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Singapore is going to double public spending again on the pre-school sector to S$1.7 billion a year in 2022, which is up significantly from the annual expenditure of S$360 million in 2012 and S$840 million this year.

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NATIONAL DAY RALLY 2017

Start life right, stay healthy and live smart Building up pre-schools, fighting diabetes and becoming a Smart Nation are integral to Singapore’s long-term success, says PM Lee

By Lee U-Wen leeuwen@sph.com.sg @LeeUwenBT Singapore

PM Lee calls on Singaporeans to get on board the Smart Nation journey, saying that while Singapore may already have the right ingredients, it still lags behind other major cities in several areas when it comes to taking full advantage of technological advances. TOP STORIES / 2 Entrepreneurship isn’t for everyone, no matter how glamorous or fulfilling it’s been portrayed to be, four serial entrepreneurs say in an interview for World Entrepreneurs’ Day. TOP STORIES / 3

The warrant issued by SHS Holdings is well-priced and could prove profitable when the company’s numbers improve.

The new enhanced auditor reports that took effect about nine months ago have been a positive experience but the disclosure of key audit matters should continue to be company specific and not become generic over time, says KPMG.

Agreement has been ratified by Turkey and can go into effect this year

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On the subject of health, Mr Lee noted that a person with a life expectancy of 82 years will experience, on average, eight years of ill health in his or her old age. PHOTO: ONG WEE JIN / THE STRAITS TIMES

BUILDING up the country’s pre-school sector, fighting diabetes and making Singapore a Smart Nation formed the key messages in Prime Minister Lee Hsien Loong’s National Day Rally speech on Sunday.

These longer-term issues, Mr Lee said at the Institute of Technical Education (ITE) headquarters in Ang Mo Kio, are important to the success, stability and well-being of the nation, both for current and future generations.

Taking a step back from immediate priorities such as the economy and security, the prime minister devoted the bulk of his 65-minute speech to the three pressing issues.

“These are the things we must work on now to build our future, so that Singaporeans can start right, stay healthy and live smart, at every age,” he said.

The pre-school sector received a major boost with Mr Lee’s announcement that the government will open up thousands of new places and double the annual spending in five years’ time.

An extra 40,000 pre-school places will be created in the next five years, taking the total number to about 200,000. The Ministry of Education, which already runs 15 kindergartens, will develop up to 50 kindergartens in the coming five years.

To improve the standards and skills of pre-school teachers and attract more good people to the profession, a new centralised institute – the National Institute of Early Childhood Development – will be set up.

Turning to the topic of health, and specifically the problem of diabetes, Mr Lee noted that a person with a life expectancy of 82 years will experience, on average, eight years of ill health in his or her old age.

One big reason for this is diabetes, and Singapore now ranks just behind the US in terms of its prevalence with one in nine citizens here suffering from the disease.

In all, roughly a third of all Singaporeans aged over 60 have diabetes.

Breaking it down by race, a quarter of those in the Chinese community have it, while the rate is one in two for the Malays, and three in five for the Indians.

To combat this “invisible disease”, Mr Lee urged people to go for regular

medical check-ups, exercise more, eat less and more healthily, and cut down on the consumption of soft drinks.

“It requires commitment and adjustments to our habits, lifestyles and diet. But the payoff is large, and it can be done,” said the prime minister, who watches his own health closely and goes for a blood sugar test twice a year because of a family history of diabetes.

The third issue he spent much time on was the importance of being a Smart Nation, a move that will create opportunities for everyone and ensure Singapore stays a leading city in the world.

He pointed out that Singapore already has several natural advantages, given that the country is small and well-connected, the people are digitally literate, and the schools are already teaching students basic computing and robotics.

“While we have the right ingredients, we lag behind other cities in several areas,” said Mr Lee, citing electronic payments and making greater use of CCTV and sensor networks as some examples. ❚ Continued on Page 2 ☛ More National Day Rally reports, Page 2

Park West condo owners eye S$750m in third try at collective sale

COMPANIES & MARKETS / 6

The Straits Times Index fell 1.6 per cent over the five trading sessions spanning Aug 11 to Aug 17, bringing its dividend-inclusive return for the year to 16.7 per cent.

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Singapore’s waterpolo team thrashes Malaysia 17-4 to claim the SEA Games gold medal – it has now been in Singapore’s hands 27 times since the sport was introduced to the games back in 1965.

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By Lynette Khoo lynkhoo@sph.com.sg @LynetteKhooBT Singapore OWNERS of condominium project Park West are hoping that third time’s the charm in their collective sale attempt, this time at an expected selling price of S$750 million.

They saw a strong start on Saturday when signatures from around 30 per cent of owners by share value and strata area were collected on their first meeting to approve the collective sales agreement. Huttons Asia was also appointed as their marketing agent.

The asking price for Park West is lower than the indicative price of S$803 million during its 2011 en bloc tender, which received no bids. An earlier 2007 attempt did not achieve the requisite 80 per cent consensus among owners.

Frankie Lim, chairman of the Collective Sales Committee, noted that the 2011 attempt took place towards the end of an en bloc up-cycle

but this time, market conditions are favourable.

“Now we can see that developers are hungry and looking for good sites. We also feel that Park West is one of the few sites available in the west zone and the government is going to launch the High Speed Rail terminal station in Jurong East,” he said. “There are good malls and the Ng Teng Fong General Hospital in Jurong East. The western region is also where the tertiary education institutions are mainly located.”

Including an estimated S$339 million in differential premiums for site intensification and lease top-up, the land rate for Park West site is estimated to be S$818 per square foot per plot ratio (psf ppr).

Located near Clementi MRT Station and Nan Hua Primary School, Park West condominium has 432 apartments and four shop units. The site spans 633,644 square feet, with 64 years left on the lease and a gross plot ratio of 2.1. Apartment owners are expected to bag around S$1.25

million to S$2.1 million each while the shop unit owners are each expecting to pocket S$1.1 million to S$1.5 million.

Elsewhere, JLL will be launching the tender for Florence Regency, a privatised HUDC estate in Hougang, on Aug 23 with a reserve price of S$600 million and freehold Amber Park condominium in the east on Aug 29 with a reserve price of S$768 million, said JLL regional director for capital markets Tan Hong Boon. This translates to a land rate of S$779 psf ppr for Florence Regency, inclusive of the differential premium of S$290 million for intensification of the site and lease top-up. The tender for Florence Regency will close on Sept 27.

For freehold Amber Park condominium, whose tender will close on Oct 3, its land rate is estimated to be S$1,284 psf ppr, with no development charges payable as its baseline gross plot ratio of 2.843 is higher than the plot ratio of 2.8 under the 2014 Master Plan, Mr Tan said.

So far this year, seven successful

Located near Clementi MRT Station, Park West has 432 apartments and four shop units. Apartment owners are expected to bag around S$1.25m to S$2.1m each, while shop owners are expecting S$1.1m to S$1.5m each. collective sales have chalked up a combined value of S$2.5 billion, far surpassing last year when only three deals worth S$1 billion were closed.

These include residential projects One Tree Hill, Rio Casa, Eunosville, Albracca, Serangoon Ville as well as Goh & Goh mixed-use building and Citimac industrial complex.

Tampines Court, a privatised HUDC estate, is said to have received

a bid of S$970 million with conditions attached but the deal is not officially closed yet.

More collective sale aspirants have also appointed their marketing agents. Former HUDC estates Laguna Park and Lagoon View have appointed Knight Frank and Edmund Tie & Company respectively. Freehold condominium Faber Garden has appointed CBRE.

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The Business Times | Monday, August 21, 2017

NATIONAL DAY RALLY 2017

Pre-school sector outlay to reach S$1.7b in 2022 PM Lee says doubling of annual spending from 2017 will foster social mobility

By Lee U-Wen leeuwen@sph.com.sg @LeeUwenBT Singapore THE government is going to double public spending again on the pre-school sector to S$1.7 billion a year in 2022, which is up significantly from the annual expenditure of S$360 million in 2012 and S$840 million this year.

Describing this as a “heavy but worthwhile” investment, Prime Minister Lee Hsien Loong said that there is a broader social purpose to this emphasis on pre-schools.

He said at the National Day Rally on Sunday: “We’re talking about infants to six-year-olds. Nowadays, even two-month-old babies are enrolled in infant-care, and that is part of pre-school. Pre-school is important to give our children a good start and have the best chance to succeed in life.”

The social purpose that Mr Lee talked about was about providing access to affordable and quality pre-schools that will help greatly to level the playing field for young children, so that all children, regardless of their family background, have the “best possible start” in life.

“We must do this because every child counts. If we get this right, we will foster social mobility, and sustain a fair and just society,” he said.

It was five years ago when the government “moved decisively” to build up the country’s pre-schools and transform the entire sector.

Nearly 50,000 more childcare and kindergarten places were created, in particular in younger estates such as Punggol and Sengkang.

Subsidies were increased to make

“We must do this because every child counts. If we get this right, we will foster social mobility, and sustain a fair and just society.”

PM Lee

pre-schools more affordable, and efforts were made to raise the standards of anchor operators. The Ministry of Education (MOE) now runs 15 of its own kindergartens for children aged five and six.

Mr Lee announced three more initiatives to take the development of Singapore’s pre-school sector to the next level.

First, there will be 40,000 new

full-day pre-school places created in the next five years, a 30 per cent increase from the available places today that will take the total number to about 200,000.

Second, MOE will increase the number of its kindergartens to 50 in the next five years in a move that Mr Lee said will “influence and uplift” the quality of the entire sector.

Lastly, the pre-school profession will get a major upgrade in order to attract more capable people to join.

A new centralised institute, called the National Institute of Early Childhood Development (NIEC), will be set up. This institute will bring together the many existing pre-school teacher training programmes – at Temasek and Ngee Ann polytechnics, the Institute of Technical Education, and the Seed Institute – under one roof.

Set up under the ambit of the National Institute of Education, the NIEC’s mandate is to develop early childhood professionals for the sector.

It will provide a full range of diploma and certificate programmes for pre-school professionals, and have the scale to develop curricula with different specialisations such as music, art, mother tongue and special education.

As for the faculty at the NIEC, Mr Lee said that they will have more opportunities for professional develop-

There will be 40,000 new full-day pre-school places created in the next five years, a 30 per cent rise from the available places today; PM Lee at My First Skool (above). PHOTO: MINISTRY OF COMMUNICATIONS AND INFORMATION ment and progression within a larger fraternity.

The prime minister added that the government will work with employers to ensure good career prospects and competitive salaries.

Noting that the pay of pre-school teachers has gone up over the last five years, he said that salaries need to improve further as the profession undergoes an upgrade.

“In particular, salaries will match career progression so that we can get not just good teachers, but able and committed specialists and leaders,” he said.

The Early Childhood Development

Agency said in a separate statement that it will embark on a three-year campaign to attract more people to join the early childhood sector. By 2020, some 20,000 professionals will be required to meet the sector’s needs, up from around 16,000 today.

Meanwhile, children from low-income and vulnerable families will benefit from a programme called KidStart, which the government has piloted for a year.

KidStart, which now has 400 families on board, begins from the time a woman is pregnant. Trained officers visit the families at home to support her and share skills and knowledge

Singapore has ‘natural advantage’ to be a Smart Nation But PM says country lags behind other major cities in taking full advantage of technological advances

By Lee U-Wen leeuwen@sph.com.sg @LeeUwenBT

■ Singpass mobile token

■ NDI platform operational

■ MyInfo extended to more govt

■ Digital signatures for

and private sector services

PayNow

Singapore WHILE Singapore may already have the right ingredients to become a Smart Nation, the country still lags behind other major cities in several areas when it comes to taking full advantage of technological advances.

Prime Minister Lee Hsien Loong underscored the importance of being a Smart Nation during the National Day Rally on Sunday, and he urged everyone – both the young and old – to get on board the journey.

“The world is changing, and unless we change with it, we will fall behind.

Singapore must stay among the leaders, to attract talent and new businesses, as we have always done,” he said.

Being a Smart Nation means taking advantage of information technology (IT) to create new jobs and new business opportunities, to boost economic productivity, bring convenience to people, and make Singapore an “outstanding city” to live, work and play in.

Singapore already has a “natural advantage” in place – the country is compact and highly connected, the population is a digitally literate one, and schools here are teaching basic computing and robotics.

Still, Mr Lee feels that much more can be done. Citing electronic payments as an example, he told the story of how Manpower Minister Lim Swee Say, during a visit to Shanghai two years ago, tried to pay for some street food using cash while everyone else in the queue used their smartphones to make digital payments.

“The hawker didn’t say anything – just gave him a quizzical look and pointed to a QR code. Only then did (Mr Lim) realise the QR code was for WeChat Pay and he was the ‘suaku’ (Hokkien slang for uninformed or backward) one!” said Mr Lee to laughter.

The Prime Minister noted how cash has become obsolete in the major Chinese cities, with nearly all types of payments done using a smartphone and scanning a QR code.

In Singapore, however, there are too many different schemes and systems around, which has resulted in cash or cheques being used for the majority of transactions.

Mr Lee said the Monetary Authority of Singapore has been working hard to integrate the different systems into one, and there is now a single unified terminal that can read different cards.

The banks have also rolled out a

Start life right, stay healthy and live smart, says PM Lee

Key milestones for strategic national projects in Singapore National Digital Identity (NDI)

Widespread adoption of NDI

paperless transactions

❚ Continued from Page 1

Common payment QR Standard

E-payments in hawker centres

E-payments Account-based ticketing for public transport

Smart urban mobility

Rollout of 25,000 unified point-of-sales terminals

Wireless sensor network deployment in Orchard Road and selected areas

Smart Nation Sensor Platform

More timely bus arrivals with common public bus fleet management system

City-level sensor data available for industry and public

Smart Connected Lamp Post trial

Deploy autonomous vehicles to enhance public transport (Earliest)

Trial on-demand bus services

MOL approach extended to more life moments

MOL app for families with young children

Moments of Life (MOL)

Expanded suite of services for families with young children

2017

2018

2019

2020

2021

2022 Source: Smart Nation and Digital Government Office

Mr Lee talked about how technology has affected the retail business, with more people going online to shop and making use of home delivery services.

He urged traditional stores and businesses to adapt and tap technology.

LIANHE ZAOBAO FILE PHOTO new service called PayNow, which allows people to transfer money to one another with just a mobile number, even if the funds come from different banks.

Another area where Singapore can benefit greatly from IT is in public safety and security, and Mr Lee said Singapore has been building a network of sensors, especially CCTV cam-

on health, nutrition and child development.

After the baby is born, the officers continue to coach the parents all the way until the child is in pre-school. Mr Lee noted that the early feedback on KidStart is promising, and if proven to be true, the programme will be scaled up to benefit even more children in future.

He stressed, however, that the major investment in the pre-school sector will amount to nothing if the country’s fertility rate does not go up.

“All this will be for nought unless young couples do your part. So please have more babies!”

eras, for some time already. The government has also made progress in developing an integrated national sensor network.

There are smaller projects to solve daily problems as well, including a new mobile application that drivers can use to pay for parking charges at public car parks.

This service, called parking.sg,

will be launched by October by the Urban Redevelopment Authority and the Housing & Development Board, in partnership with the Government Technology Agency.

Mr Lee later talked about how technology has affected the retail business, with more people going online to do their shopping and making use of home delivery services.

He urged traditional stores and businesses to adapt and reinvent themselves, and tap technology to offer their customers more efficient and convenient service.

For Singapore’s Smart Nation projects to take off, Mr Lee highlighted the need for more engineers, programmers, data analysts and technicians.

“There is a worldwide shortage of such talents and skills, but we must urgently build up our talent pool,” he said.

On its part, the government is offering scholarships and sponsorships for engineering, while the SkillsFuture and Professional Conversion Programmes are helping more people to build up and upgrade their skills.

Mr Lee praised the efforts of a 70-year-old man named Tariam Singh, a volunteer ambassador who helps his fellow seniors learn new IT skills.

Fluent in Hokkien, Mandarin, Malay, Tamil and Punjabi, he is able to demonstrate how to use messaging apps and social media to connect with others and bring people together.

“This is how we will become a Smart Nation together, by taking the initiative to improve ourselves, by helping others and bettering all our lives, by looking towards the future, and making Singapore a happening place where people love to live,” said Mr Lee.

He spoke about how the authorities here were caught “a little flat-footed” during the Little India riot in December 2013 when there were too few CCTV cameras monitoring the area and the police had to rely on footage posted online by the public.

Since then, the government has made progress to build an integrated national sensor network, through ways such as installing more cameras in public places and placing sensors on lamp posts across the island.

Mr Lee added that there need to be more projects such as unmanned and cashless convenience stores or new mobile applications to simplify daily lives, in order to keep pace with a rapidly changing world.

“Unless we change with it, we will fall behind. Singapore must stay among the leaders, to attract talent and new businesses, as we have always done.”

Overall, he said that Singapore has had an “eventful year” in 2017, whether it’s guarding against terrorism, strengthening racial harmony, or making friends and cooperating with other countries big and small.

He reiterated the fact that the economy would expand by around 2.5 per cent this year, which will be higher than last year’s 2 per cent growth. Wages have increased and productivity went up by one per cent in 2016, after going through several years of almost zero growth.

Sounding an upbeat tone, Mr Lee said that productivity should do “even better” this year. This, he added, is important because productivity is the key to the country’s prosperity and to enable workers to earn more.

Singapore’s economic transformation, however, is not complete and he emphasised that more needs to be done.

Finance Minister Heng Swee Keat and the other members of the Future Economy Council are busy doing their work, the unions and employers are fully on board, and the government is rolling out the Industry Transformation Maps, sector by sector.

The SkillsFuture national movement is also moving along to help displaced workers undergo retraining and reskilling to take up new jobs later on.

“I believe that so long as the government, people and industries work together, our economy will continue to grow steadily, we will open new frontiers and we will create good job opportunities for all.”

TOP STORIES | 3

The Business Times | Monday, August 21, 2017

Turkish PM hails FTA with Singapore Free trade agreement, which has been ratified by Turkey and can go into effect this year, paves way for boom in bilateral trade between the two countries

By Vikram Khanna vikram@sph.com.sg Singapore TURKEY’S Prime Minister Binali Yildirim has hailed the Turkey-Singapore Free Trade Agreement (TSFTA), which was ratified by the Turkish parliament on Aug 16, suggesting that it could lead to a boom in bilateral trade between the two countries.

During a media interview on Sunday – the first day of his three-day visit to Singapore – Mr Yildirim said the TSFTA is “more special” than any other free trade agreement which Turkey has signed because its coverage is much wider.

The TSFTA, which was signed in 2015, will improve market access for goods, services and government procurement as well as reduce barriers to investment. Under the agreement, Turkey will eliminate tariffs for Singapore’s exports on more than 95 per cent of all its tariff lines.

Singapore exporters, particularly of electronics, pharmaceuticals, chemicals and processed food products, stand to benefit. Singapore in turn will grant duty-free access for all imports from Turkey once the TSFTA comes into effect, which is expected to be this year.

Singapore and Turkey will also improve access to each others’ service

sectors. This is expected to benefit Singapore and Turkish companies in areas that include business services, construction and retail.

Mr Yildirim pointed out that Singapore Airlines Terminal Services is already in discussions with Turkish Airlines to provide ground services and catering at Istanbul’s airport, where major upgrading plans are under way.

In the area of procurement, Singapore companies will be able to bid for contracts from Turkish government entities, including Turkey’s central government as well as its metropolitan municipalities, including in such major cities as Istanbul, Ankara and Izmir. Turkish companies will also be able to bid for Singapore government contracts.

Mr Yildirim, who is accompanied by a large Turkish business delegation, said that after the TSFTA takes effect, bilateral trade between Singapore and Turkey should boom. The room for growth is considerable, as at present, bilateral trade is relatively modest.

According to the IMF Direction of Trade Statistics, Singapore’s exports to Turkey totalled US$474 million last year – less than 0.15 per cent of Singapore’s total exports of US$330.2 billion, while imports from Turkey were

US$540 million, or around 0.19 per cent of total imports of US$282 billion.

Mr Yildirim also pointed out that the TSFTA would enable Singapore companies to use Turkey as a gate-

way to markets in the Middle East, Central Asia and Europe, while Turkish companies could use Singapore as a platform to access markets in Asia.

He added that his country is interested in engaging more deeply with

Mr Yildirim says the TSFTA is “more special” than any other free trade agreement which Turkey has signed because its coverage is much wider.

PHOTO: FOTO MUHABIRI

Asean, which has agreed to accept Turkey as a sectoral dialogue partner.

Beyond trade and investment, he also saw opportunities for cooperation in battling terrorism. Turkey has been instrumental in the battle against the Islamic State, which is also a threat to Asian countries. “We are ready to share our experience and we are ready to share our capabilities.”

He defended the major constitutional referendum that Turkey held in April, which resulted in the approval of amendments to the Constitution that would pave the way for a presidential system of government to replace the current parliamentary system.

He pointed out that under the current system, which has been in place since 1923, Turkey has had 65 governments, with an average lifespan of 17 months. “We would like to have a government that lasts at least five years,” he said, and a presidential system would help ensure this.

While in Singapore, Mr Yildirim will meet President Tony Tan Keng Yam, Prime Minister Lee Hsien Loong, as well as address a business forum.

He will also meet representatives from GIC and Temasek Holdings as well as visit Jurong Island and the Port of Singapore Authority.

On Monday, he will deliver the 41st Singapore Lecture.

If you’re thinking of starting a business venture – think again

By Jacquelyn Cheok jaccheok@sph.com.sg @JacCheokBT Singapore

Children from Touch Community Centre’s Touch Young Arrows at a crafts workshop organised by Naiise.

Amanda Eng, chief marketing and branding officer, is keen for Naiise to continue in its range of efforts towards children’s charities and is ready to tie up with new partners.

COMPANY OF GOOD

A Naiise way to bring joy to children

By Navin Sregantan navinsre@sph.com.sg @NavinSreBT Singapore IT’S often said that there’s nothing more satisfying than seeing a happy, smiling child. It is this ethos that led to local design retailer Naiise placing an emphasis on supporting children’s charities in Singapore.

“Our children are our next generation, and if they live and appreciate design, we believe the world and their lives will be a better place,” says Dennis Tay, founder of Naiise.

Amanda Eng, chief marketing and branding officer, says: “It is our belief that good designs can have a positive impact on an individual’s mood and it is important to be able to share this joy, especially with children.

“It all started in the months leading up to Christmas in 2014, where our team wanted to organise an initiative as a way to give back to the community during the season of giving.”

This resulted in a partnership with Club Rainbow as a part of its Grant A Wish campaign which “saw 100 Club Rainbow beneficiaries hang their gift wishes on our ‘Grant A Wish’ Christmas tree and customers could purchase gifts for the children from Club Rainbow”.

These gifts were then purchased through donations made by Naiise’s customers and gift-wrapped by its staff.

To top that off, a Christmas party was also held for the children and their families with activities such as a crafts session run by Naiise and one of its business partners.

“We were so heartened by the response from our customers and suppliers that we made it a point to have at least one CSR initiative annually, especially during Christmas time,” says Ms Eng. This success laid the foundation for what has become a yearly Christmas effort by the team at Naiise.

“The following year, we partnered Touch Community Services’ Touch Young Arrows programme and 11 designers to produce 14 exclusive Christmas cards for sale at both our online and physical stores with all the proceeds going towards fundraising efforts for Touch,” says Ms Eng. A charity auction featuring artwork and design products made by Naiise’s team of designers was also held during its Christmas party while the children were also treated to a crafts workshop.

In continuing with the tradition of Christmas campaigns, 2016 saw Naiise collaborating with Volkswagen Singapore and local influencers Charmaine Seah-Ong, Cheryl Tay and Tan Kheng Hua for the 1 Gift, 2 Gives initiative.

With the initiative, gifts could be purchased from a collection of products sponsored by Naiise’s suppliers with all proceeds going to The Red Pencil Singapore, a non-profit organisation that helps children, adults and families through art therapy, to raise funds for its art therapy programmes.

“The items in this collection were also sponsored by some of our suppliers,” says Ms Eng. Naiise’s CSR efforts are not merely

geared to once-a-year initiatives during the holiday season as it also raised funds for The Red Pencil through the creation of a collection of four in-house-designed tote bags.

For each of these bags sold by Naiise, a S$2 donation was made towards the beneficiaries of The Red Pencil.

“As a design retailer, it’s important for us to provide support for their cause as it caters for beneficiaries to express themselves and heal through art therapy, and also serves to promote art therapy as a profession,” says Ms Eng. Being a local business hasn’t stopped Naiise from collaborating with international groups. In its other efforts, it continues to collaborate with Cause Corps, an international micro-volunteering community to provide space in its retail stores as an activity venue where volunteers can meet to socialise and teach new skills to others such as knitting or planting.

“Throughout the year, we have also been engaged in efforts to support and promote entrepreneurship to youth through talks, panel discussions, and mentorship programmes,” says Ms Eng. Looking ahead, she is keen for Naiise to continue in its range of efforts towards children’s charities and is thus ready to tie up with new partners. ❚ This article is part of a series showcasing companies that prove size does not matter when it comes to giving. The Business Times supports NVPC's Company of Good programme as media partner. Go to www.companyofgood.sg for more information.

ENTREPRENEURSHIP isn’t for everyone – no matter how glamourous or fulfilling it’s been portrayed to be – four serial entrepreneurs told The Business Times in a recent interview for World Entrepreneurs’ Day, which falls on Monday.

But they qualified that if one has found a valuable problem to solve, enjoys the satisfaction of turning knowledge into a solution, and is prepared for an all-consuming endeavour, one could start a venture.

Darius Cheung, who founded his fourth start-up, real estate listing portal 99.co in 2014, said: “Don’t do it. It’s not cool or glamorous or fun, as the media may portray it to be – it’s blood, sweat and tears. But if you decide to do it despite this advice, good luck and welcome.”

Alex Lin, ecosystem development head at SGInnovate, said that the greatest challenge in creating a viable business is finding a “worthwhile” problem to solve; the 54-year-old has tossed away many start-up ideas because his “assumed customers did not feel the pain at all”.

Dr Lin, who was former chief of Infocomm Investments (the investment arm of the then-Infocomm Development Authority of Singapore), has launched several tech software ventures, two of which he sold to multinational corporations in the 2000s.

“I’ve created quite a few ventures.

Some succeeded, some were too early and some were solutions looking for problems. The most painful of these ventures were the latter. But once a pain-point or problem has been identified and validated, finding a solution is not difficult.”

Jeremy Lim, whose entrepreneurial journey began when he was 19 years old and studying at Singapore Polytechnic – he started a website selling accessories for BlackBerry smartphones – noted that being a founder entails many sacrifices.

“I gave up things like having a social life. I had to juggle maintaining my grades in school and running my businesses. The loneliness was dreadful. And there was the reality of running out of money,” said the now-28-year-old, whose latest venture is a co-working space and dive bar named 21Moonstone.

Assem Thakur agrees that startups are an all-consuming endeavour. The co-founder of GIVE.Asia, a crowdfunding site for charity and medical causes, said: “It’s easy to get sucked into making your startup work at the expense of health, family and friends. The greatest challenge has been to learn how to draw boundaries between work and personal life.”

But he lives by the motto of nothing ventured, nothing gained. The 31-year-old also believes that it has never been easier than it is today for entrepreneurs, given the access to

“It’s not cool or glamorous or fun, as the media may portray it to be – it’s blood, sweat and tears. But if you decide to do it despite this advice, good luck and welcome.”

Mr Darius Cheung, who founded his fourth start-up, real estate listing portal 99.co in 2014, on entrepreneurship

tools and technologies to create global startups, such as Stripe for accepting global payments, Amazon Web Services for firing up servers and Xero for taking care of accounting needs.

“It’s almost irresponsible for creative, passionate and entrepreneurial people to not venture into building products that can make our world a better place.”

Call 6289 8822 or e-mail notices@sph.com.sg to publicise your IPOs & other offerings

For Mr Cheung, it was his father who piqued his interest in entrepreneurship. The elder Mr Cheung had in the 1970s founded a printing business, because “printing was an integral aspect of everyday life” then. But when asked if there was anything he would have done differently, he replies that finding a growth market was more important than fulfilling an everyday need.

Mr Cheung said: “My father had observed that one of his customers, a VHS tape manufacturer, had grown his business 50 times faster than him. Since then, this insight of his has influenced me to constantly seek out new growth and tech markets.”

The 36-year-old started his first venture at the age of 24, a mobile security firm tenCube, that got acquired by McAfee for reportedly S$25 million. But he was entrepreneurial even as early as in his teenage years – he imported VCDs from Hong Kong and sold them to his schoolmates.

“Being able to identify and plug gaps in the market and spot opportunities for growth has been something I’ve been doing for a long time,” he said.

It is a slightly different story with Dr Lin. Asked what got him interested in entrepreneurship, he said that he has always enjoyed turning his knowledge into something valuable.

“I like to share my knowledge and create useful things. I derive fun from making something people want, and having people appreciate and reward me for the effort.”

His advice to aspiring founders?

Observe empathetically, develop deep clear thinking, and grasp that not all startups need an exit (either an initial public offering or trade sale) as these can always continue to be run as small and medium enterprises.

Mr Lim, who has started five companies (said to be a feat for someone below the age of 30), has another piece of advice: “Don’t go against a roadblock just because it’s in the way – find ways to get around it.

“Most importantly, because entrepreneurship can get really tiring, always remember not to stop because you’re tired; stop only when you’re done.”

4

| TOP STORIES

The Business Times | Monday, August 21, 2017

MONDAY MULTIPLE

Sandwiched by powerful forces?

Firms can survive intense competition through branding, innovation and economies of scale – as long as they don’t make ill-informed acquisitions

By Cai Haoxiang haoxiang@sph.com.sg @HaoxiangCaiBT

T

HE consumer staples sector, notably the food and beverage (F&B) sector, draws investor attention for good reason. Everyone needs food. It is an easy sector to understand.

Yet the economic theory is a bit grimmer, as F&B market structure approximates what economists call perfect competition.

In this structure, there are numerous buyers and sellers of identical products. Barriers to entry are non-existent. Firms have tiny market shares and a limited influence on prices. If a chicken rice stall tries to charge 50 cents more for a basic plate, most people will just visit the stall next door. Profit margins are thus thin and constantly under threat.

The real world is imperfect, so economists in the 20th century have coined a confusingly named type of imperfect competition called monopolistic competition.

Here, products are similar but not identical. Firms differentiate themselves through branding or marketing, in order to make short-term profits.

In the long run, goes the theory, these firms can only break even.

While these companies can always make an accounting profit, meaning there might be excess money after operating costs are deducted from revenues, they can’t make an economic profit in the long run, a concept which factors in opportunity costs.

If this were true, this means companies operating in monopolistic competition can only recover the opportunity costs of their investors in the long run.

Investors would be better off in oligopolistic markets where there are high barriers to entry, and where incumbents have pricing power.

That is just theory.

In the real world, some F&B brands are able to thrive in monopolistic competition and make enormous pots of money over time. Coca-Cola and McDonald’s are two examples.

Today, we discuss some F&B companies operating in South-east Asia.

On the surface, they have been reasonably successful despite low barriers to entry in their product of choice: Bread.

Give me a raise Breadmaking requires an oven, flour, and some yeast. You can make the dough and bake the bread at home, using a machine that costs just a few hundred dollars. Neighbourhood bakeries are a dime a dozen. You don’t really hear of bread chain billionaires.

Yet there are a number of wellknown giants. Gardenia bread maker

QAF is the dominant bread supplier here and in Malaysia. Through the years, it has generated respectable operating margins of around 10 per cent for its bakery operations, sometimes more, while defending its perch at the top. (Attracted by the brand sometime back, I bought a negligible stake to monitor further.)

In Asia, one of the oldest listed bakeries is Japan’s Yamazaki Baking Co. The firm itself has been around for almost 70 years. It even opened some Singapore outlets. But operating margins are painfully thin, at 2 to 3 per cent. The firm is also struggling with a shortage of labour.

The fact that bakeries like Yamazaki and QAF have been around for decades says something.

I asked some investors how companies facing near-perfect competition survive. Astral Asset Management’s Lee Kian Soon cites three ways: Innovation, economies of scale, and brand loyalty. Skilled management can build on the above three measures to build a small moat around their business, he said.

Brand loyalty is built through ensuring consistency of quality. Innovation can keep the brand in customers’ minds, and might even allow a company to refresh a brand with a higher price.

Mr Lee cites McDonald’s McSpicy burger. “It used to be a double patty burger. One day, they reduced it to a single patty burger at a slightly reduced price. A few months later, they put back the double patty burger at a much higher price point.”

Azure Capital chief executive Terence Wong said a firm facing fierce competition might nevertheless perform after a period of industry consolidation. “The strongest competitor

Through the years, Gardenia has generated respectable operating margins of around 10 per cent for its bakery operations, sometimes more, while defending its perch at the top. ST FILE PHOTO should, after a period of hardship, be able to rise back up,” he said.

Observers say that for companies like QAF and Yamazaki, scale matters.

Raw materials like flour, sugar and yeast can be procured in bulk at cheaper prices. Perhaps innovation might help. Gardenia and Sunshine have rolled out super-fine or soft grain loaves in Singapore, and higher quality speciality bread alternatives.

Bread pits However, QAF and Yamazaki haven’t done fantastically well for investors in the long run.

Based on Bloomberg data, QAF gave shareholders annual price returns of just 3.2 per cent a year from end-April 1986 until end-July 2017.

This is despite a significant rally in recent years.

Yamazaki, which sells biscuits, crackers and prepared rice in addition to various baked goods and bread, is only somewhat better. Price returns were just 4.2 per cent a year from end-September 1974 until end-July 2017, albeit through a severe deflationary period.

What explains their middling performance? Is it the curse of monopolistic competition, or something else?

When examining the history of sliced bread firms in Singapore, it

seems that managers got too ambitious and also made sub-optimal investment decisions.

Sunshine Bread maker Auric Pacific made costly acquisitions of Delifrance and Food Junction in 2007-8, which made losses for many years.

QAF’s purchase of China apple juice firm Shaanxi Hengxing Fruit Juice in 2005 eventually ended in impairments and a sale.

So one thing to watch out for is how shareholder value can be destroyed by managerial mistakes. As veteran fund manager Tan Chong Koay put it, expansions into new markets usually don’t work out.

“Of course, you talk to management, but sometimes a company visit doesn’t count,” he said. “Management is so protective (of their plans), and say, ‘we’re OK, going into this new field.’ Most of the time it’s not OK, and it turns out to be disappointing.”

Sometimes, what hits a company can also be completely unexpected.

In Indonesia, a company called Nippon Indosari Corpindo sells the popular Sari Roti brand of bread. For many years since its listing in 2010, the company was reporting strong doubledigit operating margins and substantial revenue growth. Share prices soared multifold.

Then came end-2016, when reli-

gious tensions heated up around the then-incumbent Christian Jakarta governor popularly known as Ahok. At an anti-Ahok rally, Sari Roti hawkers carried signs that the bread was free for Muslims. The company swiftly clarified that it was not involved.

Yet that ironically might have been a public relations mistake. Bread suddenly became political. The firm came under fire for supposed Ahok sympathies. A social media campaign to boycott Sari Roti took hold.

Though the impact of the boycott is expected to pass, it had an impact on sales. Meanwhile, brokers have been cutting their ratings on the counter. They cited competition from QAF’s end-2016 entry into Indonesia and higher wheat prices, among other things.

So industry structure is perhaps just one of many factors investors have to consider. Other important factors include price, the competitive and cost environment, and managerial skills.

Ultimately, the above discussion is not just relevant for bread and F&B. Think about the numerous industries that are getting disrupted by the Internet. For them, it’s a perfect competition world out there. With the right strategies, perhaps some profits are still possible for the upper crust.

COMPANIES & MARKETS | 5

The Business Times | Monday, August 21, 2017

TOPLINE

Building the Singapore brand overseas – the Swan & Maclaren way

Group director Lim Chai Boon rebuilt the the firm from sole proprietor to having about 110 employees, with seven overseas offices, in just over six years.

PHOTO: KELVIN CHNG

Historic firm banks its future on overseas projects. BY SIOW LI SEN

S

WAN & Maclaren, Singapore’s oldest architectural firm, is nowadays getting most of its work from overseas, much in the same way as the original founders, who were Scottish engineers and came to this part of the world to build the Malayan Railway in the last decade of the 19th century.

In its latest reincarnation, Swan & Maclaren is getting some 60-70 per cent revenue from overseas projects, said Lim Chai Boon, its group director.

And revenue from Singapore projects is set to fall even further, said Mr Lim in a recent interview with The Business Times. “Ninety per cent of 2017 new contracts signed up came from overseas.”

Founded in 1892, the firm has been associated with many of Singapore’s early landmark buildings – with over a dozen gazetted national monuments, including Raffles Hotel, Goodwood Park Hotel and the Victoria Memorial Hall (as it was originally called).

The firm continued to design many post-colonial-era projects; in the 1960s, it did a lot of warehousing and industrial projects in Jurong, as well as the HSBC Building, Ocean Tower and Hong Leong Building in the central business district.

It won many awards and competitions, here and in the region, including the award winning design in 1999 of The National Library of Singapore in collaboration with Ken Yeang who was a partner at the time.

❚❚

But as the 21st century began, the firm went into a decline with partners leaving, while others passed on, said Mr Lim. By 2005-06, it had one partner and was pretty much dormant.

Mr Lim who had spent 16 years working for Hong Kong-based P&T – formerly known as Palmer & Turner, with an even older history – decided it was time to to go local or do “national service”.

He approached the sole proprietor of Swan & Maclaren in 2010 to take over the firm, and in 2011 looked for a “new generation of leaders, and started to internationalise”.

He declined to reveal the firm’s revenues but points to the size of the firm and its projects.

In a little over six years, the firm has gone from one man to about 110 employees comprising 50 architectural staff and 10 doing interior design in the Singapore office and 50 in seven overseas offices. It has projects in 10 countries. Overseas projects are in China, Cambodia, Malaysia, Thailand, Laos, Vietnam, Maldives, Sri Lanka and India.

The firm also offers to help clients increase plot value by creating masterplans that allow flexible phasing and land usage.

It is currently working on a masterplan in Dalat, Vietnam, which is interesting for its response to balancing the needs of development, natural resources and creation of opportunity for a master development to be progressed (phasing), said Christopher Flannery, Swan & Maclaren director.

The project is for a private client who wishes to showcase the natural beauty of the region by creating themed gardens, attractions and supporting development for visitors on 59.3 hectares of land.

“The proposed development of the site addresses key planning issues relating to strategic land use, phasing, scale, public routes and nodes of connectivity,” said Mr Flannery.

Currently the firm has 18 Singapore projects with gross floor area (GFA) totalling 160,861 square metres. Overseas it has 24 projects amounting to GFA of 2,249,300 sq m.

Some recent works in Singapore are GSH Plaza in Cecil Street; Vue 8 and Stratum (condominium developments in Pasir Ris); and Raffles Holland V (commercial retail).

The firm now has seven shareholders, and Mr Lim said it’s not a personcentric entity. “People are not permanent, people are coming into the firm and going out – if I’m not here, the company continues,” he said, explaining the importance of being corporate-based.

The overseas business model is one of merger and acquisition – where the firm engages with local partners, as it wants to localise while providing its service using the Singapore brand, he said.

“We export our service,” he said, quipping: “We call ourselves the “world’s local architects.”

The Singapore brand is quite well regarded, he said. “It’s reliable – we don’t b******t, we do the real thing.”

Singapore architecture is quite advanced compared to the neighbouring countries, he said. It takes two to three years to get the Singapore DNA integrated into the overseas firm, to get it to follow Singapore standards, he added.

What does he think of the state of the industry in Singapore given his strong bias towards working abroad?

“Singapore’s 50 years of rapid development and urbanisation provided valuable exposure for the architectural profession here,” said Mr Lim. “With the new emerging markets from the surrounding Asean countries, our architectural profession is well placed to share this experience and hence is held in high regard.”

Is architecture still an attractive profession given the widespread use of IT-design? Will artificial intelligence (AI) make it a human-less industry?

“Architectural design responds to cultural, political and economic considerations,” he said. There are many intangible factors that shape a building into architecture.

Parts or even whole buildings can be churned out from factories or 3D printed, he noted.

“To me this is no different from a manufactured car or product. You still need human(s) to design it and conceptualise the product.”

CHARTPOINT

VIX lows pointing to imminent correction in US equities of 3-5%

By Jeremy Ng COMPLACENCY continues to prevail in the market as reflected by the CBOE’s Volatility Index (VIX). The VIX recently touched a decade low of 8.84, a level not seen since 2006, just before the global financial crisis. The VIX measures the implied volatility of the S&P 500 Index options. It is also known as the Fear Index and has an inverse correlation to the S&P 500 Index.

Despite the index’s massive spike of 47 per cent to a high of 17.3 on Aug 10, 2017 due to the war scare in the Korea Peninsula, the fear trade simmered down as the VIX collapsed back to the complacent low teens. Nothing much has changed regarding the ongoing conflict between North Korea and the United States, but yet the market seems convinced that all is well with no need for any protection.

However, the Commitment of Traders (COT) report by the Commodity Futures Trading Commission (CFTC) confirms the complacent narrative with the non-commercial short contracts entering into record extreme highs. Non-commercial positions are contracts held by large speculators, typically hedge funds for speculation purposes. History has proven that large speculators tend to get it badly wrong when they are all heavily in the same camp. In other words, the hedge funds are heavily long the US equity market due to the negative correlation to the VIX. Since 2013, the non-commercial short contracts conformed to the 200,000 contracts mark as the upper threshold for the extreme short side. Whenever hedge funds make an outsize bet of 200,000 short contracts or more on the VIX, some short covering tends to happen, resulting in the sharp spike in VIX, highlighted by the vertical lines.

The 200,000 upper threshold mark was eventually broken to the upside as the market enters into a

Don’t be fooled by the calm VIX Index The extreme build up in VIX short contracts from non-commercial players is setting up for a massive short squeeze in the VIX +225.73%

50 short squeeze to the 20 range?

+134.77% +42.27% +28.86%

+16.93%

+42.38%

record high in short positions short short squeeze squeeze

290,000 upper threshold

short

short squeeze

200,000 upper threshold squeeze

30 20 15.55 10

+26.59%

Non-commercial short contracts VIX Futures

40

short squeeze

short squeeze

short 0.35m squeeze?

0.30m

paradigm shift

0.25m 0.20m 0.15m 0.10m

J 2012

S

D M 2012 Mar 22 2013

J

S

D M 2013

Aug 23 2013

J Jul 11 2014

S

D M 2014

J

S

D M 2015

May 8 2015

J

S Sep 9 2016

D M 2016

J

S

D 2017

Feb 17 2017 Sources: Bloomberg, PSR

new complacent paradigm, finally setting a new upper threshold at 290,000 short contracts, showing extreme greed within the system.

Further short squeezes occurred again as the short contracts hovered around the 290,000 area since August 2016.

Remarkably, the market continues to price for perfection as the VIX short contracts increased to an unprecedented level – to 350,000 contracts from the most recent COT report. We believe the 47 per cent spike on Aug 10, 2017 was just a teaser and the mother of all short squeezes is imminent with no lack of uncertainty trigger events.

Aug 21-31, 2017 will be a critical period to watch as the joint annual military exercise between South Korea and the US takes place.

September is also another crucial month. We have the US Federal Reserve (Fed) likely to announce plans on reducing its balance sheet.

Meanwhile, the European Central Bank (ECB) is expected to discuss tapering of its quantitative easing (QE) programme. The decline in liquidity from the Fed and ECB should have an adverse impact on the equity market, creating more uncertainties ahead. Finally, Sept 9 is the anniversary of the founding of North Korea. It could result in another ICBM missile test as North Korea has a habit of doing missile tests on significant dates.

In summary, the extreme short selling in the VIX is pointing towards a VIX short squeeze where the equity market enters into a period of correction. We believe the

VIX should be trading in the upper range of 20s to reflect the ongoing uncertainties. The July 28 low of 8.84 in the VIX could very well be the low for the current cycle as the US equity market enters into an overdue correction in the range of 3–5 per cent. Beware of a massive short squeeze in the VIX in a turbulent time ahead. ❚ The writer is chief technical strategist, Phillip Securities Research.

Disclaimer: Chartpoint is provided

by Phillip Securities Research for information only and should not be construed as investment advice. ❚ For further reference, visit stocksBnB.com

He went on to say that he does not see AI replacing the architect – at least not in his lifetime.

From an economic standpoint, half the world’s population is within seven hours’ flight from Singapore and these countries are actively developing and urbanising, so there is still a lot of building required, he said.

The profession remains dynamic with lots of opportunities. “There are plenty of opportunities for us as long as you join a firm with overseas exposure.”

Mr Lim, who seems more businessman than architect, said running and growing a firm naturally requires business knowledge and acumen.

“But at the same time we will need to ensure our design and service are not compromised. Our core value is to Create.

“Create stands for creativity, responsibility, enrichment, aspiration, teamwork and excellent design.

“No point running a pretty firm where there is no future for our staff.” lisen@sph.com.sg @SiowLiSenBT

NOTICES

Tel 6289-8822 I Email notices@sph.com.sg I www.sphclass.com.sg

6

| COMPANIES & MARKETS WARRANTS A LOOK

SHS warrant’s numbers are attractive GIVEN the political uncertainties in Washington and the terror attacks in Barcelona, Spain, it probably came as no surprise that warrant activity last week was subdued, very much in line with the overall market.

Investors appear to be re-evaluating Wall Street’s support for the Donald Trump reflation story in the light of the US president’s remarks after the racial protests in Charlottesville, Virginia and it remains to be seen if this support will return soon.

Still, this shouldn’t detract value investors from searching out decent buys and today’s feature, which is the warrant issued by SHS Holdings, at first glance looks like it fits that description.

SHS’s website shows the company was established in 1971 and has grown into a diversified group with three key businesses – structural steel and facade and modular construction services; renewable energy; and corrosion prevention services.

SHS’s shares on Friday closed at S$0.215. Its warrants expire in

SHS Holdings (S$)

0.25 0.23 0.21

S$0.215 (+0.5¢) Aug 18

0.19

By R Sivanithy sivan@sph.com.sg @RSivanithyBT December 2019, so there are about 28 months left – surely time enough for the patient holder to make money.

They carry an exercise price of S$0.20, so they are just in-the-money and at their last done price of S$0.051, the conversion premium is 16.7 per cent while gearing is a pretty attractive 4.2.

Purely in terms of its numbers, the conclusion would be that this instrument warrants a look, though regular readers would know that

S O N D J F M A M J J A 2016 2017 Source: Bloomberg

the usual caveat is that much depends on the outlook for the company and its financials.

Here we encounter some pause for thought – for the second quarter ended June 30, 2017, SHS recorded a 29 per cent drop in revenue from continuing operations to S$9.8 million and a net loss attributable to equity holders of S$926,000.

The conclusion, therefore, has to be that this is a well-priced warrant which could prove profitable when the company’s numbers improve.

STRATEGY SPOTLIGHT

Enhanced auditor reports off to promising start but risks need watching Key audit matters should continue to be company specific and should not revert to becoming generic over time. BY THEMIN SUWARDY AND MELVIN YONG

S

INGAPORE-LISTED companies have to guard against the risk that the new enhanced auditor reports that took effect about nine months ago may one day return to generic boilerplate language, according to professional services firm KPMG. This warning comes even as the experience on enhanced auditor reports has been positive overall so far, with issued documents containing descriptive and entity-specific information.

For audit reports issued on or after Dec 15, 2016, the disclosure of so-called key audit matters (KAM) has become mandatory for listed companies.

The audit opinion letter that comes with companies’ annual reports has seen a transformation.

“The audit reports issued during this first year moved away from the historic boilerplate reporting, with generally a binary opinion to providing better and more information about judgments made by management on KAM and the approaches that the auditors had adopted,” said Roger Tay, partner and head of audit at KPMG Singapore.

No longer are auditors just giving a “pass or fail” opinion on company financial statements but the reports have become entity-specific discussions that shed light on the audit process and the key judgments applied in arriving at the conclusions.

Board directors also feel that KAM has facilitated quality conversations with company executives.

“KAM is more helpful for shareholders as it summarises the difficulties encountered by both the company's finance team and its external auditors in addressing matters that may have financial impact on the financial accounts like valuation of investments. These are summarised clearly and concisely in the auditor report,” said Steven Lim, chairman of Sapphire Corporation.

“Audit committees depend, to varying extents, on management and auditors to surface the relevant audit issues and through such disclosures, we will know if there are any material areas that require further scrutiny,” said UOL audit committee chairman Low Weng Keong, who also sits on the boards of a number of listed companies.

Most common KAM KPMG’s research on enhanced auditor reporting shows that the most common KAM relate to carrying amount for assessments of assets including goodwill, intangible assets, investment properties and revenue recognition.

“This is not a surprise, given that these assessments involve significant amount of judgment and estimates, and the application of which usually has a significant effect on the financial statements,” said Mr Tay, whose team is producing an upcoming study on enhanced auditor reporting that looks at the experience of Singapore, London, Australia and Hong Kong.

“We have observed a fairly consistent average number of KAM and types of KAM issued across various markets that are adopting the enhanced auditors report for the first time, including Australia and Hong Kong,” said Mr Tay. “In addition, some firms have taken a step further in disclosing and

Board directors feel that KAM has facilitated quality conversations with company executives. commenting on the findings arising from their audit procedures performed,” he added.

KPMG said that while a number of reports voluntarily included the audit findings to each KAM, only about one-third had specific commentaries on management’s judgments and specific errors. The rest contains fairly generic descriptors such as “reasonable”, “within an acceptable range” and “appropriate”.

“It is important that KAM continue to be company specific and do not become generic over time,” said Mr Tay. He said this will require the support of regulators, auditors, preparers and audit committees to ensure that the good progress made in the first year of implementation does not lose momentum and innovates the process by which auditors communicate to users of financial statements.

Investors too have taken notice of the types of information that are disclosed especially if such disclosures could affect their investment strategy.

“KAM allows analysts to identify from the financial statements what

they know, what they don’t know, what they somewhat know and what they cannot know,” said OCBC Credit Research.

OCBC noted that KAM could potentially help analysts understand the more tricky elements of an organisation’s financial statements, which allows them to identify the areas where there may be potential variance between values reported in the financial statements and realised values.

As an auditor, KPMG said the enhanced auditor report has facilitated deeper and more detailed dialogues with management, audit committees and board directors on the audit.

The Business Times | Monday, August 21, 2017

HNA calls for shareholder meeting to vote on privatising-CWT offer

By Nisha Ramchandani nishar@sph.com.sg @Nisha_BT Singapore CHINESE conglomerate HNA Holding Group is convening a general meeting on Sept 7 to seek shareholder approval for its S$1.4 billion privatisation offer for CWT Limited.

A notice of the general meeting and the proxy form are expected to be despatched to shareholders on or about Aug 21.

HNA requires shareholder approval before it can go ahead with the deal. Meanwhile, certain antitrust

pre-conditions that were required from China have been satisfied. It has until Sept 9 – five months from the day it announced its intention – to fulfil all pre-conditions before it can proceed with the offer.

In April, HNA, via wholly-owned subsidiary HNA Belt and Road Investments (Singapore), launched a general offer for CWT at S$2.33 a share for the Singapore-listed logistics group, valuing its 600.3 million shares outstanding at some S$1.4 billion in total. HNA was founded by billionaire Chen Feng as the parent company of Hainan Airlines.

Tokyo bourse’s underperformance seen as buying opportunity Tokyo AS the Japanese stock market is whipsawed by the latest news on North Korea, sagging support for Prime Minister Shinzo Abe and currency swings, some analysts see recent underperformance as an opportunity to buy.

Japan’s longest string of quarterly economic expansion in more than a decade and continued growth in corporate earnings have emboldened bullish equity strategists. Comparatively low valuations and a rise in dividend yield in the past few months are also helping sentiment, as Tokyo stocks lag far behind the double-digit gains of Asian peers from Hong Kong to Mumbai this year.

“Buying on dips could prove an attractive investment strategy,” said Naohiko Miyata, chief technical analyst at Mitsubishi UFJ Morgan Stanley Securities Co, in a note. “Japanese stocks now also have support from company fundamentals, not just technical charts.”

Topix companies beat analyst profit estimates by an average of 15 per cent in the latest quarter. Earnings per share rose 27 per cent year on year, continuing a trend of gradual increases over the past five years. Results have improved despite a strengthening of about 13 per cent in the yen versus the dollar since June 2015.

While profits have risen, the

Topix’s price-to-earnings ratio has fallen to 15 times, below the 21 times level where the S&P 500 Index and Stoxx Europe 600 Index are both currently trading. Meanwhile, the Nikkei 225 Stock Average’s 14-day relative strength index fell to 32.3 last Monday, near the level of 30 that some traders see as a sign that shares are due for a rebound.

“Buying on dips could prove an attractive investment strategy.

Japanese stocks now also have support from company fundamentals, not just technical charts.”

Naohiko Miyata of Mitsubishi UFJ Morgan Stanley Securities

“We still expect the market to rise as investors recognise sustained earnings improvement,” said Chisato Haganuma, chief equity strategist at Mitsubishi UFJ Morgan Stanley, in a report. First-quarter results “have shown sales growth, with help from improved economic growth in Japan and overseas, and cost-cutting

❚ This series is brought to you by CPA Australia to share knowledge on topical issues relevant to business, finance and accounting. ❚ Themin Suwardy is associate professor of accounting (practice) at the Singapore Management University; Melvin Yong is Singapore country head, CPA Australia.

stances”. “On the whole, earnings estimates are being revised upwards.”

Not everyone is convinced that Japanese shares are set for gains.

Hitoshi Asaoka, a strategist at Asset Management One, sees the Nikkei 225 closing between 19,000 and 20,000 at year-end. Japan’s blue-chip gauge slipped 0.1 per cent to 19,702.63 on Thursday, paring its year-to-date gain to 3.1 per cent.

“It’s difficult for Japanese shares to rise much further from here,” said Mr Asaoka. “The latest GDP numbers were a little too good, and economic growth will probably peak out globally around the summer.”

One factor that has capped gains for Japanese stocks is the negative impact of the stronger yen on buying by foreigners, but “the influence of the yen on profits is far smaller than most investors think”, said Nicholas Smith, a strategist at CLSA Ltd in Tokyo. The market has also taken a hit from “sabre-rattling” over North Korea and concern over possible challenges to Mr Abe’s leadership, Mr Smith said in a report.

The political turmoil shouldn’t be a problem either way, he said. Waning support for the cabinet could pressure Mr Abe to speed up labour reform, implement fiscal stimulus and forge trade deals, he said, and even if that fails, “Japan is likely to get a prime minister with very similar economic plans and a revitalised dream”. BLOOMBERG

The Tokyo Stock Exchange’s solar power trust market has so far drawn little interest as investors prefer private funds because the public trusts’ tax benefits are limited.

PHOTO: AFP

Greater transparency The disclosures in KAM increase transparency on the audit process and allow management, audit committees and board directors to understand the key issues, judgments and estimates made to derive the conclusions, said KPMG. Citing his personal experience as a director, Mr Low said while KAM is a new disclosure requirement, the companies that he has been involved with and their auditors have always understood the need to discuss key audit issues in the planning and reporting stages of an audit and so does not introduce new audit work.

“What KAM disclosure does is to put the spotlight on the need to have open and frank discussions on how auditors go about doing their work and arriving at their eventual audit opinion on such matters,” said Mr Low. But there is room to improve.

OCBC Credit Research said, based on a sample of KAM statements it has seen, there does not appear to have been much discussion about off-balance- sheet items.

These include joint ventures and associates, even if these are a material part of the balance sheet and earnings, as well as contingent liabilities and corporate guarantees.

Still, observers say further baby steps will lead to greater outcomes as the enhanced auditor reporting process matures.

“We are optimistic that this is just the beginning of better communication between all stakeholders in the preparation and audit of financial reports,” said Mr Tay.

Hong Kong HNA Holding Group Co and HNA Group (International) Company, which collectively own about 66.84 per cent of HNA, have both undertaken to vote in favour of the deal.

The register of HNA’s members will be closed from Sept 4 to Sept 7 to determine eligibility to attend and vote at the general meeting.

CWT was incorporated in 1970 as a private arm of the Port of Singapore Authority to provide warehousing and container trucking services. It was listed on SGX in 1993.

In the stock market on Friday, CWT shares closed at S$2.13.

Tokyo Stock Exchange hopes new entrants can revive solar trust sector Tokyo THE Tokyo Stock Exchange’s (TSE) two-year-old infrastructure market hopes to get a badly needed boost for its listed solar power trusts as two new entrants plan to start up as early as this year.

The Tokyo Stock Exchange’s (TSE) solar power trust market has so far drawn little interest as investors prefer private funds because the public trusts’ tax benefits are limited.

Since the TSE created its infrastructure market in 2015, only three solar power trusts have listed with a combined value of US$180 million.

“We don’t have a wider range of investors in the market,” said Takumi Hayase, vice-president of the TSE’s new listings. “The market needs to be much bigger for institutional investors.” Now, TSE is hoping that two new trusts will bring fresh capital.

The Japanese unit of Canadian Solar Inc and electricity wholesaler Itochu Enex Co, have set up asset management firms in preparation to list investment trusts packaging their assets, according to a document from Japan’s land ministry.

Officials from both Canadian Solar and Itochu Enex declined to comment on their listing plans.

The lack of interest in the solar trusts is at odds with Japan’s soaring solar power capacity, which has soared from virtually zero at the

start of the decade to over 40,000 gigawatt-hours.

The country plans to generate 24 per cent of its power from renewables by 2030, up from 14.6 per cent in 2015, according to the Ministry of Economy, Trade and Industry.

The sluggish interest in its solar trusts are linked to its tax rules, investors said. The trusts are exempt from corporate taxes for 20 years.

In return, they are required to pay 90 per cent of their profits to investors, resulting in higher dividends than ordinary stocks.

However, a Tokyo-based fund manager, who did not want to be named because he was not authorised to speak to the media, said that it was risky to invest in solar trusts because profits could drop significantly after the tax perk expires.

“Various restrictions on the tax system is one of the factors that is limiting the growth of infrastructure trusts,” said Masanori Sato, head of the banking and structured finance group at law firm Mori Hamada & Matsumoto.

So far, the three solar trusts that have listed on the TSE market – Takara Leben Infrastructure Fund Inc, Ichigo Green Infrastructure Investment Corp, and Renewable Japan Energy Infrastructure Fund Inc – have mainly drawn interest from individual investors.

Two of the trusts are trading below their initial public offering prices, while Ichigo Green is trading 0.5 per cent above the IPO price as at Friday.

Many investors like solar projects because they offer stable long-term returns and benefit from government subsidies, so-called feed-in tariffs that guarantee revenues.

“Pension fund managers want to secure stable returns, so we hold assets long term and we do not need to seek a liquid market,” said Takeshi Ito, a senior portfolio manager for Aisin Employees’ Pension Funds.

Yet so far, investors such as Nippon Life Insurance have preferred buying into private funds that not only offer annual dividends but will also typically repay the initial investment once the fund matures.

Nippon Life in June pledged 10 billion yen (S$125 million) to a fund that General Electric is raising to invest in solar power plants in Japan.

Akitoshi Yamada, deputy general manager for Nippon Life’s alternative investment department, said that GE’s fund would deliver 5.5 per cent annual returns over the next 25 years.

“We have not considered investing in public trusts trading on the TSE yet because for now we seek lower correlations with the stock and bond market when we invest in infrastructure,” said Mr Yamada. REUTERS

COMPANIES & MARKETS | 7

The Business Times | Monday, August 21, 2017

STI / Catalist Straits Times Index Aug 18, 2017

3,351.99

WEEKLY

FTSE ST Catalist Index Aug 18, 2017

Indexed closing prices

444.87

130

AUG 19, 2016 = 100 -27.73 (-0.85%) Current streak 120 4 days Day high 3,308.69 110 Day low FTSE ST Catalist Index 3,251.99 100 52-week high Straits Times Index 3,330.75 (July 28, 2017) 52-week low AS O N D J F M A M J J A 2016 2017 2,788.80 (Nov 4, 2016)

❚❚

-15.43 (-3.35%) Current streak 12 days Day high 457.97 Day low 444.87 52-week high 533.71 (Apr 7, 2017) 52-week low 427.34 (Sept 2, 2016)

GAINERS

LOSERS CLOSE

UP

%

UNUSUAL ACTIVITY

BY CENTS 52w high/low

CLOSE

DOWN

%

BY CENTS 52w high/low

7148

341.1

3.6

7573/5334

SPDR S&P500 US$

24435 -502.1

-1.5

24929/20953

SPDR DJIA US$

21991

180.1

0.6

22120/17906

DBXT iBoxxUSTr US$

21404

-77.8

-0.3

22280/21086

DBXT USDIGInfl US$

28222

136.4

0.4

28621/28060

Lyxor MS India US$

1827

-76.4

-3.0

2217/1408

GLD US$

12308

121.4

0.7

13400/10756

UOB

2350

-70.0

-2.9

2460/1751

2384

73.7

2.3

2518/2100

JMH USD

6520

-68.2

-0.8

6750/5290

DBXT MSKorea US$

DBXT Vietnam US$

CLOSE

%

BY PERCENTAGE UP 52w high/low

CLOSE

%

VOL CLOSE($) CHANGE

China Env Res

3.2

166.7

2.0

3.2/0.1

GRP W171129

0.1 -88.9 -0.8

2.3/0.1

Vashion

0.2

100.0

0.1

1.1/0.1

New Silkroutes W1903

5.2 -82.7 -24.8

95/2

China Env Res

4.3

87.0

2.0

4.3/0.3

SGX MB eCW170904

0.3 -70.0 -0.7

7.8/0.3

Huan Hsin

2.8

55.6

1.0

2.8/0.3

STI 3300MBeCW170831

2 -51.2 -2.1

6.1/1.9

Transcorp

4.6

53.3

1.6

7.3/2.6

Blumont

0.1 -50.0 -0.1

0.6/0.1

0.043 +0.020 +86.96

50.6

0.046 +0.016 +53.33

49,143.8

1.195 +0.160 +15.46

Tiong Woon

BY PERCENTAGE DOWN 52w high/low

Centurion W171027

41.6

Transcorp Best World

+/-

363.9

0.225 -0.015

-6.25

AVIC

30.3

0.050 -0.002

-3.85

MegaChem

27.0

0.350 -0.040 -10.26

Plato Capital

119.6

0.125 -0.005

-3.85

Pacific Star Dev

1,111.5

0.200 -0.010

-4.76

GCCP

5,268.1

0.041 +0.003

+7.89

Brook Crompton

15.7

0.705 +0.100 +16.53

Shows the stocks with the highest combination of price change and of daily activity relative to the three-month average volume

STOCKS

How much longer can Wall St bank on Trump reflation?

A

BIG part of the reflation play that engulfed markets since last November’s US presidential election was that a pro-business president in the shape of Donald Trump would be good for stocks.

Such has been the pervasiveness of this conviction that Wall Street has been willing to forgive Mr Trump’s inability over the past nine months to push through his No 1 election promise, which was healthcare reform – the excuse being that revamping healthcare is very complex and was bound to be difficult in the first place.

When it comes to the Budget, approval is seen as being fairly routine, so gaining congressional endorsement for large tax cuts and spending increases is not expected to pose too much of a problem – hence the reflation play.

By R Sivanithy sivan@sph.com.sg @RSivanithyBT

For full listings of SGX prices, go to http://btd.sg/BTmkts

STI STOCKS Stock name

Close

Ascendas Reit CapitaCom Trust

Div yield

Mcap

-2

270/264

276

220

-

6

7628.2

174.5

+3

175/170

176

143.5

-

5.2

5385.5

375

+5

384/372

388

296

13.4

2.7

16044.1

CapitaMall Trust

213

+6

215/208

220

187

-

5.2

7552.6

1149 xd

+35

1172/1125

1233

803

16.3

1.4

10447.9

221 xd

-10

232/213

298

213

15

4.7

4781.1

2050

-30

2124/2028

2225

1478

12.3

2.9

52522.1

119 cd

+3.5

119.5/116

121.5

71.5

53.6

2.5

14620.9

322

-2

325/321

334

177

14.1

1.9

15598.3

37

-0.5

38/36.5

45

34

8.1

1.7

4749.9

US42.5

-2.5

45/42.5

48.5

38

-

9.3

3702.2

US752 cd

+18

764/738

789

597

5.3

2.5

17693.1

US6520 cd

-50

6738/6430

6750

5290

9.7

2.3

47700.1

3959 cd

-43

4062/3951

4850

3800

15.4

2.7

15646

CityDev ComfortDelGro DBS Grp Genting Sing Global Logistic Golden Agri-Res HPH Trust USD

JMH USD

PE

264

CapitaLand

HongkongLand USD

Change Wk high/low 52w high 52w low

Jardine C&C Keppel Corp

633

-6

645/627

723

516

14.7

3.2

11518.2

OCBC Bank

1100

-20

1143/1100

1149

833

13.4

3.3

46131.6

SATS SGX

482

+5

485/469

539

460

20.8

3.5

5414.9

740 cd

-7

758/740

782

696

23.3

3.8

7930.2

1032

-27

1066/1032

1088

960

33.8

1.9

12382.6

349

-3

358/348

421

335

22.2

4

SIA SIA Engineering SPH

3923

280

unch

288/275

388

275

17.5

6.4

4481.8

356 xd

-14

376/356

386

303

22.8

4.2

11115.8

Sembcorp Ind

298

-10

310/293

338

244

15

2.7

5332.1

Singtel

375

-1

383/371

428

359

15.7

4.7

61234.5

StarHub

256

unch

264/255

386

254

12.9

7.8

4992.2

ThaiBev

92.5

-0.5

93.5/91.5

104

83

31.4

2.6

23226.8

UOB

2350

-70

2432/2338

2460

1751

12.6

3

39231.3

ST Engineering

UOL Wilmar Intl

819

+21

825/804

825

550

22.9

1.8

6666.8

313 xd

-7

324/310

400

303

14.1

2.1

20042.6

160

+7

162.5/153.5

164

70.5

16.8

2.5

6131.4

YZJ Shipbldg SGD

OTHER SINGAPORE INDICES

MOST ACTIVE VOLUME

Aug 18 CLOSE

VALUE +/-

Rowsley

408,535,000

MDR

256,528,300

BT OB/OS

-680.00

-32.00

Addvalue Tech

156,519,000

BT CADI

-92106.00

-43.00

BT 10-day MA

-91809.00

-68.00

Sincap

144,176,100

Disa

134,725,600 Market volume 9,475,246,000 VALUE ($)

FTSE ST Mid Cap

734.57

-1.51

FTSE ST Small Cap

403.76

+1.79

FTSE ST All Share

790.81

-3.82

FTSE ST China

233.53

-0.29

DBS Grp

483,792,839

FTSE ST Catalist

444.87

-3.65

Singtel

381,508,316

FTSE ST Maritime

303.28

+1.25

OCBC Bank

273,970,474

SIMSCI

361.62

-2.06

246,728,924

SIMSCI Futures

361.65

-2.15

TR/SGX SFI

129.31

+0.13

Global Logistic CapitaLand

224,932,502 Market value

led to several top corporate chiefs resigning from his business councils, prompting Mr Trump to retaliate by dissolving those councils after only a few months in existence.

Given the frequency with which controversy surrounds the White House and its volatile main occupant, you’d have to wonder how much longer Wall Street can continue to cling on to its reflation hopes.

On Thursday, author Tony Schwartz, who co-wrote Mr Trump’s book The Art of the Deal, tweeted: “The circle is closing at blinding speed ... Trump is going to resign and declare victory before (special investigator Robert) Mueller and Congress leave him no choice”.

Anti-Trump supporters would rejoice if this was to happen, but you can be sure that Wall Street would not take it lightly.

STI / FTSE ST All-Share

WEEKLY

Indexed closing prices

FTSE ST All-Share Index Aug 18, 2017

AUG 19, 2016 = 100 120

790.81

Straits Times Index

-5.32 (-0.67%) Current streak 4 days Day high 802.84 Day low 790.81 52-week high 806.09 (July 28, 2017) 52-week low 689.96 (Nov 4, 2016)

110

FTSE ST All-Share Index 100

AS 2016

O

N

D

J F 2017

M

A

M

J

J

A

STI / MSCI EAFE Indexed closing prices

MSCI EAFE Index Aug 18, 2017

AUG 19, 2016 = 100 120

1,916.68 +0.03 (+0.00%) Current streak 1 day Day high 1,926.32 Day low 1,916.68 52-week high 1,947.62 (Aug 4, 2017) 52-week low 1,614.17 (Nov 18, 2016)

Straits Times Index 110

100

MSCI EAFE Index AS 2016

O

N

D

J F 2017

M

A

M

J

J

A

SECURITIES TRADING SCOREBOARD Multi Ind Manufacturing Commerce Tpt/Stor/Comms Finance Construction Properties Hotels/Rsts Services Elect/Gas/Water Agriculture Mining/Quarry BLW REIT TOTAL GLOBALQUOTE

Up

MAIN Down

Unch

Up

CATL Down

Unch

Up

TOTAL Down

Unch

6 39 18 10 6 9 30 7 19 1 1 1 23 9 179 0

9 68 37 17 15 14 16 4 49 0 5 4 48 9 295 0

2 18 8 4 4 5 8 2 9 1 0 0 5 4 70 0

0 17 7 0 0 0 2 1 9 0 0 2 0 0 38 0

1 23 8 2 3 4 2 4 28 0 0 5 6 0 86 0

0 10 9 0 0 0 2 1 13 0 0 1 2 0 38 0

6 56 25 10 6 9 32 8 28 1 1 3 23 9 217 2

10 91 45 19 18 18 18 8 77 0 5 9 54 9 381 1

2 28 17 4 4 5 10 3 22 1 0 1 7 4 108 0

Active counters with no volume for today are not included.

SECURITIES TRADING TURNOVER

Fund

Last sale

STI ETF IS MS INDIA US$ NikkoAM-STC Asia REI DBXT MSRussia US$ IS MS INDIA S$D ABF SG Bond ETF Phll Ap Div Reit US$ Nikko AM STI ETF Phll Ap Div Reit S$D DBXT MSINDIA US$

+/- (‘000)

329 -1 US838 +10 109.5 +1.3 US224.8 -0.3 1145 +5 116.4 -0.1 US98.4 +2 338 -2 134.1 +2.5 US1171 +29

Wk high/low 52w high/low

1740 1328 626 353 337 327 298 278 160 147

336/329 850/834 109.6/108.9 224.8/223.1 1159/1139 117/116.1 98.7/97.3 344/338 134.7/132.5 1172/1150

340/281 880/441 110.5/101 264/194 1182/919 120.1/112.1 99/84 346/286 135.6/119.9 1204/894

Buy/Sell Mcap

329/330 839/844 109.3/109.5 223.2/224.6 1143/1147 116.1/116.4 98.4/98.7 337/338 134.1/134.5 1156/1161

104.8 59.6 531.3 8.2 -

COMPANY MEETINGS MEETING

PLACE

DATE

TIME

Golden Energy

E

STI Auditorium 168 Robinson Road Level 9 Capital Tower

21-Aug

3.00pm

TEE International

S

Eagle’s View Room Level 2 Seletar Country Club 101 Seletar Club Road

21-Aug

9.00am

China Medical

E

The National University of S’pore Society 22-Aug Kent Ridge Guild House Dalvey Room 9 Kent Ridge Drive

10.00am

Haw Par Corp

E

Parkroyal on Pickering William Pickering Ballroom Level 2 3 Upper Pickering St

10.30am

A: Annual , E: Extraordinary , G: General, S: Special, W: Warrantholders

23-Aug

MAIN

Multi Ind Manufacturing Commerce Tpt/Stor/Comms Finance Construction Properties Hotels/Rsts Services Elect/Gas/Water Agriculture Mining/Quarry BLW REIT TOTAL GLOBALQUOTE

87,310 577,819 509,415 397,302 104,081 172,538 344,002 16,024 1,215,733 11,815 58,004 68,519 3,986,563 327,388 7,876,513 -

VOLUME (‘000) CATL

431 659,941 162,496 4,730 1,187 106,089 11,839 11,493 412,292 204,892 23,343 1,598,733 -

TOTAL

MAIN

87,741 291,906 1,237,760 814,832 671,911 498,006 402,032 804,710 105,268 1,074,241 278,627 14,863 355,841 919,613 27,517 14,080 1,628,025 346,645 11,815 6,648 58,004 31,115 273,411 12,997 4,009,906 355,744 327,388 542,938 9,475,246 5,728,338 606 -

VALUE (‘000) CATL

61 19,277 5,682 667 190 2,861 2,292 4,893 33,415 13,139 205 82,682 -

On a different reflation note, the minutes of the US Federal Reserve’s July meeting which were released last week showed that members are concerned with inflation remaining below the Fed’s 2 per cent target for a prolonged period.

Given their increased uncertainty about inflation, some participants thought the FOMC (Federal Open Market Committee) could afford to be patient in deciding when to hike further and wait for incoming information to confirm that the recent low readings on inflation were not likely to persist.

In response, Rabobank noted that the discussion on inflation fits with recent Fed rhetoric in which there appears to be some questioning of whether a third rate hike will be possible this year.

“Rabo’s view is that a third rate hike will not materialise this year

❚❚

TOTAL

291,967 834,109 503,688 805,377 1,074,431 17,724 921,905 18,973 380,060 6,648 31,115 26,136 355,949 542,938 5,811,020 332

Sing & foreign $ stocks. Value calculated using Monday's exchange rates.

(this view being primarily based on the recent weak prints in headline and core inflation),” said the bank.

This is a contrarian view that is starting to gain a little bit of traction among others in the investment community, although it has to be said that the consensus is still that there will be a third rate hike before the end of 2017, likely in December.

As for the local market, the question is whether the upbeat earnings outlook has already been factored in current prices. This likelihood was raised by Morgan Stanley in a Singapore strategy report last week where it said it would like to see widening net interest margins for the banks before committing itself to forecasting further upside for the market.

With the Trump reflation play in doubt and waning US inflation expectations, this would be difficult.

COMMODITIES

Chicago agricultural commodities record a volatile week Chicago

WEEKLY

Source for FTSE ST Indices: Interactive Data

5,811,020,000

SGX ETFs Most Active

COMPANY

The US market has also been willing to overlook the ever-widening investigation into Russian meddling in the elections even if this could lead to criminal charges, the constant staff upheaval in the White House and the president’s bizarre tweets, many of which have been inaccurate and ill-conceived.

This willingness to brush over the administration’s failings and shortcomings and eagerness to buy into the reflation theme has manifested itself in record-low volatility levels and record-high stock prices.

However, Mr Trump’s pro-business reputation took a large blow last week when he resisted condemning far-right, pro-white parties that were involved in racial protests in Charlottesville.

His reluctance to take a firm stand

CHICAGO Board of Trade (CBOT) grains futures have seen a week full of fluctuations, with a overall downturn prevailing.

During the trading week which ended on Aug 18, the most active corn contract for December delivery fell 9 cents, or 2.40 per cent, to US$3.6575 per bushel. A bearish report of US Department of Agriculture was believed to be the main factor for the fall.

Apart from the USDA report on Monday mentioning better corn crop conditions, the favourable weather in the leading agricultural state of Iowa added more pressure on corn futures. Additional pressure came from South American corn exports, which were ramping up.

The good news for corn was that the ethanol market remained strong in the US. Ethanol plants, using corn as raw material, responded to the recent boost in production margins, producing nearly record-high ethanol in recent weeks.

December wheat delivery last week suffered a three-straight-day sharp decrease, but managed to recover some losses in the end.

Ample world supplies and fund selling contributed to the downturn.

Traders were talking about record-high combined Ukraine/Russian

production, though logistic issues might prevent Russia from exporting more than 29-31 million tonnes of wheat. That’s roughly the volume of last year.

Price is another factor. Gulf wheat of the US is the world’s cheapest supply, on an FOB basis. A weak US dollar will help American farmers export more.

November soyabeans went down 7.25 cents last week, or 0.77 per cent, to US$9.3775 per bushel.

Brazil’s soyabean exports are almost on track to meet the USDA’s record projection, which is expected to rise 21 per cent. Export commitments are now lagging only a bit below the pace.

China’s crushing margins were reportedly up sharply last week thanks to lower soyabean futures and a stronger yuan. The “spot” crush margin jumped 114 yuan and is now profitable for the first time since late February.

China remains the world’s largest soyabean importer. CBOT soyabean prices were lifted, though moderately, for three consecutive sessions last week, obviously boosted by the news that a group of Chinese importers signed letters of intent to buy 3.8 million tonnes of US soyabeans in Omaha, Nebraska. However, soyabean futures failed to post gains on a weekly basis. XINHUA

PRIME LENDING RATES BANKS

%

Agricultural Bank Of China ..................5.50 ANZ Singapore ...................................5.50 Bangkok Bank Public Co. Ltd ..............6.00 Bank of China Limited ........................5.50 Bank of Communications ...................5.50 Bank of East Asia .................................5.75 Bank of Singapore ...............................5.50 Bank of Taiwan ...................................6.00 Bank of Tokyo-Mitsubishi UFJ, Ltd ............................................6.00 Banque Internationale a Luxembourg ...................................6.00 Barclays Bank PLC ..............................5.50 BNP Paribas ........................................6.00 Cathay United Bank .............................5.50 Chang Hwa Commercial Bank ............5.50 China Construction Bank Corp ...........5.25 CIMB Bank Berhad ..............................5.50 Citibank NA .........................................5.50 Credit Agricole Corporate and Investment Bank .............................5.75 Credit Industriel ET Commercial .....................................6.00 Deutsche Bank AG ..............................5.50 DBS Bank ..............................................4.25 DNB Bank ASA ...................................6.00 Far Eastern Bank ................................5.00 First Commercial Bank .......................5.75 Habib Bank ..........................................6.00 HL Bank ..............................................5.75 HSBC ...................................................5.50 Hua Nan Comm Bank .........................5.50 Indian Bank ........................................5.50 Indian Overseas Bank .........................5.50 Industrial & Commercial Bank of China ..................................5.00 Intesa SanPaolo SPA ...........................5.50 Korea Exchange Bank ..........................5.75 KBC Bank N.V. .....................................5.50 Land Bank of Taiwan .........................6.00 Landesbank Baden-Wuerttemberg ......6.00 Lloyds TSB Bank Plc ...........................6.25

Aug 18 Maybank ..............................................5.25 Mega Inter'l Commercial Bank Co Ltd ..............................................5.25 Mitsubishi UFJ Trust & Banking Corp, ...............................................6.00 Mizuho Bank Ltd ................................6.00 Natixis .................................................6.00 Norinchukin Bank, The .......................6.00 Nordea Bank Finland PLC ....................6.00 OCBC Bank .........................................5.00 Philippine Nat Bank ............................6.75 PT Bank Negara Indonesia (Persero) TBK ..................................6.00 PT Bank Mandiri (Persero) Tbk ..................................6.00 Rabobank International .......................5.25 Raiffeisen Bank International AG .....................................................6.00 RHB Bank Berhad ................................5.70 Royal Bank of Canada .........................4.75 Royal Bank of Scotland plc ..................5.50 Skandinaviska Enskilda Banken ..........5.75 State Bank of India ..............................6.00 Standard Chartered Bank ...................5.75 Sumitomo Mitsui Bk Corp ...................6.00 Sumitomo Mitsui Trust Bank Limited Singapore Branch .........................................6.00 Svenska Handelsbanken .....................6.00 The Shanghai Commercial & Savings Bank, Ltd .......................................................6.00 The Siam Comm Bank P Co Ltd ..........................................6.00 UCO Bank ...........................................6.00 United Overseas Bank Ltd .................5.00 Woori Bank ..........................................8.25 Source: The Association of Banks in Singapore

FINANCE COMPANIES Hong Leong Fin (PLR) ..........................6.88 Hong Leong Fin (EBR) ........................5.35 S'pura Fin (BLR) ....................................6.63 Sing Inv & Fin (PLR) .............................5.35 EBR: Enterprise Base Rate BLR: Base Lending Rate

8

| COMPANIES & MARKETS

❚❚

CURRENCIES

The Business Times | Monday, August 21, 2017

Dollar falls on uncertainty but ends week with modest gain New York THE dollar fell against a basket of major currencies on Friday last week as continued uncertainty over the economic agenda of US President Donald Trump pushed investors out of the greenback.

The dollar dropped to a four-month low against the yen in early trading but retraced some of its losses after rumours began to swirl about the impending firing of White

House senior adviser Steve Bannon.

The White House confirmed Mr Bannon’s exit in a statement on Friday afternoon.

As Mr Trump’s chief strategist, Mr Bannon has been seen as representing a right-wing political faction that critics have said encourages white supremacists such as those involved in the deadly rioting last weekend in Charlottesville, Virginia.

Mr Bannon has been also seen by

some market participants as an opposing force to Mr Trump’s chief economic adviser, Gary Cohn, and Treasury Secretary Steve Mnuchin.

The dollar dropped nearly one per cent against the yen, falling to 108.58 yen, its lowest since late April. It was last down 0.25 per cent at 109.31 yen.

“A lot of this was just carryover from the problems in the last few days out of Washington and the markets getting a bit dejected with the

idea that Trump’s going to get any legislative initiatives done this summer or even this autumn,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited.

“Especially given the public backlash against the administration in the last few days,” he added.

As a candidate, Mr Trump promised wide-ranging tax reform and fiscal stimulus measures that traders

INTERBANK CROSS RATES

FOREX RATES

Australia Canada China Euro Hong Kong India Indonesia Japan Korea Malaysia NZ Pakistan Philippines Singapore South Africa Switzerland Taiwan Thailand UK United States

A$

C$

Rmb

0.999 0.189 1.482 0.161 0.020 0.009 1.158 0.111 0.294 0.924 0.012 0.025 0.925 0.095 1.313 0.042 0.038 1.628 1.263

1.001 0.189 1.483 0.162 0.020 0.009 1.159 0.111 0.295 0.925 0.012 0.025 0.927 0.096 1.315 0.042 0.038 1.630 1.264

5.290 5.284 7.837 0.854 0.104 0.050 6.126 0.586 1.558 4.888 0.063 0.130 4.896 0.505 6.946 0.220 0.201 8.612 6.681

Euro

HK$

bet would kick-start the economy and inflation.

The dollar bounced back but failed to move higher against the yen or the euro and surrendered gains late in the day against the pound. “(Today) is kind of a microcosm of what we’ve seen all week,” said John Doyle, director of markets at Tempus Inc. “We’ve seen volatility but it’s been short-term.”

The dollar index, which tracks the

greenback against six major currencies, rose 0.35 per cent for the week.

The euro fell 0.5 per cent, for its first weekly loss against the greenback in six.

The dollar finished the week up nominally against the yen, gaining 0.1 per cent.

Mr Doyle said: “We’ve seen some ups and downs, but at the end of the week the dollar, for the most part, isn’t much changed from where we started.” REUTERS

INTERBANK CURRENCY RATES Aug 18

Ind Rs Rupiah

Yen

Won

RM

NZ$ Pak Rs

Peso

S$

Rand

Sfr

NT$

0.675 6.195 50.795 105.803 0.674 6.188 50.736 105.679 0.128 1.171 9.602 20.000 - 9.178 75.255 156.750 0.109 - 8.199 17.078 0.013 0.122 - 2.083 0.006 0.059 0.480 0.782 7.175 58.827 122.532 0.075 0.686 5.623 11.713 0.199 1.824 14.956 31.153 0.624 5.724 46.934 97.759 0.008 0.074 0.609 1.268 0.017 0.152 1.246 2.596 0.625 5.733 47.008 97.915 0.064 0.591 4.849 10.100 0.886 8.135 66.699 138.929 0.028 0.258 2.114 4.403 0.026 0.236 1.931 4.022 1.099 10.085 82.689 172.236 0.852 7.824 64.148 133.615

0.863 0.862 0.163 1.279 0.139 0.017 0.008 0.096 0.254 0.798 0.010 0.021 0.799 0.082 1.134 0.036 0.033 1.406 1.090

9.033 9.022 1.707 13.382 1.458 0.178 0.085 10.461 2.660 8.346 0.108 0.222 8.359 0.862 11.861 0.376 0.343 14.704 11.407

3.396 3.392 0.642 5.032 0.548 0.067 0.032 3.933 0.376 3.138 0.041 0.083 3.143 0.324 4.460 0.141 0.129 5.529 4.289

1.082 83.413 1.081 83.316 0.205 15.768 1.603 123.580 0.175 13.464 0.021 1.642 0.010 0.788 1.253 96.602 0.120 9.235 0.319 24.561 - 77.072 0.013 0.027 2.047 1.002 77.195 0.103 7.962 1.421 109.530 0.045 3.471 0.041 3.171 1.762 135.789 1.367 105.340

40.753 40.705 7.704 60.376 6.578 0.802 0.385 47.196 4.512 11.999 37.654 0.489 37.714 3.890 53.512 1.696 1.549 66.341 51.465

1.081 1.079 0.204 1.601 0.174 0.021 0.010 1.251 0.120 0.318 0.998 0.013 0.027 0.103 1.419 0.045 0.041 1.759 1.365

10.476 10.464 1.980 15.520 1.691 0.206 0.099 12.132 1.160 3.085 9.680 0.126 0.257 9.695 13.756 0.436 0.398 17.054 13.230

0.762 0.761 0.144 1.128 0.123 0.015 0.007 0.882 0.084 0.224 0.704 0.009 0.019 0.705 0.073 0.032 0.029 1.240 0.962

24.030 24.002 4.542 35.601 3.879 0.473 0.227 27.829 2.660 7.075 22.203 0.288 0.590 22.238 2.294 31.553 0.914 39.118 30.347

Baht Pound

26.305 26.274 4.973 38.972 4.246 0.518 0.249 30.464 2.912 7.745 24.305 0.315 0.645 24.344 2.511 34.541 1.095 42.822 33.220

0.614 0.614 0.116 0.910 0.099 0.012 0.006 0.711 0.068 0.181 0.568 0.007 0.015 0.568 0.059 0.807 0.026 0.023 0.776

US$

0.792 0.791 0.150 1.173 0.128 0.016 0.007 0.917 0.088 0.233 0.732 0.009 0.019 0.733 0.076 1.040 0.033 0.030 1.289 -

The figures are based on mid prices of currencies quoted by OCBC. For Rupiah, Yen and Won, the figures are in 100 units of the foreign currency indicated.

Among the three currencies themselves, the exchange rate should read as it is.

Against S$ Bid Offer

Currencies

US$/S$ FORWARD RATES

Aug 18

Against US$ Bid Offer

S$/US$ to one unit of foreign currency:

Australian dollar Canadian dollar Euro NZ dollar Sterling pound US dollar

1.0800 1.0788 1.6003 0.9978 1.7584 1.3643

1.0811 1.0797 1.6014 0.9990 1.7596 1.3649

0.7916 0.7911 1.1730 0.7314 1.2889 -

Bid

0.7921 0.7908 1.1733 0.7319 1.2892 -

1-month 2-months 3-months 6-months

S$

1.3637 1.3632 1.3629 1.3610

Aug 18 Offer

1.3646 1.3642 1.3635 1.3622

Source: OCBC S$/US$ to 100 units of foreign currency:

Chinese renminbi Danish kroner Hong Kong dollar Indian Rupee Indonesia rupiah Japanese yen Korean won Malaysian ringgit New Taiwan dollar Norwegian krone Philippine peso Saudi riyal Swedish krona Swiss franc Thai Baht

20.4206 20.4320 14.9678 14.9696 21.5233 21.5345 15.7761 15.7774 17.44 17.45 12.7815 12.7820 2.13 2.13 1.5588 1.5590 0.0102 0.0102 0.0075 0.0075 1.2511 1.2517 0.9170 0.9171 0.1195 0.1198 0.0876 0.0877 31.79 31.84 23.3046 23.3263 4.4943 4.4991 3.2942 3.2963 17.1703 17.1833 12.5854 12.5894 2.6499 2.6531 1.9423 1.9438 36.3775 36.3973 26.6638 26.6667 16.7868 16.8025 12.3044 12.3104 141.8339 141.9405 103.9609 103.9933 4.1056 4.1099 3.0093 3.0111 Source: OCBC

HANG SENG 28,000

SHANGHAI COMPOSITE

WEEKLY

27,047.57

NIKKEI

WEEKLY

3,268.72

3,300

DOW JONES

WEEKLY

21,000

23,000

21,674.51

(+60.18) Aug 18

(+164.06) Aug 18 26,000

INTERBANK RATES

WEEKLY

BANK RATES

(-183.81) Aug 18

3,200 21,000

19,000

19,470.41 (-259.33) Aug 18

3,100

19,000 22,000

3,000

S O N D J F M A M J ‘17

J A

S O N D J F M A M J ‘17

S O N D J F M A M J ‘17

J A

SGX DERIVATIVES TRADING

EQUITY BONDS WARRANTS FUTURES

Aug 18 OPEN

HIGH

LOW

SETT

FTSE CHINA A50 INDEX FUTURES Aug17 11622.50 11712.50 11575.00 11642.50 Sep17 11625.00 11712.50 11575.00 11642.50 NIKKEI 225 INDEX FUTURES Sep17 19675.00 19715.00 19415.00 19450.00 Dec17 19540.00 19545.00 19290.00 19320.00 MSCI TAIWAN INDEX FUTURES Aug17 389.70 390.30 385.30 Sep17 389.20 389.20 385.00 CNX NIFTY INDEX FUTURES Aug17 9909.50 9914.00 Sep17 9926.00 9928.00

9795.00 9838.00

MSCI SINGAPORE INDEX FUTURES Aug17 363.80 364.40 359.30 Sep17 363.50 364.10 361.00

387.50 387.30 9849.50 9900.50

VOL

123198 17729

OP/INT

601017 65809

96846 31 41854 956 43624 293

218026 6118 218001 26932 435774 603

15797 123

199548 1301

MINI NIKKEI 225 FUTURES Sep17 19680.00 19680.00 19417.00 19450.00 Dec17 - 19320.00

2064 0

1067 0

0 0

1489 6

NIKKEI STOCK AVERAGE DIVIDEND POINT INDEX FUTURES Dec17 368.80 0 13573 Dec18 400.60 401.00 400.60 399.80 12 7770 MINI 10-YR JAPANESE GOVT BOND FUTURES Sep17 150.620 150.830 150.610 150.810 Dec17 150.400 150.540 150.400 150.590 MSCI INDIA INDEX FUTURES Aug17 1175.80 1175.80 1161.00 Sep17 MSCI INDONESIA INDEX FUTURES Aug17 7000.00 7000.00 6920.00 Sep17 7040.00 7040.00 7040.00

1166.00 1172.00 6955.00 6955.00

2395 4 82 0 367 1

12720 2 266 0 4701 2

MSCI THAILAND INDEX FUTURES Aug17 Sep17

-

-

MSCI MALAYSIA INDEX FUTURES Aug17 Sep17 -

-

539.25 538.25

0 0

15 0

-

616.50 615.00

0 0

0 0

SGX-PSE MSCI PHILIPPINES INDEX FUTURES Aug17 - 1364.00 Sep17 - 1364.00

0 0

1 0

SGX INR/USD FUTURES Aug17 Sep17

155.870 155.380

155.950 155.420

155.650 155.250

SGX KRW/USD FUTURES Sep17 .8785 .8785 Oct17 SGX USD/SGD FUTURES Sep17 1.3641 1.3649 Oct17 -

.8748 1.3640 -

155.730 155.410 .8766 .8769 1.3638 1.3634

18867 3034 34 0 70 0

32557 2550 829 0 1731 0

SGX USD/CNH FUTURES Sep17 Oct17

6.6941 6.7058

6.6966 6.7068

6.6873 6.6961

6.6855 6.6946

5505 549

7157 1194

SGX USD/JPY FUTURES (STANDARD) Sep17 109.295 109.295 109.210 Oct17 -

108.975 108.830

40 0

0 0

SICOM RSS3 RUBBER FUTURES Sep17 187.0 188.0 186.0 Oct17 186.9 187.0 186.9

187.9 187.5

13 25

323 392

155.2 158.1

622 1152

3228 9349

SICOM TSR20 RUBBER FUTURES Sep17 Oct17

153.9 155.8

155.5 158.5

Company

153.0 155.8

SGX TSI IRON ORE CFR CHINA(62% FE FINES) INDEX FUTURES Aug17 75.00 75.07 75.00 1235 105016 Sep17 74.90 75.63 73.10 19091 112727 * Denotes an Opening Range has been established S'pore Exchange Derivatives Clearing Ltd (Co Reg No 200005878M)

S O N D

Last Sale

Second Chance Prop W200123

J F M A M J ‘17

J A

Wk Vol +or-

Conv ('000)

Exer Ratio

Disc Price

1

25

Aug 18

Prem Gear%

Mths ing

Bid

0vernight 0.80 1-month 1.0 2-months 1.0625 3-months 1.125 Overnight mode: 0.85

0.60 0.875 0.9375 1.0

US$

Offer

Bid

7 days 1 month 2 months 3 months 6 months 9 months 12 months

1.33 1.35 1.38 1.38 1.60 1.75 1.90

1.23 1.25 1.28 1.28 1.40 1.55 1.70

$Au

Offer

Bid

1 month 3 months 6 months 12 months

1.90 1.95 2.05 2.35

1.70 1.75 1.85 2.15

0.1 33755 -1.8 26286

0.1 2200

-

-

2

OCBC BK MB ECW180301

5.1

-0.7 13411

0.1 1220

-

-

7

UOB MB eCW171016

4.7

-1.5 12341

0.1 2450

-

-

2

KrisEnergy Ltd. W240131

3.8

-0.8 9639

0.0

11

1

-

77

GOVERNMENT BONDS

Charisma EnergyServicesW211128

0.4

-0.1 9531

1

0

-20

1.25

51

Period

STI 3400MBeCW171031

3.8

-0.6 6260

0.0 *****

-

-

2

Issue code

KepCorp MB ePW171002

7.5

-0.1 6242

0.2

650

-

-

2

2-Year

NX09100W

2.500

Ntegrator Intl Ltd W181123

0.6

-0.1 5925

1

1

7

2.50

15

5-Year

N517100F

OCBC Bk MB ePW171201

3.9

0.2 5210

0.1 1050

-

-

4

10-Year

DBS MB ePW171016

4.2

0.6 4862

0.1 1950

-

-

2

UOB MB ePW171106

7.8

1 4686

0.1 2300

-

-

3

OCBC Bk MB eCW171201

6.6

-0.9 4350

0.1 1120

-

-

4

CapitaLand MB ECW171101

1.6

0.1 3985

-

-

-

-

-

SingTel MBeCW180129

3.9 unch 3900

0.2

400

-

-

5 2

AsiaPhos Limited W200323 DBS MB ECW180115 OCBC Bk MB EPW180301

4.2

-0.1 3765

0.0 *****

-

-

1.2 3666

0.1 2100

-

-

4

1.5

-0.7 3206

8

2

6.20

31

6.3

-1.3 3135

0.1 2320

-

-

5

11.3

0.4 2836

0.1 1140

-

-

7

MORGAN STANLEY CAPITAL INTERNATIONAL INDICES Aug 18

World Preliminary EAFE Preliminary Europe Preliminary Australia Austria Preliminary Belgium Preliminary Canada Preliminary Denmark Preliminary Finland Preliminary France Preliminary Germany Preliminary Greece Preliminary India Indonesia Ireland Preliminary Israel Preliminary Italy Preliminary Japan Korea Malaysia Netherlands Preliminary New Zealand Norway Preliminary Pakistan Philippines Portugal Preliminary Singapore Singapore Free Spain Preliminary Sweden Preliminary Switzerland Preliminary Taiwan Thailand UK Preliminary USA Preliminary EM Far East Preliminary Hong Kong Preliminary Pacific Preliminary Far East Preliminary

Index

1461.3 1094.5 1555.5 1161.6 613.9 1240.9 1906.0 8191.5 681.1 1836.4 991.1 69.4 1165.6 6948.8 215.7 226.2 744.9 946.3 700.3 617.4 1619.4 137.7 2641.1 489.3 1365.7 89.9 1680.9 361.4 993.9 12098.

1180.0 388.7 540.6 2128.4 2314.8 725.3 16081.

917.4 1084.6

In local curr % dy % yr Change Change

-0.3 -0.7 -0.6 -0.6 -1.7 -0.9 -0.5 -0.6 -1.1 -0.6 -0.3 -1.3 -0.8 -0.2 -1.7 0.7 0.1 -1.0 -0.2 0.0 -0.7 0.4 -0.2 0.0 -0.8 -0.8 -0.6 -0.6 -0.5 -0.5 -0.8 -0.5 -0.1 -0.8 0.1 -0.3 -0.9 -0.9 -1.0

7.1 5.5 5.9 1.4 24.6 3.4 -2.5 12.6 7.5 6.4 3.3 16.6 18.5 13.5 -4.6 -8.1 10.6 3.7 20.6 7.8 13.3 7.1 4.6 -18.5 16.5 5.6 13.0 13.0 12.9 3.2 8.5 12.9 3.8 2.5 8.7 23.8 23.2 5.3 6.3

1 month 3 months 6 months 12 months

Offer

Bid

-0.35 -0.25 -0.20 0.00

-0.45 -0.45 -0.40 -0.20

$NZ

Offer

Bid

1 month 3 months 6 months 12 months

2.15 2.15 2.25 2.55

1.95 1.95 2.05 2.35

Yen

1 month 3 months 6 months 12 months

Offer

Bid

-0.15 -0.20 -0.15 -0.05

-0.25 -0.30 -0.25 -0.15

£

Offer

Bid

1 month 3 months 6 months 12 months

0.30 0.35 0.50 0.80

0.20 0.25 0.40 0.60

Rates quoted by Icap (S) Pte Ltd

29

16.5

1

Euro

Left

3

STI 3150NBePW171031

-1 32.50

Expiry

Offer

0.8

DBS MB ePW171204 - 19455.00 - 19390.00

A

BONDS, WARRANTS, PREFERENCE SHARES Most active

DBS MB eCW171016

361.65 361.90

USD NIKKEI 225 INDEX FUTURES Sep17 Dec17 -

J

Aug 18 $S

% dy Change

In S$ % yr Change

% dy Change

In US$ % yr Change

-0.3 -0.6 -0.7 -0.8 -1.8 -1.0 -0.3 -0.6 -1.1 -0.7 -0.4 -1.3 -0.8 -0.1 -1.7 0.6 0.1 -0.1 -0.6 0.1 -0.8 0.6 -0.3 -0.1 -1.1 -0.8 -0.6 -0.6 -0.5 -0.6 -0.6 -0.8 -0.1 -1.2 0.0 -0.5 -0.9 -0.3 -0.3

4.2 7.4 8.4 4.5 31.0 8.7 -2.1 18.3 13.0 11.8 8.6 22.6 18.4 8.0 0.3 -11.3 16.3 4.9 20.5 6.4 18.1 6.2 7.1 -23.8 6.2 11.0 12.9 12.9 18.7 9.0 8.2 13.2 5.6 0.6 2.6 20.0 15.3 6.1 6.5

-0.2 -0.5 -0.6 -0.7 -1.7 -0.9 -0.2 -0.5 -1.0 -0.6 -0.3 -1.2 -0.7 0.0 -1.6 0.7 0.2 0.0 -0.5 0.2 -0.7 0.7 -0.2 0.0 -1.0 -0.8 -0.5 -0.5 -0.4 -0.5 -0.5 -0.7 0.0 -1.1 0.1 -0.4 -0.8 -0.2 -0.2

10.4 13.8 14.8 10.8 38.8 15.2 3.7 25.4 19.7 18.5 15.1 29.9 25.5 14.4 6.3 -6.0 23.2 11.2 27.6 12.8 25.1 12.5 13.5 -19.2 12.5 17.6 19.7 19.7 25.7 15.5 14.7 20.0 11.9 6.6 8.7 27.2 22.2 12.4 12.8

Copyright© 1991 Morgan Stanley Capital International

GOVERNMENT SECURITIES Aug 18 Coupon rate (%)

Maturity

Close Bid

High

01-Jun-19

102.19

-

1.750

01-Apr-22

100.94

-

-

NZ07100S

3.500

01-Mar-27

111.98

112.10

112.00

15-Year

NZ10100F

2.875

01-Sep-30

106.36

-

-

20-Year

NZ16100X

2.250

01-Aug-36

97.72

-

-

30-Year

NA16100H

2.750

01-Mar-46

106.09

-

-

Note: Based on latest issue

Low

-

Source: Monetary Authority of Singapore

COMMODITY FUTURES

AGRI METALS ENERGY

Day's

Aug-17

Price Net change

% change

Last Trade

0.92%

14/09/2017

Agricultural

Aug-17

CBOT Soybeans (US cents/bu)

930.25

CBOT Soybean Oil (US cents/lb)

8.50

33.21

0.36

1.10%

14/09/2017

CBOT Wheat (US cents/bu)

414.00

-5.25

-1.25%

14/09/2017

LIFFE Cocoa (£/tonne)

1464.00

18.00

1.24%

14/09/2017

LIFFE Coffee (US$/tonne)

2062.00

4.00

0.19%

29/09/2017

369.60

8.60

2.38%

15/09/2017

1286.40

9.50

0.74%

29/08/2017

17.05

0.11

0.66%

29/08/2017

Aluminium, 99.7% purity

2076.00

-18.00

-0.86%

-

Copper, Grade A

6490.00

-42.00

-0.64%

-

Lead

2413.50

-103.50

-4.11%

-

Nickel

10725.00

-35.00

-0.33%

-

Tin

20200.00

175.00

0.87%

-

3062.00

-57.00

-1.83%

-

Crude Oil - Brent/blend (1-Mth F)

51.03

0.76

1.51%

-

Crude Oil - WTI (Near Mth)

47.09

0.31

0.66%

-

Crude Oil - Dubai (1-Mth F)

48.81

0.17

0.35%

-

Crude Oil - Tapis Blend

52.25

0.74

1.44%

-

Crude Oil-Indonesia Minas FOB

56.81

0.72

1.28%

-

Naphtha Singapore Spot FOB

48.75

-0.78

-1.57%

-

Jet Kerosene-FOB Singapore

60.94

-1.37

-2.20%

-

Opec Oil Basket Price

48.07

-0.62

-1.27%

-

Naphtha (CFR Japan)

452.00

-7.00

-1.53%

-

Gas Oil EEC (CIF Cargoes NWE)

465.25

2.00

0.43%

-

Aug-17

LIFFE White Sugar (US$/tonne)

Metals

Aug-17

COMEX - Gold (100 oz) COMEX - Silver (US$/troy oz)

LME 3-Mths Contracts (US$/MT)

Zinc. Sp High Grade

Aug-17

Energy and Oil

Aug-17

Source:Thomson Reuters

PALM OIL

Aug 18

KLCE Palm Futures (RM/MT) Delivery Month

Sep 17 Oct 17 Nov 17 Dec 17

2655.0 2651.0 2661.0 2677.0

Opening Range

Sett Price

Av Price

High

Low

Vol Done

Open Position

-

2675.0 2673.0 2681.0 2691.0

-

2680.0 2675.0 2685.0 2694.0

2636.0 2632.0 2644.0 2658.0

864 6638 25443 7014

8493 30115 68998 27043

Source: Bursa Malaysia

COMPANIES & MARKETS | 9

The Business Times | Monday, August 21, 2017

❚❚

INSIDE INSIGHTS

Buybacks and director buys up on the week

By Geoff Howie HE five trading sessions spanning Aug 11 to Aug 17 saw the Straits Times Index (STI) decline by 1.6 per cent, bringing its dividend-inclusive return for the 2017 year through to Aug 17 to 16.7 per cent, compared to an average 11 per cent return for the benchmarks of Japan, Hong Kong and Australia.

Over those five sessions, 55 stocks lodged just over 100 changes in director interests and/or substantial shareholders. The ratio of filed director acquisitions to disposals was 15 to 1, while there was a similar number of acquisitions and disposals filed for substantial shareholders.

As many as 20 stocks conducted share buybacks over the five sessions with a total consideration of S$24.4 million, more than double the buyback consideration of S$10.1 million during the four preceding sessions.

OCBC continued to purchase 200,000 shares on each of the five sessions. On Aug 17, both M1 and ST Engineering conducted their first buybacks of their current mandates which commenced in April. M1 purchased three million shares at an average price of S$1.7738 and ST Engineering purchased 1.3628 million shares at an average price of S$3.5990.

In addition to the share buybacks conducted by Best World International (BWI) on Aug 15, 16 and 17, CEO Dora Hoan and president Doreen Tan each acquired 200,000 shares of BWI on Aug 17. This saw the two founders of BWI each increase their direct interest in the stock to 5.6476 per cent (from 5.6113 per cent). With their interests in D2 Investment, in addition to shares held by family members, the two founders also maintain a 35.0774 per cent deemed interest in the shares of BWI.

T

Singapore O&G

Aug 11 to Aug 17 TOTAL NO OF SHARES BOUGHT

ISSUER/MANAGER

TOTAL CONSIDERATION (S$)

OCBC

1,000,000

11,211,964

M1

3,000,000

5,321,324

ST Engineering

1,362,800

4,904,738

Japfa

1,070,700

533,947

155,719

460,157

3,260,000

434,925

900,000

266,324

S i2i Sysma Hldgs Duty Free Intl SIA Engineering Company

64,500

225,825

Best World Intl

141,000

188,003

Bonvests Hldgs

141,800

184,930

Boustead Singapore

198,100

178,713

Singapore Post

100,000

125,161

1,099,100

114,309

240,000

64,966

60,000

51,781

Spackman Entertainment Group CNMC Goldmine Hldgs Boustead Projects AEM Hldgs

20,000

51,327

506,000

37,306

20,000

21,668

BBR Hldgs

57,400

12,623

Global Palm Resources Hldgs

31,500

11,881

13,428,619

24,401,872

IPS Securex Hldgs

China Jinjiang Environment Holding Company Among the multiple companies that Ang Swee Tian serves through board roles, he is the lead independent director of China Jinjiang Environment Holding Company (CJE). CJE’s business primarily focuses on the planning, development, construction, operation and management of waste-toenergy facilities in China and it has established a presence in India.

On Aug 15, Mr Ang acquired 80,000 shares of CJE at an average price of S$0.7948 per share. On the preceding day, CJE reported that its H1FY17 profit before tax increased 6.2 per cent y-o-y to 420.7 million yuan (S$86 million).

In its outlook, CJE management

noted that China’s National Development and Reform Commission’s 13th five-year plan for urban waste treatment reported that total capacity of waste treatment in China is targeted to rise by 46 per cent over the next five years due to urbanisation and objectives to create better living environments. Including a dividend distribution in May, the stock has returned -2 per cent in the 2017 year-to-date.

Share buybacks

After listing on Catalist in June 2015, Singapore O&G (SOG) is now the ninth biggest stock on Catalist by market capitalisation. The healthcare services play, which has gained 260 per cent since its debut, is made up of a group of specialist medical practitioners specialising in women's and children's healthcare.

On Aug 11, SOG’s executive chairman Heng Tung Lan and executive director Beh Suan Tiong each acquired 100,000 shares of SOG at an average price of S$0.477 per share. This took Dr Heng’s stake in SOG to 29.46 per cent and Dr Beh’s total stake to 10.17 per cent. Dr Heng and Dr Beh are SOG’s largest and third-largest shareholders respectively in addition to practising obstetricians and gynaecologists at the firm.

For its H1FY17 the group delivered a net profit after tax of S$4.14 million, a year-on-year decrease of 6.4 per cent to H1FY16. This followed on from a 64.8 per cent y-o-y increase in net profit in FY16.

Global Testing Corp

Total

China Jinjiang

UPP Holdings

(S$)

(S$)

1.00

0.30

Procurri Corporation On Aug 14, Procurri Corporation chairman and CEO Thomas Sean Murphy acquired 500,000 shares of the stock at an average price of S$0.2256 per share. This increased Mr Murphy’s direct and deemed stake in the company from 12.32 per cent to 12.5 per cent.

In the preceding session, the group reported that gross profit increased 27 per cent y-o-y to S$26.3 million in its H1FY17, while administrative expenses rose 88 per cent y-o-y from S$11.8 million in H1FY16 to S$22.1 million in H1FY17, largely from the inclusion of new headcount and operating expenses from the EAF acquisition and Rockland incorporation, which amounted to S$7 million.

Together with its subsidiaries, Procurri provides lifecycle services and data centre equipment across three regional hubs – the Asia-Pacific, Americas and EMEA (Europe, the Middle East and Africa) – with its global headquarters located in Singapore.

Mr Murphy said in his SGX kopi-C interview earlier this year that Procurri is well-positioned for growth.

“Today, we have all the ingredients of a global company, but you're not seeing the full results. Once we finish our M&As and get strategy-complete across geographies, you will be able to see the power of our assets pulling together in the same direction.”

He noted with the H1FY17 results

0.25

0.90

0.20 0.80

0.15

Aug 2016

Feb 2017

Aug

Aug 2015

Feb 2016

Aug

Feb 2017

Aug

that the underlying business fundamentals for Procurri’s maintenance services had strengthened significantly, evidenced by its order book which more than tripled since Dec 31, 2016, to S$20.2 million as at June 30, 2017. Including a dividend distribution in April, the stock has returned -53 per cent in the 2017 year-to-date.

UPP Holdings UPP Holdings independent director Ng Shin Ein, who also serves as managing partner of Gryphus Capital, acquired shares in the company on Aug 15 and 16. On Aug 15, Ms Ng acquired 301,400 shares of UPP at an average price of S$0.26484 per share, followed by another 220,000 shares acquired at S$0.2650 per share on Aug 16. This takes her stake in UPP to 0.059 per cent.

UPP was incorporated 50 years ago and maintains businesses in paper manufacturing, power generation, distribution of building materials and property investment holding. For its H1FY17, UPP reported profit attributable to owners of the company was up 146 per cent y-o-y to S$9.1 million.

With the H1FY17 results, the group noted that with its recent acquisition of Taiga, it now has a more diversified portfolio of businesses in different segments and geographical areas, spanning Malaysia, Myanmar, Canada and the United States. While this reduces concentration risks in any single business segment, market or country, the group noted that it is exposed to the risks associated with these businesses as well as currency fluctuation risks versus the SGD. Including two dividend distributions, the stock has returned -2 per cent in the 2017 year-to-date. ❚ The writer is the market strategist at Singapore Exchange (SGX). To read SGX’s market research reports, visit sgx.com/research.

DIVIDENDS ANNOUNCED Payment (cts) ABR Hldgs 1.000 Advancer Global 0.490 AEM Hldgs 2.500 AIMS AMP Cap Ind Reit 2.400 AIMS AMP Cap Ind Reit 0.050 AIMS AMP Cap Ind Reit (1 Apr-30 Jun 2017) 0.050 AIMS Property Securities ^ 1.506 Ascott Residence Tr 0.357 Ascott Residence Tr 2.667 Ascott Residence Tr (1 Jan-30 Jun 2017) 0.332 Asian Pay Tv Tr 1.625 Avi-tech Electronics 0.800 Avi-tech Electronics 1.000 Best World Intl 1.500 BHG Retail Reit (1 Jan-30 Jun 2017) 2.740 Breadtalk Grp 1.000 Bumitama Agri 0.750 Cache Log Tr 0.286 Cache Log Tr 1.501 Cache Log Tr (1 Apr-30 Jun 2017) 0.013 Capitaland Comm Tr 4.590 Capitaland Comm Tr (1 Jan-30 Jun 2017) 4.560 Capitaland Mall Tr 2.750 Capitaland Retail China Tr (1 Jan-30 Jun 2017) 5.360 Captii Ltd 2.500 CDL Hospitality Tr 2.950 CDL Hospitality Tr 0.970 CDL Hospitality Tr (1 Jan-30 Jun 2017) 0.180 CEI Ltd 3.000 CEI Ltd 1.040 Centurion Corp 1.000 Challenger Tech 1.100 City Developments 4.000 Cogent Hldgs 3.130 ComfortDelgro 4.350 Courts Asia 1.290 CSE Global 1.250 Dairy Farm Intl # 6.500 Daisin Retail Tr (1 Jan-30 Jun 2017) 3.010

Ex date

Rec date

Pay date

Ann date

28-Aug 19-Sep 04-Oct 04-Aug 04-Aug

30-Aug 21-Sep 06-Oct 08-Aug 08-Aug

15-Sep 29-Sep 20-Oct 21-Sep 21-Sep

17-Aug 07-Aug 07-Aug 27-Jul 27-Jul

04-Aug 28-Jun 26-Jul 26-Jul

08-Aug 30-Jun 28-Jul 28-Jul

21-Sep 15-Sep 25-Aug 25-Aug

27-Jul 23-Jun 20-Jul 20-Jul

26-Jul 18-Sep 13-Nov 13-Nov 30-Aug 08-Sep 15-Aug 22-Aug 27-Jul 27-Jul 27-Jul 25-Jul

28-Jul 20-Sep 15-Nov 15-Nov 04-Sep 12-Sep 17-Aug 24-Aug 31-Jul 31-Jul 31-Jul 27-Jul

25-Aug 27-Sep 29-Nov 29-Nov 22-Sep 27-Sep 31-Aug 04-Sep 28-Aug 28-Aug 28-Aug 25-Aug

20-Jul 14-Aug 16-Aug 16-Aug 07-Aug 08-Aug 02-Aug 14-Aug 21-Jul 21-Jul 21-Jul 19-Jul

25-Jul 27-Jul

27-Jul 31-Jul

25-Aug 29-Aug

28-Jul 21-Jul

02-Aug 29-Aug 03-Aug 03-Aug 03-Aug 14-Aug 14-Aug 04-Sep 11-Aug 17-Aug 28-Aug 17-Aug 15-Aug 22-Aug 23-Aug 06-Sep

04-Aug 31-Aug 07-Aug 07-Aug 07-Aug 16-Aug 16-Aug 06-Sep 15-Aug 21-Aug 30-Aug 21-Aug 17-Aug 24-Aug 25-Aug 08-Sep

20-Sep 12-Sep 29-Aug 29-Aug 29-Aug 25-Aug 25-Aug 15-Sep 23-Aug 13-Sep 15-Sep 28-Aug 30-Aug 13-Sep 19-Oct 20-Sep

27-Jul 16-Aug 28-Jul 28-Jul 28-Jul 04-Aug 04-Aug 16-Aug 04-Aug 11-Aug 11-Aug 11-Aug 11-Jul 10-Aug 04-Aug 11-Aug

Payment (cts) DBS Group Del Monte Pacific # Delfi Ltd # Design Studio EC World Reit (1 Apr-30 Jun 2017) ESR-Reit Far East Hospitality Tr First Reit First Reit First Reit (1 Apr-30 Jun 2017) First Resources First Sponsor Fortune Reit @ Frasers Centrepoint Tr Frasers Centrepoint Tr Frasers Comm Tr (1 Apr-30 Jun 2017) Frasers Logistics & Ind Tr Genting S'pore PLC Global Investments Global Logistic Prop Golden Energy Goodland Grp GP Batteries Int GP Industries Great Eastern GSH Corp Haw Par Corp Hiap Hoe Hiap Seng Engg Hi-P Intl Hong Leong Fin Hongkong Land # Hutchison Port Hldgs @ iFast Corp IReit Global ISEC Healthcare Jardine C&C # JMH # JSH # K1 Ventures Keppel DC Reit Keppel DC Reit Keppel DC Reit (1 Jan-30 Jun 2017)

33.000 0.610 1.220 1.250 1.540 0.956 0.970 0.080 1.170 0.890 1.250 1.000 25.530 2.886 0.114 2.398 1.840 1.500 0.650 6.000 0.800 0.300 1.500 1.500 10.000 1.000 10.000 0.500 0.500 19.000 4.000 6.000 9.500 0.680 2.890 0.500 18.000 40.000 9.500 6.500 1.930 1.460 0.240

Ex date

Rec date

Pay date

Ann date

11-Aug 24-Aug 23-Aug 18-Aug 11-Aug 19-Jul 11-Aug 21-Jul 21-Jul 21-Jul 30-Aug 29-Aug 10-Aug 28-Jul 28-Jul 28-Jul 03-Jul 23-Aug 25-Aug 03-Aug 18-Aug 17-Aug 21-Aug 10-Aug 15-Aug 23-Aug 22-Aug 29-Aug 16-Aug 28-Aug 22-Aug 23-Aug 25-Jul 04-Aug 16-Aug 22-Aug 24-Aug 23-Aug 23-Aug 25-Oct 21-Jul 21-Jul 21-Jul

15-Aug 28-Aug 25-Aug 22-Aug 15-Aug 21-Jul 15-Aug 25-Jul 25-Jul 25-Jul 04-Sep 31-Aug 14-Aug 01-Aug 01-Aug 01-Aug 05-Jul 25-Aug 29-Aug 07-Aug 22-Aug 21-Aug 23-Aug 14-Aug 17-Aug 25-Aug 24-Aug 31-Aug 18-Aug 30-Aug 24-Aug 25-Aug 27-Jul 08-Aug 18-Aug 24-Aug 28-Aug 25-Aug 25-Aug 27-Oct 25-Jul 25-Jul 25-Jul

04-Oct 08-Sep 08-Sep 08-Sep 28-Sep 31-Aug 20-Sep 28-Aug 28-Aug 28-Aug 12-Sep 20-Sep 29-Aug 29-Aug 29-Aug 29-Aug 29-Sep 20-Sep 16-Oct 22-Aug 04-Sep 28-Aug 05-Sep 24-Aug 31-Aug 06-Sep 06-Sep 15-Sep 28-Aug 11-Sep 12-Sep 19-Oct 14-Sep 21-Aug 15-Sep 31-Aug 06-Oct 19-Oct 19-Oct 08-Nov 31-Aug 31-Aug 31-Aug

07-Aug 11-Aug 07-Aug 26-Jul 03-Aug 13-Jul 04-Aug 17-Jul 17-Jul 17-Jul 11-Aug 26-Jul 31-Jul 24-Jul 24-Jul 25-Jul 31-Jul 02-Aug 14-Aug 19-May 14-Aug 11-Aug 12-Jul 12-Jul 25-Jul 04-Aug 11-Aug 10-Aug 23-May 08-Aug 10-Aug 04-Aug 19-Jul 28-Jul 10-Aug 16-Aug 04-Aug 07-Aug 07-Aug 01-Aug 17-Jul 17-Jul 17-Jul

Keppel Reit (1 Apr-30 Jun 2017) Kingsmen Creatives Lee Metal Lian Beng Lippo Malls Indo Retail Tr (1 Apr-30 Jun 2017) Mandarin Oriental Intl # Mapletree Comm Tr Mapletree Ind Tr Mapletree Log Tr Mapletree Log Tr Mapletree Log Tr (1 Apr-30 Jun 2017) Maxi-Cash Fin Svcs Megachem Ltd Mewah Intl MFG Integration Tech Multi-Chem Multi-Chem NEO Grp NeraTel Nordic Grp Olam Intl Old Chang Kee OUE OUE Commercial Reit OUE Commercial Reit OUE Commercial Reit (17 Mar-30 Jun 2017) OUE Hospitality Tr Pan Hong Hldgs Pan-United ParkwayLife Reit ParkwayLife Reit ParkwayLife Reit ParkwayLife Reit (1 Apr-30 Jun 2017) Powermatic Data Powermatic Data Prudential PLC & Q & M Dental Raffles Medical Roxy-Pacific Hldgs Sabana Reit Sarine Tech # SBS Transit

Payment (cts)

Ex date

Rec date

Pay date

Ann date

1.420 1.000 0.500 1.250

24-Jul 05-Sep 29-Aug 03-Oct

26-Jul 07-Sep 31-Aug 05-Oct

29-Aug 19-Sep 13-Sep 13-Oct

19-Jul 10-Aug 15-Aug 26-Jul

0.340 1.500 2.230 2.920 0.835 0.774 0.219 0.500 0.500 0.300 0.250 1.100 1.110 1.000 1.000 0.653 3.500 1.500 1.000 0.550 0.530

10-Aug 23-Aug 02-Aug 31-Jul 28-Jul 28-Jul 28-Jul 24-Aug 12-Sep 17-Aug 22-Aug 02-Oct 02-Oct 11-Aug 24-Aug 22-Aug 30-Aug 08-Aug 15-Sep 08-Aug 08-Aug

14-Aug 25-Aug 04-Aug 02-Aug 01-Aug 01-Aug 01-Aug 28-Aug 14-Sep 21-Aug 24-Aug 04-Oct 04-Oct 15-Aug 28-Aug 24-Aug 04-Sep 11-Aug 19-Sep 11-Aug 11-Aug

29-Aug 19-Oct 30-Aug 29-Aug 31-Aug 31-Aug 31-Aug 12-Oct 29-Sep 28-Aug 04-Sep 16-Oct 16-Oct 23-Aug 08-Sep 05-Sep 11-Sep 25-Aug 29-Sep 05-Sep 05-Sep

03-Aug 04-Aug 27-Jul 25-Jul 24-Jul 24-Jul 25-Jul 08-Aug 10-Aug 11-Aug 04-Aug 04-Aug 07-Aug 20-Jul 07-Aug 14-Aug 14-Aug 26-Jul 03-Aug 02-Aug 02-Aug

0.300 1.210 1.000 0.500 0.220 0.260 2.230 0.610 5.000 2.000 14.500 0.700 0.500 0.214 0.810 2.000 3.650

08-Aug 07-Aug 15-Aug 25-Aug 31-Jul 31-Jul 31-Jul 31-Jul 07-Aug 07-Aug 23-Aug 24-Aug 21-Aug 15-Aug 31-Jul 22-Aug 16-Aug

11-Aug 10-Aug 17-Aug 29-Aug 02-Aug 02-Aug 02-Aug 02-Aug 10-Aug 10-Aug 25-Aug 28-Aug 23-Aug 17-Aug 02-Aug 24-Aug 18-Aug

05-Sep 04-Sep 25-Aug 08-Sep 24-Aug 24-Aug 24-Aug 24-Aug 23-Aug 23-Aug 05-Oct 08-Sep 31-Aug 25-Aug 29-Aug 08-Sep 25-Aug

02-Aug 01-Aug 11-Jul 11-Aug 25-Jul 25-Jul 25-Jul 25-Jul 26-Jul 26-Jul 10-Aug 15-Aug 31-Jul 01-Aug 25-Jul 08-Aug 10-Aug

SembCorp Industries Sembcorp Marine Serial System SGX Sheng Siong Sin Heng Heavy Machinery Singapore O&G SingPost Sinwa Ltd SPH Reit S'pore Reinsurance Cor S'pore Shipping Corp S'pore Tech Engg Stamford Land Corp Stamford Tyres Starhill Global Reit Starhill Global Reit StarHub Sunningdale Tech Suntec Reit Suntec Reit Suntec Reit (1 Apr-30 Jun 2017 Talkmed Tat Seng Packaging Tat Seng Packaging Thakral Corp Transit-Mixed Concrete UMS Hldgs United Global UOB UPP Hldgs Vibrant Grp Vicom Ltd Viva Ind Tr Viva Ind Tr Wee Hur Hldgs Willas-Array Elec @ Wilmar Intl XMH Hldgs Yeo Hiap Seng Yongmao Hldgs Zhongmin Baihui Retail

Payment (cts)

Ex date

Rec date

Pay date

Ann date

3.000 1.000 0.290 13.000 1.550 1.500 0.610 0.500 0.500 1.370 0.500 1.000 5.000 1.000 1.500 0.260 0.920 4.000 2.500 1.894 0.297 0.302 0.761 1.000 1.000 2.000 1.000 1.000 0.500 35.000 0.500 1.500 13.120 1.561 0.300 0.300 31.000 3.000 0.500 2.000 1.000 0.500

15-Aug 11-Aug 21-Aug 27-Sep 10-Aug 18-Sep 18-Aug 16-Aug 24-Aug 18-Jul 18-Aug 07-Aug 17-Aug 07-Aug 05-Sep 03-Aug 03-Aug 08-Aug 17-Aug 01-Aug 01-Aug 01-Aug 14-Aug 15-Aug 12-Sep 10-Aug 21-Aug 09-Oct 17-Aug 14-Aug 17-Aug 05-Sep 14-Aug 01-Aug 01-Aug 17-Aug 10-Aug 17-Aug 07-Sep 18-Aug 01-Aug 11-Sep

17-Aug 15-Aug 23-Aug 29-Sep 14-Aug 20-Sep 22-Aug 18-Aug 28-Aug 20-Jul 22-Aug 10-Aug 21-Aug 10-Aug 07-Sep 07-Aug 07-Aug 11-Aug 21-Aug 03-Aug 03-Aug 03-Aug 16-Aug 17-Aug 14-Sep 14-Aug 23-Aug 11-Oct 21-Aug 16-Aug 21-Aug 07-Sep 16-Aug 03-Aug 03-Aug 21-Aug 14-Aug 21-Aug 11-Sep 22-Aug 03-Aug 13-Sep

31-Aug 29-Aug 08-Sep 06-Oct 29-Aug 27-Sep 04-Sep 31-Aug 11-Sep 23-Aug 14-Sep 23-Aug 29-Aug 23-Aug 18-Sep 29-Aug 29-Aug 25-Aug 31-Aug 29-Aug 29-Aug 29-Aug 24-Aug 29-Sep 29-Sep 21-Aug 08-Sep 27-Oct 05-Sep 28-Sep 31-Aug tba 23-Aug 28-Aug 28-Aug 04-Sep 25-Aug 30-Aug 21-Sep 29-Aug 21-Aug 27-Sep

03-Aug 27-Jul 08-Aug 27-Jul 27-Jul 11-Aug 11-Aug 04-Aug 07-Aug 12-Jul 11-Aug 05-Jul 11-Aug 05-Jul 04-Aug 28-Jul 28-Jul 02-Aug 02-Aug 26-Jul 26-Jul 26-Jul 08-Aug 11-Aug 14-Aug 03-Aug 26-Apr 11-Aug 10-Aug 28-Jul 11-Aug 16-Aug 07-Aug 26-Jul 26-Jul 07-Aug 26-May 10-Aug 27-Jun 14-Aug 05-Jul 11-Aug

Legend: (#) US; (*) Rmb; (@) HK; (^) A; (&) Pound; (##) Rupiah; (**) Yen; (@@) Euro; (^^) Baht; (&&) RM; (@@@) Peso; (^^^) Rs; (***) TWD; (&&&) NT; (###) CHF

BROKERS’ RECOMMENDATIONS Company name

Consensus No. of recommendation estiThis wk Last mth mates

Forecast Mean EPS PE target ($) (times) ($)

Fri’s price ($)

Company name

Source: FactSet Consensus No. of recommendation estiThis wk Last mth mates

Forecast EPS PE ($) (times)

Mean target ($)

Fri’s price ($)

Accordia Golf Trt

1.25 1.25

2

0.03 24.64

0.80

0.71

Ezion Hldgs

2.86 2.06

7

0.01 27.42

0.17

0.20

AIMS AMP Cap Industrial Reit

1.00 1.00

2

0.11 12.86

1.57

1.39

Ezra Hldgs

2.50 2.50

1

-0.07

-

0.04

-

Ascendas India Trt

1.67 1.50

2

0.06 19.03

1.18

1.14

Far East Hospitality Trt

2.14 2.17

5

0.04 18.32

0.66

Ascendas Reit

1.53 1.52

17

0.16 16.37

2.74

2.64

Fortune Reit

1.80 1.78

7

0.47 19.51

Ascott Residence Trt

1.95 1.95

8

0.07 16.01

1.16

1.19

Fraser & Neave

2.00 2.00

2

Boustead S'pore

1.50 1.50

1

0.04 19.33

0.96

0.87

Frasers Centrepoint

1.14 1.21

Breadtalk Group

1.75 1.33

2

0.08 20.38

1.94

1.64

Frasers Centrepoint Trt

Cache Logistics Trt

2.21 2.21

5

0.06 13.82

0.85

0.89

Capitacommercial Trt

1.71 1.71

19

0.10 17.03

1.74

1.75

Company name

Consensus No. of recommendation estiThis wk Last mth mates

Forecast EPS PE ($) (times)

Mean target ($)

Fri’s price ($)

Company name

Consensus No. of recommendation estiThis wk Last mth mates

Forecast EPS PE ($) (times)

Mean target ($)

Fri’s price ($)

Keppel T&T

1.00 1.00

1

0.11 13.60

2.51

1.51

SIIC Environment Hldg

1.14 1.17

7

0.04 10.82

0.61

0.47

Lippo Malls Indonesia Retail Trt

2.00 1.50

1

0.03 14.83

0.44

0.43

Silverlake Axis

1.25 1.25

2

0.02 24.74

0.64

0.59

0.66

M1

2.29 2.36

17

0.15 12.40

1.83

1.81

S'pore Airlines

1.86 1.97

17

0.42 24.30 10.39 10.32

9.78

9.15

Mapletree Commercial

1.28 1.38

9

0.09 17.87

1.69

1.56

S'pore Exchange

1.57 1.57

15

0.34 21.49

7.95

7.40

0.08 29.88

2.54

2.44

Mapletree Greater China Com Trt

1.29 1.25

6

0.06 20.06

1.17

1.12

S'pore Post

2.23 2.14

11

0.05 24.37

1.26

1.25

6

0.17 11.48

2.10

1.93

Mapletree Industrial Trt

1.68 1.66

10

0.12 16.03

1.89

1.85

S'pore Press Hldgs

2.36 2.36

7

0.15 18.27

3.03

2.80

1.45 1.42

6

0.11 19.63

2.22

2.12

Mapletree Logistic Trt

1.82 1.77

14

0.08 15.13

1.20

1.22

S'pore Technologies Engg

1.58 1.50

12

0.16 22.01

3.75

3.56

Frasers Commercial Trt

1.88 1.88

3

0.09 15.90

1.48

1.40

Midas Hldgs

1.75 1.75

2

0.02 12.59

0.29

0.21

SingTel

1.44 1.44

16

0.25 14.83

4.20

3.75

Frasers Hospitality Trt

1.50 1.50

2

0.05 14.32

1.44

0.73

Olam Intl

2.00 2.00

1

0.13 15.30

2.15

2.02

Soilbuild Business Space Reit

2.00 2.00

2

0.05 14.72

0.71

0.71

SPH Reit

1.50 1.50

4

0.05 19.64

1.05

0.99

Starhill Global Reit

1.57 1.57

5

0.05 14.83

0.83

0.76

StarHub

2.53 2.53

18

0.16 15.99

2.53

2.56

Suntec Reit

2.21 2.21

15

0.08 23.44

1.76

1.88

Tat Hong Hldgs

2.00 2.00

2

-0.02

-

0.44

0.35

UMS Hldgs

2.00 1.50

2

0.09 11.12

1.12

0.97

UOL Group

1.36 1.39

13

0.45 18.19

8.59

8.19

1.99 11.78 24.41 23.50

Capitaland

1.32 1.30

20

0.23 16.43

4.18

3.75

Genting S'pore

1.48 1.50

20

0.05 24.38

1.28

1.19

OUE Commercial Reit

2.00 2.00

2

0.03 22.98

0.68

0.71

Capitamall Trt

1.50 1.50

16

0.11 18.86

2.17

2.13

Guocoleisure

1.50 1.50

1

0.05 15.17

0.85

0.74

OUE Hospitality Trt

1.30 1.12

5

0.04 17.10

0.78

0.74

CapitaRetail China Trt

1.57 1.57

5

0.10 15.83

1.64

1.59

Global Logistic Prop

2.06 1.94

10

0.09 36.46

3.13

3.22

OUE

1.00 1.00

2

0.09 21.04

2.58

1.94

CDL Hospitality Trt

1.77 1.72

11

0.09 17.77

1.60

1.62

Golden Agri Resources

2.29 2.25

11

0.02 17.32

0.36

0.37

Oversea-Chinese Banking Corp

1.73 1.85

23

Centurion Corp

1.75 1.50

2

0.06

8.52

0.57

0.54

Great Eastern Hldg

2.00 2.00

1

1.65 15.57 25.50 25.70

PACC Offshore Service Hldgs

1.50 1.75

1

-0.04

-

0.41

0.28

Citic Envirotech

1.17 1.25

2

0.04 17.18

1.45

0.71

Hi-P Intl

1.50 1.50

1

0.11 13.08

1.45

1.40

Pacific Radiance

2.50 2.33

3

-0.08

-

0.07

0.08

City Developments

1.45 1.52

19

0.63 18.13 12.05 11.49

Ho Bee Land

1.17 1.17

2

0.19 12.21

3.00

2.35

Parkway Life Reit

1.50 1.50

3

0.13 21.22

2.79

2.70

United Overseas Bank

1.96 1.98

23

ComfortDelgro Corp

1.67 1.70

15

0.14 15.33

2.63

2.21

Hong Leong Finance

1.50 1.50

1

0.17 15.41

3.20

2.65

Perennial Real Est Hldgs

1.50 1.50

1

0.04 20.43

1.05

0.91

Vard Hldgs

2.00 2.00

1

-0.02

Cosco Corporation

2.00 2.33

2

-0.02

-

0.27

0.29

Hutchison Port Hldg Trt

2.33 2.33

9

0.02 22.67

0.36

0.42

Q & M Dental Group

2.25 2.33

2

0.02 34.15

0.62

0.63

Venture Corp

1.06 1.31

7

0.88 17.77 15.51 15.69

Courts Asia

1.50 1.50

2

0.05

7.57

0.55

0.39

IFAST Corporation

1.67 1.67

3

0.03 30.87

1.13

0.96

Raffles Medical Group

2.19 2.12

12

0.04 28.56

1.29

1.13

Wheelock Prop

1.25 1.50

1

0.07 26.14

2.27

1.83

Croesus Retail Trt

2.17 2.17

3

0.07 18.06

1.18

1.19

Indofood Agri Resources

1.75 1.75

4

0.05

8.98

0.51

0.46

Religare Health Trt

2.00 2.00

4

0.05 16.18

0.89

0.84

Wilmar Intl

1.72 1.74

17

0.25 12.50

3.68

3.13

CSE Global

2.50 2.17

2

0.04 10.67

0.39

0.38

ISEC Healthcare

1.00 1.00

1

0.02 19.69

0.40

0.32

Riverstone Hldgs

1.67 1.25

3

0.06 18.80

1.11

1.10

Wing Tai Hldgs

1.36 1.36

7

0.04 49.40

2.26

2.11

CWT

3.00

1

0.19 11.04

1.91

2.13

Japfa

2.25 2.25

2

0.06

0.72

0.53

SATS

1.85 1.92

13

0.22 21.72

5.08

4.82

Yanlord Land Group

1.38 1.62

4

0.34

5.29

2.23

1.77

2.98

Yoma Strategic Hldgs

1.50 1.50

5

0.01 38.39

0.70

0.56

DBS Group Hldgs

-

1.58 1.36

23

1.83 11.17 22.89 20.50

Jardine Cycle & Carriage

1.12 1.00

4

8.53

2.95 13.43 48.75 39.59

Sembcorp Industries

1.75 1.80

14

0.93 11.79 11.83 11.00

0.21 14.18

3.37

Del Monte Pacific

2.00 2.00

1

0.02 11.82

0.32

0.29

Keppel Corp

1.69 1.69

17

0.46 13.87

6.97

6.33

Sembcorp Marine

2.03 1.97

15

0.04 40.13

1.61

1.58

Delfi Ltd

2.00 2.00

3

0.06 31.63

2.12

1.95

Keppel DC Reit

1.50 1.50

8

0.07 17.52

1.31

1.30

Sheng Siong Group

1.69 1.83

7

0.05 20.08

1.03

0.91

ESR-REIT

2.00 2.00

3

0.04 14.49

0.58

0.56

Keppel Reit

2.00 1.93

15

0.04 25.89

1.11

1.17

SIA Engineering Co

2.25 2.25

6

0.15 23.43

3.80

3.49

-

0.24

0.24

LEGEND for consensus recommendation: Less than 1.25 ..........................................................................................................Buy Less than 1.75 .............................................................................................Overweight Less than 2.25 .........................................................................................................Hold Less than 2.75 ..........................................................................................Underweight Less than or equal to 3 .............................................................................................Sell For more information, go to http://notice.shareinvestor.com/estimates

10

| COMPANIES & MARKETS

The Bus ness T mes

SGX MAINBOARD H h

18.2 77.5 32 80 78 296 21 180 149.5 30.5 20.3 6 63 78 2.1 55.5 6.8 39 151 59 44.5 276 84.5 124.5 125 20.5 45 60 32.5 1.2 6.3 187 52.5 45.5 24.5 15.7 30 77 88.5 77.5 22 60 12.5 162 0.6 70 138 98.5 95.5 180 24.5 70.5 693 86.5 84.5 16.5 163.1 29.5 23.5 121.5 36.5 2.9 56.5 20 230 94.5 0.7 95 176 388 220 168.5 65 10 55 51.5 130 14.3 97.5 26 180 4.3 62.5 125.5 20 4.4 4.9 58.5 99 28 62 95 8.7 49.5 50.5 1.8 77 28.5 85.5 1233 116 121 70 90 91 298 3 126 86 36 15.7 45 48 132 120 10806 2225 925 1.2 65 84 33.5 50 38 245 200 68 4.9 78.5 55 40 21.5 28 81 61.5 181 69 9.6 108 62 8.7 74 44 6.5 254 6.5 18.7 17.8 17.3 69 171 50.5 139 205 139.5 302 78 2 2.6 1012 17.9 145 195.5 222 75.4 112 93 55 25.5 50 93 21.5 103.5 83 127.5 68 28.8 60 19.8 18.8 32 121.5 35.5 15.3 334 42 5.6 158 19.8 45 71 30 34.5 2584 28 214 57 47 1.5 66 48.5 417 96 20 61 74.5 41.5 1170 75.2 55 41.5 150 77 19.8 247 64.5 2.7 84.5 144 285 789 50 145.5 408 244 2 2.8 85 35 63 10130 117 27.5 223 62 0.4 80 27.5 34 59.5 20 0.3 44.5 10.2 35 430 39.5 6750 4440 19.4 12.5 106.5 4850 3.9 56.5 102 13.9 86 9.6 40

W ow

3.6 50 15.4 65 36 31.3 15.4 121 124.5 22.5 11.5 2 14 62 0.7 22.5 3 19 112 39.5 22 220 69 99.5 105.5 17 5.4 37 24 0.2 3.6 152.5 25 30.5 16.2 8.3 12.2 57 48.5 56 18 36 7.1 59 0.1 58 120 75 64 96.5 11.9 28 441 69.5 64 1.3 123.2 20 8.5 75 21.5 1.7 37.5 11.1 187 79 0.1 81 143.5 296 187 133 44 6.2 30.5 44 71 1.9 67.5 19.1 130 0.3 40.5 57.6 3.3 1.3 0.9 9.2 76.5 2.5 14.5 38.5 2.8 17.2 15.6 0.5 61.5 23 57.8 803 104 77 31 57 40 213 1.2 77 69 24 10.8 18.8 38.5 91.5 82 10500 1478 691 0.1 32 79.5 19.5 18 28.5 194.5 26 46 0.6 22.5 34 23.6 8.7 20 69.5 52.5 80 36 4.5 81 39 3.7 30 19.7 1.1 203 3.5 7.3 15.4 3 57 142 23 125 170 125.5 140.5 28 0.7 0.7 830 14.7 123.5 147 186.5 63 89 81 22.5 18.5 16 38 13.8 81 69 74.5 52 19 27 11.4 3.7 25 71.5 10.2 13.1 177 22.5 2.8 101 13.1 34 36.5 20 22.5 2010 15 178 28.5 5.8 0.5 54 38 332 74 15.6 36 45 21 878 38.8 32 27.5 40 65.5 12.6 202 34.5 0.6 61.5 67 211 597 30 128.5 331 136 0.2 0.3 53 27.5 45 9100 59 20.3 180 30 0.1 71 17.1 0.4 44 8.5 0.1 17.4 4.5 19.2 346 26.5 5290 3161 7.3 1.8 48.5 3800 0.3 8 55.5 2.3 42.4 2.6 25.5

Week Ended Aug 18 Vo

Comp n

S

8Telecom ........................................... 9 A-Smart ............................................. 69.5 A-Sonic Aero ...................................... 23 ABR .................................................... 70.5cd AEI ...................................................... 75 AEM ................................................... 243cd AF Global............................................ 16.2 AIMS Property .................................. 173.5 AIMSAMP Cap Reit .......................... 139 AP Oil ................................................. 25.5 ASL Marine ........................................ 12 ASTI .................................................... 4.8 Abterra .............................................. 14 Accordia Golf Tr ................................. 71.5 Ace Achieve Info .............................. 0.7 Acma ................................................. 32.5 Addvalue Tech................................... 4.2 Advance SCT .................................... 0.1 Advanced........................................... 31 AliPictures HKD ................................ HK130 Amara Hldgs ...................................... 49.5 Anchun Intl ....................................... 35 Anwell Tech ....................................... 9 * Ascendas Reit ................................. 264 Ascendas-hTrust .............................. 83.5 Ascendas-iTrust................................. 113.5 Ascott Reit ........................................ 118.5 Asia Enterprises ............................... 17.5 Asia Fashion ..................................... 17.2 Asian Pay TV Tr.................................. 57.5cd Aspial ................................................. 25 Attilan ................................................ 0.2 AusGroup .......................................... 4.7 AusNetServices ................................. 181.5 Avi-Tech ............................................. 47cd Azeus ................................................. 30.5 B&M Hldg........................................... BBR .................................................... 22.5 BG Bluesky ........................................ 9.1 BH Global ........................................... 14 BHG Retail Reit ................................. 74.5cd BRC Asia............................................. 85 Baker Technology ............................. 57 Ban Leong ......................................... 20.5 Banyan Tree....................................... 58 Beng Kuang ...................................... 9 Berlian LajuTank ................................ 2.7 Best World ........................................ 119.5cd Blumont ............................................. 0.1 Boardroom......................................... 66 Bonvests ........................................... 130 Boustead ........................................... 87 Boustead Proj ................................... 86.5 BreadTalk .......................................... 163.5 Broadway Ind ................................... 12.9 Brook Crompton ............................... 70.5 Bukit Sembawang ............................ 651 Bumitama Agri ................................. 72cd Bund Center ...................................... 77.5 C&G Env Protect................................ 1.4 CDL HTrust ........................................ 162 CDW ................................................... 24.5 CEFC Intl ............................................ 11.6 CEI ...................................................... 104 CH Offshore ...................................... 22 CNA .................................................... 2.6 CSC .................................................... 2.5 CSE Global.......................................... 37.5cd CWG Intl ............................................ 14.5 CWT ................................................... 213 Cache Log Trust................................. 89 Cacola ................................................ 0.1 Cacola R ............................................. Camsing Hc........................................ 95 * CapitaCom Trust ............................ 174.5 * CapitaLand ..................................... 375 * CapitaMall Trust ............................ 213 CapitaR China Tr ............................... 159.5 Captii ................................................. 54.5cd Casa ................................................... 6.2 Celestial Nutri .................................... 17 Centurion .......................................... 54cd Challenger.......................................... 44.5 Changjiang Fert ................................. 1.8 ChangtianPlastic .............................. 129 Chasen .............................................. 8.4 Chemical Ind...................................... 90 Cheung Woh ...................................... 20 China Aviation .................................. 148.5 China Bearing ................................... 2.6 China Env .......................................... 3.7 China Env Res.................................... 4.3 China Essence .................................. 1.4 China Everbright ............................... 45 China Fibretech ................................. 102 China Fishery ..................................... 7.6 China Flexpack .................................. 125 China Gaoxian .................................. 6.4 China Great Land .............................. 2.6 China Haida ....................................... 2 China Hongxing ................................. 11.5 China Intl............................................ 22.5 China Jinjiang..................................... 79 China Jishan....................................... 20 China Mining .................................... 37 China Paper ...................................... 2.4 China Sky Chem................................ 2.7 China Sun Bio ................................... 5.5 China Sunsine.................................... 78.5 China Taisan ..................................... 4.7 China Yuanbang ................................ 19.3 ChinaKangdaFood ............................ 37 ChinaSports ...................................... 1 Chip Eng Seng .................................. 72 Chuan Hup ........................................ 28 Citic Envirotech ................................ 71.5 * CityDev ........................................... 1149xd CityDev NCCPS.................................. 113.5 Cityneon............................................. 92 Civmec ............................................... 60 Cogent ............................................... 81.5cd Combine Will .................................... 89 * ComfortDelGro .............................. 221xd Compact Metal.................................. 2.2 Cordlife............................................... 80.5 Cortina ............................................... 77 Cosco ................................................. 29 CosmoSteel ...................................... 12.2 Courage Marine................................. 19.6 Courts Asia ....................................... 38.5 Creative.............................................. 118.5 Croesus RTrust ................................. 119.5 DBS Bk 4.7% NCPS ............................ 10740 * DBS Grp .......................................... 2050 DMX Technologies ............................ 10.9 DairyFarm USD .................................. US774cd Dapai Intl............................................ 0.1 Darco Water Tech ............................. 59 Dasin Retail Tr.................................... 83cd Datapulse Tech.................................. 30 Debao Property ................................ 25 Del Monte Pac .................................. 29.5cd Delfi .................................................... 195cd Delong ............................................... 154.5 Design Studio ................................... 59xd Dragon ............................................... 4 Dukang .............................................. 22.5 Dutech................................................ 37 Duty Free Intl ..................................... 29 Dyna-Mac........................................... 12.7 Dynamic Colours ............................... 26 EC World Reit..................................... 78 ESR-REIT ............................................ 55.5 Elec & Eltek USD................................ US150 Ellipsiz ................................................ 66.5 Emas Offshore ................................... 5 EnGro ................................................. 87 Envictus ............................................. 40.5 Enviro-Hub ........................................ 4.9 Enviro-Hub R333................................ 0.5 Europtronic ....................................... 0.2 Excelpoint ......................................... 61 Ezion .................................................. 19.7 Ezra ................................................... 1.1 F & N .................................................. 244 FJ Benjamin ....................................... 5 FSL Trust ............................................ 8.1 Fabchem China ................................ 15.5 Falcon Energy .................................... 4 Far East HTrust .................................. 66 Far East Orchard ............................... 152 Federal Int.......................................... 39 FibreChem NCPS............................... 11 Fibrechem Tech................................. 10.5 First Reit ............................................ 132.5 First Resources.................................. 180cd First Sponsor .................................... 136.5cd Fischer Tech....................................... 294 Food Empire ..................................... 64 Foreland FabriT ................................. 0.9 Forise Intl .......................................... 0.7 Fortune Reit HKD ............................. HK915 Fragrance .......................................... 16.5 Frasers Com Tr ................................. 140 Frasers Cpt ........................................ 193 Frasers Cpt Tr ................................... 212 Frasers HTrust .................................. 73.5 Frasers L&I Tr..................................... 108 Frasers L&I Tr AUD ............................ A81 Frencken ........................................... 52 Fu Yu .................................................. 19.1 Full Apex ........................................... 22 Fuxing China...................................... 71.5 G Invacom .......................................... 16 GK Goh .............................................. 97.5 GL ...................................................... 74.5 GP Batteries ...................................... 127.5cd GP Industries .................................... 62 GRP .................................................... 19.2 GSH .................................................... 53cd Gallant Venture ................................ 13.6 Gaylin ................................................. 8 Genting HK US$ ................................. US27cd * Genting Sing .................................. 119cd Geo Energy Res ................................ 25.5 Global Inv .......................................... 15.1cd * Global Logistic................................. 322 Global Palm Res................................. 36 Global Tech ....................................... 3.8 Global Testing .................................... 110 GlobalYellowPgs ............................... 15.6 * Golden Agri-Res .............................. 37 Golden Energy ................................... 38.5xd Goodland ........................................... 24.5xd Grand Banks ..................................... 28.5 Great Eastern..................................... 2570 Green Build ....................................... 20 GuocoLand Ltd ................................. 212 HG Metal ........................................... 48 HL Global Ent .................................... 41 HLH Grp ............................................. 0.7 HPH Trust SGD................................... 58.5 * HPH Trust USD ................................ US42.5 HPL ..................................................... 389 HRnetGroup ....................................... 75 Hafary ................................................ 16 Hai Leck.............................................. 54.5 Halcyon Agri ..................................... 56 HanKoreEnv 100 ............................... 89.5 Hanwell ............................................. 31 Haw Par Corp ................................... 1091cd Health Mgt Intl ................................. 61.5 Heeton ............................................... 47.5 Hengxin Tech..................................... 31 Hi-P Intl .............................................. 140cd Hiap Hoe ............................................ 76.5cd HiapSeng............................................ 14.5xd Ho Bee Land ...................................... 235 Hock Lian Seng.................................. 45 Hoe Leong.......................................... 0.8 Hong Fok............................................ 78.5 Hong Leong Asia .............................. 97 Hong Leong Fin ................................ 265cd * HongkongLand USD ....................... US752cd Hor Kew ............................................ 36 Hotel Grand ....................................... 134 Hotel Royal......................................... 382 Hotung Inv ........................................ 210 Hu An Cable....................................... 0.8 Huan Hsin .......................................... 2.8 Hupsteel............................................. 80 Hwa Hong ......................................... 31 Hyflux ................................................ 48.5 Hyflux 6% CPS .................................. 9950 IFAST .................................................. 96 IFS Capital ......................................... 22.5 IHH Healthcare ................................. 190 IPC Corp ............................................ 40.5 IPCO Intl ............................................. 0.2 IREIT Global ....................................... 76.5xd ISDN Hldgs ........................................ 24 ISR Capital.......................................... 0.6 Inch Kenneth .................................... Indiabulls Trust .................................. 25.5 Indofood Agri..................................... 45.5 Informatics......................................... 10 InnoPac .............................................. 0.2 InnoTek .............................................. 30.5 Interra Resource ................................ 5.9 Intraco ............................................... 25 Inv Bev Biz EURO S ............................ EUIsetan ................................................. 430 JB Foods ............................................ 33 JES Intl ............................................... 2.6 * JMH USD.......................................... US6520cd JSH USD.............................................. US4255cd Jackspeed ......................................... 17.8 Jadason ............................................. 10.1 Japfa .................................................. 52.5 * Jardine C&C..................................... 3959cd Jasper Inv .......................................... 2.2 Jaya ................................................... 8.2 K1 Ventures ...................................... 78cd KS Energy........................................... 3 KS Energy R ...................................... 25.5 KS Energy R250 ................................. 25 KSH .................................................... 72.5 KTL Global ......................................... 3.5 Karin Tech ......................................... 31

W H h

-0.5 +2.5 -2.5 -23 -0.2 +0.5 -0.5 +0.5 -0.6 -0.4 -6 +2 -0.1 -2.5 -0.4 susp +4 +3 -2 -2 susp -2 +0.5 +2.5 +0.5 -0.5 unch -0.5 susp -0.1 +5.5 -2 +0.5 unch -0.5 unch -2.5 +3 +0.9 susp -28 -0.1 -1 -0.5 -4 -0.5 -9.5 -0.4 +8.5 +6 +2.5 unch -0.2 +4 +1 -1.4 -7 -2 susp +0.1 -2 -0.6 +5 unch susp +3 +5 +6 +1.5 -5.5 -1.5 susp -0.5 -0.5 susp susp -0.6 -1.5 -7.5 susp susp +2 susp -1.5 susp susp -1.4 susp -3 -1.5 susp susp susp -6 -0.2 +1.2 unch unch +0.5 -0.5 +35 unch -2 -0.5 +1 +3 -10 +0.3 -6 -1 unch -0.2 -1.4 -4 +8.5 unch -55 -30 susp +29 susp unch +0.5 unch -0.5 -15 -0.5 unch -0.5 -0.5 -1 unch -1 unch -0.5 -1 -25 +2.5 susp -4 -6.5 +0.9 susp +0.5 susp susp -2 unch +0.1 +0.1 -1 unch -1 unch susp susp -1 -4 +0.5 -1 -3 susp unch -13 -0.2 +1 +3 +2 -0.5 +1 -0.5 -0.9 +1.5 -1.1 -1 +1 +1 -2.5 -1.3 -1.5 +0.1 +0.5 +3.5 -0.5 -0.2 -2 -1.5 +0.1 -18.5 -1.6 -0.5 +1 -0.5 unch +71 +18.5 -0.5 +0.5 unch -3 -2.5 +5 -7.5 unch -4.5 -1.5 -1 +19 -2 -0.5 -1.5 -3 +2 -0.4 +3 -2 unch -11.5 +2 +18 unch +1.5 -7 -15 unch +1 -2 unch -1 -27 -5 -1 +2 -0.5 unch -3 -0.5 unch susp susp -0.5 +1.4 unch -9 -0.8 -5 +5 unch susp -50 +26 -1 +2.5 -43 -0.2 +0.2 +1 -0.4 -0.5 +0.2 +1

1098 52 588 1942 100 2 1509 455 660 11158 251 5323 2152 95 156519 110 1 830 106 44404 2824 998 11687 60 16922 751 3203 114 4665 738 20 171 428 263 11304 467 125280 506 1 331 650 72 812 4104 26 1294 3622 53 1318 7254 330 115 178 1 4590 4593 282 4564 4954 38515 59464 82408 2367 73 23 3070 178 20921 44 10188 41 5212 440 159 745 4899 491 3 15839 4664 754 4046 8847 71 11630 283 2129 34 66519 2155 487 581 6245 396 14 651 528 5175 6 23401 1910 6 264 687 2217 2 121 358 72096 5 95 8426 1155 0 494 3551 1006 1697 65 431 47 234 414 140 2417 2 3705 8643 234 339 1958 5895 20 180 5882 4392 188 310 2450 1981 4157 5900 17491 3187 8828 12 270 159 1158 814 496 137 2036 4606 8373 84224 28137 11712 76571 37 141 778 141 48242 3924 103 435 749 10723 1993 224 30590 6600 76745 30 6115 220 505 932 1623 329 1126 435 10 12392 222 213 468 1615 466 994 721 7700 21 103 9 905 39671 9 266 727 1798 12 3266 375 222 6 20052 1583 17658 13110 2010 35 3860 5868 719 71 24 435 1061 1393 65625 9083 1194 26853 111 4865 363 3336 117 46

71 73 78 267 16.4 173.5 141.5 25.5 12.3 5.2 19.8 72 0.8 34 4.7 31 130 52 36 270 83.5 115 119.5 17.5 58 26.5 4.9 183 50.5 22.5 14 76 85.5 59 58.5 9 154.5 0.1 66 131 91 89 174 13.4 70.5 656 73.5 80 1.5 162 25.5 13 109 22 2.5 39.5 14.8 215 89 175 384 215 161.5 59.5 6.5 55 45.5 9.3 91.5 159 4.3 47 2.8 22.5 80.5 87.5 4.9 19.3 1.1 72.5 28 72.5 1172 114 96.5 61 82 89 232 2.2 86 80 30 13.1 19.9 42.5 125 120 10800 2124 774 59 83.5 30 30 205 157 60.5 4.9 22.5 38 30 13.7 26 79 56.5 181 67.5 92 45 4.9 65 251 5 8.2 15.5 5 67 155 39 133.5 185 136.5 295 69.5 0.8 924 16.7 140.5 194 216 74.5 109.5 52.5 20 71.5 16.3 101.5 75 127.5 68 19.6 54.5 13.6 27 119.5 27 15.3 325 38 3.9 128.5 17.2 38 40 25 29 2584 214 51 42 0.8 61.5 45 390 83 18 57 57.5 32 1096 65 47.5 31 150 76.5 14.9 238 48.5 80 105.5 267 764 36.5 135 385 219 0.9 2.8 82 32 49.5 9980 102.5 23.5 190 43.5 0.2 80 26 0.7 47 10 0.2 35 6.9 29 430 36 6738 4408 11.3 52.5 4062 2.4 8.2 81 3.5 74.5 4.9 32

ow

68 70.5 75 240 16.1 173.5 139 25 12 4.6 14 69.5 0.7 32.5 4 25 130 49.5 35 264 82.5 110.5 117 17.3 56.5 24.5 4.5 177 46.5 21.5 12.2 73.5 82 56 55 7.5 95 0.1 66 129.5 86.5 86 159.5 12.8 59.5 632 69.5 77.5 1.3 157.5 24 11.6 102 22 2.2 37.5 14.5 208 88.5 170 372 208 157.5 53 6.2 53 44.5 8.2 90 145 4.3 44 2 22 78 76.5 4 17.2 1 71 27 63.5 1125 113 91.5 58.5 80 85 213 1.9 77 77 28.5 12.1 18.8 38.5 105 119 10700 2028 735 59 82.5 29.5 28.5 195 145 58 3.5 22.5 37 28.5 12.2 26 78 55.5 150 61 86.5 39 4.9 61 242 4.5 7.7 15.5 3 65.5 151.5 37 132 172 135.5 294 63.5 0.7 908 16 138.5 190 210 73 106 50 19 70 16 97.5 73 126.5 62 19 52 13.1 26 116 25.5 15 321 36 3.8 101 15.6 36.5 37 20 28 2480 192.5 47 40 0.6 58.5 42.5 376 74 16 53 55 30.5 1066 61 46.5 31 138.5 72 14 233 45 78 95.5 264 738 36 131 371 206 0.7 1.2 80 31 47 9940 95 21.5 185 40 0.1 76 23.5 0.6 45.5 8.5 0.1 29 5.7 25 415 32 6430 4208 10 49 3951 2.1 8.2 75 3 71.5 3.5 30

D C

G Yd %

N P

MC p m

1.1 6 0.2 0.9 1.7 1.2 6.4 1 1.1 1 2.3 0.6 0.2 1 2.1 1 1.9 1 2.2 2.5 2.7 1.9 5.3 3.2 1.1 * 6.1 0.8 1.2 1.1 0.1 1 * 1.5 4.1 1 1 2.8 1.5 1 6.7 1.9 1.3 15.5 2.1 1.1 3.3 6.7 2 9.4 6.6 1.4 1.5 24.5 4.1 5 1.4 0.4 3.6 3.6 1 2.8 2.4 1.4 1.9 1.2 0.8 1.5 2.5 1 2 2.3 1.9 3.7 1.7 18 1 2.6 2.6 5.6 1 3.8 9.6 3.4 6.5 1 1.1 1.1 2.4 1 1 3.3 1.4 2.3 3 0.4 1.5 0.7 2.6 0.7 3.9 5.7 1.4 7.2 10.9 1.4 0.6 0.6 2.5 1.9 1.2 3.7 1.5 4.6 6.4 10 8.4 9.7 2 5.4 0.6 8.4 1.3 10.9 1.7 1.8 1.1 1 0.5 0.7 2.5 3.6 1.2 3.1 11.8 1.4 2.6 4.1 2.8 0.4

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26.2 33.3 35.2 2 12 25.5 30 1.4 11.6 54.6 7.7 25.7 416.7 1.1 17.7 11.4 39.1 29.6 151.7 19 8.1 81.8 19 1.7 17.6 9.5 13.6 12.2 40.2 184.3 5.8 23.3 12.6 21.5 16.8 98 128.9 10.2 20.4 9.1 4.3 17.4 0.5 182.7 13.4 3.3 206.7 14 12.4 10.8 5.4 16.8 9.9 18 2 260 4.8 0.9 6.9 2.6 0.8 7.9 123.3 12.5 18.7 8.1 16.3 32.9 17.4 12.2 15 36.7 16 10.8 8.4 21.9 12.3 4.4 22.3 9.2 73.2 17.5 31.5 3.8 7.5 5 20.7 11.6 24.6 11.6 17.9 54 6.3 32.5 35.2 0.6 15.2 9.7 7.6 0.9 15.7 7.1 12.4 16.2 0.2 150 13.5 13.2 13.6 10.6 10.6 85.6 13.2 2.1 9.2 53.6 9.6 13.2 14.1 15.7 7.2 8.1 63.1 26.6 20.6 19.6 3.9 68.6 7.8 21.5 18.5 8.4 8.8 8.3 16.7 19.1 53.5 12.4 5.8 20.9 7.9 7.3 7.2 6.4 7.5 22.2 5.3 12.5 15.9 41.5 14.6 1.1 31 79.5 46.2 79.2 16.6 12.5 5.9 32.9 69 13.4 1.6 9.7 9.1 10.2 40.4 5.4 15.4 2.3 10.1 27.9

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Kencana Agri .................................... 30 Keong Hong ....................................... 48 Kep Infra Tr ....................................... 55 * Keppel Corp ................................... 633 Keppel DC Reit ................................. 130 Keppel Reit ....................................... 116.5 Keppel T&T ........................................ 151 Khong Guan ....................................... 201 King Wan............................................ 15.6 Kingboard Copper ............................. 37 KingsmenCreative ............................ 60cd Koda .................................................. 120 Koh Bros ............................................ 29.5 Koon .................................................. 7.5 KrisEnergy.......................................... 10.9 LCT ..................................................... 57.5 LHT ..................................................... 65 LTC Corp ............................................ 63 Lafe .................................................... 89.5 Lankom ............................................. 2 Leader Env ........................................ 2.5 Lee Metal .......................................... 29.5cd Lian Beng .......................................... 61cd Linc Energy ....................................... 8.9 Lion Asiapac ..................................... 43 Lippo Malls Tr ................................... 43 Lonza ................................................. 7997 Lorenzo Intl ........................................ 2.3 Low Keng Huat .................................. 69 Lum Chang......................................... 34.5 Lung Kee Bermuda ........................... 66 Luxking............................................... 44.5 Luzhou Bio-Chem .............................. 2.5 M Development ............................... 0.2 M1 ...................................................... 180.5 MDR ................................................... 0.5cd MFG Intergration............................... 22cd MM2 Asia........................................... 47 MMP Resources ............................... 0.5 MSC ................................................... 116 MTQ ................................................... 38.5 MYP ................................................... 16.2 Man Oriental USD ............................. 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Monday Augus 21 2017

SGX CATALIST 52-Wk High Low

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Company

Last Sale

3Cnergy.............................................. 5.2 800 Super........................................... 118 AA ...................................................... 4.4 AGV .................................................... 20.5 APAC Strategic ................................. 0.4 Abundance Intl ................................. 4.2 Accrelist ............................................ 0.6 Acesian Partners .............................. 2 Acromec ............................................ 30 Advanced Systems .......................... 0.1 Advancer Global ............................... 29.5cd Adventus ........................................... 1.1 Alliance Mineral ................................ 25 Allied Tech ........................................ 4.5 Alpha Energy ..................................... 7.8 Amplefield Ltd ................................... 3.9 Anchor Resources ............................ 6.5 AnnAik ............................................... 10.1 Annica ............................................... 0.1 Aoxin Q & M ..................................... 20 Arion Ent ........................................... 0.2 Artivision Tech .................................. 1.3 AsiaMedic ......................................... 7.2 AsiaPhos ........................................... 9.3 Asian Micro........................................ 1.5 Asiatic ................................................ 1.2 Asiatravel.com ................................. 7.8 Aspen ................................................ 22.5 Astaka ............................................... 9.2 Atlantic Nav ....................................... 12.7 Avic ................................................... 5 Axcelasia............................................ 8 BlackGoldNatural .............................. 11.3 Boldtek............................................... 23 CFM Hldgs ........................................ 5 CMC Infocomm ................................. 9.4 CNMC Goldmine ............................... 27.5 CPH .................................................... 0.8 Capital World ..................................... 10.2 Charisma Energy .............................. 0.5 ChasWood Res .................................. 1.5 Chew's ............................................... 61.5 China Med Intl ................................... 0.3 China Star Food ................................ 9.4 ChinaKundaTech .............................. 1.8 Chinese Global ................................. 1 Choo Chiang ...................................... 36.5 Colex Hldgs........................................ 44 DeClout ............................................. 9 Disa ................................................... 1.3 EMS Energy ...................................... 2.2 ES Grp ................................................ 4.4 ETC Singapore ................................... 8.3 EcoWise ............................................. 3.2 Edition ............................................... 0.9 Eindec ................................................ 4.5 Epicentre............................................ 13 EuroSports Gbl .................................. 23.5 Far East ............................................. 7.9 Figtree ............................................... 17 Fuji Offset .......................................... 35 Fujian Zhenyun ................................. 14.9 GCCP .................................................. 4.1 GDS Global ......................................... 30 GKE .................................................... 13.3 GS Hldg .............................................. 26 GSS Energy ....................................... 13.7 HC Surgical ....................................... 63 Hatten Land ....................................... 20.5 Healthway Med ................................ 4.7 Heatec Jietong .................................. 6 Hengyang Petro................................. 28 Hiap Tong........................................... 14.1 Hosen ................................................ 4.8 Huationg Global ................................ 14.3 ICP ...................................................... 0.9 IEV ..................................................... 5.6 IHC ..................................................... 9.1 IP Softcom ........................................ 1.6 IPS Securex ........................................ 7.9 ISEC .................................................... 31.5cd ISOTeam............................................. 34.5 IX Biopharma..................................... 25 Imperium Crown .............................. 10 Infinio ................................................. 0.1 Infinio Group 1 .................................. JEP ...................................................... 2.6 Japan Foods ...................................... 43 Jason Hldg ........................................ 6.2 Jason Marine .................................... 15 Jiutian Chemical ................................ 3 Joyas Intl ........................................... 0.5 Jubilee Ind.......................................... 4 Jumbo ................................................ 54 KLW Hldgs.......................................... 0.8 KOP .................................................... 6.3 Katrina ............................................... 18.3 KimHeng Offshore............................. 7 Kimly .................................................. 37.5 Kitchen Culture ................................. 19 Koh Eco ............................................. 7.9 Kori ..................................................... 45 Koyo Intl............................................. 7.2 LHN .................................................... 18 Lasseters Intl .................................... 5 Lereno Bio-Chem .............................. 2.2 Ley Choon .......................................... 4.5 Libra .................................................. 18 LifeBrandz.......................................... 3.2 LionGold ............................................ 0.1 Loyz Energy ...................................... 1.9 MS Hldgs............................................ 8.3 MSM Intl ............................................ 8 Magnus Energy ................................. 0.1 Mary Chia .......................................... 5.8 Matex Intl .......................................... 2.4 Maxi-Cash Fin .................................... 17cd Medtecs Intl ...................................... 4.9 MegaChem ........................................ 35cd Mercurius........................................... 3.4 Metal Comp R ................................... 2.4 Metal Component ............................ 3.8 Metech Intl ....................................... 0.2 Miyoshi .............................................. 6.8 MoneyMax Fin ................................. 17.2 Moya Asia ......................................... 10.7 Moya Asia R....................................... 0.6 Moya Asia R200 ................................ 0.4 Natural Cool....................................... 9.1 NauticAWT......................................... 6.6 Neo .................................................... 65 Net Pacific Fin ................................... 4.4 New Wave ........................................ 1 Ntegrator Intl..................................... 1.5 OEL ..................................................... 0.9 OLS ..................................................... 0.4 Ocean Sky Intl .................................. 7.6 Old Chang Kee .................................. 79.5 Oriental .............................................. 11.4 P99 .................................................... 3.1 PS Group ........................................... 10 Pacific Star Dev ................................ 20 Pan Asian .......................................... 3.1 Plato Capital ..................................... 12.5 Polaris ................................................ 0.6 Pollux Prop......................................... 5.9 Progen ............................................... 8.4 QT Vascular........................................ 1.2 Renewable Energy ........................... 2.2 RenewableEne R .............................. 0.1 RenewableEne R250 ......................... 0.1 Resources Prima ............................... 2.6 Rex Intl .............................................. 4.5 SBI Offshore....................................... 8.5 SHC Capital Asia ............................... 4.2 SMJ Intl .............................................. 10 Samurai ............................................. 84 Sanli Env ............................................ 30 Santak ............................................... 16.5 Secura ................................................ 10.4 Sen Yue.............................................. 2.7 Serrano .............................................. 3.1 Shopper360 ....................................... 27.5 Sincap ................................................ 2.1 SingMedical ....................................... 62 Singapore O&G ................................. 44xd Singapore eDev ................................. 5.4 SingaporeKitchen.............................. 14 Sinjia Land ......................................... 6 SinoCloud .......................................... 0.1 Sitra.................................................... 1.4 Sitra R200 .......................................... 0.1 Smartflex .......................................... 22 Soo Kee ............................................. 12 Soon Lian .......................................... 8.8 Spackman.......................................... 10.3 Starburst ........................................... 41 Starland ............................................. 17 SunlightGrp........................................ 2.6 Sunrise Shares .................................. 4.4 Sysma ................................................ 13.4 TLV ..................................................... 9 TMC Education .................................. 4 TSH ..................................................... 3.3 TalkMed ............................................ 62.5 Teho Intl ............................................ 6.6 Transcorp........................................... 4.6 Trendlines ......................................... 14 Tritech ............................................... 6.3 Tung Lok Rest .................................... 21.5 UG Healthcare .................................. 25 UnUsUaL ............................................ 47 Union Gas .......................................... 25.5 United Global ..................................... 34.5xd Vallianz............................................... 1.3 Vashion ............................................. 0.2 Versalink ........................................... 13.5 Viking Offshore ................................. 1.4 Viking R ............................................. 0.1 Viking R1 ........................................... Wilton Resources .............................. 7.4 Wong Fong Ind .................................. 21 World Class Gbl ................................. 25 Y Ventures ......................................... 18.6 Zhongxin Fruit ................................... 1.1 Zico Hldgs ......................................... 28

+/-

-0.3 -3 -0.5 unch -0.8 -0.1 unch -1 unch unch unch -3.5 -0.2 -0.3 -1 +1.3 +0.7 -0.1 -0.1 +0.1 -0.6 +0.5 -0.2 unch unch -1.8 +0.3 -0.5 -1 +0.1 unch -0.1 -1.5 unch +0.9 -0.1 +0.1 -1 -0.8 -0.2 susp +0.1 -0.1 unch -0.5 unch -1.5 -0.3 +1 susp +0.2 -1.6 -5 -1.8 -0.5 +1.1 +0.1 unch -0.7 +0.2 -0.2 +0.1 -0.9 unch -0.5 -1 unch +0.3 -0.1 -1 susp -0.4 unch +0.1 -1.5 unch -0.6 -4.7 -0.6 unch unch -0.1 -1.6 -0.6 -0.3 unch +0.1 unch +0.8 -0.2 -0.4 -0.1 -3 -0.1 +0.1 -0.1 +0.3 -0.4 +0.3 -0.9 -2.6 -2 +0.1 +0.1 -0.2 -0.1 unch -1 susp unch unch -1.5 unch -0.5 unch +0.7 -0.3 susp susp -0.3 +1.9 -0.1 unch +4 unch -1.2 unch susp -2 +0.1 +0.5 -3.5 -0.6 unch unch +0.5 -1.5 -0.2 -2 -1 -0.2 -0.6 +0.3 +0.6 -1.5 +1.6 -0.8 -0.4 +0.5 -1 unch +1 unch unch +0.1 unch unch unch -0.5 +2.6 +0.1 -

Vol (’000)

High

Week Low

Div GrYld C’vr %

Net P/E

MCap

707 613 122643 27787 355 32028 30 116 88158 962 2057 24255 4923 407 4803 93 1469 3 24129 1833 12790 363 2282 61 2840 50 69 20688 4985 6159 1607 58808 1123 6370 3046 399 1300 68 4416 134725 706 8925 1589 50 1338 0 60 1 7437 4678 129 20543 68 7337 8428 220 50 366 103 1523 9656 1244 566 674 615 45148 6798 43 94364 2022 1220 5637 9101 1583 1163 89 3579 201 225 1156 42353 2800 15870 37318 8200 301 234 1069 468 108 1990 2730 2033 15183 17 47736 20 648 1 7021 3267 8723 2021 52428 292 383 30 2112 11 119 39142 20 56447 5681 636 100 13 198 217 1874 3927 1011 144176 2423 4055 50 51918 6508 5 14 59849 18435 0 7145 4866 600 2299 238 50 431 6596 1067 22 1449 2298 204 35997 2964 4221 762 540 32 3154 60 -

5.3 124.5 5.1 0.5 4.3 0.7 2 30.5 0.1 31 1.2 30 4.8 4 7.2 10.1 21.5 0.2 1.5 7.4 10.3 1.5 1.3 8 23.5 13.5 9.4 11.6 28.5 0.8 10.4 0.7 64 0.4 9.4 1.8 1 46 9.9 1.5 9 3.5 0.9 4.5 23.5 9.9 18.9 35 4.2 14.9 30.5 15.6 64 21 4.7 6 14.5 4.9 15.5 0.9 6.4 7.9 32 36 25.5 10.2 2.7 43.5 3.5 0.5 4.3 56.5 0.9 7 20.5 8.9 38 7.9 7.3 19.9 5.2 3.7 0.1 2 0.1 5.8 2.7 17.3 4.9 39 3.8 3.8 0.3 7 17.4 11 9.1 7.2 66 4.7 1.1 1.7 0.9 0.5 79.5 3.1 10 21 3.1 12.5 0.7 5.9 1.6 4.8 9.3 4.5 10 85 31 11.7 3.1 28.5 2.4 64.5 48 6.1 0.3 1.4 22 12 10.8 44 17 2.7 14.1 9 3.3 64 4.6 15 6.7 24 25.5 48.5 26.5 34.5 1.5 0.2 1.4 7.8 21 26 18.8 1.1 -

5.1 118 4.2 0.3 4.2 0.5 2 26 0.1 29.5 1.1 23.5 4.4 3.9 6.2 7.1 19.1 0.2 1.3 7 9.2 1 1.2 7 22.5 12.7 4.5 11 26.5 0.6 10 0.5 60.5 0.3 8.3 1.5 0.9 44 8.3 1.3 7.9 3.2 0.9 4.5 21.5 7.9 17 35 3.4 13 21.5 13.1 63 19.3 4.4 6 14.1 4.4 14.3 0.8 5.5 6.3 31 34 23.5 9.5 2.6 43 2.9 0.5 3.6 53 0.8 5.8 18.3 7 37 7.6 6.6 18 4.1 3.2 0.1 1.8 0.1 5.8 2.4 17 4.9 29 3.4 3.7 0.2 6.5 16.2 10.2 9.1 5.3 65 4.2 0.9 1.5 0.8 0.3 74.5 3.1 10 19 3.1 11.2 0.5 3.9 1.2 4.4 7.2 4.2 9.1 80 29 10.1 2.7 27 2 61.5 43.5 6 0.1 1.3 21.5 11.8 9.7 40 17 2.4 13.1 9 3.2 60 2.6 14 6.3 20.5 25 45 24 33.5 1.3 0.1 1.3 7.3 19.5 23 14.9 1.1 -

3.7 2 1 2.8 67.4 2.6 4.4 2.6 18.7 3.2 0.4 4.1 3.3 6.7 1.3 5.6 0.4 1.3 1.4 1.7 13.7 25.6 3.9 6.4 1.1 1.3 0.6 3.5 4.2 5.2 2.9 0.5 0.8 0.3 2.4 2.3 0.3 2.3 2.5 1 2.5 4.9 2.8 7.1 5.1 -

2.1 1 2.6 2 1.7 3.4 0.8 2.7 2.5 7.4 0.9 2.1 2.7 4 0.2 3.3 2.8 2.4 2.2 1 1.2 4.7 3.1 3.3 1 0.8 0.2 1.4 3.6 5.9 3.4 5.9 2.9 1.5 1.6 6.7 3.8 3 2.9 1.1 7 5.4 43.2 4.2 0.6 1.8 48.5 7.3 4.3 2.4 2.9 1.4 -

12.6 11.5 19.2 3.7 13.6 21.7 41.7 120 1.7 18.7 8.5 50 1.9 5.5 10.6 14.1 9.1 7.3 2.8 5 2.6 11.9 6.4 61.2 93.2 9.1 9.1 14.5 5.3 24 10.7 130 16 31 42.9 300 22.5 10 4.3 16.3 35.7 7.2 15 18 4.3 11.7 20.8 160 9.2 18.1 22.9 27.2 9.8 97.3 12.2 15.6 15.7 5 8 55.2 25.8 4.4 60 21.9 45.2 13.6 41.6 19 73.8 23.5 8.2 6.1 7.3 10.4 1.7 20.6 23.1 2 21.9 97.7 8.6 73.4 12.9 10.8 2.2 13.8 16 55 57.1

79.5 211 62.3 25.8 14.6 54 31.5 7.5 36.8 15.8 54.8 21.5 120.2 30.4 27.7 13.5 20.2 25.2 13.4 74.4 7.5 23.4 28.1 96.4 9.4 16.1 35.1 195 171.9 33.1 14.3 12.8 105.2 39.1 5.4 14.3 112.1 9.8 129.4 72.3 3.8 52 7.4 28.5 7.4 9.2 75.9 58.3 58.4 190.3 9.9 6.2 79.9 30.6 22.7 6.5 20.8 62.3 9 57.3 17.5 17.1 48.9 33.6 92.4 34.3 78.4 94.3 284.7 150.4 7.4 57 43.4 17.1 21.6 24.2 15.9 151 7 38.4 162.9 98.6 159.8 49 2.5 37.8 75 169.2 15.9 54.6 9.6 27.4 346.4 44.6 55.8 42.4 49.7 434.2 19 59.1 44.6 14.1 65.1 24.3 1.6 53.3 21.8 6.2 6.8 31.5 8.5 7.2 8.5 9.5 6.4 150.8 26.9 46.7 37.5 14.2 8.4 33.8 60.9 299.7 22.8 12.6 94.8 23.1 16.1 15.7 6 9.8 24.7 96.5 60.2 6.7 6.8 100.5 6.6 24.3 102.3 37 22.8 20.3 16.4 47.7 57.7 21.2 12.9 7.8 84 80.6 17.8 41.6 23.3 8.4 31.5 18.9 280 209.8 59.4 21 11.5 10.2 10.5 27.8 67.5 9.5 47.7 103 24.6 14.5 7.8 35 50.9 6.7 7.9 821.4 15.4 11 71.2 57.2 59 47.9 302.3 51 109.1 59.5 2.1 18.2 15.5 180.3 49.4 229 37.2 11.6 83.8

Week High Low

Div C’vr

GrYld %

Net P/E

MCap

-

-

-

531.3 10.3 147.4 9.9 6.8 10.4 15.9 15.5 63.8 104.8 8.2 59.6 4.7 -

w C B R R

SGX ETF A

m m

52-Wk High Low

m H G

R

120.1 136.6 99.4 1300 945 3705 136.1 453 1729 7573 1195 219.1 588 2236 2830 28621 22280 13400 1529 1588 1148 1120 1182 880 346 110.5 311.9 135.6 99 340

G M V C

m

w C R R A B w H

w w w w w A

M M

R

H V

H O &G m w C B H G XU D A R A R

H

U

W G G C

U UC UM UOA UOB UOB K H UO UO U U G U A G U U U U R V M V V V C V G V w V m V V W H W W W A W m W W XMH X A m m YH Y RMB Y GD Y m G R Y Y H Y Y m Y m Y m Y Y O H m B w

N

112.1 108.8 75.9 1153 809 2904 109.3 345 1215 5334 978 166 485 1794 2183 28060 21086 10756 1463 1467 1060 1031 919 441 286 101 290 119.9 84 281

Counter

Last Sale

ABF SG Bond ETF .................................. 116.4 CIMB APAC Div S$D ............................. 132.4 CIMB APAC Div US$..........................US98 CIMBASEAN40 S$D .............................. 1275 CIMBASEAN40 US$ ..........................US940 DBXT China50 US$ ............................US3584 DBXT MS SING US$ ...........................US136 DBXT MSBrazil US$ ...........................US437.7 DBXT MSCHINA US$ .........................US1700 DBXT MSKorea US$ ..........................US7148 DBXT MSMSIA US$ ...........................US1175 DBXT MSPHILS US$ ..........................US198.2 DBXT MSPacXJp US$ ........................US577 DBXT MSTHAI US$ ...........................US2230 DBXT MSTaiwan US$ .......................US2751 DBXT USDIGInfl US$ .........................US28222 DBXT iBoxxUSTr US$ ........................US21404 GLD US$ ............................................US12308 IS ASIA BND S$D .................................. 1482 IS ASIA HYG S$D ................................... 1491 IS ASIA HYG US$ ..............................US1086 IS Asia BND US .................................US1083 IS MS INDIA S$D .................................... 1145 IS MS INDIA US$................................US838 Nikko AM STI ETF .................................. 338 NikkoAM-STC Asia REI ......................... 109.5 ONESTOXXASEAN US$ ....................US308 Phll Ap Div Reit S$D .............................. 134.1 Phll Ap Div Reit US$ ..........................US98.4 STI ETF ................................................... 329

+/-0.1 +1.9 -6 +13.6 +35 +250 -5 +2 -6 +9 -4 +100 -57 +89 +5 +5 unch +2 +5 +10 -2 +1.3 +2.8 +2.5 +2 -1

Vol (’000) 327 1 31 112 62 3 0 114 4 84 0 0 1 51 0 3 76 18 337 1328 278 626 1 160 298 1740

117 132.4 3653 443.7 1723 7148 1175 198.3 583 2232 2751 28222 21453 12311 1482 1491 1088 1086 1159 850 344 109.6 308 134.7 98.7 336

116.1 132.4 3576 425.8 1675 7008 1171 196.9 575 2202 2751 28222 21404 12066 1482 1482 1080 1080 1139 834 338 108.9 308 132.5 97.3 329

REAL ESTATE | 11

The Business Times | Monday, August 21, 2017

Biotech firms leaving big US cities for the suburbs High rents, tight lab space forcing them out of Boston, New York and San Francisco New York THE biotech industry is facing high rents and tight lab space in Boston, New York and San Francisco, forcing companies into the suburbs in a sign that the “live, work and play” movement into big cities may have hit a roadblock.

For example, Modern Meadow, a biotech startup poised to manufacture leather from the fermentation of natural collagen protein without using live animals, was looking at a prohibitive US$200 million cost to build its own lab and manufacturing facility in New York City.

Instead, it found existing lab space at the former US headquarters of

Swiss drug-maker Roche in Nutley, New Jersey, a scant 19 km from Midtown Manhattan.

Modern Meadow also secured US$32.2 million in New Jersey tax credits at ON3, as the former Hoffman-La Roche site has been named by its new owner, Prism Capital Partners.

The startup’s search for adequate facilities is shared by other biotech firms that are encountering tight lab availability in New York, San Francisco and Boston, which attract the lion’s share of biotech venture capital funding.

Cities, especially those with powerhouse educational institutions that excel in the sciences, are attractive to

biotech companies because they provide better collaboration and transition from classroom to commercial production.

The issue with lab space in these cities is that real estate is very expensive, both to build and operate, said Andras Forgacs, chief executive of Modern Meadow.

“We don’t have the time and we don’t have the capital to be in the real estate development business in New York City. That’s not what our investors asked for,” said Mr Forgacs, whose company has raised US$53.5 million.

Leading investors include Hong Kong-based Horizon Ventures, Iconiq Capital, Artis Ventures, Singapore’s sovereign wealth fund Temasek Holdings and Sequoia Capital, among others.

“For startups especially it is important to have existing inventory that is virtually move-in ready,” Mr Forgacs said.

His firm plans to spend US$20.8 million in new construction and equipment and grow its workforce from more than 60 employees to 263 at the 47 hectare ON3, where Prism envisions a mixed-use “streetscape” to replace razed buildings and empty lots.

Biotech labs require costly safety features to isolate dangerous agents, exacerbating existing space and cost constraints.

Exosome Diagnostics moved to Waltham, Massachusetts, from Cambridge two weeks ago, a shift that will reduce rent by three to four times, said Dan Baughman, the firm’s marketing director.

“It was a no-brainer. It’s infinitely less expensive,” he said.

Waltham also attracted Dragonfly Therapeutics Inc, which looked at more than 40 sites in Cambridge, where it started in 2015.

Demand for space was high and the quality low, said Maura McCarthy, Dragonfly’s director of market development.

The lower cost of housing for employees was a benefit too, she said.

Triple net leases, where the tenant pays taxes, insurance and maintenance, are US$78.50 a square foot in Cambridge and drop to US$47 in Boston’s inner suburbs, US$31 along Route 128 north and west of Boston and then US$15 in the outer ring, brokerage Cushman & Wakefield said.

Boston has outpaced the combined number of deals and funding in-

Home-building drive in Moscow threatens developers’ profits Moscow MOSCOW’S local government project to build hundreds of thousands of new homes threatens to cause a supply glut, forcing private sector developers to cut back on their own projects and depressing apartment prices, real estate analysts said.

The authorities in Moscow intend to re-house over one million citizens living in decrepit Soviet-era apartments, which they plan to demolish, in new high-rise blocks of flats as part of a 15-year programme.

But officials have said that some of the new housing could be built for sale, in a market where developers including PIK Group, Etalon and LSR compete.

PIK and Etalon declined to comment while a spokeswoman for developer LSR said that while it was not planning to cut the size of its own projects, some homebuilders might choose to reduce prices.

These homebuilders are not expected to have a stake in the municipal project as the authorities have said that they only plan to engage them as sub-contractors for the supply of

components. The authorities have also said that the first flats under the programme are likely to be ready in about three years’ time with apartments for sale likely to follow in around 2024.

Julia Gordeyeva, a real estate analyst at Sberbank CIB, estimated that an additional 1.3-1.4 million sq m of housing could be supplied to the market each year once the resettlement project gets going.

“Taking into account the scarceness of demand, developers will have to reduce their volumes accordingly,” she said, adding that the reduction could amount to 30-35 per cent.

Pavel Bryzgalov, director for strategic development at Lider, one of Moscow’s biggest real estate companies, expects the city to have around 1.2 million sq m of new residential property to sell each year, or a quarter of all flats built in Moscow.

As a result, he said, it is possible that developers building standard apartments will have to abandon their own projects in the districts where the new municipal housing is going to be built.

Chinese pullback ‘won’t hurt commercial property prices in US’ New York

Moscow’s local government project to build thousands of new homes threatens to cause a supply glut, forcing private sector developers to cut back on their own projects and depressing apartment prices. PHOTO: REUTERS However, Alexei Shepel, owner of real estate company S.Holding which had been involved in earlier resettlement programmes in Moscow, said that the developers might yet be able to go ahead with their own projects but would need to cut prices to compete.

If a developer’s project ends up competing with a municipal one, the company will have to either put its project on hold or carry on but sell flats for a lower price, said Artyom Eiramdzhants, a real estate analyst who was formerly in charge of the Moscow market at developer Pioner.

“Imagine the city starts a largescale renovation in, for example, Izmaylovo (district), builds homes for re-housing and sale. If a developer had planned a major project there, it will most probably have to drop its plans or put it on hold indefinitely,” Ms Gordeyeva added. REUTERS

The tropical overwater bungalow turns 50 Created in the South Pacific by the Bali Hai boys, the design has since become a worldwide phenomenon Washington THE overwater bungalow – that iconic symbol of the paradisiacal tropical vacation, standing in clear blue water on stilt legs – turns the big five-oh this year. The thatched huts, often outfitted with such luxury amenities as plunge pools and glass floors to better see the fish below, are a staple on the bucket lists and Pinterest boards of aspirational travellers the world over. Yet, their origin lies in a surprisingly prosaic exercise in problem-solving.

Back in the 60s, three tanned, party-hearty California kids – Hugh Kelley, Don “Muk” McCallum and Jay Carlisle – left their 9-to-5s in pursuit of their tropical dreams in French Polynesia. Opening hotels on Moorea and Raiatea, the trio was dubbed the Bali Hai Boys, after the mystical island in James Michener’s novel South Pacific. Mr Carlisle, now in his 70s, reminisces about those days. “Our Hotel Bali Hai on Moorea thrived with its beachfront property, but Hotel Bora Bora on Raiatea struggled,” he says. “It didn’t have any beaches.”

A serious problem, indeed. “Inspired by the vernacular thatched-roof fishing huts,” he goes on, “Kelley derived the idea of building bungalows on concrete stilts out on the bay, providing direct access to the lagoon. We drilled down by hand; there were no electric drills or anything.

We did all of the work.”

That was in 1967.

The trio assured the government that the stilted bungalows wouldn’t damage the environment. “We built small docks that extended out into a flat place in the lagoon and attached them to pylons,” Mr Carlisle said. “The coral grows around the pylons and attracts the fish.”

They built three bungalows “with Plexiglas on the living room floor so you could see the reef below”. That feature soon became known as “Tahitian TV”, a must-have in any overwater bungalow.

People liked the bungalows, so the Bali Hai Boys built six more. And then three more. Then other hotels in the region started copying them.

Even though the originals were never luxe, they ignited a revolution in posh hotel architecture, and French Polynesia became synonymous with tropical glamour.

Today, with the other men’s children, Mr Carlisle oversees the Club Bali Hai Moorea Hotel, the smallest and last of their properties.

(Mr McCallum now lives on the US mainland, and Mr Kelley died in 1998.) The hotel remains quite rustic, and Mr Carlisle insists that he has no plans to change that.

The other original resorts are long gone, but

volving pharmaceutical firms in New York, San Francisco and Silicon Valley since 2014, said tech data provider CB Insights.

Funding this year through Wednesday for pharmaceutical firms in Boston is US$1.08 billion, compared to the US$570.7 million raised for companies in the three other areas.

Urban real estate owners need to understand the burgeoning life sciences industry and be creative when they redevelop sites, said Bill Hartman, a commercial broker at Cushman who helped Modern Meadow relocate.

“For the foreseeable future, life science startups and R&D organisations requiring labs will have to look far afield with a creative eye,” he said. REUTERS

Above: The original overwater bungalows, built in 1967, were inspired by the vernacular thatched-roof fishing huts. Below, from left: Hugh Kelley, Jay Carlisle and Don "Muk" McCallum at the Hotel Bali Hai Moorea in the 1960s. PHOTOS: THE WASHINGTON POST, COURTESY OF JAY CARLISLE/CLUB BALI HAI MOOREA HOTEL

in their place is a global industry of overwater bungalows.

“By my last count, there were 165 total resorts in the world with close to 9,000 overwater bungalows,” says Roger Wade, who runs OverwaterBungalows.net.

The true overwater bungalow tends to have one thing: turquoise, swimming-pool-esque waters. They can’t be exposed to waves and tides.

At the Four Seasons Bora Bora, the South Pacific boasts what is consistently rated as the world’s best.

“We’ve taken the overwater bungalow philosophy introduced by the Bali Hai Boys and have introduced the next level of design, comfort and luxury,” says hotel spokesman Brad Packer.

Each bungalow provides two outdoor living areas, one for sunning and one for dining, soaking tubs built for two, and glorious views of Mount Otemanu at every turn.

That said, you’ll find the preponderance of overwater bungalows – two-thirds – in the Maldives. Thailand, Malaysia, Indonesia, the Philippines and Cambodia have them as well.

Resorts closer to the United States have been feverishly developing overwater bungalows over the past few years, with Jamaica, St Lucia, Belize and Mexico all offering the overwater experience. And some, according to Mr Wade, are on par with those in the South Pacific, including Jamaica’s new Sandals Royal Caribbean and the El Dorado Maroma in Mexico’s Riviera Maya.

Both are luxurious, offering infinity pools, outdoor showers, two-person Jacuzzis and, of course, the glass-floored living room to view the tropical fish. The main difference, Mr Wade is quick to add, is that while these new Caribbean bungalows are set in very clear bays, their waters don’t compare with the crystalline lagoons of the South Pacific or the Maldives.

Other destinations have what Mr Wade describes as “eco-resorts” that take the overwater concept to rivers and lakes. You’ll find them in Guatemala, Panama, even Honduras.

“They’re not quite the same,” Mr Wade says.

Meaning, they don’t have the beautiful, clear waters that make the South Pacific bungalows so alluring. Nevertheless, they offer the sublimity of being suspended over water.

According to Mr Wade, the demand for overwater bungalows shows no signs of diminishing. “Resorts have popped up in Qatar,” he says, “even Africa has a couple, in Kenya and Mozambique.” There aren’t any in the United States – yet. In the meantime, with the 50th anniversary in full swing, including special anniversary packages being offered by hotels around the world, Mr Carlisle admits that the Club Bali Hai Moorea Hotel is not noting the occasion.

“I didn’t even know about the anniversary,” he says. “I guess we’re not doing anything special.”

No need. They did that 50 years ago. WP

COMMERCIAL real estate prices, hovering at record highs in the US following a six-year boom, are sustainable even as Chinese regulators tighten restrictions on overseas investment, according to Brookfield Property Partners LP. There is enough capital pouring into real estate from multiple regions – including Europe and the Middle East – to counter any potential slowdown in Chinese investment, Brookfield Property chief executive officer Brian Kingston said in a Bloomberg Television interview. While Asian buyers are often part of the equation, a global shift from low-yield fixedincome holdings to real estate will drive property values for the foreseeable future, he said.

“There was a lot of headlines around how much capital was coming out of Asia,” said Mr Kingston, a senior managing partner at Brookfield Asset Management Inc, the parent company of Brookfield Property.

“The reality is it’s broad-based. It comes from a lot of places.”

Price growth for US commercial buildings such as office towers and apartment buildings has levelled off over the past year, according to research firm Green Street Advisors LLC, and a growing disconnect between buyers and sellers is putting a damper on new deals.

In Manhattan, one of the biggest beneficiaries of a foreign capital influx in recent years, transaction volume plunged 39 per cent to US$18 billion in the first half from a year earlier, according to the Real Estate Board of New York, a trade organisation.

Still, there have been a handful of blockbuster transactions. In March, Chinese conglomerate HNA Group Co agreed to buy 245 Park Ave for US$2.21 billion, one of the highest prices ever paid for a New York skyscraper, from Brookfield Property and its 49 per cent partner in the building, the New York State Teachers’ Retirement System. BLOOMBERG

NOTICES

12

| VIEWS FROM THE TOP

The Business Times | Monday, August 21, 2017

THIS WEEK’S TOPIC: What role, if any, do you see cryptocurrencies playing in the financial system of the future?

An imposing, disruptive force Yeoh Oon Jin Executive Chairman PwC Singapore CRYPTOCURRENCIES have not only survived their early struggles, they are flourishing in different forms. With growing acceptance across different jurisdictions, regulators in these jurisdictions will be forced to adopt a set of common global regulations which will facilitate cross-border commerce. Cryptocurrencies are also evolving very quickly and will likely have a role to play in a future data-driven financial exchange system.

Though the benefits of cryptocurrencies are well publicised, they are not without risks. Hence, the jury is still out on the extent of adoption within the financial system. The key lies in managing these risks with well-balanced regulation.

Tim Phillipps Apac Financial Crime Network Leader Deloitte THE boom of cryptocurrencies will test the flexibility and patience of regulators across the globe. The key principle of regulated markets is transparency and the anonymity behind cryptocurrencies presents a looming threat. Equally, the varied experience and reputation of many unlicensed promotors combined with a technologically complex and largely misunderstood fundraising model also presents serious trust issues for investors and regulators alike. While cryptocurrencies may be an attractive alternative model for the future, the speed of transactions, the unregulated nature of many promoters and the anonymity of all parties, present real challenges to the financial safety of investors and institutions.

Sebastian Mueller Chief Operating Officer MING Labs OVER the next decade, cryptocurrencies will displace traditional currencies as the main medium of value storage and transfer. In a global economy comprised of nation-states, this technology will be able to drastically reduce transactional friction.

The underlying blockchain will become one of the key foundational technologies in finance and the legal system. As an inherently trustless system, it is perfect for facilitation industries. The next-generation banks will be application providers on top of the blockchain.

The next-generation law firms will be smart contract creators.

Omer Ali Khan General Manager, Asean Avanade CRYPTOCURRENCIES such as bitcoin are changing the way financial organisations perceive currency and how value can be exchanged. Traditional financial systems and processes have become somewhat bloated, spawning complex IT systems and unintegrated architectures.

Blockchain, the technology underlying cryptocurrencies, could be the answer to making systems easier to understand and transactions more transparent. Certainly, the technology provides security and price discovery capabilities to consumers and organisations that traditional transactional processes can’t. Typically managed by a peer-to-peer network, blockchain addresses a lack of trust that has emerged in financial systems over many years, and our work with clients indicates that it has the potential to impact institutional business in the short term.

Lee Fook Chiew Chief Executive Officer Institute of Singapore Chartered Accountants AS a new-age currency, the value of a cryptocurrency is highly dependent on the public’s perceived value and it can be manipulated by corrupt individuals. In addition, as public awareness and scrutiny of cryptocurrencies is still at a nascent stage, the instruments may be used for fraudulent transactions. This can potentially lead to an increase in cybercrimes. Besides those in the financial sector, professional accountants, regulators and enforcement agencies need to keep abreast of the types of financial crimes relating to cryptocurrencies; the regulatory requirements and sanctions; as well as the associated risks. Being well-equipped with practical knowledge in the areas of digital forensics and financial investigation would be necessary to effectively identify, interpret and analyse evidence for reporting, litigation support or case resolution.

Mark McFarland Managing Director & Chief Economist, Asia Union Bancaire Privée, UBP SA Hong Kong Branch FOR consumers, cryptocurrencies will only be successful if they are seen as a consistent store of value – alternatives to gold or standard currencies backed by disciplined central banks. There are obviously some believers as a number of retailers around the world already accept bitcoin as payment.

The attraction for government agencies is the ability to track and retrieve transactional data. For this reason the legal status of transaction data will be key for the speed of adoption or otherwise. It’s not clear why scams in regular money or in cryptocurrencies should be any different from each other.

Joel Ko Hyun Sik Co-Founder and CEO Marvelstone Ventures THE Monetary Authority of Singapore and Commercial Affairs Department are right to warn consumers about the potential risks in investment schemes involving cryptocurrencies. In Singapore, digital currencies like bitcoin are already making their mark. This June, Singapore’s central bank trialed digital tokens of the national currency issued on a private Ethereum blockchain. To the layman this may all sound very complicated, but the implications are clear: cryptocurrencies will play an increasingly important role in the financial system of the future in Singapore and other forward-thinking econom-

PHOTO: FREEIMAGES

ies. While the risks have been outlined, the benefits will be a full-blown digital currency alternative to cash: transparent, secure, efficient, and decentralised.

David Haynes Head LexisNexis Risk Solutions in Asia MAJOR investors have bought into cryptocurrencies and large wealth management firms have added cryptocurrency prices to their client portals. This momentum indicates cryptocurrency mainstreaming. Anti-money laundering compliance concerns have been a historical hurdle for the maturation of the cryptocurrency industry. Today fintech companies, like Elliptic, integrate bank-grade AML tools, like LexisNexis WorldCompliance, into their platforms so that cryptocurrency exchanges can leverage the same regulatory controls that banks around the world use. As exchanges mature their regulatory controls, banks have more confidence onboarding them as customers and lending to them. This access to credit will help cryptocurrency companies grow and thrive.

Dilip Rao Managing Director Ripple Asia-Pacific CRYPTOCURRENCIES have diversified uses and will soon be indispensable in our financial system. In the case of Ripple, it leverages a digital asset, XRP, to allow financial institutions to source liquidity on demand, in real time. This solution enables efficient expansion into new markets, lower operational costs, and faster settlement for customers.

However, for blockchain and digital assets to realise their potential, it’s critical we in the industry work with regulators, not in the shadows. Ripple has proactively

engaged regulators and central banks around the world since Day One to inform their point of view on how blockchain and digital assets can improve financial infrastructure. We’ve also invested in building a robust compliance operation to ensure we’re colouring inside the lines as well as partnered with leading global banks to author the industry’s first rulebook to standardise payment rules for institutions using blockchain technology.

Banks and regulators serve a valuable role in the financial ecosystem and have for generations protected consumers from fraud. As the role of cryptocurrencies evolve further with the impending ICO (initial coin offering) market, the role of regulators will be even more crucial to stand firm, especially against fraudulent offerings.

Chua Khai Lin Co-Founder and CFO Fundnel CRYPTOCURRENCY could yet be a major player in the financial digital revolution. However, its unique decentralised and P2P system is both a boon and bane. It provides a neutral system whose secure transactions cannot be corrupted, yet this anonymity and its liquidity makes it more susceptible to illegal activities such as fraud and money laundering.

If improper users of digital currencies can be held accountable effectively, cryptocurrencies can flourish, and users will have a system to exchange and invest money in a cashless and secure manner. How it will do so with its deregulated nature remains to be seen.

Ang Thiam Guan Vice-President and Managing Director, Asean Juniper Networks CRYPTOCURRENCY, using blockchain technology, will

Siddharth Sthalekar Founder Sacred Capital

THE hype surrounding cryptocurrencies feels like we’re in the dot-com boom.

However, this isn’t just about a “new currency” or “asset-class”.

The blockchain is a distributed ledger protocol with profound implications. It’s throwing up opportunities for entrepreneurs to leverage the power of networks and channel capital like never before. It’s sparking of innovation that isn’t possible in the mainstream world, and progressive thinkers now see this as the foundation of “The New Economy”.

So instead of chasing companies that “blockchain-ise” old businesses, it’s critical to rethink businesses and bet on genuinely innovative organisations. Interestingly, that’s exactly what the recent SEC and MAS regulations suggest.

shape the future of the financial system. From reducing time on settlements and transactions to accomplishing operational efficiencies and savings on infrastructure, the advantages that blockchain can bring to the financial services industry is vast.

While providing significant benefits, blockchain expands the attack surface and will expose new vulnerabilities within the organisation that hackers could exploit.

As such, the transition to blockchain will require a strong unified defence across the network. At Juniper Networks, we believe in harnessing the power of automation, real-time intelligence and machine learning to enable a highly-secure environment for the use of cryptocurrencies within the financial ecosystem.

Martin Mackay President and General Manager for Asia-Pacific & Japan CA Technologies ONE of the most distinct features about cryptocurrencies is their ability to remove intermediaries required to make transactions, leading to streamlined but secure payment processes. This tightening of security while improving efficiency and lowering cost makes it a disruptive force within the financial sector, thanks to the innovative blockchain technology. As we explore the impact of cryptocurrencies on established financial, social and economic frameworks, we cannot neglect the potential that blockchain brings. Its applications are vast and its capability to decentralise and democratise online services enables enterprises across different sectors to invest less in resource management and focus more on creating business value. From fraud prevention to rights management to bill settlements, the business potential for leveraging blockchain technology is enormous, and will represent a huge step forward in the application economy.

Toby Koh Group Managing Director Ademco Security Group CRYPTOCURRENCIES will be huge in the future. The product is already growing in its role as an underground banking and payment system. Speculators have driven up the value of bitcoin drastically over the last few years.

However, this sector is largely unregulated. The writing is on the wall that governments will step in to regulate this in a matter of time. The question will then be if the value of cryptocurrencies will crash.

Along with the advancement of technology and blockchain, cypytocurrencies are here to stay. This is a defining moment for financial institutions to leap to the forefront of the new banking evolution.

Christophe Duchatellier CEO, Asia-Pacific The Adecco Group PRESENT-DAY financial systems have a critical mass of transacting parties that place mutual trust in the system. The same cannot be said about cryptocurrencies yet. Currently, with perhaps the exception of bitcoins, very few understand cryptocurrencies and their associated ecosystem. This, coupled with the recent spate of negative news about usage of cryptocurrencies in cyberattacks, has created some concerns about their credibility and trust and has limited their wider adoption. Having said that, if and when cryptocurrencies do become mainstream, they can make future financial systems more decentralised and inclusive. Moreover, blockchain, the underlying technology behind cryptocurrencies, has a much larger potential to transform industries ranging from finance to logistics and shipping.

VIEWS FROM THE TOP | 13

The Business Times | Monday, August 21, 2017

Edwin Khew Teck Fook President The Institution of Engineers, Singapore CRYPTOCURRENCIES have been rising in popularity for quite a while now, due to their decentralised, anonymous and safe nature. But such currencies, unlike traditional ones, are not backed or validated by globally-recognised assets like gold.

In other words, nobody really knows the intrinsic value of a bitcoin, for example, leading to potential unrestrained speculation. Its virtual basis also runs against the grain of engineering thinking which emphasises hard, tested facts. To me, the future of a financial system is not so much about the currencies but the technologies supporting or enabling them to be resilient and fungible.

Helen Ng Chief Executive Officer General Storage Company Pte Ltd THE sheer price volatility of cryptocurrencies makes them an unstable financial instrument. There is no way of gauging actual supply and demand just by looking at the price. When demand is purely speculative, we are likely on the verge of a bubble. The old adage remains true – only invest in what you understand.

While there is growing scepticism about cryptocurrencies, blockchain technology, which enables their existence, offers greater promise for the financial and other sectors. It is time to cut through the hype surrounding cryptocurrencies and focus on the innovation capabilities of blockchain.

Richard Hoon Chairman, Board of Advisors Validus Capital MONEY is only worth what it can be exchanged for. The beauty of cryptocurrencies is that they are an easy medium of exchange and unit of account that can leverage the connectedness of the Internet. To this end, initial coin offerings (ICOs) can have numerous uses and can be tailored with unique features such as loyalty points amongst others.

However, the currency value is dependent on the size of its user base and what real goods or services people are willing to exchange for it.

Until a sufficient base is established, any long position is merely a high-risk bet on future adoption.

Lim Soon Hock Managing Director PLAN-B ICAG Pte Ltd I SEE cryptocurrencies complementing fiat and/or hard currencies in the digital economy. It is not inconceivable that digital money can eventually replace these currencies, sooner than expectations.

When more countries recognise cryptocurrencies – accepting them as legal tender, and we are seeing more of this happening – it will accelerate the pace of legitimising them.

Today cryptocurrencies, as a nascent industry, suffer from too many negative vibes associated with

scams, ponzi schemes and money laundering. Bona fide operators of digital money therefore have the unique opportunity to be different from the pack by continuing to develop and build ecosystems that promote, support and deliver trust, through regulations, for all transactions, especially those involving assets.

Through the use of blockchain technology, digital money not only shortens transaction cycles considerably but will allow large numbers of the underbanked to be served, especially in emerging and under-developed countries.

Robin C Lee Group COO Bok Seng Group I SEE this as just another innovative disruption that will impose itself on how the world may one day run its financial transactions and exchanges. As of now, it is just an attractive proposition that has gathered plenty of interest and thus has resulted in the escalation of bitcoin value, recently surpassing US$4,000.

Frankly, I do not know if this is a product of mass hysteria. Whatever it is, the crypto-bubble is expanding rapidly and may burst at any moment. Regardless I am certain the basic concepts of cryptocurrencies share the same basic characteristics of other “disruptors”: The eradication of unproductive efforts and steps in the form of intermediaries, handlings, processes, bureaucracies and yes, regulation.

Zaheer K Merchant Regional Director (Singapore & Europe) QI Group of Companies WHETHER we believe or like it, cryptocurrencies have a significant place in the future. Already more initial coin offerings (ICOs) are coming onstream, raising well over US$300 million, such as Brave, Bancor and others. The point of exchangeability (leaving aside what ICO tokens and their values may be), exchanges and inter-usability and interrelation with fiat currency (or other goods and services) and various platforms which exist for their use make them huge.

Countries are jurisdictionally recognising cryptocurrency. The overwhelming concern however is the ability of regulatory authorities to catch up in regulating and ensuring oversight (think the recent MAS circular warning of the risk of fraud and money-laundering or the CAD’s concerns of investor risks and perils).

Governments also fear their advent since they could erode sovereign control of fiat currency and tradability, such as the clearing of US dollars by New York.

Whatever way, it’s clear that cryptocurrency is going to be a significant player which may well exist conterminously with fiat currency.

Henry Tan Managing Director Nexia TS CRYPTOCURRENCIES or their “morphed” versions are here to stay. When bitcoin first started there was hype.

And then others like Ethereum came up, and I believe the innovation won’t stop here. We will see more win-

Imad Abou-Haidar APAC Managing Director Finastra

CRYPTOCURRENCIES may play an influential role in financial transactions in the future but it is not easy to disrupt the traditional money transfer system without participation from central banks.

Instead, cryptocurrencies are likely to rise in popularity with niche applications where the coordination of required participants is more straightforward.

Scalability issues, as we saw with bitcoin, and volatility mean that the optimum application of computer science and event of a cryptocurrency becoming fiat currency would need to be closer to happening than they are today.

Even with the latest technology it’s hard to store and secure cryptocurrency. People have lost millions by misplacing bitcoin keys – there is still a real physical dimension that needs to be solved.

ners not too long in the future. There would be pressure and obstacles such as regulation and countries continuing to grabble with this. Too much regulation will kill innovation, but too little, a bubble can be on the horizon.

Whatever the outcome, one thing for sure is – this will add pressure to existing financial systems. Blockchain technology is an area we have invested time in and await its wider usage.

David Leong Managing Director PeopleWorldwide Consulting Pte Ltd. THE digital reserve currency, cryptocurrency, and cryptotokens have disrupted the notion of how typical monies originate and flow through the world of finance and commerce.

Cryptocurrencies will likely change the control of typical monies from central banks to a peer-managed

system through blockchain where there is no central control.

However, cryptocurrency has to become more stable and not be treated as a purely speculative instrument.

For global acceptance it has to be built on a trusted peer network or between governments or central banks that show some commitment to preserving value.

It can originate from a group of nations, such as Asean or the G20, establishing an alternative currency that is tradeable and convertible to real money and can be used for transactions.

This new form of currency needs to adopt the meaning and purpose of money and be built as a system to simplify barter and trades and to cover all means of transactions. Then the future of money will be based on blockchains and the databases of a network of participating trusted peers and no longer with a single central bank.

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14

| BANKING & FINANCE

The Business Times | Monday, August 21, 2017

Forced to pay for insurance he didn’t need and blacklisted, too Experience of former borrower highlights the harm done to hapless customers by Wells Fargo’s dodgy practices New York WELLS Fargo has promised to make amends to the customers it forced to buy car insurance they didn’t need. Allan Dunlap, a former Wells Fargo borrower who spent months trying to get the bank to correct an insurance error that marred his credit report, says he’ll believe it when he sees it.

Some 800,000 people were affected by the Wells Fargo car insurance dealings, according to an in-depth analysis commissioned by the bank. The expense of the unneeded insurance, which covered collision damage, propelled 274,000 bank customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions.

Wells Fargo said it discontinued the insurance practices in September after it had found “inadequacies in vendor processes and internal controls that negatively impacted some customers”. The bank has contended that 570,000 people may be owed refunds.

Mr Dunlap, 55, is one of those affected by the bank’s insurance activities. His experience with Wells Fargo highlights the harm done to actual people and points to the challenges Wells faces in remedying it. More than a year after he started battling with Wells Fargo, Mr Dunlap said, he is still awaiting confirmation that his credit report has been corrected.

“I never missed a payment, and I always had insurance,” Mr Dunlap said.

“But they forced additional coverage on my vehicle, and it showed up on

my credit report that I was 60 to 90 days late on my payments.”

Repeated calls to Wells Fargo to get them to fix the error were unsuccessful, he added.

Jennifer A Temple, a Wells Fargo spokeswoman, acknowledged in a statement “that our customer service and our processes did not measure up, and we are working with Mr Dunlap to make things right.”

Mr Dunlap’s story began in March 2016 in Jamestown, North Dakota, where he worked transporting recreational vehicles. He found his dream car at a local dealership – a low-mileage, mint-condition Chrysler 300, vintage 2008, selling for around US$25,000. Together with a friend who co-signed for the loan, Dunlap financed the purchase through Wells Fargo Dealer Services. The amount of the loan was almost US$21,000.

Before he could take possession of the car, he was asked to provide the dealership with proof of existing car insurance. Wells Fargo loan documents prepared by the dealership show that his coverage was with State Farm.

For three months, he made his US$410 loan payments without a hitch. But in early May, Wells Fargo sent both borrowers a letter saying it had not received the necessary documentation showing that the car was insured. A second notice saying the same thing followed a month later.

When the first notice came in, Mr Dunlap was recovering from a stroke, he said. Still, he began calling Wells

Some 800,000 people were affected by the Wells Fargo car insurance dealings, according to an in-depth analysis commissioned by the bank.

Mr Dunlap (left) is one of those affected by the bank’s activities.

PHOTO: NYTIMES Fargo to tell them he had insurance.

He was unsuccessful, he said, because he’d be kept on hold for long periods and often got disconnected.

Ms Temple of Wells Fargo said: “We recognise there were a number of customers who experienced difficulty verifying with Wells Fargo and our vendor if they had insurance, and we are sorry that Mr Dunlap experienced this challenge.”

On July 1, Mr Dunlap’s loan statement showed, Wells Fargo charged US$1,079 for insurance on the car – the first time such a charge had appeared. The insurance, a year’s premium, took effect in March, when he bought the car.

Mr Dunlap said he didn’t know about the charge, and records show he made his regular loan payment in July. But because he owed the additional US$1,079 for insurance, he fell

behind. Late fees began accruing, and his problems on the loan were reported to credit bureaus.

He made more calls to Wells Fargo.

“I’d talk to one person in one state, another person in another state; I’d send them papers,” he said. “There were so many different people involved, the information doesn’t get to the right sources.” Some Wells Fargo letters came from Phoenix, while others were postmarked Irvine, California, and Irving, Texas.

Sometimes Mr Dunlap’s calls reached the office of the president at Wells Fargo Dealer Services. “Those people would say: ‘We’ll get back to you’,” Mr Dunlap shared. “But nothing would happen.” He even tried reaching the bank’s board, Mr Dunlap added.

Finally in mid-September, Wells Fargo cancelled the insurance it had placed on Mr Dunlap’s car. But the

bank credited his loan account with only US$846. That meant he was still behind on the loan.

Trying to get another loan to pay off the existing one was impossible, he noted. “They would say: ‘No, you’re late with Wells Fargo’.”

Exasperated, Mr Dunlap decided to sell the Chrysler in November so he could close out the Wells Fargo loan.

He sold it for around US$19,000, he said, US$6,000 less than he had paid eight months earlier. The amount he needed to pay off the loan was US$20,250, Wells Fargo records show.

But Mr Dunlap’s battle wasn’t over.

Now he had to correct his credit report, an effort that he said was still going on. This year, he asked the bank for US$1,000 in compensation for its mistakes. In a letter dated June 1, the bank declined. “At this time we are unable to comply with your request for

compensation,” the letter said. Wells also said it was submitting requests to credit bureaus to remove the late payments recorded on Mr Dunlap’s history. “We sincerely apologise for any inconvenience this matter may have caused,” the letter added.

Late last month, Mr Dunlap said he was amazed when he saw an article in The New York Times disclosing Wells Fargo’s dubious insurance practices.

“I thought I was the only one going through this,” he said.

Trying to get assurances that his credit report had been corrected, Mr Dunlap called Wells Fargo again. He said he told the bank that he planned to contact the Times reporter about his experience. “They said: ‘Don’t talk to the reporter, we’ll try to fix this’,” he said. The promise from Wells Fargo came more than a year after his problems with the bank began. It was too little, too late, he added. NYTIMES

China powers new US dollar bond market as it heads to US$1 trillion It accounts for 47% of US$730b market as at June; seen to surpass 60% by 2020 Tokyo IT is a lot harder for David Yim to rack up the airline miles these days. The bond underwriter at Standard Chartered plc used to fly across the Pacific from Hong Kong to the US four or five times a year to arrange US dollar debt deals, but he is not sure that he will make it even once in 2017.

Such is the gravitational pull that China is having on the market for US dollar bonds issued by Asian companies and banks. Borrowers used to tap US-based investors when they sold US dollar securities. Now, there is a big enough pool of greenbacks in Asia and predominantly Chinese buyers are able to take up the vast majority of bonds sold in US dollars.

Within three years, this market may reach US$1 trillion, composed mostly of Chinese US dollar bonds, according to projections from Australia

& New Zealand Banking Group Ltd. Big Chinese demand may be changing the risk dynamics of the US dollar bond market in Asia, according to market watchers.

“Having a Chinese buyer means there’s a different risk profile – it’s not like Western money managers investing in Thailand before the Asian crisis,” said Nigel Pridmore, a long-time capital markets attorney and partner in Hong Kong at law firm Ashurst.

Evidence of the impact of the change was on display this month, when financial markets round the world were roiled by escalating tensions between the US and North Korea. Among the harder hit markets was US high yield – also known as junk-rated – US dollar bonds. But premiums on junk-rated Asian US dollar bonds by comparison barely moved.

“We’ve witnessed Asia’s offshore bond markets become the less volatile part of global credit – on this firmer local demand,” said Owen Gallimore, head of credit strategy at ANZ in Singapore. That in turn is pulling in

some global asset managers to the market, he said.

But with locals now dominant, there is a welter of new dangers to consider, starting with Chinese financial regulations.

China’s move to contain leverage in its domestic financial system has made it more expensive to sell debt onshore, something that has helped

down on big private conglomerates’ overseas acquisitions is just one example of how quickly the picture can change. Any move by officials to rein in Chinese funds’ purchases of US dollar debt – or companies’ and banks’ ability to sell it – could have a dramatic effect.

“The weakness to the ‘China bid’ is its homogeneous nature and strong

“Having a Chinese buyer means there’s a different risk profile – it’s not like Western money managers investing in Thailand before the Asian crisis.”

Capital markets attorney Nigel Pridmore

fuel the boom in Chinese US dollar bond issuance. Private sector property developers that might find it tough to get loans from state-owned banks have been among the biggest sellers.

These dynamics can shift abruptly if Chinese regulators change policy.

And this summer’s surprise crack-

but unpredictable regulatory oversight,” said Mr Gallimore. “We have intra-Asia capital flight risks now rather than US and European capital flight risks.”

As the market expands, it one day may pose contagion risks to assets outside the region, much the way that a surge in European bond yields can

have a global impact. For now, foreign concerns centre on a less disciplined approach towards best practices. Market participants from non-Asian institutions sometimes complain privately about “crowding out” from Chinese buyers, who have in some cases brought looser standards from the onshore bond market.

In China, almost two-fifths of corporate debt is improbably graded “AAA” by domestic ratings companies, and bond desks lack the kind of extensive back offices to check deals or research teams to do due diligence that are found at fixed income operations in developed nations. A record number of debut US dollar bond deals by lesser-known issuers makes it tough for analysts to keep up.

The surging Asian issuance is a new chapter for the offshore US dollar bond market, which was created by the Europeans more than half a century ago. Spurred by the desire to tap a broad, international pool of capital, the manager of Italy’s highways sold the first so-called Eurobond in 1963.

It also reflects a long-held aim of Asian policymakers to encourage money to stay within the region, ever

since the 1997-98 financial crisis that saw economies and corporate empires collapse after excess borrowing in US dollars when local exchange rates were overvalued.

Nations across the region have made great efforts to build local currency bond markets, and encouraging retention of dollars in Asia – much of which come from trade surpluses – is another aspect of their approach.

China made up about 47 per cent of the US$730 billion market outstanding as at June, and is projected to surpass 60 per cent of the market by 2020, when the total reaches a forecast US$1 trillion.

For Mr Yim, the head of debt capital markets at Standard Chartered for greater China, the market’s change has meant spending more time in his home base Hong Kong, not just because of less business travel. Years ago, August was a quiet month when Asian bankers could go on Westernstyle summer holidays. Nowadays, issuance continues apace through the month. It is Chinese New Year, in January or February, that is become the dead-zone for sales. BLOOMBERG

‘Too big to fail’ Prudential said to plot escape from federal watchdog’s oversight Washington

PHOTO: BLOOMBERG

“We support the administration’s thorough review of the FSOC (Financial Stability Oversight Council) determination and designation process and look forward to reviewing the Treasury report upon completion.”

Mark Grier, Prudential’s vice-chairman, to shareholders in a May conference call

PRUDENTIAL Financial Inc is laying the groundwork to escape the government’s label that it’s too big to fail, a move that would dramatically reduce federal oversight of the largest US life insurer.

Prudential is preparing to push a federal watchdog – the Financial Stability Oversight Council (FSOC) – to remove it from a list of non-banks that regulators concluded would threaten the financial system if they collapsed, said two people familiar with the company’s plans.

With business-friendly officials appointed by President Donald Trump taking over FSOC, the Newark, New Jersey-based company sees an opening, said the people.

And the Treasury Department is expected to release a report as soon as next month criticising how the government has gone about designating companies such as Prudential, which could provide momentum for the insurer to get out. Another factor helping Prudential is rival MetLife Inc’s legal victory last year overturning its

label as a systemically important financial institution, or Sifi.

The creation of FSOC – and granting it power to flag companies as so big and interconnected that their failure could imperil the economy – was one of lawmakers’ key responses to the 2008 financial crisis. But the council, which is led by the Treasury secretary, has been controversial from the start.

Republican lawmakers say its decisions are opaque and arbitrary, while companies have griped over designations or had to sell businesses to exit the government’s grip.

Under the Dodd-Frank Act, big banks such as JPMorgan Chase & Co and Goldman Sachs Group Inc automatically received the systemic-risk label but the number of companies FSOC designated has been falling in recent years, with Prudential and American International Group Inc (AIG) the only two remaining.

The label brings tough oversight by the Federal Reserve and a series of difficult supervisory exercises, such as stress tests and the submission of strategies for how the companies can

be safely wound down in a bankruptcy.

Prudential quietly began its exit campaign as soon as Treasury Secretary Steven Mnuchin arrived on the job in February, sending him a welcome letter contending that its status as a Sifi wasn’t appropriate, the people said.

“We expect that ultimately we may not wind up as a Sifi,” Mark Grier, Prudential’s vice-chairman, told shareholders in a May conference call, adding that Washington is “moving in the right direction” on the topic of nonbank designations. “Exactly how we get there, I’m not quite sure.”

Prudential has “long maintained” it shouldn’t have been labelled risky in the first place and got to that point only through “flaws” in the council’s process, the company said in a statement.

“We support the administration’s thorough review of the FSOC determination and designation process and look forward to reviewing the Treasury report upon completion.”

Prudential could get the ball rolling by sending a letter formally re-

questing FSOC rescind its risk label, though Treasury says such petitions must typically demonstrate a company has made “an extraordinary change that materially decreases the threat the non-bank financial company could pose”.

Prudential may have an easier time when Treasury conducts an automatic annual review of its designation.

A firm needs the Treasury secretary and at least six additional FSOC members to agree to rescind its risk label, as happened last year with General Electric’s financial arm, GE Capital, after it shrank and exited most of its financial-services operations. Other FSOC members include the leaders of the Fed, the Securities and Exchange Commission and the Office of the Comptroller of the Currency.

In another development that could benefit Prudential, the Fed and the Federal Deposit Insurance Corp decided last month to give it and AIG an extra year to file their so-called living wills – the complex and labor-intensive plans in which each firm plots its route through bankruptcy. WP

ENERGY & COMMODITIES | 15

The Business Times | Monday, August 21, 2017

China’s menswear maker swops stitching for lithium batteries Shanshan aims to be bigger player in market for storing electricity for everything from e-vehicles to laptops Beijing TEN years ago, Ningbo Shanshan Co was primarily a maker of menswear turning out shirts, casual wear and business suits from its base of Ningbo, an industrial hub in China’s Zhejiang province. Not any more.

Last week, the company announced that it will spend 3.81 billion yuan (S$781 million) on a new energy storage project in China’s northern city of Baotou, bolstering its growing interest in the research, development and manufacture of lithium-ion batteries.

The move is the latest by the Chinese company to become a bigger player in the market for storing electricity for everything from electronic vehicles to laptop computers. It underscores an accelerating shift for a company that got almost all its sales

from apparel in 2006. Shanshan is “a buy recommendation on Wednesday, serious player in the battery material predicting Shanshan will trade at 26.5 business, so it’s not a surprise” to see yuan within a year, a 25 per cent inits new plan, said I-Chun Hsiao, a crease from the close on Aug 15.

Tokyo-based analyst from Bloomberg Shanshan’s newest project each New Energy Finance. “There’s an over- year will be able to produce 100,000 supply in batteries in the short term.” tonnes of anodes – a component in The industry, he said, will see lithium-ion batteries, according to a enough demand to boost manufacturing capacity by more than four-fold from 2021 to 2030. Chinese companies have about 57 gigawatt-hours (GWh) of lithium-ion manufacturing capacity, with another 78 GWh an- Bloomberg New Energy Finance analyst I-Chun Hsiao nounced, according to Bloomberg New Energy Finance data. statement on the Shanghai stock exThe shift has been good for Shan- change on Tuesday. Construction will shan investors. Its shares have gained begin in October and is expected to about 45 per cent in Shanghai trading be completed by June 2019. this year, outpacing the Shanghai The new investment adds to ShanStock Exchange Composite Index’s 5 shan’s purchase last month of 1.8 bilper cent increase. Citic Securities Co lion yuan of shares in China Molybinitiated coverage of the stock with a denum Co in a private placement as

Shanshan is a serious player in the battery material business, so it’s not a surprise to see its new plan.

part of its push to secure the raw materials use to produce cathodes.

Battery materials accounted for almost 75 per cent of Shanshan’s revenue last year. That’s up from 39 per cent in 2011 and a far cry from virtually nothing in 2006 when it got 93 per cent of its sales from making apparel, according to company filings.

The transformation to battery material manufacturing has helped rejuvenate the company’s earnings. Net income rose about 51 per cent in the first half from the same period a year earlier to 339 million yuan mainly because of its battery materials business, the company said on Tuesday.

Annual revenue has more than tripled in the past 10 years.

Besides anodes, Shanshan also produces other battery components such as cathodes and electrolytes.

The company is expanding into more aspects of electric vehicle manufacturing, including battery system integration, vehicle design, research and development and charging pole construction. BLOOMBERG

Some 2,000 turbines have been built in Oaxaca since 1994, generating 2,347 megawatts – enough to power half of Mexico City. PHOTO: AFP

Green energy revolution blowing up storm of controversy in Mexico Some accuse firms building wind farms of breaking promises, unfair contracts

Mexicans eat the prickly pear cactus, drink it, and even use it in medicines and shampoos.

Now scientists have come up with a new use for the bright green plant: producing renewable energy.

PHOTO: AFP

Mexico’s prickly pear cactus: energy source of the future?

Mexico City THE prickly pear cactus is such a powerful symbol in Mexico that they put it smack in the middle of the national flag.

It was considered sacred by the ancient Aztecs, and modern-day Mexicans eat it, drink it, and even use it in medicines and shampoos.

Now scientists have come up with a new use for the bright green plant: producing renewable energy.

Instantly recognisable with its jumble of spiny discs – its bright red fruit protruding like fat fingers from each one – the prickly pear cactus is farmed on a massive scale in Mexico.

Its soft inner flesh plays a starring role in a plethora of favourite national dishes: tacos, soups, salads, jams and even candies.

Believed by some to have healing powers, the cactus is also used in blood-pressure medications, anti-hair loss shampoos, skin creams and diet juices.

“Since before the Spanish conquistadors arrived, we have eaten prickly pear cactus. It’s our tradition and our culture,” said Israel Vazquez, who has farmed the cactus for the past 20 years on a small plot in Milpa Alta, a neighbourhood on Mexico City’s south side.

The cactus’s thick outer layer, with all those spines, has always been a waste product – until researchers developed a biogas generator to turn it into electricity.

The pilot project was launched in May at Milpa Alta’s sprawling cactus market.

The far-flung neighbourhood is a splash of green amid the smog and concrete of this Latin American mega-city, thanks in part to its more than 2,800 hectares of fields of prickly pear cactus, known in Spanish as “nopal”.

Farmers in straw sombreros trickle into these fields every morning at dawn to work the long rows of cactus that flow from the lower flanks of the dormant Teuhtli volcano.

The area produces 200,000 tonnes

a year of prickly pear cactus – up to 10 tonnes of which ends up as waste on the floor of the cactus market each day.

A local green energy start-up called Energy and Environmental Sustainability – Suema, by its Spanish acronym – got the idea to develop a biogas generator to turn that waste into energy.

They decided to build it right at the source: the bustling cactus market, where hundreds of workers start each day by cleaning up the waste left from the day before.

Oil-producing Mexico has emerged as a green energy leader in recent years. It won praise in 2015 when it became the first emerging country to announce its emissions reduction targets for the United Nations climate accord, ambitiously vowing to halve them by 2050.

To get there, it is seeking to generate half its energy from renewable sources.

Last year, green energy made up 15.4 per cent of its energy mix – though just 0.1 per cent was from biogas.

Suema is looking to change that with its generator, which will ultimately produce 175 kilowatt hours – enough electricity to keep some 9,600 low-energy light bulbs burning.

The generator – a giant silver cylinder surrounded by an intricate web of pipes – churns together organic waste with a special mix of bacteria and heats it to 55 degrees Celsius to produce biogas.

The leftovers can then be used as compost.

When it reaches full capacity around November, the generator will be able to process three to five tonnes of waste a day, producing 170 cubic metres of biogas plus a little more than one tonne of compost.

The US$840,000 project, funded mostly by the Mexico City government, is popular at the cactus market.

“It’s a good idea, because now all this waste will do something productive,” said vendor Evangelina Lara, 45, wearing a red apron and wielding the knife she uses to clean her stock.

The Mexico City government’s scientific development chief, Bernardino Rosas, hopes the generator will be the first of many.

“Our vision is to reproduce this type of project” at each of the city’s more than 300 produce markets, making them energy self-sufficient, he told AFP. In Aztec mythology, Huitzilopochtli – the god of the sun, war and human sacrifice – tore out the heart of a treacherous prince named Copilli and threw it into a lake.

The first prickly pear cactus supposedly grew on an island in that lake – its juicy red fruit symbolising Copilli’s heart.

According to the legend, Huitzilo-

pochtli told the Aztecs to build a city at the spot where they found the cactus, which would have an eagle sitting atop it eating a snake.

The story has it that this is where the Aztecs built their capital, Tenochtitlan – over whose ruins the Spanish conquistadors built Mexico City.

Today, the prickly pear cactus with the eagle eating the snake is a national symbol – so much so that it appears at the centre of Mexico’s green, white and red flag.

This all makes the cactus a very fitting fuel for Mexico’s future, said Horacio Chavira, deputy director for rural development in Milpa Alta.

“The prickly pear cactus is so Mexican that it’s a symbol of our identity,” he added. AFP

La Ventosa, Mexico CAIN Lopez looks tiny standing near the seven enormous wind turbines that tower over his farm in the Mexican village of La Ventosa.

In this gusty rural region near the Pacific coast, the wind is so strong that it sometimes flips over cars and even trailer trucks.

Mr Lopez always considered it a curse, until an international energy company came along and said that it wanted to build the 40-metre (130-foot) wind turbines on his land, offering him a small fortune by local standards.

Now he considers the wind a blessing, he says.

But not everyone sees it that way.

Some villagers in the southern state of Oaxaca accuse the multi-national energy firms that operate here of breaking promises, tricking them into unfair contracts and failing to consult them sufficiently.

Angry protesters wielding sticks and stones have blocked access to wind turbines on several occasions.

Last month, 15 people were arrested when the authorities broke up a protest in the town of Juchitan by residents demanding more money for their land.

And this month, residents of Union Hidalgo filed a court case seeking to rescind French energy company EDF’s permit to build nearly 100 new wind turbines there, saying it failed to properly consult the Zapotec indigenous community.

Now, some locals are threatening to shut the wind projects down completely.

“If we work together, we can close every single wind farm,” says Porfirio Montero, president of a local landowners’ association.

The landscape of this windswept isthmus has been transformed by the wind turbines, which look like gleaming white forests of stylised trees.

Some 2,000 turbines have been built in Oaxaca since 1994, generating 2,347 megawatts – enough to power half of Mexico City, the sprawling capital located some 700 km away.

They are the drivers of a budding green revolution in Mexico, a country that has emerged as a leader on renewable energy.

Mexico won praise in 2015 when it became the first emerging country to announce its emissions reduction targets for the United Nations climate accord, ambitiously vowing to halve them by 2050.

To get there, it is seeking to generate half its energy from renewable sources.

Last year, green energy made up 28 per cent of its energy mix, according to the government.

Mexico is now the world’s 18th largest producer of wind energy, with 3,709 megawatts, and second only to Brazil in Latin America, according to the World Wind Energy Association.

The arrival of wind power has been transformational for some.

Mr Lopez bought 52 hectares of land 25 years ago in the village of La Ventosa, whose name means “windy” in Spanish. The area lived up to its name: the wind was so strong it could bend trees down to the ground. Mr Lopez couldn’t get anything to grow on his land. He ended up using it as pasture for his cattle.

He now earns rent of US$2,800 a month – money he has used to send his kids to college and renovate his ranch house.

But Mr Montero says that the energy companies have worsened inequality in the region, one of Mexico’s poorest. “Some people earn just US$1,700 a month for the same wind turbines” that Mr Lopez has, he says.

“There are differences of 25 to 30 per cent.”

According to Mr Montero, one wind turbine generates electricity worth about US$112,000 a day.

Non-landholders often get nothing at all.

Some companies are accused of breaking promises to fund infrastructure projects to benefit the community. The wind farms create jobs when they are built, but they disappear just as quickly when the projects are done.

Another major company that has faced resistance, Spain’s Iberdrola, says that it has not received any complaints from landowners it rents from. AFP

16

| TECHNOLOGY

The Business Times | Monday, August 21, 2017

Uber running into big trouble with quiet investor

Mr Gurley has warned startups of irrational exuberance in recent years, saying that a combination of easy money, high valuations and reckless spending had created a “risk bubble” in the industry.

PHOTO: NYTIMES

VC firm Benchmark alleging dark secrets in addition to lawsuit for fraud against ex-CEO San Francisco FOR the past week, Uber’s board members have been embroiled in conversations over a thorny question: what to do about Benchmark, the venture capital firm that is one of the ride-hailing company’s largest shareholders.

While Benchmark had long supported Uber’s management, the investor had recently turned against the company’s top echelons. In June, Benchmark helped oust Uber’s co-founder, Travis Kalanick, as chief executive. Recently, the firm escalated its actions against Mr Kalanick by suing him for fraud and saying he should be removed from Uber’s board. Then, last Monday, Benchmark published an open letter to Uber employees intimating that the company had dark secrets that had not been revealed.

Uber’s board was blindsided by Benchmark’s lawsuit, according to three people with knowledge of the matter who spoke on the condition of anonymity. News of the suit led to a flurry of emails and phone calls between directors in recent days over what to do. Benchmark owns a 13 per cent stake in Uber and also holds a board seat.

Benchmark’s influence on Uber’s board, however, is now diminished.

Benchmark’s board representative, Matt Cohler, recused himself from a board committee that discusses litigation issues until the lawsuit is resolved, the people with knowledge of the matter said. The change means that for the time being, Benchmark will have restricted access to information about legal battles that are set to shape Uber’s future.

For Benchmark, this puts the venture firm further out on a long limb.

The firm, which has backed companies including eBay, Snap and Twitter, became one of Silicon Valley’s most successful startup investors by keeping a low profile in its partnerships with entrepreneurs. Now with Uber, the firm is mired in a bitter and highly public fight while it is being isolated on the company’s board.

The battle has caused other Silicon Valley investors to take Benchmark to task. Shervin Pishevar, an early Uber backer who is leading a coalition of other investors, has asked Benchmark to sell its shares in the ride-hailing company and leave its board. In a letter last week, Mr Pishevar called Benchmark’s lawsuit against Mr Kalanick “irrational in the extreme” and its other actions “culpably wrongheaded”.

“I can’t help but wonder how recent events will impact founders’ views towards raising capital from Benchmark,” Michael Boswell, a tech entrepreneur, wrote on Twitter. He called Benchmark’s actions against Mr Kalanick “ruthless”.

Anand Sanwal, chief executive of CB Insights, a research firm that tracks the venture capital industry, said that litigation between founders and venture capitalists had never been seen “at this scale or in as public a way”.

Representatives for Uber and Uber’s board declined to comment. A spokeswoman for Benchmark declined to comment beyond a statement earlier this week on the litigation. “Resorting to litigation was an ex-

tremely difficult step for Benchmark,” the statement said. “Failing to act now would mean endorsing behaviour that is utterly unacceptable in any company.”

Benchmark, which was founded in 1995, has developed a reputation for prescient startup investments. It rode the late 1990s dot-com boom by backing companies like eBay and Palm.

The company is also known for its network of influential tech executives, including Meg Whitman, the chief executive of Hewlett Packard Enterprise.

But Benchmark has been involved in disputes with entrepreneurs, sometimes leading to legal trouble. In 2005, most of the founders of a startup called Epinions, which Benchmark had invested in, sued the firm and one of its partners, Bill Gurley, among others, accusing them of withholding information in an ownership deal. The suit was eventually settled.

Silicon Valley’s memory of such episodes was often short because of Benchmark’s success. The firm, which invested US$5 million in the e-commerce company eBay, reaped a 50,000 per cent return when it went public in 1998. Twitter, Zillow and New Relic were also lucrative investments. More recently, a US$21 million investment that Benchmark made in Snap became worth more than US$2 billion when the social media company went public in March.

Benchmark invested in Uber in 2011, putting in an initial US$12 million at a valuation of around US$60 million. (That stake is now worth more than US$8 billion.) Mr Gurley, Benchmark’s most prominent part-

ner, also took a board seat at the company. He has since promoted Uber on his blog, Above the Crowd, and on social media. “Uber is a great place to work w/ loyal employees!” he wrote on Twitter last year in response to an article on the technology news site TechCrunch about the company’s aggressive employee-retention tactics.

Mr Gurley has warned startups of irrational exuberance in recent years, saying that a combination of easy money, high valuations and reckless spending had created a “risk bubble” in the industry. The message may

have been applicable to Uber, which had raised money at ever-higher valuations, burned through billions of dollars and did not file to go public.

Initially, Mr Gurley and Mr Kalanick appeared closely linked. But as Mr Gurley privately cautioned Mr Kalanick about overspending and overexpansion, their relationship frayed.

The investor encouraged Mr Kalanick to get Uber out of China, where it was spending billions, for example. Mr Gurley also advised Uber to hire a chief financial officer and think seriously about going public, according

to four people with knowledge of those talks.

Thanks in part to such fretting, Mr Kalanick would sometimes reference the character “Chicken Little”, who always claimed the sky was falling, when speaking of Mr Gurley, according to a person who spoke on condition of anonymity to describe the conversations.

Benchmark’s ability to work with Uber became strained. This year, Mr Gurley became worried that he did not get the full results of an internal Uber study that examined the reputation of the company and Mr Kalanick, according to two people with knowledge of those conversations.

Eventually, the relationship disintegrated. Benchmark spearheaded the effort to push Mr Kalanick out as chief executive in June. That same month, Mr Gurley left Uber’s board, and Mr Cohler replaced him.

A spokesman for Mr Kalanick said that Mr Gurley and Mr Kalanick were never close, that Mr Kalanick never called Mr Gurley “Chicken Little” and that Mr Gurley received the entire report about the reputation that Mr Kalanick and Uber had among consumers.

Until Benchmark sued Kalanick, the venture firm had not publicly admonished Uber’s executive team. In its lawsuit against Mr Kalanick, Benchmark claimed that it had no inkling until this year that Mr Kalanick was mismanaging the company or that Uber’s culture was deeply troubled.

The ride-hailing company had made headlines for years in its clashes with legislators and regulators, among other issues.

Now Benchmark must prove that there was fraud at Uber that it had no way of knowing about, said Bart Friedman, senior counsel at the law firm Cahill Gordon & Reindel.“If they didn’t know, they created this monster by looking the other way,” Mr Friedman added. NYTIMES

Apple under pressure to dazzle as market for smartphones slows San Francisco AS Apple and Samsung gear up to launch new flagship smartphones, the market leaders are seeking a wow factor that can help them fend off challenges from rising Chinese-based manufacturers.

Apple is under particular pressure to dazzle as the culture-changing California iPhone maker looks for a way to maintain its image as an innovation leader in a global market showing signs of slowing.

“Clearly, Apple wants to do something different for the 10th anniversary” of the iPhone, NPD Group analyst Stephen Baker told AFP. He said this is a challenge for Apple because “it is still going to be a flat piece of glass and the other things we talk about around a phone”.

Apple is widely expected to unveil the latest iteration of the iPhone in September, while smartphone market leader Samsung is holding an Aug 23 unveiling likely to launch its Galaxy Note 8 handset.

The two market leaders are seeing rivals, mainly from China, chip away at market share, creating pressure to showcase innovation, say analysts.

Some reports say the new iPhone will include a high-quality, edge-toedge screen with a notch in the top for an extra camera supporting 3D facial recognition.

Some speculate that the back of the new handset will be glass and will offer wireless charging.

“We are expecting a major design

refresh on Apple,” GlobalData analyst Avi Greengart told AFP. “That has been a sore point, especially in China.

People are looking to show off a status symbol, so it needs to look different than Huawei or Xiaomi, and I think it will.”

Apple has lost ground in the Chinese market, with revenues down 10 per cent in the past quarter from a year earlier in its “Greater China” segment.

Some reports say Apple could release as many as three new handsets, including an “iPhone Pro” aimed at capturing the high end of the market.

Global smartphone sales saw a modest decline of 0.8 per cent in the second quarter of 2017, as market leaders Samsung and Apple consolidated their positions, an IDC survey showed.

The South Korean giant maintained the top spot with a 23.3 per cent market share, while Apple held onto second place with 12 per cent, according to IDC. Huawei was the third-largest vendor, with an 11.3 per cent market share. The Chinese electronics giant closed the gap with Apple, adding two percentage points to market share from a year earlier, according to the survey.

China-based Oppo and Xiaomi rounded out the top five.

Samsung is in stride with a recently released Galaxy 8 flagship phone, seemingly recovered from an embarrassing recall of a Note 7 model due to batteries catching fire.

Apple, which has lost ground in the Chinese market, is widely expected to unveil the latest iteration of the iPhone in September. Samsung, which has seemingly recovered from a recall of a Note 7 model, is holding an Aug 23 unveiling likely to launch its Galaxy Note 8 handset. PHOTOS: REUTERS

“Samsung had the Note 7 debacle, but it appears their troubles are behind them. Samsung is doing some amazing things with its display and design.”

GlobalData analyst Avi Greengart

“Samsung had the Note 7 debacle, but it appears their troubles are behind them,” Mr Greengart said. “Samsung is doing some amazing things with its display and design.”

Mr Baker said he expected “the drum beat of Hero Android phones” that could challenge the iPhone “to be a little louder this year that it has been”.

Meanwhile, the Google-made Pixel smartphones that debuted last year will likely get a second generation in the months ahead.

New Pixels are expected to have richer screens and an additional front speaker, and to follow the trend of adding a second camera on the back for depth-sensing.

Gartner analyst Brian Blau suggested that, aside from Apple trying to

wow with an anniversary iPhone, flagship handsets launched this year would have incremental improvements, not radical transformations.

“There will be a small number of new players, and that always brings excitement.”

New entries include the “Essential” smartphone from a startup founded

by Andy Rubin, credited with being the father of Android software.

Essential, whose backers include Internet colossus Amazon and China’s Tencent Holdings, began selling its US$699 handset this month, touting the handset’s ceramic and titanium construction and the ability to add accessories on a magnetic connector.

Some analysts say the upcoming handsets may showcase the ability to

handle augmented reality (AR) as a way to revive interest.

Google has pushed augmented reality with a “Tango” phone, and enabled Pixel handsets to be used for virtual reality with “Daydream” gear.

And Apple has made an AR kit available to developers that could lead to iPhone apps.

“The standard AR demos we have seen for years as a future thing – seeing how new furniture looks in your living room or virtual coupons hanging in mid-air in supermarket aisles – we will see this fall,” Mr Greengart predicted.

Smartphone makers are also expected to do more with voice recognition and commands, making handsets more attractive in places where literacy rates are low but mobile internet access is available. AFP

Google develops new subscription tools for news publishers San Francisco ALPHABET Inc’s Google is developing new tools designed to boost subscriptions for news publishers. It follows a similar olive branch from Facebook Inc to an industry that has seen the digital behemoths take over the online advertising market.

Google’s latest foray arrives on three fronts. The first is a revamp of its feature, called “first click free”, that allows readers to access articles from subscription publications through search. Google is also exploring publishers’ tools around online payments and targeting potential subscribers. It is part of Google’s broader effort to keep consumers and

content-makers returning to the Web, the lifeblood of its ads business.

Initially, Google is testing the tools with The New York Times and the Financial Times. But Richard Gingras, Google’s vice-president for news, said that the search giant is talking to dozens of other outlets as media companies move towards online subscription models.

“It’s clear from news publishers that they can’t live on advertising alone,” he said. “But it’s also clear that we’re seeing a shift in a market.”

Media companies are focused intently on online subscriptions as print ads shrivel and digital ad spending consolidates with Facebook and Google, which together this year will

garner more than 60 per cent of the US$83 billion market, according to market research company EMarketer.

In response, both digital platforms, which have rocky relationships with publishers, are introducing products catered to them. Facebook said last month that it was working to add subscription tools inside its Instant Articles program, which hosts news articles in its mobile app.

Google’s version, called Accelerated Mobile Pages or AMP, enables news websites to load more quickly inside of search. With the new tools, Google is looking at ways to let publishers identify who may subscribe, determine how much readers would pay and speed up the process.

Mr Gingras said that the new effort would involve Google’s mobile payment services and its gargantuan ad targeting apparatus, although he did not offer specifics.

“This is an area, clearly, where our knowledge about our users can be brought to bear,” he said. “There is no singular subscription strategy that will work for each publisher.” He declined to say if or how the company would be sharing revenue with publishers.

Kinsey Wilson, an adviser to Mark Thompson, president and chief executive officer of The New York Times, said that the media company has not discussed revenue terms with Google yet.

To date, publishers have favoured Google’s mobile publishing tools, which run on the Web using open-source software. “Facebook’s environment is a Facebook-hosted walled garden,” Mr Wilson said.

The social network, however, tends to be a far bigger driver of Web traffic and, thus, an irresistible partner for the media companies.

Some publishers with subscription paywalls are concerned about Google’s search policy. If publishers sign up, they can bump up their articles high in search results, which otherwise bury pages that cannot be accessed for free. In return, they must give non-subscribers access to at least three articles a day for free.

Right now, Google and The New York Times have been testing ways to drop that number down, Mr Wilson said.

The product changes are expected to come next month.

“Early results are that there is some flexibility here,” Mr Wilson said.

Sales from subscriptions gained 13.9 per cent for his company during the second quarter while ad revenue rose 0.8 per cent.

News Corp’s Wall Street Journal dropped out of Google’s first click free program in February. After the newspaper ended the program, subscriptions ticked up, but traffic from Google fell off a cliff. The publisher told Bloomberg News that the policy “discriminated” against paid news sites. BLOOMBERG

CONSUMER | 17

The Business Times | Monday, August 21, 2017

Walmart’s clash with Amazon takes to the skies with floating warehouses The world’s largest retailer has applied for a US patent for a blimp-style machine that could make deliveries via drones Washington WAL-MART Stores, Inc has opened a new front in its battle with Amazon.com Inc. The world’s largest retailer has applied for a US patent for a floating warehouse that could make deliveries via drones, which would bring products from the aircraft down to shoppers’ homes.

The blimp-style machine would fly at heights between 500 feet and 1,000 feet, contain multiple launching bays, and be operated autonomously or by a remote human pilot.

Amazon was granted a patent for a similar vessel in April 2016.

The migration to the skies represents the latest volley in a clash between Walmart and Amazon to grab shoppers’ attention, loyalty and dollars. In the process, the companies are increasingly treading on the other’s turf: Amazon is opening physical stores and agreed to pay US$13.7 billion for upscale grocer Whole Foods Market Inc. Walmart, meanwhile, has beefed up its e-commerce business through acquisitions and offers like free two-day shipping.

An unmanned airborne warehouse – laden with drones – could help retailers lower the costs of fulfilling online orders, particularly the so-called “last mile” to a customer’s house, which is usually handled by a local or national logistics company. To avoid that expense, Walmart and other retailers often encourage shoppers to pick up those orders at the store, where they might grab a few additional items.

Earlier last week, Target Corp

The migration to the skies represents the latest volley in a fight between Walmart and Amazon to grab shoppers’ attention, loyalty and dollars. PHOTO: REUTERS agreed to acquire a software company that coordinates local deliveries.

“The core challenge of traffic and driving distance in any major city or in a very rural location can be helped by a floating warehouse,” said

Bubble tea sellers in US grow with drink’s popularity New York THE Starbucks on Waverly Place in Greenwich Village was all but empty at 8.30 on a recent Wednesday night, but across the street at Boba Guys, a bubble tea shop, the line was long.

A wave of first-time customers had just arrived at the front counter, uncertain of the drill and even more about bubble tea, which has had a niche following in the United States for some time.

An employee behind the counter guided the customers through their options, which were also explained on wall signs: Select a tea (classic milk, say, or jasmine milk or horchata), and pick a topping such as tapioca balls (the bubbles, or “boba”), almond jelly or grass jelly (an Asian treat similar in texture to Jell-O).

Then, more choices: Would you like the milk in your tea to be organic, soya or almond? What about the sweetness level: 100 per cent, 75 per cent, 50 per cent, 25 per cent or none?

“We introduce people to the way to order, and we explain the toppings and the different flavours. And we had to make adjustments for the US market.”

Derrick Fang of Ten Ren Tea

“One hundred per cent sweetness is like a Coke,” the clerk said helpfully to a customer. Also: Small or large?

Hot or cold, and, if cold, lots of ice or just a little?

Anchal Lamba, 27, owns eight Gong Cha bubble tea shops in New York City and has franchised others elsewhere in New York state, and in Massachusetts, New Jersey and Texas. “My stores in Flushing did well from Day 1 because the Asian customers are there” and were familiar with the product, she said of a location in a section of Queens.

According to the Tea Association of the USA, a trade group, 87 per cent of American millennials drink tea.

Understandably, Ms Lamba has made them a key target of her marketing efforts, sponsoring events at New York University and supplying drinks to club meetings there.

The drink she is trying to push further into the mainstream was created, so the story goes, at a teahouse

in Taichung, Taiwan, almost 30 years ago when, on a whim, a manager poured the tapioca balls from her pudding into a glass of iced Assam tea. After becoming a hit in Taiwan, bubble tea was embraced throughout Asia. It started to become increasingly available on the East and West Coasts a few years back.

On a recent visit to Boba Guys, Patrick Lin, a regular customer, ordered four drinks, including a matcha latte and a horchata, which is made with cinnamon and rice milk.

“I’m trying to try everything on the menu,” Mr Lin, a restaurateur, a said.

Ms Lamba of Gong Cha acknowledged that there could take time for some people to appreciate the chewy, gelatinous bubbles in the tea. “Sometimes, people are a little freaked out by it,” she said. “They’ll have a sip and say, ‘This is interesting’, and then they’ll have another sip and think, ‘Hmmm, maybe I will have it again’.”

In recent years, iced tea and hot tea have been making inroads against coffee, but there are signs of stress: Starbucks recently announced that it would close its stand-alone Teavana stores, calling into question the future of a brand it bought for US$620 million in 2012.

Purveyors of bubble tea hope they can take advantage of the growing popularity of tea. Some shops offer dozens of beverage options – such as fruit-based teas, smoothies and slushes – with some of the drinks even incorporate coffee.

Boba Guys began in San Francisco in 2011 as a pop-up stand inside a ramen noodle restaurant. It was a testing ground for the founders, Bin Chen and Andrew Chau, to refine their three flavours (classic black milk tea, jasmine and soya milk tea) and to work on new concoctions.

“We were in the Mission area, where there were a lot of curious foodies and a lot of Asian-Americans who had grown up drinking bubble tea,” said Mr Chen, a former creative director at a messenger bag company.

He and Mr Chau opened their first store in San Francisco in 2013 and have since expanded to six in the Bay Area and three in New York City.

Many bubble tea companies have opened stores near college campuses. The thinking, said Derrick Fang of Ten Ren Tea, “is that Asian students will introduce the culture to their non-Asian friends – and it works”. There is also a concerted effort to guide newcomers.

“We introduce people to the way to order, and we explain the toppings and the different flavours,” Mr Fang said. “And we had to make adjustments for the US market. People in America like a sweeter taste than in Asia.” NYTIMES

Brandon Fletcher, an analyst at Sanford C Bernstein. “Movable warehouses are a really nice idea because any flexible part of a logistics system allows it to be more efficient when demand varies wildly. The e-commerce world suffers from highly variable de-

mand and more creative solutions are needed.”

A movable warehouse could serve a wider distribution area, Mr Fletcher noted, compared with a traditional warehouse that can only fill orders within a fixed driving distance. The

airship could fly to one town and release a flock of drones to deliver packages, after which the drones would return to the vessel and restock while it flew to the next town. Such a system would be more efficient than having the drones fly back to a central distribution hub, according to research firm CB Insights.

“There are numerous ways to distribute and deliver products,” according to Walmart’s patent application.

“Getting the product to a delivery location, however, can cause undesirable delays, can add cost and reduce revenue.”

Walmart’s application stands a good chance of getting approved as it goes into more detail about the implementation of a gas-filled aircraft than Amazon’s patent, which is a more general description of the concept of airborne-delivery systems, according to Khaled Fekih-Romdhane, managing partner at patent-licensing firm Longhorn IP. This isn’t the first time Walmart has shadowed Amazon’s intellectual property. In October, it filed a patent application for a Web-based system similar to Amazon’s Dash buttons, which can quickly reorder household goods like paper towels or razor blades. The technology could also gather shopper data, such as how often a product is used and at what times of day.

In recent years, Walmart has significantly stepped up its patent filings, many of which focus on Web development and easing shoppers’ journey through the store. The company has also filed a patent for in-store drones that would ferry products from the backroom to the sales floor. WP

Banking restrictions hitting Uruguay’s legal marijuana sales Montevideo URUGUAY’S unique new marijuana industry has run into a hurdle as international anti-money laundering rules are forcing banks to close the accounts of pharmacies legally selling the drug.

Uruguayan pharmacies started selling marijuana last month under a 2013 law that made the South American country the first in the world to legalise pot all the way from production to sale.

But lenders such as Uruguayan state bank Banco Republica (BROU) now say they must abandon such businesses.

Not doing so would “cause BROU and its clients to be financially isolated”, its president Jorge Polgar was quoted as saying by El Observador newspaper. That would “prevent it from carrying out any kind of operation with an international counterpart”, he warned.

Another major bank, Santander of Spain, said it too would close any accounts held with it by Uruguayan pharmacies selling the drug.

“As a global bank with clients in various countries, we have to observe the various norms in force in those places,” a Santander source said.

Some pharmacies have warned that they will have to stop selling

marijuana because of the banking restrictions.

“The truth is we did not know ... that this could happen,” economy minister Danilo Astori was quoted as saying by La Republica newspaper. “A way will have to be found and we are looking for one.”

The marijuana law was launched

by Uruguay’s last president Jose Mujica. He urged his successor and ally Tabare Vazquez to find a solution. “If this gets blocked, then the whole parliament will be blocked,” warned Mr Mujica, now a senator, whose Broad Front party has a majority in the legislature.

Despite widespread public opposition, Mr Mujica pushed through the law, saying that it would stem violence and crime by undermining the illegal drugs trade.

“This is a blow to the government and to the Broad Front,” said Adolfo Garce, a political scientist at Uruguay’s University of the Republic.

“Having made so much progress, having planted and harvested the marijuana and delivered it to the pharmacies ... not being able to sell it due to an unforeseen problem is a very hard blow.”

Another of the architects of the law, Julio Calzada, said Uruguay will now have to talk with US banks to seek a way around the restrictions.

“There are alternatives,” he said, “but not in Uruguay.”

A survey published this month indicated that half of Uruguayans were opposed to selling marijuana in pharmacies.

More than 10,000 users have signed up with the authorities to buy the drug legally, according to the Cannabis Control and Regulation Institute.

In all, 16 pharmacies have been authorised to sell marijuana under state controls, barely enough to cover a country of 3.5 million people.

No major pharmacy chain has agreed to sell the drug.

Many pharmacies have been unwilling to participate in the scheme because of concerns about security and doubts that the small market of registered users is worth the trouble.

Cannabis producers have experienced similar difficulties in the US, where several states have legalised marijuana for medicinal or recreation use.

US federal anti-drug laws forbid banks from letting them hold accounts, obliging the producers to operate in cash.

Credit rating agency Standard and Poor’s estimates that only 300 of 12,000 financial institutions in the US do business with producers of the drug. AFP

Target ends relationship with troubled food startup Hampton Creek San Francisco TARGET Corp will no longer sell products made by food startup Hampton Creek Inc after an internal review, the latest major blow to the beleaguered maker of Just Mayo eggless mayonnaise and other plantbased foods.

The retail giant decided to end the relationship about two months after receiving what it described as “specific and serious food safety allegations about Hampton Creek products”.

Target pulled the San Francisco company’s products from its shelves in June while it looked into the matter and shared the claims with the US Food and Drug Administration.

Hampton Creek has said that its products are safe and comply with FDA rules. The FDA has said it won’t investigate unless it receives reports of consumers getting sick and has “no safety concerns with Hampton Creek at this time”.

“Although the FDA is not pursuing this further, we used the opportunity to review our portfolio, as we regularly do, and decided to reconsider our relationship with Hampton Creek,” Jenna Reck, a spokeswoman for Target, said on Friday. “We are not planning to bring Hampton Creek products back to Target and have openly communicated our decision with the Hampton Creek team.”

Last week, Hampton Creek released a statement saying the FDA had concluded that its products are safe and that the company hoped to resolve the issue with Target soon.

Hampton Creek said its public statement was to blame for the retailer’s decision. “Target informed us that sharing with the public the FDA’s conclusion that our products are safe violated Target’s vendor communication guidelines,” Andrew Noyes, a spokesman for Hampton Creek, said.

Target said the statement was one of several factors. “There were multiple reasons we terminated our relationship with Hampton Creek and all of the reasons were clearly communicated to Hampton Creek,” Ms Reck said. She declined to elaborate, saying Target does not discuss details of its business relationships.

The loss of Target’s business is a big setback for Hampton Creek after a year filled with scandals. Before Target’s review this summer, it was the startup’s largest retail customer, two people with knowledge of the business have said. Target was expected to bring in about US$5.5 million a year for the money-losing food maker, representing about a third of Hampton Creek sales from stores, according to one of the people. Mr Noyes disputed these figures and said Target accounted for less than 10 per cent of the company’s total net revenue in 2016 and 2017.

Some former allies have been distancing themselves from Hampton Creek recently. In the last year, the company has been rocked by revelations of an undercover project to buy back its own products from stores that briefly drew scrutiny from the feds, fundraising struggles and an executive exodus. This summer, the startup’s entire board left except for chief executive officer Joshua Tetrick, and a bottled-water company co-founded by actor Jaden Smith sued over a trademark dispute.

BLOOMBERG

18

| GOVERNMENT & ECONOMY

China’s not running a trade surplus with more than 40 nations New York CHINA’S big trade surpluses hog all the headlines, but imbalances go both ways.

South Korea’s US$72.2 billion surplus with the People’s Republic in fact tops a list of more than 40 nations that export more to the country than they import from it, followed by Switzerland and Australia, data compiled by Bloomberg show. Besides commodity exporters such as Iran and machinery producers such as Germany, smaller economies such as Ireland, Finland and Laos round out the tally.

Imports by the world’s biggest exporter show how its humming factories prop up other economies – and for some of those, what’s on the line should they find themselves involved with territorial disputes or geopolitical tensions with one of their biggest customers.

In Asia, South Korea and Malaysia are among the most vulnerable to China’s economic arm-twisting, while Japan and Vietnam look relatively immune, according to Bloomberg Intelligence estimates based on their trade surpluses with China as a share of total output.

One of China’s biggest appetites is for machines and electronics from South Korea, Malaysia and Germany, according to World Bank data from 2015, the most recent year available.

Semiconductors from South Korea and Malaysia account for much of that as they’re brought in and then installed in other electronic products assembled in China’s factories. The iPhone itself is an ecosystem that illustrates the global reach of far-flung supply chains. China’s assembly lines for the device incorporate expensive components imported from sources including Germany, Japan, South Korea, the US and Taiwan. Such complex and crucial trade relationships give South Korea something of a buf-

“Eighty per cent of Korean exports to China are intermediate goods, and everyday people can’t see them from the outside or feel them.”

Yang Pyeong Seob, senior research fellow at the Korean Institute for International Economic Policy in Beijing

fer against Chinese reprisals like those it faced last year after agreeing to install a US missile defence system.

“Eighty per cent of Korean exports to China are intermediate goods, and everyday people can’t see them from the outside or feel them,” said Yang Pyeong Seob, a senior research fellow at the Korean Institute for International Economic Policy in Beijing.

China’s factories, construction sites, vehicles soak up oil, metal and materials from commodity exporters around the world, so when the economy sneezes it spurs big swings in things such as the Australian dollar or Mongolian gross domestic product.

Those two countries are key suppliers of iron ore, precious metals and coal. Meanwhile, oil from Angola, Oman, Iran, and Venezuela helps keep China’s cars and trucks running, and Turkmenistan sends natural gas.

Chile offers metal, mainly copper, but wine and cherries are more familiar South American imports on Chinese supermarket shelves.

Swiss trade is driven by pharmaceuticals, chemicals and precision instruments and watches. The surplus size may have been distorted by commodities trading, which doesn’t necessarily lead to actual shipments.

South Africa’s shipments include diamonds, gold and wine. Elsewhere in the southern hemisphere, Brazil was China’s top overseas source of soya beans, soy oil, beef and sugar last year, according to China’s Ministry of Commerce. The most populous nation imported 38 million tonnes of soya beans alone from Brazil last year.

And farmers in New Zealand are increasingly stocking those supermarket shelves for more discerning consumers. China imported more lamb from New Zealand than anywhere else, the most wheat from Australia, and the largest amount of fruit and nuts from Chile. BLOOMBERG

The Business Times | Monday, August 21, 2017

WALL STREET INSIGHT

When riots, rhetoric and solar event eclipse earnings growth Market could bounce back from sell-off based on what Federal Reserve chief says at annual conference

By Rob Curran btworld@sph.com.sg US STOCKS fell last week and the Dow Jones Industrial Average snapped one of its longest ever streaks without a major sell-off as it plunged more than 2 per cent on Thursday.

The rally could be back on track this week, depending on what Federal Reserve chairwoman Janet Yellen says in a speech in Jackson Hole, Wyoming.

The chest- and war-drum beating match between the US and North Korea stopped last week, making what felt like it could be another Cuban missile crisis seem like just another bluff from the regime of Kim Jong Un. For bricks-and-mortar retailers, the apocalypse remains nigh, however. Among the remaining companies with high investor expectations, sportswear retailers rolled over last week, in the wake of disappointing earnings from Dick’s Sporting Goods and Foot Locker. Walmart, the world’s largest retailer by sales, was thought to be the only one that stood a chance against Amazon.

While it did boast near-Amazon like growth rates in its digital business, the famously thrifty store was

also forced into Amazon like capital outlays to build the new business.

That pruned profits and Walmart's shares slid.

One strategist said the role of politics in last week’s sell-off was overdone. Walmart’s sell-off coincided with “political things, and the unfortunate situation in Barcelona” to tip over a market that was, after all, due for a sell-off, said Joe Kinahan, chief market strategist at TDAmeritrade.

“You’ve had an amazing earnings seasons so almost 75 per cent of companies going into today have beaten overall... by and large market has ignored all the political c**p and focusing on earnings, which is the right thing.”

Perhaps what was always a relatively slim chance of a massive tax cut and infrastructure package had faded as a reason to buy stocks some time ago. For weeks, many traders, such as Mr Kinahan, have pointed to the “fundamentals”, and chiefly strongerthan-expected earnings growth as the main catalyst for the misnamed “Trump bump” since the presidential election.

But the violence in Charlottesville, Virginia and, particularly, the president’s response to the violence has serious repercussions for anyone with a

A Dow Jones rally could be back on track this week, depending on what Fed chairwoman Ms Yellen says in a speech in Jackson Hole stake in the American project, including investors. I arrived in Charlottesville a few hours after the white supremacist James Alex Fields allegedly ploughed down Heather Heyer, killing her. I found a community stunned.

One woman kept telling a small group gathered outside an apartment complex to “go home, just go home”, as she was concerned for their safety.

Another man, Joshua Crumpley, 25, spoke with his voice tightened by shock and righteous anger about his friend who had been struck by Mr Fields’ car.

The squadrons of riot police and national guards made Charlottesville feel more reminiscent of Istanbul, a city plagued by civil unrest, than it did of the small American college towns I was used to.

When Mr Trump equated the actions of the protesters who stood with Ms Heyer with the actions of the armed neo-Nazis who invaded her town, it was not just another bit of hyperbole. It was, in itself, an act of hate.

As such, it drew rebukes from across the political and business world, beginning with Merck chief executive Kenneth Frazier, who is black.

Now, The Economist and other mainstream publications are warning that Mr Trump is losing his authority along with his credibility – a weakness in the executive branch that could have far-reaching implications for economic planning and diplomatic missions. The dismissal of chief strategist Stephen Bannon, often associated with the strain of white supremacist thinking nicknamed the alt-Right, was an attempt by the administration to disavow the far Right.

But unless Mr Trump does something unprecedented and takes back his statements, he will have little support from Congress and could see further fractures within his own administration.

For the US, any repetition of the violence in Charlottesville would mark the most serious domestic instability since the late 1960s.

Outside of earnings and politics the biggest influence on the stock market is Federal Reserve policy. Expectations for a rate hike in December have steadily diminished alongside inflation rates. Despite repeated promises from central bankers for another hike this year, the odds of a December increase recently dropped below one in two. The annual central bankers’ conference in Wyoming has taken on added significance this year. “(Fed chairwoman) Janet Yellen is going to speak at Jackson Hole and you’ve got to think that’s going to be a topic of conversation,” said Mr Kinahan.

To many, this week’s eclipse is becoming fraught with symbolism. As a practical matter, it could also give the US economy a modest boost. The petrol market was goosed somewhat by prospects of pilgrimages taken all over the US to witness the “totality”, the total solar eclipse that’s slated to happen in a narrow band in the middle of the country. This prompted one energy trader to tell Dow Jones and The Wall Street Journal that he had traded on hurricanes and even alligator-inspired refinery outages, but never on a solar eclipse.

Wall Street strategists are looking forward to talking more about fundamentals and less about riots and solar eclipses.

“Assuming we get past the debt ceiling debate (which we will), the market will probably continue to discount politics and move on economics,” said Brad McMillan, chief investment officer for advisory Commonwealth Financial Network.

“Although we will certainly see more headlines from DC, the economic news is likely to continue to be positive, which should keep the market moving more smoothly than the headlines would suggest.”

Missing China mogul returns with US$1b for brain research Chen Tianqiao tells why he gave up his life’s work years ago and ceded the market to Alibaba and Tencent Washington A DOZEN years ago, the largest Internet company in China wasn’t Alibaba or Tencent, but game developer Shanda Interactive Entertainment. Its founder was a young man named Chen Tianqiao, who had become a billionaire at 30. Mr Chen was more prominent than Alibaba’s Jack Ma for much of the last decade – then he disappeared. He left China, dropping out of public view almost completely. He took his Nasdaq-listed company private in 2012.

Mr Chen is finally ready to talk publicly again. Now 44, he’s living in Singapore with plans for his next act. During a visit to his office there, he explained what led him to give up his life’s work and cede the market to Alibaba Group and Tencent Holdings, whose founders are now the country’s two richest men. It started with panic attacks in his 30s, then escalated amid the rising stress of competition and government regulations. He eventually decided he had to salvage his own health.

“As I watched the sunset every night, I thought I would never wake up,” said Mr Chen, sitting near the painting of a swirling dancer with his wife in a two-storey colonial house that serves as their office. His experience ultimately led him to a new path. The struggles with his own mental condition, combined with his Buddhist beliefs, convinced him to focus on research of the human brain.

He has set aside US$1 billion for the effort, out of a personal fortune of at least US$2.4 billion, according to the Bloomberg Billionaires Index. That includes US$115 million that Mr Chen and his wife Chrissy Luo have already given to the California Institute of Technology to establish the Tianqiao and Chrissy Chen Institute for Neuroscience. The rest will be used to directly fund young scientists and set up Chen University somewhere in the United States.

The concept for the school is unusual to say the least: It will bring together academics in everything from neuroscience, biology and psychiatry to philosophy and divinity studies, and encourage them to work together. Mr Chen thinks it’s time to focus on improving humans’ emotional well-being after centuries of effort to increase living standards.

Gaming company “This will be a university whose mission is to try to answer who we are and where we come from,” he said. “For thousands of years, we improved our happiness through changing the physical world. We now have to solve this problem by exploring inward.”

Mr Chen was born in the Chinese province of Zhejiang in 1973, and grew up as the country began to embrace capitalism in the aftermath of the Cultural Revolution. He graduated from Fudan University a year early, with a degree in economics. He met his future wife, Ms Luo, while the two of them were working at a securities firm. They were married within six months, then soon quit to start Shanda in 1999.

At the time, many Chinese entrepreneurs were rushing to create Internet portals. Mr Chen, then 26, went his own way: He created an online gaming company with Ms Luo, his younger brother and savings of about US$60,000. Their first big break came in buying distribution rights to the South Korean role-playing game Legend of Mir II. Revenue surged, giving Shanda enough money to begin developing its own games, including the World of Legend.

As online game-playing in Internet cafes be-

Mr Chen and his wife Chrissy Luo live in Singapore. Out of the US$1 billion set aside for brain research, the couple have given US$115 million to the California Institute of Technology to establish the Tianqiao and Chrissy Chen Institute for Neuroscience. PHOTO: BLOOMBERG came a craze among China’s teenagers, profit doubled from 2002 to 2003. The company raised US$152 million in a Nasdaq initial public offering (IPO) in May 2004.

Life as a public company proved tumultuous. Shares soared the first year, then plunged the second as fickle users defected to other games. Mr Chen diversified, proclaiming he wanted to become the Disney of China, then doubled down on games and saw his stock rise again. In 2009, he spun off the games unit Shanda Games in a US$1 billion offering – the biggest IPO in the US that year.

“One of the obvious differences between Chen Tianqiao and other entrepreneurs was that he had a very good financial backing and a solid revenue model,” said Jixun Foo, managing partner at GGV Capital.

The pressure was taking its toll however. In 2004, while Mr Chen was on a flight from Shanghai to Beijing, he felt excruciating pain in his chest. Convinced he was suffering a heart attack, he rushed to a hospital after landing. The doctors told him his heart was in perfect condition. He was suffering a panic attack.

That afternoon, he sat alone on a bench in China’s capital, thinking he’d never do business again. “It was so stressful, so painful,” he said.

But once he went on medication and recovered, he went back to work.

As Mr Chen’s ambitions grew, he expanded into home entertainment. He cut a partnership with Intel Corp and Microsoft to create a new set-top box that would allow TV viewers to go online, play Shanda games and buy music and films. But government officials objected.

They were reluctant to cede control over television screens to anyone beyond the government, according to Mr Chen. The project floundered. Mr Chen said he could never talk about the reasons for the failure until now.

“Some 10 years have passed,” he said.

He suffered his second attack in 2009, this time it was more severe and longer lasting.

That’s when he hit bottom emotionally, so shaky that he often felt like he couldn’t move.

“When you are lying down, you cannot sit down. When you are sitting down, you cannot get up. You cannot breathe,” he said. At first, he came to Singapore to take a break. As he watched Tencent, Alibaba and Baidu filling the void he had left behind, he planned to return.

But his wife cautioned against it, telling him there were different opportunities ahead.

“Many people spend their whole life to climb a mountain. Maybe you can climb several mountains,” she said.

A devout Buddhist who studied ways to transcend suffering, Mr Chen decided to change course for good: The family relocated to Singapore in 2010 and began to withdraw from the business. In 2011, they offered to take Shanda Interactive private for US$2.3 billion. They later sold off their stock in Shanda Games and Mr Chen resigned from its board.

Business potential Shanda ultimately couldn’t make the leap to become China’s answer to Disney and lost ground in games as players shifted to smartphones. “It is a formidable challenge,” said Serkan Toto, the founder of Tokyo consultant Kantan Games Inc. “Games are a totally different vertical from a lot of things that Disney has been doing.” For three years, the couple explored what they should dive into next. Eventually, they zeroed in on the brain.

The realisation that “there is something more important than selfish you started when I became a mom”, said Ms Luo, seated next to Mr Chen. It’s not all altruism. The Chens see enormous business potential in decoding the human brain. Among other projects, they plan to fund research into debilitating diseases such as Alzheimer’s and Parkinson’s. They’ve already backed ElMindA, an Israeli startup that’s developing tools for detecting the early stages of brain diseases.

His Singapore-based investment firm, Shanda Group, has invested in more than 100 advanced technology ventures in China and around the world. Virtual reality (VR) is a focus in part because of opportunities to connect the

technology with neuroscience. He has backed The Void, a US entertainment company that’s trying to create a VR theme park; Los Angeles-based VR game maker Survios; and Iceland’s Solfar Studios, a VR travel adventure app developer.

Mr Chen’s obsession has rubbed off on his daughters, 13 and 8: They now talk about growing up to be neuroscientists. “I have brainwashed them,” Mr Chen says. He has used his assets to make investments well beyond the cerebral. He is the largest shareholder in peer-to-peer giant LendingClub Corp and in the rural US hospital chain Community Health Systems Inc. He also holds chunky stakes in Legg Mason Inc and KKR & Co. He’s even bought up more than 700,000 acres (283,280 hectares) of timberland in the US and Canada.

Mr Chen’s influence in China endures. Several of his lieutenants have gone on to become stars in their own right, including Daniel Zhang, who was Shanda’s former CEO and is now Alibaba’s CEO. Former Shanda employees gather for a reunion every year, an event the founder never attends. This year though, Mr Chen surprised the 1,700 attendees in Shanghai on July 30 with a 10-minute video.

In the end, Shanda’s business couldn’t keep pace with the emerging titans of China’s tech industry. Alibaba’s dominance in e-commerce gave it profits to invest in new business lines and promising startups. Tencent has a similar strategic edge through control of messaging services such as WeChat, while Baidu owns the search business. Today, Alibaba’s Mr Ma is China’s richest man with a net worth of US$43.6 billion, while Tencent co-founder Pony Ma is worth US$33.2 billion.

Back in his office in Singapore, Mr Chen says he has few regrets. He applauds Alibaba and Tencent for doing a “very good job”, and says he’s thankful for the pause he’s had in his life.

He’s ready to move on to his next adventure and leave his 30-something self behind. “I look at him and think he was a bright young man,” says Mr Chen. “But I need to let that Tianqiao stay there and move forward.” WP

GOVERNMENT & ECONOMY | 19

The Business Times | Monday, August 21, 2017

Frankfurt and Dublin make bankers feel wanted in battle for Brexit jobs Many banks’ concerns still centre on issues such as a country’s regulatory regimes, infrastructure and economy Dublin “I’M here to send you the regards of the Federal Chancellor. I am entitled to tell you we want you in Germany.” This private message from Angela Merkel, delivered by a regional politician to Wall Street bankers last year, is having the desired effect.

Frankfurt, along with Dublin, is emerging on top in the battle to draw highly paid banking jobs – and the tax revenue that they bring – away from London before Britain’s departure from the European Union (EU) in March 2019.

Germany has favoured a subtle approach, with Chancellor Merkel saying little if anything in public on what is a sensitive issue at home. Instead she relied on Volker Bouffier, prime minister of the state of Hesse where Frankfurt is located, to take her invitation to New York in November, according to three sources familiar with the discussions.

Irish leaders have been less reticent, but both countries have sent the same welcoming message to US, Japanese and other foreign banks – despite the public unpopularity of bankers that still lingers after the global financial crisis.

While Paris and Amsterdam are set to lure one or two major lenders, Germany and Ireland have so far secured the bulk of commitments from big-name banks. Even then, the work of lobbyists is not over: They are pushing to host the huge business of clearing deals in euro-denominated securities, now dominated by the British capital.

Banks have been undertaking legal, financial and economic analysis in choosing new bases for their EU business if it can no longer be done from London. But they also need to know the political climate will be favourable.

“Bankers want reassurance that the government wants them,” one senior banking executive told Reuters. “Business does care about political sentiment towards them. There’s a reason: If there are problems you know that government will use its powers to help you.”

The largest global banks in London have indicated that about 9,600 jobs could go to the continent or Ireland in the next two years, though few have yet moved, according to public statements and information from industry sources.

In recent weeks Morgan Stanley, Citi and Bank of America (BOA) as well as Japan’s Nomura, Mizuho and

Sumitomo Mitsui have announced decisions for new EU headquarters, all opting for Frankfurt or Dublin.

These cities’ success follows year-long campaigns, as government agencies and lobby groups staged a charm offensive with the banks unseen since the 2007-09 crisis.

Mrs Merkel, who is seeking re-election next month, left city and Hesse officials to do the rounds in New York. That included the one-on-one meetings with senior executives on Wall Street when Mr Bouffier passed on her message.

German taxpayers had to fund a series of bank bailouts during the crisis, and the bad memories remain due to Deutsche Bank. While Germany’s biggest bank did not need rescuing, it has run up a litigation bill of 15 billion euros (S$24 billion) since 2009 due to extravagant market bets and misconduct.

Local officials have had fewer inhibitions than the national politicians. The Frankfurt Main Finance lobby group went on more than 50 trips to foreign banks’ home bases in the past year. “We’ve had indications that two thirds of the major banks’ moves will be to Frankfurt,” lead campaigner Hubertus Vaeth said.

Morgan Stanley, Citi and JPMorgan say Frankfurt will be their EU trading base after Brexit. However, Mr Vaeth told Reuters: “The strategy was to be subtle. There was no glee or triumphalism.”

As a medium-sized provincial city, Frankfurt has also been proclaiming its cultural attractions. That involved taking Wall Street firms to the city’s English-language theatre and Japanese bankers to see the Eintracht Frankfurt soccer team play.

Ireland has adopted similar sporting tactics. When Dublin hosted an American Football game between Boston College and Georgia Tech last year, government ministers worked the room at a dinner of 500 executives from Boston and Atlanta, including State Street CEO Jay Hooley.

The Irish political welcome has been more evident. New Prime Minister Leo Varadkar, building on work by his predecessor Enda Kenny, has met several bank bosses and posted a picture on his website of him smiling with BOA chief executive officer Brian Moynihan.

Politicians posing with bankers had been close to anathema since a collapse of the Irish financial system forced the country to take an international bailout in 2010, bringing austerity policies which hurt voters badly.

Frankfurt has been proclaiming its cultural attractions.

That involved taking Wall Street firms to the city’s English-language theatre and Japanese bankers to see the Eintracht Frankfurt soccer team play.

PHOTO: BLOOMBERG Extra banking jobs and tax revenue are vital for Ireland, a small economy that has relied for decades on foreign investment.

Having attracted all 10 of the world’s largest pharmaceutical companies as well as technology firms such as Google, Facebook and Apple, Ireland moved pre-emptively to offset any economic damage inflicted when Britain – its second biggest export market – leaves the EU. IDA Ireland, the state agency charged with winning foreign business, began meeting banks three months before Britons voted to leave the EU. When billboards went up

around London after the referendum extolling Paris as a financial centre, IDA officials were already in boardrooms making their pitch for Dublin.

“These investments are won through engagement at a senior level.

We weren’t trying to build relationships from scratch,” IDA chief executive Martin Shanahan told Reuters.

Dublin has bagged the planned EU headquarters of Barclays and BOA. JPMorgan has bought a building in the city, and is expected to move more middle and back-office jobs – such as risk management and deal processing – there.

Banks, however, are holding off on moving large numbers of people yet,

focusing on ensuring they have the right legal and operational framework to do business in the EU if Britain fails to negotiate a favourable exit deal, executives say. Citi for example has said the maximum number of jobs it may need to shift out of London is only around 150.

The worry for Dublin and Frankfurt is that banks could set up the EU legal entities for their trading businesses in the cities, leaving national regulators with the task of overseeing their massive balance sheets, but with the bulk of jobs staying in London or placed elsewhere in the EU. “Most banks are looking to minimise expense and disruption by relocat-

UK cranks up the pressure on EU to pivot Brexit talks to trade London THE UK announced that it is piling pressure on the European Union to shift the focus of “Brexit” negotiations away from the terms of divorce and onto their future relationship.

Britain will publish a flurry of documents in the coming days, laying out the government’s position on topics ranging from data protection to judicial cooperation. Five papers are due to be published in the week starting on Monday, the Department for Exiting the European Union said in a statement on Sunday. The next round of negotiations is due to start on Aug 29.

Before talks can move on to commerce, Prime Minister Theresa May needs to convince EU leaders at an October summit that enough progress has been made on citizens’ rights, the UK’s exit bill, and the border with Ireland. With the clock ticking down to the March 2019 departure date, Brexit Secretary David Davis has an added

sense of urgency to try and get a discussion on trade going.

While the UK has insisted that it wants to hold trade and divorce talks in tandem, the EU has been unwavering in its stance that the details of the separation must be sorted out first.

Moreover, the 27 other EU nations have united behind their lead negotiator Michel Barnier in the past five months.

The five upcoming papers are “all part of our work to drive the talks forward, and make sure we can show beyond doubt that we have made sufficient progress on withdrawal issues

by October”, Mr Davis said in the statement. Britain is “putting forward imaginative and creative solutions to build a deep and special partnership with our closest neighbors and allies”.

On Monday, Britain plans to publish papers on “goods on the market” and “confidentiality of documents”.

The first is a response to an EU paper setting out provisions that goods

made available for sale before Brexit should still be available for purchase in both the EU and UK after Britain’s withdrawal.

Mr Davis will say that the EU proposals should extend to related services – for example, a maintenance contract that comes with the sale of an elevator.

While the document will only cover a small part of the withdrawal deal, it foreshadows the fight that Britain faces to ensure that services are covered in a future trade deal with the EU. Services make up 80 per cent of the gross value added to the British economy, compared to an EU-wide 74 per cent.

The data protection and judicial cooperation papers will come later in the week, along with one on proposed mechanisms for dispute resolution once the European Court of Justice (ECJ) no longer has jurisdiction in the UK. This last one is expected to cause the most friction, since Mrs May has

Germany hopes to avoid mistakes made with earlier migrant workers Gescher, Germany AS Germany struggles to absorb more than a million migrants from the Middle East and Africa, the government is hoping to avoid the mistakes it made half a century ago when it brought in a generation of guest workers from Turkey.

In the 1960s, hundreds of thousands of Turkish men were invited in to fill labour shortages. But Germany made no attempt to help them learn the language or upgrade their skills.

The result is that three million Turks in Germany are still struggling today. They are the least integrated minority, with an unemployment rate of about 16 per cent, almost three times the national average.

Now, two years after it threw open its doors to the latest migrants, Germany has devised an integration strategy based on language and job training intended to get the newcomers into work and off welfare.

Among the changes are 600 hours of mandatory language lessons and fast-tracked work permits.

These measures are starting to show signs of success: a growing number of migrants are joining a labour market where a record 1.1 million jobs are unfilled.

“Things are very different here,” said Merhawi Tesfay, a 32-year-old Eritrean who was hired by Kremer Machine Systems, an engineering company in the town of Gescher in west-

ern Germany. “In Eritrea you find work through word of mouth. Here you have the Job Centre and online job sites. Everything comes with too much bureaucracy and my German wasn’t good enough.”

Mr Tesfay was hired initially as a trainee and then full-time through ELNet, a government-funded project run by charities which assign mentors to refugees. He had been looking for work for almost three years.

Waves of migrants, many forced to flee Syria’s civil war, began arriving in large numbers two years ago, one of the biggest migration movements Europe had seen since World War II. The challenge now for Germany, which took in the largest number of the incomers in western Europe, is to integrate them into society over the long term.

With its strong economy, Germany is better placed than many European countries, especially in southern Europe, to accept migrants. German unemployment is at its lowest since 1990 and seven straight years of growth mean the government can afford to put aside more than 10 billion euros (S$16 billion) a year for refugees.

“The lesson that Germany learnt is that integration is something you work on,” said Herbert Bruecker of Humboldt University of Berlin. “It doesn’t happen on its own.”

When the first Turkish guest work-

ing as little as possible in the first instance,” said Matt Austen, UK head of financial services at Oliver Wyman.

Many banks’ concerns still centre on issues such as a country’s regulatory regimes, infrastructure and economy.

Standard Chartered CEO Bill Winters said his bank opted for Frankfurt as its new EU base due to Germany’s AAA credit rating. With Ireland’s rating up to six notches lower, that went against Dublin. “It would’ve been easy to set up there also. But at the end of day it involved an interesting issue around the country’s credit rating. We felt large institutional investors would prefer Germany.” REUTERS

Merhawi Tesfay of Eritrea (left), with Tilman Mues (far left), managing partner of German engineering firm Kremer Machine Systems), had been looking for work for almost three years.

PHOTO: REUTERS

“The lesson that Germany learnt is that integration is something you work on. It doesn’t happen on its own.”

Herbert Bruecker of Humboldt University of Berlin

ers arrived in the 1960s, German politicians, still preoccupied with rebuilding the economy after World War II, regarded them as a temporary measure. The perception was that Turks were guests who would go back home.

The Turks, of course, did not go home. And their wives and children began following them, just as the oil crisis of the early 1970s pushed Germany into a recession that cost many guest workers their jobs.

With low skills and little grasp of

the language, many found it hard to find work again as Germany shifted away from industry towards automation and services.

This time, Germany has taken a different approach.

One month after her decision to open Germany’s borders to refugees fleeing war and persecution, Chancellor Angela Merkel told parliament in September 2015 that Germany should learn from its mistakes with the Turkish workers and seek to integrate asylum seekers from day one.

Since then, her government has focused on language and vocational training to help 1.2 million asylum seekers get into a manpower-hungry labour market and wean them off Germany’s generous welfare system.

Under legislation approved in August 2016, integration courses including language learning were made mandatory for all refugees and asylum seekers from countries such as Syria, Eritrea and Afghanistan.

The new rules included a “Give and Take” clause giving authorities

made escaping the jurisdiction of European courts a red line while the EU see a continued role for the ECJ. Mr Davis has been stung by domestic criticism of his approach, as well as an accusation from Mr Barnier that the UK has been wasting time – not least by holding a snap election in June that cost the Conservative Party its majority.

At the previous round of talks in July, envoys discussed the rights of EU citizens in Britain and those of Britons living in the bloc after Brexit.

They then published a document showing disagreement on 14 of the 44 topics related to that discussion. Last week, Britain published its proposals for how to deal with the border between Ireland and Northern Ireland, throwing down the gauntlet for the EU to do likewise. On the bill associated with Britain’s departure, ministers have acknowledged the need for a payment, though Mr Davis said last week that it would involve a “long haggle”. BLOOMBERG

powers to cut financial aid to asylum seekers if they don’t attend language courses.

The government speeded up work permits for asylum seekers, and scrapped a rule under which job centres had to prove they couldn’t find a European Union citizen for a vacancy before they could offer it to a refugee.

There are several signs that the measures are working: Some 203,000 migrants from Syria, Afghanistan, Iraq, Eritrea, Iran, Pakistan, Nigeria and Somalia were employed in May, according to the Labour Agency, 23,000 more than in February.

The government is also offering financial incentives to companies that offer vocational traineeships to refugees and asylum seekers. This could amount to half a new recruit’s salary for a year.

More than 13,500 refugees are taking part in these schemes, which involve learning a profession at a technical college while at the same time gaining experience with a company.

While it’s too early to say if the programme is a success in Germany, salary assistance schemes have boosted migrant employment rates in Scandinavia.

Germany suffers from labour shortages as its population ages. This bodes well for the largely low-skilled migrants given that sectors requiring unskilled labour such as catering and hospitality are growing fastest.

“In the last three years, 1.6 million positions were created in low-skilled sectors, 45 per cent of which were jobs for which one requires no formal qualifications,” said Mr Bruecker of Humboldt University. “We don’t only need doctors and engineers”. REUTERS

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| GOVERNMENT & ECONOMY

The Business Times | Monday, August 21, 2017

Post-Bannon Trump administration could take harder line on trade Any hopes by TPP members that US support for deal can be rekindled are doomed to disappointment: analysts

By Anthony Rowley btworld@sph.com.sg Tokyo THE firing by US President Donald Trump of his chief strategist Steve Bannon, a fierce opponent of the Trans-Pacific Partnership (TPP) in which Japan has invested heavily, has sparked hopes in Tokyo of a softer Washington line on the TPP and other US trade accords important to the country.

Japan’s Deputy Prime Minister Taro Aso will reportedly head for the US next month to prepare for a second round of bilateral economic talks in which the TPP as well as the North American Free Trade Agreement (Nafta), which is also of importance to Japanese business, are expected to figure.

Mr Aso and US Vice President Mike Pence have led the US-Japan eco-

nomic dialogue, which aims at improving bilateral cooperation in areas such as trade and investment as well as in the formulating of economic policies of both countries.

But analysts say that any hopes by Japan and other TPP members (including Singapore) that US support for the TPP can be rekindled are doomed to disappointment.

“Bannon has left the White House, but Bannonism is still driving Trump’s agenda,” said veteran Japan analyst Jesper Koll.

“America First remains on top of the agenda not just for Trump but also Republicans and many Democrats,” the head of investment firm WisdomTree, Japan, told The Business Times. “Both the Republican and Democratic candidates (at the US presidential election) vowed to kill the TPP.” After plunging last Friday to a

Mr Aso (at left) and Mr Pence have led the US-Japan economic dialogue, which aims at improving bilateral cooperation in areas such as trade and investment as well as in the formulating of economic policies of both countries.

PHOTO: AFP

three-and-a-half month low, Tokyo stock prices have been expected to rise on Monday as a result of the departure of Mr Bannon and the assumed end of his hardline approach toward US trading partners such as

China and Japan. But any rally could be short-lived.

Japan’s Prime minister Shinzo Abe has made repeated attempts to get Mr Trump to reconsider his rejection of the TPP and to embrace more liberal

trade principles. Japanese ministers fear that without a US lead on such issues, China will move toward setting trade rules for Asia.

Many people, “particularly in Japan, still hope that ‘America First’ is

just a passing fad but the reality is that US-led multilateralism is dead and whether Bannon is in or out of the White House matters little,” noted WisdomTree’s Mr Koll.

“In fact, he is probably going to be more dangerous and efficient outside the constraints of public office. Bannon has declared he is now going to war for Trump, and a big part of that war will be aggressive agitation and smear propaganda against trade practices of US allies.”

The “real problem,” added Mr Koll (a Japanese government adviser on occasions), “is that the old Washington Consensus does not have strong advocates and has failed to make a strong and convincing case for multilateralism. It will have to be other nations that lead the charge.”

For Japan, the TPP promised not only access to new markets in a dozen countries that account for 40 per cent of global economic output but also new trade and investment rules that would support a liberal and fair trading regime plus protection of intellectual property rights.

Tokyo has been left instead with the prospect of access to a much-reduced trading area within the “TPP-minus one” framework.

Meanwhile, the renegotiation of Nafta launched last week by the US threatens the tariff-free access that Japanese firms operating within Nafta have to the US market.

Why tourist-magnet Catalonia is Spain’s fertile ground for terrorists Madrid DESPITE its long experience in fighting terrorism, Spain failed this past week to prevent two deadly attacks in Catalonia – a key tourist magnet but also the Spanish region most vulnerable to such assaults, analysts say.

In attacks claimed by the Islamic State group, suspected jihadists killed 14 people and left 120 wounded, using vehicles to mow down pedestrians in Barcelona on Thursday and in the nearby seaside resort of Cambrils on early Friday.

Spain has five decades of experience fighting against the Basque separatist group ETA, which killed over 800 people until it declared a ceasefire in 2011.

But it was jolted to another dimension of terrorism in 2004 when it suffered Europe’s deadliest Islamist attack to date.

During the morning rush hour of March 11 that year, bombs packed with nails exploded on four commuter trains heading into Madrid, killing 191 people and injuring nearly 2,000.

In the aftermath of the carnage, Madrid overhauled its security forces.

It bolstered its police and intelligence services with new hires, recruited translators and reinforced its cooperation with neighbouring France and Morocco, said Mikel Buesa, a terrorism expert at Complutense University in Madrid.

Authorities also started routinely detaining suspects as a preventive measure, he added.

Additionally, “self-indoctrination” over the Internet with the intent of carrying out an attack became a crime in 2015, easing the process of such early detentions.

Although some lawyers say the measure does not always respect human rights, it has been credited with helping to spare Spain from the terror attacks that have plagued its European neighbours.

The country, with its 5,000 kilometres of coastline and long sun-

“Our last analysis published early August shows that 25 per cent of people detained in relation to Islamist terrorism come from the Barcelona province.”

Carola Garcia-Calvo of the think-tank Real Instituto Elcano

Muslim residents of Barcelona at the Las Ramblas boulevard on Saturday as they protest against terrorism and pay tribute to the victims of the Aug 17 attack in which a van was driven into a crowd, killing 13 people and injuring over 100 others. PHOTO: AFP shine hours, has also succeeded in attracting tourists shunning turbulent destinations like Tunisia or Egypt.

But the jihadist threat has risen since 2016, when Islamist websites named as a target “Al Andalus” – the name of Spanish territories governed until 1492 by Muslims better known as Moors.

And experts are particularly worried about the concentration of jihadists in Catalonia, home to the biggest community of Muslims in Spain.

Muslims number 1.9 million in the

country of 47 million inhabitants, or about 4 per cent of the population, according to the Union of Islamic Communities of Spain.

Most of them are North Africans, with Moroccans topping the list.

Because many are new arrivals, there has until now been less risk of radicalisation than elsewhere in Europe, where disenfranchised second or third-generation immigrants have sometimes turned to extremist ideology, said Javier Zaragoza, a prosecutor and anti-terror specialist.

Relatively few have left Spain to join jihadist groups such as the Islamic State organisation, with only 214 leaving to fight along jihadists in Iraq or Syria, said Carola Garcia-Calvo of the Real Instituto Elcano, a think-tank.

That is just a small fraction of the more than 1,000 people who have quit France for jihadist ranks since 2012.

But the think-tank also warned that “the metropolitan region of Barcelona is the home of jihadist terrorism in Spain”.

“Our last analysis published early August shows that 25 per cent of people detained in relation to Islamist terrorism come from the Barcelona province,” Mr Garcia-Calvo said.

Geographically, that is “the main centre of jihadist activity”.

In fact, Catalonia has seen a long history of jihadist activity.

Spain’s first jihadist – a member of the Algerian Armed Islamic Group (GIA) – was uncovered in the state in 1995.

Mohammed Atta, the pilot who slammed a passenger plane into one

India’s new policy lures foreign defence companies to manufacture there New Delhi INDIA has drawn up a shopping list for tens of billions of dollars of foreign fighter jets, armoured vehicles, submarines and helicopters – but it will only sign the cheques if they are made in India.

The world’s largest defence importer has announced a new policy inviting foreign defence manufacturers to set up shop as minority partners in India. Such deals would boost job creation and bring key defence technologies into India.

Foreign companies said that the opportunity is too good to miss.

Europe’s Airbus Group, angling to sell its Panther helicopters, has said that if it wins a contract worth several billion dollars and expected to span at least a decade, it would make India its global hub for the multi-purpose choppers. The company currently builds them at Marignane in France.

Lockheed Martin said that if its F-16 fighter jets are selected – it will likely compete with Saab for that or-

der of close to US$15 billion – it will “support the advancement of Indian manufacturing expertise”.

India initiated the bidding process for submarines in July. Germany’s ThyssenKrupp Marine Systems and France’s Naval Group are eager to compete for a contract of up to US$10 billion to build submarines in the South Asian country.

Luring foreign defence companies to build in India would be a major and much-needed boost to the economy.

Prime Minister Narendra Modi, with less than two years to national elections, is under intense pressure to create more jobs for the hundreds of thousands of people joining the workforce every month.

Growth in the first three months of 2017 slowed to 6.1 per cent. Analysts expect further disruption as businesses adjust to a new nationwide goods and services tax launched in July.

India is seeking to follow other countries which created defence sec-

tors by backing a few big players with long-term defence orders and allowing smaller businesses to develop around them.

“Countries that have a robust defence industry have a few large companies that are supported by their government with large, long-term defence orders,” Amber Dubey of the KPMG consultancy in India told AFP. “They in turn create an eco-system of large and small suppliers to stay competitive.”

India currently imports at least 90 per cent of its defence equipment, including parts for assembly. It is banking on foreign companies to bring in new technology.

The lowest bid is one key selection criteria that worries some of the competitors. “We’d like to see the Indian government work with the US government to ensure that these acquisition policies don’t disadvantage US companies just because we can’t get the lowest price,” Cara Abercrombie, former US deputy assistant secretary

of New York’s World Trade Center towers on Sept 11, 2001, spent time in Catalonia shortly before the attacks.

And in 2008, a plot targeting Barcelona’s underground trains was foiled when it was already in advanced stages.

The Vanguardia newspaper, quoting security sources, claimed last year that Catalonia was fertile ground for Salafist prayer halls, with 50 in the region at the last count.

The state is also now home to a significant number of second-generation immigrants.

Among them is the group of youths believed to have carried out this past week’s deadly attacks.

Most were children of Moroccan immigrants who had grown up in Ripoll, a town at the foot of the Pyrenees mountains.

The town is frequented by tourists, and its unemployment rate is not particularly high, while neighbours described the suspects as hardworking and serious boys.

But police warn that it may have been a case of rapid radicalisation, with the suspects turning to extremism in just a few months.

For the security forces, that is the biggest headache – because unlike returnees from the Middle Eastern war zones, such potential jihadists are difficult to detect. AFP

Lockheed Martin says that if its F-16 fighter jets (seen here in a file photo of an US Air Force plane performing an aerial display) are selected, it will support the advancement of Indian manufacturing expertise.

PHOTO: AFP

of defence for South-east Asia, told a recent panel in New York.

Under the strategic partnership policy, India will line up domestic companies that foreign players have to choose from to set up local plants.

For the Indian companies, which would hold the majority stake, it is a big win, said Dhiraj Mathur, an aerospace and defence specialist for the PwC consultancy.

“You know nothing about defence manufacturing, and you’re going to partner with a global leader to make highly sophisticated equipment – and the only reason they’re talking to you

is because the government has told them to,” he said.

The Indian government wants to bring the local companies up to global standards to compete for the next round of orders.

China also built up local defence equipment manufacturing by forcing international firms to link up with Chinese companies and to hand over technology.

In India’s case, the foreign players are still pushing for ownership. “Let us take a lead, let us be the majority,” said Ashish Saraf, vice-president for industrial development at Airbus. “Or let the Indian guys assume full liabil-

ity (as per the policy). Assuming liabilities on an aircraft is not easy . . . If a product fails, we are talking about hundreds of millions.”

His suggestion is a middle road where foreign companies can hold the majority stake, which can be pared back over time as the Indian partner gains in knowledge and experience. “It takes years to transfer (technology) and to get proven products.

These are complex products that need to perform in battles,” said Mr Saraf.

The other hurdle in the policy is that transferring defence technology requires government approval. In a strategy similar to one followed by the United States, India puts the onus on the foreign partners to get the green light from their respective governments, a challenging task for them. “But if you want indigenisation, this is the only way you’ll get it,” said PwC’s Mr Mathur. AFP

GOVERNMENT & ECONOMY | 21

The Business Times | Monday, August 21, 2017

Trump’s plan to alter Nafta could end up hurting US manufacturing Limiting imports encouraged by Nafta could raise cost of making goods at many US factories and provoke Canada and Mexico to similarly restrict trade Lexington, Kentucky NEVER mind the refrain that the American factory is supposedly a dinosaur in the age of globalisation. Here in the heart of horse country, some 700 US workers are designing and building premium ceiling fans. They tap local engineering prowess and export their wares around the world using a whimsical brand: Big Ass Fans. (Yes, that is really its name.)

But if the company stands as refutation to the premature obituaries for US manufacturing, the people running the operation worry about a looming risk. Talk of trade hostilities from Washington could shrink the globe, potentially yielding policy that could limit US exports while impeding access to crucial components of manufacturing.

The latest concern unfolds this week as the Trump administration begins to renegotiate the North American Free Trade Agreement, redrawing the terms of commerce with Mexico and Canada.

Donald Trump has long criticised Nafta as a lethal threat to American livelihoods, asserting that it has spurred an exodus of jobs to Mexico while opening the borders to unfairly cheap, tariff-free imports. He has vowed to bring factory jobs back to the US. In outlining its goals for the Nafta renegotiation, the Trump administration listed as a priority shrinking US trade deficits with Mexico and Canada. Trade experts construed that as an intention to limit imports from those countries.

But many of the imports encouraged by Nafta are parts and raw materials used by US workers in fashioning finished wares. If Mr Trump limits such imports, that could increase the cost of making goods at many US factories. It could provoke Canada and Mexico to similarly restrict trade, diminishing their purchases of American products.

In short, Mr Trump’s efforts to bring work back to the US could eliminate some jobs that are already here.

“Altering Nafta could fundamentally change the production of the economy – for the US as well as for Mexico – and that will be very disruptive,” said Swati Dhingra, an economist at the London School of Economics.

“Many of the policies being proposed could end up hurting the people who are being left behind.”

Big Ass Fans could wind up paying more for motors it imports from Mexico. It could lose sales to Canada and Mexico, its two largest export destinations and the destinations for more than a third of US exports overall.

“If we get into a trade war, that could significantly impact our US production,” said Paul Lauritzen, the company’s vice-president for manufacturing. “It just seems like the Trump guys are so focused on meeting campaign promises that they have failed to understand

An employee assembling an industrial fan at the Big Ass Fans factory in Lexington. The company is concerned that it may have to pay more for the motors it imports from Mexico and lose sales to Canada and Mexico, its two largest export destinations.

PHOTO: NYTIMES the reality of manufacturing and the global supply chain.”

In the world economy as depicted by Mr Trump, a product made in Mexico and sold on US shelves represents a theft. Such wares should have been forged in the US, using American hands.

In this spirit, Mr Trump first threatened to kill Nafta, and later agreed to the renegotiation getting underway. He has vowed to slap tariffs on a range of Chinese goods including steel. He has accused his predecessors of destroying US factory jobs by assenting to a series of abominable trade deals.

Job killer A growing body of research has concluded that a surge of imported goods produced in low-wage countries – especially China – did indeed eliminate millions of US jobs in recent decades.

Some research has found that trade with Mexico modestly depressed wage growth during the 1990s in the most-affected blue-collar industries, among them the textile trade.

“We strongly support President Trump’s intention to reopen Nafta, and agree that it can be updated and improved to significantly enhance US textile production, exports and employment,” Auggie Tantillo, president of the

National Council of Textile Organizations, an industry trade group, said in written remarks submitted to a congressional panel in June.

Still, he argued against reinstating tariffs while cautioning that the renegotiation must not disrupt “the high level of supply chain integration that exists today”.

Unions from the Steelworkers to the AFL-CIO have assailed Nafta as a job killer while also accusing the Trump administration of failing to define effective goals to boost workers’ interests.

Canada and Mexico are the largest and third-largest source of imports used by US companies in producing exports. In 2011, the most recent year for which government data is available, imports from those two countries yielded more than US$1.6 billion worth of US exports.

As Mr Lauritzen walked through his plant on a recent afternoon, he lifted an electrical device that regulates the power supply for a new line of highly energy-efficient industrial lights. It was imported from China. “If you wanted to source this domestically, your options would be minimal to zero,” he said.

Big Ass Fans began life in 1999 with a more staid name, the HVLS Fan Co. It specialised in enormous industrial-grade fans hung in vast spaces like factories and airplane hangars as a way to reduce use of air-conditioning. The

largest fans reach seven metres in diameter and sell for upwards of US$8,000.

As customers began using blunt language to describe the products, the company took their declarations as its name. Its complex on the outskirts of Lexington features no end of brand-related mischief. Signs reserve a favoured parking spot for the “Wise Ass of the Month.” The company mascot is a donkey named Fanny.

Beneath the joviality is a serious engineering operation. In 2008, when the global financial system was ensnared in disaster and the company’s revenue was about US$30 million a year, it invested nearly one-third of that sum in a new research and development facility.

Above-average pay Company innovators used the facility to develop a popular feature that simulates the variable wind speeds of an ocean breeze, which provides relief from the constant blowing of a typical fan. The company started a new residential line under the Haiku brand, using a moulded hunk of stainless steel, bamboo and other luxurious materials.

By 2012, revenue had tripled to US$90 million, according to the company. Last year, it reached US$240 million.

Big Ass Fans pays well above the state average, investing in the notion that happier work-

ers are more productive. One-third of its assembly line workers earn more than US$40,000 a year, plus health insurance, according to the company.

Ray Hawkins, 38, landed at the factory four years ago, after being laid off from his previous job as a welder at a nearby Toyota plant.

He had endured four years of joblessness with a young son at home. Since starting at the company, he has worked his way up to a supervisory position and now earns nearly one-and-a-half times his previous pay.

“When I was at Toyota, I felt like I was just a number,” he said. “Now, everybody knows my name.”

But company overseers are feeling the pressure. Jamie Hillegonds, director of global operations, is looking for savings in the supply chain. The Trump administration presents itself as a champion of business, eager to strip away job-killing regulations. Yet she finds herself having to anticipate how the president might complicate her plans.

Her company buys motors from a Midwestern supplier known for quality and good prices. But the supplier recently shifted its production to Mexico. If the Nafta renegotiation makes that product more expensive, she will have to adjust.

“It’s very difficult to develop a global sourcing strategy based on Trump’s day-to-day whims about what he wants to do,” Ms Hillegonds said. ” NYTIMES

Japan still seeking US protection while quietly staking its own path Tokyo PRIME Minister Shinzo Abe of Japan has never seemed to waver in his support for President Donald Trump, seeking out meetings and regularly speaking by telephone. He is one of a few world leaders who rarely criticise or even comment on Mr Trump’s political turmoil at home.

That approach, as much as a personal relationship, reflects Japan’s keen awareness that it needs the United States as its primary protector in a volatile region.

But amid public proclamations that appear to show little difference between the countries – and as North Korea accelerates its nuclear programme – Mr Abe has started to consider a more independent role for Japan in Asia: one that looks beyond the current White House as Japan prepares for an era in which US influence may be waning.

Japan is beginning to confront whether it wants to assert itself as a regional leader and carry on the values that have long been the foundation of US policy. “In the long term, Japan has to think about how to preserve liberal order and free trade,” said Takako Hikotani, an associate professor of modern Japanese politics and foreign policy at Columbia University. “That’s not just in the interest of Japan, but the region as a whole.”

Last month, Japan led trade talks among 11 countries that had negotiated the Trans-Pacific Partnership, which Mr Trump abandoned in his first week in office. Japan is eager to salvage the deal and proceed, even if it means forging ahead without the United States.

And in a sign that Japan recognises it may need to build a stronger relationship with China independent of its US ally, Mr Abe, in a reversal, said this summer that his country would cooperate with Beijing’s “One Belt, One Road” infrastructure initiative. Japan, for its part, has been investing in infrastructure projects throughout Soutth-east Asia.

Of course, Japan, whose military has long been constrained by its pacifist constitution, has no intention of weakening its ties with the United States, particularly when it comes to security. In Washington on Thursday, Itsunori Onodera, Japan’s defence minister, and Taro Kono, the foreign minister, met with Jim Mattis, the US defence secretary, and Rex Tillerson, the secretary of state, to cement the alliance between the two countries at a time of heightened tensions on the Korean Peninsula.

A joint statement from the officials confirmed that the United States would offer its full protection, “including US nuclear forces”, to Japan.

As the United States and North Korea trade sabre-rattling threats and China continues to send ships into disputed waters near Japan, “the reality is Japan just doesn’t have a choice,” said Tobias Harris, a Japan analyst at Teneo Intelligence, a political risk consultancy based in New York. To deal with the standoffs in its backyard, Japan “needs the US engaged”. But even on policy toward North Korea, some in Japan have called for the government to cut a separate path. An editorial in the right-wing Sankei Shimbun on Friday

Mr Abe in talks with General Joseph Dunford, chairman of the US Joint Chiefs of Staff, at a meeting in Tokyo last Friday.

Japan, aware of neighbouring threats like North Korea’s weapons advances, is mostly in lockstep with the US. But it is starting to consider a more independent role in Asia.

PHOTO: NYTIMES

“In the long term, Japan has to think about how to preserve liberal order and free trade.

That’s not just in the interest of Japan, but the region as a whole.”

Takako Hikotani, an assocate professor of modern Japanese politics and foreign policy at Columbia University

suggested that Japan “get between the two who don’t have any room to accept the other” – referring to the United States and North Korea – and approach Pyongyang to negotiate the return of Japanese citizens abducted

by North Korea four decades ago.

Others wondered whether Mr Trump’s bellicose talk this month, including a promise to bring “fire and fury” to North Korea, could spook Japan into distancing itself from the United States.

“There might be a question of how far Japan is willing to put up with Trump’s tough stance against North Korea,” said Tetsuo Kotani, a senior fellow at the Japan Institute of International Affairs. The Japanese media fanned such speculation last week after reporting that Kono, the foreign

minister, had met with his North Korean counterpart, Ri Yong Ho, at a regional security forum in Manila this month. The media said that Mr Ri indicated that North Korea was open to talks with Japan, although Japan’s Foreign Ministry declined to confirm those reports.

Some analysts suggested Japan should help mediate dialogue between North Korea and the United States.

“To keep pressing on North Korea with military power is not effective,” said Kyoji Yanagisawa, a former assistant chief Cabinet secretary and the director of a foreign policy think tank in Tokyo.

“Japan should be softening the tension between the US and North Korea,” he added.

But Japan is unlikely to play a

meaningful role in instigating talks, said a person familiar with the thinking of Mr Abe and his Cabinet. Neither North Korea nor China see Tokyo as capable of laying the groundwork for multilateral talks, said the person, who was not authorised to speak publicly. Both assume that it is either Beijing or Washington, not Moscow, Seoul or even Tokyo, that could pursue such a role.

For now, Japan plans to increase its ballistic missile defence. The Defence Ministry said that it would request funding to buy a US system, known as Aegis Ashore, that can intercept missiles mid-flight above the earth’s atmosphere.

Critics say Mr Abe should use his close relationship with Mr Trump to nudge him toward dialogue. “I don’t think there is any reason for Japan to break its ties with the United States,” said Koichi Nakano, a political scientist at Sophia University in Tokyo. “But being a real partner should also include being able to give honest – and maybe painful – advice to calm down.” But other analysts said Mr Abe is capable, when he sees it in the interests of Japan, of diverging from the United States.

Under the Obama administration, Japan imposed more limited sanctions on Russia than the White House wanted after Russia annexed the Crimean peninsula in 2014. And Japan’s efforts to revive the Trans-Pacific Partnership could also offer a template for some independence.

NYTIMES

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The Business Times | Monday, August 21, 2017

Lawyers suing GM accuse it of making threats that scuppered deal Under the deal, the carmaker would have been forced to pay US$1b in shares to resolve millions of claims New York LAWYERS for car owners suing General Motors Co over faulty ignition switches and other defects last Thursday accused the carmaker of meddling in settlement talks and having issued threats that led to the cancelling of an agreement.

Under a deal with a trust that holds many GM liabilities from before its 2009 bankruptcy, the carmaker would have been forced to pay US$1 billion in shares to resolve millions of claims.

The claims stem from GM’s 2014

recall of 2.6 million vehicles with defective ignition switches, including one linked to 124 deaths. They have since expanded to include millions of financial loss claims and hundreds of personal injury and wrongful death claims.

The agreement – first disclosed at a court hearing two weeks ago – had been five months in the making and was confirmed, a plaintiff lawyer, Edward Weisfelner, told a New York bankruptcy court last Thursday.

Representatives of the trust had not yet signed the deal, but Mr Weis-

felner said that he still considered the agreement enforceable.

But after a meeting with GM last Tuesday, the trust suddenly reversed course and in a court filing last Wednesday said that it had accepted GM’s offer to help pay for the trust to defend against the car owners’ claims in exchange for dropping the agreement.

“We uphold, but have no reason to know this for a fact, that the trust’s about-face was the subject of . . . some very direct, very serious threats issued either by GM or GM’s professionals,” Mr Weisfelner said.

Lawyers for GM and the trust, who were also present in court, rejected the allegations. “I was at that meeting.

The concept that there were any untoward threats or anything illicit . . . it just did not happen,” said Keith Martorana, an attorney for the trust.

GM’s lawyer, Arthur Steinberg, said that he did not consider the previous agreement between the trust and the plaintiffs to be binding because it had not been signed.

Bankruptcy judge Martin Glenn said that he had to take allegations over threats seriously and ordered both sides to agree on a discovery process to unearth the details of the discussions that led to the agreements.

He also said that he would not approve any of the settlements before the parties briefed him on how they would go about obtaining evidence.

“Anybody who negotiates a settlement with you better be careful as you might pull the rug out from underneath them after months of negotiations,” the judge told Mr Martorana.

GM said in a statement that it was optimistic that its agreement would gain the upper hand. “The judge has outlined a process to begin to resolve the issues raised. We will follow the process, and we look forward to the eventual approval of our settlement agreement,” it said.

The original settlement would have called for the trust to accept US$10 billion in claims to resolve about 11.9 million allegations over economic loss and between 400 and 500 personal injury and wrongful death claims. REUTERS

Bumpy road ahead for US trucking industry Washington IT has been 30 years since Burt Reynolds starred in Smokey and the Bandit and made driving a rig on the open highway seem like a cool way to make a living. That same year, only Star Wars sold more tickets.

These days, Star Wars still fills theatres but trucking no longer captures the imagination of movie goers or, it turns out, the young and unemployed. Veteran drivers are leaving the profession, and young people entering the workforce are put off by long hours away from home and the profession’s low-brow image. The result is a US trucking industry with high turnover and a dwindling number of new recruits.

“The question is where we’ll be in five or 10 years,” said Steve Viscelli, a sociologist at the University of Pennsylvania and former driver. “If e-commerce goes up a lot and the introduction of autonomous vehicles is slow and the industry does not shift to millennials, we could see actual shortages 10 years out.”

Most trucking companies have been able to make do so far, but as older truckers retire and an online buying boom leads to surging deliveries, the fear is that a driver shortage will spur delays and lost revenue. Offering generous signing bonuses, new technology and cosier cabs has not done enough to overcome the aversion to lengthy times spent alone on the road. The industry is running out of time, with the baby-boomer demographic nearing retirement and millennials continuing to skirt the sector.

The annualised driver turnover rate at large truckload fleets was 74 per cent in the first quarter, and the industry was short of about 48,000 drivers at the end of 2015.

That shortage is expected to balloon to almost 175,000 by 2024, according to the American Trucking Associations.

“Every truckload carrier is always

scrambling to fill their trucks,” Stephen Burks, an economist at the University of Minnesota Morris who used to be a driver, said in an interview.

Brick Kepler, a recruiter from the Professional Drivers Academy in Milton, Pennsylvania, often gets the cold shoulder when visiting high schools in search of potential workers. He said that students have little interest in the trucking industry, with many pressured to pursue college rather than a blue collar job. Young workers also know that they might train for a career only to be replaced by driverless semis in a decade.

“I don’t think people look at the trucking industry as the easy, glamorous, high-paying job they want,” he said. “It doesn’t appeal to the younger generation.”

To boost recruitment and keep drivers invested in their jobs, Don Daseke, chief executive officer of specialised tucking operator Daseke Inc, is giving them free stock in the company that vests over five years. “It’s our way of showing our drivers that we respect them, and they’re really important to us,” he said.

Some companies offer hefty signing bonuses. According to the American Trucking Associations’ 2014 Driver Compensation Study, 48 per cent of newly signed drivers received a signing bonus averaging US$1,500.

Some drivers have learned to cheat the system by signing up for a company just long enough to get the bonus, then jumping ship for another one – a practice that operators are trying to limit by withholding payouts until drivers hit certain milestones.

Timothy Judge, director of research at driver retention consultant Stay Metrics, called such payouts “an act of desperation” and a poor longterm strategy. “What are you communicating to the drivers? That it’s all about the short term,” he said.

Raising salaries is another option, but it would cut into profit margins.

The University of Pennsylvania’s

As older truckers retire and an online buying boom leads to surging deliveries, the fear is that a driver shortage will spur delays and lost revenue. PHOTO: BLOOMBERG

“I don’t think people look at the trucking industry as the easy, glamorous, high-paying job they want. It doesn’t appeal to the younger generation.”

Brick Kepler, a recruiter from the Professional Drivers Academy in Milton, Pennsylvania

Mr Viscelli said that companies would have to double driver pay – now about US$41,000 – to reduce turnover. About 30 per cent of new drivers quit in the first three months, according to Stay Metrics.

Even if they cannot get millennials, shipping companies would do well to reach a new audience. The average worker in the trucking industry is 45, and nearly 75 per cent of workers are white, according to the US Census Bureau. About 95 per cent are men, according to Ellen Voie, chief executive officer of Women in Trucking.

Truck drivers are “Donald Trump’s base in demographic terms”, Mr Burks said.

There has been a growing push to

Your tiny economy airline seat may soon stop shrinking Dallas EVERY so often, officials at Rockwell Collins Inc pitch a one-day job offer to residents near its Winston-Salem, North Carolina design centre: earn US$100 for sitting in an aeroplane seat for eight hours.

Show up for the gig, and there’s nary a drinks cart or flight attendant in sight. The rows of seats are arrayed in a testing area at the company’s design and engineering complex.

Even without engine hum or overhead bins, “it’s kind of like they’re on the plane,” says Alex Pozzi, vice president of research and development at the company’s campus here.

Over the years, seat researchers at B/E Aerospace, which Rockwell acquired in April for US$8 billion, have gleaned a few insights about life in the air. Most people are just fine for two hours. As the third hour approaches, stiffness increases and comfort declines.

At four hours, however, a sort of derierre detente is achieved, and the levels of discomfort recede. After all, when you’re stuck inside a sealed, speeding tube at 35,000 feet, resistance is truly futile.

There are many reasons to despise flying, from delays, to fees, to overzealous Transport Security Administration staff. But shrinking seats and the pain, claustrophobia, and rage they can trigger are arguably the biggest reason why travellers loathe airlines. The modern seat, with its power to pack more customers onto

any given plane, is at the very heart of the industry’s 21st-century economics. Slimmer seats and less legroom between rows known as pitch has enabled “cabin densification” across domestic and international fleets. More seats, quite simply, means more money and lower operating costs.

There are limits, however, even beyond physical constraints. Regulators mandate a certain ratio of attendants to seats, and carriers want to keep labour costs down. Still, the trend has clearly been moving towards crunching you. While 34 to 35 inches of pitch was once common for economy class, the new normal is 30 to 31 inches, with several major carriers deploying 28 inches on short and medium flights. Soon, however, that squeeze-play may come to an end.

The seat factory in Winston-Salem is at the centre of testing the physical limits of human tolerance.

In recent years, the “slimline” seat has become the de facto standard by which airlines outfit economy cabins.

This design is inches thinner than predecessors and markedly lighter, allowing carriers an additional cost-saver by reducing weight and thus fuel burn. Today, an economy seat that tips the scales above 20 pounds is, by an airline’s measure, too heavy to fly.

Carriers are “segmenting the economy cabin into two or three buckets”, said John Heimlich, chief economist at Airlines for America, the industry’s US trade group. These efforts

make the job more appealing to women, such as by designing cabs that accommodate shorter bodies and hiring for regional routes that allow drivers to go home at night, Ms Voie said. They are also adding features that women drivers request, such as porta-potties, smoke alarms and additional cabinet space. To boost retention, some companies such as Prime Inc offer new woman drivers a female mentor, she said.

Then there is the threat from autonomous trucks. In the long run, self-driving trucks that companies including Uber and Tesla are working to develop will save freight companies money. But it makes recruiting young people even tougher. WP

The modern seat, with its power to pack more customers onto any given plane, is at the very heart of the industry’s 21st-century economics.

FILE PHOTO

help “to minimise the market-share loss to ultra low-cost carriers or to other modes of transport”.

When Boeing Co introduced the twin-aisle 777 in the mid-1990s, a nine-seat breadth was standard. Now, the aircraft flown by carriers worldwide often seats 10 across in economy, making life even more miserable for passengers. Boeing’s 787 Dreamliner has become notorious for its economy-class pinch with nine across-seating and on some 787s, these seats are only 17 inches wide.

This cabin squeeze and seat-shrinking has helped increase earnings in an industry that’s gotten used to fiscal stability. But it occasionally results in some bad public relations. Two United passengers got into a kerfuffle in the summer of 2014 when a man stuck a “knee defender” device on the seat in front of him to prevent reclining, causing the seat’s occupant to grow irate. The crew diverted the Denver-bound flight to Chicago to eject both combatants.

In early May, news leaked that the world’s largest airline, American Airlines Group Inc, planned to add three rows of seats separated by only 29 inches of pitch on its new fleet of Boeing 737 Max, which arrives later this year. That arrangement would allow for an additional row of extra-legroom seats, which American calls main cabin extra, between first class and steerage. The move would have broken the current 30-inch pitch limit among the six-biggest US airlines, putting it closer to no-frills carriers such as Spirit Airlines Inc, which offers a mere 28 inches.

Less than six weeks later, American reversed course not because of passenger outrage, but because of flight attendants. American chief executive officer Doug Parker said on July 28 that employees pushed back at having to be the front-line defender of a new level of cabin-class stratification. Mr Parker said employees were telling him: “You’re going to

put us in a position where we need to explain to these customers that indeed this is necessary so that we can have one more row of main cabin extra?’ ” No airline has yet edged below 28-inches of legroom, although at least one major seat manufacturer, Zodiac Aerospace, has shown a prototype designed with just 27 inches.

This rush to squeeze ever-more money out of passenger posture may soon slow. Carriers such as Delta Air Lines Inc are looking to exploit this issue by retaining some creature comforts its competitors have ditched. It has kept nine-across seating on its 777s, “one of the only in the world” to do so, says Joe Kiely, Delta’s managing director of product and customer experience. Delta has also led an industry trend to fly larger aircraft on more routes, reducing the role of regional jets. JetBlue Airways Corp took pitch into consideration for its Airbus A320 fleet, which will see legroom shrink by more than an inch, to 32 inches, starting this autumn.

Despite the contraction, JetBlue wanted still to be able to advertise “the most legroom in coach”.

Bills pending in both houses of the US Congress would mandate rules on minimum airline seat space. In the past, such efforts have failed; the US Department of Transportation has likewise been reluctant to address the topic. BLOOMBERG

Mr Spohr welcomes large numbers of employees from insolvent competitor Air Berlin

Lufthansa CEO eyes pay cuts for Air Berlin crew in rescue plan Frankfurt DEUTSCHE Lufthansa AG chief executive officer Carsten Spohr is ready to welcome large numbers of employees from insolvent competitor Air Berlin Plc to build up his airline’s Eurowings unit, promoting his company as a safe haven for jobs – albeit with concessions.

“Those of you who have worked with Air Berlin crews know it: These are top people, and we’ll be very glad to get as many as we can over to us,” Mr Spohr said at an internal staff meeting. “Of course, we cannot hire these employees on Air Berlin terms, but on Eurowings terms, but we do want to be fair and take into account seniority and experience.”

The comments are a clear sign to unions that Air Berlin employees could secure a future at Lufthansa, but only in exchange for curbs to their paychecks, as the companies begin talks on which assets of the collapsing carrier can shift to its larger rival. Lufthansa is interested in operating about half of Air Berlin’s 140-plane fleet, and the discount Eurowings brand, which is in the process of slashing costs per average seat kilometer by 30 per cent by 2020, would be the new home for many of those aircraft and crews.

Air Berlin, which has only posted a full-year profit three times since its shares started trading in 2006, filed for insolvency on Aug 15 after its main shareholder, Abu Dhabi-based Etihad Airways PJSC, withdrew financial support. Germany’s federal government is providing a 150 million euro (S$241 million) bridging loan, enabling Air Berlin to keep flying for about three months.

Eurowings is already leasing three dozen planes from Air Berlin as part of an earlier effort to preserve the airline. Those aircraft are already part of the 75 that Lufthansa could gain permanently. Mr Spohr has said for months that, before Lufthansa could take over more of the fleet, Air Berlin’s debt burden must be reduced and costs cut, while antitrust authorities would have to approve any deal.

Air Berlin’s insolvency proceedings have already sent its bonds down to about 10 cents on the euro, meaning investors expect to recover almost no funds as the company is broken up. Its stock fell to a record-low 36 cents on Friday before closing at 41.9 cents, up 1.2 cents.

The bridge loan suggests that German politicians would support a national solution to Air Berlin’s woes, potentially signalling that cartel regulators could take a generous stance on the deal.

Intro-Verwaltungs GmbH, a German investment company run by former aviation entrepreneur Hans Rudolf Woehrl, said on Friday that it had teamed up with investors for a proposal to buy Air Berlin and keep it intact. Mr Woehrl sold DBA, previously the German arm of British Airways, to Air Berlin in 2006, three years after he bought the unit for one euro and turned it around. In 2007, Mr Woehrl sold leisure carrier LTU to Air Berlin for 340 million euros.

Labour leaders may favour that option, following disputes over work contracts at discount airlines including Ryanair Holdings Plc. The Dublin-based carrier especially is subject to union complaints that it violates national labour laws and squeezes workers.

Shifting large parts of Air Berlin to Lufthansa isn’t in the interest of competition, and therefore of passengers, Mr Woehrl said in a statement.

“Breaking up Air Berlin will propel the weakening of the German aviation industry”, as any assets that the Federal Cartel Office prevents Lufthansa from taking over will end up at foreign carriers, Mr Woehrl said. BLOOMBERG

| 23

The Business Times | Monday, August 21, 2017

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24

| LIFE

& CULTURE

The Business Times | Monday, August 21, 2017

Famed food guide serves up new category – Michelin Plate It’s for restaurants that don’t qualify for stars or Bib Gourmand, but that offer quality food Washington THE vaunted Michelin Guide is all about stars: Get three of them, the guide’s top rating, and your career as a chef is set for life. Reservations at your restaurant will be impossible to get, and people will be willing to pay even more for your probably expensive tasting menu.

In 1955, the guide introduced a second designation. Bib Gourmand restaurants – indicated in the book with an icon of “Bibendum”, the character also known as the Michelin Man – have been deemed a good value by Michelin inspectors. They are restaurants where you

can get two courses and a glass of wine or a dessert for US$40 or less, excluding tax and tip.

And for the upcoming 2018 guides, Michelin will unveil a new designation worldwide: L’Assiette Michelin, or the Michelin Plate. It’s a symbol that will indicate “restaurants where the inspectors have discovered quality food”.

And from now on, you’ll see it next to any restaurant in the guide that isn’t a Bib Gourmand or a starred restaurant.

It’s an attempt to clear up a bit of consumer confusion about the guide. Michelin is famously secretive about its process, which

involves dispensing anonymous inspectors to cities around the world to gauge the quality of food and service at restaurants in 28 countries. Not every restaurant in a city makes it into the book, and just being listed is an honour in and of itself. But that’s not always how it comes across to readers: Restaurants that don’t have any designations seem as though they are merely included, but not recommended.

Inspectors “want to highlight the restaurants that they review and find noteworthy food at, but haven’t earned that star or that Bib Gourmand yet”, said Lauren Davis, a publicist for Michelin North America.

So it’s actually just a change in formatting – not a new award. The Michelin Plate icon will appear next to restaurants that didn’t qualify

for a Bib Gourmand or for stars, which are the real prize.

Michelin acknowledged the awkward disparity in its press release: “The stars and Bib Gourmands often garner the most attention, but each restaurant that is included in the guide has been evaluated by a famed inspector and subsequent inclusion in the guide, now marked by the new symbol, endorses restaurants that guarantee a very good standard of a food and wine experience.”

Restaurants that are listed as a Bib Gourmand are also ineligible for stars, though some “graduate” to become starred restaurants in subsequent years. Michelin Plate restaurants will be eligible to move up, too.

The Michelin Guide was introduced by the tyre company in 1900 as a way to encourage people to take road trips and wear down their

Michelin tyres. It is still a powerful arbiter of culinary taste, though it faces steep competition from other sources, such as the World’s 50 Best Restaurants, as well as Yelp and TripAdvisor.

Critics of the guide say it is more useful in Europe, where it has a deeper history, and that the cuisine and atmosphere of American restaurants can get lost in translation.

(Naysayers especially love to point out that Michelin is a tyre company.)

The change might be welcomed by restaurants that feel they suffer from not having a symbol next to their name in the guide. At the same time, you aren’t likely to see many chefs bragging about receiving a L’Assiette Michelin next year. Even though it indicates a high-quality restaurant, it might feel like a participation trophy. WP

27 wins and counting, for Singapore’s waterpolo champs Victory over Malaysia means Singapore continues long winning streak since 1965

By Godfrey Robert ON Sunday, Singapore’s waterpolo reign hit the magical 18,872-day high. Or, in simple terms, 52 years.

In what was termed the “mother of all battles” in Kuala Lumpur, Singapore, needing a two-goal victory margin, thrashed Malaysia 17-4 at the National Aquatics Centre to claim the Southeast Asian Games (SEA Games) gold medal once more.

Indonesia took silver and Malaysia bronze.

For Singapore, this has to be the most cherished gold of all. The prized possession has now been in Singapore’s hands 27 times since the sport was introduced to the SEA Games back in 1965.

Eighty-year-old Tan Eng Bock, who captained that 1965 team, said: “It was a tremendous effort by our boys. It is a great feeling whenever we beat Malaysia in any sport.

To do it comprehensively when they are hosts provides extra joy. For a proud tradition to be maintained, it has to be a sentimental journey. It raises pride and patriotism.”

After more than a hundred matches, Singapore’s waterpolo heroes have yet to taste defeat, although they came close on three occasions.

In the inaugural three-nation tournament after Singapore had just gained independence in 1965, Singapore beat Thailand 21-0 and Malaysia defeated the Thais 11-0.

In the decider, Singapore drew 5-5 with Malaysia and won the gold medal on goal average.

While the 1965 victory is honoured in history, Tan best remembers the 1969 triumph in Rangoon when Singapore almost had their short winning streak ended.

“We were 5-3 up against Malaysia in the final. But the gutsy Malaysians fought back to 5-5, with just seconds left. At the restart, I signalled to Eric (Yeo) to pass the ball to me as I saw their goalkeeper off-position. From the

Coach Millakovic is brought into the water by Ang An Jun (left) and goalkeeper Lee Kai Yang. In the back row are, from left, Chiam Kun Yang, Loh Zhi Zhi, Samuel Yu and Koh Jian Ying, with assistant coach Eugene Teo on the right. Right: Singapore waterpolo players Chow Jing Lun (left) and Yu Junjie, SEA Games debutants, jump holding the Singapore flag from the diving platform after winning gold. It is a tradition for players making their SEA Games debut in waterpolo to jump from the diving platform at the end of the competition..PHOTOS: LIM SIN THAI/THE STRAITS TIMES

“It was a tremendous effort by our boys. It is a great feeling whenever we beat Malaysia in any sport,” says Tan, captain of the Singapore team in 1965.

THE NEW PAPER FILE PHOTO

midway line, I caught him by surprise with a long throw which he could only turn into goal. We won 6-5.”

Just last week in Kuala Lumpur, Singapore left it very late to snatch a 4-4 draw against Indonesia to head into the final with a mixture of hope and anxiety.

When the profound victory (buoyed by a storming third quarter) was sealed and the Singapore contingent broke into raptures, the players dragged Serbian coach Dejan Milakovic into the pool, The stark reality, however, is that the Indonesians and Malaysians are catching up fast and snapping at Singapore’s heels, and this sank in to the players and supporters.

It was a warning that Tan had made two decades ago. For now, though, this majestic triumph has to be savoured.

This surely ranks among the best against Malaysia in sport, as good as the many football victories over Malaysia, and Malaysia Cup kingpins Selangor, Penang and Pahang, and as good as the oft-chorused Olympic hockey stronger finish over the Malaysians at the 1956 Games in Melbourne.

For there was more than national pride at stake here. A historic record had to be kept intact. For Singapore’s waterpolo champions, that mission was accomplished in style.

CRYPTIC CROSSWORD

btnews@sph.com.sg @BusinessTimes

Outfits for Nevada’s Burning Man festival selling like hot cakes New York RECENTLY, the mannequins in the window of the Manhattan vintage shop Reminiscence traded their summer outfits for Sgt Pepper-style military coats with tassels and epaulets, harem pants, platform boots, goggles and, perhaps most mystifyingly, bulky faux fur coats.

The reason was simple: Burning Man. Burning Man, an annual gathering that draws about 65,000 participants to the Nevada desert for more than a week, may be 4,425km away, but this time of year it is very present in New York at apartment sales, weekend bazaars, dance parties and at the city’s costume, vintage and army surplus stores and even its sex shops, where shoppers assemble the elaborate outfits that are all but required on the Playa, as the gathering site is called.

“People used to come buy hippie stuff, and we didn’t know why,” said Joan Bedor, 61, who has worked for decades at Reminiscence, now near Union Square. “People kept coming and we began to focus on it. Now we know what to buy.” She pointed out embroidered Indian skirts, metallic-hued booty shorts, parasols hanging from the ceiling, and a rack of fake fur coats – a Burning Man wardrobe staple for the cold desert nights. “This is all Burn stuff,” she said.

Purchased from wholesalers during the year, it was put out in July. By this week, the mannequins had already cycled through several costumes.

At the Pink Pussycat Boutique in the West Village, Carla Dos Santos, the manager, said Burners, as they are known, had come in all week looking for supplies. “Lots of pasties,” she said. “Pasties, undies, stockings.”

New York’s Burners, like their Silicon Valley counterparts, are mainly white-collar professionals in their real lives. Tickets for the event, which begins on Aug 27, range from US$425 to US$1,200, and that doesn’t include the cost of airfare, food and costumes.

Many New Yorkers use online marketplaces like Etsy,

Alex Bovill (far left) and Krissy Alexander, both from England, shopping for their Burning Man outfits at Screaming Mimi’s, a vintage shop in New York.

PHOTO: NYTIMES which cater to Burners, but for the very last-minute shoppers, there is no place like home.

At Screaming Mimi’s, a vintage shop on 14th Street, a couple from England had stopped to get costumes before road-tripping to Nevada. “We’ve been everywhere. Markets. New Orleans. There is nothing like this,” said Alex Bovill, 28. A few busts nearby displayed the Burning Man look: mermaid wigs, horned headdresses, shell-encrusted bras.

Her boyfriend, Krissy Alexander, who works in real estate in Newcastle, had found a US$185 fake fur coat with flecks of green, pink, black and yellow. “Wacky!” he said. It is his third Burn. Asked the most essential item to have at the gathering, he said: “Drugs.”

“It seems very busy this year,” said Richard Geist, the owner of Uncle Sam’s Army Navy Outfitters on West

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Eighth Street. “It seems like people want to get away from the negativity, from everything that’s happening.”

Sales are up 80 per cent in August over July, perhaps boosted further by the Oregon Eclipse gathering. Many items sold at Uncle Sam’s were practical: canteens, compasses, combat boots, whistles to prevent getting lost after wandering into the desert, goggles and scarves to protect from sand flurries.

Mr Geist said Burning Man is now far outpacing Halloween for local businesses like his. “Halloween used to be crazy for us. After 9/11 everyone went out and partied until 2007 and then Halloween started dying off and Burning Man started picking up,” he said.

People shop for a full week of costuming and survival, not just one night. Two customers from Japan had just spent US$1,800. The average Burning Man customer spends US$600, Mr Geist said. NYTIMES

Across 1 Accept a token in new deal (4,2) 4 Little reptile exploits flowering plants (8) 9 Make reference, as man getting audibly vulgar (6) 10 Always you must keep on – not just some of you! (8) 11 As Soviet official, I’m cross, am mad (9) 13 Excellent department led by ace (5) 14 A live gent’s let loose, a gospel preacher (13) 17 Doctor on visit – severe and a bit too touchy? (13) 21 Cardinal providing article about Religious Education (5) 23 Bitterness showing by those with aspiration heading off, quick movers (9) 24 Have a hand in genuine action to cancel debt? (8) 25 One form of music and another making comeback with time (6) 26 Rat in dry zone here shedding skin (8) 27 1 Across funny old comedian (6) Down 1 Time young birds may be found in straw etc (6) 2 Tricky mile trek including middle of bog? A shorter distance (9) 3 What was paid off long ago in coppers? (3,4) 5 Girl given payment in beastly home, brought up to be respectful (11)

6 Business of transporting stuff – hard to get out of old African capital (7) 7 Number in double figures to achieve success (5) 8 Attend match, say, in which muscle is evident (8) 12 Economy good with people showing a redeeming quality (6,5) 15 Alien gent, frightfully lacking in refinement (9) 16 Harry and Edward tinkered about (8) 18 The female subsequently lacking a sanctuary (7) 19 One thus tardy is to get set apart from others (7) 20 Oriental dropping off at the front gets behind (6) 22 Frolics of old politicians undermining Speaker ultimately (5) YESTERDAY’S SOLUTION Across: 1 Basest, 4 Spectrum, 9 Operas, 10 In debted, 11 Moralist, 13 Staler, 15 Establishment, 18 Underclothing, 22 Pagans, 24 Corporal, 26 Studious, 27 Plaint, 28 Delegate, 29 Adages.

Down: 1 Blooms, 2 Spearhead, 3 Scarlet, 5 Pint, 6 Cheetah, 7 Ratel, 8 Moderate, 12 Subtle, 14 Bistro, 16 Engorging, 17 Supposed, 19 Ranking, 20 Impaled, 21 Flutes, 23 Gruel, 25 Duct.

G Telegraph Group Limited, London

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