Macau business daily, December 4th by Business Daily

MOP 6.00 Vitor Quintã

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Govt gives pledge to fix bus system Page 7

Macau pupils above OECD average

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he city wide labour shortage hampers the government as well as the private sector, administration officials told the Legislative Assembly yesterday. “Every government department faces a severe shortage of human resources,” legislator Chan Chak Mo told the media after a closed doors briefing by officials. Mr Chan explained the shortage was most severe in the Public Administration and Civil

Service Bureau, which would like 600 staff but had only 360. The Policy Research Office, the government’s think tank, was also short of staff, he said. Mr Chan said the policy unit had difficulty in finding recruits that met its requirements, which usually included a doctoral degree. He said “many people” left the office because they were “poached by other departments and big companies”. More on page 2

Year II

Number 428 Wednesday December 4, 2013

LVS confirms refinancing talks

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Labour shortage hurts govt too, officials say

April 19, 2013

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Hengqin customs post ready ‘soon’: official

Foundation can’t force clients to list spending

The expansion of a customs post to inspect goods moving to and from the special economic zone on Hengqin Island is ‘very close’ to completion, a mainland official told Business Daily. The post is in the so-called Hengqin New Area by the bridge linking the island to the rest of Zhuhai prefecture. It will be inspected for operational readiness soon by central government officials added Liu Yang.

Most associations receiving Macau Foundation money are giving the foundation more detailed information about how they spend it, foundation president Wu Zhiliang has said. But Mr Wu, speaking to reporters yesterday, was non-committal about whether associations should make public how they spend the money the foundation gives them. In June last year the Commission of Audit criticised the foundation for laxity in its supervision.

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Local factory orders hit new low: survey Orders for the city’s remaining factories slumped to a record low in the third quarter of this year as demand in Southeast Asia fell, a Macau Economic Services survey suggests. On average, exporters had orders for the following 1.7 months in the third quarter, 19 percent down on second quarter orders, according to the results of the survey, released yesterday. Page 6

23853

December 3

HSI - Movers Name

%Day

SANDS CHINA LTD

2.52

HUTCHISON WHAMPO

2.40

GALAXY ENTERTAIN

1.63

CATHAY PAC AIR

1.21

CITIC PACIFIC

1.00

BELLE INTERNATIO

-1.46

NEW WORLD DEV

-1.53

WHARF HLDG

-1.62

LI & FUNG LTD

-1.88

HENGAN INTL

-2.05

Source: Bloomberg

I SSN 2226-8294

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December 4, 2013

Macau

Labour shortage hurts govt too, officials say Difficulty in recruiting prevents the government from sticking to its budget, legislators are told Tony Lai

tony.lai@macaubusinessdaily.com

he labour shortage is hampering the government as well as the private sector, government officials have told the Legislative Assembly. The officials told a committee of the assembly yesterday that insufficient manpower was one of the causes of the government’s failure to spend all the money it budgeted to spend. The chairman of the assembly’s second standing committee, Chan Chak Mo, said after its members and representatives of five government departments met behind closed doors: “There is one conclusion: every government department faces a severe

shortage of human resources.” Mr Chan told reporters that the shortage was most severe in the Public Administration and Civil Service Bureau. He said the bureau would like 600 staff but had only 360. The Policy Research Office, the government’s think tank, was also short of staff, he said. Mr Chan said the Policy Research Office had difficulty in finding recruits that met its requirements, which usually included a doctoral degree. He said “many people” left the office because they were “poached by other departments and big companies”. The picture that the officials

Big companies are poaching civil servants, an assembly member says

painted for the committee contradicts the public perception that people are eager to work for the government because it offers secure employment. Mr Chan said the officials had suggested no solutions to the problems caused by the labour shortage. He said the officials had made only two points: “First, they cannot recruit enough people and, second, many employees will not stay in their jobs.” At the end of October 366,700 workers were employed in Macau. The unemployment rate was 1.9 percent, one of the world’s lowest.

Jobs but no takers The second standing committee is debating next year’s budget. The officials told the committee that the shortage of labour prevented the government from spending all the money it budgeted to spend. Mr Chan said: “If government departments want to recruit new people, they have to reserve some money in the budget, but it is unpredictable how many they can [hire] in the end.” He gave an illustration: “They may want to recruit 100 people but they can find only 10 people by year-end, so there is money for the wages of 90 people left.” Secretary for Public Administration and Justice Florinda Chan said last month that 15.5 percent of government spending was on the salaries of its nearly 29,600 civil servants. The government’s spent only 65.9 percent of the 54 billion patacas (US$6.75 billion) it budgeted to spend last year. By the end of October it had spent only 40.4 billion patacas or just over

half of what it has budgeted to spend this year, Financial Services Bureau data show. The officials that attended the committee meeting represented departments that propose to spend more next year than this year. The Office for Personal Data Protection, for example, proposes to spend nearly 62.8 million patacas, 70 percent more than this year. It means to spend 26 million patacas on improving its offices. Mr Chan said the committee was “satisfied” with the answers the officials had given about the increases proposed. Representatives of five other government departments are due to attend when the committee meets today.

There is one conclusion: every government department faces a severe shortage of human resources Chan Chak Mo, Legislative Assembly second standing committee chairman

Market likes govt’s light touch on homes November sales topped 800 units for first time since May suggests agency data

uyers and sellers of real estate appear pleased that no new price cooling measures were announced for the local market during the Chief Executive’s Policy Address for 2014. So says Ricacorp (Macau) Properties Ltd. Flat viewings and home transactions both rose by 12 percent month-on-month in November according to preliminary data from Ricacorp. The Financial Services Bureau said 721 flats were sold in October; so the estate agent’s information – if accurate – suggests November sales exceeded 800 units. King Chan, Ricacorp Macau’s Taipa branch sales manager, noted in a press statement there was “a

brighter prospect” in the market as the government mentioned no new reins for the housing policy directions next year. “The stable Macau policies together with the robust prospect of the economy… pushed [up] the overall home sales and flat visits last month,” he said. The government decided not to announce new curbs on local property deals in light of the ‘complicated’ global economy, said Chief Executive Fernando Chui Sai On last month. “If we only adopt a short-term, heavy-handed measure to deal with the property market, society will need to bear certain consequences as well,” – namely a possible drop in the value of existing homes, he noted.

Not so flat – home sales at six-month high

The market also appears to have adapted to measures including tighter controls on the sale off-plan of unfinished homes, said Mr Chan. Between June – when the new presales rules came into effect – and the end of October, fewer than 800 units per month were sold here. Under the rules, off-plan sales are legal only if the foundations are complete and the individual units registered with

the government. The agent added home prices “maintained stable increase” last month for many projects, without being specific about the increments. The average price of Macau housing was 80,412 patacas (US$10,070) per square metre in October, seven percent up on the September average, official data state. T.L.

December 4, 2013 April 19, 2013

Macau

Liu Yang, spokesman for Hengqin Administrative Committee

Hengqin-mainland customs post ready ‘soon’: official Will clear trucks and goods moving between island’s special economic zone and Zhuhai Stephanie Lai

sw.lai@macaubusinessdaily.com

he expansion of a customs post to inspect goods moving to and from the special economic zone on Hengqin Island is ‘very close’ to completion, a mainland official told Business Daily. The post is in the so-called Hengqin New Area by the bridge linking the

island to the rest of Zhuhai prefecture. It will be inspected for operational readiness soon by central government officials, added Liu Yang, director of the Communication and Cooperation Bureau of Hengqin Administrative Committee. He was speaking on the sidelines of a forum at Macau Tower,

organised by the Global Commercial Newspapers Union, an association of pro-Beijing publications. The expansion at the Hengqin customs post includes six vehicle lanes and a surveillance system, the Hengqin administration told media earlier in the year.

Foundation can’t force clients to list spending But the Macau Foundation is unsure whether it can order associations to publish accounts Stephanie Lai

sw.lai@macaubusinessdaily.com

According to Hengqin’s Administrative Committee, the customs post will be for clearance of imported and exported goods delivered by trucks. Only the border between Hengqin and Macau will have immigration checks. “What we’re waiting for at the moment is the final inspection from the central government,” said Mr Liu, referring to the customs post. “I believe that the remaining infrastructure works at the Hengqinmainland border post will be completed very soon,” Mr Liu said. Hengqin begun a trial scheme of localised rules on imports, taxation and immigration on August 1. Under the special rules, machinery and equipment imported for use in Hengqin infrastructure and in manufacturing plants are exempt from tax. Consumer goods and construction materials imported from Macau will not be exempt from tax. And mainland companies will still have to pay import and sales tax on products that are manufactured and processed on Hengqin. “As issued in the development plan for Hengqin in 2009, the very important policy is the design for our special immigration and customs clearance rules,” Mr Liu stated. “You could view Hengqin as a free trade zone because the island will be serving as a bonded area,” the Hengqin official added. However, Mr Liu and two other administrators from Qianhai and Nansha district in Guangzhou declined to discuss the Guangdong government’s proposal to set up its own regional free trade zone with Macau and Hong Kong. “The free trade zone plan will have to be announced by the [Guangdong] provincial government,” said Wang Jinxia, spokesman for the Qianhai authority.

It is the prerogative of the associations to decide whether or not to release reports on how they use these grants Wu Zhiliang, Macau Foundation president

ost associations receiving Macau Foundation money are giving the foundation more detailed information about how they spend it, foundation president Wu Zhiliang has said. But Mr Wu, speaking to reporters yesterday, was non-committal about whether associations should make public how they spend the money the foundation gives them. In June last year the Commission of Audit criticised the foundation for laxity in its supervision of where its money goes, saying there had been cases of associations getting too much money or more than one subsidy. The commission said in a report that the foundation lacked effective oversight of how much money a project undertaken by an association might be getting from other sources. The commission said the foundation’s analyses of how its beneficiaries used its money were

Wu Zhiliang does not believe associations would mind publishing their accounts

only superficial because they were not supported by financial data. Mr Wu said yesterday that the foundation had acted on the criticism.

“We have made some changes to the procedure for making grants from the fund,” he said. “The grantees have to report more details of the content of the funded project, which means it is clearer how the money is used.” He said the foundation had set aside 2 billion patacas (US$250 million) for grants this year. The foundation has received this year about 1,000 applications for grants for nearly 4,000 projects. About 40 percent of the projects are related to education. Mr Wu said the foundation did not require associations that it funded to release reports on how they spent the money. “We announce only how much the associations ask us for and how much is granted,” Mr Wu said. “It is the prerogative of the associations to decide whether or not to release reports on how they

use these grants.” In October the Commission Against Corruption proposed that associations receiving public money be required to publish their accounts. The commission has yet to give Chief Executive Fernando Chui Sai On a detailed proposal. Mr Wu said the foundation would look into whether it had the authority to order associations it funded to account publicly for how they spent their money. “For that we will have to have discussions with the associations,” he said. “But I believe that they would not mind publishing their accounts.”

December 4, 2013

Macau Brought to you by

HOSPITALITY Disappearing act

LVS confirms refinancing talks Seeking ‘US$3.25 bln’ to pay off existing loans and remove ‘certain covenants’ Michael Grimes

michael.grimes@macaubusinessdaily.com

The number of visitors to Macau keeps growing mainly because the number of visitors from the mainland keeps growing. Few visitors come from places other than the main sources: the mainland, Hong Kong and Taiwan. The number of visitors from the fourth-biggest source, South Korea, is the equivalent of 2.6 percent of the number from the mainland. The number of visitors from South Korea, Japan, India, Indonesia, Malaysia, Thailand, the Philippines, Singapore and Vietnam combined is the equivalent of 13 percent of the number from the mainland. And while more visitors have been coming from South Korea, fewer have been coming from the other countries. The chart shows the annual changes in the number of visitors each October for the past three years.

Parisian to cost around US$2.7 bln

South Koreans are the only visitors, from these nine countries, whose numbers grew consistently – at an average annual rate of over 20 percent. Indians visited in slowly declining numbers. Just over 12,000 came in October this year. The number of visitors from the six main sources in Southeast Asia combined fell in the past two years. So did number of visitors from Japan – by one-third. Altogether, the number of October visitors from these nine countries has declined by 6 percent since 2011. The decline accentuates Macau’s increasing dependence on the mainland for tourists.

12 %

Annual rise October visitors from South Korea

as Vegas Sands Corp, parent of Macau casino operator Sands China Ltd, is expected to announce the refinancing of some of its credit facilities in the United States after meeting bankers tomorrow U.S. time. LVS is seeking US$3.25 billion (25.95 billion patacas) of loans to pay off an existing credit pact, said Bloomberg, citing a person with knowledge of the transaction. The financing consists of a US$2.5 billion term loan B and a US$750 million revolving credit line, said the person, who asked not to be identified because terms aren’t set. The unit seeking the facility – Las Vegas Sands LLC – has about US$3.2 billion of first-lien loans, a portion of which matures as soon as May 2014, according to data compiled by Bloomberg. The parent company didn’t comment on Bloomberg’s report. But it said in a prepared statement the deal would “extend the maturity profile of the company’s long-term debt and remove certain financial covenants”. The firm added that Barclays Capital and Citi have been engaged to arrange the refinancing along with

Bank of America Merrill Lynch, BNP Paribas SA, Goldman Sachs Group Inc and Scotiabank.

Past covenants The casino firm – in common with many leveraged businesses – faced tighter terms for loans following the global financial crisis of late 2008. It has been gradually restructuring its lending terms as trading conditions have improved. LVS did however face specific constraints in recent years. In November 2008 its then auditor PricewaterhouseCoopers LLP announced there was - at that time - “substantial doubt about the company’s ability to continue as a going concern”. LVS added in a contemporary filing with the U.S. Securities and Exchange Commission that it would not be in compliance with its maximum leverage ratio for the fourth quarter 2008. Later that same month the audit firm lifted its “going concern” warning after LVS raised US$2.1 billion by selling common shares and preferred stock. But in a 10k filing to the SEC on

February 27, 2009, LVS outlined that in Macau, its development loans had (at that time) tough covenants on maximum leverage ratio of debt to adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation). The maximum leverage ratio decreased from 4.5 times as of December 31, 2008, to 4.0 times for the quarterly periods ending March 31 and June 30, 2009, and then to 3.5 times for the quarterly periods ending September 30 and December 31, 2009. Under the terms of a revolver loan, money can be borrowed again once it’s repaid; in a term loan, it can’t. A ‘term loan B’ is sold mainly to nonbank lenders such as collateralised loan obligations, bank loan mutual funds and hedge funds. In its third quarter results, Las Vegas Sands said it had total debt outstanding of US$9.76 billion as of September 30, and US$3.21 billion in unrestricted cash balances. LVS is spending approximately US$2.7 billion on a French-themed casino resort on Cotai called The Parisian. It mentioned an opening date of “late 2015” in its third quarter earnings filing.

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December 4, 2013

Macau B’mingham International delays finance exercise

irmingham International Holdings Ltd says it’s not yet finalised a deal to tidy up the finances of an English professional football club it owns. Under it, BIHL’s chairman Carson Yeung Ka Sing is to give up his rights to a roughly 15.3 million pounds (194.65 million patacas) personal loan he made to Birmingham City F.C. In return he will get convertible bonds in BIHL. Commentators in the United Kingdom have suggested the deal would make it easier for Hong Konglisted BIHL – which last week reported a HK$118.76 million (US$15.3 million) loss for the year ended June 30 – to sell the English Midlands club. BIHL now says finalisation of the funding exercise has been postponed until “on or before 20 December 2013”. Mr Yeung is currently on trial at the District Court in Wanchai, Hong Kong, charged with five counts of laundering HK$721 million between January 2001 and December 2007. Mr Yeung – at one time an investor in Macau junket firm Neptune Group – denies the charges. M.G.

Amax extends Cyprus deal deadline again Junket investor in talks for casino operation in north of Mediterranean island Michael Grimes

michael.grimes@macaubusinessdaily.com

acau casino junket investor Amax International Holdings Ltd says it has extended for a second time the deadline on talks to acquire a controlling stake in a proposed casino operation in Northern Cyprus. The new cut off point is February 28 next year. The firm’s annual report for year ended March 31, filed with the Hong Kong Stock Exchange in late July, said its accounts contained “material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern”. Amax had losses for the 12-month period of approximately HK$39.38 million (US$5.08 million). The firm first said in a filing on June 28 that it was interested in getting a controlling 51 percent stake in Southern Ruby Ltd, a limited liability entity incorporated in the Pacific island state of Samoa. Amax said the target firm had “two memorandums of understanding to obtain an exclusive right to set up and operate a casino” inside the Lara

Coastal resort of Girne, Northern Cyprus

Park Hotel, Girne, in the Turkish Republic of Northern Cyprus. Amax added it also was interested in a 10 percent stake in the hotel itself. According to the local project management company Optimal, the hotel has a construction area of 75,000 square metres (807,293 sq feet) and was completed in March at a cost of US$80 million on behalf of clients ETS Grup/Mersoy Turizm ve Otelcilik Isletmeleri Ltd Sti. Amax gave the original deadline for talks as September 30. Since that announcement, the cut off date

for negotiations had been extended firstly to end-November and now to end-February. The northern Turkish-speaking portion of the Mediterranean island of Cyprus is only recognised as an independent state by Turkey. The United States’ Department of State said in its latest International Narcotics Control Strategy Report in March the jurisdiction “lacks the legal and institutional framework necessary to provide effective protection against the risks of money laundering”.

December 4, 2013 April 19, 2013

Macau

City Chain’s slowing sales to mainlanders S

Makers of electronic and electrical equipment had less than one month’s-worth of orders in the third quarter

Q3 factory orders lowest on record Exporters fret about weak demand, costlier raw materials and the labour shortage Vítor Quintã

vitorquinta@macaubusinessdaily.com

actory orders slumped to their lowest on record in the third quarter of this year as demand in Southeast Asia weakened, a Macau Economic Services survey found. Exporters had orders for the following 1.7 months, on average, 19 percent less than in the second quarter, according to the results of the survey, released yesterday. Orders have fallen by almost one month’s-worth in the past two quarters. They are now at their lowest since 2004, when Macau Economic Services first surveyed manufacturing exporters. The textiles and clothing industry, Macau’s main domestic exporter, had orders for the following 2.5 months, on average, more than any other industry. In contrast, makers of electronic and electrical equipment had less than one month’s-worth of orders. Exporters said the reduction in orders was due mainly to weak demand from Southeast Asia. Economic growth in Indonesia, Southeast Asia’s largest economy, fell in the third quarter to its slowest rate since the 2009 global slump as the rupiah weakened, restraining investment. Exporters were pinning their hopes on higher demand from elsewhere, particularly from the mainland – Macau’s main market – but also from the United States and Japan.

0.4%

Proportion of companies expecting big increase in exports

Of the companies surveyed, 42 percent said an insufficient volume of orders was a worry and 36 percent said they were concerned by more competitive prices charged elsewhere. Macau Economic Services said manufacturers were more cautious in the third quarter about the prospects for exports as new orders shrank.

Price headaches The survey found that only one in four exporters had confidence about the future of their business. In the first quarter the proportion was 40.2 percent. Only 0.4 percent of companies believed exports would increase a lot in the following six months. Over one-third of exporters said they expected business to keep declining until early next year, a greater proportion than in the first quarter. Increases in prices of raw materials were the main drain on optimism among manufacturers, two-thirds of companies saying it was their biggest concern. Almost half of all exporters feared rises in prices would become more troublesome. The labour shortage continues to hamper manufacturers. About 62 percent of exporters said a lack of workers gave them problems. Among pharmaceutical companies, 88.2 percent reported a shortage of labour. The companies surveyed said their workforces were 2.3 percent smaller than in the second quarter. The average monthly pay of fulltime employees in manufacturing was 8,510 patacas (US$1,066) at the end of September. The median salary in all occupations was 12,000 patacas. 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.

telux Holdings International Ltd – a retailer of mid-price watches and of spectacles with shops in Macau and Hong Kong – said slowing demand from mainland customers had an impact on its latest results. As of September 30, the company had a total of 108 City Chain watch stores in Hong Kong and Macau and 96 outlets of the Optical 88 eyewear chain in the two markets. In its interim results for the six months to end-September, Stelux said City Chain in Hong Kong and Macau accounted for 37 percent of group turnover. City Chain’s turnover in the two Special Administrative Regions managed an 18 percent yearon-year expansion, while earnings before interest and taxation rose

nearly 23 percent to HK$148.6 million (US$19.2 million). Stelux said the gains were due to “improvements in store leasing strategies, improvements in samestore productivity, tightened costs control and the successful marketing strategies”. Optical 88’s performance in the two cities included a 5.3 percent rise in pre-interest, pre-tax earnings to HK$42.0 million, and turnover up 6.6 percent to HK$408.5 million. “Our top line performance could have been better if not for the revamping works in certain important shopping malls impacting the performance of some of our major stores,” explained Stelux referring to Optical 88. M.G.

Vitasoy boosts sales in Macau H

ong Kong-based food and beverage producer Vitasoy International Holdings Ltd said its profit rose by 6 percent in its financial first half to HK$182 million (US$23.5 million), mostly from sales in Macau and Hong Kong. The sales bump was mainly in nonalcoholic drinks, the company said in its report filed to the Hong Kong Stock Exchange. “Both soy and tea categories have performed solidly,” the company said, adding that sales gained from more investment in core brands. Sales revenue in Macau and Hong Kong rose about 4 percent year-onyear to HK$986 million, the company said in its interim results for the six months to end-September. Revenue from the two markets accounted for 40.3 percent of Vitasoy’s sales. The company also operates in the mainland, North America, Singapore, Australia and New Zealand. Overall, revenue grew 9 percent year-on-year to HK$2.3 billion in the six months to September 30. “The increase was driven by improved operating profit but partly offset by the increase in income tax expense and the allocation of profits

Vitasoy’s sales grew 9 percent in the six months to Sept (Photo: Manuel Cardoso)

to non-controlling shareholders,” the company said. “We continued to deliver consistent growth in both sales and profitability, despite a sluggish economic environment and higher operating costs (especially in commodity and labour costs),” Vitasoy added. In its fiscal first half, Vitasoy strengthened channel distribution and launched brand restage programmes to drive growth across different geographies. “Macau continued its remarkable performance, reflecting increasing consumers’ preference for our core products,” the company said. The board of directors has recommended an interim dividend of 3.2 Hong Kong cents per share.

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December 4, 2013 April 19, 2013

Macau

Govt gives pledge to fix bus system Hints that the contracts with the bus companies could be turned into concessions Vítor Quintã

vitorquinta@macaubusinessdaily.com

he government has pledged to mend the flaws in the bus system, which the Commission Against Corruption has described as illegal, a waste of money and contrary to the public interest. But the government has given no details of how or when the fiasco will be put right. The government said in a written statement issued late on Monday that the Transport Bureau “did not chose the right legal framework” for its contracts with the bus operators. The bureau signed service provider contracts with the three bus operators in 2011.

KEY POINTS Bus operators should have concessions Mistake ‘impacts the validity’ of contracts Govt to solve the technical, legal problems

The government statement said the law allowed private companies to operate bus services only under public service concessions. The Commission Against Corruption said in a report released last month that Transportes Urbanos de Macau SARL (Transmac), Sociedade de Transportes Colectivos de Macau SARL (TCM) and Reolian Public Transport Co Ltd were “operating illegally”. The government statement said the choice of the wrong legal framework “impacts the validity” of the bus service contracts, which should always “be in compliance with the existing legal provisions”. The Commission Against Corruption suggested that three solutions to the problem are open to the Transport Bureau. One solution would be to end the present contracts, but the commission said this would mean compensating the bus operators. Another solution would be to negotiate concessions with the operators. The third solution would be to turn the present contracts into concessions. The government statement hinted that it preferred the last option. The statement said the Secretariat for Administration and Justice and the Secretariat for Transport and Public Works had completed an

The Commission Against Corruption says the government’s contracts with the bus operators are illegal

analysis of the issue. The solution “will fix the technical and legal problems” in the contracts and “improve the bus system”. Business Daily tried to obtain more information from the Secretariat for Administration and Justice but we had received no reply by the time we went to press. Reolian deputy general manager

Abel Kuok Tong Cheong told Business Daily that the government had told his company nothing about its plans for the bus service contracts. Legislative Assembly members have demanded that Transport Bureau officials be called to account for the legal flaws. The government statement made no mention of any disciplinary action.

Small firms seek support for IT skills Only half of local businesses use computers regularly suggests government survey Tony Lai

tony.lai@macaubusinessdaily.com

mall businesses need financial support from the government to boost the use of computers in their operations says the Macau Association of Small and Medium Enterprises. According to an annual survey on the city’s information technology usage published this week by the Statistics and Census Service, only 51 percent of Macau businesses used computers regularly for their operations during 2012. The most recent survey done by the Hong Kong government in 2009 suggested nearly 64 percent of enterprises in that city used computers. Macau needs a dedicated fund to encourage technology usage and more training courses to help more of the city’s ‘micro enterprises’ to install IT. “We, the SMEs, have already faced drastic rises in rents and employees’ salaries,” said Jacky Lei, the association’s administrator. “It is difficult for us to fork another amount of money on the IT equipment.” The 51 percent usage by SMEs of such technology during 2012 is nonetheless the highest since the government started collecting information on the topic in

2001. Then only 30 percent of businesses used it.

Calculator V. PC The survey showed that most of the big firms – those with more than 100 employees each – used computers. But among companies employing nine people or fewer, the rate of IT use falls to 44.2 percent. Computer usage was lowest in the

restaurant sector, where only 32.7 percent of operations installed them. The survey did not indicate how many enterprises the government polled. “Basically the micro enterprises are not familiar with the technology and computers are not much use to them as, for example, they can simply use calculators instead of computers for accounting,” said Mr Lei. The official survey shows the top

three uses of computers last year by the business sector were: word processing (72.5 percent), creation of data banks (60.5 percent) and accounting (48.3 percent). Mr Lei believes the government should launch an individual scheme of interest-free loans for the SMEs to apply for installing the technology equipment, or provide some secondhand computers for the SMEs to operate on a trial basis. The government currently offers a number of general subsidy schemes for SMEs. They include ‘SME Aid’ offering interest-free loans of up to 600,000 patacas (US$75,000). The administration also plans a scheme next year to help SMEs set up websites for online promotion, according to the Chief Executive’s Policy Address for 2014. Data suggest only one out of 10 firms had a budget specifically for IT last year. Among those that did, 83.6 percent of firms spent fewer than 50,000 patacas. “The administration should also promote more courses of IT training for the businesses to help them be more familiar with the technology,” Mr Lei added.

December 4, 2013 April 19, 2013

Greater China Yum posts surprise gain in China sales Yum! Brands Inc, owner of KFC and Pizza Hut, posted a surprise gain in same-store sales in China last month as promotions lured diners to the company’s fried- chicken chain. Sales at stores open at least 12 months in China rose 1 percent, the company said in a statement. A limited-time, half-priced “bucket promotion” helped spur KFC sales during the beginning of November, Yum said. After the discount ended on November 10, the chain’s same-store sales were down 8 percent for the rest of the month. The company also reiterated its forecast for a 20 percent profit increase, excluding certain items, in 2014.

Sinopec pipeline blast toll rises to 62 The final death toll from an oil pipeline explosion in the Chinese coastal city of Qingdao rose to 62, authorities said yesterday. The blast last month ripped roads apart, turning cars over and sending thick black smoke billowing over the city, pictures showed. The pipeline, run by state-owned oil giant Sinopec, sprang a leak on November 22 and exploded several hours later as workers sought to repair it. The body of the last missing person was found on Monday, the Qingdao city government said in a statement on its verified account on Sina Weibo, a Chinese equivalent of Twitter.

Yuan ‘second most used’ Study shows the Chinese currency has increasingly internationalised

he yuan overtook the euro to become the second-most used currency in global trade finance in 2013, according to the Society for Worldwide Interbank Financial Telecommunication. The currency had an 8.66 percent share of letters of credit and collections in October, compared with 6.64 percent for the euro, Swift said in a statement yesterday. China, Hong Kong, Singapore, Germany and Australia were the top users of yuan in trade finance, according to the Belgium-based financial-messaging platform. The yuan’s share of global trade finance was 1.89 percent in January 2012, while the euro’s was 7.87 percent, Swift said. “The renminbi is clearly a top currency for trade finance globally and even more so in Asia,” Franck de Praetere, Swift’s Singaporebased head of payments and trade markets for Asia Pacific, said in the statement. China is seeking a greater role for its currency in global trade and investment as the state loosens

US$120 bln

Value of daily yuan transactions in April

controls on the exchange rate and borrowing costs in the world’s second-largest economy. People’s Bank of China Deputy Governor Yi Gang said on November 20 it is no longer in the nation’s interest to keep building up its foreign-exchange reserves, which totalled a record US$3.66 trillion at the end of September. Yuan deposits in Hong Kong, the largest pool outside China, rose the most since April 2011 to a record 782 billion yuan (US$128 billion)

International use of the yuan is increasing as Beijing

Goldman Sachs bullish on Chinese H shares Investment bank predicts biggest H-Share advance since 2009 Ye Xie

Honda auto sales more than double Honda Motor Co Ltd and its two local joint ventures sold 83,013 automobiles in mainland China in November, up 101.5 percent from a year earlier, the Japanese automaker said yesterday. That follows a 211.6 percent yearon-year jump in October and a 118 percent rise in September, which were partly boosted by a low base from last year when sales tanked due to a surge in anti-Japan sentiment following a territorial dispute between Beijing and Tokyo. For the first 11 months of 2013, Honda sold 655,418 units, up 22.4 percent from the same period a year earlier.

Stocks rise to six-week high China’s stocks rose to the highest level since October, led by steel, material and drug companies, as a drop in money-market rates eased concern of a cash squeeze before the resumption of initial public offerings next month. The Shanghai Composite Index gained 0.7 percent to 2,222.67 at the close. The ChiNext index rose 0.1 percent after plunging 8.3 percent on Monday, the steepest drop on record. Some investors are switching to large-company shares from smallcaps before the restart of new share offerings, said Zeng Xianzhao, an analyst at Everbright Securities Co. The CSI 300 Index advanced 1 percent to 2,442.78. The Hang Seng China Enterprises Index slid 0.7 percent to 11,462.81.

hinese stocks traded in Hong Kong will post the biggest gain since 2009 next year on prospects the economy will stabilise, Goldman Sachs Group Inc said. The Hang Seng China Enterprises Index, also known as the H-share index, will rally 18 percent to 13,600 by the end of 2014, Noah Weisberger, a New York-based analyst at Goldman Sachs, wrote in a report. The advance would be the biggest since the gauge surged 62 percent in 2009. The measure slid 0.7 percent to 11,462.81 yesterday in Hong Kong. China’s manufacturing growth beat analyst estimates in November, indicating the nation’s economic recovery is sustaining momentum amid government efforts to rein in credit growth. Goldman Sachs’s H-share forecast forms part of a trade recommendation in which the bank is telling investors to buy Chinese stocks while selling copper as a bet that commodities will lag the rally in equities. Goldman Sachs called the trade its fourth top recommendation for next year. “Equities are our favourite asset class in an environment where growth is moderate but not overheating, while policymakers remain accommodative,” Mr Weisberger said. “For the first time in the last several years, we would argue to own exposure to China through the Chinese equity market.” China last month vowed to allow more private investment in statecontrolled industries, loosen its onechild policy and better protect farmers’ rights in the most sweeping reforms

in two decades. The government also pledged to elevate the role of markets in the world’s second-largest economy.

H-share valuation Economists estimate gross domestic product will expand 7.5 percent next year after growing 7.6 percent this year, according to the median projection in Bloomberg News surveys last month. The government set a target for 7.5 percent expansion in 2013. While the H-share index closed on Monday at the highest level since February 20, it still traded 19 percent below its average valuation of the last five years, according to data compiled by Bloomberg based on estimated earnings. “We’ve been positive for China for quite some time and it’s an overweight country for us,” Allan Conway, who oversees US$27 billion as head of emerging market equities at Schroder Investment Management in London, said. Chinese stocks account for about 22 percent of his portfolio. “The market is attractively priced.” Goldman Sachs’s Mr Weisberger said buying the H-share and selling copper futures may generate a combined return of 25 percent next year. While stability in China’s growth is enough to boost “risk sentiment” after the H-share index fell 12 percent over the past three years, it’s insufficient to lift demand for copper as a supply glut weighs on the market, he said. “We think the current context is a

Equities are our favourite asset class in an environment where growth is moderate but not overheating, while policymakers remain accommodative Noah Weisberger, Goldman Sachs

little bit different whereas whatever growth acceleration we are going to see in the coming year is going to be a developed market theme,” said Mr Weisberger. “When the economic growth is driven by the developed market, it’s going to leave the commodity behind.” Mr Weisberger ended a recommendation to buy China’s H shares in November 2011 after the trade lost 5 percent. The Hang Seng China index rallied about 22 percent in the three months after he advised clients to exit the bet. Bloomberg News

December 4, 2013 April 19, 2013

Greater China

trade finance currency in October. Agreements were announced this quarter to start direct currency trading between the yuan and both the British pound and Singapore dollar.

Global payments

opens up its capital markets

The Chinese currency ranked No. 12 for transactions in the global payments system in October, unchanged from the previous month, according to Swift figures. Payment value for the currency rose 1.5 percent that month, less than the 4.6 percent growth for all currencies, the Swift data showed. That saw the yuan’s market share drop to 0.84 percent from 0.86 percent in September. Daily yuan transactions surged to US$120 billion in April from US$34 billion in 2010, making it the ninth most-traded currency in the world, according to a September report by the Bank for International Settlements in Basel, Switzerland. The yuan has appreciated 2.3 percent against the greenback this year, the best performance in

Asia, according to data compiled by Bloomberg. The currency was little changed at 6.0926 per dollar yesterday in Shanghai. In the first nine months of this year, about 17 percent of China’s global trade was settled in the currency, compared with less than 1 percent in 2009, according to Deutsche Bank AG. China and the U.K. will begin direct trading between the yuan and the British pound, Chancellor of the Exchequer George Osborne said on October 15. China also approved an 80 billion yuan quota allowing investors in London to buy onshore assets. Singapore inked a similar agreement with China a week later. Direct trading between the currencies of Japan and Australia started in the past two years. The European Central Bank and the People’s Bank of China agreed to establish a bilateral currency swap line of as much as 350 billion yuan, the Frankfurt-based central bank said in October.

Dim Sum busiest in 17 months Dim Sum bond issuance has accelerated to the fastest pace since June 2012 as China’s pledge to move toward yuan convertibility boosts demand for the currency. Sales reached 27 billion yuan (US$4.4 billion) in November, almost five times as much as October’s 5.8 billion yuan, according to data compiled by Bloomberg. China Vanke Co, a developer held by billionaire Wang Shi, was among last month’s issuers, while Hong Kong Airlines Ltd was considering an offering. The average yield on offshore yuan notes has declined 36 basis points to 3.96 percent this quarter, while the rate on Asian dollar debt has fallen 21 basis points, Bank of America Merrill Lynch indexes show. Appetite for Dim Sum bonds has picked up with the People’s Bank of China outlining plans to end daily currency intervention and move toward renminbi convertibility, including allowing special accounts for trials in Shanghai’s free-trade zone.

Bloomberg News

Services sector Tencent brand resilient in November valued at US$34 bln Services companies took more new orders last month

rowth in China’s services sector held near one-year highs in November, another indicator of strength as the government prepares to introduce sweeping reforms to restructure the world’s second-largest economy. The official purchasing managers’ index (PMI) for the non-manufacturing sector dipped slightly to 56 in November from a 13-month high of 56.3 in October, the National Bureau of Statistics said yesterday. That is still comfortably above the 50-point threshold that separates growth from contraction, and follows two other PMI surveys this week that showed a pick-up in activity for manufacturers last month. The economy has regained some momentum since mid-year after a protracted slowdown. While it was expected to lose steam as the effect of government support measures faded, activity has remained resilient into the December quarter. That is seen strengthening the government’s hand to push ahead with its ambitious agenda of reshaping the economy to boost domestic consumption at the expense of the traditional drivers of exports and investment.

Social media firm rated most valuable China tech brand

“The economy is doing OK. There is enough momentum to support growth around the third-quarter pace in the fourth quarter,” said Tim Condon, chief Asia economist at ING Financial Markets in Singapore. Yesterday’s data showed services companies took more new orders last month, though the rate of increase slowed. The sub-index for new orders stood at 51, down from October’s 51.6. In a sign that activity was softening in some areas, price pressures moderated. The sub-index for final prices fell to 49.5 from October’s 51.4, indicating some firms cut prices, and a sub-index for input prices also retreated to 54.8 from 56.1. Firms in aviation, wholesale trade, leasing and business services, water transportation, environment and public infrastructure sectors were among those to cut their final prices, the survey showed. The services industry accounted for 45 percent of China’s gross domestic output in 2012, and it overtook manufacturing as the country’s biggest employer in 2011. It has weathered the global slowdown much better than the factory sector. Reuters

nternet services company Tencent Holdings Ltd has grown so rapidly it’s now China’s most valuable listed technology brand, with a value even closing in on that of WalMart Stores Inc, a report published yesterday shows. The Tencent brand is worth about US$33.9 billion even though it’s almost unknown outside its home turf, according to an annual ranking of China’s listed companies compiled by advertising company WPP Plc and its research affiliate Millward Brown. Global retailer Wal-Mart was valued at US$36 billion in this year’s WPP-Millward Brown global ranking, published in May. The annual rankings, based on analysis of a brand’s revenue and consumer responses to it, make Tencent the first technology company to break into the top three of China’s most valuable brands. The Chinese ranking only covers the country’s publicly traded companies, which means high-profile technology brands like mobile phone maker Huawei Technologies Co and e-commerce company Alibaba Group Holding Ltd were not counted. Alibaba is widely expect to go public as early as 2014. Tencent, whose two-year-old voice and text messaging service WeChat now boasts almost 275 million active monthly users, is popular with Chinese consumers for its online games and social media applications, said Doreen Wang, head of branding for Millward Brown China. Tencent ranked third overall in the China list, trailing mobile telecommunications provider China Mobile Ltd with a brand value of

US$61.4 billion, and Industrial and Commercial Bank of China Ltd, worth US$39.6 billion. Last year, Tencent ranked fifth but leapfrogged China Construction Bank Corp and Internet search engine Baidu Inc as its brand value rose 68 percent. “It’s not an international brand yet,” Millward Brown’s Ms Wang said. “Tencent is still getting most of its brand equity from its home market in China.” “Alibaba is the e-commerce [brand] we really want to evaluate,” said Ms Wang, adding that Huawei would “probably already rank the #1 in the brand list” if it were included. In another departure in this year’s ranking, Tencent is also the first private enterprise to break into the top three in China, led by state-owned banks and telecoms companies, since 2007. Reuters

10 10

December 4, 2013 April 19, 2013

Greater China

HK on public-health alert after H7N9 case confirmed Government to step up health checks at border checkpoints

ong Kong reported its first case of a form of bird ‘flu that killed 45 people in eastern China, suggesting the virus is spreading further south in poultry. A 36-year-old Indonesian domestic helper is in critical condition after being infected with the new H7N9 ‘flu strain, Hong Kong’s government said on Monday. She had travelled to the neighbouring mainland Chinese city of Shenzhen, where she bought and slaughtered a chicken, according to a statement. Her infection suggests the virus, which is often lethal to humans but causes no symptoms in birds, is circulating less than 30 miles from downtown Hong Kong. The city’s government curbed live poultry sales 16 years ago to prevent an earlier bird-flu variant from spreading. Yesterday, it elevated the response level under its influenza pandemic preparedness plan to “serious,” requiring hospitals to step up infection controls and limit visiting hours. Hong Kong Chief Executive Leung Chun Ying said yesterday Hong Kong would step up health checks at border checkpoints to screen visitors with fever symptoms. Agricultural officers would also inspect poultry farms and chicken stalls, the chief executive told media there.

Hong Kong has suspended the import of live chickens from some mainland farms

“We might not expect that this case is the only infection” in Shenzhen, said Ben Cowling, associate professor of infectious disease epidemiology at the University of Hong Kong’s School of Public Health. Four people who had been in recent, close contact with the patient are displaying minor symptoms, said Ko Wing Man, the city’s health

secretary, in the statement. Chris Cheung, a spokesman for Hong Kong’s Department of Health, declined to elaborate on the circumstances around which the patient was probably infected. The patient visited Shenzhen on November 17, according to the statement. She had a history of “traveling to Shenzhen, buying a chicken, slaughtering

the chicken and eating the chicken,” Mr Ko told reporters in Hong Kong.

Market closures Human cases of H7N9 in China date back to February and surged in April before agriculture authorities temporarily closed live poultry markets and quarantined farms to

limit human exposure. The Geneva-based World Health Organization counted 137 laboratory-confirmed cases as of October 25. “Respiratory viruses do their own thing; they don’t respect boundaries,” said Ian Mackay, an associate professor of clinical virology at the University of Queensland in Brisbane, Australia, in a telephone interview. “It does seems that it’s continuing to add to provinces and regions, rather than reappear in all the old places it started in back in February and March.” H7N9 has previously turned up outside mainland China. In late April, officials in Taiwan reported a case in a 53-year-old man who had just returned to Taiwan via Shanghai after a business trip to the eastern city of Suzhou. Technical difficulties in detecting H7N9 infections may be causing cases to go unreported, Mr Cowling said. Residents of Guangdong, the Chinese province bordering Hong Kong and Macau, appear to have a greater preference for buying live poultry than those of other provinces, he said. Shanghai will suspend live poultry trading from January 31, the first day of the Chinese New Year, until April 30 to prevent a recurrence of the bird flu, the official news agency Xinhua reported. Hong Kong’s government has suspended the importation of live chickens from three Shenzhen farms, according to Monday’s statement. The city’s government said it has notified mainland and Macau health authorities and WHO about the confirmed infection. T.A./Bloomberg News

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AMC Theater chain seeks US$368 mln in IPO Chinese parent company retains power to control board elections

MC Entertainment Holdings Inc, the U.S. movie chain controlled by China’s richest man, plans to raise as much as US$368 million in an initial public offering. The company, based in Leawood, Kansas, plans to sell 18.4 million shares at US$18 to US$20 each, according to a statement yesterday. AMC Entertainment said it will use the proceeds to reduce debt and for general corporate purposes. The company said in August it may seek to raise as much as US$400 million. The offering of Class A shares would return AMC, the second-largest U.S. theatre chain by revenue, to a public listing for the first time in nine years. It was acquired last year by Dalian Wanda Group for US$2.6

billion, including assumption of debt. Dalian Wanda, China’s largest entertainment company, is led by Wang Jianlin, whose estimated net worth of US$12.4 billion is the highest in China, according to the Bloomberg Billionaires Index. AMC was a public company before its purchase in 2004 by Apollo Global Management and JPMorgan Chase & Co. It was subsequently merged with Loews Cineplex, a chain owned by Bain Capital LLC, Carlyle Group LP and Spectrum Equity Investors. Mr Wang’s Dalian Wanda bought the company in May 2012. Citigroup and BofA Merrill Lynch are acting as joint book-running managers and representatives of the underwriters, according to the statement. AMC plans to grant the

underwriters an option to purchase up to an additional 2.63 million shares of Class A stock. The company has applied to list the stock on the New York Stock Exchange under the symbol “AMC”. AMC had sales of US$2.04 billion through nine months of 2013, and 4,950 screens, according to filings and company statements. Regal Entertainment Group is the largest U.S. exhibitor, with sales of US$2.3 billion through nine months and more than 7,300 screens, according to company statements. Wanda invested about $700 million in connection with its purchase of AMC, according to the filing. AMC plans to pay cash dividends following completion of the offering. The Chinese parent company will

retain the power to control AMC’s affairs in terms of board elections, mergers and other extraordinary transactions, according to the filing. Bloomberg News

11 11

December 4, 2013 April 19, 2013

Asia

Biden urges Japan, China to lower tensions Seeks balance between calming tensions while backing Tokyo

to Japan. “The only choice he has if he wants a successful trip [to China] is not to go too far in his words over there,” it wrote in an editorial. “If he openly supports Tokyo and wants to ‘send an expedition to punish’ Beijing, the Chinese people won’t accept it.”

‘Pacific power’

Elaine Lies

.S. Vice President Joe Biden urged Japan and China to lower tensions that have spiked since Beijing announced an air defence zone over disputed islands in the East China Sea, while repeating that Washington was “deeply concerned” by the move. The United States has made clear it would stand by treaty obligations that would require it to defend the Japanese-controlled islands, but is also reluctant to get dragged into any military clash between the Asian rivals. Mr Biden met Japanese Prime Minister Shinzo Abe yesterday before flying to China today as part of an Asian trip in which he will seek a delicate balance between calming tensions over the zone while backing key ally Japan. “We remain deeply concerned by the announcement of a new Air Defence Identification Zone,” Mr Biden said in written answers to the Asahi daily newspaper. “This latest incident underscores the need for agreement between China and Japan to establish crisis management and confidence building measures to lower tensions.” Influential Chinese tabloid the Global Times, published by the Communist Party’s official People’s Daily, said Mr Biden should not cosy up to Mr Abe or offer effusive support

Joe Biden, U.S. Vice President

Japan reiterated yesterday that Tokyo and Washington had both rejected Beijing’s move to set up the zone – despite the fact that three U.S. airlines, acting on government advice, are notifying China of plans to transit the area. “We and the United States have the same stance of not recognising this ADIZ,” Chief Cabinet Secretary Yoshihide Suga told a news conference. “We firmly confirm this.” Washington said over the weekend that the advice to U.S. airlines did not mean U.S. acceptance of the zone, and last week sent two unarmed B-52 bombers into the area without informing China. The Japanese and South Korean governments have advised their airlines not to submit flight plans in advance, which China has demanded from all aircraft since it announced the creation of the zone on November 23. Washington takes no position on the sovereignty of the disputed islands, known as the Senkaku in Japan and the Diaoyu in China. However, it recognises Tokyo’s administrative control and says the U.S.-Japan security pact applies to them. “Japan knows that we have stayed for more than 60 years, providing the security that made possible the region’s economic miracle,” Mr Biden said. “Economically, diplomatically, militarily, we have been, we are, and we will remain a resident Pacific power.” Reuters

Rio Tinto to halve capital spending by 2015 Company to conserve cash as commodities’ prices remain fragile

io Tinto Group, the world’s second-biggest mining company, will cut capital spending to about US$8 billion in 2015, less than half its outlay last year, as mineral producers conserve cash after prices fell. Chief executive Sam Walsh, in the top job for nearly a year, said he was “pretty comfortable” with progress meeting the firm’s targets, but warned of more market volatility despite signs of a modest recovery in global growth. “From where I stand, we continue to see market fragility and volatility,” Mr Walsh said. To deal with the tougher conditions, the company has stripped out US$2.6 billion in costs so far this year, including nearly halving exploration spending to around US$850 million. The world’s second-biggest iron ore miner plans to cut capital spending to US$11 billion in 2014 from just under US$14 billion this year, and sees capital spending at US$8 billion in 2015, which would be less than half the level it was in 2012.

The spending cuts and asset sales, including proceeds from the sale of its Northparkes copper mine stake completed last weekend and the Clermont coal mine, would help the company cut debt and allow it to increase its dividend. “In the short term, in 2014 we’ll be focused on reducing debt,” chief financial officer Chris Lynch said. The company aimed to cut net debt to the “mid-teens” next year from US$22 billion, as reported at the half year in 2013, he said. “I e xpe ct fu l l y th e progressive dividend will continue to increase, but that’s a function for the board,” Mr Lynch told an investor seminar in Sydney. Mr Walsh declined to comment on whether Rio Tinto was still looking to sell down its stake in Coal & Allied in Australia or sell its majority stake in Iron Ore Company of Canada, but said the company was “not going to be rushing into something stupid”. “It’s not a religious fervour, it’s purely testing the market with assets that we regard as not exactly core,” he said,

KEY POINTS Plans to cut capital spending 20 pct a year to US$8 bln Rio Tinto CEO rules out acquisitions No new investment planned in aluminium, energy

without naming any assets. Company executives ruled out any new investments in the near term in aluminium, energy, which includes thermal coal and uranium, and diamonds, and Mr Walsh effectively ruled out making any acquisitions in the near term. “We’re not considering any acquisitions,” he said. “Right now the focus is on strengthening the business, strengthening the balance sheet.” Rio Tinto to cut net debt to mid-teens range from US$22 bln

Reuters

December 4, 2013

Asia Japan to double bond issue next year

Thai markets retreat to deepen:

The Japanese government is planning to double its issuance of inflation-linked bonds to 1.2 trillion yen (US$11.7 billion) next fiscal year, government sources said yesterday, in a sign of confidence the economy is emerging from 15 years of deflation. Inflation-linked bonds, whose principle increases with rising consumer prices, are used by investors in many countries as a hedge against inflation. Their yields also serve as a gauge of inflation expectations. But Japan, mired in falling prices, has found little demand in recent years for inflation-linked bonds, even halting their sales for several years in the wake of the global financial crisis from 2008. Now, however, the Finance Ministry is finding demand for inflation-linked Japanese government bonds as Prime Minister Shinzo Abe’s aggressive reflationary policies begin to gain some traction, the sources told Reuters. The ministry is working on a JGB-issuance plan, to be announced later this month, that would double the inflation-bond amount for the year starting next April from this fiscal year’s level, the sources said.

Street protests in Bangkok began on November 24

Indonesian taxi firm to delay 2013 IPO The planned initial public offering of Indonesia’s biggest taxi operator, PT Blue Bird, will not happen this year after the company failed to receive regulatory approval in time, sources with knowledge of the matter said yesterday. Blue Bird is the latest setback for Indonesia’s IPO market, which has been rocked by volatility in global markets and high valuations. Several stock offerings in the country, such as PT Bank Muamalat, have been delayed or cut in size. Bluebird’s IPO, which sources earlier said could raise at least US$250 million, was set to be the next biggest IPO in Indonesia since the national carrier PT Garuda Indonesia’s offering, which raised US$526 million in 2011. The Indonesian equity capital market has been in the doldrums since the middle of the year soon after the U.S. Federal Reserve began to signal that it may slow down bond purchases. This happened after CVC Capital Partners and PT Multipolar Tbk raised about US$1.3 billion by selling part of their stake in Indonesian retail giant PT Matahari Department Store in March, which had raised expectations of a strong year for Indonesia’s equity capital raisings.

ank Julius Baer & Co says losses in Thai assets will probably deepen while BlackRock Inc is bearish on the baht as political unrest threatens to worsen the nation’s economic slowdown. The SET Index of shares has dropped 3.6 percent during the past month as the baht weakened 3.1 percent against the dollar. Yields on the nation’s 10-year bonds increased 18 basis points. Foreign investors sold US$5.1 billion of Thai equities this year, set for the biggest annual outflow since Bloomberg began compiling the data in 1999, and they cut bond holdings by about US$1.3 billion in November. BlackRock, Julius Baer and Kokusai Asset Management Co, which oversee a combined US$4.5 trillion, say antigovernment protests that led to three deaths over the weekend will weigh on an economy that’s already grappling with a current-account deficit and the prospect of reduced Federal Reserve stimulus.

US$5.1 bln Foreign investors have sold of Thai equities this year

Singapore regulator sees risks from rising rates Central bank urges lenders to monitor exposure to cross-border lending

Abe vows to pass secrecy law Prime Minister Shinzo Abe vowed to push through an unpopular bill strengthening Japan’s secrecy laws that will help him shore up security ties with the U.S. in a bid to counter China’s growing military muscle in the region. The government’s approval rating fell 4 percentage points from a month ago to 49 percent, the first time it dropped below 50 percent since Mr Abe’s election almost a year ago, according to a poll by the Asahi newspaper. Half of those surveyed opposed the secrecy bill that punishes leaks of government information with jail terms of as much as 10 years. “I plan to keep explaining the contents of the law carefully to citizens to ease their concerns,” Mr Abe said at a meeting with Natsuo Yamaguchi, leader of his coalition partner, the New Komeito Party. “I intend to get the law passed during the current session of parliament,” which ends on December 6.

ingapore’s banks need to carefully monitor their exposure to crossborder regional lending as they expand such activity, the city-state’s central bank said yesterday, adding that banks also need to stay vigilant over their U.S. dollar funding. “Reflecting confidence in Asia, the banking system’s cross-border exposure to the region has increased. This confidence should be balanced with an appropriate dose of vigilance,” the Monetary Authority of Singapore (MAS) said in its annual Financial Stability Review. “Stresses arising from tightening financial conditions can manifest themselves quickly. Banks need to monitor and manage the risks from different types of exposures carefully,” the MAS said. Loans to China and India now represent 9.2 percent and 4.2 percent, respectively, of total loans made by local and foreign banks.

The central bank added that while banks have been taking steps to improve their U.S. dollar funding profiles, continued vigilance was needed on this issue. “Banks should also continue to manage their foreign-currency liquidity risks prudently, as an abrupt global financial tightening could result in U.S. dollar liquidity stresses,” the MAS said. The banking system’s Singapore dollar funding was adequate to support Singapore dollar loans, with a loan-todeposit (LTD) ratio of 79.4 percent in the third quarter of 2013, it said. The LTD ratio for non-Singapore dollar loans, however, stood at 128.2 percent in the third quarter, it added. Both corporate and household balance sheets were healthy in aggregate and the banking system’s asset quality also remains healthy, it said, adding that local banks remain well-capitalised and already meet Basel III capital requirements.

But rising indebtedness in the corporate and household sectors could exacerbate strains from any sharp increases in interest rates, MAS said. “At this juncture, asset quality remains healthy, but this could deteriorate if an unexpectedly sharp rise in interest rates puts a strain on the debt-servicing ability of over-extended borrowers.” For the household sector, housing loans were a potential risk, the central bank said. “Housing loans account for about three-quarters of total household liabilities, and could be a significant source of risk for households. The credit profile for certain housing loans was a source of concern,” it said. A 3 percent increase in mortgage rates would boost the share of overly indebted households to as much as 15 percent from 10 percent now, the MAS said. Reuters

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

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December 4, 2013

Asia

Julius Baer

While Thai stocks and the baht recouped losses in four months after political street clashes killed more than 90 people in 2010, growth now is less than a quarter of the pace it was then. “The selloff of Thai assets is not over,” said Mark Matthews, the Singapore-based head of Asia research for Julius Baer, which oversees about US$377 billion in client assets. “I don’t think any one is itching to buy this market.”

Barriers removed

Rising global interest rates could pose risks for banks

Thai 10-year government bond yields increased six basis points on Monday to 4.17 percent as riot police fired tear gas for a second day at protesters seeking to oust Prime Minister Yingluck Shinawatra. Thai police allowed opposition protesters through barricades outside the government and metropolitan police headquarters yesterday. The reason for the sudden thaw in hostilities was not immediately clear but it came after police said they would no longer use force to defend their Bangkok headquarters from thousands of anti-government protesters who marched on the high-profile target. Metropolitan Police chief Lieutenant General Kamronwit Thoopkrajang said his officers would no longer try to fend off protesters at the police base. The Thai currency has dropped 7.5 percent since May 22, when U.S. Fed chairman Ben Bernanke first signalled it may reduce monetary stimulus that has fuelled capital inflows into emerging markets. “The Thai baht at this point is one of our bigger underweights,” Joel Kim, the head of Asia Pacific fixed income at BlackRock, which oversees about US$4.1 trillion, said at a briefing in Singapore.

The protests have been led by Suthep Thaugsuban, a former deputy prime minister with the main opposition Democrat Party. Mr Suthep is seeking to erase the influence of Ms Yingluck’s brother and former premier Thaksin Shinawatra, who was ousted in a coup seven years ago.

Slowing growth Ms Yingluck survived a noconfidence vote in parliament last week over allegations of economic mismanagement, corruption and attempting to pass an amnesty bill that would have exonerated Mr Thaksin of alleged crimes, as well as pardon those involved in the 2010 killings. More than 100,000 people took to Bangkok’s streets on November 24, while protesters occupied the Ministry of Finance the next day. Thailand’s economy grew 2.7 percent in the third quarter from a year earlier, the slowest pace since the first three months of 2012, official data show. The central bank also cut its 2013 growth estimate to about 3 percent from 3.7 percent on November 27, the same day it unexpectedly lowered its benchmark interest rate by a quarter of a percentage point. Thailand’s economy may grow 3 percent this year, down from the scaled-down 3.7 percent seen in September, due to the impact of the protests, a senior official from the finance ministry said yesterday. “We have to admit that [GDP growth] will not reach 3.7 percent this year as earlier projected. It may be 3 percent, depending on the political situation, which has affected tourism and budget disbursements,” the ministry’s fiscal policy office chief, Somchai Sajjapong, told reporters. Bloomberg News

Japan salaries extend slide in Oct RBA says Aussie still Consumers face the prospect ‘uncomfortably high’ of sustained inflation

apan’s salaries extended the longest tumble since 2010, increasing pressure on household finances as inflation begins to take root. Regular wages excluding overtime and bonuses fell 0.4 percent in October from a year earlier, a 17th straight monthly decline, according to labour ministry data released yesterday. Total cash earnings rose 0.1 percent. The slide in wages threatens living standards as consumers face the prospect of sustained inflation on top of a sales-tax increase in April next year. As a weaker yen helps boost company profits, the focus is turning to salary talks early next year that may determine the success of Prime Minister Shinzo Abe’s bid to reflate the world’s third-largest economy. “Raising wages is essential for Japan’s sustainable economic recovery,” Hidenori Suezawa, a financial-market and fiscal analyst at SMBC Nikko Securities Inc in Tokyo, said before the release. “It won’t be easy for manufacturing companies to raise base pay” as they are competing globally, he said, adding that they will probably just increase bonuses. Prices excluding energy and fresh food rose 0.3 percent in October from a year earlier, the most in 15 years, indicating inflationary pressures are broadening beyond electricity and gas price increases fuelled by the yen’s decline.

Australia’s central bank leaves key rate steady

Raising wages is essential for Japan’s sustainable economic recovery Hidenori Suezawa, SMBC Nikko Securities

The Japanese currency has fallen about 16 percent against the dollar this year, weakened by the Bank of Japan’s record easing as it targets 2 percent inflation. The increase in total cash earnings stemmed from a 5.4 percent climb in overtime payments and a 3.2 percent gain in bonuses, yesterday’s data show. In the manufacturing sector, bonuses jumped 30 percent, while regular wages were unchanged. The Japanese Trade Union Confederation, or Rengo, plans to demand pay increases of more than 1 percent in the spring labour negotiations, according to a statement in October. Bloomberg News

ustralia’s central bank left its benchmark interest rate unchanged at a record low and said the currency is “still uncomfortably high,” even after a 4 percent decline since its previous meeting. Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.5 percent, the Reserve Bank of Australia said in a statement yesterday in Sydney, as predicted by all 30 economists surveyed. Maintaining the same language as a month earlier, he said a lower Aussie “is likely to be needed to achieve balanced growth in the economy”. Markets and economists predict the central bank will leave rates unchanged next year to avoid a growth gap emerging as mining companies plan fewer projects. Low borrowing

costs are driving up home prices, suggesting the RBA may be reluctant to add to its 2.25 percentage points of rate cuts since late 2011. “Rates are at or near the bottom of the cycle, but rate hikes are probably quite some way off,” said Craig James, a senior economist at a unit of Commonwealth Bank of Australia, in Sydney. “If the economy continues to gather momentum, inflation remains under control and the Aussie dollar remains near U.S. 90 cents or eases further, then the Reserve Bank can happily stay on the interest-rate sidelines.” The Australian dollar was little changed after the decision. The RBA lowered borrowing costs eight times from November 2011 to August 2013. “The full effects of these decisions are still coming through, and will be for a while yet,” Mr Stevens said in a statement that mirrored last month’s release. “The pace of borrowing has remained relatively subdued overall to date, though recently there have been signs of increased demand for finance by households.” “There has been an improvement in indicators of household and business sentiment recently, but it is still unclear how persistent this will be,” he added. Reuters

14 14

December 4, 2013 April 19, 2013

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

Max 62.65

average 62.139

Min 61.40

Last 62.30

62.70

92.5

62.44

92.2

62.18

91.9

61.92

91.6

61.66

91.3

61.40

Max 92.30

average 91.693

Min 91.05

Last 91.95

61.8

91.0

28.30 28.15 28.00 27.85 Max 28.25

average 27.956

Min 27.70

Last 28.10

25.4

27.70

31.5

25.3 61.1

31.3

25.2 25.1

60.4

31.1

25.0 Max 61.75

average 60.945

Min 59.75

Last 61.00

59.7

Max 25.40

average 25.152

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Jan14

94.12

0.319761245

0.997961155

107.9400024

85.45999908

BRENT CRUDE FUTR Jan14

111.67

0.197397936

6.932873695

113.3099976

96.13999939

GASOLINE RBOB FUT Jan14

268.5

0.246415771

5.900449633

287.259984

243.1999922

946.25

0.318049298

5.138888889

968

838.75

3.978

-0.250752257

-1.777777778

4.825000286

3.464999914

GAS OIL FUT (ICE) Jan14 NATURAL GAS FUTR Jan14

305.4

0.12786466

2.445406058

320.0099945

278.0799866

Gold Spot $/Oz

1222.29

-1.269

-26.5654

1723.45

1180.57

Silver Spot $/Oz

19.2406

-2.4043

-36.099

33.81

18.2208

Platinum Spot $/Oz

1345.75

-1.2112

-11.3326

1742.8

1294.18

NY Harb ULSD Fut Jan14 METALS

Palladium Spot $/Oz LME ALUMINUM 3MO ($)

712.7

-0.5192

1.8638

786.5

629.75

1742.5

-0.712250712

-15.94307767

2184

1736.25

LME COPPER 3MO ($)

6975

-1.133947555

-12.05396545

8346

6602

LME ZINC

1877

-0.529941706

-9.759615385

2230

1811.75

13515

-20.77960141

18770

13205

15.865

-0.220125786

2.919234512

16.80999947

14.91500092

3MO ($)

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

426

0.35335689

-30.10664479

654.75

418.5

WHEAT FUTURE(CBT) Mar14

663.5

0.264450321

-20.22843402

899

647.75

SOYBEAN FUTURE Jan14

1322.5

0.094607379

1.03132162

1406

1169

COFFEE 'C' FUTURE Mar14

109.9

-0.857013983

-31.46242594

172.25

104.1499939

SUGAR #11 (WORLD) Mar14

16.93

-0.235710077

-17.73566569

20.71999931

16.69999886

CORN FUTURE

Last 25.30

Mar14

COTTON NO.2 FUTR Mar14

78.69

0.089035869

-0.906686815

90.61000061

76.65000153

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

Max 31.50

average 31.335

Min 30.90

Last 31.25

30.9

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9097 1.6386 0.9078 1.3556 103.09 7.9848 7.7527 6.0928 62.3787 32.19 1.2557 29.646 43.724 11905 93.788 1.23052 0.82728 8.2586 10.8242 139.75 1.0299

-0.3833 -0.0244 0.1763 0.0886 -0.3007 0.0063 -0.0026 0.0082 -0.0941 -0.1802 -0.0717 -0.1619 -0.1578 -1.134 0.081 0.0991 -0.11 0.3306 -0.073 -0.3864 0.0097

-12.3434 1.2982 0.8372 2.7748 -16.4807 -0.02 -0.0271 2.2617 -11.8369 -5.0016 -2.7315 -2.0677 -6.2186 -17.7404 -4.7565 -1.8724 -1.4336 -0.4977 -2.7143 -18.7335 0

1.0599 1.6443 0.9839 1.3832 103.74 8.0111 7.7664 6.2566 68.845 32.48 1.2862 30.228 44.82 12028 105.433 1.265 0.88151 8.4957 11.0434 139.94 1.032

0.8848 1.4814 0.8891 1.2746 81.72 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9600 85.449 1.20574 0.80331 7.8281 10.195 105.98 1.0289

Macau Related Stocks NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

ARISTOCRAT LEISU

4.67

0.2145923

48.25396

5.12

3.04

2406202

CROWN RESORTS LT

16.5

-0.9009009

54.63917

17.38

9.98

1657067

AMAX INTERNATION

1.19

8.181818

-15

1.72

0.75

5096150

BOC HONG KONG HO

26.2

-1.132075

8.713691

22.85

4138865

0.485

4.301075

83.01888

0.56

0.255

1748000

7.1

-1.798064

18.53089

7.28

4.15

136000

23.55

-1.05042

1.94805

25.6

17.7

9524427

CHINESE ESTATES

22.9

-0.8658009

103.6361

23.5

9.767

122000

CHOW TAI FOOK JE

11.86

-0.3361345

-4.662376

13.4

7.44

3265900

EMPEROR ENTERTAI

4.08

5.699482

115.873

4.66

1.65

5037000

FUTURE BRIGHT

3.82

1.058201

215.1747

3.96

1.103

2033072

GALAXY ENTERTAIN

62.3

1.631321

105.2718

63.75

9392864

127.3

-0.2351097

7.245159

132.8

110.6

397207

-0.1919386

-21.80451

35.3

23.2

434182

86.45

-0.689259

6.334559

90.7

77.85

14131400

CENTURY LEGEND

NAME

24.9

Currency Exchange Rates

NAME ENERGY

Min 24.95

CHEUK NANG HLDGS CHINA OVERSEAS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16008.77

-0.4826434

22.16574

16174.51

12883.89

NASDAQ COMPOSITE INDEX

4045.26

-0.3602564

33.97058

4069.7

2951.036

FTSE 100 INDEX

6580.66

-0.2224301

11.57803

6875.62

5852.88

DAX INDEX

9391.84

-0.1076371

23.3757

9424.83

7417.3

HOPEWELL HLDGS

NIKKEI 225

15749.66

0.6042132

51.50926

15942.6

9376.97

HSBC HLDGS PLC

HANG SENG INDEX

23910.47

-0.5328108

5.53275

24111.55078

19426.35938

CSI 300 INDEX

2442.784

0.9920671

-3.177546

2791.303

2023.171

TAIWAN TAIEX INDEX

8392.55

-0.2621631

9.001231

8476.63

7491.52

KOSPI INDEX

2009.36

-1.054767

0.616406

2063.28

1770.53

S&P/ASX 200 INDEX

5256.072

-0.4440747

13.05933

5457.3

4500.2

JAKARTA COMPOSITE INDEX

4293.302

-0.6634695

-0.5417408

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1826.79

0.4752083

8.161289

1840.12

1597

NZX ALL INDEX

1005.882

-0.2130889

14.03873

1048.998

858.253

PHILIPPINES ALL SHARE IX

3766.82

-0.7088048

1.834022

4571.4

3440.12

HANG SENG BK

HUTCHISON TELE H

2.87

-3.040541

-19.38202

4.66

2.85

16819000

LUK FOOK HLDGS I

29.25

0.5154639

19.87705

31.5

16.88

1273000

MELCO INTL DEVEL

27.75

1.092896

207.9911

28.1

7.84

3525000

MGM CHINA HOLDIN

28.1

1.079137

111.6238

12.956

3359566

MIDLAND HOLDINGS

3.34

-2.623907

-9.729731

4.29

2.68

1346000

NEPTUNE GROUP

0.34

4.615385

123.6842

0.4

0.131

383401401

NEW WORLD DEV

10.32

-1.526718

-14.1431

15.12

9.98

15512037

2.521008

79.67599

61.8

30.35

11093487

SHUN HO RESOURCE

1.57

-1.257862

12.14286

1.92

1.25

14000

SHUN TAK HOLDING

4.67

0.8639309

11.45585

4.8

3.27

5696000

SANDS CHINA LTD

SJM HOLDINGS LTD

25.3

1.402806

42.55402

16.762

9759213

SMARTONE TELECOM

8.62

0.2325581

-38.77841

14.52

8.37

1918123

WYNN MACAU LTD

31.25

1.957586

49.16467

32.6

3930543

ASIA ENTERTAINME

N/A

-0.1341022

66.56229

78.03

43.57

354204 14950

Euromoney Dragon 300 Index Sin

616.78

0.39

-0.69

STOCK EXCH OF THAI INDEX

1383.33

0.6599916

-0.6178542

1649.77

1260.08

HO CHI MINH STOCK INDEX

511.62

0.6076338

23.66035

533.15

375.78

BALLY TECHNOLOGI

74.47

Laos Composite Index

1263.59

-1.584965

4.018863

1455.82

1196.44

BOC HONG KONG HO

3.39

10.42346

3.6

2.99

GALAXY ENTERTAIN

7.94

1.011386

100

8.11

3.6

5594

INTL GAME TECH

17.33

-0.9148085

22.30063

21.2

13.58

3330941

JONES LANG LASAL

99.19

1.504298

18.16774

101.46

80.36

273667

LAS VEGAS SANDS

71.63

-0.06975446

55.17764

73.49

42.3534

2614106

MELCO CROWN-ADR

35.57

-0.05619556

111.2233

13.95

2130305

MGM CHINA HOLDIN

3.55

1.139601

102.8234

3.88

1.703

7200

MGM RESORTS INTE

19.23

0.2084419

65.20618

20.98

9.83

7480522

SHFL ENTERTAINME

23.19

#N/A N/A

59.93103

23.25

12.98

344231

SJM HOLDINGS LTD

3.25

1.5625

42.69306

3.6

2.1494

16133

164.74

-0.6812564

49.13751

170.254

105.5618

750104

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

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

39.1

-1.012658

14293765

CHINA UNICOM HON

12.14

-1.461039

15420020

POWER ASSETS HOL

ALUMINUM CORP-H

2.86

-1.37931

11164730

CITIC PACIFIC

12.08

1.003344

26567588

SANDS CHINA LTD

BANK OF CHINA-H

3.72

-1.32626

207339680

BANK OF COMMUN-H

5.71

-1.211073

17152718

34.25

-0.2911208

1532233

BELLE INTERNATIO

9.42

-1.464435

20892188

BOC HONG KONG HO

26.2

-1.132075

4138865

HANG LUNG PROPER

BANK EAST ASIA

NAME

PRICE

DAY %

62.75

-0.9471192

VOLUME 3301712

2.521008

11093487

10.48

-1.318267

6386189

99.2

-0.7007007

3736695 1012565

CLP HLDGS LTD

63.05

0.07936508

3001143

CNOOC LTD

15.96

-0.1251564

77073702

COSCO PAC LTD

11.44

-1.038062

2198302

SWIRE PACIFIC-A

93.85

-0.740349

ESPRIT HLDGS

16.22

-0.7343941

7560647

TENCENT HOLDINGS

447.8

-1.409071

3217451

26.1

-0.5714286

2238260

TINGYI HLDG CO

23.15

0.4338395

4218082

WANT WANT CHINA

11.42

-0.5226481

7696296

63.8

-1.619121

4212349

CATHAY PAC AIR

16.76

1.207729

2009200

HANG SENG BK

127.3

-0.2351097

397207

CHEUNG KONG

123.9

0.6498781

3082026

HENDERSON LAND D

45.45

-0.547046

1243371

CHINA COAL ENE-H

5.17

-1.147228

25510678

HENGAN INTL

95.65

-2.048131

1175487

CHINA CONST BA-H

6.26

-0.4769475

214269925

HONG KG CHINA GS

18.48

0.5440696

10826731

CHINA LIFE INS-H

25.55

-0.5836576

43146210

CHINA MERCHANT

28.2

-0.3533569

2796496

CHINA MOBILE

83.45

-0.5363528

14156073

CHINA OVERSEAS

23.55

-1.05042

9524427

CHINA PETROLEU-H

6.59

-0.9022556

178284169

CHINA RES ENTERP

27.8

0.3610108

2077229

MTR CORP

CHINA RES LAND

NAME

HONG KONG EXCHNG

137.9

0.07256894

3027451

HSBC HLDGS PLC

86.45

-0.689259

14131400

HUTCHISON WHAMPO

102.3

2.402402

11031515

5.58

-0.3571429

190351190

10.42

-1.883239

27270179

30.2

-0.330033

1100595

IND & COMM BK-H LI & FUNG LTD

21.2

-1.165501

4231315

NEW WORLD DEV

10.32

-1.526718

15512037

CHINA RES POWER

18.66

-1.060445

3565489

PETROCHINA CO-H

9.12

-0.9771987

60568782

CHINA SHENHUA-H

26.25

-1.129944

15813519

PING AN INSURA-H

74.25

-1.394422

13724227

SINO LAND CO SUN HUNG KAI PRO

WHARF HLDG

MOVERS

24073

INDEX 23910.47 HIGH

24072.2

LOW

23810.57

52W (H) 24014.81 (L) 19426.35938

23810

29-November

3-December

15 15

December 4, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Times of India

Back to housing bubbles Nouriel Roubini

Chairman of Roubini Global Economics and Professor of Economics at New York University’s Stern School of Business

India’s economy is expected to grow by 5 percent in 2013-14 and the fiscal and current account deficits would be contained, Finance minister P Chidambaram said, indicating that Asia’s third-largest economy was on the recovery path. The government’s optimism was based on the marginally better-than-expected growth data for the second quarter released last week. “We are going through a period of stress but there is a ground for optimism… we hope things will become better in the second half of the current fiscal,” Mr Chidambaram told a news conference.

mortgage-credit restrictions seem to have a limited effect on the incentives to borrow to purchase a home. Moreover, the higher the gap between official interest rates and the higher rates on mortgage lending as a result of macro-prudential restrictions, the more room there is for regulatory arbitrage. For example, if loan-to-value ratios are reduced and down payments on home purchases are higher, households may have an incentive to borrow from friends and family – or from banks in the form of personal unsecured loans – to finance a down payment. After all, though home-price inflation has slowed modestly in some countries, home prices in general are still rising in economies where macro-prudential restrictions on mortgage lending are being used. So long as official policy rates – and thus long-term mortgage rates – remain low, such restrictions are not as binding as they otherwise would be.

Inquirer Business After five straight quarters of growing by more than 7 percent, the Philippine domestic economy is likely to slow down in the next few quarters through 2014 in the aftermath of super typhoon Haiyan, several economists said. Bank of the Philippine Islands economist Jun Neri said that factoring the effects of the typhoon, the country’s GDP growth might ease to 5.5 percent in the fourth quarter. “This would still translate to nearly 7 percent growth in full-year 2013, still an impressive follow-through to 2012’s 6.8-percent rise,” Mr Neri said.

Myanmar Times Myanmar government plans to issue new rules for foreign investment as soon as this month, an official from the Ministry of National Planning and Economic Development said. The changes will focus on sectors in which foreign investment is restricted and are likely to be introduced in December or early next year, said Daw Mya Sandar. “The revisions will focus entirely on the categories in which foreign investment can be allowed – for example, the service sector – and I guess that the number of [restrictions] will be reduced in that category,” she said.

Korea Herald South Korea recorded a deficit in tourism balance in October, extending its losing streak to 17 months since June last year, data showed. According to the data by the Korea Culture & Tourism Institute, the country’s tourism deficit came to US$94 million in October. The spending by foreign tourists visiting the country came to US$1.4 billion in October, while South Korean tourists’ overseas spending reached US$1.5 billion. Foreign tourist arrivals stood at 1.09 million in the same month, up 6.1 percent from a year ago.

Market wreck

t is widely agreed that a series of collapsing housing-market bubbles triggered the global financial crisis of 2008-2009, along with the severe recession that followed. While the United States is the best-known case, a combination of lax regulation and supervision of banks and low policy interest rates fuelled similar bubbles in the United Kingdom, Spain, Ireland, Iceland, and Dubai. Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, and, back for an encore, the U.K. (well, London). In emerging markets, bubbles are appearing in Hong Kong, Singapore, China, and Israel, and in major urban centres in Turkey, India, Indonesia, and Brazil. Signs that home prices are entering bubble territory in these economies include fast-rising home prices, high and rising price-to-income ratios, and high levels of mortgage debt as a share of household debt. In most advanced economies, bubbles are being inflated by very low short- and long-term interest rates. Given anaemic GDP growth, high unemployment, and low inflation, the wall of liquidity generated by conventional and unconventional monetary easing is driving up asset prices, starting with home prices. The situation is more varied in

emerging-market economies. Some that have high per capita income – for example, Israel, Hong Kong, and Singapore – have low inflation and want to maintain low policy interest rates to prevent exchangerate appreciation against major currencies. Others are characterised by high inflation (even above the central-bank target, as in Turkey, India, Indonesia, and Brazil). In China and India, savings are going into home purchases, because financial repression leaves households with few other assets that provide a good hedge against inflation. Rapid urbanisation in many emerging markets has also driven up home prices, as demand outstrips supply.

With shortand long-term interest rates so low, mortgagecredit restrictions seem to have a limited effect on the incentives to borrow to purchase a home

Regulatory arbitrage With central banks – especially in advanced economies and the high-income emerging economies – wary of using policy rates to fight bubbles, most countries are relying on macro-prudential regulation and supervision of the financial system to address frothy housing markets. That means lower loan-tovalue ratios, stricter mortgageunderwriting standards, limits on second-home financing, higher counter-cyclical capital buffers for mortgage lending, higher permanent capital charges for mortgages, and restrictions on the use of pension funds for down payments on home purchases. In most economies, these macro-prudential policies are modest, owing to

policymakers’ political constraints: households, real-estate developers, and elected officials protest loudly when the central bank or the regulatory authority in charge of financial stability tries to take away the punch bowl of liquidity. They complain bitterly about regulators’ “interference” with the free market, property rights, and the sacrosanct ideal of home ownership. Thus, the political economy of housing finance limits regulators’ ability to do the right thing. To be clear, macro-prudential restrictions are certainly called for; but they have been inadequate to control housing bubbles. With short- and long-term interest rates so low,

But the global economy’s new housing bubbles may not be about to burst just yet, because the forces feeding them – especially easy money and the need to hedge against inflation – are still fully operative. Moreover, many banking systems have bigger capital buffers than in the past, enabling them to absorb losses from a correction in home prices; and, in most countries, households’ equity in their homes is greater than it was in the U.S. subprime mortgage bubble. But the higher home prices rise, the further they will fall – and the greater the collateral economic and financial damage will be – when the bubble deflates. In countries where nonrecourse loans allow borrowers to walk away from a mortgage when its value exceeds that of their home, the housing bust may lead to massive defaults and banking crises. In countries (for example, Sweden) where recourse loans allow seizure of household income to enforce payment of mortgage obligations, private consumption may plummet as debt payments (and eventually rising interest rates) crowd out discretionary spending. Either way, the result would be the same: recession and stagnation. What we are witnessing in many countries looks like a slow-motion replay of the last housing-market train wreck. And, like last time, the bigger the bubbles become, the nastier the collision with reality will be. © Project Syndicate

16 16

December 4, 2013 April 19, 2013

Closing North Korea powerbroker ‘dismissed

Apple buys Topsy to track Twitter

A powerful uncle of North Korean leader Kim Jong-un has been removed from his post, South Korean media reports say. Citing South Korea’s intelligence agency, they say Chang Song-thaek (pictured), 67, lost his position as vice-chairman of the North’s top military body. Two close aides were also executed for corruption, according to the reports. If confirmed, Mr Chang’s removal would be the biggest upheaval in North Korea’s leadership since Mr Kim succeeded his father, analysts say. The National Intelligence Service made the assessment based on information provided by multiple sources, the South’s Yonhap news agency said.

Apple Inc has bought social media data analytics firm, Topsy Labs Inc, which specialises in using data from Twitter to track customer sentiment. Topsy is one of the few firms to have access to Twitter’s entire data stream. It has recently created a searchable database of all tweets sent – more than 400 billion – since Twitter’s launch. Apple did not say how much it paid for the firm, but the Wall Street Journal which first reported the story put the figure at around US$200 million. Topsy competes with firms like DataSift and Gnip to figure out who is influential on Twitter, what terms are trending, and the impact of specific Twitter campaigns.

PISA puts Macau pupils among top performers But city’s education still ranked the worst in Greater China Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

acau’s 15 year-olds have fallen behind those in the rest of Greater China in reading, maths and science for the second time, an international study suggests. But the city still scores above the OECD average and it is improving, according to the latest results from the Programme for International Assessment (PISA). The release yesterday by the Organisation for Economic Cooperation and Development shows that Macau has seen improvements in maths, reading performance and science. The tests in science, maths and reading were taken by 500,000 15-year-olds in 65 countries. In maths, students from Shanghai scored 613 on a 1,000-point scale where the OECD average was 494. Students from Singapore scored 573, Hong Kong 561, Taiwan 560, South Korea 554, Macau 538 and Japan 536. Liechtenstein, Switzerland and the Netherlands round out the top ten performers in mathematics. In 2009, Macau had an average score of 525 in maths.

Asian students outperforming rest of world

Packer’s Sri Lanka resort faces further delay Government yet to submit casino plans to parliament Ranga Sirilal

US$400 million Sri Lankan resort and casino complex planned by Australia’s Crown Ltd faces additional delays and is unlikely to be approved before the end of the year, a top government official said yesterday. The new delay comes after opposition politicians alleged Crown’s chief, gambling tycoon James Packer,

was getting concessions not given to local entrepreneurs. Mr Packer is also co-chairman of Macau casino developer Melco Crown Entertainment Ltd. Buddhist leaders also said the casino could be detrimental to the culture of Sri Lanka, a predominant Buddhist country where gambling is not accepted morally, despite the on-

again, off-again presence of casinos dating back to the 1990s. The government said in October that Mr Packer’s plans would be resubmitted to parliament by November 21 with altered terms to address the various objections, but the country’s investment and promotion minister, Lakshman Yapa Abeywardena, said yesterday the deal “might not” be approved by the end of the year. “I haven’t prepared the cabinet paper yet,” Mr Abeywardena told reporters in Colombo. “These days you can’t do it because we are busy with the budget. There is no hurry. These are long-term projects and we are aiming to start by 2015-2016. You have time.” Crown has confirmed that it was in detailed discussions with the Sri Lankan government and potential joint venture partners regarding the development of a 5-star integrated resort. The resort-casino complex is

“Asian countries [sic] outperform the rest of the world”, according to the OECD, with Shanghai, Singapore, Hong Kong, Taiwan, South Korea, Macau and Japan amongst the top performing regions. Students in Shanghai performed so well in maths that the OECD report compares their scoring to the equivalent of nearly three years of schooling above most OECD countries. China isn’t a member of the OECD and doesn’t take part in the countrywide test, although Shanghai, Hong Kong and Macau do. In Macau there were lower results on average in the three subjects than in Shanghai, Hong Kong and Taiwan. Shanghai leads the way in the region in all three subjects, followed by Hong Kong. Students in Macau scored 509 in reading performance, up from 487 in the previous report, only trailing the other regions in Greater China, plus Singapore and South Korea. In science, Macau scored 521, compared with Shanghai’s average score of 580, Hong Kong’s 555, and 523 in Taiwan. The result was an improvement from the 511 mark in 2009. Since its first participation in PISA, Macau has been able to increase the share of top performers in mathematics, reading or science, “indicating that education systems can pursue and promote academic excellence whether they perform at or above the OECD average,” the report said. Of the 64 countries with comparable data up to 2012, a total of 32 improved their reading performance while 22 showed no change and 10 deteriorated.

planned for a two-acre plot in the heart of the Colombo commercial hub. It has already been delayed once after the government asked Lake Leisure Holdings Ltd, the joint venture between Crown Ltd and its local partner, Rank Entertainment Holdings Pvt Ltd, to change its construction plans. Executives with the local partner downplayed the latest delay. “Possibly it will go through once the parliament starts in the first week of January, so one month does not make any difference,” Ravi Wijeratne, the owner of Rank Holdings, told Reuters. Officials with Crown were unavailable for immediate comment. Packer’s earlier deal had already been approved by the government’s cabinet, but Mr Abeywardena said the deal must be approved again by the cabinet after certain tax changes were made before being approved by parliament. AFP