Macau Business Daily, November 5, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo

companies want more details on bill

Beijing: Macau off pace on Portuguese language

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Chinese officials find new ways to place bets

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www.macaubusinessdaily.com

Pages 4 & 5

Stopover mulled for China’s food imports A

big part of the food products coming from Portuguesespeaking countries will start making a stopover at a new logistics centre before moving on to mainland China, likely to be announced today. Macau will also host a centre for small and medium enterprises from Portuguesespeaking countries and a third for convention and exhibitions, said the

president of Portugal’s investment and trade agency. Portugal hopes to use the centre, namely for frozen goods, once it completes the technical procedures to sell pork, poultry meat, dairy and fruit to China. The country is also hungry for investment and Macau has been an important spot to attract Chinese investors seeking residency in the European Union. More on page 2

Year II

Number 407 Tuesday November 5, 2013

Building management April 19, 2013

Brought to you by

Bosses, workers bicker over outside drivers

Hang Seng Index 23325

23294

The territory’s major trade union and business association are up in arms over whether non-residents should be allowed to work as truck drivers here. The Macau Chamber of Commerce wants to government to change its mind, claiming that the lack of truck drivers is hurting the construction industry and fuel suppliers. The suggestion came a week after truck owners decided to increase their haulage rates by up to 20 percent from January 1. The Macau Federation of Trade Unions is openly against the idea and will deliver a petition against it to Chief Executive Chui Sai On’s office today. The chamber of commerce also wants the ceiling of the aid scheme for small and medium enterprises raised to 800,000 patacas (US$100,000).

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November 4

HSI - Movers Name

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Teens still testing casino age ban

TaivexMalo clinic eyes new markets

Residents fret over pollution, food safety

A new study suggests that raising the age for entering a casino has been effective, with 20,000 attempts per month by under-21s to gain entry to Macau’s casinos. In contrast, the number of residents seeking self-exclusion from casinos for their own protection has been below expectations. Study coordinator Davis Fong says casinos must do more to promote responsible gambling among tourists. Pages 4 & 5

The rebranded TaivexMalo Day Hospital is aiming to expand its business in untapped markets abroad, having found a new majority shareholder. Taivex Healthcare Macau has settled the company’s debts and renegotiated the lease of its premises in the Venetian Macao. The partners in TaivexMalo will open a clinic in Beijing on November 15 that will serve as a test model to refer cases to the Macau centre. Page 6

Macau adults are generally more satisfied with their health and have healthier habits than their counterparts in Hong Kong, a survey commissioned by insurer AIA Group Ltd has found. Macau is joint second place in the Healthy Living Index for 15 markets in Asia and the Pacific. But the results show that most Macau adults are concerned about pollution and food safety. Page 7

%Day

KUNLUN ENERGY CO

4.03

CITIC PACIFIC

1.87

CHEUNG KONG

1.47

CHINA SHENHUA-H

1.27

CHINA RES POWER

1.23

BELLE INTERNATIO

-1.68

WHARF HLDG

-1.75

HENGAN INTL

-2.11

TINGYI HLDG CO

-3.00

CHINA RES LAND

-3.52

Source: Bloomberg

I SSN 2226-8294

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November 5, 2013

Macau

China’s food imports may enter via Macau A logistics centre here would forward products from Portuguese-speaking countries Vítor Quintã

vitorquinta@macaubusinessdaily.com

logistics centre in Macau will handle much of the food China imports from Portuguese-speaking countries, a visiting Portuguese official envisages. The official also foresees Macau having a centre for small and medium enterprises in Portuguesespeaking countries, and convention and exhibition facilities. The president of Portugal’s investment and trade agency, Pedro Reis, said yesterday that all this would “provide more muscle” and “truly turn Macau into the head and base” of a platform for business between China and the Portuguesespeaking countries. Mr Reis told reporters after a discussion about Portuguese exports that the logistics centre

City luring Chinese investors to Portugal Investors seeking residency in Portugal have invested over 200 million euros (2.2 billion patacas) there, and 75 percent comes from China, according to Portuguese Deputy Prime Minister Paulo Portas. Mr Portas praised the work of the

would “ensure the quality and speed” of the distribution of frozen food. Portugal’s exports of food to China “are increasing a lot and it is vital to have a distribution centre here,” he said. Portuguese deputy prime minister Paulo Portas, speaking at the same event, said food exports would increase once his country had met the technical requirements for selling pork, poultry, dairy produce and fruit to China. Mr Portas said the process of opening up the Chinese market to Portuguese pork was “on the final stretch”, but warned: “These procedures take years.” Mr Reis did not make clear whether the Macau logistics centre would

be a substitute for a logistics and distribution centre for Portuguese goods planned for Beijing. “You would have to ask the Chinese government,” he said. Last year his agency said it had agreed with Chinese state-owned conglomerate Nam Kwong (Group) Co Ltd to study the feasibility of a centre in Beijing. More than six years ago they proposed something similar for the Zhuhai-Macau Cross-Border Industrial Park.

The proposal got nowhere because they could not agree on a business plan. Mr Reis said the Macau logistics centre, SME centre and convention and exhibition facilities would be run under the auspices of the Forum for Economic and Trade Cooperation between China and Portuguesespeaking countries. During his stay here he will sign a deal worth 30 million euros (323.3 million patacas) for the expansion of Wuhan Industries Lda’s factory in Oliveira de Azeméis in Portugal.

Portuguese Consulate-General in Macau in promoting the investment residency scheme, under which Portugal has granted 318 “golden visas” to foreign investors. He said most investors had bought real estate in Portugal, which helped the country’s depressed construction industry. Mr Portas expects the scheme, which began in October last year, to have brought in more than 300 million euros in investments by the end of this year. Portugal is trying to open the Chinese market to its food, Paulo Portas says

Beijing says SAR off pace on Portuguese language Central govt representative hints at discontent over language promotion Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau needs to do more to promote the use of Portuguese-language and to train bilingual experts, said a central government official yesterday. Chinese companies are in desperate need of more bilingual staff, namely lawyers, to help their investment drive towards Brazil and the African Portuguese-speaking countries, said Bian Tao. The deputy head of the Central People’s Government Liaison Office in Macau said the city “has many competitive advantages when it comes to [Portuguese] language training”. But Macau “does not have the same drive” as mainland China, Mr Bian said, where there are Portuguese-language studies in 18 universities. A decade ago there were only three universities. Portuguese-language students from the mainland may come here

“to experience the living language” but most of them are better students than their local colleagues, the official said. The difference comes from “a more professional learning system” in the mainland, he said during a business roundtable on Portugal’s exports. “We used to say that Macau was China’s window to the world but now we want to task it with becoming a bridge to the Portuguese-speaking world. And being a bridge means a more active role,” Mr Biao said. The central government “wants to help” the city play that role and “that is why we have the Macau Forum,” he added. Mr Biao is the latest Beijing official to pressure Macau to put more effort into the promotion of the Portuguese language. The trend goes back to 2010, when then Chinese prime minister Wen Jiabao presided over the third ministerial

We want to task [Macau] with becoming a bridge to the Portuguesespeaking world. And being a bridge means a more active role Bian Tao, deputy head of the Central People’s Government Liaison Office in Macau

conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking countries, known as Macau Forum. It was seen as a clear signal of support for the territory’s ambition to become a platform linking the two markets. Chinese companies need bilingual staff, especially legal experts, to mask their lack of experience in outside markets, said Mr Biao. António Trindade, chief executive of CESL Asia Group agreed: “China is still learning how to behave as a foreign investor”. Even here Chinese companies have trouble in finding lawyers with knowledge of laws in the mainland and in the Portuguese-speaking Africa, said Mr Biao. That explains the legal problems and “misunderstandings” that many Chinese firms have faced in Portuguesespeaking countries, he added.

November 5, 2013 April 19, 2013

Macau

Building management firms want more details on bill Tony Lai

tony.lai@macaubusinessdaily.com

Trucking companies are raising their haulage rates next year, blaming high wages

Bosses, workers bicker over importing drivers Employers take out a newspaper ad, employees get up a petition Tony Lai

tony.lai@macaubusinessdaily.com

he trade unions and employers are at odds over whether the government should permit migrant workers to drive trucks here. The Macau Chamber of Commerce published a statement in the Chinese-language Macao Daily News yesterday proposing that migrant labour be allowed to work as truck drivers. The chamber says many businesses have been “severely deprived” of manpower, particularly truck drivers. “If Macau residents are no longer interested in particular jobs, or if supply is obviously insufficient to meet demand, shouldn’t [the government] consider importing migrant workers?” it says. It says construction companies and fuel suppliers, the biggest users of trucks, hope the government will “change its way of thinking and boldly lift the present ban”. Last week the Macau Association of Cargo Transport Companies and the Heavy Vehicle Driver Association of Macau said they would increase haulage rates by up to 20 percent from January 1 because of increases in fuel prices and wages. The chamber of commerce hopes Chief Executive Fernando Chui Sai On will include its proposal in his Policy Address for 2014, which he will make on November 12. The chamber and Mr Chui had a meeting last week. Official data show 1,247 Macau

residents work as drivers or operators of heavy vehicles, and that there are vacancies for another 245. The trade unions immediately voiced opposition to the chamber’s proposal. The Macau Federation of Trade Unions and an affiliate, the Macau Federation of Transportation, will deliver to Mr Chui’s office today a petition expressing their opposition. Federation vice-president and Legislative Assembly member Ella Lei Cheng I has urged the government to give its ban on migrant labour working as croupiers or drivers the force of law. Ms Lei said in a written inquiry to the government last month that this would help “maintain social stability”.

List of grouses Mainlanders cannot work as drivers in Macau because mainland driving licences are not valid here. Last month the Transport Bureau said it was working with its mainland counterparts on making Macau and mainland driving licences valid on both sides of the border. The head of the bureau’s vehicle and driver licensing department, Luís Correia Gageiro, said last week that cross-border validity of driving licences and letting migrant labour work as drivers were “two completely different matters”. In its statement, the chamber of commerce also presses the

government on other matters. The chamber urges the government to increase the limit on loans made under its aid scheme for small and medium enterprises to 800,000 patacas (US$100,000) from 600,000 patacas. The government raised the limit from 500,000 patacas in March last year. The chamber says the government should also simplify the procedure for applying for the interest-free loans. Macau Economic Services data show the government lent 331 enterprises 118.7 million patacas under the scheme in the first half of this year. The chamber criticises “the current development direction” of Hengqin Island which, it says, makes Macau SMEs feel that the island is “out of reach”. Macau enterprises interested in developing the island had made 89 investment proposals by last week’s deadline for submitting such proposals. The chamber calls for the government to turn the Macau Food Festival into an East Asian showcase for Macau specialities, to help expand the food and drink industry and so make the economy more diverse. The chamber expresses reservations about the government’s proposal to set a minimum wage of between 23 patacas and 30 patacas an hour for all cleaning and security staff.

uilding management firms welcome the government’s suggestion to regulate the sector but they want to know more details on the proposal. “As the society becomes more open and advanced, I surely think this licensing [mechanism] – a kind of professional recognition – is beneficial to the sector,” said Lau Kam Seng, owner of a building management firm here. “This is helpful to the industry which now deals with bigger residential hubs, compared with single buildings in the past,” said Jackey Chui Ming Man, president of the Property Management Business Association of Macau. The association has over 80 members managing over 70 percent of buildings with elevators in the city. Housing Bureau director Tam Kuong Man said on Sunday the government is planning to regulate the sector through licensing the companies and workers in the industry. The bureau is planning to launch a public consultation on the new bill in the first quarter of 2014, Mr Tam said on the sidelines of a public occasion. “The government has actually consulted the sector two or three years ago but nothing has happened since then,” said Mr Lau, a former president of the association. “We still don’t know what will be the impact on the sector as we are unaware of the details.” The bureau director did not reveal any details on Sunday, only saying they were finalising the draft bill. Mr Tam’s bureau released a consultation draft in 2008, proposing to divide the management firms in three categories. The first-grade management firms must have registered capital of over 3 million patacas (US$375,000) and would be able to oversee all buildings in the city, according to that draft. The second-grade firms would need no less than 1 million patacas, while companies with less than 300,000 patacas of capital would be in the third tier, with limits on the kind of buildings they could manage. “Macau is a small market and big international firms have already gained a foothold here,” said Mr Chui. “More consideration should be given on whether to divide the industry into three categories.” Some workers in the sector are worried about the licensing mechanism. They fear exams may be required to obtain a licence. “I am already 50 years old. What is the point of me taking an exam?” asked Ah Chong, a doorman for an industrial building in the northern district. “I only know a few words. If I knew more I would not be working here,” he said. Mr Lau brushed aside such worries, saying that an exam would probably only apply for management employees, “not frontline workers like guards and cleaners”. “We already have high requirements for management positions,” he added.

November 5, 2013

Macau

Teens still flocking to casinos’ doors Up to 20,000 under age would-be gamblers try to sneak in each month Michael Grimes

michael.grimes@macaubusinessdaily.com

Statutory framework The law says any person under 21 that enters, works or gambles in

Photo by Manuel Cardoso

here are on average 20,000 attempts per month by under21s to gain entry to Macau’s casinos, according reportedly to data from the local gaming regulator. That’s a year after a new law to bar them. The figures were revealed on the first day of ‘Responsible Gambling 2013 – Community Support’ – a two-day conference at the University of Macau to review the progress of problem gambling policies in the city. “…based on the statistics provided by DICJ, almost every month, around 20,000 people aged 21 or below try to breach the law by going inside [a casino]. Fortunately they failed,” Davis Fong Ka Chio, director of the Institute for the Study of Commercial Gaming based at the university, told Business Daily on the sidelines of the opening ceremony. “That means the law is effective because it is protecting that under-21 age group trying to gamble at an early age,” he added. Mr Fong was referring to figures from the Gaming Inspection and Coordination Bureau (DICJ), and to legislation that came into effect in November last year, raising the age for entering a casino – either for work or as a customer – from 18 to 21.

a casino will be liable to a fine of between 1,000 patacas (US$125) and 10,000 patacas, while a casino operator allowing any person under 21 to enter, work or gamble in a casino will be liable to a fine of between 10,000 patacas and 500,000 patacas. The government’s responsible

gambling initiatives began in 2009 and have since been backed up with a legal framework. The November 2012 law also had a provision allowing permanent residents to seek self-exclusion from casinos – for their own protection – for a period of up to two years. “From our studies we understand

that the percentage of people using the self-referral route – i.e. problem gamblers seeking help – is far below our expectations,” said Mr Fong. He added that official data on what percentage of those identified in the city as problem gamblers who actually refer themselves for help or exclusion are likely to be published by

Chinese officials find new ways to place Surveillance ‘much stricter’ after leadership change, says junket operator

or many years, politically linked tycoons and government officials were frequently spotted betting millions in Macau’s VIP rooms. But their numbers have dwindled because of an anti-corruption campaign led by China’s new leader Xi Jinping. The media scrum surrounding the politically connected chairman of a Chinese financial services company was interested in one particular unpaid loan. The amount – US$1.3 million (10.4 million patacas) – was nothing extraordinary but the story behind it was. Xie Xiaoqing, chairman of Rongzhong Group Ltd, was sued in January for failing to repay the money to Sands China Ltd. Mr Xie has said he wasn’t gambling and the money was for a friend. A spokesman for his company said Mr Xie was not available to comment. Just a few years ago, that might have devastated Macau, which typically generated more than 70 percent of its revenues from high rollers including wealthy government officials from mainland China. But in the third quarter those big whales accounted for just 65 percent, according to the gaming inspection bureau’s data, the lowest share since 2006. High roller baccarat revenue totalled 57.79 billion patacas in the three months ended September 30,

a growth rate of around 13 percent year-on-year and 64.8 percent of all quarterly revenue. Mass-market table games revenue expanded almost three times as quickly. Annual revenues are on a pace to rise 16 percent to US$44 billion and October’s numbers smashed analysts’ forecasts, jumping 32 percent to a record 36.48 billion patacas.

Creative ways Middle-class mass-market gamblers have taken up the slack at just the right moment, and some of those government officials are still finding their way in, albeit more quietly. “It is much stricter with the leadership change,” said Li, a Macau junket operator who helps organise high rollers’ travel and hotel arrangements and asked to be identified only by his surname. “They [officials] keep a low profile and stay in service apartments arranged by other people” instead of opulent casino suites that they once preferred. Interviews with more than a dozen casino executives, government officials, junket operators and industry analysts show Macau is learning to live with closer scrutiny from Beijing. Beijing is also deepening ties with

KEY POINTS Fewer mainland officials seen gambling in Macau High rollers more likely to be private businessman ‘Premium customers’ taking up the slack VIP under 65 pct of all third quarter revenue Officials finding creative ways to avoid detection

casinos and the junket operators that bring in the wealthy VIPs by helping to arrange their gambling credit and collecting their debts. “In the early days it was pretty much anything goes,” said a former executive at the Venetian Macao, operated by Sands China. “It really was the Wild West. There really was very limited, if any control.” Government officials would typically visit Macau for leisure or personal business, using fake passports or special permits which gave them easy access, according to junket and casino executives.

Since the corruption crackdown, officials have been finding some creative ways to avoid detection. Macau casinos have some of the most sophisticated surveillance technology yet spotting officials gambling on the property can still be difficult, said a senior executive at one of Macau’s newly opened resorts. “There are some low-ranking officials from state-owned enterprises who still come but if they have fake identification it is very difficult for us to spot,” the executive said. Some officials are getting their gambling fix without setting foot

November 5, 2013

Macau the government at the turn of the year. But he added: “From local studies and from studies in other places we understand we face very significant challenges to motivate people in the Chinese community to seek help. That’s because of the cultural issue.”

Helping tourists Mr Fong states that while most initiatives are aimed primarily at locals – because they are easier to identify and track if they have a problem – the industry also accepts it has a duty of care to tourists. In January for example, Sands China Ltd launched its Responsible Gaming Team training programme whereby casino floor staff are taught how to identify customer behaviour that might indicate problem gambling. “Some operators provide an RG [responsible gambling] channel already. So when you switch on the TV in the [hotel] room you will see that channel,” explains Davis Fong. “But one of the challenges in Macau is that a lot of tourists don’t stay overnight in a hotel.” That also makes them harder to track, he adds. One development this year however is significant changes to the responsible gambling information kiosks developed for local casino floors by the institute. “We have added things, so for example people can apply directly via the kiosk for self exclusion from local casinos. But of course they have to prove their ID, as self exclusion is a serious step.” He adds: “There’s also a hotline where they can make a telephone call via an operator to get help. We also have educational tools available via the kiosk – but in an entertaining way – for example to help players to understand house advantage – the mathematics behind gambling activities,” explains Mr Fong.

Paradise stock soars as investors look in

he shares of Paradise Entertainment Ltd rose by as much as 18.8 percent yesterday as the company was in talks with potential investors. Paradise – parent of LT Game Ltd, a maker of casino electronic multi-game products – said in a filing “it is not aware of any matter or development that is or may be relevant to these movements”. But the company told the Hong Kong Stock Exchange it “is in discussion with independent third parties in respect of a possible equity fund raising exercise”. Paradise, also operator of the Casino Kam Pek, did not disclose the identity of the potential investors or the amount of shares they were looking to buy. The company led by executive director Jay Chun said it “has not entered into any legally binding agreement or contract in relation to such possible equity fund raising exercise”. Paradise’s shares closed the day up by 16.2 percent to HK$2.66 (34 cents of U.S. dollar) in Hong Kong trading. In August Paradise announced it could raise up to HK$60.3 million after granting Silver Coast Holdings Ltd, a British Virgin Island firm owned by Chang Wang, the right to subscribe for 4.7 percent of the company.

澳門特別行政區政府 Governo da Região Administrativa Especial de Macau 澳門格蘭披治大賽車委員會 Comissão do Grande Prémio de Macau

Barrier Gates Closing Schedule for the Macau Grand Prix The 60th Macau Grand Prix will be held from November 9 and 10 and 14 to 17 this year. This major international motorsport event attracts thousands of visitors to Macau each year. The event plays an important role in the promotion of the local tourism industry, as well as enhancing the image of Macau as an international city. To a great extent, the success of the Grand Prix depends on the support and cooperation of the local residents. To minimize disruption to traffic due to the closure of some roads, the Macau Grand Prix Committee has increased the number of the barrier gates along the circuit this year, to a total of 120. However, due to certain constraints, some roads will remain closed throughout the event. The Committee seeks the understanding of motorists and asks for attention to be given the closing schedule for all barrier gates, as well as to respect the temporary signage and instructions from the Traffic Authorities.

6th November (Wed) Time

Street Av. da Amizade

Est. de Cacilhas Est. D. Maria II

15：00

Rua dos Pescadores

Av. da Amizade

Location

Notice

Exit from the garage of Hotel Grand Lapa

‫۝‬

Entrance and exit from the World Trade Center

‫۝‬

Depósito de Pólvora Exit from Seaview Garden garage

‫۝‬

Exit from the garage of Correios de Macau

‫۝‬

No Access

Construction site Exit from Macau Water Corner near the Casino Oceanus (Av. da Amizade - Avenida do Dr. Rodrigo Rodrigues) Exit from (former) Casino Macau Palace Entrance to the Mobil gas station

Est. de Cacilhas

Access

‫۝‬

Limited Access

Exit from the garage of the Chong Tou San Chong Garden From the flyover near the Reservoir to Hoi Fu Garden

V.Q.

Notice :‫ ۝‬Removal on the 10th nightime and installation on the 12th

7th November (Thu)

bets

in Macau, placing bets by calling someone sitting at a baccarat table and giving verbal instructions, said a junket operator who gave his English name as Mark.

More businessmen The VIP segment isn’t going away but the high rollers are now more likely to be wealthy private businessman rather than government officials and politically connected tycoons. Zhonglu Zeng, a professor at Macau’s Polytechnic University

who co-authored a study on high rollers from mainland China, said although the total number of high rollers are now bigger than before, the proportion is now heavily skewed to private business owners than officials. Mr Zeng said that wealthy customers are also learning and adapting. “In the past two or three years, even private businessmen have shown different behaviour,” he told Business Daily in an interview published on Monday, adding that more gamblers are now “betting less money”. The market is also seeing more ‘premium market customers’, a term usually used to describe high-limit baccarat players who are affluent, but not necessarily rich enough to qualify for the VIP rolling chip programmes of the local junkets. Academics estimate that government officials now comprise perhaps 3 percent of VIP room visitors, down from about 30 percent three years ago. Casinos have also been under pressure by Macau authorities to expand non-gaming amenities to attract families and a wider traveller base. Manuel Joaquim das Neves, head of Macau’s gaming regulator, said the ultimate aim is to emulate Las Vegas’s feat of generating as much revenue from outside the casinos as inside. “The transformation is big and fast. We still depend a lot on gaming. With the gaming tax the government can do a lot of things, one is to push the other activities,” he said. Reuters/T.A.

Time

Street

Location

Notice

Access

10：00

Est. de Cacilhas

Exit from the garage of Cheng Pek Kok (Approx.60m)

‫۝‬

Limited Access

Est. dos Parses

Exit from the garage of the Monetary Authority of Macao

No Access

Rua de Nagasaki (PJ) 15：00

20：00

Av. da Amizade

Limited Access

Corner next to the Hotel Landmark Plaza (Av. da Amizade- Alameda Dr. Carlos d'Assumpção)

Av. Ramal dos Mouros

Est. de Fereira do Amaral (upper top of the pavement behind Hou Kong School)

No Access

Est. dos Parses

Exit from Leng Nam School

Limited Access

Notice :‫ ۝‬Removal on the 10th nightime and installation on the 12th

8th November (Fri) Time

Street

Location

Notice

Av. da Amizade

Amizade Bridge– exit to Av. de Amizade (100m)

Exit from the garage of the Public Security Forces Affairs Bureau

Ramp to the E.R. of HCSJ

10：00 Est. de S. Francisco 15：00

19：00 20：00

Av. Ramal Exit of the Reservoir overpass to Baguio Court dos Mouros Est. D. Maria II Est. de Cacilhas

Main entrance of CEM Entrance to the opening of Seaview Garden

Access No Access

Limited Access

No Access

Notice : ۞Removal on the 10th nightime and installation on the 13th

Closing times and locations of the barrier gates on 9th, 10th, 14th - 17th November: Ø All barrier gates installed at the access to any public road will be closed from 03:00 until the end of the races every day. The Committee seeks the understanding of motorists for the inconvenience caused by the construction, as well as to respect the temporary signage and instructions from the Traffic Authorities. For further information, please call: 2872 8482.

November 5, 2013 April 19, 2013

Macau Photo by Manuel Cardoso

Two doctors have left since April and about seven members of the management have gone. “Some of them left because not everyone was in favour of the changes we wanted to introduce,” Mr Valente said. The company now has about 130 full-time employees and some part-timers. Taivex Macau has introduced performance-based pay. “There’s a base salary, but you get bonuses for meeting a few targets,” Mr Valente said. “This is something that not everyone is accustomed to.” The company has invested HK$2 million in new equipment for the day hospital. “That was for services we didn’t offer before, so there’s a good margin of growth,” Mr Valente said.

Big insurers

TaivexMalo clinic looking for new markets abroad A dental clinic in Beijing will open on November 15 Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

he rebranded TaivexMalo Day Hospital is aiming to expand its business in untapped markets abroad, having found a new majority shareholder. Taivex Healthcare Management Services (Macau) Ltd bought 60 percent of Pacific Health Care Ltd, which runs what used to be the Malo Clinic Macau in the Venetian Macao, six months ago. Taivex Macau is a subsidiary of Shanghai Taivex Healthcare Management Co Ltd. “The deal was completed in April,” TaivexMalo Day Hospital vice-president and Pacific Health Care administrator Jorge Valente told Business Daily in an interview. Mr Valente said he could not reveal the amount invested. “It was enough to make us the majority shareholder and to leave the company in a very sound position,” was all he would say. Mr Valente said the previous owners – including Malo Group president Paulo Maló – were still shareholders, but that their holdings had been diluted. Taivex’s investment opens new doors for the Macau clinic and spa to expand its business in the mainland. The Malo Clinic Macau had plans to expand in the mainland but put them aside while it negotiated with potential investors after a brush with bankruptcy last year. Now Malo Group and Taivex are moving into the mainland in partnership, and will open their first clinic there this month. “In China, the shareholders are the same but the stakes they hold will be different. The structure is still being worked out,” Mr Valente said. “Taivex actually has a smaller role in China, but the plans are for dental clinics, not for medical centres,” he said. “We are going to open a clinic in Beijing on November 15. It will not have a surgery room, but it will be a normal dental clinic with five rooms.” Mr Valente said the investment in the Beijing project would be from 5 million yuan (6.55 million patacas) to 10 million yuan. The business has also

established a partnership with a doctor in Guangzhou, who refers patients to Macau. “We have a satellite clinic there and, unless the business takes off a lot, Guangzhou may not need a proper built-up clinic,” Mr Valente said. He said plans for Shanghai, the parent company’s base, may take a bit longer to draw up. “We are not yet sure if we want a small or a big clinic there. A dental clinic doesn’t require a hospital licence and the investment is considerably less.” A smaller clinic could be opened early next year but, if the partners decide on a bigger investment, the clinic in Shanghai would open only late next year. “We are still trying to figure out which way to go. Either way, it will probably not have a surgery room and serve to refer patients to the Macau clinic,” Mr Valente said. He said the Beijing clinic would serve as test model. “Cases from other places will be referred here, because Macau will be the centre for our business to keep growing.” After its brush with bankruptcy last year, Pacific Health Care had to look for investors.

Cases from other places will be referred here, because Macau will be the centre for our business to keep growing Jorge Valente, TaivexMalo Day Hospital vice-president

Mr Maló had said before that he had no objection to “becoming a minority shareholder in the clinic, if that helps strengthen and grow the project”. One of the company’s suppliers sued it to recover debts amounting to over 8 million patacas (US$1 million) and tried to force it into bankruptcy. “That was one of the items on our list when we came in,” said Mr Valente. He said the company had settled its disputes with its suppliers through negotiation. “Everyone came out a winner,” he said. “It was more ill will than anything else, and currently we have no problems with our suppliers.”

Considerable growth The new managers had to renegotiate some agreements, starting with the lease of its premises in the Venetian Macao. “The previous rent was too high for a healthcare business to survive,” said Mr Valente. He gave no figure. He said the company now paid rent of between HK$1 million and HK$2 million a month. It was able to lower the rent in part because the Venetian and Pacific Health Care are now partners in the medical spa, Pacific Health Care running the spa and sharing the revenue from it. Mr Valente said business last year was not good but he expects considerable growth this year. “What we expect is 20 percent growth in revenue for this year after adjusting our business model,” he said. “We expect profit to grow faster than that.” He said he could not give amounts for revenue and profit. Taivex changed the structure of the Macau clinic, appointing new managers. The Malo Group continues to run the dental department. Michael Shao is now the chief executive of Pacific Health Care and of TaivexMalo Day Hospital. “With the new structure we changed the management and we are going in a different direction,” said Mr Valente.

He said investing in human resources would take more time. “Macau is a very peculiar place. You can have all the money you need to invest in equipment, but human capital is very hard to come by,” he said. “We are investing in training for doctors and technicians, but that takes more time. That is also why we can’t expand the business in one go.” Mr Valente said that six months after the shake-up, the company was “already seeing some success in retaining Macau patients that would otherwise go to Hong Kong or elsewhere for treatment”. He said that serving Macau people was “very important” but that TaivexMalo wished to reach beyond Macau, luring patients in from Hong Kong, the mainland and further afield.

KEY POINTS Taivex owns 60 pct of Pacific Health Care Pacific Health Care’s debts settled HK$2 mln invested in new equipment Dental clinic to open soon in Beijing

“Taking the parent’s company background and using some of their resources, we are trying to position ourselves to compete in the region,” he said. “In mainland China, through the Taivex network or via other agents, we are reaching out to potential clients and showing that they have Macau as an option, besides Hong Kong, Taiwan or Singapore.” Taivex Shanghai has a big list of customers in the mainland, including big insurers such as AXA SA, Ping An Insurance Group Co of China Ltd and China Life Insurance Co Ltd. “This is the kind of background that Pacific Health Care didn’t have in support,” Mr Valente said. He said 80 percent of TaivexMalo’s patients or customers were from Macau. But its revenue “is probably about fifty-fifty from each market”, he said. “What we are focusing on in the international market are physical check-ups, dental surgery and plastic surgery. For the domestic market we are doing all the general consultations, like gastroenterology.”

November 5, 2013 April 19, 2013

Macau

Pollution, food safety worry Macau people Adults here are much healthier than adults elsewhere in Asia and the Pacific, a survey finds Stephanie Lai

sw.lai@macaubusinessdaily.com

Trade settlement in yuan hits 100 bln The volume of cross-border yuan trade settlement business here reached 108.9 billion yuan (142.5 billion patacas) in the first eight months of 2013, the Monetary Authority of Macau said. “It represents a very significant growth in the last few years. And it is a sector that is still developing,” said Anselmo Teng Lin Seng (pictured), chairman of the city’s de facto central bank. Yuan trade settlement is already higher than during all of last ywear, when it hit 97.25 billion yuan. The yuan deposits in all banks here amounted to 62.3 billion yuan by the end of September, with 15 Macau banks now working with the currency. Portuguese and Chinese banks have “a strong foothold” in Macau’s banking sector, Mr Teng said yesterday. Those ties could be used to promote the city as a centre for yuan investment in offshore markets like Hong Kong, he added.

Residents want more housing measures Most residents want to see housing measures in the upcoming policy address, suggests a survey carried out by the research group Macao New Vision Association. Housing is for a third consecutive year the biggest priority that residents identify for Chief Executive Fernando Chui Sai On’s address, scheduled for November 12. Most of the 510 respondents are more concerned with social welfare policies and livelihood issues than with possible economic or political changes. The most pressing issues are ‘hastening the construction of public housing’, ‘strengthening property market curbs’ and ‘continuing the handout of medical vouchers’. Respondents said they are satisfied with healthcare, employment protection, education reform, cultural heritage preservation, regional economic cooperation and economic diversification. In contrast they gave the lowest score to the property market control and public housing construction as well as to the accountability system for public officials.

acau adults are generally more satisfied with their health and have healthier habits than their counterparts in Hong Kong, a survey commissioned by insurer AIA Group Ltd has found. TNS, a consumer research company, surveyed over 10,000 adults in 15 markets in Asia and the Pacific. The results show Macau adults are concerned about modern threats to health such as pollution. TNS used the results to compile an index which it calls the Healthy Living Index. TNS interviewed 153 adults in Macau. Macau and the mainland are in joint second place in the index, each with 69 points out of a possible 100. The survey measured perceptions of important elements of a healthy way of life and satisfaction with personal health. The average score of the 15 markets surveyed was 62 points in the latest index, one point more than in the previous index, compiled in 2011. Hong Kong’s score of 58 points places it near the bottom of the index. People here sleep for 6.7 hours a night, on average, slightly longer the general average and about an hour longer than people in Hong Kong. Macau people are more cautious than Hong Kong people about what they eat. Macau people exercise for 3.9 hours a week, on average. The general average is 3.0 hours and the Hong Kong average 2.8 hours.

Widespread awareness The latest survey found that internet addiction, being overweight, unsafe food and pollution are regarded as modern threats to health in Macau. Among Macau respondents, 93 percent agreed that “pollution is becoming a real health hazard” and most are concerned about various sorts of pollution: air pollution, water

AIA Healthy Living Index

Source: AIA

pollution and pollution caused the improper disposal of electronic devices. Macau respondents felt a clean environment was most important for health. Together, these attitudes are a sign of “widespread awareness of the impact of environmental factors on the wellbeing and quality of life of local residents as Macau continues its growth and economic development”, the survey report says. People in Hong Kong and Macau alike consider cancer and heart disease to be big concerns. But Macau people are more concerned than Hong Kong people about “mental conditions”, while Hong Kong people are more concerned about obesity and diabetes. “In Macau, cancer and cardiovascular diseases are major factors affecting our mortality rate,” Mário Évora, director of cardiology at the Conde S. Janurario General Hospital, told Business Daily. “For years it’s been a trend similar to Hong Kong,” he said. “For heart diseases, the risk factors are mainly hypertension, diabetes and stress,” he said. “Unlike a decade ago, stress has been a new factor, following the city’s economic development and growing competitiveness,” Mr Évora said.

South Korea key tourism market South Korean visitors will be a “key” tourism market for the territory, with more than half a million visitors expected next year, said the Macau Government Tourist Office boss. Maria Helena de Senna Fernandes said yesterday: “Last year there were over 400,000 South Korean visitors… and we hope they can overtake 500,000 next year.” “We think South Koreans are willing to spend and it is one of our international markets with a more stable growth,” she explained. Official data show Macau received over 350,000 South Korean travellers in the first nine months this year, up by 5.8 percent from a year earlier. The government will also try to explore new tourism sources like Russia, said Ms Senna Fernandes. She expects to see a “30-40 percent rise” in visitor arrivals during the Macau Grand Prix starting on Saturday. The city welcomed about 300,000 travellers during last year’s grand prix.

The average Macau adult exercises for 3.9 hours a week (Photo: Manuel Cardoso)

“But in Macau dependence on private insurance is not as great as in other countries,” he said. “One unique feature here is that, basically, the elderly – those aged 65 years or more – children and civil servants have access to free medical care from the public health service.” Food safety is regarded as another modern threat to health. Macau and Hong Kong get most of their fresh food from across the border, so over two-thirds of adults in each city are concerned about food safety. Among Macau respondents, 70 percent worry that food may contain harmful ingredients and 68 percent are doubtful about product labelling. The Macau government opened a food safety centre last month, but it has yet to publish standards for the various kinds of food. “In general, the 2013 survey results for Macau are encouraging as they suggest that Macau residents are making a clear and conscious effort to lead healthy, active lives,” AIA Macau’s chief executive Chris Ma says in the report. “Maintaining the position near the top of the Healthy Living Index is going to be increasingly challenging, given rapid economic development, the accelerating pace of life and the new modern-day threats to healthy living.”

November 5, 2013 April 19, 2013

Greater China IPOs may resume after party meeting: Citic China may lift a freeze on new listings on its domestic stock market after a top leadership meeting later this week, said Boming Cheng, president of Citic Securities Co Ltd. The Chinese Communist Party’s meeting starts on November 9. Leaders, including President Xi Jinping, will discuss economic reforms, according to Mr Cheng. “We still have reasons to believe that the IPOs may resume before the end of this year, as the policy meeting ends November 12,” Mr Cheng said in an interview. China suspended IPOs in October 2012 due to volatility in the stock market and investor concerns about the financial reporting of newly listed companies.

Chinalco shortlisted to bid for Peru mine A group led by Aluminum Corp of China was shortlisted to bid for Glencore Xstrata Plc’s Las Bambas copper project in Peru, said an executive at the Chinese company. “It’s a competitive process,” said Liu Xiangmin, senior vice president of the Beijing-based company known as Chinalco. “We are confident about our bid.” Chinalco is leading a bidding consortium that’s offered about US$5 billion for the mine, which Glencore agreed to sell to obtain Chinese regulatory approval for its US$29 billion takeover of Xstrata Plc this year, said two people with knowledge of the matter. The group also includes Jinchuan Group Ltd., China’s third-largest copper producer.

Blackstone buys stake in mall owner SCP Blackstone Group LP, the world’s biggest manager of alternative assets including private equity and real estate, agreed to buy a 40 percent stake in Chinese shopping mall developer and operator SCP Co. Blackstone is investing about US$400 million in SCP, according to a person with knowledge of the matter. An e-mailed statement from SCP yesterday didn’t disclose the value of the transaction. Chief executive Stephen Schwarzman is stepping up real estate investment in Asia, tapping the market for US$4 billion for the company’s maiden property fund focused on the region.

Yuan gains traction with global firms Market getting more comfortable with the currency

vidence the yuan is becoming truly global can be found in Rongrong Huo’s passport, which shows the HSBC Holdings Inc banker bouncing from Switzerland and South Africa fielding inquiries from a growing number of clients on how they can trade China’s currency. “The market potential is huge,” Mr Huo, who heads HSBC’s yuan business development for Europe, said in an interview after returning to London from Warsaw. “Companies are asking, how can we make progress on this front? And investors are asking, how can we bring the yuan into our asset allocation? It’s encouraging to see the engagement. It’s about the future.” Three years after China allowed the yuan to start trading in Hong Kong’s offshore market, banks and investors around the world are positioning themselves to get involved in what Nomura Holdings Inc calls the biggest revolution in the US$5.3 trillion currency market since the creation of the euro in 1999. Daily yuan transactions surged to US$120 billion in April from US$34 billion in 2010, making it the ninth most-traded currency in the world, according to a September report by the Bank for International Settlements in Basel, Switzerland. Merk Investments LLC in Palo Alto, California said it’s adding “as much as” it can of offshore yuan to its US$450 million of funds. Union Bank NA, a unit of Bank of TokyoMitsubishi UFJ Ltd, is pushing wealthy clients to diversify their savings into deposits denominated in the currency, while CME Group Inc, the world’s largest futures exchange, began offering trading in offshore yuan derivatives in February. International use of the yuan is picking up as the world’s secondlargest economy opens up its capital markets. In the first nine months of this year, about 17 percent of China’s global trade was settled in the currency, compared with less

than 1 percent in 2009, according to Deutsche Bank AG.

‘Biggest story’ Yuan-denominated debt sold by companies in the international market rose to 221 billion yuan (US$36 billion) this year through yesterday, from 16 billion yuan in 2009, data compiled by Bloomberg show. HSBC is the biggest underwriter of Dim Sum bonds, or debt denominated in yuan and sold offshore by companies ranging from French carmaker Renault SA to Seoul-based Korea Development Bank. “The development of the yuan market is the biggest story for the foreign-exchange market in many years,” Stuart Oakley, Nomura’s head of currency cash trading for Asia outside Japan, said in London. “I would compare it to the inception of the euro in terms of its significance.” A sign of the currency’s growing global acceptance is that trading in offshore yuan forwards has eclipsed that of non-deliverable contracts, the dominant instrument for foreign investors to speculate on the exchange rate since the 1990s. The NDFs are settled in dollars, skirting

US$120 bln

Value of daily yuan transactions in April China’s capital controls. HSBC estimates the average daily trade in deliverable yuan forwards was US$10 billion in October, up from US$6 billion a year earlier, while it was little changed at US$3 billion for NDFs. “I prefer using the deliverable yuan for hedging because that market is now much deeper,” Ken Hu, who manages this year’s best-performing Dim Sum bond fund as chief investment officer at BOCHK Asset Management, said. “The deliverable market is more about real commercial users so it’s more representative, while the non-deliverable ones are dominated by hedge fund flows.” Bloomberg News

Anadarko eyes sale of oil, gas project stakes Some of the sales driven by shareholder activism Shenzhen toughens home-buying rules China’s southern city of Shenzhen will raise minimum downpayments on second home purchases to 70 percent from 60 percent, the official China Securities Journal reported, the latest local move to curb property prices. The new rule in Shenzhen will take effect tomorrow and apply to home buyers who want to take mortgages from banks, the newspaper quoted unnamed banking sources in Shenzhen as saying. Banks will also tighten mortgage regulations to ensure that speculators are not granted loans, the paper said. Home prices in Shenzhen, which rose 19.7 percent in September from a year earlier, are among the highest.

nadarko Petroleum Corp is considering the sale of its holdings in oil and gas projects in China in a deal that could be valued at about US$1 billion, sources familiar with the matter said, as it eyes ploughing money back into the U.S. market. Houston-based Anadarko, which owns about a 35 percent interest in production and development projects in China’s Bohai Bay, joins a list of U.S. oil companies seeking to raise cash to invest back home. Cnooc Ltd is seen a potential buyer of Anadarko’s interests, one of the sources told Reuters. Cnooc was not immediately available for comment. Anadarko declined to comment. The sources declined to be identified as they were not authorised to speak to media.

Last year, Anadarko transferred day-to-day operations of the projects to its joint venture partner Cnooc as part of an earlier agreement. The company’s Chinese fields produced about 32,300 barrels of oil per day in the second quarter and is expected to average between 32,000 to 35,000 barrels per day for the remainder of 2013, according to the company’s second-quarter production report. China has the smallest producing fields among Anadarko’s international operations. At least two other U.S. oil companies, including Newfield Exploration Co Ltd and Hess Corp, have put part of their Asian oil and gas fields on the block this year. The retreat is not limited to independent oil and gas producers, as even some of the world’s top five integrated oil companies are cutting

back on expensive projects. Some of the sales are in part driven by activist shareholders, who are agitating for more returns. Reuters

November 5, 2013 April 19, 2013

Greater China

Banking watchdog pledges to tackle bad-loan risk Banks told to seek ‘market-based options’ to transfer bad loans

hina’s banking regulator pledged to work harder to head off the risks of a possible rise in non-performing loans, in particular from industries plagued by overcapacity. The comments from the China Banking Regulatory Co mm is s ion’s (C BR C ) chief, Shang Fulin, are the latest official warning on financial risks as the government pushes ahead with structural reforms. Mr Shang said in a meeting with bank executives in the southeastern province of Fujian that banks must seek various channels to safely dispose of bad loans in industries facing acute overcapacity problems. “We must make more efforts to prepare for a possible rise in non-performing assets and explore market-based options to pack and transfer bad loans,” Mr Shang said, according to a statement of his speech posted on the CBRC’s website yesterday. “Banks must also seek various channels to clean up bad loans by industries with overcapacity to prevent new risks from brewing,” he added.

Banks must seek channels to clean up bad loans, Shang Fulin says

To pursue a m o r e sustainable growth model and eventually rebalance the economic structure, Beijing this year has intensified a campaign to reduce overcapacity pressure in several industries.

The China Banking Association had said in an annual industry report that bad loans at Chinese banks could rise by between 70 billion yuan (US$11.5 billion) and 100 billion yuan in 2013 partly due

to delinquency risks from industries plagued by overcapacity. The association singled out the steel, photovoltaic and shipping sectors as being at the forefront of a potential new crop of bad loans.

Official data showed China’s non-performing loan ratio for commercial banks stayed at 0.96 percent at the end of June, unchanged from the level at the end of March. According to thirdquarter reports, some commercial banks saw small increases in their ratio of non-performing loans. Industrial & Commercial Bank of China Ltd last week said its ratio was 0.91 percent at the end of September, compared with 0.87 percent three months earlier. China’s fifth‑biggest lender, Bank of Com munications Co Ltd, reported an NPL ratio of 1.01 percent at end of September, from 0.99 percent at the end of June. At the Fujian meeting, Mr Shang reiterated the policy of cutting new credit lines to projects in areas of severe overcapacity. Banks are also banned from providing new credit to such projects through issuing wealth management products. He also urged banks to take action as soon as possible to not lose the best opportunity to keep bad loan risks from rising. Reuters

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November 5, 2013 April 19, 2013

Greater China

Buyer rush for HK’s luxury flats breathes life into market New home transactions hit six-month high in September Yimou Lee and Alice Woodhouse

quarter of 2013, according to real estate company Midland Realty Ltd. Hang Lung Properties and New World Development declined to comment on whether they would continue to offer discounts. Wong Leung Sing, research director at Centaline Property Agency, believed the buyers, rather than the analysts, would be proven correct over the price trend. “We can’t find the factors that will lead the market to plunge,” Mr Wong said. “Investors are still quite optimistic.” More than 5,000 small-tomedium units will be released by developers such as Cheung Kong Holdings Ltd and Sino Land Co Ltd in the first quarter of next year, pushing inventory of new homes to a ten-year high and posting what Mr Wong called “a real test” to mass consumers’ purchasing power. “The day of reckoning will be decided by the middle class,” Mr Wong said.

Calling the bottom

n a shopping mall in one of Hong Kong’s prime retail districts, more than 100 people wait patiently to take a lift to the sales floors – not to buy luxury bags or clothes, but highend apartments with price tags of up to US$4.4 million. Foster Lee, a 30-year-old banker, was among the lucky ones who won the chance to buy a unit after a ballot in which more than 1,600 people signed up for just 80 luxury units on offer. “I was expecting home prices to fall four years ago and they keep increasing. It really hurts,” said Mr Lee, who plans to buy one of the flats offered by New World Development Co Ltd and Wheelock & Company Ltd in the prime location near Kowloon West for his family. Signs on the ground point to a clear pick-up in demand from local and Chinese buyers, thanks in part to steep discounts offered by developers to offset higher stamp duties imposed a year ago to cool prices that have jumped 120 percent since 2008. The boom was fuelled in large measure by the U.S. Federal Reserve’s dollar printing campaign, or quantitative easing, to drag the U.S. economy out of the global financial crisis. It became easy to borrow cheaply, and with Hong Kong’s currency pegged to the U.S. dollar the effects of the policy were easily transmitted to the property market. But now some analysts expect property prices to fall as the Fed is expected to start withdrawing its monetary stimulus some time during coming months. Regardless, many home buyers, like Mr Lee, have shrugged off recent forecasts of a drop of up to 50 percent in prices over the next 12 months and decided to take a chance.

Tightening fears Last weekend, long queues at one project prompted developer Hang

KEY POINTS Developers providing stamp duty subsidies Chinese buyers returning to HK market Analysts expect property prices to fall Agents don’t anticipate price correction

Lung Properties Ltd to postpone pre-sales and change the firstcome, first-serve rule to a ballot system, in which more than 400 buyers competed for just 80 units priced from HK$8 million to HK$15 million (US$1.93 million). Industry watchers said up to 30 percent of buyers at recent popular projects were mainland Chinese, whose presence in the new luxury home market had fallen to less than 12 percent from 43 percent after cooling steps in October last year. “With stamp duty subsidies from developers, many Chinese buyers are attracted back to the market,” CLSA property analyst Nicole Wong said, referring to a 15 percent tax on foreign buyers that many believe was targeted at mainland Chinese. “It’s like there is no government tightening at all – developers cancel it for the Chinese buyers.” In another sign of strong demand, new home transactions rose to a sixmonth high in September, according to real estate company Centaline Property Agency Ltd.

Some analysts say the recent frenzy has also been spurred by people rushing in before an expected interest rate hike, which could lead to a collapse in Hong Kong’s property market. “They [buyers] are concerned that the banks will further tighten up credit,” said Jennifer Wong, tax partner at global accounting firm KPMG LLP in Hong Kong. “This is one of the reasons they don’t mind to pay a little bit more – they can secure the mortgage loan at a low interest.” Almost everything hangs on when the Fed decides to taper, as a rise in U.S. interest rates would drive up borrowing costs in Hong Kong, where home prices have risen 4 percent over the past year on ultralow interest rates, tight supply and abundant liquidity since cooling measures were imposed.

Reality check While the picture on the ground looks promising, analysts see property prices undergoing a sharp correction. Deutsche Bank AG forecast last month that Hong Kong home prices could drop up to 50 percent in the next 12 months, while Barclays Plc said the market will enter its first real downturn since 1998 with a 30 percent plunge by 2015. “The developers created this ‘wow factor’. They managed to draw out some people who wanted to buy and were looking for price cuts,” said Barclays property analyst Paul Louie, citing two recent projects that offered discounts of up to 40 percent. “We are just seeing the beginning of the round of price cutting. There will be more to come,” he said. “The buyers will return to the sidelines and wait for better deals.” The price difference between new launches and second-hand homes – an indicator of developers’ profitability – dropped to its lowest since 2003 at 12 percent in the third

Amid forecasts of a collapse in the property market and general gloom over the outlook for home prices, there are still some who say the worst is over. “The government tightening just pushed back the timing of the purchase for Chinese buyers,” said Patrick Chau, director of residential sales at property consultant Savills Plc. “You can never suppress the demand from that market.” Some developers are also upbeat, prompting them to start scaling back some of the incentives previously on offer. The city’s largest developer Sun Hung Kai Properties Ltd raised the price of the high-end project near Kowloon West by up to 10 percent after a strong market response – it received over 2,000 applications for a re-launch of 60 units.

The government tightening just pushed back the timing of the purchase for Chinese buyers. You can never suppress the demand from that market Patrick Chau, director of residential sales at Savills

With the city’s healthy 54 percent loan-to-value ratio, the absence of an immediate interest rate hike, and strong purchasing power from end-users and investors, Mr Chau expected home prices to rise a further 5 percent by the second quarter of 2014. “Here, at the front line of the market, we don’t see the correction that investment banks are talking about.” Reuters

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November 5, 2013 April 19, 2013

Asia

S.Korea’s Park rules out Japan summit As the region struggles to rein in North Korea’s growing nuclear capability

outh Korea’s President Park Geun-hye has painted a bleak picture of South Korea’s current and future ties with Japan – a key ally in efforts to rein in North Korea’s nuclear programme. In an interview with the BBC, Ms Park suggested a summit with Japanese Prime Minister Shinzo Abe would be pointless given Tokyo’s refusal to apologise for Japan’s “past wrongdoings”. Abuses carried out during Japan’s repressive 191045 colonial rule remain a source of deep anger and resentment in South Korea, particularly the treatment of women forced to work as “comfort women” in wartime Japanese military brothels. Outrage at Japan’s perceived reluctance to show sincere remorse and offer adequate reparations has been compounded by a territorial rift over a crop of rocky islets in the Sea of Japan (East Sea). “None of these cases have been resolved or addressed,” Ms Park said in the interview broadcast yesterday ahead of an upcoming state visit to Britain.

Park Geun-hye has highlighted a deep rift with Japan

“If Japan continues to stick to the same historical perceptions and repeat its past comments, then what purpose would a summit serve? Perhaps it would be better not to have one,”

she said. “If they continue to say there is no need for an apology, and no need to acknowledge their past wrongdoings, then what good would it do?”

Vietnam’s bad debts rise to 4.64pct of loans State-owned banks saddled with huge debts to state firms

ad debts in Vietnamese banks accounted for 4.64 percent of total loans at the end of August, up from 4.58 percent the previous month, the central bank said yesterday. Banks reported total loans of 3,290 trillion dong (US$156 billion) at the end of August, up 6.44 percent from the end of 2012, the State Bank of Vietnam said in a report on its website, suggesting bad debts would stand at US$7.24 billion. Independent experts have estimated that bad debts at Vietnam’s banks could be considerably higher than reported. State-owned banks are saddled with huge debts to state firms and have been blamed for high rates of real estate-related bad debts. Vietnam’s economy, which slowed in 2012 as banks tightened lending to avoid bad debts, has been accelerating so far this year,

but fresh funds remain limited as banks have yet to complete cleaning their books. To deal with the bad debt situation, the central bank in July launched an asset firm to buy them from banks, a move touted as one of its biggest reforms but widely seen as a band-aid fix for its ailing, creditstarved economy. Banks may achieve annual credit growth of between 11 percent and 12 percent this year, in line with the central bank’s target of 12 percent, State Bank of Vietnam governor Nguyen Van Binh told parliament in late October. The country’s credit growth at the end of October quickened to 7.89 percent from the end of 2012, Mr Binh was quoted by the Securities Investment magazine as saying in parliament, reflecting banks’ faster lending in the past month. Reuters

In recent months, the United States has tried to seek a rapprochement between its two key military allies in Asia, but has made little progress. The strain in Seoul‑Tokyo

relations is especially problematic at a time when the international community is struggling to build a consensus on dealing with North Korea’s nuclear ambitions. Speculation is growing of a possible return to sixparty talks on North Korea, in which South Korea and Japan are both participants. Their respective envoys on North Korea continue to meet for discussions, but analysts say a Park-Abe summit would be important in presenting a united front to Pyongyang. Ms Park’s pessimism about such a meeting followed a separate interview with France’s Le Figaro newspaper last week in which she held out the prospect of a summit with North Korean leader Kim Jong-un. “If a meeting with Kim Jong-un is deemed necessary to peace and the development of inter-Korean relations, then I am open to it,” Ms Park said, while adding that Pyongyang must first demonstrate “sincerity” on the issue of denuclearisation. AFP

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November 5, 2013 April 19, 2013

Asia S.Korean bonds luring companies The highest inflation-adjusted yield among Asia’s biggest economies is attracting Citigroup Inc and Western Asset Management Co to South Korea’s sovereign bonds. After adjusting for a 0.7 percent gain in consumer prices, the least in the region, the nation’s benchmark 10-year notes paid 2.75 percent as of November 1, the highest since 2009, data compiled by Bloomberg show. That compares with the so-called real yield of 2.44 percent on Thai securities, ranked second. Benign inflation has enabled central bank governor Kim Choong-soo to keep borrowing costs at a three-year low of 2.5 percent. The won has rallied the most in Asia since the end of June as exports climbed to a record and the U.S. Federal Reserve delayed tapering stimulus that has boosted emerging markets. “From a relative value perspective, the Korean curve is still attractive,” Kim Wontae, a Singapore-based analyst at Western Asset, said. “The likelihood of a U.S. taper in 2013 has greatly diminished and there is value to be had in the Korean sovereign bonds. Fundamentals will take root, making Korea an attractive option.”

Protesters rally in Bangkok against amnesty law Thailand’s biggest opposition party led thousands of supporters on a march through Bangkok’s streets yesterday in an attempt to derail government efforts to pass an amnesty law for political offences. About 10,000 demonstrators joined rallies that paralysed traffic in separate parts of Bangkok, according to police estimates. The Democrat party has vowed to continue organising demonstrations unless the government scraps the bill. Thai stocks fell to a one-month low and the baht dropped on concern the legislative push will spark instability in a country that has been wracked by street violence since a 2006 coup that ousted former leader Thaksin Shinawatra. “We are here to protect the country from a group of corrupt people who passed this unfair law,” Suthep Thaugsuban, a Democrat member of parliament, told demonstrators before leading a march from Bangkok’s Samsen railway station to the Grand Palace. Thaksin’s opponents say proposed changes will allow him to recoup his fortune and return to Thailand without spending time in jail. In 2008, Thaksin fled abuse of power charges that stemmed from a military-appointed panel, for helping his wife buy land from the government.

Bangladesh strike leaves two dead Bangladeshi police fired live rounds at protesters yesterday in renewed clashes that killed two people, as a fresh nationwide strike got under way to force the prime minister to quit, officials said. A government official said clashes erupted between hundreds of supporters of the main opposition Bangladesh Nationalist Party (BNP) and the ruling Awami League in Patgram, some 300 kilometres (185 miles) north of the capital Dhaka. “Police first fired from shotguns to disperse the warring supporters. Later they opened fire from rifles,” district administrator Habibur Rahman told AFP. A doctor at Patgram hospital said an opposition protester had died from bullet injuries and 16 other people were injured in the clashes. The clashes were among sporadic violence throughout the country at the start of another three-day strike called by the BNP and its Islamist allies, in the latest effort to press Prime Minister Sheikh Hasina to resign ahead of January elections. At least 22 people have now been killed since the opposition began its push, including strikes and street protests, last month to force Mr Hasina to let an interim administration organise the elections.

Nine Entertainment seeks up to US$658 mln in IPO Most of the proceeds earmarked to pay down debt

ine Entertainment Co and its owners are seeking as much as A$697.3 million (US$660 million) in Australia’s largest initial public offering in almost three years to repay debt and return funds to existing investors. Nine will sell 125 million new shares and 179.7 million existing shares at A$2.05 to A$2.35 apiece, the Sydney-based company said yesterday in a prospectus published on its website. Nine, which will have a market capitalisation of as much as A$2.2 billion after the IPO, will raise as much as A$294 million from the sale of new stock, based on the price range. The share sale values Australia’s second-largest media company at as much as A$2.77 billion including debt, the prospectus shows. Nine shares will be priced on December 5 and start trading the next day. Apollo Global Management LLC, Oaktree Capital Group LLC and other funds took control of Nine last

year in a debt-for-equity swap that saw previous owner CVC Capital Partners Ltd lose the majority of its investment. The company, which also owns a ticketing business and the country’s largest indoor music venue, in the past two months bought an affiliate station in Western Australia state and Microsoft Corp’s 50 percent stake in the Mi9 joint venture. Nine forecast sales of A$1.57 billion for the year to June 30, 2014, and earnings before interest, tax, depreciation and amortisation of A$305 million, according to the prospectus. The company estimated profit for the financial year will rise to A$139.5 million from A$136.7 million in the previous 12 months.

Restructuring plan Oaktree will cut its stake to 14.3 percent from 27.8 percent while Apollo’s holding will be reduced to 22 percent from 25.6 percent as

part of the IPO. Other funds that are among Nine’s owners will trim their collective holding to 30.2 percent from 46.5 percent. Under the restructuring plan agreed last October, about 60 percent of a A$5.75 billion debt and equity investment by CVC was wiped out. Senior lenders including Apollo and Oaktree received A$573 million in cash and a 95.5 percent stake in Nine, according to Federal Court documents in December. London-based CVC had bought the broadcaster from casino billionaire James Packer’s Publishing & Broadcasting Ltd. Chief executive David Gyngell will receive a A$2.5 million cash bonus for completing the IPO and 4.55 million shares, according to the prospectus. The broadcaster will also issue 4.9 million shares to nonexecutive directors and another 1.1 million shares to employees. It will have a total of 931 million shares. Bloomberg News

Westpac posts record cash profit Completes round of record earnings from Australia’s biggest banks Jackie Range

ustralia’s Westpac Banking Corp said full-year cash earnings rose 8 percent, marking its fourth straight year of record profits, on a stronger performance across all its operating divisions and a 30 percent fall in bad debts. The results complete a round of record earnings from the “Big Four” banks, which together posted A$27 billion (US$25.5 billion) in cash profit for their last financial year. The country’s second-biggest bank by market value booked cash profit of A$7.1 billion, in line with analysts’ average forecast. Cash earnings exclude one-off and non-cash items and are a measure of profitability closely watched by investors. Westpac also joined the other three in rewarding shareholders, hiking its final dividend 5 percent to A$0.88 per share and unveiling a special dividend of A$0.10 per share. “Our businesses are all performing well, we are seeing tangible benefits from the investments we have made in our digital capabilities and distribution network, and our capital position is the strongest in the sector,” chief executive Gail Kelly said in a statement. “There is no doubt that domestically we are seeing a pickup in consumer confidence which

Westpac derives much of its earnings from home mortgages

we expect will translate to a gradual increase in credit growth.” Common equity tier one capital, a measure of the bank’s ability to absorb unexpected losses, rose 94 basis points to 9.1 percent. Impairment charges fell to A$847 million, compared with A$1.2 billion a year ago. Like its rivals, Westpac derives much of its earnings power from highly profitable home mortgages. Westpac said its Australian housing loans had grown 4 percent over the period, with growth in lending partly offset by customers paying off their loans more quickly. “The market will like this result because it is clean and doesn’t contain

any nasties but with Westpac trading on a price to earnings ratio of around 15 times this number – we’re a little cautious on where margins are going next year,” Peter Esho, chief market analyst at Invast Financial Services. The nation’s oldest bank also last month extended its reach in motor vehicle finance, equipment finance and corporate lending, paying US$1.45 billion for an Australian portfolio owned by Lloyds Banking Group’s. Its shares have jumped by a third for the year to date, outperforming a 16 percent rise for the broader market. Reuters

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

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

13 13

November 5, 2013 April 19, 2013

Asia

Mitsubishi expands into Asian condos Trader looking for large-scale projects in Southeast Asia

it s ubis hi C orp, Asia’s largest trading company by market value, is expanding into property development in Southeast Asia as the slowdown in China shrinks profits from its commodity businesses. The first project, starting next year, entails building an apartment complex with more than 1,000 units in the Philippines at a cost of 40 billion yen (US$405 million), Masahiro Nagaoka, head of township development and construction at Mitsubishi, said in an interview in Tokyo. The trader has allied with local Ayala Land Corp for the project and is looking for similar opportunities in Vietnam, Indonesia and Myanmar. “We see in those countries large populations, a pent-up demand for housing, and a chance to enter markets that aren’t yet crowded,” Mr Nagaoka said. “We will look for local partners in each country.” The Tokyo-based trader is expanding outside of raw materials businesses as Chinese demand for resources declines. Mitsubishi

Mitsubishi seeks property deals as commodity profits slow

in alliance with BHP Billiton Ltd is the world’s top exporter of coking coal used to make steel. It said in May it aims to double earnings from non-commodities by 2020 from 180 billion yen (US$1.82 billion) last year. Real estate falls under Mitsubishi’s industrial finance and logistics division, which almost doubled net income to 25 billion yen in the fiscal

year ended March 31. That came as total profit dropped 20 percent on strikes at its Australian coal mines and lower oil and metals prices.

Southeast Asia Since broadening real estate and property development to the U.S. and then China two years ago, the company sees Southeast Asia

as its next growth market, Mr Nagaoka said. “We feel we can take advantage of this situation,” he added. Mitsubishi will take a 40 percent stake, the maximum for a foreign entity in the Philippines property market, in Albeo Land Corp, a unit of Ayala Land. Construction and sale of apartments will be done

in several stages over eight years, Mr Nagaoka said. The target audience will be the local upper-middle income population, defined as those with a household income between 3 million yen and 5 million yen a year, he said. “Profits in the upper luxury segment are higher, but so is the volatility,” he said. “We’re looking for more stable, large-scale projects.” Construction will begin in the Ortigas area, the second largest business district in the Philippine capital of Manila. Mitsubishi and Ayala have rights to develop a 3.6-hectare (8.9-acre) site, Mr Nagaoka said. Mitsubishi is studying projects in Vietnam, Indonesia and Myanmar and doesn’t exclude working with other partners in the Philippines on new projects, Mr Nagaoka said. It will look at projects of 20,000 square metres and larger, he said. “These countries don’t present us with direct synergies with other Mitsubishi businesses, but they are good real estate investments in their own right,” he added. Bloomberg News

14 14

November 5, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 59.50

87.0

27.40

59.18

86.8

27.18

58.86 58.54

26.74 86.4

58.22 Max 59.50

average 58.339

Max 56.7

Min 57.90

average 55.518

Last 58.55

Min 55.0

57.90

Max 86.2

average 86.420

PRICE

Last 26.4

26.30

25.88

29.86

56.02

25.76

29.72

55.68

25.64

29.58

55.34

25.52

29.44

Max 26.00

average 25.593

DAY %

YTD %

(H) 52W

Min 25.45

Last 25.55

(L) 52W

0.073987951

1.403020242

109.6999969

85.51999664

BRENT CRUDE FUTR Dec13

106.27

0.339911245

1.392996851

114.4399948

95.95999908

GASOLINE RBOB FUT Dec13

255.01

0.184646814

0.22402138

290.3199911

240.8799887

GAS OIL FUT (ICE) Dec13

906.25

-0.027578599

0.526899612

973

837

3.437

-2.163393111

-12.94326241

4.744000435

3.410000086

289.27

0.364305045

-3.056402694

321.1599827

276.4999866

NATURAL GAS FUTR Dec13 NY Harb ULSD Fut Dec13 Gold Spot $/Oz

1313.85

-0.177

-21.0645

1754.46

1180.57

Silver Spot $/Oz

21.705

-0.8112

-27.9143

34.3838

18.2208

Platinum Spot $/Oz

1450.44

-0.262

-4.4349

1742.8

1294.18

Palladium Spot $/Oz

739.73

-0.1889

5.7271

786.5

597.15

LME ALUMINUM 3MO ($)

1843

-0.860677784

-11.09503136

2184

1758

LME COPPER 3MO ($)

7245

-0.055180025

-8.649602824

8346

6602 1811.75

3MO ($)

LME NICKEL 3MO ($)

1940

-0.614754098

-6.730769231

2230

14570

-0.30790284

-14.59554513

18770

13205

15.1

0.232326585

-2.043464158

16.80999947

14.91500092

AGRICULTURE ROUGH RICE (CBOT) Jan14 Dec13

WHEAT FUTURE(CBT) Dec13

427

-0.058513751

-28.8036682

647

425.75

670.75

0.449269936

-18.2759671

913

635.5

1257

0.439472633

-3.97249809

1406

1169

105.55

0.142314991

-32.53435602

172.1499939

104.25

SOYBEAN FUTURE Jan14 COFFEE 'C' FUTURE Dec13

25.40

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 30.00

average 29.652

Min 29.35

Last 29.75

29.30

NAME

SUGAR #11 (WORLD) Mar14

18.26

0.054794521

-11.27308066

20.71999931

16.69999886

ARISTOCRAT LEISU

76.79

0.274223035

-2.476504953

93.72000122

74.34999847

CROWN RESORTS LT

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9501 1.5936 0.912 1.3499 98.61 7.9846 7.752 6.0979 61.73 31.272 1.2424 29.456 43.31 11349 93.684 1.23119 0.84709 8.2324 10.7784 133.11 1.03

0.6675 0.0628 0.0329 0.089 0.0608 0.0025 0.0013 0.0213 -0.3807 -0.2302 0.0483 -0.0713 -0.2309 -0.1234 -0.586 -0.056 -0.0272 0.1992 0.2125 -0.0225 0

-8.4506 -1.4837 0.3728 2.3427 -12.6863 -0.0175 -0.0181 2.1762 -10.9104 -2.2128 -1.6903 -1.436 -5.3221 -13.7105 -4.6507 -1.9258 -3.7387 -0.181 -2.3009 -14.6796 -0.0097

1.0599 1.6381 0.9839 1.3832 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 11.0434 135.51 1.032

0.8848 1.4814 0.8891 1.2662 79.08 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 81.971 1.20302 0.79607 7.8281 10.1113 100.33 1.0289

Macau Related Stocks

COTTON NO.2 FUTR Dec13

NAME

Min 26.3

56.36

94.68

CORN FUTURE

average 26.625

30.00

WTI CRUDE FUTURE Dec13

LME ZINC

Max 27.4

Currency Exchange Rates

NAME

METALS

86.2

Last 86.6

26.00

Commodities ENERGY

Min 86.2

26.52

56.70

55.00

Last 55.3

26.96

86.6

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.81

-2.434077

16.81

-1.580796

VOLUME CRNCY

52.69841

5.12

2.56

1277898

57.54452

17.38

9.65

2287331

AMAX HOLDINGS LT

1.17

-16.42857

1.72

0.75

295250

BOC HONG KONG HO

25.25

0.3976143

4.771783

22.85

3666533

CENTURY LEGEND

0.44

2.325581

66.03774

0.56

0.24

4441870

CHEUK NANG HLDGS

7.08

1.142857

18.197

7.24

4.1

21000

CHINA OVERSEAS

23.5

-1.260504

1.7316

25.6

17.7

8120960

CHINESE ESTATES

21.05

-0.2369668

87.18518

22.25

9.543

93500

CHOW TAI FOOK JE

12.68

0.1579779

1.929264

13.4

7.44

2738600

EMPEROR ENTERTAI

3.99

0.2512563

111.1111

4.66

1.48

3455000

3.3

0.6097561

172.2714

3.41

1.103

2988000

GALAXY ENTERTAIN

58.55

-0.5942275

92.91598

63.75

5943573

HANG SENG BK

127.9

-0.4669261

7.750635

132.8

110.6

421564

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15615.55

0.4489973

19.16501

15721

12471.49

NASDAQ COMPOSITE INDEX

3922.042

0.05959631

29.88986

3966.71

2810.8

FTSE 100 INDEX

6767.73

0.4898482

14.74988

6875.62

5605.589844

DAX INDEX

9047.31

0.4382854

18.84979

9070.17

6950.53

HOPEWELL HLDGS

25.9

-0.1926782

-22.10526

35.3

23.2

489720

NIKKEI 225

14201.57

-0.881983

36.61688

15942.6

8619.45

HSBC HLDGS PLC

85.1

-0.3512881

4.674043

90.7

73.55

8227740

HANG SENG INDEX

23189.62

-0.258798

2.351155

23944.74

19426.35938

HUTCHISON TELE H

2228000

CSI 300 INDEX

2380.454

-0.188934

-5.648059

2791.303

2023.171

TAIWAN TAIEX INDEX

8354.14

-0.4058091

8.502366

8476.63

7061.87

KOSPI INDEX

2025.17

-0.6987281

1.408077

2063.28

1770.53

S&P/ASX 200 INDEX

FUTURE BRIGHT

3.43

-0.867052

-3.651684

4.66

3.12

LUK FOOK HLDGS I

14.7541

30.05

16.88

MELCO INTL DEVEL

24.1

-2.03252

167.4806

25.75

7.46

2352542

MGM CHINA HOLDIN

26.4

-2.222222

98.82094

12.236

3257800

MIDLAND HOLDINGS

3.12

-15.67568

4.29

2.68

2428000

NEPTUNE GROUP

0.33

-4.347826

117.1053

0.4

0.131

87550000

NEW WORLD DEV

10.76

0.3731343

-10.48253

15.12

9.98

11963159

SANDS CHINA LTD

55.3

-1.426025

62.88659

60.5

29.35

8366393

5390.532

-0.380531

15.9516

5457.3

4334.3

4410.464

-0.499144

2.172426

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1808.63

-0.09832027

7.086062

1826.22

1590.67

SHUN HO RESOURCE

1.65

17.85714

1.92

1.19

NZX ALL INDEX

1034.089

0.001160455

17.23661

1035.652

851.971

SHUN TAK HOLDING

4.45

-1.766004

6.205249

4.8

3.12

3985007

PHILIPPINES ALL SHARE IX

3955.81

-0.5358149

6.943268

4571.4

3440.12

SJM HOLDINGS LTD

25.55

-1.541426

43.96266

16.762

4880864

SMARTONE TELECOM

10.22

-0.1953125

-27.41477

16.22

9.97

1742760

WYNN MACAU LTD

29.75

0.8474576

42.00477

32.6

3292934

ASIA ENTERTAINME

3.96

#N/A N/A

69409

BALLY TECHNOLOGI

71.8

-1.832103

60.59048

78.03

43.16

582637 5778

JAKARTA COMPOSITE INDEX

Euromoney Dragon 300 Index Sin

623.83

-0.57

0.44

STOCK EXCH OF THAI INDEX

1398.84

-2.116047

0.4964267

1649.77

1260.08

HO CHI MINH STOCK INDEX

497.07

20.14357

533.15

372.39

Laos Composite Index

1306.32

7.5364

1455.82

1067.27

0.1556402

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

BOC HONG KONG HO

3.3

7.491859

3.6

2.99

GALAXY ENTERTAIN

7.67

1.724138

93.19899

8.11

3.468

3430

INTL GAME TECH

18.65

-0.7978723

31.61609

21.2

12.37

2512434

JONES LANG LASAL

95.35

0.157563

13.59304

101.46

72.56

361301

LAS VEGAS SANDS

69.88

-0.4841925

51.38648

73.49

37.8353

4611842

MELCO CROWN-ADR

33.39

0.6936068

98.27791

13.43

3544033

MGM CHINA HOLDIN

3.52

1.440922

101.1094

3.88

1.6651

16000

MGM RESORTS INTE

19.3

1.365546

65.80756

20.98

9.15

13836770

SHFL ENTERTAINME

23.19

0.04314064

59.93103

23.25

12.35

361916

SJM HOLDINGS LTD

3.37

2.743902

47.96173

3.6

2.1396

71080

WYNN RESORTS LTD

167.7

0.8721805

49.07992

173.38

103.34

816322

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

39.4

-0.8805031

9544591

ALUMINUM CORP-H

2.87

1.056338

10605000

BANK OF CHINA-H

3.64

0.5524862

164816328

BANK OF COMMUN-H

5.68

10372520

BANK EAST ASIA

33.65

0.748503

1509832

BELLE INTERNATIO

10.54

-1.679104

13818156

BOC HONG KONG HO

25.25

0.3976143

NAME CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD

VOLUME

0.1650165

20117096

NAME POWER ASSETS HOL

PRICE

DAY %

64.05

-0.2336449

10.9

1.869159

13041430

SANDS CHINA LTD

2737348

55.3

-1.426025

8366393

10.96

0.1828154

3369914

103

0.684262

2693963

0.2227171

1177044

416.8

-1.372456

3478188

22.6

-3.004292

15878780

WANT WANT CHINA

11.96

-0.3333333

4462348

WHARF HLDG

64.55

-1.750381

5050600

62.5

1406343

15.52

-1.647655

51298946

COSCO PAC LTD

11.48

0.7017544

2246943

SWIRE PACIFIC-A

ESPRIT HLDGS

14.18

0.1412429

3324555

TENCENT HOLDINGS

3666533

HANG LUNG PROPER

26.05

0.9689922

4242000

TINGYI HLDG CO

127.9

-0.4669261

421564

46.3

-0.3229279

1201223

15.6

0.6451613

3088277

HANG SENG BK

1.470588

3466132

HENDERSON LAND D

CHINA COAL ENE-H

4.87

0.6198347

22958906

CHINA CONST BA-H

6.08

0.4958678

188914259

CHINA LIFE INS-H

21.15

0.9546539

30418328

CHINA MERCHANT

27.9

0.9041591

1814780

CHINA MOBILE

DAY %

12.14

CNOOC LTD

124.2

CATHAY PAC AIR CHEUNG KONG

PRICE

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG

-2.105263

791630

18.3

0.5494505

4876577

125.7

0.2392344

866092

HSBC HLDGS PLC

85.1

-0.3512881

8227740

HUTCHISON WHAMPO

97.2

-0.1540832

2495529

IND & COMM BK-H

5.41

-0.1845018

113365636

11.04

1.098901

11538000

0.1669449

919018

80.55

-0.5555556

10574701

CHINA OVERSEAS

23.5

-1.260504

8120960

CHINA PETROLEU-H

6.38

0.3144654

106354054

CHINA RES ENTERP

27.5

1.102941

1158783

MTR CORP

LI & FUNG LTD

CHINA RES LAND

21.9

-3.524229

5682667

NEW WORLD DEV

10.76

0.3731343

11963159

CHINA RES POWER

20.5

1.234568

2569700

PETROCHINA CO-H

8.79

-0.3401361

62677076

CHINA SHENHUA-H

23.85

1.273885

12403046

PING AN INSURA-H

61.35

-0.2439024

10625795

SINO LAND CO SUN HUNG KAI PRO

MOVERS

23322.07

LOW

23111.64

2 23323

INDEX 23189.62 HIGH

VOLUME

52W (H) 23944.74 (L) 19426.35938

23111

31-October

4-November

15 15

November 5, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Jakarta Post Indonesia and South Korea will hold the sixth round of negotiations for a bilateral free trade agreement (FTA) in Bali this week. The talks will be held for five days starting today. During the FTA talks, the two countries are expected to hold comprehensive discussions on investments, customs, regulations, as well as trade partnerships on goods and services. Currently, Indonesia is South Korea’s seventhlargest investment destination in the world. As of 2012, Indonesia was South Korea’s eighth-largest trading partner, with bilateral trade reaching US$29.6 billion, according to the ministry.

Inquirer Business Foreign banks operating in the Philippines face stricter capitalisation requirements in line with efforts of the central bank to maintain the stability of the local financial system. The central bank deputy governor Nestor Espenilla Jr. said the regulator was preparing a proposal that would exclude advances received by local branches of foreign banks from their parent firms as part of their tier 1 capital. This restriction, if approved, will go on top of higher capitalisation requirements mandated for all banks in the country under Basel 3 rules that take effect in January 2014.

The Age Retail spending in Australia has risen to a stronger-thanexpected 0.8 percent in September, with third-quarter sales lifting to 0.7 percent. The sales growth followed a 0.5 per cent lift in August and a flat second-quarter. Retail sales have remained fairly subdued over the past few months after a strong start at the beginning of the year. The figures are expected to cheer the Reserve Bank, which has been looking for growth in the non-mining sectors of the economy as resources investment peaks.

The Star As stocks on Bursa Malaysia hit new highs, Retirement Fund Inc, the country’s public pension fund with close to 100 billion ringgits (US$31.5 billion) in assets, plans to increase investment in European equities to diversify its portfolio. Chief executive Wan Kamaruzaman Wan Ahmad said the fund planned to allocate 50 million euros (US$67,5 million) to 100 million euros initially to buy shares of companies listed on European exchanges as it sought to capitalise on the region’s recovery from its worst recession since the eurozone was created.

Shinzo Abe

Securing Japan Yuriko Koike

Japan’s former defence minister and national security adviser, was chairwoman of Japan’s Liberal Democrat Party

hinzo Abe’s second term as Japan’s prime minister began with a laser-like focus on economic revitalisation. That policy, almost instantly dubbed “Abenomics,” comprises what have been called the three “arrows”: bold monetary policy, an expansionary fiscal stance, and structural reforms to stimulate private investment. Hosting the Olympic Games in Tokyo in 2020 has added a fourth arrow to this quiver in the form of increased infrastructure investment and tourism revenue in the years leading up to the Games. To be sure, after 15 years of deflationary recession, revitalisation of the Japanese economy remains far from complete. Nonetheless, the effects of Abe’s reforms are becoming visible in areas such as equity prices and exchange rates. But Abe also confronts a security environment in Asia that is every bit as brittle as Japan’s economy was before his government took office last December. Indeed, he confronted many of the same issues during his first administration seven years ago. His efforts back then were halted by his own resignation, and he is now making a second attempt to establish a national-security governance system to meet Japan’s needs – and those of its allies – in twenty-firstcentury Asia. In a speech to a plenary session of the lower house of Japan’s Diet on October 25, Abe emphasised that, given the current security situation in Asia, “It is essential to strengthen command functions for implementing

the prime minister’s national security policy.” Now that split control of the Diet’s upper and lower houses has been resolved, with Abe’s Liberal Democrats in strong control of both chambers, a bill to modernise Japan’s nationalsecurity governance is certain to pass.

Council restructure The bill that Abe has submitted aims to establish a Japanese National Security Council, based on lessons from the successes and failures of similar institutions in other countries, such as the NSC in the United States. The Security Council of Japan – something of a stopgap measure created to provide advice from relevant cabinet members to the prime minister in times of crisis – will now be reorganised as a formal institution. The new NSC’s membership will be limited to the prime minister, the cabinet secretary, and the foreign and defence ministers, with relevant ministers added on an ad hoc basis. A permanent National Security Secretariat, headed by a person with abundant diplomatic experience, will be established in the prime minister’s office, with 60 security specialists from various fields laying the policy groundwork for mediumand long-term national security strategy. This strategy will then be reflected in guidelines issued to Japan’s defence bodies and diplomats. Japan, like other countries, has faced jurisdictional disputes among foreign-policy, defence, and police agencies that have

hindered the aggregation and analysis of intelligence information. But, with the creation of the NSC, each ministry and agency will report important national-security information to the new secretariat, which will then carry out integrated analysis and issue reports to the prime minister and others. Of course, as in other countries, bureaucracies are creatures of habit. As we can already see, it will not be easy to overcome the obstacles posed by vertically integrated ministries and agencies. Institutionalisation will take time – and the importance of its success cannot be understated.

Now that split control of the Diet’s upper and lower houses has been resolved, a bill to modernise Japan’s national-security governance is certain to pass

Not too late For example, the new NSC will be responsible for sharing intelligence with other countries, including the U.S., Japan’s most important ally. As a result, ensuring the protection of information will be a key issue, particularly given the old habit of leaking security information to the press. That is why the Diet is also considering a bill on the protection of classified information that would impose harsher punishment on government officials who leak secrets, particularly those concerning national security. The trauma of gag laws that were imposed on the press before and during World War II resulted in the elimination of all restraints afterwards, which had the effect of making Japan a spy’s paradise, with insufficient counterintelligence measures and poor secrecy. Moreover, the long decades of peace since 1945 have served

to lower awareness among politicians of the need for confidentiality. For example, Japanese newspapers always report when, where, and with whom the Prime Minister met for dinner in the following day’s editions. In contrast to the U.S. system of presidential government, Japan has a parliamentary form of government. Yet the goals of national security and crisis management are the same in both systems – indeed, one of British Prime Minister David Cameron’s first acts when he came to power was to establish an NSC to improve coordination of policymaking. Although the establishment of the Japanese NSC is long overdue, it is not too late for Japan to benefit from the improvement in policy direction and coherence that it seems certain to bring. © Project Syndicate

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November 5, 2013 April 19, 2013

Closing GSK’s executive likely to face charges

EU moots support for non-eurozone banks

Chinese police investigating allegations of widespread corrupt practices at GlaxoSmithKline Plc (GSK) are likely to charge some of its Chinese executives but not the British drugmaker itself, legal and industry sources said. A charge against GSK itself would be a much more serious outcome for the company because it would imply higher-level corporate involvement and could result in major fines and even disruption to its operations in China. The company has been assisting authorities following accusations in July that GSK funnelled up to 3 billion yuan (US$492 million) to travel agencies to facilitate bribes to doctors and officials to boost its sales.

The European Union is considering using EU funds for non-eurozone states with balance of payments problems as a backstop for banks in those countries that fail regionwide financial health checks, EU officials said. The idea is part of a wider discussion on how to reassure investors that Europe will have enough money to bolster banks that will need recapitalising following next year’s stress tests. The 50-billion-euro (US$67 billion) facility consists of funds raised by the European Commission on capital markets. “If a non-euro member state would be in need, the facility could help, even if a particular instrument for dealing with banking sector issues was not specified,” one official said.

Eurozone factory PMI points to recovery Manufacturing economy undergoing a strong growth period Jonathan Cable

urozone manufacturing activity accelerated in October as new orders increased for the fourth month in a row, although strong competition left factories with scant room to raise prices, a survey showed yesterday. Increasingly robust gains in production countries such as Spain, Italy and Ireland mean the bloc’s nascent recovery is becoming more broad-based, survey compiler Markit Economic said. Their final Manufacturing Purchasing Managers’ Index (PMI) rose to 51.3 from September’s 51.1, in line with an earlier flash reading and with the consensus forecast of economists. It hit a 26-month high of 51.4 in August. An index measuring output, which feeds into a composite PMI reading due tomorrow and seen as a good indicator of growth, rose to 52.9 from 52.2. A reading above 50 signals an expansion in activity. “The eurozone manufacturing economy is undergoing its strongest growth period for two-and-a-half years. However, while the recovery goes

Robust gains seen in struggling countries

on, it is by all measures frustratingly slow,” said Chris Williamson, chief economist at Markit. Healthy growth in Germany, Europe’s biggest economy, pulled the troubled region out of its longest recession in the second quarter, but

it will probably only grow 0.2-0.3 percent each quarter through to the end of next year. Earlier PMIs from Germany showed activity picked up last month but across the border in France, the eurozone’s second biggest economy,

the manufacturing sector remained in contraction. Demand for manufactured goods increased last month, although not as fast as in September, and factories made little change to prices, despite rising input costs. The output prices sub-index nudged up to an 18-month high of 50.5 from 50.3 but was down from the 50.7 flash reading. “Output charges rose for the second successive month, but the rate of inflation remained marginal as competition remained strong and market demand lacklustre,” Markit said. Eurozone inflation fell to just 0.7 percent in October, official data showed last week, well short of the European Central Bank’s goal of just under two percent. While a Reuters poll last week did not predict a cut in interest rates from their record low of 0.5 percent when the Governing Council meets this week, Thursday’s inflation data prompted some economists to change their call and expect a cut. Reuters

HSBC sees profits surge by 30 pct U.K. and Hong Kong responsible for more than half of the group’s profits

SBC Holdings Plc, Europe’s largest bank, said third-quarter pre-tax profit rose 30 percent as the lender cut costs and focused on its most lucrative markets. Pre-tax profit climbed to US$4.53 billion from US$3.48 billion in the year-earlier period, the Londonbased lender said in a statement yesterday. That missed the $5.54 billion median estimate of 10 analysts surveyed by Bloomberg. The bank’s home markets of the United Kingdom and Hong Kong were responsible for more than half of the group’s profits. Foreign exchange accounts for the most revenue in the bank’s global markets business, generating US$660 million for the third quarter.

HSBC also said it’s being investigated by regulators, along with other firms, with regard to trading in the foreign-exchange market. Costs as a proportion of revenue, excluding gains and losses in the value of the bank’s own debt, fell to 61 percent from 64 percent, the bank said. That’s still higher than the goal of about 55 percent set by chief executive Stuart Gulliver, who said in May that he will cut an additional US$3 billion of expenses after beating an earlier target. “In a subdued revenue environment, management continues to take out costs,” Bernstein analysts said in an e-mailed note after the results. Mr Gulliver has closed or sold 60 businesses and eliminated 46,000 jobs since the start of 2011. The bank

has struggled to boost revenue that’s been crimped by the sovereign-debt crisis in Europe, the winding down of its U.S. consumer-finance operation and slower growth in China this year. “HSBC has made progress on costs and divestments, exiting local or small businesses,” Citigroup Inc analysts wrote in an October 23 note to investors. The lender said pre-tax profit at its investment-banking business, led by Samir Assaf, fell to US$1.85 billion from US$2.25 billion, hurt by weaker corporate fixed-income revenue. Weaker bond trading has hurt other banks including Barclays Plc, which said last week that that revenue from fixed income, currencies and commodities

dropped 44 percent to 940 million pounds, the lowest since 2011. Regulators in London and Zurich are probing the US$5.3 trillion-aday foreign-exchange market after dealers in the industry said they had been front-running client orders and attempting to rig benchmark rates. “We are cooperating with the investigations, which are at an early stage,” HSBC said yesterday. Barclays Plc, Royal Bank of Scotland Group Plc, Citigroup, Deutsche Bank AG and UBS AG have already confirmed that regulators, including the U.K.’s Financial Conduct Authority, have been in contact with them in relation to suggestions that currency markets could have been rigged. Bloomberg News