Macau Business Daily, October 7, 2013 by Business Daily

Page 3

Vitor Quintã

MOP 6.00

Workers want 1 MOP30 per hour min wage

April 19, 2013

Year II

Number 386 Monday October 7, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Golden Week visitors up 10.7 pct Page 5

City tightens tax avoidance rules

Call for statutory ban on non-res dealers Page 9

Brought to you by Zung Fu Motors (Macau) Limited

www.macaubusinessdaily.com

Hang Seng Index 23140

23122

23104

23086

23068

23050

Lending breaks record Junkets eye credibility, as casinos get digging markets in new show New domestic lending by Macau’s banks was greater in August than in any other month yet as casino operators developing new resorts in Cotai drew on syndicated loan facilities. Macau residents and companies borrowed 7.6 billion patacas (US$951.6 million) in August, the Monetary Authority of Macau announced on Friday. It was the highest figure since the authority began collecting monthly lending data in 1984, according to Business Daily’s calculations.

The exhibition space allotted to junket operators at the new Macao Gaming Show next month is almost sold out, says Virgil Chan, the event’s director of operations. The preliminary list of junket exhibitors includes David Group, Heng Shen Group, Jimei Group, Macau Golden Group, as well as Suncity Group, which claims to be the “number one junket operation in Macau in terms of scale”.

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October 4

HSI - Movers Name

%Day

CITIC PACIFIC

9.22

KUNLUN ENERGY CO

1.24

CHINA UNICOM HON

1.07

CHINA RES ENTERP

1.00

LENOVO GROUP LTD

0.74

CHEUNG KONG

-1.44

HENDERSON LAND D

-1.44

WANT WANT CHINA

-2.75

CHINA MOBILE

-2.89

GALAXY ENTERTAIN

-3.07

Source: Bloomberg

Interview

CESL Asia needed more than ever: CEO CESL Asia’s chief executive António Trindade admits the environment services firm missed out on valuable public contracts because it wouldn’t pay bribes to Ao Man Long, the territory’s former Secretary for Transport and Public Works. But CESL – marking its 25th anniversary this year – says its expertise, including solid waste disposal, water management and conservation and environmental impact assessment, is needed more than ever as Macau grows. Pages 6 & 7

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October 7, 2013

Macau Households may pay 5 pct less in power tariffs Electricity tariffs for households and small and medium enterprises may be reduced by about 5 percent once the new power rates scheme is introduced, likely to by year-end. A representative from the Office for the Development of the Energy Sector said yesterday at a public event that they had already finished the analysis report on the new scheme, which was proposed last year. They were working on the details of the scheme, which is planned to be introduced this year, said the representative quoted by public broadcaster TDM. Iun Iok Meng, advisor to the executive committee of power supplier Companhia de Electricidade de Macau SA, estimated that most households and SMEs may enjoy reductions of about 5 percent on the electricity tariffs. Under the new scheme, big users like casinos and hotels will have to pay more.

Mainland flights help airport growth in Sept The mainland Chinese market continues to be the main support for growth in the number of passengers and aircraft movements at the Macau International Airport. Macau International Airport Co Ltd (CAM) said in a press statement on Saturday that the airport handled over 435,000 passengers in September, an increase of 13.2 percent from a year earlier. CAM noted the number of mainland passengers rose 25 percent year-on-year last month while the international market grew by 12 percent. The number of aircraft movements last month also went up by 12 percent to a total of 4,148 landings and takeoffs. The company also said it saw “no significant impact” in the passenger volume since the new law on tourism rules came into effect in the mainland on October 1. The airport recorded a 35-percent rise in the number of passengers on October 1. In the statement, CAM also says China Eastern Airlines will launch the route linking Macau to Kunming this month, and that charter flights to Cambodia are expected to be launched in November.

MTEL seeks cooperation with CEM New fixed-line telecommunications operator Companhia de Telecomunicações de MTEL, Ltda plans to cooperate with Companhia de Electricidade de Macau SA (CEM) to lay down its cables, in a bid to minimise impact on residents. MTEL said in a press statement on Saturday night its management board had met with the city’s electricity supplier to discuss the potential cooperation plan. The two companies may be able to share some underground pipe network, and could also benefit from the exchange of related skills, said the press statement. This can “avoid repeated road constructions and minimise the impact on residents,” the statement added. The statement also said that CEM expressed “openness” towards the potential cooperation. MTEL received the new licence in June and has 18 months to lay down the cable network to cover 30 percent of all households here. In June MTEL chairman admitted that, as the government had taken longer than expected to approve its fixed-line telecommunications licence, the company had missed the opportunity to lay cables afforded by all the work on infrastructure, such as public housing and the Light Rapid Transit railway, which began last year.

Correction In last Monday’s edition we ran a story on page four, titled ‘Pansy Ho sustainable tourism ambassador’. In it, we referred to “…Macau Tower – a venue owned by Shun Tak Holdings Ltd”. Shun Tak contacted Business Daily to point out that Macau Tower Convention and Entertainment Centre is owned by Sociedade de Turismo e Diversões de Macau, SA, and managed by Shun Tak Holdings. Shun Tak added in its email: “…Shun Tak has investments in STDM”. To our readers and the companies involved we apologise for the error.

Macau strengthens cross border tax rules Paris-based OECD previously threatened to label city a ‘tax haven’ Tony Lai

Tony.lai@macaubusinessdaily.com

acau’s effort to improve its tax system has been praised – according to the Macau government – by the international body that nearly blacklisted the city and neighbouring Hong Kong as ‘tax havens’ four years ago. The official report from the Parisbased Organisation for Economic Cooperation and Development (OECD) had not been published at the time Business Daily went to press. But the Financial Services Bureau said in a statement yesterday that a review group by the OECD “unanimously agreed that Macau has the relevant legal and regulatory framework and the body in charge can effectively implement the practical tax information exchange, complying with international standards”. The results of the OECD’s socalled ‘peer review’ of Macau had been due to be published in the first half of this year. An earlier report about the quality of Macau’s legal and regulatory framework was approved in 2011. The government’s latest statement came after a Macau delegation attended a four-day meeting in Paris of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. The forum began a review of tax jurisdictions in 2006, looking at the mechanisms existing between tax areas for the sharing of information,

and how tax avoidance was handled. In spring 2009, OECD concerns about tax rules in Macau and Hong Kong were raised at a meeting of the G-20 – a club for rich and emerging economies. China, a G-20 member, moved to block any suggestion of blacklisting the two jurisdictions. That was agreed, on the understanding the OECD was allowed to review tax practices in the two cities. Macau was initially placed on a ‘grey list’ of tax areas that “substantially” implement the standards. The same year Macau passed legislation to enable the exchange of banking information – on request – by another jurisdiction,

to counter any risk of Macau being used for tax crimes. Further commenting on the latest review – ahead of the official findings – the bureau said: “The Macau SAR government will study and follow up the recommendations suggested in the [review] report in short time”. It did not specify what were the recommendations. Macau has so far signed socalled Tax Information Exchange Agreements or Double Taxation Conventions (DTC) with 15 jurisdictions. The city has completed talks with the United Kingdom on a possible TIEA and made draft agreements with Spain and Japan.

Govt pays MOP6.9 mln to Reolian’s employees The government promises the workforce that they will get their salaries and bonuses as usual Tony Lai

Tony.lai@macaubusinessdaily.com

he government has forked out 6.9 million patacas (US$862,000) to help bus operator Reolian Public Transport Co Ltd pay its employees. The company sought last week to be declared bankrupt. The government took over Reolian’s operations a day later. The Transport Bureau said in a written statement on Friday that the company would be asked to reimburse the money later. Reolian’s employees were supposed to be paid for September on October 1. That was the day the bus operator sought bankruptcy, saying it had no money to pay its employees. The next day the government announced that it was taking over Reolian’s operations for at least six months. Chinese-language news media

quoted some Reolian staff saying the government had paid them their salaries for last month, but not their bonuses, which Reolian usually paid in the middle of each month. “The government will continue pay the salaries of Reolian employees based on the timetable Reolian has been using,” the Transport Bureau said on Friday. The bureau said all employees, including managers, would keep their jobs. Reolian’s managers have come in for some heavy public criticism. Macau Legal System Research Association president Alex Chan Wa Keong said on public broadcaster TDM’s “Macau Forum” programme yesterday: “Its management board must also bear responsibility, and I do not know why the government

still has to pay their salaries.” Mr Chan said the government might not get its money back if Reolian was declared bankrupt. The government said last week that it would cost 19 million patacas to keep Reolian running. The Transport Bureau said the government used to pay Reolian about 14 million patacas a month to run its bus services.

October 2013 April 19,7,2013

Macau editorial

Inept bureau

T Casino operators need money for their projects in Cotai (Photo: Manuel Cardoso)

Lending breaks record as casinos get digging Domestic lending climbs to a new peak as banks head for another banner year for profit Vítor Quintã

vitorquinta@macaubusinessdaily.com

ew domestic lending by Macau’s banks was greater in August than in any other month so far as casino operators developing new resorts in Cotai drew on syndicated loan facilities. Macau residents and companies borrowed 7.6 billion patacas (US$951.6 million) in August, the Monetary Authority of Macau announced on Friday. It was the highest figure since the authority began collecting monthly lending data in 1984, according to Business Daily’s calculations. Monetary Authority of Macau senior economist Ada Ho played down the significance of the record, saying August’s figure was only 3.3 percent higher than July’s. Ms Ho told Business Daily that as the economy had grown in the past few years, so had credit demand, and that it was natural for lending to reach new peaks. She said almost 80 percent of the new lending in August was to Macau residents and that the rest was for trade financing. No data on new lending to each sector of the economy are available. A bank executive told Business

Daily that the increase in August was probably due to casino developers drawing on syndicated loan facilities they had already secured. All six casino operators have plans to build or expand casino-resorts in Cotai between 2015 and 2017. Most of these companies have big syndicated loan facilities. “All it takes is for them to mobilise a part of it and lending will jump right up,” said the bank executive, who asked to not be identified because his company does not authorise him to speak to the news media. In January Melco Crown Entertainment Ltd signed an agreement on a syndicated loan of US$1.4 billion (11.18 billion patacas) for its Studio City project. Reports in other news media said almost 30 banks were in the syndicate, including 10 Macau institutions. Another bank executive told Business Daily in April that banks here were “very willing” to finance the projects of casino operators “as long as they have the capability”. Lending outside Macau by the city’s banks rose only slightly in August to 267 billion patacas. Lending abroad

is the most profitable sort. Banks pay low interest rates on deposits here. The six-month benchmark rate was about 0.56 percent at the end of August. They can lend the money elsewhere at interest rates that are higher than they could charge at home but which are competitive abroad. Banks lent outsiders 1.7 times wh a t th ey h a d i n the b a n k i n August. Deposits by non-residents rose by 3.6 percent from July to 161 billion patacas. The combined operating profit of the banks increased to 707.3 million patacas in August, 2.6 percent more than a year earlier. The banks are on track towards another banner year, having made more money in the first eight months of this year than in all of 2011. Their combined operating profit in the first eight months was 5.4 billion patacas, 40 percent more than in the equivalent period of last year. Last year was the best ever for the banks, but this month they are likely to overtake last year’s combined profit of 6.3 billion patacas and set a new record.

he government took over the operations of Reolian Public Transport Co Ltd last week, just one day after the bus operator sought to be declared bankrupt because it ran out of money to pay its workers. A day later the head of the Transport Bureau said the way the government dealt with the situation showed how it was ready to handle such crisis. He may be right. However, what a government should do is to try to prevent such a crisis from occurring, especially when it plays a big role in the crisis in the first place. Under the new arrangement introduced in August 2011, the three bus operators collect fares and hand them to the government, which in return pays them to run the buses. This was hailed as the best solution to guarantee service quality – a promise that has yet to be fulfilled. Reolian was the newcomer and, unlike the others, had to hire hundreds of drivers, who must be Macau residents. Preventing the bus operators from employing expatriate drivers made no sense, especially considering how they face competition from unregulated complimentary coach services offered by casinos, which are able to pay much higher wages. The result is the poor bus service the city endures, bus drivers with no experience and too many bus accidents, not to mention the age of some of the buses. Without experienced drivers, the service did not improve – and that applies to all three bus operators, not only Reolian. Moreover, in April the government approved an increase of 23.3 percent in what it pays Transportes Urbanos de Macau SARL (Transmac) and Sociedade de Transportes Colectivos de Macau SARL (TCM) to run their services, but left Reolian out. At the time it was not made public what evaluation system was being used, and only in July did officials make public that a trial of such a system had given Reolian a score of 59.78, the pass mark being 60. The final version of the evaluation system is due to be ready only next year, the Transport Bureau has said. Talk about building a house on shaky foundations. In between, we see no end to traffic chaos here. The bus system has been heavily criticised by the Commission of Audit and also in the court of public opinion. Most of the time, Macau’s taxi industry is simply not working unless you wave some money at a cabbie. On the other hand, the number of private cars keeps increasing, as do the numbers of tourist and casino shuttles. The government seems to have no control over the city’s traffic, five years after it established the Transport Bureau. If the government is so quick to act in dealing with private companies, we should expect the same swiftness in dealing with public services, unless we are all satisfied with its lack of accountability.

Workers want MOP30 per hour min wage

leaners and security guards want to be paid a minimum wage of 30 patacas an hour it emerged yesterday. Bosses only want to give them 26 patacas, heard two consultation sessions organised by the government. The debate concerns solely those occupations. The administration says other lowpaid workers must wait.

Some worker representatives in the morning sessions justified their demand on the grounds that by the time the government makes a decision, inflation will have further affected the buying power of the minimum rate. But some bosses of cleaning firms warned in the afternoon session that such rates could spark a “panic wave of rises on the building management

fees” paid by households. They think the amount should be capped at 26 patacas an hours so that the small and medium enterprises can continue operations. The government has proposed a minimum wage for the two occupations ranging between 23 patacas and 30 patacas an hour. T.L.

If the government is so quick to act in dealing with private companies, we should expect the same swiftness in dealing with public services

October 7, 2013

Macau

Junket operators seek image makeover at gaming show They also wish to satisfy their appetite for business in markets beyond Macau Vítor Quintã

vitorquinta@macaubusinessdaily.com

any big VIP gaming promoters will take part in the Macao Gaming Show next month, searching for respectability and new markets in Asia, the organisers say. The preliminary list includes David Group, Heng Shen Group, Jimei Group, Macau Golden Group and Suncity Group, which claims the title of “number one junket operation in Macau in terms of scale”. The three-day Macao Gaming Show will cover over 10,000 square metres of space at the Venetian Macao. The show’s director of operations, Virgil Chan, told a press conference on Friday that the space for junket operators was “almost sold out”. Mr Chan said the main purpose of junket operators in taking part was “to improve their reputation”. The United States Department of State has routinely associated VIP gaming promoters with money laundering and organised crime.

KEY POINTS Junket operators seek better image Listing in Hong Kong is one option Expansion in Asia on their agenda

Lui’s wealth surges by US$10 bln G

alaxy Entertainment Group Ltd founder Lui Che Woo’s wealth has leaped by US$10.2 billion (81.5 billion patacas) this year – and US$1 billion on Thursday – as Macau draws record gaming revenue and his shares hit a new high. Mr Lui has a net worth of US$22.1 billion, according to the Bloomberg Billionaires Index, and is ranked as the second-richest individual in Asia, trailing Hong Kong developer Li Ka Shing. His fortune is now bigger than that of Lee Shau Kee, Cheng Yu-Tung, Mukesh Ambani and Gina Rinehart, all overtaken by Mr Lui in 2013.

Mr Chan said junket operators wished to change that image. “People don’t understand, but junkets are becoming more professional,” he said. But junket operators were at a disadvantage in competing with Macau’s casino operators to attract talented people, he said. Mr Chan said that, in an effort to improve their reputations, several junket operators were pondering listing their shares, which would make them subject to stock exchange regulation. He told Business Daily that Hong Kong was the preferred place to list.

Hunger for more “People in Hong Kong are more willing to speculate on gaming stocks,” he said. He gave the “success” of Galaxy Entertainment Group Ltd as an example. Galaxy Entertainment became the first gaming company to be listed at the Hong Kong Stock Exchange in 2005. Junket operators Neptune Group Ltd and Dore Holdings Ltd are also listed there. VIP gaming room investor Asia Entertainment & Resources Ltd is preparing to list by introduction in Hong Kong. It is already listed in the United States. Mr Chan believes Suncity Group will be the next VIP gaming promoter to make an initial public offering of its shares in Hong Kong. Mr Chan said junket operators were also taking part in the Macao Gaming Show because they hungered for new markets. He thinks the market in Macau, while not saturated, is becoming limited for junket operators seeking growth. He said most junket operators had regional marketing teams. “They are definitely seeking to expand their business outside Macau,” he said.

Only Facebook Inc’s Mark Zuckerberg and Ikea founder Ingvar Kamprad have made more money this year. The 84-year-old billionaire and his son Francis Lui Yiu Tung are expanding their flagship casino Galaxy Macau in the city’s Cotai area to capitalise on record visits by gamblers from throughout China. “Travel from China’s central and northern provinces is growing as economic activity spreads from the southern manufacturing base,” according to Bloomberg Industries analyst Tim Craighead. “The trend is benefiting Macau as rising visits from more distant regions boosts overnight stays and pares the city’s reliance on neighbouring Guangdong.” Macau’s casinos had 28.96 billion patacas in gross gaming revenue last month, 21.4 percent more than a year earlier, according to data from the gaming regulator. Visitors to Macau rose 14 percent on October 1 and 2 amid China’s National Day holidays last week, when hotels are known to

Many changes will occur in the junket business, Virgil Chan says

The organisers said in a written statement that the show would include a conference on casino growth in Asia and the business opportunities offered by such growth.

Opportunities for SMEs Mr Chan said the results of a Macau Polytechnic Institute study of the future of gaming in Macau would be revealed during the conference. “There will be many changes in the junket business in the next five years,” he said. Fitch Ratings said in August that one such change might be a wave of consolidation, as smaller junket operators were absorbed by larger, financially stronger operators. Mr Chan disagrees. “VIP gaming promotion is a very personal business, where trust and connections are

extremely important,” he said. He said that, for casinos, having more tables meant more revenue, but that the VIP gaming promotion business was different. “It’s not as simple as that,” he stressed. The organisers of the show expect about 6,500 visitors and 100 exhibitors. Nearly 80 exhibitors have confirmed their attendance. The organisers are now focusing is on luring small and medium enterprises to the show. The head of the Association of Advertising Agents, Keyvin Bi Chi Kin, told Business Daily that the aim was to allow smaller businesses to take the opportunities created by the gaming boom. Mr Chan said Macau had the biggest gaming market in the world, so there was no reason why it should not make its own casino equipment and expand its know-how.

Lui Che Woo

triple their room rates. Gross gaming revenue in 2013 is expected to grow 17 percent to US$44.5 billion from a record US$38 billion last year, according to Deutsche Bank AG analyst Karen Tang in Hong Kong. On Friday, gaming shares declined after jumping on higher Macau casino

revenue in the previous day. Galaxy slumped 3.1 percent to HK$56.90. Galaxy shares have soared 122 percent in the past 12 months and reached a record high on Thursday. Mr Lui owns a 65 percent stake in Galaxy directly and through a family trust. Bloomberg News

October 7, 2013

Macau

Visits up 10.7 pct in first five ‘Golden Week’ days Tourists sleep at Coloane campsite as room rates soar, but SME boss says it’s ‘market forces’ Michael Grimes

michael.grimes@macaubusinessdaily.com

Golden moments – Chinese tourists at start of National Day holiday period

ourist arrivals in the first five days of the Golden Week holiday rose approximately 4.7 percent year-on-year according to Macau Government Tourism Office. Visitor numbers from mainland China were up nearly 10.7 percent compared to the same period in 2012. But the Macau Travel Industry Council said on Saturday that the weekend after National Day is typically the busiest period. “In the past, October 5, 6 and 7 are the peak [days] for the visits of the mainland package tours in Golden

Week,” said Andy Wu Keng Kuong, the council’s president, speaking to the Chinese language media on the sidelines of an event. He added that a ban from October 1 on so-called ‘zero fare’ package trips from the mainland had led to a “20 to 30 percent” fall in tours done in the package format during the period. But he stated: “…there are still many visitors coming under the Individual Visit Scheme to supplement Macau’s [tourism] market so there is no significant decline on the overall visitor figure in

business as usual

Public farce

Paulo A. Azevedo pazevedo@macaubusinessdaily.com

would be very surprised if the two remaining bus operators did not welcome with open arms the routes that belonged to the now bankrupt Reolian Public Transport Co Ltd – and if, eventually, they did not say they wished to receive compensation from the government at the rates they are now being paid instead of the lower rate Reolian was being paid, even though they are all supposed to have equal contracts. I was surprised, I must say, by the readiness shown by a transport official in coming forward with such a proposal, scarcely 24 hours after Reolian declared bankruptcy. From the beginning, the Reolian story has been a farce, starting with the unlikely episode of the government first denying and later accepting Sociedade de Transportes Colectivos de Macau SARL’s bid to operate bus services, thus allowing, in a Macaustyle twist, the company to be sold to Nam Kwong (Group) Co Ltd not long after. The people in charge of Reolian, at least the ones that appeared in public, made the same mistake as many other investors that do not know how deep some relationships here can go. They always thought they should refrain from looking a gift horse in the mouth, hoping to be treated more fairly in the long run. Now they have learned how deep relationships can go, as many others have learned when their businesses clashed with longer-established operations. The Reolian story joins those of Macau Dragon and Viva Macau – just to mention the cases in the transport industry – in showing the world once again an image of Macau as a place where investors cannot trust the business environment – and definitely cannot trust the institutions that should investigate officials responsible for dubious decisions. If we continue to hear such stories (and so many similar tales that do not reach the press), the “diversification efforts” will turn out to be no better than the abilities of certain officials: simply a bad joke.

this Golden Week. And there is even no significant decline in the business of the hotel and retail industries.” There were a total of 678,371 arrivals from Tuesday October 1 to Saturday October 5 inclusive, according to data supplied by the Public Security Police. Nearly 82

percent – or 555,401 people – were from the mainland. Business Daily reported last week that according to MGTO the cheapest five-star deluxe room on Cotai during the first part of Golden Week was 5,888 patacas (US$737). Ieong Weng Seng, president of the Association of Macau Small and Medium Enterprises of Catering said on Saturday that prices were a function of supply and demand. “It reflects a free-market mechanism when [we] charge [customers] more during the mandatory holidays,” said Mr Ieong. “The rents, the costs for labour and the raw materials are all inflated. It is not a matter about the charges but whether the service quality can be raised to make the tourists feel satisfied,” he added. He stated that SMEs “continue to fair well” with “about a 10 percent rise in business compared with last year”. Macao Daily News reported on Friday that some mainland visitors stayed at the campsite at Hac Sa Beach, Coloane, due to the soaring hotel room rates during the holidays. Mr Ieong said he was optimistic that four walking trails – to attract visitors beyond the old town and downtown areas – that were launched by the tourist office last week will be good for the restaurants and cafes in those areas. Union Gaming Research Macau said last week it expects casino revenue this month to grow by between 16 percent and 19 percent year-on-year. That would produce a monthly total of between 32 billion patacas and 33 billion patacas. With Tony Lai

October 7, 2013 April 19, 2013

Macau Brought to you by

HOSPITALITY Bumpy takeoff The combined revenue of travel agencies rose by almost 78 percent from 2007 to last year. The financial crisis had some effect on the industry, but less than might have been expected. Business slowed a bit in 2009, when combined revenue fell by 2.1 percent and purchases of goods and services fell by 1 percent. The total value added by the industry fell in 2008 only. That points to tighter margins, which may have been due to demand dictating lower prices before costs could adjust. Total value added rose by 57 percent in the period under review, less than combined revenue, indicating narrower operating margins. But that did not prevent the number of travel agencies from increasing by 14 to 169 between 2008 and 2009 – the biggest relative increase in the past five calendar years.

REVENUES AND COSTS PER EMPLOYEE 250

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50 2007

2008

2009

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Operating Expenses Gross value added Salaries

CESL Asia’s work needed more than ever: CEO In a wide-ranging interview with Business Daily in the year of the firm’s 25th anniversary, CESL Asia’s chief executive António Trindade says the firm missed out on valuable public contracts because it wouldn’t get involved in the graft of Ao Man Long, the territory’s former Secretary for Transport and Public Works. But CESL says its environmental expertise – including solid waste disposal, water management and conservation and environmental impact assessment – is needed more than ever as Macau grows. He says CESL Asia will be focusing on new technology including solar energy and bringing expertise to solve the city’s wastewater issues. The CEO, who is also president of the city’s Environmental Industry Association, says that in the 1990s the city was a regional leader in best environmental practice but has now lost ground and is facing very serious challenges. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

Each of the main costs incurred by travel agencies changed differently. Compensation per employee rose by 46 percent, rising fastest in 2008 – by 18 percent. Operating expenses per employee rose by 56 percent, even though they fell in 2008 and in 2009. Revenue per employee rose by 10.5 percent, more slowly than combined revenue. Purchases of goods and services per employee rose by 9.7 percent. The outcome of these trends was that gross value added per employee fell by one-quarter in 2008 and has yet to return to its pre-crisis levels.

92 %

Rise in operating expenses of travel agencies, 2009-2012

CESL Asia is celebrating 25 years. What have been the main accomplishments and setbacks over this period? We set up as a service and knowledge company…for clients and the community at large. Knowledge is an interesting thing, because it’s universal, but what is important is the application of knowledge for local use. We were pioneers in finding [creating] a space based on local people – coming out of local universities or students from overseas – where they can apply their knowledge and service to third parties, clients or the community. We spotted this need in Macau in the late 1990s, when Macau started the big investments in the airport, the incineration plant, the wastewater treatment plants. We developed in the past few years a team of almost 500 people, more than 80 percent local, a very big part of them graduates. We retained them

and kept the people motivated and doing things that were never seen in Macau. We set up 10 years ago a social investment programme. This company is a pioneer [in that]. We are encouraging the engagement of ourselves with the community and getting the community together in programmes that are not business programmes, but aim at developing people, socially, intellectually, physically, also in welfare. We [also] manage almost 100 million patacas of energy value every month, to keep casinos in operation, to treat the water. We are a group of dedicated people making sure there is minimum impact [from commerce and industry] – the least possible smell, the least possible impact on the community. We have never had a blackout or a disruption from our services. When we operate the wastewater plant or the incineration plant, there has never been a history in our case of a substantial disruption of service for [that was] our fault.

We have never had a blackout or a disruption from our services.

You’ve mentioned successes, but over these 25 years you’ve also had some setbacks. Which would you highlight? Even apparent setbacks, we learn from them, we positively learn from them, and we go after the best things. For instance, when we lost the incineration plant after we did a fantastic job, it was a depressing time in the company, when the company as a whole felt that we had to give up and [yet] we had so much in our mind that we could contribute. We had to accept that we had to wait for other opportunities. Most of the people we had were with us for many years, and within weeks they were all working with new contracts, producing new things, working also with the new casinos in Cotai that were opening. In the context of 25 years nothing happened that has changed the perspective of a company that deals with high knowledge and applies it. One of the most recent setbacks you’ve suffered is the delay in the government signing the contract for the wastewater treatment plant in Areia Preta. How has that affected its operation? We provided [a] service and we did

the best we could. We did a lot of improvements in certain conditions. Despite the constraints over that year, we were working, looking at the problems. We could not be investing, because it was not appropriate as we didn’t have the mandate to do that, but while operating we have improved the operating performance of the water treatment, we have improved the operating performance of the emissions and [reduced] the smells, and we made a lot of effort to evaluate the solutions of the problems we were discovering. Still, there was the issue of the bad smell. Was this a consequence of the delay of the contract? Yes, it affected [that]. The problem was there years before. One more year was just one more year, but one more year of continuous improvement. In four or five years, we want to be a model plant, with no smell at all and clean water to be reused. If you look that deep, you can say we delayed one year to achieve that. What is your timeline to have the renewal of the plant finished? We have to go step by step. We have to make sure we are able to work with the government and together we can achieve the results that we commit to. Ultimately, despite the details of a few hundred pages of contract, there is the end result, which is 180,000 cubic metres of recycled water to be produced at the end of five years. We obviously expect to keep going in the water business, we think that water would be a business that interests us. You have signed the contract, but the bad smell around the water treatment centre is still there. When and how do you expect to cope with it? We believe there are solutions for that. We are discussing with the government ways to achieve that, but again we cannot deal with these things in isolation. Sometimes, you have to deal with them in the context of overall solutions, because the complexity has changed, the knowledge has changed and the engineering has changed. We are trying to transform a whole plant for the future. This plant was designed 20 years ago, no matter how smart engineers and constructors were then, naturally the world is different. We are doing something new, we have to deploy this ability to look at what is there and try to see what is feasible to implement. I am very positive we have a solution. There are a few wastewater treatment plants of similar nature in the middle of highly densely populated areas in cities, sitting there and you don’t even notice they are there. We are investigating that, we know it is possible and it can be done.

Stay in the finest hotels in Macau and read Business Daily news where it matters

October 2013 April 19,7,2013

Macau

Why did the government delay for such a long time the signature of the contract? Because there are a lot of pressures on the government, ultimately this is the reason. Did it also have to do with the Ao Man Long corruption case? It’s part of it, obviously. The question here is what is the solution? Also, it has to do with the position of the partners that the government can choose from. Can the government choose from partners that are ready to invest in the objectives? Or are these contractors just the contractors to do this job [for] two or three years? You have said in previous interviews, that because you refused to pay bribes to the former secretary you lost many contracts. How exactly has Ao Man Long impacted CESL Asia? Simple…We simply didn’t do it, so we lost our contract. We couldn’t deliver what some people expected from us. We bid all the wastewater plants and we lost always in second position. Our offer was not good enough. I’m sure our offer was good and would eventually win, if we would have [paid bribes], but we didn’t and we lost. That’s the result. As for Macau, it is trying to put up recycle water plants and, as far as I know, for six or seven years, there are none in operation. That’s a result [of the Ao Man Long corruption case]. But I want this to be put in the perspective of the future… In Macau, have you seen a lot of progress on environmental protection over these years? Macau has been doing reasonably in the past 20 years or so. The pressures now are that in the

1990s and in the beginning of the 90s, and in the beginning of the 21st century, we had quite good infrastructures environmentally, and we were performing well for the needs of Macau. We were doing so well, that we had visitors from all over the world, to look at how things were being done here. Yet, now we are coping barely with the pressures and then the pressures of the traffic of moving people around - there is a lot more people and visitors - and particularly the traffic puts a lot of pressures on air quality. That’s the daily topic. Suddenly, you have problems with salinity in the amount of water China could send to us. One good thing that happened is that the environment has become a visible part of the concerns of the government and the population. We now have an Environmental Protection Bureau, we didn’t have 10 years ago, despite all these pressures. How positive has been the work of the Environmental Protection Bureau? It was the best thing for Macau in the past 10 years. They are catching up with a lot of work. There was almost no regulation 10 years ago in Macau. Even today, in Hong Kong, if you build a building you have to demonstrate that the road outside of your building has the capacity to deal with the traffic the building is going to generate. We are far from reaching this level of concern. We are concerned with very basic things, but the very basic ‘basics’ we are still not coping with it. What is lacking for the bureau to do a better job? It is not [about] an isolated entity. It’s a broader approach that needs to be taken. The

In four or five years, we want to be a model plant, with no smell at all and clean water to be reused. …when we lost the incineration plant after we did a fantastic job, it was a depressing time…

Environmental Protection Bureau is dealing with the very basic, environmental infrastructures, environmental policy building a body of legislation, which is not easy, because Macau is not an easy situation. You don’t have industry and you don’t have many services. If the Environmental Protection Bureau decides we have to look at the wastewater coming from the restaurants, how can it be done? The single biggest problems in Macau are energy, scarcity and energy waste, water – the waste of water, not only the consumption, but the re-use of it. We are getting almost [all] of the good water that China can produce and we should have a target of 80 percent reduction [in consumption].

Looking at the future, what will be CESL Asia’s main projects? We decided to invest in technology. We are investing in solar power plants and we are trying to cooperate closely with the technology developers. It’s going deeper – providing our influence – not only in the design stage but also on the core of the technology. We are investing in new technology and new water [provision]. We are bringing in more expertise in terms of water, not only traditional water [supplies], but re-used water, desalination and so forth. We are putting up proposing] new energies, because energy is part of all this. We can also make a [cultural] bridge. We work with Chinese companies here and we are under the Portuguese regulatory system. A lot of the problems that happen for instance with the Chinese investments in Africa relate to different language [communication]. There are different environments, ways of administrating private contracts, [providing] conflict resolutions. There is a lot of potential contribution we hope to make. What’s your take on the minimum wage proposal, now under public consultation? We are a high-value service company. As a company we don’t have [a] minimum wage. We aim to pay more, that’s the nature [of the business], not only to retain people, but because it’s a measure of success. We need to pay for people to sustain their living standards, but they can only do that if they have employment. [There’s] No need for a cleaner, if the restaurant closes. It’s trial and error. ‘Yes’ to a minimum wage, it is important to set up one as soon as possible.

October 7, 2013 April 19, 2013

Macau

China gambles on theme park to boost Hengqin Chimelong may lure punters away from Macau casinos

himelong, which is set to partially open next month, is the linchpin of China’s ambitious plans to expand Hengqin Island into a leisure hub. The US$5 billion (39.9 billion patacas) resort and theme park will be completed with a mega rollercoaster and a whale shark tank, just a few hundred metres from Macau. And while some extravagant infrastructure projects in China have turned into white elephants, the odds are on Hengqin’s side largely due to the support of the Beijing government and the island’s proximity to the millions of tourists who throng to Macau every year. “I don’t have many doubts that it will be successful,” said Philip Tulk, director of equities research at Standard Chartered Bank in Hong Kong, referring to the island which the government designated as a special economic zone five years ago. “The mainland people are looking for entertainment and travel options that are reasonably easy. They strongly desire new and interesting places to go and if Chimelong can deliver on that it will be massively successful,” he added. The construction boom on Hengqin, just a 10-minute drive from Macau, comes at a time when mega-resorts are being developed in Asia in places like Taiwan, South Korea, the Philippines and Vietnam to tap the region’s growing ranks of wealthy tourists. Most of these visitors are Chinese and many choose to stay close to home, heading to Macau, where gaming revenues grew by more than a fifth last month to just over 28.9 billion patacas.

Ideal solution Macau welcomed almost 30 million visitors last year, but the government’s plans to increase that number are being stymied by a lack of land and strained infrastructure and services. Enter Hengqin, which is three times the size of Macau and which boasts long, sandy beaches and thick, mountainous forests. “Macau is small and there are too many people. It needs to be expanded. Chimelong is a good complement. It is positioned as leisure tourism,” said Niu Jing, director of the administrative committee, or local government, of the Hengqin New Area. Hengqin has been part of the central government’s plan to develop the Pearl River Delta since 2008, and the island is being groomed as a test bed for political and economic projects between the southern Guangdong province and the special administrative regions of Macau and Hong Kong. The Hengqin model also fits in with China’s plans to boost consumer spending to lift the economy and wean growth away from the manufacturing sector. By June, 56 important projects together costing 226.3 billion yuan (295.4 billion patacas) were in store for Hengqin and work costing 44.6 billion yuan had been completed, the director of the Hengqin New Area Administrative Committee’s Bureau of Communication and Cooperation,

Hengqin – gearing up to become China’s newest family friendly resort city

The customer is wanting a bigger and bigger experience … and in Macau, we just don’t have the land and it would be too expensive Francis Lui, deputy chairman, Galaxy Entertainment Group

Liu Yang, said last month during a conference here. The island had 244 registered companies with combined capital of over 20.9 billion yuan. Hengqin officials say the island has so far attracted investments from companies like Hong Kong conglomerate Shun Tak Holdings Ltd, Italian luxury yacht maker Ferretti Group and Starwood Hotels & Resorts Worldwide Inc. Ferretti, controlled by Chinese machinery group Shandong Heavy Industry, is building its Asia Pacific headquarters on the island as well as a yacht club and a navigation school. Pansy Ho Chiu King, Hong Kong’s richest woman and managing director of Shun Tak, calls Hengqin the perfect solution for Macau. The property-totransport conglomerate is building a complex that will include offices, homes and a hotel on the island. “We need to work on a plan to assimilate and to make sure that in the future, Macau would be in the centre of things but also integrated with the development and the future of the whole Pearl River delta,” Ms Ho, the daughter of Macau gambling tycoon Stanely Ho Hung Sun, told Reuters.

The government has banned gambling on Hengqin, but that has not deterred Macau’s billiondollar casino operators. Galaxy Entertainment Group Ltd is considering investing in sports stadiums, golf courses and a marina on the island to complement its Macau casinos, deputy chairman Francis Lui Yiu Tung told Reuters. “The customer is wanting a bigger and bigger experience … and in Macau, we just don’t have the land and it would be too expensive,” he said. “So Hengqin is going to be very important for us.”

Looking ahead By 2016, Hengqin will also be linked to Macau in the east and Hong Kong to the north by a bridge. Rail services will also be extended to Hengqin. Forests of cranes and scaffolding jut out from pockets of Hengqin as companies like Zhuhai Huafa Group Ltd and Shimao Property Holdings Ltd race to develop the island, where wooden stilt houses still dot parts of the shoreline. Property prices have soared, with new houses near the central business district costing more than double the amount per square metre than in the nearby Zhuhai island. Palm-fringed, six-lane highways line the island while residential highrises are cropping up as the pace of construction has picked up in the past year. Home to fewer than 8,000 people now, officials forecast the island’s population to rise to over quarter of a million in seven years time. The marine-themed Chimelong resort, headed by Chinese businessman Su Zhigang, is the biggest project to open on the island this year. Its coral-hued towers, topped by blue onion-domes, will house 1,880 hotel rooms, a conference centre, a spa and an indoor water park. The University of Macau, which finished construction of its Hengqin new campus in July this

US$5 bln Price tag on Chimelong’s new theme park

year on a site 20 times larger than its Macau location, will formally welcome students there for its next academic year. Major lenders such as Bank of China Ltd, Bank of Communications Co Ltd and Agricultural Bank of China Ltd have set up temporary offices in Hengqin’s central business district to help drive its development. The island is also hoping to lure business with tax breaks and new financial policies that include allowing companies to develop offshore business in foreign currencies and piloting the exchange of the yuan, Macau pataca and Hong Kong dollar. Reuters

Macau is small and there are too many people. It needs to be expanded. Chimelong is a good complement Niu Jing, director of the Hengqin New Area

October 2013 April 19,7,2013

Macau

Ban non-locals as dealers – by law: unions Labour activists want Chief Executive’s personal pledge enshrined in legislation Tony Lai

tony.lai@macaubusinessdaily.com

he city’s largest labour grouping is demanding the government pass a law to ban non-residents from working as casino dealers. At the moment the policy is in the form of a personal – though public – pledge from the city’s Chief Executive Fernando Chui Sai On. “We demand the government… use legislative means in banning non-residents working as casino dealers and pit supervisors to soothe the public, which will then not be panicked by rumours,” said Lam Heong Sang, legislator from the Macau Federation of Trade Unions, speaking on Friday. It followed a meeting that day with the Chief Executive and Francis Tam Pak Yuen, Secretary for Economy and Finance, to discuss the issue. Mr Chui’s office released a press statement late on Friday. It said the government is “willing to study the feasibility” of the unions’ request. “The [numerical] growth of gaming tables and the human resources in Macau must be compatible,” Mr Chui was quoted as saying, adding the government is also concerned about how to enable more locals to be promoted within the industry. Mr Chui also called for more vocational training for casino staff. “We will talk with the six gaming operators very soon on how to support more training opportunities [for gaming workers] and help them be promoted,” he said yesterday on the sidelines of a public event. Mr Tam added in the statement that the number of new live dealer tables would not exceed an annual compound growth of three percent in the next ten years. Mr Chui last Monday repeated his previous pledge on barring non-

Local jobs for local people, say unions

locals from being casino dealers at the city’s venues. “In the past I have said several times and also expressed in the Legislative Assembly that dealer positions will only be filled by locals under my term,” he stated on the sidelines of pre-National Day celebrations. It was this reference to “under my term” that appears to have alarmed labour groups, as it doesn’t appear to bind future chief executives to the same policy. According to Public Security Police estimates, a total of 1,400 people took to the streets on October 1 – the day after Mr Chui’s comments – to voice disquiet about even the idea of non-locals as dealers. The furore came a week after Michael Leven, president and chief operating officer of Las Vegas Sands Corp, suggested in the mildest terms at an investor conference in Las Vegas

that the locals-only policy on dealers was “…going to put some limit on the availability of people unless the government rules are changed”. The company was at pains subsequently to point out it had not lobbied the Macau government for a change in the rules. But the fact that fierce protection of locals’ employment rights is the preferred policy for the city’s voters as well as its leaders was clearly illustrated last week. One demonstrator from last Monday told the Chinese-language service of local public broadcaster Teledifusão de Macau: “How can Macau people survive with imported workers? We cannot make our living. The imported workers are younger than us; their education is higher than us. What can we do then?” Macau’s gaming revenue, and public revenue via gaming tax, has grown more than fivefold since 2005, the year after the first of the

new operators brought mass market gaming venues appealing to mainland Chinese visitors – to the market. Kwan Tsui Hang, another legislator from the trade unions, said after Friday’s meeting with the officials: “We hope the government will have action as soon as possible.” “The current laws leave room for the government to use bylaws and [chief executive] dispatches to ban importing labour in some job positions or job types,” she stated. She hopes the Chief Executive’s policy address in November will give clear direction on the issue. There will reportedly be another protest – this coming Thursday – against non-resident casino dealers. Secretary Tam said on Friday “one of the factors” in deciding the growth rate of the casino industry would be “the willingness of the gaming operators to input on the non-gaming elements”. Mr Tam said in July that 2015 would be the “appropriate time” to start reviewing the future of the six gaming concessions and subconcessions. They are due to expire between 2020 and 2022. With Michael Grimes

KEY POINTS Call for statutory ban on non-res dealers Personal pledge from Chief Executive not enough Unions want law plan in CE’s November policy address

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October 7, 2013 April 19, 2013

Greater China

Beijing boosts Malaysia ties Xi says Malaysia plays important role in Asean

hina President Xi Jinping signed agreements to boost economic cooperation and defence ties with Malaysia as U.S. President Barack Obama scrapped his tour of the region. Mr Xi signed a new five-year pact aimed at increasing bilateral trade to US$160 billion by 2017 and arranged to exchange army and navy personnel after meeting Malaysian Prime Minister Najib Razak on Friday. China will also help Malaysia set up a space and science laboratory as part of series of new initiatives, the president said. “China understands, Malaysia’s important role in Asean and we would like to participate and cooperate in prosperity and stability of this region,” Mr Xi told reporters in Putrajaya, near Kuala Lumpur. “We would like to have closer cooperation in defence, law enforcement, security, naval and military exchange, combating terrorism and transnational crime.” Mr Obama’s absence may add to growing anxiety in Asia that the U.S. is too preoccupied with internal political challenges to focus on countering China’s rising

influence in the region. Mr Obama has staked his second-term foreign policy on enhancing the U.S. presence in the Pacific. An increasingly assertive China has unsettled some U.S. allies in the region, including Japan and the Philippines. Malaysia Defence Minister Hishammuddin Hussein said in an interview in August that Malaysia is not worried about how often Chinese ships patrol areas it claims in the South China Sea, differing from other Southeast Asian claimants on the threat posed by China. Malaysia is one of six claimants to land features in the South China Sea, an area where competition for gas and fish has led to boats being rammed and survey cables cut. “Economic cooperation remains the cornerstone of Malaysia-China bilateral relations,” Mr Najib told reporters. “Malaysia recognises China as an important partner in its national economic development.”

1MDB agreement Malaysia is China’s largest Southeast Asian trading partner, with total

Xi Jinping, left, met with Najib Razak ahead of the APEC summit

trade reaching US$88 billion last year, according to data compiled by Bloomberg. About a fifth of Malaysia’s exports, including palm oil, went to China in 2012, making it the country’s biggest overseas market, the data show. The trade pact comes amid slowing growth in both countries. The world’s second-largest economy

Xi, Taiwan’s Siew meet on APEC sidelines

hinese leader Xi Jinping yesterday held talks with a top Taiwan official ahead of a regional economic summit in Indonesia, state media reported, in the latest sign of warming ties between the former rivals. Mr Xi met Vincent Siew, Taiwan’s former vice-president, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, which starts today, the official Xinhua news agency said. The first such China-Taiwan meeting at the APEC forum was in 2008 when tensions between the two started thawing. Mr Xi emphasised that both sides should keep pushing for peaceful development of relations, Xinhua said. He added that the idea of “both sides of the Strait are of one family” should be advocated, referring to the Taiwan Strait, the body of water dividing the two sides. Mr Xi also said that both sides should strengthen communication and cooperation and work together to rejuvenate the Chinese nation. Mr Siew, honorary chairman of the Taiwan-based Cross-Straits Common Market Foundation the island’s special envoy to APEC, had

is projected to expand 7.6 percent this year, easing from 7.7 percent in 2012, according to economists’ estimates compiled by Bloomberg News. Malaysia’s US$304 billion economy will grow 4.5 percent this year, slowing from last year’s 5.6 percent expansion, according to forecasts compiled by Bloomberg.

The Export-Import Bank of China signed an agreement with state investment fund 1Malaysia Development Bhd to jointly explore investment opportunities in the Southeast Asian nation, including a financial district being developed in Kuala Lumpur, according to a separate statement. Bloomberg News

Zeng’s ‘Last Supper’ sold by US$23.3 mln

said last week ahead of the meeting that it would be brief and focused on bilateral economic and trade issues along with increasing regional economic integration. He also said he would not deliver any special message to Mr Xi from Taiwanese President Ma Ying Jeou, and discussions would not touch on “things in the future”. Taiwan’s leaders are barred from APEC summits due to objections from China, which claims sovereignty over the island, and are represented instead by senior economic advisers or business leaders. Bilateral ties have improved markedly since Mr Ma of the Chinafriendly Kuomintang party took power in 2008 on a platform of promoting trade and reconciliation with the mainland. In June 2010 Taiwan and China signed the landmark Economic Cooperation Framework Agreement, a pact widely seen as the boldest step yet towards reconciliation. Taiwan has been a major investor in China in recent years, providing more than US$100 billion in financing according to some estimates, as well as technological know-how. AFP

painting by Zeng Fanzhi sold for HK$180.4 million (US$23.3 million) Saturday night, leading records set at an auction by Sotheby’s in Hong Kong. People in the sale room cheered as each bid came in on the work and as the hammer fell. The price including fees, paid by a telephone buyer after almost 10 minutes of bidding, was the most paid for an Asian contemporary artist at auction. The 2001 oil painting “The Last Supper” had been estimated to sell for more than HK$80 million at hammer prices. The work is from Swiss couple Myriam and Guy Ullens de Schooten, who are selling off parts of what’s considered one of the best private collections of contemporary Chinese art. Mr Zeng’s work is based on Leonardo da Vinci’s wall painting in a style that recalls Francis Bacon. Nearly four metres (13 feet) long and 2.2 metres high, it shows Christ and his 12 disciples wearing masks and communist Young Pioneers uniforms seated at a table strewn with watermelon fragments. It was sold to a private bidder who has agreed to honour a commitment by the Ullens to lend the work to the

The Last Supper

Musee de L’Art Moderne de la Ville de Paris in an exhibition opening on October 18, said Alexander Branczik who took the winning telephone bid. Sotheby’s earned HK$1.13 billion in the 62-lot sale, the New York-based company said. Six lots failed to sell. Earlier a triptych by Chinese abstract painter Zao Wou Ki sold for HK$85.2 million. The price was the most paid at auction for the artist, who died in April, beating the HK$69 million figure set in 2011. A work by Juan Luna sold for HK$25.88 million, a Philippine auction record, nearly five times its high estimate of HK$5.5 million. A painting by Pan Yuliang sold for HK$17.44 million, setting a record for the Chinese woman artist who died in 1977. Bloomberg News

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October 2013 April 19,7,2013

Greater China

HTC posts quarterly net loss Smartphone maker under pressure to find partner

aiwan’s HTC Corp slid into the red for the first time in the third quarter, adding to the case for the troubled smartphone maker to abandon its prized independence and reach out for a white knight soon. Like other strugglers in the sector, HTC has been laid low by the product and marketing might of Apple Inc and Samsung Electronics Co Ltd – woes that have been exacerbated by supply chain constraints and internal turmoil. But where Nokia Oyj has fallen into the arms of Microsoft Corp and Blackberry Ltd is now in play with one disclosed offer and another being considered, HTC has stuck to its guns that it is not for sale despite what analysts call an increasingly bleak outlook. HTC posted a quarterly operating loss of T$3.5 billion (US$120 million) as sales tumbled by a third from a year earlier, underscoring a dramatic decline for a company which boasts award-winning smartphones but has failed to develop a durable brand image. “Fundamentally there are a lot of things that need to be fixed,” said Laura Chen at BNP Paribas, adding that HTC needed to work on marketing, supply chain management and streaming its product line. “No sign of recovery anytime soon.”

HTC hit by competition, supply chain woes and internal feuds

HTC’s troubles have pushed its shares down some 55 percent for the year to date and sparked calls for the company to consider a radical overhaul. A JPMorgan note in July called for the company to look at merging with China’s Huawei

Technologies Co Ltd. Huawei has since said it is not planning to acquire another smartphone maker to grow its market share.Responding to growing speculation about a possible merger, Cher Wang, HTC’s low-profile

chairwoman and co-founder, has repeatedly ruled out selling the company and has said a low share price did not bother her. Ms Wang hails from an entrepreneurial dynasty and her father, the late Wang Yung Ching, was the founder of Taiwan’s Formosa Plastics Group. She currently owns 3.8 percent of HTC and has built a reputation for no-nonsense simplicity and cool-headedness in the face of pressure. At a net level, HTC booked a loss of T$2.97 billion, bigger than an expected loss of T$1.8 billion, according to Thomson Reuters SmartEstimates. That compares with a net profit of T$3.9 billion in the same quarter last year. Although its shares slid as much as 4 percent after the results, they later rebounded to trade 1.5 percent up on day, helped in part by a client note from Fubon Securities which said it believed HTC would team up with a Chinese IT manufacturer either through a potential cooperation deal or merger. HTC declined to comment on the Fubon report. The company’s share of the global smartphone market has plummeted from a peak of 10.3 percent in the third quarter of 2011 to 2.6 percent in the most recent quarter, according to research firm Gartner. Reuters

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October 7, 2013 April 19, 2013

Asia Obama cancels Asia summit trip U.S. President Barack Obama called off plans to visit Asia and attend two summits because of the U.S. government shutdown, raising questions about the strategic “pivot” to the region that he announced just two years ago. Mr Obama had planned to depart on Saturday for a four-nation, week-long trip. He cancelled visits to Malaysia and the Philippines earlier last week because of his budget struggle in the U.S. Congress and said on Friday he would not attend the regional summits in Indonesia and Brunei. The political standoff over the U.S. budget has shut down non-essential government services and appeared likely to drag on for another week or longer. Another crisis looms in two weeks when lawmakers must decide whether to increase the U.S. government’s US$16.7 trillion debt borrowing limit. “The president made this decision based on the difficulty in moving forward with foreign travel in the face of a shutdown, and his determination to continue pressing his case that Republicans should immediately allow a vote to reopen the government,” the White House said. Mr Obama was scheduled to meet Russian President Vladimir Putin, Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe, among other leaders, at the summits. Two of his main aims would have been to discuss the Syria crisis with Mr Putin and to hold talks on a maritime code of conduct for disputed territories in the oil- and gas-rich South China Sea. “I think the summit will go on, there is a longterm plan. [But] without Obama, you can imagine how disappointed we are. We could hardly imagine he wouldn’t come,” said Indonesian Information Minister Tifatul Sembiring on the island of Bali, host of the Asia-Pacific Economic Cooperation (APEC) summit. Mr Obama was also scheduled to attend the East Asia Summit, organised by the Association of Southeast Asian Nations (ASEAN), in Brunei this week.

APEC sees growth risks as outlook challenging Ministers agree to refrain from raising new barriers to trade and investment Shamim Adam

lobal growth will probably be slower and less balanced than desired, ministers from the Asia-Pacific Economic Cooperation member economies said. The world economy is too weak and “risks remain tilted to the downside,” ministers from the 21-member grouping said in a statement in Bali. The Asia-Pacific region will have a harder time preserving growth, given volatility in financial markets and a slow recovery in advanced nations, Moody’s Investors Service said. “What we are sensing is that there is a change in the economic cycle and sustaining the levels of economic growth that we have seen in the region over the last five years is going to become more challenging,” Michael Taylor, Moody’s chief credit officer for Asia, told reporters in Bali. The region still has a “long way to go” to shift from export-led growth to that driven by domestic demand, he said. A slowdown in China and India is reverberating across the region with the Asian Development Bank forecasting expansion at a fouryear low in 2013, putting pressure on policy makers to bolster their economies. The Group of 20 countries repeated their concern last month that stimulus pullback in developed nations may prove damaging to global markets.

Protectionist policies

Rupee leads weekly advance in currencies Asian currencies rose last week, led by India’s rupee, on speculation the Federal Reserve will delay reducing stimulus amid a U.S. political impasse. The Bloomberg-JPMorgan Asia Dollar Index gained 0.5 percent in the five days through yesterday as the U.S. government started a partial shutdown. “Asian currencies are riding on the tailcoats of a weaker dollar,” said Vishnu Varathan, an economist at Mizuho Bank Ltd in Singapore. “Increasingly, the chances of an October taper are almost extinguished, but that will take the backseat the moment we get too close to a debt-ceiling crisis.” India’s rupee climbed 1.7 percent last week to 61.44 per dollar in Mumbai, according to data compiled by Bloomberg. The Malaysian ringgit appreciated 1.4 percent to 3.1827, the Philippine peso gained 0.7 percent to 43.05, while Taiwan’s dollar advanced 0.5 percent to NT$29.502. The rupee touched 61.2637 on Friday, the strongest level since August 13, after better-than-forecast current-account data boosted optimism that the annual gap will narrow from a record. The deficit was US$21.8 billion in April through June, compared with US$18.1 billion in the previous quarter, the Reserve Bank of India said. “Expectations of improvement in the current account and funding are materially important for the rupee,” analysts at Morgan Stanley, including Hong Kongbased Geoffrey Kendrick, wrote in a research report. “We are tactically constructive on the rupee.”

APEC members must work to prevent protectionism, and improve infrastructure to facilitate trade and investment, Indonesian President Susilo Bambang Yudhoyono said in a speech in Bali yesterday to about 1,000 business executives. Giving in to protectionist tendencies will make things worse for all countries, Singapore Prime Minister Lee Hsien Loong said at the same event. “While overall confidence in growth from Asia-Pacific operations remains undiminished, we see many of the uncertainties associated with slow growth, previously limited to the more developed markets, now challenging developing economies as well,” Dennis M. Nally, chairman of PricewaterhouseCoopers International Ltd, said in a report released at APEC that surveyed more than 470 senior company officials in the region. Trade ministers are seeking momentum during the Bali meetings on a 12-nation trade pact as concessions sought by countries threaten to delay completion further from the end of 2013. The TransPacific Partnership, which involves countries such as the U.S., Australia,

Leaders of 21 Pacific Rim economies gather for the APEC Summit in Bali

Japan, Malaysia and Vietnam, would link an area with about US$28 trillion in annual economic output. “The pattern of aggregate demand is changing in the region, but it is not significant enough to drive growth at the same pace prior to the crisis,” the Pacific Economic Cooperation Council said in a statement to APEC ministers. “While investment has been increasing, some of this is due to the very cheap cost of capital during this extraordinary period,” the council said in the statement. “As long-term interest rates return to normal, more needs to be done to improve the investment climates in our respective economies.” Speculation over the future of the U.S. Federal Reserve’s quantitative easing programme has whipsawed global assets since May, when chairman Ben S. Bernanke first signalled cuts may start in 2013. Four months of rising bond yields around the world and reduced capital flows into emerging markets were thrown into reverse by the Fed’s surprise decision in September not to pare its US$85 billion in monthly asset buying.

Malaysia risks China needs more economic and financial reforms, while structural changes in Japan are essential for the country to grow, Mr Taylor from Moody’s said. For Malaysia, Moody’s senior analyst Christian de Guzman said risks are tilted to the downside. Prime Minister Najib Razak raised subsidised fuel prices for the first time since 2010 last month and has said he will delay some infrastructure projects, seeking to contain the budget gap after Fitch Ratings cut Malaysia’s credit outlook to negative in July. The government is considering a goods and services tax in the 2014 budget due October 25. “While we do have a stable

outlook, there has been deterioration in Malaysia’s credit profile over the past five, six years,” Mr de Guzman said. “If the measures announced in the budget are not strong enough to move the needle, perhaps we may reconsider the rating. At the same time, we do want to recognise that there are important strengths in Malaysia as well.”

Open markets APEC ministers said they will recommend their leaders extend through the end of 2016 a commitment to combat protectionist measures and roll back such policies that exist. “We reaffirmed our commitment to keep markets open and to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing WTOinconsistent measures in all areas, including those that stimulate exports,” the ministers said. Sixty-eight percent of chief executive officers in the Asia-Pacific region plan to increase investments next year, with China, the U.S. and Australia among top destinations over the next three to five years, the PricewaterhouseCoopers report showed. Bloomberg News

US$28 trln

Annual economic output of countries involved in the TransPacific Partnership

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

October 2013 April 19,7,2013

Asia

Pacific trade pact unlikely this year: Malaysia

huge free trade deal in the Asia-Pacific is unlikely to be signed this year, Malaysia said yesterday, a day after the United States said the year-end deadline was achievable. Prime Minister Najib Razak said the end of the year was a “very tight timeline” for the Trans-Pacific Partnership (TPP). He told a press conference after a bilateral meeting with his Canadian counterpart Stephen Harper that discussions at the two-day AsiaPacific Economic Cooperation (APEC) summit starting today would offer “a sense of whether that timetable is feasible”. “But our sense is that it may take longer than that time horizon of the end of the year,” Mr Najib added. U.S. Trade Representative Michael Froman had said Saturday negotiators made “significant progress” on sensitive issues after negotiations with counterparts in the Indonesian island of Bali before the APEC summit. U.S. President Barack Obama has said he wants to reach an accord by the end of this year on the free trade area, which would account for more than 40 percent of the global economy. The United States has spearheaded negotiations for the TPP, describing it as creating “gold standards” for the 21st century economy by taking into account fast-changing sectors such as intellectual property.

However, there has been resistance from various members within the group of 12 nations to many provisions within the TPP, and analysts believe a deal matching U.S. ambitions by the end of this year is impossible. The pact would bring together the economies of the United States, Australia, New Zealand, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Canada, Mexico

and Peru. China, which has not been invited to join TPP talks, is pursuing a rival free trade deal involving 16 AsiaPacific countries. The United States has used the trade deal as part of its so-called strategic “pivot” to the Asia-Pacific, emphasising the economic benefits for the region if it goes ahead. AFP

Reuters

Najib Razak, Malaysia’s Prime Minister

Japan’s central bank refrains from more stimulus Leika Kihara

GDP upgrade Early last week, Prime Minister Shinzo Abe said he would proceed with a planned increase in the sales tax to 8 percent from 5 percent next April, and cushion its impact with a 5 trillion yen (US$51 billion) stimulus package. Mr Kuroda said the tax rise was an important first step in reining in Japan’s huge public debt which, at double the size of its US$5 trillion economy, is the biggest among major industrialised nations. He also said the stimulus package would give a significant boost to growth, suggesting the central bank

will revise up its long-term economic forecasts when they are released on October 31. The BOJ upgraded its assessment on capital expenditure to say it was picking up, adding strength to its view the economy was recovering moderately and suggesting that no additional monetary policy measures are needed to counter the impact of the sales tax increase. Japan’s economy has now grown for three successive quarters as Mr Abe’s reflationary policies bolstered household spending and drove down the yen, benefiting exports, with annualised growth of 3.8 percent in April-June outpacing many G7 nations. The BOJ expects the sales tax hike to shave about 0.7 percentage point off growth, and estimates the economy will expand 1.3 percent in the business year beginning in April 2014. “I don’t think the BOJ’s view that the sales tax hike won’t derail the recovery is too optimistic,” said Junko Nishioka, chief Japan economist at RBS Securities. “But the 2 percent inflation remains a distant goal. Core consumer inflation could hit 1 percent early next year. But it’s an uphill battle from there.”

It may take longer than that time horizon of the end of the year

reached at an early date,” Mr Kuroda said. Through its massive holding of U.S. government debt, Japan is one America’s biggest creditors. Other top international policymakers have also warned that a failure to raise the U.S. debt ceiling before midmonth would be a serious blow to the world economy. As widely expected, the BOJ kept intact its intense monetary stimulus launched in April, under which it aims to double base money via asset purchases to meet its target of lifting inflation to 2 percent in roughly two years.

SGX-directed trading suspensions fairly rare he Singapore Exchange Ltd suspended trading in three stocks on Friday, warning the market may not be fully informed of the companies’ affairs after a plunge in their share prices, with one falling more than 60 percent. The bourse first halted trading in diversified company Blumont Group Ltd, whose stock has risen as much as 12 fold this year, after it slumped 56 percent in morning trade. It later suspended gold miner LionGold Corp Ltd and investment company Asiasons Capital Ltd. Shares in Asiasons, which is the biggest investor in LionGold and whose stock nearly trebled in the past month, fell 61 percent before trading was halted. LionGold, whose stock had jumped as much as 60 percent this year, fell 42 percent. None of the three companies responded to requests by Reuters for comment. The SGX declined to give comment beyond its statement that trading had been temporarily suspended “as there could be circumstances that would result in the market not being fully informed”. “People cannot really explain why the share prices have gone up so rapidly on high volume,” said William Tng, analyst at CIMB Research. “There seems to be a disconnect between the share price surge and the business in terms of cash flow and profitability.” “LionGold and Blumont have been making a series of acquisitions, but the potential earnings or returns from these acquisitions are uncertain at this point in time,” Mr Tng added. The move by the exchange comes after a spate of reverse takeovers in the market, which has seen many smaller companies break away from their core businesses and enter into unrelated areas, raising issues of corporate governance. The SGX also queried recent trading in three other companies, Innopac Holdings Ltd, ISDN Holdings Ltd and ISR Capital Ltd, which all fell sharply on Friday. Asiasons is the biggest shareholder in ISR, while LionGold has a stake in Innopac. Blumont and LionGold have a non-executive independent director in common. In an exchange filing, Asiasons said it had been informed that there were “malicious market rumours that a team from the Monetary Authority of Singapore has been sent to the company’s office to carry out investigations. The company confirms that such market rumours are false.” Smaller capitalised shares are the most actively traded on the Singapore bourse, which has been pushing for greater retail participation in the market.

BOJ warns of impact from U.S. fiscal standoff

prolonged U.S. budget standoff would hit global markets very hard, the Bank of Japan warned as it said it was ready to top up its existing massive stimulus if the recovery underway in the world’s third-largest economy was threatened. But for now, BOJ governor Haruhiko Kuroda saw no need to ease policy further as Japan was on the path to escape deflation and, if international risks receded as hoped, government fiscal stimulus would further boost growth next year. The U.S. budget deadlock and fears of an unprecedented U.S. default dragged Tokyo shares to a four-week low and boosted the yen, casting a cloud on an otherwise upbeat outlook for Japan’s exportdriven economy. “If this continues for a long time, this could destabilise financial markets and worsen sentiment,” Mr Kuroda told reporters on Friday after a two-day policy review meeting, adding that the BOJ was ready to respond to any sudden shocks. He declined to comment on the possibility of a U.S. debt default, but said the consequences of a prolonged standoff on global markets would be “severe”. “We sincerely hope a solution is

Singapore halts trading in three stocks after plunge

14 14

October 7, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 85.60

58.4 57.7

26.50 26.32

85.00

26.14

57.0

Max 58.3

average 56.443

Min 55.65

25.78

55.6

Last 56.9

Max 85.60

average 84.218

Min 83.80

Last 84.25

48.80

Max 22.20

average 21.737

PRICE

DAY %

YTD %

(H) 52W

0.513019069

11.08258451

111.3399963

85.79000092

103.84

BRENT CRUDE FUTR Nov13

109.46

0.422018349

4.009882174

115.7599945

96.19999695

GASOLINE RBOB FUT Nov13

260.76

-1.212304895

1.549964951

293.6000109

243.3699846

GAS OIL FUT (ICE) Nov13

921.5

-0.351446337

1.935840708

980.25

837

NATURAL GAS FUTR Nov13

3.506

0.200057159

-6.381842457

4.59400034

3.281000137

NY Harb ULSD Fut Nov13

299.9

-0.14317584

0.368139224

322.3500013

276.8100023

Gold Spot $/Oz

1311.09

0.3536

-21.2303

1781

1180.57

Silver Spot $/Oz

21.735

0.779

-27.8147

34.5625

18.2208

1388.06

0.6935

-8.5449

1742.8

1294.18

Platinum Spot $/Oz Palladium Spot $/Oz

698.9

-2.2011

-0.1086

786.5

587.4

LME ALUMINUM 3MO ($)

1844

0.930487137

-11.04679209

2184

1758

LME COPPER 3MO ($)

7260

1.043841336

-8.460471567

8355

6602

1872.5

0.240899358

-9.975961538

2230

1811.75

14050

3.881700555

-17.64361079

18813

13205

14.87

-0.201342282

-3.535517353

16.65000153

14.77000046

443.25

0.910643142

-26.09420592

647

435

687

-0.326441785

-16.29607067

913

635.5

3MO ($)

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

Min 21.15

Last 21.80

(L) 52W

WTI CRUDE FUTURE Nov13

LME ZINC

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

28.80 28.45 28.10 27.75 Max 28.7

average 27.91

Min 27.4

Last 27.95

27.40

SOYBEAN FUTURE Nov13

1295

0.523966621

-0.594895414

1409.5

1162.5

114.4

-0.823580407

-26.87759668

198.3000031

113.1999969

NAME

SUGAR #11 (WORLD) Mar14

18.48

-0.215982721

-10.20408163

22.14999962

16.69999886

ARISTOCRAT LEISU

COTTON NO.2 FUTR Dec13

87.18

-0.29733535

10.71882144

93.72000122

74.34999847

CROWN LTD

World Stock Markets - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15072.58

0.5074524

15.02152

15709.58

12471.49

NASDAQ COMPOSITE INDEX

3807.754

0.8852137

26.10487

3819.275

2810.8

FTSE 100 INDEX

6453.88

0.07504993

9.428411

6875.62

5605.589844

DAX INDEX

8622.97

0.2914662

13.27546

8770.1

6950.53

NIKKEI 225

14024.31

-0.9390242

34.91166

15942.6

8488.14

HANG SENG INDEX

23138.54

-0.3267799

2.125705

23944.74

19426.35938

CSI 300 INDEX

2409.037

0.587314

-4.51514

2791.303

2023.171

TAIWAN TAIEX INDEX

8364.55

0.06615608

8.637571

8439.15

KOSPI INDEX

1996.98

-0.124533

-0.003508593

2042.48

S&P/ASX 200 INDEX

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9435 1.601 0.9072 1.3558 97.48 7.9872 7.7546 6.124 61.44 31.28 1.2465 29.372 43.307 11381 91.967 1.22979 0.84679 8.3411 10.8583 132.14 1.03

0.5756 -1.2643 -0.5842 -0.3015 0.2154 0 -0.0013 -0.0539 0.4883 -0.016 0.1604 0.0477 -0.4664 1.3092 -0.3512 -0.2602 -0.953 -0.211 0.0451 0.5449 0

-9.0865 -1.0262 0.9039 2.79 -11.6742 -0.0501 -0.0516 1.7407 -10.4899 -2.2379 -2.0136 -1.1542 -5.3155 -13.9531 -2.8706 -1.8141 -3.7046 -1.4818 -3.0198 -14.0533 -0.0097

1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3005 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 0.8968 1.2662 77.95 7.9818 7.7498 6.1064 51.9525 28.56 1.2152 28.913 40.54 9577 79.408 1.20302 0.79607 7.8281 10.1113 100.16 1.0289

Macau Related Stocks

COFFEE 'C' FUTURE Dec13

NAME

25.60

Currency Exchange Rates

NAME

METALS

Last 25.95

21.32

Commodities ENERGY

Min 25.65

21.54

49.35

Last 50.30

average 26.006

21.76

49.90

Min 48.85

Max 26.45

21.98

50.45

average 49.739

83.80

22.20

51.00

Max 51.00

25.96

84.40

56.3

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.9

-1.408451

15.8

-1.002506

VOLUME CRNCY

55.55555

5.02

2.56

1259241

48.07872

16.27

9.28

764236

AMAX HOLDINGS LT

1.22

-5.426357

-12.85714

1.72

0.75

1305275

BOC HONG KONG HO

24.85

0.4040404

3.112032

22.85

6020526

CENTURY LEGEND

0.42

-1.176471

58.49057

0.56

0.232

294000

CHEUK NANG HLDGS

6.74

1.353383

12.52087

6.75

3.87

133285

CHINA OVERSEAS

23.2

0.4329004

0.4328988

25.6

17.7

16044690

CHINESE ESTATES

18.42

1.097695

63.79815

18.6

9.337

226551

CHOW TAI FOOK JE

11.4

0.1757469

-8.360126

13.4

7.44

4852839 1477008

EMPEROR ENTERTAI

3.64

-2.933333

92.59259

3.8

1.43

FUTURE BRIGHT

2.54

0.3952569

109.5664

2.76

1.103

989000

GALAXY ENTERTAIN

56.9

-3.06644

87.4794

58.8

24.2

25656478

HANG SENG BK

127.5

0.1571092

7.413651

132.8

110.6

827011

HOPEWELL HLDGS

26.25

0.5747126

-21.05263

35.3

23.2

1588000

HSBC HLDGS PLC

84.35

3.751534

90.7

72.85

7320109

3.43

3.625378

-3.651684

4.66

2.98

11604000

LUK FOOK HLDGS I

-0.5964215

2.459018

30.05

16.88

713140

MELCO INTL DEVEL

21.45

-1.605505

138.0688

6.61

6470000

7050.05

MGM CHINA HOLDIN

25.95

-2.443609

95.43195

27.2

12.236

5713945

1770.53

MIDLAND HOLDINGS

3.09

0.6514658

-16.48649

4.95

2.68

1380000

NEPTUNE GROUP

0.188

6.214689

23.68421

0.23

0.131

99280000

NEW WORLD DEV

11.76

-0.8431703

-2.163065

15.12

9.98

8048590

SANDS CHINA LTD

50.3

-0.5928854

48.15905

26.35

25034347

HUTCHISON TELE H

5208.017

-0.5132871

12.02566

5314.3

4334.3

4389.347

-0.663009

1.683239

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1776.56

0.2929936

5.187253

1826.22

1590.67

SHUN HO RESOURCE

1.7

-0.5847953

21.42857

1.92

1.19

22000

NZX ALL INDEX

1000.35

-0.2096859

13.41155

1005.231

846.364

SHUN TAK HOLDING

4.5

0.2227171

7.398567

4.65

2.97

7612586

PHILIPPINES ALL SHARE IX

3854.36

0.3133523

4.200621

4571.4

3440.12

SJM HOLDINGS LTD

21.8

-2.022472

22.83311

22.5

15.914

17632779

SMARTONE TELECOM

10.1

-0.3944773

-28.26705

16.22

9.97

4200068

WYNN MACAU LTD

28.15

-0.8802817

34.36754

7019070

ASIA ENTERTAINME

3.96

#N/A N/A

69409

70.42

-0.80293

57.50392

76.3

43.16

558023 11300

JAKARTA COMPOSITE INDEX

Euromoney Dragon 300 Index Sin

608.86

-0.2

-1.97

STOCK EXCH OF THAI INDEX

1427.72

-0.1021565

2.571244

1649.77

1260.08

HO CHI MINH STOCK INDEX

497.5

1.056267

20.2475

533.15

372.39

BALLY TECHNOLOGI

Laos Composite Index

1290.06

-1.475507

6.197884

1455.82

1038.79

BOC HONG KONG HO

3.2

-0.9287926

4.23453

3.6

2.99

GALAXY ENTERTAIN

7.43

-1.569848

87.15365

7.59

3.11

1175

INTL GAME TECH

19.02

0.05260389

34.22724

21.2

12.37

3327586

JONES LANG LASAL

84.17

-1.773836

0.2740023

101.46

72.56

515476

LAS VEGAS SANDS

66.36

0.5454545

43.76083

67.351

37.8353

3139551

MELCO CROWN-ADR

32.89

0.9205278

95.30879

33.59

12.74

1726769

MGM CHINA HOLDIN

3.22

83.96937

3.29

1.6651

13800

MGM RESORTS INTE

20.59

0.04859086

76.89003

20.9

9.15

5331953

SHFL ENTERTAINME

23.08

0.2171081

59.17241

23.21

12.35

377528

SJM HOLDINGS LTD

2.84

-1.045296

24.69178

2.9481

2.0508

3298

160.18

-0.2987676

42.39488

162.33

103.0933

996362

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

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

37.1

-0.1345895

34911394

ALUMINUM CORP-H

2.81

-0.7067138

7257919

BANK OF CHINA-H

3.61

0.2777778

247990376

BANK OF COMMUN-H

5.81

0.5190311

15872297

BANK EAST ASIA

32.8

-0.3039514

1106432

11.46

-0.174216

11219000

BELLE INTERNATIO

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

CHINA UNICOM HON

13.26

1.067073

71421760

POWER ASSETS HOL

67.9

-0.2204262

1903991

CITIC PACIFIC

11.14

9.215686

42069234

SANDS CHINA LTD

50.3

-0.5928854

25034347

CLP HLDGS LTD

-0.2375297

2745985

16.02

0.2503129

27234449

COSCO PAC LTD

12.1

-0.9819967

ESPRIT HLDGS

12.5

CNOOC LTD

SINO LAND CO

11.52

-0.3460208

5783914

105.1

-0.5676443

3528274

6342119

SWIRE PACIFIC-A

92.35

-0.4849138

1219457

1.626016

4060823

TENCENT HOLDINGS

419.2

-0.1429252

2472334

TINGYI HLDG CO

19.96

-0.4488778

8620000

WANT WANT CHINA

12.02

-2.750809

10697277

WHARF HLDG

68.25

0.5154639

2813842

BOC HONG KONG HO

24.85

0.4040404

6020526

HANG LUNG PROPER

25.95

-0.5747126

5562633

15.16

-1.430429

2680041

HANG SENG BK

127.5

0.1571092

827011

CHEUNG KONG

123.2

-1.44

4760481

4.69

-0.212766

19461083

CHINA CONST BA-H

6.07

0.1650165

162308862

CHINA LIFE INS-H

20.6

10781394

CHINA MERCHANT

29.5

0.5110733

4153691

CHINA MOBILE

HENDERSON LAND D

47.75

-1.444788

3995303

HENGAN INTL

91.65

-0.3804348

1676736

HONG KG CHINA GS

18.62

-0.2143623

7289012

HONG KONG EXCHNG

126.1

1522256

HSBC HLDGS PLC

84.35

7320109

97.05

0.2065049

7451800

5.51

0.1818182

121710147

11.32

-0.7017544

11094241

30.9

-0.6430868

-2.890173

43666342

HUTCHISON WHAMPO

CHINA OVERSEAS

23.2

0.4329004

16044690

IND & COMM BK-H

CHINA PETROLEU-H

6.21

-0.1607717

43309083

LI & FUNG LTD

CHINA RES ENTERP

25.3

0.998004

1583198

CHINA RES LAND

MTR CORP

VOLUME

SUN HUNG KAI PRO

CATHAY PAC AIR CHINA COAL ENE-H

NAME

MOVERS

23222.98

1702497

LOW

22859.86

52W (H) 23944.74

-0.9009009

6072389

NEW WORLD DEV

11.76

-0.8431703

8048590

18.6

0.6493506

3392602

PETROCHINA CO-H

8.61

-0.3472222

46687782

CHINA SHENHUA-H

23.6

-0.8403361

13344512

PING AN INSURA-H

58.95

0.1699235

6385990

3 23225

INDEX 23138.54 HIGH

CHINA RES POWER

(L) 19426.35938

22970

02-October

04-October

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October 2013 April 19,7,2013

Opinion

Congress plays with fire wires as Asia examines debt Business

Leading reports from Asia’s best business newspapers

Korea Herald South Korea’s central bank is expected to lower its 2014 forecast of the country’s economic growth this week amid growing signs of the world economy’s slowdown, experts said. After a monthly rate-setting meeting on Thursday, the Bank of Korea could cut next year’s growth prospect for South Korea to between 3.8 percent and 3.9 percent, citing a possible move by the International Monetary Fund to slash its growth forecast for the world economy in 2014, they said. In July, the BOK revised up the country’s 2014 growth to 4 percent from its 3.8 percent estimate made in April.

William Pesek

Bloomberg View columnist

Jakarta Globe Asia-Pacific Economic Cooperation ministers agreed on Saturday to support the advancement of the next round of the Doha talks, improve connectivity among member countries and promote sustainable growth with equity. The agreement was announced at the end of a two-day meeting, co-chaired by Indonesian Foreign Affairs Minister Marty Natalegawa and Trade Minister Gita Wirjawan. The APEC ministers agreed to support a multilateral trading system, set in 1994 to create free and open trade and investment in the Asia-Pacific region by 2020.

Asahi Shimbun Mizuho Bank that a deputy president and three of his successors knew from 2010 that loans were being extended to gangsters but did nothing about it. The lender said the officials, starting with Tetsuro Ueno, who was in charge of compliance and first became aware of the loans, failed to inform the bank’s president. “Our recognition on the issue was lax. We deeply apologise from our heart,” current vice president Toshitsugu Okabe said at a news conference. “Our investigation is still in progress ... [and] we do not have collusive relations with anti-social groups.”

Taipei Times The Chinese Nationalist Party (KMT) announced that it would not appeal the ruling of the Taiwan High Court maintaining an injunction to preserve Legislative Speaker Wang Jin Pyng’s KMT membership, amid controversy over a probe into alleged improper lobbying by Mr Wang. The move is seen as a gesture from President Ma Ying Jeou and the KMT to engineer a reconciliation with Mr Wang, as he would be able to temporarily maintain his membership and position as legislative speaker until a final ruling is handed down.

he U.S. doesn’t deserve Asia’s money, not with half of its government in financial jihad mode, damn the global consequences. The biggest economy has long taken its reserve-currency status for granted, but the events of recent days raise Washington’s hubris to entirely new levels. Chinese President Xi Jinping didn’t mention Ted Cruz, John Boehner or the Tea Party last week when he urged major developed economies to adopt responsible policies that avoid negative spillover. He didn’t have to. Their shutdown of the U.S. government and the spectre of U.S. default were written between the lines in bold type. The U.S. is playing with fire here in ways it might not recover from. American politicians should be particularly worried about a conversation Xi had in Jakarta with Indonesian President Susilo Bambang Yudhoyono. Xi proposed creating a regional bank to invest in infrastructure in Southeast Asia and pledged funding from China. Asia is also gradually building a neighbourhood International Monetary Fund. Where will all this cash come from? Asia’s US$7 trillion in currency reserves, much of it currently in dollars. Asians aren’t panicking just yet. Many here think U.S. lawmakers aren’t crazy enough to default on their nation’s debt, no matter how much they despise President Barack Obama’s policies. They will bicker, close the government and embarrass the U.S. on the world stage by forcing Obama to cancel visits to the Philippines and Malaysia. But come October 17, when the U.S. runs out of money, politicians will avert disaster.

America’s banker, Asia, is betting bond guru Bill Gross of Pacific Investment Management Co is right that the risk of the U.S. reneging on its debt is zero.

Tables turned A rational view? I’m not so sure. It’s a bit surreal being an American journalist abroad these days as the tables get turned at interviews. After a few questions from me, the interviewee will inevitably ask some variation of: What, oh what, is going on in Washington? What disturbs officials here the most is that this battle is over providing health care to Americans. How, they ask, could half your government take a stand against what other developed nations view as a basic human right? The very nature of this question is what bothers me. This battle really is a political jihad, and congressional Republicans may very well think a default is a reasonable price to pay for stopping the Affordable Care Act, which they view as the end of Western civilisation. Doing that would surely accelerate the end of the dollar’s linchpin role in global commerce. But just as it takes a village to get big, historymaking things done, Cruz and his friends in Congress may decide that it will take a crisis to get their way. Another dangerous assumption: Washington’s complacency about the primacy of its debt. Asia forgave Congress that first downgrade in 2011, prompted by Capital Hill’s last debt ceiling skirmish. Don’t expect the region’s central banks to look kindly on Standard & Poor’s knocking the U.S.

down another peg or Moody’s Investors Service yanking away its Aaa rating. While Congress takes Asia’s continued support for granted partly out of smugness, it also reflects the Hobson’s choice confronting reserve managers, meaning they have no real choice.

China’s leaders will gain in global stature as they come across as serious and moderate in the face of the Washington frathouse spectacle

China holds US$10 of U.S. Treasuries for each of its 1.3 billion people. If traders sensed that China was selling large blocks of them, markets would plunge, resulting in huge state losses and less growth as surging bond yields slammed American consumers. And really, what other assets could the Chinese readily buy in such incredibly large amounts at moment? So, to avoid the biggest foreignexchange trade in history, central banks stay in dollars.

This pyramid-scheme-like arrangement explains why U.S. government bonds are rallying. Think about the twisted logic of a giant flightto-safety trade based on fears that the very country to which you are rushing may soon default. You won’t find that dynamic explained in Economics 101 textbooks. But the more the U.S. plays with fire with its Aaa rating, the more Asia will find an alternative. Researcher Zhang Monan at the National Development and Reform Commission surely speaks for many in Beijing when she says China “must” change the situation of holding “too much” U.S. debt. The Federal Reserve’s easing programme is one thing. It’s quite another for lawmakers to hold U.S. finances hostage to score cheap political points in a farce that’s even drawn comments from Lady Gaga. Xi’s timing in proposing a regional bank can’t be a coincidence. Beijing is also involved in efforts to build another institution that might challenge the IMF and World Bank among the BRICS nations of Brazil, Russia, India, China and South Africa. Filling its vaults will come at the dollar’s expense. Tea Party supporters should consider that they are helping enhance China’s soft power around the world. Although China’s currency reserve managers may lose some sleep this month, its leaders will gain in global stature as they come across as serious and moderate in the face of the Washington frat-house spectacle. It’s amazing to watch my U.S. tax dollars hard at work making Communists look like capitalist heroes. Bloomberg View

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October 7, 2013 April 19, 2013

Closing Uncertainty dogs greyhound imports

Petronas plans LNG project in Canada

The number of greyhounds being imported to Macau to race at its dog track has fallen dramatically this year amid speculation it may soon cease operations, reports the South China Morning Post. In the eight months to the end of August, only 110 greyhounds were imported to the Canidrome, compared with 248 in the same period last year and 228 in the first eight months of 2011, says the SCMP, quoting Hong Kong’s Agriculture, Fisheries and Conservation Department. All the greyhounds – about 800 at a time – are imported from Australia via Hong Kong.

Petroliam Nasional Bhd, Malaysia’s state energy company, will build a C$36 billion (US$35 billion) liquefied natural gas plant and pipeline in Canada, Prime Minister Najib Razak said yesterday. “This is a very significant landmark decision by Petronas,” Mr Najib said in a press conference with Canadian Prime Minister Stephen Harper. Petronas completed the C$5.2 billion takeover of Canada’s Progress Energy Resources Corp in 2012, after Harper’s government initially blocked the deal. “We view Petronas investments very positively, and all the indications I have is that Petronas is looking at further investments,” Mr Harper said yesterday.

First cracks appear in Tea Party Lawmakers with ties to the movement yield on Obamacare

Swiss regulators probe banks

For alleged currency manipulation

he first cracks are appearing in the Tea Party’s push to dismantle the nation’s health law as three House lawmakers with ties to the movement said they’d back a U.S. spending bill that doesn’t centre on Obamacare. Republican Representatives Blake Farenthold of Texas, Doug Lamborn of Colorado and Dennis Ross of Florida, all of whom identify with the Tea Party, said they’d back an agreement to end the government shutdown and lift the debt ceiling if it included major revisions to U.S. tax law, significant changes to Medicare and Social Security and other policy changes. The partial government shutdown entered its sixth day since lawmakers failed to authorise spending before the October 1 start of the fiscal year. The budget standoff started when Republicans insisted on choking off funding for President Barack Obama’s Affordable Care Act, known as Obamacare. The president has refused to negotiate. “The president seems unwilling to give an inch on Obamacare, so, alright, where can we find other reforms?” Mr Farenthold said in an interview, just after a vote on giving furloughed workers retroactive pay. “If we can make the same or bigger difference doing something other than Obamacare, I don’t see why we wouldn’t do it.” Other lawmakers backed by the Tea Party movement, including Republican Representative Jim Jordan of Ohio, are refusing to budge on their Obamacare stance. House Majority Leader Eric Cantor said that Republicans want “fairness” under the health-care law. “The administration continues to give special treatment to big business and to special interests and have left the working-class Americans out,” Mr Cantor told reporters. “Just give them the same treatment.”

Debt ceiling Representative Raul Labrador, an Idaho Republican and leading voice in the fight against Obamacare, said a change to the law “has to be on the table.” “A one-year delay is still reasonable to ask for,” Mr Labrador said in an interview. Lawmakers tied to the Tea Party pushed Republican House Speaker John Boehner last month to fight for major changes to Obamacare as part of the budget debate. That stalemate

Mr Farenthold said the Obamacare battle was for “another day.” “It will collapse under its own weight, especially when the young people – who are going to be under the individual mandate – start screaming at what they’re having to pay for,” he said. Mr Farenthold said he’d back a spending deal with tax code changes and entitlement reforms aimed at “getting people who are able to work, back to work”. Mr Ross said he shifted his position because the shutdown hasn’t resulted in changes to the Affordable Care Act. The shutdown also could hurt the party, he said.

wiss regulators said they’re investigating several banks for allegedly colluding to manipulate the US$5.3 trillion-a-day foreign exchange market. The Swiss Financial Market Supervisory Authority “is coordinating closely with authorities in other countries as multiple banks around the world are potentially implicated,” it said in a statement. Separately, the competition commission said it opened a preliminary probe on September 30 after receiving allegations of collusion among banks to manipulate some foreign-exchange rates. The probes come after Bloomberg News reported in June that dealers at banks pooled information through instant messages and used client orders to move benchmark currency rates. Britain’s Financial Conduct Authority said that month it was reviewing the allegations. The U.S. Commodity Futures Trading Commission has also been reviewing potential violations of the law with regards to foreign currency markets, according to a person familiar with the matter who asked not to be identified. Authorities around the world are investigating the alleged abuse of financial benchmarks by the firms that play a central role in setting them. UBS AG, Switzerland’s largest bank, was among four firms fined about US$2.6 billion for rigging the London interbank offered rate, the benchmark for more than US$300 trillion of securities worldwide. European regulators are reviewing allegations of collusion in crude oil and biofuels markets, while the CFTC and FCA are also probing the potential manipulation of ISDAfix, a benchmark for interest-rate swaps. In the statement, Finma didn’t identify which firms it’s investigating or give details of the scope of its probe. The Swiss competition commission said it will decide at a later point what further action to take. Vinzenz Mathys, a spokesman for Bern-based Finma, declined to comment further. UBS is among the banks being probed by Swiss regulators, the Financial Times said yesterday, citing unidentified sources. Dominik Von Arx, a London-based UBS spokesman, declined to comment. Marc Dosch at Credit Suisse Group AG declined to comment.

Bloomberg News

Partial government shutdown entered sixth day

led to the first government shutdown since 1996 and is now bleeding into a debate over the nation’s US$16.7 trillion debt limit, which must be raised before October 17 to avoid a U.S. default. “We’ve tried a lot of things and used just about every arrow in our quiver against Obamacare,” Mr Lamborn said yesterday. “It has not been successful, so I think we do have to move on to the larger issues of the debt ceiling and the overall budget.” Mr Lamborn said he would back a debt limit increase if the agreement included an equal amount of spending cuts. He said he’s also seeking a deal that includes instructions for major tax-code revisions.