Macau Business Daily October 23, 2015

Beijing plans to dismantle capital controls by 2020 Page 8 China’s authorities mull different measures to curb capital outflow Page 9

Melco lenders face crunch as tables fall short of targets Page 4

UberBLACK Tests Taxi Parameters

Year IV

Number 904 Friday October 23, 2015

Publisher: Paulo A. Azevedo

Closing editor: Joanne Kuai

MOP 6.00

ICBC Macau ranked 3rd strongest bank in Asia Pacific Page 6

Uber. Often a touchstone for controversy. Offering UberBLACK in Macau for starters. Connecting passengers CE to deliver 2016 Policy with drivers. And providing high-end vehicles at fares slightly higher than those of regular taxi services. Address on 17 November A pool of drivers, pricing and Uber culture are all hurdles to overcome, say interest groups. While a local Page 3 taxi association questions the legality of the ‘flexi’ concept and licensing considerations. Macau is the DICJ demands 343rd city in which Uber has offered its services strict compliance Page

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Litigation Looming

Page 3 Better gaming performance anticipated in October

Long time partners. But Geocapital has driven a stake into Stanley Ho and Jorge Ferro Ribero’s relationship.

Sources claim unpaid staff, suppliers, banks and taxes have collapsed the company. Local economist Albano Martins has left the enterprise. Due to salary arrears. And disagreement about the use of funds by major shareholder Jorge Ferro Ribeiro

Page 3 Macau Gaming Show attracts British companies

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HSI - Movers

Sandstorm

Sands China’s Q3 profits are down 33 pct. With increasing competition in the city cited by analysts. Adjusted earnings before interest, taxes, depreciation and amortization shrank to US$545m from US$811.6m a year earlier. “It’s virtually impossible for us to tell you what we how to think about Macau,” said non-plussed owner Sheldon Adelson

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Xi Jinping Uk visit www.macaubusinessdaily.com

from junket operators

October 22

Name

%Day

China Merchants Holdi

+2.62

Swire Pacific Ltd

+2.50

Li & Fung Ltd

+1.16

Sino Land Co Ltd

+1.11

CK Hutchison Holdings

+1.03

PetroChina Co Ltd

-2.66

CNOOC Ltd

-2.84

China Unicom Hong Ko

-2.92

China Mobile Ltd

-3.08

Lenovo Group Ltd

-4.14

Source: Bloomberg

Linking London A Memorandum of Understanding has been signed. For a trading link between Hong Kong Stock Exchange and London Metal Exchange. Signed as part of the initiatives announced at a ceremony attended by Chinese President Xi Jinping and British PM David Cameron

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2 | Business Daily

October 23, 2015

Macau Macau Government reappoints Air Macau delegate The government has reappointed Maria Cristina Silva as delegate for the carrier Air Macau, with effect September 1, according to the territory’s Official Gazette. The dispatch by Chief Executive Fernando Chui Sai On defined that the term is renewed for one year with a remuneration of MOP6,600 per month. Maria Cristina Silva has been serving as government delegate to Air Macau since September 2008, when she was first appointed by then-Chief Executive Edmund Ho. Prior to Maria Cristina Silva’s appointment, the government’s delegate to Air Macau was Maria de Nazaré Saias Portela.

FAOM receives MOP1.93 million from IACM The Macau Federation of Trade Unions (FAOM) received the largest share of the subsidies disbursed by the Civic and Municipal Affairs Bureau (IACM) during the third quarter of the year, according to information published yesterday in the territory’s Official Gazette. IACM spent a total of MOP4.58 million in all supporting local institutions and individuals. The Macau Federation of Trade Unions received a payment of MOP1.89 million for expenses connected to the Workers Stadium from the months of June to August. The Federation of Trade Unions was also paid another MOP40,000 for the organization of a bazaar celebrating Children’s Day. The two subsidies from IACM together amount to MOP1.93 million.

AMCM dispenses MOP170,795 in subsidies during Q3 The Monetary Authority of Macau (AMCM) spent MOP170,795 on financial support to private entities during the third quarter of this year, according to information published yesterday in Macau’s Official Gazette. Of the total MOP170,795, most was paid to the Sport Group of AMCM - some MOP90,795 - for the development of its activities. AMCM also supported the business simulation event Global Management Challenge in Macau, organised by the Macau Management Association, with MOP50,000. Finally, the Monetary Authority spent MOP30,000 supporting scholarships for students at the University of Macau during the 2014/2015 school year.

Macau Gaming Show attracts British companies The Macau Gaming Show (MGS) - taking place between the 17th and 19th November at The Venetian - is attracting many British companies to this year’s edition, according to organisers. “We have enjoyed a strong relationship with businesses from the British Isles at the Macao Gaming Show since our debut in 2013,” said Event Director Marina Wong. “Providing a platform for exhibitors and buyers eyeing the Asian market is an integral part of MGS and we are excited that so many internationally recognised companies choose to use our exhibition to showcase their services and network here”. Inspired Gaming, International Gaming Technology, Microgaming, Quixant and TCS John Huxley are some of the companies from the British Isles attending the event.

Geocapital loses staff and headquarters The company, owned by long time partners Stanley Ho and Jorge Ferro Ribeiro, has ceased paying staff and other debts. And the General Manager has resigned due to divergences on financial management Alex Lee

alexlee@macaubusinessdaily.com

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wo local companies Geocapital Holding Limited (Geocapital Investimentos Estratégicos SA) and its main subsidiary, Geocapital Participations Limited (Geocapital Gestão de Participações SA) - have lost all their staff in Macau and have no more headquarters and representative in the city due to unpaid debts to employees, suppliers, banks and taxes here, some stretching back to August 2014.

According to Business Daily sources, local economist Albano Martins has left the company due to salary arrears and disagreement about the way the funds of the company were being used by the major shareholder, Mr. Jorge Ferro Ribeiro, a former shareholder of Construções Técnicas, a well-known construction company during the former administration of Macau by the Portuguese Government which fell into bankruptcy in the 90’s.

Our sources confirm that Mr. Martins has already sent a letter complaining about the situation and reporting the rescission of the contract with just cause to the Labour Department.

Contacted by Business Daily, former General Manager Mr. Albano Martins confirmed he had left the company last December due to “divergences with the way the companies were being financially managed”, but preferred not to comment further at this stage.

The other main shareholder of

the Holdings company is gaming magnate Stanley Ho. Geocapital Gestão de Participações SA, has considerable stakes in three banks in Africa (Banco Mais, former

From big to eclipse In 1994, Construções Técnicas, a major construction company in Macau which belonged to the Interfina Group of Ferro Ribeiro (pictured above), abandoned its position as main contractor of the then-biggest real estate undertaking in Macau, the Nam Van Lakes project.

The announcement of the removal of the company was made by Stanley Ho, at that time president of the board of the company which owed the development project.

“Construções Técnicas (CT) realised they no longer possess the financial capability to continue to lead the project so it is necessary to find another company to continue it”, the gaming mogul told Lusa in 1994.

Ho’s STDM and Chinese company San Chung Heng formed a partnership, with 45 per cent and 55 per cent, respectively, to take over CT’s responsibilities. The company continued in a consultancy role.

At the time Stanley Ho announced the dismissal of CT, the company owed around 300 million patacas.

Banco Tchuma, in Mozambique; Caixa Económica de Cabo Verde and BAO-Banco da África Ocidental in Guinea-Bissau) as well as an insurance company in Cape Vert, Ímpar.

The Stanley Ho connection Geocapital, the holding company for investment in Portuguese-speaking countries of businessmen Stanley Ho (pictured above) and Jorge Ferro Ribeiro, sought to establish itself as one of the main biofuel producers worldwide by 2018, basing its operations in Angola, Mozambique and Guinea Bissau, according to Macau’s government’s economic services website Macau Hub. Jorge Ferro Ribeiro has been one of Stanley Ho’s partners in various businesses in several countries.

In 2010, the Portuguese businessman announced the creation in Macau, possibly in the following year, of an investment bank.

“In Macau, we are negotiating with the Monetary Authority and other partners”, he was quoted as saying by Lisbon’s daily newspaper Público.

According to Business Daily sources, the Monetary Authority of Macau “never felt comfortable with that, which explains why until today Geocapital never succeeded in launching its bank here”.

A.L.

Business Daily | 3

October 23, 2015

Macau CE to deliver 2016 Policy Address The Chief Executive, Mr. Chui Sai On, will deliver the Policy Address for Fiscal Year 2016 on 17 November at the Legislative Assembly. The session will be held at 3:00pm, followed by a press conference at Government Headquarters at 5:00pm, when Mr. Chui will take questions from the press. On18 November, Mr. Chui will attend the plenary meeting of the Legislative Assembly from 3:00pm to 6:00pm to explain his policy programme to legislators and answer their questions.

Uber starts operating in territory The ride-sharing service has arrived in Macau, with controversy just steps away as taxi drivers raise questions about the legality of the service João Santos Filipe*

jsfilipe@macaubusinessdaily.com

DICJ: Stricter junket rules VIP gaming promoters, known as junket operators, have to place their accounting information in Macau and inform the authorities of the background information of senior staff handling finances, the Gaming Inspection and Co-ordination Bureau (DICJ) said in a the guideline of the accounting practice in a meeting with the industry yesterday. The casino regulator said it would reinforce the monitoring and audit work of the sector, and review related laws.

Secretary reaffirms MICE role Speaking at the 20th Macao International Trade and Investment Fair (MIF) yesterday, Secretary for Economy and Finance Lionel Leong Vai Tac said the industry of Meetings, Incentives, Conferences and Exhibitions (MICE) here has seen rapid development and is an important driver in diversifying the local economy. President of Macao Trade and Investment Promotion Institute Jackson Cheong said that over 1,000 MICE events have been held in Macau annually. The number of international conferences hosted here in 2014 enabled the city to be ranked 20th in the Asia Pacific and Middle East region.

Better gaming results in October The Secretary for Economy and Finance, Mr. Leong Vai Tac, said that so far in October the monthly gaming revenue performance judged year-onyear has been better than in the prior five months. Gaming revenue recorded so far this month showed a 20 per cent year-on-year decline, compared to a near 40 per cent aggregate decline year-on-year in the first half of 2015, the Secretary told reporters on Wednesday. He said a better gaming performance in October was due to Golden Week, a week-long Mainland holiday marking National Day.

MIA opens tender for limousine services Macau International Airport Company Limited (CAM) has opened a tender for the airport limousine services sub-concession at Macau International Airport (MIA). One operator will be selected based on experience and qualifications (300 points out of 1,000), management and operation (500 points) and financials (200 points). The selected provider will operate under a sub-concession contract with CAM for three years. Airport Limousine Services were launched from the second quarter of 2013, and the current contract with operator Golden Land Travel Ltd. for the services expires on 15 May 2016.

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ide-sharing service Uber started operating in the territory yesterday due to existing high demand. For the time being, only the UberBLACK service, which uses highend vehicles, is available.

“We launched the service because of the demand and interest it has created in the territory. For now, we are only going to provide the UberBLACK services, which is the original service. This provides highend vehicles and fares that are slightly higher than regular taxi fares”, the spokesperson for the company, Harold Li, told Business Daily.

While fares for the service are expected to be higher than regular taxi fares, they change according to peak hours and other factors. Fares are shown by the mobile application as the passenger requests the service.

The application provides an ondemand taxi service to users, but the company does not employ any taxi driver or owns any taxi car. Instead it connects drivers who drive their owns cars to passengers. Through the application, the company charges a fee from the fare paid. The passenger’s credit card is used as the sole payment method.

According to the company, prior to the launch 127,000 users had already opened the application in Macau to see if the service was available, including locals and tourists from 70 countries.

Legal issues and disputes

Since its introduction to the market, in San Francisco (United States)

during June 2011, the company has attracted a great deal of criticism and prompted demonstrations worldwide by taxi drivers. Taxi drivers frequently protest about unfair competition, as Uber drivers usually are not taxi driver licence holders.

“Every market is different and the reactions are hard to compare. But what we can see is that the demand is very high and we’re very optimistic about the launching of the Uber”, Harold Li told Business Daily. When asked about the legal status of the company, he refused to comment.

In Macau, the entrance of Uber is also likely to raise legal issues, as Business Daily has learned.

“I have some doubts about the legality of this service. According to Macau law, drivers can only be paid to drive passengers if they have a taxi licence or they work for a bus company. This makes me have serious doubts about the legality of this service”, the President of the Labour Union of Macau Taxi Drivers, Tony Kuok Leong Son, told Business Daily.

“Our association represents around 80 per cent of the total 1,200 taxi drivers in Macau. As far as we’re aware, none of these drivers is involved with Uber”, he added.

Passengers approve competition

Questions about the legality of the service and the company’s attitude also raise questions for local passengers. While the President

of the Macau Taxi Passengers Association, Andrew Scott, is in favour of more competition in the market, he is concerned about Uber.

“Any competition is good. I can see a few reasons Uber may not survive in Macau. One might be to do with licensing, another might be to do with pricing, and yet another might be to do with getting drivers. If Uber is able to successfully navigate these issues and stay in Macau long term, for sure there will be an improvement of services to the public”, he told Business Daily.

The representative of the Macau Taxi Passengers Association also believes that Uber will face problems with the Ggovernment because of the company’s nature, and the likely involvement of drivers without taxi licences issued by the Transport Bureau (DSAT).

“Uber has proved in many jurisdictions to be a polarizing company - being hailed by some as fantastic, but castigated by others for a wide range of bad behaviour ranging from price gouging to signing up drivers without proper checks to even assault on passengers, including sexual assault. I believe the culture of Uber and the Macau Government will likely clash”, he said.

Business Daily approached DSAT for a position on the legal status of Uber in Macau but by the time the story went to press DSAT was unable to provide an answer. *with Stephanie Lai

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October 23, 2015

Macau

Melco lenders face crunch as tables fall short of targets Melco was authorized by the government to operate 250 gambling tables at its US$3.2 billion Studio City resort that will open October 27, in line with analyst estimates though far fewer than Chairman Lawrence Ho said he was expecting

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enders to the newest Macau casino of Melco Crown Entertainment Ltd. face debt renegotiations as the company hasn’t gotten enough gambling tables for the US$3.2 billion project ahead of requirements it must meet next year.

The company controlled by billionaires Lawrence Ho and James Packer said it “intends to proactively engage” lenders after Macau’s government authorized it to operate 200 gaming tables and 1,233 gaming machines upon the opening of Studio City scheduled for Oct. 27, with another 50 tables to start operation from January 2016.

The company’s US$1.4 billion in secured loans require it to have 400 operating tables by October 2016, according to Standard & Poor’s Ratings.

“Unutilized tables from other Melco casinos could likely be allocated to Studio City if there is a need,” said Grant Govertsen, an analyst at Union Gaming Group.

Given the new casino is a joint venture 40 per cent-owned by hedge funds while the company owns the rest, “we don’t think Melco has much incentive to transfer these tables now and, honestly, given the current demand, 250 tables may be enough for the new casino,” he said.

Melco also operates projects including the City of Dreams and Altira Macau in the city, with 619 gaming tables as of end- June, according to data compiled

by Bloomberg Intelligence. Its adjusted property earnings before interest, taxes, depreciation and amortization

fell 35 per cent to US$204.9 million in the second quarter amid a 16-month gambling downturn in Macau, hurt by China’s anti-graft campaign and economic slowdown.

Calls to Melco’s offices in Hong Kong and Macau went unanswered Wednesday on a public holiday.

Immediate repayment

Studio City had hired Kirkland & Ellis as legal adviser and consultants Moelis & Co., which specializes in debt restructuring, due to the possibility of a lower than anticipated table allocation, according to Melco in an Aug. 12 statement. Bert Grisel, managing director in Hong Kong at Moelis, declined to comment.

A failure to meet loan requirements means banks

can require immediate repayment. If that happens, bondholders are also entitled to request Melco pay back its US$1.8 billion in notes outstanding right away.

That outcome is unlikely, according to Govertsen, who said lenders would be interested to see the project become operational instead of stalling it and will probably reach an agreement with the company to change its borrowing terms. Even with fewer tables, Govertsen said, Studio City is expected to generate enough cash to repay its debt.

Hedge fund owners

Melco bought a 60 per cent stake in the developer of Studio City for US$360 million in 2011 from entities including hedge funds Silver Point Capital LP

and Oaktree Capital Group as gaming earnings were on the rise and the Cotai Strip, where the project is being built, was seen as the next frontier in Macau.

Four years later, as the project is about to open its doors, minority shareholders, lenders and bond buyers face a much less profitable venture.

In May, S&P said Studio City’s revenue and profit growth in 2015 and 2016 will be slower than anticipated and the project will remain highly leveraged. The rating company also changed its forecast for gross gaming revenue in Macau to a drop of 20 per cent to 30 per cent in 2015 from previous expectations of a decline of as much as 10 per cent.

The latest plan to amend its loan terms doesn’t affect Studio City’s bond rating even as S&P is reviewing its assumptions on gaming table allocation and revenue, Sophie Lin, a Hong Kong-based analyst at the ratings agency, said in an e- mail Wednesday.

“We believe Studio City still has time to avoid an event of technical default through several possible measures, including renegotiation of terms, obtaining a waiver, refinancing, or obtaining support from Melco Crown,” Lin said.

Bloomberg

Curtains Up for Studio City

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nvisioned by Mr. Lawrence Ho, Studio City is a thrilling new cinematically-themed entertainment and leisure destination in Macau that is set to become Asia’s Entertainment Capital and to take Macau’s entertainment destination proposition to unprecedented new levels.

Mr. Lawrence Ho, Co-Chairman and Chief

Executive Officer of Melco Crown Entertainment said previously that “the opening of Studio City represents another major achievement for Melco Crown Entertainment as we work to develop and re-imagine the future of leisure destination offerings across Asia.

It also marks a major milestone for Macau as we continue to deliver on our commitment to expanding

the non-gaming leisure and entertainment offerings available in the territory, as a continuing strategy in supporting its evolution into a highly-diversified and world-leading leisure and tourism destination.”

Ahead of this opening scheduled for next Tuesday, let’s take a look of what Studio City has to offer :

World premiere of “The Audition”

Madonna’s ‘Rebel Heart Tour’ at Studio City

The prestigious opening celebrations will feature the world premiere of “The Audition”, starring legends of Hollywood, Robert De Niro, Leonardo DiCaprio, Brad Pitt and Academyaward winning director Martin Scorsese. The film – Macau’s first Hollywood produced short-movie – is set around a Studio City storyline and represents the very first time these iconic Hollywood stars have all worked together.

The global pop icon Madonna is set to excite and delight Asia’s music fans at Studio City’s awe-inspiring Studio City Event Center (“SCEC”) when she brings her ‘Rebel Heart Tour’ to Macau as part of a thrilling line-up of international concerts. The tour, which kicked off with 2 soldout shows in Montreal and 3 soldout shows in New York, is one of the most impressive and successful shows in the world. The Montreal Gazette proclaimed “in a spare-noexpense theatrical spectacle that artfully flowed from showstopper to showstopper, Madonna proved once again that she doesn’t just crave the spotlight — she owns it;” and Associated Press raved “Pole dancers dressed like nuns, Mike Tyson and nonstop theatrics. Welcome to the church of Madonna.”

Studio City to kick off new concert season with Aaron Kwok Studio City is bringing the world’s most celebrated entertainers to the live stage at its Studio City Event Center (“SCEC”), an international stage destined to become a ‘muststop’ destination for today’s music legends as well as up-and-coming future stars.

The SCEC’s inaugural season of world-class acts will kick off in November when ‘Asia’s King of Dance’, Aaron Kwok, returns to the concert stage. Arguably the most versatile of Hong Kong entertainment’s legendary “Four Heavenly Kings”, Aaron Kwok has been a dominant force in the world of music and dance for more than 30 years. At SCEC on November 7, 2015, he will continue to push the choreographic envelope on the Hollywood-themed entertainment resort’s new ultramodern, high-tech stage.

Iconic Golden Reel gets ready to roll Towering at 130 meters in Cotai, the Golden Reel is majestically located at the center-point between the resort’s twin “Art Deco meets Gotham City” hotel towers, and will offer visitors a thrilling ride experience unique to Studio City.

As envisioned by Mr. Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment, the Golden Reel was formed in traditional Hollywood blockbuster movie fashion when not one, but two flaming asteroids crashed through the building façade in tandem to create an almost perfect figure-8 form.

Business Daily | 5

October 23, 2015

Macau

Sands China profit misses estimates as Macau revenue tumbles Analysts says Sands lost market share as competition intensified in Cotai

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ands China Ltd., the Macau casino operator controlled by billionaire Sheldon Adelson, reported third- quarter profit fell 33 per cent, missing analysts’ estimates, as competition for tourists intensified in the city’s Cotai Strip area.

Sands China’s adjusted earnings before interest, taxes, depreciation and amortization shrank to US$545 million (MOP4.35 billion) from US$811.6 million a year earlier, the parent company Las Vegas Sands Corp. said in a statement Wednesday.

That compares with the US$563 million median estimate of five analysts surveyed by Bloomberg. Revenue shrank 29 per cent to US$1.66 billion, the company said.

“The implication is bit mixed, with some positives including dividend policy, cost-saving efforts and positive management tone about ‘stabilization in mass demand’, and some negatives including mass revenues and retail rent weaker than expected,” DS Kim, an analyst at JPMorgan Chase & Co., wrote in a note after the results.

Sands China rose 0.2 per cent to HK$28 by the close of trading in Hong Kong, against the benchmark Hang Seng Index which declined 0.6 per cent. Galaxy Entertainment Group Ltd. advanced 1.9 per cent, the top gainer among Macau casino stocks after it confirmed the government approved 100 additional gaming tables for its projects.

Operators such as Sands China and Melco Crown Entertainment Ltd. are opening new projects aimed at attracting tourists as China’s anti-graft campaign and a slowing economy discourage high-rollers from visiting Macau. Galaxy had surged the most

It’s virtually impossible for us to tell you what we - how to think about Macau. It’s so unknown to any of us. It is the big question mark for any operator today, and will continue Sheldon Adelson, Chairman and CEO of Las Vegas Sands and Sands China

in more than three months on Oct. 15 after reporting a 13 per cent sequential rise in profit for the third quarter as the opening of new casinos helped boost customer traffic and revenue.

Macau Ltd., which is scheduled to open its the US$4.1 billion Wynn Palace project in March, while Sands China’s Parisian Macao is targeted for a summer 2016 debut.

Lost market share

Macau question mark

“Sands lost market share in the third quarter on some customer overlap with Galaxy Macau, which opened Phase two,” Karen Tang, a Deutsche Bank analyst, wrote in a note, referring to Galaxy’s expansion of an existing casino-resort in the Macau’s Cotai Strip.

Casino operators are building shops, tourist attractions and other non-gambling features to lure tourists as part of Macau’s goal to reduce reliance on hard-core players.

Melco was authorized by the government to operate 250 gambling tables at its US$3.2 billion Studio City resort that will open Oct. 27, the company announced Tuesday, in line with analyst estimates though far fewer than Chairman Lawrence Ho said he was expecting.

Other companies awaiting Macau’s gaming table decisions are Wynn

CCAC slams DSAT’s use of outdated regulations IACM has also been found to be using outdated and unrealistic regulations on municipal issues

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he Commission Against Corruption (CCAC) has completed an investigation report on municipal ordinances and municipal regulations. At the beginning of this year, during the inspection of an Ombudsman case involving the Transport Bureau (DSAT), it was found that the Bureau had been imposing fines on those who allegedly violated the regulations based on the provisions of the Regulation of Use of the Centre for Driving Lessons and Exams. However, the Regulation has not been in force since 2nd June 2001.

During the investigation into the reasons DSAT applied expired regulations for management and law application, the CCAC found that the Regulation of Use

of the Centre for Driving Lessons and Exams is a regulation promulgated by the former municipal body and that the problem with the regulation already existed when the Transport Bureau was established.

Lost touch with reality

When conducting the preliminary study on the municipal ordinances and municipal regulations still in force, CCAC found that a significant number of norms are already outdated, and there may even be a possible existence of a scenario where the reality of the situation contradicts the normative content. Thus, a comprehensive followup and investigation has been conducted targeting the normative issues of the

Licensing Regulation on the Establishment for Retail of Meat, Seafood, Poultry and Vegetables (hereinafter ‘Licensing Regulation’) and the Regulation of the Municipal Market of the Macao Municipal Council (hereinafter ‘Regulation of Municipal Market’).

CCAC urged the Civic and Municipal Affairs Bureau (IACM) to revise Article 3 of the Licensing Regulation - which restricts certain establishments from selling more than one kind of food, and to conduct a complete review and revision of municipal ordinances and regulations including the Regulation of Municipal Market in order to amend and perfect the provisions which do not fit the reality of everyday life but are nevertheless in force.

Las Vegas tycoon Steve Wynn criticized the government last week for its policy of limiting gambling tables, and delays in informing operators of the number of tables casinos will receive. Macau fired back days later saying casinos must fully comply with its rules.

Adelson, who said in a teleconference after the results that he’s seeing “signs of stabilization” in Macau’s mass market gambling, remained apprehensive about the overall outlook for the world’s largest gambling hub.

“It’s virtually impossible for us to tell you what we - how to think about Macau,” said the 82-year-old casino billionaire. “It’s so unknown to any of us. It is the big question mark for any operator today, and will continue. ” Bloomberg

Echo Chan departing Forum Macau after brief tenure

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cho Chan Keng Hong, the incumbent coordinator of the support office of the permanent secretariat of the Forum for Economic and Trade and Co-operation between China and Portuguese-speaking Countries, is to be replaced

by Macau Economic Services official Cristina Gomes Pinto Morais next month, the Official Gazette announced yesterday.

Speaking to reporters on the sidelines of an event yesterday, Ms. Chan stressed that her departure following a brief 8-month tenure is for personal reasons, but declined to elaborate.

In March, veteran administrator Echo Chan Keng Hong took up the coordinator post of the office, an organ responsible for helping promote multi-lateral economic exchanges. The

office is now preparing for the 5th Ministerial Conference for China and the Portuguesespeaking countries to be held next year, Ms Chan told reporters.

Ms. Chan was previously a director at Macao Institute for Promotion of Trade and Investment (IPIM), and a coordinator of the Traditional Chinese Medicine Industrial and Scientific Park, a MSARinvested project located in Hengqin born out of cooperation initiatives between the city and the Guangdong Government.

Ms. Morais, the incumbent chief of Macau Economic Services’ External Economics Relations Department, is to replace Ms. Chan effective November 3. The appointment will last for one year, according to the Official Gazette.

S.L.

6 | Business Daily

October 23, 2015

Macau opinion

Illegal students

Pedro Cortés

Lawyer* cortes@macau.ctm.net

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t seems that university students have been treated as illegal immigrants should they not leave Macau within a short period of time having completed their degrees.

Macau has always been a place where foreigners, upon arrival for the first time, feel instantly at home, including the students that get a renewable visa for their university courses. It is only for the university courses, as those who want to send students to study here prior to university do not have a legal regime that permits it.

Universities in Macau are all publicly funded. This means that funds are injected into the institutions for the sake of the residents and not resident students who choose Macau to study. If the policy is to expel foreign students once they get their degree then something, in my opinion, is wrong. Macau should be an international and cosmopolitan place, where people that take their degree, find a job and embark upon their professional and personal lives.

If the measures are to expel them and treat them as illegals, they will not want to return and give back to the community what the community has given to them through the university.

This has happened, as I mentioned, in the past. I have friends that came first to Macau to study and are now successful businessmen and lawyers.

Well, if Macau is a place that does not treat those that come here to study well once they finish their courses then we should wonder whether the policy should be to have interchange programmes in those institutions. I’m sure that this is not what happens in other places. The best students in the United States, the UK, Singapore, etc., always have an opportunity to stay in those places. More: they also have the opportunity to get part-time jobs that not only help them pay for their studies but help integrate them into the work environment, preparing them for their future professional life.

Fortunately, I am not a politician; merely a simple lawyer trying to do his job the best way he can. But if I were a politician, I would surely like to have in my community the best students from my university institutions. Irrespective of where they came from, their religion, sex, or political beliefs.

In Macau, it seems that people think differently and sometimes forget that they are what they are because they have studied abroad and in countries I am sure they would not be expelled from should they want to stay longer and find a job upon graduation.

Macau seems to need to learn from those experiences and open, once and for all, the mentality that so often puts hurdles in the way. Or, otherwise, it will always be a tacky, culturally underdeveloped place where people whose family is not from here tend to think that they now have infinite rights to decide the lives of others. *Part-time Lecturer at the Chinese University of Hong Kong

ICBC Macau ranked 3rd strongest bank in Asia Pacific The ranking is conducted by Asian Banker Research based on the balance sheets of 500 banks in the region.

The researcher also indicated that banks in the territory were the fourth strongest in the region on average last year Kam Leong

kamleong@macaubusinessdaily.com

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ocal banks are ranked as fourth strongest in the Asia Pacific Region per their balance sheet according to Singapore-based Asian Banker Research, which also nominated the Macau Branch of the Industrial & Commercial Bank of China (ICBC Macau) third strongest bank in the region last year.

The study - Asian Banker 500 Strongest Bank by Balance Sheet Ranking 2015 - evaluates the quality and sustainability of the balance sheets of the 500 largest banks in the Asia Pacific region for the financial year 2014.

Banks in the territory, with only one bank listed in the top 10 in the region, scored on average 3.3 of 5 in terms of strength of balance sheet, following Hong Kong, Singapore and Mainland China.

ICBC Macau, ranked third strongest bank in Asia Pacific, was scored 4.13 in terms of strength of balance sheet by the report, of which its scale and asset quality were given full marks, while its balance sheet growth, profitability, liquidity and risk profile were scored 4.8, 3.8, 3.5 and 3.2, respectively.

Meanwhile, Bank of China (Hong Kong) topped the ranking with a score of 4.15, followed by Singapore’s OCBC Bank with a score of 4.14.

In fact, Hong Kong has three other banks ranked in the top 10 in Asia Pacific by the researcher. They are Industrial & Commercial Bank of China (Asia), HSBC, and Hang Seng

Weighted-average strength score by country (Maximum: 5.0)

Source: Asian Banker Research

Bank, which occupy fourth, fifth and sixth places, and were scored 3.96, 3.93 and 3.88, respectively.

Performance challenges

On the other hand, the study pointed out that rising competition by nonbanks is affecting the financial performance of banks in the Asia Pacific region, indicating banks are pressured to respond quickly to changing market conditions.

‘2014 has proved a challenging year as banks across the region faced falling profit margins and weakening asset quality amid strong competition,’ the study said, adding 2015 has also been another challenging year for the bank sector in the region.

‘The decline in Asia Pacific banks’ asset quality has continued to impact

profitability. Competition from nonbanks and relatively low interest rates also affected bank profit margins, which underscored the need for commercial banks to improve the structure of their revenue,’ it said.

Moreover, the study claimed that the financial policies of Mainland China are also expected to drag down the overall performance of banks in the region.

‘China has cut interest rates five times since November 2014, putting pressure on banks’ interest income.

Meanwhile, the amount of bad loans has risen, further squeezing bank incomes. China’s stock market slump since July 2015 and the devaluation of the RMB are expected to drag performance down. The growth in banks’ fee income is also expected to slow,’ the research firm wrote.

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October 23, 2015

Greater China QDII2 trial in Shanghai Free Trade Zone considered China is considering launching its longplanned qualified domestic individual investor (QDII2) program in the Shanghai Free Trade Zone, according to a statement posted by State Council, China’s cabinet.

The Council statement did not elaborate on potential timing for the program’s launch. Currently individual Chinese investors are allowed to purchase a maximum of US$50,000 worth of foreign currency a year, but regulators have been considering an expanded program for selected domestic investors for some time. Equity and currency market volatility this summer caused some analysts to speculate that further capital account reforms could be delayed until markets stabilized

Beijing to expand tax breaks for R&D China will expand preferential tax policies for firms engaged in research and development beginning in 2016, according to a statement posted Wednesday night on the State Council website following a Council meeting chaired by Premier Li Keqiang. Venture capital firms investing in new technology start-ups for more than two years will also receive tax breaks beginning in October 2015, the statement said. In addition, a draft of the reform to the nationwide residence permit system was also approved, the statement said, without providing further details.

HK Stock Exchange proposes ‘London connect scheme’ for metals The HKEx and LME hope that such a tie-up would also allow them to offer yuan-denominated futures and other commodities products to European investors

H

ong Kong’s stock exchange has kicked off a preliminary study to build a “London Hong Kong Connect” scheme to link commodities markets in the two global financial centres.

The scheme, which was first flagged by the exchange’s CEO Charles Li last year, was part of a series of cooperation initiatives announced during Chinese President Xi Jinping’s visit this week to the UK. If implemented, it would enable market participants in Hong Kong, which comprise some of the biggest commodities importers in the world, to effectively hedge their trading

exposure through the London Metal Exchange (LME), which is the global hub for metals trading.

“Enhanced market access is a key component of our strategy,” said Charles Li, chief executive of Hong Kong Exchanges and Clearing Limited, which owns the LME. The “non-binding memorandum of understanding” for the proposed development of the trading link was signed between Hong Kong Futures Exchange Limited and the London Metals Exchange. Regulatory approvals are still pending and no set date has been announced.

The HKEx and LME hope that

Iron and steel capacity reduced China has reduced capacity in its steel industry by 77.8 million tonnes, President Xi Jinping said on Wednesday, fending off criticism that China’s cut price steel exports had brought the British steel sector to its knees. China makes nearly half the world’s 1.6 billion tonnes of steel and experts estimate its mills have about 300 million tonnes worth of excess steelmaking capacity. Earlier this year, China said it will aim to cut as much as 80 million tonnes of steel capacity in the next three years. Last year, it eliminated 31.1 million tonnes of steel capacity.

Buying less corn for stockpiles China could buy about 50-percent less corn for state stockpiles in the 2015/16 season than the previous year as local governments offer subsidies to encourage processors to use more domestic grain, industry analysts said. Increased local purchases by Chinese processors could dent appetite for corn imports, pressuring global prices. Beijing will buy 40-50 million tonnes of corn for state stocks during a six-month purchasing period that starts next month, compared with 83 million in 2014/15, the analysts said. But those purchases will still likely push the country’s total corn stockpile to about 200 million tonnes.

HK fashion retailer to buy iconic toy shop C.banner International Holdings Ltd, a Hong Kong-based women’s footwear retailer, will buy the British toy shop Hamleys for around 100 million pounds (US$154.32 million), a source with direct knowledge of the deal said yesterday.

C.banner will announce the deal shortly, the source said, declining to be identified because the deal is not yet public. The deal comes as Chinese leader Xi Jinping is visiting the UK to promote business ties between the two countries. A spokesman for C.banner declined to comment.

such a tie-up would also allow them to offer yuan-denominated futures and other commodities products to European investors, which would further expand the use of the Chinese currency globally. This week, China’s central bank sold its first-ever dim sum bond in London.

Still, some market watchers advised caution after recent turmoil in the mainland Chinese stock markets, with some plans such as linking the stock markets of Hong Kong with those in the southern Chinese boomtown of Shenzhen beset by delays.

“We should not be too optimistic for now, because if you look at the Shenzhen-Hong Kong stock connect scheme which has been talked about for a long time but has yet to be launched, you may not expect the Hong Kong-London connect thing to be rolled out immediately as it’s cooperation between two countries,” said a commodities trader in Hong Kong.

Reuters

Capital account opening pledge weighed Even with the change, China’s government isn’t expected to relinquish complete control over the capital account

C

hina’s leadership is considering a pledge to liberalize the nation’s capital account by 2020, further freeing the flow of money across its borders, according to a person familiar with the discussions.

The commitment would be in the five-year plan for 2016 to 2020, replacing a prior reference to “speed up” capital account reform, said the

Some people worry that the Chinese economy has problems and volatility, but that will not affect the efforts of the opening of the capital account Wang Xiaoyi, deputy director, State Administration of Foreign Exchange

person, who asked not to be identified because the talks are private. Such a change would eventually allow companies and investors to freely move money in and out of the country.

President Xi Jinping’s first fiveyear plan since becoming president in March 2013, to be debated next week at the Communist Party plenum, will chart the next steps in the development of the world’s second-largest economy.

A key part of the effort is the gradual opening of China’s capital account and boosting the yuan’s status to join the dollar, yen, euro and pound as reserve currencies used for most trade and investment worldwide.

Even with the change, China’s government isn’t expected to relinquish complete control over the capital account. Capital- account opening will proceed “step by step, to make sure the risk can be contained,” Wang Xiaoyi, deputy director of the State Administration of Foreign Exchange, said at a briefing yesterday.

The People’s Bank of China and National Development and Reform Commission didn’t immediately respond to faxed requests for comment yesterday. Chinese leaders will release a final five- year plan document after the nation’s legislature meets in March.

Bloomberg News

Business Daily | 9

October 23, 2015

Greater China

Capital outflows put Tobin Tax back on Beijing’s agenda China has already announced some measures to curb yuan speculation

C

hina has for the second time this month raised the possibility of taxing foreign-exchange transactions as record capital outflows from the world’s second-largest economy put pressure on the yuan.

"We are currently studying measures including Tobin Tax, unremunerated reserve requirement and handling fees for foreign- exchange trading to suppress any abnormal and significant flows of short-term funds that seek arbitrage," Wang Xiaoyi, deputy administrator of the State Administration of Foreign Exchange (SAFE), said yesterday at a press conference in Beijing. Central bank Deputy Governor Yi Gang called for such punitive measures to be introduced to deter currency speculators in China Finance magazine, a People’s Bank of China publication.

The last time SAFE said it was considering imposing a levy on yuan trading was in early 2014, when the authorities were having to

stockpile dollars to prevent fund inflows from driving the yuan up too sharply. The tide of money has since turned and the nation’s foreignexchange reserves tumbled US$329 billion in the first nine months of this year, having been little changed in 2014 and jumped by a record US$510 billion in 2013.

"A Tobin tax is useful in curbing short-term capital outflows, but won’t benefit the yuan trading in the long run, as high-quality capital might find investing in the currency more expensive," said Liu Jian, a Shanghaibased researcher specializing in cross-border capital flows at Bank of Communications Co.

Exchange-rate gap

China’s capital controls mean the yuan is valued differently in Hong Kong’s offshore market than it is in Shanghai, creating a profit opportunity for arbitrageurs that are able to move funds between the two cities. At current exchange rates, the currency is 0.4 percent

weaker in Hong Kong than in the domestic market, encouraging outflows. The discount widened to more than 2 percent on August 12, a day after the central bank devalued the yuan, and subsequently narrowed as PBOC intervention helped to stabilize the exchange rate.

The valuation gap’s days may be numbered though as China’s leadership is said to be considering a pledge to liberalize the nation’s capital account by 2020.

The commitment would be in the five-year plan for 2016 to 2020, replacing a prior reference to “speed up” reforms in this area, according to a person familiar with the discussions.

Capital outflows from China climbed to a record US$194.3 billion in September, exceeding the previous high of US$141.7 billion in August, according to a Bloomberg estimate that also takes into account decisions by exporters and direct investment recipients to hold funds in dollars. A gauge of foreign-currency assets held by

Chinese financial institutions, including the central bank, declined by the equivalent of 761.3 billion yuan (US$120 billion), also a record, official data showed Friday.

The so-called Tobin tax was named after Nobel Laureate economist James Tobin, who first proposed such a levy in 1972 after U.S. President Richard Nixon’s decision to abandon the dollar’s peg to gold pushed up global volatility. The tax has in the past been rejected by economies from Europe to South Korea because of the

risk investors will simply take their business elsewhere.

The PBOC in September asked financial institutions to set aside 20 percent of yuan forward contract sales in reserve for a year with zero interest, while the State Administration of Foreign Exchange has told banks to conduct special checks on currency trading under capital accounts.

Capital outflows are slowing, while demand and supply for foreign exchange are basically balanced, SAFE’s Wang said.

Bloomberg News

10 | Business Daily

October 23, 2015

Greater China

Slow demand in commodities hampers shipping rates But some in the industry see a glimmer of hope given the opening of an expanded Panama Canal next year and China’s plans for a Maritime Silk Road Henning Gloystein

We are going to see big restructuring of Chinese yards in the next two years Sokje Lee, executive director for Korea, JP Morgan

B

ulk freight rates are set to remain under pressure, as cooling commodity demand coincides with a bigger vessel fleet, increasing the pressure for consolidation in the sector, industry analysts said.

Sokje Lee, executive director for Korea at JP Morgan, said there was a risk shipping rates could remain low for years.

“Don’t look for an increase in freight rates. Instead, the way to make money is to save costs,” he told a shipping conference in the Korean port city.

Lee said that weak rates were a particular threat to Chinese ship

makers as their labour costs had tripled in the last decade and were now higher than in South Korea and Japan.

Industry experts speculate that China Ocean Shipping (Group) and China Shipping could be set to announce a merged holding company.

Shares in units of the companies including China Cosco Holdings and China Shipping Development have been suspended for two months pending an announcement.

Owners of dry cargo ships including large 180,000 deadweight tonne (dwt) capesize iron ore and coal carriers are struggling with one

of the worst freight rate environments in the last seven years with average charter rates this year barely covering operating costs, brokers and analysts said.

Average earnings for capesize ships this year up to mid-October were around US$7,196 per day, according to shipping services and ship-broking firm Clarkson, while daily operating costs are about US$7,300, marine accountant Moore Stephens said.

Along with the impact of China’s slowing economy and waning appetite for raw materials, dry bulk in other parts of the world was also suffering, Jeffrey Landsberg, managing

director of commodities consultancy Commodore Research told Reuters.

“Global steel output outside of China has continued to fare even worse than Chinese steel output,” he said, adding the extent of this had not been recognized by many.

“When they do, they will realize how gloomy prospects are for the longer-term dry bulk shipping market,” Landsberg said, noting half of the world’s steel output came from outside China.

The poor conditions have led to a raft of casualties since the dry bulk market collapsed in 2008, with Japanese shipper Daiichi Chuo Kisen Kaisha filing for bankruptcy protection on September 29.

“If the fleet contracts and demand grows then at some point the two cross-over and rates start going up,” said Martin Rowe, managing director of Clarksons Platou Asia HK.

Apple to fight polluter reputation building solar projects in mainland Major Apple supplier Foxconn said it will build 400 MW of solar energy projects by 2018, starting in Henan province Valerie Volcovici and Julia Love

A

pple announced Wednesday it will build 200 megawatts of solar energy projects in China and work with local suppliers to source more renewable energy, its latest moves to green its Chinese supply chain amid criticism that its local partners are heavy polluters.

In addition to bringing on an additional 200 MW in northern, eastern and southern China, the tech giant

said it will launch an initiative to “drive its manufacturing partners to become more energy efficient and to use clean energy for their manufacturing operations.”

Apple said the 200 megawatts projects will produce the equivalent of the energy used by more by than 265,000 Chinese homes in a year.

“These projects go beyond Apple’s operations in China to help our suppliers adopt

clean renewable energy,” Lisa Jackson, Apple’s vice president of Environment, Policy and Social Initiatives, said in a statement.

The announcement comes months after Apple said it would build its first major solar energy project in China, two 20 MW solar farms in Sichuan province, with solar developer SunPower.

The company now says its China operations are “carbon neutral” because the

solar installations produce more energy than is used at its offices and retail stores throughout the country.

Four years ago, Chinese environmental groups accused Apple of turning a blind eye as its suppliers polluted the country by emitting toxic gases and discharging heavy metal sludge, among other practices.

In the United States, Apple was criticized by environmental group

Reuters

Greenpeace in 2012 for relying too heavily on fossilfuel-based energy to power its energy-hungry data centres.

On Wednesday, Greenpeace said the company had taken a “major step forward” in greening its supply chain.

“We hope that Samsung, Microsoft and other IT companies will follow their lead in manufacturing their cutting-edge devices with a 21st century energy supply,” said Gary Cook, IT policy analyst at Greenpeace.

The programs will avoid over 20 million tons of greenhouse gas emissions in China between now and 2020, according to Apple.

Apple has also taken steps to operate more cleanly in its home state of California. In February, the iPhone maker said it would buy about US$850 million of power from a new California solar farm to cut its energy bill and supply electricity for its new campus in Silicon Valley as well as other offices and stores.

Reuters

Business Daily | 11

October 23, 2015

Asia

Recession stalking North Asia PMI readings are contracting across most of Asia-Pacific, with new orders falling at the fastest pace since early 2009 Nicholas Owen

KEY POINTS China growth at weakest in quarter of a century Japan Sept shipments to China down 3.5 pct Singapore Q3 growth just 0.1 pct, Taiwan also weak South Korea Sept exports down 8.4 pct from year ago Tech, freight firms feeling the squeeze

T

he slowdown in China’s economy, the world’s second largest, is sucking the growth out of North Asia and tilting some economies towards recession.

As China undergoes a painful rebalancing of an economy that accounts for 16 percent of global GDP - up from below a tenth a decade ago - the International Monetary Fund predicts 5.5 percent growth this year for a region that also includes export powerhouses Japan, South Korea, Hong Kong and Taiwan.

That would be the weakest growth rate since the global financial crisis.

Japan’s exports grew by 0.6 percent from a year earlier in September, the slowest since August last year, data

showed on Wednesday, as shipments to China dropped by 3.5 percent.

“Without a doubt, as long as China remains in a very soft spot ... it’s natural that North Asia, which is very highly oriented to China’s market, whether directly or as a conduit, also takes a knock,” said Vishnu Varathan, a senior economist at Mizuho Bank in Singapore.

Japan’s weak export numbers have heightened concerns that its economy may slip into recession in the third quarter, with a weak yen not doing enough to support its overseas shipments.

Singapore narrowly missed a third-quarter recession after the exportreliant economy expanded just 0.1 percent from the

previous three months, but Taiwan still looks very close to one.

China’s rapid growth and liberalisation, especially after accession to the World Trade Organisation in 2001, gave a tremendous boost to Asian trade. Supply chains spread across the region, sucking in everything from coal to fuel its factories, to electronic components for mobile phones to be shipped to markets in the West.

Now, though, things are different.

PMI readings are contracting across most of Asia-Pacific, with new orders falling at the fastest pace since early 2009, and inventories piling up, meaning that production may have further to fall before economies shake

off spare capacity, according to HSBC.

Feeling the pinch

On Tuesday, Japan’s Yaskawa Electric Corp, which specialises in factory automation and robotics and relies on China for about a fifth of its sales, trimmed its annual revenue outlook, citing China’s economic slowdown.

Nidec Corp, another Japanese technology firm, on Wednesday posted higher second-quarter operating profit but kept its outlook unchanged, citing China’s slowdown.

Yasuo Sakuma, a fund manager at Bayview Asset Management in Tokyo, doesn’t see things improving soon for companies like

Yaskawa. “We still need to be cautious, considering we’re not seeing a bottoming out in orders,” he said.

Elsewhere, South Korea’s exports tumbled 8.4 percent from a year earlier in September, while Taiwan’s export orders for that month declined 4.5 percent, with orders from China sinking 9.8 percent.

As global trade stalls, Asia’s air and sea cargo operators are feeling the pressure, with the only boost to business coming from pre-Christmas shipments to the United States.

“We’re seeing some good volumes from China. The tonnage is there, but given the air freight capacity on the market we’re not getting the ‘super’ peak yields we would be hoping for at this time of year,” said Mark Sutch, Cathay Pacific’s general manager for cargo sales and marketing.

“We will be operating our peak transpacific schedule ... this week and expect the peak to continue to Thanksgiving (at end-November). A preChristmas rush is hard to predict.”

At Hong Kong Air Cargo Terminals (HACTL), one of the main cargo handlers, business is flat compared with last year.

“Slowdown in China is impacting Hong Kong in a whole range of ways, including air cargo,” said HACTL’s CEO Mark Whitehead. “I can’t see significant growth in this market ... although longer term I do have a very robust view of air cargo.”

Economists predict that North Asia’s dismal export numbers will continue for some time.

“It’s going to probably look like that to the first half of 2016 at least,” said Mizuho’s Varathan.

“We’re looking for (China’s) exports to bottom and some pick-up in consumption as we head into the middle of next year.

Reuters

Australian businesses more upbeat in Q3 National Australia Bank’s monthly version of the survey published last week reported a rebound in confidence in September alone

B

usinesses saw a marked improvement in sales and profits last quarter and turned notably more optimistic on the longer-term outlook for activity and investment, a survey showed yesterday.

National Australia Bank’s (NAB) index of business conditions rose 6 points to +11 in the three months to end September, based on its quarterly survey of more than 920 firms.

While its measure of confidence declined 4 points to 0, NAB said that fall reflected the timing of survey which came when emerging market concerns were particularly severe.

“The quarterly survey confirms the trend improvement in current conditions in the non-mining economy, while the outlook is also looking notably better,” said NAB’s chief economist Alan Oster.

The survey’s measure of sales

jumped 7 points to +13 while the profitability score rose by the same amount to +11. In a sign the improvement could prove lasting, a 4 point increase in forward orders to +5 took that index to the highest since 2009.

Firms were also more upbeat on the outlook, with the index of expectations for the next three months rising to +13 and for 12 months at a lofty +25.

As a result, many expected to lift their investment spending with the index for capex plans over the next 12 months rising to +20.

The Reserve Bank of Australia has long been hoping for a revival in spending by firms outside of the mining sector, which is suffering from weak commodity prices.

Reuters

12 | Business Daily

October 23, 2015

Asia Australia defers decision on Shell’s BG bid Australia’s competition watchdog said it has postponed a final decision on Royal Dutch Shell’s US$70 billion takeover of BG Group by a week to November 19, following an earlier deferral in September. The Australian Competition and Consumer Commission had said last month that market participants had expressed concerns the takeover may hurt gas supply competition in eastern Australia if Shell’s Arrow Energy were to sell its gas into BG’s Queensland Curtis liquefied natural gas plant for export. The commission said yesterday it had delayed its final decision “to allow additional time to consider the proposed acquisition”.

Samsung Electronics considering share buybacks Samsung Electronics Co Ltd is considering buying back its own shares as part of a broader initiative by South Korean conglomerate Samsung Group to boost shareholder value, the Korea Economic Daily reported yesterday. The paper reported that chief financial officers of various Samsung Group firms met on Wednesday to discuss shareholder returns policies, without naming its sources. Samsung Electronics and other cash-rich companies were considering share buybacks as a primary option, it said without elaborating. Samsung Electronics’ share price is down 3.6 percent so far this year.

SMFG to book US$500 mln impairment loss Sumitomo Mitsui Financial Group Inc (SMFG) is planning to book an impairment loss of around 60 billion yen (US$500 million) on its 40 percent stake in Indonesian lender PT Bank Tabungan Pensiunan Nasional Tbk (BTPN), sources with knowledge of the matter said yesterday. Japan’s third-largest lender by assets will book the loss for the April-September period after shares of BTPN fell sharply this year along with Indonesia’s broader market, said the sources, who were not authorised to discuss the matter publicly.

Hyundai Motor Q3 net profit slides South Korea’s Hyundai Motor Co said yesterday its net profit fell 23 percent in the third quarter from a year earlier, hit by a sharp slowdown in China sales and aggressive global incentives which outweighed gains in the won against the dollar. Hyundai Motor, which together with affiliate Kia Motors ranks fifth in global auto sales, said net profit was 1.2 trillion won (US$1.1 billion) in July to September, down from 1.5 trillion won a year earlier. That missed an average estimate of 1.5 trillion won from 12 analysts polled by Thomson Reuters I/B/E/S.

Moody’s says Japan’s A1 rating likely to remain a few years The ratings agency’s vice president said they are closely monitoring whether the government remains on track to meet its target to return to a primary budget surplus in fiscal 2020 Stanley White

J

apan’s sovereign credit rating is likely to remain in place for the next few years, supported by the low rates at which the government can fund its debt, an official at ratings agency Moody’s Investors Service said yesterday.

“When we downgraded last year, we were thinking there are uncertainties but the A1 rating should take us through for at least the next couple of years,” Christian de Guzman, a vice president of sovereign ratings at Moody’s, told Reuters. “But we are always watching,” he added.

De Guzman said that while it may make sense for Japan’s government to increase fiscal spending if the economy needed an extra boost, the possibility

that Japan could yet delay a sales tax increase scheduled for 2017 was a concern.

Moody’s downgraded Japan to A1 last December citing growing uncertainty over its ability to hit its debt-reduction goal. Moody’s rating for Japan is four notches below the top rating.

The outlook for Japan is stable.

In addition to a stable government debt market, stable moves in the yen are also supportive of Japan’s sovereign rating, de Guzman said.

Japan aims to return to a primary budget surplus in fiscal 2020, and then focus on reducing its public debt burden, which is the worst in the world at around twice the size of its economy.

However, the government has clearly stated it wants to focus on higher economic growth to improve public finances, and there is some concern the government could delay a sales tax hike scheduled for 2017, de Guzman said.

It is too early to determine the impact of new policies Japanese Prime Minister Shinzo Abe announced last month, because the government needs to offer more details, de Guzman said.

Abe last month tried to breath new life into his economic agenda by saying the government will raise nominal gross domestic product by nearly a quarter to 600 trillion yen (US$5.01 trillion), lift the fertility rate and improve the welfare system.

Reuters

Australia’s Santos rejects Brunei royal family-backed bid A Santos’ stake in the Papua New Guinea LNG project, could attract a premium based on a recent bid for a fellow stakeholder in the project

E

mbattled Australian oil and gas producer Santos Ltd yesterday rejected a A$7.1 billion (US$5.1 billion) takeover proposal from a fund backed by the ruling families of Brunei and the United Arab Emirates.

Santos effectively put itself on the block in August, looking to sell assets in a bid to cut its A$8.8 billion net debt as its Gladstone liquefied natural gas (LNG) project begins operations amid a sharp slump in oil prices.

It said the bid from Bermudaheadquartered Scepter, pitched at a 26 percent premium to its close on Wednesday, was “opportunistic” and included conditions that would hurt its consideration of asset sales and a wider strategic review.

Santos shares, which hit a 15-year low last month, jumped on news of the offer but were still worth only half as much as a year ago and closed at A$6.32, well below the proposed offer of A$6.88 a share.

Three analysts said the bid value was in line with or above their valuations, although Santos’s key

asset, a stake in the Papua New Guinea LNG project, could attract a premium based on a recent bid for a fellow stakeholder in the project.

Scepter said it has tapped former Santos chief executive John ElliceFlint, who led the company from 2000 to 2008, to run the company as executive chairman if a bid succeeds, and planned to build it into an Asian oil and gas leader.

Incorporated this year, the fund describes itself as a syndicate of ruling families, sovereign wealth funds and ultra-high net worth industrialists who have committed more than US$14 billion to back large transactions.

Prince Abdul Ali Yil Kabier, a member of Brunei’s ruling royal family, is a founder and director of the firm alongside financier Rayo Withanage.

Other directors include Brunei’s Prince Bahar Bin Jefri Bolkiah, the United Arab Emirates’ Sheikh Juma al Maktoum, former HSBC chairman John Bond and former U.S. ambassador to Qatar Patrick Theros.

Scepter confirmed it wanted exclusive access to Santos’ books.

A spokesman declined to comment on whether the firm was considering making a higher offer.

Shares mark time

“It’s a little surprising the market is certainly not factoring an acceptance of a bid or a higher bid coming in,” said UBS analyst Nik Burns, who said the bid was in line with his valuation on Santos.

He said that might reflect fears that Santos may see the spike in its share price as an opportunity to launch a sale of new shares to raise capital.

Santos’ spokesman declined to comment on any other alternatives the company was considering.

Santos has stakes in oil and gas production in Australia, Papua New Guinea, Indonesia and Vietnam, with the jewel in its crown considered to be its 13.5 percent stake in the Papua New Guinea LNG project.

Scepter is being advised by Australian boutique firm Highbury Partnership. Santos is being advised

by Deutsche Bank.

Reuters

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Business Daily | 13

October 23, 2015

Asia

Indonesia seeks China help as foreign investment stagnates The government plans to issue measures to stimulate the economy Herdaru Purnomo and Chris Brummitt

I

ndonesia will seek more funds from China to help drive economic growth after foreign investment stagnated last quarter.

Foreign direct investment was US$7.4 billion in July through September, unchanged from the previous quarter and down from US$7.5 billion a year earlier, according to the Indonesia Investment Coordinating Board.

In rupiah, it rose 18 percent from a year earlier. Total investment, including from domestic sources, climbed 17 percent in rupiah terms from a year earlier, and the government expects to exceed its full-year target for 519.5 trillion rupiah (US$38 billion), it said.

Widodo reshuffled his cabinet and issued a series of policy measures in recent months to try to remove impediments to doing business, after Southeast Asia’s largest economy grew in the second quarter at the slowest pace since 2009. Budget spending has picked up in recent months after a slow start to the year, with the government kick starting

was mostly trade. Not so much on FDI. Chinese FDI realization is one of the lowest.”

China has offered US$100 billion of total investments in various projects, the government has said.

Yet the realization rate of Chinese investment is only at 10 percent, Brodjonegoro said. Singapore, Japan and the Netherlands were the biggest sources of investment in the last quarter, with China fifth, the investment board said, without giving details on companies.

Signs improving Indonesia’s Finance Minister Bambang Brodjonegoro

infrastructure projects such as a Chinese-built dam.

“We need to tap more Chinese FDI,” Finance Minister Bambang Brodjonegoro told an audience of diplomats, economists and business people at a World Bank briefing yesterday. “In the past the relationship

Jokowi has been more open to Chinese investment than his predecessor Susilo Bambang Yudhoyono.

Indonesian state companies will join a Chinese counterpart to build a railway from the capital to Bandung on Java island, and the government in August started flooding a Chinesebuilt dam that was first proposed more than 30 years ago.

The rupiah extended gains after the investment data to rise 1.4 percent, the most in Asia, as

foreign funds add to their stock and bond holdings this month amid speculation Indonesia’s economy is picking up and the Federal Reserve won’t raise interest rates this year.

The investment figures in rupiah are based on an exchange rate of 12,500 a dollar for this year, and 10,500 for last year, versus a current rate of around 13,500.

The World Bank sees Indonesia’s full year gross domestic product growth at 4.7 percent, below a government target for about 5 percent. Improvements will depend on the effective implementation of the recent reform measures, with a significant pick-up in capital spending seen since July, it said yesterday.

The government plans to issue further measures to stimulate the economy, after announcing in recent months it will cut red tape, improve a process for setting annual worker wage gains, and lower fuel prices.

That comes after a year in which investors have been confused by various policy u-turns.

Bloomberg News

14 | Business Daily

October 23, 2015

International Greek banks to tap market to plug capital gaps Greece’s four big banks will turn to private investors to plug any capital shortfalls the European Central Bank’s asset quality review and baseline stress tests reveal, two banking sources close to the matter said yesterday. The HFSF, Greece’s bank bailout fund, will cover any additional capital needs found in the ECB health check’s adverse scenario if it cannot be raised in the market, the banking sources told Reuters, as the authorities finalise their recapitalisation framework. Capital controls, new austerity measures and a mountain of non-performing loans have increased the credit risk and reduced the profitability outlook of Greek banks.

Brazil keeps interest rates steady Brazil’s central bank kept interest rates on hold on Wednesday, standing pat for a second straight meeting despite a jump in inflation expectations to avoid doing more harm to an economy mired in its worst recession in decades. In a unanimous vote, the central bank’s monetary policy committee, known as Copom, kept the benchmark Selic rate at 14.25 percent, a nine-year high and still the highest among the world’s top 10 economies. The decision not to raise rates will give a breather to President Dilma Rousseff.

Bitcoin currency exchange not liable for VAT taxes

Exchanging traditional currency for the digital currency bitcoin online should be exempt from consumption taxes just like other transactions of banknotes and coins, the European Court of Justice said yesterday. Europe’s highest court ruled in response to a request

by Swedish tax authorities, who had argued bitcoin transactions should not be covered by a European Union directive exempting currency transactions from value added tax (VAT). The court ruled that bitcoins should be treated as a means of payment, and as such were protected under the directive.

Fiat CEO expects industry consolidation in 24 months A major consolidation in the global auto industry could happen in the next 24 months, Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne told CNBC. Marchionne has previously said consolidation would support the heavy investments required to meet the demands for cleaner, safer vehicles. “I think there’s a great chance that you see something in those 24 months. And it’s no use to me trying to hypothesis who the marriage of partners are, but it will happen,” he said. Marchionne had earlier this year approached General Motors Co CEO Mary Barra with an offer to merge.

Cuba says to drill for oil in deep water despite low prices The potential of Cuba’s oil industry has long been a subject of fascination as a possible source of funding Jaime Hamre

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uba plans to drill exploratory deep-water wells in the Gulf of Mexico by the end of 2016 or beginning of 2017 despite current low oil prices, officials from the state oil monopoly said.

Cuba-Petroleo (Cupet) will drill exploratory wells as deep as 7,000 meters in waters of up to 3,000 meters in production sharing contracts with Venezuelan state oil company PDVSA and Angola’s Sonangol.

“We will initiate a drilling campaign at the end of 2016 or the start of 2017,” Osvaldo Lopez, Cupet’s head of exploration, told Reuters.

“The essential goal of the new drilling campaign is at least two deep wells. There could be three. If there is a discovery there certainly will be more than two,” Lopez said on a tour of oil wells with international industry representatives.

Experts believe billions of barrels worth of oil lie beneath the waters off Cuba’s northwest coast, but a host of companies that have drilled over the years have come up dry.

Exploration has long been impeded by the U.S. trade embargo and is further complicated at times of low oil prices such as the present.

Crude oil prices have fallen in half over more than a year and the most recent forecasts project them going lower in 2016.

“We are working with several companies interested in studying the possibilities, but the price of oil makes these processes drag out a bit longer

Puerto Rico’s governor Alejandro Garcia Padilla

since companies cut their budgets,” Cupet Deputy Director Roberto Suarez told Reuters on Tuesday.

Cupet will also decide among several offers for seismic testing from companies such as France’s CGG SA and Norway’s Spectrum ASA in the next four to five months, Suarez said.

For now, the U.S. economic embargo remains in place, but under a relaxation of sanctions that took effect in July more rigs could become

available to Cuba. Cuba can now use products made with 25 percent U.S. components, up from 10 percent previously.

Only one known deep-water rig in the world met the 10 percent threshold. Officials have already identified about a dozen deep-water rigs that meet the new requirements, approximately a third of which are U.S.-owned, said Eredio Puentes, Cupet offshore drilling supervisor.

Reuters

US Treasury proposes plan to rescue Puerto Rico from default Debt ratings agencies had already downgraded Puerto Rico bonds to junk status before it paid only a fraction of a US$58 million debt that came due August 1

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he US Treasury Department proposed a plan to rescue Puerto Rico from default, but said that it needed approval from the Republican-controlled Congress.

The finances of the Caribbean island -- a US territory since the 1898 Spanish-American War -- were dealt a crippling blow in 2006 with the loss of federal tax breaks for US companies with local operations.

It has been in and out of recession in the years since. As economic activity shrank, the government papered over budget shortfalls with fresh borrowing.

Today, its debt stands at around US$72 billion, and the White House has ruled out a financial bailout for the former Spanish colony.

Only Congress has the authority to “provide Puerto Rico with the necessary tools to restructure its

financial liabilities in a fair and orderly manner under the supervision of a federal bankruptcy court” while also “creating the foundation for recovery.”

Currently, only US cities can legally go into what is known as Chapter 9 bankruptcy protection.

Detroit took this drastic measure during the depths of an economic crisis in 2013.

The Barack Obama administration also wants Congress to authorise independent fiscal oversight “to certify that Puerto Rico adheres to the recovery plan it is implementing in a credible and transparent way,” and wants Congress to reform the Commonwealth’s Medicaid program, and provide tax credits for the island.

Puerto Rico needs help fast because the emergency actions it took will be exhausted this winter, the Treasury Department said.

Over the past decade more than 300,000 people left the island as its economy shrank.

Puerto Rico’s 3.5 million residents are US citizens, though they cannot vote for president if they reside on the island.

They have no representative in the US Congress beyond a token observer.

Puerto Rico’s governor Alejandro Garcia Padilla welcomed the proposal from the Treasury Department.

“My administration has made a concerted effort to work with the Obama Administration and Congress over the past three years and these measures are a direct reflection of our shared commitment to the future of Puerto Rico,” he said in a statement.

“I look forward to having ample discussions in Washington and Puerto Rico regarding this new proposal,” he added.

AFP

Business Daily | 15

October 23, 2015

Opinion Business

wires

The trouble with financial bubbles

Leading reports from Asia’s best business newspapers

Howard Davies

First chairman of the United Kingdom’s Financial Services Authority (1997-2003), is Chairman of the Royal Bank of Scotland

THE KOREA HERALD South Korean legislators and policymakers are trying to devise the best possible way to impose taxes on the clergy, which has been a sensitive issue for years, official sources said yesterday. The government has reaffirmed on numerous occasions that there should be no exceptions when it comes to paying dues and the matter should be viewed as establishing fair taxation. A proposed bill calls for clergy who get allowances of under 40 million won (US$35,000) per annum, to have 80 percent of their income exempted, which will be classified as necessary expenses.

PHILSTAR The cost of damage to agriculture in areas affected

by Typhoon Lando has risen to P6.4 billion with the rice subsector sustaining the most damage, the Department of Agriculture (DA) reported yesterday. Damage incurred on rice soared to P5.7 billion with 383, 668 metric tons of production (MT) lost. Damaged were 272, 006 hectares, 269, 694 hectares of which have chances of recovery. Losses incurred on corn crops reached P88.32 million with 5,954 MT of produce lost. Affected were 13, 051 hectares, 12,634 hectares which may still recover.

NEW ZEALAND HERALD The bank that dubbed New Zealand the “rock star economy” has dramatically changed its tune. HSBC has added New Zealand to a watch-list of nations it has concerns about, which also includes Malaysia, Indonesia and Norway. In its latest Macro Health Check report, the bank flags concerns about rising house prices in this country, as well as our deep links with China - where growth is slowing - and tumbling dairy prices, according to the Bloomberg news agency. “Although low-risk, New Zealand may be one to watch,” HSBC economist James Pomeroy is quoted as saying.

THE JAPAN NEWS The number of visitors to Japan this year had topped 15 million as of October 9, Japan Tourism Agency Commissioner Akihiko Tamura said. Tamura revealed the most recent available figure at a press conference to announce foreign visitor data for September and JanuarySeptember compiled by the Japan National Tourism Organization. At a separate news conference the same day, Chief Cabinet Secretary Yoshihide Suga attributed the foreign visitor growth to progress in deregulation in the country. According to the government-affiliated organization, the number of visitors to Japan in September stood at an estimated 1,612,300.

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ery soon after the magnitude of the 2008 financial crisis became clear, a lively debate began about whether central banks and regulators could – and should – have done more to head it off. The traditional view, notably shared by former US Federal Reserve Chairman Alan Greenspan, is that any attempt to prick financial bubbles in advance is doomed to failure.

The most central banks can do is to clean up the mess.

Bubble-pricking may indeed choke off growth unnecessarily – and at high social cost. But there is a counter-argument.

Economists at the Bank for International Settlements (BIS) have maintained that the costs of the crisis were so large, and the clean-up so long, that we should surely now look for ways to act pre-emptively when we again see a dangerous build-up of liquidity and credit.

Hence the fierce (albeit arcane and polite) dispute between the two sides at the International Monetary Fund’s recent meeting in Lima, Peru. For the literaryminded, it was reminiscent of Jonathan Swift’s Gulliver’s Travels. Gulliver finds himself caught in a war between two tribes, one of which believes that a boiled egg should always be opened at the narrow end, while the other is fervent in its view that a spoon fits better into the bigger, rounded end.

It is fair to say that the debate has moved on a little since 2008. Most important, macroprudential regulation has been added to policymakers’ toolkit: simply put, it makes sense to vary banks’ capital requirements according to the financial cycle. When credit expansion is rapid, it may be

appropriate to increase banks’ capital requirements as a hedge against the heightened risk of a subsequent contraction. This increase would be above what microprudential supervision – assessing the risks to individual institutions – might dictate. In this way, the new Basel rules allow for requiring banks to maintain a so-called countercyclical buffer of extra capital.

But if the idea of the countercyclical buffer is now generally accepted, what of the “nuclear option” to prick a bubble: Is it justifiable to increase interest rates in response to a credit boom, even though the inflation rate might still be below target? And should central banks be given a specific financial-stability objective, separate from an inflation target?

Jaime Caruana, the General Manager of the BIS, and a former Governor of the Bank of Spain, answers yes to both questions. In Lima, he argued that the so-called “separation principle,” whereby monetary and financial stability are addressed differently and tasked to separate agencies, no longer makes sense.

The two sets of policies are, of course, bound to interact; but Caruana argues that it is wrong to say that we know too little about financial instability to be able to act in a preemptive way. We know as much about bubbles as we do about inflation, Caruana argues, and central banks’ need to move interest rates for reasons other than the short-term control of consumer-price trends should be explicitly recognized.

At the Lima meeting, the traditionalist counterview

If the idea of the countercyclical buffer is now generally accepted, what of the “nuclear option” to prick a bubble

came from Benoît Cœuré of the European Central Bank. A central bank, he argued, needs a very simple mandate that allows it to explain its actions clearly and be held accountable for them. So let central banks stick to the separation principle, “which makes our life simple.

We do not want a complicated set of objectives.”

For Cœuré, trying to maintain financial stability is in the “too difficult” box. Even macroprudential regulation is of dubious value: supervisors should confine themselves to overseeing individual institutions, leaving macrolevel policy to the grownups.

Nemat Shafik, a deputy governor of the Bank of England, tried to position herself between these opposing positions. She proposed relying on three lines of defence against financial instability.

Microprudential regulation, she argued, is the first line of defence: if all banks are

lending prudently, the chances of collective excesses are lower.

But the second line of defence is macroprudential manipulation of capital requirements, to be applied across the board or to selected market segments, such as mortgages. And, if all else fails to achieve financial stability, central banks could change interest rates. Because British law assigns capital regulation and interest-rate policy to two separate committees – with different members – within the Bank of England, the Shafik strategy would require some clever political and bureaucratic manoeuvring.

Industrial quantities of research, analysis, and debate have been devoted to the causes of the 2008 crisis and its consequences; so it seems odd that senior central bankers are still so sharply divided on the central issue of financial stability. All those days spent in secret conclave in Basel, drinking through the BIS’s legendary wine cellar, have apparently led to no consensus.

My view is that Caruana had the best of the arguments in Lima, and Cœuré the worst.

Sticking to a simple objective in the interests of a quiet life, even if you know it to be imperfect, is an inelegant posture at best. We need our central bankers to make complex decisions and to be able to balance potentially conflicting objectives. We accept that they will not always be right.

However, it is surely incumbent on them to learn from the biggest financial meltdown of the last 80 years, rather than to press on, regardless, with policy approaches that so signally failed.

Project Syndicate

16 | Business Daily

October 23, 2015

Closing Britain backs RMB’s inclusion in SDR basket

CNPC announces cooperation with BP on oil exploration

Britain supports the inclusion of the RMB, or Chinese yuan, into the International Monetary Fund’s (IMF) SDR basket subject to meeting existing criteria in the IMF’s upcoming review, said a China-Britain joint declaration issued yesterday.

Both sides urge members who have yet to ratify the 2010 quota and governance reforms to do so without delay to further enhance the voice of emerging markets and developing countries, said the document. The joint statement was signed during Chinese President Xi Jinping’s state visit to Britain, the first of its kind for a Chinese head of state in a decade.

Chinese oil giant China National Petroleum Corporation (CNPC) yesterday announced that it has inked an agreement with British energy company BP to strengthen cooperation on global oil exploration. The two companies will jointly seek opportunities in crude, refined oil, natural gas and carbon emissions trading, and exchange experience in technology and corporate governance, according to the framework agreement. The cooperation agreement will aid BP’s market expansion in China and also give a push to CNPC’s global efforts.

Beijing likely to expand funds for infrastructure In the new round the government will allow more projects to benefit from the bonds

The amount made available via a special bond program will be increased to at least 600 billion yuan

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hina is making more money available to local governments for financing infrastructure projects this year amid concerns about flagging

economic growth, according to people familiar with the matter.

The amount made available via a special bond program will be increased

to at least 600 billion yuan (US$94 billion) from 300 billion yuan for the rest of this year, according to the people, who asked not to be identified because the

deliberations are private.

The nation planned to sell 1.2 trillion yuan of bonds in 2015 to 2017 through its policy lenders and distribute the proceeds to local governments to fund infrastructure projects, Bloomberg News reported in September.

Guangdong reports increase in Air China, China Southern hit serviceplatformsforentrepreneurs upper limits on merger talk

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The bond boost signals growing concern among China’s policy makers that a target of 7 percent economic expansion for 2015 may be getting harder to achieve.

Growth slipped to 6.9 percent in the third quarter and the fourth quarter looks even gloomier with the financial sector’s contribution to growth poised to decline.

Planners of the bond program took the step after realizing that this year’s original 300 billion yuan quota won’t provide the necessary boost to the economy, the people said. Projects have been selected for the first two rounds of construction bonds, and the National Development and Reform Commission is now asking local governments to report projects for the third round, according to the people.

In the new round, the government will allow more projects to benefit from the bonds including sports facilities, electric car chargers, highways, tourism infrastructure, Internet, and removal of dangerous chemical plants, the people said. Previously, the program covered agriculture, railways, underground pipelines and shantytown renovations.

It’s unclear if the increase in funds for this year means the total size of the program is being expanded or if more of the 1.2 trillion yuan plan is being accelerated. The NDRC didn’t respond to a faxed request for comment.

Bloomberg News

Japanese PM heads to Central Asia to cement ties

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he number of “maker spaces” for entrepreneurs and innovators in south China’s Guangdong Province has reached 140, the provincial technology authority said yesterday.

Maker spaces are service centres or work facilities that support innovation. They provide financing, technical support, office space, and other help for start-ups, and create online or physical communities where people can learn, share, and work.

Eighty percent of the spaces are funded by private capital, according to the Science and Technology Bureau of Guangdong Province, adding that 48 maker spaces are located in the provincial capital, Guangzhou, while 29 are in Shenzhen.

Registered companies using the maker spaces have exceeded 3,000, according to the bureau.

The maker spaces in Guangdong Province provide services for start-ups in finance, workspace, and creative industry development, said Chen Qing, an official from the Torch High Technology Industry Development Centre of the Ministry of Science and Technology. The Chinese government has been working to make things easier for innovators and entrepreneurs in the hopes that they will become a new engine to drive growth.

ir China and China Southern Airlines closed at their upper limits in Shanghai yesterday on a media report of a possible merger of the two state-owned carriers, beating the benchmark index’s 1.5-percent climb.

Shanghai Securities News, owned by the official Xinhua News Agency, reported that Air China and China Southern were likely to join forces, citing market talk, as Beijing moves to consolidate bloated state-run conglomerates in a bid to improve competitiveness.

The Civil Aviation Administration of China, the country’s aviation regulator, and China Southern however said they had no knowledge of such a merger. Air China could not be reached for comment.

“We know nothing about it,” a China Southern executive told Reuters. “There had been some market talk on the merger of the cargo business of state carriers earlier, and now comes talk about a merger of Air China and China Southern.”

Shares of Air China and China Southern surged as much as 10 percent in the afternoon session, their daily upper limits, closing at 9.46 yuan and 8.97 yuan, respectively.

Xinhua

Reuters

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apanese Prime Minister Shinzo Abe yesterday left for a week-long tour to Mongolia and five Central Asian nations, eyeing billions of dollars in business deals as China boosts its influence in the resource-rich region.

The conservative leader, who has been pushing to kick-start the world’s number three economy, was accompanied by representatives of about 50 Japanese firms.

He is to arrive in Ulan Bator later in the day, his first visit to Mongolia since 2013.

He will later travel to Kazakhstan and Uzbekistan, and make the first-ever official visit by a Japanese premier to Turkmenistan, Tajikistan and Kyrgyzstan.

“Mongolia and Central Asia are at the centre of Asia and very important geopolitically,” Abe told reporters at a Tokyo airport ahead of his departure.

These countries “have relied on exports of natural resources, but now are seeking highquality infrastructure as they aim for an economy based on high value-added” industries. “I’d like to take a huge step in boosting ties with each country”, he said.

AFP