Macau Business Daily, Sept 23, 2014

MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo Number 631 Tuesday September 23, 2014 Year III

Inflation above 6 percent

R

ents are driving up Macau’s inflation rate. Increasing 14 percent in August. Of the 11 major consumption categories, housing and fuel costs rose higher than general inflation. Only communications costs are dropping. Housing and fuel accounted for 23 percent of all goods and services purchased. Food and non-alcoholic beverages accounted for 33 percent of household expenditure last month

www.macaubusinessdaily.com

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Golden Week, ‘White Terror’

Border building consortium appointed

Casino union leaders have been questioned by police. The protesters face prosecution for ‘aggravated disobedience’ at an August 25 rally.

Allegations they fervently deny.

The union claims it was a peaceful assembly. Police say otherwise.

Forefront of Macau Gaming accuse authorities of a ‘white terror’ threat ahead of further protests

The Official Gazette has announced further progress on The Bridge.

The Macau Government will spend 71 million patacas on the border services building. A consortium has been awarded the contract. The 29.6 kilometre-long Hong Kong-Zhuhai-Macau Bridge will connect the PRD via tunnels and bridges. Completion is slated for March 2016

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Mass market growth to flatten in October

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Fifth of Hong Kong citizens considering emigration Page 6

HSI - Movers

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September 22

Largest climate march in history

Name

Something’s in the air. The Kyoto Protocol may have expired in 2012 but people want to keep the momentum going. The People’s Climate March involved 2,808 solidarity events in as many as 166 countries on Sunday. Hong Kong assembled in solidarity. Today, a U.N. Climate Summit kicks off in New York City. UN SecretaryGeneral Ban Ki-Moon has asked nations to come up with “bold ideas”

%Day

Want Want China Ho

1.47

Tingyi Cayman Island

0.51

COSCO Pacific Ltd

0.19

Swire Pacific Ltd

0.10

CNOOC Ltd

0.00

AIA Group Ltd

-2.69

China Unicom Hong K

-3.01

China Resources Lan

-3.12

Tencent Holdings Ltd

-3.27

Sino Land Co Ltd

-4.01

Source: Bloomberg

I SSN 2226-8294

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Anonymously short A series of anonymous reports.

And consequences. Short selling of Chinese companies has ignited government outrage

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Stormy weather

Brought to you by

Now it’s Kalmaegi’s fault. Last week’s typhoon is the latest fall guy for dismal gaming revenue figures. September figures are running 14 percent below the August average. More than double what pundits were predicting two weeks ago. Gaming stocks have underperformed the market by 21 percent since January

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September 23, 2014

Macau

Record 5-month jump in rent Rents in Macau increased by 14 percent in August, pushing inflation above 6 percent. Housing and fuel was the only consumption category whose price outpaced general inflation Luís Gonçalves

Luis.goncalves@macaubusinessdaily.com

H

ousing costs in Macau in August grew at a record pace in the last five months: rent increased by 14 percent, surpassing general inflation by more than two times.

Dining out, buying fruit or going to the hairdresser is getting increasingly costly in Macau with prices rising by double digits. Only communications costs are dropping.

According to data published yesterday by the Statistics and Census office, inflation in Macau reached 6.07 percent in August on a year-on-year basis. This was a slight increase on July - when the consumer price index was 5.92 percent - due to ‘higher rentals for dwellings and dearer charges for eating out’.

Housing costs continue to drive up inflation in Macau, despite all other products and services registering a slowdown in prices last month. Prices for housing and fuel (both consolidated in the same category by DSEC) jumped 12.07 percent compared to a year ago.

That’s the fastest price increase since March this year, when housing and fuel costs rose by 12.3 percent.

Speeding up In the last five months, rents in Macau increased but at a diminishing pace. Housing costs grew at an average 12 percent in the first quarter but since April started to decelerate to 11 percent, reaching in July the second lowest rate of the year (January scored the lowest value) at 11.45 percent, according to DSEC. In 2012, housing costs grew at a 7 percent clip.

Housing and fuel is the second biggest consumption component in Macau, responsible for 23 percent of all goods and services purchased by the population. The main category belongs to food and non-alcoholic beverages with a share of 33 percent.

Combined, they represent more than half of total consumption.

But consolidating housing and fuel doesn’t give the clear picture

on how rent prices are growing far beyond the rest of the economy. More detailed data from DSEC reveals that housing costs are much larger.

Rent prices, for example, went up by 14 percent in August from a year ago, while maintenance and repair for dwelling costs increased almost 15 percent (14.87 percent). These rates are more than two times the general inflation in Macau (6.07 percent). But it’s not just property and rents. Other sectors dependent on housing, like furniture, are also surfing the wave of double-digit inflation. Prices of furniture in Macau hiked 10 percent.

Dining out While rents and other housing costs continue to dominate by a large margin the inflation trends, other products are also increasing in price above inflation. Eating out, for example, has become an expensive game here as restaurants and cafes charge more to cope with rents and greater demand from tourists.

Prices in coffee shops went up 8.6 percent in August, while in congee and noodles restaurants the bill increased by 9.4 percent. Western and Chinese restaurants hiked their prices by more than 7 percent.

But that’s not all. Macau’s residents paid 9 percent more for cultural services (cinema, concerts or expositions) in August compared to a year ago, with the same happening with fruit (10 percent more expensive) and hairdressing and grooming, the latter posting one of the largest price increases in August (10.3 percent).

Last month, of the 11 major consumption categories compiled

by DSEC, only housing and fuel costs saw prices rise more than general inflation. The rest - from food to communications to transport to clothing to education - saw not only inflation slow but recorded price increases of 2 to 5 percent.

Communications costs even decreased from a year ago by 0.17 percent.

PRODUCTS WITH BIGGEST PRICE INCREASES IN AUGUST (YEAR-ON-YEAR) GOODS AND SERVICES

VAR. (%)

Inflation

6.07

Live, chilled or frozen poultry

8.82

Live or fresh seafood

7.43

Fruit

10.12

Eating out

7.71

Chinese food

7.33

Western food

7.49

Congee and noodles

9.40

Coffee shop refreshments

8.59

Actual rentals for housing

14.20

Imputed rentals for housing

14.00

Maintenance and repair of dwelling

14.87

Furniture and furnishings

9.31

Household tools and equipment

7.43

Dentistry

7.36

Paramedical services

7.46

Maintenance and repair of vehicles

7.88

Recreational and cultural services

9.14

Pre-primary and primary education

6.63

Hairdressing and grooming services

10.27

Social protection

7.73

Macau Taxi Passengers Association pans local taxis

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he online Facebook group Macau Taxi Driver Shame (MTDS), formed in June to collect passengers’ experiences of local taxi drivers, went into legal existence yesterday. The new association, galvanized by an online group of some 2,389 members, is named Macau Taxi Passengers Association.

“Macau Taxi Passengers Association will basically work with the government on the taxi problems in Macau,” the administrator of the group, Andrew Scott, told Business Daily and said that the Association will continue compiling records of taxi drivers’ behaviour from the Internet and pass the information to the Transport Bureau (DSAT).

The group has created a ‘blacklist’ and a ‘whitelist’ for passengers to report their experiences of local taxi services and drivers in the territory.

At the beginning of the month, the group released a report on the taxi experiences that it had received up to August 28, which showed that the majority of experiences are complaints about the ‘fishing’ of local taxi drivers, who overcharge passengers or refuse to serve them, while only 21 of 120 drivers that the group received comments on were elevated to the ‘whitelist’.

According to an Association press release, it will deliver their opinions to the Transportation Affairs Bureau (DSAT) today. Public consultation on amendments to taxi regulations concludes today. Last Friday, the director of the Bureau told media that the suggestions received agree to the introduction of ‘sting operations’ such as in-cab audio recording of local taxi drivers.

K.L.

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September 23, 2014

Macau

FMG urge police to withdraw charges Gaming corporation activists have been accused of breaking the law, which they denied yesterday, complaining it was a ‘white terror’ created by the police Kam Leong

kamleong@macaubusinessdaily.com

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ive core members of local gaming union Forefront of Macau Gaming (FMG) were accused by police earlier this month of ‘aggravated disobedience’.

They denied the allegations yesterday and urged police to withdraw the prosecutions.

The five members namely, president Ieong Man Teng, vice president Lei Kuok Keong, Secretary general Cloee Chao, board members Ung Kim Ip and Loi Ngai Wai - were listed as suspects breaking through a defensive police cordon during a gaming protest which assembled gaming workers from all of the six gaming corporations on August 25.

The union said yesterday that the protest was a peaceful one and perceives some misunderstandings exist between the police and the union, saying that the purpose of the protest was only to urge the six

gaming corporations and the government to address the benefits and wages of gaming workers. The protest had not targeted the police.

On August 25, during the course of the protest, MGM workers were blocked by police from approaching MGM to voice out their demands to their employer.

Some of the protesters tried to break through the defensive police cordon while others tried to detour the wall, leading to scenes of chaos.

‘Although the members of the union tried to assist the situation at that time, it was frustrating that [the chaos] did paralyze the transportation of the area for almost an hour and a half,’ the union wrote in their press statement, claiming that all the protesters had given up heading to MGM and returned to the original route after being urged by the police to do so. Meanwhile, the vice president of FMG,

Lei Kuok Kuong, said that the police are creating a ‘white terror’ prior to the new wave of gaming protests beginning this week.

“There were many police [on August 25]. Some even recorded videos. If they really have the evidence, why did they not charge us right away?” Mr. Lei asked during a phone interview with Business Daily.

He also complained about the way police prosecuted him and his colleagues.

“Cloee Chao was the first one prosecuted by the police.

The police called at her home and told her family that she was a suspect and should go to the police station to make a confession,” Mr. Lei said.

“The police later called us [the four other members] and invited us to go to the station to assist in the case; however, when we arrived at the station, they told us that we were also suspects.”

“We, the five of us,

have reached a consensus that we will not make any confession to the police.

We would only make [one] when we are taken [before] the prosecutors,” the vice president stated.

Another wave of protests The new wave of protests staged by FMG was supposed to kick off yesterday. However, the union announced that the scheduled protest against MGM would be postponed due to “members being careless”.

“We only filed our [request to] protest on Friday to the authorities. In fact, we have to submit the information two working days before the protest. Hence, our protest today was not approved by the Civic and Municipal Affairs Bureau,” Mr. Lei said.

The demonstration had been proposed after some

200 workers from the corporations met with the Labour Affairs Bureau last Monday. The MGM workers generally hope that their employer will combine their basic salary and tips into one salary in addition to increasing it. The protest, according to Mr. Lei, would probably be put off to this coming Sunday.

Meanwhile, regarding the movements against SJM during the coming Golden Week national holiday, union head Ieong Man Teng said that they would only announce details when the date drew nearer.

FMG has been staging protests against the gaming corporations in the city. So far, they have demonstrated and assembled against Sands China, Galaxy Entertainment Group, SJM and MGM. Last Sunday, the union collected some 550 signatures from Wynn workers regarding a benefits petition.

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September 23, 2014

Macau

Typhoon Kalmaegi to crush September revenues Gaming revenues in September are running 14 percent below the August average, more than double what the market was expecting two weeks ago. Gaming stocks have already underperformed the market by 21 percent since January Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

I

t’s already been a rocky month for gaming revenues but Typhoon Kalmaegi, hitting Macau last week, could have made things worse for the industry here.

According to the latest figures, average daily gaming revenues in Macau have topped MOP800 million since the beginning of the month, a rather weak performance.

That’s 15 percent below the August average (MOP932 million) and 20 percent less than Macau’s regular performance (between MOP1 billion and MOP1.1 billion).

In a note to clients yesterday, Wells Fargo, wrote last week’s ‘results may have been affected by Typhoon Kalmaegi, which disrupted business on Tuesday in Hong Kong’. The typhoon was just one more factor pressuring gaming revenues here that

are likely to record their worst month of the year in terms of growth.

Wells Fargo plus several other banks and brokerages expect revenues to drop 10 percent year-on-year in September. In August, gaming revenues declined 6 percent, and 3 percent in June and July. Wells Fargo noted that the Chinese economy continues to perform below

expectations and that ‘weak growth trends into Golden Week and the smoking ban may create additional uncertainty’.

September blues With a week left until the end of the month, it is clear that the first positive signs in the first days of September didn’t materialise.

In the first week of this month, the average daily gaming revenues was around MOP875 million. That’s 4 percent above August’s last week and only 6 percent down on August’s full month. At the time, the market expected gaming revenues to drop in September by ‘high-single digits’. After two weeks, the outlook was revised down to a high-single to low double digit decrease. Some banks, like Deutsche Bank, even admit that gaming revenues will probably tank 18 percent, the worst month for years in Macau.

With revenues plunging, stocks are following.

Gaming stocks continue to underperform the market by a large margin.

Last week, for example, shares of casino operators lost one percent against a

one percent gain from the S&P500, the index on which the world’s major companies are listed.

Since the beginning of the year, gaming stocks have declined 3.5 percent, underperforming the S&P500 by 4 percent. But the worst is left for year-to-date comparison. Since January, shares of operators lost 12.9 percent, running 21.7 percent below the market (S&P500).

With cloudy forecasts ahead, the industry in Macau will continue to face new headwinds such as possible strikes from gaming workers during Golden Week or accusations from Macau trade unions that operators here are increasing the number of VIP gaming rooms to bypass the smoking ban. All events that will likely continue to shake gaming stocks.

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September 23, 2014

Macau

Mass market growth to flatten in October Deutsche Bank expects the mass market to go flat in October due to visa restrictions on Mainland Chinese visitors and Beijing’s anti-graft policy.

Meanwhile, the German Bank says that the new wave of casinos opening from 2015 onwards will affect the gaming industry by reducing mass table yield João Santos Filipe

jsfilipe@macaubusinessdaily.com

I

n the last few months, mass market growth has been responsible for absorbing the impact of the negative growth of the VIP segment, while achieving double-digit growth itself. According to the latest report from Deutsche Bank, however, the mass market is expected to flatten out in October.

‘VIP is worsening from -17 percent in August to -25 to -30 percent in September. But our biggest concern is in mass. Mass is sharply slowing from 15 percent in July-August to 8-10 percent in September, and potentially to 0 percent in October’, it said.

This expectation has led the German Bank to lower the Gross Gaming Revenue (GGR) prediction for 2014 to -1 percent. For this cut, it also took into account the impact of the new smoking ban regulation on gaming floors that will come into effect on 6 October.

The slowdown in the mass market has primarily been driven by two factors since July: the restrictions imposed by the tighter transit visas that affected high-frequency gamblers and by the need for high-end premium mass market players to remain low profile due to the anti-graft campaign raging in Mainland China.

‘High-frequency mass players, especially those from Guangdong, were restricted by tighter transit visa since July 1st. This impacted SJM the most. Grind-mass casinos on the Peninsula saw mass revenue fall 10-25 percent from June to July’ the report says. ‘High-end premium mass players, similar to VIPs, now

preferred to remain low profile in the anti-corruption climate. Visits by high-end premium mass had fallen by around 10 percent, according to some casino hosts’.

Another problem that is also affecting the mass market and that was stressed by the German bank is the disturbance caused by the construction of glass walls that will transform some current premium mass areas into ‘private gaming areas’ where people will be allowed to smoke after the new smoking ban regulation comes into effect.

Very Important Problem The VIP segment plummeted 17 percent in August and the expectation is that it will fall another 25 to 30 percent in September. If the trend for this segment to shrink continues, the reasons pointed for it have changed.

From April to June the main problem affecting VIP gaming was the credit reduction that arose when in the fourth month of the year a junket agent fled Macau leaving behind US$1 billion-worth of unpaid debts. At that time VIP rooms reduced lending to VIP players.

From June to August the problem became demand-side, meaning that more and more players were gambling less or choosing other destinations.

The reason behind this, according to Deutsche Bank, was again the anti-corruption policy imposed by the Beijing government.

‘Junkets have noticed that VIP players from Guangdong had come

Over the next two years, given a large increase in mass tables from the new casinos, we expect mass table yield to fall 5 percent in 2015, and 9 percent in 2016 Deutsche Bank

less over the past two months. Players preferred to stay low profile now, especially after the recent anti-graft arrests in Guangdong and Shanxi’, the report claims.

This month, however, a new trend has emerged for the VIP market to continue shrinking equalling longer repayment cycles.

‘Under the anti-corruption climate, agents found it increasingly difficult to collect gambling debts from VIPs in China. Since VIP players are coming less frequently to Macau, they also have less incentive to repay gambling debt quickly’, the report says.

In addition, agents in the VIP segment have been asking for lower interest rates and a longer credit period, which is creating extra problems for small junket companies that are unable to offer new terms.

But one man’s loss is another’s gain, thus the big junket operators are expanding their market share.

GGR to grow 1pct in 2015 As for next year, Deutsche Bank now expects GGR to increase only one percent, while in the past the prediction was 10 percent.

‘We now become concerned that in the current anti-corruption environment next year’s supply may not be able to stimulate VIP demand.

We cut VIP forecast from +5 percent to -5 percent in 2015’, they said.

As for the mass market – and despite the anticipated increased visitation resulting from the opening of the new wave of casinos in Cotai the bank is cautious about the effects of increased supply on mass table yield, which is expected to fall by 20 percent by 2017. The peak for mass table yield was achieved for the bank in 2014.

‘Over the next two years, given a large increase in mass tables from the new casinos, we expect mass table yield to fall 5 percent in 2015, and 9 percent in 2016. This capacity-driven revenue growth will hurt margins in our view as the most important operating cost (i.e.) labour cost, is directly linked to capacity’, the bank concluded.

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September 23, 2014

Macau Brands

Trends

Apple Craze Raquel Dias newsdesk@macaubusinessdaily.com

S

ay what you will, if you use Apple it’s unlikely you will seriously consider changing your smartphone.

Actually, if you’re an Apple fan, it’s unlikely you said anything negative about the brand’s iphone 6 and iphone 6 plus.

Loyalty brands are an interesting marketing concept. In a few cases it’s easy to understand why this happens, either because brands were first in their field or the best in their field for a long time. If you still prefer Gillette to any other brand of razor it’s quite understandable; the same goes for Campbell canned soup, and even the Samsonite phenomenon makes sense.

When the embryonic rumours of the first Apple smartphone started, the Internet went crazy. I remember seeing dozens of ‘prototypes’ even before the brand had officially announced the product. The story repeats itself every time a new model comes out. The hype is completely unprecedented.

It’s probably a mixture of the still lingering Steve Jobs charisma, with the cool factor. Apple products are just cool, they don’t feel part of a big corporation; they feel like they belong to a young counter-culture.

‘Think Different’ they said.

Well, it seems we’re all thinking differently now.

Bridge border building to cost MOP71 million

T

he Macau Government will spend 71 million patacas to construct the border services building in the new border area for the Hong Kong-Zhuhai-Macau Bridge, it was announced yesterday in the Official Gazette. A consortium comprising JPC Consultadoria de Arquitectura Limitada, BLA Consultores de Arquitectura e Engenharia Limitada and the Macau branch of P & T Architects

and Engineers Limited was awarded the contract.

The payment will be settled in three instalments, with the first to be paid this year, in the amount of 35.5 million patacas. Next year, the Macau Government led by Fernando Chui Sai On will pay 31.95 million patacas. For 2016, the executive predicts paying 3.55 million patacas.

The Hong Kong-Zhuhai-Macau Bridge will be 29.6 kilometres long

and will connect the three regions via tunnels and bridges. The project will cost HK$83 billion, which is approximately US$10.4 billion.

The construction of the project is slated for completion by March 2016; works began in December 2011. The Hong Kong-Zhuhai-Macau Bridge is expected to reduce the time it takes to travel from Macau to Hong Kong and is predicted to boost tourism in the region.

Fifth of Hong Kong citizens considering emigration A survey shows that one in five Hong Kong locals are ‘considering emigration’, with some already putting the wheels in motion. In the second quarter alone, Macau received 1,500 workers from the neighbouring SAR - the fastest growing community here behind Filipinos and Vietnamese Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

M

ore than 20 percent of Hong Kong people are thinking about emigrating as pessimism about the city’s future grows among locals, a survey found this week.

The survey published by the Chinese University of Hong Kong and reported yesterday by newspaper South China Morning Post (SCMP) revealed that more than half of HK’s population is pessimistic about the city’s future and 21 percent are ‘considering emigration’.

The poll was designed to measure the political sensibilities of the territory’s residents following the largest demonstrations in years against Beijing’s refusal to hold democratic elections in the city in 2017.

The Chinese University poll revealed that more than half of respondents (53.7 percent) believe that the Legislative Council should veto electoral reforms if people with a different political view from Beijing are not allowed to run for election in 2017. By contrast, almost one third of the population (29.3 percent) agrees that the government should approve these reforms.

Support for the Occupy Central movement is more mixed, the main driver of the recent demonstrations that brought thousands onto the streets. According to the survey, almost half of participants (46.3 percent) said that they did not support the pro-democratic movement, while 31 percent indicated their approval of political disobedience.

To SCMP, Professor Paul Lee Siunam of the School of Journalism and Communication of Chinese University said, “Further analysis showed those who considered themselves middleroaders tended to oppose Occupy Central protests. But if the future electoral reform proposals are so restrictive that pan-democrats will be screened out, over half of them would support the legislature rejecting the proposals”.

With a fifth of the population ready to emigrate, Macau is already absorbing part. Recent statistics show that the number of Hong Kong residents working in Macau is skyrocketing and that the community is already growing three times faster than the non-resident population who work here, and more than mainlanders, Filipinos or Vietnamese.

In the second quarter alone, Macau received more than 1,500 new workers from Hong Kong, who today make up the fourth largest non-resident population in Macau.

According to the Statistics and Census Bureau, the number of Hong Kong residents working in Macau grew 19.7 percent in the second quarter of this year for a total of 8,178 individuals. In the first quarter, Macau recorded 7,194 Hong Kong residents working here. It was, by far, the foreign community to register the highest growth. In the AprilJune period, non-resident workers in Macau increased by 6.6 percent compared to the first quarter.

Of the foreign workforce, mainlanders account for the majority with almost two thirds in June (64.3 percent) followed by Filipinos (13 percent) and Vietnamese (8.2 percent). Hong Kong people follow in fourth place with a share of 5.5 percent albeit with the greatest quarterly growth. The Chinese labour community in Macau went up 8.2 percent, while Filipinos and Vietnamese remained more or less flat with a slight increase of one percent in the second quarter.

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September 23, 2014

Macau

Marching for the climate Several countries are calling on world leaders to take action now and tackle climate change. While tens of thousands marched in New York on Sunday, Hong Kong, too, participated in the People’s Climate March Sara Farr

sarafarr@macaubusinessdaily.com

A

Any action that will slow climatic change, slow the melting of every ice mass on Earth, slow the rise of sea levels, slow the rate of extinction of our fellow species and indeed save our own, cannot possibly be seen as a bad investment Sam Inglis

One of the issues Hong Kong faces, as does Macau, is capitalising on renewable energies given the lack of natural resources here. “But we [in Hong Kong] are a financial capital and we have the power and the voice; and we definitely have the money to actually request or campaign China to take it [climate change] seriously or implement initiatives needed to actually make that transition,” he added. “Of the 656 cities in China, we [Hong Kong] have the biggest presence and we have the freedom to tell the world that we care . . . We’ve had enough. We are sick and tired of an ineffectual system, of ineffectual policies, of ineffectual policymakers.”

While he says he isn’t optimistic about that actually happening, Inglis said that the “incompatibility at the moment is the different between the Hong Kong people and their desires and the current way of operations in the Chinese government.”

“Locally we could achieve great things with the HK$800 billion currently comprising the SAR’s reserves,” he said, adding that “any action that will slow climatic change, slow the melting of every ice mass on earth, slow the rise of sea level, slow the rate of extinction of our fellow species and indeed save our own, cannot possibly be seen as a bad investment.”

Photo courtesy of Peter Inglis

s many as 200 people turned up for the People’s Climate March in Hong Kong on Sunday just ahead of today’s U.N. Climate Summit that kicks off in New York City.

Both Macau and Hong Kong rely heavily on imports, mainly from mainland China, considering that neither Special Administrative Region produces oil, gas or even energy.

Consequently, such commodities are brought in. “The big argument for us is transitioning our economies and our energy systems to being reliant on renewable energy,” Sam Inglis, the organiser of the People’s Climate March in Hong Kong, told Business Daily.

Around the world, last Sunday marked the People’s Climate March, the largest global mobilisation that in New York alone attracted more than 10,000 people including the head of the United Nations, Ban Ki-moon himself. In Adelaide, South Australia, as many as 10,000 marched, while Melbourne put 20,000 marchers on the streets – the largest crowd in the Australian cities taking action. In Toronto, 3,000 people gathered at Nathan Phillips Square.

In Hong Kong, however, there was no march, just an assembly to raise awareness, with a group photo and a call for change. The reason there was no march, according to Mr. Inglis, is that currently Hong Kong’s political climate “doesn’t lend itself to these big actions . . . I thought that despite the fact that we are part of a global mobilisation, it’s more important to have everybody together, in the one place, to meet and to chat with one another. It’s almost like a brainstorming session.”

Nonetheless, the turn-out was more than organisers had expected.

Some 100 T-shirts and masks were given to people who turned up for the movement – all of which were given away in the first few minutes of the gathering starting.

Overall, 2,808 solidarity events supported the People’s Climate March in as many as 166 countries – a movement labelled “the largest climate march in history”.

Residing hope World leaders are meeting today in New York for a forum which many hope will galvanise support to build “the greatest climate change alliance” the world has seen. But not all world leaders will be present at the U.N. Climate Summit, notably from Australia, India, China, Canada, Germany and Russia. They will, however, send other government officials in their place.

The United Nations is seeking to limit global warming to two degrees celsius (3.6 degrees fahrenheit) over pre-industrial levels but scientists say current emission trends could hike temperatures to more than twice that level by century’s end. While the New York summit is not a formal

negotiating session, UN SecretaryGeneral Ban Ki-Moon has asked nations to come with “bold ideas” for achieving a new treaty to cut greenhouse gases by December 2015.

The previous pact, known as the Kyoto Protocol, ended in 2012.

Government and industry leaders need not choose between fighting climate or growing the world’s economy. They can do both, according to a new study.

Countries can expand their economies via emission reductions in cities, land use and energy, according to a report released today by the Global Commission on the Economy & Climate, a panel set up by seven nations including the U.K. to advise on the best ways to tackle global warming.

Building better connected cities relying on mass public transportation may save more than US$3 trillion in investment costs over the next 15 years and would improve economic performance and quality of life, according to the report.

Restoring 12 percent of the world’s degraded lands can feed 200 million people and raise farmers’ income

by US$40 billion a year, it said.

Governments should also triple research and development in lowcarbon technologies to at least 0.1 percent of gross domestic product and phase out US$600 billion of fossil fuel subsidies, it said. with AFP and Bloomberg

8

September 23, 2014

Greater China Alibaba IPO ranks as world’s biggest

Short sellers target China from This month’s round of short-selling began with the publication of a

S Alibaba Group Holding Ltd.’s initial public offering now ranks as the world’s biggest in history at US$25 billion, after the e-commerce giant and some of its shareholders sold additional shares.

Overwhelming demand saw the IPO initially raise US$21.8 billion and then send Alibaba’s stock surging 38 percent in its debut on Friday. That prompted underwriters to exercise an option to sell an additional 48 million shares, a source with direct knowledge of the deal said. The IPO surpassed the previous global record set by Agricultural Bank of China Ltd in 2010 when the bank raised US$22.1 billion.

Factories’ growth seen stalling Growth in China’s large factory sector probably stalled in September, adding to worries the economy could be at risk of a sharper slowdown unless Beijing rolls out more stimulus measures, a Reuters poll showed yesterday. The flash HSBC/Markit manufacturing Purchasing Managers’ Index (PMI) likely straddled the boom-bust line of 50 in September, the median forecast of 19 economists showed, dipping from August’s final PMI reading of 50.2, a three-month low. Worries that China was slipping into a deeper downturn were heightened this month when data showed factory output grew at the weakest pace in nearly six years.

Nanjing to ease property buyout Most Chinese cities have relaxed home purchase restrictions and more measures to prop up falling prices are expected as local governments seek to support a key pillar of the economy.

Nanjing, a city in eastern Jiangsu Province, abolished on Sunday restrictions that limit the number of homes that residents can buy, the local government said on its website. This means that 40 of 46 regional Chinese governments that had imposed home purchase limits have relaxed the curbs this year, shoring up support for a slowing property market that many analysts believe poses the biggest risk to China’s economy.

Google selects HTC for Nexus tablet Google Inc. has selected HTC Corp to make its upcoming 9-inch Nexus tablet, the Wall Street Journal reported, citing people familiar with the matter.

Google had been mulling HTC as a potential Nexus tablet partner since last year and HTC engineers have been flying to the Googleplex in Mountain View in recent months to work on the project, the report said. Google’s decision to pick HTC reflects its longterm strategy of building a broad base of partners from device to device to prevent any one manufacturer from gaining a monopoly, the report said.

hort-sellers who profit from stock price declines have resumed targeting Chinese companies after a three-year lull, but many of the researchers who instigate the strategy are now cloaked in anonymity.

Three reports published this month separately accused three Chinese companies - Tianhe Chemicals, 21Vianet and Shenguan Holdings of business or accounting fraud. All three companies said the allegations were baseless but their shares were hit by a wave of short-selling by clients of the research firms and then by other investors as the reports were made public.

The reports were written by research firms that did not publicly disclose names of research analysts or even a phone number.

In the last wave of short-selling that peaked in 2011 and wiped more than US$21 billion off the market value of Chinese companies listed in the United States, the researchers advocating short-selling were mostly public.

Carson Block of Muddy Waters, one of the most prominent short sellers, openly accused several Chinese companies of accounting fraud. Block said in 2012, according to several media reports, that he moved to California from Hong Kong because he had received death threats.

Carnes’s research firm Alfred Little has the best track record among short sellers, according to data compiled

Hong Kong Stock Exchange trading floor

by Activists Shorts Research that shows the share performances of companies it targeted.

Carnes has said he was threatened by representatives of one of the companies he reported on in 2011.

His researcher Kun Huang was jailed in China for two years and then deported.

A series of incidents in recent years has highlighted China’s growing willingness to investigate, detain

and prosecute people for crimes involving the use of information for commercial purposes. Short selling has particularly irritated the authorities, financial industry analysts have said.

Now, research firms are becoming more adept at using online tools to mask their locations and identities, said John Hempton, an Australiabased short seller at Bronte Capital.

“It’s getting more anonymous,

Nissan says to make Infiniti cars in China The company, which moved its Infiniti head office to Hong Kong two years ago, is targeting sales of 30,000 units this year in China Norihiko Shirouzu and Samuel Shen

N

issan Motor Co Ltd said yesterday it had set up a joint venture to manufacture and market its Infiniti brand in China, seeking to cash in on higher demand for understated luxury sedans in the world’s biggest auto market.

The venture, Dongfeng Infiniti, is equally owned by Nissan and Dongfeng Motor Corp, a unit of Chinese auto maker Dongfeng Motor Group Co Ltd with which Nissan already operates a carmaking venture in China.

Nissan, which moved its Infiniti head office to Hong Kong two years ago, is targeting sales of 30,000 units this year in China, an 80 percent jump from a year ago. It aims to sell 100,000 Infiniti cars in China by 2018, over half of which will be locally made, the carmaker added.

Nissan is targeting higher China sales at a time when a state crackdown on extravagance among public officials is creating demand for upmarket cars that do not carry brands typically associated with opulence.

It plans to start making two Infiniti models in China in November at its factory in central Hubei province, where it currently produces the massmarket Teana and Murano models.

Local production of Nissan’s luxury brand follows similar moves

by General Motors Co’s premium Cadillac brand and could help the Japanese carmaker better compete with the three German brands - Audi, BMW and Mercedes-Benz - that currently dominate China’s upmarket car market.

The three German brands all make cars in China, which helps them cut production costs and avoid hefty import duties. They, however, need

to share profits with their Chinese partners.

Nissan sees China as key to helping it triple its global Infiniti sales to half a million vehicles by 2016. Currently, worldwide sales of Infiniti models are just a tenth of Audi’s global sales.

Luxury car brands are at the centre of a Chinese government crackdown on anti-competitive behaviours amid complaints that foreign carmakers are overcharging customers.

Reuters

9

September 23, 2014

Greater China

the shadows report by Anonymous Analytics targeting Tianhe Chemicals Group

The incentive structures are such that you’re going to see a lot of frauds (among Chinese companies), and a lot of takedowns. This will be a feature of Chinese capital markets until those incentives change John Hempton, Bronte Capital

because the attitude of the Chinese authorities is becoming more and more dangerous,” said Hempton.

The Tianhe attack This month’s round of shortselling began with the publication of a report by Anonymous Analytics against Hong Kong-listed Chinese company Tianhe Chemicals Group.

Anonymous Analytics said Tianhe

“vastly misrepresented the size and scope of its business, and has produced false and misleading statements to the market.” The research group said its findings were based on “months of due diligence, field research and analysis”. It said the analysis included government and State Administration for Industry and Commerce (SAIC) documents, and that it also conducted interviews with clients, competitors and former employees of Tianhe.

Tianhe said in a statement it “unequivocally denies and vigorously refutes the groundless allegations in the report” while Hong Kong stock exchange authorities, contacted by Reuters, refused comment.

Tianhe requested that its shares be halted from trading on September 2, the day after the Anonymous report.

The same day, another research group, Emerson Analytics, accused Hong Kong-listed sausage casing maker Shenguan Holdings Group Ltd of doctoring its books, and said its report was based on government and SAIC documents, company filings, and an analysis of the casing industry.

“In 2013, Shenguan inflated its revenue by at least 10-15 percent and hid part of its raw materials costs (the actual cost is about 124 percent higher than the reported amount). This bloated its (earnings) margins from our estimated 19.8 percent to a reported 52.4 percent,” Emerson said.

Shenguan said in a statement that the report contained errors and misleading statements.

The company also requested a halt in trading of its shares.

On September 10, Trinity Research Group published a report on Nasdaq-listed Chinese data centre company 21Vianet Group Inc. saying it had “overwhelming evidence that the company is committing

accounting and securities fraud”.

It said the report was based on a six-month investigation by a team of accountants, lawyers, telecom industry executives and insiders, as well as former employees, current and former customers and current and former service providers of the company.

In a public statement and in a letter to shareholders from its CEO, 21Vianet called the report malicious and baseless. Its shares fell as much as 35 percent before recovering slightly after the company statement.

None of the research reports listed contact names or telephone numbers - only e-mail addresses. The groups declined to disclose their location or give other details when contacted

by Reuters.

In the previous short-selling wave, several Chinese firms were delisted as their share values sank at the cost of billions of dollars in destroyed investor capital.

But the very success of the shorting campaign also hastened its end: Chinese stocks began underperforming their respective peers, while the cost of borrowing shares to short skyrocketed, cutting into profit margins.

At the same time Chinese law enforcement began moving against the due diligence investigators on whom shorters relied to dig up dirt on Chinese firms.

The recent short-selling shows these traders have discovered a new way to take on Chinese companies, relying on anonymity, public information, and less upfront costs, allowing them to profit more quickly and more safely than before, according to China-based short sellers who declined to be named.

Reuters

Cotton import quotas cut to boost domestic demand To encourage domestic producers, China will offer subsidies to provinces in the Yellow River and Yangtze River valley growing areas, said another official at NDRC

C

hina, the world’s top consumer of cotton, will slash its import quotas for 2015 to boost demand for domestic fibre, a senior official said yesterday, in a move that is expected to put downward pressure on international prices.

Beijing will only provide import quotas next year for the 894,000 tonnes that it is required to offer at low duties under commitments with the World Trade Organisation, according to Liu Xiaonan, vice head of the economy and trade department at the National Development and Reform Commission.

Previously, China has offered another type of quota, in addition to the one compliant with the WTO, but Liu said no additional quota would be made available next year.

Non-quota imports are subject to a 40 percent tariff, so the restricted availability of import quotas will inevitably dampen Chinese demand for foreign cotton.

In the 2013/14 marketing year, traders estimated that Beijing had issued 600,000800,000 tonnes through the additional quota that will not be available next year.

The government had previously said a new direct

KEY POINTS China to restrict imports quotas to 894,000 tonnes in 2015 China only offering quota linked to WTO commitment in 2015 600,000-800,000 tns imported via other quota in 2013/14 Additional quota will be unavailable in 2015, says official subsidy for cotton farmers would only be available to Xinjiang, the country’s top growing region, raising fears that domestic cotton output would drop sharply.

The change in quota policy will hurt major exporters such as the United States where Chinese demand has played a key role in influencing fibre prices.

Prices on the international market ICE hit near-five-year lows in August as the market anticipated weaker fibre demand in China ahead of

an overhaul of its policy.

The government said earlier this year it would end a three-year long programme to stockpile domestic cotton to support local growers, and instead offer subsidies direct to farmers.

The stockpiling had pushed the price of domestic cotton well above market prices, creating demand for cheaper imported fibre.

China’s cotton imports dropped by 32 percent in the 2013/14 year to 3 million tonnes, owing to weaker

demand by the domestic textile sector and mills importing yarn instead of cotton.

Imports are expected to fall further in the current year to 1.74 million tonnes, according to the U.S. Department of Agriculture.

Liu did not disclose whether next year’s import quota will be tied to domestic purchases.

ICE cotton prices slumped on Friday, after an industry website reported that Beijing may link a large amount of the WTO quota to domestic cotton purchases.

Beijing wants to boost demand for domestic cotton China to extend subsidies to provinces outside Xinjiang China will consider auctioning cotton from state reserves after the main buying season ends in March, if demand has not been satisfied by the new fibre crop, added Liu. Reuters

10

September 23, 2014

Greater China

Singapore Exchange wants China’s IPOs back Of the 770 companies listed on Southeast Asia’s largest exchange, 130 are from China, according to the bourse Jonathan Burgos

S

ingapore Exchange Ltd. is forecasting an end to a twoyear hiatus for Chinese listings after regulators made it easier for companies from Asia’s biggest economy to sell shares in the citystate.

SGX expects some initial public offerings from Chinese companies in 2015, Lawrence Wong, head of listings at the exchange operator, said in an interview on September 17. The last was Sincap Group Ltd. in June 2012. SGX and the China Securities Regulatory Commission signed a deal in November that allows mainland companies to list on the Southeast Asian bourse without having to incorporate an overseas holding company.

“China has been on our radar for a long time,” Wong said. “The arrangement with CSRC allows Chinese companies incorporated in China to list in Singapore directly.

This is very significant. In the past, it was very difficult for mainland companies to do so.”

If it works out well, it’s possible that Singapore may pose a challenge to Hong Kong again Rachel Eng, joint managing partner, WongPartnership LLP

After a flurry of Chinese companies known as the S-chips listed in Singapore in 2007, IPOs dried up as debt defaults and accounting scandals saw stocks from FerroChina Ltd. to Sino Techfibre Ltd. delisted or suspended. Mainland companies have favoured IPOs in Hong Kong this year, while those seeking a Singapore listing, including developer Chiwayland International Ltd., pursued reverse takeovers of companies on the Southeast Asian bourse.

The bourse operator has been holding seminars across China to explain the new rules to state-owned enterprises and private companies, and has received enquiries from manufacturers, property developers and mining companies interested in a

Trading volume An influx of companies would help SGX recover from a slump in new share sales and trading volume this year. Companies raised US$2.2 billion from Singapore IPOs in 2014, a 53 percent decline from the same period last year, as South Korea’s Lotte Shopping Co. and Indonesia’s Samudra Energy Ltd. postponed offers. An average S$1.05 billion (US$829 million) of shares were traded on the bourse each day this year, down 32 percent from a year earlier.

Of the 770 companies listed on Southeast Asia’s largest exchange, 130 are from China, according to the bourse. Yangzijiang Shipbuilding Holdings Ltd., China’s second-largest private shipbuilder, raised S$943.5 million in April 2007, the Singapore exchange’s largest IPO by a mainland company.

SGX is working on some big

Chinese IPOs, Wong said, declining to comment on whether they would be larger than Yangzijiang Shipbuilding.

Hong Kong IPOs IPOs in the mainland have been the main drivers of listings in Hong Kong, accounting for more than half of the US$15.5 billion raised by companies this year, according to data compiled by Bloomberg. Dalian Wanda Commercial Properties Co., the commercial realestate unit of billionaire Wang Jianlin’s conglomerate, is planning to raise as much as $6 billion, a person with knowledge of the matter said this month.

“Singapore doesn’t have any natural influx of IPOs,” said Seth Merrin, chief executive officer of Liquidnet Holdings Inc., operator of a so-called dark pool trading venue.

“Singapore and Hong Kong have been competitive. I don’t think Singapore has the ability to keep up with Hong Kong at this point because there’s an IPO factory inside of China and they’re going to Hong Kong.”

A trading link between the Hong Kong and Shanghai bourses is expected to begin next month, bolstering the former British colony’s status as a gateway to mainland markets. Hong Kong Exchanges & Clearing Ltd. has rallied 37 percent this year, the biggest gain on the Hang Seng Index, compared with SGX’s 0.6 percent drop.

More liquidity “In the short term, the Hong KongShanghai connectivity might draw a bit of liquidity into Hong Kong, making the Hong Kong bourse more attractive as a listing destination for mainland companies,” said Benjamin

Ong, an analyst at Phillip Securities Pte in Singapore. “In the long run, Singapore will remain as an attractive listing destination as regulators here are a bit more accommodative.”

Hong Kong lost the listing of Alibaba Group Holding Ltd., the biggest U.S. IPO on record, after refusing to allow its corporate governance structure.

In contrast, Singapore has introduced rules in the past three years to allow the listing of resource companies without an earnings track record, as well as dual-currency trading for stocks and exchange-traded funds.

There are 292 overseas companies listed in Singapore currently, according to SGX. Tax incentives have helped the city state attract 39 real- estate investment trusts, including ones with assets in Japan, Hong Kong and Germany.

No repeat Still, SGX is taking steps to avoid a repeat of the problems that plagued some S-chips, Wong said.

In the case of FerroChina, which had a market value of more than S$2 billion in 2007, shareholders lost their entire investment when the steelmaker was forced to delist in March 2010.

Other stocks that have been suspended include Sino Techfibre, which said a fire destroyed its financial records after reporting accounting flaws, and China Sun Bio-Chem Technology Group Co., which said a truck transporting its accounting records was stolen.

“We’ve learned from that episode,” Wong said. “When things happened, SGX required Chinese companies to conduct checks and audits. Having the direct listing framework with CSRC will help. There’s at least another pair of eyes.”

Bloomberg News

11

September 23, 2014

Asia

Indonesia and Malaysia fight for palm oil Global edible oil supplies are forecast to climb, with expectations of record soybean production in the United States and a seasonal upswing in palm oil output in Indonesia and Malaysia

P

alm oil’s share of global vegetable oil consumption looks set to climb in the months ahead as the top two producers engage in a tit-for-tat export tax tussle designed to boost sales.

Barely a month after number two producer Malaysia cut export tariffs, top palm oil maker Indonesia is preparing a similar move to boost sales of the tropical oil used for cooking and in products ranging from candies to cosmetics.

It might seem that Malaysia would then lose the competitive advantage it gained with its tax cut, which has pushed up shipments this month. But traders and analysts say there’s room for both countries to benefit at the expense of Argentina’s soybean oil and Ukraine’s sunflower oil.

Palm oil prices on the benchmark Bursa Malaysia Derivatives Exchange climbed to a one-month high this week as the market continued to rebound from a five-year low seen at the start of September.

Malaysian palm oil exports jumped more than 30 percent in the first half of September from a month before, according to estimates from cargo surveyors, as a direct benefit of abolishing export taxes.

If international and local

crude palm oil prices drop below $750 a tonne, Indonesia cuts its tax to zero, and that is expected for October.

But Jakarta may be looking at more extensive action involving export taxes on refined products, too.

Refinery capacity in Indonesia, the world’s top palm oil producer, is expected to jump to 45 million tonnes per annum by the end of 2014, up from 30.7 million last year and more than double the 21.3 million in 2012, according to the industry.

Global edible oil supplies are forecast to climb, with expectations of record soybean production in the United States and a seasonal upswing in palm oil output in Indonesia and Malaysia, which account for 60 percent of world vegetable oil exports.

Buyers in the world’s top edible oil importers, India and China, have now stepped up buying.

After its cut, Malaysia saw palm oil exports to China nearly double to 84,030 tonnes in September 1-15 from a month before, according to cargo surveyor Societe Generale de Surveillance.

Chinese festival However, Chinese importers are still working in a difficult environment. “The volume may not increase

KEY POINTS Indonesia seen exempting palm oil exports from taxes next week Jakarta may also reduce duties on palm oil products Palm oil in Indonesia quoted $106.5/T below Argentina’s soyoil

much because credit is still tight,” said one analyst with the China National Grain and Oils Information Center in Beijing.

Any recovery in demand could prompt financial players to unwind short positions in the edible oil market, providing a lift to prices.

The volume of open positions in Malaysian palm oil futures jumped to a record high last week, further evidence the market is bottoming out after the slump in prices.

And festivals in India and China will help in coming months.

“You’ve got Deepavali celebrations in India and three months later you have Lunar New Year in China,” said a palm oil trader with a foreign commodities brokerage in Kuala Lumpur.

“The two most populous countries in the world celebrate their festival seasons, so naturally demand will be strong.”

Reuters

OECD says BOJ inflation goal hard to meet April’s sales tax rise to 8 percent from 5 percent forced the economy into the deepest slump in April-June since the 2009 global financial crisis

T

he Bank of Japan must make a new commitment quickly to meet its 2 percent inflation target because achieving that goal by next spring will be difficult, a senior official at the Organisation for Economic Cooperation and Development said on Monday.

OECD Acting Chief Economist Rintaro Tamaki, speaking at a news conference, also urged the Japanese government to proceed with a second sales tax increase next year as planned to help fix its tattered public finances.

The BOJ unleashed an intense burst of monetary stimulus in April 2013, pledging to double base money, to achieve the 2 percent goal in roughly two years. It has stood pat since then, sounding confident that the economy is on track.

Tamaki said it would be up to BOJ Governor Haruhiko Kuroda to decide whether to embark on additional monetary easing.

He called for near-term stimulus, including monetary policy, to mitigate any impact of the second tax hike, adding however that the government should steer clear of large stimulus

Tamaki said it would be up to BOJ Governor Haruhiko Kuroda (pictured) to decide whether to embark on additional monetary easing

spending given the need of fiscal consolidation.

April’s sales tax rise to 8 percent from 5 percent forced the economy into the deepest slump in April-June since the 2009 global financial crisis, raising some concern that Japan may not be able to cope with the next hike to 10 percent in Oct. 2015.

Even if third-quarter growth turns out to be weak, Tamaki said Japan

should proceed with the tax hike as planned to curb its public debt, which is at more than twice the size of its GDP, the worst in the developed world.

Turning to the weak yen, Tamaki said it would help Japanese exports to increase gradually but added there was not much room for strong growth unless the global economy including China stages a solid recovery.

Reuters

We assume (Japan’s consumer inflation) won’t hit 2 percent in a stable manner in the spring of 2015, so the BOJ should commit to maintaining monetary easing beyond that as early as possible, considering the next tax hike in October 2015 Rintaro Tamaki, OECD Acting Chief Economist

12

September 23, 2014

Asia Vinatex raises US$57.6 mln at IPO Vietnam’s top textiles and garment maker, Vinatex, raised 1.22 billion dong (US$57.6 million) at its initial public offering yesterday, having sold 90 percent of shares on offer, the exchange said. Investors priced the shares of Hanoi-based Vinatex, formally known as the Vietnam National Textile and Garment Group, at an average 11,000 dong, on par with its initial starting price, the Ho Chi Minh Stock Exchange said in a statement.

State-run Vinatex had planned to sell nearly 122 million shares, or 24.4 percent of its stakes, at the IPO.

LV loves Asian biz L Capital Asia, LV’s private-equity arm, is looking for potential tourism and hospitality deals in Singapore, Thailand and Vietnam

L

VMH Moet Hennessy Louis Vuitton SA’s private-equity arm, which bought a rooftop bar and dim sum restaurant chain in Singapore this year, is seeking more investments in the region to gain from rising consumer spending.

L Capital Asia sees opportunities in Singapore’s food and beverage,

entertainment and beauty-care industries because the city has a large expatriate population and tourist flows, according to Sanjay Gujral, L Capital Asia’s regional managing director. The firm, backed by the largest luxury-goods maker, is also looking for potential tourism and hospitality deals in countries such

Singapore captures India futures Singapore is overtaking Mumbai as the biggest market for Indian stock-index futures, a sign of foreign investors’ growing influence over equities in the world’s second-most populous nation. The CHART OF THE DAY shows open interest, or the number of outstanding contracts, for CNX Nifty Index futures on the Singapore Exchange Ltd. climbed 55 percent during the past four years to about 345,000. That compares with a 60 percent decline for similar contracts traded on the National Stock Exchange of India Ltd.

Charles & Keith The firm invested in Singaporebased shoemaker Charles & Keith Group in 2010 and Australian gourmet food emporium Jones the Grocer in 2012. This year L Capital Asia bought stakes in the Crystal Jade Culinary Concepts Holding Pte restaurant chain, known for its steamed dumplings and spicy noodles,

A Louis Vuitton shop in Hong Kong

Thai c.banker bets on 1,5 pct growth Thailand’s economy is expected to grow at close to the central bank’s forecast of 1.5 percent this year as improved consumption helps offset weak exports and tourism, while monetary policy is still accommodative, the central bank governor said yesterday. Export growth this year is expected to be less than the central bank’s estimate of 3 percent, Bank of Thailand Governor Prasarn Trairatvorakul told reporters. The central bank is due to release new economic projections on Friday. Prasarn also said that the current policy rate, now at 2.0 percent, was still supportive of the economic recovery.

Vietnam’s Chinese auto imports up Vietnam saw an increase of 187 percent year-on-year in imports of completely built unit (CBU) automobiles from China in the first eight months of 2014, said a local report yesterday.

Local Thanh Nien (Young People) online newspaper yesterday quoted a report by Vietnam Customs as saying that during the eight- month period, Vietnam imported some 7,000 CBU cars from China. During the period, the country bought a total of about 37,300 CBU cars of all kinds worth over 806 million U.S. dollars from the world market, up 71.5 percent in volume and 91.9 percent in value yearon-year.

as Thailand and Vietnam.

Private-equity deal making in Southeast Asia should grow faster than the rest of Asia Pacific this year, according to Bain & Co. L Capital Asia, set up in 2009, has expanded beyond an initial focus on China and India to also look at investment opportunities in places like Southeast Asia, Australia, Korea and Japan.

L Capital Asia is backed by LVMH, billionaire chairman Bernard Arnault’s family holding company and Malaysia’s YTL Corp. It raised US$1 billion for its second Asian private-equity fund last year, after pulling US$637 million for its first fund in 2010. Discussions about a third fund will likely take place in two years, Gujral said.

Thai brokerage sees small-cap bubble This year’s 93 percent surge in the small-cap MAI Index has left the gauge valued at 4.3 times net assets

T

he biggest rally in Thailand’s small-capitalization companies in more than a decade has propelled shares to bubble levels, according to the nation’s largest brokerage.

Speculative buying has pushed some of the country’s smallest stocks to prices unjustified by their earnings potential, Montree Sornpaisarn, the chief executive officer of Maybank Kim Eng Securities (Thailand) Plc., said in an interview in Bangkok. This year’s 93 percent surge in the smallcap MAI Index has left the gauge valued at 4.3 times net assets, a record 89 percent premium over the benchmark SET Index.

Investor optimism toward smaller companies in Thailand’s US$442 billion stock market, Southeast Asia’s third-largest, has been fuelled by a military coup in May that ended six months of political turmoil and led to a resumption of state investment. The surge prompted the president of the smallcap exchange to caution investors

against excessive speculation this month and led the securities regulator to speed up legislation designed to curb manipulation.

Unexplained moves While small-cap stocks are expensive, the nation’s largest companies haven’t yet reached levels that pose major risks to investors, according to Montree.

The SET measure trades for 2.3 times net assets, down from a high of about 2.6 in May 2013, according to data compiled by Bloomberg.

The Stock Exchange of Thailand and its small-cap Market for Alternative Investment have sent requests for information to 17 companies this month, more than double the number in August, after a surge in prices and volumes, according to exchange data.

Thirteen of those stocks are listed on the MAI. Among companies that received queries from the exchange, C y b er p l a n et I n ter a c t i v e P l c .

surged 158 percent this month.

The developer of video games said in a regulatory filing last week it offered 457 million new shares to a group of investors to raise funds for expansion. Dimet Siam Plc., a producer of paints and coatings that has rallied 236 percent this month, said on September 12 it was unaware of any reason behind the rally.

The money manager’s Aberdeen Small Cap Fund has delivered an average annual return of 29 percent in the past five years, making it the best performer among more than 200 equity funds domiciled in Thailand, data compiled by Bloomberg show.

Earnings at MAI-listed companies slumped 31 percent in the first half, according to a statement from the bourse on August 20. The nation’s gross domestic product rose 0.9 percent in the three months through June from the previous quarter, when it shrank a revised 1.9 percent, according to government data.

Bloomberg News

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13

September 23, 2014

Asia Southeast Asia has all the characteristics of a developed market like a strong regulatory framework, but at the same time, it also has a fast-growing middle class Sanjay Gujral, L Capital Asia’s regional managing director

and Ku De Ta Group, which operates the 57th-floor bar at the top of Singapore’s Marina Bay Sands hotel.

The investments may benefit after the number of tourists visiting Singapore monthly surged over the past five years to reach 1.4 million in July, data compiled by Bloomberg show. Singapore ranked as the third most-favoured expat destination in a survey released in October last year

by HSBC Holdings Plc.

Backing No. 1 Southeast Asia’s economy will expand 5.4 percent in 2015, after

growing 4.7 percent this year, the Asian Development Bank forecast in July. Private-equity firms made US$3.4 billion of investments in the region in the first half of this year, almost 70 percent of 2013’s total deal value, according to Bain.

L Capital Asia hired Christina Teo from Deutsche Bank AG in 2012 to lead its investments in Southeast Asia, Australia and New Zealand.

The typical investment for its second fund will probably be about US$80 million, twice the average deal size from the first fund, Gujral said.

The firm seeks to at least double the sales of companies it invests in and increase their profits by three to five times over the investment period of four to five years, according to Gujral. L Capital Asia helps its portfolio companies boost their product offerings and distribution networks with LVMH’s support, he said.

After investing in Crystal Jade, the fund will explore ways for it to improve the beverage offerings at its fine dining outlets including with selections from LVMH’s stable of brands, which encompass champagne maker Dom Perignon and California’s Newton Vineyard winery, according to Gujral.

Earlier this month L Capital Asia agreed to invest US$80 million in South Korea’s YG Entertainment Inc., the music company that manages artists including Psy, the singer of “Gangnam Style.” YG plans to work with the private-equity firm to develop cosmetics and fashion businesses as it expands in Asia.

Bloomberg News

Japan’s UACJ to boost aluminium output Aluminium prices have risen almost 10 percent this year as major producers including United Co. Rusal and Alcoa cut output amid greater use of the metal by automakers

U

ACJ Corp., the world’s third biggest producer of rolled aluminium products, will expand its capacity for sheets used in liquefied natural gas carriers by 50 percent next year to meet rising tanker demand.

The Tokyo-based company will increase annual output capacity for rolled aluminium used in the ships to 54,000 metric tons by the end of September 2015, from 36,000 tons now, Makoto Yakata, general manager at UACJ’s sales planning department, said in an interview. UACJ is Japan’s top producer of rolled aluminium sheets for shipbuilders such as Mitsubishi Heavy Industries Ltd., IHI Corp., Kawasaki Heavy Industries Ltd. and Hyundai Heavy Industries Co. Japan, the largest buyer of LNG, is poised to increase it’s reliance on natural gas to make up for lost nuclear power generation after the 2011 Fukushima disaster.

A need for new ships is rising as Japan will start shale gas imports from the U.S. in the coming years, he said.

UACJ has raised its forecast for demand from LNG carriers to 44,000 tons in the year starting April 2015, up from 21,000 this fiscal year and higher than its previous estimate of 24,000. It will increase to 56,000 tons in fiscal year 2016. One LNG tanker uses about 4,000 tons of rolled aluminium sheets. The company will produce products for 30 LNG carriers through March 2017, he said.

Unprecedented demand Japan will need more than 20 new LNG carriers for its plans to import shale gas from the U.S., Hiroshi Hashimoto, a senior analyst at the Institute of Energy Economics, Japan, said Sept. 19. The ships will either be new or chartered from existing fleets, he said.

UACJ said in May that its total rolled products sales will increase 3.8 percent to 996,000 tons in the year ending next March. Cans account for 66 percent, following car parts with 7 percent and rolled sheets at 5 percent.

Bloomberg News

14

September 23, 2014

International Tesco cuts profit outlook Tesco cut its profit forecast for the third time this year yesterday after finding a fault in its accounts, the latest blow of several to the reputation of Britain’s biggest grocer. Shares in the company dropped 12 percent in early trade after it cut its first-half profit outlook by US$408.50 million and said its previous profit warning of August 29 had overstated expected first half profit by 23 percent. Tesco said the error had been discovered during preparation for its forthcoming interim results.

Jamaican government confident Jamaican Prime Minister Portia Simpson Miller said that the Jamaican government has met all its economic targets and promised further economic growth before fresh elections are called. Speaking at the 76th annual conference of the ruling People’s National Party, Simpson Miller said Jamaica’s macroeconomic performance has improved significantly over the past year. She said all the indicators of growth have shown that the current administration, which took office in December 2011, was on the right track, vowing that the administration will continue its growth policy.

EMC holds merger talks Data storage products maker EMC Corp held merger talks with rivals Dell Inc and Hewlett-Packard Co, the Wall Street Journal reported citing people familiar with the matter. Under pressure from an activist shareholder and the expected retirement of its long-time CEO, the company is exploring options including a sale. On the talks with Dell, given the relative sizes of the companies, Dell may not contemplate a full takeover, but may explore buying assets including its core storage business. Merger talks between HP and EMC, which were on for about a year, broke down weeks ago over financial terms.

Sulzer focuses on Siemens bid Swiss pump maker Sulzer said it had ended talks over a merger with DresserRand Group Inc. after Germany’s Siemens offered to buy the U.S. oilfield equipment maker for US$7.6 billion. “Sulzer has terminated the talks with Dresser-Rand,” Sulzer spokesman Verena Goelkel said in an emailed statement yesterday. The Swiss firm, which is controlled by Russian billionaire Viktor Vekselberg, had said last week it was in non-exclusive talks with Dresser-Rand. Siemens said earlier on Monday it was offering US$7.6 billion for Dresser-Rand. The Financial Times said on Friday General Electric may also be mulling a bid.

Lacklustre Russian car industry stalling Russia’s auto market shows no signs of improving in the next two years having been hit by an economic slowdown and weak rouble, the head of Ford Motor Co’s Russian venture told Reuters.

Sanctions over Ukraine have hurt the Russian economy, hitting car sales to a growing middle class while imported car parts have become more expensive.

“There is no sign that things will rapidly improve in the next two years,” said Ted Cannis, CEO of Ford Sollers, a 50-50 joint venture between Ford and Russian carmaker Sollers.

Obama’s recovery hasn’t reached average American Opinion polls make disturbing reading for the Democratic Party, which will have a tough time defending its slim Senate majority in the November 4 election

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resident Barack Obama, stumping for the Democrats ahead of November’s congressional elections, has twice invoked Ronald Reagan’s seminal campaign question: “are you better off than you were four years ago?”

Framing the debate like that helped Reagan twice - in 1980 when he beat incumbent Jimmy Carter, and then again in 1984 when he won reelection during an economic upswing.

But a similar message has failed to resonate for Obama primarily for one reason: while he stresses the economy has improved in almost every aspect on his watch, average family incomes have slipped.

Between 2009 when Obama took office and 2013, the latest for which numbers are available, median annual household incomes fell by more than US$2,100 in inflation-adjusted terms, Census Bureau data showed last week.

“It’s hard to make the case for ‘Morning again in America’ the way that Ronald Reagan was able to do in 1984,” said John Ullyot, a former Senate Republican aide, now with a strategy firm High Lantern Group.

“People just don’t feel connected to the recovery.”

White House economists have pointed out that the census figures do not reflect job growth and the rise in average hourly earnings seen this year, but any improvements have yet to register with the public.

Roughly two-thirds of the population thinks the economy is heading in the wrong direction, survey data from polling firm Ipsos has consistently shown over the last two years.

About four in 10 Americans also strongly disapprove of Obama’s handling of the economy and less than one in 10 feel he is doing a really good job. The president’s own overall approval rating is stuck at around 40 percent.

Frustrated by the public’s failure to give this administration credit for leading the world’s biggest economy out of its worst recession since the 1930s, Obama and his team have

gone to lengths to change that.

While crisscrossing the country in the past months to drum up support for the Democrats, Obama on at least nine occasions stressed how almost all economic gauges have improved during his presidency.

Recovery and wage challenge For one, the recovery from the 2007-2009 recession is the slowest since World War Two, but it has already extended beyond the postwar average of 58 months and there seems to be more gas in the tank. The International Monetary Fund expects the U.S. economy to grow 3 percent next year and in 2016.

On Obama’s watch, 5.1 million jobs have also been added to payrolls, the S&P/Case-Shiller national home price index is up about 17 percent and the S&P 500 stock index has more than doubled while hitting alltime records.

“By almost every economic measure, we are better off today than we were when I took office,” Obama told a Democratic women’s forum in Washington on Friday, repeating the familiar refrain.

He frequently chastises the media for underplaying news that U.S. factories, oil fields and the stock market are booming and businesses are hiring.

“You wouldn’t always know it from watching the news,” he told a Labour Day picnic in Milwaukee on September 1.

Two days later, the White House arranged a special briefing for reporters with the president’s top economic advisers, who walked through 17 charts showing the economy on the rise.

Yet near the end, when asked what indicators had failed to bounce back, Jason Furman, chairman of the Council of Economic Advisers acknowledged that stagnant incomes remained a worry.

“Wages remain one of the most fundamental economic challenges we have,” Furman said.

KEY POINTS Obama says almost all indicators have improved on his watch Lagging household incomes weigh on public mood Democrats face tough challenge in Nov. 4 mid-term vote

Many economists point out that stagnant wages are a problem that long predates this presidency. In fact, many believe that by the time incomes peaked in 1999 the United States was already slipping into a less dynamic era, grappling like other developed economies with aging and other structural impediments.

“There are big structural forces at work here. That’s not necessarily a policy error in the last few years,” said Paul Ashworth, an economist at Capital Economics in Toronto.

Even as Obama touts his economic accomplishments, he acknowledges more needs to be done to boost worker earnings.

“That’s not the simplest of messages,” said Jared Bernstein, who was chief economist to Vice President Joe Biden between 2009 and 2011.

“It’s saying, ‘We’re moving in the right direction, but we’re not there yet.’”

The problem is that not all economic indicators were created equal and not much else matters for the public if the money remains tight.

“I can’t imagine people feel particularly elated when they’re told GDP was up 4 percent last quarter, but median income was flat last year,” Bernstein said.

Reuters

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September 23, 2014

Opinion Business

wires

Education and opportunity

Leading reports from Asia’s best business newspapers

THE NEW ZEALAND HERALD

Lee Jong-Wha

Professor of Economics and Director of the Asiatic Research Institute at Korea University

Aucklanders reportedly flocked to open homes on Sunday, surer of their spending power post-election. Industry bosses are expecting sales to recover now the election is over and spring is on the way. Peter Thompson, Barfoot & Thompson managing director, said such a strong election result had resulted in agents already seeing more open home attendance, as confidence returned. “People have been holding off putting their properties on the market.

Already, yesterday, more people were at open homes,” said Thompson. Barfoot figures showed that sales volumes had slumped before the election and Harcourts also cited the election for fewer sales.

THE STAR The Association of Accredited Advertising Agents (4As) and Astro are aiming to raise the standard of local advertising industry with its annual Advanced Leadership Programme (ALP), which will be held next month. The ALP, which is in partnership with the Berlin School of Creative Leadership, was designed to gear up industry captains for future challenges, said 4As council member Omar Shaari. “The ALP is aimed at opening the minds of future leaders to be better equipped with challenges that were non-existent 10 years ago,” he told StarBiz.

THANH NIEN NEWS Despite rhetoric and laws designed to change the way business is done in Vietnam, local banks continue to funnel cheap loans toward state-owned corporations. Many public and private banks have gone so far as to secure central bank approval to lend state-owned groups more than 15 percent of their assets. They are also willing to offer these companies loans at rates below the annual deposit rate of 6-7 percent. The trend began after the Bank for Investment and Development of Vietnam (BIDV), secured permission to lend more than 15 percent of its assets to the Ministry of Transport’s Corporation.

THE AGE Macquarie Bank – famously known as “the millionaires factory” – is back on top, with chief executive Nicholas Moore and his management team taking out three of the top five places on this year’s list of highest paid executives. Mr Moore’s pay packet increased by almost 50 per cent this year to A$13.1 million, making him the country’s highest paid CEO, according to data compiled by Fairfax Media.

Macquarie’s Andrew Downe took out third position with A$12.3 million while the head of the company’s funds business Shemara Wikramanayake ranked fourth on A$12.1 million.

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ducation is a fundamental driver of personal, national, and global development. Since the beginning of the century, recognition of this has driven many countries to pursue the Millennium Development Goal of achieving universal primary education and eradicating gender disparities at all levels of education by 2015. This has contributed to considerable progress in expanding educational opportunities and attainment worldwide. But there is much more to be done.

To be sure, universal primary education has nearly been achieved. Moreover, considerable progress has been made toward gender equality in educational opportunities and attainment. Indeed, enrolment rates for school-age females have increased steadily at all levels, reaching near parity with male enrolment globally.

As a result, the gender gap in average years of schooling for the adult population – a widely used measure of educational attainment – has narrowed.

Moreover, in 2010, for people aged 25 and above, the femaleto-male ratio in average years of schooling was almost 100% in advanced countries and about 85% in developing regions. But, in many low-income countries in Sub-Saharan Africa, the Middle East, and South Asia, girls still have far less access to education, especially at the secondary and tertiary levels, than boys do.

Significant global disparities also remain in post-primary education and the quality of schooling.

In advanced countries, almost 90% of the population aged 1564 has attained at least some secondary education, compared to only 63% in developing countries. Likewise, though more than 33% of the working-age population in advanced

countries has achieved some level of tertiary education, the proportion is just 12% in the developing world.

Academic research suggests that countries with higher per capita income, lower income inequality, and lower fertility rates tend to invest more in children’s education, with public expenditure leading to higher enrolment rates. The logical conclusion is that efforts to promote more inclusive economic growth and improve education systems can raise enrolment among young people in developing countries and reduce disparities between genders and among social groups.

But simply narrowing the gaps in school-enrolment rates and total years of schooling is not enough. Countries must also ensure the quality of their education systems – a key challenge for the coming decades.

As it stands, poor educational outcomes and inefficient education systems are eliciting deep concern worldwide. In many countries, primary schools fail to provide students with appropriate cognitive skills like numeracy, literacy, problem-solving ability, and general scientific knowledge.

Furthermore, inadequate education at the secondary and tertiary levels, including technical and vocational education and training, is leaving students unequipped to meet the job market’s changing demands.

As a result, many countries are struggling with a mismatch between the skills that employers seek and those that workers have.

Wide disparities in educational quality, often measured by student achievement on international examinations, are evident within and across countries. The results of most internationally

Inadequate education at the secondary and tertiary levels, including technical and vocational education and training, is leaving students unequipped to meet the job market’s changing demands

comparable mathematics, reading, and science exams for primary and secondary students reveal a considerable gap not only between advanced and developing countries, but also across the developing world.

According to the Trends in International Mathematics and Science Study, South Korea had the highest average score (590) in 2011 on the science test for secondary students, while Ghana scored the lowest (306).

Though academic performance is determined largely by family inputs and students’ individual talents, other factors, such as the amount of school resources available to students, also play an important role, as do

various other school inputs, such as teacher quality, class size, expenditure per pupil, and instruction time.

The institutional features of education systems are another important determinant of student achievement. Private financing and provision, school autonomy, and external monitoring and assessment mechanisms tend to influence the quality of education by changing the incentives for students and teachers.

In the future, new information and communication technologies are expected to stimulate the expansion of educational opportunities and to improve educational quality at the national and global level, by offering a variety of innovative learning channels. For example, the ability to use new technologies to build borderless networks among schools can offer opportunities for students in low-income countries to learn from teachers in advanced countries – and vice versa.

The imperative is clear. Global leaders must commit to enhancing the quality of education and reduce the education gap by increasing school resources, improving the efficiency of educational institutions, and seizing the opportunities afforded by technological innovation. All of this will serve to enrich human capital, which is essential to boosting productivity and incomes.

Indeed, if such efforts are designed specifically to ensure equal opportunities for all, regardless of gender or wealth, they will be a boon to the global economy, while promoting social cohesion at the national level. When it comes to improving education, there really is no downside.

Project Syndicate 2014

16

September 23, 2014

Closing Hong Kong’s CPI up 3.9 pct in August

China and South Korea open new FTA talks

Hong Kong’s overall consumer prices was up 3.9 percent in August 2014 over the same month a year earlier, slightly smaller than the corresponding increase of 4 percent in July, the Census and Statistics Department announced yesterday. Netting out the effects of all government’s one-off relief measures, the year-on-year rate of increase in the Composite Consumer Price Index (CPI) (i.e. the underlying inflation rate) in August 2014 was 3.2 percent, also slightly smaller than that in July 3.3 percent, mainly due to the enlarged decreases in the charges for package tours.

China and the Republic of Korea (ROK) kicked off the 13th round of negotiations for a bilateral free trade agreement (FTA) in Beijing yesterday. The five-day negotiation will cover wide-ranging areas such as tax reductions on trade of goods, opening up of service sectors, further bilateral investment and the possibility of decreasing trade remedies and technical barriers. China and the ROK officially launched FTA talks in May 2012. Leaders of the two countries jointly announced in July that they would try to conclude the negotiations by the end of 2014.

Taiwan August export orders slower Export orders are seen as a leading gauge of demand for Asia’s exports and high tech devices J.R. Wu and Emily Chan

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aiwan’s export order growth was below forecast in August, but prospects in coming months will be helped by solid demand for tech goods, especially as Apple’s newest iPhone hits the market.

Some delays have affected orders but they are starting to build up for the iPhone 6 and 6 Plus since Apple Inc.’s launch earlier this month, Lin Li-jen, an official with the Ministry of Economic Affairs, told a news conference. “We have not seen orders for such international brands in August export orders because there have been delay issues.”

Lin, who is the director general of the statistics department at the ministry, did not elaborate on the delay but said she expects smartphone-related orders to become more apparent after September.

Taiwan’s export orders last month reached US$38.21 billion, mostly flat compared to the value in July. But the year-on-year growth rate at 5.2 percent came in below a Reuters poll of economists who forecast a median 7.4 percent growth.

Among the categories,

KEY POINTS August export orders +5.2 pct y/y vs f’cast +7.4 pct Orders from U.S. +5.1 pct y/y; China +2.9 pct Europe orders +5.5 pct y/y; Japan orders +6.9 pct

orders for electronic products in August grew 12.6 percent from a year earlier, while those for machinery rose a stronger 17.4 percent.

Taiwan’s export orders are seen as a leading gauge of demand for Asia’s exports and high tech devices. The island’s tech manufacturers design and churn out many of the parts and products found in smartphones, gameboxes and personal computers.

The latest iPhone is packed with parts made by Taiwanese tech component makers and assembled by major contractors including

Labour union requests gov’t to reduce imported workers quotas

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he Macau Gaming Enterprises Staff Association of Macao Federation of Trade Unions and legislator Lei Ching I met with the Human Resources Office yesterday to urge the Macau Government to reduce the allocation of quotas for imported workers seeking employment with the gaming corporations in order to protect the benefits of local root-grade workers.

The executive director of the Association, Choi Kam Fu, said that some 36 members, the majority from Wynn Macau, attended the meeting. These employees primarily work in the F&B, cleaning and uniform departments in the casinos and hotels.

Mr. Choi believes that the large number of nonresident workers will only weaken the benefits of local workers.

He also requested the gaming corporations to increase the salary of workers currently being paid around MOP8,000 (US$1,000). The government said it would follow up on the issue.

Hon Hai Precision Industry Co Ltd. Orders typically lead actual exports by two to three months, but sometimes quick turnaround times in the production of consumer electronics lead to the data being less predictable. Also, many Taiwanese factories are located in mainland China from which final exports are shipped.

Lin said that the ministry expects Taiwan’s export orders for the year to reach a record high of US$450 billion. For the first eight months of this year orders

stood at US$296.85 billion.

“The external outlook for Taiwan is still positive,” said Raymond Yeung, a senior economist at ANZ in Hong Kong.

Taiwan was outperforming South Korea’s tech exports this year, underpinned by the current iPhone 6 cycle, said Tim Condon, an economist with ING Singapore. “It is a hero-product cycle and when this cycle is over we’ll be back to low-single-digit growth,” Condon added, referring to the iPhone 6.

On a month-on-month basis, the August revenue

Govt sees more visible smartphone orders after Sept

for Taiwan Semiconductor Manufacturing Co rose for the second straight month in August, while posting a strong 26 percent on-year growth rate.

Credit Suisse said in a research report earlier this month that it was optimistic about the momentum of Taiwan’s tech exports and production in the second half due to new smartphone model launches.

Reuters

Premier Li meets Chui Sai On Slowing profits for state firms

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hinese Premier Li Keqiang has vowed support for the Macao Special Administrative Region (SAR) and closer ties between the region and the mainland.

Li made the remarks yesterday while installing Chui Sai On as Macao chief executive.

Congratulating Chui on his newly re-appointment and praising his work during the last tenure, Li praised the joint efforts of the SAR government and Macao people from all walks of life under the support of the central government for tremendous achievements in the practice of “one country, two systems” during the last 15 years. According to Li, the central government will continue to “thoroughly and accurately” implement the principles of “one country, two systems,” “Macao people administering Macao,” and a high degree of autonomy for the region while following the Macao Basic Law. “[The central government] will fully support the chief executive and the SAR government in the rule of law, actively push forward the exchange and cooperation between Macao and the mainland, as well as ensuring Macao’s unique role in the country’s overall development,” Li said.

Xinhua

C

hina’s state-owned enterprises (SOEs) saw their profit growth slow in the first eight months of 2014 amid softening growth momentum in the broader economy, showed data released by the Ministry of Finance yesterday.

The combined profits of China’s SOEs rose 8 percent year on year to 1.64 trillion yuan (US$267.4 billion) during the January-August period, slowing from the 9.2-percent rise for the first seven months. The rise in operating costs continued to outpace revenue growth, dimming the outlook for future profit growth. Total business revenues for the state firms increased 5.5 percent from a year ago to 31.2 trillion yuan in the first eight months, while operating costs rose at a faster pace of 5.7 percent to 30.08 trillion yuan.

By the end of August, SOEs’ total assets stood at 99.06 trillion yuan, while liabilities grew 12.3 percent year on year to 64.69 trillion yuan.

The figures, which exclude financial firms, were collected from SOEs in 36 provincial-level regions and those administered by the central government.

China has thousands of SOEs, 113 directly administered by the central authorities.

Xinhua