MOP 6.00 Vitor Quintã Deputy editor-in-chief
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he value of exports in the first eight months this year stood at 6.05 billion patacas (US$757.6 million), up by 12 percent from a year earlier, show data released yesterday by the Statistics and Census Service. Exporters expect a stable growth in exports throughout the remainder of the year, the Macau Importers and Exporters Association says. But expansion will be slower than last year’s increase of 17.1 percent. Dominic Sio Chi Wai, director-general of the association, said he expects growth in exports to hover under 10 percent for 2013. The city was regaining its foothold in textiles exports and had built industries in food souvenirs and electronic product components to the mainland, it adds. “Macau still has the advantage that the manufacturers here are financially sound and are efficient in delivering the orders which are, of course, small in scale,” Dominic Sio Chi Wai, directorgeneral of the association, told Business Daily.
Malaysian arrested for alleged gaming fraud Page 4
More on page 3
Year II
Number 399 Thursday October 24, 2013
Editor-in-chief Tiago Azevedo
Exports up again: but more slowly than 2012
Reolian drivers 1 petition for more govt backing
April 19, 2013
Brought to you by
Online betting, with Chinese characteristics
Zung Fu Motors (Macau) Limited
Hang Seng Index
www.macaubusinessdaily.com
Legal sports betting in mainland China could be facing the biggest shake up in nearly two decades, via government-sanctioned online gambling. But the service is unlikely to be available in Macau, where Macauslot – a monopoly founded by Stanley Ho Hung Sun – is the only company legally authorised to operate an online portal for betting on football and basketball. Anyone trying to access the new online system here in Macau – via smartphone, computer tablet or laptop – is likely to have their location automatically tracked so they cannot make cross border bets. Shenzhen-based 500.com Ltd plans a US$150 million (1.20 billion patacas) initial public offering in the United States after winning tacit approval from China’s Ministry of Finance to develop a purpose built platform for Internet sports betting. Page 2
Back door Big is beautiful Lawyers query men, Hainan’s in city’s phone records nearly casinos hotel sector in La Scala trial Japan, South Korea, Sri Lanka, Taiwan and Queensland in Australia, are all jurisdictions actively pursuing plans to attract Chinese and other East Asian gamblers to their tax systems. But the immediate potential competition to Macau for gambling revenue could come not from distant Queensland or even from culturally familiar Taiwan, but from Hainan – mainland China’s sub-tropical holiday island 504 kilometres (313 miles) southwest of Macau.
Nearly 70 percent of Macau hotel receipts last year came from just 13 properties according to data released yesterday by the Statistics and Census Service. The ‘Hotels and Similar Establishments Survey 2012’ also showed that 52 hotels and guesthouses – around half the total recorded in the market during the period – shared just one percent of total revenue. It emphasises the concentration of economic power in the new casino resorts.
Macau’s corruption watchdog has no evidence linking disgraced official Ao Man Long and two Hong Kong businessman facing corruption charges, a court heard yesterday. The trial of Joseph Lau Luen Hung and Steven Lo Kit Sing resumed with heated exchanges between Mr Lo’s lawyers and Commission Against Corruption investigators. Argument centred on records of phone calls between former secretary for transport and public works, Mr Ao, and Mr Lo.
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23487.0
23389.2
23291.4
23193.6
23095.8
22998.0
October 23
HSI - Movers Name
%Day
TINGYI HLDG CO
1.92
SUN HUNG KAI PRO
1.40
CATHAY PAC AIR
1.31
HANG SENG BK
0.70
SANDS CHINA LTD
0.44
CHINA RES LAND
-2.90
CHINA RES ENTERP
-2.91
CNOOC LTD
-3.02
CHINA MERCHANT
-3.70
CHINA UNICOM HON
-4.75
Source: Bloomberg
I SSN 2226-8294
Brought to you by
2013-10-24
2013-10-25
2013-10-26
21˚ 28˚
21˚ 28˚
19˚ 26˚
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October 24, 2013
Macau prizes – is poor compared to the illegal bookmakers. “…pricing in the government channels isn’t that great – with a mandatory maximum return to player of 69 percent. The return to player in the illegal market is probably 95 to 98 percent,” the person said. But the source added: “The market is potentially absolutely vast. Net spending on the government’s lottery product in China is about 0.2 percent of GDP [gross domestic product]. In Hong Kong it’s one percent, in Japan I think it’s 1.5 percent. So what that indicates to me is that currently there’s an enormous illegal sports betting market in China.”
Right format
Offline version – how China’s Sports Lottery normally works
Online betting, with Chinese characteristics Mainland sports wager market faces revolution with IPO for government-approved provider Michael Grimes
michael.grimes@macaubusinessdaily.com
L
egal sports betting in mainland China could be facing the biggest shake up in nearly two decades, via government-sanctioned online gambling. But the service is unlikely to be available in Macau – where Macauslot – Sociedade de Lotarias e Apostas Mútuas de Macau Lda – a monopoly founded by Stanley Ho Hung Sun, is the only company legally authorised to operate an online portal for betting on football and basketball. Anyone trying to access the new online system via smartphone, computer tablet or laptop is likely to have their location automatically tracked so they cannot make cross border bets. “If you had say an application on your phone for the new mainland online lottery, you would need to have it ‘talking’ to the national telecommunications system in China,” said a lottery industry
KEY POINTS US$150 IPO by mainland online sports lottery provider Tacit approval by Ministry of Finance China’s 2 legal lotteries generated 261.52 bln yuan in 2012 New service unlikely to be available in Macau
source – who asked to remain anonymous as the person is not authorised to speak to the media. “There will probably be a requirement that the app is linked to a global tracking system – making sure you are physically located in the right place in order to access the service legitimately,” the person explained to Business Daily. A Chinese online company – 500. com Ltd – is planning a US$150 million (1.20 billion patacas) initial public offering in the United States after winning what industry sources say is tacit approval from China’s Ministry of Finance to develop a purpose built platform for Internet sports betting.
Offline, online For the past eight to ten years in China, government-sanctioned lottery providers – licensed on a provincial basis – have merely signed agreements with online retailers to generate tickets for sale in traditional shops, rather than building tailor-made systems for online gambling in the manner of Western bookmakers. 500.com will work to change that on behalf of the country’s Sports Lottery. The latter was set up in 1994 as a sister body to the Welfare Lottery, established in 1987. Both distribute to good causes and the public coffers some of their net income once the player prize pools and administrative costs have been deducted. The notion of a ‘lottery’ might conjure the idea simply of players being asked to match randomlydrawn numbers in a daily, weekly or monthly draw. But the products available to players are much broader in some provinces, reflecting the growth of Internet and smartphone use in the country, and also the technology available
to deliver other random outcome games other than traditional number lotteries. But the industry insider tells Business Daily one of the main barriers to building the legal sports betting business in China is that the return to player – the percentage of total stake money returned as
500.com targets online-savvy U.S. investors Likely to get better valuation on Nasdaq than via HKSE, says industry source
S
henzhen-based 500.com Ltd has applied to list on the New York Stock Exchange under the symbol WBAI. Deutsche Bank AG is managing the offering. “The Hong Kong stock market is not a particularly good place to do an IPO if you’re a gaming company that doesn’t have casinos in Macau or the Philippines or Singapore,” a lottery industry insider told Business Daily. “Investors and analysts in China only know about traditional casinos. Most of them don’t understand
Another problem faced in curbing unauthorised sports betting in the Greater China market – including Hong Kong and Macau as well as the mainland – is that the authorities have so far declined to respond to market demand and authorise the form that Chinese consumers love the most. This is ‘in-running’ betting on football and basketball i.e., while matches are in progress. Chinese media recently reported that a single unlicensed online bookmaker taking ‘in-running’ bets on the mainland and allegedly involved in running illegal websites in Macau was said to have made a profit of 11 million yuan (US$1.8 million) on one percent of players’ losses plus commission in fewer than 12 months up to the time of his arrest last year. “…most people don’t use the government channels,” the lottery insider told Business Daily. “Making it available on the Internet is going to make it easier for some customers and no doubt that will stimulate some demand. But until you fix that fundamental pricing problem you’re still going to struggle to capture the huge market that is obviously there.”
lotteries, sports betting etc. Additionally, many of the investors in the lottery companies involved in China have at some stage lost money,” stated the person. The source added: “For all those reasons, to go to the United States and say ‘We have got access to the China gambling market, we are legitimate, and are using the Internet’ – the investors’ eyes will probably light up and the firm will probably get a higher valuation.” 500.com offers betting services through the Web and via mobile applications. It more than doubled its users to 18.4 million by the end of September, from 8.8 million at the end of 2010, according to a regulatory filing. The firm says it will use the proceeds from an initial public offering for technology upgrades and marketing. Net income at 500.com almost doubled to 20.6 million yuan (27.04 million patacas) from a year earlier in the nine months to September 30, as sales increased 25 percent to 163.4 million yuan, the company said. Two other China-based Internet businesses, 58.com Inc and Qunar Cayman Islands Ltd, plan to complete their own initial offerings by the end of this month, according to Bloomberg. M.G.
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October 2013 April 19,24, 2013
Macau
Stable export growth seen for rest of year Trade association expects growth of less than 10 percent as the volume of outbound goods grows Stephanie Lai sw.lai@macaubusinessdaily.com
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xporters expect a stable growth in exports throughout the remainder of the year, the Macau Importers and Exporters Association says. The city was regaining its foothold in textiles exports and had built industries in food souvenirs and electronic product components to the mainland, it says. The value of exports in the first eight months this year stood at 6.05 billion patacas (US$757.6 million), up by 12 percent from a year earlier, data from the Statistics and Census Service show. The city’s exports to the mainland have almost tripled in the same period to about 2 billion patacas, according to figures from China’s Ministry of Commerce. The statistics service says imports grew to 52.39 billion patacas in the first eight months of the year and the aggregate trade deficit stood at 46.33 billion patacas at August 31.
“From January to August, the city has seen a rather stable rise in its exports, which is mainly driven by three pillars: the remaining textile industry, the food souvenir makers and companies producing electronic parts for mobile phones and selling them to the mainland,” said Dominic Sio Chi Wai, directorgeneral of the Macau Importers and Exporters Association. “Macau still has the advantage that the manufacturers here are financially sound and are efficient in delivering the orders which are, of course, small in scale.”
“Since we lost the quota system on textile and garments exports in 2005, the city has experienced a huge slide in exports but in these two or three years I think the export growth has recovered and it is slowly rising.” The city’s exporters were significantly impacted by the end of the quota system in 2005. Textile and garment exports once accounted for more than 70 percent of the value of exports. Macau’s total exports were valued at 1.48 billion patacas in January 2005. Last year’s exports
HFor the whole 2013, the stable growth in exports may stand at a high single digit
MOP6.05 bln Value of Macau exports in the first eight months of the year
were worth 8.16 billion patacas, an increase of 17.1 percent over 2011, mainly due to a 28.2-percent increase in re-exports – goods shipped with no value added to them here. Mr Sio, a member of the Legislative Assembly, said he expects growth in exports to hover under 10 percent for the remainder of the year. “Since there are not any big projects emerging in the near future, the growth in exports will not be prominent,” he said. “For the whole 2013, the stable growth in exports may stand at a high single digit.” “From 2016 onwards, we may also expect a new boost to the export industry as the MacauGuangdong cooperation project on Chinese medicine research and the manufacturing base on Hengqin Island gradually matures.” The medicine industrial park on Hengqin will cover about 50,000 square metres. In July, the chief executive of Guangdong-Macau Traditional Chinese Medicine Technology Industrial Park Development Co Ltd, Lim Minhui, said the park would require supporting businesses, such as enterprises in the logistics, conventions and education industries, restaurants and shops. “Import-wise, there is also big room for growth as there will be strong demand derived from shopping and restaurant business brought by the casino-resorts boom in 2016 and 2017.”
Dominic Sio, director-general of the Macau Importers and Exporters Association
Exports have been rising since 2011
Facing six months in limbo, N Reolian drivers want clarity
Reolian drivers say they are concerned about the company’s future when the six months ends
early half of the staff of troubled bus operator Reolian Public Transport Co Ltd say they are concerned about the future of the company since the government took control. More than 30 Reolian workers handed a petition to the Transport Bureau yesterday. They claim to have collected the signatures of more than 200 drivers. The government took control of Reolian’s operations for a sixmonth period from October 2, one day after the public bus firm filed for bankruptcy because it ran out of money to pay wages. Reolian blamed the bankruptcy filing on the government’s refusal to increase the fee it earns by running its bus routes. One of the drivers’ representatives, who would not give his name, said “there is not much change to the daily operations since the government took over and we have received our salaries,
including bonuses, as planned. “But we still feel anxious about this situation as we do not know what will happen in six months time.” Transport Bureau director Wong Wan said earlier this month the government spent about 10 million patacas (US$1.25 million) paying the salaries of some 500 Reolian workers for September. The bureau is yet to say what will happen to Reolian and its bus routes after the six-month deadline expires. Mr Wong said there would be a solution before April. Asked what they expect from the government, the drivers declined to make any further comments to the media. In their petition to the government, the drivers wrote they “hope the government and public can be tolerant and allow Reolian to continue its operations and to serve the public”. T.L.
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October 24, 2013
Macau Zest Air to launch Macau flights in December Philippine low-cost carrier Zest Air is launching Manila-Macau flights starting December 6, and is offering promotional fares for its first flights, Philippine media reported yesterday. In a statement, the airline said it will fly here from Manila three times a week. “The addition of Manila–Macau provides yet another opportunity for Filipinos to have access to a new and attractive destination,” Zest Air chief operating officer Joy Caneba was quoted as saying. The Macau and Philippine governments in June signed a new air services agreement, which removed restrictions on the capacity of flights between Macau and other Philippine cities.
Competition is close to home The many outside jurisdictions vying for Chinese gamblers’ tax dollars diverts attention from neighbouring Hainan Michael Grimes
michael.grimes@macaubusinessdaily.com
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apan, South Korea, Sri Lanka, Taiwan and Queensland in Australia, are all jurisdictions actively pursuing plans to attract Chinese and other East Asian gamblers to their tax systems. Business Daily has carried stories on all these developments recently. Some analysts argue however that the premise these and other places might deprive Macau of market share is a false one. They argue the more gaming facilities there are in the region, the more the demand is likely to broaden and perhaps to deepen, given the undersupply of casinos relative to the population. A report from Nomura Equity Research in Hong Kong in May this year suggested that mainland China had 1,891 people per legally licensed ‘gaming position’ available in Macau. By gaming positions, it meant the total number of live dealer tables, electronic gaming tables and slot machines in the Macau casino market. The report further suggested that when the populations of Singapore, Malaysia and Indonesia are combined and compared with the positions available in the handful of legally sanctioned casinos and slot halls in that neighbourhood, there are 4,771 people per gaming position.
Hainan – deceptively laid back
Las Vegas-based gaming consultant Dean Macomber told Business Daily a fortnight ago that although China still lags behind the United States in gross domestic product per head, there is still a lot of potential growth in the mainland China market for casino gambling. “…if you take the PRC [People’s
Republic of China] and you divide all of Macau’s gaming revenues by the population of the PRC, which is 1.3 billion people – let’s just use it as a rough benchmark – that comes out as US$30 [240 patacas] per person of all ages,” Mr Macomber told us. “But if you applied [multiplied] the per capita gaming revenue in
the U.S. of US$200 per person to the 1.3 billion people in China, it [the total theoretical] revenue turns out to be a huge number of US$250 billion,” he added. Last year Macau’s casinos generated a little more than one-sixth of that figure – approximately 304.14 billion patacas (US$38 billion). The immediate potential competition to Macau for gambling revenue could come not from distant Queensland or even from culturally familiar Taiwan, but from Hainan – mainland China’s sub-tropical holiday island 504 kilometres (313 miles) southwest of Macau. It’s possibly even more of a threat because the facilities being created there aren’t classified as casinos at all, but as ‘Special Entertainment Centres’. And the buy-in is denominated not in U.S. dollar-pegged Hong Kong dollars, but in the local currency, the yuan. Macau-based gaming consultant Ben Lee of IGamiX Management recently pointed out to this newspaper, if it walks like a casino duck and quacks like a casino duck, then it quite possibly is one. He told us: “…we have seen the rise of the casino concept in Hainan, and also, the cashless poker club in Beijing. You may take that as a very early indication that the mainland Chinese government is reviewing its stance in terms of what kind of support it is willing to give to Macau in order to stand on its own two feet.” He added: “I don’t think China will withdraw its support [for Macau]. I don’t think that’s politically acceptable to either side. But China may reduce its support. We will no longer see the 40 percent year-on-year growth that we’ve seen in previous years.”
Suspect arrested for VIP room fraud Malaysian suspect questioned for taking a commission for cashing winnings from high-rollers Stephanie Lai
sw.lai@macaubusinessdaily.com
A
32-year-old Malaysian man has been arrested for alleged involvement in a gamingrelated fraud, the Public Prosecutions Office said yesterday. The man and his accomplices are suspected of operating a website as a front for a company that defrauded gamblers’ of their winnings, the prosecutions office said. In August, the office said it was investigating two companies that offered a service to cash VIP gamblers’ chips in exchange for a fee. The people claimed they were representatives from organisations called Golden Island International
Group and Flamingo International Group. The Malaysian suspect, with a surname Lim, was accused of running a Chinese-language website for Flamingo International Group. Authorities seized more than 30 million patacas (US$3.7 million) from Mr Lim’s bank account. Mr Lim was caught after he arrived at the Macau International Airport last Wednesday. The website claimed the company ran a casino, called the Flamingo Macao, with more than 3,000 slot machines. Mr Lim, identified as the manager
of the casino, established gaming accounts for the scam’s victims and requested a fee to be deposited into a bank account before the gambler, took the winnings. The prosecutors office did not disclose which games of chance were involved. The suspects allegedly approached overseas Chinese VIP gamblers
from places such as Malaysia, rather than from the mainland or Taiwan. The scam unfolded after representatives show high rollers what are claimed to be letters of authorisation from the Public Prosecutions Office and from the court suggesting that the service is approved by the government, a spokesperson told Business Daily yesterday. The office confirmed the documents are false. There is no system in Macau whereby chips from VIP gaming rooms can be cashed in exchange for a fee.
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October 24, 2013
Macau
Big hotels dominate tourism economy 2012 survey shows nearly half of city’s establishments shared only 1 pct of sectoral receipts Michael Grimes
michael.grimes@macaubusinessdaily.com
N
early 70 percent of Macau hotel receipts last year came from just 13 properties, according to data released yesterday by the Statistics and Census Service. The ‘Hotels and Similar Establishments Survey 2012’ also showed that 52 hotels and guesthouses – around half the total recorded in the market during the period – shared just one percent of total revenue. It emphasises the concentration of economic power in the new casino resorts, that have many hundreds or thousands of hotel rooms and the facilities to sell valueadded services such as in-room meals and meeting space. Total receipts for the hotel sector last year were approximately 21.93 billion patacas (US$2.75 billion), a 16.3 percent rise on a year earlier. Around 17 percent of receipts (3.83 billion patacas) were generated by rental of space for functions or meetings. A total of 47 percent of receipts (10.25 billion patacas) came from room sales, with food and beverage sales generating 22 percent
(4.91 billion patacas). The number of new hotel establishments grew by 5.3 percent year-on-year to 100 from 95 in 2011. The year marked the twostage opening of Sands China Ltd’s approximately US$4 billion Sands Cotai Central resort, and its addition to the market of three hotel towers adding around 6,000 rooms to the city’s inventory. For the territory as a whole during the year, the market comprised 67 hotels and 33 guesthouses. Of the hotels, 28 were five-star, 14 were four-star, 12 were three-star and 13 were two-star. The number of people employed in the hotel business grew much faster than the number of venues – by nearly a fifth, while the sector wage bill leapt by more than a third. It contributed to hotels’ expenditure – including depreciation costs – rising by 26 percent year-on-year to 19.45 billion patacas. The number of paid employees increased by 6,530 year-on-year to 39,618, from 33,120 in 2011
Big beasts – large hotels took 70 pct of receipts
– an expansion of 19.7 percent. Compensation of employees surged by nearly 36 percent to 7.76 billion patacas from 5.73 billion patacas a year earlier. Five-star hotels accounted for 80 percent and 85 percent of the 2012 tallies on number of employees and employee compensation.
Gross value added – a measure of the sector’s contribution to the overall economy – increased by 11 percent from a year earlier. But with the capital expenditure incurred by the market with new hotels coming into operation, gross fixed capital formation fell by 50 percent year-on-year.
Corporate
Macau Business Charity Golf 2013
T
he 7th edition of the Macau Business Charity Golf Tournament takes place on Friday October 25. The event will again be held at Caesars Golf Macau, on Cotai. The tournament is once more oversubscribed, with the organisers managing to accommodate 29 teams – four more than the planned maximum. The guaranteed prize pool of 200,000 patacas (US$25,000) will be shared among the favourite charities of the winning teams. Commenting on the strong corporate support for this year’s event, Paulo A. Azevedo, president of the Charity Association of Macau Business Readers, said: “This is once again a great result but we’re not surprised as we are used to seeing the commitment of some of the most conscientious companies of Macau.” Last year’s winner Silver Heritage Ltd is one of the favourites. But it faces a tough challenge from Wynn Macau Ltd, the Caesars Golf Team, Aristocrats’ Legends and the team from the RoadHouse Macau bar. Two Special Olympics teams will again participate in the tournament, both sponsored by local telecoms provider Companhia de Telecomunicações de Macau SARL (CTM). The company’s chief executive, Vandy Poon Fuk Hei, and José Costa Santos, a representative of Portugal’s national news agency Lusa, will each take a captaining or ‘guardian’ role with the respective Special Olympics teams. This year’s major sponsors are Macau casino developer Melco Crown Entertainment Ltd, and The Star casino resort in Sydney Australia, run by Echo Entertainment Group Ltd. The event is once more being supported by the Westin Resort Macau. The tournament’s charity gala and prize giving ceremony will be held there in the evening. Up to 180 people are expected to join the gathering of golf enthusiasts, friends and loyal supporters of the charity occasion. The few remaining seats for the cocktail and prize award presentation can be booked by telephoning +853 6654 5170. Single seats and one half table are still available.
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October 24, 2013 April 19, 2013
Macau ‘Influence peddling’ could be made crime The Commission Against Corruption said it would propose criminalising ‘influence peddling’ – the use of position or political influence on behalf of others in exchange for money or favours. In comments to Portuguese-language newspaper Ponto Final, the graft buster said such a law would strengthen the city’s legal framework in fighting white-collar crimes. The draft statute will be sent to the Chief Executive’s office “soon”, the corruption watchdog said. The bill will then be sent to the Legislative Assembly, which has to approve it. No timetable has been announced for that.
Lawyers challenge phone records at heart of trial Court hears corruption watchdog lacks evidence to prove La Scala middleman was link between businessmen and Ao Man Long Tony Lai tony.lai@macaubusinessdaily.com
M
acau’s corruption watchdog has no evidence linking disgraced secretary Ao Man Long and two Hong Kong businessman facing corruption charges, the court heard yesterday. The corruption trial of Joseph Lau Luen Hung and Steven Lo Kit Sing resumed with heated exchanges between Mr Lo’s lawyers and investigators from the Commission Against Corruption. Argument centred on the phone records of middleman Ho Meng Fai and calls between former secretary for transport and public works, Mr Ao, and the Hong Kong businessman. A prominent contractor, Mr Ho was a business partner of the jailed civil servant and was sentenced in absentia for bribery and money laundering. He escaped while on bail and is wanted by Interpol. Lawyers said yesterday it was not unusual for Mr Lo to speak frequently with Mr Ho on the telephone as both were involved in several projects. Commission Against Corruption senior investigator Io Fu Chun said Mr Ho spoke to
Mr Lo and Mr Ao from one of two phone numbers. But Mr Lo’s counsel, Jorge Neto Valente, said one of those numbers was a prepaid SIM card, which made it difficult to identify the subscriber. The investigator said calls to the other phone number would divert to the prepaid number and that Mr Ao rang the harder-to-trace prepaid number. Mr Neto Valente said there were also dozens of phone records between both numbers. “So now what? Ho Meng Fai always called himself to chit-chat?” he said. Mr Io said there were “a lot of possibilities” but both numbers were controlled by Mr Ho. Mr Lo and Mr Lau, chairman of Hong Kong-listed developer Chinese Estates Holdings Ltd, are accused of bribing Mr Ao with HK$20 million (20.6 million patacas) in 2005 to win a tender for land near the airport, the site of the mothballed La Scala flats. Mr Neto Valente told the court there was no evidence showing the phone calls between Mr Lo and Mr Ho were about the La Scala land
plots. Both men had been involved in other projects at the same time, including the construction of Galaxy Macau, StarWorld Macau and the Grand Waldo Hotel. Mr Ho was hired as one of the contractors while Mr Lo owns a consultancy. Mr Io, however, said numerous phone calls were made between the businessman and the jailed official
around the time of important dates, including the bidding period for the La Scala land. The graft buster found the phone calls “unusual” based on the analysis of other evidence related to the case, he said. Mr Lo, who was present in the court yesterday, appeared dissatisfied with Mr Io’s testimony and twice passed written notes to his legal team. Mr Io said Mr Ao gave “advanced information” on the sales of the airport land plots to the two Hong Kong tycoons in early 2005, months before the official announcement in June. “It’s not only about the sales but [Mr Ao also told them] the land bid would be different from normal tenders,” he said, meaning that the Hong Kong businessmen had enough time to prepare in advance a “blueprint” for the proposal. But Lo’s counsel said a Hong Kong architect had also prepared a design proposal for the land in 2004. Mr Io said the anti-graft agency had attempted to question the architect but they had “declined our request for investigation”.
Neto Valente, Mr Lo’s lawyer, questioned the accuracy of phone records
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October 2013 April 19,24, 2013
Macau Photo by Manuel Cardoso
Yue Xiu nearing deal to buy Chong Hing Bank jumped 7 percent to a record at the close of trading in Hong Kong Jonathan Browning and Zijing Wu
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ue Xiu Group, a trading arm of China’s Guangzhou city government, is nearing an agreement to acquire Hong Kong lender Chong Hing Bank Ltd, according to three people with knowledge of the matter. An announcement may come as early as this week, said the people, who asked not to be identified because the discussions are confidential. Chong Hing jumped 7 percent to a record at the close of trading in Hong Kong yesterday, giving it a market value of HK$15.1 billion (US$2.1 billion). The first acquisition of a Hong Kong lender since 2009 would give Yue Xiu a network of 53 branches, including one each in Macau and mainland China. Chong Hing, which named Lau Wai Man as the first chief executive officer from outside the founding Liu family last year, said in August it had been approached by prospective bidders. Two calls and an e-mail to Yue Xiu’s Guangzhou office went
unanswered. Edith Chan, a Hong Kong-based spokeswoman at Chong Hing, declined to comment. Nomura Holdings Inc is working with Yue Xiu on the transaction, while UBS AG is advising Chong Hing. The Liu family controls about 60 percent of the lender, according to exchange filings. Chong Hing said in an October 8 stock exchange filing that its controlling shareholder was in talks with Yue Xiu and “certain other independent third parties”. Hong Kong’s role as an international centre for trade in the yuan has attracted Chinese financial institutions seeking to expand abroad, including China Merchants Bank Co, which paid US$4.7 billion for the Wu family’s Wing Lung Bank Ltd in a deal completed in 2009.
Regulator scrutiny Yue Xiu Group, founded in 1985 by the Guangzhou city government as a trading company for Hong
Kong and Macau, operates in businesses including real estate, securities and transportation infrastructure. It is getting a US$1 billion short- term loan to finance a potential Chong Hing bid. The Hong Kong Monetary Authority announced changes to the city’s banking regulations this month as it sought to tighten oversight of shareholders in local lenders. Last year, Guangzhou Securities Co, a member of Yue Xiu Group, set up a joint venture advisory company with Hang Seng Bank Ltd, Hong Kong’s second-largest local lender. Chong Hing’s network of 51 branches in the city compares with more than 260 at BOC Hong
Kong (Holdings) Ltd, the Bank of China Ltd unit that’s the biggest local lender. Mr Lau replaced Liu Lit Chi, a family member who had spent more than 50 years at the bank. The lender, founded in 1948 as Liu Chong Hing Bank Ltd, dropped the family name in December 2006 to “more accurately reflect the public nature of the bank,” according to its website. Chong Hing has jumped more than 150 percent in Hong Kong trading since November 28, 2012, when Mr Lau’s appointment was announced. The stock trades at 2.02 times historical book value, according to data compiled by Bloomberg. Bloomberg News
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October 24, 2013 April 19, 2013
Greater China Stocks slump as small firms tumble
Big banks clean up books
China’s stocks fell, with the benchmark index for smaller companies capping the biggest two- day loss in 18 months, after moneymarket rates surged. Leshi Internet Information & Technology (Beijing) Co, the operator of online-video portal LeTV.com, plunged by the 10 percent daily limit for a second day. The Shanghai Composite Index slid 1.3 percent to 2,183.11 at the close, while the ChiNext index of smaller companies plunged 2.9 percent. China’s benchmark money-market rate jumped the most since July as the People’s Bank of China refrained from adding funds to markets. The nation’s consumer prices rose the most since February last month and Song Guoqing, an academic adviser to the PBOC, said on Sunday the authority may tighten policy this year if inflation quickens. The CSI 300 Index sank 1.1 percent to 2,418.49. The Hang Seng China Enterprises Index slid 1.3 percent. Trading volumes on the Shanghai index were 3.6 percent below the 30-day average today, according to data compiled by Bloomberg. The Shanghai measure closed at the lowest this month.
Largest lenders triple debt write-offs to brace for defaults of China’s gross domestic product rebounded to 7.8 percent in the third quarter.
Credit growth The nation’s debt-to-GDP ratio, excluding central government and financial debt, widened to 207 percent as credit growth continued to outpace productivity gains, Mike Werner, an analyst at Sanford C. Bernstein & Co in Hong Kong, wrote in an October 21 note to clients. That’s making investors nervous about bad loans rising at banks, he said.
US$3.65 bln
Five largest banks removed of debt in the first six months
Lenders seeking to curb credit risks
Baidu eyes financial services platform Baidu Inc will launch an online wealth management platform next week, as China’s biggest Internet search company moves away from its advertising business to compete against Alibaba Group Holding Ltd and Tencent Holdings Ltd. Baidu said it would launch its Baidu Finance Centre on October 28, offering a product together with China Asset Management Co aimed at producing an annual yield of 8 percent for depositors. China’s finance sector has been dominated by state banks for decades. But now technology companies are using their online expertise and platforms to push financial products developed by finance management firms. Baidu, e-commerce group Alibaba and Internet services company Tencent have pushed to obtain licences to build financial services platforms, offering web users mutual funds, loans and insurance. Alibaba’s online payment affiliate Alipay launched a money market fund with Tianhong Asset Management Co in June. It is the most successful Chinese fund of the year and has attracted 16 million users. Earlier this month, Alipay bought a controlling stake in Tianhong. Alibaba also has partnered with Tencent and Ping An Insurance Group to offer online insurance products.
Chinese App maker plans U.S. IPO Jiubang Digital Technology Co, the Chinese operator of mobile web portal 3g.cn, plans to seek about US$100 million in a U.S. initial public offering, said two people with knowledge of the matter. The company, based in Guangzhou, filed on Tuesday to sell American Depositary Receipts on the New York Stock Exchange under the name Sungy Mobile Ltd. The 3g.cn website offers smartphone applications for devices running on Google Inc’s Android software. Forgame Holdings Ltd, a Guangzhou-based developer of online games, and investors raised US$237 million in a Hong Kong IPO in September, according to data compiled by Bloomberg. Forgame has surged 26 percent from its initial offer price. The filing from Sungy Mobile cited plans to raise about US$80 million. That amount is a placeholder and may change. The company said first-half sales jumped 86 percent to 139.3 million yuan (US$22.9 million). It swung to a profit of 33.5 million yuan from a loss of 7.79 million yuan a year earlier.
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hina’s biggest banks tripled the amount of bad loans written off in the first half, cleaning up their books ahead of what may be a fresh wave of defaults. Industrial & Commercial Bank of China Ltd, the world’s most profitable lender, and its four largest rivals expunged in the first six months 22.1 billion yuan (US$3.65 billion) of debt that couldn’t be collected, up from 7.65 billion yuan a year earlier, filings showed. That didn’t pare first-half profits, which climbed to a record US$76 billion, as provisions were set aside in earlier periods when the loans began souring. Erasing the worst of the bad debts may allow the banks to mitigate a surge in non-performing-loan ratios amid rising defaults in the world’s second-largest economy. China has
eased rules for writing off debt to small businesses since 2010 and policymakers are pushing the lenders to increase risk buffers following an unprecedented credit boom that began in 2009. “The banks and the regulators’ interests are aligned in speeding up write-offs,” said Ma Kunpeng, a Beijing-based analyst at Credit Suisse Founder Securities Ltd. “This prepares them for a rainy day.” The China Banking Regulatory Commission, led by Shang Fulin, urged banks in April to set aside more funds to cover defaults, write off some bad loans and curb dividend payments while earnings are ample to create a buffer in case of an economic downturn. Worries about the slowdown have persisted even after expansion
The five biggest lenders have sought to curb credit risks. By the end of June, they had set aside an average 272 percent of the value of their soured debt as provisions, surpassing the regulator’s 150 percent requirement. Still, a separate threshold that calls for their loan-loss reserves to exceed 2.5 percent of total credit may become a tougher goal following the debt write-offs – which also reduce provision levels – and force the banks to set aside more funds. For ICBC, the loan-loss ratio stood at 2.5 percent at the end of June, while at China Construction Bank Corp, it was 2.63 percent. Not all banks report the figure. Press officers at Beijing-based ICBC and Construction Bank, which is ranked
Yuan rises to strongest in 20 years Currency strength also attributed to dollar supply, politics
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hina’s yuan rose to the strongest level in 20 years after the central bank boosted the currency’s reference rate to a record and U.S. jobs data signalled the Federal Reserve may delay cutting stimulus. The Bloomberg U.S. Dollar Index, which tracks the greenback versus 10 major currencies, fell to the lowest since February yesterday after a U.S. Labor Department report on Tuesday showed employers added fewer jobs last month than economists estimated. The People’s Bank of China raised the yuan’s daily fixing by 0.11 percent to 6.1330 per dollar. The currency is allowed to diverge a maximum 1 percent from the fixing. “The dollar weakness has been factored into this fixing,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “Tapering would be pushed out
further into next year.” The yuan climbed 0.11 percent to 6.0866 per dollar in Shanghai, China Foreign Exchange Trade System prices show. It reached 6.0855 earlier, the strongest level since the government unified the official and market exchange rates at the end of 1993. Twelve-month non-deliverable forwards gained 0.12 percent to 6.1470 per dollar in Hong Kong, data compiled by Bloomberg show. The contracts are trading at a 1 percent discount to the onshore spot rate. Yuan positions at local 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, according to central bank data released this week. China’s holdings of Treasuries fell by US$11.2 billion in August to US$1.268 trillion, the
least since February, as yields on the debt rose for a fourth month. In Hong Kong’s offshore market, the yuan advanced 0.12 percent to 6.0816 per dollar, according to data compiled by Bloomberg. One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, slipped one basis point, or 0.01 percentage point, to 1.23 percent. Bloomberg News
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Greater China second by assets in China, declined to comment. Allowing the banks to use their “gigantic” loan-loss reserves to eliminate the worst of the debt indicates that China is beginning to adopt a “more modern approach” to credit management, said Jim Antos, an analyst at Mizuho Securities Asia Ltd in Hong Kong. Putting the provisions to use – instead of letting them accumulate – may also give investors more confidence in the reported bad-loan figures. “Every other banking sector in the world does write off loans that are totally uncollectible,” Mr Antos said. “Finally, we see evidence that this is happening in China.” The next step should be urging banks to move more quickly in reporting that loans have started to sour, he said.
Souring debts When a borrower starts facing difficulties with repayments and the loan is classified as non-performing, the bank sets aside funds in case the debt becomes unrecoverable. The new provisions pare earnings, though the loan remains on the balance sheet while the bank attempts to collect the funds or sell it at a discount. The last resort is writing off the loan, reducing both the reported bad-debt and provision figures. The five biggest banks – which include Agricultural Bank of China Ltd, Bank of China Ltd and Bank of Communications Co – posted a 22.4 billion yuan increase in non-performing loans during the first half to take the total to 349.9 billion yuan, or 1 percent of total loans, according to data compiled by Bloomberg. They added 83.1 billion yuan to funds set aside as provisions, compared with 72.9 billion yuan in the six months ended June 2012, the data show. “Banks have an incentive to write off NPLs because that will make their loan books look cleaner,” said Tang Yayun, a Northeast Securities Co analyst in Shanghai. “The government is also pushing for a faster process to reflect the real level of bad loans, especially when there’s rising pressure on banks to manage their asset quality in an economic slowdown.” Bloomberg News
Russia grabs oil, gas export deals Rosneft agrees to sell Sinopec US$85 bln of oil over 10 years Denis Dyomkin
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ussian energy companies signed a slew of deals with China on Tuesday, seeking to lock in sales to fund costly production and pipeline projects that will direct exports away from Europe to Asia. The agreements, announced during a visit by Prime Minister Dmitry Medvedev to Beijing, brought Igor Sechin, chief executive of state oil major Rosneft OAO, closer to his goal of exporting more than 1 million barrels per day (bpd) of oil to China. Independent gas producer Novatek OAO secured a long-term contract to supply liquefied natural gas, ahead of the expected lifting of state-controlled Gazprom OAO’s export monopoly on LNG exports next year. Gazprom, the world’s largest gas company, made modest progress towards supplying pipeline gas to China but, after years of talks, will fail to seal a deal before its Russian rivals can compete for exports. Mr Medvedev hailed Rosneft’s outline agreement to pump 200,000 bpd of crude oil over 10 years to China’s Sinopec Group, in a pre-paid deal valued at US$85 billion. “That is a large sum of money for any country – even China,” the prime minister said. “It testifies to the fact that we have reached a higher and completely new level of cooperation,” he said. Speaking after the deals were signed, Chinese Premier Li Keqiang said: “Commercial cooperation is ... extremely important and must not be put off.” The pivot to Asia by the world’s largest energy-producing nation has been hastened by Europe’s economic slump, while the shale energy revolution threatens to close off the
Rosneft supplies may begin in 2014
export route to North America. “It has become very important for Russia to expedite entering the Asia-Pacific, especially the Chinese market,” said Feng Yujun, head of Russian studies at the China Institute of Contemporary International Relations. “It risks losing more opportunities if it keeps dragging its feet.”
Gas matters Analysts said the Rosneft-Sinopec deal, under which supplies are expected to flow from 2014, will increase the pressure on Mr Sechin to develop new fields in Eastern Siberia to increase pipeline exports to China from the current 300,000 bpd. Already in June, Rosneft struck deals to treble long-term supplies to China to 922,000 bpd, raising questions over whether it has the reserves and capital on hand to deliver. A separate deal announced in Beijing said that Rosneft and China
National Petroleum Corp – the main importer of its oil – had agreed on supplies to a planned oil refining joint venture in Tianjin. Rosneft last week signed a deal with CNPC to create an exploration and production venture handily sited to feed in to Russia’s main eastern export artery, the Eastern SiberiaPacific Ocean (ESPO) pipeline. Novatek, Russia’s largest gas independent, agreed to supply 3 million tonnes per year of LNG to CNPC, one of the partners in its US$20 billion project on the Arctic Yamal peninsula. The deal covers a period of 15 years, with pricing linked to the socalled Japanese crude cocktail – a benchmark based on oil prices. Gazprom said, meanwhile, that it had reached an agreement on a price formula to supply 38 billion cubic metres per year of gas by pipeline to China. Yet final price terms were not agreed, meaning talks are likely to run into 2014. Reuters
Traders using LME stock for copper financing trade Increased purchases reducing availability of refined copper in Asia Polly Yam
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hinese investors who buy copper as collateral for shortterm loans have started using London Metal Exchange warehouse stocks for the practice, driving up spot market premiums amid fears of a year-end credit crunch, traders said yesterday. The increased purchases have reduced the availability of refined copper in Asia, boosting prices, they said. Spot refined copper premiums have jumped more than 13 percent from a month earlier to US$170US$200 per tonne this week, depending on origins.
Small Chinese companies have used copper imports for years as a means to obtain finance, but a crackdown on the practice in May came as regulators sought to stamp out fake trades and limit the companies to trading bonded stocks in China. The financing practice has been increasing again, though, as some banks have started allowing companies to use copper stored in LME warehouses and others are only allowing short-term storage in bonded warehouses, traders said. Local banks do not want to stop funding the copper
trading firms as it has genera ted profits for the banks, said a manager at a large Shanghaibased copper importer that has not been affected by the tighter scrutiny. Demand for the financing trade was also increasing because investors expect another credit crunch to raise domestic financing costs before the end of the year, traders said. “People want to prepare some cash because banks tightened the credit prior to the year-end in previous years. Also, copper price differentials have been not bad recently,” a trader at a large Western
copper producer said. He added that demand for financing imports by Chinese investors should stay strong in the coming one to two months. Traders said the practice of using the LME stocks in the trade has further slowed the outflow of copper from the LME registered warehouses. In the copper financing trade, importers open letters of credit (LCs) with banks, paying a portion of the metal’s import costs. The metal is then resold to obtain cash, which can be used until the LCs are repaid in three to six months. The copper can also be
stored in bonded warehouses in China and used as collateral for loans. The premiums paid by buyers over the cash LME copper prices to secure physical metal are still lower than the four-year highs of US$220 seen in July, when price differentials between the LME and Shanghai Futures Exchange were briefly favourable for imports. China’s refined copper imports surged 32 percent in September from the previous month to a 19-month high at 347,305 tonnes, customs data showed on Monday. Reuters
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Greater China
Hong Kong employers feeling the pinch Missing workers signal danger for ageing city Michelle Yun
Economic growth needs to slow down and let the pressure ease on the labour and housing markets Kevin Lai, Daiwa Capital Markets
Construction industry facing tight labour market
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ong Kong restaurant owner Hudson Chang says he can’t lower the bar much further for hiring staff. He warns his employees repeatedly about sending messages on their iPhones during work hours. He pleads with them to be more pleasant to customers. Still, he can’t afford to fire anyone: He can’t be sure of finding a replacement. “We don’t really have much choice,” said Mr Chang, 39, owner of a venue called Indonesian Restaurant 1968 on the outskirts of the central business district. “I’m just looking for people with basic manners. You don’t even need specific qualifications. You just have to be mobile and know how to smile.” Restaurants and construction companies struggling to attract staff may be a warning sign for a city that’s projected by the government to have growth-sapping labour shortages after 2018. Fifty-seven percent of Hong Kong employers are having trouble finding the right staff, the most since 2008, according to a report by ManpowerGroup. The conclusion: Hong Kong is edging closer to the demographic turning point where, like China, its workforce will shrink. “Hong Kong employers report a considerably more pronounced talent shortage than their global peers,” said Lancy Chui, regional managing director of ManpowerGroup, a human resources company based in Milwaukee, Wisconsin. More than 80 percent of employers surveyed by the company said that staff shortages would affect their ability to serve clients and maintain competitiveness.
No shows At a French restaurant in Sheung Wan, an old urban area transformed by a mix of local and western eateries, manager Thierry Perreau complains
KEY POINTS 57 pct of employers having trouble hiring – survey Workforce expected to shrink within a few years Unemployment rate at 3.3 pct in Sept Total job vacancies jumped to 77,858 in June Retail, dining and construction sectors hardest hit
he’s been left cooling his heels by job applicants who never showed up for their interviews. “They didn’t even bother to call,” said Mr Perreau, who has worked in the food and beverage business in the U.S. and France. “I’ve never seen this before.” La Creperie, which describes itself as a family-owned restaurant specialising in crepes from the French province of Bretagne, is offering a salary of as much as HK$12,000 (US$1,548) a month for wait staff and cooks to work nine hours a day, six days a week including weekends, according to Mr Perreau. Hong Kong’s labour force stood at 3.9 million as of August, out of the city’s population of 7.2 million. The unemployment rate was 3.3 percent in September and hasn’t exceeded 4 percent since October 2010. According to the labour force projections released by the Census and Statistics Department last year, the number of Hong Kong’s workers below age 55 will shrink by 60,000 by 2018 as the population dwindles. It estimates there will be a shortfall of 14,000 workers that
year, assuming the city’s economy expands at 4 percent a year. With a higher growth rate, the deficit could reach 163,800 employees.
China syndrome That compares with mainland China, where the working population will peak within a few years, and labour shortages will appear between 2020 and 2025, according to a working paper published by the International Monetary Fund in January. While the potential shortage highlighted by the Hong Kong government is years away, employers in retail, dining, and construction are already lamenting difficulties in attracting workers. Total job vacancies jumped 10 percent to 77,858 in June from a year earlier, according to a government report last month. Unfilled jobs at construction sites surged 74 percent to 1,025 in the month. “The whole construction industry has faced a tight labour market for the past few years,” said Raymond Chan, president of the Hong Kong Institution of Engineers. “It’s the case for the professional engineers, technicians, and most seriously for the actual workers on construction sites.”
Growing old The supply of workers will become even more constrained as Hong Kong raises infrastructure spending, estimated to exceed HK$70 billion annually over the next few years. Ten major projects that the government announced in 2007 include an US$8 billion railway that will connect Guangzhou on the mainland directly to Hong Kong and a 29.6-kilometre bridge linking the city to Macau and Zhuhai. The goals are to spur visitors, who already reached a record of 48.6 million last year, create jobs
and deepen economic ties with the mainland. Younger people are shunning the construction industry because of its tough manual labour and irregularity in wage payments, said Lam Chun Shun, a director at Wah Fai Engineering Co, which does metal and glass work. He says the average age of his workers is more than 45 years. “Salary is not really an issue as it’s pretty good now, but still no one wants to enter the industry,” he said. The shortage is especially prominent in steel reinforcing, scaffolding, and nail-plating, where workers with the necessary skills are generally over 50 years old. Ageing labourers mean the speed of completing projects is slower, he said. Financial Secretary John Tsang said in February the proportion of people age 65 and older reached 14 percent last year and is expected to account for 30 percent by 2041. There will be a deficit of 66,600 workers with upper secondary education in 2018 as baby boomers leave the workforce and employers raise their expectations for hiring, the government’s 2012 report said. Hong Kong is forecast to have a shortfall of 32,600 workers at undergraduate-degree level as the economy becomes “knowledgebased,” the government says. Leung Chun Ying, the city’s chief executive, said in January the government may have to consider allowing the import of construction workers if domestic shortages persist, a discussion that has pitted industry groups against trade unions. “If you import workers, presumably because you can pay them lower wages, where would they live?” asked Kevin Lai, an economist at Daiwa Capital Markets Hong Kong Ltd. “Basically, Hong Kong’s economy is already at full capacity. Economic growth needs to slow down and let the pressure ease on the labour and housing markets.” Bloomberg News
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Asia
MCX panel to run top India commodity bourse As probe into the failure of a spot-trading platform widens Rajhkumar K Shaaw and Swansy Afonso
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he Multi Commodity Exchange of India Ltd formed a panel to run the nation’s biggest platform for commodities as authorities widened a probe into trading practices at a related spot bourse. Pravir Vohra and G. Ananth Raman have been appointed as independent directors to the board, Multi Commodity, also known as MCX, said in an exchange filing yesterday. Parveen Kumar Singhal, a deputy managing director, will act as the chief executive until a managing director is named, it said. MCX’s chief executive Shreekant Javalgekar, its chairman, and three directors quit over the past month after the commodities regulator tightened rules for selecting directors on futures exchanges. Investors have been calling for the resignation of MCX founder and vice chairman Jignesh Shah as authorities widened an investigation into the failure of a spot-trading platform backed by him. “Jignesh Shah is just buying time,” Kishor Ostwal, managing director at CNI Research Ltd, said in an interview.
MCX controls about 90 pct of India’s commodities futures market
“There is a strong possibility that MCX may change hands and the current promoters may lose control.” Shares of MCX, which controls about 90 percent of the nation’s US$2.8 trillion commodities futures market, have dropped 26 percent since July 31 when the National Spot Exchange Ltd suspended trading in most commodities. Financial Technologies (India)
Ltd, which owns 26 percent of MCX, has plunged 70 percent in the period. The NSEL broke rules by permitting the sale of goods traders didn’t keep in its warehouses, according to the regulator.
Police probe Mr Shah’s business began floundering as the payment crisis
and trading irregularities at the now defunct NSEL came to light. Mr Shah this month quit the board of the MCX-Stock Exchange Ltd, India’s newest equity bourse backed by him, after the Mumbai police began investigating the NSEL. “The entire episode has been good for the commodity market as it will mean stronger regulation and better structure in the longer term,” said Kishore Narne, head of commodity and currency at Motilal Oswal Commodity Broker Ltd. “It may take some time to happen and there may be some pain for the market over the next six months.” The Economic Offences Wing of the Mumbai police has arrested NSEL’s former chief executive Anjani Sinha and two other senior officials after an investors’ group complained the executives diverted funds and failed to settle about 56 billion rupees (US$907 million) in dues to investors. The bourse has failed to meet most of the payments target set under the supervision of the regulator. The police on Tuesday arrested Nilesh Patel, the managing director of NK Proteins Ltd, the top defaulter on the NSEL, according to Rajvardhan, additional commissioner of police at the economic offences wing. NSEL and Financial Technologies Group will co-operate with the authorities in the probe, the exchange said in a statement on September 30. The selection of a new chief executive for MCX will need to be approved by the regulator, Ramesh Abhishek, chairman of the Forward Markets Commission, said in a text message yesterday. Bloomberg News
Sri Lanka puts approvals for casinos on hold Packer’s Crown resort faces delay after tax changes
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ri Lanka has postponed final approvals for two casinos, delaying the investment by Melco Crown Entertainment Ltd co-chairman James Packer. Opposition by Buddhist religious leaders and some political parties in Sri Lanka led the government to announce late on Tuesday it will alter tax concessions granted to Mr Packer’s Crown Ltd for a US$400 million hotel resort that will include a casino. The changes could take at least one month and likely will delay Mr Packer’s mixeddevelopment investment project for the second time this year. Lakshman Yapa Abeywardena, Investment Promotion minister, said the decision to alter the deal’s terms came after various opposition politicians said the Australian tycoon was getting concessions not given to local entrepreneurs and Buddhist leaders said the casino could be detrimental to Sri Lanka’s culture. “We’ll amend the bill” and have new terms by November 21, Mr Abeywardena told
reporters. “We will describe how we are going to grant tax concessions, like if it is from the gross revenue or net revenue. We will base the tax on the gross revenue and not on the net profit. The tax concession is on investment and not on the hotel operation. We will clarify all these in the new gazette.” The ministry over the weekend released photos of Mr Packer meeting officials in Sri Lanka and Mr Abeywardena said he had asked Mr Packer to invest more in the country. “He said he was willing to bring more investments. He told us he will consider some more investments along with this investment, but we have clearly told him we would not allow investments for more casinos,” the minister added.
Parliament vote Crown last week confirmed that it was in detailed discussions with the Sri Lankan government and potential joint venture partners regarding the development of a 5-star
Packer urged to invest more but not in casinos
integrated resort and the total project cost would be approximately US$400 million. The deal has already been delayed once after the government asked Lake Leisure Holdings, the joint venture between Crown Ltd and its local partner, Rank Entertainment Holdings Pvt Ltd, to change its construction plans. Sri Lanka is banking on high-end casinos to attract high-rollers and boost tourist arrivals to 2.5 million by 2016 from the current level of about a million tourists a year.
We will base the tax on the gross revenue and not on the net profit Lakshman Yapa Abeywardena, Investment Promotion minister
Mr Packer’s deal has been already approved by the island nation’s cabinet and is expected to easily win approval from the parliament because President Mahinda Rajapaksa’s ruling coalition has more than a two‑thirds majority. Mr Packer, one of Australia’s richest men, has been in talks since February with the government over hotel and entertainment investment options as he expands his global gambling business that includes casinos in Australia, Macau, Britain and the United States. Reuters
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Asia Sy faces counterbid for Manila Bay estate
Australia inflation jumps, dashes
Ayala Land Inc, the largest Philippine builder by market value, plans to counter billionaire Henry Sy’s offer to reclaim prime land along Manila Bay for development. Ayala Land has asked the local government for an extension of the November 4 deadline to submit competing bids, the Manila-based builder said in an e-mailed statement yesterday. “This will confirm our interest to submit a counter proposal,” Ayala Land said. Mr Sy’s SM Land Inc, rivaling Ayala Land as the nation’s biggest developer, made an unsolicited offer of 54.5 billion pesos (US$1.3 billion) to the Pasay City government this month for the 300-hectare (3 square kilometres) reclamation project. The offer comes amid scarcity of large plots for development in the area comprising the capital and its neighbouring cities, known as Metropolitan Manila, which accounts for 36 percent of the US$250 billion Philippine economy. “It is a strategic move on the part of Ayala Land to counter the developments of SM,” Jomar Lacson, an analyst at Manila-based Campos Lanuza & Co, said. “This project can further diversify Ayala Land’s products and market.”
Inflation surprise highlights rising price pressures in Asia
M&L Trust ponders Australia listing M&L Hospitality Trusts, the owner of Australia’s biggest hotel, may seek a listing in the country after abandoning its initial stock sale in Singapore last year. The trust, with US$1 billion of hotels in five nations, may add more properties before its next listing attempt, said Michael Kum, the chairman of the Singapore-based M&L. The owner of the Four Points by Sheraton overlooking Sydney’s Darling Harbour dropped plans to raise as much as S$463 million (US$373 million) in April 2012 because demand was weaker than targeted, two people with knowledge of the matter said at the time. “Whenever the market recovers, we’ll look at a listing seriously, whether it’s Australia or Singapore,” Mr Kum said in an interview in Singapore. “We’ll continue to look at Australia, at Brisbane, Perth” for acquisitions, he said of the state capitals of Queensland and Western Australia. Capital values of hotels in Australian city centres are expected to rise 2.7 percent over the next two years, the strongest growth of any commercial property asset class, according to a second-quarter survey of real estate professionals by National Australia Bank Ltd.
Axiata plans IPO for telco tower assets Axiata Group Bhd, Malaysia’s largest mobilephone operator by market value, plans to undertake an initial public offering of its telecom towers within two years, its group chief financial officer said. The IPO would include its assets in Asian markets such as Bangladesh and Sri Lanka, James Maclaurin said in an interview in Kuala Lumpur. Mr Maclaurin will vacate his current post at the end of December to become chief executive of a new business unit called e.co that will oversee its tower interests, Axiata said separately in a statement. With an US$18.6 billion market capitalisation, the group is emerging Asia’s third-largest mobile-phone operator by value, according to data compiled by Bloomberg, trailing Thailand’s Advanced Indo Service Pcl and India’s Bharti Airtel Ltd. “This IPO would encompass Axiata’s tower assets across all our footprint companies,” Mr Maclaurin said. “It’s more a question of improving our operational performance.” Axiata is planning a US$500 million share sale, two people with knowledge of the matter said in August. Mr Maclaurin declined to say how much might be raised.
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ustralia’s consumer prices gained more than economists forecast last quarter, sending the local currency higher as money markets pared bets the central bank will extend its two-year easing of monetary policy this year. The trimmed mean gauge of core prices rose 0.7 percent from the previous quarter, the Bureau of Statistics said in Sydney yesterday, compared with the median forecast of 25 economists for a 0.6 percent gain. The consumer price index gained 1.2 percent from the previous three months, compared with economists forecast for a 0.8 percent increase. Reserve Bank of Australia Governor Glenn Stevens reduced borrowing costs eight times – for a total of 2.25 percentage points – from November 2011 to a record low 2.5 percent in August. With annual price rises within its 2 percent to 3 percent target, he’s seeking to boost job-intensive industries such as construction as a mining investment boom crests. “It’s still a story that inflation is subdued but perhaps it’s not so much of a non-issue as markets have thought,” said Besa Deda, chief economist at St. George Bank in Sydney. “It makes the hurdle for
Transport prices in Australia rose 2.4 pct in the third quarter
Indonesia home prices jump in Q3 Property demand bucks higher rates
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ndonesia’s most aggressive monetary tightening since 2005 is set to slow economic growth without denting soaring property demand in the world’s fourth-most populous nation. A young population, elevated inflation and property-price gains that outpace interest rates are spurring real-estate sales from Jakarta to Manado. Home prices in the third quarter probably rose 14.6 percent from a year earlier, according to a Bank Indonesia survey, while the Indonesian Real Estate Association predicts housing sales will climb more than 50 percent this year. “Indonesia has a huge population, that’s a potential market for us,” said Setyo Maharso, chairman of the Indonesian real estate association, which predicts 2013 property sales will rise to 400,000 units from 260,000 last year. “For our buyers, as long as they have the ability to pay monthly instalments, sales will keep increasing till the year end.” With foreigners restricted from owning property in Southeast Asia’s biggest economy, Indonesia
is confronting a surge in local demand rather than the capital inflows that spurred record home prices in neighbouring Singapore and Hong Kong. After the central bank imposed stricter loan-to-value ratios for mortgages, persistent price gains may prompt the government to raise some real-estate taxes, PT Bank Danamon Indonesia said. “By giving a luxury tax, especially for high-end properties, it would help to curb home-price increases,” said Anton Gunawan, chief economist at Bank Danamon. “Returns from property remain high as there’s an expectation that home prices are still rising.” Inflation eased to 8.4 percent in September after reaching a fouryear high of 8.8 percent in August. Bank Indonesia forecasts inflation of 9 percent to 9.8 percent at the end of the year and has already raised its benchmark interest rate by 1.5 percentage points since early June to 7.25 percent. “Even though the BI rate has been raised, mortgage rates won’t rise as high as surging property prices in certain areas,” said Anton Sitorus,
head of research at the Indonesian unit of Jones Lang LaSalle Inc. He expects mortgage rates to climb to an average of less than 11 percent, and estimates home prices will jump 20 percent to 30 percent a year in certain areas across Indonesia. That compares with a return of 5.25 percent for a two-year term deposit at PT Bank Mandiri, the country’s largest lender by assets, and a 7.3 percent yield for Indonesia’s 10-year government bonds. The property price gains reflect the resilience of domestic demand at a time when foreign investors have been selling the rupiah on risks posed by the current-account deficit. The central bank estimates residential property prices in the third quarter rose the fastest in Manado, a tourist destination for nearby coral reefs on Sulawesi island, with gains of 34 percent. Prices may have jumped 25 percent in Surabaya, the country’s second-largest city, and 15 percent in the capital Jakarta and surrounding satellite cities such as Tangerang and Bekasi, according to Bank Indonesia data. Bloomberg News
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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October 2013 April 19,24, 2013
Asia
rate cut hopes an RBA cut a little higher and our expectation is that they won’t cut any further, but will keep rates on hold for longer.” Non-tradables, or domestic inflation for goods and services that aren’t imported such as fast food and utilities, climbed 1.1 percent from the previous quarter, the report showed. Tradables, such as imported electrical goods and clothing, rose 1.2 percent in the biggest increase since the second quarter of 2011. Australia’s dollar declined 12 percent in the three months through June.
Stronger Aussie The currency, which has shown renewed strength since the U.S. Federal Reserve unexpectedly delayed tapering, rose. Investors see an 85 percent chance the RBA will hold rates through year-end, up from 77 percent odds yesterday, data compiled by Bloomberg from swaps contracts show. Yesterday’s report showed transport prices rose 2.4 percent in the third quarter from three months earlier as fuel prices gained. Housing costs advanced 2 percent as property rates and charges increased. The central bank aims for
inflation of between 2 percent and 3 percent on average. The CPI climbed 2.2 percent in the third quarter from a year earlier, compared with economists’ forecast for a 1.8 percent increase. The RBA is trying to rebalance the economy as resource investment wanes in the nation’s north and west, and stimulate growth in manufacturing, residential construction and retail in the south and east. “The likelihood of the RBA cutting the cash rate below the record-low 2.5 percent seems remote,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said before the report. “Interest rate-sensitive sectors are responding to the large pipeline of stimulus filtering through the economy, and further gains are expected in coming months.” Australia’s data came a week after neighbouring New Zealand, India and China all reported higherthan-expected inflation. Singapore’s consumer prices in September rose 1.6 percent from a year earlier, below forecasts, but the central bank warned that core inflation was expected to rise over the next few quarters.
Hockey injects A$8.8 bln to RBA Australian Treasurer Joe Hockey will inject A$8.8 billion (US$8.5 billion) into the central bank’s depleted reserve fund, increasing its flexibility to tackle renewed currency strength. The transfer will bring the balance of the Reserve Bank of Australia’s main capital buffer equal to 15 percent of its assets at risk, a level deemed by the RBA board as sufficient to place it in a strong financial position, Mr Hockey said yesterday in a statement. It currently stands at 3.8 percent. “This injection of funds puts beyond any doubt the Reserve Bank’s continued ability to perform its core monetary policy and foreign exchange functions, in an environment of heightened financial market volatility,” Mr Hockey said. The RBA’s capital buffer has been depleted by the sustained strength of the Australian dollar, which weighs on the local value of its foreign assets. The reserve fund stood at A$1.9 billion, Governor Glenn Stevens told a parliamentary panel in Canberra on February 22. Mr Hockey’s statement shows the balance at A$2.5 billion.
Bloomberg News/Reuters
S. Korea election meddling scandal threatens Park
Japan mulls plan for single operator to run all reactors
Ruling party has strenuously denied any involvement
The country’s nine regional utilities and two wholesalers would own the company
Park Chan-kyong
A
simmering row over alleged election meddling by South Korea’s domestic spy service is threatening to boil over into a fullblown scandal that could seriously scald President Park Geun-hye’s administration. An investigation into what initially seemed the work of a couple of maverick National Intelligence Service (NIS) agents, has now become a wider probe into a possibly coordinated online smear campaign against the opposition candidate in last year’s presidential poll. In the latest development, federal investigators questioned senior commanders at the Defence Ministry’s cyber warfare headquarters over possible military involvement. The probe has focused on the origin of multiple online posts that denounced opposition presidential candidate Moon Jae-in as a North Korean sympathiser, while extolling the virtues of ruling party candidate Ms Park. But allegations that the government has sought to suppress investigations into the scandal have been reinforced by a rift in the public prosecutor’s office. On Monday, senior prosecutor Yun Seok-yeol, who had led the probe into the NIS until his dismissal last week, told a parliamentary
J committee hearing that he had come under pressure to soft-pedal the investigation. Mr Yun was dismissed from the case after he arrested three NIS agents suspected of writing posts as part of the smear campaign. He was accused of not following protocol, but Mr Yun suggested the real reason was the progress his probe was making. While the number of anti-Moon and pro-Park posts emanating from the NIS had initially been put at less than 100, Mr Yun said his team had found that agents had posted nearly 60,000 incriminating Twitter messages. The affair has already resulted in the arrest of former National Intelligence Service chief Won Sei-hoon, and opposition lawmakers believe other senior officials were involved. “Democracy is based on fair elections. Something that should not happen has happened,” said Seoul National University Political Science professor Kang Won-taek. “Unless addressed properly, this issue will damage Park and the ruling party, especially during next year’s local elections,” Mr Kang told AFP. The opposition has made it clear that it is not demanding a re-run of the presidential election, but it does want to see heads roll and efforts made at institutional reform. AFP
apan’s government is discussing a radical overhaul of its nuclear power sector, the world’s third largest, that would combine the nation’s 50 operating reactors into a single company to rebuild an industry that’s been effectively halted by the March 2011 Fukushima disaster. The company would be owned by Japan’s nine regional utilities, and two wholesalers Japan Atomic Power Co and Electric Power Development Co, while the government and local reactor makers would give financial and technical support, Taku Yamamoto, who chairs the ruling Liberal Democratic Party’s energy committee, said in an interview. Part of the profit from sales of the new company’s electricity would be funnelled toward the clean-up of Tokyo Electric Power Co’s wrecked Fukushima atomic station and victim compensation, which combined may cost more than 11 trillion yen (US$112 billion). The plan would keep Tokyo Electric alive to shoulder Fukushima costs and avert any blackouts in Tokyo, the host of the 2020 Olympics. “The plan is based on Tepco’s profits covering Fukushima costs without taxpayers’ money and to increase the government’s role in the nuclear industry,” said Mr Yamamoto. “Who’s going to like a bankruptcy of Tepco? The company has to go on working hard for the Fukushima disaster until it dies.”
Setting up a comprehensive nuclear-management company should help Japan expand its exports of reactors and operation skills as domestic electricity demand slows, Mr Yamamoto said. Tsuyoshi Numajiri, a spokesman for Tokyo Electric which is also known as Tepco, declined to comment on lawmakers’ discussions to spin off nuclear operations at utilities, saying such plans are subject to change. Discussions of such a dramatic overhaul of the nuclear industry signal growing momentum in the government to restructure an electricity supply model that helped rebuild Japan’s economy. All of the 50 reactors are currently shut after Kansai Electric Power Co. shut No. 3 and No. 4 reactors at its Ohi plant in western Japan in September for regular safety checks. Bloomberg News
14 14
October 24, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 61.0
average 60.166
Max 58.5
Min 59.7
average 57.643
92.60
29.00
60.74
92.18
28.82
60.48
91.76
28.64
60.22
91.34
28.46
59.96
90.92
28.28
59.70
Last 59.8
Min 56.9
61.00
average 91.570
PRICE
Min 28.15
28.10
Last 28.25
26.02
30.26
57.86
25.84
30.12
57.54
25.66
29.98
57.22
25.48
29.84
Max 26.15
average 25.637
DAY %
YTD %
(H) 52W
Min 25.30
Last 25.35
(L) 52W
-0.864699898
4.369711899
109.6999969
85.51999664
BRENT CRUDE FUTR Dec13
109.21
-0.691097572
4.198072703
114.4399948
95.95999908
GASOLINE RBOB FUT Nov13
260.96
-0.271334123
1.627852636
293.6000109
243.3699846
GAS OIL FUT (ICE) Dec13
924.5
-0.61811341
2.551303383
973
837
NATURAL GAS FUTR Nov13
3.591
0.279251606
-4.112149533
4.59400034
3.281000137
297.65
-0.693957895
-0.384872825
322.3500013
276.8100023
Gold Spot $/Oz
1332.26
1.3974
-19.9584
1754.46
1180.57
Silver Spot $/Oz
22.617
2.233
-24.8854
34.3838
18.2208
Platinum Spot $/Oz
1434.4
0.3442
-5.4917
1742.8
1294.18
Palladium Spot $/Oz
NY Harb ULSD Fut Nov13
745.35
-0.0603
6.5303
786.5
587.4
LME ALUMINUM 3MO ($)
1879
1.567567568
-9.358417752
2184
1758
LME COPPER 3MO ($)
7332
1.214798454
-7.552641533
8346
6602 1811.75
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov13
25.30
Dec13
1962
1.134020619
-5.673076923
2230
14850
3.376261747
-12.95427902
18770
13205
15.25
-0.228982663
-1.070385988
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 30.40
average 29.979
Min 29.70
Last 29.75
29.70
0.798630918
-26.34431013
647
432
705.75
0.713521227
-14.01157478
913
635.5
SOYBEAN FUTURE Jan14
1299.5
0.154142582
-0.725744843
1406
1169
COFFEE 'C' FUTURE Dec13
111.9
-0.044662796
-28.47555129
179.3999939
111.8499985
NAME
SUGAR #11 (WORLD) Mar14
19.34
-0.565552699
-6.02526725
20.71999931
16.69999886
ARISTOCRAT LEISU
COTTON NO.2 FUTR Dec13
82.65
0.242571255
4.965709931
93.72000122
74.34999847
CROWN LTD
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15467.66
0.4902483
18.03644
15709.58
12471.49
NASDAQ COMPOSITE INDEX
US
3929.566
0.2427776
30.13903
3947.672
2810.8
FTSE 100 INDEX
GB
6665.98
-0.4432722
13.02466
6875.62
5605.589844
DAX INDEX
GE
8905.3
-0.4711952
16.98428
8987.63
6950.53
NIKKEI 225
JN
14426.05
-1.951982
38.77634
15942.6
8619.45
HANG SENG INDEX
HK
22999.95
-1.355465
1.514016
23944.74
19426.35938
CSI 300 INDEX
CH
2418.491
-1.120246
-4.140425
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8393.62
-0.2928155
9.015133
8459.3
7050.05
KOSPI INDEX
SK
2035.75
-0.9907009
1.937856
2063.28
1770.53
S&P/ASX 200 INDEX
YTD %
(H) 52W
(L) 52W
0.963 1.614 0.8952 1.3755 97.32 7.9854 7.7529 6.0859 61.58 31.178 1.2395 29.403 43.11 10864 93.718 1.2314 0.85224 8.3727 10.9859 133.87 1.03
-0.4137 0.0434 0.916 0.5997 1.0995 -0.0025 -0.0039 0.1216 0.1137 -0.0577 0.0807 0.0918 0.1392 3.9304 1.5205 0.3143 -0.5527 -0.504 -0.6153 0.4855 0
-7.2076 -0.2226 2.2565 4.2835 -11.529 -0.0276 -0.0297 2.3776 -10.6934 -1.918 -1.4603 -1.2584 -4.8829 -9.8582 -4.6853 -1.9425 -4.3204 -1.8536 -4.1462 -15.164 -0.0097
1.0599 1.6381 0.9839 1.3793 103.74 8.0111 7.7664 6.2566 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 11.014 135.51 1.032
0.8848 1.4814 0.894 1.2662 79.08 7.9818 7.7498 6.0816 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
4.74
-1.659751
16.66
-1.826753
VOLUME CRNCY
50.47619
5.02
2.56
1905300
56.13871
17.215
9.3
1871716
AMAX HOLDINGS LT
1.23
-1.6
-12.14286
1.72
0.75
2245925
25
-0.7936508
3.734438
28
22.85
10355332
0.435
0
64.15095
0.56
0.232
244000
6.92
-2.535211
15.52588
7.24
4.1
50000
CHINA OVERSEAS
23.65
-1.663202
2.380951
25.6
17.7
20926958
CHINESE ESTATES
21.4
-1.609195
90.29753
22.25
9.543
78000
CHOW TAI FOOK JE
12.3
-1.6
-1.125399
13.4
7.44
2064500 3420136
CHEUK NANG HLDGS
COUNTRY
DAY %
BOC HONG KONG HO CENTURY LEGEND
World Stock Markets - Indices
PRICE
Macau Related Stocks
441.75
WHEAT FUTURE(CBT) Dec13
NAME
average 28.468
58.18
97.45
CORN FUTURE
Max 29.00
30.40
WTI CRUDE FUTURE Dec13
LME ZINC
90.50
Currency Exchange Rates
NAME
METALS
Last 90.55
26.20
Commodities ENERGY
Min 90.55
58.50
56.90
Last 57.05
Max 92.55
EMPEROR ENTERTAI
4.1
0.9852217
116.9312
4.66
1.43
FUTURE BRIGHT
2.86
1.41844
135.9685
2.98
1.103
2438000
GALAXY ENTERTAIN
59.8
0.08368201
97.03459
63.75
24.35
20409853
HANG SENG BK
128.7
0.7042254
8.424603
132.8
110.6
2006888
HOPEWELL HLDGS
25.95
0.1930502
-21.95489
35.3
23.2
3421240
HSBC HLDGS PLC
84.6
-0.1471944
4.059037
90.7
73.55
12243192
HUTCHISON TELE H
3.47
-0.5730659
-2.528088
4.66
3.12
1228040
LUK FOOK HLDGS I
27.55
-1.957295
12.90984
30.05
16.88
1562500
MELCO INTL DEVEL
24.6
2.713987
173.03
25.75
7.32
6092060
28.25
0.5338078
112.7535
30
12.236
6456200
MGM CHINA HOLDIN
3.05
-2.555911
-17.56757
4.6
2.68
6330000
NEPTUNE GROUP
MIDLAND HOLDINGS
0.365
17.74194
140.1316
0.385
0.131
864943000
NEW WORLD DEV
10.96
0.3663004
-8.818639
15.12
9.98
28625941
SANDS CHINA LTD
57.05
0.4401408
68.04123
60.5
28.25
19449067
AU
5356.096
-0.3173002
15.21087
5402.4
4334.3
ID
4554.928
0.9347973
5.519075
5251.296
3837.735
FTSE Bursa Malaysia KLCI
MA
1816.3
0.705264
7.540194
1826.22
1590.67
SHUN HO RESOURCE
1.67
0
19.28572
1.92
1.19
1000
NZX ALL INDEX
NZ
1026.56
1.011035
16.38304
1026.744
851.971
SHUN TAK HOLDING
4.58
-1.927195
9.307874
4.8
3.02
7452270
PHILIPPINES ALL SHARE IX
PH
3997.37
0.4094377
8.066822
4571.4
3440.12
SJM HOLDINGS LTD
25.35
-0.9765625
42.83575
28
16.486
15989300
10.3
-1.340996
-26.84659
16.22
9.97
1604430
29.75
-1.3267
42.00477
32.6
19
14106141
JAKARTA COMPOSITE INDEX
SMARTONE TELECOM
Euromoney Dragon 300 Index Sin
SI
628.75
0.8
1.23
NA
NA
STOCK EXCH OF THAI INDEX
TH
1457.36
0.608889
4.700662
1649.77
1260.08
ASIA ENTERTAINME
3.96
0
#N/A N/A
#N/A N/A
#N/A N/A
69409
HO CHI MINH STOCK INDEX
VN
504.05
0.6952075
21.83066
533.15
372.39
BALLY TECHNOLOGI
69.94
0.8653014
56.43033
76.3
43.16
388171
Laos Composite Index
LO
1308.36
0
7.704336
1455.82
1047.94
BOC HONG KONG HO
3.29
-0.3030303
7.166126
3.6
2.99
17413
GALAXY ENTERTAIN
7.74
-4.444444
94.96222
8.11
3.13
90967
INTL GAME TECH
18.49
-0.2696872
30.48694
21.2
12.37
3563305
JONES LANG LASAL
85.69
0.4454343
2.08482
101.46
72.56
272893
LAS VEGAS SANDS
72.85
-0.518913
57.82062
73.49
37.8353
8149324 5314604
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN MACAU LTD
MELCO CROWN-ADR
34.9
-3.297312
107.2447
37
13.43
MGM CHINA HOLDIN
3.86
0
120.5347
3.88
1.6651
3000
MGM RESORTS INTE
20.57
-0.9629273
76.71821
20.98
9.15
9893936
SHFL ENTERTAINME
23.19
0.1295337
59.93103
23.2101
12.35
1037812
SJM HOLDINGS LTD
3.34
-6.703911
46.64456
3.6
2.0804
33454
169.99
-1.813666
51.11566
173.38
103.34
1727127
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AIA GROUP LTD
39.6
-0.7518797
27838257
CHINA UNICOM HON
12.02
-4.754358
35312811
ALUMINUM CORP-H
3.08
3.010033
53137480
CITIC PACIFIC
10.88
-1.090909
5204340
BANK OF CHINA-H
3.53
-1.944444
324334234
CLP HLDGS LTD
61.6
-0.4042037
5640236
5.6
-1.926445
23848759
CNOOC LTD
15.4
-3.02267
91120924
BANK EAST ASIA
32.75
-0.152439
1525762
COSCO PAC LTD
11.18
-0.8865248
3814836
SWIRE PACIFIC-A
BELLE INTERNATIO
10.64
-2.025783
17534768
ESPRIT HLDGS
13.08
1.23839
6878808
25
-0.7936508
10355332
HANG LUNG PROPER
25.55
0.1960784
BANK OF COMMUN-H
BOC HONG KONG HO
NAME
NAME
PRICE
DAY %
66.4
0.3021148
2585697
SANDS CHINA LTD
57.05
0.4401408
19449067
SINO LAND CO
11.18
0
8551103
SUN HUNG KAI PRO
101.6
1.397206
7888152
90.2
-0.933553
1822710
TENCENT HOLDINGS
430.2
-2.04918
3088742
4490854
TINGYI HLDG CO
21.25
1.918465
5912840
POWER ASSETS HOL
VOLUME
CATHAY PAC AIR
15.48
1.308901
5695894
HANG SENG BK
128.7
0.7042254
2006888
WANT WANT CHINA
11.38
-1.386482
6792283
CHEUNG KONG
122.4
-0.8906883
3372095
HENDERSON LAND D
46.45
0.4324324
5109900
WHARF HLDG
67.65
-2.591793
5338206
CHINA COAL ENE-H
4.84
0.2070393
63979937
CHINA CONST BA-H
5.87
-2.329451
324065179
HENGAN INTL
91
-0.3285871
1577430
HONG KG CHINA GS
18.16
0.1102536
9483003
HONG KONG EXCHNG
125.1
-0.6354249
2099828
HSBC HLDGS PLC
84.6
-0.1471944
12243192
40373973
HUTCHISON WHAMPO
96.6
-0.8213552
6478077
20926958
IND & COMM BK-H
5.28
-2.222222
244261463
-1.612903
69563099
LI & FUNG LTD
10.72
-1.651376
13610758
26.65
-2.91439
1611043
30
0
2087615
CHINA LIFE INS-H
20.05
-1.715686
26089019
CHINA MERCHANT
27.35
-3.697183
4524772
CHINA MOBILE
80.15
-2.434571
CHINA OVERSEAS
23.65
-1.663202
CHINA PETROLEU-H
6.1
CHINA RES ENTERP
MTR CORP
CHINA RES LAND
21.8
-2.895323
8491107
NEW WORLD DEV
10.96
0.3663004
28625941
CHINA RES POWER
20.2
-2.650602
6009343
PETROCHINA CO-H
8.94
-1.758242
120085282
CHINA SHENHUA-H
24.35
-1.814516
20715245
PING AN INSURA-H
57.95
-0.2581756
16788994
MOVERS
12
36
23495
INDEX 22999.95 HIGH
23494.37
LOW
22998.47
2
52W (H) 23944.74 (L) 19426.35938
22998
21-October
23-October
15 15
October 2013 April 19,24, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Myanmar Times An internationally backed export support programme will be implemented next month to help reduce the country’s trade deficit, the Myanmar’s Ministry of Commerce said. The programme will follow completion this month of the National Export Strategy Workshop called to discuss the export deficit Myanmar has run up over the past two years. Norway, Germany, Japan and China will provide financial and technical assistance, said commerce ministry spokesperson U Win Myint.
The Star Cybercrime involving fraud is at an alarming state with the value of cybercrime this year expected to surpass the 1 billion ringgits (US$317 million) recorded in 2012. Cyber Security Malaysia chief technology officer Solahuddin Shamsuddin said cybercrime had reached 1 billion ringgits in the first six months of the year. “The fraud cases mostly involved criminals ‘fishing’ individuals to give out their banking details,” he said. “The victims are mostly individuals that believe that the link provided in their e-mails will direct them to the real banking sites.
Straits Times The complaints smaller firms have long made about the difficulty of securing credit seem to be reflected in the more modest borrowing figures recorded last year. The value of loans made to small and medium-sized enterprises (SMEs) in the 12 months to June 30 increased by 9 percent, down from a 13 percent rise the previous year and an 18 percent jump in 2011. The figures come from an annual survey of major lenders conducted by the Monetary Authority of Singapore (MAS).
Inquirer Business Philippine total exports may grow by a much slower pace this year than that of 2012, when export receipts of US$60 billion were posted, an industry official said. The growth of merchandise exports alone may be flat, compared with the US$51.994 billion recorded last year, said Sergio R. Ortiz-Luis Jr., president of Philippine Exporters Confederation Inc. “We have already accepted the fact that we will not meet our [export] target, but we are hoping [we’ll end the year with a] positive growth. From a projection of 10 percent, we are hoping to book a 3-4 percent growth at least,” he said.
Forget free trade. Try free immigration Pankaj Mishra
Author of “From the Ruins of Empire: The Revolt Against the West and the Remaking of Asia” and a Bloomberg View columnist
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undreds of destitute migrants from Africa and the Middle East died in two shipwrecks this month while attempting to reach the shores of Italy. In the meantime, wealthy Chinese, Indians, Russians and South Africans continue to glide serenely to their favoured European destinations as they flee their increasingly unstable countries. Nations damaged by the euro crisis – Cyprus, Ireland, Latvia, Malta, Portugal, Spain – seem to have entered a race to sell the right to reside in Europe. Malta offers the cheapest path to eventual citizenship: just 260,000 euros (US$358,288). The small conditions – no criminal record, for instance – are hardly onerous. Even U.K. Chancellor of the Exchequer George Osborne promised, while visiting Beijing last week with London Mayor Boris Johnson, to expedite visas for China’s businessmen and tourists, and to open all doors to Chinese students. This eager courtship by Western politicians and businessmen of deep-pocketed and welleducated foreigners can mislead one into thinking that globalisation encourages free and open movements of peoples. In actuality, the shutters are coming down, and walls are going up, everywhere.
Fresh hurdles Even Indian software engineers face fresh hurdles to entering the U.S. today; they seem pampered compared with their fellow citizens toiling on construction sites in Dubai, who in turn enjoy privileges undreamt of by the Mexicans. The “open for business” banner unfurled by Osborne and Johnson in Beijing seems no more than a fig leaf for hard-line immigration policies. The same week that they were in China, the British government introduced a new immigration bill remarkable for its ill-concealed xenophobia. The Conservative Party is being pushed further to the right by the recent electoral successes of the stridently anti-immigrant U.K. Independence Party. In France, the extreme-right Front National led by Marine Le Pen is gaining ground among voters. A member of the Socialist government, French Interior Minister Manuel Valls, has affirmed the general rightward shift by openly calling for the expulsion of the country’s Roma population and arguing for the extension of the French ban on Islamic headgear. Last week, stalwarts of the French Left cried out in anguish as Valls deported a Roma teenager while she was on a school trip. Greece confronts, in addition to a failing economy, the viciousness of the antiimmigrant party Golden Dawn.
After an election campaign marked by competing promises to thwart immigration, Australia has a conservative prime minister determined to send boats carrying asylum seekers back to where they come from. Even countries that host the international diaspora of the rich are inwardly seething. This month in Hong Kong I was amazed to hear, in several different conversations, a word now commonly used by local residents to describe mainland Chinese in their midst: “locusts”. Singapore, the new magnet for the plutocracy of China, India, Indonesia, Malaysia and Philippines, may be set to replace Switzerland as the capital of wealth management with its deregulated banking system. But it will have to reckon with rising local protests against steeply growing inequality, rising prices and visceral loathing of flashy Chinese in Ferraris. Given the darkening antiforeigner climate in Europe, the Chinese and Indian plutocrats furiously buying villas, palazzos, chateaus, haciendas and apartments in London’s Mayfair cannot feel certain that their arrival won’t provoke their rich neighbours to mutter, “There goes the neighbourhood”.
Unreasoned hostility When even itinerant individuals with ample skills and wealth provoke racial anxiety, less fortunate migrants cannot help but incite wholly unreasoned hostility. This politically volatile distrust of foreigners in high-income countries is another side of the problem of unregulated mobility. While still-developing nationstates such as India and China haemorrhage wealth and talent, politicians in advanced economies seem far from honestly accepting their need for migrants of all kinds, and the related imperative to fight blind prejudices and ill-informed notions about migration.
crafting policies that make it harder for them to deal with demographic changes. Yet cynical domestic politicians, in the U.K. as well as in France, have stolen the initiative in defining the costs and benefits of migration. Their opportunistic demagoguery relies upon a lack of enlightened global consensus about the subject. What defines globalisation today is the mobility of human beings as much as that of capital and goods. But there is no sustained attempt to draw up a global or regional framework of principles governing crossborder flows of people, even by institutions such as the World Trade Organisation, which lays down the rules governing the international trade of goods and services, or the International Monetary Fund, which concerns itself with the stability of the international monetary system and global capital markets.
We urgently need a global set of rules for migration. Certainly, the incentives for it have never been clearer
One well-sourced analysis after another has disproved popular ideas about immigration as a further drain on public resources during a time of fiscal austerity. Foreign arrivals contribute about as much in tax revenue as they receive in benefits, according to a report in June from the Organisation for Economic Cooperation and Development. The economic rationale for migration is further underscored by the changing profile of highincome countries: high wages; slowly growing, if not declining, populations; and shortages of domestic talent. Some of the walled-off countries are slowly seeing the light. South Korea, for instance, has started to open its doors to immigrants. On the other hand, Japan, with its severely restrictive immigration policies, continues to suffer conspicuously from a shortage of unskilled workers in the construction, medical, social welfare and other service sectors. Indeed, as the OECD report warns, countries that fail to understand the effects of immigration may end up
Globalisation paradox At present, individual countries that receive (and send) migrants make policies in response to local needs and sentiments (xenophobia prominent among them). There is no multilateral process that subjects migration flows to global rules and standards. In his recent book “The Globalization Paradox: Democracy and the Future of the World Economy,” the economist Dani Rodrik writes that leaders seriously committed to boosting incomes equitably around the world should “focus single-mindedly on reforming the rules that govern labour mobility”. Rodrik proposes a “temporary work visa scheme” in rich countries that could generate US$360 billion annually for the world economy. Its potential benefits are greater than all the gains from removing tariffs and subsidies (what the negotiators at the Beckettian Doha Round of trade talks endlessly toil over), and would go directly to the poorest people on earth, skipping altogether the arduous and plainly inefficient process of trickle-down. Rodrik is, of course, aware of potential objections and hurdles to his idea, and carefully pre-empts them with an additional set of suggested policies. Immigration, he also knows, lacks a large domestic political constituency. But, as he argues correctly, so did trade liberalisation, which was pushed through by a combination of political leadership, lobbying by business groups and activist economists. We urgently need a global set of rules for migration. Certainly, the incentives for it have never been clearer, as awful human tragedies occur off the coast of Europe, and right-wing nastiness spreads across the continent. Bloomberg View
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October 24, 2013 April 19, 2013
Closing Rabobank faces near-US$1 bln Libor fine
Shanghai FTZ will not allow LME warehouses
Rabobank Groep may face a fine of roughly US$1 billion over its alleged role in the manipulation of benchmark interest rates, the second-biggest penalty in a global investigation. Sources familiar with negotiations between the bank and U.S., U.K. and Dutch authorities said a final agreement on the size of the fifth Liborrelated penalty had yet to be reached, although a deal is expected within two weeks. Rabobank’s pact would resolve claims related to attempts to manipulate a benchmark rate for Japanese yen, one of the people said. “Negotiations are ongoing,” the source said. Other institutions have been fined around US$2.7 billion.
China will retain a ban on overseas commodity exchanges setting up warehouses in the country, a government source said, dashing expectations for London Metal Exchange warehouses in the newly launched Shanghai free trade zone. Although the LME has been cautious about its chances, state-owned media had reported that the exchange would be allowed to authorise commodity warehouses in the free-trade zone, while warehousing facilities did not appear on a list of banned activities. Bringing the bourse to China was one of the major rationales the Hong Kong stock exchange gave last year for its US$2.2 billion acquisition of the LME.
ECB outlines bank healthchecks Banking review will start in November and take about a year Eva Taylor and Jonathan Gould
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he European Central Bank promised yesterday to put top eurozone banks through rigorous tests next year, staking its credibility on a review that aims to build confidence in the sector. The ECB wants to unearth any risks hidden in balance sheets before supervision comes under its roof as part of a banking union designed to avoid a repeat of the euro debt crisis, which was exacerbated by massive bad property loans in countries such as Ireland and Spain. However, some analysts say that if the review is too strict and reveals unexpectedly large problems at some banks, it could backfire by undermining the very confidence it aims to bolster. Eurozone bank shares fell sharply after the ECB announcement. Setting out its plans to scrutinise 128 top eurozone lenders, the ECB said it would use tougher new measures set out by Europe’s regulator – the European Banking Authority (EBA) – in the asset quality review it will conduct next year. “A single comprehensive assessment, uniformly applied to all significant banks, accounting for about 85 percent of the euro area banking system, is an important step forward for Europe and for the
future of the euro area economy,” ECB President Mario Draghi said. “We expect that this assessment will strengthen private sector confidence in the soundness of euro area banks and in the quality of their balance sheets,” he said. The ECB said it would conclude its assessment in October 2014 before assuming its supervisory role in November, although some policymakers have suggested that timing could slip. If capital shortfalls are identified, banks will be required to make up for them, the ECB said. Mr Draghi has said a “public backstop” must also be available.
ECB to conclude assessment in October 2014
Asset quality A provisional list of banks to be reviewed includes 24 German lenders, 16 in Spain, 15 in Italy, 13 in France, seven in the Netherlands, five in Ireland and four each in Greece, Cyprus and Portugal. “The scope of the Comprehensive Assessment is more extensive than we expected,” analysts at Citi said. Shares in eurozone banks fell 2.5 percent on concerns the tests could put them under pressure to plug capital holes, with Spanish lenders down 4 percent on average and
Italian bank stocks 3 percent weaker. The Bundesbank and financial watchdog Bafin, which in Germany share banking supervision, said the country’s banks were “already intensively preparing for the comprehensive assessment”. Detailing the measures in its review, the ECB said it would use the EBA’s definition which classifies bank loans that are more than 90 days overdue as non-performing. It will ask banks in its balance
sheet review for an 8 percent capital buffer. That could have been higher but may still prove a challenge to some banks as they attempt to become crisis-proof. The asset quality review will look across the piece at “sovereign and institutional holdings and corporate and retail exposures, and both the banking and trading books”. The EBA classifies sovereign debt as risk free, meaning banks do not have to hold extra capital to back these holdings. However, following the eurozone crisis which led to a huge restructuring of Greek debt, the Bundesbank has been pushing for the varying degrees of risk attached to bonds issued by governments to be recognised eventually, although not necessarily in the forthcoming ECB assessment. “We are all waiting to see whether Germany has got on top of its rumoured problems in the banking sector,” said Sharon Bowles, who chairs the influential committee in the European Parliament that shapes economic and financial policy. “It seems clear that banking union has not disconnected banks from sovereigns. Bank disclosures over sovereign holdings will make that even clearer,” she said. Reuters
Spain out of recession, central bank says Economy grows for first time in more than two years
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pain emerged from a two-year recession in the third quarter, strengthening Prime Minister Mariano Rajoy’s efforts to repair the nation’s finances and reduce the 26 percent jobless rate. Gross domestic product expanded 0.1 percent from the second quarter, when it shrank 0.1 percent, and fell 1.2 percent from a year ago, the Madrid-based Bank of Spain estimated in its monthly bulletin yesterday. Spain is crawling out of its second recession since 2008 as foreign investors are returning to the nation’s bond and stock markets.
Signs of export-led economic growth may bolster Mr Rajoy, half-way through his four-year term, as he tries to convince Spaniards that his unpopular austerity policies will allow the nation to leave the sovereign debt crisis behind it. “We are optimistic on the euro periphery as a whole and Spain in particular,” said Robert Wood, an economist at Berenberg Bank, which forecasts growth of as much as 1.4 percent in 2014. “The country has made big structural changes, it’s been engaged in a lot of deficit reduction, business sentiment is improving and unemployment is
probably close to a peak.” Mr Rajoy said yesterday the recovery from the crisis, which destroyed 3.8 million jobs from the peak of the debt-fuelled boom, would be “slow and gradual”. Growth was driven by overseas sales as domestic demand fell 0.3 percent, the Bank of Spain said yesterday. The decline in investment slowed and private consumption grew 0.1 percent from the previous quarter, when it was unchanged. The spread between Spain’s 10year borrowing costs and Germany’s has narrowed to less than half its peak in July 2012 and the government
sold a new 30-year bond this month for the first time since 2009. “A positive figure for Spain is a big deal from a psychological point of view because it’s the first in a number of quarters,” Ben May, a European economist at Capital Economics in London, said in a telephone interview. Mr Rajoy still needs to battle a debt burden that will approach 100 percent of economic output next year and the 56 percent youth jobless rate. Unemployment will remain above 25 percent until 2018, the International Monetary Fund forecasts. Bloomberg News