Macau Business Daily September 16, 2015

MOP 6.00

Sands China Ltd. names Wilfred Wong President and COO

Closing editor: Joanne Kuai

Chinese brokers look at Singapore’s futures markets after locals shut down

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Beijing increases fiscal spending to stimulate growth Page 9

Year IV

Number 881 Wednesday September 16, 2015

Publisher: Paulo A. Azevedo

Foreign exchange reserves MOP145 billion in August Page 2

Cards on the Table An almost unbelievable state of affairs. The overriding most important economic pillar of Macau has had no real literary representation. Not since gambling was legally sanctioned in the territory in 1847. That has now changed. With the launch of a book titled ‘Law on Gaming in Macau – Evolution, History and Legislation’. Authors Fernando Vitória and Óscar Alberto Madureira say gaming’s dominance should be reflected upon and studied. And that the book will serve as a timely tool for professionals of all stripes Page

Ja Alai to open mid-2016 Casino Jai Alai lives in hope.

Renovation works restarted in May 2015. Following a year of suspension pending gov’t approval. SJM said in its interim report it had entered into capital commitments in connection with the Jai Alai renovation project.

Jai Alai Palace is expected to open mid-2016

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You have mail They’re back. Text messages and ads promoting illegal online gaming. The Office of the Secretary for Security says tackling fake base stations is an ongoing priority. Regional co-operation with Zhuhai authorities is key. As are supporting laws, say officials

www.macaubusinessdaily.com

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Overly concerned China’s stocks slumped for a second day. In thin turnover amid concern gov’t measures to support the world’s second-largest equity market and economy are failing. The Shanghai index posted its biggest two-day loss in three weeks

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Buck stops at Dore

HSI - Movers September 15

Name

%Day

Tencent Holdings Ltd

+2.50

China Resources Enter

+1.43

Power Assets Holding

+1.07

CLP Holdings Ltd

+0.93

Want Want China Hol

+0.76

New World Developme

-2.40

Sun Hung Kai Propertie

-3.28

China Resources Powe

-3.77

Cheung Kong Property

-3.96

Belle International Ho

-5.20

Source: Bloomberg

I SSN 2226-8294

Not such a big hit for the operator. Credit Suisse analysts say junket operator Dore Entertainment contributed about 4 pct of Wynn Macau’s annual EBITDA. The alleged multimillion dollar defrauding of Dore’s capital by a previous employer is the junket’s concern, they say. Around 40 people petitioned Gov’t HQ yesterday seeking help to withdraw funds of up to HK$100 million

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Telecommunications

The Walking Wireless 4G services are on the way. Macau had 1.86 million mobile subscribers as at end-July. A 12 pct increase y-o-y. 3G prepaid users account for 1.19 million, post-paid 0.67 million, with 1,332 consumers using 2G services. In July, Internet usage reached 81.88 million hours

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2 | Business Daily

September 16, 2015

Macau

Gov’t to launch public tender for cross-border zone sewage treatment

T

he city’s Environmental Protection Bureau (DSPA) told Business Daily that as the draft works for the public tender for the operation and maintenance of the sewage treatment plant in Zhuhai-Macau Cross Border Industrial Park nears completion, the government is striving to begin operations soon.

Currently, the consortium of Waterleau and ATAL Engineering Ltd. is running the operation and maintenance services at the crossborder zone’s sewage treatment plant.

The service term expires in the first quarter of 2016.

A government dispatch issued on Monday revealed that the government will pay the consortium MOP3.27

million for the said services for this year and next. The government has already paid the consortium for these services since 2012, previous dispatches published in the Official Gazette show.

‘To protect the public interest and ensure that the operation and maintenance of the sewage treatment facilities [at Zhuhai-Macau Cross Border Industrial Park] do not encounter any interruption the MSAR Government has extended the service term with the operating consortium [Waterleau and ATAL] with the same articles as the previous contract that will last until the first quarter of 2016,’ DSPA said in a written reply to Business Daily.

Waterleau and ATAL had had links with the high-profile corruption trial of former Secretary for Transport and Public Works Ao Man Long.

The Court of First Instance ruled in March last year that the former chief executive of Waterleau Global, Luc Vriens, and the then management member at ATAL Fong Chun Yau were guilty of bribing Mr. Ao to ensure their success in building and operating the wastewater treatment plants in the cross-border zone and Coloane.

S.L.

Foreign exchange reserves MOP145 billion in August

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he preliminary estimate of Macau SAR’s foreign exchange reserves amounted to MOP145 billion (US$18.17 billion) at the end of August 2015, according to the foreign exchange reserves and nominal effective exchange rate index for the pataca of August 2015, released by the Monetary Authority of Macao yesterday.

The reserves increased by 0.3 per cent from the revised value of MOP144.6 billion (US$18.11 billion) for the previous month. The city’s foreign exchange reserves at endAugust 2015 represented 13 times the currency in circulation or 105.7 per cent of Pataca M2 at end-July 2015.

The trade-weighted effective exchange rate index for the pataca rose 0.96 points month-on-month and 8.01 points year-on-year to 105.71 in August 2015, implying that overall the pataca appreciated against the currencies of Macau’s major trading partners.

Illegal online gaming ads resurgent, tackling fake base stations a priority The Office of the Secretary for Security says that supporting laws are important but admits that legislation or revision of regulations is obligation of other departments and consensus must be reached first Joanne Kuai

joannekuai@macaubusinessdaily.com

T

ext messages and advertisements promoting illegal online gaming have made a comeback.

Despite Judiciary Police and the Bureau of Telecommunications Regulation’s (DSRT) efforts made tackling junk message stations – usually referred to as ‘fake base stations’ in Macau sending out such messages recently, legislator Chan Meng Kam said many residents reported that the phenomenon had resurged and questioned the effectiveness of the government’s operations.

In a written reply to the legislator’s enquiry, Cheong Ioc Ieng, Chief of the Office of the Secretary for Security, said such criminality has the characteristics of being very profitable at low cost, with criminal punishment relatively light, resulting in its high likelihood of making a comeback.

The security sector says they’ve enhanced patrols

around the Border Gate on a regular basis and have asked property management companies to be alert to suspicious individuals. Ms. Cheong said the mission for tackling junk messages has been made by the Secretariat as a priority and is ongoing.

Despite agreeing with the legislator that supporting lawful means and systems is fundamental, the police force admitted that making laws or revising laws lies in other specific departments’ hands.

The office chief wrote that with regard to legislation, discussions and consultations must be made and consensus reached. The police force will make analysis and appraisals and report immediately in order to give advice in preparation for future lawmaking.

Regional co-operation

The security office says that tackling junk message stations

requires co-operation with Zhuhai authorities, pointing out that since November last year four operations have been launched, with three cases involving cross-border crime.

Besides a long-term cooperation mechanism, Macau and Zhuhai have established intelligence exchange, based on the mutual consent that such criminality is a crossborder operation.

Zhuhai authorities can open a case if they receive reports from affected telecommunications companies from Mainland China; when Mainlanders are arrested in Macau, Judiciary Police can transfer the information on identification of the suspects and relevant operations to Zhuhai police, with the approval of the Macau Public Prosecutor’s Office.

The police are also aiming to further investigate arrested criminals to seek their employers and mastermind behind the organisation so that the crime will be stifled from origin.

Previously, at this year’s policy address of the Secretary for Security, Wong Sio Chak said that police action had had a limited effect in preventing others from setting up junk message stations because the punishment was relatively light, usually involving imprisonment for less than one to three years. Also, if the offender is not local, he or she would be deported and banned from entering Macau but these people can still operate the stations in Mainland China.

Business Daily | 3

September 16, 2015

Macau

Mobile subscribers increased 12 per cent in July While the territory awaits the introduction of 4G services, the number of mobile subscribers continues to increase, reaching 1.86 million in the seventh month of the year João Santos Filipe

jsfilipe@macaubusinessdaily.com

I

n July, the number of mobile services subscribers in the territory increased 12 per cent yearon-year to 1.86 million from 1.67 million, according to data from the Bureau of Telecommunication Regulation (DSRT).

While 4G technology is only expected to be a reality in the late third quarter, the majority of mobile subscribers are 3G prepaid users accounting for 1.19 million. At the same time, the 3G postpaid subscribers total 0.67 million, while the number of 2G postpaid and prepaid users stood at 1,332.

For the period considered both outgoing international calls and local mobile SMS messages declined from 26.81 million minutes to 21.21

million minutes and from 10.69 million messages to 8.74 million, respectively.

By contrast, the use of one SIM card with two numbers –

the main number being nonMacau, while the secondary is a local number – is becoming increasingly popular. In the seventh month of the year,

the number of people with two numbers on one card increased by more than one third (38.2 per cent year-onyear) from 44,711 to 61,797.

While traditional mobile services are less used by the Macau population, Internet usage is increasing at a fast pace.

More hours surfing Web

In July, the total hours of Internet usage in the territory increased 8.3 per cent yearon-year to 88.71 million hours from 81.88 million hours. Also, the number of total subscribers for Internet services increased by 6,904 (4.4 per cent year-on-year) to 164,002 from 157,098 in July 2014. Of these, the majority (163,824) are broadband subscribers while the remaining 86 are dial-up subscribers.

In relation to fixed services, the number of lines decreased 3.7 per cent year-on-year to 149,217 lines from 155,003. This decrease was mainly driven by the reduction in the number of residential telephone lines, which declined 6.2 per cent to 91,435 from 97,527 in July of last year. At the same time, the number of commercial lines increased by 306 to 57,782 from 57,476.

Still, according to DSRT data, in July there were a total of 552 commercial Wi-Fi hot spots from the operators in the territory, an increase of 223 from 329 in July 2014.

Concerning government WiFi Hot Spots there were 164 in July 2015, an increase from 147.

4 | Business Daily

September 16, 2015

Macau opinion

Puzzles

José I. Duarte Economist

W

e have just been told that the Identification Services Bureau (DSI) has been authorised (mandated?) to share information on some residents with Judiciary Police. Apparently, members of some local associations have been targeted; their number and characteristics were not specified. Legally, the Office for Personal Data Protection (GPDP) had to be consulted. The green light came in February, 2014. The fact is that this is only known now, as it is duly mentioned in the annual report of the data protection department.

As if this was not already puzzling enough, the data includes, or could include, information about their ‘world vision, political beliefs, political associations, trade union connections and religious views’.

Furthermore, the data might be transferred to other countries or territories, unidentified.

There are so many issues at issue that it’s hard to know where to start.

The first question that crossed my mind was: how does DSI know about our beliefs, political, religious or otherwise? Who told them? Where, in their legal remit, is the collection and recording of such data asserted? Fortunately, DSI moved later to the fore stating that it did not, and it was not its mission, to collect such information.

That service added to the argument that such information could presumably be surmised from the names and regulations of the associations. A reasonable argument, and one that may help us feel more at ease.

The names and statutes of associations are public, they are published in the Official Gazette, and anyone with an interest in the matter can access the information.

But then, inevitably, another question crossed our mind: if it’s that simple, why would the PJ need to ask for special access to information that is public, together with information that is private and sensitive, which would, on top of that, require a special authorisation

by GPDP? Or, as we are also told, PJ was granted access to that data (all associations data, or just a select few?) through a ‘special informatics system’ that allows them to ‘update their file’. Who is collecting and processing that information? What files are we talking about? All this seems strange; it is the least one can say.

The explanation given by PJ did not help to clarify the issue. The information was requested to ‘fight (and prevent, it appears to imply) crimes’ and to ‘support the judicial authorities’. Neither the nature of the crimes nor the support provided is defined. Restating the general job of PJ does not answer the questions raised. Are the criminal police trying to establish some connection between our beliefs and our criminal record, actual or potential?

We could go on, but enough has been questioned for a start. Some situations are like this: the more you ask and the more you learn about them, the less you understand and the foggier it gets. Is anyone in the public sphere willing to clarify what this is all about?

MGTO attends UNWTO General Assembly in Colombia

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he 21st Session of the World Tourism Organization (UNWTO) General Assembly was held in Medellín, the second largest city in Colombia from 1217 September. The Deputy Director of Macau Government Tourist Office (MGTO), Cheng Wai Tong, attended the Assembly and the activities concerned.

This Session of the General Assembly met under the theme ‘Tourism: Fostering Inclusive Development and Social Transformation’ for six days of meetings and activities including an opening ceremony, High-level Forum, Plenary sessions, Regional Committee Meetings for different regions, Tourism & Sustainability Committee Meeting, Tourism &

Competitiveness Committee Meeting and so on.

The High-level Forum was organised by the World Tourism Organization (UNWTO) and the International Civil Aviation Organization (ICAO) organised ‘Tourism and Air Transport for Development’.

Moderated by the SecretaryGeneral of UNWTO, Taleb Rifai, and the Secretary-General of ICAO, Fang Liu, the Forum focused on how closer co-operation between aviation and tourism can maximise the impact of both sectors on employment, inclusive growth and sustainable development.

Held every two years, the UNWTO General Assembly is the most important international meeting

attended by senior tourism officials and high-level representatives of the private sector from around the world.

Taleb Rifai said that this was one of the most attended General Assemblies ever, with close to 1,000 participants including over 72 ministers and State Secretaries and delegations from 115 countries/regions. This is the second time Colombia has hosted the event.

Chosen as the destination for the Assembly, Medellín is known as one of the most innovative cities and is well acclaimed for its integrated public transportation system, architecture, culture and art.

An associate member of UNWTO since 1981, Macau has been actively participating in the Organization’s meetings.

Le Saunda buys University of HK$955,320-worth Macau in world’s of its own shares best 650-700

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e Saunda purchased 456,000 of its own shares between Friday and Monday for HK$955,320, the company announced yesterday in a filing with the Hong Kong Stock Exchange.

According to the company involved in footwear manufacture and retail sales, the price for the shares ranged from HK$2.07 to HK$2.10 and the amount bought amounts to 0.064 per cent of the existing total number of shares issued by the company.

The fact that the Board of Directors considered that ‘the value of the company’s shares is consistently undervalued’ and that the current financial resources will allow the operation to go on without affecting ‘the solid financial position’ were the reasons cited for the decision.

T

he University of Macau (UM) is among the world’s best 650 to 700 universities, according to the ranking of specialists Quacquarelli Symonds (QS) Limited.

The American Massachusetts Institute of Technology (MIT) topped the list, while Tsingua University was best placed Chinese university (including SARs) taking 25th position.

The QS World University Ranking individually specifies the positions of the considered first 400 best universities, and then organises the remaining schools into groups of 50 until the 700th position. This is followed by a very large group titled 701+, where UM was placed last year.

The ranking takes into account academic reputation, employer reputation, student-to-faculty ratio, citations per faculty, international faculty ratio and international student ratio.

Business Daily | 5

September 16, 2015

Macau

Credit Suisse: Dore contributed about 4 pct of Wynn Macau’s EBITDA The junket operator contributed only about 4 pct of Wynn Macau’s annual EBITDA even before the alleged theft of capital took place, according to Credit Suisse Stephanie Lai

sw.lai@macaubusinessdaily.com

J

unket operator Dore Entertainment Co. Ltd., which is embroiled in an alleged theft of capital by a former cage staff member, contributed only about 4 per cent of casino operator Wynn Macau’s annual earnings before interest, taxation, depreciation and amortisation (EBITDA) prior to the incident, according to a note from Credit Suisse AG. “According to our check, the VIP room [Dore operates] in total generated around HK$7 billion in rolling chips in August at Wynn. This is equivalent to HK$200 million VIP gross gaming revenue (at 2.85 per cent win rate) or HK$20 million of EBITDA a month (assuming 10 per cent margin),” investment analysts Kenneth Fong and Isis Wong wrote.

“As such, even if we conservatively assume that business dropped by half, its annualised EBITDA impact would be HK$120 million or 2 per cent of our expected

HK$5.2 billion EBITDA for Wynn Macau in 2015,” Credit Suisse noted.

In an announcement filed on Monday, Wynn Macau said Dore owes no money to the company and continues to operate in its property.

Judiciary Police said yesterday that they were investigating the alleged theft reported by Dore and 27 of its investors/depositors.

Hong Kong-listed Sino Credit clarifies Dore link Hong Kong-listed firm Sino Credit Holdings Ltd. said the reported disputes surrounding junket operator Dore ‘have no connections to the group’ in a filing made after trading hours on Monday. Sino Credit, formerly known as Dore Holdings Ltd. changed the company’s name in January 2014; it is engaged in the financial leasing and pawnshop business. Sino Credit said that it had no longer engaged in or been involved in any VIP business since 2013, or with Wynn Macau casino since 2010.

The reports from the VIP room and the 27 investors cumulatively involved HK$280 million, according to police.

Call for help

As many as about 40 investors - all calling for the government’s help in public again to withdraw their cash deposits placed with Dore - delivered a petition to Government Headquarters yesterday led by legislator José Pereira Coutinho.

These investors/depositors demonstrated for the same reason on Saturday.

A common practice for junket operators here to raise capital for their rolling chip programmes is by offering private investors returns for their deposits at interest rates higher than the banks – despite the fact that the city’s casino regulator, the Gaming Inspection and Coordination Bureau (DICJ), has previously warned that

this format of absorbing deposits to raise capital is illegal.

“Many investors here are not aware of the legality issue of deposits placed with VIP gaming operators,” one of the complaining Dore depositors, Eric Lam, told Business Daily. “Ever since the VIP gaming business started in Macau, this format of raising capital has always been here. And some residents just join this kind of deposit programme and call for participation from their relatives and friends.”

“Some depositors have been offered 2 per cent interest per month for their money placed with Dore,” Mr. Chan continued.

“As we have learned, the biggest deposit placed by an individual investor in Dore was up to HK$100 million.”

A representative of the 40 demonstrating investors, Mr. Lei Chi Kam, spoke of an estimated HK$700 millionplus placed with Dore. Of

these investors, some are VIP gaming agents while others have been only depositing their money in the VIP room to earn higher interest, Mr Lei said.

The depositors’ representative added that they have so far not received any response from Dore for their request to withdraw their capital despite numerous attempts to reach the gaming promoter’s management.

‘Any matters related to Dore’s alleged failure to honour withdrawal of funds requests are related to Dore’s direct financial relationships with the parties requesting such withdrawals and accounts maintained directly between Dore and such parties,’ Wynn Macau said in its Monday filing.

‘The company hopes that all parties will be able to resolve their differences in the near future. The company will continue to monitor the situation.’

SJM: Revamped Jai Alai to open mid-2016

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asino operator SJM Holdings Ltd. says that the revamped Jai Alai project is expected to open around mid-2016, a date that has been dragged out by pending government approvals of the renovation works.

‘Renovation work was restarted on the former Casino Jai Alai premises in May 2015, which had been suspended since February 2014 pending receipt of government approvals,’ SJM said in its interim report filed on Monday.

The revamped Jai Alai property, a short walk from the Outer Harbour Ferry Terminal on the Macau Peninsula, is opposite SJM's Casino Oceanus, and will include a hotel

with approximately 130 rooms, restaurant and retail shops. But the interim report did not mention the intended gaming table allocation for the renovated Jai Alai property.

The casino operator said it had entered into capital commitments in connection with the Jai Alai renovation project of approximately HK$655 million (US$84.5 million) as at the end of June this year. The project is called Jai Alai Palace.

Speaking to media in late May this year, SJM chief executive Ambrose So Shu Fai mentioned that some HK$1 billion was to be invested in the revamp project.

S.L.

6 | Business Daily

September 16, 2015

Macau Sitoy opening store in The Venetian Macao Hong Kong-listed luxury handbags and leather goods manufacturer Sitoy Group Holdings Ltd. is opening a retail store in The Venetian Macao casino-resort in December, the company’s management told Hong Kong media on Monday. The planned opening of the store in Macau is part of Sitoy’s expansion of its retail brand Tuscan’s as well as Fashion & Joy throughout China, including Hong Kong. Retail business currently occupies 3.2 per cent of Sitoy’s overall revenue, a proprtion the group will seek to enlarge in future, the company’s management said.

Gaming dominance only three years after legalisation Fernando Vitória and Óscar Alberto Madureira have launched the book ‘Law on Gaming in Macau – Evolution, History and Legislation’ at the Rui Cunha Foundation João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

oday’s diversification of the Macau economy is the hot political topic in the territory. Notwithstanding the

overwhelming importance of this activity to the local economy, it has established itself much faster than is usually believed. This was

explained by Fernando Vitória, legal advisor to the Gaming Inspection and Co-ordination Bureau (DICJ) and co-author, in a partnership with lawyer Óscar Alberto Madureira, of the book ‘Law on Gaming in Macau – Evolution, History and Legislation’.

“It is interesting to look into the official documents and see that back in 1850, only three years after the legalisation for gambling in the territory [1847], the Government of Macau was already expecting revenues from gaming on Fantan stalls and Chinese lotteries to be much larger than any other activity, including the opium trade. We talk today a lot about diversifying the economy but the importance of gaming is really reality dating way back”, Fernando Vitória told Business Daily.

Tool for professionals

The authors say that the book, which was launched yesterday in

Sands China Ltd. names Wilfred Wong President and COO The new executive, who has business and government experience, replaces Rob Goldstein, incumbent president and COO of LVS, who has been serving as Sands China’s interim president

S

ands China Ltd., a majority owned subsidiary of global resort developer Las Vegas Sands, announced the appointment of Wilfred Wong, GBS, JP, as the company’s new president and chief operating officer, yesterday.

Mr. Wong’s appointment is effective November 1, 2015 and he will replace Rob Goldstein, current president and COO of LVS, who has been serving as Sands China’s interim president since earlier this year.

Sand China says Mr. Wong is joining the corporation having served in a variety of senior business roles, including most recently as chairman and chief executive officer of Hong

Kong-listed Hsin Chong Construction Group Ltd. Mr. Wong also held top management positions in a number of other Hong Kong-listed companies in the property development and

construction business sectors, including K. Wah International Holdings Limited, Henderson China Holdings Limited and the Shui On Group.

the Rui Cunha Foundation, is a tool for lawyers, jurists and judges that compiles the most important legal documents on gaming, such as laws and administrative regulations.

“The book is very specific and primarily targets people who work with the law, and are specifically related to the law on gaming in the territory. It is essentially a tool that gathers the main laws on gaming, administrative regulations and guidelines from DICJ”, the lawyer Óscar Alberto Madureira explained.

The volume is the result of an effort that took around one year to be complete. In addition to the legal documents, the glossary and the history on gaming, it includes the notes and interpretation from the authors on Law 16/2001, which defines the rules for the exploitation of games of fortune in the territory.

Macau gaming law education

In his conversation with Business Daily, Mr. Madureira said that it was important to have a course dedicated to the gaming law of Macau, which could be integrated into local law degrees. For the time being, there is no specific course in Macau law degrees focusing exclusively on gaming.

“Gaming is the main economic activity in the territory and the companies employing more people are the gaming operators. As such, there are many important questions directly and non-directly related to gaming that could be studied on these courses. Such courses could be very useful for future lawyers”, he said.

Initially, the book will only be published in Portuguese, but an English and Chinese version is expected at a later date yet to be announced.

Additionally, Mr. Wong has had a distinguished career in the public sector, where he served in various different capacities in the Hong Kong Government.

Mr. Wong has also served in many positions appointed by the Central People’s Government: as a member of the Hong Kong Basic Law Consultative Committee; member of the Preliminary Working Committee, and subsequently the Preparatory Committee responsible for establishing the Hong Kong Special Administrative Region. Mr Wong was also elected a member of the National People’s Congress of the People’s Republic of China for 15 years, from 1997 to 2012.

“Wilfred has a unique combination of private and public sector experience we think will be invaluable to the company at this point in our history. We’ve been a part of the Macau community for more than a decade and our needs, along with our responsibilities to the people of Macau, have changed dramatically since we opened Sands Macao in 2004. As president of Sands China, Wilfred will be able to put his experience to work helping us chart a path for our next decade of success in Macao,” said Sheldon G. Adelson, chairman of both SCL and LVS.

Business Daily | 7

September 16, 2015

Gaming

Caesars asks to appeal bond ruling threatening restructuring Caesars Entertainment Corp. seeks to challenge a court ruling it claims would halt out-of-court debt restructurings while defending its decision to abandon a bond repayment pledge

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he casino owner of Caesars, which is fighting to avoid being forced into bankruptcy alongside its main operating unit, wants to immediately appeal a judge’s finding that companies cannot impose changes to bond terms that leave creditors with no way to collect. Caesars claims the judge set too high a standard for out-of-court restructurings.

The bid by Caesars stems from a lawsuit winding its way through New York federal court. In it, bondholders claim Caesars violated the federal Trust Indenture Act by abandoning a repayment pledge as part of a restructuring. Caesars argued its contract with bondholders, known as an indenture, allowed it to scrap a promise to guarantee payment on US$7 billion in debt under certain circumstances.

U.S. District Judge Shira Scheindlin in Manhattan said she needs more evidence before deciding whether Caesars broke the law. In her August 27 ruling, she set a standard that appears to make it easier for bondholders to win.

Embolden holdouts

“This ruling would effectively prohibit any out-of-court restructuring,” Caesars said in a September 8 filing with the U.S. Court of Appeals in Manhattan. The company asked the appeals court for permission to challenge Scheindlin’s ruling now, instead of waiting for the judge to make a final decision.

In her ruling, Scheindlin asked the appeals panel to allow a quicker-than-normal appellate process.

Bankru p tc y l a wy er s are watching the case, and a similar dispute already

before the appeals court in Manhattan. In both cases, lower court judges backed an interpretation of federal law that gives more protection to bondholders fighting out-ofcourt restructurings, according to a report by bankruptcy lawyers Lisa Schweitzer and Luke Barefoot.

The rulings “could embolden holdout bondholders to force -- or threaten to force,” companies into bankruptcy instead, the lawyers wrote.

The debt in dispute is owed by Caesars’s main operating unit, with the parent company

guaranteeing repayment when the bonds were issued.

Caesars also added language to the debt contract allowing removal of that guarantee under certain circumstances.

Bondholders argue in their case that stripping the guarantee made it impossible for them to collect. Scheindlin has twice ruled that Caesars may have violated federal law by abandoning the pledge.

She has given both sides until the end of September to gather evidence to bolster their cases before holding a hearing to decide.

Caesars’s operating company filed bankruptcy in January in an effort to reduce the US$20 billion it owes creditors. Las Vegasbased Caesars says it will be forced into bankruptcy also if loses the repayment guarantee case in New York.

Bloomberg

8 | Business Daily

September 16, 2015

Greater China

Domestic brokers try Singapore’s futures market Increased interest in FTSE A50 index contracts would be a boon to Singapore Exchange Amy Li and Helen Yuan

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hinese brokerages ruing the collapse of futures trading in Shanghai are pitching clients similar contracts in Singapore.

“Goodbye, China Financial Futures Exchange; Hello, FTSE A50!” reads an advertisement by a unit of Shenzhen-based Essence Securities Co. on the WeChat messaging service, referring to Singapore-traded futures on an index of the biggest mainland companies.

China’s domestic equity futures market, ranked the world’s busiest as recently as July, has seen volumes plunge 99 percent since June as policy makers curbed leverage and position sizes and announced investigations into “malicious” short sellers. That’s left brokerages, which boosted staff numbers by 50 percent since 2011, turning to promoting contracts on the SGX FTSE China A50 Index as an alternative.

“Investors and hedge funds are showing great interest switching to overseas markets,” Zhu Bin, deputy general manager of Hangzhoubased Nanhua Futures Co., said.

“Foreign investors who have positions in mainland equities will

Investors and hedge funds are showing great interest in switching to overseas markets Zhu Bin, deputy general manager, Nanhua Futures

also turn to Singapore to hedge their positions.”

Volume in Singapore-listed frontmonth futures on the FTSE A50 gauge rose to 281,000 contracts on Monday.

That was more than 10 times the number of contracts that changed hands on the CSI 300 Index. At end of June, 3.2 million contracts were being traded a day on the mainland Chinese gauge.

Increased interest in FTSE A50 index contracts would be a boon to Singapore Exchange Ltd. Southeast Asia’s biggest bourse posted a 24 percent increase in profit in the three months to June 30 as the rally in Chinese stocks spurred demand for derivatives.

While volumes on the FTSE A50 index futures rose to the highest level since September 2 on Monday, trading has waned since the peak this year as China’s equity boom turned to bust. The 30-day average has fallen to about 301,000 contracts, half the 641,000 high in mid-July.

Futures targeted

China’s authorities are targeting futures because selling the contracts is

one of the easiest ways for investors to make large wagers against stocks. It’s also a favoured product for short-term speculators as the exchange allows participants to buy and sell the same contract in a single day. Yet for hedge funds, futures provide an easy way to adjust exposure to market swings, while large institutions use them to make cost-effective asset-allocation changes.

There are obstacles to trading of overseas stock-index futures. China’s capital controls limit foreign currency purchases to US$50,000 a year per individual, while investors need to set up an account at a Hong Kong broker, which can be a unit of a China securities firm, before they can trade overseas contracts.

Speculative traders are being drawn to the FTSE A50 index, while the higher costs from currency transactions and commission fees compared with the CSI 300 deter others, according to Shanghai CIFCO Futures Co. analyst Wang Yiming.

“Once the market recovers, China may gradually ease its restrictions on futures trading,” Wang said.

Bloomberg News

Bright to buy 50 pct stake in NZ meat processor The company, which processes foods ranging from sweets to pork products to rice wine, has been on a global acquisition spree in recent years Naomi Tajitsu and Charlotte Greenfield

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unit of China’s stateowned Bright Food Group Co Ltd will take a half share in New Zealand’s biggest meat co-operative for NZ$311 million (US$197 million), as China looks to import more of the country’s agricultural products.

Sheep and beef exporter Silver Fern Farms said yesterday it would sell a 50 percent stake to food processor Shanghai Maling Aquarius, a Bright subsidiary, giving it funds to repay debt and helping to boost its exports.

The deal is the latest in a string of investments in agriculture by companies in China, the world’s biggest meat consumer, where a growing middle class has encouraged firms to look overseas for sources of meat, dairy and other proteins.

“The long term prospect for New Zealand agriculture including meat is positive, so we’re not surprised to see offshore interest in domestic agribusinesses,” ASB rural economist Nathan Penny said.

Shanghai Maling said the purchase would give it access to the New Zealand company’s high quality produce and help it almost triple its revenues versus 2014 to as much 30 billion yuan (US$4.71 billion).

“Once this deal goes through, our company will quickly become China’s biggest consolidated lamb and beef industrial group,” Maling said in a statement to the Shanghai exchange.

O ffi ci a l s fo r B r i g h t Food and Shanghai Maling

declined to comment further on the deal.

New Zealand is the world’s biggest sheep meat exporter and fifth-largest overseas supplier of beef, sending roughly one-third of its exports by value to China in the year to June.

Silver Fern Farms, a farmer-owned co-operative, controls about 27 percent of New Zealand’s beef and sheep meat export market but has been hurt by a collapse in sheep meat prices and has struggled to make deep inroads into growing export markets.

“This is a substantial capital investment,” Silver Fern Farms Chairman Rob Hewett told reporters.

“Our partner’s assets are considerable, and we will look to leverage those opportunities into China.”

Bright, which processes foods ranging from sweets to pork products to rice wine, has been on a global acquisition spree in recent years, with British cereal maker Weetabix and Australian dairy company Mundella Foods among its buys.

Bright already has a roughly 40 percent stake in New Zealand infant formula processor Synlait, while other Chinese firms have also been active in the country.

Reuters

Business Daily | 9

September 16, 2015

Greater China Beijing accelerates fiscal spending pace But the cooling economy is also beginning to squeeze government finances

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hina cranked up its fiscal spending by 26 percent in August from a year earlier as Beijing tries to re-energise flagging economic growth and convince reluctant local officials to spend.

August data over the past week suggested the world’s second-largest economy lost further momentum over the summer, adding pressure on policymakers to ramp up what is already their biggest stimulus campaign since the global financial crisis.

The spending increase to 1.28 trillion yuan (US$201 billion) last month was the biggest percentage rise in central and local government fiscal expenditure since April, when it leapt 33 percent, data from the Ministry of Finance showed yesterday.

For the first eight months of the year, fiscal expenditure rose 14.8 percent over 10 trillion yuan (US$1.57 trillion) compared with the same period last year.

Still, some economists say the government’s full-year economic growth target of 7.0 percent is now at risk, while others fear real growth is already much weaker than official data suggest.

With traditional monetary policy responses such as interest rate cuts having less impact in reviving economic activity than in the past, China is trying to increase fiscal stimulus to both shore up shortterm growth and fend off growing deflationary pressures.

“Given China’s top policymakers have given green light to re-leverage the economy on the back of supportive fiscal policy and easing monetary policy, we expect China’s fixed asset investment growth to find a bottom soon,” economists at OCBC wrote in a note.

Spending on education rose 15.8 percent in Jan-Aug from a year earlier; healthcare 19.5 percent; and energy conversion and clean technology 22.7 percent. Outlays on social security and employment rose 21.7 percent.

However, China’s clunky budget process, and at times strained relationships with local government, appear to be still complicating the transmission process in terms of turning spending plans into actual activity.

The cooling economy is also beginning to squeeze government finances. Fiscal revenues rose 6.2

KEY POINTS

Residential property inventories drop

China ramps up spending as monetary easing slow to pay dividends Fiscal spending +25.9 in Aug y/y, biggest jump since April Fiscal revenues +6.2 pct y/y vs +12.5 pct y/y in July Revenue growth faces pressure as company profits weaken

Tianjin starts compensating people injured in blasts

percent in August from a year earlier, half the 12.5 percent pace seen in July.

Income taxes collected from companies dropped 15.4 percent in August, while contributions from the value added tax on imported goods and consumption taxes fell 16 percent.

“The growth of fiscal revenue still faces relatively big pressure in coming months,” the ministry said on their website.

Reuters

PBOC easing cushions mainland firms from Fed volatility The shift to yuan funding is already happening, with domestic corporate bond sales jumping 77 percent

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timulus unleashed by China’s central bank will cushion Chinese companies --the region’s biggest dollar debt issuers -- from a potential Federal Reserve interest rate increase, making cheaper yuan funds available.

Five interest rate cuts by the People’s Bank of China since November and rules to relax yuan bond issuance onshore mean Chinese companies are becoming less reliant on dollar funding.

Corporates from the world’s second-biggest economy have some US$302.9 billion in dollardenominated bonds outstanding, and will face higher costs to issue more such notes, or repay them in yuan, if the U.S. central bank tightens monetary policy.

“Fed rate hikes would imply that the cost of borrowing offshore debt will be higher, assuming the same credit spread,” Raymond Chia, the head of credit research for Asia ex-Japan at Schroder Investment Management in Singapore, said.

The shift to yuan funding is already happening, with domestic corporate bond sales jumping 77 percent to 7.85 trillion yuan (US$1.23 trillion) in 2015 from the same period last year, according to data compiled by Bloomberg. Dollar

offerings from Chinese companies fell 17 percent to US$117.2 billion.

It’s a contrast to 2013 when the Fed’s ‘taper tantrum’ saw Chinese companies mostly shut out of the U.S. currency market for about three months while yuan borrowing costs were higher than current levels.

Falling yields

Yields on five-year onshore government bonds have dropped 34 basis points so far in 2015 to 3.17 percent while yields on similarmaturity AA rated corporate notes have declined by 1 percentage point to 5.15 percent.

Last month’s yuan devaluation by the PBOC could also work to stoke demand from wealthy Chinese for dollar assets because the U.S. currency is still on a rising path, said Ben Sy, the Hong Kong-based head of Asia fixed income, currencies and commodities at JPMorgan Chase & Co.’s private banking unit. That could alleviate the negative impact on Chinese dollar bonds in the case a Fed rate increase boosts market volatility, he said.

Higher-yielding U.S. currency debt, such as junk-rated Chinese notes, could benefit. Yields on such bonds have dropped 12 basis points

New residential property inventory dropped from the previous year for the first time in 54 months in August, according to data from a private property consultant firm. Property inventory in 35 cities dropped 1.4 percent year on year and 0.8 percent from July, the sixth consecutive month-on-month decrease, an article in yesterday’s Economic Information Daily said, citing information from E-house China R&D Institute, a property consultant firm based in Shanghai. The reason for the drop was likely sales outpacing supply, said E-House analyst Yan Yuejin said.

The government of Tianjin has started to compensate people injured in the warehouse explosions there last month, local authorities said yesterday. Six hundred people are eligible for the compensation.

It will be given according to the severity of the injuries and the degree of impact on the victims’ lives, said sources with the Human Resources and Social Security Bureau of Binhai New Area, where the blasts occurred. Medical treatment is also free for the injured. The blasts killed 165 people, including 99 firefighters and 11 police officers.

4 HK universities ranked in world’s top 100 Four universities in Hong Kong have been ranked among the best 100 tertiary institutes in the world, according to the latest QS World University Ranking made public yesterday. The Hong Kong University of Science and Technology, celebrating its 25th anniversary next year, jumped to 28th from 40th last year, replacing the century-old University of Hong Kong that dropped two places to 30th, as Hong Kong’s top college.

The Chinese University of Hong Kong was pushed out of the top 50, moving down to 51st. The City University of Hong Kong rocketed to 57th from 108th.

National rice market to open up to U.S. imports

Onshore demand for China dollar bonds is going up whereas offshore supply is down this year Owen Gallimore, credit analyst, Australia & New Zealand Banking Group

to 9.66 percent this month, according to a Bank of America Merrill Lynch index.

The yuan may depreciate to 6.5 per dollar by the end of this year and 6.8 next year, according to forecasts

by Liu Dongliang, a senior analyst at China Merchants Bank Co. The currency was around 6.37 per dollar yesterday.

Bloomberg News

China, the world’s largest rice market, is poised to open up to U.S. exports with both countries’ governments due to sign an accord later this month ratifying American imports. The so-called phytosanitary protocol for rice is expected to be signed during Chinese President Xi Jinping’s visit to Washington, the Houston-based U.S. Rice Producers Association said Monday in a statement. “It’s a significant event that they would buy rice from the western hemisphere,” Milo Hamilton, president of Austin, Texasbased Firstgrain, a rice-trading advisory company, said in a telephone interview.

Nationwide nuclear safety checks start China has begun a nationwide safety inspection into all its existing nuclear facilities in the wake of an explosion at a chemical warehouse at the port of Tianjin last month that killed more than 160 people.

The inspections will last until November and will focus on the manufacturing and utilisation of nuclear equipment and technology, equipment used at uranium mines, and nuclear radiation risks, the Ministry of Environmental Protection said. China is embarking on a rapid nuclear construction programme that aims to raise total capacity to 58 gigawatts by the end of 2020.

10 | Business Daily

September 16, 2015

Asia KEY POINTS Sept manufacturers’ sentiment index 9 vs 17 in Aug Service-sector firms’ index 23 in Sept vs 27 in Aug Business mood seen worsening further ahead BOJ tankan likely show corporate morale slipping -analyst

Japan’s business mood sinks The loss of confidence added to a recent run of soft indicators, keeping policymakers under pressure to offer fresh stimulus to rev up growth in the world’s third largest economy Tetsushi Kajimoto and Izumi Nakagawa

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apanese manufacturers’ confidence slumped the most in a year in September to an eightmonth low and is forecast to worsen further as fears of a China-led global economic slowdown grow, a Reuters poll showed.

Domestic demand also looks increasingly fragile as service companies reporting the weakest

sentiment since March and predicted further deterioration in the coming three months.

The Reuters Tankan - which closely tracks the Bank of Japan’s (BOJ) quarterly tankan survey due on October 1 - gave the latest glimpse of corporate morale after China’s stock market rout last month.

“The BOJ tankan will probably

show worsening of sentiment at manufacturers and service-sector firms,” said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

“The key is capital spending plans in the BOJ tankan. If capital expenditures falter, that could ruin the BOJ’s scenario, possibly forcing it into further easing in October.”

The monthly poll of 516 big and

midsize companies between August 31 and September 11, of which 266 responded, cast doubt about the BOJ’s economic optimism.

“China’s slowdown is affecting our business,” an executive at a transport equipment maker said in the survey, which companies answer anonymously. A chemicals producer said, “Business conditions are on track, but we cannot describe the situation as good because of concerns about China’s slowdown.”

Boding ill for private consumption, which accounts for about 60 percent of the economy, the survey showed retailers are struggling to lure customers.

“The number of shoppers has slightly declined on the existingstore basis. We need to cut down on costs as personnel expenses rise,” said one retailer. Another said: “Sales are better than last year but they have not returned to levels seen before the sales tax hike” of April 2014.

The Reuters Tankan sentiment index for manufacturers fell to 9 in September from 17 in August, matching January’s low and sliding the most since a year ago when the economy was in a recession caused by that tax hike.

The index is seen worsening further to 7 in December.

Indian monetary authorities under pressure after cooling inflation Central bank Governor Raghuram Rajan, however, is worried about a resurgence in price pressures Rajesh Kumar Singh

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ndia’s inflation dived to a new low in August, helped by falling global commodity prices, bolstering prospects of an interest rate cut by the central bank later this month.

Retail inflation, which the central bank tracks to set rates, eased to 3.66 percent in August from a revised 3.69 percent a month ago. The reading was almost in line with 3.6 percent forecast by analysts in a Reuters poll and way below the Reserve Bank of India’s 6 percent target for January 2016.

With price pressures at record lows, expectations are building that the Reserve

Bank of India will lower borrowing costs by at least 25 basis points (bps) at its next policy review on September 29, after three cuts earlier this year, to spur economic growth.

“The inflation trajectory will be lower than RBI’s estimate,” said A. Prasanna, an economist with ICICI Securities Primary Dealership Ltd, who expects the central bank to deliver a 25 basis points of rate cut a fourth time this year.

Calls for a rate cut have grown louder after annual economic growth slowed to 7 percent in the April-June quarter from 7.5 percent in

the previous quarter. And some economists fear real growth is more sluggish than official figures suggest.

Arvind Panagariya, a top policy adviser to the government, last week said the economy needed 50-100 bps of rate cuts.

Being a net importer and consumer of commodities, India is reaping the dividends of a slump in global prices of coal, oil, iron ore and other basic materials.

Deflationary pressures?

The rapid deceleration in prices has ignited a debate in New Delhi whether Asia’s third-largest economy is

heading towards deflation.

Arvind Subramanian, Modi’s chief economic adviser, early this month warned of looming deflation and called for measures to boost consumer demand and step up investment.

RBI Governor Raghuram Rajan, however, is worried about a resurgence in price pressures in a country where inflation has been notoriously volatile.

While food inflation has broadly remained in check despite below average summer monsoon rains, prices of some staples such as onions are racing up. Retail vegetable prices, for instance, gained

Reuters

nearly 8.5 percent from July.

Entrenched expectations of high inflation also are feeding into higher wages.

Some economists are worried about a pickup in overall retail inflation once a favourable base effect wears off.

“Food will be a worry in coming months because whatever base effect that was supporting the CPI number will fade in coming months,” said Madhavi Arora, chief economist at Kotak Mahindra Bank in Mumbai.

For the RBI’s action, as for many other central banks’ around the world facing sluggish growth, much will depend on whether the U.S. Federal Reserve raises interest rates this week for the first time since 2006.

Easing policy at the same time as the Fed is tightening, however modestly, could spur further capital outflows from emerging markets.

While some analysts believe the chances of a September hike have eased amid fears of a China-led global slowdown, any fresh burst of financial market volatility following the Fed’s decision on September 17 could force the RBI to stand pat.

Reuters

Business Daily | 11

September 16, 2015

Asia Economists say Thailand to keep rates steady

Australian Prime Minister contenders: Outgoing Tony Abbott (L) and incoming Malcolm Turnbull just some hours before Liberal Party leadership ballot

New Australian PM Turnbull to focus on economy Months of public opinion polls showed the former Prime Minister’s popularity near rock bottom Matt Siegel and Jane Wardell

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ew prime minister Malcolm Turnbull dashed hopes of swift action on progressive issues such as same-sex marriage after he was sworn in as Australia’s fourth leader in two years yesterday, promising instead to focus on improving a faltering economy.

The conservative Liberal Party voted in a secret ballot late on Monday to oust Tony Abbott as its leader in favour of Turnbull, a multimillionaire former tech entrepreneur who is popular with the electorate.

“I’m filled with optimism and we will be setting out in the weeks ahead ... more of those foundations that will ensure our prosperity in the years ahead,” Turnbull told reporters as he headed to parliament yesterday before being sworn in.

Abbott was deposed barely two years into his three-year term after months of opinion polls that showed his popularity near rock bottom as Australia’s US$1.5 trillion economy struggles to cope with the end of a once-in-a-century mining boom.

Turnbull had previously been unpalatable to his party’s right wing because of his progressive views on climate change, same-sex marriage and making Australia a republic.

In his first address to parliament as leader, Turnbull stuck to the ruling coalition’s timetable set under Abbott and said Australians would vote on same-sex marriage after elections due next year.

Abbott’s dismal performance and over-reliance on slogans to sell his major policies, including a hard-line approach to refugees, eventually wore down internal opposition to Turnbull.

Abbott pledged to make the leadership transition as smooth as possible but, in his last address as leader yesterday, also expressed concern that “a revolving door prime ministership can’t be good for our country”.

Australia has been convulsed by backroom machinations and party coups in recent years that have shaken public and business confidence in government.

“There will be no wrecking, no undermining, and no sniping,” Abbott told reporters.

The Nationals, the minor partner in the ruling conservative coalition, pledged to work with Turnbull.

“A close working team is essential to delivering the good government Australia expects from their elected representatives,” Nationals leader and Deputy Prime Minister Warren Truss said in a statement.

“Generous, personal”

Turnbull, a staunch republican, was sworn in at government house in Canberra by Governor General Peter Cosgrove, Queen Elizabeth II of Britain’s representative in Australia.

Lawmakers from both sides of the aisle briefly set aside partisan bickering to praise the outgoing Abbott.

“I have exchanged harsh words with him in my time as opposition leader,” said Labor Party leader Bill Shorten. “I’ve disagreed with his politics and decisions on many occasions but I also wish to record that he had this frustrating ability on occasion, just when you were really frustrated with a particular decision he might have made, to do something unexpected and generous and personal.”

Turnbull’s ascension is seen by many political analysts as restoring stability because he presents a more formidable foe to face the Labour Party at elections due in about a year.

“Malcolm Turnbull is much more of a threat to the leader of the opposition than Tony Abbott was,” said Peter Chen, a senior lecturer in government at Sydney University.

“It looks like, unless things really change, the government will get a second term in office.”

Significant changes are expected when Turnbull, who had been toppled as Liberal Party leader by Abbott in 2009, unveils his ministry later this week. The respite from partisanship was short-lived as opponents sought to influence those changes.

Thailand’s central bank is widely expected to leave its policy interest rate steady for a third straight meeting even as the economy continues to struggle more than a year after a military coup ended months of political unrest. Twenty of 21 economists polled by Reuters forecast the one-day repurchase rate would be left unchanged at 1.50 percent when the Bank of Thailand meets today due to global market uncertainties, a weak baht and the country’s recent stimulus to help the economy. At its Aug. 5 meeting, the Monetary Policy Committee voted 7-0 to hold the rate.

FDI inflows to Philippines continue to slide In its latest report, the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, said that for June, the FDI net inflows stood at only US$383 million, down 30.9 percent year on year. This brought the year-to-date level to net inflows of US$2.02 billion, down 40.1 percent from the same period in 2014. However, the BSP said that the FDI level at the end of the six months has matched the amount of investments the country receives on average. From 2000 to 2014, average annual FDI net inflows to the Philippines stood at US$2.1 billion.

POSCO still negotiating settlement with Nippon Steel

KEY POINTS Australia gets fourth prime minister in two years Turnbull ousts Abbott in party room coup Economy faltering as mining boom ends Both sides of politics praise deposed Abbott in parliament The Greens Party immediately called on Turnbull to remove children from a controversial immigration detention centre on the Pacific island nation of Nauru, where asylum seekers arriving in Australia by boat are sent for processing.

“I urge Mr. Turnbull to show that Australia is strong enough to care for refugees by releasing the children that are locked up offshore,” Greens Senator Sarah Hanson-Young said in a statement.

Treasurer Joe Hockey, who has been battling a backlash against a deeply unpopular budget, and Defence Minister Kevin Andrews, who is overseeing a A$50 billion (US$35.70 billion) submarine tender, are both expected to be replaced.

Australian Chamber of Commerce and Industry chief executive Kate Carnell welcomed the promise of more collegiate and co-operative government, urging Turnbull to undertake reforms to boost productivity and competitiveness.

Australia’s revolving door leadership has plagued both major parties. Labour’s Kevin Rudd, elected prime minister with a strong mandate in 2007, was deposed by his deputy, Julia Gillard, in 2010 amid poll numbers as dismal as Abbott’s.

Gillard was in turn deposed by Rudd ahead of the 2013 elections won by Abbott.

Reuters

POSCO said yesterday it was still negotiating a legal settlement with Nippon Steel & Sumitomo Metal Corp after newspapers reported the South Korean steelmaker was in talks to pay its Japanese rival about 30 billion yen (US$250 million) in damages for alleged corporate espionage.

Officials at POSCO and Nippon Steel said the lawsuits, filed in April 2012, were still proceeding. South Korea’s Hankyoreh newspaper first reported the proposed settlement amount on Monday and Japan’s Yomiuri daily said the companies could reach a deal as early as this month.

S.Korea saw foreign outflows in August South Korea posted foreign net outflows in both stock and bond markets for a third consecutive month in August, although bond outflows shrank sharply compared with July, official data showed yesterday.

Foreign investors cut their local stock holdings by a net 3.944 trillion won (US$3.34 billion) during August and bond holdings by a net 216 billion won, Financial Supervisory Service data showed. The data showed net foreign fund outflows from South Korea’s main stock market rose in August from 2.261 trillion won in July, while that from the bond market fell sharply from 2.618 trillion won recorded in July.

Tokyo Steel cuts product prices for October Japan’s top electric arc furnace steelmaker, said yesterday it will cut the price of products for delivery in October by 5,000 yen to 13,000 yen (US$42US$108) a tonne due to a rise in cheap imports and slack domestic demand.

The move marks its first price reduction in 11 months. The company’s pricing strategy is closely watched by Asian rivals such as Posco, Hyundai Steel Co and Baosteel, which export to Japan.

Prices for Tokyo Steel’s main product, H-shaped beams, will fall by 7,000 yen.

12 | Business Daily

September 16, 2015

Asia

Vietnam’s ruling party optimistic on 2016-2020 growth forecast The economy expanded 5.82 per cent a year in 2011-2015 Ho Binh Minh

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ietnam aims to lift its growth rate over the next five years to an annual average of 6.5-7.0 percent by capitalising on multilateral trade deals, modernising agriculture and boosting investments, its communist party said yesterday.

The ruling party, which rarely details its economic strategy, is set for a shakeup in January 2016 after a five-yearly congress that will decide who leads a low-cost manufacturing hub with high-tech ambitions.

It will aim to maintain macro-economic stability and push for industrialisation while modernising agriculture and raising competitiveness, the party said in a draft political report ahead of the congress.

“The reform of the growth model is being shifted strongly from focusing on exports and investment capital to the development of investment capital, exports and the domestic market,” the report said.

The country will aim to “restructure and deal effectively with bad debts”, which have been lower but still at a high ratio, it said.

Vietnam’s next step is becoming a technology producer

Vietnam’s US$186 billion economy is one of only a few bright spots in Southeast Asia, posting growth of 6.28 percent in the first half of this year, the fastest since 2008.

It has embarked on liberal reforms to strengthen capital markets and position itself as a lowcost manufacturing alternative to

China, especially for cell phones, TVs, footwear and garments.

Among firms expanding in Vietnam are Samsung, LG Microsoft and Intel.

The economy expanded 5.82 percent a year in 2011-2015, below a 6.5-7 percent target, missed partly due to a toxic debt crisis in a banking sector that rippled through a fragile

economy. The average annual growth in 2006-2010 was 7 percent.

“This target in long-term may be feasible thanks to upcoming free trade agreements,” said Tran Minh Hoang, a senior economist at Vietcombank Securities.

Vietnam has signed a raft of free trade agreements (FTA), which includes top investors Japan and South Korea, the Russia-led Eurasian Economic Union. Talks on an FTA with the European Union were concluded recently.

The main draw is a looming TransPacific Partnership led by the United States and covering 40 percent of global GDP. Vietnam still battles with an inefficient state sector and bad debt currently at 3.72 percent of loans.

Opening up to trade pacts also risks exposing it to graft and low competitiveness, economists say.

The party called for tackling corruption, improving the legal system, assets declarations from its leaders and state employees and better oversight of law enforcement agencies.

Reuters

Indonesian trade data reveals persistent economic woes Imports declined 17.1 per cent, less than the poll’s forecast of 23.7 per cent and July’s 28.4 per cent plunge Nilufar Rizki and Gayatri Suroyo

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ndonesia’s exports and imports performed better than expected in August, but the trade numbers show persistently weak growth is for Southeast Asia’s biggest economy.

Exports fell 12.3 percent from a year earlier, less than the 17.4 percent drop seen in a Reuters poll and July’s 18.8 percent skid.

Imports declined 17.1 percent, less than the poll’s forecast of 23.7 percent and July’s 28.4 percent plunge.

The trade surplus narrowed to US$430 million from July’s US$1.38 billion.

The poll projected an

August surplus of US$630 million.

August became the ninth straight month with a trade surplus, but that’s not a cause for joy as it stems from the poor import numbers, which reflect how weak domestic demand remains. Imports have had double-digit annual declines every month this year.

Exports, meanwhile, have declined 11 straight months, as weak global demand exacerbated by a slowdown in China and low global commodity prices.

The statistics board said that this year, the United

States has overtaken China as the biggest buyer of Indonesia’s non-oil exports.

Falling export revenue and a currency trading at 17-year lows have hit the country’s purchasing power.

The statistics bureau said yesterday that the country’s poverty rate increased to 11.22 percent as of March, from 10.96 percent in September 2014.

Ina Primiana, an economics professor at Universitas Padjajaran in Bandung, said the prolonged drop in imports shows a growing number of factories “can’t even afford to buy the

raw materials, and they’re laying off people”.

In the second quarter, Indonesia’s gross domestic product (GDP) grew at its slowest annual pace in six years, 4.67 percent.

The government maintains that 5 percent growth remain achievable this year, though many economists feel it will be below for the first time since 2009.

The August trade numbers came out two days before a policy meeting of Bank Indonesia. All analysts in a Reuters poll expect another hold for its benchmark at 7.50 percent, particularly as the meeting takes place only hours before an intensely-awaited one of the U.S. Federal Reserve ends.

Reuters

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Business Daily | 13

September 16, 2015

Asia Bank of Japan uneasily holds on policy

Retail sales in Singapore It offered a bleaker view on overseas economies, warning that up 5.2 pct in July emerging markets were slowing Leika Kihara

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he Bank of Japan (BJ) said yesterday that slowing emerging market demand was putting further strains on the economy but held off on expanding stimulus, preserving its limited policy options in case an expected U.S. rate hike sparks more global volatility.

BOJ Governor Haruhiko Kuroda maintained his optimism on Japan’s economic outlook, saying that domestic demand remained firm despite external headwinds such as China’s slowdown.

“The slowdown in emerging economies is already affecting Japan’s exports and output. Even so, Japan’s economy continues to recover moderately,” Kuroda told a news conference. “Corporate revenues are at record-high levels, underpinning a steady improvement in job and income conditions.”

In a possible sign that its conviction about a solid third-quarter recovery may be wavering, the BOJ cut its assessment on exports and output to say they were “more or less flat.”

“Japan’s economy continues to recover moderately, although exports and output are being affected by the slowdown in emerging economies,” it said in a statement after the policy meeting.

KEY POINTS BOJ maintains massive stimulus programme Cuts assessment on exports, output BOJ offers bleaker view on overseas economies Some analysts say BOJ could ease again in Oct As widely expected, the BOJ maintained its pledge to increase base money at an annual pace of 80 trillion yen (US$665 billion) via aggressive asset purchases such as government bonds and some riskier assets such as exchange-traded equity funds.

In a sharp downgrade of views from just a few months ago, analysts now expect only a feeble economic rebound in the current quarter as China’s slowdown hits exports, heightening market expectations that the BOJ may be forced to act again later this year.

“We’re not in a recession, but the economy clearly lacks strength and prices are undershooting the BOJ’s price target by a lot,” said Hiroshi Miyazaki, senior economist, Mitsubishi UFJ Morgan Stanley Securities. “The BOJ could ease again in early October, to avoid falling behind the curve,” he said.

In a sign that cooling demand in China and elsewhere in Asia is taking a toll, a Reuters poll showed Japanese manufacturers’ confidence slumped the most in a year in September.

Fears of a China-led slowdown prompted heavy selling in global markets earlier this month by investors already worried about whether the recovering U.S. economy can withstand an interest rate hike which could come as early as this week.

A shift in the BOJ board’s composition means if Kuroda were to pull the trigger, he could count on more votes than last October, when his unexpected proposal to expand stimulus won by a razor-thin margin.

But many BOJ policymakers are wary of acting now, concerned about the risk of diminishing returns if they expand the huge asset-buying programme, which is already drying up bond market liquidity.

Reuters

S&P raises South Korea’s sovereign credit rating It was the first time that South Korea’s sovereign ratings were set at AA-minus or the equivalent

S

tandard & Poor’s raised South Korea’s sovereign currency rating to AA-minus from A-plus, commending the strength of its economic growth, decline in short-term debt component of external borrowings, and reduced foreign indebtedness of its banks. “(South) Korea will maintain economic growth performance superior to most developed economies in the next three to five years,” the agency said in a statement.

It said the decline in its shortterm debt composition and the reduced indebtedness of South Korean banks had cut the risk of a significant deterioration in external financing conditions.

The agency also affirmed the sovereign’s AA-minus local currency rating. The outlook on both ratings is stable.

This was largely seen as an overdue action after the other two of the three major global ratings agencies have already placed South Korea to the same level over the past three years, thus limiting any markets impact, economists said.

“S&P’s upgrade is not a forwardlooking decision as markets have already priced it in and the won has been stronger than the other emerging-market currencies,” said

Oh Suk-tae, economist at Societe Generale in Seoul.

Still it was the first time that South Korea’s sovereign ratings from S&P, Moody’s Investors Service and Fitch Ratings were set at AA-minus or the equivalent, the highest place that South Korea’s ratings have reached.

The upgrade came amid growing concerns in South Korea that foreign investors may pull out en masse ahead of or right after the U.S. Federal Reserve begins raising its interest rates, possibly later this year.

S&P’s announcement came after local markets ended trading. “(The upgrade) will provide a foundation for the country to be differentiated from other emergingmarket economies among foreign investors even if global market instability materialises in the future,” South Korea’s finance ministry said in a statement.

S&P said South Korea’s exports versus a year earlier have been shrinking for several months, but noted this was in line with the trend in the region. It also said South Korea’s per-capita income would keep rising to top US$30,000 by 2018 from around US$27,000 seen this year.

Reuters

Sales increased 5.2 percent in July on a year-on-year basis, said Singapore’s Department of Statistics yesterday. Excluding motor vehicles, retail sales rose 0.8 percent in July compared with the same period in 2014. However, when compared with the previous month, retail sales decreased 2.2 percent in July. Excluding motor vehicles, retail sales increased 2.6 percent. The total retail sales value in July was estimated at S$3.5 billion (US$2.5 billion), up from S$3 billion (US$2.14 billion) in July 2014.

New Zealand growth expected higher in Q2 New Zealand’s economic growth is expected to have bounced back from a quarterly two-year low as the agriculture and mining sectors recovered in the second quarter, a Reuters poll found yesterday. The median forecast in the poll saw growth of 0.5 percent in the three months to June 30, when New Zealand’s second-quarter gross domestic product data is published September 17. “We definitely see recoil from things that were held down in Q1 (agriculture and mining), which on the face of it was very weak indeed at 0.2 percent,” said Mark Smith, senior economist at ANZ.

Australian scientists turn to crowd funding Australian scientists have turned to crowd funding in an attempt to continue seeing stars as governmental funding cuts may cause astronomers to abandon a project to map the solar system’s fourth quadrant.

Twenty Australian scientists are on the brink of abandoning the four-year project that has been mapping the delta quadrant of the solar system, the brightest part of the Milky Way due to a A$60,000 funding shortfall. Professor Michael Burton told News Corp yesterday the funding for the project had been pulled after cutbacks to Australia’s scientific body.

Philippine food security chief quits Philippine President Benigno S. Aquino III’s food security Cabinet official has resigned, a senior government official said yesterday. Communications Secretary Herminio Coloma Jr. said Presidential Assistant for Food Security and Agricultural Modernization (PAFSAM) Secretary Francis Pangilinan quit from the post effective September 30 to run for the Senate in the May 2016 elections.

“The president expressed his sincerest appreciation to Secretary Pangilinan for his contribution to the government during his stint as PAFSAM and wished him the best in his future endeavors,” he said.

Total employment in Singapore falls in H1

KEY POINTS S.Korea sovereign rating up to AA-minus vs A-plus Seen as overdue action after raises by other agencies Two other agencies raised ratings in recent years

Unemployment rate in Singapore remained low and stable amid the tight labour market, and total employment in first half of 2015 contracted by 1,000 excluding Foreign Domestic Workers, the Ministry of Manpower (MOM) said yesterday. The contraction of total employment in the first half of 2015 is a significant decline from the growth of 52,200 during the same period in 2014, translating to a lower year-on-year growth of 2.1 percent in June, compared to 3.8 percent a year ago, said MOM. The moderation in total employment growth took place amid slower growth of the Singapore economy.

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September 16, 2015

International Berlin backs cutting EU funds to states that refuse refugees Germany said yesterday it approves of using EU aid funds to pressure member states into accepting binding quotas to relocate 120,000 refugees, after several eastern countries refused the migrant distribution proposal. “The negotiations situation is such that nothing happens to countries which refuse. We need to talk about ways of exerting pressure. These are often countries that receive a lot of structural funds from the European Union,” German Interior Minister Thomas de Maiziere told television network ZDF. European Commission president “has suggested that we should look at whether these countries should get less structural funds,” he added.

Brazil unveils US$17 bln deficit Brazil’s government announced spending cuts and tax increases totalling 65 billion reais (US$16.9 billion) on Monday as it scrambles to close a budget deficit that led to a downgrade of the country’s credit rating last week. The biggest item was the revival of the unpopular CPMF tax on financial transactions that will raise 32 billion reais next year if it passes a Congress opposed to new taxation. The drastic cuts hit agricultural subsidies, infrastructure investments, government salaries and bonuses, as well as public health and low-cost housing programs.

Higher UK minimum wage to hit hospitality British businesses in the hospitality, retail and social care sectors are likely to be challenged by a planned rise in the minimum wage and will need to find ways to boost productivity, an economic think tank said yesterday. The Resolution Foundation, which researches low pay, said finance minister George Osborne’s plan to raise the hourly minimum wage to 9 pounds by 2020 from its current 6.50 pounds could lead to lower hiring and profits and higher prices. Osborne is seeking to boost work incentives and cut the cost of welfare for the low-paid.

Mexico sets minimum bid values for oil auction Mexico’s finance ministry on Monday announced the minimum fiscal terms companies will be required to meet to win development rights in an upcoming oil auction, as the country seeks to lure investment despite slumping crude prices. The ministry set the minimum value of pre-tax profits for the five offshore extraction contracts up for grabs at a range of between 30.2 and 35.9 percent. The National Hydrocarbons Commission is the oil regulator that will run the September 30 auction.

Petrobras chairman to take leave Murilo Ferreira will take a leave of absence as chairman of state-run oil firm Petrobras, turning his full attention to his job as chief executive officer of Vale SA as the mining company grapples with a downturn in the sector. Luiz Nelson Guedes de Carvalho, a professor of accounting at the University of São Paulo and head of the Petrobras’ audit committee, was named interim head of the board, Petrobras said in a statement. Petroleo Brasileiro SA, as the company is formally known, did not say why Ferreira is leaving. His leave is scheduled to end November 30.

South African current-account gap narrows Growth in household spending slowed to 1.2 percent from 2.4 percent in the first quarter, while investment spending rose 1 percent from 1.8 percent

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outh Africa posted its smallest current-account deficit in four years in the second quarter as a weaker rand boosted exports and curbed consumers’ appetite for imports.

The gap on the current account, the broadest measure of trade in goods and services, eased to 3.1 percent of gross domestic product from a revised 4.7 percent in the previous three months, the Reserve Bank said in its Quarterly Bulletin released yesterday in the capital, Pretoria.

The median estimate of 18 economists in a Bloomberg survey was for a shortfall of 3.7 percent.

The rand’s 14 percent slump against the dollar this year helped to offset a slide in gold, platinum and other commodity prices, boosting export income and contributing to the nation’s first trade surplus in more than three years.

The data shows that “the weaker currency is helping to offset some of the suppressed export

receipts that we’re seeing owing to lower commodity prices,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities, said.

The trade surplus amounted to 14 billion rand in the second quarter.

Exports, excluding gold, surged 6.9 percent to an annualized 1 trillion rand (US$74 billion) in the three months through June, while imports fell 0.8 percent to 1.06 trillion rand, according to the report.

South Africa, which relies mainly on foreign investment in stocks and bonds to help fund its current-account deficit, posted an inflow of 54.8 billion rand in portfolio investment in the second quarter. That was up from 39.3 billion rand in the previous three months. Foreign direct investment recorded an inflow of 6.1 billion rand compared with an outflow of 22.2 billion rand in the three months through March.

Foreign receipts were partly undermined by a drop in tourism in the first half of the year, mainly due to the imposition of more stringent visa regulations and a spate of attacks against immigrants, the Reserve Bank said. The services account on the balance of payments, of which tourist income makes up the bulk, dropped by 4.2 percent in the second quarter.

The narrowing in the currentaccount deficit also reflected the slowdown in Africa’s second-largest economy. Expenditure by consumers, the government and businesses contracted an annualized 7.2 percent in the second quarter, the most since 1999, according to the central bank.

Bloomberg News

US auto union extends FCA contract as talks continue The union leadership has the authorization of its members to call a strike should the talks with FCA fall apart

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he United Auto Workers union said yesterday it offered Fiat Chrysler’s US subsidiary an “hour by hour” extension of its contract as negotiations continued.

The union offered indefinite contract extensions to GM and Ford while it focuses on reaching a deal with FCA US. The UAW’s four-year contracts with the Detroit Three carmakers expired at midnight Monday (0400 GMT Tuesday.)

“The UAW and FCA US LLC announced this evening that they have extended the existing collective bargaining agreement on an hour by hour basis as 2015 bargaining continues,” the union said in a brief statement issued shortly after the contracts expired.

The union leadership has the authorization of its members to call a strike should the talks with FCA fall apart.

General Motors and Ford are watching the talks closely because whatever deal is reached with FCA will dictate the wages and benefits

the United Auto Workers union seeks at the remaining Detroit carmakers.

The union has historically ensured that the Detroit Three automakers do not face competitive disadvantages by negotiating similar four-year contracts with each.

FCA was “a logical choice” to be tapped as the so-called target company because the union is determined to eliminate a two-tier wage structure imposed after the auto industry collapsed in the wake of the 2008 financial crisis, said Harley Shaiken, a labour expert from the University of California-Berkeley.

“It’s easier to start with the weakest company. You don’t want to negotiate something at General Motors and Ford that’s unacceptable” to FCA US, he said.

This is the first time that the UAW has been able to use a strike threat to strengthen its hand since 2007. The terms of GM and Chrysler’s 2009 bankruptcies prevented the union from going on strike during the 2011 negotiations.

Even a brief strike could seriously damage FCA’s bottom line, Shaiken said.

UAW President Dennis Williams has repeatedly said that he views a strike as a failure.

However, the union is also looking to claw back some of the major concessions made in order to help the Detroit Three survive the economic crisis. All three carmakers are now posting massive profits and the industry is booming.

Williams has vowed to end the two-tier system, where newer workers are paid significantly less than longterm employees. Roughly 43 percent of FCA US employees earn about US$16.50 per hour, while workers with seniority earn US$30 per hour wage.

The union is also looking for a raise for workers with seniority, who have not seen a wage increase since 2006 and have lost roughly four percent of their purchasing power to inflation.

AFP

Business Daily | 15

September 16, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The world when the Fed raises rates Martin Feldkircher Florian Huber Isabella Moder Senior economist in the Foreign Research division of the Oesterreichische Nationalbank

Economist in the Foreign Research division of the Oesterreichische Nationalbank

Economist in the Foreign Research division of the Oesterreichische Nationalbank

THE KOREA HERALD South Korea has asked the United States to support the establishment of a new Asian development bank that can fuel economic growth in a denuclearized North Korea, the finance ministry said yesterday. The bank, first proposed by President Park Geun-hye in Dresden, Germany, last year, aims to help North Korea develop its economy after it gives up its nuclear ambitions. It also plans to support development projects in China’s Liaoning, Jilin and Heilongjiang provinces, as well as Russia’s Far East. The ministry said Vice Finance Minister Joo Hyunghwan called for Washington’s cooperation and interest.

THE STAR Singapore’s ruling party is celebrating a resounding re-election victory, thanks partly to its economic Tsar, an ethnic Tamil politician whose voter appeal poses an awkward question for its leaders: can a nonChinese ever become prime minister? As the People’s Action Party (PAP) settles down to another five years in power, the guessing game of who will succeed Prime Minister Lee Hsien Loong has begun - and the name of Tharman Shanmugaratnam keeps coming up. The odds of Shanmugaratnam, who is deputy prime minister and finance minister, making it to the top job should be long.

THE NEW ZEALAND HERALD Overdue debt owed by Kiwi families seeking help from budgeters has dropped to a 14-year low, as the impact of the recent global recession eases. The average debt arrears owed by the 45,000 people who sought help from the Federation of Family Budgeting Services dropped from NZ$4013 in 2013-14 to NZ$3740 in the year to this June, the lowest since June 2001. Their total debt in arrears declined from NZ$72.5 million to NZ$66.9 million, 40 per cent below a recession peak of NZ$110.6 million in the year to June 2012.

THE PHNOM PENH POST Pork sales at local markets have taken a hit following the recent outbreak of blueear pig disease as fears have spread among consumers that the meat is not fit for human consumption, pork vendors said yesterday. First identified in Siem Reap in mid-August, Porcine Reproductive and Respiratory Syndrome, known as blue-ear pig disease, has infected more than 4,000 pigs, with over 1,200 needing to be culled. The government said, however, that despite spreading to three more provinces, the outbreak is now under control.

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he United States Federal Reserve is the world’s most powerful bank, and its most powerful component is the Federal Open Market Committee (FOMC), the twelve men and women who meet eight times a year to determine – essentially by setting interest rates – the monetary policy of the world’s largest economy.

The last time the Fed raised interest rates was in 2006, before the growth-sapping impact of the global financial crisis persuaded it and other central banks to lower rates effectively to zero and to employ so-called quantitative easing (QE) to pump money into advanced economies.

But this year, for the first time since 2007, every advanced economy in the world is growing – including America’s. And that means that the FOMC, fearful of asset bubbles, will at some point decide that America’s interest rates must rise. That may (or may not, depending on the timing) be good for the US economy, but what will it mean for the rest of the world?

Our research shows why the world, especially emerging countries, will be paying nervous attention. In mid-2013, when the Fed announced that it would gradually reduce its unconventional monetary-policy measures (for example, largescale purchases of mortgagebacked securities), emerging markets suffered large capital outflows. In other words, when the Fed even hints at tightening monetary policy, other countries suffer. Depending on just how much the FOMC decides to tighten at a future meeting,

Assuming a phased rise in the federal funds rate to 4% by 2017, we believe that economic growth in all regions except Latin America will slow in 2016, and then slow even more in 2017

we foresee negative effects on world GDP in the medium term, not only for emerging markets but also for industrialized economies.

Since the Fed started to curb its QE program, there has been constant speculation over just when its current accommodative monetary policy will end. Market participants, be they lenders or borrowers, know that “easy money” has an expiry date. They can see that after three large asset-purchase programs, the

Fed’s balance sheet has more than quadrupled since 2007, totalling about US$4.5 trillion in February 2015.

However, when assessing what the FOMC intends to do, it is important to bear in mind that the Fed’s mandate is to advance America’s national economic goals. This means that it has to consider not just the desirable rate of inflation (the target is a 2% annual rate), but also the state of the labour market – and its judgment has global implications.

That is why the Fed’s talk in mid-2013 about a gradual exit from unconventional monetary policy led to a so-called “taper tantrum” among investors, triggering a surge in global volatility and a shift in market sentiment against emerging markets. The question now is whether future changes by the FOMC in the federal funds rate (the interest rate at which banks lend each other their overnight money deposited at the Fed) will have similar, or indeed worse, effects.

To narrow any gap between its expectations for the economy and those of the public, the Fed publishes each FOMC member’s view of the range of interest rates that should be expected over the next few years. A member with a positive assessment of the US economy’s growth prospects will expect a rise in the federal funds rate; a pessimist will expect the rate to stay close to zero for a longer period.

Using information released by the Fed in March, we have constructed two scenarios: “liftoff” is based on the maximum

projected interest rates, while “delayed lift-off” is based on the minimum. To see the impact beyond America on GDP, consumer prices, exchange rates, and interest rates, we then apply the scenarios to a total of 36 emerging and advanced economies that together account for 90% of global output.

Assuming a phased rise in the federal funds rate to 4% by 2017, we believe that economic growth in all regions except Latin America will slow in 2016, and then slow even more in 2017. The cumulative loss in this “lift-off” scenario is about ten times as large as any lost economic output under the “delayed lift-off” alternative of only minimal changes to rates over the next couple of years.

Our research shows that any monetary tightening by the Fed will affect the rest of the world, but to differing degrees.

Those emerging markets that were hit severely during the “taper tantrum” episode – for example, Brazil, Indonesia, and Turkey – will certainly suffer. But the greatest negative impact will be on countries such as Canada and Mexico, which have close trade links with the US economy or those, like Germany, Japan, and Singapore, that are deeply integrated into the global economy.

In other words, though emerging markets – through their dependence on capital inflows – will be at risk when America’s monetary policy eventually returns to “normal,” the same will be true for advanced economies.

Reuters

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September 16, 2015

Closing Xi urges opening economy wider to world

China to streamline “green card” application for foreigners

China’s economy must open wider to the outside world to add fuel to national growth, Chinese President Xi Jinping told the body in charge of steering the country’s reform yesterday. “China should make unswerving efforts to attract foreign investment and foreign technology, and improve the mechanism for the country’s opening up,” he said at the 16th meeting of the Central Leading Group for Deepening Overall Reform. Promoting opening up while pushing forward reforms will add new impetus and vitality and provide new room for economic growth, Xi said. The leading group adopted a series of guidelines covering the most important subjects.

China will make it easier for foreigners to apply for permanent residence permits, or “green card,” to attract more talent from overseas, a high-level meeting decided yesterday. China will “optimize” requirements and streamline procedures for applications, according to a statement released after the 16th meeting of the Central Leading Group for Deepening Overall Reform. The meeting chaired

by President Xi Jinping passed a guideline on the management of foreigners’ permanent residence.

“China will manage foreigners’ permanent residence in a reasonable, open and pragmatic manner,” said the statement.

China stocks resume sharp slide Samuel Shen and Pete Sweeney

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hinese stocks dropped by almost 4 percent yesterday, denting hopes that a slew of regulatory measures issued

by Beijing over the past three months had brought some stability to the market.

Concerns about the Chinese economy mean stocks are down 6 percent so far this week, with the drop exacerbated by thin trading volumes as many investors opt to stay on the side-lines.

China’s benchmark CSI300 index of the biggest listed stocks in Shanghai and Shenzhen closed down nearly 4 percent yesterday, while the Shanghai Composite Index dropped 3.55 percent to end at 3,004, just above the psychologically important 3,000 mark.

The fall will be of dismay to Chinese policymakers trying to halt the market slide, given that up until this week trade in September had been relatively steady compared with the previous two tumultuous months.

Persistent doubts that China’s economic growth this year will meet the government’s official forecast of 7 percent are deterring

KEY POINTS Main benchmark stock indexes close down 3-4 pct Small cap stocks post the biggest falls Automakers start to rein in production, sources say China economy seen growing stably, BOJ governor says

many investors from reentering the market.

Some retail investors who spoke to Reuters said they are waiting for the Shanghai Composite index to go down to 2,500 before they start buying again.

Small cap stocks have posted even larger falls, with the CSI300 IT index down 7.4 percent yesterday and Shenzhen’s growth board

ChiNext 5.3 percent lower.

“With a slim chance of making a profit in this market, money is not coming in,” said Zhou Lin, analyst at Huatai Securities.

Data showed heavy investor redemptions last month, with total net assets of Chinese stock funds slumping 44 percent to 724.8 billion yuan (US$114 billion).

In the latest evidence of the impact of the economic slowdown, Volkswagen and other major carmakers in China have started to rein in production, wages and costs, industry sources said.

Still, Bank of Japan Governor Haruhiko Kuroda said yesterday he was confident Beijing’s measures would prove effective.

Mainland state firm to lease private tanks for oil reserves

China to relax market access with negative list

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“China’s economy has recently slowed, with (weakness seen) mainly in the manufacturing sector.

But it is expected to grow stably with support from the authorities’ fiscal and monetary measures,” he said at a news conference following the BOJ’s decision to leave its monetary policy unchanged.

Reuters

British inflation rate falls back to zero

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hina will make a negative list to identify sectors and businesses that are off-limits for investment and gradually improve the list through pilot programs, according to an official statement.

Yesterday, the 16th meeting of the Central Leading Group for Deepening Overall Reform, presided over by Chinese President Xi Jinping, approved a guideline for adopting a negative list approach for regulating market access, according to a statement unveiled after the meeting.

The move is significant in giving the market a bigger role in allocating resources, building a law-based business environment and making the market more open, the statement said.

The government should thoroughly loosen controls on powers that should be delegated to companies, and make sure that companies in sectors outside the negative list can decide how to run their businesses, according to the statement.

The country will gain experience and gradually improve the list through pilot programs, the statement said.

hina’s CEFC Energy has entered a preliminary agreement with an undisclosed state energy firm to provide oil storage to hold about 12.6 million barrels of commercial state crude reserves, two sources at the private energy firm said yesterday.

The new tanks, being built in Yangpu port on China’s Hainan island, are due to have a total capacity to hold 17.6 million barrels and to open at the end of 2015 after an adjacent crude oil terminal is ready for use, the sources said.

Under a heads of agreement signed for the deal, the storage would be leased for a maximum of six years, said the sources, who declined to name the state firm involved.

A final contract was due to be signed after the state firm received government approval to lease the storage, they said.

China has been taking advantage of low crude prices to build up reserves and in April this year overtook the United States as the world’s biggest crude buyer. The CEFC’s new Hainan tanks are part of 42 million barrels of commercial storage expected to open this year in China.

ritain’s annual inflation rate fell back to zero in August, as the cost of clothes rose at a slower pace compared with a year earlier, official data showed yesterday.

Last month’s 12-month inflation rate compared with 0.1 percent in July, dragged lower also by falling fuel and food prices, the Office for National Statistics (ONS) said in a statement.

The data was in line with market expectations and analysts still expect the Bank of England to start raising its main interest rate from a record low level in the coming months.

Yesterday, the ONS said that “a smaller rise in clothing prices on the month compared with a year ago was the main contributor to the slight fall in the rate” of inflation in August.

It noted that food and motor fuel prices “have provided some of the largest downward contributions to the 12-month rate during 2015”, adding that “historically, price movements for these products have been among the main causes of inflation”. Markets are closely tracking British inflation for indications of when the Bank of England will start to raise its key lending rate.

Xinhua

Reuters

AFP