Macau business daily, 2015 July 8th

MOP 6.00

Macau: RMB clearing amount jumps 14 pct in H1

Closing editor: Luís Gonçalves

Public consultation on HK-Zhuhai-Macau Bridge commercial development

PAGE 5

PAGE 7

Air Macau reports less passenger occupancy in Q1

Iao Kun loses US$5.51 billion in first half of year PAGE 6

Year IV

Number 830 Wednesday July 8, 2015

Publisher: Paulo A. Azevedo

PAGE 4

Housing Bureau Broadside It’s been up and running only six months. But the Housing Bureau’s new Islands Office has already handled more than 100 complaints and violations. Related to the activities of real estate agencies in Taipa and Coloane. Illegal contracts drafted for clients. The provision of agency activities without an official licence. And not informing the Housing Bureau of business closure. More citizens are speaking up, too, in a realisation of their rights PAGE

2

Pyrrhic Victory American think tank Brookings put the MSAR economy at the top of Asia Pacific. Thanks to employment growth in 2014. GDP contracted 2.4 pct but employment grew 7.6 pct.

Macau led the rankings, in which 8 of the 10 best performing cities were Chinese

%Day

CHINA MENGNIU DAIRY C

+1.94

MTR CORP LTD

+1.61

CATHAY PACIFIC AIRWAYS

+1.35

CLP HOLDINGS LTD

+1.15

AIA GROUP LTD

+1.11

PING AN INSURANCE GRO

-3.89

CHINA MERCHANTS HOLD

-4.90

BELLE INTERNATIONAL HO

-4.98

CHINA RESOURCES LAND

-5.39

HONG KONG EXCHANGES

-5.53

Backyard Bonus PAGE 5

STUDY

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The benchmark stock index. It has lost more than a quarter of its value since peaking on June 12. The Shanghai market fell 1.3 pct yesterday. Macau remains a strong market for the hotel industry. The coming years will be Even as the gov’t rolled out a flurry of telling, says hotelier Josef Dolp. Who puts great faith in the hardware coming measures to reverse the falling trend online. And the 2.3 billion middle-class customers just five hours away

PAGES 8&9

July 7

Source: Bloomberg

PAGE 6

Broken brakes

HSI - Movers

World centre of tourism and leisure takes a knock It doesn’t make good reading for Macau.

Hong Kong Polytechnic University researchers deliver far from good news for the MSAR. Of eight Asian regions studied, Macau rated last in terms of tourist satisfaction. Oz topped the rankings.

The yardsticks were attractions, transportation, hotels, immigration, restaurants and retail shops

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2 | Business Daily

July 8, 2015

Macau Gov’t grants MOP98 mln for tertiary students The government granted a total of MOP98.05 million(US$12.3 million) for the ‘Learning Materials Subsidy Scheme for Tertiary Students’ for academic year 2014/2015. Some 32,686 tertiary students eligible for the financial fund were given MOP3,000 each for purchasing learning materials. Of these students, 16,395 study in Macau, while 15,001 study outside the territory. The scheme regulates that its beneficiaries must be Macau residents studying a tertiary course of no less than two years’ duration either in the SAR or other institutions recognised by local authorities.

Over100 realtor violations in Islands in H1 The Housing Bureau has told a social committee of the Islands that they had handled between 100 and 150 violations by realtors in the Islands between January and June this year, some of which were uncovered by the Bureau through residents’ complaints Kam Leong

kamleong@macaubusinessdaily.com

T

he Housing Bureau’s new Islands Office handled more than 100 complaints and violations related to the activities of real estate agencies in Taipa and Coloane during the first half of this year, the Bureau told the Social Services Advisory Committee of the Islands yesterday.

The deputy convener of the social committee, Sin Chi Young, told reporters following a closeddoor meeting with the Bureau’s representatives that the newly established office of the Bureau had received some 100 complaints from the Islands’ residents about property agencies. Meanwhile, the Bureau itself had also identified between 100 and 150 violations conducted by the agencies during the first six months.

He noted that a number of these complaints and violations overlapped.

According to Mr. Sin, most of the complaints and violations by the property agencies include the contracts that the agencies drafted for their clients, with some agencies providing agent activities without an official licence, and not informing the Housing Bureau following the shutting down of their businesses.

Nevertheless, the deputy convener said the Housing Bureau did not reveal the exact number of violations or complaints.

The Bureau’s new office, which is located in the Lakeside Building in Taipa and was inaugurated in March, is mainly designated for residents living in Taipa and Coloane. The office aims to provide housing management and other services provided by the Housing Bureau. Meanwhile, it also added the supervisory services of real estate agents in April this year.

The Islands’ social committee convener claimed that they are satisfied with the efficiency of the Bureau’s works in supervising property agencies in the Islands. He perceives that the significant number of complaints and violations that the new office recorded meant local residents are now more aware of protecting their own personal rights.

Although the Islands Office of the Housing Bureau also aims to help private residential buildings there to establish their own owners’ management committees, Mr. Sin indicated that the Bureau did not provide to the committee the number of buildings that they have

helped or the number of residential buildings in Taipa and Coloane still without owners’ management committees.

Smoking-control enforcement weakened

Before the closed door meeting, committee member Cheng Son Meng complained in his speech that the strength of the government’s enforcement of the city’s smokingcontrol policy has been largely weakened vis-a-vis the beginning of the implementation four years ago.

“Residents are glad to see that the government has proposed amending the current law controlling smoking in the city, such as expanding the prohibited venues for smoking.

However, I have received complaints from residents who reckon that the supervision and enforcement of the government of the smoking-control policy is not enough although there is a law for them to obey,” Mr. Cheng stated, claiming residents are not satisfied as they often suffer secondhand smoke.

Currently, the Regime of Tobacco Prevention and Control bans smoking inside most public venues, including

the indoor area of all restaurants, bars, nightclubs, saunas and massage parlours while casinos are allowed to maintain smoking lounges on their mass gaming floors. However, Macau’s Executive Council proposed in a bill last Tuesday amending the current smoking control policy, requesting a universal smoking ban on gaming floors including VIP rooms, and the elimination of smoking lounges on mass gaming floors. The bill will be discussed for its first reading in the Legislative Assembly tomorrow.

“Residents could see the results of the smoking control policy at the beginning of its implementation.

However, four years after, the government’s enforcement of the smoking-control policy has been much weakened. As such, the government should review their enforcement and improve their services,” Mr. Cheng said.

“The imperfect supervision of the government of the smokingcontrol policy makes the existence of the law like not existing... I hope the government can improve their enforcement by improving the current law, so that more residents can enjoy a smoking-free environment,” he said, suggesting the government increase the frequency of irregular and nighttime inspections.

Seac Pai Van livelihood facilities need improvement

On the other hand, another member of the Committee, Cristina Ho Hoi Leng, urged the government to improve the auxiliary facilities in the Seac Pai Van Public Housing Group during her speech before the meeting, claiming the current available facilities in the district are not convenient enough for residents, especially the elderly, who are living there.

“The elderly sometimes need to buy medicine in pharmacies themselves after receiving treatment in public medical centres. However, there is no pharmacy at all in Seac Pai Van. Hence, residents there need to go to other communities just to buy medicine,” she said. “In addition, the elderly need to apply for the certificates of ‘being alive’ every year in order to receive their pension from the government. However, there are no such machines for the elderly to apply for the certificates in Seac Pai Van and they thus need to go to other areas for such services, as well.”

Ms. Ho said she just hopes the government allocates more resources to improving livelihood facilities in the area based on the exact demands of residents.

Business Daily | 3

July 8, 2015

Macau

No Satisfaction The Overall Tourist Satisfaction index of the Hong Kong Polytechnic University reveals that in 2014 Macau was the worst tourism destination of the eight cases studied João Santos Filipe

jsfilipe@macaubusinessdaily.com

M

acau was the worst tourism destination in terms of Overall Tourist Satisfaction, according to a study of the School of Hotel and Tourism Management from the Hong Kong Polytechnic University (PolyU).

The territory achieved 69.20 points on a scale ranging from 0 to 100 on the tourist satisfaction index.

Of the eight regions adopting the framework of the Hong Kong Polytechnic University, Macau was the last, almost 11 points behind the leader.

The region to please tourists the most was Australia, which rated a satisfaction score of 79.92 in 2014. Hong Kong was the second best placed region scoring 74.50, while Meizhou scored 74.26 in third place.

The other destinations studied were Zhongshan (73.22), Foshan (72.89),

Shenzhen (72.48) and Guangzhou (72.11). All of them are in Mainland China and managed to satisfy more tourists than Macau.

“Although statistics show that tourists are less satisfied with Hong Kong than they have been, when compared

to destinations adopting the PolyU TSI framework, the city managed to outperform Meizhou, Foshan, Shenzhen, Guangzhou and Macau with the exception of Australia”, the School of Hotel and Tourism Management Associate Dean of the PolyU

and Principal Investigator of the study, Professor Haiyan Song, said of the results.

While Macau and Hong Kong are often complementary regions for tourists, the territory still lags 5.3 points behind the former British colony.

In order to assess the satisfaction of tourists, the study focused on such items as attractions, transportation, hotels, immigration, restaurants and retail shops.

Macau visitors in Hong Kong

While the study primarily focused on the satisfaction of tourists with Hong Kong, it also focused on the preferences of visitors coming from Macau. However, these visitors are part of the group that also includes tourists from Taiwan.

In terms of visits to Hong Kong, tourists from Macau and Taiwan were the second less satisfied with the neighbouring city, scoring 71.25 points on a scale of 0 to 100. Only visitors from Japan and Korea were less satisfied than Macau residents, scoring 66.98 points.

When visiting Hong Kong, Macau residents were more satisfied with immigration services, rated 76.42 points.

The attractions of the city and retail shops were the second and third more satisfying items, scoring 74.02 and 70.02 points, respectively.

Hotels, by contrast, were considered the worse aspect with a score of 66.02 points.

The remaining items of transportation (69.52) and restaurants (69.18) also achieved a score of less than 70 points.

4 | Business Daily

July 8, 2015

Macau opinion

It’s the money…

José I. Duarte Economist

O

ne of the most difficult things when dealing with some subjects is to contest ideas that have become so ingrained that they become a kind of unquestionable truth. Some ideas are like this: they usually look obvious, at least on the surface, and they keep being repeated as unquestionable facts of life.

They provide comfort to both the speaker and the listener, something that all can easily agree on, providing an easy and solid shared ground. Quite often, it also happens, they can be untrue or mostly untrue.

When talking about casino revenues in Macau people will often establish some linkage between them and the number of visitors; or the changes in individual visa policies; or the conditions for transit visa holders - and so on… The last iteration of that linkage was the news about the number of days the transit visas can stay in ‘transit’ in Macau, so to speak. In fact, the relationship between the revenue figures and the number of overall visitors is statistically quite weak. There must be some impact, some relationship? Certainly yes – but figures throughout the years suggest that impact was low. Under the business model that prevailed for most of the last years, the total number of visitors had little bearing on the evolution of revenues. What really mattered was how much money from a few of those gamblers was placed on the tables of, you guessed it, the VIP rooms.

If in doubt – some ideas are so strongly held and repeated that actual data or facts seem impotent to tame them, to put them in their proper proportion – just look at the figures. There is a weak correlation between, say, the monthly rates of change in the total number of visitors and the corresponding rates of change in casino revenues. Break down the visitors in sameday visitors and overnight visitors and the correlation hardly improves. Do the same with the figures for individual visas and you will reach a similar conclusion. If further evidence was required, just watch how the number of visitors kept rising to historical records in 2014 while revenues dropped sharply!

Casino revenues have not been mainly driven by the evolution in the number of visitors. Alternatively, look at the credit or money supply in the Mainland – and the correlation becomes very strong. It was not by chance that the anti-graft campaign and the increased control by the monetary authorities had a noticeable and enduring effect on gambling revenues: they choked the supply of ‘gambling money’ at source.

And yet, hardly a week goes by without someone making a reference to the presumed serious effects of visitor flows, the casinos’ revenue – and, by extension, the regions’ gross domestic product and wealth. That relationship may get stronger in the future if Macau manages to make a transition to a more mass and family market oriented business model. Until then, it’s all (or mostly) about cross-border money flows.

Air Macau reports less passenger occupancy in Q1 Following a tumble in profits and little increase in the passenger load factor last year, Air Macau reports a further decline in seat occupancy for the first quarter of this year Stephanie Lai

sw.lai@macaubusinessdaily.com

C

ity flag carrier Air Macau Co. Ltd., a subsidiary of stateowned Mainland China operator Air China Ltd., saw no boost in the number of passengers and a decline in passenger load factor for the first quarter of this year, according to the latest operating results released

by Air China.

For the January to March period this year, Air Macau carried 511,600 passengers, a year-on-year drop of 0.82 per cent. This number contrasts sharply with the nearly 21 per cent yearly increase in passengers the airline carried in the same period last year.

The passenger load factor of Air Macau in the first quarter has also dropped by 3.98 percentage points year-on-year to 65.2 per cent.

The latest results disclosed by Air Macau's parent does not include the profit figure the airline earned in the first quarter but it noted that Air Macau's 'RPK' (revenue passenger kilometres) - a measure

of sales volume of passenger traffic - amounted to 870.2 million yuan (US$140.4 million), representing a slight drop of 0.03 per cent.

Air Macau has already seen its profit after tax for last year tumble by about half year-on-year to 106 million yuan as the growth of its aviation and transport business slowed in the period. The passenger load factor for the whole of last year has only edged up 0.29 percentage points to 68.2 per cent.

Regional competition

Air Macau's revenue generated from its aviation and transport business grew 3.85 per cent last year to 2.64 billion yuan, a decelerated pace when compared to the 9.27 per cent of growth seen in the previous year, according to Air China's annual results reports filed with the Shanghai Stock Exchange.

In terms of cargo traffic, the city's flag carrier has seen its 'RTK' (revenue tonnes kilometres) reach

92.3 million yuan for the first quarter, almost the same as the same period last year. The airline's 'RTK' is a measure of revenue generated by tonnes of cargo carried multiplied by distance flown.

Air Macau's 'ATK' (available tonnes kilometre) load factor in the first three months this year is also down by 3.78 percentage points yearon-year to 59.7 per cent, according to the latest operating results.

Air Macau, which is 66.9 per cent owned by its parent Air China, flies to over 20 destinations, a majority of which are Mainland Chinese cities.

The airline's chairman, Zheng Yan, told reporters earlier this year that the company's performance in 2014 had been affected by regional competition and pressure on lowering flight fares. Nevertheless, the flag carrier is set to develop more regional routes this year, in particular to Bangkok and Vietnam as well as major cities in South Korea and Japan.

Business Daily | 5

July 8, 2015

Macau

Sheraton Macao boss bullish on Macau market The managing director of the Sheraton Macao believes Macau is still a strong market for the huge number of potential customers arriving from neighbouring territories and Mainland China Stephanie Lai

sw.lai@macaubusinessdaily.com

M

acau remains a strong market for the hotel industry here in the coming years with a huge number of potential customers that can arrive here on short-haul flights, the managing director of Sheraton Macao Hotel and St. Regis Macao Josef Dolp told local Chinese-language newspaper Macao Daily News.

Macau’s inventory of hotel rooms could increase to 40,000 in the coming two years, a figure less than that of Las Vegas but the city’s number of potential customers is fourfold or more than that of the US gambling hub, Mr. Dolp said in an interview with the media outlet published yesterday.

Accounting for the strong market potential of Macau, he said that some 2.3 billion people can arrive here via five-hour short haul flights.

The potential of 300 million

middle-class customers from Mainland China alone already equates to the whole population of the United States, the hotel boss noted.

He conceded, however, that Macau could receive fewer guests this summer, when compared to hotels here having achieved an average occupancy rate of higher than 90 per cent in the same period last year.

Macau has seen weaker average hotel occupancy rates in the past few months this year, with February (80.6 per cent) and March (77.6 per cent) registering double-digit declines of 11.5 per cent and 11.1 per cent year-on-year, respectively, according to data released by the Statistics and Census Service (DSEC).

Family and MICE Josef Dolp, Managing Director of Sheraton Macao Hotel and St. Regis Macao

The decline, however, started narrowing in April and May: the average occupancy rate of hotels

here has been 79.8 per cent in April (down 6 per cent) and 79.3 per cent in May (down 6.7 per cent), the official data shows.

Meanwhile, the city has seen the number of visitors drop 2.7 per cent year-on-year to 12.51 million for the first five months of this year.

While a double-digit decline in hotel occupancy rate has kicked in for some hotels here since the middle of last year against the backdrop of shrinking gaming revenue and Beijing’s ongoing antigraft drive, Sheraton Macao has suffered relatively less impact with only a singledigit drop in the occupancy rate, Mr. Dolp told the newspaper.

Since opening, Sheraton Macao has been positioned to primarily attract family visitors and MICE visitors, the managing director noted. He also believed that the city's recent easing of transit visa restrictions for Mainland Chinese passport holders will be helpful to the tourism industry and hotels here.

Effective July 1, Mainland Chinese who transit via Macau are allowed to stay for up to seven days provided that they can present proof of onward travel to a third destination.

It is a relaxation of the visa rule that Macau authorities introduced on July 1 last year whereby Mainland Chinese travellers transiting Macau were only permitted a five day stay.

irish Macau Chamber rMB clearing amount of Commerce launches jumps 14 pct in H1 mentorship programme

T

he Irish Chamber of Commerce of Hong Kong and its partner the Irish Macau Chamber of Commerce announced a mentorship programme expected to start in September with a six month duration.

‘The aim of the programme is to facilitate and support engagement between the more experienced contacts drawn from the Irish community and ‘Friends of Ireland’ in Hong Kong and Macau,’ the chamber said in a statement, the Irish Times reported.

According to the Dublin-based paper, the programme will run for six months from September to February, using the Irish Executive Mentorship Programme platform supported by the Department of

Foreign Affairs and Trade. The mentors are typically mid to late-career executives and entrepreneurs willing to share their experience and guide early to mid-career counterparts towards accomplishing key professional goals.

The selected mentors will volunteer one to two hours per month, for six months.

The participants will be early to mid-career executives or entrepreneurs aiming to learn from experience and working towards accomplishing meaningful professional goals to achieve greater success in business, The Irish Times said.

They will dedicate at least two hours per month, for six months, preparing for and participating in meetings with the mentor.

T

he total renminbi clearing amount in the city reached 709.7 billion yuan (MOP927.4 billion/ US$115.9 billion) during the first six months of the year, which is a jump of 14.31 per cent compared to the same period last year, said the vice director of the Bank of China Macau Branch (BOC Macau), Wang Jun. The BOC Macau deputy director indicated last week during a meeting on Macau’s renminbi settlement businesses during the first half of 2015 that the city’s total renminbi clearing amount had boosted it to eighth biggest place for renminbi settlement from eleventh in the world.

Mr. Wang perceives that such significant growth in the amount of renminbi settlement in the city reflects that the business in the Chinese currency is getting

more important in the Special Administrative Region.

More than 50 representatives from the city’s Monetary Authority, the Guangzhou Branch and Zhuhai Branch of the People’s Bank of China (PBOC), and local banking sector attended the meeting.

The national central bank PBOC’s Guangzhou Branch said during the meeting that it would speed up the establishment of the new China International Payment system (CIPS) – the cross-border renminbi payment system which aims to make the cross-border clearing business of the Chinese currency more efficient.

In addition, the parties also discussed the globalisation of renminbi business, the development of the renminbi clearing business in Macau, as well as renminbi securities and investment.

K.L.

6 | Business Daily

July 8, 2015

Macau

Macau top performing economy in Asia Pacific American think tank Brookings placed the economy of the territory at the top of the Asia Pacific region because of its employment growth in 2014 João Santos Filipe

jsfilipe@macaubusinessdaily.com

‘Questions remain, however, about the sustainability of Macau’s growth given its singular reliance on gaming and tourism’, they added.

Chinese dominance

T

he Macau economy is the top performing metropolitan area in the Asia Pacific region, according to the Asia Pacific MetroMonitor 2014 study conducted by American think tank Brookings. The Special Administrative Region leads the rankings, in which 8 out of the 10 best performing cities are Chinese.

The territory managed to maintain first place, the same position it achieved in 2013, mainly because of employment growth.

The index of the research takes into account growth in Gross Domestic Product (GDP) per capita and employment.

‘Macau was the top performing metro area in the Asia Pacific region on the combined performance index in 2014, though only because its rapid 7.6 per cent employment growth counterbalanced a decline in GDP per capita of 2.1 per cent’, the think tank reported.

While the territory holds first place, Brookings casts some doubts about the future of the region because of its reliance upon gaming and the decline of revenues from Macau’s casinos.

‘Gaming revenues in Macau tumbled in the latter half of the year but the development of two major

casinos contributed to 49 per cent annual employment growth in the construction sector’, they explained.

HIGHEST PERFORMERS ON ECONOMIC PERFOMANCE INDEX 2014 Rank

Metro (Country)

GDP per Capita

Employment

1

Macau (China)

-2.1%

7.6%

2

Xiamen (China)

9.0%

2.8%

3

Fuzhou (China)

8.2%

2.8%

4

Kunming (China)

8.3%

2.7%

5

Hangzhou (China)

6.7%

3.2%

6

San Jose (USA)

2.4%

4.6%

7

Ningbo (China)

6.5%

2.7%

8

Wenzhou (China)

6.5%

2.6%

9

Chengdu (China)

8.3%

1.8%

10

Ho Chi Minh City (Vietnam)

4.9%

3.2%

Source: Brookings

iao Kun loses us$5.51 bln in first half of year

Corporate

G

‘Family Fun’ and ‘Friends Getaway’ packages at Mandarin Oriental This summer, guests can spend quality time with their family and friends with Mandarin Oriental Macau’s Family Fun and Friends Getaway packages.

Both provide luxury and relaxation in a truly spectacular setting with special savings on a second room. The Family Fun package starts from MOP4,588 and

Chinese cities are the best performing in terms of the economic index. Including Macau, 8 of the 10 highest performers are Chinese; notably, Xiamen (2nd), Fuzhou (3rd), Kunming (4th), Hangzhou (5th), Ningbo (7th), Wenzhou (8th) and Chengdu (9th).

The only two cities in the top ten that are not part of the People’s Republic of China are San Jose (United States), which took 6th place, and Ho Chi Minh

City (Vietnam), occupying 10th position.

The study - conducted by Joseph Parilla and Jesus Leal Trujillo - defined the Asia Pacific metropolitan areas as the ‘engine of global growth’.

According to the results, the 100 largest metropolitan economies in the region together accounted for 20 per cent of global GDP and 29 per cent of global GDP growth in 2014.

Among the findings of the research, it is explained that in the Asia Pacific Region, Chinese metropolitan economies experienced the fastest GDP per capita growth, while North American metro areas registered the fastest employment growth.

Another trend identified in the Asia Pacific region is that metropolitan areas specialising in business, financial and professional services registered the fastest growth in employment during 2014, while the areas specialising in commodities and utilities generated the highest GDP per capita growth.

The 100 metropolitan areas studied include cities from the Pacific coasts of Canada and the United States plus Australia, Chile, Colombia, Japan, Indonesia, and Hong Kong among others.

includes one night’s accommodation in a luxurious suite, one complimentary Deluxe Room and complimentary Internet access at the hotel. The Friends Getaway package starts from MOP3,732 and includes one night’s accommodation in an elegantly appointed Deluxe Room and second Deluxe Room at half price.

aming promoter Iao Kun Group lost US$5.51 billion (MOP44 billion) in rolling chip turnover during the first six months of this year in comparison with the previous year, the company announced yesterday.

While this year Iao Kun registered a turnover of US$3.92 billion (MOP31.3 billion) from January to June, last year it had already cashed in US$9.43 billion (MOP75.3 billion).

This means that rolling chip turnover is down 58 per cent year-on-year.

These results mirror the trend of the VIP market and the decline of gaming volume for VIP baccarat, the main focus of Iao Kun’s rooms in Macau casinos.

While revenue for the first half of the year has not yet been made public by the government, for the first quarter alone revenue from VIP baccarat declined to MOP37.7 billion from MOP65.1 billion, a 42 per cent year-on-year decline.

In June alone, however, revenue

from Iao Kun’s Macau gaming tables declined 60 per cent year-onyear to US$0.54 billion (MOP4.3 billion) from US$1.35 billion (MOP10.8 billion).

While VIP gaming in Macau has been strongly affected by the anticorruption crackdown in Mainland China and the slowdown of the Chinese economy, there is also good news for the industry.

Last month the government announced changes to the transit visit scheme, which will allow Mainlanders to stay in Macau for 7 days whilst in transit in the territory, while before only 5 days were permitted. The changes in the transit visit scheme have been perceived as a positive sign for the industry.

In Macau, Iao Kun controls VIP rooms in StarWorld, Galaxy, Sands Cotai Central, City of Dreams and Le Royal Arc Casino. However, the company, listed in New York, is working to expand its operations to Australia.

J.S.F.

Business Daily | 7

July 8, 2015

Hong Kong seniors still welcome in labour market

I

Public consultation on HK-Zhuhai-Macau Bridge commercial development

T

he Hong Kong Government will launch a public consultation about a commercial development planned on an artificial island to be built as the city’s control point for the Hong KongZhuhai-Macau Bridge.

The Hong Kong Economic Journal reported that the 150-hectare island will be developed into an area for warehouses, showrooms and flagship stores for luxury brands.

The development, with a total planned gross floor area

of 500,000 square metres, will include facilities for retail, food and beverages, entertainment, conferences, offices and business hospitality. The commercial development will have a height limit of 10 stories because of air traffic to and from nearby Hong Kong International Airport.

Security issues will also arise, as some of the facilities in the development will contain luxury goods such as antiques, art works and expensive wines.

The site on the artificial island will create synergy with

the proposed Airport North business area, a spokesman for the Airport Authority Hong Kong was quoted as saying.

The commercial district, north of the airport, will be put up for tender by the end of this year.

Hong Kong Economic Journal reported that the site is expected to be completed much earlier than the artificial island, the development plans for which are undergoing a two-month public consultation and require approval by lawmakers for an additional HK$540 million budget.

t’s a trend that goes against what’s happening in the rest of the world.

A large majority of Hong Kong companies say they’re considering hiring new employees over 60 years old.

According to a Hong Kong Council of Social Service survey, 85 per cent of 330 surveyed firms say they would consider employing staff over 60 years old. The survey reported by The Standard yesterday showed that silverhaired workers remain in demand in the city’s labour market.

Employing older workers will also give companies better skills to deal with its older customers, the survey shows. Two-thirds of respondents (66 per cent) believe having elderly staff would help improve their services to senior citizens.

To The Standard, HSBC Social Enterprise Business Centre senior consultant Howard Ling Ho-wan said, “Businesses welcome the silver- haired. As the elderly interact with other elderly people, they share the same connection . . . Just because they’re old doesn’t mean they’re regarded as cheap labour”.

The poll also showed 77 per cent of respondents vowing to stick to the “same job, same salary” policy. This finding reflects the value of senior citizens, particularly in the retail, hospitality and catering businesses, Ling said. With technological and healthcare advancements, the elderly are now healthier and more active, enabling them to work well into their later years.

The Standard underlines the challenges of Hong Kong’s aging population where a fifth of the total population will be elderly by 2023 or one in five.

However, only 7.4 per cent of citizens older than 60 work.

Ling said businesses should employ more senior citizens amid Hong Kong’s changing demographics.

The survey also covered 723 people over 60 who were interviewed in April and June. Forty-three per cent expressed the hope that more senior workers could join the labour market.

Council director Anthony Wong Kin- wai said the survey shows companies stand to benefit from employing silver- haired workers as the elderly tend to patronise establishments that are friendly to senior citizens.

8 | Business Daily

July 8, 2015

Greater China

Stocks fall again despite support m

Global investors have grown increasingly concerned that a full-blown crash could destab Samuel Shen and Pete Sweeney

C

hinese stocks fell again, taking little comfort from a slew of support measures unleashed by Beijing in recent days, and unnerved

by Chinese Premier Li Keqiang’s failure to mention the market chaos in a statement on the economy.

Before the market opened, Li said in comments posted on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30 percent off Chinese shares since mid-June.

After a brief pause in the slide on Monday, the CSI300 index of the largest listed companies in Shanghai and Shenzhen ended down 1.8 percent yesterday, while the Shanghai Composite Index lost 1.3 percent.

The ChiNext growth board, home to some of China’s giddiest small-cap valuations, fell 5.1 percent.

Qi Yifeng, analyst at consultancy CEBM, said government measures were not strong enough to reverse the downtrend, especially as it was a liquidity issue for many who had borrowed to buy shares and were now forced to sell to meet margin calls.

“It’s just a matter of whether it will fall more slowly, or continue to slump in free fall,” he said.

Exchange data shows the balance of outstanding margin loans has fallen more slowly than the market drop

and that leveraging has consequently increased to a record proportion of the market, creating a vicious cycle of pressure to sell.

Commodities markets are also taking fright at what the slump says about the underlying economy, with prices of copper, coal, natural gas and iron ore falling toward their 2015 lows.

Orchestrated campaign

In an attempt to arrest the sell-off, China has arranged a curb on new share issues and orchestrated brokerages and fund managers to promise to buy at least 120 billion yuan (US$19 billion) of stocks, helped by a state-backed margin finance company, which in turn has a direct liquidity line from the central bank.

The official Shanghai Securities News reported that China’s major insurance firms ploughed tens of billions of yuan into blue-chip exchange-traded funds (ETF) and large caps on Monday.

China Life Insurance Co Ltd bought a net 10 billion yuan in index funds, while China Pacific Insurance Group and other insurers each invested more than 1 billion yuan, the newspaper said.

That helped the indexes rise just over 2 percent on Monday, but the relief was short-lived.

Unlike other major stock markets, which are dominated by professional

KEY POINTS CSI300 AND SHANGHAI COMPOSITE INDEX CLOSE DOWN 1.3-1.8 PCT CHINEXT SMALL-CAP GROWTH BOARD ENDS DOWN 5.1 PERCENT PREMIER LI MAKES NO MENTION OF STOCK CHAOS IN STATEMENT ANOTHER 200 COMPANIES SEEK TRADING SUSPENSION -REPORT BIG 5 BANKS UP ON TARGETED BUYING, UP NEAR 10 PCT LIMIT money managers, retail investors account for around 85 percent of China trade, which exacerbates volatility.

“Where is the promised 120 billion yuan?” asked one retail investor from Hangzhou, who gave his surname as Liu. “It’s all going to blue chips. Don’t they know that retail investors are all trapped in the small caps? My stocks opened up 10 percent but closed down the (10 percent) limit!”

Blue chips fared best as a result of the targeted buying, especially the big five banks; Industrial and

A stock investor checks stock Component Index on a

Taiwan’s export slump darkens outlook for tech demand Taiwan and its export trend is a key gauge of global demand for technology gadgets worldwide Jeanny Kao and J.R. Wu

T

aiwan’s exports shrank the most in more than two years in June as demand for its signature

technology goods and from China fell sharply, threatening to erode the island’s economic outlook.

The bigger-than-expected slump was the fifth straight month of decline with shipments dropping to its

key markets in the United States, Europe and China.

Exports in June fell 13.9 percent from a year earlier, the worst fall since February 2013 when they slid 15.8 percent, and more than double the 6.0 percent decline projected by a Reuters poll.

Annual exports to the United States and Europe posted nearly double-digit contractions last month, while shipments to China fell 17 percent from a year earlier, the Ministry of Finance said on Tuesday.

Due to near record levels posted in the value of exports in July and August last year, positive on-year growth would not be possible this month nor next, said Yeh MaanTzwu, chief of the ministry’s statistics department.

However, she estimated that while July exports will fall, the decline will narrow from June’s level. And as

the peak season gets under way in the second half of the year, export growth could turn positive in September, Yeh told a news conference.

In June, exports of parts and devices used in tech and mobile gadgets tumbled as outbound electronic goods fell 10.8 percent from a year earlier and those for information communication goods dropped by a bigger 31.4 percent.

JihSun Securities economist Junwen Ku pointed to a poor performance at Taiwanese smartphone maker HTC Corp as dragging on smartphone exports.

HTC on Monday said it posted a net loss of T$8.03 billion (US$260 million) in the second quarter, which came as expected after the firm issued a loss warning in early June when it cut its second quarter revenue outlook by almost 30 percent.

Ku said that Taiwan’s central bank will likely delay any rate increase until early 2016 to ensure the tradedependent economy can cope with any persistent weakness in exports.

The grim data came after South Korea last week reported its exports declined for a sixth straight month in June.

Taiwan’s manufacturing activity in June, as measured by the Nikkei/Markit PMI, also saw new orders and new export orders fall at accelerated rates.

Reuters

Business Daily | 9

July 8, 2015

Greater China

measures

bilise the world’s second-biggest economy

Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China and Bank of Communications were all up almost by the 10 percent limit.

Ducking out

Traders are increasingly nervous about the unusually large number of Chinese companies asking for their shares to be suspended from trading, fearing that many of them are looking for excuses to duck out of the turmoil.

About a quarter of the roughly 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Monday, and yesterday the Securities Times said another 200 announced a suspension.

The plunge in China’s previously booming stock markets, which had more than doubled in the year to midJune, is a major headache for President Xi Jinping and China’s top leaders, who are already struggling to avert a sharper economic slowdown.

Beijing’s interventionist response has also raised questions about its ability to enact the market liberalisation steps that are a centrepiece of its economic reform agenda.

A surprise interest-rate cut by the central bank at the end of June, relaxations in margin trading and other “stability measures” did little to calm investors.

Underlining scepticism beyond mainland China about the sustainability of the new measures, Hong Kong listed shares of Chinese brokerages plunged on Monday.

In addition, 28 companies suspended their previously approved IPO plans.

Lei Mao, assistant professor of finance at Warwick Business School, said measures to support the market distorted the allocation of funds and trading behaviour and could create the conditions for further sharp falls.

a screen at a brokerage house in Beijing

Reuters

Mainland steel prices lowest in over 20 years China’s appetite for steel is expected to take a further hit as construction eases over the summer

C

hinese steel prices are at their lowest in more than 20 years as demand in the world’s top producer wanes, industry data shows, and some analysts say the free-fall is not even close to an end, threatening the survival of small steelmakers.

A composite price index of eight steel products compiled by the China Iron & Steel Association (CISA) fell to 65.28 points last Friday. The index is based on 1994 reference prices, meaning that prices are now nearly 35 percent lower than they were 21 years ago.

While the association did not begin compiling regular data until 2001, current prices are already believed to be lower than 1999, when the industry was hit by the Asian financial crisis.

Last year, when the index fell to 95, CISA secretary general Liu Zhenjiang said it was already at its lowest ever.

The stuttering Chinese economy is hitting demand for a range of commodities including iron ore, steel and copper.

“The biggest problem is poor demand. The worst winter is yet to come and some small steel mills have already shut down, which could become permanent as cash flow will remain a big issue,” said an official at a state-owned steel mill.

The price slide has meant local steel mills have failed to benefit from the rapid decline in iron ore, which remains about a third higher than two decades ago, and the sector is also

Yuan clearing deal with South African central bank China’s central bank has signed an agreement with the South African central bank to clear yuan transactions in the country, the People’s Bank of China said in a statement yesterday. The agreement with the South African Reserve Bank will support bilateral trade and investment between the two countries, the Chinese central bank said.

Premier Li says Beijing has ability to deal with risks Chinese Premier Li Keqiang said that China had the confidence and ability to deal with the risks and challenges faced by its economy, according to a statement on the central government’s website. Major economic indicators have stabilised and positive signs are emerging in the world’s second-largest economy, Li said, adding that China’s performance in the first half of the year had been reasonable. No mention was made of China’s stock market despite an extraordinary weekend of policy moves to stabilise shares. The stock market has slumped 30 percent since June.

Xinjiang sells 5.8 bln yuan bonds Uygur Autonomous Region sold 5.8 billion yuan (UD$934.1 million) of general obligation and special purpose bonds through private placements, China’s main bond clearinghouse website said.

The issue is part of China’s on-going swap of high-interest, mostly off-balance sheet outstanding local government debt, for official municipal bonds with lower yields. On May 15, the Finance Ministry announced that heavily-indebted provinces could issue bonds through private placements, in addition to open auctions. Xinjiang’s issue included 4.8 billion yuan of general bonds and 1.0 billion yuan of special purpose bonds, the clearinghouse said in a statement.

Futures Exchange to curb excessive trading

struggling with surging environmental compliance costs.

China’s appetite for steel is expected to take a further hit as construction eases over the summer, forcing mills to cut production. January-May output fell nearly 2 percent from a year before, with consumption dropping 5 percent, CISA data showed.

The most traded October rebar futures on the Shanghai Futures Exchange hit 1,948 yuan a tonne - the lowest since the contract’s launch in 2009 after losing 27 percent this year.

Spot rebar in Shanghai has tumbled to 1,930 yuan, 60 percent lower the 4,890 yuan peak in August 2011, Mysteel data showed.

China’s recent stock market turmoil is now threatening to pull the entire commodity complex into the red.

The majority of Chinese steel mills are still reluctant to cut production in order to maintain cash flow and bank credit.

“This is the end game for mills.

Whoever survives the current crisis could survive permanently, while those who can’t will exit the market for good,” said Cheng Xubao, an analyst at industry consultancy Custeel.com based in Beijing.

Reuters

China Financial Futures Exchange said it would limit daily trading in the CSI 500 index futures, and would also strengthen supervision over the use of index futures in hedging to calm the volatile market. Daily bets on the CSI 500 index futures, which tracks the CSI 500 index of China’s small cap firms, will be limited to 1,200 contracts, based on one side of the transaction, the exchange said in a statement. The exchange will also check if hedging positions match those in the spot market.

New free trade zones attracting investors Newly-established free trade zones (FTZs) in Guangdong, Tianjin and Fujian have shown promise in attracting overseas investment, the commerce ministry said yesterday. At the end of May, over a month after their establishment, the three zones had received a combined 22.6 billion yuan (about US$3.7 billion) in contracted overseas investment, Ministry of Commerce spokesman Shen Danyang told a press conference. The Guangdong, Tianjin and Fujian FTZ attracted 7.8 billion yuan, 11.7 billion yuan and 3.2 billion yuan, accounting for 45.3 percent, 69.4 percent and 53.6 percent of the total in their respective regions, Shen said.

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Asia

Pacific trade deal may be near The U.S. is pushing Japan to open up its long-protected agricultural market for beef, pork, dairy and rice products Carter Dougherty

Trans-Pacific Partnership would wrap together countries representing about 40 percent of the world’s economic output A recent meeting of several TPP leaders

T

op officials from 12 Pacific nations negotiating a freetrade pact plan to convene in Hawaii at the end of this month for a final push, according to two people briefed on the plans, an indication they may be nearing a deal.

The U.S. Congress last month expanded negotiating authority for President Barack Obama, setting up a potentially deal- clinching meeting of trade officials. The negotiators are tentatively planning to meet on the island of Maui, at the Westin Resort & Spa, according to one person briefed on the plans.

The Trans-Pacific Partnership would wrap together countries from the U.S. to Japan to Malaysia, representing about 40 percent of the world’s economic output.

Gary Hufbauer, a senior fellow at the Institute of International Economics, said the planned high-level negotiating session suggests officials from most or all the countries believe an agreement is within reach now that Congress approved the negotiating authority Obama sought.

Even so, trade negotiations often involve delays and the trade ministers may need to involve their heads of state

to close the final deal later this year, Hufbauer said.

“I think a deal is close but end July seems optimistic,” Hufbauer said. “The end of August seems more likely.”

Trevor Kincaid, a spokesman for Michael Froman, the U.S. Trade Representative, declined to comment.

Confidential draft

The agreement, now a confidential draft, includes 29 chapters ranging from trade in traditional goods to rules on the free flow of data -- aimed at preventing trade barriers to Internet-based commerce -- and rules on intellectual property.

Some of the thorniest issues remain traditional ones. The U.S. is pushing Japan to open up its long-protected agricultural market for beef, pork, dairy and rice products. Japan, in turn, is seeking the end of U.S. tariffs on cars and trucks for its auto industry.

Acting Deputy U.S. Trade Representative Wendy Cutler will travel to Japan this week to work on the U.S-Japan part of the overall agreement, according to one of the people briefed on the talks. It would not take effect unless the entire Pacific deal is definitively concluded.

Bloomberg News

red tape poisons indonesian stocks The big infrastructure projects promised by President Joko Widodo to jumpstart Southeast Asia’s largest economy failed to materialise, delayed by bureaucratic hurdles Nichola Saminather and Fransiska Nangoy

I

nvestors hoping that Indonesian company profits would turn around in the second half of the year are now bracing for disappointment, boding ill for a stock market that is already the worst performer in Asia.

Jakarta’s main stock index slumped 11 percent over the second quarter, the biggest three-month drop since late 2008.

President of Indonesia Joko Widodo

Since the first-quarter earnings season in April, sectors such as cement, heavy equipment and utilities have borne the brunt of downward revisions in earnings projections by analysts. The Jakarta sub-share index for basic industry is the worst performer so far this year, down 21 percent.

Higher production costs - stoked by inflation and a weaker rupiah - combined with

softer consumer demand in a sluggish economy dimmed the outlook for Indonesian companies. Profit growth estimates for 2015 have more than halved to average 4.9 percent since the end of last year, according to a Citi report.

“We’re not as optimistic as before,” said Winston Sual, president director of PT Panin Asset Management in Jakarta, which manages about 13 trillion rupiah (US$975 million) of assets. “Hopefully things will improve, but our expectation now is much lower than our expectation at the beginning of the year.”

So far, analysts have downgraded their earningsper-share forecasts by 11 percent, compared with 36 percent in 2009 and 23 percent in 2013, both periods of economic weakness, according to a report in June

by Morgan Stanley, which expects further cuts.

Share valuations in the market have fallen to 14 times earnings from a peak

of about 15.2 times at the end of 2014. While shares are cheaper, “the market will demand a bigger discount, given the downturn and the uncertainty,” said Singaporebased Ashish Goyal, head of emerging market equities at NN Investment Partners, formerly ING Investment Management.

Brokerage Mandiri Sekuritas last month cut its Indonesia rating to underweight from neutral, and its 2015 target for the Jakarta Composite Index to 4,500 from 5,450. The index is now at 4,915. CLSA reduced its 2015 target to 4,800 from 5,400.

Consumer sentiment

The first-quarter earnings reports coincided with data showing Indonesia’s economy grew at its slowest pace in six years in January-to-March.

Consumer optimism, already weakened, has worsened since. Consumers are less confident about jobs

and income for the next six months, a Bank Indonesia consumer survey in June shows.

Domestic demand accounts for half of gross domestic product.

“The impact of slowing domestic demand is very much felt,” said Jakarta-based Ade Sudrajat, chairman of Indonesia’s textile association.

“Our products are piling up in warehouses. Buying power is just not there.”

Andrew Gillan, head of Asia ex-Japan equities at Henderson Global in Singapore, also warned about companies with significant dollar debt. The rupiah has fallen 8 percent against the dollar this year.

Josh Crabb, Hong Kongbased head of Asian equities at Old Mutual Global Investors, sees the share price declines as buying opportunities.

“Infrastructure spend is still needed, and as they sort things out, that will happen,” he said.

Reuters

Business Daily | 11

July 8, 2015

Asia Former iMF economist named Thai central bank governor Veerathai Santiprabhob, the new central bank governor, was formerly an executive at the Stock Exchange of Thailand and Siam Commercial Bank Orathai Sriring and Pracha Hariraksapitak

T

hailand’s military-led government yesterday selected Veerathai Santiprabhob, a former International Monetary Fund economist, to be the governor of the Bank of Thailand for five years, starting October 1.

He will replace Prasarn Trairatvorakul, who ends his tenure at the end of September. Veerahai, a 45-year-old economics Ph.D. from Harvard University, last month emerged as the front-runner to lead the central bank, which oversees monetary policy.

The new chief will face the tough task of helping boost Southeast Asia’s second-largest economy, which is still stumbling a year after the army seized power to end political unrest.

Veerathai is currently a member of a “super board” appointed by the junta to oversee state firms and one of four outside experts on the central bank’s seven-member Monetary Policy Committee.

Yesterday, the cabinet endorsed Finance Minister Sommai Phasee’s choice of Veerathai. The other shortlisted candidate was Supavud Saicheua, managing director of Phatra Securities.

Reaction to Veerathai’s approval was positive.

“He is capable and has experience from working with the IMF. He should have a good relationship with other countries,” said strategist Kiatkong Decho of CIMB (Thailand) Veerathai was formerly an executive at the Stock Exchange of Thailand and Siam Commercial Bank. During the Asian financial crisis, he worked with the Finance Ministry’s policy research institute.

Cooperation seen

Sommai said earlier the new governor “must be a person who can withstand political friction”, a nod to the political strife faced by some previous governors.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said Veerathai’s appointment “should facilitate coherent economic policies between the government and the central bank, which is important during these challenging times”.

Charnon Boonnuch, an economist from Tisco Securities, said he expects “no big changes” at the central bank, as its policy is not set by an individual.

“I think he will be neutral but

KEY POINTS VEERATHAI SANTIPRABHOB TO REPLACE PRASARN TRIRATVORAKUL NEW GOVERNOR TO FACE STILL-STUMBLING ECONOMY CHOICE SHOULD MEAN ‘COHERENT’ ECONOMIC POLICIES - ECONOMIST leaning towards a dovish stance” as the economy is stagnating, he said.

The Monetary Policy Committee left the benchmark interest rate steady at 1.50 percent in June after two surprise consecutive cuts to try to lift an economy suffering from weak exports and domestic demand… It next reviews policy on August 5.

The economy grew only 0.9 percent last year, with political crisis bringing it to the brink of recession in the first half.

The central bank recently cut its 2015 economic growth forecast to 3.0 percent from 3.8 percent.

Reuters

S.Korean finance minister says 2015 growth hurt by Mers

Masatsugu Asakawa becomes Japan’s top financial diplomat Japan’s Ministry of Finance said international policy veteran Masatsugu Asakawa will become the country’s top financial diplomat, whose tasks include coordinating with other nations and the IMF as well as arranging currency interventions. Asakawa’s broad network with policymakers both inside and outside Japan puts him in an ideal position to coordinate with the Bank of Japan and other nations at a time when the Greek debt crisis threatens to ripple through the world economy. The appointment of Asakawa yesterday also comes as concerns have grown that a further rapid depreciation in the yen could damage Japanese households.

Hedge fund Elliott to appeal S.Korea decision on Samsung

U.S. activist hedge fund Elliott Associates said yesterday that it plans to appeal a South Korean court’s rejection of its request for an injunction blocking Samsung C&T Corp’s sale of treasury shares to ally KCC Corp. Elliott, Samsung C&T’s third-largest shareholder with a 7.1 percent sake, has been trying to block an US$8 billion all-stock takeover offer for C&T from Samsung Group sister firm Cheil Industries Inc, saying the bid undervalues C&T. With a total stake of around 6 percent, KCC will back the offer from Cheil.

Australian state could He added that low global growth had added to South Korea’s change mining rules Australian state of New South list of economic woes and that the public should acknowledge The Wales has proposed changing its mining approval process to give greater conthat periods of high growth were unlikely to recur

sideration to environmental concerns, potentially threatening a colliery expansion planned by mining giant Rio Tinto Ltd. The state’s planning minister, Rob Stokes, said in a statement yesterday that he wanted to alter the mining approval policy in the country’s biggest state to reflect “careful deliberation of environmental, economic and social issues”, shifting away from prioritising the extraction of resources. The proposed change could affect Rio’s planned expansion of it Mount Thorley Warkworth coal mine

S

outh Korea’s finance minister said yesterday growth this year would have been better had it not been for an outbreak of the deadly Middle East Respiratory Syndrome (MERS) in late May that hurt consumer and business sentiment.

“What’s been unfortunate is that if it hadn’t been for MERS, growth this year would have been better than last year’s 3.3 percent and even better than the country’s potential growth rate,” Finance Minister Choi Kyung-hwan told reporters.

Choi added that low global growth had added to South Korea’s list of economic woes and the public should acknowledge that periods of high growth, as in the past, were unlikely to occur again.

The government was now targeting 3.1 percent growth this year after the MERS outbreak, which it believes will be achieved in part by an 11.8 trillion won ($10.44 billion) supplementary budget it handed to parliament this week.

The finance minister also said tax revenue for this year has been “pretty good” as of now, when asked about the government’s fiscal soundness.

Choi noted that the current Greek

Noble Group launches external probe

South Korean Finance Minister Choi Kyung-hwan

debt crisis would have a limited impact on the economy as South Korea has little direct market exposure. The government and central bank said on Monday they were, however, keeping close tabs on developments there and any effects it may have on global financial markets.

Asked if he might return to the ruling Saenuri party, where he served as a multi-term lawmaker before being appointed as finance minister last year, Choi denied he had plans to give up his current post anytime soon.

Reuters

Singapore-listed Noble Group Ltd said yesterday it had hired external auditors to review the way it values its contracts after a research firm alleged Asia’s biggest commodities trader was inflating its assets through aggressive accounting.

Noble’s shares have fallen by as much as 48 percent since Iceberg Research issued its first report attacking the company’s fair value, mark-to-market (MTM) accounting methods and lack of transparency. Noble has rejected the allegations and started legal action in Hong Kong against a former employee it had fired in 2013.

12 | Business Daily

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Asia

Inflation priority makes India prepare to mop up liquidity The Reserve Bank of India has targeted 6 percent inflation

by January and 4 percent by March 2018 Suvashree Choudhury and Neha Dasgupta

Hesitant banks

Consumer inflation rose to 5.01 percent in May fom 4.87 percent in April

T

he Reserve Bank of India aims to drain money markets of excess liquidity to counter inflationary pressures arising from higher government spending, according to policymakers, though it could hamper chances of banks lowering lending rates.

Commercial bankers say it would be easier to reduce lending rates, as the RBI has urged them to do, if surplus

and give the funds back to the RBI, it should not be a problem,” he said.

The policymaker did not rule out the RBI selling bonds through open market operations if a longer-lasting approach was needed. The last time the RBI sold bonds on the open market was in December.

Another official aware of the developments concurred with those views.

liquidity prevailed for some months.

The liquidity surplus - now around 350 billion rupees - has dragged the average call money rate down to close to 7 percent this month. Some analysts expect it to reach 300 billion to 500 billion rupees (US$4.7 billion to US$7.88 billion) by August.

A senior policymaker aware of central bank’s thinking, who requested anonymity, said the RBI wanted to

nudge the call rate up to nearer the 7.25 percent policy repo rate.

“Overall the overnight rate has to be in alignment with the monetary policy stance,” he told Reuters late on Friday.

The policymaker said the RBI would stick with its current approach of draining excess cash largely through variable reverse repos.

“As long as the market is able to come

The RBI has lowered its policy rate by a total 75 basis points with three cuts this year, hoping that banks would do more to pass on the benefits to the broader economy. But banks say tight liquidity had stayed their hand earlier, and want liquidity to remain ample before making further moves.

“The longer this cash surplus stays, the greater will be our confidence to bring down long-term deposit and lending rates,” said a senior official at a large state-run bank.

RBI Governor Raghuram Rajan said in April that hopes of a sustained surplus were “just nuts”, given the inflation outlook.

Consumer inflation rose to 5.01 percent in May fom 4.87 percent in April.

The RBI’s priority is meeting those targets, and a seasonal surge in government spending - expected to total $45 billion in the September quarter along with the RBI’s annual dividend payout to the government of around $8 billion at least - will add to inflationary pressures unless cash is drained.

“If rates fall below where they are intended then that will hinder RBI’s inflation target,” said A. Prasanna, economist at ICICI Securities Primary Dealership, who expects cash conditions to remain broadly in surplus until September.

“It will have to use instruments other than reverse repo if the surplus liquidity persists,” he said.

Reuters

Bangladesh exports record slowest growth in 13 years A slowdown in the key Western markets such as Europe and a weak euro and Russian ruble also put a cap on export growth

B

angladesh’s exports in the fiscal year ended in June rose 3.35 percent from a year earlier, but that was the slowest growth since 2002 and pivotal garment sales, while higher, missed their target.

The Export Promotion Bureau said yesterday total exports in the 12 months ended June 30 were US$31.2 billion, or 6 percent below the target of US$33.2 billion. The annual percentage gain was the smallest since 2002.

Readymade garments, comprising knitwear and woven items, earned US$25.5 billion in July-June, up 4.5 percent from a year earlier, the bureau

A garment factory in Bangladesh

said. That was about US$1 billion below the target.

Garments are a key foreign-exchange earner for the South Asian nation, whose low wages and duty-free access to Western markets have helped make it the world’s second largest apparel exporter after China.

But the industry, which supplies many Western brands such as Wal-Mart, Tesco and H&M, has faced pressure after a string of fatal factory accidents, including a 2013 building collapse that killed more than 1,130 people.

Some exporters blamed the failure to meet the year’s tar-

get on political turmoil early in 2015 that left dead more than 120 people dead, most from petrol bombs attacks on vehicles. However, political unrest eased in April.

A slowdown in the key Western markets such as Europe and a weak euro and Russian ruble also put a cap on export growth.

The government aims to achieve economic growth of 7 percent in the current fiscal year, an increase of nearly 1 percent from the average of the last decade, on the back of rising exports and remittances from millions of citizens working overseas.

Reuters

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Business Daily | 13

July 8, 2015

Asia

Reserve Bank of Australia holds rates steady

Malaysian PM graft probe extends to six banks

The central bank has already eased twice this year Wayne Cole

A

ustralia’s central bank held interest rates at record lows yesterday as sliding commodity prices, a still-high currency and mounting economic uncertainty in China argue for continued stimulus, and even the chance of more cuts.

The Reserve Bank of Australia (RBA) underlined the need for a lower currency after its monthly policy meeting, even though it had only just hit a six-year trough on the U.S. dollar.

“Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices,” said RBA Governor Glenn Stevens.

On the outlook for policy, a typically guarded Stevens repeated that coming data would “inform” the bank’s assessment of whether the current level of rates was most effective.

He also declined to go into detail on the implications of economic ructions in Greece and China, saying only that they had not yet had much impact on sovereign borrowing costs.

The decision was well flagged as a Reuters poll of 22 analysts had found all expected rates to remain at 2 percent, though six looked for another easing by Christmas.

Interbank futures imply a 50

percent probability of a move by October, rising to 80 percent in December.

The central bank has already eased twice this year as the unwinding of a once-in-a-century mining boom carves a gaping hole out of business spending and national income.

Lately, data have suggested mining spending is falling even faster than first thought, while industry confidence has been sapped by a sharp retreat in prices for key resource exports, notably iron ore.

Watching jobs

Adding to the unwelcome mix has been a tumble in Chinese shares which risks dampening consumer confidence in Australia’s largest export market.

All of which adds to the case for a lower currency. The Aussie dollar did finally break down to a six-year low of US$0.7533 this week and could well be heading to US$0.7300, according to a Reuters poll of 55 analysts.

Still, the background is not all dark. The hundreds of billions lavished on mining is driving a sustained increase in export volumes, underpinning growth even as prices fall.

Super-low mortgage rates have lit a fire in the housing market where approvals to build new homes

KEY POINTS RBA LEAVES RATES AT 2 PCT AS EXPECTED FOLLOWING MAY CUT CALLS FOR FURTHER DECLINE IN A$ AS IT NEARS 6-YEAR LOWS CIRCUMSPECT ON IMPLICATIONS OF CHINA, GREECE TROUBLES are running at all-time highs and national prices are growing 10 percent annually.

Government tax breaks for small business announced in May were well received and helped boost new vehicle sales to a record peak in June.

Perhaps most encouragingly, the labour market has surprised with its strength and pushed the jobless rate down to a one-year low of 6.0 percent in May. Annual employment growth of 2.0 percent almost matches that of the United States.

The June jobs report is due on Thursday and confirmation of the improving trend would likely go some way to easing the central bank’s concerns over the economy.

Reuters

economists say Bank of Korea to hold rates

A task force investigating Malaysia’s troubled state investment fund 1MDB said yesterday it had frozen half a dozen bank accounts following a media report that nearly US$700 million had been transferred to an account of Prime Minister Najib Razak. The Wall Street Journal (WSJ) reported last week that investigators probing the debt-laden 1MDB had traced nearly US$700 million to bank accounts they believed belonged to the prime minister. Reuters could not independently verify the WSJ report.

Najib has denied taking any money from 1MDB or any other entity for personal gain, and is considering legal action.

Indonesia govt says no more tax this year Indonesia’s government will not introduce new taxes or raise existing ones this year in order to achieve its revenue collection target, a finance ministry official said yesterday, raising prospects of a wider fiscal deficit unless spending is cut.

President Joko Widodo’s administration is banking on a 30 percent improvement in revenue collection to help pay for a long list of infrastructure. But in the first half of this year, the government collected only 37 percent of its full year tax revenue target of 1,489.3 trillion rupiah ($112.10 billion), according to the finance ministry.

NZ concerned about foreign land purchases The New Zealand government yesterday approved a new national strategy to attract foreign investment but opposition lawmakers said it would just see more of the country’s valuable farmland sold into foreign ownership. Economic Development Minister Steven Joyce said the New Zealand Investment Attraction Strategy, to be led by senior officials from five government agencies, set out a common set of priorities, goals and key actions for government agencies to work with the private sector on investment attraction activities.

Back-to-back cuts by the Bank of Korea have been extremely Vietnam central rare since it started setting rates in May 1999 and have taken bank takes over place only in times of dire economic situations troubled lender

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outh Korea’s central bank is expected to keep interest rates on hold in July after it cut them to a record low the previous month, and the full-year growth forecast could see a modest downgrade, a Reuters poll found yesterday.

All 28 economists surveyed said the Bank of Korea (BOK) would keep the base rate at 1.50 percent at its policy meeting on July 9.

Of the 27 respondents who offered forecasts for the central bank’s future moves, only four said another interest rate cut was likely. Another four projected a hike while the remainder forecast no change until year-end and for some, through 2016.

“MERS has quieted down and the fall in exports has eased a bit so the BOK will hold this week. It will also want to observe the effects of the June rate cut and the government’s supplementary budget,” said Lee Jae-hyung, a fixed-income analyst at Yuanta Korea.

An outbreak of Middle East Respiratory Syndrome (MERS) that started in late May prompted the central bank to cut rates in a pre-emptive move in June while the government unveiled an 11.8 trillion

won (US$10.5 billion) supplementary budget to stem the economic fallout of the outbreak.

The outbreak has since been largely reined in but not before wounding consumer and business sentiment, which were dragged down to multi-year lows last month as South Koreans avoided outdoor activities over fear of contracting the virus.

The central bank is likely to downgrade its projection for economic growth this year, the same poll showed, with 21 of 24 economists expecting a modest revision.

Bank of Korea headquarters in Seoul

Twenty-one of 24 analysts in the Reuters poll who gave an opinion on the forecast expect a downgrade while the remainder said the outlook would be unchanged.

Lee Chang-seon, a senior researcher at LG Economic Research Institute, said the forecast would likely be just below 3 percent.

“The supplementary budget is not huge in size and because the economy was suffering even before MERS, it’s uncertain that recent measures taken will be able to make 3-percent growth possible,” said Lee. Reuters

Central bank said yesterday it would take over all shares in troubled lender Global Petro Bank because of its failure to restructure, making the third such move this year to consolidate the country’s fragmented banking sector. The State Bank of Vietnam (SBV) would nationalise Global Petro Bank (GP.Bank) because it had exhibited serious risks and management weakness and had failed to find a partner, or devise a feasible reform plan in the past three years, the SBV a statement. VietinBank, Vietnam’s second biggest partly private lender by assets, has been appointed to join the management of GP.Bank.

Myanmar gems emporium drops Myanmar’s 13-day gems emporium fetched 949 million euros (US$1.262 billion) from sale of gem and jade lots at its closure on Monday evening, down from 3. 4 billion US$ record sale in the annual event in 2014, according to the emporium sources yesterday. Held from June 24 to July 6 in Nay Pyi Taw, the 52nd annual Myanmar gems emporium earned from sale of 126 gem lots and over 1, 000 jade lots through open tender and competitive bidding system. The event attracted a total of 4,596 foreign and local gems traders.

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July 8, 2015

International Mexico imports gasoline as thefts cause shortages Mexico is importing 75,000 extra barrels of gasoline per day in an “unprecedented” move to mitigate shortages in several states caused by illegal pipeline taps, authorities said. An official at the state-run energy firm Pemex said the “extraordinary measures” were needed to supply service stations in several cities. A Pemex spokesman told AFP that the imports from the United States, which began last week, are on top of 400,000 barrels of gasoline that Mexico normally receives from around the world. The special import will likely be cut by half as production at refineries increases.

Buffett donates record US$2.84 bln Warren Buffett donated about US$2.84 billion of Berkshire Hathaway Inc stock to the Bill and Melinda Gates Foundation and four family charities, as part of the billionaire’s plan to give away nearly all of his wealth.

The 10th annual donation, Buffett’s largest, comprised 20.64 million Class “B” shares of Berkshire, and increased Buffett’s total contributions to the charities to more than US$21.5 billion. The Gates Foundation, which focuses on improving education and health and reducing poverty, received about 15.76 million shares, or 76 percent of the total donated.

U.S. banks post detailed crisis plans Some banks showed which parts of their business could be disposed of through public stock offerings from businesses that would be sold privately should a crisis hit Douwe Miedema

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dozen of the largest Wall Street banks published detailed plans to show how they would shut down their business during a crisis without the help of taxpayer money, a crucial step to prevent being broken up by regulators.

After the 2007-09 financial crisis, the banks were required to submit so-called “living wills” each year to show how they would proceed through bankruptcy during a crisis without quietly relying on government support to avoid putting the entire financial system at risk.

But the Federal Reserve and the Federal Deposit Insurance Corporation last year said they were unhappy with the quality of the plans and urged banks to improve them by giving more details and using more realistic assumptions, or face tough

sanctions including being broken up.

The 2010 Dodd-Frank Act gave the regulators the power to carve up the banks if they deem the living wills “not credible,” though that is only the starting point of a lengthy procedure giving banks several chances to improve.

Last year there was no such joint determination because while the FDIC did use the term, the Fed did not. It is not clear when the regulators will issue their verdict on this year’s round of submissions, the fourth.

Banks say the refilled plans, the third time they’ve been revised, show they have massively improved their resilience to withstand shocks, bulking up on shareholder capital to shield creditors, and earmarking certain bonds as susceptible to losses in return for a higher yield.

Ex-Im Bank loss: a competitive disadvantage for Boeing Loss of Export-Import Bank financing would put Boeing Co at a “huge competitive disadvantage” since its rivals continue to have access to such financing support, the head of the company’s commercial aircraft division told reporters. Ray Conner, president of Boeing Commercial Airplanes, said Boeing was seeking to reassure its customers that the U.S. Congress would soon reauthorize the bank’s charter, but said the fact that it had lapsed had created some doubt. “We absolutely need Ex-Im Bank to compete on a level playing field,” Conner said.

Citigroup said that after stabilizing its banking operations, it would offer its U.S. consumer banking operations for sale in an IPO

Reuters

Ivory Coast signs rail concession deal Ivory Coast signed a concession agreement with France’s Bouygues and Keolis and South Korean firms Hyundai Rotem and Dongsan Engineering to build and operate an urban rail line in the commercial capital Abidjan, the government said. Ivory Coast, French-speaking West Africa’s largest economy, is experiencing an economic revival as it emerges from a decade-long political crisis. Abidjan, a lagoon-side regional commercial hub, is luring back investors, but the city of 5 million has only limited mass transit and suffers from congestion problems.

Brazil auto output plunges Auto production in Brazil tumbled in June to the lowest level since January 2009, putting more jobs at risk in the country’s fragile car industry and undermining hopes for an economic recovery. Output of cars, trucks and buses dropped 12.5 percent and sales slipped 0.1 percent in June from May despite two extra weekdays, the national automakers’ association Anfavea said.

Compared to a year ago, auto output fell 14.8 percent and sales plunged 19.4 percent. Automakers are trying to limit losses by cutting deeper into payrolls, which have shrunk 8 percent in the past 12 months.

The plans contained far more detail than those from last year.

Citigroup, for instance, submitted a 102-page document, more than three times as much as the 2014 plan.

For example, Citigroup said that after stabilizing its banking operations, it would offer its U.S. consumer banking operations for sale in an IPO while international operations would be sold in private transactions.

Goldman Sachs Group Inc included a table that showed it would consider selling its domestic and international asset management businesses, as well as its J. Aron commodities trading unit, in the event that the group failed.

Morgan Stanley said it would ultimately sell its wealth management business, as well as major parts of both its investment management unit and its trading business in Japan, which is a joint venture with Mitsubishi UFJ Group.

And Britain’s Barclays said it is planning to shrink the size of its U.S. unit to US$185-215 billion by July 2016, from US$248 billion at the end of 2014.

What is published on the regulators’ websites is only the public portion of the plans. The actual documents are thousands of pages and contain detailed instruction including mundane facts such as how to access computer systems.

The banks involved are Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse , Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, UBS and Wells Fargo.

Britain faces first Conservative budget in two decades The economy is forecast to grow by 2.5 percent this year and 2.3 percent in 2016, bringing higher taxation revenues

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rime Minister David Cameron’s government will this week unveil the first Conservative budget in almost 20 years, targeting deep welfare cutbacks to honour a campaign pledge to slash spending.

Finance minister George Osborne, boosted by a surprise May 7 vote giving his centre-right Conservative Party an outright majority, will have a free hand with public finances after five years of coalition with the centrist Liberal Democrats, while the summer budget comes amid mounting global

concern over the debt crisis in antiausterity Greece.

Chancellor of the Exchequer Osborne has already vowed that his second budget so far this year will unleash more austerity to raise another £12 billion (US$19 billion).

“You do have to look at the benefits system, the welfare system, and make sure that it is fair for working people,” Osborne said. “It is not fair that people out of work can earn more than people in work so we are going to cut the benefit cap.”

He will seek to cap annual welfare payments at £23,000 per household in London, against the current level of £26,000. The amount will be lower still outside the capital.

Osborne has also said that Britons on higher incomes in subsidised council housing will have to pay closer to the market level of rent.

The Conservatives want to lower the tax burden, but also address concerns that the welfare system encourages a culture of state hand-outs.

Osborne’s priority remains tackling Britain’s total debt, which stands at about £1.5 trillion, with a deficit of around 4.0 percent of GDP in the current 2015/2016 financial year.

The Chancellor also plans to save another £650 million per year by forcing the state-funded BBC to foot the bill for the provision of free television licences for Britons aged over 75.

In addition, Osborne will announce new laws in this week’s budget to force governments to run a surplus.

The Conservative-Liberal Democrat coalition oversaw billions of pounds of cuts to state spending to slash a record deficit inherited from the previous Labour government.

AFP

Business Daily | 15

July 8, 2015

Opinion BUSINESS

WIRES

What energy shortage?

Leading reports from Asia’s best business newspapers

Jostein Eikeland

Founder, Chairman, and CEO of Alevo

TAIPEI TIMES Transactions for existing homes in the nation’s six special municipalities declined further last month from the previous year, but picked up from a month earlier, as sellers showed more pricing flexibility while buyers expected greater concessions. Housing deals in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung — which accounted for about 80 percent of sales nationwide — dropped by 10 percent to 20 percent last month from the same period last year, but increased 6.33 percent to 18,287 units from 17,199 a month earlier, the individual city governments said on their Web sites.

PHILSTAR The Bangko Sentral ng Pilipinas said there is more room to accommodate the entry of foreign banks in the country despite the green light given to five foreign banks to set up shop in the Philippines.

BSP Deputy Governor Nestor Espenila Jr. told reporters on the side-lines of the Regional Social Dialogue organized by the UNI Apro Asean Bank Unions Council and the Asean Services Employees’ Trade Unions Council, the regulator sees more foreign banks filing their application to operate in the country.

THANH NIEN NEWS Vietnam looks to raise its minimum monthly salary by just above 10 percent next year, the lowest level since 2013, a move that apparently bows to the growing pressure of the corporate sector. Under a government decree that took effect early this year, Vietnam raised the wage floor to US$101.4-US$146.2, or 15 percent, depending on the location. The government also approved a minimum-wage hike of around 15 percent in 2014. Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), told the press that his organization proposed an increase of “above 10 percent”.

BANGKOK POST Thailand wants more Japanese businesses to expand their investment in Thailand, especially in government-promoted special economic zones that could be used as production bases once the Asean Economic Community (AEC) takes full effect. Japan said the call matched its own plan to expand its presence in the Mekong River region, which the country aims to use as a platform for further investment in Asean. Prime Minister Prayut Chan-o-cha praised Thailand as a perfect location with more than 5,000 kilometres of border with neighbouring countries and their growing economies.

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f we were able to capture and use the energy from just two minutes of sunlight falling on the earth, it would be enough to fuel our cars, light and heat our buildings, and provide for all of our other electricity needs for an entire year. Simply put, we humans are not facing a shortage of energy. We are facing a technical challenge in capturing it and delivering it to consumers; and one of the most efficient ways to meet that challenge is to invest in better ways to store it.

Many of the world’s problems today can be traced to energy use, from conflicts over oil supplies and concerns about greenhouse-gas emissions to lost productivity and output stemming from shortages and blackouts. In many of the poorest parts of the world, the lack of energy stifles economic development. Globally, more than 1.3 billion people have no access to electricity; and some 2.6 billion have no access to modern cooking facilities.

More than 95% of these people are in Sub-Saharan Africa or developing Asia, and 84% live in rural areas.

During the run-up to the recent presidential election in Nigeria, for example, a woman was asked what she wanted the candidates to deliver. She replied with a one-word answer: “Light.” Electricity, a basic commodity, would allow her to continue to work and her children to study.

Unreliable or unavailable energy is a problem in much of Africa

Unreliable or unavailable energy is a problem in much of Africa and the Indian sub-continent, as well as some other parts of Asia

and the Indian sub-continent, as well as some other parts of Asia. According to a report by the International Energy Agency, improvements to the energy sector could provide the equivalent of a decade of growth in some of the poorest parts of the world.

Our global energy crisis has been aggravated by a lack of innovation. According to a study by the United States government’s Lawrence Livermore National Laboratory, more than 60% of the energy we use is lost between the time it is generated and the time it is consumed. This includes the inefficiency in converting fossil fuels to electricity, losses during transmission, wasteful consumer behaviour, and the need to maintain a reserve to prevent blackouts.

A new wave of innovation is required, one that can eliminate waste, reduce pollution, and broaden access to energy around the world. That means focusing on efficiency-boosting technologies such as wireless communication, machine-tomachine communication, smart metering, and better production management.

Renewable energy sources, including solar and wind power, are well positioned to contribute to energy needs in both mature and emerging economies. But, because the sun does not always shine, and the wind does not always blow, energy from these sources is unstable and intermittent. And this will continue to be a problem unless,

and until, we are able to store power from renewable sources efficiently.

Studies by the US Western Electricity Coordinating Council have found that finding better ways to store energy could cut total waste by about 18% and boost the efficiency of electricity use by up to 11%.

Better energy-storage methods would also make it easier to deliver electricity to hard-toreach areas that are currently underserved, as well as help make the best use of oftenscarce sources of power.

One well-tested method for storing energy is to use excess capacity to pump water into reservoirs, so that it can be used later to power turbines when demand is high. But this approach is practical only in mountainous areas, making it unsuitable as a mass-market solution. Promising areas of research include grid-scale batteries with the ability to charge and discharge tens of thousands of times and data analytics to optimize the use of the batteries and make the grid as efficient as possible.

It is not enough to generate energy. We must also use it efficiently, and the wide-scale adoption of state-of-the-art storage technology will be an essential part of the solution.

Ensuring that the world’s energy supplies are stable, efficient, accessible, and affordable will take time. But breakthroughs are on the horizon. Our task is to keep our sights there.

Project Syndicate

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July 8, 2015

Closing Philippines records lowest inflation in 20 years

China to cut retail fuel prices from today

Inflation declined further in June to 1.2 percent, the lowest in 20 years, the Philippine Statistics Authority (PSA) said yesterday. Annual decreases were still registered in the indices of housing, water, electricity, gas and other fuels and communication. The indices of food and non-alcoholic beverages, clothing and footwear, furnishing, household equipment and routine maintenance of the house, health, and education also slowed down during the month.

Emmanuel Esguerra, deputy director general of the National Economic and Development Authority said the June inflation rate was the lowest, covering the monthly inflation series from 1995 to June 2015.

Top economic planner on Tuesday announced it will lower the retail price of gasoline by 95 yuan (about US$15.5) per tonne and the price of diesel by 90 yuan. The adjustment, effective today, means retail prices will drop by 0.07 yuan per litre for gas, and 0.08 yuan per litre for diesel, according to the National Development and Reform Commission (NDRC). This is the fifth price reduction since the beginning of the year. The NDRC said the drop followed a decrease in international oil prices due to rising global supply of the fuel. Pricing regime adjusts domestic fuel prices when international crude prices change by more than 50 yuan per tonne within a period of 10 working days.

Juncker challenges Greeks, Germans to avoid Grexit He said it was not clear what message Greek voters had endorsed by rejecting a deal which had expired several days before Sunday’s plebiscite Barbara Lewis

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ean-Claude Juncker, the EU’s chief executive, chided the Greek government and his own German critics yesterday and pledged to counter those he said were secretly trying to force Greece out of the euro zone.

In a speech to the European Parliament in Strasbourg ahead of a crunch euro summit in Brussels later in the day, the European Commission president said he would work to avoid Grexit but warned: “There are some in the European Union who openly or secretly are working to exclude Greece from the euro zone.”

He did not name Germany or its finance minister Wolfgang Schaeuble, who has suggested the euro zone might be better off without Greece.

But, speaking in German, he made clear a broader anger at his own critics in Germany, notably those who said he had no right to negotiate on behalf of EU states.

And he opened his remarks

When European nations stop talking to each other, then we are heading for the end of the European Union Jean-Claude Juncker, President of the European Comission

Juncker and Tsipras in previous negotiation session

by dismissing accusations in the German press that he had “taken cover” by not speaking in public since Greek voters ignored his urgings and backed their leftist government in

a referendum on Sunday, rejecting a bailout offer.

Juncker, a veteran premier of Luxembourg and chair of the Eurogroup of finance ministers, also renewed criticism of Greek Prime

Minister Alexis Tsipras and ministers he said had called the Commission’s officials “terrorists”. Juncker said it was not clear what message Greek voters had endorsed by rejecting a deal which had

expired several days before Sunday’s plebiscite.

“It’s not a ‘No’ to Europe, I’m told. It’s not a ‘No’ to the euro, I’m told. It cannot be a ‘No’ to the proposals of the institutions, because they were not on the table,” he said, calling it a “very grave mistake” by Tsipras to break off talks.

“The ball is in the court of the Greek government.”

Countering the impatience evident among some of Greece’s euro zone creditors, Juncker insisted that Europe could only solve its problems by negotiation. “This solution can’t be found today,” he said. “If it were, then it would be too simplistic.”

“We must set aside our little egos -- and my big ego too -- and deal with the situation as we find it,” he said. “My determination is to prevent a Grexit. I am against a Grexit.

“No one should want to throw the Greeks out,” he said.

Reuters

uber’s China rival raises funds from Ping an, Capital

Hong Kong’s Q2 growth estimate Temasek global portfolio lowered to 2 pct reaches record us$194 billion

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idi Kuaidi, the Chinese car-booking business, has attracted funding from Ping An Insurance (Group) Co. and Capital International Private Equity Funds, according to people familiar with the matter.

Hillhouse Capital Management and Coatue Management are also investing, the people said, asking not to be identified as the matter is private.

In total, nearly US$2 billion was raised in the latest round, valuing the company at about US$15 billion, the people said.

Xiaoju Kuaizhi Inc., the company that owns the Didi and Kuaidi apps, said in June that its initial fundraising target was oversubscribed in five days and the company might increase the amount to be raised.

Alibaba Group Holding Ltd. and Tencent Holdings Ltd. and SoftBank Corp. are backing Didi Kuaidi.

Private car requests have tripled to 3 million daily rides on Didi Kuaidi platforms since May and gross merchandise volume is expected to reach US$12 billion by the end of this year.

Bloomberg News

n economic forecast made public yesterday by the University of Hong Kong (HKU) lowered its estimate of Hong Kong’s real GDP growth in the second quarter this year to 2 percent from the previous forecast of 2.4 percent.

The APEC Studies Program of the Hong Kong Institute of Economics and Business Strategy at the university released its quarterly Hong Kong Macroeconomic Forecast yesterday, saying the revision of the estimate reflects the slackening of external demand.

In the third quarter, real GDP growth is forecast to be 1.7 percent when compared with the same period last year, according to the report.

The report also said the effect of the U.S. dollar appreciation on Hong Kong economy is likely to be long and variable.

Hong Kong’s real GDP is expected to grow by 2.0 percent in 2015 for the year as a whole, likely between 1.6 percent and 2.4 percent, slower than the 2.5 percent growth in 2014.

Xinhua

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ingapore state investment giant Temasek Holdings said yesterday its global portfolio reached a record S$266 billion (US$194 billion) in the year to March, driven by rise in global equities.

The value of its holdings increased 19 percent from the previous fiscal year’s S$223 billion and is more than double its portfolio of S$103 billion 10 years ago, the company said in its annual report.

Net profit was S$14.5 billion from S$10.9 billion last year, said Temasek, one of the world’s biggest state-linked investment vehicles whose holdings include top global brands such as banking firm Standard Chartered, Singapore Airlines and Spanish energy giant Repsol.

“This was the most active year for us since the global financial crisis,” Temasek chairman said.

“We made S$30 billion of new investments and a record S$19 billion of divestments,” he added.

Total shareholder return, which includes dividends it pays to the Singapore government and excludes capital injections it receives, was 19.2 percent.

AFP