Macau Business Daily, August 28, 2013 by Business Daily

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Vitor Quintã

MOP 6.00

August’s 1 casino revenue near-record

April 19, 2013

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Estate agencies not downsizing in Macau

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More on page 3

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Growth in hotel rooms, guests, outpaces arrivals www.macaubusinessdaily.com

Subsidies on menu for older restaurants

raditional shop-based real estate agencies don’t intend to follow the example of their parent companies in Hong Kong by downsizing operations here. In Macau they face proportionately lower operating costs than in Hong Kong and a better market environment, industry insiders told Business Daily. “We are different from Hong Kong,” said Ronald Cheung Yat Fai, chief executive of Midland Realty (Macau) Ltd. “We do not have as many branches, unlike Hong Kong, which faces huge rent pressures,” he said. According to Midland Holdings’ filing to the Hong Kong Stock Exchange, revenue from Hong Kong and Macau was HK$1.38 billion in the first six months of the year, a 19.2 percent drop from a year earlier.

Year II

Number 358 Wednesday August 28, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

‘Responsible gaming’ spurs Jockey Club

Zung Fu Motors (Macau) Limited

Hang Seng Index

Year-on-year growth in Macau hotel guest numbers has outpaced overall visitor growth since mid-2009, says a quarterly review of the casino industry by Bloomberg. From year-end 2009 to year-end 2012, annual visitor numbers to the territory actually contracted by 1.6 percent according to data from the Statistics and Census Service reviewed by Business Daily. By contrast the number of hotel rooms grew 32 percent, from 19,697 to 26,069. Page 2

21970

21934

21898

21862

21826

21790

August 27

HSI - Movers Name

%Day

WANT WANT CHINA

9.60

SANDS CHINA LTD

3.34

LENOVO GROUP LTD

1.76

TENCENT HOLDINGS

1.46

TINGYI HLDG CO

1.26

AIA GROUP LTD

-2.03

CHINA SHENHUA-H

-2.56

BELLE INTERNATIO

-3.09

CHINA COAL ENE-H

-3.83

WHARF HLDG

-3.90

Source: Bloomberg

City’s mainland investments on rise

Fresh graduates edge up jobless rate

China approved more investment projects funded by Macau enterprises, leading to a slight rise in capital channelled to the mainland in the first seven months. The mainland says trade in services between Guangdong on one hand and Macau and Hong Kong on the other will be “basically liberalised” next year. But firms here could find it more difficult to invest as China changes its growth model, an academic says. Pages 4 & 5

New college graduates looking for their first fulltime job over the summer have slightly pushed up the unemployment rate here in the three months to July 31, official data suggest. The Statistics and Census Service announced yesterday that the unemployment rate rose by 0.1 percent to 1.9 percent in the May-July period compared with the second quarter as a whole. Page 7

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August 28, 2013

Macau

Casino rev heading for 2nd highest month on record  But some possible softening on daily takings ahead of the Mid-Autumn Festival next month

Build it and they do come, suggests report

Growth in rooms, guests, outpaces general arrivals Bloomberg review of second quarter says Cotai accommodation helping build overnight tourism market Michael Grimes

michael.grimes@macaubusinessdaily.com

ear-on-year growth in Macau hotel guest numbers has outpaced overall visitor growth since mid-2009, says a quarterly review of the casino industry by Bloomberg. From year-end 2009 to year-end 2012, annual visitor numbers to the territory actually contracted by 1.6 percent according to data from the Statistics and Census Service reviewed by Business Daily. By contrast the number of hotel rooms grew 32 percent, from 19,697 to 26,069. Bloomberg attributes most of the increase in hotel guests to the expansion of Cotai’s large integrated resorts. “These have propelled an increase in the proportion of visitors staying overnight, which in turn supports both gaming and non-gaming revenue growth,” says the report from Tim Craighead and Brian C. Miller of Bloomberg Industries’ Casinos and Gaming Team. In 2012 a total of 9.5 million people – nearly 34 percent of Macau’s 28 million visitors that year – spent at least one night in a Macau hotel, show data from Macau’s Statistics and Census Bureau. In 2002, the year that the Macau gaming market was first officially liberalised, 27 percent of all visitors stayed in hotels. “One of the top determinants of where customers gamble is where they stay, with Sands China having more than [a] 50 percent share of casino hotel capacity,” says Bloomberg. Official data show visitor numbers to the city grew nearly 144 percent in the period from December 31, 2002 to December 31, 2012, from 11.5 million annually to 28 million

annually. In the same period the number of hotel rooms in the market rose 194 percent from only 8,869 to 26,069 by December 31, 2012. As of June 30, there were 28,082 hotel rooms in Macau according to the statistics bureau. Sands China Ltd said in its 2012 annual report published in March it had 7,210 hotel rooms and suites in the market. That means Sands China has around 25 percent of all Macau hotel rooms, including those establishments without gaming. But when Sands’ five-star room inventory (around 6,000 rooms) is judged as a percentage of all Macau five-star rooms, its market share is closer to 40 percent.

Luxury rooms Knight Frank Hong Kong, a real estate company, estimated in an October report that Macau had a total of 15,000 five-star rooms out of the then market total of 26,050 rooms. Sands China intends to add another 3,300 hotel rooms to its own Macau inventory when it opens The Parisian, a new US$2.8 billion French-themed resort on Cotai complete with replica Eiffel Tower. The firm hopes to open the property in late 2015 said company chairman Sheldon Adelson during a recent earnings call. “Sands has the largest number of hotel rooms in Macau and anticipates that transportation infrastructure improvements in China and Hong Kong will bring more visitors,” says the Bloomberg review of the second quarter. “The company is increasing its entertainment offerings to attract families vacationing from

China, saying that non-gaming attractions will complement rather than cannibalise gaming revenue,” it adds. Da v i d B a i n o f i n d e p e n d e n t brokerage Sterne Agee in the United States said in a note this week that visitor numbers to Macau had increased in each of the last six months, to register a 4.3 percent rise year-to-date. He stated: “From May, calendar year 2012, to January, calendar year 2013, Macau had shown nine months of consecutive yearon-year visitation declines. We expect positive visitation trends to continue through the remainder of the year on the heels of completed infrastructure projects (Guangdong/Zhuhai intercity mass transit, increased checkpoints at the Zhuhai border, etc) and the relaxation of certain visa policies (migrant worker applications).” Mr Bain added: “Given its peer-leading hotel capacity and weighting to the mass market, we believe LVS will be a market share gainer as visitation momentum continues, and accelerates, into holiday periods.” The Bloomberg review states: “Total Chinese visitations to Macau grew between one percent and four percent year-on-year in the last four quarters, weathering four declines in arrivals from Guangdong, the largest and closest province.” It continues: “Central and northern provinces have now become growth drivers for Macau because of better travel access and macro growth initiatives. This trend lends support to further expansion of the integrated resort mass-market segment.”

ugust is likely to produce the second highest monthly revenue tally ever for Macau’s casinos. Several analysts forecast gross gaming revenue to be between 30.5 billion patacas (US$3.8 billion) and 30.9 billion patacas. David Bain of Sterne Agee expects revenue to come in at 30.9 billion, an 18-percent increase year-on-year compared to August 2012.  It would make this August the second biggest month for the Macau casino industry, just below the 31.3-billion record set in March. United States-based brokerage Sterne Agee is basing its forecast on revenue trends up to and including Sunday.  The firm adjusted downward its year-on-year percentage growth forecast for August to between 17 percent and 19 percent, from 17 percent to 20 percent.  Cameron McKnight of Wells Fargo in New York also suggested year-onyear growth for August would be 17 percent to 19 percent. He noted however that weekly revenue for the seven days to August 25 inclusive was 954 million patacas, down 12 percent week-on-week. “We would expect ADR [average daily revenue] to remain soft in the coming weeks ahead of the MidAutumn Festival (September 1922),” he stated in a note. Mr McKnight said economic sentiment among high-income Chinese consumers “remains strong”. He wrote: “HSBC flash manufacturing PMI [purchasing managers’ index] expanded to 50.1 in August from 47.7 in July; however July social financing slowed to 809 billion yuan (US$ 132.16 million) from 1.004 trillion yuan in June.” Citi forecast on Monday that gross gaming revenue should reach 30.5 billion patacas this month. M.G.

Raise the red lantern – tourist spurt expected for Mid-Autumn Festival

August 28, 2013 April 19, 2013

Macau Estate agencies keeping their presence in Macau They say it is cheaper to operate here, and expect the property market to recover Tony Lai

tony.lai@macaubusinessdaily.com

state agencies in Macau say they have no intention of following their parent companies in Hong Kong in cutting back their operations. Estate agents have told Business Daily that the property market here is better than Hong Kong’s and cheaper to operate in. “We are different from Hong Kong,” said the chief executive of Midland Realty (Macau) Ltd, Ronald Cheung Yat Fai. “We do not have as many branches, unlike Hong Kong, which faces huge rent pressures,” Mr Cheung said. Midland Macau’s parent company in Hong Kong, Midland Holdings Ltd, posted on Friday a loss of HK$88.7 million (US$11.4 million) for the first half of this year. The parent company said the loss was due to its having done the fewest deals it has done for a decade, mainly because of curbs on the Hong Kong property market imposed by the government there.

Sales in the remaining months will not be worse than in June Jane Liu Zee Ka, Ricacorp Macau managing director

Hong Kong’s South China Morning Post quoted company chairman Freddie Wong Kin Yip as saying worse was to come. Mr Wong said his company had cut its number of branches and reduced staffing by natural attrition. Another Hong Kong estate agency, Centaline Property Agency Ltd, has taken similar action. The Hong Kong government has doubled the tax on sales of property costing more than HK$2 million, and tightened restrictions on mortgage lending for commercial property and parking spaces. The Bloomberg news agency quoted the deputy chairman of Midland Holdings, Angela Wong, as saying this year that about one-third of Hong Kong’s estate agents might lose their jobs in the next year if the government kept the curbs on the property market.

Absence of pressure “For the industry, we’re probably looking at the lowest point for over two decades,” Ms Wong said. “The worst thing is that it’s now a stagnant market, so we’re not sure whether we should expand or contract. This is tough.” In Macau, Mr Cheung declined to comment on the part played by Midland Macau in its parent company’s first-half performance. Midland Holdings told the Hong Kong Stock Exchange that its firsthalf revenue in Hong Kong and Macau was HK$1.38 billion, 19.2 percent less than a year earlier. But Mr Cheung said market conditions here were different. “There is no such pressure to make profits here like Hong Kong,” he said. He said Midland Macau was

Estate agents expect more flats to come on the market this year

recruiting 10 to 20 more employees to add to the 100-strong workforce that staffs its seven branches. “We are actually facing a lack of agents now, after the enactment of the estate agents bill in July, since agents must now be licensed,” he said. The Housing Bureau told Business Daily that it had licensed 4,320 estate agents by August 14. Mr Cheung said the law on estate agents and the new law on the sale of unfinished flats had reduced the number of deals done by estate agents, but not property prices. Since June the law has allowed the sale of unfinished flats only once the foundations of the building that will contain them have been completed and the housing project has been registered with the government.

KEY POINTS Estate agencies doing fewer deals in Macau Business expected to pick up in fourth quarter Agencies here hiring staff and expanding Hong Kong property curbs depress earnings

Still in a job Financial Services Bureau data show that 739 unfinished flats were sold in June, 45.1 percent fewer than in May and half as many as a year earlier. But Mr Cheung and other Macau estate agents expect a recovery in the number of sales in the fourth quarter. “The sales in the remaining months will not be worse than in June,” said the managing director of Ricacorp (Macau) Properties Ltd, Jane Liu Zee Ka. Ms Liu’s company is the Macau subsidiary of Hong Kong’s Ricacorp Properties Ltd. “There could be a few more flats coming out later as the government has been reviewing some 20 unfinished projects, though many flats in those projects were been sold out before the new law,” she said. The Land, Public Works and Transport Bureau said in June that

21 developments that would contain over 3,700 flats were in the pipeline. “The low transaction levels in Hong Kong have persisted for more than half a year, but here it is not so bad,” Ms Liu said. “Apart from the Macau flats, we are also exploring the possibility of providing flats in Hong Kong and elsewhere to our Macau customers,” she said.Ms Liu said Ricacorp Macau had no plans to cut staff. The company employs about 150 people in its nine branches. She said the company could choose low-rent premises for a 10th branch this year. Centaline (Macau) Property Agency Ltd director Jacky Shek Po Tak said the company would keep its workforce of 150, which staffs its 10 branches.

August 28, 2013

Macau

Investment in mainland by Macau is on the rise

HOSPITALITY Surprising steadiness Most visitors to Macau are from East Asia or Southeast Asia. The Americas and Europe are the main sources of visitors from beyond. All these continents have several developed countries and visitors from them are usually relatively affluent. They come a long way, and so stay in hotels and tend to remain longer than the average visitor. So we would expect them to spend a lot. But the statistics do not match this expectation. The chart shows the average spending, gambling stakes excluded, by visitors from the Americas and Europe in general. It also shows spending by visitors from Australia, Britain and the United States specifically, in view of the involvement of so many Australians, Britons and Americans in gaming and related businesses. The figures for some quarters are unavailable.

The amounts these visitors spend are below the average for all visitors. As a rule, these visitors spend about two-thirds of what visitors in general spend. Europeans and Americans spend about the same. The difference between the simple averages of spending by Europeans and Americans is about 0.2 percentage point. The trend of all the plots in the chart is almost horizontal, showing that the amount these visitors spend, measured in patacas, has hardly changed. In view of the fluctuations in exchange rates, except that of the US dollar, and the changes in prices of goods and services for tourists, this stability in spending is surprising. J.I.D.

MOP1,085 Average spending by European visitors, 2010-2013H1

But an academic warns that investment there could become trickier Stephanie Lai

sw.lai@macaubusinessdaily.com

he mainland authorities approved more investments there by Macau enterprises in the first seven months of this year. But a Macau academic is cautious about investment in the mainland as the economy there is going through adjustments. The Ministry of Commerce approved last month 27 new investments in the mainland by Macau enterprises. Together, the investments approved are worth US$60 million (479 million patacas), 25.6 percent less than a year earlier. In the first seven months the ministry approved 167 new investments in the mainland by Macau enterprises. Together, the investments are worth US$320 million, 3.2 percent more than in the equivalent period of last year. New investments in the mainland by Macau enterprises peaked in the first seven months of 2010, when they were worth US$450 million. The ministry has been posting online figures for investment and

trade between the mainland and Macau since 2009. “The reason we’re seeing a drop in

Macau is still mainly investing in labourintensive projects there, which come with a lower profit margin and bigger production costs, such as the textiles industry Henry Lei, assistant professor of economics at the University of Macau

Macau’s investment in the mainland when compared with a few years ago is that now there are only very few local firms that invest in higher value-added projects there,” said an assistant professor of economics at the University of Macau, Henry Lei Chun Kwok.

Imports of consumables “Meanwhile, the mainland is undergoing an economic transition from reliance on the traditional manufacturing sector to higher valueadded services,” Mr Lei said. “But Macau is still mainly investing in labour-intensive projects there, which come with a lower profit margin and bigger production costs, such as the textiles industry,” he said. “If we count in the yuan appreciation, Macau’s investment growth in China will be even lower,” he said. Mr Lei said he was not optimistic about growth in Macau investment in the mainland in the near future.

‘Responsible gaming’ prompts bet station closures

Photo by Manuel Cardoso

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Macau Jockey Club confirms however it plans to develop telephone and online betting services Stephanie Lai

sw.lai@macaubusinessdaily.com

he voluntary closure of four out of seven off-course horse race betting centres “supports the responsible gaming policy” of the local government, Macau Jockey Club told Business Daily by e-mail. This newspaper asked in a phone call prior to receiving the club’s message, about Chinese media reports that the loss-making horse racing concession holder planned to ramp up its online and telephone betting operations. We asked how that squared with the proclaimed policy of promoting responsible gaming.

The club said only in the e- m a i l : “ Ou r cl u b a l w a y s h a s plans on diversifying our business development, and in future we’ll continue to develop these services.” Telephone betting accounted for 40 percent of the 1.7 billion patacas (US$213 million) in wagers generated by the club during the 2011-2012 racing season according to information on the club’s website. Online betting, at 103 million patacas, only made up six percent of the total. Cash bets – both on and off course, accounted for 925.55 million patacas. Online bets were however up 82 percent

year-on-year that season. By September 1 this year, three off-course betting outlets – in Areia Preta, the Red Market and near Dr. Carlos d’Assumpção Park – will cease operation. Another off-course betting centre known as Kuan Fat, located in downtown Macau, will shut by October 1, the club noted on its official website. Macau Jockey Club said at the moment it does not have plans to establish off-course betting centres in local casino-hotels, though added “it will study the feasibility if business requires”.

August 28, 2013

Macau

Guangdong promises liberalisation of trade The province is due to open its service sector to Macau investors next year Tony Lai

tony.lai@macaubusinessdaily.com

Macau companies are still investing in labour-intensive projects in the mainland

The Ministry of Commerce says the value of Macau’s trade with the mainland in the first seven months was US$2.05 billion, 36.9 percent more than in the equivalent period of last year. The mainland’s exports to Macau were worth US$1.81 billion, 27.6 percent more. Macau’s exports to the mainland were worth US$240 million, 199.1 percent more.

“Given the strong tourism growth in Macau, you can expect that the high bilateral trade value is supported by imports of consumable goods from the mainland,” Mr Lei said. The mainland’s exports to Macau are mainly fuel, capital equipment, food and clothes, while Macau’s exports and re-exports to the mainland are mainly textiles, machinery and copper products, Macau Statistics and Census Service data show.

Corporate Dutch Consul Guangzhou talks to Delta Bridges The Dutch Consul General for Guangzhou has given an interview to Macau-based Delta Bridges Media Ltd. Delta Bridges was set up in 2008 to link Chinese and expat businesspeople across the Pearl River Delta region. The consul, Anne Luwema (pictured), said that aside from trade ties with the Netherlands and southern China going back to the 16th century, her country is currently the European Union’s second biggest trade partner with China and the third largest regarding investment within the region. She added that China is now the second largest foreign investor in the Netherlands. She explained her country focused on nine important sectors: high tech material and systems; agriculture and food; water; energy; horticulture; chemicals; creative industries and logistics. “We are constantly evaluating both the Chinese and the Netherlands’ markets within these key sectors. We actively pursue mutually beneficial opportunities to form stronger trade links between China and the Netherlands within these sectors,” she stated.

CTM mobile apps design comp awards prizes The CTM Mobile Apps Design Competition has chosen its winning entries. The contest was organised jointly by the city’s largest telecoms provider CTM – Companhia de Telecomunicações de Macau SARL, and the Bureau of Telecommunications Regulation with the support of Macau Productivity and Technology Transfer Center. CTM says the aim was to “provide a platform for local talents to demonstrate creativity in mobile applications development, hence creating potential business opportunities and accelerating the development of the information technology industry in Macau”. Applications for the competition opened in April. CTM said nearly 100 teams registered and the organisers received more than 50 proposals. Award categories included ‘Best Creativity’, ‘Best Practicality’, ‘Open Category’ and ‘Student Category’. Declan Leong, vice president of Network Services, said: “We are pleased to see that many young IT talents are emerging in Macau, while their creative and technical capabilities have already reached a certain level, which shows that the local IT development has achieved gratifying results.”

he authorities in the mainland have said trade in services between Guangdong on one hand and Macau and Hong Kong on the other will be “basically liberalised” next year. The state-run China News Service reported yesterday that the deputy governor of Guangdong, Zhao Yufang, told a seminar in Hong Kong that services trade liberalisation “can better promote the economic development” of the Pearl River Delta. The report also quoted viceminister of Commerce Gao Yan as saying the mainland authorities were drafting a general proposal for submission to the State Council this year. The remarks of Ms Zhao and Mr Gao echoed comments made in May by the National Development and Reform Commission’s vicechairman, Zhang Xiaoqiang. Mr Zhang said it was

important for Macau and Hong Kong companies to receive the same treatment in Guangdong as mainland enterprises. However, he said services trade would be liberalised only in 2015 or 2016. Macau and the mainland have agreed on some steps towards liberalisation in their Closer Economic Partnership Arrangement (CEPA). From this year the CEPA allows Macau enterprises to invest in the mainland in 48 more fields than before. The official in charge of developing the Qianhai special economic zone, Zhang Bei, told the seminar that Guangdong was drafting a proposal to create a free trade zone along the lines of Shanghai’s. The central government gave Shanghai permission last week to open a free trade zone in the city’s Pudong New Area, which will be mainland’s first.

August 28, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Ebb and flow Changes in population have two principal causes. One is natural growth, the difference between the numbers of births and deaths in a set period. The natural growth rate is low. It has risen slightly in the past few years, but the present trend in natural growth means it will not increase the population by much in the long run, and the figures for the first half of this year suggest it is losing momentum. The other principal cause of population change is migration, the difference between the numbers of emigrants and immigrants. Migration in Macau is of three main kinds, each governed by different rules and motives. One main kind is immigration by Chinese that obtain the right to reside here. Another main kind is immigration by foreigners that gain authorisation to reside here, but only temporarily. The third main kind is immigration and emigration by Chinese or foreigners that have authorisation to reside here only while they have jobs here – whom we refer to as migrant workers. Each kind of migration follows a separate path.

Govt to give further subsidies for restaurant refurbishment Restaurateurs are bullish as more tourists give them more business Tony Lai

tony.lai@macaubusinessdaily.com

he restaurant industry expects the government to give it a third round of subsidies to renovate old restaurants this year, but fewer grants will be made. Under a scheme that has b ee n ru n n i n g s i n ce 2 0 0 8 , th e government authorises the United Association of Food and Beverage Merchants of Macau to distribute subsidies of up to 200,000 patacas (US$25,000) per applicant to defray the cost of renovating old restaurants, staffing them and managing them financially.

MOP 200,000 New money for renovation of old restaurants

The numbers of new Chinese immigrants rose fast after the economic crisis in 2008 and 2009 but have fallen more recently. Even so, over 25,000 immigrated in the period represented in the chart, and they make up probably the most stable inflow of migrants. The inflow of temporary residents has turned into an outflow. Their number has fallen by over 6,800 in the past three and a half years. The flows of migrant workers are the most dynamic. But they are also the most volatile, and have the greatest effect on the labour market and society at large. J.I.D. The content of this column is the work of Business Daily’s journalists.

66.8 %

Proportion of population growth due to migration, 2008-2013H1

“We have started preliminary work for the third round, like compiling documents and drafting guidelines, and we will then wait for government approval,” association president Lei U Weng told Business Daily. “The government is basically supportive of the scheme,” Mr Lei said. Legislative Assembly member and businessman Chan Chak Mo heads the association. Through the Macau Foundation, the government has so far granted the association 39.9 million patacas, which the association has passed on to members to refurbish 201 restaurants that have been open for over 10 years. Mr Lei said the recipients had spent all the money granted. He said the amount of new money available would be under 20 million patacas and that the association would make fewer grants. “There will only be 70 or 80 grants in the coming round, compared with

100 in the first two,” he said. “The third round is open to those that applied previously but have yet to receive any help.” Mr Lei said the conditions for eligibility would be unchanged. His association is already preparing for a fourth round of subsidies. “There should be an adjustment to the subsidy amount as inflation has been so rapid in the past few years,” he said. In the 12 months ended July 31, the average annual rate of consumer price inflation was 5.47 percent, according to official data. Mr Lei said the restaurant industry’s turnover was higher than a year ago, owing to the influx of visitors this summer. “Growth in the city’s more touristy areas was about 5 percent, while in the less-visited old districts it was about 10 to 20 percent,” he said. He said the four tourist trails to be opened by the government would be good for businesses in the lessvisited areas, although the effect would not be immediate.

Official data show Macau had 2.57 million visitors last month, 4.9 percent more than a year earlier. The number of visitors from the mainland was 1.66 million, 14 percent more.

Growth in the city’s more touristy areas was about 5 percent, while in the less-visited old districts it was about 10 to 20 percent United Association of Food and Beverage Merchants president Lei U Weng on industry turnover

August 28, 2013 April 19, 2013

Macau

Fresh graduates edge up jobless rate But more university leavers going into retail sector than previously, says recruitment expert Tony Lai

tony.lai@macaubusinessdaily.com

ew college graduates looking for their first full-time job over the summer have slightly pushed up the unemployment rate here in the three months to July 31, official data suggest. The Statistics and Census Service announced yesterday that the unemployment rate rose by 0.1 percent to 1.9 percent in the MayJuly period compared with the second quarter as a whole. The unemployed population rose by 500 to 7,000 people in the three months ended July. The statistics bureau said in its report the reason was: “…more people looking for work during the summer holiday”. “Fresh labour force entrants searching for their first job accounted for 10.2 percent of the total unemployed, an increase of 4.9 percentage points [from the previous period],” it added. Jiji Tu, managing director of human resource firm MSS Recruitment Ltd, said the university graduates are now “less worried” about not being able to secure jobs due to “the prevalence of opportunities”.

Gaming remains the city’s biggest single employer by sector

compiled by the International Labour Organization, meaning Macau ties with Singapore in that ranking. Macau’s employed population rose 0.53 percent or 1,900 people to 359,400 in the May-July period. Many new recruits joined the construction industry, government data suggest. There were 1,500 more employees in the construction sector pushing to an establishment of 33,600 people compared with the second quarter. The casino gaming industry gained 600 more workers taking the total to 83,000. Gaming remains the city’s biggest single employer by sector, accounting for 23.1 percent of the employed workforce.

Labour imports “Most [graduates] will land quickly their first job but many will change it after one or two years because they have many choices,” Ms Tu told Business Daily. The unemployment rate of 1.9 percent was still the third-lowest in the world, according to statistics

The retail industry, conversely, employed 1,300 fewer people, with numbers falling to 34,600 in the three months ended July, according to the official data. But Ms Tu said there was “a recent trend” of more fresh graduates going into retail.

The headhunter explained: “Though most graduates will still prefer starting their career in casinos or hotels, more will pick up a job in retail because the market has been quite good in these few years with the opening of many international brands.” Retail sales in the second quarter rose by 23 percent to 15.7 billion patacas (US$1.96 billion) from a year earlier, other government data released this week show. The Human Resources Office also announced yesterday that the number of non-resident workers rose to the highest ever at 122,105 last month. But the month-to-month growth slowed to 0.8 percent last month compared with 2.2 percent in June, the figures show. The hotel and restaurant sector remained as the biggest employer of imported workers in the city but they had 30 fewer non-resident employees last month to 36,056. The real estate and commercial sectors absorbed most of the new foreign labour, increasing by 100 people last month to 10,369.

August 28, 2013 April 19, 2013

Greater China

Beijing urge

Chong Hing jumps on bid report

As economy shifts gears i

Chong Hing Bank Ltd, Hong Kong’s smallest family-run lender, jumped to the highest level since its stock market debut 19 years ago after a media report that there may be a new bid for a stake in the lender. The potential buyer may offer HK$40 a share, or about 2.3 times book value, for the stake held by the Liu family, Oriental Daily News reported yesterday. Shares of the bank jumped 9.96 percent to HK$29.25. Independent third parties have approached the controlling shareholder of Liu Chong Hing Investment Ltd, the parent company, about a possible purchase of interests in Chong Hing Bank, the companies said on August 7.

he U.S. Federal Reserve must consider when and how fast it unwinds its economic stimulus to avoid harming emerging market economies, senior Chinese officials said yesterday. The warning by China’s Vice Finance Minister Zhu Guangyao and central bank Vice Governor Yi Gang came as economies from Brazil to Indonesia struggle to cope with capital flight as U.S. interest rates rise ahead of an expected tapering off in the Federal Reserve’s bond buying programme that unleashed liquidity across the world. “The U.S. economy is showing some positive signs and is recovering gradually and we welcome this,” Mr Zhu told a briefing ahead of G20 leaders’ summit in Russia next week. “But the United States – the main currency issuing country – must consider the spillover effect of its monetary policy, especially the opportunity and rhythm of its exit from the ultra-loose monetary policy,” Mr Zhu said. Financial markets are fretting that the U.S. Fed might decide to reduce its monthly bond buying when it meets on September 17 and 18. Mr Zhu said while China faced a severe economic environment at home and abroad, it would keep economic policies stable. He said China is shifting gears in terms of growth rate, while

Garry Jones to lead LME Hong Kong Exchanges & Clearing Ltd appointed Garry Jones as chief executive of the London Metal Exchange as the world’s largest basemetals marketplace seeks to expand into China, the biggest user. Mr Jones, who formerly ran NYSE Liffe, is expected to join LME on September 30, according to a statement from the Hong Kong bourse yesterday. He succeeds Martin Abbott, who said in June that he would leave at the end of the year. The LME was bought for $2.2 billion last year by Hong Kong Exchanges and chief executive Charles Li said in June that he wants to use the bourse as a catalyst to expand into commodities as China boosts consumption.

Daimler to expand China production Daimler AG, the maker of MercedesBenz cars, plans to invest 2 billion euros (US$2.7 billion) in China building its largest car factory as it seeks to challenge BMW and Audi in the country. The plant is scheduled for completion as early as 2014 and help Daimler double China production to more than 200,000 units a year, Hubertus Troska, head of the China business, said yesterday. The investments will also go into an engine plant and other auto production facilities. “If we’re not more successful in China, our goal of global position number one will be very difficult to achieve,” he said. “There’s a recognition that we need to improve our performance in China vis-avis some of our competitors.”

Antitrust probes to help enforce rules, regulator says A series of antitrust investigations by Chinese regulators are part of efforts to toughen enforcement of a 2008 antimonopoly law and are not just directed at foreign firms, the official China Daily reported yesterday. Some foreign executives in China have said recent high-profile probes into the milk powder and pharmaceutical sectors appeared to show foreign companies were being singled out. “There is no such thing as specially targeting foreign companies. Our investigations focus on monopolistic conduct, not the entities behind it,” the China Daily quoted an unidentified official from the National Development and Reform Commission as saying.

Fed seen making first taper move in September

China’s industrial profits pick up in July More evidence of a turnaround after months of slowing growth

hina’s industrial-profit growth rebounded in July, adding to signs that the world’s secondbiggest economy is stabilising after a two-quarter slowdown and an interbank lending squeeze in June. Net income rose 12 percent from a year earlier after gaining 6.3 percent in June, the statistics bureau said in Beijing yesterday. Power, telecommunications, and auto manufacturing contributed to the increase, while coal miners’ profits slid. Yesterday’s data add to higherthan-forecast industrial production in July, a rebound in trade, and a stronger reading for a manufacturing index released last week. At a briefing in Beijing, Yi Gang, a deputy governor of the central bank, said yesterday that a Federal Reserve exit from quantitative easing may have only a “limited” effect on China compared with other emerging economies. “This is another indicator that helps to paint a positive picture for the near-term growth outlook,” said Chang Jian, China economist at Barclays Plc in Hong Kong. The economy may expand 7.6 percent from a year earlier this quarter, up from 7.5 percent in the second quarter, she said. At the same time, Ms Chang said she was cautious about the medium term as the nation grapples with industrial overcapacity, declines in export competitiveness, property oversupply

RMB 419.6 bln Total profits of China’s industrial enterprises in July

and risks for the financial system. Total profits came to 419.6 billion yuan (US$68.6 billion) in the month, the National Bureau of Statistics said

yesterday. Only enterprises with annual revenue above 20 million yuan are included in the figures. In the first seven months of the year, profits came to 3.003 trillion yuan, up 11.1 percent from the same period of 2012. Private businesses registered profit growth of 15.4 percent in the seven-month period compared with 5.5 percent for stateowned enterprises. Utilities saw the biggest improvement, with electricity and heating producers’ profits up 73.5 percent and water suppliers’ up 148.5 percent. The coal mining, metals and oil and gas sectors all saw profits fall compared with the same period last year. China’s economy is showing increasing signs of stabilising, statistics bureau spokesman Sheng Laiyun said yesterday at a briefing in Beijing, adding that July economic indicators gave “positive signs”. At Nomura Holdings Inc in Hong Kong, chief China economist Zhang Zhiwei said yesterday that the sustainability of the nation’s recovery is not yet assured, adding that growth may drop below 7 percent in the first half of 2014. He sees a 6.9 percent expansion next year. Premier Li Keqiang will achieve his 7.5 percent growth target this year, according to a Bloomberg News survey of economists this month. Bloomberg News

August 28, 2013 April 19, 2013

Greater China

es caution in Fed policy tapering August official

in terms of growth rate going through “painful” economic restructuring and digesting the effects of past domestic stimulus measures. China will refrain from providing stimulus to the world’s second-largest economy, which he said was on track to grow around 7.5 percent this year – in line with the government’s target. The government will instead quicken structural adjustments, including efforts to deal with factory overcapacity, he said. Speaking at the briefing ahead of

The United States must consider the spill-over effect of its monetary policy, especially the opportunity and rhythm of its exit from the ultraloose monetary policy Zhu Guangyao, China’s Vice Finance Minister

the G20 meeting in St Petersburg on September 5 and 6, Vice Governor Yi Gang said the issue of how nations would cope as developed economies tighten their monetary policy would be a focus at the G20 meeting. “On monetary policy, the focal point [of G20] will be on how to minimise the external impact when major developed countries exit or gradually exit quantitative easing, especially causing volatile capital flows in emerging markets and putting pressures on emergingmarket currencies,” Mr Yi said. Mr Yi said a US$100 billion foreign-currency fund being discussed by countries that make up the BRICS grouping of Brazil, Russia, India, China and South Africa will be set up in the foreseeable future. He said China would provide “a big share” of the funds but he did not give details. “It will not exceed 50 percent,” he said. The BRICS’ leaders have agreed to set up the fund to help ward off currency crises.

No meeting Meanwhile, a senior Chinese diplomat said Japan is only paying “lip service” to the idea of resolving a territorial dispute and ruled out a meeting between the two countries’ leaders at a Group of 20 summit next month.

Chinese President Xi Jinping won’t meet Japanese Prime Minister Shinzo Abe at the G-20 meeting in St. Petersburg, Russia, because Japan isn’t serious about improving ties, Vice Foreign Minister Li Baodong told reporters in Beijing yesterday, citing Japan’s continued “provocative moves” in the East China Sea. “Under these circumstances, there is no basis for talks,” Mr Li said at a briefing to discuss Mr Xi’s trip to the G-20 meeting. “The Japanese side should stop paying lip service to the issue.” Mr Li’s remarks reflect the lack of progress in a dispute over an uninhabited island chain – known as Senkaku in Japanese and Diaoyu in Chinese – that has damaged trade and diplomatic ties. Japan’s government bought three of the five islands from their private owner last September, sparking protests across China. China’s exports to Japan fell 2 percent in July from a year earlier, the sixth straight decline. Mr Abe said he wanted to exchange views on regional stability with the leaders of both China and South Korea, public broadcaster NHK reported. Three Chinese Coast Guard vessels briefly entered Japanese waters yesterday near the disputed islands, Japan’s Coast Guard said in a statement. Similar incidents took place earlier this month.

PMI seen hitting 3-month high C

hina’s factory activity in August may have expanded at the fastest pace in three months, a Reuters poll showed, adding to evidence that the world’s secondlargest economy may be stabilising after slowing for more than two years. The median forecast of 12 economists polled by Reuters showed China’s official manufacturing managers’ index (PMI) in August may have risen to 50.6 from July’s 50.3. A reading above 50 indicates expanding activity while one below it points to a contraction. Beijing has stepped up efforts in recent months to prevent a sharp economic slowdown by quickening railway investment and public housing construction and introducing a series of measures to help smaller companies, which could sustain the revival of internal demand in the coming months. “PMI data for August could further confirm a stabilising trend of the economy, which is mainly underpinned by infrastructure and property investment,” said Nie Wen, an analyst at Hwabao Trust in Shanghai.

Reuters/Bloomberg News

KEY POINTS

Li Ka Shing-backed CEF seeks gold investments

August official PMI seen rising to 50.6 Could reinforce view that economy stabilising Official manufacturing PMI due on Sept 1

Venture plans to invest in mines as prices slump

Prices will average US$1,300 an ounce in the fourth quarter, the median of 17 analyst estimates compiled by Bloomberg shows. Bank of America Corp. is the most bullish, predicting a fourth- quarter average of US$1,495 an ounce, and JPMorgan Chase & Co. anticipates rising averages in every quarter through the end of next year. Gold has rallied 13 percent since the end of June as lower prices boosted demand, particularly in Asia, with prices averaging US$1,313.58 an ounce. Bullion will rebound as spending cuts by producers and the closure of costly operations brings better balance to supply and demand, the producer-funded World Gold Council said this month.

A similar, preliminary private sector survey of purchasing managers, sponsored by HSBC Holdings Plc and Markit Economics and published last week, showed activity in China’s industrial sector grew at its quickest pace in four months in August as new orders surged. The official PMI generally paints a rosier picture than the private survey, as it mainly covers big and state-backed companies, while the latter focuses more on smaller and private sector firms. The anticipated uptick in the vast manufacturing sector could also have been boosted by rising domestic demand from inventory rebuilding after significant destocking in the second quarter, analysts said. The government has also been talking about how the economy has stabilised, looking to soothe concerns on global markets about a hard landing for an economy that had slowed for nine out of the past 10 quarters. Analysts said other figures showing increased power generation and cargo freight for early August could also bode well for economic performance this month, suggesting a rapid economic slowdown may have been arrested. “We see a big chance of a rebound in the official PMI figure in August, as indicated by stronger power data and recovering cargo transport “said Gao Yuan, an analyst at Haitong Securities in Shanghai.

Bloomberg News

Reuters

EF Holdings Ltd, a venture between Li Ka Shing’s flagship company and Canadian Imperial Bank of Commerce, is looking to invest in gold mining companies after a slump in prices creates buying opportunities. “Long term, gold is a good place to be,” CEF chief executive Warren Gilman, 53, said in an interview in Hong Kong. Cheung Kong Holdings Ltd, controlled by Mr Li, Asia’s richest man, and CIBC each own 50 percent of CEF. The venture focuses on investing in resources companies globally. Bullion is heading for its first annual decline since 2000 and has slumped 27 percent from a record US$1,921.15 an ounce in September 2011. The plunge prompted investors John Paulson and George Soros to sell gold as mining companies cut jobs and the valuation of their mines. “I was a little uncomfortable making investment in gold at US$1,700 and US$1,800 an ounce,” Mr Gilman said. “The correction we’ve had this year from my perspective is great because we can hopefully fulfil that objective of making some gold investments.” CEF recently made debt investments in Uranium Energy Corp and Avanti Mining Inc, which is developing a molybdenum mine in Canada. Mr Gilman declined to comment about CEF’s size or cash available for investments.

Gold – heading for its first annual decline since 2000

Mr Li, 85, has an estimated net worth of US$27 billion, according to the Bloomberg Billionaires Index. CEF Holdings was established in 1974 by Cheung Kong and CIBC, Mr Gilman said. Gold is down 16 percent this year as the dollar strengthened and amid concern that the Federal Reserve will begin cutting back its stimulus measures. Prices may stay between US$1,000 an ounce and US$1,400 an ounce for “a couple of years and that’s predominantly because gold has to get used to, and it still seems to be adjusting, to the taper and rising real interest rates globally,” Mr Gilman said. He previously cofounded CIBC’s global mining group and was later vice chairman of the bank’s CIBC World Markets.

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August 28, 2013 April 19, 2013

Greater China

Milk powder firms count cost of probes Companies keeping constant tabs on online brand reputation Adam Jourdan

lobal milk powder firms are scrutinising Chinese social media reports up to four times a day to gauge consumer reaction to a high-profile pricing probe and food safety scare that threaten their squeaky-clean image in the US$14.5 billion China market. The stepped-up monitoring of microblogging site Weibo and local online forums reflects the outsized role social media plays in China, where access to information is restricted. Chatter about food safety scares spreads lightning-fast on Twitter-like Weibo, so companies are learning to keep constant tabs on their online brand reputation. “We work with a number of clients in this sector and we’ve been busy, very busy, over the last couple of weeks,” said a Chinabased senior executive at a social media analytics firm. He asked not to be identified because the firm is currently working with industry brands including those owned by Fonterra Cooperative Group Ltd, Danone SA and Nestle SA. Earlier this month, five international milk powder firms and one Chinese company were fined a record US$110 million after a probe into price fixing in the sector, while a botulism scare at New Zealand dairy giant Fonterra tarnished the wider reputation of imported milk powder. Reuters analysed the frequency of Weibo posts mentioning the major infant formula brands and found that the number of posts began to increase as early as May, and then peaked at the start of August, around the time of the Fonterra botulism scare. The earlier spikes could be explained by the spread of rumours around the milk powder price probe, which was publicly disclosed in July but had been in the works for four months. The viral nature of social media can also amplify

the chatter without necessarily reflecting wider consumer thinking because a single message can be reposted thousands of times.

Eyes online Nestle, which was named in the pricing probe but escaped a fine, saw the smallest spike in online chatter about its Wyeth infant formula unit, which flattened in July and August. Mentions of Mead Johnson Nutrition Co spiked the most, peaking in June, but then returned close to normal this month. The frequency of posts about Dumex and Abbott Laboratories, which makes brands such as Similac, remained high into August, suggesting the firms may have work to do to reassure consumers. Chatter about Fonterra, which doesn’t have its own-label brand in China, was little affected by the earlier price probes, but saw a sudden steep spike in August at the time of the botulism scare. In August alone, posts that mention Fonterra were five times those in January to July. Nestle and Danone declined to comment. Mead Johnson, Wyeth and Fonterra did not respond to emailed queries. Late last year, a Fonterra source told Reuters that social media in China was going to be a priority. Abbott said it is stepping up social media engagement worldwide. “Our use of social media is increasing globally as we look to better understand, respond to and connect with our customers around the world,” Abbott spokeswoman Kelly Morrison said. Chinese consumers are highly sensitive to dairy safety after a scandal in 2008 involving melaminecontaminated baby milk powder. At least six babies died and thousands more fell ill.

For the international infant formula brands, the recent scandals hit a particularly sensitive spot: their reputation for safety, which was their primary edge over local rivals. “The picture that is being painted in China is that their quality isn’t that much better that local firms,” said Torsten Stocker, Hong Kongbased partner at consulting firm AT Kearney Ltd.

Getting smarter The social data company executive said that infant formula companies had made use of online media to gauge consumer sentiment, track the spread of conversations related to their brands, and work out how to respond to the crisis. “There was one brand which was holding out and didn’t admit involvement until the very end. That made Chinese netizens angry. Other brands did better, responding quickly and getting opinion leaders to support the brand online,” he said. Consultants will now create detailed reports using the data to identify weak-spots of brands through the crisis, helping milk powder makers create tailored recovery drives, he said, adding that some firms asked for updates four times a day. Milk powder makers are also using analysis of online Chinese retailer Taobao, owned by Alibaba Group Holding Ltd, to map out demand hotspots in China’s multitude of lower-tier cities where analysts predict 80 percent of sector growth. China has more than 150 cities with a population above 1 million, and the major Western brands have yet to establish coast-to-coast distribution channels. “Many firms are looking at Taobao, which is a good indicator because it tells you where demand

US$110 mln

Fine paid by six milk powder firms, including one Chinese company

is, but where the physical infrastructure hasn’t yet reached,” said Jeff Walters, managing director at Boston Consulting Group, which advises a number of milk powder firms in China. Global infant formula firms in China have traditionally benefited from high prices and a domestic sector dogged by safety fears, but analysts said the recent turmoil could mark the start of a more challenging period for firms in China. Chinese authorities are also looking to consolidate the sector and create stronger local champions, which means they will be taking on fewer but more formidable competitors. “Now companies are going to have to get a lot smarter. They’re going have to come up with the right pricing, the right brand image and focus on far better distribution,” said Shaun Rein, managing director of China Market Research Group. Reuters

KEY POINTS Consumers highly sensitive to dairy safety Recent scandals hit international brands reputation Firms stepping up social media engagement Look for right brand image and better distribution

11 11

August 28, 2013 April 19, 2013

Asia

India approves projects to kick-start investment Announcement fails to lift the rupee as shares also drop

he Indian government said yesterday it had approved a raft of infrastructure projects worth 1.83 trillion Indian rupees (US$28.38 billion) to revive economic growth and restore investor confidence after a crash in the rupee to record lows. “The message that we are sending is that the investment cycle has restarted, and we are pushing it. It is gathering pace,” Finance Minister P. Chidambaram told a news conference to announce the kick-start for 36 stalled projects in sectors from oil, gas and power to roads and railways. He said a cabinet panel had cleared 18 power projects, alone worth 830 billion rupees. Dealers said it was partly

depressed by concerns over parliament’s approval on Monday of a plan to provide cheap grain to the poor at a cost of nearly US$20 billion. “It’s not out of choice, but out of compulsion that the finance minister is announcing so many things,” said G. Chokkalingam, managing director and chief investment officer of Centrum Wealth Management in Mumbai. “The trinity of the fiscal deficit, slowing growth and an unstable currency is hitting us badly. In addition to these, the government has passed the food security bill which may put fear in the mind of rating agencies.” It will also take time for these projects to have any impact on the economy, which will reduce the immediate affect of the news in

financial markets. “These projects have long gestation periods. So it will take several months, maybe years to achieve the desired economic activity,” said Hitendra Dave, head of global markets at HSBC India. “I think to the extent that the sheen had worn off because of decisions not taken, this will help to undo the damage of sense of indecision in the government.” Mr Chidambaram said that the rupee had “overshot its true level”, and added that the food security bill would not lead to the government overshooting its fiscal deficit target. “As I said in parliament, every emerging market is challenged today. So, India is also challenged,

The message that we are sending is that the investment cycle has restarted, and we are pushing it P. Chidambaram, Finance Minister

and the impact is felt both on the equity market as well as the currency market,” he said. “What I said a few days ago, I still maintain it. The rupee has overshot its true level, it’s undervalued. Others have confirmed it. And we have to be patient and we have to be firm and we have to do what requires to be done.”

Record low The alarm over India’s fiscal deficit eclipsed Mr Chidambaram’s announcement, as the Indian rupee hit a record low and shares slumped yesterday. Instead, the rupee plumbed new depths after Chidambaram spoke and his promise that the government will meet its fiscal deficit target also failed to turn sentiment. “I have already said that 4.8 percent of GDP and the absolute number that was indicated in the budget is a red line. The red line will not be breached,” Mr Chidambaram told a news conference. “I think we’ll simply have to be patient, be firm, do whatever is required to be done, and the rupee will find its appropriate level.” Traders said the currency market is working in a climate of fear as repeated efforts by authorities to turn the markets around fail to have a holding impact. The rupee has lost more than 16 percent against the dollar so far in 2013 – making it the worst performer by far among Asian emerging market currencies tracked by Reuters – despite frantic attempts by the government and central bank to support it and repeated comments by the finance minister that the rupee is oversold. The partially convertible rupee slumped to a record low of 66.075 to the dollar, despite central bank intervention to ease the pace of the decline, surpassing its previous alltime low of 65.56 hit last Thursday. Shares also slumped, sending the benchmark BSE index down more than 3 percent and benchmark 10-year bond yields up nearly 20 basis points. Reuters

Park scraps privatisation plan for Development Bank

outh Korea scrapped a five-year-old proposal to sell Korea Development Bank, a signal President Park Geun-hye will use the nation’s biggest policy lender to channel more funds to companies. The government proposes merging the lender with Korea Finance Corp by July 2014 while selling the brokerage unit and other assets, the Financial Services Commission said in a statement yesterday. The regulator will submit a revised version of the KDB Act, a mandate to break up holding company KDB Financial Group Inc, to parliament this year, it said. Ms Park, who came to power in February, plans to use policy banks to spur economic growth amid tight liquidity and limited investor demand for banking assets. South Korea in June began its fourth attempt to sell Woori Finance Holdings Co – this time by breaking it into pieces – weeks before HSBC Holdings Plc said it would wind

down some of its local operations after failing to find a buyer. “Park’s administration is taking the right steps in reversing the previous government’s plan for KDB’s privatisation,” said Michael Na, a Seoul-based analyst at Nomura Holdings Inc. “By letting policy banks and commercial banks fulfil their separate functions, Ms Park will be able to boost overseas investors’ trust in South Korean markets.” The timing and details for selling KDB units Daewoo Securities Co, KDB Asset Management Co, KDB Capital Corp and KDB Life Insurance Co are yet to be determined, the FSC said. The KDB Act currently requires the government to begin selling shares of Korea Development Bank by May 2014. South Korea is still open to considering an initial public offering for the lender as long as it remains a controlling shareholder to maintain a policy financing focus, the FSC said. Bloomberg News

Philippine stocks sink to 2-month low

hilippine stocks fell the most in Asia, sending the benchmark index to a two-month low, amid concern that protests over discretionary government budgets will slow state spending and weigh on economic growth. Philippine Long Distance Telephone Co, the nation’s biggest company by market value, sank to a six-week low and Ayala Corp, owner of the country’s largest property developer, plunged to the lowest level since December. SM Investments Corp, owner of the nation’s largest shoppingmall operator and biggest grocery chain, slid to an eight-month low. The Philippine Stock Exchange Index lost 4 percent to 5,916.99 at the 3.30pm close in Manila, the lowest level since June 25. The market was closed for a holiday on Monday. About 60,000 people gathered in the Philippine capital yesterday to protest the misuse of public funds after a government report this month

found discretionary budgets from 2007 to 2009 were spent on dubious projects. State spending accounted for about 8.1 percent of the Philippine economy in the fourth quarter of 2012, government figures show. “There is concern that disbursement of government funds and implementation of state projects will further slow because of complaints over the abuse of discretionary funds,” said Allan Yu, a Manila-based vice president at Metropolitan Bank & Trust Co, which oversees about US$8.4 billion. Philippine President Benigno Aquino said in a televised speech on Aug. 23 he would abolish discretionary budgets for lawmakers and that revelations of the misuse of public money are “shocking.” Senators and congressmen had access to 24.8 billion pesos (US$561 million) this year through the Priority Development Assistance Fund. Bloomberg News

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August 28, 2013 April 19, 2013

Asia F&N to spin off property unit Fraser & Neave Ltd, controlled by Thailand’s richest man, said it plans to spin off its property business from operations including beverages and publishing through a Singapore listing at the end of the year. The 130-year-old conglomerate will offer to its shareholders two shares of the property company Frasers Centrepoint Ltd for every F&N stock held, according to a company statement handed out at a Singapore briefing yesterday. F&N is spinning off a division with S$9 billion (US$7 billion) of assets as of June, allowing both companies to focus on their separate expansion strategies. The move follows the S$13.8 billion takeover by Thai billionaire Charoen Sirivadhanabhakdi, whose company will vote in favour of the transaction, according to the statement. “It’s a good move because historically, there has been a holding company discount on the group because of the combined businesses of property and non-property,” Goh Han Peng, an analyst at DMG & Partners Securities Pte in Singapore, said. “By separating them, the individual businesses can be valued separately and the food and beverage can obtain the full valuation that they deserve.” The listing of the property arm is expected in November or December, according to the statement, and the two companies will be traded separately on the Singapore exchange.

Thai stocks slump 21pct from high Thai stocks retreated for a ninth day, sending the benchmark index down more than 20 percent from this year’s high, amid concern foreign outflows will accelerate as the economy weakens. The baht and government bonds dropped. The benchmark SET Index lost 2.7 percent to close at 1,293.97 in Bangkok, its longest losing streak since 1998. Siam Cement Pcl and Total Access Communication Pcl dropped more than 3.6 percent and were among the biggest drags on the index. The baht weakened 0.8 percent to 32.18 per dollar, while the yield on 10-year government debt rose 14 basis points to 4.29 percent, the highest level since December 2009. Thailand entered a recession in the second quarter, according to figures released this month, while data yesterday showed exports unexpectedly fell last month. Southeast Asia’s second-biggest economy will probably post a current-account deficit of US$550 million in July, according to a Bloomberg survey of economists. “Companies with revenue from domestic markets should be affected by weak economic growth,” Jintana Mekintharanggur, director of equity investment at Manulife Asset Management Co in Bangkok said. “Overseas investors are unlikely to bring money back into equity markets in Thailand and the region until there are signs of strong economic growth.”

ANA to buy stake in Myanmar Airline Japanese airline pays US$25 million for stake in Asian Wings Airways

NA Holdings Inc, Japan’s largest airline, will buy a stake in Myanmar’s Asian Wings Airways Ltd as the Southeast Asian nation opens its economy for overseas investments. The Japanese carrier will pay US$25 million for a 49 percent stake in the Myanmar company, the Tokyo-based airline said in a statement yesterday. ANA joins Coca-Cola Co., PepsiCo Inc. and Unilever Plc in expanding in the nation of 64 million people, after the U.S. eased sanctions last year as Myanmar moved toward democracy following five decades of military rule. South Korea’s Incheon International Airport Corp won a US$1.1 billion contract this month to build a new international airport for Yangon, Myanmar’s largest city, to increase passenger capacity fivefold on expectations of soaring demand. “There’s still a lot more room for growth in travel in Asia,” Toshiaki Nonaka, a director of strategic planning at ANA, told reporters in Tokyo yesterday. “We want to actively go and seize that growth. With this tie-up we’re expanding our base for

flights to other Asian countries.” Asian Wings, based in Yangon, is a closely-held airline that started flying in 2011 and operates three Avions de Transport Regional ATR72 planes and an Airbus SAS A321, according to its website. It operates routes to “all major tourist destinations” in Myanmar, according to the site.

Tripling fleet The carrier will add 10 Airbus A320s to its fleet over the next five years, and boost its ATR aircraft to four, more than tripling its fleet to 15 planes, said Mr Nonaka. ANA is considering leasing the Airbus planes to Asian Wings and may invest in new technology for its ticketing system as well, he said. ANA restarted flights to Myanmar last year, for the first time in 12 years, as sanctions against the country were eased. The airport at Myanmar’s capital Naypidaw, the nation’s biggest with a capacity to handle 5 million passengers, is served by 18 international carriers. The new airport in Yangon will be

able to handle 12 million passengers a year when it opens for business in 2018. The city’s existing airport is also aiming to more than double its capacity to 5.5 million by 2016. ANA’s acquisition will be its first of a new airline since the company raised 174 billion yen (US$1.8 billion) in a share sale last year for acquisitions and aircraft purchases. All Nippon Airways, the main carrier of ANA Holdings, said earlier this year it was looking for acquisitions and partnerships in countries including India, Thailand and Myanmar after raising money in the share sale. “It will help them tap growing travel demand in Southeast Asia,” Ryota Himeno, an analyst at Barclays Securities Japan Ltd, said of the Asian Wings purchase. “It’s a step in the right direction, but they need to make more investments to make the best use of their capital.” ANA fell 0.5 percent to 208 yen at the close of trading in Tokyo yesterday. The stock has advanced 15 percent this year, compared with a 30 percent gain in Japan’s benchmark Nikkei 225 Stock Average. Bloomberg News

ANA’s first acquisition since last year’s share sale

Fonterra ups 2014 milk price forecast New Zealand’s Fonterra Cooperative Group Ltd, the world’s largest dairy processor, raised its milk price forecast by 4 percent for the 2013/14 season yesterday, citing rises in international dairy prices due to demand from emerging countries. The higher forecast price to be paid to farmers by the dairy cooperative, which commands roughly one-third of global dairy exports, reflects continued demand for its products despite a global food scare earlier this month, when some Fonterra products were found to contain a bacteria that can cause botulism. The company raised its forecast Farmgate Milk Price by 30 cents to NZ$7.80 (US$6.14) per kilogram of milk solids – the second hike in less than a month – taking the price near a record NZ$7.90 paid for the 2010/11 season. With the addition of a 32-cent forecast dividend, this would result in a final cash payout price to its farmer-shareholders of NZ$8.12, a jump of around 33 percent from a forecast payout of NZ$6.12 for the 2012/13 year ended in July. “Current market views support commodity prices remaining at historically high levels longer than previously forecasted,” Fonterra chairman John Wilson said in a statement.

Billabong sees annual losses triple B

illabong International Ltd said its 40-year-old surf brand was worthless after the company’s losses tripled amid store closures, firings and a breach of debt terms. The stock slumped as much as 16 percent. Founded by Gordon Merchant in 1973, Billabong helped sell Australian surfing culture worldwide and rose to a market value of A$3.84 billion (US$3.45 billion) at its peak

in 2007. Earnings have plummeted in the last two years as competitors stole market share and Billabong took on debt to build a store network that it’s now shrinking. “You can see how much the core business has deteriorated over the last few years. There’s still a massive challenge to get the business going right,” Todd Guyot, an analyst at Moelis & Co in Sydney, said by telephone. “It probably isn’t cool any more for the youth of today to wear Billabong.” The Gold Coast, Australiabased company has closed 158 stores, cancelled relationships with three-quarters of its suppliers, and is cutting 15 percent of jobs in its European division. The value of its 13 brands fell to A$90 million at the end of June

from A$614 million in December 2011, and the Billabong label itself is worthless, the company said in its financial statements yesterday. About A$37 million of group brand value was locked up in the DaKine outdoor clothing and backpack label which Billabong sold to Altamont last month. Four other brands, including Element skateboards and Palmers surfboard accessories, were also written down to a zero valuation, according to the statements. Full-year losses widened to A$860 million in the year ended June from a A$276 million loss in the previous 12 months. A 14 percent fall in sales put revenue below the company’s operating costs and the company took a loan from Altamont Capital Partners to refinance its debt. Reuters

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August 28, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 46.2 45.9

70.5

22.9

70.4

22.7

70.3

22.5

45.6 45.3

Max 46.2

average 45.937

Min 45

Last 46

45.0

Max 70.45

average 70.433

Min 70.25

70.2

Last 70.25

Max 22.9

average 22.583

Min 22.3

Last 22.9

19.7

45.00 44.45

23.2 22.9

19.6

43.90

22.6 19.5

43.35

Max 44.95

average 44.322

Min 42.85

Last 44.9

42.80

Max 19.68

average 19.555

Commodities PRICE

DAY %

YTD %

(H) 52W

106.11

0.179380665

13.36538462

107.9499969

86.04000092

BRENT CRUDE FUTR Oct13

111.02

0.261898311

5.003310319

113.6100006

96.37999725

GASOLINE RBOB FUT Sep13

295.3

0.044042416

7.856386281

309.1700077

260.2499962

940.75

-0.106185293

3.806896552

975.75

835.5

3.499

-0.398519784

-2.751528627

4.517000198

3.128999949

307.99

0.02923027

2.886253549

319.1699982

275.5500078

NATURAL GAS FUTR Sep13 NY Harb ULSD Fut Sep13 Gold Spot $/Oz

1410.8

1.1529

-15.2398

1796.08

1180.57

Silver Spot $/Oz

24.2316

0.9414

-19.5231

35.365

18.2208

Platinum Spot $/Oz

1548.24

0.8297

2.0089

1742.8

1294.18

Palladium Spot $/Oz

748.25

-0.5978

6.9448

786.5

587.4

1893

0.477707006

-8.683068017

2200.199951

1758

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

Last 19.52

(L) 52W

WTI CRUDE FUTURE Oct13

GAS OIL FUT (ICE) Oct13

METALS

Min 19.46

3MO ($)

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

7360

0.546448087

-7.19959652

8422

6602

1986.5

0.633232016

-4.495192308

2230

1809.75

14525

0.658350658

-14.85932005

18920

13205

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

15.925

0.220264317

3.30846578

16.65000153

14.77000046

496.5

-0.799200799

-17.21550646

665

445.75

WHEAT FUTURE(CBT) Dec13

663.25

-0.524934383

-19.18976546

913

635.5

SOYBEAN FUTURE Nov13

1388.25

-0.089960417

6.563039724

1409.75

1162.5

COFFEE 'C' FUTURE Dec13

116.95

-0.67940552

-25.24768297

200

116.3499985

NAME

15.92999935

ARISTOCRAT LEISU

74.34999847

CROWN LTD

CORN FUTURE

Dec13

SUGAR #11 (WORLD) Oct13

16.56

COTTON NO.2 FUTR Dec13

-0.30102348

84.72

-17.44765703

-0.212014134

21.82999992

7.594615189

93.72000122

World Stock Markets - Indices NAME

19.4

22.3 Max 23.2

average 22.462

Min 22

Last 23.2

22.0

Currency Exchange Rates

NAME ENERGY

22.3

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14946.46

-0.426701

14.05907

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

3657.571

21.13113

3694.188

2810.8

FTSE 100 INDEX

6440.3

-0.7978928

9.198155

6875.62

5605.589844

DAX INDEX

8316.96

-1.401161

9.255567

8557.86

6871

NIKKEI 225

13542.37

-0.6886776

30.27548

15942.6

8488.14

HANG SENG INDEX

21874.77

-0.5932656

-3.452148

23944.74

19076.78906

CSI 300 INDEX

2340.881

0.2254223

-7.216578

2791.303

2023.171

TAIWAN TAIEX INDEX

7820.84

-0.9389523

1.575944

8439.15

7050.05

KOSPI INDEX

1885.84

-0.1069995

-5.568718

2042.48

S&P/ASX 200 INDEX

5141.216

0.1131946

10.58875

JAKARTA COMPOSITE INDEX

DAY %

YTD %

(H) 52W

(L) 52W

0.894 1.5515 0.9224 1.333 97.96 7.9891 7.7566 6.1213 65.95 32.19 1.2838 30.02 44.585 11357 87.577 1.22962 0.85918 8.1626 10.6495 130.58 1.03

-0.8319 -0.3532 0.1409 -0.2992 0.684 -0.0125 -0.0168 -0.0098 -2.4905 -0.7766 -0.3116 -0.1632 -0.7738 -4.4818 1.5346 0.4335 -0.0524 0.2279 0.2967 0.9879 0

-13.8562 -4.0863 -0.7589 1.0614 -12.107 -0.0739 -0.0774 1.7856 -16.6111 -5.0016 -4.8606 -3.2878 -8.0296 -13.7712 1.9982 -1.8006 -5.0932 0.6726 -1.1184 -13.0265 -0.0097

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3593 66.075 32.19 1.2862 30.228 44.585 11357 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 1.20069 0.78875 7.8281 9.9593 97.89 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.49

-2.178649

42.53968

4.63

2.49

VOLUME CRNCY 2889571

14.59

-0.613079

36.73852

15.09

8.9

4377645

AMAX HOLDINGS LT

-2.912621

-28.57143

1.72

0.75

1662300

BOC HONG KONG HO

24.45

1.452281

22.85

7452165

CENTURY LEGEND

0.38

43.39623

0.42

0.22

CHEUK NANG HLDGS

6.28

0.8025682

4.841406

6.74

3.09

115000

CHINA OVERSEAS

23.15

-1.068376

0.2164486

25.6

17.28

9215386

CHINESE ESTATES

16.26

2.007528

44.59055

16.98

7.996

165000

CHOW TAI FOOK JE

9.9

-2.559055

-20.418

13.4

7.44

1454800

EMPEROR ENTERTAI

489792

2.72

0.7407407

43.91535

3.07

1.38

FUTURE BRIGHT

2.3

-1.287554

89.76489

2.76

1.053

402000

GALAXY ENTERTAIN

1.210121

51.56507

46.3

20.45

14745037

121.7

-0.5718954

2.527383

132.8

109

817623

HOPEWELL HLDGS

24.5

-0.4065041

-26.31579

35.3

23.2

2075800

HANG SENG BK HSBC HLDGS PLC

83.1

-1.189061

2.214018

90.7

65.85

8722369

HUTCHISON TELE H

3.33

-1.47929

-6.460673

4.66

2.98

4590000

LUK FOOK HLDGS I

24.25

-2.020202

-0.6147525

30.05

16.88

1200900

MELCO INTL DEVEL

17.82

2.178899

97.78024

18.18

5.91

4191000

MGM CHINA HOLDIN

22.9

2.690583

72.46211

23.65

11.346

2713391

1770.53

MIDLAND HOLDINGS

2.95

-1.006711

-20.27027

2.68

1424000

5249.6

4261.2

NEPTUNE GROUP

0.168

-0.591716

10.52632

0.23

0.131

4620000

NEW WORLD DEV

-1.610018

-8.48586

15.12

9.38

11305717 11763893

3961.199

-3.870003

-8.235205

5251.296

3958.098

FTSE Bursa Malaysia KLCI

1700.19

-1.294637

0.6655017

1826.22

1590.67

NZX ALL INDEX

967.812

9.722663

998.487

PHILIPPINES ALL SHARE IX

3626.64

-1.955677

4571.4

-3.588348

PRICE

SANDS CHINA LTD

44.9

3.337169

32.25331

45.5

26.05

SHUN HO RESOURCE

1.85

-0.5376344

32.14286

1.9

1.06

801.032

SHUN TAK HOLDING

4.05

1.758794

-3.34129

4.65

2.76

5672257

3411.69

SJM HOLDINGS LTD

19.52

-0.8130081

9.986344

22.382

15.401

6693000

SMARTONE TELECOM

10.88

-0.9107468

-22.72727

17.36

10.8

932000

23.2

5.936073

10.73985

26.5

16.92

11497332

HSBC Dragon 300 Index Singapor

584.85

-0.16

-5.83

STOCK EXCH OF THAI INDEX

1302.87

-1.979416

-6.398314

1649.77

1207.53

HO CHI MINH STOCK INDEX

485.57

-1.013169

17.36398

533.15

372.39

Laos Composite Index

1362.31

12.14551

1455.82

1003.17

WYNN MACAU LTD ASIA ENTERTAINME

4.12

2.487562

46.37528

4.7647

2.4835

241226

BALLY TECHNOLOGI

72.99

-0.1094841

63.25207

75.61

43.16

223552

BOC HONG KONG HO

3.19

2.572347

3.908797

3.6

2.99

9665

GALAXY ENTERTAIN

5.81

1.751313

46.34761

5.85

2.735

44354 2435768

INTL GAME TECH

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

19.6

1.344364

38.32039

20.25

11.94

JONES LANG LASAL

84.16

-0.1660735

0.2620891

101.46

70.346

194446

LAS VEGAS SANDS

56.36

-1.122807

22.09705

60.54

37.8353

6545553

MELCO CROWN-ADR

27.23

-0.2564103

61.69834

27.75

11.452

2641760

MGM CHINA HOLDIN

2.91

66.25803

2.98

1.5327

500

MGM RESORTS INTE

18.15

0.8333333

55.92783

18.54

9.15

8637962

SHFL ENTERTAINME

22.85

0.2192982

57.58621

23.08

12.35

187556

SJM HOLDINGS LTD

2.58

1.176471

13.27634

2.9481

1.9818

1100

142.94

0.7151665

27.06908

146.04

93.1279

1287602

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

NAME

AIA GROUP LTD

33.7

-2.034884

20001056

ALUMINUM CORP-H

2.62

-0.3802281

7332000

CHINA UNICOM HON

BANK OF CHINA-H

3.31

-0.8982036

169282210

BANK OF COMMUN-H

5.24

-0.7575758

15133533

BANK EAST ASIA

30.55

-0.9724473

1740175

BELLE INTERNATIO

10.66

-3.090909

25552139

BOC HONG KONG HO

24.45

7452165

HANG LUNG PROPER

CITIC PACIFIC CLP HLDGS LTD

PRICE

DAY %

VOLUME

11.68

-0.3412969

15843271

9.03

-0.660066

3860730

61.7 -0.08097166

2596620

-1.149425

7059366

100.1

-0.2988048

3275411

COSCO PAC LTD

11.28

-0.1769912

10555390

SWIRE PACIFIC-A

89.8

-0.5537099

1032579

ESPRIT HLDGS

13.56

0.1477105

3217509

TENCENT HOLDINGS

362

1.457399

2871975

24.8

-0.2012072

2849762

TINGYI HLDG CO

19.36

1.25523

23363500

WANT WANT CHINA

11.42

9.596929

42669673

-3.903904

7681367

2529050

HANG SENG BK

121.7

-0.5718954

817623

HENDERSON LAND D

46.25

-1.804671

3221289

4.77

-3.830645

44959932

85.5

0.8254717

1648976

192049702 20206406

CHINA MERCHANT

23.85

-0.4175365

3117307

CHINA MOBILE

82.95

0.06031363

11975850

CHINA OVERSEAS

23.15

-1.068376

9215386

CHINA PETROLEU-H

5.81

-0.3430532

116074588

CHINA RES ENTERP

22.9

CHINA RES LAND

21.4

-1.382488

CHINA RES POWER

17.7

-0.1128668

CHINA SHENHUA-H

24.7

-2.564103

11763893

10.32

2784738

-1.543739

1684258

3.337169

SINO LAND CO

-1.573677

-0.8121827

-1.615272

SUN HUNG KAI PRO

-0.7346189

5.74

SANDS CHINA LTD

53906174

13.76

19.54

67 44.9

POWER ASSETS HOL

VOLUME

-1.150895

108.1

CHINA LIFE INS-H

DAY %

15.46

CATHAY PAC AIR

CHINA CONST BA-H

PRICE

CNOOC LTD

CHEUNG KONG CHINA COAL ENE-H

NAME

HENGAN INTL HONG KG CHINA GS

18.32

-0.8658009

12207957

HONG KONG EXCHNG

121.2

-0.4762687

2237320

HSBC HLDGS PLC

83.1

-1.189061

8722369

HUTCHISON WHAMPO

90.8

-0.4385965

5430664

IND & COMM BK-H

5.14

-0.9633911

173824382

LI & FUNG LTD

11.82

-0.8389262

10025976

2680000

MTR CORP

28.85

1.050788

2519357

8866598

NEW WORLD DEV

-1.610018

11305717

6162000

PETROCHINA CO-H

8.65

16592244

PING AN INSURA-H

54.3 -0.09199632

15049353

WHARF HLDG

MOVERS

4 22110

INDEX 21874.77 HIGH

22100.97

LOW

21789.85

52W (H) 23944.74 (L) 19076.78906

21780

23-August

27-August

14 14

August 28, 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

Apt. on Top Floor Approx. 180 square meters HKD 19.9 million

LIKE NEW 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

Year: 2007 30,000 Km Very good condition Price: MOP88,000

classifieds@macaubusinessdaily.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

Great opportunity Loft in Downtown 2 + 1 bedrooms, 2 living rooms and garden 140 sq metres with Mezzanine

Translations

Price: HKD 12 million

Inês Dias

classifieds@macaubusinessdaily.com

Languages English, Portuguese and French

Contact now for a quote: inezfernandesdias@gmail.com

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

15 15

August 28, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China’s American bailout? Alexander Friedman

Thanh Nien Vietnam’s Politburo has allowed some residents meeting certain criteria to gamble in a casino to be built in the Van Don Economic Zone in Quang Ninh Province bordering China. Vietnam’s Minister of But the overall ban needs to be in place to limit the impact of gambling on social safety and stability, said Finance Minister Dinh Tien Dung. “If locals are barred from gambling at home, they will just find other avenues in Cambodia, Macau, or Hong Kong,” Ms Ngan said. Locals should be allowed to gamble in casinos in Vietnam to “prevent the outflow of foreign currency,” and there is a pressing need to regulate that, she said.

The Star Petroliam Nasional Bhd (Petronas) will review costs of projects, delay or differ the implementation of some of them if the need arises. Petronas chief executive Tan Sri Shamsul Azhar Abbas said costs remained a major concern, especially in light of the downtrend in crude oil prices. “We’re in the process of reviewing the costs of some of our projects, and if there’s a need for us to differ some of the projects in order to contain costs, then we would do it,” he said. Petronas posted a marginal drop in net profit to 15.26 billion ringgit (US$4.58 billion) in the second quarter.

Korea Herald South Korean consumer sentiment remained unchanged for the third straight month in August as economic uncertainty lingers, the central bank said. The consumer sentiment index – a gauge of consumers’ overall economic outlook, living conditions and future spending – came in at 105 for August, unchanged from the previous month, according to the Bank of Korea.

Jakarta Post Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) revamped its organisation, several days after the arrest of its head, Rudi Rubiandini, for allegedly accepting bribes from an oil trader. SKKMigas’ acting head, Johanes Widjonarko, said the reshuffle was simply to improve the task force’s performance in helping to boost the country’s oil production to 840,000 barrels per day (bpd) this year. Mr Rudi was arrested by Corruption Eradication Commission investigators last week at his house in South Jakarta.

Global Chief Investment Officer for UBS Wealth Management

he twenty-first-century economy has thus far been shaped by capital flows from China to the United States – a pattern that has suppressed global interest rates, helped to reflate the developed world’s leverage bubble, and, through its impact on the currency market, fuelled China’s meteoric rise. But these were no ordinary capital flows. Rather than being driven by direct or portfolio investment, they came primarily from the People’s Bank of China (PBOC), as it amassed US$3.5 trillion in foreign reserves – largely U.S. Treasury securities. The fact that a single institution wields so much influence over global macroeconomic trends has caused considerable anxiety, with doomsayers predicting that doubts about U.S. debt sustainability will force China to sell off its holdings of U.S. debt. This would drive up interest rates in the U.S. and, ultimately, could trigger the dollar’s collapse. But selling off U.S. Treasury securities, it was argued, was not in China’s interest, given that it would drive up the renminbi’s exchange rate against the dollar, diminishing the domestic value of China’s reserves and undermining the export sector’s competitiveness. Indeed, a U.S. defence department report last year on the national-security implications of China’s holdings of U.S. debt concluded that “attempting to use U.S. Treasury securities as a coercive tool would have limited effect and likely would do more harm to China than to the [U.S.]”. To describe the symbiotic relationship between China’s export-led GDP growth and America’s excessive consumption, the economic historians Niall Ferguson and Moritz Schularick coined the term “Chimerica”. The invocation of the chimera of Greek mythology – a monstrous, fire-breathing amalgam of lion, goat, and dragon – makes the term all the more appropriate, given that Chimerica has generated massive and terrifying distortions in the global economy that cannot be corrected without serious consequences.

Beijing’s interest In 2009, these distortions led Ferguson and Schularick to forecast Chimerica’s collapse – a prediction that seems to be coming true. With the reserves’ longterm effects on China’s internal economic dynamics finally taking hold, selling off foreign-exchange reserves is now in China’s interest. Over the last decade, the vast

quantities of short-term capital that were being pumped into China’s banking system drove commercial banks and other financial institutions to expand credit substantially, especially through the shadow-banking system, leading to a massive credit bubble and severe overinvestment. In order to manage the resulting increase in risk, China’s new leaders are now refusing to provide further liquidity injections, as well as curbing loans to unprofitable sectors. But these efforts could trigger a financial crisis, requiring China to initiate a major recapitalisation of the banking

system. In such a scenario, non-performing loans in China’s banking system would probably amount to roughly US$1 trillion. The most obvious means of recapitalising China’s banks would be to inject renminbidenominated government debt into the banking sector. But China’s total public debt, including off-balancesheet local-government financing vehicles, probably amounts to around 70 percent of GDP already. Despite debate over the details, the conclusion of Carmen Reinhart and Kenneth Rogoff – that a high debt/GDP ratio can inhibit economic growth – remains widely accepted; so it is unlikely that raising the debt ratio to 100 percent would be in China’s long-term interest.

After spending years attempting to insulate the U.S. economy from the upshot of its own banking crisis, the Fed may ultimately be forced to bail out China’s banks, too

Potential sell-off Even if China’s leaders decided that they had the necessary fiscal latitude to pursue such a strategy, they probably would not, owing to the risk of inflation, which, perhaps more than any other economic variable, tends to lead to social unrest. Given this, in the event of a crisis, China would most likely have to begin selling off its massive store of U.S. debt. Fortunately for China, the negative consequences of such a move would probably be far less severe than previously thought. To be sure, an injection of U.S.

Treasuries into the banking sector, and their subsequent conversion to renminbi, would still strengthen China’s currency. But the rise would most likely be offset by capital outflows, as looser capital controls would enable savers to escape the financial crisis. Moreover, even if the renminbi became stronger in the short term, China is no longer as dependent on maintaining export competitiveness as it once was, given that, excluding assembly and reprocessing, exports now contribute less than 5 percent of China’s GDP. Against this background, the U.S. Federal Reserve, rather than focusing only on “tapering” its monthly purchases of long-term securities (quantitative easing), must prepare itself for a potential sell-off of U.S. debt. Given that a Fed-funded recapitalisation of China’s banking system would negate the impact of monetary policy at home, driving up borrowing costs and impeding GDP growth, the Fed should be ready to sustain quantitative easing in the event of a Chinese financial crisis. After spending years attempting to insulate the U.S. economy from the upshot of its own banking crisis, the Fed may ultimately be forced to bail out China’s banks, too. This would fundamentally redefine – and, one hopes, rebalance – U.S.China relations. © Project Syndicate

August 28, 2013

Closing Facebook pays US$20 mln over privacy flaw

U.S. to reach debt ceiling in October

Approximately 614,000 Facebook users whose personal details appeared in ads on the site without their permission will each receive a US$15 payout. More than 150 million Facebook members had their names and pictures used in Sponsored Stories, but only those who responded to an email from the site earlier this year will be compensated. Privacy organisations will also receive some of the US$20 million settlement. U.S. District Judge Richard Seeborg acknowledged that the US$15 payments were relatively small, but said it had not been established that Facebook had “undisputedly violated the law”.

The U.S. government will reach its debt limit by mid-October unless Congress acts quickly, Treasury Secretary Jack Lew has warned. The debt ceiling was last raised in January. The government can no longer borrow if it is reached. Mr Lew said that in such a case it will be unable to meet obligations such as pensions, military salaries and Medicare payments. The country’s borrowing limit is currently capped at US$16.7 trillion. “Extraordinary measures are projected to be exhausted in the middle of October,” Mr Lew said in a letter to House Speaker John Boehner and other lawmakers.

Govt, Reolian fail to satisfy bus users The public are unhappy with bus operator Reolian Public Transport Co Ltd and the Transport Bureau’s oversight of the sector since a three-concession system began in 2011 claims a survey. Research published by the General Union of Neighbourhood Association of Macau yesterday said another operator of public buses – Transportes Urbanos de Macau SARL (Transmac) scored the highest marks on public satisfaction out of the city’s three bus operators. It gained 6.95 out of 10 marks. Sociedade de Transportes Colectivos de Macau SARL (TCM) came second with 6.69 marks while Reolian trailed some way behind with a score of 5.2, according to 1,427 people the association reportedly polled. A score below six indicates a failing score, the association said in a press statement. It is the second year the survey has been conducted. The union conceded that Reolian had the biggest improvement in performance of the three operators when judged year-on-year. Reolian’s score last year was only 4.36 last year meaning it gained 0.84 points, while the other two companies only improved by 0.12 points and 0.22 points respectively. The association also asked for the first time for public views on the regulator, the Transport Bureau. It only scored 5.8 out of 10 marks. The union suggested the government increase transparency in oversight of the bus companies. “…there is still room for improvement in the bus service,” it stated.

Li Hualin under investigation for ‘breaches of discipline’

Three executives quit as Beijing probes PetroChina

T.L.

Government investigates more executives over corruption

etroChina Co Ltd, the nation’s biggest energy producer, said three senior managers resigned amid a government probe, as China’s new leaders step up their campaign against corruption. The managers, including top executives at two PetroChina units, are “currently under investigation by relevant PRC authorities,” the Beijing-based company said yesterday in a statement. The three are Li Hualin, chairman of Kunlun Energy Co, an oil and gas producer and distributor; PetroChina vice president and general manager of its biggest oilfield, Ran Xinquan; and Wang Daofu, chief geologist for PetroChina. “The only precedent we can think of here is back in 2007 when Sinopec’s chairman Chen Tonghai was arrested,” said CLSA analyst Simon Powell in a note to investors. Mr Chen, former chairman of the nation’s second-biggest oil company, China Petroleum & Chemical Corp, or Sinopec, received a suspended death sentence in 2009 for taking bribes. The probes at PetroChina come amid a wider crackdown by China’s top leadership against official corruption that President Xi Jinping, who assumed power in March, has said threatens the communist party’s grip on power. The highly-publicised trial of former Politburo member Bo Xilai on bribery, embezzlement

and power-abuse charges has been highlighted by the party as proof of its determination to target graft. Mr Li didn’t answer three calls to his office number after hours. Mr Ran and Mr Wang couldn’t be reached, after three calls to PetroChina’s general phone number in Beijing went unanswered after normal business hours.

‘Vested interests’ “The new leadership would like to be seen as being tough on corruption and so they’re trying to be bold by cracking down on the major vested interests,” Joseph Cheng, a professor of political science at City University of Hong Kong, said. “Recent major cases, including Bo Xilai, were all targets hit by the previous leaders, so the present government is looking to pick some exemplary cases.” The three executives are being investigated for “serious discipline violations,” the official Xinhua News Agency reported yesterday, citing the State-owned Assets Supervision and Administration Commission. The executives resigned with immediate effect because of personal reasons, PetroChina said in its statement, adding its operations aren’t affected. PetroChina shares were suspended yesterday in Hong Kong ahead of the announcement and will resume trading today, according to the company. Kunlun shares were

also suspended. PetroChina shares last traded at HK$8.65 and have slumped 21 percent this year. Wen Qingshan, 54, chief accountant at PetroChina’s parent China National Petroleum Corp since last month, has been identified to become chairman of Kunlun Energy, Mao Zefeng, a spokesman for PetroChina, said by phone. Separately, Wang Yongchun, general manager of PetroChina unit Daqing Oilfield Co since 2009, is under investigation for “suspected violation of disciplines,” Xinhua reported on Monday. Mr Wang, a 30year veteran of the country’s oil and gas industry, will be replaced by Liu Hongbin, a deputy general manager at CNPC, Mr Mao said. Mr Liu was appointed to his current position at CNPC last month from vice president at PetroChina. Zhao Zhengzhang, vice president at PetroChina since May 2008, will replace Ran, who was made a director on PetroChina’s board more than two years ago, as general manager of Changqing Oilfield Co, Mr Mao said. The company became the world’s most valuable and briefly overtook ExxonMobil Corp in November 2007 when it listed its shares on the Shanghai Stock Exchange, giving it a market value of US$1 trillion. Since then its market capitalisation has fallen to US$235 billion. Bloomberg News

Chief Executive meets Taiwan’s top official Taiwan’s Mainland Affairs Council chairman Wang Yu Qi has made his first official visit to Macau. He had a meeting with the city’s Chief Executive Fernando Chui Sai On yesterday. Afterwards Mr Wang said Taiwan’s cordial relations with the city are a “good example” for cross-strait relations. During the meeting at government headquarters yesterday afternoon, Mr Chui and Mr Wang discussed Taiwan-Macau cooperation on higher education, tourism and cultural and creative industries. “From what I understand, this is the very first time for a Mainland Affairs Council’s chairman to make a meeting like today with the [MSAR] chief executive,” Mr Wang told a media gathering at the Taipei Economic and Cultural Office after meeting with Mr Chui. “The meeting with chief executive Mr Chui was very positive,” said Mr Wang, adding, “Taiwan’s good relation with Macau can set up a good example for both Taiwan-Hong Kong and cross-straits relation.” Mr Wang noted that the main purpose of his trip is to visit the city’s Taipei Economic and Cultural Office, which is the unit responsible for arranging visa applications for locals to visit or stay in Taiwan. Mr Wang will return to Taiwan at noon today after a visit to Dr Sun Yat Sen Memorial House, Macau Museum and the St Paul Ruins. S.L.