Macau business daily, Mar, 17, 2015

MOP 6.00 Closing editor: Luís Gonçalves Publisher: Paulo A. Azevedo Number 750 Tuesday March 17, 2015

Taxi App Kuaidi to enter Macau in June

S

Year III

haking up the taxi service. Maybe. China’s leading car transportation App sees a business opportunity in Macau. Taxi App Kuaidi, backed by tech giant Alibaba, is launching its mobile taxi hailing services here in three months. The company believes its service would mean a “significant improvement” in efficiency. Not to mention the death-knell of traditional on-call taxi services. Within 18 months, the company has carved a 30 pct niche out of the Hong Kong market PAGE

Forced to shop

6

Quarter of Umac graduates opt for gaming and hotels

PAGE 7 Macau to establish outbound travel alert scheme

Reports of coerced shopping continue.

In both Hong Kong and Macau.

Guangdong tourism authorities say they’re receiving an increasing number of complaints from package tour clients. Travel agencies, many illegal, force them to shop and ignore the itinerary. Tourism Quality Control and Management Bureau Director Zhang Guohui says shoddy and counterfeit goods rub salt into the wound. Authorities are now preparing an educational campaign

PAGE 4 Govt proposes new timeframe for citywide minimum wage

PAGE 2 Crocodile results may drop 27 pct

PAGE 7

PAGE 5

HSI - Movers March 16

Greenback driving pataca to near 5-year high

www.macaubusinessdaily.com

It’s on a roll. In February, the pataca reached its second highest value since 2010. That’s against a basket of currencies of its main trading partners. Undermining exports but boosting imports.

The local currency registered its seventh consecutive monthly increase last month. Pegged as it is to the strong US dollar via the Hong Kong dollar

Name

High five for pensions Pensions up 5pct. The gov’t proposes to raise the pension and several allowances in July. By a percentage close to inflation. Residents’ contribution level to the Social Security Fund, however, remains a bone of contention. Fund president Ip Peng Kun says the gov’t proposes to raise pensions, including for disabilities, by 5.35 pct; with unemployment allowance raised 5.51 pct.

And allowance for births and marriages up 5.56 pct

PAGE 2

%Day

Ping An Insurance Gr

3.23

Belle International

3.17

China Mobile Ltd

2.70

Sino Land Co Ltd

2.24

China Life Insurance

2.24

Sands China Ltd

-1.44

MTR Corp Ltd

-1.55

China Resources Ente

-2.07

LHutchison Whampoa

-2.64

Wharf Holdings Ltd/T

-3.33

Source: Bloomberg

I SSN 2226-8294

PAGE 3

More hiccups

Brought to you by

Tax collection in China. Reduced in the first two months of the year.

The housing industry continues to weigh down the Chinese economy

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2 | Business Daily

March 17, 2015

Macau

Pension and allowances to be increased more than 5 pct in July But employers and employees have still failed to conclude a target to raise their contributions to in order to support the city’s pension and several allowances Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he government proposes to raise the city’s pension and several allowances in July by a percentage range that is close to the inflation rate, although it is still struggling on the issue of extracting a higher contribution from residents to support the Social Security Fund.

The Social Security Fund supports Macau’s pension and several allowances, including allowances for unemployment, sickness, birth, marriage and funeral expenses.

According to Fund president Mr. Ip Peng Kun, the government proposes to raise the pension, including the pension for disabilities, by 5.35 per cent; the proposed increase for the unemployment allowance is 5.51 per cent, while it is suggested the allowance for birth and marriage be increased by 5.56 per cent (see table).

For the 12 months ended January this year, Macau’s average composite consumer price index increased 5.91 per cent from the previous period, according to official data.

Subsistence The committee, comprising delegates from employers’ and employees’ parties, are satisfied that the proposed changes to the pension and allowances have caught up with the city’s inflation level, according to the Fund’s president.

Mr. Ip expects that the proposed adjustment in pension and the several allowances can come into force by July.

“The adjustment made is mainly to catch up with the changes that we saw in the minimum subsistence index,

which now stands at MOP3,920 (US$489) for an individual,” Mr. Ip told media after introducing the proposed adjustment for pension and allowances to the Standing Committee for the Co-ordination of Social Affairs yesterday.

The minimum subsistence index serves as an indicator of the amount of total income to maintain the minimum standard of living, which is also the basis for the government’s adjustment of the city’s poverty allowances. The last time the minimum subsistence index was adjusted was January this year, where the index for an individual was raised by 3 per cent or MOP120 more to MOP3,920.

Consensus With the proposed increases to be made in pensions and allowances, the government is budgeting spending a total of MOP3.42 billion on supporting such payments, or an addition of MOP82.78 million.

However, the government would very likely continue to be the biggest supporter of the Social Security Fund’s

Amount adjusted after proposed changes

Increase (%)

Pension

MOP3,350/month

5.35

Disability pension

MOP3,350/month

5.35

MOP134/day

5.51

MOP134/day (for hospitalised individual)

5.51

MOP101/day (for nonhospitalised individual)

5.21

Birth allowance

MOP1,900

5.56

Marriage allowance

MOP1,900

5.56

Funeral allowance

MOP2,460

Payment for individual

Unemployment allowance Sickness allowance

5.58 Source: Social Security Fund

payments as it has still failed to obtain consensus on the contribution ratio by employer and employee to support the Fund.

“I think it’s quite hard to reach the 90 patacas of contribution from employers and employees by July this year,” Mr. Ip admitted. “We still need to communicate the matter [the contribution ratio] further with both parties.”

The Standing Committee for the Co-ordination of Social Affairs met in late January and reached a

concluded target to raise employers’ and employees’ contribution to the Social Security Fund by 45 patacas more to 90 patacas by July this year.

However, both parties were still divided over the contribution ratio of the to-be-increased payment, where employers backed the government’s suggestion of having a close to 50/50 per cent ratio to support the contribution; the labour side, however, insisted that the current ratio of the employer having to pay 67 per cent had to be maintained.

Estimated number of beneficiaries

Total expenditure before adjustment (in million)

Total expenditure after adjustment (in million)

Pension

87092

MOP3,097.08

MOP3,173.66

Disability pension

4827

MOP196.20

MOP201.12

Unemployment allowance

3200

MOP10.90

MOP11.20

Sickness allowance

2500

MOP5.80

MOP5.96

Birth allowance

5900

MOP11.30

MOP11.61

Marriage allowance

3100

MOP6.60

MOP6.78

Funeral allowance

1600

MOP4.80

MOP4.93 Source: Social Security Fund

Gov’t proposes new timeframe for citywide minimum wage

T

he MSAR Government plans to implement a citywide minimum wage policy within three years following the coming into effect of Macau’s very first minimum wage law to be applied to cleaning and security workers only. The timeframe remains uncertain as deliberation of this law is still underway.

“We’ve clearly expressed the MSAR Administration’s direction that within three years following the implementation of the minimum wage for cleaning and security workers, who are employed by property

management companies, we’ll see a citywide minimum wage policy in practice,” said the Secretary for Economy and Finance Lionel Leong Vai Tac yesterday following a closeddoor meeting with the Standing Committee for the Co-ordination of Social Affairs. Mr. Leong noted that the direction has also been agreed upon by both the employer and employee parties on the committee.

“We will study whether we should implement the minimum wage for all the other sectors gradually, or all at one time – this will be the legal

technicalities that we’ll see to,” the Secretary added.

The city’s first-ever minimum wage law, restricted to cleaning and security workers, went through the first reading of the Legislative Assembly in July last year but it has already missed former Secretary for Economy and Finance Francis Tam Pak Yuen’s expectation that the legislative work on the law could be finished in 2014.

The law, which proposed an hourly rate of MOP30 or a monthly MOP6,240 for cleaning and security workers, is still being deliberated by

the third permanent committee of the Legislative Assembly.

“Now we’ll just want to see the Assembly finish discussing the law soon for these two types of worker,” said Mr. Leong Sun Iok, a member representing the labour side in the Standing Committee for the Co-ordination of Social Affairs, “... Increasing property management expenses are not excuses to stall the discussion on the minimum wage issue as it is the basic protection for grassroots workers here.”

S.L.

Business Daily | 3

March 17, 2015

Macau China Southern Airlines launching Macau-Wuhan flights on April 3 China Southern Airlines is to commence direct round-trip flights between Macau and the Chinese city of Wuhan on April 3. The Chinese airline will provide three two-way flights between the two cities every week, on Tuesday, Friday and Sunday, respectively. The new route is the first route that China Southern, the biggest airline in China, has launched in Macau. In addition, it is also the first route connecting the Special Administrative Region to Wuhan. Following the launch, Macau residents can also travel to Moscow in Russia or San Francisco in the United States by flying to Wuhan as a layover.

Pataca close to 5-year record The current strength of the US dollar against the world’s major currencies is making local money more expensive. With the fast depreciation of the euro, yen and yuan, the pataca could break through its five-year record this month Luís Gonçalves

Luis.goncalves@macaubusinessdaily.com

L

ast month, the pataca nudged its five-year highest value, after the US dollar, to which the local money is pegged through the Hong Kong dollar, appreciated fast against some of the world’s major currencies. The greenback is rising fast supported by a solid recovery and lower unemployment in the US, while the Greek crisis in Europe is causing the euro to drop to a ten-year low, and Japan and China are underperforming.

Central banks in these countries are channelling billions to stimulate the economy and lowering their currencies to increase competitiveness in foreign markets.

According to data released by the Monetary Authority of Macau (AMCM), the trade-weighted effective exchange rate index of the pataca against the currencies of its main trading partners increased last month to 103.67. That’s a hike of 0.71 points since January and 7.01 points from a year ago. It’s also the seventh straight monthly increase, data reveals.

The pataca is now trading at 2010 levels. The index compiled by AMCM compares the value of the pataca against a basket of currencies from its major partners such as China, Hong Kong, Japan and Europe.

The local currency has reached

its second highest value since 2010.

The June 2010 record still stands, however, when the trading exchange rate increased to 104.3 points. But as the dollar continues to move from strength to strength during this period the record could topple when the next report is published in a month.

A stronger currency means good news for consumers, namely those fans of imported goods like foreignmade cars and electronics goods, from BMWs to Apple phones. It’s also a plus for local travellers as destinations like Europe and Japan are today 30 per cent cheaper than a year ago.

AMCM has also announced that

the preliminary estimate of the Macau SAR’s foreign exchange reserves amounted to MOP133.9 billion at the end of February 2015. This represented an increase of 0.4 per cent from the revised value of MOP133.3 billion for the previous month. The Macau SAR’s foreign exchange reserves amounted to MOP133.9 billion at the end of February 2015. This represented an increase of 0.4 per cent from the revised value of MOP133.3 billion for the previous month. Macao SAR’s foreign exchange reserves at end-February 2015 represented 12 times the currency in circulation or 101.7 per cent of Pataca M2 at end-January 2015.

4 | Business Daily

March 17, 2015

Macau Brands

Trends

Pandora’s Charms Raquel Dias newsdesk@macaubusinessdaily.com

P

andora, the renowned Danish jewellery brand, chose Galaxy Macau to exclusively launch their 2015 Spring collection last Wednesday. The event attracted dozens of guests.

Gathering in the Crystal Lobby of Galaxy Macau, they had the opportunity of being the first to appreciate the latest collection. Inspired by the idea of captivating moments and messengers of Springtime, the new collection was an immediate success.

‘Inspired by the beauty of Springtime, the collection reveals the magic of nature, just like those described in fairytales’ we are advised. The event comprised a fashion show where models showcased the brand’s collection.

Pandora has managed to innovate whilst maintaining the same system. Their products allow customers to mix and match different accessories to create original pieces that match their style and personality.

From a small family shop in Denmark in 1982 to a global empire with over 10,000 points of sale around the world, Pandora’s business model is extremely successful. There is something for everyone: from the popular charmed bracelets to rings, earrings, necklaces and watches.

A testament to the quality of the brand is how clients keep going back for more. No-one who has a charm bracelet ever completes it. There are the personal keepsakes, the family initials, the cute ones and the festive charms. If you were looking, you would have noticed the beautiful red charms made especially for the Chinese New Year or the lovely hearts made for Valentine’s Day. Perhaps this is the reason why Pandora has become the world’s thirdlargest jewellery company in terms of sales, after Cartier and Tiffany & Co.

Industry to establish outbound travel alert scheme The Travel Industry Council says the scheme will be a good thing for both industry and residents, protecting the interests of both parties Kam Leong

kamleong@macaubusinessdaily.com

D

irector of the Macau Government Tourist Office (MGTO) Maria Helena de Senna Fernandes said that a scheme alerting local outbound residents to potential threats in their travel destinations might be proposed within this year. The Travel Industry Council of Macau said that they support such an initiative, indicating that the scheme can protect both travel agencies and residents.

On Saturday, Ms. de Senna Fernandes told local broadcaster TDM that the Tourism Crisis Management Office (GGCT) is now evaluating the coverage list of this travel alert scheme, standards for evaluating the levels of threat, and source of information.

She also revealed that the initial idea for the scheme might be similar to that of Hong Kong, yet would not be exactly the same.

“We support establishing the scheme in Macau, as we believe that it can protect the industry, as well as residents, [by] lowering misunderstandings [between the parties],” Council President Andy Wu Keng Kuong told Business Daily in a phone interview yesterday.

In addition, the association head agrees that such a scheme should follow Hong Kong by way of classifying different levels of threats by three colours.

“If we use a similar system [to

classify the level of risk] as Hong Kong, it will reduce confusion by local residents, as many local tours depart from Hong Kong,” he added.

The outbound travel system in Hong Kong, which was established in 2009, covers a total of 85 countries and classifies threats and risks into three levels, identified by three colours - yellow, red and black.

The yellow alert means local residents should monitor the situation of the destination and exercise caution, whilst residents should avoid nonessential travel and adjust travel plans when a red alert is issued. A black alert, meanwhile, warns residents to avoid all travel in that particular country.

Nevertheless, Ms. de Senna Fernandes indicated that the government still has to consider carefully whether Macau should follow Hong Kong’s classification method, claiming threats in a same country may bring different influences to the two Special Administrative Regions, such as compensation from insurance and tour withdrawal fee.

In addition, according to TDM, the MGTO head claimed that the scheme would not be an indicator for residents to withdraw from tours once they sign up. Meanwhile, Mr. Wu perceives that the scheme would not affect tour fees in the future but encourage local residents to purchase travel insurance.

Corporate Eggs-tra Special Easter at FADO The Easter Season is approaching, a perfect time for you to create fun-filled memories with your loved ones. This year, Hotel Royal Macau is celebrating Easter the Portuguese way at FADO restaurant with an eggs-tra special a la carte menu created by our Executive Chef, Luís Américo. The menu offers a choice of 6 enticing dishes, from appetizers, main courses to desserts, all prepared using the finest ingredients, beautifully presented.

FADO’s Easter Special a la carte menu is available from March 30th to April 6th, 2015 and is available for guests to mix and match dishes of your choice. Some of the offers include Poached egg over the Easter nest with chorizo and green pea cream soup, Salmon tornedo with Jerusalem artichoke purée and roasted vegetables or Easter Lamb chops with corn textures and spinach stew.

If we use a similar system [to classify the level of risks] as Hong Kong, it will reduce the confusion of local residents, as many local tours depart from Hong Kong Andy Wu Keng Kuong, president of the Travel Industry Council of Macau

Despite the scheme not being close to implementation, the GGCT has actually issued tourism alerts to local residents before. Last September, the Office alerted Macau residents not to travel to the Philippines, following the Chinese Ministry of Foreign Affairs issuing an alert claiming Chinese citizens were under threat in the Southeast nation.

Business Daily | 5

March 17, 2015

Macau Video game parlours suspected of illegal gambling Judiciary Police (PJ) and the Civic and Municipal Affairs Bureau (IACM) launched a joint operation yesterday afternoon. Three video game parlours were raided, with some machines found to have been providing games that contain gambling elements – customers can exchange points for cash – suspected of involving illegal gambling. Police issued a statement yesterday saying that a total of 62 machines are suspected of being involved in this case and five people working at these video game parlours were detained for further interrogation. And parlours have been shut down by IACM until another inspection proves they can meet the specified requirements.

Guangdong tourists forced to shop in SARs by agencies The head of the Guangdong provincial tourism authority says more people in Guangdong are travelling overseas, with increasing complaints targeting Hong Kong and Macau trips Joanne Kuai

joannekuai@macaubusinessdaily.com

G

uangdong Tourism Quality Control and Management Bureau Director Zhang Guohui said the neighbouring province has a strong market of outbound tourists and each year more people from Guangdong travel abroad.

Authorities, however, have been receiving an increasing number of complaints from consumers, especially targeting Hong Kong and Macau.

Zhang was speaking on the sidelines of an event organised by Guangdong consumer council and commerce departments in celebration of March 15 – World Consumer Rights Day, which was established on 15 March 1983 to promote consumer rights around the world, reported Chinese News Network.

Zhang Guohui said a lot of illegal tour agencies in Guangdong

promote illegal trips to Hong Kong and Macau. One of the common practices is the bait of ‘free tour package’ – free-of-charge to join the tour groups but while travelling tourists are forced to go shopping and consume in order to make up the cost of the package tour.

The Guangdong tourism quality control head said the SARs are not alone in this, with tourism disputes

arising quite often on tour groups to Southeast Asia, particularly Thailand,.

Complaints concentrate on consumers saying that travel agencies do not follow the itinerary and force them to go shopping.

When tourists purchase souvenirs, medicine, gold and jewellery they soon realise they are of low quality or even counterfeited products when they return to China.

Another trend that is worth noting, said Zhang, is that some travelling coupons are getting more and more popular. Clicking ‘Like’ in exchange for free travel is a common trick to lure customers.

Zhang stressed that free travel is not trustworthy at all and customers need to be on the alert when choosing travel agencies in order to enjoy their trips by paying a reasonable amount of money.

The neighbouring province is also going to launch an operation online, revealed Zhang, disseminating information on the Internet or Wechat in a bid to better regulate the market. The main targets are illegal travel agencies and tour guides.

6 | Business Daily

March 17, 2015

Macau

China’s biggest Taxi App Kuaidi to explore Macau market The leading China car transportation app is launching its mobile taxi hailing services in Macau in three months and believes that traditional on-call taxi services will fall by the wayside Joanne Kuai

joannekuai@macausbuinessdaily.com

H

angzhou Kuaidi Technology Co., a taxi-booking service backed by Alibaba Group Holdings Ltd., has officially registered its trademark in Macau SAR and is preparing to launch its online taxi hailing services in three months.

“Macau has very few taxis – with more then 600,000 residents and over 30 million tourists per year, around 1,000 taxis are simply not enough,” said Ye Yun, Director of Public Relations of Kuaidi Group. “With the launch of our services, it would see a significant improvement in efficiency of taxi services and help reduce taxi vacancy rates (taxi running without passengers).”

Based in Hangzhou, a Chinese city in Zhejiang Province, Kuaidi Dache has grown to become one of the leading and most widely used mobile taxi booking app providers in China.

Users of smartphones with Android, Apple or Windows systems

can download the application and register, while taxi drivers use the same app and have their information verified.

When a customer orders taxi services by typing in a destination,

the app accesses the GPS information of both parties and sends out alerts to taxi drivers near the passenger.

The driver who picks up the order first can call the passenger directly to arrange pick-up. Once the journey is finished, both sides can evaluate each other, with a record kept.

Currently, Kuaidi Dache’s app combines integrated mapping and third party payment technology to provide widely accessible booking services to over 1 million taxis in more than 360 cities in China, including Hong Kong, as well as a range of standard and luxury cars to suit a variety of lifestyles.

The latest available data provided

by Beijing-based consultancy firm Analysys International shows Kuaidi Dache leading the industry with a 56.5 per cent share of the mobile taxi booking market in China by cumulative user accounts in the fourth quarter of last year.

With the launch of our services, it would see a significant improvement in efficiency of taxi services and help reduce taxi vacancy rates (taxi running without passengers) Ye Yun, Director of Public Relations, Kuaidi Group

SAR markets Founded in the Summer of 2012, Kuaidi tapped into the Hong Kong market as early as October 2013.

Ye Yun told Business Daily that thousands of taxis in Hong Kong now have the app installed, giving Kuaidi a market share of over 30 per cent in Hong Kong, more than international competitors such as U.S.-based Uber.

Kuaidi Dache considers Hong Kong an entry point to the overseas market, with Macau second on the list, followed by East Asia. While Ye Yun said regulatory and legislative matters are not a big issue when entering the SAR markets, in order to adapt to foreign markets, some adjustments had to be made.

The Kuaidi spokesperson said online payment in Mainland China, for example, is rather popular with the use of Alipay but people in the SARs are more used to credit cards and other payment methods. Hence, the car service app has to integrate with other third party technologies.

Moreover, a traditional Chinese version of the app has been promoted, on top of the original simplified Chinese one, with English version, Japanese and other languages in the pipeline.

Ye Yun said now they have finished registering the branch in Macau the company is preparing the team and further studying the market in the belief that the experience the company has accumulated in Hong Kong can be transferred.

He added that the company’s managerial level has some Hong Kong staff and people that have studied overseas with the knowledge of the needs of foreign markets, which gives them the confidence to expand the businesses outside China.

When commenting on the on-call taxi saga in the Macau SAR, Mr. Ye admitted that he is not familiar with Macau’s market but generally speaking an on-call taxi service is far less efficient than using a mobile app since it is based on telephone calls and an operator is needed, which means more clients require more operators leading to increased cost. Mr. Ye added that with current technology and an exponentially growing smartphone user base, the traditional on-call service will be weeded out of the market.

Business Daily | 7

March 17, 2015

Macau Hong Kong increasingly divided on 2017 election A Chinese University poll reveals that Hong Kong citizens are increasingly divided regarding the city’s political reform. More people are against the package for the 2017 Chief Executive election even based on Beijing’s framework, the South China Morning Post reports.

Almost half of the respondents – 46.9 per cent – said they want the legislature to veto the reform package, compared to a reading of 43.1 per cent in the previous poll conducted last December. Around 40.2 per cent vote for legislators to approve the package, an increase from 38.3 per cent in the December poll and a record high since the polls were launched last September, when only 29.3 per cent wanted the reform to be approved.

Corporate Joana Vasconcelos’ Valkyrie Octopus makes its China Debut in MGM MACAU

Quarter of Umac graduates opt for gaming and hotels

S

ome 25 per cent of Bachelor graduates from the University of Macau’s (UM) last academic year entered the gaming and hotel industries, according to the latest data released by UM yesterday.

More than 1,400 students with Bachelor degrees graduated from UM in 2014, of which the median of their income reached MOP14,200 (US$1,775), representing an increase of 9.4 per cent, compared to that of graduates the year before.

According to UM, a total of 14.1 per cent of its students graduating in academic year 2013/2014 entered the city’s dominant industry – gaming and entertainment, which in terms of proportion represents a decrease of some 3 per cent compared to the year before.

The hotel field, however, attracted more UM graduates, with the

percentage jumping to 10.1 per cent of the total from only 5.97 per cent in the 2012/2013 academic year.

Meanwhile, education remained one of the most popular fields for students, attracting 15.3 per cent of fresh graduates; nevertheless, it also represents a year-on-year drop of 7.78 per cent.

In fact, according to UM, the employment rate of its graduates of for year 2013/2014 is 72 per cent, whilst 20 per cent of graduates chose to continue studying.

On the other hand, the University kicked off a five-day career and internship fair for its senior students yesterday. The University said a total of 5,000 job vacancies from nearly 100 companies and organisations are offered to 1,340 students expecting to graduate in June.

K.L.

Crocodile interim results may drop 27 pct Y-o-Y

M

en’s clothing retailer Crocodile issued a profit warning last week warning shareholders that the interim profits of the company may fall as much as 27 per cent year-on-year to HK$48 million (US$6 million) as a result of the revaluation of property values.

‘Based on the preliminary unaudited consolidated management accounts of the Group for the six months ended 31 January 2015, the Board wishes to inform the Shareholders and potential investors that the unaudited interim consolidated profit attributable to owners of the Company for the Period are expected to be within the range of HK$48 million to HK$53 million, a material decrease from that of HK$66.1 million for the corresponding period last year,’ Crocodile wrote in a filing to the Hong

Kong Stock Exchange last Friday.

According to the filing, the drop in the company’s results is due to ‘the material lower revaluation gain arising from the revaluation of the Group’s investment properties and the devaluation of the financial assets at fair value through profit and loss for the Period as compared to the corresponding period last year.’

During its last fiscal year ended July 31 2014, the manufacturer of garments had gained revenues of HK$501.8 million. Nevertheless, its controlling shareholder, Lam Kin Ming, who is also the chairman and CEO of the company, announced last month he would sell 50.46 per cent of the entire share capital of the company to an independent third party.

K.L.

MGM MACAU has collaborated with the internationally celebrated Portuguese contemporary artist Joana Vasconcelos to bring to Macau her most ambitious art installation – Valkyrie Octopus. The opening ceremony at the Grande Praça last weekend officially kicked off Vasconcelos’ first solo exhibition in China.

This latest addition to MGM MACAU’s visionary art programme speaks to Macau’s integral role in the 500-year history of trade between China, Portugal and the rest of the world. Continuing in the same spirit, MGM MACAU is dedicated to promoting culturally diverse exchanges that enhance Macau’s offering as a cultural destination of world repute. “Macau and Portugal share years of history, with Eastern and Western cultures coming together to leave a deep emotional bond between Macau and Portugal.

For a city with abundant treasures of legacy, Joana’s art is simply inspirational to the cultural evolution of Macau. By fully unleashing Macau’s profound art and culture heritage and transforming them into unique tourism offerings, Macau is confident in delivering a diversified and incomparable travelling experience for visitors worldwide. This is undoubtedly a sustainable catalyst driving Macau to become the World Centre of Tourism and Leisure.” Ms. Pansy Ho, Co-chairperson & Executive Director of MGM China Holdings Limited, said.

8 | Business Daily

March 17, 2015

Greater China Power consumption falls Electricity consumption fell 6.3 percent year on year in February, reaching 359.5 billion kilowatt hours (kwh), the National Energy Administration announced yesterday. This brings the total power consumption of the first 2 months of the year to 845.4 billion kwh, up 2.5 percent year on year. During the period, power use in primary industries fell 2.5 percent while secondary industries saw an increase of 1.5 percent; and usage by the tertiary industry surged 8.1 percent. Meanwhile, residential power consumption grew 2.6 percent year on year.

Detailed “Belt and Road” roadmap China will release the implementation plan for the Belt and Road initiatives when the 2015 Boao Forum for Asia opens at the end of the month in south China. Sources told Xinhua that the implementation plan will include a detailed list of major infrastructure projects concerning railways, roads, energy, information technology and industrial parks to be started in the coming years. The number of these major infrastructure projects could reach hundreds and will spread Kazakhstan, Kyrgyzstan, Tajikistan, Pakistan and China’s other neighbouring countries, said the sources.

Vietnam-China trade deficit to widen Vietnam’s trade deficit with China continues to widen in the first two months of 2015, said Vietnam’ s Ministry of Industry and Trade (MoIT) yesterday. Specifically, in the twomonth period, Vietnam spent US$7.482 billion importing goods from China while earning US$2.312 billion from exports to the market, resulting in a trade deficit of US$5.17 billion with China, some US$2.8 billion higher than that of the same period in 2014, stated the Vietnam Industry and Trade Information Centre (VITIC) under MoIT on its website.

Fonterra enters China’s Beingmate New Zealand’s Fonterra said it paid US$553 million for a near 20 percent stake in China’s Beingmate Baby and Child Food Co. Ltd, as it looks to boost its presence in the country’s branded dairy industry. China is a crucial market for Fonterra, importing about a quarter of New Zealand’s total dairy exports to feed growing demand for milk products, particularly formula, from the country’s booming middle class. Fonterra said it paid 18 yuan per share for 192 million shares in the Chinese baby food and infant formula maker, giving it an 18.8 percent stake in the company.

Automaker executive probed China is investigating the top executive of one of the country’s biggest automakers FAW, the Communist Party’s corruption watchdog said, as a prolonged graft crackdown targets more state-owned companies. The chairman and party secretary of China FAW Group, Xu Jianyi, had been placed under investigation for “severe” violations of discipline and the law, the Central Commission for Discipline Inspection (CCDI) said, using a phrase that typically refers to corruption.

It gave no further details. FAW is China’s third biggest automaker with sales of more than three million vehicles last year, according to an industry group.

Overall shadow finance growth slowed to 43 percent last year according to People’s Bank of China (headquarters pictured) data

Trust firms shift, rather than reduce, shadow banking risk Regulators’ efforts to squeeze the shadow finance sector have been only partially successful Nathaniel Taplin and Engen Tham

C

hina’s trust firms, with total assets of US$2.2 trillion, are shifting more cash into frothy capital markets and over-the-counter (OTC) instruments instead of loans blunting regulators’ efforts to reduce shadow banking risk.

By redirecting money into capital markets and OTC products like assetbacked securities (ABS) and bankers’ acceptances, trusts are acting less like lenders and more like hedge funds or lightly regulated mutual funds.

And the shift - a response to a clampdown last year on trust lending to risky real estate and industrial projects - means a significant chunk of shadow banking risk is migrating rather than shrinking.

China trusts take in funds from retail and institutional investors and re-lend or reinvest that money, often in parts of the economy that struggle to obtain bank credit, like mid-sized private enterprises or municipal industrial projects. As of end-2014, total trust assets were 14 trillion yuan, according to China Trust Association data.

Previously, people who bought into opaque wealth management products, many of which were peddled by banks but actually backed by trust assets, found themselves heavily exposed to real estate loans. Trust firms’ changing asset mix means these investors may now instead find themselves exposed to high-yield corporate debt (junk bonds), volatile stock funds or risky short-term OTC debt instruments.

While this could help keep the wealth management industry running, and by extension help the trust industry stay afloat, it could delay efforts to properly price risk.

A Reuters analysis of China Trust Association data shows that while loans outstanding grew just 8 percent last year - far below the 62 percent growth in 2013 - growth in obscure asset categories including “tradable financial assets” and “saleable fixedterm investments” was 77 percent

and 47 percent, respectively.

Funding stress Sources at two major trust firms, who asked not to be named due to the issue’s sensitivity, confirmed they were shifting investment into the capital markets and OTC instruments.

An individual at one of China’s top three trusts said that in the past year his firm’s investment in shares and bonds grew 30-40 percent and 50 percent, respectively - helping explain where some of the leverage that has driven recent Chinese stock and fixed income market rallies has come from, and raising questions over how sustainable those rallies may be.

He said his trust had begun investing in ABS and bankers’ acceptances - tradable claims on a company’s future revenues - in January and October 2014, respectively, and would invest more this year.

Issuance of bankers’ acceptances, the riskiest form of shadow finance, slowed for most of last year only to rebound late in the year, while ABS issuance has risen rapidly over the

Yuan 14 trillion total trust assets end-2014 China Trust Association data

past year as China’s formal credit markets tightened.

Chinese companies often use bankers’ acceptances as a substitute for cash, so an increase in issuances can suggest businesses are under funding stress.

Net issuance of bankers’ acceptances surged from the fourth quarter of last year, and in January hit the highest level since the first quarter of last year, eclipsing trust loans and company-to-company “entrusted” loans as the largest net source of shadow finance.

This could imply that regulators’ efforts to squeeze the shadow finance sector have been only partially successful. A spokesperson for the China Banking Regulatory Commission declined to comment when reached by telephone.

Reinvention While overall shadow finance growth slowed to 43 percent last year, according to People’s Bank of China data, this ‘leakage’ from one kind of shadow financing to another reduces the impact of the regulatory crackdown on the sector.

Trust lending was by far the fastest growing form of finance in China from 2004-2014. Loans from trust firms expanded by over 26 times from end-2005 to an estimated 5.5 trillion yuan (US$878 billion) outstanding by end-2014. Total outstanding debt in the Chinese financial system during that period merely quadrupled.

During that period, trusts were a vital financing channel for local governments restricted from borrowing in formal debt markets. But the explosive growth of outstanding trust loans worried Beijing and prompted last year’s crackdown.

Trusts have since struggled to reinvent themselves as something closer to traditional asset managers or private funds.

Reuters

Business Daily | 9

March 17, 2015

Greater China

Fiscal income growth cools as economy slows

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rowth in China’s fiscal revenue cooled to its slowest in at least a year between January and February as China’s foundering economy dampened tax collection and other key sources of government income.

Fiscal revenue rose 3.2 percent to 2.57 trillion yuan (US$410.5 billion) in the first two months of the year, data from the Finance Ministry showed yesterday.

That was far less than an average 8.6 percent gain in fiscal income seen in 2014, and the slackest pace seen in at least a year.

Indeed, a breakdown of the figures showed taxes collected from the real estate sector fell 1.6 percent to 96.5 billion yuan in the first two months of the year as China’s housing industry stumbled.

China’s cooling housing sector, which accounts for about 15 percent of the Chinese gross domestic product, has been an increasing drag on the world’s second-biggest economy as a glut of unsold homes dampened

home prices and property investment.

Official data showed property sales in the first two months of 2015 dropped by the most in three years as real estate investment eased.

And in a reflection of the sagging housing sector, government revenue earned from selling state land tumbled 20.9 percent to 391 billion yuan.

Collection of income taxes also dropped 7.1 percent to 164.6 billion yuan, while consumption tax and import value-added tax skidded 9.7 percent to 194.8 billion yuan.

Tariffs also fell 5.3 percent to 40.9 billion yuan as plunging crude oil, iron ore and commodity prices reduced the value of imports.

On the other side of the ledger, fiscal expenditure rose 10.5 percent in the first two months of the year from the year-ago period, outstripping an average rise of 8.2 percent in 2014.

The spike in expenditure was a result of regional governments ramping up their spending to support the faltering economy, the Finance

Housing sector keeps affecting every layer of economy. Official data showed property sales in the first two months of 2015 dropped by the most in three years

Ministry said.

Government spending on social security and employment climbed 15.6 percent to 331 billion yuan,

China becomes world’s number three arms exporter Three Asian countries accounted for more than two-thirds of national exports

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hina has eased ahead of Germany and France to become the world’s number three arms exporter after the United States and Russia, a Stockholm-based think-tank said yesterday.

The volume of the multibillion dollar world arms trade rose 16 percent during the period 2010 to 2014 over the previous five years, the Stockholm International Peace Research Institute

added in its annual report.

The figures show that “the United States has taken a firm lead” with 31 percent of global exports of conventional weapons, SIPRI said, adding that Russia is second with 27 percent.

The next three arms exporters are far behind with about five percent each, and China is only slightly ahead of fourth-ranked Germany and fifth-ranked France.

Income taxes dropped 7.1 percent to 164.6 billion yuan

Three Asian countries accounted for more than twothirds of Chinese exports, with Pakistan buying 41 percent of the total, followed by Bangladesh and Myanmar. Beijing also had 18 client nations in Africa during the period.

Russia’s top client was India -the world’s leading arms importer- with 70 percent of its purchases coming from Russia.

The United States had

and expenditure on housing benefits for low-income groups jumped over a fifth to 39.3 billion yuan.

Reuters

the most diverse clientele.

South Korea, its top client, accounted for only nine percent of total US business.

Among the top suppliers, China’s sales were 143 percent the figure from the previous five years. Ukraine and Russia also saw surges in exports, while German and French exports declined.

The data reflects the volume of arms deliveries, not the financial value of the deals, SIPRI notes.

Among importers, India was far ahead of second- and third-placed Saudi Arabia and China, purchasing some 15 percent of the total volume compared with five percent each for the next two.

African arms imports shot up 45 percent in the period, SIPRI found. “Algeria was the largest arms importer in Africa, followed by Morocco,

whose arms imports increased 11-fold,” it said.

“Cameroon and Nigeria received arms from several states in order to fulfil their urgent demand for weapons to fight against the militant Islamist group Boko Haram,” SIPRI added.

While the arms trade has been on the rise for the past decade, the volume remains about one-third below its post-war peak reached in the early 1980s.

AFP

India is the world’s leading arms importer

Luxury big spenders: young, trendy and not so rich Fuelling their shopping habits are social media, multi-brand retail websites such as Beijing-based ShangPin.com and Italy’s Yoox Miral Fahmy

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lobal luxury brands expanding in China are better off targeting the HENRYs - “high earners, not rich yet” - instead of the ultra-wealthy, as a slowing economy and a government that frowns on official excesses usher in an era of less showy spending. HENRYs believe less is more. These younger spenders pride themselves on their individualism and snub the ostentatiously branded handbags and accessories

loved by the “secretary” types.

Fuelling their shopping habits are social media, multi-brand retail websites such as Beijingbased ShangPin.com and Italy’s Yoox, eclectic boutiques, and high-end department stores like Lane Crawford and Galeries Lafayette.

Chinese customers aged 25-35 are Yoox’s top spenders, International Markets Director Luca Martines told Reuters, adding that they are willing to mix niche labels with big brands.

Labels considered niche such as Celine and 3.1 Phillip Lim are among the “hottest” sectors, according to a report last week by online luxury magazine Jing Daily, citing branding and marketing experts.

Affordable labels like Tory Burch, Longines and Michael Kors are also in demand, while pricier, more conventional labels including Cartier, Louis Vuitton and Gucci have been hit by a “cold front”, the Jing Daily report added.

“The Chinese consumer is now more educated and less conformist, which means they are less inclined to look like a secretary and go for luxury brands that are overdeveloped,” said Lionel Roudaut, head of fashion design and textile at Singapore’s LASALLE College of the Arts. “The Internet has also given them access to products not available before.”

Reuters

A Louis Vuitton shop. An icon of luxury handbags.

10 | Business Daily

March 17, 2015

Greater China

Lufax loan site rejects ‘risky’ allegations Senior Chinese government advisers are calling for tighter supervision of peer-to-peer online lending

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ufax.com, a unit of Ping An Insurance (Group) Co., said none of its 7.5 million users have suffered any losses after a ratings company put it on a list of risky online lending platforms.

Shanghai-based Lufax has 837 million yuan (US$134 million) of paid-in registered capital and is in the process of getting 3 billion yuan more from unidentified investors, it said in a statement yesterday. The new investment puts Lufax on track to be the nation’s largest peer-to-peer platform by capital.

Dagong Global Credit Rating Co. last week put Lufax on a list of more than 350 such platforms that had significant credit risks. The agency estimated the Ping An unit’s actual paid-in capital had fallen to 80 million yuan from an earlier figure of 400 million yuan, without giving a specific timeframe or identifying the shareholders.

While Lufax didn’t specifically name Dagong in its statement, it denied other allegations that it disclosed information inadequately, ran an asset pool to pay off debts and offered cross-guarantees on products by different units.

Senior Chinese government

advisers are calling for tighter supervision of peer-to-peer online lending, which Yingcan Group estimates about quadrupled to US$17 billion last year from 2013, and is part of a shadow-banking industry that has driven total debt in China to almost three times gross domestic product.

Banking licenses The websites offer investors better returns than commercial lenders, averaging 15 percent in February versus the People’s Bank of China’s benchmark deposit rate of 2.5 percent, according to Yingcan.

PBOC Governor Zhou Xiaochuan said March 12 the platforms shouldn’t be considered as banks or credit cooperatives because they haven’t officially applied for, or received, banking licenses. Deputy Governor Pan Gongsheng said the same day the central bank will publish rules to promote the “healthy development” of the P2P industry as soon as possible.

Of China’s more than 1,500 lending platforms, 275 went bankrupt or had difficulty repaying money in 2014, up from 76 a year earlier, according to Shanghai-based Yingcan. The

US$17 billion

2014 peer-to-peer online lending in China Yingcan Group estimation

number of bankruptcies may rise to 500 this year, according to Zhu Mingchun, co-founder of Yingcan.

Pingan International Factoring (Tianjin) Co., a Lufax unit, is the creditor in a transaction that is “going through legal processes” after the borrower failed to honour its obligations, Lufax said in its statement. That loan is guaranteed by a third party so interests of the investors in that transaction won’t be affected, Lufax said March 12.

Bloomberg News

Consumer TV show targets Volkswagen, Nissan Marketing experts said that without damage control the impact of such shows in China could damage companies severely Adam Jourdan and Sue-Lin Wong

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KEY POINTS Chinese annual TV consumer expose criticises VW and Nissan Daimler’s Mercedes and Jaguar Land Rover also hit Annual expose show can dent reputation and sales

armakers including Volkswagen AG, Nissan Motor Co Ltd and Daimler AG were scrambling late on Sunday after China’s annual consumer rights day TV show said the firms oversold repairs and spare parts to drivers.

The annual “3.15” investigative special on China Central Television (CCTV), similar to the CBS network’s “60 Minutes” in the United States, also criticised Jaguar Land Rover for gearbox problems in some cars.

China is the world’s top auto market, and media criticism can dent reputations and drag on sales. iPhone maker Apple Inc made a rare apology in 2013 after criticism on the show of its after-sales service.

German carmaker Volkswagen, a target two years ago, was further criticised in an article before the show for its handling of a recall of its Sagitar model car.

“We have paid close attention to CCTV reporting ... and we sincerely apologise for any inconvenience caused to our customers,” said Volkswagen China spokeswoman Larissa Braun.

Nissan’s China joint venture said it would set up a team to investigate the allegations and strengthen the regulation of its service teams, according to a statement on its official microblog. Daimler declined immediate comment.

Land Rover apologised to its customers on its official microblog and said it was working to resolve the issue.

Multinational firms and their public relations teams often scramble to

respond to the allegations after seeing their company named and shamed for the first time on the night itself.

Pig blood The popular show, which singled out camera maker Nikon Corp last year, also said fast food chain Xiabuxiabu had used pig’s blood as a cheaper substitute for duck’s blood - a popular hotpot delicacy.

The firm said in a statement it would investigate the allegations and suspend sales of duck blood products.

Fast-food outlet McDonald’s Corp, supermarket chain Carrefour SA and home products firm Procter & Gamble Co have also previously come under the show’s spotlight.

Some firms have pushed out cutprice deals to consumers in the run-up the event to win over consumers in case they are targeted on the show.

CCTV itself has come under fire in China over the last couple of years, with some consumers rushing to defend its targets or simply changing channel.

But marketing experts said that without damage control the impact of such shows in China could damage companies severely.

“The 3.15 show still packs a punch to the firms targeted, and a poor or flippant response from a targeted company can evoke consumer outrage,” said James Feldkamp, chief executive officer of consumer watchdog MingJian.

Reuters

Business Daily | 11

March 17, 2015

Asia

S.Korea’s top firms to lift investment but lower recruitment South Korea’s legion of older workers has helped keep the jobless rate low but has exacerbated record low employment among the young

jobs. It is also a cause of the decade-long stagnation in wage growth, dampening consumption.

The country’s finance ministry is encouraging companies to increase investment and hiring, setting aside 15 trillion won in funds from the Korea Development Bank that will be used to match company investments.

The findings were based on a late February-early March survey of the country’s biggest conglomerates excluding financial groups, FKI said.

Reuters

Hyundai Motor Group and other conglomerates will increase their total investment to US$119.95 billion

S

outh Korea’s 30 biggest conglomerates will increase investment 16.5 percent in 2015 from a year ago, but will hire fewer new employees due to increased labour costs, business lobby group the Federation of Korean Industries (FKI) said yesterday.

Samsung Group, Hyundai Motor Group and other conglomerates will increase

their total investment to 136.4 trillion won (US$119.95 billion), excluding overseas deals or gains in stake holdings, the FKI said.

The total number of new recruits this year, however, will fall 6.3 percent from 2014 to 121,801 employees, but overall, the total number of employees will see a slight increase of 1 percent to 1,180,651 as some companies raised the retirement age

ahead of a new hiring law due to take effect next year.

“The decreased ability to recruit new entrants due to the extension of retirement age and higher labour costs due to the increase of base wages appear to have greatly affected new recruitment,” the FKI said in a statement.

South Korea has raised the retirement age from 55 to 60 for businesses hiring 300 employees or more

starting January 2016.

Many companies have also increased wages, as well as statutory benefits such as overtime allowances and severance pay since a 2013 Korean supreme court ruling.

South Korea’s legion of older workers has helped keep the jobless rate low but has exacerbated record low employment among the young - less than half of those aged 15 to 29 have

The decreased ability to recruit new entrants due to the extension of retirement age and higher labour costs due to the increase of base wages appear to have greatly affected new recruitment Federation of Korean Industries

Commodities drag down Indonesian exports Oil and gas exports were down 24.1 percent on year through the first two months of the year

I

ndonesia’s exports fell the most in two-and-a-half years due to sliding oil and gas exports, but a big fall in imports helped the country post a trade surplus for the third month in a row.

Southeast Asia’s largest economy has been hit by weak global oil and commodities prices, while a falling rupiah has not yet given exports a boost but has dampened domestic

KEY POINTS Feb exports -16.02 pct y/y as oil and gas exports fall Slide in imports by 16.24 pct signals weak consumption Trade surplus rises for third straight month on weak imports

consumption.

Exports in February dropped 16.02 percent from a year earlier, its largest fall since August 2012, data from the statistics bureau showed yesterday. Imports declined 16.24 percent. Economists in a Reuters poll had forecast exports would decline 7.60 percent and imports fall 6.80 percent.

“The 16 percent contraction in exports and imports is eye-catching, however prices add a distortion,” said Daniel Wilson of ANZ in Singapore.

“The firmer volume of imports, especially non-oil import volumes up 14.5 percent y/y year to date, suggests some firming of activity which is hidden in the headline contraction number.”

Oil and gas exports were down 24.1 percent on year through the first two months of the year, while oil and gas imports dropped 45.3 percent, data showed.

Most of Indonesia’s exports are commodities and with months of low global prices, shipments have

Oil and gas imports dropped 45.3 percent

been weak. A slowdown in big commodities importer, China, has also taken a toll with exports there in January-February falling more than 40 percent.

The rupiah, at 17-year lows, has not propped up exports so far as it has made imports of raw materials and capital goods more expensive, said Ahmad Erani Yustika, a professor at Brawijaya University in Malang, East Java.

“Theoretically a weak currency should help export competitiveness, but given that we produce things with imported raw materials, a weak rupiah actually increased costs and that affected exports,” Yustika told Reuters, adding it explains the contraction in both exports and imports in the past five months.

Imports in nearly all segments fell

in February, with only grains rising, the statistics bureau said.

The government is going to issue a set of regulations soon aimed at supporting exports and curbing imports. Among the proposed regulations is a tax break for firms exporting 30 percent of their production and temporary antidumping duties that will be imposed on imported goods suspected of being dumped.

Indonesia posted a third straight monthly trade surplus of US$738.3 million in February, helped by a large fall in imports, the statistics bureau said.

In 2014, Indonesia’s trade balance improved significantly, with the deficit more than halving to US$1.88 billion from 2013.

Reuters

12 | Business Daily

March 17, 2015

Asia Singapore watchdog blocks deal Anti-trust regulator blocked a takeover for the first time when it provisionally ruled last week that Malaysian IHH Healthcare Bhd’s planned purchase of a local unit of India’s Fortis Healthcare would lessen competition.

The proposal by IHH Healthcare, Asia’s largest hospital operator by stock market value, to buy RadlinkAsia Pte Ltd for US$98.4 million fell through after the ruling, Fortis said on Friday. The Competition Commission of Singapore, which informed the companies of its decision on March 11, said in a statement yesterday that the proposed transaction would have resulted in a “substantial lessening of competition”.

NZ-Korean FTA signing next week New Zealand Prime Minister John Key will visit the Republic of Korea next week to mark the signing of the New Zealand-South Korea Free Trade Agreement (FTA). Key said he and South Korean President Park Geunhye would witness the signing of the agreement on March 23 in Seoul. “The FTA will help New Zealand businesses maintain their competitive position in the (South) Korean market. Tariffs will be progressively eliminated on 98 percent of New Zealand’s current exports, which will create an estimated duty saving of NZ$65 million (US$47.83 million) in the first year alone,” Key said.

RBA working on benchmark replacement The Reserve Bank of Australia is working on a new interest rates benchmark for debt markets that could eventually replace the scandal-tainted bank bill swap rate (BBSW), a top central banker said yesterday. The RBA and the Australian Securities and Investment Commission (ASIC) aimed to create a robust risk-free interest rate benchmark for the local market, said RBA Assistant Governor Guy Debelle in a speech on the bond market. It would likely be based on overnight indexed swap (OIS) rates, which are essentially tied to the RBA’s over night cash rate.

Australian new vehicle sales jump Australian new vehicle sales jumped by the most in at least a year in February thanks to booming demand for sports utilities, perhaps one side effect of falling petrol prices, the Australian Bureau of Statistics said yesterday.

The ABS data showed 95,737 new vehicles were sold in February, seasonally adjusted, up 2.9 percent from January when sales had fallen 1.9 percent. Sales were also 4.1 percent higher on February last year. The pick up was led by a huge 10.5 percent surge in sales of sports utility vehicles to a record 33,516 in February.

Governor can’t convince Indian banks to cut rates Profitability, measured by the return on assets in the banking system, fell to 0.81 percent in the year ended March 2014 Anoop Agrawal and Anto Antony

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ndia’s largest lenders aren’t passing on two rounds of monetary easing to borrowers as profitability slides and bad loans surge.

State Bank of India and Bank of Baroda are among 43 of 47 lenders yet to lower base lending rates after the Reserve Bank of India cut its benchmark rate by 50 basis points to 7.5 percent in two moves this year.

The three-month interbank rate has fallen only seven basis points to 8.58 percent in 2015. A similar gauge of funding costs in China is at 4.9 percent.

“So far the drop in cost of funds isn’t enough to allow us to cut lending rates,” Ranjan Dhawan, Bank of Baroda’s Mumbai-based chief executive officer, said in a March 12 phone interview. “We’re walking a thin line,” he added. “We have limited scope to cut deposit rates because competition from other savings instruments and rising equity markets is strong.”

Central bank Governor Raghuram Rajan said in his March 4 policy statement that further monetary easing will need prerequisites including “the pass-through of past rate cuts into lending rates.” Union Bank of India said returns in the banking system have worsened from a seven-year low, and four of the five largest lenders reported higher soured loans in 2014.

“Banks are pressed on the profitability front more than ever before,” Arun Tiwari, Union Bank chairman and managing director, said in a March 11 phone interview.

“Lending-rate cuts alone won’t spur credit growth.”

Stressed assets Profitability, measured by the return on assets in the banking system, fell to 0.81 percent in the year ended March 2014, the lowest since at least 2007, RBI data show. Stressed assets, which include bad loans and restructured assets, are set to rise to 13 percent in the next 12 months, further eroding profitability, according to India Ratings & Research, the local unit of Fitch Ratings.

Loans in the system grew 10.4 percent in the 12 months through February 20, near the 9.7 percent pace in September that was the least since October 2009.

The RBI has lowered the proportion of deposits banks must invest in safer assets three times since June, leaving more funds for lending to support growth in Asia’s third-largest economy. The statutory liquidity ratio stands at 21.5 percent.

A branch office of State Bank of India in Mumbai

Banks have limited room to cut deposit rates as competing instruments such as savings plans and post office accounts are offering higher rates, according to Vibha Batra, the New Delhi- based head of financial industry ratings at ICRA Ltd., the local unit of Moody’s Investors Service.

Deposit rate State Bank of India, the country’s largest by assets, pays 8.25 percent interest on five-year deposits compared with 8.5 percent offered

by India Post and National Savings Certificates and a 31 percent surge in the S&P BSE Sensex Index of stocks in the past 12 months. The bank’s base lending rate, below which it can’t give loans, has been at 10 percent since November 2013.

The International Monetary Fund estimates it takes 13 months for 80 percent of the change in the RBI’s benchmark rate to pass-through to

Banks are pressed on the profitability front more than ever before Arun Tiwari Union Bank chairman and managing director

interbank funding costs, according to a March 11 report by the Washingtonbased lender. Transmission to banks’ deposit and lending rates takes another 9.5 months and 18.8 months, respectively, the IMF said.

“Most banks may cut lending rates in the September quarter,” Hatim Broachwala, a banking analyst at Nirmal Bang Institutional Equities Ltd. in Mumbai, said by phone on March 13. “Credit demand is also expected to improve by then.”

Capital adequacy The average capital-adequacy ratio for Indian lenders fell 20 basis points, or 0.20 percentage point, to 12.8 percent in the six months ended Sept. 30, central bank figures show.

The cost of insuring State Bank’s bonds against non-payment for five years using credit-default swaps has climbed to 146 basis points from 143 on March 5, the lowest since April 2010, according to data provider CMA. Similar contracts for ICICI Bank Ltd. have risen one basis point to 158 in that period.

The yield on India’s 8.4 percent sovereign notes due July 2024 rose 9 basis point to 7.80 percent last week according to prices from the RBI’s trading system. The rupee fell 1.25 percent to 62.9650 a dollar.

“Rising bad loans and lower demand for credit are putting many lenders under phenomenal pressure to improve retained earnings and bolster capital ratios,” Batra from ICRA said by phone on March 13. “So they may be forced to defer a cut in lending rates till the credit environment improves and the pressure on earnings ease.”

Bloomberg News

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Business Daily | 13

March 17, 2015

Asia

Southeast Asia attracts more foreign investment than China

FDI into the Philippines grew the fastest

Nicholas Owen

S

outheast Asia’s major economies drew more foreign direct investment combined than China for the second straight year in 2014, as growth in their giant neighbour cooled. But by country, inflows into the region were uneven, swayed by political change and the varying costs of doing business.

Overall FDI into Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam rose to a record US$128 billion in 2014, estimates compiled by Thomson Reuters show.

That surpassed the US$119.56 billion that flowed into China. FDI into the Philippines grew the fastest, at 66 percent, while in Thailand, where the military seized power last year, inflows fell. FDI into Indonesia, the region’s biggest economy, rose around 10 percent even though it was an election year.

As China’s troubled manufacturing sector loses momentum, Chinese businesses will be venturing abroad to cut operating costs and to search for new markets, economists say.

Manufacturing powerhouses in Southeast Asia should pay heed.

“Rising wages in China are leading low-end manufacturers to look for other low-cost locations for

their factories, with countries like Vietnam and the Philippines looking like attractive alternatives,” said Dan Martin, Asia Economist at Capital Economics. “ASEAN is also a large

IMF chief hails India as ‘bright New Zealand to continue spot’ in world economy solid growth A fall in global crude prices has also been a major boon to a country that is one of the world’s biggest oil importers

Improved household incomes and strong net migration were boosting household spending

I

nternational Monetary Fund chief Christine Lagarde hailed India as the bright spot of the global economy on Monday ahead of talks in New Delhi with Prime Minister Narendra Modi.

While Lagarde urged Modi to do more to open up the economy, she said India had the “opportunity to become one of the world’s most dynamic economies” with growth running at above seven percent.

“Among the emerging markets, and compared to advanced economies, India is the bright spot,” the former French finance minister told The Times of India newspaper.

Since Modi came to power last May, inflation has fallen to around five percent while revised gross domestic product (GDP) data has put growth for the current financial year at 7.4 percent, meaning Asia’s third largest economy is now outpacing China.

A fall in global crude prices has also been a major boon to a country that is one of the world’s biggest oil importers.

Lagarde welcomed the government’s first full budget last month for striking “a good growthequity balance” and praised Modi’s drive to make India a major manufacturing hub and an easier place to do business.

But she also outlined a series of areas where the government needed to do more to encourage investment.

“The economy should be opened more fully to the world, and there’s a good case for removing domestic

E

International Monetary Fund chief Christine Lagarde

constraints on growth, especially in energy, mining and power,” she said.

“Further reforms of India’s complex labour laws to encourage young jobseekers and boost female labour participation, as well as easing of land acquisition and other clearances, will help revive the investment cycle and achieve faster growth.”

Lagarde is paying a two-day visit to India, her first since the rightwing Modi replaced the centre-left Congress party in government.

As well as her talks with top officials, she is also due to deliver a keynote speech in New Delhi before travelling to the financial capital Mumbai for meetings on Tuesday.

AFP

conomy is expected to continue to grow solidly over the next three years, driven by home building and exports, an independent economic think tank said yesterday.

Economic growth was expected to be 3.3 percent in the March 2015 year, before easing to 2.9 percent, 2.8 percent and 2.6 percent in the following three years, according to the New Zealand Institute of Economic Research (NZIER).

The NZIER Consensus Forecasts, an average of forecasts compiled from a survey of financial and economic agencies, said home building was a key contributor to growth in the last year.

market in its own right, and one with good long-term growth prospects.

Given the general slowdown in other emerging market regions in recent years, it is starting to stand out.”

The Philippines, the secondfastest growing major economy in Asia, attracts investors with its strong economic fundamentals.

But one concern is the continuity of economic policies following the 2016 general elections. That means some investment decisions might be postponed. Slumping commodity prices could pinch on FDI inflows into resource-rich Indonesia and, to a lesser extent, Malaysia. Indonesian President Joko Widodo, who took office in October, is seeking more foreign investment in manufacturing to counter the volatile resources sector. But Indonesia has many improvements to make, particularly in its business infrastructure, to successfully challenge the region’s manufacturing leader - Thailand.

Reuters

Residential construction activity levels would remain high, but the rate of growth would moderate as the rebuild of the earthquake- battered Canterbury region neared completion, although demand in the biggest city of Auckland was still strong, said an NZIER statement.

Improved household incomes and strong net migration were boosting household spending.

Consumer price inflation was expected to drop to an annual rate of 0.5 percent in the March 2015 year, but was expected to lift as capacity pressures emerged and the Reserve Bank of New Zealand would begin gradually raising interest rates from 2017.

Exports would be flat over the March 2015 year, largely reflecting the effects of slowing global demand, but they would lift as the New Zealand dollar fell and the global economy improved.

The New Zealand dollar would remain high in 2015 then gradually ease in the following years, but it was expected to remain at historically high levels.

“There is a wide divergence in views over the labour market,” said the statement. “Most expect continued employment growth to further push down the unemployment rate.

However, some expect a sharp lift in the unemployment rate due to strong migration expanding the labour force.”

Xinhua

Reserve Bank of New Zealand (headquarters pictured) would begin gradually raising interest rates from 2017

14 | Business Daily

March 17, 2015

International Global Ports posts 2014 net loss London-listed Russian ports operator Global Ports said yesterday it had made a net loss of US$193.1 million last year compared to a profit of US$114.1 million in 2013 due mainly to foreign exchange losses. The company also said its board had proposed issuing new shares to help the company “react quickly to potential business opportunities and to take advantage of market conditions to efficiently raise new capital”. The board also proposed not making further dividend payments in the medium term, the firm said in a statement.

Scripps buys stake in Polish network U.S. media group Scripps Networks Interactive agreed to buy a majority stake in Polish broadcaster TVN for 584 million euros (US$615.3 million), gaining a foothold in a TV advertising market where revenues beat the global average and grew 6 percent last year. Scripps, which owns the Travel Channel, the Food Network and other channels, said yesterday it would buy the 52.7-percent stake in Poland’s second largest private TV network from local financial holding firm ITI and French media firm Vivendi. Scripps would then launch a tender to increase its stake.

Boeing not to repeat errors Boeing is well-positioned to hit record production targets for its popular 737 jetliner by 2018, having learned from past mistakes, the head of its industrial system told Reuters. Boeing’s production lines face a crucial test as the company prepares to lift output of its bestselling jet by 24 percent while simultaneously shifting to a new fuel-saving model, the 737 MAX. Boeing has not attempted such a production boost and model shift since 1997, when it was forced to stop assembly.

UK’s Osborne unveils pension reform budget giveaways British finance minister George Osborne offered a sweetener to pensioners, less than two months before a national election, but promised there would be no big giveaways for voters when he sets out his final pre-vote budget. With many opinion polls showing the governing Conservatives neck-and-neck with the opposition Labour party, Osborne will be looking for a chance to boost his party’s re-election prospects at his annual budget statement tomorrow. While his hopes of delivering major tax cuts have been frustrated by slow progress in bringing down Britain’s budget deficit, Osborne has been given some room for manoeuvre.

Maduro given decree powers Venezuela’s parliament granted President Maduro decree powers for the rest of 2015 in a move to defend the country from U.S. meddling. In a noisy National Assembly session, ruling Socialist Party legislators, who have a majority, applauded the “Enabling Law” as a legitimate response to a U.S. declaration that Venezuela is a security threat and sanctions on seven officials. “They (the United States) want to stick their hands into Venezuela’s wealth, just as they have done in other countries,” ruling party legislator Tania Diaz said, presenting the “anti-imperialist” Enabling Law to parliament.

Thousands to protest in Frankfurt against ECB ‘austerity’ The protest will take place near the ECB’s 1.3 billion-euro headquarters

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housands of people are expected to march in Frankfurt tomorrow to protest against austerity policies they blame on the European Central Bank, as the ECB inaugurates its new high-rise headquarters.

The gathering follows protests in Cyprus outside a meeting of the ECB’s decision-making Governing Council and marks dissatisfaction with the powerful institution, which has sought to distance itself from political wrangling in the euro zone.

“The main reason for the protest is that the ECB is in the troika and the troika is responsible for the austerity policies that have pushed so many into poverty,” said Ulrich Wilken, one of the organizers of the ‘Blockupy’ protest which will take place near the ECB’s 1.3-billion-euro (US$1.4 billion) headquarters.

The trio of inspectors, or troika, includes the European Commission and International Monetary Fund and monitors countries such as Greece and Cyprus that have received international bailouts.

The ECB is also influential as a provider of finance to the banks of struggling countries and has in recent weeks sanctioned a drip feed of extra

New ECB headquarters in Frankfurt in a phase of the construction

emergency finance to Greece’s lenders.

Greek Finance Minister Yanis Varoufakis last week criticised ECB policy towards Athens as ‘asphyxiating’, a criticism also made by the protest organizers.

“They are not democratically elected, yet they push governments into taking action all the time,” said Wilken. “We saw this again in the manner in which they made the terms harsher for Greece to get finance after the election.”

Earlier this year, the ECB stopped accepting Greek bonds as security in return for funding, when that country’s new leftist government all but abandoned its reform-for-aid pledges.

“These are the policies that they carry out from their nice new offices in Frankfurt,” Wilken said.

Organisers expect 3,000 people from abroad to join the protest, with a further 7,000 coming from Germany.

Reuters

Big problem for fund managers: liking Apple too much Holding a concentrated position in one company is one way for stock pickers to stand out as investors move money to passive index funds

A

t more than 15 percent of his fund’s assets, John Burnham, manager of the US$136 million Burnham Fund, has a larger stake in Apple than any other diversified fund.

“I think they are doing everything right and it’s still a cheap stock based on earnings and revenue,” he says.

Yet that devotion for Apple is a problem for Burnham and some other managers of so-called diversified funds like his - they want more Apple than they can buy under self-imposed risk-reducing guidelines that typically have them holding no more than 5 percent of their assets in any one company.

Burnham and the 174 fund managers like him who hold large stakes of their diversified portfolios in Apple are pulled in two directions: hoping to prevent an unforeseen drop in Apple shares from upending their portfolios, while also benefiting from a company whose shares are up 12 percent this year so far.

“Your positioning in Apple may hold a big sway in how your fund does overall, particularly in categories like large blend where every basis point counts,” said Laura Lutton, who oversees equity fund research at fund tracker Morningstar.

In 2014, for instance, funds that underweighted Apple compared to broad market indexes were the most likely to underperform their peers, she said.

Risks Holding a concentrated position in one company is one way for stock pickers to stand out as investors move money to passive index funds. Yet it is unusual for diversified funds like Burnham’s to hold more than 10 percent of their portfolios in one company, said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ. Most fund managers are inclined to take profits when a stock hits 7 percent of a portfolio, yet there are few set mandates set down by fund firms, Rosenbluth said. He said that he can’t think of any fund families that have to sell if holdings exceed guidelines as a result of appreciation.

Diversified mutual funds are allowed by law to add shares of a company as long as its total weight is below 24.9 percent of their portfolios overall, but do not have to sell shares if they appreciate above that level,

said Jay Baris, an attorney at Morrison & Foerster in New York.

Burham didn’t set out to have such a big stake in Apple, he said. He began buying shares in 2005 when they traded at a split-adjusted level of less than US$7 each. Those shares have now appreciated over 2,000 percent.

“It’s the world’s greatest company.

I just don’t see any reason to sell it,” Burnham said, adding that he thinks that the stock should trade above US$200 a share. Shares of the company closed at US$123.59 on Friday.

His big weighting in the company is also helping his performance, which may in turn bring in more investor dollars. Burnham’s fund, which also has significant positions in Chipotle Mexican Grill and Williams Companies, is up 4.8 percent for the year to date, according to Lipper, a return about 4 percentage points better than the S&P 500.

Over the last 5 years, the fund has returned an average of 14.3 percent a year, a performance slightly better than average large cap fund. The fund costs US$1.36 per US$100 invested, a rate slightly above average.

Reuters

Business Daily | 15

March 17, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Gender equality and Earth’s future

THE KOREA HERALD South Korea’s exports of agricultural products dropped 8 percent from a year earlier in February as shipments of both fresh foodstuff and processed goods dwindled, the government said yesterday.

Outbound shipments of farmed goods amounted to US$420.1 million last month, compared with US$456.5 million in the same month last year, according to the Ministry of Agriculture, Food and Rural Affairs. The drop was mostly attributed to large falls in shipments to Japan and the United States.

Shipments to China dropped 7.8 percent on-year to $57.3 million.

THE STAR Telecommunications companies (in Malaysia) are trying to translate greater data usage into higher average revenue per user (ARPU) even as the industry’s regulator is looking into ways to get the telcos to reduce their current service charges. Telcos have been changing the way they package their products to monetise data, their future growth area, since early this year. RAM Ratings Services analysts, who had issued an industry commentary recently, said translating the greater data usage into higher ARPU remained a key challenge, although the increased usage was good news.

THE STRAITS TIMES Non-executive directors at medium-sized and large listed companies in Singapore notched up hefty fee increases over the past year of 16 per cent and 15 per cent respectively, on average, a new survey had found. However, fees for nonexecutive directors at smaller firms grew a slower 7 per cent - close to the median, given the number of small listed companies. Global management consultancy Hay Group said yesterday that for the 2013-2014 financial year, the median fee for nonexecutive directors at 229 Singapore-listed companies surveyed rose 7.1 per cent.

Mary Robinson

President of the Mary Robinson Foundation and the UN Secretary-General’s Special Envoy on Climate Change

Christiana Figueres

Executive Secretary of the United Nations Framework Convention on Climate Change

Amina J. Mohammed

UN Secretary-General’s Special Adviser and has served as Assistant-Secretary-General on Post-2015 Development Planning since 2012

T

wenty years ago, the adoption by 189 governments of the Beijing Declaration and Platform for Action marked a turning point in the history of women’s rights. This progressive blueprint remains a powerful source of inspiration in the effort to realize equal opportunities for women and girls.

But while much progress has been made in the intervening decades, much more remains to be done to ensure that women and children are guaranteed healthy lives, education, and full social inclusion. In just 42 countries do women hold more than 30% of seats in the national legislature, and girls still do not have the same educational opportunities as boys in Sub-Saharan Africa, Oceania, and western Asia.

Gender equality is not just the concern of half of the world’s population; it is a human right, a concern for us all, because no society can develop – economically, politically, or socially – when half of its population is marginalized. We must leave no one behind.

This is a year of global action.

Governments will adopt a new set of Sustainable Development Goals, work together to draft a meaningful climate agreement, and craft a framework to provide the financial resources needed to deliver on a global sustainable devel-

opment agenda. Those participating would be wise to remember that inclusive sustainable development can be realized only when all human rights – including gender equality – are protected, respected, and fulfilled.

The three of us – each from different continents – support these international processes.

We share a common motivation for our work: protecting our planet for our children and

The implications of not providing girls with equal voices, choices, and opportunities affect not just their lives, but the future of the planet

grandchildren, and ensuring the development of a world where all people – regardless of their gender, race, religion, age, disability, or sexual orientation – have an equal opportunity to achieve their aspirations.

It is critical that we continue to engage men and boys actively in the fight against gender-based discrimination and violence. We have an opportunity to secure a better future and raise a new generation of girls and boys who respect one another and work together to protect the rights of all people.

The implications of not providing girls with equal voices, choices, and opportunities affect not just their lives, but the future of the planet. Efforts to promote inclusive sustainable development and fight climate change are inextricably linked.

If we care about development, we must care about the consequences our greenhouse-gas emissions are having around the world. And if we do not take urgent action, we will irreparably damage the natural systems on which life depends.

This is not a threat that we can set aside until we have eradicated poverty worldwide.

Nor is it a problem that we can leave to future generations to address. Left unchecked, climate change – along with other unsustainable patterns of development – could wipe out the gains of recent decades.

All countries – developed and developing – have a role to play in ensuring a stable world for our children.

Women are among those most vulnerable to the impacts of unsustainable practices and climate change, because they often have no independent income or land rights. In many countries, women are responsible for the provision of water and food for their families.

And when the usual sources of these resources are disrupted, women are forced to travel farther and spend more time working for less return. Scarcity requires them to make difficult choices like pulling children out of school or deciding which family member can afford to skip a meal.

In many homes around the world, women are at the heart of the household’s nexus of water, food, and energy – and thus often know first-hand about the challenges and potential solutions in these areas. In our conversations with women around the world, we hear about their struggles, but also their ideas, many of which, if applied, could facilitate change. Women are the most convincing advocates for the solutions that they need, so they should be at the forefront of decision-making on sustainable development and climate-change mitigation.

During the 59th session of the Commission on the Status of Women in New York, the international community will take stock of the progress that has been made toward achieving what was pledged 20 years ago in Beijing and assess where more efforts are needed.

This year will be crucial. With the Financing for Development conference in July, the Special Summit on Sustainable Development Goals in September, and the UN Climate Change Conference in December, we have the opportunity to integrate gender equality and women’s empowerment fully into the effort to promote sustainable development and fight climate change.

The three of us wake up every morning thinking about how to make this happen. Everyone should. We call on all women and men to join us in making their voices heard loudly and in seizing this opportunity for a just and equitable future for all.

THE PHNOM PENH POST Cambodia was the only country in the Greater Mekong sub region to have increased its rate of exports following the 2008 global financial crisis, thanks largely to garments accounting for the majority of its manufacturing exports, a new report has found.

The Greater Mekong 5 – Cambodia, Laos, Vietnam, Myanmar and Thailand – have all increased exports over the past two decades, reaching a combined total of US$383 billion. But in the five years following the financial crisis, all of the Mekong 5, other than Cambodia, have seen a deceleration in their export growth rate.

The United Nations (General Assembly hall pictured) is celebrating the 59th session of the Commission on the Status of Women

Project Syndicate

16 | Business Daily

March 17, 2015

Closing China shares hit 67-month high

Hong Kong’s GNI up 4.8 pct in December

Shares rose to the highest level in five and a half years yesterday after Premier Li Keqiang said China could turn to policy tools to aid economic growth. The benchmark Shanghai Composite Index opened higher in the morning and rallied 2.26 percent to finish at a 67-month high of 3,449.30 points. The Shenzhen Component Index went up 2.60 percent to close at 12,017.77 points. More than 100 shares on the two bourses soared by the daily limit of 10 percent, while only 19 shares declined. Combined turnover expanded to 912 billion yuan.

Hong Kong’s Gross National Income (GNI) in the fourth quarter of 2014 increased by 4.8 percent over a year earlier to HK$625.6 billion (about US$80.62 billion) at current market prices, the Census and Statistics Department announced yesterday. According to the department, the Gross Domestic Product (GDP), preliminarily estimated at HK$611.6 billion at current market prices in the same quarter, recorded a 4.6 percent increase over the same period. Measured at current market prices, the value of GNI was larger than GDP by HK$14 billion in the fourth quarter of 2014.

Pilot carbon trading markets to scale up Local authorities plan to extend pilot markets in the cities of Jinchang and Jiuquan into a province-wide scheme

The National Development and Reform Commission (NDRC) is in favour of a unified market that imposes caps on major industries

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he Chinese provinces of Gansu and Anhui are among several regions now working to set up carbon exchanges, but it remains unclear how the new CO2 trading platforms will be integrated into a nationwide scheme set to start next year.

China’s seven existing pilot carbon schemes force around 2,000 firms to buy permits to cover their

e missions. P r em i er L i Keqiang vowed last week to “expand the trials for trading carbon emissions rights” to combat climate change.

But the growing number of mostly autonomous exchanges, each of which has its own separate trading rules, could cause more headaches for regulators designing the national market.

Two cities in northwest China’s Gansu, home of

Thomas Kwok denied bail

H

ong Kong real estate billionaire Thomas Kwok, currently serving a five-year jail term, was denied bail ahead of an appeal against his conviction for corrupting the city’s former No. 2 official.

Court of Appeal Vice President Wally Yeung said yesterday after hearing arguments that he would deliver a written decision later. No date was announced for the actual appeal hearing.

Kwok, who headed Hong Kong’s biggest developer Sun Hung Kai Properties Ltd. with his younger brother, was found guilty in December of conspiring with Rafael Hui to commit misconduct in public office. The seven-month trial was the city’s highest-profile corruption case and exposed family feuds and cosy ties among the elite, and in Hui’s case a decadent lifestyle that eventually bankrupted him.

A nine-member jury found Kwok guilty of conspiring to pay HK$8.5 million (US$1.1 million) to Hui from 2005 to 2007 in exchange for favourable treatment for Sun Hung Kai, the city’s biggest developer and commercial landlord.

He was acquitted of two other charges.

Bloomberg News

some of the country’s biggest wind farms, have now been given the go-ahead by the provincial government to launch a pilot carbon exchange this year, official local news portal gscn.com. cn reported yesterday.

Local authorities plan to extend pilot markets in the cities of Jinchang and Jiuquan into a province-wide scheme, although formal launch dates have not been set.

As well as Gansu, Anhui province, Hangzhou in Zhejiang province, and Qingdao in Shandong are planning their own initiatives.

The National Development and Reform Commission (NDRC), which is designing the national CO2 scheme, is in favour of a unified market that imposes caps on major industries like power generation, but regulators are discussing how the existing pilot markets will fit in.

One possibility is to obligate all the provinces under a national cap but

leave options open for the jurisdictions to be included gradually into the national system, but the alternative is to widen coverage by launching more regional pilot schemes, which can finally be linked together once the nationwide market becomes fully functional in 2020.

While the final decision is pending approval from cabinet, the existing markets are determined to go their own way and widen coverage into more sectors.

One difficulty is the different thresholds at which firms are forced to participate in the schemes.

Shenzhen’s pilot market is about to be widened into the transportation sector, the fist time traffic emissions have been covered in China, and it could bring around 400 new companies into the scheme, Ge Xingan, vice director of Shenzhen’s China Emissions Exchange, told Reuters.

But Shenzhen, China’s smallest market, sets a threshold of just 3,000 tonnes of CO2 a year, less than one third of the levels set elsewhere, and in the new nationwide scheme, the coverage threshold could be as high as 26,000 tonnes, according to Jiang Zhaoli, an NDRC official.

Reuters

Leadership and talent management pays off

India wholesale prices drop 2.06%

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C

holesale inflation fell a sharper-thanexpected 2.06 percent in February, the fourth straight drop, as global oil prices sit at multi-year lows, data showed yesterday.

The fall in the Wholesale Price Index (WPI), the inflation measure with the biggest basket of goods, was greater than a 0.8 percent drop predicted by a Bloomberg survey and will fuel talk of another interest rate cut. Prime Minister Narendra Modi’s right-wing government had earlier revised the November fall in WPI inflation to 0.17 percent.

The latest figures show food and fuel prices dropped in February, good news for millions of Indians living in chronic poverty who are badly affected by any sharp changes in both categories.

“My sense is that the Reserve Bank of India (RBI) will take this chance and cut 25 basis points in April,” said Ashutosh Datar, economist at IIFL Institutional Equities in Mumbai.

The RBI has made two unscheduled cuts this year on easing inflation in a bid to boost business borrowing and assist growth.

ompanies with strong leadership and talent management practices increase their revenues 2.2 times faster and their profits 1.5 times faster than companies with weak practices, said a report released here by the Boston Consulting Group (BCG) yesterday.

The report entitled “The Global Leadership and Talent Index: The Smart Way to Improve Capabilities and Create Value” is the result of a recently completed survey of 1,263 CEOs and HR directors of global companies.

Based on the assessment of a company’s relative strength of each of these capabilities by the executives, BCG created six levels of leadership and talent management maturity, such as “talent magnets”, “average performers”, and “talent laggards”.

The study generated the Global Leadership and Talent Index (GLTI), one of the first tools of its kind, which allows companies to accurately assess their leadership and talent capabilities and also lays out a specific roadmap to help them improve.

AFP

Xinhua