Macau business daily, Apr, 17, 2015

MOP 6.00 Closing editor: Luís Gonçalves Publisher: Paulo A. Azevedo Number 772 Friday April 17, 2015 Year IV

Fingers crossed

Delayed schedules and budget overruns. The bane of the Secretary for Transport and Public Works’ life. During his Policy Address for 2015, Raimundo Rosario revealed the gov’t is planning to introduce a new method of calculating project time. While picking up tips from Hong Kong on compensative penalties in public works. Several legislators criticised the Secretary’s perceived negativism. The gov’t will try to reach consensus with the Light Rail Transit (LRT) contractor. And it’s fingers crossed on Pac On Ferry Terminal Page

3

Not so Wonderful

Rolling the dice

Claim and counterclaim. Charlie Choi Kei Ian, chairman of mobile gaming application developer ‘Wonderful World’, denies all knowledge. He is accused of founding the debt-chasing website ‘Wonderful World’. And defending against a lawsuit accusing him of violating the personal data protection law. Plus aggravated disobedience

It was already anticipated by investors. Galaxy profits tanked 40 pct. With revenues sliding 32 pct in Q1, in line with market expectations. The company has pushed out quarterly results about a month earlier than usual. Turning its full attention to opening two new local properties. And wooing gamblers scared away by China’s crackdown on corruptionkdown on corruption

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Tourist inflation at 5-year low Good news for tourists. Prices for tourist services increased last quarter at the slowest pace since 2009.

Accommodation costs dropped almost 5 pct, data released by the Statistics and Census Service shows. The main driver dragging prices down for visitors was the lower prices of 3 and 4-star hotel rooms. Which declined 7 and 3 pct, respectively

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This global world

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Insurance assurance Upward trajectory. The Macau insurance industry grew 20.4 pct from 2009 to 2013. Research and Markets says life segment products account for over 70 pct of the insurance business. The study revealed. The gaming and tourism industry plus low penetration rate of the insurance market bodes well for the industry

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2

FDI in China climbed in Q1. To US$34.88 billion.

Overseas direct investment (ODI) increased 0.4 pct in March. For a Y-o-Y total of US$8.39 billion

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9

Elaine Wynn gains advisor backing Page 6

HSI - Movers April 16

Name

%Day

China Life Insurance

4.09

PetroChina Co Ltd

3.96

Galaxy Entertainment

3.83

CNOOC Ltd

3.41

Ping An Insurance Gr

3.10

Hengan International

-1.23

Cathay Pacific Airwa

-1.43

China Merchants Hold

-1.81

Wharf Holdings Ltd/T

-2.11

Sino Land Co Ltd

-2.50

Source: Bloomberg

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Tourist spending: Macau world’s 5th largest market Page 5

Local sales of Chow Tai Fook and Luk Fook decline in Q1 Page 4

Bloomberry plans US$1 bln South Korea casino deal Page 7

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2 | Business Daily

April 17, 2015

Macau

Macau insurance industry grows 20.4 per cent from 2009 to 2013 In terms of gross written premiums, the Macau insurance industry grew 20.4 per cent from 2009 to 2013, according to a recent study. The life segment accounted for more than 70 per cent of the insurance business João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he Macau insurance industry grew 20.4 per cent in terms of gross written premiums from 2009 to 2013, according a report titled ‘The Insurance Industry in Macau, Key Trends and Opportunities to 2018’

by Research and Markets.

Written premiums refer to the amount of premium charged for a policy that has already become effective.

‘The Macanese insurance

industry grew in terms of gross written premium recording a CAGR [compound annual growth rate] of 20.4 per cent during the review period [2009-2013]’, the study about this sector in Macau reads.

According to the same study ‘the life segment accounted for 72.7 per cent of the industry’s gross written premium in 2013. Meanwhile, the non-life segment grew

at a CAGR of 20.1 per cent during the review period [2009-2013].’

The life insurance segment concerns insurance that covers risks related to human life, such as premature death, and income during retirement or illness. Non-life insurance protects an individual against losses and damages.

Concerning the period from 2013 to 2018 the report paints a very good image of

the development of the sector in the Special Administrative Region of Macau saying it is set to grow in the following years.

The reasons behind this forecast arise from the development of the gaming industry, tourism and other infrastructure but also from the low penetration rate of the insurance market in Macau in comparison with other countries in Asia.

‘Macanese insurance penetration stood at 1.6 per cent in 2013, compared to the Asian average of 6.0 per cent’, the key points of the study found. ‘The industry is set to grow owing to its booming gambling industry [and] developments in tourism and infrastructural growth’, the study explains.

The fact that the Macau population is aging is seen in the study as an opportunity for the development of the sector, attracting more clients based on life insurance. ‘Macau’s aging population and high life expectancy supports the

growth of life insurance’, the study explains.

The insurance sector in Macau is regulated by the Monetary Authority of Macau (AMCM), according to which, in February, observed a total of 23 licensed insurance companies operating in the Special Administrative Region. From those, 8 are based in Macau: Macau Life Insurance, Seguradora Vida FWD (Macau), Luen Fung Hang Life Insurance, China Taiping Insurance (Macau), Luen Fung Hang Insurance, Companhia de Seguros Delta Ásia, Macau Insurance Company, and ACE Seguradora.

Research and Markets Ltd. is headquartered in Dublin, Ireland and provides market research and data services such as annual reports of various companies listed in NASDAQ, NYSE, and AMEX, and reports of geographical locations, including Africa, Asia, Europe, South America, North America and the Middle East.

Wonderful World operator denies blacklisting casino debtors Kam Leong

kamleong@macaubusinessdaily.com

C

harlie Choi Kei Ian, chairman of mobile gaming application developer ‘Wonderful World’, denied yesterday that he is the founder of the debt-chasing website ‘Wonderful World’ during the first hearing of a lawsuit brought against him by authorities accusing him of violating the personal data protection law and aggravated disobedience.

The website 99world. com, launched in 2013, discloses debtors’ personal information, including their names, photos, and amount of debt. According to the website, it has successfully clawed back a total of 200

million yuan (US$32.3 million) of debts.

During his testimony at the Court of First Instance, Mr. Choi denied that he had set up the Internet site and was responsible for the listed information on the website, claiming he found the accusations of the authorities baffling.

The prosecutor in the case reminded the defendant that his denial contradicts interviews with the media in which he claimed to be the founder of the website.

Mr. Choi replied, however, that he found the news reports inexplicable, saying he only provided the media with his

own opinions on the website and the junket market of Macau.

Data protection Last March and April, Mr. Choi was ordered by Judiciary Police (PJ) to remove the information on the site following the Office for Personal Data Protection (GPDP) reporting the case.

As he did not do so, Mr. Choi was arrested by the PJ last April for alleged ‘failure to comply with the obligation to protect personal data’.

According to the prosecutor, Mr. Choi is suspected by authorities of being the owner of the website

as the only two contacts of the website, one mobile and one fax number, are under the name of Mr. Choi and his company, respectively.

In addition, Mr. Choi had filed an application with the Provisional Municipal Council of Macau (IACM) for permission to post advertisements of the website on local vehicles.

Mr. Choi denied that he is the user of the mobile contact, claiming he likes collecting mobile numbers and lending the numbers to friends when they are in Macau. The contact number on the website, according to Mr. Choi, is used by one of his friends,

Wang Chao [pinyin], whom Mr. Choi claimed may be the shareholder of the website.

“I don’t know why the fax contact of my company is on the website… I applied to the IACM for permission because I found the website to be funny. Wang Chao has many cars, so I applied for permission under my name so that it is more convenient for him [to promote the website],” Mr. Choi said.

Meanwhile, a witness from GPDP admitted to Mr. Choi’s lawyer that the Office did not call the mobile contact number directly after they found the number under the name of Mr. Choi.

Business Daily | 3

April 17, 2015

Macau

Public works budgets and schedules a puzzle Secretary for Transport and Public Works Raimundo Rosario has conceded that delays and overrun budgets are the major problems in public works but stresses it’s hard to follow the budget or schedule. He said his priority is to pick up the projects that have been put on hold Joanne Kuai

joannekuai@macaubusinessdaily.com

SJM and Melco to arrange workers transportation SJM and Melco Crown are to arrange transportation for their staff to travel between the Lotus Border in Cotai and their workplace starting from April 21 and May 1, respectively, Secretary for Transport and Public Works Raimundo Rasario has revealed.

Transport Bureau director Wong Wan said the Bureau has instructed all six gaming operators to provide transportation for their workers, adding “some co-operate, some procrastinate”.

Mr. Wong said that the arrangement of transporting the workers from the Lotus Border in Hengqin to enter Cotai in Macau would be the best option, since it alleviates the burden on the public transport system as well as the traffic on the roads of Macau. Mr. Wong added that they will follow up on the remaining four gaming operators with regard to this issue. He said that the authorities had made it clear to the gaming operators that this year is the time for review of the gaming industry and if there is no positive reaction regarding the government’s request, “the consequences would be serious”.

neighbouring region is having difficulties in this area and he believes that the execution of such policies in the future will encounter more difficulties.

Reflection necessary

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he Secretary for Transport and Public Works, Raimundo Rosario, has revealed that the government has not yet reached a consensus with the contractor in charge of the Light Rail Transit (LRT) superstructure of the depot in terms of terminating the contract. He stresses that the government will seek other solutions before taking legal action.

Raimundo Rosairo also revealed that regarding some other public works, the government has been taking the initiative to resolve the problems of projects delayed or put on hold. Regarding the Pac On Ferry Terminal, he said that more money and time will be spent but the project should be finished by the end of this year and that the terminal can be

Human Resources: Mission Impossible Secretary Raimundo Rosario said that many tasks under his secretariat with 15 departments and 3,200 personnel are basically “mission impossible”.

Mr. Rosario said his secretariat has

In response to some legislators’ criticism that public works tenders are still granted following the guideline of “the lower the price, the greater the chance the bidder will win”, Raimundo Rosario said that the

secretariat hasn’t been following the guideline for years, and that in the past four months he has been in office most of the projects he approved are not granted to the bidder offering the lowest price.

The Secretary for public works acknowledged that the major problems affecting Macau’s public works now are delayed schedule and budget overruns. Rosario revealed that currently the government is considering the possibility of introducing a new method of calculating project time.

He indicated that by the end of this month, some officials will head to Hong Kong to study the experience of compensative penalties in public works. However, he said even the

Some legislators said that reflection is necessary, criticising the Secretary for simply saying “We can’t do it”, “I don’t know why it happened”, and “there’s too much work.”

Legislator Ho Ion Sang suggested to the Secretary that the current legal framework regulating public works need to be reviewed and revised since some of the [regulations] are more than 30 years old and unsuited to Macau’s current conditions. Mr. Ho also said administrative procedures need to be simplified in order to speed up the process, which is also in accordance with the Chief Executive’s policy of “streamlining administration”.

Raimundo Rosario admitted that he hasn’t been in office for long and has been away from Macau for many years, saying ever since he took up the office he has been focusing on “solving the problems” such as putting public construction that have been stopped back into operation. He stressed that when the government launches an open tender they want the works finished rather than engage in lawsuits.

a tremendous workload and that the government is not the private sector, with some decisions needing to be made through tedious administrative procedures. He further indicated that the Chief Executive, Chui Sai On, has already put forward the policy of “streamlining administration” and said that only the security and health sectors can recruit more people, thus he has to work with what he has now.

In terms of staff training, Rosario cited the example of the Transportation Infrastructure Office(GIT), citing the average age of personnel being around 30 years old. Many are good engineers

unfamiliar with administrative procedures.

He said that instead of technical training staff need to be taught about administrative procedures which “were not taught by university”.

The Secretary - who took up the office four months ago - said that ever since then he hasn’t really had a stable team to work with since many managerial level staff in several departments experience or are going to experience personnel changes.

The Secretary said he would try to find the suitable people to fill the vacancies of those positions as soon as possible.

He even made a public ‘recruitment

advertisement’ at the meeting, appealing to people that are not in the civil servant system to join the management of his secretariat, saying that he has tried to hire people but been refused as “these shoes are too difficult to fill”.

“Anyone is more than welcome to call my office if they want to apply for the job of Bureau director! I am not joking,” said Mr. Rosario. “People in these posts are under a lot of pressure. And directors or vice directors have a monthly salary of merely MOP70,000 to MOP80,000 [a month].

Theoretically, not many people are willing to take up these jobs.”

put into use by the end of next year.

In terms of the Toi San Public Housing project, the government and contractor have already agreed to terminate the contract and relevant arrangements will be made accordingly. Regarding the Mong Ha Public Housing and Sports Pavilion project, the Secretary said that the government and contractor are still at the stage of negotiating.

Acknowledging difficulties

4 | Business Daily

April 17, 2015

Macau Almost 10 local youths land Hengqin business fund Vice president of the Hengqin Financial Investment Company Zhao Guopei said the Company is granting subsidies to almost 10 applicants from Macau for them to set up their businesses on Hengqin Island, according to local newspaper Macao Daily.

The Hengqin New Area recently established a 2 billion yuan (US$326) start-up aid fund in order to help Macau youths establish their own businesses in a ‘business hub’ on the island. According to Mr. Zhao, these applicants are proposing to establish businesses related to I.T, culture, technology and innovation.

Local sales of Chow Tai Fook and Luk Fook decline in Q1 The Hong Kong-listed jewellery chains posted sales woes in both Hong Kong and Macau as high spending Mainland costumers opt to shop abroad Stephanie Lai

sw.lai@macaubusinessdaily.com

travelling and spending abroad’, Chow Tai Fook said regarding sales data in its latest filing.

Chow Tai Fook’s competitor Luk Fook also posted a widened sales decline in the first three months of this year, according to the latter’s unaudited sales data filed with the Hong Kong Stock Exchange on Wednesday.

Luk Fook saw same-store sales decline 22 per cent in the JanuaryMarch period, a further drop from the 6 per cent decline seen in the previous quarter. The jeweller’s overall samestore sales posted a drop of 20 per cent in the period.

U.S. strength

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how Tai Fook Jewellery and Luk Fook, who both run shops here, told of a further samestore sales decline in the first three months this year registered in Hong Kong and Macau as high spending Mainland Chinese tourists shopped further afield.

Chow Tai Fook reported that its same-store sales in Hong Kong, Macau and other markets registered a 26 per cent year-on-year decline in the January – March period, a wider decrease when compared with the 21 per cent decline in the previous quarter ended December 31, according to the company’s latest disclosure of unaudited operation data filed with the Hong Kong Stock Exchange on Wednesday.

While the jewellery chain did not detail the sales revenue figure, the widened same-store sales seen in the two cities dragged down overall same store sales for the first three months this year, which are down by 16 per cent when compared to the same period last year.

Gold slump Chow Tai Fook, which mainly relies on the sale of gold products and gem-set jewellery, saw same-store sales of both types of product decline by a faster rate in Hong Kong and

Macau than in Mainland China. The company’s overall retail sales value declined 9 per cent in the period, and also in the final quarter of its financial year 2014/2015.

While same-store sales of gold products in Hong Kong and Macau posted a 32 per cent year-on-year decrease in the January-March period, the decrease for China is 10 per cent,

Corporate 4th Special Olympics Golf Masters tees off on Monday From 20th to 25th April, the Special Olympics Golf Masters in Macau will host 25 teams from 17 countries, and Special Administrative Regions, from 4 different continents, reflecting further growth of the event which has metamorphosed from a purely golfing tournament into a multicultural, multi-social programme framed by art, music, dance, entertainment and sightseeing – the biggest programme of its kind in the big wide world of the Special Olympics. The event will be held on the greens of Caesars Golf Club, and the Secretary for Social Affairs and Culture, Alexis Tam, has graciously accepted the invitation to launch the competition.

The official press conference was held yesterday at Clube Militar de Macau, at which Paulo A. Azevedo (President of the Charity Association of Macau Business Readers), Toby Leung (MGM Vice President of Marketing & Communications), Ada Lo (Chair of Macau Special Olympics) and Stefan Kuehn (Tournament Director) introduced this year’s event to the attending media.

Toby Leung mentioned that it’s never too late, never too early and never too much to honour and invest in causes that combine the diverse cultural history of this city with social responsibility, while Ada Lo announced the participation of the homegrown team that will treat this event as a warm up in preparation for the upcoming World Games in Los Angeles in July.

according to Chow Tai Fook’s filing; the company’s same-store sales of gem-set jewellery saw a 3 per cent rise in the Mainland market in the period but that for Hong Kong and Macau posted a 17 per cent drop. The plunge in sales seen in the two Special Administrative Regions is primarily due to a ‘surge in the number of highspending Mainland Chinese tourists

‘This was because the devaluation of various currencies against the strong U.S. dollar attracted consumers to spend in other regions and the slowing economic growth in Mainland China dampened consumers’ purchasing sentiment,’ Luk Fook explained apropos the drop in its overall samestore sales.

Chow Tai Fook ran a total of 2,257 points of sale in Mainland China, Hong Kong and Macau by the end of March.

During the financial year ending Marchend, Chow Tai Fook had expanded to a total of 14 new outlets.

While for Luk Fook, the jeweller had a total of 1,383 shops by March-end, of which 58 of them were self-operated shops in Hong Kong and Macau.

Both Chow Tai Fook and Luk Fook have already seen revenues and profits shrink in the first half of their financial year 2014/2015, or the period covering April to September 2014.

Chow Tai Fook’s first interim profit declined 24 per cent to HK$2.74 billion (US$353 million) whilst revenue dropped 22 per cent to HK$29.3 billion because of less sales of gold products despite more Chinese visitors travelling to the SARs in the period.

Luk Fook’s first interim profit dipped 16.4 per cent to HK$966 million, while its revenue decreased by one-fourth to HK$10 billion.

Business Daily | 5

April 17, 2015

Macau

Tourist spending: Macau world’s 5th largest market The tourism sector in Macau continues to perform well, and the city took fifth place in 2014 in terms of top earners, according to the World Tourism Organization João Santos Filipe

jsfilipe@macaubusinessdaily.com

M

acau occupies fifth place in terms of top earners in the tourism industry, according to data revealed yesterday by the World Tourism Organization (UNWTO).

UNWTO did not disclose the total amount earned by Macau during 2014, as it has only released preliminary information but in 2013 Macau earned US$52 billion (MOP418 billion). However, international tourism receipts in 2014 increased worldwide to a record US$1,245 billion (MOP9,940 billion).

The United States is the biggest earner with a total of US$177 billion (MOP1,413 billion), followed by Spain (US$65 billion / MOP519 billion) and Mainland China, which increased its earnings by 10 per cent to US$57 billion (MOP445 billion). Hong Kong placed 10th but the amount earned was not revealed.

In 2013, the region took US$42

billion (MOP335 billion) from tourism.

Stimulus In 2014, receipts from international visitors spending on accommodation, food and drink, entertainment, shopping and other services and goods reached an estimated US$1,245 billion, an increase of 3.4 per cent from US$1,197 billion. During the same period, international tourism arrivals increased 4.4 per cent from US$1,087 million to US$1,135 million in 2014.

Meanwhile, earnings from international passenger transport services amounted to US$221 billion, meaning that in 2014 total exports from international tourism went up to US$1,500 billion or US$4 billion [MOP32 billion] per day.

“International tourism is an increasingly significant component

of international trade as seen in export earnings from international tourism and passenger transport, which reached US$ 1.5 trillion in 2014” said UNWTO SecretaryGeneral Taleb Rifai. “In a scenario with decreasing commodity prices, spending on international tourism grew significantly in 2014, proving the sector’s capacity to stimulate economic growth, boost exports and create jobs”.

Chinese big spenders The WTO also revealed that in 2014 China was the top spender in terms of tourism, amounting to US$165 billion, which represented an increase of 28 per cent. Mainland China was followed by the United

States, Germany, the United Kingdom and Russia. The bottom half of the top 10 in terms of spend was completed

by France (6th), Canada (7th), Italy (8th), Australia (9th) and Brazil (10th).

No data on this aspect was published in relation to Macau.

However, the region spent US$1.8 billion during 2013 in terms of outbound tourism, which accounted at the time for 60th position in the ranking.

Regarding market share by international tourism receipts, Europe led taking 41 per cent of the market.

Asia and the Pacific took 31 per cent of the market, while the Americas accounted for 22 per cent of the share. The Middle East and Africa took 4 and 3 per cent of the market, respectively.

Tourist prices post five-year low growth in Q1 Less costly room rates for 3 and 4-star hotels have dragged down the inflation level felt by tourists visiting Macau in the first quarter Stephanie Lai

sw.lai@macaubusinessdaily.com

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he city’s tourist price index (TPI) in the first quarter of this year posted a five-year low growth as accommodation costs for visitors in the period had dropped, the latest data released by the Statistics and Census Service shows.

Macau’s TPI, an index meant to gauge price changes in goods and services purchased by visitors, increased by 1.51 per cent year-onyear to 146.19 points in the first quarter, according to official data.

The first quarter TPI also represents an annualised increase of 3.63 per cent, representing a growth level at a five-year low.

The sub-index for accommodation costs, a major component in the basket of goods and services that visitors consume here, dropped by a year-on-year 4.33 per cent due to ‘lower room rates for 3 and 4-star hotels’, the census service concluded.

This corresponds to information gathered by the Macau Hotel Association, which in its latest survey noted lower room rates for both 3 and 4-star hotels in the first two months of this year: the average rate for the

city’s 3-star hotels had dropped by about 7 per cent year-on-year to MOP1,236 (HK$154.8) while that for 4-star hotels dipped by about 3 per cent to MOP1,102.

The inflation felt by visitors here in the first quarter was primarily attributable to costlier restaurant services and clothing, the official data noted.

The sub-index for restaurant services, another major component in visitors’ spending items, increased by 7.86 per cent year-on-year in the first quarter. The index for clothing in the period increased by 5.49 per cent.

The census service data also indicates that visitors here have experienced a notable increase in ‘entertainment and cultural activities’, although this spending category is a minor component in the goods and services that are gauged for price changes.

The sub-index for entertainment and cultural activities increased by 5.18 per cent year-on-year in the first quarter, a spending item that shows the third biggest cost increase following restaurant services and clothing.

Corporate Melco and Taubman join forces in Studio City Yesterday, Melco Crown Entertainment and Taubman Asia, a subsidiary of U.S. mall REIT, Taubman Centers, Inc. unveiled plans to deliver an entertainment-centered shopping experience in its upcoming resort Studio City.

Taubman Asia is providing merchandising, marketing and management services for its retail project. The Boulevard at Studio City will provide a 300,000 sq. ft. ‘immersive’ retail entertainment environment and will transport guests to high-energy streetscapes, entertaining them at every turn with featured streets and squares inspired by iconic shopping and entertainment locations, including New York’s Times Square and Hollywood’s Beverly Hills.

6 | Business Daily

April 17, 2015

Macau

Galaxy clears way for two new Macau casinos with early earnings Profits tanked 40 per cent, with revenues sliding 32 per cent in the first quarter of the year in line with market expectations Bloomberg

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alaxy Entertainment Group Ltd. has pushed out quarterly results about a month earlier than usual, turning its attention to opening two new Macau casinos and winning back gamblers scared away

by China’s crackdown on corruption.

The casino operator reported that first-quarter adjusted earnings before interest, taxes, depreciation and amortisation, or adjusted Ebitda, fell 40 per cent to HK$2.3 billion (US$297 million), matching the median estimate of five analysts surveyed by Bloomberg. Revenue dipped 32 per cent to HK$13.7 billion, driven by a decline in highstakes gamblers.

Galaxy “must be busy internally” preparing for the opening of the expanded resorts, Victor Yip, an analyst at UOB- Kay Hian Holdings Ltd., said in an interview. “The new projects are so big they want to get this out of the way before moving to the next thing,” he said.

The company is expanding as Macau casinos expect gaming receipts to fall to their lowest level since 2011 as the Chinese economy slows and President Xi Jinping’s nationwide graft crackdown stretches into a third year. Gross gaming revenue in the world’s largest gambling hub fell 39 per cent to MOP21.5 billion (US$2.7 billion) last month - the 10th consecutive monthly decline.

Galaxy is due to open the two projects on Macau’s Cotai Strip on May 27, making it the first of the city’s six casino operators to open a wave of new and expanded resorts. In each of the

past three years, Galaxy has reported first-quarter results in mid-May.

Bad to worse Galaxy shares rose as much as 4 per cent to HK$38 in Hong Kong trading, amid a 0.1 per cent decline in the benchmark Hang Seng Index.

The BI Macau/China Gaming Market Competitive Peers Index was up 2.3 per cent yesterday.

Analysts have raced to slash their

forecasts for Macau casino revenue this year following a lacklustre Lunar New Year showed the pace of the downturn was accelerating.

Demand from Chinese high-rollers “appears to be undergoing another leg down amid ever strengthening anti-corruption efforts,” DS Kim, an analyst with JP Morgan Chase & Co., wrote in a note on Thursday. He now forecasts a 23 per cent decrease in Macau gaming revenue this year, down from 18 per cent previously.

Galaxy reported that first-quarter revenue from VIP gamblers sank 41 per cent to HK$8.7 billion, while its mass market sales slumped 16 per cent to HK$4.3 billion.

‘We remain optimistic in the longer term outlook for Macau despite the current challenges and we are now absolutely focused on executing the openings of Galaxy Macau Phase II and Broadway at Galaxy Macau,’ the company said in its earnings announcement.

Elaine Wynn gains advisor backing

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laine Wynn gained the backing of proxy advisor Egan-Jones in her campaign to be re-elected to the board of Wynn Resorts Ltd., the latest twist in a long-running feud with ex-husband Steve Wynn, the company’s chief executive.

‘The manner in which the existing board has handled the company’s third-largest shareholder and fellow board member, Elaine P. Wynn, the resulting proxy contest, all too public dispute and the continuing multiyear decline in the company’s

stock price, compel us to support the dissident,’ Egan-Jones said Wednesday in an e-mailed report.

The Las Vegas-based casino operator is seeking to remove Elaine Wynn from its board. The Wynns are embroiled in a dispute over control of her 9.4 per cent stake in the company.

Investors are being asked to choose two board members at the April 24 annual meeting.

In its report, Egan-Jones recommended clients not vote for the two nominees put forth by the Wynn Resorts board: John J. Hagenbuch

and J. Edward Virtue.

‘We strongly disagree with EganJones’ recommendation,’ Wynn Resorts said in a statement. ‘In addition to failing to recognise Elaine Wynn’s inherent conflict of interest, Egan-Jones also failed to give proper weight to the board’s commitment to search for new independent director candidates, prioritising women and diverse candidates, and to increase the board’s size accordingly by the end of 2015.’

The Egan-Jones recommendation shows that proxy advisors, who help

large shareholders decide how they’ll vote at annual meetings, are divided over the Wynn dispute. Glass, Lewis & Co. told clients on Monday to vote for the company’s nominees and not Elaine Wynn, saying it believed management’s position that her legal dispute is influencing her board decisions.

Institutional Shareholder Services Inc., another advisor, said last week its clients shouldn’t vote for any of the nominees, citing what it said were long-standing problems with executive pay and perks at Wynn Resorts.

Bloomberg

Business Daily | 7

April 17, 2015

Gaming Philippines’ Bloomberry S. Korea casino deal Bloomberry Resorts Corp. plans to invest more than US$1 billion in an integrated casino complex in South Korea and is in talks with a potential Korean partner for the project, company chairman Enrique Razon said yesterday. The gaming firm last month signed deals to buy an island and a casino operator in South Korea, jumpstarting its overseas expansion programme. Bloomberry is the owner and operator of US$1.2 billion integrated casino-resort Solaire on Manila Bay. It is the first of four casino projects in Entertainment City, Manila’s much smaller version of the Las Vegas gaming strip.

Caesars nears deal on anti-money laundering lapses The fact that the company’s operating unit, Caesars Entertainment, filed for bankruptcy this year could mean that the company will not pay the full amount of whatever penalty is assessed as the penalty would likely be unsecured debt

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he U.S. Treasury Department’s anti-money laundering unit may soon issue a civil penalty to Caesars Entertainment Corp. regarding anti-money laundering lapses unearthed during a probe underway for roughly two years, two sources familiar with the matter said.

The final details of a settlement agreement are being ironed out, said the sources, who spoke on condition of anonymity as they were not authorised to publicly discuss the matter. One of the sources said the company was not expected to be required

to fire any employees. It is unclear whether Treasury’s Financial Crimes Enforcement Network (FinCEN) will require the company to make improvements to its compliance programme.

The sources added that the Justice Department, which had also been probing the casino company, does not appear poised to take any punitive action.

FinCEN and the Justice Department in recent years have been working to tighten anti-money laundering compliance in the casino industry due

to a perception that criminals around the world are moving large sums of ill-gotten gains through casino properties.

Steve Hudak, a spokesman for FinCEN, declined to comment on Caesars Entertainment Corp., as did spokesmen for Caesars and the Justice Department.

The sources said they did not know how much Caesars would be expected to pay as part of the terms of a deal.

The investigation stemmed in part from failures to properly police sports book activity and prevent wagers

being placed by illegal betting rings, one of the sources said.

The fact that Caesars’ operating unit, Caesars Entertainment Operating Co., filed for Chapter 11 bankruptcy earlier this year could mean the company will not pay the full amount of whatever penalty is assessed as the penalty would likely be unsecured debt, the same source said.

This source added that because alleged Caesars’ anti-money laundering failures were “very serious,” any settlement that did not result in dismissals or jail time for any individual would amount to “a slap on the wrist.” It is unclear whether any employees were individually investigated as part of the FinCEN or Justice Department probes.

In October 2013, Caesars disclosed that FinCEN was investigating the Desert Palace Inc. unit which runs the flagship Caesars Palace casino in Las Vegas over alleged failures to comply with the Bank Secrecy Act, the primary U.S. anti-money laundering law. Caesars also said that a federal grand jury was investigating the matter.

Reuters

8 | Business Daily

April 17, 2015

Greater China Securities regulator calls for calm The chairman of China’s securities regulator told Chinese stock investors yesterday to stay “rational and calm”, saying he especially needed to remind new investors of their inexperience when it came to handling market volatility. Xiao Gang, who leads the China Securities Regulatory Commission, said investors must not think they are missing the boat if they have not invested in the Chinese stock market, which has surged around 70 percent since November. Beijing is keen to limit risky investment in the country’s bourses, fearful that recent big inflows of cash into the markets could flow out.

U.S. could work with China on AIIB The United States could work directly with China on projects pushed by a Beijing-led development bank if the new institution embraces standards honed by organizations like the World Bank, a top official said. Adopting such standards would make it possible for the Asian Infrastructure Investment Bank to cofinance projects with existing multilateral banks “and similarly for the United States to work in a bilateral fashion with the Chinese,” a senior U.S. Treasury official told journalists by phone.

HK becomes India’s 3rd largest exporter India’s exports to Hong Kong have jumped to nearly US$11 billion from April 2014 to January 2015, making it the third largest export destination of India, said local media yesterday. Local daily The Hindustan Times quoted the Ministry of Commerce officials as saying that China’s Hong Kong has become the third largest buyer of Indian goods after the United States and the United Arab Emirates, with Indian exports to China’s Hong Kong attaining US$10.96 billion from April 2014 to January 2015, up from US$6.65 billion in the 2008-09 fiscal year which was from April 2008 to March 2009.

Rating Internet cafes for better service Chinese authorities are planning to introduce a rating system to its 140,000 Internet cafes in a bid to improve service. The cafes will be rated on sanitation, percentage of oxygen in the air and handling of garbage, according to a statement by the Internet Access Service Association yesterday. Only licensed cafes that have no marks on their records will be eligible for the rating system. The Ministry of Culture said checks will be carried out according to the rating results.

CSR rolls out ultra-quick-charge bus A Chinese company yesterday unveiled the world’s quickest charging electric bus, with a battery that takes just 10 seconds to be fully charged. The bus recharges while stationary or while passengers get on or off, and each charge enables the bus to run for least five kilometres, said Zhou Qinghe, president of Zhuzhou Electric Locomotive, a subsidiary of high-speed train maker CSR. In addition, the bus consumes 30 to 50 percent less energy than other electric vehicles. The capacitor can function safely for 12 years even under extreme temperatures, according to the company.

Exporters expect more pain as economy sputters Recent currency fluctuations have offset some costs for Chinese factories, making some imports cheaper, including raw materials and precision parts from Europe or Japan James Pomfret

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ore than half of China’s exporters expect a trade slowdown to last at least six months as production costs climb and European demand weakens, according to a Reuters survey at the country’s biggest trade fair.

On the opening day of the biannual Canton Fair in the Pearl River Delta, the workshop of the world, the cavernous halls were filled with international buyers, but many, especially Europeans hit by a weaker euro, appeared to be ordering fewer goods and haggling hard with manufacturers.

The fair is taking place just after economic data showed China’s exports unexpectedly fell 15 percent in March and its economy grew at its slowest pace in six years in the first quarter.

A Reuters survey of 90 mostly small to medium-sized manufacturers of goods from consumer electronics to heavy machinery and car parts showed many at the fair are expecting tough times.

On average respondents expected their orders to rise just 3.1 percent in 2015, while production costs, mostly labour and materials, would climb 6.5 percent.

While 43 percent of those polled said they expected an export rebound within six months, 24 percent said the downturn would continue for at least six months, and a further 33 percent put the timeframe at more than a year.

The fair has long been a barometer for the economy of China, which has been the world’s biggest exporter since 2009, but the country’s dominance is under threat as the currency strengthens, labour costs soar and authorities shift from an excessive reliance on exports.

Many respondents reported a continued tightness in the labour

market as skilled young workers become harder to find and the economy rebalances towards consumption and services.

Hard bargain Some European buyers, hit by a sharp depreciation in the euro against the dollar and China’s yuan, were pushing for discounts, despite exporters looking to raise prices an average of 4.6 percent this year, the poll showed.

“There are still buyers,” said Zhu Xiangkui, a manager at a stall selling batteries, as he shook his head. “(But) most of them have the mentality of bargaining when they arrive.”

KEY POINTS Manufacturers see orders up on average 3.1 pct in 2015 -poll Expect production costs to rise 6.5 pct in 2015 43 pct see export rebound within 6 months, 57 pct longer China’s March exports fell 15 pct, Q1 GDP growth slowing

Juan Banovio, a veteran buyer from Spain with a retail business in Madrid, said some Chinese manufacturers had agreed to slash prices by 8-10 percent as price competition intensifies and buyers become more discerning.

“They understand the pressure we face in Europe ... and they’re trying to help, but not much. Most European buyers are ordering less,” said Banovio at a stall selling brightly coloured vacuum cleaners.

Since the 2008/09 financial crisis, China’s exporters have struggled with a strengthening currency and rising labour costs, with global supply chains shifting increasingly inland or to cheaper hubs such as Vietnam and Bangladesh.

While many factories said the impact of yuan appreciation was not as significant over the past 12 months compared with previous years, the poll found that on average manufacturers said they would be in the red if the yuan hit 5.6 to the greenback, compared with about 6.2 now.

“Right now the exchange rate (the yuan) is stable, and that’s good,” said George Chen, a factory manager with Qiyun Audio that manufactures amplifiers. “But if it goes below 6 (to the dollar) that would mean all factories would have nowhere to go, or at least 80 percent of factories couldn’t survive.”

Some 40 percent said they were pessimistic about their factory’s prospects, while 59 percent were neutral.

“We all have a kind of pessimism,” said Lu Jie, a vice-general manager of YSD, a metal-forming machinery factory in the lower-cost area of Hubei in central China.

“We have orders, but the environment is still so tough.”

Reuters

Business Daily | 9

April 17, 2015

Greater China

FDI accelerates in March Chinese first-quarter investment in EU surged more than eightfold to US$3.54 billion

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oreign direct investment into China picked up in March, official figures showed yesterday, though outbound investment from the world’s secondlargest economy slowed sharply.

FDI rose 2.2 percent year-onyear last month to US$12.4 billion, the commerce ministry said, an acceleration from February’s 0.9 percent gain.

“Investment from major countries and regions in China was generally stable,” the ministry said in a statement.

For the first three months of 2015, FDI gained 11.3 percent to US$34.88 billion, the figures showed.

Overseas direct investment (ODI) increased 0.4 percent in March yearon-year to US$8.39 billion, while for the first quarter it jumped 29.6 percent to US$25.79 billion.

Both ODI and FDI exclude financial sectors.

China drew a total of US$119.6 billion of FDI in 2014, while ODI surged to US$102.9 billion, passing the US$100 billion mark for the first time as Chinese companies seek opportunities abroad with economic growth slowing at home.

The three-month increase in FDI was driven by a 30.5 percent year-onyear increase in investment from the European Union to US$2.02 billion.

AFP

Investment from Britain and France each rose to US$370 million, for gains of 40.0 percent and 258.7 percent respectively.

Investment from Saudi Arabia surged nearly 800 percent to US$240 million, the ministry said, without giving an explanation.

Investment from Japan, with which China is in a bitter dispute

over territory and wartime history, fell 12.3 percent to US$1.06 billion, the figures showed.

FDI from the United States dropped 40.4 percent to US$620 million, while that from the ASEAN group of Southeast Asian countries fell 31.2 percent to US$1.35 billion.

China’s appeal as an investment destination has been declining in

Hong Kong banks cut yuan deposit rates The sudden reversal of cross-border flows bodes well for the expansion of the yuan pool in Hong Kong Michelle Chen

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ong Kong banks have started to cut yuan deposit rates following robust southbound trading flows under a stock connect scheme between Shanghai and the former British colony.

The flow of funds into Hong Kong is expected to shore up the shrinking offshore yuan pool, which has been under pressure as the weakness of the Chinese currency had dampened investors’ appetite.

Since the fourth quarter of last year, banks competed aggressively to draw in new yuan funds and retain clients with attractive deposit rates when the yuan depreciated sharply.

One-year yuan deposit rates had risen recently to well above 4 percent in Hong Kong, compared with the benchmark rate of 2.75 percent for the same tenor in the mainland.

However, the situation has changed as more funds are flowing into Hong Kong from the onshore market under the stock connect over the past few weeks. The yuan FX rate has also steadied after sustained weakness during most of the first quarter.

The yuan had long positions for the first time since late January, according to a survey of 18 currency analysts and traders from banks and asset management companies conducted

by Reuters earlier this month.

Some lenders in Hong Kong have begun to lower yuan deposit rates

recent years owing to rising labour and land costs and competition from Southeast Asian countries such as Vietnam.

Foreign investors have also complained of issues such as China’s chronic air pollution as well as official campaigns and investigations into their business practices.

Chinese first-quarter investment to the EU surged more than eightfold to US$3.54 billion, the ministry said, attributing the gain mainly to a US$2.89 billion investment by state-owned oil giant China National Petroleum Corporation in the Netherlands, which was included in the February figures announced last month.

It said Chinese investment to ASEAN, Hong Kong, the US and Russia all gained, increasing 51.4 percent, 44.4 percent, 37.4 percent and 14.3 percent, respectively. The ministry did not provide totals.

China has been actively acquiring foreign assets, particularly energy and resources, to power its economy, with firms encouraged to make overseas acquisitions to gain market access and international experience.

INVESTMENT IN AUSTRALIA FELL 66.3 PER CENT, WHILE THAT IN JAPAN DECLINED 16.7 PER CENT

costs in the offshore yuan market. The one-week lending rate traded at 3.8 percent yesterday, compared with 5.4 percent a month ago.

“We can feel that yuan market liquidity in Hong Kong has improved a lot recently, which will continue to push down deposit rates,” said Ngan Kim Man, head of RMB business strategy and planning at Hang Seng Bank.

“Yuan deposit rates have risen to a very high level after the last round of competition for yuan funds since the end of last year and there’s little space for any increase even without the strong southbound flows,” Ngan said.

But any significant cut in interest rates is unlikely since cross-border flows under various schemes are still biased toward funds flowing north as China is expected to further broaden investment channels for foreigners, analysts say.

Reuters

Some of the most famous banks in Hong Kong dot the skyline

offered to retail investors. Hang Seng Bank, for example, adjusted the promotional rates for three-month and six-month yuan time deposits from 4.1 percent to 3.8 percent on Monday, a spokeswoman of the bank told Reuters.

China Construction Bank (Asia) which once provided the highest oneyear deposit rate of 4.5 percent in Hong Kong also cut yuan deposit rates from one-month to 12-month by 10-15 basis points, with the oneyear rate standing at 4.4 percent now.

Chinese investors used up the entire 10.5 billion yuan (US$1.7 billion) daily quota to buy Hong Kong stocks for two consecutive days last week, the first time the daily quota has been exhausted since the scheme was launched.

The sudden reversal of cross-border flows bodes well for the expansion of the yuan pool in Hong Kong, where liquidity had been drained by the more popular northbound flows.

Strong southbound trading flows have helped ease elevated interbank funding

We can feel that yuan market liquidity in Hong Kong has improved a lot recently, which will continue to push down deposit rates Ngan Kim Man head of RMB business strategy and planning Hang Seng Bank

10 | Business Daily

April 17, 2015

Greater China TSMC books 65 pct rise in Q1 net profit Taiwan Semiconductor Manufacturing Co Ltd (TSMC) reported a 65 percent rise in first-quarter net profit yesterday, beating analyst estimates, boosted by strong sales of iPhones from main client Apple Inc. The world’s largest contract chip manufacturer booked T$79 billion (US$2.54 billion) for January-March, compared with the T$77.8 billion average estimate of 22 analysts polled

by Reuters. The company also reported a quarterly revenue rise of 49.8 percent, as devices from watches to washing machines require more chips. Companywatchers are skittish about the firm’s future as competition intensifies.

US lobbies about Internet law An open and free Internet is essential in the 21st century, U.S. Commerce Secretary Penny Pritzker told Chinese officials yesterday, urging them to ensure that government functions as an enabler of entrepreneurship, rather than a barrier.

Pritzker is leading a three-city trade mission to China, focused largely on green industries, to boost business links despite friction over issues including high-tech exports and cybersecurity regulations.

“We work to expand access to broadband and to protect a free and open Internet, which is absolutely a necessity for any firm in the 21st century, for them to be successful,” Pritzker said.

Cotton imports drop around 40 pct China’s cotton imports dropped around 40 percent in March from the same month the year before, hit by strikes at U.S. West Coast ports and as Beijing issues less import permits to mills. The world’s top consumer of the fibre shipped in 127,900 tonnes last month, industry body the China Cotton Association said.

“We think delayed shipments will catch up during April,” said one trader who expects some 100,000-150,000 tonnes of U.S. cotton held up by the strikes to arrive in China in coming weeks.

Premier Li discards yuan’s devaluation It will not be easy for China to grow its economy by 7 percent this year, Chinese Premier Li Keqiang was quoted as saying, but he ruled out currency devaluation to promote growth through exports. “It’s true that our economy is still under downward pressure,” Li was quoted as saying in an interview with the Financial Times. “It won’t be easy to achieve another 7 percent growth this year.” Li told the newspaper, however, that China could not rely on devaluing its currency to lift Chinese exports.

Market-cap for CNR and CSR exceeds Boeing Combined market capitalization for China’s two leading train makers has exceeded that of Boeing after their shares in Shanghai rose by the daily trading limit of 10 percent for four consecutive days.

China announced the merger of China CNR Corporation Ltd. and CSR Corporation Ltd. late last year in hope of gaining greater edge over overseas rivals like Canada’s Bombardier and Germany’s Siemens in global competition. The merger has yet to be finalized. Boeing, the world’s largest aircraft maker, is currently valued at US$107.22 billion after its shares closed down 0.51 percent on Wednesday.

Trading hall of Hong Kong Stock Exchange

HK’s stocks enjoy and fear Chinese investors flood Chinese began overflowing into Hong Kong stocks in April, pushing the Hang Seng index up more than 11 percent so far this month to a seven-year high Pete Sweeney and Michelle Chen

S

urging investment from mainland China has jolted Hong Kong’s stock market from the doldrums, but the volatility of such flows, driven by an unfamiliar breed of investor, presents new risks to the stability of the city’s economy and currency.

A Reuters analysis shows that Chinese investors have moved a net 68 billion yuan (US$10.97 billion) into Hong Kong-listed stocks via the Shanghai-Hong Kong stock connect programme since its launch in November, the vast bulk of it during just a few days in April.

That new money, plus tens of billions of dollars from a separate channel for Chinese institutional investors and untold flows from Chinese-controlled offshore funds, has helped push the market’s capitalisation to HK$28.6 trillion (US$3.7 trillion) in April from HK$25.5 trillion in November.

That is driving profits in Hong Kong’s financial industry, presenting opportunities for companies to raise capital and perhaps boosting consumer confidence.

But this tide of cash can flow out as quickly as it flowed in, especially if investors conclude the rally has run too far ahead of the slowing economies on both sides of the border.

“With the help of China’s opening up, Hong Kong’s status as a global financial centre has been enhanced.

However, its economy is also entering into a bubble cycle, and it’s just the beginning,” said Raymond Yeung, analyst at ANZ in Hong Kong.

The Shanghai Composite Index has gained over 70 percent since late November when the central bank made a surprise cut to interest rates, and the rally began overflowing into Hong Kong stocks in April, pushing the Hang Seng index up more than 11 percent so far this month to a seven-year high. “(Inflows) will add pressure to the already high property prices and

cause inflation,” said Yeung. “It will also bring more risks when sudden capital outflows happen.”

According to exchange data, 62 percent of mainland Chinese investors in Hong Kong in 2014 were ordinary retail investors, who tend to behave very differently to the institutional fund managers Hong Kong is accustomed to.

On average, domestic Chinese investors hold a stock for as little as 24 days, compared with 260 days in Hong Kong, UBS analyst Lu Wenjie said in a research note.

“These two groups of investors are totally different, and there will be certain chemical reactions as they meet,” wrote Charles Li, CEO of the Hong Kong exchange (HKEx), on his blog.

HKEx data for 2014 shows mainland investors made up only 5.1 percent of its total cash market trading by value, lagging institutional funds from the UK and United States, which together accounted for over 20 percent.

But that equation is changing rapidly.

KEY POINTS Mainland inflows through stock connect programme flood HK Push Hang Seng index to 7-year high Mainland retail investors seen more volatile Complicates management of liquidity, dollar peg

The stock connect scheme means Chinese investors can invest up to 250 billion yuan (US$40.3 billion) in Hong Kong markets, and that quota is expected to be widened this year.

And the Chinese flows are amplified by foreign money riding on its coat tails.

All of which has pushed volatility in the Hong Kong and Shanghai bourses to record highs, producing wide price swings.

The potential for vast and sudden moves of liquidity in and out of the Hong Kong dollar will also complicate monetary policy.

Hong Kong operates one of the world’s last remaining currency pegs to the U.S. dollar, which means it must buy or sell dollars when the currency looks set to exceed its daily trading band.

In recent days, the Hong Kong Monetary Authority (HKMA) was forced to intervene multiple times as demand for Hong Kong dollars spiked.

“Invariably the investment opportunity at any one time will be on one side or the other, and this is likely to create sudden inflows and outflows that will put pressure on the Hong Kong dollar peg,” said Francois Perrin, head of Greater China Equities for BNP Investment Partners.

Two individuals familiar with the exchange’s thinking said Hong Kong, not Beijing, had originally requested the imposition of quotas for the programme for fear an exodus of capital into China could put pressure on the exchange’s trading system and the dollar peg.

HKEx said the quotas “were mutually agreed between the regulators and the exchanges as a means of managing risk in the initial stages”.

HKMA declined to directly answer questions related to the impact these flows might have on monetary strategy, but reiterated its policy to “monitor the market developments closely and maintain the stability of the Hong Kong dollar”.

Reuters

Business Daily | 11

April 17, 2015

Asia

PBOC easing seen by economists to cushion growth slowdown Tame inflation, a slump in exports and the weakest industrial output growth since November 2008 last month are set to prompt Premier Li and PBOC’s Governor Zhou to act

C

hina’s leaders will switch to stimulus mode to support an economy that expanded at the weakest pace since 2009 last quarter, economists said.

The central bank will inject more cash into banks, cut the amount of reserves lenders must keep, reduce interest rates, and steer money market levels lower, according to banks including Macquarie Group Ltd., HSBC Holdings Plc, and Nomura Holdings Inc. The government is also expected to loosen fiscal settings and expedite infrastructure spending plans.

The good news is Premier Li Keqiang and People’s Bank of China Governor Zhou Xiaochuan have far more policy firepower than counterparts in Japan and Europe.

The bad news: stimulus so far hasn’t spurred a revival, as banks remain reluctant to lend and the outlook for external demand remains uncertain.

“Monetary easing must accelerate in the coming months to support the economy,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong.

Shen expects a RRR cut this month, “in view of the sense of urgency by the government.” He also flagged increased investment as part of the new Silk Road initiative.

“They have many tools at their disposal and there is still ample room

Underlying growth momentum, partly reflected in the March data, is likely already at, if not slightly below policy makers’ bottom line Qu Hongbin HSBC Everyone has its eyes set on People’s Bank of China (headquarters pictured) after Wednesday results

for further stimulus,” said Arjen van Dijkhuizen, senior economist at ABN Amro Bank NV in Amsterdam.

Larry Hu at Macquarie forecasts faster infrastructure investment approvals as well as interest-rate and RRR cuts. Zhao Yang at Nomura expects 25 basis point interest-rate cuts and half percentage point RRR reductions in each of the remaining three quarters of the year, while UBS Group AG’s Wang Tao sees accelerated construction of key rail,

water and energy projects, along with more monetary easing.

The premier last month said policy makers will step in to support the economy if jobs and wages are hurt by the slowdown, while PBOC Governor Zhou said the nation needs to be vigilant about deflation risks and policy makers have “room to act.”

Without further policy easing, real rates will continue to rise, said Qu Hongbin at HSBC in Hong Kong.

On the fiscal front, policy will be

expansionary this year, “in part to flank the implementation of the new local government debt framework, which puts downward pressure on local government borrowing,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong.

One hurdle that may curb the extent of any monetary stimulus is China’s surging stock market, which took off after the central bank cut interest rates for the first time in two years in November.

Bloomberg News

TPG, Fosun in the lead to acquire Cirque du Soleil Cirque du Soleil has been working with investment bank Goldman Sachs Group since last year to find a strategic partner Liana B. Baker and Greg Roumeliotis

A

consortium of private equity firm TPG Capital LP and Chinese conglomerate Fosun International Ltd is in the final stages of negotiations to acquire Cirque du Soleil, according to people familiar with the matter.

TPG and Fosun have prevailed in an auction for the world’s largest theatrical production company over a rival private equity consortium comprising CVC Capital Partners Ltd and Providence Equity LLC, the people said on Wednesday, confirming an earlier report in Canadian newspaper The Globe and Mail.

A deal is not yet final and could fall apart, the sources said. Reuters had reported last week that the two consortia were in final negotiations with the company’s owner and founder Guy Laliberté.

The price that TPG and Fosun were negotiating with Laliberté could not be learned, but sources close to the process had previously stated a deal would likely value Cirque du Soleil near US$1.5 billion.

Laliberté is expected to keep at least a 10 percent stake in Cirque

Sources close to the process had previously stated a deal would likely value Cirque du Soleil near US$1.5 billion

du Soleil and continue to play a significant role in the company, one of the people said. Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, plans to be minority investor in Cirque du Soleil, according to the sources.

The sources asked not to be identified because the negotiations are confidential. TPG and Providence Equity declined to comment, while

Fosun, CVC, Caisse and Cirque du Soleil did not respond to requests for comment.

Best known for its acrobatic spectacles and Las Vegas shows, Cirque du Soleil has been working with investment bank Goldman Sachs Group since last year to find a strategic partner.

Founded by Laliberté and street performers in Quebec in 1984,

Cirque du Soleil has become one of Canada’s most famous exports.

Laliberté currently owns 90 percent of the Montreal-based company.

Cirque du Soleil’s shows featuring acrobats and whimsical plots tour around the world and are performed nightly in Las Vegas and other resorts.

It has roughly 4,000 employees and it employs 1,300 performing artists in 50 countries, according to its website.

While the company generates the majority of its revenue from ticket sales, it also organizes private events, sells retail goods based on its shows, and licenses its brand to the hospitality and fashion industries. It has a joint venture with BCE Inc’s Bell Media to create television programming, movies and games.

TPG owns most of Hollywood talent agency Creative Artists Agency, started movie and television studio company STX Entertainment, and helped take Spanish-language broadcaster and television network Univision private. Its partnership with Shanghai-based Fosun is expected to help Cirque du Soleil expand in Asia.

Reuters

12 | Business Daily

April 17, 2015

Asia

Australian employment surprisingly strong Mining companies shed 44,000 workers in the year to February Australia chases trade deal with India

Wayne Cole

Slowing growth in top trade partner China and plunging prices for iron ore and coal are adding impetus to Australian efforts to secure a free trade deal with India by the end of the year. Officials are meeting in Canberra this week, a source familiar with the talks said, the second round of official discussions since Prime Minister Tony Abbott and his Indian counterpart Narendra Modi agreed in November to accelerate long-running but slow-moving negotiations. An agreement with India would cap an unprecedented two years for Australian trade negotiators.

Japan becomes largest U.S. Treasuries holder U.S. Treasury Department data showed Japan edged out China in February as the largest holder of U.S. Treasuries, a month in which foreign investors sold U.S. government debt for a fourth straight month. Data showed outflows from U.S. Treasuries totalled US$6.30 billion in the month, down from net selling of US$55.1 billion January. Japan eclipsed China as the largest Treasury holder for the first time since August 2008. Japan’s holdings actually declined in February, to US$1.224 trillion, from US$1.238 trillion the previous month, while China’s also fell, to US$1.223 trillion from $US1.239 trillion.

Shinhan gets nod to buy stake in Bank Metro Shinhan Bank, part of Shinhan Financial Group, has received regulatory approval to buy 40 percent of Indonesia’s Bank Metro Express, more than two years after the South Korean lender signed a deal for the stake purchase. Muliaman Hadad, chairman of the board of commissioners at Indonesia’s financial services authority, said yesterday the deal had been approved. “But of course, this cooperation has to be based on a principle that benefits both sides,” Hadad said. Shinhan’s stake purchase would be worth 700 billion rupiah (US$55 million).

McDonald’s Japan sees wider losses The Japanese unit of McDonald’s Corp said yesterday it expects its losses to widen this year as it struggles to bring back customers after a series of food safety scandals. The company also announced turnaround measures including plans to renovate stores, close underperforming outlets and cut costs. McDonald’s Holdings Co (Japan) Ltd forecast an operating loss of 25 billion yen (US$210 million) in 2015, following a loss of 6.71 billion yen last year. The average estimate of two analysts was a loss of 7.95 billion yen.

A

ustralian employment sped past expectations in March while jobs created in February were revised up sharply, an upbeat report that sent the local dollar surging as markets scaled back bets for another cut in interest rates.

Yesterday’s figures from the Australian Bureau of Statistics showed employment rose 37,700 in March, more than double the market forecast of 15,000. February’s increase was also revised up to show a rousing 41,900 increase.

The spike in hiring drove the unemployment rate down to 6.1 percent, and away from January’s decade-peak of 6.3 percent. Full-time employment was healthy and hours worked rose again, suggesting the labour market was not as weak as generally assumed.

“It’s a strong report across the board,” said Su-Lin Ong, a senior economist at RBC Capital Markets, while noting that statistical problems with the series meant they should be treated with caution.

“On face value, it is telling you that the labour market is definitely not deteriorating and the unemployment rate seems fairly stable,” she added.

“The odds are that we could still see a rate cut in May, but these numbers reduce that risk.”

The probability of a move in

May dropped to 50 percent, from around 60 percent, while investors were having second thoughts about the prospect of a cut in June.

While the Reserve Bank of Australia (RBA) skipped a chance to lower its 2.25 percent cash rate this month, many had assumed it would

KEY POINTS Employment +37,700 in March, beating forecasts of +15,000 Feb employment revised up sharply to +41,900 Jobless rate dips to 6.1 pct from revised 6.2 pct A$ jumps as market scales back bets on near-term rate cut

ease again given sub-par economic growth and a rising unemployment rate.

Instead, yesterday’s data showed annual jobs growth running at a solid 1.6 percent which was almost fast enough to match growth in the workforce and so stabilise unemployment.

In all, 184,200 net new jobs were created in the year to March, while the labour force expanded by 226,800.

Employment in the mining sector has been hit hard by sliding prices for resources, notably iron ore. But this sector only ever accounted for around 2 percent of total employment.

Mining companies shed 44,000 workers in the year to February, or about a fifth of the sector’s jobs.

Yet twice as many new jobs were created in professional, scientific and technical services.

Some 99,000 net new positions were created in this sector over the year to February, making it the fourth biggest employer. Much of that comes courtesy of a surge in home building.

“The home building boom is serving to lift a raft of boats,” said Craig James, an economist at CommSec. “Architects, carpenters, building material suppliers, hardware and homemaker stores are just some of the areas benefiting from the boom.”

Reuters

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Luis Gonçalves, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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Business Daily | 13

April 17, 2015

Asia

Philippines considers easing IPO rules The exchange is keeping its target of 10 IPOs and backdoor listings for 2015 Kana Nishizawa and Ian Sayson

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he Philippine stock exchange is considering relaxing its listing rules for infrastructure companies amid a dearth of initial public offerings and growing demand for cash to fund roads, power plants and ports.

Infrastructure companies may be exempted from rules requiring three years of profitability, after a similar waiver for renewable energy companies was introduced in 2011, Hans Sicat, president of the Philippine bourse, said in an interview in Hong Kong on Wednesday. The exchange is keeping its target of 10 IPOs and backdoor listings for 2015, even after just one company announced plans for an IPO so far this year.

Philippine economic growth will probably accelerate to 6.4 percent in 2015 from 6.1 percent last year amid increased government spending and investment, according to the Asian Development Bank. Companies going public will enter a stock market trading near the highest valuation in two years after a 9.4 percent gain in 2015 through Wednesday.

“We need to do a more thoughtful analysis of how we can, without sacrificing the suitability requirements that our exchange and the Securities & Exchange Commission want, get a

robust amount of IPOs,” Sicat said.

Key driver There’s already a pipeline of consumer, property, banks and conglomerates with infrastructure projects that are in the mid- to-late

stages of their application process, Sicat said. Crown Asia Chemicals Corp. is the only company so far to announce an IPO this year.

The government said in February it plans infrastructure investments amounting to 4 percent of gross domestic product

this year, which will be increased to 5 percent in 2016.

“Investors are looking at infrastructure companies because infrastructure will be a key driver of the Philippine economy in the coming years,” said Rico Gomez, who helps oversee about US$1.8 billion as vice president at Rizal Commercial Banking Corp. in Manila. “There aren’t that many direct infrastructure plays in the stock market now.”

Sicat’s projection for 200 billion pesos (US$4.5 billion) of capital raising on the exchange this year would surpass last year’s level of about 150 billion pesos. The relaxation of listing rules for infrastructure companies, if implemented, would be a welcome development because companies tend to take several years to become profitable, said Eduardo Francisco, the Manila-based president of BDO Capital & Investment Corp., a venture of the largest Philippine bank by assets.

In September 2011, the bourse amended rules so that renewable energy firms didn’t need to show a one-year operating history to list on its second board, which is for companies with a market value of at least 250 million pesos.

Bloomberg News

14 | Business Daily

April 17, 2015

International Putin: Return to growth in less than 2 years Russian President Vladimir Putin said yesterday Russia’s economy could return to growth in less than two years.

In a televised call-in with the nation, Putin was reminded that he had said the economy could return to growth in two years. He said: “It may be quicker. With what we are seeing now, the strengthening of the rouble and the growth in the markets ... I think that it may happen faster.” “But somewhere in the region of two years,” he added.

IMF and World Bank meet to tackle volatility Lagarde and her World Bank counterpart Jim Yong Kim have already warned middle and low-income countries that they face more financial turbulence ahead for long-term relief and rebuilding for the three West African countries savaged by the Ebola epidemic, Guinea, Liberia and Sierra Leone.

After the World Bank, the IMF and individual governments threw in hundreds of millions of dollars to confront the outbreak last year, Ebola is now mostly under control, though with a toll of more than 10,000 dead.

Oxfam International is urging the World Bank to raise US$1.7 billion to help countries hit by the epidemic to improve their sanitary infrastructure.

Sodexo keeps goals after H1 profit rises French catering, facilities management and vouchers group Sodexo kept its full-year goals yesterday after operating profit rose 8.6 percent in the first half, helped by cost cuts and new contracts in North America and emerging economies. The world’s second-biggest catering services company after Britain’s Compass Group said operating income excluding restructuring costs and currency effects in the six months to February 28 reached 620 million euros (US$663 million). “Firsthalf results are in line with our expectations,” Chief Executive Michel Landel told a conference call.

Bernanke to advise hedge fund Citadel Ben Bernanke, former chairman of the U.S. Federal Reserve, has agreed to become a senior adviser to Citadel Investment Group, a US$25 billion hedge fund founded by billionaire investor Kenneth Griffin, the New York Times reported yesterday. Bernanke, who handed the reins of the U.S. central bank to Janet Yellen last year, will advise Citadel’s investment committees on global economic and financial issues and meet the fund’s investors, the newspaper said.

Big-name hedge funds are making a habit of hiring former central bankers and other government officials as their funds grow in size and scope.

Early Easter helps Unilever sales jump Dutch food and cosmetics giant Unilever said yesterday its sales jumped by 12.3 percent in the first quarter to 12.8 billion euros (US$13.6 billion), boosted by favourable currency rates and an early Easter. “We have had a good start to the year, helped by favourable currency movements but also an improvement in underlying sales,” Unilever’s chief executive Paul Polman said. “This despite a continued challenging trading environment in many parts of the world,” Polman said in a statement.

Target announces data breach settlement Target Corp said it had agreed to reimburse about US$19 million to financial institutions that had issued MasterCard-branded cards that were a part of the massive data breach at the retailer in 2013. The amount under the settlement with MasterCard Inc covers costs that banks incurred to reissue credit cards and debit cards to customers as a result of the breach, Target said in a statement. In 2013, Target said at least 40 million credit cards were compromised by the breach during the holiday shopping season.

Shadow of Greek debt crisis World Bank President Jim Yong Kim

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sluggish global economy, the Greek debt crisis and continuing fallout of the Ebola epidemic focus attention of top finance officials gathering at World Bank and IMF Spring meetings.

With high unemployment festering in advanced economies, and emerging countries entering their fifth straight year of slowing growth, how to fire up output and demand is the primary order of business for the world’s central bankers and finance ministers in Washington.

Christine Lagarde, the managing director of the International Monetary Fund, has warned that the world risks sinking into an laconic “new mediocre” which does not lift people’s livelihoods.

In its update of global prospects this week, the IMF stuck to its forecast of “subdued” growth of 3.5 percent this year, picking up to 3.8 percent in 2016.

But IMF chief economist Olivier Blanchard warned that countries need to commit more effort to investments, especially in infrastructure, and implement market-opening reforms to increase output faster.

“It would be wrong to speak, as some have done, of stagnation, but prospects are more subdued,” he said. “And more subdued prospects lead, in turn, to lower spending and lower growth.”

Lagarde and her World Bank counterpart Jim Yong Kim have already warned middle and lowincome countries that they face more financial turbulence ahead, as the US central bank tightens up monetary policy with fresh interest rate hikes later this year.

But Kim will also try to keep the focus on fighting extreme poverty, and is planning a new fundraising effort

The meetings will remain overshadowed by the impact of turmoil in the Middle East and Ukraine, where the IMF controversially signed off on its second bailout loan in a year.

Also clouding the discussions will be the showdown between Greece and its EU creditors, with Athens close to defaulting on its massive debt, which could force its split from the eurozone.

That could fuel a new round of turmoil across global markets, many worry.

Greek Finance Minister Yanis Varoufakis will be at the meetings, and even attend a White House commemoration of Greece’s 19th century independence struggle, where he could meet with President Barack Obama.

Stopping in New York on Wednesday ahead of the IMF-World Bank meetings, German Finance Minister Wolfgang Schaeuble said no deal had been reached yet between EU and Greek negotiators, but added that he does not expect Greece to leave the eurozone.

AFP

ECB survey of experts paints brighter euro zone outlook The predictions came a day after ECB President Mario Draghi pledged to roll out the bank’s money-printing programme ‘firmly’ John O’Donnell and Marc Jones

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conomists and other experts surveyed by the European Central Bank pared back their predictions yesterday for inflation to just above zero for this year as oil prices stay low, but expect it will pick up strongly in 2016 and beyond thanks to fresh money printing.

The closely watched Survey of Professional Forecasters upgraded forecasts for economic growth in the coming three years, although economists see only a modest improvement in unemployment in the years to 2017.

The low value of the euro, a trend that is helping exporters, and the roll out of the European Central Bank’s money printing programme known

as quantitative easing were credited with the longer-term improvement to inflation, a key measure of economic health.

While the group of experts, economists and academics expected inflation to remain almost stagnant this year, at 0.1 percent, they forecast a jump in 2016 to 1.2 percent and further progress over the longer term.

Despite this year’s weak reading, they also did not expect it to slip into the red at any stage.

The predictions came a day after ECB President Mario Draghi pledged to roll out the bank’s moneyprinting programme ‘firmly’, as he painted a slightly more optimistic economic picture, saying that it would

strengthen gradually.

The upbeat forecasts of the experts surveyed by the ECB further improves this outlook. It also dovetails with another closely watched poll of banks this week, which showed firms’ appetite for credit was expected to be strongest in over a decade in the coming months.

Draghi, describing speculation that the fledgling 60 billion euro a month scheme would be scaled back as “surprising”, underlined on Wednesday his determination to see through quantitative easing until September 2016, or until inflation was back up to the bank’s target of close to 2 percent.

Reuters

Business Daily | 15

April 17, 2015

Opinion Business

wires

The harm of regulatory disharmony

Leading reports from Asia’s best business newspapers Howard Davies

Former Chairman of Britain’s Financial Services Authority, Deputy Governor of the Bank of England, and Director of the London School of Economics

THE KOREA HERALD South Korean companies, led by bio and game firms, are seeking to go public on the local stock market this year to capitalize on the recent bullish run, the bourse operator said yesterday. Twenty companies have applied for the regulatory approval to make debuts on the main KOSPI and the tech-heavy KOSDAQ markets, sharply up from eight in the same period last year, according to the Korea Exchange. Among the four awaiting the KOSPI market debut are Innocean Worldwide Inc., Hyundai Motor Group’s advertisement arm, and Tonymoly Co., a Korean cosmetics firm featuring budget brands.

THE STAR Petroliam Nasional Bhd (Petronas) president and chief executive officer Datuk Wan Zulkiflee Wan Ariffin said there will be no salary cut and retrenchment of Petronas staff. In an effort to cut cost, Petronas had told its contractors, who also provide manpower to Petronas Carigali Sdn Bhd, that it would reduce 20% of their current salary.

There will be no salary cut for Petronas staff, including Petronas Carigali. He explained that the 20% salary reduction was part of the group’s costoptimising exercise with its service providers.

THE JAKARTA POST State-controlled oil and gas company PT Pertamina will scale down its expansion plans to cope with the sharp drop in crude oil prices, which has severely affected the company’s earnings. Pertamina upstream director Syamsu Alam said in Jakarta that the company would reduce exploration activities on the company’s oil and gas fields in the country in order to be able to slash production. He said the company would, for example, drill fewer oil wells this year. “We’ve found the output target from each well is not economically viable as the current oil price is low,” he said.

TAIPEI TIMES This year’s Taipei Spring Computer Show, which opened yesterday at the Taipei World Trade Centre, is set to present more creative consumer electronics products rather than traditional computer products amid the development of Internet of Things applications. “Over the past year, we have noticed that there are many new Taiwanese start-ups making smart devices to make life simpler and more fun, and they are not necessarily notebooks or smartphones,” said Enoch Du, secretary-general of the Taipei Computer Association.

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n the alphabet soup of institutions involved in the regulation of global financial markets, the FMLC – the Financial Markets Law Committee – is not very prominent. Given that it is based only in London, having grown out of an initiative by the Bank of England 20 years ago, and that most of its members are lawyers, most banks have not even heard of it (though some of them are represented on its Council).

But the services provided by the FMLC have never been more necessary.

The FMLC’s mission is to identify and propose solutions to issues of legal uncertainty in financial markets that might create risks in the future. As a recent FMLC paper showed, the wave of new regulations implemented since the global financial crisis – many of which were poorly planned or inconsistent across countries – has left a jumbled landscape of legal uncertainties.

Consider banks’ capital requirements. The Basel 3 Accord, adherence to which increased the liquidity of all banks and decreased their leverage, is viewed as a firm standard in some parts of the world. But, in others, it is regarded as a minimum to which additional rules may be added. Such “super-equivalence” or, more colloquially, “gold-plating” creates inconsistencies across jurisdictions, thereby facilitating regulatory arbitrage.

Likewise, the European Union, in contrast to the United States, regards the leverage ratio as a supervisory optional extra, known as a “Pillar 2 measure” (which permits supervisors to add additional capital buffers to address a particular bank’s

idiosyncratic risks). And, though both the US and the EU prohibit proprietary trading, they each define it differently.

There are also inconsistencies between the US and the EU in derivatives-market reform, which the Financial Stability Board has warned could undermine the objectives, set out by the G-20, of greater standardization of contracts and enhanced transparency. And, whereas the Basel standards continue to refer extensively to credit ratings as the basis for assessing the creditworthiness of borrowers, the Dodd-Frank Act in the US moves away from reliance on ratings.

Such differences – and the FMLC Council lists many more – reflect a dangerous shift in the world’s approach to regulation.

The early post-crisis enthusiasm for new, globally agreed regulatory standards has given way to a range of national initiatives, driven by domestic political agendas, with little regard for cross-border compatibility.

More problematic, the peer-review procedures that have been introduced so far will do little, if anything, to resolve the problem. Nor do the memoranda of understanding drawn up by national financial regulators offer hope of salvation. According to the FMLC paper, “they are usually the subject of interpretative disagreement, are not legally binding, do not benefit from any binding dispute-resolution mechanisms, and do not prevent national authorities from acting unilaterally.”

So what can be done? The FMLC makes four important recommendations.

First, the Financial Stability Board should help to reduce avoidable inconsistencies

The early postcrisis enthusiasm for new, globally agreed regulatory standards has given way to a range of national initiatives, driven by domestic political agendas, with little regard for cross-border compatibility

across countries by propagating a set of high-level principles to which all member countries would be expected to conform when introducing new regulations. Indeed, the need for such principles should have been recognized in 2009, when the wave of re-regulation began.

Second, to address existing regulatory conflicts, the FMLC recommends establishing a “conflict of regulation” framework to determine which legal regime – that of a global firm’s home country or that of its local subsidiary’s host country – has jurisdiction in a specific cross-border dispute. The alternative of relying on a third-party multilateral organization to act as mediator in such disputes,

the report explains, has little support from G-20 countries.

Third, the FMLC proposes expanding the Financial Stability Board’s mandate. That body, which emerged from the old Financial Stability Forum in 2009 with few powers and no formal status, has only recently become a separate legal entity.

Strengthening its powers – to include, for example, the establishment of principles for addressing cross-border legal inconsistencies – could go a long way toward addressing the problems raised by regulatory disparities.

Finally, the FMLC calls for the establishment of a permanent G-20 secretariat to improve continuity and coordination across G-20 presidencies. As it stands, political priorities are constantly in flux, with individual dossiers losing their centrality, and even vanishing, from year to year.

Regulatory uncertainty may not seem like the most exciting topic, which is probably why the FMLC report has attracted so little attention. But, as the 2008 global financial crisis starkly demonstrated, it can render markets dysfunctional, with ambiguity about different regulators’ responsibilities making it difficult, even impossible, to address the problems caused by failing firms. (Former US Treasury Secretary Tim Geithner’s crisis memoir makes that point painfully clear.)

When I chaired the United Kingdom’s regulatory body, the Financial Services Authority, I believed in the idea that lawyers should be on tap, not on top. But they should always be heard. The FMLC’s influential lawyers have spoken. The world should listen.

Project Syndicate

16 | Business Daily

April 17, 2015

Closing OPEC sees higher demand as price drop hits rivals

BlackRock profit rises as money pours into ETFs

OPEC said yesterday demand for its oil this year would be higher than previously thought as its strategy of letting prices fall to hurt other producers begins to take effect. But the monthly report from the Organization of the Petroleum Exporting Countries (OPEC) also confirmed industry estimates of a surge in OPEC production in March, led by higher output in Saudi Arabia and Iraq and a partial recovery in Libyan production, adding to excess supplies. OPEC forecasts demand for its oil would average 29.27 million barrels per day in 2015, up 80,000 bpd from its previous prediction.

The world’s largest money manager reported an 8.7 percent rise in first-quarter profit, boosted by positive flows into its exchange-traded funds. The company’s net income rose to US$822 million, or US$4.84 per share, in the quarter ended March 31 from US$756 million, or US$4.40 per share, a year earlier. On an adjusted basis, BlackRock earned US$4.89 per share, handily beating analysts’ estimate of US$4.52. Net inflows totalled US$68.7 billion as investors poured US$35.48 billion into BlackRock’s ETFs, with the lion’s share going into fixed-income funds.

Assets under management rose to US$4.8 trillion at the end of the quarter.

China to ban water-polluting paper mills, oil refineries Kathy Chen and Dominique Patton

Authorities want to cut agricultural water use by more than 3.7 billion cubic metres by improving irrigation efficiency by 2018

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hina will ban water-polluting paper mills, oil refineries, pesticide producers and other industrial plants by the end of 2016, as it moves to tackle severe pollution of the country’s water supply.

The long-awaited plan comes as the central government steps up its “war on pollution” after years of industrial development that have left one-third of China’s major river basins and 60 percent of its underground water contaminated.

Growing public discontent over the environmental degradation has led to increasing scrutiny of industrial polluters. China’s largest energy company China National Petroleum Corporation last month agreed to pay 100 million yuan (US$16 million) in compensation after it was accused of leaking benzene into the water system in Lanzhou in northwest China.

But experts say much more needs to be done to protect China’s scarce water resources.

“Water is the bottleneck to China’s industrial development. Coal miners and factories located in western regions are suffering from water shortage, and if their discharge of dirty waste water is not treated, the pressure will increase,” said Alex Zhang, president of McWong Environmental Technology, a United States-based water technology company.

The new plan - published by the State Council, China’s cabinet - aims to raise the share of good quality water, ranked at national standard three or above, to more than 70 percent in the seven major river basins, and to more than 93 percent in the urban drinking water supply by 2020.

Impact on water will become a key consideration in future industrial expansion, said the cabinet, adding that it will restrict building of petrochemical and metal smelting

factories along major river basins.

“We will fully consider the capacity of our water resources and environment, and determine city planning, project location, population and industrial output according to water reserves,” it said.

China currently controls water usage by allocating volume permits to each province, and requests for additional water for new projects will be refused in regions already exceeding their allocated quotas, said the cabinet.

China fiscal revenue rises

Robeco waiting to join HK-SHG link scheme

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The government is targeting a cap on overall water consumption at 670 billion cubic metres by 2020, and wants to cut agricultural water use by more than 3.7 billion cubic metres by improving irrigation efficiency by 2018.

Tiered pricing for residential water users will be rolled out nationwide this year to encourage conservation.

Non-residential users will be charged progressive fees for overshooting quotas under a plan to enter into force by 2020.

Reuters

CSR on hunt for robot deals to aid expansion beyond rail

utch asset management firm Robeco said yesterday it expects to secure approval from Luxembourg regulators to participate in a stock connect scheme between Shanghai and Hong Kong as early as the end of this month.

Luxembourg regulators have been approving funds to participate in the scheme only on a case by case basis due to concerns regarding the safekeeping of assets under the scheme.

“We are not able to participate in the Shanghai-Hong Kong stock connect due to regulatory approval. But we expect to have that approval at the end of this month or early next month,” said Victoria Mio, chief investment officer at Robeco.

The asset manager has fully used up its Qualified Foreign Institutional Investor (QFII) quota to enter China’s A-share market and is unlikely to apply for a fresh quota if it is allowed to use the stock connect channel, Mio said.

Robeco Chinese Equities fund, which was launched in 1997, has a fund size of US$1.29 billion.

iscal revenue rose 5.8 percent year on year to reach 1.07 trillion yuan (US$174 billion) in March, the Ministry of Finance announced yesterday.

Although the pace slightly quickened from the 3.2-percent gain seen in January-February, it remained within a low-growth range, said the ministry website.

Last month, the central government collected 390 billion yuan in fiscal revenue, up 3.2 percent year on year, while local governments saw fiscal revenue expand 7.4 percent to 680 billion yuan.

Real estate business tax went down 10.5 percent year on year, and deed tax decreased 28.7 percent to 33.4 billion yuan.

Meanwhile, the national fiscal spending expanded 4.4 percent from a year ago to 1.4 trillion yuan, with spending on transportation up 43.3 percent.

In the face of slowing revenue, the ministry said it will strengthen budget management and activate unused funds to support key social projects.

China plans to raise its budget deficit to 2.3 percent of its gross domestic product (GDP) for 2015, up from last year’s target of 2.1 percent.

hinese train-maker CSR Corp.’s rail technology arm said it’s seeking further foreign deals to accelerate diversification into new industries after completing the acquisition of British sub-sea rover manufacturer SMD. CSR Times Electric, which closed the 130 million pound (US$192 million) purchase of Specialist Machine Developments (SDM) on Wednesday, is targeting the robotics, factory automation and electronics sectors, with the U.K. once again among countries of interest, Chief Executive Officer Li Donglin said.“We have not found a specific target, but we have several scouters who are looking for the relevant information for these areas,” Li said in an interview.

CSR and China CNR Corp. received state approval last week for a merger that will unite China’s top two train-makers as part of a government plan to create industry champions that can better compete in international markets.

Li said the SMD deal delivers technology in an area where China is “very lacking” and will compliment its main high-speed rail capabilities.

Reuters

Xinhua

Bloomberg News

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