Macau Business Daily September 4, 2015

MOP 6.00

Global Aspirations

Closing editor: Joanne Kuai

A stellar year. In 2015, local gaming tycoon Lawrence Ho Yau Lung’s casino resorts went global. City of Dreams Manila opened in February, while Studio City Macau and Tigre de Cristal open next month.

A total investment of US$5.17 bln is laying the foundations of an empire

Year IV

Number 873 Friday September 4, 2015

Publisher: Paulo A. Azevedo

Pages 4 & 5

MICE Subsidy Secure

The axe is falling on gov’t budgets. But the MICE industry is secure for now. The Macau Convention Iao Kun rolling chip and Exhibition Association director says the budget allocation is ‘basically fixed’ for this year and turnover dives 72 pct in August the first half of 2016. But Alan Ho Hoi Meng added the gov’t will adopt a more cautious approach Page 6 in selecting beneficiaries. For the first half, financial support from the gov’t and other organisations IGT appoints Ken for exhibition organisers occupied 34.5 per cent of total receipts of MOP78 million Page

3

Bossingham to run slot division

Page 6

Debt recovery surging

China’s gas-demand growth rate below GDP hinders Russian deal

Page 10

A total of 58 junket-related court actions filed this year. Multiple new cases await hearings by the Court of First Instance. A sharp rise in lawsuits has been filed by VIP gaming promoters since the beginning of 2014 as VIP revenues deteriorate

G20 meeting focusing on Chinese and American economies

Page 16

Page 6

Budget out of step President Xi Jinping has announced a cut in PLA troops.

On the occasion of the parade celebrating the 70th anniversary of victory against Japanese invasion that signalled an end to WWII

Page 8

HSI - Movers September 3

V-Day Commemoration

Name

A commemorative ceremony of the 70th anniversary of victory of the Chinese people’s war of resistance against Japanese aggression and world anti-Fascist war was held in Macau. Acting Chief Executive Wong Sio Chak appealed to locals to embrace ‘One country, two systems’. And seize the opportunities presented by ‘One belt, one road’

Page 2

www.macaubusinessdaily.com

Aviation

%Day

Belle International Ho

+1.45

CK Hutchison Holdings

+1.38

Want Want China Hol

+1.28

China Life Insurance C

+0.78

China Overseas Land &

+0.68

CITIC Ltd

-3.73

CNOOC Ltd

-4.12

Galaxy Entertainment

-4.18

Kunlun Energy Co Ltd

-4.28

Bank of Communicatio

-5.66

Source: Bloomberg

Hat Trick

I SSN 2226-8294

Macau International Airport has hit new records. For single-day flight movements of over 200. Singlemonth flight movements of over 4,900. And single-month passenger traffic volume exceeding 570,000 in August

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2 | Business Daily

September 4, 2015

Macau opinion

Here she comes

Pedro Cortés

Lawyer* cortes@macau.ctm.net

O

ne of the best songs of Velvet Underground, with lyrics by Lou Reed, is Femme Fatale - “Here she comes, you better watch your step / She’s going to break your heart in two, it’s true / It’s not hard to realise / Just look into her false coloured eyes / She builds you up to just put you down, what a clown”.

Believing in the latest news and speeches of this week, here she comes, the austerity.

I fully agree with good measures of the government whenever moments of crisis arise. It is prudent to prepare for future economic hardship. However, it seems that these measures may not be necessary. The government will still have a surplus at the end of the year. Unless, of course, there are things that we mortals cannot see at this moment and a crisis like the Asian crisis of 1997 or the SARS outbreak of 2003 are just around the corner. Hopefully not, and that our government knows what it’s doing.

All this notwithstanding, it seems that a certain amount of prudence should be employed in the use of words like ‘austerity’, ‘crisis’ or suchlike that resonate so resoundingly. My family always said that we should try to overcome problems by preparing ourselves for an uncertain future the best we can.

I guess this is what our government is doing: preparing the population for the future, whatever that be.

It would have been better, in my humble opinion, however, that such future had been predicted in advance – say, three or four years ago, when the markets were rampaging like a bull in a China shop.

I maintain that we are not in a crisis but in a correction. A correction of misbehaviour and bad practices which occurred in the past and that may have influenced the need for diversification.

When we read in some forums that Macau is now preparing itself for new times implementing measures to become more Vegas and less Macau I can’t help but recall some principles of the 2001 international tender and conclude that the reason why some of the operators were chosen arose from the promises of shows, spectacles, different tourists, and big showbiz names.

Unfortunately, thirteen years have passed and we may have lost them. Fortunately, we’re still on time to gain a brighter future without austerity. And then we may sing: “She didn’t show up / It was only a shadow”. *Part-time Lecturer at the Chinese University of Hong Kong

MIA posts new highs in August

D

riven by diversified market strategies and peak travel seasons during the summer holidays, Macau International Airport (MIA) recorded continuous growth in passenger volume in August.

MIA hit new records for single-day flight movements recording over 200 movements, single-month flight movements recording over 4,900 movements, and single-month passenger traffic volume breaking through 570,000.

Although affected by a series of unstable factors in the Southeast Asia region, MIA was able to maintain a significant growth of 9 per cent in passenger volume, mainly due to an

increase in local residents travelling during the summer holidays and tourists visiting Macau. Passenger volume in August surpassed 570,000, with daily average passenger volume more than 18,000; traffic volume recorded over 4,900 movements, increasing 12 per cent over 2014.

This August, over 220,000 passengers used South East Asia routes, with around 190,000 passengers travelling on Mainland China routes while over 160,000 passengers on Taiwan, China routes were recorded by MIA, representing an increase of 10 per cent, 5 per cent and 13 per cent as compared to the same period last year.

70th anniversary of V-Day commemorated

A

cting Chief Executive Wong Sio Chak said Macau people’s salvation efforts during the anti-Japanese war fully demonstrated the tradition of patriotism, and that the sense of country-loving would continue to foster sustainable development of the city.

Mr. Wong said this yesterday whilst presiding over the commemorative ceremony of the 70th anniversary of victory of the Chinese people’s war of resistance against Japanese aggression and world anti-Fascist war held in Tap Seac Square.

He said he hoped the young generation would learn from history, prevent history from repeating itself, and treasure the stable social environment driven by peace-

loving forces and the strength of development.

With the full support of the country, Macau has achieved unprecedented social economic development since its return to the motherland and by the successful implementation of the ‘one country, two systems’, he said.

Mr. Wong urged the public to seize the development opportunities brought by the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative to continue to push forward the process of the city.

Also delivering a speech at today’s ceremony, community representative Tong Chi Kin said the holding of the commemorative ceremony showed that people had never forgotten the

MIA air freight surpassed 2,300,000 tons in August, representing growth of 14 per cent; business jets recorded over 250 movements, representing growth of 15 per cent.

Meanwhile, Jetstar Pacific Airlines launched its Haiphong-Macau service this month. Furthermore, new routes will be launching from Ho Chi Minh, Okinawa and Haikou, China routes to Macau in September.

MIA says that the continuous route development to South East Asia will strengthen the route network and provide a wider range of choice for Macau citizens, as well as tourists from Mainland China travelling to multiple destinations.

suffering and humiliation endured during thoe difficult time, to honour martyrs and cherish peace.

Youth representative Leong Chi Hou said that young students should always remember the selfless dedication of the older generations and revolutionaries, and treasure the hard-won peace.

The ceremony was attended by Deputy Director of the Liaison Office of the Central People’s Government in the Macau SAR, Yao Jin; Deputy Commissioner of the Ministry of Foreign Affairs of the PRC in the Macau SAR, Cai Siping; Director of the Political Department of the People’s Liberation Army Macau Garrison, Zhang Jian; together with about 440 government officials and representatives of the community.

The ceremony included a flagraising, playing and singing of the National Anthem, wreath-laying, silent tribute ceremony, and revolutionary songs performed by members of the Women’s General Association of Macau and Kao Yip Middle School.

Business Daily | 3

September 4, 2015

Macau

Trade chamber: Budget for MICE events subsidy unaffected The recently announced austerity measures have so far not impacted the government’s subsidy of MICE events held here, as the budget has already been fixed for this year and the first half of 2016, a trade chamber said Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he austerity measures announced by the government this week will not affect the budget allocation for subsidy schemes supporting the meetings, incentives, conventions and exhibitions (MICE) organised here but the government has pledged a closer scrutiny of the selection of subsidy beneficiaries, the director of the Macau Convention and Exhibition Association, Alan Ho Hoi Meng, told us.

“The budget allocation for subsidising the organising of MICE events is basically fixed for this year and the first half of next year, so I don’t think the austerity measures announced by the government will impact the subsidy schemes in the short-term,” Mr Ho told us.

“But the government said it would be more careful and selective when granting subsidies to beneficiaries,” he added. “For

instance, when the government sees some events like shopping carnivals being held in the same month, of which the activity nature is very similar and does not generate much economic benefit, they will not be granting any aid to support these events.”

Two programmes

Mr. Ho’s association recently attended a meeting of the advisory body, the Committee for the Development of Convention and Exhibition, last week, which was hosted by the Secretary for Economy and Finance Lionel Leong Vai Tac. Currently, two schemes are practised by the government to subsidise MICE events held here; namely, the Convention and Exhibition Stimulation Programme and the International Meeting and Trade Fair Support Programme.

These two programmes, which have a slightly different scope in terms of target coverage, both subsidise event organisers’ costs for participants’ accommodation, promotion and marketing, as well as transport, interpretation and translation services. The grantor of the two programmes is the autonomous body the Macau Industrial and Commercial Development Fund.

Declining revenues

For the first half of this year, the financial support from the government and other organisations for the exhibition organisers here occupies 34.5 per cent or MOP26.9 million of their total receipts at MOP78 million, official data shows.

But the receipts the exhibition organisers had in the period was declining at a faster rate than their expenditure: the organisers’ income

dropped 11.2 per cent year-on-year to MOP78 million in the JanuaryJune period but expenses only dipped 4.3 per cent to MOP86.6 million.

Following a losing streak of 15 consecutive months in gross gaming revenue as at August the Macau Government announced on Tuesday a set of cost-cutting measures, including the ‘freezing’ of 5 per cent of the budgeted consumption spending for government departments and autonomous bodies, as well as the freezing of 10 per cent of budgeted investment spending.

Speaking to reporters in Beijing on Wednesday, Mr Leong said that the government would not rule out a second round of cost-cutting measures if worse economic data emerges although such measures would not impact social welfare policies and public investment plans (PIDDA).

4 | Business Daily

September 4, 2015

Macau

2015: The year Lawrence Ho’s gaming empire went global In less than one year, the 38-year old billionaire’s companies are opening three casinos in three far-flung jurisdictions soaking up US$5.17 billion investment João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he monopoly of Macau’s gaming industry that lasted 40 years and his role of transforming Macau into the Monaco of the East have bestowed upon Stanley Ho Hung Sun the nickname ‘King of Gambling’. But while the last 15 years may have ‘cooled’ the magnate’s status, his son Lawrence Ho Yau Lung is determined to keep the name of the family at the top of the industry.

In less than one year the 38-year old businessman will be directly responsible for the opening of three casinos accounting for an investment of over US$5.17 billion (MOP41.4 billion). This amount also takes into consideration the share of his partners in the various projects.

The kick-off of this remarkable year for Lawrence Ho began on February 2, with the Grand Opening of City of Dreams Manila.

Similar to his projects in Macau, in the Philippines the gaming resort involving Mr. Ho is primarily owned by the joint-venture Melco Crown Entertainment. In this project, Ho, owner of Melco International, has Australian billionaire and owner of

Crown Resorts James Packer as a partner.

The project has been recording increasing profit, and in the second quarter of the year City of Dreams Manila generated an adjusted EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortization] of US$12.6 million, up 343.5 per cent quarter-on-quarter from US$2.9 million recorded in the first quarter.

Macau goes from Monaco to ‘Vegas’

In the past, Macau was known as the Monaco of the East but the liberalisation of the gaming sector and new policies of the territory’s government have aligned the region more with Las Vega.

These days, the Special Administrative Region is all about non-gaming and diversification.

Based on this new path, the CEO of Melco Crown has announced the October opening of the US$3.2 billion Studio City Macau.

“It [Studio City] also marks a major milestone for Macau as we continue to deliver on our commitment to expanding the non-

gaming leisure and entertainment offerings available in the territory, as a continuing strategy in supporting its evolution into a highly diversified and world-leading leisure and tourism destination”, Mr. Ho said on the day of the announcement of the opening date of the integrated resort.

Times may be tough in Macau, with gaming revenues declining for 15 consecutive months - for the first seven months of the year alone, gross gaming revenues declined 36.5 per cent to MOP158.9 billion from MOP250.4 billion – but the Cochairman and CEO of Melco Crown is confident and recalled that Altira Macau, his first Macau resort, also opened in ‘tough’ times, coinciding with the 2008 financial crisis.

Russian adventure

Of the three gaming venues being opened this year by Stanley Ho’s son, the one raising most questions is the Tigre de Cristal casino in Vladivostok.

In the Russian project Lawrence Ho is primarily involved through his controlled company Summit Ascent.

The opening of the first phase of the US$672 million project, sited

in one of the four Russian gaming zones (Primorye Region), has already been delayed from 28 August to “late October” although the company has announced that the soft opening of the Tigre de Cristal resorts will take place on 8 October.

This delay was justified by “slower than expected delivery of certain final fit-out materials” and “extensive fire and sprinkler systems inspections by the local government [which] necessitated minor changes to hotel corridor timber and doors”.

Still, according to a filing by Summit Ascent this delay and changes required to the construction did not result in an increase in budget for the first phase, which amounts to US$172 million. The second phase calls for an investment of US$500 million.

City of Dreams’ new tower

While the Melco Crown and Summit Ascent head has been focusing his attention on the new projects, mainly Studio City, which he has visited frequently over the last weeks, he has also devoted attention to developing the existing resorts.

Lawrence Ho Resort-Casinos

The cinematic-themed US$3.2 billion resort

Studio City

Studio City is opening on 27 October, creating in the process large expectations with relation to the non-gaming elements of the resort. As happened in the past with City of Dreams Macau, the company is opening a resort amid troubled times for the sector in the Special Administrative Region.

The Gold Reel, which will be the world’s highest figure of 8 Ferris Wheel, and the Batman Dark Flight 4D flight simulation are the non-gaming elements expected to raise the bar in terms of entertainment in the territory and that many investors consider to be a gamechanger in the region.

However, before the casino starts operating, the attention of the company and

Location: Macau (China) Opening Date: October 27, 2015 Investment: US$3.2 billion (MOP25.6 billion) Area: 13.1 hectares Number of Rooms: 1,600 Gaming Tables: 400 (requested) Interest: 60% (via Melco Crown Entertainment) Partners: New Cotai LLC (40%)

City of Dreams Manila Location: Manila (Philippines) Opening Date: February 2, 2015 Investment: US$1.3 billion (MOP10.4 billion) Area: 6.2 hectares Number of Rooms: 940 Gaming Tables: 380 Interest: 68.83% (via Melco Crown Entertainment) Partners: SM Investments Corporation and Premium Leisure Amusement

Tigre de Cristal Location: Vladivostok (Russia) Opening Date: October 8, 2015 (soft opening) Investment: US$672 million (MOP5.36 billion) Area: 9.0 hectares Number of Rooms: 621 Gaming Tables: 187 Interest: 65% (60% via Summit Ascent and 5% through Melco International Development) Partners: Firich Enterprises (25%) and local Russian firms (10%) NB: Data includes Phase I and II of project.

By opening date only Phase I will be completed.

investors, while focusing on preparing for the grand opening, is squarely on the number of gaming tables to be granted by the government to the new property.

Because of the slowdown in the industry, the tables may not be as important as in the past but the CEO of the company has repeatedly stressed that it is very important for the resort to start operating with 400 gaming tables.

The opening ceremony of Studio City will also be remembered for the premier of The Audition, a short movie commissioned by Melco Crown and directed by Martin Scorsese, starring Hollywood actors Robert De Niro, Leonardo Dicaprio and Brad Pitt. The movie is said to have cost around US$70 million.

Business Daily | 5

September 4, 2015

Macau Lawrence Ho Yau Lung Lawrence Ho Yau Lung is the 38-year old fifth child of the marriage between Stanley Ho Hung Sun and his second wife Lucina Laam King Ying. After moving at the age of nine to Canada, where he was educated, he graduated from the University of Toronto with a BA degree in commerce in 1999.

In the beginning of the 2000’s he returned to Hong Kong and assumed the management of Melco International bringing it to profit and changing its focus to gaming. He is also Chairman of Summit Ascent, a Hong Kong-based company founded in 1993.

In 2006, he Co-founded Melco Crown Entertainment with Australian billionaire James Packer, and won a gaming licence in Macau, thereafter opening casinoresorts Altira Macau and City of Dreams in the territory and is preparing to launch Studio City.

As a player in the gaming sector he is competing against elder sister Pansy Catalina Ho Chiu King, who is a major shareholder of Macau gaming operator MGM China.

In 2017, Melco Crown is expecting to open the fifth tower of City of Dreams Macau, designed by renowned architect Dame Zaha Hadid. The new tower will have 40 floors, a gross floor area of 150,000 square metres, and will add 780 guestrooms to the property.

In all, 2015 will be a remarkable year for the young Hong Kong billionaire. Last year, he had two properties in Macau operating, Altira Macau and City of Dreams. With these three openings and expansion to the Philippines and Russia he has taken his gaming empire global.

City of Dreams Manila leading visitation

A Russian dream named Tigre de Cistal

City of Dreams Manila is the result of an investment of US$1.3 billion and is the first casino Lawrence Ho has been involved with abroad. The project, carrying Macau’s City of Dreams brand, had its grand opening on February 2 but opened its doors to the public on December 14 last year.

“I am delighted to announce that we are bringing the highly successful City of Dreams brand to the Philippines. I’m confident that City of Dreams Manila will be the pride of the leisure and entertainment industry here in the Philippines”, Ho said when revealing the project.

The resort has three hotels - Hyatt, Nobu and Crown Towers - totalling 940 rooms, and occupies 6.2 hectares in the Philip-

The Tigre de Cristal casino will grant to Lawrence Ho a monopoly on gaming in the Russian Far East’s Vladivostok until at least 2018. However, this region is expected to be developed into a tourism hub with 10 casinos operating there in the future.

Located near northern Mainland China, the strategy of the resort is to rely not only on Russian gamblers but Chinese living in North China who may consider Macau too far away. However, Summit Ascent is also keen on attracting gamblers from South Korea and Japan. In the Empire of the Rising Sun gambling is still illegal, in spite of much talk of legalisation.

pines capital. It was the second casino to open on Manila’s growing gaming strip after Solaire Resort and Casino in 2013.

During the second quarter of this year, City of Dreams Manila generated an EBITDA of US$12.6 million, up 343.5 per cent quarter-on-quarter, from the US$2.9 million EBITDA recorded in the first quarter of the year. Also during the second quarter, the total revenues of the resort hit US$75 million, while non-gaming revenues reached US$28.6 million.

According to Lawrence Ho, during the presentation of the second quarter results of Melco Crown, the casino has been the market leader in the Philippines in terms of visitation, expanding across all segments of the market.

The US$672 million project will be developed in two phases, with the second increasing the capacity of the resort very significantly. The first phase, which is expected to open by late October this year, is the result of a US$172 million investment and will include 121 hotel rooms, 25 VIP gaming tables, 42 mass market tables, 759 slot machines and electronic table games.

The second phase calls for an investment of US$500 million, 100 VIP gaming tables, 70 mass market tables and 500 slot machines. This expansion will also add some 500 hotel rooms to the property.

6 | Business Daily

September 4, 2015

Macau IGT appoints Ken Bossingham to run slot division International Game Technology (IGT) named on Tuesday Ken Bossingham to oversee global management of the company’s slot division, Las Vegas Review-Journal has reported. Bossingham will be the Senior Vice President of Casino Core Product, responsible for the development and sales of all classes of IGT’s slot machines, including games shipped to commercial casinos, Indian casinos and various product lines. In assuming his new position he will be based in Las Vegas. The new employee of IGT was recently the Chief Operating Officer for slot machine company American Gaming Systems. IGT is headquartered in London but is also represented in Macau. The company is the result of the US$6.4 billion (MOP51.1 billion) merger between lottery systems giant GTECH Holdings and IGT.

Flurry of junket lawsuits as VIP play deteriorates The city has seen a surge in litigation filed by junket companies since last year against the backdrop of deteriorating VIP gaming revenues Stephanie Lai

sw.lai@macaubusinessdaily.com

A

s soon as the city’s Court of First Instance (TJB) reopened on September 1, following a month of vacation, a flurry of lawsuits had already been filed by the VIP gaming promoters for the court to process – boosting junketrelated court actions filed this year to a total of 58 cases so far, data from the official website of the court and compilation from the US-based International Union of Operating Engineers (IUOE) shows.

According to online court data, the TJB reopened this week with new cases (see table) filed by the city’s junket companies and gaming concession holder Venetian Macau SA in August. These cases, a summary of which is not disclosed online, involve major VIP gaming promoter companies such as Sun City and Tak Chun on the plaintiffs’ list, with the latter even accounting for three of the litigations.

The city has seen a sharp rise in the number of lawsuits filed by VIP gaming promoters since the beginning of 2014 (see graph) while gross gaming revenue – in large part emanating from VIP gaming – started registering a decline from June 2014.

Gaming revenues generated by VIP play peaked in the first quarter of 2014 at MOP65 billion (about US$8.14 billion) but the segment has since registered continuous decline, and has, according to available official data, dropped 42.2 per cent yearon-year to MOP31.57 billion in the second quarter of this year against the backdrop of Beijing’s persistent anti-graft drive and China’s slowing economy.

JUNKET LAWSUITS FILED WITH MACAU COURTS 100

93

80 58

60

40 *Data through Sept 2, 2015

37

2012

2013

19

20

0

39

6

7

5

2008

2009

2010

2011

Source: macaugamingwatch.com (by International Union of Operating Engineers)

2014

2015*

The lawsuits filed by Macau’s junkets with the local court in the past 20 months (151 in total) is more than the previous 6 years combined (113), data compiled by the US-based trade union IUOE shows.

Of all these cases filed in the past years, the six most litigious junkets that pursued debt through the local court system were Grand Palace Gaming Promotion Co. Ltd.; Tak Chun Gaming Promotion Co. Ltd.; Feng Yi Jenny; Pollyana Chu Yuet Wah; Macao Golden Group Ltd. and San Chao Gaming Promotion Co. Ltd., according to the union’s compilation of local court data.

Ms. Chu, who runs a sole proprietor junket, is a well-known Hong Kong businesswoman who also serves as chief executive officer of the Hong Kong-listed Kingston Financial Group Ltd., a company that provisions financial services and has interests in casino-hotels Casa Real and Grandview in Macau.

Her father Lee Wai Man, who is also a substantial shareholder in Kingston Financial, is a well-known veteran VIP gaming promoter who heads up junket company Macao Golden Group.

These six litigious junkets have contributed a combined 101 lawsuits or 38 per cent of litigations filed with the TJB.

LAWSUITS FILED WITH COURT OF FIRST INSTANCE BY LOCAL VIP GAMING PROMOTERS AND GAMING CONCESSION HOLDERS (From August to Sept 2) Date of lawsuit filed Case no.

01/09/15 01/09/15

Name of plaintiff

CV1-15-0130-CEO SUN CITY PROMOÇÃO DE JOGOS SOCIEDADE UNIPESSOAL LIMITADA -

COMPANHIA DE PROMOÇÃO DE JOGOS TAK CHUN S.A.(Rep. pela administradora WONG PUI KENG)

31/08/15

CV3-15-0126-CEO VENETIAN MACAU S.A.

31/08/15

CV3-15-0125-CEO VENETIAN MACAU S.A.

31/08/15

CV1-15-0128-CEO VENETIAN MACAU S.A.

31/08/15

CV1-15-0127-CEO VENETIAN MACAU S.A.

31/08/15

CV3-15-0124-CEO VENETIAN MACAU S.A.

31/08/15

CV1-15-0126-CEO VENETIAN MACAU S.A.

31/08/15

CV2-15-0125-CEO VENETIAN MACAU S.A.

31/08/15

CV2-15-0124-CEO VENETIAN MACAU S.A.

31/08/15

CV2-15-0126-CEO VENETIAN MACAU S.A.

26/08/15

CV3-15-0123-CEO SOCIEDADE DE ENTRETENIMENTO SING VONG LIMITADA

26/08/15

CV2-15-0122-CEO SOCIEDADE DE ENTRETENIMENTO SING VONG LIMITADA

28/08/15

CV1-15-0122-CEO KAM KUOK PROMOÇÃO DE JOGOS SOCIEDADE UNIPESSOAL LIMITADA

19/08/15

CV3-15-0117-CEO GRAND PALACE PROMOÇÃO DE JOGOS - SOCIEDADE UNIPESSOAL LIMITADA

18/08/15

CV1-15-0118-CEO COMPANHIA DE INVESTIMENTO HAISHEN GRUPO LIMITADA

17/08/15

CV3-15-0116-CEO COMPANHIA DE PROMOÇÃO DE JOGOS TAK CHUN S.A.(Rep. pela administradora WONG PUI KENG)

17/08/15

CV2-15-0118-CEO COMPANHIA DE PROMOÇÃO DE JOGOS TAK CHUN S.A.(Rep. pela administradora WONG PUI KENG)

Source: www.court.gov.mo

Iao Kun rolling chip turnover dives 72 pct in August

T

he rolling chip turnover of Iao Kun Group plunged 72 per cent year-on-year in August to US$0.4 billion (MOP3.5 billion) from US$1.5 billion (MOP12.2 billion), according to a filing of the company with the American NASDAQ Stock Exchange.

This suggests that the company’s business has underperformed the trend in the city’s gaming revenues. Last month, Macau posted gross gaming revenues of a year-on-year decrease

of some 35.5 per cent to MOP18.6 billion (US$2.3 billion) from MOP28.8 billion (US$3.6 billion).

In relation to the first eight months of the year, the gaming promoter recorded a rolling chip turnover of US$4.8 billion (MOP38.3 billion), representing an average of US$0.6 billion (MOP4.8 billion) per month, down 62 per cent year-on-year from 2018, when it generated US$12.6 billion (MOP100.4 billion) for the first eight months, which meant an average

of US$1.6 billion (MOP12.5 billion).

During the same time, Macau’s overall gaming industry decreased 36.5 per cent to MOP158.88 billion (US$19.9 billion) from MOP250.38 billion (US$31.4 billion).

In Macau, Iao Kun controls VIP rooms in StarWorld, Galaxy, Sands Cotai Central, City of Dreams and Le Royal Arc Casino. Recently, the company expanded its operations to Australia and Cambodia.

J.S.F.

8 | Business Daily

September 4, 2015

Greater China

Surveys resu

Trade data are expected industrial output, retail s

A

flood of data from China in coming weeks is likely to point to further weakness in the world’s second-largest economy, reinforcing expectations that Beijing needs to roll out fresh stimulus measures and keeping global financial markets on edge.

While industrial output may have picked up last month, China’s exports and imports likely continued to shrink and growth in fixed-asset investment is languishing near multi-year lows, a Reuters poll showed.

KEY POINTS Aug exports seen at -6.0 pct y/y vs July’s -8.3 pct Aug imports seen at -8.2 pct y/y vs -8.1 pct in July Aug CPI f’cast +1.8 pct y/y, vs July’s +1.6 pct Aug PPI f’cast -5.5 pct y/y vs July’s -5.4 pct Aug factory output f’cast +6.4 pct y/y vs July’s +6.0 pct

China’s exports and imports likely continued to shrink

President Xi Jinping announces military cuts during parade Beijing announced in March a 10.1-percent rise in national defence budget in 2015, the lowest growth in five years

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s fighter jets streaked through the skies of Beijing and tanks rolled through Tiananmen Square to commemorate the end of World War II, Chinese President Xi Jinping told the world that the nation was committed to peace and announced the biggest cuts to the army in almost two decades.

“Chinese love peace,” Xi said in a televised speech. “No matter how much stronger

it may become, China will never seek hegemony or expansion. It will never inflict its past suffering on any other nation.”

China announced it will cut the number of its standing troops by 300,000 by the end of 2017 yesterday, in its latest effort to build slimmer but stronger armed forces.

Yang Yujun, spokesman of China’s Defence Ministry, made the announcement at

a press conference hours after President Xi Jinping, also chairman of the Central Military Commission, pledged the military cuts at a massive military parade commemorating the end of WWII. Yang said the move will mainly target troops equipped with out of date armaments, administrative staff and noncombatant personnel, while optimizing the structure of Chinese forces.

China’s President Xi Jinping (C-B) gestures as he delivers a speech behind Russia’s President Vladimir Putin (R), South Korea’s President Park Geun-hye (C) and Kazakhstan President Nursultan Nazarbayev on Tiananmen Gate

At 2.3 million, China now has the world’s largest activeduty military, including 850,000 ground forces, according to a government paper published in 2013.

Yang said the reform will adopt a step-by-step approach and will be accomplished by the end of 2017.

He said the decision is in line with the current situation of the state and military. “Chinese armed forces will be slimmer but more capable, and their composition more scientific.”

This will be China’s fourth military reduction since the 1980s. In 1985, China downsized its army by more than 1 million, the largest cut ever.

Even after the reduction, China’s military will still be the world’s largest, which meets China’s practical needs, Yang said. Aside from safeguarding national unity and territorial integrity, China needs a military to undertake non-military tasks such as disaster relief, peacekeeping and international rescue, he said.

China also needs its military to cope with the threat of terrorism, separatism and extremism, Yang added.

Concerning China’s defence budget, Yang said it will be kept on a proper level to meet various needs including expenditure on new armaments, information technology and soldiers’ salaries.

When asked about whether the money saved from downsizing will be used to develop other weapons, the spokesman reiterated China’s defensive nuclear policy, saying it won’t use nuclear weapons first and China advocates peaceful exploration of outer space.

China announced in March a 10.1-percent rise in national defence budget in 2015, the lowest growth in five years.

Yang noted the military cut announcement will underline China’s bonafide and wish to uphold peace, achieve common development and share prosperity with other nations.

He also told the press conference that “more reform measures will be released.”

Xinhua and Bloomberg News

Business Daily | 9

September 4, 2015

Greater China

ults see weak August data

Taiwan bourse to on September 8, inflation September 10, lending September 9-15, explore trading link with Malaysia sales, investment due September 13 New loans likely fell sharply from July, while manufacturers had to cut prices more deeply to win business.

The downbeat data will raise the chances that annual economic growth may dip below 7 percent in the third quarter for the first time since the global financial crisis, as demand weakens at home and abroad.

Fears that China may be at risk of a hard landing that would jeopardize the global economy have grown in recent weeks after a series of grim factory activity surveys.

The government is also still struggling to stabilise the yuan after its surprise devaluation of the currency on August 11 and has been unable to halt a stock market rout that has seen the country’s share indexes plunge 40 percent since mid-June.

Tao Wang, China economist at UBS in Hong Kong, said some August data may not seem as bad on the surface as those in July when compared with a year earlier but will still point to a loss of economic momentum over the summer.

“Meanwhile, shrinking stock market trading amid on-going volatility has dampened the financial industry’s contribution to GDP growth. As such, Q3 GDP growth looks set to fall below 7 percent.”

China’s exports were expected to drop 6.0 percent in August compared with a year earlier, after dipping 8.3

percent in July, a median forecast of 20 analysts polled by Reuters showed.

Imports likely shrank for a 10th straight month, slipping 8.2 percent, following a drop of 8.1 percent in July, reflecting both weak global commodity prices and persistently soft domestic demand.

Growth in fixed-asset investment, one of the major drivers of China’s economy, was seen slowing to 11.1 percent in the first eight months of the year from the same period in 2014, versus 11.2 percent in January-July - the weakest expansion in nearly 15 years.

Annual consumer inflation likely inched up to 1.8 percent in August from July’s 1.6 percent, though the increase was driven mainly by soaring pork prices.

But broader deflationary pressures persisted. Manufacturers likely had to cut prices for the 41st month in a row, with a forecast 5.5 percent drop in the producer price index (PPI) the biggest since the global crisis.

Factory output was forecast to have grown 6.4 percent last month from a year earlier, picking up slightly from 6.0 percent in July, but there is little sign of a turn-around in the face of sluggish demand and overcapacity.

Activity in China’s factory sector shrank at its fastest rate in at least three years in August as domestic

and export orders tumbled, surveys showed on Tuesday.

Similar business surveys showed growth was also slowing in the services sector, which has been the lone bright spot in the economy over the last year.

Annual retail sales growth was seen unchanged at 10.5 percent, despite some automakers’ reports this week of sharply lower sales.

Chinese banks may have extended 900 billion yuan (US$141.44 billion) worth of new loans last month, down from a surprisingly robust 1.48 trillion yuan in July, which was propelled by Beijing’s massive rescue package for the slumping stock market.

The broad measure of M2 money supply likely grew 13.2 percent, easing from July’s 13.3 percent.

Beijing has announced a slew of stimulus moves since last year to avert a sharper slowdown, including five interest rate cuts since November and help for the ailing property market, and economists expect more support measures in coming months.

The government’s growth target is 7 percent this year, down from 7.4 percent in 2014 and the slowest in a quarter of a century.

But some economists believe China’s real growth rate is already much weaker than official data suggest.

Reuters

South Korea says it agrees to seek summit with China, Japan A three-way summit may ease tensions related to territorial disputes and invigorate talks on a free-trade deal between the countries Sam Kim

S

outh Korea said it agreed with China to seek a three-way summit with Japan in late October or early November in a step toward easing tensions in the region.

Chinese President Xi Jinping and South Korean President Park Geun Hye agreed trilateral cooperation would contribute to peace and prosperity in the region when the two leaders met in Beijing for talks Wednesday, the presidential office in Seoul said in a statement on its website. The summit would take place in South Korea, it said. Japan would probably accept such an invitation, the Nikkei newspaper said, citing a senior government official.

A three-way summit may ease tensions related to territorial disputes and invigorate talks on a free-trade deal between the countries, which account for a fifth of the world economy. The three are also members of six-nation talks aimed at dismantling North Korea’s nuclear arms programs.

The foreign ministers of China,

Taiwan’s stock exchange is open to exploring setting up a stock-trading link with Malaysia if the Southeast Asian nation’s stock exchange is interested, a Taiwan bourse official said yesterday. “We are open,” Lori Liu, vice president of the Taiwan Stock Exchange’s trading department, said in the Malaysian capital city. “We can recommend to our regulator and Bursa Malaysia if they are interested,” Liu said. The Taiwan Stock Exchange has been eager to broaden its trading links to bolster its position after the launch of a similar link between Shanghai and Hong Kong last year.

U.S. says Beijing will be held accountable on currency The Obama administration on Wednesday urged China to be clear about its intentions when it changes currency policies. “They need to understand that they signal their intentions by the actions they take and the way they announce them,” U.S. Treasury Secretary Jack Lew told network CNBC in an interview ahead of a Group of 20 meeting that Chinese officials will attend. “They have to be very clear that they are continuing to move in a positive direction and we’re going to hold them accountable,” Lew said.

Mexico launches anti-dumping probe of China steel Mexico’s government opened on Wednesday an anti-dumping investigation into steel wire rod from China following protests by Mexican producers. The probe was announced following a request by three companies, ArcelorMittal Las Truchas, Deacero and Ternium Mexico, which claimed that Chinese imports were sold below national prices, harming domestic production. Mexico’s government imposed some tariffs on steel products from Asia in July and tightened customs controls after national companies said they were forced to lay off thousands of workers due to “unfair competition.”

Sugar collapse awakens bulls A collapse in China’s sugar production is igniting business for Thai millers, drawing down stockpiles and setting the stage for a recovery in prices. Dry weather and a decline in sugarcane planting means China will produce the least sweetener in a decade next season, according to researcher Green Pool Commodity Specialists. That’s a big opportunity for Thailand. The world’s second-largest exporter shipped four times as much white sugar to China this year through August 21, from a year earlier, data from the Bangkok-based Office of the Cane and Sugar Board showed.

Japan and South Korea agreed in March to hold the summit “at the earliest convenient time,” after a hiatus of more than three years due to tensions over territorial disputes and historical perceptions. Japanese Prime Minister Shinzo Abe would also be invited to his first bilateral meeting with Park, the Nikkei reported.

Wartime past

Park and Xi in recent months have signalled a willingness to put aside acrimony over Japan’s wartime past.

Park said last month that it was time for relations with Japan to move forward “based on the right historical recognition” after Abe said Japan inflicted “immeasurable damage and suffering” across Asia, in his statement marking the 70th anniversary of Japan’s surrender in World War II. A report by China’s official Xinhua news service on the Xi-Park meeting said the two leaders vowed to boost cooperation, but it didn’t refer to an agreement on a three-way meeting with Abe. A statement on

Snackmaker Liwayway prepares HK IPO Premier Li Keqiang and Park said Li hoped all sides would work together to create favourable conditions for a three-way summit

the Chinese government’s website after a meeting between Premier Li Keqiang and Park said Li hoped all sides would work together to create favourable conditions for a three-way summit. It didn’t specify an agreement or timeframe though.

Bloomberg News

Chinese snack maker Liwayway Holdings Co. is planning a Hong Kong initial public offering that could raise as much as US$200 million, people with knowledge of the matter said. Liwayway, which sells potato chips under the “Oishi” brand, has hired banks for a share sale next year, the people said Wednesday. It hasn’t yet filed a listing application with the Hong Kong stock exchange, according to the people, who asked not to be named as the information is private.

10 | Business Daily

September 4, 2015

Greater China

Low gas-demand growth rate hinders Russian deals In the first seven months of 2015, Russia shipped 23.3 million metric tons of crude oil to China Haixing Jin

C

hina’s demand for natural gas is on pace to grow at a slower rate than the economy for a second straight year, a fact that bodes poorly for any energy agreements that President Xi Jinping and Russian counterpart Vladimir Putin may sign during a meeting in Beijing yesterday.

China’s natural-gas consumption through July rose just 2.3 percent from the same period in 2014, according to data released by the National Development and Reform Commission. Apparent demand actually fell by more than 5 percent in April and May, the first year-onyear declines since at least 2011.

That data reflects the shifting nature of China’s economy and the forces underpinning the two countries’

relationship. An economic slowdown and lagging industrial production has affected China’s appetite for everything from iron ore to fossil fuels, while Russia’s recession amid a plunge in oil prices and western sanctions only increases the urgency for it to sign new deals.

“Right now, with weakening economies, China and Russia have different priorities,” said Chen Rui, a researcher at the CNPC Economics & Technology Research Institute.

“Russia will definitely push to increase exports to gain income. China, because its energy dependence rate is still very high, is focusing on guaranteed supply and safety.”

In 2014, demand increased about 5.6 percent, dropping below China’s

economic growth for the first time in at least a decade, according to NDRC figures compiled by Bloomberg Intelligence. Substituting gas for dirtier fossil fuels is a key to the nation’s pollution-reduction strategy.

China and Russia will sign a series of agreements for “pragmatic cooperation”’ in the areas including infrastructure, energy and investment, China’s Foreign Ministry said in a faxed response to questions.

Despite China’s economic trouble, Russia has played a bigger role as an energy supplier. In the first seven months of 2015, Russia shipped 23.3 million metric tons of crude oil to China to edge out Angola for second place behind Saudi Arabia.

The African nation has been China’s

No. 2 supplier of crude for a decade.

In May, Russia sent more crude than Saudi Arabia to China, the first time in any month since September 2004, data compiled by Bloomberg show.

China and Russia signed a framework agreement last November on a 30-year program of gas supplies from Siberia. That preliminary deal, on which talks are planned this week, is slightly smaller than the US$400 billion contract signed in May 2014, which took almost two decades of negotiations. The price of the first 30-year pact is tied to crude oil, which has tumbled by about half the past year.

Russia’s economy relies more on China than the other way around.

Bilateral trade last year was US$92 billion, making the mainland Russia’s largest partner. From China’s perspective, Russia ranked just eighth, with the U.S., Japan and Germany the top partners. China’s US$50.9 billion of exports to Russia weren’t enough to put that market in its top 10.

Russia’s nominal gross domestic product was US$1.86 trillion last year in current dollar terms, only 12 percent more than in 2008. China’s GDP expanded 127 percent in the same period to US$10.36 trillion.

Russia’s reliance on energy for economic growth helps explain the divergence of the two economies.

Bloomberg News

Russia will definitely push to increase exports to gain income. China, because its energy dependence rate is still very high, is focusing on guaranteed supply and safety Chen Rui, researcher, CNPC Economics & Technology Research Institute

Taiwan to launch home-grown submarine plan The spending was set out in the defence ministry’s budget for 2016

T

aiwan has allocated T$3 billion (US$92.55 million) over four years, beginning next year, to launch a long-awaited programme for the island to build its own diesel-electric submarines.

The expected allocation is the first for a plan that has been talked about since the early 2000s, when a deal with the United States for eight diesel-electric submarines got bogged down because of technical and political constraints.

The plan come as other navies in the regional expand their submarine fleets in part to create a strategic deterrent against China’s growing naval assertiveness in Asian waters.

Taiwan has four aging submarines, including two

that date to World War Two, although its military is otherwise considered generally modern.

China has about 70 submarines, along with

dozens of surface ships and a refurbished aircraft carrier.

Critical to Taiwan’s indigenous submarine programme is the transfer from the United States or

other Western countries of submarine-manufacturing technology.

Support from U.S. companies or release of export technology controls would need a nod from the U.S. government.

China opposes any form of military technological transfers or weapons sales to Taiwan.

The spending plan, which is allotted through to 2019, covers only the contract design phase of what should be a decades-long programme.

Taiwan’s Ship and Ocean Industries R&D Centre (SOIC), a government-backed ship designer and technical consultant, is expected to select a consortium to lead the contract design phase, according to military and industry sources in Taiwan.

By carrying out this first phase, Taiwan will be able to deepen its vessel design capabilities, develop its industry and acquire intellectual property, it said.

The defence ministry is planning to spend T$321.7 billion in 2016, accounting for 16.1 percent - the biggest share - of the central government’s overall expenditures, budget plans show.

The government’s 2016 budget was delivered to lawmakers this week and will be reviewed when parliament begins a new session later this month.

The submarine plan has support in parliament which is expected to approve the overall budget.

Reuters

Business Daily | 11

September 4, 2015

Asia

Thai consumer confidence sinks Confidence should start to recover in the fourth quarter following the government's new stimulus measures Pairat Temphairojana and Orathai Sriring

T

hai consumer confidence fell for the eighth successive month in August to a 15-month low, as weak exports and a deadly bomb blast in the capital Bangkok hold back economic recovery, a university survey showed yesterday.

The consumer confidence index of the University of the Thai Chamber of Commerce dropped to 72.3 in August from 73.4 in July. The reading was the lowest since May 2014, when the army seized power to end months of political unrest.

However, confidence should start to recover in the fourth quarter following the government's new stimulus measures to help a struggling economy, the university said in a statement.

The government unveiled on Tuesday 136 billion baht (US$3.81 billion) of economic measures, including soft loans, aimed at lifting lowincome earners' purchasing power.

The stimulus could boost economic growth by 0.7-1.0 percentage point this year, Thanavath Phonvichai, an economics professor at the university, told a news conference.

"It won't stimulate the

KEY POINTS Aug index at 72.3, lowest since May 2014, vs July’s 73.4 Sentiment hurt by weak economy, Bangkok’s deadly bomb blast Consumption should recover in Q4 on govt stimulus - university

whole economy but it's a good one. Without it, the economy may grow less than 2.5 percent this year," he said.

The university maintains its growth forecast of 2.5-2.9 percent for 2015.

The stimulus comes after Prime Minister Prayuth Chan-ocha reshuffled his cabinet, appointing a new finance minister and a new deputy premier to oversee the economy.

Southeast Asia's second-

largest economy has yet to regain momentum after more than a year of military rule as exports are sluggish while high household debt has crimped consumption. Falling commodity prices have also cut farmers' incomes.

The one bright spot, tourism, has been dealt a blow from the Aug. 17 Bangkok shrine bombing.

The Finance Minister said last week the blast could reduce foreign tourists numbers by 300,000 this year

and GDP growth by 0.05 percentage point.

The government has also said it would introduce measures to help smaller businesses and to boost investments as companies struggle with weak demand.

Charoen Pokphand Foods, Thailand's largest meat and feed producer, has halved its revenue growth target to 5 percent, citing the slowing economy.

Bank of Thailand Governor Prasarn Trairatvorakul said

BOJ member warns Japan won’t hit inflation goal even by early 2018 Takahide Kiuchi said he was against expanding stimulus further given the limited effect it would have on boosting growth Leika Kihara

J

apan is unlikely to see inflation hit the central bank’s 2 percent target over the next 2-1/2 years, Bank of Japan board member Takahide Kiuchi said, warning that China’s slowdown has become a huge risk to global growth.

The former market economist said inflation has been dampened by weak consumer confidence and faltering exports as China’s growth engine sputters.

Kuichi, however, dismissed the chance that problems in China could trigger a global financial crisis.

“With China’s property market showing signs of a pick-up and authorities showing readiness to take policy measures, I expect the economy to stabilise over the course of time,” he told reporters yesterday after meeting with business leaders in Aomori, northern Japan.

Bank of Japan Governor Haruhiko Kuroda has voiced confidence that economy is on track to hit the price target

Kiuchi - among those in the ninemember board wary of the rising costs of the BOJ’s radical stimulus - stuck to his lone proposal to taper the bank’s asset purchases and allow itself more

time to hit its 2 percent price target.

“Consumer inflation ... is unlikely to reach 2 percent even in fiscal 2017” ending in March 2018, Kiuchi said.

“I think the price target of 2 percent

this week he expected secondhalf growth to be close to the first half's pace of 2.9 percent, while stimulus measures should lift confidence and help the economy in the short term.

The state planning agency last month cut its 2015 economic growth forecast to 2.7-3.2 percent from 3.0-4.0 percent. Many economists believe the downgraded figure is still too optimistic. Growth was just 0.9 percent last year.

Reuters

is well above the level consistent with Japan’s current growth potential,” he said, adding that it was difficult to hit the price target unless the BOJ’s efforts were accompanied by structural reforms to boost the country’s productivity.

Don’t expect more stimuli

While acknowledging that Japan’s economy was in a lull, Kiuchi said he was against expanding stimulus further given the limited effect it would have on boosting growth.

“Focusing too narrowly on pushing up prices doesn’t make sense,” he said.

The world’s third-biggest economy slipped into a contraction in AprilJune and inflation has ground to a halt, keeping the BOJ under pressure to expand stimulus to meet its pledge to accelerate inflation to 2 percent by around September next year.

BOJ Governor Haruhiko Kuroda has voiced confidence that Japan is on track to hit the price target.

But some board members, including Kiuchi, share doubts held by private analysts on whether the ambitious target can be met so soon and with monetary stimulus alone.

Kiuchi has been the lone board member to advocate tapering the BOJ’s massive asset purchases on concern the cost of the programme, such as drying up bond market liquidity, was already exceeding the benefits. He was among the four board members who voted against the BOJ’s decision last October to ease policy.

Reuters

12 | Business Daily

September 4, 2015

Asia

Park identifies last chance for reform as Korean corporate bonds slide President Park Geun Hye said this week her government is facing “the last chance for economic revitalization and structural reforms” Moonyoung Tae

The 2017 bonds of Samsung Electronics Co. fell to a low for the year in August of 100.1 cents on the dollar and remain near that. The company’s earnings have declined for five straight quarters. Second-quarter profit missed analyst estimates after the firm misjudged market demand for its S6 smartphone.

Domestic demand in the nation, which generates about half its gross domestic product by shipping products overseas, is also slumping as the export engine stalls.

The 2045 notes of Shinsegae Co., which runs department stores, have dropped to 98.3 cents on the dollar from 99.4 at their issuance in May.

Yields jump

S

outh Korea’s sputtering economy has left its corporate bonds set for their longest slide since the global financial crisis, as the emergingmarket rout catches up with borrowers facing a surge in repayments.

Average prices on the foreign currency notes have decreased 0.2 percent since June 30, set for a second quarterly decline after sliding 1.1 percent in the previous period, the longest streak of drops since 2008, according to Bank of America Merrill Lynch indexes. The debtors must repay US$7 billion of international liabilities in October through December, up 53 percent from last year, just as the won trading near a five-year low adds to servicing costs.

President Park Geun Hye said this week her government is facing “the last chance for economic revitalization and structural reforms” as she struggles midway through her term to reverse the slowest growth in two years. Bond

risk has shot up to its highest since 2013 amid military tensions with North Korea and slowing demand in China that dragged exports down the most since 2009 in August.

“South Korea’s economic fundamentals are sensitive to external factors,” said Yoon In Koo, a fixedincome analyst at the governmentfunded Korea Centre for International Finance. “As nervousness in global financial markets spreads, investors seem to be losing some interest in South Korean assets that don’t pay higher yields than other emerging markets while still being affected by the rout.”

China ripples

South Korean President Park Geun Hye

South Korea is getting squeezed as growth in China, the biggest market for its goods, cools to the slowest pace since 1990 and drags on global expansion.

Korean exports plunged 14.7 percent in August from a year earlier, an eighth straight monthly decline.

The extra yield investors demand to hold Korean corporate notes in foreign currencies over Treasuries surged to an 18-month high of 118 basis points in August, the Bank of America Merrill Lynch index shows.

Korean dollar bonds declined 1.3 percent in the three months through June 30, their worst quarterly performance since the same period of 2013, a JPMorgan Chase & Co. index shows.

“Global risk is reflected in the South Korean corporate spread,” said Lee Jae Hyung, a fixed-income strategist at Yuanta Securities Korea Co. in Seoul.

The fall in the won is adding to investor concern about companies’ finances by making overseas interest payments more expensive even as it fails to shore up exports. The currency has weakened 8.2 percent against the dollar this year, as data Wednesday showed Korea’s current-account surplus narrowed amid the global selloff in emerging-market assets.

Bloomberg News

Fee concerns cloud Australia’s corporate registry sale Critics say proposals unveiled last week to establish a new “cost recovery” fee regime for ASIC is tantamount to price-gouging Nathan Lynch and Byron Kaye

T

he Australian government is under fire over proposed changes to the fees charged by its corporate regulator’s registry arm ahead of the unit’s possible sale, with critics warning against double-dipping and feegouging to boost the asset’s value.

The government is examining a sale of the Australian Securities and Investment Commission’s (ASIC) company registry unit, valued at up to A$6 billion (US$4.2 billion) depending on the fees it can charge.

But critics say proposals unveiled last week to establish a new “cost recovery” fee regime for ASIC is tantamount to pricegouging, in a country which already has some of the highest registry-related charges in the world.

The government is proposing to charge market participants A$260 million a year to cover regulatory costs.

However, recommended reductions for other fees such as company searches and some registry services have not been proposed.

“If industry is going to pay the full cost of its own regulation then there is little justification

for charging businesses and consumers for services that have already been paid for,” said former senator Mark Bishop, who chaired an inquiry into ASIC’s performance.

“You can’t have doubledipping,” he told Thomson Reuters Regulatory Insight, which focuses on governance, compliance and risk management.

Expressions of interest are expected to be made within weeks, with Australian media reporting potential bidders including Veda Group and Link Market Services.

Veda declined to comment and Link did not immediately

respond to requests for comment.

ASIC declined to comment on the fee structure. A spokesman for Assistant Treasurer Josh Frydenberg said no decision had been made about future fees.

Australian fees for registryrelated charges are already high by global standards and have “nothing to do with cost recovery but everything to do with fee-gouging,” University of New South Wales accounting lecturer Jeffrey Knapp said.

“The annual financial reports of the biggest companies operating in Australia should be available to all members of the

public - not just to people who can afford it,” he said.

Typical company searches, for example, are free in New Zealand and Britain but cost about A$38 in Australia.

ASIC has been a lucrative revenue source for the federal government for more than a decade. The registry unit had revenue of A$680 million and costs of A$142 million in the 2013 financial year, according to information provided at last year’s inquiry into ASIC’s performance.

The government has given no timeframe for any privatisation of the unit.

Reuters

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Business Daily | 13

September 4, 2015

Asia Foreigners’ net selling of Japan stocks hits record high

S. Korea revises Q2 GDP up

Traders said when the Nikkei drops below the 18,000 level, its price-to-earnings ratio drops to around 14, making Japanese stocks attractive for pension funds Ayai Tomisawa

N

et selling of Japanese cash and futures stocks by foreign investors during last week hit a record high as buyers shunned riskier assets on worries that a Chinaled slowdown could hurt global growth.

Foreigners, who were also net sellers in the previous two weeks, sold a total of 707.05 billion yen (US$5.89 billion) worth of Japanese cash stocks during the week of August 24-28, the biggest weekly selling since March 2014, data released by the Japan Exchange Group yesterday showed.

Foreigners sold a net 1.176 trillion yen in futures, taking the combined cash and futures net selling to 1.883 trillion yen, the higher ever, according to brokerages tracking the data.

“The figure shows that foreign investors were extremely risk-averse,” said Seiichi Miura, an investment strategist at Mitsubishi UFJ Morgan Stanley Securities, adding that global investors grew more concerned that China’s slowing demand could eat

KEY POINTS

Malaysia’s economy in stronger position

Trust banks bought highest value of Japan stocks since March 2009 into production in advanced countries like Japan.

“If the market can confirm that profit growth is intact for Japanese companies at their mid-year earnings results in October, selling by foreigners will likely pause,” Miura said.

Concerns about China’s economy pushed Japanese stocks sharply down, with the Nikkei share average falling more than 13 percent from its 18-1/2 year high in late June and the broader Topix also dropping 13 percent from its eight-year peak last month.

Also keeping investors on edge is the prospects that the U.S. Federal Reserve could raise U.S. interest rates in the coming months.

Foreigners sold highest value in cash Japan stocks since March 2014 Conversely, trust banks, which manage corporate pension trusts and national pension fund trusts, bought a net 263 billion yen in Japanese cash stocks, the highest since March 2009.

Traders said when the Nikkei drops below the 18,000 level, its price-to-earnings ratio drops to around 14, making Japanese stocks attractive for pension funds which tend to hunt stocks at attractively priced levels.

The Nikkei ended 0.5 percent higher at 18,182.39 yesterday.

Swiss freeze millions amid investigations of Malaysian fund Swiss financial regulator FINMA has also said it was checking with some Swiss banks on whether they have done business with 1MDB

S

wiss authorities said on Wednesday they had frozen funds in Swiss banks amid investigations of Malaysia’s troubled state investment fund, 1Malaysia Development Berhad (1MDB), on suspicion of corruption and money laundering.

Both Swiss and Malaysian authorities are conducting inquiries concerning the fund, whose advisory board is chaired by Prime Minister Najib Razak. The fund has been dogged by controversy over its US$11 billion debt and alleged financial mismanagement.

“The Office of the Attorney General of Switzerland (OAG) has frozen assets amounting to several tens of millions of U.S. dollars on Swiss bank accounts,” an OAG spokeswoman said by email in response to an enquiry.

“At this early stage of the procedure, the OAG is analysing and consolidating evidence. The OAG is already in contact with the Malaysian authorities. International cooperation with foreign countries, in particular with Malaysia, will probably be necessary to establish the facts,” she said.

In Malaysia, 1MDB noted the

Both Swiss and Malaysian authorities are conducting inquiries concerning the fund, whose advisory board is chaired by Prime Minister Najib Razak

South Korea’s economy grew a seasonally adjusted 0.3 percent during the April-June quarter from the previous three-month period, revised central bank data showed yesterday, unchanged from its earlier estimate. Over a year earlier, South Korea’s gross domestic product expanded by 2.2 percent in the second quarter, the Bank of Korea data showed, also unchanged from its earlier estimate released on July 23. It was the worst quarterly growth in more than six years for Asia’s fourth-largest economy and less than half the 0.8 percent expansion during the January-March period.

report and said in a statement: “As far as 1MDB is aware, none of the company’s bank accounts have been frozen. 1MDB is in the process of developing a better understanding of the on-going investigations in Switzerland so the company can cooperate to its fullest extent.”

Swiss financial regulator FINMA has also said it was checking with some Swiss banks on whether they have done business with 1MDB. Malaysia’s attorney general last month denied reports that a new task force would investigate 1MDB, saying the new body was just a “rebranding” of an existing team that focuses on crimes such as tax evasion and illegal fund flows.

The OAG last month opened criminal proceedings against two executives of 1MDB as well as against unknown persons on suspicion of corruption of foreign officials, misconduct in public office and money laundering.

“The proceedings are based on two notifications of suspicious transaction reports by the Swiss financial intelligence unit MROS,” the OAG statement said.

FINMA declined comment on the status of its inquiries.

Reuters

The Malaysian economy is in a stronger position than it was during the 1997 Asian Financial Crisis to bear any “incoming storms”, Prime Minister Najib Razak said yesterday. Local companies now have stronger balance sheets and governance, while structural reforms to the financial and banking sector has strengthened it against “intense bouts of volatility”, Najib said at the World Capital Markets Symposium, an event organised by the country’s Securities Commission. “We are on track to achieve our goal of becoming a high income status nation by 2020,” Najib said.

Philippine Airlines to shed 117 job Philippine Airlines Inc (PAL) said yesterday it is laying off 117 domestic ground crew, or about 2 percent of its total staff strength, in November to focus on its core operations for sustaining profitability. “PAL will disengage from non-core services such as our ground-handling activities in domestic stations which can be turned over to qualified third-party service providers,” the carrier said in a statement. The airline, owned by PAL Holdings Inc which is controlled by the Philippines’ fourth-richest man, Lucio Tan, had 2,386 ground employees in the Philippines and 2,512 flight crew as of end-2014.

Australia’s new vehicle sales rise Sales of new vehicles in Australia rose 2.9 percent in August compared with the same month a year ago, led by a boom in demand for small sports utilities. The Australian Federal Chamber of Automotive Industries’ VFACTS report yesterday showed total sales were 90,705 in August, compared with 88,155 for the same period last year. Sales were down 1.7 percent from July. Sports utility vehicles (SUV) jumped 19.4 percent on August last year, with the small SUV segment surging 51.3 percent.

Toshiba to post 10 bln yen loss Japan’s Toshiba Corp is likely to post a net loss of about 10 billion yen (US$83 million) when it reports its financial 2014/15 earnings as early as this week, the Yomiuri daily reported, amid a probe into improper accounting at the company. Toshiba was already expected to report a loss after an independent probe found it had overstated its profits by US$1.2 billion over several years, but the figure cited by Yomiuri was the first indication of how deep that loss would be. There was no immediate comment from Toshiba.

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September 4, 2015

International Maduro suggests ideas on stabilising oil prices Venezuelan President Nicolas Maduro said yesterday he would talk to Russian President Vladimir Putin about what could be done to stabilise world oil markets and prices. Maduro made the comments as the two men, both leaders of major oil producing countries, began talks in Beijing, after attending a military parade to mark 70 years since the end of World War Two in Asia. “We can talk about what we can do to stabilise oil market and stabilise prices, what would allow us to overcome the current conditions,” Maduro told Putin at the start of the meeting.

EU regulators clear Shell’s takeover of BG Group Royal Dutch Shell gained EU approval on Wednesday for its US$58 billion acquisition of Britain’s BG Group, the second of four key markets needed to clear the deal, but faced a slight delay in securing a decision in Australia. The European Commission said the transaction would not grant Shell market power in oil and gas exploration, the liquefaction of gas and the wholesale supply of liquefied natural gas (LNG).

The takeover will make Shell become the world’s top LNG producer and a major deep-water oil player.

UK growth set to slow Businesses in Britain’s services sector recorded their slowest growth in more than two years last month, mirroring signs of economic weakness in the United States and China, a closely watched survey showed yesterday. Financial data company Markit, which compiled the figures, said Britain’s overall economic growth rate was likely to slow to 0.5 percent in the three months to September from an above-average 0.7 percent in the second quarter. “Even after allowing for usual seasonal influences, August saw an unexpectedly sharp slowing in the pace of economic growth,” Markit’s chief economist Chris Williamson said.

Implats plans US$300 mln equity cash call Impala Platinum plans to raise 4 billion rand (US$299 million) to fund the development of two shafts at its strike-ridden South African operations, the company said yesterday, news that sent shares tumbling to 12-year lows. Impala, along with rivals Lonmin and Anglo American Platinum, is still recovering from last year’s record five-month strike that cost the industry billions in lost output, damaged the viability of some mines and led to job cuts. Impala said it would use the capital raised to complete two shafts in Rustenburg, the epicentre of last year’s strike.

Majority of US shale firms pass up hedge chance With the benefit of hindsight, last quarter may have been the best chance for cash-strapped U.S. shale oil producers to ensure they would get at least US$60 a barrel for the next year or two. Barely a third did so. According to a Reuters analysis of hedging disclosures by the 30 largest such firms, more than half of them did not expand their hedges during the three months ended June or had no hedges at all, exposing them to a plunge that wiped more than US$20 off the price of oil in the following months.

Euro zone business growth at four-year high The PMI for the bloc’s dominant service industry rose to 54.4 from July’s 54.0 Jonathan Cable

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uro zone business activity accelerated at its fastest pace in more than four years last month as Italy turned in its best performance since early 2011 and German growth strengthened, surveys showed yesterday.

But while those upbeat surveys will provide some welcome news for the European Central Bank, which is struggling to boost the economy and inflation, they still only point to modest third-quarter GDP growth.

No change is expected when the ECB’s Governing Council announces its latest policy decision later yesterday but there is a growing chance its billion-euro stimulus programme will be extended beyond a planned completion date of September 2016.

“The PMI is indicating euro area GDP growth close to 0.4 percent in the third quarter, a solid albeit unspectacular rate of expansion,” said Chris Williamson, chief economist at survey compiler Markit.

“Policymakers have little scope for complacency, however, as slower growth in the emerging markets and recent financial market volatility, as well as a stronger euro, have the potential to hit the economy’s performance in coming months.”

Markit’s final August Composite Purchasing Managers’ Index (PMI) beat an earlier estimate of 54.1, settling at 54.3 -- its highest level since May 2011. In July it registered 53.9 and has now been above 50, which denotes expansion, since July 2013.

The PMI for the bloc’s dominant service industry rose to 54.4 from July’s 54.0. The flash estimate was 54.3. The manufacturing PMI, released on Tuesday, dipped to 52.3 from 52.4.

An earlier composite PMI from Germany, Europe’s largest economy, leapt to 55.0 from 53.7 in July, smashing a flash estimate for a more modest rise to 54.0. Italy’s composite reading rose to 55.0, its highest since March 2011.

Spain’s PMI also soared but it was a different story in France where the composite PMI slumped to 50.2, its lowest since the start of the year.

In another positive sign for the ECB, firms increased prices last month -- although only barely -- for the first time since early 2012. The composite output price sub index climbed to 50.1 from July’s 49.8.

The ECB began pumping 60 billion euros a month of fresh cash into the economy about half a year ago through bond purchases with the

Russia needs to develop Vladivostok fish hub to boost economy Putin has made localisation across the Russian economy a priority Katya Golubkova and Lidia Kelly

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ussia needs to create its own Asia-Pacific hub to store, process and trade seafood and fish, Agriculture Minister Alexander Tkachev said yesterday, the latest plan to protect domestic producers.

Relations between Russia and the West are at their lowest since the Cold War after sanctions were imposed on Moscow for its role in the Ukraine crisis. Russia retaliated by banning most Western food imports and turning instead to Asia, where President Vladimir Putin is visiting Beijing on Thursday to attend a military parade.

“Fish are our hard-currency export, our grain, oil and gas, our national heritage,” Tkachev told the Eastern Economic Forum in Vladivostok, the first event of its kind in Russia’s Far East.

Putin has made localisation across the Russian economy a priority.

Inflation rose to 15.6 percent in July, year-on-year, on the sanctions, the food ban and a weak rouble.

Tkachev said that a fish hub in Vladivostok should store, refine and trade fish and seafood and become a source of growth for the economy.

KEY POINTS Euro zone August composite PMI at four-year high of 54.3 Markit says PMI points to Q3 GDP growth of 0.4 pct Firms raise prices for first time in over three years aim to boost inflation. But official data showed prices rose just 0.2 percent in the 19-country bloc last month.

To meet the upturn in demand, service firms took on staff at the second fastest rate since May 2011.

The index rose to 52.3 from 51.7 in July. Unemployment surprisingly fell to a more than three-year low of 10.9 percent in July.

Reuters

“We are the fish country... We are unlikely to become leaders but we should be at least serious, second (biggest) players in the Asia-Pacific region,” he told reporters.

The Tsukiji Market in Tokyo, in operation since 1935, is the world’s biggest wholesale fish and seafood market, famous for its tuna auctions.

Tkachev estimated the cost of creating the fish hub at between 20 and 40 billion roubles (US$300US$600 million). “Given the crisis, of course, this is big money, hard to find, but I think this is our priority,” he said.

The waters off Vladivostok, which Soviet leader Nikita Khrushchev was inspired to develop by a 1959 visit to San Francisco, have scallops, calamari, octopus among other seafood and fish.

Still, shops are empty of most fresh seafood, which can be found only at isolated markets. A kilo of scallops would total around 1,800 roubles (US$27).

“This is a bit too high for a regular dinner, even for the middle class,” said Alexander, a taxi driver who has his own boat and goes fishing once a week.

“Auctions, when fishermen can just sell their catch from the boat, would help both demand and price.”

Reuters

Business Daily | 15

September 4, 2015

Opinion Business

wires

A tale of two theories

Leading reports from Asia’s best business newspapers Jean Pisani-Ferry

Professor at the Hertie School of Governance in Berlin, currently serves as Commissioner-General for Policy Planning for the French government

CHINA DAILY China’s securities regulator on Wednesday fined three companies for illegal business activities amid the recent chaos in the country’s stock market. An investigation found that Shanghai-based Mecrt Corporation, Hangzhou-based Hundsun Technologies and Hithink Flush Information Network developed an operating system that allowed securities investors to trade without opening accounts via real-name registration, violating the Securities Act, said the China Securities Regulatory Commission. A total of 132.85 million yuan will be confiscated from Hundsun and it will be fined a further 398.56 million yuan.

TAIPEI TIMES Four groups visited Chinese Nationalist Party (KMT) presidential candidate Hung Hsiu-chu’s office and called for Hung’s support on legal reforms. Hung endorsed the need for a national convention on judicial reforms and proposed the establishment of a judicial reform committee in the legislature. Representatives of the Taiwan Bar Association, the Taipei Bar Association, the Taiwan Law Society and the Judicial Reform Foundation — who met with Democratic Progressive Party (DPP) presidential candidate Tsai Ing-wen on Wednesday last week — visited Hung’s office in Taipei to propose judicial reform platforms.

THE TIMES OF INDIA German auto major Audi is set to pump in fresh investment and enhance its manufacturing set-up in India as the company eyes sales of over 50,000 cars by 2020. A senior official in the Volkswagen group - of which Audi is a constituent - said the fresh investment for India will be announced “very soon” by a board member from the brand’s headquarters. “The plan is to have a bigger set-up in India as the market is seen as key and strategic,” the official said, requesting anonymity.

THE JAPAN NEWS The Economy, Trade and Industry Ministry launched an electricity market watchdog to protect consumers and ensure fair competition ahead of the full liberalization of power retailing in April 2016. The five-member Electricity Market Surveillance Commission is headed by Tatsuo Hatta, president of the Asian Growth Research Institute.

Its secretariat has a staff of around 70. The commission will work hard to monitor market developments and set electricity trading rules, Hatta said. The watchdog will examine whether power retailers explain terms of contracts to consumers appropriately before concluding the deals.

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lobal growth disappoints again. A year ago, the International Monetary Fund expected world output to rise 4% in 2015. Now the Fund is forecasting 3.3% for the year – about the same as in 2013 and 2014, and more than a full percentage point below the 2000-2007 average.

In the eurozone, growth in the latest quarter was underwhelming. Japan has returned to negative territory.

Brazil and Russia are in recession. World trade has stalled. And China’s economic slowdown and market turmoil this summer have created further uncertainty.

True, there are bright spots: India, Spain, and the United Kingdom are beating expectations. The United States’ recovery is solid. Africa is doing well. But, overall, it is hard to deny that the global economy lacks momentum.

This is partly because trees cannot grow forever: China’s economy could not continue to get 10% bigger every year. And in part, it is because growth is not unconditionally desirable: Citizens may be better off with a little less of it, and more clean air.

But many countries are still poor enough to be endowed with strong growth potential, and many others, though rich, have not yet recovered from the global financial crisis. So there must be something else holding growth back.

There are essentially two competing explanations. The first, the Secular Stagnation Hypothesis, has been proposed

by Larry Summers. Its key premise is that the equilibrium interest rate at which demand would balance supply is currently below the actual interest rate.

This seems paradoxical, because interest rates are close to zero in most advanced economies. But what matters is the real rate of interest, that is, the difference between the market rate and inflation.

Aggregate economic balance may require a negative real interest rate; but with inflation at an all-time low – the IMF expects it to be negative this year and next in the advanced economies, and zero in the emerging economies – this is not feasible.

There are several reasons why the equilibrium interest rate could have reached negative territory. Some are structural: saving is high globally, especially in Asia but also in Europe, where aging countries like Germany put money aside for retirement. At the same time, the new digital economy is less capital-intensive than the old brick-and-mortar economy.

This may be accentuated in the future by the advent of the socalled sharing economy.

Other factors are temporary.

In several countries, debtfinanced housing booms have left households and companies over-leveraged; and governments have reduced deficits to contain their own debt. As a result, there are likely to be too few investors and too many savers.

The Secular Stagnation Hypothesis is worrying, because it gives few reasons to believe that things will improve by themselves. True, debt deleveraging is not without limits. But it is impeded by slow growth and, thanks to high unemployment and weak global demand, persistently low inflation. Worse, over the longer term, low investment undermines productivity, while protracted unemployment

Overall, it is hard to deny that the global economy lacks momentum

destroys skills. Both reduce future potential growth.

A vicious circle, it seems, is at work. The way to break it, according to Summers, is to sustain monetary stimulus and boost demand aggressively through fiscal policy.

The alternative explanation for the persistence of weak global growth has been best formulated by the Bank for International Settlements (BIS), an organization of central banks. The BIS maintains that excessively low interest rates are a big reason why growth is disappointing.

This explanation may seem even more paradoxical than the first, but the logic is straightforward: Governments often try to escape the hard task of improving economic efficiency through supply-side reforms and rely on demand-side fixes instead. So, when confronted with a growth slowdown caused by structural factors, many countries responded by lowering interest rates and stimulating credit.

But cheap credit promotes bad investment and excessive debt, which borrowers often are unable to repay. More fundamentally, investment is a bet that cannot pay off if growth is structurally depressed.

Artificial growth promotion only ends in tears.

Furthermore, the BIS claims that credit may well aggravate structural deficiencies. Housing bubbles and investments in dubious projects result in a waste of resources and a misallocation of capital that ultimately dampens potential growth. The best example is perhaps Spain in the 2000s, where students left university before graduating to take part in the real-estate frenzy. Amassing useless concrete and losing human capital, the country lost twice.

So here, too, the logic points to a vicious circle: Slower growth leads to artificial remedies and further erosion of long-term growth potential.

The BIS argues in favour of fiscal restraint, debt restructuring if needed, and swift normalization of monetary policies – quite explicitly criticizing the US Federal Reserve’s caution and the European Central Bank’s aggressive stance.

Both theories are internally consistent. Both also fit only some of the facts.

The Secular Stagnation Hypothesis accounts well for the mistakes made in the eurozone in the aftermath of the global recession, when sovereigns attempted to deleverage while companies and households were unwilling to spend, and the ECB was keeping monetary policy relatively tight. The BIS’s explanation reads like a summary of the woes of China, where growth has slowed from 10% to 7% or less, but the authorities still push investment amounting to almost half of GDP and promote all sorts of low-return projects.

So which theory fits the facts better globally? So far, it is odd to claim that advanced countries have stimulated demand excessively. Persistently low employment and nearzero aggregate inflation do not suggest that they have erred on the side of profligacy. True, financial recklessness remains a risk, but this is why regulatory instruments have been added to the policy toolbox. So the BIS’s call for across-the-board monetary normalization is premature (though this does not mean that reforms should wait).

In the emerging world, however, the mismatch between growth expectations and actual potential has often become a serious issue that demandside stimulus and endless debt accumulation cannot cure.

Rather, governments should stop basing their legitimacy on inflated growth prospects.

Project Syndicate

16 | Business Daily

September 4, 2015

Closing Guatemalan president accused of corruption resigns

Xi meets UN chief after Victory Day parade

Embattled Guatemalan President Otto Perez (pictured) announced his resignation yesterday, after a warrant was issued for his arrest for allegedly masterminding a huge fraud scheme. The conservative leader, in power since 2012, decided to step down to confront “individually the proceedings against him,” his spokesman Jorge Ortega said, hours after the arrest warrant was issued. On Tuesday, Congress stripped him of his immunity, paving the way for him to be prosecuted. His resignation upsets the political landscape in the central American nation just days before voters go to the polls to elect a new president who will take office in 2016.

President Xi Jinping met with UN Secretary-General Ban Ki-moon after China’s massive military parade yesterday. Xi welcomed Ban’s attendance at China’s V-Day celebrations, saying that the event showed Chinese people’s resolution in safeguarding peace. Xi told Ban that as the United Nations is one of the most important results of WWII, China was the first country to sign on the UN Charter.

China is willing to safeguard the victory results of WWII and the UN Charter-based international order together with the UN. Ban said the Chinese people suffered heavy losses during and made significant contributions to the anti-Fascist war.

G20 seeks to smooth economic shockwaves from China Whether China can manage a soft landing after years of explosive economic growth will be at the heart of G20 talks

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orld finance ministers and central bankers gather in Turkey this weekend to grapple with the fallout of slowing growth in China, tanking emerging economies and panicked global stock markets.

“China’s transition to a lower growth, while broadly in line with forecasts, appears to have larger-than-previouslyenvisaged cross-border repercussions, reflected in weakening commodity prices and stock prices,” the International Monetary Fund warned in a report on policy challenges facing the G20.

“The expected boost in economic activity from lower oil prices has not materialized, and lower energy costs are keeping inflation low. Hence, monetary policy must stay accommodative to prevent real interest rates from rising prematurely,” it said.

The Fund cautioned policymakers at the US Federal Reserve, who meet September 16-17, to make their decision on interest rates dependant on the economic and financial data, noting

Xi Jinping at previous G20 edition held in Australia

“little evidence of meaningful wage and price pressures”.

It urged the European Central Bank to extend its 60-billion-euro (US$68 billion)-a-month sovereign bond buying programme if inflation fails to meet its medium-term target of just under two percent.

The IMF told the Bank of Japan it “should stand ready for further easing”.

This week IMF managing director Christine Lagarde conceded global economic growth will likely be weaker in 2015 than the 3.3 percent

Mongolia unlikely to seal US$4 bln coal mine deal

estimate the IMF made just two months ago, due in part to fallout from China’s slowdown.

China in focus

One Western government official said China’s enormous reserves and determination to ease its economy from reliance on state investment and exports to increased domestic consumer spending should be sufficient to overcome its current troubles.

Andrew Kenningham, senior economist at Capital Economics in London, says some of the reaction to

China’s slowing has been over-blown anyway.

“For China we don’t think the outlook is nearly as bad as many people are suggesting.

We could even see some reacceleration of growth in the second half of this year, partly because of policy stimulus,” he said.

Not all observers are as optimistic, however, and calls have multiplied for Beijing to step up efforts to address the panic.

But China isn’t alone in encountering problems. The United States has produced

Reassuring, not resounding

Given that context, messages from gathering G20 officials will likely seek to be more reassuring than resounding.

“I am convinced that the recent market developments -- which are not yet over -are not the sort to destabilise the European economy,” European Economic Affairs Commissioner Pierre Moscovici said Tuesday in a preview of the expected G20 tone.

Sebastien Jean, director of the CEPII economic research institute said one focus of the meeting should be to clearly differentiate market panic about China from effective action that must be taken to address the situation.

“There’s been a lot of overinterpretation, so it will be important for G20 leaders to reaffirm their determination to coordinate” action, Jean said.

Concerted action is even more important amid what Jean calls “the really sensitive moment” of the US Federal Reserve preparing to raise interest rates after years at rock-bottom levels.

That response by investors has already begun in expectation of US rate hikes -- further slowing emerging economies that had been motors of global growth in recent years.

AFP

Bangladesh factory owners to stand trial over deadly fire

China’s crude steel output continues to fall

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mixed economic data, French growth has again stalled, and both Canada and Brazil have entered recession as commodity prices slide.

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delayed US$4 billion deal aimed at spurring development of Mongolia’s enormous Tavan Tolgoi coal mine has only a slim chance of going ahead, partly due to China’s slowing growth, one of the country’s chief negotiators said yesterday.

A plan for a consortium of Mongolian Mining Corp, China’s Shenhua Energy and Japan’s Sumitomo Corp to take over the operations of state-owned Erdenes Tavan Tolgoi was blocked

by Mongolia’s parliament speaker in April, leaving the future of the deal in the hands of lawmakers.

Minister Mendsaikhan Enkhsaikhan, who led the Mongolia’s negotiations with the consortium, told an investor conference in Ulaanbaatar he was pessimistic on the prospects of lawmakers clearing the deal.

Mongolia relies on China to buy nearly all of its minerals and petroleum, which made up 86 percent of exports in the first six months of 2015.

Slowing growth in China amid expanding supply worldwide has driven prices sharply lower for most of Mongolia’s chief exports, such as coal and copper, to more than six-year lows.

hina’s crude steel output continued to decline after recording its first half-year drop in two decades, the latest data from the country’s top economic planner showed.

Crude steel production dipped 1.8 percent year on year to 476 million tonnes in the first seven months of 2015, compared with a 2.7 percent increase in the same period of last year, according to the National Development and Reform Commission (NDRC).

In the first six months, output fell 1.3 percent year on year, the first half-year drop in nearly 20 years, earlier figures showed.

China’s once sizzling steel industry has cooled down as the economy shifts gear from double-digit growth to 7 percent expansion in the first half of this year, hurting industry profits and forcing factories to close. In the first half, medium- and large-sized steel producers suffered 21.7 billion yuan (US$3.4 billion) of losses in their main businesses, losing 16.8 billion yuan more than the same period of last year, according to data from the China Iron and Steel Association.

Steel prices remained weak, with the domestic steel price index slipping 4.68 points from June.

Bangladesh court yesterday ordered two garment factory owners and 11 others stand trial for causing the death of 111 workers, almost three years after the country’s worst industrial fire.

Delwar Hossain and his wife Mahmuda Akter were formally charged over the blaze that tore through the Tazreen factory on Dhaka’s outskirts, trapping workers who stitched clothes for Western retailers.

“The court charged the 13 including Delwar and his wife with causing death by negligence,” prosecutor Khandakar Abdul Mannan said outside the district court in Dhaka.

“The judge ordered a trial from October 1 when witness testimonies will be recorded,” Mannan told AFP. The November 2012 fire shone an international spotlight on appalling safety and other conditions in Bangladesh’s US$25 billion garment industry.

But the disaster was followed by an even bigger tragedy less than 12 months later, when the ninestorey Rana Plaza garment complex collapsed killing 1,138 people.

Reuters

Xinhua

AFP