Macau Business Daily, September 26, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Number 379 Thursday September 26, 2013 Year II www.macaubusinessdaily.com

April 19, 2013

Construction force needs ‘to double’ for Cotai projects

‘Yes but no but yes’ – Coutinho’s election appeal Page 6

DB confirms August mass market up 44 pct Page 7

he construction workforce must double in the next few years to meet demand created by new Cotai casino resorts, says Lo Kai Jone, chairman of the Macau Construction Association. To achieve it, the government will need a more flexible policy on labour imports he told Business Daily. In 2010 the government announced a ‘one-forone’ policy on construction labour recruitment, i.e. one local hired for every imported worker. In March 2012 there were hints the government might be relaxing the policy, when then Labour Affairs Bureau director Shuen Ka Hung moved to another job. But Mr Lo said yesterday: “The government could handle this ratio in a more flexible manner. For instance the ratio could be lower when there is great [labour] demand while it could be higher at other times.” More on page 3

Taxi drivers want 10 pct fare hike from next month

Brought to you by Zung Fu Motors (Macau) Limited

Hang Seng Index

A driver lobby group wants taxi fares increased by at least 10 percent within weeks to make up for one last year that did little to help its members. The plan to increase fares was put forward by the Macau Taxi Driver Mutual Association. It has been criticised by the Public Utilities Concern Association of Macau, which wants the government to improve standards across the city’s taxi companies.

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Dealer squeeze on the cards as industry grows Unless Macau changes its rule that only permanent residents can be casino dealers it will put “some limit on the availability of people” suggested Michael Leven, president and chief operating officer of Las Vegas Sands Corp at an investor forum in the United States. Business Daily has calculated Macau could need as many as 10,000 extra casino dealers just for Cotai alone between mid-2015 and 2018. Page 4

Ground handling tender pushed back to 2014 Menzies Macau Airport Services Ltd will continue providing ground-handling services at the city’s airport. But an open tender will be launched next year to introduce some competition, said Cui Guang, director of logistics and general aviation development at Macau International Airport Co Ltd (CAM). The Civil Aviation Authority has not yet received any applications for long-haul flights to Macau it said yesterday. Page 5

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September 25

HSI - Movers Name

%Day

CHINA RES POWER

1.00

HENDERSON LAND D

0.73

CHINA PETROLEU-H

0.65

HENGAN INTL

0.54

CHINA RES ENTERP

0.40

BOC HONG KONG HO

0.20

NEW WORLD DEV

0.17

WANT WANT CHINA

-0.16

WHARF HLDG

-0.64

TINGYI HLDG CO

-1.20

Source: Bloomberg

I SSN 2226-8294

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September 26, 2013

Macau opinion

Rien ne vas plus

José I. Duarte Economist

he elections are over and a few faces will be replaced at the Legislative Assembly. There are still uncertainties about the exact make up of the assembly but that does not matter, since there will be no substantial change to the status quo. The Chief Executive will nominate some members. Regardless of their merits, these appointees do not have a voice of their own. They are destined to be someone else’s voice. The representatives of the corporations were nominated long ago. Continuity is their business. So who will become the 14th directly elected member may have symbolic importance but will not change the essence of the thing. The direct elections were taken over by candidates associated with the interests of Stanley Ho Hung Sun’s empire. While the current electoral model prevents the Ho-linked candidates from directly representing his corporate interests, they managed to use the existing arrangements to their advantage – an effort that paid off handsomely. Despite the occasionally conflicting interests in the gaming industry, it now has a lobby with a presence as important as the chief executive. I am not prepared to get into the details of electoral bookkeeping. That is limited to an accounting of the candidate’s votes and the corresponding legislators’ losses and gains. That has already been done in many instances and in the present context, that analytical effort is mostly irrelevant. In Macau, there is hardly any consistent or continuing demographic or sociological analysis of the electorate. Electoral polls are forbidden, for all practical purposes, and formal political activity is seriously constrained. During periods of campaigning or otherwise, a politician’s freedom of expression is inhibited by ad hoc rules, some of dubious validity, made by the electoral commission. The issue now, after the elections is to reflect on what these results mean for the evolution of political and economic systems in Macau. Change is not the first word that comes to mind. In fact, the impression I get is that the political system has reached the limits of its ability to renovate itself. Alternative voices that represent the wider part of the community not associated with the casinos or unrepresented by the political appointees have failed to make a significant mark at these elections. These sectors are the big losers in the political process. They have not been able to counter the intrinsic devaluation of the popular vote ingrained in the city’s political arrangements or to mobilise their own support. There was nothing in the way the election was organised or conducted to suggest that the dominant voices in Macau have exhibited any willingness, let alone capacity, to progress towards broader and more pluralistic representation, more open political participation or even increased competition. In that sense, the political system and the balance of interests it represents appear to be stuck. That bodes ill for the time when the fortuitous conditions that have provided the exceptional times we have been living through start to fade. And that time will come. On the economics front, the landscape is essentially unchanged. It could probably be summed up in a simple phrase: more of the same. Although, with a twist. The gambling sector is adding political weight to its already overwhelming economic weight. Increasingly, it will be the only show in town. Economic diversification will happen only in a limited way, in satellite activities and in a way that will inevitably be subordinate to gambling’s interests. Meanwhile, the city’s heritage will be reduced to the status of decoration. The relationships that are the soul of a place will be increasingly weakened by social desertification. A significant share of residents will relocate to neighbouring regions and further away. They will be replaced by transient residents with little attachment to Macau and its history. In the great design of things, Macau will fulfil a destiny its people could not or would not want to escape: to become a real Las Vegas of the East, the glittery, pleasure park of the Pearl River Delta. The dice have been rolled.

There were just 1,176 taxis licensed to operate in July

Taxi drivers want 10 pct fare hike from next month Consumers’ concern group says government must improve service, introduce more cabs Tony Lai tony.lai@macaubusinessdaily.com

driver lobby group wants taxi fares increased by at least 10 percent within weeks to make up for an increase last year that did little to help its members. The plan to increase fares was put forward by the Macau Taxi Driver Mutual Association and has been criticised by the Public Utilities Concern Association of Macau. It says the government should do more to improve service standards across the city’s taxi companies. As Business Daily reported in July, the drivers’ association has confirmed it wants fares to go up. It says last year’s 2.00 pataca (25 US cent) increase to flag fall failed to put more money in its members’ pockets. “We will submit a proposal to the government around the middle of next month. We still have to ask for more opinions from the drivers and seek approval from the board of our association,” said drivers’ association chairman Tony Kuok Leong Son yesterday. “We have stopped our preparations for some time due to the Legislative Assembly election as we didn’t want to politicise the issue.” Mr Kuok said a final proposal had not been drafted but the drivers would seek a fare increase

of “over 10 percent”. “We particularly want a raise on fares charged after the flag fall. Those are the ones that most affect our earnings but an increase was not approved last year,” he said. The government approved fare increases in July last year. Flag fall for up to a 1,600-m journey increased to 15 patacas from 13 patacas. The government turned down a request from drivers to increase fares to 1.50 patacas for every 200 metres travelled instead of 1.50 patacas for each 230-metre interval.

Owners’ gain The Public Utilities Concern Association says any fare increase would do little to help consumers. “The taxi industry has always put pressure on the government over fare hikes but any rise now will bring no benefits to the public,” said president Chiang Chong Fai. “The service provided now does not match the price they charge.” Any increase would mean “further profit” for taxi owners and do little to help the drivers who rent the taxis, Mr Chiang said. The arrangement here is the same

as in Hong Kong, he said. The Hong Kong government approved a fare increase on Tuesday. Passengers will pay an additional HK$2.00 on flag fall and an extra 10 Hong Kong cents for every 200 metres travelled, the South China Morning Post reported. Mr Chiang said fare increases in Hong Kong would benefit taxi owners and inflate the value of their licences. He said speculators had pushed up the price of a taxi licence here and the government had to act to stop the practice. Prices for one of 200 new taxi licences auctioned last year ranged from about 800,000 patacas to 1.1 million patacas. Mr Chiang wants to see more taxis on the road. Trying to hail a taxi was “a joke” that had harmed Macau’s image among tourists. “We only have some 1,000 taxis now but we are receiving some 20 million visitors a year,” he said. “It is easier to find a 10 pataca bill on the street than to get a taxi.” Official data shows there were 1,176 taxis in operation in July. The Transport Bureau told Business Daily earlier this year it was considering issuing another 100 taxi licences.

September 26, 2013 April 19, 2013

Macau

Workforce ‘must double’ to keep up with new resorts Construction association chairman says government must be more flexible on migrant labour quotas Tony Lai

tony.lai@macaubusinessdaily.com

he number of construction workers will double in the next few years to meet the demand created by new resorts being built in Cotai, Macau Construction Association chairman Lo Kai Jone says. He told Business Daily the volume of work would mean the government must adopt more flexible policies on migrant workers. There were 21,943 migrants working in the construction sector last month, up by 3,131 people from July, official data released yesterday shows. It is the biggest number of migrant workers in the construction sector since the Human Resources Office began releasing monthly data in 2007. Six years ago, the industry had just 11,800 migrant workers. Most were from the mainland, 19,512 workers or about 89 percent. Mr Lo said the biggest employers were contractors on the Light Rapid Transit railway network and on “the second wave of gaming development”. Each of the city’s six gaming operators have new casino-resorts planned in Cotai or are planning to expand existing facilities between 2015 and 2017.

At least five new casino-resorts are scheduled to open in Cotai from 2015

“Right now most resort [sites] have only begun the basic work like drilling and they will need more construction workers in the next few years for the main infrastructure works,” said Mr Lo. “This will definitely put a strain on the construction market as I estimate the sector needs at least to

double the current human resources to meet the demand.” Overall, there were 32,100 people working in construction at the end of July, the Statistics and Census Service says. About 19,700 workers were residents. Based on Mr Lo’s assessment, the construction workforce would

need at least 64,200 workers in the near future. Mr Lo said importing workers was the most efficient and low-cost solution to covering the industry’s labour shortage.

Cheaper staff “The construction industry is quite a weird industry as our human resource needs are cyclical. We need a large number of workers for only a certain period of time,” he said. “As for the non-residents they can simply leave when there are no jobs but where can the locals go? They will become unemployed.” The administration has publicly announced a ratio of one resident to one migrant worker in the construction sector. “The government could handle this ratio in a more flexible manner,” said Mr Lo. “For instance, the ratio could be lower when there is great [labour] demand while it could be higher at other times.” The Human Resources Office could also grant shorter-term labour quotas spanning six months instead of the usual two or three years, if it fears that builders may abuse the quota system, he said. The office’s performance has improved a lot in a few years, Mr Lo said. He also stressed the need to encourage more residents to take up vocational training in construction, even though he acknowledges few are interested in joining the sector. There were 127,233 migrant workers in Macau at the end of last month, up by 4.2 percent from July. The hotel and restaurant sector were the biggest employers of migrants, accounting for 28.9 percent of the total.

VIP clubhouses boost Milan Station sales Second-hand bag retailer uses gaming links to reach high-rollers Tony Lai

tony.lai@macaubusinessdaily.com

ilan Station Holdings Ltd made “outstanding” business in Macau in the first half this year thanks to sales in “exclusive clubhouses” that allowed it to reach high-income consumers. Second-hand bag sales here surged in the first six months by 31.7 percent from a year earlier to nearly HK$34.9 million (US$4.5 million), according to the retailer’s interim report released earlier this week. “The increase was mainly attributable to the products sales in exclusive clubhouses in Macau,” Milan Station said in. Its only store here in Rua de S. Domingos had a “stable performance”. Business Daily tried to contact Milan Station to find out more about its clubhouse sales but calls to the number listed on its website went unanswered. The clubhouses are in all likelihood linked to the gaming industry. Milan Station said in its 2012 annual report that it wanted to open “specialty counters in the VIP lounge of the premier casinos in Macau”. The firm then said in May they had “succeeded in striking a deal with

an exclusive clubhouse in Macau to set up a point of sales in the latter’s entertainment premises”. The clubhouse deals helped the company to capture opportunities in “the premium consumer market”, says the interim report released this week. Milan Station is optimistic on its business prospects here as it aims to set up more sales points in clubhouses. “While more five-star hotels, large shopping centres and casinos were completed one after another, more high-end consumers (…) were attracted to Macau, creating more opportunities for the luxury goods sector,” said the retailer. Milan Station’s operations here were the sole bright light for the firm, posting gross profits of HK$11.1 million in the first half, up by 37 percent year-on-year. The retailer recorded sales declines in Hong Kong and mainland China, dragged down by slower economy and measures to curb public officials’ extravagance. Milan Station posted a loss of HK$10.4 million in the first half, compared with a profit of HK$386,000 a year earlier.

Milan Station has just one shop here, in Rua de S. Domingos

September 26, 2013

Macau

Dealer squeeze on the cards Macau could need 10,000 new casino dealers by 2018 – and they must all be locals Michael Grimes

michael.grimes@macaubusinessdaily.com

nless Macau changes its rule that only permanent residents can be casino dealers it will put “some limit on the availability of people” suggested Michael Leven, president and chief operating officer of Las Vegas Sands Corp at an investor forum in the United States. Mr Leven told delegates at the UBS and Deutsche Bank Gaming Investment Forum in Las Vegas on Monday United States time: “As you all know, the Macanese [sic] have to be dealers today. All of them have to be not only residents but citizens of Macau. And that’s going to put some limit on the availability of people unless the government rules are changed.” Flesh and blood card dealers matter a lot in Macau. Chinese gamblers generally prefer to play live table games, and mostly baccarat, because of its low house edge compared to other casino games. Business Daily has calculated Macau could need as many as 10,000 extra casino dealers just for Cotai alone between mid-2015 and 2018, were the government to approve all the approximately 3,366 new tables that the eight new Cotai projects have requested. The figure is based on the assumption that three dealers would be needed per table – the current ratio in the local industry.

Optimistic numbers But Ricardo Siu Chi Sen – associate professor of business and economics at the University of Macau – told Business Daily there was no guarantee the operators would get all the tables requested.

“This is only an attempt [at new tables] by the industry, but we don’t know if the government will approve it finally because of the labour issue,” he explained, adding that the government’s cap on table numbers envisaged only a three percent compound annual growth over ten years from the 5,485 tables that were in the market at the end of the fourth quarter last year. That, he said, would give a net growth of only 1,650 tables up to the end of 2022. “Since not all tables are operated fully every day, casinos may be able to make some internal staffing adjustments. Anyway, my expectation is that at least 3,000 to 4,000 more dealers may be demanded in the future, which will add to the pressure of Macau’s local labour market for sure,” stated Mr Siu. At the end of the second quarter this year, there were only 6,400 unemployed residents in the whole of Macau.

16,720 patacas (US$2,093) at the end of the second quarter. That’s a 43 percent rise on the 11,676 patacas in average monthly wages that Macau dealers earned in the second quarter of 2004 when the Statistics and Census Service started to compile such data. According to Starr Xian, a principal consultant in human resources with Pentasia Macau, basic salaries for casino dealers in Singapore are around S$2,000 (12,729 patacas). There were approximately 17,619 dealers employed in Macau casinos as of June 30 according to data compiled by the statistics service. They were serving a total of 5,746 tables as of the end of the second quarter according to data from the Gaming Inspection and Coordination Bureau. If as many as 10,000 new dealers were approved, it would represent a 57 percent increase on the number

School leavers Since November last year, the pool of people from which casino operators can recruit casino dealers has changed. Under a new law effective from that month, the age at which people can visit casinos or work in them was raised from 18 to 21. That means school leavers can no longer be recruited directly as casino workers in any capacity. The locals-only rule on dealers has helped to push up their wages as a growing number of casinos chase a limited pool of talent. Average monthly earnings per dealer were

Player, banker, or dealer? (Photo by Manuel Cardoso)

KEY POINTS Locals-only dealer rule ‘limits’ availability: Leven Possibly 10,000 dealers needed by 2018 More likely 4,000 approved: Ricardo Siu Dealer wages up 43 pct since 2004

of dealers working in Macau at the end of the first half of this year. The calculation of new dealer posts doesn’t include those required to staff up to 350 new-to-market tables that Macau Legend Development Ltd – co-chaired by former Macau legislator David Chow Kam Fai – says it has been promised for projects on Macau peninsula. LVS – via its 70 percent owned local unit Sands China Ltd – already operates four properties in Macau (three of them on Cotai) and is planning another, a French-themed The Parisian costing approximately US$2.7 billion. The number of tables for the property is still to be confirmed, but LVS hopes to open it in “late 2015”. Mr Leven said at the Las Vegas investor forum – referring to his firm’s project and those of rivals on Cotai: “All of those properties are going to need employees – people to make the beds, people to clean the rooms, and do all the rest of that stuff. So I don’t think the government of Macau – in my own opinion – would allow these properties to be built if in fact there’s not going to be anybody there to run them. So I think everybody that’s building is very optimistic those situations will be taken care of by the government.” Academic Mr Siu says the attitude of permanent residents to the industry’s growth must also be taken into account. “Some local workers may insist – for their own benefit – on nonresidents being prevented from taking certain jobs. This may curb the development of the industry and the sustainable growth of the local economy as a whole,” he stated.

September 26, 2013

Macau

Open bid on aircraft services deal called off until next year After pledging an open tender this year, airport operator now says Menzies must stay on Stephanie Lai

sw.lai@macaubusinessdaily.com

Three airport sub-concession contracts signed 18 years ago will expire before the end of the year

round handling services at the airport will be run by Menzies Macau Airport Services Ltd for an open-ended period but the airport has reiterated a promise to end the 18-year-old monopoly. Macau International Airport Co Ltd director of logistics and general aviation development Cui Guang said the company was “still negotiating with Menzies on the [renewal] contract terms”. Menzies must continue work at Macau International Airport because the airport company had “to maintain the existing operation running smoothly and without interruption,” Mr Cui said yesterday. During the 4th China and Portuguese-speaking Countries Airports Conference, Mr Cui said Menzies’ monopoly would eventually end and an open tender process would be launched next year. Mr Cui did not reveal the lengths of the new ground handling contracts. “We are renewing with Menzies not because there were no companies interested in coming to provide the service,” he said. “Actually, we got in touch with four or five international companies that showed interest in providing ground handling services at the airport.” Two years ago, Turkish group Çelebi Aviation Holding said it was interested in bidding for a second ground-handling licence. The existing service contracts were signed 18 years ago and expire in the middle of December. In July, Mr Cui said a tender would be called by the end of this year. He said yesterday that Menzies’ would be required to “make their daily operation fully computerised and obtain more international qualifications for their services”.

Two for every one The airport said in July it hoped to have at least two contractors for

each sub-concession service at the airfield, including ground handling, catering, private jet management and fuel. At the time, Mr Cui said the city’s “small aviation market” and “airport’s limited space and resources” could deter potential service providers. Two more operators will operate private jet businesses from the airport once a contract with Macau Business Aviation Centre Ltd ends in November. The airport company’s deputy director of logistics and general aviation, Franco Kwan, said another fixed-base operator would compete against Macau Business Aviation Centre. Mr Kwan said the company would also seek a maintenance, repair and overhaul operator for private jets using the airport. It would be a first for Macau. In the first eight months of this year, there were 1,281 takeoffs and landings by private jet, an increase of 21.4 percent over the same time last year, Mr Kwan said. Over the previous six-year period, aeroplane movements grew at an average annual rate of 16.3 percent each year. Mr Kwan predicted there would be about 1,900 private jet movements this year. Another Macau-based private aviation operator, Jet Asia Ltd, hopes to sell six aeroplanes due to “largely unsatisfactory conditions” in the corporate jet market. Mr Kwan said “each company has its own marketing strategy and perhaps it encountered some problems”. Macau-registered aviation companies, including Jet Asia, represented less than 14 percent of the private jet movements at the airport so far this year. “Given we had 28 million tourists arriving here last year, we still have big potential for the business jet development as some of these are high-spending tourists,” said Mr Kwan. Growth in conventions, exhibitions and entertainment would also boost the private jet business, he said.

Aviation regulator still waiting on Indian bid The Civil Aviation Authority has not received any applications from airlines interested in launching direct long-haul flights to Macau, president Simon Chan Weng Hong told media yesterday. “Indian airlines did enquire and visit us before, but at present they have not chosen Macau yet due to their own considerations,” Mr Chan said. Indian low-cost airline SpiceJet Airlines Ltd told Macau airport executives in August that it had applied to the aviation authority in India to fly between New Delhi and Macau three times a week. The aviation regulator here is still waiting on an application from SpiceJet, said Mr Chan.

September 26, 2013 April 19, 2013

Macau

Last-minute election appeal makes it three José Pereira Coutinho filed a late-night appeal against invalid votes Stephanie Lai

sw.lai@macaubusinessdaily.com

third Legislative Assembly candidacy has filed an appeal over invalid votes in the September 15 election via fax late Tuesday night, the Court of Final Appeal told Business Daily. The court declined to name the candidacies. Legislator José Pereira Coutinho, who heads ticket number nine, texted media late on Tuesday night saying his group intended to appeal against the election result. Just hours earlier his team had sent e-mails and faxes to Macau media saying it would not appeal the election result after all. “We had an internal meeting and then we decided to move forward,” Mr Coutinho told the Portuguese-language newspaper Jornal Tribuna de Macau. The decision to appeal “is due to the fact that Angela Leong and Chan Meng Kam are also appealing to the court,” Mr Coutinho said. He declined to comment on why his ticket had changed its mind twice. Business Daily could not get a comment from Mr Coutinho’s ticket by the time the story went to press. Also on Tuesday, Chan Meng Kam, the leader of the most successful candidacy, asked the court to have 82 spoiled votes counted as valid for his ticket. The ticket led by gaming executive Angela Leong On Kei also appealed to court over invalid votes. The court has four days to make a final ruling. It told Business Daily that a decision is expected within this week.

Racing animals’ rules out this year

bylaw regulating the management of pet dogs and racing animals, as well as a law on animal protection, will be out by this year, the government hopes. The Civic and Municipal Affairs Bureau said yesterday in its regular meeting that they hope to finish drafting both bills before the end of the month. Both bills will then be reviewed at the Executive Council and the animal protection laws will then head to the Legislative Assembly. The bureau revealed no details from the bills’ content. New rules on racing animals could affect the management of the Macau Jockey Club and the Canidrome, which has been criticised by animal activists for putting down underperforming greyhounds. Vong Iao Lek, acting president of the bureau, said in the meeting that rules on pet sales and pet breeding would be included in another law. The bureau hopes to send this proposal to the Executive Council for discussion this year, said Mr Vong. A bylaw setting rules for the use of animals in laboratory testing could be sent to the council next year, said the bureau. T.L.

September 26, 2013 April 19, 2013

Macau

DB confirms Aug mass gaming up 44 pct y-o-y Research report adds many Macau hotels already booked up for Golden Week Michael Grimes

michael.grimes@macaubusinessdaily.com

report by Deutsche Bank in Hong Kong published on Monday has confirmed that Macau’s mass-market gambling revenue rose 44 percent year-onyear in August. Business Daily first reported exactly that spike – in mass-market table games revenue – in an article on September 5, based on industry data obtained by this newspaper. The new paper by Deutsche Bank research analyst Karen Tang states: “In August, mass gaming revenue growth surprisingly accelerated from a year-to-date run rate of 33 percent year-on-year to 44 percent year-on-year, beating expectations. It was the fastest growth since December 2011.” She added: “Part of the strong growth was due to the government’s re-classification of some of SJM’s VIP tables back to mass market table. But even after stripping out 3-4ppt [percentage points] on this,

the growth rate was still above expectations.” Macau gaming stocks appeared to react positively to the bank’s suggestion that October gaming revenues could set a new record. “Given rising minimum bets, we think October gaming revenue could hit 32 billion patacas (US$4 billion), up 17 percent year-on-year,” says Ms Tang’s report. The report adds that many Macau hotels appear to be already fullybooked for the Golden Week holidays straddling China’s National Day on October 1. “We surveyed 17 hotels for their bookings over Golden Week. We found that 14 are already fully booked for October 3-5 (ThursdaySaturday), and 13 for October 1-2 (Tuesday-Wednesday),” states the DB report. It notes that those hotels with rooms still available appear to be more expensive than last year. “For example, a room at Holiday

Inn on Oct 2-5 will now cost HK$2,805 [US$362] per night, 12 percent higher than booking this time last year,” it states.

Cheap, cheerful-ish At the lower end of the Macau tourism market, there’s been some restructuring, suggesting the mainland authorities and those in Macau are focusing more on quality tourism rather than pure quantity – partly as a way of protecting mainland consumers from exploitation. Two weeks ago Business Daily reported that under new rules implemented by the China National Tourism Administration, and taking effect from October 1, so-called ‘zero fare’ tours to Macau would be banned. These are package trips with either a very low or entirely free basic cost, but where participants are strongly encouraged or even pressured to buy souvenirs from certain shops,

with the agents and guides getting a commission on the sales. Cheong Chi Man, vice-president of Macau Travel Agency Association, told this newspaper it could lead to as “five percent to 10 percent” decrease in package visitors. Last week state-owned China Travel Service (Macau) Ltd said its new range of Macau tours launched next month would be 50 percent more expensive on average due to the new rules. Deutsche Bank’s Karen Tang said this week she didn’t expect the changes would have much effect on the gambling market “We think China’s new ban on ‘zero fare tours’ only impacts low-end day trippers to Macau,” she stated. Latest official data from the Statistics and Census Service show the city received more than 5.5 million package tour visitors in the first seven months this year, an increase of 12 percent year-on-year.

Corporate Grand Lisboa to host Business Awards gala Sociedade de Jogos de Macau named Ceremony Partner of Macau’s premier awards for business The 2013 Business Awards of the Year has announced Sociedade de Jogos de Macau, SA as the event’s official Ceremony Partner. The gala awards presentation and dinner will be held in the Grand Ballroom of the Grand Lisboa at a date yet to be confirmed. Business Awards of the Year chairman Paulo A. Azevedo said: “We are delighted to welcome a company of SJM’s calibre as we celebrate the best of Macau’s people and business community.” “By working with one of Macau’s most respected brands, the Business Awards of the Year will flourish, meeting its aim of rewarding the companies, institutions and individuals that contribute the most to the city’s development.” The Business Awards of the Year organising committee is expecting more than 200 guests at the gala dinner. The 2013 Business Awards of the Year organising committee can also announce that the Macau Government Tourism Office is a Platinum Sponsor of this year’s event. Banco Nacional Ultramarino SA has been named as a Silver Sponsor. The awards are a first for Macau. The winners will be selected by an independent panel of 27 members representing the business community, government and grassroots organisations. There are nine categories of awards: leadership, young entrepreneur, female entrepreneur, research achievement, innovation, corporate social responsibility, environmental performance, small and medium enterprise, and non-profit organisation. The jury for the 2013 Business Awards of the Year is comprised of some of Macau’s leading personalities, including politicians, entrepreneurs, academics and professionals from a range of industry sectors.

September 26, 2013 April 19, 2013

Greater China

Land revenue addiction pushes home costs up Vicious cycle complicating Chinese govt’s efforts to provide affordable housing

hinese cities, addicted to the money they raise by selling land to developers, are undermining the government’s multiyear campaign to contain housing costs. Municipal residential land deals, measured by area, rose 26 percent in the

first eight months of the year from the same period in 2012, according to China Investment Securities Co. The average price per square metre jumped 43 percent, pushing proceeds up 80 percent to 816.5 billion yuan (US$133 billion). Local officials rely on revenue from the sales to

repay debt, especially as economic growth slows. Developers bid up prices because demand from homebuyers remains strong. The cycle is driving property costs higher, complicating premier Li Keqiang’s task of preventing social unrest over the lack of affordable

housing amid a massive urbanisation programme. “If the momentum in the land market can’t be cooled down rather quickly, it’s actually a fairly dangerous signal,” Fu Bei, Standard & Poor’s Hong Kong-based property credit analyst, said in a phone interview. “Should it keep heating up, we’re worried there might be further policy tightening, and there could be consequences for the entire market that are unpredictable at this point.” The government has been trying to cool the housing market since April 2010, following a 14 percent jump in new home prices the previous year. The most-recent curbs, introduced in March by Mr Li’s predecessor, Wen Jiabao, included higher down-payment requirements and interest rates for secondhome mortgages in cities with “excessively fast” price gains. Thirty-five provincial cities set price-control targets, mostly capping increases at the growth rate of local disposable incomes.

Li’s hesitation Mr Li hasn’t taken additional steps as he seeks to rein in prices without hurting economic growth, which has slowed to less than 8 percent for five consecutive quarters. At the same time he has championed urbanisation as a “huge engine” of China’s future economy, a campaign that requires affordable housing for the millions of Chinese moving from rural areas to cities. His job is made harder as Chinese, disillusioned

Local Chinese officials rely on revenue from land sales to repay debt

by financial markets, keep buying property. The benchmark Shanghai Composite Index is down 58 percent since the end of 2007. New home prices in China’s four major cities rose the most since January 2011 last month from a year earlier, led by a 19 percent jump in Guangzhou, the National Bureau of Statistics said last week. They jumped 15 percent in Beijing and Shanghai. The central government’s efforts had a “limited restrictive effect” as local officials took “different attitudes” in implementing the requirements, according to a quarterly report on the Ministry of Land and Resources website July 16.

Land banks Builders have been buying more land to keep up with demand. China Vanke Co, the largest developer by sales, bought 3.4 million square meters of land in the first half of 2013, almost five times its purchases a year earlier, according to company filings. The average cost of land for new projects jumped 23 percent. Sun Hung Kai Properties Ltd, the Hong Kong-based developer that is the world’s biggest by market value, bought a site in Shanghai the following day for what S&P’s Ms Fu said was a “shocking” 21.8 billion yuan. That was the most spent for a single parcel of land in China this year, according to Centaline Group, parent of the nation’s biggest real estate agency. Bloomberg News

Alibaba to seek US listing after HK snub Talks with HK stock exchange break down over control of board nominations

hinese e-commerce company Alibaba Group Holding Ltd has decided to hold an initial public offering in New York after talks with Hong Kong regulators broke down over a listing in the Asian financial hub, two sources familiar with the discussions said yesterday. “We’ve come to the end of dialogue with Hong Kong and we’re pivoting to the U.S. to start the listing process,” a company source familiar with the discussions said. Alibaba has engaged United States law firms to start working on its initial public listing and will soon be hiring banks to manage it, added the company source, who was not authorised to speak publicly on the matter. Alibaba had asked the Hong Kong exchange to let its partners control a majority of board nominations, a person familiar with the matter said last month. That would enable Mr Ma, who owns 7.4 percent, and his management team to maintain control. Hong Kong’s bourse doesn’t allow

share classes with different voting rights, as the United States does. Such arrangements helped Zuckerberg and Google co-founders Larry Page and Sergey Brin keep control of their companies after they went public. Investment banks have valued Alibaba, founded by former English teacher Jack Ma, at as much as US$120 billion, which would make it the third-biggest Internet company behind Google Inc and Amazon.com Inc based on market capitalisation. Losing the Alibaba listing would be a blow to Hong Kong, which hasn’t hosted a first-time share sale of more than US$4 billion since October 2010. Alibaba could raise about HK$100 billion (US$12.9 billion) in an initial sale, Ernst & Young LLP said June 28. That would make it the world’s biggest IPO since Facebook raised US$16 billion in May of last year, and Hong Kong’s largest since AIA Group Ltd’s US$20 billion sale in October 2010, according to data compiled by Bloomberg. Reuters/Bloomberg

Investment banks have valued Alibaba at as much as US$120 billion

September 26, 2013 April 19, 2013

Greater China The data “reveal weakening gains in profits, revenues, wages, employment and prices, all showing slipping growth on-quarter – no disaster, but certainly not the powerful expansion suggested by the consensus narrative.”

Growth measures

Transportation, including shipping, had the biggest drop in people claiming a revenue hike

Beige Book contradicts expansion pickup data Rebound suggested by China official data ‘seriously flawed’, says report

hina’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed. Increases in businessinvestment and real estate revenue also slowed, while service industries picked up and employees became tougher to find, the survey from New York-based China Beige Book International

said on Tuesday. The report is based on responses from 2,000 people from August 12 to September 4 as well as 32 in-depth interviews conducted later in September. The quarterly report, modelled on the United States Federal Reserve’s Beige Book business survey, diverges from government figures showing faster July and August gains in factory production that have spurred analysts from

Citigroup Inc to Deutsche Bank AG to upgrade expansion estimates. Nomura Holdings Inc is among banks sceptical that any rebound will be sustained next year. The results “show the conventional wisdom of a renewed, strong economic expansion in China to be seriously flawed,” China Beige Book president Leland Miller and Craig Charney, research and polling director, said in a statement.

The report, like the Fed’s version, doesn’t give estimates of gross domestic product growth or other indicators beyond the survey results. The economy expanded 7.5 percent in the AprilJune period from a year earlier, slowing for a second quarter, according to China’s National Bureau of Statistics. The government has since introduced measures including faster railway spending and tax cuts to aid expansion. The first China Beige Book, from the second quarter of 2012, said the economy was picking up, a few months ahead of official data indicating a rebound. This year’s secondquarter report showed expansion slowing across the country and a decline in companies taking out loans. The latest survey said 47 percent of manufacturers reported revenue gains, down 6 percentage points from the second-quarter survey. Growth in export orders was “stable” for the United States and Europe and “off a bit” in Asia and developing nations outside of Asia. In transportation, including shippers, 51 percent of respondents said revenue rose, down 18 percentage points. Fifty-three percent of a broader sample of

businesses said investment rose, a 4-point decline. Service revenue rose for 57 percent of respondents, up 3 points. The survey said bankloan gains ebbed and borrowing costs declined while companies used nonbank channels more often. Forty-six percent of bankers said loans rose, down 14 percentage points from the prior survey, and there was a 20-point drop in the share expecting credit availability to ease in six months. The mean interest rate on all new loans fell 47 basis points to 6.63 percent, China Beige Book said. So-called shadow lenders’ share of financing rose to 29 percent of loans in the third quarter, up 5 percentage points, the survey said. Not all the China data showing a rebound have come from government sources. A Monday report from HSBC Holdings Plc and Markit Economics showed manufacturing strengthened more than estimated this month, mirroring an August increase in a similar government-produced index. China’s statisticsbureau chief, Ma Jiantang, said earlier this month that the agency has “zero tolerance” for falsified data after it publicised cases of manipulated local numbers and the customs bureau cracked down on fraudulent export invoices. Li Keqiang, who became premier this year, said in 2007 that gross domestic product figures were “manmade” and “for reference only,” according to a WikiLeaks cable. Bloomberg News

Smithfield agrees sale to Shuanghui Shareholders approve biggest US takeover by Chinese firm

Smithfield shareholders will receive US$34 cash for each share

mithfield Foods Inc shareholders on Tuesday approved the pork giant’s US$4.7 billion sale to Shuanghui International Holdings Ltd in what is shaping up as the biggest acquisition of a United States company by a Chinese firm. The closely watched transaction, valued at US$7.1 billion including debt, is expected to close today. The deal, which aims to satisfy China’s increasing appetite for pork, marries two of the world’s largest pork producers and had faced scrutiny over China’s highprofile food safety failures, concerns over American pork supplies and national security. But earlier this month, the United States Committee on Foreign Investment cleared the way for the deal, removing an important hurdle. More than 96 percent of the votes cast at a special Smithfield shareholder meeting on Tuesday were in favor of the acquisition. The votes cast represented 76 percent of Smithfield’s outstanding

common shares, the company said in a statement. Under the terms of the deal, Smithfield shareholders will receive US$34 cash for each share of Smithfield common stock they own. After the acquisition closes, Shuanghui must then decide the fate of Spanish packaged meats company Campofrio, of which Smithfield holds a 37 percent stake. Shuanghui can decide to buy the remaining stake in Campofrio which it does not own, or will have to reduce its position to less than 30 percent. Smithfield had previously held talks to acquire a controlling interest in Campofrio in 2011 but scrapped plans, citing a weak European economy. “We will comply with the applicable Spanish decrees on this matter,” said a spokesperson for Shuanghui International. “After closing our merger, we will notify the Spanish stock exchange commission of our intended actions in this regard.” Reuters

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September 26, 2013 April 19, 2013

Greater China

Fonterra brushes recall to step up China plan CEO sees own-brand milk formula in 70 Chinese cities in three years Naomi Tajitsu

onterra, the world’s largest dairy processor, is moving ahead with plans to launch its own branded milk formula in China, undeterred by a recent botulism scare and Beijing’s crackdown on foreign firms over alleged corrupt sales practices. Chief executive officer Theo Spierings told Reuters yesterday he expected the company’s Anmum brand of infant milk formula to be available in 70 cities in the world’s second-largest economy in 2-3 years as part of a plan to enter the country’s

lucrative formula market. “We reviewed our plans after the [botulism] crisis. We reviewed whether we should delay it, and we said ‘No’, so it’s full steam ahead,” Mr Spierings said, adding he was stepping up Fonterra’s China expansion, prioritising growth in its consumer brands and food services there over other regions. “In China (...) we’re going faster. In other geographies, in India, we’ve put some plans on hold. In Africa, we are only stepping up things in a limited way,” he said.

China is a magnet for foreign milk formula makers, with its US$12.4 billion market expected to double by 2017. Foreign firms are under scrutiny, however, after reports alleged companies bribed medical staff to recommend their products to new mothers. Authorities have also fined a group of mostly foreign milk formula producers US$110 million for price fixing. Fonterra recently launched Anmum infant formula in Guangzhou

province on a pilot basis via the company’s website, he said, adding it would be available in Hong Kong later this year. But Mr Spierings said the roll-out for Beijing and Shanghai would be delayed as Fonterra had yet to develop a retail presence in the capital, and still had to assess whether it could take on fierce competition in Shanghai. In pushing its own brand in China, New Zealand’s Fonterra Cooperative Group will be up against rivals such as Danone – a major customer whose brands command 9.2 percent of the Chinese market – and Mead Johnson.

Regaining trust Mr Spierings said more work had to be done to regain the trust of Chinese consumers in the wake of last month’s contamination scare, when Fonterra said it found a potentially fatal bacteria in one of its products, triggering recalls of infant milk formula and sports drinks in nine countries including China. New Zealand’s Ministry for Primary Industries later said tests showed the botulism scare had been a false alarm because whey protein concentrate made by Fonterra contained a less harmful bacteria. Fonterra, which controls nearly a third of the world dairy trade and generates around 7 percent of New Zealand’s gross domestic product, said it earmarked a NZ$14 million provision for the recall. “Consumers are still in angst mode, and sometimes they don’t really know what happened,” Mr Spierings said. “But we can’t solve that alone. We need positive voices also coming from the Chinese government and our customers. That’s what we’re doing right now.” Industry experts in China say the scare added to consumer uncertainty about the safety of foreign branded infant formula.

Fonterra is trying to regain the trust of Chinese consumers in the wake of a contamination scare

Reuters

Wheat prices hit record high as tight supply bites Rising domestic prices could stoke Chinese demand for imported wheat

hinese wheat prices have hit record peaks due to dwindling high-quality supplies and growing expectations state purchase prices will rise before the planting season begins next month. Beijing, keen to encourage farmers to grow more wheat for the 2014 harvest, is expected to announce an increase in the price it pays for grain for its national stockpiles before planting begins in October. Rising domestic prices could stoke Chinese demand for imported wheat, triggering another round of overseas purchases by the world’s top wheat producer, analysts said. “If the price gap widens further, China could step up imports from Australia, Canada and may also be interested in U.S. hard-red spring wheat,” said an industry analyst with an official think-tank. He declined to be named as he is not authorised to talk to the media. China has already bought more than 6 million tonnes of wheat from the United States – predominantly

soft-red winter wheat – as well as Australia after bad weather damaged domestic crops, the China National Grain and Oils Information Centre said this week. Prices for standard quality wheat reached 2,560 yuan (US$420) per tonne in the top growing region of Henan on Tuesday, up 9.4 percent since the latest harvest hit markets in June. High-quality wheat in the major consuming province of Guangdong reached 2,900 yuan per tonne, up 8.2 percent from June. The most-active Zhengzhou wheat futures for January 2014 delivery touched a record high of 2,885 yuan per tonne on Tuesday, but had eased to 2,845 yuan per tonne yesterday. Chinese prices in the south of the country make United States hard red spring wheat competitive even after tax and freight. “Wheat consumption comes to a seasonal peak around now, but supply is not promising. Wheat

Beijing is expected to pays more for grain for its national stockpiles

supply in the market is pretty tight,” said Zhang Weiwei, an analyst with New Era Futures. Flour mills typically step up purchases and build inventories ahead of traditional holidays in October. The market expects Beijing to

raise its minimum purchase price by 9 percent from last year’s price of 2,240 yuan per tonne, Zhang Weiwei said. Farmers are also holding back from selling in the hope that prices will push higher, analysts said. Reuters

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September 26, 2013 April 19, 2013

Asia

Thailand is the world’s third largest fish exporter by value

Migrants keep Thai fishing industry afloat Claims of forced labour, violence could lead to cuts in foreign aid

ifting through freshly caught sardines at a port in southern Thailand, Shi-Jai is one of thousands of migrant workers – including women and children – who keep the kingdom’s huge fishing industry in business. Each day a small army of labourers from countries including Myanmar and Cambodia – some legal, some undocumented – man

rusting trawlers or help offload and sort the catch at ports around the country. Shi-Jai, who hails from Myanmar’s Mon state, says she earns about US$10 a day at a port in Thailand’s insurgency-hit south. “It is not too much, but it is higher than I can earn at home,” she says as a stern-faced supervisor prowls along the line of women – and a handful

of children – sorting through the morning catch. The workers live in scruffy dormitory blocks close to the port in Pattani in Thailand’s deep south, where a near decade-long rebellion led by Muslim militants has claimed more than 5,700 lives. Thailand is the world’s third largest fish exporter by value, with sales worth around US$7

billion a year. But it is under international pressure to respond to reports of fishermen forced to work as virtual slaves under brutal conditions. Earlier this month the International Labour Organization (ILO) warned of “serious abuses” in the fishing industry such as forced labour and violence. Ten percent of respondents to an ILO survey reported being severely beaten on board boats, while more than a quarter said they worked or were on call between 17 and 24 hours a day. About 17 percent of the mainly undocumented Myanmar and Cambodian fishermen surveyed by the ILO in Thailand were forced to work under threat of financial penalty, violence or denunciation to the authorities. The European Union and United States, which are major markets for Thai seafood products, have vowed to jointly combat illegal and unregulated fishing. Thailand sits near the bottom of an annual US people trafficking report and must improve its efforts on combating forced labour or face relegation next year – which could trigger cuts in non-humanitarian and non-trade US aid. But for many migrant workers, high unemployment in their native countries is the biggest worry. “We can’t find work in Cambodia so we have to come here,” said 21-year-old fisherman Makaa, whose weather-beaten face gives him the appearance of a much older man. “Some people have work permits, some don’t... but we all need jobs,” he said. AFP

Vietnam economic growth up this year But ‘strong measures’ needed to meet annual target, central bank warns

ietnam’s economic growth picked up slightly in the first nine months of the year, official figures showed yesterday, but experts warned the communist country could still miss its annual target. Gross domestic product (GDP) grew 5.14 percent in the first three quarters of 2013 from a year earlier, according to preliminary data

from the Ministry of Planning and Investment, compared with 4.73 percent for the same period in 2012. This year’s growth rate is “moderate, within control and acceptable”, said independent analyst Cao Sy Kiem, a former governor of Vietnam’s central bank. But he said the authorities would have to take “really strong measures” if they are to meet their

goal of economic growth of around 5.5 percent for 2013, after a 13-year low of 5.03 percent in 2012. According to an online report from the Ministry of Planning and Investment, much of the JanuarySeptember GDP growth was due to the service sector, which was up 6.25 percent. Meanwhile inflation fell for the first time in four months in September, to 6.30 percent year-on-year, from 7.50 percent in August, according to figures released Wednesday by the General Statistics Office. Communist Vietnam is struggling

with a host of economic woes, including sluggish domestic demand, a banking sector weighed down with high levels of toxic debt and record numbers of bankruptcies. In May, the central bank cut interest rates for the eighth time in little more than a year in an attempt to spur bank lending and boost consumption. The authorities repeatedly raised interest rates in 2011 to cool down the economy and to rein in double-digit inflation, but last year were forced to reverse course and resort to stimulus measures. AFP

12 12

September 26, 2013 April 19, 2013

Asia

Higher sales tax to avert debt disaster Japan’s economic recovery has failed to chip away at its debt pile: expert

apan must raise its sales tax to at least 20 percent by the time the Olympics come to Tokyo in 2020 to avert a “disaster” in its bond market, according to the head of a panel advising the world’s biggest pension fund. The consumption levy, due to increase in April for the first time since 1997, will need to quadruple from current levels to handle Japan’s increasing welfare costs and rein in the nation’s debt, said Takatoshi Ito, who leads an investment panel for the 121 trillion yen (US$1.23 tr i l lion) G over nme n t Pe n sion Investment Fund. He said funds like the one he leads are at risk of being too dependent on Japanese government bonds, where 10-year yields of 0.675 percent are the lowest globally. Prime minister Shinzo Abe is expected to decide next month if Japan’s economy can weather an increase in the tax to 8 percent in April. Current rates of 5 percent are

a fifth of the value-added taxes imposed in Nordic countries like Sweden, and need to be raised to prevent the implosion of a debt burden that’s more than double the size of Japan’s economy, Mr Ito said. “There is a narrow path to escape from the disaster,” Mr Ito, the dean of Tokyo University’s Graduate School of Public Policy, said in an interview Tuesday. “The good news is that there is a big fiscal space to increase taxes.” Mr Abe will announce his decision on October 1 after the release of the Bank of Japan’s Tankan survey of business sentiment. The central bank unveiled an unprecedented monetary stimulus program in April, saying it would double monthly government bond purchases to more than 7 trillion yen in pursuit of a 2 percent inflation target. The easing has kept a lid on bond yields as it helped Japan’s exporters by sending the yen to a 4 1/2-year low of 103.74 per dollar in May.

Applied Materials to buy Tokyo Electron

Even as Japan’s economy recovers from the effects of an earthquake and nuclear crisis in 2011, it hasn’t begun to chip away at its debt pile. Government obligations will grow to 245 percent of economic output this year, the highest ratio globally. While more than 90 percent of government bonds are held domestically, Japan’s declining population and expanding welfare expenses mean that the country will eventually lose the ability to fund its debts, Mr Ito said. Without an increase in the tax rate toward 20 percent or higher by 2020, “my prediction is that a big disaster happens in 2023,” he said, citing projections for household wealth and government borrowing. Sales tax increases are the way to reform Japan’s finances because they don’t affect growth as much as levies on household or corporate income and they don’t transfer costs onto future generations, according to Mr Ito. Bloomberg News

Applied Materials Inc, the largest chipmakingequipment supplier, agreed to acquire Tokyo Electron Ltd for US$9.39 billion in stock in the largest overseas deal for a Japanese company in six years. Gary Dickerson, who was promoted to chief executive officer of Applied Materials this month, will also lead the combined manufacturer, the companies said in a statement Tuesday. Applied Materials shareholders will own 68 percent of the new entity. Mr Dickerson is moving to consolidate the industry across continents amid slowing demand for equipment used to prepare silicon during the early stages of chip fabrication.

Australia’s Telstra to cut 1,100 jobs Australia’s largest phone company, Telstra Corp Ltd, said yesterday it will cut 1,100 jobs, or around 3.6 percent of its Australian workforce, by mid-2014 as part of a company-wide restructuring. Telstra said the jobs would be cut from its operations division and some customer services, but would not affect the Network Applications and Services division. The latest cuts follow the announcement of 170 job losses in July due to a shift in back office operations to India. Telstra chief operations officer Brendon Riley said it was reducing headcount to adapt to changing technologies and industry restructuring.

Samsung to unveil curved display phone Samsung said yesterday it would unveil a smartphone with a curved display in October – a technological innovation aimed at maintaining its lead in an increasingly saturated market. Curved displays are at a nascent stage in display technology which is shifting towards flexible panels that are bendable or can even be rolled or folded. “We will introduce a smartphone with a curved display in October,” Samsung mobile business head of strategic marketing D.J. Lee told reporters. Samsung – the world’s top maker of smartphones and TVs – unveiled prototype products with a flexible screen in January.

Hyundai, Kia extend car brake recall Hyundai Motor and its affiliate Kia Motors said they are recalling about 660,000 vehicles in South Korea to fix a faulty brake switch, with further recalls in other countries possible. The recall, which involves models such as Hyundai’s Genesis and Azera large-size sedans, extends a problem that has already affected over two million cars and is the largest in South Korea since the current recall system was introduced in 2003, the transport ministry said. In April, Hyundai and Kia recalled more than 1.8 million vehicles in the United States because of the same issue.

Japanese pay a sales tax of 5 percent, much lower than in other developed countries

EDITORIAL COUNCIL Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok FOUNDER & PUBLISHER Paulo A. Azevedo | pazevedo@macaubusinessdaily.com EDITOR-IN-CHIEF Tiago Azevedo DEPUTY EDITOR-IN-CHIEF Vitor Quintã ASSOCIATE EDITOR Michael Grimes GROUP SENIOR ANALYST José I. Duarte NEWSDESK Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee CREATIVE DIRECTOR José Manuel Cardoso WEB & IT Janne Louhikari CONTRIBUTORS James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani PHOTOGRAPHY Carmo Correia, Manuel Cardoso ASSISTANT TO THE PUBLISHER Laurentina da Silva | ltinas@macaubusinessdaily.com OFFICE MANAGER Elsa Vong | elsav@macaubusinessdaily.com AGENCIES Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate PRINTED in Macau by Welfare Ltd.

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September 26, 2013 April 19, 2013

Asia

Asian tycoons’ wealth close to North Americas’ W

The maritime industry contributes about 7 percent of Singapore’s economy

Singapore pouring billions into port to rival Shanghai City-state faces rising competition from neighbours Sharon Chen

ingapore plans to almost double its container port capacity after Shanghai overtook the nation to become the world’s busiest harbor, part of prime minister Lee Hsien Loong’s push for an economic and popular revival. The plan may spur yearly growth of 5 percent and port building costs could top S$10 billion (US$8 billion), said Vishnu Varathan, an economist at Mizuho Bank Ltd in Singapore. The government is spending at least S$8.8 million this fiscal year on the project, which involves moving terminals to free 1,000 hectares for development and building a larger facility at Tuas in the southwest. The country faces rising competition from neighbouring ports, greater congestion as its population is set to climb toward 6.9 million by 2030 and record property prices that add pressure for more homes on an island smaller than New York City. The harbour plan shows the island isn’t running out of space or potential, Mr Lee said in a speech to the nation in August. “It’s out of necessity,” said Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd. “You don’t want your business to spill over to the other ports. You want to strengthen this position as a trading hub in the region.” Mr Lee’s People’s Action Party is trying to reverse an erosion of its electoral dominance amid unease

about overcrowding and economic prospects, said Cherian George, an adjunct fellow at Singapore’s Institute of Policy Studies. Growth in the US$275 billion economy hit a three-year low of 1.3 percent in 2012.

Reaching capacity The government said in the budget that it’s allocating the initial project funds in the year ending March for preparations toward land reclamation. It has said that some berths at the unified and expanded container terminal at Tuas may be ready as soon as 2022. The deepwater port will eventually have capacity for 65 million standard 20-foot containers a year, according to Transport minister Lui Tuck Yew. PSA International Ltd, Singapore’s biggest container-port operator, says it can handle 35 million on the island currently. The maritime industry contributes about 7 percent of gross domestic product, a government website shows. Terminals from Asia to Europe face the need for deeper ports and bigger cranes as carriers roll out ever larger ships. Located at the southern end of the 965-kilometre Malacca Strait, Singapore handled almost 32 million containers in 2012.

That’s the most in the world after Shanghai, data from Londonbased periodical Containerisation International shows. The island’s average annual container traffic growth is 5.3 percent and reaching capacity in the terminals near the central business district, said Jason Chiang, a senior manager at Drewry Shipping Consultants Ltd in Singapore. The island lies on one of the world’s busiest trading routes and has acted as a way point for vessels ferrying goods to and from the West since Thomas Stamford Raffles founded a free port in 1819. Terminals built near the city centre from the 1970s helped Singapore become a key transshipment hub, where cargo is shifted between larger and smaller carriers for onward transport. Since then, regional competition has intensified. Shanghai overtook Singapore in 2010, Malaysian harbours such as Johor’s Port of Tanjung Pelepas have offered lower fees and Indonesia is expanding its busiest port to give more ships the option of sailing directly instead of through Singapore. Harbour consolidation will boost productivity and save on costs by reducing the need for trucks to ferry goods between different terminals, said Sam Ang, Southeast Asia Chief Executive Officer of DHL Global Forwarding. Bloomberg News

ealth among Asia-Pacific millionaires may top that among North Americans as soon as next year as Japanese economic growth boosts investor returns in the country, a report by Cap Gemini SA and Royal Bank of Canada showed. Asians with at least US$1 million in investable assets are expected to see their riches climb to US$15.9 trillion by 2015 from US$12 trillion last year, according to the 2013 Asia-Pacific Wealth report, released yesterday. North American high net-worth individuals held US$12.7 trillion in 2012. Japan, the world’s bestperforming major stock market this year, accounts for more than half of Asia’s millionaires and will drive regional prosperity as prime minister Shinzo Abe’s economic stimulus policies aim to reverse 15 years of deflation, the report showed. The country last year posted a 5.2 percent expansion in millionaire wealth, the slowest among 18 Asian countries tracked in the study. “Despite its lacklustre growth in recent years, Japan remains a strong force in the market,” the report stated. Improved market prospects may encourage rich Japanese “to shift their asset allocation from cash to equities, spurring further wealth growth in mature Asia.” Asia-Pacific millionaires expanded their assets at an annual rate of 4.9 percent in the five years to 2012, three times faster than expansion in North America, home to the largest concentration of millionaire wealth, according to the report. The number of high net-worth individuals in the Asia-Pacific region grew 9.4 percent to 3.68 million last year, slipping to second behind North America, which rose 11.5 percent from a year earlier to 3.73 million, according to the 17th annual World Wealth Report published in June. Asia-Pacific’s slower millionaire population increase last year is expected to be temporary. Bloomberg News

Hong Kong’s Li Ka Shing is considered Asia’s richest man

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September 26, 2013 April 19, 2013

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

Max 54.45

average 53.972

Min 53.3

Last 53.7

54.5

81.0

54.2

80.5

53.9

80.0

53.6

79.5

53.3

24.9

Max 80.55

average 80.141

Min 79.5

Last 48.6

PRICE

21.15

26.0

47.4

25.8 20.65

Max 21.35

average 21.133

103.18

0.048482498

10.37655113

111.3399963

85.79000092

BRENT CRUDE FUTR Nov13

109

0.331369661

3.572786013

115.7599945

96.19999695

GASOLINE RBOB FUT Oct13

266.97

0.394855596

2.605788078

298.210001

246.6799974

GAS OIL FUT (ICE) Nov13

913.5

0.82781457

1.050884956

980.25

837

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3.521

0.830469645

-3.002754821

4.525000095

3.154000044

297.01

0.307328605

-0.695442843

322.8999853

276.1999846

Gold Spot $/Oz

1321.57

0.4775

-20.6007

1796.08

1180.57

Silver Spot $/Oz

21.6208

0.6555

-28.194

35.365

18.2208

Platinum Spot $/Oz

1429.3

0.2244

-5.8277

1742.8

1294.18

Palladium Spot $/Oz

WTI CRUDE FUTURE Nov13

NY Harb ULSD Fut Oct13

(H) 52W

Min 20.5

Last 21.3

(L) 52W

720.65

0.7409

786.5

587.4

LME ALUMINUM 3MO ($)

1796

-1.182943604

-13.36227689

2184

1758

LME COPPER 3MO ($)

7147

-1.352657005

-9.885260371

8379.75

6602 1811.75

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13 Dec13

WHEAT FUTURE(CBT) Dec13

1875

-1.055408971

-9.855769231

2230

13750

-1.433691756

-19.4021102

18920

13205

15.45

-0.226025186

0.227051573

16.65000153

14.77000046

450.75

0.445682451

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647

445.75

661.5

0.493733384

-19.40298507

913

635.5

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1316.75

0.323809524

1.074649779

1409.5

1162.5

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117.55

-0.254560882

-24.86417386

200

113.9499969

20.40

COUNTRY MAJOR

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

ASIA PACIFIC

CROSSES

25.7 Max 26.1

average 25.964

Min 25.6

Last 26

25.6

NAME

PRICE

SUGAR #11 (WORLD) Mar14

17.95

0.111544897

-12.77939747

22.14999962

16.69999886

ARISTOCRAT LEISU

84.7

0.379236786

7.569215138

93.72000122

74.34999847

CROWN LTD

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9343 1.5993 0.9111 1.3495 98.55 7.986 7.7539 6.1195 62.645 31.335 1.256 29.586 43.425 11490 92.077 1.22956 0.8438 8.2535 10.7779 133 1.0299

-0.4263 0.0688 0.1098 0.0964 0.3044 -0.0013 -0.0077 -0.0016 0.1995 0.1117 -0.0239 0.0068 0 -0.148 0.732 0.013 -0.0284 0.1321 -0.103 0.2105 0.0097

-9.973 -1.1313 0.472 2.3124 -12.6332 -0.0351 -0.0426 1.8155 -12.2117 -2.4094 -2.7548 -1.8691 -5.5728 -14.7694 -2.9866 -1.7958 -3.3634 -0.4362 -2.2964 -14.609 0

1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3083 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

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

Macau Related Stocks

COTTON NO.2 FUTR Dec13

NAME

25.9

20.90

YTD %

CORN FUTURE

24.7

48.6

DAY %

LME ZINC

Last 25

Currency Exchange Rates

NAME

METALS

Min 24.75

26.1

Commodities ENERGY

average 24.906

21.40

47.7 Min 47.45

Max 25

48.9

48.0

average 48.543

24.8

79.0

Last 79.9

48.3

Max 48.9

25.0

DAY %

YTD %

(H) 52W

(L) 52W

4.5

1.351351

15.53

0.06443299

VOLUME CRNCY

42.85714

4.7

2.56

2589658

45.54827

16.08

8.92

993867

AMAX HOLDINGS LT

1.33

3.100775

-4.999998

1.72

0.75

2953425

BOC HONG KONG HO

25.15

0.1992032

4.356845

22.85

8034259

CENTURY LEGEND

0.45

-2.173913

69.81133

0.56

0.23

1200000

CHEUK NANG HLDGS

6.48

1.886792

8.180305

6.74

3.67

34137

CHINA OVERSEAS

23.45

1.51515

25.6

17.7

12244701

CHINESE ESTATES

17.88

1.016949

58.99625

18.12

8.168

98000

CHOW TAI FOOK JE

11.24

0.7168459

-9.646299

13.4

7.44

3466000

EMPEROR ENTERTAI

3.48

7.739938

84.12699

3.55

1.43

4454470

FUTURE BRIGHT

2.54

109.5664

2.76

1.103

228000

GALAXY ENTERTAIN

53.7

0.4677268

76.93575

24.1

13399918

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15334.59

-0.4336624

17.02096

15709.58

12471.49

NASDAQ COMPOSITE INDEX

3768.254

0.07877219

24.79672

3798.76

2810.8

FTSE 100 INDEX

6542.27

-0.4441935

10.92711

6875.62

5605.589844

127

0.4746835

6.992421

132.8

110.6

978120

DAX INDEX

8618.56

-0.5313575

13.21752

8770.1

6950.53

HOPEWELL HLDGS

25.95

1.169591

-21.95489

35.3

23.2

1556000

NIKKEI 225

14620.53

-0.7607613

40.64721

15942.6

8488.14

HSBC HLDGS PLC

HANG SENG INDEX

23209.63

0.1319727

2.43948

23944.74

19426.35938

CSI 300 INDEX

2429.03

-0.6078437

-3.722698

2791.303

2023.171

TAIWAN TAIEX INDEX

8283.9

-0.1833929

7.590108

8439.15

7050.05

KOSPI INDEX

1998.06

-0.4504011

0.05057508

2042.48

1770.53

S&P/ASX 200 INDEX

HANG SENG BK

85.15

-0.6997085

4.735543

90.7

72.1

14136497

HUTCHISON TELE H

3.45

-1.146132

-3.089886

4.66

2.98

6374026

LUK FOOK HLDGS I

24.65

1.024592

30.05

16.88

703000

MELCO INTL DEVEL

20.95

2.195122

132.5194

21.2

6.55

4088164

MGM CHINA HOLDIN

1.010101

88.27741

25.15

12.18

7252955

MIDLAND HOLDINGS

3.23

-12.7027

2.68

746000

NEPTUNE GROUP

0.185

1.648352

21.71053

0.23

0.131

30450000

NEW WORLD DEV

12.02

0.1666667

15.12

9.98

14374507

SANDS CHINA LTD

48.6

1.780105

43.15169

49.8

26.35

15883527

SHUN HO RESOURCE

1.7

21.42857

1.92

1.19

4.29

2.386633

4.65

2.92

2331575

5275.939

0.7981602

13.48667

5300.1

4334.3

4381.127

-1.777548

1.49281

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1783.78

-0.4853611

5.614736

1826.22

1590.67

NZX ALL INDEX

1001.081

0.6303716

13.49443

1004.229

834.309

SHUN TAK HOLDING

PHILIPPINES ALL SHARE IX

3853.54

-0.5650971

4.178451

4571.4

3440.12

SJM HOLDINGS LTD

JAKARTA COMPOSITE INDEX

21.3

2.898551

20.01584

22.382

15.815

8139683

10.46

-1.506591

-25.71023

16.22

9.97

3280337

WYNN MACAU LTD

1.761252

24.10501

26.5

3044276

ASIA ENTERTAINME

3.83

1.591512

36.07216

4.7647

2.4835

133040

73.53

-0.836143

64.45986

76.3

43.16

489014 3389

SMARTONE TELECOM

HSBC Dragon 300 Index Singapor

619.7

-0.24

-0.22

STOCK EXCH OF THAI INDEX

1415.75

-0.1424773

1.711289

1649.77

1260.08

HO CHI MINH STOCK INDEX

486.22

0.7041962

17.52109

533.15

372.39

BALLY TECHNOLOGI

Laos Composite Index

1298.19

2.160963

6.867137

1455.82

1038.79

BOC HONG KONG HO

3.17

3.257331

3.6

2.99

GALAXY ENTERTAIN

6.95

-1.517621

75.06297

7.16

3.11

7700

INTL GAME TECH

20.87

0.2883229

47.28299

21.2

12.37

2782478

JONES LANG LASAL

86.45

-1.2

2.990228

101.46

72.56

352335

LAS VEGAS SANDS

66.1

2.037666

43.19757

66.5

37.8353

6052020 1720991

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

MELCO CROWN-ADR

30.91

-0.03234153

83.55107

31.95

12.72

MGM CHINA HOLDIN

3.18

81.68404

3.18

1.5895

6300

MGM RESORTS INTE

20.14

1.409869

73.02405

20.41

9.15

7752374

SHFL ENTERTAINME

22.96

58.34483

23.08

12.35

936302

SJM HOLDINGS LTD

2.72

-0.3663004

19.42311

2.9481

2.0311

132409

156.12

0.7030897

38.78567

157.49

103.0933

698259

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

37.1

0.6784261

19006644

CHINA UNICOM HON

ALUMINUM CORP-H

2.83

3.284672

42776146

CITIC PACIFIC

BANK OF CHINA-H

3.61

0.2777778

245443993

CLP HLDGS LTD

BANK OF COMMUN-H

5.86

-0.3401361

29494772

BANK EAST ASIA

33.1

1.223242

4959474

COSCO PAC LTD

BELLE INTERNATIO

11.56

-0.1727116

9642965

ESPRIT HLDGS

BOC HONG KONG HO

25.15

0.1992032

8034259

HANG LUNG PROPER

CATHAY PAC AIR

15.36

-0.6468305

3226983

CHEUNG KONG

119.2

0.2523129

2741845

CHINA COAL ENE-H

4.75

-3.258656

74968720

CHINA CONST BA-H

6.15

0.4901961

173505110

CHINA LIFE INS-H CHINA MERCHANT CHINA MOBILE

-0.2375297

17575346

28.8

4.423495

9116320

NAME

PRICE

DAY %

VOLUME

12.24

0.3278689

17088911

PING AN INSURA-H

9.85

-1.005025

4866596

POWER ASSETS HOL

63.9

-0.3120125

2701124

SANDS CHINA LTD

15.8

35480004

SINO LAND CO

12.32

1.650165

11604551

SUN HUNG KAI PRO

12.14

-0.8169935

1796533

-0.952381

5486224

HANG SENG BK

127

0.4746835

978120

HENDERSON LAND D

48.2

0.7314525

2881613

0.5405405

1829409

18.52

0.4338395

6022984

CNOOC LTD

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG

126.4

-1.172791

3732367

HSBC HLDGS PLC

85.15

-0.6997085

14136497

88.3

0.7415859

11316542

HUTCHISON WHAMPO

93.8

-0.2658161

3012933

23.45

12244701

IND & COMM BK-H

5.61

0.7181329

266423203

CHINA PETROLEU-H

6.15

0.6546645

85131391

LI & FUNG LTD

11.78

-1.174497

11233715

CHINA RES ENTERP

25.25

0.3976143

1867239

30.5

1.328904

2535922

CHINA OVERSEAS

MTR CORP

CHINA RES LAND

22.05

-2.217295

10785412

NEW WORLD DEV

12.02

0.1666667

14374507

CHINA RES POWER

18.26

0.9955752

6515578

PETROCHINA CO-H

8.68

-0.4587156

59801520

CHINA SHENHUA-H

24.3

-1.818182

22888666

NAME

PRICE

DAY %

VOLUME

58.75

-1.343409

11345052

67.9

-0.2936858

1607708

48.6

1.780105

15883527

11.54

1.050788

4385056

105.6

0.09478673

3794608

SWIRE PACIFIC-A

92.85

-0.2149382

933887

TENCENT HOLDINGS

409.6

1.738698

2692157

TINGYI HLDG CO WANT WANT CHINA

MOVERS

20.6

-1.199041

8522619

12.42

-0.1607717

10980148

23560

INDEX 23209.63 HIGH

23502.51

LOW

23117.41

52W (H) 23944.74 (L) 19426.35938

23110

23-September

25-September

15 15

September 26, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Jakarta Post

Women and the world economy Christine Lagarde

Managing Director of the International Monetary Fund

Commercial banks should increase their equity capital from as little as three percent now to between 15 and 30 percent of total assets to discourage them from taking excessive risks with other people’s money, Anat Admati, a member of the American Federal Deposit Insurance Corporation, asserted on Tuesday. “We will never have a safe and healthy financial system until banks are forced to rely more on money from their owners,” said Ms Admati.

Korea Herald The global ranking of South Korea’s nominal gross domestic product (GDP) stayed flat at 15th for the fifth straight year in 2012, data compiled by the World Bank showed yesterday. Korea’s nominal GDP was valued at US$1.13 trillion in 2012, up from US$1.11 trillion in the previous year, according to the international organisation. Korea’s GDP ranking reached 13th in 2006 and 2007 before declining to 15th in the midst of the global financial crisis.

Straits Times There are four major uncertainties facing global economies today, from the problems affecting the United States economy to the growing tension between the younger and older generations, said Singapore’s deputy prime minister Tharman Shanmugaratnam. One major source of uncertainty in the world today is the issues facing the United States economy, he said. The way markets react to decisions and forward guidance by the Federal Reserve can be destabilising, he added.

Thanh Nien Vietopia, Asia’s largest indoor “edutainment” city, is slated to open soon. The US$25-million project by HimLam Vietnamese Kid Intelligence Development JSC is located in an area of more than 30,800 square metres. Vietopia simulates a real city with an airport, hospitals, fire stations, banks and even a space research institute. The “city” presents more than 70 typical jobs and more than 100 child-friendly firstperson vocational activities. It can receive 3,500 children every day.

n many countries, public debate about gender equality focuses mainly on women’s access to top positions and high-powered career opportunities. But the “glass ceiling” is only a small part of the issue. The broader question is whether women have the same opportunities as men to participate in labor markets in the first place. In other words, are women empowered to contribute fully to global economic growth and prosperity? Unfortunately, the International Monetary Fund’s latest study by its staff, “Women, Work, and the Economy,” shows that, despite some improvements, progress toward levelling the playing field for women has stalled. This is bad news for everyone, because it translates into lower economic growth – amounting to as much as 27% of per capita GDP in some countries. Around the world, the number of women in the workforce remains far below that of men; only about half of working-age women are employed. Women account for most unpaid work, and when they are paid, they are overrepresented in the informal sector and among the poor. They continue to be paid less than men for the same jobs, even in OECD countries, where the average gender wage gap is about 16%. And in many countries, distortions and discrimination in the labor market restrict women’s chances of equal pay and rising to senior positions. The potential gains from a larger female workforce are striking. In Egypt, for example, if the number of

female workers were raised to the same level as that of men, the country’s GDP could grow by 34%. In the United Arab Emirates, GDP would expand by 12%, in Japan by 9%, and in the United States by 5%. According to a recent study based on data from the International Labour Organization, of the 865 million women worldwide who could contribute more fully to their economies, 812 million live in emerging and developing countries. Raising women’s labourmarket participation rate boosts economic performance in a number of ways. For example, higher incomes for women lead to higher household spending on

Legal, regulatory, and social discrimination against women in many countries still prevents them from seeking paid work in the formal sector

educating girls – a key prerequisite for faster longterm growth. Employment of women on an equal basis with men provides companies with a larger talent pool, potentially increasing creativity, innovation, and productivity. And, in advanced countries, a larger female labor force can help to counteract the impact of a shrinking workforce and mitigate the costs of an aging population. So what underlies the persistence of gaping inequality and stalled progress? Legal, regulatory, and social discrimination against women in many countries still prevents them from seeking paid work in the formal sector. As a result, women dominate the informal economy, where jobs are often transient and earnings are low. In addition, tax systems and socialwelfare programs in many countries are designed in ways that discourage women from working. Against this background, government tax and spending policies, as well as labourmarket regulation, should be reformed to help boost female employment. For example, taxing individual rather than family income – which in many economies imposes a higher marginal tax on the second earner in households – would encourage women to seek employment. Linking social-welfare benefits to participation in the workforce, training, or active labourmarket programmes also can help, as can affordable, highquality childcare and greater opportunities for paternity and maternity leave. In Brazil,

for example, the share of women in the workforce has risen sharply over the past 20 years, from about 45% to almost 60%, owing in part to family-friendly policies. These are just a few examples; far more can be done. Women benefit when flexible work arrangements are introduced and the barriers between part-time and fulltime work contracts are lowered, as the Netherlands has successfully done. In developing countries, accessible water and better transportation systems in rural areas can help women manage their time better. Establishing and upholding equal property and inheritance rights can increase women’s access to credit and other productive resources, and creating greater awareness of legal rights in general will help reduce discrimination. Some of these steps have been taken in recent years, but is time to jumpstart the process. We urge policymakers to take action and implement policies aimed at removing the obstacles that block women’s participation in th e w o r k f o r c e . W e a t the IMF will do our part by enhancing our analysis of the economic effects of gender inequality and working with our member countries to enable women to contribute fully to global economic growth and prosperity. Especially now, with the growth outlook uncertain in much of the world, policies that encourage more women to enter the workforce certainly can help. Women are ready, willing, and able. Take my word for it.

16 16

September 26, 2013 April 19, 2013

Closing Big banks cut Basel shortfall

Sweden sells Nordea bank share

The largest global banks cut the shortfall in the reserves they will need to meet Basel capital rules by 82.9 billion euros (US$112 billion) in the second half of 2012, leaving a gap of 115 billion euros. “Shortfalls in the riskbased capital of large internationally active banks continue to shrink,” the Basel Committee on Banking Supervision said in a statement on its website. The biggest European lenders account for a large part of the remaining shortfall, according to data published yesterday by the European Banking Authority.

Sweden said yesterday it had sold its remaining 7.0-percent share in the country’s largest bank, Nordea, for 21.6 billion kronor (US$3.4 billion). “The revenue from the sale will be used to reduce the public debt,” the government said in a statement. The sale was one of the final chapters in a massive restructuring of Sweden’s banking sector set in motion in the early 1990s when the nation was hit by a severe financial crisis. Financial Markets minister Peter Norman said “the state’s role is to regulate banks, not own them”.

France says public debt to hit record in 2014 Major cuts on public spending not enough to meet EU deficit target

F JPMorgan is facing probes over sale of bonds backed by risky home loans

JPMorgan in talks to settle mortgage probes Troubled bank tries to move past its recent legal issues

PMorgan Chase & Co, facing several investigations into its mortgage practices, is seeking a global settlement with American government authorities in multiple jurisdictions, a person familiar with the matter said on Tuesday. Negotiations have resumed with the United States Department of Justice after federal prosecutors in California delayed a plan to file a lawsuit there on Tuesday. The global settlement would cover probes of JPMorgan’s mortgage business, as well as investigations of similar operations it inherited from other banks during the financial crisis. The investigations include civil and criminal authorities from the Department of Justice. The California case involved the sale of bonds backed by subprime mortgages and other risky home loans between 2005 and 2007. The California negotiations initially broke down over the amount the bank would pay as a penalty, sources said. Meanwhile, the Department of Housing and Urban Development took issue on Tuesday with a report in another publication that the agency was seeking a US$20 billion settlement

from the bank over its mortgage practices. The housing agency said that was “categorically false.” “The department takes the allegations against JPMorgan Chase seriously and has been involved in multi-party negotiations to reach a settlement. However, no one at this agency – including the secretary – ever floated a US$20 billion settlement figure,” Housing and Urban Development general counsel Helen Kanovsky said. The Housing and Urban Development’s involvement in the talks suggest that both sides want to resolve multiple investigations in a larger settlement, according to people familiar with the matter. Experts said the new move toward settlement talks appeared to be driven by a strong desire within the bank to move past its legal troubles as quickly as possible, but the Justice Department likely has the upper hand in the talks, given how close it came to filing the suit. JPMorgan disclosed in August that California civil authorities had told the bank in May they had preliminarily concluded it violated federal securities laws. Reuters

rance said yesterday its public debt would hit a record 95.1 percent of gross domestic product in 2014, far higher than previous estimates, as it unveiled next year’s draft budget for the embattled eurozone economy. But the government said debt should fall back in 2015, and reiterated a pledge to meet its European Union-mandated deadline to bring the public deficit below three percent that year. The draft budget was presented to the cabinet by Finance minister Pierre Moscovici and Budget minister Bernard Cazeneuve, who outlined “unprecedented” 15-billion-euro (US$20-billion) cuts in public spending as France tries to rein in its public deficit without compromising growth. The country is battling to rekindle tepid economic growth back amid record-high unemployment, limited investment and low consumer spending. Some 80 percent of fiscal savings next year will come from cuts in public spending and 20 percent from a rise in taxes, the ministers said. These decisions are based on an estimated 0.9 percent rise in gross

domestic product next year, close to a consensus of 0.8 percent amongst French economists. France aims to trim the budget shortfall to 3.6 percent of gross domestic product next year from 4.1 percent this year and 4.8 percent in 2012. The 2013 figure is bigger than the 3.9 percent envisioned by the European Commission in May. “The reaction from Brussels on the budget will set the tone of things to come,” said Philippe Gudin, chief European economist at Barclays Capital and a former official in the French finance ministry. “The retirement reform was disappointing compared with what could have been done – you almost hesitate to call it a reform.” The pension plan put forward by François Hollande’s government involves lengthening work lives between 2020 and 2035, requiring 43 years of contributions for a full pension at the end of the period, up from 41 years now. Yet it avoids lifting the retirement age from the current minimum of 62 or cutting the increase in pension payouts to less than inflation, opting instead to lift contributions starting next year. AFP/Bloomberg

François Hollande, French president