Macau Business Daily, November 11, 2013 by Business Daily

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MOP 6.00 Deputy editor-in-chief

Vitor Quintã

Low-paid civil servants to get monthly handouts

Junket investor 1 Amax warns of likely first half loss

April 19, 2013

www.macaubusinessdaily.com

Year II

Number 411 Monday November 11, 2013

Editor-in-chief Tiago Azevedo

More than 23,800 hotel rooms planned for city

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unior public servants are to get a monthly allowance of up to 2,100 patacas (US$263) says the government. That’s on top of the 8,000 patacas per year handout that permanent residents – the majority of the city’s public sector workers – currently already receive. “Some of these workers are left with very little money at the end of the month, so this measure will help a few of them,” José Pereira Coutinho, President of the

Macau Civil Servants Association, told Business Daily. The Public Administration and Civil Service Bureau did not respond before press time to a request for additional details. Entry-level civil servants are paid between 7,700 patacas and 10,500 patacas a month say official data. The government increased the pay of Macau’s 28,000 public-sector workers by 6.06 percent in May. More on page 3

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Hang Seng Index 22776

No competition in cable TV market before September

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15-year concession to supply cable television ends in April. The government has commissioned the University of Macau to do a study of the development of television services. The Telecommunications Regulation Bureau said in a written statement that the findings of the study would help

the government build a framework for television services that would be “adjusted to market reality”. The bureau said the first draft of the report is due in January. The final version, including long-term recommendations, should be finished by next September, it added. Page 5

Louis XIII shares fall on new placement

Nearly 8,000 new private flats within three years

Macau boutique casino developer Louis XIII Holdings Ltd saw its stock fall 8.14 percent in Friday trading. It followed the company saying it planned a placement of general mandate shares representing approximately 20 percent of its existing issued share capital. Union Gaming Research Macau says Casino Louis XIII – a 66-table resort on the Cotai-Coloane border – is on track to open in early 2016. Page 2

A total of 74 private residential projects were under construction in the third quarter this year. They would provide about 8,830 flats, with most due to be completed within three years, suggest statistics from the Land, Public Works and Transport Bureau. The department says nearly 70 percent of the homes under construction are one- or two-bedroomed units. The remainder – 2,706 flats – have three bedrooms or more. Page 4

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22706

November 8

HSI - Movers Name

%Day

BANK EAST ASIA

1.35

CITIC PACIFIC

1.31

CHINA RES POWER

0.93

GALAXY ENTERTAIN

0.52

SUN HUNG KAI PRO

0.49

BELLE INTERNATIO

-1.57

CHINA COAL ENE-H

-1.68

CHINA RES LAND

-1.86

CHINA UNICOM HON

-2.01

COSCO PAC LTD

-2.48

Source: Bloomberg

I SSN 2226-8294

Interview

Macau should push for electric cars: dealer Macau is the perfect location for electric cars and it should do more to support the expansion of this segment, says the general manager of BMW Concessionaires (Macau) Ltd, Albert Hui. The auto dealer has just launched the BMW i3, the first electric car in its portfolio, at the Macau Auto Show. It has about 10 orders from Macau clients so far added Mr Hui. Pages 6&7

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November 11, 2013

Macau

Louis XIII shares fall on new placement Stock’s value has risen more than 1,200 pct since initial February sale Michael Grimes

michael.grimes@macaubusinessdaily.com

Casino Louis XIII will be on edge of Cotai

hares in Macau boutique casino developer Louis XIII Holdings Ltd fell 8.14 percent in Friday trading. It followed a company announcement shortly after noon that day it planned a placement of general mandate shares representing approximately 20 percent of its existing issued share capital. But Friday’s closing market value of HK$8.91 per share, represented a

1,210 percent premium on the original placement price of 68 HK cents in February. The firm said in its latest filing with the Hong Kong Stock Exchange that the maximum aggregate sum raised from the new placing would be “approximately HK$593.14 million” (US$76.5 million). The money would be raised via subscription for up to 72,070,500 general mandate shares at HK$8.23 per

placing share. The placing agents and joint book runners for the exercise are Deutsche Bank AG Hong Hong and CLSA Asia-Pacific Markets in Hong Kong, and Union Gaming Advisors in the United States. In February this year the initial sale of placing shares in Louis XIII Holdings – then known as Paul Y. Engineering Group Ltd (PYE) – raised HK$3.2 billion gross (US$413 million) toward the estimated

US$800 million total capital costs of the Casino Louis XIII scheme on the CotaiColoane border. At that time the business said in a filing that 705,882,000 shares, representing approximately 19.91 percent of the issued share capital of PYE – as enlarged by the original placing – were subscribed by Pride Wisdom. Pride Wisdom was the vendor under the ‘Falloncroft sales and purchase agreement’ whereby the casino project acquired the land it needed. According to a February 6 filing, Pride Wisdom is “a private company indirectly owned by Mr Sean Hung, the son of Mr Stephen Hung”. The latter was a director of PYE and now chairman of Louis XIII Holdings.

Service agreement Casino Louis XIII is expected to operate under a so-called ‘service agreement’ using the gaming permission of one of the existing concessionaires or subconcessionaires. The identity of the licence provider has not so far been disclosed by Louis XIII Holdings. Union Gaming Research

Macau said just over a fortnight ago it expected the next milestone for the project would be a debt deal with a “likely consortium of Chinese banks. The research house added it expected such a move “should fully fund the project”. Louis XIII Holdings said in a filing on Thursday last week that it and subsidiaries “are in advanced discussions with a mainland China-based bank in respect of the group’s funding requirements for the project”. The firm said it had a letter of intent for debt financing for the scheme whereby – subject to terms – the bank proposed to grant a credit facility of “about HK$3 billion”, plus a likely working capital facility of HK$1 billion. Last week Louis XIII Holdings announced that award-winning U.S.-based architect Peter Marino would be exterior designer of the casino-hotel. It will operate 66 gaming tables (50 premium mass and 16 VIP) according to company statements. Union Gaming Research Macau says Louis XIII Holdings Ltd is on track to open its planned boutique casino on the Cotai-Coloane border in “early 2016”.

Amax warns of likely first half loss Junket investor also changes name to Amax International Holdings Michael Grimes

michael.grimes@macaubusinessdaily.com

roubled Macau junket investor Amax Holdings Ltd has changed its name to Amax International Holdings Ltd and dropped its Chinese identifying name from its Hong Kong listing. “The change of name will not affect any of the rights of the shareholders,” it said in a filing announcing the new moniker. Only 24 hours later the firm issued a warning to shareholders that it expected to report a loss for the six months to September 30. It added that a net loss of approximately HK$14.96 million (US$1.92 million) had been recorded in the corresponding period in 2012. In August an external auditor said in the firm’s annual report for year ended March 31 that Amax’s accounts contain “material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern”. Amax blamed the expected 2013 half-year loss on its failure to get financial information from an associate – Greek Mythology (Macau) Entertainment Group Corporation

Greek Mythology Casino, Taipa

Ltd – an entity linked to the Greek Mythology Casino at the New Century Hotel on Taipa. Amax said in its November 8 filing: “…continuous actions have been taken in attempt to obtain the associate’s financial information, including but not limited to, sending several demand letters through the company’s management and lawyers in Hong Kong and Macau and requesting the associate’s financial information from the associate’s accountant”. Last month it emerged that an

executive connected with the New Century Hotel and Greek Mythology Casino has been arrested in Macau on suspicion of fraud. Chen Mei Huan – also known as Chan Mei Fun – was held over allegations involving 35 Macau and mainland Chinese investors and more than HK$300 million (US$38.7 million), said police.

Table grab Greek Mythology operates its casino under the gaming concession

of Sociedade de Jogos de Macau SA, an associated company of Hong Konglisted Macau casino developer SJM Holdings Ltd. In August 2012 SJM stripped Greek Mythology of a third of its then 120 tables following a dramatic and at times bizarre series of events. They included an attack the previous June by masked men on Ms Chen’s former boyfriend and business partner, Ng Man Sun. In September last year Mr Ng completed a hostile takeover of Amax Holdings. In 1997 Mr Ng – a veteran of the Macau junket industry during the monopoly of Stanley Ho Hung Sun – was the target of a drive-by shooting at the New Century. No one was ever arrested or charged in connection with either that attack or the one last June. Hong Kong-listed Amax had losses for the 12-months to March 31 of approximately HK$39.38 million according to earlier filings. This year it has been pursuing a casino project in Northern Cyprus and another in the Pacific island republic of Vanuatu according to other regulatory announcements.

November 11, 2013 April 19, 2013

Macau editorial

Red tape challenge

The government increased the pay of public-sector workers by 6.06 percent in May (Photo: Manuel Cardoso)

Govt to pay poor civil servants allowances of up to MOP2,100 A civil service union welcomes the money but criticises what civil servants have to do to get it Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

he government will begin giving low-paid civil servants monthly allowances as a shortterm way of boosting their incomes. The Public Administration and Civil Service Bureau said in a written statement issued last week that it would begin taking applications for allowances today. The allowances will range from 1,050 patacas (US$131) to 2,100 patacas a month. The scheme will be in effect for a year, after which it may be renewed. Only civil servants with insufficient income to cover their monthly expenses will get the maximum allowance. A civil servant that has fewer than 500 patacas left after paying all basic living expenses will be entitled to an allowance of 1,400 patacas. A civil servant left with between 500 patacas and 1,000 patacas will get an allowance of 1,050 patacas. Applicants for allowances must submit receipts or statements proving their expenses. The bureau said it would use data from the Statistics and Census Service as a reference in assessing what it considers “reasonable expenses”. Macau Civil Servants Association president José Pereira Coutinho, who is also a member of the Legislative Assembly, said he was pleased that low-paid civil servants would have their incomes boosted. “Some of these workers are left with very little money at the end of

the month, so this measure will help a few of them,” Mr Coutinho told Business Daily. But the application process worries him. “They will ask applicants for personal information, which could breach their privacy and prevent a few of them from applying,” he said.

New pay demand Mr Coutinho criticised the lack of specific criteria to be used in assessing applications. “If they really want to help these public-sector workers, they could introduce a scheme just like the cash handout, helping all entry-level civil servants,” he said. Business Daily asked the Public Administration and Civil Service Bureau for more details, but the bureau had not replied by the time we went to press. Entry-level civil servants are paid between 7,700 patacas and 10,500 patacas a month. The government increased the pay of Macau’s 28,000 public-sector workers by 6.06 percent in May. The increase did not put much more money in the pockets of lowpaid civil servants. An entry-level civil servant that earned 6,600 patacas a month before the pay rise earned just 400 patacas more after it. The Macau Civil Servants Association is urging the government

Gov’t depts got budgetsums wrong: Tam’ In our October 21 edition we published an article titled ‘Gov’t depts got budget sums wrong: Tam’, according to which the 2012 budget surplus is of 72.76 billion patacas. However, in fact the 2012 budget surplus was nearly 91 billion patacas (US$11 billion). The

KEY POINTS Monthly allowance capped at MOP2,100 Applicants must prove monthly expenses Allowance scheme to run for one year Union calls for 7 pct increase in pay

to raise the pay of public-sector workers by 7 percent next year. “The increase will be needed to cover the loss of purchasing power of civil servants as they face soaring inflation,” Mr Coutinho said. The annual rate of consumer price inflation averaged 5.42 percent in the 12 months ended September. “I think it is time to review the civil service pay scale and even consider different pay increases for different pay grades,” Mr Coutinho said. At present, any increase in pay applies uniformly to civil servants in all nine pay grades, ranging from entrylevel employees to senior technicians.

figure of 72.76 billion patacas corresponds to the administration’s surplus without taking into account the performance of the many autonomous public departments. This amount will be transferred to the government’s fiscal reserve as soon as the Legislative Assembly finishes discussing the 2012 budget report. For that inaccuracy we apologise to our readers.

The tight restrictions on Macau’s labour market are biting into company profits, and the manpower shortage could lead to the demise of several businesses, especially small and medium enterprises. The shortage has already made service here worse. Last week 40 business groups voiced their opposition to enshrining in law the government bans on migrant labour working here as dealers or drivers. They went further and called for the government to revoke all restrictions on imported labour. The call alarmed the trade unions, which last month took to the streets to voice their demand that the bans be given the force of law. Denying some industries access to migrant workers is a mistake, in the long run. The pay of dealers is increasing every year and is expected to rise steeply in 2015 and 2016, when new casino resorts open in Cotai, so many permanent residents will be lured into the gaming industry. That will put companies in other industries, which already find it hard to compete in the labour market, under more pressure. Macau will have to find qualified workers elsewhere to make up for the widening gap between the gaming industry’s demand for workers and the size of the city’s labour force. Employment law is meant to protect workers from unfair practices and make clear the rights and responsibilities of employees and employers. But when regulation becomes over-complicated and restrictive, it can have the opposite effect and make it difficult for businesses to create jobs. Quotas for imported workers are not unique to Macau. Other places have quotas, but the problem here is how the rules are applied. We often hear complaints by companies that had to wait six or even nine months to bring in migrant workers. The ways the government sets the quotas for companies in each industry seem completely random. How can companies survive if they cannot find qualified workers? The hotel industry and the meetings and exhibitions industry will be the sectors most in need of graduate recruits between now and 2015, a Tertiary Education Services Office report published last week says. It says companies in these industries will need at least 7,125 graduate recruits in the next two years. But between now and 2015 only 1,939 Macau students will graduate with degrees appropriate for employment in these fields, meaning supply will fall short of demand by a staggering 72.8 percent. The Policy Research Office, a government think-tank, estimated earlier this year that the city will require 40,000 more workers by 2016. Only 6,900 workers were unemployed here at the end of September, so getting 40,000 more workers may be hard. More migrant workers will be needed as Macau pursues its goal of becoming a worldclass draw for tourists. More migrant workers will be needed not only to fill vacant positions, but to force resident workers to improve their skills and become more competitive. If Macau wants its economy to be more diverse, its companies to create jobs and its people to climb the social ladder, the government should cut through the red tape as soon as possible. Making the process of hiring migrant workers speedier and more transparent would be a good start.

Quotas for imported workers are not unique to Macau … but the problem here is how the rules are applied

November 11, 2013

Macau Poker whizz up HK$4.35 mln at ACOP Macau South Korea’s Sunny Jung (pictured) won just over HK$4.35 million (US$561,000) when he was crowned the second Asia Championship of Poker main event champion. It was the culmination of a 17-day tournament at PokerStars LIVE at the City of Dreams. The main event at Melco Crown Entertainment Ltd’s flagship Cotai casino had a HK$100,000 buy-in. That meant the top prize provided Mr Jung with a 43-times return on his investment. The guaranteed prize pool for that main event was HK$20 million. ACOP was organised under the umbrella of the Asia Pacific Poker Tour.

Nearly 8,000 private flats ready within 3 years Smaller homes continue to dominate commercial construction on peninsula, govt data show Stephanie Lai

sw.lai@macaubusinessdaily.com

total of 74 private residential projects were under construction in the third quarter this year. They would provide about 8,830 flats, with the majority due to be completed within three years, suggest new statistics from the Land, Public Works and Transport Bureau. The department says nearly 70 percent of the homes under construction are one- or twobedroomed units. The remainder – a total of 2,706 flats – have three bedrooms or more. Half of all the private units under way in the third quarter, or 4,413 flats, were on Macau peninsula. A majority of these had a saleable area smaller than or equal to 75 square metres (807 sq. feet). A total of 2,648 homes were being built on Coloane in the period. Most were 75 sq. ms to 150 sq. ms. On Taipa, there were 1,769 homes under construction. There nearly 70 percent are of at least 75 sq. ms. The bureau’s data show nearly 90 percent of the 8,830 new private sector homes are flats in high-rise buildings. During the third quarter the territory had only 53 low-rise home projects – defined by the bureau as those under 20.5 metres (six storeys) high. They would provide around 530 units and are mostly in old neighbourhoods on Macau peninsula. By the end of the third quarter,

Macau peninsula – site of most new private sector home building

there were 241 private home construction projects awaiting approval. According to the plans submitted by the developers, they would provide about 27,972 homes. Around half would be one- to twobedroomed units. Nearly 57 percent

of the 241 schemes pending approval would offer homes with a saleable area ranging from 75 sq. ms to 150 sq. ms. In the three months to September 30, the bureau issued occupancy permits for six home projects,

containing a total of 76 flats. They are all located on the Macau peninsula. Another 17 completed residential projects with about 794 units located on the peninsula are still under inspection or pending inspection said the bureau.

At least 23,800 hotel rooms in the pipeline Cotai is in line to get some 17,900 of the new rooms under construction or on the drawing board Stephanie Lai

sw.lai@macaubusinessdaily.com

Cotai is where most of the new hotel rooms that Macau will have in next few years are being built

he 13 hotels under construction at the end of September will contain over 8,470 rooms, most of them in Cotai, Land, Public Works and Transport Bureau data show. The bureau said on Friday that most of the hotels were being built on the peninsula, but that the four hotels being built or expanded in Cotai would together contain over 6,800 rooms. The bureau did not identify the hotel projects. But the second phase of Galaxy

Entertainment Group Ltd’s Galaxy Macau resort and Melco Crown Entertainment Ltd’s Studio City resort are probably among them. The bureau said that at the end of September it was considering 27 projects to build hotels that would together contain another 15,400 or more rooms – 11,099 of them in Cotai. Of the hotel projects under consideration, 19 would be on the peninsula, four in Cotai, two on Taipa

and two on Coloane. If all the projects went ahead, Macau would get over 23,800 more hotel rooms – almost as many as it has already. The bureau did not say what sort of hotels these projects envisaged or when the hotels would be completed. At the end of September the Macau Government Tourist Office said it was considering five applications to build new two-star hotels or guesthouses and one application to expand an old one. None of the establishments would have over 100 rooms, the office said. It said one establishment, in an old building in Travessa da Paixão near the Ruins of St Paul’s, would have only seven rooms. Macau had about 1,400 low-cost hotel rooms at the end of August, data from Statistics and Census Service show. The city had 27,761 hotel rooms altogether.

November 11, 2013

Macau

No competition in cable TV market before Sept The government will await the findings of a study before auctioning cable television licences, an official says Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

he government will end the monopoly of the cable television market, but will publicly auction licences to supply cable television only after next September, according to the acting head of the Telecommunications Regulation Bureau, Hoi Chi Leong. Macau Cable TV Co Ltd’s exclusive, 15-year concession to supply cable television ends in April. The government has commissioned the University of Macau to do a study of the development of television services. The Telecommunications Regulation Bureau said in a written statement that the findings of the study would help the government build a framework for television services that would be “adjusted to market reality”. The bureau said the first

Macau Cable TV’s exclusive concession to supply cable television expires in April (Photo: Manuel Cardoso)

draft of the study report was due in January. The final report, including suggestions for the long-term development of the market, should be finished by next

September, it said. Radio Macau quoted Mr Hoi as saying on Friday that licences to supply cable television would be issued only once the government

had assessed the findings of the study. He did not say precisely when the government would call for bids for licences. Business Daily tried

to get details from the Telecommunications Regulation Bureau, but the bureau had not replied by the time we went to press. It is unclear whether the government will extend Macau Cable TV’s exclusive concession after April or whether the government is considering some other arrangement. A Macau Cable TV spokesman said the company had heard about the study only on Friday. “We are trying to get more information and it wouldn’t be suitable to comment right now,” the spokesman told Business Daily. The government is contesting in the courts an arbitrator’s decision that Macau Cable TV should be paid 200 million patacas (US$25 million) in compensation. Macau Cable TV says the government failed to uphold the company’s exclusive right to supply cable television. The company ran at a loss until 2010, as it had to compete with public antenna companies, which have most of the market and relay television transmissions to households more cheaply. Macau Cable TV chief commercial officer John Chiang Kwong Io previously told this newspaper that the government’s objection to the arbitrator’s decision should not weaken his company’s chances of winning a new licence.

November 11, 2013 April 19, 2013

Macau Brought to you by

HOSPITALITY Flying higher The third-quarter figures for civil aviation indicate that this will be another year of growth. The number of landings at Macau airport in the first nine months of this year was 17.6 percent higher than a year earlier. The annual increase in the number of landings in the first nine months of last year was only 7 percent. The number of landings in the first nine months of this year was 86 percent of the number in all of last year. As a rule, fourthquarter figures are similar to third-quarter figures. If this holds true this year, the number of incoming flights will be about 15 percent higher this year than last year. Helicopter traffic is going against the general upward trend. The number of helicopter landings decreased by 9 percent last year, and the number last year was even below the number in 2010. In the third quarter of this year the number of helicopter landings was almost 20 percent fewer than a year earlier.

Macau should push for electric Macau is the perfect location for electric cars and it should do more to support the expansion of this segment, says the general manager of BMW Concessionaires (Macau) Ltd, Albert Hui. The auto dealer has just launched the BMW i3, the first electric car in its portfolio, at the Macau Auto Show. It has about 10 orders from Macau clients, with the first cars to be delivered and on the road by the middle of next year, explains Mr Hui. The lack of charging stations may delay sales of the new model, but the car dealer is considering installing private power stations for the owner. The cost may be included in the car price, but it will be a “reasonable price”, says Mr Hui. The BMW i3 has an indicative price of about HK$450,000, he adds. Mr Hui states that the increase in his firm’s sales of affordable and high-end cars in the first nine months of the year exceeded estimates. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso Of the places that all these flights take off from, only the mainland is now the origin of more flights than before. Of the additional flights last year, over 70 percent were from the mainland. Of the additional flights in the first nine months of this year, about 55 percent were from the mainland, indicating some easing of Macau’s dependence on the mainland for growth in tourism. Taiwan was the origin of most flights until 2010. The number of flights from Taiwan continues to decease. Taiwan was the origin of 30 percent fewer flights in the third quarter than a year earlier. The number of helicopter flights from Hong Kong was 20 percent lower in the third quarter than a year earlier and number of helicopter flights from the mainland was 18 percent lower.

11.5 pct

Annual increase in Q3 landings at airport

You have just launched the BMW i3, the first electric car in your portfolio. Are you already selling it here? We are already taking orders. The first delivery of the i3 will be roughly in the middle of next year and we are working on the support sales and after-sales, particularly on the charging facilities. This is one of our major concerns. During the motor show, a lot of people showed interest in this car and the most asked question was how and where to charge it. Of course we expect more public charging facilities to be set up in Macau in the coming months. Some operators are interested in installing more charging facilities. But at the same time we will also try to find other solutions and one possibility is to install a charging station at the owner’s place.

Is it possible to charge these electric cars in private buildings? Technically it is possible, but we need to sort out some issues. We need to know if we can install these charging facilities in the parking space of residential complexes or apartment buildings. We are taking [vehicle] orders, but we need to further explore the possibility of installing charging stations for the clients. We are flexible – of course, we try our best to help them. If there are too many obstacles to provide a satisfactory solution, of course our clients have the option of getting back their deposits. But hopefully we will try to sort out individual needs on individual basis.

For Rolls Royce, which is the icon of automobile luxury, a lot of our clients are from mainland China

Will Macau have more public charging stations in the near future? This is the general trend, but it just depends on how fast. This is happening worldwide. In Hong Kong there are more than 1,000 stations. The fact that there are only a few charging stations must affect the final price. Is the i3 more expensive here because of this? There is an installation cost for a charging station for private use, but it will not be an unacceptable amount. According to studies that we have been conducting it will be a reasonable amount. How many orders do you have for the i3? Because we launched the car in the [Macau] motor show, we had about 10 orders during the show. But we also have a long list of prospective clients, so we will keep contact with these interested parties. When we have a clearer picture on how to install the charging stations, we will contact them. I’m sure, by that time, when they have more information, they can make a decision more easily. If you don’t manage to install those private charging stations and no more public facilities are added to the market, will that compromise sales of the i3 in Macau? We don’t have a deadline.

November 11, 2013 April 19, 2013

Macau

cars: dealer

first, and we also look at how we can incorporate those installation costs as part of the total price. That will make people more receptive to this relatively new concept. The ultimate goal is to have a reasonable pricing, that people can afford, and that is hassle-free, they don’t need to consider things like how and where to charge. You’ve decided to launch this car here despite the obstacles. Why Macau and not mainland China? Macau is one of the most ideal places in the world for electric cars. You don’t have a big geographic area here and when you fully charge the car, it can run, in normal conditions, three or four days. There is no better place in the world for electric cars [than] in Macau. Also, these cars are for megacities. In Macau, in terms of international exposure, it is an ideal place for launching this product, because there are a lot of people. Tourists from everywhere will come here to experience a special culture. It’s a good place to show the latest products to international visitors. It is also good for the international image of Macau, because the manufacturer is treating Macau as an international megacity. The product is only available in individual cities, so we are proud of being one of those cities considered suitable for these cars. We expect more electric cars to enter this market to show people from elsewhere that Macau is a place that supports clean energy. It’s good for Macau’s image. It’s a win-win situation.

We know that there are some constraints, so we don’t have a very ambitious target nor do we have to sell a number of cars in a certain period of time. It will be a gradual process. The manufacturer also understands that, so it doesn’t try to push a lot of cars into the market. Also, the supply is limited for now, so they don’t have a lot of stock that they need to clear. There is a high demand for the i3 worldwide, in the United States, in Europe and even in mainland China, so we are not pressured to push for sales. We are doing it gradually and, as time goes by, there will be more facilities to charge these cars. All the uncertainties will soon get clear [be resolved], and we expect to have a better market environment.

Macau is one of the most ideal places in the world for electric cars… you don’t have a big geographic area

What currently is the price of the i3 in Macau and how much higher can it go, if the [charging station] conditions don’t improve? It’s not final yet, but the indicative price is about HK$450,000 [US$58,052], which is reasonable. We are still thinking on how to provide the services as package, and whether the installation cost for the chargers will be included in the car price, so we need to fix the car price

In Macau your company sells cars ranging from BMWs to Rolls Royce limousines. Are you happy with the volume of sales here? This year has been quite promising. We were expecting some growth this year, but the actual volume of sales is more than we had forecast. For example, up to September, sales of BMWs have increased 37 percent from a year earlier. We also had a 150 percent growth year-on-year in sales of Rolls Royce [vehicles] during the same period It’s quite a promising result, but actually the entire market has been booming. When we look at the overall car sales, during this period, there has been a 10 percent growth, which is quite a normal and steady growth for the whole market here. We have been outperforming the market in this segment. As a result, our market share has also been growing. For BMW we are taking of a market share of about 11 percent, while for the Mini range [made by BMW] it’s about two percent. Put the two brands together and we have a market share of about 13 percent, which is not a bad figure. When you look at this market, more than 10 percent is quite a reassuring figure. We are quite happy and we expect this to continue. Has the increase in sales for the high-end cars or for more affordable cars? For BMW, the growth is across the board. Of course, in terms of the volume, our major contributors are the BMW 1 Series, BMW 3 and BMW 5, because most people can afford these models. But, when we look at our higher-end models, like the BMW 7 Series, BMW 6, BMW x5 and BMW x6 Series, we can also see sales growing in this segment. We will get even stronger in the coming year as we have new models being launched in 2014.

The models to be launched are midor high-end? Mid-range, but some are high-end. For example, we just launched the x5 Series, which is quite a highend model. For the mid range, we just launched in the Macau Auto Show the BMW 5, and these are also in the mid or closer to the high-end models. Who are BMW and Rolls Royce’s clients here? For the BMW, because the product portfolio is so big, includes a wide range of customers. But for Rolls Royce, which is the icon of automobile luxury, a lot of our clients are from mainland China. We also have corporate clients including the casino operators, hotel operators, and the entrepreneurs, because there is no substitute for Rolls Royce. The brand here will have a good position, because there is virtually no direct competitor. When the new projects in Cotai are finished, a lot of new casino and hotelresorts will open, and we expect to have a great demand for such limousines. We are quite optimistic about the future growth in sales of Rolls Royce and of high-end models of BMW. Looking at the Rolls Royce product range, is the biggest increase in sales for limousines or passenger cars? It’s quite balanced. Rolls Royce traditionally is a symbol of limousines, because these are very big cars, but in the past few years there is more variety in the market. For example, we have now the Rolls Royce Ghost, which is a relatively smaller, four-door sedan. There is going to be more variety, which attracts both corporate and private clients. For the Ghost, some are corporate and some are private clients, so it’s appealing to a broader range of customers. The high-end models of BMW and Rolls Royce are usually very powerful cars. Considering the actual size of Macau, does that have any impact on your sales? Of course these cars are very powerful. They have very high performance, great engine output, but most of the clients who buy these cars are not only looking at the performance aspect of these cars. They are looking at status, because they’re driving it as a representation of their status and their business needs. The major reason [for buying] is the refinement of these cars, the quality in the exterior and interior details. It is also used as a social statement. There is a currently a proposal under public consultation of mutual recognition of driving licences for Macau and Guangdong province. If it goes forward, will that have any impact – even, if indirectly – to your sales? It is a good trend, because the connection between Guangdong and Macau, or even Hong Kong for that matter, is getting closer. The bridge connecting these three places will be completed in a few years, so an eventual mutual recognition is a good move for us to have a greater enhancement and connection between these three places. The [licence] recognition doesn’t mean that the car can actually come in [to Macau] or go to the other side [via the bridge], because there will be restrictions. The governments of these three places will sort out the best solution, probably not only related to the driving licences but also whether

There is a high demand for the i3 worldwide … so we are not pressured to push for sales

cars can move freely between these three places. There will be more traffic in these places, but we still have to see how will the governments manage the higher traffic volume. So it might have no impact on sales? It won’t have an immediate impact, because the cars are not allowed to cross borders. But this is a first step that will facilitate traffic flow between these three places. Do you think there should be more flexibility on licence acceptance? The recognition of the driving licences is a good move in the right direction. Subsequently, if and when the governments introduce measures to allow cross-border traffic, that may be beneficial for the car sales. People would be able to drive their cars to other places and it is an incentive for them to own a better car. Hong Kong is also an important market for BMW and Rolls Royce. What are the main differences Hong Kong and the market here? Hong Kong is a very mature market. Sales in Hong Kong have also been growing for BMW and Rolls Royce. Macau is growing a little bit faster than Hong Kong in terms of car sales. Sales here, when we look at the overall growth, are growing at about 10 percent. In Hong Kong, the market is expecting an eight percent growth for 2013. Both are growing, but Macau is at a slightly faster pace. We don’t expect the growth in Hong Kong to be as big as in Macau, because the market here is still booming, and Hong Kong is a very mature market.

…a lot of people showed interest in this [BMW i3] car and the most asked question was how and where to charge it

Who are your buyers in the neighbouring region? Hong Kong has a wider range of clients – a lot of professionals, expats and businessmen – from small and medium enterprises to large corporations. The population is bigger there and so is the volume of sales. But, in general, customers in Hong Kong prefer to buy higher-end models. In Hong Kong, the BMW 5 Series or higher-end models have a bigger share of the market compared to our model mix in Macau, where the BMW 1 has a bigger percentage.

November 11, 2013 April 19, 2013

Greater China

Dissident Chinese art finds haven in billionaire’s gallery Co-founder of Australia’s Platinum bets on new breed of Chinese artists Gillian Wee and William Mellor

Billionaire Kerr Neilson is the co-founder of Sydney-based Platinum Asset Management Ltd

udith Neilson weaves through the lunchtime crowd at the White Rabbit Gallery in Sydney and pauses before what appears to be a large pile of building rubble spread across the floor. “Watch closely,” she instructs. The mound of dirt, concrete and wood gently rises and falls – as if breathing. Created in 2009 by Shanghai-born Xu Zhen, “Calm” aims to convey that people in the Middle East have been buried under stereotypes as well as debris from bombings, Bloomberg Markets will report in its Billionaires Issue in December. “It’s really quite exquisite,” Ms Neilson says of “Calm.” Visitors can view it and the other works in her collection, all produced after 2000, at the gallery free of charge. “It would be pointless for me to have incredible stuff and not let other people enjoy it. You’re so rewarded by the input and appreciation you get from the audience,” she says. Billionaire Kerr Neilson, Judith’s husband and the co-founder of Sydney-based Platinum Asset Management Ltd, set up a US$30 million foundation in 2007 to fund the gallery and the Chinese contemporary collection of more than 700 works – one of the largest in the world. The Neilsons haven’t followed the well-worn path among rich collectors who compete to own the world’s mostcoveted art. SAC Capital Advisors LP founder Steven Cohen spent US$155 million last year for Picasso’s Le Reve, adding to his works by Van

Gogh, Manet and Warhol. Cosmetics magnate Leonard Lauder cemented his legacy as a leading patron of the arts this year with his pledge to the Metropolitan Museum of Art of 78 cubist pieces valued at about US$1 billion.

Snorting drugs In the White Rabbit Gallery, a former Rolls-Royce repair depot, the Neilsons aim to give wider exposure to a new breed of Chinese artists who address the rampant consumerism, pollution, censorship and the breakdown of social ties that have accompanied China’s rise to become the world’s second-biggest economy. In the series “Red Star Motel,” photographer Chili, 32, who was born in Beijing, depicts the debauchery of young people snorting drugs, beating each other and having sex. Beijing artist and former seamstress Sun Furong, 52, expresses the bleakness of much of her existence by shredding 100 Mao suits in “Tomb Figures,” according to the gallery. Gonkar Gyatso, who was born in Tibet and now lives in England, captures the dramatic shifts in his peripatetic life in “My Identity.” The four photographic self-portraits show him dressed as everything from a Chinese soldier to a Buddhist monk.

Tiananmen uprising “Judith is producing a collection that highlights what’s happening in

China since the turn of the century,” Kerr, 63, says. “It’s not about picking heroes of the moment, but much more about going for artists who still haven’t been discovered.” Judith, 67, developed a passion for Chinese art after she visited a gallery in Sydney in 1999 and became enthralled with a sculpture by Beijing artist Wang Zhiyuan. He had twisted metal into figures that combine animal and human shapes. Ms Neilson, who was born in Zimbabwe and earned a degree in textiles and graphic design in South Africa, hired Mr Wang – then an art student at the University of Sydney – to tutor her. Mr Wang, 54, guided Ms Neilson’s exploration of China’s burgeoning contemporary art scene, which took off after the 1989 Tiananmen Square uprising. Ms Neilson made her first of more than 25 trips to China in 1999 and would ultimately buy works from about 300 artists, including Mr Wang’s “Thrown to the Wind.” It’s an 11-meter-tall (36-foot-tall) sculpture of discarded plastic bottles he made in 2010.

Oil spills Ms Neilson also purchased “Oil Spills,” a series of black porcelain discs that rest on the floor, by Ai Weiwei, whose installations and sculptures have been the subject of major shows in New York and Europe. Ai, an outspoken critic of China’s human rights record, spent 81 days in jail in 2011.

“Neilson has achieved one of the most interesting collections of Chinese art,” says Karen Smith, director of the OCT Contemporary Art Terminal in Xi’an, the capital of Shaanxi province. “She has work from a younger generation of artists, much of it experimental, and by artists who are as interested in the feelings of materials as they are in the conceptual qualities of the art.” Kerr Neilson, a native of South Africa, and Judith left the country in 1983 amid the racial conflict over apartheid, and the couple settled in Sydney. Mr Neilson co-founded Platinum in 1994. By 2007, the firm had amassed A$9.6 billion (US$9.1 billion) in assets and went public in Australia. As of early November, Mr Neilson owned about 56 percent of the firm – which manages more than US$19 billion – giving him a net worth of more than US$2 billion, according to the Bloomberg Billionaires Index. White Rabbit, which opened in 2009, has become a landmark in a country that has undergone an ethnic and cultural transformation. For much of the 20th century, the former British colony operated a socalled White Australia Policy barring non-European immigration. As China has emerged as its most important trading partner, Australia now welcomes as many Chinese immigrants annually as it does British. Mandarin is the second-most-spoken language after English in Australia. Bloomberg News

November 11, 2013 April 19, 2013

Greater China

HK refused TV licence to applicant OKed by regulator Executive Council may have abused its power on decision, legislator says Joshua Fellman

ong Kong’s broadcasting regulator said it recommended the approval of all three applications for new free television licenses, including the one rejected by city chief executive Leung Chun Ying. Hong Kong Television Network Ltd, PCCW Ltd and i-Cable Communications Ltd all met financial, technical and managerial criteria, according to a letter and document dated Thursday from Hong Kong’s Communications Authority to legislators. The missive followed Mr Leung and his cabinet’s rejection of H.K. TV Network’s bid last month, when they gave licenses to the other two broadcasters. “The Authority considered it best in the public interest to recommend the grant of licenses to those which met the relevant requirements,” according to the document. “On the whole, the Authority considered that all three

applicants had demonstrated their compliance.” Ranking the applications wasn’t “necessary or appropriate,” it said. Tens of thousands marched in protest last month against Mr Leung’s decision, pushing his popularity to near-record lows. The outcry over the licenses, the first granted in almost four decades, highlights the demand for choice in a market dominated by Television Broadcasts Ltd and concerns that Hong Kong’s policies lack accountability. Legislators on November 7 voted against conducting an inquiry into the decision.

‘Very unusual’ “It is very unusual for the government and the Executive Council to make a decision without taking into account an industry regulator’s recommendation,” Albert Chan Wai Yip, a lawmaker

from the People Power party, said by phone Friday. “I have never seen this happen in other industries such as telecommunications and ports.” Mr Chan said there may be political considerations in the licensing decision and the Legislative Council will continue follow up the situation. The Executive Council may have abused its power on the licensing decision, Civic Party legislator Dennis Kwok said Saturday. The Legco panel on Information Technology and Broadcasting plans to invite Communications Authority chairman Ambrose Ho to elaborate further on its recommendations, Mr Kwok said in a phone interview.

Waning support Mr Leung has struggled to gain broad public support since taking office in July last year, when he defeated front-

Shanghai CRED buys Kiwi resort

hanghai CRED Real Estate Co has purchased a New Zealand resort hotel as well as an adjacent vineyard and golf course which it plans to develop and promote to wealthy Chinese tourists. Acquisition of the Peppers Carrington resort at Karikari, about 330 kilometers north of Auckland by road, was completed recently after being approved by the government in July, Shanghai CRED said in an e-mailed statement. The resort “can provide the sort of holiday experience that high-income Chinese and other international tourists are seeking,” Guo Gui, general manager of Shanghai CRED, said in the statement. His company has been involved with similar properties in

China and will promote Carrington through its many tourism contacts, he said. China is New Zealand’s secondbiggest source of tourists after Australia. Spending by Chinese visitors is predicted to surge 55 percent by 2018, according to government forecasts published in August. Shanghai CRED bought the 1,100-hectare property from a United States-based owner, it said in the statement. The purchase price was treated as confidential when the Overseas Investment Office granted consent in July, and isn’t being disclosed, Cedric Allan, a New Zealand spokesman for the buyer, said in a telephone interview Saturday. Bloomberg News

Television licensing new headache for HK chief executive Leung Chun Ying

runner Henry Tang. The city said earlier this month that a consultant’s report showed Hong Kong’s free-to-air television market is unable to support five operators. Applicants were assessed based on their financial soundness, investment plans, and technical and program content, it said. Television Broadcasts’ flagship channel has a 93

percent audience share during prime time on weekdays, according to its 2012 interim report. Asia Television Ltd is the city’s other incumbent free-to-air broadcaster. Hong Kong Television, founded by Ricky Wong, said it would cut about 320 jobs after the application was rejected, spurring workers to organize protests against the government. Bloomberg News

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November 11, 2013 April 19, 2013

Greater China China Cosco director quits amid probe China Cosco Holdings Co executive director Xu Minjie resigned after the nation’s largest shipping company said he was under investigation by a regulatory body. Mr Xu quit because of “personal reasons,” China Cosco said in a statement to the Hong Kong Stock Exchange Friday. The company said on Thursday that Mr Xu was being probed, without elaborating on why or by whom. The probe, which comes after PetroChina Co in August removed four senior managers amid an investigation by authorities, signals a broadening crackdown on corruption by China’s new leaders under president Xi Jinping.

Inflation below target as leaders start summit Industrial production growth tops estimates as recovery sustains momentum Price gains have stayed within the government’s 2013 target of 3.5 percent every month this year. Estimates for October consumer inflation from 44 analysts ranged from 2.8 percent to 3.5 percent, according to the Bloomberg survey. The median estimate of 40 economists was for a 1.4 percent drop in producer prices. Producer prices fell a more-thanprojected 1.5 percent, after a 1.3 percent decline the previous month. It was the 20th straight month of declining factory-gate prices, the longest stretch since 2002. “As long as PPI [producer price index] inflation remains negative, there is little passthrough effect to CPI inflation,” Liu Li Gang and Zhou Hao, economists at Australia & New Zealand Banking Group Ltd, said in a note.

Food prices

Food prices rose the most in October since April 2012

hina’s consumer prices rose less than economists forecast in October and factory-gate deflation deepened for the first time in five months, reducing odds that officials will tighten monetary policy. The consumer price index (CPI) rose 3.2 percent in October from a year earlier, the National Bureau of

Statistics said Saturday in Beijing, compared with the 3.3 percent median estimate in a Bloomberg News survey and September’s 3.1 percent. Industrial-production growth unexpectedly accelerated to 10.3 percent, a separate report showed. Inflation below the government’s 3.5 percent full-year target may allow

Communist Party leaders, gathering Saturday in Beijing for an economic summit, to take a measured approach to reining in credit growth. State media have called the meeting a “watershed” for reform as China seeks to move to an economy focused on domestic demand. “Both CPI inflation and economic growth still remain within Beijing policy makers’ comfort zone,” said Qu Hongbin, chief China economist at HSBC Holdings Plc in Hong Kong. While there’s “no need for either easing or tightening in the coming months,” the central bank will have to use its tools to keep liquidity stable as money inflows keep rising, Mr Qu said. The gain in factory output compares with a median estimate of 10 percent in a Bloomberg News survey and September’s 10.2 percent pace. Retail sales rose 13.3 percent in October from a year earlier, the same pace as the previous month, while January-to-October fixed asset investment excluding rural areas expanded 20.1 percent, after a 20.2 percent rate in the first nine months, statistics bureau data showed.

Inflation estimates The central bank is scheduled to release money supply and lending numbers by November 15.

The October CPI gain was the highest since February when the index also rose 3.2 percent. Food prices rose 6.5 percent from a year earlier, the most since April 2012, while nonfood inflation was unchanged from September at 1.6 percent, according to Saturday’s data. Transportation and communications costs fell 0.6 percent, the most in four months. Competition is helping keep consumer-price gains muted, as Chinese online shopping sites gear up for “Singles Day” sales today by slashing prices. 360buy Jingdong Inc began offering half-price Pampers diapers as of November 1 and will slice as much as 70 percent off items including slimming belts and facial moisturisers, according to its website. The benchmark seven-day repurchase rate climbed 85 basis points to 5.05 percent in October, helping derail a stock market rally and driving the one-year government bond yield to a record high. In June, the Shanghai Composite Index of shares sank 7.7 percent after the repurchase rate touched an all-time high of 10.77 percent.

Comfort zone While inflation remains in a “comfortable zone,” it has begun to “flag an alarm for the monetary authority to keep a close watch on the trend,” Hu Yifan, chief economist at Haitong International Securities Group in Hong Kong, said in a note. Yuan positions at Chinese financial institutions accumulated from foreign-exchange purchases, a gauge of capital inflows, rose in September by the most in five months, data showed last month. Among other recent signs of potential tightening, the People’s Bank of China said in a report this week that the economy “may see a decline in leverage” over a relatively long period of time, a suggestion that UBS AG said hadn’t been previously mentioned by a government economic agency. Bloomberg News

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Asia

Forest misuse costly for Indonesia: report Country missing out on US$7 billion in revenue, says Human Rights Watch Berni Moestafa

llegal logging and mismanagement of Indonesia’s forestry industry may have prevented more than US$7 billion flowing to state coffers from 2007 to 2011, costing the government more than its health budget, Human Rights Watch said. In contrast, the Indonesian government’s 2011 revenue from timber royalties and reforestation fees was US$300 million, said Emily Harwell, the lead author of a report released by Human Rights Watch. “This is a very conservative estimate,” Ms Harwell, a partner at Natural Capital Advisors LLC, said at a briefing in Jakarta on Friday of lost revenue. “The calculation doesn’t include any wood that’s smuggled.” The report indicates weak governance is chipping away at revenues in the world’s fourth-most populous nation, as budget and current-account deficits this year hurt the rupiah. In 2011, revenue missed from forestry totaled more than US$2 billion, exceeding the government’s health spending for that year, New York-based Human Rights Watch said in the report. The report calculated how much wood was used by industries such as pulp, furniture and saw mills, and compared it with the available legal supply of timber, Ms Harwell said. The supply of legal timber was “considerably smaller than what you need to produce that amount of products,” Ms Harwell said, adding that from the missing supply she was able to calculate the lost fees. Indonesia ranked 118 among 176 countries on Transparency International’s 2012 corruption perceptions index, undermining the investment appeal of Southeast Asia’s largest economy. Facing slowing growth, the government is trying to narrow budget and trade gaps by curbing state spending and easing restrictions on investment in some industries.

Most corrupt Out of 20 central government institutions, the Ministry of Forestry

The rainforest has suffered as Indonesia became the world’s largest producer of palm oil

was the only one scoring below the minimum standard for integrity in providing public services, according to a 2012 survey by the Corruption Eradication Commission, or KPK. Johan Budi, a spokesman at the anti-graft agency, couldn’t be reached when called on his mobile phone, and two calls to his office weren’t answered. “We do have an illegal logging problem,” Sumarto Suharno, a spokesman at the Ministry of Forestry, said by telephone on Friday. “The case with the policeman in Papua is being investigated and we’re looking whether anyone in the forestry ministry is involved.” A Papua-based policeman allegedly made almost US$1 million in transfers to senior police

officials to protect illegal logging and fuel smuggling businesses, an investigation by a Jakarta-based nongovernment organization Indonesia Police Watch found. The policeman has been named a suspect, according to a statement on the website of the Attorney General’s office. The police force is perceived as the most corrupt institution in Indonesia, according to Transparency International.

Plantation pressure State losses from illegal logging have narrowed to less than 1 trillion rupiah (US$87.6 million) a year, from about 30.7 trillion rupiah in 2002, because of certification requirements for timber sold, Mr Suharno said. He declined to comment on the Human

Rights Watch report, saying he has yet to see it. Expansion of oil palm and pulp plantations to support economic growth is occurring in existing natural forests and on land claimed by local communities, Human Rights Watch said. Indonesia has become the world’s largest producer of palm oil, used to make cooking oil, biscuits and other processed foods. Palm oil output may increase to 26.7 million tons to 27 million tons this year from 25.7 million tons in 2012, according to Indonesia’s Palm Oil Board. The paper industry plans to nearly double its current mill capacity by 2015, Human Rights Watch said, citing a report by the Center for International Forestry Research. Bloomberg News

Nissan to make mini-vehicles Carmaker tries to maintain jobs and production level

issan Motor will start producing minivehicles, a special category of small cars in Japan, as early as next year in a bid to maintain its jobs and production level, a report said Saturday. The move would mark the first time that Nissan produced “kei” category cars, defined as automobiles with engines of 660cc or smaller. The firm has been selling such models made by Suzuki and Mitsubishi Motor under its brand since the early 2000s. Nissan will stop buying

kei vehicles from Suzuki, while deepening its ties with Mitsubishi, the Nikkei said. The report came after Renault-Nissan and Mitsubishi announced on Tuesday that they would broaden their strategic cooperation to share the production of vehicles, technology and factory capacity and highlighted the development of electric cars. In 2011, Mitsubishi and Nissan created a joint company called NMKV to develop kei cars. Mitsubishi is already

producing a mini-vehicle model jointly developed with Nissan, and plans to produce the second model to come out of the joint programme, the Nikkei said. But Nissan would produce the third model to be developed from the NissanMitsubishi cooperation, the Nikkei added. The move should help offset the impact of Nissan’s decision to bring production of sports utility vehicles to the United States from Japanese plants. The planned production

Nissan will stop buying ‘kei’ vehicles from Suzuki

of mini-vehicles should fill the idle capacity of Japanese factories to keep domestic output at 1 million units a year, the level needed to maintain employment, the Nikkei said. Mini-vehicles, which are fuel efficient and come with

smaller taxes, account for 39 percent of all new-auto sales in Japan. By launching mini-vehicle production, Nissan seeks to acquire related knowhow for future growth, the Nikkei said. AFP

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November 11, 2013 April 19, 2013

Asia

India Tata Motors quarterly profit soars As risky gamble in Jaguar Land Rover pays off dramatically Penelope Macrae

ndia’s Tata Motors said Friday its quarterly net profit surged by a surprise 71 percent as a stellar performance by its British luxury marque Jaguar Land Rover offset a dive in domestic sales. The country’s leading automotive group has become heavily reliant on revenues from JLR which it bought for US$2.3 billion from Ford in 2008 at the height of the global financial crisis. The purchase, seen by auto analysts at the time as a risky gamble for the Indian company, has paid off dramatically with the iconic luxury brands accounting for most of Tata Motors’ profit. The vehicle giant, which also makes the low-cost Nano hatchback, reported consolidated second-quarter net profit climbed to 35.42 billion rupees (US$558 million) from 20.75 billion rupees a year earlier. British unit Jaguar Land Rover’s after-tax profit

Jaguar Land Rover’s after-tax profit soared by 66.2 percent

for the three months to September soared by 66.2 percent to 507 million pounds (US$811 million). “The weak operating environment in the India business was more than offset by the increase in wholesale volumes and richer product and market mix at Jaguar Land Rover,” the company said. The profit increase was the first in four financial quarters posted by Tata Motors and

outstripped market consensus forecasts of around 25 billion rupees. Total revenues of Tata Motors, part of the giant steel-to-software Tata Group, jumped 31 percent to 568.82 billion rupees. Jaguar Land Rover’s sales climbed an overall 21 percent to 102,644 units in the quarter, according to the statement. Jaguar deliveries rose 56.5

percent to 20,024 units. Land Rover sales increased 14.8 percent to 82,620 vehicles.

India pressure JLR’s strong performance has been driven by a slew of new launches and sturdy demand from China. But in India, the economy has been growing at a decade low of five percent, putting the brakes on the once-red hot

domestic car and commercial vehicle market. High borrowing costs, worries over a sharp slowdown in the economy and costly fuel prices have kept car buyers out of showrooms and sharply reduced demand for trucks, hitting Tata’s domestic revenues. Arun Agarwal, auto analyst at Mumbai’s Kotak Securities, said he expected Tata’s India operations “to remain under pressure” but “JLR’s profitability to stay healthy led by new launches”. Tata Motors’ India operations swung to a net loss of 8.04 billion rupees in the second quarter compared with a net profit of 8.67 billion rupees in the same period a year earlier while sales slumped 29 percent to 8.76 billion rupees. The company blamed the slowdown in economic activity and a “tight financing environment” for the poor performance. AFP

Japan Display applies for share listing: sources Even though slowdown in tablet screen business raises doubts over expansion Reiji Murai and Emi Emoto

apan Display, the world’s largest maker of displays for smartphones and tablets, has applied for a share listing in Tokyo that it hopes will raise up to 200 billion yen (US$2 billion), sources familiar with the matter said on Saturday. The state-controlled company may face difficulty hitting its fundraising target, however, after a sudden slowdown in its tablet screen business last month that could raise doubts over an expansion drive, industry sources have said. Japan Display has nevertheless decided to push ahead with plans for an initial public offering (IPO) by March and proceed with its expansion, one of the sources said, confident of continued growth in smartphone and tablet demand and its ability to find additional customers. Industry sources have said the capacity utilisation rate at its recently opened Mobara plant near Tokyo fell sharply in October, reflecting

soft orders for tablets using its screens. This is likely to weigh on the company’s earnings outlook and could dampen demand for the share offering, they added. The company, formed in April of last year from display units of Sony Corp, Hitachi Ltd and Toshiba Corp, is 70 percent owned by the Innovation Network Corp of Japan, a mostly government-funded body to support “next-generation” businesses. Japan Display has committed US$2 billion to investment in the Mobara plant, which it bought from Panasonic Corp and began operating in June of this year. The funds raised from the IPO would be used for additional expansion projects. Japanese companies typically proceed with a share offering about three months after submitting an application to the Tokyo Stock Exchange. Although the company does not name its customers, industry

Japan Display supplies screens for Apple Inc’s iPhone

sources widely confirm that it supplies screens for both Google Inc’s Nexus7 tablet and Amazon. com Inc’s Kindle Fire HDX, as well as Apple Inc’s iPhone.

Japan Display chalked up sales of 450 billion yen in the latest year to March and an operating profit of several billion yen. Reuters

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

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November 11, 2013 April 19, 2013

Asia

Echo’s makes big move in Australia gaming war Echo plans to spend US$1.4 bln upgrading Queensland casinos Maggie Lu Yueyang and Jane Wardell

earlier fallen as low as A$2.28, as Echo also said subdued discretionary spending continues to impact its revenue growth, analysts said. “The admission that they need to spend more money and disruptions to their operations will weigh further on short-term earnings,” said Invast Australia chief market analyst Peter Esho. “It’s not the positive upswing news the market is waiting for.”

Tug-of-war continues Queensland state has four casinos currently, with Echo owning three in Brisbane, Gold Coast and Townsville, and Reef Casino Trust owning the Reef Hotel casino complex in Cairns. The Queensland government said last month it planned to offer up to three new casino licences, with just one of those earmarked for Brisbane – leaving Crown and Echo in direct competition again.

KEY POINTS Echo overspending to match Crown: analysts Queensland govt mulls three new licences Echo shares tumbled after announcement

Echo dropped plans to expand its existing Star casino in Sydney

cho Entertainment Group Ltd unveiled plans to invest A$1.5 billion ($1.42 billion) in its Queensland casinos, sending its shares to an all-time low on Friday as investors fretted it risks overspending to fend off rival Crown Resorts Ltd. Crown, controlled by billionaire James Packer, an Echo are battling for supremacy in the Australian casino sector as the country seeks to grab a larger slice of the booming Asian gaming market.

Australia’s 13 casinos currently capture just one percent of the US$34 billion market for highroller gamblers in Asia annually, but state governments are greenlighting multibillion dollar developments to boost that figure. The fight between Crown and Echo is moving north after Crown won the first round in Sydney when it received approval from the New South Wales state government for a high roller room in a A$1 billion luxury hotel

and residential development. That spelled the end of Echo’s plans to spend A$1.1 billion on new luxury hotels and an expansion of its existing Star casino in the harbourside city, a major blow for the company. Echo is now switching that investment to turn its existing casinos in Brisbane and the Gold Coast into more luxurious integrated resorts, but analysts said it is paying a hefty price. Echo shares were down 4.7 percent at A$2.45, in afternoon trade, having

Echo plans to expand its Jupiters Casino on the Gold Coast with a six-star hotel and to transform its current separate Treasury Casino and hotel in Brisbane to a large-scale integrated resort precinct. It may sell its Jupiters Casino in Townsville, which has limited opportunity for an upgrade, it added. Crown is yet to provide details of any investment but has already expressed its interest in Queensland. Reuters

Stay in the finest hotels in Macau and read Business Daily news where it matters

New Zealand says regulator decision is threat to broadband Country betting on fast Internet to boost economic performance Tracy Withers

ew Zealand’s government says a regulator’s decision to cut the cost of existing copper wire-based Internet services by almost a quarter threatens a proposed fast broadband network. “If the copper price takes a hit at this level then there is a real threat that ultrafast broadband won’t get built, either to as many people, or in the time frame we want or possibly even at all,” Communications

minister Amy Adams said in an interview broadcast on TV3 Saturday. Shares in Chorus Ltd, the government’s biggest partner in the NZ$4.5 billion (US$3.7 billion) project, slumped 23 percent since the Commerce Commission’s copper price ruling on November 5. The company said the resulting drop in revenue will hurt its ability to fund its share of the fast broadband roll-out and may put it in default with its bankers.

Ms Adams has ordered an independent assessment of Chorus’s ability to fulfill its obligations. Once that review is in, the government will determine its response which may include overruling the regulator’s decision, she said. “We think consumers benefit the most when there are the right incentives for people to build the most innovative, leading replacement technology,” Ms Adams said. “Has the

Commerce Commission ended up setting copper prices so low that we can’t afford to build replacement technology?” The government would expect Chorus to make its own adjustments and there may be scope to change the contract with the government to make it more viable, she said. Seeking a new partner is less likely because of the disruption to the existing rollout, which is in its third year, she said.

Prime minister John Key’s government is betting fast broadband will boost economic performance by improving productivity and allowing new industries to develop. “We all want prices to be as low as they can, but are we willing to trade off access to world-leading technology just to have slightly lower prices on what is an increasingly outdated network,” Ms Adams said. Bloomberg News

14 14

November 11, 2013 April 19, 2013

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

Max 57.95

average 57.472

Max 54.45

Min 56.9

average 54.187

Last 57.7

Min 53.90

Last 54.35

58.00

88.00

26.9

57.78

87.74

26.8

57.56

87.48

26.7

57.34

87.22

26.6

57.12

86.96

26.5

56.90

Max 88.00

average 87.281

PRICE

Min 26.4

Last 26.4

26.4

54.38

25.7

29.42

54.26

25.6

29.24

54.14

25.5

29.06

54.02

25.4

28.88

53.90

Max 25.80

average 25.508

DAY %

YTD %

(H) 52W

Min 25.35

Last 25.70

(L) 52W

0.08492569

0.974617115

109.6999969

85.51999664

BRENT CRUDE FUTR Dec13

103.42

-0.038662285

-1.326209331

114.4399948

95.95999908

GASOLINE RBOB FUT Dec13

250.62

0.12384643

-1.501336268

290.3199911

241.5999889

GAS OIL FUT (ICE) Dec13

885.25

-0.056449337

-1.802551303

973

837

3.539

0.568343279

-10.35967579

4.744000435

3.378999949

283.91

-0.003522119

-4.852709541

321.1599827

276.4999866

Gold Spot $/Oz

1311.67

-0.2851

-21.1955

1754.46

1180.57

Silver Spot $/Oz

NATURAL GAS FUTR Dec13 NY Harb ULSD Fut Dec13

21.7235

-0.2342

-27.8529

34.3838

18.2208

Platinum Spot $/Oz

1458.6

-0.5217

-3.8972

1742.8

1294.18

Palladium Spot $/Oz

761.5

0.3254

8.8386

786.5

604

LME ALUMINUM 3MO ($)

1821

-0.054884742

-12.15629522

2184

1758

7145

0.421644413

-9.910477872

8346

6602

1900.5

-0.653423941

-8.629807692

2230

1811.75

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

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

14000

-0.779588944

-17.93669402

18770

13205

15.495

-0.064495324

0.518975024

16.80999947

14.91500092

420.25

-0.059453032

-29.92913714

647

419

WHEAT FUTURE(CBT) Dec13

653.25

0.038284839

-20.40816327

913

635.5

SOYBEAN FUTURE Jan14

Dec13

1264.25

-0.177654955

-3.418640183

1406

1169

COFFEE 'C' FUTURE Dec13

103.8

-0.144300144

-33.65292426

172.0999908

100.9499969

SUGAR #11 (WORLD) Mar14

18.08

0.22172949

-12.14771623

20.71999931

16.69999886

COTTON NO.2 FUTR Dec13

76.42

-0.442926061

-2.946405893

93.72000122

74.34999847

World Stock Markets - Indices NAME

average 26.614

29.60

94.28

CORN FUTURE

Max 26.9

25.8

WTI CRUDE FUTURE Dec13

LME ZINC

86.70

25.3

Max 29.55

average 28.960

Min 28.75

Last 28.85

28.70

Currency Exchange Rates

NAME

METALS

Last 87.00

54.50

Commodities ENERGY

Min 86.75

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

0.9462 1.6087 0.9165 1.3418 98.21 7.9841 7.7516 6.0908 62.655 31.402 1.2434 29.462 43.193 11413 92.929 1.22975 0.83405 8.1707 10.7127 131.78 1.03

-0.3161 0.0684 -0.3601 -0.6442 0.5091 0 0 0.0115 -0.3831 -0.2452 -0.0643 -0.1358 0.0509 -0.1752 0.8264 0.2862 0.7314 0.8065 0.6562 1.161 0

-8.8264 -0.5502 -0.12 1.7286 -12.3307 -0.0113 -0.0129 2.2953 -12.2257 -2.6177 -1.7693 -1.4561 -5.0656 -14.1943 -3.8761 -1.8109 -2.2337 0.5728 -1.7017 -13.8185 -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 ARISTOCRAT LEISU

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.8

-3.225806

52.38095

5.12

2.56

5119668

16.67

-1.767826

56.23243

17.38

9.77

1690257

AMAX HOLDINGS LT

1.15

0.877193

-17.85714

1.72

0.75

1175750

BOC HONG KONG HO

24.65

2.282156

22.85

6196030 1342000

CROWN RESORTS LT

CENTURY LEGEND

0.43

-4.444444

62.26416

0.56

0.24

CHEUK NANG HLDGS

7.17

-0.6925208

19.6995

7.28

4.1

58091

CHINA OVERSEAS

-0.862069

-0.4329021

25.6

17.7

13809852

CHINESE ESTATES

21.35

1.184834

89.8529

22.25

9.543

17500

CHOW TAI FOOK JE

12.28

-2.073365

-1.28617

13.4

7.44

5488906

EMPEROR ENTERTAI

4.14

0.9756098

119.0476

4.66

1.48

1835000

3.2

-1.538462

164.0207

3.41

1.103

1314000

57.7

0.5226481

90.11532

63.75

6226717

HANG SENG BK

126.1

0.3980892

6.234207

132.8

110.6

1026908

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15593.98

-0.970986

19.00041

15797.67969

12471.49

NASDAQ COMPOSITE INDEX

3857.333

-1.89761

27.74683

3966.71

2810.8

FTSE 100 INDEX

6668.25

-0.4325675

13.06315

6875.62

5605.589844

DAX INDEX

9019.32

-0.6795485

18.48211

9193.980469

6950.53

HOPEWELL HLDGS

25.95

0.9727626

-21.95489

35.3

23.2

1065934

NIKKEI 225

14086.8

-0.995471

35.51281

15942.6

8619.45

HSBC HLDGS PLC

85.4

-0.5241701

5.043046

90.7

73.55

6976862

HANG SENG INDEX

22744.39

-0.5971759

0.3860662

23944.74

19426.35938

HUTCHISON TELE H

3.39

-0.2941176

-4.775279

4.66

3.12

3046000

CSI 300 INDEX

2307.945

-1.393133

-8.522035

2791.303

2023.171

LUK FOOK HLDGS I

27.3

11.88525

30.05

16.88

1591003

MELCO INTL DEVEL

24.25

-2.414487

169.1454

25.75

7.46

6229700

TAIWAN TAIEX INDEX

8229.59

-0.6533305

6.884731

8476.63

7061.87

MGM CHINA HOLDIN

26.4

-2.402957

98.82094

12.236

3521163

KOSPI INDEX

1984.87

-0.9565677

-0.6099023

2063.28

1770.53

MIDLAND HOLDINGS

3.19

-0.3125

-13.78378

4.29

2.68

658000

NEPTUNE GROUP

0.32

110.5263

0.4

0.131

53490000

NEW WORLD DEV

10.6

-0.7490637

-11.81365

15.12

9.98

13231515

SANDS CHINA LTD

54.35

-0.3666361

60.08836

60.5

29.35

8297260

FUTURE BRIGHT GALAXY ENTERTAIN

5400.665

-0.3941508

16.16956

5457.3

4334.3

4475.451

-0.2375778

3.677917

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1806.39

-0.0121775

6.953437

1826.22

1590.67

SHUN HO RESOURCE

1.55

-4.320988

10.71429

1.92

1.19

10000

NZX ALL INDEX

1042.651

0.5462947

18.2073

1048.998

853.452

SHUN TAK HOLDING

4.44

-1.113586

5.966586

4.8

3.12

2281259

PHILIPPINES ALL SHARE IX

3876.9

-1.048752

4.809973

4571.4

3440.12

SJM HOLDINGS LTD

25.7

0.1949318

44.80784

16.762

5527982

SMARTONE TELECOM

9.95

-0.5

-29.33239

9.93

1798600

WYNN MACAU LTD

28.85

-2.037351

37.70883

32.6

3752937

ASIA ENTERTAINME

3.96

N/A

69409

69.76

-4.294142

56.02774

78.03

43.16

808399 10350

S&P/ASX 200 INDEX JAKARTA COMPOSITE INDEX

Euromoney Dragon 300 Index Sin

622.76

-0.41

0.27

STOCK EXCH OF THAI INDEX

1399.32

-1.817952

0.5309098

1649.77

1260.08

HO CHI MINH STOCK INDEX

498.61

-0.25007

20.51579

533.15

374.15

BALLY TECHNOLOGI

Laos Composite Index

1305.31

7.453266

1455.82

1123.21

BOC HONG KONG HO

3.3

0.9174312

7.491859

3.6

2.99

GALAXY ENTERTAIN

7.4

-1.069519

86.39798

8.11

3.468

600

17.18

-12.39164

21.24206

21.2

12.37

19066005

JONES LANG LASAL

93.6

-0.02136296

11.50822

101.46

72.56

364783

LAS VEGAS SANDS

68.46

-2.934921

48.31023

73.49

37.8353

6175166

MELCO CROWN-ADR

33.23

-5.084262

97.32779

13.43

5208583

MGM CHINA HOLDIN

3.4

-3.68272

94.25337

3.88

1.703

1500

MGM RESORTS INTE

18.58

-2.722513

59.62199

20.98

9.15

9143388

SHFL ENTERTAINME

23.15

-0.1724881

59.65517

23.25

12.35

752637

SJM HOLDINGS LTD

3.35

47.08362

3.6

2.1396

2117

159.51

-2.962648

41.79927

173.38

103.34

2623948

INTL GAME TECH

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

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

38.1

-0.78125

22032334

NAME CHINA UNICOM HON

ALUMINUM CORP-H

2.76

-3.157895

20683013

CITIC PACIFIC

BANK OF CHINA-H

3.54

-0.2816901

209385244

BANK OF COMMUN-H

5.45

-0.3656307

23422095

BANK EAST ASIA

33.75

1.351351

2488182

BELLE INTERNATIO

10.02

-1.571709

52775000

CLP HLDGS LTD CNOOC LTD COSCO PAC LTD ESPRIT HLDGS

BOC HONG KONG HO

24.65

6196030

HANG LUNG PROPER

CATHAY PAC AIR

14.92

-0.7978723

2063926

HANG SENG BK

CHEUNG KONG

120.4

0.08312552

3387033

CHINA COAL ENE-H

4.67

-1.684211

28878885

CHINA CONST BA-H

5.9

-0.5059022

176504706

VOLUME

-2.01005

17781485

10.86

1.30597

6873048

61.7

2833301

15.28

-1.036269

41998169

-2.48227

5775410

14.98

4.608939

16263666

25.7

-0.3875969

126.1

0.3980892

1584743

TENCENT HOLDINGS

401.4

-1.472754

4618402

3250992

TINGYI HLDG CO

21.75

-0.9111617

4851090

1026908

WANT WANT CHINA

11.16

-1.06383

10513405

WHARF HLDG

63.95

0.3137255

1831421

HONG KONG EXCHNG

124

-0.4815409

2558814

HSBC HLDGS PLC

85.4

-0.5241701

6976862

-0.9840098

14620450

HUTCHISON WHAMPO

-0.862069

13809852

IND & COMM BK-H

CHINA PETROLEU-H

6.28

-1.257862

63831697

CHINA RES ENTERP

26.45

0.3795066

SINO LAND CO

2902150

7282204

8297260

-0.1647446

-0.1108647

80.5

-0.3666361

90.9

18.02

2066469

54.35

SWIRE PACIFIC-A

2787771

20922495

2823848

SANDS CHINA LTD

4917530

1982217

-0.9661836

VOLUME

0.4926108

0.2217295

-0.9124088

-0.4746835 -0.7476636

-0.8291874

20.5

DAY %

62.9

102

89.7

27.15

PRICE

POWER ASSETS HOL

10.62

45.2

HONG KG CHINA GS

NAME

SUN HUNG KAI PRO

HENDERSON LAND D

CHINA MERCHANT CHINA OVERSEAS

DAY %

11.7

HENGAN INTL

CHINA LIFE INS-H CHINA MOBILE

PRICE

94.45

-0.839895

4657290

5.22

-0.9487666

162991440

LI & FUNG LTD

10.64

-0.3745318

19337796

2792445

MTR CORP

29.35

-0.676819

2325260

CHINA RES LAND

21.05

-1.864802

7724588

NEW WORLD DEV

10.6

-0.7490637

13231515

CHINA RES POWER

19.44

0.9345794

8389634

PETROCHINA CO-H

8.61

-0.2317497

53138281

CHINA SHENHUA-H

23.85

-0.625

18457500

PING AN INSURA-H

61.05

0.1640689

11540284

MOVERS

23112

INDEX 22744.39 HIGH

23111.65

LOW

22706.92

52W (H) 23944.74 (L) 19426.35938

22706

6-November

8-November

15 15

November 11, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Taipei Times The newly inked free-trade agreement with Singapore is expected to help Taiwan move closer to talks on joining the Regional Comprehensive Economic Partnership (RCEP), industry bodies said. “Singapore will help secure a seat for Taiwan when the nation seeks to join the regional economy in Southeast Asia,” General Chamber of Commerce chairman Lawrence Chang said. “It’s better to think of the agreement as a starting point for Taiwan to join RCEP, and with the pack inked, the possibility [for Taiwan to become a member of RCEP] seems higher than ever.”

Who will run the world’s deficits? Sanjeev Sanyal

Global Strategist at Deutsche Bank, was named ‘Young Global Leader 2010’ by the World Economic Forum

between a country’s saving and investment rates, both of which are heavily influenced by demographics, we need to consider rapid changes in population dynamics.

World’s investor

Inquirer Business The Philippines may buck the growth downtrend seen for most developing countries in 2013, according to international think tank Oxford Analytica. The Philippines may be one of the few countries to register growth faster than that reported in 2012 despite the lingering uncertainties in the global economy, it said. It described the Philippines, along with a few others, to be a “notable exception,” as growth of most emerging markets are likely to decelerate this year. Average growth in 2013 looks set to be “lower than the 2012 rate of just below 5 percent, with few hot spots visible,” the think tank said.

Korea Herald South Korean President Park Geun-hye and Belgium Prime Minister Elio Di Rupo agreed to bolster cooperation on wider development projects. The two countries signed a memorandum of understanding in development fields to explore projects in countries such as the Democratic Republic of the Congo, Rwanda and Vietnam. They also agreed to maximise the use of the South Korea-EU Free Trade Agreement to consistently expand bilateral trade and investment volume that currently stands at an annual US$3.65 billion.

Jakarta Globe Indonesia’s rupiah and bond yields will return to levels seen in 2009 after the U.S. Federal Reserve cuts stimulus that has buoyed emergingmarket assets, Finance Minister Chatib Basri said. “The normal world is a world without quantitative easing,” Mr Basri said. “I see that after the QE taper, we will return to that situation.” The U.S. central bank is expected to start reducing its US$85 billion a month of bond purchases early next year.

hese days everyone seems to want to run a current-account surplus. China has long run large surpluses. The eurozone is now running even larger ones, with swings in southern Europe augmenting Germany’s longstanding surpluses. Indeed, countries from Singapore to Russia are running large surpluses. Meanwhile, America’s external deficit – which for decades has helped to sustain surpluses elsewhere – is now smaller than it was before 2008, with many economists arguing that it should never revert to its previous levels (they argue that the shale-gas boom makes this unlikely, anyway). Financial markets have also made clear that the ability of other major deficit countries, like Brazil and India, to absorb capital flows is reaching its limit. Since the world is a closed system, this raises the question: Who will run the world’s deficits? Mainstream economists believe that the global economy should function as a balanced mechanical arrangement in which external surpluses and deficits are smoothed out over time. But periods of global economic expansion have virtually always been characterised by symbiotic imbalances.

One part of the world runs large deficits for a prolonged period, creating demand; another part of the world runs surpluses, financing its counterparts’ deficits. This was true of Roman-Indian trade in the first and second centuries, and of the age of European exploration in the sixteenth century. It was also true of the two Bretton Woods arrangements, in which the U.S. ran the necessary deficits.

Creating distortions Admittedly, imbalanced systems create distortions. The Romans had to debase their coins, owing to the continuous loss of gold to India. The Spanish empire flooded the world with silver coins as it paid for its many wars. Bretton Woods I collapsed in 1971, when the dollar’s peg to gold became untenable, and Bretton Woods II ended in 2008, owing to the misallocation of capital. But these distortions did not prevent unbalanced systems from enduring for long periods. The only significant period of “balanced” economic expansion was in the early nineteenth century. The British East India Company deliberately imposed a triangular trade arrangement

It would be convenient if global demographics were distributed in such a way that ageing countries could run surpluses just when younger countries needed the capital

whereby Britain sold manufactured goods to India in order to buy opium, which it subsequently sold in China to finance the purchase of tea and other products. In other words, balanced global economic growth required war, colonisation, and large-scale drug trafficking. So, what symbiotic imbalance will underpin the next round of global economic growth? Given that the current account is the difference

China currently saves and invests half of its GDP, but, as its workforce shrinks in the coming years, its investment rate is likely to fall sharply. However, ageing will keep the saving rate from falling at the same pace. This differential will generate large external surpluses that will transform China from the “world’s factory” into the “world’s investor”. It would be convenient if global demographics were distributed in such a way that ageing countries could run surpluses just when younger countries needed the capital. In reality, many major economies will be trying to save for retirement at the same time. Moreover, the younger countries are typically emerging markets, which have neither the scale nor the capacity to absorb the world’s excess savings efficiently. The U.S. is the main exception: it has both the required scale and the youngest population of any major developed country. Given this, it will once again fall to the U.S. to run the world’s largest external deficit, in what could be dubbed Bretton Woods III. It may seem appalling to expect such a highly indebted country to continue to run deficits; but the world is willing to finance the U.S. at negative real interest rates. Indeed, the main international concern has been U.S. policymakers’ reluctance to raise the government’s debt ceiling. If the U.S. is unable or unwilling to run the required deficits, the global economy will flounder in a savings glut of low demand and cheap capital until another alternative emerges. Or perhaps the low cost of international capital will entice the U.S. to absorb some of the world’s excess savings, triggering a new period of global expansion. While a Bretton Woods III arrangement would inevitably generate its own distortions, it could last for years if the capital is invested sensibly. The prospect of its eventual demise is not a good reason to wait for some theoretical ideal of global balance to materialise. If history is any indication, we will be waiting for a long time. © Project Syndicate

16 16

November 11, 2013 April 19, 2013

Closing US govt wants maximum fine for BofA

More e-channels at Gongbei border

Bank of America Corp should pay the maximum penalty of US$863 million for selling defective loans to Fannie Mae and Freddie Mac, given the egregiousness of the fraud, United States prosecutors told a federal judge. Bank of America’s Countrywide unit was found liable by a jury in Manhattan federal court last month for selling the government-sponsored entities thousands of defective loans in the first mortgage-fraud case brought by the United States to go to trial. The bank’s fraud was “simple but brazen,” prosecutors wrote in a court filing last night.

A total of 24 new ‘e-channels’ opened at the Gongbei border crossing with the mainland at the weekend. They are able automatically to scan the identity documents of registered users and allow them access via electronic barriers. The aim is to shorten waiting times for land crossings between Macau and Zhuhai, the Xinhua news agency reported, quoting mainland immigration officers. There are now a total of 120 e-channels at Gongbei. E-channels processed nearly 60- percent of the 100 million travel journeys made via the land borders last year, noted Xinhua.

Getting gamblers still a challenge: Razon Filipino millionaire slams former Solaire managers amid dispute

he Philippines is still lagging behind its Asian gaming rivals when it comes to attracting outside gamblers, says Enrique Razon, owner of Solaire Resort & Casino, the first resort to open in Manila’s Entertainment City. The Philippine Amusement & Gaming Corp., the government gambling regu lator, which itself operates 13 casinos, predicts that the new resorts will increase gaming revenue in the country to US$10 billion by 2017. Analysts say that to make that happen the Philippines will have to work hard to improve its airports, roads and other infrastructure. The country will eventually be able to compete with other Asian venues, says Marvin Fausto, the Manila-based chief investment officer at BDO Unibank Inc. “But it will take a longer time,” he says. “Singapore is safe, easy to go around; things work there. There are a lot of things that have to be fixed here.” Mr Razon agrees. “We have severe disadvantages in infrastructure, transportation,” he says. “The challenge

Enrique Razon is the owner of Manila’s Solaire Resort & Casino

is getting them to make the first trip; when they come, they realise it’s safe.” Solaire’s second level is designed for high stakes gamblers from China, South Korea and other Asian markets, it has private rooms and views across Manila Bay. Mr Razon says that Solaire’s all-important section for VIP gamblers is

full on weekends. The casino has attracted 30 junket operators, he says, referring to the firms that organise gambling trips for Chinese and other Asian bettors. “The Philippine gaming industry is still in the nascent stage, and, given Razon’s business acumen, you would expect his project to be a long-term success,” says Alan

Richardson, a Hong Kongbased money manager at Samsung Asset Management. Mr Razon found little time for recreation after the dispute broke out with Global Gaming Asset Management (GGAM), which forced him to take over daily management of Solaire. He says that Bill Weidner, head of GGAM, never returned

to Solaire after attending its opening. “They turned out to be a very expensive, glorified executive-search firm,” Mr Razon says. GGAM is seeking arbitration in Singapore, a neutral jurisdiction. Bloomberry’s allegations “have no factual or legal validity,” the Las Vegas company says in a statement. It adds GGAM was always “actively engaged on the ground in the Philippines on behalf of Solaire.” Mr Razon quickly replaced GGAM, in early October naming Thomas Arasi, a former chief executive officer of Marina Bay Sands, Las Vegas Sands Corp’s casino resort in Singapore, as president of Bloomberry. Mr Razon wants to use his Manila casino as a springboard to other countries. He says he expects Macau’s government to allow new entrants to operate in the world’s largest gambling hub from 2020 when existing licenses start expiring. Bloomberg News

Apple working on curved iPhone screens Tim Culpan

pple Inc is developing new iPhone designs including bigger screens with curved glass and enhanced sensors that can detect different levels of pressure, said a person familiar with the plans. Two models planned for release in the second half of next year will feature larger displays with glass that curves downward at the edges, said the person, declining to be identified as the details aren’t public. Sensors that can distinguish heavy or light touches on the

screen may be incorporated into subsequent models, the person said. The new iPhones will be Apple’s largest at screens of 4.7 5.5 inches, the person said, approaching in size the 5.7-inch Galaxy Note 3 that Samsung Electronics Co debuted in September. The South Korean maker last month released the curved display Galaxy Round, the latest phone in an array of sizes and price points that’s helped keep it ahead of Apple in global market share. The new Apple handsets are still in development and

plans haven’t been completed, the person said, adding that the company will probably release them in the third quarter of next year. Apple broke with past practice in September when it unveiled two versions of the iPhone at the same time, the iPhone 5s with more advanced features and the iPhone 5c at lower prices, as part of a strategy to appeal to broader markets. Demand for the iPhone 5s is much higher, and iPhone 5c production has been reduced, the person said. Bloomberg News