Macau Business Daily, Jan 5, 2015

MOP 6.00 Number 700 Monday January 5, 2015

Publisher: Paulo A. Azevedo

Closing editor: Joanne Kuai

SJM announces 5pct pay rise, the first operator to meet casino workers’ demands | PAGE 4

December figures cap ‘rocky’ year

Year III

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nother Gross Gaming Revenue record. But one causing concern and consternation in various quarters. Even if it was anticipated. GGR suffered its first full-year fall in 2014. Dropping 2.6 per cent from 2013 to finish the year at MOP351.5 billion (US$44 billion). December gaming revenue plunged an unprecedented 30 per cent y-o-y to 23.29 billion patacas (US$2.92 billion). Credit Suisse analysts claim the ‘sharp revenue deceleration in mass market is likely to be a negative surprise to the market and drive another round of re-rating’ PAGE

125 IPOs launched in Mainland in 2014

Great opportunity

PAGE 9

Fresh air from Chinese local bonds markets

Hengqin Headquarters Commercial Building is officially inviting business. Real estate agency Centaline Property believes the development of Hengqin can make up for the lack of land resources in Macau.

With the 24-hour border crossing, the realtor sees great potential in the Hengqin project

PAGE 10

Brought to you by

HSI - Movers January 2

Name

PAGE 5

Melco Crown de-listing in HK www.macaubusinessdaily.com

3

Interview

Not such a good idea after all. Dual-listed casino operator Melco Crown Entertainment Ltd. applied to de-list from the Hong Kong Stock Exchange on Friday. Barely three years after listing its shares on the major financial hub. The company cited limited fundraising opportunities. Plus onerous compliance obligations and costs

PAGE 4

Goodbye chimneys, hello shops

It’s confirmed. Official figures from China highlight the slowing manufacturing sector. While revealing an inspiring increase in the service sector

PAGE 8

‘Chopsticks and Gambling’

A blessing in disguise. So says Associate Professor Desmond Lam of the University of Macau regarding plunging casino revenues. The gambling psychology and behavioural expert sees an opportunity to diversify the economy away from solely gaming. But changing fundamental risk seeking attitudes that exhibit a high illusion of control will be a major challenge, he concedes

PAGES 6 & 7

%Day

China Overseas Land

8.46

China Resources Land

7.09

Ping An Insurance Gr

5.06

Kunlun Energy Co Ltd

4.09

China Life Insurance

3.12

Tingyi Cayman Island

-1.13

Sands China Ltd

-1.18

Li & Fung Ltd

-1.52

Want Want China Hol

-1.76

Galaxy Entertainment

-1.83

Source: Bloomberg

I SSN 2226-8294

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2 | Business Daily

January 5, 2015

Macau

Monetary Authority continues conservative policy The Monetary Authority is sticking to its cautious approach in investing for the fiscal reserve, as evidenced by the return rate of 1.19 per cent recorded at the end of September Stephanie Lai

sw.lai@macaubusinessdaily.com

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increased by 6.06 per cent from the previous period.

“For investors worldwide, there is still not any uniform standard in assessing the investment performance of funds, and controversies exist about whether the inflation rate should be used to gauge the performance,” the Monetary Authority chairman, Anselmo Teng Lin Seng, wrote in the reply, which was only made public on Friday, noting that the inflation level alone is not suitable as the judging basis for the investment of the fiscal reserve.

“The fiscal reserve [of Macau] is primarily a finance risk buffer, and serves as the last protection for the paying capacity of our public financial system,” Mr. Teng wrote. “So, the MSAR’s fiscal reserve,

he Monetary Authority of Macau says that the local inflation rate as a benchmark for gauging the returns on the city’s fiscal reserve investment is not “suitable”, as the reserve is more a “stabilisation fund” than a sovereign wealth fund that has a longer investment period and a bigger risk appetite.

The Authority’s statement, dated from early December, was in response to legislator Si Ka Lon’s written enquiry doubting the returns rate for the city’s fiscal reserve at 1.19 per cent registered at the end of September last year as being much lower than the inflation rate at the time. For the 12 months ended November last year, the average composite consumer price index

especially the ‘basic reserve’, should be a stabilisation fund.

In its current stage, it is not suitable to stress a ‘higher than inflation rate’ as a basis for judging the reserve’s return.”

The “basic reserve” mentioned by Mr. Teng is a portion carved out from the city’s fiscal reserve kept for emergencies. According to fiscal reserve rules, the basic reserve should amount to 150 per cent of the annual expenditure budgeted by the government.

Prior to Mr. Fernando Chui Sai On’s mention of establishing a special “investment and development” fund during his campaign for his secondterm as Chief Executive in August last year, the Monetary Authority has already noted that it would look into the International Monetary Fund’s suggestion of establishing a sovereign wealth fund. But since then no official information has been issued as to how the suggestion could work here.

As at the end of October last year, Macau’s fiscal reserve amounted to nearly 246.38 billion patacas (US$31.4 billion), in which the basic reserve reached 116.46 billion patacas.

The reserve has earned 4.7 billion patacas, from its establishment in February 2012 to the end of October last year, according to the latest data released in the Official Gazette.

Merchandise exports hit MOP827mln, up 11% Merchandise exports for November 2014 totalled MOP827 million, an 11 per cent increase year-on-year. Clock and watch exports amounted to MOP71.2 million, which accounted for a 171 per cent increase compared to the same period the previous year Joanne Kuai

joannekuai@macaubusinessdaily.com

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he Statistics and Census Service (DSEC) has indicated that total merchandise exports for November 2014 amounted to MOP827 million, up 11per cent year-on-year; the value of re-exports (MOP671 million) and domestic exports (MOP156 million) rose by 13per cent and 1per cent, respectively. Merchandise imports totalled MOP8.11 billion, up 9per cent year-onyear, while the merchandise trade deficit amounted to MOP7.28 billion.

In the first eleven months of 2014, the total value of merchandise export increased by 10 per cent year-onyear to MOP8.95 billion, of which the value of re-exports (MOP7.14 billion) increased by 12 per cent, while that of domestic exports (MOP1.82 billion) held stable as in the same period of 2013. The total value of merchandise imports grew by 11per cent to MOP81.10 billion. The merchandise trade deficit

widened to MOP72.14 billion.

Analysed by destination, merchandise exports to Hong Kong (MOP5.25 billion) and the EU (MOP263 million) in the first eleven months of 2014 increased by 22 per cent and 4 per cent year-on-year, while exports to Mainland China (MOP1.41 billion) and the USA (MOP282 million) decreased by 5 per cent and 15 per cent, respectively.

Exports of non-textiles increased by 11 per cent year-on-year to MOP8.24 billion, of which the value of machines, apparatus & parts (MOP1.61 billion) and clocks & watches (MOP779 million) rose by 36 per cent and 75 per cent, respectively, but that of electronic components (MOP597 million) dropped by 34 per cent. Exports of textiles & garments totalled MOP713 million, down 8 per cent.

Also, in November 2014 alone exports of clocks & watches amounted to MOP71.2 million, rising

171 per cent compared to the same period the previous year and stood as the category that gained the biggest momentum.

By country of origin, merchandise imports from Mainland China (MOP26.70 billion) and the EU (MOP19.87 billion) increased by 12 per cent and 18 per cent year-on-year in the first eleven months of 2014. Imports of consumer goods rose by 10 per cent to MOP50.81 billion, with imports of food & beverages (MOP10.57 billion) and watches (MOP7.38 billion) increasing by 22 per cent and 33 per cent, respectively.

Moreover, imports of construction materials (MOP3.18 billion) grew by 28 per cent.

External merchandise trade reached MOP90.05 billion in the first eleven months of 2014, up by 11 per cent compared with MOP81.04 billion in the same period of 2013.

Source: DSEC

Business Daily | 3

January 5, 2015

Macau

Annual GGR falls for first time in decade The gaming industry posted negative growth in revenues for 2014, down 2.6 per cent year-on-year, while the GGR for December 2014 plunged an unprecedented 30.4 per cent year-on-year Kam Leong

kamleong@macaubusinessdaily.com

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ross gaming revenue (GGR) fell a precipitous 30.4 per cent year-on-year in December 2014, the biggest single-month drop that Macau has ever posted. The record-breaking drop also contributed to the city registering its first annual fall of 2.6 per cent year-on-year in gaming revenue since the regulator started releasing GGR data in 2005.

The latest data released by the Gaming Inspection and Coordination Bureau (DICJ) on Friday revealed that total casino revenue for 2014 had declined to 351.5 billion patacas from the 360.7 billion patacas of 2013.

Meanwhile, in December, the casinos only took in 23.3 billion patacas, compared to the 33.5 billion patacas of 2013.

The unprecedented monthly drop in December may have been driven by declining revenue in the mass gaming market in addition to that in the VIP sector.

Credit Suisse analysts Kenneth Fong and Isis Wong estimate that VIP revenue had dipped by between 37 and 40 per cent year-on-year while mass revenue may have also dropped by between 13 per cent and 19 per cent year-on-year in December, claiming the ‘sharp revenue deceleration in mass market is likely to be a negative surprise to the market and drive another round of re-rating.’

No immediate recovery The analysts believe that the stricter enforcement of transit visa rules and

the strengthening supervision of the industry called for by President Xi Jinping during his visit to Macau in December may continue to weigh on revenue recovery.

As such, despite expecting the drop in GGR to narrow to between 14 and 18 per cent year-on-year this month given the lower comparison base set by the Chinese New Year period, the two analysts believe that the decrease in GGR could subsequently widen again in February, resulting in GGR possibly dropping by more than 20 per cent between the first two months of 2015.

In fact, the annual drop in GGR for 2014 had been predicted by one gaming operator. At the beginning of December 2014, chief executive of SJM Holdings Ltd, Ambrose So Shu Fai, said that he thought that the GGR for 2014 might decrease compared to 2013, believing, like Credit Suisse, that the anti-graft campaign of the central government would continue to depress the numbers of VIP gamblers.

In addition to the anti-corruption policies which are believed to be driving high-rollers away from Macau, other polices such as visa restrictions, UnionPay restrictions and mass floor smoking ban are also seen as factors slowing down the gaming industry.

However, the chairman of MGM China, Pansy Ho Chiu King, said last month that she perceived that the consecutive drops of GGR in 2014 were ‘normal’ as it had been rising by double digits for almost a decade.

On the other hand, the new Secretary for Economy and Finance, Lionel Leong Vai Tac, remarked recently that the economy is undergoing an adjustment phase in which declining gaming revenue and resultant taxes would continue to be apparent.

Unsurprising result The annual drop of GGR for 2014 had also been foreseen. Monthly GGR had started turning south in June 2014, by decreasing 3.7 per cent year-on-year, igniting the following consecutive drops. In July and August, the decrease in GGR remained in single digit territory – down by 3.6 per cent and 6.1 per cent year-onyear, respectively.

However, double-digit falls followed in September, when GGR decreased by 11.7 per cent yearon-year. In October and November, GGR tanked 23.3 per cent and 19.6 per cent year-on-year, respectively.

These drops in monthly GGR during the five months had actually brought the Asian gaming hub to see its accumulative GGR in the first eleven months of 2014 almost flatten - up only 0.3 per cent - compared to the same period in 2013.

Nevertheless, according to DICJ data, Macau had experienced longer consecutive drops in GGR before.

Between December 2008 and June 2009, GGR decreased for seven consecutive months following the financial crisis in 2007 and 2008.

Nevertheless, the respective annual GGR of 2008 and 2009 still posted positive growth.

SJM leads annual market share In terms of market share, gaming operator SJM Holdings Ltd., founded

by Stanley Ho Hung Sun, has resumed its lead, closing 2014 with a slightly higher share of 23 per cent, according to figures compiled by Portuguese news agency Lusa.

In second place came Sands China, owned by U.S. tycoon Sheldon Adelson, with a share of over 22.5 per cent. Galaxy ended last year with a market share of close to 21 per cent.

In the second half of the table, Melco Crown, of which a major shareholder is Lawrence Ho, son of Stanley Ho, continued the trend of the year to finish fourth, with a share of slightly over 13 per cent, followed

by Wynn, almost three points behind.

In last position, despite being very close to Wynn, MGM China, chaired

by Pansy Ho, daughter of Stanley Ho, closed 2014 with an annual market share of slightly above 9.5 per cent.

In December 2014 alone, SJM led with a share of over 23.5 per cent, followed by Galaxy and Sands China with market shares of around 20 per cent, with about half a percentage difference between them. The second half of the table was led by Melco Crown with almost 15 per cent, followed by MGM China with almost 10.5 per cent and Wynn with just over 10 per cent. with Lusa

4 | Business Daily

January 5, 2015

Macau

SJM announces 5 pct wage rise Gaming operator SJM Holdings Limited announced last week that it would increase employees’ salaries by 5 pct in addition to consolidating workers’ basic wage and ‘tea money’ for the provident fund Kam Leong

kamleong@macaubusinessdaily.com

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aming operator SJM Holding Limited announced internally last Wednesday that it is to increase the salary of its workers by five per cent effective this month. The corporation’s contributions to the provident fund of its workers will also be based on a combination of the employee’s basic salary and tips, known as ‘tea money’.

SJM, the first of six gaming operators to announce a salary hike in the New Year, said in an internal notice that ‘despite the prospect of the economy remaining unknown, [SJM] is still optimistic about the long term development of the economy.

[As such, SJM] has decided to be the first in the industry to announce a salary increase for its employees, improving benefits and carrying out a bonus scheme just as before’.

In addition, the gaming corporation will rescind the position of ‘dealer inspector’ (DI), known as interns of supervisors. Employees at this level will be promoted to pit supervisor, with corresponding salary, according to the announcement.

Gaming labour union: surprising announcement Meanwhile, the secretary general of local gaming union Forefront of Macau Gaming (FMG), Cloee Chao, told Business Daily in a phone interview last Friday that the union is surprised by SJM’s sudden announcement.

“The announcement awarding five per cent rise in salary is very surprising, especially when it is under the [condition of] gaming revenue dropping for six consecutive months. We are satisfied that

SJM is the first [operator] to increase workers’ salaries”, Ms. Chao said, indicating that the new arrangements of SJM had met the demands voiced recently by workers.

From August to October, SJM workers had protested against their employer on several occasions for better remuneration and benefits.

The demands included a 10 per cent lift in salary, bonus, combining the basic salary and tips into one when contributing to the

provident fund and cancelling internship positions.

According to the union secretary, prior to the new measures the provident fund that SJM contributed to was only based on basic salary, which equals half the full salary. Meanwhile, the holders of DI positions had been paid dealers’ salaries even though they worked as supervisors.

“From the new notice, we think that SJM did listen to the workers’ demands.

Although salaries have only been increased by 5 per cent [not] 10 per cent, workers are already satisfied as other demands have also been met, including the earlier announcement of distributing ‘living subsidies’,” Ms. Chao said.

Although the wave of protests did not force SJM to award increased salaries at that time, it did announce in August that it would give ‘living subsidies’ to its workers from 2015 to 2020, equivalent to employees’ salaries of 1.5 or 2 months.

“Some workers have reflected to us that they have already received the ‘living subsidies’ for 2015 today [Friday]”, Ms Chao claimed, saying she is hoping that the other five gaming operators will follow SJM in increasing salaries for their gaming workers.

Melco Crown to quit Hong Kong Stock Exchange Casino operator Melco Crown Entertainment, a joint venture between Lawrence Ho and James Packer, plans to de-list its shares in Hong Kong following Macau’s first ever fall in casino revenues Joanne Kuai

joannekuai@macaubusinessdaily.com

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elco Crown Entertainment Ltd., the Macau casino operator controlled by Lawrence Ho and Australian billionaire James Packer, said it will de-list from the Hong Kong Stock Exchange because of low trading volume.

The company, which also trades on the Nasdaq Stock Market, hasn’t found opportunities to raise additional funds in Hong Kong since listing there in 2011, it said in a statement on Friday. The casino operator plunged 35 per cent in the city last year, while the benchmark Hang Seng Index rose 1.3 per cent.

It told shareholders it wants to pull out of Hong Kong because of setbacks in raising money and limited share trades.

“Appropriate opportunities to

raise additional equity in Hong Kong have not arisen”, Melco Crown said in its filing. “Maintaining the listing requires additional ongoing regulatory compliance obligations and such requirements involve significant additional costs and administrative burden”.

An average US$342,000 (MOP2,732,317) of Melco shares have changed hands daily on the Hong Kong exchange since the company’s debut there, compared with US$98 million daily in the U.S. during the same period, data compiled by Bloomberg shows. Melco said the move is subject to shareholder approval.

While the proposal is technically up to all shareholders, Crown Resorts owns 33.6 per cent of the company, while Mr. Ho controls a further 33.6

per cent. Melco Crown will remain listed on the Nasdaq, where its shareholders are far more active.

The planned delisting comes after Macau’s casinos reported their first annual decline in revenue following a decade of expansion. Casino sales in Macau fell 2.6 per cent to 351.5 billion patacas in 2014.

Crown Resorts remained relatively upbeat about Macau at its annual meeting in October, but chief executive Rowen Craigie admitted that market conditions in Macau had weakened during the fourth quarter of financial year 2014.

Crown Resorts is also facing the prospect of problematic regime change in Sri Lanka, where it plans to build a US$400 million casino resort.

With AFP and Bloomberg

Business Daily | 5

January 5, 2015

Macau Agents start hunting MISSHA’s sudden for Hengqin Headquarters closure provokes Building tenants labour complaints An office unit inside the mega Hengqin Headquarters Building project costs at least 200 yuan per square metre in rent, not far from the city’s prime office units’ cost Stephanie Lai

sw.lai@macaubusinessdaily.com

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state agents are already preparing to lease out the offices and shops of major office and commercial complex Hengqin Headquarters Building even though the structure of the buildings as well as Hengqin island’s supporting infrastructure remain a work in progress.

Hengqin Headquarters Building, a project in which the government-owned Zhuhai Da Heng Qin Investment Co Ltd owns stakes, comprises two commercial towers and a shopping complex – the lower tower of 33 storeys, some 160 metres tall, is still currently under construction, while another 468-metre tall tower, or over 100 storeys, is pending issuance of a construction permit, property agents tell Business Daily.

The project, which is a short walk from the Hengqin

border, will also support a 5-star hotel. The hotel element is a part of the project’s third phase, which is only expected to be completed by 2020.

The first phase of the project, the 33-storey high tower, is expected to be topped off this year at the soonest, Centaline (Macau) Property Agency Ltd told Chinese-language media in a press briefing on Friday.

The tower, which mainly comprises office units, also features shopping spaces on its first to fourth storeys.

The building’s offices, for which the project developer has already started to look for tenants, will rent for at least 200 yuan (US$32.2 or HK$240) per square metre.

The rental cost of the 57 shop spaces for lease of the project’s first phase, which range from 54 to 490 square metres, average out at 500

yuan per square metre.

Local estate agents are trying to attract tenants to Hengqin Headquarters Building offices at a level that is not far removed from the city’s own office rental costs, which have seen double-digit increases throughout last year.

In the ZAPE district, an area on Macau Peninsula with a concentration of office buildings, the average rental cost of an office unit in the fourth quarter last year was about HK$258 per square metre (or HK$24 per square foot) – a level that has already risen by 50 per cent through the year; the average unit in the ZAPE district fetches a selling price of HK$112,980 per square metre, which represents a rise of 42 per cent throughout the whole year, according to Centaline Macau.

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outh Korean cosmetics brand MISSHA has seen a sudden suspension of business at its Hong Kong and Macau outlets, about which staff were not informed in advance and who consequently asked for government assistance in getting lay-off compensation.

The Labour Affairs Bureau said it has received complaints lodged by four staff working in MISSHA’s local unit on Friday following the cosmetics retailer’s sudden closure.

The Bureau noted that it was handling the staff’s complaints against no advance closure notice issued and not issuing lay-off compensation.

The scenario is largely similar to the staff in Hong Kong, where MISSHA operated 20 outlets in the city.

As of yesterday, the local unit of MISSHA remained closed with no notice posted on its door. The local unit is located amid a parade

of telecommunication accessories stores and pawnshops near Sintra Hotel in the Nam Van district, and not far away from fellow South Korean cosmetics retail competitors Sweetmay and Nature Republic in the tourists-thronged S. Domingos district.

MISSHA, owned by Seoulbased Able C&C Co Ltd, opened its first store in Hong Kong in 2004. The brand has seen shop expansion in both Hong Kong and Macau since then amid the increasing popularity of South Korean cosmetics products.

While the Hong Kong and Macau agent for the cosmetics brand has not yet accounted for its sudden suspension of business, the Labour Department in Hong Kong has already warned that it would ‘prosecute the company if it was found to be in breach of the Employment Ordinance’.

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New public works head pledges transparency

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he new director of the Land, Public Works and Transport Bureau says that the third round of public consultation on the five new landfills will start in the first quarter, although no specific date has been given.

Li Canfeng, sworn in to the office last Friday, has also called for transparency and openness and puts infrastructure works on the top of the list at his inauguration ceremony.

“The tasks of Public Works are extensive. It involves urban planning, land management, infrastructure, urban construction, project supervision, etc. Each task is closely related to people’s lives. Each task is related to the city’s development. We will listen to society’s opinions and strengthen communication and exchanges with citizens to make our administration and information open and

transparent”, said Mr. Li. The Secretary for Transport and Public Works, Raimundo do Rosário, who presided at the inauguration ceremony of Li, reiterated Li’s expertise and experience, saying he was qualified to be the director of the Bureau.

Li Canfeng holds a degree in engineering from the South China University of Technology, has a Master’s degree in Engineering from Instituto Superior Técnico in Lisbon and a PhD in Engineering from the Institute of Civil Engineering and Transportation of the South China University of Technology.

The engineer returns to the Director of Lands, Public Works and Transport Macau (DSSOPT) six years after a decade (from 1998 to 2008) as deputy director of the department then directed

by Jaime Carion.

J.K.

6 | Business Daily

January 5, 2015

Macau

Blessing in disguise Gaming revenues have been on a six-month slide since June, leading analysts to label 2014 a ‘choppy’ year. And while many are worried and wary, this may turn out to be a blessing in disguise for the Macau economy, which the government has said time and again it wants to diversify. Desmond Lam, Associate Professor at the University of Macau, tells Business Daily how analysts have set expectations too high and that the resulting ‘adjustments’ will favour Macau’s long-term future Sara Farr

sarafarr@macaubusinessdaily.com

The gaming industry has been liberalised for 12 years now. How much has gambling behaviour changed in that time? And what are the main differences, particularly with Chinese gamblers?

I feel that the fundamental risk seeking attitudes and behaviour of Chinese gamblers have not really changed. They are still fond of gambling, gamble to win [and] best the house, and exhibit the high illusion of control.

These are the core values of our gamblers, which is not likely to change easily over time. Over the years, I’ve noticed a higher risk seeking aptitude – that is, our Chinese gamblers are more willing to bet more, hence want to win more - which seems to have increased along with higher table limits.

Is the drop in gaming revenue something to be concerned about from the perspective of an economy that relies solely on gaming?

I think, naturally, yes. But given that we [the government] have been trying to diversify our economy since day one away from only gaming, this new trend may be a blessing for Macau and its residents.

Is it a fair assessment that there are a few factors – namely the VIP slowdown, Beijing’s anti‑corruption drive, Chinese President Xi Jinping’s visit, and transit visa restrictions – that have, to some extent, affected Macau’s overall gaming environment and gambler behaviour?

I think it’s a fair assessment. Given that the risk seeking interest in gaming tables has not receded – an example is Chinese gamblers who choose to come and still gamble quite avidly - I think external constraints play an important part in our reduced gaming revenue, particularly in the VIP segment.

There are also reports that postulate that Chinese gamblers are travelling to other countries to gamble. I also think that regional and global competition for Chinese gamblers is heating up.

Why is there so much emphasis put on these issues?

Some postulate that VIP gamblers seem to be shying away from Macau and seek more private gambling centres regionally and worldwide. To a certain extent, I agree. I also think that Chinese gamblers are seeking more variety and more value added in the places

are setting such high expectations, which are often unreasonable. I certainly don’t see last year as a ‘choppy’ year.

Given that the risk seeking interest in gaming tables has not receded, I think external constraints play an important part in our reduced gaming revenue

that they gamble in, which means they are more demanding now.

Analysts have repeatedly said that 2014 was a ‘choppy’ year for the gaming industry. Was it?

The Macau gaming industry has ballooned, particularly the VIP segment, in the last 12 years and a few analysts complain about this high growth. I feel that analysts

Why is that?

I think it is welcoming to see corrections in our gaming market and adjustments made to move into the mass gaming segment [and] away from the more negative image of the VIP market, which suits Macau’s long-term goals better. I feel that Macau has been producing and exporting social ills – or negative externalities – particularly in the VIP gaming segment. These ills have to be controlled in order to achieve a more sustainable longterm growth. I think Macau is unique and still has strong growth potential in the future.

Attracting new gamblers How do you think the full smoking ban will affect players’ behaviour?

I don’t think it will affect overall gamblers’ behaviour that much.

Are they likely to gamble less or to move to premium mass or the VIP segment where smoking is allowed?

I certainly don’t think mass

Business Daily | 7

January 5, 2015

Macau

I feel that analysts are setting such high expectations, which are often unreasonable.

I certainly don’t see this year as a ‘choppy’ year

gaming market players will avoid Macau simply because of a full smoking ban. In other countries, [a full] smoking ban leads to reduced gaming revenue in the first year but then quickly rebounds.

I think a [full] smoking ban will bring in new types of gamblers, perhaps leisure ones, who were previously put off by smokers.

How do you foresee the gaming industry next year – both in terms of gambler behaviour and also what casinos can do to retain the gamblers they have and attract more?

As stated, I think our Chinese gamblers are more demanding now and seek greater customer value. Hence, we need to create and promote better products and services in order to keep up. We need to be more customised and more in tune to their needs. This

is particularly important given that regional and international competitors are upgrading their offerings to attract our Chinese gamblers, who are experiencing visa difficulties [to the territory] and [Beijing’s] anti-corruption drive and want to keep a lower profile.

Desmond Lam

Do you think there will be more casino workers protests?

I’m not sure.

Are they still unhappy but afraid of voicing their demands for fear of being reprimanded?

I just feel that casino operators need to do more to build satisfaction and loyalty among their staff. Training, trust and empowerment play a big part.

Given the uncertainty in gaming revenue that we are facing now, I think more internal marketing is needed to reduce turnover and hence labour costs. I certainly don’t think casino workers fear that they will be reprimanded.

Your latest book – ‘Chopsticks and Gambling’ - is said to be a great insight into Chinese gambling culture. What differs between this book and your previous one ‘The World of Chinese Gambling’?

‘Chopsticks and Gambling’ is a newer and better version of ‘The World of Chinese Gambling’.

It is published by Transaction Publishers in the US, which is a major publisher of social sciences books. Hence, ‘Chopsticks and Gambling’ is more academic in nature, more structured, and more rigorously written. There is greater focus on the research aspects of the

I think a [full] smoking ban will bring in new types of gamblers who were previously put off by smokers

Chinese gambling phenomenon – both regular and problem gambling – and also more detailed documentation of Chinese games and gambling history. Still, it is relevant and suitable for anyone, particularly those in the West who are interested in knowing more about Chinese gamblers – not just in Macau – or about casino gambling.

Desmond Lam is a gambling psychology and behavioural expert, primarily focused on Chinese gaming culture. He is an associate professor of marketing at the University of Macau (UM), and has taught in a number of other universities including the University of Western Sydney (UWS), University of South Australia and the Hong Kong Polytechnic University.

Other than gambling psychology and behaviour, Lam is also an expert in hospitality services marketing and cross-cultural management issues.

Throughout his academic career, Desmond Lam has taught in Australia, Singapore, Hong Kong, Macau, and Malaysia. He has conducted numerous courses at different tertiary levels. Some of these include Chinese gambling culture, casino and gaming management, events marketing, product management, marketing strategy, advanced marketing management, international marketing, and public relations.

His latest book - ‘Chopsticks and Gambling’ – is published

by Transaction Publishers.

8 | Business Daily

January 5, 2015

Greater China Paced monetary easing Lowering financing costs remains a policy priority for China in 2015 given the likely limited effects on lending rates from the benchmark interest rate cut on November 21, said Chang Jian, Barclays Chief China Economist. Fundamentally, reduced capital inflows result in tighter system liquidity and rising bank funding costs, reducing banks’ incentives to pass on the lending rate cut, Chang said in a note. In the near term, the government is not likely to send too strong an easing signal, such as a required reserve ratio (RRR) cut.

Huawei 2014 sales to rise Telecoms equipment maker Huawei Technologies expects advances in cloud computing and higher demand for smart devices to have lifted 2014 sales revenue by 15 percent to US$46 billion, CEO Ken Hu said in a new year’s message on the company’s website. The Shenzhen-based company, for which three executives share CEO duties in six-month rotation, had said last year that it will achieve sustainable growth in 2014. It had also targeted revenue of US$70 billion by 2018, or annual growth of about 10 percent a year.

P2P trading booms in 2014 The trading value of China’s booming Peer-to-peer (P2P) platforms hit 250 billion yuan (about US$41 billion) for the whole of 2014, doubling 2013’s statistics, according to the Internet Society of China. P2P online lending uses the Internet to conduct daily transactions or finance businesses. P2P platforms of this kind exceeded 1,600 in 2014 in China.

December 2014 alone saw 47 newly-registered P2P platforms. The new financing channel has helped break the strangle state-owned finance once held on those looking to back new businesses.

Three new foreign courier firms

China has permitted three new overseas courier firms to offer domestic delivery services, state news agency Xinhua said, as part of government pledges to further open up the fast-growing market.

The State Post Bureau has approved Yamato (China) Transport Co Ltd, the China unit of Yamato Holdings Co Ltd, OCS Overseas Courier Service (Shanghai) Co Ltd and Kerry Logistics Co Ltd, Xinhua said. The government said in September it would ease restrictions on foreign couriers seeking to deliver packages nationwide.

Slaughter against bird flu Authorities in Huizhou City in south China’s Guangdong Province said that it had slaughtered 13,000 chickens on a poultry farm, as its exports to Hong Kong were found to be infected with the deadly H7N9 virus. Hong Kong authorities said that it would cull 15,000 chickens at the Cheung Sha Wan Market following the latest discovery of the deadly H7N9 virus in poultry imported from Guangdong.

Authorities in Huizhou traced the infected birds to the Guangdong Lyufeng Poultry Farm, and culled its stock.

December’s factory figures invite

Growth in China’s services sector, which accounts for close to half o

C

hina’s factory activity sputtered in December, underlining the challenges facing the country’s manufacturers as they fight rising costs and softening demand in a cooling economy.

After a rough 2014, the world’s second-largest economy looks set to start the new year on a weak note, reinforcing expectations that Beijing will roll out more stimulus to avert a sharper slowdown which could trigger job losses and debt defaults.

A property slump is expected to last well into 2015, companies will continue to struggle to pay off debt and export demand may remain erratic, leaving only the services sector as the lone bright spot in the economy.

China’s official Purchasing Managers’ Index (PMI) slipped to 50.1 in December from November’s 50.3, a government study showed, its lowest level of the year and clinging just above the 50-point level that separates growth from contraction on a monthly basis.

Analysts polled by Reuters had forecast a reading of 50.1.

“This indicates that industrial growth is still in a downward trend, but the pace (of declines) is slowing,” Zhang Liqun, an economist at the Development Research Centre, said in a statement accompanying the report.

“The current economic situation is in the process of returning to stability from slowing down,” Zhang said.

A similar private survey on

KEY POINTS Factory activity weakens but services resilient Dec official factory PMI slows to 50.1, lowest in 2014 Official services PMI rises to 54.1 Exports may be bottoming out but property slump to continue More policy easing seen to avert sharp slowdown

Wednesday showed activity shrank for the first time in seven months in December. That survey focuses on smaller companies, which are facing greater strains, notably higher financing costs and problems getting loans.

The official survey looks more at larger, state-owned firms, which have been more resilient to the protracted downturn, partly due to generous government subsidies and better access to credit.

Many analysts expect economic growth in the fourth quarter to slow

A Chinese car maker Geely worker in a factory

only marginally from 7.3 percent in the third quarter, though a raft of weak data suggest that may be too optimistic.

That means full-year growth will

Beijing increases housing credit ceiling The 1.2 million yuan Beijing ceiling is currently the highest in China

W

ith a stagnant housing market, Beijing has increased the ceiling of housing public accumulation fund loans from 800,000 yuan (US$130,000) to 1.2 million yuan, local authorities announced.

The housing pubic accumulation fund consists of long-term housing savings deposited by both employers and workers every month. It can only be used for workers to purchase a house and, if unused, is returned to workers when they leave office or retire.

The current interest rate for housing pubic accumulation fund loans over five years is 4.25 percent, compared with 6.15 percent offered by commercial banks.

The 1.2 million yuan Beijing ceiling is currently the highest in China. In the capital, a 100-squaremeter apartment can costs more than 3 million yuan.

First home buyers who acquire a property not exceeding 90 square meters can apply for as much as 1.2 million yuan from January 1 in 2015, according to local fund administrators. For second home buyers, the upper limit is still 800,000 yuan.

The new policy should help the moribund housing market. After years of double-digit increases, housing prices in China started to cool in late 2013. The downturn continued in 2014 and spread to most big cities.

The number of new apartments sold in Beijing this year was less than 93,000, down 21 percent. The number

93,000

new apartments sold in Beijing in 2014 yearto-year 21 pct down

of second-hand apartments was just over 94,000, down 37 percent, according to real estate agencies.

To avoid a sharp slowdown in the property market, on September 30 a joint announcement by the People’s

Bank of China, the central bank, and the China Banking Regulatory Commission eased mortgage measures for home buyers. Mortgages on second homes have since been treated as a first mortgage if the buyer has no outstanding mortgage.

Before the easing of rules, 41 out of the 46 cities that had home purchase restrictions removed them. Beijing still bans residents from buying a third home and non-Beijingers can only own one.

The latest monthly data shows new home prices fell in 67 out of 70 cities in November, with 68 cities reporting price drops from the levels of a year before.

Xinhua

Business Daily | 9

January 5, 2015

Greater China

e to more stimuli

of the economy, remains robust, though firms are still shedding jobs for the first time in more than two years on Nov. 21. It has also injected more funds into the banking system in recent months and relaxed restrictions to persuade risk-averse banks to lend more.

In addition, the economic planning agency has been approving more infrastructure projects.

While its recent moves may have bought the central bank some time to see if conditions improve, many economists still expect more interest rate cuts as well as reductions in banks’ required reserve ratios (RRR) this year, perhaps as soon as the first quarter.

That would allow banks to lend more money at more attractive rates, but authorities will still need to find a way to stimulate genuine demand at a time when domestic demand is sluggish and many businesses are in no mood to expand.

“We believe that investment in the manufacturing sector will only see single-digit growth this year, compared with 13 percent in 2014,” economists at ANZ said in a research note.

Some encouraging signs?

undershoot the government’s 7.5 percent target and mark the weakest expansion in 24 years.

Economists who advise the government have recommended

that China lower its growth target to around 7 percent in 2015.

In a bid to spur growth and keep borrowing costs down, the central bank unexpectedly cut interest rates

Some hopeful signs have emerged from recent data, though analysts say they may only partly offset the downdraft from the weak property market and its knock-on effect on other industries, which is weighing on demand for everything from

furniture and glass to cement to steel.

Growth in China’s services sector, which accounts for close to half of the economy, remains robust, though firms are still shedding jobs.

The official non-manufacturing Purchasing Managers’ Index, or PMI, rose to 54.1 in December from November’s 53.9.

Authorities want services to overtake manufacturing as the bigger driver of activity in coming years.

Export demand may also be bottoming out, with a stronger U.S. economy helping to offset weakness in Europe and Japan.

An index for new orders - a proxy for foreign and domestic demand - retreated to 50.4 in December from November’s 50.9. But new export orders shrank at a slower rate, climbing to 49.1 in December from 48.4 in November.

The private HSBC/Markit activity survey showed new export orders increased.

The official PMI also indicated big Chinese factories were weathering the downturn better than their smaller counterparts, as banks prefer to lend to state-owned firms, assuming the government will bail them out to prevent any defaults.

The PMI for large manufactures was 54.6 last month, while business shrank for small-to medium-sized factories.

Mainland records 125 IPOs in 2014 Hong Kong has enjoyed another record year in 2014

T

he Chinese mainland stock market saw 125 initial public offerings (IPO) in 2014, raising 78.7 billion yuan (US$12.86 billion), consultancy Deloitte said.

This still fell short of the 154 IPOs, which raised 103.4 billion in 2012, the year before IPOs were suspended, Deloitte said.

The China Securities Regulatory Commission (CSRC), the securities watchdog, approved seven rounds of new offerings since June 2014, when the Commission restarted the IPO market.

Deloitte figures showed that IPOs from the Main Board in Shanghai contributed the most funds (43 percent), followed by the Small- and Medium-sized Enterprise Board (29 percent) and Shenzhen’s ChiNext (28 percent).

China’s Nasdaq-style board of growth enterprises the ChiNext Board, which started trading on October 30, 2009, mainly lists hi-tech companies and those with high growth potential.

In terms of new listings, despite a new rule allowing applicants to choose between listing on either the Shanghai or Shenzhen bourse, ChiNext (40 percent) took a dominant

US$12.86 blilion 2014 Chinese mainland IPOs raised

position while the Main Board (34 percent) and SME Board (26 percent) trailed.

Anthony Wu from Deloitte China’s China A-Share Capital Market Leader, said the CSRC’s commentary of getting 100 IPO candidates listed from June to end of 2014 suggested that the market would record at least 23 IPOs during January and February 2015.

The increase in the number of companies added to the Public Offering Review Committee of the CSRC in the last two weeks of 2014 also indicates that the authority is speeding up its issuance pace in order to ease pressure on more than 600 enterprises still waiting for IPO review, Wu said.

He also said upcoming listings are expected to be

small and medium in scale in view of the on-going concern over market liquidity.

They will also focus on companies from the manufacturing, consumer and retail and emerging industry sectors. For businesses that are seeking substantial funding through IPOs, many are likely to continue to head to Hong Kong, he added.

Hong Kong has enjoyed another record year in 2014.

Its new IPOs experienced a double-digit rally from 2013 to 11 percent, while funds raised surged 35 percent.

Excluding the transfer of seven listings from the Growth Enterprise Market to the Main Board, the market completed 115 IPOs raising HK$227.7 billion (US$29.3 billion U.S. dollars) in 2014 against 104 IPOs raising HK$168.9 billion in 2013.

The New York Stock Exchange clearly stood first in the global IPO race in 2014 with proceeds of US$74.1 billion despite the fact that Hong Kong recorded four huge IPOs in December.

The London Stock Exchange took third place with US$24.8 billion, while proceeds of US$23.2 billion raised on the NASDAQ saw it ranked fourth.

Xinhua

Main Board in Shanghai (Stock Exchange building pictured) contributed the most funds to IPO raising

Reuters

10 | Business Daily

January 5, 2015

Greater China

Moody analyses local bond markets boost A reports says that budgetary reforms now being implemented will lead to greater transparency, improving the markets

T

he Chinese government’s plan to expand pilot bond program for local governments is a fresh boost for the development of China’s regional and local government bond markets, rating agency Moody’s said in a latest report.

Chinese Finance Minister Lou Jiwei, at an annual national fiscal conference ended on Tuesday, announced that more participants would be added to the list of 8 provincial governments currently participating in the pilot bond program.

Moreover, the participants will be allowed to issue specialpurpose bonds in addition to the general-obligation bonds now issued.

Lou also stated the Chinese central government’s intention to improve the pricing mechanism of the embryonic local government bond market, especially by strengthening market discipline.

This latest development improves Chinese regional and local government bond markets, as the market discipline required for a functioning bond market will demand increased transparency and accountability.

This will in turn enforce strong local decision-making and responsible public policy, Moody’s said in the report.

Such a development will be in line with China’s revised budget law that will allow local governments to issue bonds outside of the pilot program.

Chinese Finance Minister Lou Jiwei stated the Chinese central government’s intention to improve the pricing mechanism of the embryonic local government bond market by strengthening market discipline

It is also in line with the guidelines issued by the State Council (cabinet) on October 2 2014, which specify that local governments should begin to issue debt directly and no longer rely on indirect borrowing through local government financing vehicles and other government-related entities, Moody’s said.

Moody’s said that other budgetary reforms now being implemented will lead to greater transparency, a

condition which is critical for developing local government bond markets.

These reforms cover, among others, the development of comprehensive financial statements, including balance sheets, multi-year budgeting, and greater disclosure of debt and other obligations.

Also, the planned improvement in the pricing mechanism is important to reflect credit distinctions among the entities as required

by a successful bond market, Moody’s said.

In a separate announcement on December 25 2014, and pending final approval from central government authorities, one of the 10 local government pilot participants, the Ningxia Hui Autonomous Region, plans to access offshore bond markets, with terms of 5 years or less and an overall issuance size of up to US$1.5 billion.

This development represents the first planned

offshore bond issuance by a Chinese regional government and is a logical next step for the on-going development of China’s regional and local bond market, Moody’s said.

The elevated discipline of offshore markets should benefit the financial profiles of Chinese local governments by enhancing transparency and accountability, which in turn will encourage responsible fiscal behaviour by local governments, Moody’s added.

Xinhua

Kaisa fails to repay loan and might default on others Analysts said the fact that the company did not ask for an extension to repay the loan raised concerns about strategy Umesh Desai and Clare Jim

K

aisa Group Holdings warned it may default on more debt after it failed to repay a HK$400 million (US$51.3 million) loan, the latest developer to flag financial difficulties amid a downturn in the real estate sector.

Shenzhen-based Kaisa, which has a market capitalisation of HK$8.2 billion, is one of the smaller listed property firms in China, where a credit crunch and excess supply are putting pressure on a sector once key to economic growth.

Last year, Agile Property Holdings Ltd suffered debt financing problems and some of its executives were detained.

Kaisa currently has a net debt-toEBITDA ratio of 5.4, above the 3.4 average ratio of its peers, Thomson Reuters data shows. EBITDA or earnings before interest, tax, depreciation and amortisation is often

used as a proxy for cash flow.

Kaisa said paying the HK$400 million loan and its interest became compulsory on Dec. 31, after its chairman resigned. The failure to repay the HSBC term loan may trigger defaults on other debt, it said in an exchange filing late on Thursday.

Kaisa executives declined to comment further on the matter.

Analysts, however, said the fact that the company did not ask for an extension to repay the loan, as is common practice in such cases, raised concerns about Kaisa’s strategy.

In the past month, the authorities blocked the sale of some projects in Shenzhen which research firm CreditSights estimated to be worth about a fifth of Kaisa’s overall book value. The vice chairman and chief financial officer also resigned.

“This default, the recent departures and the sales blockage raise a lot of

KEY POINTS Repayment clause triggered

by Chairman departure Shenzhen blockage, personnel exit spark cash flow concerns Bonds halved in the past month; cross-default fears linger

questions,” said Dilip Parameswaran, chief executive at Asia Credit Advisors.

“They could have asked the bank for a waiver like in the case of Agile.”

As of 30 June 2014, the company’s cash and bank deposits stood at about 11.1 billion yuan (US$1.79 billion).

Nomura analyst Jeffrey Gao said this showed the debt default was more likely due to “technical” reasons and not a liquidity crunch.

Trading in Kaisa shares has been halted since Monday and the yield on bonds due 2018 rising to more than 45 percent from around 9 percent at the start of the month.

On Friday, all its dollar bonds were indicated 25-35 cents lower.

Bonds due 2019 and 2020 were both indicated in the 37-43 cents on the dollar range, after trading as high as 101 and 104 cents on the dollar in December.

Reuters

Business Daily | 11

January 5, 2015

Asia

Singapore’s Q4 data signals weaker outlook for 2015 The manufacturing sector contracted 5.8 percent in October-December, and shrank 2.0 percent from a year earlier Masayuki Kitano and Saeed Azhar

S

ingapore’s economic growth slowed more than expected in the fourth quarter as the manufacturing sector contracted in the face of erratic global demand, raising concerns about the outlook for 2015.

Gross domestic product expanded by 1.6 percent in the fourth quarter on an annualised and seasonally adjusted basis, advance estimates from the Ministry of Trade and Industry (MTI) showed on Friday.

That was down sharply from 3.1 percent in the third quarter, and below the median forecast of 3.0 percent growth in a Reuters survey.

The weak figures came as the global economy ended 2014 in a fragile state, with factory activity shrinking in China, euro zone business growth remaining weak, and emerging market giant Russia in a spiralling currency crisis.

The manufacturing sector contracted 5.8 percent in OctoberDecember, and shrank 2.0 percent from a year earlier.

“Unlike 2014, when we started on a strong note for the first half and after that the momentum tapered off, we could be starting 2015 on a relatively soft note, especially as people are looking forward to the Fed to normalise policy,” said Selena Ling, an economist at Oversea-Chinese Banking Corp.

She said she expects Singapore’s economy to grow 2-3 percent in 2015, below the government’s forecast for 2-4 percent growth.

Full-year growth for 2014 slowed to 2.8 percent from 3.9 percent in 2013.

An uneven global recovery and lacklustre exports have tempered growth for Singapore this year.

The country’s trade agency has said non-oil domestic exports are likely to grow between 1.0 to 3.0 percent in 2015. Its 2014 forecast is for a drop of 1.5 to 1.0 percent, after a 6.0 percent fall in 2013.

KEY POINTS Singapore Q4 GDP +1.6 pct q/q annualised; +1.5 pct y/y Q4 growth weaker than expected as manufacturing contracts Full-year 2014 growth +2.8 pct, down from +3.9 pct in 2013 Property prices down 4 pct in 2014, first annual drop since 2008

The electronics sector, a key driver of exports, has struggled to tap into global demand for smartphones and other hi-tech products, and has lagged regional competitors such as South Korea and Taiwan.

In addition, the government’s push to reduce a politically unpopular reliance on overseas workers has led to a tight labour market and wage pressures, affecting economic growth.

Property cooling measures Prime Minister Lee Hsien Loong said in his New Year’s speech that growth “will be slower than we are used to”, due partly to the tightening of policies, including those on foreign workers.

In the wake of a series of property cooling measures over the past few years, private residential property

prices fell 4.0 percent in 2014, the first annual decline since 2008.

“We are cautious on the outlook for 2015 as the economy faces headwinds from a softening property market and slowing in the credit cycle. External demand will also likely remain modest,” said economist Benjamin Shatil at J.P.Morgan.

Most economists expect the Monetary Authority of Singapore to stick to its tight stance of allowing a “modest and gradual” appreciation of the Singapore dollar at its next policy review in April and to keep all related policy settings unchanged.

But there is a minority view that the MAS will ease policy in April, as weak oil brings disinflationary pressures and growth momentum remains tepid.

Indian finance minister says state banks need more autonomy Prime Minister Modi told the bankers there would be no interference from the government, according to a statement

I

ndian Finance Minister Arun Jaitley said that state-owned banks needed much more autonomy, but he stopped short of giving any details of proposed reforms.

Jaitley made the comment at a two-day meeting of public sector bankers convened by Prime Minister Narendra Modi’s government to suggest a roadmap for reforms. The meeting ended on Saturday.

“There is a need for far greater autonomy being given to them,” Jaitley

said at the meeting, which was also attended by Modi and Reserve Bank of India Governor Raghuram Rajan.

India’s state-run banks recorded the highest level of stressed loans at 12.9 percent of their advances in

Arun Jaitley on the way to India’s budget presentation session

September last year, while the same ratio for private sector banks was at 4.4 percent, according to central bank data.

More than two dozen state banks have been constrained by a pile of bad loans and governance issues. They also lag private sector rivals in profitability.

For years, political interference and union opposition have thwarted major reforms such as mergers and lowering of the government’s holding to give

Reuters

more autonomy in decisionmaking.

The bankers suggested the government, whose stakes in the state-run banks range from 56 percent to 84 percent, should transfer its holding to a new investment company and over time cut its ownership to below 51 percent.

The bankers also recommended creation of “independent high performing boards” that would drive capital raising and acquisition strategies.

They also pitched for minimum interference by various government institutions.

Hasmukh Adhia, financial services secretary in the finance ministry, said Jaitley told the public sector bankers their suggestions would be looked at “very positively”.

He did not elaborate.

If reformed, India’s big state lenders offer investors the best exposure to any sustained upswing in the economy, analysts say.

Reuters

12 | Business Daily

January 5, 2015

Asia S.Korean factory activity shrinks Manufacturing activity shrank for a fourth consecutive month in December but at a slower pace, a private-sector survey showed, adding to signs that the economy may be slowly regaining its footing heading into 2015. The HSBC/Markit purchasing managers’ index (PMI) on South Korea’s manufacturing sector rose to a seasonally adjusted 49.9 in December from 49.0 in November. It just missed the 50-point mark which separates expansion from contraction but was the highest reading since August.

India’s factory growth high The activity expanded at its fastest pace in two years in December as new orders flooded in and factories kept price increases to a minimum, a business survey showed on Friday. Strong new business reinforces Finance Minister Arun Jaitley’s view that the economy will grow “much better” in 2015/16, while weaker inflation gives the Reserve Bank of India (RBI) more room to cut interest rates as expected this year.

The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, rose to 54.5 in December from 53.3, its highest since end-2012.

Hyundai-Kia see sales growth weaker

Indonesia’s economic outlook cloudy Inflation accelerating while exports weakening Adriana Nina Kusuma and Nilufar Rizki

I

ndonesia’s annual inflation accelerated to its fastest pace in almost six years in December, while exports fell more sharply than expected, raising concerns about economic growth prospects.

Southeast Asia’s largest economy has been wrestling with bringing down a worryingly large current account deficit, but a move to cut burdensome oil subsidies has been countered by weak commodities that have hit the country’s exports.

“We’ll be lucky to get 5.1 percent growth” in the fourth quarter, said Wellian Wiranto at OCBC bank in Singapore.

“For 2105 as a whole we see things picking up to 5.4 percent. It’s still quite low, given how Indonesia should be able to perform, but nevertheless an improvement from 2014.”

Manufacturing activity also contracted for the third straight month in December, a private survey showed on Friday. The batch of weak data highlighting slower growth and a spike in costs pushed the rupiah

down 1 percent to two-week lows.

Consumer prices rose by 8.36 percent, the statistics bureau said, compared with November’s increase of 6.23 percent and a Reuters poll forecast of 7.92 percent. December’s year-on-year increase was the sharpest since February 2009.

But economists were not overly concerned as cost pressures will likely ease.

“I don’t think inflation will be that big an issue,” said Wiranto.

“We know there will be quite a bit of disinflationary pressure in the months ahead.”

Inflationary pressures have built up since mid-November, when President Joko Widodo’s government raised gasoline and diesel prices by more than 30 percent to reduce spending on subsidies. The impact of the fuelprice hikes - the first since June 2013 - continued to push inflation upwards last month.

Seasonal factors also nudged prices higher in December, with the cost of chilli, a staple in many local dishes,

KEY POINTS Dec CPI +8.36 pct y/y, fastest rise since Feb 2009 Nov exports -14.57 pct y/y vs forecast -4.31 pct Posts trade deficit of US$425.7 mln vs forecast for small surplus rising sharply as people celebrated the holidays.

On a month-on-month basis, consumer prices rose by 2.46 percent in December. Transportation costs were up by 5.55 percent on the month and by 12.14 percent on the year.

Price pressures are likely to recede this month as the fall in global oil prices has allowed the government to cut subsidies without causing prices

South Korea exports top forecasts The company forecast sales this year to grow at the slowest pace since 2003, hampered by capacity constraints and a weaker yen that is likely to give Japanese rivals an edge in key markets.

Hyundai and Kia, together the world’s fifth largest automaker by sales, said on Friday they aim to sell 8.2 million vehicles in 2015 - a 2.5 percent increase from a year ago and the smallest rise since 2003, when sales grew 2 percent, company data shows.

Myanmar to start bond auctions Myanmar will formalise sales of government debt via auction system in Yangon this month, a central bank official said. “Government treasury bonds will be auctioned electronically there (Yangon) among local private banks in the beginning and in the bigger market later,” Set Aung, the deputy central bank governor, told Reuters. He said interest rates on treasury bonds were fixed at present, but when the market is opened - tentatively on Jan. 28 - bond prices would be floating and dependent on supply and demand, interest rates and market trends.

Exports in December grew to each of its top three markets of China, the United States and the European Union Christine Kim and Choonsik Yoo

S

outh Korean exports grew more than expected in December but protracted weakness in Europe and China is clouding the prospects for 2015, keeping the door open for further policy easing by the central bank.

Shipments in December grew 3.7 percent over a year earlier, the trade ministry said on Thursday, beating even the rosiest forecast from a Reuters survey of 13 analysts and marking the strongest growth since September.

South Korea is the world’s seventhlargest exporter and the first major exporting economy in the world to report trade figures every month, thus providing a quick guide on the latest state of global trade and the economy.

But analysts warned sluggish demand in some of its major markets could make exports erratic again in the new year, while the trade ministry cautioned exports in 2015 would post growth of only 3.7 percent after a 2.4 percent gain in 2014.

“There still are negative factors such as effects from possible interestrate increases in the United States, the yen’s weakness, slowing growth in the oil-producing economies and an economic crisis in Russia,” the ministry said in the statement.

The median forecast from the Reuters survey was for December exports to grow 0.8 percent, with projections ranging from a fall of 1.0 percent to an increase of 2.6 percent.

Despite concerns about uneven global demand and the competitive impact of a sharply weaker Japanese yen, South Korea’s exports in December grew to each of its top three markets of China, the United States and the European Union. The three regions together buy nearly half of its goods overseas.

Exports for the whole of 2014 set a record high of $573.1 billion, underlining strengthening competitiveness for some of its companies, led by smartphone

maker Samsung Electronics and automaker Hyundai Motor.

Finance Minister Choi Kyunghwan welcomed the resilient export performance for December, but promised to “do the utmost” to reenergise the economy in the new year.

The finance ministry estimates South Korea’s economy to expand by 3.4 percent in 2014 and expects growth to quicken to 3.8 percent in 2015, but both the ministry and the central bank have promised to maintain a pro-growth policy stance this year.

The government implemented a series of stimulus measures over the past several months in the face of a sluggish economic recovery, while the Bank of Korea cut interest rates in August and October. Analysts expect a further rate cut as soon as the first quarter of this year.

The central bank next reviews its policy on January 15.

Reuters

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Business Daily | 13

January 5, 2015

Asia Inflationary pressures have built up since mid-November, when President Joko Widodo (pictured) raised gasoline and diesel prices by more than 30 percent

to rise, as it has in the past.

On January 1, Widodo’s government cut the price of a litre of gasoline by 10.5 percent to 7,600 rupiah (US$0.61) as part of the most far-reaching reform to fuel subsidies for decades.

Coordinating Economics Minister Sofyan Djalil told a news conference on Wednesday that the government would scrap gasoline subsidies

altogether and let pump prices rise and fall in line with market forces on a monthly basis.

International oil prices have plunged by around 50 percent since mid-June.

Even though inflationary pressures will likely lessen, Bank Indonesia is not expected to cut interest rates in a hurry.

“They continue to have to maintain

a fairly tight monetary policy,” said Wiranto, from the possible impact on the rupiah when U.S. interest rates rise, possibly in mid-2015.

Bank Indonesia, which raised its reference rate by 25 basis points the day after November’s fuel-price hike, is scheduled to hold its next meeting on January 15. This year the central bank aims to keep inflation at between 3 and 5 percent.

Separately, Indonesia posted a merchandise trade deficit of US$425.7 million in November.

Exports fell 14.57 percent from a year earlier to US$13.62 billion, while imports were down by 7.31 percent at US$14.04 billion. A Reuters poll had predicted exports would fall only 4.31 percent and imports rise 0.07 percent.

Reuters

India raises solar investment target Canadian Solar and China’s JA solar told Reuters they are looking at making cells or modules - used in solar panels - in India

I

ndian Prime Minister Narendra Modi has ramped up his target for solar energy as he bets on renewables to help meet rising power demand and overcome the frequent outages that plague Asia’s third largest economy, a senior official told Reuters.

India gets twice as much sunshine as many European countries that use solar power. But the clean energy source contributes less than 1 percent to India’s energy mix, while its dependence on erratic coal supplies causes chronic power cuts that idle industry and hurt growth.

Modi now wants companies from China, Japan, Germany and the United States to lead investments of US$100 billion over seven years to boost India’s solar energy capacity by 33 times to 100,000 megawatts (MW), said Upendra Tripathy, the top official in the Ministry of New and Renewable Energy.

That would raise solar’s share of India’s total energy mix to more than 10 percent. In Germany, a leader in renewable energy, solar accounted for about 6 percent of total power generated in 2014.

India had earlier set an investment target of US$100 billion for the next five years for all types of renewable

KEY POINTS Wants to boost capacity 33-fold to 100,000 MW - official Solar share in India’s energy mix to rise to 10 pct Previously Modi had targeted $100 bln for all renewables Solar to close cost gap vs thermal in three years India’s Prime Minister Narendra Modi

energy, with wind taking up two-thirds of the total. In an interview, Tripathy said Modi’s new solar target was ambitious, “but if you do not have a higher goal, you will not achieve anything”.

Canadian Solar and China’s JA solar told Reuters they are looking at making cells or modules - used in solar panels - in India.

JinkoSolar Holdings said recent announcements have also raised their interest.

U.S.-based First Solar and SunEdison Inc have sizeable businesses in India, and together with local firms

will invest US$6 billion in India for the fiscal year to March 31. Tripathy expects new and existing companies to invest about US$14 billion annually starting next fiscal year through to 2022.

Among First Solar’s top projects are two plants with Kiran Energy Solar Power and Mahindra Solar One totalling 50 MW in Rajasthan. SunEdison is working on a 39 MW project in India and hopes to participate in the solar expansion plan, said regional managing director

Pashupathy Gopalan.

Solar energy in India costs up to 50 percent more than power from sources like coal. But the government expects the rising efficiency and falling cost of solar panels, cheaper capital and increasing thermal tariffs to close the gap within three years.

Modi promised on highprofile visits to Japan and the United States last year to help solar companies overcome barriers to entering the Indian market.

“Their basic problems are who is the buyer, where

is the land and can India have a regime where they can raise low-cost capital?”

Tripathy said. “These three issues have to be addressed and we are addressing them.”

To create sufficient demand, power distributors will have to raise renewable energy purchases to 8 percent from 3 percent by 2020. There is also a plan to require new thermal plants to have a 10 percent renewable mix, which they can generate or buy from solar companies as credit.

Reuters

14 | Business Daily

January 5, 2015

International U.S. factories suffer end-of-year chill The U.S. factory sector grew at its slowest pace in six months in December, a sign that weakness in the global economy is weighing on the United States.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 55.5 last month from 58.7 in November. A reading above 50 indicates expansion in the manufacturing sector, and the reading remains well above its two-year average. That means the slowdown appears unlikely to derail a broader strengthening of the U.S. economy.

Mexico factory sentiment high Mexico’s manufacturing sector sentiment rose in December to a two year high as output and new orders surged, boosting bets for a strong 2015 for industry in Latin America’s No. 2 economy. The HSBC Mexico Manufacturing Purchasing Managers’ Index rose to 55.3 in December when adjusted for seasonal swings, from 54.3 in November, marking its best performance since December 2012, a survey showed. The data “provides more evidence that the economy is gaining momentum,” HSBC economist Andre Loes said in a statement.

France’s ‘supertax’ quietly dies with few mourners Businesses blame red tape and high taxes for throttling economic activity, leading to a rare protest by business owners last month

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nce a flagship policy of French President Francois Hollande, the 75-percent “supertax” on top earners limps into its final weeks this month having sparked plenty of controversy but few economic results.

It was no surprise that the policy, which expires on February 1, would be quietly dropped: it was only ever slated to last two years and the Socialist government has for months declared it would not be renewed.

The tax had also been watered down until it was barely a shadow of the “exceptional contribution to

Shifting right

Papandreou complicates Greek election Former Greek Prime Minister George Papandreou announced the creation of a new political party on Friday, confirming a long-expected split from the centre-left PASOK and complicating the potential outcome of this month’s national election. The new party, dubbed “Movement for Change”, has yet to detail policies but they are expected to be similar to those of PASOK, part of the ruling coalition led by Prime Minister Antonis Samaras’s centre-right New Democracy. Papandreou was prime minister when the euro zone crisis broke.

Paraguay finance minister quits German Rojas has resigned and will be replaced next week by a 36-yearold central bank director, the country’s president said. Rojas, who spearheaded a successful sovereign debt issue in August, is the first minister to quit the Cabinet of President Horacio Cartes since the conservative leader took office in August 2013. Cartes picked the boyish-faced Santiago Peña as his next finance minister, describing him as a “bright young man” who would accelerate development of the South American country.

Ecuador: best countries for retirement Looking for a safe, affordable place for retirement? With its warm climate, affordable housing and generous benefits, Ecuador was named the best country to retire in by InternationalLiving.com.

The South American nation bordered by Colombia and Peru topped the website’s annual global retirement index of 25 best countries, scoring high points for affordable cost-of-living, entertainment and amenities. Next are Panama, Mexico, Malaysia and Costa Rica, rounding out the top five nations in the index that looks at eight criteria to determine the best countries for retirement.

solidarity” proclaimed by Hollande when he came to power in 2012.

France’s top court had declared as unconstitutional the original plan to levy the tax on all individuals earning one million euros (US$1.2 million).

The government came back with a version that made companies pay the 75-percent rate only for the portion of employees’ salaries above the millioneuro ceiling.

But by then, it had already become a symbol of France’s opposition to big business and attracted high-profile derision.

Actor Gerard Depardieu stormed out of the country in a huff over the tax and took up Russian citizenship in 2013. It was reported he only paid sixpercent tax in his new home. French football clubs were also horrified, saying the tax made it difficult to attract top-flight talent.

French President Francois Hollande delivers his New Year wishes during a pre-recorded address to the nation, at the Elysee Palace in Paris

The fate of the supertax mirrored the wider trajectory of the troubled Socialist presidency, which was elected in a surge of left-wing enthusiasm but has been forced to temper its initial approach in a desperate bid to escape the country’s economic quagmire.

Even by its own standards, the tax was largely a failure -- the watereddown version brought in minimal revenue and did little to tackle wealth inequalities.

It also had a limited impact on the government’s efforts to balance its books and pay off ballooning debts.

Still more damaging was the way it added to the perception of France as “anti-business”, an image that was gleefully exploited across the Channel in Britain where Prime Minister David Cameron said he would “roll out the red carpet” for French executives fleeing the supertax.

Facing record unemployment, a sluggish economy and unable to meet European borrowing limits, Hollande has since taken his country in a very different direction.

Last year he appointed economic liberals such as Prime Minister Manuel Valls and Economic Minister Emmanuel Macron to give the impression of a France “open for business”.

For his Socialist party, such efforts lie somewhere between blasphemy and high treason. Hollande was forced to dissolve the government in August and fire two leftist ministers who opposed the new direction.

But he appears willing to risk a civil war in his ranks to reverse the long cycle of economic disappointment that has helped his popularity ratings plumb unprecedented lows.

Hollande appears to be listening, and is pinning his hopes on a package of reforms to boost business activity -cutting public spending and red tape, opening up “protected” professions and relaxing rules on Sunday trading.

AFP

White House to announce nominee for Fed board The U.S. central bank has five Fed governors in place on the seven-member board Emily Stephenson

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he White House will soon announce a nominee to the Federal Reserve Board, a person familiar with the matter said, in a move that would begin the process of filling one of the Fed’s two empty seats in Washington.

The person said the White House will announce a nominee next week or the following week, adding that the nominee will likely have a community banking background.

The move comes as the new U.S. Congress convenes next week, with Republicans in control of both chambers after wresting the Senate from Democrats in November. The Fed is expected to come under heavier political pressure this year, from both Republicans and Democrats, as it pulls back from its unprecedented economic stimulus and begins raising interest rates.

Board members are appointed by the president, subject to Senate confirmation.

Not one of the current five governors has experience in the community banking industry, which has led to speculation that the White House would name someone from the sector as a nominee.

Reuters reported in April that Diana Preston, a lawyer who left a post at the American Bankers Association; Rebeca Romero Rainey, who runs a small bank in New Mexico; and Ann Marie Mehlum, who headed an Oregon-based bank before joining a federal small-business agency, were among the Fed board candidates the White House was considering.

Former Treasury official Michael Barr’s name also surfaced as a possible Fed board candidate.

But the White House did not move on any of those names and attention on the two empty Fed seats faded in the second half of last year. It resurfaced as Congress was wrapping up in December.

A decision by the U.S. Senate last month to set aside a terrorism insurance bill until 2015 killed a provision requiring that one seat on the Fed board be dedicated to a person with community banking experience.

But the provision is likely to come up again because it has strong support in both the House of Representatives and the Senate.

Many U.S. lawmakers worry that big Wall Street firms hold undue sway at the U.S. central bank and see adding a community banker as a way to temper that.

Reuters

Business Daily | 15

January 5, 2015

Opinion Business

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Leading reports from Asia’s best business newspapers

U.S. assets enter 2015 strong; volatility may ensue

THE KOREA HERALD Credit card spending in South Korea is expected to top 700 trillion won (US$634 billion) this year, but credit issuers’ profitability may not improve largely due to a fall in spending by individual cardholders, data showed yesterday. Credit card spending in the country last year was estimated at 690 trillion won, and the comparable figure for this year is 701 trillion won, according to the data compiled by KB Financial Group, the country’s top banking group. In 2013, credit card spending reached 680 trillion won after topping the 600 trillion won mark in 2011.

James Saft

Reuters columnist

PHILSTAR Philippine manufacturing output growth in November likely weakened from the previous month on softer consumer demand and food supply shocks, Moody’s Analytics said. The firm has forecast factory output, as measured by the volume of production index, to have expanded 7.2 percent in November, slower than the 7.5-percent growth in October. “Industrial production likely cooled a little in November from October’s 7.5 percent yearon-year expansion,” Moody’s said. “Consumer demand has cooled in the second half of the year, dampening food manufacturing. Bad weather associated with typhoon season will affect food supplies and food production through December,” the firm added.

THE STRAITS TIMES The committee of inquiry looking into a major trading disruption on the Singapore Exchange (SGX) on November 5 has confirmed the appointment of independent experts to assist it in its investigations.

The SGX said in a statement the investigations will include a review of the bourse operator’s technical, operational management and communications issues. Work by these independent experts began last month and they will submit their findings and recommendations to the committee of inquiry.

The committee of inquiry is made up of four SGX board directors who are independent of the management.

CHINA DAILY Chinese Ambassador to Zambia Yang Youming said on Friday that Chinese firms operating in Zambia will not halt their operations following the change of the country’s mining tax plan. The Zambian parliament recently approved the 2015 national budget, which has introduced a new mining tax plan. The new tax law has since been assented to by the acting Zambian president.

The new tax plan has seen the increase in mineral royalty taxes from six to eight percent for underground mines and to 20 percent for open pit mines.

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trong growth, cheap energy and some forced generosity from the Federal Reserve due to falling inflation all imply a strong first half of 2015 for U.S. financial markets.

That the rest of the world, China, Japan and Europe will all see weakness will only reinforce the attraction of dollar assets, which will benefit particularly from the easy monetary conditions.

The risk is that policymakers and investors underestimate U.S. economic strength, setting the stage for an equity market downdraft if the Fed is forced to raise interest rates sooner than anticipated.

It has been a time of gifts for the United States, with the economy expanding at a 5 percent clip in the third quarter, the best showing since 2003.

Particularly encouraging was the nearly 9 percent expansion in business investment, a sign that corporations are encouraged about prospects.

Consumer spending grew, too, and should continue to expand given the effect on wallets of the quite rapid fall in the price of oil - down nearly 50 percent on some measures since June.

The effect of cheaper energy is being felt more powerfully now than in the third quarter and will be more powerful yet in 2015.

That helps to explain why U.S. stocks are trading very near their all-time highs in inflationadjusted terms, as does the stance of the Federal Reserve, whose projections and overall message after its last rate-setting

meeting in December were far more downbeat than the data released since then.

The fall in oil prices could drive core inflation, already well below Fed targets, lower yet next year.

That could convince a Federal Open Market Committee, which will have a more dovish line-up in 2015, to wait longer before raising rates.

“A zero percent rate policy in the face of the latest 6 percent trend in nominal gross domestic product is likely a case of playing with fire for even the most dovish Fed in recent memory,” David Rosenberg, strategist at Gluskin, Sheff in Toronto, wrote in a note to clients.

Investors in equities are generally thrilled when policymakers take risks with over-heating, though they are often not so happy once the corrective steps are taken. All of this argues for a continued rise in the dollar in the early stages of 2015, and strong relative performance from riskier U.S. assets like equities and higher-yielding debt.

1987 all over again?

As a market phenomenon, all of this is self-sustaining. Good data, good profits and easy monetary policy drive gains in the stock market, which in turn forces less-convinced investors from the side-lines.

The impact from cheaper energy is strong and will get stronger.

U.S. growth will be as much as 0.5 percentage point higher than otherwise next year as a result, according to the International

The price of oil could also be telling us that things globally are weak enough to justify a longer delay in policy normalization by the Fed

Monetary Fund, and as much as 0.6 percentage point in 2016.

To look for a historical parallel, oil prices fell even more sharply in 1985 and 1986, setting the stage for a multi-year economic expansion.

“As is the case now, most analysts were underestimating how well the economy was going to do as 1986 drew to a close - that 1987 was going to be a real breakout year for growth, bond yields, the Fed, and stock market volatility,” Rosenberg wrote.

It is, of course, impossible to foresee a major market correction.

But a scenario in which the Fed hikes sooner than expected next year, and gives off signs it will raise rates more rapidly than anticipated, is one that would also figure a great deal of downward volatility.

This is not the only way it could play out. The Fed may well be justified in waiting, or it could easily bring the market along with it as it edges toward hikes in the first three months of 2015.

The price of oil could also be telling us that things globally are weak enough to justify a longer delay in policy normalization by the Fed. Much of the fall in oil prices is due to plentiful supply, both as a result of the application of new technology in the United States and older suppliers like Libya coming back online after political dislocation.

The IMF, however, estimates that 20-35 percent of the fall is due to decreasing demand, which in and of itself is a warning signal.

Copper, a base metal used heavily in industry and which often moves in tandem with global growth, recently touched four-and-a-half-year lows and is down about 18 percent this year.

That may foreshadow weaker conditions in Europe and China, which could hurt U.S. growth and outweigh the benefit of cheaper oil.

Meanwhile, the party in U.S. risky assets looks set to continue, and with few good alternative choices elsewhere, investors, as ever, will be forced to pile in.

Reuters

16 | Business Daily

January 5, 2015

Closing Xiaomi smartphone sales triple in 2014

Piketty says Gates loves his book but not tax plan

Chinese smartphone maker Xiaomi Inc. sold 61.12 million smartphones in 2014, up 227 percent year on year, company founder and chief executive officer (CEO) Lei Jun said yesterday. Total sales revenue with tax reached 74.3 billion yuan (US$12 billion), up 135 percent year on year, Lei said in an open email to the company’s employees. Sales of the brand expanded to six countries and regions over the past year, including Malaysia, Singapore and the Philippines. The company was valued at US$45 billion in the new round of financing late December.

Thomas Piketty (pictured), the French economist whose best-selling book has added tinder to the debate on income inequality, counts the world’s richest person among his fans. “I had this discussion with Bill Gates a couple of weeks ago,” Piketty, the author of “Capital in the Twenty-First Century,” said yesterday. “He told me, ‘I love everything that’s in your book, but I don’t want to pay more tax.” A tax on wealth is one of Piketty’s key recommendations for addressing inequality. Last week, he refused to accept France’s highest decoration, the Legion d’honneur.

UK stock pickers post weak results Of nearly 500 actively managed UK equity funds tracked by Lipper, 48 percent lagged the FTSE 100 Index

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early half of the mutual funds picking British stocks fell short of the gains in the broader share market in 2014, raising the prospect they could lose yet more market share to cheaper index fund rivals in 2015.

That marked the worst underperformance by these funds since 2011 and a major reversal of fortunes for the fund managers in Europe’s biggest asset management hub. About 85 percent of the funds had exceeded gains in UK’s main FTSE 100 Index in 2013, data from Thomson Reuters Lipper showed.

Funds investing across Europe did even worse, with nearly 70 percent of them failing to beat last year’s 6.8 percent gain in the MSCI Europe NR EUR Index, the most popular benchmark for Europe-focused stock funds, the data showed.

UK-focused equity funds managed about US$400 billion in assets at the end of September, the most by any other country-focused funds in Europe and only about US$83 billion less than funds investing across the entire region, Lipper data showed.

Weak market returns and a post-crisis regulatory focus

on poor business practice across the financial services industry have seen rules changed to make fund fees more transparent and more managers called to account for poor performance.

And the data for 2014 suggests more tense conversations are likely in the coming weeks as investors sit down with fund managers ahead of their annual rejig of investment portfolios.

Britain’s benchmark FTSE 100 index rose 0.7 percent last year, assuming dividends were reinvested. The broader FTSE

China launches website on weaponry procurement

All Share index, meanwhile, advanced 1.2 percent.

While not a particularly challenging hurdle, funds with combined assets of more than US$180 billion failed to beat it, data from fund tracker Thomson Reuters Lipper showed.

Among the larger funds, underperformers included M&G Recovery, which fell 9.6 percent, Schroder UK Opportunities, down 8.6 percent, Scottish Widows UK Growth, down 2.6 percent and Fidelity Special Situations, down 1.7 percent.

The setback will force investors to focus to the value of active management and on fees that are sometimes more than 10 times those of a passive index tracking or exchangetraded fund.

The FTSE Mid 250 Index had risen 32 percent with dividend reinvested in 2013 and rose 3.7 percent last year.

Of nearly 500 actively managed UK equity funds tracked by Lipper, 48 percent lagged the FTSE 100 Index, while 52 percent failed to match or exceed the gains in the FTSE All Share Index.

More than a third of the funds lost money during the year.

Looking at the year-onyear comparison, investors could be forgiven for thinking 2014 a momentary blip, but the longer term data suggests it is more a return to the norm.

The 2014 results highlights a longer-term struggle of UK funds, with a majority failing to outperform the FTSE All Share Total Return Index over the last ten years, Lipper data showed, making investors shun active fund managers.

Reuters

Iran’s President says economy An action plan for property can’t grow in isolation rights implementation

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website on military weapon procurement was officially launched yesterday.

Under the General Armament Department of the People’s Liberation Army (PLA), weain.mil. cn provides information on the country’s weapon and armament needs, relevant policies, procurement notices, enterprise lists and technology.

Private enterprises, military armamentpurchasing departments and military industry groups as well as personnel can register on the website for consultation and further information.

According to the PLA General Armament Department, the new platform was established to cement military and civilian integration and aims to accelerate steps in armament procurement system reform, break procurement barriers, improve competitiveness and promote efficiency.

Since 2014, a series of policies have been issued to improve military and civilian integration, market access, information exchange, supervision, and security.

In May, 2014, the first “military and civilian integration forum” released around 200 items on weapon procurement, which attracted more than 100 private enterprises and scores of cooperation agreements were subsequently signed.

ran “cannot have sustainable growth in isolation,” President Hassan Rouhani, whose government seeks to have international sanctions against the nation lifted, said in the Iranian capital yesterday.

“Gone are the days when it was said if foreign investors come to Iran its independence will suffer,” Rouhani said in an address opening a Tehran conference on sustainable growth and job creation, local media reported. Opening up “doesn’t mean letting go of the nation’s ideals and principles,” he said, according to the staterun Fars news agency.

Rouhani took office after eight years of rule by ex-president Mahmoud Ahmadinejad during which United Nations, European Union and U.S. sanctions over the country’s nuclear program multiplied, driving the country deeper into political and economic isolation. Ahmadinejad’s government minimized the impact of technological and financial restrictions.

Elected in 2013, Rouhani pledged to move Iran away from the confrontational path and build ties with the West to improve an economy suffering from a weakened national currency and 40 percent inflation.

Xinhua

Bloomberg News

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hina has issued an action plan on further implementation of the country’s intellectual property rights (IPR) strategy.

The plan, released by the State Council General Office, highlighted the goals and measures for IPR generation, use, protection and management from 2014 to 2020.

China issued an outline of the national IPR strategy in 2008, planning to increase self-directed IPR, improve protection and the country’s IPR awareness over five years. It also set goals for 2020.

The first five-year goals set by the outline have essentially been realized, the latest plan said.

Further enforcement of the strategy is an important support and guarantee for deepened overall reform and a significant move to help promote economic adjustment.

It detailed actions taken for the full implementation of the IPR strategy, including promotion of IPR creation and use, strengthening protection, intensifying management and extending international cooperation.

Three fundamental projects will be carried out in IPR information services, statistics and monitoring, and talent training, according to the plan.

Xinhua