Deputy editor-in-chief Editor-in-chief Tiago Azevedo www.macaubusinessdaily.com
Commercial mortgages double y-o-y in August Page 4
More overseas deals signed at trade fair
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City’s powerful made to declare some of their assets A
ssets as declared by senior officials from the Chief Executive downwards have been published online by the Court of Final Appeal. The announcements are the result of a new Asset Declaration Law enacted in April. Under it, the city’s incumbent chief executive, legislators and others, must give details of certain financial interests. Those are: the number of real estate properties held; stakes in companies, and roles in nonprofit bodies including Macau’s large network of publicly-funded associations and outside charities. The deadline for the current round of declarations was Friday. A total of 400 officials are listed. Failure to disclose assets accurately is punishable by fines equivalent to between three months and one year’s salary for the official in question, the law says. More on page 3
Year II
Number 396 Monday October 21, 2013
Leaning tower of Patane: govt pledges support
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Vitor Quintã
MOP 6.00
April 19,Q3 2013 Record cheers Sands China investors
Solid waste contract extended – again
Brought to you by Zung Fu Motors (Macau) Limited
Macau Waste Systems Co Ltd, known as CSR, will make more than 66 million patacas (US$8.3 million) from the extension of its solid waste management contract until next April. The government has extended CSR’s contract because a new 10-year contract remains on hold owing to a legal challenge. This extension is the fourth extension of CSR’s original contract, which expired in September 2011. Page 5
Developers look across border for better returns
Hang Seng Index 23350
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October 18
HSI - Movers
Three Macau enterprises – including the owner of the Royal Supermarket chain – plan to invest HK$2 billion (US$258 million) in a big commercial property project in neighbouring Zhuhai, Business Daily has learned. Local property investors are turning to the mainland as prices here continue to bubble and returns fall. “The rental returns for commercial property like malls are big in the mainland,” said Choi Meng Wa, another of the investors.
Name
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Interview
‘Raise age limit for casino access’: campaigner The minimum age for admittance to or employment by casinos should be raised to 23 or 24 years, says the head of the Macau Responsible Gaming Association, William Kuan Vai Lam. Mr Kuan said youngsters should work in other industries before being allowed to join the casino sector. He is also the developer of Windsor Arch on Taipa. He said opposition to the housing project had ceased, meaning the project was going ahead according to plan and that it should be finished within a year. Pages 6 & 7
%Day
SANDS CHINA LTD
9.23
AIA GROUP LTD
4.43
GALAXY ENTERTAIN
4.09
TENCENT HOLDINGS
2.28
TINGYI HLDG CO
2.22
IND & COMM BK-H
-0.55
CHINA RES LAND
-0.66
MTR CORP
-0.66
KUNLUN ENERGY CO
-1.52
LENOVO GROUP LTD
-1.71
Source: Bloomberg
I SSN 2226-8294
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October 21, 2013
Macau KEY POINTS Macau companies to build hotel, shop and office complex in Zhuhai The three companies have already invested HK$800 mln Construction of the complex expected to be finished by 2018 Investors eye bigger returns from mainland property Greater mainland domestic demand will help commercial property projects
The underground shopping mall by the Gongbei border crossing will get a facelift
Investors looking north for returns on property A shopping mall entrepreneur says Macau companies are interested in investing in commercial property in the mainland Stephanie Lai
sw.lai@macaubusinessdaily.com
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hree enterprises will invest HK$2 billion (US$258 million) in a big commercial property project in Zhuhai, showing that Macau’s property investors are turning to the mainland in their quest for better returns. The three enterprises are Loi Loi Group Co Ltd, Tong Lei Engineering and Construction Co Ltd, and Meng Wa Investment Ltd. Loi Loi runs the Royal Supermarket chain. The owner of Meng Wa, Choi Meng Wa, ran the Sun Star City Mall in Macau’s city centre and is director-general of the Industry and Commerce Association of Macau. “In the first phase, in form of a privately offered fund, we have invested nearly HK$800 million in this hotel, shopping mall and office complex in Jingshan road in Zhuhai’s Jida district,” Mr Choi told Business Daily. “The complex is going to be a skyscraper. It’s going to be a 270-metre-high building with 90 floors,” he said. He and his Macau partners will chip in the other HK$1.2 billion for the project three years from now. A Zhuhai company will also take part in the project. “We’ve already got approval for the construction of the complex,” said Mr Choi. “Construction will start in December next year, and is expected to be finished by 2018.” He said the investment in the Zhuhai complex was only the start
of the quest by the three Macau companies for commercial property projects in the mainland. “We’ll continue to look for investment opportunities in other major property projects in Zhuhai in the coming years,” he said. Mr Choi said Macau businesses had been interested in investing in commercial property in the mainland since the end of 2009. “The rental returns for commercial property like malls are big in the mainland, where we can make the investment by borrowing at a very cheap rate in Macau,” he said.
Boost for demand “If you are investing in commercial assets like shops in Macau, the rate of return is now only about 1.5 percent to 2.5 percent,” Mr Choi said. “But in the mainland the rate of return on assets like malls can go up to 12 percent to 15 percent, which is a much better deal,” he added. “The real trigger point for local businesses investing in mainland property projects was last year,” he said. “As the government here rolled out tougher measures to curb the property market, with the special stamp duty extended to shops and offices, investors then started to look for new outlets for their capital.” Mr Choi cited Precious Sky Ltd, a Macau property investment company incorporated in the British Virgin Islands, as an example. Precious
Sky bought Hong Kong-listed Madex International (Holdings) Ltd’s shopping mall in Harbin for 250 million yuan (327.4 million patacas). The mall is now let exclusively to mainland electronics retailer Suning Appliance Co Ltd. “We’ll complete the whole transaction at the beginning of next year,” Precious Sky deputy general manager Chan Mei Peng told Business Daily on Friday. “There is still huge room for the value of commercial property to grow in the mainland,” said Ms Chan, speaking on the sidelines of the Macao International Trade and Investment Fair. “And we’ll put a particular focus on the second-tier and third-tier cities instead of the delta region.”
HK$2 bln
Amount three Macau companies will invest in a multi-purpose complex in Zhuhai
Mr Choi said: “I think the trend for Macau companies to invest in mainland commercial property will continue, especially when the country is focusing on boosting internal demand, which will strengthen the consumer market.” Loi Loi, Tong Lei and Meng Wa bought 52 percent of Madex International Co Ltd in June for HK$800 million. Unlisted Madex was previously wholly owned by Zhuhai businessman Liang Wenguan, chairman of the Madex group.
Going underground Madex owns Port Plaza, the underground shopping centre on the Zhuhai side of the Gongbei border crossing. “Madex International Co introduced Macau shareholders for two reasons: one, Macau investors know Macau customers’ shopping habits better, and a good number of them shop at Port Plaza,” said Mr Choi. “Another reason is that Macau’s enterprises can act faster than Hong Kong’s, especially the listed companies, because they usually require more time to get transaction approvals and do research.” He said the investment in Port Plaza would not entail any immediate changes in the way the shopping centre operated. “Changes may happen only after three and a half years, because the terms of the contract with mall operator San Yek Seng (Macau) Investment Co Ltd still apply,” he said. San Yek Seng has run Port Plaza since 2006. Its management contract lasts until 2016. “We really want to renew Port Plaza,” said Mr Choi. “The underground mall now caters to grey businesses like pirated DVD or handbag sellers, and yuan moneychangers,” he said. “We want to change this current model and introduce some special brands to upgrade the mall,” he added. “But that also happens to be what San Yek Seng does not quite agree to do.” Mr Choi said he and his partners were considering inviting new shops to open in Port Plaza by 2015, but had yet to decide. “Now, about 30 percent of Port Plaza’s customers are from Macau,” he said. “Our future target is to make it 50 percent.” Mr Choi only hinted at the sort of businesses he would like to see in the shopping centre. “Spas, beauty salons and pedicure are what mainland has an advantage in,” he stated. The businesses in Port Plaza paid about 200 million yuan in rent last year. Most have one-year leases.
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October 2013 April 19,21, 2013
Macau
City’s power brokers list some financial assets New law requires declaration of certain financial interests by govt officials, legislators, executives of govt-owned firms
editorial
War in the trenches
Tony Lai
tony.lai@macaubusinessdaily.com
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ssets as declared by senior officials from the Chief Executive downwards have been published online by the Court of Final Appeal. The declarations are the result of a new Asset Declaration Law enacted in April. Under it, the city’s incumbent chief executive, members of the government, legislators, judges from courts, officials from the Public Prosecutions Office, chiefs of cabinets, directors and deputy directors of government departments and senior managers of firms with majority public ownership, must give details of certain financial interests. Those are: the number of real estate properties held; stakes in companies, and roles in nonprofit bodies including Macau’s large network of publicly-funded associations and outside charities. The deadline for the current round of declarations was Friday. A total of 400 officials are listed.
KEY POINTS Asset Declaration Law enacted in April Saturday was registration deadline List published yesterday by Court of Final Appeal Non-disclosure punishable by fine of up to one year’s salary
Businessman and legislator Chan Meng Kam – who won the largest share of the popular vote at the September 15 election – declared that up to and including September 1 he held 407 properties, including 53 flats, 239 shops, 28 office spaces and 87 car parks. Legislators and developers Fong Chi Keong and Mak Soi Kun had no real estate listed on the website as being directly under their names.
Angela Leong On Kei, an executive director of Macau casino developer SJM Holdings Ltd – whose ticket narrowly missed out on winning a second seat in last month’s election – declared 52 properties including 38 flats and 11 car parks. Ms Leong, fourth consort of Stanley Ho Hung Sun, founder of Sociedade de Turismo e Diversões de Macau SA, which effectively held the city’s casino monopoly for 40 years until 2002, also declared a 6.8-percent direct interest in STDM. Mr Chan also declared a 79-percent stake in Golden Dragon Group Co Ltd, which runs hotels and casinos. Mr Chan also has shares in other 112 firms. They include restaurants, electrical appliance retailers, travel agencies, the privately run City University of Macau, technology firms and real estate developers. He also registered interests in mainland Chinese firms including his birthplace Fujian province. The businessman told media he always declared his assets “honestly” and the public “does not have to pay particular attention” to his assets. He stressed “many” his properties have been used for supporting social services. Mr Chan said 164 of his reported shop properties were for his own use, with the rest rented or loaned to other people. A total of 32 homes were for “self-usage” with 88 and commercial units were leased to outsiders. Legal expert and legislator Vong Hing Fai announced holding 58.5 properties directly under his name. Ms Leong also registered a 97.3-percent stake in Macau Jai Alai
Co Ltd, and 30-percent share in Macau (Yat Yuen) Canidrome Co Ltd.
Government officials The city’s major officials, meanwhile, have in average fewer than 10 properties each and no business interests. Chief Executive Fernando Chui Sai On declared three residential units in Macau and mainland China and three car parks here. Ho Veng On, chief of Commission of Audit, registered the most properties among senior officials, 11 including six flats, one shop and four car parks. Secretary for Public Administration and Justice Florinda Chan declared six properties including one land plot of 500 square metres she bought “abroad” in 1993. She didn’t state where it was. Secretary for Economy and Finance Francis Tam Pak Yuen is the only senior official declaring business interests in four separate companies. But the secretary explained in the declaration document that all the firms had no commercial operations. Three companies were established to hold family assets before the city’s handover in 1999 and one has been inactive for many years. Choi Lai Hang, director of Macau Customs, is the sole major official declaring no shares in any properties and companies. Mak Soi Kun’s entry said he had no business interests – despite his position as general manager in two engineering firms. But Mr Mak told media he had declared his real estate and business interests, and did not know why were not shown on the documents. Court officials could not be contacted for comment yesterday on why Mr Mak’s reported declarations were not listed. Failure to disclose assets accurately is punishable by fines equivalent to between three months and one year’s salary for the official in question, the law says. Pansy Ho Chiu King, a daughter of Stanley Ho and a board member of MGM China Holdings Ltd, also declared assets because of her role as the board vice-chairman of Macau International Airport Co Ltd (CAM). The co-chairperson (sic) of MGM China claimed two properties – car parks – directly under her name, the documents show; beside her 27-percent interest in the gaming company and a 4.76-percent direct interest in Shun Tak Holdings Ltd. Details of the declarations can be found in Portuguese and Chinese at: www.court. gov.mo/pt/subpage/ property-search
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ooking at recent events here it is easy to imagine that the Marxist class struggle may have been conveniently set aside in the mainland but proudly lives on in Macau. On one side of the barricades we have the struggling proletariat of Macau residents, living on a median monthly income of 12,000 patacas (US$1,502) – the value of which is continuously eroded by inflation, be it inflation in housing prices or inflation in the prices of food imported from the mainland. Two years ago the government dropped its promise to set a general minimum wage. It bowed to pressure from employers and chose the easy path of extending to the private sector the minimum wage set for employees of the government’s cleaning and security contractors. On the other side we have the entrepreneurs, who have to deal constantly with the lack of workers – particularly qualified ones – and rising wages, especially when Macau’s unemployment rate of 1.9 percent is one of the world’s lowest. We also see business interests gaining a firmer foothold in the Legislative Assembly, which is expected to discuss important bills such as the minimum wage legislation. Workers’ representatives often argue that a minimum wage is essential, as a large part of the employed labour force earn very little, while bosses say they are at the mercy of their employees because workers can easily change jobs on a whim. So who is telling the truth? Probably, both are. Life can be remarkably easy for qualified personnel in Macau, as many job openings remain vacant. However, that same labour shortage that pushes wages up and makes workers a precious resource also means fewer people must do more work. This burden increases the stress of living in a small city, crowded with millions of tourists, residents and cars, and in a social environment that values – probably too much – a person’s pay cheque and position on a business card. Would a minimum wage help in any way? Not much. The government is soliciting opinion on a minimum wage for all cleaners and security guards, proposing a pay rate of between 23 patacas and 30 patacas per hour. Certainly, this is a complex matter which people are very sensitive about, but it will not make a huge difference as a minimum wage will apply to only a small fraction of the population. Morally, Macau should have a general minimum wage to protect its most vulnerable workers, even though it will come at a certain cost. And, more than just introducing a minimum wage, we must make sure it is enforced. On the other hand, the debate should not lead us to ignore other important topics, such as labour and trade union rights, which seem to have vanished from the public eye.
The debate on the minimum wage should not lead us to ignore other important topics, such as labour and trade union rights, which seem to have vanished from the public eye
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October 21, 2013
Macau
Record Q3, dividends, cheer Sands China investors
Law planned for medical disputes A draft bill covering medical malpractice disputes will be scrutinised soon by the Legislative Assembly, Executive Council spokesperson Leong Heng Teng told media in a briefing on Friday. Under it, for the first time local medical units will be legally required to report any medical mishaps within 24 hours. Additionally, medical units will have to keep patient records for at least 10 years. The bill also suggests the establishment of an evaluation committee to investigate and identify medical accidents, and an arbitration centre to settle disputes over the mishaps.
Adjusted property EBITDA up 62 pct, aiding a three-month results record says parent LVS Michael Grimes
michael.grimes@macaubusinessdaily.com
S
heldon Adelson – chairman of Las Vegas Sands Corp and Sands China Ltd – made himself and other shareholders happy by announcing record third quarter results in Macau that beat analysts’ estimates. Sands China’s adjusted property earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 62 percent to US$785.3 million (6.27 billion patacas) in the three months to September 30, the company said in a stock exchange statement. That compares with an average estimate of US$732 million from 10 analysts compiled by Bloomberg. Sands China is 70 percent owned by LVS which in turn is 50.04 percent owned by Mr Adelson and his family, according
Sands ‘will follow rules directly’: Leven LVS president Michael Leven stressed during the firm’s quarterly earnings call that Sands China would “follow the rules directly” regarding the employment of permanent residents as dealers. Mr Leven had mentioned in comments to investors last month that the requirement was “going to put some limit on the availability of people unless the government rules are changed”. But Mr Leven went out of his way in new comments to analysts to clarify the company had no intention of trying to lobby to change the rules. “All the comments that have gone on in the last month about that have caused a lot of uproar in the local
to Sands China’s 2013 interim results published in August. Mr Adelson said in the parent firm’s third quarter earnings call that US$700 million had been returned – via dividends and stock repurchases – to non-LVS shareholders in Sands China in the previous 21 months. He said: “We have every intention of increasing the recurring dividend at Las Vegas Sands in the years ahead, as our business and cash flows continue to improve. We have US$1.65 billion remaining under the current stock repurchase authorisation, and in the future, we expect to repurchase at least US$75 million of stock per month.” Sands China’s stock rose 9.2 percent to close at HK$58 on Friday, the highest level since its November 2009 listing. The shares have climbed
community in Macau,” he stated. “I don’t think anybody, including us, is prepared to venture away from those rules at all, and the government assures us that we’ll have enough people available at the time when we have more tables and more situations, and we will follow the rules directly on that area.” On the same call his boss, LVS chairman Sheldon Adelson hinted that all the operators building new Cotai projects – including LVS with its US$2.8 billion The Parisian – faced the prospect of not getting all the tables they want. “…the last thing I heard was everybody’s not going to be as happy with the table allocation as everybody would like to be, and that’s – we’ll have to live with that, we think we’re in a better position. Our competitors aren’t going to do any better than we have,” he stated. M.G.
Govt pledges support to rebuild Sin Fong Redevelopment could cost 130 million patacas, official says
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he government said it would provide support if residents of Sin Fong Garden flats choose to redevelop the 18-year-old highrise building. It is more than a year since a pillar collapsed in the car park of the housing development in Patane, forcing the 140 households to be evacuated. The October 10, 2012 collapse raised fears over the structural integrity of the building.
The government yesterday pledged to help with the reconstruction of the building. It had a 50-minute meeting between representatives of Sin Fong Garden residents and officials. Chief Executive Fernando Chui Sai On headed the meeting. Jaime Carion, director of the Land, Public Works and Transport Bureau, said the redevelopment could take up to two years and cost at least 130 million patacas (US$16.3 million).
Coloane hospital ready by end-2017
71 percent this year, compared with a three percent gain for the city’s benchmark Hang Seng Index, of which Sands China is a part. “The good result merely reconfirms the bullish market consensus on its earnings power, which is a welcomed source of certainty in this market,” said Linus Yip, a strategist with First Shanghai Securities. Sands China has more than 9,000 hotel rooms and about 40 percent of Macau’s four and five-star offerings, according to Deutsche Bank AG estimates. “Its massive room inventory gives it an unparalleled strategic advantage in Macau,” Karen Tang, a Hong Kong-based analyst at Deutsche Bank, wrote in a note published on Friday, raising the company’s target price to HK$65 from HK$53.1, while keeping a “buy” rating. Net income for the Hong Konglisted unit of Las Vegas Sands Corp rose 89 percent to US$617.9 million from US$326.7 million a year earlier, according to its parent’s filing in U.S. GAAP (generally applied accounting principles) standard. Revenue climbed 43 percent to US$2.34 billion. Parent Las Vegas Sands also reported earnings above estimates.
The city’s second public hospital located near Seac Pai Van will be ready by end-2017, the Health Bureau confirmed in press statement on Friday. The construction will not be separated into two phases as originally planned, the bureau added. But the statement gave no detail on the budget forecast and the starting date for building work. Meanwhile, the construction of the new emergency department building at the peninsula’s public hospital – Centro Hospitalar Conde de São Januário – finished last month. Admission of patients will start on Wednesday.
Macau ‘legitimate place’ Wynn tells Massachusetts Macau casino investor Wynn Resorts Ltd’s play for a gaming licence in Massachusetts in the northeastern United States is at the suitability hearings phase. It included candid exchanges between Gaming Commission officials and Wynn chairman Steve Wynn regarding his Macau operations. “There’s never been a casino anywhere in the world that has no criminal activity. You really have some disdain for investigations and law enforcement. That’s my opinion,” commissioner Gayle Cameron told Mr Wynn during suitability hearings reported the Boston Globe. “Macau is a legitimate place,” Mr Wynn replied. “They’re not gangsters or bums, they’re businessmen.”
With Bloomberg News/Reuters
Secretary for Transport and Public Works Lau Si Io told media after the meeting that the government decided to support the redevelopment of the Patane building after most residents “clearly expressed” such intention. A majority of owners at Sin Fong Garden have signed a letter of intent opting for redevelopment, the building’s management committee head Wong Man Sang had said in July. The biggest omission among the owners was the Tung Sin Tong Charitable Society that owns 32 flats in the building. Mr Wong said he was “satisfied” after meeting with Mr Chui. The government will continue to hold meetings with the Sing Fong representatives this week to discuss all legal, tax and financing issues, secretary Lau said, adding that the final decision will depend on the agreement from all flat owners. T.L.
Carson Yeung’s SJM cash was ‘casino winnings’ Cash cheques totalling HK$62 million (US$8 million) paid by Macau casino company SJM into accounts held by Carson Yeung Ka Sing were “all winnings” from gambling in Macau, a Hong Kong District Court heard. Prosecutors have said the money was “criminal proceeds”. Mr Yeung – owner of Birmingham City Football Club in the United Kingdom – denies five counts of laundering more than HK$720 million deposited in five bank accounts from January 2001 to December 2007. The court heard that Mr Yeung first gambled in VIP rooms that had profit agreements with listed casino junket investor Neptune Group Ltd.
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October 21, 2013
Macau MGM’s Pansy Ho links ‘no bar’ in Massachusetts MGM Resorts International – 51 percent owner of a Macau casino venture – doesn’t believe its business dealings there will reflect negatively on its “suitability” to operate a proposed casino in Massachusetts in the United States, says executive vice president John McManus. Neighbouring New Jersey had previously found the firm “unsuitable” to be in Atlantic City because of its business ties to Pansy Ho Chiu King (pictured). In February MGM Resorts petitioned state regulators to re-establish its casino licence there. In Maryland – where MGM is also seeking a licence – regulators have not required MGM to sever ties with Ms Ho.
CSR to make MOP66 mln from contract extension A legal dispute means the company will keep collecting the rubbish until next April Tony Lai
tony.lai@macaubusinessdaily.com
Commercial mortgages double in August
M
acau Waste Systems Co Ltd, known as CSR, will make over 66 million patacas (US$8.3 million) from the extension of its solid waste management contract until next April. The government has extended CSR’s contract because a new 10year contract remains on hold owing to a legal challenge. This extension is the fourth extension of CSR’s original contract, which expired in September 2011. The Environmental Protection Bureau said in a written statement issued on Saturday that it could not sign the new contract because a losing bidder had applied for an injunction preventing the government from signing the contract with CSR. The new contract is worth 2.07 billion patacas. “ C ons ider ing the original contract will end on October 31,” the bureau said, “the SAR government decided to have a short-term extension of six months with the existing operator, based on the terms of the original contract.” The original contract says CSR must be paid 132.7 million patacas a year for its services. That would make the six-month extension worth at least 66.4 million patacas to CSR, according to Business Daily’s calculations. In June Spanish firm Urbaser
New commercial mortgages totalled 4.1 billion patacas CSR’s contract was due to expire on October 31 (Photo: Manuel Cardoso)
SA applied to the Court of Second Instance for an injunction to stop the government from signing the contract with CSR, and later asked the court to overturn the award of the contract. Urbaser alleged that the bidding process had been flawed. Urbaser said the tender requirements “objectively benefited CSR” as they had included no anti-corruption criteria for the evaluation of bidders. The Environmental Protection Bureau said on Saturday that the tendering and evaluation processes were “just, fair, open and rigorous”. The bureau said the government did not rule out shortening CSR’s extension if the legal dispute was settled before next April. CSR said in a written statement issued beforehand that it would ensure the continuity of its rubbish collection service.
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ew commercial mortgages more than doubled in August from a year earlier while the new approved loans for off-plan flats also recovered slightly. The Monetary Authority of Macau said on Friday the new approved loans for commercial properties – including shops and offices – totalled 4.1 billion patacas (US$512.5 million) in August, up by 133.1 percent year-on-year. The value also surged by about 60 percent monthon-month, Friday’s data show. Property firm Savills (Macau) Ltd said this month that demand for shops, particularly the ones located in downtown near the Senado Square, remained high as the city is pulling in more tourists as casino operators add shopping malls, spas and shows to woo family-oriented visitors. The firm said five downtown shops had been sold for 300 million patacas to 400 million patacas each in the past six months. In contrast, new home loans
approved by Macau banks in August were down by about a quarter – judged both year-on-year and month-on-month – to 3.33 billion patacas. Almost all loans, 99.1 percent of new home mortgages, were granted to residents. But mortgages for unfinished flats slightly recovered in August to 44.2 million patacas, up by 31.9 percent month-on-month. The new law regulating pre-sales of unfinished flats was introduced in June when the value of collateralised mortgages bottomed at 9.3 million patacas. But August’s value still fell by 81.4 percent from a year earlier, the data show. The rules are designed to prevent developers changing the specification on units after taking money from investors, or failing to complete work. The delinquency ratio – the amount of overdue loans against the current loans – in August dropped to 0.06 percent. T.L.
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October 21, 2013 April 19, 2013
Macau
Campaigner calls for higher age limit for casino access
Brought to you by
HOSPITALITY Package tour de force August is usually a good month for travel agents, and August this year was no exception. The number of guests in hotels was over 12 percent higher in August than a year earlier and the number of rooms in hotels was over 14 percent higher. Hotel occupancy rates were above 90 percent. This was due in part to growth of 6.6 percent in the number of package tourists. Mainlanders were the main contributors to this growth. The number of package tourists from the mainland rose by just over 14 percent. But more visitors from the mainland also means greater dependence on a single source of tourists.
The Statistics and Census Service has published monthly data on package tours since 2011. Asians have always made up a large proportion of package tourists – predictably, because they live nearer to Macau than visitors from other continents. Asians have made up about 99.3 percent of package tourists so far this year. Package tourists from elsewhere have accounted for under 1 percent of the total since the second quarter of 2011. The predominance of mainlanders among Asian package tourists has been growing. Mainlanders used to make up about 73 percent of Asian package tourists. In July and August this year they made up nearly 80 percent. The rise in July and August is consistent with the previous trend, suggesting a sustained increase in the proportion of package tourists from the mainland. It also means the proportion of package tourists from the rest of Asia has been decreasing almost every quarter since the second quarter of last year. J.I.D.
79.7 %
Proportion of Asian package tourists in August that were mainlanders
The minimum age for admittance to or employment by casinos should be raised to 23 or 24 years, says the head of the Macau Responsible Gaming Association, William Kuan Vai Lam. In an interview with Business Daily, Mr Kuan, speaking through an interpreter, said youngsters should work in other industries before being allowed to join the casino industry. Mr Kuan is also the developer of Windsor Arch on Taipa. He said opposition to the housing project had ceased, meaning the project was going ahead according to plan and that it should be finished within a year. He said more land for development could solve the problems in the real estate market here. Mr Kuan was also a candidate in last month’s elections to the Legislative Assembly. Luciana Leitão
leitao.luciana@macaubusiness.com
Photo by Manuel Cardoso
How effective you think the government’s measures to reduce the number of problem gamblers in Macau are? Addicted players not only impact their own lives, but also their families. Roughly speaking, one problem gambler could impact about 300 people around him. Now, if you are a sick player, the government just advises you to think again before going back to a casino or just limits the age for admittance and employment. So if you want to play and feel you cannot control yourself, how can the government help? Is it possible for the government to set rules to help these problem gamblers? For example, maybe the government can let the family join a programme which would help addicted gamblers and give the family some power to bar him or her from entering a casino.
Should the casinos have a bigger say in this? Yes. The casinos need to increase their staff or increase the number of notices reminding people about responsible gambling. The casinos can also reduce the number of ATMs, so it is not so easy to withdraw money in a casino. Casinos need more staff, not to work as security, but to look at people’s behaviour. Casinos and the government should also work together, arranging for social workers to work in gaming venues. If casino staff find someone out of control, the social worker can immediately act in concert with the casino staff. Also, in the casino there are a lot of people around the table that want to lend money to the player, especially if they find this player has lost a lot of money. The government or casinos need to increase surveillance and prevent them from getting close to the player, because the player is addicted. They need to increase surveillance and restrict people like that in borrowing money. One year has passed since the rule banning people under 21 from entering casinos was introduced. You said before that this has not been as effective as expected. How do you make it work better? I still feel 21 is not enough, I’m not happy with it. Maybe it would be better to set it at 23 or 24. If Macau wants to be an international
city, we need young people to go into different industries, not only gaming. Maybe young people should finish college first and have more experience in different fields before working in casinos. If young people just finish high school and go immediately into the casino industry, it’s not easy to come back. Once in, maybe they cannot get different skills. If they leave the gaming industry, it is not easy to go back and they can’t learn different skills for other industries. I strongly recommend that the government or casinos hire people older than 23 or 24. Maybe the government could also set up a sort of programme just to encourage young people to go into different industries first, just to give them enough time to get some other sort of experience first. Your company owns the Windsor Arch housing project. Is it moving forward as planned? It keeps going forward and, hopefully, the project can be done in a year’s time. As for prices, they will keep going up. This is a trend that has been running for a long time. Overall, the government supply of land is still very limited, so a lot of local buyers, if they don’t buy now, maybe they will not be able to buy in future, so this market will keep going up and it will push prices up. We look forward to seeing if the government can do something to increase the land
news where it matters
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Macau supply. Maybe that is the best way to control market prices. Many of your buyers were buying off the plan, and some estate agencies have said the law on presales of unfinished flats has hit sales in Windsor Arch. How severe was it? Most of the prospective buyers are not looking for investments. Most are buying for their own use, to live there. Because of the lack of land supply, they don’t have too many options if they are looking for new flats. Windsor Arch had a lot of opponents because of its height, and some people even threatened to sue. Has this been settled? We are just building it according to the government plan. The government allowed the building to be so high. Although some residents made some noise and even went to court, as far as we know, the cases are already closed. So far, we have kept going according to the original plan. You’ve mentioned that the problem in the real estate market here is the lack of supply. How can it be solved? Maybe if the government had a clear plan for land supply. This year the government at last came up with new legislation such as the land bill, the urban planning bill and the cultural heritage protection bill. These three bills have been approved, but we still cannot predict very clearly what the market reaction will be. Now, in Macau there is still a lot of space
If we put too many restrictions on the local property market, it will affect more people in terms of long-term development
available. Some is on Taipa, some on Coloane and some in the Nam Van Lake area, so the government should consider how to make use of this land. Currently, there is not only a shortage of land but also a shortage of property. Why is this happening? Because the government doesn’t have a clear plan which everyone can understand. For example, there is one bill that been discussed for more than 10 years, which is the bill on the rejuvenation of old districts. If the government really wants to control the market and let it grow in a healthy way, it should pass this bill first and make sure the market can forecast development more clearly. How about the idea of having Macau land reserved for Macau residents? Would this help the market or just distort it? Macau is a city with business freedom, and this can be considered from different angles. The government has built 19,000 public housing units and it also has a plan for more affordable units. If we put too many restrictions on the local property market, it will affect more people in terms of long-term development. Maybe the government could have some plan for entry-level government officials, providing government housing for them. In the beginning it would be to rent, but when they had enough money they would be able to buy it. It would be helpful for middle-level or entry-level government officials. While running for a seat in the Legislative Assembly in last month’s elections, you suggested there should be more flexibility in importing human resources. Is this important for the development of Macau? In these elections I wanted the government to pay more attention to helping small and medium enterprises to sort out the human resources problem. I hope the government can put more into helping SMEs keep their businesses running and into ensuring they have enough human resources. Most local people understand the problems, as Macau is very short of human resources. But I want to focus on how to help SMEs
run their businesses. Increasing imports of labour is one idea, but not everything. The government is protecting in particular croupiers in casinos and professional drivers. If the government over-protects these two occupations, it means they may pay highly while other occupations may have no people in them. I’m worried about this, too. I hope local people can have work here. It is only normal to expect Macau residents to be able to find work and to have the chance of promotion, which at the moment is not easy. If the government protects these two occupations it may narrow the chances for development. Maybe it’s difficult for the government to say it can open up such occupations, since thousands of people have been demonstrating against opening up the market to imported labour. We don’t want to say we pushed the government to open up these occupations, but the government should have some ideas for helping small companies get the human resources they need to keep running their businesses. The government is consulting the public about a proposal to set a minimum wage for cleaning and security staff, which could be the basis for a general minimum wage. What’s your take on this? If we can set it reasonably, the minimum wage may be helpful for low-income earners, like cleaning and security staff. But we also have to look at the bigger picture. If the government sets this minimum wage too high, maybe it
will put more pressure on SMEs, which may be forced to look for other options. Also, some of these entry-level employees are old, with lower levels of education, and if the minimum wage is too high maybe the boss won’t be able to employ them. Maybe that is a real danger or a problem if the wage is too high. Maybe the government could consider drawing a line, and support could be provided for people with earnings below that line, such as a cheaper housing or other sorts of benefits. If the total income of a family is below this line, maybe they could even get some allowances. The government already gives allowances to people with earnings below a certain level, and it doesn’t seem to fix the problem. Should it increase the allowances? Yes, the government gives some support, but not enough. It should increase the support given by such programmes.
If Macau wants to be an international city, we need young people to go into different industries and not only gaming
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China’s economic growth speeds up Third quarter GDP growth fastest this year, but outlook dim Aileen Wang and Kevin Yao
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hina’s economy grew at its quickest pace this year between July and September in a rebound fuelled largely by investment, although signs are already emerging that the pick up in activity may lose some vigour. Gross domestic product in the world’s second-biggest economy rose 7.8 percent from a year earlier, official data showed, marking only the second quarter in the last 10 in which growth has accelerated. An unexpected fall in exports in September, and easing growth in factory output and retail sales suggested the economy was already slowing down at the end of the quarter. Authorities are also expected to cool credit growth as inflation pushes to a seven-month high, another factor analysts say will drag on economic activity. “The growth peak was behind us in the third quarter,” said Ting Lu, an economist at Bank of AmericaMerrill Lynch. “We believe the People’s Bank of China will slightly shift its monetary policy from a moderate expansion in the third quarter to a neutral stance.” After three decades of doubledigit growth heavily reliant on exports and investment, China is trying to shift or “restructure” the economic mix so that activity is geared much more to consumption, as it is in more developed countries. But the latest figures show investment accounted for over half of the expansion so far this year, underlining the challenge Beijing faces to restructure the economy, which it hopes will provide for more sustainable growth in the future. Reducing reliance on China’s traditional growth drivers is expected to crimp the economy, although
sluggish global demand has provided an added drag. In the first nine months of the year, the US$8.5 trillion economy grew 7.7 percent from a year earlier, putting it on track to achieve Beijing’s 2013 growth target of 7.5 percent, which would still be China’s worst performance in 23 years. The surprise fall in exports came after emerging market demand wilted as choppy financial markets sapped confidence, a trend the government said this week is likely to continue. The impasse in the U.S. Congress over the government’s debt ceiling could be replayed before a new February 7 deadline, shaking confidence once more. And with the yuan hitting a record high on Friday for the fifth consecutive day, Chinese exporters face the hurdle of a rising currency eroding their competitiveness. “The economy is facing a complex and uncertain domestic
KEY POINTS GDP rose 7.8 pct in third quarter Economy grows 2.2 pct from previous quarter GDP up 7.7 pct in first nine months Efforts to restructure economy to weigh on growth
There are concerns that the property market may be overheating
and international environment,” Sheng Laiyun, a spokesman for the National Bureau of Statistics told a briefing. “In addition, we have accumulated chronic structural imbalance problems in our economy and need to deepen reforms.”
Credit growth The data shows China is a long way from having consumption as the main driver of its economic growth. Consumption accounted for 46 percent of growth in the first nine months, compared with 56 percent taken up by investment. Exports, on the other hand, subtracted 1.7 percent from growth. The government has sped up projects in infrastructure to support growth, although it has stayed away from more aggressive measures to avoid undermining its efforts to steer the economy in another direction. Overall investment in infrastructure expanded at a red-hot pace of 29 percent between January and September, the second-fastest area of investment growth after agriculture. Nie Wen, an analyst at Hwabao Trust in Shanghai, estimated government-backed investment could have accounted for around 25 percent of the total in the first three quarters of the year. Usually, it is 15 percent to 20 percent, Mr Nie said. Investment in the property sector, where prices are at record highs despite measures to calm the market, were also especially buoyant, with the housing industry accounting for 16 percent of the economic activity in the first nine months. That is up from 15 percent in the first six months. Overall investment rose in the first nine months by 20.2 percent from a year earlier, compared with expectations for a 20.3 percent gain. The figures suggesting the economy lost steam towards the end of the third quarter mirror a fall in power consumption growth, one of the barometers of economic health favoured by China’s Premier Li Keqiang. To underpin the economy, most analysts believe China will keep interest rates unchanged in the next year-and-a-half. But with inflation hitting a seven-month high in September of 3.1 percent at a time when the central bank has voiced concerns about a brisk expansion in credit, points to some policy tweaks. Reuters
Norman Chan says banks must have stable funding s
HKMA may bank fundin
Loans rising at a ‘relative
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he Hong Kong Monetary Authority may introduce measures to discourage banks from using short-term funding for long-term loans as the regulator seeks to ensure faster lending growth
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Greater China
sources
y tighten ng rules
ely fast’ annualised rate doesn’t destabilise the economy. Loans have risen by a “relatively fast” annualised rate of 18 percent to 19 percent from January through September, HKMA chief executive Norman Chan told reporters in
Beijing. If final September data show growth stayed strong, the city’s de facto central bank will tell lenders to cut reliance on the interbank market and seek more stable sources of funds, matching the maturities of borrowing and lending more closely, he said. The HKMA said in July it had summoned banks for meetings after annualised loan growth doubled to almost 40 percent in June, as a cash crunch in mainland China’s interbank market increased Hong Kong’s relative attractiveness for borrowers. Units of foreign banks have been subject to the maturity matching requirements since late 2011. “During a liquidity squeeze, banks could be forced to call in loans from corporates just because funding stops due to a mismatch,” said Mr Chan. “We don’t want to see that. We wish to ensure banks have stable funding sources.” Total loans in the city may climb by 15 percent to 19 percent this year, HKMA deputy chief executive Arthur Yuen said last month. That compares with 20 percent in 2011 and 29 percent in 2010, the fastest pace since 1990. The idea of new measures “makes sense” and the rules won’t have a “huge” impact on lending margins, Benjamin Hung, chairman of the Hong Kong Association of Banks and chief executive officer of Standard Chartered Plc’s local unit, told reporters in Beijing. Hong Kong banks’ loans have grown faster than deposits this year, Mr Hung said. For the rest of 2013, lending may maintain the same pace of growth as in the first nine months or slow slightly, he said. Bloomberg News
Dalian iron ore futures debut I
ron ore futures for physical delivery debut on the Dalian Commodity Exchange on Friday as China takes greater control of price setting in the biggest seaborne commodity trade after oil. The contract for delivery in May, the most active by volume with 300,818 lots, closed at 977 yuan (US$160) a metric ton, after opening at the bourse-set price of 950 yuan. The exchange, the nation’s thirdlargest by volume of futures, will use stockpiles of the steel-making feedstock at shipping terminals including Tianjin and Qingdao, as well as material held at some mills. Dalian’s futures backed by the raw material challenge index-based contracts settled financially by CME
Group Inc, Singapore Exchange Ltd and IntercontinentalExchange Inc. Overseas companies will be allowed to trade via units registered in China, the bourse said. “China is a natural home for iron ore trading as the biggest user,” said Wu Wenzhang, head of research at Shanghai Steelhome Information Technology Co. “There’s more than 90 million tons of inventory sitting at Chinese ports, providing perfect conditions for delivery that’s unmatched anywhere else in the world.” Imports by China rose to a record 74.6 million tons in September, buoyed by steel demand, according to data released on October 12 by the customs agency. “Judging from the first day of trading volume, the new iron ore futures attracted quite a lot of participants and we think it bodes well for more liquidity in the future,” said Gao Bo, an analyst at Mysteel Research in Shanghai. Bloomberg News
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Greater China Nanjing mayor sacked after inquiry The mayor of China’s eastern city of Nanjing has been sacked, state media say, amid a crackdown on corruption. Ji Jianye was dismissed from his leadership positions for “suspected serious disciplinary violations”, official Xinhua news agency said. It comes two days after the ruling party’s corruption watchdog revealed Mr Ji was under investigation. No details of the case have been revealed, however, state-backed newspaper the 21st Century Business Herald said Mr Ji was investigated over economic corruption and construction projects. A report on Communist Party mouthpiece People’s Daily said Mr Ji’s case could involve about 20 million yuan (US$3.3 million) in funds.
TPG China Media buys remaining Fox stake TPG China Media LP will buy TwentyFirst Century Fox Inc’s remaining 12.15 percent stake in China-focused broadcaster Phoenix Satellite Television Holdings Ltd for HK$1.66 billion (US$214 million). TPG will buy 607 million shares at HK$2.73 each from Fox unit Star Entertainment Holdings Ltd, Hong Kongbased Phoenix said in a filing to the stock exchange. On completion, Fox, controlled by Rupert Murdoch, will no longer hold a stake in Phoenix and its directors will resign, Fox and TPG said in an e-mailed press release.
EU members eye investment negotiations with Beijing Talks could be forerunner to full free-trade talks Philip Blenkinsop and Robin Emmott
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uropean Union governments agreed to start talks with China to remove restrictions on foreign investment and set clearer rules on doing business after months of trade disputes over Chinese solar panels and EU wine. The decision by trade ministers from the EU’s 28 member states means negotiations with China can start at a summit in Beijing on November 21, with the aim of sealing an investment agreement in the following two-and-a-half years. The deal, reinforcing existing bilateral agreements between China and individual EU members, would seek to guarantee investors that they would be treated fairly and that their assets could not be expropriated without compensation. The European Union also wants greater access to China and the removal of restrictions on investment in certain sectors, notably in services such as banking, or the requirement to work with a Chinese joint venture partner. “For us it is a condition that the agreement should be about investment protection, but also about market access. That of course will be the big discussion,” EU Trade
Commissioner Karel De Gucht told a news conference in Luxembourg. Trade between Europe and China has doubled since 2003 and is worth more than 1 billion euros (US$1.37 billion) a day, but China receives just 2 percent of the EU’s foreign investment. European companies complain of poor treatment in China, for example being pushed into joint ventures and forced to share sensitive information. Mr De Gucht said it was for both sides to compromise.
Trade peace The European Union and China spent the first half of the year in a trade battle, principally over EU accusations that Chinese companies were selling some 21 billion euros (US$29 billion) a year of solar panels into the bloc below cost. China threatened to retaliate by imposing duties on EU wine. A deal on solar panels was reached at the end of July, prompting China to discuss dropping its inquiry into whether Europe was dumping wine. “We don’t want to have trade wars, we want to have trade peace,”
Shanghai studies traffic jam charge Shanghai, which inaugurated a free trade zone last month, is studying whether to impose a traffic congestion charge as part of a broader plan to fight pollution. A congestion charge is one of the measures being considered as part of a white paper on transportation, Gao Yiyi, an official with the Shanghai Municipal Transport and Port Authority, said at a departmental briefing. If implemented, Shanghai would be the first in mainland China to adopt road pricing for motorists, following Singapore and London, which charge drivers more for traveling into the city centre at peak hours.
SEC accuses Yuhe of false claims Yuhe International Inc, a Chinese company that supplies chickens to broiler farms in China, was sued for fraud by the U.S. Securities and Exchange Commission and accused of telling investors it made a US$15 million acquisition that never happened. The agency also sued Gao Zhentao, the company’s founder and chairman, in federal court in Washington. The announced acquisition was questioned in a June 13, 2011, report by GeoInvesting LLC, a Skippack, Pennsylvania investment firm, and days later the company acknowledged that it “had never been completed,” according to the complaint. “Yuhe misled its public investors by disseminating a series of materially false statements,” the agency said.
Fosun snaps up New York skyscraper Chinese group pays US$725 million for JPMorgan Chase building
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PMorgan Chase & Co’s deal to sell 1 Chase Manhattan Plaza to Fosun International Ltd would be the largest purchase of a New York building by a Chinese buyer, showing Asian investors’ growing appetite for U.S. real estate. Shanghai-based Fosun, run by billionaire Guo Guangchang, agreed to buy the 60-story lower
Manhattan tower for US$725 million, according to a statement filed to the Hong Kong Stock Exchange. The 2.2 million-squarefoot (204,000-square-metre) steel skyscraper was completed in 1961. Chinese buyers are expanding U.S. property investments, seeking yield and a safe haven while the government maintains curbs on
Swedish trade minister Ewa Bjorling told Reuters on the sidelines of Friday’s meeting with her EU counterparts. “We should have a more appropriate trade relationship. China is important and will become even more important,” she added The investment talks are the first by the European Union not to be tied to a free-trade deal. Mr De Gucht said a number of obstacles stood in the way of such a full trade pact with China – such as subsidies, export credits and cheap loans. “You cannot start a free trade agreement if there is not already in principle a level playing field,” he said. “I don’t believe that any time soon negotiations for a free-trade agreement make a lot of sense, unless all of a sudden the Chinese would dramatically change.” Trade ministers also agreed to include investment in talks that are ongoing with certain members of the Association of Southeast Asian Nations (Asean): Malaysia, Thailand and Vietnam. They also agreed that the EU would discuss investment protection with Singapore, having already struck a free-trade deal last December. Reuters
domestic purchases. This year, a group including Zhang Xin, the billionaire co-founder of Soho China Ltd, took a stake in midtown Manhattan’s General Motors Building. Greenland Holding Group Co, a Shanghai-based, state-owned developer, agreed this month to buy a 70 percent share of Atlantic Yards, a residential and commercial project in Brooklyn. “The wave continues with this purchase,” said Dan Fasulo, managing director of propertyresearch firm Real Capital Analytics Inc. “We’ve seen a series of trophy transactions in key cities around the United States done by the Chinese, in New York, San Francisco, Los Angeles, as well as smaller acquisitions in other markets around the country.” The Fosun purchase is the biggest of an entire building in New York by a Chinese buyer, according to Real Capital. Major deals by Asian investors include the joint purchase last year of San Francisco’s 101 California St. by the Hong Kong Monetary Authority and GIC Pte, Singapore’s sovereignwealth fund, for US$910 million, the firm’s data show. China leads all foreign countries in New York property investment this year with US$1.37 billion of acquisitions, not including Chase Manhattan Plaza, according to Real Capital. Next is Canada with US$1.19 billion. “There’s a lot of excess capital in China that needs a way out at the moment,” said Simon Lo, Hong Kongbased executive director at property broker Colliers International. “Also, by investing in markets like New York, they believe they can gain from the recovery of the U.S. economy and real estate market.” Bloomberg News
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Asia India gears up to launch interest rate futures Central bank trying to gain traction with investors
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ndia plans to launch trading of government bond futures within the next two months as part of efforts to deepen its financial markets, according to several sources involved in the discussions with the central bank. These interest rate futures would help banks and financial firms in Asia’s third-largest economy assess expectations for borrowing costs and hedge the risks of rate changes to their bond portfolios. It would also provide the country’s policymakers with a valuable gauge to measure market expectations for their future rate decisions. Although the plans are at an advanced stage, the sources said the Reserve Bank of India (RBI) has not yet finalised the structure of the product, which will allow investors to bet on the direction of interest rates. They declined to be identified publicly commenting on the closelyheld discussions. Getting the structure right is critical for the central bank, which failed in two previous attempts in 2003 and 2009 because of what market participants have said were faulty designs. New RBI Governor Raghuram Rajan has made deepening India’s financial markets a priority, in part to prevent trading of derivatives based on domestic products from
shifting to overseas markets such as Singapore. “This product is Rajan’s baby so everyone is on their toes to make it a success. It will be launched in a month or two months at the most,” said one senior market participant who has been in discussions with the RBI. In response to a query from Reuters, an RBI spokeswoman said: “We are discussing the product with stakeholders.” Although India has active
derivatives markets in currencies and equities, it has struggled to develop liquidity in debt derivatives, depriving banks and other financial firms of a hedging opportunity. Banks, insurers, primary dealers and provident funds own about 90 percent of Indian government bonds. India has a vibrant exchangetraded equities derivatives market, with turnover about 14 times that of cash markets, reflecting the potential demand for rate derivatives. IRFs are widely used in more
developed markets. In South Korea, rate derivatives account for 14 percent of total derivatives traded on exchanges, according to official data. Although Indian banks trade over-the-counter interest rate swaps (IRS), that structure does not lend itself to long-duration contracts and trading is mostly in the one- and fiveyear segments. In India, however, the benchmark 10-year bond is by far the most traded. Sources said the RBI for now is leaning towards benchmarking interest rate futures contracts against a basket of bonds with varying maturities as opposed to using only the benchmark 10-year bond as the basis of pricing the contract. Using only one bond future is the preferred option for many market participants since it would simplify the structure. However, the RBI is concerned that traders could seek to influence the market by aggressively trading the underlying bond, according to people involved in the discussions. India’s three main exchanges – the National Stock Exchange, Multi Commodity Exchange of India Limited (MCX) and BSE Ltd – are involved in the discussions and expected to allow trading of interest rate futures on their platforms, sources said.
Raghuram Rajan has made deepening India’s financial markets a priority
Reuters
BOJ ready to act if slowdown threatens price goal Risks to central bank’s target would be from overseas, says deputy governor Leika Kihara
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lowing global growth and U.S. fiscal woes are among key risks to Japan’s economy, the Bank of Japan’s deputy governor said, stressing the central bank’s readiness to ease monetary policy further if its 2 percent inflation target comes under threat. But Kikuo Iwata said that for now, Japan’s economy is on track for a steady recovery and will gradually see price increases accelerate toward 2 percent, thanks in part to a fiscal stimulus package planned by the government. “If, in light of global uncertainties, the achievement of our 2 percent inflation target becomes difficult, it’s necessary to take further policy action,” Mr Iwata said at an university symposium in Tokyo. Mr Iwata, a former academic known as a strong advocate of reflationary policies, played a key role in crafting the BOJ’s monetary stimulus framework put in place in April. The bank aims to double the country’s base money to raise the inflation rate to 2 percent in roughly two years. Japan’s economy is moving in line with the BOJ’s projection of a moderate recovery, with personal consumption acting as a key driver of growth and companies gradually increasing capital expenditure, he said. Core consumer prices rose 0.8 percent in August from a year earlier, the fastest pace of growth in nearly five years, although most of
whether more stimulus is needed to get 2 percent inflation would be made from a long-term perspective. He said he could not comment on what kind of steps would be considered if the BOJ were to act further. Every month, the BOJ now buys roughly 7 trillion yen in government bonds, as well as risky assets, to pump money into the economy under its intense monetary stimulus framework launched in April. It has stood pat on monetary policy since then. In a separate speech on Friday, BOJ Governor Haruhiko Kuroda said the effects of the bank’s monetary stimulus are firmly emerging on economic activity. Japan’s economy on track to meet price goal, says Iwata
the increase was due to rising energy prices and a weak yen that inflated the cost of raw material imports.
Gloomy outlook But the global economic outlook has deteriorated compared with when the BOJ launched its intense stimulus in April, Mr Iwata said, warning that any risks which could threaten achievement of the 2 percent inflation target would be from overseas. He said that uncertainty over U.S. fiscal policy “will continue to serve as a big constraint and downside
risk” to U.S. growth. Slowing Asian growth could also weigh on Japanese exports, the deputy governor added. “If such overseas risks become big enough to make our current monetary stimulus insufficient to achieve 2 percent inflation, we’re ready to take some form of action,” Mr Iwata said. He added, however, the pain for Japan’s economy from the overseas slowdown will be somewhat offset by the government’s 5 trillion yen (US$51 billion) fiscal stimulus package aimed at cushioning the hit from next year’s sales tax hike. Mr Iwata also said the decision on
Reuters
If the achievement of our 2 percent inflation target becomes difficult, it’s necessary to take further policy action Kikuo Iwata, Bank of Japan’s deputy governor
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Asia Singapore lifts trading curbs on 3 companies Singapore Exchange Ltd is to lift trading curbs on three inter-linked companies whose S$8.7 billion (US$7 billion) slump in combined market value in just two days earlier this month had sparked criticism of the SGX’s market controls. SGX said it was lifting curbs on Blumont Group Ltd, Asiasons Capital Ltd and LionGold Corp Ltd, restoring their full access to the equity market. Trading in the three had been suspended on October 4 after their shares suffered dramatic reversals from massive increases built up earlier this year. SGX subsequently declared them “designated securities”, meaning traders could not short-sell them and had to pay for any purchases with cash upfront. These trading curbs, the first to be imposed on any Singapore-listed stocks for five years, will be lifted today, though SGX said it would continue to monitor trading of all three. The slump in the three stocks had turned them back into the penny stocks they were before their dramatic gains earlier this year.
S.Korea, Malaysia sign US$4.7 bln swap deal South Korea’s central bank said yesterday it had signed a bilateral currency swap deal with Malaysia valid for three years and worth up to US$4.7 billion to boost trade and financial cooperation between the two countries. The arrangement lets either country swap 5 trillion won for 15 billion Malaysian ringgit, or vice versa. The Bank of Korea said in a statement the agreement expires in three years, but can be extended if needed. The currency swap was the third swap-pact signed this month after a US$5.4 billion won-dirham agreement with the United Arab Emirates and a won-rupiah pact with the Indonesian central bank last week valued at up to US$10 billion. The agreement with Malaysia was reached during Bank of Korea Governor Kim Choong-soo’s visit to Kuala Lumpur to mark the 30th anniversary of the meeting of Southeast Asian central banks.
SoftBank takes US$1 bln Brightstar stake Japanese telecom group takes 57 percent stake in mobile phone distributor
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apan’s SoftBank Corp said it had agreed to pay US$1.26 billion for a 57 percent stake in privately held mobile phone distributor Brightstar Corp as it looks to boost its bargaining power with handset makers. SoftBank, which owns 80 percent of No. 3 U.S. mobile operator Sprint Corp, said that under the agreement its ownership of Brightstar would increase to 70 percent over the next five years, or upon certain unspecified events. SoftBank, which is valuing Brightstar at US$2.2 billion, had announced earlier last week it was in talks with the company, which delivers phones, tablets and accessories from manufacturers to wireless operators and retailers. SoftBank’s billionaire founder, Masayoshi Son, has said that buying Sprint would allow SoftBank, which also runs a mobile network in Japan, to buy phones in bigger volumes and avail of discounts from an industry dominated by Samsung Electronics Co Ltd and Apple Inc. As part of the deal, the companies said that a buying and innovation division in Brightstar would realise savings and efficiencies for SoftBank, Sprint, and Brightstar. Under the agreement, Brightstar will become the exclusive provider of handsets to certain SoftBank affiliates. By combining the buying power of Brightstar’s customers in 50 countries with that of SoftBank’s various telecom affiliates, Brightstar would become a buyer of US$20 billion worth of mobile equipment and services per year according to a person familiar with the deal who asked not to be named. “When you have that level of
buying power it puts you at the table, not just from a savings perspective, but also when device manufacturers want to talk to you about the latest and greatest products,” said the person. However, it was not immediately clear how the deal might affect existing partnerships at Brightstar which lists Sprint’s three biggest rivals Verizon Wireless , AT&T Inc and T-Mobile US as customers. T-Mobile declined to comment for the story and AT&T and Verizon did not respond. Analysts said there appeared to be a big risk that Brightstar’s three
big U.S. customers could take their business elsewhere rather than partner with the company which would have the same majority owner as No. 3 U.S. mobile provider Sprint. IDC analyst John Jackson suggested that SoftBank may try to create some benefit from the deal for Sprint’s rivals too. “I would certainly think the existing Brightstar customers will want to review their situation,” said Mr Jackson. But he added, “None of this will have been lost on SoftBank. The whole model falls down without the scale of the other operators.” Reuters
SoftBank has added to its growing stable of U.S. businesses
Currencies advance on Fed optimism Asian currencies had a third weekly gain, led by South Korea’s won, on optimism the Federal Reserve will delay any reduction in stimulus after a budget impasse threatened the world’s largest economy. The Bloomberg-JPMorgan Asia Dollar Index extended its advance from October 11 to 0.4 percent after U.S. President Barack Obama signed legislation last week that ended a 16-day partial government shutdown and deferred funding and debt ceiling deadlines into 2014. The “fiscal shenanigans” undermined the case for tapering the Fed’s US$85 billion in monthly bond buying, Dallas Fed President Richard Fisher said. “The removal of the U.S. default risk added to improving risk sentiment,” said Hideki Hayashi, a researcher at the Japan Centre for Economic Research in Tokyo. Speculation the Fed “will not rush to reduce stimulus already gave some underlying support to emerging-market assets,” he said. The won strengthened 1 percent last week to 1,060.84 per dollar in Seoul, according to prices compiled by Bloomberg. Thailand’s baht gained 0.8 percent to 31.06, Malaysia’s ringgit climbed 0.7 percent to 3.1561, while Indonesia’s rupiah rose 0.4 percent to 11,323. The yuan gained 0.39 percent to 6.0968, its best week in a year.
DBS in bid for SocGen’s Asian private bank D
BS Group Holdings Ltd is among banks that have advanced in bidding for Societe Generale SA’s private banking assets in Asia, said three people with knowledge of the matter. Societe Generale picked about five suitors to study the unit’s finances after they made initial offers, said one of the people, asking not to be named because the process is confidential. Final bids are expected by the end of November, according to two people, who didn’t identify
the other companies. The division oversees about US$13 billion. DBS could overtake Deutsche Bank AG and Morgan Stanley in Asia-Pacific wealth management by buying the Societe Generale operations, based on figures from Private Banker International. While wealth in Asia has been growing at a faster pace than elsewhere, costs as a proportion of revenues for private banks are higher, studies have shown. “Wealth is a good business to be in,” said Kevin Kwek, an analyst
at Sanford C. Bernstein & Co in Singapore. “It doesn’t seem to be a large acquisition, and this could potentially fill some geographic and segment gaps, and add breadth and depth of customers for DBS.” Spokeswomen for DBS and Societe Generale declined to comment. HSBC Holdings Plc, Standard Chartered Plc and Credit Suisse Group AG were among companies that submitted first-round bids for the Societe Generale unit, Reuters reported this month. DBS runs Asia’s ninth-largest private bank, with assets under management of US$46 billion at the end of 2012, according to a Private Banker International study published last week. Morgan Stanley oversaw US$58 billion while Deutsche Bank managed US$50 billion, the report showed. Bloomberg News
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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13 13
October 2013 April 19,21, 2013
Asia
James Packer confirms Sri Lankan casino plans Seeks joint venture partners for the project
A
ustralian tycoon James Packer, chairman of Crown Ltd, said he plans to pump A$400 million (US$384 million) into a five-star gambling resort in Sri Lanka, cashing in on the country’s tourism potential. The billionaire, who operates casinos in Melbourne, Perth and Macau and is planning a complex in Manila, said the project on the banks of Beira Lake in Colombo would create 2,500 jobs. Sri Lanka is banking on high-end casinos to attract high-rollers and boost tourist arrivals to 2.5 million by 2016 from the current level of about a million tourists a year. Mr Packer, co-chairman in Macau casino operator Melco Crown Entertainment Ltd, said he was in detailed discussions with the Sri Lankan government and potential joint venture partners to develop the resort, which will have 450 rooms as well as restaurants, retail stores, conference facilities
and gambling spaces. “I have great confidence in the country’s future and believe as a destination that it is Sri Lanka’s time to shine in Asia,” Mr Packer said in a statement to the Australian Stock Exchange. “A Crown integrated
growing line-up of luxury Colombo hotels, including a US$400 million beachfront Shangri-La, the Taj group’s upgraded five-star Samudra Colombo, and a John Keells Holdings Plc gaming resort. The tourism industry on the Indian Ocean island, famed for its beaches and wildlife, has boomed in the past four years after the end of a decadeslong civil war in which more than 100,000 people died. Mr Packer said the Sri Lankan parliament and the Price forecast for Board of Investment Crown’s casino resort were in the process of considering whether in Sri Lanka to grant investment approvals. resort would help redefine A Sri Lankan governluxury tourism in Sri Lanka ment spokesman, Keheliya and play a significant role in Rambukwella, last month helping to drive increased said the cabinet had grantinternational in-bound ed the project a partial tourism especially from 10-year tax holiday while India and China,” he added. approving the “mixed deThe resort will join a velopments”, a euphemism
US$384 mln
James Packer says it’s ‘Sri Lanka’s time to shine’
for casino hotels. Mr Packer is also seeking to develop a hotel for highrollers in Australia’s largest city Sydney, as well as
projects in Macau and the Philippines via Crown’s stake in Melco Crown Entertainment. AFP
14 14
October 21, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 92.6
59.9 59.4
Max 58.6
Min 57.95
average 57.383
Last 59.8
Min 55
57.9
Max 92.45
average 91.827
PRICE
average 29.491
Min 28.5
Last 29.55
28.40
57.7
26.25
32.0
56.8
25.90
31.4
55.9
25.55
30.8
Max 26.5
average 26.122
DAY %
YTD %
(H) 52W
Min 25.25
Last 26.4
(L) 52W
0.139068243
7.841249465
111.3399963
85.79000092
BRENT CRUDE FUTR Dec13
109.94
0.760700211
4.894571129
114.4399948
95.95999908
GASOLINE RBOB FUT Nov13
267.32
0.955474149
4.10468105
293.6000109
243.3699846
933
0.647249191
3.494176373
973
837
3.764
0.186318871
0.507343124
4.59400034
3.281000137
303.54
1.518394649
1.586345382
322.3500013
276.8100023
Gold Spot $/Oz
1316.25
0.7987
-20.9203
1754.46
1180.57
Silver Spot $/Oz
21.9285
1.0074
-27.172
34.3838
18.2208
Platinum Spot $/Oz
1438.75
1.6569
-5.2051
1742.8
1294.18
Palladium Spot $/Oz
GAS OIL FUT (ICE) Dec13 NATURAL GAS FUTR Nov13 NY Harb ULSD Fut Nov13
740.95
2.7271
5.9014
786.5
587.4
LME ALUMINUM 3MO ($)
1847
-0.162162162
-10.90207429
2184
1758
LME COPPER 3MO ($)
7245
0.20746888
-8.649602824
8346
6602 1811.75
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13
25.20
Dec13
1934
0.285195748
-7.019230769
2230
14200
1.392359871
-16.76436108
18770
13205
15.29
-1.035598706
-0.810898476
16.65000153
14.68999958
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
Max 32.55
average 31.584
Min 30.3
Last 31.6
30.2
-0.338600451
-26.38599416
647
432
705.75
2.879008746
-14.01157478
913
635.5
SOYBEAN FUTURE Nov13
1291.25
-0.15464914
-0.882748033
1409.5
1162.5
COFFEE 'C' FUTURE Dec13
114.65
-0.043591979
-26.71780121
181.5500031
113.1999969
NAME
SUGAR #11 (WORLD) Mar14
19.5
2.631578947
-5.247813411
20.85000038
16.69999886
ARISTOCRAT LEISU
COTTON NO.2 FUTR Dec13
83.11
-0.847053209
5.5499111
93.72000122
74.34999847
CROWN LTD
DAY %
YTD %
(H) 52W
(L) 52W
0.9677 1.6167 0.9017 1.3687 97.72 7.986 7.7531 6.0964 61.265 31.06 1.2391 29.417 43.07 10904 94.574 1.2343 0.8466 8.3357 10.9378 133.79 1.03
0.6972 0.6663 0.2773 0.4624 0.3275 0.0088 0.0129 0.0115 -0.0735 -0.0644 0.1695 -0.1768 -0.0116 2.0268 -0.3796 -0.1985 0.2055 -0.3443 -0.5266 -0.1719 0
-6.7547 -0.0556 1.5194 3.768 -11.8911 -0.0351 -0.0322 2.2013 -10.2342 -1.5454 -1.4285 -1.3054 -4.7945 -10.1889 -5.548 -2.1729 -3.683 -1.418 -3.7247 -15.1132 -0.0097
1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.2577 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 10.9436 134.95 1.032
0.8848 1.4814 0.8968 1.2662 79.08 7.9818 7.7498 6.0883 52.89 28.56 1.2168 28.913 40.54 9590 81.636 1.20302 0.79607 7.8281 10.1113 100.33 1.0289
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
VOLUME CRNCY
4.79
-0.6224066
52.06349
5.02
2.56
1777220
16.75
1.392252
56.98219
16.87
9.3
2291788
AMAX HOLDINGS LT
1.28
5.785124
-8.571427
1.72
0.75
6282000
BOC HONG KONG HO
25.3
1.2
4.979251
28
22.85
15572904
0.435
8.75
64.15095
0.56
0.232
6748000
7.2
-0.1386963
20.20034
7.24
4.1
185000
CHINA OVERSEAS
24.3
0
5.194803
25.6
17.7
8634758
CHINESE ESTATES
21.55
2.132701
91.63139
21.8
9.543
302250
CHOW TAI FOOK JE
12.66
2.261712
1.768492
13.4
7.44
12920600
EMPEROR ENTERTAI
4.15
-0.9546539
119.5767
4.66
1.43
6815000
FUTURE BRIGHT
2.73
3.802281
125.2427
2.76
1.103
4468000
GALAXY ENTERTAIN
59.8
4.090513
97.03459
60
24.2
18056400 1074284
CENTURY LEGEND
World Stock Markets - Indices
PRICE
Macau Related Stocks
441.5
WHEAT FUTURE(CBT) Dec13
NAME
Max 29.8
32.6
100.81
CORN FUTURE
89.6
26.60
WTI CRUDE FUTURE Nov13
LME ZINC
Last 92.1
Currency Exchange Rates
NAME
METALS
Min 89.65
58.6
Commodities ENERGY
28.75
90.2
55.0
Last 58
29.10
90.8
58.4
average 59.418
29.45
91.4
58.9
Max 59.85
29.80
92.0
CHEUK NANG HLDGS
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15399.65
0.1821535
17.51745
15709.58
12471.49
NASDAQ COMPOSITE INDEX
US
3914.278
1.323584
29.63273
3914.932
2810.8
FTSE 100 INDEX
GB
6622.58
0.7058831
12.2888
6875.62
5605.589844
128.4
0.6269592
8.171865
132.8
110.6
DAX INDEX
GE
8865.1
0.6028157
16.45619
8865.1
6950.53
HOPEWELL HLDGS
26.4
0.7633588
-20.6015
35.3
23.2
1182500
NIKKEI 225
JN
14561.54
-0.1711856
40.07973
15942.6
8619.45
HSBC HLDGS PLC
84.85
0.9518144
4.36654
90.7
73.55
10177879
HANG SENG INDEX
HK
23340.1
1.061794
3.015325
23944.74
19426.35938
CSI 300 INDEX
CH
2426.054
0.5272383
-3.840658
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8441.19
0.7941796
9.632969
8441.19
7050.05
KOSPI INDEX
SK
2052.4
0.5777684
2.771581
2052.44
S&P/ASX 200 INDEX
HANG SENG BK
HUTCHISON TELE H
3.61
1.120448
1.404496
4.66
3.12
6654500
LUK FOOK HLDGS I
28
5.065666
14.7541
30.05
16.88
6748404
MELCO INTL DEVEL
25
5.485232
177.4695
25.2
7.26
7781242
MGM CHINA HOLDIN
29.55
4.232804
122.5439
29.85
12.236
5083400
1770.53
MIDLAND HOLDINGS
3.19
1.269841
-13.78378
4.6
2.68
996000
NEPTUNE GROUP
0.26
17.11712
71.05264
0.29
0.131
971615000
NEW WORLD DEV
10.98
0.1824818
-8.65225
15.12
9.98
15299394
58
9.227872
70.83947
58.85
28.25
34265506
SHUN HO RESOURCE
1.65
0
17.85714
1.92
1.19
86000
4.72
3.508772
12.64916
4.72
3
13402194 20512422
AU
5321.466
0.7261643
14.46597
5326.5
4334.3
ID
4546.571
0.6116713
5.325468
5251.296
3837.735
FTSE Bursa Malaysia KLCI
MA
1799.59
0.1207286
6.550817
1826.22
1590.67
NZX ALL INDEX
NZ
1000.373
-0.3904235
13.41416
1005.921
851.971
SHUN TAK HOLDING
PHILIPPINES ALL SHARE IX
PH
3984.37
0.6865966
7.715374
4571.4
3440.12
SJM HOLDINGS LTD
JAKARTA COMPOSITE INDEX
Euromoney Dragon 300 Index Sin
SI
622.96
0.76
0.3
NA
NA
SANDS CHINA LTD
SMARTONE TELECOM WYNN MACAU LTD
26.4
5.6
48.75202
26.6
16.486
10.58
0
-24.85795
16.22
9.97
1579000
31.6
4.290429
50.83532
32.6
19
11430090
STOCK EXCH OF THAI INDEX
TH
1484.72
1.063924
6.666277
1649.77
1260.08
HO CHI MINH STOCK INDEX
VN
500.83
0.2482035
21.05237
533.15
372.39
ASIA ENTERTAINME
3.96
0
#N/A N/A
#N/A N/A
#N/A N/A
69409
BALLY TECHNOLOGI
69.79
-0.05728197
56.09484
76.3
43.16
217367
Laos Composite Index
LO
1299.21
-0.6993488
6.951105
1455.82
1047.94
BOC HONG KONG HO
3.3
4.100946
7.491859
3.6
2.99
9350
GALAXY ENTERTAIN
7.7
3.407061
93.95466
7.79
3.13
18250 2463282
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
INTL GAME TECH
18.62
-1.062699
31.40437
21.2
12.37
JONES LANG LASAL
86.14
0.2560521
2.620917
101.46
72.56
143566
LAS VEGAS SANDS
72.52
2.184021
57.10572
73.07
37.8353
8663760
MELCO CROWN-ADR
36.505
4.989934
116.7755
36.65
13.43
5959754
MGM CHINA HOLDIN
3.85
4.054054
119.9634
3.85
1.6651
4600
MGM RESORTS INTE
20.69
-0.4331088
77.74914
20.98
9.15
10605703
SHFL ENTERTAINME
23.18
-0.04312204
59.86207
23.21
12.35
876960
SJM HOLDINGS LTD
3.37
3.058104
47.96173
3.37
2.0804
31000
171.92
1.45167
52.83137
172.75
103.34
1007342
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AIA GROUP LTD
30.2
1.003344
16574881
CHINA UNICOM HON
13.68
1.333333
22775492
ALUMINUM CORP-H
3.61
0
15433022
CITIC PACIFIC
10.12
0.1980198
6468988
BANK OF CHINA-H
3.15
1.286174
329406866
BANK OF COMMUN-H
5.87
0.8591065
37793438
29
0.1727116
14.5
BANK EAST ASIA BELLE INTERNATIO
NAME
CLP HLDGS LTD
NAME
PRICE
DAY %
64.4
0.625
2568679
SANDS CHINA LTD
28.75
-0.1736111
6213954
SINO LAND CO
14.28
0.990099
7686664
SUN HUNG KAI PRO
109.1
1.018519
8616634
93
-0.4815409
2456828
265.6
1.45149
2048509
23.9
0
2206357
10
0.8064516
5926157
52.75
1.05364
3208615
POWER ASSETS HOL
65.6
0
1561243
CNOOC LTD
16.32
0.4926108
46287676
1260442
COSCO PAC LTD
11.76
0
3138217
SWIRE PACIFIC-A
0
7192500
ESPRIT HLDGS
12.44
-0.48
4211743
TENCENT HOLDINGS
24
0.2087683
10140777
HANG LUNG PROPER
26.55
-0.1879699
7812341
TINGYI HLDG CO
CATHAY PAC AIR
13.78
0.2911208
3140232
HANG SENG BK
119.7
0.167364
1690249
WANT WANT CHINA
CHEUNG KONG
114.9
1.23348
3918568
HENDERSON LAND D
57
2.059087
5880582
WHARF HLDG
75.55
0.1325381
701703
20
1.112235
6329376
125.6
3.54493
9625332
76.5 -0.06531679
9291476
BOC HONG KONG HO
CHINA COAL ENE-H
7.7
-0.1297017
40174849
CHINA CONST BA-H
5.87
1.206897
202072100
CHINA LIFE INS-H
22.9
0.4385965
30126882
CHINA MERCHANT
25.6
0.3921569
4209584
HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC
85.45
1.064459
16569813
HUTCHISON WHAMPO
CHINA OVERSEAS
20.2
-0.2469136
19374736
IND & COMM BK-H
CHINA PETROLEU-H
8.36
0.9661836
101198904
CHINA RES ENTERP
25.2
0.8
CHINA MOBILE
77.35
1.243455
6697663
5.17
1.372549
317570965
LI & FUNG LTD
12.84
-0.9259259
17517410
4219717
MTR CORP
29.85
1.530612
4880670
CHINA RES LAND
17.16
1.179245
6849146
NEW WORLD DEV
12.98
1.564945
12528960
CHINA RES POWER
16.08
-0.618047
7490964
PETROCHINA CO-H
10.94
-1.263538
64234127
CHINA SHENHUA-H
33.35
-0.1497006
11160228
PING AN INSURA-H
63.35
1.198083
8338502
MOVERS
32
14
23351.48
LOW
23094.88
4 23355
INDEX 23340.1 HIGH
VOLUME
52W (H) 23944.74 (L) 19426.35938
23094
16-October
18-October
15 15
October 2013 April 19,21, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Korea Herald South Korean corporate profitability deteriorated to a record low in 2012 as the global economic slowdown sharply dented sales growth, the central bank said on Sunday. The average ratio of pre-tax net profit to sales, a key barometer of profitability, came in at 3.4 percent in 2012, the lowest since the Bank of Korea began compiling related data in 2009. The central bank surveyed 464,000 companies. The comparable figure for 2009 was 3.9 percent but rose to 4.9 percent in 2010. But the ratio fell again to 3.7 percent in 2011.
Taipei Times Taiwan’s ambitious free economic pilot zones, touted by the government as an engine to drive economic growth, could lead to a mass influx of Chinese whitecollar workers, an opposition lawmaker said. Taiwan Solidarity Union Legislator Hsu Chung Hsin said the degree to which the nation is opening its economy to China is already so high that it comes behind only Hong Kong and Singapore. Restrictions on foreign investments, including from China, product imports and fund inflows could be largely relaxed, resulting in a wider opening in the markets for China, Mr Hsu said.
Jakarta Globe Gold demand across Asia will keep expanding as inflation spurs investment purchases, said HSBC Holdings Plc. Demand for jewellery, bars and coins in India, Greater China, Indonesia and Vietnam increased to about 60 percent of the global total compared with 35 percent in 2004, economists including Frederic Neumann wrote in a note, citing data from the World Gold Council. “With inflation still elevated in many markets and interest rates not offering adequate compensation, expect Asia’s voracious appetite for gold to persist,” Mr Neumann wrote.
Asahi Shimbun Mizuho Bank will establish a new department to prevent loans to organised crime figures following revelations the bank – and its board of directors – did nothing about previous lending to yakuza members. The bank will also bring in outside directors to its board. Sources said Mizuho Bank will include the measures in its business improvement plan that will be submitted to the Financial Services Agency on October 28. The FSA ordered Mizuho Bank to compile the plan after it admitted that loans had been extended to gangsters.
America’s debt-ceiling debacle Katharina Pistor
W
Professor of law and Director of the Centre on Global Legal Transformation at Columbia University
hen Greece’s sovereign-debt crisis threatened the euro’s survival, U.S. officials called their European counterparts to express bewilderment at their inability to resolve the issue. Now, the tables have turned, with American leaders on the receiving end of such calls. The most recent threat of a U.S. debt default has been avoided, but only temporarily. Another battle looms early next year, when the U.S. government’s debt ceiling will have to be raised again. In Europe, the absence of a political union – considered a necessary precondition for sharing debt obligations and, thus, putting the euro on a sound footing – is widely held to lie at the root of the continent’s crisis. But the U.S. crisis suggests that political union is no panacea for managing sovereign debt. For weeks, Republicans in the House of Representatives threatened to keep the government shuttered – thereby preventing it from extending its borrowing authority beyond the October 17 deadline – in order to challenge laws that were enacted by Congress as a whole and upheld by the Supreme Court. In the eurozone, the main source of disagreement has been how debts in need of refinancing were incurred – that is, whether they contravened agreed debt limits. In the United States, the bone of contention has been the purpose that the funds will serve. The difference is ultimately minor, and should not be allowed to overshadow
what is really at stake: democratic self-governance in an age of high public debt.
Cheap politics In 1773, the so-called Sons of Liberty staged the Boston Tea Party under the slogan, “No taxation without representation”. And America’s founders clearly regarded legislative control over the budget as a key pillar of democratic governance. Taxation remains the dominant source of government revenue in most developed countries. But the role of debt finance has been growing – and, with it, the need to refinance old debt when total expenditure, including debt service, exceeds total revenue. Broad access to deep and liquid international debt markets has enabled policymakers to bypass some of the most challenging aspects of democratic governance. Rather than tackle thorny questions about how to allocate limited resources, democratic governments seem to believe that they can have it all: low taxes and ample debt finance to fund wars or electorate-pleasing programmes. Growing debt burdens suggest that this form of cheap politics has run its course. But the problem runs deeper than that. Excessive reliance on debt finance has undermined basic tenets of democracy, with government finance increasingly determined not by electoral cycles and political deliberation, but by repayment schedules. In times of economic growth, debt finance provides an easy
escape from difficult choices. When the economy falters, however, creditors – and those who are willing to entertain the prospect of default – can impose their will on everyone else. This power follows from the nature of debt. A tax is a quasi-equity claim of the government on its citizens’ financial expectations. Gaining the consent of the majority of citizens to raise taxes can be a tall order politically, and has become more difficult as capital mobility has narrowed the tax base and triggered a race to the bottom on rates.
Managing debt Debt, by contrast, is a contractual commitment to repay creditors who are largely oblivious to how the money is spent. By incurring debt, states trade an element of sovereignty – the flexibility to alter course over time in
The problem is that democracies have yet to learn how to manage debt effectively
response to the electorate’s demands – for the ability to fund expenditures without being compelled to navigate the political minefield of raising taxes. Creating viable institutions for managing public debt in a democracy is difficult. The mechanisms currently on offer are treaty-based, constitutional, and statutory debt ceilings, pegged as a ratio of GDP, or, as in the U.S., established in nominal terms. Treaty-based debt ceilings are largely toothless, as Europe’s experience suggests. Constitutional debt limits have yet to be tested in times of emergency, when new funding is needed quickly. And, as the recent impasse in the U.S. demonstrates, political minorities with effective veto power can abuse statutory ceilings in an economic downturn, when dependence on external debt finance increases. Indeed, to the extent that reliance on debt finance undermines self-governance, debt-ceiling abuse for partisan gain becomes more likely. The problem is that democracies have yet to learn how to manage debt effectively. While political union may stabilise the euro, it will not sustain or strengthen democracy unless Europe’s leaders address this critical failing. Even the world’s oldest continuous democracy is not immune to the erosion of selfgovernance. Commitments never to raise taxes have left the U.S. dependent on debt finance – and, more frightening, on those who are ready to veto refinancing it. © Project Syndicate
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October 21, 2013 April 19, 2013
Closing Food safety centre to recruit more staff Hend takes Macau Open as Els slips Macau’s food safety centre will increase staff numbers by up to two-thirds next year. The territory’s first law on food safety took effect yesterday. It consolidates enforcement powers for issues such as food testing and quality control under one department – the Civic and Municipal Affairs Bureau. At the weekend Alex Vong Iao Lek, the bureau’s acting president, said the department would raise the number of administrative staff and experts in the food safety centre from 90 now to at most 150 next year.
More overseas pacts at trade fair The Macau International Trade and Investment Fair concluded yesterday
T
he city’s cheerleader for economic growth beyond casinos – Macau Trade and Investment Promotion Institute – said 98 agreements were signed in an annual four-day investment fair concluded yesterday. The total was 11.4 percent up from last year. The 18th edition of the Macau International Trade and Investment Fair (MIF) drew more than 116,000 visitors including business professionals – an increase of 12 percent on last year’s attendance. Irene Lau Kuan Va, executive director of the institute, told media that the outcomes “reach the expected targets”. The institute emphasised in its final press statement the agreements made this year include those with firms from Russia, Romania and Dubai. “The agreement content and the background [of the signing parties] shows MIF has played a
role of trade platform and Macau being used [by firms] to explore overseas and mainland markets,” said the statement. It included Macau and Russian firms signing a cooperation pact on
Australian long hitter Scott Hend (pictured) claimed victory at the Venetian Macau Open yesterday as the tournament’s star draw Ernie Els was forced to content himself with third place. On a day of drama in the US$800,000 (6.4 million patacas) Asian Tour tournament, which also saw India’s Anirban Lahiri match the course record with an impressive nine-underpar 62, Mr Hend capitalised on his overnight four-shot lead. He finished the tournament with a three-stroke victory, closing with a four-under-par 67 for a 16-under-par 268 total.
construction equipment. But the trade institute did not reveal the total amount of all actual contracts signed this year. Last year there were a total of 88 contracts worth 5.5 billion patacas (US$687.5 million). Ms Lau added: “Right now the Portuguese-speaking firms know that they can use MIF to meet [companies] from the mainland and the European Union. It has become a habit for them to come every year and promote [their] products and services here.” Over 2,000 business matching sessions were also held in the fourday fair, up by 11.7 percent from a year earlier. T.L.
Considers selling shares in its Watson Group retailing unit
H
The European Union and Canada agreed a multibillion-dollar trade pact that will integrate two of the world’s largest economies and pave the way for Europe to clinch an even bigger deal with the United States. The deal will make Canada the only G8 country to have preferential access to the world’s two largest markets, the EU and the United States, home to a total of 800 million people. “This is the biggest deal our country has ever made,” Canadian Prime Minister Stephen Harper said in Brussels, adding that it outstripped the North American Free Trade Agreement between Canada, the United States and Mexico. Talks between the two sides launched in May 2009 but stalled for months over quotas for Canadian beef and EU cheese. The deal marks a breakthrough for Brussels’ free-trade agenda, which had previously achieved smaller agreements with South Korea and Singapore. It is expected to increase bilateral trade in goods and services by a fifth to 25.7 billion euros (US$35 billion) a year, according to the latest EU estimates. European Commission President José Manuel Barroso said he hoped the agreement could come into effect from 2015, after EU governments, the European Parliament and Canada’s 10 provinces give their blessing.
JPMorgan faces record US$13b fine
Hutchison drops plan to sell ParknShop utchison Whampoa Ltd, controlled by Asia’s richest man, Li Ka Shing, has scrapped a plan to sell its supermarkets business, ParknShop, and will instead focus on expanding in China, it told the Hong Kong Stock Exchange. The sale of ParknShop, which operates 345 stores in Hong Kong, China and Macau, had been expected to fetch between US$3 billion (23.96 billion patacas) and US$4 billion, with prospective bidders including prominent retailers. ParknShop attracted initial offers in August from suitors including China Resources Enterprise Ltd, Sun Art Retail Group Ltd, Japan’s Aeon Co, Woolworths and CP Group, according to people with knowledge of the process. But Hutchison has decided not to sell after conducting an initial strategic review with advisors
EU strikes trade deal with Canada
Goldman Sachs and Bank of American Merrill Lynch, it said in a filing to the Hong Kong Stock Exchange on Friday. “The company has decided not to pursue a private sale of its ParknShop business at this time and will continue to implement an accelerated growth strategy with a particular focus in mainland China,” Hutchison said. The ports-to-energy conglomerate said selling ParknShop would not deliver maximum value to its shareholders. Hutchison also said it planned to conduct a strategic review of its health and beauty retail business A.S. Watson & Co Ltd with possible options including public offerings of all or some of those businesses in appropriate markets. But the Hong Kong-based company won’t consider giving up control of the unit, according to the statement.
“The asking price was too aggressive,” Ronald Wan, chief China adviser at Asian Capital Holdings Ltd, which has about US$100 million of assets under management, told Bloomberg. “Hutchison couldn’t sell with maximum gain and the transaction price of ParknShop would have affected the valuation of Watson, so it chose to drop the plan.” ParknShop generated HK$21.7 billion in revenue last year and earnings before interest, tax, depreciation and amortisation of HK$1.4 billion, another person familiar with the matter previously told Reuters. Established in 1973, ParknShop’s market share trailed the 40 percent held by Wellcome, which is controlled by Singaporelisted Dairy Farm International Holdings Ltd, according to researcher Euromonitor. Reuters/Bloomberg News
JPMorgan Chase & Co has reached a tentative US$13 billion deal with the U.S. Justice Department and other government agencies to settle investigations into bad mortgage loans the bank sold to investors before the financial crisis, a source familiar with the talks said. The tentative deal, the largest ever between the U.S. government and a single company, does not release the bank from criminal liability for some of the mortgages it packaged into bonds and sold to investors. That had been a major sticking point in the discussions, but the government refused to budge on that issue and JPMorgan felt it had no choice but to give in, according to a second source. Until recently, the most that JPMorgan was willing to pay was closer to US$11 billion. The ongoing criminal investigation underscores how even if this settlement takes some heat off JPMorgan chief executive Jamie Dimon, he still has myriad regulatory issues to deal with. The biggest U.S. bank sidestepped the worst of the financial crisis but now faces more than a dozen probes globally into everything from alleged bribery in China to a possible role in manipulating benchmark interest rates known as Libor.
Reuters