MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo
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Minimum wage could wipe off profit margins C
leaning and security companies will see their profit margins decline by up to 7.1 percent if they have to pay a minimum of 30 patacas (US$3.75) an hour to their employees, a study predicts. The firms surveyed said they would feel the pinch while the building management fees paid by households could also rise by up to 17.3 percent. The government has proposed a minimum wage between 23 patacas
‘Step out’ from crowds, govt tells visitors Page 5
Japan next item in Melco’s to-do list Page 8
and 30 patacas an hour for all cleaners and security guards, both residents and non-residents. The proposal is up for discussion during a 45-day public consultation starting today. The Labour Affairs Bureau wants to have all the consultation works wrapped up this year but there is no timetable for when the law might be out. And there are no plans to introduce a citywide minimum wage, Wong Chi Hong, head of the Labour Affairs Bureau, hinted yesterday. More on page 2
Year II
Number 381 Monday September 30, 2013
Pansy Ho pledges1 to sustainable tourism
April 19, 2013
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Election results shake off court appeals
Solid waste on hold as legal battle rages on
The Court of Final Appeal agreed to have 51 spoiled votes in the September 15 Legislative Assembly election counted as valid. But in the end it counted for little. José Pereira Coutinho’s ticket managed to keep hold of the last of the 14 directly elected seats, which went to Leong Veng Chai. Chan Meng Kam’s candidacy got a further 36 votes.
The government says it will not sign a new 10-year contract with Macau Waste Systems Co Ltd, known as CSR, due to an appeal filed by another company in the running for the city’s solid waste management contract. With just one month to go before CSR’s current deal expires, the company is likely to get a fourth extension.
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September 27
HSI - Movers Name
%Day
TENCENT HOLDINGS
2.15
HANG LUNG PROPER
1.73
CATHAY PAC AIR
1.60
GALAXY ENTERTAIN
1.57
CNOOC LTD
1.52
KUNLUN ENERGY CO
-0.74
BANK OF CHINA-H
-0.83
WANT WANT CHINA
-1.00
CHINA RES ENTERP
-1.19
CHINA LIFE INS-H
-1.20
Source: Bloomberg
Rush for Latin America’s golden opportunities
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The government is ignoring the opportunities that Latin American ties could provide for the city’s economic diversification, says Gary Ngai Mei Cheong. Latin American mines could feed Macau’s jewellery retail, he said in an interview with Business Daily. There is little hope, however, for universal suffrage, Mr Ngai, a political observer, adds. Residents’ political apathy makes democracy nothing but wishful thinking, he said. Pages 6 & 7
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September 30, 2013
Macau Online derivatives show for Macau A trade show for companies working in the electronic market for financial derivatives is to be held in Macau in January. The organisers describe iFX EXPO Asia as the largest businessto-business exhibition for the financial sector. It is a joint effort by news publication Forex Magnates and ConversionPros a specialist online marketing consultancy. “Last year we attracted over 40 exhibitors and over 1,100 attendees. This year we have increased [to] over 60 exhibitors, and well over 2,000 attendees,” said Gal Ron chief executive of ConversionPros. It is the second year the show has been held in Macau.
Minimum wage to slice firms’ profits Public consultation on minimum wage for cleaners, guards starts today Tony Lai
tony.lai@macaubusinessdaily.com
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leaning and security companies will see their profit margins decline by up to 7.1 percent if they have to pay a minimum wage of 30 patacas (US$3.75) an hour to their employees, a study predicts. The Labour Affairs Bureau released yesterday a study by the University of Macau on the minimum wage for all cleaners and security guards ahead of a 45-day public consultation starting today. The government has proposed a minimum wage between 23 patacas and 30 patacas an hour. If the wage is set at just 23 patacas, 77.8 percent of all companies surveyed said they would feel the pinch. If the target is moved to 30 patacas, no firm will remain unscathed, the survey shows. The average decrease in profit margins could vary from 4.1 percent to 7.1 percent, added the study, while the building management fees paid by households would also rise between 7.9 percent and 17.3 percent. “The employees surely think the higher the salary the better [for them],” said Wong Chi Hong, the Labour Affairs Bureau director. “But we also hope the society
understands that we do not want to see that the micro, small and medium enterprises cannot keep operating due to the minimum wage.” He stressed the minimum wage in the industry will be set based on the salary level of employees, the financial ability of the employers and the economic development of the city. The university compiled the survey by getting responses from 20
The government has proposed a minimum wage between 23 patacas and 30 patacas an hour
employers and 442 workers in this sector between January and May. According to the study, the average salary of the city’s 10,800 cleaners and security guards – including residents and non-residents – is currently at 24.1 patacas per hour, excluding bonus. If the minimum wage was set at 30 patacas, over 96 percent of security guards and 88 percent of cleaners would get a raise, says the study. Mr Wong said the bureau hopes to finish all preparatory and consultation works “by year-end” but he made no mention of when the law might be ready. Labour groups have previously criticised the government for taking too much time to introduce a minimum wage. Asked whether the minimum wage could be set outside the proposed range of 23-30 patacas an hour, Mr Wong said they would set up a value “conforming to the situation at the time”. The official also gave no timetable for the implementation of a citywide minimum wage. The government will focus on the low-paid groups first, he added.
Jobless rate remains unchanged The city’s unemployment rate remained at 1.9 percent in the JuneAugust period, government data released on Friday show. The number of jobless people went up by 200 from the May-July period to 7,200, of which 13.6 percent were looking for a first job. The hotel sector lost 1,200 workers compared to the May-July period. Most of the new staff hired in the summer went to the construction industry, which saw its workforce jump by 1,200 to 34,800. The gaming industry remained the biggest employer with 82,500 people, 500 less than in the May-July period.
Court election ruling leaves seats untouched Pereira Coutinho’s ticket kept second Legislative Assembly seat Vítor Quintã
vitorquinta@macaubusinessdaily.com
T
he Court of Final Appeal agreed to have 51 spoiled votes in the September 15 Legislative Assembly election counted as valid but it failed to change the seat allocation. The Friday ruling awarded four more votes to gaming executive Angela Leong On Kei’s ticket and 11 more to the candidacy of José Pereira Coutinho, president of the Macau Civil Servants Association. As a result Mr Pereira Coutinho’s ticket managed to keep hold of the last of the 14 directly elected seats in the assembly, which went to Leong Veng Chai. The former prison guard beat Kent Wong Seng Hong to it by a margin of fewer than 20 votes. Mr Wong is the second candidate on the ticket led by Ms Leong. Chan Meng Kam’s ticket was the most successful, as it became the
first candidacy since the handover to secure three seats thanks to 26,390 votes. Nonetheless Mr Chan’s team tried to have a further 82 invalid ballots overturned. The court ruling awarded the candidacy 36 of those 82 votes. After the court decision, Chief Executive Fernando Chui Sai On said the legislative election showed “that the development of Macau’s political system had borne fruit”. Two directly elected members and two indirectly elected seats were added to the Legislative Assembly in last year’s reforms. The government will “continue to maintain a good communication and close cooperation with the Legislative Assembly in the near future in a bid to improve efficiency and quality in legislation,” Mr Chui said in a statement.
Almost 4,300 votes were counted as invalid in the September 15 election
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September 30, 2013 April 19, 2013
Macau
Legal action freezes solid waste contract
editorial
CSR could have its rubbish collection contract extended yet again
Walking on a tightrope
Vítor Quintã
vitorquinta@macaubusinessdaily.com
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he government says it will refrain from signing a new 10-year waste management contract with Macau Waste Systems Co Ltd, known as CSR, because another company that bid for the contract is suing. In June Spanish company Urbaser SA applied to the Court of Second Instance for an injunction to stop the
government from giving the contract to CSR, and later asked the court to overturn the award of the contract. An Environmental Protection Bureau spokesperson told Business Daily that the court had yet to rule on the application for an injunction. The bureau said in written statement issued on Friday that the court had notified it of the request
CSR has been responsible for collecting the city’s trash since before the handover
to suspend the award. It said the government was following up the case in accordance with the law and so the contract could not be signed. CSR’s original contract was supposed to end in September 2011, but it was extended on three occasions. It is now due to expire on October 31. Business Daily asked the bureau if it would extend the CSR’s contract again, but we had received no reply by the time we went to press. We were unable to get in touch with CSR. The bureau said on Friday that the government “attaches great importance to the current provision” of solid waste management services. It said the government would continue to uphold the public interest in keeping the city clean. CSR is a joint venture by Hong Kong’s Swire SITA Waste Services Ltd and Macau’s H. Nolasco Group. The company has been responsible for collecting Macau’s rubbish since before the handover. CSR won the 10-year contract with a bid of 2.07 billion patacas (US$258.8 million), the lowest of the five bids. Urbaser’s bid was 2.39 billion patacas.
Cab owners join fare rise chorus Taxi owners say a fare increase of 10 percent proposed by drivers is insufficient to offset the rise in maintenance costs Tony Lai
tony.lai@macaubusinessdaily.com
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group of taxi owners intends to echo taxi drivers in demanding a fare increase this year, but the owners want a bigger increase than the cabbies. The Taxi Association of Macau called over the weekend for the flag fall, the fare for the first 1,600 metres of a cab journey, to be raised to 17 patacas (US$2.10) from 15 patacas. The association called for the fare for every subsequent 230 metres to be raised to 2.00 patacas from 1.50 patacas, or for the incremental distance that 1.50 patacas buys to be reduced. Association vice-president Tai Kam Leong said the increase would cover rising costs, particularly the costs of operating the 200 taxis newly licensed last year, which must meet the Euro IV emission standards. “The costs of the 200 new taxis have surged a lot, exceeding the original estimate by the industry,” Mr Tai told Business Daily. He said the cost of maintaining one of the new taxis was over three times higher than the cost of maintaining an older cab. He said last year’s “relatively low” fare increase was insufficient
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he government is playing a dangerous game in its handling of Macau’s labour situation. On the one hand it keeps talking tough on migrant workers in order to prevent a small but vocal group of grassroots activists from going around shouting about outsiders “stealing” jobs from permanent residents. Anything serves as an excuse for petty displays of xenophobia, from Chief Executive Fernando Chui Sai On’s suggestion to make it easier for mainlanders studying at Macau universities to get jobs here after graduating, to rumours about Sands China Ltd hiring workers from abroad as gaming pit supervisors. On the other hand, the government has quietly allowed the number of migrant workers almost to double in three years, with no transparency or any hint of a policy. The authorities have been quite happy to treat one-third of the labour force as second-class citizens while making it more difficult for talented and qualified professionals to become residents. Other cities, such as Hong Kong and Singapore, seek to lure talent from abroad. Macau makes sure they have to wait months for the privilege of coming over. Even the current hiring spree has been far from sufficient to fill all the vacancies or to keep the unemployment rate from continuing to shrink. Walking on this tightrope will only get riskier, as all of the city’s six gaming companies have new casino-resorts planned for Cotai or intend to expand their present facilities from 2015. The number of construction workers must double in the next few years to meet the demand, the Macau Construction Association says. And gaming companies have warned that in the coming years there will be insufficient dealers, who must be permanent residents. The government has never explained what the sense is in opening so many resorts in the space of just two years. Will the infrastructure be ready for the extra burden? With work on the Light Rapid Transit railway suffering delay after delay, the answer is negative. In 2008 and 2009, when the global financial crisis hit Macau, it was easy for the government to give in to the prophets of doom and to press companies to reduce the number of migrant workers. But there will come a time when, with a dozen resorts employing probably more than 100,000 people in Cotai, that will no longer be an option. What will the government do then? If any problem arises, will the chief executive – picked by interest groups among the handful of families that rule Macau and the city’s strongest businesses – have enough strength to face a rising unemployment rate without panicking and giving into cheap populism? The odds do not look good.
The taxi flag fall was last increased in July last year
to cover costs. The government approved a fare increase in July last year. The flag fall rose to 15 patacas from 13 patacas. The Macau Taxi Driver Mutual Association recently proposed a fare increase of at least 10 percent for reasons similar to those given by the owners. The drivers intend to submit their proposal to the government next month. Mr Tai said the owners were likely to submit a separate proposal because there had been rifts between
the owners and the drivers in recent years. He said his association hoped to agree on a proposal this year after gauging the public reaction. The chairman of the Macau Taxi Driver Mutual Association, Tony Kuok Leong Son, was not immediately available for comment yesterday. Last week the Public Utilities Concern Association of Macau declared itself opposed to a fare increase, saying the service given by taxis should be improved first.
Will the chief executive … have enough strength to face a rising unemployment rate without panicking and giving into cheap populism?
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September 30, 2013
Macau Chinese premier to visit Macau: TDM
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China’s Premier Li Keqiang will visit Macau in November, according to public broadcaster Teledifusão de Macau SA. TDM quoted unnamed sources saying Mr Li would preside at the fourth ministerial conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries, known as Forum Macau, on November 5 and 6. Beijing is poised to sign a three-year cooperation agreement with Portuguese-speaking countries at the forum. Portuguese Deputy Prime Minister Paulo Portas will also attend the event, TDM reported. The forum was first held in 2003.
HOSPITALITY Where and how The number of visitors was 4.6 percent higher in the first eight months of this year than in the equivalent period of last year. But the trends in the numbers of visitors from the three top origins differed, depending on whether they came from the mainland, Hong Kong or Taiwan, and whether they came by land, sea or air. The general rise in the number of visitors was due mainly to the increase in visitors from the mainland, which more than made up for decreases in visitors from most other places. The number of visitors from the mainland rose by over 1.2 million, while the number from all sources of visitors combined rose by just over 860,000. The number of visitors all sources other than the mainland fell by 370,000.
Pansy Ho sustainable tourism ambassador PATA Foundation claims to support ‘responsible’ travel in Asia Pacific region Michael Grimes
michael.grimes@macaubusinessdaily.com
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How a visitor gets to Macau – by land, sea or air – makes a difference. Mainlanders arrived in bigger numbers by every mode: 8.9 percent more came by land and 26.5 percent more came by air. Although most visitors from the mainland come by land, the proportions of visitors that come by air and sea is increasing. The trends among visitors from Taiwan are the opposite. Fewer people from Taiwan visited, whether they came by land, sea or air. Altogether, about 10 percent fewer visited. The decrease was slowest in the number arriving by sea – which was never a large number anyway. The number of visitors from Hong Kong, who usually come by sea, fell by 4 percent. But the number that came by air rose by 14 percent.
acau casino, hotel and ferry investor Pansy Ho Chiu King is to be the first ambassador for the PATA Foundation. The body is an offshoot of the tourism industry lobby group the Pacific Asia Travel Association. The foundation claims its role is to “… contribute to the sustainable and responsible development of travel and tourism in Asia Pacific through the protection of the environment, the conservation of heritage and support for education”. In accepting the role, Ms Ho stated: “Via the PATA foundation, we can make tourism not only the largest industry in the world, but something that could help the communities that we live in.” She added she is planning a gala dinner next year to raise funds for the foundation. The body says it has supported more than 118 ‘sustainable tourism’ projects, provided 104 scholarships and helped 29 countries through donations and grants “in excess of US$1 million”. Chinese tourists
J.I.D.
9.8 %
Annual fall in visitors from Taiwan in the first eight months Pansy Ho – advocate for responsible tourism
travelling overseas spent a record US$102 billion (814.7 billion patacas) in 2012 according to the World Tourism Organization. Recently at the Global Tourism Economy Forum held at Macau Tower – a venue owned by Shun Tak Holdings Ltd, of which Ms Ho is managing director – she described neighbouring Hengqin Island, part of mainland China, as the “perfect solution” to Macau’s tourism capacity limits.
Captive audience Hengqin’s Chimelong theme park should be open for business by the end of this year says the developer of the scheme. Chimelong and its accompanying hotels could eventually have capacity for 10 million visitors per year – equal to nearly a third of Macau’s 28 million visitors last year – it was suggested during the Global Gaming Expo Asia conference in May. According to media reports, Chimelong will have a collection of
marine mammals including beluga whales, bottlenose dolphins and Pacific white-sided dolphins. In June Samuel Hung, head of the Hong Kong Dolphin Conservation Society, said that remaining wild dolphins in the Pearl River Delta were under severe threat from the increasing number of construction projects in Macau and ferry traffic. The number of indigenous dolphins – called Chinese white dolphins or ‘pink’ dolphins – known to be living in Hong Kong waters fell to 61 from 159 in 2003 according to the society. The Hong Kong branch of the conservation charity WWF says on its website: “There are many high-speed ferries running between Hong Kong, Macau and other cites in the Pearl River area every day. The marine traffic has increased in western waters, doubling from 1999 to 2009. The current high-speed ferry routes transverse the prime dolphin habitats around Lantau waters, increasing the risk of dolphins being hit and causing injuries.”
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September 30, 2013
Macau Visitors will grow 6 pct this year: tourism boss The Macau Government Tourist Office expects the number of visitors coming to the city to increase 6 percent during the whole of this year despite the possible impact from new package tour rules coming into effect in mainland China next month. Maria Helena Senna Fernandes (pictured), the bureau’s director, said yesterday there would be several events that will draw more tourists until the end of the year, such as the 60th Macau Grand Prix in November. If the forecast proves to be accurate, the city would receive 29.8 million travellers this year.
Wise choice – the Mandarin’s House, featured on walking Route 3
‘Step Out’ campaign launched Tourist office urging travel firms to include new citywide walks in their itineraries Michael Grimes
michael.grimes@macaubusinessdaily.com
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acau Government Tourist Office on Friday officially launched publicity for the first of its walking tours around the city. Behind the scenes it has been marketing them to the travel trade for some time. Four journeys on foot – under the theme ‘Step Out, Experience Macau’s Communities’ – have been suggested by MGTO in time for the Golden Week holiday to mark China’s National Day on October 1. The start of the autumn season is usually accompanied by a fall in temperatures and of humidity in the city, making walking more comfortable. But the walks are also in response to some practical and economic issues raised by the growth of Macau’s tourism industry. Maria Helena de Senna Fernandes, the director of the tourist office, said a fortnight ago the walks scheme
could “enrich tourists’ choices” and “drive prosperity to other districts”. Most tour groups currently focus on visiting Macau’s UNESCO World Heritage sites, many concentrated in the city’s old town district on Macau peninsula. That has been good news for shopkeepers and commercial landlords in the downtown area, but has done little to help businesses in neighbouring districts – some of which currently only experience the downside of coaches and minibuses loading and unloading tourist passengers in their narrow streets. As Business Daily reported in July, in the first half this year – for prime locations such as the pedestrian thoroughfares surrounding Senado Square at the heart of the old town – monthly shop rents ranged from HK$500 (US$64.50) to HK$1,500 per square foot, according to property agency Jones Lang LaSalle.
Also in the first half, sales of goods by the shops in that area grew by 16.6 percent year-on-year, although that was from a strong base that saw even higher year-on-year expansion in sales revenue in 2012. Other districts would like a share of that prosperity. The walks may also produce the added bonus of easing slightly the current congestion around the most popular sites.
Sights, seen MGTO said on Friday it has been “inviting overseas travel agencies and media for successive familiarisation trips in Macau while encouraging travel consultants to consider adopting the walking routes in their itinerary planning”. In the future, MGTO says it plans to have smartphone applications giving information and directions for the
walking routes. Route 1 – ‘A Tour of Historical Trails’ starts in Avenida da Praia Grande and takes in St Dominic’s Church, Kuan Tai Temple and Cheng Peng Theatre, before ending at Praça de Ponte e Horta. Route 2 – ‘Tour of Nature and Creativity’ starts at Kun Iam Tong, taking in the Guia Fortress, the Dr Sun Yat Sen Memorial House and St Lazarus Church. Route 3 – ‘A Tour of East Meets West’, begins at Senado Square and includes St Joseph’s Seminary and Church, the Mandarin’s House, Lilau Square, A-Ma Temple and ends at Macau Maritime Museum in the Barra district. Route 4 – ‘A Tour of Arts and Culture’, starts at Macau Fisherman’s Wharf and features Macau Museum of Art, Macau Science Center and Macau Tower, concluding at A-Ma Temple.
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Look east, MAPEAL president urges
Food essentials addition The Statistical and Census department tracks every month great amounts of data on prices, which are used to compute various price indices and their components. They also publish the actual prices of some fairly basic and highly demanded food products. These include various kinds of rice, red and white meat, some popular kinds of fish, some vegetables and fruit, and eggs. The service does not compile these price data as an index, and we can neither measure the effect of the prices of these goods on the consumer price index nor can we make strong comparisons between the rates of change in their prices. But the data do give a snapshot of changes in the prices of kinds of food that make up a big part of the diet in Macau. They suggest that the rises in prices of staples are in line with or below consumer price inflation in general.
The price of rice from the mainland oscillated by about 4 percent to 4.5 percent around the average of 10.50 patacas (US$1.31) a kg in the six months ended August. The average was just 40 avos above the average a year earlier. The prices of most other kinds of food shown in that table show similarly small changes. Some kinds of food, such as tomatoes and apples, were cheaper last month than a year earlier. Tomatoes were fully 7 percent cheaper. The rises in the prices of sources of protein seem to be the fastest. Chicken was 8 percent more expensive. Pork and eggs were both about 6 percent dearer. J.I.D. The content of this column is the work of Business Daily’s journalists.
8.1 %
Annual rise in the August price of chicken
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acau should be getting closer to Latin America – not only Brazil but also the continent’s Spanishspeaking countries, says Gary Ngai Mei Cheong, the president of the Macao Association for the Promotion of Exchange between Asia-Pacific and Latin America, known by the acronym MAPEAL. Mr Ngai told Business Daily in an interview that he was disappointed by the government’s refusal to use public money to set up a fund for investment in mining in Latin America, but that he would not give up pressing for such a fund. He said the results of this month’s Legislative Assembly elections reflected political apathy. And he believes that to hope for universal suffrage by 2019 is just wishful thinking. Mr Ngai was vice-president of the Macau Cultural Institute before the handover. Luciana Leitão
leitao.luciana@macaubusiness.com
Photo by Manuel Cardoso
Why did you create MAPEAL? We established the foundation before the handover. Our main objective was to use Macau as a bridge between China and the Latin countries – not only the Portuguese-speaking world but also the Spanish-speaking one, and that is a big part of the world. We have a long history of Sino-Latin culture, the only ones in China with this kind of background. We had to preserve it after the handover. How to make Macau a special bridge between China and the Latin world? It is not an easy job. Although Portuguese is an official language, it has no deep roots in the Chinese
community. This is a negative aspect. Unfortunately, even now, very few are aware of it. We have to diversify our economy, preserve the culture. That’s what China wants. In 2003 top Beijing officials came to Macau to establish the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries. It’s a Beijing strategy to use Macau as a link to the Portuguesespeaking countries. Brazil, the biggest Portuguese-speaking country, is in Latin America. It would be a waste not to make the most of it. You have to train people to speak Portuguese, to have good knowledge of the history, culture and law of these countries. But, unfortunately, as yet we don’t have this in place, because the top officials in government don’t care about it. As long as we get money from casinos, it’s enough. The government recently rejected a proposal put forward by your association to create an investment fund to find gold and silver in Latin America. Was this meant as a way to diversify the economy? Yes, to diversify the economy. It’s one of the ways. We have been exploring it with our friends from Latin America for a long time already. How do we do it? Do you have a chance to invest with Macau money? Of course you have. Stanley Ho has already established a good business in Africa’s Portuguese-speaking countries. What is lacking is the will of the government. We should use part of that money. I proposed to the government a US$20 million [160 million pataca] fund. It’s enough for a first step, to attract capital also from the private sector – mainly the casinos here, but also small and medium enterprises. If we can bring them together in a venture, and if you can get profit out of it, you’ll distribute it through shares. It’s possible. Singapore has been doing it already. If Singapore can do it, why can’t Macau? We have people in Latin America doing this job, collecting information about investment in the mining industry, and we got a lot of feedback. And it wouldn’t take much time if you went into partnerships with locals. We are talking about mines that have already been dug, so there is only residual gold and silver. We can bring it to Macau and use it for our
jewellery industry, together with the mainland. We already have a lot of industries that can process it. Why did the government reject this fund? They said it’s too risky. No one wants to make a decision in the government, because next year Francis Tam [Pak Yuen, Secretary for Economy an Finance] is going and he doesn’t want to take on the responsibility. There is a political culture among top officials that it’s better to do nothing than venture into something new in which you may make mistakes. Have you already started proposing this fund to the private sector? Yes. I talked to the Small and Medium Enterprises Association, under Stanley Au, two or three years ago. He said he would try if it was good and it had no risk. I talked to the general manager of Nam Kwong, and he said yes. So the private sector is welcoming it. So do you still need the government’s support? It’s the government responsibility.
Although Portuguese is an official language, it has no deep roots in the Chinese community. This is a negative aspect. Unfortunately, even now, very few are aware of it
Are you looking for other solutions, within the private sector? We will find another way. There are people who want to, but I haven’t talked to them yet. I was waiting for the government. It’s their responsibility to diversify the economy. I’m still waiting for the final answer.
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Macau Santos was supporting us. The private sector is more active, more flexible. It has many ways to do things instead of just one. For the future, what are your association’s plans? To make this bridge to Latin America strong in future, we need people. It will take a lot of time to train them, and Macau students should be more active in doing things. They don’t want to go to Brazil or Africa. They say it’s too dangerous, too risky. But the mainland Chinese are volunteering to go. We have to change the mentality of our students. In 2005 you joined the Legislative Assembly election campaign. Were you involved this time? I was invited to join some of the campaigns but I refused. I’m too old. But I’m supporting the Macanese to speak up. Were you disappointed with the results of the recent elections? You can’t change things in a short time in Macau. The political culture is different from Hong Kong’s. In Hong Kong people have a political culture, consciousness, more democracy, more freedom, more equality, and not just for the top wealthy people. People must participate. They cannot just stay at home and do nothing. The election turnout is dropping instead of going up. I call it political apathy.
You have also been fighting for post-graduate studies on Latin America. This is a way to strengthen our education about the Latin community. A lot of people already know how to speak Portuguese in Macau, and it’s easy to learn Spanish. Why has it been so difficult to introduce them? The University of St Joseph was the first one I approached. [Former rector] Ruben Cabral was very active. He got permission from the Tertiary Education Services Office, the programme was approved, it went to the Ministry of Education in Beijing and it was stuck there for many years. There was a political problem and we can’t
There is a political culture among top officials that it’s better to do nothing than venture into something new in which you may make mistakes
solve this problem any more. We went to the University of Macau to get their cooperation. But there is another problem there. The rector is not really big on culture, on the humanities, but on technology. He was not interested at all? No, not interested at all. It’s not a priority. Then it becomes a problem if you wait too long, because you need people to be good not only at the languages, but at the history, culture, law, economy of Latin American countries. Also, they must know more about China. If you want to become a bridge, you need to know both sides. Forum Macau was created 10 years ago to serve as a link to the Portuguese-speaking countries. Why not have something similar for Latin America? This is a problem with the government. If the government is willing to do this, it can easily do it. Beijing has already said it many times: Macau’s priority is to be a link to the Portuguesespeaking and Latin countries. [Chief Executive] Fernando Chui Sai On has also said in a speech that we are a link not only to the Portuguese-speaking countries but also to other Latin countries. But nothing happened. Could your association act in partnership with Forum Macau? No, because we are different. They are government and we are an NGO. I have supported [Forum Macau deputy secretary-general] Rita Santos many times already.
We are working very closely, but we are more flexible. You don’t want to mix things? No, we can’t. Non-government organisations work more easily with Latin America because 12 countries in Latin America still have diplomatic relations with Taiwan. Beijing and Taipei now have some kind of ceasefire, a diplomatic truce between them. Macau plays a really good role in this, because it’s under the one country, two systems formula. We can receive them here. Most Portuguese-speaking countries are developing countries, with natural resources that interest China. How about Latin America? Asia, if you include ASEAN, is now number one in the world. Number two is Latin America and third is Africa. Brazil is the biggest trading partner of China. Forum Macau also includes Brazil. How could your association’s support add value? The forum’s support is more through governments, and we are working through private investment. In this clean energy plan we have, we are trying to get the technology to produce ethanol from sugar cane from Brazil. It’s already running in Brazil. It’s good and cheap. Why not take this technology to China, through Macau? How do you assess the work the forum has been doing? They try very hard, but it’s not enough to go through the government. That’s why Rita
You support universal suffrage. Is it still possible to have it by 2019? It’s idealistic. Hong Kong is doing it in 2017, why not Macau in 2019? This is wishful thinking. It’s not realistic. Macau’s political culture doesn’t change very much. People don’t care about politics. They just care about their housing or if they have a car. Is there the rule of law in the elections? No. People are saying there was a lot of bribery going on, but nobody is taking care of it. Where are the people to enforce the law and punish bribery? These elections had some surprises, like the impressive victory of Chan Meng Kam. What will change in the next four years? These are minor changes, not fundamental changes. According to the Basic Law, Macau people rule Macau. Many people say that it’s Macau businessmen ruling Macau, and that we have no say. We’re not a democracy. Democracy is still a long way away.
Many people say that it’s Macau businessmen ruling Macau, and that we have no say. We’re not a democracy. Democracy is still a long way away
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Macau
Wynn Macau sues Chinese tycoon Gaming operator trying to recover HK$14 million debt
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ynn Macau Ltd, chaired by Las Vegas mogul Steve Wynn, is suing a Chinese tycoon for HK$14 million (US$1.81 million) in gambling debts, the latest case of a casino in the world’s biggest gaming hub using the courts to go after its money. According to a writ filed in Hong Kong’s High Court last week, the casino is seeking to get the money from tycoon Li Jun who owns Beijingbased autos to property company Abest Group. Macau is the only place in the country where people are allowed to gamble in casinos. But recovering gambling debts on the mainland is illegal. The case comes at a time when China’s leadership is toeing a strict line on corruption and flagrant excess. While Macau casinos such as Wynn are hungry for business from rich people form China, known as “big whale” gamblers, who can bet billions of yuan at a time, they run the risk of not being able to recover debts once the gamblers return to China. Wynn’s lawsuit against Mr Li follows earlier writs filed by the
Wynn Macau seeks to get the money in Hong Kong’s High Court
Venetian Macau, operated by Sands China Ltd, which sued Shanghai businesswoman Zou Yunyu and Xie Xiaoqing, a deputy to the Hubei
THERE ARE THINGS WE DON’T DO
provincial People’s Congress, in January this year. Although much of the lending is done by VIP promoters, known
BUT WE DO•••
as junkets, Macau casinos lend directly to prominent gamblers only when sufficient due diligence and background checks have been done to ensure the casino has legal grounds to get the money back in foreign jurisdictions, casino executives say. The writ showed Mr Li’s address as Hong Kong’s Four Season’s Hotel. A telephone call to Mr Li’s room was answered by a man who confirmed his name was Li Jun but said it was not him who was being sued by Wynn, but someone else. He declined to comment further. This month, Mr Li broke into the home of a Hong Kong-based television star, the South China Morning Post reported, citing Hong Kong prosecutors. He was released on bail and has been barred from leaving Hong Kong, it added. Macau, a cash cow for billionaires and U.S. tycoons such as Steve Wynn and Sheldon Adelson, chairman of Las Vegas Sands Corp, raked in US$38 billion in gaming revenues in 2012. Over two thirds of Macau’s visitors come from mainland China. Reuters
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Melco Crown eyes Japanese opportunities Casino operator plans to invest US$5 billion in Japan casino-resorts
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elco Crown Entertainment Ltd said it plans to invest more than US$5 billion (39.9 billion patacas) in Japan casino resorts if it receives permission to build in what could be the world’s secondlargest gambling market. The casino operator, a venture between Macau casino mogul Lawrence Ho Yau Lung and Australian billionaire James Packer, prefers developing resorts in the country’s capital of Tokyo and Osaka, Mr Ho said in an interview in Tokyo. “The potential is huge for integrated resorts in Japan,” Mr Ho, co-chairman of Melco Crown, said. “If Japan opens up and allows integrated resorts in Tokyo, Osaka, the market could easily be in excess of US$10 billion to US$15 billion or more.” Melco joins U.S.-based competitors such as Wynn Resorts Ltd, MGM Resorts International and Las Vegas Sands Corp in seeking expansion opportunities in Japan as Tokyo’s selection to host the 2020 Olympics boosts confidence the government will legalise casinos. Wynn
and MGM executives have said their companies would invest several billion dollars in Japan. Japan’s capital beat Madrid and Istanbul to host the Summer Games, its second following the 1964 Olympics. Plans to revitalise the capital city’s infrastructure and build adequate accommodations for visitors are an additional catalyst for approving casino resorts, which typically include hotels and other entertainment venues. Japan has long been touted as an attractive gaming market with a large and relatively rich population base. It also enjoys global appeal as a tourist destination. The country would become the world’s second-largest casino hub generating US$10 billion revenue a year should it open up the market, Union Gaming Group LLC estimated.
Government lobby The 36-year-old son of Macau gambling tycoon Stanley Ho Hung Sun said
The potential is huge for integrated resorts in Japan Lawrence Ho, co-chairman, Melco Crown Entertainment
he has been lobbying with multiple cabinet members in Japan for the legalisation of casinos. The executive sees “significant” non-gaming revenue for the country as he doesn’t expect “visitors just come to Japan and go straight to casinos. There’s so much to do, so much to see. Japan has a rich culture.” Wynn Resorts’ investment
in a Japan casino “is going to be way bigger” than the US$4 billion it is spending on its current project in Macau’s Cotai area, Wynn Resorts Development president and chief operating officer Gamal Aziz said in an interview earlier this month in Tokyo. MGM Resorts would invest “several” billion dollars once the market opens up, president Bill
Hornbuckle said. Both casino operators said they plan to partner with a local consortium to build casino resorts while Sands has said it is “open minded” about the idea. Mr Ho said the company also considers working with local groups. The three U.S. companies are interested in developing projects in Tokyo and Osaka. Bloomberg News
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Greater China
China launches free trade zone in Shanghai
ANZ, Singapore’s UOB eye Wing Hang Bank
New area billed as major step for financial reforms
Second family-run HK lender to get a takeover offer this year
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Mainland officials inaugurate Shanghai trade zone in financial reform drive
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hinese officials inaugurated Shanghai’s new free trade zone yesterday as the country looks to experiment with loosened capital controls and other reforms to sustain economic growth. Important tasks for the zone include deepening financial-sector innovation and a liberalised service sector, Commerce Minister Gao Hucheng said. The city government should establish an “efficient, safe, and open economic system” in the zone, he added. The area is a testing ground for free-market policies that Premier Li Keqiang has signalled he may later implement more broadly throughout the world’s second-largest economy. The initiative pushes forward a goal of making Shanghai a world financial centre by 2020. Bank of China Ltd and Bank of Communications Co Ltd said they got regulatory approval to set up branches in the zone, as did Citibank China Co. A total of eight domestic banks and two foreign ones were given licences to operate there, the Oriental Morning Post reported on its verified microblog account yesterday. “China is a priority market for Citi,” Citi Asia Pacific chief executive Stephen Bird said in the e-mail. An additional 25 companies, including units of Porsche AG, SAIC Motor Corp and a trading unit of BNP Paribas SA were also granted licences, the Morning Post said. China will allow trials of yuan convertibility in capital flows in the zone as long as risks are controlled, the State Council said in a statement
on Friday. It didn’t elaborate on how the currency would be more easily exchanged for others. Excitement at the launch has boosted stocks of Shanghai-based firms and spurred a rally in home prices and land costs in areas bordering the zone in the past few weeks, state media has reported. But analysts and observers adopted a cautious approach. “It shows that the new government is keen on making reforms,” Stefan Sack, vice president of the European Chamber of Commerce in China, told AFP. “We have to see what kind of regulations will really be implemented there.”
Financial reform Eighteen service industries will be liberalised including banking and shipping, with foreign financial institutions allowed to team with private-capital partners in China to set up joint-venture banks, the nation’s top decision-making body said. Wholly foreign-owned shipping-management companies will also be permitted, it said. President of the U.S. Chamber of Commerce in Shanghai Kenneth Jarrett said the zone’s plan showed a clear emphasis on service sectors. “It suggests that the government does plan to have the service sector as a major component of what the FTZ will do,” he said. “Our members are eager to find out more. But there is a sense that the zone could offer real opportunities for our member companies.”
HSBC Holdings Plc analysts said in a September 6 note that planned policies for the Shanghai zone would make it the “primary test ground of financial reform and innovation”. The success of the area, “in turn, would provide renewed impetus driving forward China’s ongoing financial reforms,” economists Ma Xiaoping and Qu Hongbin wrote. Officials have been considering the Shanghai policies ahead of a Communist Party meeting in November due to expand on the leadership’s plans for reducing the government’s hand in the economy and financial system. Mr Li has called for the state to increase the role of the private sector to sustain growth. Analysts are divided on whether the zone will have a noticeable impact on the broader economy. Eight of 17 respondents to a Bloomberg News survey said the area will have no effect or a negligible impact on growth over the next five years, while eight said it will boost annual expansion by 0.1 percentage point to 0.5 point. One economist in the survey, conducted September 18 to September 25, said growth would increase by 0.5 point to 0.9 point. At the same time, projections for expansion this year have risen after industrial-production gains accelerated in July and August. China’s economy probably grew 7.7 percent in the third quarter, according to the median forecast in a Bloomberg News survey this month, up from an estimate of 7.5 percent in August. Bloomberg News
ingapore’s United Overseas Bank Ltd and Australia & New Zealand Banking Group Ltd are considering a bid for Hong Kong’s Wing Hang Bank Ltd, according to people familiar with the matter. Wing Hang, with a market capitalisation of US$4.7 billion (37.5 billion patacas), announced earlier this month that its controlling shareholders had received preliminary offers from independent third parties to purchase their shares in the bank. It did not name the bidders. People familiar with the matter told Reuters on Saturday that ANZ and UOB were among the companies considering a bid for the Hong Kong bank. The Wall Street Journal also cited people familiar with the matter as saying UOB and ANZ had shown interest. Wing Hang Bank is the second family-run Hong Kong lender to get a takeover offer since August. Chong Hing Bank Ltd said that it had received offers from multiple parties, without naming the suitors. Banco Weng Hang SA, a unit of Wing Hang Bank, has 12 outlets in Macau. Wing Hang’s Macau unit reported first half profit up 38 percent year-on-year to 195.9 million patacas thanks to strong demand for loans here. A UOB spokesman on Saturday said the bank does not comment on market speculation. An ANZ spokesman said: “From time to time we look at opportunities as part of our super regional strategy however we don’t comment on market speculation.” Wing Hang Bank could not be reached for comment. New capital rules and competition from bigger rivals like HSBC Holdings Plc and Standard Chartered Bank Plc have also given controlling shareholders of Hong Kong banks more incentive not to hold out for more lofty premiums that other city lenders commanded before the global financial crisis. Hong Kong’s Fung family, along with BNY International Financing Corp, control about 45 percent of the Wing Hang Bank. The stock has soared since takeover talk started to close at HK$117.9 in Hong Kong trading on Friday. Reuters/T.A.
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Greater China
A fifth of Hong Kong people in need: Government recognises poverty levels for the first time
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fifth of Hong Kong’s population is living in poverty, underscoring the challenge Chief Executive Leung Chun Ying faces in seeking to narrow a record wealth gap. About 1.3 million people, or 19.6 percent of the population, were below the poverty line last year, according to a report released on Friday. The benchmark, determined for the first time, was set at half of the city’s median household income, excluding impact of tax and welfare transfer, the report said. A one-person household with less than HK$3,600 per month will be considered poor, under last year’s statistics. For twoperson households, the amount is HK$7,700 and HK$14,300 for fourperson households. In line with the household income measurement used by the Organisation for Economic Cooperation and Development, assets and debts are not counted. The report, commissioned by Mr Leung, may give him the backing needed to ask for more spending and overcome objections to further increases to the city’s minimum wage. Tens of thousands of people protested on July 1, the anniversary of Hong Kong’s return to China, demanding the government address the inequality between the rich and the poor, which has been exacerbated
by the doubling of home prices since early 2009. “The poverty line is a useful reference point for knowing whether the situation is improving or deteriorating,” said Willy Lam Wo Lap, an adjunct professor of history at the Chinese University of Hong Kong. “The line itself does not solve Hong Kong’s problems. What the government should do is ensure its target of public housing is met.” Hong Kong’s Gini coefficient, a measure of income inequality, rose to 0.537 in 2011 from 0.525 in 2001, the government said last June. The score, a high for the city since records began in 1971, is above the 0.4 level used by analysts as a gauge of the potential for social unrest.
Alleviate poverty “To alleviate poverty, the government must promote balanced economic development,” Mr Leung said at a summit on Friday. “Poverty is not only an issue of the low-income population’s hardship, but it also affects Hong Kong’s harmony and stability, thus affecting its long-term competitiveness,” he said. If accounting for recurring cash benefits, the population living in poverty falls to 1 million, or 15.2 percent, the report said. To lift all of these people up to the poverty
1.3 million
Hongkongers below poverty line
line would require HK$14.8 billion, (US$1.9 billion) according to Chief Secretary Carrie Lam. “We don’t take the view that alleviating poverty means to narrow the wealth gap,” she said at a press conference. There may not be a lot of support for Hong Kong, a capitalist society and a free economy, to tackle the wealth gap with a more socialist attitude, she said. The point is to create upward mobility, she added. Labour unrest and protests have increased in Hong Kong in the past two years as inflation and home prices soared. Lawmakers were quick to push the government into action after the numbers were revealed. “We feel that the government should raise the minimum wage and should also
Wealth gap in Hong Kong worsening
implement subsidies for those with low incomes so that people that come out to work can really support their families,” Labour Party chairman Lee Cheuk Yan said. Hong Kong increased the minimum wage 7.1 percent to HK$30 an hour on May 1. The raise will bolster the salaries of about 327,200 employees, or 10 percent of the city’s workers, according to a
Private bank push sparks stock frenzy Speculators feast on stocks linked to private banks Heng Xie and Gabriel Wildau
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igns that China is preparing to open its banking sector to privately-owned lenders has raised hopes that they can help ease financing difficulties afflicting smaller firms. A handful of listed companies have also seen their stock prices soar in recent weeks on rumours they are planning moves into banking. But bankers and policymakers say that hopes for private banks have
been inflated. At least in the short term, private banks will provide neither big new profits to listed companies nor an easy solution to small- and medium-sized enterprises’ (SMEs) financing woes. “Of course this is the general policy direction, but the gap between hype and actual progress is really too huge,” said a regulatory official, who asked not to be identified because he was
Private capital comprises a significant share of the current banking system
not authorised to comment on policy. “The bank regulator’s specific plan is still in the discussion phase. This rush of public attention isn’t necessarily a good thing.” Shares in Suning Commerce Group Co Ltd, a large electronics retailer, had risen by 65 percent this month through Tuesday after the firm announced plans to establish a private bank. The stock has since
corrected but is still up 42 percent. Tencent Holdings Ltd, the Internet giant that runs the popular WeChat social networking platform, also said it has applied for a banking licence as part of a consortium of firms. Its shares have risen by 13 percent in September. But an executive at Tencent told Reuters it has no plans to establish a bank on its own. “As far as I know, establishing a bank really isn’t a main element in Tencent’s development plans in the financial domain,” he said. Chinese punters in recent weeks have also speculated wildly on smaller-cap stocks based purely on rumours, including Beijing Centergate Technologies and Jiangsu Hongdou Industries, which is up 44 percent on the month. Beyond the speculative frenzy, the push for private banks has also raised hopes that they could help channel more financing to China’s productive but cash-starved private firms. Economists have long decried the tendency of China’s state-dominated banking system to grant loans primarily to large state-owned firms, even as SMEs account for 60 percent of GDP and around 75 percent of new jobs. But banks and officials warn that even if regulators move aggressively to permit new, privately-owned banks, it won’t provide an immediate solution to SME financing. “Small- and medium-sized banks
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Greater China
report
The average gross household income of the poorest 10 percent of the population fell 16 percent to HK$2,170 a month in 2011, from 10 years earlier, according to a government report. The comparable income for the richest 10 percent jumped to HK$137,480 a month, a 12 percent increase. Mr Leung increased welfare spending by about a third in his first budget delivered in February, boosting recurrent spending by 31 percent to HK$56 billion in the fiscal year starting April 1. He handed out allowances to more than 400,000 elderly residents and pumped US$2 billion into a poverty alleviation fund. Hong Kong’s wealth inequality may increase as the population ages. The proportion of people aged 65 and older reached 14 percent last year and is expected to account for 30 percent by 2041, Financial Secretary John Tsang said in February. Bloomberg News/AFP
report by a government commission before the new ruling. “Having an official indicator will help the government define its social welfare policies and will also raise public expectations for something to be done,” Chung Kim Wah, an assistant professor at the Hong Kong Polytechnic University, said by phone. “It’ll put a certain pressure on the administration.”
HK$14.8 billion
Needed to lift all the people up to the poverty line
Power Assets seeks US$5 bln from spinoff
Beijing warns of choppy capital flows
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ower Assets Holdings Ltd, controlled by Asia’s richest man, Li Ka Shing, is seeking to raise as much as US$5 billion by selling units in its Hong Kong electricity arm, two people with knowledge of the plan said. Power Assets plans to sell as much as a 70 percent stake in the division through a business trust structure, the company said in a statement to the Hong Kong Stock Exchange on Friday. That may be worth US$5 billion, said the people, who asked not to be identified because the details are private. A US$5 billion sale would be the biggest initial public offering in Hong Kong since October 2010, when AIA Group Ltd raised US$20.4 billion, according to data compiled by Bloomberg. Mr Li is selling assets in Hong Kong where growth is slowing, as he pursues acquisitions in Europe. “Li Ka Shing is cashing out in a relatively good market, which is consistent with his divestment strategies,” Ronald Wan, chief China adviser at Asian Capital HK Co, said. “He may want to seek overseas assets with higher growth rates as the Hong Kong electricity unit is a stable and mature business.” Proceeds from the spinoff will enable Power Assets to pursue acquisitions in the global power industry, it said in the statement. Bloomberg News
themselves face higher financing costs than big banks. This means they can’t possibly offer low-interest loans to SMEs,” said a senior executive at a large, state-owned bank. “I’m afraid that relying on private banks to solve SME financing problems is difficult to achieve.” The case of Minsheng Bank Corp Ltd, a privately-owned lender founded in 1996 and known for its focus on SMEs, is instructive. “When Minsheng Bank was established, we said we wanted to serve private enterprises and SMEs. But once we started to do it, we found that the bad loan rate was very high. We didn’t dare to keep going. We had to reverse course and start ‘dating a rich guy,’” a Minsheng board director told Reuters. Only after the bank developed a foundation of reliable, low-risk borrowers did it begin to wade back into SME lending. “Cultivating and operating a bank requires a long-term mentality. Requiring a bank to effectively service SMEs in the short term one shouldn’t be so idealistic,” the director said. Reuters
KEY POINTS Policymakers express support for privately-owned banks Hope that private banks can boost financing to small firms But officials, bankers say no panacea for SME financing woes
HK counts costs after losing Alibaba listing T he collapse of negotiations for Alibaba Group Holding Ltd’s listing in Hong Kong, which sees the lucrative initial public offering set to head to New York, has prompted sharp criticism of the city’s stock exchange from the Chinese online trading giant and some investors. Talks between the Hong Kong Exchanges & Clearing Ltd and Alibaba, looking at ways to grant founder Jack Ma and its senior management some control over the board of directors ended in vain, according to a blog post by Alibaba’s co-founder Joe Tsai last week. In a scathing attack on the exchange’s regulators, he warned that the world’s largest companies would “pass by” Hong Kong unless its bourse was more willing to be flexible. “We firmly believe that Hong Kong must consider what is needed in order to adapt to future trends and changes,” Mr Tsai said on his blog. “The question Hong Kong must address is whether it is ready to look forward as the rest of the world passes it by.” However others welcomed the move as a sign the Hong Kong Stock Exchange was willing to stick by its own rules despite the potential size of the listing. Hong Kong’s loss will likely be New York’s gain. Dow Jones Newswires, quoting a source, said the company now plans to list in the American city, has already hired a U.S. law firm to work on an IPO there,
and would likely hire banks soon. The company’s stock market listing is expected to raise about US$10 billion, which would make it the technology industry’s largest IPO since Facebook’s offering last year. Tanrich Securities vice president Jackson Wong believes Hong Kong is losing out from an investor’s perspective. “We really would like to see a giant Internet stock from China to be listed in Hong Kong, rather than in New York,” Mr Wong said, describing any listing by the company to be a “blockbuster IPO”. “When investors are in the stock market, they want to make money and to buy some quality stocks and Alibaba is one of the two big Internet companies.” The initial impact on the city’s stock exchange could be huge with a boost to its daily turnover in the long run, Mr Wong said, without providing any figures. According to Wong, Mr Alibaba would trade in a similar way to Chinese Internet giant Tencent Holdings Ltd, which adds around two percent to the daily turnover for the Hong Kong Stock Exchange. Hong Kong’s bourse does not allow companies to issue two types of shares which give founders and management a greater voting weight compared to minority shareholders. Charles Li, the chief executive of HKex, said that he defended public interest against the rights of certain company shareholders in a lengthy and unusual blog post about a dream he recently had. Without directly commenting on the technology company, Li said: “As enshrined in our charter, in the event of a conflict, public interest is put ahead of shareholder interest at HKEx.” Hong Kong stock exchange refused to confirm that talks between the two have broken down. AFP
China expects to see volatile capital flows across its borders for the rest of the year because of economic uncertainty at home and abroad, the foreign exchange regulator said on Friday. The cloudy economic environment was also likely to shrink China’s trade and capital account surpluses in coming months, the State Administration of Foreign Exchange said. China revised up its current account surplus for the second quarter on Friday to US$50.9 billion. “As there are numerous uncertain and unstable factors within and outside the country, crossborder capital flows would continue to volatility,” the regulator said.
Bank regulator to expand consumer finance programme China’s banking regulator said it will expand a consumer financing pilot programme to 10 more cities as part of attempts to bring more private capital into lending markets. In a statement on Friday, the China Banking Regulatory Commission said the expansion will meet demand from middle and lower income consumers, and boost consumption and private sector participation in the country’s finance industry. The regulator also said Hong Kong and Macau financial organisations would be allowed to establish consumer lending companies in test sites in southern China.
Banks to sell asset backed securities China will allow selected banks to issue asset-back securities (ABS) worth 300 billion yuan (US$49 billion) by the end of June next year, expanding a pilot programme to support the economy, three industry sources said. The People’s Bank of China asked 20 banks, including big state banks, to submit their ABS issuance plans at a recent meeting which also involved securities brokerages and trust companies, the sources familiar with the development said. “The central bank said that the size [of issuance] will be around 300 billion yuan,” said a source.
Corruption drive extends to provinces China’s anti-corruption watchdog said it had uncovered abuses at several provincial governments and stateowned enterprises, in the latest sign of an expanding crackdown on graft. Taskforces working since May had found mismanagement and corruption in Jiangxi, Hubei and Guizhou provinces, along with the sprawling western city of Chongqing, the party’s Central Committee for Discipline Inspection said in a statement last week. Experts, however, say only deep and difficult political reforms will have a lasting impact on curbing corruption.
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Asia
Japan inflation hits 5 year-high Wage gains needed to end deflation, minister says Leika Kihara
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apan’s core consumer inflation in August hit its highest level in nearly five years, while prices of personal electronics rose for the first time since 1992 – signs Japan may be emerging from 15 years of nagging deflation. Core consumer prices, which include oil products but exclude volatile prices of fresh food, rose 0.8 percent in August from a year
KEY POINTS August nationwide core CPI up 0.8 pct Gains driven mostly by electricity, gasoline costs Durable goods prices turning up, signal deflation ending Economics minister calls for wage growth
earlier after a 0.7 percent increase in July, marking the third straight month of gains. It was the fastest rise since November 2008, when core consumer inflation hit 1 percent reflecting a spike in global commodity prices, government data showed on Friday. But most of the increase was caused by rising gasoline costs and a weaker yen that inflated the price of food imports and may dampen consumer sentiment, which is already showing signs of peaking. That said, prices of durable leisure goods, such as personal computers and audio-visual equipment, rose 0.1 percent in August from a year earlier, turning positive for the first time since 1992, in a sector where consumer prices have fallen steadily. The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, fell 0.1 percent in August. That was the same pace of decline as in July and smaller than a 0.2 percent fall in June, an indication that downward price pressure is ebbing. Economics Minister Akira Amari said it was too early to declare an end to deflation, stressing that wages and prices excluding energy
costs had to rise more. “Japan is in the process of emerging from prolonged deflation,” Mr Amari told a news conference. “An exit from deflation will become distant if we’re seeing cost-push inflation, where wages aren’t catching up with rising prices,” he said. The Bank of Japan has expressed confidence that prices will continue to rise and approach its 2 percent inflation target as robust personal spending allows more companies to pass rising costs on to consumers.
Wages key Still, Mr Amari said the government can declare an end to deflation only when core-core consumer inflation turns positive and there is enough evidence it will stay that way, void of any sudden shocks to the economy. Some analysts expect core consumer inflation to exceed 1 percent by the end of this year mostly on rising energy and food prices. That may weigh on personal consumption, which would also feel the pain from an expected sales tax hike in April. “The rise in prices of daily necessities is negative for household sentiment and consumption,” said
Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo. “Companies may raise monthly salaries slightly if the economy remains in good shape. But that won’t be enough to offset the decline in real household income next year.” Japan’s economy expanded for three straight quarters in AprilJune, outpacing many G7 nations, as Prime Minister Shinzo Abe’s progrowth policies bolstered household spending and drove down the yen, benefiting exports. The BOJ also offered an intense burst of stimulus in April, pledging to double the base money via aggressive asset purchases to achieve its 2 percent inflation target in two years. Mr Amari said that while the government cannot force companies to raise wages, it will continue to meet business and labour union executives to seek their cooperation. Reuters
S&P warns on debt downgrade Japan could face a debt downgrade if it does not shrink its budget deficit, which is unlikely to return to primary balance by a targeted date of fiscal 2020, even if the prime minister’s policies go well, a senior official of Standard & Poor’s said. Japan’s outstanding debt burden is the highest in the world at 1,000 trillion yen (US$10.2 billion), or more than twice the size of its economy. Standard & Poor’s remains doubtful about the scale of Japanese welfare reform and how much spending can be cut, Takahira Ogawa, director of sovereign ratings at the agency, told reporters. Prime Minister Shinzo Abe is set to announce around October 1 that he will raise sales tax to 8 percent from 5 percent in April to pay for welfare spending, but the hike may not aid public finances because the government is compiling stimulus measures to offset the blow, Mr Ogawa said. “The government is taking about raising the sales tax by 3 percentage points, but the stimulus spending is worth around 2 percentage points,” he added. “In the end a 1 percent point hike may not have much of an impact.” The agency has an AA- rating on Japan, which is three notches from the top rating of AAA. S&P’s rating on Japan has a negative outlook, meaning a downgrade is possible.
The economy expanded for three straight quarters in April-June
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
13 13
September 30, 2013 April 19, 2013
Asia
Thailand cuts growth outlook As dismal output casts doubts on recovery
T
hailand cut its growth outlook this year and said policy would stay supportive as poor manufacturing output suggested Southeast Asia’s second-largest economy may struggle to emerge from recession. The fifth straight month of contraction in manufacturing output, worst than the market had expected, has fanned debate on when the economy can pull out of a downturn. Thailand is grappling with a current account deficit and capital outflow pressures ahead of a tapering in U.S. monetary stimulus. Thailand’s finance ministry cut the outlook on growth for 2013 to 3.7 percent from 4.5 percent projected in June due to weak exports and slower domestic demand. “The MPC [monetary policy committee] is expected to keep the policy rate on hold until next year to support economic growth,” the ministry’s fiscal policy office chief, Somchai Sajjapong, told a news conference. “But next year, there is a chance that the rate will go higher if inflationary pressure picks up,” he said. Exports were estimated to increase just 1.8 percent in 2013, which will
result in a trade surplus of US$4.9 billion and a current account surplus of US$1.3 billion, he said. On August 21, the MPC left the benchmark rate at 2.50 percent for a second straight meeting, saying that was appropriate for the economy to gain momentum. It next reviews policy on October 16, and most economists expect no change. Weakness in exports and slowing domestic demand pulled Thailand into a mild recession in the second quarter, as Southeast Asia’s secondlargest economy shrank on a quarterly basis in each of the first two quarters. Some analysts expect Thailand’s fortunes to improve at the year-end and the government has said the third quarter would see positive quarteron-quarter growth. “The outlook should be positive, judging from improvement in international countries which should support the export and industrial sectors,” said Pimonwan Mahujchariyawong, an economist at Kasikorn Research Centre, adding that output should improve in the final quarter of the year. Thai authorities have said the economy should pull out of recession,
Weak exports and slower domestic demand threatens recovery
Rupiah leads weekly drop on U.S. debt risk A
sian currencies fell last week, led by Indonesia’s rupiah and Malaysia’s ringgit, as concern U.S. lawmakers will be unable to resolve a budget impasse deterred risk-taking. The rupiah touched the weakest level since April 2009 on September 25 and the ringgit had its biggest weekly drop in three months. The U.S. Senate voted on Friday to finance the government through November 15 after removing language to choke off funding for a health-care law, putting pressure on the House to avoid a federal shutdown set to start October 1. Overseas investors pulled US$381 million from Indonesian and Thai stocks this
week, exchange data show. “The uncertainty in the U.S. is affecting sentiment to a certain extent,” said Joey Cuyegkeng, an economist at ING Groep NV in Manila. The rupiah slid 1.7 percent last week to 11,539 per dollar as of Friday in Jakarta, prices from local banks showed. The ringgit dropped 1.9 percent to 3.2276 per dollar, the Philippine peso weakened 0.7 percent to 43.33 and Thailand’s baht fell 0.7 percent to 31.33. India’s rupee declined 0.4 percent to 62.4975. Indonesia’s government will announce August trade data this week, after imports exceeded exports by an unprecedented US$2.3 billion in July. Bank Indonesia has increased its reference rate by 1.5 percentage points to 7.25 percent since midJune, and the monetary authority doesn’t want to see the currency “too strong,” spokesman Peter Jacobs said this month. “The rupiah continues to underperform the rest of the region” partly because government efforts to tackle the trade and current-account deficits are not expected to have much impact, said Roy Teo, a senior currency strategist at ABN Amro Bank NV in Singapore. “If we see signs that the
believing shipments will rebound in the final months of the year, usually the country’s export season. “Looking ahead, fundamentals of the economy remain sound overall. Monetary and fiscal conditions will continue to be supportive,” Bank of Thailand governor Prasarn Trairatvorakul told a conference. He said there were some concerns about the possibility of continued sluggishness in private demand, and supply-side constraints in the labour market and the production sector could hold back the future potential of investment and exports. Reuters
Vietnam to devalue dong by 2 percent Vietnam plans to devalue its currency as much as 2 percent by the end of this year and ease limits on foreign ownership in banks “in the very near future,” Prime Minister Nguyen Tan Dung said. Overseas investors could be allowed to own as much as 49 percent of lenders, Mr Dung said in an interview with Bloomberg. The government considers the dong overvalued and wants to weaken it to help boost competitiveness as other currencies in the region slump, he said. Vietnam devalued its currency by 1 percent in June, the first reduction since December 2011. “It is our plan to further devalue the dong 1 to 2 percent,” Mr Dung said during his visit to New York for the United Nations General Assembly. “That is an appropriate step that we will take given the expert advice we are getting and given the current economic situation.” The dong, which can trade as much as 1 percent on either side of its peg at 21,036 per dollar, has lost 1.3 percent this year versus the dollar, while Asian currencies from the Indian rupee to the Malaysian ringgit have dropped at least 5 percent.
BoT looks into how Bibor is set Bank of Thailand governor Prasarn Trairatvorakul said on Friday he had asked officials to look at how the Bangkok Interbank Offered Rate (Bibor), the main interbank lending rate, is set. “I’ve asked them to do that, it’s an internal matter,” he told Reuters in response to a question on whether a scandal over the manipulation of the London Interbank Offered Rate (Libor), a global benchmark rate, had prompted a review. Simon Clarke, a Hong Kong-based partner at Allen and Overy law firm who specialises in financial services, said the BoT had asked banks to review their Bibor submissions in recent weeks. Mr Prasarn didn’t say what had prompted the BoT review. There is no suggestion of any irregularities in the Bibor market and the review could be purely precautionary. Seventeen banks contribute to the Bibor rate, including Thailand’s main banks and international lenders.
trade and current-account balances are improving then we will be less bearish on the currency.” Thailand’s baht had its first weekly loss in three on concern the nation’s recession will deter foreign inflows. Barclays Plc cut the country’s 2013 economic growth forecast to 2.5 percent from 3.5 percent, citing a domestic credit crunch, waning stimulus and lack of confidence after gross domestic product decreased in the first two quarters. Overseas sales fell in each of the three months through July. Bloomberg News
The rupiah is underperforming the rest of the region
Mizuho penalised for organised crime dealings Mizuho Financial Group Inc’s lending unit was penalised by Japan’s banking regulator for failing to take steps to end more than two years of transactions with “anti-social” groups. Mizuho Bank Ltd was ordered to strengthen legal compliance and administrative controls, the Financial Services Agency said in a statement in Tokyo. The unit of Japan’s thirdbiggest bank by market value made loans to the anti-social groups, the FSA said, without identifying them. The phrase is often used in Japan to describe criminal organisations. Japanese authorities have stepped up efforts to combat yakuza gangs, whose activities range from extortion to fraud and money laundering, according to the National Police Agency. In the first penalty of its kind against a Japanese bank since 2007, the FSA told Mizuho to make a “clean break” from the groups after conducting 230 transactions, mostly car loans. “There could be reputation risks, but Mizuho may not receive any direct impact on its business as this is just an internal controls matter,” said Yoshinobu Yamada, a Tokyobased analyst at Deutsche Bank AG. “Lending to anti-social groups will become one of the main focuses of Japanese regulators in future.” Mizuho made transactions valued at about 200 million yen (US$2 million), an FSA official said at a news briefing in Tokyo, asking not to be named in accordance with the agency’s policy.
Australia to raise debt ceiling Australia’s new conservative government will introduce laws to lift its current A$300 billion (US$280 billion) debt ceiling to head off concerns Australia could reach its limit before Christmas, Treasurer Joe Hockey said. In his first full media conference as Treasurer, Mr Hockey said the legislation would be one of four key legislative packages for the new government, which swept into power at elections on September 7, ending six years of turbulent Labor rule. In a pre-election budget update, Australia’s Treasury forecast the face value of outstanding Australian government securities would reach its A$300 billion limit by December 2013 before falling back to around A$290 billion by June 30, 2014. “The debt limit is an issue we are dealing with now,” Mr Hockey told reporters. “We have to increase the debt limit, because I’m advised we will go extremely close to the debt limit of A$300 billion before Christmas. Labor refused to deal with it. We will deal with it.” In its pre-election budget and economic update, Treasury forecast the face value of government securities would peak at A$350 billion in April 2015, and then A$370 billion in April 2016, ending at A$370 billion by June 30, 2017.
14 14
September 30, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 54.95
average 54.656
Max 49
Min 54.25
average 48.667
Last 54.95
Min 48.25
Last 48.75
55.0
83.1
25.5
54.8
82.8
25.3
54.6
82.5
25.1
54.4
82.2
24.9
54.2
Max 83
average 82.625
PRICE
Last 25.2
24.7
48.8
21.55
26.6
48.6
21.40
48.4
21.25
48.2
26.5 26.4
Max 21.7
average 21.295
DAY %
YTD %
(H) 52W
Min 21.1
Last 21.3
(L) 52W
-0.553236921
9.606332905
111.3399963
85.79000092
BRENT CRUDE FUTR Nov13
108.79
-0.384580167
3.373242113
115.7599945
96.19999695
GASOLINE RBOB FUT Oct13
270.2
-0.11090573
3.847188593
298.210001
246.6799974
GAS OIL FUT (ICE) Nov13
919.5
-0.054347826
1.71460177
980.25
837
3.56
-0.196243342
-4.939919893
4.59400034
3.281000137
299.71
-0.219729001
0.207295463
322.8999853
276.1999846
Gold Spot $/Oz
1324.18
-0.8662
-20.4439
1796.08
1180.57
Silver Spot $/Oz
21.5935
-1.4994
-28.2846
35.365
18.2208
Platinum Spot $/Oz
1412.8
-1.3167
-6.9148
1742.8
1294.18
Palladium Spot $/Oz
722.9
-0.3721
3.3216
786.5
587.4
LME ALUMINUM 3MO ($)
1822
0.997782705
-12.10805596
2184
1758
LME COPPER 3MO ($)
7251
0.743313651
-8.573950322
8379.75
6602 1811.75
NATURAL GAS FUTR Nov13 NY Harb ULSD Fut Oct13
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13
1898
0.636267232
-8.75
2230
13825
0
-18.96248535
18920
13205
15.38
0.391644909
-0.227051573
16.65000153
14.77000046
457
0.054734537
-23.80158399
647
445.75
677.5
-0.110578695
-17.45354858
913
635.5
Dec13
WHEAT FUTURE(CBT) Dec13
21.10
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
26.3 Max 26.7
average 26.441
Min 26.25
Last 26.45
26.2
1321
0.322764382
1.400882748
1409.5
1162.5
COFFEE 'C' FUTURE Dec13
115.4
-0.216169477
-26.23841483
200
113.9499969
SUGAR #11 (WORLD) Mar14
18.01
-0.9895547
-12.48785228
22.14999962
16.69999886
ARISTOCRAT LEISU
86
0.62010062
9.22021844
93.72000122
74.34999847
CROWN LTD
COTTON NO.2 FUTR Dec13
World Stock Markets - Indices
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.9316 1.6078 0.9085 1.3498 98.59 7.9868 7.7543 6.1186 62.3456 31.31 1.2561 29.567 43.365 11284 91.843 1.22631 0.83951 8.2613 10.7801 133.07 1.03
-0.8303 0.1308 0.1761 -0.0444 0.0507 0 -0.0039 0.0327 -0.4279 -0.3833 -0.0478 0.1353 -0.2306 -0.7178 0.8961 0.2234 0.1787 0.0617 0.0557 0.1052 0
-10.2332 -0.6058 0.7595 2.3351 -12.6686 -0.0451 -0.0477 1.8305 -11.7901 -2.3315 -2.7625 -1.8061 -5.4422 -13.2134 -2.7395 -1.5355 -2.8695 -0.5302 -2.3163 -14.6539 -0.0097
1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.302 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 0.79291 7.8281 10.1113 99.64 1.0289
Macau Related Stocks
SOYBEAN FUTURE Nov13
NAME
Min 24.75
26.7
102.46
CORN FUTURE
average 25.127
21.70
WTI CRUDE FUTURE Nov13
LME ZINC
Max 25.45
Currency Exchange Rates
NAME
METALS
81.9
Last 81.9
49.0
Commodities ENERGY
Min 81.9
NAME
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
VOLUME CRNCY
4.6
2.908277
46.03174
4.7
2.56
1211901
15.85
1.863753
48.54733
16.08
8.92
944682
AMAX HOLDINGS LT
1.31
1.550388
-6.42857
1.72
0.75
1031295
BOC HONG KONG HO
25.15
0
4.356845
28
22.85
7553787
CENTURY LEGEND
0.435
-1.136364
64.15095
0.56
0.23
581000
6.54
1.081917
9.181974
6.74
3.68
91488
CHINA OVERSEAS
23.05
-0.6465517
-0.2164519
25.6
17.7
21738426
CHINESE ESTATES
17.58
-0.3401361
56.32853
18.12
8.168
23000
CHOW TAI FOOK JE
11.18
-0.5338078
-10.12861
13.4
7.44
1699351
EMPEROR ENTERTAI
3.51
0.2857143
85.71429
3.56
1.43
2622800
2.6
2.362205
114.5168
2.76
1.103
1902000
GALAXY ENTERTAIN
54.95
1.571165
81.05436
56
24.1
8596318
HANG SENG BK
126.8
-0.07880221
6.823929
132.8
110.6
1223408
CHEUK NANG HLDGS
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15328.3
0.3603684
16.97296
15709.58
12471.49
NASDAQ COMPOSITE INDEX
US
3787.427
0.7000082
25.43169
3798.76
2810.8
FTSE 100 INDEX
GB
6520.31
-0.6896562
10.55476
6875.62
5605.589844
DAX INDEX
GE
8619.65
-0.5130366
13.23185
8770.1
6950.53
HOPEWELL HLDGS
25.95
0
-21.95489
35.3
23.2
604500
NIKKEI 225
JN
14760.07
-0.263867
41.98956
15942.6
8488.14
HSBC HLDGS PLC
85.35
0.1760563
4.981546
90.7
72.1
13711949
HANG SENG INDEX
HK
23207.04
0.3546374
2.42804
23944.74
19426.35938
2146000
CSI 300 INDEX
CH
2394.971
0.4415287
-5.072668
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8230.68
0.5620256
6.898885
8439.15
7050.05
MGM CHINA HOLDIN
25.2
KOSPI INDEX
SK
2011.8
0.2231831
0.7385894
2042.48
1770.53
MIDLAND HOLDINGS
3.2
NEPTUNE GROUP
0.183
NEW WORLD DEV SANDS CHINA LTD
S&P/ASX 200 INDEX
FUTURE BRIGHT
HUTCHISON TELE H
3.42
-1.156069
-3.932583
4.66
2.98
LUK FOOK HLDGS I
24.6
-0.2028398
0.8196737
30.05
16.88
790000
MELCO INTL DEVEL
20.85
0.2403846
131.4095
21.2
6.55
3561150
1.408451
89.78363
25.45
12.18
2910016
-0.621118
-13.51351
5
2.68
1018000
-1.081081
20.39474
0.23
0.131
10240000
11.84
-0.3367003
-1.497508
15.12
9.98
15223638
48.75
0
43.59352
49.8
26.35
10088043
AU
5307.061
0.2380982
14.15612
5314.3
4334.3
ID
4423.719
0.4045945
2.479499
5251.296
3837.735
FTSE Bursa Malaysia KLCI
MA
1776.16
0.1127294
5.163568
1826.22
1590.67
SHUN HO RESOURCE
1.69
-0.5882353
20.71429
1.92
1.19
0
NZX ALL INDEX
NZ
1004.981
0.3327516
13.93658
1005.231
834.341
SHUN TAK HOLDING
4.35
-0.4576659
3.818614
4.65
2.92
3040539
PHILIPPINES ALL SHARE IX
PH
3841.25
0.02004958
3.846196
4571.4
3440.12
JAKARTA COMPOSITE INDEX
HSBC Dragon 300 Index Singapor
SI
615.72
-0.49
-0.86
NA
NA
STOCK EXCH OF THAI INDEX
TH
1418.21
-0.4597266
1.888019
1649.77
1260.08
HO CHI MINH STOCK INDEX
VN
486.61
0.3092082
17.61535
533.15
372.39
Laos Composite Index
LO
1299.21
0.7889592
6.951105
1455.82
1038.79
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
21.3
-0.6993007
20.01584
22.382
15.835
7271621
SMARTONE TELECOM
SJM HOLDINGS LTD
10.38
0.3868472
-26.27841
16.22
9.97
3467980
WYNN MACAU LTD
26.45
-1.30597
26.25298
26.9
19
4438274
ASIA ENTERTAINME
3.81
-3.053435
35.3616
4.7647
2.4835
100125
BALLY TECHNOLOGI
74.33
-0.1343544
66.24916
76.3
43.16
251657
BOC HONG KONG HO
3.23
-1.52439
5.211729
3.6
2.99
6665
GALAXY ENTERTAIN
7.04
1.149425
77.32997
7.16
3.11
1200
INTL GAME TECH
20.67
-1.147776
45.87156
21.2
12.37
3788033
JONES LANG LASAL
88.12
0.9392898
4.979744
101.46
72.56
372278
LAS VEGAS SANDS
66.9
1.48665
44.93068
67.351
37.8353
4792505
MELCO CROWN-ADR
31.86
0.2517306
89.1924
32.24
12.74
2238169
MGM CHINA HOLDIN
3.24
1.886792
85.11204
3.24
1.5895
1500
MGM RESORTS INTE
20.27
0.3465347
74.14089
20.41
9.15
5122058
SHFL ENTERTAINME
22.99
0.0435161
58.55172
23.09
12.35
500266
SJM HOLDINGS LTD
2.79
0.7220217
22.4965
2.9481
2.0508
7500
159.74
1.351437
42.00374
159.85
103.0933
1101144
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
AIA GROUP LTD
37.2
0.4048583
19132954
CHINA UNICOM HON
ALUMINUM CORP-H
2.87
2.135231
33834827
CITIC PACIFIC
BANK OF CHINA-H
3.58
-0.8310249
291894284
BANK OF COMMUN-H
5.83
-0.1712329
28941172
33.25
0
3169054
11.7
1.036269
12572092
BANK EAST ASIA BELLE INTERNATIO
NAME
CLP HLDGS LTD
PRICE
DAY %
VOLUME
12.12
0
15086830
9.93
0.3030303
NAME
PRICE
DAY %
POWER ASSETS HOL
67.65
0.5200594
2246086
7043870
SANDS CHINA LTD
48.75
0
10088043
SINO LAND CO
11.44
0.5272408
6186639
SUN HUNG KAI PRO
107.4
1.512287
5655414
93.4
0.5382131
1030194
417.8
2.151589
3318124
63.8
-0.2345582
2390359
CNOOC LTD
15.98
1.524778
59652361
COSCO PAC LTD
12.34
-0.1618123
7163075
SWIRE PACIFIC-A
ESPRIT HLDGS
12.06
-1.309329
3227752
TENCENT HOLDINGS
26.5
VOLUME
BOC HONG KONG HO
25.15
0
7553787
HANG LUNG PROPER
1.727447
3181206
TINGYI HLDG CO
20.95
1.452785
5085020
CATHAY PAC AIR
15.26
1.59787
3297630
HANG SENG BK
126.8 -0.07880221
1223408
WANT WANT CHINA
11.92
-0.2190808
14688084
HENDERSON LAND D
48.75
1.036269
2898142
WHARF HLDG
69.2
0.5813953
2656398
92.5
0.3253796
1431936
18.64
0.3229279
7192092
CHEUNG KONG
121
0.8333333
4088724
CHINA COAL ENE-H
4.72
0.8547009
39761300
CHINA CONST BA-H
6.06
-0.1647446
286055546
CHINA LIFE INS-H
20.55
-1.201923
29052829
CHINA MERCHANT
29.05
0
6376445
HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG
125.6
0.48
2006138
HSBC HLDGS PLC
85.35
0.1760563
13711949
CHINA MOBILE
88.15
0.7428571
15019453
HUTCHISON WHAMPO
94.15
0.1595745
4126210
CHINA OVERSEAS
23.05
-0.6465517
21738426
IND & COMM BK-H
5.54
-0.7168459
238594416
CHINA PETROLEU-H
6.19
0.3241491
101056940
LI & FUNG LTD
11.4
-0.1751313
24565555
CHINA RES ENTERP
24.9
-0.6781013
1651241
MTR CORP
30.95
1.47541
2353405
CHINA RES LAND
22.15
1.141553
4540353
NEW WORLD DEV
11.84
-0.3367003
15223638
CHINA RES POWER
18.34
0.5482456
6291708
PETROCHINA CO-H
8.71
0.5773672
62378897
CHINA SHENHUA-H
24.05
-0.6198347
18159508
PING AN INSURA-H
58.75
0.5993151
10080641
MOVERS
30
25
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September 30, 2013 April 19, 2013
Opinion Business
wires
Occupy QE
Leading reports from Asia’s best business newspapers
Taipei Times
Stephen S. Roach
Faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of The Next Asia
In addition to mounting calls from across party lines for his resignation over the controversial handling of an alleged improper lobbying case involving Legislative Speaker Wang Jin Pyng, Supreme Prosecutors’ Office Special Investigation Division Prosecutor-General Huang Shih Ming is facing investigations. Judicial Reform Foundation Executive Director Lin Feng Jeng said that the foundation has requested that the committee look into Mr Huang’s alleged abuse of power to put surveillance on telephone calls.
Asahi Shimbun Japan’s Financial Services Agency said Mizuho Bank Ltd, one of the country’s largest lenders, extended at least 230 loans worth 200 million yen (US$2 million) to gangsters. Although a Mizuho director in charge of compliance noticed the loans to the gangsters, the company failed to take action for more than two years, FSA officials said. The agency told Mizuho to clarify management responsibility and report measures to prevent a recurrence by October 28. The FSA will also investigate whether other banks are engaged in dealings with gangsters.
Jakarta Globe Indonesia will use its position as the host country of the upcoming Asia-Pacific Economic Cooperation to push for a united front among its members ahead of the 9th round of World Trade Organisation Ministerial Conference, which will be held in Bali this December, the country’s Deputy Trade Minister Bayu Khrisnamurti said. Indonesia will consider the upcoming APEC conference success if the body’s leaders “deliver a positive message for the upcoming WTO round,” Mr Bayu said. The goal is to further lower trade barriers globally.
Korea Herald South Korea’s labour productivity dropped slightly from a year earlier in the second quarter as labour input grew at a faster rate than total output, the government said. The labour productivity index for all industries in the April-July period came to 98.6, down 0.3 percent from the same period in 2012, according to the Ministry of Trade, Industry and Energy. Labour productivity for the second quarter dropped as labour input rose 1.9 percent on-year while total industrial output went up only 1.6 percent, the ministry said in a press release.
grown at an average annual rate of just 1.1 percent, easily the weakest period of consumer demand in the postWorld War II era. That is the main reason why the post2008 recovery in GDP and employment has been the most anaemic on record. Trapped in the aftermath of a wrenching balance-sheet recession, U.S. families remain fixated on deleveraging – paying down debt and rebuilding their income-based saving balances. Progress has been slow and limited on both counts. Notwithstanding sharp reductions in debt service traceable to the Fed’s zerointerest rate subsidy, the stock of debt is still about 116 percent of disposable personal income, well above the 43 percent average in the final three decades of the twentieth century. Similarly, the personal saving rate, at 4.25 percent in the first half of 2013, is less than half the 9.3 percent norm over the 19701999 period.
Little effect
The Federal Reserve continues to cling to a destabilising and ineffective strategy. By maintaining its policy of quantitative easing (QE) – which entails monthly purchases of long-term assets worth US$85 billion – the Fed is courting an increasingly treacherous endgame at home and abroad. By now, the global repercussions are clear, falling most acutely on developing economies with large current-account deficits – namely, India, Indonesia, Brazil, Turkey, and South Africa. These countries benefited the most from QE-induced capital inflows, and they were the first to come under pressure when it looked like the spigot was about to be turned off. When the Fed flinched at its midSeptember policy meeting, they enjoyed a sigh-of-relief rally in their currencies and equity markets. But there is an even more insidious problem brewing on the home front. With its benchmark lending rate at the zero-bound, the Fed has embraced a fundamentally different approach in attempting to guide the U.S. economy. It has shifted its focus from the price of credit to influencing the credit cycle’s quantity dimension through the liquidity injections that quantitative easing requires. In doing so, the Fed is relying on the “wealth effect” – brought about largely by increasing equity and home prices – as its principal transmission mechanism for stabilisation policy. There are serious problems with this approach. First, wealth effects are statistically small; most studies show that only about 3-5 cents of every dollar of asset appreciation eventually feeds through to higher personal consumption.
As a result, outsize gains in asset markets – and the related risks of new bubbles – are needed to make a meaningful difference for the real economy. Second, wealth effects are maximised when debt service is minimised – that is, when interest expenses do not swallow the capital gains of asset appreciation. That provides the rationale for the Fed’s zero-interest-rate policy – but at the obvious cost of discriminating against savers, who lose any semblance of interest income. Third, and most important, wealth effects are for the wealthy. The Fed should know that better than anyone. After all, it conducts a comprehensive triennial Survey of Consumer Finances (SCF), which provides a detailed assessment of the role that wealth and balance sheets play in shaping the behaviour of a broad cross-section of American consumers.
primary residences) with a median value of US$756,400 – nearly six times the value held by the other 90 percent. All of this means that the wealthiest 10 percent of the U.S. income distribution benefit the most from the Fed’s liquidity injections into risky asset markets. And yet, despite the significant increases in asset values traceable to QE over the past several years – residential property as well as financial assets – there has been little to show for it in terms of a wealth-generated recovery in the U.S. economy. The problem continues to be the crisis-battered American consumer. In the 22 quarters since early 2008, real personalconsumption expenditure, which accounts for about 70 percent of U.S. GDP, has
Slow progress In 2010, the last year for which SCF data are available, the top 10 percent of the U.S. income distribution had median holdings of some US$267,500 in their equity portfolios, nearly 16 times the median holdings of US$17,000 for the other 90 percent. Fully 90.6 percent of U.S. families in the highest decile of the income distribution owned stocks – double the 45 percent ownership share of the other 90 percent. Moreover, the 2010 SCF shows that the highest decile’s median holdings of all financial assets totalled US$550,800, or 20 times the holdings of the other 90 percent. At the same time, the top 10 percent also owned non-financial assets (including
The Occupy Wall Street … galvanised attention to income and wealth inequality in the U.S. and around the world. Unfortunately, the problem has only worsened
This underscores yet another of QE’s inherent contradictions: its transmission effects are narrow, while the problems it is supposed to address are broad. Wealth effects that benefit a small but extremely affluent slice of the U.S. population have done little to provide meaningful relief for most American families, who remain squeezed by lingering balance-sheet problems, weak labour markets, and anaemic income growth. Nor is there any reason to believe that the benefits at the top will trickle down. With real consumption stuck on a 1 percent growth trajectory, the bulk of the U.S. population understandably views economic recovery and job security very differently from those enamoured of wealth effects. The Fed’s goal of pushing the unemployment rate down to 6.5 percent is a noble one. But relying on wealth effects targeted at the rich to achieve that goal remains one of the great disconnects in the art and practice of economic policy. The Occupy Wall Street movement began two years ago this month. While it can be criticised for its failure to develop a specific agenda for action, it galvanised attention to income and wealth inequality in the U.S. and around the world. Unfortunately, the problem has only worsened. Lost in the angst over inequality is the critical role that central banks have played in exacerbating the problem. Yes, asset markets were initially ecstatic over the Fed’s decision this month not to scale back QE. The thrill, however, was lost on Main Street. That is precisely the point. The Fed’s own survey data, which underscore the concentration of wealth at the upper end of the U.S. income distribution, fit the script of the Occupy movement to a tee. QE benefits the few who need it the least. That is not exactly a recipe for a broadbased and socially optimal economic recovery. © Project Syndicate
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September 30, 2013 April 19, 2013
Closing Abe open to talks amid island dispute
U.S. moves closer to partial shutdown
Prime Minister Shinzo Abe (pictured) said he would keep the door open to dialogue with China amid a lull in incursions by official Chinese ships into Japanese-controlled waters around a group of disputed islands. Relations with China soured a year ago when Japan bought three uninhabited islands also claimed by China. The row has damaged trade ties between Asia’s two largest economies. “We have to get closer and have this dialogue,” Mr Abe said in an interview on the “Charlie Rose” show on PBS television, reiterating that “Our door to dialogue is open”.
The U.S. government has less than 48 hours to avert a shutdown of government services amid political divisions over President Obama’s healthcare law. Yesterday the Republican-run House of Representatives voted to pull the law’s funding, raising chances of a shutdown. The government needs to agree a new policy-wide spending bill before the U.S. fiscal year ends at midnight on Monday. If it fails, non-essential federal services face closure, with employees sidelined or left working without pay. Early on Sunday, the House passed an amended version of the Senate spending bill that removed funding from the healthcare law.
Berlusconi’s ministers resign Italy’s left-right coalition hovers on brink of collapse
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talian Prime Minister Enrico Letta’s government teetered after allies of former leader Silvio Berlusconi, led by Deputy Premier Angelino Alfano, said they planned to quit the cabinet. The nation’s leaders stopped short of dissolving the five- monthold administration, invoking procedure and scheduling a meeting between Mr Letta and President Giorgio Napolitano. Mr Letta’s government has been torn apart by legal troubles facing Mr Berlusconi, whose criminal taxfraud conviction subjects him to expulsion proceedings in parliament. Mr Berlusconi said in a statement he has lost faith in the government and called on the five ministers from his People of Liberty party, or PDL, to step down. Minutes later, Mr Alfano responded with a statement of his own saying the resignations were en route. “Everything suggests that the coalition is compromised,” Federico Santi, an analyst with Eurasia Group, said in an e-mail. “The most likely outcome is early elections, but the timing would be uncertain.” Mr Letta relies on PDL lawmakers, the second-biggest force in his three-party coalition, for a majority in the Senate. Without their support, it will be up to Mr Napolitano to either stitch together a new majority or call snap elections. Italy’s president is considering ways out of an acute political crisis.
Enrico Letta relies on PDL lawmakers for a majority in the Senate
Mr Napolitano hinted that he would try to oversee the formation of a new coalition without calling elections. Speaking on Saturday, President Napolitano called for political continuity in the country. “We need a parliament that discusses and works, not that breaks up every now and then,” he said. Political turmoil has plagued Italy, the world’s third-biggest debtor after the U.S. and Japan, throughout the euro financial crisis. Markets have calmed since European Central Bank President Mario Draghi’s July 2012 promise to protect the single currency. Mr Berlusconi, forced out in 2011, brought down his successor, Mario Monti, in December 2012. An election
in February produced a fragmented parliament incapable of enacting a programme to pull Italy from its two-year recession.
Economy risk Italian 10-year bond yields have fallen 1.65 percentage points to 4.41 percent since Mr Draghi’s commitment. The country’s economy, which has contracted since the third quarter of 2011, showed signs of continued weakness as industrial production unexpectedly fell in July. The disintegration of Mr Letta’s parliamentary alliance would put Italy’s economy and its bonds
at increased risk. Mr Letta has sought spending cuts to bring the budget deficit this year within the European Union limit of 3 percent of gross domestic product. He was also pushing for cuts to eliminate a planned 1 percentage point increase in the value-added tax scheduled to take place October 1. Mr Berlusconi, who turned 77 yesterday, said he was pulling his ministers from the Cabinet because the government wasn’t doing enough to avoid the VAT increase. Mr Letta disputed that assertion. “Berlusconi is trying to justify his foolish and irresponsible move,” the prime minister said in a statement. “Italians will see through such an enormous lie and such an attempt to totally overturn reality.” Mr Letta is determined to call a confidence vote in parliament, which may occur tomorrow, daily Il Messaggero reported, without citing anyone. The Italian premier is counting on the support of some PDL lawmakers who are ready to abandon Mr Berlusconi, the newspaper said. Should Letta fail to secure support, the alternative would be a government with a limited mandate and a tight time line to pass crucial reforms such as the election law and the budget stability law before a new vote, Il Messaggero said. “Needless to say, the ongoing political scenario is now expected to weigh on Italian BTPs,” whose yields and spreads versus other European countries’ debt showed “a great deal of nervousness over the past few weeks,” Annalisa Piazza, an analyst at Newedge Group in London, said in a note to clients yesterday. Bloomberg News
EU stands firm on aviation emissions Several countries say interim regulatory schemes should not be allowed
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urope cannot accept a global deal to curb the growth of aviation emissions through a markets-based scheme starting in 2020 unless it allows for regional measures to operate in the interim, its top climate change official said. Connie Hedegaard, European Commissioner for Climate Action, said because it would take at least seven years to get a global market scheme in place, measures like the EU’s emissions trading scheme are needed in the meantime. Several countries, including India and Vietnam, said that interim regulatory schemes should not be allowed and all references to the schemes should be excised from ICAO’s text.
Ms Hedegaard spoke as delegates from more than 190 countries worked furiously at the United Nations International Civil Aviation Organisation’s (ICAO) assembly in Montreal to hash out an agreement on ways to reduce emissions from the global airline industry. A deal could be near completion by Wednesday. “Now we have the chance to agree that yes, these airline emissions should be regulated. But this scheme is not entering into force tomorrow,” Ms Hedegaard told Reuters in an interview in New York. “We should still have our own regional scheme until then.” The question of whether foreign carriers need to comply with these measures ahead of a global deal is
the most contentious issue at ICAO’s triennial assembly. Brussels last November postponed a law that would have required all airlines to pay for their emissions for the entirety of their flights into and out of European airports. The so-called stop the clock effort was meant to give ICAO time to strike a global deal and avert a trade war from trading partners such as China, India and the United States, who said the measure infringed upon on their sovereignty. As a compromise, the commission agreed that if ICAO reaches a deal, it would apply its law to foreign airlines’ emissions within European airspace. “While we’re doing this, of course Europe will have to regulate airline
emissions. Those who can afford to fly long distances should cover the cost of their emissions,” Ms Hedegaard said. The gathering heads into its second week today trying to resolve that and other contested items contained in an emissions proposal agreed to by ICAO’s 36-member governing council earlier this month. The European Union is under pressure to preserve its right to regulate part of the emissions from flights into and out of the continent. It faces a fresh threat of legal action by European airlines and pressure from European lawmakers, who criticised the commission for already conceding too much. Reuters