Macau Business Daily, October 23, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief

new hotel project next to Macau Jockey Club may have a casino, an executive from the venue’s management company said yesterday. The mere mention of a casino raised eyebrows among media attending the ground breaking ceremony for the 373-room, HK$2 billion (US$256.4 million) Hollywood Roosevelt Macau hotel – reportedly being developed by Macau-based Yoho Group Ltd. The surprise was because of the government’s apparent commitment to preventing proliferation of gaming venues created via so-called ‘service agreements’ made with the city’s existing gaming concessionaires and sub-concessionaires. Macau’s first chief executive Edmund Ho Hau Wah in 2008 reportedly imposed a ban on service agreements. But the ban reportedly doesn’t apply to deals made before that date. Nobody – apart from those involved – seems to know exactly how many are out there. The Gaming Inspection and Coordination Bureau told Business Daily yesterday: “The bureau, until now, has not received any application to open a new casino.”

Casino Louis XIII 1 on for ‘early 2016’ opening Page 4

Next round of continuing education in Q2 Page 6

Japan tosses Okada’s libel suit v. Wynn Page 7

More on page 3

www.macaubusinessdaily.com

Year II

Photo by Manuel Cardoso

Number 398 Wednesday October 23, 2013

Editor-in-chief Tiago Azevedo

Planned Taipa hotel may have casino

April 19, 2013

Carson Yeung was front man: auditor

Brought to you by Zung Fu Motors (Macau) Limited

An external forensic auditor has found that most of the known payments from Macau-linked businessman Carson Yeung Ka Sing to Birmingham International Holdings Ltd involved money that had originated from undisclosed third parties. A separate auditor has issued a damning report on past internal management at Hong Kong-listed BIHL. The firm bought a controlling stake in English professional football club Birmingham City F.C. in September 2009. Page 2

Bling’s the thing as yachts, jets go on show Three fairs exhibiting respectively, private jets, luxury yachts and high-end cars will be held concurrently for the first time this year. The China (Macau) International Automobile Exhibition; the Macau Business Aviation Exhibition; and the Macau International Yacht Import and Export Fair will be held between November 1 and 3. Li Zhizhong, vice-president of Nam Kwong (Group) Co Ltd, one of the event’s organisers, said the aim was cross-promotion. Page 5

Debit card crime poses new legal challenges Existing criminal provisions fall short of deterring the use of fraudulent debit cards, a newly emergent financial crime that can pose a huge legal challenge to the authorities here, says Vu Ka Vai, adviser to Macau’s Prosecutor General. In May last year, the Judiciary Police handled a case involving a group from mainland China that attempted to withdraw money using a fake debit card at a local pawnshop. Page 7

Hang Seng Index 23357

23341

23325

23309

23293

23277

October 22

HSI - Movers Name

%Day

CHINA RES POWER

3.85

CATHAY PAC AIR

2.00

HUTCHISON WHAMPO

1.72

CHINA SHENHUA-H

1.43

LENOVO GROUP LTD

0.98

CHINA MERCHANT

-1.56

TENCENT HOLDINGS

-1.92

CHINA MOBILE

-3.41

GALAXY ENTERTAIN

-4.48

SANDS CHINA LTD

-4.86

Source: Bloomberg

I SSN 2226-8294

Brought to you by

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2013-10-24

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October 23, 2013

Macau Neptune buys into profits at a Galaxy VIP club Macau junket investor Neptune Group Ltd is to buy a five percent stake in a firm called Joyful Celebrate Global Ltd for HK$241 million (US$31.1 million), Neptune said in a filing to the Hong Kong Stock Exchange. Joyful Celebrate is entitled to 0.3 percent of the rolling chip turnover generated by “Galaxy Neptune Guangdong VIP Club” at Galaxy Macau resort on Cotai, according to the document. The club generated rolling chip turnover of approximately HK$7.5 billion per month for the past 12 months states the filing. It adds that in the first 12 months after the acquisition, Neptune Group will be entitled to a profit stream of “not less than HK$271 million”. Joyful Celebrate is a British Virgin Islandsregistered entity 100 percent owned by a Jason Tsang Ho Yan. That firm in turn fully owns a junket promoter working with Macau gaming concessionaire Galaxy Casino SA at “Galaxy Neptune Guangdong VIP Club”, says the regulatory document.

‘Third parties’ gave cash to Carson Yeung: auditor Forensic accountant wasn’t asked to find who was ultimately supplying money to soccer club owner Michael Grimes

michael.grimes@macaubusinessdaily.com

BIHL chairman Carson Yeung

China Star sells stakes to its family owners China Star Entertainment Group Ltd – which controls the Macau casino property Hotel Lan Kwai Fong (pictured), operating under a Sociedade de Jogos de Macau SA gaming licence – has two new and non-wholly owned subsidiaries. It’s the result of two share purchase and sale loan agreements worth a total of HK$125 million (US$ 16.1 million). The “ultimate beneficial owners” of the two units – investment holding companies Mighty Chief Ltd and Rosy Mile Ltd – are “immediate family members” according to a Hong Kong Stock Exchange filing. That’s understood to be reference to the family of China Star’s chairman and chief executive Charles Heung Wah Keung. Facilities at Macau’s Hotel Lan Kwai Fong include an 18th floor suite with eight VIP rooms according to the property’s website. China Star also invests in “operations which receive profit streams from the gaming promotion business in one of the VIP gaming rooms at the Grand Lisboa Casino in Macau,” according to another filing.

Sincere Watch gives profit warning Sincere Watch (Hong Kong) Ltd – sole distributor of Franck Muller watches and accessories in Macau, Hong Kong, Taiwan and mainland China – has warned of a likely decline in profit for the six months to September 30. The unaudited interim results of the group for that period are due next month. Sincere Watch said in its 2012 interim report published in December that mainland China and Macau accounted for about 31.1 percent of the group’s approximately HK$349.7 million (US$45.1 million) revenue in the six months to March 31, 2012. During that period, sales in those markets showed a decrease of 27.9 percent from HK$150.9 million to HK$108.8 million, compared with the same period in 2011. Profit after taxation for the six months ended 30 September 30, 2012 decreased by 25.3 percent from HK$60.9 million to HK$45.5 million. The company’s 67 watch retail outlets in North Asia as of December last year are run by 30 independent dealers.

n external forensic auditor has found that most of the known payments from businessman Carson Yeung Ka Sing to Birmingham International Holdings Ltd involved money that had originated from undisclosed third parties. A separate auditor has issued a damning report on past internal management at Hong Kong-listed BIHL. The firm bought a controlling stake in English professional football club Birmingham City F.C. in September 2009 using a loan guaranteed by Mr Yeung and fellow director Vico Hui Ho Luek.

According to the latest BIHL filing, ShineWing found that of transactions totalling HK$166 million (US$21.4 million) from Mr Yeung to BIHL – and its predecessor company Grandtop International Holdings Ltd – made between January 1, 2007 and June 30, 2011, “most of them were remitted from third parties”. In other words, the funds did not originate from Mr Yeung himself. The auditor added however that under the brief given by the BIHL board, it “was not required to perform any background searches for companies/individuals involved in the relevant suspicious transactions or fund flows”.

Court case

Carson Yeung is not interested in a full disposal of the football club Peter Pannu, Birmingham City F.C. acting chairman

BIHL voluntarily suspended trading in its shares on the Hong Kong Stock Exchange on June 30 2011 after Mr Yeung’s arrest on what the firm says are unrelated money laundering charges. The board nonetheless ordered a series of reports into the management of the firm and transactions involving chairman Mr Yeung. They include a review by ShineWing Specialist Advisory Services Ltd, a Beijing-based firm with expertise in forensic accountancy.

Mr Yeung is currently on trial at the District Court in Wan Chai, Hong Kong, facing five counts of laundering more than HK$720 million deposited in five bank accounts from January 2001 to December 2007. In the summer of 2009 he c o m p l e t e d the purchase of Birmingham City for 81.5 million pounds (1.05 billion patacas). At that time the club was in the English Premier League. It is currently languishing in 20th place in the second-tier Championship. BIHL repeated in its latest filing that a letter from solicitors representing Mr Yeung said the five money-laundering charges against him “do not relate to any of the accounts of the company”. Auditor KTC Partners CPA Ltd was hired by Birmingham International in February to conduct the internal controls review. It did so between January 28 and March 29 this year, with a follow up review at the end of May according to BIHL’s latest filing. It found 11 major failings, including that the firm had no

KEY POINTS 86 known payments between BIHL and Carson Yeung from Jan 1, 2007 to June 30, 2011 The transactions totalled HK$327 million Another GBP15 million in 14 known transactions between Birmingham City F.C. and Mr Yeung in relevant period Multiple failures of internal control found at BIHL as late as March this year

comprehensive accounting policy; that it had “a number” of cases of non-compliance with the exchange’s listing rules; and that the board did not assess the “competence and sufficiency of finance function” at least annually. The filing additionally states that a separate review of the Birmingham City F.C. acquisition is “currently not a priority for the company, given other strategic priorities…” The Independent newspaper in the United Kingdom reported on Sunday that Gianni Paladini – a former chairman of Queens Park Rangers F.C. – made a “sale agreement” to buy Birmingham City two weeks ago but had heard nothing since. But the club said in a statement: “As has already been highlighted by acting chairman, Peter Pannu; the club’s president, Carson Yeung, is not interested in a full disposal of the football club.”

October 2013 April 19,23, 2013

Macau Casinos failing smoke zone tests all appeal All 16 gaming venues that failed a second round of air quality tests on their smoking areas have appealed to the Health Bureau against the findings, its director Lei Chin Ion (pictured) confirmed yesterday. The bureau has to address the appeals to determine whether or not the size of their smoking areas should be reduced, he told media. “The appeals from each [casino] are different and we have to discuss with the legal experts whether the proposed appeals are reasonable,” he said. He would not confirm when either the test results or the appeal outcomes would be released.

Planned Taipa hotel may have casino Property with 373 high-end hotel rooms for plot next to Macau Jockey Club that’s been unused for years Tony Lai

tony.lai@macaubusinessdaily.com

new hotel project next to Macau Jockey Club may have a casino, an executive from the venue’s management company said yesterday. “If you want to have a nice property where you can relax, where you can go to a nice swimming pool, enjoy restaurants, party but also go to [a] casino, this is all what Hollywood Roosevelt is about,” said Christophe Vielle, chief executive of GCP Hospitality Management Ltd. The mere mention of a casino raised eyebrows among media attending the ground breaking ceremony for the 373-room, HK$2 billion (US$256.4 million) Hollywood Roosevelt Macau hotel – reportedly being developed by Macau-based Yoho Group Ltd. The surprise was because of the government’s apparent commitment to preventing proliferation of gaming venues created via so-called ‘service agreements’ with the city’s existing gaming concessionaires and subconcessionaires. Asked about whether the government had approved a casino at the venue, Mr Vielle said: “This will be discussed later on.” He added: “I am [from] the hotel management company and in terms of casino you [the media] have to talk to the developer…I think the

Ground breaking yesterday for new Taipa ‘casino’ hotel

developer hopes to have a casino.” Mike Lam In Wai, identified as from the management board of Yoho and a shareholder in Hollywood Roosevelt Macau, declined to take media questions yesterday. Mr Lam is also general manager of the Macau branch of Taiwanese airline TransAsia Airways. After the event, Business Daily asked the local casino regulator, the Gaming Inspection and Coordination

Macau idle Three plots next to Macau Jockey Club long are zoned but long-unused

ollywood Roosevelt Macau will be on one of three land plots next to Macau Jockey Club. The parcels had been zoned for differing types of development prior to Macau’s handover from Portuguese administration in 1999, but had lain idle for more than a decade. In August 2012 the Land, Public Works and Transport Bureau issued maps determining the construction area, height and storey limits, access, and planning constraints applicable to the three plots. Business Daily has reviewed the documents online. None of them mention gaming. Yesterday the newspaper asked the bureau for comment on the hotel’s gaming element and whether there was a possibility of all three plots

being merged into one development. No reply was available by press time. According to a news report by Chinese-language newspaper Cheng Pou in July, the hotel land plot has been held since before Macau’s 1999 handover by a firm called Sociedade Hoteleira Macau Taipa Resort. It is reportedly controlled by two British Virgin Island firms. The newspaper named three people as administrators of Sociedade Hoteleira. Those same names – which include Mike Lam In Wai – featured in a press release issued yesterday by hotel developer Yoho Group Ltd and venue manager GCP Hospitality Management Ltd. Two other long-idle plots next door – one zoned for residential use

Bureau, about the reports of a casino on the site. It said in an e-mailed statement: “The bureau, until now, has not received any application to open a new casino. According to the normal procedure, the bureau will carry out analysis on the project and review whether the project matches the requirements of setting up a casino once [the bureau] has received an application.”

and the other for “non industrial” use – are directly associated with Macau Jockey Club, which was founded by Stanley Ho Hung Sun. The club’s current executive directors include Mr Ho’s fourth consort Angela Leong On Kei and also Ambrose So Shu Fai. Both are also senior executives of Macau casino developer SJM Holdings Ltd. Hong Kong property investment company Gaw Capital Partners is known to have bought the residential-zoned land from the Jockey Club although the precise date has not been reported. Industrial & Commercial Bank of China (Macau) Ltd announced in November last year however that Gaw planned to invest in a low-density luxury development. Jaime Carion, director of the land bureau, said this July there was “a taskforce” following up the progress of the three plots. He explained there was “a reason” the land had not yet been developed, but he declined to say what it was. T.L./M.G.

Macau’s first chief executive Edmund Ho Hau Wah in 2008 reportedly imposed a ban on any new so-called ‘service agreements’ – whereby the gaming licence rights of existing concessionaires could be spun off to allow third party investors to set up casinos in the territory. The practice dates back to the days of Stanley Ho Hung Sun’s casino monopoly, when partnering with other investors was a way of sharing market risk and also offering the community a share in the erstwhile monopoly’s good fortune. Nowadays the government’s stated policy is to limit the proliferation of gaming venues in a proven market that has been aggressively expanding revenue thanks to the contribution of mainland Chinese tourists. But Edmund Ho apparently placed no limitations on existing or pre-approved service agreements. That’s seemingly on what local businessman David Chow Kam Fai was relying when he announced he was building another casino hotel using a Sociedade de Jogos de Macau SA licence at Macau Fisherman’s Wharf, and that his request for 350 new tables was “outside” the government’s table cap. The Hollywood Roosevelt Macau plot covers 250,000 square feet (23,226 sq. metres). It will have 28,000 square metres of floor space with “5,000 square metres reserved for the gaming space”, according to the Chinese-language portion of the developer Yoho’s website. The casino is not mentioned in the English-language section. The project will be ready by “mid-2015”, said Christophe Vielle yesterday. With Michael Grimes

I think the developer hopes to have a casino Christophe Vielle, GCP Hospitality Management

October 23, 2013

Macau

Casino Louis XIII on track for ‘early 2016’

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HOSPITALITY Asian masses shy away The number of package tourists has been increasing. Almost all come from Asia. The number of Asian package tourists has risen by over 30 percent in the past two years. But the proportion from places other than the mainland seems to be shrinking. The proportion was about 20 percent in the past three quarters, well below the peak of 31.3 percent at the beginning of last year. Mainlanders accounted for most of the annual rise of 15 percent in the number of Asian package tourists in the second quarter of this year. In contrast, the number of package tourists from most other places in Asia was lower in the second quarter than a year earlier. Visitors from Hong Kong outnumber those from Taiwan. But only a minority of visitors from Hong Kong come on package tours, so Taiwan is Macau’s secondbiggest source of package tourists and Hong Kong the third-biggest. The number of package tourists from Southeast Asia is comparable to the number from Taiwan.

In the second quarter the number of package tourists from Hong Kong was 3.5 percent lower than a year earlier, and the number from Japan over 50 percent lower. The proportional annual fall in the numbers from all other places in the chart, except South Korea, was somewhere in between. The number of South Korean package tourists rose by 22 percent. The figures for July and August appear to confirm the declining trend in the number of Asian package tourists from places other than the mainland. The figures for July and August are unexpectedly low, in most cases. The number of Japanese package tourists was under one-third of what it was in the third quarter of last year. J.I.D.

22.3 %

Annual rise in Q2 package tourists from S. Korea

But Union Gaming says ‘notably more risk’ than other Cotai schemes, as relying on someone else’s licence Michael Grimes

michael.grimes@macaubusinessdaily.com

nion Gaming Research Macau says Louis XIII Holdings Ltd is on track to open its planned boutique casino on the Cotai-Coloane border in “early 2016”. It follows a recent site visit by the research house, which commenced coverage of Louis XIII’s Hong Kong-listed stock in August. Union Gaming states that progress has been made on the foundations of the property, to be known as Casino Louis XIII. Union Gaming suggests the work could be a milestone to trigger upward movement in the share price, which it says had appreciated 34 percent over a two week period relative to a closing price of HK$6.93 (89 US cents) on October 7. In January a share and bond offer in Hong Kong raised HK$3.2 billion (US$413 million) toward the estimated US$800 million capital costs of the scheme. “The next milestone should be the completion of a debt deal that we expect should fully fund the project,” writes Union Gaming’s Grant Govertsen in a note. He adds, referring to Louis XIII Holdings’ previous name: “We think progress continues to be made with a likely consortium of Chinese banks (similar to the ones the company – in the form of Paul Y Engineering – has

Boutique casino planned for Cotai-Coloane border (Photo: Manuel Cardoso)

worked with in the past) and that an announcement is increasingly likely before year end.” Casino Louis XIII is expected to operate under a so-called service agreement with an existing casino concessionaire or sub-concessionaire. The management has so far declined to reveal on which operator’s licence it will be relying. Union Gaming notes: “There is notably more risk to the Louis XIII story than its peer group in Macau, all of whom are also developing casino resort projects in the Cotai area. Risks to Louis XIII include

receiving an allocation of table games from the Macau government, receiving necessary construction and labour approvals to complete the project, obtaining financing (debt or equity) to complete the project, and finding a gaming concessionaire/ sub-concessionaire to enter into a service provider agreement.” According to company filings and guidance to analysts, the property will include 66 gaming tables (50 premium mass and 16 VIP) and 236 hotel rooms all of which are at least 2,000 square feet (186 sq. m.) or larger.

Over 1,600 estate agencies licensed But the number approved is only one-third of the estimated number that need them

he government had licensed over 1,600 estate agencies by Friday, the Housing Bureau says. The law on estate agents, which came into force on July 1, requires estate agencies and individual estate agents to be licensed. The law also says a mediation contract must contain information about the property being sold, identify the estate agent and the agent’s client, state the agent’s commission and set out the legal obligations of the seller, the agent and the buyer. It also prohibits estate agents from operating out of residential or

industrial buildings. The Housing Bureau said previously that it had received 4,728 applications from individual estate agents for temporary licences. The bureau said that it had approved 3,959 of those applications. The bureau had received 1,649 applications from estate agencies for provisional licences by the June 30 deadline. It approved 1,180 of those applications in July. The bureau told Business Daily yesterday that by Friday it had granted 1,631 licences to estate agencies. It did not distinguish between permanent and provisional licences.

The bureau said it had rejected three applications because the applicants had refused to move out of offices in industrial buildings. The government has estimated that over 16,000 individual estate agents and 5,200 estate agencies are required to obtain licences. An estate agency found operating without a licence is liable to a fine of between 50,000 patacas (US$6,250) and 300,000 patacas. An agency found employing unlicensed estate agents is liable to a fine of between 30,000 patacas and 150,000 patacas for each unlicensed individual employed. S.L.

October 23, 2013

Macau

Planes, boats, cars share spotlight Three simultaneous exhibitions are expected to benefit hotels, restaurants and shops Tony Lai

tony.lai@macaubusinessdaily.com

hree annual exhibitions – of private aircraft, yachts and upmarket automobiles – will be held simultaneously this year in the hope that they will feed off each other. The Macau Business Aviation Exhibition, the Macau International Yacht Import and Export Fair and the China (Macau) International Automobile Exhibition will all be held between November 1 and 3. One of the organisers is Nam Kwong (Group) Co Ltd. Nam Kwong’s vice president Li Zhizhong told a press conference yesterday that the organisers had chosen to hold the three shows at the same time “to further raise the awareness of each of the exhibitions”. He said the three shows would share the same resources but each use them to its own advantage. He said the shows would take advantage of being held in Macau – a centre for tourism – to attract “high-end customers” from Greater China and Southeast Asia. He expects the hotels near the exhibitions to be “packed” early next month. Nearby

At the last two yacht exhibitions, 60 percent of the buyers were mainlanders

shops, restaurants and places of entertainment might also benefit from the shows, Mr Li said. The automobile show will occupy 60,000 square metres of the Venetian Macao, 10 percent more than last year. China National Automotive

Industry International Corp, one of the organisers, said over 400 vehicles of 60 makes would be on display. Company chairman Zhang Fusheng expects over 160,000 people to attend, 10,000 more than last year. Mr Zhang said one zone

would contain vehicles that together were worth nearly HK$200 million (US$25.6 million). Part of the yacht exhibition will for the first time be held in the Macau Yacht Club’s marina in Ilha Verde. The rest will occupy 20,000 square metres of the Venetian Macao. Nam Kwong said 1,000 commercial buyers had attended the boat show last year, 20 percent more than the year before. The total attendance was 45,000 people, the same as the year before. Buyers ordered 20 yachts and 300 people expressed interest in buying. One of the organisers is China Ocean Aviation Group Inc. The company’s convention project manager, Wang Hongguo, told the state-run China News Service that 60 percent of the buyers at the last two shows had been mainlanders. The aviation exhibition will be held at Macau International Airport. The organisers say they expect a bigger attendance this year than last year. The organisers of the three shows will run shuttle buses along six routes connecting the exhibitions, with stops in the city centre and on Taipa.

October 23, 2013 April 19, 2013

Macau

Next round of continuing studies starts in 2014Q2 The government will increase the continuing education scheme allowance by an undetermined amount Stephanie Lai

sw.lai@macaubusinessdaily.com

Photo by Manuel Cardoso

he government will probably begin taking applications for further continuing education scheme allowances in the second quarter of 2014, the Education and Youth Affairs Bureau says. The deputy chief of the bureau’s continuing education division, Kong Ngai, told reporters late on Monday that the bureau aimed to have approved the courses that the allowances can be spent on by next April, so people can enrol for courses in May or June. The much-criticised continuing education scheme entitles residents aged 15 or older to a maximum of 5,000 patacas (US$626) to spend on government-approved examinations or courses, to be taken between 2011 and the end of this year. The bureau had previously said the scheme would be extended. It said it would assess the scheme’s effectiveness before deciding to approve new courses or applications for allowances. Secretary for Social Affairs and Culture Cheong U has said the government may increase the amount

Only 36 percent of people taking advantage of the continuing education scheme have used up their full allowance

it spends on the scheme next year. “I do not rule out an appropriate rise,” Mr Cheong said in July. The government has spent more

than 390 million patacas on the scheme since it began. On Monday Mr Kong said the government would increase the maximum allowance next year, but that it had yet to decide how much the increase would be.

6,000 inspections Over 130,000 people have taken advantage of the scheme since it began, but only 36 percent have used up their full allowance. Last November the Commission of Audit issued a report critical of the scheme. The commission suggested that the government had wrongly approved hundreds of courses and exams. Mr Kong said the Education and Youth Affairs Bureau had made 6,000 inspections since the scheme

Zhuhai factory making elevated sections for Macau’s LRT

LRT’s peninsula route revealed before year-end T he Light Rapid Transit railway’s route around Macau peninsula will be announced before year-end. The route is in the “final stage of internal assessment”, deputy coordinator at Transportation Infrastructure Office André Sales Ritchie stated to media on the sidelines of a visit to a Zhuhai factory making overhead sections of the LRT route. But Mr Ritchie did not respond to questions on whether the peninsula section would pass along Rua de Londres in NAPE district. That suggestion was criticised last year by the Commission against Corruption. Yesterday Mr Ritchie, the infrastructure office’s deputy

chief, said the prefabricated components for the overhead section in Taipa will be tested and assembled after the necessary heavy-duty crane is delivered to the city later this year. Top Builders International Co Ltd, which is constructing the train depot and transport interchange on Taipa, said in August that the project might be finished only in 2018. More workers and equipment have already been employed to try and make up time on the Taipa section, said Samuel Su, deputy manager of a joint venture contractor responsible for the Pac On section, speaking yesterday. S.L.

had begun, and had found 19 cases of institutions or students breaking the rules. He said these included cases of students adopting another person’s identity with a view to using that person’s allowance, and cases of institutions failing to put on as many courses as they had said they would. The bureau had passed three of the 19 cases to Public Prosecutions Office, he said. But Mr Kong declined to describe those cases. Earlier this year the bureau said it would pay only for “core” courses in future. It considers core courses to be those that will help the students contribute to making Macau a global centre for tourism or contribute to making Macau a conduit for trade between the mainland and Portuguese-speaking countries.

Angolan businessmen seeking partners here T he Angolan Chamber of Commerce and Industry (CCIA) is due to take part in activities taking place alongside the fourth ministerial conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries, director José Alentejo said in Luanda. The ministerial conference is scheduled for November 5 and 6, but the committee will arrive on November 2, he added. The eight state-members are expected to sign an action plan until 2016 that will set new goals and areas for economic and commercial cooperation, according to a press statement released yesterday. The conference will include a seminar on a US$1 billion (7.98

billion patacas) fund to help development cooperation projects in the Portuguese-speaking countries. Former Chinese premier Wen Jiabao unveiled the fund during the last Forum Macau ministerial conference in 2010. But the stateowned China Development Bank Corp – in charge of running the fund – only began accepting applications in April this year. Cited by newspaper Jornal de Angola, Mr Alentejo said the Angolan businessmen would focus on issues related to the newly established fund. Mr Alentejo is responsible for the private sector at the CCIA, Macauhub reported. So far 15 Angolan businesspeople have signed up for the meeting, he said. T.A.

October 2013 April 19,23, 2013

Macau

Japan court tosses Okada’s libel suit v. Wynn Says pachinko billionaire’s fight with casino operator belongs in U.S.

Debit card fraud worries the authorities

Law feeble in face of debit card fraud, says luminary An adviser to the prosecutor-general says the law must be reformed to counter financial crime Stephanie Lai

sw.lai@macaubusinessdaily.com

he law fails to deter debit card fraud, which could pose a huge challenge to the authorities, according to an adviser to the prosecutor-general. In May last year the Judiciary Police detected a group of mainlanders attempting to get money from a pawnshop using a fake debit card.

“The members of the criminal group got to know each other at a local casino, and they did intend to commit crimes by using fraudulent debit cards and credit cards,” the prosecutorgeneral’s adviser, Vu Ka Vai, told Business Daily in an interview yesterday. “In cases like that, we can charge suspects with the use of fake currency,” Mr Vu said. “But that provision, article 257 of the penal code, applies only to the use of fake notes, credit cards and warranties, but not debit cards,” he said. “In the case of a fake debit card, at best we could only charge the suspects with improperly obtaining computer data.” Improperly obtaining computer data is punishable with less than three years in prison. “The legal process for dealing with debit card crime is more troublesome, and the punishment is less severe than the crime of using fake currency, which can result in imprisonment for two to 12 years.” In September the Court of Second Instance convicted one of the accused and imposed a prison sentence of two years and nine months. The accused is appealing. Prosecutor-General Ho

Chio Meng suggested in a speech to mark the beginning of the new judicial year that the penal code be reformed to counter the growth in new types of financial crime. “Definitely, the use of fake debit cards is an issue that the amendments to the law Mr Ho was referring to must deal with urgently,” said Mr Vu. “We’ve not really had many reported cases of the use of fake debit cards so far, nor can we confirm that all of those crimes are related to gaming,” he said. “But this crime can pose huge legal risks because it can involve the disappearance of millions in bank deposits held by victims that have had their debit card information stolen by criminals.” The coordinator of the Office for Personal Data Protection, Sonia Chan Hoi Fan, told Business Daily on the sidelines of a credit card crime seminar yesterday that the office had received no reports of personal data being leaked through the use of payment cards. The office was set up in March 2007. Ms Chan said that since then it had received 14 complaints about the collection of excessive amounts of personal data from applicants for payment cards or about failure to deliver payment cards securely.

Tokyo court has dismissed a defamation lawsuit filed by Japanese billionaire Kazuo Okada against U.S.based casino operator Wynn Resorts Ltd and some of its top executives, saying the case should not be handled by a Japanese tribunal. Wynn Resorts’ legal representative in Japan confirmed yesterday the ruling in the case, which centres on Wynn Resorts’ release in early 2012 of an English language report alleging business misconduct by Mr Okada in pursuit of a Philippines casino project. The Tokyo District Court judge noted that the legal fight between Mr Okada and Wynn Resorts was based in the United States, according to a copy of the ruling, which was made on Monday and seen by Reuters. The suit is one of several legal battles between Mr Okada and his former business partner Wynn Resorts chairman Steve Wynn. The case was filed in August 2012 by the Japanese billionaire, one of his holding companies and Universal Entertainment Corp, the US$1.7 billion (13.6 billion patacas) gaming machine maker he founded. Mr Okada had sought 11.2 billion yen (909.3 million patacas) in damages from Wynn Resorts, Mr Wynn and other executives. A spokesman for Universal Entertainment, which is controlled by Mr Okada through the holding

company, declined to comment on the case. Mr Okada’s legal representative was not immediately available for comment. Mr Okada and his companies are under investigation in the United States for potential violations of anti-bribery laws in relation to a US$2 billion casino project at Manila Bay in the Philippines, according to a court filing made earlier this year by U.S. federal prosecutors. The Department of Justice in the Philippines is also investigating Mr Okada and his companies for possible bribery and violations of foreign ownership restrictions in setting up landholding companies for the casino project. The department held two days of preliminary hearings into the latter issue last week. Mr Okada did not attend the sessions. An earlier inquiry by the DoJ and the country’s National Bureau of Investigation suggested Universal Entertainment used three local firms: Eagle I Landholdings Inc; Eagle II Holdco Inc; and Tiger Resort Inc; to avoid the Philippines’ 40-percent limit on foreign ownership of businesses. Mr Okada has denied any wrongdoing. Universal has separately filed a defamation suit against Reuters in Tokyo for its reporting on US$40 million in payments made in relation to the casino project on Manila Bay.

No comfort – Kazuo Okada’s Tokyo suit v. Wynn dismissed

Reuters/M.G.

October 23, 2013 April 19, 2013

Greater China

China home prices hit near 3-year high Major cities post home-price gains as curbs kept HTC planning Android smartwatch HTC Corp is developing a smartwatch that uses Google Inc’s Android software and can take pictures, according to a person familiar with the matter. The watch’s price, full functions and sales strategy still must be decided before it’s released by the second half of 2014, said the person, who asked not to be identified because the plans aren’t public. The smartwatch will join a growing segment of wearable technology that already includes devices from Samsung Electronics Co and Sony Corp. Dwindling market share for HTC smartphones has led to the company’s first quarterly loss and a 54 percent slump in its share price this year as it loses ground to Samsung, the world’s biggest smartphone maker. Apple Inc has a team of designers working on a watch-like device, two people familiar with the matter said in February, and the company has sought trademark protection for the “iWatch” name in Japan. Retail sales of Internet-connected wearable devices, including watches and eyeglasses, will reach US$19 billion by 2018, compared with US$1.4 billion this year, Juniper Research said in an October 15 report. HTC doesn’t comment on rumours or speculation, the company said in an e-mailed response to questions from Bloomberg News. Taiwan-based HTC has been in talks with Amazon.com Inc since at least June to develop handsets for sale to users of the Amazon Prime service, two people familiar with the talks said earlier this month. Samsung’s smartwatch, the US$299 Galaxy Gear, went on sale on September 25. It features a 1.63-inch (4.1-centimetre) screen and 1.9-megapixel camera, and it syncs with tablets and smartphones using Android software to make phone calls.

Beijing approves Rio copper mine sales Buyers of copper from Rio Tinto Group’s US$6.6 billion Oyu Tolgoi mine venture in Mongolia have been approved to collect their orders, ending a four-month wait that had stalled sales from the project. “The withdrawal of concentrate from the warehouse by customers is expected to ramp up quickly,” Vancouver-based Turquoise Hill Resources Ltd, 51 percent-owned by Rio, said yesterday in a statement. “As revenue is recognised when customers collect concentrate, Oyu Tolgoi will now begin recording revenue.” The release of the concentrate will allow Oyu Tolgoi to start recording revenue, with the mine shipping production since July and receiving payments from customers. It comes as Rio and Mongolia continue talks to resolve differences that have stalled a planned underground expansion at the mine. Chinese buyers have now received the necessary approvals to collect the concentrate, Turquoise Hill said yesterday. About 1,000 metric tons of concentrate from the mine was shipped to an undisclosed buyer in China on Sunday, Liu Hongmei, a customs officer at the Hohhot branch that oversees the Gants Mod border post where the copper is being held in bonded warehouses, said in a phone interview yesterday. Turquoise Hill, owner of 66 percent of Oyu Tolgoi LLC, confirmed the first convoy departed from the warehouse on October 19. “The Chinese buyers have started submitting paperwork to clear customs since last week,” Ms Liu said. The remaining copper in warehouses at the border will be released “as soon as paperwork on relevant taxes are completed,” she told Reuters.

Xiaoyi Shao and Jonathan Standing

hina’s home prices rose the most in nearly three years in September, led by a surge in big cities, adding to the threat of a property bubble that is set to test government policymakers ahead of a key economic reform meeting due next month. Average new home prices in 70 major Chinese cites climbed 9.1 percent last month from a year ago, according to Reuters calculations, the biggest rise since the National Bureau of Statistics changed the way it calculated home price changes in January 2011. The rises show that China’s four-year-long attempts to balance controlling property prices without stifling one of the bright spots of growth in a slowing economy have not succeeded. The focus now turns to whether the government will act at the ruling party’s plenum due in November. “With the issue in the property market becoming more and more severe, the third plenum next month should touch upon the problem,” said Wang Jun, a researcher at the China Centre for International Economic Exchanges (CCIEE), a government think-tank. “I think the reform agenda unveiled on the party plenum will involve some land reform policies.” The figures from the National Bureau of Statistics data published yesterday showed that the country’s largest cities continued to see rises well above the national average, with prices up 16 percent in Beijing, 17 percent in Shanghai and about 20 percent in the southern cities of Guangzhou and Shenzhen. The rises in those four cities were also the largest since January 2011. Prices had risen 8.3 year-on-year in August. The government is concerned about a property bubble and

Property still seen as the safest investment

the potential for social unrest as inequality over access to housing grows, but also is mindful that property is a growth area in an economy where overall expansion is slowing. The world’s second-largest economy is on track to achieve the government’s growth target of 7.5 percent in 2013, though that figure would be a two-decade low. Property is still seen by many Chinese as the safest investment, meaning demand for housing is strong, while central government exhortations to local authorities to control prices have met with

KEY POINTS Sept home prices jump 9.1 pct on-year New home prices rise in 64 of 70 cities Prices in large cities jump from a year earlier New policies may come at next month’s meeting

Gazprom looking to clinch gas deal with China Soaring LNG prices make proposal a lucrative prospect for Russian exporter

ear-record prices for liquefied natural gas are increasing the likelihood that Russia’s export monopoly will strike a deal to supply Chinese consumers by pipeline after more than 10 years of negotiations. LNG prices in Asia, still affected by the 2011 shutdown of Japan’s nuclear reactors, rose to a sevenmonth high last week and are 42 percent higher than in Europe. OAO Gazprom chief executive Alexey Miller joined Russian Prime Minister Dmitry Medvedev in Beijing yesterday, seeking to negotiate a price with China by year end and conclude talks that have been under way since at least 2002. China’s appetite for gas will

double by 2018 as Asia’s biggest economy seeks to replace dirty coalburning power plants, International Energy Agency forecasts show. Gazprom, which supplies Europe with 25 percent of its gas, is looking for new markets as westward exports stagnate. The Russian state company is also under pressure to clinch a deal after government-controlled OAO Rosneft signed a pact making China its biggest crude buyer by 2018, said James Henderson, a senior research fellow at the Oxford Institute for Energy Studies. “China is looking to pay European prices, Gazprom dreams of getting Asian LNG prices, and they’ll probably meet halfway,” Ron Smith,

an oil and gas analyst at Citibank Inc in Moscow, said. “There is some urgency for these supplies if Beijing wants to clean up its air.” LNG prices in northeast Asia were US$16.80 per million British thermal units as of October 14, US$5 more than in Europe, according to World Gas Intelligence assessments of cargoes for delivery in four to eight weeks. While a gas deal in Beijing would be a “major breakthrough” for Russia and could make China its largest trading partner, the economics of the proposal may scuttle it, according to Fyodor Lukyanov, the head of the Moscow-based Council on Foreign and Defence Policy. Bloomberg News

October 2013 April 19,23, 2013

Greater China resistance because many local authorities rely on land sales to boost their coffers. Policymaking is also complicated by a divergence in housing inflation between big cities, where prices are rising rapidly, and small ones, where the rises tend to be smaller. “There are overheating signs in tier 1 cities. I think the central government should take some measures, at least including stricter implementation of existing measures,” said Wang Juelin, a retired former deputy head of research at the Ministry of Housing. Some city housing authorities have been summoned by the central government and told to implement policies, while in the latest policy move, the Land Ministry has required major cities, including Beijing and Shanghai, to make the amount of residential land available higher than the average over the past five years. “Some targeted actions may be taken in the coming months, including a tougher tone or reiteration of current tightening bias by government officials, tighter controls over sales of high-end houses,” said Harrison Hu, an economist at UBS AG in a research note. Some of the items possibly on the agenda for the plenum include pushing forward land reform to increase housing supply, expanding property taxes and increasing the supply of affordable housing. China may also widen financing channels for developers and introduce new land policies, official media quoted industry sources as saying last week. “Some major cities still faces strong pressure of rising home prices in the fourth quarter, the possibility of expanding property tax is increasing,” said He Tian, a research head of China Real Estate Index System, a consultancy linked to China’s largest online property information firm Soufun Holdings Ltd. The NBS data showed sixty-four cities posted month-on-month price gains, slowing from 66 in August. Reuters

HK builders looking abroad Developers to invest cash elsewhere as property sales slow at home Kelvin Wong

ong Kong developers are looking at overseas projects as residential sales in the city are near a two-decade low because of property curbs, said Jones Lang LaSalle Inc and Cushman & Wakefield Inc. Builders have approached Jones Lang LaSalle about investing in London and deals may happen in the next three to six months, Joseph Tsang, Hong Kong-based managing director at the world’s second-biggest property brokerage, said, declining to name the companies because of confidentiality agreements. Cushman said it is seeing interest from Hong Kong developers to invest in London, Tokyo and Bangkok. Home sales at developers, including Sun Hung Kai Properties Ltd, slowed to the lowest since 2008 in the first half as the government stepped up measures over the past year to quell concerns that housing is becoming unaffordable for the general public. They join mainland Chinese builders that are accelerating purchases of real estate in cities including New York and London. Hong Kong developers “are sitting on a pile of cash and they need to do something,” Mr Tsang said in an interview in Hong Kong. “I’m not saying they’re stopping investing in Hong Kong now, but going forward, if they feel Hong Kong is becoming a tougher place to do business, more and more of them will look elsewhere.” Since 2010, Hong Kong has introduced measures including extra property transaction taxes and tighter mortgage-lending requirements. Total residential transactions in the first half fell to the lowest since 1996,

Home sales at HK developers slowed to the lowest since 2008

according to data available on the Land Registry’s website.

Overseas appetite Cushman, the world’s biggest closely held realtor, has been approached by large and small developers since February when the government doubled the stamp duty on all property transactions above HK$2 million (US$257,951), said John Siu, managing director in Hong Kong, without naming the companies. Colliers International is getting similar “approaches,” Simon Lo, Hong Kong-based executive director of research and advisory, said, declining to name the clients. Hong Kong developers have tended to expand in Asia. Hang Lung Properties Ltd and Wharf Holdings Ltd have accelerated investments in mainland China since Hong Kong returned to Chinese rule in 1997. Sun Hung Kai, the city’s secondbiggest developer by market value, last month paid 21.8 billion yuan (US$3.6 billion) for a site in Shanghai in an auction, a record for the city. While they are picking up efforts

PBOC tightening in word and deed Central bank eyes money market as risky credit concerns grow

he People’s Bank of China used words and deeds to flag a possible shift to tighter monetary policy as an academic adviser highlighted inflation risks and yuan gains restarted. The currency touched a 20-year high of 6.0915 per dollar last week, after a two-month period in which it held around 6.12. Song Guoqing, a PBOC academic adviser, said this weekend that the monetary authority may lean toward tightening should there be an acceleration in consumer prices, which reached an annual pace of 3.1 percent last month. Expansion in the world’s secondlargest economy sped up to 7.8 percent in the third quarter from a year earlier, the statistics bureau said on Friday, reversing a slowdown that put the government at risk of missing its growth target for 2013. The yuan has gained 2.3 percent versus the dollar this year, and analysts predict it will be Asia’s biggest gainer through September 2014. “It looks like China won’t have any problem in achieving its growth

targets this year, and as inflation in the fourth quarter may trend higher, monetary policy is likely to be tightened slightly,” said Li Yiming, a Beijing-based analyst at Citic Securities Co, China’s largest brokerage. The central bank will start by suspending auctions of reverserepurchase agreements that inject cash and then resume sales of repurchase contracts and bills if necessary, she added.

Holding back The central bank held back from liquidity operations for the second day running yesterday as regulators show signs of concern that loose liquidity might be fuelling another round of risky credit expansion. Short-term money rates have slid steeply since the end of the third quarter, with the weightedaverage benchmark seven-day repo rate down nearly a full percentage point over the last eight trading sessions. The Shanghai Interbank

US$129 bln New yuan loans made by Chinese banks in September

Offered Rate (SHIBOR ) posted a similar decline. Traders and economists believe current easy liquidity conditions are in part a gesture from the central bank following a credit crunch it engineered in the interbank market in late June that saw some short-

to diversify their sources of earnings, Hong Kong still remains the biggest contributor of income for the city’s developers. Cheung Kong, Hong Kong’s biggest developer by market value, and Sun Hung Kai made 62 percent and 90 percent of their revenue from Hong Kong respectively, according to their latest full-year results. Much of the growth was fuelled by the multifold increase in real estate prices in the city over the past decade. Hong Kong has the world’s highest home prices, most expensive retail rents, and the second-highest office occupancy costs, according to data compiled by brokers including Cushman. For Hong Kong developers, the growth at home is starting to fade as property curbs start to take effect. Home prices in the city may fall as much as 25 percent from their peak in March, while a price war between developers will intensify, Raymond Ngai, a Hong Kong-based analyst at Bank of America Corp’s Merrill Lynch unit, said last week at a briefing. Bloomberg News

term rates quoted as high as 30 percent. The move was widely seen as a warning to banks to rein in riskier lending. The rate spike was short-lived but caused a market panic nevertheless, and the PBOC appeared to have been admonished by the central government for the opaque way in which the cash squeeze was managed. Now, however, economists are worrying the PBOC may have gone too far in the opposite direction. Yuan positions at Chinese banks accumulated from sales of foreign exchange to the PBOC rose 126.4 billion yuan (US$20.7 billion) to 27.5 trillion yuan at the end of September from a month earlier. Foreign-exchange reserves climbed to a record US$3.66 trillion in the third quarter from US$3.5 trillion at the end of June, a sign the government’s efforts to protect growth attracted money even as developing nations from India to Indonesia saw an exit of capital because of concern the Federal Reserve will taper stimulus. “The foreign-exchange data probably reflect China’s safe-haven status and suggests hot money came into the country during the period of market turmoil,” said Timothy Condon, ING Groep NV’s Singapore‑based head of Asia research. Bloomberg News/Reuters

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October 23, 2013 April 19, 2013

Greater China

China importing more Iranian oil Needs big cuts in Iran oil imports to meet 2013 target Chen Aizhu and Judy Hua

hina would need to make huge cuts in its Iranian oil imports over the last quarter of 2013 if it is to meet an unofficial target for the year and increase its chances for winning a waiver to U.S. sanctions aimed at Tehran’s nuclear programme. China and other importers of Iranian oil have to keep reducing the shipments to win waivers to the U.S. sanctions, but China’s intake of Iranian oil is running 1.4 percent higher than last year through the end of September, official customs data showed. Despite cuts in China’s import of most Iranian crude grades, the start-up in July of an independent petrochemical plant that processes South Pars condensate has hampered efforts to lower the oil shipments by an unofficial target of at least 5 percent. China’s daily crude imports from Iran in September were the thirdhighest so far this year, highlighting the difficulty it is having in cutting the shipments. At 475,521 barrels per day (bpd), according to the data, the Iranian oil imports were up 24 percent from the same month last year and up 9 percent from August. “We have been making efforts to control imports from Iran in the second half of this year,” said an industry source familiar with the China’s import situation. “Our Iranian oil imports are

already very low. We will keep the current imports level from Iran for the rest of the year,” he said. The U.S. and EU sanctions aimed at ending Iran’s nuclear programme have cut Iran’s oil exports in half from pre-2012 levels and cost it billions of dollars a month in lost revenue.

KEY POINTS Sept Iranian crude imports up 24 pct on year Jan-Sept Iranian imports 428,160 bpd, up 1.4 pct on year Dragon Aromatics plant hampers progress towards unofficial target While China’s daily imports from Iran are running higher than last year, they are still down more than fifth from a peak of 555,200 bpd hit in 2011.

Dragon Aromatics Chinese oil officials estimated late last year that domestic refiners would cut their Iran shipments at least 5 percent this year from 21.92 million tonnes, or an average 438,450 bpd for 2012, putting its maximum

Petrochemical plant adds 66,000 bpd to Iranian imports

target for 2013 at around 416,400 bpd. China, Iran’s largest oil client, for the nine months through September bought 16.01 million tonnes of Iranian crude oil, or an average of 428,160 bpd. That would mean China needs to limit its imports from Iran over each of the next three months to about 1.6 million tonnes or about 380,000 bpd, according to Reuters calculations, down 18 percent from the nearly 2 million tonnes imported in September. Part of China’s problem in making the necessary cuts is the start-up of the independent Dragon Aromatics petrochemical

plant in southern China. The plant, owned by a Taiwanese group, started up at the end of July and has become a regular importer of Iranian South Pars condensate, a light crude oil counted in China’s crude import data. Dragon has been taking about 2 million barrels, or about 66,000 bpd, of South Pars condensate each month for the last two months and will continue to do so through the end of the year, according to a trade official with direct knowledge of the plant’s operations. “Yes, Dragon’s purchase of Iranian condensate should be the main reason for the increase,” said another source

involved in China oil trade. China, India and South Korea will have their sixmonth waivers on the U.S. sanctions reviewed in early December, although it is not known how a potential easing of TehranWashington relations will impact those renewals. Japan won its most recent six-month waiver extension in early September. Despite the election in August of moderate reformer President Hassan Rouhani, it will take time to work out any relaxation of sanctions on Iranian oil exports and banking access, the Obama administration has cautioned. Reuters

CCTV draws backlash for probing Starbucks TV station criticised for ignoring social problems

hinese Internet users lashed out at China Central Television for accusing Starbucks Corp of price gouging, criticising the state broadcaster for deflecting attention from more pressing social issues. The U.S. coffee chain charges higher prices locally than in cities such as Chicago and London, CCTV said in a 20-minute report on Sunday. A CCTV posting on Starbucks on China’s Twitter-like Weibo service drew more than 29,000 comments, most of which lambasted the station for ignoring problems such as high housing prices and corruption. The CCTV report follows a trend of state media targeting foreign companies for unfair

treatment of Chinese consumers, with Apple Inc to Yum! Brands Inc among companies that have made public apologies. China’s citizens face rising pollution, food safety issues and soaring house prices even as incomes have risen. “Initially CCTV had anticipated the villain would be Starbucks,” Mary Bergstrom, founder of Shanghai-based consultancy Bergstrom Group. “What people are saying now is that the villain is the state media. It’s putting them in a difficult position to report news.” Social media sites have become platforms for Chinese citizens to expose corruption and wrongdoing in a country where all domestic newspapers and television stations are state owned.

China’s Gini coefficient, a measure of income differences, was 0.474 last year, according to the government, higher than the 0.4 level that analysts say signals a potential for social unrest. “CCTV, can we talk about China’s housing and gas prices and other basic living costs before we discuss expensive coffee?” one Chinese Internet user named Anderson Ye posted on Weibo. Starbucks’s pricing is based on local market costs such as labour and real estate, the world’s largest coffee chain, said in an e-mailed statement on Monday. CCTV said its survey found a medium-sized cup of Starbucks latte was priced at 27 yuan (US$4.40) in

Starbucks plans to open its 1,000th outlet in the mainland

China, versus US$3.26 in Chicago and 2.5 pounds (US$4) for a similar-sized beverage in London. Every market is “unique and has different operating costs, so it would be inaccurate to draw conclusions about

one market based on the prices in a different market,” Starbucks said. “Our costs are variable over time, reflecting the changing economic environment in which we operate.” Bloomberg News

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October 2013 April 19,23, 2013

Asia

Analysts take a bite out of investment banks Independent research industry starting to gain a foothold in Asia Saikat Chatterjee and Nishant Kumar

fter 27 years working for investment banks and hedge funds, Hong Kongbased equity research analyst Paul Schulte decided it was time to fly solo. Carrying a resume littered with big names like Nomura Holdings Inc and CCB International, the overseas investment banking arm of China Construction Bank Corp, and several others, some of whom no longer exist, Mr Schulte wished he had gone independent sooner. The independent research industry is already relatively mature in the West thanks to regulations enacted last decade in the United States to end the conflicts of interest between banks and analysts. Now, a growing number of analysts are trying their luck as independents, selling knowledge and expertise picking stocks, as investment banks have cut back on research departments in the wake of the global financial crisis. “We are in a very different world,” Mr Schulte, a 48-year-old American, told Reuters in a Hong Kong office space that he shares with other companies. “In the last four years, if you don’t see that the research game in investment banks is over, then you are just a fool,” said the ex-Lehman executive. Banks were and continue to be under pressure because of shrinking trading volumes, thinning client lists and regulatory changes restricting their proprietary trading activities. As a result, there were less jobs and pay in research units, and less chance of career advancement. It became a recipe for disillusion, raising questions over professional values and quality of life for Mr Schulte.

Growth industry “When you are inside an institution, there are fundamental conflicts of interest. Let’s not

pretend there is any independence going on whatsoever,” said Mr Schulte, who has sovereign wealth fund CIC and hedge fund Fortress among his clients. “Some people just don’t feel comfortable anymore working for financial institutions.” These days he is unafraid to make a lot more sell recommendations than he ever did working for banks. Nearly half of his calls are “sells” right now as compared to less than a tenth that the teams he led at banks regularly issued.

There is definitely room for them but they will be at the fringes. Research is free at the banks and comes packaged with other benefits for the buy side Tim Condon, ING Groep NV in Singapore

Critics have long said that research analysts working for banks were too soft on companies, while independent analysts can be more cold-eyed and ready to issue sell calls, helping clients to short or stay away from struggling companies. Top analysts, who just a few years ago took home US$1 millionplus, have become increasingly unaffordable and left banks to set up on their own. The inroads made in Asia by independents are modest and few are profitable, but the growth is evident. Commissions paid to the independent research industry in Asia has risen by 40 percent to US$200 million since 2009, according to Integrity Research Associates, a consultant. By comparison, global equity commissions, which are mainly paid to investment banks, fell 21 percent US$27.7 billion. In April, Mr Schulte joined the platform of IND-X Securities (Asia) Ltd, a marketing and support firm for independent analysts, and founded his own research service. Hong Kong-based IND-X has marketing and support relationships with over 30 quality independent research providers, focusing mainly on Asia and emerging markets. It estimates there are roughly 40 such independent firms operational in Asia.

‘At the fringes’

Mr Schulte, who also teaches at the University of Science and Technology in Hong Kong, is among a growing number of independent analysts challenging the overly optimistic ratings that the sell side analysts often give to the companies they cover.

A number of analysts in the region have built up more than a decade of experience, command a following among fund managers and are ready to take the risk of striking out on their own. The funds industry itself is maturing. As the rank of experienced analysts shrink at banks due to cost pressures, senior portfolio managers are likely to consider subscribing to independent research firms started by top analysts.

“These are sort of grizzled analysts, who are disillusioned, highly sceptical, do not want to work for big investment banks and they have seen a number of cycles and that’s what people pay for,” said Gillem Tulloch, founder of Forensic Asia. Independent research firms charge anywhere between US$10,000 to US$100,000 per year subscription fees in Asia. To keep cost down they share resources, often hosting meetings at Starbucks rather than the boardroom. They face other challenges such as persuading Asian fund managers, who are used to getting support from the sell side, to pay for research. Louis Vincent Gave, the chief executive at Gavekal, said one of the main challenges is also from the rise of passive funds and exchange traded funds that require no research to invest and are getting more popular globally. “I don’t think we are going to see a wholesale migration of the research function from banks to the independent research space,” said Tim Condon, managing director and head of Asian research at ING Groep NV in Singapore. “There is definitely room for them but they will be at the fringes. Research is free at the banks and comes packaged with other benefits for the buy side.” Banks help funds execute trade and arrange corporate access. While technology is making execution less of an advantage, banks continue to rule when it comes to connecting fund managers with companies using their investment banking relationships. It’s tough for the independent analysts to match that, but they say clients do not expect corporate access from them but value and pay for research and opinion. “As the funds industry move towards unbundling of services such as corporate access, research or investment banking deals, independent research firms are likely to gain,” Mr Tulloch said. They are already benefitting from the cuts at research units of banks, hiring talent at lower cost. The long-term lure also includes M&A opportunities as investment banks may buy some of the independent firms to bring back talent. Staying put in shrinking world of investment banks research units would carry its own risks. “As an analyst, whether you like it or not, you are tied to the bottomline and if you are not perceived to be contributing to the bottom-line, you are a suspect,” Mr Schulte said. Reuters

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October 23, 2013 April 19, 2013

Asia Highbridge eyes Asia hedge fund Highbridge Capital Management LLC, the JPMorgan Chase & Co unit that manages about US$31 billion, is starting an Asia hedge fund, returning to the market more than two years after shutting a predecessor fund. Highbridge plans to raise about US$250 million for the Pan Asia Multistrategy fund when it opens to investors in early 2014, said two people with knowledge of the matter, asking not to be identified because the information is private. The fund is led by 32-year-old Asia head Arjun Menon, who is based in Hong Kong, according to a document seen by Bloomberg News. Queenie Tsao, a spokeswoman for Highbridge at RLM Finsbury Ltd in the city, declined to comment on the plan, citing legal restrictions. The firm liquidated the about US$1.5 billion Asia Opportunities Fund after former Asia head Carl Huttenlocher left in March 2011 to start his own hedge-fund company, Myriad Capital Management Ltd. The new Asia fund will focus on exploiting pricing gaps between related securities, taking less risk than its predecessor, the people said.

Panel calls for review of Japan arms exports curbs An advisory panel to Prime Minister Shinzo Abe called for a review of Japan’s selfimposed curbs on arms exports and said the country’s defence industry should become more competitive. Japan should take a more active role in global security, the panel of academics said in a draft of the country’s first ever national security strategy released yesterday. The draft referred to the rising influence of China in the region and provocations by North Korea, as well as growing marine and cyber space threats. The report comes 10 months after Mr Abe swept to power vowing to protect Japan’s territory amid a dispute with China over uninhabited islands in the East China Sea. He increased Japan’s defence budget for the first time in 11 years and is seeking to pass legislation this year to establish a National Security Council, in a bid to bring security policy more firmly under political control.

KB Financial among bidders for Government yet to announce the total number of bidders Seonjin Cha

Financial Group Inc is among firms bidding for Woori Finance Holdings Co’s brokerage arm and five other units, as South Korea makes a fourth attempt to privatise the nation’s biggest financial group by assets. KB Financial made an initial offer for a package of Woori Finance’s businesses consisting of its brokerage, asset management, life insurance and savings bank units, KB said yesterday in a regulatory filing. The owner of Korea’s largest bank made separate offers for Woori’s distressed-debt trading firm and leasing unit. The six companies may fetch more than 1.5 trillion won (US$1.4 billion) when combined, according to Nomura Holdings Inc, as the government sells its Woori assets separately and breaks with an all-ornothing strategy that’s failed three times since 2010. NH Financial Group also made an offer for the brokeragerelated package, the Seoul-based company said. “Financial holding firms like KB and NH may have the best chances to win this race as they’re eager to diversify businesses and to beef up their securities units,” Jun Baeseung, an analyst at Shinyoung Securities Co, said by phone. PineStreet Group, a Seoul-based investment advisory firm, also entered a bid for the brokeragerelated assets, vice chairman Kim Myung-jeon said.

US$1.4 bln Sale of the six companies may fetch when combined, says Nomura

The government is yet to announce the total number of bidders for Woori Investment & Securities Co, Woori Asset Management Co, Woori Aviva Life Insurance Co and Woori FG Savings Bank following Monday’s bid deadline. Total offers for Woori F&I Co, the distressed-asset trading unit, and leasing unit Woori Financial Co are also yet to be disclosed. Woori Investment rose 0.4 percent to 11,650 won at the close of trading in Seoul, valuing Woori Finance’s 38 percent stake at about 882 billion won. Shares of Woori Finance dropped 0.4 percent to 13,150 won. The benchmark Kospi Index rose 0.2 percent.

Taxpayer bailout South Korea is trying to recoup taxpayer money spent more than a decade ago to bail out the nation’s weakest banks. The government

The company’s flagship Woori Bank will be sold next year

Philippines allows foreign share-issuers get forex Blackstone opens in Singapore Blackstone Group LP, the world’s biggest manager of alternative assets, will seek more investments in Southeast Asia following the opening of an office in Singapore seven years after entering the Asia-Pacific region. Blackstone, led by chief executive Stephen Schwarzman, has more than US$5 billion of Asian assets, of which more than half are in real estate. Singapore will be the firm’s second office with treasury functions after New York, according to the company, which manages about US$248 billion worldwide. The office, its eighth in Asia after cities including Hong Kong, Tokyo, Mumbai and Sydney, will give the New York-based firm its first presence in Southeast Asia, where the economy is forecast by the Asian Development Bank to expand 4.9 percent this year and 5.3 percent in 2014.

he Philippine central bank has opened the way for foreign companies that get a listing in Manila to convert their share-sale proceeds into foreign exchange via the banking system. The Bangko Sentral ng Pilipinas (BSP) said yesterday it has issued a circular that makes clear such conversions of proceeds are permitted. Diwa Guinigundo, a deputy governor of the BSP, said the central bank is also requiring foreign investments in the local equities market to be registered to allow for outward remittance through the banks of income from such placements. “The new FX liberalisation policy aims to facilitate cross-border investment transactions consistent with our commitments under the ASEAN Economic Blueprint 2015,” Mr Guinigundo said in a text message

to reporters. “The listing and trading of nonresident securities in the domestic market can promote greater confidence in the economy and its capital market,” he said. Monetary authorities said the new rules would address concerns raised after Singapore-based Del Monte Pacific Ltd became the first company on a foreign bourse to get a Manila listing. It listed 1.297 billion shares in the Philippines. Wilhelmina Manalac, the central bank’s managing director for the international subsector, said the new rules will help deepen the local capital market by encouraging creation of more instruments for domestic investors. A non-resident company that issues shares in the Philippines through the stock exchange will now be allowed to convert the pesos from

it into foreign exchange that can be taken out of the country. The peso has fallen 5 percent this year against the U.S. dollar, largely because of losses between May and September due to worries about the U.S. Federal Reserve reducing its stimulus. The Indonesian rupiah has been Asia’s weakest currency this year, falling 15 percent against the dollar. The Philippines expects its stock market to participate soon in the electronic trading links that stock exchanges in Singapore, Malaysia and Thailand set up last year. Indonesia and two markets in Vietnam are also likely to link up in the unified stock exchanges, as the region gears up to take advantage of free flow of capital with the creation of the integrated economic community of the 10-member Association of Southeast Asian Nations by 2015. Reuters

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

13 13

October 2013 April 19,23, 2013

Asia

Australia to raise debt limit to A$500 bln, audit spending

Woori’s brokerage

Cabinet also signed off on audit of all government spending said in June that it will sell Woori Finance’s assets in three parts after failing to woo buyers for its 57 percent stake as a package. Potential buyers were uninterested in paying for businesses that didn’t fit with their business models. The first phase of the latest approach lured 11 bids for Woori Finance’s two regional banks on October 18. The company’s flagship Woori Bank, credit card business and other units will be sold next year. The most recent sale attempt may provide the government’s best chance at divesting Woori Finance as separate assets will appeal to a wider array of bidders, CLSA Asia-Pacific Markets said in July. “For anyone who wants to grow in the area of securities and nonbanking businesses, owning Woori Investment would make you a strong player,” Sohn Mi-ji, an analyst at Shinhan Investment Corp, said. Buying Woori Investment, the country’s fourth-largest brokerage by market value, would give the winning bidder control of South Korea’s top merger and acquisition adviser and debt underwriter, according to data compiled by Bloomberg. Woori Finance is seeking to sell its 38 percent stake in the brokerage business, 52 percent of Woori Financial, 99 percent of the insurance business it owns jointly with Aviva Plc and all of the asset management unit, Woori F&I and the savings bank. Bloomberg News

Singapore, China agree on direct currency trading Beijing extends offshore yuan investment scheme to Singapore

hina will extend its prized offshore renminbi investment scheme to Singapore, the Monetary Authority of Singapore (MAS) said yesterday, as Beijing internationalises its yuan currency in the Asia-Pacific region and beyond. Other agreements announced yesterday to coincide with the visit of Chinese executive vice premier Zhang Gaoli to Singapore, include plans to introduce direct currency trading between the yuan and Singapore dollar, entrenching Singapore’s position as Asia’s largest centre for forex trading. The aggregate quota of 50 billion yuan (US$8.2 billion) for Singapore under the Renminbi Qualified Foreign Institutional Investor (RQFII) will let qualified Singapore-based institutional investors use offshore yuan deposits to buy Chinese stocks and bonds, the MAS said in a statement. “Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the RMB in international trade and investment in the years to come,”

MAS managing director Ravi Menon said in the statement. China has been gradually relaxing restrictions on the use of the yuan with a view to eventually making the currency fully convertible. Last week, British Chancellor George Osborne said China will extend the RQFII to London and give investors there the right to buy up to 80 billion yuan of Chinese securities. China and Singapore also said they will set up a working group to promote bilateral trade in services as well work on letting approved Chinaincorporated companies list directly in Singapore instead of through entities incorporated outside China. Singapore started yuan clearing services in May, when HSBC Holdings Plc and Standard Chartered Plc sold the city-state’s first Dim Sum bonds. Further details on direct currency trading will be announced separately, while new measures are being studied to allow cross-border flows of yuan between Singapore and China’s Suzhou Industrial Park as well as Tianjin Eco-City, the MAS said in yesterday’s statement. Reuters

Hockey said it was important to have ‘a buffer’

ustralia’s new conservative government plans to raise its debt ceiling by twothirds to A$500 billion (US$483 billion), Treasurer Joe Hockey said yesterday, heading off concerns the country could reach its limit before Christmas. “The debt limit needs to be set so as to provide sufficient headroom to ensure there is stability and certainty for the financial markets about the government’s capacity to finance its operations for the foreseeable future,” Mr Hockey said. “We need not look any further than the recent events in the United States to realise how imperative for stability and certainty is for confidence.” Brinkmanship over raising the U.S. debt ceiling earlier this month partially shut down the federal government and roiled financial markets before a 11th hour deal was hammered out. In a budget update before September’s election, Australia’s Treasury forecast the face value of outstanding Australian government securities would reach its A$300 billion limit by December 2013 before falling back to around A$290 billion by June 30, 2014. The hike in the Australian debt

ceiling had little impact in Australian financial markets, which were expecting the increase. Demand for Australia’s AAArated government bonds is strong and with net government debt forecast to peak at 13 percent of gross domestic product, investors are mostly sanguine about an increase in borrowings. Parliament is expected to hold its first sittings under conservative Prime Minister Tony Abbott in late October, giving the new government up to six weeks to pass the new debt limit. Mr Hockey said it was important to have what he called “a buffer of A$40 to A$60 billion to provide stability”. “We have decided to go to A$500 billion. This is the legacy of bad Labor government and this is part of the job that we have to fix.” Mr Hockey also announced plans for a Commission of Audit on the scope, efficiency and functions of the government. The Commission would be tasked with identifying savings to deliver a surplus of 1 percent of GDP by 202324 by eliminating wasteful spending, identifying unnecessary duplication and improving the efficiency of government services. Reuters

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14 14

October 23, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 61.90

96.00

29.5

61.35

95.05

29.2

60.80

94.10

60.25

93.15

28.9 28.6

Max 61.85

average 60.508

Min 59.75

Last 59.75

59.70

Max 96.00

average 93.087

Min 92.20

Last 92.85

Last 56.8

26.4

31.1

26.1

30.7

25.8

30.3

56.8

Max 26.65

average 25.768

PRICE

DAY %

YTD %

(H) 52W

5.905006418

111.3399963

85.79000092

-0.22172949

BRENT CRUDE FUTR Dec13

109.85

0.191535936

4.80870146

114.4399948

95.95999908

GASOLINE RBOB FUT Nov13

265.41

0.011304544

3.360853649

293.6000109

243.3699846

GAS OIL FUT (ICE) Dec13

933.25

-0.13376137

3.521907931

973

837

3.656

-0.327153762

-2.376502003

4.59400034

3.281000137

301.51

0.149471866

0.906961178

322.3500013

276.8100023

NATURAL GAS FUTR Nov13 NY Harb ULSD Fut Nov13 Gold Spot $/Oz

1311.08

-0.3557

-21.2309

1754.46

1180.57

Silver Spot $/Oz

22.034

-0.2309

-26.8217

34.3838

18.2208

Platinum Spot $/Oz

1428.65

-0.6571

-5.8705

1742.8

1294.18

Palladium Spot $/Oz

745.75

0.2244

6.5875

786.5

587.4

LME ALUMINUM 3MO ($)

1850

0.162425555

-10.75735649

2184

1758

LME COPPER 3MO ($)

7244

-0.013802622

-8.662211575

8346

6602 1811.75

3MO ($)

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

Min 25.50

Last 25.60

(L) 52W

WTI CRUDE FUTURE Nov13

LME ZINC

25.5

Dec13

1940

0.310237849

-6.730769231

2230

14365

1.161971831

-15.7971864

18770

13205

15.235

-0.163826999

-1.167693805

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 31.50

average 30.260

Min 29.95

Last 30.15

29.9

-0.112612613

-26.05252188

647

432

696.25

-0.500178635

-15.1690527

913

635.5

SOYBEAN FUTURE Jan14

1290.25

-0.788158401

-1.432391138

1406

1169

COFFEE 'C' FUTURE Dec13

112.95

0.221827862

-27.80441035

181.5500031

112.2999954

NAME

SUGAR #11 (WORLD) Mar14

19.36

-0.308959835

-5.92808552

20.85000038

16.69999886

ARISTOCRAT LEISU

COTTON NO.2 FUTR Dec13

82.98

-0.096315916

5.38481077

93.72000122

74.34999847

CROWN LTD

DAY %

YTD %

(H) 52W

(L) 52W

0.9656 1.6127 0.9034 1.3671 98.37 7.9853 7.7527 6.0933 61.71 31.132 1.2409 29.43 43.17 11044 94.985 1.2351 0.8477 8.3305 10.917 134.48 1.03

-0.1138 -0.2474 -0.0221 -0.0439 -0.2745 0.0038 0.0026 0.0164 -0.3059 -0.0771 0 -0.0374 -0.0695 -1.7294 -0.159 0.0138 -0.2029 -0.0012 0.0421 -0.2305 0

-6.957 -0.3029 1.3283 3.6467 -12.4733 -0.0263 -0.0271 2.2533 -10.8815 -1.7731 -1.5714 -1.349 -5.0151 -11.3274 -5.9567 -2.2363 -3.808 -1.3565 -3.5413 -15.5488 -0.0097

1.0599 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.2568 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 81.656 1.20302 0.79607 7.8281 10.1113 100.33 1.0289

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.82

-0.6185567

16.97

-1.049563

VOLUME CRNCY

53.01587

5.02

2.56

1437290

59.04405

17.215

9.3

2269790

AMAX HOLDINGS LT

1.25

-2.34375

-10.71428

1.72

0.75

1937600

BOC HONG KONG HO

25.2

-0.1980198

4.564314

22.85

7721449

0.435

-2.247191

64.15095

0.56

0.232

588000

7.1

-1.114206

18.53089

7.24

4.1

30000

CHINA OVERSEAS

24.05

-0.8247423

4.112552

25.6

17.7

17264220

CHINESE ESTATES

21.75

-0.4576659

93.40987

22.25

9.543

44500

CHOW TAI FOOK JE

12.5

-0.63593

0.4823185

13.4

7.44

6562000

EMPEROR ENTERTAI

4.06

-5.581395

114.8148

4.66

1.43

2799000

FUTURE BRIGHT

2.82

-4.081633

132.6683

2.98

1.103

3396000

GALAXY ENTERTAIN

59.75

-4.476419

96.86985

63.75

24.2

19934929

CENTURY LEGEND

World Stock Markets - Indices

PRICE

Macau Related Stocks

443.5

WHEAT FUTURE(CBT) Dec13

NAME

28.0

Currency Exchange Rates

NAME

METALS

Last 28.10

58.4

Commodities ENERGY

Min 28.05

31.5

57.2 Min 56.8

average 28.395

26.7

57.6

average 57.145

Max 28.05

58.8

58.0

Max 58.8

92.20

28.3

CHEUK NANG HLDGS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15392.2

-0.04837772

17.46059

15709.58

12471.49

NASDAQ COMPOSITE INDEX

3920.049

0.1474346

29.82385

3931.452

2810.8

FTSE 100 INDEX

6661.78

0.113913

12.95345

6875.62

5605.589844

HANG SENG BK

127.8

0.07830854

7.666389

132.8

110.6

694390

DAX INDEX

8859.63

-0.08559616

16.38434

8876.14

6950.53

HOPEWELL HLDGS

26.45

-0.1886792

-20.45113

35.3

23.2

4424500

NIKKEI 225

14713.25

0.1339361

41.53916

15942.6

8619.45

HSBC HLDGS PLC

85.5

0.5291005

5.166048

90.7

73.55

9391831

HANG SENG INDEX

23315.99

-0.5212015

2.908914

23944.74

19426.35938

HUTCHISON TELE H

3.49

-1.412429

-1.966291

4.66

3.12

5946000

CSI 300 INDEX

2445.891

-1.029044

-3.05439

2791.303

2023.171

LUK FOOK HLDGS I

28.1

2.554745

15.16394

30.05

16.88

2003000

MELCO INTL DEVEL

23.95

-4.2

165.8158

25.75

7.26

7544308

TAIWAN TAIEX INDEX

8418.27

-0.01247132

9.335276

8459.3

7050.05

MGM CHINA HOLDIN

28.1

-5.067568

111.6238

12.236

12441062

KOSPI INDEX

2056.12

0.1514849

2.957866

2060.18

1770.53

MIDLAND HOLDINGS

3.13

-0.9493671

-15.40541

4.6

2.68

406000

NEPTUNE GROUP

0.31

-4.615385

103.9474

0.335

0.131

424235000

NEW WORLD DEV

10.92

-0.5464481

-9.151418

15.12

9.98

9798101

SANDS CHINA LTD

56.8

-4.857621

67.30486

60.5

28.25

28596781

S&P/ASX 200 INDEX JAKARTA COMPOSITE INDEX

5373.145

0.3993818

15.5776

5380.4

4334.3

4507.605

-1.541508

4.422789

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1802.2

-0.0227448

6.70535

1826.22

1590.67

SHUN HO RESOURCE

1.67

19.28572

1.92

1.19

NZX ALL INDEX

1016.285

0.7508593

15.21813

1017.455

851.971

SHUN TAK HOLDING

4.67

-2.301255

11.45585

4.8

9003434

PHILIPPINES ALL SHARE IX

3981.07

0.02914639

7.626159

4571.4

3440.12

SJM HOLDINGS LTD

26255459

Euromoney Dragon 300 Index Sin

25.6

-6.569343

44.24439

16.486

SMARTONE TELECOM

10.44

0.7722008

-25.85227

16.22

9.97

672175

WYNN MACAU LTD

30.15

-5.485893

43.91408

32.6

11021670

623.74

-0.33

0.43

STOCK EXCH OF THAI INDEX

1450.21

0.1152885

4.186985

1649.77

1260.08

HO CHI MINH STOCK INDEX

500.57

-0.199374

20.98953

533.15

372.39

ASIA ENTERTAINME

3.96

N/A

69409

BALLY TECHNOLOGI

69.34

-0.6447915

55.08835

76.3

43.16

276323

Laos Composite Index

1308.36

1.418539

7.704336

1455.82

1047.94

BOC HONG KONG HO

3.3

7.491859

3.6

2.99

9350

GALAXY ENTERTAIN

8.1

5.194805

104.0302

8.11

3.13

30718 3049376

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

INTL GAME TECH

18.54

-0.4296455

30.8398

21.2

12.37

JONES LANG LASAL

85.31

-0.9635477

1.632115

101.46

72.56

241674

LAS VEGAS SANDS

73.23

0.9790403

58.64385

73.24

37.8353

5342867

MELCO CROWN-ADR

36.09

-1.136831

114.3112

13.43

3482313

MGM CHINA HOLDIN

3.86

0.2597403

120.5347

3.88

1.6651

3000

MGM RESORTS INTE

20.77

0.3866602

78.43642

20.98

9.15

7929185

SHUFFLE MASTER

23.16

-0.08628128

59.72414

23.21

12.35

227265

3.58

6.231454

57.18189

3.6

2.0804

29983

173.13

0.7038157

53.90702

173.34

103.34

913683

SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

39.9

0.8849558

35763752

CHINA UNICOM HON

ALUMINUM CORP-H

2.99

1.70068

23280850

CITIC PACIFIC

BANK OF CHINA-H

3.6

-0.2770083

205459300

BANK OF COMMUN-H

5.71

-0.5226481

14576106

BANK EAST ASIA

32.8

-0.6060606

1896870

10.86

-1.451906

19762450

BELLE INTERNATIO

NAME

PRICE

DAY %

VOLUME

12.62

-1.097179

14392340

-0.5424955

3306426

CLP HLDGS LTD

61.85

-0.2419355

4123012

CNOOC LTD

15.88

-0.6257822

42483794

COSCO PAC LTD

11.28

0.8944544

ESPRIT HLDGS

12.92

7292806

SWIRE PACIFIC-A

91.05

0.6633499

2175853

-0.6153846

1590443

TENCENT HOLDINGS

439.2

-1.9205

3951542

TINGYI HLDG CO

20.85

0.4819277

2242000

WANT WANT CHINA

11.54

0.6980803

7832286

WHARF HLDG

69.45 -0.07194245

3205759

25.5

-0.7782101

1480000

HANG SENG BK

127.8

0.07830854

694390

CHEUNG KONG

HENDERSON LAND D

46.25

-0.5376344

1883344

91.3

-1.243916

1719107

HONG KG CHINA GS

18.14

-0.3296703

6757180

HONG KONG EXCHNG

CHINA CONST BA-H

6.01

-0.661157

141959783

CHINA LIFE INS-H

20.4

-0.4878049

12159845

CHINA MERCHANT

28.4

-1.559792

2499772

HENGAN INTL

125.9

1218545

HSBC HLDGS PLC

85.5

0.5291005

9391831

97.4

1.723238

9098213

5.4

-0.3690037

147979120

10.9

0.1838235

12298427

CHINA MOBILE

82.15

-3.409759

49296280

HUTCHISON WHAMPO

CHINA OVERSEAS

24.05

-0.8247423

17264220

IND & COMM BK-H

CHINA PETROLEU-H

6.2

-0.1610306

54633660

LI & FUNG LTD

CHINA RES ENTERP

27.45

0.1824818

2589478

MTR CORP

28596781

3441983

HANG LUNG PROPER

1746116

-4.857621

4874366

7721449

34219901

56.8

0.3590664

3476810

0.162206

2193500

SANDS CHINA LTD

-0.7920792

2.00267 -0.617284

VOLUME

100.2

-0.1980198

4.83

-0.3012048

11.18

25.2 123.5

DAY %

66.2

SINO LAND CO

15.28

CHINA COAL ENE-H

PRICE

POWER ASSETS HOL

SUN HUNG KAI PRO

CATHAY PAC AIR

BOC HONG KONG HO

NAME

MOVERS

23494.37

1221344

LOW

23226.37

52W (H) 23944.74

CHINA RES LAND

22.45

-1.001014

3365200

NEW WORLD DEV

10.92

-0.5464481

9798101

20.75

3.853854

7982779

PETROCHINA CO-H

9.1

0.6637168

38976153

CHINA SHENHUA-H

24.8

1.431493

16090235

PING AN INSURA-H

58.1

-0.8532423

5761604

2 23495

INDEX 23315.99 HIGH

CHINA RES POWER

(L) 19426.35938

23226

18-October

22-October

15 15

October 2013 April 19,23, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Thanh Nien Daily Vietnam’s Prime Minister Nguyen Tan Dung said that state budget overspending this year would likely be significantly higher than desired. Mr Dung made the statement while delivering a report on the country’s current socio-economic situation that estimated Vietnam’s GDP growth at 5.4 percent this year. Mr Dung told lawmakers that state budget overspending in 2013 may reach 5.3 percent of GDP. According to the report, total public spending this year will reach an estimated 986.3 trillion dong (US$46.75 billion), 0.8 percent higher than the government’s budget forecast.

Korea Herald South Korea’s exports to Japan have declined sharply this year as the Japanese yen’s weakness, coupled with a stronger Korean won, has reduced demand for Korean goods, data showed yesterday. Shipments to Japan declined 13.32 percent on-year in August this year, dropping for the seventh consecutive month, according to the data compiled by the Korea International Trade Association. Exports to Japan accounted for 5.94 percent of South Korea’s total outbound shipments in August, also down from 7.7 percent in January.

Yomiuri Shimbun The Democratic Party of Japan demanded that Yasuhiro Sato, president of Mizuho Financial Group Inc, appear before the Diet to answer questions over bank loans to gangsters. At a meeting of the House of Representatives Budget Committee, DPJ member Akira Nagatsuma called for Mr Sato to give unsworn testimony over the scandal. Committee Chairman Toshihiro Nikai said the matter would be considered at a committee board meeting. Mizuho Bank extended loans to gangs through group consumer credit company Orient Corp.

Jakarta Post Sharp currency fluctuations and rising borrowing costs have deterred Indonesian companies from taking out overseas loans, with the latest data showing that the private sector’s offshore debts has fallen to its lowest level in two years. According to data from Bank Indonesia, the private sector only borrowed US$9.3 billion from overseas in August, falling sharply from US$11.1 billion a month earlier. It was the lowest monthly level of offshore borrowing since July 2011, with the level having already decelerated for three consecutive months.

China’s wake-up call from Washington

Stephen S. Roach

Faculty member at Yale University and former chairman of Morgan Stanley Asia

es, the United States dodged another bullet with a last-minute deal on the debt ceiling. But, with 90 days left to bridge the ideological and partisan divide before another crisis erupts, the fuse on America’s debt bomb is getting shorter and shorter. As a dysfunctional U.S. government peers into the abyss, China – America’s largest foreign creditor – has much at stake. It began so innocently. As recently as 2000, China owned only about US$60 billion in U.S. Treasuries, or roughly 2 percent of the outstanding U.S. debt of US$3.3 trillion held by the public. But then both countries upped the ante on America’s fiscal profligacy. U.S. debt exploded to nearly US$12 trillion (US$16.7 trillion if intragovernmental holdings are included). And China’s share of America’s publiclyheld debt overhang increased more than five-fold, to nearly 11 percent (US$1.3 trillion) by July 2013. Along with roughly US$700 billion in Chinese holdings of U.S. agency debt (Fannie Mae and Freddie Mac), China’s total US$2 trillion exposure to U.S. government and quasigovernment securities is massive by any standard. China’s seemingly open-ended purchases of U.S. government debt are at the heart of a web of co-dependency that binds the two economies. China does not buy Treasuries out of benevolence, or because it looks to America as a shining example of wealth and prosperity. It certainly is not attracted by the return and seemingly riskless security of U.S. government paper – both of which are much in play in an era of zero interest rates and mounting concerns about default. Nor is sympathy at work; China does not buy Treasuries because it wants to temper the pain of America’s fiscal brinkmanship. China buys Treasuries because they suit its currency policy and the export-led growth that it has relied on over the past 33 years. As a surplus saver, China has run large currentaccount surpluses since 1994, accumulating a massive portfolio of foreign-exchange reserves that now stands at almost US$3.7 trillion.

Reserve currency China has recycled about 60 percent of these reserves back into dollar-denominated U.S. government securities, because it wants to limit any appreciation of the renminbi against the world’s benchmark currency. If China bought fewer dollars, the renminbi’s exchange rate – up 35 percent against the dollar since mid-2005 – would

Co-dependency was never a sustainable strategy for either side. China just happens to have understood this first

strengthen more sharply than it already has, jeopardising competiveness and exportled growth. This arrangement fits America’s needs like a glove. Given its extraordinary shortfall of domestic saving, the U.S. runs chronic current-account deficits and relies on foreign investors to fill the funding void. U.S. politicians take this for granted as a special privilege bestowed by the dollar’s position as the world’s major reserve currency. When queried about America’s dependence on foreign lenders, they often smugly retort, “Where else would they go?” I have heard that line many times when I have testified before the U.S. Congress. Of course, America benefits from China’s outward-facing growth model in many other ways, as well. China’s purchases of Treasuries help hold down U.S. interest rates – possibly by as much as one percentage point – which provides broad support to other asset markets, such as equities and real estate, whose valuation depends to some extent on Chinese-

subsidised U.S. interest rates. And, of course, hard-pressed middle-class American consumers benefit hugely from low-cost Chinese imports – the Walmart effect – that enable them to stretch their budgets in an era of unrelenting pressure on jobs and real incomes.

Tipping point For more than 20 years, this mutually beneficial codependency has served both countries well in compensating for their inherent saving imbalances while satisfying their respective growth agendas. But here the past should not be viewed as prologue. A seismic shift is at hand, and America’s recent fiscal follies may well be the tipping point. China has made a conscious strategic decision to alter its growth strategy. Its 12th Five-Year Plan, enacted in March 2011, lays out a broad framework for a more balanced growth model that relies increasingly on domestic private consumption. These plans are about to be put into action. An important meeting in November – the Third Plenum of the Central Committee of the 18th Chinese Communist Party Congress – will provide a major test of the new leadership team’s commitment to a detailed agenda of reforms and policies that will be required to achieve this shift. The debt-ceiling debacle has sent a clear message to China – and comes in conjunction with other warning signs. Post-crisis sluggishness in U.S. aggregate demand – especially consumer demand – is likely to persist, denying Chinese exporters the support they need from their largest foreign market. U.S.-led China bashing – a bipartisan blame game that

reached new heights in the 2012 political cycle – remains a real threat. And now the safety and security of U.S. debt are at risk. Economic alarms rarely ring so loudly. The time has come for China to respond with equal clarity.

Changing strategy Rebalancing is China’s only option. Several internal factors – excess resource consumption, environmental degradation, and mounting income inequalities – are calling the old model into question, while a broad constellation of U.S.-centric external forces also attests to the urgent need for realignment. With rebalancing will come a decline in China’s surplus saving, much slower accumulation of foreignexchange reserves, and a concomitant reduction in its seemingly voracious demand for dollar-denominated assets. Curtailing purchases of U.S. Treasuries is a perfectly logical outgrowth of this process. Long dependent on China to finesse its fiscal problems, America may now have to pay a much steeper price to secure external capital. Recently, Chinese commentators have provocatively referred to the inevitability of a “de-Americanised world”. For China, this is not a power race. It should be seen as more of a conscious strategy to do what is right for China as it confronts its own daunting growth and development imperatives in the coming years. The U.S. will find it equally urgent to come to grips with a very different China. Codependency was never a sustainable strategy for either side. China just happens to have understood this first. The days of its open-ended buying of Treasuries will soon come to an end. © Project Syndicate

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October 23, 2013 April 19, 2013

Closing Turkey EU accession talks to restart

U.S. shutdown hurt Republicans’ image: poll

The European Union says it has agreed to resume membership talks with Turkey. The EU’s European affairs ministers, meeting in Luxembourg, said the talks would restart on November 5, after being stalled for three years. The EU had first agreed to relaunch negotiations in June, but postponed the talks after members criticised Turkey’s crackdown on anti-government protests. Turkey met the last condition for accession talks in 2005, but negotiations have stalled over a range of issues, including concern over freedom of speech and democracy, treatment of religious minorities, judicial reform, and ongoing tensions with Cyprus, an EU member.

The recent shutdown of the U.S. government has taken a stinging toll on the image of the Republican Party, according to a poll published yesterday. The Washington Post-ABC News survey showed the public’s opinion of the party has sunk to an all-time low, with nearly two-thirds (63 percent) saying they held an unfavourable view, compared to 32 percent who view it favourably. The government shutdown was sparked after Republicans driven by the ultra-conservative Tea Party faction tried to make a bill to keep funding the government contingent on gutting President Barack Obama’s signature health care law.

Incheon casino resort woos Chinese punters Paradise teams up with Sega Sammy for US$1.7 bln resort

ne of South Korea’s biggest gaming firms Paradise Co Ltd is building a US$1.7 billion casino resort in the coastal city of Incheon to lure the rising number of Chinese gamblers flocking to the country. Paradise, one of two companies that dominate South Korea’s foreigner-only casino market, said yesterday it was teaming up with Japanese gaming firm Sega Sammy Holdings Inc for the project, which is scheduled to be completed in 2017 and will be located minutes away from Seoul’s international airport. The resort would be one of the biggest in South Korea, which is attracting the attention of major casino operators like Las Vegas Sands Corp and Caesars Entertainment Corp at a time when several other Asian nations are betting on casinos to boost the number of wealthy Japanese and Chinese visitors as well as their economies. The new Incheon resort, dubbed Paradise City, expects to attract

Chinese tourist numbers on the rise

160,000 visitors a day, of which twothirds are likely to be Chinese, the head of the project, Choi Jong-hwan, said in a statement. Paradise shares closed up 3.6

percent in Seoul compared to a 3.1 percent gain in the Korea Composite Stock Price Index (KOSPI). Last week, Las Vegas Sands Corp chairman and chief executive

Sheldon Alderson said his company was looking into opportunities in South Korea. Japan’s Universal Entertainment Corp and a consortium of Caesars Entertainment Corp and Lippo Ltd had also applied for licences to build casinos in Incheon, but the government rejected their bids in June without giving a reason. South Korea allows its citizens to gamble at only one of the 16 or so casinos operating in the country. Paradise and local competitor Grand Korea Leisure are the biggest players in the foreigner-only domestic casino market and both firms target Chinese high-rollers from abroad. Paradise also collaborates with Macau junket operator Suncity Group to attract punters. The number of Chinese tourists to South Korea jumped nearly 50 percent year-on-year in the first nine months of 2013, the official Yonhap news agency said on Tuesday. Reuters

Nokia launches tablet to join gadget push Devices to retain Nokia brand after Microsoft handover

okia Oyj, in its first product introduction since agreeing to sell its handset business to Microsoft Corp, showed a tablet and smartphones that give a glimpse of how the merged businesses will try to revive demand. The Lumia 2520 tablet, along with the Lumia 1320 and 1520 phones are among the last products Nokia developed before deciding to sell the devices unit to Microsoft in a deal that is due to close in the first quarter of next year. Nokia, once the global leader in mobile phones, arrived late to the smartphone race and has struggled to catch up with Apple Inc and Samsung Electronics Co Ltd, who dominate the increasingly crowded market for large-screen smartphones, known as phablets. The Lumia tablet, which has a 10-inch screen, will also face tough

competition from the likes of Apple, which is expected to unveil slimmer, faster iPads. The phablets, which both have 6-inch screens, will take on a multitude of similar devices from Samsung. Analysts said the new products, which will retain the Nokia brand after the Microsoft handover, are priced low enough to attract interest. The Lumia 2520, which comes in glossy red and white as well as matt cyan and black versions, is expected to start shipping in the fourth quarter for about US$499. “The tablet is a nice design, it’s a good-value proposition,” Gartner analyst Annette Zimmermann said, though she doubts that Nokia’s first foray into the tablet market will bring billions in sales. Others also questioned whether the new launch is

The Lumia 1520 runs the latest version of the Windows Phone system

enough to lure consumers back to Nokia and Microsoft, while Forrester analyst Thomas Husson said the Lumia 2520’s position for Microsoft is unclear, particularly after the software giant launched its own tablets. At midnight on Monday, Microsoft started selling its Surface 2 and Surface Pro 2 tablets. Still feeling its way in the computer hardware business, the company is banking on the lighter and faster models boosting the lacklustre sales of its touch-screen devices. “Despite a more affordable price, the respective positioning of Nokia’s tablet versus the Surface 2 is not obvious and will have to be dealt with after the Nokia acquisition,”

Mr Husson said. The new devices will help Microsoft to increase the number of Windows users, but Mr Husson said he expects it to remain a long way from “a significant installed base of consumers”. Nokia’s former chief executive Stephen Elop, hired in 2010 to turn round the company, decided in early 2011 to drop Nokia’s own operating system in favour of the Microsoft’s untested Windows Phone software. The Lumia devices have been well received by technology blogs and critics, but sales have been slow to pick up, partly because of a lack of Windows Phone apps and a limited marketing budget. Reuters