Macau Business Daily September 18, 2015

MOP 6.00

Dore suspect former cage manager was swindler

Closing editor: Joanne Kuai

Investors react coldly to Alibaba’s recent strategy

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Page 10

China’s outbound direct investment expected to surpass US$1 trillion for first time in 2015 Page 8

Year IV

Number 882 Friday September 18, 2015

Publisher: Paulo A. Azevedo

Government: New contract with bus operator TCM effective Oct 1 Page 2

Far Horizons

Time to re-think. With gaming ‘consolidating’, it’s appropriate to develop non-gaming, says Pansy Ho. The Co-chair of MGM China is also Secretary-General of the Global Tourism Economy Forum.

Her Forum message was unequivocal. Macau companies need to learn to be more daring and innovative. And they need to get on board the One Belt, One Road national initiative Page

Competition Fierce Clothing company Bossini has reported a 9.2 per cent y-o-y drop. To HK$115.4 million in its annual results ended June 2015. Tourist area sales have declined. Driven by fewer visitors from Mainland China, ‘political uncertainties’ and ‘the appreciating US dollar’

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5

Welcome!

Casino workers. Now more proactive, tolerant and smiling at customers. The Gaming Service Index posted record highs in the 2Q. A survey conducted by Macau Gaming Research Association sent ‘mystery shoppers’ to 11 casinos to collect data

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ANIMA (Society for the Protection of Animals) is determined to shut down the Canidrome greyhound racing. A candlelight vigil taking place in different cities around the world will raise awareness and boost the campaign. CE Chui Sai On says more opinions are to be solicited from residents

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Brought to you by

HSI - Movers September 17

Stimulus Central

Name

The gov’t is turning on the tap. Pouring funds into infrastructure projects. Particularly roads, railways and airports. The central bank will cut interest rates and bank reserve requirements to galvanise the ailing economy

Pages 8 & 9

Property www.macaubusinessdaily.com

Tail Up

Property Tightrope

%Day

Lenovo Group Ltd

+5.73

China Resources Enter

+4.07

Tingyi Cayman Islands

+3.75

China Mengniu Dairy C

+2.45

China Life Insurance C

+1.97

CK Hutchison Holdings

-2.17

China Merchants Hold

-2.19

MTR Corp Ltd

-2.25

Belle International Ho

-3.58

BOC Hong Kong Holdin

-3.78

Source: Bloomberg

I SSN 2226-8294

Weak market sentiment. Plus relentless decline in gaming revenues. The slowing local economy will drive average home prices down 15 pct in 3Q. So says the Macau Property Evaluation Association.

Unfinished flats, and new and luxury homes will suffer the steepest declines. With many VIP gaming investors cashing up at deep discounts

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2 | Business Daily

September 18, 2015

Macau Air Macau mulls launching mediumhaul flights

W

Anima confident it can close down Canidrome

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he President of Anima (Society for the Protection of Animals), Albano Martins, believes the actions of the non-profit organisation will eventually lead to the closure of Macau Canidrome.

On September 30, the organisation will hold a candlelight vigil opposite the Macau Government Palace.

“We’re going to be there to remember all the animals that have lost their lives because of the dog races in Macau. Usually, we don’t

hold this kind of event but on the same day another 25 candlelight vigils will take place in different cities around the world, ranging from Asia to Europe, Oceania and America, to support us and to shut down the Canidrome”, Mr. Martins told Business Daily yesterday.

The concession for Macau (Yat Yuen) Canidrome Co. to exploit greyhound racing expires in December 31 of this year and the government has asked an unnamed

university to conduct a study to assess the importance of greyhound racing to Macau.

“We asked for a study about the Canidrome and if it should continue to operate. We know that it does not represent a large proportion of the gaming sector in Macau but it is part of it”, Chief Executive Fernando Chui Sai On said yesterday during the graduation ceremony of Institute for Tourism Studies students, as quoted by Chinese Radio TDM.

u Xiao Ming, vice president of the city’s flag carrier Air Macau, said the company is mulling the launch of medium-haul flights as part of its new five-year development plan.

Speaking to media at a company event on Wednesday, Mr. Wu said Air Macau was planning to focus on developing Southeast Asia-bound flight routes and launching mid-haul flights, such as to India.

Of the 26 destinations that Air Macau currently flies to, 18 are cities located in Mainland China, while the rest are in Taiwan, Vietnam, Thailand, South Korea and Japan.

The flag carrier executive said it has seen a double-digit drop in the number of passengers travelling on MainlandMacau routes so far this year. But stable growth is still evident in passengers taking Southeast Asian flights.

Despite having seen the number of passengers rise 6.5 per cent year-onyear to 1.08 million during the first half of this year, Air Macau filled a smaller proportion of seats on its flights.

In the first six months of this year, the airline’s passenger load factor decreased by 1.53 percentage points to 66.4 per cent.

Air Macau’s revenue passenger kilometres grew 7.7 per cent to RMB1.83 billion (about US$285.9 million) in the period.

S.L.

Bossini posts disappointing DSSOPT: Final plan performance in Macau and HK for fourth Taipa/Macau Net income of the company went down 9.2 per cent to HK$115.4 million, while the board wants to cut rental costs for the territories

T

he disappointing performance of Bossini sales in the tourist areas of Macau and Hong Kong drove the net profit of the clothing company down 9.2 per cent year-on-year for fiscal year 2014/15.

According to the filing with the Hong Kong Stock Exchange in the year ended June 2015 net profit shrank to HK$115.4 million from HK$127.1 million.

‘Although the stores in Hong Kong’s residential areas and Macau experienced decent sales growth overall, it merely mitigated partially the sales downturn for stores in Hong Kong tourist areas such as Mongkok, Causeway Bay and Tsim Sha Tsui, where the shoppers traffic reduced and competition remained fierce’, the company said.

The performance in this market – defined as ‘the heart of Bossini’s operations worldwide’ - was explained by the decline of visitors from Mainland China, ‘political uncertainties’ and ‘the appreciating US dollar’.

In relation to the Chinese Special Administrative Regions, the group generated a record-high revenue of HK$1,760 million, while in the previous year it generated HK$1,757 million. Nevertheless, operating profit decreased to HK$158 million from HK$202 million (21.8 per cent yearon-year) while the profit margin declined to 9 per cent from 11 per cent.

Concerning the outlook of the company for the regions, the company will focus on implementing cost control measures by increasing ‘shop productivity and conducting negotiations with landlords to lower rents in line with sales figures’.

In terms of overall revenue, which also includes the markets of Mainland China, Taiwan and Singapore, it recorded a very slight decrease (1 per cent) to HK$2,523 million from HK$2,548 million for fiscal year 2013/2014.

J.S.F.

connection in the works

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he director of the Land, Public Works and Transport Bureau (DSSOPT), Li Canfeng, said the government, besides conducting technical analysis, would still like to gather more opinions from the public regarding the planned fourth connection between the Peninsula and Taipa.

This comes following a written enquiry by legislstor Kwan Tsui Heng, slamming the government for the abrupt public consultation on that matter without adequately preparing the public with sufficient information on the project.

In a July 15 enquiry, Ms. Kwan said that the government had announced the public consultation less than a month before which was against the guidelines of conducting public consultations for public policies. She further pointed out that despite the government’s acknowledgement that a fourth passage is a pressing issue due to existing congested connections whose capacity is approaching saturation, the government still hasn’t even decided whether the fourth linkage is to be a bridge or a tunnel.

The Director of the DSSOPT replied in a letter that previously they wanted to build a tunnel which would be open 24 hours despite critical weather conditions such as typhoons but in the last round of studies some experts raised different proposals and suggested not establishing a lane for motorcycles, which the government felt obliged to inform the public about.

In addition, Li Canfeng said that the project involves great works, such as an analysis of capacity, impact on the view, the pros and cons of bridge or tunnel, and the methods of construction.

Moreover, the SAR Government needs to communicate with Mainland authorities because such matters involve the usage right of the waters surrounding Macau and need to comply with Mainland law as well.

However, the DSSPOT director said that a final plan will be reached within this year and that the ensuing works will be launched as soon as possible.

J.K.

Business Daily | 3

September 18, 2015

Macau Government: New TCM contract effective Oct 1 The Macau Government signed a new public concession contract with public bus operator Transportes Colectivos de Macau SARL (TCM) yesterday, according to a press release issued by the Transport Bureau (DSAT). The contract will take effect on October 1 and last until July 31 2018. The government said that the format of the contract with TCM is similar to the contract signed with Macau New Era Public Bus Company in June last year. The government has set a cap on the subsidies that it hands to TCM:

whenever the revenue generated from fares and other assets exceeds the bus operator’s expenses by 4 per cent, the operator will have to return the subsidies it received in excess to the government. New Era’s subsidy cap stands at 3 per cent.

Once the contract with TCM takes effect, the government expects that it will give a monthly subsidy of MOP15.5 million to the bus operator. The government says new contract negotiations with Transmac are still ongoing.

Appraisers: Average home price for Q3 could drop 15 pct The Macau Property Evaluation Association says given the weak market sentiment the average home price could drop 15 pct q-o-q

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he city’s average home price for the current quarter could drop by some 15 per cent compared to the second quarter, with highend homes declining by about 20 per cent or more given the prevailing weak market sentiment, said the Macau Property Evaluation Association’s founding president Leong Keng Seng.

“For all types of homes here, our members [appraisers] have seen a downtrend in price levels in the current quarter,” Mr.

Leong told us. “For some secondhand flats that are more than 10 years old, their average price has so far dropped by around 10 per cent quarter-on-quarter, while for high-end homes, a decline of about 20 per cent or more is evident for the current quarter. So, we’re expecting that the July-September period will show a 15 per cent quarteron-quarter drop in home prices.”

The homes sh owin g steeper declines are mainly unfinished flats or new

homes with transaction notary uncompleted, which many VIP gaming investors have had to sell recently with deep discounts to cash up, Mr. Leong said.

Weakened market

Weak home market sentiment has persisted as the local economy has slowed against the backdrop of the continuous decline in casino earnings, which have made both buyers and sellers more hesitant in closing deals, Mr. Leong and estate broker Centaline

(Macau) Property Agency Ltd. told Business Daily.

Compared to the second quarter, the average home price for July and August has already shown an 8-9 per cent drop, according to Centaline Macau’s figures.

In the second quarter of this year, the average home price was MOP95,565 per square metre, up 7.2 per cent from the previous quarter but nevertheless a drop of 16 per cent compared to a year ago, according to Financial Services Bureau (DSF) data. The Bureau

has also recorded a total of 1,848 home transactions in the second quarter, 500 less than a year ago.

Different opinions

While Mr. Leong expects the home price downtrend to persist in the coming quarter and next year, senior regional sales director of Centaline Macau, Roy Ho Siu Hang, disagrees.

“Market sentiment is indeed very weak now as people have sensed the economic slowdown here,” Mr. Ho said. “But unemployment here has not increased much, and people’s salaries have also been rising.”

Mr. Ho is still optimistic that market sentiment could improve in the coming months following a better economic outlook with more Cotai casino-resorts openings and the government’s efforts to help improve the tourism business here.

S.L.

4 | Business Daily

September 18, 2015

Macau opinion

Hotel Estoril

Dore suspect former cage manager of swindling Junket operator Dore Entertainment has declared after days of investigation that it suspects a former employee has used the company’s name to take capital from outside depositors offering high interest rates

Pedro Cortés

Lawyer* cortes@macau.ctm.net

I

t doesn’t look like – despite the advanced baldness I already flaunt – but it’s been 13 years and 6 months since I arrived in Macau.

At that time we used to play football in Tap Seac. Then, we could cross the Nobre Carvalho Bridge. Sai Wan was still a project.

But even then there was a common building in Macau with a rotten aspect: the Hotel Estoril.

There were intentions that it harbour the new facilities of the Portuguese School. There were intentions. But then the road to hell is paved with good (and bad) intentions. Well, finally we have a Secretary - Mr. Alexis Tam - who put his hand up to create something iconic and different. A Secretary with vision, irrespective of my not agreeing with some other policies, such as the smoking ban.

But Mr. Tam is making things happen and demonstrating a work ethic. Of course, he will be criticized for the work done. But much better, surely, than not doing anything and being considered competent by default.

What Macau also needs is to have places to be visited because the iconic buildings were fashioned by famous architects. What would Bilbao in our days be without the Guggenheim Museum?

Well, Macau needs just that. That’s also part of the diversification of the economy. Iconic buildings create new tourism opportunities and new tourists. People that go to Taipei visit the 101 tower. Tourists who go to KL visit the Petronas Towers. Singapore has the Marina Bay Sands Complex and we already think of it as if the city was the building.

Well, one may say, we have the Grand Lisboa and we already almost have two Arc de Triomph-like buildings. We will have an Eiffel Tower soon. Yeah, yeah, yeah… Except for the Grand Lisboa, that one starts to like after some years, the others are copies. And people will still prefer the original.

In this context, then, I congratulate Mr. Tam and his advisors for the idea of summoning international architects – with all due respect to the locals, some of whom are my very dear friends – to create a project for the Estoril Hotel. Needless to say, I also like the current façade. But I truly dislike the decadent status of the building.

Macau needs politicians like Mr. Tam: with vision, without fear of making mistakes, with the capacity to project the city and solve problems. What’s next? The hospital in Cotai before the projected term? Efforts are needed for the good of Macau residents and of all those who would visit us. * Part-time Lecturer at the Chinese University of Hong Kong

Stephanie Lai

sw.lai@macaubusinessdaily.com

J

unket operator Dore Entertainment Co. Ltd. said that it suspects former cage manager Mimi Chow had used the company’s name to attract deposit capital by offering high interest rates, a swindling act that the company has also fallen victim to along with other outside investors and depositors.

The statement came from a declaration notice published by the junket operator in the local Chineselanguage newspaper Macao Daily

News yesterday, which said that the company had concluded that Ms. Chow has allegedly stolen over HK$100 million from the cage.

Dore published this notice following a demonstration by about 40 people claiming to be depositors or investors in the junket firm in the past few days, telling media that they were unable to withdraw their deposits from the company since the news of the alleged cage capital theft broke last week.

‘The company has never collected capital by offering high interest rates because it well understands that this action is illegal,’ Dore said in the statement.

‘After days of internal investigation, the company suspects that former cage manager Ms. Chow [Mimi Chow] has used the company’s name without authorisation and pooled capital by offering high interest rates,’ the statement reads. ‘This is a swindling act that not only involves the company’s clients but also people that have no connections to the company.’

But the junket firm, which runs VIP business in Wynn Macau casinoresort, said that its operation is ‘business as usual’ so far.

In a previous statement, Wynn Resorts said it had not any money or was owed any by Dore.

As of Wednesday, the city’s Judiciary Police said it had received 31 reports in total from Dore and depositors regarding the alleged theft of capital, which involved some HK$330 million (US$43 million).

The alleged theft of cage capital is still under investigation.

‘The company would suggest people that have been impacted by the incident report to the Judiciary Police, and keep all related receipts or evidence to assist police solve the case,’ Dore said in the statement.

‘The incident has already imposed a negative influence on the company that is hard to compensate for. The company is also a victim of the incident’.

Three Mainlanders arrested for texting junk messages

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udiciary Police arrested three men from Mainland China for sending text messages and ads promoting illegal online gaming. This is the sixth operation launched by the police this year tackling junk message stations – usually referred to as ‘fake base stations’.

In yesterday’s operation, police raided four residential units near the Border Gate area and confiscated 9 fake stations, including wire, laptops and radio frequency simulators.

The police said these criminal organisations usually rent units facing the Border Gate. One of the apartments busted was the second time it was found to have hosted a fake base station.

Secretary for Security Wong Sio Chak recently 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 of 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. The Secretary said a long-term mechanism of regional co-operation with Zhuhai authorities has been established and the mission for tackling junk messages has been made an ongoing priority by the Secretariat.

Business Daily | 5

September 18, 2015

Macau Water fee hike contract signed Secretary for Transport and Public Works Raimundo Arrais do Rosário has signed the additional clause on service fee increase of the contract extending the service supply period of Macau’s sole water distributor Macao Water Supply Co. Ltd, according to a press release issued by the Secretary’s office yesterday.

The government granted a 4.28 per cent increase to MOP5.12 (US$0.64) per cubic metre of water supplied to users to the company last week, substantially lower than the 11.88 per cent requested by Macao Water in March. The government says the increase in service fee will come into effect following the day the adjustment is published in the Official Gazette. The increase will not affect the price that users pay.

Pansy Ho: Macau companies need to be more daring The Secretary-General of the Global Tourism Economy Forum defined the companies in Macau as too conventional and appealed for them to be more innovative João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he Vice Chairman and SecretaryGeneral of the Global Tourism Economy Forum, Pansy Ho, said yesterday that the companies operating in Macau are too conservative and that in order to expand they need to be more daring. Ms. Ho spoke during the press conference launching the Global Tourism Economy Forum, which will take place in The Venetian from 12-14 October.

“In the Forum we will have

Internet and technology experts that will be keen to show how to look and explore the Mainland China market, and especially how to build a better network. This is really needed in Macau, where companies are too conventional. We need to be more advanced”, Ms. Ho said.

The fourth edition of the Global Tourism Economy Forum will be themed ‘Belt and Road Initiative: Unleashing the New Dynamics of

Last chance for open-top bus tour The government is in talks with a local travel agency to introduce changes to the open-top bus tour in order to attract more tourists. The project was launched five weeks ago but has failed to attract the attention of visitors to the point that it may be scrapped in the coming weeks.

“We’re considering introducing changes to the routes by increasing the number of buses and focusing only on one of the two routes available. There are also indications that the price may be too high and that may be changed”, Maria Helena de Senna Fernandes, the Director of MGTO, said.

“We are working with the selected travel

agency to run the bus tour to improve the quality of the product to attract more tourists. If the changes introduced fail then we may have to scrap it”, she said.

“But the product needs more time in the market; it was only introduced five weeks ago, so we have to wait”.

The Director of MGTO also said that because the number of visitors from January to July had dropped 3.5 per cent year-on-year the government has been in conversation with travel agencies mainly from Hong Kong and Taiwan to compensate for this decline. The policy in terms of visitors is to attract around 31.5 million per year, as per last year.

Cultural Tourism’, which is directly related to Mainland China’s One Belt, One Road policy introduced in 2013 by President Xi Jinping, who advocates connecting Asia and Europe and hopes to assert China’s status on the international stage.

“In last year’s edition we already approached this theme. But now we want to take it further. We will have the participation in the Forum of many different countries, which also shows that people are assimilating the importance of Macau as a platform in the One Belt, One Road policy”, she said.

However, and despite the achievements made, the SecretaryGeneral of the Global Tourism Economy Forum has a clear direction for the event in future editions.

“In the future we want to explore more elements that can be related to this policy. We want to bring more parties to the event and enlarge the cooperation between different suppliers and industries, which at this time we haven’t yet established a relation with”, she said.

Time to rethink Macau

Driven by the decline in gaming revenues, which in turn was mainly affected by external factors, the territory has sunk into recession.

However, for Pansy Ho, who is also Co-Chairperson of MGM China, this is an opportunity to rethink the tourism industry in Macau.

Harbour Mile project?

Eight years waiting and counting Yesterday, on the sidelines of the event, Pansy Ho, in her role as Managing Director of Shun Tak, was asked about the luxury residential Harbour Mile project, which is to be located in Nam Van area near Macau Tower.

“Our application in relation to this project was submitted eight years ago and we are still in the application project. We are following the law”, she said.

The project is pending the Master Plan of Nam Van area, which the government has been reviewing. Besides this project, Pansy Ho said that Shun Tak has other projects pending government approval.

Although she did not name the projects, they include a hotel to be developed in Cotai for which the company is waiting for a land grant.

“When there’s a really fast growth there is no time to think very clearly about development. The consolidation of the gaming revenues is offering us the time to think about the tourism industry and if we manage to increase non-gaming elements and increase the attractiveness of Macau then this period is really good for all of us”, she said.

At the press conference the Macau Government was represented by the Chief of Office of the Secretary for Social Affairs and Culture Lai Ieng Kit and the Director of the Macau Government Tourist Office (MGTO) Maria Helena de Senna Fernandes.

6 | Business Daily

September 18, 2015

Macau

Gaming service quality at record high The Gaming Service Index compiled by the Macau Gaming Research Association shows that the service quality of dealers increased 33 pct Q-o-Q, indicating more proactive attitudes, tolerance and smiles Joanne Kuai

joannekuai@macaubusinessdaily.com

T

he Gaming Service Index (GSI) of the 2Q 2015 was 131 based on reference year 2013 of 100, representing an increase of 24 per cent quarter-on-quarter and 22 per cent year-on-year. The score is so far the highest since the survey was first conducted in 2013.

The latest result was released this week. The index was compiled by the Macau Gaming Research Association (MGRA) and conducted by SGS Hong Kong Ltd. Undercover assessors rated staff in 11 casinos from all six gaming operators on ‘smile’, ‘proactive attitude’ and ‘patience’.

The data was collected by undercover clients, recruited and trained by MGRA and SGS. The targets of assessment included the mass markets of Wynn, MGM Macau, Galaxy, Lisboa, Grand Lisboa, City of Dreams, Oceanus, Ponte 16, Venetian and Sands Cotai Central.

The report did not identify which casino operators had the best or worse scores, showing that all six operators have improved since last year’s assessment.

Historical peak

According to the Gaming Service Index, results collected on weekdays outperform those on the weekend.

chatted and laughed with fellow colleagues. He did not actively greet customers.’

Security employees demonstrated the best service performance of the various staff categories assessed.

And there is an obvious trend of improvement in table games, which dominate headcount.

The survey conductor said that during the data collection process, SGS arranged a group of project coordinators for supervision in order to ensure quality standards. Mystery shoppers had to submit data within 24 hours after the visits to avoid a vague memory after a long period of time.

Other services However, the gap between the two timeslots started to narrow from the last quarter of 2014 while the two figures are nearly on a par with the second quarter of 2015.

In terms of different criteria, the ‘smiling’ index keeps climbing, standing at 110 in the first quarter of 2015 and 127 in the second quarter, the highest since the survey has been conducted.

The ‘proactive attitude’ index dipped to its lowest point in the first

Macau Gaming Service Index (GSI)

Source: Macau Gaming Research Association (MGRA)

quarter at 82, but had a rebound that topped the chart in the second quarter at 144. The tolerance index also hit its historical peak at 127 in the second quarter.

The sample size totalled 864 casino workers in the first half. The score for each evaluation is either 0 or 1, with the industry average score the mean of six concessionary casino operators.

Best security

The index measuring different departments in casinos showed mixed results. The increase was more noticeable for ‘Dealers’, ‘Slot machines attendants’, ‘Guest Services’. The performance of dealers increased 33 per cent quarter-on-quarter.

A positive sample of smiling dealers reads: ‘Staff [member] asked if customers needed cards with a smile on her face. There is no feeling of cool and rigid service attitude’, while a negative sample reads: ‘Staff did not have any smile when servicing customers, but the staff [member]

The research also included the waiting time at shuttle bus stations, which indicated that in general waiting time bounced back to 9.8 minutes in the second quarter of 2015, from the record short of 4.7 minutes recorded in the previous quarter, but is on par with the figures of 2014.

In addition, the air quality comment shows that is was generally good in the first half of 2015. Also, since the second half of 2014, more than 60 per cent of toilet environment assessments consistently rated ‘satisfied’.

The Association says that the Gaming Service Index should be compiled periodically to facilitate trend analysis in order to monitor the service level of the gaming industry.

The community will be aware of its service quality, and gaming concessionaries can improve their customer service using this GSI as their benchmark. In the meantime, the Macau Gaming Research Association said they had conducted their Fifth General Meeting and elected new office bearers.

Corporate MGM presents ‘Red Mansion Feast’ in October

Sofitel Celebrates Wine Days

MGM Macau is collaborating with Yechun Teahouse, a century-old restaurant in Yangzhou, to prepare a menu of Huaiyang delicacies and Red Mansion Feast, all created by a master chef’s team of nine nationally renowned chefs from the region with MGM’s elite chef’s team.

Sofitel Macau At Ponte unveils the all-new 2015 edition of Sofitel Wine Days, during which Sofitel hotels around the world will celebrate French wine and art-de-vivre, offering guests a wide array of extraordinary wine experiences. Sofitel Macau’s programmes will be held from September 21

In October this year, MGM’s two signature Chinese restaurants will collaborate with Yechun Teahouse in preparing a Huaiyang Feast and an inaugural Red Mansion Feast in Macau featuring co-operation between nationally renowned chefs from Yangzhou and MGM’s chefs.

to October 31, 2015 during the traditional wine harvesting period in France. From a partnership with 2004 Worldwide Best Sommelier Enrico Bernar-do to an exclusive global study about the art of wine to luxurious in-hotel events, Sofitel Wine Days 2015 is a happening that is not to be missed!

8 | Business Daily

September 18, 2015

Greater China

Growth as a

Premier Li Keqiang has r was no basis for more de Kevin Yao

C

hina’s policymakers think they can stem a rapid rundown of their foreign exchange reserves and ease pressure on the currency by pump-priming the economy to meet this year’s growth target, sources involved in policy discussions said.

Beijing will channel funds mainly into infrastructure projects, including railways, roads and airports, and the central bank will cut interest rates and bank reserve requirements, policy insiders say, reigniting fears of reverting to an old stimulus playbook at odds with an official drive to reform the economy.

“If we can stabilise growth, yuan depreciation expectations could be changed,” said an influential economist who advises the government.

“We need to stabilise growth by stepping up fiscal policy support,” he said.

The Ministry of Finance did not immediately respond to a request for comment.

But meeting an arbitrary growth target might not satisfy global markets, who are increasingly worried that imbalances in the economy are not being addressed.

Beijing, mindful of the lessons learned in 2008-09 when a massive

Total offshore investment Beijing-Washington co-operation on track to book US$1 tln on hacking Xi’s agenda

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hina’s outbound direct investment (ODI) is expected to surpass US$1 trillion for the first time in 2015, as slowing economic growth and rising internationalisation of Chinese business see more local companies investing overseas.

Total direct investment offshore increased to just under US$883 billion in 2014, Zhang Xiangchen, Deputy China International Trade Representative at the Ministry of Commerce (Mofcom), said yesterday.

The commerce ministry on Wednesday reported that non-financial outbound direct investment rose 18.2 percent to 473.4 billion yuan, or US$77 billion, for the first eight months of the year.

Mofcom yesterday also revised up its 2014 offshore non-financial direct investment tally to US$107.2 billion from the US$102.9 billion reported previously, taking total outward investment for the year to US$123.12 billion.

China’s slowing economy and market volatility is driving domestic firms to acquire foreign brands and technology, as well as diversifying, said Thilo Hanesmann, Research Director at Rhodium Group in New York.

The Beijing government has

rolled out policies to support the global efforts of Chinese companies, offering financial incentives and removing administrative controls on offshore deals.

Chinese firms have already announced or completed 390 deals worth US$77 billion in the year to Sept 16, according to Thomson Reuters data, a doubling of the deal amount for the same period last year.

China’s global M&A deal volume this year already surpasses the US$70.4 billion in deals reached in 2008, formerly the biggest year so far for offshore mergers.

Industrial deals were the biggest transactions, led by China National Chemical Corp’s buyout of Italian tyre-maker Pirelli & C Spa for US$8.88 billion, which included Pirelli’s debt.

Many of this year’s big-ticket deals were done by Chinese firms buying financial services businesses, including HNA Group Co’s subsidiary Bohai Leasing Co, which paid $2.56 billion for aviation leasing firm Avolon Holdings Ltd. By the end of 2014, 18,500 Chinese domestic investors had established nearly 30,000 enterprises overseas, with about 77 percent showing profits in 2014, Zhang said.

Reuters

Law enforcement cooperation likely to be discussed Michael Martina

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hina opposes Internet attacks and wants to work with the United States in cyberspace but will defend its interests, a senior Chinese official said yesterday after U.S. President Barack Obama warned of a forceful response to Beijing over hacking.

Tensions over cyber security will take centre stage during a trip by Chinese President Xi Jinping to Washington next week, Xi’s first state visit to the United States.

Obama told executives on Wednesday the United States has emphasised to China that industrial espionage in cyberspace would be considered an “act of aggression”, and called for an international framework to prevent the Internet from being “weaponized”.

Beijing and Washington face “common challenges” on Internet security, making it “especially important for the two sides to increase mutual trust and cooperation

in cyberspace”, Chinese Assistant Foreign Minister Zheng Zeguang said.

“At the same time, the Chinese government firmly safeguards its own interests in cyberspace and is resolutely opposed to any statements or actions that harm China’s interests,” Zheng told reporters at a briefing on Xi’s state visit.

Zheng said “we can cooperate and we should cooperate”, including on setting international Internet standards.

Last week, U.S. officials said Washington was considering sanctions against both Russian and Chinese individuals and companies for cyber attacks against U.S. commercial targets.

However, a person briefed on the White House’s thinking said on Tuesday the United States does not plan to impose sanctions on Chinese entities for economic cyber attacks ahead of Xi’s visit to avoid what would be seen as a diplomatic disaster.

The New York Times, citing unidentified sources, reported that Beijing had sent a letter to some U.S. firms earlier this summer asking them to promise they would not harm China’s national security and would store Chinese user data within the country.

Law enforcement cooperation is also likely to be on the agenda during Xi’s visit, with Beijing pushing Washington for help in tracking down and repatriating dozens of alleged Chinese fugitives living in the United States who are wanted in China as part of a widespread crackdown on corruption.

U.S. officials say they are not averse to such cooperation but that, despite requests, Beijing has failed to produce the kind of evidence of criminality needed under American law to support deportation.

Zheng said Beijing had provided “ample” evidence.

Reuters

Business Daily | 9

September 18, 2015

Greater China

antidote to currency woes

Fund to promote energy efficient buildings with U.S.

repeatedly said the yuan will be held basically stable and there epreciation

stimulus package saddled the economy with debt, may assess spending plans more carefully this time and make sure projects are financially sound, policy insiders say.

A report by Citi economists said policymakers risked a deeper “recession”, which they defined as a significant increase in unemployment and excess capacity, if stimulus favoured investment rather than encouraged a shift to consumptiondriven growth.

The economists said they feared that “even if a timely fiscal stimulus is implemented, its composition is likely to be such that excess capacity in the traditional industries and sectors is enhanced, thus avoiding an early recession only by raising the risk of a later but deeper and longer recession”.

The signals are that spending will be directed to traditional engines.

China’s top planning agency, the National Development and Reform Commission (NDRC), has approved about 800 billion yuan (US$126 billion) of railway, port and highway projects so far this year.

Government spending jumped 26 percent in August from a year earlier as Beijing tries to re-energise flagging growth.

“Investment faces big downward pressure, and it’s difficult to boost exports, while there is more room to manoeuvre on fiscal policy,” said an economist at a well-connected think-tank.

Forex worries

The central bank has been using its foreign exchange reserves since mid2014 to support the yuan, but pressure on the currency has intensified since a surprise devaluation on August 11.

In the face of a surge in capital outflows, the central bank sold down its forex reserves by a record US$94 billion in August, taking the cumulative drop to $436 billion, or 11 percent, since a June 2014 peak of US$3.99 trillion.

The yuan-buying intervention has also tightened liquidity conditions, forcing Beijing to cut reserve requirement ratios for banks, to release funds into the market.

“It will be troublesome if market expectations (for the yuan) become one-sided,” said a senior economist at a top government think-tank.

China may see further declines in its reserves, which are still the world’s largest, if pressure on the yuan and capital outflows persist because of domestic weakness or external factors such as a U.S. rate rise.

Rare earth demand rising 50 pct by 2020 China not only produces around 90 percent of global rare earth supplies, but also consumes about 80 percent

C

hinese rare earth demand is likely to soar by more than 50 percent in the next five years, putting pressure on authorities to relax tough production quotas that have spurred illegal mining and rampant smuggling.

Chen Zhanheng, vice-secretary general of the Association of China Rare Earth Industry, told a conference in Shanghai that domestic consumption

was expected to rise nearly 9 percent this year to 97,700 tonnes, and would end the decade at nearly 150,000 tonnes, up from 90,000 tonnes in 2014.

With China expected to export at least 30,000 tonnes through official channels this year, the production cap of 105,000 tonnes is unlikely to satisfy total demand, meaning that there are still incentives for illegal producers.

Analysts differ on the minimum reserves needed to ensure sufficient cover for imports and debt, with some government economists putting it at $2 trillion.

China will conduct checks on firms’ foreign exchange buying to prevent speculation and step up a crackdown on illegal cross-border money transactions, an official at the country’s foreign exchange regulator said on Thursday.

“We should strengthen supervision on FX outflows, but it’s far from reaching a stage that we employ real capital controls,” said the influential economist who advises the government.

The credibility of Beijing’s economic forecasting could be critical to stemming the outflows, especially as top leaders meet in October to determine the next five-year plan for 2016-2020.

Sources have said the plan is likely to maintain a growth target of about 7 percent, driven by a previous goal to double GDP in the 10 years to 2020.

“Their determination to safeguard this year’s growth target is great” said a government economist.

“So is the difficulty,” he added.

Reuters

“It is not very easy to close all illegal mining and it is very easy for illegal miners to steal from the mines.

Costs are low, the mines are scattered and some local governments also protect illegal miners,” said Chen.

China’s controversial reform plans for the rare earth sector have included strict production and export quotas as well as a nationwide crackdown on illegal mining and processing. Plans to consolidate production in the hands of six state-owned conglomerates are also due to be completed by year-end.

China said the policies were designed to curb pollution, but overseas critics said its real aim was to dominate strategic downstream sectors like defence and renewable energy. Rare earths are used in a range of products from smartphones to military jet engines and hybrid vehicles.

While it has now been forced to ditch export quotas following a World Trade Organisation ruling, China has already encouraged overseas consumers to relocate to the country.

China not only produces around 90 percent of global rare earth supplies, but also consumes about 80 percent, according to industry estimates, and demand is set to continue rising.

Dudley Kingsnorth, executive director of the Industrial Minerals Company of Australia, said there will be a supply shortfall of 50,000 tonnes this year that is likely to be met by illegal production in China.

Illegal output and smuggling from China have helped drag global prices to their lowest level since 2011 and put foreign producers like Molycorp in jeopardy.

“This is the major issue facing the industry today, and unless this is controlled, it will bring catastrophe for a long time,” said Kingsnorth.

Reuters

Chinese and U.S. companies launched a cooperative fund to promote energy conservation for buildings in China yesterday. The fund is facilitated by the Office of the Central Leading Group for Financial and Economic Affairs, one of the country’s top economic offices, and the Paulson Institute to reflect the consensus of both countries to combat climate change. Chinese companies, including China State Construction, Industrial and Commercial Bank of China and Vanke and U.S. firms Warburg Pincus and DOW Chemical, contributed to the fund.

Checks to prevent speculation China will conduct checks on firms’ foreign exchange buying to prevent speculation, an official at the country’s foreign exchange regulator said yesterday. Wang Yungui, head of policy and regulation department at the State Administration of Foreign Exhange (SAFE), said some firms engage in large-scale foreign exchange purchases to seek arbitrage opportunities. Wang also said capital account reforms will continue but risks will be taken into consideration.

Bank regulator urged to “leave no stone unturned” China’s banking regulators must “leave no stone unturned” rooting out illegal activity, the ruling Communist Party’s anti-graft watchdog said yesterday, intensifying a campaign against graft launched by President Xi Jinping. Dozens of senior officials have been investigated or jailed since Xi took over the party’s leadership in late 2012 and the presidency in 2013. “In the past half year Huarong, Great Wall, Dongfang, Xinda, four other asset management companies, and China Merchants Bank have all been investigated, and concrete results achieved,” the party’s Central Commission for Discipline Inspection said.

Xi to tour Boeing, Microsoft on U.S. visit Chinese President Xi Jinping will tour Boeing Co and Microsoft Corp in Seattle on the first stop of his U.S. visit next week, state and company officials confirmed. His itinerary for the September 22-24 stay in Seattle includes visiting Microsoft’s campus in Redmond, Washington, and Boeing’s massive factory in Everett. Xi is expected to make the only policy speech of his U.S. visit in Seattle on September 22. “We’re honoured that President Xi will see our factory and meet the Boeing employees who worked to deliver a record 155 airplanes to China last year,” Boeing Chairman Jim McNerney said.

MOU with Argentina for yuan clearing China’s central bank said yesterday that it signed a memorandum of understanding on yuan clearing with Argentina’s central bank. A yuan clearing facility in Argentina would benefit bilateral trade and investment, according to the statement published on the People’s Bank of China website.

10 | Business Daily

September 18, 2015

Greater China

Lost in translation? Alibaba’s hot deals leave investors cold Alibaba’s transition to mobile shopping from more lucrative PCs has been slower than expected Paul Carsten and John Ruwitch

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year since it went public in the biggest stock listing ever, China’s Alibaba Group Holding Ltd has spent more than US$6 billion on everything from an electronics store chain to a robot maker. As shares hover below their debut price, investors in the e-commerce giant wonder just when it will all pay off.

The seemingly scattershot approach to deals has left shareholders asking how Jack Ma’s baby, once the darling of bourses, analysts and investors alike, will pull new businesses together to manage a vital transition.

From dominance of a surging China, it must cope with saturation in a slowing economy where shoppers are beginning to tighten their belts. At the same time,

smaller rival JD.com Inc’s growing market share is cause for concern - especially as it’s backed by Alibaba nemesis Tencent Holdings Ltd. “They are trying to do too many things at once,” said John Ettinger, a co-portfolio manager of the US$5.6 billion Federated Kaufmann fund, which has owned Alibaba shares since the fanfare of the initial public offering.

Close to US$140 billion has been wiped off the company’s market value since last November’s peak.

The shares have fallen 28 percent since the end of their September 19 opening day surge, versus a 0.8 percent fall in the S&P 500.

Alibaba Executive Vice Chairman Joe Tsai painted the acquisitions strategy as a coordinated game of chess

in an interview with Reuters last week.

Still, Alibaba’s transition to mobile shopping from more-lucrative PCs has been slower than expected and in August it reported its worst recorded quarterly growth in revenue and transaction volume. With the latter expected to fall further, a flurry of brokerages have cut targets; one lone analyst recommends selling.

From taxis to football

The US$6 billion-plus in M&A activity since the IPO has highlighted an expansion strategy that’s nothing if not diverse. Since 2013, investments by Alibaba and affiliates stack up to more than US$16 billion,

by Reuters’ calculations, in sectors such as taxi hailing,

pharmaceuticals, financial media, postal services and half a football club.

Publicly available data suggests an underwhelming performance so far by several investments.

Shares in microblog platform Weibo Corp, retailer Haier Electronics Group Co Ltd, online video firm Youku Tudou Inc and mobile dating firm Momo Inc have underperformed the broader markets since Alibaba pumped cash into them.

Even those whose shares have gained have struggled to make profit. Alibaba Pictures Group Ltd has lost money for the past 18 months, while Alibaba Health Information Technology Ltd hasn’t been profitable since early 2012; its losses have only increased.

An Alibaba spokesman said the firm was optimistic about these companies’ prospects and had communicated there would be losses early on, but declined to comment on other investments.

Some of these deals do tie into broader strategies to improve the e-commerce firm’s logistics, and expand into new areas like digital entertainment and Internet finance.

But some say Alibaba cash-rich from years of wildfire growth - is spending big and wide in search of success beyond its central business as the threats of shrinking margins, slowing growth and dangerous rivals loom.

“They’re trying to hedge their bets in several directions,” said Richard Kramer, the London-based founder of Arete Research. “I think they realise that there’s going to be natural limits to their core business.”

In February, Alibaba invested US$590 million in obscure Chinese smartphone maker Meizu Technology Co to compete in a market which is already saturated and seeing margins flatten and competition intensify.

The online giant has even gone big to get into a sector whose business it helped disrupt. In August, Alibaba paid a hefty 146 times Suning Commerce Group Co Ltd’s earnings to take a US$4.6 billion stake in the brick-andmortar electronics retailer, an investment it says is a logistics play.

Still, the company’s growth and entrepreneurial success story remains a draw for many. Most brokerage target prices are above the current level, and analysts like Chi Tsang, with HSBC in Hong Kong, remain bullish.

“We’re just stuck in this negative vortex, where people don’t like China...and now it’s a ‘broken IPO’, which has added even more insult to injury,” he said. “The stock is cheap, it’s very cheap.”

Reuters

NZ rejects farm purchase by Mainland company China has encouraged firms to look overseas for sources of meat, dairy and other proteins as its middle class expands

N

ew Zealand's government yesterday unexpectedly blocked the NZ$88 million (US$56 million) purchase of a local farm by China's Shanghai Pengxin amid public concerns about foreign land ownership.

The move was a surprise as the Overseas Investment Office (OIO), a body that supervises foreign bids for sensitive assets in New Zealand, had previously given its approval for the sale of the 13,800 hectare Lochinver farm in the country's North Island.

"We are not satisfied there will be, or is likely to be, a substantial benefit to New Zealand - a key requirement for applications of sensitive land of this size," the government said in a statement.

Rules on foreign ownership of land in New Zealand are stricter than in

many other nations as the potential buyer has to show a benefit to the country.

Pengxin, owned by Chinese billionaire Jiang Zhaobai, said in a statement it was surprised by the decision and was considering its options.

Stevenson Group, which agreed to sell the property to the Chinese buyer, said it was unclear why the farm was different to others that had been approved.

Shanghai Pengxin New Zealand is part of Chinese conglomerate Shanghai Pengxin's agribusiness, which has been aggressively investing in the nation.

Dairy is New Zealand's largest export earner, while China is the nation's biggest customer for many dairy and meat products.

Reuters

Business Daily | 11

September 18, 2015

Asia

Singapore’s disappointing exports add to easing risk In January, the central bank eased its monetary policy in an off-cycle move, but then left it unchanged in April Jongwoo Cheon and Masayuki Kitano

KEY POINTS Aug NODX -8.4 pct y/y vs -3.0 pct forecast Aug NODX -4.6 pct m/m sadj vs +0.5 pct forecast NODX to China, Europe shrink more; U.S. sales up

In January, the monetary authority eased its monetary policy in an off-cycle move, but then left it unchanged in April

S

ingapore’s exports fell more in August than expected on a steep decline in sales to China and Europe, adding to the prospects of a further easing by the central bank next month to shield the economy from uneven global growth and to shore up inflation.

Non-oil domestic exports (NODX) slid 8.4 percent in August from a year earlier, trade agency International Enterprise Singapore said in a statement yesterday.

That compared with a 3.0 percent contraction forecast in a Reuters poll.

In July, non-oil domestic exports eased 0.7 percent from a year earlier with shipments to the United States, China and Europe declining.

Exports on the month fell 4.6 percent in August on a seasonally adjusted basis, compared to a 0.5 percent rise predicted in the survey and a 2.5 percent gain in July.

The data came ahead of the Monetary Authority Singapore’s (MAS) semi-annual policy meeting in October.

Recent disappointing economic data such as July factory output stirred concerns over a technical recession and the need for policy easing next month. The central bank has not published the date of the meeting yet.

“Growth is clearly undershooting.

Core inflation is still benign for now. So normally that would actually warrant an easing in monetary policy settings, when the central bank actually next meets in October,” said Weiwen Ng, an economist for ANZ. The MAS’ policy response, however, is also likely to be constrained by its focus on cost pressures arising from a tight labour market and higher debt servicing costs on rising interest rates, Ng said.

Singapore’s monetary policy is focused on managing the exchange rate rather than interest rates.

Expectations for a softer Singapore dollar can put upward pressure on local interest rates as investors seek higher yields as compensation for holding the weakening currency.

In January, the central bank eased its monetary policy in an off-cycle move, but then left it unchanged in April.

The trade-dependent economy has been suffering from deepening slowdown in major markets such as China.

Non-oil domestic exports to China - Singapore’s largest export market - fell 8.2 percent in August from a year earlier. That compared with 1.6 percent contraction in July.

Annual sales to Europe slid 9.0 percent in August, compared with a 1.7 percent fall in July.

Non-oil domestic exports of electronics fell 2.7 percent in August from a year earlier. That compared with a 2.5 percent gain in July.

“The electronics exports has fallen despite a very supportive base from last year. That suggests that to an extent the global impact is starting to come to Singapore now, especially what we are seeing in China,” said Vaninder Singh, an economist for RBS. Singh added that his current expectation is that the MAS will reduce the slope to zero percent at its October policy meeting.

Manufacturing is a key element of Singapore’s exports, but it has been underperforming neighbours such as South Korea and Taiwan due to fierce competition and Singapore’s lack of popular high-tech products such as smartphones.

Activity in Singapore factories, including the important electronics sector, shrank for a second straight month in August, a survey showed earlier this month.

Reuters

Obama upbeat on prospects for Pacific trade deal TPP trade ministers failed to clinch a deal at a meeting in late July

U

.S. President Barack Obama (pictured) said he was confident Pacific Rim nations could nail down an agreement on a freetrade pact this year although approval by the U.S. Congress was not guaranteed.

Speaking to a group of corporate executives, Obama said trade ministers should soon have an opportunity to close a deal on the 12-nation Trans-Pacific Partnership.

In Ottawa, a Canadian official later said chief negotiators would meet in Atlanta, Georgia on Saturday September 26 and trade ministers would gather in the same city the following week.

“I’m confident that we

can get it done, and I believe we can get it done this year,” Obama told the Business Roundtable.

He added, however, that U.S. lawmakers might not sign off on the pact even though they have given him authority to speed trade deals through Congress.

“The politics around trade are tough,” Obama said.

The TPP, a centrepiece of Obama’s push to reassert U.S. economic power in Asia, would link a dozen nations stretching from Japan to Chile that account for two-thirds of the world economy and onethird of global trade.

TPP trade ministers failed to clinch a deal at a meeting

in late July, but they have said an agreement was within reach, despite some remaining thorny issues in some sectors such as autos and dairy.

The Canadian official also said representatives from the United States, Canada, Mexico and Japan would meet in San Francisco early next week to address disagreements over the auto sector.

Obama told the executives he was confident Washington could achieve its main goal, “which is to make sure that we’ve got a level playing field for American businesses and American workers in the fastest growing region of the world.”

Reuters

12 | Business Daily

September 18, 2015

Asia

Japan’s export growth puts central bank on notice Exports destined for China, Japan’s largest trading partner, fell 4.6 percent in August

KEY POINTS Aug exports +3.1 yr/yr vs forecast +4.0 pct yr/yr Exports to China fall first time since Feb Imports -3.1 pct y/y, vs forecast -2.2 pct y/y

Stanley White

Trade deficit 569.7 bln yen, vs forecast deficit 541.3 bln

J

apan’s exports slowed for a second straight month in August in a worrying sign that China’s economic slowdown could deal a damaging blow to the world’s third-biggest economy and force policymakers to inject fresh stimulus before too long.

The data joins a string of depressing shipment numbers in key regional economies - including South Korea and Taiwan - which has heightened anxiety over a China-led slowdown in global growth and tempered bets of the U.S. Federal Reserve lifting rates for the first time in almost a

decade later on Thursday.

Slowing exports could increase the chance of additional monetary easing from the Bank of Japan, because this could lead to lower factory output, slack economic activity and less momentum needed to offset deflationary pressure caused by a collapse in oil prices.

“Our house view is that the BOJ will ease again in January, but the economic data suggest an increasing chance the BOJ will move at the end of October,” said Hidenobu Tokuda senior economist at Mizuho Research Institute.

The Finance Ministry said Japanese exports in August rose 3.1 percent onyear, smaller than the median estimate for 4.0 percent growth expected by economists in a Reuters poll, and less than July’s 7.6 percent year-on-year rise.

Exports destined for China, Japan’s largest trading partner, fell 4.6 percent in August from a year ago, compared with July’s 4.2 percent annual increase.

The decline was the first since February due to falling shipments of car parts and electronics, with exports to Asia rising 1.1 percent year-on-year in August, slowing from a 6.1 percent increase in July - another sign of the China-slowdown effect on demand.

“I wouldn’t be surprised if exports started falling. This is worse than the BOJ anticipated,” Tokuda said.

Indeed, while exports to the United States have been a bright spot, growth slowed in August. Exports rose an annual 11.1 percent last month versus an 18.8 percent rise in July.

BOJ’s daunting challenge

In a measure of the challenge facing the Bank of Japan’s goal of sparking

Speculation is rising that BOJ will ease policy again inflation towards its 2 percent goal, ratings agency Standard & Poor’s on Wednesday downgraded Japan’s credit rating by one notch to A+ and cast doubt about Tokyo’s economic revival strategy.

While Japan’s economy is expected to expand in July-September after a 1.2 percent annualised contraction in the previous quarter, a surprise decline in industrial production in July led a few economists to warn about the risk of a recession.

The monthly Reuters Corporate survey, which was published earlier yesterday, also showed growing concern about demand for Japanese goods abroad.

“Infrastructure-related demand is hitting new lows,” a manager at a rubber company that exports to China said in the survey.

“On top of that, starting with the electronics parts sector, we are really feeling a slowdown in a wide range of industries.”

Reuters

NZ economic growth slows to annual 2.4 pct in Q2 Growth was expected to slow in coming months as falling global dairy prices slashed farmer incomes and began to reverberate through the economy Charlotte Greenfield

N

ew Zealand’s economy bounced back from a quarterly two-year low as the agriculture and mining sectors picked up, although annual growth continued to ease, leaving the central bank with room to cut rates further.

The economy grew a seasonally adjusted 0.4 percent in the quarter, according to Statistics New Zealand, slightly below economists’ forecast of 0.5 percent but well

above the previous quarter’s 0.2 percent.

The annual growth rate eased to 2.4 percent from 2.7 percent in the previous quarter. Economists had expected 2.5 percent.

“In a nutshell the GDP output is not as rosy as the Reserve Bank was expecting,” said Nick Tuffley, chief economist at ASB. “We still think the Reserve Bank will have to cut by another 25 basis points. It’s

is a pretty tight call between October and December; the lift in dairy prices has been quite substantial, but that’s coming at the cost of weaker production.”

The Reserve Bank of New Zealand (RBNZ) last week downgraded its forecast for GDP to 2.1 percent in March 2016 from 3.2 percent in its previous monetary policy statement in June.

The RBNZ cut its benchmark interest rate by

Construction increased 0.8 percent, led by infrastructure building, while residential building declined

25 basis points to 2.75 percent and said a further economic slowdown in China, New Zealand’s biggest trading partner, could lead to more rate cuts if it weakened growth in the island nation.

Eight of the 13 analysts polled expected the RBNZ to cut rates by 25 basis points next month and most believed rates would stay on hold throughout 2016 at 2.5 percent.

Agriculture and mining supported the economy’s growth in the second quarter with agriculture up 3 percent, while mining rose 2.5 percent.

Agriculture rose on increased dairy production, as well as beef and lamb farming, as the sector recovered from a drought earlier in the year.

Mining rose on an increase in oil and gas extraction as the Tui Oilfield returned to full production after a partial shutdown in the first quarter.

Services growth was mixed with business services up 2.3 percent, but transport falling 1.8 percent, its largest quarterly fall in six years, because of reduced road transport and related support business.

Reuters

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Business Daily | 13

September 18, 2015

Asia Myanmar to receive World Bank’s financial support

Singapore keeps 2015 tourism forecast Hotel room supply is set to grow about 20 percent by 2018 Aradhana Aravindan

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ingapore is sticking to its forecast for more than 15 million visitor arrivals this year, encouraged by a spurt in travellers from China and India in July, the head of its tourism board said, despite a subdued first half.

The city-state, which is preparing for the eighth edition of its annual Formula One weekend frenzy under a pall of smoke from fires in neighbouring Indonesia, last year posted the first fall in visitor arrivals since 2009 and missed its own estimate.

For 2015, it expects 15.1-15.5 million travellers, or flat to a 3 percent rise.

“That’s something we are still on target to achieve,” Lionel Yeo, chief executive of the Singapore Tourism Board, told Reuters in an interview.

“We are somewhat hopeful that we have turned a corner,” he said ahead of the marquee race that helps pull

in average tourism receipts of S$150 million (US$107 million).

July arrivals rose 7.7 percent, but were still down 1.7 percent in the first seven months.

Singapore, named Lonely Planet’s 2015 top travel destination, has over the years built itself into a tourist destination famous for its glitzy malls, street food, casinos and the night street race.

While tumbling local currencies have hit vacationers from Indonesia, its biggest market, and Malaysia, efforts to promote Singapore in smaller Indian and Chinese cities are paying off.

Chinese travellers picked up pace after falling last year for the first time since two casinos were opened in Singapore in 2010. Visitor arrivals have risen about 56 percent from 2009-end to last year.

Yeo said Singapore was comfortable

with a moderate annual growth rate of 3-4 percent over the medium term.

Tourism contributes 4 percent to Singapore’s economic output, which is forecast by economists to see the weakest expansion since 2009.

Falling tourism has hurt JanuaryJuly room rates, which dipped 5.5 percent.

Average revenue per available room (RevPar) was S$205, with the key industry measure poised for its lowest showing since 2010. Room rates are expected to continue to fall, hurting the outlook for hospitality real estate investment trusts.

“We expect there to be negative pressure on RevPar, particularly for the Singapore assets of hospitality REITs over the next one to two years,” said Hasira De Silva, a director at Fitch Ratings in Singapore.

Reuters

Australia delays decision on Shell bid for BG Sonali Paul

A

Indian officials talk up economic stability before Fed decision Indian policymakers highlighted the resilience of Asia’s third-largest economy yesterday, as world markets braced for what could be the first increase in U.S. interest rates since before the global financial crisis. Addressing a business conference, Finance Minister Arun Jaitley outlined the government’s growth-friendly reform agenda and promised within days to resolve tax disputes with investors that have blighted India’s image as a place to do business. “In a situation where there is turmoil almost by the day as far as global markets are concerned, we are trying to make the fundamentals of our own economy sound,” Jaitley said.

Japan auto lobby says meeting targets tough Japan’s auto industry lobby said yesterday its domestic vehicle sales forecast of 4.99 million vehicles for this business year would be difficult to meet if the current pace of sales continues in the second half.

Fumihiko Ike, chairman of the Japan Automobile Manufacturers Association (JAMA), said a recovery in the country’s demand for cars was riding on 660cc minivehicles, but the outlook was “very tough” due to an increase in taxes for that segment.

The forecast of 4.99 million vehicles in the year to March represents a decline of 5.4 percent from a year earlier.

The commission in charge said it now planned to issue a final decision on November 12

ustralia’s competition watchdog flagged concerns yesterday that Royal Dutch Shell’s proposed US$70 billion takeover of BG Group may lessen gas supply competition in eastern Australia and delayed a final decision on the bid to November.

The Australian Competition and Consumer Commission (ACCC) said a large number of market participants had expressed concerns that the proposed takeover may lead Shell’s Arrow Energy to sell its gas into BG’s Queensland Curtis liquefied natural gas plant (QCLNG) for export.

“If the proposed acquisition resulted in less supply of gas to the domestic market, therefore, this could substantially lessen competition to supply domestic gas users and lead to higher domestic prices and more restrictive contractual terms,” ACCC Chairman Rod Sims said in a statement.

In response to the regulator’s concern about gas sales by Arrow Energy, which is 50-50 owned by Shell and PetroChina , Shell said BG already had enough gas to meet all its commitments.

Myanmar will receive US$400 million U. S. dollars from to provide financing and technical assistance for Myanmar’s National Electrification Plan (NEP), according to a press release of the World Bank Group issued here yesterday. In Myanmar, where over 70 percent of the people have no access to electricity, bringing light to towns and villages is an urgent priority in helping people out of poverty and in powering a rapidly growing economy, the release said. The six-year project is expected to benefit over 6.2 million people by bringing electricity to more than 1.2 million households in Myanmar through 2021.

S.K. c.banker sees Fed rate rise pace modest “Arrow and QCLNG collaboration could assist the development of Arrow’s undeveloped resources to potentially accelerate additional gas supplies into both the domestic and export market,” Shell said in an emailed statement.

The takeover has already been cleared by U.S. and Brazilian anti-trust authorities. It still needs approvals from Australia’s Foreign Investment Review Board and China to go ahead.

Shell said it remained confident the deal would be completed in early 2016.

Some of Australia’s biggest manufacturers fear Shell’s takeover of BG could worsen what they see as a lack of competition in the country’s eastern gas market, spurred by three new LNG export plants, including BG’s, in Queensland.

“This burst in demand for gas over a very short timeframe for the LNG industry is effectively upending the east coast gas market,” Sims said in a speech at a gas conference on Thursday, outlining the commission’s

KEY POINTS Regulator raises domestic gas supply, price concerns ACCC to issue final decision on Nov. 12 Shell says still expects to complete deal in Q1 2016

preliminary impressions on a review of the east coast gas market due in April 2016.

He said the commission had evidence that after the LNG projects were approved, many Australian industrial gas users went from a market where they received three to five offers of supply on negotiable terms, to a market where they received no offers or only one true offer on inflexible terms.

Reuters

South Korea’s central bank head said yesterday it expected the U.S. Federal Reserve to begin raising interest rates this year and raise them in the future at a more gradual pace than in the past. “Based on remarks from the Federal Reserve officials, we expect the Fed’s rate increases to show a different pattern from the past,” Bank of Korea Governor Lee Ju-yeol told a parliamentary committee during a policy audit. He added the impact on the South Korean economy and financial markets would be dependent on the comments by the Federal Reserve about its direction.

Suzuki buys back Volkswagen stake Suzuki Motor Corp said it had bought back a 19.9 percent stake previously held by Volkswagen AG for 460.28 billion yen (US$3.82 billion), ending a partnership that soured soon after it was formed. Japan’s fourth-largest automaker said it purchased 119.787 million shares at 3,842.50 yen each in after-hours trading yesterday. Suzuki also said in a statement it saw no need to now revise its earnings forecasts for the current business year through next March.

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September 18, 2015

International France bolsters ban on genetically modified crops France is to use a new European opt-out scheme to ensure a ban on the cultivation of genetically modified crops in the country remains in place, it said yesterday. The European Union’s largest grain grower and exporter has asked the European Commission, the EU executive, for France to be excluded from some GM maize crop cultivation under the new scheme, the farm and environment ministries said in a joint statement. The EU opt-out, agreed in March, allows individual countries to seek exclusion from any approval request for GM cultivation.

Germany undermines the way to EU banking union For the German banks that Finance Ministry supervises directly, the ECB will have to apply the rules issued by the ministry Birgit Jennen and Boris Groendahl

Swiss central bank keeps rates negative Switzerland’s central bank left its policy of negative interest rates unchanged yesterday as it seeks to weaken a “significantly overvalued” Swiss franc, but predicted a deeper-than-expected bout of deflation due to low oil prices. At its quarterly policy meeting Switzerland’s central bank kept its target range for the three-month Libor at -1.25 to -0.25 percent, as analysts polled

by Reuters had expected. It kept a 0.75 percent charge on some cash deposits at the SNB. The Swiss National Bank said that, despite a slight depreciation of late, the Swiss franc is still too strong.

ECB gives central banks power for emergency funding National central banks in the euro zone will now have the power to make announcements about any emergency funding that they provide to their banks, the European Central Bank said on Wednesday. “The Governing Council of the European Central Bank has decided that national central banks will from now on have the option to communicate publicly about the provision of Emergency Liquidity Assistance to the banks in their country,” the ECB said.

Central banks will still have to seek ECB approval to provide ELA and to make any announcement about it.

Altice to buy U.S. firm Cablevision U.S. cable TV operator Cablevision Systems Corp has agreed to a US$17.7 billion takeover offer by European telecommunications company Altice, according to two people familiar with the matter, the latest acquisitions in a sector struggling with declining viewership. Shares of Cablevision, which is controlled by New York’s Dolan family, jumped as much as 16 percent to US$33.12 after the bell as details of the takeover deal, which includes Cablevision’s debt, became public. The New York Times had earlier reported on the deal.

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ermany is resisting the European Central Bank’s drive to smooth out Europe’s “supervisory patchwork,” retaining the right to make rules on how banks are managed.

In an amendment to the nation’s banking act, the Finance Ministry in Berlin will be able to issue rules on banks’ recovery plans, risk management and internal decisions under a bill implementing European Union rules for winding down failing banks. The ECB criticized a previous draft for fostering fragmentation and undermining its authority. The tweaked version seen by Bloomberg makes only minor concessions, granting the ECB the right to be heard in some cases.

ECB’s supervision chief Daniele Nouy said this week lawmakers will “use the opportunity to put differences into this new banking law.

So all of a sudden something that’s supposedly our territory is transposed into a national law and we have to go through the national authority, or ask the national authority to do something.”

ECB began overseeing the euro area’s biggest lenders last year as part of a “banking union” that’s meant to end fragmentation of financial conditions in the currency bloc. The central bank’s Single Supervisory Mechanism, led by Nouy, has made it a top priority to end national exceptions and discretions, sometimes running into opposition from member states keen to retain competences and shield their lenders.

Insolvency code

The German amendments are part of an overhaul of German banking law, adapting national legislation to implement EU rules for resolving failing banks. Changes are also made to the insolvency code, making it easier to impose losses on senior bondholders.

Germany’s Federal Financial Supervisory Authority, known as BaFin, imposes rules and standards by circulars that aren’t formally binding. Under the new law, the Finance Ministry will assume this role, its decrees will be mandatory and the supervisor will have the power

Yet another election?

Weary Greeks see little gain from vote

Ukrainian lawmakers back debt pact

Turnout in these elections is likely to be lower than in the January vote, when it was 63.6 percent

Ukraine’s parliament approved a pact negotiated by the government to restructure US$18 billion of foreign debt, dispelling concern that a revolt by lawmakers would scupper the deal and jeopardize the flow of bailout funds. Legislation to finalize the accord was backed by more than 300 deputies in the 450-seat chamber yesterday in Kiev. The result means the restructuring, sealed in August, can continue as planned.

“Voting in support of this bill means a vote in favour of economic growth and inflows of foreign investments,” Prime Minister Arseniy Yatsenyuk told lawmakers before the vote.

s Greeks are summoned to the ballot box yet again -- after a vote in January that brought former Prime Minister Alexis Tsipras to power and a referendum in July on the terms of the country’s European bailout -- election fatigue has set in.

Voters are bracing for more economic pain no matter who’s elected.

Tsipras stepped down on August 20 after eight months in power, announcing new parliamentary

A

elections following the political turmoil resulting from his government’s signing of a third bailout agreement with Greece’s creditors in August.

New austerity measures in the 86 billion-euro (US$97.2 billion) bailout saw Tsipras suffer defections of his own party’s lawmakers, forcing him to seek a new mandate.

“Holding elections continuously in such a short period of time creates for citizens the impression that their vote

to punish violations. For the German banks it supervises directly, the ECB will have to apply the rules issued by the ministry.

With respect to risk management, the ministry has to consult the ECB before it issues decrees but isn’t bound by its opinion. On banks’ recovery plans, the ministry can delegate the power to issue decrees to BaFin and there is no requirement to consult the ECB. The ECB came down hard on this aspect of the bill in a previous version, while praising changes intended to make bail-in easier as a possible blueprint for Europe.

Lautenschlaeger letter

In its so-called MaRisk and MaSan circulars, BaFin has been setting rules that frequently deviate from EUwide rules, Nouy’s deputy Sabine Lautenschlaeger said in a July letter to the Bundestag, the lower house of Germany’s parliament. For example, BaFin allows netting of certain risks that aren’t permitted under the ECB’s methodology, resulting in lower capital requirements, she said.

By making such rules legally binding for German banks as the law stipulates, the ECB would have to apply them even if they contradict standards applied to other banks it oversees, she said.

“The regulations create national competencies that will set an obstacle to the single supervision of significant banks by the ECB,” Lautenschlaeger wrote. “That would cement the ‘supervisory patchwork’ that significantly contributed to the emergence of the financial crisis. It would contradict the spirit of the banking union.”

Bloomberg News

is of little importance,” said Jenny Papadopoulou, a bank employee.

Election fatigue

Some of the ballot weariness is evident in the lacklustre campaign participation. As with the year’s earlier votes, party kiosks have been set up in Athens’s Syntagma square and rallies will be held by the main parties. Yet while people huddle around in the square, the mood is sombre and there is none of the passion or enthusiasm that marked the previous ballots.

Greece’s unemployment rate in the second quarter fell to 24.6 percent from 26.6 percent in the previous three months ahead of the summer tourist season, the Hellenic Statistical Authority said Thursday. Tourist arrivals jumped 27 percent this year through May, according to the Bank of Greece.

Opinion polls show Tsipras’s Syriza and Evangelos Meimarakis’s New Democracy vying for first place, with neither of the two in a position to win an absolute majority that would allow them to form a government without some sort of coalition with a smaller party. Tsipras has ruled out a coalition with Meimarakis.

Bloomberg News

Business Daily | 15

September 18, 2015

Opinion Business

wires

Securing a sustainable future

Leading reports from Asia’s best business newspapers

Gro Harlem Brundtland Former prime minister of Norway and a member of The Elders, a group of independent global leaders working together for peace and human rights

Graça Machel

Former Minister of Education of Mozambique, Founder of the Graça Machel Trust, and a member of The Elders

TAIPEI TIMES Manufacturing revenue shrank 0.8 percent annually to NT$12.84 trillion (US$391.92 billion) in the first half of the year, dragged down by weaker-than-expected global smartphone demand and falling global crude oil prices, the Ministry of Economic Affairs said yesterday. Revenue in the second half may be flattish or even decline from a year earlier because of a higher comparison base last year, the ministry said.

Last quarter alone, revenue dropped 2.9 percent to NT$6.46 trillion from a year earlier, as slowing smartphone demand negatively affected the sales performance of Taiwanese chip designers.

VIETNAM NEWS A multi-sector delegation of 30 businesses from India met yesterday with executives of more than 100 Vietnamese companies in HCM City to explore business opportunities.

The visiting companies operate in pharmaceuticals (both raw materials and finished products), engineering products and consultancies, plastics, chemicals, lubricants and agriculture biotech products.

They are also involved in innovative nanotechnology products for roads, garments, raw materials for steel industry and knitwear. Viet Nam’s key exports to India include mobile phones and accessories, computers, electronic devices and accessories, rubber, black pepper, wood and wooden products.

THE PHNOM PENH POST Cambodia Securities Exchange (CSX) will hold a meeting next week to review the submitted financial statements of Phnom Penh Autonomous Port (PPAP), Cambodia’s second-largest port, and to consider its eligibility to list and trade its securities on the stock exchange, a CSX official said yesterday. Soleil Lamun, acting director of market operations at the exchange, said CSX board members will meet on September 22 to review PPAP’s listing documents, which include the company’s profile and financial statements.

He said the board is expected to approve PPAP’s listing application before referring it to the market regulator.

THE TIMES OF INDIA 10 entities, including Ujjivan Financial Services and Equitas Holdings, got RBI’s approval to set up Small Finance Banks to provide basic banking services to small farmers and micro industries. Other entities to get the Reserve Bank’s nod are Au Financiers (Jaipur), Capital Local Area Bank (Jalandhar), Disha Microfin (Ahmedabad), ESAF Microfinance (Chennai), Janalakshmi Financial (Bengaluru), RGVN (North East) Microfinance (Guwahati), Suryoday Micro Finance (Mumbai) and Utkarsh Micro Finance (Varanasi). The “inprinciple” approval will be valid for 18 months to enable these entities comply with the guidelines on Small Finance Banks, RBI said in a statement.

W

hen Karl Marx and Friedrich Engels wrote that “All that is solid melts into air,” they intended it as a metaphor for the disruptive transformations that the Industrial Revolution implied for established social norms. Today, their words can be taken literally: Carbon-dioxide emissions and other industrial pollutants released into the atmosphere are changing the planet – with huge implications for the environment, health, population movements, and social justice. The world is at a crossroads, and much of the progress we have made in these areas could vanish into thin air.

In 2007, Nelson Mandela founded The Elders to address just such risks, mandating this independent group of former leaders to “speak truth unto power.” That is what we will do at the launch of the new Sustainable Development Goals (SDGs) at the United Nations General Assembly later this month.

The SDGs will succeed the Millennium Development Goals (MDGs), which guided international development efforts from 2000-2015. The MDGs helped millions of people escape illiteracy, disease, and hunger, and placed development at the heart of the global political agenda. However, their overall impact was often inadequate, particularly in fragile, conflictridden states – and they failed to include sustainability in their targets.

The SDGs represent a quantum leap forward, because they recognize the vital links among challenges – including poverty in all its forms, gender inequality, climate change,

Sustainable growth and development policies cannot be imposed by diktat; they must be designed and implemented in a way that heeds the views and experiences of ordinary citizens

and poor governance – that must be addressed in tandem. Seventeen separate goals may seem unwieldy, but their cumulative effect should mean that no topic or constituency falls through the cracks. Sustainability is finally being integrated into global development, in line with what campaigners have been demanding for decades.

As former leaders from the

global North and South, respectively, we are particularly pleased that the SDGs will apply to all UN member states and not just those in the developing world. In this way, we hope they will become as “universal” as the Universal Declaration of Human Rights – a vital element of the civic armoury in the fight for fairness.

Implementation and accountability are key. Fine words are not enough; leaders must commit to putting them into action, and civil society must be vigilant in tracking progress and blowing the whistle when not enough is being done. Too often, summit declarations have melted into air once the delegations went home and short-term political calculus regained the upper hand.

This time, the stakes are too high. The decisions taken this year, at the SDG summit and at the climate conference in Paris in December, will have a lasting impact on our planet’s future.

A stable climate underpins prosperity, poverty reduction, and the rule of law. If world leaders in Paris do not agree to credible measures to keep a rise in temperatures to below two degrees Celsius, the SDGs will not be realized.

We do not face a choice between reducing poverty and addressing climate change, as the fossilfuel companies maintain.

Indeed, the dangerous effects of climate change threaten to undo the development gains that the MDGs helped to achieve. We risk a world of suffocating heat waves, severe droughts, disastrous floods, and devastating wildfires. Entire regions could experience

catastrophic declines in food production. Sea levels could rise, drowning major cities and small island states. Large populations would be displaced, exacerbating existing economic strains and social tensions.

At the same time, there is an emerging consensus – among grassroots organizations and central bankers alike – that inequality poses a serious threat to people’s livelihoods and prosperity worldwide.

Globalization has led to a weakening of social contracts within nation-states and regional blocs and even among continents.

The answer to inequality cannot be to build walls, hoard wealth, and stigmatize the poor and vulnerable. Sustainable prosperity requires that all groups within a society share equitably in the benefits of economic growth – especially as our societies become ever more interdependent. For this reason, we are particularly encouraged by Goal 10 of the SDGs, with its commitment to reducing inequality within and among countries, as well as the focus on gender equality throughout the goals.

We know that any framework or process will have its limitations.

International summits are too often conducted in a way that is remote and alienating for people outside the conference hall. Back in the 1980s, the UN commissioned what became known as the Brundtland Report to address mounting global concern about damaging environmental, social, and economic trends. The report defined the concept of “sustainable development” and called for radical change.

It warned that, “Unless we are able to translate our words into a language that can reach the minds and hearts of people young and old, we shall not be able to undertake the extensive social changes needed to correct the course of development.”

Sustainable growth and development policies cannot be imposed by diktat; they must be designed and implemented in a way that heeds the views and experiences of ordinary citizens. To implement the SDGs and minimize climate change, massive shifts will be required to move away from our fossil-fuel-driven economic model. Public understanding and consent will be crucial.

World leaders must have the courage to take bold decisions, explain their necessity, and implement them in a just and effective way. They have no right to deny a decent future to our grandchildren. It is no longer a question of choices, but an obligation to prevent catastrophe. The time for action is now. We must not allow this opportunity to melt away.

Project Syndicate

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September 18, 2015

Closing Mainland-ASEAN expo to attract over 2,200 companies

HK’s Biostime to buy Australian vitamin maker

The upcoming China-ASEAN Expo is expected to draw more than 2,200 companies from China and the Association of Southeast Asian Nations (ASEAN), organizers said yesterday. The 12th expo is slated to be held in Nanning, capital of south China’s Guangxi Zhuang Autonomous Region, from today to September 21. Companies have applied for more than 5,500 booths at the expo, while 4,600 booths are planned, said Hu Suojin, an official with China’s Ministry of Commerce. 27 forums on industrial cooperation, e-commerce, environmental protection, tourism, among other fields, will be held during the event.

Hong Kong-listed Biostime International Holdings is buying Australian vitamin maker Swisse Wellness for about A$1.6 billion (US$1.2 billion), people familiar with the matter told Reuters on Thursday.

The deal comes as Australian vitamins manufacturers have been enjoying a rush of popularity in China because of a weak Australian dollar and a trade deal that has cut import taxes for Australian companies selling products into the mainland. For Biostime the acquisition is a big bite, as the deal value is similar to its own US$1.1 billion market capitalisation. The company is taking out a bridge loan to part-fund the acquisition.

Indonesia’s central bank holds rates, senses inflation risk Annual inflation cooled to 7.18 percent in August, still well above the 3-5 percent target range the central bank set for this year Nilufar Rizki and Gayatri Suroyo

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ndonesia’s central bank left its key policy rate unchanged yesterday, as expected, amid rising pressure on the rupiah ahead of the U.S. Federal Reserve’s decision on interest rates.

The benchmark rate was kept at 7.50 percent, a level that Bank Indonesia (BI) has maintained for seven straight meetings as it tries to strike a balance between stabilising the rupiah, driving down inflation and promoting economic growth.

The rupiah has been steadily depreciating against the dollar, trading at levels not seen since the Asian financial crisis. It was trading at 14,455 per dollar on Thursday after the rate decision, not moving from earlier levels.

Economists said the currency may weaken further should the Fed raise rates later on Thursday, sparking capital flight. Meanwhile, the benchmark 10-year government bond yield edged down slightly to 9.444 percent

after the rate announcement from 9.520 percent earlier.

Southeast Asia’s largest economy is confronting weak exports and consumption, but the risk of outflows and inflationary pressures have

China rail giant CRRC ramps up overseas drive

limited the central bank’s policy options.

Economic growth was 4.67 percent in the second quarter, the slowest in six years. The central bank has said it would dip below 5 percent for the

first time since 2009, though growth may pick up to 5.2-5.6 percent next year.

“BI may welcome some further currency weakness because of the boost it would give to exporters. However,

in the event that a hike in U.S. interest rates triggers another sharp sell-off in the rupiah, it would be difficult for BI to loosen policy at all,” said Gareth Leather, Asia Economist at Capital Economics in London, adding that BI was also monitoring inflation.

Annual inflation cooled to 7.18 percent in August, still well above the 3-5 percent target range the central bank set for this year.

In a bid to buffer the economy from outflows, the government last week also announced the first instalment of a stimulus package aimed at attracting more investment, boosting consumption and supporting the fragile currency.

Reuters

Buffett, Cook among business Goldman Sachs chief elites to hear President Xi’s speech ‘would not invest in China’

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C

unit of China’s CRRC Corp, the world’s biggest train maker by revenue, yesterday agreed a deal to help build a planned high-speed link from Las Vegas to Los Angeles, underlining the rail giant’s lofty overseas ambitions.

CRRC, formed from a state-driven merger of China’s two largest train makers, is among a large group of the country’s rail firms that has inked an accord for the project with XpressWest, a venture set up by Las Vegas-based hotel and casino developer Marnell Companies.

Beijing recently clinched contracts in Russia, although it has faced hurdles in Mexico and Indonesia due to bureaucratic flip-flops in those countries.

The company plans to grow its share of revenue from work overseas to 30 percent within the next five years, a senior executive said in an interview on Wednesday before the XpressWest deal was announced. Having completed its merger in May, it booked first-half revenue of 91.8 billion yuan (US$14.42 billion), only 12 percent of which was booked overseas.

hinese President Xi Jinping will give a speech to U.S. business leaders including Apple Inc.’s Tim Cook and Warren Buffett of Berkshire Hathaway Inc. as part of an exchange between top Chinese and American companies in Seattle.

Among the Chinese guests at the September 23 event are Jack Ma, head of Alibaba Group Holding Ltd., and Yang Yuanqing, chief executive officer of Lenovo Group, according to the Paulson Institute.Aside from the above mentioned, the following executives will attend: Mary Barra, General Motors Co.; Jeff Bezos, Amazon Inc.; John Chambers, Cisco Systems Inc.; Dave Cote, Honeywell International Inc.; Bob Iger, Walt Disney Co.; Ellen Kullman, DuPont Co.; Andrew Liveris, Dow Chemical Co.; Satya Nadella, Microsoft Corp.; Indra Nooyi, PepsiCo Inc.; Dennis Muilenburg, Boeing Co.; Tom Pritzker, Hyatt Hotels Corp.; Howard Schultz, Starbucks Corp.; Ma Huateng, Tencent Holdings Ltd.; Wang Yusuo, ENN Energy Holdings Ltd.; Ma Zehua, COSCO Group; Guan Qing, China State Construction Engineering Corp.; Wan Long, Shuanghui Group; Tian Guoli, Bank of China Ltd.; Jiang Jianqing, ICBC.

Reuters

Bloomberg News

T

he chairman of investment banking giant Goldman Sachs has slammed China’s handling of its economy, adding he would not currently invest in the country, the Wall Street Journal reported yesterday.

Lloyd Blankfein told the paper that China’s broad stock market intervention, including state-funded share buying, as it seeks to shore up slumping prices, was “ham-handed” and “sloppy”.

“They don’t have a lot of experience in this market stuff,” Blankfein, who is also Goldman’s chief executive, said of the ruling Communist authorities.

His comments come after Goldman this month said that it estimated China’s economy was growing at around six percent a year, lower than the official figures of 7.0 percent for each of the first two quarters.

Blankfein said Chinese leaders “know what the problems are” but changes in policy would be “really hard”.

He added that he “would not invest in China right now”, the newspaper said.

AFP