Macau Business Daily, Oct 8, 2014

MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo Number 640 Wednesday October 8, 2014

Social services struggling in Islands

M

Year III

ore than 100,000 people now live in Taipa and Coloane. More services are therefore needed for the elderly and children. But the lack of human resources is endemic in social services. For the elderly there aren’t enough beds to meet demand. Long waiting lists and red tape don’t help.

The Social Welfare Bureau has been fingered as the bottleneck. Nursing homes have the spaces but the resources are wanting. Some 6-7,000 elderly currently live in the Islands PAGE

Historic Centre consultation It starts on Friday and lasts 60 days. A new public consultation on the protection and management plan of Macau’s Historic Centre.

UNESCO expects a report by February 2015. The details of the plan will only be announced next year. Prior to yet another public consultation

2

HSI - Movers October 7

Name

%Day

Lenovo Group Ltd

2.21

CLP Holdings Ltd

2.15

Belle International

1.84

CNOOC Ltd

1.50

China Mengniu Dairy

1.38

Kunlun Energy Co Ltd

-0.71

COSCO Pacific Ltd

-0.75

Hong Kong Exchange

-0.80

China Merchants Hol

-1.25

China Resources Lan

-1.28

Source: Bloomberg

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Ups and downs

Brought to you by

We’ve been here before.

A royal flush of declining gaming revenues since June. But that’s compared to a record 2013. Gurus say that the more conservative performance of 2012 should be added to the analytical mix

www.macaubusinessdaily.com

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Ailing private health sector China’s private health sector represents fertile soil. But the lack of doctors is the fly in the ointment. It’s curbing expansion. And there are perception issues. Meanwhile, online consultations are booming as Alibaba’s latest shares indicate

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Land expansion, again Guangdong authorities have granted land to Macau. Now the SAR wants more in Hengqin. A further 10sq km to be exact. This would be reclaimed, and subject to mainland law

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October 8, 2014

Macau

More ‘beds’ needed for elderly Islanders With the population of Taipa and Coloane surpassing 100,000, the Advisory Council of Community Services of the Islands recognises that residents there need more services for the elderly and children Kam Leong

kamleong@macaubusinessdaily.com

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he elderly in Taipa and Coloane are facing a serious lack of allocations for them if they want to stay in the nursing homes for the aged. However, the Social Welfare Bureau said that the allocations of childcare centres for young children meet current demands, according to the Advisory Council of Community Services of the Islands.

The deputy convener of the council, Lawrence Wong, and council member Lam Vai Hong told reporters following a closed-door meeting with the Bureau that the islands are facing problems of bed shortages because of the speed at which the evaluation process is made.

However, according to Mr. Lam, the Bureau explained that the problem was caused by the lack of human resources, such as care workers and trained staff.

Since 2008, all elderly who want to move into

nursing homes have to apply to the Bureau, which will conduct an evaluation of each case to decide which home they are allocated to.

However, Mr. Lam indicated that such an evaluation sometimes takes months, which is unreasonable for the elderly, who always express an urgent need when applying for such homes.

He cited the home for the aged near Bohdi Garden in Taipa as an example, claiming that the centre can offer a total of 297 beds for the elderly but due to manpower shortages and administrative procedures the number of elderly that the centre has received is not yet enough to fill it since its opening last November, despite the fact that many elderly are waiting for such homes.

However, the council member was not able to provide actual figures of the elderly awaiting services.

Meanwhile, deputy convener Mr. Wong revealed that the Bureau hopes to

emphasise the policy of encouraging the elderly to remain in their homes with their families. He also told reporters that the government is planning to increase the number of elderly services in the new urban zones, as well as in Hengqin.

According to Mr. Wong, there are currently between 6,000 and 7,000 elderly living in the Islands, accounting for some 7 percent of the total population in the areas. He expects that the numbers of ‘beds’ in the homes and nursing homes for the aged will remain flat until 2017/2018.

Child Services meeting demands Meanwhile, the Bureau told the Council during the meeting that the quotas of the childcare centres for children aged 0 to 3 years old in Taipa and Coloane are satisfying the demands of residents, according to Mr. Wong.

The Bureau revealed that

2,880 children aged between 0 and 3 years old lived in the Islands last year, while the allocations of the childcare centres were at some 2,590 after the Bureau applied measures to increase the number.

The measures, according to Mr. Wong, are to increases the number of childcare centres as well as to lessen the

number of children in each classroom of such centres.

Before the closed-door meeting, some Council members expressed concern about hygiene problems in construction sites which may cause Dengue, the high price of housing as well as the traffic jams on the bridges connecting the Macau Peninsula to the Islands.

Public consultation on Historic Centre management plan A 60-day long public consultation period on the protection and management plan of the Historic Centre of Macau starts on Friday. But a more detailed plan will only be available next year, says Cultural Affairs Bureau Director Ung Vai Meng Joanne Kuai

joannekuai@macaubusinessdaily.com

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he consultation paper lists several suggestions including restricting the height of buildings in the area and regulating commercial billboards but no practical measures can be formulated.

At the press conference announcing the consultation, Ung Vai Meng stressed that this preliminary round seeks to raise residents’ awareness of the protection of the Historic Centre of Macau and collect their opinions.

The works of this stage will translate into an administrative regulation with legal effect. A more detailed guideline for practices is expected to be released next year following another round of public consultations.

Mr. Ung told media that this is part of the work they are undertaking for the report on the status of Macau’s World Heritage sites as required by UNESCO. The report is due on 1st February 2015.

Ung Vai Meng rejected the idea of controlling the amount of visitors in order to protect the Historic Centre.

He said that Macau’s Historic Centre overlaps major common areas that have

long been residential and commercial, hence it would be difficult to manage the flow of people. But he pointed out that the number of visitors in certain tourist spots such as the Mandarin House are indeed controlled.

With regard to the renovation of the buildings that are inscribed on the list - which is mandated as the duty of the property owner according to the Cultural Heritage Protection law passed this March - Mr. Ung said it would be conducted in accordance with the law, with the application handled by the Land, Public Works and Transport Bureau, to whom the Cultural Affairs Bureau would act as advisor.

The Historic Centre of Macau is a collection of over twenty sites comprising two separate core zones in the city centre on the Macau Peninsula.

Each core zone is surrounded by a buffer zone.

In 2005, the Historic Centre of Macau was inscribed on the UNESCO World Heritage List, making it the 31st designated World Heritage site in China.

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October 8, 2014

Macau

Optimism for more land request Macau has requested another 10 square kilometres of land from Hengqin to further expand and develop Joanne Kuai

joannekuai@macaubusinessdaily.com

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he Trade and Investment Promotion Institute (IPIM) said the Macau Government has already submitted an official request to Beijing for a 10 square kilometer plot of land in Hengqin Island to power the SAR’s development.

In a reply to a written enquiry from legislator Si Ka Lon, IPIM president Jackson Chang said that the Guangdong authorities have positively responded and that the application awaits approval by the central government.

According to Chinese media outlet Macau Daily, the plot of land would be reclaimed from the sea as there is no more ‘normal’ land available for this purpose. Hengqin Development Strategy has indicated that 70 percent of the land on the island has to be naturally reserved, which means only 30 square kilometers from the nearly 100 square kilometre island can be developed. Many projects have already occupied a large part of the available land, such as the University of Macau Hengqin Campus, the GuandongMacau Cooperative Industrial Park and the Chimelong Group’s Ocean Kingdom. The world’s biggest marine park has just welcomed its

fifth million visitor since opening nine months ago. The report also pointed out that reclaiming more land would not conflict with other ongoing projects or any approved plan for the island. Moreover, the original idea is for the land to be reserved for economy and trade in order to promote the diversification of industries. Many, however, are asking for more social services. Currently, the application is still in its preliminary stage. More planning is underway.

Authorities from both Macau and Guangdong will have to conduct more studies in order to reach consensus.

The Southern Metropolitan Daily of Guangzhou also reported recently that the SAR Government would pay an annual lease as does the University

of Macau, which is leased at MOP1.2 billion for 50 years. While Macau law governs the university campus, the proposed 10 square kilometres would be subject to mainland Chinese law.

It also said that if the application were approved, it would give the Macau Government – not Zhuhai authorities− the power to decide which companies set up in the zone.

Jackson Chang also said in his reply that the 33 local investment projects recommended by the SAR Government were agreed by the Hengqin authorities for the Guangdong-Macau Cooperation Industrial Park on the island, which refers to 4.5 square kilometres of land parcels scattered throughout Hengqin and designated for different business

sectors. These include tourism and leisure and businesses, the cultural and creative businesses, information technology and other trade services.

Some 11 enterprises have entered the Guangdong-Macau Cooperative Chinese Medicine Technology Industry Park and Business Incubation Centre, and more Macau companies are considering the possibility of setting foot in Hengqin through the Centre.

In Cuiheng, an area in Zhongshan City, located 30 kilometers from Macau, a 5 square kilometer Guangdong-Macau Comprehensive Cooperation Demonstration Zone will be set up.

Jackson Chang said that earlier this year the ‘Framework Agreement to collaboratively develop Cuiheng new areas of Zhongshan between the Macau SAR Government and Zhongshan Government’ was signed. Several protocols were made.

Accordingly, the ‘demonstration zone’ will comprise five sub-areas dependent upon different functions, including industrial park, international commercial and trade services, education and training zone, cultural exchange zone and GuangdongMacau tourism cooperation zone.

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October 8, 2014

Macau

VIP bet pays off for Galaxy Galaxy came out of September as the market share leader of the casino industry here. Grant Govertsen, an analyst with Union Gaming Research, told Business Daily that the group’s strategy is working and that the company will be able to retain this position for the time being João Santos Filipe

jsfilipe@macaubusinessdaily.com

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or the first time ever, Galaxy has managed to occupy the first place in terms of market share in the Macau gaming industry. The company founded by Lui Che Woo achieved 22.9 percent of the gaming market, as it focused its energies in the VIP segment, Grant Govertsen, an analyst with Union Gaming Research, explained to Business Daily.

“In all likelihood, the reason that Galaxy would have come out on top in terms of market share is their VIP performance. In general, Galaxy has been growing its VIP business while all other operators have experienced notable declines (up to 25 percent) in their VIP business”, he said. “As a result, Galaxy would move to the top market share in terms of revenue.

It is entirely due to the fact that Galaxy is the only operator (of the six concessionaires) that is growing its VIP business”, he added.

In the race for the leadership, Galaxy overtook Sands China (21.8 percent), which ranked second, and SJM (20.9 percent), which achieved

Galaxy has the unique advantage of being the first operator to open its new casino on Cotai Grant Govertsen, Union Gaming analyst

its worst position ever in terms of market share. So far, Sands China and SJM have been the only other concessionaires to sit at the top of the ranking.

The Union Gaming analyst expects Galaxy to hold its position as market

share leader in the future. However, as the VIP segment recovers, the fight for leadership will enter another level.

“For the time being, yes, we would expect Galaxy to likely retain its top market share of revenue position.

However, when the VIP business recovers, I think you will see Sands, SJM and Galaxy all vying for the market share leader position”, Mr. Govertsen said.

In the opinion of Grant Govertsen, Galaxy has the edge, as Phase 2 of Galaxy Macau will begin operations in early 2015, which will increase the number of gaming areas of the company.

“Looking ahead, Galaxy has the unique advantage of being the first operator to open its new casino on Cotai. This should be advantageous for Galaxy, especially if the VIP market recovers in a meaningful way in early 2015. That would dovetail nicely with the large amount of supply Galaxy will bring online”, he said.

As for the gaming operators in the fight for the top position, Sands China

is targeting opening the Parisian in late 2015, in spite of construction delays. As for SJM, the Lisboa Palace is slated to open during 2017.

Although there are good reasons for Galaxy to be optimistic, the effects of the new smoking ban law have yet to be seen. As for last Monday, when the regulation came into effect, the operator had only working smoking rooms on its gaming floors in StarWorld Hotel. The Galaxy Macau, which generated the largest slice of the revenue in the first half of the year (HK$25 billion vs. HK$12.3 billion from StarWorld), is still waiting for its smoking rooms to be operational.

However, Grant Govertsen stressed to Business Daily that more important than the market share is profitability.

In that arena, he said, Sands China is leading the race.

“It’s important to point out that it’s not the same thing as profitability.

We would argue that in terms of market share of profit, Sands China would still lead the market by a wide margin”, he stressed.

Corporate MIA passengers jump 17 pct during Golden Week

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he number of travellers using Macau International Airport posted significant growth during the National Day Golden Week – more than 74,000 passengers passed through the local airport in the time period, a yearon-year increase of 17 percent, the managing company of the airport, Macau International Airport Co. Ltd. (CAM), announced on Monday night.

CAM announced that the fiveday Golden Week holiday starting on October 1 was the first peak for MIA since the summer holiday. Its figures showed that more than 700 aircraft movements were recorded in these five days, representing 10 percent growth year-on-year.

Meanwhile, the passenger volume of MIA registered a year-on-year 1.4 percent increase in September, with over 44,000 passengers passing through the local airport; over 2,300 aircraft landings and departures were reported for a 1.4 increase year-on-year.

The managing company particularly stated that Southeast

Asia passengers as well as Mainland travellers recorded a 7.7 percent and a 2 percent growth year-on-year, respectively. However, those from Taiwan registered a slight drop, the company claimed, without releasing the figure.

In addition, CAM said that MIA had used the advantages of local air traffic rights to facilitate a new air service, such as launching charter flights from Bangkok to Palau via Macau. ‘MIA will continue taking advantage of the air freedom, developing more regular and charter air services, further diversifying the route market,’ it wrote in its announcement.

During the summer peak, the airport recorded a daily average of 14,300 passengers in July and a daily average of 16,400 passengers in August. Meanwhile, new outbound flights from Macau International Airport jumped year-on-year by 74 percent in July and August, according to a press release by the Civil Aviation Authority in August.

K.L.

Zombies walk for Orbis Zombies will take to the streets on Saturday, October 25 for a charity walk – the first ever of its kind in Macau – with proceeds going to Orbis. The event is being organised by the Macau Tower and sponsored by AG Group. According to organisers, the Macau Zombie Walk 2014 is ‘expected to draw hundreds of zombies and spectators who will bring along a lot of fun, energy and excitement to spice up the Halloween atmosphere at Macau Tower.’ Organisers said that ‘many individuals these days spend too much time in front of the screen… These routine habits may result in a variety of health issues… [and] in light of addressing these problems, Orbis is precisely the right organisation we should support as it dedicates all its efforts to promoting eye care and health, and overcoming unnecessary blindness.’

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October 8, 2014

Macau

Tough comparisons Investors say Golden Week casino visitation probably declined from a year ago, while this month’s gaming revenue growth will be compared to an exceptional October in 2013 when it jumped 32 percent. Brokerages are shifting to two-year stacks to avoid misleading comparisons Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

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ot even numbers are on Macau’s gaming industry side this year. The historical success and double-digit growth era is coming at a ‘cost’ in 2014.

A numeric one, but with deep implications in terms of stock values and investor sentiment - two factors that when on the downside mean millions lost.

Prior to October gaming revenue figures being published in a few weeks, investors are already anticipating the worst: a fifth straight month of declining revenues and a drop bordering on 20 percent year-on-year.

While the slowdown of revenues in Macau is due to factors like crackdowns on corruption, less credit for junkets and the smoking ban most of the negative headlines are caused by a statistical effect: a comparison with a record 2013, when the

industry published figures going through the roof from revenues to profits to shares.

Some brokerages and banks are turning towards twoyear stacks to compare this year’s performance in order to eliminate the effect of the record 2013 that is amplifying the magnitude of the current slowdown, thereby attempting to get a clearer picture.

Left behind This statistical effect will probably reach its peak this month. October’s gaming revenues will improve when compared to September’s because of this month’s Golden Week but when the year-on-year figures pop up the reaction will be the opposite.

It’s a record jump against a record decline.

According to current estimates, gaming revenues

Business Daily Half Page Ad Gala Night October 5th outlines.indd 1

will decline almost 20 percent this month compared to a year ago. Wells Fargo now expects a 19 percent decline, a revised down figure from a previous 15 percent drop. Deutsche Bank says gaming revenues will go down by 18 percent.

That’s the fifth straight month of diminishing revenues on a year-on-year basis with October’s drop being double that of September’s and three times greater than August’s.

In October last year, gaming revenues in Macau skyrocketed by 31.9 percent,

the biggest increase of 2013.

That’s the growth figure analysts will compare with in a few weeks. ‘It’s important to note that October 2013 is a tough [month] to compare as VIP and mass revenues grew by 28 percent and 45 percent, respectively’, said Wells Fargo in a note to clients. When compared to October 2012, gaming revenues in Macau this month are likely to go up 12.9 percent, quite a different scenario.

To achieve the performance of October 2013, when

revenues totalled MOP36 billion, the gaming industry here had to amass a daily average of MOP1.2 billion from mass and VIP tables.

That’s more than unlikely to happen. Since the Summer, average daily revenues have been running at around MOP850 million, and some investors expect that Golden Week daily revenue will hover around MOP1 billion.

Despite the 14 percent increase in Golden Week visitors to Macau this year, for the gaming industry the holiday period was probably a ‘false positive’, Union Gaming said this week. ‘Based on our casual observations over the weekend , we think casino foot traffic likely declined during Golden Week’, wrote the brokerage, citing the protests in Hong Kong that impacted the movements of mainlanders and Hong Kong travellers.

10/6/2014 1:05:15 PM

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October 8, 2014

Gaming

Vietnam urged to build casino on small island Policymakers are seeking to replicate the success of Singapore and Macau in attracting gaming resorts and tourism

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y Son and an inlet off its coast has just recently been connected to Vietnam’s power grid, and already a high-ranking banker and senior economist are pushing for a casino and other high-end tourism services.

Thanh Nien News quotes chairman of the Bank for Investment and Development of Vietnam Tran Bac Ha as saying that “the 69-hectare Be Island should be set aside for a high-end entertainment area with 5-star hotels and casinos to attract tourists for long holiday visits.”

“I believe that Ly Son can become the silver island of the central region in the near future,” he added while addressing a conference on the administration and development of the islands.

According to the report, both islands have a combined area of 10 square kilometres and are located 15 nautical miles off the coast of Quang Ngai Province. As many as 21,000

residents inhabit both islands, many of them fishermen and garlic farmers.

Because of its close proximity to the Dung Quat Economic Zone, the island could play an important role.

According, to Mr. Ha, an airport should be built there as well as a dock for hydroplanes.

But some are urging “competent investment in tourism services” for Be Island as a means to avoid “small and wasteful projects.” Tran Du Lich, head of an advisory group on developing the country’s central coast, is quoted by the newspaper as saying that “relevant authorities should bring in sand to help reclaim portions of the island for tourism development.” To which Vietnam’s deputy Prime Minister Nguyen Xuan Phuc said he would forward the proposals to the central government for consideration, adding that any farmers on the island should not be affected by the construction project.

Currently, only foreign passport holders are allowed to gamble in the country but

Vietnam is drawing closer to allowing its citizens to gamble in casinos as the government tries to boost revenue and compete for regional gaming investment.

The finance ministry plans to submit the final draft of a new casino decree to Prime Minister Nguyen Tan Dung this month, Ngo Van Tuan, head of the department for banking and finance at the ministry, said at the end of August.

Approval is likely before the end of the year, he said. The decree is modelled on Singapore’s gaming regulations and would permit Vietnamese to enter local casinos.

“There are many Vietnamese who gamble in casinos in Singapore and Cambodia, and it’s obvious that we’ve lost some state revenue here,” said Phan Thi Thu Hien, deputy head of the banking and finance department.

“We’ve studied what regional countries have done and think we should do the same. These changes would help increase government income.”

Bassaka Air to fly Chinese gamblers

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assaka Air, a new start-up airline, has been granted an aircraft operation certificate by Cambodia’s civil aviation authority, according to a report in the country’s English-language newspaper Phnom Penh Post.

“This is only the first step. We have many more steps to go before we can schedule our flight,” Joseph Stecker, chief executive officer of BA is quoted as saying. “The fact is that now we have AOC. Other steps have to take place before we can take flight and I cannot give any specific date.”

The approval comes after NagaCorp’s plans to launch its own commercial flights between Cambodia’s capital and mainland China were reported. These were meant to boost the Chinese VIP junket programme in Phnom Penh.

According to the report, Mr. Stecker denied the casino operator had any financial interest in BA, although confirming that the aircraft were leased from NagaCorp.

Bassaka Air is also partnering China International Travel Services (CITS) and, according to the Phnom Penh Post, will lease two Airbus A320s to NagaCorp in order to fly Chinese tourists. The date of the first flight has yet to be announced.

NagaCorp is the owner of Cambodia’s largest gaming operation, which posted revenues of US$271.9 million in the first nine months of the year, up 26 percent from US$215 million year-on-year. The company’s VIP segment totalled US$4.1 billion at the end of September, a 25 percent increase over the same period a year ago.

Trump casino union to block road in protest

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union representing workers of the bankr upt Trump Entertainment Resorts Inc. plans to block an Atlantic City street two days from now to protest management requests to give up their pension and health-care plans.

Unite Here, which represents 270,000 workers nationally, met with Trump representatives twice last week and has been unable to come to terms, Bob McDevitt, president of the union’s Local 54, said in an e-mailed statement. Another meeting is scheduled for this week.

Trump Entertainment, the casino operator founded

by Donald Trump, declared bankruptcy last month in the wake of continued declines in gambling in New Jersey. The company owns the shuttered Trump Plaza hotel and its Trump Taj Mahal may close next month. The casino operator’s spokesman didn’t immediately respond to a call and e-mail seeking comment on the union’s plan.

Under a plan filed last week, Carl Icahn, who controls most of the company’s US$286 million debt, would invest US$100 million in new capital if labour and other concessions are met.

Last week, a bankruptcy judge in Wilmington, Delaware, refused to let the company immediately drop out of the union pension. Eliminating just the pension from the collectivebargaining agreement would violate the bankruptcy code, which requires a contract to be considered as a whole, the judge said.

Separately yesterday, Donald Trump, who no longer has a management role at the company, said his name was being removed from the Trump Plaza following a lawsuit in which he said the casino properties had deteriorated to such an extent they should no longer bear his brand. He’s still seeking to have his name taken off the Taj Mahal.

Bloomberg

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October 8, 2014

Gaming

A Chinese Las Vegas in Spain Wang Jianlin - Wanda Group founder and second richest individual in mainland China - has signed a deal with the Spanish Government to build a ‘gigantic project’ near Madrid featuring casinos, hotels and shopping malls Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

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ang Jianlin and the Spanish Government have signed an agreement to build a multibillion dollar mega resort featuring casinos, shopping malls and 5-star hotels on the outskirts of Madrid. If the Wanda Group founder’s plans go ahead this will be the second opportunity for the southern European country to build a major casino, following the failed flirtation with Sheldon Adelson two years ago.

According to the Spanish press, on his recent trip to Beijing Mariano Rajoy, Spain’s Prime Minister, met with Mr. Wang to seal an agreement to build ‘a gigantic project’ near Madrid that both sides have been working behind the curtains to move forward for some months now. The press has already labelled the project the ‘Chinese Las Vegas’ and ‘Chinese Eurovegas’.

No details were given about the amount of money Wang Jianlin is willing to spend on the casino resort but sources quoted by the press talk of several billion dollars. The ‘gigantic’ project will have casinos, shopping malls, 5-star hotels, amusement parks and residential buildings. Spanish papers also reported that Wanda Group representatives had recently visited various locations on the outskirts of

Madrid like Alcoron, Aldea del Fresno and Campamento, an area full of abandoned military compounds.

Ironically, this is the same region where Las Vegas Sands owner Sheldon Adelson wanted to build his mega Eurovegas casino resort.

Eurovegas was set to be a major investment of US$6 billion - that could stretch to US$17 billion – creating 92,000 new jobs. The project

fell through, however, after various demands by Adelson were vetoed by Madrid, namely a change in the smoking law or guarantees to keep the casino profitable.

The negotiations, run directly by the Spanish Prime Minister, are seen as a way for Mr. Rajoy to assure that the Wanda Group casino project doesn’t meet the same fate as Adelson’s. Spanish press quoting anonymous sources

also emphasised that Wang’s project is more shopping and property oriented than Eurovegas.

Spain is keen to bring the mega-casino to its soil as a way of attracting foreign investment, creating more jobs and stimulating an economy mired in deep recession during the recent sovereign crisis in Europe.

Spain, however, is not new for Wang Jianlin, now the second richest man in mainland China; he owns 75 department stores, 85 shopping plazas and 51 5-star hotels, according to Forbes Magazine.

Last March, the Chinese tycoon bought ‘Edificio Espana’, one of the most iconic buildings in Madrid and once Europe’s tallest building, for which Mr. Jianlin paid more than US$300 million.

Now he has the opportunity to invest 20 times more and create a gambling landmark in Europe.

8

October 8, 2014

Greater China

Doctors shun China’s private health The difficulties in attracting Chinese doctors to the private sector go beyond government policy

Private hospitals are expensive and you often can’t claim for reimbursement from national insurance.

Plus, I trust the level of medical care at public hospitals more Cai Jiejing, researcher China Medical University Hospital

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s China tries to privatize an overburdened public healthcare system, private hospitals face a shortage ... of doctors.

The bottleneck - the result of resistance from both public hospitals and doctors themselves - could dent a drive to reform China’s hospital sector, just as investors flock to a healthcare delivery market that’s set to more than double to US$600 billion by the end of the decade, according to consultancy Bain & Co.

Part of the problem is that doctors across most of China need permission from the state-owned hospitals where they practice before they can also work in the private sector. And many public hospitals don’t want to let their best doctors go.

Privatization is a key plank in China’s push to revamp an unpopular national healthcare system, blighted by crowded hospitals, corruption and simmering tension between patients and staff. China wants to raise the

number of private hospital beds to a fifth of the total by next year.

The reforms have attracted local and overseas investors looking to take a slice of China’s healthcare bill. McKinsey & Co expects total healthcare spending, including drugs and medical devices, to hit US$1 trillion by 2020.

Late last month, private equity group Trustbridge Partners broke ground on a US$500 million general hospital in Shanghai. German hospital

operator Artemed Group, Chinese drugmaker Fosun Pharmaceutical, investment firm TPG Capital and property developers China Vanke and Evergrande are also investing in Chinese hospitals.

All that glitters Despite widespread dissatisfaction with public hospitals, a challenge for private institutions - even those boasting world-class equipment and

Rare earth Exchange see 2 billion yuan trade China is the world’s largest rare earth producer and exporter, accounting for more than 90 percent of the world’s supply

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hina’s first rare earth Exchange has amassed almost two billion yuan in trade since opening in March, a recent report has shown.

Gu Ming, general manager of the Baotou Rare Earth Products Exchange, said that by the end of September, more than 9,700 tonnes of rare earths have been traded, with the total turnover reaching 1.7 billion yuan (US$277 million).

“The latest data is sufficient proof that the exchange has been in good operation,” Gu said.

Located in Baotou City, north China’s Inner Mongolia Autonomous Region, the exchange was initiated

by Baotou Steel Rare Earth (Group) Hi-Tech Co. (BSRE), China’s leading rare earth producer, and another 12 firms and institutions with a registered capital of 120 million yuan

(US$19.32 million).

Zhang Zhong, general manager of BSRE, praised the exchange for its significance and influence in the industry, as its initiators could obtain 80 percent of China’s total rare earth ore and products each year respectively.

Since its debut, the electronic trading platform has become a magnet for both domestic and

Our annual export quota takes up 79 percent of the country’s total, illustrating the importance of the exchange Zhang Zhong, Baotou Steel Rare Earth Group, general manager

A rare earth magnet (down) produce incredible effects on certain fluids

foreign companies, with more than 90 involved in its trading, and its influence is still expanding, Gu said.

Yang Zhanfeng, dean of Baotou Research Institute of Rare Earths, said that the exchange has effectively regulated the industry of the precious ore and enhanced transparency, as companies all trade on the same platform with the same standard.

China is the world’s largest rare earth producer and exporter, accounting for more than 90 percent of the world’s supply. However, the country lacks pricing power in the global market and wild price swings of resources have had a negative effect on Chinese producers.

Rare earth metals are vital for manufacturing high-tech products ranging from smartphones and wind turbines to electric car batteries and missiles.

Reuters

9

October 8, 2014

Greater China sparkling decor - is that some Chinese patients are still dubious about the quality and affordability of private care.

As a result, while almost half of China’s 24,700 hospitals are private, most healthcare is still delivered by public institutions, with some 84 percent of in-patients coming through public facilities, according to a Deutsche Bank report in June.

State hospitals depend on drug sales and tests for their revenues, making hospitals fertile ground for bribes from pharmaceutical companies, unnecessary drug prescriptions and excessive testing.

Patients start queuing outside top hospitals before dawn, only to get as little as 2-3 minutes with a doctor.

Government drive Beijing wants to open the sector as China’s burgeoning middle class, ageing society and environmental pollution fuel demand for more and better healthcare.

Currently, patients flock to the top hospitals for care because of the perceived poor quality of local primary care institutions, putting enormous pressure on big city hospitals.

Over the last five years, Beijing has expanded national health insurance coverage, encouraged greater private investment in the sector, and sought to control drug costs. It has also raised the threshold for foreign ownership of hospitals. In August, it loosened rules to allow foreign investors to wholly own hospitals in seven cities and provinces.

Beijing views relaxing rules on private investment in the sector both as a way to offer more options for patients and as a fillip for the reform of public hospitals, said Ellon

Xu, Shanghai-based principal at consultancy Bain.

However, at a local level, public hospital leaders are often reluctant to even share their best doctors, let alone see them leave. Private rivals have to pay a premium to bring in star names, lure doctors from abroad or opt for younger doctors seeking a career boost. Only in August did Beijing become the first municipality to let doctors work in more than one place without permission from their boss.

Part of the problem, doctors say, is that public hospitals are short-staffed.

China has 1.4 physicians per 1,000 people, compared to 2.4 in the United States and 2.8 in the UK, according to the World Health Organization.

The number of doctors per 1,000 patients fell 26 percent in public hospitals and 16 percent in private hospitals between 2008 and 2012, according to Deutsche Bank.

While health authorities acknowledge a shortage, their focus is on getting more doctors for rural areas. The National Health and Family Planning Commission set targets in 2011 for increasing the numbers and quality of primary care physicians in these areas by 2020, in part through improvements in education.

Zhu Yan, who left a good job at the prestigious Peking Union Medical College Hospital to start his own clinic in the southern city of Shenzhen, ticked off a list of issues that prevent more doctors from working in private hospitals: Chinese doctors prefer the security and prestige of state hospitals; private hospitals want to hire older, more experienced doctors, but it’s mostly younger doctors who are motivated to leave.

Reuters

Online medical services gain popularity Alibaba has reached agreements with nearly 50 top hospitals in major cities across China

O

nline health is shaping up to be a hot new industry in China, as an increasing number of hospitals begin providing cyber services.

According to Alibaba, as of October a total of 15 hospitals across China have joined the “Future Hospital” scheme initiated by the tech giant’s third-party online payment platform Alipay four months ago.

“Future Hospital” is a mobile medical treatment strategy expected to help hospitals improve operating efficiency and optimize the deployment of medical resources. The scheme has allowed medical institutions to access Alipay’s account system, mobile platform, payment and financial solutions, cloud computing and big data platforms.

More than 10,000 patients seek the virtual services every day, including registration and medical payment, largely shortening the typically timeconsuming process in hospitals, said Wang Lijuan, general manager of Alibaba’s small and micro business financial service group.

For instance, in the Guangzhou Women and Children’s Medical Center in the southern metropolis

10,000

patients seek virtual services every day

of Guangzhou, about 15 percent of patients choose to pay medical fees via Alipay. So far, more than 70,000 patients have used the services.

But Alibaba must figure out a way to remove one big stumbling block in the emerging industry at the moment, as the platform is yet to be connected with China’s medical reimbursement system, which is a must if it wants its “services on the fingertip” to enjoy mass popularity in China.

Currently, Alibaba has reached agreements with nearly 50 top hospitals in major cities across China, and the scheme is expected to be available in those hospitals before the end of this year.

Xinhua

Hilton to sell NY’s Waldorf Astoria to Chinese firm Hilton said it would use the proceeds from the sale to buy more hotels in the United States

H

ilton Worldwide Holdings Inc. said it would sell its flagship Waldorf Astoria New York hotel to a Chinese insurance company for US$1.95 billion, one of the highest prices per room ever paid for a U.S. hotel.

Anbang Insurance Group Co Ltd will pay US$1.38 million per room for the Manhattan hotel that was o n c e hom e t o Marilyn Monroe, in a deal that will see Hilton continue to operate the property for the next 100 years.

The Waldorf Astoria is the latest iconic New York property to be bought by a Chinese company, after last year’s sale of One Chase Manhattan Plaza to Fosun International Ltd, controlled by billionaire Guo Guangchang.

Beijing-based Anbang manages about 700 billion yuan (US$114 billion) worth of assets, according to its website. Based on full occupancy at the Waldorf’s lowest room rate of US$329, Anbang would recover its investment in about 10 years.

But some rooms are much more expensive. A night in the Towers presidential

suite will cost a single guest US$1,609, according to the hotel’s website. The hotel had 1,413 rooms as of December 31.

Conrad Hilton, founder of the Hilton Hotels chain, bought the Waldorf Astoria New York in 1949, nearly two decades after the hotel opened on Park Avenue.

The hotel was the setting for the “Weekend at The Waldorf”, starring Ginger

Rogers, and its US$1,000per-week Suite 2728 was home to Marilyn Monroe in 1955 after she left behind her troubled life in Hollywood.

The per-room price paid by Anbang is more than that fetched by some other high-end hotels in the past few years, though less than the $1.5 million per room paid in 2012 for the 157-room Setai Fifth

Avenue near the Empire State Building.

Patrick Scholes, analyst at SunTrust Robinson Humphrey Inc., said he believed the renovations would include the conversion of some of the Waldorf Astoria’s top floors into condominiums.

Hilton’s luxury brand, Waldorf Astoria Hotels & Resorts, owns 27 properties in cities such

as Amsterdam, Chicago, Dubai and Shanghai.

Hilton said it would use the proceeds from the sale to buy more hotels in the United States.

“The sale allows (Hilton) to unlock a lot of capital and redeploy to grow the company’s presence in other markets,” said Evercore Partners analyst Smedes Rose.

Reuters

10

October 8, 2014

Asia S. Korea’s car exports rise South Korea’s car exports rose 3.6 percent in September from a year earlier on demand from North American and Middle East regions, a government report showed yesterday. Auto exports increased to 195,527 units last month, according to the Ministry of Trade, Industry and Energy.

For the first nine months of this year, car exports reached 2,242,714 units, up 0.4 percent from the same period of last year.

Auto parts exports fell 4.3 percent from a year earlier to US$1.96 billion in September due to the worsening of economic conditions in Russia, Brazil and India.

Vietnam to see positive 2014 growth Vietnam will likely obtain higher gross domestic product (GDP) growth in 2014 based on strong exports and low inflation so far this year, according to Hong Kong and Shanghai Banking Corporation (HSBC).

Vietnam’s export performance has been enviable as the sector has expanded by 14.1 percent since early this year, an impressive result amid lacklustre demand across the globe, local Saigon Times daily quoted sources from the bank’s Global Research Report as saying yesterday. The HSBC Manufacturing Purchasing Managers’ Index (PMI) mirrored this trend as the index has risen for 12 consecutive months.

Abe says weaker yen hurts households Japanese Prime Minister Shinzo Abe said yesterday that a weaker yen burdens households and small firms by increasing fuel prices. A weaker yen has both benefits and costs as it will help exporters while negatively impact importers of raw materials, Abe told the parliament, where some lawmakers criticised Abe’s policy as hurting households. The yen hit a six-year low of 110.09 yen to the dollar last week.

Myanmar tunes up Thilawa SEZ Myanmar has offered 20 sectors of economic activities to local and foreign investors in the country’ s first biggest Thilawa Special Economic Zone (SEZ) project being implemented on the outskirts of Yangon by a Myanmar-Japan joint venture, according to the Ministry of National Planning and Economic Development yesterday.

The business activities, announced by the ministry, include trade, basic infrastructure development such as housing complexes and hotels, technology and design firms, services for warehouses, transportation, computer software, information on economy, insurance and law, retail and wholesale, finance, rental, consultancy, construction, education, and environmental conservation.

GPIF portfolio shift delayed Japan’s US$1.2 trillion public pension fund, the world’s largest, will delay a highly anticipated decision on shifting its portfolio allocations to November or later, people familiar with the process said yesterday. The asset reallocation by the Government Pension Investment Fund, which is still expected to increase the giant fund’s buying of Tokyo stocks and cut its Japanese government bond weighting, was initially expected for early this month. But one source told Reuters the final decision will come between mid-November and mid-December. The Wall Street Journal reported on Monday that the decision would likely be delayed until November.

Nuclear restart to hit Japan oil usage Besides the probable return of at least a few nuclear reactors to operation, new gas- and coal-fired plants are also scheduled to come online

J

apan’s reboot of nuclear power, expected to begin early next year, is set to punish oil imports the most as utilities slash the use of their highest-cost fuel and shut ageing oil-fired plants, a survey of Japan’s nine biggest power companies showed.

Utilities in Japan are keen to close oil-burning units, not only because crude and fuel oil are their most expensive fossil fuels, but also because the plants are costly to maintain. This could see the world’s No.3 oil consumer cutting use further just as weak global demand and ample supply are already pushing the international Brent benchmark to multi-year lows.

In the fiscal year ended March 31, Japan’s big utilities burned 18 percent less oil - mostly opting for cheaper coal - after oil for power use hit a 16-year high the previous year.

Units burning liquefied natural gas (LNG) and coal are more likely to be kept running, keeping imports of those two fuels near or higher than the records reached since the world’s worst nuclear disaster in 25 years at the Fukushima power plant in eastern Japan in 2011.

Company responses in the survey

indicate most would like to cut fuel oil and crude usage.

Import costs and records Fossil fuel imports by utilities in the three business years since

Fukushima have on average been about 3 trillion yen (US$28 billion) higher per year than the yearly costs before 2011, contributing to a string of record trade deficits.

Japan, which takes about a third of global LNG shipments, imported

Ikata nuclear powerplant in Japan

NZ business confidence slides to 2-year low in Q3 On a seasonally adjusted basis, a net 20 percent of firms expected general conditions to pick up, from a net 33 percent in the previous survey

N

ew Zealand business confidence fell to a two-year low in the third quarter as the pace of economic growth has slowed while cost pressures rise, a private think tank said yesterday, suggesting that interest rates will remain on hold for the coming months.

A net 19 percent of firms surveyed expected general business conditions to improve, the lowest since the September 2012 quarter, from 32 percent in the previous quarter, the New Zealand Institute of Economic Research’s quarterly survey of business opinion (QSBO) showed.

“Activity has stabilised ... but confidence and optimism has come off across the board, and this fading is synchronised across all regions and industries,” NZIER principal economist Shamubeel Eaqub said.

The survey showed that costs and prices have risen in the last six months, pointing to CPI inflation of around 2.5 percent in nearly 2015.

Still, capacity pressures are easing, particularly in the Canterbury region where earthquake reconstruction projects had led to rising pressures, suggesting that the pace of further rate rises may be

A certain workload remains dependent upon rebuilding of infrastructure and buildings damaged by the 2011 earthquake

slower than initially anticipated.

The poll’s measure of capacity utilisation was 90.6 percent, unchanged from the second quarter.

On a seasonally adjusted basis, a net 20 percent of firms expected general conditions to pick up, from a net 33 percent in the previous survey.

Slowing growth The survey added to the view that New Zealand’s economy is starting to cool after annual growth sped to a 10-year high of

KEY POINTS Business situation falls to +19 pct, lowest since Q3 2012 Survey shows economic growth slowing after strong expansion Poll shows expectations for next rate rise in early 2015

11

October 8, 2014

Asia a record 87.73 million tonnes of the fuel in the year through March for both utilities and other uses, paying an all-time high of 7.34 trillion yen.

Thermal coal imports hit a record of 111.52 million tonnes after rising 5 percent from the previous year.

Oil use for power fell nearly a fifth over the same fiscal period to less than 418,000 barrels per day (bpd), down from a 16-year high of nearly 510,000 bpd the previous year.

King coal While power firms reduced oil use last fiscal year, their coal use rose nearly 20 percent and LNG by less than 1 percent.

That trend has held in the first eight months of this calendar year, with fuel oil and crude use falling

3.9 percent in the second quarter, widely considered by analysts to mark a peak in the current cycle.

The NZIER survey showed trading activity was little changed in the third quarter, while profits have turned lower and investment intentions have moderated from past quarters. Retail sales slipped, making merchants more cautious about ordering stocks.

Manufacturing exports grew strongly, reflecting rising confidence among firms in light of a sell-off in the New Zealand dollar, but hiring has moderated, suggesting the labour market may struggle to expand further following strong growth in the past year.

The survey results support economist expectations that the Reserve Bank of New Zealand will keep its official cash rate on hold at 3.50 percent until the first quarter of next year following four consecutive rate rises since March.

Some are becoming concerned that an on-going fall in global prices for dairy products, a major export earner for the agriculturebased economy, may significantly slow overall growth, pushing back further rate rises to later in 2015.

The QSBO survey does not include the important agricultural sector, notably dairy, which has been a significant driver of growth on the back of high commodity prices and demand.

The NZIER expects the RBNZ to hold off from raising rates until the first quarter of 2016.

Other economists have revised their expectations for the next rate rise to come around mid-year, given the risk that global dairy prices may have further to fall after tumbling nearly 50 percent so far this year.

Reuters

about 15 percent, while coal use rose 6 percent and LNG 1 percent.

With several new, more efficient gas and coal units coming online this year and next, further cuts in the use of high-cost oil capacity is likely on the cards.

Factoring in maintenance, repairs and other costs, oil-fired generation is more than twice as expensive per kilowatt-hour as the next cheapest fuel, which is LNG, according to the most recent evaluation from the Japanese government in 2011.

In the year that ended March 31, oil made up nearly 17 percent of thermal fuel use by volume, while accounting for about 24 percent of thermal fuel cost, according to Reuters calculations based on government data.

Reuters

BOJ stands pat on policy The BOJ maintained its pledge of increasing base money at an annual pace of US$547‑US$638 billion through purchases of government bonds and risky assets

T

he Bank of Japan yesterday maintained its massive asset buying programme but offered a bleaker view on factory output, following signs that the world’s thirdlargest economy was hit harder than expected by a sales tax increase in April.

Policymakers stuck to their view that the economy will resume a moderate recovery and achieve the bank’s 2 percent inflation target next year without more monetary easing, but also acknowledged that weak consumer spending is hurting output and business sentiment.

BOJ Governor Haruhiko Kuroda maintained that optimism earlier in the day, telling parliament that a positive economic cycle remained in place, with households and companies increasing spending as they see incomes rising.

But he warned of potential risks to growth and stressed anew that the central bank was ready to ease monetary policy further if the economy and prices undershoot its forecast.

“It’s true the effect (of the sales tax hike) on the economy is being prolonged. There’s also the effect of bad summer weather,” Kuroda told parliament.

The BOJ’s policy meeting yesterday was interrupted because Kuroda was summoned to speak in parliament, a rare event that last happened in September 1998.

KEY POINTS No policy change expected, debate begins on new forecasts BOJ cuts view on output as sales tax weighs on economy BOJ member Shirai says inflation expectations turning flat An intense burst of monetary and fiscal stimulus, which were the first two “arrows” of Prime Minister Shinzo Abe’s strategy to end 15 years of deflation, has helped boost business sentiment by lifting share prices and weakening the yen.

The growth strategy to boost Japan’s long-term economic potential, dubbed the third arrow of “Abenomics,” has disappointed markets and, along with a spate of weak data, has cast doubts on the success of reviving the economy on a sustained basis.

“Japan’s economy continues to recover moderately as a trend, but there is some weakness in production ... after the sales tax hike,” the BOJ said in a statement after the meeting.

Reuters

Indian services growth quickens The new business sub-index climbed to 52.4 from 51.9, signalling robust demand

G

rowth in Indian services activity picked up pace in September as order books filled up at a faster rate, a business survey showed yesterday.

The HSBC Services Purchasing Managers’ Index (PMI), compiled by Markit, rose to 51.6 in September from 50.6 in August, reversing a

slowdown seen in the previous two months.

A reading above 50 signifies growth while anything below denotes contraction.

The new business sub-index climbed to 52.4 from 51.9, signalling robust demand.

“Service sector activity bottomed

Activity in the private sector has expanded steadily since May, when Prime Minister Narendra Modi won elections

out in September thanks to stronger new business flows,” said Frederic Neumann, co-head of Asian economic research at survey sponsor HSBC. In what might also give some respite to an economy that has long struggled with high inflation, the sub-index measuring output price growth fell to a near four-year low.

India’s annual consumer price inflation eased in August to 7.80 percent from 7.96 percent in July.

Wholesale prices also rose at a slower clip during that month.

But the Reserve Bank of India doesn’t appear to be in a hurry to ease monetary policy and hinted last week that it won’t do so until it is confident that consumer inflation can be reduced to a target of 6 percent

by January 2016.

Activity in the private sector has expanded steadily since May, when Prime Minister Narendra Modi won a landslide mandate that created a wave of optimism over India’s economic prospects.

But the lack of sweeping reforms

by Modi’s government so far has taken the sheen off those hopes.

The survey showed firms’ confidence regarding future business grew at the slowest pace in a year last month.

“A pick up in reform effort is sorely needed to put growth on a firmer footing and address supply side risks to inflation,” Neumann said.

Reuters

12

October 8, 2014

Asia

Australia keeps rates low

Aussie housing shows strongest growth Reserve Bank of Australia reiterated that the currency was still high A private construction index measuring the development of residential housing industry has posted its strongest reading on record yesterday. The Australian Industry Group - Housing Industry Association Performance of Construction Index (PCI) jumped 4.1 points to 59.1 in September. It is the strongest pace of growth recorded in the survey’s nineyear history. Residential property development is leading the growth with the house building subsector at 61.7 points, and apartment building rising to 60.5.

Commercial construction rose 3 points to 58.4. Engineering construction did grow slightly, rising 4.6 points to 48.3.

Petronas threatens LNG plant delay

Malaysian state-owned energy company Petronas said it could delay its planned US$11 billion liquefied natural gas plant on Canada’s Pacific Coast by up to 15 years unless it can reach a favourable tax deal by month’s end. Petronas said in a statement that the economics of the plant are marginal and without a favourable tax arrangement with the province of British Columbia and Canada’s federal government, it could shelve the project for a decade or more. The company set a deadline of the end of October to reach a deal.

S.Korea c.banker says not in deflation South Korea’s central bank chief said yesterday that the economy is not in deflation, but rather is going through a state of prolonged low price pressures and growth. Bank of Korea Governor Lee Ju-yeol made the comments to lawmakers during a parliamentary audit.

When asked by a lawmaker whether he believed monetary policy had much effect in boosting economic growth, Bank of Korea Governor Lee Ju-yeol said the expected effects are weak.

Aussie biz confident on Christmas sales Australian business owners are optimistic about seeing a jump in sales during the run-up to Christmas, with retailers and the services industry lifting their forecasts for the final quarter of the year. According to Dun & Bradstreet’s latest Business Expectations Survey, 47 percent of businesses expect higher sales levels compared to last year, while 11 percent forecast a decline and 42 percent similar trade. The retail sales index has risen to 27.1 points, up from 9.7 points last year, while the services sales index has jumped to 43. 4 points, up from 4.0 points in 2013.

A

ustralia’s central bank kept interest rates at record lows for a 13th straight policy meeting yesterday, saying the economy was to run a little below par for some time yet.

The local dollar eased a touch after the Reserve Bank of Australia (RBA) reiterated that the currency was still high by historic standards, even though it has fallen sharply in the past month.

“Overall, the Bank still expects growth to be a little below trend for the next several quarters,” said RBA Governor Glenn Stevens, in what was largely a re-run of recent statements.

“On present indications, the most prudent course is likely to be a period of stability in interest rates.”

There had been some speculation it might drop the reference to a period of stability given rates have already been at 2.5 percent for over a year.

Interbank futures had priced in no chance of a move this week, while a Reuters poll of 18 analysts had found all expected rates to stay on hold. All also suspect the next move to be up but not until well into 2015.

There have been two major developments since the September policy meeting, one welcome the other less so.

On the positive side the local currency has fallen around 7 percent against a broadly stronger U.S. dollar,

Interior of the Reserve Bank of Australia

Samsung heads for annual profit fall This would mark the South Korean giant’s weakest quarterly profit since the second quarter of 2011 and the fourth consecutive quarter of earnings declines on a yearly basis

S

amsung Electronics Co Ltd is heading for its first annual earnings drop since 2011 after it revealed its July-September profit would be the lowest in more than three years and said short-term prospects for smartphones were uncertain.

The world’s smartphone leader has seen its global market share decline in annual terms for the past two quarters, according to Strategy Analytics, out-classed by Apple Inc.’s iPhones in the premium segment and undercut by Chinese rivals like Lenovo Group Ltd and Xiaomi Inc. at the bottom end.

“Considering the operating profit guidance, it looks like the company dealt with unsold inventory issues during the third quarter,” Alpha Asset Management fund manager Hong Jeong-woong said. “I think Samsung’s earnings are at a turning point.”

Samsung said in a regulatory filing yesterday that operating profit for the third quarter likely

KEY POINTS Samsung Q3 op profit seen at 4.1 trln won vs 5.6 trln won fcasts Q3 profit likely lowest since Q2 2011 Samsung says Q4 smartphone outlook remains uncertain

fell 59.7 percent to 4.1 trillion won (US$3.8 billion), well below a mean forecast of 5.6 trillion won tipped by a Thomson Reuters I/B/E/S survey of 43 analysts.

Samsung said that although “uncertainty” persisted in the mobile business, which accounted for nearly

70 percent of its 2013 operating profit, it “cautiously expects” higher shipments of new smartphones and strong seasonal demand for TV products.

Many analysts and investors believe the best days are behind Samsung’s mobile division as it will need to sacrifice margins.

Operating margin for the smartphone business fell substantially in the quarter due to higher marketing expenditure and sharply lower average selling prices, as the proportion of shipments for high-end devices fell and prices for older models dropped, Samsung said.

HMC Investment analyst Greg Roh said Samsung’s average smartphone selling price likely fell to US$224 in the third quarter from US$301 in the second quarter. In comparison, Counterpoint analyst Tom Kang says Apple’s average sales price may rise to about US$605 for July-September from US$580 in the previous period.

Reuters

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13

October 8, 2014

Asia Sumitomo Mitsui plans fund for local banks

by historic standards

KEY POINTS RBA holds rates at 2.5 pct, sticks to stable policy outlook Says A$ still high historically despite recent fall Markets priced for no move in rates until well into 2015 so cushioning miners from the impact of lower commodity prices while also making domestic businesses more competitive.

The RBA has long agitated for a lower currency and sounded as though it still wanted to see it fall farther.

“The exchange rate has declined recently, in large part reflecting the strengthening US dollar, but remains high by historical standards,” said Stevens.

Curbing speculation, not building Less welcome to policymakers in recent months has been a surge in borrowing to buy investment properties, particularly in the inner cities of Sydney and Melbourne.

The RBA is worried that risky lending could fuel an upward spiral in home prices that could potentially spill over into a bust that hurts consumer wealth and spending.

Price growth did slow somewhat in September, according to figures from property consultant RP Data, but were still up 9.3 percent on the same month last year.

In Sydney, annual price growth was running at a rapid 14.3 percent with Melbourne following at 8.1 percent.

The danger was real enough that regulators are considering experimenting with macroprudential rules that aim to limit the build up of leverage and risk-taking in the banking system as a whole, rather than just at individual banks.

Policymakers are acutely aware of the need to safeguard an on-going revival in home building, which is badly needed to help offset the drag from a cooling mining sector.

Signs are the upswing in construction is a powerful one with a survey of the sector showing activity hit a nine-year peak in September.

Even better, demand for labour climbed to the highest in the history of the survey and the sector is the third biggest employer in the country with over a million workers.

Reuters

Earnings at Japan’s regional lenders are under pressure from record-low interest rates and a shrinking population

S

umitomo Mitsui Financial Group Inc. will start its first fund for Japanese regional banks to finance projects overseas, helping them boost loans abroad as the world’s third-largest economy slows.

Local banks will invest in a portfolio of loans extended by Sumitomo Mitsui for infrastructure and energy projects in the U.S., Europe and Asia, said Yusuke Takahashi, a senior official in the syndication department of Japan’s second-biggest bank. The Tokyo-based lender is in final talks on terms with several banks and expects to raise US$20 million to US$30 million from each one, Takahashi said in an October 3 interview.

Sumitomo Mitsui began discussing the fund with the Financial Services Agency last year as the regulator considers ways to help local banks invest in higher-yielding loans overseas and diversify away from Japanese government debt, Takahashi said.

Takahashi didn’t specify the size of the fund or name any banks that are involved.

Sumitomo Mitsui will have exposure to the fund so it shares the same risk

as the regional lenders, according to Takahashi, who heads a loan placement group at the company’s banking unit. Sumitomo Mitsui will receive management fees from the banks, he said, without elaborating.

More participants The company may consider a series of funds under the plan and broaden the investor base to include insurance companies and pension managers, he said. Getting more participants will increase the bank’s capacity to originate syndicated loans abroad, he added.

“The fund is positive both for regional banks and Sumitomo Mitsui,” said Ryoji Yoshizawa, a director of financial institution ratings at Standard & Poor’s in Tokyo. “Local banks that don’t have access to overseas lending can broaden their income stream” and Sumitomo Mitsui can reduce its concentration of credit for particular projects, he said.

Borrowing costs have dropped as the Bank of Japan buys bonds at an unprecedented pace to stimulate the economy.

Bloomberg News

NZ Finance Minister urges tighter spending control Minister Bill English said it was too early to say a surplus would be attained

T

he New Zealand government will need to keep a tight rein on spending if it is to reach its first budget surplus in seven years, the Finance Minister said yesterday, but he would not be drawn on whether it would be attained.

The government reported a bigger than expected deficit for the past year as its tax take was lower than forecast and its expenses higher.

The operating balance excluding gains and losses (OBEGAL), which strips out unrealised investment gains or losses, for the 12 months to June 30 was a deficit of NZ$2.93 billion ($2.29 billion), against a forecast deficit of NZ$2.59 billion.

Finance Minister Bill English said getting back to a budget surplus this fiscal year, as targeted by the government, would be a challenge.

“The government will continue to focus strongly on managing expenditure tightly and stabilising and then reducing debt - including carefully managing its future capital needs,” English told a media briefing.

The government forecast a budget surplus of NZ$297

KEY POINTS NZ govt deficit bigger than expected at NZ$2.93 bln NZ Finmin won’t “speculate” on reaching surplus this year NZ growth to slow on dairy, global outlook, NZ$ a headwind million this fiscal year in the pre-election economic and fiscal update published in mid-August.

“I’d rather not speculate on it,” he told the media briefing, saying it would be clearer at the half year economic and fiscal update (HYEFU) to be published on Dec 16.

An economist doubted a surplus would be reached this year, but said it would not be a major issue if it did not.

“I think it’s a bridge too far at this juncture, but whether we get a NZ$200 million surplus or a NZ$200 million deficit is not worth splitting hairs over,” said ANZ chief economist

A panorama of Auckland’s financial heart

Cameron Bagrie, adding that maintaining a trend of improving finances was the key factor.

English said the New Zealand currency, which has fallen about 11 percent since its three-year peak in midJuly, remained a headwind for the economy, and a challenge to exporters.

He said the economy was better than it had been for many years, but was expected to return to more normal levels as it adjusted to lower dairy prices and a more restrained outlook for global growth.

New Zealand’s economy grew at its fastest pace in 10 years in the year to June

30, driven by earthquakerelated building activity, strong dairy prices, and consumption.

The Treasury said core tax revenue in the 2013/14 year was around NZ$900 million less than forecast, although it was up 4.7 percent on a year earlier.

Reuters

14

October 8, 2014

International German industry output plunges German industrial output fell far more than expected in August and posted its biggest drop since the financial crisis in early 2009, Economy Ministry data showed yesterday, the latest figures to raise question marks about Europe’s largest economy. The 4.0 percent month-on-month drop missed the consensus forecast in a Reuters poll for a 1.5 percent decrease and came short even of the lowest forecast for a 3.0 percent fall. It was the biggest drop since a 6.9 percent fall in January 2009.

Amazon to face EU antitrust probe Amazon.com Inc. faces an in-depth European Union probe over a tax deal with the Luxembourg authorities, according to a person familiar with the investigation. The European Commission suspects Luxembourg broke EU rules on state aid with a 2003 ruling giving Amazon assurances on how some of its income would be taxed, said the person who asked not to be identified because the details of the probe aren’t public. The EU inquiry into Amazon comes amid a global crackdown on corporate tax-avoidance as governments struggle to increase revenue and reduce deficits.

Venezuela starts process to pay debt Venezuela has withdrawn money from its central bank reserves to start paying roughly US$1.786 billion in debt, a high-ranking government source told Reuters, allaying fears the Socialist-run country might opt to default. Venezuela has to service roughly US$1.498 billion due from its Global 2014 bond on Wednesday and about US$250 million in coupons as of next week. The country has to pay a total of around $5 billion in sovereign bonds and bonds issued by state oil company PDVSA this month.

Private equity firm eyes Tesco unit Private equity buyout firm TPG has approached troubled British grocer Tesco PLC to buy its data gathering and analysis subsidiary Dunnhumby, which is worth well over 2 billion sterling, the Sky News reported. TPG’s offer to Tesco came several months ago, when Philip Clarke was still chief executive. Despite a rejection from Tesco on its initial approach, TPG still remains interested in the business, Sky News said, citing sources. Tesco is examining its ownership of Dunnhumby as part of a broader review of its business being led by CEO Dave Lewis, the Sky News said.

BNP asks for help as dollar clearing ban nears BNP Paribas has asked at least three banks to help it clear certain energy transactions in U.S. dollars next year to make sure it can keep its energy trade finance division operating after a ban imposed for violating U.S. sanctions, sources said. The French bank made the requests to JP Morgan Chase and Co, Bank of America Merrill Lynch and Citi in July and August, according to sources who asked not to be named because talks are confidential.

Europe moves closer to 2030 climate accord 57 top European companies, funds and associations sent a letter to EU heads of state, urging them to agree on a “robust” climate and energy policy framework and energy strategy

T

he European Union made headway toward a deal on a strategy to shift to a lowcarbon economy and boost security of energy supplies amid a natural-gas dispute between Russia and Ukraine.

Energy and environment ministers from the EU’s 28 member states met in Milan to prepare ground for a compromise at the October 23-24 summit, where the bloc’s leaders are expected to decide on policies for 2030. The challenge for governments is to reconcile the need for cheaper and safer energy while accelerating the pace of emissions reductions.

If we’re going to make investment to improve our energy security, they’re the same investments that we’ll have to make to tackle climate change Ed Davey, U.K. secretary of state for energy and climate change

“There’s a real sense that a deal can be done and a real determination to try to get a deal done,” Ed Davey, U.K. secretary of state for energy and climate change, said in an interview after the meeting. “There’s still quite a deal of diplomacy to be done, but we’re narrowing down on the differences.”

EU nations are discussing a recommendation by the European Commission to adopt a binding goal to cut greenhouse gases by 40 percent by 2030, accelerating the pace of emissions reduction from 20 percent in 2020 compared with 1990 levels. The EU’s regulatory arm also proposed an EU-wide target to boost the share of renewables in energy consumption to 27 percent and an additional goal of increasing energy efficiency by 30 percent in the next decade.

‘Constructive debate’ “It was a very constructive debate,” EU Climate Commissioner Connie Hedegaard told reporters after the ministerial gathering. “I’ll leave Milan with the impression that it will be possible for our heads of state to make the package.”

At their summit, which will take place in Brussels, EU leaders are also scheduled to discuss energy security strategy for Europe. The debate to diversify energy supply sources and reduce the region’s dependence on fossil fuels comes as a pricing dispute led to the cut-off of Russian

natural-gas supplies to Ukraine, the transit country for around 15 percent of the EU’s demand for the fuel.

Temporary deal The EU is trying to broker a compromise between Russia and Ukraine and proposed a temporary deal to restore flows before winter.

The next round of three-way talks will be set this week, the commission said in a statement on October 3.

Russian Energy Minister Alexander Novak on September 26 called the EU plan “a big step” toward an agreement. Ukrainian Energy Minister Yuri Prodan said last week that his country is “ready to reach an agreement but not at the volumes and in the timeframes set by Russia.”

Concerns among EU governments over a possible disruption have increased as Russia and Ukraine have traded accusations of threats to EU-bound gas since July. European nations have already agreed to stress test Europe’s energy system to help overcome a potential cutoff in the 2014-15 winter and the results showed the bloc can manage potential problems, according to Claudio de Vincenti, Italian deputy minister for economic development.

EU leaders plan to decide on further measures to enhance the bloc’s energy security later this month.

Bloomberg News

Regulators want quick Deutsche Bank settlement The bank faces a number of investigations that touch on the U.S. mortgage market, foreign exchange and high-frequency trading

U

.S. and UK regulators are pushing to settle the Deutsche Bank AG Libor case quickly and hope to extract major penalties, although a conclusion is unlikely before 2015, The Wall Street Journal reported, citing unidentified sources.

U.S. prosecutors are also discussing plans to force Deutsche Bank to plead guilty to attempting to manipulate Libor, the interest rate benchmark that underpins trillions of dollars in mortgages, derivatives and consumer credit, the New York Times reported separately, citing legal sources.

Officials have not made a final decision, the New York Times added.

Deutsche Bank is two years into a turnaround plan launched in 2012 that has seen costs fall and operating profit leap, but the threat of further penalties from alleged misconduct has cast a shadow over the share price and management’s success claims.

The bank’s own investigation has not uncovered any evidence of

wrongdoing by senior executives, but did find that “certain employees, acting on their own initiative, engaged in conduct that falls short of the bank’s standards,” the bank said in a statement.

The bank originally hoped to clear the decks of legal issues in 2014 but has guided recently that 2015 will likely be the year instead when the majority of investigations are concluded.

Regulators are hoping to convince the bank to pay well into the hundreds of millions of dollars, the Journal said.

The bank is being investigated by the U.S. Commodity Futures Trading Commission and Justice Department and the UK Financial Conduct Authority, the newspaper added.

The bank has set aside 7.8 billion euros (US$9.8 billion) in the past two and a half years for fines and settlements and expects to face another 3 billion in costs in 2014.

Deutsche Bank headquarters

The litigation reserves are weighing on third-quarter earnings, which benefited from strong retail and investment banking activities, sources familiar with the matter said.

Reuters

15

October 8, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China’s visionary stimulus Zhang Jun

Professor of Economics and Director of the China Centre for Economic Studies at Fudan University, Shanghai

PHILSTAR “Because of the possible spill overs and consumer protection concerns, the BSP will continue to closely monitor developments and implement further refinements to policy as appropriate,” BSP Governor Amando M. Tetangco Jr. said in an e-mail to reporters. Latest central bank data showed the real estate exposure (REE) of banks rose 22 percent to P1.097 trillion in end-June from the same period last year. Loans extended to the sector went up 21 percent to P924.317 billion, while investments in the property market climbed 26 percent to P172.907 billion.

Wen Jiabao at the World Economic Forum Annual Meeting in Davos 2009

THE PHNOM PENH POST Prime Minister Hun Sen has called on his government to review electricity pricing for industrial consumption in a bid to increase Cambodia’s attractiveness as an investment destination. Speaking at the opening of the International Investment Conference 2014 held yesterday in Phnom Penh, the prime minister said Cambodia’s electricity supply had reached a turning point in 2014, with several major development projects – including hydro- and coal-fuelled power plants – beginning operations this year. Hun Sen said the commencement of new power-producing facilities had led to a surplus of about 246 megawatts during the rainy season.

THE STAR For the first time in its history, Malaysia Airlines (MAS) will have a foreigner as its chief executive officer, who will be given the mandate to chart the restructuring of the company as well as see through its results over the next five years. In what is seen as a move to send a signal to the various stakeholders that the Government is not leaving any stone unturned in its efforts to put MAS on a proper footing amid keen competition in the airline industry, it is learnt that MAS’ major shareholder has given its tacit agreement to the candidate.

THE JAPAN NEWS Toshiba Corp. plans to discontinue production and sales of its e-book readers before the end of the year, The Yomiuri Shimbun has learned. Informed sources say Toshiba’s e-book distribution service for its e-book reader BookPlace MONO will be transferred to another company. The electronics giant has failed to expand use of the device against the popularity of smartphones and other tablet devices. Sony Corp. and Panasonic Corp. have also discontinued their production of e-book devices.

With Toshiba’s withdrawal, all major Japanese electronics makers will have abandoned the e-book reader market.

I

n March of last year, the first session of China’s 12th National People’s Congress began with then-Premier Wen Jiabao delivering his tenth and final “report on the work of the government.” When he had finished, the 3,000 representatives in attendance gave him a resounding ovation that was surely a response to more than the report; it was a display of praise and respect for his achievements as the head of China’s government.

Since then, however, assessments of Wen’s leadership –particularly his stewardship of the economy– have varied widely. Whereas Wen’s supporters remain adamant that he fundamentally supported a shift toward democracy and a market economy for China, his critics lambast him for failing to fulfil his promises of political and economic reform. As Wen’s successor, Li Keqiang, attempts to engineer deep systemic reforms, understanding Wen’s policy decisions could not be more relevant.

Wen’s most contentious economic policy was the CN¥4 trillion (US$586 billion) stimulus package that his government launched in response to the 2008 financial crisis. Though the policy succeeded in buttressing China’s economic growth, it was widely criticized as an overreaction – one that led to excessive monetary expansion.

Indeed, the surge in bank loans caused China’s M2 (a broad measure of the money supply) to soar, from 150% of GDP in 2008 to some 200%, or more than CN¥100 trillion, today. The massive injection of liquidity into China’s economy has contributed to rising debt, especially among local governments and firms, while fuelling massive real-estate bubbles,

and resulting in significant excess capacity.

Over the last 18 months, Li’s government has been attempting to address these challenges, by overhauling China’s industrial structure, reducing excess production capacity, restricting lending, containing the shadow banking sector, and curbing real-estate investment. And he has had some success – at the expense of economic growth. Though the current rate of 7% is comfortable, it is far lower than the double-digit rates that prevailed prior to 2008.

Given the need for further economic restructuring – and in view of long-term demographic trends, which will reduce the labour supply – pre-2008 growth rates are unlikely to be restored. This is fine with Li, who recognizes that structural transformation and industrial upgrading – not an unsustainable credit-led growth model – is the key to achieving high-income status.

But there is more to assessing Wen’s stimulus than the growth/reform trade-off. The policy also helped to expand China’s foreign trade and boost its external financial strength (with a robust balance-of-payments position, large international reserves, and a stable currency), thereby creating space for Li to carry out his ambitious reform agenda.

At the same time, the global financial crisis triggered a shift in the relative price of assets worldwide. As developed countries were plunged into debt crises, with shrinking asset values and declining exchange rates, China’s international purchasing power grew. This, together with Wen’s stimulus, bolstered China’s investment and financing capabilities considerably.

Countries like New Zealand

It will not be long before China undergoes an historic shift from net merchandise exporter to net capital exporter

and Peru, unable to depend on developed countries for export demand, signed bilateral free-trade agreements with China. Likewise, when developed countries cut back on their foreign investment, China stepped in to inject much-needed capital into the global economy.

In fact, many countries began to pursue improved bilateral relations with China, in order to gain access to its capital.

For example, in 2009, Jamaica was faced with a plummeting currency, surging unemployment, and considerable banking-sector risks stemming from exposure to government debt.

When its traditional allies, the United States and the United Kingdom, rejected its pleas for help, it turned to China, which provided US$138 million in loans to prop up the economy.

By next year, China’s outward investment is likely to reach over US$100 billion annually – bringing it close to parity with inflows. It will not be long before China undergoes an historic shift from net merchandise exporter to net capital exporter.

And China’s external financing activities do not end there. In 2009-2010, China also invested heavily in the International Monetary Fund, with the People’s Bank of China announcing in 2009 that it would buy up to 32 billion special drawing rights (the IMF’s quasi-currency) – the equivalent of about US$50 billion. Over the same period, China signed multiple bilateral currency-swap agreements, offered policy loans and special assistance, and contributed to regional investment funds.

In the coming years, China’s engagement with the developing world will continue to deepen.

The National People’s Congress has discussed using a portion of China’s foreign-exchange reserves to finance infrastructure projects in developing countries. Such a Chinese “Marshall Plan” could seek to strengthen developing countries’ capacity to absorb Chinese goods, or it could advance a broader development agenda. Some central-bank officials have even advocated the establishment of a supra-sovereign wealth fund for developing-country investment.

China’s continued development demands that it continues to enlarge its capacity and influence in foreign assistance. The global economic crisis accelerated the timetable for this process considerably, forcing China’s leaders to pursue it simultaneously with the economy’s structural transformation.

In this respect, Wen gave Li an invaluable head start.

Project Syndicate

16

October 8, 2014

Closing South Korea’s technology exports increase

Food scare hits McDonald’s Japan sales forecasts

South Korea’s exports of information & communication technology (ICT) products hit the second-biggest in the country’s history due to record semi-conductor shipments, a government report said yesterday. Exports in the ICT sector reached US$15.43 billion in September, posting the largest except for the record high of US$16.23 billion tallied in October 2013. By item, chip exports expanded 7.4 percent from a year earlier to US$5.81 billion in September, marking the record high in the country’s history. The record exports came amid stable chip prices. Display panel exports climbed 9.4 percent to US$2.48 billion in the same period.

McDonald’s forecast yesterday a net loss of 17 billion yen (US$156.7 million) for 2014, its first loss in 11 years, after a food safety scandal hit sales already weakened by stiff competition from convenience stores. The announcement brought further gloom for McDonald’s Corp , which holds 49.9 percent of McDonald’s Japan, and has been struggling globally with falling sales. Facing tough competition from domestic convenience stores, McDonald’s Japan had been suffering from weak demand even before the food safety scare, in which a major Chinese supplier of chicken meat was found to be in breach of safety standards.

Bitter days for China’s sugar industry The spiralling-down industry has taken its toll on farmers

C

hina’s embattled sugar industry, facing pressure from foreign competitors and technological shortcomings, is caught in the middle of a year-long sales crisis.

According to latest statistics from the China Sugar Association (CSA), manufacturers delivered about 13,318,000 tonnes of sugar in the 2013/2014 “sugar-making period,” which lasted from last October to September this year.

But sales of sugar is a mere 77 percent of the same period last year, with 10.24 million tonnes sold by the end of August.

With winter, the industry’s slowest season, coming soon the worrisome situation shows no signs of getting better anytime soon.

In Guangxi Zhuang Autonomous Region, China’s biggest producer of sugar, some 1.5 million tones of sugar remains in shops.

Local farmers are still waiting anxiously for 1.9 billion yuan (US$309.4 million) of unpaid money for the sugar cane they sold, according to CSA’s Guangxi branch.

Cheng Weijun, who manages the department that oversees trade with the farmers at the East Asia Sugar Factory in Guangxi’s Chongzuo City, has felt the

pinch in a period usually marked by booming sales.

“By mid-September, only 70 percent of our sugar has been purchased,” he said.

The factory produced about 220,000 tonnes of sugar in the 2013/2014 period, which should be sold at least 5,000 yuan per tonne to avoid losses. But as tepid business cast its spell, sugar price is set at around 4,300 yuan, eating away at profits for factories like East Asia.

Hong Kong retail sales drop

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ales at major Hong Kong retailer chains have fallen as much as 50 percent during the bulk of the Chinese National Day holidays after pro-democracy protests disrupted the shopping season, according to a survey.

Sales dropped at least 15 percent during the first five days of the holidays known as Golden Week, the Hong Kong Retail Management Association said in a statement yesterday, citing a survey on its members. Retailers selling watches and jewellery were among the most affected, according to the group.

Sales at small- to medium-sized companies plunged as much as 80 percent, according to the association. Those operating in the Mong Kok, Causeway Bay or Tsim Sha Tsui shopping areas occupied by protesters were hurt the most, it said.

The figures are among the earliest indicators of the financial toll caused by the protests. Thousands of people demanding a free election for the next Hong Kong leader have taken to the streets, including those of Chow Tai Fook, the world’s largest jewellery chain.

Bloomberg News

Huang Zongxin, manager of the farm business department of Guangxi Funan East Asia Sugar Co. Ltd, said that some farmers have stopped growing sugarcane because of disappointing sales.

“Out of 580,000 mu (38,667 hectars) of our sugarcane planting bases, about 48,000 mu has been changed for vegetables and fruits,” Huang told Xinhua.

In Guangxi, strikes by

sugarcane farmers have been reported due to unpaid wages.

Foreign pressure Domestic demand for sugar has been dwarfed by imports of the product, disturbing the supplydemand relationship in the country.

Customs data shows from 2011 to 2013, China’s sugar imports have almost doubled from 2.92 million

Taiwan exports lag on weak European growth

tonnes to a record 4.54 million tonnes, accounting for almost one third of domestic production. In the first five months of this year alone, inbound sugar stood at 1.3 million tonnes, a year-on-year increase of 6.7 percent, and that figure does not include smuggled sugar.

Soaring imports are a result of foreign sugar costing less, according to Zhong Zhiyou, vice president of the farm business department of Guangxi Nanning East Asia Sugar Group (GNEASG).

“Even with all taxes included, imported sugar is still cheaper than homegrown products,” Zhong said.

As urgency for change mounts, experts have come up with a technical solution for the slinking demand.

Sugarcane was initially introduced from Taiwan. But the type of sugarcane used is susceptible to problems such as pests and low production, said Niu Gongfan, a senior engineer with the CSA’s Guangxi branch.

“We have developed our own strand of sugarcane that yields higher production, and we are gradually replacing the old types,” Niu said.

Tang Shaoxiong, vice general manager of GNEASG, said new growing techniques is being applied to help local sugarcanes grow better.

Xinhua

China keeps wool import quota

S

eptember exports expanded only half as much as expected, data showed yesterday, as weakness in some industrial sectors and stagnant demand from the euro zone offset the dividends from new product launches by Apple Inc. Exports in September grew 4.70 percent from a year earlier, the island’s Ministry of Finance said, versus expectations of 9.30 percent in a Reuters poll of 13 economists and less than half of August’s 9.60 percent growth.

Growth was constrained by mere 1.2 percent gain in shipments to Europe last month, a dramatic slowdown from the 13.5 percent jump in August.

“The market for electronic goods is still booming,” the ministry said in a statement.

Data from Europe has been poor across the board lately, with factory prices in August slipping from a year earlier.

Taiwan’s exports to its largest trading partner China grew 3.60 percent, slower than in August, while those to the U.S. gained 8.80 percent versus 4.90 percent the previous month.

Reuters

T

he Chinese Ministry of Commerce has kept next year’s import quota of wool and wool tops unchanged from 2014, allowing a maximum of 287,000 tonnes of wool to be imported in 2015.

Meanwhile, the import quota for wool tops was set at 80,000 tonnes, according to a statement by the MOC on its website.

China has refused to increase the import quota of wool and wool tops since 2006 even after it became the world’s largest wool processor and consumer in recent years.

The country relies on imports for more than 75 percent.

The MOC and its authorized departments will allocate the quota on a “first come, first serve” basis until the quota is filled.

Applicants shall be enterprises that actually imports wool or wool tops with import quota licenses in 2014 without regulation-violation record the previous year.

Those newly built or newly operational companies with a processing capacity above 5,000 tonnes can also apply for the import quota for 2015.

Xinhua