Ambrose So Shu Fai, chief executive of SJM Holdings Ltd, yesterday mentioned a capital cost of HK$25 billion (US$3.2 billion) for the firm’s entire SJM Cotai resort. He was speaking at a press conference in Macau heralding a brand partnership on the project with Palazzo Versace, a luxury hotel chain belonging to Italy-based fashion house Gianni Versace SpA. In November, Mr So mentioned a figure of 20 billion patacas for the whole resort.
Number 365 Friday September 6, 2013
Editor-in-chief Tiago Azevedo
SJM Cotai joins 1 the US$3 bln club
April 19, 2013
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16 casinos to face cuts in smoking zones
he size of smoking areas in 16 gaming establishments will be reduced after they again failed tests of their air quality, Secretary for Social Affairs and Culture Cheong U has said. Mr Cheong, speaking on the sidelines of a management seminar yesterday, said analysis of the samples gathered for a second round of tests of the quality of the air in the smoking areas of casinos was “at the final
stage”. He told reporters: “The results for the second round of air quality checks have improved. There are 16 failing to meet the standards, while there were 28 in the first round.” He declined to identify the establishments that had failed the tests. “I understand the casinos have committed themselves to improvement,” he said. More on page 2
Delta bridge final link in free-trade chain Veteran businessman Victor Fung Kwok King believes the Hong KongZhuhai-Macau Bridge will be a game changer in developing the Pearl River Delta economy. The infrastructure will multiply the economic benefits of the free trade zone envisaged for Guangdong and better balance development in the Pearl River Delta region, he said yesterday at a regional forum organised by the Macau Management Association. Page 2
Pay with your phone here or in Taiwan Smartphone owners could soon be able to use them to pay for services or goods. An e-commerce service provider is launching a mobile payment system in the fourth quarter this year, which will be first tested in Macau and Taiwan. The goal is to eventually set up a single payment system for the two regions, as well as Hong Kong. Page 6
Election hopefuls call for trade union law Despite the failure of four previous attempts, several tickets of candidates in the Legislative Assembly elections pledge to continue lobbying for a trade union bill and the collective bargaining rights of workers. But they admit the political reform has done little to improve the odds of getting such a law approved, due to the opposition of the legislators from the business sector. Page 4
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September 6, 2013
Smoke penalties await 16 venues But the air quality in casino smoking areas has improved, a government secretary says Tony Lai
he size of smoking areas in 16 gaming establishments will be reduced after they again failed tests of their air quality, Secretary for Social Affairs and Culture Cheong U has said. Mr Cheong, speaking on the sidelines of a management seminar yesterday, said analysis of the samples gathered for a second round of tests of the quality of the air in the smoking areas of casinos was “at the final stage”.
There is no deliberate delay... We have no reason to give preferential treatment to anybody Cheong U, Secretary for Social Affairs and Culture
He told reporters: “The results for the second round of air quality checks have improved. There are 16 failing to meet the standards, while there were 28 in the first round.” He declined to identify the establishments that had failed the tests. “I understand the casinos have committed themselves to improvement,” he said. Since January 1 smoking has been allowed only in designated areas of gaming establishments. Smoking areas must take up no more than half of an establishment’s floor space. The Health Bureau, which Mr Cheong oversees, announced in April that almost two-thirds of Macau’s 46 gaming establishments had failed the first round of air quality tests. The government said at the time that these establishments would face penalties if they again failed to reach the required standards. “We have to carry out the tests in a fair and just manner,” Mr Cheong said. “Any failing casino will face having their smoking areas reduced.”
Heaps of data He did not say how the government would go about imposing this penalty. He said he hoped that the way any penalties would be imposed would be announced this month, along with results of the second round of air quality tests.
Since January 1 smoking has been allowed only in designated areas of gaming establishments
“But there could still be some procedures, for instance if there is any appeal, that may put back the date for maybe 10 days,” he said. The second round of tests was made in May and the results were supposed to be announced in June. It took time to analyse a “large amount of data”, Mr Cheong said. “Our work is ongoing and there is no deliberate delay,” he said. “We have no reason to give preferential treatment to anybody. Everything is done in accordance
with the regulations and the situation has improved,” he said. Mr Cheong did not say whether the establishments that had failed the tests had been notified of their failure. The Health Bureau said in April that of the casinos with shortcomings in their air quality revealed by the first round of tests, 16 were run under the gaming licence of Sociedade de Jogos de Macau SA. The rest belong to Melco Crown (Macau) SA, Galaxy Casino SA and Wynn Resorts (Macau) SA.
Bridge is the trade zone clincher, says biz guru A business leader says the Hong Kong-Zhuhai-Macau Bridge will make all the difference to any Guangdong free trade zone Tony Lai
he Hong Kong-Zhuhai-Macau Bridge will better connect places in the Pearl River Delta and multiply the economic benefits of the free trade zone envisaged for Guangdong, veteran businessman Victor Fung Kwok King says.
“Guangdong province surely has adequate conditions for setting up a free trade zone,” Mr Fung said yesterday. “It is very important to include both the special administrative regions of Hong Kong and Macau,
Guangdong province surely has adequate conditions for setting up a free trade zone Victor Fung, Greater Pearl River Delta Business Council
in particular.” The inclusion of the two cities “will make a trade zone that is very competitive, up to international standards,” he said. Mr Fung is chairman of Greater Pearl River Delta Business Council and a former chairman of the Hong Kong Trade Development Council. The China Daily reported Wednesday that Guangdong is thinking of setting up a free trade zone in cooperation with Macau and Hong Kong. The state-run newspaper said the Guangdong provincial government would ask the central government to create a free trade zone by bundling together four special economic areas, including Hengqin Island, just over the border from Macau, and Nansha in Guangzhou. Speaking on the sidelines of a regional cooperation forum organised by the Macau Management Association, Mr Fung said the economic impact of the free trade zone “would be even bigger” after the Hong Kong-Zhuhai-Macau Bridge opened in 2016. He said development of the Pearl
River Delta would be more balanced, with more business opportunities popping up on the west bank insisted of being concentrated in the east. Once that happened, China would also be able to depend on the Pearl River Delta for foreign trade, not just on the Yangtze River Delta around Shanghai, he said. Guangdong’s proposal for a free trade zone was prompted by Shanghai’s decision to create the mainland’s first free trade zone, which will integrate four special economic areas. Enterprises in a free trade zone can import, process and export goods without customs getting in the way, and take advantage of tax breaks and greater ease in buying and selling currencies. Mr Fung believes the new bridge can breathe new life into cooperation among Guangdong, Hong Kong and Macau. “We have talked about that for many years, but this will be the first time we’ve had a bridge,” he said. The Hong Kong-Zhuhai-Macau Bridge, 42 km long, will cut the road journey between the banks of the Pearl River estuary to 30 minutes.
September 6, 2013 April 19, 2013
Empire strikes back – the Palazzo Versace style (Photo: Palazzo Versace)
SJM Cotai joins the US$3 bln club CEO mentions magic number for planned new casino resort on day it signs a hotel deal with fashion house Versace Michael Grimes
mbrose So Shu Fai, chief executive of SJM Holdings Ltd, yesterday mentioned a capital cost of HK$25 billion (US$3.2 billion) for the firm’s entire SJM Cotai resort. He was speaking at a press conference in Macau heralding a brand partnership on the project with Palazzo Versace, a luxury hotel chain belonging to the Milan, Italy-based fashion house Gianni Versace SpA. That one remark served in the end to overshadow slightly the press event, as the media puzzled over what appeared to be a back door announcement of a rise in total Cotai project costs. In November, shortly after the land concession announcement for SJM Cotai, Mr So mentioned a figure of 20 billion patacas for the whole resort. That means in Hong Kong dollar terms there’s a 22 percent difference between the number quoted in November and the number quoted yesterday. But after the press conference Mr So spoke to Business Daily to clarify his comments. “The last time we did an estimate it was nearly a year ago. Now we have a clearer understanding of what we are going to build. We will be making a fine tuning on the figures in due course,” Mr So told us. He added: “This figure is construction costs excluding [government] land premium.” Business Daily reported yesterday that according to a survey by civil engineering consultancy firm EC Harris LLP, Macau is now the fifth most expensive construction location in the world. SJM Cotai is likely to have 2,000 hotel rooms in total, SJM has said. Mr So repeated yesterday that the
firm has asked the government for 700 gaming tables. Palazzo Versace will be one element of the project, in its own 20-storey tower. It will open in 2017 and have 270 rooms and suites, and have a built up area of more than 34,000 square metres (365,972 sq. feet) with restaurants, a spa, indoor and outdoor swimming pools retail space and other luxury facilities, said Mr So. Exactly what Gianni Versace SpA gets out of sharing its design and name with SJM Cotai – other than branding exposure in China – wasn’t fully clarified at yesterday’s press conference.
The hotel will be “100 percent” owned and managed by SJM, said Mr So. “We will build and manage the hotel, and Versace will offer the design and creativity,” the executive stated. He declined to say if Versace would share any revenue on hotel operations or receive a licensing fee. When asked about project costs for the Versace hotel, Mr So said during the press conference it “wasn’t appropriate” at this stage to reveal it. “One of the [resort] towers is integrated into the whole [Cotai] complex and we do not have a breakdown of those [numbers],” he told Business Daily after the event. “Also, some of these areas are common with the other [proposed hotel] properties. That’s why we haven’t got that number written down to share with you yet. People can guess the cost [of Palazzo Versace Macau] but I’m not going to give any guidance on that.”
The last time we did an estimate it was nearly a year ago. Now we have a clearer understanding of what we are going to build Ambrose So, SJM Holdings chief executive
The Cotai tie up could indirectly benefit Versace’s bottom line as a window for Chinese consumers into what Mr So referred to as the Versace ‘lifestyle’. Gian Giacomo Ferraris, the fashion firm’s chief executive, said it expects “double-digit” percentage growth in sales globally in each of the next three to five years. In 2012, Versace reported earnings before interest, taxation, depreciation and amortisation of 44.5 million euros (467.12 million patacas) on revenue of 408.7 million euros. Newly rich Chinese consumers are likely to be an important part of future expansion. Business Daily understands that SJM did proprietary
research on what would appeal to Chinese consumers before seeking the partnership with Palazzo Versace. According to Polly Cheung, a spokeswoman for Versace based in Hong Kong, the firm’s Macau outlets are among its best-performing globally. Angela Leong On Kei, an SJM executive director and fourth consort of the casino firm’s founder Stanley Ho Hung Sun, was wearing Versace at the press event yesterday, and is described by the company as a “major customer” in her own right. Mr Ferraris stressed that the hotel operation was integral to the brand. “It’s not complementary, it’s part of the particularity of our brand,” he explained. “Since the 1970s Versace developed furniture, dishes, vases, textiles,” he added. Mr So said SJM had chosen to partner with Palazzo Versace on Cotai “because it’s about lifestyle, not just a luxury brand…It’s a new experience that we will offer to the visitors of Macau. We always like to be offering something new and something very unique.” The fashion house is currently privately owned but plans a public flotation within three to five years. It also has plans to sell a minority stake privately before offering shares to the public. “We decided to open a minority stake sale” prior an initial public offering, Mr Ferraris said yesterday. Donatella Versace – who attended yesterday’s signing ceremony – and Santo Versace, two siblings of the murdered founder Gianni – currently own 20 percent and 30 percent respectively. Donatella’s daughter Allegra, a non-executive director, owns the rest. With Bloomberg News
September 6, 2013
Election bets demand law on trade unions
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But candidates say political reforms have done little to improve the odds of getting such a law
Big-city tourism The majority of the city’s tourists come from Guangdong, a province that provides almost as many visitors as Hong Kong and Taiwan combined. Guangdong tourist arrivals also dwarf numbers from all other mainland regions. There are four tourists from Guangdong for every one from the three next biggest provinces combined. Guangdong is also the only mainland province where tourist arrivals under the individual visit scheme outnumber visitors arriving on a package tour. Between July 2010 and last July, about 59 percent of tourists from that province had an individual visa. The figure for Zhejiang province, the next biggest market, is 35 percent. Even tourists from Fujian, a province with strong cultural ties to Macau, are about one-sixth of the figure from Guangdong. The shares for the other provinces stand at about onetenth or less.
Strikes by workers are already happening here, and … we just want to fight for a legal status for local trade unions Kwan Tsui Hang, Legislative Assembly candidate
An assembly that is dominated by business sector representatives is hard to convince José Pereira Coutinho, Legislative Assembly candidate
A trade union law would permit unions to call strikes
More tourists from the mainland’s biggest municipalities – Beijing, Shanghai, Tianjin and Chongqing – are likely to travel on an individual visa. Top of the league, in relative terms, is Tianjin. More than 85 percent of tourists from there used the individual visit scheme. Shanghai, with almost five times as many visitors, has a slightly smaller share, topping about 80 percent. There are almost as many Shanghai tourists travelling by themselves as there are from Fujian, Zhejiang and Hunan combined. Only Chongqing, among the big cities sends more visitors in tours than individually, although by a small margin. This suggests a clear difference between the types and purposes of visitors from the big urban centres and the rest of the country, Guangdong aside. J.I.D.
Tourists from Guangdong arrived on individual visas this year up to July 31
law on trade unions and the collective bargaining rights of workers will be back on the table for discussion next year, several tickets of candidates in the Legislative Assembly elections have promised. Despite the failure of four attempts to pass a trade union bill, candidates from the Macau Federation of Trade Unions, the New Macau Association and the Macau Civil Servants Association are not giving up. The leader of the Macau Federation of Trade Unions ticket, Kwan Tsui Hang, said yesterday she would push harder to get support for a trade union law in the new assembly. “We did not raise the trade union bill in the last legislative term because we knew there were are still some voices against it,” said Ms Kwan, a sitting member. “I understood the worries of legislators from business sectors, in particular over the right to strike of workers,” she told Business Daily. “We explained that strikes by workers are already happening
here, and that we just want to fight for a legal status for local trade unions,” she said. But it was impossible to persuade members of the assembly from the business sector and those appointed by Chief Executive Fernando Chui Sai On, Ms Kwan said. She said the votes of at least 17 of the 33 members of the new assembly would be needed to pass any bill. The new assembly will have four more seats than its predecessor. The closest any trade union bill has got to being passed was in 2009, when a bill garnered 11 votes. “We still lacked four votes to pull it off,” Ms Kwan said.
Hard to sell Assembly member José Pereira Coutinho, president of the Macau Civil Servants Association, made the last attempt to introduce a trade union bill, in March this year. Mr Coutinho, who is running for re-election, said the assembly would need to be structured more
democratically to get a trade union bill passed. “We need to have more directly elected members in the assembly,” he told Business Daily. “An assembly that is dominated by business sector representatives is hard to convince.” Mr Coutinho criticised Ms Kwan for having backed the government’s successful proposal to add two directly elected and two indirectly elected seats to the assembly. “It is a conflicting situation where it is hard to get support for this bill,” he said. Sitting member Ng Kuok Cheong of the New Macau Association said the new assembly would probably debate a trade union bill. But Mr Ng, the leader of the one of the association’s three tickets, has little hope that such a bill will be passed. “The key would be for the chief executive to agree to the initiative. Ultimately the appointed legislators would say yes to the bill,” he told Business Daily. “It is not a matter of convincing other legislators, but getting the chief executive’s nod in support of the bill,” he said.
September 6, 2013
Q2 factory orders lowest since 2004 Exporters of manufactured goods are more cautious as fear of competition grows Vítor Quintã
actories had a big slump in orders in the second quarter of this year as demand in several important markets fell, a Macau Economic Services survey has found. On average, exporters had orders for the following 2.1 months in the second quarter, 23.6 percent less than in the first, according to the results of the survey, released on Wednesday. It was the lowest average since 2004, when Macau Economic Services first surveyed manufacturing exporters. The textiles and clothing industry, Macau’s main domestic exporter, had orders for the following 2.5 months, on average, more than any other industry. Other manufacturing industries had orders for 1.94 months, the least ever. Exporters said the reduction in demand was due mostly to weak orders from Africa. They also believed the prospects for exporting to the mainland and the European Union – two of the city’s main markets – were not as good as in the first quarter. Exporters were pinning their
Taxi drivers in hot water T
he police has transferred 107 cases of taxi drivers breaching the laws – either by over-charging or turning down passengers – to the Transport Bureau for follow-up in the first eight months of this year. In a press statement published yesterday, the Public Security Police did not say how many cases had lead to penalties being imposed. The statement only stressed a
hopes on higher demand from Hong Kong, the United States, Japan and Southeast Asia. Over one-third of all companies surveyed said an insufficient volume of orders was their main concern for the following quarter. As new orders shrank, manufacturers were more cautious about exports. The survey found that in the second quarter 28.5 percent of exporters had confidence about the future of their business. In the first quarter the proportion was 40.2 percent.
Vacancies galore Only 2 percent of all companies believed exports would increase a lot in the following six months. Almost half of all exporters said they expected business to stagnate during the rest of this year, 28.2 percent having said so in the first quarter. Increasing international competition was the main reason for the loss of optimism among manufacturers. Almost half of all companies said their main concern was more competitive prices charged elsewhere.
violation could lead to a maximum fine of 1,000 patacas (US$125). The Transport Bureau has been mulling to revise regulations on taxis to raise the fines to 5,000 patacas in order to deter drivers from breaching the laws. Wong Wan, the bureau director, said earlier this week it might be difficult to fine the taxi drivers for violations due to the absence of complaints. Taxis’ profiteering attempts have come to the public attention last month, after some drivers charged ten-times the usual fare when typhoon Utor paralysed the city’s traffic. T.L.
In yesterday’s edition we published an article titled “Direct flights to Delhi win Indian approval”, that stated Air Macau Co Ltd would launch a new flight between Macau and Zhenzhou, capital of Henan, on September 25. This statement was based on inaccurate data provided to Business Daily. Air Macau will launch this new route on September 23, if its application is approved. The Civil Aviation Authority of Macau said it is still reviewing the application. For that inaccuracy we apologise to our readers and to Air Macau.
A similar proportion feared rises in prices of raw materials would become more troublesome. The labour shortage continues to hamper manufacturing industries. About 62 percent of all exporters and two-thirds of those that make goods other than textiles said they struggled with a lack of workers. The companies surveyed said their workforces were 0.3 percent smaller than in the first quarter, and that 1,260 jobs were vacant
at the end of March. The average monthly pay of fulltime employees in manufacturing was 7,890 patacas (US$988) at the end of March. The median salary in all occupations was 11,000 patacas. Manufacturing output has been rising since 2009, having declined in the preceding six years as the textiles industry contracted after quotas for international trade in textiles were abolished.
September 6, 2013 April 19, 2013
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Financial Monitor Domestic trends When economists measure gross domestic product, they classify spending by individuals, the government or organisations as private consumption, government expenses and investment. These three categories have evolved since the 2008-9 financial crisis.
Mobile payment dreams closer to reality E-commerce provider eyes single payment system for Macau, Hong Kong and Taiwan Stephanie Lai
There are two parts to private consumption, spending by households and by not-for-profit institutions – which represent about 3 percent of total consumption. Spending by households, on the other hand, represents the biggest proportion of private consumption. It has risen steadily, albeit at a slower rate than GDP, and was about one-third higher this year than in 2008. That is due to a growing population and also rising per capita consumption. Government consumption is the sum of two main types of expenses: remuneration of civil servants and the acquisition of goods and services. Remuneration rose by just 21 percent between 2008 and the end of the first half, which suggests the increase in private consumption is driven by the private sector. The cost of buying goods and services grew quickly but its growth has trailed behind GDP’s growth. Of the three components to investments, inventory typically only represents a fraction of the total but has increased noticeably. More detailed data might explain the sources of that growth. Construction represents, by far, the bigger share of investment. The downward part of the investment cycle is clearly visible. Investment in equipment and machinery is clearly the slowest moving element of all, with an increase of just 13 percent in the period. J.I.D. The content of this column is the work of Business Daily’s journalists.
he Macau population could soon be able to use their smartphones to pay for services or goods, with an e-commerce service provider planning to launch a mobile payment system here. Hong Kong-based Tradelink Electronic Commerce Ltd says the project, which it calls ‘mobile e-wallet’, could be up and running in the fourth quarter this year. The project is a collaboration between Tradelink and Joint Electronic Teller Services Ltd (Jetco), the biggest network of ATMs in Hong Kong and Macau. Tradelink confirmed to Business Daily that the company decided to test the public’s response to the mobile e-wallet in Taiwan and Macau before taking it to mainland China. “The China market is much larger and very fragmented,” Tradelink chief executive Michael Wu Wai Chung said in an e-mail reply. The exact timing for the launch in Macau has not yet been set “as the discussions with our partner there are still on-going,” Mr Wu said.
KEY POINTS Mobile payment system online in Q4 Tradelink in talks with Macau partner
Household consumption’s share of total domestic expenditure in H1
Partner banks to set charges, limits Macau Pass also eyeing SIM payment
The system will only be brought online by the fourth quarter this year, he added. In its interim results, filed with the Hong Kong Stock Exchange last week, Tradelink said it was in talks with Taiwan and Macau partners to explore the possibility of a single mobile e-wallet for the three regions. The service charges and any limits for the payment amount of the e-wallet will depend on the conditions agreed with the different partner banks, Mr Wu said.
Macau Pass “As we understand it, Jetco will subsidise a significant part of the costs of its member banks but will not dictate charging arrangements for its member banks,” Mr Wu said. “They [the member banks] will likely have different arrangements,” he added. Macau Pass SA deputy general manager David Lao told Business Daily in April that the company was negotiating with some of the city’s telecommunications companies
about developing a SIM card for mobile phones with the functions of a Macau Pass stored-value card. “We have already developed some samples but we still need to discuss some details with the telecommunications companies,” Mr Lao said. “We hope we can launch this service within this year,” he added. “With this SIM card in a mobile, it can be used no differently from a Macau Pass card.” “This is the first phase of this project, and in the second phase we hope to do this via downloading an app rather than using a SIM card,” he said. Mobile payment is already a reality in Hong Kong. In November HSBC bank launched a mobile payment service that enables cardholders to make credit card payments with their iPhones on any Visa payWave terminals. In June this year, Hang Seng Bank and telecommunication service provider PCCW-HKT Ltd launched special SIM cards with mobile payment for most Android smartphones.
September 6, 2013 April 19, 2013
Macau Deutsche lifts 2013 gaming revenue forecast Macau’s gross gaming revenue will grow 16.7 percent during all of this year, Deutsche Bank AG predicted, increasing its previous forecast of 15.4 percent. In an update to investors, the bank forecasts this month’s gross gaming revenue will be 21.3 percent higher than a year ago. The fast growing mass-market will continue to outshine the high-end business, Deutsche Bank said. The note sees mass-market increasing by 37.1 percent this month and VIP gaming revenue by just 13.9 percent. Its forecast of growth in gross gaming revenue next year is unchanged at 7.2 percent.
Dore gets loan from pawnshop it bought
isted Macau junket room investor Dore Holdings Ltd says in a Hong Kong filing it is to borrow 10.50 million yuan (US$1.72 million) from a mainland pawnshop operator it bought in late July. Dore will get the 12-month loan from
Guangzhou City Yuenqian Investment Consultancy Ltd and Guangdong Lido Pawnshop Co Ltd. The latter trades using the name Lido Pawnshop. Under the deal, Dore will pay interest and fees equal to 24 percent per annum with interest payable every 30 days.
Junket business picks up after buying VIP room The purchase of a VIP gaming room at Le Royal Arc Casino in June continues to drive a rebound in business, Asia Entertainment and Resources Ltd said. The junket operator announced unaudited rolling chip turnover of US$1.49 billion (11.9 billion patacas) last month, a one percent year-on-year increase. After falling throughout the first half of this year, total bets in the company’s gaming rooms rose by 15 percent yearon-year in July. The company’s rolling chip turnover for the first eight months of this year is still down 10 percent year-on-year to US$11.53 billion.
Corporate Senior Hengqin official for Delta Bridges Q&A Niu Jing – director general of the administrative committee of Hengqin New Area – is to be a guest speaker at a conference organised by Macaubased Delta Bridges Media Ltd. The event is at the Mandarin Oriental, Macau, on September 13. The organisers suggest there will be an opportunity to quiz the senior mainland official in an open question and answer session. Mr Niu will – say the organisers – offer: “…an insight as to what we can expect from this new development and will be able to answer any questions regarding the much-anticipated Hengqin New Area.” The gathering is what’s known as a Delta Inter Chamber Event, involving chambers of commerce from Macau, Hong Kong and Guangdong. The participating chambers are from: the Republic of Ireland, France, the United States, Germany, Denmark, Italy, Spain and Canada. Television and print media from Guangdong province on the mainland and from Macau are already scheduled to attend the event, say the organisers.
Strong line-up for global tourism forum The second edition of the Global Tourism Economy Forum will take place from September 17 to 19 at Macau Tower Convention & Entertainment Centre. The theme for the 2013 event is ‘Regenerate our Economies: Invest in Travel and Tourism’. The organisers promise an event where delegates can “meet, communicate and interview with leading policy-makers and the world’s top leaders in the tourism and hospitality industry”. Attendees include: Taleb Rifai, secretary-general of the World Tourism Organization; Wang Qinmin, chairman of All-China Federation of Industry & Commerce; João Manuel Costa Antunes, chairman of the Pacific Asia Travel Association; Thong Khon, Minister of Tourism of Cambodia; Mari Elka Pangestu, Minister of Tourism and Creative Economy of the Republic of Indonesia; Adolfo Mesquita Nunes, Secretary of State of Tourism for Portugal; Naren Srinivasan, senior vice president of strategy and corporate development for car hire firm Hertz Corporation and Zheng Yuewen, founder and chairman of Beijingbased investment conglomerate Creat Group.
It didn’t specify the purpose of the loan, simply citing it would “increase the revenue of the group and to bring positive cashflow arisen from the interest income in respect of the loan”. Junket investors such as Dore typically seek capital investors to
provide loans for rolling chip operations of associates that provide credit to VIP gamblers in Macau. “It is the group’s intention to develop the pawn loan businesses in the PRC [People’s Republic of China] and expand into other financing related businesses,” added the Dore filing. Business Daily reported earlier this year that Suncity Group Ltd – which in 2007 began as a gaming promoter at Wynn Macau Ltd – has developed into a conglomerate with interests including mainland real estate and iron ore mining in Indonesia. Dore reported profits up 79 percent for year ended March 31, 2013, on revenue down nearly 43 percent. “The decrease in the group’s revenue was mainly attributable to the more intense competition in the gaming sector in Macau,” said the firm in an earlier filing. Turnover of the group, which has operations at The Venetian Macao, was approximately HK$25.61 million (US$3.3 million) compared to HK$44.59 million in the same period of 2012. Its profit was approximately HK$16.48 million compared to HK$9.19 million a year earlier. Basic and diluted earnings per share were 76 HK cents. M.G.
September 6, 2013 April 19, 2013
PBOC urges joint efforts to curb financ Central bank vice governor mentions overlapping regulations, conflicting standards
hinese regulators must strengthen policy coordination to ward off potential financial risks, some of which stem from overcapacity and debt problems in some sectors, Hu Xiaolian, a vice central bank governor, said yesterday. Ms Hu’s remarks followed the recent establishment of a new supervisory mechanism under which the People’s Bank of China (PBOC) plays a leading role in coordinating policies and financial regulations. “Overcapacity and excessively high debt levels in some sectors will create hidden dangers for potential financial risks,” she told a financial forum in Beijing. “We need to strengthen policy coordination, strengthen systemic [risk] monitoring and macroprudential regulatory requirements, only in this way we can firmly safeguard the bottom line in preventing systemic and regional financial risks.” Concerted efforts are needed to rein in risks in China’s banking sector, including credit and money markets, as well as capital and insurance markets, she added. China’s changed economic landscape – slower economic growth, market-based reforms of interest rates and currency regimes, an increased financial innovation – all reinforced the case for joint supervision, she said. The country’s current main financial supervisors include the PBOC, the China Banking Regulatory Commission, China Securities Regulatory Commission (CSRC), China Insurance Regulatory Commission and the State
Administration of Foreign Exchange. Ms Hu conceded that the current system has some flaws, such as overlapping regulations, or conflicting standards. Last month, the cabinet approved the establishment of a joint meeting mechanism, under which the central bank and other regulators hold regular meetings on policies and regulations. China’s local government debt is among the biggest threats to its economy as the credit mostly funded the building of public infrastructure, which yield low financial returns. Poor government disclosure on debt levels have further aggravated concerns about the true size of China’s bad debt risks. Separately, Jiang Yang, a vice chairman of the CSRC, pledged to speed up preparatory work for launching crude oil futures. Chinese banks have been allowed to experiment with credit securitisation to help support the slowing economy.
Overcapacity and excessively high debt levels in some sectors will create hidden dangers for potential financial risks Hu Xiaolian, PBOC’s vice governor
Fewer loans China’s leaders are extending a clampdown on credit, prompting analysts from JPMorgan Chase & Co to Societe Generale SA to caution that the economy is vulnerable to weakening after the pickup so far this quarter. New yuan loans were probably little changed in August, after aggregate financing, the broadest measure of credit, posted a fourth straight drop in July, the longest streak in 11 years of data. Analysts’ median estimates point to the fastest industrial-output gain since December and the slowest producer-
price decline in six months. The moderation in credit after a record first-quarter financing boom stands to cap an economic rebound being driven by a recovery i n co n fi d en ce a n d P r e m i e r L i Keqiang’s support measures, such as faster spending on railways. Ov er ca p a ci ty a n d pr e s s u r e t o clean up debt loom as challenges, according to JPMorgan, which sees growth slowing to 7.2 percent in 2014 from 7.6 percent this year. “There is less risk in the near
term,” said Zhu Haibin, JPMorgan chief China economist in Hong Kong, who has worked at the Bank for International Settlements. “But this round of recovery will not be a strong one and won’t last long.” Analysts surveyed by Bloomberg News last month see growth slowing to 7.3 percent in the fourth quarter, the weakest in more than four years, after 7.5 percent in the July-September period, based on median estimates. “The recovery is not sustainable
Shanghai zone allowed free yuan exchange Companies will open special accounts to freely exchange the currency
hina will allow unfettered exchange of its yuan currency in its first free trade zone, a draft plan seen by AFP yesterday showed, in a bold push to reform the world’s second largest economy. The free trade zone (FTZ) in Shanghai is intended to make the city into a true international trade and financial centre and challenge the free economy of Hong Kong, analysts and government officials said. Premier Li Keqiang, who took office in March, is backing the zone – which his cabinet approved last month – to be one of the crowning achievements of his administration, they said. The draft plan seen by AFP showed the FTZ goes beyond greater liberalisation of trade to take in investment and financial services – including free convertibility of currency. “Under the pre-condition that risk can be controlled, in the zone convertibility of the renminbi on the capital account will be conducted, the first to carry out and test [it],” the plan said. It does not explicitly state that the exchange rate will be purely market set. China’s yuan currency, also
known as the renminbi, is convertible for trade but the government keeps a tight grip on the capital account on worries unpredictable inflows or outflows could harm the economy – and reduce its control over it. A government official familiar with the plans said companies registered in the FTZ could open special accounts to freely exchange yuan, but with only a few exceptions they would be required to close their onshore Chinese accounts. Under the draft plan, the FTZ would let interest rates be set by the market. China currently fixes deposit rates by administrative order, but the central bank began allowing banks to decide their own lending rates in July.
is overwhelmingly dominated by state-run institutions. “They want an offshore harbour,
‘Bold step’ According to the Ministry of Commerce, the 29-square-kilometre FTZ groups four existing areas in Shanghai: the international airport, deepwater port, a bonded zone and a logistics area. The draft plan said the FTZ would “support” establishment of foreign and joint ventures banks and welcome privately-funded financial institutions. At present China’s banking sector
KEY POINTS Shanghai to have China’s first free trade zone FTZ to include free convertibility of yuan China seeking ‘offshore harbour’ – executive
basically like Hong Kong,” said a financial industry executive briefed on the plans. The government tapped commercial hub Shanghai because of the success of its Waigaoqiao bonded zone, the executive said, which allows goods to be imported tax-free, unless they are to be sold on within the domestic Chinese market. The FTZ project as a whole “will be a bold step to escalate China’s economic development to the next level”, ANZ Banking Group said in a research report this week. “Its success could be a model for the next stage of China’s economic reform, opening up and capital account liberalisation.” But it warned such liberalisation would increase the risk of large capital flows, which could impact the economy. For trade, the government envisions making the zone a centre for cross-border e-commerce transactions, a plan which may require cooperation with a payments provider, officials said. The State Council, China’s cabinet, gave the FTZ its go-ahead in August and details will be announced after the “overall plan” is approved on September 27, officials said. AFP
September 6, 2013 April 19, 2013
China must give market bigger role: EU Chamber
Beijing sells land at record price
Chamber calls for more independence for regulators
because of one very simple reason: insufficient credit,” said Yao Wei, China economist at Societe Generale in Hong Kong. Regulators are keeping a close watch on lending to local governments and banks can’t pump funds into the economy to support investment, making non-bank financing “very important for growth.” “We may see growth picking up for one or two quarters, but it’s hard to sustain,” Ms Yao said. Reuters/Bloomberg News
hina’s government must reduce its role in the economy and allow marketdriven change to ensure sustainable growth, according to a report by the European Union Chamber of Commerce in China. “China could previously make a choice between economic restructuring and maintaining growth,” Davide Cucino, president of the chamber, said at a briefing on its annual position paper in Beijing. Now “the only way to get sustainable growth is to carry out structural reform”. Plans for a zone for trade and investment reforms in Shanghai and July’s move to deregulate lending rates indicate the new leadership of President Xi Jinping has a “serious approach” to carrying out marketdriven change, Mr Cucino said. For now, the government has a conflict of interest as both owner and regulator of businesses and its banks are propping up unproductive state enterprises and financing wasteful projects, the chamber said in its report. “In the past we had the experience to have a lot of wording about this and that change but not really actions,” Mr Cucino said. “This time it looks like there is a serious approach even because I believe, and we believe, there is not really a big choice. We are in a no u-turn situation.” The chamber recommended further interest-rate liberalisation,
more independence for regulators, a greater role for the private sector, and that more resources be allocated to ensure compliance with regulations. “Market price signals – in particular higher interest rates – would restrain current high levels of credit growth and incentivise efficiency,” the chamber said in its report. The EU is home to some of the biggest foreign companies doing business in China, including Volkswagen AG, Siemens AG, HSBC Holdings Plc, Deutsche Bank AG and Danish wind-turbine maker Vestas Wind Systems A/S. Bloomberg News
Cathay opposes Jetstar HK plan Says licence should not be awarded to ‘franchise controlled by a foreign airline’ Jasmine Wang and Simon Lee
athay Pacific Airways Ltd opposed a Qantas Airways Ltd venture’s plan to start a budget carrier in Hong Kong, saying the proposal violates local laws and granting access would be detrimental to the city’s interests. “Cathay Pacific Airways can confirm that it has filed a formal objection to the application,” the Hong Kong-based airline said in an exchange statement yesterday. The application of Jetstar Hong Kong, a venture between Qantas, China Eastern Airlines Corp and Shun Tak Holdings Ltd, a company founded by gambling tycoon Stanley Ho Hung Sun, was made public by the city last month. Approving the application would be a violation of Article 134 of Hong Kong’s Basic Law because Jetstar Hong Kong doesn’t meet the requirement that it must have its principal place of business in the city, Cathay said in its statement. About half of Hong Kong’s traffic is controlled by Cathay, and Asia’s biggest international carrier
is seeking to defend that dominance while China’s economic growth slows. “That provision wasn’t there to stop low-cost carriers, they didn’t exist,” said Danny Gittings, assistant professor of law at the University of Hong Kong School of Professional and Continuing Education, and author of the book “Introduction to the Hong Kong Basic Law”. “If Cathay Pacific really believes that the decision breaks the Basic Law, it’s certainly open for them to bring a case on that basis.”
‘Dangerous precedent’ The precise meaning of the article hasn’t yet been litigated, Mr Gittings said. The original intention of the law, written in the 1980s, was to prevent Chinese carriers from taking control of Hong Kong’s air traffic rights after the handover, he said. According to the Basic Law, the local government has the authority to issue licences to airlines incorporated in the city and use it as its principal
place of business. “The application would set a dangerous precedent by granting control of Hong Kong’s hardnegotiated sovereign air traffic rights to a carrier that is nothing more than a franchise operation controlled by a foreign airline,” Cathay said. Emma Kearns, a spokeswoman for Jetstar, said in an e-mail that she couldn’t immediately comment on Cathay’s objection. Hong Kong’s Transport and Housing Bureau didn’t immediately reply to an e-mailed request for comment. The bureau said last month it’s reviewing laws regarding designating a carrier as local and expects to complete the process “in the next few months”. Under the current system, an applicant must seek an air operator’s certificate and an air transport licence as well as the designation as a Hong Kong carrier, according to the bureau. In June, Jetstar Hong Kong sold a 33.3 percent stake to Shun Tak. The venture also named Pansy Ho Chiu King, managing director of Shun Tak and a daughter of Stanley Ho, as its chairman. Bloomberg News
China sold a residential land parcel in Beijing at a record price amid rising competition among developers for sites in major cities, which have led price gains even as the government maintains property curbs. The 28,100 -square-metre (302,356-squarefoot) National Agriculture Exhibition Centre plot, northeast of the city centre, was sold for 2.1 billion yuan (YS$343 million) to Sunac China Holdings Ltd yesterday, according to a statement on the local land reserve centre’s website. Sunac’s bid included a commitment to build a 278,000-square-metre hospital at another site, according to the statement. The total purchase price of 4.3 billion yuan implies a cost per square metre of buildable space of 73,000 yuan, the most expensive in China, according to Centaline Property Agency Ltd, the nation’s biggest real-estate brokerage. The number of apartments sold for more than 10 million yuan in the Chinese capital jumped 81 percent to 1,388 in the first half from a year earlier, as wealthy buyers favoured bigger properties under the government’s purchase restrictions, according to realtor Bacic & 5i5j Group.
U.S. likely to clear US$4.7b Smithfield deal The U.S. government is unlikely to block Chinese meat company Shuanghui International Holdings Ltd’s US$4.7 billion deal to buy Smithfield Foods Inc on national security grounds, one person familiar with the matter told Reuters. The deal, if approved, would be the largest ever acquisition of a U.S. company by a Chinese firm. The bid – an effort to feed a growing Chinese appetite for U.S. pork – has stirred some concern among U.S. politicians and faced review by a committee of several government agencies overseen by the Treasury Department. The Committee on Foreign Investment in the United States (CFIUS) is an executive branch panel that examines foreign investment for potential threats to national security. It said in late July it would take a further 45 days to review Shuanghui’s plan to purchase Smithfield, which was set to conclude by tomorrow. Some lawmakers expressed concerns the deal could jeopardise U.S. food safety and raise pork prices for American consumers. However, most analysts familiar with the CFIUS process said the review was largely procedural and expected the deal to go through since there were no clear national security issues involved.
Sun Hung Kai gets Shanghai site Hong Kong’s largest developer, Sun Hung Kai Properties Ltd, yesterday won an auction for a commercial district site in Shanghai worth 21.77 billion yuan (US$3.6 billion). Hong Kong developers are increasing investments in mainland China to offset thinning margins at home as a series of government tightening measures take a toll. “The pressure for competition in the Hong Kong market is getting higher and higher,” said Thomas Lam, head of research for Greater China at Knight Frank. Sun Hung Kai Properties outbid Hong Kong developer Wharf Holdings Ltd to build offices, restaurants and a hotel in Shanghai’s Xujiahui district, a popular shopping and entertainment hub in China’s financial centre about 30 minutes by car from downtown Shanghai. The bid was 24 percent higher than the reserve price of 17.5 billion yuan, according to Shanghai’s New Area Planning and Land Authority. Sun Hung Kai warned earlier this year about the impact of tighter measures on Hong Kong’s property market and lowered its sales target for this financial year by 9 percent.
September 6, 2013 April 19, 2013
Asia Nomura to begin Ashikaga Exit Nomura Holdings Inc will begin its exit from Ashikaga Holdings Co by selling about 21 billion yen (US$210 million) of preferred shares in the Japanese regional bank, said two people briefed on the matter. Nomura Capital Investment Co, a unit of Japan’s largest brokerage, is poised to sell 8,000 preferred shares to closely held Ashikaga next week for 2.58 million yen apiece, said the people, who asked not to be named as the transaction is private. The sale would further Nomura’s goal of exiting private equity investments as chief executive Koji Nagai focuses on bolstering profit growth. It joins global firms including Bank of America Corp in selling assets to raise cash and concentrate on their main businesses as regulators tighten capital and liquidity requirements. Nomura, which first invested in Utsunomiya, Tochigi-based Ashikaga in 2008 when it bought shares held by the government, is preparing to sell a portion of the stake in an initial public offering or through mergers and acquisitions, the people said. Kenji Yamashita, a Tokyo-based spokesman for Nomura, declined to comment, as did Ashikaga’s spokesman Ikumasa Kobayashi. Ashikaga will seek to buy back as many as 10,000 preferred shares from investors and cancel them to reduce costs for dividend payments and increase cash reserves, the lender said in a statement on May 31.
Indian rupee, stocks up on Rajan confidence Monetary stability the central bank’s primary role, says new governor
Raghuram Rajan, India’s newly installed central bank governor
Samsung’s smartwatch tests consumer demand Samsung Electronics Co set the price of its Galaxy Gear at US$299 as the biggest maker of smartphones beats Apple Inc in unveiling a wristwatch device that can make phone calls, surf the Web and take photos. Featuring a 1.63-inch (4.1-centimetre) screen and 1.9-megapixel camera, the Gear will go on sale on September 25, Shin Jong-kyun, head of Samsung’s mobile business, said at the company’s headquarters in Suwon, South Korea. The device syncs with tablets and smartphones using Google Inc’s Android software to make phone calls. Samsung showed the Galaxy Gear at IFA, Europe’s largest consumer-electronics show, as it races Apple and Sony Corp to carve a share of the market for wearable technology amid slowing growth in smartphones. The first companies to sell devices that multitask could lock customers into their platform and boost device sales, with researcher Strategy Analytics expecting 500,000 Galaxy Gears to be shipped this year. The Gear weighs 74 grams (2.6 ounces), is available in six colors – including orange, gold and lime green – and has an ultra-thin screen using organic light-emitting diode, or OLED, technology. The device has a fitness tracker and works with about 70 applications, according to Samsung. It has a 4-gigabyte internal memory and 512 megabytes of RAM. It links wirelessly to a user’s smartphone. A built-in speaker enables hands-free calls from the Gear while voice recognition features allow users to draft messages, set alarms and check the weather. Apple has a team of designers working on a watch-like device, two people familiar with the matter said in February. Sony already has its Smartwatch that syncs with Android handsets. The Smartwatch 2 will reach stores this month, and can be used as a second screen for the Xperia Z1 smartphone, Sony said on Wednesday. Qualcomm Inc, the biggest maker of chips for mobile phones, will begin selling a connected wristwatch called Toq, the company said. Bloomberg News
enable the RBI with more firepower,” economists at Kotak Mahindra Bank Ltd, led by Mumbai-based Indranil Pan, wrote in a report. “These measures are definitely positive as far as sentiment is concerned.” The rupee climbed as much as 2.3 percent to 65.53 per dollar, before trading at 66.08 in Mumbai, prices from local banks compiled by Bloomberg show. The currency, which sank to a record low of 68.845 on August 28, has weakened more than 16 percent this year, the worst performance after the South African Rand among 24 emerging-market currencies tracked by Bloomberg. The yield on the 7.16 percent 10-year government bonds due May 2023 slid 14 basis points, or 0.14 percentage point, to 8.25 percent, according to the central bank’s trading system. That’s the lowest since August 22. The 30-stock S&P BSE Sensex rose 2.3 percent, led by
the biggest rally in lenders since May 2009, as Mr Rajan outlined plans to bolster the financial industry. The central bank plans to offer currency swaps to banks at 3.5 percent. That compares with market rates between 6 percent and 8 percent, according to Barclays Plc. The pension funds bill caps overseas ownership in local ventures at 26 percent. The threshold for foreign direct investment in pensions will be kept in line with the cap for insurance, which was opened to overseas companies in 2000. The legislation now needs the approval of the upper house. Mr Rajan, who predicted the 2008 global financial crisis and has been appointed governor for three years, said after the close of markets on Wednesday that containing inflation expectations is the RBI’s key goal. The former International Monetary Fund chief
BOJ upgrades Japan’s economic outlook
from August when it said the economy was “starting to recover moderately.” The government is leaning toward raising the tax as planned from April and cushioning the impact with fiscal stimulus. The central bank may also come under pressure to act, although it is in no mood to ease pre-emptively to counter the expected drag on growth. “The BOJ’s upgrade seems appropriate because revised GDP is likely to show that capital expenditure turned positive,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. “Our main scenario is that the BOJ will ease again around the time of the first tax hike next year. There are risks from the Middle East and overseas economies, but if the BOJ eases again it will be for domestic reasons.”
ndia’s rupee jumped more than 2 percent after the new central bank governor took steps to boost dollar supply and lawmakers moved closer to allowing foreign investment in pension funds. Bonds and stocks rallied. In his first briefing after taking office, Reserve Bank of India Governor Raghuram Rajan announced a plan to provide concessional swaps for banks’ foreign-currency deposits, a move that will boost the authority’s reserves by US$10 billion, according to Bank of America Merrill Lynch. India’s lower house of parliament passed a bill on Wednesday allowing international holdings in the nation’s pension funds as the government tries to revive the economy and shore up the rupee. Mr Rajan “wasted no time in announcing measures that could potentially lead to an increase in the dollar reserves of the RBI and hence
Central bank says exports and investment boosting recovery Leika Kihara
he Bank of Japan declared the world’s third-largest economy is recovering as it voted yesterday to maintain its monetary stimulus, offering a more upbeat view than last month on growing signs the benefits of its expansionary policy are broadening. A slew of positive data has underscored the view that robust household spending and the feel-good mood generated by Prime Minister Shinzo Abe’s pro-growth policies are gradually prompting companies to increase capital spending and hiring.
The BOJ’s upgraded view may heighten the case for Mr Abe to go ahead with a planned sales tax hike from next year, a move seen as necessary to start reining in Japan’s huge public debt. As widely expected, the central bank voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion yen (US$603 billion) to 70 trillion yen. “Japan’s economy is recovering moderately,” the BOJ said in a statement, revising up its assessment
Encouraging data Japan emerged from recession in 2012 and data for much of this year has shown the benefits of Mr Abe’s reflationary policies and the BOJ’s aggressive stimulus. Recent data have been particularly encouraging, with the jobless rate
September 6, 2013 April 19, 2013
economist faces the challenge of a weak currency and consumer inflation that’s running at almost 10 percent. India’s economy expanded 4.4 percent in the quarter ended June, the weakest pace since 2009.
restrictions on capital outflows implemented August 14, giving companies more scope to invest abroad using overseas debt. The central bank also allowed businesses to borrow from foreign shareholders subject to conditions, according to statements on its website. Allowing banks to swap foreigncurrency deposits, “along with a few other measures, could attract US$10 billion of forex inflows in the next three months and could be a material near-term positive for the rupee,” Barclays analysts including Mumbai-based Siddhartha Sanyal wrote in a report yesterday. “A meaningful improvement in rupee sentiment would raise the likelihood of a rollback in September-October of some of the RBI’s recent liquiditytightening measures.” Mr Rajan also plans to make it easier for banks to open branches and lend to non-state sectors of the economy, steps that JPMorgan Chase & Co analysts say will have a “major long-term impact” on bank profits. There’s a need to cut the requirement for banks to invest in government debt and ensure lending to productive sectors of the economy, Mr Rajan said. The RBI will look at ways to improve the recovery mechanism for bad loans and propose a database for large loans across banks, he said. “Rising bad loans are the biggest concern for investors, and if Rajan can tackle that, then it will be the biggest boost to lenders’ profits and sentiment,” Manish Sonthalia, a Mumbai-based money manager at Motilal Oswal Asset Management Co, said. Bloomberg News
Easing rules Mr Rajan replaced Duvvuri Subbarao, who in July took steps to restrict banks’ access to cash and began draining money through weekly bill sales in an attempt to push up short-term rates and support the rupee. Bond yields climbed in each of the past three months, the longest such run for benchmark 10-year debt since August 2010, data compiled by Bloomberg show. The surge in yields following the cash squeeze prompted the central bank to announce a plan to buy back long-dated debt. The RBI clarified some
KEY POINTS Panel to ‘revise’ monetary policy framework Rajan vows to stabilise the rupee Central bank to open a swap window New measures may lure US$10 bln in inflows
Consumer prices climbed the most in five years in July
at the lowest in almost five years, summer bonuses increasing and core consumer prices rising at the fastest pace in nearly five years. Finance ministry data on Monday also showed a healthy increase in corporate capital spending, pointing to a sharp upward revision to secondquarter GDP data due next week from a preliminary 2.6 percent expansion. That gives advocates of the tax hike ammunition to counter the views of opponents that Japan should delay or water down the tax increases to prevent
the economy from faltering again. Unless Mr Abe changes the plan, the sales tax will be raised to 8 percent from 5 percent in April and to 10 percent in October 2015. He will decide early next month, taking into account the BOJ’s “tankan” business sentiment survey due on October 1. The BOJ has consistently called for the need to fix Japan’s tattered finances and has argued that the sales tax hikes won’t threaten the economic recovery or delay an end to deflation. Reuters
August inflation the lowest in four years
Philippine inflation gives policy leeway
hilippine inflation eased more than expected to a four-year low in August, giving the central bank ample room to hold rates steady at a record low to support one of Asia’s fastest growing economies and buffer it from the challenges of a capital exodus roiling emerging markets. Emerging market economies, particularly India and Indonesia which are struggling with slowing growth, yawning current account deficits and a reliance on foreign capital to fund these gaps, have seen their currencies dive in recent months. The flight of capital from these markets has been magnified by the U.S. Federal Reserve’s plan to wind own its bond-buying monetary stimulus, with investors drawn to dollar-based assets amid rising U.S. Treasury yields. Still, despite recent policy action by India, Indonesia and Thailand to defend their beleaguered currencies, Bangko Sentral ng Pilipinas (BSP) is unlikely to raise interest rates at a meeting next week even in the face of a sharp decline in its peso currency. With the Philippine economy in a
Australia ships more iron ore to China A
ustralian shipments of iron ore to China looked to have stayed strong in August, a month after Australia boasted its second-highest exports ever to the Asian giant and a sign of healthy demand for resources. Iron ore exports to China from Port Hedland, which handles about a fifth of the global seaborne market for the steel-making raw material, rose 9 percent in August from July. Ore shipments of 22.3 million tonnes were up a hefty 33 percent on August last year and not far from all-time highs hit in May. Since the figures are released just a few days
sweet spot – lower inflation and strong growth – the central bank has ample headroom to manoeuvre policy. The consumer price index rose 2.1 percent in August from a year earlier, data showed yesterday, the lowest in four years, due to lower costs of food and beverages, tobacco, utilities, and clothing. It was below analysts’ 2.4 percent consensus estimate. “The weaker peso might not be a convincing case for the BSP to hike rates,” said Bernard Aw, economist at Forecast PTE in Singapore, adding the average exchange rate so far this year is still within the central bank assumption of 41 to 43 per dollar. Yesterday’s data brought average inflation in the eight months to August at 2.8 percent, still below the central bank’s 2013 target of 3-5 percent. Central bank Governor Amando Tetangco said authorities have policy room to cushion the impact of any price pressures if tensions in the Middle East push up commodity costs. “The BSP has room in its policy tool kit to mitigate potential adverse effects coming from these factors,” Mr Tetangco said. Reuters
after the end of the month, they offer a timely leading indicator of demand in China. Australia is the single largest supplier of the ore to China, ahead of Brazil. Iron ore is Australia’s single biggest export earner, bringing in around A$60 billion (US$54.9 billion) in a good year. The strength of shipments increases the chance that Australia will report a trade surplus for August, and also add to economic growth. Figures on July trade from the Australian Bureau of Statistics (ABS) out yesterday underlined the importance of China to the resourcerich nation. Australian exports to China in July were the second highest on record at A$7.75 billion, an increase of 29 percent on the same month last year. Much of that is thanks to iron ore prices which have surged around 25 percent in the past three months to reach US$138 a tonne. Reuters
September 6, 2013 April 19, 2013
Abbott set to inherit economy others would envy Australia growing faster than any other developed nation Wayne Cole
Abbott favourite for Australian general election
ustralia’s presumptive prime minister, Tony Abbott, is set to inherit a slowing economy, rising unemployment and a budget in the red. Yet look out to a threeyear election horizon, and the view is a lot better. Mr Abbott’s conservative Liberal-National coalition appears to be a shoe-in at elections tomorrows, ending six years of Labor rule, and all the talk has been of the challenges he faces. Chief among those are worries about a substandard economy and the pressure it’s putting on public coffers – fears which have in large part been fanned by Mr Abbott’s coalition while in opposition. Indeed, the last recession was more than two decades ago and government debt is relatively low and manageable. Kevin Rudd vowed to save Labor from a “catastrophic” Australian election defeat when he took over as leader in June. While polls show he’s narrowed the gap, the party still faces eviction. Mr Abbott’s coalition leads Labor by 54 to 46 percent on a two- party preferred basis, a Newspoll published September 2 in the Australian newspaper showed. Under Mr Rudd, Labor initially erased a 14-point deficit. As his popularity waned over the course of the five-week campaign the gap crept back to eight points and he was eclipsed as preferred leader by Mr Abbott. If Labor loses, the immediate question would be whether Mr Rudd stayed on as opposition leader.
Economy growing Any economic pain is likely to be concentrated in the near term, where blame can be conveniently laid at the feet of the former government. It also helps that the starting point is not as bad as many feared. Government figures out this week showed the economy grew by 0.6 percent in the June quarter and a steady 2.6 percent for the year, defying speculation of a much deeper slowdown. That is short of the 3.25 percent to 3.5 percent pace that Australians have come to think of as “normal”, but the economy is still consistently faster than any
other developed nation. Most economists expect growth to stay around 2.5 percent for a few more quarters, but further out things are brighter. For instance, Reuters’ latest poll of global banks found they expected economic growth to quicken to 3.1 percent over next year. The Reserve Bank of Australia (RBA) is confident growth will accelerate to an above-average pace by 2015 – its forecasts even stretch as high as 4.25 percent. With another election not due until 2016, such an outcome would put Abbott in the driving seat to win a second term.
is by far the biggest consumer of its iron ore, a A$60 billion-a-year boon to its trade accounts. “Finally, all the evidence now points to a renaissance of growth in the advanced economies,” said Scott Haslem, an economist at UBS AG. He noted that while instability in some emerging markets, such as India and Brazil, had garnered a lot of headlines, those countries accounted for only 12 to 13 percent of global output. In comparison, the economies that were stabilising, which includes China, were four times larger at 55 percent of output. “This suggests greater upside risks, than downside risks, to global growth from here,” Mr Haslem said.
KEY POINTS Economy grew 2.6 pct in the June quarter y-o-y Central bank confident growth will accelerate Aussie has fallen by 14 pct since April Abbott’s coalition leads Labor by 54 to 46 pct
Developments offshore should also augur well for Mr Abbott, with a marked improvement in economic news from the rich world in the past month or so.
Fortunate timing The United States has gained enough traction that the Federal Reserve can consider reining back on stimulus, while Europe has emerged from recession. Japan has boasted its best growth in years, and fears of a hard landing for China have faded in the face of better data on manufacturing and trade. The latter is particularly good news for Australia as the Asian giant takes fully a third of its exports and
Another timely blessing for Mr Abbott has been the decline in the Australian dollar. For almost all of the last three years of Labor government it had been punishingly high, hollowing out manufacturing and crimping export earnings. Since most of Australia’s resource exports are priced in U.S. dollars, a high local currency lessens returns to miners, and so profits and tax receipts. Fortunately for Mr Abbott, then, that the currency has fallen by 14 percent since April, delivering a major windfall to miners and the next government’s bottom line. The RBA has made much of research that implies a 10 percent decline in the currency will stimulate economic growth by between 0.5 and 1 percentage point over two years. “The Aussie is once again playing its traditional role as an income buffer,” said Michael Blythe, chief economist at Commonwealth Bank of Australia. “The main beneficiaries of this income buffering should be corporate profits and government tax revenues related to that profit story.” Having spent the past three years excoriating the Labor government for running deficits and accusing it of taking debt to crisis levels, Mr Abbott has since abandoned all pretence of trying to get into the black in his first term of office. Net government debt is expected
to peak at 13 percent of GDP in the year ending June 2015, and the budget deficit for the current fiscal year is forecast at US$30 billion, equal to 1.9 percent of gross domestic product. Mr Abbott’s earlier stance on the deficit had raised the prospect of a dose of European-style austerity, which is now widely seen as having needlessly deepened the recession in Europe and actually only added to government debt problems. Such was the threat that it moved U.S. Nobel Prize-winning economist Joseph Stiglitz to write a warning piece for the Sydney Morning Herald newspaper this week. “The political spotlight has fallen on the perceived problem of government debt, with alarming proposals to bring austerity ‘down under’,” Mr Stiglitz wrote. “Proposals for substantial budget cuts seem particularly misplaced at this time given that Australia’s economy is confronting new global challenges.” Yet he needn’t have worried, because a return to budget surpluses now sounds more of an aspiration than a target. Instead, Mr Abbott conjured up a 10-year timetable to reach a “believable surplus”, a distant goal that would also require his party to win three elections in a row, and told ABC television he was aiming for relatively modest savings. Reuters
The Aussie is once again playing its traditional role as an income buffer Michael Blythe, Commonwealth Bank of Australia
September 6, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 50.6
46.4 Max 47.15
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AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
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World Stock Markets - Indices NAME
Currency Exchange Rates
0.914 1.5618 0.9396 1.3189 99.89 7.9885 7.7558 6.1186 66.3262 32.338 1.2779 29.803 44.535 11649 91.303 1.23922 0.84442 8.065 10.5356 131.74 1.03
-0.2074 0.0448 -0.3193 0.0607 -0.4405 -0.0038 -0.0052 0.0065 1.1516 -0.4175 -0.2739 0.0839 -0.2807 -2.0431 -0.241 -0.3857 -0.0154 -0.0905 -0.0598 -0.501 0
-11.9291 -3.4496 -2.5756 -0.0076 -13.8052 -0.0663 -0.067 1.8305 -17.084 -5.4363 -4.4213 -2.5836 -7.9264 -15.9327 -2.1642 -2.5613 -3.4343 1.8909 -0.0494 -13.7923 -0.0097
1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3478 68.845 32.35 1.2862 30.228 44.82 11701 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032
0.8848 1.4814 0.9022 1.2532 77.13 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20126 0.78886 7.8281 10.0144 98.23 1.0289
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September 6, 2013 April 19, 2013
Classifieds Mountain Villa For Sale in Koh-Samui Price: HK$ 16 million
3 x King Bed en-Suites, 1 x King Bed basement Suite, 2 x 2 Single Bed, Spacious Living area and fully furnished kitchen, Swimming pool - children / adult, 2 levels Maid’s quarter, Fully Furnished, Balcony, Terrace / Patio, 2 x Outside Salas, Barbecue, 2 x Parking Spaces, 7-seater SUV included. Contact Ms Chan - Sarah@clever-cloggs.com.hk Tel: 2861-3317
Unique opportunity The Fountainside
Apt. on Top Floor Approx. 180 square meters HKD 19.9 million
LIKE NEW 4 APARTMENTS BUILDING IN LISBON Price: HK$ 17,000,000
2 Apartments T3 (1st and 2 floor), 1 Apartment T2 (3rd floor), 1 Apartment T0 (top floor), garage for 4 cars + laundry and storage area. Location: Close to RPC embassy firstname.lastname@example.org Mobile: +351910836655
Year: 2007 30,000 Km Very good condition Price: MOP88,000
FOR SALE - ONE GRANTAI Tower 3; Flat 10K.
Luxury hilltop flat, fully air conditioned, 3 bedrooms, 2 full bathrooms, maid’s room, fully equipped kitchen , living room, dining area, and 2 balconies with stunning Cotai Strip and sea views. Facilities include: health club, swimming pool, tennis, play area, and much more. 2320 sq. ft. selling price: HK$ 7,950/sq. ft. Contact: Steven Kahn (852) 2541 7775 Monday - Friday 11am - 6pm
Great opportunity Loft in Downtown 2 + 1 bedrooms, 2 living rooms and garden 140 sq metres with Mezzanine
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editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | firstname.lastname@example.org Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | email@example.com office manager Elsa Vong | firstname.lastname@example.org Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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September 6, 2013 April 19, 2013
Leading reports from Asia’s best business newspapers
The end of the emerging market party Ricardo Hausmann
Former minister of planning of Venezuela, is a professor of economics at Harvard University
Bangkok Post The Bank of Thailand’s Monetary Policy Committee (MPC) is concerned about auto loan defaults and carfor-cash loans as consumer debt swells, opting to keep its policy interest rate at 2.5 percent for the time being. The MPC voted six to one to maintain the 2.5 percent interest rate at its Aug 21 meeting, believing it would encourage economic growth while further easing its monetary policy could lead to a build-up of financial imbalances. The central bank trimmed its 2013 GDP growth forecast in July to 4.2 percent from 5.1 percent.
Taipei Times Taiwan’s household debt burden may face heavy pressure once the central bank launches a new round of interest rate normalisation, raising its policy rates by as much as 2 percentage points, Fitch Ratings said. “Debt burden will approach the level recorded during the twin-card financial storm [credit and cash card debt problems] in 2005 if rates are hiked by 200 basis points,” Taiwan-based Fitch Ratings director on financial institutions Cherry Huang told a media briefing.
Inquirer Business Southeast Asian economies like the Philippines face a sharp deceleration in growth as a result of a credit crunch brought on by a shift in the monetary policy of the U.S. Federal Reserve. The Institute of Chartered Accountants in England and Wales also warned that, although Southeast Asian economies have more stable economic foundations, the countries might also have to deal with the slowdown in China. The report noted that the Philippines’ GDP growth for 2013 could hit 5.3 percent in 2013, slowing down from the 6.8 percent reported the year before.
Jakarta Post The rupiah has suffered its worst plunge in the nondeliverable forward (NDF) market for one month contracts since 2009. The rate dropped by two percent to 11,756 rupiah per U.S. dollar on Wednesday and even touched 11,788 rupiah per dollar, the weakest since April 2009. This figure is 5 percent weaker than the rate recorded in the spot market. Kontan.co.id reported the decline was driven by market players’ concern over the possibility of a United States attack on Syria.
nthusiasm for emerging markets has been evaporating this year, and not just because of the U.S. Federal Reserve’s planned cuts in its large-scale asset purchases. Emergingmarket stocks and bonds are down for the year and their economic growth is slowing. To see why, it is useful to understand how we got here. Between 2003 and 2011, GDP in current prices grew by a cumulative 35 percent in the United States, and by 32 percent, 36 percent, and 49 p e r c e n t i n G r e a t Britain, Japan, and Germany, respectively, all measured in U.S. dollars. In the same period, nominal GDP soared by 348 percent in Brazil, 346 percent in China, 331 percent in Russia, and 203 percent in India, also in U.S. dollars. And it was not just these socalled BRIC countries that boomed. Kazakhstan’s output expanded by more than 500 percent, while Indonesia, Nigeria, Ethiopia, Rwanda, Ukraine, Chile, Colombia, Romania, and Vietnam grew by more than 200 percent each. This means that average sales, measured in U.S. dollars, by supermarkets, beverage companies, department stores, telecoms, computer shops, and Chinese motorcycle vendors grew at comparable rates in these countries. It makes sense for companies to move to where dollar sales are booming, and for asset managers to put money where GDP growth measured in dollars is fastest. One might be inclined to interpret this amazing emerging-market performance as a consequence of the growth in the amount of real stuff that these economies produced. But that would be mostly wrong. Consider Brazil. Only 11 percent of its China-beating nominal GDP growth between 2003 and 2011 was due to growth in real (inflationadjusted) output. The other 89 percent resulted from 222 percent growth in dollar prices in that period, as local-currency
prices rose faster than prices in the U.S. and the exchange rate appreciated.
Nominal GDP Some of the prices that increased were those of commodities that Brazil exports. This was reflected in a 40 percent gain in the country’s terms of trade (the price of exports relative to imports), which meant that the same export volumes translated into more dollars. Russia went through a somewhat similar experience. Real output growth explains only 12.5 percent of the increase in the U.S. dollar value of nominal GDP in 2003-
In most countries, the U.S. dollar value of GDP growth handsomely exceeded what would be expected from real growth
2011, with the rest attributable to the rise in oil prices, which improved Russia’s terms of trade by 125 percent, and to a 56 percent real appreciation of the ruble against the dollar. By contrast, China’s real growth was three times that of Brazil and Russia, but its terms of trade actually deteriorated by 26 percent, because its manufactured exports became cheaper while its commodity imports became more
expensive. The share of real growth in the main emerging countries’ nominal U.S. dollar GDP growth was 20 percent. The three phenomena that boost nominal GDP – increases in real output, a rise in the relative price of exports, and real exchange-rate appreciation – do not operate independently of one another. Countries that grow faster tend to experience real exchange-rate appreciation, a phenomenon known as the Balassa-Samuelson effect. Countries whose terms of trade improve also tend to grow faster and undergo real exchange-rate appreciation as domestic spending of their increased export earnings expands the economy and makes dollars relatively more abundant (and thus cheaper). Real exchange rates may also appreciate because of increases in capital inflows, which reflect foreign investors’ enthusiasm for the prospects of the country in question. For example, from 2003 to 2011, Turkey’s inflows increased by almost 8 percent of GDP, which partly explains the 70 percent increase in prices measured in dollars. Real appreciation could also be caused by inconsistent macroeconomic policies that put the country in a perilous position, as in Argentina and Venezuela.
Party over Distinguishing between these disparate and inter-related phenomena is important, because some are clearly unsustainable. In general, terms-of-trade improvements and capital inflows do not continue permanently: they either stabilise or eventually reverse direction. Indeed, terms of trade do not have much of a longterm trend and show very pronounced reversion to the mean. While prices of oil, metals, and food rose very significantly after 2003, reaching historic highs sometime between 2008 and 2011, nobody expects similar price increases in the future.
The debate is whether prices will remain more or less where they are or decline, as food, metals, and coal prices have already done. The same can be said of capital inflows and the upward pressure that they place on the real exchange rate. After all, foreign investors are putting their money in the country because they expect to be able to take even more money out in the future; when this occurs, growth tends to slow, if not collapse, as happened in Spain, Portugal, Greece, and Ireland. In some countries, such as China, Thailand, South Korea, and Vietnam, nominal GDP growth was driven to a large extent by real growth. Moreover, according to the soon-to-be-published Atlas of Economic Complexity, these economies began producing more complex products, a harbinger of sustainable growth. Angola, Ethiopia, Ghana, and Nigeria also had very significant real growth, but nominal GDP was boosted by very large terms-of-trade effects and real appreciation. For most emerging-market countries, however, nominal GDP growth in the 20032011 period was caused by terms-of-trade improvements, capital inflows, and real appreciation. These meanreverting processes are, well, reverting, implying that the buoyant performance of the recent past is unlikely to return any time soon. In most countries, the U.S. dollar value of GDP growth handsomely exceeded what would be expected from real growth and a reasonable allowance for the accompanying BalassaSamuelson effect. The same dynamics that inflated the dollar value of GDP growth in the good years for these countries will now work in the opposite direction: stable or lower export prices will reduce real growth and cause their currencies to stop appreciating or even weaken in real terms. No wonder the party is over. © Project Syndicate
September 6, 2013
Closing Euro zone interest rates held at low
Xiaomi to launch smart TV next month
The European Central Bank (ECB) has held interest rates at a historic low of 0.5 percent despite tentative signs that the euro zone is recovering. The euro zone emerged from recession in the second quarter of this year, with growth of 0.3 percent recorded between April and June. But there is still concern that many European economies remain in trouble. In July, ECB president Mario Draghi said interest rates are likely to remain low for an “extended period”. But the bank has not given any indication on how long an “extended period” might be.
Xiaomi Corp, the smartphone maker that outsells Apple Inc. in China, has beat it on another front. The Chinese company will soon offer a TV that connects to the Web and runs on the Android operating system. The 47-inch (119-centimetre) TV costs 2,999 yuan (US$490) and will be available next month, Lei Jun (pictured), founder and chief executive, said at a press conference in Beijing yesterday. Mr Lei also introduced a new handset he said would be the world’s fastest smartphone. The 16-gigabyte model will cost 1,999 yuan.
Banks keep raking in profit Macau’s financial sector on track for another banner year Tony Lai firstname.lastname@example.org
he city’s banking sector kept the growing momentum going by almost doubling its profits in July from a year earlier, data released by the Monetary Authority of Macau yesterday suggest. The combined profits of the 29 lenders operating here reached 777.5 million patacas (US$97.2 million), up by 92.4 percent from the same period of 2012. July’s results extend the industry’s growing streak this year into six months after a slight dip in January. Macau banks have accumulated profits of 4.69 billion patacas in the first seven months of 2013, already exceeding the 4.28 billion patacas they earned in the first three quarters of last year. Banking profits are growing 48.1 percent so far this year. They are on track to set a new record of over 9 billion patacas by yearend, according to Business Daily
calculations. That would eclipse the historic-high result of 6.29 billion patacas posted last year. Deposits here grew faster than loans in July as residents put more money in the bank. Residents’ deposits rose by 3.6 percent monthto-month to 404.2 billion patacas. In contrast, non-residents’ deposits dropped by 3.2 percent from June. Total deposits reached 616.6 billion patacas in July, 1.9 percent higher than a year earlier. The rise in loans was slower at 1.4 percent to 499.6 billion patacas, bringing down the loan-to-deposit ratio to 81 percent in July. This ratio could continue to fall until the end of the year as banks may raise up deposit rates to attract more savings and boost the annual balance sheet, a banking executive told Business Daily earlier this week.
Banking profits are growing 48.1 percent so far this year
BRICS to commit US$100 bln to FX fund Officials warn much work to do before operational Lidia Kelly and Alessandra Prentice
he BRICS group of emerging economies will contribute US$100 billion to a fighting fund to steady currency markets destabilised by an expected pullback of U.S. monetary stimulus, Russian President Vladimir Putin said yesterday. China, holder of the world’s largest foreign exchange reserves, will contribute the bulk of the currency pool. But it will be much smaller than the US$240 billion originally envisaged and officials said it would not be functional for some time yet. Cheap dollars that fuelled a boom in Brazil, Russia, India, China and South Africa over the past decade have turned tail since Ben Bernanke, chairman of the Federal Reserve, warned in May of a ‘taper’ in the U.S. bond-buying scheme.
“The initiative to establish a BRICS currency reserve pool is at its final stage,” Mr Putin said in opening remarks to a meeting of BRICS leaders during a Group of 20 summit in Russia’s second city, St. Petersburg. “Its capital volume has been agreed at US$100 billion. Russia has made a decision to contribute,” Mr Putin added, without specifying a figure. Earlier China’s Vice Finance Minister Zhu Guangyao said that Beijing “will take the lion’s share of this”. Both Mr Zhu and Russian Deputy Finance Minister Sergei Storchak said details still needed to be worked out, suggesting that – beyond the announcement – much more work would need to be done on the reserve facility.
A joint BRICS development bank, with capital of up to US$50 billion, is also still months away from realisation amid disagreements over burden sharing and where it should be based. “We have asked not to create unnecessary expectations,” Mr Storchak told Reuters regarding the currency pool. “Politically, the countries are ready, but technically they are not.” “The total is known but I don’t even know how to come to that,” he added.
Financial imbalance Last year’s original initiative foresaw creating a pool of central bank funds available to BRICS facing balance of payments difficulties.
There was also a push to create an IMF-style credit line to insure against external shocks. The Fed is widely expected this month to take its first steps to reduce the extraordinary monetary stimulus, with potentially huge implications for a global financial system where the U.S. dollar accounts for 62 percent of reserve assets. A Reuters survey of over 50 foreign exchange strategists put the probability of joint intervention by emerging-nation central banks within the next few weeks at just 15 percent. Only three said the likelihood was greater than 50 percent. The emerging nation facing the biggest financial shock, India, received scant sympathy from China and Russia as both called for policy action to tackle external deficits. “We see the temporary difficulties of some BRICS countries, mainly as difficulties in terms of international balance of payments,” said Mr Zhu. “The policy options in response to such ... difficulties include increasing interest rates or devaluing currencies.” Mr Storchak said the G20 communique’s wording on spillover effects would be the same as agreed by G20 ministers in July, when they said future changes to monetary policy should be “carefully calibrated and clearly communicated”. Reuters