Macau Business Daily August 10, 2015

Closing editor: Joanne Kuai

MOP 6.00

The Devil discards Prada Several quarters have disappointed. Market conditions in Greater China - Macau and Hong Kong in particular – have weighed heavily on Prada Group’s bottom line.

Sales fell 19 pct in Q1.

Analysts say the situation is ‘worse than feared’

Year IV

Number 853 Monday August 10, 2015

Publisher: Paulo A. Azevedo

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Financial ties strengthened Getting it together. The approval standards of the newly-introduced policy for the cross-border yuan loan business seem set to be adopted in Macau. The loan interest rate may be freely decided by banks and companies based on existing business principles, said BoC Macau. State-owned Bank of China is leading the charge Page

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Vietnam-Macau charter flights to boost tourism Page 2

BNU profit reaches MOP28.5 million in 1H Page 3

Designed to deliver

MGTO visits Nansha in Guangzhou and Shenzhen

The gov’t has completed a marathon process. Discussing regulations applicable to the formation and working rules for a committee. Responsible for accreditation of the city’s urban planning and architecture professionals. About 100 to 200 registered interns are expected each year

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Future Bright forecasts losses of HK$27.5 million for 1H Page 5

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Deflation fears fester China’s producer prices continued to fall in July. Signalling a looming deflation risk, data from the National Bureau of Statistics (NBS) showed yesterday. The July reading dipped to the lowest level since end-2009. Marking the 41st straight month of decline

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HSI - Movers August 7

Model Citizen

Studio City has high hopes of success. But its financial model may be drastically affected by table allocation, warns CEO Lawrence Ho. Substantially less than 400 could mean a reversion to VIP and premium mass. Ho hopes Melco Crown can be ‘rewarded’ for being a ‘model citizen’ apropos fulfilling gov’t expectations

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www.macaubusinessdaily.com

Interview

Go green, go healthy

Name

%Day

China Shenhua Energy

+4.18

Hong Kong Exchanges

+3.41

Galaxy Entertainment

+3.36

Bank of Communicatio

+2.50

Cathay Pacific Airways

+1.96

China Mengniu Dairy C

-1.04

Hang Lung Properties

-1.17

Want Want China Hol

-1.31

Cheung Kong Property

-1.35

Belle International Ho

-2.22

Source: Bloomberg

I SSN 2226-8294

Healthy take-away food. Tailored for health conscious urban white collar workers. Sophie Lei says green living and green eating are the way to go. The co-founder of Greens Kitchen & Juicery told Business Daily she believes the local good food industry has great potential. It’s just a matter of getting the word out

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August 10, 2015

Macau

Pool of registered architects and urban planners stable

Credit card repayments down 8.9 pct Q-on-Q

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ollowing the implementation of the new qualification system on July 1 for architects and urban planners, the government expects that the newly registered number of professionals working as interns in this field will remain at around 100 to 200

every year, a trend that will not vary much from the past.

The number was given by chief of the technical support division of the Land, Public Works and Transport Bureau (DSSOPT) Lei Hon Kei on Friday, when the Executive Council announced that they have finished discussing

a draft administrative regulation that decides the formation and working rules for a committee responsible for the accreditation of the city’s urban planning and architect professionals.

Six of this 13-member committee will be appointed professionals from the private sector, with the rest government delegates, Council spokesperson Leong Heng Teng said on Friday. The exact line-up of the committee will only be gazetted later this year.

The new law governing the qualification system for architects and urban planners, approved last year and effective last month, covers a wider and more detailed range of engineering and urban planning professionals when compared to the previous professional registration practice.

Prior to the law coming into effect this year, the city had about 1,500 registered professionals working as architects and engineers, Mr. Lei said.

S.L.

he total number of personal credit cards in circulation was 870,062 at the end of June 2015, equivalent to an increase of 2.7 per cent over a quarter earlier and 9.2 per cent increase on the same period last year, according to the credit card statistics for the second quarter of 2015 released by the Monetary Authority of Macau (AMCM) on Friday.

The latest data from AMCM reveals that the numbers of pataca (MOP) cards, Hong Kong Dollar (HKD) cards and Renminbi (RMB) cards were 628,756 plus 79,035 and 162,271 respectively.

MOP cards, HKD cards and RMB cards witnessed respective growth of 2.9 per cent, 1.1 per cent and 2.9 percent quarter-on-quarter.

Compared with a year ago, MOP cards and RMB cards (the majority of which were MOP/RMB dual-currency cards) rose 10.9 per cent and 9.1 percent, respectively, whilst HKD cards dropped 2.6 per cent .

As at end-June 2015, the credit card credit limit granted

by banks in Macau reached MOP19.5 billion, up 6.7 per cent from end-March 2015.

Credit card receivables amounted to MOP2.1 billion while the rollover amount totalled MOP616.7 million, accounting for 28.9 per cent of credit card receivables.

Turnover remained

The delinquency ratio (i.e.) the ratio of delinquent amount overdue for more than three months to credit card receivables, edged down from 1.07 per cent at endMarch 2015 to 1.06 per cent at end-June 2015 but was higher than the level of 0.87 per cent a year ago.

For the second quarter of 2015, credit card turnover remained virtually unchanged at MOP4.3 billion. The cash advance turnover was MOP218.2 million, accounting for 5.0 per cent of total credit card turnover.

Credit card repayments, in which payments for interest and fees are included, went down 8.9 per cent from the previous quarter to MOP4.2 billion.

Zhuhai has accumulatively supplied 30 billion kwh to Macau

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huhai Power Supply Bureau announced last week that it has accumulatively supplied a total of 30 billion kwh of electricity, and achieved 31 consecutive years

of stable power supply to Macau, Xinhua News Agency reported.

From July 1984, the Zhuhai Power Supply Bureau has been supplying electricity to Macau on a 110-kilovolt power line. From January to July this year, Zhuhai exported 2.21 billion kwh to Macau, a six-fold increase over the same period in 1999.

To enhance the stability of power supply to Macau, Zhuhai established the Electric Power Research Institute, which has developed a cable for on-site detection of partial discharge line interference software.

A representative of the Zhuhai Power Supply Bureau told Xinhua News Agency that to guarantee the safe supply of power to the SAR the Bureau set up Gongbei substation in Zhuhai. On July 25, the circuit of Zhuhai Qinyun substation to Macau Lotus substation completed construction and is ready to be put into use.

Travel firms plan Vietnam-Macau flights to boost tourism

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travel agency in Macau is cooperating with two Vietnamese companies to offer charter flights between Ho Chi Minh City and Macao, Vietnamese online newspaper Tuoi Tre (Youth) News reported last week.

There will be three return flights each week from September 22, according to representatives of Sun Star from Macau, Viking Travel in Ho Chi Minh City and Indochina Travel Services in Hanoi. They said

they will maintain the service for a year and will increase the number of flights if the demand is strong. Each flight can carry 180 passengers.

Tran Xuan Hung, director of Viking, said it will cooperate with the Macau firm to bring tourists into Vietnam on short trips. It will also bring foreign tourists from Ho Chi Minh City to Macau on the chartered flights, local news website Saigon Times Online reported.

Xinhua

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August 10, 2015

Macau

New yuan loan policy for Nansha, Hengqin The state-owned Bank of China Macau branch believes that more Chinese firms will make use of the freshly announced cross-border yuan loan policy in Nansha and Hengqin and borrow from banks here Stephanie Lai

sw.lai@macaubusinessdaily.com

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he approval standards for Macau firms applying for loans for their projects in Hengqin and Nansha will become more similar to the ones they get for their projects in the city following the implementation of the recently announced pilot measures for crossborder yuan loan business in these two new zones of Guangdong Free Trade Zone, the Bank of China (BoC) Macau Branch remarked to Business Daily.

On July 13, the People’s Bank of China Guangzhou Branch announced the administrative measures for the pilot cross-border yuan loan business in Nansha and Henqin New Area, enabling firms incorporated in both areas and engaged in actual operation or investment in these two new areas to apply for cross-border yuan loans from banking financial institutions from Hong Kong or Macau.

The eligible borrowers also cover companies incorporated in other areas of Guangdong Province, including Macau, that are engaged in the investment or construction of ‘important’ projects in Nansha or Hengqin – although the measures do not specify what standards constitute ‘important’.

Macau share

Nevertheless, the local branch of Bank of China has been amongst the first batch of banks to have made use of the measures. Last month, together with the Guandong and Hong Kong branch of BoC, the BoC Macau branch jointly issued 595 million yuan to five Chinese firms operating in both Nansha and Hengqin, including a

subsidiary of food chain operator Future Bright Holdings Ltd. which is currently building a food plaza project in Hengqin Island. Future Bright operates several chain restaurants and food souvenir businesses, as well as industrial catering in Macau.

‘The approval standards for Macau firms [applying for loans for their projects in Nansha or Hengqin] will become more similar to the loans they apply for, for projects here.

And the loan interest rate can be freely decided by the banks and the companies based on their business principles, as practised in Hong Kong and Macau,’ BoC Macau remarked on the new measures to us in a written reply.

The bank did not give us information of any further batch of companies applying for loans under the new measures. But it noted that small and medium enterprises (SMEs) or start-ups here that are developing their business in Nansha or Hengqin can consider making use of the new measures.

Pioneers

The bank’s local branch is at the same time bullish on more Mainland Chinese firms taking advantage of the new cross-border yuan loan measures given the cost advantage of the banks in Macau and Hong Kong with their business environment of liberalised interest rate.

BoC Macau’ competitor Industrial and Commercial Bank of China (Macau) Ltd. is another front-running financial institution taking part in the cross-border yuan loan policy as soon as the new measures were announced.

ICBC Macau, together with the Guangdong branch of the bank, issued 240 million yuan to four Mainland Chinese firms running projects in Nansha and Hengqin. The borrowers are BP Guangzhou Development Oil Products Company Ltd., Nansha Stevedoring Co. Ltd. of Guangzhou Port, Zhuhai Chimelong Investment and Development Company Ltd., and Hengqin Financial Investment Co. Ltd., according to ICBC Macau.

BNU profit reaches MOP28.5 million in first half The profit of the bank grew 46 per cent during the first half of the year to MOP28.5 million, according to Portuguese news agency Lusa

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anco Nacional Ultramarino (BNU) increased profits during the first half of this year by 46 per cent to MOP28.5 million in comparison to the same period of 2014. According to the data accessed

by Lusa, BNU achieved the best results of the Portuguese Group Caixa Geral de Depósitos.

The Portuguese news agency compared the data from the first half of 2015 with the results of 2012, during which time BNU more than doubled its profit. Still according to Lusa – which does not specify the amounts – from 2012 to 2015, turnover increased 57 per cent, financial margin 70 per cent, and income 53 per cent.

Also, at the end of July BNU had 208,000 clients, representing an increase of 8 per cent in comparison with the first half of 2012. During the same period, the number of financial products hold by clients increased to an average of 3.26, more than 8 per cent.

“The results of the first half of the year reflect the work that has been done during recent years, which is more focused on service to clients and on a closer proximity with the community. At the same time, we have been launching in the market a variety of innovative and attractive products that have generated a very positive feedback from the market”, the CEO of BNU, Pedro Cardoso, told Lusa.

“We are working step-by-step to make sure BNU goes through sustainable growth and also to make available for our clients products that on one side strengthen our position in the local market and on the other side reestablish the Group Caixa Geral de Depósitos as the ideal partner in making sure that Macau secures its position connecting China and the Portuguesespeaking countries”, he explained.

Regarding the whole year of 2014, BNU registered a profit of MOP443.3 million, an increase of 10.1 per cent in comparison to 2013.

J.S.F

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August 10, 2015

Macau

MGTO Nansha and Shenzhen visit enhances regional co-operation With regional travel a catalyst for tourism development, Macau’s tourism sector hopes strong ties will help promote ‘one trip, multi stops’

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he Macau Government Tourist Office (MGTO) visited Nansha in Guangzhou and Shenzhen together with Macau trade delegates last week, where they met with local tourism officials and members of the travel trade in order to enhance regional co-operation in tourism.

This was in keeping with one of this year’s major tourism tasks, which is to implement the ‘Framework Agreement on Co-operation between Guangdong and Macao’ in order that Macau and Nansha in Guangzhou can jointly develop yachting tourism.

In order to implement the task

proposed in the co-operation meeting between Guangzhou and Macau this May, MGTO led a delegation with representatives of Macau travel trade to Nansha for an update on the city’s latest developments. The delegation then took the opportunity to pay an exchange and familiarisation visit to Shenzhen.

MGTO Director Maria Helena de Senna Fernandes, Head of Destination Marketing Betty Fok and Head of Licensing and Inspection Ines Chan together with representatives from the Association of Macau Tourist Agents, the Travel Industry Council

of Macau and Macau travel agencies formed a delegation of 16 members to visit the two cities.

Besides visits to local attractions, the three-day programme included networking and discussion sessions with members of the travel trade in Nansha and Shenzhen.

MGTO officials also met with the tourism authorities of Guangzhou and Shenzhen to discuss a range of topics for the enhancement of co-operation including tourism resource sharing, visitor trends of the destinations, concerted efforts in promoting regional travel and the upgrade of tourism quality.

The tourism authorities of Shenzhen and Macau signed the first Memorandum of Co-operation on Tourism in 2006. Following that, the two offices signed the ‘Agreement on Co-operation to Foster Quality and Integrity Tourism in Macau’ in early 2012 and the ‘Framework Agreement on Co-operation in Tourism between Shenzhen, Hong Kong, Macau and Zhuhai’ in September. The two destinations also held a joint presentation of their tourism products in Chongqing in the same month to foster their tourism development through destination promotion, industry management and multidestination tours.

Guangdong Province is Macau’s greatest visitor source from the Mainland. Between January and May this year, Macau recorded over 4.33 million visitor arrivals from Guangdong. Regional travel has become a leading trend for tourism development. MGTO hopes to build a stronger communication system with different Mainland provinces and cities through various platforms to attract more international visitations to Macau and neighbouring cities in the style of visiting multi-destinations on one trip.

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August 10, 2015

Macau

Studio City mass market focus dependent upon gaming tables The CEO of ‘model citizen’ Melco Crown, Lawrence Ho, says that a mass market strategy for Studio City is dependent upon the number of gaming tables granted

by Fernando Chui Sai On’s government João Santos Filipe

jsfilipe@macaubusinessdaily.com

in sticking by their [government’s] policy . . . Hopefully, there is a reward at the end of the day for a model citizen”.

Sun City opens more rooms in Altira

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he government is keen to transform Macau into a World Centre of Tourism and Leisure based more on the mass market than the VIP model that has been the reality until present. However, the Co-chairman and CEO of Melco Crown, Lawrence Ho (pictured), said that a mass market oriented strategy for Studio City is dependent upon the number of tables granted

by the government. The company is requesting 400 tables for the new resort slated to open on 27 October.

“The ultimate table-grant number would determine what we’re going to do. But if we are on the low end of it, there’s always a chance that we would just focus on the [VIP segment] and premium mass”, Lawrence Ho Yau Lung said during the presentation of results for the second quarter. “We’re

Prada sales miss estimates as China luxury slump persists

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rada SpA reported firsthalf revenue that missed analysts’ estimates as demand for its handbags and wallets in Hong Kong and Macau continued to wane.

Sales rose 4 per cent to 1.82 billion euros (US$2 billion), the Milan-based luxury goods maker said last Friday in a statement. Analysts predicted 1.87 billion euros, based on the median of nine estimates compiled by Bloomberg.

The Asia-Pacific region, Prada’s most important market, showed a “similar negative trend” to the first quarter, when Greater China sales fell 19 per cent excluding currency effects, Prada said.

Revenue in its wholesale business dropped 14 per cent as Prada has trimmed its network of distributors.

The company is also opening fewer stores and introducing more bags priced between 1,000 euros and 1,200 euros as it attempts to reignite demand amid a clampdown on extravagance in China.

Sales were “worse than feared,” said Luca Solca, an analyst at Exane BNP Paribas. The company’s efforts to broaden its focus beyond high-priced products should leads to improvements in the second half, he said.

“We expect to hear less and less bad news from Prada.”

The stock has dropped 30 per cent in the past year, compared with a 52 per cent gain in LVMH Moet Hennessy Louis Vuitton SE, the world’s largest maker of luxury goods.

Bloomberg

extremely concerned about the table allocation. If we get the low end it would have a drastic impact on our financial modelling”.

Focusing on the non-gaming attractions of the new resort, which has been demanded by the government’s policy, the son of Stanley Ho stressed that Melco Crown has been “a model citizen in Macau in terms of investment and

During the conference to present Melco Crown’s second quarter results, the CEO also praised the “symbolic” change on transit visas policy, which extends the period of transit that Mainlanders are allowed to stay in Macau from five to seven days.

“Transit visas increasing from five to seven days is not practically relevant because people don’t really stay for five to seven days. But it’s just the sentiment that tells our customers that they are not unwelcome to Macau any more”, he said.

While mass market is the new focus of the company, Lawrence Ho also discussed the new approach of the company to the VIP segment.

He revealed that while some smaller junkets are closing rooms, the city’s largest operator, Sun City, continues to expand the number of rooms in the company’s Altira property.

“We have been looking at the optimisation of the smaller junket operators, while the larger ones are gradually ramping up quite well.

Since the beginning of the year, junket operators like Sun City are opening new rooms in Altira. The key is really more to do with the optimisation of the smaller junket operators”, he said.

During the second quarter, the net revenues of Melco Crown went down 24 per cent year-on-year to US$916 million.

Future Bright forecast: Down HK$27.5 million for first half The Hong Kong-based company issued a profit warning for the first six months of the year, defining its performance as ‘unsatisfactory’

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uture Bright has issued a profit warning and is anticipating losses of HK$27.5 million for the first six months of the year.

Among the explanations for the underperformance of the company during this period is the slowdown of sales in Macau.

While in the first six months of the previous year Future Bright generated HK$118.5 million in profit, in one year the situation has changed drastically driven by the slowdown of sales in terms of the food business in Macau, losses in the food souvenir business, in the new restaurants and in the food court in Huafa

Mall in Zhuhai in addition to the decrease in fair value gains of the company’s investment property.

In the first six months of the year the turnover of the company, whose managing director is legislator and local businessman Chan Chak Mo, decreased 2.8 per cent year-onyear to HK$407.3 million from HK$419 million. In terms of gross operating profit, it plunged 57.3 per cent to HK$67.2 million from HK$157.3 million in the first half of 2014. As for gross operating profit margin, it more than halved to 16.5 per cent from 37.5 per cent.

The expectation for the rest

of the year is for the financial situation to continue to be challenging.

‘Management believes that in the coming months of 2015 the group’s operating environments will still be challenging and the group will monitor the performance of its various businesses closely’, the report reads.

‘Taking into account the unsatisfactory performance of the group in the period, the overall performance of the Group for the whole of 2015 will be materially and adversely affected, as compared to those of the year of 2014.’

J.S.F.

6 | Business Daily

August 10, 2015

Macau

“The city’s demand for green food has not yet been fulfilled” Green living, green eating – they are not just new concepts for life styles, but also new ideas for business. Sophie Lei, co-founder of Greens Kitchen & Juicery which features take-away cold-pressed juices and wholefood salads and snacks told Business Daily that the local green food industry has great potential Kam Leong

kamleong@macaubusinessdaily.com Photos: Cheong Kam Ka

What gave you the idea to open Greens Kitchen as you’ve been engaged in other fields, such as media publications?

Well, first of all, I’m a workaholic.

I was born in the 1960s. Hence, I got to care for my body more.

Around four years ago, I started to run marathons and hired a personal fitness trainer, hoping to improve my body and to avoid any injuries and pain as many of my friends told me running marathons can easily hurt your body, especially your feet.

But then, I also realised I’d had bad eating habits so I started to get to know about the concept of healthy eating. My daughter is studying in Los Angeles. When I go to America to visit her, I see there are a lot of good small-scale stores there selling healthy food so that people can easily adapt to a healthy lifestyle.

Yet, in Macau there are very few such stores. Much of the time, I needed to cook at home myself when I wanted to eat healthily. It’s very difficult to search for a place selling this kind of food. And that’s why I started to have the idea of opening one myself.

Greens Kitchen has four cofounders. How did you all meet?

We kind of met by chance. I’m a member of the International

Women’s League. I met some foreign friends through this association. And when we talked, we found that we all like eating healthy food but perceived it’s really hard to find such food in Macau.

At the same time, I have other businesses so I wasn’t available to run the daily operation [of Greens Kitchen]. That’s why I originally planned to operate behind the screen in the beginning, giving my ideas and business advice to my partners as I’ve been working in the fields of business development and consultancy.

Were take-away juices and healthy snacks your first idea for this green business?

Yes; our store features our [coldpressed] juices. Nevertheless, as we’re in a Chinese society, we were worried that our customers may not be very used to eating cold stuff. In addition, I care about my lunch very much. As I said, it’s really hard to find a place in Macau providing a good lunch. Hence, we decided to sell both juices and lunches, naming ourselves ‘kitchen’.

What’s the investment cost of starting up such a business?

Frankly, compared to my other businesses, the investment cost for

The problem is that the knowledge of local people about green food is still at a rather low level. The concept of green food is from overseas. That’s why we’re also planning to organise some talks on the topic as I found that once they get to know the concepts, they’re more willing to try new things

Greens Kitchen is not really that high. However, our operation cost is very high indeed. After all, the food we use is all organic, or is superfood that you cannot find in Macau. As such, we have to import most of our food and the delivery fee is very high. On the other hand, we don’t put any preservatives in our products as their storage period is very short. These make our operation fees much higher than our investment cost.

How many bottles of juice do you produce every day?

We can produce a maximum of 400 bottles of juice per day. The number, of course, will depend upon other conditions, such as the freshness of the juices and business [demands]. On average, we produce 200 bottles every day. The number will change [depending upon the] orders we receive for a juice detox package, which is our featured product. We provide eight bottles of juices for each set of detox programmes. So, if I receive 10 orders for the packages a day, I will need to produce 80 bottles of juices only for the bookings.

Compared to Hong Kong and Taiwan, ‘eating green’ is still a quite new concept for the city. How’s this affecting the operation? Any difficulties?

Business Daily | 7

August 10, 2015

Macau Well, it did cause some difficulties for us. In Hong Kong, there are many organic farms so you can easily find organic food to use. The same case in Taiwan, Singapore and even the Philippines, as well.

As such, the green business there can at least save on the delivery cost.

However, in Macau, there’s no such farm at all. Well, maybe some people are cultivating their own vegetables with hydroponics machines. But this way of cultivation is still not as good as soil culture.

Did you intentionally select the central area for the store?

Yes, we did intentionally. That’s because I like eating in the central districts of Hong Kong - like Central, Sheung Wan - packed with lots of fancy restaurants or cozy places for people to eat. I thought Macau should also have this kind of place. [Our current location] is close to our central district, surrounded by many offices, big-scale commercial centres and a few bank headquarters. As such, I think this location is really suitable for our business as people working here tend to have busy lifestyles, always going out for lunch or dinner. In fact, many have also asked me why we didn’t select Taipa for our store. In my opinion, Taipa’s a more leisurely place. Hence, in the end, we chose this location.

After all, white collars are our targeted customers as they spend a lot of time in the office every day and they need to care about their health more.

Who are your frequent customers - the local Chinese?

Or foreigners who are perceived to be more familiar with the concept of green diet?

This is a very interesting question.

Foreigners tend to come here a lot once they try and like our food; like buying lunch here five days a week. As they have the concept that once they adapt to a healthy style, they will stick to it by only eating healthy food, but not other things like noodles.

Meanwhile, we also have many Chinese customers. However, many of them perceive us as a back-up for them, like taking pills when you’re sick. They usually come to us when they realise they may need to consume something healthy, probably after some big meals. So they may come once a week.

They don’t treat eating green as a habit like foreigners do; this is the difference between the two groups of customers that I’ve observed.

Compared to the start of the business, have you seen the city’s demands for green food increase?

Yes, there’s a very obvious increase in demand. However, the problem is that the knowledge of local people about green food is still at a rather low level. Firstly, the concept of green food is from overseas. There are many proper nouns that they may not know and they are shy to ask. That’s why we’re also planning to organise some talks on the topic as I found that once they get to know the concepts, they’re more willing to try new things.

In your opinion, how do the high prices of green food, compared to ordinary food, affect the popularity of the green concept in Macau?

Many people do not understand why [green] food is that expensive as food prices in Macau are rather low compared to other regions.

Nevertheless, for people always travelling overseas, or having lived abroad, they know that you cannot eat out on some MOP30 to MOP40. For example, eating out in America or Australia will cost a minimum of US$8 or AUD8.

In Macau, when people can spend MOP30 to MOP40 for a meal, they will for sure think a salad of MOP70 is expensive. But they don’t take the food we use into account. You’re really paying for what you’re eating... It’s like the difference between white sugar and brown sugar.

What are the industry’s prospects?

I really see there’s a high potential for the field. With Macau becoming an international city, more people,

Greens Kitchen, cold-pressed juice Greens Kitchen & Juicery, which officially opened its doors last October, is the premier place in the city selling cold-pressed juices, which it is claimed maintain all the nutrition of fruits or vegetables used.

The founders of this local green-food store include the interviewee Sophie Lei, who is the CEO of local Chinese-language lifestyle magazine SD Magazine, Russian nutritionist Katya Maia, Heidi Chan, wife of junket operator Suncity Group boss Alvin Chan, and chef Abbi Mitchell-Morley.

According to Ms. Lei, a bottle of cold-pressed juice can provide the nutrition of one to two kilos of fresh fruit or vegetables, as the process of producing cold-pressed juices will not create any heat that damages the original nutrition of fruits and vegetables like ordinary juicers do.

Meanwhile, Greens Kitchen also has in-house nutritionists, providing consultancy to customers who are interested in their juice detox packages.

I think the business has potential as long as clients understand the concept and are willing to try. After all, [healthy eating] is a big new trend that people in the world are all hoping will improve their quality of life

spend more on new clothes and watches. After that, they will start to change and improve their eating habits. So I do believe the demand in the city is quite high, but they are just dispersed.

Any new stores on the horizon?

We’re not planning for another new store so far although we have received a lot of feedback asking us to open a green restaurant. Our current business is only providing take-away food so there’s no space for people to sit down and eat. Besides, some may think the package of take-away food is not really that appealing. I’ll consider this suggestion but I don’t think it will be realistic in the short term as I will still need to see whether our current business is successful.

After all, you don’t want to lose money even if you don’t expect to make a profit right away. Opening a restaurant is our target but it will not be fulfilled in the short term.

But this idea is viable? especially those returning from aboard, are getting used to this kind of consumption. In addition, we can also see that more people are caring more about their health... Hence, I think the business has potential as long as clients understand the concept and are willing to try. After all, [healthy eating] is a big new trend that people in the world are all hoping will improve their quality of life.

Is there a balance in the supply and demand of healthy in Macau?

It’s not really balanced. Many people have requested us to provide a delivery service so we think shops like us should exist in different districts of the city.

Our scale is quite small yet the operation cost is very high. As such, it’s really hard for us to provide delivery. Hence, I don’t think the city’s demands for green food have already been fulfilled.

Our shop is small - serving 40 to 50 customers per day can already make us very busy. So, broadly, the supply is sill very low even though shops in different districts can each serve some 40 to 50 customers.

In addition, when people want to improve their quality of life – clothing, food, shelter and transportation - they may first

Yes. Rent is only one consideration. Well, timing is really important. Looking back to five years ago, although the rent was cheaper residents could not afford this kind of expensive food. But now, with the economy surging, rent is really high. As long as we can solve the problem of rent, I think it will be a good idea for people to sit down and enjoy green food as I believe every person wants to look better and be healthier.

The city’s SMEs also face the challenge of manpower in addition to rent. Do you have the same problem?

For human resources, we have difficulties in finding bilingual staff. It’s actually quite easy for us to look for English-speaking staff, like our nutritionists who speak English. But for bilingual people, they may not want to work in a small-size store... We also have some Chinese-speaking nutritionists returning from Taiwan applying for jobs. But we prefer English-speaking staff as most of our Chinese customers can speak English while not many of our foreign customers can speak Chinese. In all, I haven’t found hiring people difficult for us, as I think young people nowadays like doing jobs that are cool and trendy, like we are.

8 | Business Daily

August 10, 2015

Greater China

July producer prices slump to near 6-year low Data showed pork price inflation was the most buoyant

P

roducer prices in China fell to a near six-year low in July while consumer inflation remained subdued, signalling the world’s second-largest economy was still facing deflationary pressures and that Beijing has room to further support the sluggish economy.

The producer price index (PPI) fell 5.4 percent from a year earlier, the National Statistics Bureau said yesterday, compared with an expected 5.0 percent decline. It was the worst reading since October 2009 and the 40th straight month of price falls.

The index, which tracks the factory-gate selling prices of firms from miners to manufacturers, pointed to persistent weakness in commodity prices and soft demand in China’s economy which are eroding company profits.

An official factory survey last week showed deteriorating conditions forced companies to cut staffing for the 21st straight month, and manufacturers had to reduce selling prices to a six-month low due to increasing competition.

In line with sluggishness in the broader economy, annual consumer

It was the worst reading since October 2009 and the 40th straight month of price falls

inflation stayed muted at 1.6 percent despite surging pork prices, slightly higher than a 1.5 percent estimate, and up from June’s 1.4 percent.

The data showed pork price inflation was the most buoyant in July, with prices surging 16.7 percent due to a sharp fall in hog supplies.

Pork prices are an important component of China’s consumer price index basket, the weighting of which is a secret though some economists estimate that food accounts for as much as 30 percent of the index.

But economists do not believe higher pork prices alone will derail further policy easing in coming months, as Beijing fights to meet its 7 percent 2015 growth target.

HSBC said in a recent research note that it still expects another 25 basis point (bps) interest rate cut in the second-half of this year and a 200 bps cut in banks’ required reserve ratio (RRR).

The central bank has already cut interest rates four times since November and lowered the RRR for big banks by 150 bps.

A private survey last week showed factory activity in China shrank the most in two years in July, and a raft of data this week is expected to indicate renewed weakness in China’s economy. Despite the easy money environment, industrial profits dropped in June on falling prices, while banks saw a surge in bad loans for the first-half.

Compounding the grim picture, panic selling in Chinese shares earlier in the month have rattled business and consumer confidence, though unprecedented government support measures have stemmed the rout for now.

Reuters

July exports disappoint again Volume imports of most major commodities were higher than expected, as Chinese industry took advantage of the lower prices to restock on raw materials Gerry Shih and Pete Sweeney

C

hinese exports tumbled 8.3 percent in July, their biggest drop in four months and far worse than expected, reinforcing expectations that Beijing will be forced to roll out more stimulus to support the world’s second-largest economy.

Imports also fell heavily from a year earlier, in line with market forecasts but suggesting domestic demand might be too feeble to offset the weaker global demand for China’s exports.

Economists had forecast exports to fall just 1 percent, after a 2.8 percent uptick in June, but the data on Saturday showed depressed demand from Europe and the first drop in exports to the United States, China’s biggest market, since March.

Exports to the European Union fell 12.3 percent in July while those to the United States dropped 1.3 percent. Demand from Japan, another big trading partner, slid 13 percent.

“A recovery in external demand remains far off and economic growth will continue to rely on domestic demand, which implies policies should continue to be relaxed in

the second half,” wrote Qu Hongbin, China economist at global bank HSBC. Imports fell 8.1 percent, according to the data from the General Administration of Customs. That compared with forecasts for an 8 percent drop, after a 6.1 percent decline in June, though these falls also reflected weaker commodity prices.

KEY POINTS Exports -8.3 pct y/y, imports -8.1 pct y/y Trade balance shrinks by 9 pct to $43 bn Exports particularly weak to European Union Exports to United States fall for first time since March

China recorded a trade surplus of US$43.03 billion for the month, below forecasts of US$53.25 billion.

The July trade data could further dim hopes for an economic turnaround in the second half of this year, after a few signs of stabilisation had emerged in June.

China’s factory activity suffered its biggest contraction in two years in July as new orders fell.

On Friday the central bank published a report warning of further economic weakness, but argued the economy needed a retooled growth engine, instead of short-term stimulus.

Economists also blame a strong yuan for the export weakness, with ANZ Research estimating the currency’s nominal effective exchange rate has risen by 13.5 percent since June 2014.

Analysts say Beijing has been keeping its yuan strong to wean its economy off low-end export manufacturing. A strong yuan policy also supports domestic buying power, helps Chinese firms to borrow and invest abroad, and encourages foreign firms and governments to increase their use of the currency.

“These factors suggest that China’s exports will continue to face strong headwinds,” Liu Ligang and Louis Lam said in an ANZ Research note on Saturday, adding that they doubted Beijing would hit its trade growth target of 6 percent for this year.

China’s weak import figure partly reflects weak commodity prices paid to trading partners such as Australia, which ships coal and iron ore to China.

Coal deliveries in particular rose strongly in July, up 28.1 percent, though commodity analysts said that prospects for the market remained dim overall.

Stephen Koukoulas, managing director of Australian consultancy Markets Economics, said the fall in commodity prices was a major concern for the Australian and New Zealand economies, which both rely heavily on demand from China.

“Probably the volumes are ok but the prices that are being paid are hugely lower. We have got a real concern there for the future levels of the Aussie dollar,” Koukoulas said.

Reuters

Business Daily | 9

August 10, 2015

Greater China Central bank warns of economic weakness due to reforms Buffeted by a housing slowdown, wobbly foreign and domestic demand and most recently, a stock market crash, China’s economy has had a difficult year

People’s Bank of China headquarters in Beijing

C

hina’s economy may face headwinds in coming months due to its reform efforts, the central bank said on Friday and it warned that monetary policy was being blunted by a lack of new growth drivers and lukewarm appetite for new investment.

Yet despite the pain of reforms, the People’s Bank of China said the world’s second-largest economy should not be powered by strong

stimulus in the medium term, and must instead depend on a retooled growth engine to drive activity.

In its second-quarter monetary policy report, the central bank also cautioned that more financial innovation in China was heightening risks by increasing volatility in asset prices and raising debt levels.

It reiterated its stance by saying that policy would be kept prudent, though there would be a focus on

keeping it “appropriate” and neither too tight nor too loose. The yuan will also be kept at a reasonable level and more flexibility will be introduced to the exchange rate, it said.

Buffeted by a housing slowdown, wobbly foreign and domestic demand and most recently, a stock market crash, China’s economy has had a difficult year.

Growth has hovered at 7 percent in the first six months and is widely expected to stay at that level for the year, which would leave China with its worst economic performance in a quarter of a century.

The central bank did not comment directly on the outlook for interest rates and reserve requirements, which analysts expect authorities to cut or relax in coming months to stoke growth.

But it promised to stabilise financial markets and financial market expectations, without referring to recent stock market falls that wiped out as much as a third of share prices at one point.

The bank also said consumer inflation was running at a low level, and noted that monetary policy would not target changes in the price of any specific good, with elaborating.

Reuters

Funds hold US$161 bln in “ammunition” to re-enter stock market Foreign fund managers who cut their China exposure amid the recent rout are wary about putting the money back if Beijing continues to intervene heavily

C

lose to 300 China funds that oversee more than 1 trillion yuan (US$161.04 billion) are sitting on the side-lines with “ammunition” to enter the stock markets at any time, the Shanghai Securities News reported on Friday, citing its own calculations.

The report is the latest attempt

by China’s state media to restore confidence in the country’s markets after a 25 percent crash in late June and early July rattled both leaders in Beijing and global investors.

Panic selling has slowly ebbed after Beijing rolled an unprecedented series of support measures in recent weeks to avoid a full-blown crash.

But many investors are reluctant to get back into the market after weeks of wild price swings.

The Shanghai Secruities News said it compared data of 294 funds on July 27, when stocks plunged more than 8 percent in their biggest one-day drop in more than eight years, and on August 4.

The changes of the net value of these funds suggested that they had held little to no position in the market in that period, and were likely sitting on cash.

A Reuters survey of China fund managers last week showed they had cut their equity allocations to the lowest in 6-1/2 years as prices slid

“After the recent sharp tumbles in the market, the share prices of a proportion of firms have fallen to the levels before the bull market, the time to enter the market has emerged,” the newspaper reported an unidentified fund manager as saying.

In a separate article, the newspaper also said that foreign investors such as UBS, Deutsche Bank and BlackRock Inc in interviews spoke highly of the

regulator’s market rescue actions, and were already bargain hunting or waiting to re-enter the market.

While some fund managers believe that stocks will be propped up by the bailout, others noted that the government will have to withdraw from the market at some point, which could trigger a fresh slide.

Reuters

Shenzhen-Hong Kong stock connect tests done Technical preparations for connecting Hong Kong and Shenzhen stock trading are complete and the scheme can begin within four months of regulators giving it the green light, the chairman of Hong Kong’s stock exchange said on Friday.

The comment by Charles Li, chairman of Hong Kong Exchanges & Clearing (HKEx), comes amid some concern in Hong Kong that China’s recent market turmoil could delay the launch of a stock “connect” with the southern Chinese city’s exchange, similar to an existing one with Shanghai rolled out in November.

130 million yuan to boost e-commerce in Xinjiang The Chinese government has allocated 130 million yuan (US$20.9 million) in funding to boost e-commerce development in northwest China’s Xinjiang Uygur Autonomous Region. The special fund will be given to seven e-business demonstration counties, including Aksu County and Minfeng County, the regional financial department announced yesterday. The Ministry of Finance and the Ministry of Commerce have allocated a total of 2 billion yuan to 200 counties chosen from China’s central and western provinces earlier this year.

The fund will be used to support the e-commerce activities.

U.S. officials to look into refrigerant imports U.S. trade officials will keep looking into low-priced Chinese imports of hydrofluorocarbon (HFC) products, used in air conditioning and refrigeration, after the U.S. International Trade Commission found on Friday that there was a reasonable indication of injury to U.S. producers. The complaint was filed by the American Hydrofluorocarbon Coalition, whose members include Arkema SA, the Chemours Co, Honeywell International Inc, Hudson Technologies Inc, Worthington Industries Inc and Mexichem Fluor Inc, a subsidiary of Mexichem. The Department of Commerce is due to hand down a preliminary decision on whether to impose anti-dumping duties on the products

by December 2.

Sany says willing to help Venezuela sell bonds in Asia Chinese construction machinery maker Sany Heavy Industry Co Ltd is willing to help Venezuela and state oil company PDVSA sell bonds in China and in Asia, Sany chairman Liang Wengen said during a visit to Caracas on Thursday.

Sany provides construction equipment to Venezuela through a bilateral oil-forloans financing scheme under which Beijing has lent US$50 billion. The loans are paid off with shipments of crude and fuel by Venezuela’s state oil company PDVSA. Low oil prices have left the OPEC nation increasingly reliant on China to meet financing needs.

10 | Business Daily

August 10, 2015

Greater China

Mainland market loses its shine for foreign firms Sales of luxury watches and spirits have already been battered by an extended austerity and anti‑corruption campaign under President Xi Jinping

Some investors have long seen China as a high risk destination.

Rising costs for labour and more competitive markets as domestic brands gain stature have troubled foreign companies in recent years, as well as a series of anti-monopoly probes which appeared to target overseas firms.

“The industrial competitiveness of Chinese enterprises has improved, making it harder for foreign companies to compete,” Li Daxiao, an analyst at Yingda Securities, told AFP.

‘Worse than expected’

Luxury brands are reforecasting results after an on-going market weakening

T

he once irresistible allure of the Chinese market to foreign multinationals is losing some of its lustre as slowing growth in the world’s second-largest economy hits their sales.

The latest figures from firms reporting during the current results season in Europe, the United States and Japan paint a picture of overseas firms facing a worsening of operating conditions in China.

Volkswagen, which has invested heavily in China

and has just displaced Toyota as the world’s leading car manufacturer, saw sales in the country -- which it describes as its “second home market” -- fall 3.9 percent in the first half, its first drop in a decade.

“W e are keeping a very close watch on global macroeconomic trends,” chief executive Martin Winterkorn said in a statement, “especially where there are uncertainties such as in the Chinese, Brazilian and Russian markets”.

The appeal of nearly 1.4 billion consumers and an economy regularly growing in double digits has brought more than US$1.5 trillion of foreign investment to China over the last three decades.

But the economic expansion is slowing -- gross domestic product grew 7.0 percent year-on-year in April-June, matching the worst quarterly result since the first three months of 2009 during the global financial crisis.

Such challenges have been compounded by the country’s slowing economy.

Japan’s second-biggest steelmaker JFE Holdings lowered its annual profit forecast in late July because of “the economic slowdown in China and the overproduction of steel” in the country, the world’s largest consumer of the metal.

In the United States, industrial giant UTC, the maker of Otis lifts, revised down its earnings forecast for 2015 partly on the back of what it described as “a slowing China”.

As well as lifts, the firm makes heating and cooling systems for buildings, leaving it exposed to a broad slowdown in the real estate sector, which its chief executive Gregory Hayes described as “worse than we had expected”.

Retail sales are still growing in China -- they were up 10.6 percent year-on-year in June, according to the government -- but some foreign firms are struggling to maintain their slice of the cake.

Apple’s iPhone sales surged 85 percent in Greater China -- which includes Hong Kong and Taiwan -- with revenue from the region more than doubling to US$13 billion for the latest quarter ended June 27, according to the company.

But independent analysts Canalys said this week it had been pushed into third place in the quarter by local manufacturers Xiaomi and Huawei, which produce cheaper products, while South Korea’s Samsung was relegated to fourth.

Like nowhere else

International financial markets have been spooked by a recent rout on China’s stock market, which continues to be volatile despite direct intervention by Beijing.

Analysts say that the impact on the real economy has been limited so far, despite reports the auto and property sectors have both taken a hit.

Suspicions grew that the economic slowdown could be more pronounced than official statistics suggest, after second quarter growth exactly met the government’s fullyear target of around seven percent, despite a series of disappointing indicators during the period.

AFP

Foxconn plans 5-year investment in Indian facility Sources declined to say if the Taiwan-based company would make mobile phones at the new facility Devidutta Tripathy

T

aiwan’s Foxconn, the world’s largest contract electronics manufacturer and a key supplier to Apple Inc, on Saturday signed a pact with India’s Maharashtra state to invest US$5 billion over five years on a new electronics manufacturing facility.

The announcement was made

by Foxconn founder Terry Gou and Maharashtra Chief Minister Devendra Fadnavis after the signing of an accord in the state capital Mumbai.

The Foxconn announcement will bolster Indian Prime Minister Narendra Modi’s “Make in India” campaign, which aims to turn Asia’s third-largest economy into a manufacturing powerhouse.

Gou said Foxconn, the trade name for Hon Hai Precision Industry Co Ltd which also counts Blackberry, Xiaomi and Amazon as clients, was looking for local partners for the facility in the western Indian state.

KEY POINTS Facility to be set up in western Maharashtra state Foxconn looking for local partners for the facility India could help Foxconn mitigate accelerating wage inflation in China, where it makes the majority of iPhones, and base production sites closer to markets where its key clients want to grow.

On Tuesday, Gou said in New Delhi that he was looking at setting up manufacturing units in various Indian states and possible partnerships in the world’s fastest growing smartphone market.

He had said in May that Foxconn was aiming to develop 10-12 facilities in India, including factories and data centres, by 2020. Local businessmen are hoping that as Foxconn and other companies invest in the country, suppliers will follow.

Chief minister Fadnavis said the Foxconn plant would generate employment for about 50,000 people.

Foxconn employs about 1.3 million people during peak

production times, making it one of the largest private employers in the world. But it has had to improve labour conditions following a series of suicides in 2010-2011, mostly at its Shenzhen manufacturing operation.

The company on Friday confirmed the death of an employee at its Zhengzhou plant in China which a labour group said was suicide.

Reuters

Business Daily | 11

August 10, 2015

Asia

Indonesia urges U.S. Fed to hurry up and raise rates Southeast Asia’s largest economy was one of the worst hit by outflows when the Fed first announced a plan to taper off its monetary stimulus in 2013 Gayatri Suroyo and John Chalmers

I

ndonesia wants the U.S. Federal Reserve to hurry up and raise interest rates because uncertainty over when it will tighten has created downward pressure on the rupiah, the country’s chief economics minister said.

Sofyan Djalil, coordinating minister for economics, told Reuters that he did not see the rupiah dropping when the U.S. tightening does come because the move has been built into market expectations, and in fact the currency is now undervalued.

The Federal Reserve has kept rates at a near-zero level since December 2008 as part of its effort to spur the recovery from the 2007-2009 financial crisis.

Fed officials are still undecided on whether to raise rates next month.

However, data released on Friday showed U.S. non-farm payrolls increased by 215,000 in July, pointing to an improving economy and bolstering the case for a September hike.

The rupiah has been emerging Asia’s second-worst performing currency so far this year, falling by more than 8 percent against the dollar. It hit its lowest level since the Asian financial crisis in 1998 multiple times this year, with Friday being the latest when it touched 13,542 per dollar.

Due to its sizeable current account deficit, Southeast Asia’s largest economy was one of the worst hit by outflows when the Fed first announced a plan to taper off its monetary stimulus in 2013.

I wish the Fed will decide and the sooner is the better for Indonesia because the uncertainty gives ... the financial market a good legitimacy to play around Sofyan Djalil, Indonesia’s coordinating minister for economics

Indonesia’s coordinating minister for economics Sofyan Djalil

The rupiah fell by more than 20 percent against the dollar that year and the country was dubbed one of the ‘fragile five’.

Indonesia’s current account gap has shrunk since then and is predicted to fall to a level the central bank, Bank Indonesia, considers healthy at below 2.5 percent of gross domestic product (GDP) in 2015.

Djalil said Indonesia’s fundamentals are good but the current weakness of the rupiah is because

markets have priced in a 25-50 basis point increase in the Fed’s rate. “Our rupiah is undervalued,” he said.

Bank Indonesia expects capital inflows after the U.S. rate increase and that the financial market will see Indonesia’s positive side again, Senior Deputy Governor Mirza Adityaswara said on Friday.

The inflation rate in July was 7.26 percent, above the central bank’s target range of 3-5 percent. Bank Indonesia said inflation will stay

high before dropping back to 4.34.5 percent later this year due to a base-effect adjustment.

But Djalil said there was anecdotal evidence that economic activity is picking up, such as an increase in container shipments out of Jakarta and steadier sales of motorbikes.

He said the government still believes economic growth will recover to come in at 5.0-5.2 percent for full-year 2015.

Reuters

Bank of Japan Governor warns of inflation goal delay The BOJ has left policy unchanged since expanding stimulus in October last year but some economists doubt how much longer it can afford to remain on the sidelines Leika Kihara and Stanley White

B

ank of Japan (BOJ) Governor Haruhiko Kuroda on Friday warned that the timing for hitting his ambitious 2 percent inflation target may be delayed further if oil price falls persist.

But he stressed the central bank won’t expand stimulus again unless oil price falls last long enough to discourage companies from raising prices and hurt a broad uptrend in inflation.

Kuroda also remained upbeat on the outlook, despite growing signs the economy may have contracted in between April and June.

“The recent weakness in exports and output are temporary,” Kuroda told a news conference, adding that household spending will emerge from the doldrums as wages keep rising.

“More companies are raising the prices of their goods and services, which shows the underlying trend of inflation is improving,” he said.

As widely expected, the BOJ reiterated its pledge to increase base money, or cash and deposits at the bank, at an annual pace of 80 trillion yen (US$641 billion) through purchases of government bonds and risky assets.

Oil a headache again

The BOJ expects inflation to hit its 2 percent target by around September next year as improvements in the economy prompt companies to raise wages and prices.

Many analysts doubt price growth will accelerate so quickly with inflation having ground to a halt due to soft

consumption and the effect of last year’s oil price falls.

Gross domestic product data, due out August 17, is expected to show Japan’s economy shrank at an annualised rate of 1.9 percent in the second quarter, a Reuters poll found.

While growth is expected to rebound in the current quarter, some analysts warn that sluggish demand in China and tame wage growth at home will keep any pick-up modest.

Kuroda acknowledged that China and other emerging market economies were slowing. But he clung to the view that overseas demand will pick up as strength in advanced economies broadens out.

The BOJ’s rosy forecast is, however, increasingly at odds with economists’ views.

“Consumer prices could dip into negative territory and stay there longer than expected. The BOJ may ease again in October,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

Renewed falls in oil and commodities prices are adding downward pressure on inflation.

“The timing for achieving our price target may change somewhat depending on future oil price moves.

But what’s important in terms of monetary policy is the broad trend of inflation,” Kuroda said.

“If oil price moves affect inflation expectations and the underlying trend of inflation, we may consider adjusting policy,” he said.

Reuters

12 | Business Daily

August 10, 2015

Asia

Malaysian officials visit Goldman office as part of 1MDB probe The U.S. investment bank has come under fire in the Malaysian media and among opposition politicians because of the fees it earned helping 1MDB rack up large debts Praveen Menon, Saeed Azhar and Olivia Oran

M

alaysian anti-corruption officials investigating state investor 1MDB for alleged graft visited the local office of Goldman Sachs last month seeking documents relating to the state firm, two people familiar with the visit said.

The scandal engulfing indebted 1MDB has triggered a political crisis for Prime Minister Najib Razak, who oversees the fund, and has contributed to the ringgit’s fall to a 17-year low against the U.S. dollar.

One of the sources familiar with the matter told Reuters Malaysian Anti-Corruption Commission (MACC) officials visited Goldman Sach’s office in Kuala Lumpur on July 8, the same day the antigraft authority visited the offices of 1MDB. “1MDB is the subject of investigations, not Goldman Sachs,” this source said.

Goldman Sachs is working with the MACC on its request, this source said without providing more details.

Goldman Sachs declined to comment.

Goldman Sachs helped 1MDB raise US$6.5 billion in three bond deals in 2012 and 2013, earning itself roughly US$590 million in fees, commissions and expenses, a person familiar with the situation said.

Goldman was able to book big fees because the deals were private placements and Goldman bought some of the bonds itself before

selling them, debt bankers familiar with the bonds said.

But it made a lot more on the bonds, around 9 percent of the total, than the more typical 1 percent that is usually charged for arranging bonds.

Now burdened by more than US$11 billion of debt including various bonds, 1MDB is now seeking

to offload assets parked under its power unit Edra Global Energy Bhd, and sell developmental rights in its high-profile property projects.

Investigators in Malaysia have been probing the management of the fund, including allegations that nearly US$700 million was channelled from 1MDB to the prime minister’s bank accounts.

Najib, who also acts as finance minister in Malaysia and chairs 1MDB’s advisory board, has denied taking any money for personal gain and last week the anti-corruption commission said the funds were from a donation, not from 1MDB, without elaborating on who the donor was.

The scandal is exactly the sort of thing Goldman has been trying to avoid since overhauling its approval process for transactions in the wake of the 2008-09 financial crisis.

Banks typically put increased scrutiny on deals where there may be reputational risk as well as financial risk, such as when dealing with governments and tycoons.

Cambodian e-commerce growing due to increased Internet access Nguon Sovan and Zhang Yanfang

I

nvestors have turned their eyes to the e-commerce sector in Cambodia as more people in the Southeast Asian nation have access to the Internet, businessmen and commerce officials say.

Cheat Thilong, a marketing officer with a Phnom Penh-based shopping website Shop168, which was launched more than two years ago, said e-commerce outlets are mushrooming here due to the increasing numbers of Internet users.

“Two years ago, there were only a few businessto-customer (B2C) shopping websites in Cambodia, but now the number has reached almost 20,” he told Xinhua.

He said his online platform currently partners with 30 stores.

The Shop168 sells products merely in Cambodia, said the merchant, adding that customers in Phnom Penh can pay cash on delivery, while customers in provinces are required to pay cash first via mobile payment company Wing, then the company will

send the products to them via logistic company Viettel Post.

Figures from the Ministry of Posts and Telecommunications show that more than 5 million of the nearly 15-million population in Cambodia have obtained access to the Internet as of 2014, most of whom get online via smart phones.

Minister of Posts and Telecommunications Prak Sokhonn said in April that in Cambodia, Internet penetration rate is currently just over 30 percent and is expected to reach almost 65 percent by 2020.

Sear Rithy, chairman of Worldbridge International Group (WIG), which

launched a shopping website called MAIO (My All-In-One) Mall in Phnom Penh in April, said the web portal has seen sales growth from 8 percent to 10 percent month-on-month.

Commenting on goods delivery and payment means, he said since Worldbridge International Group is a worldwide logistics company and the largest logistics company in Cambodia, it can send products anywhere.

According to Rithy, the development of online shopping platforms still have a way to go here because most Cambodian people do not trust the online outlets, they worry that the companies will provide them products that

Reuters

don’t reflect what they want.

He said his company is seeking foreign partners and hopes that it will be able to cooperate with China’s Alibaba.com in the future.

Speaking about tax payment for online products, he said because there is currently no e-commerce law, both online and offline products are treated in the same way and taxes at that the same level are required to be paid.

Commerce Secretary of State Mao Thora said Cambodia has not yet regulated the e-commerce sector.

He said the Ministry of Commerce, in cooperation with the Ministry of Posts and Telecommunications and the Central Bank, has finalized the draft law on e-commerce, but it has not been sent to the Council of Ministers for approval yet.

Thora said since there is no law to govern the sector, accurate e-commerce trade volume is currently unavailable.

Xinhua

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Business Daily | 13

August 10, 2015

Asia Fonterra proposes price floor for ‘unsustainable’ milk market

Myanmar delays Yangon tender Myanmar’s Yangon region government has delayed the tender opening date for the development of one of the new town expansion projects in the former capital until September 22, an official report said yesterday. The tender opening date was originally scheduled for August 18. The resumption of the temporarily-suspended controversial project was approved by the parliament in June. The invitation for tender from local citizen developers began on July 13. The new town plan is one of the seven modern housing projects of the Greater Yangon Development Strategic Plan-2040.

Dairy prices fell to a 12-year low at last week’s Global Dairy Trade auction amid weak demand and oversupply David Fickling

F

onterra Co-Operative Group Ltd., the world’s biggest dairy exporter, wants a price floor to support a global milk market that Chief Executive Officer Theo Spierings calls “absolutely not sustainable.”

Milk prices are at “a very low level, below the bottom” and face “a bumpy ride for another six to 12 months,” Spierings said in an interview with New Zealand’s TV3 news Saturday.

“We have to make sure that we get through with minimum damage,” he said.

Dairy prices fell to a 12-year low at last week’s GlobalDairyTrade auction amid weak demand and oversupply.

New Zealand central bank Governor Graeme Wheeler has cut interest rates twice this year and signalled further easing as the price weakness threatens to curb economic growth in a nation that relies on dairy for a quarter of its export earnings.

“We have to look at some more drastic thinking around our global dairy trade auction, because in Europe there’s a kind of a bottom created by governments, and we don’t have that,” Spierings said, according to a

Sumitomo Life in We have to look at out-of-the-box solutions talks to buy Symetra Theo Spierings, Fonterra’s Chief Executive Officer

transcript of the interview. “We have to look at out-of-the-box solutions.”

The European Union’s common agricultural policy incorporates a public intervention price for products including butter and skimmed milk powder at which the E.U. buys up farmers’ stock to support market prices.

Fonterra said Friday it would reduce its forecast for global milk

prices in the season ending May 31, 2016, to NZ$3.85 (US$2.55) a kilogram of milk solids. That’s the lowest since 2006 and 27 percent less than Fonterra’s May 28 prediction of NZ$5.25 a kilogram.

The company would pay the forecast amount to farmers, plus 40 to 50 New Zealand cents per share.

It would also provide an extra 50 cents per share in the form of an interest-free loan repayable if milk prices recover to more than NZ$6.

Bloomberg News

Mongolian premier fires allied ministers Parliament endorsed the prime minister’s proposal to remove the Mongolian People’s Party (MPP) from the coalition gov’t Terrence Edwards

M

ongolian Prime Minister Chimed Saikhanbileg has replaced six members of his cabinet, a change the president said could hurt an already limping economy and further deter foreign investors worried about political stability.

Mongolia has promised to use its vast untapped mineral reserves to develop its tiny, landlocked economy, but flagship projects have been delayed and foreign investment deterred by political disputes and regulatory uncertainties.

Parliament endorsed the prime minister’s proposal to remove the Mongolian People’s Party (MPP) from the coalition government on Friday, meaning the party’s six cabinet members lost their jobs.

Saikhanbileg, a member of the Mongolian Democratic Party, was appointed last year with a mission to rejuvenate the flagging economy through foreign investment in the mining sector, and will retain his position as prime minister.

The coalition was originally expected to last until July 2016 parliamentary elections and its early dissolution threatens to disrupt parliamentary decisions on a number of lucrative mining projects.

The Toronto-listed Centerra

Japan’s Sumitomo Life Insurance Co is in talks to buy U.S. life insurer Symetra Financial Corp, the Nikkei business daily reported yesterday. Sumitomo Life is looking to acquire Washington-based Symetra for a fee estimated between 400 to 500 billion yen (US$3.22 billion to US$4.03 billion), the Nikkei said without citing sources. According to the Nikkei, Symetra’s management is expected to remain after the acquisition by Sumitomo Life. Sumitomo Life would join a growing list of Japanese life insurers looking to expand business in the United States.

Philippine reserves down The Philippine gross international reserves (GIR) declined by US$0.2 billion to US$80.4 billion in July compared to the previous month, the central bank said Friday. Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the decrease in reserves was due mainly to the payments made by the government for its maturing foreign exchange obligations and revaluation adjustments on the BSP’s gold holdings and foreign currency-denominated reserves. “These were partially offset by the BSP’s foreign exchange operations and income from investments abroad as well as the national government’s net foreign currency deposits,” he said.

First reactor restart in Japan delayed Gold Inc. is awaiting a decision from parliament on the stake size the government will take in the Gatsuurt gold mine it hopes to put into production.

Parliament must also must vote on a proposed investment agreement with a private consortium led by China’s Shenhua Energy to develop and mine the huge Tavan Tolgoi coal mine.

Mongolia’s development plans had already been delayed as a result of a

two-year dispute with global miner Rio Tinto over the expansion of the US$6.5 billion Oyu Tolgoi copper mine, which was finally settled in May. This week, President Tsakhia Elbegdorj, who is also a Democratic Party member, weighed in with a letter condemning the proposed plan to remove the MPP, saying it threatened to “destabilize” the government.

That, in turn, could reflect poorly on the economy, he said.

Reuters

Kyushu Electric Power Co is considering delaying Japan’s first attempt to restart a nuclear reactor in nearly two years by one day to August 11, the Asahi newspaper reported on Friday. All of Japan’s reactors were gradually shut down in the wake of the 2011 Fukushima disaster and are being relicensed under a new safety regime, with Kyushu Electric’s Sendai No. 1 the first to get final approval to restart. Because the reactor has been shut for more than four years, Kyushu Electric is checking equipment carefully to ensure there are no problems.

Vietnam earns US$3.7 bln from wood exports Vietnam earned some US$3.7 billion from exports of wood in the first seven months of 2015, up 8.3 percent year-on-year, statistics from the Vietnam Customs showed on Friday. During the seven-month period, the United States, Japan and China were three major consumers of Vietnamese wood, accounting for 66.3 percent of total export revenue. Nguyen Ton Quyen, vice president of Vietnam Timber and Forest Product Association, said that Vietnam’s wood export revenue has witnessed an average growth of 15 percent per year, from US$294 million in 2000 to around US$6.2 billion in 2014.

14 | Business Daily

August 10, 2015

International Greek govt discussing third bailout draft Government officials discussed a draft of the country’s third bailout agreement drawn up on the basis of discussions with EU/IMF lenders, a government official said on Saturday, boosting hopes a deal could be wrapped up in days.

Athens is racing to wrap up the bailout agreement of as much as 86 billion euros by as early as Tuesday in a bid to get the first disbursement of aid by August 20, when it faces a debt payment to the European Central Bank. The talks on Saturday focused on the so-called “prior actions” Greece must legislate.

Puerto Rico’s creditors should prepare to sacrifice Governor said there have been informal restructuring meetings with creditors and that “the position from a majority of them is very positive”

Puerto Ricans have already made sacrifices… And now creditors should also make sacrifices and sit down voluntarily and negotiate with us

Codelco denounces mine damage The world’s biggest copper producer, complained on Saturday of damage to its Salvador mine by striking workers, as talks to end a nearly three-week protest in Chile sputtered to a halt. Contract workers affiliated with the Confederation of Copper Workers, or CTC, have been protesting across Codelco’s operations since July 21, leading to the shutdown of the Salvador mine and partial suspension of operations elsewhere. The contractors - cleaners, drivers, and other workers, including some miners - have been demanding the right to negotiate a benefits package similar to the one offered to Codelco’s direct employees.

Rousseff reappoints Petrobras prosecutor Brazilian president Dilma Rousseff on Saturday appointed a top prosecutor investigating a massive corruption scandal at state-run oil company Petrobras to remain on the job for another two years.

Rousseff met with prosecutor general Rodrigo Janot in the presidential palace to tell him of her decision to submit his name again for Senate approval, Justice Minister Jose Eduardo Cardozo said in Brasilia. Janot had received overwhelming backing from his peers to remain on the job during a vote at the association of federal prosecutors last week.

Panama temporarily restricts draft of vessels The Panama Canal Authority will temporarily lower the maximum draft of ships passing through the canal, due to droughts caused by El Nino, authorities said on Friday. Starting on September 8, the greatest draft allowed will be 11.89 m, down from the current maximum of 12.04 m, the Panama Canal Authority (ACP) said. The change could affect about 20 percent of ships that use this route, ACP records show. If the droughts persist, authorities said they could further reduce the draft to 11.73 m, starting on September 16.

Activist hedge fund takes stake in AmEx ValueAct Capital Management LP has taken a stake in credit card issuer American Express Co, which is struggling with the loss of several co-branded tie-ups amid intense competition. The company’s shares jumped as much as 7 percent to US$80.14 in regular trading, after Bloomberg reported that ValueAct had built a US$1 billion stake and was seeking “shareholder-friendly” changes. At that price, the company is valued at about US$80 billion. AmEx is not yet a core active target of ValueAct, Bloomberg said, citing people with knowledge of the matter.

Alejandro Garcia Padilla, Puerto Rico Governor

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uerto Rico’s creditors should be prepared to make “sacrifices” in their demands with the U.S. territory after the government skipped an August 1 bond payment, Governor, Alejandro Garcia Padilla (pictured) said on Friday.

The commonwealth paid only US$628,000 of a US$58 million payment due on its Public Finance Corp (PFC) bonds, the first time it had ever failed to make a debt payment.

Investors and credit rating agencies viewed it as a default.

“Puerto Ricans have already made sacrifices,” Garcia Padilla told the press. “And now creditors should also make sacrifices and sit down voluntarily and negotiate with us.”

Garcia Padilla shocked investors in June when he called Puerto Rico’s US$72 billion debt load “unpayable” and called for negotiations with creditors to seek concessions.

Some critics took issue with Garcia Padilla’s sweeping language, pointing out that different classes of Puerto Rican debt carry different protections.

Garcia Padilla acknowledged that on Friday, saying “not all obligations are equal,” but he added that the PFC missed payment “legally ... is not a default because of the contractual model of that particular public entity.”

The governor’s remarks come a day after two key PFC bondholders, OppenheimerFunds and Franklin Advisers, took the opposite view in a letter to PFC. The funds, which have nearly US$7 billion in combined exposure to Puerto Rican debt, said the failure to pay was “unprecedented” and “violates the requirements of Puerto Rican law.”

“The path that the current administration has chosen will steer

Buffett’s Berkshire nears deal for Precision Castparts A purchase would likely let Berkshire deploy much of its US$66.59 billion of cash, while still leaving the US$20 bln cushion Buffett wants

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arren Buffett’s Berkshire Hathaway Inc is nearing an agreement to buy Precision Castparts Corp, in what could be the company’s largest purchase ever, according to a person familiar with the matter.

The purchase of Precision Castparts, which makes aircraft components and energy-production equipment, could be announced as soon as this week and cost more than US$30 billion, assuming typical premiums for mergers, according to the Wall Street Journal, which first reported the news. Precision Castparts’ market value was US$26.7 billion on Friday.

Neither Berkshire nor Precision Castparts returned calls and emails seeking comment.

Berkshire is one of Precision Castparts’ largest shareholders, with a roughly 3 percent stake worth US$882 million as of March 31, according to securities filings.

Though it began building that stake in 2012, it remains among the smaller investments in Berkshire’s portfolio.

Such investments are normally picked

by Buffett’s investment managers, Todd Combs and Ted Weschler.

The addition of Precision Castparts would extend Buffett’s decade-long push into the industrial sector, where he has bought such companies as parts maker Marmon, Israeli toolmaker Iscar, and specialty chemicals company Lubrizol.

He considers those companies among his “Powerhouse Five”

Puerto Rico towards litigation and create further deterioration in the capital markets’ trust in Puerto Rico,” the funds said.

Garcia Padilla said there have been informal restructuring meetings with creditors and that “the position from a majority of them is very positive.”

“Of course, they would need to see what Puerto Rico would do to guarantee this doesn’t happen again,” he added.

An economic recovery working group created by Garcia Padilla is slated to deliver a report by August 30 outlining potential restructuring measures. The governor said the report “will present the road that the country needs to follow to end the crisis.”

Reuters

collection of non-insurance businesses that contribute greatly to Berkshire’s bottom line.

Precision Castparts makes components such as nuts, bolts and other fasteners for aerospace companies such as Airbus Group SE and Boeing Co, an industry that accounts for roughly 70 percent of sales. It also makes products such as pipes and fittings for power and industrial companies.

The company reported a profit of US$1.53 billion on net sales of US$10 billion for its fiscal year ended March 29.

But it has struggled with slack demand in some businesses, and last month missed analysts’ quarterly profit forecasts as Chief Executive Officer Mark Donegan lamented a “challenging” oil and gas environment.

Precision Castparts shares have fallen 29 percent since June 2014, and have lagged the Standard & Poor’s 500 by close to 30 percentage points over the last five years.

Berkshire shares have also lagged that index over five years, but by a smaller percentage.

Berkshire’s biggest purchase is the US$26.5 billion takeover in 2010 of the 77.4 percent of the Burlington Northern Santa Fe railroad it did not already own.

Reuters

Business Daily | 15

August 10, 2015

Opinion

A defeat for international wires tax cooperation Business

Leading reports from Asia’s best business newspapers

José Antonio Ocampo

PHILSTAR The Bangko Sentral ng Pilipinas (BSP) has enough room to tweak the reserve requirement ratio for banks to stem the impact of the US Federal Reserve interest rate lift-off, British investment bank Barclays and US financial giant Citigroup said in separate reports. In its latest Emerging Markets research note, Barclays said the BSP’s Monetary Board could ease the reserve requirement imposed on banks to minimize the impact of the impending interest rate increase by the US central bank. Barclays said the BSP’s Monetary Board is likely to keep interest rates unchanged in its upcoming meeting on August 13.

TAIPEI TIMES Taiwan’s steel exports for the first half of this year fell by nearly 20 percent as oversupply sent product prices into a tailspin, according to the Ministry of Economic Affairs.

The ministry said that expanded steel production capacity in China, one of the largest steel suppliers in the world, has exacerbated the global supply glut, adding that the impact from the oversupply was more visible in the Asia-Pacific region. The ministry said that as the global economy showed signs of weakening, demand for steel products has been declining, dragging product prices even lower.

THE KOREA HERALD Looking at an imminent merger, the two flagship banks of Hana Financial Group respectively held extraordinary shareholders’ meetings Friday to approve the merger agreement and the consequent revisions of their articles of association.

The name of the incoming bank will be KEB-Hana Bank, as KEB will be the embracing body, while Hana Bank will be folded in and cease to exist. Hana Financial Group chairman Kim Jung-tae and Hana Bank president Kim Byoung-ho were added to KEB’s board of directors, where KEB president Kim Han-jo is already a member.

THANH NIEN NEWS The government’s investment arm SCIC will “gradually” sell its shares in Vietnam’s largest dairy producer Vinamilk, where it currently owns a 45 percent stake, news website Saigon Times Online reported on Friday. The company’s shareholders will decide on SCIC’s divestment process, Deputy Minister of Planning and Investment Dang Huy Dong was quoted as saying at an M&A forum in Ho Chi Minh City. “Vinamilk is a business where the government does not need to have ownership,” Dong said.

Dong’s statement came amid reports that SCIC has been trying to take control of the company.

Professor at Columbia University and Chair of the Independent Commission for the Reform of International Corporate Taxation

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ost of the world’s governments – eager to mobilize more tax revenues to finance development and curb pervasive tax-avoidance schemes, such as those revealed in the socalled Luxembourg Leaks scandal last year – have an interest in collaborating on taxation matters. Yet at the Third International Conference on Financing for Development, held in Addis Ababa last month, the momentum toward strengthening international tax cooperation came to an abrupt halt.

Developed countries blocked a proposal at the conference to establish an intergovernmental tax body within the United Nations to replace the current UN Committee of Experts.

These countries insist that tax cooperation should take place exclusively under the leadership of the OECD, a body that they control.

The rest of the world should hope this will prove to be a pause rather than an end to progress on international tax cooperation, which began 13 years ago, at the first International Conference on Financing for Development in Monterrey, Mexico. Two years later, in 2004, the United Nations Economic and Social Council (ECOSOC) upgraded its “ad hoc group” of tax experts to a regular committee. This meant that the experts would meet regularly and have an expanded mandate that went beyond merely updating a model double-taxation treaty.

Four years later, at the Second Conference on Financing for

Development, in Doha, Qatar, policymakers acknowledged that more needed to be done in tax matters, and asked ECOSOC to consider strengthening institutional arrangements. And then, in the year leading up to the Addis Ababa conference, the UN Secretary-General endorsed the need for “an intergovernmental committee on tax cooperation, under the auspices of the United Nations.”

His endorsement, along with strong support from nongovernmental organizations and the Independent Commission for the Reform of International Corporate Taxation, gave greater force to the demand by developing countries, organized around the Group of 77 and China, for an equal voice in setting global tax norms. Up until the 11th hour of negotiations in Addis Ababa, they stood firm in calling for an intergovernmental body with the mandate and resources to create a coherent global framework for international tax cooperation.

But to no avail: Developed countries, led by the United States and the United Kingdom –home to many of the multinational corporations implicated in the “Lux Leaks” – succeeded in blocking this much-needed advance in global governance. In the end, the Addis Ababa Action Agenda provides that the current Committee of Experts will continue to function according to its 2004 mandate, with three additional meeting days per year, all funded through voluntary contributions. That is a profoundly disappointing outcome.

But to no avail: Developed countries, led by the United States and the United Kingdom –home to many of the multinational corporations implicated in the “Lux Leaks” – succeeded in blocking this muchneeded advance in global governance

The developed countries have an argument – but not a convincing one. The OECD, whose members are essentially the world’s 34 richest countries, certainly has the capacity to set international standards on taxation. Yet the domination of a select group of countries over tax norms has meant that, in reality, the global governance architecture for taxation has not kept pace with globalization.

The Monterrey Consensus reached in 2002 included a call to enhance “the voice and participation of developing countries in international economic decision-making and norms-setting.” But although the OECD invites some developing countries to participate in its discussions to establish norms, it offers them no decision-making power. The OECD is thus a weak surrogate for a globally representative intergovernmental forum.

Such a body must operate under the auspices of the United Nations, which bears the institutional legitimacy necessary to respond effectively to the challenges of globalization with coherent global standards to combat abusive tax practices and ensure fair taxation of corporate profits worldwide.

Despite the disappointment in Addis Ababa, the call for reform of the international tax system is not likely to be silenced. Instead, it will grow louder on all sides, as the developed countries’ counter-productive resistance to any give and take on international cooperation results in a tsunami of unilateral tax measures beyond OECD control.

Project Syndicate

16 | Business Daily

August 10, 2015

Closing Singapore oil tanker found without cargo near Indonesia

Lock-up shares worth 55 bln yuan to become tradable

A ship with 3,500 metric tonnes of marine fuel oil that was reported missing in the Malacca Strait off Malaysia on Saturday, was found in Indonesian waters without its cargo, Malaysian Maritime Enforcement Agency said. The 10 crew members of the Singapore-registered tanker MT Joaquim, which had been on its way to Langkawi, Malaysia, from Tanjung Pinang, Indonesia, were released by a group of hijackers at 0055 GMT yesterday, the Malaysian Maritime Enforcement Agency said in a statement yesterday. The ship was found near Indonesia’s Rupat Island with its cargo missing, the agency’s deputy director general said.

Lock-up shares worth nearly 55 billion yuan (US$9 billion) will become eligible for trade on China’s stock market this week. About 2.9 billion shares from 27 companies will become tradable on the Shanghai and Shenzhen bourses. The amount, up from the 43.7 billion yuan in shares unlocked this week, will add pressure on China’s struggling stock market. Hebang Co., Ltd., a Sichuan Province-based mining company, will see non-tradable shares worth around 12.9 billion yuan become tradable on the Shanghai Stock Exchange on August 13, the largest amount to hit the market.

Asia’s super-rich courted

by Swiss wealth managers Turning Asian riches into profitable business is no easy task for wealth managers

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witzerland’s wealth managers have long courted Asia’s superrich amid slowing growth at home and an international crackdown on its bank secrecy rules that has made the country a less attractive place to keep cash.

But the competition has recently shifted up a gear, with the new boss of Credit Suisse signalling he wants to embark on a similar path to cross-town rival UBS, which in 2011 chose to shrink its investment bank and focus on the more stable wealth management business, especially in Asia.

The attractions are obvious, with a recent slowdown in growth still leaving many Asian economies far outpacing Western counterparts.

Boston Consulting Group (BCG) forecasts private wealth in the Asia Pacific, excluding Japan, will grow on average by 9.7 percent a year through to 2019, more than double the rate in Western Europe.

According to the latest

With almost 1,200 relationship managers, according to Asian Private Banker, UBS has more than twice as many bankers in Asia than any other wealth manager

Asia Pacific Wealth Report published in October by Capgemini and RBC Wealth Management, the region’s population of high net worth individuals -- defined as those with investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables -- grew 17 percent to 4.3 million in 2013, while their wealth grew 18 percent to US$14.2 trillion.

That compared with growth rates of 13 percent and 12 percent respectively

Germanwings crash victims’ families plan US lawsuit

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in the rest of the world.

Asia’s growing ranks of self-made millionaires and billionaires are proving more active in managing their wealth than Europeans living off inheritances, regularly playing banks against each other to get the best deal.

Asia’s super-rich also tend to spread their money out over six banks or so.

And wealth managers are increasingly having to offer inflated pay packets to poach bankers in a region where demand for talent exceeds supply.

Private banks in the Asia Pacific typically need assets under management of more than US$20 billion to be profitable, according to consultancy EY. To bulk up quickly, banks could look to acquisitions.

In recent years, Julius Baer has bought Merrill Lynch’s wealth management business outside of the United States, while Union Bancaire Privee has snapped up Coutts International. Both purchases helped the banks beef up their presence in Asia.

Leading the pack in size at the moment is UBS, the biggest wealth manager by assets globally and in the Asia Pacific, which BCG estimates will overtake North America in 2016 as the world’s wealthiest region.

In 2014, UBS managed US$272 billion in the Asia Pacific region, according to a study from magazine Asian Private Banker. Citi’s private bank and Credit Suisse rounded out the top three with assets of US$255 billion and US$154 billion respectively.

But competition is heating up, with Credit Suisse’s Asia Pacific CEO Helman Sitohang saying the bank was targeting the region’s growing population of entrepreneurs.

Judging by its giant Hong Kong banner, unveiled earlier this year as part of the bank’s largest outdoor advertisement in the world, UBS is determined to defend its lead.

Edmund Koh, the head of UBS’s wealth management business in southeast Asia and Asia Pacific hub, said Credit Suisse faced a challenge to catch up. Koh hopes the Asia Pacific will contribute at least one third of UBS’s private bank profits by 2017, compared with just under 30 percent now.

Credit Suisse’s Sitohang told Reuters the bank would consider raising headcount in the region, though retaining bankers can be just as important as hiring new ones.

Ruble to circulate in China-Russia border city

32 million Argentines to vote in primaries

T

A

elatives of victims of the Germanwings crash in the French Alps hope to take their compensation claims against parent company Lufthansa to a US court, their lawyer said yesterday.

Co-pilot Andreas Lubitz, 27, has been blamed for deliberately crashing the flight on March 24 headed from Spain to Germany that claimed the lives of all 150 people on board.

“We are preparing a lawsuit in the USA and see good chances of finding a judicial venue in the United States,” Elmar Giemulla, who represents 39 families, told newspaper Bild am Sonntag.

The plaintiffs wanted to know “how it was possible that a co-pilot with known mental health problems and a corresponding history was allowed to fly at all,” the lawyer was quoted as saying.

The newspaper said compensation in air accident cases in the United States is usually 10 times higher than in Germany.

It was not immediately clear on what legal basis the lawyer wanted the case against the German airline to be heard in the United States. Relatives of many of the 72 Germans among the dead have turned down Lufthansa’s compensation offer and accused the airline of ignoring their suffering.

he People’s Bank of China (PBC) has authorized Suifenhe City on the ChinaRussia border in northeastern China’s Heilongjiang Province as a pilot zone where the ruble can be officially used alongside the yuan.

Jin Mei, deputy secretary-general of the monetary policy committee of the central bank made the announcement at the opening ceremony of a trade exposition in Suifenhe Saturday.

The circulation of the Russian ruble in the border city is a result of the “benign development” in settling bilateral trade with yuan and ruble instead of U.S. dollar, Jin said.

Suifeihe City is the major hub of Heilongjiang Province’s trade with Russia. The city accounted for 80 percent of Heilongjiang’s export of goods to Russia and reported a foreign trade of US$7.59 billion in 2014.

Ruble is already widely used in Suifenhe, particularly in shops and hotels targeting Russian customers, local sources said.

City officials believe that legalizing the use of ruble will promote bilateral economic cooperation and boost tourism. The pilot project will not threaten the renminbi as the domestic currency, they said.

AFP

Xinhua

Reuters

rgentines are at primaries election to choose presidential candidates for the October 25 elections as ruling party contender Daniel Scioli begins to pull clear of his rivals.

Polls show that Scioli is backed by about 37 percent of voters, compared with 30 percent for the leading opposition candidate Mauricio Macri’s Cambiemos alliance. Dissident Peronist lawmaker Sergio Massa’s alliance may take 18 percent of votes. People have to vote in one of the eight primaries.

Scioli, a 58-year-old two-time governor of Buenos Aires province, is trying to build on the 12-year rule by the Kirchner family by promising to maintain social spending while making some economic adjustments to attract more investment.

Macri, a two-time mayor of the capital is vowing to resolve outstanding creditor demands and slow inflation, while keeping nationalized companies under state-control.

With South America’s second-largest economy unable to borrow in overseas bond markets due to its 2014 default, investors expect whoever wins the presidential election to seek a settlement with holdout creditors.

Bloomberg News