Macau Business Daily, September 13, 2013 by Business Daily

MOP 6.00 Vitor Quintã

Chinese pounce on Portugal’s ‘buy a home, get a visa’

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

April 19, 2013

Buyers wanted for1 Hengqin offices Page 5

Bally merger costs cut SHFL profits Page 7

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Year II

Number 370 Friday September 13, 2013

Zung Fu Motors (Macau) Limited

acau is serving as a stepping stone to Portugal for mainland Chinese who buy property there and obtain residency, Midland Realty (Macau) Ltd says. The estate agency says it began to organise tours this summer to help prospective investors find property to buy in Portugal’s capital, Lisbon. Most inquiries come from mainland Chinese who want to acquire European residency. But the agency says this was a good time to invest in Portugal as property there was cheaper than before and the return on investment is attractive. The Portuguese consulate-general in Macau confirms that most of the 61 candidates for the Golden Residence Permit programme come from Guangdong province and prefer to invest in property. More on page 3

Hang Seng Index 23040

23014

22988

22962

22936

22910

September 12

HSI - Movers

www.macaubusinessdaily.com

Name

%Day

TENCENT HOLDINGS

2.64

COSCO PAC LTD

2.36

CHINA UNICOM HON

1.44

BANK OF CHINA-H

1.42

GALAXY ENTERTAIN

1.33

CHINA COAL ENE-H

-2.25

SANDS CHINA LTD

-2.28

HANG LUNG PROPER

-2.49

BOC HONG KONG HO

-2.93

CHINA SHENHUA-H

-3.70

Source: Bloomberg

I SSN 2226-8294

Macau’s election, a beginner’s guide

Diaoyu dispute clouds food fest

Just days before the Legislative Assembly election, Business Daily tries to explain what makes the city’s voting system tick. With most of the power in the chief executive’s hands, the assembly is often called a rubberstamp body with no power to create laws. But sociologist Paulo Godinho warns it would be a mistake to think there’s no accountability to voters. Page 2

The Macau Food Festival will again be without an authentic Japanese food zone this year. Organisers say the political tensions between China and Japan over the disputes Diaoyu Islands are even worse than last year. The festival, to be held at the Sai Van Lake Plaza from November 8 to 24, will instead have a special zone called the Thai Village. Page 4

Higher sales less lucrative for SmarTone SmarTone Macau has seen its revenue for the year ended June 30 almost double as it got a bigger share of the mobile market. But the company’s profit fell by over two-thirds due to a decline in roaming, the most profitable segment for telecom operators. And SmarTone’s profit could continue to fall after a tariff reduction for mainland China roaming introduced on August 23. Page 6

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September 13, 2013

Macau

There are 20 candidate tickets in the running for 14 directly elected seats

Macau’s election – a beginner’s guide Don’t know your ‘list voting’ from your ‘seven plus 12’?... sociologist Paulo Godinho offers some help to the uninitiated Michael Grimes

michael.grimes@macaubusinessdaily.com

or Macau non-residents more familiar with elections at home – such as the United Kingdom’s first-past-the post voting system, or Australia’s legally compulsory poll by preference vote in single member seats – the list system used in Macau elections to the Legislative Assembly can be confusing. For Portuguese nationals the arrangements used in Macau can appear – superficially at least – to be similar to elections at home. A major difference among several, says sociologist Paulo Godinho – who has commentated for television broadcasters on election races in his native Portugal – is that in Macau, the executive branch, in the form of a city chief executive, is the main initiator of policy and the source of power. There are no professional political parties with grassroots members pushing policy ideas up the chain of command.

“The power of the government by itself in Macau is much stronger than the power of parliaments in European jurisdictions,” he explains. “In the latter places if you don’t have a majority in parliament you cannot get your programme approved. Here it’s a lot different. There are a few things that need to be approved by the Legislative Assembly but most of the activity of the government doesn’t depend on the approval of the local ‘parliament’.” Another difference says Mr Godinho is that in Macau the 14 directly elected members of the Legislative Assembly are in a minority to the “seven plus 12” – the seven members appointed by the chief executive and the 12 indirectly elected by the city’s associations and social sectors. These two groups usually vote together and are usually regarded as ‘loyalists’ when it comes

Voting with their feet – and bellies

f voter participation is any measure of an electoral system’s success, it can be argued Macau is doing quite well. In the U.S. Presidential Election last November, the national voter turnout was 57.5 percent of all eligible voters according to the country’s Bipartisan Research Center. In Macau’s previous election in 2009, the turnout was 59.9 percent. Paulo Godinho expects a similar result this time from an eligible electorate of 277,153 – a rise of 11.4 percent on those entitled to vote in 2009. It’s clearly easier to marshal the vote in a small jurisdiction such as Macau compared to a vast continentsized country such as the United States. But here some polling day practices to gee up voter numbers have occurred historically that – if uncovered in a country such as Zimbabwe – would have official international observers reaching for

Some of the stranger practices seen in previous elections at Macau’s polling booths

to support for the policies of the central government. “Bills [proposed laws] that really go against government policy – even if they seem fair and right – the chance of those bills to pass in the local parliament are very very weak because there is a pro-government majority,” says Mr Godinho.

Fickle Europeans Advocates of the current system say it gives governance in Macau a stability not always seen in the fractious party politics of the West. If anyone wants a commentary on the occasional perversity of ‘pure’ democracy and its ‘stop-go’ approach to policy they can find it in a comment by Jean-Claude Juncker, a former prime minister of Luxembourg, discussing the reforms needed for the euro zone. “We all know what

their phone speed dial. One was a former practice – officially banned this year – of laying on hot food for voters after bringing them to the polling station. The understanding was that those who gave the food would also get the vote. “Of course they could not be 100 percent sure if the people were voting for them or not,” says Paulo Godinho. “In past elections, at the time mobile phones started to have cameras it seems some of the lists at that time were requiring voters they had transported and fed, to take a photo in the voting booth to confirm they were voting for the right list.” The Electoral Commission says that this year standard polling booth curtains will be replaced with translucent ones to give some privacy, but not so much that a voter can partake in any banned practices. M.G.

to do, we just don’t know how to get re-elected after we’ve done it,” he stated. Mr Godinho suggests however it would be a mistake to think there’s no accountability to voters in Macau’s political and electoral system. “There is a sense of the legislators being accountable to the people, and that is reflected in the way the people vote,” he states. “People will reward those candidates they feel are doing or proposing things in their name that are better than what is being proposed by the other directly elected members or by the government.” Being a directly elected legislator doesn’t automatically mean the person will challenge or oppose the government. “Some of the ones that will be directly elected on Sunday will also be close to the government,” says Paulo Godinho, but he adds: “If something is wrong and so obviously wrong that it affects the welfare of the people, and it is mentioned over and over by directly elected members of the assembly, I think the government then feels the pressure to change things.” For some non-residents the ‘list’ voting system is unfamiliar territory. Mr Godinho explained it for Business Daily readers. “In theory each list of candidates is running for all the 14 [directly elected] seats,” he states. “In the list you – as a voter – cannot choose which candidate you prefer. The order of the candidates on the list has already been decided. The voter can only choose which list.” An important difference between Portugal and Macau is how many votes it takes here for a list to get three of its candidates elected.

There is a sense of the legislators being accountable to the people, and that is reflected in the way the people vote Paulo Godinho, seasoned political observer

“Here, with 10,000 votes you can get one member from your list elected. With around 20,000 votes you are able to get two. But then if you want to get three, instead of 30,000 votes, in Macau you need 40,000 votes,” explains Paulo Godinho. It results, he says, in lists ‘splitting’ for tactical reasons. This also means that one list will rarely get a dominant share of the popular vote. “The most popular lists split. And they try to split the votes so that each sub-divided lists gets at least 20,000 votes, i.e. two members.” In neighbouring Hong Kong there’s frequent talk of the electoral system progressing toward a Western-style democratic system. While the New Macau Association has made a call for that, it’s not envisaged in Macau’s mini-constitution, the Basic Law. “The Basic Law here does give room to other electoral models,” says Paulo Godinho. “The only thing that limits the model of Macau is that the Basic Law says that in the future there will still be nominated members of the local parliament. So to end up with only directly elected members is not possible.”

September 13, 2013 April 19, 2013

Macau

Midland lures Chinese investors to Portugal The estate agency says mainlanders are tempted by the offer of residency Tony Lai

tony.lai@macaubusinessdaily.com

acau is serving as a stepping stone to Portugal for mainland Chinese who buy property there and obtain residency, Midland Realty (Macau) Ltd says. The estate agency says it began this summer to help prospective investors in Portugal to find property to buy in Lisbon. “There is a small number of Macau residents interested in our programme,” Midland Macau chief executive Ronald Cheung Yat Fai told Business Daily yesterday. “But most inquiries come from mainland Chinese – some of whom hold Macau or Hong Kong ID cards – who want to acquire European residency,” Mr Cheung said. “I am flying to Lisbon tomorrow to help two mainland buyers to look over properties there.” Midland Macau is arranging another tour of Portugal for property seekers over the forthcoming National Day holidays in the mainland. Last October the Portuguese government began offering residency to foreign investors that transfer at least 1 million euros (10.6 million

patacas) to Portugal, open a business that creates a minimum of 10 jobs there or buy real estate there worth a minimum of 500,000 euros. Mr Cheung said Macau, as a former Portuguese possession, was well placed to help foreign investors take advantage of this offer. “The buyers can settle transactions here temporarily as there are lawyers in Macau who have licences in both places,” he said.

Main motive Midland Macau has so far helped two mainland buyers of property in Portugal to settle deals and get preliminary approval from the Portuguese authorities to reside there. “They only need to fly to Portugal again to follow up the process and have their fingerprints done,” Mr Cheung said. He said the process was simple, but that mainlanders might face more hurdles than Macau residents because mainland documentation had to be translated into Portuguese. Our sister publication, Macau

Business magazine, says that by the end of June the Portuguese authorities had allowed 47 qualified foreign investors to reside in Portugal and were still dealing with applications by 139 others. Over 90 percent of those allowed to reside there qualified by buying real estate, and the biggest buyers were from Greater China. IRG International Realty Mediação Imobiliária Lda, a Lisbon estate agency, told the magazine that it had sold over 30 homes to Chinese investors since April, and that 10 percent were from Macau. Mr Cheung said the main motive for buying property in Portugal was to obtain residency. He said this was a good time to invest in Portugal as property there was cheaper than before. “The property market works like a cycle. It will go up after it is down,” he said.

Yield and risk Midland Macau says a new flat in the centre of Lisbon now costs between

6,000 patacas (US$751) and 7,000 patacas a square foot, and that buying a two-bedroom flat will qualify an investor for residency. “The outskirts of Lisbon are even cheaper, around 3,000 patacas to 4,000 patacas a square foot,” Mr Cheung said. That makes housing about as pricey in central Lisbon as in Macau. Official data show residential space here cost an average of 6,154 patacas per square foot in July. But unfinished flats are more expensive, at an average of 109,809 patacas a square metre. He said the return on investment in a shop in Lisbon was between 4 percent and 8 percent a year. “But there is a saying: the higher the yield, higher the risk,” he said. Mr Cheung said the response of investors to the service Midland Macau was offering had been average so far, but that business would pick up in time as the estate agency had only just begun to explore the market.

Most inquiries come from mainland Chinese … who want to acquire European residency Ronald Cheung Yat Fai, Midland Macau’s chief executive

Golden visa seekers favour property

ver 60 people have applied here for an investment residency programme in Portugal, said Manuel Ricardo Silva, chancellor of the Portuguese consulate-general in Macau. “There has been a good turnout of people asking for information on the Golden Residence Permit programme,” he told Business Daily. Up to August the consulate received 61 applications, with most candidates coming from mainland China and seeking to earn a European Union residency via property investment. “Over 90 percent of the applicants, I would say, choose the real estate purchase option,” Mr Silva said. Portugal is granting residence permits to non-European Union citizens interested in investing there. Investors must transfer at least 1 million euros (10.6 million patacas) to Portugal, open a business that creates a minimum of 10 jobs or purchase property worth a minimum of 500,000 euros. Most candidates are Chinese nationals from neighbouring Guangdong province, Mr Silva added.

Portugal began offering residency to qualified foreign investors last October

V.Q.

September 13, 2013

Macau

Islands dispute sours food fest

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The Macau Food Festival organisers say a Japanese contribution is still off the menu

HOSPITALITY

Stephanie Lai

sw.lai@macaubusinessdaily.com

Lifespans of MICE In the meetings, incentives, conventions and exhibitions (MICE) business, different types of events attract different kinds and numbers of people. Different types of events also tend to last for different average lengths of time. The average duration of each type of event varies greatly. Meetings arranged by the government or associations are usually the shortest events. In the 22 quarters for which data are available, only in two quarters did government meetings last two or more days, on average. The most frequent average duration was 1.2 days. Exhibitions tend to be the longest events. The general average duration has been 3.5 days since the beginning of 2009, and the average has never dropped below 2.2 days. The average duration of conventions has usually been somewhere in the middle. For clarity, the chart omits plots for the average durations of government meetings and association meetings, which are similar the average duration of corporate meetings.

No particular pattern is immediately apparent. The shorter government and association meetings seem to happen in the first half of any given year, but the average durations vary from year to year. Among incentives, conventions and exhibitions, the shorter events seem to happen in the second half, or there is no obvious pattern. In other words, average figures for MICE events do not seem to mean much. In contrast, individual figures can be striking. One of the most striking is the average duration of six days for the 13 exhibitions held in the second quarter of 2010. J.I.D.

3.4 days

Average duration of incentive events, Q2

he Macau Food Festival will again be without an authentic Japanese food zone this year because of what festival organiser Chan Chak Mo calls “political” considerations. South Korea has banned the import of seafood from Japan in case the seafood is contaminated by radioactive water leaked into the sea from the damaged nuclear power plant in Fukushima. But Mr Chan told reporters yesterday that dropping the Japanese food zone “was not really about” radioactive contamination. “The Civic and Municipal Affairs Bureau did a pretty good job of inspecting food imports for the effects of radiation,” he said. “It is more of a political factor we are considering. And the political atmosphere this year is worse than last year,” he said. The long-running Sino-Japanese dispute over ownership of islets that China calls the Diaoyu islands and Japan calls the Senkaku islands flared up again in August last year, when demonstrators from Hong Kong and Macau landed on them. The Macau Food Festival subsequently dropped its Kansai Food Festival zone, which 30 Japanese enterprises would have contributed to. The festival organisers, the United Association of Food and Beverage Merchants of Macau, which Mr Chan heads, instead picked 10 of Macau’s Japanese restaurants to fill the space. Mr Chan is the managing director of Future Bright Holdings Ltd, which gets over half of its revenue from nine Japanese restaurants here. “We lost some 8 percent to 10 percent of our sales revenue compared with the previous festival,”

Activist eyes Diaoyu return on Oct 1 M

acau activist Ng Sek Io is planning a return to the Diaoyu Islands, also known as Senkaku Islands in Japan, on October 1.

The Macau Food Festival will be held at the Sai Van Lake Plaza from November 8 to 24

Mr Chan said. This year’s festival, to be held at the Sai Van Lake Plaza from November 8 to 24, will have a special zone called the Thai Village. “We are also discussing with the Civic and Municipal Affairs Bureau whether we can place floating lanterns in the water to go with Thailand’s lantern festival,” Mr Chan said. The organisers expect the festival to have about 130 booths, about the same as last year. The Macau government sponsors the event. As usual, each stall owner will

receive a subsidy of 10,000 patacas (US$1,252). Mr Chan conceded that the festival was not a “lucrative” event for stallholders. “Every big restaurant that runs a booth at the festival loses money,” he said. “But all we want is to get a good visitor flow and an occasion to sell your brand,” he said. “The organising committee is certainly not thinking of earning money,” Mr Chan added. “But many small restaurant owners do not think so.”

The attempt is being timed to fall on China’s National Day, Mr Ng told Business Daily. “We plan to land on the islands to commemorate our action a year ago,” he said. Mr Ng’s World Chinese Alliance in Defence of the Diaoyu Islands and the Hong Kong-based Action Committee for Defending the Diaoyu Islands landed in the island on August 14 last year. Japanese police detained them for two days. “We expect that the mainland coast guards will be stricter this year to try to prevent us from going in order to avoid complicated

consequences,” Mr Ng said. “But we are ready to set off at all costs,” said the activist, who is also a candidate at Sunday’s Legislative Assembly election. The alliance is still looking for a proper fishing boat, Mr Ng said. “With our action, we just want to put more pressure on China to take a tougher stance on the sovereignty issue,” he added. On Wednesday Japan boosted patrols in the East Sea to “prevent provocative actions” from China’s military forces. S.L.

September 13, 2013

Macau

Hengqin offices tempt investors Macau buyers bet on the island’s potential for economic development Tony Lai

tony.lai@macaubusinessdaily.com

he developers of lowdensity office premises on Hengqin Island are enticing Macau investors with the promise that they will win big once the island is fully developed. Shanghai-listed developer Gemdale Corp began here yesterday a three-day sale of space in the second phase of The Doorway, which is in the Shizimen central business district of the island. The second phase has 96 office blocks, each containing between 180 square metres and 1,600 square metres of space. “We are doing promotion here because we think there will be some Macau investors interested in the project, as in the first phase,” said a Gemdale sales representative surnamed Wu. “For the first phase of our project, about 20 percent to -30 percent of all buyers came from Macau,” the sales rep told Business Daily. He said most buyers from Macau were not companies looking for offices but investors optimistic about Hengqin’s potential for economic development.

The central government has designated the island as a special economic area. The sales rep said that once the island had been fully developed, investors could profit from letting their office space. Gemdale’s website says the first phase of The Doorway could become a platform for cultural and creative industries. The first phase can accommodate 194 enterprises. Mr Wu said the second phase would be low-density and environment-friendly. He said the office space cost at least 800 yuan (1,037 patacas) a square foot. Gemdale has no official targets for the amount of sales it makes or the number of inquiries it gets during its three-day sale. The second phase will cover over 88,000 square metres. The entire project will have eight phases, which together will cover about 700,000 square metres. The sales rep said construction of the first two phases had been completed.

Beijing has designated Hengqin Island as a special economic area

Tilting San Kio building goes down T

he demolition of Koi Fu, the tilting old building in the San Kio district, started yesterday to make room for redevelopment. With the help of the General Union of Neighbourhood Associations – known as ‘Kai Fong’ in Cantonese – the 12 Koi Fu owners reached a deal worth over 8 million patacas (US$1 million) with Kuan Seng Estate Development Co Ltd. Two years ago Kuan Seng had also launched the redevelopment of two other residential buildings with structural problems: Fok Leng, adjacent to Koi Fu, and Meng Heng, another old six-storey building located right next to Ilha Verde’s public housing construction site. In the three cases the ‘Kai Fong’ helped to group the owners into one legal entity to negotiate with the developer, with both parties agreeing to the redevelopment in the form of a housing presales deal, ‘Kai Fong’ member Leong Keng Seng told Business Daily. But some of the Koi Fu owners, quoted by TDM Chinese radio, said the stamp duty required for the redevelopment project was “a heavy cost” to bear. S.L.

September 13, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Bumper sales Retail sales grew considerably in the first half of this year. The increases in sales of cosmetics and of watches and jewellery were the biggest. Sales of cosmetics rose by 39 percent from a year earlier and sales of watches and jewellery rose by 24.4 percent. The increases in sales of pharmacy goods, which rose by 24 percent, and of shoes, which rose by 23.7 percent, came close. Sales of communication equipment, largely mobile phones, seem to be stalling. They rose by under 2 percent, lagging well behind sales of many other goods. Among the categories surveyed, sales of dried seafood were the only ones to decrease, falling by almost 2 percent. The chart shows the seven top-selling sorts of goods. Of course, the sorts of goods sold in department stores may belong in other categories, too, so any overlaps make the picture somewhat imprecise.

SmarTone sells more, profits less Mobile services provider SmarTone Macau saw its profit take a roaming hit Vítor Quintã

vitorquinta@macaubusinessdaily.com

SmarTone’s business has been growing faster in Macau than in Hong Kong

The best-selling goods in the first half were watches and jewellery. The value of the watches and jewellery sold was almost as great as the combined sales of the three next best-selling sorts of goods – department store goods, leather products and clothing, in that order. Sales of watches and jewellery have been growing fastest over the long run, the value in the first half being 4.7 times what it was in 2009. Sales of leather products have been the next fastest growing, the value being 4.3 times in the same period. Watches, jewellery and leather are strongly influenced by the expenditure of Macau visitors. J.I.D. The content of this column is the work of Business Daily’s journalists.

20.7 %

Year-on-year rise in H1 retail sales

marTone Mobile Communications (Macau) Ltd has seen its revenue for the year ended June 30 almost double as the telecommunications operator got a bigger share of the market. The venture reported service revenues of HK$734.9 million (US$94.8 million), up by 91 percent from the previous year, the firm’s parent company announced. “In Macau, local service revenues were stable,” SmarTone Telecommunications Holdings Ltd told the Hong Kong Stock Exchange

in a filing. However SmarTone Macau has seen its operating profit for the last financial year fall by over two-thirds. The subsidiary posted an operating profit of just HK$23.2 million, down from HK$72.5 million a year earlier. The profit drop in SmarTone’s operation here was affected by a “lower contribution from roaming business,” the company said in the filing. Roaming is the most profitable segment for telecommunications operators.

Macau offsets weak China demand for luxury retailer L

uxury goods group Compagnie Financière Richemont SA reported weak demand for its high-end watches in mainland China, offset by growth in Macau and Hong Kong. The maker of Cartier jewellery and Piaget watches said in a statement yesterday that five-month sales in Asia-Pacific slowed to 4 percent, from 12 percent a year ago. “Asia-Pacific was led by good

growth in Hong Kong and Macau, offset by lower sales in mainland China,” the Switzerland-based company said. Weaker demand in China is “largely reflecting a prudent consumer sentiment after several years of exceptional expansion,” Richemont said. Luxury goods groups have grappled with weak demand in their most important growth market,

As a result, SmarTone Macau’s earnings before interest, taxes, depreciation and amortisation – or operational performance – fell by over a third to HK$87.6 million. In late February the city’s three telecommunication operators reduced roaming charges for voice calls and text messages between mainland China and Macau between 11 percent and 24 percent. And SmarTone’s roaming revenue decline here is set to continue after a second tariff reduction on August 23. SmarTone Macau did not release a detailed tariff adjustment at the time but the Bureau of Telecommunications Regulation said the reduction implemented by each company would be no less than 13 percent. Despite picking a bigger slice of the telecom market, SmartTone is still unable to fully challenge former monopoly holder Companhia de Telecomunicações de Macau SARL, better known as CTM. CTM raked in revenue of HK$2.23 billion and a profit of HK$497 million in the first half of this year alone, controlling shareholder Citic Telecom International Holdings Ltd said last month. Still, SmarTone’s growth in Macau has been growing faster than in Hong Kong. The operations here accounted for 6.1 percent of SmarTone’s overall revenues, up from 4.6 percent in the first half of the fiscal year. The Hong Kong-based group posted a net profit of HK$843 million, down by 18 percent year-on-year.

91%

year-on-year hike in SmarTone Macau revenue

China, but recently there have been signs that demand may be recovering. Tiffany & Co, Prada SpA and Coach Inc have reported good sales growth in China, while Kering still noted weak Chinese demand and Hermes International SCA said its timepieces in China were suffering from a crackdown on expensive gifts for favours. The world’s second biggest luxury goods group reported overall sales growth of 9 percent. Analysts in a Reuters poll had forecast sales growth of 9.3 percent at constant exchange rates. Richemont’s shares have gained 31 percent so far this year in the Swiss Exchange. V.Q. with Reuters

September 13, 2013 April 19, 2013

Macau

SHFL profits cut by Bally merger costs Lower-than-anticipated gaming machine sales disappoint analysts Vítor Quintã

vitorquinta@macaubusinessdaily.com

HFL entertainment Inc, a maker of casino equipment, announced its net profit tumbled in the last fiscal quarter, due to costs from the proposed merger with Bally Technologies Inc. The United States firm reported on Wednesday U.S. time that net profit fell by 38.5 percent yearon-year to US$6.4 million (51.1 million patacas) in the three months ended July 31. The estimated US$1.3-billion merger with Bally – another leading Nevada-based gaming equipment firm – cost the company US$3.6 million in the third quarter. In an earnings release, SHFL said that the merger announced in July remains pending and subject to approval by its shareholders and gaming regulators in several jurisdictions. It will take a year – until the second quarter of 2014 – to complete the merger process, said Neil Davidson, Bally’s chief financial officer, during a joint conference call with SHFL

SHLF’s sales rose by 16 percent year-on-year, below market estimates

shared with analysts in July. SHLF’s sales rose by 16 percent from a year earlier to US$73.5 million, which was below Wall

Bumpy stock ride for Ponte 16 operator

uccess Universe Group Ltd, the co-operator of Macau casino resort Ponte 16, saw its shares fall yesterday but not enough to erase a 50-percent jump on Wednesday. In just one day the company’s shares rose from less than HK$0.23 (US$0.03) to HK$0.34 in Hong Kong trading. That was the highest point for Success Universe’s stock in the last year. In a filing to the Hong Kong Stock Exchange the board said “it is not aware of any reasons for such unusual increases in the price and the trading volume of the shares of the company”. Last week a Japanese investment firm exercised a five-year old option to take an indirect stake in Success Universe. Yesterday the company’s shares fell by 4.6 percent to close at HK$0.31. Success Universe owns a 49 percent investor stake in Ponte 16. The other half of the venture is controlled by Sociedade de Jogos de Macau SA. V.Q.

Jet Asia sells two more planes P

rivate aviation operator Jet Asia Ltd is selling two more airplanes, as the company cuts down on its fleet because it does not get enough charters. SJM Holdings Ltd said in a filing that one of its subsidiaries is paying Credit Suisse AG US$9.9 million (79.1 million patacas) to exercise an early buy option in order to place Jet Asia in a position to sell the two airplanes. Jet Asia is owned by Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau (STDM) SA, one of the controlling shareholders of SJM. Jet Asia has recently agreed to sell four airplanes to “an independent party,” the company had told the Hong Kong Stock Exchange last month. The sale of two of these four airplanes was completed in August and the other two are now being negotiated. The company is selling these four Hawker mid-sized jets to a United States company, a source told Business Daily in July. Jet Asia is seeking to sell a total of six airplanes. V.Q.

Street estimates of revenue of US$78 million, online gaming news service GamblingCompliance reported. SHFL sells slot machines, card

shufflers and other gambling supplies. It dominates the Macau market in the utility products segment. Utility revenue was up 5.3 percent to US$25.6 million. Gaming machine revenue jumped 16.1 percent to US$23.1 million, lower than anticipated by analysts, who were also cagey over a 30 percent increase in costs. “Overall results were disappointing, in our view,” Eilers Research director Todd Eilers said in a note to clients. The merger “could have been a distraction in the quarter,” he added. In June SHFL chief executive Gavin Isaacs told our sister publication Macau Business magazine that the city’s gaming industry would “be a strong market focus for us in the year ahead”. “We’re growing 20 percent a year here and I want to help keep it going,” Mr Isaacs said.

US$3.6 mln

Cost of Bally merger for SHFL in last fiscal quarter

September 13, 2013 April 19, 2013

Greater China

HK property tycoons scramble to meet targets

Fosun buys into luxury firm Caruso

Developers selling homes at about a 20 pct premium over prices Yimou Lee

The property market’s bubble risk is still something we can’t ignore, says Leung Chun Ying

ong Kong’s powerful property developers are locked in a price war as measures to cool one of the world’s most expensive real estate markets force them to impose steep discounts to hit sales targets, with many turning to mainland China to fill the gap. Developers such as Cheung Kong (Holdings) Ltd, controlled by Asia’s richest man Li Ka Shing, are even throwing in free car park spaces – which can be worth US$100,000 or more in densely populated Hong Kong – to lure buyers at a time when quarterly transactions are at their lowest level since 1996. Real estate agents have also taken to the streets to urge the government to relax cooling measures that they say could cost them their jobs, although market watchers say the government is unlikely to budge any time soon. “The Hong Kong government has

made it clear that it can’t afford the risks of removing the measures,” said Thomas Lam, head of research for greater China at real estate firm Knight Frank. He added the government was not expected to revoke the measures, which include higher stamp duties for buyers and home loan curbs, in the next 12 to 24 months. Combined contracted property sales of Hong Kong’s four major developers – Sun Hung Kai Properties, Cheung Kong, Henderson Land Development and New World Development – dropped 39 percent year-on-year in the first half of 2013, according to Phillips Securities.

Restraining demand The latest earnings reports from Hong Kong developers show tightening steps are indeed taking a toll. Sun Hung Kai Properties, which has a market value of US$35.5 billion, joined that list yesterday, when it reported its first decline in annual underlying profit since it started reporting underlying profit in 2005. It posted a deeper-than-expected 14 percent drop in underlying profit to HK$18.6 billion (US$2.40 billion) for the 2013 fiscal year and said it had recorded satisfactory contracted sales of HK$32.9 billion for the period. Sun Hung Kai earlier this year lowered its sales target for the 2013 financial year by 9 percent to HK$32 billion due to the impact of tightening measures. “The government’s stringent measures, particularly various types of stamp duty, will continue to restrain various kinds of demand, though first-time buyers who usually purchase small- to medium-sized

Chinese bad-loan banker markets bonds As costs slide and economists boost their forecast fro growth

hina Orient Asset Management Corp, which purchases, manages and disposes of non-performing loans, is offering a sale of dollar-denominated debt as premiums for the nation’s issuers fall to a three-month low. The state-owned company plans to sell five-year bonds at about 337.5 basis points more than similar-maturity Treasuries, a person familiar with the matter said, asking not to be identified because the terms aren’t set. The average spread on dollar securities sold by Chinese borrowers narrowed to 367 basis points yesterday, the tightest since May 31, according to JPMorgan Chase & Co indexes.

Sri Lanka’s National Savings Bank, Export-Import Bank of Korea and Sumitomo Life Insurance Co are also marketing debt. Industrial output in the world’s second-largest economy expanded at the fastest pace in 17 months in August. Economists at Bank of America Corp yesterday became the latest to boost their forecast for China’s economic growth, projecting a 7.7 percent expansion this year from a previous outlook for 7.6 percent. “The recent data has definitely been a little bit more supportive,” said Kaushik Rudra, the global head of credit research in Singapore at Standard Chartered Plc. “A lot of

units will be less affected,” Sun Hung Kai said in its earnings statement. The battle to rein in property prices has pitted Hong Kong Chief Executive Leung Chun Ying against tycoons such as Cheung Kong’s Mr Li, who publicly opposed Mr Leung in last year’s leadership election. Mr Leung reiterated on Wednesday that the city had no plans to relax recent property cooling measures, given the continuing risk of a real estate market bubble. “After careful consideration, the government considers that any exemptions or tax rebates would weaken any relevant property cooling policies aimed at lowering the risk of a property market bubble,” Mr Leung said at a business lunch. “The property market’s bubble risk is still something we can’t ignore,” he added, noting home prices continued to rise an average of 0.4 percent between March and July. Hong Kong began taking steps to cool property prices in October 2009, although no real impact had been seen until the most recent moves in February. “There are no speculators in the market now due to the tightening measures, so developers are forced to sell properties close to the market price,” said research associate director Wong Leung Sing at Centaline Property Agency. Developers are selling new homes at about a 20 percent premium over prices in the second-hand home market, a sharp fall from price premiums of between 50 percent and 80 percent before the latest round of property curbs started last October, said Knight Franks’ Mr Lam. Reuters

people were concerned about what sort of growth outlook they were going to get in China and were starting to price in a very negative scenario. That is getting priced down and that could provide stability to the markets over the short term.” Factory production rose 10.4 percent in August from a year earlier, the National Bureau of Statistics said in a statement in Beijing on Tuesday. China Orient Asset Management, which also engages in investment banking, financing services and private equity, plans to sell the notes through unit Century Master Investment Co, the person with knowledge of the matter said. Cifi Holdings Group Co, a Chinese builder, sold the first U.S.dollar Asian junk debt in almost two months on Wednesday, offering US$225 million more of its existing 12.25 percent bonds due 2018, data compiled by Bloomberg show. Dalvey Asset Holding Ltd bought US$100 million of the notes in a private placement arranged by UBS AG, according to a statement to the Hong Kong Stock Exchange. Bloomberg News

Chinese conglomerate Fosun International Ltd said it has bought a 35 percent stake in Italian highend menswear maker Raffaele Caruso SpA for an disclosed sum, marking its first investment in the luxury sector in Europe. “We are interested in investments linked to the secular trend of manufacturing and consumption upgrade in China,” Fosun chairman Guo Guangchang said in a press statement. “Fosun will leverage its competitive advantages to help Caruso expanding in the China market.” Fosun said a fund under its management acquired the stake in Caruso through a capital increase.

Tianjin Gas chairman under investigation The chairman of China’s Tianjin Gas Group, Jin Jianping, is being investigated for “serious discipline violations”, the official Xinhua news agency posted on its microblog yesterday, the latest senior energy executive to come under scrutiny. The news was later reposted on the website of China’s official corruption watchdog. Mr Jin resigned as chairman of the board of the Hong Kong-listed Tianjin Jinran Public Utilities Co Ltd at the beginning of the month, according to an announcement made to the Hong Kong stock exchange.

Taiwan parliament speaker challenges expulsion Taiwan’s parliament speaker challenged his expulsion from the ruling party over influence-peddling claims, complicating President Ma Ying Jeou’s bid to focus attention on policy after a series of scandals. Wang Jin Pyng sought an injunction from the Taipei District Court after the Kuomintang Party expelled him on Wednesday. Any “severe conflict” that develops between Mr Ma and parliament could affect the island’s economy, said Eric Hsing, a trader at First Securities Inc. “Some important bills affecting Taiwan’s economic infrastructure including the service pact may not pass.”

China should pursue ‘high quality’ urbanisation China must plan scientifically for “high-quality” urbanisation that is human-oriented and energy-saving, a senior official at the country’s top economic planning agency said in remarks published yesterday. Leaders have an ambitious plan to boost the urban population by 400 million over the next decade. “Our urbanisation should embody the concepts of green, intensive, intelligent and lowcarbon and it does not mean simply building things or enclosing land,” Zhang Xiaoqiang, vice head of the National Development and Reform Commission, said in an interview.

September 13, 2013 April 19, 2013

Greater China

China to cut coal use, shut polluters Government sets higher targets for nuclear power and natural gas David Stanway

hina unveiled comprehensive new measures to tackle air pollution yesterday, with plans to slash coal consumption and close polluting mills, factories and smelters, but experts said implementing the bold targets would be a major challenge. China has been under heavy pressure to address the causes of air pollution after thick, hazardous smog engulfed much of the industrial north, including the capital, Beijing, in January. It has also been anxious to head off potential sources of unrest as an increasingly affluent urban population turns against a growthat-all-costs economic model that has spoiled much of China’s air, water and soil. China published the plan on its official website, also promising to boost nuclear power and natural gas use. Environmentalists welcomed the plan but were sceptical about its effective implementation. “The coal consumption reduction targets for key industrial areas are a good sign they are taking air pollution and public health more seriously, but to make those targets happen, the action plan is a bit disappointing and there are loopholes,” said Huang Wei, a campaigner with Greenpeace in Beijing. Beijing has struggled to get wayward provinces and industries to adhere to its anti-pollution

measures and there were few concrete measures in the new plan to help strengthen its ability to monitor and punish those who violate the rules. “We don’t see any fundamental structural changes, and this could be a potential risk in China’s efforts to meet targets to reduce PM 2.5,” said Mr Huang, referring to China’s plan to cut a key indicator of air pollution by 25 percent in Beijing and surrounding provinces by 2017.

Opening loopholes Coal, which supplies more than three-quarters of China’s total electricity needs, has been identified as one of the main areas it needs to tackle. China would cut total consumption of the fossil fuel to below 65 percent of primary energy use by 2017 under the new plan, down from 66.8 percent last year. However, eastern coastal regions would be allowed to source more thermal electricity from other provinces through the power grid, raising the possibility that China’s coal consumption would be moved inland rather than actually reduced. “For [big coal-producing] places like Shanxi and Inner Mongolia, this might be a potential loophole for them to actually increase their coal consumption,” Mr Huang said. Green groups were expecting the action plan to include detailed

Sino Biopharm plunges after bribery report Drugmaker suspended trading in Hong Kong

ino Biopharmaceutical Ltd plunged the most in about 13 years before being suspended in Hong Kong trading, after a report by state-run Chinese Central Television alleged bribery at a unit of the medicine maker. Sino Biopharmaceutical fell 16 percent to HK$4.76, headed for the largest drop since October 2000, before being halted at 11.49am. The stock has been suspended pending an announcement to clarify certain information in recent press reports, the drugmaker said yesterday. Two groups of doctors attended 50-minute meetings organised by the company in China and then left on sponsored trips, according to the broadcast yesterday evening. The report is the latest claim of bribery involving physicians amid China’s crackdown on corruption in its US$350 billion health-care market. The probe has extended to multiple drug companies and local hospitals after China said it was investigating GlaxoSmithKline Plc over claims that company employees used cash and sexual favours to bribe doctors and health officials.

“Sino Biopharm is now mostly exposed to policy headwinds,” Iris Wang, a health-care analyst at Credit Suisse Group AG, wrote in a note yesterday. “We believe this event will force Sino Biopharm to strengthen its compliance control and largely affect top-line growth.” Ms Wa n g cu t h er r a ti n g o n the company to underperform from neutral. The TV programme referred to Jiangsu Chia Tai-Tianqing, one of 23 “principal subsidiaries” listed by Sino Biopharm in its 2012 annual report. Sino Biopharmaceutical has sent a team to Jiangsu to investigate the allegations, Cao Xiwen, the company chairman’s secretary, said in a telephone interview. It will issue a statement after it gets more clarity on the matter, he said. In July, China accused Glaxo of crimes involving 3 billion yuan (US$490 million) of deceptive travel and meeting expenses as well as trade in sexual favours. Authorities detained four senior executives in China at Glaxo, the U.K.’s biggest drugmaker. Bloomberg News

Hazardous smog engulfed much of the industrial north, including Beijing, in January

regional coal consumption cuts, but those cuts appear to have been left to the provinces to settle themselves. Other targets in the plan were also generally in line with a previous plans. It said it would aim to raise the share of non-fossil fuel energy to 13 percent by 2017, up from 11.4 percent in 2012. Its previous target stood at 15 percent by 2020. To help meet that target, it would raise installed nuclear capacity to

50 gigawatts (GW) by 2017, up from 12.5 GW now and slightly accelerating a previous 2020 target of 58 GW. It would add 150 billion cubic metres of natural gas trunk pipeline transmission capacity by the end of 2015 to cover industrial areas like the Beijing-Tianjin-Hebei region and the Yangtze and Pearl river deltas in the east and southeast. Reuters

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Greater China

Dalian Wanda to spend US$5 bln in acquisitions Property developer eyes foreign firms and assets Koh Gui Qing

hinese property developer Dalian Wanda Group says it can afford to spend as much as US$5 billion every year to buy foreign firms or assets, underscoring the rising clout of the firm as it expands abroad. Just weeks after completing its buy-out of British yacht maker Sunseeker International Ltd, chairman Wang Jianlin says

that he’s prepared to spend even more than US$5 billion in a single acquisition if the right opportunity arises. Mr Wang, ranked as China’s richest man by Forbes this week, said the company will continue to focus on the hospitality and entertainment industries. “Every year we should have around a few billion U.S. dollars,” said Mr Wang, who was speaking in an

interview on the sidelines of the World Economic Forum in Dalian, northern China. Wanda Group, a privately-held conglomerate that operates businesses ranging from hotels and shopping malls to cinemas, has expanded rapidly outside China in recent years. In June, Mr Wang told Reuters that he planned to invest about US$1 billion to build a five-star hotel in New

York and that he wanted to build Wanda hotels in eight to 10 cities outside China over the next decade in an effort to increase the company’s global presence. The New York announcement followed a 1 billion pound (US$1.57 billion) British investment that included the acquisition of Sunseeker, Britain’s largest luxury yacht maker by sales, and the construction of a 160-room Wanda hotel and apartment building in London.

‘Not complicated’ Wanda made its first international foray last year, buying U.S. cinema chain AMC Entertainment for US$2.6 billion. The company announced on Wednesday that it would hold opening ceremonies for its new 30 billion yuan (US$4.90 billion) film studio

US$87.8 bln China’s overseas investments in 2012

in the Chinese coastal city of Qingdao later this month. China’s overseas investments totalled US$87.8 billion in 2012, up 17.6 percent from 2011, making it the world’s thirdlargest investor behind the U.S. and Japan, according to a report jointly released by China’s Ministry of Commerce, the National Bureau of Statistics, and the State Administration of Foreign Exchange. Concerns that Chinese investments overseas are hindered by rising regulatory scrutiny are also unfounded, Mr Wang said, blaming “sensational media reports” for stirring undue worries. The U.S. government is not hostile to investment from overseas, and likewise China’s regulation of foreign investment is not as stringent as some think, he said. “At first, we were scared too. We thought if we invested in the United States, we would have to wait a long time. We asked a local lawyer and he also said he wasn’t confident of an approval. “But to our surprise, it’s not that complicated. As long as it is a bona fide private firm, as long as it does not involve sensitive industries, I believe there will be no problems.” Wanda has succeeded in closing overseas deals for service-sector acquisitions and investments while Chinese companies in more sensitive fields such as resources and telecommunications have often faced opposition when trying to buy foreign assets. Dalian Wanda Group, which was founded in 1988, has 300 billion yuan (US$49.02 billion) in total assets and 141.7 billion yuan in annual revenue, according to the company. Reuters

Wang Jianlin was this week ranked China’s richest man by Forbes

Henkel to expand in smaller cities Company to invest ‘heavily’ to lift proportion of Chinese sales

enkel AG, the German maker of adhesives and Soft Scrub cleaners, plans to step up expansion in China as the company pushes to sell hair and skin care products in smaller cities outside Beijing and Shanghai. The company will invest “heavily” to lift the proportion of China sales at its consumer business to 30 percent from the current 20 percent, chief executive Kasper Rorsted said in an interview yesterday. Adhesives account for 80 percent of the company’s China revenue, he said. “Beauty care is where we are expanding,” Mr Rorsted said at the World Economic Forum in Dalian, China. Henkel will expand its professional range of

hair products, including colorants, which it’s mainly selling in the bigger cities, he said. The Dusseldorf-based maker of Loctite glue and Persil detergent is diversifying operations as consumers in western Europe hold back spending. Henkel’s plan for China would allow the company to expand in a beauty and personal-care market that may grow 8.8 percent to US$34.8 billion this year, according to estimates by London-based researcher Euromonitor. “We are very convinced emerging markets will continue to drive growth over the next many years to come,” Mr Rorsted said. Henkel has a target of increasing revenue to

20 billion euros (US$27 billion) in 2016 from 16.5 billion euros last year, with half its sales coming from markets including Latin America or the AsiaPacific region. Henkel has “double-digit growth rates” in China, which is the company’s largest market behind the U.S. and Germany and will become its “primary growth market,” Mr Rosted said. The company last month reported secondquarter earnings that beat analyst estimates, helped by demand for its laundry and home-care products in emerging markets. Earnings before interest and taxes excluding one-time gains or costs rose 8.2 percent to 660 million euros. Bloomberg News

‘Zero tolerance’ for fake data, says statistics boss

hina’s statisticsbureau chief said the agency has “zero tolerance” for falsified data after it publicised cases of manipulated local numbers and the customs bureau cracked down on fraudulent export invoices. Incidents exposed by the statistics agency are isolated and won’t affect the broader quality of data, Ma Jiantang, head of the National Bureau of Statistics, said yesterday at a media event in Beijing. China’s government has struggled to win the trust of investors and economists for data ranging from gross domestic product to trade. Mr Ma said in June that China would start an investigation to ensure the accuracy of numbers filed by companies and that

those found submitting inaccurate information for major statistics may be “severely punished”. The statistics bureau found inflated data on industrial output in Henglan town in southern Guangdong province, according to a June 14 report by the state-run Xinhua News Agency. A county in the southwestern province of Yunnan falsified industrial output and fixedasset investment figures, according to a China Information News report posted on the bureau’s website on September 5. Li Keqiang, who became premier this year, said in 2007 that GDP figures were “man-made” and “for reference only,” according to a WikiLeaks cable published in 2010. Bloomberg News

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Asia Mitsubishi Motors weighs share sale Mitsubishi Motors Corp is considering various options including a public share offering as it seeks funding to buy back preferred shares from other Mitsubishi companies, in a move that would mark its emergence from a decade of financial support, sources said. The capital increase could allow the automaker, Japan’s sixth biggest by sales volume, to pay back its biggest shareholders for a 2004 bailout and resume dividend payments after a decade and a half. People familiar with the situation, who asked not to be named, said that Mitsubishi Motors is in the early stages of studying a potential share offering and that key details, including the amount, were not yet decided. The Nikkei business daily reported earlier yesterday that Mitsubishi Motors would offer about 200 billion yen (US$2 billion) in shares to the public during the financial year ending in March 2014. “While Mitsubishi Motors is considering various measures regarding the treatment of preferred stock, there has been no decision made,” company spokeswoman Namie Koketsu said. For Mitsubishi Motors to resume dividend payments, it must first decide how to deal with around 380 billion yen (US$3.8 billion) in preferred shares held by other Mitsubishi group companies. Group companies including Mitsubishi UFJ Financial Group Inc, Mitsubishi Corp and Mitsubishi Heavy Industries Ltd rescued the troubled carmaker by taking the bulk of a preferred share offering in 2004 after a failed tie-up with DaimlerChrysler AG. Unless these are converted into ordinary stock, Mitsubishi Motors will simply end up paying dividends to those companies. But any conversion would dilute the value of ordinary shares.

Sharp to raise up to US$1.7 bln Japan’s Sharp Corp plans to raise up to US$1.7 billion as the struggling TV and display maker seeks to pay down debt after a rescue last year and shore up its tattered finances, people with knowledge of the moves told Reuters. The capital injection would move Sharp forward in its turnaround plan, with one source saying it will tide the company over through the business year ending in March. “Sharp is considering raising money through public offering and is in negotiations for third-party allocation, but nothing has been decided,” Hiroshi Takenami, a spokesman for Sharp, said yesterday. Sharp also faces a shortfall in its corporate pension plan and will have total unfunded liabilities amounting 120 billion yen (US$1.20 billion) at the end of the March business year. The full amount does not need to be funded immediately but it increases the pressure on the embattled electronics maker to raise capital. The sources said the Osaka-based company, which supplies display panels for Apple Inc’s smartphones, aims to raise as much as 150 billion yen through a public share offering. And it may raise an additional 20 billion yen in a third-party share allocation, according to a financing plan that has been shared with creditors. The company last year posted a 545 billion yen net loss, which pushed its capital below 6 percent of equity, well short of the 20 percent ratio widely seen as a financial-stability threshold for manufacturers. It received a 360 billion yen rescue from banks last year and has since received investments from Samsung Electronics Co Ltd and Qualcomm Inc, two of its major clients. Reuters

Stock market rally risks stalling if Abe disappoints

Japan’s stock rally braces for economic reforms test Further economic reforms needed to convince doubters Ayai Tomisawa

breakneck stock market rally in Japan, the best by far in the developed world this year, risks stalling as doubts emerge among foreign investors that Prime Minister Shinzo Abe can embark on bold economic reforms to underwrite sustainable long-term growth. The issue for many foreign fund managers is whether Mr Abe will be able to deliver crucial structural reforms to compliment his fiscal and monetary expansionary policies that’s driven an euphoric rise in stocks and provided fresh impetus to the world’s third-largest economy. The benchmark Nikkei is up 40 percent so far this year, the top performer among major developed markets in local currency terms. In comparison, the U.S. S&P index is up 18.4 percent in the same period, while Europe’s FTSEurofirst 300 is up 10 percent. Other bright spots include an uptick in capital spending, consumer confidence and easing deflation pressures. Data this week showed Japan’s economy grew at a much faster pace than initially expected in the second quarter, comfortably outstripping its peers in the developed world. Still, investors remember only too well the excruciating memories of the past. Many of them were burnt in the last two decades as stock market rallies fizzled on disappointment that Japanese politicians had failed

Bank of Korea holds rate steady T

he Bank of Korea held its key interest rate steady on economic resilience that is attracting foreign capital and made the won the best performer in Asia over the past month. Governor Kim Choong-soo and his board kept the seven-day repurchase

to follow through with painful but necessary restructuring. As the markets await Mr Abe’s final green light on a two-stage sales tax increase and other reform details, foreign investors are looking to lock in profits on outperformers and put some of their money into laggards. A case in point is the recent surge in the number of foreign fund managers attending brokerage seminars as they search for undervalued stocks or new investment ideas. The number of overseas money managers at a four-day conference at an upscale hotel in Tokyo organised by Mizuho Securities Asia Ltd doubled to 320 from the previous event in February. Robert Taylor, a portfolio manager at Harris Associates L.P. in Chicago with US$20 billion under management, was among them. “Abe-san really hasn’t done anything yet. All he has done was quantitative easing. Nothing fundamental really has changed,” Mr Taylor said. “As share prices reflect more positive sentiment, things are not as attractively priced to us, so we want to decrease our weight.” “As things get close to the fair value, the chance of losing money in that [stock] name goes up so it becomes more risky and so we want to reduce that risk by trimming the position and adding more undervalued names.” If Mr Abe decides to proceed as scheduled, the sales tax will rise to 8

percent from 5 percent on April 1, and to 10 percent in October 2015, as part of the plan to restore the fiscal health of Japan, which has a debt level of more than twice the size of its economy – the highest in the developed world. However, the prime minister is treading cautiously. Many politicians blame the last tax increase, in 1997, for plunging the country into recession, but a recent run of positive data has bolstered the view that the economy can withstand the pain from a tax hike. Apart from the tax-hike plan, investors are also keenly aware of other reforms that the government will need to tackle over the next year to spur long term economic growth. Indeed, in June markets sold off after Mr Abe unveiled an underwhelming package of longterm growth plans. Immigration has long been a sensitive and thorny subject. Japanese politicians of the past have lacked the political will to address the issue even though the nation’s greying population – the highest proportion of total population in the developed world – puts a big burden on the economy. “We discovered that Abenomics doesn’t address the main issue of Japan, which is demographics. Immigration is the key factor to change the view of long-term investors,” said Joel Le Saux, senior portfolio manager at SYZ Asset Management SA in Geneva.

rate at 2.5 percent for a fourth straight month, the central bank said in a statement in Seoul yesterday. With inflation near its lowest since 1999, the BOK has room to keep its policy rate steady, as signs that China’s economy is rebounding back the central bank’s forecast that domestic growth will accelerate this year. Continued capital inflows, even as speculation of Federal Reserve tapering draws global investors to the U.S., reduce the need for the BOK to raise rates. “The nation sees steady capital inflows unlike some other emerging countries, which gives much room for the Bank of Korea to keep the rate low for economic growth,” said Lee Sang Jae, chief economist at Hyundai

Securities Co in Seoul, before the announcement. The BOK will increase its benchmark rate to 2.75 percent by the end of next year, according to the median forecast in a survey of 19 economists by Bloomberg News. “The monetary easing cycle is over. Pressures stemming from potential tapering of asset purchases by the U.S. Fed will limit additional rate cuts in Korea,” Ronald Man, a Hong Kong-based economist at HSBC Holdings Plc, said before the announcement. “The next move will likely be a 25-basis-point hike in the third quarter of 2014 when the global economy picks up again.”

Bloomberg News

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Asia Growth problems not structural: Rajan India’s slowing economy and its massive current account and fiscal deficits are not structural problems and can be fixed with modest reforms, newly appointed central bank governor Raghuram Rajan said yesterday. Mr Rajan acknowledged the economy will expand at a pace that will be its slowest in a decade, with annual growth this year likely to be between 5 percent and 5.5 percent. In commentary published on the Project Syndicate website, he also drew an analogy between the current bearishness on the country, whose currency has barely recovered from record lows last month, to the fickle loyalties of Indian cricket fans. “A few years ago, India could do no wrong.... Today, India can do no right,” Mr Rajan wrote in the piece. Referring to the record current account deficit and slowing growth, Mr Rajan said those “can all be fixed by means of modest reforms”. “This is not to say that ambitious reform is not good, or is not warranted to sustain growth for the next decade. But India does not need to become a manufacturing giant overnight to fix its current problems,” he wrote.

N. Korea may have restarted nuclear reactor North Korea may have restarted a nuclear reactor capable of producing enough plutonium to make one atomic bomb every year, a U.S. research institute said. Satellite imagery taken August 31 shows white steam rising from a building containing turbines and generators powered by the 5-megawatt reactor at Yongbyon, North Korea’s main nuclear complex, the U.S.-Korea Institute of Advanced International Studies at Johns Hopkins University said yesterday. North Korea said on April 2 it would restart all facilities at Yongbyon, including the reactor mothballed under a six-nation disarmament deal in 2007, for producing energy and “bolstering up the nuclear armed force both in quality and quantity”. South Korea’s National Intelligence Service declined to confirm the institute’s findings yesterday. “North Korea now appears to have put the reactor into operation,” the institute said in the e-mailed analysis. The reactor “is capable of producing six kilograms (13.2 pounds) of plutonium a year that can be used by Pyongyang to slowly increase the size of its nuclear weapons stockpile.”

Singapore seeks funds to build green towers Singapore’s building regulator is seeking more funds to support landlords who upgrade systems used to power and cool structures, which account for a third of the nation’s electricity consumption. The Building and Construction Authority wants more money after exhausting S$100 million (US$78 million) allotted in 2009 to help property owners make their developments more environmentally friendly, chief executive John Keung said. It needs the funds to offer incentives and programmes to help owners of older properties upgrade, he said. Singapore is aiming to have 80 percent of its properties meet its green standards by 2030 as buildings make up a fifth of its land area. The authority said a recent study of 36 commercial properties that upgraded cooling systems showed energy consumption fell 16 percent. Only 21 percent of the city’s buildings meet its green standards now, it said.

SocGen mulls sale of Asia private bank Sale is part of restructuring strategy to boost profits

ociete Generale SA, France’s No. 2 listed bank, is exploring the sale of its Asia private banking arm, people familiar with the matter told Reuters, seeking to exit a market where small managers are getting hit by rising costs and competition. The Singapore-based division could fetch about US$600 million, the people said, though the actual sale price has yet to be determined and may exceed that figure. The sources declined to be identified as the discussions are confidential. A Paris-based spokeswoman for SocGen declined comment. SocGen is the third major global financial institution to seek to sell its Asian wealth arm in the last five years, as the region’s surging tide of millionaires and billionaires have posed a challenge to smaller private banks, which lack the asset base to compete with large global players and local upstarts. According to the 2013 Capgemini/ RBC Wealth Report, Asia Pacific is expected to be the region with the world’s biggest population of high net worth individuals by next year. Asia’s high net worth individuals – a term used to describe people with more than US$1 million of investable assets – hold US$12 trillion in assets, just shy of North America’s total. While Asia is among the fastest growing regions in the world for individual wealth, its millionaires and billionaires tend to offer small chunks of their riches to many wealth managers, rather than picking one to preserve over time.

RBNZ signals interest rate rise N

ew Zealand’s central bank said interest rate increases “will likely be required next year” as the economy strengthens and inflation picks up. “With the inflation pressures that have the potential to build up, given the capacity constraints in the economy, we will need to raise interest rates,” Reserve Bank of New Zealand governor Graeme Wheeler said yesterday after leaving the official cash rate at 2.5 percent, a record low. “Exactly when that will start to trigger will be determined by many factors. At this point we don’t

That goes counter to the pattern in the U.S. and Europe where private bank clients tend to hand over their money to the managers for the long haul. Private bankers in Asia often remark that because the money they receive is usually first or second generation wealth, they act more like brokers than private bankers – an arrangement that can be costly.

Potential buyers Standard Chartered Plc, Singapore’s United Overseas Bank Ltd and DBS Group Holding Ltd are among the companies that may express interest in the business, according to the people familiar with the matter. All three banks

expect that to start this year.” New Zealand may become one of the first developed nations to begin raising borrowing costs as an overheated housing market and accelerating economic growth start to stoke price pressures. Until then, Mr Wheeler is betting new limits on riskier mortgages will curb demand for property and give him scope to leave rates unchanged for as long as possible to avoid fuelling demand for the New Zealand dollar. New Zealand’s currency has gained 1.6 percent the past three months, the best performer among the 10 major developed currencies tracked by Bloomberg. “The overvalued currency is a problem and we would certainly, as a central bank, like to see a weaker currency,” Mr Wheeler told a parliamentary committee after the rate decision was announced. The exchange rate’s gains are hurting industries such as manufacturing and tourism, he said. Bloomberg News

declined to comment. Although SocGen does not break out country details for the private bank, the Asia business may account for around 10 billion euros (US$13.3 billion) to 12 billion euros of assets under management, according to Jean-Pierre Lambert, an analyst at Keefe, Bruyette & Woods. The potential sale of its Asian private bank would be the next step in a series of initiatives the French bank has taken to cut costs and boost profits. The French bank is restructuring its asset-gathering operations after recently combining them with its corporate and investment bank under Didier Valet. SocGen earlier this year sold its Japan private bank to Sumitomo Mitsui Banking Corp for an undisclosed sum. One factor leading to private bank consolidation in Asia is competition. Barclays said in a research note on Monday that 15 private banks have opened in Asia since 2009, bringing the total to 45. Another is the growing separation between the big and smaller players in the field. The sale of SocGen’s private bank in Asia, one of only a few managing more than US$10 billion, is expected to attract suitors ranging from global lenders to major regional banks in Asia, people familiar with the matter said. Reuters

US$600 mln Potential value of SocGen’s Asia private bank

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

13 13

September 13, 2013 April 19, 2013

Asia

Billionaires halt mining deals on rupee erosion Deals could slow down as assets become more expensive, says analyst

ndian billionaires led by Kumar Mangalam Birla are stalling purchases of mines overseas as the rupee’s 13 percent drop this year inflates the cost of deals. The Aditya Birla Group, which runs the nation’s second-biggest copper and aluminium maker, has put acquisition plans on hold, said a person with direct knowledge of the matter. JSW Steel Ltd, controlled by the billionaire Jindal family, would prefer to wait, commercial director Jayant Acharya said. “It won’t be easy to make decisions on merger and acquisitions in such a volatile environment,” Mr Acharya said in an interview. “Calls need to be made in a measured manner.” Indian companies spent US$12.7 million on mining assets abroad this year, the lowest amount since at least 2008, as the rupee’s tumble made it Asia’s second-worst performer. Companies that have refrained from overseas purchases risk facing higher import costs for raw materials should the rupee weaken further because of India’s record currentaccount deficit. JSW, India’s third-largest steelmaker, was looking to buy coking coal mines overseas to feed its annual 14 million metric ton capacity

in the country, chairman Sajjan Jindal said in May. The company in July got shareholder approval to raise its borrowing limit to 400 billion rupees (US$6.3 billion) from 250 billion rupees to fund expansion and acquisitions.

Aborted efforts The Aditya Birla Group, which is scouting for iron ore, coal and copper ore assets outside India, had bid through wholly-owned unit Essel Mining Ltd for Northern Iron Ltd, an Australian miner of iron ore. Essel later ended the effort, Northern Iron said in a statement in November. Aditya Birla Group spokeswoman declined to comment on the pace of overseas acquisitions. “Deals could slow down further as assets have become more expensive,” said Ketan Shaah, executive director and head of investment banking at Daiwa Capital Markets India Pvt in Mumbai. “Financing has also become more difficult.” Average dollar debt costs for Indian companies jumped to a 19-month high of 6.32 percent on August 22 from a record low of 3.76 percent, indexes compiled by HSBC Holdings Plc show.

Indian firms spent US$12.7 mln on mining assets abroad this year

A weaker rupee is weighing on producers of electricity, coal and metal as shrinking industrial output squeezes profit margins and strains finances. India’s gross domestic product grew 4.4 percent in the three months through June 30 from a year earlier, after increasing 5 percent in the year to March 31, the smallest gain since 2003. Any “external shock” could sink the rupee past 70, Arvind Virmani, an adviser on the Reserve Bank of

India’s panel on monetary policy, said on September 3. The rupee touched an unprecedented low of 68.845 a dollar on August 28 and has rebounded about 9 percent since. The fall in the currency in “such a short time is a big risk” and companies in the middle of talks “will have to recalculate their economics,” said Prasun Kumar Mukherjee, executive director at billionaire Anil Agarwal-controlled Sesa Goa Ltd. Bloomberg News

14 14

September 13, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 85.00

53.3

84.06

53.1

Max 47.95

Min 52.5

average 47.447

Last 53.3

Min 47

Last 47.05

52.5

Max 85

average 83.227

PRICE

average 23.556

Min 23.3

Last 23.3

23.3

25.6

47.75

21.3

25.4

47.50

21.1

25.2

47.25

20.9

25.0

47.00

Max 21.45

average 20.933

DAY %

YTD %

(H) 52W

Min 20.75

Last 20.75

(L) 52W

15.25641026

112.2399979

86.04000092

0.297508367

BRENT CRUDE FUTR Oct13

111.9

0.358744395

5.83561903

117.3399963

96.37999725

GASOLINE RBOB FUT Oct13

273.2

0.730034658

5.000192167

298.210001

246.6799974

GAS OIL FUT (ICE) Oct13

944.5

0.052966102

4.220689655

985.5

835.5

NATURAL GAS FUTR Oct13

3.547

-0.560695262

-2.286501377

4.525000095

3.154000044

NY Harb ULSD Fut Oct13

308.51

0.432970897

3.149553646

322.8999853

276.1999846

Gold Spot $/Oz

1343.2

-1.2309

-19.3012

1796.08

1180.57

Silver Spot $/Oz

22.7

-1.085

-24.6098

35.365

18.2208

Platinum Spot $/Oz

1462.3

-1.1525

-3.6534

1742.8

1294.18

Palladium Spot $/Oz

685.95

-2.0393

-1.9595

786.5

587.4

LME ALUMINUM 3MO ($)

1803

0.333889816

-13.02460203

2200.199951

1758

LME COPPER 3MO ($)

7170

-9.59525911

8422

6602 1811.75

3MO ($)

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

1875

-0.053304904

-9.855769231

2230

13825

0.618631732

-18.96248535

18920

13205

15.58

0.032102729

1.070385988

16.65000153

14.77000046

469

-0.740740741

-21.80075031

662.5

445.75

WHEAT FUTURE(CBT) Dec13

646.25

-0.270061728

-21.26104173

913

635.5

SOYBEAN FUTURE Nov13

1361.75

0.257684521

4.528881213

1409.75

1162.5

COFFEE 'C' FUTURE Dec13

120.25

-0.455298013

-23.13838287

200

115.25

20.7

Dec13

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

Max 25.5

average 25.104

Min 24.8

Last 24.1

24.8

NAME

17.64

-14.28571429

22.14999962

16.69999886

ARISTOCRAT LEISU

COTTON NO.2 FUTR Dec13

84.12

-0.272673385

6.832613665

93.72000122

74.34999847

CROWN LTD

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9248 1.5789 0.9312 1.3295 99.54 7.9868 7.7539 6.1182 63.4875 31.735 1.2684 29.727 43.87 11353 92.044 1.23805 0.84204 8.1337 10.6188 132.33 1.0301

-0.6019 0.1205 0.3651 0.2866 0.7535 0.0075 0.0103 0.0131 -0.193 0.772 0 0.0269 -0.1596 -0.0617 1.3787 0.084 -0.1603 -0.1623 -0.2938 0.4761 -0.0097

-10.8884 -2.3924 -1.6967 0.7961 -13.5021 -0.0451 -0.0426 1.8371 -13.3766 -3.6395 -3.7055 -2.3346 -6.5307 -13.7409 -2.9518 -2.4692 -3.1614 1.0303 -0.8325 -14.1767 -0.0194

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3324 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8848 1.4814 0.9022 1.2662 77.13 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20302 0.79235 7.8281 10.1113 99.55 1.0289

Macau Related Stocks

SUGAR #11 (WORLD) Mar14

NAME

Max 23.7

21.5

107.88

CORN FUTURE

80.30

Last 82.6

48.00

WTI CRUDE FUTURE Oct13

LME ZINC

Min 80.35

Currency Exchange Rates

NAME

METALS

23.4

81.24

Commodities ENERGY

23.5

82.18

52.7

average 52.812

23.6

83.12

52.9

Max 53.3

23.7

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.64

1.199564

47.30158

4.7

2.56

2672261

15.47

1.376147

44.98594

15.72

8.9

2920310

AMAX HOLDINGS LT

1.07

0.9433962

-23.57143

1.72

0.75

604575

BOC HONG KONG HO

24.85

-0.8182

3.112032

22.85

8601617

CENTURY LEGEND

0.38

8.571429

43.39623

0.42

0.23

204000

CHEUK NANG HLDGS

6.34

5.843076

6.74

3.19

43458

CHINA OVERSEAS

0.6289308

3.896102

25.6

17.7

22474182

CHINESE ESTATES

17.58

1.267281

56.32853

17.86

8.047

89056

CHOW TAI FOOK JE

10.88

-12.54019

13.4

7.44

4508641

EMPEROR ENTERTAI

3.01

0.6688963

59.25926

3.19

1.43

325000

2.4

0.8403361

98.01553

2.76

1.053

714000

53.3

1.330798

75.61779

53.55

22.65

11143863 1067908

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15326.6

0.8922353

16.95998

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

3725.01

-0.1075885

23.36457

3729.384

2810.8

FTSE 100 INDEX

6600.95

0.1900301

11.92205

6875.62

5605.589844

HANG SENG BK

125.9

-0.07936508

6.065715

132.8

110.6

DAX INDEX

8504.96

0.1086428

11.72522

8557.86

6950.53

HOPEWELL HLDGS

25.15

-24.3609

35.3

23.2

763872

NIKKEI 225

14387.27

-0.2620438

38.40328

15942.6

8488.14

HSBC HLDGS PLC

85.7

0.1753361

5.41205

90.7

9232624

HANG SENG INDEX

22953.72

0.07228451

1.309978

23944.74

19426.35938

HUTCHISON TELE H

3.46

-3.081232

-2.808987

4.66

2.98

9429685

CSI 300 INDEX

2507.455

0.9894119

-0.6142339

2791.303

2023.171

LUK FOOK HLDGS I

24.85

-1.388889

1.844264

30.05

16.88

2470600

MELCO INTL DEVEL

20.95

3.712871

132.5194

21.1

6.33

8119000

TAIWAN TAIEX INDEX

8225.36

0.1994155

6.829799

8439.15

7050.05

MGM CHINA HOLDIN

23.3

-0.8510638

75.47454

24.2

12.028

4507869

KOSPI INDEX

2004.06

0.01047983

0.3510182

2042.48

1770.53

MIDLAND HOLDINGS

3.08

1.650165

-16.75676

2.68

2556000

NEPTUNE GROUP

0.192

-3.030303

26.31579

0.23

0.131

59260000

NEW WORLD DEV

11.58

-0.3442341

-3.660569

15.12

9.98

7719606

SANDS CHINA LTD

47.05

-2.284528

38.58615

48.5

26.35

14170876

S&P/ASX 200 INDEX

FUTURE BRIGHT GALAXY ENTERTAIN

5242.536

0.155682

12.76817

5252.1

4325.8

4349.874

0.01046117

0.7688074

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1770.68

0.1244006

4.839108

1826.22

1590.67

SHUN HO RESOURCE

1.78

-0.5586592

27.14286

1.92

1.14

NZX ALL INDEX

984.344

0.2154286

11.59692

998.487

831.52

SHUN TAK HOLDING

4.37

1.157407

4.295941

4.65

2.86

6374300

PHILIPPINES ALL SHARE IX

3767.78

-0.1751276

1.859974

4571.4

3440.12

SJM HOLDINGS LTD

20.75

-1.190476

16.91684

22.382

15.795

7516545

SMARTONE TELECOM

10.36

-14.94253

-26.42045

16.22

10.24

32660246 12614085

JAKARTA COMPOSITE INDEX

HSBC Dragon 300 Index Singapor

593.83

-0.52

-4.39

STOCK EXCH OF THAI INDEX

1407.2

-0.2820335

1.097031

1649.77

1252.62

HO CHI MINH STOCK INDEX

475.59

-0.1700252

14.95178

533.15

372.39

Laos Composite Index

1328.71

1.397283

9.379549

1455.82

1007.25

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

WYNN MACAU LTD

25.1

2.44898

19.80906

26.5

18.32

ASIA ENTERTAINME

4.08

-0.2444988

44.95416

4.7647

2.4835

57057

BALLY TECHNOLOGI

74.05

-0.02700149

65.62291

75.61

43.16

315477

BOC HONG KONG HO

3.31

7.817592

3.6

2.99

9100

GALAXY ENTERTAIN

6.86

-0.5797101

72.79597

6.94

3.11

15284 3271994

INTL GAME TECH

19.99

-0.1997004

41.07269

20.94

12.37

JONES LANG LASAL

87.66

0.1599634

4.431734

101.46

72.56

258194

LAS VEGAS SANDS

63.48

0.7459133

37.52166

63.98

37.8353

5036101

MELCO CROWN-ADR

31.17

2.667984

85.09501

31.41

12.5

5486152

MGM CHINA HOLDIN

2.98

70.25737

3.07

1.5895

5365

MGM RESORTS INTE

19.1

0.3151261

64.08934

19.17

9.15

8269816

SHFL ENTERTAINME

22.82

0.2195872

57.37931

23.08

12.35

252887

SJM HOLDINGS LTD

2.73

1.486989

19.86217

2.9481

2.0311

42100

150.87

1.0922

34.11859

151.19

99.0914

1144038

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

34.95

-0.8510638

17618944

CHINA UNICOM HON

ALUMINUM CORP-H

2.94

2.083333

21098377

CITIC PACIFIC

BANK OF CHINA-H

3.58

1.416431

357778437

BANK OF COMMUN-H

5.88

1.204819

46784450

BANK EAST ASIA

31.4

-0.7898894

2003971

BELLE INTERNATIO

11.3

0.3552398

15517200

AIA GROUP LTD

NAME

PRICE

DAY %

VOLUME

12.68

1.44

43427097

9.92

-0.2012072

8392284

DAY %

66.25

-0.4507889

VOLUME 3337699

SANDS CHINA LTD

47.05

-2.284528

14170876

CLP HLDGS LTD

62.65

-0.2388535

2495203

1.102941

8590023

16.06

-0.9864365

49915109

SUN HUNG KAI PRO

103.1

0.4873294

3727739

11.3

2.355072

11345282

SWIRE PACIFIC-A

91.85

0.8232711

1712348

12.06

0.5

7000262

TENCENT HOLDINGS

412.8

2.635505

4025430

25.5

-2.48566

5618354

TINGYI HLDG CO

20.4

-1.686747

8051760

125.9 -0.07936508

1067908

WANT WANT CHINA

11.1

-0.7155635

9713048

WHARF HLDG

66.9

-0.7418398

3680764

COSCO PAC LTD ESPRIT HLDGS

BOC HONG KONG HO

24.85

-0.8182

8601617

HANG LUNG PROPER

14.26

-1.10957

1830100

HANG SENG BK

CHEUNG KONG

114.7

0.9683099

2460508

HENDERSON LAND D

CHINA COAL ENE-H

5.22

-2.247191

71183705

CHINA CONST BA-H

6.09

0.4950495

284130847

46.8

-0.952381

2237367

HENGAN INTL

87.65

0.1714286

1212665

HONG KG CHINA GS

18.22

0.7743363

13261274

HONG KONG EXCHNG

126.6

-0.2364066

2026714

85.7

0.1753361

9232624

CHINA LIFE INS-H

21.25

0.7109005

27792242

CHINA MERCHANT

27.25

-1.268116

3053564

CHINA MOBILE

86.85

-0.3442341

18015123

HUTCHISON WHAMPO

92.95

0.05382131

2924787

0.6289308

22474182

IND & COMM BK-H

5.48

-0.1821494

198183511

CHINA PETROLEU-H

6.09

-0.6525285

92253258

LI & FUNG LTD

11.6

14908081

CHINA RES ENTERP

23.85

0.4210526

2192315

MTR CORP

30.15

-0.8223684

CHINA RES LAND

PRICE

POWER ASSETS HOL

CNOOC LTD

CATHAY PAC AIR

CHINA OVERSEAS

NAME

HSBC HLDGS PLC

SINO LAND CO

MOVERS

23095.86

1522052

LOW

22854.54

52W (H) 23944.74

22.5

9203324

NEW WORLD DEV

11.58

-0.3442341

7719606

18.54

-1.172708

9778964

PETROCHINA CO-H

8.69

1.046512

97398941

CHINA SHENHUA-H

-3.703704

28661748

PING AN INSURA-H

59.75

0.4201681

11676517

2 23100

INDEX 22953.72 HIGH

CHINA RES POWER

(L) 19426.35938

22850

10-September

12-September

15 15

September 13, 2013 April 19, 2013

Opinion Business

wires

Is Europe out of the woods?

Leading reports from Asia’s best business newspapers

Taipei Times Credit Suisse said Taiwan’s current political turmoil would shock the local stock market, but the impact would be limited. “Political uncertainties may cause impacts to TAIEX in the short term, but we forecast the shocks will not last too long,” Credit Suisse analysts Chung Hsu told reporters on the sidelines of the brokerage’s 14th Asian Technology Conference in Taipei. Ms Hsu’s comment followed the Chinese Nationalist Party’s (KMT) revoking the membership of Legislative Speaker Wang Jin Pyng on Wednesday.

Jakarta Globe The Indonesian government is showing signs of desperation in its attempt to improve the country’s worsening economic situation, calling for business “patriotism” in dealing with the country’s weakening currency and persistent current account deficit. In a meeting with business leaders, Industry Minister MS Hidayat said he “asked them to increase exports, improve performance and to keep workers productive”. “If, in this attempt to show patriotism, they need back-up from the government, we will supply it,” he said.

The Age Australia’s economy unexpectedly shed jobs in August, taking the unemployment rate to a fresh-four year high and reviving the chance of a rate cut. The number of people employed fell by 10,800 from the previous month, when it declined by a revised 11,400, the statistics bureau said on Thursday. That compares with expectations of a 10,000 increase. The jobless rate rose to 5.8 percent from 5.7 percent. The number of fulltime jobs declined by 2600 in August, and part-time employment fell by 8200, the report showed.

Times of India Rating agency Crisil has revised its growth estimate for the current fiscal year to a decade low of 4.8 percent even as it raised agriculture growth to 4.5 percent which is more than double of last year 1.9 percent. Growth is expected to be dragged down by services, which is expected to grow at just 6.5 percent compared with the nearly 10 percent through the last decade. Two out of three sectors will see a decline in revenue growth. The collapse of the investment cycle will severely dent infrastructure, capital goods, automobiles and real estate sectors,” the rating agency said.

Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley

he euro zone crisis is over, or so we are being told. But can a couple of quarters of economic growth support claims of recovery? There is no doubt that the outlook for Europe has brightened since early 2012. Ten euro zone countries had just been downgraded by the ratings agency Standard & Poor’s. Economic activity was spiralling downward, while nervous investors were fleeing southern European banks. The Spanish government was about to nationalise Bankia, the country’s fourth-largest bank, but could not say where it would obtain the funds to recapitalise it. Interest rates on government bonds were racing upward. In Greece, meanwhile, an election was approaching, amid fears that the new government would reject the country’s financing agreement with the European Union and the International Monetary Fund. At that point, the country might be forced out of the euro zone. And what happened in Greece would not stay in Greece. Once the process of euro exit had started, there was no telling where it would stop. The general feeling was that the common currency was doomed. In fairness, this dark prognosis was not universally embraced. My own favourite recollection of this period is from March 2012, when I shared a podium in New York with another, more famous economist. We were asked: “What probability do you attach to Greece leaving the euro zone by the end of the year?” He said 100 percent. I said 0 percent. This caused no little amusement in the

audience. In the end, one of us was more right than the other.

True lender What those forecasting the euro zone’s collapse overlooked was the commitment of elected officials and their constituents to the European project. In Greece, where tensions ran highest, Syriza, the main leftist anti-euro party, received only 27 percent of the vote in the 2012 parliamentary election. In the run-up to Germany’s general election later this month, the Christian Democrats and the Social Democrats have indistinguishable pro-euro

Doing just enough to prevent the euro zone from collapsing is not the same as setting the stage for sustainable growth

positions. Alternative für Deutschland, the anti-euro party, is polling a mere 4 percent. It may yet win a few seats in the Bundestag; but the numbers indicate that

euro-scepticism remains a fringe position. Along with this deep and abiding commitment to the European project, there is fear of the unknown. The consequences of abandoning the euro are highly uncertain, and few European leaders are willing to go there. When push comes to shove, they are prepared to do just enough to hold the euro zone together, even if the necessary steps are economically and politically distasteful. So what changed in the last year? First, Europe now has a true lender of last resort. In July 2012, European Central Bank President Mario Draghi pledged that the ECB would do “whatever it takes” to preserve the euro. Draghi was still new on the job, so markets interpreted his pledge as signalling the advent of a new regime. A few days later, the ECB established its “outright monetary transactions” programme, which promised potentially unlimited purchases of troubled euro zone governments’ bonds. As a result, a mad dash for the exits by investors could no longer cause European financial markets to collapse. Eurozone member states then agreed to address their banking problems by creating a single supervisor and a mechanism for winding down bad banks. Spain conducted a systematic audit of its banking system, and 100 billion euros (US$132 billion) of EU and IMF money was made available for recapitalisation.

Unfinished business To be sure, there has been only limited progress in establishing the single

supervisor – and no progress on the resolution mechanism. But the commitment is important. The spectre of a collapse of Europe’s banks, like the spectre of a selffulfilling debt crisis, has been banished, allowing Europe’s nose-diving economies to pull up in time. But Europe could still suffer a hard landing. The banks remain weak. Now that the European Banking Authority has finally issued new prudential rules, they can get about the business of raising the capital they need as a buffer against losses. Société Générale has moved in this direction, but few other banks have followed so far. So long as European banks remain undercapitalised and overleveraged, a sustainable recovery supported by robust bank lending is unlikely. Nor has the debt overhang been removed. In the first quarter of this year, the euro zone’s public-debt ratio actually rose, to 92.2 percent of GDP. Given policy makers’ reluctance to contemplate write-downs, specifically of debt held by official lenders, governments have been forced to levy high taxes to service their obligations, in turn depressing investment. It would be better to give the European Stability Mechanism, the ECB, and other official holders of sovereign debt the haircuts that they deserve. Doing just enough to prevent the euro zone from collapsing is not the same as setting the stage for sustainable growth. Yes, Europe’s economic performance has improved. But if policy makers fail to complete unfinished business, the prognosis will be bleak. © Project Syndicate

September 13, 2013

Closing Indonesia in fresh interest rate rise

Former HK anti-graft head faulted for meals

Bank Indonesia unexpectedly raised its key interest rate for the fourth time since early June to support a weakening currency and cool inflation. The central bank increased the reference rate by a quarter of a percentage point to 7.25 percent, the highest in more than four years, and it also raised the deposit facility rate. The central bank has said it is allowing the rupiah to reach a new equilibrium after intervention to stem the currency’s decline reduced its foreign reserves. The Philippines held its benchmark rate at 3.5 percent, a record low, as easing inflation gave policy makers room to support the economy.

Hong Kong’s former anti-corruption head Timothy Tong breached spending limits on entertainment by hosting lavish meals and traveling without approval, a governmentappointed panel found. Mr Tong, who headed the Independent Commission Against Corruption until June 2012, exceeded the budget for more than a third of the 206 lunches and dinners he hosted, the panel said in a report yesterday. “The former commissioner should have ensured that entertainments hosted by the ICAC adhered strictly to the principle of frugality, instead of frequently exceeding the ceilings himself,” the panel said.

Sri Lanka approves Crown’s casino project Minister says investment could exceed US$350 mln Ranga Sirilal

ri Lanka has approved a hotel and leisure resort deal with Australian gambling tycoon James Packer’s Crown Ltd, but the investment is likely to surpass the original US$350 million, the country’s investment promotion minister told Reuters yesterday. The deal had been delayed because the Sri Lankan government had asked Lake Leisure Holdings, the joint venture between Crown and its local partner, Rank Entertainment Holdings Pvt Ltd, to change its construction plan. Mr Packer, one of Australia’s richest men, has been in talks since February with authorities in the island nation over hotel and entertainment investment options as he expands his global gambling business, which includes casinos in Australia, Macau, Britain and the United States. Mr

Packer is co-chairman of Macau casino operator Melco Crown Entertainment Ltd. Government officials had sought to change the project site, saying the original plans envisioned a structure that would have blocked the vista of a popular lake in the heart of Colombo, the capital. But Investment Promotion Minister Lakshman Yapa Abeywardena said the government had approved a deal for a structure with two towers that would leave the lake visible, instead of the earlier plan’s single tower, which would have obstructed the view. “Today cabinet approved the tax concessions for the strategic development project of Lake Leisure Holdings,” Mr Abeywardena said in an interview. “Now it will go to the parliament. The agreement is for US$350 million.

Crown’s deal approved after months of delay

They have made some alterations, so it might increase.” He did not elaborate on the tax concessions given to Mr Packer. President Mahinda Rajapaksa’s ruling party has a parliamentary majority of more than two-thirds and Packer’s deal is likely to win lawmakers’ approval easily. Rapid economic growth in Sri Lanka has been fuelled by Chinese infrastructure investment after the end of a 26-year civil war in 2009. The island nation’s proximity to a huge pool of potential gamblers in India and rising tourist numbers are also proving attractive to investors

Japan agrees deal on sales tax rise Abe plans US$50 bln stimulus package to offset impact each 1 percentage point rise in the tax will generate roughly 2.7 trillion yen in revenues.

Yoshifumi Takemoto and Yuko Yoshikawa

Tax breaks

apan is considering US$50 billion in economic stimulus to cushion the blow of a national sales-tax increase that is meant to rein in the government’s massive debt, people involved in the decisions said on yesterday. Prime Minister Shinzo Abe is set to raise the tax to 8 percent from 5 percent in April, rejecting calls by some advisers to delay or water down the fiscal tightening in order to keep the economic recovery on track. The tax hike is the biggest effort in years by the world’s third-largest economy to contain a public debt

that, at more than twice the nation’s annual economic output, is the biggest in the world. But Mr Abe has said he must balance the long-term need to balance the budget against his top priority of breaking Japan free from 15 years of deflation and tepid growth. To offset the drag from the tax increase, Mr Abe this week instructed his government to craft a stimulus package by the end of the month. One option is a spending package worth 5 trillion yen (US$50.01 billion), one of the sources said. The government estimates that

Chief Cabinet Secretary Yoshihide Suga said Mr Abe has not yet decided on the tax increase, a move expected on October 1 after a key survey of business sentiment from the Bank of Japan. Mr Suga, the top government spokesman, said Finance Minister Taro Aso and Economics Minister Akira Amari will work out the size and contents of any package. Mr Aso’s ministry, concerned about getting Japan’s finances in order, is a strong proponent of the tax increase and wants to minimise any further spending. Mr Amari has

from the gaming industry. Mr Packer has planned a hotel complex with a minimum of 400 rooms and related services, Mr Abeywardena has said earlier. Sri Lanka expects its economy to grow by more than 7 percent this year and is targeting a record US$2 billion in foreign direct investment this year. Mr Abeywardena said FDI so far this year had reached US$800 million, a jump of 25 percent from the same period in the previous year. “We have asked them [Crown] to start to bring in the FDI from October this year,” he added. Reuters

said the economic package must be bigger than 2 trillion yen to avoid an economic relapse. Options include payments to lower-income people to promote housing purchases, tax breaks for companies that increase capital spending and possibly a one-off income-tax cut, sources said. The prime minister has been proceeding cautiously since many politicians blame the last sales-tax hike, in 1997, for plunging the country into recession. The economy has improved smartly since Mr Abe came to office in December on a platform of fiscal stimulus, monetary easing and growth-promotion measures, but the rebound remains fragile. With a big upward revision to second-quarter GDP this week and the feel-good boost of Tokyo winning the right to host the 2020 summer Olympics, “the justification for delaying or changing the tax hike disappeared,” one source said. Political leaders from a spectrum of parties agreed last year to double the sales tax to 10 percent in two stages by October 2015. But the law requires the government to certify that the economy is strong enough to weather the drag from the tax hike. Reuters