MOP 6.00 Vitor Quintã
Yeung waives right to soccer loan Page 4
FamilyMart plans1 home delivery service
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Govt admits ‘might’ be property bubble
www.macaubusinessdaily.com
Year II
Number 414 Thursday November 14, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
April 19, 2013 One person, one credit card
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he government conceded for the first time yesterday – albeit coyly and in a grudging way – there might be a local property price bubble. But Chief Executive Fernando Chui Sai On told legislators – asking why he didn’t tackle the issue in his Policy Address for 2014 – that he didn’t want to apply further price cooling measures in case it panicked the market and caused the bubble to burst – if indeed it really existed. “…if a property bubble is really there, we have the purchasing power of all residents here [to take] into
account, including those who have already bought a home,” Mr Chui said. Elsewhere, academic Agnes Lam told a University of Macau panel on another policy proposal – getting more locals in senior casino management positions – that looming gaming concession expiry dates give the government “a lot of bargaining power”. Fellow academic Davis Fong added the government was “a bit slow” in developing a mid- to long-term tourism policy.
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Inflation drags down fiscal reserve returns
Li Ka Shing firm urges HK-Macau railway
The government’s fiscal reserve is losing money in real terms as inflation expands at twice the rate of its capital returns. The fund held 167.34 billion patacas (US$20.95 billion) at the end of September, according to a Monetary Authority of Macau report yesterday. The reserve has grown by 4.79 percent in its first 18 months of operation. The consumer price index expanded 9.28 percent in the same period. Page 4
Hong Kong should build rail links to Macau and Zhuhai to improve the region’s economic integration, suggests a Hong Kong developer. “Hong Kong has no future if we can’t merge with the Pearl River Delta,” said Justin Chiu Kwok Hung, executive director of Cheung Kong Holdings Ltd. Cheung Kong is a logistics and estate development conglomerate controlled by Asia’s richest man, Li Ka Shing. Page 5
Land bureau director to testify in La Scala trial Jaime Carion, director of the Land, Transport and Public Works Bureau, has been summoned to court on November 18 by the defence of businessman Steven Lo Kit Sing. Mr Lo and fellow Hong Kong businessmen Joseph Lau Luen Hung are accused of bribing with HK$20 million (US$2.58 million) now-jailed Ao Man Long, a former secretary for transport and public works, to win a 2005 land bid. Page 6
Name
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BOC HONG KONG HO
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CLP HLDGS LTD
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BELLE INTERNATIO
-4.72
Source: Bloomberg
I SSN 2226-8294
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November 14, 2013
Macau
‘Hire resident managers or lose gaming licence’ Govt has all the cards to force gaming firms to appoint more locals in management: scholar Tony Lai
tony.lai@macaubusinessdaily.com
Gaming concessions will expire between 2020 and 2022
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he authorities could ask for more Macau residents to be promoted to management positions as a requirement to renew the gaming concessions and subconcessions, a scholar suggests. “The government now has a lot of bargaining power to do that,” said Agnes Lam Iok Fong, assistant professor of communications at the University of Macau. “The contract is up for renewal soon; that’s the most powerful tool the government has,” said Ms Lam, who is also a political commentator. The administration could tell operators, she added: “If you don’t agree to this, we may find another person to run the casinos.” The six current gaming concessions
and sub-concessions will expire between 2020 and 2022. Secretary for Economy and Finance Francis Tam Pak Yuen said in July that 2015 was the “appropriate time” to discuss their renewal. Ms Lam’s comment came during an academic panel discussion held at the university yesterday. It concerned the Policy Address for 2014 delivered on Tuesday by the city’s Chief Executive Fernando Chui Sai On. During the address Mr Chui pledged to “further push largescale enterprises, especially gaming operators, to raise the proportion of resident employees in the different management levels.” Mr Chui said at the Legislative
Assembly yesterday that gaming company bosses have told him they would try to assist with implementation of the policy. He didn’t mention with which executives and companies he had spoken. The government has previously created quotas for the numbers of imported workers allowed per company in Macau. The idea of creating quotas for numbers of residents in management positions has not so far been raised by the government. Teresa Vong Sou Kuan, associate professor of education at the University of Macau, said it would be “more important” to have a timetable than a ratio for such localisation. Joey Lao Chi Ngai, president of
the Macau Association of Economic Sciences, said this measure is “key” to groom talents. “Talents can only grow and improve when they are in use,” he said. On Tuesday Mr Chui also announced a string of measures to “nurture talents” locally, though few details were released.
Feasibility doubts “One scheme states the government would cooperate with private firms to send their staff for training abroad,” said Ms Lam. “I have doubts on whether there is room to implement this under the current Macau [legal] framework.” The scholar criticised the lack of details on the new measures. It would be “more practical” to improve the territory’s education, namely higher education, she added. Ms Wong agreed, while lamenting that just 53 of every 100 junior high-school graduates would enrol in senior high school while the rest would start working. It would be helpful for the government to gather more information on the local economy’s demand for professionals, Ms Wong added. “As for the plan to attract talents living outside to return to Macau … it is more practical for the government to give out a blueprint of the industries it wants to develop,” suggested Ms Lam. The policy address said the administration would “provide special treatment” to lure back qualified residents living outside. The city should work on providing “a fair, transparent” work environment and improve on many pressing issues such as housing, transport, and medical facilities to attract suitably talented people, Ms Lam added. Lin Guangzhi, manager of the University of Macau’s Centre for Macau Studies, believes the government should pay attention to the qualifications of the workforce. “Why do casino dealers want protection from the government? Because their educational qualifications are not enough and thus they are afraid of competition,” said Mr Lin. Several labour groups have demanded the government pass a law to ban non-residents from working as casino dealers. Mr Lin warned against having an “overly protective” labour policy and said a degree of competition with imported labour is needed.
Tourism policy needed ahead of new Cotai resorts Cash handout a ‘sugar-coated poison’ fuelling residents’ reliance on sweeteners
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he administration should hasten the city’s tourism planning or its hand will be forced by events, via the many resorts set to open on Cotai, says a gaming scholar. Davis Fong Ka Chio, director of the University of Macau’s Institute for the Study of Commercial Gaming, thinks the government is being “a bit slow”. Chief Executive Fernando Chui Sai On said in his Policy Address for 2014 on Tuesday that studies for a mid- to long-term tourism plan for the territory would only begin
next year. “More forward-looking plans are needed from the government but many integrated gaming resorts will open in the future, particularly after 2015-16,” said Mr Fong. “We only have 30 square kilometres [and] it is important for us to know how to receive 30 million visitors [a year],” he said in an academic panel discussion held yesterday on the policy address. “How many will be business visitors, family travellers or gamblers? This
requires a further breakdown in the planning.” In contrast, the scholar applauded the creation of a subsidy scheme for attracting international parties to hold conventions here. “It is a good step to help diversify Macau’s economy,” said Mr Fong. More measures are needed in the future, however, to expand the industry for meetings, incentives, conferences and exhibitions, he added. The members of the panel held at the University of Macau criticised the decision
to continue and increase the cash handout. Permanent residents will receive 9,000 patacas (US$1,125) next year, 1,000 patacas more than this year while non-permanent residents can get 5,400 patacas, up from 4,800 patacas this year. Teresa Vong Sou Kuan, associate professor of education at University of Macau, described the bigger cash handout as a “larger sugar-coated poison”. “My [17-year-old] nephew’s reaction [to the policy address] was: why
doesn’t the government start handing out flats?” said Ms Vong. This remark reflects the residents’ growing reliance on short-term measures, she added. The government will have to “bear the fruits of social unrest” once the scheme is dropped, she warned. The city’s Chief Executive declined to answer media questions on whether annual cash handouts – first launched in 2008 after several years of street demonstrations during May Day – would become a permanent policy. T.L.
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November 14, 2013 April 19, 2013
Macau
Govt to wait-and-see on property bubble
editorial
Chief executive defends decision not to introduce extra price curbs
Promised land
Stephanie Lai
sw.lai@macaubusinessdaily.com
policy would lead to an increase in interest rates here, which are currently close to zero. Analysts expect the Fed to scale back its bond purchases early next year. Mr Chui reiterated that the property curbing measures announced in October last year have had a cooling effect on the market. In October the special stamp duty was extended to shops, offices and parking lots and home mortgage terms were tightened to try to deter speculators. In June new rules on buying unfinished properties off-plan were also introduced. In the second quarter of 2013 there were 4,029 people buying unfinished flats but in the third quarter sales went down to 1,908, said Mr Chui. Transactions of existing homes also dropped, he added. “We have noticed that the home price rise is not as steep as in the previous years,” the official said.
Numbers problem
An interest rate hike could harm property market, said Mr Chui
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hief Executive Fernando Chui Sai On left the property market alone in his Policy Address for 2014 – because of fears it would burst any asset bubble that might be forming. “We are concerned with whether there is a property bubble, so after much consideration we have decided not to put any property curbing measures in the policy address,” he said yesterday. “We have to consider certain risks: if a property bubble is really there, we have the purchasing power of all residents here [to take] into account, including those who have already bought a home,” Mr Chui said. Uncertainties in the world economy were another factor, Mr Chui said. His comments came during questions yesterday from Legislative Assembly members on his policy address,
delivered on Tuesday. “While preparing the policy address, we have listened to opinions from banks, the construction sector and several economists,” said Mr Chui. “We are concerned with the complicated and volatile global economy and the possible change in the interest rate,” he explained. The mortgage rates charged by banks here are in lockstep with interest rates in the United States due to the indirect peg between the pataca and the US dollar. United States Federal Reserve chairman Ben Bernanke said in June that the central bank might start reducing its bond-buying programme this year. At the end of October the Fed decided to leave things as they are. But any change to the bond buying
An academic study on Macau households concluded that 85.5 percent of all residents live in homes they own, Mr Chui said. He did not name the institution in charge of the study or disclose any further details. Several assembly members challenged the quoted conclusion. “If only about 20 percent of all residents are living in rented homes, why are so many people still complaining about the home price problem?” legis lator Kwan Tsui Hang asked. “Even for this 20 percent that are renting flats, the rent level is already rising so high that it needs certain control,” Ms Kwan told media after the assembly. “No matter if it is for small businesses or tenants, we need a law to curb rents,” said the Macau Federation of Trade Unions vice-president. She believes short-term measures, such as taxing people that buy more than one home here, should be introduced to curb speculation. In contrast, legislator and developer Tommy Lau Veng Seng agrees with the Chief Executive that no more property curbs are needed. Any more measures could lead to financial losses for investors and end-users, he told Business Daily.
Govt to assess need to import drivers
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he government will assess whether it should allow migrant workers to drive trucks in Macau, Chief Executive Fernando Chui Sai On announced yesterday. Mr Chui returned to the Legislative Assembly last afternoon to take questions from members on his Policy Address for 2014, which
he presented Tuesday. Assembly member and businessman Kou Hoi In said many businesses have been deprived of manpower, in particular truck drivers. Mr Chui replied the government would conduct a study to assess Macau’s needs for drivers and whether migrant labour should be allowed to work as truck drivers.
The government will however still continue banning migrants from working as casino dealers, Mr Chui stated. He added that Macau’s current rules are sound enough, and there is no need to ban non-local dealers by law, as requested by several labour unions. V.Q.
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hief Executive Fernando Chui Sai On says the government’s labour policy has not changed, that it wants to protect local jobs, but that it is now placing a greater emphasis on making sure residents are promoted up the ladder. Mr Chui is sending a clear message to private companies, with gaming operators at the top of his list. “The government will further push large-scale enterprises, especially gaming operators, to raise the proportion of resident employees in the different management levels,” he said after Tuesday’s Policy Address. Nurturing talent was undoubtedly the catchphrase of Mr Chui’s policy direction document for next year. But throwing more money at nurturing human resources is not nearly enough and the city’s leader fell short of announcing any specific measures to better train Macau’s workers. Firms already find it hard to hire high-quality talent and it is difficult for companies to promote residents into management posts because they are often needed to fill less senior positions that are reserved only for Macau locals. The government will have to concede ground. Mr Chui announced a highest-ever cash handout of 9,000 patacas (US$1,125) for permanent residents, 1,000 patacas more than this year. It was part of a collection of bonuses for the general population but each of the incentives fails to deal with more crucial issues. In a press conference following his address to members of the Legislative Assembly, Mr Chui shied away from saying the cash handout policy was permanent. “We are just sharing the economic benefits… I cannot say if the policy will be kept in the future,” he said. The cash handouts are apparently focused on heading off growing public anger over bigger economic problems. Mr Chui’s handouts package, which also includes a 7,000-pataca deposit into the provident funds of eligible residents and a 5,400-pataca handout for non-permanent residents, masks his failure to come up with long-term solutions to combat inflation and expensive housing.
Confidence trick While there is evidence from surveys that residents are most concerned about home prices and soaring rents, Mr Chui had little to say about these issues on Tuesday. In his blueprint for the year ahead, Mr Chui said public housing would be a priority and pledged to look into the concept of “Macau land for Macau people”. But amid growing public discontent at high home prices, he did not say how the government planned to better regulate the private housing market. Most residents earn too much to apply for public housing but not enough to afford the current prices in the private market – especially because most flats reaching the market are in the luxury segment. This time Mr Chui refrained from advising residents not to buy a home, but did agree that home prices were too high. The problem was caused by homebuyers’ lack of confidence, he said. “If residents are confident that we have planned to reserve sufficient land, it should help [alleviate home prices],”Mr Chui said. Confidence must be very low indeed, judging by the way home prices and rents have soared in the past few years. Industry observers, analysts and real estate agents have identified a lack of land as one of the major problems affecting the property market. While we wait for the promised land to be developed, the government should introduce more measures to rein in prices – rent regulation, for instance. Mr Chui said it should be up to the market to regulate itself. It sounds strange that a government willing to interfere in the way companies manage their human resources is the same one keeping its hands off the property market. The government’s new motto should read: let’s nurture local talent and encourage them to live elsewhere.
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November 14, 2013
Macau
Inflation drags down fiscal reserve returns Real returns lag even though riskier investment strategy has seen fund’s performance improve Vítor Quintã vitorquinta@macaubusinessdaily.com
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he government’s fiscal reserve is still losing money in real terms as inflation is increasing twice as fast as returns on capital. The reserve held 167.34 billion patacas (US$20.95 billion) at the end of September, according to an update on the fund’s performance published by the Monetary Authority of Macau in the Official Gazette yesterday. The fiscal reserve has returned 4.73 billion patacas in its first 18 months of operation, representing growth of about 4.79 percent, according to calculations by Business Daily. But in real terms, less the rate of inflation, the reserve is still heading backwards. The consumer price index has increased by 9.28 percent in the same period, almost twice as fast as the reserve’s return on investment. The fund has added 68.48 billion patacas since it was established in the middle of February last year with an initial capital of about 98.86 billion patacas. The significant return is largely due to the transfer in January of the fiscal surplus from 2011, nearly 64 billion patacas. After investing the surplus from 2011, the monetary authority said it was able to adopt “an investment strategy that aims to achieve a higher
MOP167 bln Held in the fiscal reserve at September 30
The Monetary Authority of Macau controls the fiscal reserve for the government (Photo: Manuel Cardoso)
return in the long term”. The riskier investment strategy could mean more short-term losses, as was the case in June, the city’s de facto central bank said in August. The reserve has so far performed better in its second year of operation than in its first. It returned 1.83 percent in the six months from the end of February to September 30 – a
higher rate of return than the 1.75 percent achieved last year. The special reserve, a vehicle set aside for investment, held 55.41 billion patacas at the end of September, a 323.37-million-pataca increase in one month. A substantial proportion of the city’s investment funds, 111.92 billion patacas, remains in the basic
reserve, which is kept for emergencies. The fund’s rules say the basic reserve must amount to 150 percent of the annual expenditure budgeted by the government, which has now reached 74.63 billion patacas. There was a budget surplus of 72.76 billion patacas last year. That amount will be added to the reserve early next year, after the Legislative Assembly finishes reviewing the budget report. In the first 10 months of this year, the government had a surplus of 85.47 billion patacas, official data show. The government is forecasting a surplus of nearly 76 billion patacas next year, according to the budget documents sent to the assembly on Tuesday.
One person, one credit card But easy credit fails to tempt Macau consumers rich in cash
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acau had almost as many credit cards as inhabitants by the end of September, official data show, mostly thanks to the continued growth in dualcurrency cards. By the end of the third quarter the number of cards issued by Macau-based banks reached 593,794, according to data released
by the Monetary Authority of Macau yesterday. Credit cards have increased by 3.8 percent from the previous quarter. The city now has an average of 0.99 cards per inhabitant, the highest ratio since the city’s de facto central bank began releasing data on credit cards in 2007. The city had 598,200 inhabitants
at the end of September, according to a Statistics and Census Service estimate published on Monday. In the last two years Macau’s banks issued a further 130,300 cards. In the same period the city’s population increased by just 44,500. Growth has been fuelled by dual-currency credit cards that can be charged in patacas and yuan and are popular for cross-border shopping trips. In the third quarter the number of dual-currency cards issued by Macau-based banks rose by 8.9 percent to 131,961. Dual-currency cards have grown much faster than those denominated
in patacas (up by 3.6 percent) or in Hong Kong dollars (up by 4.9 percent) last quarter. Banks are allowing consumers to spend more with their cards, their combined credit limit rising to a record 13.28 billion patacas (US$1.66 billion) in the third quarter, 8.1 percent more than in the second. Despite the banks being more generous, credit card spending rose by just 5.3 percent to 3.43 billion patacas. On average, card holders used 25.8 percent of their credit, the lowest percentage for four years, Business Daily’s calculations indicate.
Unique opportunity The Fountainside
Apt. on Top Floor Approx. 180 square meters HKD 19.9 million Credit cards are growing faster than Macau’s population
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November 14, 2013
Macau
Ribbon of rail should bind Delta cities, says HK builder A railway to Hengqin would benefit tourism, logistics in Macau, says engineers’ institute Stephanie Lai sw.lai@macaubusinessdaily.com
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ong Kong should build rail links to Macau and Zhuhai to enhance its competiveness and help integrate the cities within the Pearl River Delta, a prominent developer says. It is an idea with merit, according to an association of Macau engineers, who say a railway to Hengqin Island could help improve logistics and tourism. Speaking at a Bloomberg seminar on Tuesday, Justin Chiu Kwok Hung, executive director of Cheung Kong Holdings Ltd, said Hong Kong should build rail links to Macau and Zhuhai, rivalling similar high-speed networks built by Beijing. “Hong Kong has no future if we can’t merge with the Pearl River Delta,” he said. “We marginalise ourselves when we cut ourselves off from the Pearl River Delta.” Cheung Kong is a logistics
High-speed railway could boost integration in the Pearl River Delta, says Mr Chiu
and property development conglomerate controlled by Asia’s richest man, Li Ka Shing. Macau Institution of Engineers director Wu Chou Kit says the suggestion is worthy of consideration but warned against
introducing rail into the Hong Kong-Zhuhai-Macau Bridge project. “It carries a higher risk if such a rail link project is built alongside the bridge, considering weather factors like typhoons,” Mr Wu told Business Daily.
“Building the rail project above the waters is also more complicated.” Hong Kong’s Highways Department also opposes the idea, saying it would do little to help Hong Kong’s logistics network to the mainland or boost tourist numbers. On the official website for the Hong Kong-ZhuhaiMacau Bridge project, the Hong Kong department said introducing a railway line would also be costly. “A more viable option would be a high-speed rail that can link Guangzhou South Railway Station to Hengqin Island,” Mr Wu said. Guangzhou South is an interchange or terminus station for several rail lines linking the capital of Guangdong province to Shenzhen, Zhuhai and Wuhan. “By 2020, tourism development will have
become much more mature in both Hengqin and Cotai… with several malls and resorts built in these two areas,” said Mr Wu. Building a rail link to Hengqin could help Macau increase its ability to meet the challenges caused by tourism development, he said. The Lotus Bridge border crossing, which connects Macau to Hengqin, could also serve as a logistics zone for the city if a rail link to Guangzhou were established. “Now you can see that the lotus port is really under-used. On a daily basis, not many trucks or tourists go through that port,” Mr Wu said. Rail would breathe new life into the border crossing, he said. Goods from the mainland could be delivered there and more tourists could enter Macau. With Bloomberg News
Corporate Asian Tatler firm doing mag for junket Edipresse Asia Ltd – the Hong Kong based publisher of the Asian Tatler magazine titles focusing on socialites in the region – says it has been chosen to produce a new magazine on behalf of Macau junket investor Suncity Group Ltd. ‘First’ is described as a “high-end luxury lifestyle and business quarterly”. The first edition is due “before year end” said Edipresse, adding the magazine would be aimed “primarily at Suncity’s VIP membership of high-net-worth individuals” – a reference to high roller gamblers in Macau. The periodical will cover luxury products and services, financial advice and “interviews with movers and shakers from the worlds of sport, business, entertainment and the arts,” added the publishing house. Suncity’s chairman Alvin Chau Cheok Wa said in a prepared statement the new magazine would also: “…showcase the unrivalled products and services Suncity has to offer.” Earlier this year another Suncity executive said the group was diversifying into “different areas, particularly property, finance and media”.
In-flight caterer lands at Forum Macau Local in-flight caterer Servair Macau provided 6,000 meal servings to security and technical staff at the recent ministerial conference between seven Portuguesespeaking jurisdictions and mainland officials in Macau. Servair Macau’s exclusive concession to provide services at Macau International Airport officially ended in 2006 but “until now no new investors have shown interest,” the Civil Aviation Authority of Macau told Business Daily last year. Servair Macau – also known as MCS-Macau Catering Services Co Ltd – is a joint venture between Servair-SATS Holdings and local companies including: Sociedade de Turismo e Diversões de Macau SA founded by Stanley Ho Hung Sun; H. Nolasco & Cia Lda; and Wu’s Group Ltd. Servair-SATS in turn is a joint venture of Servair Group – an Air France subsidiary that’s one of the world’s largest airline caterers – and SATS, Singapore Airlines’ catering unit. The conference event – commonly known as Forum Macau, was held on November 3, 4 and 5 at The Venetian Macao.
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November 14, 2013 April 19, 2013
Macau
Land bureau chief called to testify in La Scala trial Jaime Carion’s testimony in bribery trial to be limited to official decisions made after 2005 Tony Lai tony.lai@macaubusinessdaily.com
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Jaime Carion could testify at the Court of First Instance on Monday
he director of the Land, Transport and Public Works Bureau, Jaime Carion, has been summoned to appear in court on Monday to testify in an ongoing corruption trial involving land deals approved by his former boss. Lawyer Rui Sousa, counsel for businessman Steven Lo Kit Sing, asked the court yesterday to add Mr Carion to the witness list, saying his testimony would be “useful” in the defence of Mr Lo and Joseph Lau Luen Hung. The Hong Kong businessmen are accused of paying a HK$20-million (US$2.58 million) bribe to Ao Man Long, the former secretary for transport and public works. The bribe was allegedly paid to ensure the success of their bid for land in 2005 that
became the site of high-end La Scala residential project. If Mr Carion takes the stand, he will be the highestranked Macau official to testify in the trial. The Court of First Instance has limited the scope of issues on which Mr Carion can be questioned. “Questions challenging the validity of any administrative procedures [after 2005] will not be allowed,” presiding judge Mário Silvestre said yesterday.
January deadline Mr Carion was not directly involved in overseeing the 2005 tender process but he played a part in numerous dispatches regarding the La Scala land sale from 2006 to 2011, said Mr Sousa. Those communications included decisions on how
many flats could be built in the plots located near the airport and the tower blocks’ maximum height. Those decisions were “not approved by Ao Man Long but ultimately by the current Secretary for Transport and Public Works” Lau Si Io, Mr Sousa said. The defence for Mr Lo and Mr Lau has argued that Mr Ao offered no special treatment to the two businessmen. Mr Ao was sentenced to 29 and a half years’ jail for corruption and money laundering. The government declared invalid the original grant of land and subsequent grant in 2011. That decision has been appealed by land concessionaire Moon Ocean Ltd, a company that was established by Mr Lo and is now controlled by Mr Lau’s Chinese Estates Holdings Ltd. The court also accepted a request from Mr Lau’s defence to summon one more witness, a Hong Kong lawyer, to talk about loan agreements involving Chinese Estates and Moon Ocean. Mr Lau’s lawyer had planned to call six more witnesses, while nine witnesses were planned for Mr Lo. Judge Silvestre set January 15 as the tentative date for the trial’s closing statements. He did not set a date for the court to deliver its verdict.
Carson Yeung waives right to soccer club loan Could ease way for struggling Birmingham City F.C. to be sold, says holding company Michael Grimes
michael.grimes@macaubusinessdaily.com
M
acau-linked businessman Carson Yeung Ka Sing is to relinquish his rights to a roughly 15.3 million pounds (194.65 million patacas) personal loan made to an English professional football club he controls. In return he will get convertible bonds in its holding company. Another – unnamed creditor – has agreed to take a “50 percent haircut” on a HK$56 million debt to the club’s holding firm provided that the residue is paid within three months of the holding company returning to public trading. Both moves are mentioned in a filing by Hong Kong-listed Birmingham International Holdings Ltd. Both moves could smooth the way for the struggling football club – Birmingham City F.C. – to be sold. Mr Yeung would subscribe to the bonds at three HK cents per conversion share – an 80.5 percent discount to the most recent HK$0.154 trading price of the stock. BIHL has been suspended from trading since June 30, 2011 following Mr Yeung’s arrest. He is currently on trial at the District Court in Wanchai, Hong Kong, charged with five counts of laundering HK$721 million (US$93 million at current prices) between January 2001 and December 2007. Mr Yeung denies the charges, but the assets concerned have been frozen
pending the trial’s outcome. BIHL said in a filing to the stock exchange late on Tuesday: “Against the backdrop of Mr Yeung’s ongoing court case in Hong Kong, it has come to the attention of the board that some potential buyers’ interest in BCP [Birmingham City Plc] and/or BCFC are deterred by the financial links between BCFC and Mr Yeung.” The holding firm added: “By virtue of novating [converting] the debt from BCFC to the company, the value of the company’s interest in BCFC to prospective buyers may be increased.”
‘Deal’ claimed Gianni Paladini, the former chairman of another English soccer club – Queen’s Park Rangers F.C. – last month said he was “very disappointed” a deal he believed he’d made with BIHL’s acting chairman Peter Pannu for Birmingham City had not been confirmed. BIHL challenges Mr Paladini’s version of events. “Mr Yeung still wishes to preserve the listing status of the club’s parent company… in Hong Kong, a point that had already been relayed to Mr Paladini’s representatives,” it said. “Any formal developments regarding the ownership of the football club will be announced via the Hong Kong Stock Exchange first and foremost,
Carson Yeung – on trial for money laundering
in keeping with respective rules and regulations, and will not be played out through the media.” Birmingham City was in the elite English Premier League when Mr Yeung bought his controlling rights in 2009. Currently it’s in 18th place in the second tier Championship. BIHL said in a filing earlier this month that Mr Yeung would not have any further involvement in BIHL’s management until the case against him comes to a “favourable close” or until he resigns. Mr Yeung concluded his trial testimony this week. The court earlier
heard he and his father had in January 2005 spent approximately HK$26.4 million for a 20 percent stake in Macau junket investor Neptune Group. In a separate deal that year, Mr Yeung said he took over the shares of another Neptune investor – Lin Cheuk Fung – for HK$20 million. “I was the shareholder behind the scenes,” he told the court, adding that interest on his investment generated about HK$300,000 each month. Closing arguments by lawyers in the case are scheduled to start on December 12, with a verdict expected early next year.
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November 14, 2013 April 19, 2013
Macau
Delivery plan puts Japanese corner stores in every home FamilyMart chain plans to extend its existing cross-strait delivery service as far as Macau and Hong Kong Stephanie Lai sw.lai@macaubusinessdaily.com
1,029
FAMILYMART FRANCHISES IN MAINLAND CHINA
Without a store in Macau or Hong Kong, FamilyMart says it will deliver by long distance
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Japanese convenience store chain is planning to launch a home delivery service to Macau and Hong Kong without setting up outlets here.
FamilyMart Company Ltd said yesterday it wanted to provide a service similar to its existing cross-Taiwan Strait deliveries from the first quarter of next year.
Consumers can have goods bought at stores in Taiwan shipped to the mainland and collect them from FamilyMart outlets. In Shanghai, the company
also offers a 24-hour delivery service from some of its franchised outlets. As FamilyMart’s logistics network matures, the chain would like to extend the delivery service throughout Greater China, including Macau and Hong Kong. The company may work with a logistics partner in both cities because it currently has no franchises in either. “We are still planning
how to extend the service to Hong Kong and Macau,” a spokeswoman from FamilyMart’s Taiwan operation told Business Daily. “One possible way is to reach a local partner, such as a convenience store operator, to provide this delivery service.” FamilyMart says it takes eight to 12 days for a parcel of between 2kg and 5kg to reach a Shanghai outlet from Taiwan. The service is restricted to goods such as dried food, clothing and accessories, cosmetics, home ornaments, milk powder and tea leaves. FamilyMart charges between NT$388 (104.70 patacas) and NT$588 for its deliveries to Shanghai. “The service is targeted at mainland tourists shopping in Taiwan who want to send their purchases in bulk back home,” the spokeswoman said. “It also targets mainland-based Taiwanese businessmen.” By the end of September, the convenience store chain had 1,029 franchises in Shanghai, Suzhou, Guangzhou, Chengdu and Hangzhou. FamilyMart expects to extend the new 24-hour parcel delivery service to 300 more stores in Shanghai by the end of the month. There are currently 761 FamilyMart franchises in Shanghai.
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The biggest rise in bad loan ratios occurred at mid-sized banks
Banks’ bad loans jump by most in 8 years Economists expect bad loans to rise as growth slows
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ad loans held by Chinese banks rose by the largest amount in eight years in the third quarter, adding to concerns about excessive debt as the world’s second largest economy slows. Bad bank loans outstanding rose by 24.1 billion yuan (US$3.96
billion) to 563 billion yuan at the end of September, according to the China Banking Regulatory Commission. That marked the largest quarterly rise in the volume of bad loans since the fourth quarter of 2005. Due to swift overall loan growth in the third quarter, however, Chinese
Beijing to set up security council C
hina’s Communist Party said the country would set up a state committee to better coordinate security issues as it expands its military reach. In a one-sentence statement toward the end of a 5,000 character communique on Tuesday, the party said it would establish the committee and improve the country’s national security system and strategy. The context of the sentence was a section on China’s internal matters, and no details were given about what the committee would do or who would lead it. The body will help China better respond to international challenges as it rises in global stature, Qu Xing, head of the China Institute of International Studies, an official research group
under the Foreign Ministry, said in an article on the website of the party’s official People’s Daily newspaper. “There’s been talk of establishing an NSC-like body for coordinating national security policy for over a decade,” Taylor Fravel, a professor at Massachusetts Institute of Technology who studies China’s ties with its neighbors, said in an e-mail. “That said, this appears in the section on domestic affairs and could very well be a domestically oriented body, though it could also have some international role. At this point, however, it is all speculation.” The U.S. National Security Council (NSC) brings together top officials from the White House, State Department, Defence Department and other actors
banks’ non-performing loan ratio ticked up only slightly. The systemwide NPL ratio reached 0.97 percent from 0.96 percent from the end of June, the commission said. Analysts widely believe the official NPL ratio understates the true extent of bad loans on Chinese
to streamline decision making. China’s government also faces a growing number of strikes, protests and riots that it considers threats to domestic stability, alongside ethnic tensions in western regions such as Tibet and Xinjiang. On October 28, a sport-utility vehicle crashed and burst into flames near Beijing’s Tiananmen Square in front of the gate bearing the portrait of chairman Mao Zedong, killing its three occupants and two bystanders. The government called the incident a terrorist attack. Jin Canrong, a professor at the School of International Studies at Renmin University in Beijing, said China’s government agencies often don’t coordinate with each other,
banks’ balance sheets. Independent estimates for end-June 2013 range from one to five percent. Economists expect bad loans to rise further as growth slows and some loans, which were granted during a credit-fuelled stimulus plan launched at the height of the global financial crisis in 2008, turn sour. Chinese regulators are encouraging banks to raise fresh capital in order to strengthen their ability to absorb bad loans. Last week they announced new rules allowing commercial banks to sell special lossabsorbing subordinate debt on the country’s stock exchange. But, the latest figures also show that banks have become less cautious in setting aside provisions to badloan losses. The ratio of loan-loss provisions to overall loans dipped to 287 percent at end-September, the lowest ratio since end-2011 and down from 293 percent at end-June. Bank analysts noted last month that many banks had reduced provisioning in order to boost reported net profit. The biggest rise in bad loan ratios occurred at mid-sized banks, whose overall ratio rose from 0.83 percent from 0.80 percent. China Merchants Bank Co Ltd, China’s sixth largest lender, reported last month that its NPL ratio rose to 0.79 percent at end-September from 0.71 percent at end-June. The weighted-average capital adequacy ratio of Chinese banks was 12.18 percent at the end of September, down from 12.24 percent at the end of June, the CBRC said in a statement on its website. But average core tier-one capital ratios rose slightly to 9.87 percent from 9.85 percent. Reuters
creating the potential for conflict. “All the government agencies also have their own interests,” Mr Jin said. “We do need better coordination.” President Xi Jinping is likely to head the new committee, Zheng Yongnian, director of the East Asian Institute at the National University of Singapore, said by phone. Mr Xi assumed the chairmanship of the Central Military Commission when he became party general secretary in November, 2013, giving him control over the People’s Liberation Army. Domestic security is now handled by the Central Politics and Law Commission headed by Meng Jianzhu, who isn’t on the Politburo Standing Committee, the party’s highest ruling body. Foreign affairs is also channeled through a Foreign Affairs Work Leading Small Group, which serves as a coordinator for different ministries. Bloomberg News
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HK needs closer mainland ties: Blackstone’s Leung
Taiwan to lower GDP forecast Taiwan said it will again lower the forecast for 2013 economic growth, though it declined to signal how big a cut is coming. The cabinet’s accounting and statistics chief, SuMei Shih, told the legislative council yesterday that poor exports, which hurt domestic investment and consumption, are the main reason for lowering the forecast. In August, the office revised the forecast for growth in gross domestic product this year to 2.31 percent, from 2.4 percent. Some private economists expect the 2013 rate to be below 2 percent.
Former finance secretary calls for free-trade zone
Cnooc signs deal for LNG terminal
What Shanghai lacks is the pool of talent that’s already residing in Hong Kong Antony Leung, greater China chairman, Blackstone Group
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ong Kong should build a free-trade zone with the neighbouring Chinese province of Guangdong to make it a more competitive commercial and financial centre for the world’s second-biggest economy, a former top city official said. By creating a zone that allows Hong Kong-based companies and individuals to freely access Chinese markets, the city would be able to better exploit lower tax rates and other advantages it has over Shanghai and mainland regions, Antony Leung, who served as finance secretary from 2001 to 2003 and is now greater China chairman for Blackstone Group LP, said yesterday at a Bloomberg seminar. “What Shanghai lacks is the pool of talent that’s already residing in Hong Kong,” Mr Leung said. “Hong Kong is renowned for a low tax and simple tax regime, and with our rule of law, with the freedom, with the convenience and comfortable living, I think we can attract a lot of talents.” The comments underscore the challenges Hong Kong Chief Executive Leung Chun Ying faces in fending against competition from Shanghai, which China targets making a global financial centre by 2020 and where
Sina’s Weibo service close to break-even S
ina Corp said its Twitterlike Weibo service is close to breaking even as advertising sales at the operator of China’s biggest microblogging service climbs and the company’s profit more than doubled. Third-quarter net income rose to US$25.4 million from US$9.88
authorities last month set up a free trade zone to test investment, trade and market reforms. BlackRock Inc, the world’s biggest money manager, last month said it’s cutting investments in Hong Kong on concern its markets will underperform.
No future “Hong Kong has no future if we can’t merge with the Pearl River Delta,” Justin Chiu, executive director at Cheung Kong Holdings Ltd, the developer controlled by Asia’s richest man, said at the seminar. Debate in Hong Kong about its role in China is intensifying as Chinese leaders pledge to give markets a bigger economic role, while demands from opposition lawmakers for democracy in Hong Kong raises the ire of the central government in Beijing. Guangdong, the biggest regional economy in China, is lobbying for a free-trade zone with Hong Kong and Macau, governor Zhu Xiaodan said in September. The zone will let Hong Kong’s services industry grow and lift the region, he said. The proposed Guangdong freetrade zone would also cover Qianhai in Shenzhen, Hengqin Island in Zhuhai and Nansha in Guangzhou.
million a year earlier, Shanghaibased Sina said in a statement. Sales gained 21 percent to US$184.6 million, surpassing the average estimate of US$178 million. “The vast majority of the [earnings] growth should come from Weibo,” Sina chief executive Charles Chao said in a call with analysts yesterday. He said Alibaba advertising also “played a very important role in Weibo’s advertising growth”. Advertising revenue climbed 26 percent to US$151.6 million from a year earlier. The company is collaborating with Alibaba Group Holding Ltd, China’s largest e-commerce operator and a shareholder in Sina’s Weibo service, in areas of advertising and payment
Li Ka Shing, Asia’s richest man, said in September Hong Kong needs to raise its competitiveness if it wants to avoid losing out to Shanghai. At the same time, Hong Kong also needs to manage the social tensions that have risen with closer ties, Regina Ip, an executive council member, said yesterday at the seminar. “The integration has also given rise to political problems in the form of resentment against more competition for Hong Kong-based resources – baby milk formulas, maternity beds, kindergarten school places,” said Ms Ip. Only 35 percent of people in Hong Kong trust in the Chinese government, according to a survey by the University of Hong Kong Public Opinion Programme of 1,007 people conducted September 15 to 17. Rising discontent may erode China’s support for Hong Kong, Allan Zeman, chairman of Lan Kwai Fong Holdings Ltd, the biggest landlord for restaurants and bars in Hong Kong’s business district, said at the seminar. “Beijing has lost faith in Hong Kong,” Mr Zeman said. “It is watching us very carefully, so we really shouldn’t shoot ourselves in the foot and allow other cities in China to surpass us.” Bloomberg News
systems to better compete with Tencent Holdings Ltd. Mr Chao said that while most of Alibaba’s advertising spending was for personal computers, as the e-commerce company’s products became more suited to mobile marketing it would spend more in that area. Currently, only 20 percent of Weibo’s advertising revenues come from mobile. Sina said that it expected adjusted net revenue to range between US$190 million and US$194 million in the fourth quarter. “Sina Weibo towers above other platforms in adoption and leads in satisfaction,” Xiaofeng Wang, a Beijing-based analyst with Forrester Research, said in a note. Reuters
Cnooc Ltd, China’s top offshore oil explorer, has signed a sole proponent agreement with the provincial government of British Columbia to examine the development of a liquefied natural gas terminal at Grassy Point along Canada’s west coast. The deal brings the Aurora LNG project one step closer to reality, though the joint venture with Japan’s Inpex Corp and JGC Corp is still subject to regulatory approval and a final investment decision. There are currently no LNG export terminals in Canada.
Tencent, Sohu to sue Baidu over copyright Online video providers Tencent Holdings Ltd and Sohu.com Inc said the owner of China’s largest search engine, Baidu Inc, is infringing copyrights by distributing content without licences. Some material on Baidu’s video search is available without authorisation, companies including also Youku Tudou Inc, Dalian Wanda Group and the Motion Picture Association of America, said in a joint statement. The group is seeking 300 million yuan (US$49.2 million) in damages from Baidu and others for copyright violation. Baidu was not immediately available for comment.
Stocks drop most in seven weeks China’s stocks slumped the most in almost seven weeks after a toplevel Communist Party meeting disappointed investors looking for details on policy shifts to combat a slowdown in the world’s secondlargest economy. The Shanghai Composite Index dropped 1.8 percent to 2,087.94 at the close, the biggest decline since September 26. Hong Kong shares also slumped to their biggest loss in nearly three months, led by sectors likely to see margins cut as a result of more competition after China’s Communist Party elevated its focus on markets at a key policy meeting. The Hang Seng Index finished down 1.9 percent at 22,463.8 points.
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SMEs find it difficult to guarantee financial support
Chinese SMEs struggling for land, private capital Academic calls for land reclamation mechanism to manage idle plots
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hou Bailin has been feeling a little jaded recently. His company just received an order worth over 400 million yuan (US$65.7 million), but he had to hold back from the lucrative deal. “My factories have now all stalled because we could barely finance continued production,” Mr Zhou said. Mr Zhou is the general manager of Giga Solar Co Ltd, located in the n the Guangxi Zhuang Autonomous Region. The company, which produces crystalline silicon solar cells, has run out of capital because of antidumping duties imposed by the European Union, he said. The duties were imposed because the EU accuses companies in the industry of receiving subsidies from the government. The company could easily resume production if it could obtain circulating capital of 50 million yuan, which is impossible at the moment, Mr Zhou said. “I feel like I am stuck in a moor and there seems to be no financing straw for me to clutch at,” he said. This is just an example of what China’s small- and medium-sized enterprises (SMEs) are going through. According to a recent report published by Standard Chartered Bank, the confidence index of China’s SMEs in the second quarter of this year fell by 4.47 percentage points to 52.04 percent after bouncing in the first three months. The report shows that SMEs are cautiously optimistic about an economic recovery amid China’s decelerating growth, and their confidence index has decreased in terms of operation, investment and financing.
Financing pains Zhang Liangjie, board chairman of the Liuzhou Longjie Automobile Fittings Co Ltd, a powertrain
component manufacturer in Guangxi, said that his company needed loans to upgrade its production line due to high product requirements by overseas customers. “We need up to 10 million yuan to complete the upgrading process, but it’s hard to find the money,” Mr Zhang said. The financing troubles will disrupt the development plans of emerging companies like his, said Mr Zhang, who had his factories built in the industrial city of Liuzhou, home to several well-known brands such as Liuzhou LMZ Co Ltd and Guangxi Golden Throat Group. Banks are reluctant to grant loans to SMEs, which usually lack collateral and sufficient certificates. Yuan Chiping, deputy director of the Centre for Studies of Hong Kong, Macau and Pearl River Delta at Sun Yat Sen University, said that what deters financial institutions from providing loans is that SMEs make too little profit.
Lack of land Adding to the financing pains are additional costs, said an executive of a small local company in Guangxi, who refused to be named. “Suppose we borrowed 10 million yuan. We would have to take out money to cover additional costs like accruement, deposit, and consulting fees, among others, after which only 8 million yuan would be left,” said the entrepreneur. In January, Sabina Bauer, senior director of Financial Institutions at Fitch Ratings, had singled out smallvolume customers such as SMEs, startups and entrepreneurs “might not be very attractive to bigger banks”. The lack of sufficient land is another pain for the heads of China’s SMEs, which are trying to edge each other out for precious and limited land in various cities in China to
build industrial parks. “Foxconn asked us for 10,000 mu [about 667 hectares] of land to build their industrial park here, but we were just unable to provide it to them,” said Luo Huazhong, director of the development and reform commission of Guangxi’s Yulin City. Mr Luo said the problem is shared by many other companies, as land resources are limited and it has been quite difficult for local governments to acquire land.
KEY POINTS CONFIDENCE INDEX OF SMES FELL TO 52.04 PCT IN Q2 BANKS RELUCTANT TO GRANT LOANS TO SMALLER FIRMS FINANCING TROUBLES MAY DISRUPT DEVELOPMENT PLANS PRIVATE BANKS SHOULD BE ASSIGNED TO SERVE SMES – ANALYST “Take Guangxi for example. Each year we need about 30,000 hectares of land for new large projects in the region, but only 12,000 hectares can be allocated by the central government,” said the official. Insufficient land resources have restricted the number of incoming projects, and companies have to pay deposits to reserve the limited land, he added. To help SMEs tackle the difficulties, local governments in China have put forward various preferential policies to offer support, but such efforts seem to have been in vain.
Chinese SMEs had mediocre performance in the eyes of Forbes: only 63 such companies (including some from Hong Kong) were listed in the top 200 small- and mediumsized public companies in Asia – the lowest number in five years.
Providing support Despite the flat performance, experts believe that there is still potential to be tapped in the future growth of such companies, but new measures are required to tame the financial market and manage land that is occupied but never used. Zuo Xiaolei, chief consultant to the president of China Galaxy Securities Co Ltd, said that the government should assign private banks to serve local SMEs by proving financial support, which is a way to optimise the allocation of financial resources. Mr Zuo’s idea was echoed by Yuan Chiping, who argued that a government-guided platform needs to be established with designated financial institutions. “In this way, private capital will flow into SMEs more smoothly via the platform, while the companies are supervised by local governments on the platform,” said Mr Yuan. When it comes to the urgent need for land, Jin Tao, an economist from Xiamen University, said that governments should set the bar high when they draw investments so that land resources could be used more effectively. “It is a smart idea to invite hightech and environmentally friendly companies that occupy less soil and make best use of the local advantages,” Mr Jin said. He added that a land reclamation mechanism should be in place to manage the idle land and put it to use where it is most needed. Xinhua/T.A.
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Asia
Crime-loan punishments viewed as ‘light’: Sato Mizuho chief acknowledges other loans to crime groups Monami Yui
conducting fresh inspections of Mizuho, Japan’s third-largest bank by market value, this month along with its bigger rivals Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc. Mr Sato, in his first Diet testimony on the issue, said Mizuho has other loans to crime groups than the type that regulators have been examining, which were made through the Tokyobased bank’s Orient Corp consumercredit affiliate. Mr Sato has stepped down from a government panel amid the deepening scandal.
Loan screening
Taking them on board and making efforts to end transactions with antisocial groups is my current responsibility Yasuhiro Sato, Mizuho Financial Group president
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izuho Financial Group Inc president Yasuhiro Sato, grilled by lawmakers over the Japanese bank’s loans to crime groups, acknowledged that its punishments of officials were viewed as “light”. “I know there are harsh opinions regarding punishments for executives
including myself,” Mr Sato told the lower house financial affairs committee in Tokyo yesterday. “Taking them on board and making efforts to end transactions with antisocial groups is my current responsibility.” Mizuho said last month that it will cut pay for officials including Mr Sato and chairman Takashi Tsukamoto for
failing to stop 200 million yen (US$2 million) in loans made to gangsters. The Financial Services Agency, which ordered Mizuho to bolster compliance in September, is examining the bank’s business improvement plan filed last month before taking any more action. The regulator also began
Mizuho uses a database on criminal organisations to screen potential customers and ensure that people associated with the groups don’t make contracts, Mr Sato said. “However, there are cases where borrowers become identified with such groups once the database is updated,” he said. “Once we find out such loans, we try to cancel them.” Sumitomo Mitsui’s banking unit chief, Takeshi Kunibe, made similar remarks at the same session, saying there are borrowers at his bank that aren’t initially known to be members of antisocial groups. Once they are identified later, the Tokyo-based lender makes efforts to cancels the debts, he said. Mr Sato and Mr Kunibe declined to give the number of loan cases or amounts. Mr Kunibe, who is chairman of the Japanese Bankers Association, said the lobby group will develop additional measures to combat crime syndicates this month, including a revision of its code of conduct and ways to prevent gangsters from making loan contracts with banks. The association is working with the police to share databases on gangs and considering exchanging more information with consumer-credit firms, he said last month.
Sumitomo Mitsui raises profit forecast After posting the highest half-year earnings in its history
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umitomo Mitsui Financial Group Inc, Japan’s second-biggest bank by market value, raised its full-year profit forecast 29 percent after the country’s stock market rally helped first-half earnings climb to a record. Net income will probably total 750 billion yen (US$7.5 billion) in the year ending March 31, the Tokyo-based company said in a statement yesterday. That compares with the 580 billion yen previously forecast. Japan’s equity rebound, while moderating in recent months, has spurred Sumitomo Mitsui’s fee income and increased the value of its shareholdings. Lending at major banks has climbed for 11 months and corporate bankruptcies have fallen for
12 as the world’s third-largest economy recovers on the back of Prime Minister Shinzo Abe’s stimulus measures. “The upward revision was bigger than I expected,” Miki Murakami, a Tokyo-based analyst at Fitch Ratings Ltd, said by phone. “I don’t think the bank will have any problem achieving the target unless there is a shock in the markets.” The bank led by President Koichi Miyata joins Toyota Motor Corp and Panasonic Corp in raising profit forecasts in a mixed earnings season that also saw companies from Nissan Motor Co to Sony Corp lower projections. Mitsubishi UFJ Financial Group Inc, Japan’s biggest lender, and Mizuho Financial Group Inc, the bank that’s being probed for lending to
Net income jumped 53 pct in the six months ended September 30
crime groups, are scheduled to report today.
Quarterly gain Net income jumped 53 percent in the six months ended September 30 from a year earlier to 505.7 billion yen, the highest half-year earnings in Sumitomo
Mitsui’s 11-year history. Second-quarter profit rose 2 percent from a year earlier to 217.4 billion yen, according to Bloomberg calculations based on the six-month data, which were reported after Japan’s stock market closed. Sumitomo Mitsui raised its planned full-year dividend to
Bloomber News
120 yen from 110 yen. Mr Miyata stressed the importance of severing ties with crime groups, after Japan’s financial regulator ordered Mizuho to bolster compliance in September for failing to end loans to gangsters through a consumer-credit affiliate. “I don’t think our bank needs a big overhaul in measures to block anti-social groups, but this requires continued efforts,” Mr Miyata said at a news briefing. The Financial Services Agency began inspecting the three megabanks this month following the probe into Mizuho. Prime Minister Abe’s campaign to end deflation with fiscal spending and monetary easing helped Japanese stocks become the best performers in the developed world this year even after declining from a peak in May. Sumitomo Mitsui had a 60.4 billion-yen gain from equity-related investments in the first half, compared with a loss of 132.9 billion yen a year earlier, its earnings statement showed. Lending income increased 15 percent to 780.3 billion yen. Bloomberg News
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Asia Fung bids for Australian casino business Chinese tycoon Tony Fung has offered to pay A$214 million (US$199 million) to buy Reef Casino Trust, which owns the only casino in the Australian city of Cairns near the Great Barrier Reef, in a bid to enter the country’s gambling and tourism market. Shares in Reef Casino surged 40.49 percent to six-year highs after the announcement. Mr Fung, a billionaire son of one of the founders of Hong Kong conglomerate Sun Hung Kai & Co Ltd, has previously proposed a A$4.2 billion (US$3.8 billion) casino and resort project in Cairns, which has yet to get approval from the Queensland state government. Reef was in discussion with Aquis Casino Acquisitions Pty Ltd, controlled by Mr Fung, after receiving a non-binding proposal to buy all the units at a cash price of A$4.354 per unit, the trust company said in a statement. The offer is priced at a 53 percent premium to Reef’s closing price on Tuesday. One condition of the proposal is that Aquis also buys Casino Canberra, which is associated with Reef. The biggest holders of the trust – Casinos Austria and France’s Accor Group – had indicated that they would support the proposal unless there was a superior proposal, the trust added. Aquis has started meeting with the Queensland and Australian Capital Territory governments regarding regulatory processes involved, according to the statement. Australia’s 13 casinos currently capture just one percent of the US$34 billion market for high-roller gamblers in Asia annually, but state governments are greenlighting multibillion dollar developments to boost that figure.
H&M grabs more control of Asia factories Three decades after it started doing business with suppliers in Bangladesh, Hennes & Mauritz AB is seeking greater control of production in a nation where it is among the largest purchasers of clothing. H&M this year agreed to become the sole client of two factories in Bangladesh and one in Cambodia, helping convince building owners to offer satisfactory conditions and wages, Anna Gedda, H&M’s social sustainability manager, said. “We see these a little like test centres where we can try out different things that we can then push out on a larger scale in the entire supply chain,” Ms Gedda said in an interview. H&M, which normally shares factory space with other labels, is seeking tighter control over production in countries like Bangladesh, where thousands of workers held protests this week to demand higher wages. The deaths of more than 1,000 Bangladeshis in April’s collapse of the Rana Plaza complex led retailers including H&M and main European rival Inditex SA to commit to improving fire and building safety. H&M is among global clothing retailers that have shifted output toward Asia, using local contractors to reduce the cost of production. The three factories where H&M has taken full control of production were chosen from among some of the retailer’s top suppliers, Ms Gedda said.
S.Korea to lift short-sale ban on financial stocks Government seeks to galvanise the capital market
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outh Korea will allow investors to short-sell financial stocks from today, judging that the stock market is strong enough to withstand the lifting of a five-year ban imposed during the global financial crisis. The restriction will be lifted because equities have stabilised since July and the government wants to energise the capital market, the Financial Services Commission said yesterday in an e-mailed statement. Short sales occur when an investor sells borrowed securities in anticipation of a price decline. South Korea forbade such trades for all stocks in October 2008 to arrest a slump in equities triggered by the worldwide credit freeze. It lifted the ban for non-financial stocks in June 2009, while keeping restrictions on banks, brokerages and other financial firms as they bolstered balance sheets. The crisis caused at least US$2 trillion of losses worldwide, according to data compiled by Bloomberg. “The move is evidence that South Korea is confident about its stock market,” Sohn Joon Beom, a Seoulbased analyst at LIG Investment & Securities Co, said by phone. “Removal of the ban will help increase trading volume of financial stocks, which would support the securities industry and asset managers.” The regulator will revise rules by June 2014 to enhance disclosure on short-selling positions and ensure violators are penalised. The FSC will closely monitor transactions for financial stocks, which account for 12 percent of the value of South Korea’s equity market, it said.
Naked selling So-called naked short selling, which refers to selling equities without holding them, will continue to be prohibited for all stocks,
The Kospi index has rallied on purchases from foreign investors
We expect this will help vitalise the capital market and boost market transparency Financial Services Commission
according to the FSC. “We expect this will help vitalise the capital market and boost market transparency,” the FSC said. “We want to minimise any ill effects of short selling and maximise its good function by enhancing indirect regulations and lifting the ban.”
The benchmark Kospi index has rallied about 10 percent from an 11-month low reached on June 25. The gauge climbed for a fourth straight month in October, fuelled by purchases from foreign investors. It closed 1.6 percent lower yesterday before the statement was released. Still, trading volume in South Korea has declined even as shares advanced. For financial stocks, the daily average trading volume was 352.5 billion won (US$329 million) in the first half of this year, down from 935.2 billion won for 2008, the FSC said in the statement. Earnings at domestic and foreign brokerages operating in South Korea shrank to 565.2 billion won in the six months ended June, about a third of the level reported two years earlier, Financial Supervisory Service data show. That was the lowest since the industry posted a 294.9 billion won profit in the same period of 2005. Earnings in the three months ended September were 132.4 billion won, the FSS said this week. Bloomberg News
BOJ member warns of overseas risks J apan’s core machinery orders fell more than expected and a central banker warned of headwinds from soft overseas growth, underscoring the difficulties of sustaining the economic recovery Prime Minister Shinzo Abe’s stimulus policies generated. Board member Ryuzo Miyao stressed the Bank of Japan’s readiness to loosen monetary policy again should the global economy and domestic wages fail to pick up, forcing a change to the central bank’s upbeat economic forecasts. “I see risks somewhat tilted toward
the downside for both the economy and prices,” said Mr Miyao, who is among those in the nine-member board relatively pessimistic about the outlook. “If the BOJ were to act again, it won’t rule out any policy steps in advance,” he told a news conference yesterday after meeting with business leaders in Matsumoto. “We must be mindful of the possibility that global and U.S. economic recoveries may be delayed depending on how U.S. fiscal problems play out,” Mr Miyao said. He also warned of the risk that the coming sales tax hike may hit the
economy harder than expected as households spend less, which in turn could slow the pace of price rises. However, Mr Miyao maintained the view that Japan’s economy is recovering moderately driven by strength in consumption, which will help accelerate inflation as companies feel more confident about passing along higher costs to consumers. Mr Miyao’s comments came after data showed core machinery orders, a volatile series regarded as a leading indicator of capital expenditure, fell 2.1 percent in September. Reuters
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Japan to overhaul power sector Reform plans to open the residential electricity market to competition Aaron Sheldrick and Osamu Tsukimori
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apan’s upper house passed legislation yesterday to start the most ambitious reform of its electricity sector since 1951, a process prompted by the Fukushima nuclear crisis that may end with the break-up of powerful regional monopolies. The reforms, including the establishment of a national grid and the liberalisation of the power market for homes, are central to Prime Minister Shinzo Abe’s drive to overhaul the economy, as high energy costs threaten to derail efforts to reverse decades of stagnation. Regional monopolies, including Tokyo Electric Power Co and Kansai Electric Power Co, supply almost 98 percent of Japan’s electricity and terms for access to their transmission lines make it onerous for new entrants. Wrenching control of transmission from the monopolies to create a national grid became a big issue after the March 2011 earthquake and tsunami that sparked the Fukushima disaster and highlighted an inability to transfer power to areas suffering shortages. The power law was passed by Japan’s lower house earlier this month and sailed through the upper house with 202 votes in favour and 29 against, a parliamentary official said by phone. While the energy companies say they support the thrust of
Changes will split utilities’ generation and transmission businesses
the proposed changes, they have repeatedly urged the government to give priority to stable power supplies and say reform should be slowed down if this cannot be guaranteed. The utilities have resisted attempts since the 1990s to liberalise the industry. The companies and their affiliates have ties with politicians, fund their campaigns and often give government officials executive roles. “There are quite a few issues to resolve,” Makoto Yagi, chairman of the Japan Federation of Power Companies and president of Kansai Electric, said
in a statement after the vote. “In the separation of power generation and transmission, in particular, to ensure stable supplies, arrangements and rules to supplement the split need to be in place,” he said.
National grid The monopolies were set up in 1951 during the American occupation after World War Two and followed the U.S. model at the time, with regional utilities
controlling all aspects of generation and transmission. Tokyo Electric, which before the meltdowns at its Fukushima Daiichi facility was the most powerful utility, is now under government control and being split into separate units. That process will probably be the template for broader change. The legislation calls for the creation of a national grid company in 2015. “Ensuring high voltage transmission and distribution assets are optimised across Japan rather than by individual monopolies is key to delivering affordable electricity to Japanese consumers and allowing access to a broad range of generation assets including renewable energy,” said Tom O’Sullivan, founder of independent energy consultancy Mathyos Japan. The government plans to liberalise the market for homes, an important source of earnings for power companies, by 2016. The market for customers using more than 50 kilowatts was opened up in 2005 but utilities can still block supplies from independent power producers as they control transmission lines. The most ambitious phase of the reform envisages breaking the monopolies into separate generation and transmission companies by 2020 and abolishing price controls. Reuters
Australia’s PM brings carbon tax repeal bill Carbon pricing plan aims to reduce emissions by taxing major polluters Maggie Lu Yueyang
A
ustralian Prime Minister Tony Abbott stuck to an election pledge yesterday to quickly repeal a carbon tax, introducing legislation as the new parliament met for the first time. Mr Abbott, once a climate-change sceptic, was elected in September partly on the back of a plan to scrap a scheme to price the carbon emissions responsible for global warming. But he faces a tough test to convince opposition politicians, with the Greens and Labor Party vowing to fight the changes. “The election was a referendum on the carbon tax,” Mr Abbott told parliament. “The people have spoken. Now it’s up to this parliament
to show that it’s listened.” The previous Labor government’s carbon pricing plan was aimed at reducing emissions by taxing major polluters with the world’s highest carbon price of A$23 (US$22.23) a tonne before moving to a market cap-and-trade system by mid-2014. Instead, the government will set up a so-called direct action plan, including an emission reduction fund and a market-based incentive for businesses to reduce greenhouse emissions. Australia has the world’s highest carbon emissions per capita due mainly to its reliance on coal-fired power stations. The bill should easily pass the
lower house, where Mr Abbott has a clear majority, but may find it hard to get through the Senate where the Greens, independents and several small parties hold the balance of power. If the Senate blocks the bill, the prime minister has promised to call a double dissolution of parliament to break the deadlock. Such a move, last called in 1987, would mean elections to both the lower and upper houses. Mr Abbott has a long reform agenda to address as he attempts to revive the economy in the face of a fading mining boom that has put pressure on tax revenues and the government’s debt position. Labor and the Greens have vowed
The people have spoken. Now it’s up to this parliament to show that it’s listened Tony Abbott, Australian Prime Minister
to fight plans to introduce laws to lift the government’s A$300 billion (US$280 billion) debt ceiling to head off concern Australia could reach its limit before the end of the year. Reuters
14 14
November 14, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 89.8
57.9 57.6
Max 55.05
Min 56.8
Average 54.722
Last 57.15
Min 54
56.7
Max 89.75
Average 89.552
PRICE
Average 27.229
Min 26.6
26.60
Last 27.1
29.40
54.9
23.7
29.15
54.6
23.6
28.90
54.3
23.5
28.65
Max 24.85
Average 24.289
DAY %
YTD %
(H) 52W
Min 24
Last 24
(L) 52W
0.311693895
-0.042840313
109.6999969
85.51999664
93.33
BRENT CRUDE FUTR Dec13
106.28
0.44419242
1.402537926
114.4399948
95.95999908
GASOLINE RBOB FUT Dec13
259.55
0.351840396
2.008332023
290.3199911
241.5999889
893
-0.195585359
-0.942872989
973
837
3.646
0.801769422
-7.649442756
4.744000435
3.378999949
286.18
0.301415954
-4.091960186
321.1599827
276.4999866
GAS OIL FUT (ICE) Dec13 NATURAL GAS FUTR Dec13 NY Harb ULSD Fut Dec13 Gold Spot $/Oz
1275.2
-0.4838
-23.3866
1754.46
1180.57
Silver Spot $/Oz
20.7923
-1.9301
-30.9455
34.3838
18.2208
Platinum Spot $/Oz
1439.1
0.3858
-5.182
1742.8
1294.18
Palladium Spot $/Oz
740.55
-1.0793
5.8443
786.5
611.23
1800
-0.497512438
-13.16931983
2184
1758
LME ALUMINUM 3MO ($) LME COPPER 3MO ($)
7120
-0.738881918
-10.22569663
8346
6602
LME ZINC
1885
-0.527704485
-9.375
2230
1811.75
13630
-0.872727273
-20.10550996
18770
13205
15.485
-0.289761751
0.454103146
16.80999947
14.91500092
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14
432.75
0.1156738
-27.84493539
647
415.5
WHEAT FUTURE(CBT) Dec13
646.25
0.15497869
-21.26104173
902
635.5
SOYBEAN FUTURE Jan14
1316.75
0.171167744
0.592055004
1406
1169
108.8
2.351834431
-32.14842532
173.25
104.1499939
17.9
0.167879127
-13.0223518
20.71999931
16.69999886
Dec13
COFFEE 'C' FUTURE Mar14 SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Mar14
78.39
0.21733572
-1.284472988
90.61000061
76.58999634
World Stock Markets - Indices NAME
Max 27.5
23.8
WTI CRUDE FUTURE Dec13
CORN FUTURE
89.3
Last 89.55
23.4
Max 29.4
Average 28.756
Min 28.4
Last 28.75
28.40
Currency Exchange Rates
NAME
METALS
Min 89.35
55.2
Commodities ENERGY
26.85
89.4
54.0
Last 54.25
27.10
89.5
57.0
Average 57.487
27.35
89.6
57.3
Max 57.85
27.60
89.7
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
0.9288 1.5898 0.9171 1.3436 99.49 7.9858 7.7531 6.0915 63.6625 31.593 1.2492 29.632 43.72 11596 92.41 1.23216 0.84512 8.1843 10.7291 133.67 1.03
-0.3861 0.1007 0.3162 0.2836 0.2613 -0.0025 -0.0013 0.0016 0.0511 0.038 0.1361 -0.1249 0.1258 0.0776 0.6428 0.0365 -0.1751 -0.3556 -0.2731 -0.015 0
-10.503 -1.7186 -0.1854 1.865 -13.4586 -0.0326 -0.0322 2.2835 -13.6148 -3.2064 -2.2254 -2.0215 -6.21 -15.5485 -3.3362 -2.003 -3.5143 0.4057 -1.852 -15.037 -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 1.2672 79.35 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 82.561 1.20302 0.79733 7.8281 10.1164 100.61 1.0289
Macau Related Stocks NAME
PRICE
ARISTOCRAT LEISU CROWN RESORTS LT
DAY %
YTD %
(H) 52W
(L) 52W
VOLUME CRNCY
4.67
-1.268499
48.25396
5.12
2.56
1562907
16.42
-0.6654567
53.88941
17.38
9.77
1772305
AMAX INTERNATION
1.11
-0.8928571
-20.71428
1.72
0.75
1002000
BOC HONG KONG HO
25.15
1.004016
4.356845
28
22.85
18062444
CENTURY LEGEND
0.425
-2.298851
60.37737
0.56
0.24
540000
7.05
-1.810585
17.69616
7.28
4.1
75000
22.65
-1.948052
-1.948054
25.6
17.7
15490500
CHINESE ESTATES
21.7
1.877934
92.96525
22.25
9.543
112500
CHOW TAI FOOK JE
12.36
-1.12
-0.6430835
13.4
7.44
6193300
EMPEROR ENTERTAI
3.94
-2.716049
108.4656
4.66
1.48
2720000
FUTURE BRIGHT
3.23
-2.121212
166.4959
3.41
1.103
1554000
GALAXY ENTERTAIN
57.15
-0.5221932
88.30313
63.75
27
5728939
HANG SENG BK
125.1
-1.184834
5.391747
132.8
110.6
1660206
CHEUK NANG HLDGS CHINA OVERSEAS
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15750.67
-0.2054729
20.19614
15797.67969
12471.49
NASDAQ COMPOSITE INDEX
US
3919.92
0.003316504
29.81958
3966.71
2810.8
FTSE 100 INDEX
GB
6690.48
-0.539782
13.44007
6875.62
5605.589844
DAX INDEX
GE
9060.57
-0.1752882
19.02399
9193.980469
6950.53
HOPEWELL HLDGS
25.8
-0.9596929
-22.40602
35.3
23.2
873963
NIKKEI 225
JN
14567.16
-0.1475116
40.1338
15942.6
8619.45
HSBC HLDGS PLC
84.8
-1.395349
4.305039
90.7
73.55
10826320
HANG SENG INDEX
HK
22463.83
-1.910712
-0.8522335
23944.74
19426.35938
6395000
CSI 300 INDEX
CH
2288.116
-2.217265
-9.307982
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8104.26
-1.110398
5.256962
8476.63
7061.87
MGM CHINA HOLDIN
KOSPI INDEX
SK
1963.56
-1.599615
-1.676973
2063.28
1770.53
MIDLAND HOLDINGS NEPTUNE GROUP
0.285
NEW WORLD DEV
10.52
SANDS CHINA LTD
54.25
HUTCHISON TELE H
3.14
-1.875
-11.79775
4.66
3.12
LUK FOOK HLDGS I
26.8
-0.7407407
9.836067
30.05
16.88
617381
MELCO INTL DEVEL
24.8
1.22449
175.2497
25.75
7.57
3629591
27.1
0.3703704
104.0927
30
12.236
2903446
3.23
-0.6153846
-12.7027
4.29
2.68
694015
-8.064516
87.50001
0.4
0.131
173216500
-1.498127
-12.4792
15.12
9.98
12617319
-0.8226691
59.79381
60.5
29.35
7336740
S&P/ASX 200 INDEX
AU
5319.177
-1.370586
14.41673
5457.3
4334.3
JAKARTA COMPOSITE INDEX
ID
4288.887
-2.094511
-0.6440079
5251.296
3837.735
FTSE Bursa Malaysia KLCI
MA
1782.88
-0.6641409
5.561447
1826.22
1590.67
SHUN HO RESOURCE
1.6
0
14.28572
1.92
1.19
0
NZX ALL INDEX
NZ
1037.504
0.09039454
17.62378
1048.998
857.105
SHUN TAK HOLDING
4.33
-0.6880734
3.341287
4.8
3.13
3070750
PHILIPPINES ALL SHARE IX
PH
3860.6
0.2177971
4.369316
4571.4
3440.12
SJM HOLDINGS LTD
23.45
-2.291667
32.13011
28
16.762
12264339
8.92
-4.189044
-36.64773
15
8.83
9266300
WYNN MACAU LTD
28.75
-1.202749
37.2315
32.6
19
2100161
ASIA ENTERTAINME
3.96
0
N/A
N/A
N/A
69409
0.166713
61.26147
78.03
43.16
548931 14906
SMARTONE TELECOM
Euromoney Dragon 300 Index Sin
SI
617.05
-0.12
-0.65
NA
NA
STOCK EXCH OF THAI INDEX
TH
1403.64
-0.6680443
0.8412752
1649.77
1260.08
HO CHI MINH STOCK INDEX
VN
496.12
-0.307445
19.91395
533.15
374.15
BALLY TECHNOLOGI
72.1
LAOS COMPOSITE INDEX
LO
1276.83
-0.8687753
5.108781
1455.82
1149.65
BOC HONG KONG HO
3.25
0.931677
5.863194
3.6
2.99
GALAXY ENTERTAIN
7.5
-0.9247028
88.91688
8.11
3.471
500
INTL GAME TECH
17.95
0.2233389
26.67608
21.2
12.37
3630825
JONES LANG LASAL
93.86
-0.5193429
11.81796
101.46
72.56
415243
LAS VEGAS SANDS
70.84
0.625
53.46621
73.49
37.8353
4590656
MELCO CROWN-ADR
34.93
0.3159104
107.4228
37
13.43
2870825
MGM CHINA HOLDIN
3.4
0
94.25337
3.88
1.703
950
MGM RESORTS INTE
19.26
0.3125
65.46391
20.98
9.15
6009834
SHFL ENTERTAINME
23.15
0.1730852
59.65517
23.25
12.35
1058701
SJM HOLDINGS LTD
3.08
-4.938272
35.22912
3.6
2.1494
11570
167.38
1.423984
48.79545
173.38
103.34
2799426
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
PRICE
DAY %
VOLUME
AIA GROUP LTD
37.8
-1.434159
17969007
NAME CHINA UNICOM HON
11.48
-2.380952
21765078
NAME
PRICE
DAY %
61.9
-1.039169
ALUMINUM CORP-H
2.72
-0.729927
12095189
CITIC PACIFIC
10.58
-2.218115
5396246
SANDS CHINA LTD
3772703
54.25
-0.8226691
7336740
BANK OF CHINA-H
3.46
-3.351955
477894634
CLP HLDGS LTD
61.45
-0.1624695
4175253
BANK OF COMMUN-H
5.32
-3.797468
47423670
CNOOC LTD
14.86
-2.621232
62975011
SINO LAND CO
10.56
-0.7518797
4349619
SUN HUNG KAI PRO
100.2
-1.085884
BANK EAST ASIA
33.5
-1.325479
2239909
COSCO PAC LTD
10.9
-0.3656307
2932129
6843048
89.5
-1.214128
1435630
392.6
-4.00978
7272084
21.5
-2.050114
7513440
POWER ASSETS HOL
SWIRE PACIFIC-A
VOLUME
9.48
-4.723618
48517864
ESPRIT HLDGS
16.2
2.402023
16130803
BOC HONG KONG HO
25.15
1.004016
18062444
HANG LUNG PROPER
25.2
-1.754386
4317583
TINGYI HLDG CO
CATHAY PAC AIR
14.82
-1.331558
2738506
HANG SENG BK
125.1
-1.184834
1660206
WANT WANT CHINA
11.04
-0.8976661
11192502
CHEUNG KONG
HENDERSON LAND D
45.05
0
3675849
WHARF HLDG
63.45
-2.083333
5034718
87.9
-1.787709
1574653
HONG KG CHINA GS
17.92
-0.7751938
11576878
HONG KONG EXCHNG
123.2
-0.6451613
1953941
84.8
-1.395349
10826320
92.95
-1.117021
4839853
5.16
-3.551402
439269643
10.26
-2.285714
33846643
29.2
-1.683502
1859575
BELLE INTERNATIO
119.2
-0.5838198
3853327
CHINA COAL ENE-H
4.65
-1.273885
32334768
CHINA CONST BA-H
5.8
-2.847571
325157747
CHINA LIFE INS-H
20.4
-2.625298
33021317
CHINA MERCHANT
26.55
-2.209945
4207048
CHINA MOBILE
HENGAN INTL
HSBC HLDGS PLC
79.6
-1.056557
18140920
HUTCHISON WHAMPO
22.65
-1.948052
15490500
IND & COMM BK-H
CHINA PETROLEU-H
6.24
-2.954899
85412837
LI & FUNG LTD
CHINA RES ENTERP
25.9
-0.5758157
5792403
MTR CORP
CHINA OVERSEAS
CHINA RES LAND
20.55
-1.674641
7531925
NEW WORLD DEV
10.52
-1.498127
12617319
CHINA RES POWER
18.42
-2.848101
8281779
PETROCHINA CO-H
8.5
-2.411022
108978081
CHINA SHENHUA-H
23.55
-2.079002
25739774
PING AN INSURA-H
60.95
-2.088353
15760642
TENCENT HOLDINGS
MOVERS
1
48
23090
INDEX 22463.83 HIGH
23088.88
LOW
22463.83
1
52W (H) 23944.74 (L) 19426.35938
22460
11-November
13-November
15 15
November 14, 2013 April 19, 2013
Opinion BUSINESS
WIRES
Leading reports from Asia’s best business newspapers
BANGKOK POST Thai business leaders have called for an end to anti-amnesty bill street demonstrations after the Senate decided to reject the bill on Monday, warning that lengthy protests in Bangkok will worsen the economy. Isara Vongkusolkit, chairman of both the Board of Trade and the Thai Chamber of Commerce, wants all rallies to be called off to reduce confrontation amid escalating political tensions. Prolonged rallies could be another blow to already weak economic growth, Mr Isara said, adding that the country has entered the peak tourism season.
Behind the scenes of Tokyo’s political soap opera
CHINA DAILY A modern fiscal system that supports the initiative of both central and local authorities should be set up, said a communique issued Tuesday after a key meeting of the Communist Party of China. China needs to improve its budget management and taxation systems in a bid to make responsibilities of government agencies match properly with what they spend, it said. A proper fiscal system provides institutional guarantee for optimised allocation of resources, social equality and long-term stability, the document added.
THANH NIEN DAILY Vietnam’s banks have failed to use foreign invested firms to improve their credit growth figures, and experts say they are hampered by less competitive interest rates. “Local banks cannot compete with their foreign rivals in terms of interest rates. Also, foreign lenders do not ask customers to pay fees for repaying loans before they are due,” economist Bui Kien Thanh said. Foreign banks do not use much of deposits they mobilise from Vietnam at high interest rates to lend to their customers, he said. They use funds mobilised in their home countries at much lower rates.
TIMES OF INDIA India’s consumer goods industry saw its sales plummet further in September as Indian households cut back their spends on soaps, shampoos and food items. While the slide in consumption has been seen over the past year, in September the sector grew by a mere 5.3 percent as against 7.3 percent and 7.9 percent in August and July, respectively, companies said quoting Nielsen data. The fall in growth is indicative of how inflation numbers and an overall negative economic sentiment are holding back consumers from purchasing essential and nonessential consumer products.
William Pesek
Bloomberg View columnist
S
hinzo Abe faces plenty of roadblocks in his quest to revive Japan’s sluggish economy. His mentor wasn’t supposed to be one of them. Former Prime Minister Junichiro Koizumi (pictured) is easily the most popular Japanese politician of the last 20 years. Not since Yasuhiro Nakasone in the mid-1980s had a Japanese leader made such a splash domestically and globally. Not coincidentally, both were keen reformers – as Abe, too, claims to be. After he left office in 2006, the now-71-year-old Koizumi seemed happy to stay in the shadows. That changed last month, when he made a very public about-face from his previous support of Japan’s nuclear industry. “Nothing is as costly as nuclear power generation,” Koizumi said in an October 1 speech, arguing that Japan “could do well without” the dangerous reactors on its seismically active shores. Since then, Koizumi has made a series of televised comments about the crisis at Fukushima, the dangers of atomic waste, the desirability of Japan hawking nuclear hardware overseas, and the urgent need for green alternatives. On Tuesday, he again urged Abe to abandon nuclear power. His campaign is landing a major blow to Abe’s revival plan. “Abenomics” claims to be firing three arrows – monetary and fiscal stimulus, plus deregulation – but there’s a nonadmitted fourth: cheaper energy. The anti-nuclear movement Abe sought to contain now has a bona fide political rock star on its side.
Koizumi’s arrow Why would Koizumi fire his arrow at the heart of his protégé’s programme? Some
wonder if it’s revenge. After five years of clearing away the bad loans of the 1990s, privatising giants such as Japan Post and scrapping wasteful public works spending to reduce government debt, Koizumi entrusted Abe with his antideflation blueprint. Abe tossed it in his office drawer and focused elsewhere during his first – and failed – stint as prime minister from 2006 to 2007. Japan’s recovery faltered. I’m giving Koizumi the benefit of the doubt. He is the master of the zeitgeist. Like former U.S. President Bill Clinton, Koizumi’s gift was reading the national mood and harnessing public anger to force his change-resistant Liberal Democratic Party to act.
Abe may be too bitter to realise that his mentor is doing him a big favour
Koizumi senses the public’s very valid fear of reactors, and he’s shaming Tokyo to act. There are actually five things Abe would be wise to learn from Koizumi to ensure this term ends better than his first. One, keep your word. Few thought Koizumi could privatise the sprawling postal system, which ran the world’s biggest savings bank – a multitrillion-dollar piggy bank that corrupt politicians used to fund pet projects. Abe has taken the easy steps among those he promised:
opening the monetary and fiscal spigots. But more than 10 months in, Abe has had zero success making Japan more competitive, those steps having failed to spur innovation and encourage companies to hire more employees or raise salaries. As 2014 approaches and markets wonder what gives, Abe hasn’t even fleshed out his much-advertised restructuring plan.
Think bigger Two, the people are your secret weapon. Koizumi’s lively mane of grey hair and blunt comments earned him the nickname “Lionheart”. He captivated a nation hungry for the strong, forwardlooking leadership Asia’s second-biggest economy hadn’t seen in years. That gave Koizumi the high approval ratings he needed to nudge the Liberal Democratic Party in a new direction. Abe should use a similar dynamic to jam controversial reforms through his party. Instead, he’s more inclined to tell Japanese what the country needs than to listen. If Abe worked harder to get the people behind him, persuading them to call their parliament members and demand change, Abenomics might succeed. Instead, the prime minister is earning the public’s distrust with a bill that would give the government sweeping power to keep secrets, including those related to the murky and incompetent nuclear industry. Three, it’s not personal. Investors consider Abe a big thinker; Koizumi wants him to think much bigger. Abe, 59, should heed Koizumi’s call for an aggressive plan to rid Japan of the reactors the public came to fear after March 11,
2011, when a giant earthquake and tsunami destroyed Fukushima. A green revolution that involves Japan’s vast geothermal resources would create jobs and prosperity and also serve humankind. Japanese would rally around an endeavour that would pay bigger dividends than restarting reactors or selling new ones to India and Turkey. Four, mind the neighbours. Koizumi was hardly without his flaws. Many economists believe his pro-market policies gutted Japan’s social-safety net and accelerated inequality. But his biggest failing was angering China and South Korea with unrepentant visits to Tokyo’s Yasukuni Shrine, which honours several convicted war criminals along with Japan’s war dead. Abe refuses to say whether he will visit the shrine, an action that would further alienate two important economies already seething over competing island claims. A weaker yen isn’t going to help Japanese exporters if Chinese and Koreans aren’t buying their goods. Five, don’t mess up the endgame. Koizumi throttled back during the last two years of his premiership, and his reform drive lost momentum. Abe needs to shift his own into a higher gear, accelerate upgrades over time and cement them. Otherwise, his cabinet’s 60 percent approval rating will disappear, along with his chances of changing Japan Inc. Abe may be too bitter to realise that his mentor is doing him a big favour. By lending his popularity to the antinuclear chorus and exciting the public about a pro-growth energy future, Koizumi isn’t just counselling a better way. He’s offering his protégé an invitation into the pantheon of true Japanese reformers. Bloomberg View
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November 14, 2013 April 19, 2013
Closing PetroChina to buy Petrobras assets
S.Korea, Russia agree on US$3 bln deals
PetroChina Co Ltd, the country’s biggest oil and natural gas producer, will buy Petroleo Brasileiro SA’s assets in Peru for US$2.6 billion, expanding its portfolio in the region. The Beijing-based company will take over three blocks of oil and gas fields in Peru from the seller, known as Petrobras, it said in a statement to the Hong Kong Stock Exchange. Petrobras owns two blocks entirely and has a 46 percent stake in the third, according to the statement. “In terms of strategy this will help PetroChina diversify it’s assets internationally,” Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc, said.
South Korea and Russia have agreed on US$3 billion of arrangements aimed at helping companies from one country secure financing for investment and ease trade deals in the other, Seoul’s finance ministry said yesterday. The arrangements were formed between two South Korean public institutions and three Russian entities, including the Russian State Development Bank VEB, the Russian Direct Investment Fund and Sberbank. The deals were announced during a visit by Russian President Vladimir Putin. South Korea is keen to boost investment in Russia, especially on energy, natural resources, petrochemical and construction projects.
Indonesia plans US$35 bln in infrastructure projects Fifteen infrastructure projects will start next year, government says
I
ndonesia announced plans yesterday for US$35 billion in new infrastructure projects from next year in a bid to tackle one of the biggest deterrents to investment in Southeast Asia’s biggest economy. Of the 56 planned projects, 32 are meant to be partnerships between the private and public sector, which Indonesia calls ‘PPP’ ventures. “We want the PPP scheme to dominate the development projects,” chief economic minister Hatta Rajasa told reporters, adding that there would have to be incentives to attract private investors. Indonesia has attracted record applications for foreign investment in recent years, but the level has started to slow in the face of a weaker global economy and some severe infrastructure bottlenecks. Economists say the government has to urgently address problems such
of some will be done by PPPs. There are also railways and number of highways, including toll roads in Sumatra, one of the world’s largest islands. No new railway line has been built in Indonesia since the end of Dutch colonial rule nearly 70 years ago.
Narrow deficit
Government to solve ports congestion as it competes for investment
as congested ports and crumbling roads if it is to have any hope of competing for investment with other fast-growing Asian nations. On November 6, Indonesian officials said they planned soon to remove or reduce barriers to foreign investment in a number of key sectors, including airports and ports. The list released on Wednesday of 56 projects
shows a spread across the world’s largest archipelago, but many are on the islands of Java and Sumatra. Several are in the sprawling eastern island of Sulawesi and on resource-rich Kalimantan, on the island of Borneo. Among the projects, which will start between 20142017, are eight seaports, two airports, eight railways, five power plants and 11 water supply and waste treatment,
German council warns on coalition pledges C
hancellor Angela Merkel’s willingness to compromise with the Social Democrats to form a coalition risks rolling back steps taken by her predecessor that made Europe’s biggest economy stronger, her Council of Economic Experts said. “The present economic situation and Germany’s healthy position compared to the euro area’s crisis countries seem to have obstructed many politicians’ view of the major future challenges,” the independent council said in its annual report published yesterday in Berlin. Demands by coalition negotiators to introduce pensions for mothers, raise some pensions, allow exemptions to the retirement age of 67 and set minimum wages will make it harder in the future to master challenges
faced by Germany, the council said in the report. Mrs Merkel, speaking to journalists after receiving the report, said that while the government will take the panel’s advice “seriously” it “often doesn’t implement all that you recommend”. “Forward-looking economic policy is necessary to strengthen Germany’s economic growth and to ensure the viability of public finances and the social security systems,” the council said. Proposals to introduce a blanket minimum wage and restrict temporary employment and limited employment contracts “serve to weaken the labour market,” the council said. The currently favourable fiscal situation should be used to consolidate public finances, it said. Reuters
The government said the first 15 projects will start next year, including a port at Kuala Tanjung in North Sumatra to boost coal and palm oil exports, a US$447 million upgrade to Jakarta’s barely functioning sewerage system and developing a new airport in West Java, between Jakarta and Bandung, to lift some of the burden on the capital’s overcrowded main airport. “These infrastructure projects are crucial to sustain Indonesia’s longterm growth,” said Andy Ferdinand, head of research
at Batavia Prosperindo Sekuritas in Jakarta. But in the shorter term, spending on the investments will not be enough to reverse a slowdown in the economic growth rate due to slackening domestic demand and weak exports deficit, he added. Meanwhile, Indonesia’s large current account deficit narrowed in the third quarter, but less than expected and not enough to end concerns about the vulnerability of the economy to more capital outflows when the U.S. Federal Reserve tapers its asset-buying stimulus. Worries over the size of the deficit, which has been gnawing at investor confidence for months, were underscored on Tuesday when Bank Indonesia announced a surprise 25-basis-point increase in its interest rates, saying it did so to manage the current account. The balance of payments numbers highlight Indonesia’s struggle to curb import growth, especially for fuel, in the face of weaker global demand for its exports and despite efforts to slow domestic consumption. The deficit in the current account was 3.8 percent of GDP in the third quarter compared with 4.4 percent in the second, and the equivalent of US$8.4 billion. Reuters
Greece says on track to meet bailout targets G reek tax revenues exceeded expectations in October, helping the country stay on track to meet its 2013 fiscal target, the government said yesterday. In what may strengthen Athens’ hand in protracted bailout negotiations with its international lenders, the central government posted a primary budget surplus – before interest payments and one-off revenues – of 1.1 billion euros (US$1.48 billion). Deputy Finance Minister Christos Staikouras told reporters tax revenue in the period was 250 million euros ahead of target, showing that households and business are coping with record unemployment and a wave of corporate bankruptcies in the sixth year of an austerityfuelled recession. This means that Athens was on course to hit its 2013 fiscal targets
and fulfil conditions to seek additional debt relief from its international lenders, Mr Staikouras said. “At a huge sacrifice to Greek citizens, unprecedented in postwar Europe, it seems that the country is succeeding its goal,” Mr Staikouras said. A 345-million euro primary surplus target at general government level, which also includes the budgets of social security administrations and local government, was “feasible”, he said. Yesterday’s reading may help Athens in negotiations with the troika of lenders, which questions its promise that it will hit its 2014 targets without resort to new, unpopular savings. “The country strengthens its negotiating position,” Mr Staikouras said. Reuters