Macau Business Daily, Spetember 24, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief

Property fund NAV per share rises one-third Page 5

Usagi ‘hangover’ lasts into Monday for travellers

acau’s high-end offices experienced the strongest growth in rental and capital values among all China’s tier-two cities in the first half of this year, a report says. The Greater China Office Index report from Jones Lang LaSalle says Macau’s grade A office rents were up by 10.5 percent thanks to “strong and rising demand from the construction and casino sectors”. The average yearly rent for a grade A office in Macau amounted to 1,788 yuan (US$2,334) per square metre, the report released last week shows. This figure is close to Guangzhou, a tier-one city whose average rent went up to 1,849 yuan per square metre in the first half. The Macau branch of Jones Lang LaSalle says grade A offices here have “quality property management” and most belong to a single owner.

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Year II

Number 377 Tuesday September 24, 2013

Editor-in-chief Tiago Azevedo

Highest office rents of China tier-two cities

April 19, 2013

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Macau-Hengqin red tape dogs food souvenir sector

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Lengthy inspection procedures by mainland customs officials could stifle hopes of Macau manufacturers selling more of their popular souvenir food products to visitors expected to flock to Hengqin Island’s new tourist facilities. “…the [cross-border] inspection procedures are time-consuming, and time is the biggest enemy to freshly-made food products,” Alan Wong Yeuk Lai, managing director of Choi Heong Yuen Bakery, told Business Daily yesterday. He’d like speedier inspection.

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Coutinho ticket joins court battle over spoiled ballots

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Legislative Assembly candidates led by José Pereira Coutinho are joining the court battle over whether spoiled ballots from September 15’s election should be counted as valid. His ticket will join a battle at the Court of Final Appeal over which of the 4,331 spoiled ballots cast should be counted as valid votes. Mr Coutinho told Business Daily he believes at least “a few” should be reinstated. Page 3

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Reliance on mainland tourists higher than ever in August Macau’s much heralded attempt to diversify its economy looks shaky after official data released yesterday showed two out of three visitors last month were from the mainland. It was the highest monthly proportion since official data became available in 1998. Visitors from the People’s Republic totalled 1.88 million last month, up by 15.1 percent from a year earlier. Mainlanders accounted for 65.5 percent of all August visitors. Page 5

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September 24, 2013

Macau

Border controls sour hopes for Hengqin souvenir food Exemption of Macau-made food from border inspections remains pie in the sky Tony Lai

tony.lai@macaubusinessdaily.com

he Macau souvenir food industry dreams of selling cookies and beef jerky just across the border on Hengqin Island, but the reality of border controls is thwarting its plans. The managing director of Choi Heong Yuen Bakery, Alan Wong Yeuk Lai, said: “We definitely have interest in getting a grip on the Hengqin market – and even the entire mainland – because of the popularity of souvenir food among mainlanders.” Choi Heong Yuen has 11 branches and six other outlets in Macau but none in the mainland. “Our manufacturing line is located in Macau and we have to export the food products to the mainland, and they undergo inspection procedures when crossing the border,” Mr Wong said. “But the problem now is that the inspection procedures are timeconsuming, and time is the biggest enemy to freshly made food products,” he said. He declined to estimate how long the inspection procedures took, saying it depended on the official in charge of each inspection. The president of the Macau Pastry Specialty Association, Alan Ho Hoi Ming, also said mainland

Builders urged to reduce accidents B

uilders must carry out risk assessments for ongoing works to prevent accidents and injuries, the government said, after concluding the investigation of four serious construction accidents this year. The Labour Affairs Bureau said in a press statement yesterday that the contractors in-charge of the sites where the accidents took place “have been fined” for not following construction safety rules. The bureau did not reveal

The Macau Pastry Specialty Association intends to set up a Hengqin Island version of Rua do Cunha

inspection procedures were one of the main obstacles to selling Macau souvenir food across the border. “The procedure is particularly complex for any goods containing meat, like the meat jerky in our case,” Mr Ho said.

the amount of penalties paid. All four accidents were linked to the misuse of building equipment. “Both the contractors and sub-contractor had not carried out risk assessments for their ongoing works to identify potential dangers in advance,” the statement added. For instance, one contractor had not evaluated the soil where it set up a crane that later fell over, the bureau said. Construction at the four sites was suspended but has been resumed, said the bureau. Two of the accidents took place in the construction sites for the Taipa section of the Light Railway Transit project while another occurred in a Taipa plot where a social housing hub is being built. The latest accident happened in July, in the site for the expansion of the Chinese People’s Liberation Army Garrison here. It was the sole accident in which a person died. T.L.

His association is drafting a Hengqin investment plan, which it will submit to the Macau Trade and Investment Promotion Institute.

Empty words The institute began taking applications to invest on the island last month. The deadline for applications is October 31. The Macau Pastry Specialty Association intends to set up on Hengqin something similar to Rua do Cunha, an area of souvenir food shops in Old Taipa Village. “We are now improving our project proposal and 15 of our members have expressed interest in joining in this investment on Hengqin,” Mr Ho said. “But there are still a lot of technical aspects to be solved, like the inspections, which we still have to discuss further with the Zhuhai Inspection and Quarantine Bureau,” he said. The bureau comes under the General Administration of Quality Supervision, Inspection and Quarantine, which said in April that Macau retail products meant for sale on Hengqin could be exempt from inspection. Mr Ho said: “We have heard about that, but such an exemption, as a matter of fact, has yet to be made.” Mainland news media reported last month that Hengqin would institute new inspection procedures and offer tax breaks only after

new Hengqin border facilities had tried to copy its brand. were finished. The Chinese-language The facilities are expected M a c a o D a i l y N e w s to be completed this year. reported that the Macau Mr Ho said a plan to T r a d e a n d I n v e s t m e n t reserve space for Macau Promotion Institute had souvenir food sellers in received 62 inquiries about H e n g q i n ’ s C h i m e l o n g investment on Hengqin by International Ocean Resort September 13. had been shelved. The inquiries were about He said border controls investment in the tourism, were not the only reason that real estate and Chinese the plan had been shelved, t r a d i t i o n a l m e d i c i n e but declined to elaborate. businesses. “Right now, only October The newspaper said the Fifth Bakery is set to have an institute had no available outlet in Chimelong when it i n f o r m a t i o n a b o u t opens later this year,” Mr applications to invest on Ho said. Hengqin. He said that unlike other Macau bakers, October Fifth had its production facilities in the mainland. In March, October Fifth president Lao Ngai Leong told our Chinese-language sister publication, Business Intelligence, that the company had one facility in Jiangmen and another in Xinhui, both in Guangdong, and over 9,000 outlets in the mainland. Mr Wong said the Border inspections take far laxity of trademark too long for fresh food protection in the mainland was Hengqin Rua do Cunha another obstacle to interests 15 enterprises Choi Heong Yuen tapping into the Plan for souvenir food mainland market. M r L a o s a i d shops in Chimelong shelved in March that October Fifth had Mainland copycats had disputes about infringing souvenir trademarks in the trademarks mainland when other companies

KEY POINTS

September 24, 2013 April 19, 2013

Macau

Coutinho ticket joins court battle over spoiled ballots Election Commission says final results confirm the winners as originally declared Stephanie Lai

sw.lai@macaubusinessdaily.com

The ticket led by José Pereira Coutinho won two seats in the Legislative Assembly elections

Mr Wong is the second candidate on the ticket led by gaming company executive Angela Leong On Kei. Mr Wong said on Sunday that his ticket would challenge the election results in the Court of Final Appeal. The court would then have four days to make a final ruling. Mr Coutinho told Business Daily yesterday that his ticket wasn’t appealing because it had doubts that Mr Leong would keep his seat. But he said some spoiled ballots should be counted as valid votes for his ticket. “There were a few votes for us that got smudged by the stamp ink,” he said. “We think those votes should be counted as well,” he said.

Right first time After a recount of the votes for three tickets, the Election Commission confirmed yesterday that the winners it had originally declared

would keep their seats. “We respect the result of the commission’s recount,” Mr Coutinho said, “but we would still like to exercise our basic legal rights.” The recount was held because fewer than 100 votes separated candidates on the tickets led by Ms Leong, Mr Coutinho and Chan Meng Kam. “According to our count, there is no change in the directly elected seats,” an official of the commission, Mai Man Ieng, told reporters. “Compared with the original election results, ticket nine lost one valid vote,” Mr Mai said. Ticket nine is Mr Coutinho’s. The commission reexamined the 4,345 ballots originally considered spoiled and declared 14 of them valid after all. Mr Mai said three tickets had expressed their intention to challenge or defend the election results in court: Ms Leong’s, Mr Coutinho’s and Mr Chan’s.

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But Mr Mai said the Election Commission had yet to be officially notified. The second candidate on Mr Chan’s ticket, Si Ka Lon, told Business Daily that his ticket was still considering whether to go to court. Mr Chan’s ticket was the most successful, winning three seats.

“Previously, the controversy was about 400 votes for us. We were thinking about whether we should challenge the results if those 400 votes were declared invalid,” Mr Si said. “But the whole ticket has yet to reach a decision yet,” he said. “We are going to discuss it soon.”

Ticket

Final Results

he ticket of Legislative Assembly candidates led by José Pereira Coutinho will argue in court that some of the spoiled ballots in the elections on September 15 should be counted as valid votes. The ticket will join a battle at the Court of Final Appeal over which of the 4,331 spoiled ballots cast should be counted as valid votes. Mr Coutinho told Business Daily his ticket believes “a few” spoiled ballots should be counted as valid votes – and that some of those should be counted as votes for his ticket. Mr Coutinho’s ticket won two of the 14 directly elected seats in the assembly: one went to him as president of the Macau Civil Servants Association; the other went to Leong Veng Chai, a former prison guard. Mr Leong won the last of the seats up for grabs, beating Kent Wong Seng Hong to it by a margin of fewer than 20 votes.

Number of Votes

September 24, 2013

Macau

Office rents rise faster here than in any second-tier city High-end offices are becoming more expensive – and more lucrative for owners, an estate agency says Stephanie Lai

sw.lai@macaubusinessdaily.com

Macau’s grade A offices are almost as expensive as Guangzhou’s

he growth of the rental and capital values of high-end offices in Macau was the strongest in all second-tier cities in the first half of this year, Jones Lang LaSalle says. The estate agency’s latest Greater China Office Index report says Macau’s grade A office rents were 10.5 percent higher in the first half of the year than a year earlier owing to “strong and rising demand from the construction and casino sectors”. The report says the average annual rent for grade A office space here was 1,788 yuan (2,334 patacas) a square metre. This was close to the average of 1,849 yuan a square metre in Guangzhou, a first-tier city. The Macau branch of Jones Lang LaSalle said grade A offices here had “quality property management” and that most belonged to a single owner. “We are seeing a boom in supporting businesses like exhibition planning companies, advertising and other multi-media agencies, and in construction companies following the recent launch of more Cotai casinoresorts,” said Jones Lang LaSalle (Macau) Ltd associate director of research Alvin Mak.

Less empty space Mr Mak said there was still room for office rents to rise because of high demand from these supporting businesses. “And some of them do seek grade A offices, like the ones in the FIT building,” he said. The FIT building is in Praia Grande. Office rents rose in most secondtier cities in the first half, but they rose fastest in Macau. The second-fastest rate of growth was 7.3 percent, in Shenyang, Liaoning’s provincial capital. But office rents in Chengdu were a drag on the Greater China Office Index. Chengdu has more grade A office space than any other second-tier

city, but 40 percent of it is vacant and rents fell by 3.8 percent in the second quarter. The Macau branch of Jones Lang LaSalle said last month that office rents here had been 12.3 percent higher in the first half than a year before because of growing demand and fewer offices lying empty. It said that by the end of June the proportion of all office space lying empty had fallen to about 12 percent and the proportion of grade A office space lying empty had fallen below 10 percent. “We do not have a projection at the moment, but we expect the vacancy rate for local offices to continue to go down in the second half of this year,” Mr Mak said.

Slight cooling effect The Greater China Office Index report says the average capital value of grade A office space here was 60,074 yuan a square metre in the second quarter, over two-thirds more than a year before. The report describes Macau as “a small market with strong speculative investment demand” for grade A offices. Last October the government expanded the special stamp duty to cover sales of offices. The special stamp duty is a levy of 20 percent on the sale of a property if it is sold within a year of being purchased, or of 10 percent if it is sold between one and two years after being purchased. It is meant to cool the red-hot property market. Mr Mak thinks expansion of the special stamp duty has had some effect. “Without this measure, the capital values of offices could have risen much more rapidly, given strong local investment,” he said. “For the whole of 2013, we expect the capital values of grade A offices in Macau to achieve a double-digit increase,” he predicted.

September 24, 2013

Macau

Dependence on mainlanders greater than ever in August An academic calls for a drive for more non-gaming attractions and more direct flights Tony Lai

tony.lai@macaubusinessdaily.com

wo out of three visitors last month were mainlanders, the highest proportion on record, official data show. An academic says it may prove dangerous for the tourism business to depend so heavily on visitors from the mainland if the mainland economy hits a bump. Statistics and Census Service data published yesterday show 1.88 million mainlanders visited last month, 15.1 percent more than a year earlier. They made up 65.5 percent of all visitors, the highest proportion since official data were first published in 1998. Macau had 2.87 million visitors from all sources last month, 7.1 percent more than a year earlier. The coordinator of the gaming and hospitality management programme at the University of Macau, Amy So

Siu Ian, says the mainland should be expected to make an important contribution to the tourism business here, given its proximity. But Ms So told Business Daily that dependence on the mainland was “slightly dangerous”. She said a downturn in the mainland economy could mean fewer tourists. “There are always problems when a place relies too much on a single source of tourists, and it is a particular problem for Macau, whose target is to become a global tourism centre,” she said. China’s 12th Five-Year Plan, put forward in 2008 and reconfirmed in 2011, envisages Macau as a “world centre of tourism and leisure”. Last month’s figures paint a different picture. Over 92 percent of visitors came from Greater China. Just 1.9 percent came from Europe, Australia or the Americas. “It is difficult to diversify the market, but we must do so,” Mr So said.

Air links pay off

There are always problems when a place relies too much on a single source of tourists Amy So Siu Ian University of Macau specialist

She said Hong Kong had a similar problem. Hong Kong Tourism Board data show mainlanders made up 74.8 percent of the 30.2 million visitors to Hong Kong in July. “More outside promotion of the non-gaming elements of Macau would be helpful, as well as more direct flights to various places,” Ms So said. Macau’s largest source of tourists other than Greater China is South Korea. In the first eight months of this

Over 92 percent of visitors to Macau last month came from Greater China

year over 312,900 South Koreans visited, 4.7 percent more than a year before. The deputy director of the Macau Government Tourist Office, Manuel Gonçalves Pires Júnior, said in April that the increase in South Korean tourists was due to more direct flights. Last year Air Busan begun flying two times a week between Macau and Busan, South Korea’s secondbiggest city. In the first eight months Macau had about 19.6 million visitors from all sources, 4.7 percent more than a year earlier. Of this total, over 19,900 were Russians, 22.2 percent more. The growth in the number of Russian tourists was outpaced

only by growth in the number of Vietnamese tourists, which rose by 26.1 percent. The government is hoping to attract more visitors from Russia and South Korea. The Macau Government Tourist Office opened a representative office in Moscow in March. Japan is Macau’s second-largest source of tourists other than Greater China. But in the first eight months the number of Japanese tourists fell to 186,000, one-third fewer than a year earlier. Macau’s largest source of tourists after the mainland is Hong Kong, which sent 3.9 percent fewer, and the next-largest is Taiwan, which sent 10 percent fewer.

Property fund NAV per share rises one-third London-listed investment vehicle floated in London in 2006, targeting then cheap Macau real estate

acau Property Opportunities Fund Ltd reported adjusted net asset value per share up 31.3 percent year-on-year to US$3.95 (31.54 patacas) in financial year ended June 30. “I am confident there is more growth to come,” said David Hinde, the fund’s chairman in a statement accompanying the results. The fund, managed by Sniper Capital, listed on the Alternative Investment Market on the London Stock Exchange in 2006. Its Macau assets include The Waterside, a luxury residential property that’s part of One Central. Occupancy there reached 90 percent based on total gross floor area, with an average net rent of HK$22.40 per square foot per month as of 30 June 2013, a nine percent increase year-on-year, said the fund.

A low-density residential development at The Fountainside is undergoing internal fit out with the project’s sales permit from the government expected “by endOctober 2013, allowing final sales to recommence” said the results release. Macau Property Opportunities Fund said last month it stood to realise 392 million yuan (511.40 million patacas) net, from the sale of its two Zhuhai properties. That transaction is expected to be completed by the end of February next year, the fund said in its results statement. A Senado Square site acquired by the fund in 2007 for US$33 million and earmarked for a retail development, is expected to see construction starting next year “once formal planning consent has been received”, states the fund. M.G.

Artist’s impression of interior at The Fountainside

September 24, 2013 April 19, 2013

Macau

Usagi ‘hangover’ lasts into Monday Travel services experience second day of disruption following typhoon Michael Grimes

michael.grimes@macaubusinessdaily.com

he effects of Typhoon Usagi continued to have an impact on Macau tourism yesterday, despite the storm never reaching signal No 8 level in the city. Ferry services to Hong Kong were only resumed after signal No 8 was lowered in the neighbouring city at 9.20am on Monday, while ferry services to mainland China took longer to return as ports to the west of Macau continued to feel the effects of the high winds and rain as the storm travelled west. Signal No 3 came down in Macau at 11am. Usagi was the third typhoon and the nineteenth tropical storm of the 2013 season in the northwest Pacific. Meteorologists had heralded it initially as potentially a super typhoon with the strongest winds for 34 years. In the end, Usagi’s bark was worse than its bite, with the storm losing some of its power after making landfall in Guangdong Province about 145 kilometres (90 miles) east of Hong Kong on Sunday evening. By the time it reached Macau at around 8pm on Sunday, it had weakened sufficiently to allow the Macao Meteorological and Geophysical Bureau to maintain the signal No 3 that had been raised at 11am on Sunday.

Further delays Macau International Airport suffered cancellations and delays to flights on Sunday, creating a backlog that produced further delays on Monday. Yesterday at least 16 flights were either delayed or rescheduled – some by many hours. At least five – all Air Macau flights to mainland China – were cancelled, according to the airport’s own website. On Sunday, angry Air Macau passengers had accused the city’s flag

carrier of overreacting by cancelling flights from noon that day – only an hour after the signal No 3 had been raised – while rival commercial carriers had continued to fly. “Even though Macau was spared from the brunt of the storm, Typhoon Usagi will still have disrupted the geographies where Macau’s primary customer bases are located,” said Union Gaming Research Macau in a note yesterday. The research house added, in a reference to Monday travel: “….it continues to impact these

geographies today (i.e. the storm is over Guangzhou this morning). We therefore still think Typhoon Usagi could negatively impact September’s year-on-year [revenue] growth rate by at least a few hundred basis points relative to current projections; VIP luck factor notwithstanding.” Union added: “…we believe it is likely that many customers – especially high value customers – elected to defer their trips to Macau.” Some macroeconomic data from mainland China yesterday hinted in a possible bounce in Macau VIP gambling revenue six months down the line.

Mainland data The flash China HSBC Purchasing Managers’ Index – a measure of industrial activity focusing on the mainland’s private sector rather than on state-owned enterprises – climbed to 51.2 in September from a final 50.1 reading in August – hitting a

KEY POINTS Macau avoids worst of Typhoon Usagi Travel still disrupted yesterday Some Air Macau flights cancelled Monday Gaming growth likely lost ‘basis points’: Union Gaming

More travel delays in the wake of Usagi (Photo by: Manuel Cardoso)

high not seen since March. In Hong Kong, yesterday’s morning session for the stock exchange was cancelled. The lowering of the signal No 8 at 9.20am came too late for morning trading, which had been due to start at 9am. The market resumed at 1pm Hong Kong time. CLSA Asia-Pacific Markets said it was continuing with its 20th Investors’ Forum at the Grand Hyatt in Hong Kong. The event is due to end today. Hong Kong Investment Funds Association rescheduled its conference that had been due to take place yesterday. At least 25 people were killed in Guangdong province by Typhoon Usagi, and 3.56 million residents were directly affected by the storm, China’s Ministry of Civil Affairs said on its website, citing the provincial agency. Usagi had led to 3.24 billion yuan (US$529 million) of losses in Guangdong province, it said. With Bloomberg News/ Reuters

September 24, 2013 April 19, 2013

Macau Beijing says no ‘external interference’ Beijing would oppose any “external interference” on Macau’s internal affairs, including the recent Legislative Assembly election, Zhang Jinfeng, deputy commissioner of China’s Ministry of Foreign Affairs in Macau, told media on the sidelines of a public event yesterday. She also praised the election as displaying the “wisdom” and “capability” of the Macau government and people. Ms Zhang did not explain what she meant by “external interference”. In late July she criticised comments made on the election by “representatives of foreign institutions”, saying that they “were exerting pressure on local affairs”.

AERL ‘may’ delay HK listing Due to sudden death of a sponsor’s principal says junket room business

acau junket investor As ia En te rtain ment & Resources Ltd said in a statement filed with Nasdaq in New York it “may” have to delay its planned listing by introduction in Hong Kong. “The company was recently informed that the sponsor’s principal who is in charge of our Hong Kong listing application has unexpectedly passed away at home,” said the firm. It adds: “Such [an] unfortunate development was completely unanticipated and resulted in complications for the Hong Kong dual listing application which has otherwise been progressing according to plan.”

A note from David Bain of independent brokerage Sterne Agee in the United States suggested earlier this month that AERL’s Hong Kong listing could happen “in weeks”. Listing by introduction is the same method used by Nasdaqlisted Macau casino developer Melco Crown Entertainment Ltd when it made a dual listing in Hong Kong in December 2011. In such a process, a company that has shares issued on another exchange can – subject to local regulatory approval – list its shares in Hong Kong without raising new funds or issuing new shares. AERL recorded a net loss for

the second quarter ending June 30 of US$3.0 million (23.96 million patacas), or six US cents per share fully diluted, compared to net income of US$22.0 million, or 48 US cents per share fully diluted, in the same period of 2012. On June 26 AERL – chaired by Macau junket room veteran Lam Man Pou – completed a deal to acquire the rights to 100 percent of the profit from the Level 1 VIP room at L’Arc Macau’s casino on Macau peninsula. AERL now works with VIP room gaming promoters in a total of five high roller rooms in Macau. M.G.

L’Arc Macau – latest venue for AERL operations

September 24, 2013 April 19, 2013

Greater China

Manufacturing hits six-month high Rebound in China’s economy gaining momentum on improving demand

hina’s manufacturing activity expanded in September to a six-month high, HSBC said yesterday, a further sign that a rebound in the world’s second-largest economy is gaining momentum on improving demand. The British banking giant’s preliminary purchasing managers’ index (PMI) for September hit 51.2, the highest since March when it stood at 51.6, HSBC said in a statement. The result was higher than last month’s final reading of 50.1, which had improved from an 11-month low of 47.7 in July and ended three months of contraction, according to the bank. The index tracks manufacturing activity in China’s factories and workshops and is a closely watched gauge of the health of the world’s second-largest economy. A reading below 50 indicates contraction, while anything above signals expansion. The September figure suggested China’s ongoing growth rebound is consolidating on the back of “simultaneous improvements” in overseas and domestic demand, HSBC economist Qu Hongbin said in the release. “We expect a more sustained recovery as the further filteringthrough of fine-tuning measures should lift domestic demand,” he said. “This will create more favourable conditions to push forward reforms, which should in turn boost mid- and long-term growth outlooks.” Chinese authorities have so far been reluctant to introduce largescale stimulus measures, but in late July did announce some steps to boost growth, such as reducing taxes on small companies and encouraging railway development. The first half of this year saw analyst concerns about China’s economy mount after an expected rebound from growth of 7.7 percent last year – the worst performance in 13 years – failed to materialise. Growth stood at 7.7 percent in the first three months of this year and slowed further to 7.5 percent in the April-June period, but recent data, including strong exports and industrial output, have pointed to renewed strength in the economy. HSBC said the final September PMI reading will be published next Monday. AFP

HSBC’s purchasing managers’ index for September brought good news

United States and China have imposed duties on solar gear imports

US peace plan to avert China solar panel trade war Business group wants fund to help American manufacturers Brian Wingfield

solar-energy group is offering a plan to resolve a trade dispute between the United States and China, saying import duties currently in place are crippling the industry in both nations. The Washington-based Solar Energy Industries Association planned to announce yesterday a proposal to eliminate tariffs on solar gear and establish a fund to help United States manufacturers, with contributions from China. “The problem we have right now is that the trading rules are not working well,” John Smirnow, vice president for trade and competitiveness for the group, known as SEIA, said in a phone interview. “Solar has a very complex global supply chain” and relying on the existing system to settle trade disputes isn’t working, he said. Tensions between the United States and China, the world’s two largest economies, over cleanenergy production have threatened to erupt into a trade war within the last year, with both sides imposing duties on imports. The price of polysilicon, the main ingredient in solar cells, has dropped 57 percent since 2010, as both nations grapple for market share. The United States Commerce Department a year ago set penalty rates for Chinese producers, including Suntech Power Holdings Co and

Trina Solar Ltd, after determining the companies had benefited from government subsidies and had “dumped” their products onto the United States market at below the cost of production. The American unit of Bonnbased SolarWorld AG brought the complaint.

China duties In July, China began imposing duties as high as 57 percent on United States polysilicon imports. The United States solarenergy industry, which includes manufacturers as well as installers of solar panels, has been caught in the crosshairs. While import duties on Chinesemade solar cells have benefited some United States manufacturers, they have made the finished panels more expensive, harming panel installers and consumers who face higher prices for the finished product, according to Mr Smirnow. At the same time, Chinese manufacturers face higher prices as they seek to avoid United States duties, he said. Since the tariffs set by the Commerce department last year apply only to Chinese-made solar cells, solar panel manufacturers in the Asian nation are buying cells at a premium in Taiwan and putting

together the finished panels in China before shipping them to the United States, Mr Smirnow said.

Manufacturers’ fund The plan would abolish the United States duties on solar cells from China, as well as China’s tariffs on American polysilicon. Instead, China’s solar-energy companies would establish a fund in the United States that American solar-cell manufacturers could draw from to help them “scale-up,” Mr Smirnow said. While the size of the fund would be negotiated based on market estimates, it would probably be in the hundreds of millions of dollars over the next three years, he said. “Currently Chinese companies are paying a premium to get their products into the US market,” according to Mr Smirnow. Payments to the fund – combined with the abolition of United States import duties – would provide Chinese manufacturers with a cheaper option than having to purchase solar cells in Taiwan or another nation, he said. The compromise plan is similar to a settlement in which the United States agreed to pay into a Brazilian fund to help the South American nation’s cotton industry rather than face stiff import duties, Smirnow said. Bloomberg News

September 24, 2013 April 19, 2013

Greater China POSCO to build Chongqing steel mill South Korean steel maker POSCO said yesterday it has agreed to set up a steel plant jointly with China’s Chongqing Iron & Steel Co, hoping strong demand from the world’s biggest steel consumer will offset weak sales at home. The 50/50 venture, to be built in Chongqing in western China, will have annual production capacity of 3 million tonnes. The two firms also agreed to consider setting up a joint venture producing auto steel sheets, POSCO said in a statement. The new plant will use POSCO’s self-developed steel making technology called Finex, which reduces production costs and greenhouse gas emissions and allows producers to use cheaper raw materials, such as ore fines and non-coking coal.

Usagi kills 20 in southern China Hong Kong shut down, stock exchange closed for the morning

powerful typhoon hit Hong Kong and the southern China coast yesterday, killing at least 20 people on the mainland, crippling power lines and causing flooding and gale force winds. Typhoon Usagi, the strongest storm to hit the Western Pacific this year, began pounding the Asian financial centre late on Sunday. More than 370 flights were cancelled. The number 8 signal warning remained in force early yesterday, with financial markets closed for the morning. China’s National Meteorological Centre issued its highest alert, with more than 80,000 people moved to safety in Fujian province and authorities deploying at least 50,000 disaster-relief workers. At least 20 people were killed on China’s southern coast, television reports said, including 13 in Shanwei in the eastern fringes of Guangdong province. The victims included people hit by debris and others who had drowned. One man was killed by a falling window pane. “It is the strongest typhoon I have

ever encountered,” Xinhua quoted Luo Hailing, a gas station attendant in Shanwei, as saying. “So terrible, lucky we made preparations.” Winds of more than 180 km/ hour were recorded in some parts of southern China, toppling trees, cranes and blowing cars off roads in some areas. The storm had earlier brought

down three major power lines in coastal Fujian, cutting off electricity supplies to about 170,000 households. In Guangdong province, a major base for Chinese nuclear power, the Daya Bay nuclear power plant just east of Hong Kong had initiated emergency response schemes. Four of the six power-generating

units at the plant had been ordered to operate at reduced load. Airlines cancelled flights to cities in southern Guangdong and Fujian, while shipping was suspended between China and Taiwan, state media said. Bullet trains from Guangzhou city to Beijing were suspended. More than 47,000 fishing boats were in harbour and schools were closed in 14 coastal cities. Despite earlier warnings the typhoon could pose a severe risk to Hong Kong, the city suffered only minimal damage, including toppled trees. There were no fatalities in the city. The Hong Kong Exchange delayed the start of trading on securities and derivatives markets due to the typhoon. Nearly 450 flights scheduled for the Hong Kong airport were either cancelled or delayed. Usagi lashed the east and south coasts of Taiwan on Saturday after slamming into the Philippines’ northernmost islands, where it cut communication and power lines and triggered landslides. Agencies

Wanda to build park, world’s largest studio As conglomerate remains in talks with overseas movie chains

alian Wanda Group, founded by China’s richest man Wang Jianlin, said it plans to invest 50 billion yuan (US$8.2 billion) to build an entertainment park in the eastern Chinese city of Qingdao. The 540-hectare (1,334-acre) Qingdao Oriental Movie Metropolis park, which is scheduled for completion in 2017, will include a movie museum, wax museum, exhibition center, yacht club and hotels, the company said in a statement Sunday. The complex will also house 20 studios including the world’s largest studio at 10,000 square meters, it said. Billionaire Mr Wang said in an interview this month that he was in talks with overseas movie chains following a US$2.6 billion purchase of the second-largest United States cinema operator AMC Entertainment Holdings Inc last year. At the time, it was the biggest acquisition of a United States corporation by a Chinese company. Dalian Wanda Group wants to build hotels in as many as 10 major

cities around the world including projects planned for London and New York, Mr Wang said at the interview. He did not name the investment banks or targets, and said he had been in talks with “several” companies over the past year. He said he wants to build five-star hotels at a rate of 15 per year. Wanda has 40 hotels. Mr Wang’s closely held Dalian Wanda Group is the owner of the country’s biggest commercial land developer. It also develops shopping malls and runs department stores, luxury hotels and movie theaters. Over two decades, he has built 72 shopping centres throughout China called “Wanda Plazas,” anchored by his company’s department stores, office buildings and cinemas. The Dalian Wanda conglomerate is owned by Mr Wang and his son Wang Sicong. The 58-yearold has a net worth of US$13.5 billion, according to the Bloomberg Billionaires Index. Bloomberg News

Hollywood stars attended the ground-breaking of a movie industry base in Qingdao

10 10

September 24, 2013 April 19, 2013

Greater China

HK banks talk sale as bids near pre-crisis days Buyers eye entry intro an international hub for trade in yuan

ome of Hong Kong’s last familyowned banks may finally be willing to sell as potential takeover valuations approach levels last seen before the height of the financial crisis. Wing Hang Bank Ltd has surged 42 percent since saying last week its shareholders are in talks to sell, while Chong Hing Bank Ltd has risen 55 percent since disclosing last month approaches from suitors. Having recovered all their market value lost since the crisis, the banks are now offering buyers entry into an international hub for trade in China’s currency. Wing Hang, more profitable than Chong Hing, may fetch as much as 3 times its book value, said Mizuho Financial Group Inc and BNP Paribas SA. That equates to a price tag of US$7.9 billion, 68 percent more than the lender’s market value last week. No corporate bank takeover in the developed world has obtained such a multiple in more than five years, according to data compiled by Bloomberg. “This is scarcity premium – there are only a few mid-sized Hong Kong banks available,” Frank Yuen, an analyst in the city at BNP, said in a phone interview. “Buyers are eyeing the banking licence in Hong Kong. They are looking for growth opportunities in the offshore yuan business and crossborder trade flows.”

Wing Hang, founded in 1937 as a moneychanger in Guangzhou, and Chong Hing, founded in 1948, are among the four remaining familyowned banks in Hong Kong. Both generate most of their income from traditional services such as loans, mortgages and credit cards, their latest annual reports show. Wing Hang had a market value last week of HK$36.6 billion (US$4.7 billion), while Chong Hing was valued at US$2 billion. Takeover speculation has mounted since November, when Chong Hing named its first chief executive officer from outside the Liu family, which controls about 60 percent of the lender. Chong Hing’s share price has since more than doubled. In March, the bank said it was open to bids. “This opened the floodgates,” Jim Antos, a Hong Kong-based analyst at Mizuho, said in an e-mail. “The Liu family may have done a great favour to the banking sector by deciding it’s time to sell.”

Yuan center Hong Kong’s banks are attracting suitors as the city’s role as the largest offshore yuan center draws companies seeking financing. Outstanding yuan-denominated loans in Hong Kong surged to 113 billion yuan in July from 1.8 billion yuan in 2010, the Hong Kong Monetary Authority said.

Wing Hang said September 16 that shareholders were in talks for a sale

The “offshore yuan business offers good growth opportunity to Hong Kong banks,” Kathy Xu, a Hong Kong-based investment manager at Aberdeen Asset Management Plc, said in a phone interview. Aberdeen oversees about US$318 billion of assets worldwide. Wing Hang said September 16 that shareholders including the family of chairman Patrick Fung were in talks for a sale that would trigger a mandatory buyout offer. The Oriental Daily reported that China Life Insurance Co. was a possible bidder. Wing Hang may appeal to Beijingbased China Life, the nation’s largest insurer, because it offers access to the offshore yuan market, as well as trade finance and bond sales, said Mr Antos at Mizuho.

Overseas expansion “China has been encouraging companies in the country to expand overseas,” Lewis Wan, Hong Kongbased chief investment officer at Pride Investments Group Ltd, said in a phone interview. “As Chinese financial institutions have grown large enough for overseas expansion, it’s normal to see them getting a Hong Kong bank as a stepping stone.” A Chinese insurer could target Wing Hang’s customers and, indirectly, tap mainland China’s banking market, Edmond Law, an

analyst at UOB Kay Hian Holdings Ltd, said in a phone interview. According to Sanford C. Bernstein & Co, China Life would gain little from a takeover of a small Hong Kong bank. There are few cost savings, and the scope to sell insurance to bank customers is “far from convincing,” Bernstein analysts, led by Linda Sun-Mattison in Hong Kong, wrote in a September 18 report.

Price gap All the same, takeover interest from outside the banking industry has raised the probability of the lenders fetching prices that meet the demands of the controlling families, said Mr Yuen, the analyst at BNP. “Buyers in the past were usually banks and were not willing to pay a high price,” he said. “The emergence of a non-bank buyer bridges the price gap.” Wing Hang, which has more branches in Macau and China than Chong Hing, should command a higher valuation than its rival, Grace Wu, a Hong Kong-based analyst at Daiwa Capital Markets, wrote in a September 17 report. Based on the average of six analysts’ estimates compiled by Bloomberg, Wing Hang may sell for 2.5 times its book value. Mizuho estimated the bank would sell for 2 to 3 times book. Ms Wu at Daiwa estimated it would sell at the upper end of a range of 2.5 to 3.3 times. The last time an acquisition of a bank in the developed world was announced at close to that level was before the collapse of Lehman Brothers Holdings Inc in September 2008, according to data compiled by Bloomberg. That year, China Merchants Bank Co beat out Australia & New Zealand Banking Group Ltd to buy Wing Lung Bank Ltd. Bloomberg News

11 11

September 24, 2013 April 19, 2013

Asia

India cooking oil refiners seek levies as plants idle Lower palm oil prices are making imports too cheap for comfort Swansy Afonso

Overseas purchases of cooking oil surged to a record in the 10 months to August

ooking oil refiners in India are seeking higher tariffs to curb cheaper imports that have eroded margins of companies in the world’s second-largest consumer of the commodity. India must increase the levy to 12.5 percent from 7.5 percent, Atul Chaturvedi, chief executive officer at Adani Wilmar Ltd, said in an interview.

Overseas purchases of refined, bleached and deodorised palm olein surged 36 percent to a record in the 10 months to August as a drop in palm prices in Malaysia made it lucrative to import processed products. Refiners including Adani and Ruchi Soya Industries Ltd, India’s largest cooking oil processor, say they are operating at 30 percent of capacity as imports flood the market.

Rising overseas purchases are hurting prime minister Manmohan Singh’s efforts to rein in an unprecedented current account deficit that sent the rupee to a record low last month. At the rate now for capacity utilisation “you are as good as closed,” said Mr Chaturvedi. “If the refineries are shut, you are going to have a lot of job losses.” Demands for higher levies may increase as international prices slump further. Palm, the world’s most-used cooking oil, may drop to the lowest level since 2009 by January as global supplies of edible oils expand and crude oil weakens, Dorab Mistry, director at Godrej International Ltd., said Sunday.

Prices retreat Futures will probably retreat to 2,000 ringgit (US$629) a metric tonne in Kuala Lumpur if Brazil and Argentina, the largest soybean growers after the United States, harvest bigger crops and Brent crude drops below US$100 a barrel, Mr Mistry told an industry conference in Mumbai.

The contract for delivery in December lost 0.7 percent to 2,300 ringgit on the Bursa Malaysia Derivatives on Friday, the lowest price at close for the most-active contract since August 14. Futures dropped 2 percent last week. “If you don’t change levies now, you are not going to have any margins,” Paul Bloemendal, commercial director at Ruchi Soya, said in an interview Sunday. “With no margins you are not going to get investments.” India will decide on the import tariff in 10 days, Food minister K.V. Thomas said on Friday. The government in April 2008 cut the tax to 7.5 percent. India will also have to take into account the effect of higher taxes on inflation, which accelerated to the fastest pace in six months in August. Mr Singh has moved to attract foreign investment and increased gold-import taxes to try and pare a record current-account gap to about US$70 billion in 2013-2014. The government has raised the bullion levy three times this year and linked imports to re-exports to moderate consumption. Bloomberg News

Australian wine industry faces shift to quality Treasury Wine CEO departs after firm forced to destroy thousands of litres Jane Wardell

he ousting of the chief executive of Treasury Wine Estates Ltd, the world’s second-largest wine maker, yesterday underscored the need for a fundamental shift in the way Australia markets its wines to the world as its exports fall. Once hailed around the world for its so-called “critter labels” – cheap but decent quality wines featuring colourful kangaroo and koala adorned labels – Australia has been slow to grasp a move by consumers toward higher-end tipples. The global trend is most noticeable in the United States, the world’s largest wine consumer where Treasury competes against the world’s biggest company by sales Constellation Brands Inc, and in the rapidly growing Chinese market. That leaves Australia with the tough task of cutting oversupply, increasing prices and – perhaps most importantly – rebranding its wines to the quality end of the market. “People are trading up,” said Mark Parer, a Beijing-based importer of Australian wines with Plantagenet Wines. “The French are way ahead on marketing and branding.” Australia exported A$1.8 billion

of wine worldwide last year, down from a peak of A $3 billion in 2007, according to the Winemakers’ Federation of Australia. In the United States, consumers bought just 16 million litres of Australian wines priced around A$3.75 (US$3.52), down from 77 million litres in 2007. Tre a s u r y ’ s m i s j u d g m en t o f the move upward in the United States proved very costly for the company and chief executive David Dearie, who presided over a A$160 million charge due to the destruction of thousands of gallons of cheap wine. Treasury, whose brands include mass-produced Berringer, Wolf Blass, Rosemount and high-end Penfolds, was also forced to offer major discounts on “excess, aged and deteriorating inventory” after significantly over estimating United States demand. Treasury chairman Paul Rayner said yesterday the board decided the company needed “a leader with a stronger operational focus to deliver the company’s growth ambitions.” Mr Rayner said the United States market was an integral part of the business, although he noted a new chief executive officer would

have leeway to alter the company’s strategy there. Treasury is not alone in its troubles. Privately-held Casella Wines, the maker of the ubiquitous Yellow Tail “critter” label, earlier this year posted its first financial loss. Casella, which was forced to negotiate a debt restructure with lender National Australia Bank Ltd, blamed the high Australian dollar

for crimping export margins and allowing lower-cost countries like Chile and Argentina to gain market share in the United States. But analysts say the lower Australian dollar masked the wider problem for Australian wine exports and the recent rise in the currency will not be enough to revive its fortunes. Reuters

Australia has been slow to grasp a move by consumers toward higher-end tipples

12 12

September 24, 2013 April 19, 2013

Asia

Russia rail link offers new hope for N. Korea

Thai farmers hooked on subsidies test Yingluck Fiscal problems growing as Thailand struggles to control rising debt

Rajin special zone has so far failed to fulfil expectations

Clashes erupted earlier this month over proposed cuts to rubber subsidies

hailand’s decision to expand subsidies for rice and rubber farmers to quell protests is undermining efforts to control rising debt, even as governments in neighbouring Malaysia and Indonesia cut back support programs. The government will pay 21.2 billion baht (US$681 million) directly to rubber farmers’ bank accounts to offset falling prices, up from 10 billion baht agreed on earlier, after violent clashes between the police and growers demanding subsidies. The administration also promised to buy rice at above-market rates for another crop year, at a cost of 270 billion baht. The payouts may slow prime minister Yingluck Shinawatra’s plan to balance the budget by 2017 and contain the ratio of debt to gross domestic product that rose to 44.3 percent in June this year from 38.2 percent in end-2008. A business sentiment index dropped in July to the lowest level in more than a year and consumer confidence fell to a nine-month low

on concern political risk is rising as the economy weakens. “It’s a tricky situation, given the demands of the protesters,” said Euben Paracuelles, an economist at Nomura Holdings Inc in Singapore. “The government doesn’t have much more room for subsidies. The risk is the protests could be drawn out and the longer they persist the more they become a concern, especially if they are more disruptive and add to an already weak growth outlook.”

Roads blocked As many as 12,000 farmers blocked roads and railways for two weeks from August 26, stranding thousands of passengers and disrupting traffic in the southern provinces that account for 80 percent of the nation’s rubber output. About 76 police officers were injured and nine vehicles torched in Nakhon Sri Thammarat at the height of the clashes earlier this month. Ms Yingluck said on September 15 that the government and most

rubber farmers had agreed on the subsidy amount, prompting many demonstrators to return to their plantations. The Southeast Asian nation has also spent 675 billion baht since October 2011 on buying rice directly from farmers. The government estimates it lost about 137 billion baht in the 2011-2012 crop year as it then sold the grain at a loss. While agriculture accounted for 8.4 percent of the nation’s gross domestic product last year, rural residents make up almost 87 percent of the population of 67 million people. Ms Yingluck’s party won a parliamentary majority in 2011 elections with support from poorer rural areas in northern Thailand. “They try to please voters to keep their popularity,” said Somjai Phagaphasvivat, a political science lecturer at Thammasat University in Bangkok. “But they create fiscal problems which may explode sooner rather than later if the global economy faces a serious downturn.”

ussia and North Korea have reopened a rail link that Pyongyang hopes will offer a trading boost to the isolated, sanctions-squeezed state. The 54-kilometre (33-mile) track from the Russian border town of Khasan to the North Korean port of Rajin was opened for service at a special ceremony on Sunday, the North’s official KCNA news agency reported. Rajin is the centrepiece of the Rason Special Economic Zone established by North Korea in 1991 in an apparent effort to emulate the success of similar zones set up by China. Located in the far northeast where the borders of North Korea, Russia and China converge, Rajin was chosen because of its potential as a warm-water port for the North’s two giant neighbours. At a summit in 2001, North Korea’s late leader Kim Jong-Il and Russian president Vladimir Putin agreed to restore the rail link, as part of a joint project that included a container terminal in Rajin. Work on the railway line began in 2008. Since receiving special economic zone status more than two decades ago, Rason has largely failed to fulfil expectations, but development activity there has gained momentum in the last few years. Rajin’s potential as a lucrative trading hub is an increasingly attractive prospect for a country burdened by a raft of international sanctions imposed over its nuclear weapons programme. Initially, the rail link will transport Russian coal supplies to Asia-Pacific markets. The initial vision was for the Khasan-Rajin link to eventually become part of the so-called “Iron Silk Road” – a rail network spanning Asia and Europe. But that idea envisages a train service linking the entire Korean peninsula – a project that looks like being held permanent hostage to volatile North-South Korean relations.

Bloomberg News

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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AFP

13 13

September 24, 2013 April 19, 2013

Asia

Singapore reveals tighter rules for hiring skilled foreigners As residents’ discontent over greater competition for jobs and education grows Sharon Chen

ingapore will impose new rules prodding companies to consider locals before hiring foreigners for professional jobs, according to the Ministry of Manpower. The city state will set up a job bank where companies are required to advertise positions before applying for so-called employment passes for foreign professionals, it said. The advertisements must be open to all Singaporeans. “Even as we remain open to foreign manpower to complement our local workforce, all firms must make an effort to consider Singaporeans fairly,” acting Manpower minister Tan Chuan-Jin said in a statement yesterday. “‘Hiring-own-kind’ and other

discriminatory practices that unfairly exclude Singaporeans run against our fundamental values of fairness and meritocracy.” Singapore tightened restrictions on foreign workers for a fourth straight year in February, in part because of voter discontent over congestion, rising property prices and greater competition for jobs and education. The curbs have led to a labour crunch and rising wage costs for companies, which the government has said will probably hurt growth in Southeast Asia’s only advanced economy. Responding to feedback from Singaporeans that some companies are hiring foreigners over citizens, Mr Tan and deputy prime minister

Tharman Shanmugaratnam met with senior management in a number of financial companies to emphasise that they should make a concerted effort to develop a local talent pipeline, the manpower minister said in Parliament in March. “We must set expectations about what is acceptable and what is not,” Mr Tan said yesterday. “It requires persuasion, explanation and leading by example. The worst employers must be taken to task.” Singapore will also raise the minimum pay for employment- pass holders to S$3,300 (US$2,600) a month in January, according to the statement. The job bank will be set up by mid-2014, it said. Companies with 25 or fewer

employees will be exempt from the new rules, as well as jobs that pay a fixed monthly salary of S$12,000 or more, according to the statement. The government will also identify firms “that have scope to improve,” such as those with a lower concentration of Singaporeans at the professional, managerial and executive levels, compared to their peers, or those that have faced nationality-based discriminatory complaints, the ministry said. Foreign employment growth in Singapore slowed in the first half of 2013 from a year earlier and the labour market will remain tight for the rest of 2013, the ministry said this month. Bloomberg News

Philippines ready to curb outflows after Fed taper Central bank ponders tightening of monetary policy, says deputy governor

he Philippines is prepared for a possible tapering of the Federal Reserve’s record stimulus with policy measures to deal with capital outflows, central bank deputy governor Diwa Guinigundo said. “We can ride out any turbulence, as we have policy tools in our hand that we can deploy anytime,” Mr Guinigundo said in a briefing in Manila Saturday. The measures include boosting dollar and peso liquidity, careful surveillance of risk, use of forward guidance, tapping currency-swap agreements, and possible tightening of monetary policy, he said. Emerging-market nations should prepare for an eventual reduction in United States stimulus as higher borrowing costs will come, World Bank managing director Sri Mulyani Indrawati said last week. Bangko Sentral ng Pilipinas kept its benchmark interest rate at a record-low 3.5 percent for a seventh meeting this month after inflation eased to a four-year low. Speculation over the future of the Fed’s quantitative easing has whipsawed global assets since May, when chairman Ben Bernanke first signalled cuts may start in 2013. Liquidity and credit growth in the Philippines are rising in tandem with the economy, and policy makers don’t see bubbles in the property market, assistant governor Cyd Amador said Saturday. Philippine gross domestic product rose 7.5 percent in the second quarter from a year earlier, matching China’s pace. Rising demand for real estate in the country is for consumption and not for speculative or investment

President Benigno Aquino is raising spending to a record this year

purposes, Mr Amador said, adding that the central bank regularly consults with property companies and banks to prevent bubble risks.

Legislative changes The central bank is seeking an increase of 150 billion pesos (US$3.5 billion) in its capital from the current 50 billion pesos authorised in its charter, deputy governor Vicente Aquino said Friday. The central bank has proposed

legislative changes to its charter including exemption from taxes and the authority to issue debt to better manage liquidity, he said. “Additional capital and the ability to issue its own debt would boost confidence in the central bank’s ability to manage macroeconomic stability and will send a signal to the market that the BSP can curb extreme volatility,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. “This should be an urgent priority

for lawmakers.” President Benigno Aquino is raising spending to a record this year and seeking more than US$17 billion of investment in roads and airports. Fitch Ratings and Standard and Poor’s this year awarded the Philippines its first investmentgrade scores, while Moody’s Investors Service, which ranks the nation a level below, has said it is reviewing its rating for an upgrade. Bloomberg News

14 14

September 24, 2013 April 19, 2013

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

55.6 55.4

82.1

24.5

81.4

24.4

80.7

24.3

55.2 55.0

Max 55.6

average 55.052

Min 54.8

Last 55.15

54.8

Max 82.1

average 81.672

Min 80.05

80.0

Last 81.05

Last 48.7

20.95

25.9

20.90

25.8

20.85

25.7

48.4

Max 21

average 20.885

DAY %

YTD %

PRICE 108.59

0.481169612

16.01495726

112.2399979

86.04000092

BRENT CRUDE FUTR Nov13

110.8

0.180831826

5.283162296

115.7599945

96.19999695

GASOLINE RBOB FUT Oct13

274.64

0.156814121

5.553633883

298.210001

246.6799974

GAS OIL FUT (ICE) Nov13

936.75

1.544715447

3.622787611

980.25

837

3.734

0.565580393

2.865013774

4.525000095

3.154000044

304.77

0.236803157

1.899093918

322.8999853

276.1999846

Gold Spot $/Oz

1366.21

5.0599

-17.9187

1796.08

1180.57

Silver Spot $/Oz

22.9755

6.831

-23.6948

35.365

18.2208

Platinum Spot $/Oz

1473.6

3.8954

-2.9089

1742.8

1294.18

Palladium Spot $/Oz

WTI CRUDE FUTURE Oct13

NATURAL GAS FUTR Oct13 NY Harb ULSD Fut Oct13

(H) 52W

716.88

2.6975

2.4612

786.5

587.4

1785

0.421940928

-13.89290883

2185.25

1758

LME COPPER 3MO ($)

7184

1.540636042

-9.418736603

8422

6602 1811.75

3MO ($)

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

Last 20.85

(L) 52W

LME ALUMINUM 3MO ($)

LME ZINC

Min 20.8

1870

0.510615426

-10.09615385

2230

13930

0.723065799

-18.34701055

18920

13205

15.65

0.256245996

1.524489134

16.65000153

14.77000046

460

0.821917808

-23.30137557

647

445.75

WHEAT FUTURE(CBT) Dec13

654.5

1.237432328

-20.25586354

913

635.5

SOYBEAN FUTURE Nov13

1358.5

0.797625672

4.279408943

1409.5

1162.5

COFFEE 'C' FUTURE Dec13

116.1

1.044386423

-25.79098754

200

113.9499969

Dec13

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

Max 26

average 25.868

Min 25.65

Last 25.75

25.6

NAME

PRICE

SUGAR #11 (WORLD) Mar14

17.64

0.915331808

-14.28571429

22.14999962

16.69999886

ARISTOCRAT LEISU

85.69

0.175356558

8.826517653

93.72000122

74.34999847

CROWN LTD

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9509 1.6092 0.9093 1.3564 98.81 7.9865 7.7542 6.1212 61.7288 30.948 1.2444 29.531 43.055 10875 93.947 1.23345 0.84296 8.2934 10.8358 134.02 1.03

1.6679 0.7892 1.9136 1.5878 0.1316 0 -0.0039 -0.0033 2.683 2.3103 1.1572 0.5824 1.1032 4.1287 -1.503 0.3121 -0.7924 -1.418 -1.5966 -1.4326 0

-8.3735 -0.5193 0.6708 2.8355 -12.8631 -0.0413 -0.0464 1.7872 -10.9087 -1.1891 -1.8483 -1.6864 -4.7614 -9.9494 -4.9177 -2.1055 -3.2671 -0.9152 -2.8184 -15.2589 -0.0097

1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3112 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 10.9254 134.22 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 9523 79.408 1.20302 0.79235 7.8281 10.1113 99.64 1.0289

Macau Related Stocks

COTTON NO.2 FUTR Dec13

NAME

20.80

Currency Exchange Rates

NAME

METALS

24.2

48.8

Commodities ENERGY

Last 24.3

26.0

48.5 Min 48.45

Min 24.25

21.00

48.6

average 48.639

average 23.372

48.9

48.7

Max 48.85

Max 24.45

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.49

-1.101322

42.53968

4.7

2.56

3608469

15.77

0.7667732

47.79756

16.08

8.92

2286250

AMAX HOLDINGS LT

1.29

-4.444444

-7.857141

1.72

0.75

4633775

BOC HONG KONG HO

25.2

1.408451

4.564314

22.85

15235508

CENTURY LEGEND

0.41

-1.204819

54.71699

0.56

0.23

4968000

CHEUK NANG HLDGS

6.52

1.399689

8.848084

6.74

3.52

304000

24.05

1.05042

4.112552

25.6

17.7

15951841

CHINESE ESTATES

17.9

2.052452

59.1741

18.12

8.168

145666

CHOW TAI FOOK JE

11.16

3.525046

-10.28939

13.4

7.44

15624400

EMPEROR ENTERTAI

3.48

2.052786

84.12699

3.55

1.43

3600000

FUTURE BRIGHT

2.47

-4.263566

103.791

2.76

1.053

2838000

GALAXY ENTERTAIN

55.15

2.795899

81.71334

24.1

13340677

HANG SENG BK

1602206

CHINA OVERSEAS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15676.94

0.9479238

19.6335

15709.58

12471.49

NASDAQ COMPOSITE INDEX

3783.641

1.012948

25.30631

3790.704

2810.8

FTSE 100 INDEX

6649.47

1.382108

12.74473

6875.62

5605.589844

127.6

0.3144654

7.497897

132.8

110.6

DAX INDEX

8740.27

1.206685

14.81636

8770.1

6950.53

HOPEWELL HLDGS

26.7

4.500978

-19.69925

35.3

23.2

3660600

NIKKEI 225

14766.18

1.798094

42.04834

15942.6

8488.14

HSBC HLDGS PLC

87.95

2.030162

8.179578

90.7

72.1

27063635

HANG SENG INDEX

23502.51

1.665668

3.732148

23944.74

19426.35938

CSI 300 INDEX

2432.51

0.2137335

-3.584765

2791.303

2023.171

TAIWAN TAIEX INDEX

8209.18

-0.4921343

6.619647

8439.15

7050.05

KOSPI INDEX

2005.58

-0.3869135

0.4271253

2042.48

S&P/ASX 200 INDEX

5295.55

1.096

13.90851

4667.881

4.584704

FTSE Bursa Malaysia KLCI

1793.53

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

HUTCHISON TELE H

3.44

-3.370785

4.66

2.98

11771000

LUK FOOK HLDGS I

25.7

6.860707

5.32787

30.05

16.88

6820803

MELCO INTL DEVEL

20.95

1.946472

132.5194

21.15

6.55

4850000

MGM CHINA HOLDIN

24.3

1.461378

83.00564

24.5

12.18

5471000

1770.53

MIDLAND HOLDINGS

3.23

2.539683

-12.7027

2.68

2498100

5300.1

4334.3

NEPTUNE GROUP

0.199

0.5050505

30.92106

0.23

0.131

90230000

8.135726

5251.296

3837.735

NEW WORLD DEV

12.5

4.340568

3.99334

15.12

9.98

35819805

1.249294

6.192018

1826.22

1590.67

SANDS CHINA LTD

48.7

2.418507

43.44624

48.9

26.35

11481983

SHUN HO RESOURCE

1.7

21.42857

1.92

1.19

78000

1003.417

0.989548

13.75927

1003.641

834.309

SHUN TAK HOLDING

4.24

-1.165501

1.193316

4.65

2.9

3954752

3924.67

2.382785

6.10141

4571.4

3440.12

SJM HOLDINGS LTD

20.85

2.205882

17.48029

22.382

15.795

8214356

10.4

4.104104

-26.13636

16.22

9.97

12231240 6805547

HSBC Dragon 300 Index Singapor

613.39

0.47

-1.24

STOCK EXCH OF THAI INDEX

1488.46

3.427765

6.934968

1649.77

1260.08

HO CHI MINH STOCK INDEX

476.09

0.3858643

15.07263

533.15

372.39

Laos Composite Index

1289.04

1.359544

6.113916

1455.82

1038.79

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

SMARTONE TELECOM WYNN MACAU LTD

25.75

1.980198

22.91169

26.5

ASIA ENTERTAINME

3.93

0.7692308

39.62496

4.7647

2.4835

64712

BALLY TECHNOLOGI

75.08

-0.7534699

67.92664

75.8

43.16

431960

BOC HONG KONG HO

3.17

-2.461538

3.257331

3.6

2.99

3389

GALAXY ENTERTAIN

-1.269394

76.32242

7.16

3.11

24690

INTL GAME TECH

20.87

0.04793864

47.28299

21.17

12.37

4283337

JONES LANG LASAL

89.21

0.8136513

6.278291

101.46

72.56

428869

LAS VEGAS SANDS

64.64

0.6070039

40.03466

64.7201

37.8353

5157887

MELCO CROWN-ADR

31.02

0.5510535

84.20427

31.95

12.5

2211116

MGM CHINA HOLDIN

3.04

73.68537

3.07

1.5895

6100

MGM RESORTS INTE

19.77

1.12532

69.84536

19.88

9.15

9604634

SHFL ENTERTAINME

22.57

-0.08853475

55.65517

23.08

12.35

404262

SJM HOLDINGS LTD

2.67

-0.7434944

17.22784

2.9481

2.0311

41280

153.028

1.504378

36.03698

153.47

103.0933

1110971

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

37.1

1.923077

46601236

CHINA UNICOM HON

12.84

1.102362

21679665

POWER ASSETS HOL

ALUMINUM CORP-H

2.78

0.3610108

17779750

CITIC PACIFIC

10.04

1.311806

10856480

SANDS CHINA LTD

BANK OF CHINA-H

3.65

1.388889

433255423

BANK OF COMMUN-H

5.98

1.355932

37497694

BANK EAST ASIA

32.65

1.872075

6226855

BELLE INTERNATIO

11.28

1.438849

23750674

25.2

1.408451

15235508

CATHAY PAC AIR

14.88

-0.1342282

3842301

CHEUNG KONG

BOC HONG KONG HO

NAME

PRICE

DAY %

0.5173688

VOLUME 4780945

48.7

2.418507

11481983

CLP HLDGS LTD

64.05

0.6284368

5038852

SINO LAND CO

11.86

8.608059

43265889

CNOOC LTD

16.08

0.6257822

61066127

SUN HUNG KAI PRO

108.7

5.024155

18826650

COSCO PAC LTD

11.98

3.275862

15399986

SWIRE PACIFIC-A

92.95

1.087548

2267782

ESPRIT HLDGS

12.2

1.328904

4352277

TENCENT HOLDINGS

410.2

1.93837

6517215

HANG LUNG PROPER

26.4

1.34357

7845948

TINGYI HLDG CO

21.1

-1.860465

7758246

HANG SENG BK

127.6

0.3144654

1602206

WANT WANT CHINA

11.84

1.196581

14614276

HENDERSON LAND D

70.4

4.451039

10814964

122.8

2.333333

10647911

49.65

4.197272

10368298

CHINA COAL ENE-H

5.08

2.21328

176513307

HENGAN INTL

89.7

-1.265823

2890291

CHINA CONST BA-H

6.21

1.636661

282187209

HONG KG CHINA GS

18.5

0.4343105

17235238

CHINA LIFE INS-H

21.2

1.678657

30438233

CHINA MERCHANT

28.4

6.168224

7114561

CHINA MOBILE

87.95

0.6868918

CHINA OVERSEAS

24.05

1.05042

CHINA PETROLEU-H

6.25

CHINA RES ENTERP

HONG KONG EXCHNG

130.4

0.6949807

4369696

HSBC HLDGS PLC

87.95

2.030162

27063635

21195033

HUTCHISON WHAMPO

94.45

1.723209

14024627

15951841

IND & COMM BK-H

5.59

1.821494

343224666

1.957586

92118116

LI & FUNG LTD

11.96

2.572899

29025058

0.4016064

2885427

MTR CORP

30.8

-0.6451613

3913827

23.45

1.295896

7153575

NEW WORLD DEV

12.5

4.340568

35819805

CHINA RES POWER

-0.3322259

7530350

PETROCHINA CO-H

8.93

2.173913

121046758

CHINA SHENHUA-H

25.7

0.7843137

24244860

PING AN INSURA-H

60.9

2.01005

13103829

CHINA RES LAND

NAME

WHARF HLDG

MOVERS

23560

INDEX 23502.51 HIGH

23549.89

LOW

23099.17

52W (H) 23944.74 (L) 19426.35938

23090

16-September

18-September

15 15

September 24, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Times of India The Indian quick service restaurant (QSR) market will see its next big growth push come from consumers in tier-II and tier-III cities. Annual spends on eating out at QSR chains in non-metros are expected to surge 150 percent to Rs$3,750 (US$59.8) per household over the next three years, according to estimates by a domestic research firm. In value terms, pizzas, burgers and sandwiches still account for 83% of the domestic QSR market.

Bangkok Post Thai Nippon Rubber Industry (TNR), one of the world’s largest condom producers, expects the Asean Economic Community (AEC) to help it double its turnover in five years. But TNR is also seeking to expand its sales with new products and is eyeing the trend for glow-in-the-dark contraceptives as well as coffee-flavoured condoms. Assisted by regional integration under the AEC, TNR is now aiming to increase its revenue by 15-20 percent a year, said managing director Amorn Dararattanaroj.

Asahi Shimbun A major Japanese movie and television programme production company, aiming to cash in on the growing popularity of anime and manga overseas, is now offering an Internet pay channel in the United States. Toei Co started the “Toei Japan Channel” service in September to distribute its hit works, including “Kamen Rider (Masked Rider),” a popular TV series for children. The company hopes to enhance Japan’s cool status in the United States.

Jakarta Globe Aries Indo Global, a hand phone maker, has changed the name of its brand to Evercross from Cross, as it attempts to expand in Southeast Asia. To support the plan, the company is building a Rp 1 trillion (US$87 million) assembly plant in Semarang, Central Java, with monthly production capacity at 500,000 units. Edward Sofiananda, AIG’s president director, said he found out that Cross name has been licensed for various products in neighbouring countries.

Asia’s game without frontiers Jaswant Singh

former Indian finance minister, foreign minister, and defense minister

owadays, many people seem to be more relaxed than ever about nationality, with the Internet enabling them to forge close connections with distant cultures and people. But states remain extremely sensitive about their borders’ inviolability. After all, territory – including land, oceans, air space, rivers, and seabeds – is central to a country’s identity, and shapes its security and foreign policy. States can respond to territorial disputes either by surrendering some aspects of sovereignty, thus weakening their power and influence, or by adopting a more robust national-defence strategy aimed at fending off current challenges and precluding future threats. Today, many Asian countries are choosing the latter option. Consider the territorial disputes roiling the Indian Ocean and other East Asian regions, sparked by China’s repeated – and increasingly assertive – efforts to claim sovereignty over vast maritime areas. As China’s incursions reignite long-smoldering disagreements and threaten to destabilize the regional status quo, countries throughout Asia are reconsidering their strategic positions. For example, the Philippines is revamping its security strategy by enhancing cooperation with the United States – China’s counterweight in the region – only two decades after it closed two major American military installations, the naval base at Subic Bay and Clark Air Base. Vietnam, too, has strengthened its ties with the US. And, after decades of absence, America has resumed training programmes for Indonesia’s military. More significant, Japan’s leaders are now openly debating ways to transform

the country’s post-World War II pacifism into a much more assertive nationalism. In fact, in August, the Japan Maritime Self-Defense Force unveiled the helicopter destroyer Izumo, whose structure and capabilities resemble those of an aircraft carrier, with possible offensive applications. This emerging strategic shift will likely have far-reaching consequences, raising the stakes of Sino-Japanese sparring over islands in the East China Sea. But, while Japan’s tense relationship with China dominates headlines worldwide, the strategic rivalry between China and India is more likely to shape Asian power dynamics in the coming decades. And recent events suggest that China knows it. In April, a platoon of Chinese People’s Liberation Army (PLA) border-security personnel crossed the so-called “line of actual control” into India’s Depsang Valley in Ladakh to erect an encampment, where they remained for almost three weeks. China’s leaders have yet to explain what prompted the incursion – but there is no shortage of speculation. Some claim that the local PLA commander initiated the “stand-off,” while others contend that China’s new president, Xi Jinping, was using the transgression to assert his authority over the PLA. The incursion has even been linked to the scandal surrounding Chongqing’s disgraced former Communist Party chief, Bo Xilai, who had close ties with high-ranking PLA and security-services officers. But the most likely explanation is the simplest one: China was deliberately asserting its authority over the disputed border. As it stands, India and China are openly competing for influence in Sri Lanka,

While Japan’s tense relationship with China dominates headlines worldwide, the strategic rivalry between China and India is more likely to shape Asian power dynamics in the coming decades

Myanmar, Nepal, and Bangladesh. So far, they have largely relied on economic and commercial mechanisms – especially rival port and pipeline projects – to secure their positions. China is not allowing its economic slowdown to derail its efforts to enlarge and modernise its navy and expand its commercial interests around Eurasia’s southern rim. It has been investing or demonstrating interest in deep-water port projects in Kenya, Tanzania, and Bangladesh, and it has been directly involved in financing and constructing Indian Ocean ports in Myanmar, Sri Lanka, and Pakistan.

Just as China is helping to develop Pakistan’s port of Gwadar, India is helping to develop Iran’s Chabahar port 70 kilometers (43.5 miles) away. Chabahar is not useful only to counter China; it will serve as a vital link for India to transport goods to Afghanistan, Central Asia, and beyond. India could even develop a major communication hub with the port as its nexus. Moreover, India is working to safeguard its naval superiority over China. In August, the reactor aboard India’s first indigenously built nuclear submarine, INS Arihant, was activated, bringing the country one step closer to realising its long-sought goal of a “nuclear triad” – the capability to launch nuclear weapons from land, air, and sea. Just three days later, India launched the aircraft carrier INS Vikrant. But, as The Economist observed, “rarely does nemesis follow hubris so quickly.” Indeed, just two days after the Vikrant’s launch, explosions at the naval dockyard in Mumbai sank INS Sindhurakshak – one of the ten Kilo-class submarines that form the backbone of India’s aging conventionalsubmarine fleet – killing 18 crew members. Perhaps China’s apparent economic, strategic, and military advantages will prove less significant than many believe – especially given continuing uncertainty over the terms of America’s strategic “pivot” toward Asia. Indeed, with the US on their side, either Japan or India could conceivably tip the scales in its own favor. But one thing is clear: a great game is beginning among Asia’s great powers, and there are scant rules in place to manage how it will be played. © Project Syndicate

September 24, 2013

Closing Bangladesh garment workers protest over pay US pushes to refinance lost-value homes More than 100 Bangladeshi garment factories were forced to shut yesterday as thousands of workers protested to demand a US$100 a month minimum wage and about 50 people were injured in clashes, police and witnesses said. Garments are a vital sector for Bangladesh and its low wages and dutyfree access to Western markets have helped make it the world’s secondlargest apparel exporter after China. But the US$20 billion industry has been under a spotlight after the collapse of a building housing factories in April that killed more than 1,130 people.

A United States regulator is starting a campaign to encourage as many as 2 million borrowers to refinance with a government program for properties that have lost value. Officials at the Federal Housing Finance Agency convened focus groups this year to find out why borrowers paying interest rates as high as 7 percent had not yet tried to lower their monthly payments through the Home Affordable Refinance Program. They found many did not realize they were eligible. The agency estimates that there are between 1 and 2 million borrowers eligible who are paying abovemarket interest rates.

Bailed-out Europe gets unwanted Merkel win Angela Merkel wins third term as leader of German government James G. Neuger

outhern Europeans are facing four more years of Angela Merkel whether they like it or not. Majorities of 82 percent in Spain, 65 percent in Portugal and 58 percent in Italy repudiate the German leader’s handling of the euro area’s debt crisis, blaming her for drastic cuts in social services, recession and record unemployment, according to a German Marshall Fund poll released last week. The majority that matters, in Germany, decided otherwise yesterday, putting Ms Merkel back in charge and saluting policies that have kept the currency union intact while at times veering close to letting it unravel. Any concessions now are likely to come on the margins: a little more money for Greece here, a little less austerity there, without altering her

determination at most to drip-feed aid to countries that embrace tight budgets, wage restraint and exportoriented industry. “Crisis management is very much

a continuation of the status quo,” said Mujtaba Rahman, a former European Commission official who is now director of European analysis at the Eurasia Group in New York.

Ms Merkel’s Christian Democratic bloc fell short of an absolute majority

Eurozone economy ‘gathers pace’ As service sector and manufacturing continue to improve

But record-high unemployment in several countries remain a concern

urozone business activity continued to pick up in September to hit a 27-month high, a closely watched survey showed yesterday, but doubts remained over whether the recovery was sustainable. The Composite Purchasing Managers’ Index compiled by Markit Economics jumped to 52.1 points for September from 51.5 in August, pushing further beyond the 50-points boom-or-bust line. The rise confirms a recovery for the embattled single currency bloc, which finally exited 18 months of recession in the second quarter this year, growing by a modest 0.3 percent. The emergence from recession is again being led by Germany, though other countries are beginning to lift out of the doldrums as well. “It is particularly encouraging to see the business situation improved across the region,” said Chris Williamson, chief economist at Markit. “Although the upturn continued

“The core German principles of legal certainty and conditionality will remain in place. Decisionmaking will still be incremental.” Ms Merkel, 59, will start her third term with Europe perched between crisis and recovery. The 17-nation euro zone is emerging from a record 18-month recession and Ireland is poised to become the first of five aiddependent countries to be weaned off outside help. “We cannot prematurely drop the pressure to reform,” Ms Merkel said on German television yesterday. Defending her habit of feeling her way into problem-solving instead of laying out grand visions, she said that “once I know that something will cost something, I’ll say so.” Ms Merkel wouldn’t speculate on the shape of her next government, most likely a rerun of her 2005-2009 coalition with the Social Democrats, her party’s traditional rivals. The Christian Democratic bloc won 311 seats in the Bundestag, five short of an absolute majority, forcing Merkel to share power with the Social Democrats or Greens. One school of thought holds that Ms Merkel, in her third term, will turn to legacy-building by dispensing aid more liberally and shouldering more of the costs of forging a closer euro union. Bloomberg News

to be led by Germany, France saw the first increase in business since early-2012 and elsewhere growth was the strongest since early-2011,” he said. Markit also said the employment picture, though still poor, was improving in the eurozone, a key point of concern with record joblessness well anchored in several countries. “Employment continued to fall, though it is reassuring that the rate of job losses eased to only a very modest pace, suggesting that employment could start rising again soon,” Mr Williamson said. The biggest gain in activity was seen in the services sector, but manufacturing continued to improve as well. Analysts remained cautious however and warned that a full recovery may still be out of grasp. “September’s rise in the eurozone’s composite PMI suggests that the bloc’s recovery continued in Q3,” said James Howat of Capital Economics. “But there are still good reasons to worry about the economic outlook,” he said. “Indeed, disappointing recent harder data ... suggest that the eurozone’s recovery still rests on fragile foundations.” AFP