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Deputy editor-in-chief Editor-in-chief Tiago Azevedo
Kingston Financial’s gaming rev up 10 pct Page 6
Table cap ‘won’t influence’ gaming licence talks: Tam T
alks on the renewal of the casino concessions should not be influenced by the current gaming table cap, Secretary for Economy and Finance Francis Tam Pak Yuen said yesterday. The concession of Sociedade de Jogos de Macau SA – and its related sub-concession held by MGM Grand Paradise SA – are due to expire in 2020 before the end of the existing cap on live dealer table numbers.
Angry truckers circle Legislative Assembly Page 16
Mr Tam reiterated to the Legislative Assembly that 2015 or 2016 would be the “appropriate time” to discuss the renewal of the six concessions and sub-concessions. “…we should not use the current framework to set our discussion,” said Mr Tam. He also spoke of possibly introducing a competition law to help to combat price fixing and associated consumer price inflation. More on page 3
Year II
Number 422 Tuesday November 26, 2013
1
Exhibition visitors down 13 pct in Q3
Vitor Quintã
MOP 6.00
April 19, 2013
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Hang Seng Index www.macaubusinessdaily.com
23830
23800
23770
23740
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23680
November 25
Bright future for prime Cable company denies trying shop site says Future Bright to tilt future TV market A landlord that caused Macau Government Tourist Office to leave a prime downtown site by proposing a 248 percent rent rise, says it’s close to signing a new big brand retail tenant for the space. Future Bright Holdings Ltd, controlled by Legislative Assembly member Chan Chak Mo, added in a Hong Kong filing that its third-quarter operating profit was 24.5 percent higher this year than last year.
Macau Cable TV Co Ltd has denied it’s trying to buy the right to relay a popular Chinese-language Hong Kong television channel and thus secure its position in the market here once its cable television monopoly ends. Chinese-language news media reported yesterday “a local television firm” was negotiating with Hong Kong’s Television Broadcasts Ltd (TVB) to get the right to relay in Macau TVB’s free-to-air channel TVB Jade.
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HSI - Movers Name
%Day
TENCENT HOLDINGS
3.16
KUNLUN ENERGY CO
2.42
LENOVO GROUP LTD
1.66
BELLE INTERNATIO
1.17
CHINA MOBILE
0.75
SINO LAND CO
-1.29
CITIC PACIFIC
-1.43
SWIRE PACIFIC-A
-1.95
CHINA PETROLEU-H
-2.57
HANG LUNG PROPER
-2.82
Source: Bloomberg
Food industry output is Q3 all-time record
I SSN 2226-8294
Macau’s food and drink makers were busier in the third quarter than has ever been recorded for that time period. Their contribution helped raise manufacturing output to its highest level for five years. The index of food and drink production rose to 135.3 points in the third quarter of this year, 14.7 percent higher than in the second quarter, official data released yesterday show. Page 5
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November 26, 2013
Macau
‘Major brand’ negotiating lease, Future Bright says The company has plans for food outlets in Zhuhai to tap demand from visitors Vítor Quintã
vitorquinta@macaubusinessdaily.com
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estaurant operator Future Bright Holdings Ltd says it is close to agreeing to let a building in a prime shopping area to a well-known brand. In reporting its results for the third quarter of this year, Future Bright also said it had plans for a food court in Zhuhai. The company told the Hong Kong Stock Exchange that its third-quarter
operating profit was 24.5 percent higher this year than last year. Future Bright said negotiation of a five-year lease of a six-storey commercial building in the city centre, near the Ruins of St Paul’s, was in “its final stage”. The company said the prospective tenant was “a major consumer brand”. The present tenant is the government, which rented the
building to display products made in Macau. The government’s lease expires at the end of this year. Future Bright managing director Chan Chak Mo told Business Daily in August that his company had hired Hong Kong estate agents Centaline Property Agency Ltd and its Macau branch to scour the globe for new tenants. Centaline said in a written statement that Future Bright was seeking monthly rent of HK$170 (US$21.80) per square foot or HK$4 million for the whole building, which has 21,968 square feet of floor space. That means the annual rent would be HK$48 million. The government is paying HK$14 million a year.
Future Bright said it had signed a letter of intent to open a “big food court” and at least four restaurants in the Huafa Mall in Zhuhai, near the Gongbei border crossing. The company said it believed more visitors to Macau would come through Zhuhai and linger there, and that many migrant workers employed in Macau would live in Zhuhai and commute. Future Bright said it had closed eight food counters in the City of Dreams resort on Cotai. These counters had contributed an “insignificant” 1.8 percent of turnover, the company said. It said it was close to opening three restaurants on the new campus of the University of Macau on Hengqin Island, and that it was preparing to enter the souvenir food market. Future Bright said its new facilities for producing food were taking shape at “full speed”, and that the materials for packaging Macau Yeng Kee Bakery products had now been redesigned. The company said it would use some of the shop space on the ground floor of its six-storey commercial building in the city centre for selling its souvenir products.
Cross-border demand
The government’s lease of Future Bright’s building near the Ruins of St Paul’s expires on December 31 (Photo: Manuel Cardoso)
Future Bright said its thirdquarter gross operating profit had risen to HK$76.2 million. Food and drink turnover rose to HK$186 million, 17 percent more than a year before. The company’s Japanese restaurants remained its main source of revenue, accounting for HK$97.3 million worth.
HK$76.2 mln Future Bright’s Q3 operating profit
Exhibitions attendance down 13 pct in Q3 But ‘meetings’ segment up 92 pct y-o-y to 30,000 visitors, says government Michael Grimes
michael.grimes@macaubusinessdaily.com
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total of 218 meetings, incentives, conferences and exhibitions (MICE) events were held in Macau in the third quarter of 2013, a marginal reduction of five events, or 2.3 percent, judged year-on-year. The numbers were released yesterday by the Statistics and Census Service. However, attendance at ‘exhibitions’ – the event category pulling the biggest crowds – was down 13 percent year-on-year in the three months to September 30, at 593,000 people, compared to 684,000 in the year prior period. MICE events are regarded by the city’s government as an important way of diversifying the economy beyond gaming. They are also favoured because of their perceived ability to create a multiplier effect in the local economy. Visitors to such events – especially attendees from out of town – buy other
goods and services during their stay. How much of the economic benefit from MICE spreads through the whole community is a matter of debate. According to other data released last month by the government, nearly 70 percent of Macau hotel receipts last year came from just 13 big hotel properties – mostly linked to the casino resorts. Also under scrutiny recently is how much of Macau’s MICE business is driven by the availability of government subsidies, and how much is due to underlying, truly marketdriven demand. About 40 million patacas (US$5 million) were allocated to subsidising the MICE sector this year – an increase on 2012’s budget – said the government last December. According to the Economic Services website, MICE events lasting at
MICE – capturing a sustainable audience
least three days and with a minimum of 100 ‘overseas’ participants – a definition that includes those from mainland China – are
entitled to a 10 percent subsidy on accommodation costs; 400 patacas per person for food expenses; 50 percent of promotion
and marketing expenses up to a maximum of 100,000 patacas, and 15 percent of event translation fees to a ceiling of 20,000 patacas.
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November 26, 2013 April 19, 2013
Macau
Two in three current gaming managers are residents Imported labour growth under control, says govt, as workforce will not expand by above 20,000 a year Tony Lai
tony.lai@macaubusinessdaily.com
M
acau residents already occupy two-thirds of the top management positions in Macau’s six gaming operators it was suggested yesterday. The revelation came from Secretary for Economy and Finance Francis Tam Pak Yuen in his departmental Policy Address for 2014. The numbers are based on data provided by the industry. The impression given by the city’s Chief Executive Fernando Chui Sai On in his government-wide Policy Address for 2014 earlier this month was that Macau need more residents in senior casino industry positions. Mr Chui had pledged to “further push large-scale enterprises, especially gaming operators, to raise the proportion of resident employees in the different management levels.” But yesterday his colleague Mr Tam said there are currently only 232 non-residents working as gaming managers; 32 percent of the total. “We can keep this data in mind and insist they [the companies] gradually improve such ratio,” said Mr Tam. “For instance, the six gaming operators now have courses to train up residents to fill up the top positions, or so-called management trainees … and there are now 150 such trainees getting ready for taking higher positions,” he said. Data from the Statistics and Census Services show there were over 54,000 employees in the gaming industry by June, of which 2,400, or 4.4 percent, worked as managers or directors. “In the past few years we have basically pushed the gaming operators to localise their mid[-level] management positions in the gaming area,” Mr Tam said. “Not only the pit supervisors but also other mid-management positions like section managers are also basically taken up by locals,” he added. The official said 85 percent of the management professionals in the nongaming operations of the six operators are residents. “We do not need laws to carry out such works,” he stated. Mr Tam added that the current growth rate of the city’s workforce as a whole is under control and that the city is able to absorb the numbers. In the past few months worker groups have asked the government to pass laws banning non-residents from working as casino dealers and pit supervisors. The Macau Federation of Transportation led over 100 drivers in a protest outside the assembly yesterday calling for a legislative ban on non-residents working as drivers.
Macro control Ella Lei Cheng, indirectly elected legislator for the labour constituency, doubts the accuracy the data, saying it is “different from what the workers generally perceive”. She emphasised that 20 construction firms with more than 100 workers each have over 10,000 imported workers combined. Those companies have fewer than 1,000 resident workers between them, Ms Lei said. “Where is the so-called
No need for a law to protect residents’ gaming jobs, said Francis Tam
ratio of 1 [resident] to 1 [non-resident] in the sector?” she added. Fellow legislator Au Kam San said: “It is undeniable Macau lacks human resources but the key is how the importation should be done … Which industry lacks workers and how many?” Mr Tam did not provide concrete data on labour demand in other industries.
He said the government would not allow importation of workers to grow to fast. The government “has succeeded” in keeping the rise in the employed population at “some 20,000 workers each year” including non-residents since 2008, said Mr Tam. This is the “appropriate capacity” for the territory so that the employment
and salary levels of the residents are not affected, he added. The pace of economic development will “conform” to the government’s general principles, namely ensuring the employment of residents, he said. The employed population reached over 364,300 by September, rising by 3.8 percent year-on-year, official data show.
Gaming licence talks ‘out of the box’: Tam Financial secretary adds government will ponder competition law to help combat inflation Tony Lai
tony.lai@macaubusinessdaily.com
F
uture talks on the renewal of gaming concessions should not be influenced by the gaming table cap, Secretary for Economy and Finance Francis Tam Pak Yuen said. He reiterated to the Legislative Assembly yesterday that 2015 or 2016 will be the “appropriate time” to discuss the renewal of the six gaming concessions and sub-concessions. “We will be talking about the next step of development, after 2020 or 2022, [when the concessions expire] and we should not use the current framework to set our discussion.” “We should broaden our mind set,” the official said. “We should have a broader vision, not restrained by current measures like the [live gaming] table cap.” The secretary did not elaborate on what could happen to the gaming table cap. The government will listen to the requests of the industry and the public, Mr Tam said. The compound annual growth of the gaming tables in the next 10 years was capped at 3 percent a year. By this year’s third quarter there were 5,748 tables in casinos here. Mr Tam also spoke about inflation. He said 70 percent of the rise in consumer prices was driven
Macau’s casinos had 5,748 gaming tables at the end of September
by internal demand like tourism spending and housing prices. The government will continue to increase the transparency of the pricing information, said Mr Tam. “We have also started to study the possibility of [introducing] a competition law”. Year-on-year inflation hit 6.18 percent last month, the highest level since August last year. The secretary also defended the way the government’s fiscal reserve is run: “The annual yield of the
reserve has been in average 3.1 percent in past 14 years compared with an inflation of 2 percent.” The return on investment of the current reserve, which was only set up in February 2012, has been below inflation. The government is working with banks to ensure it will comply with the Foreign Account Tax Compliance Act by the time it comes into force in the United States in July, said Mr Tam. He did not rule out revising the city’s financial regulations.
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November 26, 2013
Macau
Cable company denies trying to cement grip on TV market Reports say Macau Cable TV is attempting to get the right to relay a popular free-to-air channel Tony Lai
tony.lai@macaubusinessdaily.com
whatever price the company demands for the free-to-air channel, which is watched by almost all residents here.” Macau Cable TV’s John Chiang admitted that his company was in contact with TVB. “We have been cooperating with TVB for a long time on its pay television channels that we broadcast here,” he said. “We have had new talks on cooperation with TVB, but nothing like what the reports said.” He declined to give details of the talks.
Maturity awaited
M
acau Cable TV Co Ltd has denied reports that it is trying to buy the right to relay a popular Hong Kong television channel and thus secure its position in the market here once its cable television monopoly ends. “It is absurd what is said in the reports. They can say what they want, but the reality is not like that,” Macau Cable TV chief commercial officer John Chiang Kuong Io told Business Daily.
Chinese-language news media reported yesterday that “a local television firm” was negotiating with Hong Kong’s Television Broadcasts Ltd (TVB) to get the right to relay in Macau TVB’s free-to-air channel TVB Jade. The reports failed to identity the company, but all the signs are that they refer to Macau Cable TV. The president of the Public Utilities Concern Association of Macau, Chiang Chong Fai, said
he was “worried” that such a deal might spoil the government’s plan to open up the television market after Macau Cable TV’s 15-year monopoly of the supply of cable television ends in April. “If the company succeeds in getting the right this will increase its bargaining power, but weaken the government’s say in the future development of television,” Chiang Chong Fai said. “Residents may have to pay
Macau Cable TV’s 15-year monopoly of cable television ends in April (Photo: Manuel Cardoso)
Business Daily invited the Bureau of Telecommunications Regulation to comment, but the bureau had failed to respond by the time we went to press. Macau’s TDM Radio quoted TVB as saying it would comment only once the “situation has matured”. Macau Cable TV says it relays three pay television channels marketed by TVB’s international arm: TVB XingH, TVB8 and TVBS-Asia. John Chiang said debate about the future of the television market was “a good thing, as the public now acknowledges the existence and importance of copyrights”. Macau Cable TV is claiming compensation from the government, arguing that the government failed to protect the company’s exclusive right to supply cable television. The government allowed unlicensed public antenna companies to relay copyrighted programming. An arbitrator accepted Macau Cable TV’s argument, but the government has appealed against the arbitrator’s award of 200 million patacas (US$25 million) in compensation. The government has commissioned the University of Macau to study how the television market should be developed. The government has said it intends to distinguish between pay television and “basic” free-to-air television, and to give Macau Cable TV a new contract.
Corporate SJM gives MOP550K to Walk for a Million
Sofitel aids Global Flying Hospitals in Philippines
Casino concessionaire Sociedade de Jogos de Macau SA has donated 550,000 patacas (US$68,880) to the Walk for a Million charity. The annual walk is organised by the Readers Charity Fund of the Chinese-language newspaper Macao Daily News. Ambrose So Shu Fai, chief executive of SJM Holdings Ltd, and Angela Leong On Kei, an executive director, presented the donation to the fund’s vice president Lok Po and vice directorgeneral António José de Freitas. “…we are dedicated to making active and positive contributions to Macau, and encourage our employees to do likewise,” said Mr So. The casino company will have its own team made up of directors and staff members in this year’s edition of the Walk for a Million, which is on Sunday, December 8. The two-kilometre walk starts from Macau Cultural Centre on Macau peninsula. Last year’s event raised more than 13 million patacas for good causes and attracted approximately 40,000 participants said the organisers.
Donations made by Sofitel Macau guests to Global Flying Hospitals are being channelled direct to the hotel group’s Philippine fund to help the victims of Typhoon Haiyan. GFH was founded in 2001 by Neill Newton, an Australian business consultant and pilot. The charity uses specialised aircraft to deliver medical staff, equipment and supplies to regions in need. Sofitel Luxury Hotels became a sponsor of Global Flying Hospitals in January 2012. The group’s properties throughout Asia invite guests to donate and support the charity. Mr Newton said in an update of the charity’s efforts: “GFH is working hard to acquire the Hercules C130 cargo aircraft, and manufacture the 21st century mobile medical hospitals, to be action-ready for the next disaster.” Global Flying Hospitals (Macau) Association was formed in 2009 and received approval from the Macau SAR government. In November 2011 the charity opened an office in Macau to act as its base in the Asia region.
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November 26, 2013
Macau
Food industry output in Q3 the most ever The recovery in manufacturing production continues, propelled by the boom in tourism Vítor Quintã
vitorquinta@macaubusinessdaily.com
M
acau’s food and drink processors were busier in the third quarter than ever before, and their contribution increased manufacturing output to its highest level for five years. The index of food and drink production rose to 135.3 points in the third quarter of this year, 14.7 percent higher than in the second quarter, official data released yesterday show. The reading was the highest since the Statistics and Census Service began collecting data on food and drink production in 2008. The food and drink processing business is driven by demand from tourists, and tourism is booming. Food and drink production grew in spite of a fall of 3.1 percent in the output of Chinese bakeries. Products made by Chinese bakeries are popular among visitors as souvenirs. Food and drink production accounts for over one-third of the manufacturing production index. The manufacturing production index rose by 8.6 percent to 97.4 points, its highest level in any
Products made by Chinese bakeries are popular among visitors as souvenirs
quarter since 2008. Manufacturing output has been rising since 2009, having declined in the preceding six years as the textiles industry contracted after quotas for international trade in textiles were abolished. The textiles and clothing industries combined still account for about 30 percent of the manufacturing production index. But the output of
Construction sector extends hiring spree T
he construction industry hired a further 700 migrant workers in October as it expands its labour force to deal with the demand created by new resorts being built in Cotai. There were 24,237 non-residents working in the construction sector last month, up by 698 people from September, official data released yesterday show. It is the biggest number of migrant workers in the construction sector since the Human Resources Office began releasing monthly data in 2007. Six years ago, the industry had just 11,800 migrant workers. Most were from the mainland, 21,602 workers or about 89.1 percent. The biggest employers are contractors on the Light Rapid Transit railway network and on the second wave of gaming development. Each of the city’s six gaming operators have new casino-resorts planned for Cotai or are currently
expanding existing facilities between 2015 and 2017. These companies had directly hired 2,039 construction workers by the end of October, up by 93 from a month earlier. Overall, there were 38,200 people working in construction at the end of September, up by 6,100 people from the end of June, the Statistics and Census Service says. There were 132,950 migrant workers in Macau at the end of last month, up by 2,128 from September. The hotel and restaurant sector were the biggest employers of migrants, accounting for 37,855 or 28.5 percent of the total. Third on the list are domestic workers, which reached 19,229 by the end of October, up by 207. This number is set to rise as Macau is set to bring in about 300 maids from the mainland under a trial scheme by May.
Most outside construction workers come from mainland China
V.Q.
both industries continues to shrink. The clothing production index reading was 5.8 points in the third quarter, having been 241.5 in 2003. Other sorts of manufacturers have driven the recovery in output. One of those were makers of nonmetallic mineral goods, which include construction materials such as cement, ceramics, glass and lime.
The non-metallic mineral goods production index rose by 20.2 percent to 119.5 points, its highest level for six years. The Statistics and Census Service said in a written statement that the rise reflected increased demand for concrete. The construction industry is getting busier as work on several casino-resorts in Cotai and big infrastructure projects picks up pace. The tobacco production index fell by almost one-third from the record level it had risen to in the second quarter. The Statistics and Census Service describes the tobacco processing industry as “an exportoriented industry”.
14.7 %
Increase in food and drink output in Q3
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November 26, 2013 April 19, 2013
Macau
Casa Real casino-hotel on the peninsula
Kingston Financial’s gaming rev up 10 pct Group profit up 34 pct in six months to Sept 30 on ‘income from margin and IPO financing business’ Michael Grimes
michael.grimes@macaubusinessdaily.com
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ombined gaming revenue at two Macau casino-hotels controlled by Kingston Financial Group Ltd rose nearly 11 percent in the six months to September 30 the firm said in a filing. The two properties – Casa Real on the peninsula and Grandview at Taipa – “consistently provided solid contributions to the group in line with the rapid development of the gaming industry in Macau,” said Kingston. Market-wide during the period gross gaming revenue grew nearly 19 percent according to Macau government data. Group gaming revenue – including food and beverage sales in the casinos – amounted to approximately HK$329.58 million (US$42.5 million) for the period, compared to HK$297.97 million in the equivalent 2012 period, according to Kingston’s unaudited interim results. The number represented 75 percent of total hospitality sector revenue for the group. As of September 30, Kingston had 60 tables in two mass market gaming halls, 11 tables in the two self-managed VIP rooms and 255 slot machines and 140 “live baccarat” machines in its two electronic gaming halls. Both casinos operate – under a so-called service agreement – on the gaming licence of Sociedade de Jogos de Macau SA. Kingston Financial added in its results that the latest renovation work for its Macau hotel rooms was done in July. “…the group is planning to have further retouching in other parts of the properties to advance the overall image,” it added. Pollyanna Chu Yuet Wah, chief executive of Kingston Financial, acquired a controlling stake in Casa Real in 2005 for HK$750 million in cash and 110 million shares according to evidence submitted to a Hong Kong court. Control of Grandview was achieved the same year in a separate deal. The assets were later injected into the Kingston Financial listed company. Pollyanna Chu, ranked by Forbes
as 35th richest person in Hong Kong, sits on the national committee of the mainland government’s advisory body the Chinese People’s Political Consultative Conference. In 1997 the Hong Kong Securities and Futures Commission fined her HK$10,000 for acting as a commodities dealer’s representative for Kingston Futures, part of the Kingston Group, without a licence, according to SFC records. In 2003, Ms Chu surrendered her securities and commodity dealer representative licences in relation to charges she helped or overlooked manipulative warrant trades. According to a separate Hong Kong regulatory filing, Kingston Securities Ltd – another unit of Kingston Financial – underwrote the purchase of English football club Birmingham City F.C. by Hong Kong businessman Carson Yeung Ka Sing. That deal took place in stages between 2007 and 2009. Mr Yeung is currently on trial at the District Court in Wanchai Hong Kong, accused of laundering funds totalling HK$721 million between January 2001 and December 2007. He denies wrongdoing. There is no suggestion either from evidence produced in court or elsewhere that Kingston Financial or any of its units were in any way party to the offences alleged against Mr Yeung. Kingston Securities is currently the guarantor for up to HK$339.90 million worth of new shares in China Star Entertainment Ltd. The latter controls Hotel Lan Kwai Fong Macau, another Macau casino-hotel operating under a licence from SJM SA. Profit attributable to Kingston Financial’s owners for the six months to September 30 increased by 34 percent to nearly HK$341.10 million from approximately HK$254,83 million in the year prior period. That was “mainly due to increase in income from margin and IPO financing business” said the group.
Govt’s green fund extended to end-2014 T
he government’s Environmental Protection and Energy Conservation Fund will continue to accept applications for subsidies until the end of next year. The government announced in yesterday’s Official Gazette the fund launched in 2011 has been extended for a second time, until December 31, 2014. The fund granted a recordhigh amount of 30 million patacas (US$3.8 million) in subsidies in the third quarter, up from 20.2 million patacas a year before. The 200-million-pataca fund is for subsidising the acquisition by companies and associations of environment-friendly technology, equipment and other products. The fund pays up to 80 percent of the cost of acquisition, up to a limit
Store network revamp drives Bauhaus profit F
ashion retailer Bauhaus International Holdings Ltd’s net profit in its financial first half ended September jumped by more than half due to a better performance in Macau and Hong Kong. The company said in a filing to the Hong Kong Stock Exchange its profit “increased significantly”
of 500,000 patacas per grant. It does not pay any of the cost of installation or of associated construction or refurbishment. The Environmental Protection Bureau has previously said most of the subsidies have been for energy-saving lighting and air conditioning, kitchen extractor hoods and air purifying equipment. The Environmental Protection Bureau runs the fund, which was launched with an initial capital of 200 million patacas. It has granted a total of 117.7 million patacas in subsidies since its inception, in late 2011. V.Q.
by 55.3 percent to HK$16 million (US$2.1 million). “Strong sales growth” of 20.8 percent to HK$378.1 million in Macau and Hong Kong fuelled the recovery Bauhaus wrote. The two cities had accounted for over twothirds of its first-half takings. “Remarkable same store sales growth” came even though Bauhaus closed two of its 79 outlets here and in Hong Kong in the last six months, the retailer said in the filing. The company says it has been “closing down underperforming shops and relocating shops to other prime shopping locations with lower rentals”. The Hong Kong company has three Bauhaus shops and one Tough Jeansmith store in Macau. Bauhaus’ Hong Kong and Macau operations posted HK$52 million in profit before tax, up by 40.2 percent year-on-year. But the company warned that the market conditions remain “tough” as a result of volatile retail sentiment, fierce competition among fashion retail players, high rentals and soaring staff costs. V.Q.
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November 26, 2013 April 19, 2013
Macau
3D printing to cut its teeth in medical gizmos, fashion The cost of 3D printers and materials is expected to fall once patents expire Stephanie Lai
sw.lai@macaubusinessdaily.com
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rowth in the use of 3D printing to produce wearable devices and medical aids will accelerate in the next two years in Hong Kong, authorities on the subject say. The technology will become more widespread once printers and printing materials become cheaper, people attending a seminar here yesterday told Business Daily. Industrial designers have long relied on 3D printing to make scale models of products and prototypes quickly. The hype about 3D printing h a s incr eas ed rec ently as its potential in making parts for the aerospace and medical devices industries and models for architects becomes clearer. A senior consultant to the Hong Kong Productivity Council, biomedical engineer Bryan So Man Kit, believes 3D printing will grow faster in the near future. Mr So, speaking on the sidelines of the seminar, said the technology was maturing and
becoming more common in Hong Kong, so growth in the use of 3D printing would be principally in the production of wearable devices and medical devices. “I think the expansion will happen faster in the production of fashion accessories or other wearable devices using 3D printing technology,” he said. “These items you can sell in malls, and they are products that can be made in limited editions, where design is the main selling point.” he said. “For professional users, medical device manufacturing will find more applications for 3D technology, especially because there will be more need arising from our ageing society.”
Patents to expire Mr So said the main obstacle to using 3D printing to make customised medical implants was the need to obtain safety certification for some post-production processes such as sterilisation of the devices.
A seminar on the development of 3D printing was held here yesterday
He said the Hong Kong Productivity Council was helping users of 3D printing to get quality management certification for the manufacture of medical devices.
In the meantime, 3D printing is used to pluck lower-hanging fruit. “We are mostly using 3D printing to make surgical aids, for which the manufacturing criteria are not as strict as those for implants,” Mr So said. One supplier of 3D printing hardware and software is Taiwan’s Logistic Technology Corp. The company’s general manager, Thomas Yang, told the seminar that important patents for a form of 3D printing technology known as laser sintering would expire next year. Laser sintering costs relatively little, gives high resolution in all three dimensions and can make objects that can be sold as finished products. It is cheaper than fused deposition modelling, the most common form of 3D printing technology, which allows printing in only three or four colours. Mr So said: “We expect the cost of printing devices and materials to fall further after three to five years as more patents expire and the market becomes more competitive.”
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November 26, 2013 April 19, 2013
Greater China Hutchison sells HK house over HK$500 mln Hutchison Whampoa Ltd sold a second house in Hong Kong’s upmarket Victoria Peak area in a week for more than HK$500 million, as developers accelerate sales amid expectations property prices are peaking. The 530-square-metre house in the seven-home, 28 Barker Road project was sold to an unidentified buyer for HK$538 million (US$69.4 million), according to the project’s website. Hutchison Whampoa, controlled by Li Ka Shing, on November 20 sold a house in the same project for HK$740 million, the second highest paid in the city, according to broker Colliers International.
Chinalco to drop bid for Glencore’s mine A group led by Aluminium Corp of China has abandoned its bid for Glencore Xstrata Plc’s Las Bambas copper project in Peru, a person with direct knowledge of the matter said. Chinalco, as the state-owned aluminium producer is known, decided to drop out after the Chinese government asked it to be a minority partner in a combined bid led by China Minmetals Corp, said the person, who asked not to be identified as the matter is private. The Chinalco-led group had offered about US$5 billion for the Las Bambas copper mine, people familiar with the situation said earlier this month.
China, Japan trade barbs on a Asian airlines to give flight plans to China after airspace zone created
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hina traded barbs with the U.S. and Japan over its newly announced air defence zone in the East China Sea, as tensions escalated between Asia’s largest economies and risked damaging a resurgence in trade. China’s Defence Ministry filed protests to both nations’ embassies, calling Japan’s remarks “unreasonable” and the U.S. comments “wrong,” according to a statement posted on the ministry’s website yesterday. Japan lodged a complaint as the U.S. and South Korea expressed concern about China’s creation of the zone on November 23. The war of words further strained ties in a territorial dispute between China and Japan in the East China Sea days after China announced the air defence zone and said aircraft entering the area must report flight plans and identify themselves. Those frictions contrast with a nascent recovery in business, with exports to China rising 21.3 percent in October from a year ago, and add to pressure on Japanese Prime Minister Shinzo Abe, whose government is set
to unveil its first post-war national security strategy next month. “The risks of a major conflict stemming from an incident in the air or in the maritime domain ticked higher this weekend,” Scott Harold, who specialises in Chinese diplomacy at Rand Corp, a policy institute, said in an e-mail. “The step is highly provocative, a new development, and undoubtedly raises the prospect of conflict.” While the U.S. doesn’t take sides in the territorial dispute, it recognises Japan’s administration of islands in the area. The U.S. is a treaty ally of Japan and in October the two set a road map for defence cooperation over the next 20 years.
‘Dangerous act’ The islands, known as Diaoyu in Chinese and Senkaku in Japanese, lie inside China’s new air defence zone. Both nations claim sovereignty over the area, whose waters are rich in oil, natural gas and fish. The dispute comes as China and Japan seek a greater role in the region, courting nations in Southeast
The islands have been a source of tension for decades
Beijing, Shanghai to launch carbon trading exchanges Trading likely to start slowly as the government treads cautiously
KEY POINTS Facilities owned by stateowned giants in schemes
Bright Food to list Weetabix, Manassen China’s state-owned Bright Food (Group) Co Ltd said yesterday it plans to list British cereal maker Weetabix Ltd and Australia’s Manassen Foods along with other foreign assets it had acquired over the past few years. Bright Food said it has not set a timeframe for the proposed listings or give details about the value of any offer. “When we acquired these assets, we already had plans for them to list overseas,” company spokesman Pan Jianjun said. The Shanghai-based company has bought several overseas food firms in recent years as it seeks to expand its global reach and competitiveness.
Carlyle to sell Taiwan’s Eastern Broadcasting Carlyle Group LP is preparing to sell its controlling stake in Eastern Broadcasting Co, Taiwan’s biggest broadcaster, and is seeking as much as US$700 million, people familiar with the matter said. The U.S. private equity firm has contacted investment banks about finding buyers for its 67 percent stake in the cable TV company, said the people. The sale may draw interest from local Taiwanese media groups, two of the people said. Eastern Media International Corp, which owns 21 percent of Eastern Broadcasting, is interested in acquiring Carlyle’s stake, one person familiar with the matter said.
Nationwide plan to be chosen from competing schemes No legal means of forcing firms to participate
China is the world’s biggest source of carbon emissions
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ainland officials will launch two new pilot carbon trading schemes this week in Beijing and Shanghai as they strive to cut soaring rates of greenhouse gas, reduce choking smog and determine the best system for a nationwide roll out. China, the world’s biggest source of climate-changing carbon emissions, is under domestic pressure from its population to counter air pollution and has pledged to cut the 2005 rate of CO2 emissions per unit of GDP growth by 40-45 percent by 2020. As U.N.-led climate talks stumbled in Warsaw last week, the country’s chief negotiator Xie Zhenhua was keen to push the country’s CO2 cutting credentials, challenging developed nations to match the efforts being made by China to tackle global warming. The new platforms, which will force industrial firms to buy credits to cover any CO2 they emit above allocated quotas, also underscore Beijing’s commitment to “market mechanisms” to slow emissions
growth, in line with an ambitious raft of reforms outlined earlier this month. “It is definitely a move in the right direction, but there are concerns about activity – these are pilot schemes and are used as a learning experience, and local governments might not be particularly concerned by volumes,” said Shawn He, a climate lawyer with the Hualian legal practice in Beijing.
Reform slate Trading is likely to start slowly as the government treads cautiously and tries to learn lessons from Europe, where an excess of credits has left carbon prices in the doldrums. Hualian’s Mr He said there were concerns how effective the pilot schemes would be, as no binding carbon caps would be imposed on enterprises and there were no legal means of forcing them to participate. China’s government hopes climate targets will help meet other policy goals on pollution, sustainable development and industrial restructuring. The pilot markets would not only
allow China to reduce CO2 but would also help “upgrade industries”, Mr Xie said in Warsaw last week. Officials have suggested carbon credits could provide a financial incentive to close down inefficient steel or cement plants. Closures would free up the carbon credits to sell on the market. The schemes are expected to draw in some of the country’s largest companies, including leading steelmaker Baoshan Iron and Steel in Shanghai. The Beijing exchange will include oil giant Sinopec’s Yanshan refinery, coal miner Shenhua Group and giant utilities like Huaneng. While the fines for noncompliance are minimal, Mr He acknowledged the state-owned companies are expected to participate fully given political pressure to take part and the close relationship with local governments. In the first phase, credits will be distributed to member firms free of charge, meaning participants will face additional costs only if they exceed their quotas and have to buy. The Beijing platform is expected to force bigger polluters to buy more credits in coming years. Reuters
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Greater China
air defence zone
I am strongly concerned as it is a profoundly dangerous act that may cause unintended consequences Shinzo Abe, Japanese Prime Minister
Asia, and as China adopts a more conciliatory tone over a territorial spat with countries in the South China Sea. China said its military will take “defensive emergency measures” if aircraft entering the area don’t comply with its rules. The move from Beijing is “profoundly dangerous”, Japan’s prime minister said yesterday. Mr Abe’s warning comes after Washington said it would stand by him in the event of any military clash over the islands. “I am strongly concerned as it is a profoundly dangerous act that may cause unintended consequences,” Mr Abe told parliament, reports said. “Japan will ask China to restrain itself while we continue cooperating with the international community,” he added. The announcement of the area, which also includes waters claimed by Taipei and Seoul, provoked ire in both cities, with South Korean defence ministry spokesman Kim Min-seok saying it was “regrettable”. Japan’s foreign ministry said it would not respect the Chinese demarcation, which it said had “no validity whatsoever in Japan”. A map and details of the zone’s coordinates were posted on the Chinese Defence Ministry’s website. “This is a necessary measure taken by China in exercising its self-defence right,” ministry spokesman Yang Yajun said in a separate statement also on the
site. “It is not directed against any specific country or target.” “Japan is working and consulting closely with its ally, the United States, and will coordinate with other relevant countries and partners which have common interests in the stability and safety of the region,” Japanese Foreign Minister Fumio Kishida said. Asian aviation officials said airlines would have to inform Chinese authorities of their flight plans before entering airspace over waters disputed with Japan, forcing carriers to acknowledge China’s authority over the newly declared zone. A transport ministry official in Seoul said South Korean planes flying in the new zone would notify China’s civil aviation authorities of their flight plans. Yi Shin Juang, deputy director of the air-traffic service division of the Taiwan Civil Aeronautics Administration, said Taiwanese carriers would issue similar notifications, but would not be required to adjust flight paths. An official at the Japan Civil Aviation Bureau said Japanese airlines flying through the region to nonmainland Chinese destinations would likely need to inform China of their plans. “Airlines have been advised to take greater care in the area,” said another bureau official. Reuters/AFP
Developers owe billions in land taxes: CCTV
Expert warns of local government debt
But analysts say report could be based on miscalculations
Debt of public sector accounts for about 50 percent of the country’s GDP, says researcher
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hinese property developers failed to pay at least 3.8 trillion yuan (US$624 billion) in land taxes between 2005 and 2012, according to a China Central Television report. Agile Property Holdings Ltd, which owes the government 8.3 billion yuan in land appreciation taxes, and Soho China Ltd owe the most among the 45 developers that failed to pay, CCTV reported yesterday, citing calculations by Li Jinsong, a Beijing-based lawyer. Other companies that owe the tax include China Vanke Co Ltd, the country’s biggest developer listed on mainland exchanges, the state television said. The report was questioned by analysts from Credit Suisse Group AG and CIMB-GK Securities Research who said it was either a miscalculation or didn’t take into account the timing of the tax payments. “Although the news may put Chinese developers’ shares under pressure, I don’t expect it to immediately prompt all local governments to enforce” full payment of the tax, known as LAT, Jinsong Du, a Hong Kong-based property analyst at Credit Suisse wrote in a note to clients yesterday. “The TV programme ignored the dynamics between developers and local governments, which often allow developers to pay LAT over an extended period of time to incentivise the developers to buy more land.”
Tax misunderstanding The report was based on a “misunderstanding,” which wrongly assumed the company’s provision for
the tax as an immediate obligation for payment of the tax, a spokeswoman for China Vanke, who asked for anonymity due to company rules, said in an e-mailed reply. “They are different concepts. Developers will only pay LAT after property projects are completed, while before that we make a provision for LAT payment.” Investment relations spokesmen at Agile and Soho China, who asked for anonymity because of company rules, wouldn’t immediately comment on the report. Vanessa Wang, investment relations officer at Guangzhou R&F Properties Co, another developer cited in the report, said by phone yesterday that their tax filings are all conducted according to Hong Kong and mainland China regulations, and the company won’t comment on the CCTV report. Mr Li, the lawyer from Beijing Yitong law firm, previously worked in auditing firms and started tracking payment of the tax since 2006, he said in a phone interview yesterday. He referred to a document on the firm’s website for the methodology he used and declined to give details. Mr Li’s calculation method is “questionable” because property developers in China usually set aside a provision for the tax of about 7 percent to 8 percent of gross sales, said Johnson Hu, a Hong Kong-based property analyst at CIMB-GK. Based on Mr Li’s estimates of the tax payments owed, the 45 developers would have had to record contracted sales of at least 54 trillion yuan in the past eight years, Mr Hu said. Bloomberg News
he size of local government debt is at a controllable level although risks are increasing in some areas and projects due to a lack of transparency, a finance ministry official at a think tank was quoted as saying by the official People’s Daily. Jia Kang, head of the Research Institute of Fiscal Science, said in comments published yesterday that the overall debt of China’s public sector accounts for about 50 percent of the country’s GDP, within a safe level. China’s local government debt has surged as credit flowed into the building of public infrastructure. Poor government disclosure on debt levels has further aggravated concerns about the true size of the debt. “We still need to wait for this year’s audit results. Even if the total debt ratio of the public sector has increased, it still would not surpass levels warning of danger substantially,” Mr Jia said. He was referring to internationally accepted ways of measuring outstanding government debt as a percentage of GDP and fiscal deficits as a percentage of GDP. China’s Audit Office said in July it would conduct an audit of all government debt at the request of the cabinet, but the results have not yet been published. Mr Jia also warned that China could not lower its guard on potential risks arising from financial strain in some areas and projects. “There is still relatively high accumulation of risks in some areas and projects. We should take preventive measures at an early stage,” Mr Jia said, without giving more details.
Local government debt stood at 10.7 trln yuan at the end of 2010
Beijing has repeatedly played down fears about local government debt and insists systemic problems are unlikely. Official figures showed local government debt reached 10.7 trillion yuan (US$1.76 trillion) by the end of 2010. The nation has this year intensified efforts to control the raising of debt by the financing arms of municipal authorities, 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. Reuters
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Greater China Smithfield’s US$7.1 bln deal tops China’s outbound tally
China set to overtake Japan in M&A deals Chinese buyers expressing interest in more overseas deals Denny Thomas
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hina is set to become Asia’s leader in outbound corporate acquisitions this year, ending Japan’s two-year reign, as the country’s appetite for overseas targets expands beyond natural resources and into areas such as food and banking. The country’s biggest companies are expected to boost the volume of M&A deals next year as they seek new sources of revenue growth and more global brands to expand their reach into other markets, according to investment bankers. So far this year, Chinese companies have launched US$56.2 billion of overseas M&As, led by Shuanghui International Holdings’ US$7.1 billion purchase of Smithfield Foods Inc. While that is below last year’s US$62.1 billion tally, it is far ahead of the US$40.7 billion of deals done by Japanese firms this year, according to Thomson Reuters data. Energy and power still
dominate China’s outbound deals in value terms, though their share of overall M&As has fallen to 44.1 percent from 52.3 percent five years ago, the data show. By contrast, the proportion of financials has risen by twothirds to 14.4 percent. “Chinese financial institutions are now showing greater confidence than at any time since the global financial crisis in striking outbound deals, and we expect more M&A in this space,” Colin Banfield, head of Asia-Pacific M&A at Citigroup, said. Barclays Plc leads the league table for China’s outbound deals this year, followed by Morgan Stanley, Goldman Sachs and Citigroup, according to Thomson Reuters data.
Expanding share Asia’s share of global M&As has grown to more than 20 percent from the low single-digits 10 years ago, still well below Europe and
the United States. But China, hungry for overseas growth, will push that even higher. Earlier this month, China Construction Bank Corp agreed to buy a 72 percent stake in Banco Industrial e Comercial SA for about US$720 million. Citigroup advised the Brazilian bank, while Morgan Stanley advised CCB. China has reshuffled the top decks at some of its banks and regulators following the nation’s once-in-a-decade political leadership change last year. Bank of China Ltd appointed Tian Guoli as its chairman in May, and in the same month, Bank of Communications Co Ltd named Niu Ximing as its chairman. As the new management teams settle into their jobs, they are expected to be more aggressive in purchasing assets – and possibly other financial institutions. There is more urgency for Chinese banks to
accelerate global growth as the leadership change is poised to precipitate more financial sector reforms, further pressuring margins, bankers said. Among the Chinese banks on the prowl are Industrial and Commercial Bank of China Ltd (ICBC) and Agricultural Bank of China Ltd (AgBank), which are in pursuit of two separate deals. ICBC is in talks to buy Standard Bank Group’s London trading unit, while AgBank is considering a bid for Hong Kong’s Wing Hang Bank Ltd, Reuters previously reported. Chinese buyers have also expressed interest in strong consumer and luxury brands overseas, and have managed to ink deals in that space. Still, the Shuanghui deal showed China Inc was willing to take on a different target – a large, U.S. pork producer – that came with a serious risk of political opposition. After a minor uproar, Shuanghui closed the deal.
KEY POINTS Chinese companies launched US$56.2 bln of M&A Share of financial sector in M&A up 66 pct in five years Chinese firms ‘showing greater confidence’ – analyst More deals seen in healthcare and technology sectors “When we look at our own deal pipeline, the private sector is increasingly prominent,” said Citigroup’s Mr Banfield, adding healthcare and tech as key sectors. “Thematically, we see a shift from the SOEs towards private sector-led M&A activity.” Reuters
Dalton Fund beat peers with 25 pct return Fund focusing on entrepreneur-led companies in Greater China
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he Dalton Greater China Fund, run by James Rosenwald III, a former adviser to funds linked to billionaire George Soros, beat peers with a 25 percent return this year, an investor newsletter seen by Bloomberg News showed. The US$64 million fund outperformed the Eurekahedge Greater China Long-Short Equities Hedge Fund Index by almost 10 percentage points in the first 10 months. Bets on Taiwanese technology companies including Himax Technologies Inc and Hong Kongbased property developers drove performance, Tony Hsu, Rosenwald’s Shanghai-based co-manager, said in
an e-mailed response. Dalton Greater China Fund has focused on entrepreneur-led companies and against statecontrolled enterprises, Mr Hsu said. In a region with capital markets that sometimes fail to reflect its economic growth, Hong Kong-listed Chinese stocks, as measured by the Hang Seng China Enterprise Index, lagged the MSCI World Index in the three of the last five full years. “We own a number of entrepreneurial-led companies where there is strong alignment of interests between the management and shareholders,” Mr Hsu said in the e-mail. “At stateowned enterprises, the senior execu-
tives are placed into these management roles by the state and typically have no ownership in the companies they run.” The Eurekahedge Greater China Long-Short Equities Hedge Fund Index underperformed the Singaporebased data provider’s global industry index in three out of the last five full years. One of the fund’s most profitable trades this year was an investment in Himax, which designs chips for consumer electronics displays. Google Inc agreed to buy a 6 percent stake in a unit of the Taiwanese company that makes liquid crystal on silicon chips and modules used in applications such as Google Glass.
Dalton began to buy Himax shares at about US$1 in 2011, said Mr Hsu. Himax’s American depositary receipts hit a high of US$11.02 on October 2. Dalton is also betting on Hong Kong-listed property developers with prime assets in the largest Chinese cities yet trading at large discounts to their net asset value, according to Mr Hsu. An example is CSI Properties Ltd, a Hong Kong developer with a number of assets in Shanghai that’s valued at less than 40 percent of its book value. “First-tier cities will be major beneficiaries of the urbanisation trends across China,” Mr Hsu said. Bloomberg News
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Asia
Philippine diaspora rushing storm aid Calamities highlight the Philippines’s dependence on remittances Karl Lester M. Yap and Cecilia Yap
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fter Lyn Lyn Rael’s threeroom house was swept away by Super Typhoon Haiyan, leaving her husband and five children homeless, she borrowed 25,000 pesos (US$570), the equivalent of two months’ wages, from her employer in Singapore to send to her family. “They’re all depending on me,” the 30-year-old nanny, who comes from Maghubas village in Leyte province in central Philippines, said by phone. “I had to leave the country two years ago to make money to pay for my kids’ education and for our rice farm. Now to add to it, I need to rebuild our house.” Remittance growth rose an average 3.7 percentage points in the three months after past major disasters, Nomura Holdings Inc said in a note this month, using data from seven calamities since 2004. Transfers from 10.5 million overseas workers like Ms Rael are equivalent to about 10 percent of gross domestic product, underscoring the reliance on these funds even with the fastest expansion among Southeast Asia’s biggest economies. “Calamities highlight the Philippines’s dependence on remittances to finance domestic consumption, with the affected families turning to their relatives working abroad for help,” said Trinh Nguyen, an economist at HSBC Holdings Plc in Hong Kong, who forecasts the funds could rise 6 percent this year. “Unless the government succeeds in creating more jobs at home, Filipinos will still need to travel abroad to have better employment opportunities and this dependence will persist.” The Philippine Stock Exchange Index has fallen more than 6 percent since the November 8 typhoon swept away coastal towns and destroyed an entire city in the Visayas group of islands. The peso dropped about 1.5 percent in the same period. Damage to residential, commercial and agricultural properties is estimated at between US$6.5 billion
Remittances to the Philippines may hit US$26 bln this year, says the World Bank
and US$14.5 billion, catastrophe modelling firm AIR Worldwide said on November 18. The storm left more than 5,000 dead and displaced 3.4 million.
Foreign exchange The World Bank forecast in October that remittances to the Philippines will rise 5.7 percent this year to US$26 billion. Overseas Filipinos rushing to send money to families affected by Haiyan will boost funds over the next few months, according to HSBC, UBS AG, Credit Suisse Group AG and Barclays Plc. In the world’s third-largest recipient of remittances, the funds are the biggest source of foreign exchange after exports, and help boost local consumption, supporting sales of companies including Vista Land &
Lifescapes Inc and Jollibee Foods Corp. Remittances rose 5.8 percent in the January-to-September period from a year earlier, according to the central bank. The Philippines avoided a recession during the 2009 global economic slump as remittances helped counter a slide in exports, even as neighbouring economies from Singapore to Thailand contracted. The number of workers from nurses to engineers leaving the Philippines increased 12.6 percent last year to a record 2.08 million, even as GDP grew 6.8 percent from the previous year, the fastest pace since 2010. “Philippines does depend on its remittances which is inevitable, given the economic opportunities within the country are limited,” the
Asian Development Bank’s Managing Director-General Rajat Nag said in an interview. The “economy needs to get more diversified”. Philippine President Benigno Aquino has overseen an economic revival with growth exceeding 7 percent for four straight quarters. The nation this year won investment-grade scores from Moody’s Investors Service, Fitch Ratings and Standard & Poor’s. Expansion this quarter may be between 4.1 percent and 5.9 percent, Economic Planning Secretary Arsenio Balisacan said on November 14, commenting on the effects of the storm. Full-year growth this year will probably be 6.5 percent to 7 percent, within the government’s targeted range, he said. Bloomberg News
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ASX system error forces delay of auction product
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hi-X Australia Pty, which had planned to offer investors a way of trading the equity market closing auction starting yesterday, postponed the product after a system error at ASX Ltd. Chi-X Australia, the nation’s only competitor exchange to ASX, was set to offer its “market on close”
product, which matches orders with bids at the closing price for each security. This would allow Chi-X Australia users to participate for the first time in the auction held on the ASX at the end of each trading day. A computer software error at ASX over the weekend prompted the Australian Securities and Investments Commission to postpone the
start, said John Fildes, chief executive of Chi-X Australia. “It’s a complete disaster,” Mr Fildes said in a telephone interview yesterday. “ASIC asked everyone involved in this to delay. I will be meeting with ASIC about it, but we don’t want to make a fuss, we’d rather get on with resolving this.” The product for trading
the closing auction through Chi-X Australia, known as MOC, was supposed to begin today for all S&P/ASX 200 Index companies, with no minimum order size. “ASX’s monitoring detected a potential issue with some third-party provided software that, along with other enhancements to ASX Trade, was due to be
implemented last weekend,” Matthew Gibbs, a spokesman for ASX, said in an e-mail. “To prevent any disruption to normal market operation, we made the decision to postpone until a fix could be put in place. We were not prepared to put the Australian market at risk. We will now work with ASIC, Chi-X and clients to plan for a new implementation date.” Chi-X Australia’s Mr Fildes said he has spoken with Peter Hiom, ASX’s deputy chief executive officer, to express concern about the delay. Bloomberg News
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Asia Indonesia raises volcano alert Indonesian officials have raised the alert for the Mount Sinabung volcano in North Sumatra to the highest level. The status was raised from “stand-by” to “caution” – the highest alert for volcanic activity – on Sunday. People have also been warned to stay at least 5 km from the crater. Mt Sinabung has been showing signs of life since September, after being dormant for three years. Over the weekend, it shot ash and rocks far into the air. More than 15,000 villagers in the area had already been moved to temporary shelters, officials said in a statement. Airlines have also been advised not to fly near the area.
The government has instructed police and all security officers to handle the situation gently, based on international practices Yingluck Shinawatra, Thailand’s Prime Minister
Protesters split into groups yesterday for marches to different locations
Thai capital rocked by protests Anti-government protests swell as Yingluck calls for unity
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hai anti-government groups began spreading their protest to military bases, government offices and television stations yesterday after more than 100,000 people joined rallies to oust Prime Minister Yingluck Shinawatra. “We will not stop even if she dissolves parliament or resigns,” Suthep Thaugsuban, a former member of the largest opposition party who
resigned this month to lead the protests, told supporters at Bangkok’s Democracy Monument. “We will create a real democracy with the king as the head of state.” Government opponents started street rallies last month to oppose legislative efforts that they said would benefit Yingluck’s brother, Thaksin Shinawatra, who was ousted as premier in a 2006 coup and has lived in
self-imposed exile overseas since fleeing graft charges in 2008. Yingluck called for “unity, reconciliation, peace and respect in the rule of law,” and said her administration was willing to listen to dissenting voices. “The government has instructed police and all security officers to handle the situation gently, based on international practices,
so the demonstration won’t be used as a tool by people who want to make changes in a non-democratic way,” Yingluck said on her official Facebook page, remarks that were confirmed by her office. Yingluck’s administration has struggled to contain weeks of protests against both a bill that would have provided amnesty for most political offences stretching back to the 2006 coup and
Saputo raises bid for Warrnambool Cheese
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aputo Inc, Canada’s largest milk processor, raised its offer for Warrnambool Cheese & Butter Factory Co to A$515 million (US$472 million), beating two rival bids for Australia’s oldest dairy producer. Saputo will pay A$9.20 cash a share, up from A$9 a share, on condition it gains more than 50 percent of Warrnambool, the Montreal-based company said yesterday in a statement.
The offer trumps a A$9 bid from Murray Goulburn Cooperative Co and a cash and share offer from Bega Cheese Ltd. The three-way contest for 125-year-old Warrnambool, based near the town in Victoria that bears its name, has more than doubled the target’s market value in the two months since Bega, its largest shareholder, made an initial offer. Bidders are pursuing greater scale
to help them tap rising demand for dairy produce, including milk powder, in Asia’s emerging nations. Saputo’s new offer was “simpler, more certain and potentially more valuable” than the previous one, which Warrnambool’s board of directors recommended to shareholders, the company said in a separate statement. Warrnambool rose 2 percent to A$9.23 at the close of trading in Sydney.
a separate move to make the senate fully elected. The purpose of the demonstrations has switched in the past week from opposing those legislative efforts to ending “suffering under the rule of Thaksin and his people,” Suthep said. The unrest threatens to increase instability that has caused global funds to pull a net US$2.1 billion from Thai bonds and equities this month through November 22, according to official data. The SET Index of stocks has fallen 6.7 percent in the past month, the most in Asia after the Philippines, according to data compiled by Bloomberg. The battle is the latest between allies of Thaksin who have won the past five elections, and royalists who
Warrnambool, which recommended Saputo’s A$9 a share bid, will hold information sessions with shareholders and suppliers this week, which will be attended by Saputo executives, the Australian company said yesterday in a statement. Bega holds 18 percent of Warrnambool, maker of brands such as Sungold milk and Great Ocean Road cheese, and Murray Goulburn owns 17 percent, according to data compiled by Bloomberg. Bega’s stock closed at A$4.67 today, valuing its proposal at A$9.005 for each Warrnambool share it doesn’t own. Bloomberg News
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Asia Posco rating cut by Moody’s Posco had its credit rating lowered one level to the second-lowest investment grade by Moody’s Investors Service on concern South Korea’s largest steelmaker will struggle to cut debt amid a tough sales environment. “Persistent weakness” in Asia’s steel industry will probably prevent Posco from making a significant improvement in profit margins, the credit ratings company said yesterday in a statement. It downgraded Posco’s foreign currency bond rating to Baa2 from Baa1. The steelmaker reported a slump in third-quarter profit last month and cut its 2013 sales forecast for a second time.
backed his ouster and claim that parties linked to him govern with a “tyranny of the majority”. Since the military putsch, courts have voided an election won by Thaksin’s party, disbanded two parties linked to him, disqualified about 200 of his allies from politics, sentenced him to jail and seized 46 billion baht (US$1.4 billion) of his wealth. I n 2008, prote sters pushing for a mostly appointed parliament seized government offices and Bangkok’s airports in a bid to oust Thaksin’s allies, and an army crackdown on a protest by Thaksin supporters in 2010 left more than 90 people dead. The political upheaval has revealed rifts in Thai society, particularly between the traditional elite and the increasingly vocal rural majority from which Thaksin’s allies pull their electoral mandate. Yingluck’s Pheu Thai party and its coalition partners command a majority in parliament. The government raised minimum wages last year and introduced a programme in 2011 to buy rice at abovemarket prices to boost rural incomes. Thailand’s skilful macroeconomic management, strong fundamentals, high international reserves, and moderate public debt levels have blunted the impact of recent shocks and are underpinning a recovery, the Executive Board of the International Monetary Fund said on November 12. Bloomberg News
Taxing times for Singapore as it faces mounting scrutiny Debate about how multinationals lower their tax bills moving to Asia Rachel Armstrong
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ingapore does not look at first sight like one of Apple Inc’s priority markets: it has no official Apple Store and doesn’t even rate a mention in the company’s latest annual report. Apple South Asia Pte Ltd, however, its Singapore entity, booked US$14.9 billion in revenue for the 12 months to September 2012 – more than it would have received had the country’s entire 5.3 million population each bought an iPhone 5S, an iPad Air and a MacBook Pro. There is nothing illegal about the accounting practices employed by the computer giant, which, like many multinational companies ranging from Google Inc and Microsoft Corp to BHP Billiton Ltd and Huawei Technology Co Ltd, uses the city-state as a key hub for its Asia business. Singapore has so far largely stayed out of the debate raging in Europe and the United States about the ways multinationals try to lower their tax bills. But revenue-hungry governments are looking to impose tougher rules on socalled transfer pricing that
could make it harder for firms to trade goods, services or assets between their Singapore and overseas entities. As a result, accountants warn that the city-state will need to review the level of transparency in its tax incentive schemes and get stronger justifications from companies on their transfer pricing arrangements to fend off challenges from other jurisdictions. “Singapore’s challenge is to ensure that it stands ready to adequately address any kind of unilateral tax action taken by other countries,” said Abhijit Ghosh, a partner at PricewaterhouseCoopers in Singapore. “In this brave new world of fiscal competition for the tax dollar, dispute resolution will be on the increase and Singapore will need to focus more resources on enforcing and defending its principles of value creation in international forums.”
Low tax draw The city-state’s government says it is against artificially contrived arrangements constructed
“solely for the purpose of flouting or exploiting loopholes in tax rules”, according to a spokeswoman from the Ministry of Finance. However Singapore is also arguing that it should not be singled out because it has low tax rates. “We must guard against new forms of protectionism masquerading as tax harmonisation,” the spokeswoman said. “We should avoid converging on high taxes globally as this would only hurt growth and jobs.” Companies justify booking significant amounts of revenue and profits in Singapore by the fact they often run key business functions such as finance and operations, hold intellectual property rights there or base regional executives in the city. Apple says its Singapore base includes finance, operations, online sales and customer support functions. Singapore lures international companies with its reliable legal system, skilled, English-speaking workforce and high living standards. However, its low tax rates
and generous tax incentive programmes are one of the biggest draws and have been a key driver behind the economic success story of the island. The Group of 20 (G20) big developed and emerging economies has backed a draft OECD plan that would give tax authorities greater rights to “re-characterise” transactions and ignore intercompany contracts if they believe they are aimed at channelling profits into low tax countries. Singapore is not a member of the OECD, a 34-nation association of mostly rich countries, but has said it will support the Base Erosion and Profit Shifting Report the OECD published in July this year. Its headline corporate tax rate is 17 percent – low, but not remarkably so, by international standards. Many multinationals moving to the city-state will pay a lower rate, however, as they are able to take advantage of tax incentives offered in return for undertakings such as providing jobs and capital investment. Reuters
Kuroda says easy policy to stay Bank of Japan governor adds that easing may be expanded if needed Leika Kihara
Bank of Japan Governor Haruhiko Kuroda yesterday stressed the bank’s resolve to maintain its ultra-loose monetary policy and expand stimulus further if risks to the economy threaten its 2 percent price target. Mr Kuroda, however, shrugged off negative interest rates as a realistic option for central banks even as they become increasingly reliant on unconventional steps to stimulate their economies, pointing out that the implications for an economy remained unclear. “Negative short-term interest rates could be possible and [may have been] experimented with in some countries in the past. But that’s
only to some extent and for quite a short time,” he said in a seminar. Expectations that the BOJ will stick to its aggressive stimulus policy – under which it pledged to double base money via asset purchases to accelerate inflation to 2 percent in roughly two years – have weighed on the yen, pushing it to a six-month low against the dollar yesterday. Mr Kuroda said that while the BOJ’s price target is “ambitious,” he expects Japan to reach it sometime late next fiscal year or early fiscal 2015, which ends in March 2016. He stressed that the BOJ will continue its ultra-easy policy “in coming months and years” to achieve its 2 percent inflation target
in a stable matter. “Of course there are downside and upside risks,” Mr Kuroda said, adding that the BOJ is willing “to adjust its policy as necessary, if necessary, either downward or upward depending on the nature of the risks”. As widely expected, the BOJ kept monetary policy steady last week and maintained its upbeat assessment that the world’s thirdlargest economy was recovering moderately. It has stood pat on policy since adopting in April its aggressive stimulus that pledged to achieve 2 percent inflation in two years. Reuters
Kuroda vows to achieve inflation target in a stable matter
14 14
November 26, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 60.20
average 59.785
Min 59.55
Last 59.75
60.20
90.00
60.06
89.86
59.92
89.72
59.78
89.58
59.64
89.44
59.50
Max 90.00
average 89.802
Min 89.35
Last 89.35
57.30
89.30
27.9
27.7
27.5
Max 27.90
average 27.633
Min 27.30
Last 27.65
27.3
24.3
29.9
24.2
29.7
24.1
29.5
57.16 57.02 56.88 56.74 Max 57.25
average 56.966
Min 56.65
Last 56.95
56.60
Max 24.30
average 24.164
Commodities PRICE
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Jan14
93.77
-0.085242408
0.622384376
107.9400024
85.45999908
BRENT CRUDE FUTR Jan14
108.03
-0.027762354
3.447285263
113.3099976
96.13999939
GASOLINE RBOB FUT Dec13
266.55
0.093879084
4.759471781
290.3199911
241.5999889
912
0.13724952
1.333333333
968
838.75
3.686
0.326619488
-6.63627153
4.744000435
3.378999949
295.23
-0.074462684
-1.059016723
321.1599827
276.4999866
1246.63
-1.9413
-25.103
1754.46
1180.57
GAS OIL FUT (ICE) Jan14 NATURAL GAS FUTR Dec13 NY Harb ULSD Fut Dec13 METALS
Gold Spot $/Oz Silver Spot $/Oz
19.918
-2.2645
-33.8492
34.3838
18.2208
Platinum Spot $/Oz
1398.6
-0.9483
-7.8504
1742.8
1294.18
Palladium Spot $/Oz
715.38
-0.4703
2.2468
786.5
629.75
LME ALUMINUM 3MO ($)
1781
-0.724637681
-14.08586589
2184
1758
LME COPPER 3MO ($)
6996
0.37302726
-11.78918169
8346
6602
LME ZINC
1890
-0.316455696
-9.134615385
2230
1811.75
13530
-0.733675715
-20.69167644
18770
13205
15.66
-0.15938795
1.589361012
16.80999947
14.91500092
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14
425.5
0.058788948
-30.18867925
654.75
420
WHEAT FUTURE(CBT) Mar14
658
0.381388253
-20.88969041
904.75
647.75
SOYBEAN FUTURE Jan14
1278
0.333660451
-2.368220015
1406
1169
110.25
0.045372051
-31.24415341
172.25
104.1499939
17.6
0
-14.48007775
20.71999931
16.69999886
CORN FUTURE
Mar14
COFFEE 'C' FUTURE Mar14 SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Mar14
78.32
0.230355772
-1.372623095
90.61000061
76.58999634
World Stock Markets - Indices NAME
Last 24.05
24.0
Max 29.85
average 29.677
Min 29.30
Last 29.40
29.3
Currency Exchange Rates
NAME ENERGY
Min 24.05
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
0.915 1.6209 0.9089 1.3533 101.73 7.9853 7.7527 6.0926 62.5588 31.975 1.2523 29.631 43.87 11735 93.08 1.23005 0.83491 8.2459 10.8083 137.67 1.03
-0.3594 -0.1048 -0.2421 -0.1844 -0.4522 0.0075 0.0052 0.0164 0.4895 -0.516 -0.1837 -0.0742 -0.0228 -0.2983 -0.2149 -0.0569 0.0743 -0.2983 -0.1628 -0.2833 0
-11.8327 0.204 0.7152 2.6005 -15.3642 -0.0263 -0.0271 2.265 -12.0907 -4.3628 -2.4675 -2.0182 -6.5307 -16.5488 -4.032 -1.8349 -2.3344 -0.3444 -2.5712 -17.5056 -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 11751 105.433 1.265 0.88151 8.4957 11.0434 137.99 1.032
0.8848 1.4814 0.8891 1.2746 81.69 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 85.24 1.20302 0.80331 7.8281 10.195 105.28 1.0289
Macau Related Stocks NAME
PRICE
ARISTOCRAT LEISU CROWN RESORTS LT
DAY %
YTD %
(H) 52W
(L) 52W
4.77
-0.209205
16.63
0.4833837
VOLUME CRNCY
51.42857
5.12
2.73
1103165
55.85754
17.38
9.98
1169430
AMAX INTERNATION
1.09
0.9259259
-22.14286
1.72
0.75
589550
BOC HONG KONG HO
26.25
0.1908397
8.92116
28
22.85
8945560
CENTURY LEGEND
0.485
-3
83.01888
0.56
0.24
745500
7.04
0.1422475
17.52922
7.28
4.13
25000
CHINA OVERSEAS
23.75
-0.8350731
2.813851
25.6
17.7
12267011
CHINESE ESTATES
22.05
0.2272727
96.07759
22.8
9.767
118000
CHOW TAI FOOK JE
12.34
0.6525285
-0.8038552
13.4
7.44
3009300
EMPEROR ENTERTAI
3.97
0.5063291
110.0529
4.66
1.65
1280000
3.8
2.702703
213.5246
3.96
1.103
5946000
GALAXY ENTERTAIN
59.75
0.1676446
96.86985
63.75
27
4614349 663356
CHEUK NANG HLDGS
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
16064.77
0.3421614
22.59309
16068.78
12765.32031
NASDAQ COMPOSITE INDEX
US
3991.649
0.5667201
32.1951
3994.969
2935.878
FTSE 100 INDEX
GB
6704.27
0.4490359
13.67389
6875.62
5755.23
HANG SENG BK
125.9
-0.3955696
6.065715
132.8
110.6
DAX INDEX
GE
9257.51
0.4172886
21.61108
9258.75
7219.55
HOPEWELL HLDGS
26.15
0.3838772
-21.35338
35.3
23.2
507000
NIKKEI 225
JN
15619.13
1.543455
50.25358
15942.6
9304.72
HSBC HLDGS PLC
86.5
-0.1154734
6.39606
90.7
76.55
5840269
HANG SENG INDEX
HK
23684.45
-0.04992345
4.535168
23944.74
19426.35938
HUTCHISON TELE H
CSI 300 INDEX
CH
2388.629
-0.3892055
-5.324041
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
8187.51
0.8714047
6.338201
8476.63
KOSPI INDEX
SK
2015.98
0.4859862
0.9478947
2063.28
2.99
2.047782
-16.01123
4.66
2.91
7758700
LUK FOOK HLDGS I
31
3.161398
27.04918
31.35
16.88
3031959
MELCO INTL DEVEL
26.75
0.7532957
196.8923
28.1
7.84
2858100
7148.97
MGM CHINA HOLDIN
27.65
0.3629764
108.2348
30
12.805
1595092
1770.53
MIDLAND HOLDINGS
3.21
0.3125
-13.24324
4.29
2.68
506200
0.305
1.666667
100.6579
0.4
0.131
114533200
S&P/ASX 200 INDEX
AU
5352.834
0.3171342
15.1407
5457.3
4397.9
JAKARTA COMPOSITE INDEX
ID
4333.159
0.3519949
0.3815928
5251.296
3837.735
FTSE Bursa Malaysia KLCI
MA
1803.35
0.4920536
6.77344
1826.22
1590.67
NZX ALL INDEX
NZ
1015.183
-0.07795467
15.0932
1048.998
PHILIPPINES ALL SHARE IX
PH
3681.67
-0.9672829
-0.4679685
4571.4
NEPTUNE GROUP NEW WORLD DEV
10.5
0
-12.64559
15.12
9.98
6704071
SANDS CHINA LTD
56.95
0.7073386
67.74668
60.5
30.35
4168066
SHUN HO RESOURCE
1.62
0
15.71429
1.92
1.22
0
858.253
SHUN TAK HOLDING
4.51
2.5
7.63723
4.8
3.27
5404502
3440.12
SJM HOLDINGS LTD
Euromoney Dragon 300 Index Sin
SI
615.24
-0.12
-0.94
NA
NA
STOCK EXCH OF THAI INDEX
TH
1347.28
-0.867505
-3.207778
1649.77
1260.08
HO CHI MINH STOCK INDEX
VN
506.46
0.1621707
22.41316
533.15
374.15
Laos Composite Index
LO
1264.59
-1.035357
4.101183
1455.82
1196.44
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
FUTURE BRIGHT
24.05
1.263158
35.51084
28
16.762
4131450
SMARTONE TELECOM
8.67
0.3472222
-38.4233
14.66
8.63
3480527
WYNN MACAU LTD
29.4
0.6849315
40.33412
32.6
19
3683462
ASIA ENTERTAINME
N/A
N/A
N/A
N/A
N/A
0
BALLY TECHNOLOGI
71.76
0.1255756
60.50101
78.03
43.57
208175 3128
BOC HONG KONG HO
3.39
0
10.42346
3.6
2.99
GALAXY ENTERTAIN
7.728
1.684211
94.65995
8.11
3.6
2830
INTL GAME TECH
16.96
-1.509872
19.68948
21.2
12.9
3508052
JONES LANG LASAL
98.17
1.289723
16.95258
101.46
76.7013
281734
LAS VEGAS SANDS
70.47
0.7002001
52.66465
73.49
40.9632
3120083 1272661
MELCO CROWN-ADR
34.5
-0.02897711
104.8694
37
13.95
MGM CHINA HOLDIN
3.44
0
96.53871
3.88
1.703
100
MGM RESORTS INTE
18.82
-0.3705664
61.68384
20.98
9.8
4434899
SHFL ENTERTAINME
23.19
0
59.93103
23.25
12.98
344231
SJM HOLDINGS LTD
3.108
0
36.45847
3.6
2.1494
8000
WYNN RESORTS LTD
162.45
-0.6604293
47.0644
170.254
104.7075
717949
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
39
0
13277728
ALUMINUM CORP-H
2.84
-1.388889
6741721
BANK OF CHINA-H
3.72
-0.2680965
306052189
BANK OF COMMUN-H
5.74
0.1745201
16720620
34.15
-0.1461988
1038247
AIA GROUP LTD
BANK EAST ASIA BELLE INTERNATIO
NAME
PRICE
DAY %
VOLUME
CHINA UNICOM HON
12.02
-0.661157
11247848
CITIC PACIFIC
11.04
-1.428571
CLP HLDGS LTD
63.1
CNOOC LTD COSCO PAC LTD ESPRIT HLDGS
-0.4784689
280686798
CHINA LIFE INS-H
24.95
-0.2
46064701
CHINA MERCHANT
29.15
0.5172414
2022849
10.72
-1.289134
4311548
15.7
0
44274204
SUN HUNG KAI PRO
99.05
-0.3019628
3314046
11.4
-0.6968641
2405507
90.7
-1.945946
1940109 6405820
HENDERSON LAND D
45.55
-0.5458515
2632930
95
-0.6276151
2596727
HONG KG CHINA GS
18.16
-0.110011
6902232
HONG KONG EXCHNG
136.7
-0.4369993
3646632
86.5
-0.1154734
5840269
96.75
-0.1032525
2655477
5.52
-0.5405405
171477013
LI & FUNG LTD
10.84
-1.094891
8978020
MTR CORP
29.65
0
681659
HENGAN INTL
HSBC HLDGS PLC
CHINA MOBILE
81.05
0.7458048
16456426
HUTCHISON WHAMPO
CHINA OVERSEAS
23.75
-0.8350731
12267011
IND & COMM BK-H
CHINA PETROLEU-H
6.83
-2.56776
207393480
CHINA RES ENTERP
27.6
0
3395189
CHINA RES LAND
SINO LAND CO
663356
CHEUNG KONG
6.24
1500692
-0.3955696
3515950
CHINA CONST BA-H
4168066
0.2382844
125.9
0.486618
2526029
0.7073386
HANG SENG BK
16.52
42983054
56.95
3424818
CATHAY PAC AIR
0
SANDS CHINA LTD
12919868
HANG LUNG PROPER
-0.7782101
1200890
4942564
3.658537
8945560
5.1
VOLUME
0.1593625
-2.824859
19929536
0.1908397
122.5
DAY %
62.85
17
1.168969
26.25
CHINA COAL ENE-H
PRICE
POWER ASSETS HOL
25.8
9.52
BOC HONG KONG HO
20.8
-1.187648
5455330
NEW WORLD DEV
10.5
0
6704071
CHINA RES POWER
18.22
-0.8705114
8927400
PETROCHINA CO-H
9.32
-1.061571
107353179
CHINA SHENHUA-H
26.5
-0.5628518
14565477
PING AN INSURA-H
72.25
-1.230349
19728513
NAME
SWIRE PACIFIC-A TENCENT HOLDINGS
438
3.155911
TINGYI HLDG CO
22.1
-0.896861
4770830
WANT WANT CHINA
10.98
-1.081081
10248232
WHARF HLDG
64.95
-0.5359877
2178013
MOVERS
13
31
23830
INDEX 23684.45 HIGH
23829.97
LOW
23521.03
6
52W (H) 23944.74 (L) 19426.35938
23521
21-November
25-November
15 15
November 26, 2013 April 19, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
China Daily China will further boost the development of e-commerce, aiming to bring online retail sales up to 10 percent of the country’s total retail sales by 2015, according to guidelines released by the Ministry of Commerce. Total e-commerce transactions in China, including retail sales, are expected to exceed 18 trillion yuan (US$2.95 trillion) by 2015. China will expand the use of e-commerce with a focus on key areas including retail, cross-border trade, agricultural products and the service sector. The ministry will also offer financial support to encourage more firms to engage in cross-border e-commerce.
The shale revolution’s global footprint Javier Solana
Former EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain
Wall Street Journal Bitcoin – the difficult-to-explain electronic currency – is getting a boost in part from China. Watchers of the nascent market say Chinese interest is fuelling a rise in prices, topping US$700 in recent days. It looks like the central bank is willing to tolerate it, at least for the time being. Asked for the official view on the cyber currency, Yi Gang, a vice governor of the People’s Bank of China, had this to say this week: “What I can tell you now is that from the perspective of the People’s Bank of China, for now we can’t recognise [the legality] of the Bitcoin,” he said in response to a question.
Thanh Nien Daily Consumer confidence in Vietnam rose to the year’s highest level in the third quarter, with more consumers feeling certain about job prospects and personal finances, a Nielsen survey has found. The Vietnam consumer confidence index inched up 2 points to 97,3 points above the global average of 94, the information and measurement company said. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. By country, Indonesia reported the highest index score globally of 120, followed by the Philippines (118).
Myanmar Times Garment exports have surged since the European Union admitted Myanmar into its generalised system of preferences last April, opening up European markets. According to U Aung Myint, director of SMC garment manufacturing and member of the Myanmar Garment Manufacturers’ Association, Myanmar exported US$400 million worth of garments from May through July, on pace to surpass the US$700 million it exported through all of the last financial year. He said that the sudden rise in exports has also been fuelled by problems with the garment sector in regional countries.
T
housands of negotiators were gathered at the United Nations climate-change talks in Warsaw, creating a blueprint for a comprehensive global agreement to be delivered by 2015. But, as the negotiators work, the world’s energy landscape is in enormous flux. Given that most of the world’s CO2 emissions stem from energy production and transport, it is critical to monitor these changes closely. In particular, the shockwaves triggered by the shaleenergy revolution unleashed in the United States are reverberating globally. With the advent of hydraulic fracturing, or “fracking,” U.S. oil production has risen by 30 percent, and gas production by 25 percent, in just five years. Shale gas contributed almost nothing to U.S. natural-gas supplies at the start of the century; by last year, its share had soared to 34 percent, with the U.S. Energy Information Administration predicting a further rise to one-half by 2040. As a result of this bonanza, U.S. domestic energy prices have plummeted. The U.S., with all its geographical blessings, is on the road to energy self-sufficiency and is reaping clear economic benefits. Development of unconventional oil and gas supported 2.1 million jobs and contributed US$74 billion in tax revenues and royalty payments to government coffers in 2012. Industrial competitiveness has soared, owing to much higher gas prices in Europe and Asia. Refiners and petrochemical companies are flocking to the U.S. But this does not mean that the U.S. can withdraw into splendid energy isolation.
After all, energy is a global commodity. The effect is direct when it comes to oil prices. Although oil accounts for a smaller part of the energy mix nowadays and spare capacity is currently well ensured, chiefly by Saudi Arabia, a price shock would still have global effects – as such shocks have had in the past.
European challenge Gas prices, by contrast, vary widely across regions: from under US$4/MMBtu in the US to around US$10 in Europe and US$15 in Asia. Until the gas market becomes more liquid and more global, this spread will remain. Nonetheless, global economic interdependence means that every country has a stake in others’ energy bills. If one region’s economy falters, all countries feel the effects. In Europe, shale-energy resources have largely remained in the ground. Even so, the shale revolution across the Atlantic has been felt in diverse ways. For example, decreased U.S. demand for liquefied natural gas (LNG) has allowed gas prices to come down in Europe. European utilities’ bargaining power vis-à-vis Russian gas giant Gazprom has risen considerably – despite long-term oil-indexed supply contracts. Yet European competitiveness is in danger. European companies are still buying gas at around triple the price paid by U.S. firms. This is unlikely to change in the near future, as liquefaction and transport costs will keep LNG prices high even if the U.S. issues more export permits. Finally, Europe’s energy mix is gradually shifting from the
one that it needs to reach its climate-change goals. As inexpensive natural gas has eroded coal’s traditional share of electricity generation in the U.S., importing cheap coal from the U.S. has become more attractive to Europe. Especially in Germany, the Energiewende (the shift away from nuclear energy following the Fukushima catastrophe in 2011) has led to an increase in coal consumption. Indeed, coal is on track to provide more than half of Germany’s electricity supply. The EU’s position as a climate-change champion is in danger. Greenhousegas emissions may have dropped as a consequence of reduced production amid the economic recession, but the coal resurgence does not bode well for future targets.
Weak link Coal is king in China too, providing two-thirds of its power supply. But China’s rulers know that this situation is unsustainable. Not only is air pollution a growing source of concern, but diversification of energy sources is a crucial national-security interest. The scale of China’s unconventional energy endowments is still relatively uncertain. But population density and water scarcity will certainly be inhibiting factors in their exploitation. China maintains robust relationships with energy producers in the Middle East, Russia, and elsewhere (including booming Myanmar) – to secure and diversify its conventional sources. Just last month, Dmitri Medvedev’s first visit to China as Russia’s prime minister resulted in a ten-year, US$85 billion oil-supply deal for the state-
owned energy giant Rosneft. Natural gas, however, is the weak link. Asia’s pipeline network is far too thin, and gas prices are among the highest in the world. That implies a potential boon to Russia’s main gas producers, especially as Europe’s energy-diversification campaign weakens export demand. Indeed, given that oil and gas revenues account for half of Russia’s federal budget, adapting to new realities is virtually an existential imperative for the Russian state. There is opportunity in Siberia’s frozen taiga, particularly the Bazhenov field, which may hold some of the largest unconventional reserves in the world. But the investment needed to develop these resources may remain in short supply in the absence of tax reforms.
Simply put, the current cost of pollution is too low, while the level of urgency is high
The shale-energy revolution that started in the U.S. is thus causing sweeping changes worldwide. And incorporating shale gas into the world’s energy mix could help to combat climate change by creating a bridge to a lowcarbon future. So long as methane leakage is contained, CO2 emissions from naturalgas combustion can be significantly lower than those caused by reliance on oil. Cheap energy sources, however, can eventually come at a high price, albeit with a politically tricky time lag. Simply put, the current cost of pollution is too low, while the level of urgency is high. In Warsaw and beyond, it is vitally important that the international community reaches a sufficiently high common denominator in limiting greenhouse-gas emissions. If not, we will not be able to limit the global temperature increase to a sustainable level. © Project Syndicate
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November 26, 2013 April 19, 2013
Closing ECB’s options ‘not fully exhausted’
Apple buys motion sensor-making firm
European Central Bank Governing Council member Ardo Hansson (pictured) said the ECB stands ready to cut borrowing costs further and is technically prepared to make its deposit rate negative. “The options on rate cuts are still not fully exhausted and there are all kinds of other measures that are still on the table,” Mr Hansson told Bloomberg in an interview. “Of course, every time you use one option, you have one less to use. But I don’t see us, by any means, running out of our toolkit of things we can draw on.” The ECB cut its main refinancing rate by a quarter percentage point to a record low of 0.25 percent this month.
Apple Inc has bought Israel-based PrimeSense Ltd, a developer of chips that enable three-dimensional machine vision, the companies said yesterday. An Apple spokesman confirmed the purchase but declined to say how much it spent. Israeli media said it was about US$350 million. “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans,” an Apple spokesman said in an e-mail. PrimeSense’s sensing technology, which gives digital devices the ability to observe a scene in three dimensions, was used to help power Microsoft Corp’s Xbox Kinect.
Protesting wagons circle lawmaker’s ‘camp’ Truckers fear import of non-resident commercial drivers as solution to city’s logistics challenges Stephanie Lai
sw.lai@macaubusinessdaily.com
Wheel concern – yesterday’s demonstration passes the Legislative Assembly (Photo: Manuel Cardoso)
A
rolling convoy of trucks briefly surrounded the front of the Legislative Assembly building yesterday afternoon in a protest against the possibility of the government allowing the importing of commercial drivers.
Other demonstrators – including drivers of buses, taxis and tourist coaches – arrived on foot to join the demonstration. The event was triggered by the city’s Chief Executive Fernando Chui Sai On saying earlier this
month following his annual Policy Address – and in response to business sector legislator Kou Hoi In – that the administration would “study” the possibility of importing commercial drivers to help ease the city’s logistics challenges.
Oil prices fall on Iran nuclear deal Hopes of cheaper petrol boosts economic outlook Richard Hubbard
O
il prices fell yesterday and world shares were buoyed higher after Iran and six world powers sealed a deal to curb its nuclear programme, easing back on geopolitical tension. Brent crude, a benchmark for world oil prices, shed over US$2 a barrel, its biggest drop for more than three weeks, to trade around US$108.70, although the deal means Iran won’t be allowed to increase oil sales for six months. “It’s positive news, its clearly boosting equity markets today and in a broader sense its reflationary for the global economy,” said Mike
Ingram, market commentator at BGC Partners. Iran agreed on Sunday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, an accord that broke a decade-long deadlock. “Some of the risk premium has been taken out because of the Iran deal,” Henk Potts, who helps oversee about US$310 billion as a strategist at Barclays Wealth & Investment Management in London, said yesterday. “Sanctions have been hitting Iran oil dramatically. There is hope that in the long term the
supply dynamics will improve. High commodity prices are one of the key costs to businesses and consumers so a decline in oil equates to lightening up the tax burden.” European shares rose by 0.4 percent, extending last week’s solid gains which took many of the region’s indexes back to multi-year highs. Germany’s DAX hit a fresh record high. MSCI’s world equity index, which tracks shares in 45 countries, had gained 0.2 percent reflecting the firmer tone in Europe and gains across Asian share markets as news of the Iran deal emerged.
Local freight truckers, responsible for importing most of Macau’s necessities, fear their wages would be undercut by the use of cheaper labour from across the border. Yesterday’s protest was led by Macau Federation of Transportation under the umbrella of the Macau Federation of Trade Unions. Tong Chak Sam, director of the transport lobby group, told Business Daily that the demonstration was triggered by Mr Kou’s call to allow importation of professional drivers by small- and medium-sized companies. Public Security Police said about 100 people joined yesterday’s action. “What we fear is that once imported labour is allowed to work as drivers for local companies, we’ll get unemployed,” said Mr Tong, who is currently a self-employed truck driver earning about 10,000 patacas (US$1,252) a month. “We also don’t believe that the government is able to guarantee that the local drivers can get the same wage level as the imported labour if we’re really having them to take the driving jobs,” said Mr Tong, adding that most drivers that joined the demonstration at the assembly were from 50 to 60 years old. Vice-president of China Chamber of Commerce Vong Kok Seng, also an owner of a logistics company, told Business Daily that he understood the federation’s fears but stressed that the government has to consider market realities. “There is indeed a need to import drivers,” said Mr Vong. “For every type of driving jobs it’s difficult to find a person to fill up the position easily.”
In an attempt to force Tehran to curb its programme, the U.S. and other leading economies have imposed a series of tough sanctions aimed at Iran’s oil exports – a key driver of its economy. In November 2011, Washington threatened to cut off from the U.S. financial system foreign financial institutions that conducted oil transactions with Iran’s central bank. That prompted several countries including China, Japan, India and South Korea – some of the biggest buyers of Iranian oil – to cut their imports. The European Union also imposed a ban on imports of Iranian oil. While the deal has raised hopes of a long-term agreement that may allow Iran to eventually increase its oil sales, some analysts said that oil prices were unlikely to see further declines. “This news is hot off the press, and so there is some knee-jerk reaction,” said Ben le Brun, a market analyst at OptionsXpress in Sydney. Reuters/Bloomberg News