Macau Business Daily, November 7, 2013 by Business Daily

MOP 6.00 Vitor Quintã

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Macau Foundation subsidies up twofold in Q3 Page 4

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acau property developer San You Development Ltd confirmed yesterday it’s connected to the newly finalised US$438 million (3.50 billion patacas) purchase of Caesars Golf Macau on Cotai. Nevada-based Caesars Entertainment Corp said in a filing it had completed the sale of the site for US$420 million (3.35 billion patacas) – net of US$18 million “commissions and closing costs” – to Macau-based Pearl Dynasty Investments Ltd. Pearl Dynasty shares a fax number and office address with San You – the firm behind the city’s luxury apartment projects Residencia, The Manhattan and The Greenville. When Business Daily contacted San You yesterday, a female staff member surnamed Chan told us: “I am aware of the sale of the golf course, which is related to the development of our company.” More on page 2

Year II

Number 409 Thursday November 7, 2013

City joins finance1 lease ‘party’ – 20 years on

No ‘crappy box’ for Melco Crown, says Lawrence Ho

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

San You linked to golf course purchase April 19, 2013

Brought to you by

www.macaubusinessdaily.com

Hang Seng Index 23112

23082

23052

23022

China’s Lusophone fund open to local investors Macau businesses looking for investment opportunities in the Portuguese-speaking countries could benefit

from the US$1 billion (eight billion patacas) cooperation and fund launched by Beijing, Secretary for Economy and Finance

Francis Tam Pak Yuen told media yesterday. The fund will take on investment projects requiring between US$5 million and US$20

million in investment – deals of a scale beyond the management capacity most Macau companies, he acknowledged. Page 3

Casino smoke penalties ‘known in two weeks’

Ao ‘executed’ govt orders on airport land: official Disgraced official Ao Man Long gave the green light to sell off government land now at the centre of a corruption trial involving two Hong Kong tycoons a court heard yesterday. But Mr Ao was only “executing” government instructions, the Court of First Instance was told. Businessmen Joseph Lau Luen Hung and Steven Lo Kit Sing are accused of money laundering and corruption. Page 4

Long-overdue results from the latest checks on air quality in casino smoking zones will be out “within two weeks” said a unions-backed legislator, quoting a meeting with Chief Executive Fernando Chui Sai On. Mr Chui has “instructed” Secretary for Social Affairs and Culture Cheong U and Health Bureau director Lei Chin Ion to meet the new deadline, said Legislative Assembly member Ella Lei Cheng I. Page 5

22992

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November 6

HSI - Movers Name

%Day

KUNLUN ENERGY CO

2.33

SWIRE PACIFIC-A

1.23

SANDS CHINA LTD

1.20

CHINA RES ENTERP

1.12

CHINA MOBILE

1.06

HENDERSON LAND D

-0.87

SINO LAND CO

-0.92

CHINA COAL ENE-H

-1.03

LI & FUNG LTD

-1.11

WANT WANT CHINA

-2.11

Source: Bloomberg

I SSN 2226-8294

Brought to you by

2013-11-07

2013-11-08

2013-11-09

21˚ 28˚

22˚ 28˚

November 7, 2013

Macau Leong leads cultural industries fund Executive Council spokesman Leong Heng Teng will lead the cultural industries fund. His appointment by the Chief Executive – for a two-year period – was announced in the Official Gazette yesterday. He will chair the fund’s administrative committee. By regulation, it is authorised to grant funding of up to 500,000 patacas (US$62,619) to projects that are engaged in the production of ‘cultural and creative products’. Any project seeking more must approach the fund’s board of trustees and chief executive. Mr Leong is also vice-chairman of the Committee for Cultural Industries, the advisory body for local cultural policy-making.

Links of another kind – San You connected to golf course deal

Developer confirms links to golf course purchase Buyer Pearl Dynasty connected to Macau real estate firm San You Michael Grimes

michael.grimes@macaubusinessdaily.com

acau property developer San You Development Ltd confirmed yesterday it is connected with the newly finalised US$438 million (3.50 billion patacas) purchase of Caesars Golf Macau on Cotai. Nevada-based Caesars Entertainment Corp said in a filing on Monday United States time, it had completed the sale of the site for US$420 million (3.35 billion patacas) – net of US$18 million “commissions and closing costs” – to Macaubased Pearl Dynasty Investments Ltd. Pearl Dynasty shares a fax number and office address with San You – the firm behind the city’s luxury apartment projects Residencia, The Manhattan and The Greenville. It has led to speculation that the new owners would seek a change of use on the site to allow at the very least some housing. The land is

currently only zoned as a golf course according to Caesars. When Business Daily contacted San You yesterday, a female staff member surnamed Chan told us: “I am aware of the sale of the golf course, which is related to the development of our company. But I am not sure about whether [Pearl Dynasty] is one of our subsidiaries or not…. I can only get back to you later with any details.”

BVI company Macau’s Commercial and Movable Goods Registry lists Timothy Cheong Lok Tin, Tan Zhenwei and Li Zhaoguang as having started San You in 1997. In 2005, Mr Cheong bought Mr Tan’s stake. He also bought most of Mr Li’s stake, with the rest acquired by Hercules Sky Ltd, a British Virgin Islands company, adds the registry. According to sources spoken to by Business Daily,

Stephen Hung, now chairman of Louis XIII Holdings Ltd – a firm planning a casino via a so-called service agreement on another site in Cotai – originally brokered the then Harrah’s Entertainment Inc’s purchase of what was then Macau Orient Golf Course in September 2007. Although Harrah’s denied it at the time, it was widely considered in the industry as an attempt to parlay the 71-hectare (175 acres) course into a casino resort. That dream was ended when the Macau government said it would not issue any more casino concessions or sub-concessions during the lifetime of the current ones. Six years on, the disposal of the golf course, announced in a filing on Monday, United States time, means that heavily indebted Caesars – which has tried but so far failed to get any sort of casino operation in East Asia – has realised just under 73 US cents on the dollar for the

US$438 mln Pearl Dynasty paying for Caesars Golf Macau

US$577.7 million it paid for the Macau golf course.

Debt load In January 2008 Harrah’s – with a network of casinos in the United States – took on debt when it was bought for US$30.7 billion in a leveraged buyout by affiliates of private equity firms Apollo Global Management LLC and TPG Capital. In 2010, after a name change to Caesars

Entertainment, and when the purchasers were planning a partial return of the company to the public markets in a US$500 million flotation, Barron’s described the 2008 deal as “one of the worst big LBO deals at the top of the market”. Caesars Entertainment bonds fell this week after Fitch Ratings said the casino company, still struggling with US$23.5 billion in debt, might seek to limit bondholder claims on some assets to obtain better terms in a debt restructuring. Caesars Entertainment Operating Co’s US$3.3 billion in 10 percent second-lien notes maturing in December 2018 fell two US cents on the dollar to 48 US cents, lifting the yield to 30.84 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes have plunged from 70.5 cents in January. In late October Caesars said it was pulling out of a US$1 billion proposed joint venture for a casino in Boston, Massachusetts, after background checks by a local gaming regulator. Caesars, which denies any wrongdoing, also said in a regulatory filing on October 21 that one of its subsidiaries was subject to a U.S. federal grand jury investigation, as part of a nationwide crackdown on alleged money laundering in the gaming industry. With Tony Lai/Bloomberg News

November 7, 2013 April 19, 2013

Macau

US$1-bln fund ready to ease Luso-investment Fund’s restrictions are likely to preclude most Macau firms from first round of loans Stephanie Lai

sw.lai@macaubusinessdaily.com

usinesses eager to invest in Portuguese-speaking countries may benefit from loans from the US$1-billion (7.98-billion pataca) Cooperation and Development Fund. Secretary for Economy and Finance Francis Tam Pak Yuen said yesterday at the Macau Forum that the fund was seeking investment projects valued between US$5 million and US$20 million. Those amounts were probably out of reach of most Macau companies but finding a mainland partner would help firms access loans, Mr Tam said on the sidelines of a businessmatching seminar. The fund, announced last year, targeted “bigger investments, such as the agricultural projects” in Portuguesespeaking countries, he said. “In the past two years, we have seen many cooperation projects have been discussed between Macau and mainland China that involved investment in agricultural projects in Angola and Mozambique,” he said. “So far we have seen three or four of these investments in agriculture and fishery projects in the two countries.”

Macau firms should find mainland partners to qualify for loans, Francis Tam says

Yesterday’s seminar was part of the fourth ministerial conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking countries, known as the Macau Forum. Just US$125 million will initially be made available for applications from member states. Investors will have four to six

years before they must start repaying the loan. China, Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, Portugal and East Timor are the existing members of the Macau Forum. The fund is backed by China Development Bank Corp and the Macau Industrial and Commercial Development Fund.

The fund will not directly control the investments but retains the power to appoint directors, supervisors or financial management staff in the companies running the projects. Macau stands to benefit from other Macau Forum initiatives announced earlier this week. Three new business centres will be established to boost trade prior to 2016, when China and the Portuguese-speaking countries are due to meet again. Offices for small- and mediumsized enterprises, for food products distribution, and for conventions and exhibitions would be set up, the State Council vice-premier Wang Yang said on Tuesday. “The MSAR government and its mainland counterpart will have to cooperate to build these three centres,” said Mr Tam. “We hope that, by the time we are having the next Sino-Portuguese ministerial conference in three years, we can present the workings of the three centres and review them.” On Monday, Portugal’s investment and trade agency president Pedro Reis said a food products logistics centre would be set up, focusing on distributing frozen food. Mr Tam did not specify if the distribution centre would handle logistics generally or food. “We don’t have to necessarily build a centre to have the Portuguese products imported here and sell them to the mainland,” Mr Tam said. “We can present the [Portuguese] products to the mainland market and help the buyers there understand the products.” “If the mainland buyers are interested, they can place an order through an agent here and get the goods imported directly to the mainland. This is the role that the distribution centre can play.”

Macau joins financial leasing ‘party’ First such leveraged finance firm launches nearly two decades after such operations legalised here Tony Lai

tony.lai@macaubusinessdaily.com

inancial leasing – a form of leveraged investment long popular in the West – has spread to Macau, with the establishment of the city’s first such specialist in the sector. Land Tai Fung (Macao) International Financial Leasing Co Ltd, was officially set up this week, although such services have been legal in Macau since 1994. A finance lease is one primarily to raise capital to pay for assets, rather than a genuine rental. An example is where the lessee (a customer or borrower) selects an asset such as equipment, a vehicle, or software. A finance company then purchases that asset and allows the lessee use of the item during the lease. The lessee pays a series of rentals or instalments to the finance house for the use of the asset.

Depending on depreciation, the lender recovers most or all of the cost of the asset and also earns interest via the instalment payments. The user has the option to acquire ownership of the asset at the end of the process. “As Macau is positioned as an international tourism and exhibition centre, there is undoubtedly largescale development in areas like tourism facilities and yachts,” said Land Tai Fung’s chairman Gao Jisheng yesterday. “…we are striving to provide innovative financial services to companies in such areas,” he said at the firm’s inauguration ceremony.

Economic growth The city’s further economic and tourism cooperation with nearby

Hengqin Island and the expected completion of the Hong Kong-Zhuhai-Macau Bridge by 2016 will further raise needs for financial leasing, for example when the Macau small-and medium-sized enterprises want to invest on Hengqin, said Mr Gao. Anselmo Teng Lin Seng, chairman of the Monetary Authority of Macau, told media at the ceremony this new company can “offer more financing channels” for companies and “diversify Macau’s financial structure”. The business – a Macaumainland joint venture – can further promote bilateral collaboration, said Mr Teng. “We have considered numerous areas like the credentials of the shareholders, its operating experience, its management style and risk management

Tai Fung bank part of JV (Photo: Manuel Cardoso)

during the review process [of Land Tai Fung establishment],” stated Mr Teng. Land Tai Fung is a collaboration between Tai Fung Bank Ltd – established by the family of former chief executive Edmund Ho Hau Wah – and Land-G (Macau) Group Ltd, founded by Mr Gao who is also chairman of Lander Holdings Group Co Ltd. Lander Holdings is a mainland conglomerate with

investment, leasing and real estate interests including Shenzhen-listed Lander Real Estate Co Ltd. “Its business plan, which we think is executable, is also considered as well and its financing channels are normal and healthy,” added the head of the monetary authority. Mr Teng stressed the formation of the company was lawful and met international standards for financial institutions.

November 7, 2013

Macau Ao ‘acted under orders’ on La Scala land sale A former civil servant tells corruption trial the government tried to sell land near the airport in the 1990s Tony Lai

tony.lai@macaubusinessdaily.com

isgraced official Ao Man Long gave the signal to sell the land involved in the corruption trial of two Hong Kong tycoons but he was only “executing” government instructions, the Court of First Instance heard yesterday. The pre-recorded testimony of witness José Castanheira Lourenço, the former director of the Infrastructure Development Office, was played to the court hearing the trial of Hong Kong businessmen Joseph Lau Luen Hung and Steven Lo Kit Sing. Mr Castanheira Lourenço backed the prosecution’s claim that Mr Ao, his former boss, “instructed” him to launch the sale of land plots near the airport that became the site of the La Scala housing project. “But I think this was an order from the government and he [Mr Ao] only executed it,” he testified earlier this year in Portugal. Mr Lo and Mr Lau, the chairman of Hong Kong-listed developer Chinese Estates Holdings Ltd, are charged with paying a HK$20million (US$2.5 million) bribe to Mr Ao to ensure the success of their bid for five pieces of land in 2005. The former secretary for Transport and Public Works, Mr Ao was sentenced to 29 and a half years’ jail in earlier trials. “Ao Man Long told me it was an appropriate time to try to sell the land due to the market conditions at that time,” said Mr Castanheira Lourenço. “The land [market] was at a low at the end of the Portuguese administration… the land price only started to rise a few years after the handover to China.” Mr Castanheira Lourenço was a government representative in Lei Pou Fat Development Co Ltd, the umbrella company that managed the land near the airport, in which the government had a stake of 88 percent. He said the g o v e r n m e n t wanted to sell the land in the 1990’s but had set the price “too high”. The valuation was 50 percent lower than the

shareholders’ expectations. The other shares were owned by businessman Ng Fok, Macau International Airport Co Ltd and Sociedade de Turismo e Diversões de Macau SA (STDM). Representatives from Lei Pou Fat even toured Taiwan in 1996 to market the land and were accompanied by lawyers who could promptly draft a sales agreement, he said.

STDM’s advantage STDM was one of three bidders invited to tender for the land in 2005. It formed a joint venture with Vigers Holdings Ltd, a property surveyor. The other two bids came from Apex and CBRE Group Inc, and Jones Lang LaSalle Inc and Moon Ocean Ltd. Moon Ocean was owned by Lo and later sold to Lau. Mr Castanheira Lourenço said Mr Ao gave instructions that the bidders must have international experience in big projects. At a Lei Pou Fat shareholder meeting, STDM “suggested” it should be invited to tender, he said. STDM had asked for a direct grant of the land previously and enjoyed an “advantage” over other bidders because it was aware of the land valuation reports from December 2004 and January 2005.

The prosecution has argued that the two Hong Kong businessmen knew about the sale in advance because they had bribed Mr Ao and could prepare a better bid. Mr Castanheira Lourenço said the “major” factor in selecting a winner was price. Moon Ocean and Jones Lang LaSalle won the tender with a HK$1.3-billion bid while STDM’s bid was about HK$17 million lower. Mr Castanheira Lourenço said there was no influence from Mr Ao during the tender process or the evaluation of the bids. The trial resumes on Monday.

Macau Foundation subsidies double One in four patacas went to the University of Science and Technology in third quarter Vítor Quintã vitorquinta@macaubusinessdaily.com

he Macau Foundation granted twice as much money in subsidies in the third quarter of this year than in the same period a year earlier, official data show. According to a notice published in the Official Gazette yesterday, the foundation approved subsidies worth 334.7 million patacas (US$41.9 million) in the last quarter, up from 170.4 million patacas a year earlier. Almost one in four patacas or 82.3 million patacas went to the foundation behind the private Macau University of Science and Technology (MUST). The foundation got 55 million patacas to help finance its day-today activities and set up a training centre on robotic surgery, plus 27.3 million patacas to its football field and sports pavilion. The university has now received more than 163 million patacas from the public purse since 2009 for its sports centre. The second biggest beneficiary of Macau Foundation subsidies in the last quarter was the University of Saint Joseph. The institution linked to the Catholic Church got 45 million patacas for its new campus in Ilha Verde. Next on the list came another higher education institution. The City University of Macau, owned by businessman and legislator Chan Meng Kam, received 30 million patacas to finance its activities. The foundation grabbed the spotlight in June after the Commission of Audit released a report slamming the institution’s lax supervision, causing cases of over-subsidising and of associations getting more than one subsidy. In response Wu Zhiliang, president of the foundation, pledged to improve the accountability on how the subsidies are spent. The Commission Against Corruption joined the discussion last month. “Now is the right moment” to analyse the role of the Macau Foundation, the ombudsman said, namely because the amount of money granted to associations has been growing significantly in the last few years.

November 7, 2013

Macau Govt ready to clear air on smoking penalties Casinos with substandard air quality to know fate in a fortnight, says chief executive Tony Lai

tony.lai@macaubusinessdaily.com

Sixteen gaming venues failed the second round of tests

ong-overdue results from the round of surveys of casino air quality – and any penalties for failing to effectively clear tobacco smoke – will be out within two weeks, says Legislative Assembly member Ella Lei Cheng I. The Macau Federation of Trade Unions, represented in the assembly by Ms Lei, met Chief Executive Fernando Chui Sai On at government headquarters yesterday. Mr Chui had instructed Secretary for Social Affairs and Culture Cheong U and Health Bureau director Lei Chin Ion to release the results within two weeks, Ms Lei said after the meeting. “The chief executive said he has clearly instructed… the government to follow what is written in the law and cut the floor space of smoking areas for any failing [casinos],” said Ms Lei. In a press statement released yesterday, Mr Chui’s cabinet did not confirm the two-week deadline, only saying the result and penalties would be out “in due course”. Any further delay in releasing the results of the air-quality tests would be “inexcusable” in the wake of Mr Chui’s instructions, Ms Lei said. From January 1, smoking has been prohibited in half of the floor area of the city’s gaming rooms. The government can reduce the size of the smoking zones

if casino operators do not meet air-quality standards. Results from a second round of checks and any penalties were due to be published before July but that announcement has been hit by delays. The Health Bureau said it handling large amounts of data and dealing with appeals from casinos had slowed its work. “The appeals from each [casino] are different, and we have to discuss with the legal experts whether or not the appeals are reasonable,” said Health Bureau director Mr Lei last month. The government said 16 gaming venues failed the second round, down from 28 in the first round. The trade union representatives and Mr Chui also discussed next week’s Policy Address for 2014. Ms Lei, the trade union federation’s vice-president, said Mr Chui did not reveal any details yesterday. “The government will continue and strengthen social welfare policies beneficial to the residents,” Ms Lei said. She said the federation gave its position on a proposed minimum wage for cleaners and security guards, as well as housing and residents’ employment. Mr Chui’s cabinet quoted Secretary for Economy and Finance Francis Tam Pak Yuen as saying the government will “study” the federation’s suggestions.

November 7, 2013 April 19, 2013

Macau

Macau casinos’ owner loaned to Birmingham City’s buyer Carson Yeung’s Grandtop got money from Kingston Financial in 2007

Iao Kun rolling chip turnover up

Vítor Quintã

vitorquinta@macaubusinessdaily.com

Nasdaq-listed Macau junket room investor Iao Kun Group Holding Co Ltd – which last month changed name from Asia Entertainment & Resources Ltd – said October’s rolling chip turnover rose three percent year-on-year from the same month in 2012. It reached US$1.51 billion (12.06 billion patacas), compared to US$1.47 billion for the same period a year earlier. The increase in rolling turnover was “primarily attributable to the completion in June 2013 of the acquisition of 100 percent of the profit interest in the operations of the VIP gaming room at Level 1 of Le Royal Arc Casino,” said the firm.

Dore to be ‘Sino Credit Holdings’ Hong Kong-listed Macau junket room investor Dore Holdings Ltd plans to change its name to Sino Credit Holdings Ltd, it said in a filing yesterday. It follows a recent trend of Macau junket businesses changing either their listed name or their brand name. In some cases the changes appear to highlight the transition of the junket sector – which raises capital for VIP casino play and issues credit to high rollers – from an informal industry to a more professionally organised business. Dore last month appointed a 38-year old Master of Business Administration as chief executive.

Six-story building approved for Barra A six-story residential building with a shop on the ground floor has been approved for a 47-square-metre plot near the Moorish Barracks in Barra. According to yesterday’s Official Gazette, developer Vicky Plaza Ltda will pay less than 400,000 patacas (US$50,000) for the plot, plus a yearly rent of 101 patacas. The company represented by director Vicky Chow Sui Fong will have two and a half years to develop the plot. Vicky Plaza had submitted the latest development project, which added a commercial ground-floor unit, in October 2011.

Carson Yeung began buying up Birmingham City in 2007

he owner of the Casa Real and Grandview hotel-casinos extended – via a subsidiary – a loan to a Hong Kong-listed entity that bought Birmingham City football club in the United Kingdom, a court heard on Tuesday. Kingston Corporate Finance Ltd – a unit of Hong Kong-listed Kingston Financial Group Ltd – lent HK$140 million (US$18 million) to the then Grandtop International Holdings Ltd in 2007, Hong Kong prosecutors said. Carson Yeung Ka Sing, the chairman of Grandtop – which in 2009 changed its name to Birmingham International Holdings Ltd – is on trial charged with five counts of laundering a total of HK$721 million between January 2001 and December 2007. In stages between 2007 and 2009 Grandtop bought a controlling interest in the soccer club – based in the English midlands – for 81.5 million pounds (1.2 billion patacas). Asked why Kingston Finance decided to grant the loan, Mr

Yeung told the Hong Kong District Court in Wanchai: “I think they thought our plan was okay. At the time, I had shares as security with them. I also signed a personal guarantee,” reported the South China Morning Post. It was not clear whether the money from the loan was used in the purchase of the Birmingham club, the court heard. Mr Yeung, aged 52, is accused of laundering HK$721 million between January 2001 and December 2007. Another unit of Kingston Financial Group – Kingston Securities Ltd – had underwritten the football club purchase, Birmingham International said in a January filing. Kingston Financial Group bought the Casa Real casino hotel on Macau peninsula and the Grandview casino hotel in Taipa in 2005. Both operate under a gaming licence from Sociedade de Jogos de Macau SA. It was also said in court that Kingston Securities was the underwriter of Neptune Group Ltd, a

Hong Kong-listed investor in Macau junket operations. In an earlier trial session, Mr Yeung confirmed he had received HK$20 million from a man called Cheung Chi Tai in 2007. The defendant said it related to a HK$26.4 million investment he had made at a “Neptune Club VIP room” in January 2005. Mr Cheung was named in a 1992 United States Senate report on Asian organised crime as a member of the Wo Hop To triad. Mr Cheung was also named by a police witness as a leader of Wo Hop To during a Hong Kong court case in 2009. He was listed in court records as the “mastermind” of a plot to break the arms and legs of a Macau casino dealer. Cheung Chi Tai was arrested in connection with the case but released by Hong Kong police because of insufficient evidence. Mr Cheung’s name has in the past featured on Neptune Group paperwork as an “executive director”.

Corporate Most floor space at G2E Asia already booked

Okura Macau gets China Travel Award

About 95 percent of exhibition space for next year’s edition of Global Gaming Expo (G2E) Asia, which is held annually in Macau, has already been let. The organisers, Reed Exhibitions in partnership with the American Gaming Association (AGA), expect next year’s event to have more speakers than this year’s edition. In 2013, the three-day conference featured 19 tracks and 44 speakers who discussed topics focused on Macau, marketing, the gaming floor, risk management, finance and non-gaming amenities. G2E Asia 2014 will be held from May 20-22, 2014 at the Venetian Macao. It will have dedicated pavilions for business solutions, electronic gaming and training, security and surveillance. The Players Club VIP programme, which matches casino-resort buyers with sellers, will return after making its debut this year. In 2013, G2E Asia hosted 5,851 buyers and visitors from 72 countries and regions.

Hotel Okura Macau was chosen by the readers of Travel+ Magazine as one of the ‘Best Urban Business Hotels’ at the 2013 China Travel Awards ceremony. An awards ceremony for the World Travel Awards was held on the evening of October 1 in Dubai, before the China Travel Awards took place in Shanghai on October 16. Okura Macau, launched at the Galaxy Macau resort in Cotai in 2011, is a double debut for Okura Hotel Resorts. It was the group’s first property here and it was the first time an Okura hotel is sharing premises with other hotels. Okura Macau, run by general manager Harmen Dubbelaar, has 488 rooms, including 59 suites, an Okura Club, a VIP lounge and a business centre with three boardrooms. To cater to the needs of meetings, seminars and events, Hotel Okura Macau offers six banquet rooms on the 28th floor totalling 550 square metres.

November 7, 2013 April 19, 2013

Macau

No ‘crappy box’ for Melco Crown on Cotai Casino developer’s co-chairman takes swipe at competition during Q3 earnings call Michael Grimes

michael.grimes@macaubusinessdaily.com

co-chairman of Melco Crown Entertainment Ltd appeared to take a swipe at market challengers in his firm’s latest earnings call. Lawrence Ho Yau Lung told analysts – referring to the fifth hotel tower planned for City of Dreams – he would not “build a crappy box like some of our competitors”. His remarks were in response to a question about gaming table allocation for the planned new tower, which Mr Ho said the firm hoped to open in “late 2016 or early 2017”. The Macau market is currently subject to a government cap on new live dealer tables. Under the policy, table provision is envisaged expanding at a rate equivalent to three percent compound growth over the next decade, from a base of 5,485 tables recorded at the end of the fourth quarter last year. “…our view is that if the government ever increases the cap, and I’m not saying that they would, but if they

Cheerful but not cheap-looking – City of Dreams

do do it, they would want to allocate [extra tables to MCE],” said Mr Ho on the call. “They [the government] have been telling us that they would reward operators for contributing to the diversity of Macau and, at the same time, for iconic buildings. So if we were to build a crappy box, like some of our competitors – who naturally wouldn’t qualify for that

[extra allocation]…I think this [an iconic building] gives us a really good chance of qualifying for tables,” he stated.

Direct VIPs In response to another question, Ted Chan Ying Tat, chief operating officer of MCE, said the amount of business contributed from so-called ‘premium direct’

players – VIPs directly managed and given credit by the casino operator and thus providing a better margin to the house than VIPs managed and funded by junkets – had risen yearon-year during the three months to September 30. “I think our premium direct actually grew from last year, [when it was] about 15 percent, to the third quarter roughly about 20 percent in

CoD [City of Dreams], [on] a total rolling volume basis,” said Mr Chan. “In fact, on a sequential basis, we grew more than 20 percent from the second quarter to the third quarter, which is quite essential in terms of our premium inhouse business.” Elsewhere on the call Geoff Davis, MCE’s chief financial officer, said a more than 65 percent year-on-year increase in mass table games revenue and “strong cost control focus” had helped groupwide luck-adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) margin in the third quarter expand more than 200 basis points judged quarter-on-quarter, to “approximately 25.9 percent”. City of Dreams’ massmarket table game gross revenue increased 73 percent year-on-year in the third quarter, said the firm in a filing. Slot handle at CoD during the period rose 52 percent, to approximately US$1.24 billion (9.9 billion patacas).

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

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

Traffic Authorities.

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 7, 2013 April 19, 2013

Greater China Swiss fund enters mainland with VStone Swiss fund-of-hedge-funds manager Gottex Fund Management Holdings Ltd will form a joint venture with China’s VStone Asset Management, to further its aim to invest in Asia and raise capital from the region. VStone will help Gottex establish a foothold in China and help its global clients get access to investments. “The objective is to build out Gottex capability in China and to be able to provide our investors access to China’s onshore markets across equity, fixed income and private equity,” Gottex cofounder Max Gottschalk told Reuters.

Apple passes ZTE with iPhone release Apple Inc captured fifth place in China’s smartphone market in the third quarter, surpassing ZTE Corp and Xiaomi Corp, after it included the Asian nation in the latest iPhone’s global debut. Shipments of the iPhone rose 32 percent year-on-year to hand Apple 6 percent of the country’s smartphone market in the third quarter, Nicole Peng, the China research director for Canalys, said. Samsung Electronics Co Ltd widened its lead after shipments more than doubled to give the company a 21 percent share of the world’s largest smartphone market, according to Ms Peng.

Sinopec parent plans stake buyback China Petrochemical Group, parent of Shanghai and Hong Kong listed oil giant Sinopec Corp, plans to spend an estimated maximum US$17.7 billion to buy back a 2 percent stake in the Shanghai-listed entity over the next year, in an apparent move to support the mainland’s sagging stock market. The state-owned parent started the purchase on Tuesday, buying 6.06 million shares, or 0.005 percent of the listed arm, Sinopec said in a filing to the Shanghai Stock Exchange yesterday. A 2 percent stake amounts to 2.33 billion shares, based on Sinopec’s total capital base of 116.6 billion share.

Cheung Kong weighs offer for Fortum unit Cheung Kong Infrastructure Holdings Ltd, controlled by Asia’s richest man Li Ka Shing (pictured), is interested in bidding for the Finnish electricity grid owned by Fortum Oyj, a person familiar with the matter said. Cheung Kong Infrastructure is working with UBS AG on a possible offer, the person said. Fortum said in January that it was considering selling its electricity distribution businesses in the Nordic region to focus on power generation. The company said it planned to complete the review of the electricity units in Finland, Sweden and Norway by the end of the year.

United overseas mulls Hon As Beijing said to have approved more trade zones

hina’s plans to develop freetrade zones in Shanghai and Guangzhou may be dimming the attraction of banks in Hong Kong for foreign acquirers such as Singapore’s United Overseas Bank Ltd. The zones may make Hong Kong “less relevant” in coming years, Citigroup Inc said in a report yesterday, citing comments made on Tuesday on a conference call by officials at UOB, Southeast Asia’s third-largest largest bank. They were responding to a question about UOB’s interest in bidding for Hong Kong’s Wing Hang Bank Ltd, according to James Antos, an analyst at Mizuho Securities Asia Ltd, who was on the call. “Management repeated that UOB is not going to overpay for any acquisition,” Mr Antos wrote in an e-mail yesterday. “In the case of Wing Hang Bank, the longer-term franchise value might not be what it is right now, considering that China is developing the Shanghai Free Trade Zone.” Singapore banks are mulling overseas expansion plans to offset the lowest lending margins in Southeast Asia. Oversea-Chinese Banking Corp is considering a bid for Wing Hang, a family-run Hong Kong lender, people familiar with the matter said on October 24. Samuel Tsien, OCBC’s chief executive, declined to comment on the bid at his bank’s third-quarter results briefing on November 1. Banks in Singapore have an average net interest margin of 1.77

Wing Hang an acquisition target for Singapore banks

percent, according to data compiled by Bloomberg. While that’s higher than Hong Kong’s 1.73 percent, the Chinese city is seen by lenders as a gateway to the mainland and a way to benefit from increasing global use of the yuan.

Higher profit “Hong Kong will need to consider the role the Shanghai Free Trade

Zone will have in the longer term,” Jimmy Koh, UOB’s managing director of investor relations, wrote in an e-mail to Bloomberg News. “We feel that the Shanghai FTZ is still in its early stages and has a complementary role in developing trade flows between Greater China and the rest of the world.” The central government has approved in principle a free trade

Beijing to test loans to support farmers Officials aim at reducing reliance on stockpiling

hina is set to test using loans and subsidies to support farmers from next year, a senior government official said, indicating a shift away from a controversial scheme to stockpile agricultural commodities. Reduced reliance on stockpiling, which has pushed domestic prices way above international markets, would be welcomed by local firms such as sugar and cotton mills that have had to shell out more for raw materials. But it would also weigh on global markets that have been buoyed by Chinese stockpiling. “China has already started to tackle the pricing mechanism for agricultural commodities,” said Zhao Lihua, a director at the economy and trade division of the National Development and Reform Commission (NDRC). “We hope to establish a support system made up of subsidies, loans, insurance and stockpiling together,” he added in a speech last week at a sugar conference in the southwestern city of Kunming. China has stockpiled crops including sugar, cotton, soy and corn for several years, paying abovemarket prices to help its farmers. The cotton stockpiler is paying 20,400 yuan (US$3,300) per tonne of fibre this year, about double global prices. But in driving up domestic prices, the policy has fuelled a

Research agency proposes changes to rural land ownership rules

surge in cheaper imports, benefiting overseas suppliers rather than the local market. China is estimated to have imported around 2 million tonnes of sugar at the full 50 percent import duty in the 2012/13 year, thanks to price premiums close to US$400 per tonne between domestic and international prices. This has helped support an oversupplied global sugar market, which saw prices fall to a 3-year low in July. NDRC, the planning body that sets economic policies, has already sought industry comment on proposals to overhaul cotton stockpiling. “The earlier methods were rather simplistic,” said Mr Zhao, according to a transcript of his speech published

by an industry website. The new support policies have not yet been decided but will be tested out on some products from next year, he said, without giving further details. China Politburo member Yu Zhengsheng said the Communist Party would consider “unprecedented” economic reforms this month, as a top research agency proposed changes to rural land ownership rules and social security. The research centre proposes to let farmers use land as collateral or transfer it to others. Under existing regulations, farmers own rights to use land collectively and can’t sell to developers directly, leading to grabs by local governments. Reuters

November 7, 2013 April 19, 2013

Greater China

ng Kong lure

Huawei tapping European markets Company relying more on handsets, deputy chairman says

Hong Kong will need to consider the role the Shanghai Free Trade Zone will have in the longer term Jimmy Koh, UOB’s managing director

zone comprising Macau, Hong Kong and parts of Guangdong, the 21st Century Business Herald reported late last month. The Chinese-language newspaper quoted unidentified sources as saying approval for the zone may be officially announced after the Communist Party Central Committee meeting in Beijing from November 9 to 12. President Xi Jinping is expected

to lay out during the meeting China’s main plan for reform in the next 10 years. The 21st Century Business Herald said the Guangdong provincial government’s proposal for a free trade zone had won favour mainly because of the emphasis it put on regional cooperation, which would mean the zone would not clash with Shanghai’s new free trade zone, which had a global outlook. The proposal is for the zone to include the special administrative regions of Macau and Hong Kong and three parts of the province of Guangdong: Qianhai near Shenzhen, Hengqin Island and Nansha in Guangzhou. Bloomberg News/T.A.

uawei Technologies Co Ltd, the third-largest smartphone vendor, is focusing on a gradual growth strategy instead of acquisitions to chase Samsung Electronics Co Ltd and Apple Inc for market share, its deputy chairman said. “We’re not expecting an explosive development of our smartphone business, rather we want to grow that business step by step,” Eric Xu told reporters in London yesterday. “Ultimately we want to be the leading brand worldwide in smartphones, but it will take a while to get there.” Mr Xu confirmed Huawei’s smartphone growth target of 10 percent this year and next. The company is relying more on handsets while it fights cybersecurity concerns that have restricted its access in U.S. and Australian phoneequipment markets. Huawei, China’s largest supplier of telecommunications networks, isn’t planning an acquisition to bolster its position because of potential product overlaps, he said. The comments would damp speculation over a linkup by the Chinese company with takeover targets such as France’s Alcatel‑ Lucent SA and BlackBerry Ltd of Canada. Huawei hasn’t held any discussions with BlackBerry, said Mr Xu, who is also acting chief executive under a rotating arrangement set up two years ago by the closely held

company based in Shenzhen. European carriers are accelerating their expansion of fourth-generation networks, and Huawei will focus on upgrading existing customers in the region to faster services, Mr Xu said. As telecommunications operators move toward consolidation in the region, Mr Xu said Huawei has found operators prefer having choices in their vendors, comparing it to the fashion industry in that “customers’ needs are changing constantly”. Huawei shipped 12.5 million smartphones in the third quarter, taking 4.8 percent of the global market, trailing only Samsung’s 31 percent and Apple’s 13 percent, researcher International Data Corp. said last month. “We don’t know if we can keep that spot next quarter and we don’t care much about being No. 3 at any given quarter,” Mr Xu said. “We want to be an athlete in the long run and grow step by step.” Smartphones helped boost Huawei’s sales 11 percent in the first six months this year to 113.8 billion yuan (US$18.7 billion). Its 10 percent annual smartphone growth could raise consumer devices to 25 percent of the company’s sales in 2017 from 22 percent last year, deputy chairman Guo Ping said in April. Sales of network equipment will fall to 60 percent of revenue in 2017 from 73 percent in 2012, Mr Guo said. Bloomberg News

Hong Kong bourse quarterly profit up as trading jumps Funds raised through IPOs increased 34 percent last quarter

ong Kong Exchanges & Clearing Ltd, the world’s second-biggest bourse operator by market value, said profit climbed 20 percent last quarter from a year earlier as trading of shares and derivatives jumped. Net income increased to HK$1.2 billion (US$155 million) in the three months through September 30 from HK$1 billion a year before, according to a statement yesterday. The average daily value of stocks traded on the exchange surged 19 percent, while the number of derivatives contracts bought and sold each day rose 18 percent. Trading climbed as the Hang Seng Index, the worst performer among developed markets tracked by Bloomberg in the first half of 2013, rebounded 16 percent from a June 24 low.

The London Metal Exchange, which the Asian bourse bought for US$2.2 billion in December to expand into commodities, contributed HK$318 million of profit in the first nine months of the year, Hong Kong Exchanges said yesterday. The LME is seeking its first foothold in mainland China, while facing increasing regulatory scrutiny of its global warehouse network. “LME has made some kind of an impact,” Matthew Smith, an analyst at Macquarie Group Ltd, said by phone, adding that the profit figures were in line with his expectations. “In terms of growth going forward, the mainland warehousing is one issue. If it does happen, it would justify or come close to justifying why they did the deal in the first place.” Establishing LME’s first

warehouses in mainland China is a long-term aspiration, Hong Kong Exchanges chief executive Charles Li said in June. The earnings from LME in the first nine months of the year equated to about 9 percent of the Hong Kong bourse’s HK$3.5 billion profit in the period, according to yesterday’s statement. Funds raised through initial public offerings in Hong Kong increased

34 percent to HK$18.2 billion last quarter from the same period a year earlier, according to the exchange operator’s quarterly report. The average daily value of shares bought and sold on the exchange rose 19 percent to HK$55.2 billion in the three months through September 30 from the same part of 2012, Hong Kong Exchanges said.

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The LME contributed HK$318 million of profit in the first nine months

Apt. on Top Floor Approx. 180 square meters HKD 19.9 million

Bloomberg News

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Greater China

Huishang Bank prices shares at HK$3.53 Lender prices IPO near bottom, set to start trading on November 12

uishang Bank Corp Ltd, a lender in the eastern Chinese province of Anhui, is set to raise about US$1.2 billion after pricing its IPO near the bottom of expectations, in the biggest bank offering in Hong Kong in more than three years, people familiar with the matter told Reuters. Huishang Bank’s softer pricing came as smaller rival Bank of Chongqing Co Ltd on the same day made a lacklustre trading debut, starting flat compared with its IPO price of HK$6.00 per share. At the closing it was trading at HK$5.99. The benchmark Hang Seng share index was flat for the day. Huishang Bank and Bank of Chongqing are kicking off a busy few months of capital raising by Chinese lenders as they seek to bolster their balance sheets against a possible spike in bad debts in the world’s secondbiggest economy. Chinese banks are planning to raise about US$11 billion in stock

US$1.2 bln

Huishang and some shareholders raised in the offering sales in Hong Kong between now and the middle of next year, according to estimates by Thomson Reuters. The Hefei-based bank priced its initial public offering at HK$3.53

per share, after marketing the shares in an indicative range of HK$3.47 to HK$3.88. Huishang is offering 2.61 billion shares in the IPO, taking the deal value to HK$9.21 billion

Shuanghui hires lenders for up to US$6 bln HK IPO Share sale to help revive the IPO market in Hong Kong Fiona Lau and Elzio Barreto

huanghui International Holdings Ltd, which bought U.S. pork producer Smithfield Foods Inc this year, has hired banks for a Hong Kong IPO, seeking to raise up to US$6 billion in what could be the region’s largest stock offering in four years. The potential size of a deal is subject to change. While one source familiar the matter said it could go as high as US$6 billion, another said it was more likely to be in the US$3 billion to US$4 billion range. An IPO would allow Shuanghui

to pay down debt borrowed for the US$4.7 billion Smithfield purchase and provide an exit for investors such as CDH Investments Fund Management Co, one of China’s biggest and oldest private equity firms which has long aimed to sell its stake in the company. The listing, expected in the second quarter of 2014, would be a major boost for the Hong Kong stock exchange, which has seen public offering volumes drop over the last two years and has missed out

on a potential US$15 billion IPO for Chinese e-commerce firm Alibaba Group Holding Ltd. Shuanghui has tapped BOC International Holdings Ltd, Citic Securities Co Ltd, Goldman Sachs Inc, Morgan Stanley, Standard Chartered Plc and UBS AG to lead the IPO, sources familiar with the matter said. The news was first reported by IFR, a Thomson Reuters publication. The bank line-up is not final, one person familiar with the plan said.

KEY POINTS IPO planned for second quarter of 2014 – IFR Would provide an exit for CDH, other investors IPO could value companies at about US$20 bln Could be the biggest AsiaPacific IPO in about 4 years

Shuanghui’s US$4.7 bln takeover Smithfield was concluded in September

(US$1.2 billion). That would make it the biggest Hong Kong listing by a bank since Chongqing Rural Commercial Bank raised US$1.7 billion in its IPO in September 2010, according to Thomson Reuters data. Six cornerstone investors have pledged to buy up to US$639 million worth of shares in Huishang’s IPO, or about half of the deal size, which is well above the average of 30 percent for Hong Kong IPOs. Mainland Chinese banks like Huishang, whose home city of Hefei has been described by The Economist magazine as having the fastestgrowing metropolitan economy in the world, are waiting in line to tap capital markets. The deals would add to the US$6.2 billion in IPOs that financial services firms – including banks, insurers and brokerages – have raised in Asia Pacific so far in 2013, accounting for nearly one-quarter of all funds raised in the region from new listings. Huishang is slated to debut on the Hong Kong stock exchange on November 12. The people declined to be identified because the information is not yet public. Huishang had assets of 324.2 billion yuan (US$53.2 billion), loans of 163.8 billion yuan and deposits of 239.5 billion yuan at the end of last year, according to the prospectus. The lender, founded in 2005, will use the IPO proceeds to strengthen its core capital base. Reuters

A representative for Shuanghui said in an email the company would not comment on any enquiries related to a possible IPO.

Second quarter Plans for an IPO by Shuanghui were first revealed by Reuters in July when sources said the combined Shuanghui/ Smithfield company would have a value of about US$20 billion. The Smithfield purchase was the largest ever acquisition of a U.S. company by a Chinese firm, bringing together the world’s biggest hog producer and China’s largest meat processing company – Shuanghuiowned Henan Shuanghui Investment & Development Co. Including debt, the deal was valued at US$7.1 billion. Bank of China Ltd and Morgan Stanley together provided US$7 billion of loans to finance it. Despite political opposition in the United States, the deal closed in September, allowing Shuanghui to directly sell Smithfield pork goods across China to meet the country’s huge demand for the product. Shuanghui International’s private equity investors include China’s CDH Investments, which owns 33.7 percent through several funds and New Horizon Capital, founded by Winston Wen, the son of China’s former premier Wen Jiabao, which owns 4.2 percent. Goldman Sachs’ main investing arm has a 5.2 percent stake, public filings showed. Singapore state investor Temasek Holdings Pte Ltd has a 2.8 percent holding. Hong Kong stock exchange rules require one year of ownership before a merged entity can list, though companies can apply for a waiver to seek an earlier deal. IFR said the IPO is expected in the second quarter of 2014. At US$6 billion, the IPO would be the biggest in Asia Pacific since AIA Group Ltd’s US$20.5 billion listing in October 2010. Reuters

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Asia

Japan mob loans scandal claims another lender Regulator widened probe into crime loans by big banks

it as a problem, believing that the compliance division… was taking care of it,” said the panel’s 100‑page report. The company said 54 former and current executives would be punished, including Mizuho Bank chairman Takashi Tsukamoto, who would step down from his post but stay on as head of the parent company. Mizuho Financial president Yasuhiro Sato will give up six months’ pay.

Buying loans

Unit of Mitsubishi UFJ extended loans to members of criminal groups

major Japanese credit company said yesterday it had lent money to yakuza gangsters in a widening scandal that is sweeping through the country’s banking system. The admission by JACCS Co Ltd, a unit of Japan’s largest lender Mitsubishi UFJ Financial Group Inc, is the latest in a growing line and comes as a government agency says it will buy shady loans to help companies keep their balance sheets clean. A spokesman for JACCS said an

inspection of its books had revealed several instances of its lending cash to figures with links to Japan’s underworld. “Those cases were found linked to anti-social individuals after the initial screenings,” said the spokesman. He refused to give an exact number, but admitted it was “more than one but still a single digit”. As of late October, JACCS had provided several loans to people linked to organised crime by itself or together with other financial institutions, but plans to end those

transactions in the near future, it said. The scandal has gripped Japan’s banking sector since Mizuho Financial Group Inc came under fire in September for the revelation that it had processed hundreds of loans worth about US$2 million to mobsters. A panel of lawyers hired by Mizuho to probe the transactions said last week that “many officials and board members were aware of, or were in a position to be aware of, the issue”. “However they failed to recognise

In the wake of that report, Japan’s financial watchdog said it would probe the country’s top three banks – Mizuho, Mitsubishi UFJ and Sumitomo Mitsui Financial Group Inc – in an effort to weed out the practice of offering loans to the underworld. Like the Italian mafia or Chinese triads, the yakuza engage in activities ranging from gambling, drugs, and prostitution to loan sharking, protection rackets, whitecollar crime and business conducted through front companies. The gangs, which themselves are not illegal, have historically been tolerated by the authorities, although recently efforts have been made to choke off their sources of funding. Observers say the extent of the mob’s reach into legitimate areas of finance is sometimes the result of officials looking the other way, but often a loan may be extended in good faith to someone who appears to be above board. It is only later that the individual’s connection to organised crime is uncovered. A state agency, the Deposit Insurance Corporation of Japan, began a scheme two years ago to help financial companies scrub their books of links to gangsters. The agency buys the loans at a discount from the bank or credit card company, which must swallow the loss, while the state tries to recover the cash, an official at the Deposit Insurance Corp said. Since its introduction in 2011, the agency has bought debts worth nearly 300 million yen (US$3 million). It has paid 11.7 million yen for them, he said. AFP

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Mitsubishi Motors to sell 210 bln yen in shares Sale is part of a reorganisation at the automaker

itsubishi Motors Corp will sell as much as 210 billion yen (US$2.1 billion) in new shares to fund a buyback of preferred stock held by other Mitsubishi group companies that bailed out their carmaking affiliate. Mitsubishi Motors will spend 284.8 billion yen buying back the preferred shares at an average discount of 25 percent, the Japanese automaker, which plans to pay dividends for the first time since 1998, said in a statement. The sale is part of a reorganisation at Mitsubishi Motors involving

affiliates such as Mitsubishi UFJ Financial Group Inc that were stuck with billions of dollars of preferred shares, which don’t carry voting rights, after giving cash and extending debt to the automaker. They have sought to convert those holdings into common stock because the preferred shares haven’t generated dividends, as Mitsubishi Motors’ sales slumped after the company admitted it covered up defects. “Mitsubishi Motors will become a normalised company from a recovering company,” president

Osamu Masuko said at a briefing in Tokyo yesterday. Mitsubishi Motors has said it plans to eliminate all outstanding preferred shares before the fiscal year ends in March, when it plans to resume dividends. It’s aiming for operating profit of 135 billion yen from sales of 2.6 trillion yen by the fiscal year ending March 2017 as it plans to cut 110 billion yen in costs in the same period, the company said. Mitsubishi Motors had operating income of 67.4 billion yen and sales of 1.8 trillion yen in fiscal year ended

March, according to data compiled by Bloomberg. The company aims for annual volume sales of 1.43 million units by the end of its mid-term plan on March 2017. For the year ending March 2014, it forecast deliveries of 1.11 million units on higher sales of SUVs and pickup trucks. The carmaker needed a bailout after admitting in 2000 that it covered up customer complaints and production defects for more than two decades, prompting a global recall of as many as 2 million cars. Bloomberg News

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Asia

Indonesia’s Q3 growth weakest in nearly GDP grows less than 6 percent as investment capped Novrida Manurung

ndonesia’s growth slowed to the weakest since the 2009 global recession as a declining rupiah restrained investment in Southeast Asia’s largest economy. Gross domestic product increased 5.62 percent in the three months ended September 30 from a year earlier, the Central Bureau of Statistics said in Jakarta yesterday. That compares with a revised 5.83 percent pace for the second quarter and the median estimate of 5.6 percent in a Bloomberg News survey of 23 economists. The data highlights the vulnerability of the Indonesian economy as it grapples with a depreciated exchange rate, elevated inflation and diminished foreign capital inflows ahead of elections in 2014. Bank Indonesia has raised its key rate by 1.5 percentage points since early June to shore up the rupiah and

stem price gains, while the government predicts growth next year will be slower as it reins in spending to narrow a record current-account gap. “Growth is still some way from bottoming,” said Robert Prior-Wandesforde, a Singapore-based economist at Credit Suisse Group AG. “The combination of the lagged effects of higher interest rates,” a downturn in commodity-related industries and weaker real income growth will hurt expansion in private consumption, he said. The rupiah has dropped more than 15 percent this year, the worst performer among Asia’s 11 mostactive currencies tracked by Bloomberg. Indonesia’s GDP increased 2.96 percent last quarter from the previous three months, when it expanded 2.61 percent. That compared with the 3.01 percent median estimate in a Bloomberg survey.

KEY POINTS GDP grew 5.62 pct in Q3 from a year earlier Economy throttled by weak exports, slowing consumption Growth ‘still some way from bottoming’ – economist

The country will hold parliamentary elections in April and a presidential one in July. President Susilo Bambang Yudhoyono, whose party won the 2009 vote and who can’t run for a third term, is seeing his legacy of economic stability threatened by the sliding rupiah and

The rupiah has lost 15 percent so far this year

Thai Senate to block amnesty bill Legislative push has hurt stocks and the baht

hailand’s Senate is set to reject a proposed amnesty law for political offences on November 11 after weeklong street protests raised concerns its passage would reignite political violence. Opposition from the public, universities and business groups convinced a majority of Thailand’s 149 senators to block the legislation, Senate Speaker Nikom Wairatpanij said at a media briefing in Bangkok. More than 32,000 people joined demonstrations in the capital and 17 other provinces on Monday, according to police estimates, with the push for the amnesty law weighing on Thai stocks and the baht. The legislative failure would be a setback for Thaksin Shinawatra, who was ousted as prime minister in a 2006 coup and has guided policy from abroad since his sister, Yingluck, won elections in 2011.

More than 32,000 people joined protests on Monday

Yingluck struggled to convince the public that the bill aimed to heal social divisions caused by the coup rather than help Thaksin return to Thailand and

recover part of a fortune that was seized after he fled a jail term in 2008. “I don’t want to see the amnesty law used as a political tool,” Yingluck said

in a televised speech. “This government will work for the country’s benefit and will not use its majority to go against the people’s wishes.” Parties linked to Thaksin

have won the past five elections on support from rural areas, and Yingluck’s Pheu Thai party commands a majority in parliament. “It was a major part of his strategy, using his party and majority vote in parliament,” Poocharoen Ora-Orn, an assistant professor at the Lee Kuan Yew School of Public Policy in Singapore, said of Thaksin. “Unfortunately, he hasn’t got buy-in from everybody, and even people in his party and the coalition party – they’re shaking their heads saying why did we do this? Why did we stab ourselves when the government was actually doing quite well?” The legislative push has hurt stocks and the baht amid concern it will spark fresh clashes in a country where past protests by Thaksin’s supporters and opponents have led to an airport seizure, business centre blockages and arson attacks. Bloomberg News

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, 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.

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Asia

4 years

current‑account deficit. Bank Indonesia cut its 2013 economic growth forecast last month to between 5.5 percent and 5.9 percent, from as much as 6.2 percent earlier. “The increase in prices – such as transportation costs as a result of higher subsidised fuel price and the rise in electricity tariffs – all of these have put a cap on consumer spending,” Henri Honoris, president director of PT Modern PutraIndonesia, the franchise holder of 7-Eleven convenience stores in the country, said in an October 31 interview. “From the domestic side, the slowdown means demand for dollars also fell but not much. So, the impact [of GDP data] to the rupiah is not significant. However, the Fed’s tapering is a different issue since it will impact the hot money,” said David Sumual, economist at BCA in Jakarta. The World Bank said last month downside risks to Indonesia’s economic outlook are sizeable, as higher borrowing costs and inflation may have a greaterthan-expected effect on domestic demand. Inflation remained above 8 percent for a fourth month in October. Exports have dropped for 18 consecutive months.

“External demand continues to provide little boost to growth,” as exporters’ earnings remain under pressure from low commodity prices, Gundy Cahyadi, a Singapore-based economist at DBS Group Holdings Ltd, said before the report. Foreign direct investment into Indonesia rose 18.4 percent last quarter from a year earlier, after increasing about 19 percent in the April-June period. “We have to delay our expansion, this year we won’t open new shops as aggressively as the previous years,” Mr Honoris said. “We are adjusting our products and services over the next one or two years as we observe the economic conditions.” The current-account shortfall was a record 4.4 percent of GDP in the three months through June, and central bank governor Agus Martowardojo has said it may have narrowed to about 3.3 percent to 3.5 percent of GDP last quarter. Bank Indonesia and the government are serious about addressing the currentaccount deficit, Finance Minister Chatib Basri said on October 25. “To manage it, our macro policies must be tight” for both monetary and fiscal matters, he said. Bloomberg News/Reuters

Samsung vows to increase acquisitions

amsung Electronics Co Ltd will pursue more international acquisitions as Asia’s biggest technology company by revenue seeks to grow beyond its core consumerelectronics businesses amid fears of market saturation. The maker of Galaxy smartphones will be more a g g r es s i v e i n m a k i n g deals after spending about US$1 billion investing in 14 companies since 2010, chief financial officer Lee Sang Hoon told a briefing in Seoul yesterday. Those prior investments include Sharp Corp and Medison Co as the company tries to better integrate its hardware and software offerings. “Going forward, we will expand our mergers-andacquisitions strategy beyond a few target areas to pursue opportunities across a wide range of fields,” Mr Lee said. The company wants to “enhance the competitive edge of our current businesses and capture new chances for future growth,” he said.

Bubble trouble seen brewing in Australia Property market sees rapid price gains amid low borrowing costs

The company is consi dering a dividend payout of 1 percent of its average stock price, it said yesterday. The company, which overtook Apple Inc in smartphones, has used sales of cheaper handsets in emerging markets to stoke earnings in mobiles as growth in high-end devices slows amid market saturation. Samsung will spend US$14 billion on research and development by the end of this year, compared with US$8 billion in 2010, Mr Lee said today. About 400 analysts and technology experts are attending the company’s first analyst briefing with top management since 2005. The company has earmarked a record 24 trillion won in capital expenditure this year and had spent about 63 percent of the total as of September 30. The company is targeting annual sales of US$400 billion in 2020, cochief executive Kwon Ohhyun said. Reuters

that went to auction in Sydney over the November 2 weekend were sold, even as the number of properties for sale rose to 739, the highest number in three years, according to APM. The average home price across Australia’s biggest cities was A$605,336 as of October 31, after recovering from a decline of 7.4 percent between October 2010 and May 2012, according to the RP Data-Rismark index. While that’s a record, it’s about the same level in real terms as at the end of 2010, based on the statistics bureau’s inflation calculator.

A$718,122 Average home price in Sydney at the end of October

igi Wong beat four other bidders in an auction of a three-bedroom Sydney house with peeling wallpaper, cracked doors and an overgrown backyard by paying A$856,000 (US$811,060), 14 percent more than the realtor expected the property to fetch. “I’m not sure if I paid too much,” said Ms Wong, an accountant at the University of Sydney, after winning the bidding war for the investment property in an inner-west suburb where prices have tripled in the past 15 years. “Since I can, and have capacity to borrow money, I should utilise it.” Australia, where housing accounts for about 60 percent of average household wealth compared with a global average of 45 percent, joins

countries from Canada to Sweden to China seeing rapid price gains amid low borrowing costs that are sparking fears of a housing bubble. For now, constrained housing supply and demand from investors are driving prices higher, overpowering the downdraft from slower economic growth and a rising jobless rate. “It’s easy to see how bubble-like conditions could emerge,” said Saul Eslake, chief Australia economist at Bank of America Merrill Lynch in Melbourne. For now, while prices are climbing, the increase isn’t being accompanied by a rapid rise in borrowing or building, he said. In Sydney, the nation’s most populous city, the average home price surged 13 percent in the 10 months to October 31 to a record

A$718,122 according to the RP Data-Rismark home value index. That compares with US$806,000 in New York as of September 30, according to the Real Estate Board of New York, and 331,338 pounds (US$536,237) in London, according to the Nationwide Building Society.

High debt Australians are used to high home prices and debt. Average household debt has hovered near 150 percent of annual income since 2006, compared with 135 percent in the U.S. House prices haven’t fallen more than 10 percent in any one year for more than 40 years, according to data cited by the Reserve Bank of Australia. More than 81 percent of homes

Investors like Ms Wong and self-managed pension funds, along with foreign buyers, are spurring the recovery. The value of loans to investors rose a seasonally adjusted 26 percent in August from a year earlier, while those to owneroccupiers increased only 9.7 percent, government data show. Rising sales to investors puts the housing market in a more precarious position if economic conditions unexpectedly sour, Mr Eslake said. “Investors aren’t as committed to their properties as owner-occupiers,” he said by telephone. Changes in the outlook for home prices, rising interest rates or unfavourable changes in regulation could lead them to “dump their properties, putting sharp downward pressure on prices,” he said. Bloomberg News

14 14

November 7, 2013 April 19, 2013

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

Max 58.35

average 58.00

Max 55.05

Min 57.55

average 54.752

Last 57.60

Min 54.25

Last 54.90

58.40

89.0

58.22

88.6

58.04

88.2

57.86

87.8

57.68

87.4

57.50

Max 89.5

average 88.366

26.0

54.92

25.9

54.74

25.8

54.56

25.7

54.38

25.6

54.20

Max 26.00

average 25.829

PRICE

DAY %

YTD %

(H) 52W

93.92

0.5890543

109.6999969

85.51999664

BRENT CRUDE FUTR Dec13

105.84

0.484192538

0.982730655

114.4399948

95.95999908

GASOLINE RBOB FUT Dec13

254.59

1.18437264

0.058952995

290.3199911

241.5999889

GAS OIL FUT (ICE) Dec13

899.75

0.250696379

-0.19412091

973

837

3.486

0.577034045

-11.70212766

4.744000435

3.378999949

288.19

0.62148668

-3.418345119

321.1599827

276.4999866

1312.26

-0.0061

-21.16

1754.46

1180.57

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

21.729

0.2602

-27.8346

34.3838

18.2208

Platinum Spot $/Oz

1457.07

0.3471

-3.998

1742.8

1294.18

Palladium Spot $/Oz

756.47

1.5737

8.1197

786.5

604

1818

-0.560645426

-12.30101302

2184

1758

7161

0.167855644

-9.708737864

8346

6602

1922.5

-0.077962578

-7.572115385

2230

1811.75

Silver Spot $/Oz

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14

14345

-0.173973556

-15.9144197

18770

13205

15.25

-0.196335079

-1.070385988

16.80999947

14.91500092

424.25

-0.176470588

-29.26219258

647

424

WHEAT FUTURE(CBT) Dec13

658.75

0.419207317

-19.73804447

913

635.5

SOYBEAN FUTURE Jan14

1252.75

0.199960008

-4.297173415

1406

1169

COFFEE 'C' FUTURE Dec13

103.45

-0.241080039

-33.8766379

172.0999908

102.8499985

18.22

-0.21905805

-11.46744412

20.71999931

16.69999886

CORN FUTURE

Dec13

SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Dec13

76.84

1.185159492

-2.413004826

93.72000122

74.34999847

World Stock Markets - Indices NAME

Last 25.75

(L) 52W

WTI CRUDE FUTURE Dec13

LME ZINC

Min 25.50

25.5

27.05 26.80 26.55 Max 27.25

average 26.920

Min 26.35

Last 27.00

26.30

30.1 30.0 29.9 29.8 Max 30.05

average 29.812

Min 29.70

Last 29.75

29.7

Currency Exchange Rates

NAME

METALS

87.0

Last 88.5

55.10

Commodities ENERGY

Min 87.0

27.30

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15618.22

-0.1336392

19.18539

15721

12471.49

NASDAQ COMPOSITE INDEX

3939.864

0.083143

30.48008

3966.71

2810.8

FTSE 100 INDEX

6765.14

0.2712381

14.70597

6875.62

5605.589844

DAX INDEX

9054.38

0.5024914

18.94267

9070.17

NIKKEI 225

14337.31

0.786904

37.92267

HANG SENG INDEX

23036.94

-0.008724356

CSI 300 INDEX

2353.568

TAIWAN TAIEX INDEX

KOSPI INDEX

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

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.951 1.607 0.912 1.3494 98.53 7.9844 7.7519 6.0936 62.2262 31.298 1.2432 29.445 43.287 11420 93.697 1.23068 0.83967 8.2221 10.774 132.95 1.03

0.0947 0.0997 -0.1096 -0.0593 -0.2639 -0.0038 -0.0039 0.1132 -0.9662 -0.1853 -0.1287 -0.0475 -0.2125 -0.5604 -0.3533 -0.0512 0.1655 0.062 0.0575 -0.2031 0

-8.3638 -0.6553 0.3728 2.3048 -12.6154 -0.015 -0.0168 2.2483 -11.6208 -2.2941 -1.7535 -1.3992 -5.2718 -14.2469 -4.664 -1.8851 -2.888 -0.0559 -2.261 -14.5769 -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 NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

ARISTOCRAT LEISU

4.84

-0.2061856

CROWN RESORTS LT

16.7

-0.417412

AMAX HOLDINGS LT

1.16

BOC HONG KONG HO

24.95

VOLUME CRNCY

53.65079

5.12

2.56

1075639

56.51359

17.38

9.65

2790810

0.8695652

-17.14286

1.72

0.75

980700

3.526969

22.85

6027550 212000

CENTURY LEGEND

0.44

3.529412

66.03774

0.56

0.24

CHEUK NANG HLDGS

7.16

-0.4172462

19.53256

7.24

4.1

16000

CHINA OVERSEAS

23.1

-0.4310345

25.6

17.7

11200634

CHINESE ESTATES

21.5

-0.462963

91.18677

22.25

9.543

7500

CHOW TAI FOOK JE

12.54

-0.4761905

0.8038619

13.4

7.44

3593600

EMPEROR ENTERTAI

4.06

2.01005

114.8148

4.66

1.48

4130000

FUTURE BRIGHT

3.23

-1.52439

166.4959

3.41

1.103

2900000

GALAXY ENTERTAIN

57.6

-0.1733102

89.78583

63.75

4996355

HANG SENG BK

127.1

-0.3918495

7.076667

132.8

110.6

770216

6950.53

HOPEWELL HLDGS

25.55

-23.15789

35.3

23.2

1003500

15942.6

8619.45

HSBC HLDGS PLC

86.6

0.2895194

6.519061

90.7

73.55

14299290

1.677278

23944.74

19426.35938

HUTCHISON TELE H

3.41

0.5899705

-4.213482

4.66

3.12

4074000

-1.266943

-6.713715

2791.303

2023.171

LUK FOOK HLDGS I

27.3

-1.086957

11.88525

30.05

16.88

2395015

MELCO INTL DEVEL

24.75

3.125

174.6948

25.75

7.46

5084482

8281.97

0.2392825

7.565033

8476.63

7061.87

MGM CHINA HOLDIN

1.503759

103.3396

12.236

2860135

2013.67

-0.01291008

0.8322272

2063.28

1770.53

MIDLAND HOLDINGS

3.14

0.3194888

-15.13514

4.29

2.68

834000

NEPTUNE GROUP

0.32

110.5263

0.4

0.131

53775000

NEW WORLD DEV

10.72

-10.81531

15.12

9.98

6992327

SANDS CHINA LTD

54.9

1.198157

61.70839

60.5

29.35

11761522

5433.805

0.03392881

16.88241

5457.3

4334.3

4428.797

0.1245454

2.597127

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1801.48

-0.3314025

6.662721

1826.22

1590.67

SHUN HO RESOURCE

1.62

-1.818182

15.71429

1.92

1.19

NZX ALL INDEX

1041.48

0.2200746

18.07454

1044.142

853.106

SHUN TAK HOLDING

4.48

-0.4444444

6.92124

4.8

3.12

2625172

PHILIPPINES ALL SHARE IX

3933.25

-0.3917725

6.333368

4571.4

3440.12

SJM HOLDINGS LTD

25.75

0.9803922

45.08957

16.762

7186716

10.2

-27.55682

16.22

9.97

2222000

WYNN MACAU LTD

29.75

0.3372681

42.00477

32.6

3907863

ASIA ENTERTAINME

3.96

N/A

69409

73.25

0.2600602

63.8336

78.03

43.16

522541

S&P/ASX 200 INDEX JAKARTA COMPOSITE INDEX

SMARTONE TELECOM

Euromoney Dragon 300 Index Sin

625.12

0.65

STOCK EXCH OF THAI INDEX

1432.39

1.197507

2.906752

1649.77

1260.08

HO CHI MINH STOCK INDEX

502.52

0.5462294

21.46085

533.15

374.15

BALLY TECHNOLOGI

Laos Composite Index

1305.31

-0.07731643

7.453266

1455.82

1085.58

BOC HONG KONG HO

3.17

-3.939394

3.257331

3.6

2.99

5000

GALAXY ENTERTAIN

7.48

-0.2666667

88.4131

8.11

3.468

15490 5582280

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

INTL GAME TECH

18.78

-3.840246

32.53352

21.2

12.37

JONES LANG LASAL

93.47

-1.16316

11.35334

101.46

72.56

252767

LAS VEGAS SANDS

69.74

-0.1002722

51.08319

73.49

37.8353

2526342

MELCO CROWN-ADR

33.87

-0.5870267

101.1283

13.43

3361994

MGM CHINA HOLDIN

3.45

97.11004

3.88

1.6651

15314

MGM RESORTS INTE

19.15

-0.7257646

64.5189

20.98

9.15

7137839

SHFL ENTERTAINME

23.21

0.1294219

60.06897

23.25

12.35

257356

SJM HOLDINGS LTD

3.27

-1.506024

43.57117

3.6

2.1396

31200

WYNN RESORTS LTD

165.2

-0.7748213

46.8575

173.38

103.34

1093764

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

38.65

-0.2580645

14313934

CHINA UNICOM HON

ALUMINUM CORP-H

2.84

-0.6993007

10269300

BANK OF CHINA-H

3.59

-0.5540166

264194037

BANK OF COMMUN-H

5.57

17317345

BANK EAST ASIA

33.45

0.4504505

2554335

BELLE INTERNATIO

10.46

0.7707129

23327252

BOC HONG KONG HO

24.95

AIA GROUP LTD

NAME

PRICE

DAY %

VOLUME

11.96

-0.3333333

20325892

CITIC PACIFIC

10.8

4894847

SANDS CHINA LTD

CLP HLDGS LTD

61.8

-0.4029009

3131754

SINO LAND CO

CNOOC LTD

15.5

0.388601

41759249

COSCO PAC LTD

11.38

0.1760563

2929898

SWIRE PACIFIC-A

ESPRIT HLDGS

14.28

0.8474576

3831498

6027550

HANG LUNG PROPER

25.85

0.1937984

4443721

CATHAY PAC AIR

15.14

3745298

HANG SENG BK

127.1

-0.3918495

770216

CHEUNG KONG

121.5

-0.2463054

2691417

HENDERSON LAND D

45.55

-0.8705114

3613606

CHINA COAL ENE-H

4.8

-1.030928

16702257

HENGAN INTL

91.95

-0.3791983

1271595

CHINA CONST BA-H

5.99

-0.4983389

210824551

HONG KG CHINA GS

18.08

-0.4405286

9744801

CHINA LIFE INS-H

20.95

-0.7109005

29927404

HONG KONG EXCHNG

CHINA MERCHANT

27.5

0.1821494

2844292

CHINA MOBILE

125.9

0.6394884

3391048

HSBC HLDGS PLC

86.6

0.2895194

14299290

81.25

1.057214

13680843

HUTCHISON WHAMPO

95.4

-0.4694836

4548840

CHINA OVERSEAS

23.1

-0.4310345

11200634

IND & COMM BK-H

5.32

-0.3745318

185776152

CHINA PETROLEU-H

6.44

0.4680187

116611546

10.72

-1.107011

17775223

CHINA RES ENTERP

27.05

1.121495

1181095

MTR CORP

1.010101

LI & FUNG LTD

NAME

PRICE

DAY %

63.25

0.1583531

2972746

54.9

1.198157

11761522

10.72

-0.9242144

5060275

102

3127448

90.35

1.232493

1965527

TENCENT HOLDINGS

412

0.04856727

2299209

TINGYI HLDG CO

22.3

0.4504505

4634500

11.14

-2.108963

22048375

63.7

-0.7014809

3729251

POWER ASSETS HOL

SUN HUNG KAI PRO

WANT WANT CHINA WHARF HLDG

MOVERS

23322.07

2186066

LOW

22964.78

52W (H) 23944.74

CHINA RES LAND

21.6

-0.6896552

4485700

NEW WORLD DEV

10.72

6992327

19.8

-0.6024096

4168901

PETROCHINA CO-H

8.67

-0.4592423

90736282

CHINA SHENHUA-H

23.9

11282693

PING AN INSURA-H

61.2

0.1636661

10269870

7 23323

INDEX 23036.94 HIGH

CHINA RES POWER

VOLUME

(L) 19426.35938

22964

4-November

6-November

15 15

November 7, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China is choking on its success

Jakarta Globe The Indonesia Chamber of Commerce and Industry called on the government to focus on increasing local food production to minimise the nation’s reliance on imports, saying that the country still imports up to 75 percent of its food. “Aside from aiming to improve food security, this is also aimed at improving trade,” said Suryo Bambang Sulisto, the chairman of the body. The group also supports the Agriculture Ministry’s suggestion to scrap subsidies for fertilisers and to replace them with an infrastructure development programme.

William Pesek

Bloomberg View columnist

Wall StREET Journal Since the global recession, China has helped offset the free fall in sales and profits in the eurozone and stagnant revenue in the U.S. But the latest set of quarterly earnings results reveal that for many companies, China has been a drag. While some industries did well, the combination of slower economic growth, plus government crackdowns that have put fresh scrutiny on the way companies win new business, hurt sectors from technology to luxury goods to pharmaceuticals. As a result, the sluggish global sales that persisted through much of the recovery aren’t likely to pick up soon.

Inquirer Business Consumer prices in the Philippines rose below expectations in October as lower power rates offset the effects of several typhoons and other calamities on the country’s food supply, government data showed. Monetary authorities said inflation might start to slow down again in the remaining two months of the year, bucking analysts’ expectations that consumer prices “bottomed out” in last July. Inflation reached a sevenmonth high of 2.9 percent in October, slightly faster than the 2.7 percent recorded the month before. The year-to-date average stayed at 2.8 percent at the end of October, the same level as September.

Straits Times Singapore’s factory output expanded for an eighth straight month in October, in line with a similar pick-up across the region. In a bright start to the fourth quarter, new data showed that the Purchasing Managers’ Index (PMI) came in at 51.2 last month. Readings above 50 indicate expansion. The latest figure beat both September’s reading and economists’ forecasts. The PMI is compiled monthly by the Singapore Institute of Purchasing and Materials Management (SIPMM) from a survey of more than 150 industrial firms.

alking through Beijing’s Tiananmen Square last week, a German family of five surrounded me, all wearing large face masks and sunglasses. They weren’t robbing me, just asking me to take their photo. When I yelled the customary “Say ‘cheese,’” the dad joked: “We are smiling under here.” Only China’s pollution bubble is no laughing matter, and tourists tell the story. Thanks to extreme air pollution, foreign arrivals plunged by roughly 50 percent in the first three-quarters of the year. Beijing could see even fewer visitors to the Forbidden City, the Great Wall and the famous square dominated by a painting of Mao Zedong thanks to images of acrid smog that have been beaming around the globe. The timing doesn’t help. Jokes about renaming the city “Greyjing” or “Beige-jing” coincide with the Communist Party’s much-anticipated Third Plenum meeting from November 9 to 12. In a more democratic system, that might increase the urgency to act boldly to address a bad-air crisis that’s literally impossible not to see. But early signals aren’t encouraging. News media leaks have the more than 200 members of the party’s Central Committee crafting a vague blueprint for readjusting China’s economic structure. Nowhere are there hints the plan will do what China really needs to do: Ban coal.

China’s crisis The conventional wisdom is that China will eventually get serious about the environment, and when it does, the skies will turn blue before we know it.

This view finds comfort in the experiences of the U.K. and the U.S. and concludes that Beijing’s toxic-air challenge pales in comparison with London’s back in the days of Charles Dickens. But what if the comparison is a false one? What if China’s crisis is different and harder to reverse? Neither London in the 1850s or 1950s nor Pennsylvania in the 1940s was at the mercy of a paranoid authoritarian government whose legitimacy relies on 8 percent growth. Case studies of the past weren’t as linearly reliant on manufacturing. They weren’t dealing with urbanisation anywhere near the scale of modern-day China.

Thanks to extreme air pollution, foreign arrivals plunged by roughly 50 percent in the first three-quarters of the year

They didn’t rely on huge overseas investment predicated partly on the ability to pollute freely. Large numbers of their politicians weren’t becoming multimillionaires from the existing system. China is entering completely uncharted territory – navigating the demands of

a newly vocal middle class without the democratic and civil institutions that helped Japan and the U.S. clean up environmental damage in the 1970s. It’s also doing so with higher levels of corruption. The party is playing with fire. Anger over pollution has replaced land grabs as the primary cause of social unrest. The last 12 months have seen a sharp increase in protests against chemical plants and oil refineries. Fewer than 1 percent of China’s 500 largest cities meet the World Health Organisation’s air-quality standards, while seven are ranked among the 10 most polluted in the world. Walking the streets of Beijing, it’s hard not to feel like you are trapped in an airport smoking lounge. As China chokes on its success, the solution is obvious: Phase out the use of coal immediately. Flush with US$3.7 trillion of currency reserves, China could finance a transition to natural gas. Doing so requires political will of the kind that neither President Xi Jinping nor Premier Li Keqiang has displayed. When China does make the transition away from coal, the economy will slow significantly in ways that would damage the state-owned enterprises that dominate the economy and enrich the Communist Party and its cronies.

Embarrassing year China’s new leaders are acting in other ways. A series of embarrassments this year – not least of them thousands of dead pigs floating in the Huangpu River near Shanghai and myriad food-contamination

scandals – and the increased frequency of protests leave them little choice. In August, China promised to spend the equivalent of the gross domestic product of Singapore, or about US$275 billion, to improve air quality. “Of course, the country continues to be an investment destination and expats will come here in numbers, but it is definitely harder to sell Beijing as a posting,” says Kobus van der Wath, founder of the Beijing Axis, an international advisory firm. “Also, the level of dissatis faction among Chinese was/is very high at the times when pollution was/is at its worst.” But there’s little sign China understands the extent to which bad air is imperilling investment. Many of the government’s ideas about cleaning up firsttier cities such as Beijing involve moving coal-burning plants toward Shanxi province and inner Mongolia – in other words, redistributing pollution to less populated areas. Better emissions standards are vital, too. In 2012 alone, China added more cars than the total number that plied its roads in 1999. Once the U.K. and U.S. got serious about reducing carbon emissions, the transition away from coal took a few decades. But China doesn’t have decades. So Beijing can rail against the foreign media for exaggerating its grey air. It can pretend wind turbines, solar farms and other renewables alone will do the trick. But China should do the inevitable and curb coal use today. Otherwise, the only tourists heading to Beijing in the years ahead will be adventure seekers donning gas masks. Bloomberg View

16 16

November 7, 2013 April 19, 2013

Closing Abenomics fuels Toyota profit upgrade

ING may leave rescue two years early

Toyota Motor Corp is closing in on a record profit set before the Lehman crisis after topping up its annual net profit forecast by nearly US$2 billion and outperforming Japanese rivals as its expansion plans bear fruit. Toyota credited its conservative strategy as a key factor when it raised its net profit forecast by 190 billion yen to 1.67 trillion yen (US$16.95 billion) for the year ending in March 2014, just short of its record 1.72 trillion yen from six years ago. Toyota, one of the most export-reliant Japanese carmakers, is also reaping the benefits of a weakening yen that has boosted its profit margins.

ING Groep NV said it should complete its restructuring two years ahead of schedule, meaning the Dutch banking and insurance group could be one of the first eurozone casualties of the 2008 global crisis to emerge from a state rescue. Cutting free of the state is seen as an important step for ING, removing a European ban on acquisitions and giving it greater pricing flexibility so it can compete more easily. ING, which required a 10 billion euro (US$13.5 billion) bailout by the state, was forced to retreat from its global empires, including from Macau, to focus on Europe, where business is hampered by anaemic economic growth.

Indonesia to ease curbs on foreign investment

Workers in Greece are holding a 24-hour general strike over continuing cuts

Strike brings Greece to a halt

Indonesia said it will allow foreign investment in airports and ports as the government seeks to revitalise an economy growing at the weakest pace since the global recession. The country may also ease limits on overseas holdings in its telecommunications and pharmaceutical industries, the Investment Coordinating Board said yesterday, hours after a report showed economic expansion slowed for a fifth quarter. Gross domestic product increased 5.62 percent in the three months ended September 30 from a year earlier, as a declining rupiah restrained investment in Southeast Asia’s largest economy. Indonesian policymakers are grappling with a depreciated exchange rate, elevated inflation and diminished foreign capital inflows undermining President Susilo Bambang Yudhoyono’s legacy of economic stability before he steps down next year. His failure to fix infrastructure gaps in his two terms has added to price pressures, threatening his party’s chances at elections in 2014. “The dust has yet to settle on the slowdown definitely,” said Wellian Wiranto, a Singaporebased investment strategist at the wealthmanagement unit of Barclays Plc. “Hopefully it will be replaced by construction dust coming from new infrastructure investment if they stick to these opening up measures.”

At issue is the latest instalment from the second bailout, worth 1 billion euros

general strike hit Greece yesterday, paralysing public services and disrupting transport as auditors from the European Union and the International Monetary Fund worked to finalise the recession-hit country’s next budget, looking to eliminate a fiscal shortfall that could bring more unpopular cuts. Defying pouring rain, some 4,000 members of the Communistaffiliated union PAME marched to central Syntagma square, police said. Another 1,000 protesters gathered outside the offices of the biggest union GSEE but the main demonstration was scrapped due to the weather. “It is an unfortunate occurrence, the protest will not take place owing to the weather conditions,” a GSEE spokeswoman said. Similar protests are being held in Greece’s second city Thessaloniki, with some 10,000 demonstrators taking part, according to police. The latest strike this year by the country’s main unions shut down the civil service as well as train and ferry services nationwide. Hospitals were operating on reduced staff and several flights were cancelled because of work stoppages by civil aviation staff. GSEE, which represents the private sector, said workers were “carrying on their struggle against

pointless austerity policies”. “The government and [creditors] are talking about fiscal gaps and deficits. But they don’t say that the big gap is in the social state and society,” GSEE chairman Yiannis Panagopoulos said in a statement. Greek President Karolos Papoulias told the country’s creditors that the Greeks have nothing left to give. “[Greeks] today have given what they can to overcome the crisis, and this must be respected by Europe,” Mr Papoulias said last month. “The Greek people can give no more… this is our message. And they should not think that we will succumb to blackmail. [We] never have,” said Mr Papoulias.

Fiscal gap Greece lurched into recession when the global economic crisis hit in 2008, and by 2010 rising borrowing costs on its massive debt forced Athens to seek a bailout from the EU and the IMF. Two bailouts, worth up to 240 billion euros (US$325 billion) plus about 100 billion euros in a debt write-off, helped stave off a feared break-up of the euro and kept the Greek state financially afloat. However they came at a stiff cost to Greeks. In order to tap the bailout loans the Greek government had to raise taxes while cutting benefits,

wages, and jobs. Since 2008, the unemployment rate has tripled to 27.6 percent while the economy has contracted by 22 percent. “We will not stop. Our only hope lies in struggle,” Mr Panagopoulos said. The mission by the so-called troika of creditors – the EU, IMF and the European Central Bank – is expected to push for more unpopular austerity measures to cover a fiscal gap of two billion euros (US$2.7 billion) forecast for 2014. The troika’s report is also necessary to unlock a vital onebillion-euro loan instalment. There is anger in Greece over ongoing cuts in the face of a six-year recession and soaring unemployment, and further outrage that new taxes are being prepared to help meet deficit goals. On Tuesday, protestors heckled the auditors outside the finance ministry and a man was briefly detained after throwing coins at the car of the IMF mission’s chief. A sizeable number of government deputies have also protested at plans to increase tax on agricultural land, a move that has put pressure on Prime Minister Antonis Samaras. “This is a negotiation… we should remove the notion that this is a war,” Mr Samaras said in a televised interview late on Monday. AFP

Eurozone services expand more than estimated Euro-area services output grew more than initially estimated in October, adding to signs the currency bloc’s economic recovery is gaining momentum. An index based on a survey of purchasing managers in the services industry fell to 51.6 from 52.2 in September, Londonbased Markit Economics said yesterday. That exceeds Markit’s initial estimate of 50.9. The gauge has been above 50, indicating expansion, for three months. The euro-area economy probably grew 0.2 percent in the third quarter after exiting a record long recession in the previous three-month period, according to a Bloomberg News survey of 31 economists. The European Commission on Tuesday trimmed its forecast for eurozone growth next year to 1.1 percent from its 1.2 percent prediction in May. Markit’s composite index based on a survey of purchasing managers in the services and manufacturing industries dipped to 51.9 from 52.2 in September, yesterday’s report showed. The manufacturing gauge was unchanged at 51.3. “The euro-area economic recovery lost less momentum than first estimated in October,” Chris Williamson, Markit’s chief economist, wrote in yesterday’s report. “The survey signals a mere 0.2 percent quarterly growth rate at the start of the fourth quarter, unchanged on the third quarter.”