MOP 6.00 Vitor Quintã Deputy editor-in-chief
Big yellow taxi crisis O
fficials will not renew the operating licence of the city’s only yellow taxi firm unless it provides 100 on-call taxis a day as required by its concession contract. It hasn’t done so for several years. The current licence is due to expire on February 6 next year. The firm says it will struggle to meet the condition because of Macau’s notorious labour shortages. “We are exploring every means to expand the
Walking trails for visitors start on Friday Page 2
recruitment,” Eugenio Cheng Wing Chiu, executive director of the licensee, Vang Iek Radio Taxi Co, told Business Daily. “…considering that every taxi requires 2.5 to 3 drivers to complete a whole day’s shift…there is still a distance to go to achieve the goal,” said Lo Seng Chi, head of the Transport Bureau’s traffic management department yesterday.
CTM invests to boost telecoms stability Page 3
The rise of the non-gambling tourist
More on page 5
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Number 378 Wednesday September 25, 2013
Editor-in-chief Tiago Azevedo
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www.macaubusinessdaily.com
Year II
Election winner joins appeal court bandwagon
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Hang Seng Index 23330
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Chan Meng Kam has asked the Court of Final Appeal to have 82 spoiled votes counted as valid for his ticket. It’s the second candidacy to go to court over the September 15 election. Si Ka Lon, the second name on Mr Chan’s ticket, confirmed to Business Daily that an appeal was filed yesterday afternoon. Mr Chan’s ticket won an unprecedented three seats. Page 3
Creatives have designs on mainland wallets
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Local design company Macau Creations is betting on a bigger brand presence and a new store to attract mainland Chinese shoppers to its postcards, bags and artworks. Wilson Lam Chi Ian, the firm’s founder and chief executive, said tourists now accounted for about 70 percent of its business while Macau residents and firms make up the rest. The firm opens its third store – at Macau Tower – on September 23. Page 2
%Day
CATHAY PAC AIR
3.48
LENOVO GROUP LTD
3.14
BANK EAST ASIA
1.55
WHARF HLDG
0.71
LI & FUNG LTD
0.51
HANG LUNG PROPER
-2.23
HENDERSON LAND D
-2.74
CHINA SHENHUA-H
-2.94
CHINA UNICOM HON
-3.17
CHINA RES LAND
-3.43
Source: Bloomberg
I SSN 2226-8294
Govt in no rush to open up market for cable TV The chances of the city getting a second cable television supplier when Macau Cable TV Co Ltd’s exclusive concession expires in April are looking slimmer because the regulator says it is in no hurry to open up the market. Bureau of Telecommunications Regulation director Lawrence Tou Veng Keong confirmed yesterday however there would be changes in the television market after April. Page 4
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Macau (US$313.90) each here in the second quarter, one-quarter more than the average tourist, official data show. The indifference of mainlanders does not worry Mr Lam. He believes their shopping habits will change. “Having more shops, adjusting the product varieties and building up the brand will naturally attract more tourists, including mainlanders,” he said.
Money secondary
Macau Creations seeks to attract mainlanders The design company opens a third shop, in the Macau Tower, in the hope of boosting its business Tony Lai
tony.lai@macaubusinessdaily.com
D
esign company Macau Creations is betting on greater exposure of its brand and a new shop to attract indifferent tourists from the mainland to its postcards, bags and works of art. The company’s founder and chief executive, Wilson Lam Chi Ian, has told Business Daily that about 70 percent of its business is with tourists and that the rest is with Macau people or enterprises. “We surely want more tourists to buy our products,” Mr Lam said, “as it would put us under big pressure if we counted only on locals, because of the limited
population here.” For three years Macau Creations has been selling products inspired by the work of Macau artists in its main shops near the Ruins of St Paul’s and in Rua do Cunha on Taipa. The products range from stationery to clothes. On Monday the company opened its third main shop, on the ground floor of the Macau Tower, another draw for tourists. “Many tourists from Southeast Asia love our products and there are also customers from South Korea, Taiwan and Japan – but not mainlanders,” Mr Lam said.
Official data show that last month 65.5 percent of visitors to Macau were mainlanders, the highest proportion ever. Mr Lam is not surprised by the lack of interest that mainlanders show in Macau Creations products. “We expected that, and right from the start mainlanders were not our major target. We cannot satisfy them,” he said. “The price of our products is slightly higher than average,” he said. “We also don’t sell the sort of luxury goods they love to buy.” Visitors from the mainland spent about 2,511 patacas
Mr Lam declined to talk about his company’s sales or other financial figures. He said the company wished for a return on its investment but did not aim to make as much as a gold shop or an estate agency. “It is more important to do our job pragmatically and happily, and we regard money as a lower priority,” he said. “We also want tourists to know that Macau makes not only almond cookies but also cultural, creative products,” Mr Lam said. Macau Creations may be different, but it faces the same problems that other companies here face: the shortage of labour and high rents. “We are lucky that our landlords know that we are not selling gold,” Mr Lam remarked. The company’s shop in the Macau Tower is its biggest, covering about 3,000 square feet. Macau Creations and Heong Yuen Bakery make joint use of the premises, just as they make joint use of premises in Rua do Cunha. The Macau Tower shop also has co-operation agreements with a Hong Kong wedding planner and a German watchmaker. Apart from its three main shops, Macau Creations has seven smaller outlets, three of them in The Venetian Macao.
Walking trails for tourists start on Friday Getting up, walking to St Lazarus one option offered by city bosses to ease downtown congestion Tony Lai
tony.lai@macaubusinessdaily.com
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our new walking tour routes around Macau will be advertised to the public from Friday. The idea is to divert tourists from the most crowded spots on Macau peninsula in time for the National Day holiday period next week. Macau Government Tourist Office said in a press statement it is “currently designing a number of other walking routes,” – including for Taipa and Coloane – to be launched next year. A government team led by the tourism bureau intends to set up “direction signs or tour map boards” at the start and end of the trails. Therouteswillbepromoted through government websites, messages to cell phone handsets, printed materials and WeChat, a social mobile application
popular in mainland China. One trail, focusing on Macau’s history, goes from Nam Van Lake to the Ponte e Horta area at the Inner Harbour. Another will look into “nature and creativity,” leading visitors from the Kun Iam Temple in Mong Ha district to the St Lazarus Church near Tap Seac Square. The third route, named ‘East Meets West’, will link Senado Square to the Maritime Museum in Barra. The last one will draw tourists into arts and culture all the way from the Macau Fisherman’s Wharf to A-Ma Temple in Barra. Maria Helena de Senna Fernandes, the tourism bureau director, said earlier this month they expect a similar number of visitors in next week’s holidays as last year.
During the four-day MidAutumn Festival holidays from September 19, Macau welcomed over 470,000 tourists, a fall of 6.7 percent from the same period last year,
said the Public Security Police. Exact year-on-year comparisons are difficult however, as in 2012 the Mid-Autumn Festival – based on the lunar calendar and
A new trail to lure tourists to Saint Lazarus district
therefore on variable dates – dovetailed with the first three days of the National Day holidays starting on October 1 – a time when many mainlanders take breaks.
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Macau
Election winner joins appeal court bandwagon Chan Meng Kam’s ticket unhappy with spoiled votes even though it took biggest share of popular vote Stephanie Lai
sw.lai@macaubusinessdaily.com
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han Meng Kam has asked the Court of Final Appeal to have 82 spoiled votes counted as valid for his ticket. It’s the second candidacy to go to court over the September 15 election. Si Ka Lon, the second name on Mr Chan’s ticket, confirmed to Business Daily that an appeal was filed yesterday afternoon. Mr Chan’s ticket was the most successful, winning an unprecedented three seats. It secured 26,390 votes out of the 146,467 valid votes cast for the directly elected candidates. But the candidacy is not completely satisfied. “Previously we did have about 400 spoiled votes that caused some controversy, but there was less room to dispute those [votes] as the stamps were outside the tick box,” said Mr Si. In addition there were 82 ballots in which voters stamped not only inside the tick box for Mr Chan’s ticket – as required by law – but also near the
Chan Meng Kam and Angela Leong have appealed their election results
ticket’s name, Mr Si explained. The Election Commission decided to count those ballots as invalid but the candidacy disagrees.
“We are appealing not because we are worried about the election result, but because we feel that we have the right to do it anyway,” he stressed.
The Court of Final Appeal confirmed to Business Daily that it received appeals from two tickets yesterday afternoon over the final election result. The court declined to name the candidacies. The ticket led by gaming executive Angela Leong On Kei confirmed to Business Daily on Sunday that it had appealed to the court because it disagreed with the election commission’s decisions regarding some of the spoiled votes. On Monday José Pereira Coutinho, president of the Macau Civil Servants Association, said his ticket would also appeal over invalid votes. But yesterday Mr Coutinho issued a press statement saying it would not appeal the election result after all. Business Daily was unable before press time to reach Mr Coutinho to find out why.
We are appealing not because we are worried about the election result, but because we feel that we have the right to do it Si Ka Lon, Legislative Assembly candidate
CTM forks out to boost system stability A
fter three blackouts in one year, the city’s largest telecommunications provider is investing 400 million patacas (US$50 million) to “further enhance the resilience and stability” of its system. It will cover all the fixed-telephone, mobile, and internet networks, the Companhia de Telecomunicações de Macau SARL (CTM) and network supplier Ericsson announced in yesterday. The first phase of the half-year project will start on Saturday and it involves upgrading the software and hardware of the fixed-line telephone switching system, said CTM in a press statement. The network upgrade will also “pave way for the future emergence of convergence services”, said the company. Vandy Poon Fuk Hei, CTM’s chief executive, said the customers may experience disruptions “of two minutes in the worst scenario” during the upgrade. CTM’s reputation was hit by three
telecommunications blackout last year. The company paid a 800,000-pataca fine for the first incident. In the same event, Lawrence Tou Veng Keong, director of the Bureau of Telecommunications Regulation, revealed that the government would renew the contract for free public wireless Internet service WiFi Go for another year. The three-year contract worth some 50 million patacas with Centro de Informações Tecnologia de Macau (CITM) will expire by the end of this month. Mr Tou said there was not enough time to launch a public tender, which could jeopardise “the continuous operation of WiFi Go”. The new contract will be worth over 10 million patacas, he said. Michael Choi is the chief executive of CITM. He is also chairman of Companhia de Telecomunicações de MTEL Ltda, the new licensed operator for fixedline telephone services. T.L.
CTM’s reputation was hit by three telecommunications blackout last year
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Macau
Govt in no rush to open up market for cable TV
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The regulator says it will have a big say in free-to-air television in future
revolving doors Typically, more than half of visitors to Macau are day-trippers, who are in town for only a few hours. Among visitors that stay the night, a large proportion – occasionally over 30 percent – do not stay in hotels. Besides, the average visit is short, and visitors that do stay in hotels do not stay long. Until recently, how long hotel guests stayed depended on the class of hotel they stayed in. These days their stays are of increasingly similar length, no matter what sort of hotel they stay in. Sufficiently detailed data on this have been available only since 2011.
In early 2011, guests in five-star hotels stayed longest: 1.9 nights, on average. Guests in two-star hotels had the briefest stays: 1.1 nights, on average. The difference is narrowing. In the second quarter of this year five-star hotel guests stayed 1.51 nights, on average, and two-star hotel guests stayed 1.13 nights. Last year the average length of stay in five-star hotels fell steeply at first and then seemed to stabilise. It rose early this year but fell again in the second quarter. This means that, roughly speaking, it now takes five guests in a row to keep a hotel room occupied whereas before it took four. Guests in hostels have the second-longest stays. But in the second quarter the average length of a hostel guest’s stay was 1.4 nights, 0.2 night shorter than in early 2011. The lengths of stay of guests in other classes of accommodation seem to be converging towards 1.2 nights. These features indicate that the hotel business depends on a high turnover of tourists and guests.
Tony Lai
tony.lai@macaubusinessdaily.com
T
he chances of the city getting a second cable television supplier when Macau Cable TV Co Ltd’s exclusive concession expires in April are looking slimmer because the regulator says it is in no hurry to open up the market. The regulator also says it will have a big say in free-to-air broadcasts in future. Bureau of Telecommunications Regulation director Lawrence Tou Veng Keong confirmed yesterday that there would be changes in the television market after April. “Right now we are setting up the conditions in the hope that the future supply of basic TV channels can be done in a non-commercial operation led by the government,” Mr Tou said on the sidelines of a conference. At present most households pay unlicensed antenna companies a small annual fee to supply them with television transmissions. “As for the paid television service, which is a commercial operation, we will work toward issuing licences,” Mr Tou said, meaning licences other than Macau Cable TV’s. He said Macau Cable TV would continue to operate. Asked whether competition could be introduced by April, he replied that it was “too early” to say. “[We] have to draft the relevant regulations and collect opinions
from the market, and there are also relevant licensing procedures. All these take time,” he said. “We cannot rush when carrying out the work just for the sake of opening up the market.” The Bureau of Telecommunications Regulation had intended to open up the landline telephone market last year, but a new licence was issued only this June, and the new competitor has yet to begin operating.
Interest welcome Mr Tou said free-to-air broadcasts would serve only a “complementary function” and that they could not fully satisfy people’s needs. But he declined to elaborate on the future direction of the television market. He said the government had employed an unidentified academic institute to study the matter. “It is required to collect a wide range of opinions from society about the positioning and planning of television services,” Mr Tou said. Macau’s largest telecommunications company, Companhia de Telecomunicações de Macau SARL (CTM) said this month it was “interested” in bidding for a new licence to supply television transmissions.
J.I.D.
1.51 nights Average length of stay in five-star hotels in June and July
Macau Cable TV’s exclusive concession to supply cable television expires in April
Vandy Poon Fuk Hei, CTM’s chief executive, said yesterday at a company event that they already have “mature” television technology. He added no price for CTM’s service has been set as it would depends on the government’s plan. Mr Tou said his bureau “absolutely welcomes” interest from any company in supplying television transmissions. Macau Cable TV and 14 antenna companies signed in July a deal that allows the supply of television transmissions to most households to be maintained until April, so getting round a court ruling that antenna companies were relaying transmissions illegally. But copyright problems mean most viewers can now watch only about one-third of the number of television channels they had access to before. Mr Tou said his bureau was in talks with the copyright holders about making “a few more channels” available for the antenna companies to relay, but that it faced “certain difficulties” in the negotiations. He said arbitrators had yet to decide on Macau Cable TV’s claim for 500 million patacas in compensation from the government. The company accuses the authorities of having failed to protect its exclusive rights.
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Macau
Yellow taxi firm scrambles to recruit to keep licence The cab operator is hopeful that it will have enough drivers to keep it on the road Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he yellow taxi operator is struggling to hire enough drivers to keep 100 on-call cabs on the road and so preserve its licence. The government has said the operator, Vang Iek Radio Taxi Co, must have sufficient drivers before it will renew the licence. The head of the Transport Bureau’s traffic management department, Lo Seng Chi, said yesterday: “The company has recruited about 40 or 50 full-time taxi drivers.” Mr Lo told reporters: “But considering that every taxi requires 2.5 to three drivers to complete a whole day’s shift, there is still a distance to go to achieve the goal.” The bureau has said it will renew the special licence to operate yellow taxis, which expires on February 6, only if the operator can field 100 on-call taxis. Vang Iek executive director Eugenio Cheng Wing Chiu said it had been “quite hard” to recruit full-time taxi drivers because of the labour shortage.
Vang Iek’s special licence to operate yellow taxis expires on February 6
“S o we h a v e a l s o b eg u n a n internal search, asking our current drivers if they are interested in working under our new scheme,” he told Business Daily. Vang Iek introduced in March a new pay scheme for drivers. Drivers work a fixed number of hours during a six-day week. Each gets a basic wage of 60 patacas (US$7.50) an hour, insurance benefits and social security contributions, paid holidays and bonuses.
Usually, cabbies simply rent taxis from the owners for a set period.
No stone unturned Mr Cheng said: “We are exploring every means to expand recruitment.” He said the company’s efforts included looking for “some” parttime drivers. But he said it was confident that it would find enough drivers for 100 on-call taxis by the time its licence
came up for renewal next year. To help bus passengers, the Transport Bureau has begun to sort Macau’s 64 bus services into four categories, including express, regular and shuttle services. “We hope that it will be faster and easier for the passengers to catch the right bus,” Mr Lo said. “In the coming days we will increase our advertising.” Mr Lo declined to comment on the dispute between the government and Reolian Public Transport Co, one of Macau’s three bus operators. In June Reolian asked the Administrative Court to order the government to pay the company a promised increase of 23.3 percent in what it gets to run its bus services. In July the company pressed the courts to decide on its claim. Mr Lo said only that the matter was still in the hands of the courts. “The government is waiting for a final decision from the court,” he said. Headded:“Thebusserviceallocations and their day-to-day operation are not affected by this lawsuit.”
Corporate GLI names new regional boss Gaming Laboratories International LLC has promoted Ian Hughes to vice-president for global services and managing director of Australia and GLI Asia. Mr Hughes was formerly the company’s senior director of engineering and client services. GLI is an independent tester, inspector and certification service for the gaming industry and consults on security. The company has 21 laboratories around the world, including its Macau facility, which opened in 2006. “Probably 50 percent of the work that we do out of the Macau laboratory is for international markets outside of Macau. That would include the Philippines, Vietnam and even the U.S. and South America,” Mr Hughes told our sister publication Macau Business magazine recently He added that GLI has faced a “very low” staff turnover in Macau, which is unusual in the market – where labour is in short supply – and in the local gaming industry, where firms strongly compete for talent. The full interview is in August’s edition.
IGT rings changes on its logo Slot machine maker International Game Technology has redesigned its corporate logo (pictured). The change was revealed on the first day of Global Gaming Expo in Las Vegas. “This is so much more than a logo change,” IGT Chief Executive Officer Patti Hart said in a statement. The new campaign includes painting blue the IGT vans that transport service staff maintaining casino clients’ equipment, and a new slot machine with themes based on the Hollywood hit film Avatar. Globally IGT faces increasing competition in traditional markets. The company paid as much as US$500 million (3.99 billion patacas) for online casino games provider Double Down Interactive last year. That has products appealing to users of Facebook and other Internet-based social media. In the United States there are attempts to create marketing tie-ups between online games and traditional bricks and mortar casinos. More than 360,000 people participated in an online poker tournament on IGT-affiliated websites in July.
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Financial Monitor Steady inflation The consumer price index indicates that prices in August were 5.3 percent higher than a year earlier. Prices were 3.2 percent higher than at beginning of this year. In August last year prices were 2.9 percent higher than at beginning of the year. Given that prices usually rise a bit faster in the festive season at the end of each year, the results so far suggest inflation will be faster this year than last. But prices are mainly following previous trends and, assuming no big surprises are in store, the annual rate of consumer price inflation should end this year between 5.0 percent and 6.0 percent.
Among the basics, food and drink price inflation has been the fastest since the base of the CPI was last reset. It overtook clothing and shoe price inflation at the end of 2011, and it is still faster than average inflation. The annual rate was about 6.7 percent in each of the past two quarters. Clothing and shoe price inflation has been slowing and seems to be settling below the average rate. Housing and fuel price inflation is accelerating, the annual rate having been being about 9 percent in the past two quarters. The rises in prices of alcoholic drink and tobacco have been due mainly to a single increase in taxes which made them jump by 22 percent around the beginning of last year. J.I.D. The content of this column is the work of Business Daily’s journalists.
5.28 %
Average rise in CPI in the first eight months from a year earlier
The rise of the non-gambling tourist Singapore puts up barriers to locals betting, Macau strives for more family visitors Michael Grimes
michael.grimes@macaubusinessdaily.com
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on-gaming revenue accounted for about a quarter of total combined revenue at Singapore’s two casino resorts in the quarter to June 30. Market wide in Macau, non-gaming activities account for approximately 10 percent of total casino revenue, although those Macau resorts with Las Vegasstyle eating and entertainment facilities generally do better. Singapore’s non-gaming revenue performance needs to be set in the context of the bet generating power of the Macau venues. Macau’s 35 casino venues (only 32 are currently active) produced gross gaming revenues of 304.14 billion patacas (US$38 billion) last year. Singapore’s two properties produced ‘just’ US$4.15 billion. While still an impressive number, that Singapore total was down yearon-year, affected by a Singapore government clampdown on gambling by locals. Last year according to the annual report of parent company Las Vegas Sands Corp, Marina Bay Sands’ total casino revenues were US$2.27 billion – a 3.9 percent decline from a year earlier. According to Genting Singapore, those of Resorts World Sentosa were S$2.37 billion (US$1.88 billion) – a fall of 12 percent on 2011. Only Resorts World uses ‘International Market Agents’ – a euphemism for junkets that bring in mainly Asian high roller players from outside the city. In Singapore the VIP agents are licensed and closely scrutinised by the city’s Casino Regulatory Authority. They are also barred from having links with Macau junkets. MBS has high roller players, but manages them and gives credit to them directly. Singapore locals already face a barrier to casino entry via either a daily levy of S$100 (638 patacas) a day or S$2,000 for an annual pass. But this year the Lion City’s government has announced further measures. They include the Casino Visit Limit scheme. It sets a cap on the number of times per month certain “vulnerable” people may attend the casino floors at Singapore’s two integrated resorts. All these factors create market incentives for Singapore’s casino properties to build further their nongaming revenues. But there are also
Cuddly alternatives – drive for non-gamblers continues here and in Singapore
structural differences from Macau that may aid them in that goal. Casino space accounts for fewer than five percent of the gross floor area at MBS and Resorts World, compared with Macau where it can consume more than 20 percent at some venues. “The gaming component in Singapore is not growing due to a combination of increasing pressure to inhibit local play, plus the lack of the volume multiplier which are the junket operators in Macau,” said Ben Lee, Asian gaming consultant at Macau-based consultancy IGamiX. “Is that a bad thing? Not
KEY POINTS Singapore proportionally more non-gaming rev from casinos Macau non-gaming elements increasing for new Cotai resorts Macau increasingly dependent on mainland gamblers Singapore curbing betting by citizens and permanent residents
necessarily, as the Singapore government’s objective was to increase tourism, not gambling. Gaming was merely the tool for them to achieve their objective.” Visitor arrivals in Singapore have jumped by nearly 50 percent to an estimated 14.4 million in 2012 compared with the end of 2009, according to Singapore Tourism Board data. RWS was the first casino to open in February 2010, followed by MBS, which had its soft opening in April that year. In Macau, visitor arrivals began from a higher base – approximately 21.8 million in 2009 according to the city’s Statistics and Census Service. But the Macau visitor growth from then to the end of 2012 was a more modest 29 percent, giving a total of around 28.1 million. Sixty percent of those were from mainland China, and that proportion has been creeping up this year. It has raised concerns in Macau about the government’s overreliance on gambling revenue from mainland tourists and the lack of alternative employment options for Macau residents. Aware of this, Macau now requires the new casino schemes being built on Cotai to devote a higher proportion of their gross floor area to non-gaming elements such as restaurants, hotels, retail and event space. Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance, has publicly stated that non-gaming amenities would be a “very important” factor in deciding gaming table allocation for new projects.
September 25, 2013 April 19, 2013
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Greater China
Beijing has the world’s most onerous commutes, says the International Business Machines Corp
Motorhomes become status symbols in Beijing traffic jams In China RVs are used not just for vacations but also to schmoose clients
W
hile stuck in traffic on the Beijing-Shanghai Expressway last year, Yin Ximin decided he had been smart to buy a recreational vehicle (RV). “Women were so desperate they had their friends or family shield them so they could urinate on the side of the road,” said Mr Yin, 48, who owns an advertising firm in Beijing. “An RV makes long trips less painful. We can lounge around, have drinks, listen to music – and use the bathroom.” Back in Beijing, Mr Yin uses his 19-foot (6-meter) motor home from manufacturer Shandong Dream Trip RV Co to fetch clients from the airport and schmoose on the way back into the increasingly gridlocked city, where the number of registered cars has more than tripled since 2000. As more Chinese embrace automobile culture, foreign RV makers are expanding in China. Researcher 21RV.com estimates the number of motor homes in
China will surge from about 9,000 to 800,000 in the 10 years to 2022. The United States has some 9.6 million RVs on its roads, according to 21RV. Winnebago Industries Inc, based in Forest City, Iowa, began working in 2011 with dealers in Beijing and several other cities, selling models ranging from 200,000 yuan (US$33,000) to 2 million yuan. Thor Industries Inc, the Elkhart, Indiana-based owner of the Airstream brand, started selling its distinctive silver camping trailers
800,000
number of motor homes in China by 2022: 21RV.com
from a Beijing dealership in March. “Foreign RV brands are still little-known to Chinese consumers,” sales manager Zhang Minrui said by phone from a Winnebago dealership in Dalian. He declined to give sales figures, though he said “demand will no doubt continue to expand in coming years as more people take self-drive vacations.”
Sleeping six Germany’s Dethleffs GmbH & Co started selling imported RVs and caravan trailers this year from showrooms in several Chinese cities. The RVs, which can sleep six, run an average of 1.5 million yuan, said Surana Chen, president of its Chinese operations. “High-end RVs are new symbols of status and success, like yachts and private jets,” said Ms Chen. “Demand for RVs for business use has been way beyond our expectations.” Great Wall Motor Co, China’s biggest SUV maker, and pick-up truck maker Xinkai Automobile Group Co, also have started making motor homes and touring coaches that can be substantially cheaper than the imports. Great Wall’s most expensive model costs 508,000 yuan, according to auto website Cheshi.com.
Roger Federer Beijing Centech Investment Management Co, says it sold about 300 luxury motor homes made by domestic manufacturer Zhongtian last year. The vehicles have been rented by Chinese actress Fan Bingbing, former Houston Rocket Yao Ming and tennis player Roger Federer. One potential brake on sales is driving restrictions. In some provinces, a bus-driver’s license – among the toughest permits to get – is required to pilot an RV, while in others a standard passenger-
car license is sufficient, according to Beijing Centech. And in some areas, it is illegal to tow a camping caravan trailer, the RV dealer said. A further limiting factor is a lack of campgrounds. The country has just 150 designated areas for camping, versus 16,500 in the United States, according to 21RV. The government aims to change that. A plan issued this year promises more campgrounds and related infrastructure to promote domestic travel, though detailed figures have not been disclosed.
Worst commute RV sales are benefiting as Chinese spend more on vacations and leisure. The country overtook Germany and the United States to become the world’s biggest source of tourists last year, according to the China Tourism Academy. “My husband and I spend more than 100 days a year travelling for fun, and an RV can make our trips more relaxing,” said Paula Wang, 52, who runs a catering business in Shanghai. “I love taking pictures wherever we go. With an RV, we can take our time looking for the best shots without having to rush to reach the next hotel.” The worsening traffic in China’s major cities is adding to the appeal of RVs. Beijing, deemed the city with the world’s most onerous commutes by International Business Machines Corp in 2010, has seen car registrations soar to 5.2 million last year from 1.5 million in 2000. Michael Gu decided to buy an RV to discuss business while picking up or dropping off guests after wasting hours stuck in crawling traffic. “I thought it would be much easier to hold meetings and do business while my driver fights through the jams,” said Mr Gu, 48, who runs an investment firm. “Traffic in Beijing is just horrible.” Bloomberg News
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Greater China
Only “heavy punches” will dent monopolies: regulator China’s reform commission pledges to widen competition probes
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heavy-handed approach is needed to halt a rise in monopolistic behaviour by companies in China, a senior official said yesterday, in a sign that an antitrust campaign which has already ensnared top global firms, could get tougher. “Only heavy punches will work,” Xu Kunlin, head of the anti-monopoly bureau at the National Development and Reform
Commission (NDRC), said in a speech to a business forum in Beijing. “It’s easy to find evidence on many firms’ monopolistic behaviour in China,” Mr Xu said. “Some of it could be found on the Internet,” he added, noting the ease of discovery was the reason why investigations had been so successful this year. The NDRC is China’s top economic planning body but it also
regulates prices. It has launched a spate of antitrust investigations across sectors ranging from pharmaceuticals to milk powder and jewellery in recent months. In particular, authorities are paying attention to whether manufacturers are forcing retailers to set minimum prices for products, which would contravene a 2008 anti-monopoly law. China’s leaders are trying to restructure the economy to one where
growth is driven by consumers, and while Mr Xu did not mention any specific companies or industries, he said investigations would focus more on sectors affecting the lives of ordinary people. He added that competition policy should be a key economic policy area for China. Speaking later to Reuters, Mr Xu said authorities had some targets for future investigations but he declined to give specific details. During his speech, he reiterated that the investigations were not aimed at specific companies or foreign firms. “It would not be objective to say that the investigations target foreign firms because they involve foreign firms,” Mr Xu said, adding that antitrust investigations would become routine and people would get used to them. The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms. It fined a group of mostly foreign milk powder producers, including Mead Johnson Nutrition Co and Danone, a total of US$110 million for price fixing last month. The agency is also investigating the pricing practices of 60 local and foreign pharmaceutical firms. Autos, telecoms and banks might come next, regulators have suggested. Some antitrust experts argue foreign companies have been more vulnerable to regulators since they lack domestic political backing. Reuters
A newspaper report claims juice makers were buying up rotten fruit
The Zhengzhou exchange will initially list 10 steam coal futures contracts
Juice probe launched after rotten fruit report C
Steam coal futures launched tomorrow C
hina’s food safety watchdog has launched an investigation into local juice makers after a media report said they used rotten fruit to make their products. The probe includes two branches of the country’s sector leader, China Huiyuan Juice Group Ltd. Farmers in several Chinese provinces sold rotten fruit to distributors, which was then bought by canned fruit producers and juice manufacturers to cut costs, the 21st Century Business Herald said in the report on Monday. “We take this very seriously and have urgently deployed food safety
teams in Anhui, Jiangsu, Shandong and other provinces to immediately open an investigation,” the China Food and Drug Administration (CFDA) said in a statement on their website. Food safety is a serious topic in China where scandals from milk laced with industrial chemicals to recycled “gutter oil” for cooking have left many consumers wary. A recent Pew Research report said almost four in 10 Chinese people felt that food safety was a “very big problem”. Huiyuan, once an acquisition target for The Coca-Cola Co, said that after an initial probe there was no evidence that the company had used rotten fruit to make its juice, according to a statement on its website. The CFDA added Huiyuan’s Shandong unit had not produced any juice since the end of last year, while it had not yet found any rotten fruit on site at the company’s Beijing branch. It added that there was as yet no evidence of rotten fruit at the Anhui unit of China Haisheng Juice Holdings Co Ltd or at the Jiangsu unit of Yantai North Andre Juice Co Ltd. Reuters
hina’s Zhengzhou Commodity Exchange said it would launch trading in steam coal futures tomorrow, aiming to tap growing demand for hedging tools in the world’s top producer and importer of the resource. In a separate statement, the Shanghai Futures Exchange said it would start trading a futures contract for road-paving material bitumen on October 9. China has sped up the expansion of its commodity futures markets this year as the government hopes to offer companies more hedging
tools while trying to improve the structure of the economy. Beijing also hopes to have a bigger say in pricing of major commodities globally. Trading in steam coal and bitumen futures had been flagged earlier, with the China Securities Regulatory Commission also granting approval for the Dalian Commodity Exchange to launch China’s first iron ore futures. Regulators are also considering allowing trade in futures of crude oil, iron alloys and a slew of agricultural products, industrial sources have said. The Zhengzhou exchange will initially list 10 steam coal futures contracts from December 2013 to September 2014, all with a base price of 520 yuan (US$85) per tonne, it said in a statement published late on Monday on its website. The Shanghai exchange plans to launch eight bitumen futures contracts on October 9, with their base prices announced a day ahead of their listing, it said on its website. Reuters
10 10
September 25, 2013 April 19, 2013
Greater China
Facebook, Twitter open in Shanghai free trade zone Foreign telecom firms could bid to provide Internet services in the zone
F
acebook, Twitter and other websites deemed sensitive and blocked by the Chinese government will be accessible in a planned free-trade zone (FTZ) in Shanghai, the South China Morning Post reported yesterday. Citing unidentified government sources, the Hong Kong newspaper
also said authorities would welcome bids from foreign telecoms firms for licences to provide Internet services in the zone.
China’s ruling Communist Party aggressively censors the Internet, routinely deleting online postings and
blocking access to websites it deems inappropriate or politically sensitive. Facebook and Twitter were blocked by Beijing in mid-2009 following deadly riots in the western province of Xinjiang that authorities say were abetted by the social networking sites. The New York Times has been blocked since reporting last year that the family of then-premier Wen Jiabao
Facebook was blocked in China in mid-2009 following deadly riots in Xinjiang
Alibaba challenges WeChat with instant-messaging app E-commerce firm may consider initial share sale, analysts say Lulu Yilun Chen
A
libaba Group Holding Ltd, the largest e-commerce company in China, is offering an instant-messaging application as it tries to compete against Tencent Holdings Ltd’s WeChat in the world’s biggest smartphone market. The app, called Laiwang, allows users to form group chats with as many as 500 people and share maps, videos and stickers, according to Alizila, a website run by Alibaba. It has about 1 million existing users, and the company wants to boost that to 100 million, the company said in an e-mail Monday. Alibaba’s competition with Tencent comes as smartphone shipments in China are projected to rise to 450 million units next year from 360 million this year,
according to International Data Corp. More than 84 percent of China’s Internet users regularly access instant messaging, making it the most popular online application in the country, according to data compiled by Bloomberg. “Alibaba wants to gain as many access points for users as possible,” said Alex Wang, a Beijing-based analyst at Internet consulting group IResearch. “Tencent has an existing advantage with WeChat and lots of users. It would be a challenge for Alibaba to compete in that sense.” Tencent’s QQ instant messaging service had 818 million monthly active users at the end of June, and WeChat, known as Weixin in China, had 236 million.
Laiwang has privacy settings for photos and a “burn after reading” feature that deletes a message after the recipient has read it, according to Alizila. Analysts expect Alibaba may consider an initial share sale that could be the largest since Facebook Inc. The Hangzhou-based company has a value of about US$87 billion, according to the average of 11 analyst estimates released in July. The number of people in China accessing the Internet via mobile devices rose 10 percent to 464 million by the end of June from six months earlier, according to the China Internet Network Information Center. That is greater than the population of any other country except India. Bloomberg News
had amassed a huge fortune. The recently approved Shanghai FTZ is slated to be a test bed for convertibility of China’s yuan currency and further liberalisation of interest rates, as well as reforms of foreign direct investment and taxation, the State Council, or cabinet, has said. The zone will be formally launched on Sunday, the Securities Times reported earlier this month. The idea of unblocking websites in the FTZ was to make foreigners “feel like at home”, the South China Morning Post quoted a government source as saying. “If they can’t get onto Facebook or read The New York Times, they may naturally wonder how special the free-trade zone is compared with the rest of China,” the source said. China’s three biggest telecoms companies – China Mobile, China Unicom and China Telecom – have been informed of the decision to allow foreign competition in the FTZ, the sources told the newspaper. The three state-owned companies had not raised complaints because they knew the decision had been endorsed by Chinese leadership including premier Li Keqiang, who has backed the Shanghai FTZ, the sources added.
Parkview to buy Chinese properties from parent
H
ong Kong Parkview Group Ltd, a Hong Kong-listed property arm of COFCO Corp, will issue shares to buy commercial property assets from its parent for HK$14.2 billion (US$1.8 billion). Hong Kong Parkview will buy stakes in companies, which hold assets in Chinese cities including Beijing and Chengdu, it said yesterday in a filing to the Hong Kong stock exchange. It will sell as many as 2.3 billion shares to investors to raise funds for the purchase, Parkview said. The company “will become the overseas listed platform of COFCO Corporation, holding its mixed-use complexes as well as other commercial properties,” Hong Kong Parkview said in the
statement. Should investors not take up the shares offered, COFCO will receieve stock that will give it 98 percent of the Hong Kong unit, up from 69 percent now, Parkview said. COFCO is a Chinese stateowned company that also owns stakes in China Foods Ltd, China Agri-Industries Holdings Ltd and China Mengniu Dairy Co. After the deal is completed, Hong Kong Parkview will change its name to COFCO Land Holdings Ltd, and will hold commercial properties in Beijing, Shanghai, Hong Kong and other Chinese provinces such as Sichuan and Hainan provinces, it said. Shares in Hong Kong Parkview resumed trading yesterday. Bloomberg News
11 11
September 25, 2013 April 19, 2013
Asia
Indonesia swears by tin policy amid price hike New trade rules aimed at increasing tin value causing market confusion
T
he Indonesian government will stick with a rule change requiring tin producers to trade the metal locally before export, curbing supplies from the biggest shipper, and says the model may be applied to other commodities. The new policy is designed to increase the value of tin shipments and establish a domestically determined benchmark price, according to Trade minister Gita Wirjawan. It will be implemented over the long term, and shipments are expected to decline, Mr Wirjawan said in an interview in Jakarta. Three-month futures on the London Metal Exchange, which has traded the global benchmark for more than a century, rallied to the highest since March this month after the rule change took effect and Indonesian suppliers cut shipments. Stockpiles of the metal used to make solder and packaging are heading for the biggest monthly drop since January 2012. The new policy is causing confusion in the market, said Standard Bank Group Ltd. “We have to see this policy in a long-term context, that is for us to be able to increase value-added products domestically,” said Mr Wirjawan. “The essence is that, if this succeeds, this can be an example for other products,” he said, without listing other commodities. The country is the biggest exporter of palm oil and largest minednickel producer. “We are the second-biggest producer in the world and biggest exporter in the world, we have to use a reference price that is determined in Indonesia, not another place,” he said. “We are keeping this policy for a while.”
Indonesia is the second biggest tin producer in the world
The rule change, which took effect August 30, is part of wider government efforts to boost the value of commodity shipments from Southeast Asia’s largest economy. Indonesia has ordered mining companies to build smelters as it plans to ban raw mineral-ore shipments from January 2014. The country imposed a tax on cocoa-bean shipments in 2010 to encourage investment in processing plants. Tin-purity rules were also stiffened this year. PT Timah, Indonesia’s largest tin
producer which declared force majeure on exports after the policy change, wants to sell its tin to overseas buyers through the Indonesia Commodity and Derivatives Exchange. The Jakarta-based ICDX has traded 515 tons of the metal in total since August 30, according to exchange data compiled by Bloomberg. Indonesia shipped 98,817 tons of tin last year, with 9,874 tons sent overseas in September 2012. “We have to be in a position where we can crystallise the value, determine the value,” said
Mr Wirjawan. “In three weeks, the price has increased from US$20,000 to US$23,000. So that really reflects that we are able to crystallise the value.” The global tin market faces a deficit of 6,000 tons this year, a fourth consecutive annual shortage, Standard Bank said in a report on Septembers 11. Indonesia’s rule changes were causing confusion and helping to boost prices, it said, forecasting US$28,000 a ton next year. Bloomberg News
Japan eyes Canada shale gas Resource-poor Asian country feels pinch of atomic reactors closing
J
apan and Canada were set to hold talks yesterday on Canadian shale gas exports to Japan, reports said, as the resource-poor Asian country looks to diversify its sources of fuel. Japanese prime minister Shinzo Abe, in Ottawa at the start of a fiveday trip to North America, was set to meet Canadian prime minister Stephen Harper later in the day. The two men will discuss Tokyo’s giving assistance in the construction of pipelines and infrastructure to encourage the early export of liquefied natural gas (LNG) to Japan, national broadcaster NHK said. Those exports were likely to start around 2020, according to Kyodo News, while the Nikkei newspaper said they might begin in late 2018. Japan, the world’s third largest economy, is the world’s biggest LNG consumer, but pays a higher price for LNG than that charged in Europe and North America because Asian contracts are often long-term and
linked to oil prices. The trend has remained despite increasing global production of LNG, particularly in light of the United States shale gas revolution, Japanese officials have said. Hefty prices for LNG have hit Japanese utilities, which are now entirely without working atomic reactors because of a public backlash in the aftermath of the 2011 disaster at the Fukushima nuclear plant. LNG-powered thermal plants used to provide about a third of Japan’s electricity before the tsunami-sparked crisis. They now account for about a half. A gas trade deal with Canada would follow an earlier agreement by the United States to ship shale gas to Japan from around 2017. Mr Abe and Mr Harper were also expected to discuss the trans-Pacific Partnership free trade deal, as well as the violence in Syria. AFP
Japan pays a higher price for LNG than that charged in Europe and North America
12 12
September 25, 2013 April 19, 2013
Asia Lixil in talks to buy Grohe
Australia to review fibre network Govt turns up heat on operator as rollout falls 50 percent behind target David Fickling
Lixil Corp, a Japanese toilet maker, is in advanced talks to buy German bathroomfixtures company Grohe Group for more than 3 billion euros (US$4 billion), according to people with knowledge of the matter. The companies may announce an agreement as early as this week, said the people. An initial public offering remains an option because no final deal has been reached, they said. Lixil, which also bought bathroom-fixture maker American Standard Brands this year, said last month it’s considering overseas alliances and acquisitions to more than double sales to 1 trillion yen (US$10 billion).
Bids fly in for Woori regional banks South Korea received a first round of offers to buy Woori Finance Holdings Co’s two regional banks as the government tries to privatise the nation’s biggest financial group. Seven potential investors submitted preliminary bids for Woori’s Kwangju Bank unit and four made offers for Kyongnam Bank, Korea Deposit Insurance Corp said by e-mail. Shinhan Financial Group Co said it made an offer for Kwangju and Industrial Bank of Korea said it was among the bidders for Kyongnam. The total stakes to be sold may be valued at about US$2 billion, according to Kyobo Securities Co.
Samsung launches Dubai venture
Tony Abbott has promised to connect all households to high-speed Internet by 2016
A
ustralia will review its national fibre network as the rollout falls 50 percent behind targets and the new Communications minister sought resignations from all directors of the government-backed company building the project. NBN Co’s target for the number of buildings with fibre broadband connections by the end of June 2014 has been revised down by half, Communications Minister Malcolm Turnbull told reporters in Sydney yesterday. About 1.3 million premises would have had access to the network by that date, according to the company’s most recent corporate plan. Mr Turnbull has previously criticised the project, estimated to cost about A$44 billion (US$41 billion) by the previous government, for missed targets and cost overruns. About 33,600 homes and businesses were using the fibre network at the end of June, with 207,500 premises connected to the cables, compared to a target of more
than 2 million connections in NBN Co’s earlier 2011 corporate plan. “The NBN rollout has to date repeatedly missed its targets,” he said. The government wants to “get the best result for taxpayers and consumers as soon as possible.” Mr Turnbull said all but one of the seven-person board had tendered their resignations. The move “should not be regarded as any criticism of any of the directors”, Mr Turnbull said, and was intended to give the government flexibility in remaking the board given its different policy for the network.
Cheaper plan The strategic review won’t start until the new board is in place, he said. Mr Turnbull and prime minister Tony Abbott have promised to connect all households to high-speed Internet by 2016 for A$30 billion, saving money by running the fibre
only as far as junction boxes as much as a kilometer from homes and covering the remaining distance using existing copper wires. The previous government’s plan would have run fibre direct to almost every home and workplace in the country. Construction work on the network will continue while a planned 60day review of the project is carried out, and companies building the infrastructure will continue work “well into 2014”, Mr Turnbull said. The revised target, which will give less than 1 million homes and businesses access to the network in June 2014, compares to a 2.7 million forecast in NBN Co’s 2011 corporate plan. The original plan called for 12 million fibre connections by the project’s completion in 2021. The network now being proposed would give every household download speeds of 25 megabits per second by 2016, according to the government. Bloomberg News
Arabtec, the construction firm part-owned by Abu Dhabi state fund Aabar, said it launched a joint venture with South Korea’s Samsung Engineering Co that would focus on large energy and power projects in the region. Each company will own 40 percent of the new venture and the remaining 20 percent will be owned by Tasameem Property Investment, Arabtec said in a bourse statement yesterday. Arabtec and Samsung first agreed on the venture in April, saying it would bid for projects worth US$3-10 billion in oil and gas, power and infrastructure in the Middle East and North Africa.
San Miguel in talks over Manila Electric stake San Miguel Corp, the Philippines’ largest company by sales, said it’s in talks to sell its Manila Electric Co shares to JG Summit Holdings Inc. An agreement may be signed this year if San Miguel gets an improved offer, president Ramon Ang said in a mobile-phone message, without elaborating. He didn’t reply when asked if San Miguel will sell all of its 27.1 percent stake in the nation’s largest power retailer. The brewery and foodmaker sold a 5.7 percent stake in Manila Electric for US$400 million in July.
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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13 13
September 25, 2013 April 19, 2013
Asia Seoul rejects Boeing in fighter jet deal South Korea voted against Boeing’s F-15 Silent Eagle in its 8.3 trillion won (US$7.7 billion) tender for 60 fighter jets, the country’s arms procurement agency said yesterday, saying it will restart the project. “DAPA...will swiftly pursue the programme again in order to minimise the vacuum in combat capabilities,” South Korea’s Defense Acquisition Program Administration (DAPA) said in a statement. Boeing’s F-15 had been the only bid out of three that was under-budget and eligible to win the country’s largest-ever defence import deal under South Korean law.
S.Korea mulls tax hike as revenue gap widens New president forced to scale back welfare, defence spending pledges
S
even months after taking office, South Korean president Park Geun Hye’s election promises threaten to unravel as revenue shortfalls ignite a debate on tax increases to pay for her welfare and defense spending plans. A budget plan for 2014 is due to be submitted to the National Assembly by October 2, as Ms Park chases 135 trillion won (US$126 billion) over five years to fund her pledges. The president may say this week that she is scaling back her welfare commitment, domestic media reported. South Korea’s fiscal deficit widened to a record 46.2 trillion won in the first half as slower growth dented revenue, leading some lawmakers in Ms Park’s ruling Saenuri party to say that tax increases could be needed to fund the extra spending. Any move to push up levies would risk dragging down the president’s popularity and sapping momentum from Asia’s fourthlargest economy as policy makers try to cement a recovery. “If the government starts raising taxes, it’s likely to hit big business and high-income individuals,” said Jeon Young Jae, a Seoul-based economist at Samsung Economic Research Institute, adding that higher corporate taxes could “damp momentum in production.” The government aims to sustain the pace of economic growth after a 1.1 percent expansion in the second quarter that was the fastest in more than two years. The Kospi index of stocks has climbed about 13 percent from this year’s low in June as exporters such as Samsung Electronics Co. weather the decline in the yen that aids rivals in Japan.
pensions for the elderly, due to revenue constraints, Chosun Ilbo reported, citing unnamed government officials.
‘Road map’ “The government seems to have no road map,” another ruling party lawmaker, Kim Tae Ho, said at parliament committee on September 13. “Most people agree you can’t raise enough money” through targeting tax evasion and looking for savings within government spending, the lawmaker said. For his part, Finance minister Hyun Oh Seok has said that the government should focus on efforts such as reducing tax exemptions and cracking down on the cash economy before turning to tax increases. In an interview in Seoul on August 28, Mr Hyun said he “cannot say”
whether the government will achieve a goal of balancing its books by 2017, citing factors including the decline in tax revenue. “All I can say is that fiscal consolidation is the most important issue that the government keeps in mind.” Already, the government has struck controversy over taxes. A revised tax code announced by the finance ministry on August 8 was scrapped by Ms Park four days later after complaints from members of the public and politicians that it favored the wealthy and conglomerates. The president said her administration hadn’t intended to thin the wallets of low and middleincome earners.
Household debt The South Korean economy faces headwinds, with record household
‘Last resort’ While Ms Park aims to provide more support to an aging population, narrow an income gap and bolster the military, she said during her election campaign that raising taxes would be a “last resort.” Instead, she aimed to use measures such as a crackdown on tax dodging and the cash economy, and cuts to government spending in other areas, to find the cash. Last week, she told ruling and opposition party leaders that increasing taxes would be possible “under a national consensus,” according to Yeo Sang Kyoo, a ruling party lawmaker. Broadcaster YTN reported that Ms Park will speak about next year’s budget and controversies over her welfare pledges at a cabinet meeting tomorrow, citing spokesman Lee Jung Hyun. The government may not stick to her welfare pledges, including
Any move to push up levies would risk dragging down Ms Park’s popularity
debt and a sluggish housing market weighing on consumption. A slowdown in business investment prompted Ms Park to consult with business heads last month on regulatory changes that could help create jobs and boost wages. In the longer term, officials also face the challenge of an aging population. The nation’s fiscal deficit will widen to 1.8 percent of gross domestic product in 2013 from 1.4 percent last year, the government forecast in May when the parliament approved an extra budget to help spur growth. “The government will be in a perennial tug-of-war over fiscal restraint for a long time as it deals with the aging population and increasing welfare costs,” said Mr Jeon at Samsung Economic Research Institute. Bloomberg News
14 14
September 25, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 54.3
average 53.589
Max 48.3
Min 53.4
average 48.012
Last 53.45
Min 47.7
Last 47.75
54.40
81.0
25.0
54.15
80.5
24.9
53.90
80.0
24.8
53.65
79.5
24.7
53.40
Max 81
average 79.593
PRICE
Last 24.75
24.6
48.2
21.1
25.9
48.0
21.0
25.7
47.8
20.7
25.5
47.6
Max 21.3
average 20.8
DAY %
YTD %
(H) 52W
Min 20.5
Last 20.7
(L) 52W
-0.376484217
10.39794608
111.3399963
85.79000092
BRENT CRUDE FUTR Nov13
107.79
-0.342085799
2.423033067
115.7599945
96.19999695
GASOLINE RBOB FUT Oct13
260.71
-0.606176134
0.199853953
298.210001
246.6799974
GAS OIL FUT (ICE) Nov13
907
-0.575500137
0.331858407
980.25
837
NATURAL GAS FUTR Oct13
3.6
-0.055524708
-0.826446281
4.525000095
3.154000044
294.14
-0.500642717
-1.655020228
322.8999853
276.1999846
NY Harb ULSD Fut Oct13 Gold Spot $/Oz
1317.86
-0.5884
-20.8236
1796.08
1180.57
Silver Spot $/Oz
21.518
-1.2143
-28.5354
35.365
18.2208
Platinum Spot $/Oz
1422.4
-0.7155
-6.2823
1742.8
1294.18
Palladium Spot $/Oz LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)
LME NICKEL 3MO ($)
713.5
-0.8201
1.9781
786.5
587.4
1817.5
0.972222222
-12.32513266
2184
1758
7245
-0.480769231
-8.649602824
8379.75
6602 1811.75
1895
1.255677264
-8.894230769
2230
13950
-0.605628785
-18.22977726
18920
13205
15.5
-0.225297715
0.551410963
16.65000153
14.77000046
AGRICULTURE ROUGH RICE (CBOT) Nov13
455.5
0.496414782
-24.0516882
647
445.75
WHEAT FUTURE(CBT) Dec13
654.25
0.114766641
-20.28632348
913
635.5
SOYBEAN FUTURE Nov13
Dec13
1320.75
0.994073791
1.381692573
1409.5
1162.5
117.8
0.640751815
-24.7043784
200
113.9499969
COFFEE 'C' FUTURE Dec13
20.5
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 25.577
Min 25.35
Last 25.55
25.3
NAME
PRICE
SUGAR #11 (WORLD) Mar14
17.85
0.506756757
-13.26530612
22.14999962
16.69999886
ARISTOCRAT LEISU
84.81
0.640797437
7.708915418
93.72000122
74.34999847
CROWN LTD
World Stock Markets - Indices
11830500
73.58492
0.56
0.23
6.176966
6.74
3.6
108042
23.45
-1.882845
1.51515
25.6
17.7
14565377
CHINESE ESTATES
17.7
0.3401361
57.39562
18.12
8.168
66465
CHOW TAI FOOK JE
11.16
-0.1788909
-10.28939
13.4
7.44
1747142
EMPEROR ENTERTAI
3.23
-2.710843
70.89947
3.55
1.43
2826000
FUTURE BRIGHT
2.54
2.008032
109.5664
2.76
1.103
1578000
GALAXY ENTERTAIN
53.45
-2.106227
76.11202
56
24.1
14284652
HANG SENG BK
126.4
-0.1579779
6.486945
132.8
110.6
1280625
HOPEWELL HLDGS
25.65
-1.724138
-22.85714
35.3
23.2
1798154
HSBC HLDGS PLC
85.75
-0.6373117
5.473551
90.7
72.1
11101882 8002040
2810.8
FTSE 100 INDEX
GB
6569.7
0.1880327
11.3922
6875.62
5605.589844
DAX INDEX
GE
8652.71
0.2017303
13.66614
8770.1
6950.53
NIKKEI 225
JN
14732.61
-0.06654267
41.7254
15942.6
8488.14
HANG SENG INDEX
HK
23179.04
-0.8236513
2.304458
23944.74
19426.35938
CSI 300 INDEX
CH
2443.885
-1.148855
-3.133904
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8299.12
0.07584865
7.78778
8439.15
7050.05
MGM CHINA HOLDIN
KOSPI INDEX
SK
2007.1
-0.1149591
0.5032386
2042.48
1770.53
MIDLAND HOLDINGS NEPTUNE GROUP
1590.67
NZX ALL INDEX
NZ
994.81
0.1716838
12.78347
1004.229
PHILIPPINES ALL SHARE IX
PH
3875.44
-0.1931526
4.770503
4571.4
HUTCHISON TELE H
3.49
0
-1.966291
4.66
2.98
LUK FOOK HLDGS I
24.65
-1.004016
1.024592
30.05
16.88
1488000
MELCO INTL DEVEL
20.5
-2.612827
127.525
21.2
6.55
3104000
24.75
1.64271
86.39463
25
12.18
6984606
3.23
-2.416918
-12.7027
5
2.68
1356000
0.182
-7.614213
19.73685
0.23
0.131
77180000
12
-1.153213
-0.1663932
15.12
9.98
17984978
47.75
-0.7276507
40.64801
49.8
26.35
15102152
SHUN HO RESOURCE
1.7
0
21.42857
1.92
1.19
0
834.309
SHUN TAK HOLDING
4.29
0.7042254
2.386633
4.65
2.92
4947130
3440.12
SJM HOLDINGS LTD
HSBC Dragon 300 Index Singapor
SI
621.19
-0.75
0.02
NA
NA
STOCK EXCH OF THAI INDEX
TH
1420.79
-1.106022
2.073379
1649.77
1260.08
HO CHI MINH STOCK INDEX
VN
482.82
0.7785594
16.6993
533.15
372.39
Laos Composite Index
LO
1270.73
-1.49838
4.60663
1455.82
1038.79
NEW WORLD DEV SANDS CHINA LTD
20.7
-1.193317
16.63511
22.382
15.795
6053560
SMARTONE TELECOM
10.62
0.7590133
-24.57386
16.22
9.97
8241176
WYNN MACAU LTD
25.55
-2.10728
21.95704
26.5
19
4529779
ASIA ENTERTAINME
3.77
-1.308901
33.94048
4.7647
2.4835
146492
BALLY TECHNOLOGI
74.15
-0.5098618
65.84657
76.3
43.16
343384
BOC HONG KONG HO
3.17
0
3.257331
3.6
2.99
3389
GALAXY ENTERTAIN
7.0571
-0.1824611
77.7607
7.16
3.11
12800 2997005
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
930646
0
3798.76
1826.22
1527659
8.92
-2.003082
24.69849
6.129846
2.56
16.08
0.46
-0.2500842
-0.2159923
4.7
45.45454
6.36
3765.288
1792.48
40.95238
CHEUK NANG HLDGS
US
MA
0.2257336 -0.1287001
CENTURY LEGEND
NASDAQ COMPOSITE INDEX
FTSE Bursa Malaysia KLCI
4.44 15.52
VOLUME CRNCY
1997350
12471.49
4334.3
(L) 52W
7216556
15709.58
3837.735
(H) 52W
0.75
17.53065
5300.1
YTD %
22.85
-0.3217249
5251.296
DAY %
28
15401.38
3.329546
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 9563 79.408 1.20302 0.79235 7.8281 10.1113 99.64 1.0289
1.72
US
12.58805
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 134.95 1.032
4.149376
DOW JONES INDUS. AVG
-2.245172
-9.5972 -1.1746 0.3838 2.229 -12.9688 -0.0338 -0.0335 1.8172 -12.1818 -2.3627 -2.6695 -1.8758 -5.5728 -14.6431 -3.7591 -1.803 -3.3244 -0.5675 -2.2093 -14.8651 -0.0097
-7.857141
(L) 52W
-0.3483701
-0.4879 -0.4112 0.0439 -0.2146 0 0 0.0026 0.0212 -0.0418 -0.0862 -0.255 -0.0203 -0.3454 -0.2441 0.4838 0.2554 -0.1944 0.0992 0.2164 0.2099 0
-0.7692308
(H) 52W
4460.413
0.9382 1.5986 0.9119 1.3484 98.93 7.9859 7.7532 6.1194 62.6237 31.32 1.2549 29.588 43.425 11473 92.816 1.22965 0.84346 8.2644 10.7683 133.4 1.03
-0.1988072
YTD %
5234.162
(L) 52W
1.29
DAY %
ID
(H) 52W
25.1
CHINA OVERSEAS
AU
YTD %
AMAX HOLDINGS LT
PRICE
JAKARTA COMPOSITE INDEX
DAY %
BOC HONG KONG HO
COUNTRY
S&P/ASX 200 INDEX
PRICE
Macau Related Stocks
COTTON NO.2 FUTR Dec13
NAME
Min 24.6
26.1
103.2
CORN FUTURE
average 24.747
21.3
WTI CRUDE FUTURE Nov13
LME ZINC
Max 24.95
Currency Exchange Rates
NAME
METALS
79.0
Last 79.5
48.4
Commodities ENERGY
Min 79
20.81
-0.9519277
46.85956
21.2
12.37
JONES LANG LASAL
87.5
-0.7598957
4.241122
101.46
72.56
257984
LAS VEGAS SANDS
64.78
-0.4915515
40.33796
65.9265
37.8353
4403602
MELCO CROWN-ADR
30.92
0.2106628
83.61045
31.95
12.5
2158599
MGM CHINA HOLDIN
3.18
2.912621
81.68404
3.18
1.5895
6300
MGM RESORTS INTE
19.86
-0.3012048
70.61855
20.3
9.15
7385679
SHFL ENTERTAINME
22.96
1.368653
58.34483
23.08
12.35
1123136
SJM HOLDINGS LTD
2.73
-0.3649635
19.86217
2.9481
2.0311
125290
155.03
-0.1236938
37.8167
155.87
103.0933
836643
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
36.85
-0.270636
13895021
CHINA UNICOM HON
2.74
-1.792115
18609750
CITIC PACIFIC
3.6
-1.098901
311866948
CLP HLDGS LTD
BANK OF COMMUN-H
5.88
-0.6756757
28409607
BANK EAST ASIA
32.7
1.552795
3544112
11.58
-1.014217
18145048
AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H
BELLE INTERNATIO BOC HONG KONG HO
NAME
CNOOC LTD
PRICE
DAY %
VOLUME
NAME
PRICE
DAY %
VOLUME
12.2
-3.174603
27613989
PING AN INSURA-H
9.95
-0.8964143
7131320
POWER ASSETS HOL
59.55
-1.407285
11977020
68.1
0.07347539
64.1
0.4702194
2385321
1719920
SANDS CHINA LTD
47.75
-0.7276507
15102152 6997572
15.8
-1.496259
46711023
SINO LAND CO
11.42
-1.551724
COSCO PAC LTD
12.12
0.4975124
6261546
SUN HUNG KAI PRO
105.5
-1.585821
6079370
ESPRIT HLDGS
12.24
-0.4878049
2358133
SWIRE PACIFIC-A
93.05
0.3234501
1200487
25.1
-0.1988072
7216556
HANG LUNG PROPER
26.25
-2.234637
4442845
TENCENT HOLDINGS
402.6
-1.612903
4213515
CATHAY PAC AIR
15.46
3.480589
7823062
HANG SENG BK
126.4
-0.1579779
1280625
TINGYI HLDG CO
20.85
-0.2392344
6758480
CHEUNG KONG
HENDERSON LAND D
47.85
-2.743902
5006692
WANT WANT CHINA
12.44
0
19627692
92.5
-1.64806
2820312
HONG KG CHINA GS
18.44
0.3264418
6925579
118.9
-1.735537
4554742
CHINA COAL ENE-H
4.91
-1.603206
85277419
CHINA CONST BA-H
6.12
-0.6493506
234429628
CHINA LIFE INS-H
21.05
-0.9411765
20267661
CHINA MERCHANT
27.8
-0.8912656
4426496
CHINA MOBILE
87.65
-0.6235828
CHINA OVERSEAS
23.45
-1.882845
CHINA PETROLEU-H
6.11
CHINA RES ENTERP
25.15
HENGAN INTL HONG KONG EXCHNG
127.9
-0.8527132
3349381
HSBC HLDGS PLC
85.75
-0.6373117
11101882
15816853
HUTCHISON WHAMPO
94.05
-0.1062135
4438459
14565377
IND & COMM BK-H
5.57
-0.5357143
221549579
-1.292407
99339141
LI & FUNG LTD
11.92
0.5059022
14020201
0.3992016
7523253
MTR CORP
30.1
-2.113821
3881300
CHINA RES LAND
22.55
-3.426124
7443100
NEW WORLD DEV
12
-1.153213
17984978
CHINA RES POWER
18.08
0.2217295
6018944
PETROCHINA CO-H
8.72
-1.468927
82371243
CHINA SHENHUA-H
24.75
-2.941176
22864026
MOVERS
12
36
23560
INDEX 23179.04 HIGH
23549.89
LOW
23117.41
2
52W (H) 23944.74 23110
(L) 19426.35938 19-September
24-September
15 15
September 25, 2013 April 19, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Times of India
Asia’s rebalancing act Lee Jong-Wha
Director of the Asiatic Research Institute at Korea University, served as chief economist and head of the Office of Regional Economic Integration at the Asian Development
Bank
The government is pushing the United Kingdom arm of infrastructure financing firm India Infrastructure Finance Corporation to expand its portfolio to meet the increasing demand. “Indian firms are finding it difficult to manage dollar denominated loans” because of the sharp fall in the rupee, said a senior finance ministry official. IIFC (UK) has a credit line of US$5 billion from the Reserve Bank of India but it has disbursed only US$1 billion so far.
Malaysia Star The waters near Johor and Malacca have surpassed Somalia as the world’s most dangerous marine passageway, according to the International Maritime Bureau (IMB). It attributed this to the rise in piracy off Indonesia’s Tanjung Priok, Dumai, Belawan, Taboneo and Muara Jawa – where the waters have been marked as hot spots. The Kuala Lumpur-based IMB has warned mariners to take precautions when plying the 960km stretch shared by Malaysia, Indonesia and Singapore.
Philippines Inquirer The International Monetary Fund (IMF) has cut its growth forecast for the Philippine economy to 6.75 percent this year amid volatility in global financial markets, which may slightly offset the country’s strong fundamentals. “Following the announcement of prospective tapering of asset purchases by the US Federal Reserve in late May, Philippine assets saw selling pressure that caused the peso to weaken and market interest rates to rise,” the IMF said in a statement.
Yomiuri Shimbun Automobile and motorcycle manufacturers are expanding their development of equipment for the elderly and physically disabled as Japan’s population continues to gray. Yamaha Motor Co released a device in August to provide electric power to wheelchairs. In May, Honda Motor Co began renting its Walking Assist device to hospitals. According to the Japan Assistive Products Association, the country’s market for welfare equipment in 2011 was about 1.96 trillion yen.
R
apid economic growth in China undoubtedly benefits the rest of Asia. Indeed, strong Chinese demand has supported its trading partners’ export-led growth for much of the past three decades. But now, faced with a slowdown in China and significant downside risks there, the rest of Asia must abandon over-reliance on export-oriented development strategies and strive to ensure stable and sustainable growth domestically and regionally. China’s vulnerabilities and risks – stemming from property bubbles, shadow banking, and local-government debt – have triggered concerns about a crisis not only there, but also in neighboring Asian countries. Some, indeed, now predict a Chinese banking or fiscal disaster; others predict longterm stagnation equivalent to Japan’s lost decades. These “hard landing” scenarios are extreme. But the road ahead is bumpy and uncertain. No one can guarantee that Prime Minister Li Keqiang’s attempts to achieve deleveraging and structural reform will succeed. Moreover, external shocks, policy mistakes, and political instability could disrupt even the best-laid plans. In any case, China’s stellar growth record cannot be sustained. Even if it manages a “soft landing,” annual output growth will slow to 5-6% in the coming decades. Standard growth theory predicts “convergence” of per capita GDP: a fast-growing country will eventually encounter difficulty maintaining high rates of labor mobilization, capital accumulation, and technological progress. In China, labor inputs have fallen as a result of declining fertility and an aging population. Reduced rates of return will lower investment rates. China may be able
to rely on policy reforms to boost productivity growth; but, with relatively low innovative capacity, it will struggle to catch up with frontier technologies. China’s inevitable growth slowdown, along with a large tail risk, threatens stable growth in Asian economies that have become increasingly interdependent. Trade within Asia now accounts for more than half of the continent’s total trade turnover. Moreover, direct investment and financial flows contribute further to economic interdependence. The rise in intra-Asian trade reflects China’s central role in East Asia’s production networks. From 2001 to 2011, China’s share of South Korean exports doubled, from 12% to 24%; its share of Japanese exports grew even faster, rising from 8% to 20%. As a result, China has become South Korea’s single largest export market, and Japan’s second largest. It is also the largest trading partner of all ten members of the Association of Southeast Asian Nations (ASEAN). Asian economies’ deepening trade and financial integration has left them increasingly vulnerable to growth shocks from China, with exporters of commodities and capital goods especially vulnerable. In fact, a study by the Asian Development Bank shows that Chinese shocks have larger and more persistent effects on individual Asian economies’ output than do global shocks, as a 1% increase in China’s GDP raised GDP in emerging East Asia by about 0.6%. In terms of investment, the International Monetary Fund predicts that a disruption in China’s investment boom will adversely affect its trading partners. A drop of one percentage point in China’s investment rate is estimated to reduce Taiwan’s GDP
growth rate by 0.9 percentage points and Korea’s by 0.6 percentage points. If China can successfully rebalance its economy and shift to consumption-based growth, its trading partners could benefit enormously from a huge retail market. But as long as China’s import share of final consumption remains low, direct gains for exporters of consumer goods are likely to be small.
Asian economies’ deepening trade and financial integration has left them increasingly vulnerable to growth shocks from China
As they prepare for the coming Chinese slowdown and seek to minimize the risk of regional destabilization, Asian economies must strengthen domestic demand and reduce excessive reliance on exports to China. In other words, sustainable growth
requires all of Asia’s Chinadependent economies to rebalance their two main growth engines. To enhance domestic demand, Asia, including China, must reallocate resources and structurally transform the economy. Reinforcing social safety nets, broadening and deepening financial markets, and supporting small and medium-size enterprises would also strengthen domestic demand. Likewise, service-sector liberalization will be essential to promoting productivity and creating jobs. In short, implementation of fiscal, financial, and structural reforms can mitigate the spillover effects from China’s slowdown. But a second reform front, aimed at enhancing regional coordination, must also be opened. With economic shocks able to spread more quickly than ever before, owing to broadened trade and financial channels, all Asian countries must maintain a sound macroeconomic environment. Perhaps most important, deeper regional integration calls for closer cooperation in macroeconomic and financial surveillance, as envisaged by the Chiang Mai Initiative Multilateralization. Asian countries must be able to conduct well-coordinated candid reviews of one another to reduce the likelihood of risks and detect emerging vulnerabilities. China’s long-term growth potential – and that of the rest of developing Asia – is not pre-defined. Maximizing it requires not only that individual countries address their weaknesses and rebalance their sources of growth, but also that they build and strengthen the regional institutions needed to manage economic integration. © Project Syndicate
16
September 25, 2013
Closing China gets stake in Russian potash giant
Resorts World Manila 1H revenue up 31 pct
China, the world’s largest potash consumer, has acquired a 12.5 percent stake in Russia’s Uralkali, the leading producer of the soil nutrient, Uralkali said yesterday. The deal, a rare example of the Chinese acquiring direct ownership of Russian natural resource assets, took place amid speculation that tycoon Suleiman Kerimov might sell his large stake in Uralkali over a dispute between Russia and Belarus. Chinese sovereign wealth fund China Investment Corp received the stake in Uralkali in a bond exchange deal. A source said it was triggered when Uralkali’s market value fell below US$20 billion.
Revenues at Resorts World Manila casino resort in the Philippines rose nearly 31 percent year-on-year in the first half, said joint venture partner Genting Hong Ltd. Resorts World’s operator – Travellers Group Hotel Group Inc – reported US$468.9 million (3.74 billion patacas) in total revenues and US$109.0 million in earnings before interest, taxation, depreciation and amortisation, compared with US$358.3 million total revenues and US$77.9 million EBITDA in the first half of 2012. Travellers International is a collaboration between Hong Kong-listed Genting HK – which also runs casino cruise ships out of Hong Kong – and Filipino-Chinese Andrew Tan’s Alliance Global Group Inc.
German business confidence improves less than forecast Recovery from the euro area’s longest-ever recession remains fragile
G
Re-elected German chancellor Angela Merkel faces a challenge
erman business confidence rose less than economists forecast in September amid caution over the recovery in the euro area, the nation’s biggest trading partner. The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 107.7 from a revised 107.6 in August. That compares with a median forecast of 108 in a Bloomberg News survey of 43 analysts. The gauge has still gained for five months to its highest level since April 2012. While Germany is benefiting from unemployment near a two-decade low and the end of the euro area’s longest-ever recession, the European Central Bank has called the region’s recovery fragile. That’s a challenge for Angela Merkel, who is poised for a third term as German chancellor after her Christian Democrats took the largest share of the vote in Sunday’s elections on the strength of her economic record. The European Central Bank has pledged to keep interest rates low to support the recovery. The Ifo report “confirms that the recovery profile for
the European monetary union’s biggest economy is still slow,” said Annalisa Piazza, an analyst at Newedge Group in London. “The confirmation of an extremely accommodative monetary policy stance is a key supportive factor for confidence as industrialists see a prolonged period of time of favorable financing in Germany where credit conditions are smooth and chances of pick-up in activity.” A measure of the current situation unexpectedly dropped to 111.4 in September from 112 the prior month, yesterday’s report showed. A gauge of expectations climbed to 104.2 from 103.3. The survey was conducted before Germany’s election, Ifo said. German growth isn’t matching the pace of the second quarter when gross domestic product expanded 0.7 percent, according to the Bundesbank. German factory orders, industrial production and exports all declined in July, and a preliminary gauge of manufacturing for September unexpectedly dropped. “At the start of summer 2013, the German economy didn’t sustain the rebound from earlier in the year,” the Frankfurt-based central bank said in its monthly report Monday. “Company investment confirms the evidence of a solid foundation, though signs of a dramatic upswing are lacking.” The Bundesbank predicts the German economy will expand 0.3 percent this year and 1.5 percent in 2014. Unemployment was at 6.8 percent in August. Bloomberg News
Ailing BlackBerry agrees to buyout Canada’s Fairfax Financial ready to take fallen tech giant private Michel Comte
T
ech pionee r Blac k Be rry made a last roll of the dice Monday and agreed to a probable US$4.7 billion buyout by a consortium planning to take the struggling smartphone maker private. BlackBerry was once a leader in mobile tech but has been squeezed by rivals Android and Apple. The Ontario-based company said it had signed a letter of intent with a group led by Fairfax Financial Holdings Limited, which has offered to acquire the company. Fairfax, a Canadian firm headed by billionaire Prem Watsa, is already BlackBerry’s largest shareholder
with approximately 10 percent of its shares. Mr Watsa resigned from BlackBerry’s board in August when it announced a search for a suitor. Mr Watsa said the sale “will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.” “We can deliver immediate value to shareholders while we continue the execution of a long-term strategy in a private company.” Under the proposed BlackBerryFairfax deal, the consortium would offer US$9 for each outstanding share, and Fairfax would contribute its own shares in the transaction.
BlackBerry said its board supports the plan. A firm deal, once due diligence is completed, is expected by November 4. It also hinges on the consortium obtaining financing. BlackBerry said it would continue a search for a possibly better suitor in the interim. “This is probably the best possible outcome of several unattractive options for BlackBerry,” said analyst Jack Gold of J. Gold Associates. While BlackBerry helped create a culture of mobile users glued to smartphones, many have since moved to iPhones or devices using Android software like Samsung’s
Galaxy range. According to International Data Corporation, BlackBerry’s global market share had slipped to 3.7 percent in the second quarter, the lowest since tracking began. Android accounts for nearly 80 percent. AFP