Macau business daily, Mar, 19, 2015

MOP 6.00 Closing editor: Luís Gonçalves Publisher: Paulo A. Azevedo Number 752 Thursday March 19, 2015 Year III

A page turner

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ocal bookshops are feeling the heat. Taiwan’s biggest online bookstore - books.com.tw – has entered the Macau market. Applying further pressure on bookstores here. Its game-changer is its discount policy and speedy product delivery. Several bookstore owners are wary. As Taiwanese novels are popular. On the downside, some are bracing for a 20-30pct desertion by subscribers.

On the other hand, some take it as a wake-up call. Either way, expect better service, and innovations from traditional stores PAGE

3 Macau law applied in Zhuhai for first time

Heeding the call

PAGE 4 China stocks break 15-year link with HK as rates diverge

Global Gaming Expo (G2E) Asia is back. Organisers say non-gaming sectors will be in the limelight.

In particular, clubbing and entertainment. Conferences on the DJ profession, social media, and how to equip the clubs of tomorrow all figure in the expo. Not to mention everything to do with gaming

PAGE 7 Watch retailer Hengdeli profit up 26 pct in 2014

PAGE 4 Cuiheng to help diversify Macau economy

PAGE 6

PAGE 2

Air Macau taken to task on fuel surcharges

HSI - Movers March 18

Name

Legislator Kwan Tsui Hang is adamant.

Air Macau should account for its tardy adjustment of fuel surcharge. The territory’s flag carrier only lowered it last month. While most airlines around the globe did so mid-2014. When international fuel prices plunged by half. What does the city’s Civil Aviation Authority have to say, she asks.

www.macaubusinessdaily.com

PAGE 4

Home prices drop in metropolis Dropping like a stone. New home prices are getting cheaper and cheaper in China. Slower sales in February due to the New Year’s festival drove average prices down further. In the country’s biggest cities, owners – and buyers - saw 5.7pct come off

Page 8

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China Resources Ente

4.62

Kunlun Energy Co Ltd

3.51

Galaxy Entertainment

2.23

Wharf Holdings Ltd/T

2.01

China Resources Powe

1.91

Cathay Pacific Airwa

-0.59

China Overseas Land

-0.69

China Resources Land

-0.70

Link REIT/The

-0.85

Want Want China Hol

-2.01

Source: Bloomberg

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Gearing up for gas It’s a gas. The Chairman of the Executive Committee of CEM has announced an innovative plan. The company will invest some MOP1.7 billion to generate electric power from natural gas. Total investment this year in Macau will be around MOP1 billion. The new wave of casinos is expected to increase power consumption. But the CEO says Macau’s economic momentum will determine just how much

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2 | Business Daily

March 19, 2015

Macau

Non-gaming elements to dominate G2E Asia In this year’s edition of Global Gaming Expo (G2E) Asia, non-gaming sectors such as clubbing and other entertainment elements will feature strongly Joanne Kuai

joannekuai@macaubusinessdaily.com

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lobal Gaming Expo (G2E) Asia has announced that it will host a pavilion for Nightlife, as the result of a partnership with Macau International Clubbing Show (MICS). The exhibition will take place at The Venetian Macao from May 19 to 21.

The next edition of G2E is going to be more focused on the non-gaming sector than in previous years, following the recent trend of the Macau gaming industry.

“Entertainment has become an increasingly significant feature in the gaming industry. This is the first year G2E Asia is bringing suppliers and high profile brands from the international clubbing scene to the gaming industry”, said Josephine Lee, senior vice president of Reed Exhibitions, the organiser of the exhibition in partnership with the American Gaming Association.

The Macau International Clubbing Show (MICE), featuring bar

equipment, sound and light, event management, design, beverages and new technologies, has participants from 31 countries.

Conferences on how the DJ profession has been evolving, and how social media such as Facebook has become the core of communication

for nightlife establishments, and what will equip clubs of tomorrow will take place during the expo.

Reed Exhibition Senior Marketing Director, Lisa Moi, also told Business Daily that this year’s highlights include iGaming, where 20 iGaming exhibitors will be presented and a summit on the topic will be held on 21 May. In the IT and business solutions sector, some internationally acclaimed brands, such as IBM will also be joining, with One2One summit, where suppliers will be connected with prequalified key purchasing decision makers in the region, considered to help with accelerating sales by shortening the sales cycle and an effective way of building business relationships.

Ms. Moi added that another highlight of this year’s event is the All Asia Dealer’s Championship, where croupiers will showcase their talents and skills and share their experiences with their peers from other Asian jurisdictions. The event aims to encourage the front staff of the industry and foster their career development.

In addition, an Asia Lottery Forum covering issues of the lottery industry in Asia will be held. A pavilion dedicated to Macau companies is also designed for local brands to showcase them to G2E Asia buyers, who comprise more than 70 per cent of international visitors.

Data provided by the organiser also shows that from 2013 to 2014 the number of attendees at G2E Asia jumped 36 per cent from 6,074 to 8,233. At the same time, the number of exhibitors increased 13 per cent from 141 to 160.

Business Daily | 3

March 19, 2015

Macau

Taiwan’s biggest online bookstore threatens local trade A speedy and convenient delivery service offered by books.com.tw means extra pressure imposed upon traditional bookstores here Stephanie Lai

sw.lai@macaubusinessdaily.com

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he recent entrance of Taiwan’s biggest online bookstore books.com.tw - into Macau has spelt further pressure on local bookstores, given the company’s discount policy and speedy product delivery, a challenge which compels traditional bookstores to improve their subscription service and enhance reader loyalty.

The books.com.tw operation, an online subsidiary of major Taiwanese food conglomerate Uni-President Enterprises Corporation, announced on Monday that their product pick-up service was available from 7-Eleven convenience stores in Macau, almost a year after the online bookstore’s first launch of this service in neighbouring Hong Kong in April last year.

The delivery charges of the ordered items for Macau customers is about HK$5 more than in Hong Kong, according to the company.

In addition to retailing books on the website, the Taiwanese enterprise purveys some 40,000 types of item ranging from stationery to cosmetics, dried food, electronic products and clothes, which are also available for Macau customers to purchase online and pick up from convenience stores here.

Local traditional bookstores Cultural Plaza and Starlight Bookstore anticipate that the entrance of books.com.tw could mean a loss of subscribers in the short term but the entry of the online bookstore would not immediately translate into a price competition here, they say.

Price Wars “We’ll evaluate how well books. com.tw works here and what will

happen to our revenue terms,” director and general manager of Starlight Bookstore Daniel Sio told us, saying: “I don’t think a competition of discount policies will happen here soon.”

Upon the start of the product pickup service here, the Taiwan online bookstore has announced a special discount policy by which customers need not pay delivery expenses when purchasing more than five items from the website from March 16 to the end of this month.

“We will also see if we can further speed up our current delivery of books imported from Taiwan. And for some of these books from there, we’re skipping the Hong Kong distributors and will import them directly from the Taiwanese publishers,” Mr. Sio said. “The cost therein would be a bit cheaper but we’ll see whether it will be translated into the selling price because we are trying to avoid too much of a price competition here when the bookstores’ operation here is already quite challenged.”

For Mr. Sio’s Starlight Bookstore, around 60-65 per cent of the books on sale are imported from Taiwan, of which Chinese novel translations remain popular amongst readers here. The entrance of books.com. tw, however, will not make Starlight alter its current structure regarding imported books from the island, Mr. Sio said.

Cultural Plaza, meanwhile, which imports some 10-20 per cent of its books from Taiwan, expects a shortterm impact caused by books.com.tw.

“I think we’ll be losing 20-30 per cent of our existing subscribers that frequently order Taiwanese books, at least for these first couple of months

following the [introduction] of books. com.tw here,” general manager Chan U Ion told us.

The Taiwan online bookstore is looking to register four times its existing sales revenue generated from the SARs with the extension of the pick-up service to Macau, Taiwan’s Chinese-language media reported.

The selling price of books available on books.com.tw is 20 to 30 per cent cheaper than those sold in Hong Kong’s traditional outlets, according to Taiwan media.

Better service To cope with this latest challenge posed by the Taiwan online bookstore,

I think we’ll be losing 20-30 per cent of our existing subscribers that frequently order Taiwanese books, at least for these first couple of months following the [introduction] of books.com.tw here Chan U Ion, General Manager of Cultural Plaza

both Starlight Bookstore and Cultural Plaza pledge to improve their service to enhance the loyalty of their subscribers.

“We’re now fixing our own website, into which we’ve already considered incorporating an online order service in future,” said Mr Sio. “We’re now discussing how we can place an online payment system there; and if things turn out successful, we hope that we can also provide an accompanying delivery service to our readers.”

For Cultural Plaza, the bookstore’s near-term goal is to provide a better product delivery tracking service for its readers via sending mobile phone message updates, as well as providing more discounts on its books on sale, according to Chan U Ion. While local traditional bookstores are feeling the universal challenge imposed by online bookstores that provide a more efficient product delivery service with attractive prices offered to readers, Mr. Chan reckons that some help from the government will be necessary to help traditional bookstores here sustain their business.

“The Macau Government can, for instance, put forward an incentive scheme that provides school kids with book vouchers, or even vouchers for stationery,” Mr. Chan said. “It’s a workable policy, and one that is actually good for the government’s image as it can work to promote reading culture here.”

Currently, there are around 10 bookstores in Macau. In the past year, at least one closed due to the pressure of surging shop rents, Business Daily has learned.

4 | Business Daily

March 19, 2015

Macau Brands

Trends

Humble abode Raquel Dias newsdesk@macaubusinessdaily.com

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t is fair to say that Ikea is probably the culprit of the growing interest most of us show in our house décor.

Prior to its existence most of us would never have known about the array of plastic and paper lampshades available in the world.

Fewer of us, the educated and knowledgeable, have aspired to higher things. In the past, names like Marcel Breuer were known for their modern design chairs, which have been in since the 30’s. It was the Bauhaus education.

On a different note Tom Dixon, the British designer who was recently invited to present his latest collection in Macau, has again shown design can be innovative. What we noted in Tom Dixon’s presentation, however, is that what really is in is not only the sleek and elegant furniture and beautiful light fixtures but primarily the small ‘home accessories’ line.

From cool brass bookmarks to scented candles there was a little of everything. Desktop accessories were also present, as were plates, glasses and other tableware items.

The reason is simple: people don’t change furniture as much as they change the little touches one gives to the home. In terms of production, it is also simpler to order a higher number of smaller objects.

Nonetheless, it is important to note that future generations will be prouder to show their friends the cool purchases their parents made in the past. Anything beats little porcelain cats or miniature dogs some of us had to deal with growing up.

Air Macau fuel surcharges require supervision

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egislator Kwan Tsui Hang queried whether the city’s Civil Aviation Authority is supervising the fuel surcharges charged by the airlines operating routes connecting to Macau. In addition, she also said that the flag carrier of the Special Administrative Region - Air Macau - had decreased the additional fee to reflect changes in fuel costs too slowly.

In her written interpellation filed yesterday, the legislator complained that Air Macau only lowered its fuel surcharges last month while most airlines around the globe had reduced charges following plunging international fuel prices of a half since the middle of last year.

According to the official website of Air Macau, the flag carrier decreased its fuel surcharges for

flights originating from Macau to the Mainland, Taiwan, Thailand, Japan, South Korea and Vietnam from February 16 only. The new fuel surcharge is now US$30 (MOP240) per sector, representing a decrease of 21 per cent, compared to the US$38 per sector before.

‘Given the fluctuation of fuel prices, does the Civil Aviation Authority have any scheme to oversee the fuel surcharges of flights that depart from Macau?

What did the Authority do to supervise such surcharges? Why were the fuel surcharges for flights departing from Macau only reduced in February?’ the legislator asked in her enquiry.

Meanwhile, she is also dissatisfied that the official website of the Authority does not provide comprehensive information about

fuel surcharges charged by airlines taking off from Macau.

The legislator indicated that the local government should follow the aviation polices of Hong Kong and Taiwan, which regulates that any fuel surcharges must be approved by the authorities and announced on official websites.

In fact, despite Air Macau decreasing its fuel surcharges by 21 per cent, Cathay Pacific, Hong Kong’s biggest airline, had already accumulatively lowered such surcharges by 160 per cent for short-haul flights and by 59 per cent for long-haul flights since April of last year to February 2015, down from HK$211 to HK$81 per sector, and from HK$875 to HK$356 per sector, respectively, official data of the Civil Aviation Department of Hong Kong shows.

K.L.

Macau law applied in Zhuhai for first time

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n ruling on a dispute about a loan, the Zhuhai Municipal Court has said that because the contract signed by the plaintiff and defendant mandated that the agreement would be governed by Macau law the court has processed the case using Macau law for the first time, according to Xinhua News Agency.

The court in the neighbouring city across the border issued a statement on Tuesday saying that it has arrived at a verdict based on Macau’s legal propositions and ordered the defendant to return a seven million yuan loan to the plaintiff as well as paying interest and fine caused by the overdue repayment.

The case dates back to March 2013 when a man living in Macau

surnamed Lam lent seven million yuan to a man living in Guangzhou surnamed Wang because the latter wanted to undertake a construction project.

Both sides agreed and had it written in the contract that the deal would be governed by Macau law.

The contract reads that if Mr. Wang did not repay the loan on time a 0.5 per cent overdue fine would apply on a daily basis.

Three days after the contract was signed, the sum was transferred to Mr. Wang’s nephew. The loan was supposed to be repaid in nine months.

But the day came when the contract expired, and Mr. Wang did not repay the money.

Mr. Lam said he pursued Mr. Wang

regarding the loan on many occasions but Mr. Wang kept procrastinating and even changed his mobile number.

Hence, Mr. Lam took legal action, suing Mr. Wang, his nephew and two subcontractors on the construction project located in Guangxi.

Whilst processing the case, the Zhuhai Court said that it considered that the clause on the interest and overdue payment as applied in Macau law did not contravene Mainland China’s laws and regulations on processing foreign-related civil cases.

However, based on Mainland China law, the court disagreed that the other two parties besides Mr. Wang had joint liability. Mr. Lam disputed this and has taken the case to the Guangdong Provincial Court.

Business Daily | 5

March 19, 2015

Macau

CEM to invest MOP1.7 billion in natural gas The Chairman of the Executive Committee of CEM has revealed that the company will invest some MOP1.7 billion to generate power with natural gas. For this year, the total investment of the company in Macau will be around MOP1 billion João Santos Filipe

jsfilipe@macaubusinessdaily.com

Electricity tariffs may decrease during this year During this year, Macau consumers should expect the electricity tariff to remain stable or even to decrease, according to the Chairman of the Executive Committee of CEM, Bernie Leong.

“The coming electricity fee should remain stable for this year. The main reason for this is the importation price, which we are not expecting to suffer big changes. The other reason is related to our own generated power. Since the oil market is quite stable registering some decrease compared to last year we expect to keep our tariff stable or even with a kind of little decrease”, he said.

In 2014, CEM imported 88 per cent of total power consumption from Mainland China. As the company has not yet released last year’s annual report it is not known how much it paid for this energy. However, in 2013 the company spent MOP3.5 billion in the purchase of electricity.

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ompanhia de Electricidade de Macau (CEM) is ready to splash out MOP1.7 billion in order to start generating power using natural gas, the Chairman of the Executive Committee, Bernie Leong, said yesterday on the sidelines of the company’s Media Spring Luncheon.

“At the moment, we do not have very precise figures but I would say it should be around MOP1.7 billion”, he said when asked about how much CEM would have to invest to replace some of the old diesel generating sets with the new natural gas turbine devices.

“At this phase we are negotiating with the Macau Government and so we’re not yet doing any investment in this area”, he explained.

According to Mr. Leong, if CEM

is allowed to generate power with natural gas Macau consumers may see the price of electricity decrease.

“With the use of this technology and with the reasonable price of natural gas, we could produce relatively economic energy in Macau.

Overall, I believe our tariff would stabilise. However, if we had a real good production price the tariff would be lower and this could benefit everybody in Macau.”

“We’re actually working on the proposal to submit to the government.

In due time we will make our announcement. It is very optimistic to think we will have news about this during the first half of the year but we will try to do it”.

In relation to 2015, CEM is investing more than MOP1 billion

in Macau, mainly to improve and increase its power transmission capacity and distribution systems.

“We have submitted our investment proposal to the Macau Government.

It involves an amount of MOP1 billion. The investment is mainly for our transmission and distribution network. This is necessary to cope with the increased power demand of our customers”, he said.

Five per cent power consumption increase From May 2015, the new wave of casinos will open in Cotai, which is expected to increase power consumption. However, according to the Chairman of the Executive Committee the economic momentum

In relation to last year, the company invested MOP539 million in the upgrade and expansion of its transmission and distribution network. Concerning the investment in terms of the maintenance of the network, CEM spent about MOP100 million in Macau.

of the territory will have an impact on power consumption.

“We expect some increase of consumption especially in the Cotai area. On the other hand, because of the little economic slowdown I would take this increase more cautiously. It should be around 5 per cent for this year”, he explained.

Macau is now going through technical recession as Gross Domestic Product has now declined in two consecutive quarters. In the last quarter of last year alone GDP dropped 17.2 per cent.

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March 19, 2015

Macau Pac On temporary trade port closed A temporary port for foreign trade in the Pac On cargo working area in Taipa closed from yesterday, per an announcement in the Official Gazette. The port was established in 2011 for the purpose of loading and unloading construction materials and cargo for nearby construction projects, namely reclamation work between the Pac On Ferry Terminal and the Macau International Airport in Taipa, the installation work for aluminum ingots on Ponte de Amizade, as well as maintenance work on Ponte Governador Nobre de Carvalho.

Two new deputy directors appointed for Liaison Office The Chinese State Council has delegated two Chinese officials as vice directors of the Liaison Office of the central government in Macau. They are Sun Da and Zheng Zhen Tao. Mr. Sun, from Shandong Province, had already been secretary-general of the Liaison Office in the Special Administrative Region prior to the promotion. Meanwhile, Mr. Zheng, from Guangdong Province, was originally the Secretary of Zhejiang Municipal Committee of the central government. According to the announcement of the State Council, Mr. Zheng arrived in Macau to assume his new position on Monday.

Sin Wun Kao promoted to vice head of Customs Secretary for Security Wong Sio Chak has appointed the current assistant director-general of Macau Customs, Sin Wun Kao, to the post of new deputy director-general of the government body, according to the Official Gazette released yesterday. The announcement indicates that Mr. Sin’s term will last for one year. Starting with the Marine Police in 1982, precursor of the current Customs, Mr. Sin was promoted and has been the assistant director-general of the government department since the body was established in 2001.

Echo Chan inaugurated as Forum Macau head

Newly inaugurated Director of the Supporting Office to the Secretariate of China and Portuguese-speaking Countries Economic Co-operation Forum, Echo Chan Keng Hong, was sworn in to the position yesterday. She is replacing Rita Santos. Ms. Chan has served as Executive Director of the Macau Trade and Investment Promotion Institute (IPIM) and is also a former President of the Guangdong-Macau Traditional Chinese Medicine Technology Industrial Park Development and Macao Investment and Development. Ms. Chan said in accordance with the central government’s goal set for Macau of building the SAR as a platform, the office will continue promoting the communication and exchange between local enterprises and Portuguese-speaking countries.

Professor of the Macao Polytechnic Institute, Mr Chen Qingyun, speaks in the seminar

Cuiheng to help diversify Macau economy

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seminar was recently held in Zhongshan to study the planning of the Cuiheng New District and developments to adequately diversify the economy of Macau.

Organised by Guangdong authorities and the Macau Polytechnic Institute, the seminar was attended by academics from Beijing, Guangzhou and Macau, in addition to representatives from the Macau Government.

They discussed issues regarding the framework agreement for the

development of the Cuiheng New District in Zhongshan and the first meeting last month of the Taskforce for the Promotion of ZhongshanMacau Co-operation.

At the seminar, held last week in Zhongshan, the group discussed the positioning of the GuangdongMacau co-operation display zone, measures to combine Zhongshan’s geographic advantages and experience in light industry with Macau’s ‘One country, two systems’, platform and management experience, and how to bring more opportunities to small

and medium-sized enterprises and young people.

In the long run, the governments should make best use of the country’s strategic development and the development of Guangdong and Macau.

Representing the Macau Government at the seminar was the head of the committee for the strategic development of Guangdong and Macau, Consultant to the Chief Executive’s Office Mr. Kou Chin Hung plus the deputy head of the committee, Mr. Yang Daokuang.

Watch retailer Hengdeli profit up 26 pct in 2014

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hinese watch retailer Hengdeli Holdings Ltd. saw its profits surge 25.9 per cent year-onyear in 2014, amounting to some 504 million yuan (MOP653 million) compared to the 400 million yuan in 2013, the company told the Hong Kong Stock Exchange yesterday.

In 2014, the Hong Kong-listed company’s turnover reached some 14.7 billion yuan, which is a yearon-year increase of 10.4 per cent, compared to the 13.3 billion yuan in 2013. In addition, its operational profits jumped to 1.03 billion yuan

from some 968 million in the year before.

According to the filing, the retail sales of the group also increased 6.3 per cent year-on-year, amounting to 10.6 billion yuan, credited to sales growth in its Mainland market that focuses on mid-end watches. The sales of the company there registered an increase of 11.6 per cent yearon-year, reaching 6.25 billion yuan.

However, its Hong Kong business, which primarily sells high-end branded watches, experienced a year-on-year decrease of 17.7 per

cent, amounting to 2.59 billion yuan.

‘Hong Kong’s high-end consumer goods sector continued to follow a correction trajectory,’ the company wrote.

Meanwhile, owning one boutique store in Macau, the company said its business in the Special Administrative Region is poised to grow. ‘In recent years, watch and jewellery retail sales in Macau accounted for a significant weight of, and a sizeable increase in, Macau’s total retail sales,’ the retailer said.

K.L.

Business Daily | 7

March 19, 2015

Hong Kong

China stocks break 15-year link with Hong Kong as rates diverge The 15-year link between Chinese and Hong Kong stocks is breaking down

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hile cross-border trade and capital flows have kept the two stock markets moving nearly in tandem for most of their history, that relationship is fading as the outlook for interest rates in China and Hong Kong diverges. The MSCI China Index’s 60-day correlation with the MSCI Hong Kong Index fell to 0.31 on Tuesday, the lowest level since May 2000, according to data compiled by Bloomberg.

China’s central bank is easing monetary policy to support growth even as the U.S. Federal Reserve gets closer to raising borrowing costs - a move that will get transmitted to Hong Kong’s economy through the city’s currency peg with the dollar.

UBS Group AG, Henderson Global Investors and Edmond de Rothschild Group say the outperformance of Chinese shares will probably extend.

“The weakening correlation between Hong Kong and China stocks reflects the out-of-sync economic growth,” said Lu Wenjie, a strategist at UBS in Shanghai who turned bullish on Chinese stocks in November. “The close link built over the past decade is breaking loose.”

The MSCI China Index climbed 1.1 per cent, while the Hong Kong gauge rose 0.3 per cent. The 60-day correlation between the two measures is less than half the average level of 0.8 during the past 15 years, data compiled by Bloomberg shows. A reading of 1 would mean the two gauges move in lockstep, while minus 1 signifies opposite directions.

Policy split The measure of mainland companies has advanced 4.3 per cent this year, versus a 1.3 per cent gain in the Hong Kong gauge.

Chinese stocks will outperform Hong Kong’s as rising U.S. interest rates weigh on the city’s property market, where prices are near record highs, Douglas Morton, the head of Asia research at Aviate Global LLP, said in a phone interview in Hong

Kong on March 12.

China has reduced its benchmark lending rate twice since November and lowered reserve requirements for banks in February, with economists in Bloomberg surveys projecting the central bank will cut both further this year. By contrast, most traders predict the Fed will raise rates from near zero by year-end. The odds of an increase by December are about 76 per cent, futures contracts show.

Two systems “For Hong Kong, the direction of the Fed funds rate and U.S. monetary policy will be very important,” said Charlie Awdry, a London-based money manager at Henderson Global Investors, which oversees about US$120 billion.

“Right now, I am overweight China, underweight Hong Kong.”

The former British colony, which was returned to China in 1997 under the ‘One Country, Two Systems’ constitutional system, has also seen some of its economic ties to the mainland frayed after last year’s Occupy Central pro-democracy protests, according to UBS’s Lu. Retail sales slumped 14.6 percent in January, the most since April 2003, as spending by mainland tourists declined.

Credit Suisse Group AG cited a weak outlook for Chinese tourism as it lowered its 2016 economic growth forecast for Hong Kong to 2.2 per cent from 3.3 per cent, saying investors should have underweight positions in Hong Kong-focused companies and overweight holdings in Chinese shares.

“If mainland tourism is on a downtrend, Hong Kong’s economy will suffer a lot,” Vincent Chan, a Chinese equity strategist at Credit Suisse, wrote in a March 17 report.

Government support While China’s economy is also slowing, Premier Li Keqiang signalled during this month’s annual legislative meetings that the government won’t allow growth to fall below this year’s

target of 7 per cent, said Hao Hong, head of Chinese research at Bocom International Holdings Co. in Hong Kong. Policy makers will take action if growth drifts toward the lower limit of its range and cuts into employment or wages, Li said at the close of the National People’s Congress on March 15.

Technology companies have been among the best performers in the MSCI China gauge as policy makers encouraged investment in the industry.

Tencent Holdings Ltd., operator of the WeChat messaging service, has climbed 19 per cent this year through yesterday, while Alibaba Pictures Group Ltd., the entertainment arm of China’s biggest e-commerce company, jumped 94 per cent.

Best performers Hong Kong has better prospects than China as stronger U.S. growth allows the city to increase exports to the world’s biggest economy, said Pauline Dan, the head of Greater China

equities at Pictet Asset Management Ltd. Hong Kong also has companies with improving earnings outlooks, such as property developer Cheung Kong Holdings Ltd., Dan said.

Cheung Kong and Hutchison Whampoa Ltd. are the best performers in the MSCI Hong Kong gauge this year, rallying at least 15 per cent after billionaire owner Li Ka-shing proposed combining his real estate assets into a new entity.

When it comes to valuations, the Chinese gauge offers investors a cheaper alternative. It traded at 9.9 estimated profit for the next 12 months yesterday, versus 14.7 for Hong Kong and 13 for the Shanghai Composite Index of mainland-listed stocks.

“The future and growth path of Hong Kong is less clear,” David Gaud, a Hong Kong-based senior portfolio manager at Edmond de Rothschild, which oversees about US$151 billion, said by phone on March 12. “While in China, investors see some support.”

Bloomberg

8 | Business Daily

March 19, 2015

Greater China KEY POINTS Real estate stocks jump on hopes of easier loans, tax cuts Seasonal sales rebound seen after record price falls

Home price falls fastest on record It was the biggest annual fall in the nationwide survey Clare Jim

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hina’s average new home prices fell at the fastest pace on record in February from a year earlier, hurt by slower sales during the Lunar New Year holidays, but developers and analysts expected prices to slowly recover - particularly in top-tier cities.

Average new home prices in China’s 70 major cities dropped 5.7 percent last month from a year ago, the sixth consecutive fall, following January’s 5.1 percent decline.

It was the biggest annual fall in the nationwide survey which has been compiled since 2011. The monthly fall in February from January was 0.4 percent, the same as in the previous month.

Real estate stocks jumped in response to the price news, with the Bank of Communications expecting the government will take measures to bolster the market, including lowering taxes and loosening requirements for

mortgage lending.

“Over the weekend, Premier Li Keqiang vowed to support the economy if it continues to slide, so the worse the economic data, the sooner stimulus policies will be rolled out,” said Luo Wenbo, analyst at Qilu Securities.

“Investors wouldn’t have been so bold if the Premier hadn’t made that promise.”

The National Bureau of Statistics (NBS) data showed new home prices in Beijing fell 0.2 percent between February and January, accelerating from a 0.1 percent fall in January from December, while Shanghai prices fell again by 0.1 percent after stabilising following eight straight month-on-month falls.

Westpac Global Economics said in a report that home price consolidation was limited to tier 1 markets.

“Outside the wealthier coastal cities, the process of clearing excess inventory requires further discounting at the new end, and lower asking prices in secondary markets.”

“In short, there are further signs of a bottoming in the tier 1 cities, while the rest of the country continues to struggle,” it said.

Of the 70 major cities the NBS monitors, 66 posted a monthly decline, up from January’s 64.

Seasonal sales rebound Liu Jianwei, senior statistician at the NBS said in a statement yesterday that sales in March will show a significant seasonal rebound from February’s Lunar New Year pause.

Sales volume in 40 major cities monitored by housing data company CREIS rose 51.6 percent in the first

week of March compared to the previous week, while they rose around 23 percent in the second week. Most of the rise came from first and second-tier cities.

“Although the overall market eased in the beginning of the year, as policies loosen further and new launches pick up in March, the property market is expected to see a recovery,” said consultancy China Real Estate Index System (CREIS).

Sino-Ocean Land also forecast a slight rise in prices for top-tier cities in 2015 in an earning statement on Tuesday.

Shanghai-based developer CIFI Holdings said last week it plans to raise prices by 10 to 15 percent this year.

China’s central bank cut interest rates for the second time in just over three months at the end of February, in an effort to support the economy and ward off deflation.

Reuters

Shoemaker Yue Yuen hit by factory strike Yue Yuen said the reorganisation of its production process was being driven by the economic environment

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hina’s Yue Yuen Industrial Holdings Ltd, the world’s largest sports shoe maker, said yesterday thousands of workers at a factory in the south of the country have gone on strike following changes to production processes.

About 4,000-5,000 staff at Yue Yuen, which supplies footwear for Nike Inc and Adidas AG, were protesting at facilities that produce shoes for international brands, said Jerry Shum, the firm’s Hong Kong-based investor relations director. He didn’t identify the brands supplied by the plant.

The company was in control of the situation and expected it to be resolved in a few days, Shum said. He said the strike, by workers representing about 2-3 percent of Yue Yuen’s staff in China, had no impact on Yue Yuen’s production schedule so far.

“Due to changes in the economic environment, we need to reorganise some of the production,” Shum said. “As a consequence, workers are not very happy to see the change in the production... and that led to some disagreement.”

New York-based China Labour Watch said the workers were demanding an immediate pay-out of

their housing fund following a move to merge two plants. Shum declined to confirm if that was the case.

A Nike official in Hong Kong said she was not aware of the strike. Adidas did not immediately respond to a request for comment.

Last year, tens of thousands of workers at Yue Yuen, which has a market value of US$6.5 billion, called off a strike after the footwear maker pledged to meet some of their demands for better benefits.

Major manufacturers have been shifting some of their production away

from China to other Asian countries, such as Vietnam and Indonesia, as labour and production costs in the country escalate.

Yue Yuen said the reorganisation of its production process was being driven by the economic environment and it was trying to offer more options to cost-sensitive customers.

“If people are concerned about cost, then they are going to consider other countries as well. It is driven by the economic environment that leads to some changes occurring within China,” Shum said, without elaborating.

Reuters

Business Daily | 9

March 19, 2015

Greater China

Evergrande gets US$16 bln credit lines

More individual visitors to Taiwan

The company said the credit lines show support from banks Umesh Desai and Clare Jim

C

hinese banks have extended Evergrande Real Estate Group a 100 billion yuan (US$16 billion) credit lifeline, as a slump in China’s key property sector pressure one of the biggest and most indebted developers.

Evergrande, China’s fourth largest property developer by sales, said the credit lines had been extended by four major state-owned banks since February. The company is owned by billionaire Xu Jiayin, one of the country’s richest men.

The statement, issued on Tuesday, helped Evergrande’s bonds recover on from an up to 3 point fall triggered by unconfirmed social media remarks that it was facing payment difficulties. The bonds opened unchanged yesterday.

Standard & Poors analyst Vincent Lam, however, said the credit lines were not legally binding, adding to investors’ concerns about the company and a sector that accounts for some 15 percent of China’s GDP, and which has been slowing along with the economy.

“We don’t know if the proceeds from additional debt went into non-property investments, which is why bond investors are sceptical,” said Yin Chin Cheong, analyst at research firm CreditSights.

“For creditors it will remain a point of concern unless these investments contribute to improved cash flows.”

Evergrande said the credit lines show support from banks but declined to give details on how it plans to use the financing. The company reports full-year earnings on March 30.

Evergrande’s main markets are

Natural forests logging stopped by 2020

in third and fourth tier cities which have seen some of the biggest drops.

The company’s debt to equity ratio stands at 167 percent, above

KEY POINTS Credit lines are not committed finances from China banks Diversification into low cash generating areas a concern High proportion of land banks in smaller cities

Cathay Pacific profit rises The firm plans to raise capacity in 2015 by 6 percent for passengers and 10 percent for cargo Fang Yan and Matthew Miller

H

ong Kong’s Cathay Pacific Airways yesterday said net profit rose 20 percent last year due to a recovery in a cargo business that it plans to expand to

Residents from 11 more Chinese mainland cities can now visit Taiwan on individual tours, starting from April 15, authorities announced yesterday.

The fifth batch of approved cities are Haikou, Hohhot, Lanzhou, Yinchuan, Changzhou, Zhoushan, Huizhou, Weihai, Longyan, Guilin and Xuzhou, according to the Association for Tourism Exchange Across the Taiwan Straits. Since the first pilot scheme in 2011, residents from 47 mainland cities have been given permission to enter Taiwan on individual tours. The association also approved 48 travel agencies to handle the tours. So far, 311 travel agencies got the permission.

meet growing demand on long-haul routes.

Profit reached HK$3.2 billion (US$412.48 million) in 2014 on a 5.5 percent rise in revenue at

the sector’s average of 107 percent, Thomson Reuters data shows. It will take 4.6 years to pay off debt at current cash generation rates compared to its peers’ average of 3.7 years.

Earlier this year, smaller homebuilder Kaisa Group Holdings Ltd raised the red flag on Chinese developers’ leverage when it disclosed a surge in loans after officials froze some of its projects.

Kaisa is now negotiating with bondholders to avoid becoming the first Chinese developer to default on its offshore debt.

Evergrande took on more debt in recent years as it diversified into food, energy and sports: it finances the Guangzhou Evergrande Taobao soccer club along with e-commerce giant Alibaba Group Holdings.

Reuters

HK$106 billion. The profit result compared with the HK$3.48 billion estimate of 17 analysts polled by Thomson Reuters SmartEstimate, which emphasises estimates of the historically more accurate analysts.

The airline did not provide guidance for the current year, but said it is “positive about the overall prospects for 2015”.

“In 2014, 2015, we’ve seen a very robust recovery in cargo volume, mostly in the United States. That’s crucial for Cathay as it’s one the largest cargo carriers in the world,” said analyst Geoffrey Cheng at BOCOM International ahead of earnings.

Since March 2014, Cathay said it has expanded its cargo service to Calgary and other three destinations, to take advantage of a recovery in the segment helped in part by congestion at sea ports on the West Coast of the United States. The congestion has been exacerbated by strikes by dock workers.

Cathay, whose core rivals include Singapore Airlines Ltd and Korean Airlines Co Ltd, plans to raise capacity in 2015 by 6 percent for passengers and 10 percent for cargo, management said in an analyst briefing late last year.

The airline plans new passenger routes to Boston, Zurich and Manchester, while North America will be the focus of new cargo services, said Cheng, who attended the briefing.

Reuters

Commercial logging of natural forests in key zones will be stopped by 2020 as part of a slew of reform steps to promote ecological progress, Chinese authorities announced late Tuesday.

State plantations are also asked to reduce harvesting from man-made forests for business purposes by 20 percent by 2020, the central government said. China logs about 49.94 million cubic meters of natural forest each year and started a landmark pilot program in key forest zones in northeastern China’s Heilongjiang Province to ban all commercial logging of natural forests last April.

China-funded road in Cambodia Cambodian Prime Minister Hun Sen yesterday broke ground for the construction of a 174-kilometer national road No. 58 under Chinese financial support. According to the master-plan, the road is expected to cost US$122 million, which is the soft loan from China, and Shanghai Construction (Group) General Company will undertake the construction, which is expected to be completed in August 2018. Speaking at the groundbreaking ceremony, Hun Sen said Cambodia was very satisfied with the assistance from China. He said the road would be very important to facilitate travels and goods transportation between Cambodia and Thailand.

Nexen to cut jobs in U.S. and UK Nexen Energy, a wholly owned subsidiary of China’s CNOOC Ltd, said it will cut about 400 jobs in North America and the United Kingdom in response to plunging global oil prices. The Calgarybased company is also slowing work on the next phase of its Kinosis oil sands project in northern Alberta, which has regulatory approval to produce 70,000 barrels per day. Kinosis 1B is in its early stages and a Nexen spokeswoman said the company has no estimates on when oil will be produced from that phase of the project.

10 | Business Daily

March 19, 2015

Greater China

Alibaba investors face lock-up battered but largely unbowed Jessica Toonkel

A

s Alibaba was preparing to sell shares to U.S. investors for the first time, Jerry Verseput tried to persuade his clients not to throw money at the giant China-based e-commerce company because he thinks IPOs are a gamble, especially those with a lot of hype.

“I said if you want to go play with the money, I will do it for you but understand this is for entertainment purposes and not an investment strategy,” said Verseput, president of Veripax Financial Management in Folsom, California, who manages about US$65 million. For the two clients that insisted on buying stock, Verseput made sure they only invested less than one percent of their assets in the IPO. That was probably good advice. Six months after Alibaba’s IPO, the shares are down more than 29 percent from their November high. Alibaba opened on September 19 at US$92.70, ended its first day at US$93.89 and reached its peak on November 13, when it hit US$120. The stock closed Tuesday at US$84.50, about 24 percent above the US$68 IPO price.

Alibaba, which already commands 80 percent of the Chinese market and handles more ecommerce than Amazon and eBay combined, trades at a price-to-earnings ratio of about 30, compared with Seattle-based Amazon, which sports a three-digit P/E. Yesterday, a lock-up period expired allowing insiders owning a total of 437 million Alibaba shares sell. A larger lock-up of more than a billion shares held by insiders, including Yahoo! expires in September. Some investors are worrying about further drops in the stock as insiders sell.

At TD Ameritrade, which typically serves retail investors, more than half of those who bought shares of Alibaba

at the IPO still own the stock, while 24 percent sold within a month of buying.

“It’s been ugly,” said Alan Haft, a Newport, California-based financial adviser who said he “shamefully went on CNBC touting the stock” before the IPO and talked about a dozen of his clients into buying it. He says he still sees a good long term picture for Alibaba, but not right away. “The

When the time comes for expiration you don’t see a big decline in the stock unless if there is something fundamentally wrong or something has happened to change the investment thesis Adam Sarhan Sarhan Capital, CEO

First successful session of Alibaba in New York market

stock is probably going to get worse so in the short term it’s a regret.”

Many analysts believe the end of the lockup has already been priced in. And given Alibaba’s size, any selling will get absorbed easily, said Gil Luria, managing director of equity research for Wedbush Securities. The 25-day average trading volume for Alibaba is 14.5 million shares.

Some investors have come back down to earth after seeing its most recent quarterly results. While nonGAAP net income, which strips out exceptional items, rose 25 percent to 13.12 billion yuan (US$2.1 billion) in the quarter ended December 2014, investors zeroed in on disappointing sales growth: revenue rose 40 percent from the previous year, down from a 53.7 percent gain in the September quarter.

Alibaba’s underwhelming holiday quarter performance and a public verbal tussle with a powerful Chinese industry regulator helped trigger the stock’s decline. They brought to the fore two major risks to further gains: politics and the shift to mobile commerce. The lower-thanexpected December-quarter revenue underscored how Alibaba earns less on smartphones and tablets as its users shift toward mobile shopping.

As of February 27, short interest in the stock came to almost 57 million shares, or 2.3 percent of Alibaba’s outstanding stock (2.488 billion).

That’s more than double the 21 million shares as of September 30, when the Nasdaq began compiling data.

“Typically there is a lot of pent-up anticipation around the expiration but history shows that a vast majority of times that anticipation doesn’t manifest,” said Adam Sarhan, chief executive of Sarhan Capital in New York, who is short Alibaba shares.

Several of the biggest hedge

Yesterday, a lock-up period expired allowing insiders owning a total of 437 million Alibaba shares to sell

fund managers, including Leon Cooperman’s Omega Advisors, David Tepper’s Appaloosa Management and Barry Rosenstein’s Jana Partners LLC dissolved their stakes in Alibaba at the end of last year, while others reduced their holdings, according to U.S. regulatory filings.

Other money managers, like Haft, expect more rockiness in coming months, but think Alibaba will make them money.

Counterfeit question Alibaba’s stock has taken a hit as Chinese regulators stepped up their scrutiny of counterfeit products on its ecommerce sites. In late January China’s State Administration for Industry and Commerce issues a nowretracted report accusing Alibaba for allowing the sale of fake products on its sites, among other things.

However, Alibaba has ramped up its focus on identifying and removing counterfeits from its sites.

“I think in the longer term Alibaba is going to be a more credible company in the international market,” Haft said. “It will take another six months to a year for the stock to cycle back, but I think the fundamentals of the company are strong.”

September’s lockup of 1.6 billion shares could have a bigger effect on the stock, but how much will depend on whether Alibaba has made significant progress on dealing with the counterfeiting issue, said Henry Guo, a senior analyst with Greenwich, Connecticut-based JG Capital Corp.

As for Verseput’s two clients, they’re hanging on. “They are thinking it’s a big company and 20 years from now it should be a good investment,” he said.

Reuters

Business Daily | 11

March 19, 2015

Asia

Asian business sentiment steady Companies in the property sector were the most positive in the survey

C

oncern over a U.S. interest rate hike kept sentiment in check at some of Asia’s biggest firms, as optimism about the outlook for business over the next six months was near steady in the first quarter, a Thomson Reuters/INSEAD survey showed.

The Thomson Reuters/INSEAD Asian Business Sentiment Index was 71 for the March quarter versus 72 three months earlier. A reading above 50 indicates an overall positive view.

Companies in India were the most upbeat for the fourth straight quarter, logging 97 on hopes that low inflation and aggressive interest rate cuts will boost the domestic economy.

Singapore firms registered the least positive outlook for the third consecutive quarter in anticipation of the first U.S. rate hike in almost a decade, which could happen as early as June. Local banks are likely to match the hike, making mortgages expensive and pulling down demand for property.

“There is significant risk as people may have different interpretations of movements in interest rates in a way that can cause dramatic changes in financial markets,” said Antonio Fatas, a Singapore-based economics professor at INSEAD. China’s reading rose to 54 from 50, as businesses became more optimistic about their future amid central bank efforts to moderate the economic slowdown with looser monetary policy, including successive interest rate cuts since late last year.

Optimism slid the most in Australia where firms reported a score of 70 from 85 in the fourth quarter, as falling prices of commodities tempered sentiment in the resource-exporting nation.

The poll, by Thomson Reuters with global business and management school INSEAD, was conducted over the first two weeks of March. Of 111 respondents, 45 percent reported a positive outlook, 51 percent were

Indians (Prime Minister Modi pictured) are nost optimistic among of Asians

neutral and 4 percent were negative.

Participating firms included Japanese beverage conglomerate Asahi Group Holdings Ltd, South Korean shipbuilder Hyundai Heavy Industries Co Ltd and Australian building materials maker James Hardie Industries PLC. Overall, the survey showed Asian firms consider global economic uncertainty as the biggest threat to their six-month business outlook, followed by rising costs and other risks such as regulatory change and increased competition.

Companies in the property sector were the most positive in the survey with a reading of 88, a one-point increase from the previous poll. Retail and drugs followed with 82 and 81 respectively, from 83 and 70.

Financial institutions, dogged by

KEY POINTS Sentiment index falls to 71 in Q1 from 72 in Q4 Firms think global economic uncertainty biggest risk India, Thailand most optimistic; China, Singapore least Property, retail most positive; auto, financial least

regulatory uncertainty and a lingering hangover from the global financial crisis, were least positive with a score of 55, though that was an improvement from 50 in the previous two quarters.

A robust economic recovery and low interest rates are boosting business at finance houses in Taiwan such as Yuanta Investment Consulting, said the company’s chief economist, Aidan Wang. Yuanta plans to expand this year and anticipates an increase in hiring, Wang told Reuters.

Elsewhere, the picture was more subdued.

“Finance firms anywhere in the world are very weak,” said INSEAD’s Fatas. “It’s a combination of the financial crisis, a lack of confidence, and increased regulation which has made business very complex.”

Reuters

SK businesses visit North’s factory park to protest wage rise The North Korean agency that supervises the complex demanded an increase of about US$3.65 in the minimum monthly wage for its workers, to US$74 a month Ju-min Park

Kaesong factory park

S

outh Koreans who operate factories in an industrial complex in North Korea went to the park yesterday to protest against a North Korean decision to increase wages paid to North Korean workers there.

The Kaesong industrial zone, jointly by the two Koreas, is just on the North Korean side of their heavily fortified border. It is last remaining symbol of economic cooperation between the rival states.

North Korea shut down the complex for five months in 2013, during a period of diplomatic tension, and dialogue between the two sides on its operations have been patchy for years.

“The unilateral change of labour

rules is a problem,” Chung Ki-sup, the leader of a council leader of South Korean companies that have operations in the zone, told reporters, referring to the wage increase.

“But that can be easily resolved when dialogue resumes,” he said before crossing the border.

South Korea has 125 companies in the zone, most of them smalland medium-sized firms, employing 53,000 relatively cheap North Korean workers.

The complex has operated for a decade but there have been persistent questions about the viability of a project that is subject to political tension between the two Koreas, which remain technically at war.

In September, the North

introduced a regulation allowing it to detain South Korean workers if their companies failed to live up to their contracts, if confiscation of property did not cover potential losses.

A S o u th Ko r ea n b u s i n e s s representative said the rule could hurt investment.

The wage increase and lack of dialogue about it are likely to compound such doubts.

The North Korean agency that supervises the complex demanded an increase of about US$3.65 in the minimum monthly wage for its workers, to US$74 a month.

South Korea has rejected the demand, saying the unilateral increase violated agreements. North Korea has said it has the sovereign right to raise

- 125 South Korean companies - 53,000 North Korean employees

wages at Kaesong.

Chung said he believed the stalemate over Kaesong was linked to South Korea’s refusal to ban activist groups from launching into North Korea balloons carrying leaflets critical of the North Korean government. The balloons infuriate North Korea.

Reuters

12 | Business Daily

March 19, 2015

Asia

South Korea’s jobless rate rises The higher jobless rate came as job creation slowed down in February

S

outh Korea’s jobless rate rose in February to the highest in five years amid slow growth of job creation, a government report showed yesterday.

Unemployment rate gained 0.1 percentage point from a year earlier to 4.6 percent in February, the highest since February 2010 when it recorded 4.9 percent, according to Statistics Korea.

The unemployment rate among those aged 15-29 was 11.1 percent in February, the highest since July 1999 when the figure posted 11. 5 percent.

The so-called “sentiment” jobless rate, which the statistics agency began to unveil from November 2014, was 12.5 percent in February, up from 11.9 percent in January.

The official unemployment rate gauges the percentage of those unemployed who actively sought jobs in the past four weeks to the sum of people employed and unemployed.

The sentiment jobless rate includes part-time workers who hope to get a regular job working more than 36 hours a week and those who want to work but reply during the job survey period that they conducted no job-searching activity in the past four weeks.

The number of those unemployed was 1,203,000 in February, up 2. 1 percent from a year earlier.

The higher jobless rate came as job creation slowed down in February when the number of those employed grew 376,000 from a year earlier to 25,195,000.

After peaking at 594,000 in August last year, the monthly employment fell to the 400,000 level from September

workers rose 1.3 percent, with those who work on a daily basis growing 1.3 percent.

The economically inactive population, or those aged over 15 minus the sum of those employed and unemployed, increased 0.5 percent from a year earlier to 16,429,000 in February.

Among them, those in housework reduced 1.4 percent, but those in old age increased 4.1 percent amid the rapid population aging.

The so-called “take-a-rest” group jumped 9 percent in February from a year ago. The group refers to those who replied that they took a rest during the job survey period. The group is important as it can include

The unemployment rate among those aged 15-29 was 11.1 percent in February to December, before staying below 400,000 in January and February.

The hiring rate edged up 0.2 percentage points from a year earlier to 58.8 percent in February. The rate gauges the percentage of working people to the working age population, or those aged 15 or more. It is used as an alternative to jobless rate, and the government has targeted the 70 percent hiring rate in the long term.

The employment was led by those in their 50s and 60s, whose job creation reached 193,000 and

183,000 each in February. Job growth among those in their 20s and 30s were 44,000 and 18,000 respectively, but the employment in their 40s reduced 48,000 last month.

By industry, those hired by manufacturers and builders expanded 3.7 percent and 4.1 percent each.

Employers in the service industry also recruited more workers than a year earlier.

Among wage earners, regular workers increased 3.2 percent in February from a year earlier. Irregular

Primary sectors chill New Zealand’s GDP Many economists expect a fall in agriculture production will reduce growth slightly in the first half of the year Naomi Tajitsu

E

conomic growth in New Zealand likely eased in the fourth quarter as activity in primary industries levelled off from the previous quarter’s blistering pace, bolstering the view that the country’s interest rates will stay on hold until early 2016.

The construction and services sectors likely expanded as consumer spending picked up, though not enough to stoke inflationary pressures which have been muted, giving room for the Reserve Bank of New Zealand to keep rates unchanged following a series of rises to 3.5 percent last year.

Economists polled by Reuters expect the economy expanded 0.7 percent in the three months to

December, nudging annual growth up to 3.3 percent from 3.2 percent in the September quarter.

While easing from 1.0 percent quarterly growth in July-September, the annual growth reading would show that New Zealand continues to outperform many developed economies including neighbouring Australia, Europe and Japan, which have been shoring up their economies by loosening monetary policy.

“You could characterise Q4 growth as a domestically focussed quarter -- strong on retail, strong on business and personal services -- while looking pretty flat in terms of primary sectors and manufacturing,” Westpac economist Michael Gordon said.

KEY POINTS New Zealand Q4 GDP due at 2145 GMT, March 18 Economists see q/q growth of 0.7 pct, annual growth 3.3 pct Data to bolster RBNZ stance that rates to stay on hold

those who are unemployed and too discouraged to search for work for a long time.

Those who were too discouraged to continue their search for jobs amounted to 456,000 in February.

Discouraged workers are those who want to work and are available to do so but failed to get a job due to tough labour market conditions. They are those who looked for a job sometime in the prior 12 months.

Xinhua

“Part of this is payback from last quarter, when we saw a very strong pick-up in the agriculture sector and non-manufacturing, and they were numbers which would be very difficult to repeat.”

Quarterly growth of 0.7 percent would be consistent with the current growth trend seen by many economists, and largely in line with the RBNZ’s quarterly forecast of 0.8 percent.

Still, many believe that sustained growth will stoke price pressures down the line, lifting CPI from an annual 0.8 percent back towards the mid-point of the RBNZ’s 1-3 percent target range and prompting a rate rise in the first half of 2016.

While growing consumption, a buoyant construction sector and rising immigration continues to boost the economy, it faces risks in coming months due to slowing growth in China and Australia, its biggest trading partners.

In addition, many economists expect a fall in agriculture production will reduce growth slightly in the first half of the year as drought weighs on the dairy and meat industries, the country’s largest export earners.

Reuters

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Business Daily | 13

March 19, 2015

Asia Thai economy seen growing 3 pct The Thai economy is expected to show annual growth of 3.0 percent in the first quarter, and growth is expected to be in the range of 3.5-4.0 percent for 2015, cabinet secretary Ampon Kittiampon told a news briefing after a meeting of economic ministers. Faster government spending and a strong performance by the tourism sector were key factors in the estimate of first quarter growth, said Arkhom Termpittayapaisith, secretarygeneral of the National Economic and Social Development Board (NESDB).

Last year, the economic growth was 0.7 percent.

Japan export growth slows Strong external demand is seen as key to bolstering an economy that is emerging from a recession Stanley White

Malaysia hopes for solution with LME Customs agency hopes to reach an agreement soon after the London Metal Exchange (LME) threatened to stop registering metal in the country if a new tax affects its two bonded zones there, local media reported yesterday.

The Star newspaper cited Subromaniam Tholasy, director of the custom agency’s tax unit, as saying his department would be looking into the matter to come up with an amicable solution soon. The LME has been seeking details on how a new Malaysian goods and services tax will impact metal stored in LME warehouses in Johor and Port Klang.

CBA ex-executive charged with bribery A former executive of the Commonwealth Bank of Australia was arrested and charged yesterday with bribery following an investigation involving Australian and U.S. authorities.

Keith Hunter, a 61-year old U.S. national and Sydney resident, is suspected, with another former CBA employee, of having granted a U.S. IT company a contract without putting it to public tender, the Australian police said. In exchange, the two allegedly received payment. More than US$1.5 million in suspected corrupt payments were frozen by the Fraud and Cybercrime Squad, the police added.

Japan’s crude benchmark price falls Benchmark crude oil price fell to a near six-year low in February as imports dropped 11.6 percent from the same month a year earlier, according to data released by the Ministry of Finance yesterday. The price fall, which reflects slumping global oil prices, has helped cut costs for the country’s struggling utilities as they have resorted to fossil fuels to replace nuclear capacity shutdown in the wake of the 2011 Fukushima disaster.

The decline in fossil fuel prices has also helped cut Japan’s trade deficit.

Panasonic agrees to bigger base pay rises The company said yesterday it has agreed to increase the base salary for its employees by 3,000 yen a month, higher than last year’s 2,000 yen hike, following annual wage negotiations with the electronics maker’s labour union. Many Japanese firms are due to announce the results of their wage talks yesterday. Higher wages are considered key to sustaining growth and decisively ending deflation in the world’s No.3 economy. Prime Minister Shinzo Abe’s government has been urging Japanese companies to do their part and lift workers’ pay.

BOJ Governor Haruhiko Kuroda (pictured) said lower energy costs may push consumer prices into negative territory

J

apan’s export growth slowed sharply in February after surging in the previous month thanks to the timing of the Lunar New Year, but analysts expect strong demand from the United States to boost shipments and help the economy step up the pace.

Exports rose 2.4 percent in February from a year earlier, and was ahead of the 0.3 percent annual increase expected by economists in a Reuters poll. It followed a 17.0 percent year-on-year rise in January, which was the fastest growth since November 2013.

Policymakers are keen to see Japan’s export engine in good heart as it’s an important driver of corporate earnings, which should eventually translate into higher salaries for workers and help the economy break out of years of deflation.

“This slowdown is a temporary phenomenon related to the Lunar New Year, and I see no change to

the overall trend that exports will continue to recover,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“Exports have already contributed a lot to supporting production. Even if this support weakens in the short term, in the long run this will benefits the overall economy.”

Exports to China, Japan’s largest trading partner, tumbled 17.3 percent on-year in February due to lower shipments of cars and car parts, Ministry of Finance data showed yesterday.

That was a dramatic reversal from the 20.8 percent annual increase in January as demand surged before the Lunar New Year.

Exports to Asia fell an annual 1.1 percent, the first decline since August.

Shipments to the United States rose 14.3 percent in the year to February as exports of cars, car parts and construction equipment rose.

While that was slower than a 16.5

percent annual increase in January, the overall rate of growth suggested still-strong demand from the world’s biggest economy.

Imports fell 3.6 percent in the year to February, which resulted in a trade deficit of 424.6 billion yen (US$3.5 billion), less than a median estimate of a 1.05 trillion yen deficit.

Strong external demand is seen as key to bolstering an economy that is emerging from a recession, and helping to generate enough inflation to meet the Bank of Japan’s 2 percent price goal.

On Tuesday, the BOJ left its massive quantitative easing programme unchanged.

BOJ Governor Haruhiko Kuroda said lower energy costs may push consumer prices into negative territory but it won’t derail a pick-up in inflation as the economy recovers, signalling that he sees no immediate need to expand stimulus.

Reuters

Sri Lanka holds rates at record lows The monetary authority early this month tightened monetary policy by scrapping a 5 percent lower repo penalty rate paid to banks Shihar Aneez and Ranga Sirilal

S

ri Lanka’s central bank kept key policy rates steady at record lows for a 14th straight month yesterday, as expected, and said the low interest rate environment is expected to continue benefiting from moderating inflation.

It left the standing deposit facility (SDF) rate and the standing lending facility rate (SLFR) unchanged at 6.50 percent and 8.00 percent, respectively. The commercial banks’ statutory reserve ratio was unchanged at 6.00 percent.

A Reuters poll had expected the rates to be left unchanged.

The central bank expects the US$76 billion economy to grow 7.5 percent to 8 percent this year.

It expanded 7.4 percent last year, accelerating from 7.2 percent in 2013.

Low and steady inflation and an expected improvement in business confidence will lend further support

to the economy this year, the central bank believes.

The monetary authority early this month tightened monetary policy by scrapping a 5 percent lower repo penalty rate paid to banks which use SDFR more than three times a month.

“Given signs of a sustained increase in credit flows to the private sector, the central bank removed the restriction placed on the access to its Standing Deposit Facility (SDF),” the bank said in a statement.

Private sector credit grew at a near two-year high of 11.5 percent year-on-year in January compared to 8.8 percent in December.

Lower inflation, interest rates Annual inflation hit a record low of 0.6 percent year-on-year in February after the newly elected government reduced a raft of taxes as promised

during President Maithripala Sirisena’s election campaign.

The central bank said headline inflation is likely to remain at low levels, particularly in the first half of 2015, due to the impact of the tax reductions, supported by improved supply conditions.

Since the 5 percent lower repo penalty rate was removed, yields on t-bills rose between 112 basis points (bps) and 124 bps at two weekly auctions in the last two weeks through March 11 amid heavy borrowing by the government, with the 91-day t-bill yield rising to a 14-month high of 7.10 percent.

Between December 2012 and January 2014, the central bank cut the repurchase rate, or repo rate, by 125 basis points (bps) and the reverse repurchase rate, the reverse repo, by 175 bps to stimulate economic growth.

Reuters

14 | Business Daily

March 19, 2015

International Denmark increases banks’ limits The limit on Danish commercial banks’ combined current account holdings at the central bank will be increased to 145 billion Danish crowns (US$20.6 billion) from 37 billion crowns effective from Friday, the central bank said. The move is a way of relieving pressure on commercial banks, which have been paying to deposit cash with the central bank since the bank cut interest rates into negative territory in a bid to relieve upward pressure on the Danish crown.

The bank’s certificate of deposit rate is -0.75 percent.

Foreign banks may be subject to future UK stress tests Banks have to deal with often opaque tests in multiple jurisdictions leaving investors with a muddy picture of their health

ExxonMobil asks Russia to repay taxes U.S. oil and gas major ExxonMobil has asked the Russian government to reimburse taxes worth “several billion roubles” it says it overpaid on a project in the far east of Russia, the Kommersant daily reported yesterday. The newspaper, citing unnamed sources, said ExxonMobil believes it overpaid profit taxes on its Sakhalin-1 oil and gas project. Russia reduced the profit tax in 2009 to 20 percent but ExxonMobil continued to pay at the earlier level of 35 percent after the project broke even in 2008, it said.

Greek PM to raise cash crunch at summit Alexis Tsipras will raise the country’s deepening cash crunch in talks with EU leaders at this week’s summit in Brussels, the government’s spokesman said yesterday, as Athens faces running out of cash in weeks. Greece agreed a fourmonth extension to its bailout programme last month but has not received any fresh aid, which remains frozen amid Athens’ steadily worsening relations with its international creditors. “We will aim to clarify the February 20 accord with the Eurogroup and how it will be accompanied by the provision of liquidity to the Greek economy,” government spokesman Gabriel Sakellaridis told Skai TV.

Mexico could sanction Televisa The investigative unit of Mexico’s industry regulator has decided in a preliminary decision that Grupo Televisa SAB has substantial power in the pay-TV market, setting the nation’s largest broadcaster up for potential sanctions. The unit of Mexico’s Federal Telecommunications Institute posted a draft with its findings, which applies to Televisa’s cable and satellite TV units, on the agency’s website. The document was presented to the board on March 13 and is subject to final approval. Televisa was also designated Mexico’s dominant broadcaster last year by the regulator.

A panorama of London’s traditional financial district, The City

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he British units of foreign banks could be required by UK regulators to submit to annual health exams for the first time, banking and industry sources said, potentially bringing Britain’s policies into line with those of the U.S. Federal Reserve.

The UK’s Prudential Regulation Authority (PRA) has recently started asking foreign banks to submit data, the sources said, a possible first step toward making them subject to the stress tests, which assess if banks have enough capital to withstand a hypothetical economic crisis.

One of the sources added that British units of U.S. banks were being asked for more data to give the regulator a better understanding of market risk, but it does not necessarily mean that formal stress tests will be

required in the near future.

The PRA’s deliberations underscore efforts by regulators around the world to step up scrutiny of foreign banks operating in their region, to make sure they are strong enough to stand on their own if their parent group experiences trouble.

Before the 2008 financial crisis, regulators globally largely relied on their peers abroad to oversee foreign banks doing business on their turf.

That changed after some foreign banks were forced to tap emergency dollar funding from the U.S. central bank during the crisis.

The PRA has said it would launch a consultation paper this year to see how it would proceed with its stress testing program beginning in 2016 but declined to give further details. It has said the same eight UK banks and

Colombian GDP expands less than forecast

Central bank reduced in January its 2015 growth estimate to 3.6 percent, Caesars warns creditor from 4.3 percent, citing lower crude prices about lawsuits Casino company Caesars Entertainment Corp, whose operating unit is in bankruptcy, warned on Monday that the litigation stemming from its restructuring efforts could hamper its ability to continue operating as a going concern.

Creditors have brought numerous lawsuits alleging fraud over transfers of assets out of the operating unit, Caesars Entertainment Operating Company. As the unit struggled to overhaul its operations prior to filing for bankruptcy in January, it transferred a number of its most valuable properties and casinos to affiliates of the parent company.

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olombia’s economy grew less than analysts expected in the last three months of 2014, as a decade-long oil and mining boom comes to an end.

Gross domestic product expanded 3.5 percent from a year earlier, compared with 4.2 percent in the third quarter, the national statistics agency said. The median forecast of 34 analysts surveyed by Bloomberg was for growth of 3.9 percent. GDP rose 0.7 percent from the previous three months.

The central bank, the Finance Ministry and private sector economists

have all slashed their GDP forecasts in the past six months as prices fell for Colombia’s oil, coal, coffee and gold exports. Crude, which accounts for about half of exports and about 16 percent of government revenue, has fallen more than 50 percent in six months.

“Last year was very good, but the data continue to point to a moderation,” said Camilo Perez, chief economist at Banco de Bogota. “The market may take it a bit negatively, since there was a small surprise on the downside.”

Perez reiterated his forecast

building societies that were stress-tested last year will be examined in 2015.

All eight institutions passed last year’s health check, though Lloyds Banking Group and Royal Bank of Scotland only narrowly exceeded minimum standards for withstanding a severe UK recession and slump in house prices. The exam took place alongside a broader test of Europe’s top 130 banks by the continent’s watchdog.

The PRA has warned its stress tests could get tougher and this year may focus more on risks from overseas markets.

The PRA’s consultation study could lead to proposals to increase the number of banks in the test from 2016 and beyond, including UK units of U.S. and other overseas banks as well as more smaller UK banks, the sources said, asking not to be named because they were not authorized to speak with the media.

A senior U.S. bank official said a key question for the U.S banks would be whether the UK would accept the same data and risk models that are submitted for the Fed’s stress tests, or whether Britain would require that they compile another set of data.

Politicians abroad have criticized the U.S Federal Reserve for tightening its grip on foreign banks, saying the added U.S. oversight is not necessary because European parent companies have significantly improved their capital positions.

The Fed is requiring them to hold as much capital locally as their domestic rivals, and the number of foreign banks in the stress tests is growing.

It says the extra requirements are necessary because foreign banks’ activities have expanded significantly and could affect U.S. financial stability.

The Fed’s stress tests are among its most important tools to test the resilience of large banks, which critics say are “too big to manage.”

Reuters

that the central bank will leave its benchmark policy rate unchanged at 4.5 percent at its March 20 board meeting.

Colombia’s economy has outpaced most of its neighbours over the last ten years amid an oil boom that former Finance Minister Jose Antonio Ocampo said exceeded in length and intensity all of the coffee booms of the 20th century.

Even after slowing in the fourth quarter, the economy expanded 4.6 percent during the whole of 2014, outpacing Mexico, Chile and Peru.

Brazil reports on its 2014 GDP on March 27.

Oil and mining GDP contracted 3.3 percent from a year earlier, while manufacturing output contacted 0.3 percent. Construction remained the best-performing sector, expanding 5.9 percent over the same period.

GDP will expand 3.6 percent this year, the slowest pace since 2009, according to a survey of 20 economists

by Bloomberg in February, compared with the 4.8 percent forecast six months earlier.

Bloomberg News

Business Daily | 15

March 19, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

THE NEW ZEALAND HERALD

How scary is the bond market?

New Zealand has a “two-speed” economy as strong domestic demand cushions a weaker export sector, according to Moody’s Analytics. GDP data … will probably show New Zealand’s economy expanded 0.8 per cent in the fourth quarter of last year, said Faraz Syed, an associate economist at Moody’s Analytics, a division of Moody’s Corp which is independent of the credit ratings service. “Dry weather weighed on exports and production, though the domestic economy continued to tick along,” Syed said in a note.

Robert J. Shiller

2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices

THE PHNOM PENH POST The Cambodian government is aiming to increase its revenue collection to US$3.78 billion for 2015, on the back of strong tax and customs income. A directive signed by Monaster of Economy and Finance Aun Porn Moniroth on Monday says US$2.75 billion will be collected via current revenue and the balance US$1.03 billion will come from capital revenue. While the ministry isn’t raising taxes on goods, businesses and income, it will strengthen its revenue collection. The directive set the tax department a target of US$84 million monthly.

PHILSTAR After pioneering the nation’s first large-scale solar rooftop projects, Solar Philippines claims a new frontier with the launch of the largest solar farm in Luzon. The groundmounted system will comprise over 150,000 solar panels, covering over 75 hectares of land owned by the company.

Once completed this year, it is expected to generate enough energy to power the majority of the entire province of Batangas. Over three decades of operation, it is expected to offset over one-million tons of carbon dioxide, equivalent to planting over five million trees.

THE KOREA HERALD Prosecutors raided the head office of a Seoul builder yesterday to investigate its alleged irregularities in the sale of a stake in an overseas nickel mine to a state-run company during the previous administration. The Seoul Central District Prosecutors’ Office said investigators swooped down on financially troubled Keangnam Enterprises Ltd. in eastern Seoul to confiscate evidence related to the suspicions.

In 2010, the state-run Korea Resources Corp. suffered a loss of 11.6 billion won (US$10.3 million) after buying a 1.5 percent stake in the Ambatovy nickel operation in Madagascar for 35 billion won.

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he prices of long-term government bonds have been running very high in recent years (that is, their yields have been very low). In the United States, the 30-year Treasury bond yield reached a record low (since the Federal Reserve series began in 1972) of 2.25% on January 30. The yield on the United Kingdom’s 30-year government bond fell to 2.04% on the same day. The Japanese 20-year government bond yielded just 0.87% on January 20.

All of these yields have since moved slightly higher, but they remain exceptionally low. It seems puzzling – and unsustainable – that people would tie up their money for 20 or 30 years to earn little or nothing more than these central banks’ 2% target rate for annual inflation. So, with the bond market appearing ripe for a dramatic correction, many are wondering whether a crash could drag down markets for other long-term assets, such as housing and equities.

It is a question that I am repeatedly asked at seminars and conferences. After all, participants in the housing and equity markets set prices with a view to prices in the bond market, so contagion from one long-term market to another seems like a real possibility.

I have been thinking about the bond market for a long time. In fact, the long-term bond market was the subject of my 1972 PhD dissertation and my firstever academic publication the following year, co-authored with my academic adviser, Franco

Modigliani. Our work with data for the years 1952-1971 showed that the long-term bond market back then was pretty easy to describe. Long-term interest rates on any given date could be explained quite well as a certain weighted average of the last 18 quarters of inflation and the last 18 quarters of shortterm real interest rates. When either inflation or short-term real interest rates went up, long-term rates rose. When either fell, so did long-term rates.

We now have more than 40 years of additional data, so I took a look to see if our theory still predicts well. It turns out that our estimates then, if applied to subsequent data, predicted long-term rates extremely well for the 20 years after we published; but then, in the mid-1990s, our theory started to over predict.

According to our model, longterm rates in the US should be even lower than they are now, because both inflation and short-term real interest rates are practically zero or negative.

Even taking into account the impact of quantitative easing since 2008, long-term rates are higher than expected.

But the explanation that we developed so long ago still fits well enough to encourage the belief that we will not see a crash in the bond market unless central banks tighten monetary policy very sharply (by hiking short-term interest rates) or there is a major spike in inflation.

Bond-market crashes have actually been relatively rare and mild. In the US, the biggest one-year drop in the Global Financial Data

extension of Moody’s monthly total return index for 30-year corporate bonds (going back to 1857) was 12.5% in the 12 months ending in February 1980.

Compare that to the stock market: According to the GFD monthly S&P 500 total return index, an annual loss of 67.8% occurred

It seems puzzling – and unsustainable – that people would tie up their money for 20 or 30 years to earn little or nothing more than these central banks’ 2% target rate for annual inflation

in the year ending in May 1932, during the Great Depression, and one-year losses have exceeded 12.5% in 23 separate episodes since 1900.

It is also worth noting what kind of event is needed to produce a 12.5% crash in the long-term bond market. The one-year drop in February 1980 came immediately after Paul Volcker took the helm of the Federal Reserve in 1979.

A 1979 Gallup Poll had shown that 62% of Americans regarded inflation as the “most important problem facing the nation.”

Volcker took radical steps to deal with it, hiking short-term interest rates so high that he created a major recession. He also created enemies (and even faced death threats). People wondered whether he would get away with it politically, or be impeached.

Regarding the stock market and the housing market, there may well be a major downward correction someday. But it probably will have little to do with a bond-market crash. That was the case with the biggest US stock-market corrections of the last century (after 1907, 1929, 1973, 2000, and 2007) and the biggest US housing-market corrections of all time (after 1979, 1989, and 2006).

It is true that extraordinarily low long-term bond yields put us outside the range of historical experience. But so would a scenario in which a sudden bondmarket crash drags down prices of stocks and housing. When an event has never occurred, it cannot be predicted with any semblance of confidence.

Project Syndicate

16 | Business Daily

March 19, 2015

Closing Tencent Q4 net income up 51 pct but misses forecasts

China February net forex purchases at 42.2 bln yuan

China’s biggest social network and online entertainment firm, posted a 51 percent gain in fourth-quarter net income, missing estimates, as sharing and content costs took a bite out of healthy revenue growth. Net income for the quarter ending December rose to 5.95 billion yuan (US$955.9 million), below estimates of 6.26 billion yuan, according to a Thomson Reuters SmartEstimate poll of 11 analysts. Revenue grew 24 percent to 20.978 billion yuan (US$3.37 billion), slightly above forecasts of 20.5 billion yuan, on the back of strong sales from online gaming on PCs and smart phones linked to social networks.

Central bank and financial institutions spent 42.2 billion yuan (US$6.85 billion) on foreign exchange purchases in February, data from the central bank showed yesterday. The data ended two months of net sales seen in January and December, easing worries of massive capital outflow from the country. As of the end of February, Chinese financial institutions’ total yuan funds outstanding for foreign exchange totalled 29.34 trillion yuan, according to PBOC. Separate data from China’s foreign exchange regulator showed Chinese banks sold a net 105.4 billion yuan worth of foreign exchange to customers in over-the-counter transactions in February.

ECB besieged by protests as Draghi fetes new tower Dozens of groups, including Syriza followers, are joining in the rally Angela Cullen and Jeff Black

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nti-austerity protesters seeking to spoil the inauguration of the European Central Bank’s new headquarters in Frankfurt’s east end set several cars alight and left a trail of destruction across the city in clashes with police before the opening ceremony yesterday.

Police deployed water cannons to restore calm and keep the demonstrators at bay in the area surrounding the 1.3 billion-euro (US$1.4 billion) tower, after erecting barbed wire and barricades on Tuesday.

More than 10,000 protesters have descended on the euro area’s financial capital and home of the common currency under the Blockupy banner, and several thousand police officers are on duty.

The first incidents occurred “shortly after 6 a.m.,” said Claudia Rogalski, a police spokeswoman. “There have been violent outbreaks at several locations in which police have been attacked.”

Eight police officers were injured in the altercations, she said.

A burning blockade near the new European Central Bank (ECB) headquarters

Rioters set several cars, including seven police vehicles, and garbage containers alight, set off smoke bombs and threw stones, glass and corrosive substances, police said in Twitter postings. Some arrests have been made, the police said, without providing a number, and have detained about 350 people “who prior to this rioted and committed criminal acts.”

Laying blame Nine days after the ECB started buying sovereign debt in a 1.1 trillion-euro plan to revive inflation and rescue

the economy, protesters are laying the blame for recession and unemployment in the 19-nation euro area at the doors of ECB President Mario Draghi and German Chancellor Angela Merkel.

“In the past, we protested against things like the rescue of the banks in Europe,” Werner Renz, a representative of protest group Attac, said on Tuesday. “The focus of our protests this year is on Greece. We need more of Athens in Europe and less of Berlin. There is no way Greece can repay all its debt.

The situation can’t be solved by austerity alone.”

The demonstrators planned to blockade the area around the ECB in “transnational actions of civil disobedience,” Blockupy said on its website. The ECB has issued guidance to staff on how to dress so as to avoid drawing attention.

German protests Protesters in November scaled fencing at the ECB’s headquarters and hurled paint bombs at the glass facade while trying to gain entrance to the building after a small group of about 2,000 demonstrators taking part

HK detected 5,000 illegal Chinese monopolise U.S. investment visa applications milk powder cases last year

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in an organized rally broke away. The organizers called an end to that march after the incident.

While social unrest is relatively rare in Germany, Europe’s biggest economy has been the scene of several mass protests in recent months as a wave of antiimmigration sentiment sparked demonstrations by the Pegida movement opposing what it calls the Islamization of Europe. The biggest of these attracted as many as 25,000 people in the eastern city of Dresden in January.

In October, more than 4,000 soccer hooligans and neo-Nazis raged through the streets of Cologne, hurling bottles and stones at police, in a protest rally that spiralled out of control. Traditional May Day protests, to mark the May 1 Labour Day, frequently erupt in violence.

The police are required to strike a balance between protecting citizens and upholding the freedom of assembly rights anchored in Germany’s constitution.

Bloomberg News

Indonesia could face US$21 bln revenue shortfall

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ainland Chinese account for over 80 percent of people awaiting visas that bestow U.S. citizenship in return for investment, showed findings by real estate services firm Savills Studley, who said the trend is pushing up demand for commercial property.

A rising number of Chinese are applying for EB-5 visas, where non-citizens put at least US$500,000 into a business in the United States, as they seek to park their wealth offshore - in part to escape the impact of an anti-corruption drive at home.

Australia has a similar scheme for those investing over US$4 million, with 90 percent of applicants from China. Australian property has long been popular among Chinese but investment has accelerated since the start of the anti-graft campaign last year.

In the U.S., Savills Studley said over 6,400 people are on the waiting list for an EB-5 visa, and that it expects this year’s allotment for Chinese applicants to be reached by September, compared with late August last year.

rom March 2014 to February 2015, Hong Kong’s Customs and Excise Department detected a total of 4,986 cases of illegal export of powdered formula, involving the arrest of 5,000 persons, Hong Kong’s Secretary for Security Lai Tung-kwok said yesterday.

Replying to a lawmaker’s question in regard of parallel trading in the Legislative Council, Lai said the Hong Kong government is very concerned about the nuisance caused by parallel trading activities to the daily lives of residents. The law enforcement agencies have been implementing a series of countermeasures in accordance with law.

According to Lai, 61,200 kg of powdered formula were seized in the illegal export cases from March 2014 to February 2015. Of the 5,000 persons arrested in these cases, 1,748 were Hong Kong residents, 3,235 were mainland residents and 17 persons were of foreign nationality.

Lai said the Immigration Department of Hong Kong has established a “watch list of suspected parallel traders”.

ndonesia’s 2015 revenue target is “really unrealistic” and there will be a large budget shortfall that could force the government to cut spending, a World Bank economist said yesterday.

“Revenue shortfall is absolutely unavoidable,” Ndiame Diop, the bank’s lead economist for Indonesia, told a seminar titled “Indonesia Economic Quarterly: High Expectations”.

A World Bank report released at the event said this year’s revenue shortfall could be as much as 282 trillion rupiah (US$21.4 billion).

A key impact of the shortfall, Diop said, is that “perhaps the government will have to revise its spending plan”.

President Joko Widodo, who took office in October, won parliament’s approval in mid-February for a 2015 budget that includes big increases in infrastructure spending and tax collection.

It calls for a 14 percent increase in total revenue and a 30 percent rise in tax collection, even though Indonesia is currently being hurt by falling oil and gas revenue and lower commodity prices.

Reuters

Xinhua

Reuters