Macau business daily, Apr, 16, 2015

MOP 6.00 Year IV

Number 771 Thursday April 16, 2015

Publisher: Paulo A. Azevedo

Closing editor: Luís Gonçalves

Caesars fall boosts 5-year record number of U.S. companies seeking bankruptcy Page 7

The Mong Ha Gate Cost overruns. Low quality. Red tape. The dire state of public works in Macau has become the “new normal”. So says Legislator Ho Ion Sang, pointing to several mega infrastructure projects. The most recent example? The reconstruction of the Mong Ha social housing and Sports Pavilion. Now on hold because of a lawsuit involving the gov’t and contractor. Legislator Ho put Secretary for Transport and Public Works Raimundo Rosario on notice that he would ask penetrating questions at his Policy Address Q & A. Demanding answers to the Mong Ha fiasco. And the wider culture of the construction industry PAGE 2

Power outage zaps city A massive power outage. Triggered by malfunctioning electrical substations.

Paralysing fixed-line telephones, traffic lights and elevator services yesterday, said the gov’t.

Banking services were also briefly suspended.

Electricity supplies were restored at noon.

Electricity supplier CEM denied the power outage had anything to do with electricity importation from Mainland China

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Residential prices to rebound

Paper trail pursuit

Economic housing law revised to speed up process Page 3

Pataca rose again in March Page 5

Luxury brands cut prices in Hong Kong Page 7

They tanked 20 pct since Q3 of last year.

But housing prices have been going up since February. This quarter, they may claw back as much as 10 pct, according to Centaline Property

A U.S. workers’ union is tenaciously pursuing an answer. The International Union of Operating Engineers wants the Chief Executive’s response. Did previous CE Edmund Ho grant land rights to two local companies which subsequently claimed to have owned the Cotai land of Wynn Macau? The union asks the gov’t if official documents can be provided. And whether representatives of the Macau Gov’t were empowered under local law to grant undocumented land rights

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Page 6

HSI - Movers April 15

Name

%Day

Industrial & Commerc

4.86

China Construction B

4.39

Bank of Communicatio

4.31

CNOOC Ltd

3.86

Bank of China Ltd

3.56

Fai Chi Kei lifting

China Mengniu Dairy

-2.62

China Mobile Ltd

-2.65

China Shenhua Energy

-2.82

The gov’t has approved mixed residential and commercial development located at a plot occupying nearly 5,500 square metres.

In Fai Chi Kei on the northern Macau Peninsula. Adjacent to local developer Mr. Liu Chak Wan’s own residential works

Want Want China Hol

-3.70

Swire Pacific Ltd

-3.95

Source: Bloomberg

I SSN 2226-8294

www.macaubusinessdaily.com

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China slowing further China’s official figures were released yesterday. Confirming the downward trend. And highlighting a stubbornly bad performance by the property sector and factory output

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2 | Business Daily

April 16, 2015

Macau 47-year-old resident worker falls to death from industrial building A 47-year-old local resident worker fell to his death from the seventh floor of an industrial building in Fai Chi Kei district on Tuesday, the sixth fatal industrial accident to take place in the city this year.

A check by the Labour Affairs Bureau on the accident site determined that he was working without safety equipment whilst erecting a scaffold. In the first four months of this year, of the six fatal industrial accidents that have occurred, four happened o casino-hotel project sites in the city.

Mong Ha stadium construction lawsuit Legislator Ho Ion Sang said that he would closely question Secretary for Transport and Public Works Raimundo Rosario – who’s at the Legislative Assembly for his 2015 Policy Address today – about the many delays, budget overruns and quality flaws apparent in public projects Joanne Kuai

joannekuai@macaubusinessdaily.com

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ork on the reconstruction of the Mong Ha Sports Pavilion has been put on hold because of a lawsuit between the government and the contractor, said the Secretary for Social Affairs and Culture who oversees the sports facility during his Policy Address on Monday.

The bids for the construction contract of the Mong Ha Social Housing Phase II and the reconstruction of the sports pavilion of Mong Ha (structure of basement) date back to July 15, 2011, according to the Infrastructure Development Office (GDI).

The contract was awarded to local enterprise Hobbs Construction Company Limited at a price exceeding MOP685 million – the lowest among all 16 tenders.

The contract mandated that the whole construction should be completed within 840 days, while the basement of the sports pavilion was to be finished within the first 270 days. The pavilion was closed on September 18, 2011.

Legislator Ho Ion Sang pointed out that according to the information the government has provided, the basement should have been finished in 2012, and the whole project wrapped up by early 2014. According to residents’ complaints and his own site inspection, the basement has not yet been completed; as the construction has been halted he cannot see the completion of the project in the foreseeable future.

Regarding the project delay, Mr. Ho submitted a written enquiry on March 20, 2015, requesting the reason behind the delay, the expected completion date of the project and the expenditure. He told Business Daily that so far he has received no reply from the authorities.

Technical issues The complicity of the construction has resulted in the delay of the project, according to the quality assurance (QA) service provider for the Mong Ha project. The soil condition varies a lot in this relatively large-scale site, and the previous structure (old Mong Ha Sports Pavilion) on top had left some pilings underground, causing unexpected demolition work.

“The drawing of the site that originally was occupied by the old pavilion was quite old. The locations of some previous pilings were not specified,” said Ho Chon Kit, an engineer from the Centre for Engineering Research and Testing of the University of Macau, which was commissioned by GDI to supervise QA at the Mong Ha site.

“During excavation, the contractor had a lot of difficulties. They ran into unexpected pilings and rocks underground that needed to be removed. That resulted in a lot of delay,” said Mr. Ho. Currently, the contractor has finished the foundation as in bored pilings and has basically completed

excavation and lateral support (ELS) – it is still missing the reinforced concrete (RC) superstructure.

Mr. Ho told Business Daily that he has heard about the lawsuit involving GDI and the contractor but doesn’t know the details. He also said he hasn’t received any notification that the construction at the site has been stopped and that regular weekly site meetings are still being hold.

As of the week before last week, Mr. Ho said he still attended the weekly site meetings at Mong Ha construction site, on behalf of the QA team, with representatives from GDI, the contractor Hobbs Construction, and the supervision team (PAL Ásia Consultores, Limitada).

“The new normal” Budget overruns, uncontrollable delays and quality flaws in largescale public projects are becoming “the new normal” in the Macau SAR, said Legislator Ho Ion Sang, citing the Light Rail Transit (LRT), Pac On Ferry Terminal in Taipa and the Mong Ha social housing and stadium.

Legislator Ho Ion Sang said he had heard about the judiciary proceeding regarding the Mong Ha project but doesn’t know the details. He said he attaches great importance to the case since he always cares about public housing and residents’ urgent need for sports facilities in town.

The legislator said that the existing bid and tender system for

public works in Macau has many flaws, as it doesn’t attach sufficient importance to the bidders’ ability, skills, experience and background but rather the price. And there is no blacklist of contractors that records delay or other malpractices.

“The Secretariat for Transport and Public Works has a guideline which indicates the lower the price the higher the chance the bidder has of winning the contract. This is not scientific at all,” said Mr. Ho. “The qualifications of the contractors were not well evaluated when the contract was granted. And sometimes the contractor uses this policy to bid at a low price but asks for more money when construction is in progress. When they don’t get it, the construction gets delayed. And sometimes it results in lawsuits,” said Mr. Ho. In the case of the Mong Ha project, the open tender document issued by GDI in May 2011, reads ‘Reasonable price – 60%; Work plan – 10%; construction experience and quality 18%; integrity and credibility – 12%.’

Administrative problem Another big problem lies in the inefficiency of the administrative process – whenever a problem occurs or a decision has to be made documents circulate among different stakeholders.

“Administrative approval takes a long time to be done whenever a change happens,” said the legislator.

“One government department takes days to draw up a document, and another department takes more days to review it, and it goes on and on, during which time the contractor will stop working.”

“This makes a huge difference between public works and the private projects such as the casino resorts.

And it usually results in unforeseeable delay of those public projects, as well as serious budget overruns and sometimes quality flaws.”

The legislator said that the government is aware of these problems so he doesn’t understand why they haven’t made any change or improvement yet. He intends to urge the Secretary for Transport and Public Works, Raimundo Rosario, to review the issues. The Secretary is at the Legislative Assembly for his 2015 Policy Address today.

Business Daily has approached the GDI and the contractor Hobbs regading the details of the construction project as well as the judiciary proceedings but received no reply by the time we went to press.

Business Daily | 3

April 16, 2015

Macau

Massive power outage hits Macau

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massive power outage, triggered by malfunctioning electrical substations, hit Macau yesterday, paralysing fixed-line telephones, traffic lights and elevator services, said the government. Banking services in the affected areas were also briefly suspended before electricity supplies were restored at noon. Some shops were temporarily closed due to the incident as well.

The city’s sole electricity supplier CEM – Companhia de Electricidade de Macau – said at 10:56am yesterday morning that a malfunction of the 110kV high-voltage equipment in the Canal dos Patos substation subsequently affected four primary substations including S. Paulo, D. Maria, Porto Exterior and Ariea Preta substations.

Extensive areas in Macau Peninsula were affected, with 100,000 customers on the Macau Peninsula and some customers in Taipa, Coloane and the University of Macau encountering voltage dips caused by the incident.

The power supply was fully restored at 12:20pm according to CEM.

Mainland China CEM has denied the power outage had anything to do

with electricity importation from Mainland China. The two existing networks for power supplied by stateowned China Southern Power Grid, situated in Gongbei Port and Lotus Port, respectively, account for 95 per cent of local power consumption.

In a joint press conference held following the incident, the Co-ordinator of the Office for the Development of the Energy Sector, Arnaldo Ernesto dos Santos, said the government is requiring CEM

to submit a preliminary report in one week and an extensive report in one month.

A representative of the Public Security Police Force said the border crossing remained normal during the incident and said the government had despatched more police officers onto the streets to ensure public order was maintained.

75 trapped The Fire Services Bureau activated its emergency

mechanism, including mobilising 150 officers and more vehicles to help in rescue work. It handled 75 cases of people trapped in elevators and helped 440 affected by the lift incidents.

The Health Bureau said the incident had only a minor effect on the services of the emergency ward, and the operation of surgery wards and intensive care units, as the hospital has an emergency power supply.

CEM said it took emergency

measures by activating the generation units of Coloane Power Plant A to provide emergency supply, which generated the black smoke at its power plant that the company explained is normal.

CEM has apologised for the incident and said the company would learn from it to further optimise the stability of the power supply.

It also disclosed that the last regular inspection of the Canal dos Patos substation was conducted last month.

Economic housing law revised to speed up process The government announced yesterday the introduction of a preliminary selection stage in the process of allocating economic housing João Santos Filipe

jsfilipe@macaubusinessdaily.com

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preliminary selection stage to assess whether applicants for economic housing are eligible to receive such units is to be introduced to the process of the allocation of such units, government spokesperson Leong Heng Teng announced yesterday. The introduction has yet to be approved to the Legislative Assembly and seeks to speed up the process of the allocation of economic housing.

“The law amendment will allow the Housing Bureau [IH] to make a preliminary selection, through the analysis of the information provided by applicants, in order to verify if the candidates really meet the criteria to apply for the houses”, Leong Heng Teng explained. “The intention of this amendment is to let the applicants know as fast as possible if their application has been successful”.

In the event that the law amendment is approved by the Legislative Assembly it will take retroactive effect on the ongoing process to allocate economic housing which started in December 2013 with a March 2014 deadline.

“As at April 2014, there were 42,000 applicants for 1,900 house units. Without the amendment to the law, the results of these applications would have only been known in 2016.

However, if the amendment proposal is sent to the Legislative Assembly and approved by July then in August the preliminary selection can be done and the draw made. This will mean that this amendment can speed up this process by almost one year”, Leong Heng Teng said.

“In relation to the application process started in 2013 we will make sure that these changes do not limit or damage the rights of any of the applicants”, he added.

Deeper changes to law ahead The government spokesperson also explained that this amendment is the first step in changing the economic housing law and that the government is already studying the introduction of deeper changes to the law.

“This change concerns only the process of selecting candidates to receive economic units. However, the government is working on a universal revision of the law that will be announced in a few months”, Mr. Leong said.

The government spokesperson also said that the scrutiny of economic housing not being occupied by the applicants will increase. According to data from the Housing Bureau, from a total of 7.087 economic housing units

4G tariffs and fines Leong Heng Teng also announced that the government will send for approval to the Legislative Assembly changes to the tariffs and fines applied to telecommunication services.

These changes are motivated by the introduction of the 4G services in Macau that are expected to be launched this year, after the government announced in March the allocation of licences to CTM, China Telecom, Hutchison Macau and SmartTone.

allocated by the government, 1.457 are not being used, which accounts for 20.6 per cent. Such situations are illegal.

Economic housing is built by the government in order to offer housing at affordable prices to Macau residents.

The process by which these houses are allocated prioritizes nuclear families over non-nuclear families and individuals.

4 | Business Daily

April 16, 2015

Macau Brands

Trends

Frends with benefits Raquel Dias newsdesk@macaubusinessdaily.com

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ike most products, headphones and audio equipment have gone luxurious. Naturally, high-end sound equipment has always existed; one has only to think of brands like Mackintosh (not to be confused with Apple computers) to see that it’s not that young a market. What’s new about the trend is the fact that image has surpassed the necessity for good music.

New functions have been added to headphones, as well, like a bluetooth and call answering, for example.

The bigger investment in the appearance of audio equipment means great designers get together with sound engineers to produce a good product with a luxurious feeling.

A good example is the latest limited edition of Frends Taylor’s headphones. At almost MOP3,000 the headphones guarantee you not only a good sound quality but mostly a stylish finish to your outfit.

The new product also opens the brand to a more male market, as the headphones have a gold finish covered in brown python leather, a different direction from the well known edition made to look like crystal.

This limited edition also comes with leather padding and three buttons to interchange between calls and music as well as volume control.

Additional private housing project for Fai Chi Kei Two new private residential projects are to be built in the Fai Chi Kei North Bay district, which both belong to local prominent businessmen Stephanie Lai

sw.lai@macaubusinessdaily.com

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he government has approved the mixed residential and commercial development located at a plot occupying nearly 5,500 square metres in Fai Chi Kei on the northern Macau Peninsula.

This would be a property project adjacent to local developer Mr. Liu Chak Wan’s own residential works.

According to an official dispatch published yesterday, local property developer Dong Fu Ye Ltd. were granted four years to develop their property project on Lot C on Rua do Comandante João Belo, a site in the Fai Chi Kei North Bay area that is home to several social housing buildings and private residences.

An owner of the property developer Dong Fu Ye and also the president of Real Estate Association of Macau, Mr. Chong Siu Kin, declined to tell Business Daily the number of residential units, their respective size or pricing intended for this project, saying that they are still working on the construction plan.

“Four years is actually a tight schedule for us to complete the project, considering that now you have to wait for a fairly long time to get the [imported] labour quota approved,” Mr. Chong remarked.

“Also, we’re to be fined MOP180,000 (US$22,546) per day of project delay; and if we are three months behind the government’s

Four years is actually a tight schedule for us to complete the project, considering that now you have to wait for a fairly long time to get the [imported] labour quota approved Chong Siu Kin, Real Estate Association of Macau

stipulated completion schedule, this amount of fine will be increased to MOP360,000 per day,” Mr. Chong added. “That’s a cost pressure we’re facing to finish the project on time.”

The project will comprise two towers of 34 floors, according to the official dispatch. The approved gross

floor area of the residential areas is 60,578 square metres, while that of the commercial units is 10,562 square metres.

The developer Dong Fu Ye’s property project is located adjacent to local developer Liu Chak Wan’s two plots on the same street.

Liu Chak Wan’s Tin Wei Investment Company Ltd. acquired the two plots for MOP1.42 billion in 2008. The two plots of land, which are of a combined size of 4,671 square metres, will support a mixed residential and commercial establishment. Speaking to media in November last year, Mr. Liu noted that he expected his property project would take three to four years to complete.

The plot that Dong Fu Ye is building the property project on was acquired via a closed bid in 2009 launched by the Bank of China, Ltd., Business Daily has learnt. The plot, occupying 5,496 square metres, was initially leased to the Bank of China by the Macau Government through a land swap in 2007, according to the Official Gazette.

At the time, through the land swap, the Macau Government acquired 9,511 square metres located at Estrada Marginal da Ilha Verde worth MOP168.7 million.

The plot was then developed by the government to build a social housing complex.

Business Daily | 5

April 16, 2015

Macau André Ritchie leaves deputy chief’s post at GIT A statement published by the Transportation Infrastructure Office (GIT) has announced that André Sales Ritchie resigned his post as the unit’s assistant co-ordinator on April 1, another departure that follows the Office’s former chief Lei Chan Tong’s stepping down in November last year. Mr. Ritchie, who has served as deputy chief of the Office since 2011, had his term renewed on an annual basis. The Office, which is responsible for overseeing and co-ordinating the light rapid transit (LRT) project, is now only left with the incumbent assistant co-ordinator Mr. Ho Cheong Kei – who is also the acting director of the unit.

Housing prices to rebound 10 pct in Q2 Following an accumulative drop of more than 20 per cent since the third quarter of last year, housing prices have been going up since February, says Centaline Property Kam Leong

kamleong@macaubusinessdaily.com

“We expect housing prices in the second quarter will continue increasing by between 5 and 10 per cent from the first quarter,” she said, claiming it is possible that home prices may rebound 20 per cent in the first half of the year.

In addition, she predicts that the transaction of residential flats in March also rebounded to some 800, from 269 and 286 in February and January of this year, respectively.

She indicated that the hike in transactions is due to the increased supply of new properties, as well as many second-hand properties escaping the special stamp duty.

The special stamp duty is a levy of 20 per cent on the sale of a property if it is sold within a year of being purchased, or 10 per cent if it is sold between one and two years of being purchased.

Residential rental slumped in Q1

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ousing prices are rebounding, Centaline (Macau) Property Agency Ltd. claims, forecasting that housing prices in this quarter may claw back as much as 10 per cent.

“Since the end of last year, the property market entered an adjustment phase, with housing prices dropping steeply. Due to the market atmosphere, some landlords sold their properties at low prices. Now these cheap supplies have been consumed, the asking prices of landlords for the following properties will remain high,” the director of the agency,

Jacky Shek Po Tak, said yesterday in a press briefing by the agency reviewing the real estate market in the previous quarter.

According to the latest official data of the Finance Services Bureau (DSF), home prices in February reached MOP89,352 (US$11,168) on average per square metre, up 4 per cent compared to the MOP85,717 per square metre recorded in January of this year.

“We estimate that housing prices have increased some 3 per cent in March from February, which means that the housing prices in February

and March had accumulatively [risen] by 7 per cent from January,” Mr. Shek said.

In fact, during the third quarter of last year, home prices started to drop by 13.5 per cent quarter-on-quarter to MP98,422 from MOP113,984 per square metre. In January of this year, the decline was extended to 24.7 per cent from the second quarter of 2014.

A senior regional sales director of the agency, Noel Cheung Lai Wah, said housing prices would keep increasing following the growth rate of the previous two months.

Despite housing prices showing signs of increase in the past quarter, residential rentals decreased by at least 18 per cent on average from the previous quarter, according to the agency.

“The slowdown of the VIP gaming market has led some tenants to quit their tenancy of high-end properties near the casinos. On the other hand, the low-end rental market is also affected by the 24-hour border crossing at Lotus Border and the extended operating hours of the Border Gate because many nonresident workers prefer renting a house in Zhuhai,” Mrs. Cheung said, claiming that the plunge in the rental market was driven by the increasing supply.

Meanwhile, according to another senior regional sales director of the agency, Roy Ho Siu Hang, the buying prices of industrial buildings also declined some 10 per cent quarteron-quarter in the first three months.

He anticipated that these prices will plummet 20 per cent to MOP3,300 per square foot in the first half of the year. Nevertheless, rental for industrial buildings have not mirrored the downturn, but increased by 6 per cent quarter-on-quarter to MOP8.5 per square foot.

Pataca rose again in March

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he trade-weighted effective exchange rate index for the pataca, a gauge of the domestic currency’s exchange rate against the currencies of Macao’s major trading partners, rose 1.52 points month-onmonth and 8.42 points year-on-year to 105.19 in March 2015. As the US dollar continues to rise against the world’s major currencies like the euro, yuan and yen, the local currency - pegged to the US dollar through Hong Kong - is strengthening month by month.

The Monetary Authority of Macao also announced yesterday that the preliminary estimate of Macao SAR’s foreign exchange reserves amounted to MOP136.9 billion (US$17.14 billion) at the end of March 2015. The reserves

increased by 1.9% from the revised value of MOP134.3 billion (US$16.81 billion) for the previous month. Macao SAR’s foreign exchange reserves at endMarch 2015 represented 11 times the currency in circulation or 103.0 per cent of Pataca M2 at end-February 2015.

6 | Business Daily

April 16, 2015

Macau

U.S. trade union insists on Cotai land deal clarification The International Union of Operating Engineers is requesting the Chief Executive confirm whether previous CE Edmund Ho had granted land rights to two local companies which claimed previously to have owned the Cotai land of Wynn Macau Kam Leong

kamleong@macaubusinessdaily.com

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he International Union of Operating Engineers (IUOE) announced on Monday that it has submitted a public letter to Chief Executive (CE) Fernando Chui Sai On, requesting information about what role former CE Edmund Ho Hau Wah played in committing land rights to a parcel of Cotai land to two local firms before it was purchased by Wynn Macau.

Wynn Resorts, parent company of Wynn Macau, was made to pay MOP400 million (US$50 million) in 2006 for the land rights of the Cotai Land to Macau firms Tien Chiao Entertainment and Investment Company (Tien Chiao) and Companhia de Entretenimento e Investimento Chinese Limitada backed by Beijing businessman Ho Ho, who according to the Wall Street

Journal owned 90 per cent of the two companies.

In the letter to Chui Sai On on Monday, the representative of IUOE, Jeffrey Fiedler, queried whether the former CE of the Special Administrative Region, Edmund Ho, had committed the land rights to Tien Chiao and if there are any official documents that can be provided by the government showing so.

‘We question whether representatives for the Macau Government were empowered under Macau law to grant undocumented land rights during that time or any other time,’ the Union wrote.

In fact, last year, IUOE filed with the city’s graft watchdog, the Commission Against Corruption (CCAC), claiming that there was no

official document proving that the government had committed the land rights to the two Chinese companies.

Meanwhile, the Union said that it had found from a 200-plus page document provided by the Land, Public Works and Transport Bureau (DSSOPT) that the government did record the step-by-step progress of how Wynn Macau was awarded the plot of land.

‘The Land Bureau handed over more than 200 pages, filed in 31 separate entries, covering step-bystep the land concession process, beginning with Wynn Macau’s initial application filing in February 2006, to the opening of the concession file in July 2006, to the initial joint venture between Wynn Macau and Ho Ho, to ultimately the awarding of the concession in December 2011,’ noted the IUOE representative in a press release by the Union.

‘However, a glaring omission in these Cotai land documents is any reference to the Macau Government committing land rights to Ho Ho prior to 2006. Why would the government document seemingly everything concerning this land in Cotai except this critical and valuable earmark to Ho Ho and his associates?’ Mr. Fiedler queried, claiming that their requests, if successful, will set a new precedent for the transparency of the Macau Government.

In 2012, Wynn boss Steve Wynn explained to our sister publication Macau Business that he had had to pay MOP400 million for the land rights due to expressing his interest in the Cotai land too late. Finally, however, Tien Chaio was willing to give up its land rights for US$50 million, which Wynn Resorts did pay in 2012.

Birmingham appoints new auditors as old ones quit

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irmingham International Holdings Limited has announced that the company will appoint new auditors, following previous auditors KTC Partners CPA Limited declining to continue serving the company for the year ended June 30.

The company filed with the Hong Kong Stock Exchange yesterday that it had received a non-acceptance of engagement from KTC in January, after the shareholders of the company had resolved to appoint KTC as auditors for the company in a general meeting on January 6.

‘In the Notice, KTC stated that after they took into account many factors including the professional risks associated with the audit, the Company was informed that KTC did not accept the proposed appointment as auditors of the Company,’ Birmingham wrote.

Zhonghui ANDA CPA Limited will be appointed by Birmingham’s receiver Ernst & Young as the new auditors to replace KTC, the Hong Kong-listed company said.

Birmingham registered a net loss of HK$156 million for the year ended June 30 2014. Last month, the company’s board underwent a major reshuffle, in which seven directors resigned, including Chairman Cheung Shing and Vice-Chairman Ma Shui Cheong.

K.L.

Corporate Tejo grand wine tasting in Macau

Galaxy and Caritas Macau hosted Arts Workshop

Team Tejo, the only winemaking community based on the famous Portuguese river, the Tejo, inland from Lisbon, will host a tasting of wines from the region in Macau. The event will take place in Portugal’s Consular Residence on May 13 from 3:00pm to 6:00pm. More than 70 brands from nine wine producers such as Adega do Cartaxo, Casa Cadaval, Casal da Coelheira, Casal do Conde, Companhia das Lezirias, Fiuza. Quinta da Alorna, Quinta da Ribeirinha, and Quinta Vale dos Fornos will be on show.

“This river valley setting endows us with ideal natural conditions for vineyards and wineries, enabling us to create diverse styles for all wine moments. These ideal conditions ensure that our wines are always high quality, consistently appealing, and reliable at a range of price points and occasions”, wrote Team Tejo.

Galaxy Entertainment Group and Caritas Macau host the ‘Me and My Galaxy’ Inclusive Arts Workshop for people with disabilities in the East Square of Galaxy Macau on Saturday. During the workshop, the Galaxy volunteer team and 40 service users of Caritas Macau together created a painting measuring six metres by two metres to foster social inclusion of persons with disabilities and able bodies.

A total of 40 members from five rehabilitation centres under Caritas Macau participated in the event. Mr. Paul Pun, Secretary General of Caritas Macau, said the workshop was meaningful as it gave members an equal opportunity to participate in arts creation and promote social integration for all.

Mr. Buddy Lam, Vice President of Public Relations of GEG, said this workshop served as a platform of mutual understanding and sharing between people with autism and the community at large.

Business Daily | 7

April 16, 2015

Macau

Luxury brands cut prices in Hong Kong Major brands like Cartier, Chanel, Patek Phillipe, Dior and Prada are cutting prices in Hong Kong in the wake of weakening sales. A trend likely to spread to Macau as companies usually consolidate both markets in their accounts

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uxury French watchmaker and jeweller Cartier is the latest designer brand to reduce its prices in Hong Kong, offering a 5 per cent discount starting yesterday, The Standard has reported. The Hong Kong paper said that a Tank Louis Cartier price has been slashed

by HK$3,400 and will cost HK$65,075 in stores. A Ballon

Bleu De Cartier timepiece is set to retail at HK$40,470, a saving of HK$2,130.

Sources told The Standard that Cartier will also reduce the prices of other jewellery pieces today. The brand follows the lead of Chanel, which offered discounts of up to 20 per cent on designer handbags last month. Cartier confirmed the price cuts

on its products without volunteering further details.

The report noted that the current discounting is due to the record drop in the euro and business disruption caused by parallel trading.

In February, Swiss watchmaker Patek Philippe also slashed prices, followed

by Italian luxury goods maker Prada which cut prices in Asia, including Hong Kong, as it reported its first drop in annual net profits since listing in the SAR four years ago.

The Standard added that recently French luxury brand Dior modestly reduced prices of Miss Dior and Soft Dior bags. For example, a Miss Dior bag dropped 12 per cent to HK$26,000 from HK$29,000. After Chanel cut its prices, a Boy Chanel handbag went for HK$29,700, a discount of HK$8,000.

Caesars fall boosts 5-year record number of U.S. companies seeking bankruptcy

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he number of bankruptcies of publicly traded U.S. companies has climbed to the highest first-quarter level for five years, according to a Reuters analysis of data from research firm bankruptcompanynews. com. Many of them were the walking wounded of corporate America. Caesars operating unit, for example, has been unprofitable for five years.

Plunging prices of crude oil and other commodities is one of the major reasons for the increased filings, and bankruptcy experts say a more aggressive stance by lenders may also be hurting some companies.

While U.S. stocks have climbed to near record levels and the jobless rate has fallen to a six-year low, 26 publicly traded U.S. corporations filed for bankruptcy in the first three months of 2015. The number doubled from 11 in the first quarter of last year and was the

highest since the 27 of the first quarter of 2010, which was in the immediate aftermath of the financial crisis.

In addition, many of the bankruptcies were large. Six companies reported at least a billion dollars in assets when they filed in the first quarter of this year, the most in the first quarter of any year since 2009.

The US$34 billion in assets held by the 26 companies is the second highest for a first quarter in the past decade. The highest was the $102 billion held by the public companies that filed in the first quarter of 2009 when the crisis was at its worst.

If the pace of the first quarter continues, 2015 will end with more than 100 public company bankruptcies. The last time they reached that level was the 106 recorded in 2010, although in 2009 they soared to 211. The median number over the past decade is 86.

Reuters

8 | Business Daily

April 16, 2015

Greater China

Growth slows to 6-year low On a quarterly basis, growth slowed to 1.3 percent between January and March after seasonal adjustments Kevin Yao and Koh Gui Qing

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hina grew at its slowest pace in six years at the start of 2015 and weakness in key sectors suggested the world’s second-largest economy was still losing momentum, intensifying Beijing’s struggle to find the right policy mix to shore up activity.

A series of cuts in interest rates, lower reserve ratios at banks and easing measures in the property sector look to have mostly flowed into stock market speculation without delivering much support to fundamentals. Still, the economy’s persisting slowdown means more stimulus measures are expected soon.

Gross domestic product grew an annual 7.0 percent in the first quarter, slowing from 7.3 percent in the fourth quarter of 2014, China’s statistics

bureau said. While that matched the median forecast in a Reuters poll, analysts said it seemed at odds with data on the components of growth.

Monthly retail sales, industrial output and fixed asset investment data released with the GDP figures all missed analyst expectations. Growth in fixed-asset investment (FAI), a key economic driver in China, was the slowest since 2000, while industrial output grew at its weakest since the global financial crisis in 2008.

“If you look at Q1, exports were poor, industrial production was poor, FAI was much slower, retail sales soft, so how can GDP in real terms still be 7 percent?” said Kevin Lai, senior economist at Daiwa in Hong Kong.

The National Bureau of Statistics

did not release a breakdown of the GDP figures, saying the final figures were not yet available.

It was the weakest expansion since the first quarter of 2009, when the global financial crisis saw China’s growth tumble to 6.6 percent. A massive stimulus package pulled the economy out of the slump but at the cost of saddling local governments with a mountain of debt.

On a quarterly basis, growth slowed to 1.3 percent between January and March after seasonal adjustments, the statistics bureau said, from 1.5 percent in the previous three months.

“Both a policy rate cut and bank reserve ratio cut are likely,” said Louis Kuijs, chief China economist at RBS in Hong Kong, saying the

YAO XUEKANG

various measures rather than just cutting RRR or interest rates... But if it cuts RRR, this month will a good timing.”

fact the monthly data didn’t show an improvement in March increased the pressure for a rate cut.

China’s leadership, while emphasizing the need to adapt to “a new normal” of slower but better-quality growth, have signalled growing concern about a deeper downturn that could fuel job losses and debt defaults.

Premier Li Keqiang said last week that China faced increased downward pressures, and the government must “stand up to” such pressure to protect employment and incomes.

Employment was being supported by the services sector, with the survey-based unemployment rate standing at 5.1 percent, according to Sheng Laiyun, the statistics bureau spokesperson.

However, weaker growth and nagging factory deflation could force more manufacturers to cut jobs, analysts say, especially if Beijing follows through on threats to allow more defaults and bankruptcies in industries suffering from overcapacity.

“The problem of unemployment may show up if GDP growth continuously stays below 7 percent,” said Nie Wen, an economist at Hwabao Trust in Shanghai.

Reuters

KEY POINTS Q1 growth slowed to 7.0 pct y/y from Q4’s 7.3 pct Factory output in March +5.6 pct y/y, below forecast More policy easing seen needed to hit 2015 growth target C.bank may deliver more cuts in interest rates, reserve ratio

EXPERTS’ OPINION

analyst, Essence Securities “The Q1 GDP growth matches the market expectation, but is not quite compatible with the factory output and growth in the service sector.

Growth in factory output is quite disappointing, meaning very limited impact has been triggered from the central government’s determination to keep economic growth steady.”

ZHU QIBING

analyst, Minzu Securities “It’s certain that the government will relax monetary policy, but it could use

TIM CONDON economist, ING

“For the first quarter, obviously the weakness in trade has translated into weak manufacturing. That implies that services and construction are picking up, offsetting a lot of the weakness.”

ZHOU HAO

economist, ANZ Bank “The overall economic situation is very weak. China is still facing high

economic downward pressure, and it is very imminent to roll out both financial and monetary easing policy.

In addition, there are chances that growth for the whole of 2015 can drop to below 7 percent.”

LOUIS KUIJS

chief CHINA economist, RBS “Both a policy rate cut and bank reserve ratio cut are likely. We were already expecting both to happen, but I think this data, especially the fact that there doesn’t seem to be an improvement in March... probably will increase the pressure and the likelihood for at least one more cut in benchmark interest rates.”

Business Daily | 9

April 16, 2015

Greater China

G

Property investment growth weakens

rowth in China’s real estate investment in the first quarter slowed to the lowest rate since 2009 as developers focused on clearing excess inventory, while a series of government support measures braked the rate of decline in property sales.

While home sales are expected to climb in the coming months helped by government support, economists and analysts said falling property investment will continue to weigh on the economy.

Property investment growth eased to 8.5 percent in January to March from a year earlier, the National Bureau of Statistics (NBS) reported on Wednesday, dropping from 10.4 percent in the first two months of 2015. The 2009 low was 8.3 percent.

Property sales volume dropped 9.2 percent from the year-earlier period, narrowing from a 16.3 percent decline in January to February.

The real estate downturn remains a key risk to China’s 7 percent economic growth target, crimping demand in 40 related economic sectors ranging from steel to cement to furniture.

China Vanke, the country’s largest property developer, last month warned of a large inventory of unsold property, and state-backed China Resources Land said the sector will continue to focus on clearing inventory this year.

But the rate of decline in Chinese home prices slowed in March from February.

Reuters

C

Power output suffers biggest drop since 2008

hina produced 451.1 billion kilowatt-hours (kWh) of power in March, down 3.7 percent compared to the previous year, official data showed yesterday, a further sign that an economic slowdown is hurting energy-consuming industries.

Excluding holiday months, the year-on-year decline in power output is the biggest since late 2008, when China’s economy was hit by the global financial crisis, with analysts saying the slowdown was the major driver.

According to China’s National Bureau of Statistics, output from China’s power stations over the first quarter of the year reached 1.31 trillion kWh, down 0.1 percent from the same period of 2014.

Output from thermal power stations, most of which run on coal, fell 9.4 percent to 349.7 billion kWh in March, amounting to 77.5 percent of the total. Hydropower generation rose 25.3 percent to 67.6 billion kWh, or 15 percent of the total.

The statistics bureau also said in a statement that China’s energy intensity - its consumption per unit of economic growth - fell 5.6 percent year-on-year in the first quarter.

Power generation growth fell to 3.2 percent last year, the slowest rate since the Asian financial crisis, hit by the slowing economy, milder weather and government efforts to improve energy efficiency.

Reut

C

Oil demand up

hina’s implied oil demand in March rose 7.6 percent from a year ago, as refinery throughput hit a record high due to continued strength in gasoline and kerosene consumption in the world’s top energy consumer.

The country consumed roughly 10.53 million barrels per day (bpd) of oil in March, according to Reuters calculations based on preliminary government data, but this was down slightly from a record 10.6 million bpd in February.

China’s February implied oil demand would fall to under 10.3 million bpd if estimated changes in commercial fuel inventories are factored in, leaving December 2014 higher, at 10.45 million bpd.

Changes in commercial fuel inventories for March will be released later this month.

In the first two months, commercial stocks of diesel rose an estimated 2.9 million tonnes, or 20 million barrels.

Demand for jet kerosene was also strong, with output over January and February rising 21 percent on year.

Refinery throughput in the March hit a record high, gaining 5.5 percent on year to 44.69 million tonnes, or 10.52 million bpd, data from the National Bureau of Statistics (NBS) showed.

Despite high crude runs, China has still accumulated an implied excess of 30 million barrels of crude in the first three months of the year, Reuters calculations show.

Reuters

ZHANG YIPING

Economist, China Merchants Securities “The possibility of (further) interest rate and RRR cuts in Q2 is very small.

One of the main considerations for policymakers is the labour market.

But if deflation pressure grows and the labour market deteriorates, the government may act more to contain this trend.”

QI YIFENG

macro analyst, CEBM Group “The growth rate is higher than expected, as all evidence pointed to GDP growth of lower than 7 percent.

But it doesn’t change our view that China needs to cut either RRR or interest rate every month during the next three to six months to keep the economy from slowing further.”

YU PINGKANG

chief economist, Huatai Securities “We think the economy is likely to stabilize slightly in the second quarter if the government sticks to the current fiscal policy and continue to support the money markets.”

ANDREW COLQUHOUN

head of asia-pacific sovereigns, Fitch Ratings “We expect real GDP growth of 6.8 percent this year and 6.5 percent next year. Slower growth should not be viewed as bad news if it means the economy is adjusting to a more sustainable path.”

Consumer spending continues to weaken Consumers appeared increasingly reluctant to spend and growth in retail sales continued to slow in March. Retail sales grew 10.2 percent in March from a year earlier to 2.27 trillion yuan (370 billion U.S. dollars), the National Bureau of Statistics (NBS) said yesterday. The pace slowed from 10.7 percent in the January-February period and an annual 12 percent in 2014, dragging down aggregate growth in the first quarter (Q1)to 10.6 percent. Online retail sales of goods and services remained robust in Q1 despite growth declining from an annual 49.7 percent in 2014 to 41.3 percent.

Household income continues to grow The average per capita income of Chinese households continued to rise in the first quarter of the year, the National Bureau of Statistics (NBS) said yesterday. Average per capita household income rose 9.4 percent year on year to 6,087 yuan (US$992.30), recording 8.1 percent growth after inflation. The household income growth rate for 2014 was 8 percent. Per-capita disposable income for urban people hit 8,572 yuan, up 8.3 percent. The growth rate was 7 percent in real terms. Disposable income for rural residents stood at 3,279 yuan, up 10 percent. In real terms, it climbed 8.9 percent.

Pilot power sector reform expanded China is expanding a pilot scheme that gives local authorities more control over electricity transmission and distribution prices, as the world’s largest power market steps up deregulation to boost efficiency, according to a government document. The sector revamp would require the country’s two dominant grid operators, the State Grid Corp of China and China Southern Power Grid, to eventually segregate their power transmission and distribution businesses, a transformation that may take years to complete, experts say.

Following Shenzhen and Inner Mongolia, the provinces of Anhui, Hubei, Ningxia and Yunnan will join the pilot scheme.

AIIB founders top 57 with seven new members The prospective founding members of the Asian Infrastructure Investment Bank (AIIB) hit 57 yesterday after seven more countries were approved, China’s Ministry of Finance said. Sweden, Israel, South Africa, Azerbaijan, Iceland, Portugal and Poland were all included as founding members. Founding members of the AIIB have the right to help define the bank’s rules, while countries that applied to join after March 31 will be considered ordinary members with voting rights only but less say in the rule-making process.

10 | Business Daily

April 16, 2015

Greater China

Alibaba injects pharmacy business into HK-listed affiliate

Beijing hopes to boost retail drug sales at pharmacy chains and online

C

hinese e-commerce firm Alibaba Group Holding is injecting its online pharmacy operations into a Hong Kong-listed affiliate in a US$2.5 billion deal to consolidate its healthcare enterprise and ride a boom in online healthrelated business.

Shares in the affiliate, Alibaba Health Information Technology Limited, nearly doubled early on Wednesday after the announcement, resuming trading after being suspended since March 20.

Under the deal, Alibaba Health will buy 100 percent of the online pharmacy operations from a wholly owned subsidiary of Alibaba Group and another investor for HK$19.45 billion (US$2.5 billion). It will issue shares and bonds to fund the purchase, with the shares priced at HK$5.28 each.

“We expect that this integration will enable Alibaba Group to build a healthcare ecosystem that can utilize e-commerce, big data and other technologies to improve the healthcare supply chain,” Alibaba Group chief operating officer Daniel Zhang said in a statement.

Online pharmacies are currently limited to selling over-the-counter medicines and healthcare products such as cough remedies and vitamin tablets, but China is gearing up to open the over 1 trillion yuan (US$161 billion) prescription drug market to online pharmacy operators like Alibaba Health, JD.com and WalMart Stores Inc. Beijing hopes to boost retail drug sales at pharmacy chains and online, and wrestle some sales away

KEY POINTS Alibaba Health buys online pharmacy ops from Alibaba Group unit, investor To issue shares and convertible bonds to fund deal Alibaba Health shares almost double on trade resumption

from hospitals, which currently control around three-quarters of drug sales.

Alibaba said there were currently 186 online-licensed pharmacies on its Tmall online marketplace. Gross merchandise value (GMV) of those businesses for the financial year ended March 31, 2015 was approximately 4.74 billion yuan, it said. After the consolidation, consumers will still to be able to access online pharmacies

through Tmall.

The deal, which is subject to approval by independent shareholders of Alibaba Health, is expected to be completed in the third quarter this year, raising Alibaba Group’s effective equity ownership of Alibaba Health to about 53 percent from 38 percent and making it a consolidated subsidiary, it said.

Rivals such as Tencent Holdings, JD.com and Baidu have all made

moves to get into China’s online healthcare market, seen as a potential cure for a fragmented and opaque market controlled by state-run distributors and hospitals.

“All these online healthcare services will help better integrate asymmetrical and highly fragmented healthcare services in China,” said Goldman Sachs healthcare analyst Wei Du in a recent report.

15 years after the date of accession.

WTO members can normally apply punitive “anti-dumping” tariffs on others only if export prices are below those in the exporter’s home market.

But with China, the EU and others have been able to ignore low domestic prices and set tariffs to make Chinese exports as expensive as in wealthier countries.

Those WTO limitations on China appear to expire on December 11, 2016, although it is not clear exactly what that implies.

As reported exclusively by Reuters this month, the European Commission’s legal service has warned the EU would not have a good case to disregard the expiration of China’s right to claim equal treatment with its competitors.

European manufacturers have their own legal analysis.

“Only with Alice-in-Wonderland logic could a state-planned economy become a market economy just by the mere passage of time,” said Milan Nitzschke, a German solar power executive who has led efforts to protect the EU solar industry from unfairly cheap Chinese imports.

Reuters

Upcoming trade status key to China-EU relations A World Trade Organization protocol that treats China as a more marketbased economy from late 2016 will shape relations for years to come Robin Emmott

C

hina’s top diplomat in Brussels warned the European Union not to disregard changes to global trade rules set to favour Beijing and which European companies fear will open the bloc to a flood of cheap Chinese goods.

World trading powers including Europe are in a bind over how to interpret a World Trade Organization protocol that treats China as a more market-based economy from late 2016 -- a status that will make it harder for the EU to protect local industry.

The decision will shape Sino-EU relations for years to come, either souring ties or potentially building goodwill as China opens up its markets, despite the risks to EU firms at home.

“This is not something bilateral (with the European Union),” China’s ambassador to the EU, Yang Yanyi,

told the European Parliament’s trade committee in rare public comments

by China on the highly sensitive issue.

“According to the WTO, China will obtain this market economy status in 2016, next year. So we hope that all sides abide by WTO rules and don’t resort to protectionism and prudently use trade defence instruments,” she told lawmakers.

The issue is likely to be at the centre of an EU-China summit that Yang said would take place in Brussels in June.

The 28-country European Union needs to decide on its approach soon because of the legislative changes it will entail and parliament’s approval.

The WTO recognised when Communist China joined the trade body in 2001 that its local prices are not set by market forces but said limitations on its exports would expire

Reuters

KEY POINTS Application of WTO rules set to define Sino-EU ties EU lawyers say EU cannot ignore rules on China’s status

Business Daily | 11

April 16, 2015

Asia

OECD says Bank of Japan has done enough Leika Kihara and Stanley White

J

apan must be mindful of the risks of its massive monetary stimulus and speed up muchneeded structural reforms to revive the economy, the OECD said yesterday, warning of delays in their implementation.

Prime Minister Shinzo Abe’s policies to revive the economy have been dubbed ‘Abenomics’, and the OECD report pointed to the mixed results of a strategy dependent on “three arrows” - massive monetary expansion, fiscal stimulus and structural reform.

OECD Secretary-General Angel Gurria said that while the Bank of Japan’s stimulus - dubbed “quantitative and qualitative easing” (QQE) - cut borrowing costs and helped boost the economy, there were limits to what monetary policy can do.

“The first arrow is working, but there are limits,” Gurria told reporters after issuing a report on recommendations for Japan, suggesting that no additional monetary easing was necessary for the time being. “Structural reforms are not in the hands of central banks.”

The OECD also urged Japan to boost labour productivity and remove trade barriers, stressing that the structural reforms that make up the “third arrow” of Abenomics have lagged the first two arrows of monetary and fiscal stimulus.

“The third arrow of Abenomics is its most crucial component, without which the unprecedented monetary expansion and the fiscal effort will not succeed in putting Japan on a path to faster growth and fiscal

But urged Japan to boost labour productivity and remove trade barriers

yen depreciation and a run-up in interest rates that could undermine the financing of government deficits,” it said.

In its upgraded forecasts, the OECD expects Japan’s economy to grow 1.0 percent this year, up from 0.8 percent foreseen in November, and 1.4 percent in 2016, up from 1.0 percent, reflecting expectations for stronger business investment.

The BOJ deployed QQE in 2013 and now pledges to increase base money at an annual pace of 80 trillion yen (US$668 billion) in order to hit 2 percent inflation around the year ending in March 2016.

Reuters

OECD Secretary-General Angel Gurria

sustainability,” it said.

On the weak yen, Gurria urged Japanese firms to use the current window of opportunity to export as much as possible since the yen will rebound once economic growth picks up pace.

“Over the medium to long term, if Japan is successful (in reviving the economy) the yen will strengthen.”

Lagging third arrow In the report, the OECD welcomed last October’s surprise expansion of QQE, saying the move and Abe’s decision to delay a sales tax hike should sustain inflation expectations

and “facilitate a definitive exit from deflation.”

But it warned that the sheer size of the BOJ’s purchases may disrupt the bond market and fuel asset price bubbles, acknowledging concerns held by QQE sceptics that the cost of the radical stimulus may outweigh the benefits.

Without a credible plan to curb its huge public debt, Japan may face a bond market sell-off that could hit banks with huge bond holdings, the report said.

“The recent expansion of QQE prompted concerns that the BOJ is being forced to monetise government debt, raising the risk of sustained

KEY POINTS BOJ’s huge asset buying may disrupt market, fuel bubbles-OECD Warns of bond market uncertainty when BOJ ends stimulus Third-arrow reforms, which crucial for Abenomics, lagging Yen will rise long-term if Japan revives economy-Gurria

Philippines considers new term auction facility Central bank Governor also raised the possibility of holding auctions, as another way to allocate overnight reverse repurchase agreements to banks

T

he Philippine central bank is considering introducing a new liquidity tool that will allow banks to deposit money with the monetary authority for one month to a year as a way to better manage money supply in the financial system.

Policymakers are studying a possible term auction facility tool to manage cash in the banking system to achieve its inflation targets, Bangko Sentral ng Pilipinas Governor Amando Tetangco said yesterday.

“There are many components

to this, including a liquidity forecasting tool and potentially a term auction facility. These are all still in the discussion stage,” Tetangco told Reuters, adding these were aimed at managing domestic liquidity to influence market behaviour.

The central bank has a 2-4 percent inflation target for 2015-2018.

Tetangco said the tools will be announced to the market at the right time.

Under the plan, the size of term deposits to be offered at the auction will be set by the

central bank, with the price to be determined by banks which will compete for the available volume, making price discovery more efficient and transparent.

In January, Tetangco also

The central bank has a 2-4 percent inflation target for 2015-2018

raised the possibility of holding auctions, as another way to allocate overnight reverse repurchase agreements to banks to enhance its open market operations (OMO).

The central bank conducts its OMO via the overnight lending or repurchase window, with the rate now at 6 percent, serving as the ceiling for its OMO. It pays 2.5 percent for its short-term special deposit accounts, which serves as the floor. The overnight borrowing or policy rate is at 4 percent.

“BSP’s acceptance or rejection of these bids/rates in the RRP (reverse repo programme) and in the term facilities and potential auction sizes could send a strong signal of near-term policy bias,” Citibank said in research note.

“Timing of BSP’s auction for term deposits would have to be coordinated with the primary auction of government securities to deter sharp liquidity swings,” Citibank said.

Reuters

12 | Business Daily

April 16, 2015

Asia

Indonesia’s Q1 trade surplus highlights export pressures Analysts say effects of weak imports on trade balance implies improvement in current account deficit Malaysian cocoa grinding falls Cocoa processing in Malaysia continued to slump in the first quarter of this year, the Malaysian Cocoa Board said yesterday, as grinders slowed output in hopes that prices would improve. Cocoa grinding, which reflects demand for the key ingredient in chocolate, fell 27.5 percent to 45,208 tonnes in the Jan-March period from a year ago, according to the board.

Compared to the fourth quarter, grinding was down 18.7 percent, the board said, without providing details. Last year Malaysia’s full-year grinding dropped more than 14 percent, to 244,423 tonnes from 285,608 tonnes in 2013.

Moody’s confident in Australia’s Aaa rating Moody’s Investors Service said yesterday that Australia’s top-notch Aaa sovereign rating is safe for now, but warned it could be forced to take action if the government’s fiscal deficit is not reversed over time. Moody’s said Australia’s general government debt has risen to 30 percent of gross domestic product (GDP) in 2014, from below 10 percent in 2008 due to a growing fiscal deficit. The government is struggling to get its budget back in the black as it faces falling revenues from a slump in iron ore prices, Australia’s single biggest export earner.

Mirae official says S.K. to cut rates South Korea’s central bank is likely to lower interest rates soon from their current record low, and may even do so subsequently, as the economy loses steam, an executive at the country’s biggest fixed-income fund manager said. Shin Jae-hoon, head of the domestic fixed-income team at Mirae Asset Global Investments, said the Bank of Korea (BOK) will be forced to cut rates even though doing so does not have the impact it once did, given the limited policy options. Since launching its easing cycle in mid-2012, it has lowered rates six times in 25 basis point moves.

Japanese PM adviser says dollar at Y120 acceptable The yen is fairly valued around current levels, a key economic adviser to Prime Minister Shinzo Abe said, a day after comments he made were taken to mean the yen was too weak. Koichi Hamada, an emeritus professor of economics at Yale University, also told Reuters he was not suggesting the Bank of Japan ease policy at its next meeting this month, in contrast to the recent views of another Abe adviser. He was quoted on Monday as saying a 105 yen rate was acceptable.

Nilufar Rizki and Gayatri Suroyo

I

ndonesia’s unexpectedly large trade surplus in the first quarter will help narrow the country’s current account deficit but points to weak exports that will drag on economic growth.

Exports from Southeast Asia’s largest economy have been hit by falling commodity prices, while a weak rupiah has not boosted the competitiveness of manufactured exports due to rising costs at home.

Indonesia’s trade surplus totalled US$2.43 billion in the first quarter, the statistics bureau said yesterday - the biggest in three years.

But the surplus, which was more than twice the size of the US$1.07 billion surplus in the first three months of 2014, was derived from a deep contraction in both exports and imports.

“This (surplus) is likely to be a positive for market sentiment, given lingering concerns of current account balance this year,” said Gundy Cahyadi, economist with DBS Bank in Singapore, noting that it comes alongside poor export growth.

Annual March exports fell 9.75 percent and imports dropped 13.39 percent, both sliding for the sixth straight month. But the declines were less than what economists expected in a Reuters poll of 15.40 percent and 15.62 percent, respectively.

The country’s US$1.13 billion surplus in March was also better than expectations for a surplus of US$620 million.

Weak consumption

its current account deficit forecast for the first quarter.

It had earlier forecast the current account deficit to be around 1.8-2 percent of GDP in the first quarter due to a big gap in the services account, narrowing from 2.81 percent in the last quarter of 2014.

The central bank said the gap would widen in the quarters to come and be around 3 percent of GDP for the full year 2015.

Reuters

Analysts said the effect of weak imports on the trade balance implies improvement in the current account deficit in the first quarter.

“It’s been the same story for several months now, imports falling more than exports,” said Rangga Cipta, an economist with Samuel Sekuritas in Jakarta. “This suggests the trade balance will improve for the year and we could be seeing a surplus (in 2015).”

Indonesia’s central bank said on Tuesday it believed the trade surplus for January-March was in line with

KEY POINTS March exports at $13.71 bln, -9.75 pct y/y March imports at $12.58 bln, -13.39 pct y/y March trade surplus biggest since December 2013

New Zealand housing imbalances rising The central bank has said it expects to be on hold for some time

N

ew Zealand’s housing market imbalances are increasing and action is required to avoid potential financial instability, but the central bank will not raise rates to tackle the issue, a senior official said yesterday.

Reserve Bank of New Zealand Deputy Governor Grant Spencer said limits on low deposit home loans were losing their impact, but he said raising rates was not an option.

“Nor can monetary policy be used currently to dampen housing demand, as CPI inflation is below the Reserve Bank’s target range,” Spencer said in a speech to a business group.

The RBNZ has held its cash rate steady since September last year because of low inflation, a high currency, falling commodity prices and a mixed global outlook.

The central bank has said it expects to be on hold for some time, with analysts expecting the next move to be a rise in the first half of next year at the earliest.

“The RBNZ is working to bring new macroprudential tools into play,

but in the meantime we see scant appetite to tighten or ease at this juncture,” said TD Securities’ chief macro-strategist Annette Beacher.

Spencer said the low-deposit lending limits, introduced in late2013, would remain in place and the RBNZ was looking at other macroprudential tools to try to cool the market.

Last month, the RBNZ said it is looking at requiring banks to hold greater reserves for loans to property investors, which might raise the cost of borrowing.

It has been warning all year about renewed strength in the housing market driven by migrationfuelled demand and lack of supply, particularly in the country’s biggest city, Auckland.

“The increasing degree of stretch in prices means that an eventual market correction is increasingly likely to be disruptive to financial stability and the economy,” Spencer said.

Latest industry data this week showed prices hitting a record high in March.

Spencer said the tax system favoured investment in housing and potential changes needed to be considered.

New Zealand does not have capital gains or land taxes, nor stamp duties which have been used in other countries to control the property market, although the government has ruled out any specific tax measures to target the property sector.

Reuters

KEY POINTS RBNZ rules out rate hikes to tackle housing imbalance RBNZ says lending limits will stay in place RBNZ says favourable tax rules boost market

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Business Daily | 13

April 16, 2015

Asia

Sri Lanka cuts rates by 50 bps to boost economy The central bank estimates growth at 7.5 percent this year, but depressed private credit growth and high borrowing costs have hurt sentiment Shihar Aneez and Ranga Sirilal

S

ri Lanka’s central bank yesterday surprised markets by cutting key policy rates to record lows in a move aimed at boosting economic growth, but some analysts warned the easing risked further eroding a shaky balance of payments position.

The monetary authority said it will pursue a relaxed policy stance until stubbornly high borrowing costs come down, noting that business investment remains low despite soft inflation.

It cut the standing deposit facility (SDF) rate and the standing lending facility rate (SLFR) by 50 basispoint each to 6.00 percent and 7.50 percent, respectively. A Reuters poll had predicted the rates to be left unchanged.

“Current behaviour of market interest rates is viewed to be inconsistent with the continued low inflation and investments needed to address concerns on economic growth for the year,” Central Bank of Sri Lanka said in a statement.

Annual inflation hit a record low of 0.1 percent in March as growth has slowed in recent quarters amid slack private consumption, with the US$76 billion economy growing 6.4

Reuters

I don’t think it is an appropriate move given the pressure on the balance-of-payments we have seen in the last six months Amal Sandaratne CEO, Frontier Research percent in the fourth quarter - the weakest in almost two years.

Average Weighted Prime Lending

Rate (AWPR), a proxy for market lending rates, was at 7.14 percent as of April 10, the highest level since

World’s most expensive bank is a 20%-a-year Indian growth machine The bank’s loans rose 17 percent in the year to December, versus 10.5 percent for the industry have even further to climb. The bank has reported annual profit growth of at least 20 percent every year since 1998, a feat unmatched by any of the world’s 200 biggest lenders, and analysts say the firm will maintain that pace through at least March 2017. HDFC also stands to benefit if Prime Minister Narendra Modi succeeds in his efforts to revive Asia’s third-largest economy.

Middle Class

I

t’s hard to overstate just how much global investors are captivated by HDFC Bank Ltd., India’s biggest lender by market value.

Not only does the stock trade at the highest valuation among the world’s largest banks, but international funds are so bullish that they’re willing to pay a record 20 percent premium over HDFC’s local stock price to get their

September last year.

The key policy rates have been kept steady at record lows for 14 straight months through March, and some analysts say yesterday’s surprise move risks inflaming a worsening balance of payments (BOP) picture and putting more pressure on the rupee currency.

Latest official estimates for January 2015 showed the BOP at a deficit of US$696.5 million, compared to US$732.9 million surplus in the year ago period.

That has pressured the rupee, which is down 1.3 percent so far this year.

However, the central bank said the BOP outlook remains favourable in 2015, citing positive impacts including from continued inflows from current account related transactions and a lower fuel import bill.

The central bank has been defending the rupee heavily since December amid high local borrowing to finance populist budget policies ahead of Parliamentary elections expected as early as June.

hands on the limited number of shares available to foreigners. Brokerage analysts, meanwhile, have more buy ratings on the company than at any other time in 14 years.

While sceptics say the stock has become too expensive, IDBI Capital Market Services Ltd., the most accurate forecaster of HDFC shares in the past year, predicts valuations

Led by Managing Director Aditya Puri, a 20-year veteran of Citigroup Inc. before he joined the Indian lender in 1994, HDFC has maintained such consistent profitability by limiting exposure to heavily-indebted Indian corporations and lending to the country’s growing middle class. The bank, which has the third-biggest weighting in the benchmark S&P BSE Sensex, has climbed 9 percent this year after a 43 percent surge in 2014.

Foreign investors, who ploughed more money into Indian stocks this year than any other Asian nation, can’t buy the lender’s shares from the open market because overseas holdings have reached the country’s

49 percent ownership limit. That’s causing the stock to trade at a premium in India’s foreign segment, where global investors go after holdings reach the cap. The gap widened to a record 20.7 percent on April 8.

Relative value Gains in HDFC Bank’s shares will probably level out after valuations increased, according to Supreeth Shankarghal, a director at QF Assets Ltd., a hedge fund in Bengaluru.

The stock is valued at 5.6 times net assets, within 5 percent of the highest level since 2008, data compiled by Bloomberg show. The bank is more than four times more expensive than the Bloomberg World Banks Index, near the widest gap on record, and has a higher price-to-book ratio than all 50 of the world’s largest lenders by market value.

Rising valuations aren’t deterring analysts. HDFC has a consensus rating of 4.48 on a scale where 5 denotes a unanimous buy recommendation, the highest since 2005, according to data compiled by Bloomberg.

HDFC had a capital adequacy ratio of 15.7 percent at the end of September and a gross bad-loan ratio of 1 percent. That compares with 12.8 percent and 4.5 percent, respectively, for India’s banking system as a whole.

Loan growth will accelerate to 24 percent annually through March 2017 as India’s economic expansion picks up, according to IDBI Capital’s Shial.

HDFC’s net income has increased at an average annual rate of 33 percent during the past decade, outpacing India’s 5.6 percent mean wholesale inflation rate over that period.

Bloomberg News

14 | Business Daily

April 16, 2015

International Euro zone surplus widens An increase in exports and stable imports helped the euro zone widen its trade surplus in February, although by slightly less than expected, as a weaker euro helped soften the continued fall in sales to Russia. Unadjusted for seasonal swings, exports to the rest of the world rose 4 percent and imports were unchanged, taking the bloc’s trade surplus to 20.3 billion euros (US$21.47 billion) versus 14.4 billion euros in February 2014, the EU’s statistics office Eurostat said yesterday.

Economists polled by Reuters expected a surplus of 21.1 billion euros.

Deutsche bank fined

by Dubai regulator Deutsche Bank AG was fined US$8.4 million by the Dubai Financial Services Authority for “serious breaches.” The DFSA, which regulates the Dubai International Financial Centre, fined the Frankfurt-based bank for misleading it, failures in the lender’s internal governance and systems, client take-on and anti-money laundering processes, according to a statement posted on the regulator’s website yesterday. Deutsche Bank was aware that its Private Wealth Management business was operating in breach of DFSA requirements and didn’t take adequate steps to address the issue, the DFSA said.

Russia must review int’l participation

Nokia agrees deal to buy Alcatel-Lucent The new firm will go by the name Nokia, be based in Finland, and be run by Nokia’s current management team Gabriel Bourovitch

N

okia has struck a 15.6-billioneuro deal to buy its rival Alcatel-Lucent to create the world’s biggest supplier of mobile phone network equipment, both firms said yesterday.

The merger of two companies that were once new technology stars but have since lost some of their lustre will produce a European champion able to take on Nokia’s Swedish rival Ericsson or fierce Chinese competition.

The announcement sent shares in Alcatel-Lucent plunging more than 10 percent on Paris’s stock market.

Finland’s Nokia said it had agreed to give shareholders in its FrancoAmerican rival 0.55 shares in the new merged company for every one of their own.

The two firms have “highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific,” Nokia’s statement said.

The new firm will go by the name Nokia, be based in Finland, and be

run by Nokia’s current management team, it said.

The group is targeting savings of 900 million euros (US$960 million) in costs by the end of 2019 without further job cuts on top of the restructuring already taking place in Alcatel-Lucent, both companies said.

This is likely to appease the French government, which had expressed concern about jobs disappearing in the country if the merger were to go through.

It has also in the past blocked takeovers of companies it considers national jewels.

The government caused a furore in 2013 when it blocked a bid by US giant Yahoo! to acquire Dailymotion.

Not ‘losing Alcatel’ Jean-Marie Le Guen, a member of the Socialist government, told French radio that France was not “losing Alcatel” and told employees that the government would make sure they kept their jobs.

Russia must review its participation in international funds and financial organisations to conserve resources which are being used up by fees, Finance Minister Anton Siluanov said yesterday. Russia has been forced to cut expenditure after the oil price plunged, shrinking revenues needed to fund President Vladimir Putin’s social spending promises and his plan to boost the defence industry.

Asked whether the fall in income would hurt Russia’s role in the BRICS bloc of large emerging economies, Siluanov said funds for forming the charter capital of a BRICS bank were accounted for in Russia’s budget law.

Currency shifts support global growth Recent shifts in exchange rates should help the global economy, boosting Japan and Europe in particular, amid increasing divergence in the growth paths of the world’s major economies, the International Monetary Fund said. The institution kept its global growth forecasts unchanged, with faster economic expansion in the euro zone and India expected to be offset by diminished prospects in other key emerging markets such as Russia and Brazil.

Digital music revenues match CDs Digital delivery of music caught up with physical formats like CDs as a money stream for the first time last year, the trade association IFPI said. It came, however, as overall global sales of US$14.97 billion fell marginally from 2013. Piracy and free Internet sites remain a huge problem for an industry still reeling from the impact of turning music into digital form, which encouraged copying, bootlegs and free music sites, and led to a collapse in sales from US$40 billion in 1999.

But “they must also know that if this merger didn’t happen, then maybe one day, Alcatel would not have been big enough to take on the international (market),” he said.

“If you watch the trains go by, you stay on the platform.”

Both companies said that the merger should save an additional 200 million euros in financial charges.

Michel Combes, Alcatel-Lucent’s boss, told French TV channel BFM Business that the new group was committed to “increasing R&D activities in France by 25 percent” by hiring 500 additional researchers, bringing the total research and development workforce in the country to 2,500.

Rumours have swirled since December of a possible deal between the two firms, with France’s Les Echos daily reporting on Monday that executives had been in negotiations since January.

Nokia was the world’s biggest mobile phone maker for more than a decade until it was overtaken by South Korea’s Samsung in 2012.

Then in 2014, Nokia sold its mobile phone and tablet division to US software giant Microsoft, and the company now develops mobile and Internet network infrastructures for operators.

Nokia is now set for a significant boost in market share.

The deal will also help Nokia bolster its mobile infrastructure business against Swedish archrival Ericsson and China’s Huawei, profiting from Alcatel’s position as a leading supplier of 4G and LTE mobile networks and related services.

AFP

IEA cuts non-OPEC supply forecast Even though oil prices have more than halved in just six months, the OPEC oil cartel has refused to cut its supply volume

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he International Energy Agency yesterday cut its supply forecast for non-OPEC countries, citing downturns in North America and the “worsening conflict” in Yemen.

The Paris-based agency cut its 2015 forecast for non-OPEC output by 120,000 barrels a day to 630,000 bpd “on the back of a slightly more negative outlook for the US LTO (light tight oil) production and Canadian non-oil sands output, and of the fallout from the worsening conflict in Yemen,” it said in its monthly report.

“According to our latest estimates, fighting in Yemen has halved production to about 60,000 bpd in April, from an already depressed level of roughly 120,000 bpd,” the

IEA said.

“Recently launched Saudi air strikes, while not targeting energy infrastructure directly, have led international oil companies active in the country... to practically halt operations and pull out expatriate staff,” the report said.

“The start of a Saudi-led military campaign against Yemen in late March sparked concern of possible supply disruptions through the area’s vital sea lanes,” it said.

In North America, the IEA cited “signs that US LTO production month-on-month growth will grind to a halt as early as May”, and noted a “continued drop in the number of oil rigs... reductions in capital expenditures, and a credit crunch among LTO producers in the US.”

In Canada, the IEA pointed to “falling drilling rates and an increasing backlog of uncompleted wells.”

Even though oil prices have more than halved in just six months, the OPEC oil cartel has refused to cut its supply volume.

Analysts believe this is because the cartel wants to use cheaper prices to force new US shale producers off the market.

The IEA also raised its forecast for world demand by 90,000 bpd to 93.6 million bpd.

It attributed “the notable acceleration” on 2014’s 700,000 bpd growth to cold temperatures in the first quarter of this year “and a steadily improving global economic backdrop”.

AFP

Business Daily | 15

April 16, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China economic stimulus may do little for commodities

THE STRAITS TIMES

Clyde Russell Reuters columnist

The Accounting and Corporate Regulatory Authority (Acra) announced yesterday that it will be phasing in changes to the Companies Act in two stages.

About 40 per cent of the over 200 legislative amendments will take effect in the first phase on July 1, 2015. The second phase encompassing the rest of the legislative amendments is expected to come into effect in the first quarter of 2016.

Acra said this approach is being adopted as some changes are directly linked to the registration and filing processes in Acra’s online business filing and information portal.

THE BANGKOK POST Thai listed companies’ earnings are expected to expand 36.8% this year, propelled by the triple-digit percentage growth of the industrial and resources sectors, says the Investor Analysts Association.

The industrial and resources sectors are estimated to deliver 150% and 101% earnings growth in 2015, respectively.

The technology sector’s earnings are expected to grow 44.3%.

On the other end of the scale, the consumption sector is only projected to show 11.1% net profit gain this year. The Stock Exchange of Thailand recently issued a statement that listed companies’ aggregate net profit declined 11.3% to 702 billion baht last year.

THE KOREA HERALD Hyundai Motor Co., South Korea’s top automaker, denied a media report yesterday that it is seeking to build a factory in Mexico, calling it “groundless.” Bloomberg earlier reported that Hyundai Motor is pushing to build a plant in Mexico, citing an interview with a high-ranking official of the local unit of the automaker. He was quoted as saying that Hyundai’s car production in the country will likely start in a few years.

Mexico is emerging as one of the largest automobile markets in Latin America.

THE TIMES OF INDIA Finance minister Arun Jaitley said the government will press ahead with Rs 40,000 crore tax demand on foreign institutional investors (FIIs) as they lost a case against levy of tax on capital gains they made. “FIIs went to a tribunal, which is called Authority for Advance Rulings (against levy of 20% Minimum Alternate Tax on capital gains). The tribunal has decided against them. I can change the face of India’s irrigation with that Rs 40,000 crore,” he said.

I

t used to be a fairly safe bet that weak Chinese growth numbers would spark government stimulus measures, thereby boosting commodity import demand and prices.

While the soft first quarter gross domestic product (GDP) numbers may well result in a relaxation of monetary policy and measures to boost infrastructure spending, it’s also likely that commodity volumes and prices won’t respond much.

GDP rose 7 percent year-onyear in the first quarter, in line with forecasts but still the slowest rate in six years.

But in many ways China doesn’t really look like an economy growing at 7 percent, with exports plunging in March, power generation dropping 3.7 percent, the biggest fall since 2008, and a host of other indicators pointing to sluggish growth.

The National Bureau of Statistics remains confident that China will meet its GDP growth target of 7 percent for the whole of 2015, and also pointed out in comments after yesterday’s GDP numbers that there is plenty of scope for increased infrastructure investment.

Normally these sort of comments would be music to the ears of iron ore, copper and coal miners, as well as oil and gas producers.

But there are a number of reasons that suggest that even increased spending may not result in any significant gains in commodity demand, and therefore prices.

The situation is different for each of the major commodities that China imports, but there are some common themes.

The main one is oversupply, and this applies mainly to iron

ore, coal and to some extent crude oil.

Among the swathe of data released yesterday was news that steel output fell 1.2 percent in March from a year earlier, taking the decline in the first quarter to 1.7 percent.

This hardly bodes well for iron ore demand, meaning that imports will only rise by taking market share from domestic output, something that has been happening.

Iron ore imports jumped 18.5 percent in March from February, and are up 2.4 percent in the first quarter.

No doubt this is being helped by the slide in spot prices, with the index at US$50.10 a tonne on Tuesday, just above the re-

There are a number of reasons that suggest that even increased spending may not result in any significant gains in commodity demand, and therefore prices

cord low of US$46.70 earlier this month.

Prices are down nearly 30 percent so far this year, and are just more than a quarter of what they were four years ago when several major mining companies decided to dramatically increase output in the belief that Chinese demand would continue to rise.

If steady steel output is assumed for the rest of 2015, iron ore import volumes will largely depend on prices remaining low enough to ensure domestic supplies continue to leave the market.

Although nothing has been announced officially, there appears to be concern among the Chinese authorities and steel companies that low prices will entrench the dominance of the major global miners, something that China has railed against in the past.

This raises the prospect of some kind of support for the domestic iron ore industry, which may limit growth in import volumes.

Storage driving oil, copper Similar to iron ore, crude oil import volumes have held up well in the first quarter, rising 7.5 percent to 80.34 million tonnes, or about 6.52 million barrels per day (bpd).

But this strength in imports is potentially misleading as it’s likely that as much as 420,000 bpd was flowing into strategic and commercial storage, given the difference between crude available from imports and domestic output and refinery processing.

Taking away the likely flow into storage leaves China with only

a modest increase in oil consumption in the first quarter, which tallies with weakness seen in industrial production growth.

While stimulus measures may boost oil consumption, it’s highly unlikely that this would be enough to increase global oil prices. Much more likely is that a reduction in oil purchased for stockpiling will put downward pressure on prices.

China’s copper demand may be a beneficiary of stimulus spending, but it’s worth noting that the nature of copper imports are changing, with more ores and concentrates being shipped in and less refined metal.

This shows the build-up of smelting and refining capacity inside China, which may be negative for the outlook for refined copper prices. But once again the real driver of China’s appetite is likely to be how much of the metal is bought for stockpiling rather than consumption.

Coal imports dropped 41.5 percent in the first quarter from the same period last year, and weaker thermal power generation is only part of the explanation.

China’s domestic producers are fighting to ensure they get a higher share of the coal market, which is also under pressure from efforts to reduce pollution.

Overall, the picture for commodities is that even if the Chinese authorities decide to stimulate the economy by boosting traditional drivers such as infrastructure, manufacturing and housing construction, there’s no guarantee this will flow through in a meaningful way to imports.

Reuters

16 | Business Daily

April 16, 2015

Closing Singapore’s retail sales up in February

EU charges Google over shopping searches

Retail sales increased 15.8 percent in February on a year-on-year basis, mainly due to retail sales of food and beverages, department stores and supermarkets over the Chinese New Year, said the Department of Statistics Singapore (SingStat) yesterday. Retail sales increased 14.8 percent compared with a year ago except motor vehicles, said SingStat. However, retail sales fell by 3.3 percent in February on a month-on-month basis. Excluding motor vehicles, retail sales remained unchanged. The total retail sales value in February was estimated at 3.4 billion Singapore dollars, higher than 3 billion Singapore dollars in February in 2014.

The European Union accused Google yesterday of cheating competitors by distorting Internet search results in favour of its Google Shopping service and also launched an antitrust probe into its Android mobile operating system. Competition Commissioner said the U.S. tech giant had been sent a Statement of Objections to which it can respond. The Commission, whose control of antitrust matters across the wealthy 28-nation bloc gives it a major say in the fate of global corporations, can fine firms up to 10 percent of their annual sales — or a penalty of over US$6 billion for Google.

Segway bought by Xiaomi-backed start-up The acquired company holds more than 400 patents related to the devices

S

egway Inc., the developer of twowheeled, electricpowered people movers, was acquired by China-based competitor Ninebot Inc. After allying with Segway, Ninebot will use electric driving, mobile Internet and man-machine interaction technologies for future products, Gao Lufeng, Ninebot chief executive officer, said at a press conference in Beijing. The companies didn’t disclose terms of the April 1 transaction.

The announcement came after Xiaomi Corp., the Beijing-based smartphone maker that owns part of Ninebot, joined in an US$80 million funding round for Ninebot that included Sequoia Capital and the Shunwei Foundation.

Ninebot began two years ago as a crowd-funded project and its products are now available in more than 38 countries, with production facilities in China, according to its website.

“Ninebot is a fast-growing short-distance transportation company backed by wellknown investors,” Segway President Rod Keller said in a video message shown at the press conference yesterday.

“The combination of Ninebot and Segway will bring together industry-leading research,

The combination of Ninebot and Segway will bring together industryleading research, development, engineering and manufacturing Rod Keller, Segway President

development, engineering and manufacturing.”

Patents cache Keller said Segway holds more than 400 patents related to the devices. Ninebot’s Gao

JD.com sets up cross-border e-commerce platform

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said the purchase included all of Segway’s assets.

Inventor Dean Kamen introduced the Segway in 2001 and began selling it to the public in 2002 with hopes of revolutionizing urban transport. He sold the

company, which was later bought by Summit Strategic Investments LLC in 2013, according to Bedford, New Hampshire-based Segway’s website.

Segway’s products are used by police and tour groups, while sales to individual consumers have been hampered by a high price tag and restrictions by cities on where the devices can be driven.

The U.S. International Trade Commission in November agreed to investigate a claim by Segway that Ninebot and several other Chinese companies infringed on its patents. Segway had been seeking to block imports of the transporters in an investigation that would probably have taken 15 to 18 months, according to an ITC statement in November.

The China-based company also makes a singlewheeled device called the Ninebot One. In the U.S., the Ninebot sells for $3,199, while the Ninebot One can be purchased for $850, according to the company’s website.

Xiaomi, China’s largest smartphone maker, is expanding into web-enabled smart home devices and consumer electronics by taking stakes in other startups. The company has backed 27 such companies under plans to invest in as many as 100, Xiaomi Chief Executive Officer Lei Jun has said.

Xiaomi holds a controlling stake in Ninebot, Lei said yesterday. He declined to provide the size of the shareholding, or to comment on how much Ninebot paid for Segway.

Bloomberg News

Independent firms to supervise China’s state firms assets

Kaisa fires staff appointed from proposed suitor-memo

C

T

D.com Inc, China’s No. 2 e-commerce player, yesterday launched its JD Worldwide crossborder online shopping platform, a challenger to Alibaba’s Tmall Global service.

JD Worldwide will allow Chinese shoppers to buy imports from U.S. firms such as Nike Inc, Starbucks Corp and Ocean Spray Cranberries Inc, as well as products from countries like Australia, France, Germany, Japan, South Korea, New Zealand and the United Kingdom, JD.com said in a press release.

Overseas suppliers will provide more than 1,200 brands, without those merchants requiring a presence in China.

The venture adds to a host of online retail rivals for Alibaba and Amazon.com Inc catering to fears about the quality and safety of Chinese goods after a number of scares, and comes on the back of a Chinese government push to promote e-commerce and relax import restrictions.

JD.com, backed by Alibaba arch-rival Tencent Holdings Ltd , also said it launched with eBay Inc a programme to allow Chinese shoppers to buy select goods from U.S. eBay sellers.

hina will spend 11.39 million yuan (US$1.86 million) to ensure a thorough examination of overseas assets of state-owned enterprises (SOE), it was announced yesterday.

Seven independent accounting firms will oversee the examination of SOE assets abroad, according to a statement posted on the website of the State Council’s State-owned Assets Supervision and Administration Commission (SASAC) yesterday.

The Supervisory Board for Key Large Stateowned Enterprises, under the SASAC, contracts third parties to supervise SEO major projects and overseas assets, to ensure transparency.

SASAC made seven contracts open to bidding, three of which concern the examination of SOEs overseas assets, and four concern the examination of SOEs key projects. It is estimated that the more than 110 centrally-administered SOEs held overseas assets worth more than 4.3 trillion yuan (US$698 billion) as of the end of 2013.

The independent financial firms handling this round of supervision must be work within the Chinese legal framework.

Reuters

Xinhua

roubled Chinese developer Kaisa Group has fired three staff members it had appointed from its suitor and larger rival Sunac China, a move analysts said cast further doubt over the proposed US$385 million takeover.

In an internal memo dated that appeared in Chinese media, Kaisa said an executive vice president and two employees at its human resources and administrative department - who were appointed from Sunac after it made the takeover proposal - had been “discharged of their duties”.

A Kaisa official confirmed the contents of the memo to Reuters, but declined to be named as he was not authorised to speak to the media.

Both Kaisa and Sunac declined to comment on the memo.

Sunac had in February offered to buy two units of Kaisa and acquire majority stakes in another two, giving the heavily indebted developer a financial lifeline after the authorities in its home base, the southern city of Shenzhen, blocked sales of several residential projects in December.

Reuters