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Retail sales gain as mainland visitors rise
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he rising number of mainland tourists to Macau is boosting the city’s retail sales and luxury companies, suggest new government figures. The recent slowing in China’s macroeconomic growth is not so far denting tourists’ appetites for spending. Indeed the growing value of the yuan relative to the U.S. dollar-pegged pataca is boosting their purchasing power. Retail sales in the second quarter rose by 23 percent to 15.7 billion patacas (US$1.96 billion) from a year earlier, the Statistics and Census Service announced yesterday. Quarter-on-quarter the rise was 64 million patacas. Salaries in the retail industry rose to 11,250 patacas (US$1,406) in the second quarter, 9.1 percent more than a year earlier. The inflation rate in the second quarter 2013 judged year-onyear was 5.13 percent. More on page 3
Year II
Number 357 Tuesday August 27, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Vitor Quintã
MOP 6.00
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April 19, 2013
You have nothing to fear, Philippines tells visitors
Brought to you by Zung Fu Motors (Macau) Limited
Hang Seng Index 22100
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It’s safe to travel to the Philippines – especially since reforms following the murderous hijacking there in 2010 of a bus loaded with Hong Kong tourists – Philippine government spokesman Edwin Lacierda told Business Daily. The Philippine authorities hope the Hong Kong government will rescind its warning against travelling there, Mr Lacierda told us at a public relations event in Manila designed to improve the country’s under fire image. The Philippines had almost 199,200 visitors from mainland China in the first half of this year, 32.1 percent more than a year earlier, despite the Sino-Philippine dispute over island territory in the South China Sea.
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HSI - Movers Name
Pages 6 & 7
Jockey Club to shut four off-course bet centres
Melco Int limits Russia casino stake to 5 pct
Galaxy Macau boosts Hsin Chong’s turnover
Macau Jockey Club is to close four of its seven off-course betting centres in Macau. The club did not specify the reasons for the closures in the brief announcement on its official website. “The removal [of offcourse betting centres] is not due to a particular instruction of the DICJ,” said the gaming regulator by e-mail, playing down linkage with an administrative order to relocate some suburban slot parlours. Page 2
Lawrence Ho Yau Lung’s gaming firm Melco International Development Ltd is limiting its direct ownership of a Russian casino scheme to a five percent equity stake. Melco International is subject to regulation in the United States thanks to its 33.7 percent shareholding in Nasdaq-listed Macau casino developer Melco Crown Entertainment Ltd. The casino in the Primorye region of the Russian Far East, could open in September. Page 4
Work on Phase 2 of Galaxy Macau casino resort has brought more than HK$1.15 billion revenue to Hsin Chong Construction Group Ltd so far this year. Unaudited turnover in the first half surged by 44 percent yearon-year to more than HK$5.7 billion (US$730.8 million), the Hong Konglisted contractor said in its latest interim results. Galaxy Entertainment Group Ltd is due to open Galaxy Macau Phase 2 in mid-2015. Page 5
%Day
BELLE INTERNATIO
5.57
TINGYI HLDG CO
4.03
CHINA SHENHUA-H
3.68
GALAXY ENTERTAIN
2.48
CHINA LIFE INS-H
2.28
SANDS CHINA LTD
-0.46
CHINA UNICOM HON
-0.51
HONG KG CHINA GS
-0.54
HENDERSON LAND D
-0.63
CHINA RES LAND
-2.69
Source: Bloomberg
I SSN 2226-8294
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August 27, 2013
Macau
Loss-making Jockey Club to shut four off-course bet centres Regulator calls move ‘response to needs of the community’ and not linked to govt demand for slot parlour relocations Stephanie Lai
sw.lai@macaubusinessdaily.com
I
n the next 35 days Macau Jockey Club is to close four of its seven off-course betting centres in Macau. The club did not specify the reasons for the closures in the brief announcement on its official website. By September 1, three centres – in Areia Preta, the Red Market and near Dr. Carlos d’Assumpção Park – will cease operation. Another off-course betting outlet known as Kuan Fat, located in downtown Macau, will shut by October 1, the club said. Business Daily asked the club why it was taking the action, but no reply was available by press time. Macau Jockey Club still operates three other centres handling offcourse cash bets – in Iao Hon district, San Kio district and at Yat Yuen dog racing track (also known as the Canidrome) in Fai Chi Kei. In an e-mailed reply to Business Daily, the Gaming Inspection and Coordination Bureau noted that Macau Jockey Club’s planned closure of the betting outlets is a response to “the needs of the community”. “The gaming concessionaires have always been reminded by the government about their social responsibilities on their gaming operations,” the bureau replied. “As such, the Macau Jockey Club has responded to the needs of the community by removing several offcourse betting stations away from the residential areas.”
Off pace In June Business Daily reported Macau Jockey Club’s losses for 2012 were 57.7 million patacas (US$7.2 million), up from 17.8 million patacas in 2011. The operation has
Macau Jockey Club, Taipa (Photo: Manuel Cardoso)
not made money since 2003. The institution has been technically insolvent since 2006 as its losses are higher than its share capital, set at three billion patacas. The club holds an exclusive horse racing concession that expires in August 2015. According to the Chinese language version of the jockey club’s website, its key officials include chairman Stanley Ho Hung Sun, founder of Macau casino developer SJM Holdings Ltd; his fourth consort Angela Leong On Kei, an executive director of SJM; and Ambrose So Shu Fai, chief executive of SJM. In November last year, the government issued an administrative regulation instructing SJM and Mocha Clubs – a unit of Melco Crown Entertainment Ltd – to relocate five
slot parlours away from residential areas within 12 months. Yat Yuen Canidrome Slot Lounge and Treasure Hunt Slot Lounge on Macau peninsula are operated by SJM. Mocha Lan Kwai Fong and Mocha Marina Plaza (in the downtown area) and Mocha Hotel Taipa Best Western in Taipa, are Melco Crown’s. The regulation did not require betting stations for horse or dog races to move away from residential areas. “The removal [of off-course betting centres] is not due to a particular instruction of the DICJ,” said the regulator by e-mail, adding “but rather a response to the message conveyed by the government throughout the past years in an effort to address the concerns and needs of the community.” Citing unidentified sources from
the Macau Jockey Club, Chineselanguage Macao Daily News reported yesterday that following the closure of the four off-course betting centres, the club will strengthen its Internet and phone betting services. The newspaper also suggested the club planned to establish off-course betting centres in local “casinohotels”, though did not specify the spots. Union Gaming Research Macau said in a note: “Although the [Macau] Jockey Club off-site betting centres do not fall under the new slot parlour regulations that were passed last November to control the location of slot parlours, we believe the closure of these OBCs could be part of the Macau government’s plan to slowly relocate gaming related entities out of heavily residential areas in Macau.” With Michael Grimes
Industrial park’s sewage plant contract extended Suspicion surrounding the operator fails to stop contract extension as government prepares new tender Tony Lai
tony.lai@macaubusinessdaily.com
T
he government has extended until March 2014 the contact to run the sewage treatment plant in the Zhuhai-Macau CrossBorder Industrial Park, while it prepares a new public tender. Executives of companies that formed the consortium that runs the sewage plant are among the accused in a bribery case arising from the web of corruption woven by Ao Man Long when he was a government secretary.
Yesterday’s Official Gazette says the government will pay the consortium comprising ATAL Engineering Ltd and Waterleau 5.4 million patacas (US$675,000) to keep operating and maintaining the plant. Waterleau Macau Lda is a subsidiary of Belgium’s Waterleau Global Water Technology NV. The government will pay the consortium 3.6 million patacas this
year and 1.8 million patacas next year. In December last year, the government said it would pay the consortium 8.9 million patacas to run the plant for a few more months. The Environmental Protection Bureau, which oversees the plant, said the original contract expired “in mid this year”. But they extend the contract until March 31, 2014 as the guidelines for a new tender are still being drafted, the bureau told
Business Daily in an e-mail reply. The government will attempt to launch the tender “within this year”, the bureau said, avoiding questions on Waterleau. The chief executive of Waterleau Global, Luc Vriens, and the managing director of ATAL Engineering, Fong Chun Yau, are on trial in the Court of First Instance on charges of bribery and money laundering. They are accused of bribing Mr Ao when he was secretary for Transport and Public Works to ensure that their companies won the contract to build and operate the sewage treatment plants in the cross-border zone and on Coloane. Both men have denied any wrongdoing. A court has already convicted Mr Ao of corruption and sentenced him to 29 years and six months in prison.
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August 27, 2013 April 19, 2013
Macau
Retail sales gaining as mainland visitors rise Market unscathed by slowing Chinese economy as value of retail sales jumps 23 pct year-on-year Tony Lai
tony.lai@macaubusinessdaily.com
T
he rising number of mainland tourists to Macau is providing a boost for the city’s retail sales and luxury companies, suggest new government figures. The recent slowing in China’s macroeconomic growth is not so far denting their appetite for spending. Indeed the growing value of the yuan relative to the U.S. dollar-pegged pataca is boosting the purchasing power of mainland visitors. Retail sales in the second quarter rose by 23 percent to 15.7 billion patacas (US$1.96 billion) from a year earlier, the Statistics and Census Service announced yesterday. Quarter-on-quarter the rise was 64 million patacas. Companies such as jewellery retailer Luk Fook Holdings (International) Ltd, have added stores in the city to tap mainland shoppers. “These data reflect [that] the slowing economy in the mainland is yet to have a bigger impact on residents there, as well as on the retail market here,” said Jack Chang Chak Io, vice-president of the Macau Association of Economic Sciences. Some analysts forecast the mainland economy would slow further this year, after some reported deterioration in trade and industrial data in recent months. China’s gross domestic product expansion eased to 7.5 percent yearon-year in the second quarter from 7.7 percent in the previous three months. “The retail market here, mostly driven by tourism, has so far been s u p por t ed by a stead y rise in the number of visitors this year, particularly by mainland Chinese,” Mr Chang told Business Daily. Henry Lei Chun Kwok, an economics professor at the University of Macau, added: “The value of the yuan has appreciated so far this year, so mainlanders may be more willing to spend as they have a higher purchasing power in Macau.”
Gold rush Other government data show the city welcomed 4.3 percent more visitors in the first seven months of this year than in the same period of 2012, bringing the aggregate to July 31 to more than 16.7 million. The mainland tourist component of the total grew even faster at 10.4 percent year-onyear to 10.6 million. The mainland’s currency has risen nearly by 1.1 percent year-onyear against the pataca in the first six months, data from the Monetary Authority of Macau show. Mainland tourist consumption in Macau has been picking up
partly because people trust more in the products sold here, said Mr Lei. “The products sold here have better quality [compared with mainland products] in many mainlanders’ perspective, so they may continue to shop here,” he said. Mr Chang said the fall in gold prices worldwide in April also drove up the sales of jewelleries in the second quarter, which boosted retails sales here. Yesterday’s figures show the sales of watches and jewelleries surged by one-third to 5.5 billion patacas in the April-June period compared with a year earlier. They accounted for 35 percent of total sales in the quarter. But sales of cosmetic and hygienic products, also a favourite among mainland tourists, recorded the highest increase in the three months ended June 30. Sales of such products increased by 44 percent year-on-year to more than 436 million patacas. “The retail market has seen a steady growth in the first half of the year, which is also supported by strong domestic demand,” said Frederick Yip Wing Fat, president of the Macau Association of Retailers and Tourism Services. Mr Yip said the crackdown on lavish spending in the mainland will have little impact on Macau. “I am not too worried (…) as there have been more middle-class tourists coming from the mainland,” he told us. Hong Kong financial firm Oriental Patron Financial Group Ltd had said in December that the mainland’s
If the mainland economy continues to slow down, this will ultimately affect the income of mainland residents and their consuming behaviour, and hence Macau Jack Chang, vice-president, Macau Association of Economic Sciences
growing middle class would continue to fuel Macau’s retail sales, at a faster rate than Hong Kong. The value of retail sales grew 21 percent to 31.5 billion patacas in the first six months of the year. Sales of leather products and adults’ clothing surged by over a quarter year-on-year to over 3.3 billion patacas and 2.8 billion patacas in the first half of this year, yesterday data show. But sales of dried seafood products, however, fell by six percent in the first half to about 120 million patacas. Such items have fallen off the menu since China’s new leadership came to power demanding austerity from Communist Party and military officials as a means of reigning in graft and dampening public anger over corruption.
Cautious optimism Chinese President Xi Jinping announced this year a crackdown on corruption, and urged the political elite to refrain from flashy displays of wealth. Beijing has imposed a “frugal working style” on civil servants, barring them from spending public money on lavish banquets or fancy cars, and from accepting expensive gifts. Nonetheless, Mr Lei said he is “optimistic” about Macau retail sales in the remainder of this year, adding that the second half will have a similar growth as in the first six months. Mr Chang is also bullish on the retail market but he cautions: “If the mainland economy continues to slow down, this will ultimately affect the income of mainland residents and their consuming behaviour, and hence Macau.” But there have been signs of stabilisation in the mainland economy. China’s industrial output, a key indicator, rose 9.7 percent in July from a year earlier, beating the estimates compiled by Bloomberg and Dow Jones of about 8.9 percent to nine percent. The figure was also the highest in five months. The Macau statistic bureau also polled the city’s retailers’ about their prospects for the third quarter, with over two-thirds maintaining a stable outlook. More than 22 percent believe sales could improve while only 9.2 percent expected business to fall.
Retail wage hike beats inflation Employees in the retail sector saw their salaries rise above the rate of inflation in the 12 months to June 30, latest official data suggest. The Statistics and Census Service announced yesterday monthly salaries in the retail industry rose to 11,250 patacas (US$1,406) in the second quarter, 9.1 percent more than a year earlier. The inflation rate in the second quarter 2013 judged year-on-year was 5.13 percent. Yesterday’s data also show the employee turnover rate in the retail industry went down by 2.4 percent points year-on-year to 6.6 percent in the April-June period. The vacancy rate dropped by 4.8 percent points to 10.8 percent. “The outflow of human resources showed improvement but vacancies were still not filled,” the bureau stated. The wholesale and retail sector saw employee numbers swell by 13.8 percent to more than 42,600 in the second quarter compared to the same period a year earlier. T.L.
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August 27, 2013
Macau
Melco International limits Russian casino stake to 5pct Melco regulated in U.S. via its holding in Macau casino operator Melco Crown Entertainment Michael Grimes
michael.grimes@macaubusinessdaily.com
L
awr ence Ho Y au L u n g’s gaming firm Melco International Development Ltd is limiting its direct ownership of a Russian casino scheme to a five percent equity stake. A further 46 percent holding (when added to the Melco stake giving Mr Ho 51 percent and thus control of the Russian project) is to be held by Summit Ascent Holdings Ltd. The latter is another Hong Kong-listed investment vehicle that according to filings on Sunday is controlled by Mr Ho, although his direct stake in Summit Ascent is recorded at 37 percent. In a complex and multi-layered transaction, Melco International and
Summit Ascent will proportionally pay a total of HK$514 million (US$66.3 million) to acquire a Hong Kong firm called Oriental Regent. That in turn will own a casino project in the Primorye region of the Russian Far East. The region shares a border with mainland China and North Korea. The total value of the project is said to be US$130 million according to a Hong Kong filing by Summit Ascent. The first phase of the scheme will have around 119 hotel rooms, 800 slot machines, 25 VIP gaming tables and 40 mass-market gaming tables, according to Summit Ascent. The resort superstructure including
foundations and shell (floors and roof) of the main casino and hotel building has already been constructed, states the filing. The other partners in the project are Firich with 19 percent, and Elegant City with 30 percent. Firich is a wholly owned subsidiary of FEC, a Taiwan-listed maker of electronic gaming machines, multi-player gaming terminals, video lottery terminals and lottery point-of-sale terminals. Elegant City is controlled by Oleg Drozdov, a Russian businessman involved in the construction sector in Primorye – of which Vladivostok is the regional seat – according to Summit Ascent. “Russia currently offers a very
favourable tax environment for gaming business compared to other jurisdictions,” added Summit Ascent in its Hong Kong filing on the deal. It didn’t specify the gaming tax rate applicable to this project. But Business Daily understands that since 2004 each region of the Russian Federation where casino gambling is still permitted is allowed to set its own gambling tax rate within limits set by Federal Law 142-FZ gazetted in August 1998. This law sets taxation rules not at a percentage of gross revenue, but gives guidance on minimum annual rates per table or machine expressed as a multiple of the minimum wage rate. So for example, per live table the annual minimum tax must be 1,200 times the minimum wage rate (it doesn’t specify if hourly, weekly, monthly or yearly). For a gaming machine it must be an annual minimum of 45 times the minimum wage rate. Any taxation rates above that level can be reduced by 20 percent if the venue has more than 30 live gaming tables and more than 40 gaming machines, says the statute. Las Vegas-based Gaming Market Advisors said in a report last year it did not expect gaming tax in Russia to exceed the equivalent of seven percent of the gross, versus Macau’s effective 39 percent gaming tax rate.
U.S. facing Melco International is subject to regulation in Hong Kong via its listing there and in the United States thanks to its 33.7 percent shareholding in Melco Crown Entertainment Ltd. The latter is listed on Nasdaq and regulated by the U.S. Securities and Exchange Commission. The U.S. Department of State said in the March update of its Narcotics Control Strategy Report: “Criminal elements from Russia and neighbouring countries continue to use Russia’s financial system and foreign legal entities to launder money.” The report adds: “Gaming is only allowed in particular regions, with regulation shared across multiple agencies, including the Ministries of Finance and Internal Affairs. Russian gaming regulations are strict, although it is difficult to make broad conclusions about the effectiveness of enforcement beyond a few high profile cases.”
Lawrence Ho – moderating Melco International’s direct exposure to Russian project
Jet Asia seeks to sell six planes Private jet operator owned by Stanley Ho’s family reducing its fleet Vítor Quintã
vitorquinta@macaubusinessdaily.com
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rivate aviation operator Jet Asia Ltd is seeking to sell six airplanes, as the company cuts down on its fleet because it does not get enough charters. “Conditions in the corporate jet market have been largely unsatisfactory and Jet Asia took the decision to sell the six aircraft,” gaming operator SJM Holdings Ltd said in a filing to the Hong Kong Stock Exchange. Jet Asia is owned by Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau (STDM) SA, one of the controlling shareholders of SJM. Jet Asia has recently agreed to sell four of those six airplanes to “an independent party,” SJM said in the
statement. The company is selling these four Hawker mid-sized jets to a United States company, a source told Business Daily last month. The sales of two of these four airplanes “have now completed,” SJM said. Jet Asia has been operating since 1995 and it provides transport mainly for the STDM chairman’s family. When the gaming market was liberalised, in 2002, the company saw what it thought was an opportunity to make money by offering “adequate chartered jet services for the group’s gaming patrons,” SJM said. The cost of a charter ranged from US$20,000 (160,000 patacas) to US$120,000, depending on the
destination, Jet Asia told our sister publication Macau Business two years ago.
But the business has remained far from enough to cover the high fixed costs, the source said last month.
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August 27, 2013
Macau
Galaxy Macau’s Phase 2 due to open in 2015 (Photo: Manuel Cardoso)
Galaxy Macau boosts Hsin Chong’s turnover Hong Kong-listed contractor says revenue here increased almost sixfold in the first half Tony Lai
tony.lai@macaubusinessdaily.com
T
he construction works for the second phase of the Galaxy Macau casino resort have brought over HK$1.15 billion in revenue to Hsin Chong Construction Group Ltd so far this year. The company’s unaudited turnover in the first half surged by 44 percent year-on-year to more than HK$5.7 billion (US$730.8 million),
the Hong Kong-listed contractor said in its latest interim results. But its turnover would only reach HK$4.55 billion, a merely 15-percent rise, if the Galaxy works were not included, the company told the Hong Kong Stock Exchange. Galaxy Macau Phase 2, a project from casino operator Galaxy Entertainment Group Ltd, is due
to open in mid-2015 at a cost of HK$19.6 billion. Hsin Chong’s revenue from Macau surged by almost six fold to HK$1.6 billion in the first half of the year, accounting for 31 percent of the group’s revenue. During the first half of 2013, the company received total new orders of HK$2.4 billion, it said. Hsing Chong has a few big
clients in Macau. Aside from Galaxy Entertainment, founded by Hong Kong building materials tycoon Lui Che Woo, Venetian Macau SA, a subsidiary of gaming operator Sands China Ltd, is also one of the company’s major clients here. “During the reporting period, we provided construction management services to Venetian Resorts and Casino’s Parcel 3 and [we] have started the construction of Galaxy Resort and Casino Phase 2,” the company said in the filing. “Both projects are expected to deliver turnover (…) of over HK$3 billion in coming years,” in addition to the HK$1.15 billion in the six months to June 30, Hsing Chon said in the statement. ‘Parcel 3’ is a reference to a Sands China Ltd plot on Cotai next to the Four Seasons Macao. It will be used by Sands China – chaired by Sheldon Adelson – for a Frenchthemed casino resort with replica Eiffel Tower called The Parisian. The new property is expected to cost US$2.8 billion (22.4 billion patacas) according to statements by senior company executives. Hong Kong-based Hsin Chong also helped build Sands Cotai Central casino resort across the road. It opened in phases starting in April last year. The contractor also has a 500-million-patacas contract to build the long-delayed new campus of University of Saint Joseph in Ilha Verde. It is scheduled to become operational in 2015. Hsin Chong’s profits attributable to shareholders rose by eight percent to HK$80.6 million in the first half of this year, cutting its interim dividend per share by 12 percent to 2.2 cents of Hong Kong dollar.
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August 27, 2013 April 19, 2013
Macau
You have nothing to fear, Philippines tells visitors Travel agents say Macau people need to feel it is safe before they will go there Stephanie Lai*
sw.lai@macaubusinessdaily.com
T
here is no reason to fear travelling to the Philippines, owing to reforms made since the murderous hijacking there in 2010 of a bus loaded with Hong Kong tourists, according to Philippine government spokesman Edwin Lacierda. But Macau travel agencies say the killing in Manila of eight Hong Kong people, shot dead during a bungled attempt to rescue them from an ex-policeman who had taken them hostage, still discourages many potential tourists from holidaying in the Philippines. The Hong Kong Security Bureau reacted to the killings by issuing a warning against travelling to the Philippines which had the effect of stopping all Hong Kong tours to the country. Macau’s Tourism Crisis Management Office warned Macau people against going to the Philippines. The Philippine government hopes Hong Kong will rescind its warning. Mr Lacierda, who speaks for President Benigno Aquino, told reporters from mainland China, Hong Kong and Macau recently: “It’s very unfortunate that we are being compared to Syria.” In view of the civil war in Syria, Hong Kong has issued a warning against travelling there similar to its warning against travelling to the Philippines. Mr Lacierda said of the bus hijack killings: “We’ve expressed very deep regret over the incident and we have done a lot of reforms.”
Not a hot spot These reforms included posting tourist police in the most popular tourist spots to secure “not only Chinese tourists, but all travellers”, he said. “We deployed around 1,300 policemen in 21 major tourist destinations.” The Macau Travel Industry Council and the city’s travel agents say the bus hijack killings are a lasting impediment to the flow of tourists from Macau to the Philippines. New Sintra Tours Ltd branch manager Joe Fong Choi I told Business Daily that Macau people, as neighbours of Hong Kong, immediately felt the same way as Hong Kong people. Ms Fong said the killings “did affect a bit” the number of Macau people going to the Philippines. Philippine Department of Tourism data show that 7,261 Macau people visited the country in 2011, over one-third fewer than the year before. “Frankly speaking, for the past two to three years residents have still had a perception that the country is not a safe place to visit, and that drives them to opt for other travel alternatives,” she said. Macau Travel Industry Council president Andy Wu Keng Kuong told Business Daily that the bus hijack killings were only part of the reason for the aversion to travelling to the Philippines. The Philippines was “not a hot spot” for tourism in the first place, owing to “an overall sense of
Philippines, unlike before the bus hijack killings. But they do arrange flights and hotels. The Philippines faces price competition. Ms Fong said Thailand was one competitor. “The individual travel package of flight tickets and four-star hotel can be 10 to 20 percent cheaper than the Philippines,” she said. She said yet another deterrent to holidaymaking in the Philippines was the time it took to get around the country. “When you’re going to Boracay, say, you have to spend almost two hours on a direct flight to Manila and then take a transfer flight to the island,” Ms Fong said. “And you have to spend again a couple of hours waiting for that transfer. No one really likes to spend so much time on transport when visiting Asian countries,” she said.
insecurity,” Mr Wu said. “Visitors just like to feel safe and comfortable when travelling, and no one can feel at ease when there are frequent security checks everywhere in the Philippines,” he said.
Hours on a plane He said tourism to the Philippines from Macau would not recover unless this “dangerous vibe” dissipated. Mr Wu said tourists from Macau that do go to the Philippines preferred places such as Cebu or Boracay, in the centre of the country. “Manila, on the other hand, is a less common choice,” he said. The cost of going to the Philippines is another deterrent. Travel agents in Macau say they now arrange no package tours to the
Visitor arrivals to the Philippines by country of residence Country/Region
2010 2011 2012 2012H1 2013H1
China
187,446 243,137 250,883 150,749 199,157
Hong Kong
133,746 112,106 118,666 57,790 65,696
Macau
11,221 7,261 9,298 6,005 3,697
Taiwan
142,455 181,738 216,511 114,269 86,076
Region
2005 2006 2007 2008 2009
Macau
1,963 3,120 3,689 8,657 11,380
Source: Department of Tourism, Philippines
Philippine Department of Tourism data show that the number of visitors to the Philippines from Macau peaked at 11,380 in 2009. That was before direct flights between the two places began. In the first half of this year the number was under 3,700, or 38.4 percent fewer than a year earlier. The Philippine government launched last year a worldwide campaign to attract tourists with the slogan, “It’s more fun in the Philippines”. Business Daily asked the Philippine Tourism Promotion Board about the effectiveness of the campaign in Macau, but we had received no reply by the time we went to press. Travel agents here say the campaign has yet to have much effect. “We have been telling the Philippine tourism authority for many years that there should be more aggressive effort put into tourism promotion campaigns,” said Ms Fong. “But so far we have seen no travel coupons or discounts offered for promoting travel to the Philippines, or booths set up at tourism fairs as a matter of course,” she said. * The reporter travelled to the Philippines by invitation of the Philippine Department of Foreign Affairs
We’ve expressed very deep regret over the incident and we have done a lot of reforms Edwin Lacierda, Philippine presidential spokesman on the Manila bus hijack killings
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August 27, 2013 April 19, 2013
Macau Chinese have Philippine fun despite maritime face-off The Philippines aims to attract 3 million mainland Chinese visitors in 2016
T Fewer HK tourists seek Philippine beaches
Manila hoping HK will cancel travel warning But the Hong Kong government says this is not the right time Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he Philippine government hopes the Hong Kong government will rescind its warning against travelling to the Philippines, which was issued after the killing of eight Hong Kong people taken hostage there in 2010, Philippine government spokesman Edwin Lacierda says. Those killed were in a party of Hong Kong tourists aboard a bus hijacked by an ex-policeman in Manila. They were shot dead during a bungled attempt to rescue them. Mr Lacierda, who speaks for President Benigno Aquino, told reporters from mainland China, Hong Kong and Macau recently: “We would hope that at a certain point in our tourism relationship the Hong Kong government will decide to lift the black travel alert.” He said Mr Aquino’s government had “done a lot of reforms, and will continue to do a lot” to make the Philippines safe for tourists. He said “a big investigation” of the botched attempt to rescue the hostages had led to criminal and administrative charges against those thought responsible. Mr Lacierda said the government had circulated a manual on how to manage similar incidents properly. “We’re in touch with the Hong
16.1 %
Drop in Hong Kong tourism to the Philippines in 2011
Kong government, and also its Tourism Industry Council, who are trying to further improve the situation,” he said. He said the council had recommended that every tour bus be fitted with an emergency button that would allow the driver to alert the authorities to trouble. “We’ve done a number of measures to show our sincerity in ensuring the safety of our tourists,” Mr Lacierda said.
Unfortunate comparison On Thursday 22 survivors of the bus hijacking and the mother of one of those killed, the tour guide, began a lawsuit in Hong Kong against the Philippine government. On the same day Hong Kong Secretary for Security Lai Tung Kuok told reporters that this was “not the proper moment” to rescind the warning against travelling to the Philippines. Hong Kong has issued a similar warning against travelling to Syria, in view of the civil war there. Mr Lacierda said: “It’s very unfortunate that we are being compared to Syria, because Hong Kong has also imposed a black travel alert against Syria. And the situation is totally different.” He said that despite the warning against travelling to the Philippines, his country was still getting “a number of Hong Kong tourists – not a small number”. Philippine Department of Tourism data show that 112,106 tourists from Hong Kong visited the Philippines in 2011, 16.1 percent fewer than in 2010, the year of the bus hijack killings. “We certainly do appreciate the presence of Hong Kong tourists, and any tourists are welcome. Based on our recent statistics, one tourist is equivalent to one job in our country,” Mr Lacierda said. The survivors of the bus hijacking are suing the Philippine
government and eight Philippine officials for millions of Hong Kong dollars in compensation. The tour guide’s brother, Tse Che Kin, told reporters that his family would also seek a formal apology.
Deep regret On Friday the plaintiffs went to the Philippine Consulate in Hong Kong to present a petition, but found the consulate closed. The Philippine Department of Foreign Affairs told Business Daily that it had received no official communication about the petition. Mr Lai, the Hong Kong secretary for security, declined to comment on the lawsuit. He said Hong Kong would continue to press the Philippines to answer the demands of the survivors and families of those killed. Mr Lacierda told Business Daily that the Philippine government would make no comment until it knew what was in the lawsuit. A fortnight earlier, he told reporters that the government had “expressed very deep regret over the incident” to the survivors of the hijacking and the families of those killed. President Aquino had sent a delegation led by Tourism Secretary Alberto Lim “to convey our regret to the people of Hong Kong”, Mr Lacierda said. “We also have, through our private organisations, offered to provide some assistance to the families.” He said his government’s response to the bus hijack killings could not be compared with its response to the killing in May of a Taiwan fisherman, who was shot dead by the Philippine Coast Guard. “We never sent a government representative to Taiwan, because we don’t have diplomatic relations with Taiwan. We recognise the importance of maintaining our relations with China,” Mr Lacierda said. “The situation in Taiwan is totally different,” he added.
he Philippines had almost 199,200 visitors from mainland China in the first half of this year, 32.1 percent more than a year earlier, despite the SinoPhilippine dispute over territory in the South China Sea. The Philippine government believes tourism from greater China will grow steadily, according to its Tourism Promotions Board’s North Asia marketing and promotions chief, Gwendolyn Batoon. The spokesman for Philippine President Benigno Aquino, Edwin Lacierda, recently told reporters from mainland China, Hong Kong and Macau: “Our target for 2016, as part of the five-year development plan for economic cooperation, will be 3 million tourists from China. We think it’s going to happen.” The Philippine government launched last year a campaign to attract tourists with the slogan, “It’s more fun in the Philippines”. Ms Batoon told Business Daily: “The ‘It’s more fun in the Philippines’ campaign has boosted visitor arrivals from mainland China.” She said the campaign highlighted places to visit in the Philippines and Filipino hospitality. “The increase from China can be attributed to improved flight access,” she said. “Another reason for the increase in inbound tourism is the China government’s promotion of outbound tourism.” Mr Lacierda said the Shanghai Morning Post had chosen the Philippines as its “most romantic destination” and that the Oriental Morning Post had called it the “best travel destination of 2012”. He said the dispute between China and the Philippines over territory in the South China Sea had not prevented them from “maintaining a very good relationship”. He reiterated the Philippine contention that the International Tribunal for the Law of the Sea should settle the dispute. In the first half of this year China was the fourth-biggest source of visitors to the Philippines after South Korea, the United States and Japan. The Philippines had 2.38 million visitors, 11.1 percent more than a year earlier. “Tourism has grown even during the recent European recession or the earlier Asian economic crisis. Tourism will remain resilient even in difficult times,” said Ms Batoon. S.L.
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Economy shows signs of stabilisation: govt Policy makers confident of meeting economic growth target
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hina’s economy is showing clear signs of stabilisation, helped by policy support and some improvement in global demand, and is on track to meet the government’s 2013 growth target of 7.5 percent, the state statistics bureau said yesterday. The issue of local government debt also remained under control, the National Bureau of Statistics said at a briefing organised by the foreign ministry that may have been aimed at allaying global concern about China’s slowdown. “We are confident that the economy is sustaining the positive momentum in the second half and confident of meeting the economic growth target,” said Sheng Laiyun, the NBS’s spokesman. “The economy is showing some positive changes. Signs of growth stabilisation are becoming more obvious,” he said. A private factory survey last week reinforced signs of stabilising in the economy in the third quarter after the government took supportive measures, including scrapping taxes for small firms and accelerating investment in urban infrastructure and railways. That followed a raft of July data which saw factory output grew at its fastest pace since the start of the year, and surprisingly strong trade data. China’s annual economic growth slowed to 7.5 percent in the second quarter, down from 7.7 percent in the three months ended March 31 – the ninth such deceleration in the past 10 quarters. Beijing has said it is willing tolerate slower growth as it pushes reforms designed to reduce pollution, social inequity and an economic growth model which has an over-reliance on debt-financed construction and exports.
Economic drivers Mr Sheng said it was very difficult for China to maintain a fast growth rate due to structural adjustments and declining surplus labour, but rising consumption, increasing urbanisation and catch-up growth in
Shift towards services to boost job creation
less developed regions will be longterm economic drivers. The government has launched a series of targeted measures recently to support the economy, including scrapping taxes for small firms, offering more help for ailing exporters and accelerating investment in urban infrastructure and railways. But rapidly slowing growth has also been putting pressure on China’s heavily indebted companies and provincial governments, raising concerns that the country’s explosion in credit since 2008 may be on the verge of a meltdown. Credit in China’s economy almost doubled between 2008 and last year, pushing investment to 46 percent of GDP, much of that into infrastructure and property. The China Banking Regulatory Commission has recently begun working with China’s securities regulator to encourage the securitisation of loans to help lenders sell problematic loans and is developing a platform to help banks sell such loans to investors. That follows a move last year to let provincial governments set up their own debt-purchasing companies.
“The central government is attaching great importance to developments in the debt issue,” Mr Sheng said.
Waning job needs Some analysts believe Chinese officials shifting the economy away from exports and investment can allow growth to sink closer to 6 percent within the next five years without triggering a destabilising jump in unemployment. The pace of expansion needed to absorb new entrants to the labour force will slip to 6.4 percent in 2018 from 7.3 percent this year, according to the median forecast in a Bloomberg News survey of 12 economists. China’s declining working-age population and a jump in jobs in labour-intensive service industries such as logistics may help to limit unemployment in coming years. Swelling local-government debt and environmental degradation underscore the case for letting growth settle at a slower pace than the investment- driven 9.3 percent average of the past five years. “We have a shrinking workforce that’s unfavourable for headline
China Minzhong tumbles after short seller report
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ood producer China Minzhong Food Corp Ltd yesterday became the first Singaporelisted Chinese firm to come under attack by a short-seller, which wiped off more than 50 percent of its market value in two hours and triggered a trading halt. Short-sellers have in recent years targeted Chinese companies listed in Hong Kong, Canada and the United States, citing irregularities, but they have so far avoided any of the 143 China-based firms listed on the Singapore Exchange Ltd. China Minzhong, which until yesterday’s share price slump had a market value of around US$520 million, was hit after Californiabased Glaucus Research Group
Minzhong listed in Singapore in 2010
issued a report alleging the company misled investors about sales to its biggest customers. The report also raised questions over the credibility of China Minzhong’s financial performance compared to its peers. Glaucus said
they and their associates have a direct or indirect short position in the company. Travis Seet, China Minzhong’s financial controller, told Reuters the company was taking legal advice on how to respond to the report.
growth but favourable from an employment standpoint,” said Andrew Polk, an economist in Beijing with The Conference Board, a New York-based research group. “As the economy shifts towards services, which are more labour-intensive and less productive, you can have slower growth but still have robust job creation.” Reuters/Bloomberg News
KEY POINTS China on track to meet GDP growth target Signs of growth stabilisation more obvious Local government debt under control – stats bureau Growth can sink closer to 6 pct on waning jobs
He declined to make any further comment and trading was halted pending an announcement from the company. China Minzhong listed in Singapore in 2010 and has attracted several big-name investors, including Singapore sovereign wealth fund GIC which sold its 14.4 percent stake in February to Indofood Sukses Makmur Tbk PT. Analysts said China Minzhong will struggle to recover from its share price plunge regardless of the veracity of the short-seller’s allegations. “Given the huge damage done already, we believe it will be an uphill task (especially without GIC’s backing now) for the company to re-build confidence,” Lim & Tan Securities wrote in a note. Shares in China Minzhong fell 47.8 percent in two hours of trade before the company requested a trading halt. Nearly 24 million shares were traded, almost ten times the average full day volume traded over the past month. Reuters
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Jetstar entry to hurt HK aviation: Cathay About half of Hong Kong’s traffic controlled by Cathay
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athay Pacific Airways Ltd, seeking to bounce back from its lowest profit in at least 15 years, said allowing foreign airlines to share Hong Kong’s traffic rights would damage the city’s economy as a Qantas Airways Ltd venture seeks to start a budget carrier. Cathay will respond to the government within two weeks on an application by Jetstar Hong Kong to operate out of the city, the airline said in an e-mailed statement. The proposal of the new carrier, part owned by Qantas, China Eastern Airlines Corp and Shun Tak Holdings Ltd, was published in the local government gazette. About half of Hong Kong’s traffic is controlled by Cathay and Asia’s biggest international carrier is seeking to defend that dominance while China’s economic growth slows. Jetstar Hong Kong in June sold a 33.3 percent stake to the company founded by gambling tycoon Stanley Ho Hung Sun in a bid to win an operating licence in Hong Kong, where no budget airline has a base. Qantas and China Eastern Airlines hold 33.3 percent each of the proposed carrier. Pansy Ho Chiu King, managing director of Shun Tak and a daughter of Stanley Ho, was appointed chairman of Jetstar Hong Kong last week. “Expecting Cathay to support Jetstar would be like turkeys voting for Christmas,” said Timothy Ross, a Singapore-based analyst at Credit Suisse Group AG. “In such a highly competitive industry as the airline sector, incumbents do their best to eliminate potential competition as
Fast Retailing plans HK listing in 2014
Shun Tak, headed by Pansy Ho, bought a stake in Jetstar in June
early as possible.” Hong Kong’s Transport and Housing Bureau is currently reviewing the regime for designation of local carriers and expects to complete the process “in the next few months,” the authority said in an e-mailed statement yesterday. The Bureau said in June it won’t process any application to start airlines in the city pending the completion of the review. Under the current system, an applicant must seek an air operator’s certificate and an air transport licence as well as the designation as a Hong Kong carrier, according to the Bureau’s statement. Jetstar Hong Kong’s application for the licence was published on the gazette on Friday. “Jetstar Hong Kong is a carrier that is a franchise of and controlled by Jetstar Australia and its parent,
Qantas Airways,” Cathay said. Putting some of Hong Kong’s airtraffic rights “into the hands of a carrier that is controlled by a foreign airline would also be very damaging to the local aviation industry and the Hong Kong economy”. According to Hong Kong’s basic law, the local government has the authority to issue licences to airlines incorporated in Hong Kong and with the city as its principal place of business. “Whilst we don’t take anything for granted, we are confident that Jetstar Hong Kong will meet all requirements including principal place of business,” Jetstar said in an e-mailed statement. “Vast majority of the future direct 600 staff members will be employed locally.” Bloomberg News
Bo prosecutors demand ‘severe punishment’ Trial of former Chinese official accused of corruption ends
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o Xilai deserves severe punishment because he refused to admit guilt on bribery, embezzlement and abuse of power charges, Chinese prosecutors said as the ousted Politburo member’s trial ended yesterday. Mr Bo insisted during his five-day trial that while he made mistakes in his career, he didn’t commit any crimes. He sought to discredit those who testified against him, calling his wife crazy, comparing a former businessman in Dalian to a wild biting dog and saying his former police chief in the city of Chongqing had lied. “The suspect’s crimes are serious, and given that he doesn’t admit to them, he should not be entitled to more lenient punishment in the eyes of the law,” prosecutors said, according to a transcript posted to the microblog of the court in the eastern city of Jinan where the trial took place. “He should be punished more severely in the eyes of the law.” But no foreign media were present in court and no independent verification was possible. The delays in posting the transcripts lengthened as the trial went on, and yesterday’s posting of the prosecutor’s address was taken down within minutes of being published. It was reposted
Prosecutors said no leniency should be shown to Bo Xilai
and taken down again, before being re-published once more with one section deleted. Mr Bo’s spirited defence, hailed in state media as a sign of the trial’s transparency, appears to have been carefully managed, signalling it was part of the Communist Party’s plans for his case, said Steve Tsang, director of the China Policy Institute at the University of Nottingham in England. The court’s release of updates on
the Internet broke with precedent in which sensitive political trials were conducted in secret. “Bo is merely challenging the evidence put up against him,” Mr Tsang said. “He is not challenging the right and legitimacy of the leadership putting him on trial.” Mr Bo, 64, a former commerce minister and party secretary of Chongqing, was accused of bribery, embezzlement and abuse of power in the murder of British businessman Neil Heywood. Prosecutors said yesterday the facts are clear and the evidence is sufficient that Mr Bo is guilty of all charges against him, according to a posting on the court’s microblog. Announcing the end of the trial hours later, the official Xinhua News Agency said the verdict would be announced at a date still to be decided. In his rebuttal yesterday, Mr Bo said the prosecution’s accusations were “forced”. He said he didn’t have the close bond with his wife that prosecutors claimed. Mr Bo rejected a claim by another witness that he paid for family expenses such as plane tickets. “Even the lousiest TV drama scriptwriter wouldn’t create something like this,” he said. AFP
Fast Retailing Co Ltd, Asia’s largest clothing retailer, plans to list in Hong Kong early next year, said three people with knowledge of the matter. Fast Retailing, the Japan-based company that operates Uniqlo brand stores, plans to submit a filing with the city’s bourse as early as next month for issuing Hong Kong depositary receipts, one of the people said, asking not to be identified because the process is private. The company won’t raise any money as part of the listing, the people said. Led by billionaire Tadashi Yanai, Fast Retailing is seeking to widen its investor base as it expands abroad, the people said. The company plans to add about 100 stores a year over the next decade in China to increase outlets in Asia’s largest economy to 3,000. As of February, Fast Retailing had 182 Uniqlo stores in mainland China and 16 in Hong Kong, according to its website. Besides Tokyo, the company is traded in Germany and the U.S. Fast Retailing’s American depositary receipts have advanced 27 percent this year, trailing the 45 percent rally in the Tokyo- traded stock that took its market value to 3.4 trillion yen (US$35 billion). Fast Retailing would become the third Japanese company to list in Hong Kong, following SBI Holdings Inc and Dynam Japan Holdings Co, data compiled by Bloomberg show.
Geely targets U.S. exports Geely Automobile Holdings Ltd, whose parent owns Volvo Cars, said it plans to start exporting cars that it develops with the Swedish brand to the U.S. in 2016, a decade after founder Li Shufu first set the goal. The Chinese automaker is banking on Volvo’s reputation for safety and reliability to help it compete in developed markets, after a previous attempt to break into the U.S. failed because of a lack in consumer recognition and confidence. Geely first took part in the Detroit motor show in 2006. “Our acquisition of Volvo enhanced our image and overseas consumers are seeing us as an international company,” Gui Shengyue, chief executive of Geely, said in an interview. “Our deliveries in U.S. and Europe will be banking on those jointly developed models,” he told Bloomberg. Chairman Li had previously kept the Geely and Volvo brands separate on concerns that an association with a Chinese marque would diminish the Swedish automaker’s image. The joint models may help burnish Geely’s image as the Chinese carmaker seeks to become the country’s largest auto exporter. The automaker said last week that it may become China’s biggest vehicle exporter this year with as many as 180,000 units in overseas shipments. Geely sold 100,800 vehicles abroad last year, lagging behind top-ranked Chery Automobile Co’s 184,800 units, according to the China Association of Automobile Manufacturers.
Beijing probes VP of CNPC Wang Yongchun, vice president of China’s biggest oil company, the China National Petroleum Corp, has been put under formal investigation for “severe breaches of discipline”, the government said yesterday. China’s Ministry of Supervision made the announcement in a notice posted on its official website. It did not specify the alleged breaches. Neither Mr Wang nor a company spokesman could be immediately reached for comment. CNPC is the parent of PetroChina Co Ltd, China’s largest oil and gas producer. Mr Wang also serves as the head of China’s largest oilfield at Daqing in the northeast. Mr Wang had been regarded as a potential candidate to replace CNPC’s former chairman, Jiang Jiemin, who was appointed as chairman of the StateOwned Assets Supervision and Administration Commission earlier this year. The job went to Zhou Jiping in April.
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India’s ONGC takes Africa gasfield stake Anadarko sells 10 pct of offshore field in Mozambique
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NGC Videsh Ltd, a unit of India’s biggest energy explorer, will probably raise debt overseas to fund its entire US$2.64 billion purchase of a 10 percent stake in a Mozambique gas field from Anadarko Petroleum Corp. “It’s a project where earnings will be in dollars, spending in dollars and hence we want the liabilities to be in dollars as well,” ONGC Videsh Managing Director D.K. Sarraf said in an interview. “The impact of the dollar funding could help avoid the impact of a fluctuating rupee.”
ONGC is leading India’s push to get access to oil and natural gas reserves around the world with US$6.14 billion of deals this year as a growing population and industrialisation drives up energy demand in Asia’s third-biggest economy. Funding the acquisition with overseas debt will help ONGC skirt the effect of a sinking rupee, which has dropped 14.17 percent this year, the worst decline among its Asian peers. The acquisition, subject to approvals in Mozambique and India,
will add to Oil & Natural Gas Corp’s interest in Rovuma Area 1, after it joined with Oil India Ltd in June to buy a 10 percent stake for US$2.5 billion from Videocon Industries Ltd. State-run Bharat Petroleum Corp owns 10 percent stake in the field, taking Indian ownership to 30 percent, the biggest group. “The valuation is fair and there’s synergy as the Indian group will control a large part of the field and can bring some of the gas back home,” said Gagan Dixit, a Mumbai-based analyst with Quant Broking Pvt, who has a buy rating on ONGC. “India could become Mozambique’s biggest market for its gas.”
India’s energy security.” The Rovuma Area 1 has the potential to become one of the world’s largest LNG projects, ONGC said in the statement. At a planned capacity of 20 million tons annually, the Mozambique project could be the world’s largest LNG export site after Ras Laffan in Qatar, where Exxon Mobil Corp is a partner. Anadarko, which will remain the operator of Area 1 with a 26.5 percent stake, said the deal “values our pre-transaction interest at more than US$9.6 billion,” according to a separate statement from The Woodlands, Texas, based company. The company will use cash from the sale to boost development at its U.S. onshore projects as well as the Gulf of Mexico, according to the statement. Anadarko and Eni SpA have been leading efforts to convert gas from the Indian Ocean fields in Mozambique to liquid and transport it to nations including India via tankers. Liquefied natural gas plants need billions of dollars in investment to chill the gas to a liquid and ship it using tankers. Bloomberg News
Energy security
India relies heavily on imports to meet the growing domestic demand for fuel
The field will supply gas to a liquefaction plant that “is strategically located to supply LNG to India at a competitive price,” ONGC said yesterday in statement. The New Delhi-based company and its units plan to spend 11 trillion rupees (US$171 billion) by 2030 to add reserves in India and overseas and reverse a drop in output from aging fields at home. “The acquisition is strategic because it give us access to a lot of LNG which can be brought to India,” Mr Sarraf said. “It’s a big step toward
Bank Mandiri says Singapore a ‘small opportunity’ Indonesia’s largest bank says domestic market more attractive Sanat Vallikappen
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udi Gunadi Sadikin, the head of Indonesia’s largest bank, said his home market is more attractive than Singapore less than a month after Indonesian efforts to get access to the city state scuttled what would have been Southeast Asia’s biggest banking takeover. “It is more important for the Singaporean banks to get into Indonesia” rather than the other way round, said Mr Sadikin, president d i rect or of PT Ban k Mandiri, referring to his country’s under-
It is more important for the Singaporean banks to get into Indonesia Budi Gunadi Sadikin, PT Bank Mandiri
penetrated banking sector and Singapore’s smaller economy and population. “Singapore to us is a small opportunity,” he said in an interview. Indonesia’s central bank has been seeking reciprocity in Singapore for the nation’s biggest banks, including Mandiri, the largest by assets. At the same time, Indonesia last year imposed foreign ownership limits that prompted Singapore’s DBS Group Holdings Ltd to drop its 66.4 trillion rupiah (US$6 billion) acquisition of PT Bank Danamon Indonesia. If the Monetary Authority of Singapore showed a “positive gesture” in granting greater access to Indonesian banks, “then the transaction would have gone smoothly,” Mr Sadikin said. He said he would still be “very happy” for Jakarta-based Bank Mandiri to receive a full banking licence in Singapore. “I won’t open 25 branches in one year. But at least I have the flexibility.”
the latest company filings. Indonesian banks with a market value of at least US$5 billion boast an average margin of 6.55 percent. Indonesia’s economy may expand between 5.8 percent and 5.9 percent in 2013, Finance Minister Chatib Basri said on Friday. The Singapore government estimates growth will range from 2.5 percent to 3.5 percent this year.
US$2.64 bln
ONGC will pay for a stake in a Mozambique gas field
Still, Indonesia hasn’t been immune to capital flight from emerging markets on speculation that the U.S. will start tapering its bond-buying stimulus programme. The Indonesian rupiah fell to the lowest level in more than four years against the dollar yesterday. Indonesia needs to address its current-account deficit and reduce inflation, Mr Sadikin said. Southeast Asia’s largest economy posted a record current-account shortfall of US$9.8 billion in the second quarter. The central bank raised benchmark interest rates in June and July to combat inflation at a four-year high. “What we’re doing now is readjustment to the new realities, the new fundamentals of our economy,” Mr Sadikin said in a separate Bloomberg Television interview with Haslinda Amin. “Yes, there will be a short period of shocks, up and down, but the fundamentals will prevail.”
Loan profitability The average net interest margin, a measure of lending profitability, for Singapore banks is 1.8 percent, the lowest in Southeast Asia, according to data compiled by Bloomberg from
Central bank raised interest rates in June and July
Bloomberg News
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Australia PM backs high-speed rail project
Japan may dip into reserves to fight toxic water Japan may use emergency reserve funds from this year’s budget to help Tokyo Electric Power Co Inc, the operator of the crippled Fukushima nuclear plant, deal with escalating radioactive water problems at the site. Tepco acknowledged last week that hundreds of tonnes of highly radioactive water had leaked from a tank, one of around 350 assembled quickly after the 2011 earthquake and tsunami that triggered nuclear meltdowns at the site. Tepco also said last month – after repeated denials – that the Fukushima plant was leaking contaminated water into the Pacific Ocean from trenches between the reactor buildings and the shoreline. “It’s deplorable,” chief cabinet secretary Yoshihide Suga told a news conference yesterday. “It is necessary for the country to step forward and offer support to solve the problem as well as prevent a recurrence.” Mr Suga said trade and industry minister Toshimitsu Motegi had been instructed to come up with measures, including the possible use of reserve funds from the state budget for the year ending March 2014. Japan put aside a total of 350 billion yen (US$3.55 billion) in reserves for natural disasters and other emergencies in the budget.
Vietnam’s trade slips back into deficit Vietnam, which reported trade surpluses in June and July, had a US$300 million deficit in August, a state-run newspaper said yesterday. The deficit for the first eight months of this year is US$600 million, compared with US$400 million in the same period a year earlier, the Vietnam Economic Times newspaper said, citing Planning and Investment Ministry data. According to the data, January-August exports rose 14.7 percent from a year earlier to US$84.8 billion, while imports for those eight months were up 14.9 percent to US$85.billion. The government is expected to release details of Vietnam’s exports and imports later this week. In 2012, Vietnam had its first annual trade surplus in two decades, which economists attributed mainly to weak imports as the slowing economy hit consumer demand. This year, trade has swung between deficit and surplus. There were deficits in February through May – the biggest being April’s US$937 million – and then there were surpluses of US$286 million in June and US$379 million in July. In July, the Industry and Trade Ministry slashed its projection for the 2013 trade deficit to between US$3 billion and US$4 billion, from more than US$9 billion.
Axiata planning IPO of towers Axiata Group Bhd, Malaysia’s largest mobilephone operator by market value, plans to raise at least US$500 million in an initial public offering of its telecommunications tower assets, said two people with knowledge of the matter. Axiata is working with CIMB Group Holdings Bhd, Goldman Sachs Group Inc and JPMorgan Chase & Co on the IPO, which may take place next year in Kuala Lumpur, said the people, who asked not to be identified as the process is private. Kuala Lumpur-based Axiata is evaluating a bid for PT Axis Telekom Indonesia as competition for cell-phone subscribers in that country intensifies, people familiar with the matter said in May. The company last year cancelled a plan to sell 7,000 telecom towers in Indonesia, citing a lack of interest. Malaysia hasn’t hosted an IPO of more than US$500 million since Astro Malaysia Holdings Bhd raised US$1.5 billion in October last year, data compiled by Bloomberg show. The group plans to spin off its tower assets in seven countries into a single entity with a market value of 8 billion ringgit to 10 billion ringgit, Focus Malaysia newspaper reported in February.
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The sale of ING’s South Korean unit leaves the bailed-out Dutch firm with its Japan insurance unit left to sell, bringing it closer to fulfilling its agreement with European regulators to offload more than 50 percent of its Asian operations by the end of 2013. ING’s Japanese insurance unit stopped selling variable annuities in 2009 and it was unclear when ING would reach an agreement on its sale. The Japanese financial regulator is reluctant to let a private equity firm own that business, sources previously reported. Since its rescue in 2008, ING has dismantled its once-fashionable banking and insurance model and announced thousands of job cuts and other cost savings. ING has raised about 23 billion euros (US$31 billion) in total from divesting insurance, investment management and other assets to repay state aid.
ustralia’s Labor government yesterday pledged to press on with plans for a high-speed rail network linking major east coast cities, saying it would diversify the economy as the mining boom slows. Prime Minister Kevin Rudd, battling a strong candidate in conservative opposition leader Tony Abbott in September 7 national polls, has committed to focusing on jobs in the last fortnight of the campaign. To achieve this, he said, good infrastructure was vital. “If we do not have world-class infrastructure there is no future for the Australian economy. It’s as basic as that,” he told journalists in Sydney. “This vast continent of ours has 23 million people on it – unless you’ve got the infrastructure pumping, well frankly it’s not going to work.” The government allocated A$52 million (US$47 million) to a new authority to oversee the rail project which would stretch down the east coast from Brisbane to Melbourne via Sydney and Canberra. A government study in April showed the entire project would cost US$120 billion and take more than 40 years to complete Transport Minister Anthony Albanese said as a first step the government would enact legislation this year, if re-elected, to preserve the 1,748 kilometre corridor on which the track would be laid. “This high-speed rail network, connecting our three largest cities and the national capital, forms part of federal Labor’s plan to support jobs beyond the China mining boom,” Mr Albanese and Mr Rudd said in a joint statement. Proponents believe high-speed rail has the potential to be a productivity, lifestyle and environmental gamechanger in continent-sized Australia, allowing travellers to transit from Sydney to Melbourne in less than three hours.
Reuters
AFP
ING gives major step in divestment strategy
MBK buys ING’s Korean life insurance unit Agreement brings to end 17-month-old sale process
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NG Greop NV has agreed to sell its South Korean insurance unit to private equity firm MBK Partners for total cash proceeds of about 1.84 trillion won (US$1.65 billion), the Dutch financial services firm said in a statement yesterday. The agreement to sell the South Korean unit marks another step in ING’s 1-1/2-year-old Asian divestment process. Last year, the bailed-out Dutch insurer sold its Hong Kong, Macau and Southeast Asian insurance units for a combined value of US$3.87 billion. Under the agreement, ING will hold an indirect 10 percent stake in ING Life Korea for about 120 billion Korean won (US$107 million). By retaining a minority stake, ING will be able to ensure a smooth transition of the business into the hands of the private equity firm. The deal will give MBK the right to use ING’s brand name for the next five years. MBK is seeking an up-to 1 trillion won syndicated loan to fund the acquisition, Basis Point reported last week. “This transaction is a major step in the divestment of our Asian insurance and investment management activities,” Jan Hommen, chief executive of ING, said in the statement. “Together with the scheduled payment of the next tranche of the core Tier 1 securities to the Dutch State in November 2013, this will bring us further into the end phase of the restructuring of our company.” The deal marks South Korea’s largest insurance M&A deal, surpassing the US$1 billion purchase of a 24 percent stake in Kyobo Life Insurance Co last year by a consortium led by private equity firm Affinity Equity. MBK recently entered exclusive talks for the controlling stake after the insurance unit attracted a total of four bids in May, including from Tong Yang Life Insurance Co Ltd, Hanwha Life Insurance Co Ltd and Kyobo Life Insurance Co Ltd, sources previously told Reuters. But the sale of the South Korean unit had never been a smooth process. In December last year, KB Financial Group Inc walked away from a US$2.1 billion bid to buy the unit. In June, a Tong Yang-Vogo Fund consortium also dropped out after entering exclusive talks to buy the unit, South Korean media reported.
Japan sales-tax decision in early October: Amari
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apanese Prime Minister Shinzo Abe will make a decision on a sales-tax increase by early October, before a gathering of AsiaPacific leaders in Indonesia, according to Economy Minister Akira Amari. Mr Abe will decide “at the latest” before a summit of leaders from the Asia-Pacific Economic Cooperation forum, which starts in Indonesia on October 7, Mr Amari said on NHK television. Expert panels comprising business leaders, academics and policy makers are set to begin meetings today to consider if Japan’s economy is strong enough to withstand an increase in the tax. Gross domestic product grew an annualised 2.6 percent in the second quarter from the previous period, a result which Finance Minister Taro Aso said supported the case for an increase.
Mr Amari said last week that there is a good balance of views on the panels, which will include Mr Abe advisers Etsuro Honda and Koichi Hamada, who are cautious about increasing the levy. The sales tax is set to rise to 8 percent in April from 5 percent now, an increase that the prime minister can postpone or cancel should he determine the economy can’t bear the impact. Mr Abe will take into account the views of the expert panels and revised GDP data for the second quarter, due September 9. The Bank of Japan will release a third-quarter Tankan survey of business sentiment on October 1, and Mr Abe may also consider those figures, Mr Amari said. A poll published yesterday by the Nikkei newspaper showed 17 percent of respondents support increasing the tax as planned, while 55 percent said that while it should be raised, the government should be flexible on the timing and size of the increase. 24 percent of those surveyed opposed the measure. The survey was based on 895 responses from 1,476 households contacted, and gave no margin for error. Reuters
12 12
August 27, 2013 April 19, 2013
Asia
Emerging market turmoil not currency crisis: analysts Policy management key as governments ‘better equipped’ Aurélia End
P
lunging emerging market currencies on the prospect of U.S. stimulus tapering have stirred memories of the 1997 Asian financial crisis, but analysts doubt a similar catastrophe is in the making. “There are negative linkages [now] but I don’t think that we are in a repetition of the 1990s crisis,” said Jean Medecin, a member of the investment committee at the Carmignac Gestion SA asset manager. While the Indian rupee has so far taken the worst beating, falling nearly 15 percent against the U.S. dollar over the past three months, Indonesia’s rupiah and the Brazilian real are down 10 percent, and the Turkish lira over 5 percent in a trend that is frightfully reminiscent of the crisis that began in Thailand in mid-1997. Back then, investors reacted by panicking, withdrawing funds en masse, resulting in the Thai bath eventually collapsing. The phenomenon then spread like a wildfire throughout Asia, and even to Russia, with foreign capital vanishing almost with the blink of an eye. Short of capital, emerging countries suffered acute shortages of credit, plunging them even deeper into the crisis. Fifteen years on, India’s Prime Minister Manmohan Singh last week said emerging countries are now much better equipped. In 1991, India had only 15 days worth of foreign exchange reserves, he said. “Now we have reserves of six to seven months. So there is no comparison. And no question of going back to the 1991 crisis,” Mr Singh said.
‘Not destructive’ Last week, Nobel prize winning economist Paul Krugman wrote on his New York Times blog that in retrospect, the flood of money into emerging markets looks like a bubble.
But Mr Krugman said “for the moment, I don’t see a good reason to believe that the bursting of this particular bubble will be catastrophic”. Standard & Poor’s rating agency agreed. In a report it called the capital outflows “disruptive not destructive”, and said most Asian developing nations will “weather the disruption without a sharp slowdown in economic growth or prolonged financial volatility”. Mr Krugman said “what made the Asian crisis of 1997-8 so bad was the high level of foreign-currency denominated debt, and that seems less of an issue now”. The Economist’s Ryan Avent wrote on his blog that a bigger concern are potential policy errors on behalf of governments and central banks as they try to stem the slide of their currencies. “Recklessly imposed capital controls could fuel panic and impair long-run growth,” he said.
India’s central bank has tried to stabilise the rupee for months with measures like hiking shortterm interest rates and imposing capital controls. “Worse still, central banks may strangle their economies with high rates in an attempt to protect their currencies’ values,” Mr Avent said. Thus the end of U.S. monetary stimulus “risks squeezing demand around the world” when its purpose was to prop it up in rich countries. Ratings agency Fitch believes that “policy management will be the key factor in determining whether economic and financial stability is maintained in India and Indonesia following the intensified pressure on currencies and asset prices”. Recent developments have not prompted it to revise ratings, it added. So far, however, central banks seem to prefer hiking short-term rates rather than their main rates, which would slow investment, consumption and growth. Turkey took that tack last week, hiking its overnight rate and shutting off other short-term rates to deter speculation against the lira, while keeping its main rate on hold.
Smartest move
KEY POINTS Flood of money looking like a bubble – Krugman Emerging economies faced with structural problems Central banks prefer hiking short-term rates Potential policy errors bigger concern
However, the current situation is “a painful adjustment phenomenon” for emerging nations, said strategist Maarten-Jan Bakkum at Dutch bank ING IM. “After years of rising currencies, emerging economies are now faced with structural problems. In the absence of remedies to cure the problem, they have corrected this through exchange rates,” he said. Simon Derrick, chief currency strategist at BNY Mellon said that “letting the currency take the strain might be the smartest move for some emerging market nations”. He noted that in 2008, when emerging markets last tried to stop
the outflow of funds, they failed despite spending up to 20 percent of their foreign currency reserves. Mr Derrick suggested that central bank forex intervention during a time when easy money poured in only gave investors an artificially cheap exchange rate to enter the markets. “It also provides an artificially advantageous price at which to leave now.” Still, several countries have moved to defend their currencies. Brazil, which had led emerging market complaints that Western stimulus measures had resulted in the appreciation of their currencies and eroded its competitiveness, turned around, saying it would make US$55 billion available to prop up the real. Turkey pledged to inject a minimum of US$100 million per day, while India announced it would put US$1.26 billion into the banking system by buying back long-term government bonds, although it said the move was aimed at making more credit available to boost economic growth rather than defending the rupee. The investment outflow poses immediate risks for Turkey and India as they rely heavily on shortterm foreign funds to cover their large current account deficits (6.5 percent of GDP for Turkey and 4.8 percent for India). However tapering concerns is only half the story according to analyst Michael Hewson at CMC Markets. “…the growth slowdowns being experienced in those markets have forced investors to look more carefully at the structural problems that are facing those particular economies, with India and Brazil in particular in the firing line, as growth slows and inflation rises,” he said. AFP
Govts must be able to control capital flows Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows. These findings were presented at the Kansas City Federal Reserve’s monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks. The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences. “Macroprudential policies are necessary to restore monetary policy independence for the non-central countries,” wrote Helene Rey, professor at the London Business School. “They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered.” That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control. “Independent monetary policies are possible if – and only if – the capital account is managed, directly or indirectly, via macroprudential policies,” Ms Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.
13 13
August 27, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 71.0
45.6
22.6
45.4
22.5 70.5
45.2
22.4
45.0
Max 45.55
average 45.304
Min 44.9
44.8
Last 44.45
22.3 Max 70.95
average 70.627
Min 70
70.0
Last 70.45
Max 22.6
average 22.4
Min 22.25
Last 22.3
19.7
43.90
22.2
43.76
22.0
43.62
19.6
43.48
21.8 21.6
43.34 Max 43.85
average 43.537
Min 43.2
Last 43.45
43.20
Max 19.7
average 19.637
Commodities PRICE
WTI CRUDE FUTURE Oct13
DAY %
106.41
YTD %
-0.00939673
(H) 52W
Last 19.68
(L) 52W
13.68589744
107.9499969
86.04000092
BRENT CRUDE FUTR Oct13
110.77
-0.24315562
4.76685898
113.6100006
96.37999725
GASOLINE RBOB FUT Sep13
300.09
-0.209497207
9.605902334
309.1700077
260.2499962
GAS OIL FUT (ICE) Oct13
941.5
-0.159066808
3.889655172
975.75
835.5
NATURAL GAS FUTR Sep13
3.543
1.664275466
-1.528627015
4.517000198
3.128999949
308.74
-0.245557351
3.136796392
319.1699982
275.5500078
Gold Spot $/Oz
1394.17
-0.2547
-16.2389
1796.08
1180.57
Silver Spot $/Oz
24.0088
-0.2439
-20.263
35.365
18.2208
Platinum Spot $/Oz
NY Harb ULSD Fut Sep13 METALS
Min 19.56
1532.38
-0.5678
0.9639
1742.8
1294.18
Palladium Spot $/Oz
753.5
0.2862
7.6952
786.5
587.4
LME ALUMINUM 3MO ($)
1893
0.477707006
-8.683068017
2200.199951
1758
LME COPPER 3MO ($)
COUNTRY MAJOR
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
ASIA PACIFIC
CROSSES
7360
0.546448087
-7.19959652
8422
6602
1986.5
0.633232016
-4.495192308
2230
1809.75
14525
0.658350658
-14.85932005
18920
13205
15.675
0.609756098
1.686668829
16.65000153
14.77000046
487.25
3.670212766
-18.75781576
665
445.75
WHEAT FUTURE(CBT) Dec13
657.75
1.818885449
-19.85988425
913
635.5
SOYBEAN FUTURE Nov13
1381.75
4.047439759
6.064095183
1409.75
1162.5
COFFEE 'C' FUTURE Dec13
117.05
0
-25.18376478
200
116.3499985
NAME
15.92999935
ARISTOCRAT LEISU
74.34999847
CROWN LTD
LME ZINC
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13 CORN FUTURE
Dec13
SUGAR #11 (WORLD) Oct13
16.47
COTTON NO.2 FUTR Dec13
1.167076167
84.78
0.832540438
-17.89631107
21.82999992
7.670815342
93.72000122
World Stock Markets - Indices NAME
19.5
Max 21.15
average 21.902
Min 21.55
Last 21.9
21.4
Currency Exchange Rates
NAME ENERGY
22.2
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15010.51
0.3125556
14.54785
15658.42969
12471.49
NASDAQ COMPOSITE INDEX
US
3657.792
0.5244995
21.13845
3694.188
2810.8
FTSE 100 INDEX
GB
6492.1
0.7015808
10.07645
6875.62
5605.589844
DAX INDEX
GE
8391.87
-0.298444
10.23962
8557.86
6871
NIKKEI 225
JN
13636.28
-0.1776649
31.17888
15942.6
8488.14
HANG SENG INDEX
HK
22005.32
0.648615
-2.875941
23944.74
19076.78906
CSI 300 INDEX
CH
2335.616
2.128925
-7.425268
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
7894.97
0.2751067
2.538739
8439.15
7050.05
KOSPI INDEX
SK
1887.86
0.9464431
-5.467567
2042.48
1770.53
S&P/ASX 200 INDEX
AU
5135.403
0.235041
10.46371
5249.6
4261.2
JAKARTA COMPOSITE INDEX
ID
4135.953
-0.8123598
-4.186866
5251.296
3978.078
FTSE Bursa Malaysia KLCI
MA
1725.39
0.2510066
2.157557
1826.22
1590.67
NZX ALL INDEX
NZ
967.883
0.3857228
9.73071
998.487
PHILIPPINES ALL SHARE IX
PH
3761.62
0.1317656
1.693444
4571.4
DAY %
YTD %
(H) 52W
(L) 52W
0.9031 1.5576 0.9237 1.3368 98.49 7.988 7.7554 6.1207 64.21 31.97 1.2797 29.971 44.24 10848 88.95 1.23479 0.85825 8.1812 10.6784 131.66 1.03
0.0111 0.045 -0.1624 -0.1121 0.2335 -0.0063 -0.0077 0.0212 -1.3355 -0.3754 -0.0625 0.0801 -0.0904 1.9358 0.1832 -0.1271 0.1398 -0.1296 -0.0843 0.3342 0
-12.9794 -3.7092 -0.8986 1.3495 -12.58 -0.0601 -0.0619 1.7955 -14.3513 -4.3478 -4.5558 -3.1297 -7.3124 -9.7253 0.4238 -2.2117 -4.9904 0.4437 -1.386 -13.7399 -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 11168 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
4.59
2.227171
45.71428
4.63
2.49
VOLUME CRNCY 2053832
14.68
2.37099
37.582
15.09
8.9
3948347
AMAX HOLDINGS LT
1.03
0.9803922
-26.42857
1.72
0.75
1132650
BOC HONG KONG HO
24.45
0
1.452281
28
22.85
4320467 24000
CENTURY LEGEND
0.38
8.571429
43.39623
0.42
0.22
CHEUK NANG HLDGS
6.23
-0.4792332
4.006682
6.74
3.09
94000
CHINA OVERSEAS
23.4
1.872007
1.2987
25.6
17.28
12659426
CHINESE ESTATES
15.94
-0.9937888
41.74498
16.98
7.996
45000
CHOW TAI FOOK JE
10.16
0.3952569
-18.32797
13.4
7.44
1637200 680000
EMPEROR ENTERTAI
2.7
-2.173913
42.85714
3.07
1.38
2.33
-0.4273504
92.24008
2.76
1.053
844000
GALAXY ENTERTAIN
45.45
2.480271
49.75288
45.6
20.45
11175215
HANG SENG BK
FUTURE BRIGHT
122.4
1.073493
3.117105
132.8
109
724177
HOPEWELL HLDGS
24.6
2.5
-26.01504
35.3
23.2
1802364
HSBC HLDGS PLC
84.1
0.4778973
3.444031
90.7
65.85
4759772
HUTCHISON TELE H
3.38
-3.082437
-5.056178
4.66
2.98
5033000
LUK FOOK HLDGS I
24.75
2.061856
1.434428
30.05
16.88
893000
MELCO INTL DEVEL
17.44
0.4608295
93.5627
18.18
5.91
2116485
MGM CHINA HOLDIN
22.3
-0.4464286
67.94345
23.65
11.346
1283600
MIDLAND HOLDINGS
2.98
-2.614379
-19.45946
5
2.68
3728000
NEPTUNE GROUP
0.169
-1.169591
11.18421
0.23
0.131
7370000
NEW WORLD DEV
11.18
0
-6.988356
15.12
9.38
10334638
SANDS CHINA LTD
7170082
43.45
-0.4581901
27.98232
45.5
26.05
SHUN HO RESOURCE
1.86
0.5405405
32.85715
1.9
1.06
216000
799.651
SHUN TAK HOLDING
3.98
-0.7481297
-5.011934
4.65
2.76
5707000
3411.69
SJM HOLDINGS LTD
19.68
-0.1015228
10.88787
22.382
15.401
4195000
SMARTONE TELECOM
10.98
1.291513
-22.01705
17.36
10.82
582165
21.9
1.62413
4.534602
26.5
16.92
5084143
HSBC Dragon 300 Index Singapor
SI
585.77
0.34
-5.69
NA
NA
STOCK EXCH OF THAI INDEX
TH
1341.47
0.2496021
-3.625188
1649.77
1207.53
HO CHI MINH STOCK INDEX
VN
490.54
0.7641428
18.56525
533.15
372.39
Laos Composite Index
LO
1362.31
1.439336
12.14551
1455.82
1003.17
WYNN MACAU LTD 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
57
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.
PRICE
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
18
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
2
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
34.4
-0.2898551
12303860
ALUMINUM CORP-H
2.63
-0.3787879
4970000
BANK OF CHINA-H
3.34
0.9063444
191665460
BANK OF COMMUN-H
5.28
0.9560229
19597491
30.85
1.313629
1401040
11
5.566219
40670620
BANK EAST ASIA BELLE INTERNATIO
NAME CHINA UNICOM HON CITIC PACIFIC
PRICE
DAY %
VOLUME
NAME
PRICE
11.72
-0.5093379
17230897
68.1
1.490313
1674072
9.09
1.337793
6944261
SANDS CHINA LTD
43.45
-0.4581901
7170082
3616611
SINO LAND CO
10.44
1.359223
6249399
SUN HUNG KAI PRO
100.4
0.2997003
2004984
90.3
0.78125
831753
356.8
0.2810568
2129462
POWER ASSETS HOL
DAY %
VOLUME
CLP HLDGS LTD
61.75 -0.08090615
CNOOC LTD
15.64
0.128041
70628570
11.3
-0.3527337
1588933
SWIRE PACIFIC-A
13.54
0.147929
3054450
TENCENT HOLDINGS TINGYI HLDG CO
19.12
4.026115
6646000
WANT WANT CHINA
10.42
0.7736944
9405350
66.6
1.601831
3155453
COSCO PAC LTD ESPRIT HLDGS
BOC HONG KONG HO
24.45
0
4320467
HANG LUNG PROPER
24.85
0.2016129
2051519
CATHAY PAC AIR
13.98
-0.2853067
1657715
HANG SENG BK
122.4
1.073493
724177
CHEUNG KONG
HENDERSON LAND D
47.1
-0.6329114
3644912
HENGAN INTL
84.8
-0.2352941
935986
HONG KG CHINA GS
18.48
-0.5382131
14534541
HONG KONG EXCHNG
123.6
0.9803922
1627740
84.1
0.4778973
4759772
108.9
0
2455938
CHINA COAL ENE-H
4.96
0.6085193
74628399
CHINA CONST BA-H
5.83
0.6908463
169309014
CHINA LIFE INS-H
19.7
2.284528
27739433
CHINA MERCHANT
23.95
1.914894
2801611
CHINA MOBILE
82.9
-0.3006615
14263461
HUTCHISON WHAMPO
91.2
1.389661
5314016
CHINA OVERSEAS
23.4
1.872007
12659426
IND & COMM BK-H
5.19
0.9727626
141191935
CHINA PETROLEU-H
5.83
1.923077
102451923
11.92
0.8460237
15510772
CHINA RES ENTERP
22.9
0.2188184
2606500
MTR CORP
28.55
0.528169
1277961
CHINA RES LAND
21.7
-2.690583
11792927
NEW WORLD DEV
11.18
0
10334638
CHINA RES POWER
17.72
-0.4494382
3565517
PETROCHINA CO-H
8.65
1.764706
88344106
CHINA SHENHUA-H
25.35
3.680982
30721479
PING AN INSURA-H
54.35
2.161654
10517207
HSBC HLDGS PLC
LI & FUNG LTD
WHARF HLDG
MOVERS
34
13
3 22110
INDEX 22005.32 HIGH
22100.97
LOW
21538.19
52W (H) 23944.74 (L) 19076.78906
21529
22-August
26-August
14 14
August 27, 2013 April 19, 2013
Classifieds Mountain Villa For Sale in Koh-Samui Price: HK$ 16 million
3 x King Bed en-Suites, 1 x King Bed basement Suite, 2 x 2 Single Bed, Spacious Living area and fully furnished kitchen, Swimming pool - children / adult, 2 levels Maid’s quarter, Fully Furnished, Balcony, Terrace / Patio, 2 x Outside Salas, Barbecue, 2 x Parking Spaces, 7-seater SUV included. Contact Ms Chan - Sarah@clever-cloggs.com.hk Tel: 2861-3317
Unique opportunity The Fountainside
Top Floor Approx. 180 square meters HKD 19.9 million
Translations 4 APARTMENTS BUILDING IN LISBON Price: HK$ 17,000,000
2 Apartments T3 (1st and 2 floor), 1 Apartment T2 (3rd floor), 1 Apartment T0 (top floor), garage for 4 cars + laundry and storage area. Location: Close to RPC embassy classifieds@macaubusinessdaily.com Mobile: +351910836655
Great opportunity Loft in Downtown 2 + 1 bedrooms, 2 living rooms and garden
Inês Dias Languages English, Portuguese and French Contact now for a quote: inezfernandesdias@gmail.com
FOR SALE - ONE GRANTAI Tower 3; Flat 10K.
Luxury hilltop flat, fully air conditioned, 3 bedrooms, 2 full bathrooms, maid’s room, fully equipped kitchen , living room, dining area, and 2 balconies with stunning Cotai Strip and sea views. Facilities include: health club, swimming pool, tennis, play area, and much more. 2320 sq. ft. selling price: HK$ 7,950/sq. ft. Contact: Steven Kahn (852) 2541 7775 Monday - Friday 11am - 6pm
140 sq metres with Mezzanine
Bruno Beato Ascenção
Price: HKD 12 million classifieds@macaubusinessdaily.com
Lawyer
Avenida da Praia Grande, no. 409, China Law Building, 11th floor. Tel:28785795 Fax:28785797 Email:bascencao@gmail.com
Recruitment
Marketing and Advertising Coordinator
Highly reputable media company is looking to hire a full-time Marketing and Advertising Coordinator with competitive salary.
Duties
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August 27, 2013 April 19, 2013
Opinion
India’s problem is wires exports, not the rupee Business
Leading reports from Asia’s best business newspapers
Taipei Times Taiwan’s stock market would be unlikely to see material impact if the U.S. Federal Reserve scales down its current round of quantitative easing because the nation’s economic fundamentals remain sound, Bank of America Merrill Lynch said in a research note. With Taiwan’s export-oriented economy expected to benefit from rising global demand, particularly from the US, the local bourse could be buffered from external shocks if foreign investors start to repatriate their funds due to a possible tapering by the Fed, Merrill Lynch said.
Bangkok Post Thailand’s Revenue Department remains uncertain of achieving its tax revenue target of 1.77 trillion baht (US$55 billion) this fiscal year, as value-added tax (VAT) on imported goods has declined. Director-general Satit Rungkasiri estimates tax collection derived from VAT for fiscal 2013 ending September 30 could be 7.03 billion baht, falling short of the 7.1-billion target. VAT is the major tax contributor of the Revenue Department, and 60 percent of VAT revenue is generated from imported products and the rest from domestic consumption.
Economic Times The Indian government is planning to a give easier exit window to foreign investors in construction, housing and township projects, hoping to spur greater equity inflow into the debt burdened sector and help faster completion of delayed projects. The measures are continuation of the government’s ongoing drive to make FDI policy more attractive. Under the current rules, 100 percent FDI is allowed in the construction, housing and township but subject to a three-year lock-in. The sector attracted US$1.3 billion in 2012-13, down 58 percent from US$3.1 billion a year earlier.
The Australian Caltex Australia Ltd said first-half profit fell after sharp Australian dollar declines boosted the cost of key imports, and fuel sales suffered from production outages at a Brisbane refinery and damage to a Sydney pipeline. Australia’s biggest oil refiner, half-owned by Chevron Corp, said net profit on a replacement cost-ofsales basis – which excludes the value of its inventories – dropped to A$171 million (US$154 million). The figure was within the company’s guidance range of A$160 million to A$175 million.
Swaminathan S. Anklesaria Aiyar Research fellow at the Cato Institute
K
ing Canute had it easy. Indian Finance Minister Palaniappan Chidambaram has battled currency markets for two months, trying to stem the collapse of the Indian rupee from 55 to a dollar in May to 65 last week. He has found commanding currency markets even harder than commanding the ocean waves. He should stop trying. A weaker rupee is not inherently a terrible thing. Rather than frantically shoring up the currency, Chidambaram should target the structural impediments in the economy that have caused both Indian and foreign investors to lose faith in the once-glowing India story. A falling rupee is a political, not an economic disaster. The plunge raises import prices and exacerbates inflation in the runup to the next general election, just eight months away. In an attempt to support the currency, the government has increased import duties on gold and consumer durables, and has raised short-term interest rates to curb currency speculation. What’s bad for electoral prospects, however, can be good for an economy running a current account deficit that’s reached 4.8 percent of GDP. A cheaper rupee will encourage exports and discourage imports. Inflation will erode some of these apparent advantages. Indeed, the rupee’s fall from 45 to 60 a dollar from 2011 to June 2013 didn’t lift exports at all: The advantages were offset by high inflation and a lousy business climate. However, exports rose 12
Chidambaram doesn’t have enough weapons to prop up the exchange rate
percent in July, suggesting that the rupee may finally have fallen enough.
Strangled birth The danger now is that dysfunction in the Indian economy will strangle any incipient export boom at birth. GDP growth slowed to 5 percent last year, after racing along at 8.5 percent for a decade. Industry and, until the recent uptick, exports have stagnated. Inflation has soared. The current account deficit is almost double what the Reserve Bank says is sustainable. A year ago, rating companies threatened to downgrade India to junk. Chidambaram was recalled to the Finance Ministry to stave off that verdict. He cut the fiscal deficit from 5.8 percent of GDP to 4.9 percent, and promised a further reduction this year. He initiated reforms, including liberalised entry for retail giants such as Wal-Mart Stores Inc. The hope was that fiscal discipline plus reforms would revive animal spirits among investors, and produce an economic spurt before the elections. The plan was on track until May: Inflation fell, interest rates were cut three times, and US$20 billion of foreign portfolio investment flowed in. But after Fed chairman Ben S. Bernanke said he would soon phase out quantitative easing, inducing higher interest rates, billions of dollars flooded out of emerging markets into the U.S., seeking higher yields. All emerging-market currencies
swooned, including the rupee. Finance Ministry officials argue that the rupee at 65 is irrational, a clear case of overshooting. They’ve forgotten two maxims of John Maynard Keynes. One is that people will ultimately do the rational thing, but only after exploring all the alternatives. The second is that markets can be irrational for longer than you can stay solvent. India’s foreign exchange reserves are substantial at US$280 billion, but foreign debts of more than US$170 billion have to be rolled over in the coming year, so running down reserves is not an option. Chidambaram has sought other ways to bridge the current account deficit: quasisovereign bonds, liberalised corporate borrowing overseas and a special bond issue for overseas Indians.
No enthusiasm But attracting dollars is not enough. Underlying the economic slowdown is a virtual investment strike by Indian businessmen, who have been put off by the terrible business climate. Corruption is a major issue. In areas such as real estate, minerals and government contracts, honest business has long been impossible. But dishonest business with bribes could be done, and kept these parts of the economy growing. Recently bribes have become more difficult, sometimes impossible, after activist judges began inquiring into scams, buttressed by a new Right to Information Act
that exposed government files to public scrutiny. Result: The bureaucracy has stopped moving files. Many Indian businessmen say they would rather invest abroad than in India. Apollo Tyres Ltd, India’s top tire manufacturer, has acquired Cooper Tire & Rubber Co in the U.S., and says its next investment priorities lie in Serbia, China and Mexico. If Chidambaram can’t get India businessmen excited, can he really enthuse foreign ones? Sadly, last year’s reforms are not translating into large orders for equipment and machinery, the kind that would start a true industrial and export surge. Foreign investment in retail may have been liberalised, but so many conditions are attached that not one dollar has actually flowed in. The cabinet may have just cleared 1.7 trillion rupees’ worth of projects, but these haven’t produced the expected explosion of orders. In some cases, further clearances are needed from state governments. In other cases, businessmen are delaying investment until the economy picks up. Chidambaram doesn’t have enough weapons to prop up the exchange rate. Rather, he should concentrate on converting cleared projects into actual physical investment and on converting the cheaper rupee into an export boom. If investment and exports begin to surge again, business confidence will return. That’s when the rupee will strengthen. Bloomberg View
16
August 27, 2013
Closing Greece ‘may need 10b euros more’
Indonesia stocks near year-low
Greece may need a third bailout but would not accept new austerity measures, the Greek finance minister has said. Yannis Stournaras (pictured) said: “If there is need for further support to Greece, it will be in the order of about 10 billion euros (US$13.4 billion), or much smaller than the previous programmes.” Greece has already received two bailouts totalling about 240 billion euros. “We are not talking about a new bailout but an economic support package without new [austerity] terms... until 2016, the targets – our obligations – have been set and other measures or targets cannot be required.”
Indonesian stocks closed at their lowest in nearly a year yesterday as investors weighed in the potential impact of recent government measures on growth while Thai stocks reversed earlier gains to fall after weak July trade data. Jakarta’s Composite Index finished down 1.2 percent at 4,120.67, the lowest since September 6, 2012, in relatively moderate trade. The Thai index ended down 0.7 percent at 1,329.18, its lowest close since November 30, 2012. Singapore stocks pared earlier gains to edge lower while Malaysia closed nearly flat after late selling as uncertainty over when the U.S. Fed would start unwinding monetary stimulus clouded markets globally.
World leaders to put shadow banks on long leash
Baosteel sees steel prices weakening
G20 to endorse shadow banking package in September Huw Jones
W
orld leaders are expected to take a softly-softly approach to regulating the so-called shadow banking sector when they meet in Russia next month to avoid damaging the flow of finance to the global economy. While governments have cracked down on risk-taking by traditional banks in the wake of the financial crisis, the shadow banking sector, an assortment of financial intermediaries that handle US$60 trillion of transactions a year – roughly the same size as the world economy – remains a source of systemic risk for taxpayers. Such intermediaries, which include hedge funds, money market funds and structured investment vehicles, provide credit to the financial sector, but, unlike banks, have no access to central bank support or safeguards such as deposit insurance and debt guarantees. They often rely on short-term funding sources, such as the repurchase or repo market, in which borrowers sell the lender a security as collateral and agree to buy it back later at a set time and price. At their meeting on September 5-6 the Group of 20 economies (G20) will endorse reforms but stop short of rushing through far-reaching changes because of the role shadow banking activities play in providing liquidity to the still fragile banking sector, according to people familiar with the G20’s work. Banks’ use of off-balance-sheet vehicles to repackage and sell on U.S. subprime mortgages kick-started the financial crisis in 2007, but such shadow banking activity, known as securitisation, is viewed as key to helping wean banks off central bank money and fund themselves. “There is a fuss about this because the crisis of 2008 was essentially a shadow banking crisis, as most of the lending in the United States and U.K. was financed through shortterm repo,” said Alistair Milne, professor of financial economics at Loughborough University. “The shadow banking reform is more about not getting into trouble in the future, so they can take a bit more time,” added Mr Milne, a former Bank of England and UK Treasury official. Regulators pushed through a new regulatory regime for traditional
G20 meeting to take place in Russia next month
banks – the Basel III framework, which forces them to hold more capital – in record time.
No ‘hit list’ There is growing appreciation at the G20 that unlike action on banks, which targeted the institutions themselves, reform of the more complex shadow banking world should be focused on activities. “Just increasing capital won’t work in most cases because it’s not about entities, but mostly about markets, interlinked transactions and networks,” said Andres Portilla, director of regulatory affairs at the Institute of International Finance, a banking and insurance lobby in Washington. The G20 has drawn up a list of top global “systemic” banks and insurers who must hold more capital because their size and complexity could lead to market mayhem if they were to fail.
Regulators in Britain have already collected data on hedge funds and found so far that none is systemic. People familiar with the G20 work said the summit won’t pursue a “hit list” approach in shadow banking but likely endorse a broad supervisory framework with optional tools to stop the sector undermining financial stability. Hedge funds and broker-dealers who become excessively leveraged using the repo markets will be a key target. While top firms will be relieved they won’t be singled out, the G20 is likely to brush aside their opposition to a requirement for them to apply a minimum discount – or “haircut” – on the value of collateral they take to cover securities lending and repos. The aim of this first global rule is to ensure that the collateral taken provides a big enough safety cushion if market valuations plunge. Reuters
Chinese steel prices are likely to weaken in the second half as supply continues to outstrip demand, a senior executive with Baoshan Iron & Steel Co Ltd, the country’s biggest listed steelmaker by market value, said yesterday. Overcapacity in China, which produces nearly half the world’s steel, has thinned profit margins of domestic steelmakers, limiting the impact of any recovery in demand. Baosteel reported a 61 percent drop in first-half earnings. With around 300 million tonnes of surplus steel capacity in China – equivalent to nearly twice the output of the European Union last year – Beijing is implementing measures to end the glut including curbing credit access to the sector. “The rebound is lacking in strength to be sustained in the near term, and steel prices will be volatile in the second half and weaker than the first half due to uncertainties in demand and oversupply,” Dai Zhihao, the company’s general manager, told analysts at a closed-door briefing, according to an analyst who attended the meeting. Mr Dai said he expected steel demand to remain resilient over the rest of the year, but warned that supply would continue to outpace demand. He said the price of steelmaking raw material iron ore would also rise faster than that of steel products in the third quarter, eating into profits. Chinese steel futures have lost about 8 percent so far this year, but have been recovering since June, with demand from end-users picking up ahead of September and October, when demand is traditionally strong. The drop in steel prices has similarly dampened appetite for raw material iron ore, with spot prices down around 4 percent this year. Worries over a supply glut means margins will remain under pressure. Japan’s Nippon Steel & Sumitomo Metal Corp, the world’s biggest steelmaker by market value, said last week excess supply from Chinese mills will cap gains in Asian steel prices this year. “During the next 12 months, [Asian] steelmakers’ profits will remain at a historically low level given the persistent Chinese overcapacity,” Moody’s Rating Agency said earlier this month in a research note. Baosteel will not target any mergers or acquisitions in the world’s biggest steel industry in the coming years but may boost investment in other sectors, the company’s chairman said at the briefing, according to the analyst. Baosteel plans to start production at its integrated Zhanjiang project in southeastern Guangdong province in 2016, Mr Dai added. The project, approved in 2012, has an annual capacity of 9 million tonnes of crude steel.