apple's iPhone shipments still lag far behind domestic rivals, with the company ranked only fifth on the mainland behind Huawei, Oppo, Vivo and Xiaomi.

Third-quarter growth was only temporary, according to Mo, predicting that Apple was unlikely to sustain such momentum in Q4. AFP