Macau Business Daily September 11, 2015

MOP 6.00

Wynn sues Ctrip.com

Closing editor: Joanne Kuai

Wynn Resorts Holdings LCC has sued China e-travel ticketing service Ctrip.com (Hong Kong) Ltd. For the latter’s alleged trademark infringement and unauthorised use of images of Wynn Macau Hotel. Their contract expired in September but Ctrip has continued using copyrighted photos

Year IV

Number 878 Friday September 11, 2015

Publisher: Paulo A. Azevedo

Page 4

Riding the Korean Wave S. Korean culture continues to fascinate. ‘Hallyu’ – the ‘Wave of Korea’ – continues to wash over I.T Limited announces the territory. Presenting business opportunities for the fleet of foot. Food, cosmetics, clothing and departure of CFO Page 2 electronics from the Hermit Kingdom are booming in the MSAR. Competitive pricing, excellent quality, the devalued won and a constantly evolving product mix tick all the right boxes.

Yuan deposits in Hong Kong falling E-commerce and High Street shops are slugging it out Page

2

despite stabilisation

Page 8

Premier Li: Onshore currency market opening to foreign central banks

Bon Jovi jog on

Page 9

An abrupt cancellation of concerts on the Mainland.

But iconic American band Bon Jovi are still scheduled to appear in Macau this month.

The Beijing and Shanghai gigs were purportedly unplugged due to the band’s previous usage of an image of the Dalai Lama

Like it or not, Shanghai’s crude oil futures will be a global benchmark

Page 10

Page 4

HSI - Movers September 10

Risky Prices Consumer prices in China.

They’ve hit the highest level this year. While deflation risks in industrial production loom larger. Signalling the need for continued easing policies

www.macaubusinessdaily.com

Page 8

Growing Industries

Name

China Resources Powe

-0.53

Macau’s receipts from industrial establishments. Up 15.2 pct y-o-y in 2014 to MOP10.91 billion (US$1.39 billion). Boosted by increased revenues from the food products and beverages manufacturing sector. The production of cement and concrete. And increased local power generation and natural gas supply

Cathay Pacific Airways

-0.57

China Resources Enter

-0.61

Sands China Ltd

-4.75

Lenovo Group Ltd

-4.82

China Resources Land

-5.02

PetroChina Co Ltd

-5.08

Economy

CNOOC Ltd

-6.58

Digging In

Source: Bloomberg

Page 5

Pessimism rules. With a leading financier and economist agreed on gaming’s poor prospects. Delta Asia Financial Group chairman Stanley Au Chong Kit believes the city’s economy won’t turn the corner for three years. While economist Ricardo Siu Chi Sen says the economic contraction is sure to remain for the rest of the year

Page 3

%Day

Cheung Kong Property

+0.53

CITIC Ltd

+0.43

I SSN 2226-8294

2015-9-11

2015-9-12

2015-9-13

26˚ 31˚

25˚ 30˚

24˚ 29˚

2 | Business Daily

September 11, 2015

Macau I.T Limited announces departure of CFO The Chief Financial Officer of I.T Limited, Tsang Hing Hung Eymon, has resigned his position, the clothing company announced yesterday in a filing with the Hong Kong Stock Exchange, although the decision took effect on Wednesday.

According to the filing there is no disagreement between Mr. Tsang and the company but no official reason was volunteered to justify this departure.

I.T Limited also explained that until a replacement for Tsang Hing Hing Eymon is found, Chief Executive Officer Sham Kar Wai will assume the responsibilities of the CFO position.

During the fiscal year of 2015/2015, I.T Limited recorded a turnover of HK$221.3 million in Macau, up 1.6 per cent in comparison to the previous HK$217.8 million.

AACM launches official WeChat account The Civil Aviation Authority of Macau SAR (AACM) has launched its official WeChat account. The Bureau says that according to a study asking Macau’s residents on the usage of the new media, 90 per cent of the Macao population are using WeChat.

In addition, more and more government entities have adopted WeChat to publish their news. With the objective of achieving better dissemination of news, AACM has taken the opportunity to exploit an additional channel to publish their stories so that the information can reach more local residents and overseas readers in a faster and more direct manner. Those who are interested in subscribing to the official AACM Wechat account can search the Wechat ID ‘MacaoCAA’.

‘Little Water Steward’ app launched by Macao Water The Macao Water Supply Company Limited has launched a self-developed mobile app called ‘Little Water Steward’. By using this app, customers can better manage their water use issues on a smart phone, including balance check and bill payment, electronic water bill and SMS reminder service applications. In addition, by clicking on the news function, the user can obtain the latest information about Macao Water, water quality testing reports and project notices. This mobile app is equipped with an incident reporting function. The user can report any cases of burst pipes, water leakage or illegal water use in Macau via this platform to Macao Water by uploading photos and videos for more detailed information, while detecting the location of the incident by using the built-in global positioning system to reduce response time.

Three fireworks displays on September 19 The Portuguese fireworks team which could not perform on 5 September due to technical reasons is now scheduled to present its fireworks display on September 19 (Saturday). With the fireworks teams from Korea and Italy scheduled for performance as well, there will be three fireworks displays on the same night. Citizens and visitors can refer to the latest schedule as follow: 21:00 – Korea - Daehan Fireworks Co 21:30 – Italy – Parente Fireworks Group S.R.L 22:00 – Portugal - Luso Pirotecnia Group The 27th Macau International Fireworks Display Contest is held above the sea in front of Macau Tower on 5, 12, 19, 27 September and 1 October.

‘Hallyu’ invades territory, boosting imports from Korea Cellphones and motor vehicles have traditionally been the main imported products from South Korea. But influenced by such artists as G Dragon, Psy, Lin Min Ho and Hyuna, residents can’t get enough of cosmetics and clothes from Korea

T

he increasing popularity of the South Korean culture all over Asia, particularly in Mainland China, has fuelled the growth of exports from the country. In Macau, the Korean Wave or Hallyu, as the cultural influence has been named, has also arrived, changing the cosmetics and clothes retail markets in the process. This has resulted in the opening of many shops in the territory with the ‘advertising faces of singers and actors’ such as G Dragon, Psy, Hyuna and Lee Min Ho everywhere.

“People really love the [popular] Korean trend, both make-up and fashion and especially Chinese people. You can find tons of Chinese ‘youtubers’ teaching Korean makeup”, local resident Laurentina Silva told Business Daily.

“The Korean culture is really a word-of-mouth trend these days.

Some girls really love the Korean make-up style because of the pop songs and artists”, local student Iris Sio explained added.

Business opportunists

While the Korean culture in the territory is emerging, for others this also represents an opportunity to start a business and open a cosmetics shop.

Such was the case of local resident Serena Cheng, who started selling Korean products online in 2012 before opening a shop in August last year in a shop in Pak Wai Building.

“Korean commercials have become very popular in Asia. At the same time, in movies and in music videos, the skin of the pop stars and their make-up is really good. So Korean products have become the hottest trend in Macau”, the co-owner of Sis Beauty, Serena Cheng, told Business Daily. “First we tried to sell our products online. Then the industry changed and become more mature.

So we decided to open a shop”, she explained.

Strong Pataca

The ‘boom’ in imports of South Korean cosmetics products was strongest from 2012 to 2013, when overall imports to the territory of Korean products increased 25 per cent year-on-year to MOP2,119

million from MOP1,695 million. Cell phones have been the most imported product from South Korea, which can be explained these days by the success of giant Samsung and sales of the Galaxy series. But since 2012, the category ‘other beauty or makeup preparations and preparations for the care of the skin’ has always been among the top three most imported products from South Korea, Statistics and Census Service (DSEC) data reveals.

However, even during last year, when overall exports – led by the revaluation of the South Korean Won in relation to the Macanese pataca – decreased 16.9 per cent, imports from Korea of lip and skin make-up products increased significantly.

According to DSEC data, the imports of Korean powders for make-up or skincare increased from MOP0.123 million in 2012 to MOP7.27 million in 2014. At the same time, imports of products defined by DSEC as ‘other beauty or makeup preparations and preparations for the care of the skin’ jumped to MOP123.1 million in 2014 from MOP64.6 million in 2012.

Competitive prices

While French and Japanese cosmetics brands have traditionally been the most popular in Macau, Korean brands such as Tony Moly, FaceShop, Nature Republic, Missha and Etude House are becoming increasingly popular. One of the reasons to explain the popularity of such products, besides the influence of the culture, is the relationship between price and quality.

“While the Japanese cosmetics industry is very well developed, the Korean industry is still emerging and developing. But their products are very popular because their labour force is cheaper and so they can offer more competitive prices to the customer”, Ms. Cheng explained.

“If you compare the prices [of Korean products] with the famous Western brands, they are much cheaper. I use a make-up remover from a Korean brand, that costs around MOP200, and lasts for two to three months. The product is really good”, Laurentina Silva explained.

Marketing strategy

Apart the price, the strategy of the Korean brands to constantly innovate and offer new and different products is also a plus for sales. “People really like the Korean products not only because of the ongoing trend but also because the brands always have new products in the shops”, Ms. Silva told Business Daily.

The Internet is still the preferred way to buy such products, with many people preferring to buy directly from Korean-only shops. However, this has not stopped more shops from opening in the territory.

“The Internet is the preferred way to buy these products. But we decided to open the shop because we want to increase the confidence of the customer in our products. It’s also more convenient for clients to take the goods and when they come they have the opportunity to see more items”, Serena Cheng said. “But we can feel that the competition in terms of shops is becoming more fierce”.

J.S.F.

Cosmetics Imported to Macau (MOP million) 2012

2013

2014

2015*

Powders for make-up or skincare

0.173

6.54

7.27

2.21

Organic products to wash the skin

1.70

5.05

3.86

4.57

Other beauty or make-up and skin care preparations

64.57

98.88

123.14

97.38

Eye make-up preparations

0.443

2.22

0.686

1.16

Lip make-up preparations

0.595

3.39

6.20

2.60

Manicure and pedicure preparations

0.297

0.988

0.647

0.820

Total South Korean Imports

1695

2119

1760

920

Source: DSEC | *From January to July

Business Daily | 3

September 11, 2015

Macau

GDP contraction to stay, unemployment gradually edging up The economic slowdown is expected to persist throughout the year, while the unemployment rate will gradually edge up to at least 2 per cent in the coming 12 months, an economist and banker predict Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he city’s unabated gaming slump and the adverse factors of the recent Chinese yuan depreciation and stock market crash means that the economic contraction is here to stay for the rest of the year, with unemployment likely to climb to at least 2 per cent in the coming 12 months, economist Ricardo Siu Chi Sen and Delta Asia Financial Group chairman Stanley Au Chong Kit believe.

Mr. Au, also the president of the Small and Medium Enterprises Association of Macau, told media on Wednesday that he believed the city’s adjustment phase for gaming industry will last for at least three years, despite the city completing new Cotai casino-resorts in the coming two years.

The banker also believes that the gaming operators would not take on many new recruits, and may even have plans to downsize.

“The economic contraction is sure to remain for Macau for the rest of the year, but the decline for the third and fourth quarter could see a narrower deceleration rate compared to the first two quarters,” associate professor in business economics at the University of Macau (UM) Ricardo Siu Chi Sen, told Business Daily.

Mr. Siu said he estimated that the gross gaming revenue here will contract by about 30 per cent in the third quarter and below 30 per cent in the last quarter of this year.

A narrower decline is likely for the city’s gross domestic product (GDP) in the current and fourth quarter as there will be stimulated tourism demand induced by new openings of gaming and entertainment

complexes (such as Melco Crown Entertainment’s Studio City). The effect of adverse policy factors such as Beijing’s anti-graft drive has already been “largely reflected in the market”, Mr. Siu said.

“There’ve been some unforeseeable factors that took place [last month] – the yuan depreciation and the stock market crash in China – which have impacted the wealth effect, so that will affect non-gaming consumption here and eventually also impede economic growth,” Mr. Siu said.

Macau’s GDP dropped 26.4 per cent year-on-year in real terms for the quarter ended June 30, according to official data. This is a decline that has accelerated from the 24.5 per cent year-on-year drop evident in the first quarter of this year against the backdrop of the city’s unrelenting decline in gaming revenue.

In the April to June period, the exports of gaming services plunged 40.5 per cent, while exports of other tourism services fell by 21.5 per cent compared to a year ago.

The city’s GDP growth for 2014 contracted 0.4 per cent in real terms, which was nearly flat when compared with the previous year.

Slightly higher unemployment

Delta Asia chairman Stanley Au believes that the city’s unemployment rate could further climb by two to three percentage points in future and his expectation that the gaming companies will not overly increase employment opportunities.

The unemployment rate remained at a low 1.8 per cent in the three months ended June 30, unchanged from the trimester ended May 31,

according to official data. The number of workers unemployed was also steady at 7,200 in the April-June period.

“I think it’s possible that the unemployment rate will edge up to 2 per cent to 2.5 per cent in the coming 12 months, which is about 10,000 unemployed people,” Mr. Siu forecast.

“There are ongoing VIP gaming room closures, and the high-end retail industry here has also been impacted by fewer gamblers’ visits,” he said.

“So that means the retail labour force would meet some adjustments . . .

People have the mentality that as the remuneration offers in [highend] retail or gaming are not as good as before, they will wait and see for a better opportunity to join the market,” Mr. Siu said. “And that would mean a higher unemployment rate is possible.”

For Mr. Au, the economic contraction and a likely slight increase in the unemployment rate means more breathing space for the small and medium enterprises (SMEs) here, as he reckons that the labour shortage issue faced by SMEs could be gradually alleviated.

4 | Business Daily

September 11, 2015

Macau

Bon Jovi Live in Macau Gaming Literature going ahead opinion

The cancellation of the American band’s concerts in Beijing and Shanghai won’t affect the scheduled performances in Macau

Pedro Cortés

Lawyer* cortes@macau.ctm.net

C

ome Tuesday, my good friends Fernando Vitória and Óscar Madureira will launch a book titled ‘Gaming law in Macau’ in Fundação Rui Cunha.

Despite it only being – for now – in one of the official languages of Macau (yes, my friends, Portuguese is still an official language) what will be highlighted is that Macau lacked and still lacks literature, doctrine and studies on its major industry. People in Macau write about everything. From Christian churches to Taoist temples, from Macanese food to rickshaws. But when it comes to the major industry, scholars (with some exceptions), people in the industry, and others seem to be afraid of writing, as if it is a metaphysic matter residing in the hands of the gods and that cannot be discussed, understood by the common people or even transported to other jurisdictions as an example.

Truth be told, Fundação Rui Cunha has played a very important role in the development of doctrinal studies and in the discussion of various matters, especially legal matters that are part of the heritage of Macau and that have played a very important role in the economic boom Macau has enjoyed. Unlike some tendencies that from time to time show up and are voiced in some forums, I am of the view that, among other factors, Macau became and is what it is – the biggest casino gaming player in the world – because a structured legal system existed and was kept after the handover. This was a victory of the Joint Declaration between Portugal and the People’s Republic of China which led to the Basic Law of Macau and, of course, of the successive Governments of Macau since 1999 that soon understood that the system could not be disrupted and that the Declaration and the Basic Law should be accomplished, respected and implemented in their terms.

Our legal system was and is capable of defying the challenges that society faces.

Hopefully, it will not be destroyed and the principles will be kept intact.

Returning to the launch of the book, a compilation of the laws, history and evolution of the gaming industry in Macau, a glossary of the terms normally used and jargon is very useful. I do sincerely hope that some of the legal operators find no excuse not to read it and understand what the laws and regulations of the most important industry in Macau are.

A big round of applause to Fundação Rui Cunha and to the authors of the book for this initiative and hopefully we may have other names coming out with more books and studies on this not so complex sub-field of law. *Part-time Lecturer at the Chinese University of Hong Kong

F

or the moment, the Bon Jovi concerts scheduled for 25th & 26th September at Cotai Arena in The Venetian – with tickets ranging from MOP580 to MOP3,580 (US$73 to US$448) – ‘are still planned to go ahead as scheduled’, despite the band’s abrupt concert cancellations in Mainland China.

Donna Campbell, Director of Public Relations at Sands China, told Business Daily that “to date the company have done an extensive marketing campaign in both Hong Kong and Macau to promote the concerts.”

However, with regards to a press conference prior to the event or interview sessions with artists as Cotai Arena often stage, the company said that they have not had any confirmation of this from the promoters AEG.

‘Unexpectedly cancelled’

Bon Jovi’s two concerts next week in Beijing and Shanghai — with tickets ranging from Rmb480 to Rmb3,880 (US$75 to US$600) — were abruptly cancelled this week.

Tour organiser AEG Live Asia issued a statement on its official Sina

Weibo microblog account announcing the cancellation of the concert ‘due to unforeseen reasons.’

‘We will offer refunds to all fans who purchased tickets,’ it said. ‘We deeply regret the inconvenience and disappointment it may cause you.’

It is believed the concerts were scrapped because the band used an image of the Dalai Lama as a backdrop at a gig in Taiwan in 2010, the Financial Times reported.

The concerts were to have been Bon Jovi’s first in China and had been eagerly promoted by band members. In August, Jon Bon Jovi sang in Mandarin on a recording of the Moon Represents My Heart, a popular love song, as a “special gift to Chinese fans” before the dates.

Sensitive time

The issue of Tibet remains sensitive in China, especially now as this week also marks the 50th anniversary of the founding of the Tibet Autonomous Region which was established on September 1, 1965, following the establishment of the regional People’s Congress, the local legislature, which meant that the people of Tibet could elect deputies to Congress.

State news agency Xinhua reported that a ceremony is to be held in the square in front of the Potala Palace in Lhasa, capital of the Tibet Autonomous Region, to celebrate the occasion with the attendance of top Chinese political advisor Yu Zhengsheng heading a 65-member delegation from the central government.

The ruling Communist Party is alert to any perceived support from foreign governments and celebrities for the exiled Tibetan spiritual leader, whom they denounce as a separatist.

Wynn Resorts sues Ctrip.com Hong Kong for trademark infringement

C

asino-resort operator Wynn Resorts Holdings LCC has sued China e-travel ticketing service Ctrip.com (Hong Kong) Ltd. for the latter’s trademark alleged trademark infringement and unauthorised use of images of Wynn Macau Hotel, Hong Kong’s Chinese-language news outlet hk.on.cc reported yesterday.

The action has been lodged with the High Court of Hong Kong.

Citing the background to Wynn Resorts’ action, the report said that

the casino operator had reached an agreement with e-travel agent Ctrip’s Macau subsidiary in 2011 to promote and market Wynn Macau Hotel. The contract expired in September last year.

Regardless, Ctrip has continued displaying Wynn’s registered trademark and the copyrighted photos of its hotel in Macau, according to the reported action content.

Wynn Resorts has asked for a court order to restrain Ctrip from using the company’s trademark and images.

The casino operator has also asked for compensation for the infringement although the amount was not specified in the report.

Shanghai-headquartered Ctrip, known as Ctrip.com International, Ltd., is a well-known online travel agency service in China which offers hotel reservations, flight and train ticketing services as well as corporate travel management.

S.L.

Business Daily | 5

September 11, 2015

Macau UMAC Honours College holds admissions ceremony The University of Macau Honours College held an admissions ceremony on Wednesday to welcome 50 new students selected from over 140 candidates. These students will undertake various training courses and activities offered by the Honours College, which is mainly aimed at developing their potential and leaderships skills. Beside this, these 50 individuals will study abroad for one semester in various universities to develop an understanding of cultural fluency. At the admissions ceremony, UM University Council Chair Dr. Lam Kam Seng and Rector Wei Zhao presented admission certificates to the 50 new students. On the same evening, the Honours College also received a calligraphic work by Ambrose So Shu Fai, who, besides being CEO of SJM Holdings, is also a calligrapher and recipient of an honorary doctorate from the University of Macau.

Industrial sector receipts up 15 pct for 2014

M

acau’s receipts from industrial establishments were up 15.2 per cent year-on-year in 2014 to MOP10.91 billion (US$1.39 billion) boosted by higher revenue registered in the food products and beverages manufacturing sector, the production of cement and concrete, and the increase in local power generation and rising natural gas supply, according to the latest data released by the Statistics and Census Service.

Analysed by industry, the total receipts of manufacture of food products and beverages continued to rise last year due to growing

visitor demand, up 33.5 per cent year-on-year to MOP1.95 billion.

With increased infrastructure construction, total receipts from the manufacture of other nonmetallic mineral products (mainly cement and concrete) was up nearly 30 per cent to MOP2.24 billion.

Owing to the increase in local power generated and the rising supply of natural gas, the total receipts of the electricity, gas and water supply sector increased 16.6 per cent to MOP3.11 billion.

In 2014, the manufacturing business of wearing apparel registered eight consecutive

years of decline: total receipts from this sector decreased 31.2 per cent year-on-year to MOP695 million.

For all of the 864 industrial establishments in operation last year, the gross surplus – total receipts less intermediate consumption and compensation of employees – grew 14 per cent year-on-year to MOP2.14 billion.

The gross value added of these industrial establishments, a value that measures sector contribution to the economy, increased 12.6 per cent to MOP4.18 billion.

S.L.

6 | Business Daily

September 11, 2015

Macau

Local entrepreneurs embracing Hengqin start-up hub More business opportunities, preferential policies and an inspiring ambience head the reasons several young Macau entrepreneurs are venturing into a new business start-up hub in Hengqin

T

he Inno Valley HQ is one of the major projects of Hengqin further deepening exchanges and integration with Macau, as the island is included as part of the China (Guangdong) Pilot Free

Trade Zone that officially kicked off in April.

An inspiring ambience is one of the key appeals Inno Valley HQ - a newly launched business start-up hub on nearby Hengqin Island - holds for young Macau

entrepreneur Samson Hoi Kai Fong. In other words, an atmosphere in which people from different backgrounds and industries can work together under the same roof with the same goal, and has a kick to it.

“It’s very important that Inno Valley has fostered an inspiring atmosphere with a group of business starters working side by side like a kind of big family. It’s much more meaningful than [just] providing financial subsidies,” said Mr Hoi, who graduated from university in 2012.

“Different ideas could come up when brainstorming with [people from] different industries,” he added.

His company is among the first 30 Macau teams and companies setting foot in the hub, which they believe could provide more than office space. From an enlightening atmosphere to business opportunities and preferential policies, they are betting on this platform to propel their businesses to new heights.

Operated by Hengqin Financial Investment Co. Ltd., a financial firm controlled by the Hengqin New Area authorities, Inno Valley HQ promotes itself as

“a one-stop services platform for business starters”. The 128,105 square metre area has zeroed in on Macau starters aged 18 to 45, reserving a certain amount of floor space for projects or companies from Macau, Hengqin Financial said in a statement.

The hub ‘focuses on resolving the top four difficulties of Macau youngsters in running a business in Mainland [China]’ - namely, business registration, recruitment, financing and development - the company added.

Prior to the opening of the first phase of the 30,000 square metre hub on June 29, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac, praised the initiative of the Hengqin authorities during a site inspection.

The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com

Gaming promoter: potential full smoking ban in casinos will severely impact their business Embracing the headwinds in the sector, the junkets anticipate the predicament will last for at least two more years

C

ompared with a share of some 70 per cent of the territory’s gaming revenue in early 2010, the revenue generated by VIP rooms only accounted for 55.5 per cent of the total in this year’s second quarter, the lowest on record since such data was made available in 2005.

The gaming industry trade group of promoters, also known as junket operators, has come under the spotlight in the past few months from hosting forums to meeting officials to releasing strongly worded statements in newspapers. The reason behind this change is not difficult to divine as declared by its president, Kwok Chi Chung (pictured) - their survival is on the line.

“We have stayed low profile for nearly three years as we are a peculiar industry. It’s not appropriate for us to publicly make comments all the

time,” he said. “So why do we voice out this time? It’s because a full smoking ban [in casinos] will have an extremely severe impact upon the business of gaming promoters.”

In addition to a proposed smoking ban, the local junket business has taken a beating from a pervasive crackdown on corruption in Mainland China while the gaming operators are also working on developing the mass market. But Mr. Kwok, speaking in an interview in mid-August, believes they will survive, emerging from the current predicament in a more transparent and businesslike manner.

In a carefully worded response avoiding the mention of graft, Mr. Kwok attributed the slump to “a mix of factors”, explaining: “As economic growth [on the Mainland] is slowing, Mainlanders don’t have much money to gamble here. It’s also

quite normal to see an adjustment in the gaming revenue, which has grown exponentially for a decade following market liberalisation [in the early 2000’s].”

In response to accusations that the sector is often linked to crime and money laundering, Mr. Kwok said: “Macau is a small community so it’s not unusual for people to have friends or relatives with triad links but this doesn’t mean we will bring this into our operation.”

Acknowledging the territory has “mature” regulations in governing the sector, he nevertheless agrees it is time to improve the overall legal framework in a bid to catch up with the changes in the junket business.

The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com

8 | Business Daily

September 11, 2015

Greater China

Deflation fears persist despite rising price

The consumer price index rose 2 percent from a year earlier to a one-year high but prod Pete Sweeney and Winni Zhou

C

hina’s manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflation risks in the economy and adding to expectations for further stimulus measures.

The producer price index (PPI) fell 5.9 percent in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed yesterday.

The market had expected a decline of 5.5 percent after a drop of 5.4 percent in July.

“The change in PPI is very worrying. It could affect corporate profitability, which in turn could affect consumption and the economy,” said Li Huiyong, economist at Shenyin & Wanguo Securities.

“We must step up policy support.”

The consumer price index (CPI) rose 2 percent from a year earlier to a one-year high, the National Bureau of Statistics said, but the gain was due largely to soaring food prices, not an improvement in economic activity.

Analysts polled by Reuters had predicted CPI would rise 1.8 percent, compared with 1.6 percent posted the prior month.

Indeed, non-food inflation remained subdued at 1.1 percent, unchanged from July.

“The risk for China is still deflation, not inflation. PPI deflation will eventually filter down to affect CPI, and aggregate demand will continue to be weak,” said Kevin Lai, chief economist Asia Ex-Japan at Daiwa, adding his firm had just cut its 2016 CPI forecast to -0.5 percent from 0.5 percent.

“In addition all the capital outflows (due to the slowing economy) will force the PBOC to continue purchasing

yuan, which is hugely destructive to the monetary base,” he said.

Vicious cycle

Continuously falling producer prices are eating into profits at many Chinese firms and raising the relative burden of their debts. Official and private factory surveys last week also showed manufacturers laid off workers at a faster rate last month as their order books shrank.

The central bank has cut interest rates five times since November and more reductions are expected in

coming months, but many economists believe real rates are still too high, discouraging new investment.

Economists at ANZ said further policy easing is needed soon to head off the risk of a vicious cycle of slower growth and deflation. They expect the central bank to cut banks’ reserve requirements (RRR) by another 50 basis points by year-end.

Data earlier this week showed imports tumbled more than expected in August while exports shrank again, pointing to persistently weak demand both at home and abroad.

Hong Kong yuan deposits likely to fall despite stabilisation efforts The Hong Kong Monetary Authority will release its August deposit figure at the end of this month Michelle Chen

H

ong Kong’s yuan deposits are expected to shrink in coming months as investors fear further weakening in the currency, despite a slew of measures from Beijing to steady the yuan and curb speculation after its surprise devaluation last month.

The People’s Bank of China (PBOC) will require banks trading currency forwards in China to keep the equivalent of 20 percent of their clients’ forex forwards positions in dollar reserves from October 15, aiming to dampen bearish bets on its currency, sources have told Reuters.

In addition, the State Administration of Foreign Exchange (SAFE) has instructed banks to bolster management of foreign exchange transactions and pay attention to suspicious FX transactions involving large amounts and frequent payments.

But these measures have yet to reverse weak sentiment on the Chinese currency since the August 11 devaluation.

Offshore spot yuan still trades at a deep discount to the onshore spot, suggesting

foreign investors are more bearish on the yuan’s outlook.

The wide spread between the two rates, which is now hovering around four-year highs, discourages Chinese

importers from moving yuan funds to offshore markets to convert to dollars, which used to be a crucial channel for yuan accumulation in Hong Kong.

Meanwhile, the lower

yuan/dollar FX rate in the world’s biggest offshore yuan centre is prompting exporters to do conversions here and move yuan funds back to the mainland, draining offshore yuan liquidity.

Companies have already started to convert their yuan to other currencies. Hong Kong fashion retailer I.T said it had converted all of its yuan fixed deposits, amounting to 1.187 billion yuan (US$185.95 million), into Hong Kong dollars.

The company said it expected to record a foreign exchange loss of approximately HK$60 million which may have a substantial negative impact on its profits.

More companies may follow suit as they were caught off guard by the PBOC’s unexpected move to weaken its currency by nearly 2 percent, which exposed them to big FX losses due to the yuan deposits they hold.

Banks are increasing interest rates to draw in new yuan funds. Bank of China Hong Kong, the yuan clearing bank in the former British colony, is offering 3.8 percent for seven-day yuan deposits to clients that convert Hong Kong dollar deposits to yuan.

Hong Kong is not alone in facing such pressures. Other offshore yuan centres where yuan deposits recorded impressive growth have also seen their yuan pools shrinking.

Reuters

Business Daily | 9

September 11, 2015

Greater China Beijing opens onshore currency market to foreign central banks

index

ducer prices decreased

Auto sales dip in August

More than 60 global central banks and sovereign wealth funds have invested in yuan-denominated assets

KEY POINTS Deflationary pressures may be intensifying Reinforce expectations of more stimulus measures August CPI +2.0 pct y/y (f’cast +1.8 pct, prev +1.6 pct) August PPI -5.9 pct y/y (f’cast -5.5 pct, prev -5.4 pct)

Other data from China this week - including industrial output and investment on Sunday - are likely to be downbeat, keeping financial markets on edge. Fears of a Chinaled global slowdown have grown in recent weeks after a series of grim factory activity surveys.

The chairman of the National Development and Reform Commission (NDRC) said on Wednesday that China’s economic fundamentals are healthy while still facing relatively large downward pressure.

Reuters

C

hina will allow foreign central banks to trade in the onshore foreign-exchange market, Premier Li Keqiang said in a keynote speech at a World Economic Forum meeting yesterday.

The nation will keep the yuan stable at a reasonable, equilibrium level, he said. Overseas monetary authorities have already been granted access to China’s interbank bond market, encouraging them to hold yuandenominated assets in their reserves.

“Not long ago, we allowed foreign central banks to participate in the interbank bond market,” Li said.

“The next step is to allow foreign central banks to directly participate in the interbank foreign-exchange market. Before the end of this year, we will complete the cross-border yuan payment system that facilitates the development of the offshore yuan market.”

The move will help further China’s push for the yuan to join the dollar, euro, yen and pound in the International Monetary Fund’s Special Drawing Rights basket of

reserve currencies. A key indicator used to determine qualification is a currency’s share of official reserves and the yuan ranked seventh last year, behind the four SDR members as well as the Australian and Canadian dollars, according to the IMF.

Global holdings

More than 60 global central banks and sovereign wealth funds have invested in yuan-denominated assets, with combined holdings of around US$70 billion to US$120 billion, Standard Chartered Plc estimated in a report published in May. “This is a step toward China’s capital account opening, but the significance depends on how specifically the PBOC will open the onshore market and whether foreign central banks will participate,” said Liu Dongliang, a Shenzhen-based analyst at China Merchants Bank Co. “The yuan will be less volatile and the market will be less speculative as central banks make long-term and stable investments.”

Bloomberg News

HNA plans mainland’s first Islamic finance deal

Auto sales in China were flat in the first eight months of the year and could drop this year for the first time since the market took off in the late 1990s.

Sales in the world’s largest auto market fell 3 percent in August from a year earlier to 1.7 million vehicles, dented

by China’s slowest economic growth in a quarter of a century, an industry association said yesterday. That’s not as weak as July’s 7.1 percent drop, but sales have now fallen for five straight months, the longest losing streak in at least five years.

Dell says to invest US$125 bln Computer maker Dell Inc will invest US$125 billion in China over the next five years, its chief executive said yesterday, as the company continues to expand in the world’s second-largest economy.

The world’s third-largest maker of personal computers said the investment would contribute about US$175 billion to imports and exports, sustaining more than one million jobs in China. “The Internet is the new engine for China’s future economic growth and has unlimited potential,” Chief Executive Michael Dell wrote in a statement.

Government fines Dongfeng Nissan A provincial branch of China’s state planning agency yesterday it would fine one of Nissan Motor Co Ltd’s joint ventures in China 123 million yuan (US$19.27 million) for fixing prices. The Guangdong branch of the National Development and Reform Commission (NDRC) said it would also fine 17 dealers of Dongfeng Nissan a total of 19.1 million yuan after discovering the automaker had made price fixing agreements with its dealers. A Nissan spokesman in Hong Kong said the Yokohama-based automaker was “currently looking into the precise nature of the fine”.

Islamic finance has boomed on the back of strong economic growth in its core markets of the Gulf and southeast Asia, but FDI rises 22 pct y/y such pools of capital remain mostly untapped by Chinese firms China attracted 54.2 billion yuan

(US$8.49 billion) in foreign direct investment (FDI) in August, up 22 percent from a year earlier, the official Xinhua news agency said yesterday, citing data from the Commerce Ministry. No further details were given. Earlier official data showed FDI inflows in July rose 5.2 percent from a year earlier to 50.6 billion yuan.

Bernardo Vizcaino

H

NA Group, owner of Hainan Airlines, is planning the first Islamic financing deal by a mainland Chinese company, highlighting a growing push by China’s private firms to find funding overseas as domestic loans remain scarce and costly.

The shipping and airlines conglomerate plans to raise up to US$150 million in Islamic loans in October to buy ships, said Andrew Kinal, managing director of Genevabased Shariah Advisory Group (SAG), which is advising on the deals.

HNA’s financing arm will then issue “a very large offshore sukuk”, or Islamic bonds, of benchmark size before yearend, said Kinal, which typically means of at least US$500 million.

“A mix of global and Gulfbased banks are working on this transaction,” he said.

Though it will be the first shariacompliant financing used by a mainland Chinese company, Kinal does not expect it to be the last.

“This first Chinese Islamic transaction is just the beginning for

Islamic finance into China,” he said.

Islamic finance has boomed on the back of strong economic growth in its core markets of the Gulf and southeast Asia, but such pools of capital remain mostly untapped by Chinese firms.

As China’s economy heads for its weakest growth in a quarter century, the central bank has cut lending rates and trimmed reserve requirements to spur economic growth, but this has not translated into cheap financing for private firms.

“State-owned enterprises enjoy privileged access to the loan market, so their cost of financing is lower, but for private companies this is different,” said Hong Kong-based Ben Ping Chung Cheung, SAG’s AsiaPacific head.

“The availability of credit is lower for them, so this is feeding interest into offshore funding sources.”

Islamic finance is a growth area for global financial centres including Britain, Hong Kong and Luxembourg, which have all issued debut sukuk over the past year.

KEY POINTS

Commerce Ministry anticipates growing exports this year

HNA to raise US$150 mln Islamic financing in Oct to buy ships Also plans Islamic bond of at least US$500 mln by year-end Geneva-based Shariah Advisory Group advising on the deals Hong Kong tapped the market for a second time in May, a US$1 billion deal, as part of efforts to attract mainland firms to issue sukuk of their own.

HNA Group, which posted revenue of 170 billion yuan (US$27 billion) in 2014, has been on a spending spree this year, agreeing to buy stakes in air cargo handler Swissport International Ltd and Irish-based aircraft leasing firm Avolon Holdings Ltd. Reuters

China’s exports will see positive growth this year while the decline in imports will ease, state media quoted the commerce ministry as saying yesterday. The fundamentals of China’s foreign trade have not changed, the official Xinhua news agency quoted Wang Dongtang, deputy director of the ministry’s Foreign Trade Department of as saying. China’s imports shrank far more than expected in August, falling for the 10th straight month and adding to global investors’ concerns that the world’s second-largest economy may be slowing more sharply than earlier expected. Exports in August dropped 5.5 percent from a year earlier, slightly less than a 6.0 percent decline forecast in a Reuters poll, but improving from an 8.3 percent drop in July.

10 | Business Daily

September 11, 2015

Greater China

Like it or not, Shanghai’s crude oil futures will be a global benchmark The contract will better represent China’s growing importance in setting crude prices, increase the yuan’s role as an international currency and offer a measure of national pride Henning Gloystein

C

hina’s push to establish a crude derivatives contract has been met with early scepticism, but oil executives say the country’s growing economic influence means a third global crude benchmark is inevitable.

A derivatives contract would give the Shanghai International Energy Exchange, known as INE, a slice of an oil futures market worth trillions of dollars, offering a rival to London’s Brent and U.S. West Texas Intermediate (WTI).

And while others have tried and failed, China brings its might as the world’s biggest oil buyer, a strong dose of political will and the alignment of its financial and banking system for a yuan-denominated contract.

“The energy industry is still manned, literally, by people from the West. But the world moves on, and there’s a change of guard,” said a senior market executive, speaking on the side-lines of a major industry gathering in Singapore this week, at which delegates spoke on condition of anonymity.

“China has become the world’s biggest oil trader, and that means that an oil price will be set there, like it or not.”

Shanghai’s INE is in the final stages of launching crude oil futures, perhaps as early as October, although sources said delays were likely due to market turmoil.

The contract would better represent China’s growing importance in setting crude prices, increase the yuan’s role as an international currency and offer a measure of national pride.

It would also allow traders to arbitrage between major global regions, the Americas, Europe/Middle

KEY POINTS Chinese crude benchmark all but inevitable-executives Rise of China’s crude futures expected to be gradual Competitors, incumbents are not sitting idle

East/Africa (EMEA) and the Asia/ Pacific.

Others, like the Dubai Mercantile Exchange (DME), have tried to establish an Asian benchmark, but have so far failed to attract sufficient liquidity to dominate the region.

Market participants also have concerns relating to the large size of China’s state-owned oil majors, recent moves by regulators to influence the country’s share markets, and the use of the yuan.

“The market doesn’t like the idea of a benchmark dominated by the world’s biggest consumer, where the regulator is suspected of having the goal of lowering prices,” said an executive with a non-Chinese exchange in Asia, speaking at the same event.

Global clout

The current benchmark for pricing oil in Asia in the absence of a derivatives contract is the Dubai crude assessment, run by Platts, part of McGraw Hill Financial, where trading in a specified time-frame is used to assess a daily price.

Yet traders have been concerned at heavy trading by China’s state-owned Chinaoil and Unipec, which pushed up Middle East grades even as other grades were being pressured lower, and left other companies struggling to take part.

China’s largest independent refiner, Shandong Dongming Petrochemical Group, said it was one of the first companies to call for Chinese crude futures despite some concerns.

“We’re concerned that the two big companies could be too strong in terms of financing,” said Shandong Dongming director Zhang Liucheng.

“They’re like aircraft carriers and we’re just a small sampan (Chinese wooden boat).”

Having a yuan-denominated contract could also limit the takeup of Shanghai’s derivatives contract.

“I think it will initially mainly be used as a forex (foreign exchange) play between the dollar and yuan,” said the head of trading with a major oil merchant.

China will still face competitors, including incumbent Platts, oil trading hub Singapore which is also keen to introduce a crude oil futures contract, and DME. Additionally, regional animosity will be hard for China to overcome.

“We can participate in TOCOM (Tokyo Commodity Exchange).

(There’s) no reason to go to Shanghai,” said Masashi Nakayama, general manager of the crude oil and tanker department at Japan’s Cosmo Oil. But many executives see the success of a China contract as a given, even if the take-up is gradual.

“One-by-one, the oil-majors will start to participate, then others will follow,” said an executive with a Western oil major. “While it might take some time to establish itself due to choppy markets and regulatory hurdles as well as the fact that it would introduce a foreign exchange element to crude futures, it is overdue for a Chinese contract to established.”

Reuters

BlackRock CEO advises government on stock volatility The firm, the world’s largest asset manager, is ramping up its investments in China across the board Jessica Toonkel

B

BlackRock headquarters

lackRock Chief Executive Officer Larry Fink travelled to China in August to advise the Chinese government on how to handle stock market volatility, CNBC reported on Wednesday, citing sources.

The Chinese government invited Fink to consult them on the situation, according to the CNBC report.

A BlackRock spokesman declined to comment.

This would not be the first time that government officials have turned to Fink for advice. Last October, U.S.

Treasury officials turned to Fink for guidance after a flash crash in the U.S. Treasury market.

BlackRock Inc, the world’s largest asset manager, is ramping up its investments in China across the board.

The firm is looking to increase its China real estate portfolio exposure and has been snapping up shares of Chinese companies listed on the Hong Kong exchange after the recent declines.

On Monday, the firm secured an additional US$400 million quota to invest in

Chinese markets, in one of the largest one-time approvals granted by the authorities to invest in the mainland.

The Chinese stock market has fallen over 40 percent since mid-June, prompting a volley of government measures including pushing domestic investors to buy shares, questioning them over trading strategies and a probe into market volatility that has elicited public confessions of wrongdoing from brokers, a regulator and a journalist.

Reuters

Business Daily | 11

September 11, 2015

Asia

New Zealand’s central bank cuts rates The RBNZ cuts its 90-bank bill forecast to reflect an additional rate cut in the coming months Charlotte Greenfield and Naomi Tajitsu

N

ew Zealand’s central bank cut its benchmark interest rate yesterday and said a further economic slowdown in China, the country’s biggest trading partner, could lead to more rate cuts if it weakened growth in the island nation.

The Reserve Bank of New Zealand (RBNZ) cut its official cash rate (OCR) by 25 basis points to 2.75 percent as widely expected, its third cut in as many policy reviews.

“Some further easing in the OCR seems likely,” RBNZ governor Graeme Wheeler said in a statement. “This will depend on the emerging flow of economic data.”

Weak dairy prices and plummeting business and consumer confidence were weighing on growth, Wheeler said. The RBNZ cut its 90bank bill forecast to reflect an additional rate cut in the coming months, and reduced its economic growth and inflation forecasts.

Westpac chief economist Dominick Stephens said the RBNZ had foreshadowed the possibility of new lows for interest rates. “It’s certainly not what the RBNZ is currently thinking, but alternative scenarios have an unfortunate habit of coming true.”

Reserve Bank of New Zealand headquarters

The RBNZ cut its outlook for global growth in its quarterly policy statement, and outlined a scenario where a sluggish Chinese economy might push New Zealand’s OCR towards 2.0 percent in the next year - which would be a record low.

“Conditions that probably would be needed to create a recession in New Zealand would be something like

China slowing dramatically or perhaps moving into a recession,” Wheeler told reporters. “That would certainly create huge problems in Australia and ourselves.”

Though most economists believe a gradual and prolonged slowdown in China’s economy is more likely, a stock market crash and unexpected yuan devaluation last month have

rattled confidence, inside and outside China.

“The big worry would be if China really started to significantly devalue the RMB (yuan),” Wheeler said, estimating China’s current growth rate at around 5-6.5 percent, versus the official 7 percent forecast.

“We’ve seen authorities basically say they want to stabilise the RMB but if there

Slide in Japan’s machinery orders ramps up monetary pressure The central bank is expected to offer a bleaker assessment on overseas economies at next week’s policy review

were to be a very substantial depreciation in the RMB it would certainly export deflation around the rest of the world, so everybody is looking closely at China.”

The RBNZ said falls in the New Zealand dollar helped support some growth, but it needed to fall further to offset to lower commodity prices, particularly for dairy exports.

Reuters

KEY POINTS July core machinery orders -3.6 pct m/m vs f’cast +3.7 pct Manufacturers’ orders -5.3 pct; service sector -6.0 Govt cuts view to say pickup in orders seen stalling

Tetsushi Kajimoto

July core machinery orders +2.8 pct y/y vs f’cast +10.5 pct

J

apanese machinery orders unexpectedly fell for a second straight month in July, ratcheting up pressure on the Bank of Japan (BOJ) to offer fresh stimulus, perhaps as early as next month, to re-energise an economy struggling to recover from a slump.

A string of soft data in recent weeks has raised questions about the BOJ’s economic optimism, especially as fears of a deepening slowdown in Japan’s major trading partner China has rattled global financial markets.

Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, fell 3.6 percent in July, the Cabinet office data showed yesterday.

That followed a 7.9 percent monthon-month decline in June and was far worse than a 3.7 percent increase expected by economists.

“While uncertainty remains high about China and global economy, poor orders, particularly at the service sector, reflect persistent weakness in domestic demand,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“The BOJ may ease policy further in October, but additional easing would not be enough to achieve its inflation target.”

Many analysts cast doubt on the BOJ’s optimism that a steady economic recovery will help bring inflation to its 2 percent goal by around September 2016.

Not helping the BOJ’s cause is a perceived reluctance by Prime Minister Shinzo Abe to embark on bolder reforms needed for durable growth.

As exports falter and the China gloom saps global growth, the BOJ is expected to offer a bleaker assessment on overseas economies at next week’s policy review, but many in the bank prefer to hold off on expanding stimulus for now.

Earlier yesterday, BOJ Governor Haruhiko Kuroda said timing for hitting inflation goal would vary depending on oil price moves.

Outlook gloomy

Worryingly, the Cabinet Office cut its assessment of core orders, saying a pickup is seen stalling.

A Reuters poll showed in July that two in five Japanese firms plan to boost capital spending this business year.

Policymakers have been hoping that companies will use hefty profits gained from a weak yen and lower fuel costs to boost wages and investment, generating a positive cycle of rising income and higher spending.

However, that scenario has yet to play out amid sluggish capital spending, persistent weakness in private consumption and soft exports.

Analysts cut Japan’s growth forecast to an annualised 1.67 percent in the current quarter, after a 1.2 percent contraction in April-June. The economy is expected to expand just 1.11 percent in the current fiscal year.

Reuters

12 | Business Daily

September 11, 2015

Asia

APEC nations eye closer financial integration amid gloomier outlook Coming only days after a meeting of finance ministers from the world’s 20 largest economies in Ankara, the APEC talks risk being overshadowed

It is imperative for APEC to further advance financial integration as a driver for intensified intra-regional trade and investment Roberto Tan, Philippines’ National Treasurer

Filipino activists hold banners against the Asia-Pacific Economic Cooperation (APEC)

A

sia-Pacific nations must integrate their financial markets more closely to boost trade and investment, the Philippines’ national treasurer told a meeting of finance ministry officials from the Asia-Pacific Economic Cooperation (APEC) group yesterday.

“It is imperative for APEC to further advance financial integration as a driver for intensified intra-regional trade and investment,” National Treasurer Roberto Tan said, even as China’s slowdown clouds economic prospects.

Tan was speaking at the start of a meeting of finance ministers from the 21-member bloc on the Philippine resort island of Cebu.

He also called for fiscal reforms to make policy more effective, and stressed the importance of publicprivate partnerships in financing the region’s infrastructure needs, estimated by the Asian Development Bank at US$800 billion a year.

“For this to materialise, bankable projects have to be identified in the pipeline and capital markets

developed,” he said.

The Cebu meeting takes place amid growing concern over slower growth in China, the world’s secondlargest economy, and recent ructions in global financial markets following Beijing’s devaluation of its yuan currency last month.

APEC’s members include the United States, China, Japan, South Korea, Indonesia and Canada, and together account for 57 percent of global production and 46.5 percent of world trade.

In public, delegates have refrained from expressing concerns about China, but one source at the closeddoor talks said a lack of financial market integration was partly to blame for recent market swings.

“If China adhered to market forces it should have adjusted more gradually,” he said, asking not to be identified because of the sensitivity of the issue.

Coming only days after a meeting of finance ministers from the world’s 20 largest economies in Ankara, Turkey, the APEC talks risk being overshadowed.

This year, only a handful of governments have sent ministers to represent them at the forum.

Asked if he was disappointed that so many ministers had chosen to skip the meeting, Philippine Finance Undersecretary Gil Beltran said that it was usual.

“That does not diminish our commitment to many of the initiatives that we agree on,” he said.

Peru is due to host next year’s APEC meetings, but its finance minister was among the no-shows.

Peruvian finance ministry official Fabier Roca Fabianis said the minister himself could not come because of political problems at home.

“This is not a measure of commitment - the presence or no presence of the ministers,” Fabianis said.

PM’s advisor suggests next month good opportunity for easing in Japan Isabel Reynolds and Takashi Hirokawa

T

he Bank of Japan (BOJ) should expand its monetary easing program by at least 10 trillion yen (US$83 billion), ruling Liberal Democratic Party lawmaker Kozo Yamamoto said in an interview yesterday, adding that its October 30 policy meeting would be a “good opportunity” to add stimulus.

Yamamoto said reaching the bank’s 2 percent inflation target in the first half of the fiscal year beginning April 2016 is an “absolute imperative,” and governor Haruhiko Kuroda

Reuters

budget if necessary, he said, and the funds should be spent on regional revival, helping struggling small- and mediumsized companies and people with low incomes.

China crisis

must fulfil his responsibility to explain if he fails. The BOJ is scheduled to release its next outlook report on the economy and inflation on October 30.

“Looking at the BOJ’s pattern of behaviour, that would be the easiest timing,” Yamamoto said at his offices in Tokyo. “They will probably be revising their outlook” downward, he added.

Last October, the central bank surprised markets by expanding its annual target for expanding the monetary base to 80 trillion yen from the previous 60-70 trillion

yen. The program has been primarily used to purchase government bonds in an effort to prime the economy and spur inflation. Still, the BOJ’s preferred price gauge, pressured by declines in oil, fell to zero percent for a third time this year in July.

“An OK for more easing from the political side increases the possibility for action, and that’s why the market reacted,” said Atsushi Takeda, an economist at Itochu Corp. in Tokyo. “The BOJ has no choice but to ease more. It’s obvious the economy has hit a snag.”

Given that more than two years of monetary easing has failed to spur price gains, some BOJ officials see a growing likelihood the bank will lower its inflation outlook, and again delay the time frame for reaching its target due to cheaper oil prices, people familiar with the discussions said.

Yamamoto, who has advised Prime Minister Shinzo Abe on economic policy, said an extra budget of 3.5 trillion yen to 5 trillion yen is needed to bolster the economy. New government bonds should be issued to fund the extra

Finance Minister Taro Aso told parliament earlier yesterday that an extra budget was not yet being discussed, adding that the government must closely examine the economy and consider the importance of balancing fiscal health with growth.

The BOJ is taking an overly optimistic view of the Chinese economy, Yamamoto said, adding that it is in an “extremely serious” state.

“Over-investment has resulted in bad debt, and it will take time to deal with that,” Yamamoto said. While the direct effect on Japan may be limited, China’s problems will gradually affect the global economy, he said.

Bloomberg News

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 editor editor@macaubusinessdaily.com newsroom newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

Business Daily | 13

September 11, 2015

Asia Australian jobs beat expectations

Indian inflation Sentiment for the Aussie was also weighed by media reports easing in August suggesting the August unemployment rate could have jumped Indian consumer inflation was expected to 6.5 percent to have slowed to a record-low in Au-

gust, hit by slack global energy costs and low food prices, a Reuters poll found, likely increasing pressure on the central bank to cut rates at its meeting later this month. The poll of over 30 economists, conducted this week, forecast inflation to ease to 3.6 percent in August year-onyear, from July’s already all-time-low of 3.78 percent. Signs of inflation cooling rapidly will likely increase calls for the Reserve Bank of India to cut interest rates at its September meeting.

Ian Chua

T

he Australian economy created slightly more jobs than expected in August while the jobless rate edged lower as expected, helping take some pressure off the downbeat local dollar.

Employment rose by 17,400 in August, well ahead of the median economists’ forecast for a rise of 5,000, figures from the Australian Bureau of Statistics showed yesterday.

Crucially, most of the increase came from full-time positions, which climbed 11,500.

The unemployment rate edged down to 6.2 percent as expected, off a 13-year high of 6.3 percent in July.

“The jobless rate appears to be peaking, and not too far above the perceived natural rate of unemployment near 5.5 percent,” said Craig James, chief economist at CommSec. “Australia is clearly on the right track. More jobs are being created and forward-looking indicators like job advertisements suggest that job creation will continue.”

Sentiment for the Aussie was also weighed by media reports suggesting the August unemployment rate could have jumped to 6.5 percent, partly because of the government’s recent move to tighten requirements for receiving unemployment benefits.

Malaysia’s industrial output up

The worry was that this could have forced more respondents in the ABS labour force survey to identify as actively seeking work, pushing up the participation rate and in turn the unemployment rate.

Instead, yesterday’s data showed the participation rate edged down to 65.0 percent, from 65.1 percent.

The employment-to-population ratio, which expresses the number of employed persons as a percentage of

the population aged 15 years and over, held steady at 61.0 percent in August.

“Overall, today’s August labour market update was more robust than expected,” said Annette Beacher, chief economist at TDSecurities.

“This report is consistent with recent Reserve Bank of Australia rhetoric. Subsequently, today’s report contains next to no implications for monetary policy or rates.”

Reuters

S&P director warns of Chinese impact on South Korea’s economy In a note to clients earlier yesterday, S&P cut growth forecasts of several countries, including South Korea, due to weaker global trade and worries over China’s economy Christine Kim

C

hina poses a bigger risk to South Korea’s economy and its sovereign credit ratings than an anticipated Federal Reserve rate hike as Beijing’s policies have become more unpredictable, a senior director at Standard & Poor’s said yesterday.

“In the very short term, like one to two years, there’s a limit to how much worse it (the Chinese economy) can get because the government still has a lot of resources it can control to offset any problems,” Kim Eng Tan, S&P’s Asia-Pacific senior director of sovereign and international public finance ratings, told Reuters in an interview.

But in the long term, he said, China’s economic problems “could become more serious”.

Tan said recent policy changes by the Chinese government have created uncertainties and sparked investor concerns over how well the government can contain risks.

“Something has changed in the policy settings of China that we have to watch closely,” he said, adding that there is “decreasing confidence in their ability to manage risks in the country as they rebalance. If this perception worsens, it will be more costly for them to achieve economic growth.”

The S&P director said it was “strange” how the Chinese government had wanted to boost stock market prices. When these fell again, “they had no choice but to intervene”, he said.

For South Korea, S&P has a sovereign rating of A+, with a positive outlook.

In a note to clients earlier yesterday, S&P cut growth forecasts of several countries, including South Korea, due to weaker global trade and worries over China’s economy.

S&P now forecasts South Korea will grow 2.7 percent this year and 2.8 percent next year, from the previous projections of 3.0 and 3.2 percent, respectively.

China is South Korea’s largest trading partner, accounting for more than one-fifth of its smaller neighbour’s total foreign trade.

Reuters

Malaysia’s July industrial production rose 6.1 percent from a year earlier, well above market predictions, due to manufacturing and mining sector growth, data from the Statistics Department showed yesterday.

A Reuters poll of economists had forecast annual industrial output would grow 4.8 percent. Output in June was 4.3 percent.

Data from earlier this month showed July’s exports rose 3.5 percent from a year earlier due to an increase in demand for electrical and electronic goods. Malaysia’s manufacturing Purchasing Managers’ Index for August, however, charted its lowest readings in nearly three years.

India approves mobile airwaves trading India allowed telecom carriers to trade unused mobile airwaves, a move aimed at improving services in the world’s second-biggest market by number of mobile customers. Spectrum sharing guidelines were issued by the government in August, but leasing was not allowed. On Wednesday, telecoms minister Ravi Shankar Prasad said buying and selling of unused airwaves would be allowed for all spectrums and companies would not need government approval for these transactions. However, if sample checks show that “the undertaking is wrong then action will be taken, including the cancellation of the trading agreement,” he said.

Japan Post IPOs aim to raise US$11.7 bln The listings of Japan Post Holdings Co and its huge bank and insurance units will seek to raise a combined 1.4 trillion yen (US$11.7 billion), with each company offering about 10 percent of their outstanding shares, a source with direct knowledge of the deal said. The triple IPOs together represent the country’s biggest privatisation since the 2.4 trillion yen (US$20 billion) listing of Nippon Telegraph and Telephone Corp (NTT) in 1987.

The source said Japan Post Holdings will set an indicative price of 1,350 yen per share, Japan Post Bank 1,400 yen a share, while Japan Post Insurance 2,150 yen.

Hyundai Motor union Something has changed votes for strike in the policy settings of China that we have to watch closely Kim Eng Tan, S&P’s Asia-Pacific senior director of sovereign and international public finance ratings

Workers at South Korea’s largest automaker Hyundai Motor have voted to strike unless a deal is reached over a wage dispute, a union spokesman said yesterday. Of the union’s 48,585 members, some 89 percent took part in Wednesday’s vote, with 78 percent supporting possible strike action, said spokesman Hwang Ki-Tae. “Technically, the union is now able to launch a strike as early as Monday next week. “However, we would like to reach a deal with management peacefully,” Hwang told AFP.

14 | Business Daily

September 11, 2015

International World food commodity prices plunge The price of international food commodities slumped in August to their lowest level in almost seven years, the Food and Agriculture Organization said yesterday. The UN body said the prices of almost all commodities measured in its Food Price Index dropped last month, including milk, vegetable oils, sugar and cereals. “Ample supplies, a slump in energy prices and concerns over China’s economic slowdown all contributed to the sharpest fall of the FAO Food Price Index in almost seven years,” it said in a statement. In contrast, meat prices in August remained virtually unchanged from the previous month.

U.S. job openings hit record high U.S. job openings surged to a record high in July and employers appeared to have trouble filling openings, the latest signal of an increasingly tight labour market that could push the Federal Reserve closer to raising interest rates. The monthly Job Openings and Labour Turnover Survey, or JOLTS, is one of the job market metrics on Fed Chair Janet Yellen’s so-called dashboard. It was published ahead of the U.S. central bank’s September 16-17 policy meeting. Job openings, a measure of labour demand, increased 430,000 to a seasonally adjusted 5.8 million.

Lloyd’s of London H1 profit drops The Lloyd’s of London insurance market posted a 28 percent drop in first-half pretax profit yesterday and said pricing remained tough in a competitive market.

The insurance and reinsurance markets have attracted new players in recent years, drawn by high returns compared with other markets. “We are in an intensively competitive environment at the moment because of the attractive returns,” chief executive Inga Beale told Reuters, adding this meant “there has been some pressure on pricing”. Pretax profit for the half-year ending June 30 fell 28 percent to US$1.83 billion, the firm said.

German Econ Minister forecasts growth Germany’s economy is on a solid growth path and an expansion of 1.8 percent both this year and next is realistic, Economy Minister Sigmar Gabriel said yesterday.

Economic growth is bringing in higher tax receipts than expected, Gabriel told the Bundestag lower house of parliament.

Turning to the influx of refugees pouring into Germany, Gabriel said this was, “probably the biggest national, European challenge since reunification” in 1990.

Credit Agricole may pay US$900 mln in sanctions France’s Credit Agricole SA is nearing an agreement to pay about US$900 million to resolve investigations into whether it illegally moved funds through the United States for blacklisted individuals and countries such as Sudan and Iran, according to a person familiar with the matter. Talks are on-going and the total penalty, negotiated by multiple U.S. agencies, could change. A second source described the current settlement as in the “high hundreds of millions” and suggested it could reach a US$1 billion. The bank is expected to reach an accord as soon as this month.

S&P cuts Brazil’s sovereign credit rating to junk The government also announced in August that the economy was officially in recession and that the contraction could extend through 2016 Sebastian Smith

S

tandard & Poor’s cut Brazil’s sovereign credit rating to junk, citing the struggle by President Dilma Rousseff’s government to master growing debt and political turmoil.

“We are lowering the long-term foreign and local currency ratings on Brazil to ‘BB+’ and ‘BBB-’ respectively,” the agency said in a statement.

The junk rating is a blow to Brazil’s foundering economy because it could drive off investors just when Rousseff and her finance minister, Joaquim Levy, are battling to balance the books.

Analyst Andre Leite at TAG Investimento noted that Brazil now finds itself rated lower than Russia, which is under painful international sanctions over its support for separatists in neighbouring Ukraine.

“If another rating agency also lowers Brazil, then very probably we’re going to see institutional investors obliged to pull their money out,” Leite said.

Last month Levy, who has tried to steer Brazil to health with austerity measures, presented the country’s first ever deficit budget for 2016 and he is now under pressure to raise taxes despite heavy opposition in Congress.

“The political challenges Brazil faces have continued to mount, weighing on the government’s ability and willingness to submit a 2016 budget to Congress” consistent with economic targets, Standard & Poor’s said.

“The negative outlook reflects what we believe is a greater than one-in-

Brazilian President Dilma Rousseff waves to the crowds during the military parade marking Brazil’s Independence Day, in Brasilia, Brazil.

three likelihood of a further downgrade due to a further deterioration of Brazil’s fiscal position,” the agency said in its statement.

Other risks in Brazil include “potential key policy reversals given the fluid political dynamics, including a further lack of cohesion within the president’s cabinet or due to greater economic turmoil than we currently expect.”

Planning Minister Nelson Barbosa said the downgrade was a “surprise” but not insurmountable.

“This news is not good but it can be reversed and we are working to do so. The Brazilian government has all the tools to resolve the country’s fiscal issue,” he said.

Corruption and instability

Standard & Poor’s reasoning reads like an investor horror show, starting with “spill over effects” from the stillunfolding corruption scandal centred

on state-owned oil giant Petrobras.

Petrobras lost US$2.1 billion in a scheme where top Brazilian executives and politicians are said to have robbed the company by cooking up inflated construction contracts in exchange for bribes.

That scandal, which continues to grow, has badly hurt investor confidence and contributed to rockbottom approval ratings for Rousseff, with some in Congress pushing for her impeachment.

Rousseff has not been accused, but she chaired the board at Petrobras between 2003 and 2010, when much of the alleged corruption was flourishing.

As her political stock dwindles, Rousseff has found it harder to push unpopular reforms that had been hoped would bring order to an economy suffering badly from the worldwide drop in commodities prices.

Last week, markets were shaken by rumours -- later denied -- that Levy was resigning.

Standard & Poor’s said the political situation did not augur well.

“The series of events leading to the budget proposal suggests to us diminished cohesion within President Rousseff’s cabinet and contributes to our assessment of a weaker credit profile.”

Brazil saw boom years peaking with 7.5 percent economic growth in 2010. But analysts say Latin America’s biggest country -- the host of next year’s Summer Olympics -now faces a prolonged downturn.

AFP

U.S. to focus more on executives in criminal cases Yates said companies would not get credit for cooperating with investigators unless they identify all employees responsible for crimes and turn over all evidence against them

T

he U.S. Justice Department has issued new guidelines that emphasize prosecuting individual executives in whitecollar crime cases, and not just their corporations.

Deputy Attorney General Sally Yates, author of a memo outlining the rules for federal prosecutors, was to announce the guidelines in a speech yesterday at the New York University Law School.

The memo, first obtained by the New York Times, came in response to criticism that the Obama administration had not vigorously pursued individuals in the financial meltdown and housing crisis of 2008-2009 and in various corporate

scandals, the newspaper said.

“Crime is crime,” Yates planned to say in her address, according to excerpts released by the Justice Department.

“And it is our obligation at the Justice Department to ensure that we are holding lawbreakers accountable regardless of whether they commit their crimes on the street corner or in the board room,” she added. “In the white-collar context, that means pursuing not just corporate entities but also the individuals through which these corporations act.”

By going after individuals, Yates said the Justice Department wanted to “change corporate culture to appropriately recognize the full costs

of wrongdoing, rather than treating liability as a cost of doing business.”

Yates said companies would not get credit for cooperating with investigators unless they identify all employees responsible for crimes - regardless of executive rank or seniority - and turn over all evidence against them. Civil and criminal attorneys both should focus on individuals from the beginning of an investigation, the memo said.

It also said cases against corporations should not be resolved unless there is a clear plan to resolve related cases against individuals.

Yates said companies would not be allowed to let low-level employees take the blame in criminal cases.

Business Daily | 15

September 11, 2015

Opinion Business

wires

Fed up with the Fed

Leading reports from Asia’s best business newspapers Joseph E. Stiglitz

Nobel laureate in economics, is University Professor at Columbia University

TAIPEI TIMES The national treasury collected NT$117.9 billion (US$3.6 billion) in tax revenues last month, a 9.1 percent increase from a year earlier, thanks to an income levy on cash dividends received by foreign investors, the Ministry of Finance said.

Personal income tax revenues totalled NT$63.2 billion last month, with foreign investors paying NT$42.3 billion, or 20 percent of their overall cash dividends distributed by local companies from profits earned last year, the ministry said.

That meant foreign investors gained NT$211.5 billion last month alone from holding shares in local companies, the ministry said.

VIETNAM NEWS The Ministry of Finance has proposed to increase special consumption tax on imported goods to ensure fair competition between locally manufactured products and imported ones. Under the current regulations, the special consumption tax on imported goods is calculated keeping in mind their cost, insurance, and freight value plus current import tariff.

However, the ministry said the import tax on automobiles and air-conditioners would be lowered to zero under the country’s commitment to international integration. The current special consumption tax on imported goods would not ensure fairness between local and imported items.

THE STRAITS TIMES DBS Bank and global ratings agency Moody’s Investors Service have sharply lowered their Singapore economic growth forecasts for this year to below 2 per cent.

They both blamed factors such as the recent stock market turbulence and China’s economic slowdown for the hefty revisions - now below the official 2 to 2.5 per cent forecast range. DBS also cited subdued global growth, especially in the United States.

The bank slashed its 2015 forecast to 1.8 per cent, down from its forecast of 2.4 per cent in July.

THE TIMES OF INDIA Indian e-commerce’s bad boy and former Housing CEO Rahul Yadav is close to raising US$15 million from entrepreneurs for his new venture - a data analytics cum data viewing company, which will be integrated with 3D viewing and virtual reality format. “Majority of the US$15-million mark is pretty much approved inprincipal. For funds, he has only approached entrepreneurs he has genuine respect for.

He has not, so far, got any corporate entity to invest for his new venture but successful entrepreneurs, who are ready to back his idea,” a source told Times of India.

A

t the end of every August, central bankers and financiers from around the world meet in Jackson Hole, Wyoming, for the US Federal Reserve’s economic symposium. This year, the participants were greeted by a large group of mostly young people, including many Africanand Hispanic Americans.

The group was not there so much to protest as to inform.

They wanted the assembled policymakers to know that their decisions affect ordinary people, not just the financiers who are worried about what inflation does to the value of their bonds or what interest-rate hikes might do to their stock portfolios. And their green tee shirts were emblazoned with the message that for these Americans, there has been no recovery.

Even now, seven years after the global financial crisis triggered the Great Recession, “official” unemployment among AfricanAmericans is more than 9%.

According to a broader (and more appropriate) definition, which includes part-time employees seeking full-time jobs and marginally employed workers, the unemployment rate for the United States as a whole is 10.3%. But, for African-Americans – especially the young – the rate is much higher. For example, for AfricanAmericans aged 17-20 who have graduated high school but not enrolled in college, the unemployment rate is over 50%.

The “jobs gap” – the difference between today’s employment

and what it should be – is some three million.

With so many people out of work, downward pressure on wages is showing up in official statistics as well. So far this year, real wages for non-supervisory workers fell by nearly 0.5%.

This is part of a long-term trend that explains why household incomes in the middle of the distribution are lower than they were a quarter-century ago.

Wage stagnation also helps to explain why statements from Fed officials that the economy has virtually returned to normal are met with derision.

Perhaps that is true in the neighbourhoods where the officials live. But, with the bulk of the increase in incomes since the US “recovery” began going to the top 1% of earners, it is not true for most communities.

The young people at Jackson Hole, representing a national movement called, naturally, “Fed Up,” could attest to that.

There is strong evidence that economies perform better with a tight labour market and, as the International Monetary Fund has shown, lower inequality (and the former typically leads to the latter). Of course, the financiers and corporate executives who pay US$1,000 to attend the Jackson Hole meeting see things differently: Low wages mean high profits, and low interest rates mean high stock prices.

The Fed has a dual mandate – to promote full employment and price stability. It has been more than successful at the second, partly because it has been less than successful at the

first. So why will policymakers be considering an interest-rate hike at the Fed’s September meeting?

The usual argument for raising interest rates is to dampen an overheating economy in which inflationary pressures have become too high. That is obviously not the case now.

Indeed, given wage stagnation and the strong dollar, inflation is well below the Fed’s own 2% target, not to mention the 4% rate for which many economists (including the International Monetary Fund’s former chief economist, Olivier Blanchard) have argued.

Inflation hawks argue that the inflation dragon must be slayed before one sees the whites of its eyes: Fail to act now and it will burn you in a year or two. But, in the current circumstances, higher inflation would be good for the economy.

There is essentially no risk that the economy would overheat so quickly that the Fed could not intervene in time to prevent excessive inflation. Whatever the unemployment rate at which inflationary pressures become significant – a key question for policymakers – we know that it is far lower than the rate today.

If the Fed focuses excessively on inflation, it worsens inequality, which in turn worsens overall economic performance. Wages falter during recessions; if the Fed then raises interest rates every time there is a sign of wage growth, workers’ share will be ratcheted down – never recovering what was lost in the downturn.

The argument for raising interest rates focuses not on the wellbeing of workers, but that of the financiers. The worry is that in a low-interestrate environment, investors’ irrational “search for yield” fuels financial-sector distortions. In a well-functioning economy, one would have expected the low cost of capital to be the basis of healthy growth. In the US, workers are being asked to sacrifice their livelihoods and wellbeing to protect wellheeled financiers from the consequences of their own recklessness.

The Fed should simultaneously stimulate the economy and tame the financial markets.

Good regulation means more than just preventing the banking sector from harming the rest of us (though the Fed didn’t do a very good job of that before the crisis). It also means adopting and enforcing rules that restrict the flow of funds into speculation and encourage the financial sector to play the constructive role in our economy that it should, by providing capital to establish new firms and enable successful companies to expand.

I often feel a great deal of sympathy for Fed officials, because they must make close calls in an environment of considerable uncertainty. But the call right now is not a close one. On the contrary, it is as close to a no-brainer as such decisions can be: Now is not the time to tighten credit and slow down the economy.

Project Syndicate

16 | Business Daily

September 11, 2015

Closing China increases quota for net yuan inflows

Mercedes beats Audi to take second place in luxury-car sales

The People’s Bank of China (PBOC) has increased the quota for net yuan inflows under a cross-border pooling scheme that enables companies to transfer the yuan between their onshore and offshore entities freely, two sources told Reuters yesterday.

The scheme that was allowed in the Shanghai free trade zone (pictured) and later expanded to the whole country last year could help multinational companies optimize their cash management and enhance capital efficiency. The PBOC has a formula to calculate how much funds are allowed to enter China on a net basis, and the coefficient it uses was increased from 0.1 to 0.5, said the sources with direct knowledge of the matter.

Mercedes-Benz outsold Audi in the eight months through August to become the world’s second-biggest luxury-car maker, as both Audi and BMW struggled to match its sales growth in China. Mercedes delivered 1.19 million vehicles in the period, 10,880 cars more than the 1.18 million at Volkswagen AG’s Audi. The Daimler AG brand last outsold Audi on an annual basis in 2010.

Mercedes profited from soaring sales of its mid-range C- Class sedan and its sport-utility vehicles and also from China, where it was the only one of the top three luxury-car makers to see sales grow in August. “We expect Mercedes to overtake Audi this year and stay ahead for the next two,” said Marc-Rene Tonn, an analyst with Warburg Research.

Hedge fund bets against emerging market currencies get crowded China’s slowdown has dampened prospects for commodity-linked and emerging markets Netty Ismail

H

edge funds are piling into bets that the dollar will gain against emerging-market currencies, especially those vulnerable to falling commodity prices, according to a money manager which invests in the funds.

The popularity of the trade will fuel volatility in those currencies should such funds adjust their positions, said Sam Diedrich, a director at Pacific Alternative Asset Management Co., which oversees about US$9.5 billion in hedge-fund investments.

“It’s become a crowded trade,” Diedrich, who is based in Irvine, California, said in an interview by phone.

“Long term, I still think the trade works, but you could see some large swings.”

A gauge of emergingmarket currencies slumped to a record this week as China’s shock devaluation of the yuan on August 11 triggered a global market rout, sapping demand for

higher- yielding assets. The currencies of developing nations -- from Malaysia to South Africa to Brazil -were the worst performers against the greenback in the past month.

China’s slowdown has damped prospects for commodity-linked and emerging markets, with Standard & Poor’s cutting Brazil’s credit rating to junk

100,000 pilots needed over next 2 decades in China

on growth concerns. A further devaluation of the yuan could hurt Asia’s currencies, infecting emerging markets elsewhere, Diedrich said.

Dollar bulls

“Long-term structural bullish dollar positions are still out there,” he said. “There are a lot of reasons to think that U.S. dollar strength will continue for quite some time,

particularly against emerging markets.”

While traders have pared bets the Federal Reserve will raise interest rates when it meets next week, the prospect of monetary tightening as early as O cto b e r w i l l p r o b a b l y support the greenback, Diedrich said. The outlook for swings in global foreignexchange rates as measured

China curbs conventional gas output

C

by a JPMorgan Chase & Co. gauge rose to a seven-month high this week.

“The volatility in portfolios has increased and it’s led to a good deal of de-risking,” Diedrich said. “Given the light positioning overall, I don’t think it’s a big trade necessarily in hedge funds to be betting one way or the other on a Fed hike.”

Bloomberg News

Japanese nuclear plant begins commercial operations

C

A

hina will need at least 100,000 new civil aviation pilots over the next 20 years, Boeing Commercial Airplanes forecast yesterday.

The Asia-Pacific region will have the greatest demand for commercial airline pilots and technicians worldwide over the next 20 years, approximately 40 percent of the global need, said Boeing in its 2015 Boeing Pilot and Technician Outlook, which projects aviation personnel demand.

China’s needs will account for the largest share, Boeing said, adding that around 106,000 airline maintenance technicians will be necessary over the coming years.

“By 2034, the Asia Pacific region will need about 226,000 new pilots and 238,000 technicians, providing huge career opportunities,” said Sherry Carbary, vice president of Boeing Flight Services.

According to Boeing’s 2015 Current Market Outlook, 14,330 new airplanes, worth US$2.2 trillion, will be needed in the Asia-Pacific region by 2034.

China is the world’s fastest growing aviation market. Mounting air traffic needs more planes and qualified pilots.

hina’s state energy giants are reducing output from conventional natural gas fields as demand growth for the fuel eases to a multi-year low, local media and sources said, although shale gas targets are being maintained.

Sinopec Corp and PetroChina have restricted production at two major conventional fields Puguang and Anyue - in the Sichuan gas basin, as a cooling economy curbs fuel use by industries like chemical plants and glass and ceramics makers.

By end-August, Sinopec had closed 12 wells at Puguang, one of the country’s largest with annual production capacity of 12 billion cubic metres (bcm), and planned to shut in another 15 wells, the Sichuan Daily reported, citing a Sinopec official at Puguang.

Sinopec said Puguang was pumping at a daily commercial rate of 10 million cubic metres, which was half the amount at the start of the year, as reported by the paper. The production loss was equivalent to roughly 3 percent of national output.

Puguang is competing with rising production at the Fuling shale gas project, China’s first and largest commercial shale discovery, as well as at the nearby conventional Yuanba gas field.

Japanese nuclear power plant started commercial operations yesterday for the first time after two years of shutdown triggered by the Fukushima crisis.

Utility Kyushu Electric Power said a reactor at Sendai, about 1,000 kilometres southwest of Tokyo, started “normal operation at 4 pm (0300 PM) following final inspections” conducted by the Nuclear Regulation Authority on the day.

The plant reached full power generation at the end of last month and is now ready to supply the Kyushu region.

But the same day an anti-nuclear citizen group submitted a request to close the plant to Kagoshima prefecture where the reactor is located, according to public broadcaster NHK. The 31-year-old reactor was restarted in August under tougher post-Fukushima safety rules as the government pushes to return to a cheaper energy source despite widespread public opposition.

The restart came after a quake-sparked tsunami in 2011 swamped cooling systems and triggered reactor meltdowns at the Fukushima plant, prompting the shutdown of Japan’s 50 reactors and starting an impassioned public debate over the use of atomic power.

Xinhua

Reuters

AFP