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Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Stop associations, casinos from electioneering: watchdog A
ssociations linked to Legislative Assembly candidates should be restricted from providing any kind of benefits to their members at election time, said Vasco Fong Man Chong, head of the Commission Against Corruption. “Introducing this measure should regulate the problem of the ‘free meals culture’,” he stated yesterday – two days after the polls had closed. On Sunday – the actual day of the election – the commission told Business Daily it was “not aware” of any irregularities. Yet that day an elderly woman was shown on local television saying she was promised a meal if she voted for a particular ticket. The recount of votes for the tickets of Angela Leong On Kei, José Pereira Coutinho and Chan Meng Kam is expected to take two days, said the election audit committee.
Number 373 Wednesday September 18, 2013 Year II www.macaubusinessdaily.com
CTS raises package tour fees by half
Page 2
Vitor Quintã
MOP 6.00
Slot manager deal for Pharaoh’s Palace
April 19, 2013
More on page 2
Banco Weng Hang’s parent ponders sell off
Brought to you by Zung Fu Motors (Macau) Limited
A local bank providing financial backing for the Studio City casino resort on Cotai is the subject of a possible takeover bid aimed at its Hong Kong parent. Banco Weng Hang SA, a unit of Wing Hang Bank Ltd, has 12 outlets in Macau. In January it joined a US$1.4 billion syndicated loan for the construction of the US$2.9 billion (23.2 billion patacas) Studio City. Page 3
Hang Seng Index 23250
23228
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23184
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Jade sales hit by Myanmar hold ups
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September 17
The city’s sales of jade – one of the gemstones most highly-prized by Chinese consumers – have been hit by rising prices as supplies of high quality material from Myanmar – a major producer – dry up. “There has been no particular growth in jade sales here in these last few years as the buyers have higher standards for the jade quality,” Lei Cheok Kuan, general manager of Cherry Goldsmith and Jewellery (Group) Ltd told Business Daily. Page 5
Trading partners regret city’s labour shortage The dominance of the casino industry and rigid labour policies are undermining Macau’s economic diversification efforts, World Trade Organization members have said. The WTO’s fourth trade policy review of Macau, conducted in May, urged the government to ensure that companies have enough workers. Thailand’s permanent representative at the WTO said the fast growth of Macau’s economy “placed upward pressure on prices, in particular on land and labour”. Page 6
HSI - Movers Name
%Day
BANK EAST ASIA
5.67
WANT WANT CHINA
4.26
HENGAN INTL
2.19
CHINA RES LAND
1.75
LENOVO GROUP LTD
1.24
WHARF HLDG
-1.32
CHINA MERCHANT
-1.43
CHINA LIFE INS-H
-1.86
GALAXY ENTERTAIN
-2.17
CHINA COAL ENE-H
-2.70
Source: Bloomberg
I SSN 2226-8294
Brought to you by
2013-09-18
2013-09-19
2013-09-20
26˚ 32˚
26˚ 32˚
27˚ 33˚
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September 18, 2013
Macau
Keep associations, casinos out of electioneering: watchdog Changes needed to end ‘free meal culture’, says graft commissioner Stephanie Lai
sw.lai@macaubusinessdaily.com
A
ssociations linked to Legislative Assembly candidates should be restricted from providing any kind of benefits to their members, said Vasco Fong Man Chong, head of the Commission Against Corruption. Speaking to media yesterday on the sidelines of a public event, the city’s graft watchdog again called on the government to revise the electoral laws. “Macau’s elections are all about the association culture,” said Mr Fong. As such, all electoral tickets should declare which associations are supporting it when handing in its application, he said. “That way the law could restrict these associations from providing a n y m at er ial or non -mate rial returns to their members,” the commissioner added. “Introducing this measure should regulate the problem of the ‘free meals culture’.” Online media All About Macau reported an alleged corruption case
outside a dim-sum restaurant in Toi San district on election day. A group of campaign volunteers were reportedly checking voters’ names out a list while holding wads of money. Mr Fong, who is also a member of the Election Commission, said the pictures included in the report “can serve as a reference, but there is still no proof that the volunteers are handing the money” to voters. “We are still following up on the case,” he added.
Gaming role The commissioner also believes “the position and role of the gaming companies in the election process” should be reconsidered when amending the electoral law. “In the past, when Macau only had one gaming concessionaire, there were laws restricting it from interfering in the electoral affairs,” said Mr Fong. “One day most of the assembly
members might come from this [gaming] sector,” warned Mr Fong. “How to balance the voices of other sectors [in the assembly]? This issue has a direct relation with our political system design.” “What I have to point out is that gaming companies are playing a certain role in the direct election process,” he added. “But when the assembly is leaning too much towards this sector, is it beneficial to the whole of society? This is a point we have to consider.” “I have to stress that I do not mean [representatives from] gaming companies should be banned from standing for election,” Mr Fong added. With Macau pushing for economic diversification, “how should the law allow voices from these [other] sectors in the assembly? Should we impose certain restrictions on it?” Mr Fong asked. “This issue needs to be pondered.” The graft watchdog acknowledged the current electoral laws are lagging behind current social
Macau’s electoral laws out-of-date and need revamp, says Vasco Fong
changes, such as online campaigning. However, he gave no timeframe for when the electoral law might be amended. The election audit committee finished counting all void votes and awarded three, two and five votes to the tickets led by Angela Leong On Kei, José Pereira Coutinho and Chan Meng Kam respectively. But with less than 100 votes separating the three candidacies, all valid votes will be recounted again today. The recount is expected to take two days.
Slot manager deal for Pharaoh’s Palace C Y Foundation says acquired rights for HK$69 mln
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Y Foundation Group Ltd, a Hong Kong-listed company, has completed a deal to acquire a firm that manages the slot machines at Pharaoh’s Palace Casino at The Landmark Macau hotel. C Y Foundation announced in May it planned to acquire the target business – Weike (G) Management Macau Ltd – for a total consideration of HK$69 million (US$8.9 million). One of the directors of the target firm is Poh Po Lian, chairman of casino equipment supplier Weike Gaming Technology Ltd. “The plan is to change the name of Weike (G) Management Macau to make sure people are clear there is a separation between the gaming equipment manufacturer and the
management business,” said Ray Poh, a director of Weike Gaming. Weike (G) Management Macau signed a five-year deal in February to manage and maintain slot machines at The Landmark Macau site, with an option to renew the contract for a further five years. Macau Legend Development Ltd, led by local businessman David Chow Kam Fai, provides gaming services at Pharaoh’s Palace and at Babylon Casino, Macau Fisherman’s Wharf, on behalf of casino concessionaire Sociedade de Jogos de Macau SA. The firm acquired by C Y Foundation operates 205 slots and electronic table games at Pharaoh’s Palace. M.G.
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September 18, 2013 April 19, 2013
Macau
Banco Weng Hang branch, Three Lamps district (Photo: Manuel Cardoso)
Banco Weng Hang’s parent ponders sell off Macau lender – banker to city’s casino projects – had stronger first half than Hong Kong owner Wing Hang Bank Michael Grimes
michael.grimes@macaubusinessdaily.com
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local bank providing financial backing for the Studio City casino resort on Cotai is the subject of a possible takeover bid aimed at its Hong Kong parent. Banco Weng Hang SA, a unit of Wing Hang Bank Ltd, has 12 outlets in Macau. In January it was announced as a participant in a US$1.4 billion syndicated loan for the construction of the US$2.9 billion (23.2 billion patacas) Studio City. The property, due to open in mid-2015 according to its senior management, is 60 percent owned by Melco Crown Entertainment Ltd. Wing Hang said yesterday it had received what it described as preliminary “offers” – from an unnamed suitor. Its shares rose 39.38 percent on the day in Hong Kong trading, to HK$116.80. Wing Hang – part owned by Patrick Fung Yuk Bun and members of his family – has been linked in unconfirmed reports with stateowned China Life Insurance Co Ltd, which describes itself as the largest life insurer in the People’s Republic of China. Jacky So Yuk Chow, chair professor of finance at the University of Macau, told Business Daily that small local banks tended to have a concentration of retail customers that can be expensive to manage compared to corporate customers. “…cost per service will be higher – and therefore not efficient – compared to the big accounts of larger banks,” said Mr So. “Large banks may also fund international trade and investments, etc – things that smaller banks are not able to do. In fact small banks use
big banks as their ‘correspondent banks’,” he added.
Consolidation trend Wing Hang is the second familyrun Hong Kong lender this week linked to sale talks. Chong Hing Bank Ltd, that city’s smallest such institution, also participated in January’s syndicated loan for Studio City. The number of publicly traded family run banks in Hong Kong has fallen to four from six more than a decade ago. Mainland Chinese firms have been the main suitors. China Merchants Bank Co Ltd, based in Shenzhen over the border from Hong Kong, paid US$4.7 billion for the Wu family’s Wing Lung Bank Ltd in a 2009 deal.
KEY POINTS Wing Hang Bank gets ‘offers’ for buyout Macau unit Banco Weng Hang has 12 outlets here Parent’s shares surged 39 pct yesterday Weng Hang profits jumped 38 pct y-o-y in 1H
Chong Hing confirmed in a statement on Monday it’s in discussions with interested parties including Yue Xiu Group. Yue Xiu is the trading arm of the Guangzhou city government. One possible motivation for local family banks to seek tie-ups with bigger institutions is the requirement – following the global banking crisis that began in 2008 – for banks to strengthen their capital reserves relative to loans. Rising competition has put more pressure on mid-cap Hong Kong lenders, with their return on equity slumping to nine percent from about 20 percent in 2001, Bank of America Merrill Lynch estimates. Since 2009, Hong Kong bank acquisitions have been valued at an average 1.9 times book value, which would give a price of around HK$126 a share, or US$5 billion, for Wing Hang, UBS AG analyst Stephen Andrews wrote in a note. The Fung family, its affiliates and BNY International Financing Corp together hold about 45 percent of the shares.
Strong half Jacky So said in previous disposals of local banks, family members have been asked to stay on to help manage the business. “Some of them may serve as ‘advisers’ or ‘consultants’ for a time period since they know the practice and customers well,” he stated. Business Daily reported last month that Wing Hang’s Macau unit Weng Hang reported first half profit up 38 percent year-on-year
to 195.9 million patacas thanks to strong demand for loans here. The group’s non-performing loans in Macau amounted to 25.5 million patacas at the end of the first half. Fitch Ratings said in May it regarded Wing Hang group’s “exposure and growth relating to China as a potential negative rating trigger”. But Grace Wu, banking analyst at Daiwa Capital Markets in Hong Kong, said yesterday: “Wing Hang is more attractive than Chong Hing and Dah Sing because of its track record in return on equity.” She added its market share in deposits was also stronger. “The small and medium-sized banks of Hong Kong will need to get a mainland partner so that they can tap the growth opportunities in the cross-border yuan businesses,” Ms Wu said. Wing Hang has 43 outlets in Hong Kong and 15 in mainland China, including a branch in Zhuhai next door to Macau. The group lent 16.48 billion patacas to be spent in Macau in the first half, 8.5 percent up on a year earlier. The Macau operation loaned a further 10.75 billion patacas beyond the city’s borders, a 9.3 percent increase year-on-year. The bank was founded in 1937 as a moneychanger in Guangzhou by Fung Yiu King. It was re-established in Hong Kong after World War II and granted a banking licence in 1960, according to its website. With Bloomberg News
They [the Fung family] may remain as minority shareholders if they still own stocks. Otherwise, they will be out totally Jacky So, University of Macau
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September 18, 2013
Macau
HK’s 3rd runway plan fails to fluster Macau
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But what the future holds for Macau airport remains under wraps
Howdy! G’day!
Tony Lai
tony.lai@macaubusinessdaily.com
The increasing weight of Macau in the world gaming market and the presence of several international gaming companies here might lead us to expect a considerable flow of visitors and thus hotel guests from outside Asia. The figures show otherwise. Visitors from countries outside Asia have made up about 4 percent of all visitors in recent years. The figure for the first half of this year is about the same. The Statistics and Census Service online database has figures for hotel guests from Canada and the United States; Britain, France, Germany, Italy and Portugal; and Australia and New Zealand. Visitors from these nine countries combined make up a maximum of 2.3 percent of all hotel guests.
The Macau airport handled 4.49 million passengers last year
T Visitors from the English-speaking countries make up the largest proportion of hotel guests from these nine countries. Americans make up about one-third. Australians make up just under one-quarter. Americans and Australians outnumber hotel guests from the five European countries shown here. The numbers of hotel guests from these nine countries seem to be rising this year. The average number of Americans staying in hotels here has risen by 9 percent. Visitors from all the other countries outside Asia make up under 2 percent of hotel guests, and the proportion seems to be declining this year. In the first six months they made up just 0.4 percent. J.I.D.
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Daily average number of American hotel guests, 2013H1
he addition of a third runway at Hong Kong airport would pose no threat to Macau airport, the Civil Aviation Authority of Macau says. This month the Hong Kong government began pushing harder for a third runway for Hong Kong airport to attract more aviation traffic – an idea that has come in for some criticism. But there are enough passengers to go around, the Civil Aviation Authority of Macau told Business Daily. “The population in the Pearl River Delta region is enough to support the existence and development of the five airports in the area,” the authority said in an email. The Pearl River Delta has airports
CTS raises package tour fees by half A
ll the package tours launched next month by state-owned China Travel Service (Macau) Ltd will be 50 percent more expensive on average due to a new law in mainland China. The agency’s deputy general manager Huang Canhui said
in Macau, Hong Kong, Zhuhai, Guangzhou and Shenzhen. These airports “have complemented each other and avoided any vicious competition to strive for a win-win situation,” the authority said. The five airports agreed in 2009 that Macau airport should be a small to medium international airport. The Civil Aviation Authority of Macau has been drawing up a master plan for the airport’s development up to 2030. The authority revealed the plan to chosen news media a year ago. But it has yet to set a date for the publication of the plan. The authority said: “The final report is already completed but the
SAR government still needs to have detailed discussions with Macau International Airport Co Ltd on the technical aspects.” The airport is flag carrier Air Macau’s base. The chairman of Air Macau Co Ltd, Zheng Yan, has disputed assertions that the plan has been too long in the making. Mr Zheng told reporters on Monday that the number of passengers the airport handled had yet to reach the airport’s capacity of “between 5 million and 6 million” a year. The airport handled 4.49 million passengers last year. In the first eight months this year it handled 12.5 percent more passengers than it handled in the equivalent period of last year.
yesterday they had to “redesign all the routes again” for their tour groups. Starting from October 1, mainland travel agencies and agents cannot earn commissions from retailers by forcing tourists to visit particular shops. The new rules also apply to mainland tour groups visiting Macau. Speaking on the sidelines of the signing of a cooperation deal with Xinjiang Uyghur Autonomous Region, Mr Huang explained the revised tours would focus on quality tourism. The emphasis would be on sightseeing. Better food and beverages would also be offered, he explained. The higher price will “definitely affect” the number of visitors in
package tours coming here in the short-term, Mr Huang confirmed. But there would be no impact on travel agencies’ revenue, he predicted. Andy Wu Keng Kuong, president of the Macau Travel Industry Council, told Business Daily earlier this month the number of package tours coming here could decline by some 10 percent next month as the more expensive tours could put off some mainland visitors. Latest official data show the city received more than 5.5 million package tour visitors in the first seven months this year, an increase of 12 percent year-on-year. T.L.
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September 18, 2013
Macau
High prices, so-so quality keep jade sales sluggish The absence of standards makes jade much less precious than gold and diamonds, retailers say Tony Lai
tony.lai@macaubusinessdaily.com
J
ade prices are rocketing upward and buyers are demanding higher quality, but the market for jade in Macau remains small, jewellers say. “There has been no particular growth in jade sales here in the past few years, as buyers have higher standards,” the general manager of Cherry Goldsmith and Jewellery (Group) Ltd, Lei Cheok Kuan, told Business Daily. “Macau is such a small market that the jade supply has never been abundant,” said Mr Lei, who is vice-president of the Macau Goldsmiths Guild. The guild has over 100 retailers of gold and jewellery among its members. Mr Lei said Macau got most of its jade from Hong Kong. Up to 90 percent of the world’s jadeite – the most sought-after type of jade – is mined in the north of Myanmar. Hundreds of tonnes is transported to state auctions there, which have so far been held at least twice a year. But only one big auction has been held this year. Myanmar news media say official figures show the number of lots auctioned was 38 percent lower than at the previous auction, in March last year. Hong Kong jade dealers say this is due to the desire of Myanmar to process and sell its own jade products. “It is increasingly hard to get highquality raw jade from Myanmar. If you do not pay more, the good raw material will be bought by others,” Hong Kong jade dealer Li Kwong Kei said. Mr Lei said higher prices had kept some buyers away. He said the prices of jade products here started at several thousand
patacas and could go up to several hundred thousand patacas.
Matter of taste The managing director of Seng Fung Jewellery Co Ltd, Lei Chi Fong, said higher prices for the raw material in Myanmar inevitably meant higher prices for finished products in Macau. “If the flour is more expensive, the bread will also become more expensive,” he said. Mr Lei of Seng Fung is president of the Macau Goldsmith’s Guild. He said buyers might find it hard to put a value on jade and jade products because the market had no standards for quality or pricing, unlike the markets for gold and diamonds. “There is an international price for gold, while diamonds can be graded by the four Cs, but the assessment of jade is more personal and subjective,” he said. The four Cs by which diamonds are rated are colour, cut, clarity and carats. Mr Lei of Cherry said the requirements of buyers in Hong Kong and Macau were “slightly different” from those of buyers in the mainland. “In Hong Kong and Macau, we pay more attention to the colours of the jade, like if it is red or green enough, while the mainland favours colourless jade with no impurities,” he said. Mr Lei of Seng Fung is optimistic about jade sales in the future. “It will take time for more people to learn to appreciate jade and develop their tastes,” he said. He said the number of fans of jade was increasing in the mainland, particularly among the newly rich.
Jade prices have been increasing since 2005, owing to greater spending power among Chinese
With AFP
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September 18, 2013 April 19, 2013
Macau Brought to you by
Financial Monitor Emperor’s old clothes The textiles industry has almost vanished from the economy. Its disappearance was as fast as it was savage. The last year that textiles made up over half of exports was 2008. The proportion crashed the following year. Last year it was slightly over 10 percent. In the first half of this year textiles made up under 8 percent of exports. Knitted clothing made up nearly one-third of exports at the beginning of the period under review. Between 2008 and 2009 sales of knitted clothing dropped by three-quarters. In the first half of this year knitted clothing made up 3.2 percent of exports.
Sales of the other main sorts of textiles – clothing made with fabrics and textiles products other than clothing – also contracted, but slightly less abruptly. Last year clothing made with fabrics accounted for about 14 percent of exports and textiles other than clothing accounted for 23 percent. In 2011 the value of exports of clothing made with fabrics exceeded the value of exports of knitted clothing for the first time. In the first half of this year exports of clothing made with fabrics were 50 percent greater than exports of knitted clothing. Exports of textiles other than clothing have been more resilient. They contracted less than exports of clothing in 2009, and their decline since then has been slower. But textiles other than clothing never made up more than 5 percent of exports in the period under review. Today they make up under 2 percent.
Trading partners bemoan Macau’s labour shortage WTO members say Macau’s labour policy is out of touch with the city’s needs Vítor Quintã
vitorquinta@macaubusinessdaily.com
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he dominance of the casino industry and rigid labour policies are undermining Macau’s economic diversification efforts, World Trade Organisation members have said. During the WTO’s fourth trade policy review of Macau, conducted in May, several members urged the government to ensure that companies have enough workers. According to meeting records released this week, Thailand’s permanent representative at the WTO, Weerachai Nopsuwanwong, said the fast growth of Macau’s economy and the gaming industry’s dominance “have placed upward pressure on prices, in particular on land and labour”. The median salary has risen by one-third in the past three years, reaching 12,000 patacas (US$1,500) a month, official data show. Mr Weerachai said higher costs “in turn harm the competitiveness of non-gaming sectors, including manufacturing”. A Turkish representative said the gaming boom and the resulting inflows of money into the market here had meant “ upward pressure on factor prices such as land and labour”. Higher prices “seem to be drastically harming competition and crowding the
manufacturing and other sectors out of GDP composition”, the representative said. Manufacturing’s contribution to GDP shrank from 2.9 percent to 0.7 percent in just four years, according to the meeting records. In response, Macau Economic Services director Sou Tim Peng, who led a delegation to the WTO, acknowledged that manufacturing “is still undergoing a very difficult adjustment” since the end of quotas for international trade in textiles in 2005. The government said it was “supporting the development of designs, especially those with local characteristics”, and promoting Macau brands abroad to make manufacturing’s transition to making high-value-added products easier. WTO members said Macau’s labour policies were to blame for the shortage of workers here and threatened the city’s competitiveness.
Diversification obstacle A Canadian representative said: “The lack of qualified labour available to foreign companies is a direct result of complicated policies that do not address the realities of Macau’s labour shortage.” Approving the hiring of migrant workers case by case and requiring
J.I.D. The content of this column is the work of Business Daily’s journalists.
2%
Textiles other than clothing as proportion of 2012 exports
Services exports, including gaming, took up 60 percent of Macau’s GDP last year
KEY POINTS Gaming dominance pushes up costs Other industries feeling the pinch Labour policies lack transparency
companies to maintain a minimum proportion of residents in their workforces were the wrong approach, the representative said. In 2010 the government said it was considering imposing ratios of resident labour to migrant labour in each sector of the economy, but has since given no details. The only such ratio publicly announced is the ratio for the construction industry, which is at least one to one. A Canadian representative urged the government to “consider more predictable, transparent and flexible policies” on labour. This would attract more privatesector interest in investing in Macau, the representative said. A European Union representative said: “The shortage of labour may be an obstacle to the diversification of the economy.” Given the low unemployment rate – “effectively full employment” – and continuing economic growth, Macau should be encouraged “to ensure the sufficient availability of foreign labour”, the representative said. In response, Mr Sou acknowledged that the city has “virtually full employment” and that the resulting labour shortage “has put upward pressure on wages”. He said the government had “alleviated” the labour shortage, mainly through “more flexible labour laws” that allowed in more migrant workers. The proportion of migrant workers in the labour force had grown from under one-quarter in 2007 to over one-third by July this year, official data show.
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Greater China ZTE aims to expand cloud services overseas ZTE Corp, the world’s fifth largest telecoms equipment maker, plans to expand cloud computing services abroad, despite the challenge of allaying security concerns. “Nowadays, data privacy has become a hot topic. But we understand that every customer has its own requirements and characteristics and we are always monitoring developments in the industry,” Zhu Jinyun, ZTE’s general manager for cloud computing and IT products operations, told Reuters. ZTE, the second-biggest telecoms equipment company in China behind Huawei Technologies Co Ltd, already provides cloud services to China’s telecom carriers, such as China Telecom Corp Ltd, major internet firms and oil and energy companies. And Mr Zhu said he was targeting a 10 percent contribution from the cloud and enterprise business to ZTE’s overall revenues in 2013, up from around 7 to 8 percent last year. He declined to break down the revenue figure for cloud computing, which enables organisations to remotely store, manage and process data and applications. The global market for public and virtual private cloud services will grow from US$30.3 billion in 2011 to more than US$241 billion in 2020, with major players including Amazon.com Inc , Google Inc and Salesforce. com Inc, according to IT research firm Forrester.
Tencent buys into Sohu unit Tencent Holdings Ltd, Asia’s largest Internet company, paid US$448 million for a stake in China’s third-largest search engine to expand its Web offerings in the world’s largest market. Tencent bought a 36.5 percent stake in Sohu. com Inc.’s Sogou search unit with an option to increase the investment to 40 percent, according to a joint statement by the companies. Sohu will remain the controlling shareholder. Joining forces could help the companies compete against Baidu Inc. in search and mobile Internet as users spend more time on smartphones and tablet computers. China’s online population surged almost sevenfold since Tencent’s 2004 initial public offering, with revenue at billionaire Pony Ma’s company more than doubling in the past two years. “It’s the final piece of the puzzle that Tencent needs, which is to take over all the platforms on the Internet,” said Billy Leung, an analyst at RHB Research Institute Sdn in Hong Kong. “Sogou’s a good target, and it has a good search system.” Sogou accounted for 5.5 percent of searchengine queries in China in the March quarter. Baidu had 82 percent and Qihoo 360 Technology Co followed with 9 percent, according to data compiled by Bloomberg.
Regulator calls for new bank products CBRC chairman encourages innovation while warning on risks
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hina’s banking watchdog has encouraged banks to develop new products but urged them to minimise risks in the sector, setting the latest official tone on financial innovation and reform. The regulator’s warning on risk comes at a time Chinese banks are zealously developing new financial products. The industry has seen explosive growth of off-balance-sheet loans, which are often packaged into wealth management products. S h a n g F u l i n , th e ch a i r m a n of China Banking Regulatory Commission, said that CBRC will encourage financial innovation, while ensuring that banks don’t remain on the hook for risks they have supposedly transferred offbalance-sheet. “Some off-balance-sheet
innovative business lines have gotten inter-tangled with [on- balancesheet] deposit and lending business,” he said. “We need to segregate lending, wealth management, brokerage, and securities investment businesses, implementing protective barriers around each, while encouraging innovation within each segment,” the chairman said. “Some related-party transactions hide potential risks and contagion. There is even the phenomenon of ‘many ants together killing the elephant’,” he added. Mr Shang said that banks should earn fee income on wealth management products but should not also earn investment income or assume credit risk from off-balancesheet assets.
Shang Fulin urged banks to tighten risk control
In recent years, banks have used cooperation with non-bank institutions such as trust companies and securities brokerages to transfer some loans off balance sheet, even as they remain exposed to the underlying risk.
Global lessons In May, regulators issued new rules preventing banks from trading between separate on- and off-balance sheet accounts. A severe cash crunch in late June was due in part to banks who needed to raise funds to pay off maturing wealth management products. They borrowed cash from other banks to bring off-balance-sheet assets back on their books temporarily. The chief regulator also asked banks to tighten risk control by setting up a broader risk-detection measure to cover both on- and offtheir balance sheet businesses, as well as overseas operations. “A lesson from the global financial crisis tells us the overlapping of different businesses may intensify the accumulation and contagion of risks,” Mr Shang said in a speech at a banking sector meeting, according to a statement posted on the CBRC’s website. Mr Shang also pledged to push forward a pilot programme for credit asset securitisation and urged banks to quicken the “market-oriented” disposal of non-performing loans. “We should ensure the risks of bad assets are transferred veritably and set aside relevant assets provision for retained risks,” he added. Chinese policymakers have recently signalled their intention to push banks to work through bad debts on their own in order to make government bailouts unnecessary. China’s cabinet had earlier said it would expand the pilot programme for securitising credit assets, in the latest effort to expedite long-awaited financial reform. Progress has been slow on the programme, which was interrupted by the 2008-2009 financial crisis. Reuters
Institutions to launch local govt debt ratings Total volume of debt expected to rise slightly after new audit Alibaba expands banking foray Alibaba Group’s founder, Jack Ma, took another stab at shaking up China’s banking industry as the country’s largest e-commerce firm sealed a strategic pact with mid-sized lender China Minsheng Banking Corp Ltd to offer financial services. Hangzhou-based Alibaba Group Holding Ltd, better known for its online platforms that resemble a mix of EBay Inc and Amazon.com Inc, has accelerated its move into China’s financial services sector in recent years to support businesses on its platforms. Since 2010, Alibaba has been offering microloans and money management services with an aim of supplying more financing options to small and medium-sized enterprises that account for the bulk of its B2B platform. In 2010, Alibaba set up its loans business, offering credit to small businesses that used its e-commerce websites to sell their wares. Alibaba has offered loans totalling 100 billion yuan (US$16.34 billion) since starting the business, the company said in July. Since January this year, it has been offering credit internationally. The tie-up with China Minsheng, the country’s seventh-largest listed bank, includes cooperating on wealth management and credit card businesses, direct banking and information technology, the lender said in a securities filing with the Hong Kong Stock Exchange.
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Chinese credit ratings agency is teaming up with an influential state-backed think tank to issue ratings of local governments, in a step towards establishing a standardised municipal bond market. China’s budget law forbids Chinese local governments from borrowing directly, but localities have evaded this restriction by taking on debt through special-purpose vehicles known as local government financing platforms (LGFVs). A mechanism to provide credit ratings of provincial and governments could lay the groundwork for reforms to allow direct bond issuance, bringing greater transparency to the murky world of Chinese local government finance. In late July, China’s cabinet ordered an audit of all government debt, including through LGFVs, highlighting concerns over an explosion in local borrowing that accompanied China’s response to the global financial crisis. China’s finance ministry will wrap
up its first full audit in more than two years in September and release the results in October, Vice Finance Minister Zhu Guangyao said earlier this month. The total volume of debt is expected to rise slightly, he said. China Credit Rating Co Ltd announced the partnership with the Chinese Academy of Social Science’s Institute of Finance and Banking at a joint ceremony on Monday, the company said on its website yesterday. “In recent years, many types of debt are actually very close to local government debt, but they haven’t used the term ‘government debt’,” Li Yang, vice president of the academy and a former member of the central bank’s monetary policy committee, said at the ceremony, the official Shanghai Securities News reported yesterday. Under the partnership, the institute will publish regular reports on the overall local government financing environment and develop quantitative indicators. The ratings agency will use the institute’s work as a foundation to provide ratings of specific local
government bond issuers. Mr Li said that as China’s government proceeded with financial and fiscal reforms, standardised local government bond issuance was likely to scale up. Localities already issue debt directly on a limited scale under a pilot programme that began in 2011. The finance ministry said in March that it would raise the total quota for direct issuance of local government debt to 350 billion yuan (US$57,2 billion) for 2013, up from 250 billion yuan in 2012. Under this pilot, six local governments are allowed to sell bonds directly in China’s interbank bond market, while the finance ministry conducts bond auctions on behalf of other localities. China Credit Rating, one of China’s three main bond rating agencies, is owned by the National Association of Financial Market Institutional Investors, an industry association for China’s interbank bond market overseen by the central bank. Reuters
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September 18, 2013 April 19, 2013
Greater China
Mazda may lower China sales target Automaker yet to emerge from slump in mainland market
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azda Motor Corp, Japan’s most export-dependent automaker, said the company may cut its midterm China sales target after deliveries in the world’s biggest car market fell for 17 straight months. The company’s plan for China sales to reach 400,000 units by the year ending March 2016 “may be revised,” Masamichi Kogai, who was promoted to president in June, said in an interview last week. The company is forecasting China sales to only reach 200,000 this fiscal year. While no Japanese carmaker has seen a bigger turnaround – in terms of profits or share price – since the yen began weakening almost a year ago, Mazda has yet to emerge from its slump in China. After reshuffling its top management in the country this year, Mazda is now betting that the locally produced CX-5 SUV and Mazda 6 will help spur a recovery. “Mazda is switching to local production of their
top models in China now, so once that kicks in, sales should pick up,” said Koichi Sugimoto, an auto analyst at BNP Paribas SA in Tokyo. “Their products are improving, and the models they’ll be introducing fall under the popular category in China too.” Mazda’s sales in China have fallen 21 percent in the first eight months of the year, making it among the worst performers. Investors haven’t been too worried. Mazda has surged fourfold in Tokyo trading since late October, when the historically strong yen began crashing. Before that, Mazda’s heavy reliance on exports made the stock so unpopular that it was headed to be the worst-performing Japanese car stock for a second straight year. Mazda’s not alone in struggling in China. Sales at Japanese automakers from Toyota Motor Corp to Honda Motor Co have yet to fully recover since a diplomatic row over a group of uninhabited islands
Our global market share is 2 percent, but we’d definitely want to expand that, especially young people Masamichi Kogai, Mazda president
fuelled a wave of anti-Japan protests a year ago. Even so, Mazda’s slump predates the islands dispute. Echoing comments from other automotive chieftains, the new Mazda president
Chinese importers Beijing slaps to buy US$2.8 bln duties on U.S. of U.S. soybeans solar material
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hinese companies signed agreements with U.S. agricultural exporters to buy 4.83 million tonnes of U.S. soybeans valued at about US$2.8 billion. At a ceremony hosted by the U.S. Soybean Export Council, officials from Chinese companies including COFCO, Sinograin, and Chinatex signed 13 separate agreements with representatives from Archer Daniels Midland, Bunge and others. The soybeans will be shipped in the current marketing year, which began on September 1, and likely before the next South American crop begins flooding the market in March, said a trader at the event. The letters of intent signed on Monday are not binding sales contracts but are traditionally honoured by established trading partners such as China and the United States, he said. The value of the deals was estimated as the final terms will be negotiated at a later date. Still, some exporters declared the agreements to the U.S. Department of Agriculture, which are then reported as confirmed sales per daily reporting rules. Signing ceremonies in 2011 and 2012 triggered confirmations by the USDA of the two largest singleday U.S. soybean sales on record. The volume of the purchase agreements signed on Monday is a fraction of China’s annual U.S. soybean demand. China, the top soybean importer, bought more than 21.5 million tonnes of the oilseed from the United States last season and 59.5 million tonnes from all origins.
eijing announced it would impose preliminary antisubsidy duties on some imports of U.S. solar-grade polysilicon, a move that could intensify trade tensions between the world’s two largest economies. China’s Commerce Ministry said it would hit U.S. imports of the material used to make solar panels with relatively low duties of up to 6.5 percent, amid trade frictions in the struggling global solar industry. That follows the ministry’s much heftier anti-dumping duties – used for goods sold below market value – of 53.3 percent to 57 percent on U.S. polysilicon in July, a move which many saw as a bid to protect China’s struggling domestic industry. Washington called those duties disappointing. According to its investigation, “subsidies exist and China’s polysilicon industry suffered substantial harm”, the ministry said in a statement on its website. Beginning on Friday, importers of polysilicon from Hemlock Semiconductor Corp and AE Polysilicon Corp will have to pay the duties. The ministry said other companies, including REC Solar Grade Silicon LCC, REC Advanced Silicon Materials LCC, and MEMC Pasadena Inc, would not be subject to anti-subsidy duties because they had not been subsidised or the rates were too low. China has also locked horns with the European Union and South Korea over the solar industry.
Reuters
Reuters
said one of his longerterm tasks will be to help revive interest in cars from younger consumers. “Our global market share is 2 percent, but we’d definitely want to expand that,
especially young people,” Mr Kogai said. “It’s said that young people in Japan don’t need cars anymore, but we want to explore and create new markets.” Bloomberg News
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September 18, 2013 April 19, 2013
Greater China KMT files appeal against Wang’s injunction Taiwan’s Kuomintang party appealed a court ruling that blocked it from expelling the parliament speaker. The Taipei District Court, which issued the freeze, had no jurisdiction over Wang Jin Pyng’s (pictured) expulsion, which was an internal party matter, Kuomintang lawyer Chen Ming said in remarks on cable network TVBS. The lawyers lodged the appeal on Monday, said Lai Chien Yi, divisional chief judge. A Kuomintang disciplinary committee revoked parliamentary speaker Wang’s membership last week after ruling that he damaged the party’s reputation when he tried to halt the prosecution of a fellow lawmaker.
China expands margin trading, short-selling scheme Beijing moves to deepen participation in equities markets
multiple delistings, but short sellers have complained that Beijing is more interested in protecting the ability of Chinese companies to fundraise than the interests of ordinary investors. At the same time, investors remain highly suspicious of reports of insider trading and other forms of market manipulation by brokerages and other market players using derivatives, and deep government involvement in the operation of many major listed firms adds another layer of opacity to the market. Regulators and brokerages are concerned by signs that Chinese investors are souring on equities in general, letting trading accounts go dormant and moving their money into real estate and high-yield wealth management products instead. In August, China Everbright Securities Co Ltd was hit with a record fine and multiple forced executive resignations after the company tried to compensate for erroneous trades by making massive hedging bets in the index futures markets. When markets collapsed again, the hedged bets paid off for Everbright, but many retail investors took massive losses. Reuters
Brokerages allowed trading of 287 stocks of the Chinese A-share
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hina’s securities regulator has approved a plan to expand participation in a pilot programme allowing margin trading and short selling and triple the number of stocks that can be traded on margin, as Beijing moves to deepen and diversify investor participation in its equities markets. The China Securities Finance Corporation Ltd, the semigovernmental agency that runs the trial, named 19 new brokerages that will be allowed to participate in the project, bringing the total number of brokerage participants to 30 from the original 11. These brokerages will be allowed
margin trading and short selling for 287 stocks, comprising 64.3 percent of the Chinese A-share market’s capitalisation, up from the current 87 tickers available, the agency announced on its website. The new regulations come into effect today. Chinahasbeengraduallyexpanding its margin trading programme, hoping to add liquidity and improve price discovery in its stock markets, but caution has ruled. Brokerages can only trade highly liquid major tickers in profitable companies on margin, limiting opportunities for targeted short selling. Analysts have pointed out that
other aspects of the political system – in particular the ability of powerful firms to use the law enforcement system to suppress criticism – make short selling highly risky on a personal level for those who engage in it. Recent campaigns against “rumour mongering” through social media will also inhibit short selling strategies that rely on the dissemination of negative reports about companies online in order to drive their stock prices down. Government and industry associations have publicly railed against short-seller attacks on Chinese firms listed in New York and Hong Kong that have caused
Danone unit to probe bribe allegations French group milk powder brand named in China TV expose
C
hinese state TV said on Monday that Danone SA had bribed hospital staff to give its milk powder to new-born babies, allegations that the French food group said it was shocked by and would investigate immediately. China Central Television (CCTV) cited an unidentified former Dumex sales manager as saying the company had paid medical staff at a city hospital in Tianjin to promote its products.
Milk powder is a highly sensitive topic in China after a scandal in 2008 when melamine added to baby milk killed at least six children and left thousands ill. This damaged the reputation of local firms and boosted international brands’ market share. Chinese authorities have been cracking down in recent months on graft in various industries, with foreign companies such as British drugmaker GlaxoSmithKline Plc and Germany’s Bayer AG in regulators’
sights. Autos, telecommunications and banks may come next, regulators have suggested. Local and foreign-owned milk powder firms, including Danone, were fined a record amount in August for price fixing. The former Dumex sales manager, cited by CCTV, said that that company gave several hundred thousand yuan in “gifts” to the hospital every year. CCTV said the man had a document detailing
KEY POINTS Regulator expands pilot programme Number of stocks traded on margin can triple New rules come into effect today 19 new brokerages allowed to participate
payments to doctors, with their bank card details and amounts paid. The document, which CCTV said it had seen, showed staff at the hospital had received about 300,000 yuan (US$49,000) in total each month from Dumex, with individual payments ranging from several hundred yuan to about 10,000 yuan. “Dumex China pays great attention to and is extremely shocked by the CCTV report... We will immediately launch an investigation,” Dumex said in a statement passed on by a Danone spokeswoman in Paris. “Dumex Baby Food Co strictly adheres to Chinese laws and regulations,” she said. Danone had a 9.2 percent share by retail value of China’s US$12.4 billion formula milk market in 2012, according to data from market research firm Euromonitor. Reuters
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September 18, 2013 April 19, 2013
Asia
Indonesia’s deficit takes toll on resource drive Current-account deficit also the main factor in rupiah’s decline
I
ndonesian policymakers are scrambling to ease nationalistic resource rules that threaten to slash mining exports from January and potentially widen a current account deficit already at a nearrecord high. The deficit, which reached US$9.8 billion in the second quarter, or more than 4 percent of GDP, has become enemy No. 1 for President Susilo Bambang Yudhoyono’s administration, and any policies that worsen the situation have come under fire. Regulations initially passed more than a year ago to allow Indonesia to seize more control over its natural resources are being reviewed as the government looks to bolster exports to offset a bulging import bill. “For exports, this is an emergency,” Energy and Mineral Resources Minister Jero Wacik told reporters recently. “What is important is that the balance of imports and exports improves for our country.” The trade deficit in July widened to a record US$2.31 billion from US$880 million the previous month due to a spike in oil imports. The trade balance along with investment income make up Indonesia’s current account deficit. Among the policies the government is reconsidering are a pending ban on mineral ore exports, and a royalty hike and export tax on coal. Shipments from the two industries represent more than 15 percent of Indonesia’s total exports by value, or about US$2.5 billion a month. Indonesia is the world’s top exporter of nickel ore, thermal coal and refined tin. “A ban applied [on mineral ore exports] in January 2014 would lead to a significant disruption of exports,” Barclays Plc analysts said in a research report. “This could aggravate market concerns regarding the country’s current account deficit, which would be an unattractive proposal for the government.”
Loosening rules The Energy and Mineral Resources Ministry has initiated talks with lawmakers to revise the 2009 law that requires mineral ores to be processed domestically before export, starting from January.
KEY POINTS Policymakers look to ease nationalistic rules Govt seeks to bolster exports to offset import bill Pending minerals export ban, coal royalty hike under review Rupiah has weakened 13.9 pct since the start of June
One option being discussed is to allow limited exports from companies that have already made investments or signed agreements to process ore domestically, such as PT Perusahaan Perseroan Aneka Tambang (Antam). “Those who have shown good intentions [in processing ore domestically] should be allowed to continue exports, but they need a legal umbrella first,” Thamrin Sihite, a director general at the ministry, told reporters last week. A second option being considered was to delay the ban and instead increase the ore export tax by as much as 50 percent from the current 20 percent, said Tony Wenas, vice chairman of the Indonesian Mining Association. Both options would still lead to a decline in mineral ore exports, although much less than a blanket export ban. The proposed changes come a month after the government scrapped its 2013 export quota system for minerals to increase overseas sales and encourage mining investment. In a further retreat, the ministry earlier this month indicated it would relax a rule forcing foreign miners to sell majority stakes within 10 years of the start of production. The ministry is also looking at loosening regulations that would increase royalties on coal production for mining permit holders, known as IUPs, and a new tax on all coal shipments next year. Indonesia ships around US$2 billion worth of coal a month, one of its largest exports by value. A drop in shipments would exacerbate the country’s current account deficit. Finance Minister Chatib Basri told local media on Friday that the government would not introduce the coal tax next year in order to protect exports, but would impose the planned royalty hike.
Rupiah passes rupee as Asia’s worst currency
dominant for the rupiah.” Indonesia sold US$1.5 billion of dollar-denominated Islamic bonds this month at the highest yield since 2009; its reserves are near the lowest
level in almost three years; and foreigners have pulled out US$2.66 billion from local equities since the start of June. Reuters/Bloomberg News
Rupiah decline The country’s current-account deficit will drive away foreign investors and add pressure on the rupiah, the worst-performing currency in Asia since the beginning of June, according to Nomura Holdings Inc. The currency has weakened 13.9 percent since the start of June, compared with the 10 percent drop in India’s rupee, to be the worst performer in Asia during the period. Bank Indonesia has embarked on its most aggressive tightening since 2005, joining Brazil and India in taking steps to support their currencies as the prospect of reduced U.S. monetary stimulus prompts investors to sell emerging-market assets. Indonesia’s foreign-exchange reserves have declined as the central bank defended the rupiah, while bondholders are demanding higher yields to hold its debt. “The current-account deficit is the main factor in the rupiah’s decline, not just from its direct impact on foreign- exchange supply but also from the confidence channel,” said Euben Paracuelles, a Singapore-based economist at a unit of Japan’s largest brokerage. “Nomura forecasts the deficit to narrow in second half of 2013, but it is the capital outflows amid Fed tapering concerns that could be more
RBA says rate cuts still possible A
ustralia’s central bank repeated it retains the option of reducing interest rates and said a further drop in the currency would aid the economy as resource investment slows, minutes of the September 3 meeting showed. “Members agreed that the bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them,” the Reserve Bank of Australia said in notes of the meeting, at which it left its benchmark rate at a record low, released in Sydney yesterday. “Some further decline in the exchange rate would be helpful.” The meeting was held four days before an election won by Tony Abbott’s coalition, which ousted the Labor government of Kevin Rudd, pledging to cut red tape and lower taxes to boost the US$1.5 trillion
economy as a China-led mining investment boom crests. Governor Glenn Stevens and his board have lowered borrowing costs by 2.25 percentage points since late 2011 to 2.5 percent as growth slows and unemployment rises. “The big picture remains that the RBA is on hold for now and remains in data-watching mode,” said Alvin Pontoh, Singapore-based strategist at TD Securities. “At the same time, the RBA continues to express its preference for a lower Australian dollar.” Australian house prices rose by the most in more than three years in the second quarter, aiding the central bank’s aim of rebalancing growth from mining regions in the north and west toward services and manufacturers in the south and east. “Lending rates had declined to historically low levels as a result, which, together with the lower – though still high – exchange rate, were continuing to provide a substantial degree of policy stimulus to the economy,” the minutes said. “This was most evident in the housing market, with the lags in the effect of policy meaning that earlier actions were still likely to take some time to have their full effect on demand more generally.” Bloomberg News
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September 18, 2013 April 19, 2013
Asia Sri Lanka keeps rates steady Sri Lanka’s central bank kept key monetary policy rates unchanged yesterday, saying that its past measures are gradually reducing borrowing costs and that the country has the potential to achieve the targeted 7.5 percent economic growth this year. “The downward movement of short term interest rates has begun to permeate to interest rates of longer term loans and this trend is expected to gather momentum over the coming months, further reducing the borrowing costs of economic agents,” the central bank said in a statement.
Philippine c.bank ready to tweak policy
Govt considering a goods and services tax in the 2014 fiscal plan
Malaysians brace for austerity As government cools spending in bid to shore up current account Chong Pooi Koon
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alaysian Prime Minister Najib Razak returned to power this year with the help of a spending spree that boosted consumption. Now voters could feel the pinch as he tries to appease a different group: rating companies. Mr Najib’s government raised subsidised fuel prices for the first time since 2010 this month and has said it will delay some infrastructure projects, seeking to contain the budget gap and shore up the current account after Fitch Ratings cut Malaysia’s credit outlook to negative in July. It is also considering a goods and services tax in the 2014 fiscal plan due October 25. The shift toward austerity could cool the domestic demand and investment that kept Malaysia’s gross domestic product rising an average 6 percent in the three years through 2012. The country joins Asian emerging markets such as Indonesia in confronting slower growth as they deal with the side effects of spurring local consumption, undermining the region’s role as the main driver of global expansion. “It’s payback time,” said Santitarn Sathirathai, a Singaporebased economist at Credit Suisse Group AG, who cut Malaysia’s 2013 growth forecast to 4.4 percent from 5 percent this month. “Currentaccount deterioration, fiscal balance deterioration, higher leverage, all these things are the price you have to pay” for boosting domestic demand, he said. Along with rising national debt and a dwindling current-account surplus, Malaysians have also accumulated Southeast Asia’s highest level of household borrowings at 80.5 percent of GDP, according to Bank of America Merrill Lynch. The central bank in July
imposed curbs including a shorter maximum tenure for mortgages, saying household indebtedness has expanded by an average of 12 percent per annum in the past five years.
Spending restraint The government’s spending restraint is aimed at maintaining confidence in Malaysia’s fiscal outlook as capital outflows from emerging markets deliver particular trauma to countries like India and Indonesia, which are grappling with current-account deficits and budgets burdened with subsidy costs. The ringgit weakened about 2 percent this quarter, among the worst performers in Asia. The country’s default risk rose above that of the Philippines for the first time this year. At 53.3 percent, Malaysia’s debtto-GDP ratio is the highest among 13 emerging Asian markets after Sri Lanka, according to data compiled by Bloomberg. Fitch cited rising debt levels and a lack of budgetary reform when it cut the country’s rating outlook.
KEY POINTS Govt seeking to contain budget gap Fiscal targets ‘increasingly out of reach’ – Moody’s Economic growth may slow to 4.3 pct – DBS Group
Moody’s Investors Service said this month the budget deficit may exceed 4 percent of GDP this year, warning the government’s fiscal targets will become “increasingly out of reach” without additional measures to contain it. Malaysian consumers and businesses from builders to retailers are bracing for rising prices and slower economic growth, as the 11 percent increase in diesel and gasoline costs this month raises inflation risks while the potential slowdown in state spending cuts construction and maintenance contracts. “Food is going to be more expensive and I think we will have to reduce eating out,” said scrap-metal dealer Selvarajoo Sinnapan, 54, who has three cars and two trucks. “What I am more worried about is the price of food and other basic daily necessity things. I am sure many farmers and traders will start hiking up prices.” Economic growth may slow to 4.3 percent this year, the worst performance since the global recession in 2009, according to DBS Group Holdings Ltd. The banking group cut its forecast from 5 percent this month, saying the government’s efforts to improve fiscal health will dent consumer spending and investment. Mr Najib went on a spending binge to woo voters before the May election, including smartphone rebates for youths, household electricity subsidies and higher wages for civil servants. He’s now focusing government spending on more specific areas, saying public projects with low import content will continue while those requiring more imports will be “sequenced accordingly”. Bloomberg News
The Philippine central bank is ready to tweak its monetary policy, adjust macroprudential measures, or deploy new ones amid external risks to inflation and economic growth, governor Amando Tetangco (pictured) said yesterday. “BSP [the central bank] stands ready to make refinements to existing macroprudential measures or deploy new ones if necessary,” he said at a mid-year briefing by the Philippines’ economic managers. The central bank can also “make adjustments in stance of monetary policy as the inflation target will allow to support economic growth”, he said.
Eiji Toyoda dies at 100 Eiji Toyoda, who spearheaded Toyota Motor Corp’s expansion in the U.S. as the automaker’s longest-serving president, has died. He was 100. Toyoda died because of heart failure at the Toyota Memorial Hospital in Toyota City, the company said in a statement. During his 57-year career, the younger cousin of Toyota Motor’s founder helped reshape a maker of Chevrolet knockoffs into an automaker whose manufacturing efficiency became the envy of competitors. By the time he stepped down in 1994, the company was assembling Corollas in the U.S., had started the Lexus luxury brand and had initiated a project that would develop the world’s most successful gas-electric vehicle, the Prius.
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.
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September 18, 2013 April 19, 2013
Asia
Singapore’s home sales rebound to be short-lived Sales expected to improve but at a more gradual pace
S
ingapore’s jump in private home sales last month was only a temporary reprieve for developers as the government’s cooling measures take root and mortgage rates begin to rise. The city’s housing sales climbed 54 percent to 742 in August from July, when they fell to 482, the lowest in almost four years, according to government data. With nine rounds of cooling measures since mid-2009, the increase will be short-lived, according to Mizuho Bank Ltd and UOB Kay Hian Pte. Monthly sales averaged about 1,700 units in the first six months of the year. “There have been successive rounds of measures coming through and with mortgage rates also beginning to move up, you will find that buyers are becoming more circumspect and wondering if these are the right entry levels,” said Vishnu Varathan, a Singapore-based economist at Mizuho, who forecast home prices to fall 10 percent to 15 percent by 2016. Singapore unveiled new rules in June governing how financial institutions grant property loans to individuals. Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a more
The two biggest publicly traded developers said they expect ‘headwinds’ in the market
than four-year campaign to curb speculation in Asia’s second-most expensive housing market, according to a Knight Frank LLP and Citi Private Bank report. The new loan framework requires that lenders take a borrower’s debt into consideration when granting property loans, the Monetary Authority of Singapore said June 28.
Home loans should not exceed a total debt-servicing ratio of 60 percent and those that do will be considered imprudent, it said. “Normalising interest rates” will pose significant financial risks to individual borrowers and the economy, the Ministry of National Development said on its website in response to questions in parliament
yesterday. The property curbs are needed to avoid a “major price correction,” it said.
Higher rates Singapore’s home lending rates have risen about 0.5 percentage points in the past year, according to Keff Hui, a director at Mortgage Supermart Singapore, a mortgage broker. Executive condominiums made up almost half of the homes sold in August, an unprecedented level, according to SLP International Property Consultants. Including these apartments, offered with some restrictions such as a monthly household income cap of S$12,000 (US$9,523), August sales were 1,468, according to the government data. “The bulk of the sales in August was on the executive condo side, not on private sales, which shows demand for private home sales is still low,” said Vikrant Pandey, a Singaporebased analyst at UOB Kay Hian, who expects the number of residential properties sold to drop 30 percent in the next 12 months and as much as a 10 percent decline in prices. “The measures are having their impact.” Earlier measures haven’t damped housing values. The private residential price index rose 1 percent to a record 215.4 points in the second quarter, extending a 0.6 percent increase in the first three months, according to data from the Urban Redevelopment Authority on July 26. Suburban prices climbed 3.8 percent in the June quarter, accelerating from a 1.4 percent gain in the previous three months, the data showed. Bloomberg News
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September 18, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 54.9
54.5
54.1
Max 54.9
average 54.183
Min 53.7
53.7
Last 54.15
Max 84
average 81.65
Min 80.4
Last 80.5
84.4
24.2
83.2
24.1
82.0
24.0
80.8
23.9
79.6
Max 24.15
average 24.029
Min 23.8
Last 23.8
21.3
48.1 47.9
25.70 25.45
21.0
47.7
25.20 20.7
47.5
Max 47.95
average 47.664
Min 47.35
Last 47.65
47.3
Max 21.25
average 20.683
Commodities PRICE
DAY %
YTD %
(H) 52W
106.01
-0.544141101
13.25854701
112.2399979
86.04000092
BRENT CRUDE FUTR Nov13
109.52
-0.499682021
4.066894717
115.7599945
96.19999695
GASOLINE RBOB FUT Oct13
271
-0.242950747
4.154656213
298.210001
246.6799974
938.25
-0.63542494
3.531034483
985.5
835.5
3.757
0.508293205
3.49862259
4.525000095
3.154000044
305.29
-0.352514933
2.072954629
322.8999853
276.1999846
Gold Spot $/Oz
1317.86
0.1573
-20.8236
1796.08
1180.57
Silver Spot $/Oz
21.9677
0.4697
-27.0418
35.365
18.2208
Platinum Spot $/Oz
1442.3
-0.2145
-4.9712
1742.8
1294.18
Palladium Spot $/Oz
NATURAL GAS FUTR Oct13 NY Harb ULSD Fut Oct13
704.43
-0.1517
0.6818
786.5
587.4
LME ALUMINUM 3MO ($)
1782
-0.446927374
-14.03762663
2190
1758
LME COPPER 3MO ($)
7085
0.624911234
-10.6670029
8422
6602 1811.75
LME ZINC
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13 CORN FUTURE
Last 20.6
(L) 52W
WTI CRUDE FUTURE Oct13
GAS OIL FUT (ICE) Oct13
METALS
Min 20.45
Dec13
1867
-0.107009096
-10.24038462
2230
13870
-0.036036036
-18.69871043
18920
13205
15.605
0.256986829
1.232565683
16.65000153
14.77000046
463.5
1.533406353
-22.71779908
661
445.75
647
0.89668616
-21.16966189
913
635.5
WHEAT FUTURE(CBT) Dec13 SOYBEAN FUTURE Nov13
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 25.7
average 25.129
Min 24.75
Last 25.15
24.70
1357.25
0.667531986
4.183458069
1409.5
1162.5
118.9
-0.293501048
-24.00127836
200
115.25
SUGAR #11 (WORLD) Mar14
17.51
-0.114090131
-14.91739553
22.14999962
16.69999886
ARISTOCRAT LEISU
COTTON NO.2 FUTR Dec13
84.3
0.357142857
7.061214122
93.72000122
74.34999847
CROWN LTD
World Stock Markets - Indices
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.9335 1.5894 0.9262 1.3362 99.12 7.9871 7.7542 6.121 63.22 31.765 1.2618 29.658 43.655 11182 92.535 1.23757 0.84074 8.1716 10.6726 132.45 1.03
-0.4691 -0.1884 0.1512 0.1349 -0.2421 -0.0063 -0.0026 -0.0131 -0.5892 -0.2046 -0.1427 -0.0034 -0.1031 1.7707 0.228 0.0145 -0.3307 0.0942 -0.163 -0.3775 0
-10.0501 -1.7433 -1.1661 1.304 -13.1356 -0.0488 -0.0464 1.7906 -13.0101 -3.7305 -3.2018 -2.1074 -6.0703 -12.4217 -3.4668 -2.4314 -3.0116 0.5617 -1.3324 -14.2544 -0.0097
1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.324 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 77.44 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9475 79.408 1.20302 0.79235 7.8281 10.1113 99.64 1.0289
Macau Related Stocks
COFFEE 'C' FUTURE Dec13
NAME
20.4
24.95
Currency Exchange Rates
NAME ENERGY
23.8
NAME
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
VOLUME CRNCY
4.58
-0.2178649
45.39682
4.7
2.56
1590344
15.81
0.3172589
48.17245
15.99
8.92
893009
AMAX HOLDINGS LT
1.33
22.01835
-4.999998
1.72
0.75
19115475
BOC HONG KONG HO
24.9
0
3.3195
28
22.85
7700093
CENTURY LEGEND
0.35
-7.894737
32.07548
0.42
0.23
148000
CHEUK NANG HLDGS
6.39
0.4716981
6.6778
6.74
3.31
31000
CHINA OVERSEAS
23.95
0.209205
3.679652
25.6
17.7
11450588
CHINESE ESTATES
17.76
0.9090909
57.92916
18.02
8.168
275389
CHOW TAI FOOK JE
11.06
0.1811594
-11.09324
13.4
7.44
7129686
EMPEROR ENTERTAI
3.23
4.530744
70.89947
3.23
1.43
3189800
FUTURE BRIGHT
2.47
2.489627
103.791
2.76
1.053
1908000
GALAXY ENTERTAIN
54.15
-2.168022
78.41845
55.5
24.1
15470902 714529
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15494.78
0.7721094
18.2434
15658.42969
12471.49
NASDAQ COMPOSITE INDEX
US
3717.846
-0.1165445
23.12731
3756.245
2810.8
FTSE 100 INDEX
GB
6602.92
-0.3010784
11.95545
6875.62
5605.589844
HANG SENG BK
126.7
-0.2362205
6.739683
132.8
110.6
DAX INDEX
GE
8593.48
-0.2266342
12.88807
8626.11
6950.53
HOPEWELL HLDGS
25.45
0.9920635
-23.45865
35.3
23.2
956378
NIKKEI 225
JN
14311.67
-0.645624
37.67602
15942.6
8488.14
HSBC HLDGS PLC
86.2
-1.033295
6.027056
90.7
72.1
9455286
HANG SENG INDEX
HK
23180.52
-0.3091723
2.310992
23944.74
19426.35938
HUTCHISON TELE H
3.46
-0.5747126
-2.808987
4.66
2.98
4082000
CSI 300 INDEX
CH
2427.322
-2.060531
-3.790396
2791.303
2023.171
LUK FOOK HLDGS I
25.4
0.1972387
4.098362
30.05
16.88
1502776
MELCO INTL DEVEL
20.55
-2.836879
128.0799
21.15
6.55
4852000
TAIWAN TAIEX INDEX
TA
8249.78
-0.06735035
7.146961
8439.15
7050.05
MGM CHINA HOLDIN
23.8
-0.41841
79.24009
24.45
12.18
4254527
KOSPI INDEX
SK
2005.58
-0.3869135
0.4271253
2042.48
1770.53
MIDLAND HOLDINGS
3.17
-0.9375
-14.32433
5
2.68
2554000
S&P/ASX 200 INDEX
AU
5251.242
0.06200471
12.95544
5266.1
4334.3
NEPTUNE GROUP
0.191
0.5263158
25.6579
0.23
0.131
150908000
ID
4517.62
-0.1021397
4.654799
5251.296
3837.735
NEW WORLD DEV
11.68
0
-2.828623
15.12
9.98
7714138
FTSE Bursa Malaysia KLCI
MA
1774.94
0.2337926
5.091329
1826.22
1590.67
SANDS CHINA LTD
47.65
-0.2094241
40.35346
48.5
26.35
13387697
NZX ALL INDEX
NZ
996.248
0.07463549
12.9465
998.487
834.309
PHILIPPINES ALL SHARE IX
PH
3837.81
0.9304576
3.753199
4571.4
3440.12
JAKARTA COMPOSITE INDEX
HSBC Dragon 300 Index Singapor
SI
610.13
2.61
-1.76
NA
NA
STOCK EXCH OF THAI INDEX
TH
1441.7
-0.2359682
3.575603
1649.77
1260.08
HO CHI MINH STOCK INDEX
VN
477.73
0.4541918
15.46902
533.15
372.39
Laos Composite Index
LO
1272.77
-1.573713
4.774566
1455.82
1038.79
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
SHUN HO RESOURCE
1.7
0
21.42857
1.92
1.18
0
SHUN TAK HOLDING
4.29
-0.6944444
2.386633
4.65
2.9
3386369
20.6
-1.670644
16.07165
22.382
15.795
4818948
SMARTONE TELECOM
SJM HOLDINGS LTD
10.04
-1.375246
-28.69318
16.22
9.98
6194000
WYNN MACAU LTD
25.15
-0.1984127
20.04773
26.5
19
6640963
ASIA ENTERTAINME
4.06
0.2469136
44.2436
4.7647
2.4835
32559
BALLY TECHNOLOGI
75
0.6711409
67.74771
75.61
43.16
262450
BOC HONG KONG HO
3.24
0
5.537462
3.6
2.99
5500
GALAXY ENTERTAIN
7.12
5.481481
79.34509
7.16
3.11
39985
INTL GAME TECH
20.96
3.149606
47.91814
20.96
12.37
5893438
JONES LANG LASAL
87.42
1.262597
4.145815
101.46
72.56
255869
LAS VEGAS SANDS
63.65
0.1731193
37.88995
64.7201
37.8353
4525258
MELCO CROWN-ADR
30.77
-0.5172971
82.71971
31.95
12.5
2954363
MGM CHINA HOLDIN
3.04
0
73.68537
3.07
1.5895
6100
MGM RESORTS INTE
19.3
0.05184033
65.80756
19.8
9.15
8948727
SHFL ENTERTAINME
22.62
-0.3963012
56
23.08
12.35
1013686
SJM HOLDINGS LTD
2.74
4.580153
20.30123
2.9481
2.0311
1100
149.98
-0.2460925
33.32741
152.61
103.0933
880191
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
AIA GROUP LTD
35.7
-0.9708738
14111549
ALUMINUM CORP-H
2.84
0
8460000
BANK OF CHINA-H
NAME CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD
18164263
9.92
0
6979544
NAME
PRICE
DAY %
67.7
1.195815
2694405
SANDS CHINA LTD
47.65
-0.2094241
13387697
SINO LAND CO
10.86
0.3696858
6117338
SUN HUNG KAI PRO
102.6
0
2805603
91.8
-0.5955604
1153758
418.8
-0.5698006
4862073
21.4
0.7058824
5507500
11.76
4.255319
14158987
67.2
-1.321586
2470719
POWER ASSETS HOL
63.5
0.1577287
2201853
-0.9876543
59624122
COSCO PAC LTD
11.82
0.1694915
6870814
SWIRE PACIFIC-A
ESPRIT HLDGS
12.12
-0.9803922
5176458
TENCENT HOLDINGS
26
0.7751938
7208976
TINGYI HLDG CO
126.7
-0.2362205
714529
47.1
0.3194888
2565123
90.95
2.191011
2459687
18.4
0.2178649
7123147
HONG KONG EXCHNG
129
-0.1547988
2531964
HSBC HLDGS PLC
86.2
-1.033295
9455286
92.35
-1.124197
5474586
5.54
0
200843053
LI & FUNG LTD
11.6
0
6937666
4435061
MTR CORP
30.9
0.8156607
338289233 26779086
BANK EAST ASIA
33.55
5.669291
9651294
BELLE INTERNATIO
11.36
0.5309735
16950550
24.9
0
7700093
HANG LUNG PROPER
CATHAY PAC AIR
14.78
0.6811989
6201875
HANG SENG BK
CHEUNG KONG
116.4
0.954033
4720244
HENDERSON LAND D
CHINA COAL ENE-H
5.04
-2.702703
52986593
CHINA CONST BA-H
6.13
-0.1628664
206418514
CHINA LIFE INS-H
21.05
-1.864802
29619801
CHINA MERCHANT
27.5
-1.433692
1773809
CHINA MOBILE
88.25 -0.05662514
13021704
HUTCHISON WHAMPO
CHINA OVERSEAS
23.95
0.209205
11450588
IND & COMM BK-H
CHINA PETROLEU-H
6.18
-0.1615509
73506433
CHINA RES ENTERP
24.75
0.6097561
CHINA RES LAND
VOLUME
-0.1577287
16.04
0 -0.3395586
BOC HONG KONG HO
DAY %
12.66
CNOOC LTD
3.6 5.87
BANK OF COMMUN-H
PRICE
HENGAN INTL HONG KG CHINA GS
WANT WANT CHINA WHARF HLDG
MOVERS
23095.86
2725417
LOW
22854.54
52W (H) 23944.74
23.2
1.754386
6975585
NEW WORLD DEV
11.68
0
7714138
18.22
-0.3282276
6519021
PETROCHINA CO-H
8.76
-0.6802721
61623884
CHINA SHENHUA-H
25.5
-0.390625
13102802
PING AN INSURA-H
60.05
-0.7438017
9013823
24
7 23270
INDEX 23180.52 HIGH
CHINA RES POWER
19
VOLUME
(L) 19426.35938
22800
13-September
17-September
15 15
September 18, 2013 April 19, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Jakarta Post With expanding demand for new airplane deliveries, Southeast Asia will need around 48,100 pilots and 50,300 technicians over the next two decades, according to an estimate by Boeing Co. The 2013 Boeing Pilot & Technician Outlook shows the industry will need 192,300 new commercial pilots and 215,300 new technicians in the Asia-Pacific region through 2032. “There is a very real demand for competent aviation personnel globally and the AsiaPacific region is particularly impacted,” said Bob Bellitto, global sales director with Boeing Flight Services.
Taipei Times Taiwan’s Chinese Nationalist Party on Monday took Legislative Speaker Wang Jin Pyng’s lawsuit concerning his party membership and speakership to a higher court. Chen Ming, a lawyer who represents the KMT, filed an appeal with the Taiwan High Court against the ruling handed down by the Taipei District Court in favour of Mr Wang on Friday. Mr Wang had requested an injunction from the Taipei District Court against the KMT’s decision to revoke his party membership over his alleged role in influencing a prosecutor in a legal case.
Korea Herald South Korea’s producer prices declined for the 11th straight month in August due to on-year retreats in oil costs and the local currency’s gain against the U.S. dollar, the central bank said. The producer price index, a barometer of future consumer inflation, slid 1.3 percent in August from a year earlier, compared with a 1 percent on-year decline in July, according to the Bank of Korea. On an annual basis, the producer prices have fallen every month since October 2012 when such prices fell 0.5 percent on-year.
Bangkok Post Thailand’s government is considering the use of special emergency laws to control rubber farmer protesters in the South, Thawat Boonfueng, deputy secretary-general to the prime minister, said. Protesting rubber and oil palm growers clashed with police and resumed their highway blockade just hours after officers cleared the demonstration on Monday morning. There were several injuries on both sides, including two protesters who were shot in their legs.
Asia’s emerging community
I
Fidel V. Ramos
Former president of the Philippines (1992-1998), is a member of the ASEAN Eminent Persons Group that provided the concepts and guidelines for drafting the ASEAN Charter
n recent months, China has sparred with the Philippines, Vietnam, and Japan over its extravagant territorial claims in the South and East China Seas and the West Philippine Sea. These conflicts have undermined regional security, impeded investment planning, and sparked an undeclared military contest between China and its regional counterweight, the United States. Indeed, U.S. Vice President Joe Biden recently made it clear that the resources and attention that the United States is allocating to the Asia-Pacific region are aimed primarily at enhancing security and stability. The U.S. has, Biden declared, “set about … strengthening our alliances, deepening security partnerships, and investing like never before in regional institutions to help manage disputes peacefully.” America’s increasing involvement in Asia has already bolstered the efforts of the Association of Southeast Asian Nations to move toward a full-fledged diplomatic and economic “community,” akin in many ways to the European Economic Community that preceded the European Union. The ASEAN Community – which ASEAN leaders hope to establish by 2015 – would be a concert of nations, bound together by a shared commitment to sustainable development, that is outwardlooking, resilient, peaceful, stable, and prosperous. ASEAN’s pursuit of deeper integration follows a global trend toward using regional groupings and partnerships to gain economies of scale and enlarge “home” markets. At the same time, it reflects growing anxiety, stemming largely from China’s increasingly aggressive posture toward
many of its neighbours. China appears determined to reshape the international security and economic system that the U.S. built after World War II and has led ever since – a system that has long protected America’s Asian allies. As China’s power grows, the U.S. is finding it increasingly difficult to preserve a regional balance of power that is favourable to its interests. As a result, increased burden-sharing among AsiaPacific countries is needed to confront shared threats like cross-border terrorism, pandemic diseases, climate change and environmental degradation, and trafficking of people, drugs, and weapons.
Domestic threats Fortunately, the region’s leaders seem to recognise this need. For example, defence spending is on the rise, even without cajoling from the U.S. India and Japan have recently launched new capital ships, and are deepening their military cooperation. The Philippines is renewing its old defence ties with the U.S., and deepening its nascent links with Japan. But these pragmatic moves should not be viewed as evidence that Asia is on the verge of violent conflict. Despite their legitimate fears of military escalation in the South China Sea, Southeast Asia’s citizens remain optimistic that a peaceful, diplomatic resolution will be achieved, and that China will fulfil its commitment to forge a code of conduct for activities in ASEAN’s maritime heartland. The apparent inclination of China’s new leaders to work within a global rules-based system reinforces this hope. Moreover, ASEAN’s pursuit
of further integration is not rooted exclusively in concerns associated with China’s rise as a regional and global power. Long-standing threats to internal stability – including deep economic inequality, ethnic and religious conflict, and, in some cases, demands for territorial autonomy – remain acute. But, just as the wealth created by European integration helped to reconcile historic divisions, such as those that once roiled Northern Ireland, a genuine economic community in Southeast Asia can provide the dynamism needed to address deep-rooted domestic disputes effectively. Indonesia – the largest of the ten ASEAN countries, with a population of 250 million – has assumed a leadership role in setting security landmarks on the road toward the ASEAN Community. Indonesia has also proposed
Only by building a more unified, dynamic community can ASEAN leaders secure a more prosperous, stable, and sustainable future for their citizens
an ASEAN Peacekeeping Centres Network and a Regional Peacekeeping Force – institutions that the region urgently needs and that, despite the difficulty of multilateral security cooperation, are within ASEAN’s capacity to establish.
Nurturing citizens But success will depend on whether ASEAN countries implement crucial reforms. In order to stimulate GDP growth, encourage the establishment of competitive and dynamic enterprises, facilitate larger trade flows, and create more jobs, they must dismantle barriers that raise costs, inhibit competition, and deter new investment. Throughout this process, ASEAN’s leaders must bear in mind a crucial lesson of the EU: high-level agreements that lack the consent of ordinary people have limited effectiveness and longevity. Citizens – ASEAN’s most important stakeholders – must regard the bloc’s mission as their own. Thus, in order to build public support for the ASEAN Community, policymakers must ensure that it genuinely improves people’s lives by delivering more effective health-care systems, improved housing, better education, and greater access to decent, higherwage jobs. Furthermore, ASEAN leaders must build durable institutions that represent both the particular interests of individual member countries and the larger interests of the community as a whole. As it stands, ASEAN has no mechanism to expedite decision-making in crisis situations or, more important, to enforce compliance with collective decisions – a deficiency highlighted by disputes over the proposed code of conduct for the South China Sea. The ASEAN Secretariat, for example, lacks the authority and resources to perform crucial functions, including formulating policies, coordinating implementation, monitoring compliance, and settling disputes. As a result, ASEAN, as a McKinsey study argued, effectively “grants a veto to any country that resists regional economic integration”. While U.S. efforts to enhance stability in the AsiaPacific region are welcome, they are inadequate to offset rising strategic and economic uncertainty. Only by building a more unified, dynamic community can ASEAN leaders secure a more prosperous, stable, and sustainable future for their citizens. © Project Syndicate
16
September 18, 2013
Closing U.K. raises US$5.1b from Lloyds share sale Euro scepticism on the rise in EU: poll Britain has raised 3.2 billion pounds (US$5.1 billion) from the sale of a 6 percent stake in Lloyds Banking Group, marking a milestone in the economy’s recovery from the 2008 financial crisis. The government pumped a combined 66 billion pounds into Lloyds and Royal Bank of Scotland in 2008, leaving it with a 39 percent shareholding in Lloyds. “This is another step in the long journey in putting right what went so badly wrong in the British economy,” Finance Minister George Osborne said yesterday. The stock was sold to unnamed investment institutions at 75 pence per share, a 3 percent discount to Lloyds’ closing price on Monday.
Euro scepticism is on the rise in Germany, France, Italy and Spain, an opinion poll published by the French daily La Croix showed yesterday. Most people questioned still consider membership of the 28-member European Union to be a good thing, according to the poll carried out by the Ifop institute, five years after the start of the lingering debt crisis. However, there are growing levels of euro scepticism. In Spain, 37 percent of respondents said EU membership was a bad thing, up from 26 percent in June 2012, rising to 43 percent in France and 44 percent in euro zone powerhouse Germany, from 36 percent.
Hong Kong most costly city for rents: Savills H
China drew US$79.77 billion in FDI in the first eight months of 2013
China stocks fall as FDI slows FDI soft but not an indication of weaker recovery, analyst says
C
hina’s stocks fell the most in two months after foreign investment data trailed economists’ estimates and moneymarket rates rose before the start of holidays this week. Liquor maker Kweichow Moutai Co plunged 5.6 percent, dragging a gauge of consumer-staples producers to the second-biggest loss among industry groups. Shanghai Pudong Development Bank Co and Poly Real Estate Group Co led declines for lenders and developers with a retreat of more than 3 percent. Shanghai International Port (Group) Co dropped 10 percent after UBS AG downgraded the stock to sell. The Shanghai Composite Index fell 2.1 percent to 2,185.56 at the close, the most since July 8. A report showed foreign-direct investment grew 0.6 percent last month, compared with the Bloomberg estimate of 12.5 percent growth. A gauge of funding availability in the banking system climbed as demand for cash increased ahead of local holidays. Hong Kong shares also slipped from a 17-week high yesterday, led by financial counters as turnover dropped ahead of the two-day meeting at which the U.S. Federal Reserve meeting is expected to start cutting its stimulus. The Hang Seng Index, which on
Monday had its highest close since May 22, fell 0.3 percent to 23,180.5 points. The China Enterprises Index of the top Chinese listings in Hong Kong inched up 0.4 percent. “It’s pretty heavy profit taking after the recent rally and investors are using poor data as an excuse to sell shares,” said Wang Zheng, Shanghaibased chief investment officer at Jingxi Investment Management Co, which manages US$120 million. The Shanghai index has risen 12 percent since this year’s low on June 27 as data ranging from exports to industrial output showed growth is accelerating and as companies based in the city surged after the State Council approved a free-trade zone. Mainland markets will close on September 19 and 20 for the midAutumn festival and on October 1 to 7 for National Day holidays. The CSI 300 Index slipped 2.1 percent to 2,427.32 yesterday. China’s non-financial foreign direct investment rose in August from a year earlier to US$8.38 billion, according to the Ministry of Commerce. Foreign investment growth slowed from 24.1 percent in July. The Conference Board’s leading index for China climbed 0.7 percent to 269.3 last month from 267.4 in July. “While the FDI figure is rather soft this, in my opinion, is not an
indication that the economic recovery is weaker than expected,” said Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co in Shanghai. “FDI is becoming very volatile but the main driver on China’s economic growth is not any more foreign investment but domestic capital.” A measure of consumer-staples producers in the CSI 300 slid 2.4 percent, the second most among 10 industry groups. Kweichow Moutai, China’s biggest liquor maker by market value, declined 5.6 percent to 141.30 yuan. “Sales of Moutai and other liquors are said to sell not very well ahead of holidays so these shares are being dumped,” Jingxi Investment’s Mr Wang said. Shanghai Pudong bank declined 5.7 percent to 10.83 yuan. Shanghaibased Bank of Communications retreated 3.5 percent to 4.41 yuan. Ping An Bank lost 3.1 percent to 12.79 yuan. Poly Real Estate Group, the second-biggest developer, declined 3.7 percent to 10.59 yuan. The Shanghai measure is valued at 8.8 times its projected 12-month earnings, compared with the five-year average of 12.6 times, according to data compiled by Bloomberg. Trading volumes were 12 percent above the 30day average, Bloomberg data showed. Bloomberg News/Reuters
ong Kong is the most expensive city in the world to rent business and residential space, according to a report by Savills Plc. New York displaced London as the world’s second-most expensive city in the first half of 2013, the World Cities Review, which measures costs in the world’s 10 leading cities, released yesterday showed. New York was ranked fifth at the beginning of 2010, the London-based property broker said. Hong Kong’s home prices have more than doubled since early 2009 to a record, raising concerns of an asset bubble and stoking public discontent. The city also has the world’s most expensive retail rents and its Central business district was the costliest district to rent an office until it was overtaken by London’s West End at the end of 2012, according to Cushman & Wakefield Inc. It would cost US$1.63 million per year for a seven-person team to set up in Hong Kong, the most expensive, according to Savills Executive Unit, a core business unit measure the broker uses to compare costs across cities. New York came second with US$1.55 million and London third with US$1.53 million, according to the report. Singapore offered businesses locating there the best-value accommodation in relation to the size of its economy, Savills said in the report. Bloomberg News
To set up an office for a seven-person team in HK would cost US$1.63 million per year