Asia News Update
China: Real estate investments grow 19.5% from January to November
Source: Steel Orbis, 10 December 2013
From January to November in 2013, total real estate investments in China totaled USD 1.27 million, an increase of 19.5% year on year. This reflected an increased growth rate by 0.3 percentage points on the year on year increase reported in January to October 2013. The information was announced by the country’s national bureau of statistics. At the same time, investment in residential buildings in China during the period achieved USD 0.87 trillion, marking a 19.1% increase year on year and accounting for 68.7% of total real estate investments in the country in the period.
For the same period this year, new commercial real estate sold in China equated to a total area of 1.10807 billion meters squared, up 20.8% year on year, and down 1% when compared to the growth from January to October 2013. The total area covered by new residential buildings sold from January to November increased 21.3%, and the combined area covered by new office buildings sold increased by 26.6%, while the total area of new commercial business space for the period also grew 12.1%.
India: Nissan to sell cars online
Source: Zig Wheels 10 December 2013
Nissan Motors India has announced online booking through credit card, marking the company’s first foray into online sales. The entire product range will be available for purchase via the web. The process is simple and straightforward; customers make the payment online and then pick up their car at the nearest Nissan dealership. Nitish Tipnis, director of marketing, for Hover Automotive India, Nissan’s Indian company said that the decision was made sense given how consumers use the internet.
“Today most car buyers go online before making a decision so using the internet is a logical extension of the purchase cycle. At Nissan, we are putting in place suitable payment gateways with the help of specific car portals to ensure timely delivery and service at the time of purchase. The objective is to simplify the purchase cycle and delight the customer by making the entire sales journey quicker and more efficient with no compromise on service," he said. The vehicles currently on offer include the mid-sized sedan 'Sunny', Nissan Evalia (MPV), compact hatchback Micra, newly launched compact premium SUV Terrano, luxury sedan Teana, SUV X-Trail and the iconic sports car Nissan 370Z.
China’s car lobby opposes softening of foreign automaker restrictions
Source: Automotive News, 4 December 2013
China's automotive lobby has fiercely opposed a potential easing of restrictions by Beijing on foreign ownership in the car industry, arguing that the move would seriously weaken the position of domestic carmakers. Dong Yang, secretary general of the China Association of Automobile Manufacturers, maintained that if foreign ownership rules were relaxed, Chinese carmakers would lose control of the joint ventures they currently own and run together with global automakers. China has required foreign companies including General Motors, Ford Motor Co., Volkswagen Group and Toyota Motor Corp. to form joint ventures in order to produce cars in the country, with the hope that the Chinese manufacturers would absorb foreign technology and management expertise to become more competitive.
The Ministry of Commerce stated in a media briefing in November that the government would likely relax rules on foreign investment soon in areas including auto manufacturing. The current regulations also requires that foreign automakers’ technical centers be jointly run in China and that the foreign enterprises transfer certain technology to their local partners. At a recent automotive conference in Wuhan, Chen Lin, the Commerce Ministry official who oversees international automotive investment policy, acknowledged that unlike China, automakers investing in most countries around the world are not required to form a joint venture with a local partner to own and operate any assembly plants in their markets.
Indonesia: General Motors sees China-like take-off in car market
Source: Reuters, 10 December 2013
General Motors is trying to break the Japanese stranglehold on the popular family car market in Indonesia, where it sees the next auto boom after China. Despite being in Indonesia for about 30 years longer than Japan's Toyota Motor and its affiliates including Daihatsu Motor Co Ltd, the U.S. company is only a small player in Southeast Asia's biggest economy. The U.S. company sold around 12,000 cars from January to October 2013, whereas Toyota, the world's biggest car maker, sold more than 350,000.
General Motors is banking on multi-purpose vehicles, sport utility vehicles and compact cars to close the gap with its Japanese rivals, said Michael Dunne, who became president of the company's Indonesian operations in September. "The most exciting thing about Indonesia is it reminds me of China about a dozen years ago, early 2000s," Dunne, a former car consultant who was also the author of a book on General Motors' strategy in China, he continued “Population times per capita income equals opportunity for automakers. So when you have a massive population and you have that income threshold crossing $3,500, in country after country, without exception, that's been a trigger of take-off." Sales in Indonesia by some estimates are expected to double over the next three years.
Japan: Umicore Shokubai opens new technical R&D centre
Source: Chemicals Technology, 5 December 2013
Umicore Shokubai Japan, a joint venture between Belgium's Umicore and Japanese company Nippon Shokubai, has opened a new technical R&D centre in Tokoname City, Japan. The new technical R&D centre, which is spread across an area of about 15,000m², features advanced equipment and improved capabilities. The centre will be used in development and testing of automotive catalysts for the Japanese automotive industry and others.According to the JV, the new centre will further help Umicore Shokubai Japan to test next generation catalysts and broaden its offering to Japanese OEMs.
Shokubai Japan president Hideaki Muraki said: "Growing our global catalyst business with Japanese automotive producers is a key element of our strategy." Umicore Shokubai Japan markets automotive catalysts to Japanese automotive companies and has its manufacturing and R&D centre in Himeji, Hyogo Prefecture. Belgian materials technology and recycling company Umicore owns a 60% stake in Umicore Shokubai, while the remainder is owned by Nippon Shokubai. The R&D centre project was supported by grants from the Japanese External Trade Organisation (JETRO) and the Aichi Prefecture.
Asia: Clamping down on diversion of drug-making chemicals
Source: Manafn, 3 December 2013
At the "Precursor Control in Asia: Addressing the Challenges" meeting in Thailand, on December 2, Acting Principal Deputy Assistant Secretary of State for International Narcotics and Law Enforcement Carol Perez addressed more than 100 technical experts and policymakers from around the world, calling for action to reduce the diversion of legal chemicals to the manufacture of illegal drugs. Perez pressed for more effective utilization of international control mechanisms already in place and called for greater attention to the illegal diversion of acetic anhydride, a chemical used in the manufacture of heroin.
Asia is the principal producer of many of the chemicals used by drug traffickers in and outside the region for manufacturing heroin and methamphetamine. Opiate abuse is a long-standing problem in Asia, and methamphetamine and amphetamine-type stimulants pose new and fast-growing threats. The delegates will discuss ways to improve the usage of existing information-sharing tools and other forms of law enforcement cooperation to combat the activities of organized crime organizations involved in the production of these dangerous illicit drugs.
India: SABIC opens R&D centre in Bengaluru
Source: Chemicals Technology, 2 December 2013
Saudi Basic Industries Corporation (SABIC) has opened a USD 100m technology centre in Bengaluru, India. The centre will house 300 researchers, engineers and other staff, who will carry out research on materials including those for construction, clean energy, electrics, electronics, medical devices and transportation. Spanning an area of 187,000m², the latest R&D centre is designed with dedicated environmental and sustainable codes and a zero-discharge facility. SABIC chairman Prince Saud bin Abdullah bin Thenayan Al-Saud said Saudi Arabia and India have a long history of deep relationships. "We believe in the future of India - a rapidly developing nation where partnership and inclusive development is a priority. India is an important market for us in Asia, which is why our investment here is significant," added Al-Saud.
SABIC vice chairman and CEO Mohamed Al-Mady said the centre in Bengaluru is an integral part of company's R&D strategy."In this centre the scientists here are carrying out cutting-edge research into new platforms for next-generation materials across industry sectors including construction, clean energy, electrics and electronics, medical devices, transportation. Other initiatives include designing greener building materials to reduce environmental footprints and developing eco-friendly products in response to global megatrends and needs." The R&D centre will add to the existing centres already in the region - one in Moka, Japan, and the other in Sungnam, South Korea, while another centre will open in December 2013.
Construction & Property Development
Singapore’s real estate market slowing down
Source: CNBC, 5 December 2013
Demand for Singapore real estate will decline in 2014, according to a report from PricewaterhouseCoopers, which said the market fell four spots in its 2014 ranking of property markets. According to PwC's Emerging Trends in Real Estate Asia Pacific forecast, concerns surrounding an oversupply in some Singapore property sectors have suppressed appetite. The decline may be a surprise to many, given that the country is one of the most expensive real estate markets in the world. Low interest rates have spurred a huge increase in prices, and as a result regulators have introduced a plethora of measures to cool the market since 2009.
Choo Eng Beng, real estate leader at PwC said contradicting factors were creating a mixed outlook for Singapore's real estate market. "On the one hand, investing in real estate is getting more expensive due to the expected higher interest rates, compressed capitalization rates [which refer to the rate of return on a property based on its expected income] and tighter regulations. On the other hand some see room for better returns with low vacancy rates and potential for higher rentals," he said.
Cambodia: Construction sector sees 29% growth over first ten months of 2013
Source: Global Times, 5 December 2013
Cambodia's construction sector has received a investments totaling USD 2.48 billion US dollars in the first 10 months of 2013. A figure up 29% compared with USD 1.92 billion over the same period 2012, a recent government report showed. Over the January to October period this year, the Ministry of Land Management, Urban Planning and Construction granted licenses to 1,370 construction projects, down 8 % from 1,494 projects at the same period 2012. According to the deputy director of the Ministry's Construction Department, Lao Tip Seiha, the projects included condominiums, residential units, commercial buildings, hotels, casinos and factories.
"Construction is playing an important role to develop the economy," he said. He added: “The growth is thanks to Cambodia's economic and political stability and favorable business climate for investors.” Nuon Rithy, the managing director of Bonna Realty Group, backed the assessment saying that the post-election political stability was a major factor contributing to the growth in the sector. "Since the July's election, buying and selling properties are normal and prices of properties are stable...This reflects public confidence in the country's political stability." Top 10 countries and regions investing in the Cambodia’s real estate and construction are South Korea, China, Britain, Thailand, Russia, Japan, Malaysia, China's Taiwan, India and Vietnam.
Malaysia: New housing rules in Penang aim to stave off property bubble
Source: The Malay Online, 08 December 2013
First-time home buyers in Penang will be required to get state approval if they intend to sell their properties within a specified time frame, under new housing rules that will take effect from February 1 in 2014. Chief Minister Lim Guan Eng said the new rules - created to clamp down on property speculation - will impose a moratorium of up to 10 years on the sale of houses by first-time homeowners, which covers low-cost homes costing up to USD 13,092 and low-medium cost valued up to USD 22,600.
According to Lim, even if a sale is approved, it can only be sold to “listed buyers” who have registered with the state’s housing department and certified to fall under the low income group. Explaining the overall rationale, he stated: “As a responsible government seeking sustainable economic growth and development, the Penang state government is careful to avoid the pitfalls of any property bubble that will bring hardship to the rakyat and damage the economy.” Penang will arguably be the first state government of its volition to impose tough rules on home ownership when the new regulations come into effect early in 2014, as Malaysians struggle to keep up with rapid inflation in house prices, especially in urban centers.
Consumer & Retail
Vietnam’s retail sector continues to excite
Source: Vietnam Briefing, 10 December 2013
Retail continues to be one of Vietnam’s most exciting sectors of industry. This attractiveness to both foreign and domestic businesses is that Vietnam already has a well-developed economy that continues to improve, a high population (90+ million) and ever increasing living standards. Crucially important as well, are statistics like the fact that 42 % of Vietnamese are under the age of 25 and that there are a large amount of women in the workforce. Through November of this year, Vietnam’s total turnover for retail was USD 113 billion, a 12.6% increase y-o-y. Looking deeper at the figures reveals that the trade sector saw a 12.2 y-o-y increase, hotel and restaurant services expanded 15.3%, the service sector rose by 13.4%, and the tourism industry saw a modest growth of 1.8%.
According to the Association of Vietnam Retailers, the country currently has around 750 supermarkets, 130 shopping centers and 9,000 traditional markets. Moreover, the US Department of Agriculture’s Foreign Agricultural Service has found that grocery retail sales have risen 130% since 2008. FDI into Vietnam’s retail sector is at a strong level. Up until September of this year, the AVR recorded around 168 new FDI projects in the country with a total investment of around USD 380 million. Due to World Trade Organization concessions, Vietnam’s domestic market is now open to foreign competition. Retail companies are aggressively moving into the country and have strong expansion plans for the future.
Japan: Consumer confidence improved in November
Source: The Economic Times, 10 December 2013
Japanese consumer confidence rose in November, a Cabinet Office survey showed, giving evidence of an emerging optimism about wages and the job market. The survey's sentiment index for general households, which includes views on incomes and jobs, was 42.5 in November, an increase in 1.3 points from October’s 41.2. A survey with results below 50 suggests consumer pessimism. The Cabinet Office has maintained its assessment on consumer sentiment, saying it is in an improving trend. The public's inflation expectations fell for the first time in 11 months in November after rising sharply in the previous month. The latest available price data when the Nov. 15 survey was conducted had shown that the year-on-year rise in core CPI decelerated to +0.7% in September from +0.8% in August.
A total of 89.2% of the survey participants in November said prices would rise over the in 2014, down from 89.5 in October, but it was still higher than 87.8% in September. The October figure was the highest reading since 88.2% in August 2008. The share of those expecting a price drop was unchanged at 3.5%. Looking ahead, consumer confidence is expected to be supported by the government's economic stimulus package and the Bank of Japan's commitment to continue aggressive easing, but at the same time public ratings of the cabinet of Prime Minister Shinzo Abe slumped over the weekend after the ruling coalition rammed the controversial state secrets bill through parliament. Meanwhile, the annual inflation rate may not rise steadily in coming months after reaching 1% from +0.9% in October as energy and commodity markets have been tame.
Thailand: Consumer confidence approaching two year thanks to political unrest
Source: International Business Times, 3 December 2013
Thailand's consumer confidence hit a 22-month low in November as the movement to ouster Prime Minister Yingluck Shinawatra threatens to affect southeast Asia's second-largest economy, including its tourism industry during the festive year-end. , According to a poll by the University of the Thai Chamber of Commerce, the consumer confidence index dropped to 75.0 in November from 76.6 in the previous month, marking an eighth successive month of decline. Consumer confidence was also depressed by weaker economic growth and downbeat forecasts. This trend is expected to continue for some months, UTCC added.
Following the removal of Yingluck on December 3, it is expected that the rising street violence surrounding the turmoil has disrupted companies' operations and has resulted in the cancellation or deferral of business events, which is expected to weigh down on consumption. “Confidence was hurt by many factors; slowing growth and high living costs plus the political situation. There is no sign of confidence recovering and spending is likely to remain subdued until early in 2014," Thanavath Pholvichai said, director of the UTCC's Center for Economic and Business Forecasting.
Energy, Resources & Environment
Australia: The real cost of pesticides in nation’s food boom
Source: Food Magazine, 6 December 2013
More than USD 15.2 billion worth of crops grown in Australia annually is attributed to agricultural pesticides. That’s a staggering 68% of the USD 23.2 billion industry, according to a recent Deloitte report commissioned by CropLife Australia. So should we all pat ourselves on the back and eat up? Most of us want cheap, perfect-looking produce and farmers want to make a decent living. Agricultural pesticides have undoubtedly reduced food loss and helped farmers provide the unblemished produce we have grown so used to.
But pesticides also represent a significant source of risk for human and wildlife health, and pollution into our waterways. Should we be concerned about these “costs”, and how do we account for them? Pesticides (insecticides, herbicides, and fungicides) are applied over large areas in agriculture and urban settings. Their use represents an important source of diffuse chemical pollution that is difficult to monitor and difficult to control. The overuse and reliance on pesticides has resulted in weeds and insects developing resistance to insecticides and herbicides. This results in excessive, ever-increasing pesticide use in an attempt to get on top of the problem.
Cambodia: Growth prospects solidify as energy appetite increases
Source: Eco-business.com, 9 December 2013
According to the Asian Development Bank’s figures released in November, Cambodian Gross Domestic Product (GDP) is expected to rise 7.2% in 2013 and up to 7.5% in 2014. The special trade preference scheme in conjunction with the European Union importing products from Cambodia duty-free and quota-free, partly explains this positive outlook. Though the garment industry accounted for nearly 90% of Cambodia’s exports in 2011, it is no longer the sole industry supporting Cambodian exports. The Cambodian Investment Board has granted a number of industrial zones around the country the status of “Special Economic Zone”, which are designed to attract investments by offering low taxes and exemptions on import/export duties.
Outside of the shoe and textile factories, electronics and automotive parts manufacturers are now moving into Cambodia. “In Phnom Penh Special Economic Zone, Japanese investors are the leading foreign presence ahead of Taiwanese and Malays,” said Jeff Peron, Chief Development Officer for The Blue Circle. Given this development and the lack of internal power generation in Cambodia (the country was importing 43% of its power needs in 2012), renewable energy sources will play a key role in providing local, clean, and sustainable energy in the future.
Japanese energy giants rush into storage as solar booms
Source: Green Tech Media, 9 December 2013
Japan is emerging as a hot spot for energy storage projects, as utilities and technology companies look to battery-based solutions in response to the surge in solar PV installations. Two new battery storage projects have been announced in December, with Toshiba to install a 20-megawatt-hour/40-megawatt lithium-ion battery project in Tohoku, and the island of Okinawa announcing a 2-megawatt battery storage project. Japan is expected to be the largest market for solar PV installations in 2013, with around 9 gigawatts to be installed following the introduction of feed-in tariffs 2012 in response to the Fukushima nuclear disaster. This year, the Japanese government launched a USD 300 million grant program to support the installation of large-scale battery systems to help integrate renewables into the grid.
Bloomberg New Energy Finance reports that that the Toshiba system announced on November 26 will provide frequency regulation and operating reserves for Tohoku Electric. It is due to be commissioned in February 2014. The Ministry of Economy, Trade and Industry announced a 2-megawatt lead battery storage system to be built on Okinawa, the country’s southernmost island, to respond to up to 57 megawatts of solar farms of 300 kilowatts or more that are expected to be in place by the end of the year. The ministry says this is reaching capacity for the island, and new systems may not be able to be installed without storage. The 2-megawatt system may increase the renewable capacity by around 10%. The pilot project will be combined with another study looking into grid management.
Malaysia’s banks aiming to land segment of “secret millionaires”
Source: The Malay Mail Online, 8 December 2013
Malaysia is becoming a key destination for the region’s super-rich seeking financial services, but the rise of a band of “secret millionaires” has banks looking for new approaches to capture the elusive business, according to an FT report. According to Carolyn Leng, CIMB’s head of private banking, much of this vast wealth was often tied to the location these “secret millionaires” began their roots, away from urban centers, and forcing banks to work hard to seek them out. “Each trade they make is worth USD 1 million but none of the banks notice these people, because they don’t wear suits and don’t speak English.”
Connecting with these individuals and convincing them to sign up for the bank’s various services mean doing away with usual conventions and strategies, Leng said. One of the difficulties, according to Leng is that “these people want to be with family and friends, leaving for home at 5pm, rather than being super-wealthy and answerable to shareholders.” Many of these “secret millionaires” are essentially thriving family businesses looking to spread their wings either in the region or farther afield. For these individuals, one of the crucial services that banks are providing to win their accounts was facilitate continuity and power transfers across the generations, from father to son and beyond.
Singapore’s banks could face increased compliance costs
Source: Channel News Asia, 6 December 2013
Private banks in Singapore may soon face higher compliance costs. The recent data theft incident involving Standard Chartered Private Bank clients could lead to more stringent checks and reviews of banks by regulators, say analysts. Stanchart has not revealed which countries the 647 affected clients came from, but they did say their relationship managers have been calling affected clients and reassuring them that their accounts are secure and there have been no unauthorized transactions. This theft of Stanchart's customer data could have broader implications for Singapore's banking sector.
According to Vishnu Varathan, Mizuho Bank’s senior economist: "This will give rise to a lot more audits being done and give rise to cost of compliance that will inevitably trickle down to customers and eat into margins -- all in view of making the systems more robust because at the end of the day, for any country to be a banking centre or wealth centre, integrity is foremost and there shouldn't be questions over whether data is handled loosely or not." But other observers say this incident will not have long term fall out on Singapore's private banking sector.
China’s regulators ban banks from handling Bitcoin
Source: BBC, 5 December 2013
Chinese regulators have banned the country’s banks from handling transactions involving the Bitcoin virtual currency. The ban came in a notice issued by the People's Bank of China that stated that Bitcoins were a “virtual good,” had no legal status and should not be used as a currency. The ban was imposed because bitcoins are not backed by any country or central authority, said the PBOC notice. It added that it would be increasing efforts to stop the use efforts to use bitcoins to launder money.
Individuals are still free to trade in bitcoins under the decision but should be aware of the risks involved, but the PBOC added that it planned to formalize the regulation of exchanges that dealt in the currency. Experts that spoke with Reuters stated that the PBOC was moved to make its decision because Chinese nationals are heavily involved in trading the virtual currency. This is thought to be the case because it can help these people avoid currency controls on trade in the yuan. The value of bitcoins traded on Chinese exchanges fell after the announcement..
Logistics & Transportation
Indonesia: BMT Completes Pre-Feasibility Study for Pelindo II
Source: Dredging Today, 12 December 2013
BMT Asia Pacific (BMT), a subsidiary of BMT Group, the leading international maritime design, engineering and risk management consultancy, has announced the completion of its latest project with state-owned port operator, Indonesian Port Corporation II. BMT has delivered a pre-feasibility study for a possible Greenfield site in the region of Kijing in West Kalimantan, Indonesia. The three month study saw a number of experts from BMT’s offices in Hong Kong, Singapore and Indonesia come together to provide both economic and technical expertise, to determine the viability of a multi-purpose deep water port on the west coast of Borneo – the world’s third largest island.
BMT specialists carried out extensive analysis and research on areas including: hinterland market assessment, throughput forecasting, technical review for port suitability, various conceptual layout design exercises and financial viability assessments. The existence of a new port in Kijing will connect West Kalimantan with the principal intra-Asian shipping network, and improve the region’s connectivity and logistical efficiencies. Johnny Tjea, President Director of BMT Asia Pacific Indonesia comments: “While the rest of the world is still feeling the effects of the global financial crisis, Indonesia is one of the fastest growing economies in Asia. As such, the Government recognises that investment in port infrastructure is a key ingredient to drive economic growth and enhance supply chain efficiencies in Indonesia. We are excited to be working with IPC II again and playing an integral role in an important, strategic project.”
India taps waterways with new river terminal
Source: Port Finance International, 5 December 2013
A new river terminal was opened in Kolkata (Calcutta, West Bengal) heralding a new era in tapping India’s vast waterways for commercial navigation. The Garden Reach Jetty-2 terminal of the Inland Waterways Authority of India (IWAI) was built at a cost of Rs340 million ($5.5M) in the Kolkata Port Trust area. Barges will transport coal across the Ganges-Bhagirathi-Hoogly River System stretching over 900 km. The system is called National Waterway-1, mirroring the National Highway system of India’s road network.
While inaugurating the terminal on the Hoogly River, India’s shipping minister GK Vasan flagged off coal barges of 2,100 dwt each to formally launch movement of coal from Sandheads in the Bay of Bengal to the Farakka thermal power plant of state-owned utility NTPC. Jindal ITF of the private sector infrastructure group Jindal has pumped in Rs5 billion ($81M) in the project, funding a transshipper at Sandheads, coal unloading cranes and a conveyor belt system at Farakka, and 23 coal-carrying barges. Jindal ITF has been awarded the contract by NTPC to transport imported coal in barges for a period of seven years. It has committed to handle 3M tonnes of coal annually during this period. Imported coal will be offloaded from Panamax vessels and transported in barges to power plants in Farakka, about 300km north of Kolkata.
Chinese demand driving tanker markets forward
Source: Hellenic Shipping News, 3 December 2013
Oil demand from Asia and especially China has intensified over the past couple of months and especially during the end of October, providing solid ground for gains across most of the large crude oil tanker Eastbound routes. As such, the Far East oil demand has provided the foundation for a strong boost in freight rates for several routes, like the TCE for MEG/Japan, which almost doubled at the start of November, reaching levels of USD 42,000/day. Similarly, the WAF/F.East route gained by around 40% in just one day, touching the very lucrative level of USD 98,939/day. "It’s no wonder that we had media frenzy on the matter, with all of them quick to call on this accelerat-ed demand as the corner stone of a full on recovery of the market", said Mr. George Lazaridis, Research Analyst of shipbroker Intermodal.
According to Lazaridis, “This means that most of the current imports have been potential for the purpose of re-stocking. This point may be even taken further as some propose possible build-up of commercial inventories ahead of the commissioning of some of the most recent refinery units. This may well be more cause for worries then you would think, as the most recent imports are for the use for China’s expansionary petroleum exports plan which once put into play may well cause crude oil shipments to drop to other refin-ery destinations some of which may lay further away from China and as such bring about a drop in overall market tonne-mile demand".
Manufacturing & Industrial
China manufacturing beats estimates as output rises
Source: Bloomberg, 1 December 2013
Chinese manufacturing growth beat analyst estimates in November, indicating the nation’s economic recovery is sustaining momentum amid government efforts to rein in credit growth. The Purchasing Managers’ Index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on 1 December, exceeding 24 out of 26 estimates in a Bloomberg News survey. A separate gauge from HSBC Holdings Plc and Markit Economics today was 50.8, topping all 13 analysts’ projections. Numbers above 50 signal expansion.
Stability in manufacturing in the world’s second-biggest economy may give Premier Li Keqiang more room to implement policy changes laid out after a Communist Party meeting November. While industrial investment is picking up and retail sales have increased 13 % so far this year, China faces headwinds that include factory overcapacity, excessive corporate debt and slower export demand. “Momentum seems to be quite stable at the moment so policy makers can be quite relaxed,” said Wang Tao, chief China economist at UBS AG in Hong Kong. “If anything, growth in the fourth quarter is not going to weaken as much as many people had expected,” Wang said, with “robust” production momentum and expanding domestic and export orders “pointing to pretty stable growth ahead.”
Malaysia's October industrial production up 1.7%
Source: The Star, 12 December 2013
Malaysia’s industrial production index (IPI) in October grew a stronger-than-expected 1.7% year-on-year following a rebound in manufacturing, and surprised economists who forecast of a 0.8% increase. The October IPI was boosted by manufacturing, which rose 3.3% and electricity, up 4.8%. Mining fell 3.6%. It said September’s IPI was unchanged at 1.0% on-year. In seasonally adjusted terms, the IPI in October 2013 increased by 1.9% month-on-month. The increase was particularly due to the increases of manufacturing index and mining index of 0.8% and 4.4% respectively. Meanwhile, the electricity index decreased by 0.9%.
The department said on a yearly basis, manufacturing output rose 3.3% in October following an increase of 2.4% in September. Major sub-sectors which saw increases in October 2013 were electrical and electronics products (14.3%); transport equipment and other manufactures (15.1%) and textiles, wearing apparel, leather products and footwear (9.4%). On a seasonally adjusted month-on-month basis, manufacturing output increased by 0.8% in October. It is expected that the long-term trend is set to remain intact, reflected by strong export demand from major advanced economies. Consequently, we maintain our earlier projection of gross domestic product (GDP) growth at 5.0% in the fourth quarter of 2013. For the full year, we forecast growths of 4.6% and 5% in 2013 and 2014 respectively.
Korea's manufacturing index improves slightly in November 2013
Source: Business Insider, 1 December 2013
The HSBC South Korea PMI rose marginally to 50.4 in November, up from 50.2 in October, signaling a slight improvement in operating conditions. Whilst the PMI posted only just above the 50.0 no-change mark separating growth from contraction, this was nevertheless the highest reading in six months. Output growth slowed to virtual stagnation in November, as the seasonally adjusted Index registered only fractional growth. That said, the Index posted above the 50.0 no-change mark for the second successive month, following a four-month sequence of readings signaling contraction. Respondents cited increased smartphone sales and improvements in the automobile industry due to the settlement of strikes as key drivers.
Like output, new orders also registered such meagre growth as to broadly indicate stagnation in November. Anecdotal evidence suggested the impact of an expansion in foreign demand, and consequent rise in new export orders, was tempered by a contraction of domestic demand. Conversely, new export orders grew at a solid pace in November, though the rate of growth eased from October’s 31-month high. Some panellists attributed the latest increase to an expansion in demand in key foreign markets, such as China, South East Asia and Japan.
Pharmaceuticals & Healthcare
Myanmar seeking outside investment for healthcare
Source: Reuters, 3 December 2013
Myanmar’s reformist government is hoping to improve the conditions of its healthcare system as they increase spending and look for foreign investment to revive one of Asia’s worst systems. In line with this, a number of leading regional healthcare companies already have operations in Myanmar with others planning an entry in the near-term, as they see huge growth. Attracting foreign investment is part of a broad plan to reform the healthcare system by President Thein Sein, who has already cut military spending and increased funding for health from 1% of 2012 to 3% this year.
However, many of the rules are unclear for foreign investors, who say they are being held back by the uncertainty. According to a senior military official who requested anonymity, the health ministry is drawing up regulations for foreign hospital operators to open facilities in Myanmar independently or through joint ventures. For example, Bangkok Dusit Medical Services Pcl, Thailand's largest private hospital group, sees Myanmar as the company's "first priority for foreign investment", said Chief Operating Officer Chatree Duangnet. But they are still waiting for further clarifications. The healthcare system fell apart during decades of neglect under military rule, so that currently the high price is beyond the means of many in one of Asia's poorest countries, while those who can afford it often seek treatment overseas.
Health ministry orders 33 drugs off Taiwan's shelves
Source: Want China Times, 5 December 2013
Taiwan's Ministry of Health and Welfare has made public a list of 33 drugs that do not conform to their own description, ordering their removal off the shelves. The list includes products from a number of major pharmaceutical manufacturers in Taiwan, such as UC Pharma, Nang Kuang Pharmaceutical, Everest Pharm Industrial and Synmosa Biopharma Corp. The manufacturers said that people should not be concerned about the quality of their products, and that the pharmaceutical ingredients were modified due to changes in regulation.
The 33 medicines treat asthma, hypertension, ulcers and also includes pain killers. All are principal products for the pharmaceutical manufacturers. Nang Kuang Pharmaceutical is the company with the most drugs on the list, with a total of 13. The companies named will now have to test each item before they can go back on the shelves, each experiment reportedly costs between NT$2 million and NT$3 million (US$67,600-$101,400). Wang Yu-pei, general manager of Nang Kuang Pharmaceutical, said the company always follows government regulations, and goes by the standards set by the country's Food and Drug Administration.
Indonesia: Free healthcare overwhelming Papua
Source: Scoop, 9 December 2013
As more people sign up for health insurance offered to indigenous people in Indonesia's Papua province, a public health system already struggling with too few health workers and substandard services is coming under greater strain. “People in the mountains and in coastal areas have flocked to the hospitals seeking treatment, even for diseases that can be handled by local clinics… People go straight to hospitals because they want to be treated by specialists,” said Aloysius Giay, director of the state-run Abepura Hospital near Jayapura, the provincial capital. Yusmina Wakum pays around USD 50 and travels 350km for eight hours by bus to reach the main hospital in Jayapura, to receive treatment for gout.
“Where we live there's a hospital, but medicines are not good,” said Yusmina's 19-year-old sister, Miriam Wakum, as her elder sibling sat slumped in a wheelchair. “She got worse and couldn't sleep, so we decided to take her here.” The health scheme was intended for use only in the province’s 34 tertiary referral hospitals, but residents have largely refused to seek care for non-emergency complaints in more than 300 public health clinics known as Puskesmas – citing poor service and lack of specialists – even though those services are also free, Giay said. About 52 % of Papua’s 2.8-million population are indigenous. In the past two years overcrowding has increased and patient queues have grown longer as more people joined the scheme, launched in 2009. The problem may worsen, health officials say, with the government’s plans to launch a universal healthcare scheme for all Papuans, indigenous and non-indigenous.
India: Bangalore realty gets maximum PE fund, Mumbai sees decline
Source: First Post, 1 December 2013
Bangalore's realty market received the maximum private equity investment of nearly USD 350 million in the country during January-September 2013 with increased demand for leased office assets from institutional investors. Private equity (PE) investment in Bangalore rose by 79% to USD 317 million during the first three quarters of 2013 calendar year as compared to USD 180 million in the year ago period. Bangalore witnessed the highest level of announced investment value in 2013 at USD 317 million. This was due to a commitment by a sovereign fund into a platform focused on leased office assets.
Explaining the reason behind Bangalore emerging on top in PE investment, a PE Executive Managing Director South Asia Sanjay Dutt said: "Bangalore is an IT capital and hub for south India. Profile of developers in the city is very good." He also attributed higher PE investments in Bangalore to availability of properties across all segments at a reasonable and attractive valuations. Sobha Developers, Puravankara Projects, Prestige Estates and Brigade group are the major developers in Bangalore. According to the report, PE investment in Pune jumped more than three-fold during January-September period the same period 2012. In NCR, all the investments were made in the residential asset class. Mumbai, which traditionally attracted the maximum investments in the country, was the only city to witness a decline of 43% in PE investments.
China private equity in transition
Source: Euro Money, 1 December 2013
China’s private equity industry has been going through a long-term growth spurt, with the number of private equity firms growing three-fold over the past decade to number more than 750 today. However, the industry is at a transitional stage as a result of the virtual closure of the Chinese IPO market in recent months. According to a China Scope Financial report, recent data from the China Securities Regulatory Commission show that 761 companies have filed and are currently waiting to go public. As a result, PE fundraising in China has decreased. Chris Lerner of Eaton Partners, which opened an office in Shanghai in 2007, says: "Private equity in a developing market like China, although less liquid, is not unlike other asset classes. You tend to have more exaggerated swings in sentiment and capital as things evolve; I don’t think private equity is any different in that regard." He says there are other factors affecting the market, including "structural financing imbalances, policy-driven directives, liquidity constraints, and relatively immature capital markets".
Bob Partridge, head of Ernst & Young’s Greater China private equity practice, says: "Over the last five to eight years, China has gone from an emerging private equity market to a maturing private equity market." For investors and the industry, there is a need to clearly delineate between long-term investing and short-term speculation. Kwek Ping Yong, chief executive of Inventis Investment Holdings, and author of the books, Private equity in China: Challenges and opportunities and Due diligence in China: Beyond the checklists, says: "PE should not be dependent solely on IPOs for exit. In China, the biggest problem with linking PE with IPOs is that so many pre-IPO funds call themselves PE funds but they are not. Pre-IPO funds are a type of speculative investment."
PE finds plenty of risks but also attractive opportunities in Southeast Asia
Source: Qfinance, 11 December 2013
Despite looking intensely vulnerable to both economic, political and natural disasters, Southeast Asia is exhibiting the kind of dynamic growth that private equity investors have always associated with above average returns. Over the last 10 years, the region has become a dealmaking hotspot, and has attracted the attention of leading US and European private equity houses in the process. The Association of Southeast Asian Nations (ASEAN) consists of ten countries; the original founders back in August 1967 were Indonesia, Malaysia, the Philippines, Singapore and Thailand. They were subsequently joined by Brunei, Burma, Cambodia, Laos and Vietnam. As a trade zone, the area boasts a population of some 600 million, or 8.8% of the world's population, and has a combined nominal GDP of more than USD 3.3 trillion, with GDP growth in excess of 8%.
On the downside, investors do have plenty to worry about - most notably the region's vulnerability to natural disasters such as Typhoon Haiyan, which devastated parts of the Philippines on 8 November 2013, allied to strong political volatility emphasized by Thailand's riots in 2010 and the November 2013 rioting that sent the country's prime minister, Yingluck Shinawatra, fleeing to a secret location. But the upside, in terms of corporate out-performance, is proving strong enough to put ASEAN squarely in the sights of a number of leading PE houses. According to BCG, ASEAN is already the third-largest emerging market bloc behind China and India, and is easily outperforming both Brazil and Russia.
Technology, Media & Telecommunications
India: Tablet usage trends in 2013
Source: COIL, 9 December 2013
CyberMedia Research has compiled the results from its study on tablet use in India. The survey asked 3,600 individuals, including 1,200 non-users, a range of questions. Their findings provide a range of insights. Regarding OS preferences, 87% indicated a preference for Android over Apple. For household income, 43% of users had an income of USD 650-980, suggesting potential for mass adoption. Three-quarters of users bought tablets for portability, though they were not seen as a replacement for PCs as 78% said they didn’t think tablets were ready to become their primary device for computing.
Satya Sundar Mohanty, senior manager, Demand-side Research, CMR stated on the findings that, "Indian consumers' increasing preference for Tablets and the country's younger demographics have added to the adoption of mobile internet access devices. With changing consumer lifestyles, the India market presents a favourable opportunity for vendors." And Sumanta Mukherjee, general manager, CMR DSR and InfoTech Practices maintained: "Consumers are driving segmentation of the market away from one-size-fits-all models toward different devices available at distinct price points. Interestingly, satisfaction seems to peak for tablets in 5000 to 10000 price range as well as 20,000 and above price bracket."
China issues 4G licenses
Source: Developing Telecoms, 6 December 2013
The Chinese Ministry of Industry and Information Technology (MIIT) has issued the country’s first round of 4G licences to China Mobile, China Telecom and China Unicom. It is currently unknown if the three largest operators are obliged by the licence terms to meet any rollout deadlines, or if they have had to pay any part of the fee upfront. All three of the licences are for TD-LTE, with FDD-LTE licences expected to be issued in 2014. While China Mobile is basing its main LTE network on the TD strain, both China Telecom and China Unicom are planning on deploying both technologies. China Mobile is planning on launching 4G services on December 18.
China Mobile reportedly snapped up 130MHz of spectrum across several frequency bands (1.9GHz, 2.3GHz and 2.6GHz). Meanwhile, China Telecom and China Unicom each won 40MHz of spectrum in unconfirmed bands. The licence issue will be a welcome opportunity for China Mobile to offer services outside of its home-grown TD-SCDMA network. The “inferiority” of this technology compared to other global 3G standards was deemed an impediment for China Mobile by ratings agency Fitch. While one potential problem with TD-LTE is the lack of compatible devices, the sheer scale of China Mobile’s operation presents manufacturers with a significant opportunity. Apple is one major device maker reportedly considering a deal with China Mobile, with the country’s Telecommunications Equipment and Certification Centre believed to have approved an Apple handset that supports the TD strain.
Increasing number of Thai surf websites via mobile phones
Source: Thai News, 11 December 2013
An increasing number of Thais are reportedly using their mobile phones to surf the internet, whereas house phones are just used for making regular calls. sAccording to the National Broadcasting and Telecommunications Commission (NBTC), a survey conducted from 2012-2013 on the behavior of Thai citizens in relation to the usage of telecommunications showed an increase in mobile phone usage to surf the web - mostly for media sound services.
Surfing the web via mobile phones increased 31.9% in 2013 in comparison to the 18.4% increase in the previous year. Bangkok Metropolitan area was reported to have the most usage at 53.2%, followed by the South, the central region, the North and then the Northeast; at 29.5%, 24.3% and 18.9% respectively. The NBTC said the behavioral study was to accumulate necessary information on the usage of telecommunication technologies in the country in order to be further implemented in the policy making, control and services of Thailand’s telecommunications.