Macau Business Daily, November 15, 2013 by Business Daily

Page 6

Vitor Quintã

MOP 6.00

Four in five 1 package tourists from mainland

April 19, 2013

Deputy editor-in-chief

Govt accounting must change under new budget law Page 7

www.macaubusinessdaily.com

Year II

Number 415 Friday November 15, 2013

Editor-in-chief Tiago Azevedo

Mobile payment dreams to become reality in 2014 Page 16

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Scrap illegal bus system, watchdog tells govt

acau’s public bus system is illegal, a waste of money and against the public interest, the Commission against Corruption says. The ombudsman calls in a report – released yesterday – for the government’s contracts with the bus

operators to be scrapped. The report could be the final blow for the troubled bus system, and force the Transport Bureau to change it. Only private companies under public service concessions are allowed to operate bus services only, said the commission and a legal expert.

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The watchdog says the bus contracts must be dropped, renegotiated or transformed into concessions. Legislative Assembly members prefer the latter option, while calling on the Transport Bureau officials in charge to be held accountable for the mess. More on page 3

HSI - Movers Name

%Day

TENCENT HOLDINGS

4.64

CHINA RES ENTERP

4.25

SANDS CHINA LTD

2.12

CHINA MERCHANT

2.07

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1.95

HANG SENG BK

-0.40

BELLE INTERNATIO

-0.63

POWER ASSETS HOL

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CLP HLDGS LTD

-0.73

WANT WANT CHINA

-1.63

Source: Bloomberg

I SSN 2226-8294

Tourism boom forces rethink Public investment fund on new border crossing to ease home prices: agency The new border crossing planned for Ilha Verde will operate independently rather than as an offshoot of the Gongbei crossing – to cope with the growth in the number of travellers. The budget and design plan are still pending. Macau and Guangdong announced yesterday that the Lotus Bridge border crossing from Hengqin to Cotai would be open for three more hours each day from January. Page 2

The government should set up an investment fund to divert residents’ savings from being spent on the local property market. It would ease home price inflation, suggests an estate agent. A mooted interest rate rise would have limited impact on cooling home prices, said Midland Realty (Macau) Ltd. Prices here are expected to grow by 30 percent next year. Page 16

New gaming show, same old battle Macau Customs visited the stand of casino equipment maker SHFL entertainment Inc yesterday at the first edition of Macao Gaming Show. Officials did not remove any products. SHFL has been in a long patent dispute with Macau-based LT Game Ltd and its chairman Jay Chun. Separately Mr Chun said his Paradise Entertainment Ltd intends to operate two more casinos in Macau under service agreements with existing concessionaires. Pages 4 & 5

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November 15, 2013

Macau opinion

Talent show

Heavy traffic means change of plan for border crossings The new crossing in Ilha Verde will operate separately from the Gongbei crossing Tony Lai

tony.lai@macaubusinessdaily.com

José I. Duarte Economist

he main items on the political agenda these days are, inevitably, the Policy Address for 2014 and next year’s budget. The Policy Address introduction has a fair amount of self-congratulatory statements and the usual share of ritual references to the founding principles of the region. Somehow it is what it has to be, but it is to be doubted that many will care enough to read it carefully. A balance of past achievements and failures, or any judgement of them, are mostly absent. Previous addresses were never strong on that point; still less this one. Whatever little stock is taken of the past, it is taken in very general terms in the introduction. The first section, where the government used to report on the achievements of the preceding year, has just disappeared. We are assured, however, that “the government has kept the promise to take decisions in a scientific manner”, and that seems to be enough. After the introduction the document moves direct to the enunciation of the government’s priorities for next year. The star concept this year is “talent”. It is the first big orientation listed: the government is committed to the development of local talent. To be precise, “the government will make efforts to build a long-term efficient mechanism for the development of talent”. In the three or so pages dedicated to this topic, the word appears no fewer than 35 times. The creation of “a social system for the development of talent” is necessary because “talent is the engine of social progress”. So apart from “reinforcing the improvement of education-related legislation”, the government “wishes to promote the phased build-up of various systems for the development of talent, creating thus a long-term efficient mechanism”. The mission has been stated. How to carry it out? The measures listed in the Policy Address include these: the creation of a commission, under the Chief Executive, to “plan scientifically the longterm development of talent”; the creation of a talent database and a talent evaluation system, based on a classification – still to be developed – that will allow the “efficient selection and placement of talent”; the increase in rewards for “the institutions and companies that excel in the development of local talent” and the professionals or specialists that provide “outstanding contributions”. In general, “government actions will promote the search for, evaluation, selection and adequate placement of talent”. It seems we are creating a kind of super headhunting consultancy. In case they fear something improper, the people are given a guarantee that the “talent selection system will be guided by the principles of impartiality, fairness and transparency”. The government will consider the creation of new incentive systems for the “development of elites” and to “stimulate” or “incentivise” the training and development of qualified, specialised, technical professionals. The government will “advocate the increase in the percentage of local workers in management functions at various levels” in big companies, especially the casino operators. We must suppose that what the government advocates must not be taken lightly, and that it amounts to an actual policy, must we not? Other measures or intentions are listed, but the foregoing is enough to give the gist of it. Not a single Policy Address since 2000 has not identified education as a priority. Several incentive mechanisms exist and have been reinforced over time to support the education and training of Macau people. Changes in the law were made to improve the education system and its outcomes. All those measures were praised as having, one way or the other, achieved their aims. Thousands of officials over the years have been subject to training and development action, in Macau and elsewhere. And we are still getting no local talent? It is surprising, then, that all the measures and plans above are put forward without any effort to evaluate past policies, their hits and misses. Should we conclude that all past actions ended in failure? If so, what does that bode for the new ones? In the end, without such evaluation, and without any solid rationale underpinning this newly acquired passion for talent, people may be tempted to conclude that all this will amount to is just one more exercise in showering money and privileges on people to keep them complacent. Meanwhile, the world outside keeps turning.

he new border crossing planned for Ilha Verde will operate independently rather than as an offshoot of the Gongbei crossing, to cope with the growth in the number of travellers. Macau and Guangdong agreed yesterday at their annual conference on cooperation between Zhuhai and Macau to keep the Lotus Bridge border crossing open for three more hours each day from January. The head of the Secretary for Transport and Public Works’ cabinet, Francis Wong Chan Tong, said after the meeting, held in Zhuhai, that treating the Ilha Verde crossing as an offshoot would put it under too much pressure, considering that 93 million people used the Gongbei crossing last year. The Ilha Verde crossing was proposed last year. Vice-premier Wang Yang announced during a visit to Macau this month that the central government has approved the proposal. The new crossing was originally meant simply to relieve pressure on the Gongbei crossing. Mr Wong said Macau and Guangdong had since agreed to ask Beijing to let the new crossing operate independently. He said they had agreed to do so after central government officials inspected the site earlier this year. Macau and Guangdong had originally thought that operating the crossing independently would be too complicated, he said. Mr Wong said allowing the new crossing to operate independently would make staffing it easier, especially for the mainland authorities. Representatives of Macau and Guangdong declined to say whether any changes would be made to the design of the crossing, its capacity, the schedule for its construction or the budget for building it. The Macau government issued a written statement after the meeting saying that no budget or design had yet been proposed for the crossing. Mr Wong said that, as originally

Macau, Guangdong agreed to set up a new body to work on the development of Hengqin

envisaged, cars would be barred from using the crossing.

Market-moving news Mr Wong said Macau and the mainland customs service, the Ministry of Public Security, the National Port Office and the General Administration of Quality Supervision, Inspection and Quarantine would discuss “innovative” entry and exit procedures. The Macau government said the first step towards establishing the new crossing was to move the Nam Yue wholesale market to make room for it. The government said work on new premises for the wholesale market in the Zhuhai-Macau Cross Border Industrial Park would start early next year and that the market would move there in 2016. Rehabilitation of the Canal dos Patos area will be part of the project to build the new border crossing. Mr Wong said he hoped rehabilitation work could start next year. The head of Zhuhai’s Hong Kong and Macau Affairs Bureau, Zhou Jianchun, announced after the meeting that the Lotus Bridge border crossing to Hengqin Island would be open from 8am to 10pm from January. At present cars and buses can use the Lotus Bridge crossing between 9am and 8pm, and trucks can use it from 8am to 8pm. Mr Zhou said Guangdong and

KEY POINTS No design, budget yet for Ilha Verde crossing Nam Yue wholesale market to move in 2016 Lotus Bridge crossing to be open longer Barra-Wanzai tunnel feasibility being studied Macau would “strive” to find the staff to keep the crossing open around the clock. He said there was no schedule for extending the opening hours of the Gongbei crossing. Mr Wong said Guangdong and Macau were interested in digging a tunnel under the sea to link Barra in Macau to Wanzai in Zhuhai. He said they had begun working on an “initial feasibility report”. Any tunnel would require the approval of Beijing, he said. Representatives of Macau and Guangdong signed yesterday an agreement to cooperate more closely on the environment and to set up a new a body to work on the development of Hengqin.

New LRT route will impact other stops: Govt

he decision to have the Light Rapid Transit railway run along the waterfront of NAPE will affect the design of other stretches in the peninsula section, an official warned. “If the railway has to run the outskirt [of NAPE], there is surely impact [on the design],” said Francis Wong Chan Tong, head of the Secretariat for Transport and Public Works. But he declined to tell media yesterday whether or not the peninsula section would have to be re-designed. Chief Executive Fernando Chui Sai On announced in the Policy Address

for 2014 on Tuesday the railway will run along the waterfront rather than through the middle of NAPE district amid residents’ opposition over safety concerns. Beijing recently approved a plan to adjust part of the reclaimed plots in that area, making it feasible to have the waterfront railway, said Mr Chui. “Our next step is to carry out more in-depth analysis because by running along the waterfront, [the railway] may have to pass on the road under the oldest Macau-Taipa bridge,” Nobre de Carvalho Bridge, said Mr Wong. “We have to carry out a careful and

meticulous technical study here as the Macau-Taipa bridge is a prominent symbol for Macau.” He declined to comment on when the study would be finished or whether that would mean postponing the launch of the railway operations beyond 2015. “Every different proposal has its cost and a price to pay,” the cabinet chief said. The start of construction works on the Macau peninsula section has been on hold since July last year, when the Commission Against Corruption sided with residents over the NAPE route. T.L.

November 15, 2013 April 19, 2013

Macau

Bus system is illegal so scrap it, watchdog says The Commission against Corruption slams the Transport Bureau for getting the bus system all wrong Vítor Quintã

vitorquinta@macaubusinessdaily.com

Public bus service not worth the money: Commission Against Corruption (Photo: Manuel Cardoso)

acau’s bus system is illegal, a waste of money and contrary to the public interest, the Commission against Corruption says. The commission calls in a report released yesterday for the government’s contracts with the bus operators to be scrapped. The report could be the final blow for the troubled bus system, and force the Transport Bureau to change it. The commission says the system was illegal right from the start because the Transport Bureau chose to sign service provider contracts with the three bus operators. The law allows private companies to operate bus services only under public service concessions. The commission says this means Transportes Urbanos de Macau SARL (Transmac), Sociedade de Transportes Colectivos de Macau SARL (TCM) and Reolian Public Transport Co Ltd

are “operating illegally”. The Transport Bureau’s actions were “arbitrary” and “deviate from the principles and demands of public management”, the commission says. It says the bus system “is the most serious case” of harm to the public interest and violation of the law that it has encountered. The system is also “a poor use of public money”, it says. The report comes in late already, Legislative Assembly member Au Kam San told Business Daily. The bus system got off on the wrong foot, he recalled, with the government giving a direct contract to TCM to settle a court dispute. TCM’s bid for the 2009 bus tender was rejected because it was allegedly four minutes late. The assembly was not heard over the implementation of the new system and there was no public consultation,

FURTHER CRITICISM Bus operators should not have liability exemption ‘Most serious case’ watchdog has seen Bus subsidy increase also illegal Contracts must be made public Doubts over TCM, Transmac assets

Report comes ‘too late’ for Reolian Controversial subsidy hike to bus operators was illegal: watchdog

he Commission Against Corruption report saying the public bus system is illegal is too little too late for bankrupt operator Reolian Public Transport Co Ltd, says general manager Cédric Rigaud. The report released yesterday sides with Reolian, who went all the way to the Court of Final Instance in its quest to be recognised as a public service concessionaire instead of a public service provider. “It is another piece of evidence backing our claim to get the public service concessionaire status,” Mr Rigaud told Business Daily yesterday. “I am pleased to see, after two years of this new system, a public body formulate the same conclusion

we had reached even before the launch,” he said. Asked if this report came too late to change the gloomy outlook for Reolian, he agreed. The government seized Reolian’s

operations on October 2, one day after the public bus firm filed for bankruptcy because it ran out of money to pay its workers. Mr Rigaud believes the administration will want to “act quickly” to fix the problem. “They can’t have five more years of doing this,” he said. With no concession in place, the controversial decision to increase the subsidy paid to bus operators for its services is illegal, the commission says in its report. It is not possible “in any way” to increase payments to public service providers during the term of the contract, the commission wrote. The government in June last year

Mr Au added. The commission lays out three solutions to the problem that are open to the Transport Bureau.

Logical way out One solution would be to end the present contracts, but the commission says this would mean compensating the bus operators. Another solution would be to negotiate new concession contracts with the operators, as long the concession contracts “strictly abide by the relevant legislation”, the commission says. The third solution would be to turn the present contracts into concession contracts, but the commission says this would raise other issues that the Transport Bureau would have to deal with. The latter is the most viable and preferable option, said Mr Au, while warning that it would still be “a complex legal procedure with a lot of negotiations” involved. The government could take the opportunity to “add more articles in the contract to facilitate better supervision over the bus service quality,” legislator Ho Ion Sang said in an inquiry yesterday. Whatever option the government takes, the bus services must remain normal “even if it involves extra cost,” legislator Si Ka Lon said. The Transport Bureau said in a statement the report was born out of “different interpretations” of the law on public buses. It declined to comment further due to the lawsuit filed by Reolian (see story below). Lawyer Sérgio de Almeida Correia told Business Daily the commission was right in its interpretation. The Transport Bureau made a mistake in “assuming that if something is not explicitly banned by law, then it’s allowed,” he said. Mr Si told Business Daily the officials in charge “should be held accountable” for the fracas. “These problems have lasted for a long time but the officials appear to have no idea there was any problem.” The commission has sent its report to Chief Executive Fernando Chui Sai On. The law does not compel him to accept the commission’s conclusions. The commission has not sent the report to the Public Prosecutions Office but Mr Almeida Correia is confident the prosecutors “will not be able to ignore” the incident. TCM and Transmac declined to comment.

promised all three bus operators an increase of 23.3 percent in service subsidies. But the announcement of the increase provoked a public outcry over the quality of bus services. In April the government gave Sociedade de Transportes Colectivos de Macau SARL (TCM) and Transportes Urbanos de Macau SARL (Transmac) the increase it had promised, but not Reolian. Reolian sued the government. “The other two operators are also having financial problems,” Mr Rigaud warned, because they are yet to receive any reply on a second subsidy increase requested in April this year. Transport Bureau director Wong Wan also managed to encroach on the Financial Services Bureau’s powers, by including provisions on road tax exemption for public buses in the contracts, yesterday’s report adds. That exemption – a demand that Reolian took to court – can only be granted to public service concessionaires, the ombudsman said. V.Q.

November 15, 2013

Macau

Groundhog Day for SHFL as customs swoop again Nevada-based casino equipment supplier in long-running patent dispute with Macau firm LT Game Michael Grimes

michael.grimes@macaubusinessdaily.com

gents from Macau Customs visited the stand of casino equipment maker SHFL entertainment Inc yesterday at the first edition of the Macao Gaming Show. The officials arrived at around 12.30pm and stayed for around two hours, taking notes, photographs and video footage of the SHFL Fusion Hybrid electronic game product on display. The agents also consulted with locally based lawyers representing the Nevada company. The customs officials did not remove any equipment. They declined to speak to the media, but Business Daily understands from sources the agents attended as a result of a complaint received by an undisclosed party. João Nuno Riquito, a lawyer representing SHFL, told Business Daily last night: “I don’t have knowledge of what the officials were looking for. But I can confirm as of now, no injunction has been served on SHFL entertainment.” SHFL – formerly known as Shuffle Master – has been in a long and at times bitter trade dispute with a Macau-

Macau Customs in action yesterday

based company called LT Game Ltd and its Hong Kong-listed parent company Paradise Entertainment Ltd. It concerns a patent claimed in Macau by LT Game for technology in a multi-game electronic table game product

featuring a live dealer. LT Game is chaired by Jay Chun, who is also the chairman of the Macau Gaming Equipment Manufacturers Association, the organisers of this week’s trade event.

SHFL was invited to Macao Gaming Show by representatives of the association, Business Daily has confirmed from independent sources. SHFL displayed the same Fusion Hybrid product at another Macau-based trade

U.S. gambling regulator calls for info sharing

he chairman of one of the leading gambling regulators in the United States said yesterday he would like to see greater information sharing on an informal basis between regulators. Richard J. Lopes, chairman of the California Gambling Control Commission, made the comment during his keynote speech on the

first day of the Macao Gaming Show. He said that with casino gaming increasingly being operated on a global basis, it was important for regulators to share intelligence. “Sometimes we don’t know whether another jurisdiction is doing an investigation until we read about it in a newspaper,” he stated. In April California issued a

Richard J. Lopes, chairman of the California Gambling Control Commission

gaming resource supplier licence to Aruze Gaming America, a casino equipment maker controlled by former Wynn Resorts Ltd director Kazuo Okada. It knew at the time that a U.S. Department of Justice investigation had been launched into Mr Okada in relation to his pursuit of a casino licence in The Philippines. Subsequently that country’s justice department has launched its own criminal investigation into claims Mr Okada used dummy companies to hide the fact he had majority control of land in Manila Bay for the project – in defiance of the Philippines’ constitution. He denies wrongdoing. Mr Lopes declined yesterday to discuss Mr Okada’s case, but he told Business Daily on the sidelines of the Macao Gaming Show conference: “If you read something in the Macau newspapers about something going on here, concerning someone licensed outside Macau – what do you do as a regulator [overseas]? Do you open up an investigation? Do you charge [bill] them for that investigation? Do you monitor the situation? That’s one of the reasons if the regulatory agencies worked together, it would be much, much simpler for them to just exchange information.” M.G.

show – Global Gaming Expo Asia 2013, and at G2E in Las Vegas in September, without any legal problems, say the same independent sources. But In 2009 Shuffle Master had equipment from its Rapid games product line – an earlier version of its multi-game electronic table product – seized at G2E Asia and several of its management attending the show detained after a complaint from Paradise, Shuffle Master confirmed in a subsequent regulatory filing. And on the first day of G2E Asia 2012, SHFL was forced to cover up its Rapid product after Macau Customs agents served an injunction on the firm, as a result of a complaint by LT Game of patent infringement; which in Macau is a criminal offence. The injunction was lifted later the same day and the Rapid product put back on display, after lawyers for the U.S. firm went to court in Macau. Frank J. Fahrenkopf – then president and CEO of a G2E Asia co-organiser the American Gaming Association – complained at the time that LT Game was using a trade event “to leverage” its litigation. No comment was available from either LT Game or Paradise Entertainment yesterday. But one industry source told this newspaper: “Given that SHFL were invited to take part in this show, for someone then to call customs to their stand is not very polite to say the least.” The two parties are currently awaiting judgement from the Court of First Instance in Macau over litigation linked to the patent dispute.

Singapore slaps S$527,000 fines on casinos T

he Casino Regulatory Authority of Singapore has imposed new fines totalling S$337,500 (2.16 million patacas) on Marina Bay Sands Pte Ltd and S$190,000 on Resorts World at Sentosa Pte Ltd – the city-state’s two gaming resort operators. They are for “regulatory breaches reported or detected” between May 1, 2012 and December 31, 2012. The offences for both, involved Singapore citizens and permanent residents without valid entry levies – including those who stayed beyond the allotted time – and failures to keep out people subject to exclusion orders. In Resorts World Sentosa’s case there was also a failure to prevent “five foreign minors” from reaching the gaming floor. The regulator stated on its website: “CRA takes a serious view of these lapses as the social safeguard measures have been put in place to protect the vulnerable from the harms of casino gambling. CRA will continue to be vigilant and take firm action against regulatory breaches.”

November 15, 2013

Macau

Jay Chun’s Paradise ‘to run two more casinos’ Casino equipment maker also expects machine sales to rise at least 35 pct next year

aradise Entertainment Ltd intends to operate two more casinos in Macau under so-called service agreements with existing Macau concessionaires, its chairman Jay Chun said yesterday. He didn’t give details. Mr Chun was speaking on the sidelines of the Macao Gaming Show at CotaiExpo in The Venetian Macao. It is a new casino industry event strongly backed by the city’s government. Mr Chun is also chairman of the show’s initiator, the Macau Gaming Equipment Manufacturers Association. He appeared on a platform at the opening ceremony yesterday with government dignitaries and a senior representative from the Liaison Office of the Central People’s Government. Paradise already operates Kam Pek Paradise casino under the licence of Sociedade de Jogos de Macau SA. It is next door to SJM’s original flagship property Casino Lisboa. Kam Pek Paradise has 37 gaming tables, more than 900 live multi-game machines and over 300 slot machines, according to the company’s website.

to bet simultaneously, Mr Chun said. According to data from the local regulator, the Gaming Inspection and Coordination Bureau, the number of slot machines in Macau fell 10 percent sequentially in the nine months to September 30, from the 16,406 recorded in the first quarter to 14,775 in the third quarter. Macau casino developer SJM Holdings Ltd said in its third quarter results this week the number of slot machines on its venues’ floors had fallen 12 percent year-onyear from 3,348 units in the three months to September 30, from 3,812 slots in the equivalent 2012 period.

LT Game

Jay Chun, chairman and CEO of Paradise Entertainment

The businessman said he expects Paradise Entertainment’s equipment sales to grow at least 35 percent next year as casino operators plan to buy more electronic table games to

boost their profitability. Casino companies are ordering more electronic equipment and replacing lower-yielding betting tables with new games that allow more players

Hong Kong-listed Paradise has a unit called LT Game Ltd that makes live dealer multi-game electronic table games currently popular with local casino operators. New products would aid Paradise’s revenue next year when no new casino is scheduled to open, said Mr Chun, who expects “strong replacement and new orders”. The Paradise group currently accounts for 20

percent of the slot machine sales market in Macau and 60 percent of the sales market for electronic table games featuring a live dealer, said Mr Chun. Paradise Entertainment’s first-half profit dropped about 15 percent to HK$40.20 million (US$5.18 million) because of what Mr Chun said was a one-off disposal gain recorded in the same period a year earlier. Paradise Entertainment has plans to expand into the United States, Australia, Singapore, Cambodia and Vietnam, Mr Chun added. “There are about one million gaming machines in the U.S. right now, whereas Macau only has 16,000,” the executive stated. “The U.S. market will definitely be our priority.” Paradise Entertainment announced on November 5 it had raised about HK$77.6 million by issuing 33.7 million new shares at HK$2.30 each to two investment funds controlled by Bridger Management LLC, a New York-based hedge fund operation. The proceeds will be used as working capital, it said. M.G./Bloomberg News

November 15, 2013 April 19, 2013

Macau Brought to you by

HOSPITALITY Plain sailing The Outer Harbour ferry terminal is the main point of entry for visitors from Hong Kong, Macau’s second-biggest source of tourists. Many visitors from Guangdong and many from elsewhere that come through the airports in Hong Kong or Shenzhen arrive at one or other of Macau’s three ferry terminals. The number of ferries arriving rose by 25 percent in 2009 and by 13 percent in 2010 to reach a peak of 74,000 in 2011. Since then the number has fallen slowly, reaching just over 70,000 last year. In the first three quarters of this year the numbers of ferries arriving were similar to the numbers last year. Fourth-quarter figures are usually about the same as thirdquarter figures, so this year’s total will probably be close to last year’s.

Package tours soar ahead of new rules Mainland China accounted for over 80 percent of all tours in September Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

Four out of five package tourists came from the mainland in September

The figures for the third quarter of this year and the third quarter of each of the preceding five years illustrate the trends in the number of ferries arriving. The number rose until 2010, then decreased slightly, then steadied. The Cotai ferry terminal was not operating in 2008. Since it opened the proportions of vessels arriving at the Cotai ferry terminal and at the Outer Harbour ferry terminal have been roughly the same every year. The proportion arriving at the Inner Harbour ferry terminal shrank as the number of arrivals there fell by 7 percent. As a rule, fewer than 10 percent of arriving vessels land their passengers at the Inner Harbour ferry terminal. Two-thirds of arriving vessels land their passengers at the Outer Harbour ferry terminal and the rest land their passengers at the Cotai ferry terminal.

190

Daily average of ferry arrivals, 2013Q3

lmost 1 million visitors arrived in Macau on package tours in September, the month before new rules curbing free package tours took effect in mainland China. Macau had 944,188 package tourists in September, 26 percent more than a year earlier, the Statistics and Census Service announced yesterday. It was the second busiest month for tour operators since the Statistics and Census Service began collecting data on package tours in 2011. August was the busiest month ever with 973,766 package tourists arriving here. August and September had been expected to be record months because the summer holidays make it a peak season for package tourism. Since March the number of package tourists has been higher every month than a year earlier, mostly supported by mainland tourists. Tours originating from across the border accounted for 80.4 percent of all package tours in September. Taiwan, the second biggest source for tours arriving here, accounted for just 6.0 percent. In the first nine months of the year about 7.41 million visitors came to Macau in organised tours. That’s more than for the whole of 2011,

when 7.31 million package tourists arrived here.

Heavy reliance The reliance on the mainland market is growing this year. Package tourists from the mainland accounted for 77.0 percent of all organised tours in the first three quarters of the year, the data showed. The mainland market accounted for 71.5 percent of all the package tourists that arrived in Macau last year. Such heavy reliance could prove dangerous if China’s economy meets a bump, Amy So Siu Ian, coordinator of gaming and hospitality management programme at University of Macau, said in September. But the mainland’s effort to curb free package tours may end the boom. Since October 1 the mainland has banned tour operators from compelling package tourists to shop in shops of the operator’s choosing. This has curbed free or excessively cheap package tours run by operators that rely on commissions to recoup their costs, and has thus made package tours more expensive. The state-run People’s Daily reported that one particular five-day

7.41 mln Visitors on package tours in the first nine months of 2013

tour from Beijing to Macau and Hong Kong would cost 6,760 yuan (8,862 patacas) per person from October 4, 70 percent more than it cost before. The president of the Macau Travel Industry Council, Andy Wu Keng Kuong, said in September that the industry expected the number of package tourists to fall by at least 10 percent between this month and the end of the year. September was also a good month for hotels here, with 862,470 people having stayed overnight in hotels or guesthouses, 10.3 percent more than a year earlier. The figures also indicate more demand for accommodation than a year earlier. The average rate of hotel occupancy was 82.7 percent, 1.8 percentage points more than in September last year.

November 15, 2013 April 19, 2013

Macau

Alter accounting rules, legislators advise govt The present rules make it seem the government spends money too slowly, a committee believes Stephanie Lai

sw.lai@macaubusinessdaily.com

If we adopt the accrual basis the reflection of the balances will be more accurate

The Legislative Assembly is discussing the government’s report on the 2012 budget

overnment accounting rules will have to be changed to reflect public finances better once the budget law is amended, the second standing

committee of the Legislative Assembly thinks. The government would consider scrapping the rule that requires departments to record revenue when cash

special units, make their balances based only on real cash payments,” Mr Chan told reporters after his committee and Secretary for Economy and Finance Francis Tam Pak Yuen met behind closed doors. These “special units” include the Monetary Authority of Macau, the Macau Foundation, Macau Post, Macau Postal Savings, the Automobile and Maritime Security Fund and the Pension Fund. The present accounting basis gives an inaccurate reflection of the financial balances of many government departments and leads to a seemingly low budget execution rate.

is received and expenses when they are paid in cash, committee chairman Chan Chak Mo said yesterday. “Many government departments, save for some

Chan Chak Mo, Legislative Assembly second standing committee chairman

Committee members expressed concern about the low execution rate of the budgets of many government projects. Last year the government spent 86.1 percent of its budget, official data show. The problem was particularly obvious in the finances of several autonomous entities, such as the Social Security Fund, said Mr Chan. Amendments of the budget law are being prepared. Financial Services Bureau director Vitória Alice Maria da Conceição said in September that the amendment bill should be ready next year. Mr Chan said the amendments would have to tweak the accounting basis to reflect more accurately the real income and spending of government departments. “If we adopt the accrual basis the reflection of the balances will be more accurate,” Mr Chan said. The accrual method records income when it is due and records deductions when expenses are incurred. “With this change, it will no longer appear that they are spending very little of the money granted under the budget approved,” Mr Chan said. His committee is reviewing the government’s report on last year’s budget.

Corporate MCI Group enters meetings market

Junket profit tumbles amid expansion talks

acau casino junket investor Iao Kun Group Holding Co Ltd has seen its profit fall more than two-thirds but the firm remains bullish on plans to increase its market share. Iao Kun – formerly known as Asia Entertainment & Resources Ltd – announced profits of US$6.9 million (55.1 million patacas) in the third quarter of 2013, down by 69.1 percent year-on-year. The fall was due to junket agents receiving higher commissions, namely because Iao Kun no longer offers complimentary hotel and casino services, the company said. In a filing to the Nasdaq in New York, the junket room investor also blamed “increased market competition,” and a smaller percentage of direct business – clients that did not require credit. Profit could have been even lower if not for a US$0.9 million boost in the value of three VIP gambling

rooms that Iao Kun bought, the latest of which a room at Le Royal Arc Casino in July. The acquisitions were one of the reasons why the firm’s revenue rose by 12.8 percent year-on-year to US$61 million in the third quarter. Luck was on Iao Kun’s side, with “a higher than normal” win rate of 3.22 percent. The expected win rate range for VIP gaming is 2.7-3 percent. A new model, which offers middlemen a share of revenue instead of credit to attract high rollers, has also helped, the company said. “We are taking the necessary measures to best utilise our shareholders capital to grow our business,” said Man Pou Lam, Iao Kun chairman. “Our strategy remains unchanged – to increase our market share leading to growth in revenue and net income,” he added in a statement. V.Q.

MCI Group, a communications and event management firm, has set up an office in Macau, after buying Australian-based OffSite Connections Event Solutions. The deal was clinched in April and last month the Greater China operations of Off-Site Connections were integrated into MCI’s Shanghai branch. The company announced on Monday it has opened its MCI Macau office to take advantage of the city’s “exceptional conference and meeting facilities”. MCI Group is betting that closer economic integration in the Pearl River Delta, fuelled by the opening of the Hong Kong-Zhuhai-Macau bridge – slated for 2016 – could make Macau the meetings centre of the region. MCI said in a statement it would work closely with the Venetian Macao and Sheraton Macau while bring in Off-Site Connections’ strong record of creative event production. The Macau acquisition is among the six new office openings across four countries announced by the company.

Pearl River’s hidden gems out in new guidebook A new book seeking to unveil some of the hidden gems of the Pearl River Delta region was launched yesterday afternoon at the Portuguese Bookshop here. Thomas Bird, a British freelance writer based in Shenzhen who is the principlecontributing writer to ‘Hong Kong’s Backyard: Explore the Pearl River Delta’ was present at the launch. He introduced some of the treasures included in the book, from surfer beaches, to artists’ villages, Ming dynasty fortresses to ancestral temples, hiking trails to archipelagos of hidden islands. The integration of Hong Kong, Macau and the Pearl River Delta cities is becoming a reality but the region remains mysterious to many. This guidebook aims to help readers discover a diverse world right across the border. The book is backed by Make-Do Studios, a Hong Kong-based publisher dedicated to publishing Asian literature in translation, as well as travel guides.

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Greater China

Local debt pile hinders rate freedom Liberalised rates could make it very difficult for the govt to roll over debt Justina Lee

hinese local governments’ US$1.6 trillion in bank borrowings are a major obstacle to the freeing up of interest rates in the world’s second-largest economy, according to BNP Paribas SA and Capital Economics Ltd. The financing arms of municipal authorities owed lenders 9.7 trillion yuan (US$1.6 trillion), or 14 percent of all loans, in mid-2013, according to China Banking Regulatory Commission figures. Most have weak credit profiles, Moody’s Investors Service said in a November 5 report, noting that only 53 percent of 388 such companies it surveyed in June had enough cash to cover estimated debt payments and interest this year without refinancing. If rates are liberalised and advance quickly, “it will make it very difficult for the government to roll over debt as the cost of doing that will be rising fast,” said Chi Lo, Hong Kong-based senior strategist at BNP Paribas Investment Partners. That’s partly why “I won’t bet on deposit rates being fully liberalised within the next year or two.” China is seeking to give markets a greater say in setting borrowing costs without triggering a surge in interest rates that would boost loan defaults. Years of state-directed

Bad debts at China’s big banks rose 3.5 percent in the third quarter

lending and interest-rate controls led to a banking crisis in the late 1990s and the government spent more than $650 billion over a decade on bailouts. Bad loans at the nation’s four biggest banks rose in the third quarter by the most since at least 2010. Government bond yields surged

this week to the highest levels in at least five years as the Communist Party leadership met to outline the country’s economic and social policies for the coming years. A communique released after the four-day session ended November 12 said market forces would be

beauty salons as part of its outreach campaign for the deal.

Sensitive enterprises

Taiwan restricts Chinese investment As opposition fears competition will hurt domestic industries

aiwan announced stricter rules for investment projects by Chinese companies as President Ma Ying Jeou seeks to overcome lawmaker resistance to legislation that would boost economic ties with China. In new rules effective yesterday, the Ministry of Economic Affairs’ Investment Commission, which vets proposals for China investments, said it won’t approve transactions deemed politically sensitive and will now require more Chineseinvested companies to report financial information, according to a commission statement. The new restrictions come as lawmakers prepare to consider a trade accord signed between Taiwan and China in June that would open up as many as 80 sectors, including

banking, brokerages and e-commerce. The government is refining existing rules on Chinese investment based on input from various groups, said Chu Ping, a director at Taiwan’s Investment Commission. “As the services pact is still under legislative review, the government wants to reduce space for opposition,” said Leon Chu, a Taipei-based economist at Jih Sun Securities Co. Taiwan’s opposition party, concerned that Chinese competition will hurt domestic industries, called for a detailed review of each provision of the trade agreement, which allows certain industries to hold controlling stakes in joint ventures across the Taiwan Strait. Mr Ma’s administration has offered support to industries such as traditional Chinese medicine and

Enterprises judged by the commission to be politically, socially or culturally sensitive will have their investment licenses revoked, the Investment Commission said. The rule also applies to companies that create monopolies, threaten national security, or damage economic development or financial stability. Chinese companies with paidin capital of more than NT$30 million (US$1 million) must now submit financial statements to regulators, compared with a previous threshold of NT$80 million, according to the statement. The commission also said the government won’t approve any stake sales by Chinese-invested corporates if they affect national security or the public interest. Existing restrictions on telecommunications assets caused the collapse of China Mobile Ltd’s plan to buy part of Far EasTone Telecommunications Co, the first investment by a Chinese state-owned company in Taiwan in six decades. The companies waited four years for Taiwan to lift the bans before abandoning the plan. The planned $670 million deal by China’s biggest bank by assets, Industrial & Commercial Bank of China Ltd, to take a 20 percent stake in Taiwan’s Sinopac Financial Holdings Co is in limbo, pending passage of the services trade pact and regulatory sign-off. The Taipei-based Economic Daily News reported on October 25 the trade agreement is unlikely to pass the legislature by the end of this year based on the schedule of public hearings. Bloomberg News

given a “decisive” role in allocating resources, though it didn’t provide further details. “Investors are expecting interestrate liberalisation to accelerate and funding costs to increase quickly, so it’s very hard for bond yields to come down,” said Min Shuai, a Shanghai-

November 15, 2013 April 19, 2013

Greater China

US$1.6 trln

Financing arms of local govts had borrowed by mid-2013

based fixed-income analyst at Guotai Junan Securities Co, the nation’s third-biggest brokerage. The yield on 10-year government bonds rose 47 basis points this quarter to 4.47 percent yesterday, the highest level since 2008, according to Interbank Funding Centre data. The People’s Bank of China in July removed a floor on borrowing costs set at 30 percent below the benchmark. It may allow onshore trading of negotiable certificates of deposit by the end of this year and establish a deposit insurance programme in 2014 before scrapping the limit on savings rates by 2015, Deutsche Bank AG forecast in a note in September. This will subject the nation’s 3,800 banks to greater competition, forcing them to pay savers more to retain their share of the country’s 101 trillion yuan of deposits. The PBOC has described the policy shift as the “most critical and risky” step in its banking overhaul. The nation has this year intensified efforts to control the raising of debt

by LGFVs, which allow authorities to circumvent a ban on direct borrowing. A nationwide audit of local authorities ordered by the State Council in July will show their overall debt may have surged to more than 20 trillion yuan, Liu Yuhui, a researcher at the Chinese Academy of Social Sciences, said on September 16.

Lack of details The communique from the third plenum stopped short of offering any details on interest-rate reforms or local government finances. A lack of consensus over changes to the financial sector may be the reason, Zhang Ming, an economist at the Chinese Academy of Social Sciences in Beijing, said in a Bloomberg Brief yesterday. Reforms will progress at a slower pace than anticipated and deposit rates will remain capped in the short term, he said. The lack of details could also be related to large local government debt found in the audit report, according to Alicia Garcia-Herrero, chief economist for emerging markets at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “Under liberalised interest rates, banks will have no choice but to increase the lending rate,” said Ms Garcia-Herrero. “If they do that, LGFVs may have to say, ‘Sorry, I can’t pay, there’s too much on our plate’.” China expanded a programme to allow local authorities to sell notes directly in July, 20 months after the trial started, to let borrowing costs better reflect debt quality and provide transparency. Bloomberg News

China should break up rail operator: NDRC’s Li Researcher says private investors should have a bigger role in the industry

hina should split up the stateowned monopoly that owns and operates the nation’s railways to improve efficiency, a researcher at the country’s top economic planning agency said. The government should let more state-owned companies such as Shenhua Group and private investors play a bigger role in the rail industry to compete with China Railway Corp, Li Kun, deputy director of the National Development and Reform Commission’s transportation research institute, said in an interview by phone yesterday. “The direction of China Railway’s future reform should be in breaking up its dominance in providing rail services,” Mr Li said. He said this view was his personal opinion, and he isn’t speaking on behalf of the planning agency. China this week pledged to make markets “decisive” in allocating resources, while stopping short of detailed policy shifts, after a gathering of Communist Party leaders. China Railway Corp took over the nation’s railway networks in March after the government dismantled the Ministry of Railways to battle graft and bureaucracy. Reform of the railway system

wasn’t mentioned in the communique, which was published by the official Xinhua news agency. The document also said the state will remain “dominant” in the economy. While a breakup of the rail system is needed, it’s unlikely to happen in the short term, Mr Li said. The focus now should be on streamlining China Railway Corp’s management of the network, he said, reiterating that this is his personal opinion. China’s Ministry of Railways had more than 2 million employees and 2.8 trillion yuan (US$460 billion) of debt, equal to the size of Denmark’s economy, as of the end of 2012. Bloomberg News

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Greater China Hon Hai income up on new products

Hong Kong is the world’s fifth-largest currency trading centre

Hong Kong lures firms with sukuk sale plan Offers Shariah-compliant bonds to develop capital markets

Hon Hai Precision Industry Co, flagship of electronics maker Foxconn Technology Group, posted profit that beat analyst estimates as it assembled new products including Apple Inc iPhones and Sony Corp game consoles. Third-quarter net income climbed 1.6 percent to NT$30.8 billion (US$1 billion), according to a filing by the Taipei-based company to the Taiwan Stock Exchange. New devices including the latest iPhone and preparation for the latest iPad helped revenue climb from the previous quarter. That may not be enough to overcome sliding demand for computers and the company may miss its 15 percent annual sales growth target this year, according to Kirk Yang at Barclays Plc. “Operating margins were helped by the introduction of new products including the iPhone and Sony’s upcoming games console,” said Gokul Hariharan, an analyst at JPMorgan Chase & Co in Hong Kong. Margins are usually higher at the start of a product release and drop as clients push prices lower, he said. Third-quarter sales were NT$919 billion and operating profit rose to NT$31.8 billion during the period, the company said.

Yudith Ho and Liau Y-Sing

ong Kong’s planned sukuk will pave the way for Chinese corporates to sell the debt in the city and pits it against financial rivals London and Singapore in the competition to become a global Islamic finance hub. The territory, the world’s fifthlargest currency trading centre, will offer its debut Shariah-compliant bonds to develop capital markets, Au King Chi, permanent secretary of Financial Services and Treasury, said. That came less than two weeks after Prime Minister David Cameron announced late last month that the U.K. intended to sell Islamic notes. The sale by Hong Kong, which gave sukuk equal tax treatment in July, will make it easier for issuance by companies from greater China, Amanie Advisors Sdn said. The city will compete with London, the largest currency trading venue, for a slice of an Islamic financial market that will more than double to US$2.7 trillion by 2017, according to PricewaterhouseCoopers LLP. “Hong Kong is the gateway to China, which is a very unique proposition,” Baiza Bain, managing director at Amanie Advisors, a Kuala Lumpur-based Islamic finance consultancy, said in an interview.

“The reason why governments would be doing it is to actually open the door for the corporates.”

‘Strong message’ The city is considering amending regulations that will allow the government to sell sukuk, a spokesman for the Financial Services and Treasury said in an e-mailed response to questions. The spokesman, who asked not to be named citing official policy, declined to give any details on the timing or size of the offer. Khazanah Nasional Bhd, a Malaysian state-owned investment company, sold the world’s first yuan-denominated Shariah note in Hong Kong in 2011. Hong Kong-based Noble Group Ltd, Asia’s largest trader of commodities, started a 3 billion ringgit (US$939 million) Islamic bond programme in Kuala Lumpur last year. Standard Chartered Plc and AmInvestment Bank Bhd said in July that they were reaching out to companies in greater China to boost Islamic finance awareness after the territory revised its laws to exempt Shariah-compliant notes from being taxed on the transfer of underlying assets. “A benchmark issue from the Hong Kong government will send

Probe of JPMorgan hiring involves Wen’s daughter Bank had contract with consultancy run by Lily Chang – NYTimes

PMorgan Chase & Co paid US$1.8 million over two years to a small consulting firm run by the daughter of former Chinese Premier Wen Jiabao, The New York Times reported yesterday, a relationship that is part of a wider U.S. probe into the Wall Street bank’s hiring practices in the region. Citing documents, public filings and interviews, the newspaper said JPMorgan had a US$75,000 a month contract with Fullmark Consultants, a consultancy run by Lily Chang,

which appeared to have only one other employee. The paper said Ms Chang is the alias of Wen Ruchun, the only daughter of Wen Jiabao, who as premier had oversight of financial institutions at the time of the contract. U.S. authorities are investigating JPMorgan’s hiring practices in China as part of a wider bribery probe into whether the bank traded contracts and jobs in order to win business. Investment banks globally have a long history of hiring people with

a strong message to the market,” Davide Barzilai, the Asia-Pacific Islamic finance head at law firm Norton Rose Fulbright, said. “With Hong Kong’s strong capital markets and banking community, Hong Kong will be well-placed to develop as an Islamic finance hub.” In Asia, Hong Kong will compete with Singapore, which overtook Tokyo this year as the region’s top currency trading centre. The Southeast Asian nation, which removed double taxation of sukuk in 2006, had S$130 million (US$104 million) of Islamic debt sales last year. That’s only around 1 percent of the 326.5 billion ringgit of issuance in Malaysia, the world’s largest sukuk market and a pioneer of Islamic finance, official data show. Hong Kong’s move is probably because of “a desire to maintain its status as a leading financial centre for both conventional as well as Islamic finance,” Megat Hizaini Hassan, head of the Islamic finance practice at law firm Lee Hishammuddin Allen & Gledhill in Kuala Lumpur, said. “The regulators in Hong Kong may need to convince potential issuers, advisers and arrangers to come to Hong Kong to issue sukuk.” Bloomberg News

Tencent jumps after boosting online game sales Tencent Holdings Ltd, Asia’s largest Internet company, climbed the most in about six months in Hong Kong trading after posting a 35 percent gain in revenue from games played on desktops and its WeChat messaging app. Tencent shares rose as much as 5.15 percent to HK$412.80 before trading at HK$410.8 at the close, its biggest advance since May 20. The stock has gained 65 percent this year. Billionaire Ma Huateng’s company is boosting spending on development and marketing to popularise games and services including the QQ messaging app and WeChat, known as Weixin in China. The Shenzhen-based company hired soccer superstar Lionel Messi to promote the apps as it pursues new revenue streams, including charging for emoticons, to compete with Alibaba Group Holding Ltd and Sina Corp for China’s 464 million mobile Internet users. “What people are excited about is the open mobile platform on Weixin,” said Billy Leung, an analyst at RHB Research Institute Sdn. in Hong Kong. “Essentially, Weixin opened up people to games.” Tencent’s five games released through QQ and Weixin had 570 million registered users within three months, president Martin Lau said during an earnings conference call.

CRE underlying Q3 profit jumps key connections who can help win advisory roles on important and lucrative deals. The practice was widespread in China from the early-2000s, when investment banks engaged in socalled ‘elephant hunting’ – chasing mandates to manage the multi-billion dollar stock offerings of the country’s big state-owned enterprises. The distinction between hiring a relative of a foreign official who may be well connected, and employing such a person with the express hope of winning specific business, is key to proving violations of the U.S. Foreign Corrupt Practices Act (FCPA). The U.S. Securities and Exchange Commission’s (SEC) antibribery unit is leading the JPMorgan probe, a person familiar with the matter previously told Reuters. A spokeswoman for JPMorgan in Hong Kong said that the bank was “cooperating fully with regulators”. Reuters could not immediately reach Wen Ruchun for comment. Reuters

China Resources Enterprise Ltd, the statebacked hypermarket operator and beermaker, said underlying profit rose 36 percent in the third-quarter on improved consumer spending. Earnings excluding asset revaluations and disposals rose 36 percent to HK$911 million (US$117.5 million) in the three months ended September, the company said in a stockexchange statement yesterday. Government-backed China Resources has expanded its beer and retail businesses by buying rivals and opening new stores to tap rising domestic consumption as incomes climb. “China’s domestic economy showed positive momentum as total retail sales of consumer goods continued to see a better growth rate, while consumers in tier-one cities were more willing to spend,” the company said in yesterday’s statement. Sales rose 19 percent to HK$40.6 billion. China Resources, listed in Hong Kong, derives more than 90 percent of its revenue from the mainland. Underlying profit at the retail operations fell 2.6 percent, while net income fell 83 percent to HK$84 million in the threemonth period. The difference arose from revaluation of an investment property located in Hong Kong last year. Reuters

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Asia

Australia’s Senate rejects raising debt ceiling Government ‘running on borrowed money’, says Hockey

If Labor prevents an increase in the debt limit, there is no choice but to have massive cuts to government expenditure Joe Hockey, Australia’s Treasurer

seek to block Prime Minister Tony Abbott’s attempt to repeal a carbonprice mechanism and mining profits tax before Christmas. While the coalition has a majority in the lower house, it doesn’t control the Senate. The balance of power there is currently held by the Greens, which have also said they will oppose the increase to A$500 billion. The makeup of the upper house will change July 1 when Senators elected in the September 7 ballot take their seats. Treasury said in its pre-election outlook released on August 13 that the federal deficit will widen to A$30.1 billion for the fiscal year ending June 30, and the budget is no longer projected to return to balance in 2015-16. The coalition will release updated projections before Christmas. The 67 percent increase in the ceiling is needed to provide certainty to investors, Mr Hockey said yesterday. Foreigners held 69 percent of Australia’s outstanding debt in the second quarter, down from a record 76 percent a year earlier, government data show. Australia’s 10-year government bond yield rose 36 basis points this quarter to 4.17 percent and touched 4.3 percent on Wednesday, the most since March 2012.

Debt limit

ustralia’s upper house Senate proposed capping the nation’s debt ceiling at A$400 billion (US$374 billion), frustrating government efforts to increase it to half a trillion dollars. The Liberal-National coalition government says the current A$300 billion limit will be breached next month, and yesterday sought Senate approval for an increase to A$500 billion. The opposition Labor party and the Greens amended the bill and sent it back to the lower house, where the government says it will reject it. “If Labor prevents an increase in the debt limit, there is no choice but to have massive cuts to government expenditure,” Treasurer Joe Hockey said in an Australian Broadcasting Corp interview yesterday. “The government is running on borrowed money.”

Signs of a slowdown are emerging in the 12th-largest economy, with the Reserve Bank of Australia last week forecasting below-trend growth and rising unemployment in 2014 as resource investment drops and the currency strengthens. While the coalition and Labor are likely to avert a U.S.-style government shutdown before a December 12 deadline, the dispute highlights the government’s precarious budget position, Nomura Holdings Inc interest-rate strategist Martin Whetton said. “It’s not a good look for Australia,” said Sydney-based Mr Whetton. “We’ve seen with the U.S. example how disruptive these sorts of political disputes over debt can be. The bigger picture is that budget revenue expectations are poor for

the government over the next four years because of high spending and an economy growing sub-trend.”

Political game Labor says the proposed 67 percent rise in the debt ceiling is unnecessary and is designed to avoid pushing a further increase through parliament around 2016, when the next election is due. “We see the treasurer of Australia threatening to shut down the government because he can’t get his way,” Shadow Treasurer Chris Bowen told reporters in Canberra yesterday. “This government was elected to reduce the debt. That’s what they told the Australian people they’d do.” Labor has also indicated it will

“If I want to offer stability and certainty and predictability to the budget position and to the financial markets about the Australian debt position, I get us a debt limit that we never want to reach,” Mr Hockey said. “You’ve got longer-dated debt. You’ve got refinancing debt. As interest rates rise the cost of us financing our debt increases.” Australia needs to raise the ceiling to A$500 billion to create A$40 billion to A$60 billion of “room,” implying A$440 billion to A$460 billion of debt at its peak in 2016, according to Nomura’s Mr Whetton. “Markets will shrug this off in Australia as they understand that a debt deal of A$400 billion at least will be reached and that will cover a decent period of time,” Mr Whetton said. “The end game is a political one.” Bloomberg News

S.Korea holds rates for sixth month S

outh Korea’s central bank held interest rates steady for a sixth consecutive month yesterday, as expected, while monitoring a steady economic recovery as analysts largely expect it to keep policy steady until late next year. The Bank of Korea’s monetary policy committee held its base rate steady at 2.50 percent, a media official said without elaborating. “Today’s decision to hold rates was unanimous,” Bank of Korea governor Kim Choong-soo said at a news conference. All 22 analysts surveyed by

Reuters before the decision had predicted no change in the rate, while 16 of the 21 analysts who gave forecasts on the next policy move said the central bank would raise rates in late 2014. “I don’t think there is any reason to expect the Bank of Korea’s benchmark rate to change from now until the end of the first half of 2014, unless the need for additional stimulus emerges,” said Kong Dong-rak, a fixed-income analyst at Hanwha Securities in Seoul. “South Korea’s growth should recover to its potential rate next year,

so I think the Bank of Korea will raise rates once in the second half of next year for the sake of rate normalisation.” South Korea’s fundamentals have steadily improved, with the central bank confident the economy will post an annual growth of 2.8 percent this year and 3.8 percent the next. Exports in October notched a record, easily beating market expectations and jumping by an annual 7.3 percent. The numbers are likely to pick up as conditions offshore improve. Also underpinning South Korea’s steady growth was a private survey

for the manufacturing sector from last month which showed activity in the sector expanded in October for the first time in five months. Although inflation slipped to a 14-year low in October, annual consumer prices are expected to pick up next year as domestic consumption recovers in line with the economy. “Inflation in South Korea is expected to remain low on the back of policies like free childcare provision and the downward stabilisation of international agricultural product prices,” said Mr Kim. Reuters

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Asia Bangladesh factories to re-open after wage agreement Bangladesh garment factory owners agreed to a minimum wage of 5,300 taka (US$68) a month for workers, promising to end a labour dispute that has shut factories in the Ashulia industrial zone on the outskirts of the capital Dhaka. A group of owners met Prime Minister Sheikh Hasina, who urged them to accept a recommendation made by a government- appointed panel, Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, said in a phone interview from Dhaka. “We have agreed to the recommendation and I hope labour unrest will now come to an end,” he said, after the meeting. BGMEA also reversed an earlier decision to keep about 250 factories shut in the industrial zone, he said. “There is no point keeping the factories shut as we have agreed to the recommendation,” Mr Islam said. “We have decided to resume operations of those factories.” Ashulia factories account for 35 percent of Bangladesh’s garment output and supply to retailers including Hennes & Mauritz AB and Wal-Mart Stores Inc, according to Abdus Salam Murshedy, president of the Exporters Association of Bangladesh.

Virgin Australia to raise US$328 mln Virgin Australia Holdings Ltd, the country’s second-largest carrier, said it plans to raise A$350 million (US$328 million) in a share sale that allows airlines that are its biggest investors to lift their stake to 70 percent. The carrier’s three largest shareholders, Air New Zealand Ltd, Etihad Airways PJSC, and Singapore Airlines Ltd, currently have 62.6 percent of the company and may lift that to 69.8 percent if they take the maximum stake in the raising, the company said in a regulatory statement yesterday. They’ll fund between A$220 million and A$316 million of the entitlement offer, according to an investor presentation. The capital raising will help reduce debt that Virgin took on to fund its fight with Qantas Airways Ltd for a share of Australia’s domestic travel market. “We are pleased that our major shareholders have indicated their support for the offer,” Neil Chatfield, Virgin Australia’s chairman, said in the statement.

Japan economic growth halves in third quarter Slowdown flashes warning to Abe as reforms await

apanese companies eased off on capital-spending growth in the third quarter and failed to step up exports even with a cheaper yen, contributing to an economic slowdown that puts pressure on Prime Minister Shinzo Abe. Gross domestic product rose at an annualised 1.9 percent, down from 3.8 percent the previous quarter, with the gain relying on government spending and an accumulation of inventories, the Cabinet Office reported in Tokyo. Growth expanded 0.5 percent from the previous quarter. It was a fourth successive quarter of growth, the best run for the world’s third-largest economy in three years. A widening trade gap lopped off 1.8 percentage point from growth. Corporate investment increased 0.7 percent, down from 4.4 percent. Mr Abe’s 11-month old administration has sought to reenergise Japan Inc after years of deflation and population declines reduced manufacturers’ incentive to expand at home. Yesterday’s figures show companies have yet to respond in force, signalling bolder steps may be needed to cut regulation and give companies an incentive to deploy near-record stockpiles of cash. “Warning lights are flashing for Abenomics,” said Kiichi Murashima,

chief economist at Citigroup Inc in Tokyo. “With the absence of further weakening in the yen and a clear global recovery, Japan’s recovery is losing momentum.” Officials haven’t demonstrated concern. Economy Minister Akira Amari yesterday said he expects a moderate pace of consumption growth ahead and a solid export recovery. The Cabinet Office this week attributed a slide in consumer confidence to worries about typhoons and the U.S. fiscal impasse, rather than the domestic economy. Bank of Japan governor Haruhiko Kuroda on November 5 said the country remains on pace to achieve his 2 percent inflation goal.

Trade gap Consumer spending contributed 0.1 percentage point to growth last quarter and business investment 0.2 point. Japan’s net exports – shipments out of the country minus imports – subtracted 1.8 percentage points from the annualised growth rate, the report showed. Even with a weakened yen, export volumes are down, a trade index indicates. September’s volume was 1.8 percent lower than a year earlier after a 20 percent slide in the currency

against the dollar. Economic growth may rebound this quarter and in the first three months of next year as consumers splurge ahead of a sales-tax bump in April. At the same time, the latest survey of confidence showed rising concern about the cost of living and Naohiko Baba, chief Japan economist at Goldman Sachs Group Inc, says that the effects of the tax increase will produce wilder swings in consumption.

KEY POINTS Japan Q3 GDP up 1.9 pct year-on-year Private consumption slowed, exports weaken Inventory build-up helps offset slowdown in growth GDP to rebound as consumer spending gains momentum

Rajan urges ‘deep breath’ after market tumble RBI chief says no fundamental reason for rupee volatility SingTel Q2 profit beats estimates Singapore Telecommunications Ltd, Southeast Asia’s biggest phone company, posted secondquarter profit that beat analysts’ estimates as strong domestic sales offset the negative impact of a rising local currency. Underlying earnings after tax, which exclude one-time items, rose to S$884 million (US$709 million) in the three months ended September 30 from S$886 million a year earlier, SingTel said in a statement yesterday. SingTel is boosting spending on acquisitions and adding digital businesses such as mobile advertising to limit reliance on its biggest markets, Singapore and Australia, where growth is slowing. The company is expanding in faster-growing Asian markets, including increasing its stake in Bharti Airtel Ltd, India’s biggest wireless carrier. Net income in the quarter rose to S$870 million from S$868 million a year earlier, SingTel said. Sales fell 8.9 percent to S$4.16 billion. The company will pay an interim dividend of 6.8 Singapore cents a share. “Our strong operating performance was impacted by the strengthening of the Singapore dollar,” chief executive Chua Sock Koong said in the statement.

ndia’s central bank governor, Raghuram Rajan, expressed comfort about core inflation and highlighted the narrowing current account deficit as he sought to reassure investors worried the country would be hit hard in a global market sell-off. Most immediately, he pledged to move slowly if needed in winding down an oil window that provides dollars directly to state-run oil companies, while announcing a bond purchase of 80 billion rupees (US$1.26 billion) to inject liquidity in markets. Both had been key concerns in markets. The news briefing was an unprecedented departure for the traditionally cautious central bank. Since taking the helm of the Reserve Bank of India (RBI) in September, Mr Rajan has pledged to be more communicative and has so far been warmly welcomed by investors. Still, Mr Rajan’s remarks had a

above a two-month low hit earlier. “It’s important that the RBI clarifies interpretation of economic events and the likely direction of economic policies at times of uncertainty so that the market worries about the right things and does not get into a tizzy about the wrong ones. That is my quote today,” Mr Rajan told reporters. “There is no fundamental reason for volatility in value of the rupee,” he also said. “At some time, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that.” RBI’s Rajan called sudden news briefing to comfort investors

mixed impact on markets, sending benchmark 10-year bond prices rallying, although the rupee failed to gain much despite ending the day well

Inflation comfort Mr Rajan addressed reporters after stronger-than-expected U.S. jobs data last week had sparked concerns about an early end to the Federal Reserve’s stimulus, hitting the

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

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13 13

November 15, 2013 April 19, 2013

Asia With the absence of further weakening in the yen and a clear global recovery, Japan’s recovery is losing momentum Kiichi Murashima, chief economist at Citigroup

Retail sales likely to pick up before a sales tax rise in April

Deepening uncertainty over export trends point to volatility in GDP readings to come, Mr Baba said this week. The GDP deflator, a broad measure of prices across the economy, fell 0.3 percent, compared with a forecast slide of 0.5 percent. Export growth slowed in September as the nation extended a record run of trade deficits, while imports climbed 16.5 percent, according to separate Finance Ministry figures. Growth in shipments to all major regions declined, with the weakness concentrated in exports to Asia.

“Exports have failed to grow in volume despite expectations they would rise with a time lag following a weakening yen, suggesting there may be a structural problem hurting exporters’ competitiveness and exporting capability,” Mr Baba said. Kyohei Morita, chief Japan economist at Barclays Plc in Tokyo, said exports should pick up as the global economy improves, although this may mask concerns at home. “The weakness in capital spending shows there is no real domestic strength,” he said. The economy’s deceleration

accompanied a waning of Japan’s stock-market rally and the yen’s depreciation, as the initial effect of Mr Abe’s injection of monetary and fiscal stimulus diminished. Real-estate investment jumped an annualised 11.3 percent from the previous quarter when it climbed 1.6 percent, while business investment growth slowed, dropping to 0.7 percent from 4.4 percent. Private consumption growth declined to 0.4 percent. Mr Abe is pushing to pass a set of bills in the current parliamentary session, ending December 6, including

rupee and sending Indian bonds and shares tumbling, although markets remain well above the levels of the summer lows. Some investors had started to fear a repeat of the summer, when the rupee slumped to a record low of 68.85 to the dollar, punished by worries about the country’s vulnerability should foreign investors sell because of Fed tapering. Analysts also cited some comfort from the governor’s remarks on inflation given the RBI has raised interest rates by a half percentage point since September in two backto-back actions as it fights off rising consumer prices. Worries about yet another rate hike had gripped investors after India reported late on Tuesday consumer price inflation accelerated more than expected to 10.09 percent in October from 9.84 percent in September. At his briefing, Mr Rajan called food inflation “worryingly high”, but said he was comforted by a downward trend in the core consumer price index.

Korean shipping lines face cash crunch Firms may need assistance to repay loans taken to buy new vessels

outh Korea’s three biggest shipping companies face a cash crunch as 3 trillion won (US$2.8 billion) of bonds are due for repayment in the next two years amid mounting losses from a global slump in rates to carry cargo. Hanjin Shipping Co Ltd, Hyundai Merchant Marine Co Ltd and STX Pan Ocean Co Ltd are all forecast to post losses in 2013 for a third consecutive year, further denting the combined 1.5 trillion won of cash and near cash items they had as of the end of June. The companies need to repay 1.4

trillion won of bonds next year and 1.6 trillion won the year after. A debt-fuelled expansion after the 2008 Lehman Brothers Holdings Inc bankruptcy filing pushed the carriers into losses so deep they may need financial assistance to repay loans taken to buy new vessels, said Kim Iksang, a credit analyst at HI Investment & Securities Co. As China’s economy cools and weak consumer spending persists in the U.S. and Europe, the companies are unlikely to turn around to improve their ability to repay loans, said Um Kyung-a, an analyst at Shinyoung

Reuters

US$1.26 bln

RBI’s planned bond purchase to inject liquidity in markets South Korea’s shipping companies expected to post losses next year

tax incentives to encourage corporate investment and the establishment of strategic economic zones that will enjoy reduced business regulation. The government is targeting 3 percent nominal GDP growth and a 2 percent expansion in real terms, on average, over the next 10 years, rates that Bruce Kasman, JPMorgan Chase & Co’s chief economist, said would be “remarkable”. “Japan’s choices are so bad and difficult” that if the nation can maintain some level of growth over the next decade and also make progress in easing its fiscal burden and altering the structure of the economy, government policies will have been successful, Mr Kasman said. Bloomberg News/Reuters

Securities Co. “It’s pretty much out of their control,” said Seoul-based Mr Um. “Cash is depleting quite fast while the shipping industry isn’t showing any signs of a recovery. I don’t think we can completely forgo the possibility of things turning worse next year.” Hanjin, South Korea’s largest shipping company, and Hyundai Merchant are expected to post losses next year as well, according to analyst estimates compiled by Bloomberg. STX, the largest commodity-mover and under court receivership since June, may post its first profit in four years in 2014. Hanjin has been selling assets and has sufficient cash for payments, said Kim Young-tae, a spokesman at the shipping company. The carrier will continue to look at financing options, including a perpetual bond sale, he said. Hyundai Merchant has secured funds to meet payments until the first half of next year, said Lee Junki, a spokesman. Hyundai will look at “various options,” if the shipping industry doesn’t improve, he said. Bloomberg News

14 14

November 15, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 91.5

57.8 57.6

Min 57.05

Last 57.5

57.0

Max 91.5

average 91.185

Min 89.55

Last 91

Last 55.4

PRICE

26.70

24.4

29.3

24.2

29.2

24.0

29.1

54.6

Max 24.5

average 24.325

DAY %

YTD %

(H) 52W

Min 23.85

Last 24.5

(L) 52W

93.93

0.05325948

0.599764378

109.6999969

85.51999664

BRENT CRUDE FUTR Dec13

107.59

0.438760269

2.652418662

114.4399948

95.95999908

GASOLINE RBOB FUT Dec13

265.82

1.149162861

4.472567206

290.3199911

241.5999889

GAS OIL FUT (ICE) Dec13

902.5

0.138696255

0.110926234

973

837

NATURAL GAS FUTR Dec13

3.549

-0.476724621

-10.10638298

4.744000435

3.378999949

290.12

0.120785451

-2.771540601

321.1599827

276.4999866

Gold Spot $/Oz

1284.39

0.6291

-22.8344

1754.46

1180.57

Silver Spot $/Oz

NY Harb ULSD Fut Dec13

20.7973

-0.1522

-30.9289

34.3838

18.2208

Platinum Spot $/Oz

1447.1

0.8011

-4.6549

1742.8

1294.18

Palladium Spot $/Oz

737.38

-0.4388

5.3912

786.5

620

1795

-0.277777778

-13.41051616

2184

1758

LME COPPER 3MO ($)

6980

-1.966292135

-11.9909217

8346

6602

LME ZINC

1886

0.053050398

-9.326923077

2230

1811.75

13675

0.330154072

-19.84173505

18770

13205

15.55

-0.320512821

0.875770354

16.80999947

14.91500092

LME ALUMINUM 3MO ($)

3MO ($)

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

430.25

0.116346713

-28.26177574

647

415.5

WHEAT FUTURE(CBT) Dec13

649.25

0.580945004

-20.89552239

902

635.5

SOYBEAN FUTURE Jan14

1309.25

-0.437262357

0.019098549

1406

1169

COFFEE 'C' FUTURE Mar14

105.95

-2.619485294

-33.92578734

173.25

104.1499939

17.83

0.168539326

-13.36248785

20.71999931

16.69999886

Dec13

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

78.3

-0.36900369

-1.39780884

90.61000061

76.58999634

World Stock Markets - Indices NAME

Last 26.95

55.4

WTI CRUDE FUTURE Dec13

CORN FUTURE

Min 26.75

23.8

Max 29.4

average 29.235

Min 29.05

Last 29.35

29.0

Currency Exchange Rates

NAME

METALS

average 27.041

29.4

Commodities ENERGY

Max 27.65

24.6

54.8 Min 54.6

89.5

55.6

55.0

average 55.275

26.95

89.9

55.2

Max 55.6

27.20

90.3

57.2

average 57.435

27.45

90.7

57.4

Max 57.75

27.70

91.1

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15821.63

0.4505205

20.73765

15822.98047

12471.49

NASDAQ COMPOSITE INDEX

3965.575

1.164692

31.33158

3966.71

2810.8

FTSE 100 INDEX

6692.78

0.946908

13.47907

6875.62

5605.589844

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

0.9312 1.6046 0.9153 1.3468 99.84 7.9859 7.7534 6.0926 63.135 31.54 1.247 29.588 43.56 11528 92.972 1.23279 0.83936 8.2032 10.7551 134.47 1.03

0.2368 0.583 0.295 0.3577 -0.2804 -0.0013 0 -0.0181 0.293 0.1902 0.1844 0.1487 0.3673 0.6679 -0.5152 -0.0641 0.224 -0.2304 -0.3747 -0.6321 0

-10.2717 -0.8037 0.0109 2.1077 -13.762 -0.0338 -0.0361 2.265 -12.893 -3.0438 -2.0529 -1.8758 -5.8655 -15.0503 -3.9205 -2.0531 -2.8522 0.1743 -2.0892 -15.5425 -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 1.2691 79.98 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 82.975 1.20302 0.80059 7.8281 10.1532 101.95 1.0289

Macau Related Stocks NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

HANG SENG BK

124.6

-0.3996803

4.970517

132.8

110.6

1938215

HOPEWELL HLDGS

25.75

-0.1937984

-22.55639

35.3

23.2

1188971

HSBC HLDGS PLC

85.1

0.3537736

4.674043

90.7

73.8

11749605

HUTCHISON TELE H

3.12

-0.6369427

-12.35955

4.66

3.12

3613794

LUK FOOK HLDGS I

27.5

2.61194

12.70492

30.05

16.88

1991000

MELCO INTL DEVEL

25.7

3.629032

185.2386

25.85

7.57

10801598

MGM CHINA HOLDIN

26.95

-0.5535055

102.963

12.236

4876600

MIDLAND HOLDINGS

3.22

-0.3095975

-12.97297

4.29

2.68

726015

NEPTUNE GROUP

0.295

3.508772

94.07895

0.4

0.131

117690000

NEW WORLD DEV

10.54

0.1901141

-12.31282

15.12

9.98

6675587

SANDS CHINA LTD

55.4

2.119816

63.18115

60.5

29.9

6740027

SHUN HO RESOURCE

1.62

1.25

15.71429

1.92

1.19

80000

SHUN TAK HOLDING

4.41

1.847575

5.250595

4.8

3.13

3854872

DAX INDEX

9129.31

0.8225444

19.92698

9193.980469

6950.53

SJM HOLDINGS LTD

24.5

4.477612

38.04639

16.762

8018924

NIKKEI 225

14876.41

2.122926

43.10873

15942.6

8653.49

SMARTONE TELECOM

8.95

0.3363229

-36.43466

8.83

2760949

HANG SENG INDEX

22649.15

0.8249706

-0.03429209

23944.74

19426.35938

WYNN MACAU LTD

29.35

2.086957

40.09546

32.6

2146534

CSI 300 INDEX

2304.501

0.7160913

-8.658545

2791.303

2023.171

ASIA ENTERTAINME

3.96

N/A

69409

BALLY TECHNOLOGI

72.68

0.8044383

62.55872

78.03

43.16

461773

TAIWAN TAIEX INDEX

8134.91

0.3781962

5.655045

8476.63

7061.87

BOC HONG KONG HO

3.25

5.863194

3.6

2.99

14906

KOSPI INDEX

1967.56

0.2037116

-1.476678

2063.28

1770.53

GALAXY ENTERTAIN

7.43

-0.9333333

87.15365

8.11

3.471

37245

INTL GAME TECH

17.96

0.05571031

26.74665

21.2

12.37

4149894

JONES LANG LASAL

94.75

0.9482208

12.87824

101.46

72.56

263866

LAS VEGAS SANDS

71.95

1.566911

55.87088

73.49

37.8353

4805187 2008303

S&P/ASX 200 INDEX

5355.429

0.681534

15.19653

5457.3

4334.3

JAKARTA COMPOSITE INDEX

4375.107

1.701949

1.353351

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1787.63

0.2883607

5.842687

1826.22

1590.67

MELCO CROWN-ADR

35.33

1.145147

109.7981

13.43

NZX ALL INDEX

1039.005

0.1446741

17.79395

1048.998

857.105

MGM CHINA HOLDIN

3.54

4.117647

102.252

3.88

1.703

886

PHILIPPINES ALL SHARE IX

3864.74

0.1072372

4.481236

4571.4

3440.12

MGM RESORTS INTE

19.7

2.284528

69.24398

20.98

9.15

8024176

Euromoney Dragon 300 Index Sin

615.25

-0.29

-0.94

SHFL ENTERTAINME

23.16

0.04319654

59.72414

23.25

12.35

662729

STOCK EXCH OF THAI INDEX

1418.2

0.9560284

1.8873

1649.77

1260.08

SJM HOLDINGS LTD

3.05

-0.974026

33.91195

3.6

2.1494

28780

170.206

1.688374

51.30767

173.38

103.34

1024840

HO CHI MINH STOCK INDEX

497.85

0.348706

20.3321

533.15

374.15

BALLY TECHNOLOGI

72.89

-0.4914676

63.02841

78.03

43.16

437705

Laos Composite Index

1276.83

5.108781

1455.82

1168.98

BOC HONG KONG HO

3.27

3.154574

6.51466

3.6

2.99

10709

GALAXY ENTERTAIN

7.48

88.4131

8.11

3.468

15705

INTL GAME TECH

19.61

4.419595

38.39097

21.2

12.37

6680167

JONES LANG LASAL

93.62

0.1604793

11.53204

101.46

72.56

206181

LAS VEGAS SANDS

70.53

1.132779

52.79463

73.49

37.8353

3499363 3510976

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

WYNN RESORTS LTD

MELCO CROWN-ADR

35.01

3.36581

107.8979

13.43

MGM CHINA HOLDIN

3.53

2.318841

101.6807

3.88

1.703

300

MGM RESORTS INTE

19.1

-0.2610966

64.08934

20.98

9.15

6301666

SHFL ENTERTAINME

23.19

-0.08616975

59.93103

23.25

12.35

266192

SJM HOLDINGS LTD

3.35

2.446483

47.08362

3.6

2.1396

2117

164.38

-0.496368

46.12855

173.38

103.34

1270966

WYNN RESORTS LTD

HKD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

38.05

0.6613757

16870149

ALUMINUM CORP-H

2.75

1.102941

7963323

BANK OF CHINA-H

3.48

0.5780347

295035216

BANK OF COMMUN-H

5.34

0.3759398

19654173

BANK EAST ASIA

33.5

1069496

BELLE INTERNATIO

9.42

-0.6329114

BOC HONG KONG HO

25.35

CATHAY PAC AIR CHEUNG KONG

AIA GROUP LTD

NAME CHINA UNICOM HON CITIC PACIFIC

DAY %

VOLUME

11.7

1.916376

23138760

10.54

-0.3780718

5836097

NAME

PRICE

DAY %

POWER ASSETS HOL

61.5

-0.6462036

5020929

SANDS CHINA LTD

55.4

2.119816

6740027

-0.7323027

5812129

14.98

0.807537

42798873

COSCO PAC LTD

10.9

3043607

45178028

ESPRIT HLDGS

16.8

3.703704

16666499

0.7952286

12700018

HANG LUNG PROPER

25.2

2728149

TINGYI HLDG CO

14.92

0.6747638

2362069

124.6

-0.3996803

1938215

HENDERSON LAND D

45.3

0.554939

3093452

HENGAN INTL

89.3

1.592719

1577527

HONG KG CHINA GS

17.88

-0.2232143

8979189

HONG KONG EXCHNG

119.7

0.4194631

4739157

CHINA COAL ENE-H

4.66

0.2150538

26154985

CHINA CONST BA-H

5.84

0.6896552

186763309

CHINA LIFE INS-H

20.6

0.9803922

14556002

CHINA MERCHANT

27.1

2.071563

1960954

CHINA MOBILE

80.15

0.6909548

CHINA OVERSEAS

22.85

0.8830022

CHINA PETROLEU-H

6.3

0.9615385

41565946

CHINA RES ENTERP

4.247104

17219634

CLP HLDGS LTD

PRICE

CNOOC LTD

HANG SENG BK

123.4

0.1623377

1707988

HSBC HLDGS PLC

85.1

0.3537736

11749605

13729920

HUTCHISON WHAMPO

94.1

1.237224

4021637

13587972

IND & COMM BK-H

5.19

0.5813953

205315644

LI & FUNG LTD

10.46

1.949318

42998239

MTR CORP

29.25

0.1712329

SINO LAND CO

10.56

2373543

SUN HUNG KAI PRO

100.5

0.2994012

6242052

89.4

-0.1117318

1313980

410.8

4.635762

9829519

21.5

7517343

WANT WANT CHINA

10.86

-1.630435

11497234

WHARF HLDG

63.65

0.3152088

2355391

SWIRE PACIFIC-A TENCENT HOLDINGS

MOVERS

23313.61

2053845

LOW

22839.82

52W (H) 23944.74

CHINA RES LAND

20.85

1.459854

3748130

NEW WORLD DEV

10.54

0.1901141

6675587

18.48

0.3257329

7029008

PETROCHINA CO-H

8.59

1.058824

40927315

CHINA SHENHUA-H

23.75

0.8492569

9646094

PING AN INSURA-H

61.25

0.4922067

8361169

5 23070

INDEX 22649.15 HIGH

CHINA RES POWER

VOLUME

(L) 19426.35938

22460

12-November

14-November

15 15

November 15, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Korea Herald Presidents Park Geun-hye of South Korea and Vladimir Putin of Russia agreed to broaden economic cooperation including a Russian-led project to develop a North Korean border port that will set the basis for an envisioned railway link from Korea to Siberia. The two leaders agreed to seek wider cooperation on short and long-term projects in such fields as shipbuilding, financial infrastructure, logistics, energy, science. The two leaders also affirmed that North Korea’s development of nuclear and missile capabilities ran counter to the U.N. Security Council’s resolutions.

Financial safety nets for Asia Lee Jong-Wha

Professor of Economics and Director of the Asiatic Research Institute at Korea University, served as chief economist at the Asian Development Bank

The Star Malaysian companies are seeking to build strategic partnerships with their Indonesian counterparts in the services sector, to jointly grab economic opportunities, as well as undertake business in third countries. This initiative is being spearheaded by the Malaysia External Trade Development Corp (Matrade) in its four-day Malaysia Services Exhibition (MSE) 2013. “Indonesia and Malaysia by virtue of close ties, can together develop the services sector, and perhaps also envision a wider market such as that in Asean,” Matrade deputy chief executive Susila Devi said.

Myanmar Times The World Bank has warned that the authorities should keep a close eye on consumer prices after data released by the government last week pointed to recent inflation growing over 7 percent. The Central Statistical Organisation for Myanmar said year-on-year inflation reached 7.33 percentfor the month of August due to high food, gas and electricity prices. The sudden increase comes following low inflation rates averaging 2.8 percent in 201213. “It will be important for the authorities to keep a close eye on the situation so that it does not get out of hand,” Daw May Thet Zin, the World Bank’s economist for Myanmar, said.

The Age Virgin Australia has resorted to a A$350 million (US$328 million) capital raising amid tough operating conditions in the domestic market, in a move that paves the way for its major shareholders to tighten their grip on the airline. The raising will be underwritten by the airline’s three major shareholders – Air New Zealand, Etihad and Singapore – which is almost certain to result in them increasing their stakes further. Australia’s second-largest airline will issue almost 925 million shares at 38 cents a piece, which it argues will significantly strengthen its balance sheet.

merging economies are facing significant uncertainty and serious downside risks. One major source of instability is the looming reversal of the U.S. Federal Reserve’s expansionary monetary policy – the prospect of which is generating volatility in global financial markets and threatening to disrupt emerging-economy growth. The Fed has signalled that its federal funds rate will remain near 0 percent, at least as long as unemployment exceeds 6.5 percent and inflation expectations remain well anchored. But when and how the Fed will begin tightening monetary policy remains unclear. What is certain is that, in making its decision, the Fed will not consider its policy’s spillover effects on the rest of the world, leaving affected countries’ policymakers and central bankers to deal with the fallout. Tighter U.S. monetary policy could intensify the global credit shortage, thereby increasing pressure on Asia’s economic and financial systems. Overreaction and herding behaviour by market participants could trigger a sudden reversal of capital inflows, with a severe dollar shortage – as occurred in 1997 and 2008 – straining Asian banks and corporations.

in the international monetary system, as the failure to ensure sufficient liquidity weighed heavily on emerging Asian economies. Since then, these countries have taken measures to safeguard the stability of their financial systems against volatile external shocks, strengthen financial supervision and regulation, and develop more effective macroeconomic frameworks, including better macroprudential regulation and capital-control measures. But their heavy reliance on international trade and capital flows means that they remain vulnerable to severe financial spillovers from the United States. Moreover, since the 1997 Asian financial crisis, the region’s emerging economies

The failure to ensure sufficient liquidity weighed heavily on emerging Asian economies

Heavy reliance These risks explain why the Fed’s mere suggestion of a potential move toward reducing its purchases of long-term asset (so-called quantitative easing) caused emerging-market currencies and asset prices to plummet this summer. They also underscore Asian economies’ need for stronger financial safety nets. The 2008 global financial crisis revealed fundamental flaws

have increased their holdings of foreign-exchange reserves, and now possess more than half of the world’s total. Seven of the world’s top ten reserve-holding economies are in Asia. But hoarding international reserves, mostly in the form of low-yielding shortterm U.S. Treasury securities, is expensive and inefficient.

Some Asian economies, especially China, are also attempting to internationalise their currencies. Given China’s expanding global influence, the renminbi’s emergence as a new international currency is inevitable. For smaller economies, however, internationalisation will be far more difficult. In their quest to ensure sufficient liquidity, Asian economies have also actively pursued currency-swap arrangements. Since 2008, China has signed 23 bilateral swap agreements, including one with South Korea. Japan expanded bilateral swap facilities with its Asian neighbours during the global financial crisis. And the ten ASEAN countries, together with China, Japan, and South Korea, have constructed a US$240 billion regional reserve pool to provide short-term liquidity to members in an emergency. Such swaps should help Asian countries to cope with currency turmoil in the wake of a Fed policy reversal. But they remain untested and, given their relatively small volumes, cannot reassure markets or provide adequate emergency support to crisis countries, especially in the event of largescale systemic shocks. The Fed, as the de facto global lender of last resort, can improve significantly the effectiveness of Asia’s financial safety nets by establishing currencyswap arrangements with emerging economies’ central banks during the policy-reversal process. In 2008, the Fed established currency-swap lines with the central banks of ten developed economies, including the eurozone, the United Kingdom, Japan, and Switzerland, and four emerging economies (Brazil, South Korea, Mexico, and Singapore).

These arrangements, most of which ended in 2010, responded to strains in shortterm credit markets and improved liquidity conditions during the crisis. The South Korean central bank’s US$30 billion swap, though limited, averted a run on the won.

Fed move wRe-establishing the Fed’s swap arrangements with emerging economies would minimise negative spillovers during the coming monetarypolicy reversal. Even an announcement by the Fed stating its willingness to do so would go a long way toward reassuring markets that emerging economies can avert a liquidity crisis. The swap lines would also serve American interests. After all, trouble in emerging economies would destabilise the entire global economy, threatening the fragile recoveries of advanced economies, including the U.S. And, given China’s rise, it is clearly in America’s interest to maintain a balance of economic power in Asia. Critics might cite the moralhazard risk generated by liquidity support. But a welldesigned framework that offers swap lines only to wellqualified emerging economies – and only temporarily – would diminish this risk substantially. In fact, some experts, such as the economist Edwin Truman, have proposed establishing an institutionalised global swap arrangement as a more effective and robust crisisprevention mechanism – an idea that G-20 countries should consider. But creating such a system would take time. In the meantime, the Fed should take the initiative by re-establishing swap lines with advanced and emerging economies alike. © Project Syndicate

16 16

November 15, 2013 April 19, 2013

Closing Sale of CTM stake boosts PT profit

Eurozone economic growth slows

Portugal Telecom SPGS SA (PT) said the sale of its stake in Companhia de Telecomunicações de Macau SARL boosted it profit in the first nine months of the year. PT’s net profit rose to 305 million euros (3.27 billion patacas) in the nine months to September 30, the group said in a regulatory filing of its accounts. PT sold its stake of 28 percent in CTM to Citic Telecom International Holdings Ltd in January for 3.3 billion patacas (US$411.6 million). PT’s consolidated operating revenues fell by 8.8 percent to 4.547 billion euros, the company said.

The economy of the eurozone grew by just 0.1 percent in the July-toSeptember period, down from 0.3 percent growth in the previous quarter. The figure marks just the second quarter of a growth phase that replaced an 18-month recession, the longest period of contraction to affect the single currency area. It shows the eurozone’s recovery is extremely tentative. Even figures from the region’s strongest and most important economies, France and Germany, proved disappointing. France shrank 0.1 percent in the third quarter of the year, while German growth slowed to 0.3 percent.

More investment channels to ease home price: agency Overseas investment fund for residents would reduce hot money flowing into property market Tony Lai

tony.lai@macaubusinessdaily.com

he government should set up an investment fund to divert the residents’ savings from the property market here and ease high home prices, suggests an estate agent. A possible interest rate rise in the near future will have limited impact on home prices, which are expected to grow by 30 percent next year, Midland Realty (Macau) Ltd said. Home prices have risen by more than half in the first three quarters of this year to about 9,100 patacas (US$1,137) per square foot, said the agency, quoting government data. Midland Macau chief executive Ronald Cheung Yat Fai blamed the growing wealth of residents. Residents’ deposits have jumped by 60 percent since 2011 to hit over 402.2 billion patacas by end August.

Most flats under construction have already been sold, Midland Realty says

In the same period the population grew by just 10 percent, he said in a property market review yesterday. “There is basically no interest rate [for deposits] so residents have to turn to the home market, the sole investment channel

here against inflation,” Mr Cheung said. The six-month benchmark rate was about 0.55 percent yesterday. Yearly inflation was at 6.12 percent in September. Mr Cheung suggests the government could set up an investment fund and allow

residents to buy bonds to “divert their capital inflow from the housing market”. Residents’ wealth will continue to grow as the economy benefits from the opening of new Cotai resorts and the Hong Kong-ZhuhaiMacau Bridge by 2016, he predicted. Financial Services Bureau data show that the average home price was 81,337 patacas a square metre (10.76 square feet) in the first nine months of this year, 44 percent more than a year earlier.

Sold flats Home prices were also driven up by the unbalance of supply and demand. There will be fewer than 1,000 flats available in the market next year while residents here demand “between

Tradelink launches cross-border e-wallet Developer partners with MTEL to promote payment system here Stephanie Lai

sw.lai@macaubusinessdaily.com

ong Kong-based Tradelink Electronic Commerce Ltd launched yesterday a plugin device to enable e-payment on smartphones and tablets. The mobile e-wallet system will be ready to be used in Macau and Taiwan in the first quarter of next year, the company said. The mobile e-wallet allows the client to use any mobile device to make payments through credit cards, pre-paid cards, e-cash, vouchers and coupons.

Tradelink yesterday noted that the device would support data of up to six credit cards, such as Visa, UnionPay and MasterCard along with prepaid cards and e-vouchers. The developer expects the system to be able to support information of as many as 24 credit cards in the future. The operation of the mobile e-wallet is independent of any telecommunication operator and is not limited to any specific software running on smartphones,

Tradelink added. Macau Telecommunication Co Ltd (MTel) will promote the Tradelink mobile e-wallet in Macau next year, the e-commerce company said without detailing further partnership content to Business Daily. However, the company confirmed to Business Daily that the plugin device would be available ‘for free initially’. “…the device will be offered free of charge by banks in the initial stage,” the company said in an e-mail

5,000 and 6,000 [flats] annually”, Mr Cheung estimated. Latest data from the Land, Public Works and Transport Bureau show there were 8,830 flats being built in the third quarter that could be ready within three years. Mr Cheung questioned the data. Almost 5,650 flats have already been sold off the plan, which means nearly two-thirds of the units being built already have a buyer, he said. Only about 1 percent of all second-hand flats are available for sale but even fewer are offered at a reasonable price, he added. Home prices will only fall if the mainland economy hits a wall or if there is a drastic fall in visitor arrivals, said the Midland chief executive. “The second risk is a rise in interest rates but a slight rise would have no impact here; [Macau is] different from Hong Kong which is more driven by psychological factors,” he said. “A rise under 0.5 percent would be no problem but a bigger increase would start affecting Macau.” The United States Federal Reserve has said interest rate will remain low until at least 2015. 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.

reply. “The cost of the device will be absorbed by the banks and Jetco.” “As to how long this initial free period will be available [to banks’ customers] is a question for the banks and Jetco to decide,” Tradelink added. Tradelink’s contactless payment technology has adopted the patented Wave device from Israeli vendor On Track Innovations. Recently certified by MasterCard, the Wave device connects to the handset’s operating system via the audio jack, allowing for PIN code authentication, reloading cash electronically and checking available balances. Tradelink also mentioned that the mobile payment project would mean that a single mobile e-wallet can be used in Hong Kong, Macau and Taiwan, also the first of such project launched in the Greater China region. The e-wallet has already been adopted by Joint Electronic Teller Services Ltd (Jetco) in Hong Kong. Jetco is the biggest network of ATMs in both Hong Kong and Macau.