Macau Business Daily, August 26, 2013 by Business Daily

MOP 6.00 Vitor Quintã

Mainland tourists at record levels

Year II

Number 356 Monday August 26, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

April 19, 2013

Court orders 1 cleaning of Ilha Verde plot Page 3

Bank lending to SMEs up 90 pct year-on-year

Page 8

Pansy Ho to pilot Jetstar Hong Kong

Page 9

ore mainlanders visited Macau last month than ever before, increasing the tourism industry’s reliance on them. Official data call into question the effectiveness of the Macau Government Tourist Office’s efforts to tap other sources of tourists. The data show 1.66 million mainlanders visited last month, 14 percent more than a year earlier. It was the largest number of visitors from over the border since the Statistics and Census Service began publishing monthly data on tourist numbers in 2008. The coordinator of the University of Macau’s gaming and hospitality management programme, Amy So Siu Ian, told Business Daily: “It was probably because of the summer, which is usually a peak season.” Altogether, 2.57 million people visited Macau last month, 4.9 percent than a year earlier. More on page 2

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Contractor, govt, square up over LRT

Dynam to run pachinko at Fisherman’s Wharf

The government and one contractor for the Light Rapid Transit (LRT) railway seem to be moving further apart in a row over who is responsible for delays to the project. “We will actively consider taking legal action to seek for justice and try to let the relevant party [the government] address the problem directly and amend the past errors,” said a statement from Top Builders International Co Ltd. Page 4

Japanese operator Dynam Japan Holdings Co Ltd is going to run a pachinko hall at Macau Fisherman’s Wharf starting next year, the company said. Meanwhile the wharf’s owner Macau Legend Development Ltd – recently the beneficiary of HK$2.04 billion net (US$263.06 million) via a global share offering managed from Hong Kong – saw its first half profits slip by nearly six percent on revenue that actually rose by one quarter. Page 5

Property ‘tipping point’ looms: estate agent The housing market is nearing a tipping point as rents rise and price increases slow, says JML Property director Juliet Risdon. Ms Risdon told Business Daily that property prices would not fall much, as demand by would-be buyers would increase again and housing would remain in short supply. She said Macau needed to make homes affordable for the average resident, but warned against too much market intervention. Pages 6 & 7

August 23

HSI - Movers Name

%Day

KUNLUN ENERGY CO

3.15

HENDERSON LAND D

2.60

HANG LUNG PROPER

1.85

GALAXY ENTERTAIN

1.84

NEW WORLD DEV

1.64

TINGYI HLDG CO

-1.71

POWER ASSETS HOL

-1.97

PETROCHINA CO-H

-2.30

CHINA RES POWER

-3.26

BELLE INTERNATIO

-3.52

Source: Bloomberg

I SSN 2226-8294

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August 26, 2013

Macau

Tourists from mainland flock in for the summer Almost two-thirds of all visitors came from over the border last month Vítor Quintã

vitorquinta@macaubusinessdaily.com

ore mainlanders visited Macau last month than ever before, increasing the tourism industry’s reliance on them. Official data released on Friday call into question the effectiveness of the Macau Government Tourist Office’s efforts to tap other sources of tourists. The data show 1.66 million mainlanders visited last month, 14 percent more than a year earlier. It was the largest number of visitors from over the border since the Statistics and Census Service began publishing monthly data on tourist numbers in 2008. The coordinator of the University of Macau’s gaming and hospitality management programme, Amy So Siu Ian, told Business Daily: “It was probably because of the summer, which is usually a peak season.” Altogether, 2.57 million people visited Macau last month, 4.9 percent than a year earlier. That meant 64.7 percent of visitors were mainlanders, the

1.66 mln

Visitors from mainland in July

largest proportion ever, according to Business Daily’s calculations. Ms So said an increase in the predominance of mainlanders among visitors to Macau was plausible, in view of the city’s proximity to the mainland. “The question is whether Macau wants or has the capacity to host any more visitors,” she said. Criticism of the effect of the individual visa scheme has been voiced in social media. Some mainlanders are allowed visas to travel to Macau as individuals rather than as members of tour groups, who travel on collective visas. An outpouring of public annoyance after the Lunar New Year holidays in February, when the city was packed with tourists, prompted the government’s Policy Research Office to do a study of the individual visa scheme. This month Chief Executive Fernando Chui Sai On said Macau was far from reaching its capacity for tourists.

Crowd dispersal Mr Chui said the city’s capacity, according to the results of a study commissioned by the Macau Government Tourist Office, was 81,000 tourists a day. This figure implies a capacity of 29.6 million a year. Macau had 28.1 million visitors last year. In the first seven months of this year 16.7 million people visited, 4.3 percent more than in the equivalent period of last year. If that rate of increase is maintained, the city will have had nearly 29.3 million visitors by the end of this year. Ms So said the way to increase

tourist capacity was “to create more attraction sites”. She said such attractions should be away from busier tourist spots such as Senado Square and the Ruins of St Paul’s. If the city centre became more crowded, “that may be a problem for both residents and tourists”, she said. Macau Government Tourist Office director Maria Helena de Senna Fernandes announced last week that four walking routes will be opened to divert tourists away from the city centre. She said the trails would be opened in time for the next wave of visitors, expected during the mainland’s seven days of National Day holidays beginning on October 1. Ms So commented: “It is a good start. Macau is small, and walking around is a good way to enjoy the city without putting too much pressure on transport.” She said inadequate transport was one of the city’s main problems. “It shows even in the visitor satisfaction surveys,” she said. The government is relying heavily on the Light Rapid Transit (LRT) elevated railway to ease the city’s road traffic congestion. But last week one of the contractors building the LRT said the project may be finished only in 2018, three years late.

Russians are coming Guangdong’s predominance among Macau’s sources of tourists from the mainland has diminished slightly, although it remains by far the most important source. Last month 738,100 visitors were from Guangdong, 8 percent more than a year earlier. In contrast, the number of visitors

from Chongqing increased by 23 percent, the number from Hunan increased by 16.6 percent and the number from Beijing increased by 15.9 percent. Ms Fernandes has said the Macau Government Tourist Office wishes to tap new sources of tourists, such as South Korea, India and Russia. Official data show its efforts have had a degree of success. Last month almost 15,000 Indians visited, 9.5 percent more than a year earlier; over 38,400 South Koreans visited, 6.6 percent more; and nearly 1,800 Russians visited, 7.5 percent more. The Macau Government Tourist Office opened a representative office in Moscow in March. The numbers of visitors from three of Macau’s most important sources – Japan, Hong Kong and Taiwan – continue to shrink. The number of visitors from Japan was under 20,600 last month, 41.4 percent fewer than a year earlier. The number of Japanese tourists has been lower than a year earlier every month since September as China and Japan argue over ownership of the islands that China calls the Diaoyu Islands and Japan calls the Senkaku Islands. The number of visitors from Taiwan was just over 91,200 last month, 18.7 percent fewer. The number has been declining every month this year. The number of visitors from Hong Kong, Macau’s secondmost important source of tourists, was 598,200 last month, 6.5 percent fewer.

KEY POINTS Record month for visitors from mainland Guangdong’s predominance diminishes More Indians, Koreans, Russians visit Fewer tourists from Hong Kong, Taiwan

August 26, 2013 April 19, 2013

Macau

Court orders cleanup of disputed Ilha Verde plot

opinion

Robin Hood they ain’t

Land on Ilha Verde Hill remains undeveloped while ownership is still an issue Michael Grimes

Stephanie Lai

michael.grimes@macaubusinessdaily.com

sw.lai@macaubusinessdaily.com

he Court of Second Instance has ordered one of the two claimants to a plot of land in Ilha Verde where a former monastery stands to start today removing all the rubbish from the plot. The court order was published in the Chinese-language Macao Daily News on Friday. Kong Cheong Investment Co Ltd and Wui San Development Co Ltd have for years disputed ownership of the land, on Ilha Verde Hill. Kong Cheong Investment manager Fong Lap told Business Daily that the rubbish the court order referred to was abandoned cars and gas cylinders dumped on the plot. “The court ordered us to clear the rubbish because of concerns about fire safety, as it could be a danger to the public,” said Mr Fong. “But the order does not affect our management rights over the plot.” Mr Fong’s company has accused the biggest shareholder in Wui San Development, Sun Weimin, of defrauding Kong Cheong Investment. Mr Fong says Mr Sun persuaded him a year ago to sell Kong Cheong Investment’s rights to manage the land to Wui San Development for 160 million patacas (US$20 million). Mr Fong alleges that Mr Sun has yet to pay up. Mr Fong contends that Wui San Development has no rights to the land “as Kong Cheong still owns the management rights”. A representative of Wui San Development, Fu Weijie, argues that his company “indisputably” holds

full rights to the land. “We’ll see about the case in court. We’re still waiting for the hearing to be scheduled,” Mr Fu told Business Daily. “Kong Cheong for sure has to leave the hill.”

Other battles Kong Cheong Investment and Wui San Development have other legal battles to fight. Both companies are defendants in a court case about sales of space in what would have been a residential project. The Court of First Instance is due to hold its first hearing of the case on September 5. The case is about pre-sales of space in a development that was to have been built on Ilha Verde Hill. Buyers from the Guangdong city of

We’ll see about the case in court. We’re still waiting for the hearing to be scheduled Fu Weijie, Wui San Development’s representative

Jiangmen bought some of the space. Mr Fong said the plaintiff in the case was a buyer from Jiangmen, adding that the project was to build a “few blocks of mixed commercial and residential towers”. “Back in 1992 and 1993 Kong Cheong was tied up with debts, so the company decided to sell the project to buyers from Jiangmen,” he said. Mr Fong said the project did not get off the ground because the government refused to allow housing to be built on the hill. He denied that the pre-sales were fraudulent, although he conceded that he had not been working for Kong Cheong Investment at the time. “Back then Kong Cheong had appointed a company to sell the project, but the company was terribly unaware of the government’s requirements,” he said. Until Kong Cheong Investment and Wui San Development fell out over ownership of the land, they had plans to put a commercial building on it, but the government refused to allow that project, either. “The buyers should have been warned by the developers of all these government rules,” said Mr Fong. “They were not warned and we are now being sued.” Business Daily tried but failed to contact Zhao Lu, counsel for the plaintiff. Mr Fu, the Wui San Development representative, declined to comment on the forthcoming court case, apart from remarking: “It’s a mess made by Kong Cheong, not us.”

angsters have been a recurring theme in my life. As a junior reporter in London more years ago than I care to remember, I covered the release from prison of east London gang boss Reggie Kray, and his death and funeral only weeks thereafter; the high security trial for cocaine smuggling of his older brother Charlie (absolutely no pun involved or intended); and the reminiscences of several other major figures including ‘Mad’ Frankie Fraser. His ‘c.v.’ included being an enforcer for the Richardson Gang in South London where his speciality was torture, including removing with pliers the teeth of opponents. He also claimed a role in The Great Train Robbery in 1963 (which netted a record 2.6 million, roughly the equivalent of £46 million today). One ex-con described the impact on the London gang scene of Frankie Fraser joining the Richardsons as “like China getting the atom bomb”. I felt relieved to meet him only when he was already in his 70s and ‘semi-retired’ after spending 42 of those years in prison. “Michael,” he told me, in the clipped but precise diction of the older London working class, “I am a thief and a villain, but I would not change a thing”. On one occasion I had to phone another confirmed Great Train Robber – Ronnie Biggs – who at that time was still in Brazil, where he had fled after escaping from prison in 1965 and was able to remain on account of fathering a child with a Brazilian woman. He started the conversation by asking me how the weather was in London, then suggesting that perhaps a life of crime did pay after all. The recurring theme here is that gangsters can often seem like glamorous rogues. Look how many films have been made about them in the West and in Asia. I know from experience it is easy to be charmed by them. And they wouldn’t be able to function if there were no market for their ‘services’ and ‘goods’. Marilyn Wisbey – a girlfriend of Frankie Fraser and whose own father Tommy was part of the train gang – explained it to me as follows: “What you have to remember is that if you grew up in a poor part of London, you couldn’t always trust the police or rely on them. When Ronnie and Reggie were around, no one broke into your home, and no one disrespected the women in the area.” There are some echoes of that attitude here in Macau. Last week an advertisement on the Chinese version of a website acting as an extrajudicial debt enforcement agency – by naming and shaming alleged Macau casino debtors – said the blacklist was the “best publicity platform” to “help chase debts for the gaming sector” and “exercises a deterrent effect on cheaters”. In other words, we can’t rely on the rule of law, so we’ll form a self-protection body and do our own thing. But going outside the law for your remedies is a dangerous path. In June Britain’s Daily Mirror reported that Frankie Fraser – now living in a retirement home in south London, had been served by police with an ‘Asbo’ – an anti-social behaviour order – after a row with another elderly resident. That’s some achievement for an 89-year-old.

Going outside the law for your remedies is a dangerous path The Ilha Verde plot has been idle for decades (Photo: Manuel Cardoso)

August 26, 2013

Macau

Govt, contractor, flash mixed signals on LRT

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Sides eye court to settle case if dispute over light railway project drags on

Seasonal spenders The average visitor to Macau spent less in the second quarter of this year than in the two preceding quarters. That is what we have come to expect. The fourth quarter of each year includes Christmas and New Year, a peak period for tourism, and the first quarter includes the Lunar New year, another peak period. So a drop in average spending per visitor in the second quarter of each year is hardly surprising. This year the average visitor spent about 3.6 percent less in the second quarter than in the first. Last year average visitor spent about 9.4 percent less.

Tourists from the mainland usually spend most per head – 30 percent more than visitors in general in the period represented in the chart. Mainlanders are the only kind of visitor that spend consistently more than the average. Japanese spent more than the average only briefly, in the middle of 2010. Spending per head by tourists from Macau’s second-biggest source of visitors, Hong Kong, is typically about half the average. This reflects the brevity of their visits. The growth in spending per head by tourists from Taiwan reflects an increase in the duration of their visits. Until direct flights between the mainland and Taiwan began, air passengers from Taiwan would use Macau as a staging post on their way to or from the mainland, so their visits to the city were brief. Those that visit now stay longer and so spend more. The growth in spending per head by tourists from Southeast Asia is comparatively slow. Japanese are the only visitors from any of Macau’s main sources that spent less per head in the second quarter than three years earlier. J.I.D.

15.2 %

Rise in spending per visitor, 2012Q2-2013Q2

Tony Lai

tony.lai@macaubusinessdaily.com

he government and one contractor for the Light Rapid Transit (LRT) railway seem to be moving further apart in a row over who is responsible for delays to the project. Both sides are talking about going to court to settle the matter. Top Builders International Co Ltd, which has been contracted by the government to construct a railway depot and transportation hub in Taipa, said in press statement on Friday it has “already sought advice from lawyers” as the company did not want the works to be “infinitely delayed”. “We will actively consider taking legal action to seek for justice and try to let the relevant party [the government] address the problem directly and amend the past errors,” said the statement. The Transportation Infrastructure Office, the public body in charge of the project, criticised Top Builders for being “inflexible”. “If the contractor keeps being uncooperative and we cannot resolve the problems after discussion, we must act in accordance with the contracts and laws,” Lei Chan Tong, the office director, told public broadcaster TDM in an interview. News of the row first became public on August 16 when Top Builders gave a press conference complaining the Taipa section of the LRT scheme was running three years behind schedule, and would not be ready until 2018. It blamed that on government mismanagement and indecision. Officials in charge of transport

BNU to issue MOP9.65b of new banknotes B

anco Nacional Ultramarino SA (BNU) was authorised to issue 9.65 billion patacas (US$1.2 billion) of new banknotes, the Executive Council said in a statement. Friday’s statement did

infrastructure hit back at the claims, saying the original timetable could be achieved, if all contractors cooperated and showed the necessary commitment. The transport infrastructure office deputy chief, André Sales Ritchie, stated that currently the project was around six months behind schedule. Top Builders said in the Friday statement the depot construction couldn’t continue as “the soil of the site has not been improved [by the government] in accordance with a consultant report”. “The concrete structure built upon the soil will severely crack due to the soil sedimentation,” stressed the statement.

Constant changes According to the contractor, only one percent of the 555-million patacas (US$69.4-million) work on the Taipa depot and associated works had been completed despite

not reveal when the new banknotes will reach the market, but that should happen gradually. In June, the Monetary Authority of Macau told Business Daily that BNU would replenish its banknote supply “on the basis of their notes in stock and also their projection of future demand for notes in circulation”. Bank of China Ltd’s (BOC) Macau branch, the other lender here authorised to issue notes, was authorised to issue 9.1 billion patacas of new banknotes in June. BOC will issue a total of 60 million notes with a face value of 10 patacas and 40 million notes with a face value of 20 patacas within this year. The remaining banknotes, with a face value of 50, 100, 500 and 1,000 patacas, will be introduced in the

one-third of the original time allowed for construction having passed. But transport infrastructure boss Mr Lei rejected the contractor’s version, saying all the data about the soil and its condition had been listed in the tendering documents for the railway depot scheme. Mr Lei – in his first comments since the row became public – told TDM there was “not much use” in Top Builders’ suggestion that the government make improvements to stabilise the soil, given that the firm had already sunk 300 concrete pillars into the soil to support the foundation of the site. The contractor said in its Friday statement that no progress would be seen at the transport hub at Estrada Governador Albano de Oliveira if the government did not allow it to block off roads next to the Windsor Arch housing project. Top Builders said it needed to do so in order to excavate the underground portions of the transport interchange. That work had already been delayed for 11 months, said Top Builders. It asked the government to lay out the information about the LRT works including what has been completed so far. Mr Lei countered that his office had suggested an alternative construction scenario to the contractor. “The construction sector should know that there will be many changes in the construction sites, and contractors need to be flexible,” he stated. “It is the problem of the contractor if it insists on the present plan [and] that no other plans are possible.”

market gradually, over a period of five years. It is necessary to print more money as currency in circulation is growing fast, Anselmo Teng Lin Seng, chairman of the financial regulator said earlier this year. Currency in circulation rose by 22 percent in the 12 months ended in June to reach 8.33 billion patacas, official data show. The money supply ‘M1’ – a measurement that also includes bank deposits and other assets that can quickly be converted to currency – rose by more than a third yearon-year to 51.95 billion patacas in June. But the supply of pataca grew much slower, by 21.4 percent, to 22.9 billion patacas. T.A.

August 26, 2013

Macau

Macau Legend profits slip on higher revenue First half performance affected by 80 percent rise y-o-y in admin costs Michael Grimes

michael.grimes@macaubusinessdaily.com

acau Legend Development Ltd – recently the beneficiary of HK$2.04 billion net (US$263.06 million) via a global share offering managed from Hong Kong – saw its first half profits slip by nearly six percent on revenue that actually rose by one quarter. One culprit for the deterioration was the cost of sales and services. They leapt by nearly 42 percent in the first six months to HK$363.51 million,

compared to around HK$256.40 million in the same period last year. The public offering occurred just after the reporting period. But operating and administrative expenses for Macau Legend – a casino and hotel services firm co-chaired by former Macau legislator David Chow Kam Fai and relying on the gaming licence of Macau casino concessionaire Sociedade de Jogos de Macau SA – did jump by 80 percent in

the lead up to the IPO, reaching nearly HK$174.33 million compared to just HK$96.74 million a year earlier. Profit and total comprehensive income attributable to owners of the company was approximately HK$266.73 million to June 30 compared to about HK$282.71 million in the prior year period. But total revenue grew 25 percent during the period, to about HK$843.77 million from the HK$673.89 million generated in the first half of 2012. Gaming revenue made up nearly 74 percent of all the group’s revenue. Mass market table games revenue expanded by 20 percent during the period, to approximately HK$549.44 million from about HK$454.93 in the prior period. VIP table games revenue rose by nearly 18 percent year-on-year in the first half, to HK$68.10 million, from about HK$57.84 million.

Wharf factor

David Chow – co-chairman of Macau Legend Development

The first half results also reveal that Macau Legend – which is planning to use most of the IPO proceeds to build a new casino hotel to open by the end of 2014 at Macau Fisherman’s Wharf according to another filing – is involved in ongoing lawsuits in Macau for sums totalling just under 112.72 million patacas (US$14.11 million). In one

the firm has sued an unidentified former tenant at Fisherman’s Wharf for what it claims is 89.01 million patacas unpaid rent. In May 2012, Macau Legend acquired 100 percent of Macau Fisherman’s Wharf International Investment Ltd (MFW), the operator of the waterside attraction. It was originally opened on December 31, 2005 as a joint venture between Mr Chow and Stanley Ho Hung Sun, founder of SJM, but failed to draw crowds. The latest filing says the former tenant made a counterclaim for slightly fewer than 90.73 million patacas, alleging breaches of agreement by the Wharf’s managing entity. The filing adds that at an unspecified date in the first half, Macau’s Court of First Instance dismissed the counterclaim and ordered the former tenant to pay 67.15 million patacas. “The former tenant appeals against such decision and the case will be sent to the Macau Court of Second Instance,” states the filing. The other lawsuit also involves Fisherman’s Wharf, with a construction contractor claiming slightly fewer than 23.71 million patacas in outstanding payments. MFW counterclaimed for 14.51 million patacas alleging defective work by the contractor. “In April 2010, the Macau Court of First Instance dismissed all claims from the contractor and awarded 462,000 patacas to MFW,” says the latest filing, adding that the contractor appealed against the judgement and another hearing – this time in front of the Court of Second Instance – is pending. In 2010 a group of international investors – including investment bank Merrill Lynch, Och-Ziff Capital Management Group (a U.S. hedge fund) and TPG-Axon Capital Management – took a 68 percent haircut on US$390 million worth of funding Mr Chow had raised from them on the strength of the Fisherman’s Wharf story.

Dynam to run pachinko hall at Fisherman’s Wharf Could be first step towards a potential Japan casino venture, says analyst Vítor Quintã

vitorquinta@macaubusinessdaily.com

apanese firm Dynam Japan Holdings Co Ltd is going to run a pachinko hall at Macau Fisherman’s Wharf starting next year, the company said. The venture, part of a business cooperation deal, could be the first step in a future joint bid for a gaming licence in Japan, says Union Gaming Research Macau analyst Grant Govertsen. Dynam and Macau Legend Development Ltd – Fisherman’s Wharf operator – signed on Friday a non-binding deal, the two firms told the Hong Kong Stock Exchange. The Japanese firm pledged to “set up and operate” at least 100 pachinko machines – a combination of slot machine and pinball game – at the theme park. Dynam will pay a monthly rent

to Macau Legend and share the revenue from the hall. The five-year deal will be reviewed every year, the filing adds. “It’s a modest installation, possibly a trial just to see how it goes,” Mr Govertsen told Business Daily. If all goes well, the number of pachinko machines might increase, he added. Dynam will market Macau Legend’s hotels and casinos to its customers in Japan and South Korea, while providing advice on “entertainment, retail and food and beverage facilities” targeted at these customers. It could help the firm led by David Chow Kam Fai “potentially capture a segment of the Japanese customers by providing them with a home in Macau they currently don’t have,” Mr Govertsen said.

On the other hand the deal “might suggest an interest in gaming in Japan from both firms,” the analyst added. In May Dynam chairman Yoji Sato said the firm has an interest in pursuing a casino licence in Japan if the government there decides to offer one or more for tender. With the Japanese parliament “seriously considering legalising gaming,” Dynam’s relationship with a Macau casino operator “could prove helpful,” Mr Govertsen said. The pachinko firm invested US$35 million (280 million patacas) in Macau Legend’s Hong Kong listing in June. Dynam has a stake of 1.85 percent in Mr Chow’s operator. Pachinko-style games have been

tried previously in Macau but without commercial success. Pachinko is technically not a gambling game under Japanese law as customers play for prizes not cash. But in that country players are able to swap the prizes for cash at booths around the corner from the pachinko parlours. Our sister publication Macau Business magazine reported in November 2005 that pachinko was to be given a trial at the Ponte 16 casino resort near Macau’s Inner Harbour, following a deal that gave Maruhan Corp – one of Japan’s biggest pachinko parlour owners – a stake in the Ponte 16 operation. Maruhan sold out earlier this year. With Michael Grimes

August 26, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Here to work The number of migrant workers in Macau was 121,194 at the end of June, the most ever. The number had been increasing for 12 consecutive quarters. It was almost 50,000 higher than three years before. The number of migrant workers in the third quarter of 2010 was the lowest since the middle of 2007. Coincidentally, between the middle of 2007 and the third quarter of 2010 almost 21,000 mainlanders were given permission to reside in Macau.

Tipping point looming, estate agent believes The housing market is nearing a tipping point as rents rise and the increase in prices slows, says JML Property director Juliet Risdon. Ms Risdon told Business Daily in an interview that property prices would not fall much, as demand by would-be buyers would increase again and housing would remain in short supply. She said Macau needed to find ways to make homes affordable for the average resident, but warned against too much intervention in the market. New rules for the market were welcome and might even curb speculation, she said. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso In 2008 and 2009 the economic crisis played a part in curbing the number of migrant workers. At the beginning of 2010 their number was still decreasing. But by the third quarter of 2010 the number had begun increasing. Since then, the number of migrant workers has risen by almost 4,100 each quarter, on average. The rate of turnover in migrant workers is more intense than the increasing trend in their number may suggest. In the period represented in the chart almost 10,000 migrant workers left Macau each quarter, and about 14,000 arrived. In the second quarter of this year the increases in the number of migrant workers and in the number of newly arrived migrant workers were the biggest in any quarter yet. Almost 18,000 arrived, increasing the labour force by almost 6,500. J.I.D. The content of this column is the work of Business Daily’s journalists.

68 %

Increase in migrant workers, 2010Q2-2013Q2

A lot of changes have been made to the property market in a bid to rein in soaring prices. What is your outlook for the market? It’s difficult to predict. Macau is a very positive long-term investment and it will continue to do very well. Like any market, it will have its ups and downs and so, with what’s been going on, it’s likely that there is a period of maybe a downfall, which will then give people time to get the money together, for the banks to look at reinvestment, loan money and regroup. It’s gone up and up for so long. Historically, Macau hasn’t really had much of a real estate market as such, so it’s difficult to predict the ups and downs. If you look at the last eight to 10 years, you’ve seen the downside, but it’s gone up dramatically afterward. Macau, it’s a very safe long-term investment. Could we expect prices to go down any time soon? There is a potential for that to happen and that’s not only in Macau, but it is worldwide. It is part of an effect that is on the economy generally. It’s likely we’ll see some changes in the market,

rather than a downfall. I don’t think it’s a bad thing at all. It’s just time to take a breath and then start again. These changes also have to do with new rules, such as the law on estate agents’ licences and the law on presales of unfinished units? There is a certain percentage that is related to the new laws and regulations. With regard to the new law and regulations on the real estate market itself, like the real estate agents’ licensing, it’s only a good thing for Macau. It

The average person in Macau can’t afford to buy, and that has to be looked at

means that people can truly get the benefit of knowledge from real estate agents and be able to understand truly what they are buying, and the agents have some form of responsibility. I don’t know if that has a direct effect on the market at all. That is a separate issue, and I don’t think that will affect the market at all. There are new regulations and laws with regard to the stamp duty and, of course, that would have a direct effect. But the government is taking on its responsibility to try to make changes in Macau and that will have an effect. Long term, the changes won’t have a negative impact. At the end of the day, it continues to be a positive effect. The average person in Macau can’t afford to buy, and that has to be looked at. That’s an area of the market that will potentially have some impact on the overall property speculation. Investors and speculators will always invest and speculate, but there is an area of the market which means that the local people on the street can’t afford to buy and that has to change. If that means that property prices come down, maybe it’s not a bad thing.

August 26, 2013 April 19, 2013

Macau The government says it cannot interfere in a free market. How can it then control how much prices increase? The government can’t. The government is absolutely right. It hasn’t and cannot get involved. The government will put in stamp duties and taxes, and in some areas of the market that has to be done, in order to give other people opportunity to be able to buy. If that dampens the market slightly, which enables the average person to buy property in Macau, it’s not a bad thing. But will the stamp duty and more taxes be enough? There also have to be some incentives as well from the banks to be able to give the people of Macau the opportunity to borrow money, and that’s a world effect on loans and lending. It’s not just Macau. All the banks are much more cautious. Overall, what will happen is… Property prices have gone up. Rents have gone up and are continuing to go up. There is no change in the rental market. Yes, the sales have dropped off, but what’s going to happen is that you’ll get to a point where the rents become so expensive that the demand becomes so great, and that will be the tipping point. Then, suddenly, you will see people buying again, because it simply doesn’t make sense to rent. I don’t think it necessarily has to have involvement of the government. Macau is not a big enough market where you can have the property prices and the rents very high at the same time. It tends to be one or another. As rents go up, the sale prices tend to decrease, and then when it gets to a point, the tipping point, that it’s so great, people say: “Why am I renting? I’m better off to buy.” Then, of course, the reverse happens. People go to the banks. As the banks get more demand, they tend to lend more, the rates are better, people buy more properties and the property prices then start to increase again and so on. It’s a trend that has happened before, and I’m sure it’s a trend that will continue in Macau. Are we close to that tipping point? With rents going up and property prices starting to slow down, and purchasing starting to slow down, yes. But, again, there has to be enough supply for the demand: Macau often has the issue of not having enough properties. Even though it has enough apartments, it doesn’t necessarily mean it has enough properties for people to live in. It’s a supply-anddemand situation. Is this a good time to buy property in Macau? I would say, to buy in Macau and to borrow money is still cheap. Lending rates are still low. Even when they go up, they’re still very low. The long-term investment in Macau is still very positive and yes, maybe you will buy it at tomorrow’s price, but you’re not going to buy it at yesterday’s price and you will never buy again at yesterday’s price. Maybe you’re looking at paying a little bit more than what you would want to, but down the line you’ll be very happy with your investment. It’s never going to go back, and probably what stops some people buying today is that they look at properties two, three, four, six years ago and, if you’re talking about a property that is 3 million patacas [US$375,554] now, it was

probably 790,000 patacas then. Is it really going to go down? I think those days are history. They are a thing of the past. People keep mentioning a bubble in the real estate market. Is there a possibility of it bursting in the near future? Every real estate market has a bubble and everybody gets very excited about it and likes to predict when it is going to be. Macau has really yet to get that bubble, because it’s a very new market. The long-term growth of Macau, the long-term plan of Macau is really positive, so the bubble in Macau will probably be in 10 years. It’s way too early to have really a bubble. There will be a settling. The market has gone up and it will probably reach an equilibrium for a period of time, which was what it did four or five years ago. But I don’t think property prices that are 20 million patacas will come down to 5 million patacas, which they were 10 years ago. You might see 20 million patacas come down to 17 million patacas, but I don’t think you will really see that bubble burst.

There has to be enough supply for the demand: Macau often has the issue of not having enough properties

Mainland China is going through an economic slowdown. Is that already impacting the real estate market here? Obviously, the investment from the mainland in Macau will change at some point. Is it changing? We’re still seeing a lot of people buying and a lot of people in the mainland investing. From where we are as a company in this market, I can’t see it as having any direct impact to us, as a company, yet. We’re not mainstream. I’m not saying it doesn’t affect us, but I don’t think we see as big an effect as some of the big ones. We are in a different area of the market and unique from that point of view. You’ve mentioned that the law regulating real estate agents is a good thing. There were a lot of protests against it, though. Why are some people in the industry against it? I don’t think people were necessarily against the law bringing in licences for real estate agents. I haven’t met anybody so far in real estate who’s been against that. My understanding is that the protests are in regard to certain requirements made of the real estate agents that they couldn’t adhere to. I don’t know of anybody against having a licence and being more responsible. Are these requirements too strict? The issue was that the area was a little grey, and the guidelines were not particularly clear. I’m sure that is something they’re looking into and that in due course those guidelines will be made a little clearer, so people know what their requirements are with regard to the new regulations for real estate.

Looking at the bill on pre-sales of unfinished flats, does it have any impact on the market? It will have a lot of impact, because normally a lot of investors or speculators will buy off the plan, so of course the new law will affect the speculative activity. The government is doing its best to protect Macau and its people, and it’s not an easy position to be in, because whatever area of the market you try to control and make changes in, you’re always going to make somebody unhappy. It’s not easy and Macau as a place is incredibly wealthy and doing incredibly well. A lot of the issues we see are really because Macau is a small place and it has been for so long, and suddenly in the last eight, 10 years it has just exploded. Nobody was prepared for it. What is happening in Macau is a time

when the property market… In other countries it would take 100 years to go from one extreme to another, and here it has happened in eight years. It is kind of hard for Macau to catch up with that situation. People are trying to do the best they can to take care of it.

Suddenly, you will see people buying again, because it simply doesn’t make sense to rent

August 26, 2013 April 19, 2013

Macau

Banks lending more to SMEs Loans to small and medium enterprises almost doubled in the first half Tony Lai

tony.lai@macaubusinessdaily.com

he city’s small and medium enterprises (SMEs) rushed to the banks to get more loans in the first six months of the year, lured by more attractive financing options, says an association representing the sector. The newly approved credit to SMEs amounted to 12.6 billion patacas (US$1.6 billion) from January to June, up by 3.6 percent from the second half of last year, the Monetary Authority of Macau announced on Friday. The data show a nearly 90-percent rise from the first half of last year, when SMEs were only granted loans worth 6.7 billion patacas. The collateral ratio, the upper amount of credit allowed versus tangible assets pledged, reached the highest since the authority began collecting data in 2008 at 75.2 percent in the first half of the year. But the SMEs only used 57 percent of the loans approved, a slight decline of 2.3 percent from a year earlier, said the financial regulator. The Federal General Commercial Association of Macau Small and Medium Enterprises said it has become easier for SMEs to get loans from banks or the government in the last “two or three years”.

“Both the government and the banks have been more aware of the difficult conditions that SMEs face here and are able to grant more support,” Fong Kin Fu, president of the association, told Business Daily. The Macau Economic Services also has an SME Aid Scheme offering interest-free loans of up to 600,000 patacas. “Several banks have also started tailored services for the SMEs, like streamlining the loan application procedures and consultations, in these past few years,” said Mr Fong. The Bank of China Ltd’s Macau branch opened a new SME Services Centre in Iao Hon on Friday. The local branch of another top mainland bank, Industrial & Commercial Bank of China (Macau) Ltd, already had a SME centre near the Red Market. Friday data also show that banks lent more to firms in retail and information technology, up by 24.3 percent and 21.2 percent respectively from a year earlier. But new loans approved to restaurants and hotels declined by nearly one-third in the six months to June 30. There was no information on whether that was due to a decline in applications or

an increase in refusals. The loan delinquency ratio – the amount of due but unpaid loan balances versus the aggregate bank loan balances outstanding city wide in the first six months this year – was down to 0.5 percent, its lowest-ever

level since the authority started collecting the relevant data in 2008. “Right now getting financed is only a small problem for the SMEs,” said Mr Fong. “The biggest challenges that SMEs face remain the labour shortage and soaring rents.”

MOP12.6 bln New loans approved to SMEs in the first half

Event organisers still in the red But higher revenues show second quarter profit Tony Lai

tony.lai@macaubusinessdaily.com

vent organisers narrowed losses in the first half of the year with better results in the three months to June 30, data from the Statistics and Census Service show. The bureau said event organisers had revenues of over 33.8 million patacas (US$4.2 million) in the second quarter, up by 56 percent from the same period a year ago. Expenses grew at a slower pace of 48 percent to nearly 28.2 million patacas, Friday’s data show. Overall, event organisers posted a profit of 5.6 million patacas in the second quarter. It was the first time for event organisers to be on the black since the second quarter of last year. But the better results in the AprilJune period were not enough to offset losses incurred in the first quarter. In the six months to June 30 organisers posted a loss of 23.8 million patacas, with costs almost doubling year-onyear to 62.9 million patacas. Macau organised fewer meetings and exhibitions in the first six months

of the year. The number of events fell by 9.3 percent from a year earlier to 458, according to official figures. But the events drew 45 percent more visitors this year to over 422,000, the highest first-half figure since the government began compiling data in 2009. Commerce and trade were the most popular topics with 212 events held in the city in the first half, attracting more than 290,000 attendees. Events related to information and technology were also favoured as the number of visitors increased by eight-fold to over 43,600. The government is planning to increase subsidies to the industry. The administration will next year subsidise “international-standard” meetings, incentives, conventions and exhibitions held here, Macau Economic Services director Sou Tim Peng said last month. The bureau is still working on the guidelines, but the scheme could be up and running in the first half of 2014.

August 26, 2013 April 19, 2013

Macau

Pansy Ho to pilot Jetstar Hong Kong Would-be low fares carrier gets second chairman in under a year Michael Grimes

michael.grimes@macaubusinessdaily.com

ansy Ho Chiu King, cochairperson [sic] of Macau casino developer MGM China Holdings Ltd, is to head a joint venture of existing major airlines hoping to open up Hong Kong as a hub for lowcost air travel in the region. She is the second chairman of Jetstar Hong Kong in less than a year. She takes over from Tang Bing, who is also a director and vice president of one of Jetstar Hong Kong’s one-third equity partners, the mainland carrier China Eastern Airlines Corp Ltd. The new Jetstar business was originally set up in March 2012 as a two-way joint venture between China Eastern and Australian carrier Qantas Airways Ltd’s existing nofrills unit Jetstar Group. It is still waiting for permission from the Hong Kong government to operate from Hong Kong International Airport. The carrier would focus on flying to secondary Chinese cities and would buy or lease about 18 aircraft within three years, Qantas chief executive Alan Joyce has said. In June, Shun Tak Holdings Ltd – founded by Ms Ho’s father Stanley Ho Hung Sun and with her in operational control as managing director – joined the Jetstar Hong Kong consortium as

an equal one-third equity partner. At the time analysts suggested the Ho family’s political and business connections might speed the process of gaining operating permission. Each of the three partners has pledged US$66 million (527.7 million patacas) to the venture. A new low fares operation to challenge Hong Kong’s flagship full service carrier Cathay Pacific Airways Ltd would “stimulate new demand for the leisure travelling market which in turn will enhance inflow of visitors to the Pearl River Delta region (including Macau),” Shun Tak said in a statement at the time.

portion of that from her share of a US$1.5 billion initial public offering for MGM China in Hong Kong in May 2011. MGM China bought its Macau gaming sub-concession for a modest US$200 million from her father’s Macau gaming concession Sociedade de Jogos de Macau SA in 2005. During the Reuters interview Ms Ho made it clear she has not lost her love for the arts. She mentioned plans to bring more exhibitions, music festivals, cultural shows and theatre to Macau. She is also positioning Shun Tak

in hotel management, aviation and property, further expanding the family business’s extensive footprint in the Pearl River Delta. Speaking of the changes since market liberalisation in 2002, she said: “It was very much the local, traditional style, which is really just a lot of gaming parlours ... Now, throughout the past decade, because of the opening up of the market and the introduction of new operators, we all vie to get our own positioning and our own edge”.

Study choice Elsewhere, in an interview with Reuters in Hong Kong, Ms Ho revealed that she had been steered into studying business and away from her first choice – literature – by her father. “He said in this age and time, why would you want to take up something so passive?” she recalled. The choice helped her to become wealthy in her own right. Forbes magazine estimates Ms Ho’s net worth at US$4.4 billion – a significant

Pansy Ho – advised by father not to study ‘passive’ literature

With Reuters

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August 26, 2013 April 19, 2013

Greater China

Construction Bank profit growth slows

hina Construction Bank Corp, the nation’s second-largest lender, posted the smallest profit increase in five quarters, weighed down by rising bad-loan charges as the economy slowed. Net income in the second quarter climbed 9.7 percent to 60.1 billion yuan (US$9.82 billion) from 54.8 billion yuan a year earlier, based on figures published by the Beijingbased lender yesterday. The earnings reflect how Chinese banks are grappling with rising defaults and weak lending demand as the world’s second-largest economy heads for the slowest pace of expansion in 23 years. Combined net income at Construction Bank and

its three largest peers may grow by less than 10 percent this year for the first time since they sold shares to the public, according to analyst estimates compiled by Bloomberg News. “Chinese banks’ asset quality shows no sign of stabilisation as the economy remains sluggish,” said Mu Hua, a Guangzhou-based analyst at GF Securities Co. “Bad loans is a lagging indicator therefore we expect the NPL balance to keep rising in the rest of year. The slowdown in loan expansion has also dragged banks’ profit growth and the trend will continue as the central bank keeps the lid on total lending.” Shares of Construction Bank fell 0.9 percent to HK$5.79 in Hong Kong on

Friday, extending this year’s decline to 6.9 percent. That compares with a 3.5 percent drop in the benchmark Hang Seng Index in 2013. Construction Bank doled out 583 billion yuan of new lending in the first half to take its total to 8.1 trillion yuan at the end of June. Non-performing loans rose to 80.3 billion yuan from 74.6 billion yuan at the beginning of the year as borrowers struggled to repay debt. Construction Bank set aside 16.1 billion yuan for potential bad loans in the first half, compared with 14.7 billion yuan a year earlier. In the first half, Construction Bank’s profit rose 13 percent to a record 119.7 billion yuan, according to yesterday’s statement. Its net interest income gained 11 percent to 187.7 billion yuan after the net interest margin, a measure of lending profitability, was unchanged at 2.71 percent. Fee-based income gained 13 percent to 55.5 billion yuan. Bloomberg News

Police chief lying: Bo Xilai

Jiangxi Copper Co Ltd has joined a list of potential Chinese suitors interested in buying Glencore Xstrata Plc’s US$5 billionplus Las Bambas copper mine in Peru. Jiangxi, China’s biggest copper producer, may eventually team up with either Chinalco Mining Corp International or MMG Ltd, which are also evaluating bids for the mine, one of several sources told Reuters. All three might team up together, the source said. Magris Resources Inc, a private equity firm, is also in the running for the asset, said a source familiar with the situation. Glencore has invited first round bids for the Las Bambas mine by mid-September.

‘Out of context’ Mr Bo on Saturday admitted mistakes relating to the investigation into Mr Heywood’s killing and “some responsibility” for embezzled state funds that were transferred to one of Ms Gu’s bank accounts. But he denies charges of abuse of

China Petroleum & Chemical Corp, Asia’s biggest refiner, posted a 24 percent increase in first- half profit after its refining business returned to profit. Net income rose to 30.3 billion yuan (US$4.95 billion), or 0.25 yuan a share, in the six months ended June 30 from 24.5 billion yuan, or 0.21 yuan, a year earlier, the Beijingbased company, known as Sinopec, said yesterday in a filing. Sinopec made a 200 million yuan gain from refining, compared with a 18.5 billion yuan loss a year earlier. “The reform of retail fuel prices in the first half helped improve profit margin in the refining business and turned the sector from a loss into a profit,” Sinopec said in the statement.

Jiangxi Copper eyes Glencore’s Peru mine

Court proceedings adjourned until today ormer top Chinese politician Bo Xilai has accused his ex-police chief of lying over allegations of abuse of power. Mr Bo launched a scathing attack on Wang Lijun, his former associate in the central city of Chongqing, saying his testimony was “full of lies and fraud”. The trial, in its fourth day in the city on Jinan, was later adjourned until today. Mr Wang turned accuser at a hearing in the eastern city of Jinan, but Mr Bo said his testimony was “full of lies and fraud”. It was the latest flamboyant denunciation by Mr Bo, who has dismissed his wife Gu Kailai as “insane” and compared another prosecution witness to a “mad dog”. The Intermediate People’s Court in Jinan is posting regular but delayed transcripts of the proceedings on its account on Sina Weibo, a Twitter equivalent, in a move hailed by state media as unprecedented transparency, although no independent verification is possible. Mr Wang was the key figure in court on Saturday, testifying against Mr Bo over allegations of abuse of power. He provided explosive details about the scandal triggered by the death of British businessman Neil Heywood, saying that Mr Bo had punched him after he told the politician his wife was responsible. Days later, Mr Wang fled to a U.S. consulate to seek asylum, blowing the scandal open. “His character is extremely bad, he created rumours… and threw dust in the public’s eyes,” Mr Bo said yesterday. “It’s beneath legal credibility to present such a person as a key witness.” “Wang Lijun was lying during the trial and his testimony was not valid at all,” he added.

Sinopec H1 net rises 24 pct

Baidu buys majority stake in Nuomi Baidu Inc, owner of China’s largest search engine, agreed to buy a majority stake in the e-commerce website operator Nuomi Holdings Inc for about US$160 million. Baidu will buy about 59 percent of the operator of Nuomi.com from Renren Inc, according to a PR Newswire statement. Nuomi had general merchandise sales of about US$120 million in the second quarter, the companies said. “Buying Nuomi can help diversify Baidu’s revenue model,” said Ricky Lai, an analyst at Guotai Junan International Holdings Ltd in Hong Kong. “Adding e-commerce can complement Baidu’s advertisement business.” The acquisition is expected to close in the fourth quarter, according to the statement.

Wang Lijun testified in court over the weekend

power, bribery and embezzlement. “The public prosecutor clearly has done a lot of work and I highly respect it,” he said yesterday, but insisted the evidence against him had been “interpreted out of context”. The scandal erupted in advance of a generational shift of power atop the factionalised Communist Party, and Mr Bo’s feisty performance during his trial has astonished a public unfamiliar with the open airing of top-level intrigue. The hearings are in stark contrast to previous Chinese political trials in which most defendants have humbly confessed their crimes in opaque court proceedings. Revelations of private jet flights, luxury villas and rare animal meats have held Chinese Internet users spellbound, while Mr Bo has showed open disdain for prosecution witnesses, including his wife.

He confessed to having had extramarital affairs and said Ms Gu moved to Britain because she was angry with him, the court transcripts showed. The trial was originally widely expected to last only two days but will resume for a fifth day today, the court said after adjourning following yesterday’s morning session. It has finished hearing evidence on the charges themselves and will consider property seized during the investigation, it added. Analysts still believe a guilty verdict and long prison sentence for Mr Bo were agreed beforehand. During the trial nothing has been said publicly of Mr Bo’s links with other top communist leaders – even though he was once one of the 25 highestranking members of the ruling party and tipped to ascend even higher. AFP

Alibaba seeking partners’ board control for HK IPO Alibaba Group Holding Ltd has asked Hong Kong’s stock exchange to let its partners nominate a majority of the e-commerce giant’s board, said a person with knowledge of the matter, a move that would keep executives in control if the company lists in the city. Alibaba has more than 20 partners – including billionaire chairman Jack Ma, co-founder Joseph Tsai and chief executive Jonathan Lu. Hong Kong doesn’t allow dual-class structures that give some shareholders voting rights that are larger than their stake, so the proposal suggests Mr Ma would prefer to take his company public in the city if top executives can retain some control.

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August 26, 2013 April 19, 2013

Greater China per ounce, the company said on August 2, while Alacer Gold Corp said it will mothball two high-cost mines in Australia if it can’t sell the assets within 18 months after taking charges of US$902 million on the unit since the last quarter of 2012. At Barrick, net debt jumped last quarter to 83 percent of equity from 49 percent in the previous quarter, according to data compiled by Bloomberg. Zijin’s ratio rose to 55 percent from 51 percent.

‘Improve things’

China to become world’s biggest gold consumer

China gold-mine deals at record after price plunge Demand grows as companies get easier access to capital David Stringer and Brett Foley

cquisitions by China’s gold mining companies reached a record this year as the metal’s steepest quarterly drop in more than nine decades slashes mine values and sidelines Western rivals laden with debt. Takeovers and asset purchases by producers based in China and Hong Kong rose to a record US$2.24 billion this year, beating last year’s record US$1.96 billion, according to data compiled by Bloomberg. Zijin Mining Group Co, the world’s seventh-largest gold company by market value, and Zhaojin Mining Industry Co are among companies looking to strike after the share prices of targets fell an average 53 percent since bullion peaked in 2011. “The gold declines are good for key Chinese producers to buy overseas assets,” Chen He, head of overseas resources development at Zhaojin Mining, China’s fourth-largest producer, with a US$2.3 billion market value, said in an interview. “This year our main task is to closely watch potential targets as prices in 2014 are forecast to be lower.” Global producers led by Canada’s Barrick Gold Corp, the world’s second-biggest by value, were warned by investors against deals after taking US$26 billion in writedowns since July 16 following a spree that saw US$162 billion spent on acquisitions during a decade-long price boom. Shareholders are “actually actively telling a lot of companies, we’d rather you not do M&A transactions,” Barrick chief executive Jamie Sokalsky said on May 21 at the Bloomberg Canada Economic Summit in Toronto.

Demand explodes Chinese buyers are less constrained as demand at home explodes. With consumption having jumped to 4 metric tons a day, the nation is set to overtake India as the biggest consumer this half. Many producers in China have better cash

flow than overseas competitors and lower production costs. Zijin is forecast to have all-in costs, which include administration, capital spending and exploration, of US$658 per ounce this year and Zhaojin US$549 per ounce, compared with a global average of US$831, brokerage UOB Kay Hian Ltd said in a note to clients last month. Papillon Resources Ltd, which has a project in Mali, may be a possible target for Chinese companies, according to RBS Morgans Ltd. Iamgold Corp, with a US$2.4 billion market value, Amara Mining Plc and Perseus Mining Ltd also are possible targets, said David Brennan, an analyst in Melbourne at Ord Minnett Ltd.

US$2.24 bln

Takeovers and asset purchases by China- and HK-based producers this year

“There are some good bargains out there, and things that are too good to pass up on,” said James Wilson, a Perth-based analyst at RBS Morgans Ltd and a geologist who has worked in Australia, Africa and China. Perseus has fallen 62 percent this year, meaning it’s “not surprising that some consider us to be a takeover target,” the Perth-based producer’s CEO Jeff Quartermaine said in an e-mailed statement. Papillon Resources hasn’t yet received approaches, CEO Mark Connelly said by phone. “We could be a potential target. Any decision would be for the

shareholders to make.” Gold producers globally were involved in US$10.3 billion of deals this year, compared with a record US$32.6 billion in 2010 and last year’s US$8.9 billion, the data show. Chinese M&A is accelerating, with transaction values more than doubling in the first half from the preceding period. “They are hunting assets that are more distressed, or are obviously for sale,” said Matt Weaver, a Perthbased director of advisory firm Azure Capital. “But we are also finding that they are becoming a lot more discerning.”

Easier financing Financing is often easier for Chinese commodities companies compared with rivals overseas, Jake Klein, chairman of Evolution Mining Ltd, said in an interview. “They have access to cheaper, vast pools of capital, they are going to be competitive,” said Klein, who previously ran gold mines in China. Zijin said in November 2012 it had received 30 billion yuan (US$4.9 billion) in loans from the state-controlled China Development Bank’s Hong Kong and Fujian units for overseas acquisitions. China’s government has urged national gold producers to boost development of overseas resources in neighbouring countries and in Africa and Latin America, according to its 12th Five-Year Plan which ends in 2015. The encouragement is probably linked to the country’s desire to increase its gold holdings, Marcus Grubb, managing director of investment research at the World Gold Council, said in an interview. Zijin, China’s biggest producer, is looking at buying several assets and considering making a bid for three of Barrick’s mines in Australia, the company said June 20. Barrick plans to sell, close or trim production at 12 of its 27 mines where costs are higher than US$1,000

Newmont Mining Corp of the U.S., the world’s third-biggest gold miner, said in December it was in talks to sell the stalled Hope Bay project in Canada. Johannesburg-based Gold Fields Ltd, spun off most of its South African assets into Sibanye Gold Ltd in the past year amid a wave of strikes and above-inflation pay increases. “I think some of the Chinese companies believe they can actually improve things,” Owen Hegarty, vice chairman of G-Resources Group Ltd, said in an interview in Hong Kong. Bullion’s spiral into a bear market in April provoked a buying frenzy in malls and shops in China, a culture that traditionally acquires the metal for brides, babies and strongboxes. There will be about 6.6 million brides in China this year alone, according to the World Gold Council. At a national level China, with the world’s largest foreign exchange reserves of US$3.497 trillion on June 30, is likely to increase gold holdings to diversify from the dollar, according to the Official Monetary and Financial Institutions Forum. Net imports into China more than doubled in the first half to 493 metric tons, from about 239 tons a year ago, according to Bloomberg calculations based on Hong Kong customs data. “What is often not understood is that the Chinese approach to metals is strategic and, in the case of gold, also has the added element of being involved in Chinese reserve asset management,” the Gold Council’s Mr Grubb said in an interview.

Doubting takeovers To be sure, with gold heading for its worst year in three decades and some brokers forecasting the metal to extend losses, BOCOM International Ltd’s Benjamin Pei isn’t convinced takeovers will soar. Societe Generale SA last month predicted gold may average US$1,150 an ounce in 2014, the lowest annual average since 2009. “Recent price declines have squeezed gold miners’ profit margins and largely affected their cash flow, hampering their ability to spend on acquisitions,” said Beijing-based Mr Pei. China National Gold Group President Sun Zhaoxue said in March, after talks ended in January with Barrick over its African unit, that China’s state-owned enterprises face obstacles such as cultural gaps and environmental barriers in seeking overseas deals and shouldn’t rush to conclude them. Gold consumption in China jumped 54 percent to 706.36 metric tons in the first six months, the China Gold Association said this month. Per capita gold holdings in China are little more than 5 grams, compared with the average 20 grams in developed countries, meaning there’s huge potential as long as the economy is growing, the association said in June. “China’s appetite for gold is virtually insatiable,” said Jon Price, managing director of Phoenix Gold Ltd. “They have a large bank account with which to work, and a lot of U.S. dollars that they perhaps would rather see turned into physical assets. I can see them being a dominant player.” Bloomberg News

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August 26, 2013 April 19, 2013

Asia Thai parliament passes budget

Indonesia announces tax breaks

Thailand’s parliament has approved the budget for the 2013/14 fiscal year with a smaller deficit than the current year, although some big infrastructure spending to boost the economy has been kept out of the fiscal calculation. The 2.525 trillion baht (US$79 billion) budget bill, proposed by Prime Minister Yingluck Shinawatra is up from 2.40 trillion baht in the current year’s budget ending September 30. The planned deficit of 250 billion baht for 2013/14, about 1.9 percent of gross domestic product is down from 300 billion baht in the current year. Of the total spending, the government says 2 trillion baht will be for current expenditure, with about 457 billion baht going to investment. However, the government had earmarked 350 billion baht for flood management projects this year and said it would start a 2 trillion baht, seven-year infrastructure programme that would help sustain domestic demand at a time of subdued exports. Thailand’s economy should see year-on-year growth in the third quarter while weakness in the baht is not a concern and will be good for exports, the finance minister said. The economy grew 2.8 percent in the second quarter from a year earlier. But it shrank 0.3 percent from the January-March period, when it contracted 1.7 percent, meaning the country slipped into recession.

Government trying to lure investment as rupiah slumps

Rupee completes second weekly loss

The rupiah has lost about 5 percent this month

India’s rupee completed a second weekly loss after plunging to a record on signs the U.S. is getting closer to reducing stimulus that fuelled demand for emerging-market assets. Minutes of the Federal Reserve’s July meeting released last week showed policy makers were “broadly comfortable” with reducing bond-buying this year should the U.S. economy improve. Global funds cut holdings of Indian debt by US$9.9 billion since the Fed chairman first flagged possible paring on May 22, leaving the rupee vulnerable to the nation’s record currentaccount deficit. “The rupee’s levels reflect lack of flows in the market,” said Mirza Baig, head of foreign-exchange and interest-rate strategy in Singapore at BNP Paribas SA. “Indian authorities should just allow the currency to find its own value.” The rupee fell 2.6 percent last week to 63.33 per dollar in Mumbai and touched an unprecedented 65.56 on Thursday, according to prices from local banks compiled by Bloomberg. It rose 2.1 percent on Friday, the biggest jump since June 2012. India’s currentaccount deficit widened to a record 4.8 percent of gross domestic product in the year ended March 31.

Sri Lanka court ends ban on sale of Fonterra products A Sri Lankan court ended a ban on the sale, distribution and advertising of all Fonterra Cooperative Group Ltd milk products, lawyers said, soon after the company suspended operations in Sri Lanka on Friday. The New Zealand dairy giant said earlier it had temporarily suspended work at the Sri Lanka unit, citing precautionary measures to ensure the safety of its 755 employees after it faced product bans, court cases and angry demonstrators. The district court of Gampaha last week banned Fonterra from selling or advertising its products after food safety authorities said they found the toxic agricultural chemical dicyandiamide (DCD) in two batches of milk powder. Fonterra vigorously disputes the finding. Upul Jayasuriya, who represented a health sector trade union that filed the case, said the judge had said consumers could make a decision on whether or not to use Fonterra milk powder. “They [defendants] made submissions, but the judge did not refer to any suppression and misrepresentation. The judge said that there is no independent report to say that there is DCD,” Mr Jayasuriya said.

ndonesia said it will offer tax breaks to companies and speed up some infrastructure projects as the country focuses on investment to narrow a current-account deficit and spur economic growth. Indonesia is taking steps to stabilise the economy, Coordinating Minister for the Economy Hatta Rajasa said in a speech in Jakarta yesterday as he announced a relaxation of mineral-export quotas and a simpler investment-permit process. A record current-account deficit in the second quarter and worsethan-estimated economic growth and inflation data have prompted investors to sell stocks and led the rupiah to its weakest level since April 2009. Foreign direct investment increased at its slowest pace in three years last quarter, and President Susilo Bambang Yudhoyono expects the 2013 economic expansion to miss targets. “The situation as of now is safe, but we must increase our vigilance with what’s happening lately,” Mr Rajasa said. “In the short term, the government and of course Bank Indonesia will take steps to safeguard macroeconomic stability especially in the financial sector and the balance of payments. And these efforts will be combined with structural policies to maintain economic growth at a realistic level.” Mr Yudhoyono, due to hand over power in elections next year, is seeking to shore up his legacy of political and economic stability in

BOJ stimulus paying off: Kuroda G

overnor Haruhiko Kuroda said the Bank of Japan’s decision to step up stimulus is paying off in the economy and financial markets. The campaign “has started to exert effects,” Mr Kuroda told the Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyoming yesterday. Bond

the world’s fourth-most populous nation. The government’s plans will be combined with Bank Indonesia policy changes to deal with the current-account gap and weakening rupiah, Mr Rajasa said as he unveiled higher import taxes on luxury goods.

Swelling deficit Mr Rajasa didn’t provide details on changes relating to mineral exports. Indonesia banned exports of 32 types of unprocessed metals in May 2012, even as it waived the restriction for companies operating under so-called mining business licences that are planning to build local refineries. Those companies are subject to a 20 percent tax and quotas. Major companies operating under the Contract of Work, such as Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp were exempted from the rule. “Commodity prices remain weak, the mining sector’s profitability is declining rapidly, and government receipts through royalties and taxes would have suffered if the government had not taken any measures to relax the current ban or recalibrate the effective banning exports of unprocessed ores in 2014,” said Xavier Jean, a Singapore-based director of corporate ratings at Standard & Poor’s. “That would have only added to the doldrums, so this is not coming as a surprise.” Economic growth has slowed

purchases have been “exerting strong downward pressure on the nominal interest rates”. Japan’s central bank is buying more than 7 trillion yen (US$70.9 billion) in bonds each month to expand the monetary base by 60 trillion yen to 70 trillion yen per year. It seeks to generate inflation of 2 percent within two years after 15 years of battling deflationary forces. Mr Kuroda said the push has helped boost stock prices and restrain bond yields, while supporting bank lending and bolstering confidence among consumers and businesses. Inflation expectations are also picking up, he said. “We think that at least in the next two years or so we would be able

in the last four quarters, dipping below 6 percent in the three months through June for the first time since 2010. It will be difficult to reach the government’s target of 6.3 percent this year, Mr Yudhoyono told reporters on August 21. The rupiah climbed 0.3 percent to 10,791 per dollar on Friday, after trading as low as 10,840 earlier. It has lost about 5 percent this month. “In the past few days we have seen a lot of capital flying out of Indonesia,” Alexander Rusli, chief executive of Indonesia’s third-largest telecommunications company PT Indosat, said in an interview with Bloomberg Television. “As a CEO of an Indonesian company, I do agree that we have been slow in taking measures to anticipate the situation.” The current-account deficit swelled to US$9.8 billion in the second quarter, the central bank reported on August 16. That is the largest shortfall in data compiled by Bloomberg going back to 1989. The gap should narrow this quarter and next, Mr Rajasa said. “We do not think there is a magic bullet that can turn things around,” Barclays Plc analysts led by Prakriti Sofat, wrote in an August 22 note. “A medium-term strategy to address the structural current-account deficit and financing would be helpful. However, the political cycle and nationalistic policy bias pose headwinds to undertaking such reform.” Bloomberg News

to contain increases in long-term interest rates, so as to maintain low real interest rates,” he added. Consumer prices rose in June, and the world’s third-biggest economy expanded at an annualised 2.6 percent in the three months through June 30. The benchmark Nikkei 225 Stock Average is up 31 percent this year. A report last week showed Japan’s exports in July jumped 12.2 percent from a year earlier, the most since 2010, aiding Prime Minister Shinzo Abe’s efforts to drive the recovery. Japan will maintain the bondbuying strategy “while continuing to make efforts to maintain the stability of the global financial system,” Mr Kuroda said. Bloomberg News

13 13

August 26, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)

Max 44.6

average 44.356

Max 43.05

Min 43.85

average 43.787

Last 44.35

Min 43.35

Last 43.65

44.6

70.8

22.6

44.4

70.6

22.5

44.2

70.4

22.4

44.0

70.2

22.3

43.8

Max 70.75

average 70.475

19.8

43.9

19.7

43.7

19.6

43.5

19.5

43.3

Max 19.76

average 19.674

PRICE

DAY %

YTD %

(H) 52W

106.42

1.323431401

13.6965812

107.9499969

86.04000092

BRENT CRUDE FUTR Oct13

111.04

1.037306642

5.022226426

113.6100006

96.37999725

GASOLINE RBOB FUT Sep13

300.72

1.43011333

9.836005698

309.1700077

260.2499962

GAS OIL FUT (ICE) Oct13

943

0.667200427

4.055172414

975.75

835.5

NATURAL GAS FUTR Sep13

3.485

-1.692524683

-3.140633685

4.517000198

3.128999949

NY Harb ULSD Fut Sep13

309.5

0.817616209

3.390679806

319.1699982

275.5500078

Gold Spot $/Oz

1397.73

2.2039

-16.025

1796.08

1180.57

Silver Spot $/Oz

24.0675

4.341

-20.0681

35.365

18.2208

Platinum Spot $/Oz

1541.13

1.5438

1.5404

1742.8

1294.18

Palladium Spot $/Oz

751.35

0.196

7.3879

786.5

587.4

1893

0.477707006

-8.683068017

2200.199951

1758

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13 CORN FUTURE

19.4

-7.19959652

8422

6602

-4.495192308

2230

1809.75

14525

0.658350658

-14.85932005

18920

13205

15.58

0.548564053

1.070385988

16.65000153

14.77000046

470

1.184068891

-21.63401417

665

445.75

646

0.858704137

-21.29150168

913

635.5

1328

3.205750923

1.938207638

1409.75

1162.5

117.05

-25.18376478

200

116.3499985

NAME

15.92999935

ARISTOCRAT LEISU

74.34999847

CROWN LTD

1.167076167

84.08

-17.89631107

-0.118793062

21.82999992

6.781813564

93.72000122

World Stock Markets - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15010.51

0.3125556

14.54785

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

3657.792

0.5244995

21.13845

3694.188

2810.8

FTSE 100 INDEX

6492.1

0.7015808

10.07645

6875.62

5605.589844

DAX INDEX

8416.99

0.2274381

10.56961

8557.86

6871

NIKKEI 225

13660.55

2.210073

31.41235

15942.6

8488.14

HANG SENG INDEX

21863.51

-0.145647

-3.501845

23944.74

19076.78906

CSI 300 INDEX

2286.929

-0.7379992

-9.355032

2791.303

2023.171

TAIWAN TAIEX INDEX

7873.31

0.7541225

2.25742

8439.15

7050.05

KOSPI INDEX

1870.16

1.137839

-6.353872

2042.48

S&P/ASX 200 INDEX

5123.361

0.938029

10.20468

4169.827

-0.03802069

FTSE Bursa Malaysia KLCI

1721.07

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

CROSSES

0.633232016

16.47

COTTON NO.2 FUTR Dec13

ASIA PACIFIC

0.546448087

SOYBEAN FUTURE Nov13 SUGAR #11 (WORLD) Oct13

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

7360

Dec13

COFFEE 'C' FUTURE Dec13

COUNTRY MAJOR

1986.5

WHEAT FUTURE(CBT) Dec13

NAME

Last 19.7

(L) 52W

WTI CRUDE FUTURE Oct13

LME ZINC

Min 19.48

Max 22.55

average 22.462

Min 22.25

22.2

Last 22.4

21.7

21.6

21.5

Max 21.7

average 21.589

Min 21.45

21.4

Last 21.55

Currency Exchange Rates

NAME

METALS

70.0

Last 70

44.1

Commodities ENERGY

Min 70

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.903 1.5569 0.9222 1.3383 98.72 7.9875 7.7548 6.122 63.3525 31.85 1.2789 29.995 44.2 11058 89.113 1.23322 0.85945 8.1706 10.6694 132.1 1.03

0.4561 -0.0321 0.6289 0.5258 -0.0405 0.01 0.0103 -0.0114 2.0165 0.7849 0.4144 0.1167 -0.0792 -1.6549 -0.4657 0.1816 -0.5422 0.0649 -0.3318 -0.5526 0

-12.989 -3.7525 -0.7374 1.4632 -12.7836 -0.0538 -0.0542 1.7739 -13.1921 -3.9874 -4.4961 -3.2072 -7.2285 -11.4397 0.2401 -2.0872 -5.123 0.574 -1.3028 -14.0273 -0.0097

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3597 65.56 32.17 1.2862 30.228 44.299 11148 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8848 1.4814 0.9022 1.2466 77.13 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20066 0.78875 7.8281 9.9593 97.89 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.49

1.58371

42.53968

4.63

2.49

VOLUME CRNCY 1935262

14.34

5.596465

34.3955

14.69

8.9

4022473

AMAX HOLDINGS LT

1.02

-0.9708738

-27.14286

1.72

0.75

1527150

BOC HONG KONG HO

24.45

0.204918

1.452281

22.85

5861163

CENTURY LEGEND

0.35

-1.408451

32.07548

0.42

0.22

58500

CHEUK NANG HLDGS

6.26

4.507517

6.74

3.09

69248 14900562

CHINA OVERSEAS

23.15

0.2164502

0.2164486

25.6

17.28

CHINESE ESTATES

16.1

0.625

43.16776

16.98

7.996

49500

CHOW TAI FOOK JE

10.12

3.476483

-18.64951

13.4

7.44

3347000

EMPEROR ENTERTAI

2.76

2.985075

46.03175

3.07

1.38

935000

FUTURE BRIGHT

2.34

-0.4255319

93.06515

2.76

1.053

1290000 10671229

GALAXY ENTERTAIN

44.35

1.836969

46.1285

44.95

20.45

HANG SENG BK

121.1

-0.08250825

2.021907

132.8

109

995805

1.052632

-27.81955

35.3

23.2

1354500

HOPEWELL HLDGS HSBC HLDGS PLC

83.7

0.1795332

2.952026

90.7

65.85

12519417

HUTCHISON TELE H

3.55

-0.8379888

-0.2808973

4.66

2.98

7044000

LUK FOOK HLDGS I

24.25

2.105263

-0.6147525

30.05

16.88

1393600

MELCO INTL DEVEL

17.36

0.8130081

92.6748

18.18

5.91

5671530

MGM CHINA HOLDIN

22.4

1.587302

68.69656

23.65

11.346

2213600

1770.53

MIDLAND HOLDINGS

3.06

-0.3257329

-17.2973

2.68

818000

5249.6

4261.2

NEPTUNE GROUP

0.171

0.5882353

12.5

0.23

0.131

6670000

-3.402143

5251.296

3978.078

NEW WORLD DEV

11.18

1.636364

-6.988356

15.12

9.38

11429776

0.04068892

1.901773

1826.22

1590.67

SANDS CHINA LTD

43.65

0.9248555

28.57143

45.5

26.05

5674242

SHUN HO RESOURCE

1.85

14.19753

32.14286

1.9

1.06

690000

964.164

-0.1531622

9.309081

998.487

799.651

SHUN TAK HOLDING

4.01

3.084833

-4.295944

4.65

2.76

13604254

3761.62

0.1317656

1.693444

4571.4

3411.69

SJM HOLDINGS LTD

HSBC Dragon 300 Index Singapor

583.78

-0.7

-6.01

STOCK EXCH OF THAI INDEX

1338.13

-1.011977

-3.86514

1649.77

1207.53

HO CHI MINH STOCK INDEX

486.82

-1.874546

17.66611

533.15

372.39

Laos Composite Index

1342.98

10.55426

1455.82

1003.17

19.7

1.861427

11.00056

22.382

15.401

11624000

SMARTONE TELECOM

10.84

-23.01136

17.36

10.82

1189500

WYNN MACAU LTD

21.55

1.891253

2.863958

26.5

16.92

2911243

ASIA ENTERTAINME

4.02

3.341902

42.82248

4.7647

2.4835

232987

BALLY TECHNOLOGI

73.07

0.8140177

63.431

75.61

43.16

374525

BOC HONG KONG HO

3.11

-0.3205128

1.302934

3.6

2.99

6830

GALAXY ENTERTAIN

5.71

1.601423

43.82871

5.78

2.735

4775

19.34

-0.2063983

36.48553

20.25

11.94

2008278

84.3

-0.3781612

0.4288748

101.46

70.346

248939

0.4582305

23.48354

60.54

37.8353

4298030 1380073

INTL GAME TECH JONES LANG LASAL LAS VEGAS SANDS

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.

MELCO CROWN-ADR

27.3

0.3676471

62.11401

27.57

11.452

MGM CHINA HOLDIN

2.91

-0.3424658

66.25803

2.98

1.5327

500

MGM RESORTS INTE

1.010101

54.63917

18.01

9.15

7407413

SHFL ENTERTAINME

22.8

-0.2406476

57.24138

23.08

12.35

161592

SJM HOLDINGS LTD

2.55

11.95917

2.9481

1.9818

24395

141.925

0.4707631

26.16677

144.99

93.1279

542552

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

34.5

0.4366812

19545528

ALUMINUM CORP-H

2.64

-1.492537

5910471

BANK OF CHINA-H

3.31

-0.6006006

281981174

BANK OF COMMUN-H

5.23

-0.7590133

23865990

BANK EAST ASIA

30.45

0.3294893

936133

BELLE INTERNATIO

10.42

-3.518519

26814000

NAME CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD

7658562

-0.0998004

1756298

89.6

0.3359462

1119219

355.8

-1.166667

3344605

TENCENT HOLDINGS

24.8

1.848049

4444485

TINGYI HLDG CO

18.38

-1.71123

6902679

121.1 -0.08250825

995805

WANT WANT CHINA

10.34

0.3883495

9273408

WHARF HLDG

65.55

-0.4555809

2924719

-0.1833181

2693282

0.6122449

83906035

HENDERSON LAND D HENGAN INTL

47.4

2.597403

5800385

-0.2347418

1400281

HONG KG CHINA GS

18.58

-0.1075269

14665882

HONG KONG EXCHNG

122.4

-0.5686434

1300742

83.7

0.1795332

12519417

89.95

-0.6077348

6246670

5.14

-0.3875969

220499907

11.82

-1.5

26808900

HSBC HLDGS PLC

CHINA MOBILE

83.15

0.4833837

16393395

HUTCHISON WHAMPO

CHINA OVERSEAS

23.15

0.2164502

14900562

IND & COMM BK-H

CHINA PETROLEU-H

5.72

-0.3484321

67409499

LI & FUNG LTD

CHINA RES ENTERP

22.85

-1.508621

3198000

MTR CORP

22.3

0.6772009

3625400

NEW WORLD DEV

CHINA RES LAND

-0.7707129

2895995

4.93

1683226

10.3 100.1

1.501502

108.9

2168146 5674242

13.52

CHEUNG KONG

23.5

SINO LAND CO

-1.972243 0.9248555

ESPRIT HLDGS HANG SENG BK

CHINA MERCHANT

4444863

67.1 43.65

SWIRE PACIFIC-A

HANG LUNG PROPER

22919158

SANDS CHINA LTD

POWER ASSETS HOL

5076000

5861163

231560662

6182000

1.25

3542244

0.1039501

11983016

-1.428571

VOLUME

11.34

0.204918

-0.8561644

-0.8417508

8.97

DAY %

COSCO PAC LTD

1.447178

5.79

PRICE

97391045

24.45

19.26

11.78

61.8 -0.08084074

NAME

0.7741935

14.02

CHINA LIFE INS-H

VOLUME

15.62

BOC HONG KONG HO

CHINA CONST BA-H

DAY %

CNOOC LTD

CATHAY PAC AIR CHINA COAL ENE-H

PRICE

CHINA RES POWER

17.8

-3.26087

8086527

PETROCHINA CO-H

CHINA SHENHUA-H

24.45

1.242236

24268505

PING AN INSURA-H

28.4

0.3533569

1777466

11.18

1.636364

11429776

8.5

-2.298851

171958874

53.2 -0.09389671

12258974

SUN HUNG KAI PRO

MOVERS

22060

INDEX 21863.51 HIGH

22058.04

LOW

21538.19

52W (H) 23944.74 21530

(L) 19076.78906 21-August

23-August

14 14

August 26, 2013 April 19, 2013

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August 26, 2013 April 19, 2013

Opinion Business

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Leading reports from Asia’s best business newspapers

Taipei Times Taiwan’s unemployment rate last month rose to its highest level this year, with an increasing number of firsttime jobseekers – mainly new graduates – unable to get job offers, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said. The unemployment rate rose to 4.25 percent last month, from 4.14 percent in June, to its highest level since November last year, the DGBAS said in its monthly report. Deputy director Lo Yi-ling attributed the month-on-month rise in unemployment to the influx of first-time jobseekers following the graduation season.

Inquirer Business The Philippines’ balance of payments (BOP) surplus hit a six-month high of US$1.099 billion in July. Data released by the Bangko Sentral ng Pilipinas showed that the July figure was the highest since January, when the BOP surplus reached US$2.043 billion. This was achieved as foreign investors returned to the Philippines after pulling out in droves in June. A major component contributing to the surplus in the BOP are remittances from overseas Filipino workers, which are expected to reach US$22.5 billion this year, up by 5 percent from 2012.

Korea Herald Fitch Ratings has kept its rating on South Korea unchanged despite snowballing speculation of another Asian crisis. The rating house said that it retains the nation’s sovereign rating of “AA-,” the fourth-highest investment grade with a stable outlook, citing the country’s good fundamentals. The global credit appraiser said it maintains the level as it believes that the country’s household debts and exterior economic conditions will unlikely have a profound impact on the country’s longterm foreign currency rating.

China Daily The central government announced a move that will reduce the number of administrative procedures and streamline approval processes at all levels of government. The State Council said the move will further boost reforms in the structure of governments and remove government hindrances on enterprises. According to the statement, authorities should not set approval requirements in industries where a market can properly govern itself. It also added that private capital should be given more access to sectors that are tightly controlled by the government or state-owned companies.

It looks like 1998 again in China William Pesek

Bloomberg View columnist

f all the reporting trips I made in my Washington days, flying with Lawrence Summers to Beijing so he could kiss Zhu Rongji’s ring ranks among the most fascinating. Anyone who has spent inside of five minutes with Summers knows he’s not the grovelling type. But this was in January 1998, when Summers was deputy secretary of the U.S. Treasury, and Bill Clinton’s White House feared China would devalue the yuan and toss more fuel onto Asia’s already blazing crisis. As we landed in Beijing, Zhu, China’s reformist premier-inwaiting, was the man to see first. Summers won pledges from Zhu not to weaken China’s currency and to keep Hong Kong’s dollar pegged to the U.S.’s. I’m reminded of the experience not just because Zhu is back in the news with a new book of speeches, letters and commentaries. Or because Summers may soon be named Federal Reserve chairman, just as Zhu once ran China’s central bank. It comes to mind because the economic challenges China faced in 1998 are eerily similar to those it faces today. Looking at the raft of China’s problems, one might imagine the 15 years separating Zhu’s inauguration as Chinese premier in March 1998 and Li Keqiang’s in March of this year had never happened. Now, as then, economists worry China’s economy might collapse, a mountain of non-performing loans might go bad, state-owned enterprises are stifling innovation, and social unrest might overwhelm Beijing.

First visit Back in the late 1990s, Zhu was the first visit of every foreign policy maker for a reason. He was the face of “new China” – a boisterous, confident, Englishspeaking technocrat who understood free-market language and was beyond reproach as a reformer. On that Beijing trip in 1998, Summers told me that he viewed Zhu as China’s answer to Paul Volcker. And Summers would be proved right. Just like the former Fed chairman who defeated the inflation of the late 1970s with harsh monetary medicine, Zhu tossed more than 40 million people out of work to trim back the influence of stateowned companies. Zhu saw China’s 2001 entry into the World Trade Organisation as a Trojan horse of sorts. Joining meant opening the economy and financial industry to foreign investment and, to a

Zhu Rongji

certain extent, international conventions of trade, intellectual property and environmental management. Likewise, Zhu didn’t view the internationalisation of China’s currency as a tool of financial hegemony but as a means of forcing change. Everything changed when Zhu and his boss, President Jiang Zemin, retired in 2003. Their respective successors, Wen Jiabao and Hu Jintao, feared modernisation would jeopardise growth and fan

If Zhu had been marooned on a desert island during the WenHu years and returned to Beijing today, he would be excused for thinking little had changed

social unrest. Whereas Zhu was a protégé of Deng Xiaoping, who opened the economy in the 1970s and 1980s, Hu and Wen were cut more from the Mao Zedong mould. Reform died, free speech was curtailed even as Google and Facebook spread across the globe, and stateowned enterprises reasserted their dominance over the Chinese economy. If Zhu had been marooned on a desert island during the Wen-Hu years and returned to Beijing today, he would be excused for thinking little had changed. In fact, Zhu would find things worse off. The world tends to obsess over the wrong metrics. Yes, China is now the globe’s second-biggest economy, has US$3.5 trillion in currency reserves, boasts an aircraft carrier, and spreads its largess the world over to win energy contracts and friends. But over the last 10 years, China’s economy has regressed as the state companies Zhu tried to tame used cheap capital to expand their grip. They now impose a significant drag on growth.

Corrupt communists So far, Li has displayed only one flash of Zhu-like bravado: a sudden clampdown on credit in June that drove the benchmark interest rate to a record 12.45 percent. The target was a shadowbanking sector that has seen phenomenal growth

and escapes regulatory supervision. The sector has encouraged an explosion of debt among state companies and local governments, while a plethora of wealth-management products obscures the true level of liabilities. Since then, Li has acted far more conservatively. Why? For one thing, vested interests have grown as rapidly as debt over the last 15 years. Things were plenty corrupt in Zhu’s day, but there were far fewer Communist Party millionaires and billionaires defending the status quo at all costs. The bigger difference may be pure nerve. Zhu developed a reputation as a risk-taker during his days as mayor of Shanghai, where he made it easier for foreigners to start businesses. And, as the world is learning from his new book, Zhu’s pragmatism kept the Tiananmen Square protests in Beijing from spreading to China’s biggest city. Li rose to office with a lower profile and a reputation for caution. On that flight back to Washington in 1998, Summers recounted something Zhu had told him. The premier noted that the crisis then slamming Indonesia, Malaysia, South Korea and Thailand had educated China about the dangers of economic models that didn’t work. Fifteen years on, Chinese leaders seem to have forgotten those lessons. Li might want to pick up Zhu’s book and refresh his memory – fast. Bloomberg View

August 26, 2013

Closing Shanghai Exchange mulls circuit breaker Abbott pledges surplus within decade The Shanghai Stock Exchange is considering setting up a circuit-breaking mechanism as part of efforts to avoid a repeat of a trading error on August 16 that triggered the biggest swing in its benchmark index since 2009. It will also study the possibility of allowing the cancellation of trades during incidents similar to the erroneous buy orders made by Everbright Securities Co Ltd, a spokesman from the stock exchange said on its Weibo. The exchange is also looking into allowing a “T+0” trading mechanism for the spot market, which allows investors to buy and sell the same stock on the same day, to protect the rights of small investors.

Australian opposition leader Tony Abbott yesterday officially began the Liberal party’s election campaign, promising a budget surplus equal to 1 percent of GDP within a decade amid polls signalling he is set to become the nation’s next prime minister. “The current government has turned a A$20 billion [US$18 billion] surplus into deficits stretching out as far as the eye can see,” Mr Abbott told supporters in Brisbane. “We can’t afford another three years like the last six.” Mr Abbott also pledged to have legislation in Parliament within his first 100 days in office to abolish the Labor government’s mining and carbon taxes.

More 18,000 rooms planned for Cotai Tony Lai

tony.lai@macaubusinessdaily.com

ore than 6,200 hotel rooms were being built at the end of June but most will be scaled for high-end accommodation in the Cotai strip, data from the Land, Public Works and Transport Bureau show. By the end of the second quarter, there were 11 hotel projects being built, most of them in the Macau peninsula. Though only three projects are getting off the ground or being expanded on Cotai, they account for more than 85 percent of the hotel room supply under construction, or more than 5,600 rooms. The bureau did not identify the projects, but the new supply very likely comes from the phase two of Galaxy Macau and the Melco Crown Entertainment Ltd’s Studio City resort. With a further 16.700 hotel rooms provided by 27 projects that the bureau is still reviewing, Macau can anticipate over 23,000 hotel rooms in the pipeline. Among the projects being reviewed, 12,600 rooms are planned for Cotai projects. Most of the new hotels, 17, are planned for the peninsula, while five are to be built in Cotai. There are also plans to build three hotels in Taipa and two in Coloane. But it is yet not known how many rooms will be for budget hotels as the classification of each hotel will only be carried out by the Macau Government Tourist Office once the construction is completed. Maria Helena de Senna Fernandes, the office director, said last week they were still reviewing five applications for budget hotels – the same figure she had mentioned in February. She hopes the hotels could come into operation as soon as possible. There were 1,470 budget hotel rooms by the end of June, accounting for 5 percent of the 28,000 available rooms now.

Slumping shares – Kospi index the cheapest in Asia

China, South Korea best in emerging market rout HSBC bullish on cheap and profitable stocks

he US$1.5 trillion decline in equities in emerging markets has left South Korean and Chinese shares the most attractive for Bill Maldonado, who directs stock investments for HSBC Global Asset Management Ltd. “It seems almost foolhardy in the face of the current volatility to be that positive but in reality, we are,” said Mr Maldonado, Asia-Pacific chief investment officer for the unit of the London-based bank, which manages US$413 billion. “The two big outliers today, which look both very cheap and very profitable, are China and Korea.” While Korean profits are rising, slumping shares have made the benchmark Kospi index the cheapest in Asia, trading on Friday at just 0.97 times the value of its constituents’ assets. The ratio for China’s Shanghai Composite Index was 1.41 times, after falling in June to the lowest in 17 years. Mr Maldonado’s outlook for South Korea and China contrasts with growing doubts about India, where he’s weighing whether being bullish about investing in the nation was a mistake. HSBC, Aberdeen Asset Management Ltd and Baring Asset Management Ltd say some

developing-nation valuations are too compelling to ignore after the MSCI Emerging Markets Index slumped 13 percent this year through Friday. That left it trading at 10.5 times estimated profit, compared with 15 for the Standard & Poor’s 500 Index. While Asia’s role as the world’s growth engine is waning, economists surveyed by Bloomberg predict expansion of 6.3 percent across the region in 2013. That’s still more than triple the expected global rate.

Cheap valuations Investors should also buy shares of banks, energy companies and other industries that benefit from a stronger economy, Mr Maldonado said in an interview. Energy stocks are the cheapest among the 10 industry groups in an MSCI gauge of equities in developed and emerging markets when prices are compared to forecast earnings. Analysts expect companies in South Korea’s Kospi index to boost earnings per share by 58 percent in the next 12 months, according to data compiled by Bloomberg. The gauge climbed 1.1 percent on Friday, while the Shanghai Composite Index declined 0.5 percent. The discrepancy in premiums

between developed and emerging markets is due to investors preferring liquid large-cap stocks where they can get in and out easily, rather than a rebalancing of world growth or profitability, according to Mr Maldonado. Growth in emerging economies is still strong despite recent slowdowns, he said. Emerging markets may outperform developed markets over five years, Aberdeen Asset’s chief investment officer, Anne Richards, said at a briefing in Sydney last week. The fund manager likes Indian stocks on their valuations and growth potential, Peter Elston, Singaporebased head of Asia-Pacific strategy at Aberdeen Asset, told Bloomberg TV. Chinese stocks are attractive as the risk of a sudden economic slump is receding and valuations trail other markets, Agnes Deng, head of Hong Kong and China equities at Baring Asset, said. Their optimism contrasts with bearish investors who are fleeing riskier assets as the U.S. Federal Reserve plans to pare back some of the unprecedented cash it has pumped into the global financial system. The value of emergingmarket stocks slipped US$1.5 trillion from a May 8 high through Friday. Bloomberg News