Macau business daily, 2015 July 15

MOP 6.00

Chinese Estates’ assets disposal extended to Mainland

Closing editor: Luís Gonçalves

Page 4

Pataca rebounds in June Page 5

Deutsche Bank’s casino investment challenged

Putin changes law for Vladivostok to compete with Macau Page 7

Year IV

Number 836 Thursday July 16, 2015

Publisher: Paulo A. Azevedo

Page 7

Collateral Damage Shops in tourism areas. No sector has been more affected by the gaming downturn. Centaline and Jones Lang LaSalle say these stores have suffered convulsions. With -45 pct in sales prices and -30 pct in rentals. Beating the overall market slump several fold during Q1. Some shop tenants called it a day when confronted with aggressive prices demanded by owners. Meanwhile, residential unit rentals dipped around 5 pct with high end units dropping 11 pct Pages

2&3

Room with a view The Macau Gov’t has approved the construction of a 3-star guesthouse near Mount Fortress on the Macau Peninsula. Companhia de Fomento Predial Iong Seng, Lda. plans to build a seven-storey 3-star guesthouse occupying a gross floor area of 1,490 square metres. The company has 36 months to complete the project.

It will be the fifth 3-star guesthouse in operation here

It’s that transparency issue again.

New Macau Association legislators Au Kam San and Antonio Ng Kuok Cheong want a formal hearing. They say the gov’t must disclose information about ‘idle’ land grants. The pro-democrats want to know why the gov’t allowed landholders to retain 16 plots of land ‘mistakenly’ confiscated

Page 4

Brought to you by

HSI - Movers July 15

‘Unjustified’ recovery

Investors are cautious. The recent 20 pct jump in value of gaming stocks following transit visa relaxation is termed ‘unjustified’. And the recent crash in the Chinese stock market is likely to hit Macau in the VIP and mass premium segments. Because many of the city’s junkets lost a packet in the past three weeks, says Deutsche Bank

Page 6

Name

%Day

BOC Hong Kong Holdin

+2.29

China Petroleum & Che

+1.97

Cheung Kong Property

+1.92

China Mobile Ltd

+0.99

Link REIT/The

+0.67

Hong Kong Exchanges

-2.40

CITIC Ltd

-2.45

China Life Insurance C

-2.69

New World Developme

-3.30

Galaxy Entertainment

-3.67

Source: Bloomberg

China www.macaubusinessdaily.com

Another quarter, another drop. No end in sight for the high-end retail sector.

Jewellery company Luk Fook saw sales decline 19 pct in its Hong Kong and Macau shops for the April-June period. This, after a drop of 22 pct in the previous quarter

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Page 4

Digging for answers

Dropping like a stone

Adding up the figures

I SSN 2226-8294

National GDP figures. An unpredicted and remarkable 7.0 pct increase. But feeble activity in many sectors of the Chinese economy has aroused doubts among seasoned observers. “Hard won”, says the stats bureau. With increased domestic consumption given the credit

Pages 8&9

2015-7-16

2015-7-17

2015-7-18

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2 | Business Daily

July 16, 2015

Macau

Real Estate: Shops affected most by gaming downturn With the city’s gaming, retail, and tourism sectors all heading south, local real estate agencies say the property market is also affected; shops in tourism areas are affected most with both sale prices and rentals down Kam Leong

kamleong@macaubusinessdaily.com

boosted a great amount of deals in the central area, [enabling] the average sale price of shops in the second quarter to increase to MOP47,086 [from MOP34,378 per square foot in the first quarter],” Mr. Ho said.

The property agent said some shopowners in NAPE had also reduced their asking price for their MOP100 million shops by more than 30 per cent, and had successfully attracted some buyers for self-use.

Nevertheless, both the sales price and rental of the shops in the livelihood areas, such as the northern district, were not likely affected by the downturn of the gaming industry as they are servicing residents as opposed to tourists, according to Mr. Ho.

Office

A

mid the ongoing downturn of the gaming industry, the city’s street-level shops, especially those located in tourism areas, recorded significant double-digit drops in their sale prices and rental during the first half of this year, local realtors Centaline (Macau) Property Agency Ltd. and Jones Lang LaSalle (JLL) Macau both said yesterday.

Associate director of Retail of JLL Macau, Oliver Tong, said during a press briefing by the agency yesterday that overall shop rentals had experienced a decline of 5.8 per cent in the first half compared to the end of 2014. However, owners of street-level shops might have even seen the rental of their shops slumping by 30 per cent during the six months.

In fact, the drop in the rental of the city’s street-level shops is most apparent in those located in the central and NAPE districts.

According to data provided by Centaline in another press briefing yesterday, the average leasing price for street-level shops in the central area were slashed 45 per cent yearon-year to MOP206.5 per square foot during the first half of this year vis-a-vis MOP300 per square foot one year ago.

In addition, the west part of NAPE near the casinos also saw rental decline on average 15 per cent yearon-year, or 30 per cent as compared to its hike period, the senior regional sales director of Centaline, Roy Ho Siu Hang, said.

With shop rentals in the central area having dropped a lot, Mr. Tong perceives that the decrease is due

to shopowners having asked too aggressive a price before. “[The shopowners] were asking rather aggressive rentals during the second half of last year so you could see the rental market was kind of deadlocked at that time. Many tenants said that they could not afford the rental, and some of the shops were thus left vacant,” Mr. Tong said, indicating landlords were eventually willing to lower rentals during the first half of this year.

Although some shops were given up by the retailers, Mr. Tong said the shop leasing market has already found support following the decreases in the rental prices, indicating many of these ‘abandoned’ shops are now occupied by famous international retailers.

This kind of situation is also happening in NAPE, according to Centaline’s Roy Ho. “Since the second quarter of this year, you can see that the market has stabilised. I think you’ll start seeing shops [that were left vacant] being renovated again soon,” Mr. Ho said.

Shop sales

Meanwhile, Centaline data also indicates that shop values in the central area have plunged by more than a half, or 51 per cent, yearon-year, to MOP41,092 per square foot during the six months from MOP84,000 per square foot one year ago.

The total number of transactions for street-level shops totalled 350 during the period. Despite describing the number as the worst since the

[The shop owners] were asking for rather aggressive rentals during the second half of last year. Many tenants said that they could not afford the rental, and some of the shops were thus left vacant Oliver Tong, associate director of Retail, JLL Macau

financial tsunami of 2008, Mr. Ho said that the market had become more active from the second quarter, during which transaction reached 250 - as shop landlords reluctantly lowered sale prices after realising the recovery of the gaming industry will not materialise soon.

“Following the leasing values of their shops largely declining, shopowners, especially those owning high-standard shops, were willing to adjust their prices from the second quarter. The movement, in fact,

The leasing value of offices, meanwhile, recorded a slightly growth during the first half of this year. JLL Macau thinks that the rental, as well as the sales price of offices will remain stable in the second half. Centaline’s agent, however, perceives that both values will decline.

According to JLL Macau’s own index, the overall rental for offices slightly rose by 0.5 per cent during the first six months, compared to the end of 2014, while that for Grade A offices in the city even registered growth of 5.7 per cent.

Centaline’s data also indicated that that the average rental cost of offices had increased to MOP24 per square foot on average during the first half from MOP17 one year ago.

However, the real estate agency indicated that the sales price of offices had decreased by 6 per cent year-onyear. On a different comparison, JLL said capital values fell by 4.8 per cent compared to the end of 2014.

“The property market has not yet found support for the transaction of offices. As such, both sales prices and rental of offices may decline continuously,” Mr. Ho said.

Meanwhile, JLL Macau’s associate director of Capital Markets, Alison Yip, holds a different opinion. “With the rising office rentals in Nam Van district amidst the declining office capital values, the investment yields of Grade A offices rose significantly to 2.3 per cent while the overall office sector recorded a 2.6 per cent decrease in the second quarter of 2015. We expect both office sales and leasing markets in Macau to remain stable in 2015,” she said.

Home prices

On the other hand, the director of Centaline Macau Jacky Shek Po Tak estimated that the city’s home prices have rebounded since the second quarter following increases recorded in the number of transactions.

The Centaline director claimed that housing prices in the second quarter of this year reached some MOP93,653 per square metre, a slight increase of 5 per cent year-on-year.

According to Mr. Shek, the total number of transactions in the first

Business Daily | 3

July 16, 2015

Macau Centaline believes that housing prices will stabilise from the third quarter of the year as the landlords who were rushing to sell their properties have already sold the units during the first half

half of the year might total 2,700, of which 1,650 were transacted during the second quarter.

Meanwhile, JLL Macau’s head of residential, Jeff Wong, indicated that capital values for high-end and mass-to-medium residential sectors fell 17.1 per cent and 11.6 per cent year-on-year during the first half, respectively.

Nevertheless, he said that the investment return for residential units, on the contrary, had registered a slight growth year-on-year.

According to Mr. Wong, the investment return for high-end and

mass-to-medium residential units was 1.9 per cent and 2 per cent during the six months, up 0.03 percentage points and 0.1 percentage points yearon-year, respectively.

Predicting housing prices in the second half, he claimed prices may still have room to decrease by no more than 5 per cent during the rest of the year.

“Taking into account the abundant new residential supply in the first half, we expect to see a mild consolidation in both residential sales and leasing markets during the second half of 2015,” Mr. Wong said.

Centaline’s director, on the other hand, perceives that housing prices will stabilised from the third quarter of the year as landlords who were rushing to sell their properties have already sold their units during the first half; as such, the remaining landlords in the market are primarily those asking for more solid prices.

Residential rental

The JLL residential head said that the rental of the mass and medium residential market had decreased by 5.5 per cent during the first half as compared to the end of 2014 due to the new supply of housing in the sector.

In addition, the rental of high-end residential units had plunged 11.7 per cent year-on-year during the first half, following the junkets’ disposal of their luxury housings.

“We believe that the rentals for mass and medium residential units will stabilise [in the second half] at the current level following the upcoming new projects opening that will give a solid support to the rental sector due to it increasing the [amount] of imported labour,” Mr. Wong said, claiming the luxury market will experience more pressure.

“However, we believe that most of the correction [to the property market] has already been realised.

So, for the rest of the year, the range of the correction [in prices] will be within 5 per cent only,” the JLL agent claimed.

4 | Business Daily

July 16, 2015

Macau Chinese Estates’ assets disposal deals extended to Mainland China Hong Kong-listed Chinese Estates Holdings Ltd. has agreed to sell three of its residential and commercial properties located in Chengdu in Sichuan Province as well as an investment in a limited partnership incorporated in Shanghai to Mainland Chinese developer Evergrande Real Estate Group, the company said in a Tuesday filing. For Chinese Estates, the net proceeds from the said disposal will approximate HK$6.5 billion (US$838.6 billion). This disposal follows Chinese Estates’ earlier sell-off of its shopping complex ‘The One’ in Tsim Sha Tsui in Hong Kong, La Scala luxury residential project in Macau, and shop and car parking spaces in the Hong Kong shopping complex Silvercord.

3-star guesthouse to be constructed near Mount Fortress

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he Macau Government has approved the construction of a 3-star guesthouse on a 183 square metre site near Mount Fortress on the Macau Peninsula. The site currently houses a dilapidated building following years of suspended construction.

The site, close to Travessa do Tudum and Calçada da Rocha, will be re-utilised by the land grantee, Companhia

de Fomento Predial Iong Seng, Lda, to build a seven-storey 3-star guesthouse occupying a gross floor area of 1,490 square metres, according to an announcement filed by the Land, Public Works and Transport Bureau in the Official Gazette yesterday.

The land grantee has a total of 36 months to complete the guesthouse project, the gazette noted.

The company is to pay a

land premium of MOP3.24 million (US$405,834) to the government to proceed with the project.

While the guest accommodation in Macau is dominated by 3 to 5-star hotels, there are now only four 3-star guesthouses in operation here, according to Macau Government Tourist Office’s record published on its official website.

The guesthouse to be built will be situated in what the local authority terms as a historical heritage protection zone, an area where any issuance of the urban condition plan for a construction project will also need to take into account opinions expressed by the Cultural Affairs Bureau (IC), according to the Cultural Heritage Protection Law. An urban condition plan is a document issued by the public works department that determines a project’s construction area, height cap and plot ratio.

S.L.

Pro-democrat legislators urge hearing on idle land plots

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ew Macau Association legislators Au Kam San and Antonio Ng Kuok Cheong have submitted a motion requesting a hearing on the cases of the city's idle land plots, a move the prodemocrats urge as they deem the government has not been transparent in disclosing information to the public about the land grants.

In a statement published yesterday, the pair requested the setting up of a select committee to follow up on the land grants issue, involving the city's undeveloped plots, as well as a hearing to be held in the Legislative Assembly which both the former and incumbent Secretary for Transport and Public Works should attend.

In 2011, the MSAR Government announced that of 113 plots of undeveloped granted land, 48 plots were confirmed to

be held accountable by the developers.

Late last month, however, the government announced that of these 48 plots, 16 had been ‘mistakenle’ classified as idle by the government. Following an immediate public outcry, the Chief Executive appointed the Commission Against Corruption to investigate the 16 plots which the government had allowed the landholders to keep.

For the hearing, the prodemocrat legislators have urged the Assembly to hear on whether the list of 113 undeveloped plots announced in 2011 had undergone any changes without public knowledge.

The two legislators are also attempting to pursue the reason behind the sudden announcement of the 16 plots the government eventually let the landholders keep.

S.L.

Corporate Aristocrat the big winner in ‘2015 Reader’s Choice Best Slot Awards’ Aristocrat was the runaway winner in the ‘2015 Reader’s Choice Best Slot Awards’ as chosen by the readers of Southern California Gaming Guide™. Aristocrat won 11 awards in all.

The company’s Buffalo Stampede™ topped the competition, grabbing the Best Video Slot title. Buffalo Stampede was also named Best Penny Slot, Luckiest Slot, Best Video Slot Bonus Round and Best Slot Graphics.

Aristocrat’s smash hit The Walking Dead™ Slot Game was also a big winner, named to the lists of Best Video Slot, Best Progressive Slot, Best Video Slot Bonus Round and Best Slot Graphics. Aristocrat’s Can Can de Paris™ and Mr. Cashman™ were also winners, named to the lists of Best Penny Slots and Best Classic Slots, respectively.

“We are very excited to have Aristocrat’s games named the clear winners for the Southern California Gaming Guide awards, particularly because they were chosen by players. We strive to create the world’s greatest gaming experience every day, and we are happy to have our efforts validated in such a big way by the players in this dynamic market,” said Maureen Sweeny, Aristocrat’s Chief Commercial Officer.

Galaxy engaging in energy saving by recycling resources Galaxy Entertainment Group has been shouldering its responsibility for environmental protection. As of June 2015, the properties under GEG have collected over 5,000kg of soap for recycling and donated it to third world countries. At the same time, GEG has implemented various measures for energy saving and environmental protection, including replacing 50,000 florescent tubes and

lamp bulbs with LED lighting saving more than 7 million kWh of energy. GEG has also obtained an advanced Hobart Pulper machine to aggressively reduce the volume and size of food waste by 80 per cent, thus relieving pressure on storage and weight.

With different environmental projects processing on hand, GEG is committed to conserving the environment and supporting the sustainable development of society.

Business Daily | 5

July 16, 2015

Macau Measures introduced to prevent illicit cigarettes Secretary for Security Wong Sio Chak says the police departments have introduced measures to prevent irregularity following the implementation of the new tobacco tax.

Speaking to reporters after the opening of the 11th Military Summer Camp for Macao Young Students on 13 July, Mr Wong said the measures included more random inspection at border checkpoints. The Macao Customs Service will review its measures in a timely manner, whilst maintaining close contact with other related departments in the prevention of illicit cigarettes.

Value of pataca rebounds in June

Fidelidade Insurance generates profits of MOP6.2 mln in 2014

F

idelidade generated a profit of MOP6.2 million during 2014 through its non-life and life insurance branches, according to information published yesterday in Macau’s Official Gazette.

Concerning non-life insurance, the company achieved a profit of around MOP5 million, despite the ‘rising cost of personnel’ and an increase in ‘provision for future claims’.

The value of the profit is similar to the year 2013, when MOP5 million was also the profit declared.

However, in the course of one year the non-life insurance branch of Fidelidade lost 0.2

per cent market share - from 6.3 per cent in 2013 to 6.1 per cent in 2014. However, the value of non-life premiums increased in one year from MOP117 million to MOP118 million. Overall, in 2014 the total non-life insurance market accounted for MOP2 billion, according to Fidelidade, a 5 per cent increase year-on-year.

As for life insurance activities, this branch of the Portuguese company outperformed the market in terms of increase in life premiums. While overall the life insurance market expanded 40 per cent to MOP6.9 billion, the life premiums of the company jumped seven times (667 per cent year-on-

A

6.1 pct

Non-life insurance Market share in 2014 year) to MOP128.4 million from MOP16.7 million.

However, the profit of the company from life insurances decreased to MOP1.2 million from around MOP1.5 million, explained by the increased cost of staff.

J.S.F.

fter devaluing for two consecutive months, the value of local money increased in June against the currencies of Macau’s major trading partners, cutting the costs of imported products to the territory.

According to the Monetary Authority of Macau (AMCM) the trade-weighted effective change rate index for the pataca – an index that compares the value of the pataca against a basket of currencies of its major trading partners – reached 103.99 points last month. Previously, the index had dropped 0.34 points month-on-month in April and 1.09 points month-onmonth in May. Among others, this basket includes global heavyweight currencies such as the yuan (Mainland China),

yen (Japan) and the Euro (European Union). In yearon-year terms, it increased 6.54 points in June to 103.99 points, while in the previous year it was 97.45 points.

Foreign exchange reserves increased 3.6 per cent to MOP144.1 billion (US$18.04 billion) in June from the revised value of MOP139.1 billion (US$17.42 billion) recorded in May, according to AMCM. In June 2014, foreign reserves went up 14.5 per cent from MOP125.9 billion (US$15.77 billion).

However, while in June 2014 the city’s foreign exchange reserves represented 13 times the currency in circulation, in June this year it accounted for 12 times the currency in circulation.

J.S.F.

6 | Business Daily

July 16, 2015

Macau Brands

Trends

Fast-fashion, Singapore style Raquel Dias newsdesk@macaubusinessdaily.com

Stock market crash to hit VIP and premium market segments Investors say that the 20 per cent jump in gaming stock value following the visa relaxation is ‘unjustified’. Revenues are predicted to fall 7 per cent in 2016 João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he first time I walked past the Charles & Keith shop in The Venetian Macau, I thought it was probably one of those expensive brands I had never heard about before.

The boutique was huge and the décor sleek. Shoes and handbags were arranged neatly and the last thing that went through my mind was ‘fast fashion’.

There was no pop music screaming from the shop nor were there hundreds of the same item just waiting for you to pick your own size. There was even enough staff to go about and proper chairs for customers to sit in to try their shoes on.

I went in anyway because I needed to know more about the brand. How could it happen? A shop this size and I didn’t know about it?

I was extremely surprised by the prices. The service was the same as any of the regular boutiques, but items were as cheap as Forever 21 (O.K. maybe not AS cheap, but close).

When I went home to do my research - as well as look at my newly purchased handbags - I found my answer. It was fast-fashion all right, but fast-fashion Singapore style. The brand was founded in 1996 by brothers Charles and Keith Wong, under the Charles & Keith Group which also owns the brands Charles & Keith Signature Label and Pedro, and it is doing a great job.

Most of their designs are inspired by the great labels, but they do add their own touch so customers won’t feel they are using a knockoff. The new season has plenty of great stuff, but we leave you with a favourite.

T

he Shanghai Stock Exchange crash is likely to impact Macau’s casino industry through the VIP and premium mass market segments, according to the latest research note from Deutsche Bank. The bank’s gaming analyst, Karen Tang, writes that there is a 70 per cent correlation between the Shanghai A-share market with Macau’s VIP gaming revenue and as such damage to the sector is to be expected.

“The Shanghai A share index has fallen 23 per cent from its peak in midJune having climbed 60 per cent from early January. Many junket agents are Mainland Chinese. According to our channel checks, many have lost much money in the Chinese stock market in the past three weeks”, she said. “In the extreme cases, some have even withdrawn their deposits with junket operators to cover margin calls for their A-share investments in China”.

However, liquidity squeeze is not expected immediately because even if the VIP segment is facing

problems those are caused by the lack of demand rather than by credit-supply shortage. This demand problem has been caused for such reasons as the corruption crackdown and the slowdown of the Mainland Chinese economy.

“While we think the liquidity squeeze in the junket system is still small at this stage, we think the negative wealth effect will dampen VIP and premium mass demand for longer”, Karen Tang explained.

Gaming stocks jump unjustified

Concerning the value of casino operators’ stocks, Deutsche Bank says that the 20 per cent increase since the government announced the relaxation of the transit visa scheme for Mainlanders is ‘unjustified’. Karen Tang explained this point with the risk mentioned before about the Shanghai A-share market crash.

The investment bank reiterates its prediction that gaming revenues will drop another 7 per cent in 2016 because with the enforcement of the

The Shanghai A share index has fallen 23 per cent from its peak in mid-June after rising 60 per cent from early January. Many junket agents are Mainland Chinese. According to our channel checks, many of them have lost much money in the Chinese stock market in the past three weeks Karen Tang, Deutsche Bank gaming analyst

full smoking ban the VIP segment is expected to decline 10 to 15 per cent and the mass market 5 to 6 per cent.

“We maintain our view that gross gaming revenue/day will worsen again in early 2016 as we assume a full smoking ban will reduce VIP revenue sequentially by 10-15 per cent and mass revenue by 5-6 per cent”, she writes. “We think consensus has not yet factored this into their forecasts, and therefore the market still expects a GGR recovery in 2016”, the bank explains to justify its out-of-consensus forecast.

Luk Fook sales decline 19 pct in HK, Macau

H

ong Kong-listed jewellery company Luk Fook Holdings (International) Ltd. saw its same-store sales decline by a yearon-year 19 per cent in its shops in Hong Kong and Macau for the AprilJune period, a drop that narrowed from the 22 per cent decline seen in the previous quarter, according to the company's operation data filed with the Hong Kong Stock Exchange yesterday.

Led by the fall of sales in the Hong Kong and Macau market, Luk Fook’s overall same-store sales in the April-June period is down 18 per cent year-on-year due to persistently weak consumer sentiment, the company noted in the filing although it did not detail sales revenue.

While Luk Fook saw comparable store sales decline in the two cities, the jeweller’s same-store sales in Mainland China in the period has levelled compared to a year ago, an improvement from the same-store

sales decline of 5 per cent year-onyear in the January-March period.

As at end-June, Luk Fook operated 49 shops in Hong Kong, 10 shops in Macau and 80 in Mainland China.

Business Daily | 7

July 16, 2015

Gaming

Putin changes law for Vladivostok to compete with Macau Russia’s Far Eastern capital is now considered a free port with several tax and investment advantages. The goal of local authorities is to see Vladivostok compete more effectively with the likes of Macau - a long established free port - and Busan in South Korea

T

he competitor who came in from the cold. Russian president Vladimir Putin has signed a law that establishes Vladivostok as a free port. The move gives the country’s Far East capital huge tax advantages for locals whilst making the region more attractive to foreign investment, especially from China, Japan and South Korea, The Siberian Times reported. The goal of Putin, according to the newspaper, is to revive Vladivostok’s economy and compete with Macau and Busan.

For t he gaming industry, Vladivostok is one of the new destinations for sector expansion in Asia Pacific. Several casinos are planned, with one of them belonging to Lawrence Ho, CEO of Melco Crown Entertaiment that runs City of Dreams and the upcoming Studio City here. Mr Ho’s company in Russia, Summit Ascent Holdings, said recently that its project is ‘nearing completion’.

The new legal framework, valid for the next 70 years, unites ports in 15 cities near Vladivostok.

Primorsky Territory Governor Vladimir Miklushevsky told The Siberian Times that it will make the city an attractive option for overseas trade and help stimulate the economy.

The newspaper reported that four zones are included in the new regime: a port and airport zone, an industrial zone, a scientificpromotional zone, and a touristrecreational zone. The goal of local authorities is to see Vladivostok compete more effectively with the likes of Macau - a long established free port - and Busan in South Korea.

A gambling zone is also due to open soon in the region.

For companies interested in investing in the region, or already there, the new regime will give access to direct state aid for the construction of infrastructure, although the principal source of financing must be personal resources and the territory’s budget. For residents, there’s a possibility of obtaining state land, tax benefits for property and land, and free Customs zone. Crucially, there will also be a simplified visa regime, which should be a plus for

gaming companies wishing to attract more gamblers and customers.

Vladimir Putin said that “free port residents will receive ample benefits. These are not just tax benefits, but also a simplified visa regime, the implementation of a free customs zone, and simplified border control procedures. ‘This September, the first Eastern Economic Forum will be held in Vladivostok, which will include a detailed presentation of our proposals to foreign investors.”

The Siberian Times also quoted the president’s representative in the Far East Yury Trutnev as saying: “We have introduced a ‘one-stop’ principle of administrative procedures. Investors can resolve all related issues at one federal agency without having to run from one department to another.”

Russia’s Vladivostok initiative followed a study of Asia-Pacific countries’ taxation, administrative regulations, tariffs and infrastructure, absorbing lessons from their methods.

Deutsche Bank’s casino investment challenged over libor plea After paying US$2.5 bln fine and settling fraud charges with U.S. and U.K. authorities, the bank is now being targeted by Culinary Workers Union Local 226 in Las Vegas. The union has asked Nevada casino regulators to review the bank’s 25 pct ownership of Station Casinos

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eutsche Bank AG is facing a union challenge to a casino investment as a result of its involvement in the London Interbank Offered Rate manipulation scandal.

The bank, which in April agreed to a US$2.5 billion fine and settled fraud charges with U.S. and U.K. authorities, is being targeted by Culinary Workers Union Local 226 in Las Vegas. The union has asked Nevada casino regulators to review the bank’s 25 per cent ownership

of Station Casinos LLC. “We are gravely concerned about the suitability of Deutsche Bank to hold, through a subsidiary, a 25 per cent equity stake in Station Casinos,” Maya Holmes, research director for the 55,000-member local, wrote in a June 17 letter.

The Culinary Workers Local 226 and Bartenders Local 165, affiliates of UNITE HERE, plan to picket Palace Station, a company casino near the Las Vegas Strip, on Friday.

In the letter, Holmes urged Tony Alamo, chairman of the Nevada Gaming Commission, and A.G. Burnett, chairman of the Nevada Gaming Control Board, to call hearings on whether the bank and its executives are qualified to continue owning the stake.

Burnett, in an e-mail Thursday, said the board is reviewing the matter.

Liborgate

“When someone presents us with information alleging

that a licensee has done something inappropriate, we independently investigate that,” Burnett said in an e-mail. “Here, we have not reached any conclusions.”

Amanda Williams, a spokeswoman for Deutsche Bank, declined to comment on the letter. Casino regulators issue licences to owners and review the backgrounds of large investors.

The union, which represents food-service

workers and others in Las Vegas, is trying to organise employees at Station Casinos, a Las Vegasbased company that owns or manages 21 properties.

Station Casinos, controlled by brothers Frank and Lorenzo Fertitta, is considering an initial public offering, people with knowledge of the matter said in May. The company could be valued at more than $3.5 billion, including $2.15 billion in debt, one of the people said then. That would suggest a value of about $337 million for the Deutsche Bank stake.

Deutsche Bank acquired the interest in Station as part of a 2009 bankruptcy court reorganisation.

The bank’s April Libor settlement resulted in a record fine. It admitted to its role in manipulating the price of the Libor, a benchmark interest rate widely used by lenders and investors all over the world.

Bloomberg

8 | Business Daily

July 16, 2015

Greater China

Domestic growth beats forecasts

The surprisingly positive readings have some analysts questioning the accuracy of officia Kevin Yao and Pete Sweeney

Private consumption leads the positive data

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hina’s economy grew an annual 7 percent in the second quarter, steady with the previous quarter and slightly better than analysts’ forecasts, though further stimulus is still expected after the quarter ended with a stock market crash.

Monthly activity data, released

alongside the GDP report, also beat expectations across the board to show signs of a rebound, with factory output hitting a five-month high, following reports of increased bank lending on Tuesday.

It has been a difficult year for the world’s second-largest economy.

Slowing growth in trade, investment and domestic demand has been compounded by a cooling property sector, deflationary pressure, and the recent equity market panic, so signs of improvement may help buttress faltering investor confidence in the effectiveness of Beijing’s management.

Beijing will still need to provide liquidity to buttress its still-rickety stock exchanges - which the statistics bureau described as key to economic stability - and to reduce the cost of corporate financing, which remains far higher than returns on investment for many companies.

Property investments grow State revenue jumps in June gains helped annual growth at slowest pace in 6 years The in spending quicken to 13.9 percent Sales volume data could suggest the market may be bottoming out

in June from May’s 2.6 percent

Xiaoyi Shao and Koh Gui Qing

hina said government revenue in June was 13.9 percent higher than a year earlier, thanks in part to higher property tax payments, and this supported a spike in state spending.

The Finance Ministry said yesterday that June revenue hit 1.53 trillion yuan (US$246.5 billion) after the biggest annual percentage rise this year. May’s total was 1.44 trillion yuan, only 5 percent above the year-earlier level.

The big rise in June was a result of companies paying more taxes on the back of stronger earnings, as well as a tentative improvement in the housing market, which has battled a downturn since 2014.

The figures could lift hopes that China’s economy is stabilising after a difficult half-year that climaxed with a stock market rout.

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hina’s real estate investment in the first half eased to its slowest since 2009, pointing to persistent weakness, even as sales improved on government measures to support the sector.

Property investment, a main driver of the economy, grew 4.6 percent in the first half of 2015 from a year earlier, marking the slowest rate since the March quarter of 2009, data from the National Bureau of Statistics (NBS) showed yesterday.

A prolonged slowdown in the property market has weighed on the broader economy.

Economists believe that weak property investment, as an important part of the overall investment, will continue to pose one of the main risks to China’s economy until its high inventories of unsold homes are cleared.

“The investment poses the biggest challenge to the economic recovery in the second half of this year as the current fiscal policy has not helped to improve the situation too much,” said Ye Bingnan, an analyst in BOC International in Beijing.

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The unsold floor space totalled 657.4 million square metres by the end of June, up 20.8 percent from the same period a year ago, NBS data showed.

Still, while real estate investment is expected to remain weak this year, sales volume data could suggest the market may be bottoming out.

The floor area of property sold rose 3.9 percent during the January-June period, reversing a 0.2 percent decline in January to May, the NBS data showed.

In June alone, property sales measured by floor space rose 16 percent from a year earlier, marking the third consecutive month of positive growth, according to Reuters calculations. The figure compared with a 15 percent rise in May. To lift the struggling property market, Beijing relaxed tax rules and cut downpayments for second home buyers in late March.

The central bank has already cut lending rates four times in six months and reduced the amount of cash that banks must hold as reserves to bolster economic activity.

Reuters

The ministry said that propertyrelated tax income climbed 3.7 percent in June from a year ago, its first annual increase this year.

Growth in domestic consumption tax was buoyant, zooming up 31.4 percent on a yearly basis to 20.6 billion yuan, while corporate income tax increased 17.5 percent.

The gains helped annual growth in spending quicken to 13.9 percent in June from May’s 2.6 percent. In April, expenditure spiked 33 percent from a year earlier.

No details were given on how the government allocated its 1.88 trillion yuan expenditure last month.

Authorities have repeatedly vowed to accelerate construction of key development and infrastructure projects to lift the economy.

Reuters

Business Daily | 9

July 16, 2015

Greater China

al data

KEY POINTS Q1 GDP +7.0 pct y/y (f’cast +6.9 pct, prev +7.0 pct) Q1 GDP +1.7 pct q/q (f’cast +1.7) June industrial output +6.8 pct (f’cast +6.0 pct) June retail sales +10.6 pct (f’cast +10.2 pct) April-June fixed asset investment +11.4 pct (f’cast +11.2 pct)

Economists have also called for more direct fiscal stimulus to help support local governments as they grapple with a mountain of debt.

Fiscal expenditure rose 13.9 percent on an annual basis in June, a sharp rise from May’s low 2.6 percent but well below April’s 33.2 percent spike.

The surprisingly positive readings have some analysts questioning the accuracy of official data, suggesting they are more about reassuring investors than true reflections of

performance. For example, June power output only increased 0.5 percent year-on-year, even though factory output climbed 6.8 percent.

The National Bureau of Statistics rejected suggestions that figures were being inflated.

It is not only the government reporting a warmer second quarter; the recent independent China Beige Book survey also reported signs of a broad-based recovery for the period, which it said was largely driven by growth in the interior provinces.

“While actual growth is almost certainly a percentage point or two slower than the official figures show, there are good reasons to think that the latest figures are mirroring a genuine stabilisation,” wrote Julian Evans-Pritchard, economist at Capital Economics in Singapore.

“There is growing evidence of an improvement in the wider economy.”

More pain, more gain

The statistics bureau described the recovery as “hard won” and noted it was driven primarily by an increase in domestic consumption, which produced 60 percent of China’s economic growth in the first half, compared with 35.7 percent for capital formation and 4.3 percent from net exports.

Consumption contributed 51.2 percent to GDP growth in 2014, so the rise will be welcomed by a government that is trying to reduce its dependence on exports in favour of domestic demand.

The statistics bureau warned that the nascent recovery required more support to consolidate.

“We must also take note that domestic and the external economic environment remains complex, and the global economic recovery is tortuous and slow,” it said.

Even so, bureau spokesman

Sheng Laiyun predicted further improvements in the second half as previous policy measures, including several interest rate cuts, take effect.

Andrew Colquhoun of Fitch Ratings also expects an improvement in the rest of the year.

“The resilience of retail sales in June is a further encouraging sign that downside risk, while not negligible, is receding, despite recent equitymarket volatility.”

Credit questions

Data on Tuesday showed bank lending increased sharply in June, thanks to central bank support.

However, economists worry that many companies and individuals borrowed heavily to buy stocks in the first half, so the sharp stock market decline - when many companies suspended their stocks from trading, locking up shares used as collateral could inhibit banks’ ability to lend.

Stock markets have stabilised since the central bank began serving as indirect buyer of last resort, but sharp rallies last week were not sustained this week.

Chinese stock markets did not celebrate the growth figures, with benchmark indexes down more than 2 percent.

Before the market plunged in June, key indexes had risen nearly 60 percent in the first half, which some economists estimate added more than a percentage point to total GDP growth in that period, mostly by boosting activity in the financial services sector.

If that boost peters out now the market appears to have run out of steam, it could drag on third-quarter figures.

The government has forecast economic growth of around 7 percent for 2015, which would be the weakest rate in 25 years.

Power consumption rises China consumed 472.3 billion kilowatt-hours (kWh) of electricity in June, up 1.8 percent from the previous year, figures from the country’s National Energy Administration showed yesterday. The year-on-year growth rates have been recovering steadily since March, when consumption fell 2.2 percent and total power generation dropped by its biggest margin since 2008. Consumption in the first six months of the year reached 2.662 trillion kWh, 1.3 percent higher than the same period in 2014. China produced 474.5 billion kWh of power in June, up 0.5 percent compared to the same period last year.

Cotton imports drop Chinese cotton imports dropped nearly 26 percent in June from the year before as relatively high international prices and a lack of quotas for shipments curbed appetite for overseas purchases. The world’s top consumer of the fibre imported 161,800 tonnes in June, meaning the total for the first six months of the year plunged 33 percent from the same period in 2014 to 933,900 tonnes. Beijing has been trying to boost consumption of locally-grown cotton, with traders saying it has only issued 894,000 tonnes of import quotas this year - the minimum required under WTO commitments.

Beijing closes 121 markets

Hong Kong regulator tells bourse to keep Hanergy suspended

A total of 121 markets, most of them small, were closed in Beijing in 2014 and the first half of this year, in a move to ease congestion. This reduced the space covered by markets in the city by about 1.15 million square meters, or 8.2 percent of the total, according to survey results released by the Beijing Statistics Bureau. Due to the number of customers attracted by small markets, they can easily cause traffic jams. “The move has proven effective to improving the urban environment and relieving traffic pressure,” said the bureau.

Management had hoped share trading could be resumed and had been in talks with the exchange

Yum brands’ sales decrease

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he Hong Kong securities regulator has directed the city’s stock exchange to extend a nearly two-month suspension of all dealing in shares of Hanergy Thin Film Power Group Ltd, the mainland Chinese solar technology company being investigated by the watchdog after its shares plummeted in May. In a statement yesterday, the Hong Kong exchange said the Securities and Futures Commission (SFC) had intervened under a rarely used provision that exchange data shows can lead to stocks being suspended for years in some cases. The bourse declined to comment beyond its statement.

The provision allows the SFC to halt trading in a Hong Kong stock if it believes the company concerned has distributed “any materially false, incomplete or misleading information” in relation to its affairs, has failed to comply with SFC rules, or if the SFC deems it is in the public interest to do so.

The SFC declined to comment on its intervention to suspend the stock, which takes responsibility for authorising a trading restart out of the bourse’s hands.

Hanergy itself asked the HKEx

Hanergy lost half its market value of nearly US$40 billion in just 24 minutes of trading in May

to suspend trading in its shares on May 20 after the company lost half its market value of nearly US$40 billion in just 24 minutes of trading.

The stock has been suspended ever since, with the SFC announcing on May 28 that it is conducting an investigation into Hanergy’s “affairs” without providing further details.

Reuters

Officials at Hanergy did not immediately respond to requests for comment yesterday.

Hanergy’s management had hoped share trading could be resumed and had been in talks with the exchange, according to a person familiar with the matter. Reuters reported on June 24 that the HKEx had asked Hanergy to provide its unlisted Chinese parent company’s accounts before permitting a resumption, a request turned down

by Hanergy.

The SFC has only used its power to intervene on trading resumptions on a few occasions. Previous examples include China High Precision Automation Group Ltd, a manufacturing holding company, and sports fabric maker Hontex International Holdings.

China High Precision, which was suspended in August 2012, is still awaiting the green light for a trading restart from the SFC, which hasn’t disclosed details of the case.

Meanwhile Hontex shares were first suspended in March 2010 before being eventually delisted after the regulator investigated information provided to investors in the firm’s initial public offering prospectus.

Reuters

The owner of the Pizza Hut and Taco Bell restaurant chains in China, reported its fourth straight quarter of falling sales, as it struggles to recover from a food scandal in China, a market where the company makes most of its profit. The company’s net income fell to US$235 million, or 53 cents per share, in the second quarter ended June 13, from US$334 million, or 73 cents per share, a year earlier. Revenue fell to US$3.11 billion from US$3.20 billion. Same-store sales in China fell 10 percent, steeper than the 8.4 percent decline analysts had expected.

Coal output falls China produced 327 million tonnes of coal in June, down 4.9 percent from the same period last year, with major producers slashing output to minimise losses, according to data from the country’s statistics bureau.

Production in the first six months reached 1.789 billion tonnes, down 5.8 percent compared with the same period of 2014, the National Bureau of Statistics said. Coking coal production in June also fell 6.9 percent on the year to 38.38 million tonnes.

Beijing has been trying to ease its dependence on coal and encourage new sources of energy.

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July 16, 2015

Greater China

IPO freeze opens door to alternative financiers Reuters contacted about a third of the 28 companies whose IPOs were halted, and most said they would fund their businesses using existing cash and bank loans for now Denny Thomas

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hina’s move to halt new company listings on its stock markets is offering private equity firms, hedge funds and sovereign wealth funds an opening to fill private companies’ funding needs, paving the way for more M&A activity.

After a plunge in share prices China suspended IPOs to close the pipeline of new issues, which tend to suck money out of the market.

Companies on the verge of listing are now faced with the task of finding new means of financing to grow their businesses. The longer the freeze lasts, the more likely companies are to need funding from alternative, more costly financiers.

For private Chinese companies, tapping public markets was the cheapest way to raise capital after mainland share indexes more than doubled in the past year to midJune, when the rally went abruptly into reverse.

To arrest the slide, regulators halted 28 IPOs earlier this month, and it is unclear when they will lift the ban.

Chinese companies are not new to state intervention in IPO markets. A

KEY POINTS Open-ended halt to IPOs cuts an option for SME funding Estimate of gap for alternative funding about US$17 bln Last China IPO halt ended in Dec 2013 after 15 months

previous 15-month freeze ended as recently as December 2013 after 750 new offerings were blocked.

Bankers, private equity investors and wealth funds are now sniffing around for opportunities as companies face tight liquidity conditions.

Tim Dattels, managing partner of private equity firm TPG Capital Ltd said the sharp run-up in Chinese stocks had made it harder for private equity firms to strike deals, but circumstances were now more promising.

“We are dealing in a market now that is illiquid, nowhere to get listed and very little room to raise capital.

We are going to see a more normalized role for private equity as a provider of capital for growth situation and illiquid situations,” Dattels added.

In many economies, bank finance

is the first port of call, but not in China. Beijing’s repeated efforts to cajole banks to lend to small and midsized enterprises has failed as China’s biggest lenders prefer providing credit to less risky state-owned enterprises.

“Long-term capital providers such as sovereign wealth funds and family

Disney unveils Shanghai’s US$5.5 bln Tomorrowland park The world’s largest entertainment company is trying to include as much local content as possible to appeal to Chinese consumers Christopher Palmeri and Alexandra Ho

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alt Disney Co.’s new park in China will offer Jet Packs, a rafting adventure, rides on a Tron-themed Lightcycle and the largest parade in any of its resorts, all aimed at winning over Chinese customers.

The Shanghai park, scheduled to open next spring, includes six themed lands such as Mickey Avenue and Tomorrowland, and an area where visitors can interact with characters from the Star Wars and

Marvel movies. They were unveiled Wednesday at a press conference in Shanghai.

Disney’s first resort in the Chinese mainland “celebrates and embraces China’s incredibly rich heritage,” Chairman and Chief Executive Officer Robert Iger said at the media event in Shanghai.

It’s meant to “delight and entertain the people of China for generations to come,” he said.

The US$5.5 billion Disney

Shanghai Resort, which the company is building with local partners, is served by two hotels -- Shanghai Disneyland Hotel and Toy Story Hotel. The project is Disney’s largest foreign investment and a big bet on the growth of middle-class

The parks and resorts division accounts for 31 percent of the company’s US$48.8 billion in revenue in the last fiscal year

consumers in the world’s most-populous country.

Under a strategy Iger calls “authentically Disney, distinctly Chinese,” the world’s largest entertainment company is trying to include as much local content as possible to appeal to Chinese consumers and avoid complaints of cultural imperialism that greeted its resort in France.

The park, which Disney began building in April 2011, is located in the Pudong district of Shanghai, China’s wealthiest metropolis. It’s the centrepiece of a 20-squarekilometer tourism and resorts zone, adjacent to Pudong International Airport.

Hong Kong Disney

Disney is opening the resort in the face of an economic slowdown in China. The world’s largest theme-park operator also will have to deal with increased competition, including a Universal Studios theme park being built in

Beijing, and a studio and entertainment centre in Shanghai from DreamWorks Animation SKG Inc. The company also operates a Disneyland Resort in Hong Kong, opened in 2005.

Disney will keep developing both the Hong Kong and Shanghai resorts as it wants them to stay relevant, said Bob Weis, Executive Vice President of Walt Disney Imagineering, the unit responsible for content creation for the resorts.

It’s a “tremendous opportunity” as the Chinese are increasingly focused on travel and staying at resorts which is a trend that Disney wants to be a leader in, said Weis said at the Shanghai press event.

Burbank, Californiabased Disney previously released only a few details about the Shanghai project.

Its Enchanted Storybook Castle will be the largest such structure at any of its parks.

Bloomberg News

Business Daily | 11

July 16, 2015

Greater China offices will have a constructive role in China should the IPO markets remain shut down for an extended period,” said Mayooran Elalingam, head of M&A, Asia-Pacific, at Deutsche Bank.

Funding gap

Chinese companies raised US$23 billion through stock market listings in the first-half 2015, according to Thomson Reuters data, and consultant EY had forecast a total of about 250 billion yuan (US$40 billion) for the full year. That could leave a funding gap for alternative financiers of about US$17 billion in the second half.

Dattels said his fund preferred healthcare, consumer, financials and technology sectors. “We continue to be focused on buyouts and on growth investments in our core sectors,” he added.

Singapore state investor Temasek Holdings is also willing to bet on China despite the volatility. Temasek’s underlying China exposure stands at 27 percent, second only to its Singapore exposure.

“We are actively building our position in the Chinese capital market,” said Wu Yibing, Temasek’s head of China, adding that the shortterm volatility might provide a good investment opportunity.

Some companies said they still wanted to pursue an IPO, while others were looking at alternatives.

Shenzhen Silver Basis Technology Co Ltd, a mould manufacturer, had planned to raise about 340 million yuan (US$55 million) before Beijing stepped in.

While the inability to list companies creates an opportunity for alternative financiers, it also removes an avenue for them to cash out of their investment, which increases the likelihood of alternative exit strategies such as mergers and acquisitions.

Reuters

BOC Hong Kong seeks buyers for Nanyang unit The asking price announced yesterday is equivalent to about 1.95 times Nanyang Commercial’s book value at the end of 2014

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OC Hong Kong Holdings Ltd., controlled by China’s fourth-largest lender Bank of China, is seeking to sell its Nanyang Commercial Bank Ltd. unit for HK$68 billion (US$8.8 billion), part of a push to focus more on business in Southeast Asia.

The bidding is expected to close August 25, BOC Hong Kong said in a statement yesterday to the Beijing Financial Assets Exchange. The potential suitor or its controlling shareholder must be a financial institution with Chinese government ownership of more than 50 percent, according to the statement.

BOC Hong Kong said earlier this year it would sell Nanyang Commercial as part of a review of its portfolio which would also involve the takeover of some Southeast Asian assets from its parent, Bank of China Ltd. The asking price announced yesterday is equivalent to about 1.95 times Nanyang Commercial’s book value at the end of 2014.

“This deal gives the potential buyer full control of NCB. That’s why the seller can ask for a high price,” said Li Shanshan, a Beijingbased analyst at Bocom International Holdings Co. “Deals like this are always expensive.”

No potential buyers were listed in the latest statement.

Bad-loan manager China Cinda Asset Management Co., China Life Insurance Co., New China Life Insurance Co. and Yue Xiu Group were shortlisted to make offers for the Hong Kong lender, people with knowledge of the matter said in May. Yue Xiu Group, the investment arm of the Guangzhou city government, spent US$1.5 billion last year for a majority stake in Chong Hing Bank Ltd., valuing the lender at 2.08 times historical book value, according to data compiled

by Bloomberg. Singapore’s OverseaChinese Banking Corp. paid $5 billion for Hong Kong’s Wing Hang Bank Ltd. last year, valuing the target at 1.77 times on that basis.

Nanyang Commercial saw its rating cut at Moody’s Investors Service in December amid concern about rising bad-loan risks from its rapid mainland expansion. The lender had 42 branches in the city and 38 outlets in mainland China at the end of 2014, with HK$303.9 billion of consolidated assets, according to its annual report.

Bloomberg News

Crude steel output dips as demand falters Steel consumption in Mainland is expected to slide further this year Ruby Lian and David Stanway

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hina’s crude steel output dropped 0.8 percent in June from a year earlier, government data showed yesterday, with demand hit by sputtering economic growth and a property slowdown in the world’s top producer.

But average daily output reached 2.298 million tonnes last month, the highest since June last year, according to data from the National Bureau of Statistics.

“The daily output was a bit surprising. Steel mills are desperate to protect their market share and maintain cash flow despite deepening losses,” said Qiu Yuecheng, analyst with steel trading platform Xiben New Line E-Commerce in Shanghai.

“However, the biggest concern for steel mills is steel demand is declining this year because of the slowing economy, and some will have to accelerate cuts in steel output in July.”

Total steel output declined 1.3 percent to 409.97 million tonnes for the first half of 2015 compared with the same period a year ago, according to the data from the statistics bureau.

Chinese steel prices are at their lowest in more than 20 years as the

Shares back to negative territory Chinese shares fell back into negative territory yesterday despite better-than-expected second-quarter economic growth. The benchmark Shanghai Composite Index slumped 3.03 percent to close at 3,805.7 points. It dipped more than 4 percent below 3,800 points during the afternoon session before making up ground. The newly released economic growth rate, which stood at 7 percent in the second quarter and beat a median market forecast of 6.9 percent, failed to buoy the stocks. The fall extended a retreat seen on Tuesday, when the Shanghai index lost 1.16 percent.

Kaisa plans to resume Shenzhen sales Kaisa Group Holdings Ltd., the Chinese developer in the midst of a protracted debt restructuring, plans to resume sales at three property projects in Shenzhen as early as this month, promising to ease its financial woes. Kaisa is in talks with creditors to resolve sales that have been blocked at Kaisa City Plaza, Yuefeng Garden and Qianhai Plaza, Tam Lai Ling, a senior adviser and former Kaisa vice chairman, said in a phone interview yesterday.

The company hopes to sign a framework agreement with an onshore creditor committee this week or next to push forward its debt restructuring, he said.

Car price war launched as sales slow Chinese car dealers have launched a price war as their inventories climb amid downward economic pressure. The auto sector, which experienced years of explosive growth, saw sales up by a mere 1.4 percent year on year in the first half of 2015, when about 12 million vehicles were sold, according to the China Association of Automobile Manufacturers.

Sales in June fell by 5.3 percent month on month to 1.8 million, down by 2.3 percent compared with the same period last year. Industry insiders predict this year’s growth to be a tepid 3 percent.

Three local officials in graft probe

KEY POINTS China H1 crude steel output down 1.3 pct on year But average daily steel output hits 1-yr high in June Steel output seen falling in July slowing economy cuts into demand for a range of commodities including iron ore and steel, threatening the survival of small steel mills in the country.

More steel mills have planned to schedule maintenance to curb production and reduce losses, and output is expected to fall in July and August as demand dips further as construction activity slows over the summer.

Large steelmakers’ losses in their core business more than doubled for January-May from a year earlier, as the apparent consumption of crude steel dropped 5.1 percent for the first five months from a year before, more than a 3.3-percent decline over the same period in 2014.

The most traded rebar futures on the Shanghai Futures Exchange have lost about 25 percent so far this year, after losing more than 28 percent across all of 2014.

Reuters

Chinese prosecutors have put three officials from north China’s Hebei Province and the south-western province of Sichuan under investigation for alleged bribe taking, the Supreme People’s Procuratorate said yesterday. Prosecutors are investigating Chen Gui, former Communist Party of China chief of Hengshui City in Hebei, Gu Huaipu, former head of the Hebei provincial government’s civil affairs department, and Chai Yongbo, former Party chief of the Sichuan Conservatory of Music. The statement did not give any further details. China is in the middle of an anti-corruption campaign targeting both “tigers” and “flies.”

Yihaodian’s founders quit to start new business The founders of Yihaodian, a Chinese online retailer 51 percent-owned by WalMart Stores Inc., have resigned to start a new venture. Chairman Yu Gang and Chief Executive Officer Liu Junling have decided to leave the company and WalMart is “recruiting other leaders”, the Bentonville, Arkansas-based retailer said in an e-mailed statement yesterday. Yu and Liu, former Dell Inc. employees who started the Chinese company in 2008, couldn’t be immediately reached for comment. WalMart became the largest shareholder of the Shanghai-based e-retailer in 2012 as it sought to tap China’s e-commerce boom.

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Asia Indonesia revises May trade surplus Indonesia’s statistics bureau yesterday revised the country’s May trade surplus to US$1.08 billion, up from US$955 million reported a month ago. The bureau revised May exports to US$12.69 billion from US$12.56 billion and maintained imports at US$11.61 billion. Here are the monthly trade figures since the start of 2014, in billions of U.S. dollars and annual percentage change. Numbers may differ from previous reports due to official revision.

Australian new vehicle sales jump in June Australia’s monthly new vehicle sales jumped to their second-highest ever in June. New vehicle sales rose a seasonally adjusted 3.8 percent in June from May, when they had dipped 0.8 percent, data from the Australian Bureau of Statistics showed yesterday. Total sales of 97,620 new vehicles were up 4.0 percent on June last year, and were the highest since September 2012. The increase was spread across all classes, with sales of sports utilities rising 3.3 percent, passenger vehicles 5.4 percent and other vehicles 1.1 percent.

Vietnam Airlines upgrading costs over US$3 billion National flag carrier Vietnam Airlines has spent nearly 80 trillion Vietnamese dong (US$3.7 billion) in the past decade on upgrading its aircraft fleet, Vietnam News Agency reported. From 2006 to 2010, the carrier invested 17.4 trillion Vietnamese dong (US$809 million) in nine aircraft projects, bringing its fleet to 68 aircraft by 2010, compared with 38 planes in 2006. It owned 43 percent of the total planes. In the 2011-2015 period, over 54 trillion Vietnamese dong (US$2.5 billion) have been allocated to the same purpose.

Indonesia to increase coffee output

Indonesia’s agricultural ministry plans to boost the country’s coffee production by implementing a sound agricultural practice. Director General for Plantation of Agriculture Ministry Gamal Nasir said that vast archipelago country Indonesia has larger land potential for expanding plantation for the commodity but the productivity remains low as most of the growers still apply traditional way on cultivation. The productivity of Indonesia’s coffee plantation only reached below 1 ton per hectare, far below Vietnam’s productivity of 2.2 tons to 4 tons per hectare, said Nasir.

Bank of Japan trims growth forecast A quarterly review of its long-term forecasts underscores uncertainties surrounding the central bank’s projections Leika Kihara and Stanley White

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he Bank of Japan trimmed its economic growth forecast yesterday but held off on offering fresh stimulus, convinced that an expected pick up in consumption will help accelerate inflation toward its 2 percent target.

Defying lingering market scepticism over its rosy outlook, the central bank roughly maintained its forecasts that see inflation reaching its target in the fiscal year beginning in April 2016.

Nodding to signs of weakness in external demand, the BOJ offered a slightly gloomier view on exports and output to say they have been “picking up albeit with some fluctuations.”

Last month, it said exports and output were picking up.

“The BOJ’s growth forecasts are not too far off the mark, but the inflation forecasts look extremely optimistic,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“The BOJ will likely have to downgrade these inflation forecasts again ... Since (Governor Haruhiko) Kuroda is sticking by his 2 percent inflation target, this would imply more monetary easing at some point.”

As widely expected, the BOJ kept intact its pledge of expanding base money at an annual pace of 80 trillion yen (US$648 billion) via aggressive asset purchases.

Japanese policymakers, who had braced for market turbulence from

Greece’s debt crisis and China’s stock market rout, were relieved when Beijing’s rapid-fire support steps restored a measure of calm to its markets and Athens clinched a lastminute conditional bailout.

A quarterly review of its long-term forecasts underscored uncertainties surrounding the BOJ’s projections with the economy likely to have stalled in April-June on weak exports.

The BOJ cut its growth projection for the current fiscal year to March 2016 by 0.3 percentage point to 1.7 percent.

The nine-member board also cut by 0.1 point to 0.7 percent this fiscal year’s consumer inflation forecast.

The estimate for fiscal 2016 was trimmed by the same margin to 1.9 percent, and that for fiscal 2017 to 1.8 percent from 1.9 percent.

External outlook uncertain

At a press conference scheduled for early afternoon, Kuroda is likely to reiterate his optimism on the global outlook but may point to heightening uncertainty over the bank’s scenario that solid U.S. growth will pull emerging economies out of the doldrums next year.

Japan’s economy likely entered a soft patch on weak exports and household spending, though analysts expect growth to pick up in JulySeptember as rising wages lift consumption.

KEY POINTS BOJ keeps massive stimulus intact as expected BOJ slightly cuts CPI forecasts but eyes goal being met next yr Assessment of exports, output slightly bleaker

While the BOJ expects robust U.S. demand to prop up growth in Japan’s Asian export markets, pessimists in the board fret that shipments may remain soft for longer than expected given China’s economic woes and lacklustre global growth.

The International Monetary Fund trimmed its global growth forecast to take into account the impact of recent weakness in the United States.

The BOJ is confident a solid economic recovery will help accelerate inflation to 2 percent by around September next year.

Many analysts doubt price growth will accelerate so quickly and some predict additional stimulus to come later this year.

Reuters

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July 16, 2015

Asia South Korea’s job creation slows in June The youth unemployment rate for those aged 15-29 reached 10.2 percent in June, higher than any June figure in the past 26 years

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ob creation in South Korea slowed down last month on the aftermath of the outbreak of Middle East Respiratory Syndrome (MERS), a government report showed yesterday.

The number of those employed increased 329,000 in June from a year earlier after rising 379,000 the prior month, according to Statistics Korea.

Job creation in the manufacturing and construction sectors advanced 3.1 percent and 1.6 percent each last month, but those in the service industry slowed on the back of MERS outbreak. The service industry added 282,000 jobs in June from a year earlier after creating 315,000 jobs in May. As more population participated in economic activity, both employment and unemployment rates advance in June. The participation rate climbed 0.2 percentage points from a year earlier to 63.3 percent in June.

The hiring rate for those aged 15 or more was unchanged at 60.9 percent, but the OECD-method employment rate for those aged 15-64 gained 0.3 percentage points to 66 percent.

The employment rate gauges the percentage of working people to the working age population, or those aged 15 or more. It is used as an alternative to jobless rate, and the government targets 70 percent over the long run.

Those who were too discouraged to continue their search for jobs amounted to 440,000 in June, up from 414,000 in May

The jobless rate gained 0.4 percentage points from a year earlier to 3.9 percent in June. The so-called “sentiment” jobless rate, which the statistical agency began to unveil from November 2014, was 11.3 percent in June, up from 11 percent in May. The number of youths unemployed was 449,000 in June, up 42,000 from a year earlier. The youth hiring rate was 41.4 percent in June, up 0.7 percentage points from a year ago.

The June employment was led by people of old age. Job creation in those aged more than 60 increased

170,000 in June, and those in their 50s and 20s expanded 155,000 and 73,000 each. Job creation in their 30s and 40s fell 55,000 and 12,000 each.

Among wage earners, regular workers rose 2.8 percent last month, with irregular workers and those who work on a daily basis gaining 1.3 percent and 2.9 percent respectively.

The economically inactive

population, or those aged over 15 minus the sum of those employed and unemployed, grew 0.7 percent, or 104,000, from a year earlier to 15,770,000 in June.

Among them, those in schools reduced 4.9 percent, but those in childcare and old age increased 2.6 percent and 5.1 percent each.

Xinhua

Fewer people want to live Down Under Alongside fewer migrants in Australia, the natural increase in population also slowed last year to the weakest since 2006

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s Australia’s mininginvestment boom winds down, the central bank has been relying on a steady flow of new migrants to boost the economy -- a stimulant most developed nations lack.

But the country’s appeal is now waning as wages stagnate and its jobless rate climbs above the U.S. level.

The population is on track for the slowest growth in nine years -- a danger signal for an already faltering economy.

“It’s another challenge for policy makers already struggling with a difficult situation,” said James McIntyre, head of economic research at Macquarie Group Ltd. in Sydney and a former Treasury official. “On the monetary policy side, it really amps up the pressure.”

An expanding population and record-low interest rates are lynchpins for the Reserve Bank of Australia’s forecast that growth will pick up to its long-run average of about 3 percent. Without rising ranks of new workers to boost consumption and buy the growing number of newly constructed houses, the economy’s recovery is that much trickier.

Australia’s population growth slowed to 1.4

percent in 2014 -- double the average of countries in the Organisation for Economic Cooperation and Development but down from 1.8 percent two years earlier.

The slowdown is at odds with the RBA’s May forecast for a 1.7 percent gain in workingage population this year.

Easing needed?

“This suggests the Australian economy will likely fall short

of the current growth path expected by policy makers in the near term and thus justifies some further easing,” said Tim Toohey, chief economist for Goldman Sachs Group Inc. in Australia.

Consumer confidence dropped 3.2 percent this month, a Westpac Banking Corp. survey showed yesterday, as pessimists outnumbered optimists for the 15th time in 17 months.

Australia and the U.S., which traditionally vie for immigrants, are heading in opposite directions economically. The jobless rate Down Under, currently at 6 percent, has been higher than the U.S. rate, now at 5.3 percent, for the past nine months.

Macquarie estimates Australia’s population growth could slow to 1.3 percent this year, the weakest since mid-2006, as net migration cools to 162,000. Treasury projected earlier this year that a net 237,750 people would arrive in 2015, rising to 250,000 in each of the following three years.

Consumers critical

The danger of the slowdown in new arrivals is underscored

by Australia’s first quarter growth data. The economy expanded 2.3 percent from a year earlier, with 1.3 percentage points of that coming from resource exports, according to McIntyre. That means the rest of the economy produced just 1 percentage point of growth, highlighting the importance of sustaining consumer demand.

“Households are choosing to have children only after a period of sustained income

growth,” Toohey said. Given household income growth is the slowest since the early 1990s, “it is not surprising that the number of births has slowed appreciably.”

Fewer workers than expected are also a complication for Australia’s budget, as revenue from personal income and consumption taxes is hit.

The fiscal deficit is already more than 2 percent of gross domestic product and compounded by falling iron ore prices.

Housing glut?

Then there’s housing.

The central bank’s 2 percent cash rate has fuelled a surge in property prices in the two biggest cities, Sydney and Melbourne, prompting a building boom as construction companies cash in. Policy makers have hailed the home building boost as a means to ease supply shortfalls and soak up former mine workers.

But Goldman now sees the potential for a property glut as population growth slows.

Its revised demographic estimates point to an excess of 75,000 dwellings by 2017 rather than a previously forecast shortfall of 140,000.

Bloomberg News

14 | Business Daily

July 16, 2015

International BlackRock quarterly profit rises 1.3 pct BlackRock Inc, the world’s largest asset manager, posted a small rise in second-quarter profit, as the firm saw net outflows for the first time in several quarters. The New York-based asset manager reported net income attributable to company of US$819 million, or US$4.84 per share, up from US$808 million, or US$4.72 per share, a year earlier.

European Union may ease bank rules Tougher capital rules imposed on banks in the European Union since the financial crisis will be reviewed to see if they unnecessarily crimp lending, the bloc’s financial services chief said yesterday, as Europe makes growth its top priority. Jonathan Hill said the bloc’s capital requirements law may be changed to make it easier for banks to lend to companies. Banks were found to be undercapitalised when the 2007-09 financial crisis began, forcing taxpayers to bail out many lenders, and a global set of tougher capital rules, known as Basel III, were approved and applied in Europe.

Former HSBC boss regrets Swiss, Mexican deals HSBC should have made deeper checks before buying a Swiss private bank that allegedly allowed customers to dodge taxes and a Mexican business that breached anti-money laundering rules, its former chairman said. “With the benefit of hindsight, it would have been better to have drilled into the detail much earlier. We didn’t get everything right,” Stephen Green told British lawmakers yesterday. These scandals have damaged the image of Europe’s biggest bank and the reputation of Green, who served as the bank’s chief executive between 2003 and 2006.

Woolworths set to beat full-year sales estimates South Africa’s Woolworths Holdings Ltd is poised to beat estimates with its annual sales next month after the retailer said yesterday that revenue probably surged 55 percent in the year through June.

Woolworths said sales were boosted by the first time contribution from David Jones, the Australian department store chain it acquired in August last year.

The sales growth guidance is above a 51.5 percent forecast in a Reuters poll of 12 analysts. Excluding the impact of David Jones, sales grew 12 percent, slightly slower than a year ago.

Paulson’s hedge fund takes stake in Syngenta Hedge fund Paulson & Co has taken a stake in Syngenta AG, and could push for the board of directors of the Swiss pesticide maker to accept a takeover offer from U.S. seed company Monsanto Co, people familiar with the matter said on Tuesday. Monsanto, the world’s largest seed company, made a US$45 billion bid for Syngenta that the Swiss company rejected. The U.S. company is still working on a deal and could decide to increase its bid. Paulson & Co, headed by billionaire John Paulson, became famous after betting that the U.S. housing bubble would burst.

Renewables outpace nuclear for 45 pct of world population Almost half of all added electricity generating capacity in 2014 was from renewables Aaron Sheldrick

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olar, wind and other forms of renewable energy besides hydro-electric dams now supply more electricity than nuclear in Japan, China, India and five other major economies accounting for about half the world’s population, an atomic industry report shows.

While nuclear stations on average produce about twice as much electricity as renewables annually for every kilowatt installed, the high growth of solar, wind and other renewables means atomic power is fast being eclipsed as nations turn away from the energy source after the Fukushima disaster in Japan.

This is one of the main observations of the World Nuclear Industry Status Report 2015, a draft copy of which was given to Reuters.

Nuclear power generation increased by 2.2 percent globally in 2014, even with the first extended shutdown of Japan’s atomic industry for 45 years, but with solar power increasing 38 percent and wind power up by a tenth, energy from the sun, wind and other renewable sources is outpacing that from the atom.

Rising costs, construction delays, public opposition and aging fleets of reactors are hurting the chances of nuclear while falling costs, greater efficiency and better management of fluctuating renewable supplies, along with improved storage, are changing the face of energy production globally.

“The impressively resilient hopes

that many people still have of a global nuclear renaissance are being trumped by a real time revolution in efficiency plus renewables plus storage, delivering more and more solutions on the ground every year,” Jonathon Porritt, co-founder and trustee of the Forum for the Future, wrote in a foreword to the report.

Almost half of all added electricity generating capacity in 2014 was from renewables, excluding large hydrodams, the report said.

In output terms, China, Japan and India, which are three of the world’s four largest economies, along with Brazil, Germany, Mexico, the Netherlands and Spain now generate more electricity from non-hydro renewables than nuclear, it said.

In Britain, output from renewables, including hydro, surpassed atomic generation “for the first time in decades”, while in the United States the share of renewables was 13 percent, up from 8.5 percent in 2007.

Discounting Japan’s moribund industry due to its long-term outage, the report said the world’s operating units numbered 391 in 2014, up three from a year earlier, and 47 less than a 2002 peak.

The report’s lead authors are industry analysts Mycle Schneider, based in Paris, and London-based Antony Froggatt. Both have advised European government bodies on energy and nuclear policy.

Reuters

U.K. wage growth accelerates as unemployment rate rises Employment fell by 67,000 in the March-May period Jillian Ward

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.K. wage growth accelerated to the fastest pace in more than five years while the jobless rate rose, creating a mixed picture for policy makers assessing the timing for the first interest-rate increase.

The pound fell.

Total pay increased an annual 3.2 percent in the three months through May, the fastest since early 2010, the Office for National Statistics said yesterday in London. It’s still less than the 3.3 percent pace forecast by economists; in addition, the ONS said the unemployment rate rose to 5.6 percent, the first increase since the fourth quarter of 2013.

The Monetary Policy Committee is closely monitoring the labour market for signs of price pressures though the inflation rate dropped to zero last month. Governor Mark Carney said Tuesday the time to raise interest rates from a record low is drawing

closer, a view echoed by policy maker David Miles hours later.

“The soft tone of the latest U.K. labour-market figures will temper expectations of a near-term rate rise following yesterday’s relatively hawkish comments by some MPC members,” said Vicky Redwood, an economist at Capital Economics in London. “Although some members of the MPC are clearly ready to start voting for a rate rise soon, we don’t think that the economic data are strong enough to push a majority toward one yet.”

Employment drop

The ONS report also showed that employment fell by 67,000 in the March-May period, the first decline since early 2013. There was a drop of 97,000 in part-time workers, while full-time employment increased 30,000.

Economists had forecast the ILO unemployment rate would stay at 5.5 percent, based on the median of estimates in a Bloomberg News survey. That level, reached in the three months through April, was the lowest since 2008.

The data are “extremely concerning,” said Stephen Timms, who speaks for the opposition Labour Party on work and pensions.

Total pay in the private sector increased an annual 3.8 percent in the quarter through May, according to the ONS. That’s the biggest increase since April 2010. Regular pay across the economy rose 2.8 percent, up from 2.7 percent.

A narrower measure of unemployment showed claims for jobless benefits rose 7,000 in June from May. That’s the first increase since October 2012. The rate on that measure stayed at 2.3 percent.

Bloomberg News

Business Daily | 15

July 16, 2015

Opinion

Today’s dark lords of finance? wires Business

Leading reports from Asia’s best business newspapers

Alexander Friedman Group CEO of GAM Holding

VIETNAM NEWS Small-sized banks with no specific business strategy are considering mergers, as recent consolidation in the banking sector has made it difficult for them to compete with larger banks. The recent mergers and acquisitions wave in the banking sector has created larger banks and reordered the banking system, posing difficulties for smaller banks in competing against many larger rivals.

According to the director of a small bank, who declined to be named, it is now difficult for small banks to compete against larger banks in capital mobilisation due to their brand image.

THE AGE (Australia’s) Treasurer Joe Hockey has reaffirmed his commitment to addressing bracket creep in the upcoming tax review, but has refused to include changes to politically sensitive areas like superannuation concessions, negative gearing and GST. Mr Hockey has indicated previously that he wants to cut personal tax rates.

The Intergenerational Report released by Treasury earlier this year also outlined the problem of bracket creep where wage inflation places taxpayers in higher marginal tax brackets, leaving them with less take-home pay and giving them less incentive to work.

THE JAPAN NEWS U.S. carrier Delta Air Lines Inc., the world’s largest airline, is in talks with the U.S. aircraft leasing company Intrepid Aviation Ltd. over a possible Delta role in reviving Skymark Airlines.

Delta has also weighed a counterproposal by the failed Japanese airline, according to sources. Both Skymark and Intrepid, the airline’s biggest creditor, individually drafted rehabilitation plans seeking support from the other creditors. Skymark, on the other hand, has drawn up a plan of its own that includes assistance from ANA Holdings Inc.

PHILSTAR The Bureau of Collections (BOC) grew its collections by 14.3 percent to P31.2 billion in June from P27.3 billion a year ago, surpassing its target for the period. The latest figure is also 6.4 percent higher than the bureau’s P29.3 billion collection goal for the period. The increase in collections was due to the 19.3-percent climb in the volume of imports during the period, the BOC said.

The volume of non-oil imports went up 26.5 percent, offsetting a three percent decrease in the shipments of crude oil and petroleum products.

G20 central bankers in Australia meeting last year

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n his Pulitzer-Prize-winning book, Lords of Finance, the economist Liaquat Ahamad tells the story of how four central bankers, driven by staunch adherence to the gold standard, “broke the world” and triggered the Great Depression.

Today’s central bankers largely share a new conventional wisdom – about the benefits of loose monetary policy. Are monetary policymakers poised to break the world again?

Orthodox monetary policy no longer enshrines the gold standard, which caused the central bankers of the 1920s to mismanage interest rates, triggering a global economic meltdown that ultimately set the stage for World War II. But the unprecedented period of coordinated loose monetary policy since the beginning of the financial crisis in 2008 could be just as problematic.

Indeed, the discernible effect on financial markets has already been huge.

The first-order impact is clear.

Institutional investors have found it difficult to achieve positive real yields in any of the traditional safe-haven investments. Life insurers, for example, have struggled to meet their guaranteed rates of return. According to a recent report by Swiss Re, had government bonds been trading closer to their “fair value,” insurers in America and Europe would have earned some US$40-US$80 billion from 2008 to 2013 (assuming a typical 50-60% allocation to fixed income). For public pension funds, an additional 1% yield during this period would have increased annual income by US$40-50 billion.

Investors have responded to near-zero interest rates with unprecedented adjustments in the way they allocate assets.

In most cases, they have taken on more risk. For starters, they have moved into riskier credit instruments, resulting in a compression of corporatebond spreads. Once returns on commercial paper had been driven to all-time lows, investors continued to push into equities.

Approximately 63% of global institutional investors increased allocations in developed-market equities in the six months prior to April 2015, according to data from a recent State Street survey – even though some 60% of them expect a market correction of 10-20%.

Even the world’s most conservative investors have taken on unprecedented risk.

Japan’s public pension funds, which include the world’s largest, have dumped local bonds at record rates. In addition to boosting investments in foreign stocks and bonds, they have now raised their holdings of domestic stocks for the fifth consecutive quarter.

These allocation decisions are understandable, given the paltry yields available in fixed-income investments, but the resulting second-order impact could ultimately prove devastating.

The equity bull market is now six years old. Even after the market volatility following the crisis in Greece and the Chinese stock market’s plunge, valuations appear to be high. The S&P 500 has surpassed pre-2008 levels, with companies’ shares trading at 18 times their earnings.

As long as the tailwinds of global quantitative easing, cheap oil, and further institutional inflows

As long as the tailwinds of global quantitative easing, cheap oil, and further institutional inflows keep blowing, equities could continue to rally. But at some point, a real market correction will arrive

keep blowing, equities could continue to rally. But at some point, a real market correction will arrive. And when it does, pension funds and insurance companies will be more exposed than ever before to volatility in the equity markets.

This overexposure comes at a time when demographic trends are working against pension funds. In Germany, for example, where 20% of the population is older than 65, the number of

working-age adults will shrink from about 50 million today to as few as 34 million by 2060.

Among emerging markets, rapidly rising life expectancy and plunging fertility are likely to double the share of China’s over-60 population by 2050 – adding roughly a half-billion people who require support in their unproductive years.

If the combined effect of steep losses in equity markets and rising dependency ratios cause pension funds to struggle to meet their obligations, it will be up to governments to provide safety nets – if they can. Government debt as a percentage of global GDP has increased at an annual rate of 9.3% since 2007.

In Europe, for example, Greece is not the only country drowning in debt. In 2014, debt levels throughout the eurozone continued to climb, reaching nearly 92% of GDP – the highest since the single currency’s introduction in 1999. If pensions and governments both prove unable to provide for the elderly, countries across the continent could experience rising social instability – a broader version of the saga playing out in Greece.

The new Lords of Finance have arguably been successful in many of their objectives since the financial crisis erupted seven years ago. For this, they deserve credit. But, when an emergency strikes, large-scale policy responses always produce unintended consequences typically sowing the seeds for the next full-blown crisis. Given recent market turmoil, the question now is whether the next crisis has already begun.

Project Syndicate

16 | Business Daily

July 16, 2015

Closing China sees record summer grain output

China begins construction of ‘world’s tallest’ dam

Summer grain output increased for a 12th consecutive year in 2015 thanks to intensified government support for agriculture and favourable weather, according to new official figures. The National Bureau of Statistics said in a statement on its website yesterday that summer grain production reached a record 141.07 million tonnes this year, up 3.3 percent, or 4.47 million tonnes, from that of 2014. The total area for growing summer crops was 27.69 million hectares this year, up 0.4 percent from the previous year and adding 548,000 tonnes to the yield, the bureau said.

China has begun building a 314-metre high dam which will be among the world’s tallest, officials said, as the country massively expands hydropower. The Shuangjiankou dam on a tributary of China’s mighty Yangtze river will be completed in 2022, the environmental ministry said on its website Tuesday. The facility, costing 36 billion yuan (US$5.8 billion), will be higher than the world’s current tallest dam, the 305-metre Jinping-1, also in China. China seeks to reach a goal of obtaining 20 per cent of its power from non-fossil sources by 2030.

Huawei gets green light to make handsets in India Foxconn, the Taiwanese tech group that assembles the Apple Inc iPhone in China, is also looking to open 10-12 plants in India by 2020

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hinese telecoms giant Huawei Technologies Co has won a key Indian government manufacturing approval, paving the way for it to become the first major Chinese brand to make handsets in one of the world’s biggest markets for mobile phones.

The green light from the Ministry of Home Affairs, confirmed by an official yesterday, comes 19 months after Huawei first applied for a manufacturing licence, amid wrangling over national security concerns. It also marks a significant boost for Prime Minister Narendra Modi’s ‘Make in India’ campaign.

India has 975 million mobile phone subscriptions in a fast-growing market.

Close to 150 million subscribers use mostly imported, Internet-friendly smartphones, a number that’s forecast to grow about 26 percent annually until 2019, according to a recent HSBC report.

“India is an important overseas market for Huawei,” Allen Wang, president of Huawei’s consumer business group in India, told Reuters yesterday. “We aim to become a top three brand in India within three years.”

A spokesman for Huawei in India said separately the firm had not received official communication from the government, and declined to comment further.

India has 975 million mobile phone subscriptions in a fast‑growing market

Pending final approvals, Huawei would become the first big-name Chinese phone maker to manufacture hardware in India’s growing market to helping compensate for slowing growth at home. Xiaomi Inc, China’s leading smartphone, maker earlier this month reported a sequential drop in half-year sales.

Huawei already has research and development operations in India, and manufactures for export in the southern state of Tamil Nadu. Setting up local research and production centres is seen as key to helping Chinese firms offer top-end features at even lower cost to India’s pricesensitive consumers.

The green light for Huawei comes two months after Prime Minister Modi visited China in an effort to promote stronger business ties.

China’s ambassador to India told Reuters earlier this year that tough security reviews and visa restrictions were slowing investment, despite Modi’s promise to roll out the red carpet to foreign business.

India has been a testing ground for Chinese firms like Lenovo Group Ltd and others, trying

out new products and strategies.

Chinese producers are beginning to win market share from betterknown rivals such as South Korea’s Samsung Electronics Co and homegrown supplier Micromax.

Foxconn, the Taiwanese tech group that assembles the Apple Inc iPhone in China, is also looking to open 10-12 plants in India by 2020 and is in talks to manufacture the iPhone in the country.

S. Korea indicts military generals Consensus the key for defence projects corruptions on land reform in India

Air pollution costs France 100 billion euros per year

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outh Korean prosecutors said yesterday that dozens of officials, including 10 former and current military generals, were indicted for corruption charges on defence projects.

The joint investigation team between the prosecution and the military, which was launched in November last year to eliminate irregularities in defence projects, unveiled an interim probe result, local media reports showed. The number of those prosecuted was 63, including 38 former and current military officers, six government officials and 19 businessmen and lobbyists.

Among them, 47 were under restricted prosecution.

The 38 military officers included four-star generals such as the two former Navy chiefs of staff. Twentyeight Navy officials were indicted, with six Air Force officers and four Army officers being prosecuted.

The military corruption amounted to 980.9 billion won (US$860 million), including forgery of documents, bribery, military secrets-related crimes.

The investigation team, composed of 18 prosecutors, eight military prosecutors and about 90 investigators, would continue its joint probe as 41 others are still under investigation.

ndia’s government said yesterday a consensus was needed quickly to pass a business-friendly land reform law, or else a legislative deadlock would have to be broken by allowing federal states to pass their own measures.

“Either the centre must build a coalition and pass the land bill quickly, or give the flexibility to the states to pass their own laws,” Finance Minister Arun Jaitley told a news conference.

He spoke after Prime Minister Narendra Modi chaired a meeting with leaders of India’s federal states. Only 16 of 29 chief ministers attended the talks, with Jaitley accusing some from opposition parties of a “boycott”.

Modi has been unable to pass amendments that make it easier for government and business to forcibly buy land for development, because he lacks a majority in the upper house of parliament. The bill is a key element of his economic agenda.

The opposition Congress party, which lost a 2014 general election to Modi, opposes the changes, which it denounces as anti-farmer.

Xinhua

Reuters

Reuters

he effects of air pollution cost France some 100 billion euros (US$110.1 billion) each year, a French Senate committee report estimated yesterday, citing impact to health as the major expense.

The study said air pollution is not merely a health threat, but also represents “an economic aberration” costing the French state and businesses billions annually in treating illness, and financing employee sick leave, lost productivity, reduced agriculture yields and cleaning up sooty buildings and other venues.

It estimated the financial impact of atmospheric pollution for health reasons at “between 68 and 97 billion euros” per year, ranging from treatment of aggravated conditions like asthma to battling forms of cancer caused by smog.

It pegged the direct cost to France’s health care system at least three billion euros per year, with the remainder of the linked largely to time and productivity lost by businesses whose employees require sick leave during peak pollution periods.

Outlays for non-health reasons were estimated at 4.3 billion euros.

AFP