Closing editor: Joanne Kuai
MOP 6.00
Be water, my friend MOP5.12 per cubic metre of water supplied to users. But the gov’t is picking up the tab for the 4.28 pct hike. With consumers covered. Meanwhile, plans are afoot to build up the city’s water capacity
Year IV
Number 870 Tuesday September 1, 2015
Publisher: Paulo A. Azevedo
Page 2
Local Economy Contracts 26.4 pct
Even worse than the plunge in Q1. Macau’s Q2 GDP tumbled 26.4 pct. Meaning the local economy has Average home prices dipped to its lowest since 2011. Gaming services decreased 40.5 pct y-o-y. While the export of other decline 12.5 per cent in July tourism services dropped 21.5 pct. Domestic demand, however, remains stable. And merchandise exports Page 2 rose 25.6 pct. Gross gaming revenue has declined 14 consecutive months but green shoots are apparent Page
3
Page 4
Forced Hand
Machinery industry deeply affected by slowing economy
Up to 10 VIP gaming rooms have or will close. According to a junket trade association and gaming workers’ union, David Group is left with one VIP room in Wynn Macau. While Heng Seng Group went from 11 rooms and 700 staff to four rooms and around 100 staff. Bad debts and the slowing Chinese economy may trigger more closures
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Analysts believe China will issue new easing measures in December
Page 10
Page 5
Trade Confessions Xinhua agency has revealed a slew of confessions. Regarding recent Chinese stock market gyrations. Arrestees include inside traders from the regulator arm, executives from a brokerage, and a reporter
Page 9
Big Bang
HSI - Movers August 31
Name
Excited fans can hardly wait. S. Korean boy band Big Bang is performing in Cotai in October. But tickets sold out in hours. Leaving disappointed fans with little alternative but to go online. Ticket touts are charging up to five times the official price. In blatant and illegal speculation
Page 7
Tourism
Hotel Hopeful www.macaubusinessdaily.com
Milan Station’s interim sales in Macau drop 78.6 pct
Package group tours overall fell 22 pct in July from a year ago. With 19 pct less Mainland package tourists arriving in the period. But almost a million guests checked into hotels and guesthouses, up 4.6 pct y-o-y. Those from Hong Kong surged 44.6 pct, while Mainland China guests decreased 1.1 pct
Page 3
%Day
China Merchants Hold
+4.23
CNOOC Ltd
+4.00
Bank of Communicatio
+3.55
Cheung Kong Property
+3.23
China Mobile Ltd
+2.29
Cathay Pacific Airways
-2.23
Want Want China Hol
-2.34
Lenovo Group Ltd
-5.50
Galaxy Entertainment
-5.51
China Mengniu Dairy C
-5.57
Source: Bloomberg
I SSN 2226-8294
2015-9-1
2015-9-2
2015-9-3
24˚ 29˚
25˚ 30˚
25˚ 32˚
2 | Business Daily
September 1, 2015
Macau AECOM Asia’s MOP18.35 million Tourism Plan AECOM Asia is to receive MOP18.35 million for the elaboration of the General Plan of the City’s Tourism Industry Development, according to information published yesterday in Macau’s Official Gazette. The contract signed between the government and the Hong Kong-based company involves a payment of MOP9.18 million this year, MOP5.50 million in 2016 and another MOP3.67 million in 2017. The money will come from the Tourism Fund, which falls under the scope of the Macau Government Tourist Office (MGTO). Previously, MGTO Director Helena de Senna Fernandes said the plan for tourism development would assist the city in improving its transport network and diversifying its tourism products.
Gov’t approves 4.28 pct water service fee hike The government has reiterated that the increase in the service fee for Macau Water would not affect the price consumers pay Joanne Kuai
joannekuai@macaubusinesdaily.com
growth in the year, according to the annual profit figures published by the company.
Water supply
Macau casinos and hotels bet on abduction insurance Major hotels and casinos in Macau are betting on insurance policies to guard against the abduction of wealthy guests because of unpaid gaming debts, a Hong Kong insurance broker told the South China Morning Post newspaper. Ashley Coles, an assistant director of credit, political and security risks at Jardine Lloyd Thompson, also revealed that all major hotels and casino groups in Macau had expressed interest in specialist risk insurance to mitigate fallout from any high-profile incident. “Word of mouth can lead to a trend of an interest in the policy, security and protection … all the major casino and hotel chains will have looked into this”, he said, as quoted by the Hong Kong newspaper.
MUST authorised to create Pharmacy degree The Macau University of Science and Technology (MUST) has been authorised by the government to offer a degree in Pharmacy, according to a dispatch signed on 21 August by the Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, and published yesterday in Macau’s Official Gazette. The undergraduate programme will only be available to students enrolling in the university in the academic year of 2016/2017, with classes taught in Chinese and English. The degree will be of a five-year duration. At the moment, MUST’s department of Chinese Medicine offers students a Bachelor of Pharmacy in Chinese Medicine, acquired after four years.
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he government will pay the city’s sole water distributor Macao Water Supply Co. Ltd. MOP5.12 (US$0.64) per cubic metre of water supplied to users, a hike of 4.28 per cent on the previous MOP4.91, the government announced yesterday. The hike, however, is substantially lower than the 11.88 per cent requested by Macao Water in March. The increase in service fee will come into effect after the government signs an additional contract with Macao Water on the subject, following the day when the adjustment is published in the Official Gazette. The increase will not affect the price that users pay. The approved hike is mainly based on changes in the composite price index (CPI), water supply cost for the past year, the company’s service
quality, its coherence in practicing the government’s policies in terms of water resources management, its fulfilment of the contract and the damage rate of the water pipes, the Marine and Water Bureau explained in a press release issued yesterday. In late August last year, the government started to pay Macao Water MOP4.91 per cubic metre of water supplied to users, a hike of 5.59 per cent versus the previous MOP4.65 rate. This approved hike was explained at the time as helping ease the financial pressure of investing in large-scale water supply infrastructure in the next few years. Macao Water’s profit after tax for 2014 represented a 9.4 per cent increase from the MOP53.56 million in 2013, when the water distributor registered an 8.4 per cent profit
Currently, there are three water treatment plants equipped with a total of five different techniques and production lines in the SAR. The three water treatment plants are the Ilha Verde Water Treatment Plant, which has the longest history, the Main Storage Reservoir Water Treatment Plant (MSR), which has the largest capacity, and the Coloane Water Treatment Plant. The three plants provide a total capacity of 390,000 cubic metres a day. According to the latest statistics from Macao Water, for the time being the peak consumption in summer has reached 290,000 cubic metres a day, thus compared to total capacity one fourth remains as backup in case of emergency. Last year, Macao Water submitted a plan for the local water supply for the next five years, including projections regarding local water demands for the next ten years, to the SAR Government, including constructing a new water treatment plant in Seac Pai Van for a larger capacity of water supply to the Cotai area. The company says the future Seac Pai Van Water Treatment Plant, designed for a total capacity of 200,000 cubic metres a day, is currently in its planning stage. On completion of the plant, the total capacity for the entire city will be enhanced to 590,000 cubic metres a day, further ensuring a stable water supply to the islands, thus reducing their dependence upon the water supply system on the Macau Peninsula.
Average home prices decline 12.5 per cent in July
Pengest awarded MOP8.97 mln contract The number of home transactions in the territory also decreased 14.5 per cent to a total of 529 The government is to pay MOP8.97 million to the Portuguese company Pengest Internacional for the inspection of the construction of the dike in reclamation territory Zone E1. The information was released yesterday in Macau’s Official Gazette in a dispatch signed by Fernando Chui Sai On. The payment is to be made in three instalments, with the first this year involving MOP3.14 million, the second next year in the amount of MOP4.72 million, and another tranche of MOP1.11 million in 2017. Pengest has worked previously with the government on such projects as the construction of the Lotus Bridge, completed in 1999, and the Avenida a Sul da Baía de Nossa Senhora da Esperança, completed in 2002.
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he average price of homes and transactions declined in July 12.5 per cent year-on-year to MOP84,753 per square metre and 14.5 per cent to 529 cases, according to the latest data from the Financial Services Bureau (DSF) published yesterday. For the overall home market in the territory the average price of a flat was MOP84,753 (US$10,617) per square metre, down 12.5 per cent from MOP96,828 (US$12,129) per square metre, when compared to a year ago. In terms of location, Taipa recorded the highest average price with MOP99,907 per square
metre, a decrease of 7.6 per cent year-on-year from MOP108,095 per square metre. Meanwhile, Macau Peninsula recorded the lowest average price of MOP77,971 per square metre, down 15.7 per cent year-on-year from MOP92,540 per square metre. In terms of home transactions in Coloane the price declined 21.1 per cent year-on-year to MOP93,503 per square metre from MOP118,568 per square metre a year ago.
Coloane transactions up
In July, the overall number of transactions declined 14.5 per cent
year-on-year to 529 cases from 619 cases, mainly driven by the cooling down of the market on the Macau Peninsula, where transactions dropped 20.2 per cent year-on-year to 399 from 500. In Taipa, home transactions also decreased but at a slower rate of ‘only’ 4.2 per cent to 92 from 96. In Coloane, however, there was a different trend, as square metre prices went down. On the island, the number of transactions soared 65 per cent year-on-year to a total of 38 transactions from 23. J.S.F.
Business Daily | 3
September 1, 2015
Macau
Q2 GDP shrinks 26.4 pct y-o-y Gross Domestic Product has fallen to 2011 levels as casino slump threatens surplus Joanne Kuai*
joannekuai@macaubusinessdaily.com
M
acau’s economy plunged to its lowest since 2011 as highend gamblers sidestepped the world’s largest casino market amid a widening crackdown on graft in China. The city where gambling accounts for four-fifths of economic output saw its Gross Domestic Product (GDP) tumble 26.4 per cent in the last quarter, according to data released by the Statistics and Census Service (DSEC) yesterday. The drop worsened from 24.5 per cent in the first quarter. The decline would take Macau’s GDP to about MOP77.5 billion (US$9.7 billion) at constant prices, making it the weakest since early 2011. The government says that the economic contraction was mainly due to a decline in export of services, of which export of gaming services decreased 40.5 per cent yearon-year and exports of other tourism services dropped 21.5 per cent.
However, DSEC data also shows that domestic demand has remained stable, with investment, private consumption expenditure and government final consumption expenditure rising 3.2 per cent, 2.0 per cent and 5.7 per cent, respectively. Merchandise
exports also rose 25.6 per cent. In the first half year of 2015, the economy contracted by 25.4 per cent in real terms.
Casino slump threat
The only Chinese city where casinos are legal, Macau has seen gross gaming revenue
plunge 14 consecutive months due to the central government’s crackdown on corruption in a campaign that has kept high-stakes bettors at bay. China’s slowing economy has further curbed visits by mass market gamblers and tourists.
The government is due today to report that the gaming slump deepened in August to a 37.8 per cent drop, according to the median estimate of seven analysts surveyed by Bloomberg. That would reverse a gradual easing since the start of the year that had given hopes the industry was recovering. While its economy has fared worse than crisis and debt-laden Greece in recent months, Macau’s unemployment rate has held steady at less than 2 per cent and its government has maintained a surplus. Still, the fiscal surplus of MOP8.63 billion (US$1.1 billion) in the second quarter has almost halved from a quarter earlier amid falling gaming taxes. Beijingbacked Chief Executive Fernando Chui says he will reduce government spending if the casino downturn worsens. *with Bloomberg
Package tour visitors plunge 22.3 pct in July Visitors arriving in the SAR on tour groups totalled some 820,000 - up 16.3 per cent month-on-month but down 22.3 pct year-on-year
I
nformation from the Statistics and Census Service (DSEC) reveals that visitors on package tours totalled 820,000 in July 2015, with those from the biggest source of visitors to the city, Mainland China, dropping 19.1 per cent to some 686,600. In the first seven months of 2015, visitors on package tours totalled 5,762,000, down 2.9 per cent compared to the same period of last year, according to DSEC’s
data released yesterday. However, during the same period, Mainland visitors travelling to the SAR on tour groups actually grew 0.7 per cent to some 4,664,000. Following Mainland China, Taiwan is the second biggest source of visitors on package tours to Macau, at 55,400 in July, down 24 per cent year-on-year for 345,200 in the first seven months, a contraction of 19.1 per cent compared to the same period last year.
According to DSEC data, some 102 hotels and guesthouses operated in the city as at the end of July, providing some 30,000 hotel rooms, representing 7.2 per cent increase year-on-year. In July, a total of 978,000 guests checked into hotels and guesthouses, up 4.6 per cent yearon-year. Guests from Hong Kong surged 44.6 per cent, while those from Mainland China decreased 1.1 per cent. The length of stay of
guests was also prolonged to 1.4 nights, an increase of 0.1 nights compared to the same period of last year. However, with the increasing amount of hotel rooms, the hotel occupancy rate decreased by 6.0 per cent to 80.6 per cent compared to a year ago. Nevertheless, the number is sill higher than the monthly occupancy rate in the first half of this year. J.K.
4 | Business Daily
September 1, 2015
Macau
Milan Station’s interim sales in Macau drop 78.6 per cent
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uxury handbag store chain Milan Station Holdings Ltd. has reported a sharp 78.6 per cent year-on-year decline in its retail revenue derived from the Macau market for the first six months of this year, the company announced in its results filing with the Hong Kong Stock Exchange. The company said its business in the city has been significantly affected as the gambling industry and tourism trade had ‘hit their troughs’. Milan Station’s retail revenue in Macau in the interim period was HK$11.8 million, representing 5.7 per cent of overall sales revenue. During the interim period, Milan Station closed its retail stores in Macau; while its points of sale in ‘exclusive clubhouses’ was unsatisfactory.
By price range of product, revenue derived from Milan Station’s items priced at above HK$50,000 – comprising over half of the company’s sales revenue – saw a 31.1 per cent year-on-year decline to HK$118.3 million.
As Milan Station has also sold less in Hong Kong, Mainland China and Singapore, the retailer’s overall retail revenue plunged 36.6 per cent to HK$208.8 million. The company said its loss for the
period decreased significantly by 65.6 per cent to HK$6.8 million, under what it called ‘effective cost control’ and a one-off gain of about HK$12 million from the disposal of a property. S.L.
Bonjour posts soaring interim Lawrence Ho’s profit, sales down 14.4 pct Russian casino to open on October 8
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ong Kong-listed cosmetics retailer Bonjour Holdings Ltd., which also runs a retail business here, said its profit for the first six months of this year has soared 288 per cent yearon-year to HK$424 million (US$54.7 million) although it is mainly due to the company’s disposal of beauty and health salon operations in the period, the company said in its interim results filing. The disposal, completed in January, has generated for Bonjour a gain of about HK$399 million, according to the filing released after the closing of the stock exchange on Friday.
Nevertheless, Bonjour’s overall sales turnover for the interim period has dropped 14.4 per cent to nearly HK$1.15 billion, mainly dragged down by fewer sales in the combined core market of Hong Kong and Macau. Bonjour’s sales revenue in Macau was only slightly up by 1.2 per cent to HK$109 million. As at the end of the interim period, Bonjour ran 46 stores in Hong Kong, Macau and Guangzhou, one store more than a year ago. The cosmetic retailer’s profit from continuing operations declined 75 per
cent year-on-year to HK$25 million for the January-June period. In the filing, Bonjour said that it expected the challenging retail environment to persist in the second half of this year given Mainland Chinese tourists’ evolving preference for Japan, South Korea and Europe. The average ticket size of the cosmetics retailer was also likely to be hurt from the fact that a higher ratio of Chinese tourists are coming from lower-tier cities with less spending power and daytrippers, the filing said. S.L.
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ocal gaming entrepreneur Lawrence Ho Yau Long’s Tiger de Cristal casino project in the Russian Far East will have its soft opening on 8th October this year, Summit Ascent Holding Ltd., a company controlled by the entrepreneur, announced last week. ‘We now expect to conduct a soft opening of the property on 8th October 2015. A grand opening of the property including the hotel is now expected to be conducted in late October 2015,’ the company wrote in a filing with Hong Kong Stock Exchange last Thursday after trading hours. In May it was announced that the project - located in the Integrated Entertainment Zone of the Primorye Region near Vladivostok in Russia - would open its doors by 28th August this year. The announcement was made by Summit Ascent’s subsidiary, G1 Entertainment LLC, which is in charge of the gaming project. The subsidiary was formerly known as First Gambling Co. of the East LLC. ‘The Tiger de Cristal property is undergoing final fit-out and operations commissioning, and is concurrently progressing through the government
building approval process,’ the company wrote in the filing. Meanwhile, Summit Ascent said that its subsidiary has maintained stringent cost controls , believing it is not necessary to resort to external fundraising following no expectation of material budget overruns. ‘We remain optimistic about the prospects for our project in the Russian Far East and appreciate our stakeholders and partners’ ongoing support as we approach our imminent opening date,’ it said. The Tiger De Cristal project is expected to accommodate 25 VIP gaming tables, 40 mass market gaming tables and 800 slot machines, in addition to offering 119 hotel rooms. K.L.
Business Daily | 5
September 1, 2015
Macau
At least 8 VIP gaming rooms close in August Macau will have seen the closure or planned closure of 8-10 VIP gaming rooms in August to early September as the ailing VIP business remains moribund, a junket trade association and gaming workers’ union claim Stephanie Lai
sw.lai@macaubusinessdaily.com
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he city has or will see the closure or planned closure of 8-10 VIP gaming rooms in August by early this month, as the VIP gaming operation here remains under huge pressurise by competition from Southeast Asia and poor gaming debt repayment ability of Chinese gamblers, the Association of Gaming and Entertainment Promoters of Macau and casino worker activist group Forefront of Macau Gaming have told us. Within the span of a month, Macau has seen the closure of at least 8 VIP rooms, with prominent VIP gaming operators such as the Golden Group amongst those that have closed down rooms, the president of the Association of Gaming and Entertainment Promoters of Macau, Kwok Chi Chung, told Business Daily. Another major junket operator here, David Group, is also rumoured
to have been left with only one VIP gaming room in Wynn Macau starting from today – a huge size-down from the original seven rooms working at the beginning of this year, according to Mr. Kwok and deputy director of Forefront of Macau Gaming Lei Kuok Keong.
David Group had declined to confirm the figure to us, and no reply from Wynn Macau has been received by the time the story went to press. “The operation costs at this point have become unbearable for some VIP gaming operators,” said Mr. Kwok, citing the loss of appeal of Macau
for Chinese gamblers and poor debt repayment ability of some of these gamblers as main reasons for the VIP room closures. Gathering statistics about the number of persons affected by the VIP room closures could prove tricky as their operation involved individual junket affiliates and creditors, said Forefront of Macau Gaming deputy director Mr. Lei. But he cited a rough count that over 3,000 local resident employees have been affected by the closure of around 40-50 VIP rooms from the beginning of this year until present. “One of the most serious cases [for labour lay-offs from VIP gaming operators] is with the junket operator Heng Sheng Group,” Mr. Lei told us. “At the peak time of their business, around Chinese New Year in 2014, the group had 11 VIP rooms running here and employed 700 staff – but now they’ve got only four VIP rooms left, and their staff number has dropped to around 100.” Mr. Lei believes more VIP room closures are likely by the end of the year as there has been no stimulant for the ailing VIP gaming business in the city against the backdrop of the slowing Chinese economy. By official count, the number of licensed junket promoters in Macau stood at around 182 as at the end of July, just one less than the 183 junket promoters published in the Official Gazette on January 28 this year, according to the casino regulator Gaming Inspection and Co-ordination Bureau. These figures represent a marked downsizing from the 210-plus licensed junket operators as published in the official record in January last year.
6 | Business Daily
September 1, 2015
Macau
Suffering at home, Bebe pushes into China at precarious time The retailer is teaming up with Longgoal LLC that will open at least 60 retail and wholesale points of distribution for Bebe in mainland China, Hong Kong, Macau and Taiwan
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or Bebe Stores Inc. at least, China is looking pretty good right now. The U.S. apparel chain, which has struggled with weak sales in its home country, is expanding into the Asian nation in search of growth. As part of a licensing deal announced last Thursday, Bebe will get its brand into as many as 150 places in China during the next five years. Bebe is making the move at a time when China’s economic prospects are in doubt. Concerns about a slowdown in the world’s second-largest economy have roiled global markets over the past week, contributing to the Standard & Poor’s 500 Index’s first correction since 2011. But Bebe Chief Executive Officer Jim Wiggett sees the China expansion as a no-brainer. Demand for brand-name clothing is still huge in the country, he said, and Bebe’s Shanghai-based partner will defray the risks. “The appetite is voracious,” Wiggett said in an interview. “The market might be adjusting in the short term, but it’s going to settle down.” The retailer, which sells going-out attire and other clothing for women, is teaming up with Longgoal LLC, a retail management firm. Longgoal will
open at least 60 retail and wholesale points of distribution for Bebe in mainland China, Hong Kong, Macau and Taiwan. The first boutique will debut next summer, said Brisbane, California-based Bebe. Longgoal already has partnerships with retail brands such as Thomas Pink, which is owned by LVMH Moet Hennessy Louis Vuitton SE. Under the Bebe agreement, as much as 30 per cent of the products sold in China will be designed and developed locally.
Athleisure push
Wiggett is working to turn around the retailer by cutting down on promotions and relying less heavily on nightlife clothing -- the dresses and tops that Bebe is known for. Earlier this month, the company announced plans to sell an athleisure footwear line at Macy’s Inc., pushing into a category that has bolstered results at Old Navy and other retailers. Bebe reported a loss of 5 cents a share in the fourth quarter, which ended July 4, according to a separate statement Thursday. Comparablestore sales -- a closely watched benchmark -- rose 1.1 per cent in the period. But Bebe expects sales by
that measure to decline by mid-single digits in the first quarter, with a loss per share in the “high teens.”
Stock falls
Though news of the China expansion sent Bebe shares up before Thursday’s close, they plunged on Friday after the earnings results were posted. The stock, which had already been down
The appetite is voracious. The market might be adjusting in the short term, but it’s going to settle down Jim Wiggett, Bebe Chief Executive Officer
15 per cent this year, tumbled 28 per cent in New York to $1.35, the biggest decline since it began trading in 1998. For investors, China has been a risky bet of late. The country has the world’s most volatile stocks after Greece, and its equity markets lost US$5 trillion during a two-month rout. The Chinese government has devalued its currency and cut interest rates. And a crackdown on extravagance has stoked fears of an economic slowdown. To some extent, Bebe is insulated from the greater uncertainty. Because of the wholesaling arrangement, sales will be in U.S. dollars with no currency risk, Chief Financial Officer Liyuan Woo said. And while Chinese shoppers may not be buying luxury items right now, Bebe products will be sold at more attainable price levels, Woo said. Furthermore, Chinese tourists are already familiar with the chain from visiting the U.S. “We figured: ‘Let’s go to where she lives and give her an opportunity to shop locally,’” Wiggett said. “Because of our price point, there’s a larger base for us to go after who can’t afford the prestige brands.”
Business Daily | 7
September 1, 2015
Macau
Big Bang’s sold-out tickets turn into gold on black market Tickets for the Korean Pop band are being sold on the Internet by speculators at prices reaching MOP10,000, which is five times the official cost for the shows in the Cotai Arena
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ickets for the soldout Big Bang music shows taking place in the Cotai Arena on 23 and 24 October are on sale on the Internet by speculators asking five times the advertised price. While promoters sold the tickets for prices ranging from MOP688 to MOP1,888, Facebook groups are pushing prices as high as HK$10,000, Business Daily understands from potential buyers on the social network. Public ticket sales for the concerts started on Friday 28 August, with 18.000 tickets sold in two hours. Meanwhile, in the first hours of the public sales for the show of the Korean-pop boys band, the huge traffic to the websites selling tickets namely CotaiTicketing, Hong Kong Ticketing and Macau Ticket - made it impossible for most fans to login. Thus, the alternative for hardcore fans was to look online for tickets.
“I asked for the prices of the tickets from these people selling online and I was asked for amounts ranging from around MOP2,600, MOP2,800 to HK5,000 to MOP10,000”, local resident Hin Son told Business Daily, after failing to buy a ticket in the public sale. The same experience was shared by Claúdia Chao, a
local resident working as part-time clerk, who told Business Daily, “I tried to buy the tickets when the public sale began. But it took me one hour before I was able to login because many people were trying to access the websites. When I finally managed to do it, all the tickets were sold out. Now the only option is to buy
the tickets online”, she said. “The sales on the Internet are crazy. People are asking for MOP3,500 for one ticket alone and for two tickets I was asked for MOP6,000. I will not pay this much”.
Speculation scare
Prior to the beginning of the public sale, according to Business Daily checks, on
Wednesday 26 August ‘the golden papers’ for the VIP areas could already be found on sale on social networks for VIP Standing Zone B for MOP3,600. The official price was MOP1,888. However, this is not a surprise, as the promoters had a priority booking system for credit cardholders of a bank operating in the territory. “In Macau, there are thousands of people that feel that there is too much speculation going on with the Big Bang show and so they decided just not to watch it”, Hin Son said. On being contacted by Business Daily, a spokesperson for the government explained that speculators are committing an illegal act, as defined by the legal regime on infractions against public health and against the economy. According to Article 23 of Law 6/96/M, the act of selling goods or the provision of services at a higher price than those on labels or lettering of the products or other lists elaborated upon by the original vendor is punishable by six months to three years in jail or a criminal fine of at least 120 days. When the promoters of the show, The Venetian Macao, ELF Asia and Live Nation Lushington (Hong Kong), were contacted by Business Daily they refused to comment on the issue. J.S.F.
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8 | Business Daily
September 1, 2015
Greater China
Slowing economy hits earnings at top machinery makers The country’s construction machinery sales were only US$17 billion last year, less than half the 2011 level
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hina’s slowing economy has taken its toll on the first-half earnings of major construction machinery makers Zoomlion Heavy Industry Science and Technology Co Ltd and Sany Heavy Industry Co Ltd. Encouraged to expand after Beijing unleashed a US$644 billion stimulus package in 2008 during the global financial crisis, Chinese heavy equipment makers are stuck with a glut of unsold equipment and factories they do not need. In January-June, Zoomlion booked a 309.8 million yuan (US$48.51 million) net loss, in line with its own forecast of 300-380 million yuan, according to a stock exchange filing late on Sunday. It made 900.1 million yuan net profit a year earlier. Sany reported a 75.6 percent fall in net income to 334.8 million yuan for the same period, according to a filing. Even China’s pledge to support the Silk Road infrastructure initiative
with US$40 billion worth of investments may not be enough to revive the heavy machinery sector, industry players and analysts said. Projects under the Silk
Road plan include a network of railways, highways, oil and gas pipelines and power grids across central, west and south Asia to as far as Greece, Russia and Oman.
“There are too many machines out there in the market,” Zoomlion Chairman Zhan Chunxin told Reuters recently. “Companies tended to get orders ahead of major
infrastructure projects previously, but now we hardly get any inquires even if several projects kick off at the same time.” Last year, China’s production capacity for wheel loaders, a kind of earth-mover, amounted to 420,000 units, 2.6 times as much as global sales for the year. Capacity for excavators topped 538,000 units, far exceeding global sales of 418,500 units, according to industry consultancy OffHighway Research. The country’s construction machinery sales, meanwhile, were only US$17 billion last year, less than half the 2011 level. They are expected to fall further to US$13 billion this year, it said. “It’s no exaggeration at all to say that the Chinese market is in the middle of a catastrophic long-term slump,” Zeng Guangan, chairman of Guangxi Liugong Machinery Co, told a recent industry forum. Despite growing concerns about the broader Chinese economy, the country is growing at a “reasonable” pace and the government can handle the risks, Premier Li Keqiang said in remarks published late on Saturday after a special cabinet meeting. The government reported annual growth in the second quarter was 7 percent, a figure some economists doubt. Reuters
U.S. considering sanctions over Chinese cyber theft Suspicions that Chinese hackers were behind a series of data breaches in the U.S. have been an irritant in relations between the world’s two largest economies
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he White House is considering applying sanctions against companies and individuals in China it believes have benefited from Chinese hacking of U.S. trade secrets, the Washington Post reported on Sunday. The newspaper, citing several unidentified Obama administration officials, said a final determination on whether to issue the sanctions was expected soon, possibly as early as the next two weeks. Suspicions that Chinese hackers were behind a series of data breaches in the United States have been an irritant in relations between the world's two largest economies as President Xi Jinping prepares to make his first visit to the United States next month. Obama administration officials have said China is the top suspect in the massive hacking of a U.S. government agency that compromised the personnel records of at least 4.2 million current and former government workers. China has denied involvement. U.S. government officials and cyber analysts say Chinese hackers are using high-tech tactics to build massive databases that could be used for traditional espionage, such as recruiting spies or gaining access to secure data on other networks. A White House official had no immediate comment on the report. The State Department did not
immediately respond to a request for comment. A senior administration official said in reply to a Reuters query that President Barack Obama noted when he signed an executive order earlier this year enabling the use of economic sanctions against cyber hackers that the administration "is pursuing a
comprehensive strategy to confront such actors." "That strategy includes diplomatic engagement, trade policy tools, law enforcement mechanisms, and imposing sanctions on individuals or entities that engage in certain significant, malicious cyber-enabled activities," the official said.
"We are assessing all of our options to respond to these threats in a manner and time frame of our choosing," the official added. The Post quoted an administration official as saying the possible sanctions move "sends a signal to Beijing that the administration is going to start fighting back on economic espionage, and it sends a signal to the private sector that we're on your team. It tells China, enough is enough." The newspaper said the sanctions would not be imposed as retaliation for the suspected hacking of the U.S. government personnel records, as they were deemed to have been carried out for intelligence reasons rather than to benefit Chinese industry. Reuters
U.S. government officials and cyber analysts say Chinese hackers are using high-tech tactics to build massive databases
Business Daily | 9
September 1, 2015
Greater China State media announces confessions in probes into stocks plunge
July services trade deficit widens
Xinhua also said Liu Shufan, an official with the China Securities Regulatory Commission (CSRC), had confessed to insider trading
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hinese state media announced a slew of confessions yesterday following investigations into recent stock market gyrations, including from a detained reporter who admitted to spreading false information that caused “panic and disorder”. An official from China’s securities regulator had confessed to insider trading while four senior executives from China’s largest brokerage, CITIC Securities, had also confessed to insider dealing, the official Xinhua news agency reported. China is trying to boost its stock markets. Among a number of measures, authorities have cracked down on the fabrication of trading information, alleged malicious short selling and other strategies seen as hampering a recovery. Xinhua said Wang Xiaolu, a reporter at the respected Caijing business magazine, had confessed to writing about the Chinese stock market “based on hearsay and his own subjective guesses” that “inflicted huge losses on the country and investors”. Xinhua did not say if Wang wrote more than one story or detail what he reported. Caijing could not be reached for comment. In a statement last
Wednesday, a day after Xinhua said Wang was being held, Caijing said it had not been given a reason for his detention, adding it would support his actions within the normal course of reporting. It was unclear if Wang had a lawyer. Chinese state media often publish confessions of those detained in highprofile cases before they are tried in court, a practice that rule of law advocates say violates the rights of the accused to due process. Xinhua also said Liu Shufan, an official with the China Securities Regulatory Commission (CSRC), had confessed to insider trading, forging official seals and using his position to boost a listed company’s share price in return for several million yuan worth of bribes. It was unclear if Liu had been detained or had a lawyer. The CSRC could not be reached for comment. Xinhua added that Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie, whom it described as senior executives at CITIC Securities, had confessed to insider trading, although it gave few details. A CITIC Securities spokesman declined to comment. On Sunday, the brokerage said several senior managers had been asked to assist with a public
Among a number of measures, authorities have cracked down on the fabrication of trading information
security investigation and that the company was actively cooperating with the request. It was unclear if the four were being detained or had legal representation. Eight CITIC employees were being investigated for suspected illegal securities trading, Xinhua has previously said. It has not said if that investigation is linked to the one involving the CSRC official. Reuters
China’s trade deficit in services continued to widen in July to US$17.6 billion, the foreign exchange regulator said yesterday, as Chinese spent more abroad than foreign visitors in the country. The deficit was led by a huge gap of US$15.9 billion in spending between Chinese and foreign visitors, the State Administration of Foreign Exchange (SAFE) said in a statement. China posted a US$46 billion surplus on trade of goods in July, resulting in a combined surplus on trade in goods and services of US$28.4 billion.
Funds cut equity allocations to lowest on record Chinese fund managers have cut the proportion of their portfolios to be invested in stocks over the next three months to an eight-year low, a Reuters poll showed, reflecting pessimism after the recent turbulence in China’s equities market. Chinese fund managers cut their suggested equity allocations for the next three months to 66.3 percent - the lowest since June 2007 when the poll was first conducted - from 72.5 percent, according to a poll of eight China-based fund managers conducted this week. Funds increased their suggested bond allocation to 14.4 percent from 9.4 percent a month ago.
Listed companies post 8.7 pct growth in H1 profit
KEY POINTS China’s gold demand to pick up in 2016, help support prices China’s central bank to further raise gold reserves
Mainland demand may help gold rise in 2016 China’s gold reserves rose by nearly 610,000 troy ounces, or 19 tonnes, to 53.93 million troy ounces in July from June Ruby Lian and David Stanway
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hina's gold demand is expected to rise and help push the price of bullion back to about US$1,200 an ounce next year, the chairman of Zijin Mining Group , the world's biggest gold producer by market value, said yesterday. "China's government is expected to further increase gold reserves as it takes a very small portion of foreign exchange reserves, and demand from jewellery buying and manufacturing will also pick up,"
Chen Jinghe said in an interview. However, the economic slowdown in the world's top consumer of the metal will continue over the next two to three years which will keep the price of commodities such as gold and copper under pressure, Chen said. The World Gold Council expects China's gold demand to at least hold steady this year from a year ago, at just under 1,000 tonnes. China consumed 973.6 tonnes of gold in 2014, it said.
Zijin aims for more overseas expansion through M&A
After a 12-year bull run, global prices of the safe haven metal, which peaked in 2011, have struggled to gain traction. It sank to US$1,077 per ounce on July 24, its lowest in 5-1/2 years, and has gradually risen to about US$1,130 over the past few weeks. China's gold reserves rose by nearly 610,000 troy ounces, or 19 tonnes, to 53.93 million troy ounces in July from June. Zijin Mining posted a 20.9 percent rise in its first-half net profit at 1.3 billion yuan (US$203.88 million) despite a sharp fall in gold and copper prices over the period. Other major gold producers posted a big fall in first-half net profit. Zhongjin Gold and Shandong Gold Mining saw their net profit drop more than 80 percent, according to their exchange filings. Zijin, which unveiled three acquisitions of foreign mining assets between May and June, will push ahead with mine acquisitions to expand its portfolio outside of China. Reuters
Combined first-half profit of China’s listed companies grew 8.66 percent from a year earlier, the official Shanghai Securities News reported yesterday. Profit growth fell from 10 percent in the first half of 2014, reflecting China’s slowing economy. China’s 2,800 listed companies reported a combined profit of 1.42 trillion yuan (US$222.37 billion) during the first six months of the year, two-thirds of which was contributed by the financial sector and the country’s two oil giants, Sinopec and PetroChina, according to the article. Profit at smaller companies grew faster than blue-chips.
Firm behind Three Gorges Dam reports surging deals Chinese construction giant China Gezhouba Group Co. Ltd., which built the Three Gorges Dam, yesterday announced that the value of its signed overseas contracts in the first half (H1) of 2015 had more than doubled from the same period last year. Gezhouba inked deals worth 144.7 billion yuan (US$22.6 bln) during the January-June period, it said, adding that overseas projects, worth 65.9 billion yuan, registered an yearly rise of 134 percent. This year’s new contracts include a 1 billion dollar sewage plant project in Egypt, and a US$4.5 billion hydropower station project in Angola.
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September 1, 2015
Greater China
Central bank likely to ease policy again by end-December Economists also say China’s housing market is dangerously close to a steep correction and targeted measures from Beijing would be needed
People’s Bank of China branch office in Shanghai
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hina’s central bank is highly likely to ease monetary policy again by the end of this year, according to economists surveyed by Reuters, as it seeks to support a rapidly cooling economy and calm financial markets. With factory activity, exports and inflation slowing along with prolonged producer price deflation, economists polled predicted that the PBOC would have to act again. The median from a snap survey of around 20 economists showed there is a 80 percent chance of a further cut in the reserve requirement ratio (RRR) by end-December, while the chance for a reduction in the lending
and deposit rates stood at 70 percent. While prospects of further easing will calm investors who are jittery over the effects a China slowdown could have on global growth, some analysts fear Beijing’s strategy might prove inadequate. “The drip-feed of stimulus might not be sufficient to arrest aggressive bears, or significantly lift the economy in a demand-constrained world,” Mizuho Bank economists wrote in a note. “While China’s latest easing measures are certainly welcome, we are worried that such reactive, ad hoc and uncoordinated (policy) might undermine conviction and efficacy.”
The poll also showed China’s key lending rate will probably be cut to 4.35 percent by the end of the year, after which it is expected to stay steady, and the deposit rate is expected to come down by 25 basis points to 1.50 percent by the yearend. Economists expect the PBOC to lower the RRR further, with the median consensus showing it will be cut to 17 percent from the current 18 percent by end-December and further lowered to 16 percent by the end of next year. “There will be a need to inject liquidity in interbank market to neutralize the impact from foreign
exchange intervention,” said Flemming Jegbjærg Nielsen, analyst at Danske Bank. Falling interest rates could increase capital outflows in China and drag the yuan lower, meaning more PBOC intervention in currency markets as policymakers have pledged to protect the yuan from sharp falls. While the increased liquidity from the reserve cuts will benefit big banks, demand for credit from China’s vast population and businesses is tepid and remains a source of concern. Asked what else the PBOC could do apart from cutting rates, some respondents said it could lend directly to select banks, expand its mediumterm lending facility and take more steps to aid the real economy. Economists also said China’s housing market, a major factor in economic activity, is dangerously close to a steep correction and targeted measures from Beijing would be needed along with policy easing from the central bank to tackle the slowdown. “We are expecting fiscal spending to be much stronger for the rest of the year after the significant disruption in the first half,” said Julian Evans Pritchard, China economist at Capital Economics. “If Beijing wants to hit its spending target its going to have to step up spending.” Reuters
Further action to stop water pollution needed A new action plan aims to ban water-polluting paper mills, oil refineries, pesticide producers and other industrial plants by the end of 2016 Dominique Patton
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hina faces a “formidable task” to clean up its rivers and lakes and needs a fundamental change in attitudes to prioritise the environment over economic development at all cost, vice premier Wang Yang said. China published a water pollution prevention action plan in April, promising to improve water supplies in the world’s most populous country and second largest economy after years of heavy pollution caused by industrial development. One-third of major Chinese river basins and 60 percent of its underground water is contaminated. Speaking at a meeting to discuss the country’s efforts so far, Wang said preventing water pollution remained a “formidable task”. The new action plan aims to ban water-polluting paper mills, oil refineries,
pesticide producers and other industrial plants by the end of 2016 in a bid to better protect China’s scarce water supplies. China has already blocked the approval of 163 state-level projects during the 12th five-year plan period (2011-2015), said Chen Jining, Minister for Environmental Protection. But many companies ignore environmental impact assessments or find ways around environmental requirements, he said. Around 30,000 companies illegally constructed projects during the first half of the year, according to a nationwide MEP survey. Enforcement of environmental rules has long been a problem in China, where state-owned enterprises routinely pay negligible fines instead of meeting regulations. Local governments are often more focussed on
growth and generating tax income than environmental protection, said Chen. He called for a revision of environmental laws to increase the penalties for violations and strengthen the legal status of EIAs. Wang said more efforts were needed to improve accountability for water pollution, such as research into turning water-related environmental quality into binding targets. Beijing has said it will require outgoing cadres to be assessed according to the state of the natural resource assets under their management and it wants to make local governments take full responsibility for water quality, he added. China would accelerate the introduction of emission permits and use of other economic instruments to incentivise water protection, said Wang. Reuters
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September 1, 2015
Asia
Japan’s July industrial output falls Some members of Japan's ruling Liberal Democratic Party have already started talking about compiling new economic stimulus measures Stanley White
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apan’s industrial output unexpectedly fell in July in a worrying sign that high inventories and weak overseas demand could further hamper an economy struggling to recover from a slump in the second quarter. The 0.6 percent decline in output in July was much worse than the median estimate for a 0.1 percent increase and follows a 1.1 rise in June, trade ministry data showed yesterday. The economy is expected to recover in July-September after a contraction in the previous quarter, but some economists are scaling back their expectations, bolstering the argument for fiscal stimulus to stave off a possible recession. “Our GDP forecasts were already at the bottom of the consensus, but the risks are to the downside,” said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. “It is even possible for the economy to contract in the third quarter.” Shiraishi expects the economy to grow an annualised 0.6 percent in July-September. The median estimate in a Reuters poll taken before the output data puts annualised growth at 2.2 percent.
KEY POINTS July output -0.6 pct vs forecast +0.1 pct Output seen +2.8 pct in Aug, -1.7 pct in Sept Analysts trying to gauge recover from Q2 GDP contraction
Some members of Japan’s ruling Liberal Democratic Party have already started talking about compiling new economic stimulus measures. This is also a tense time for the Bank of Japan because it is counting on an acceleration in economic growth to drive consumer prices to its 2 percent inflation target.
Soft overseas demand
Output fell in July as companies produced less
smartphone parts, computers and cars, the data showed. Manufacturers surveyed by the trade ministry expect output to have risen 2.8 percent in August and decrease 1.7 percent in September. Makers of manufacturing equipment expect their output to tumble 9.1 percent in September, a worrying sign that overseas demand for capital goods is weak, Shiraishi said.
If output performs as forecast in August and September that would imply the economy grew 0.4 percent in the third quarter, but growth could be weaker as manufactures tend to be too optimistic, Capital Economics economist Marcel Thieliant wrote in a note. One risk to the outlook for industrial output is domestic consumer spending. Weak household consumption contributed to a 1.6 percent
annualised contraction in gross domestic product in April-June. Policymakers have repeatedly said this was a one-off factor due to bad weather. However, the recent data have yet to show a clear recovery. Export demand is another worry, especially after the scale of China’s economic problems sparked a global selloff in share markets. Reuters
Australian housing investor credit cools Record low interest rates have stoked a house price boom in Sydney and Melbourne led by investor buying Ian Chua
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rowth in Australia’s investor mortgage credit cooled to its slowest in nearly two years in July, an outcome that is likely to be welcomed by the central bank which is working with other regulators to curb lending to housing investors. Other data out yesterday was mixed, with weak business inventories offset by a solid bounce in wage incomes, leaving intact forecasts for a soft gross domestic product figure (GDP) for the second quarter. The GDP data is due on Wednesday. Overall, there is nothing in the latest set of economic reports that would push the Reserve Bank of Australia (RBA) to cut interest rates today, when it holds its next meeting. “The Reserve Bank is going to stay on the side lines, this is the sort of economy that doesn’t need a kick along at the moment,” said Craig James, chief economist at CommSec. All 25 economists polled by Reuters on Friday see the RBA keeping the cash
KEY POINTS Growth in housing investor credit cools in July Weak business inventories offset by wages bounce RBA seen on hold today
rate unchanged at a record low 2.0 percent at the September 1 meeting. Figures from the central bank showed housing-investor credit growth slowed to 0.6 percent in July, from 1.0 percent in June, marking the lowest monthly change since October
2013. The annual rate eased to 10.8 percent, from 11.1 percent. “The RBA would be encouraged by that, plus we have a pick in business credit as well, so that is a good sign that confidence is returning to the business sector. It gives some hope that non-mining investment is going to pick up,” said Janu Chan, economist at St George bank. Record low interest rates have stoked a house price boom in Sydney
and Melbourne led by investor buying. This has prompted the RBA and other regulators such as the Australian Prudential Regulation Authority (APRA) to crack down on risky lending. APRA recently announced tough new capital rules on the mortgage portfolios of banks and just last week, Chairman Wayne Byres said the regulator “remained open to taking additional steps, if needed.” “This indicates that APRA’s macro prudential policy measures are impacting on investor credit growth with further regulation, including higher mortgage lending capital risk weights, expected to further weigh on mortgage lending growth in the coming months,” analysts at ANZ wrote in a note to clients. Yesterday’s data from the Australian Bureau of Statistics showed inventories were flat in the second quarter, confounding the median forecast of a Reuters poll for a 0.3 percent increase. Reuters
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September 1, 2015
Asia
South Korean consumers leave MERS fears behind MERS drove a dent into domestic consumption in late May and June as South Koreans stayed away from crowded areas to avoid contagion Christine Kim
KEY POINTS July industrial output -0.5 pct s/adj m/m (Reuters poll +0.1 pct) Services rebound in July as consumption recovers from MERS Eyes on trade, inflation data out Sept 1 A prevention patrol working during MERS crisis
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outh Korea’s domestic demand sector rebounded in July from the effects of June’s Middle East Respiratory Syndrome outbreak, government data showed yesterday, although industrial output fell as exports weakened. The improvement in demand for services offered some relief to
Asia’s fourth-largest economy, but government officials and analysts said more data was required to confirm a steadfast recovery. August trade and inflation indicators are due out today. “Services rebounded firmly but consumption on a whole is coming back at a slow pace,” a high-ranking
finance ministry official told Reuters. “We’ll see better conditions in August.” MERS drove a dent into domestic consumption in late May and June as South Koreans stayed away from crowded areas to avoid contagion. The virus infected 186 people, killed 36 and put nearly 17,000 in quarantine.
A Bank of Korea report last week said services have been improving since early July as MERS subsided, but the tourism industry will take more time to recover. Park Sang-hyun, chief economist at HI Investment & Securities, said exports need to bounce back in order for all industries to return to growth. Exports have been falling throughout this year and they are expected to post yet another steep decline in August. Park added that although a firm recovery has yet to be seen, the central bank is unlikely to cut interest rates anytime soon, which are already at a record-low 1.50 percent. The services sector output index rebounded by a seasonally adjusted 1.7 percent in July on a monthly basis after a revised 1.5 percent decline in June, offsetting weakness from exports and marking the fastest growth in services since a 1.8 percent rise in February 2012, Statistics Korea data showed. Retail sales rose 1.9 percent in July on a monthly basis, rebounding from a 3.5 percent slump in June. Yesterday’s data also showed the industrial output index fell by a seasonally adjusted 0.5 percent in July from June, and followed a revised 2.5 percent rise in June, which was upgraded from a provisional 2.3 percent gain reported earlier. The median forecast in a Reuters poll of economists was for July industrial output to edge up 0.1 percent from June, although forecasts varied from a 1.0 percent gain to a fall of 2.1 percent. On an annual basis, industrial output slipped 3.3 percent in July after a revised 1.4 percent rise in June, the data showed, compared to a median 1.0 percent decline tipped in the Reuters survey. Reuters
Consumption and investment slip in Thailand Bank of Thailand Governor Prasarn Trairatvorakul said annual second-half growth should be similar to the first half’s 2.9 percent Orathai Sriring and Kitiphong Thaichareon
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hailand’s private consumption and investment slipped in July, central bank data showed yesterday, adding to the pessimism over weak exports that suggests a still fragile economic recovery. Southeast Asia’s secondlargest economy is struggling to recover after an army coup in May 2014 ended months of street protests with exports contracting every month this year while consumption has been curbed by high household debt. The Bank of Thailand’s private consumption index for July fell 1.1 percent from
June, its biggest monthly drop in a year. In June, the index was revised to a 1.4 percent rise from 0.9 percent. Its index for private investment eased 0.1 percent in July, the same as in June, which was revised from a 0.2 percent rise. “Overall economic activities in July were weak. Only the tourism sector and public spending continued to expand well,” the BOT said in a statement. The BOT recently said the economy this year could grow less than 3 percent projected earlier, with exports falling more than the forecast 1.5
percent - marking a third straight year of contraction. It is due to give new forecasts on September 25 The central bank said annual exports slipped 3.1 percent in July. Shipments are equal to over 60 percent of the economy. Industrial goods accounted for 78 percent of total exports in July, when factory output fell a fifth straight month. But there are hopeful signs of some stabilisation in exports as the auto industry manufactures new models, analysts said. The government hopes a weak baht, which has dropped about 8 percent against the
dollar this year, will help exports. Domestic demand has been sluggish while low commodity prices have cut farmers’ income and government spending has been slow. In a bid to lift consumption, a key growth engine, the junta will discuss on Tuesday stimulus measures, including additional funds for lowincome people. “The measures will help alleviate short-term problems and shore up confidence. But practically, the government also needs to be careful about (borrowers’) debt servicing ability,” BOT Governor
Prasarn Trairatvorakul said yesterday. “The measures will help alleviate short-term problems and shore up confidence. But practically, the government also needs to be careful about (borrowers’) debt servicing ability,” BOT Governor Prasarn Trairatvorakul said yesterday. He said annual second-half growth should be similar to the first half’s 2.9 percent. In April-June, the economy grew 0.4 percent from the first quarter and 2.8 percent from a year earlier. Growth was a mere 0.9 percent in 2014. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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September 1, 2015
Asia Overseas housing speculators could face New Zealand withholding tax
Indonesian labour union to hold mass rally
Investors accounted for 41 percent of Auckland house purchases, up 8 percentage points since late 2013
More than 40,000 workers will take to the streets in Indonesia nationwide today to demand government take measures to avoid mass layoff and restrict entry of foreign workers, a labour union official announced yesterday. Said Iqbal, president of the Confederation of Indonesian Workers Union (KSPI) said the workers will have a long march in downtown Jakarta and 20 other cities to express their demand. Iqbal noted that Indonesian laborers are concerned over the slump of Indonesian rupiah against U.S. dollar, which may lead to massive lay-off.
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oreign property speculators could face a withholding tax on selling New Zealand assets in order to ensure taxes on gains are paid, under proposals revealed by the government yesterday. Revenue Minister Todd McClay said the government was seeking public feedback on the proposal, which would apply only to offshore property sellers. The move was an important part of the government’s measures to curb investment in the overheated housing market. Last week, the government introduced a tax bill that would require income tax paid on any gains from homes bought and sold within two years, excluding on an owner’s main home, inherited property or relationship settlement transfers. “The objective is to target those people who are seeking to make a quick gain from property, whether they are based in New Zealand or overseas,” McClay said in a statement. “However, it can be more difficult to collect tax from people speculating on property in New Zealand if that seller lives overseas. For this reason we are proposing that a portion of the sales proceeds are withheld at the time of sale and paid to Inland Revenue as a pre-payment or bond
Australian inflation gauge stays subdued in August
against any tax that may be due,” he said. “We want all people buying and selling property for profit to know that we expect due taxes to be paid.” House prices in the biggest city of Auckland -- home to a quarter of New Zealand’s population -- surged by 24 percent over the past year, compared with 3 percent for the rest of the country, Reserve Bank of New Zealand (RBNZ) deputy governor Grant Spencer said last week.
Investors accounted for 41 percent of Auckland house purchases, up 8 percentage points since late 2013. The trend was increasing the risk to the country’s financial stability in the event of a sharp fall in prices. In May, the RBNZ had modified its loan-to-value ration (LVR) policy for mortgage lending by commercial banks to specifically target Auckland residential investors, while easing restrictions in the rest of the country. Xinhua
Asian LNG price faces steep fall as perfect storm brews A 25 pct fall in oil prices since June is adding to LNG weakness Henning Gloystein and Jacob Gronholt-Pedersen
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sian liquefied natural gas (LNG) prices could fall a further 25 percent in coming months as new supply, falling demand and weaker oil prices put it on par with iron ore and coal as the worst performing commodity of recent years. Asia’s LNG market has already fared worse than slumping oil markets, with spot prices down 60 percent since 2014 to US$8 per million British thermal units (mmBtu), ending half a decade of high prices. Australia’s biggest energy firm, Woodside Petroleum, in August reported a 40 percent slide in firsthalf profits and said it expected LNG prices to remain low into 2016. Ratings agency Moody’s said yesterday it expected Woodside’s credit metrics “to deteriorate substantially from its previously very strong levels.” LNG prices look to have further to fall. While crude demand remains strong, research group Energy Aspects estimates Asian LNG imports fell 8.5 percent in the first half of 2015 from the same time last year, as the region’s economies slow. Add to the mix El Niño, which usually means milder winters in
northern Asia, and a unique cocktail for falling prices may appear. “The traditional power houses in north Asia are all showing signs of (demand) weakness at a point when there is lots of supply coming on to the market,” said Neil Beveridge of Bernstein Research. China’s LNG imports have slumped from double digit growth in recent years to a three percent fall in the first half of 2015 from a year earlier. For Japan, the world’s top LNG importer, the restart of its nuclear power plants is eating away at LNG’s market share in an environment of generally falling energy demand. Imports into South Korea have also fallen due to a slowing economy and rising nuclear power output. The slowing demand comes just as output soars. Following US$200 billion of investments into LNG projects, Australia’s exports are soaring, tripling its capacity to 86 million tonnes before 2020, which would make it the world’s biggest LNG exporter ahead of Qatar. Australia’s soaring output comes at the same time as the United States starts exporting for the first time towards the end of this year. “The latest leg down in oil prices
A private-sector gauge of Australian inflation showed price pressures remained well contained in August and were no bar to another cut in interest rates if needed. The TD Securities-Melbourne Institute’s monthly measure of consumer prices rose 0.1 percent in August from July, when it edged up 0.2 percent. The annual pace ticked up to 1.7 percent, from 1.6 percent but was still under the Reserve Bank of Australia’s (RBA) target band of 2 to 3 percent.
Singapore’s July bank lending rises Singapore’s total bank lending in July rose on stronger demand for property loans and from the general commerce sector, central bank data showed on Monday. Loans and advances by domestic banks in the city-state amounted to S$610.4 billion (US$433.1 billion) last month, according to data from the Monetary Authority of Singapore. That compared with S$606.8 billion in June. July bank lending grew 2.2 percent from S$597.4 billion a year earlier. Housing and bridging loans in July increased to S$181.6 billion from S$180.3 billion in June. These loans totalled S$172.6 billion in July 2014.
India plans to amend RBI Act for including monetary panel
KEY POINTS Asian spot LNG prices down 60 pct since 2014 Industry expects worse to come as output soars and demand slows El Niño to cause mild winter, further dent demand LNG could rival coal, iron ore as worst performing commodity is in the process of feeding through into gas prices,” consultancy Timera Energy said, as oil-indexation in LNG contracts meant crude movements would be priced into LNG with several months delay. Analysts and traders said Asian LNG prices could fall to US$6 per mmBtu, representing a 70 percent price drop since 2014 and putting it in the same league as coal and iron ore. Reuters
The Indian government plans to change the Reserve Bank of India Act before the end of the fiscal year so it can set up a new committee to direct the country’s monetary policy, retiring Finance Secretary Rajiv Mehrishi told Reuters. The committee would be comprised of appointees from the government, the Reserve Bank of India, and independent members appointed by the government, but any changes have to be approved by the parliament, which has blocked other government bills.
Mitsubishi to build new Tokyo office Mitsubishi Estate Co said yesterday it would build a massive office and retail complex in central Tokyo for a cost of more than 1 trillion yen (US$8.27 billion). The 3.1-hectar complex, to be adjacent to Tokyo Station, will feature four towers including a 390-metre-high building that would be Japan’s tallest, the company said. The project is due to be completed by March 2028, it said. Mitsubishi Estate has already redeveloped a significant portion of Tokyo’s Marunouchi district and turned the area into Japan’s financial hub.
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September 1, 2015
International German retail sales rebound in July Retail sales rose month-on-month at their strongest pace in nine months in July, reinforcing expectations that private consumption will support growth in Europe’s largest economy this year. The 1.4 percent increase, measured in real terms, was above a Reuters consensus forecast for a rise of 1.0 percent and the biggest monthly increase since October of last year. Retail sales is a notoriously volatile indicator that is often subject to large revisions. The June reading was revised to a drop of 1.0 percent from an originally reported decline of 2.3 percent.
Citi aims to boost equities franchise Citigroup plans to rebuild its long-neglected equities franchise seeking to capitalize on a retrenchment by rivals in the face of new rules designed to make the financial system less risky, according people familiar with the bank’s plans. A lack of investment in equities and a traditional focus on bond trading kept the No. 3 U.S. bank by assets in the lower echelons of equities league tables, which measure how much revenue Wall Street banks earn from their equity trading units.
Euro-Area inflation stays at 0.2% The ECB currently forecasts that inflation will average 0.3 percent this year, improving to 1.5 percent in 2016 Catherine Bosley
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he euro area’s inflation rate held steady in August, highlighting the challenge facing European Central Bank policy makers as they seek to revive consumer-price growth. Consumer prices rose an annual 0.2 percent, exceeding the median economist forecast for a reading of 0.1 percent. Core inflation held at 1 percent, the EU’s statistics office in Luxembourg said in a report yesterday.
Brazilian 2016 budget will be in the red Brazilian President Dilma Rousseff will send Congress a 2016 budget with a primary deficit after she abandoned plans to reinstate an unpopular tax to raise revenues next year, Brazilian media reported. Rousseff’s economic team decided it was best to present realistic budget numbers to avoid losing further credibility in the market, the O Globo, Folha de S.Paulo and Estado de S.Paulo newspapers reported, citing presidential aides. Without additional revenues, government officials warned last week it would be impossible to meet a fiscal savings target of 0.7 percent of gross domestic product next year.
Danish GDP growth slows Denmark’s economic expansion slowed as both exports and household demand declined. Gross domestic product grew 0.2 percent in the second quarter from 0.5 percent in the first, the statistics office in Copenhagen said yesterday, citing preliminary data. “This isn’t a strong number in any way,” said Nordea Chief Economist Helge Pedersen. Exports plunged 2.2 percent after growing 1.8 percent in the first three months of 2015. Household spending fell 0.5 percent after rising 0.6 percent. The GDP report comes a week after the government cut its forecast for economic expansion to 1.5 percent this year.
Bertelsmann sees higher revenues German media giant Bertelsmann said yesterday it expects sales and underlying earnings to increase in the whole of 2015 after a strong first half of the year. “Bertelsmann achieved strong growth in revenues, operating (profit) and net income in the first half of 2015,” the group said in a statement. “We are very satisfied with the development of the past months,” said chief executive Thomas Rabe. In the medium term, we intend to significantly increase group net income towards one billion euros” (US$1.1 billion), he said.
On Thursday President Mario Draghi will unveil new growth and inflation projections
The ECB has cut interest rates and is buying bonds to battle anaemic inflation, which has been below the central bank’s goal of just under 2 percent for two years. With China’s economy cooling and oil prices falling, Executive Board member Peter Praet said last week the challenge is become tougher and that policy makers are ready to do more if needed. “It’s driven by energy and that for the ECB is a double-edged sword,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen. “It’s good for real income, and we see the recovery in the euro area is driven by private consumption,” he said. “The bad part is that it drives inflation further away from the objective.” To help reverse course and fulfil its mandate, the ECB is in the midst of quantitative easing program that it plans to run until September 2016. The central bank’s Governing Council holds its next policy meeting on Thursday in Frankfurt, President Mario Draghi will give a press conference after the decision, when he will unveil new growth and inflation projections. A Bloomberg gauge that tracks returns from 22 raw materials plunged to the lowest level since 1999 last week on concern a glut in
Developments in the world economy and in commodity markets have increased the downside risk of achieving the sustainable inflation path toward 2 percent Peter Praet, Executive Board member, European Central Bank
everything from oil to copper will be exacerbated as the Chinese economy grows at the slowest pace in more than two decades. If those factors threaten its inflation goal, the ECB is ready to expand or extend QE, Praet said on August 26. Bloomberg News
Egyptian gas discovery heats up Israeli debate over fuel export Steinitz and Israeli Prime Minister Benjamin Netanyahu are trying to win parliamentary approval for the gas development blueprint Calev Ben-David
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he discovery of a major Egyptian natural gas field is stoking the political debate in Israel over how to best utilize its own energy resources. Italian energy company Eni SpA announced Sunday it had discovered the largest gas field ever found in the Mediterranean Sea, off Egypt’s coast. The Zohr Prospect is estimated to hold 30 trillion cubic feet of gas, roughly equivalent to the combined amount in Israel’s two large offshore fields, Tamar and Leviathan. Israeli Energy Minister Yuval Steinitz cited the Egyptian gas find to criticize opponents of a government plan designed to resolve regulatory disputes over the nation’s gas fields and promote fuel exports. Critics of the planned regulation say it allows energy companies to charge Israeli consumers too much by damping competition; some object to planned exports.
“This is a painful wake-up call about the folly of all the regulators concerning the gas issue,” Steinitz told Israel Radio. Egypt has been able to spur new gas exploration by offering companies a stable regulatory environment, while Israel has been “missing the boat” on developing its own finds. Tamar was discovered in 2009 and Leviathan, a year later. The expansion of Tamar and the development of Leviathan have been held up amid the regulatory debate. The reserves are controlled by Houston-based Noble Energy Inc. and Israel’s Delek Group Ltd. News of the Egyptian find sent Israeli energy explorers’ shares plunging in Tel Aviv yesterday.
Prices outlook
“It turns out that Egypt does not need our gas,” lawmaker Shelly Yachimovich of the opposition
Zionist Union party told Israel Radio. “If this is a real discovery, there will be regional competition and prices will fall, so it is clear we must not allow a decade of draconian contracts,” she said. Steinitz and Israeli Prime Minister Benjamin Netanyahu are trying to win parliamentary approval for the gas development blueprint. The plan’s opponents say the Egyptian discovery reinforces their arguments against the government’s proposal, including its export aims and the prices it sets for domestic gas sales. “This doesn’t yet close the door on exports to Egypt,” said Amir Foster, partner at Foster Consultancy Group and adviser to Israeli natural gas companies. “The demand there is something like 25 percent more than what they can currently produce.” Bloomberg News
Business Daily | 15
September 1, 2015
Opinion Business
wires
From China: quantitative tightening
Leading reports from Asia’s best business newspapers
James Saft
Reuters columnist
TAIPEI TIMES With the Executive Yuan poised to raise the cap on the number of Chinese tourists traveling to Taiwan via the Free Independent Travel (FIT) program, an opposition lawmaker likened the move to a deal with the devil, saying that violations of the law by Chinese tourists are on the rise, with last year’s total almost double that of 2013. The National Development Council proposed “economyboosting measures” earlier this month, including raising the cap on the number of Chinese tourists traveling to Taiwan via the FIT program from 4,000 to 5,000 per day.
THE KOREA HERALD South Korea expanded its presence in China’s import market in the first half of the year thanks to strong demand for its semiconductors and consumer goods, data showed yesterday. China, the world’s No. 2 economy, imported US$82.8 billion worth of South Korean products in the January-June period, which accounted for 10.7 percent of Beijing’s total imports valued at US$775.8 billion, according to the data by the Korea International Trade Association. The comparable figures were 9.3 percent for the same period a year earlier, 9.7 percent for all of 2014, and 9.2 percent for 2013.
THE STRAITS TIMES The Singapore economy is flirting with a technical recession as worsening global conditions weigh on the outlook, especially in manufacturing. While the chances of a real recession - a significant, sustained decline in activity across the economy - are slim, a pick-up is also unlikely given subdued global conditions and the lack of a strong growth driver, economists say. A technical recession happens when an economy suffers two consecutive quarters of quarter-on-quarter shrinkage. Singapore last went through one in the wake of the global financial crisis, when the economy suffered four straight quarters of quarter-on-quarter contraction.
BANGKOK POST Advertising spending on digital media is expected to grow by 62% this year to nearly 10 billion baht, almost double the earlier projection of 33%, despite the faltering economy. The higher-than-expected growth will come from digital media’s cost efficiency and growing audience, especially among the younger generation, said Siwat Chawareewong, president of the Digital Advertising Association (Thailand) (DAAT). Facebook and video advertising on YouTube account for the highest share of online ad spending.
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oney is flowing out of China at a quickening pace, leading to Beijing selling currency reserves in what amounts to a global quantitative tightening. Absent loosening elsewhere, conditions for riskier assets, and for global growth, will get tougher. The People’s Bank of China piled up nearly US$4 trillion of foreign assets in the decade from 2003 as dollars flowed in from trade and were invested in securities such as U.S. Treasuries in order to keep the yuan from strengthening. Now the money is going the other way, a trend which accelerated after China experimented with a devaluation and a new semi-flotation of its yuan. Whereas China had been spending down its reserves at a more than US$500 billion annual clip in July, conflicting reports suggest the PBOC may have spent between US$100 billion and 200 billion since the August 11 currency regime shift. “The PBOC has been defending the renminbi, selling FX reserves and reducing its ownership of global fixed income assets. The PBOC’s actions are equivalent to an unwind of QE, or in other words Quantitative Tightening,” Deutsche Bank strategist George Saravelos wrote in a note to clients. Remember that the assets bought up and stashed away by the PBOC were larger than all of the Federal Reserve’s QE efforts combined. Reserve accumulation by China contributed to the overly loose global financial conditions that built and exploded in the
Reserve accumulation by China contributed to the overly loose global financial conditions that built and exploded in the financial crisis. The return journey may prove less of a bang and more of a slow bleed
financial crisis. The return journey may prove less of a bang and more of a slow bleed. Already we may be seeing the impact of Chinese selling in the Treasury market. Weak demand at Treasury auctions last Tuesday and Wednesday were marked by weak demand from ‘indirect bidders’, a category into which foreign central banks fall. As well, Treasury prices haven’t moved as they usually would during signs of financial stress. Despite their safe asset status, 10-year Treasury yields, now around 2.17 percent, are actually up by four basis points, with prices moving down, since China’s currency shift August 11. Bond market guru Bill Gross, of Janus Capital, questioned on Twitter whether China was selling long bonds, an issue he has yet to enlarge upon. Money is flowing out of China for a complex set of reasons. Outbound money is partly direct and indirect investment flows, and partly money controlled by private Chinese citizens seeking a safe haven, both from more difficult financial conditions at home and also from the threat of seizure via official action.
Series of unfortunate events China’s support of its stock market and its gyrations in currency markets both count as spectacular mistakes. The initial devaluation of the yuan sparked concern that more was to come, leading to greater speculative outflows. At the same time, the heavy-handed but ineffectual support of the stock market managed to inspire fear, with arrests of short-sellers and a financial journalist, but not confidence in official control.
While there is little doubt that China’s US$3.6 trillion of foreign reserves gives it much latitude in how it chooses to deal with outbound capital flows, this is not a state of affairs which can continue indefinitely. China’s reserve stockpile is well above what the IMF recommends in similar situations, if we define China as having, more or less, a fixed currency with no capital controls. “In a nutshell, the PBOC’s war chest is sizeable, no doubt, but not unlimited. It is not a good idea to keep at this battle of currency stabilization for too long,” Wei Yao, economist at Societe Generale, wrote to clients. The concept of quantitative tightening originating from China helps to explain much of the market gyrations of the past couple of weeks. Risk assets have been hit and fixed income faced cross currents. There is likely some demand for Treasuries as a safe haven, and because tightening is bad for growth, but this is countervailed by both the reality of reserve selling and the fear of more to come. There may be no easy way out of this set of circumstances. China’s economy will not swiftly reverse course, which might attract flows, nor is it likely to simply allow a sharp devaluation. The reality may well be that after more than a decade of attracting capital flows and stimulating global financial conditions, China, along with the rest of the world, may see a long period of the reverse. Rather than a bubble popping, the correct metaphor may be a long, slow deflation. Reuters
16 | Business Daily
September 1, 2015
Closing PBOC injects 140 bln yuan via short-term lending operations
Hong Kong employers urged to hire middle-aged workers
China’s central bank injected 140 billion yuan (US$21.96 billion) into banks through its shortterm lending operations (SLO) tool yesterday, according to a statement published on the central bank website. The interest rate on the 6-day day lines of credit will be 2.35 percent, the same as last Friday’s SLO, the bank said. Last week the central bank injected a total of 280 billion yuan (US$43.92 billion) through two separate SLOs. The People’s Bank of China launched SLOs in 2013 to supplement its other monetary policy tools. The facility is mainly used to provide one- to three-day direct lines of credit to commercial banks.
Hong Kong’s Labour Department said yesterday that it will extend the Employment Program for the Middle-aged to cover part-time jobs from September. The move is to encourage employers to provide more suitable employment opportunities for the mature job seekers, the department said. Employers who engage unemployed mature job seekers aged 40 or above and provide them with on-the-job training may apply for a training allowance of up to 3,000 HK dollars (about US$386) per month per employee under the program, for a period of three to six months. The department will launch a Job Fair for Middle-aged and Elderly Employment on September 10.
Yuan pares biggest monthly loss since 1994
interventions have improved market sentiment,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore.
Consultancy Ltd. The PBOC raised the fixing, which restricts the onshore spot price’s moves to 2 percent on either side, by another 0.15 percent yesterday to 6.3983 a dollar. The increases raise questions about policy makers’ role in determining the level. The PBOC said on August 11 that it was adopting a new methodology for setting the official rate, and that market makers who submit contributing prices would have to consider the previous day’s close, foreignexchange demand and supply, as well as changes in major currency rates.
Balancing act
Year-end forecasts
Policy makers are trying to balance the need for financial stability with a desire for stronger exports and the yuan’s inclusion in the International Monetary Fund’s basket of reserve currencies
C
hina’s yuan rose for the fourth day, trimming the biggest monthly loss since 1994, after Premier Li Keqiang signalled support for the currency following a devaluation that rattled global markets and shook confidence in the world’s second-largest economy. The yuan climbed 0.19 percent to close at 6.3763 a dollar in Shanghai, according to China Foreign Exchange Trade System prices. That takes its advance in the past four sessions to 0.6 percent and pares its loss for August to 2.6 percent. There’s no basis for yuan declines to continue, Li said late last week. Using words such as “basically stable” and “reasonable and equilibrium level,” he added to efforts to calm investors after a period of depreciation tested the central bank’s commitment to a new, more market-driven exchange-rate system. “The government’s verbal
Policy makers are trying to balance the need for financial stability with a desire for stronger exports and the yuan’s inclusion in the International Monetary Fund’s basket of reserve currencies. Keeping the yuan stable dented the competitiveness of shipments and contributed to a US$315 billion decline in foreignexchange reserves in the year through July. The Shanghai Composite Index of equities plunged 12.5 percent in August amid concern about a slowing economy and the level of government support. The central bank cut its benchmark interest rates for the fifth time since November last week and lowered lenders’
China to open high-speed rail link to North Korean border
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There’s no basis for yuan declines to continue, Premier Li Keqiang said late last week
reserve-requirement ratios. The People’s Bank of China strengthened the yuan’s reference rate by the most in five months on Friday, a move that
suggested policy makers were trying to “save face” before a September 3 parade to celebrate victory in World War II, according to Brilliant and Bright Investment
Indonesia favouring China over Japan in railway bid
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The onshore yuan will decline to 6.5 versus the greenback by the end of 2015, according to the median estimate in a Bloomberg survey. Before the PBOC’s surprise devaluation, the currency was forecast to end the year at 6.2. The freely-traded offshore yuan in Hong Kong rose 0.26 percent to 6.4463 a dollar yesterday, according to data compiled by Bloomberg. That trims its decline for the month to a still- unprecedented 3.5 percent. Hong Kong’s end-July yuan deposits rose 0.1 percent from the previous month to 994.1 billion yuan (US$156 billion), the city’s de facto monetary authority said yesterday. Bloomberg News
UN climate chief warns about cash crunch for Paris conference
K
hina will open a high-speed rail line to the North Korean border on Tuesday, state news agency Xinhua said, the latest effort to boost economic ties despite tension between the countries. The line, under construction since 2010, will run 207 km from Shenyang to the border city of Dandong, which faces North Korea across the Yalu River, and will shorten the train journey from 3 1/2 hours to just over one hour, Xinhua said. The new link will “raise the region’s economic competitiveness”, the report cited an unnamed railway official saying. As much as 80 percent of trade between China and North Korea passes through Dandong, which is near one of North Korea’s special economic zones on Hwanggumpyong island. China has encouraged the development of three special economic zones in North Korea, hoping to tap low labour costs and encourage the North to see the benefits of economic reform, even while publicly rebuking it over its nuclear weapons programme. While there has been little sign of progress in the new economic zones, China continues to improve infrastructure on its side of the border, including building a bridge from Dandong into North Korea. fourth-largest economy and the North’s main rival.
ndonesia is leaning towards China over Japan in an aggressive bidding battle to build the Southeast Asian nation’s first high-speed railway, two government sources involved in making the decision said. The two Asian giants have both sent envoys to lobby Indonesian officials over the past two weeks, each sweetening the terms of their bid for the contract worth about US$5 billion. Analysts believe that whoever wins will likely become the front runner for other high-speed rail projects coming up in Asia over the coming years, including one linking Kuala Lumpur and Singapore. A cabinet-level committee led by chief economic minister Darmin Nasution will met yesterday to make its recommendation on which country should build the rail line between the capital, Jakarta, and textile hub of Bandung. President Joko Widodo is expected to announce the winner within days. “Indonesia is leaning towards China because their proposal is less financially burdensome on the Indonesian government and because the issue of safety has been adequately addressed,” a government source told Reuters.
ey climate negotiations opened in Bonn yesterday with a top UN official warning there was not enough money to host a year-end Paris conference tasked with sealing a global carbon-curbing pact. Addressing delegates, UN climate chief Christiana Figueres said there was insufficient “funding for participation for either the October session, which is already planned, or for the COP.” She was referring to the next scheduled negotiating round, and to the Conference of Parties (COP), which takes place between November 30 and December 11. “I regret to inform you that we have a deficit now of 1.2 million euros (US$1.3 million) just to cover the sessions you have in your calendar,” she said, urging “parties in a position to do so, to contribute.” The hotly-anticipated Paris conference has been charged with concluding a historic pact that will, for the first time, commit all nations to reducing greenhouse gas emissions. The UN-adopted goal is to limit average global warming to two degrees Celsius over pre-Industrial Revolution levels. Diplomats were scheduled to meet in Bonn twice before the year-end UN conference to create a workable draft for what will become the Paris pact.
Reuters
Reuters
AFP