Macau business daily, Dec 9th by Business Daily

Deputy editor-in-chief Editor-in-chief Tiago Azevedo Number 431 Monday December 9, 2013 Year II

Tourism policy shaped to residents’ needs: MGTO The Macau Government Tourist Office is preparing a mid- to long-term plan for the city’s tourism development, says director Maria Helena de Senna

Vitor Quintã

MOP 6.00

Interview

April 19, 2013

Fernandes. It will focus on striking a balance between the interests of the local communities and those of visitors, she said in an interview with Business Daily.

The official also acknowledged it is necessary to improve public transport and conditions for pedestrians. Pages 6 & 7

Beijing doubles Macau’s mainland bond quota T

20 billion yuan (26.2 billion patacas) from 10 billion yuan. The authority can invest money from Macau’s fiscal reserve, which it oversees. Macau’s investments in yuandenominated instruments are part of the fiscal reserve investment diversification plan and are for long-term

investment purposes. Beijing has capital controls, but in recent years has granted quotas for institutions such as central banks, insurers and foreign banks to trade in the mainland capital markets, because it wishes the yuan to become a global currency for trade and investment. More on page 2

CE’s pay to rise, govt pledges more public jobs in 2014

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Hang Seng Index The city’s Chief Executive is to have his salary increased by 10 percent, the Executive Council has announced. It will push Mr Chui’s total annual salary package to about 3.8 million patacas (US$472,791) – nearly US$73,000 more than the basic salary of President Barack Obama of the United States. In other developments, civil servants’ housing subsidy will increase by 40 percent, from the current 1,500 patacas (US$187) to 2,100 patacas, according to a draft bill. The government also said on Friday it plans to recruit around 5,000 new public workers next year – representing approximately a 16 percent increase on the current 29,598 total. The aim is to improve the administration’s execution rate on budgeted spending. Local unemployment was only 1.9 percent during August to October.

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TENCENT HOLDINGS

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Consumer watchdog needs teeth says scholar

Insurer baulking at Wing Hang asking price

Chow Tai Fook jewellery sees gold in the masses

LENOVO GROUP LTD

The Consumer Council should have enforcement powers, including authority to penalise offenders, suggests Legislative Assembly member and academic Gabriel Tong Io Cheng. Some consumer issues – including a taxi driver’s recent alleged attempt to pass off Thai currency to a mainland customer as newly issued Hong Kong banknotes – involve claims of criminality. Other issues, such as fairness and quality, may relate only to consumer protection law.

Anbang Insurance Group, the Chinese insurer considering a bid for Wing Hang Bank Ltd, is hesitating over the asking price for the family-run Hong Kong lender, said sources. It’s willing to pay no more than 1.7 times the institution’s 2013 book value. Wing Hang’s Macau unit Weng Hang reported first half profit up 38 percent yearon-year to 195.9 million patacas (US$24.5 million) thanks to strong demand for loans.

The world’s most valuable jewellery retailer by market capitalisation – Chow Tai Fook Jewellery Group Ltd – is using branded Hello Kitty and Winnie the Pooh products to appeal to China’s emerging middle class. Superman and the Angry Birds characters also feature in Chow Tai Fook Jewellery Group’s range of affordable pieces. The company hopes they will win over millions of Chinese living outside major cities, many shopping in Macau.

Source: Bloomberg

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December 9, 2013

Macau

Beijing doubles Macau’s quota in the mainland bond market Macau is now allowed to invest 20 billion yuan from its fiscal reserve in the interbank bond market Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

he central government has doubled the amount of money the Monetary Authority of Macau can invest in the mainland interbank bond market, in a further push to make the yuan a global currency. Beijing recently increased the Monetary Authority’s quota for investment to 20 billion yuan (26.2 billion patacas) from 10 billion yuan. The authority can invest money from the fiscal reserve, which it oversees. “The quota … was revised only recently and increased in late November 2013,” the authority told Business Daily in writing. “The Monetary Authority will monitor the growth of the fiscal reserve in the future, and ask for a higher quota when the time is appropriate,” it said. “Investments are made when opportunities arise in the market.” Beijing has capital controls, but in recent years has granted quotas for institutions such as central banks, insurers and foreign banks to trade in the mainland capital markets, because it wishes the yuan to become a global currency for trade and investment. Macau’s investments in yuandenominated instruments are part of the fiscal reserve investment diversification plan and are for longterm investment purposes. Hong Kong has a similar strategy, using money from its exchange fund. Last year the mainland regulators doubled to 30 billion yuan the Hong Kong Monetary Authority (HKMA) quota for investment in the mainland interbank bond market.

Mainland long-term bonds could be a shelter from volatility, says Jacky So

The Monetary Authority will monitor the growth of the fiscal reserve in the future, and ask for a higher quota when the time is appropriate Monetary Authority of Macau

A spokesperson from the HKMA told us it had used up all its new quota. “The HKMA is in active dialogue with the relevant mainland authorities regarding our investment in the mainland markets, including our quota to invest in the interbank bond markets,” the spokesperson said.

Yuan trumps euro In June 2011 Beijing granted the HKMA a separate quota of US$300 million (2.4 billion patacas) for investment in mainland A-shares and listed bonds.

The Monetary Authority of Macau said it was reviewing its own Qualified Foreign Institutional Investor (QFII) quota for investment in A-shares and listed bonds. The QFII programme, started in 2002, allows certain licensed investors to put money into the mainland’s stock markets. Investment in these markets from outside the mainland is limited by quotas. Beijing’s push to make the yuan a global currency is making progress. Of the letters of credit and collection used in global trade finance in October, 8.66 percent were in yuan, the Society for Worldwide Interbank Financial Telecommunication said last week. Most were in U.S. dollars and 6.64 percent were in euros. Macau’s bigger quota for investment in the mainland interbank bond market allows the fiscal reserve to hold more yuan, in line with government strategy. The Monetary Authority said this year it was considering putting more money from the fiscal reserve into yuan-denominated investments in both the mainland and offshore markets. The purpose is to get better returns than the fiscal reserve gets now. The fiscal reserve held 168.07

billion patacas at the end of October, according to official data. Investment in securities outside the city by Macau residents, including institutional investors, amounted to 310.6 billion patacas at the end of June. Investment in external long-term debt amounted to 159.4 billion patacas, one-third more than at the end of last year. Of the money invested in longterm debt, 96.7 billion patacas was invested in mainland debt, and the next-biggest proportion was invested in Hong Kong debt.

Rate storm signal The professor of finance at the University of Macau, Jacky So Yuk Chow, says investors are hunting higher returns across the border. “China is trying to enhance its infrastructure such as roads, railways, airports and seaports. These are long-term investments and should be funded by long-term bonds,” Mr So told Business Daily. He said the interest rate in the mainland was also attractive. Because the yuan could still appreciate, “investing in long-term bonds will have higher interest income

MOP26.2 bln Macau’s new quota for investment in yuan-denominated bonds

and capital gains due to bond price changes”, he said. Mr So expects this trend to continue. “The economic development trend and the yuan will attract more foreign investments from Macau, especially when investors in Macau become more wealthy,” he said. He said greater investment in longterm bonds “could be a portfolio rebalancing or a reaction to change in the interest rate/yield curve”. Mr So said that when the United States changed its ultra-easy monetary policy, it would indirectly affect interest rates in other countries. “China can be a shelter from the volatility,” he said.

December 9, 2013 April 19, 2013

Macau SJM renews coach, limo contract to 2016 SJM Holdings has renewed a transport services contract with a business controlled by SJM’s chairman Stanley Ho Hung Sun. The new three-year deal – worth up to HK$200 million (US$25.8 million) will run until December 31, 2016. Under it, an entity called Shun Tak & CITS Coach (Macao) Ltd, will continue to provide coach, mini-bus and limousine services to SJM’s gaming patrons, hotel guests and staff in Macau as well as operating cross-border routes to mainland cities. The annual cap for transport spending in 2014 – HK$63 million – will be 41 percent higher than what was actually spent this year.

editorial

Mandela was never here

Academic urges govt to give T fangs to consumer watchdog A watchdog that bites could respond more promptly to complaints by tourists, a law professor says Tony Lai

tony.lai@macaubusinessdaily.com

he Consumer Council should have enforcement powers, including the authority to punish offenders, if Macau wishes to be a world centre for leisure and tourism, an academic has said. The Consumer Council has said it is revising the consumer protection law to adapt it to global trends. Speaking in a seminar held by the council on Friday, University of Macau law professor and Legislative Assembly member Gabriel Tong Io Cheng said the council should “have more legal means to better perform its duties”. Mr Tong compared the council with its counterparts in other places. “Our Consumer Council only has limited powers, meaning it cannot directly impose any fines.” He said that apart from giving information and arbitrating in consumer disputes, it was important for the council to be able to fine “any bad sheep”. Mr Tong said this would help Macau become world centre for leisure and tourism. “As tourists have to leave within a short time period, the Consumer Council should be granted powers to respond and follow up enquiries and complaints more promptly,” he said. The Consumer Council’s June newsletter says complaints and inquiries by tourists made up 11 percent of the cases it handled in the first half of this year, having made up 6 percent before. The newsletter says this reflects the widening of the range of goods and services consumed by tourists as more visit Macau to go shopping. Mr Tong believes the council should be empowered to punish minor violations with small fines. The president of the Consumer Council, Wong Hon Neng, said the council was working on amendments to the consumer protection law, which was enacted in 1988. “We have submitted information and some of our opinions to our superiors,” Mr Wong told the seminar. He declined to say when amendments to the consumer protection law would be ready.

New complexity “I respect the opinions of Professor Tong,” Mr Wong replied when asked whether the government would consider Mr Tong’s suggestions. “Due to changes in consumption patterns, it is reasonable to have changes in the law,” Mr Wong said.

A growing proportion of complaints to the Consumer Council are made by tourists

Our Consumer Council has only limited powers, meaning it cannot directly impose any fines Gabriel Tong, University of Macau law professor

“Consumption patterns have become more complex, no longer being limited to purchasing goods and services in shops, but now involving the Internet and trade fairs.” The idea of giving the Consumer Council enforcement powers has been around since at least 2008. Chief Executive Fernando Chui

Sai On told the Legislative Assembly in April that the consumer protection law would be reviewed soon. Mr Wong said the government was considering a competition law. Secretary for the Economy and Finance Francis Tam Pak Yuen said the same thing last month. Members of the World Trade Organisation said in the organisation’s trade policy review of Macau in May that the government here should consider the need for comprehensive competition legislation. The Consumer Council received 843 complaints and 2,749 enquiries in the first six months of this year, 4.7 percent fewer than a year earlier. Mr Wong said the council had received fewer complaints in the past few years because it had been more active in educating consumers. “Consumers are now better prepared to understand the issues when they buy something,” he said. “It is better than coming to look for us after they discover a problem.”

wo weeks ago, rookie Legislative Assembly member Song Pek Kei accused migrant workers of driving up housing rents and taking over Macau’s public places. On Friday, another newcomer to the assembly, Zheng Anting, asked the government to do something to stop migrant workers and tourists from travelling on buses. There is plenty that could be said about the incongruity of these remarks, given that Ms Song’s parents were born in the mainland and that Mr Zheng became a Macau resident only in 2001. Plenty more could be said about how the targets of their xenophobic speeches are not Chinese immigrants but workers from Southeast Asia, with different languages and cultures. But more worrying was the feeble response of other legislators and the government to such rabble-rousing. Secretary for Transport and Public Works Lau Si Io told Mr Zheng that non‑residents “have the right” to use public services because they contributed to the economy. But a person’s worth should be defined by more than how much value they add to output. Friday’s shameful session of the assembly, broadcast live, took place just one day after the death of Nelson Mandela, the South African statesman, who emerged triumphant from a 20-year struggle against apartheid. Apartheid was a system of racial segregation that barred anybody but whites from many public places, and gave non-whites inferior public services, including inferior transport. Does that description ring a bell? “Bad men need nothing more to compass their ends, than that good men should look on and do nothing,” British philosopher John Stuart Mill said in 1867. Not all of South Africa’s white minority wholeheartedly supported apartheid. But too many good people looked on and did nothing. The government’s refusal to stand up against populism and defend migrant workers – onethird of the workforce – tells Macau residents that it is all right to discriminate on the grounds of where people come from. That is what our directly elected legislators are doing, after all, in pandering to the basest inclinations of residents. If these demagogues succeed, it will surely reinforce assertions that Macau people are not ready for universal suffrage. There is some truth in such assertions. But we can also argue that the restricted influence of the popular vote ends up encouraging residents to choose populists that they believe can stand up against government apathy. It is easy to play down the xenophobic remarks heard in the assembly, in the conviction that the world has learned its lesson and that apartheid will never happen again. But don’t forget Qatar, a small state with a tiny population where foreigners make up most of the labour force – just as migrant workers will soon make up most of Macau’s labour force. Qatar is a place where the desire to protect the locals at all costs has led to the controversial Kafala system, under which foreigners are bound to their employer. Foreigners are not allowed to leave their jobs or even the country without the permission of their employers. This system has led to Nepalese construction workers facing what the Guardian newspaper calls “exploitation and abuses that amount to modern-day slavery”. It is almost as if Mr Mandela was never here.

The government’s refusal to stand up against populism and defend migrant workers … tells Macau residents that it is all right to discriminate on the grounds of where people come from

December 9, 2013

Macau

Govt set for hiring spree next year Legislative Assembly advises govt to be cautious on payroll budget Tony Lai

tony.lai@macaubusinessdaily.com

Every government department has a huge increase in the number of workers [planned for next year] but the budget execution rate of some departments is quite low Chan Chak Mo, president of the assembly second standing committee Number of civil servants could reach 34,438 next year

he government has been told by Legislative Assembly members to be cautious on plans to increase the number of civil servants by up to 16 percent next year. The number of civil servants will go up to 34,438 next year if the government can find enough people to fill up all the new positions, said Chan Chak Mo, president of the Legislative Assembly’s second standing committee. That would mean a 16.4-percent rise from the current workforce of 29,598. “We are surely concerned about this”, said Mr Chan on December 6, after his committee held a final

meeting on the government’s next year budget, before it is up for final voting. In previous committee meetings several government officials spoke of difficulties in hiring and retaining workers, leading to low budget execution rate. “Every government department has a huge increase in the number of workers [planned for next year] but the budget execution rate of some departments is quite low this year so we hope they can be more strict” on spending forecasts, Mr Chan said. “We want them to try to save up money,” said the legislator. The Transport Bureau, for instance, is set to spend 1.88 billion

patacas (US$235.9 million) next year as well as to add 76 new workers. But on December 4 Transport Bureau director Wong Wan estimated that the bureau would spend only 54 percent of its budget for this year. Asked how the administration reacted to the committee’s concerns, Mr Chan replied: “The relevant government departments agreed with our opinions… and promised better to draft the budget.” Last month Secretary for Public Administration and Justice Florinda Chan defended the government’s spending on civil servants, saying it only accounted for 15 percent of its annual budget. “They are sincere [in striving for

improvement] but let’s see how much they will do,” said Mr Chan. The administration is set to spend 77.6 billion patacas (US$9.7 billion) next year, down by six percent from this year’s budget, according to the government proposal. But Mr Chan explained the decline was due to the change in the accounting method of the Social Security Fund and the actual expenditure next year would actually rise by four percent. The fiscal reserve will total 240 billion patacas when the 2012 surplus can be officially included next month, he said adding that the reserve could reach more than 360 billion patacas when the expected surpluses of 201314 are included.

Govt to boost subsidies Chief executive, judges for civil servants to receive higher pay

everal subsidies paid to local civil servants will in future be increased and linked to civil servants’ pay index, the Executive Council announced on Friday. No date was given for the changes. They are yet to be debated by the Legislative Assembly. The housing allowance will increase by 40 percent, from the current 1,500 patacas (US$187) to 2,100 patacas, according to the draft bill. This subsidy will in the future be equivalent to 30 points of the civil service pay index, the draft bill shows. In May, the latest salary hike for civil servants increased the value of each point in the pay index to 70 patacas from 66 patacas, an increase of six percent. The draft bill also proposes raising the subsidies for marriages, births, funerals, civil servants’ family and

seniority bonus by between 37 percent and 42.6 percent, and linking them to the pay index. Marriage and birth subsidies will be increased to 3,150 patacas from 2,300 patacas before, while the funeral subsidy is to be increased to 3,850 patacas from the current 2,700 patacas. Linking the subsidy amount to the civil service pay index enables it to reflect any changes that happen to the civil servants’ pay level, the council’s spokesman Leong Heng Teng told media in a press conference on Friday. The Executive Council said the proposal has considered the rising inflation in recent years. The new arrangement should particularly benefit the lower-income civil servants, it said in a statement. S.L.

he Chief Executive is to have his salary increased by 10 percent, the Executive Council announced on Friday. But the draft bill is yet to be debated by the Legislative Assembly. According to the document, Chief Executive Fernando Chui Sai On’s basic monthly salary will be raised to 199,796 patacas (US$25,014). Adding the representation expenses he’s entitled to each month, of 69,929 patacas, his monthly income will rise to 269,725 patacas. With the increase Mr Chui will have an annual salary of about 3.8 million patacas (US$472,791), which makes him one of the highest paid government leaders in the world. President Barack Obama of the United States had a basic annual salary of US$400,000 in 2013

Chui Sai On

according to public records lodged online. Next year there will also be pay increases in Macau for the five secretaries of government, judicial officers and legislators, who have their salaries linked to the Chief Executive’s wage.

The head of the Legislative Assembly, Ho Iat Seng, and the president of the Court of Final Appeal, Sam Hou Fai, earn 80 percent of the chief executive’s basic monthly salary. Under the proposed pay rise, Mr Ho and Judge Sam will be earning a basic monthly salary of 159,83 patacas. The five secretaries and the heads of the Commission Against Corruption, the Commission of Audit and the Prosecutor-General earn 75 percent of the Chief Executive’s salary, which means their wages will be raised to 149,847 patacas, the Executive Council said in a statement. The hike also extends to the police and customs chiefs and to all prosecutors. “The current pay and the effort dedicated by the judicial staff is not balanced” under the mounting work pressure and labour shortage, the council said in the statement. Under the current pay index for the public sector, the government forecasts an additional expense of 17.2 million patacas each year to support the proposed pay rise. S.L.

December 9, 2013

Macau

Anbang seen baulking at Wing Hang asking price Lender valued at 1.7 times book after its shares surged this year

nbang Insurance Group, the Chinese insurer considering a bid for Wing Hang Bank Ltd, is baulking at the asking price for the family-run Hong Kong lender, said two people with knowledge of the matter. Beijing-based Anbang has indicated it’s willing to pay no more than 1.7 times the lender’s book value this year, said one of the people, who asked not to be identified because the information is private. That compares with an asking price of about two times, the people said. Wing Hang has a market value of about US$4.7 billion, which is 1.7 times its estimated 2013 book value, according to data compiled by Bloomberg. The lender may fetch as much as three times book, according to Mizuho Financial Group Inc and BNP Paribas SA estimates. Wing Hang has also drawn interest from Singapore’s Oversea- Chinese Banking Corp and Canada’s Bank of Nova Scotia, people with knowledge of the process said earlier. Australia & New Zealand Banking Group Ltd chief executive Michael Smith said recently takeover targets in Hong Kong are expensive. “I have always been interested in assets in this part of the world and Hong Kong obviously is an attractive

Wing Hang has a network of 70 branches, including 12 here (Photo: Manuel Cardoso)

market, but I feel they are overpriced,” Mr Smith said in October. Hong Kong’s family-run banks, pressured by larger competitors like HSBC Holdings Plc and Bank of China Ltd, are attracting interest from acquirers as the city’s role in cross-border financing expands. Binding bids for Wing Hang are

expected during the middle of this month, although there is no definitive deadline, according to the people. Press officials at Anbang didn’t return messages seeking comment, while Cherry Yung, a Hong Kong-based spokeswoman at Wing Hang Bank, declined to comment. Wing Hang shares fell 0.9 percent,

the most in two weeks, to close at HK$117.30 on Friday in Hong Kong. The city’s benchmark Hang Seng Index rose 0.1 percent.

Regulatory approval Anbang, which offers insurance and asset management, is working with Deutsche Bank AG for the Wing Hang negotiations, the people said. The insurer, whose shareholders include state-owned Shanghai Automotive Industry Corp. and China Petrochemical Corp, has 510 billion yuan (670 billion patacas) of assets, according to its website. Any purchase by Anbang would require regulatory approval from the China Insurance Regulatory Commission, which adds to the risks of completing a deal and may deter Wing Hang from selecting Anbang as a preferred buyer even if it can meet the asking price, one of the people said. Wing Hang would give a buyer a network of 70 branches spanning Hong Kong, Macau and mainland China. Its presence across southern China’s Pearl River Delta makes it a more attractive target than other smaller family-owned banks in the city, Grace Wu, an analyst at Daiwa Capital Markets Hong Kong Ltd, said. Banco Weng Hang SA, a unit of Wing Hang, has 12 outlets in Macau. In August, Wing Hang’s Macau unit Weng Hang reported first half profit up 38 percent year-on-year to 195.9 million patacas (US$24.5 million) thanks to strong demand for loans here. The group’s non-performing loans in Macau amounted to 25.5 million patacas at the end of the first half. Bloomberg News/T.A.

December 9, 2013 April 19, 2013

Macau Brought to you by

HOSPITALITY Conflicting trends When we consider the impact of the meetings, incentives, conferences and exhibitions (MICE) industry on the local economy, the most important indicator is the number of participants. Their total increased noticeably since 2009, the year the Statistics and Census Service start publishing this data. In 2012, the figure was almost three times as big as in 2009. The year 2011 alone saw a significant jump, close to 60 percent relative to the previous year. But events differ significantly in terms of their size and they have followed distinct trends also. Government and associations meetings and incentive meetings have seen their levels of attendance decrease rapidly in the same period, by figures of 45 percent, 55 percent, and 35 percent, respectively. In contrast, company meetings and conferences have seen their numbers rise by 80 percent and seven percent. Exhibitions have just seen their tally explode, with a more than two-fold rise in the number of their participants in these four years.

MGTO chief: residents part of

he Macau Government Tourist Office is making a medium-term to long-term plan for tourism development, says the director of the office, Maria Helena de Senna Fernandes. Ms Senna Fernandes told Business Daily in an interview that the plan would take into account the need to strike a balance between the interests of Macau people and the interests of visitors. She believes getting to Macau will become easier for long-haul travellers once the Hong KongZhuhai-Macau Bridge opens in 2016. She acknowledges that it is necessary to improve transport and the environment for pedestrians in Macau because it is difficult to get around the city. Ms Senna Fernandes said that over the next few months the government would begin putting up new signs indicating historic sites, and putting on more cultural entertainment.

Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

What is the government’s goal in tourism development?

We always say tourism is not an end in itself but a means to an end. The end, of course, is that we want Macau to develop into a world centre of tourism and leisure. But as we move towards that goal, what we are talking about is not just a Macau for the tourists. What we are talking about is making Macau a place that is good for people to live in, as well as to come to and travel to. There has to be a balance between the local community’s needs and the tourist’s needs. The average number of participants in MICE events in the third quarter suggests the continuation of a slight downward trend started in 2011. Having almost doubled between 2010 and 2011, those figures have decreased by about six percent and 10 percent in the last two years. The average for incentive meetings has been quite volatile, with extremes of 62 participants in 2012 and of 452 participants in the year before. This year, in the third quarter, the figure rebounded to 410 participants. For all types of events, the third quarter figures were above the average number recorded for the same quarter in the previous four years. But in the case of exhibitions – the biggest contributor for the combined tally – the figure was almost 12 percent below that of the two last years.

13.3 %

Annual decrease in the number of participants in MICE events in Q3

How do you propose to strike such a balance?

It’s not easy. One of our main work plans for next year is to prepare a real overall plan for the tourism industry. Previously, most of our strategies were short-term or reactive. In the future we hope that through medium- to longterm planning, we can have more strategies that would be able to take us forward. Of course, the final plan has to come out more like a scientific study. We would like to have a clearer definition of how we can become a world centre of tourism and leisure, some of the parameters we need to take into consideration. We need a more concerted effort, and not just our work abroad. But since this will take some time to actually come out, we have to do something in the near future as well, in order also to keep Macau’s tourism development going but at the same time to get the support of the local community. That’s why in our plans for next year

we will continue with our tourism awareness campaign, which is aimed at the local community. In the past, we must say our main focus was trying to get more tourists to come to Macau from all over the world, so we did a lot of work outside Macau. This will continue, of course, but this year a lot of our focus has been redirected to the local community, and this has to continue.

Macau’s tourism relies on gaming. Is your biggest challenge diversification?

In the case of Macau we are lucky in the sense that we have our own community, our own history and culture. Of course, the gaming sector has for many years received a lot of attention. But we see a lot of good signs – one is the fact that in 2005 the historic sites of Macau were listed by UNESCO. That gives Macau very strong recognition in terms of our history and culture. The UNESCO recognition has pretty much overturned the preconceptions of many people, and we are on the right track in terms of promoting Macau’s history and culture. But, of course, a lot more has to be done, because in many places, while they understand Macau has many things, the number one impression is still gaming. We are working together with the various operators to come up with new ideas. Sometimes what we need is to repackage what other elements we’ve got into a more concerted product. For us it is about really identifying the products that are more mature and interesting. We need to start working on it.

What we are talking about is making Macau a place that is good for people to live in, as well as to come to and travel to

Is Macau succeeding in attracting different kinds of visitors?

We have been working on diversifying our tourism sector and also diversifying our markets, attracting people from other places like Korea and Japan. But which are the segments within

December 9, 2013 April 19, 2013

Macau

tourism recipe

operators to improve this aspect of the product. But then you see other operators entering the market (not in big numbers: we have five applications right now for this particularly category) and other enquiries from budget chain hotels in the mainland or other places coming to Macau to do feasibility studies. We are not totally sure how quickly this will come to fruition, but at least you see there is a lot of interest in the low end of the market.

UNESCO has expressed concern about the protection of Macau’s heritage. Are there reasons for concern?

those regions we want to attract to Macau? This is actually studied one by one with the various representatives abroad.

Are we making progress towards tourism diversification?

A lot of steps have been taken. For example, our international visitors (when I talk about international visitors, I leave out mainland China, Hong Kong and Taiwan): if we look at 14 years ago, we are talking about 500,000; when we talk about last year, we had 3 million international visitors. We’re obviously working hard on the international market and nowadays people are recognising Macau. In some potential markets a lot of progress has been made. Korea has now become our number one international market because a lot of effort has been made there. It has even overtaken Japan.

Most of Macau’s hotel rooms are five-star rooms. Do we have enough low-cost hotels for the market’s needs?

Our low-cost offering right now is 1,400 rooms. The occupancy rates for the high-end hotels are actually better than for the low-end hotels. We are actually encouraging our low-end hotels to improve their product and also their selling channels. That’s why we have actually encouraged them and supported them financially to set up a website to promote themselves. We do believe different

I do believe all efforts of our Cultural Affairs Bureau are really to preserve the integrity of the whole historic centre and other places of a historic nature. It is very important for Macau as a tourism destination to preserve these historic monuments, because this is what makes Macau different. We have completed a study on the walking signage in the whole historic area and the vicinity this year. That’s why we came up with four walking routes. This study gave us a lot of insight as to where we should actually install signs or where we should take out those signs because some are a little bit confusing. The walking routes are not the end of it. There are a lot of improvements in the walking environment. In the next few months probably we’ll already see some new walking signs being installed. We are also planning to put on some cultural entertainment attractions. Some of them would be performances, but some would be 3D mapping. One of our projects for next year is to look at smaller areas of historic interest and, instead of big works, see how we can improve the interest – even for residents – of some places of historic interest through 3D mapping. After the big 3D mapping at the Ruins of St Paul, the Cultural Affairs Bureau invited the experts to train some local artists so we can use that know‑how.

A lot more has to be done, because in many places, while they understand Macau has many things, the number one impression is still gaming

price ranges need to exist in the market so you can actually give good choices to your visitors. Otherwise, Macau would just become a high-end product and we would forget other people that might want to visit us – say, for instance, students – who are not able at this stage in their lives to afford very expensive accommodation.

Are Macau’s low-cost hotels still too expensive? There is room for improvement. Nowadays, even for the lower category, people are looking not just for a room and a shower but also for more modern amenities. We need to encourage the existing

What infrastructure does Macau need to cope with the millions of visitors coming in?

If you’re talking about infrastructure, there are many different aspects to it. We need improvements in terms of accessibility – because then, of course, we will also get more international visitors – and also in the border facilities; in Macau, improvements in terms of transport and also, of course, the walking environment (sometimes, people would like to walk but in some areas the streets are not really good to walk in – they are too narrow); and then, of course, in terms of places – how we can improve the presentation of temples and churches so that people understand more in depth. They don’t just go in and take a picture, so that’s why we have another programme we started together with the diocese and the organisations of various temples in order to train people to talk about the temples and churches. We are fine-tuning our promotion work outside Macau to attract quality tourists: those people who would like to come to Macau for a longer period of stay.

Do you believe the Light Rapid Transit railway will help? It will not solve everything but it will definitely ease a lot of road use. For Macau people, the LRT will help especially in

It is very important for Macau as a tourism destination to preserve these historic monuments, because this is what makes Macau different

going between Macau and Taipa, because of the convenience, the speed and the lack of traffic jams. For tourists, it would be even more convenient for getting to the main hotel areas or new development areas. It would probably cut down on the use of casino-hotel shuttle buses.

Isn’t it still too hard to reach Macau by air?

From some places yes; from other places no. Macau doesn’t have long-haul connections. But for the nearby regions it is already becoming more and more convenient because we have more flights coming in from Korea, Japan, Southeast Asia. Nowadays a lot of people come to Macau via Hong Kong or through other transit points. In the future, with the ease of travel between Hong Kong and Macau across the bridge starting in 2016, it will also help Macau have easier accessibility for long-haul markets. Our airport will remain a feeder in terms of regional markets. As for longhaul markets, at this point in time there is a lack of outbound travel from Macau. Not that the people of Macau don’t travel, but we don’t have enough people for outbound travel to follow a very consistent pattern.

How urgent is renovation of the ferry terminal?

The ferry terminal was actually inaugurated 20 years ago. We were talking about 5 million or 6 million visitors a year. We’re talking about 30 million this year. At the time it was built we didn’t have so many people coming in with a lot of luggage, so there are different requirements from 20 years ago. The ferry terminal is undergoing renovation work now because they would like to add more facilities to keep up with what is needed. But we’re looking to opening the new ferry terminal very soon. Two ferry terminals would give us a better solution for sea travel to Macau. The new terminal building will be much more modern and have more amenities.

Two serious ferry accidents happened this year. How will this damage Macau’s image?

In any kind of transport there are certain risks. Zero accidents would be the perfect scenario, but we have to be prepared for the possibility of accidents. This time the ferry terminal and the various government departments responded very quickly and this will help to give our travellers much more confidence. I don’t think it will be so serious as to affect the international image of Macau.

December 9, 2013 April 19, 2013

Macau

Chow Tai Fook sees gold in the masses Mainland Chinese the major source of revenue for jewellery retailer

he world’s most valuable jewellery retailer Chow Tai Fook Jewellery Group Ltd is on a quest to conquer the hearts of China’s future big spenders. Its weapons of choice: Hello Kitty and Winnie the Pooh. Superman and the Angry Birds team also feature in Chow Tai Fook Jewellery Group’s range of fashionable, and affordable, pieces which the company hopes will win over the millions of Chinese who live outside major cities but who are reaping the benefits of a rapidly growing economy and who remain enamoured by the gleam of gold. “We are quite similar to the fast fashion way of business in that our products are only available for a limited period of time,” Kent Wong, managing director of Chow Tai Fook, told Reuters. “The stock-keeping units will have to respond promptly to the fast-changing tastes of customers, especially young customers, who can share information about trends very quickly on their smartphones,” he added. China, the world’s second-largest economy, is on track to overtake India as the world’s biggest consumer of gold this year as falling prices encourage purchases for both personal use and investment. Combine that penchant for gold with a population that is rapidly urbanising, and becoming more affluent and trendconscious in the process, and building customer loyalty as well as keeping up with fashion becomes key to the prospects of jewellery retailers. About 100 million people are likely to move into cities over the next 17 years, according to ratings agency Moody’s. China is already the second-largest market for Zara-brand owner Inditex SA, the world’s biggest fashion retailer.

Chow Tai Fook reaching out for young customers

“Just like fast fashion, fast jewellery is the right stuff to target at the youth and the products can also sell at a better margin when they are limited edition,” said Renee Tai, a Hong Kong-based analyst at brokerage UOB-Kay Hian Holdings Ltd.

For the masses Chow Tai Fook’s U.S.-based competitor Tiffany & Co, best known for its expensive diamond necklaces and engagement rings, also gets about 30 percent of sales globally from its less expensive jewellery, primarily silver items costing less than US$500 that have long been part of its selection. Chow Tai Fook’s fashion jewellery, which costs between HK$200 (US$26) and HK$2,000, is also a far cry from the luxury offerings that have traditionally

accounted for over 80 percent of sales, and which on average cost about 10 times as much. But the shift to expand mass-market retail is already paying off. Chow Tai Fook saw its net profit rise by a forecastbeating 92.3 percent in the six months ended September, with same-store sales growing 33.2 percent. Net income almost doubled to HK$3.5 billion from HK$1.82 billion a year earlier for the six months ended September 30, the retailer said a fortnight ago. The world’s largest listed jewellery chain posted revenue of HK$37.8 billion in its financial first half, up by 48.5 percent from a year earlier. Revenue rose by 33 percent at stores open for at least a year. Revenue in Macau, Hong Kong and other Asian markets increased by

61 percent year-on-year to HK$18.4 billion, the company said. But as it pushes into rapidly changing jewellery, Chow Tai Fook faces the challenge of retaining its reputation for exclusive, luxury items while also appealing to the masses. Chow Tai Fook also maintains three distinct store layouts that cater to its clients – the high-end luxury consumers, the youth and the mass market, managing director Mr≈Wong said. Analysts say focusing on the younger generation is key. “The company has to ensure this group of people gets familiar with the brand and they won’t feel your products are out-of-date,” said UOB-Kay Hian analyst Ms Tai. “They have to groom a new group of customers to support the brand and products.” Reuters/T.A.

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

Corporate Conrad Macao wins eco-award at WTA

Michelin star for CoD’s Jade Dragon

The World Travel Awards has named Conrad Macao, Cotai Central, as the ‘World’s Leading Green Hotel. The ceremony for this year’s awards (pictured) was held in Doha, Qatar. Conrad Macao is one of the Macau resort properties that has taken the annual global event Earth Hour – when businesses and homeowners across the world are encouraged to switch off external or non-essential lighting – and extended it initially to a monthly local event, and now a twice-monthly event. The hotel’s management adds that on average per month it recycles more than 5,000 kilos of paper, nearly 200 kg of plastic, close to 3,000 kg of metal, in excess of 200 kg of cooking oil, more than 100 kg of soap, almost 200 kg of glass. The property says it also recycles more than 500 kg of other materials; and recently implemented wood and food waste recycling. Conrad Macao also utilises energy-saving bulbs and low-energy LED lighting throughout the property.

Jade Dragon (pictured) – a Cantonese restaurant at Melco Crown Entertainment Group Ltd’s Cotai resort City of Dreams – has been awarded its first Michelin star. Only 11 restaurants in Macau have been awarded with Michelin stars. Three of them were new additions to the list in the just-published Michelin Guide to Hong Kong & Macau 2014. City of Dreams’ The Tasting Room retained its one Michelin star for a second year. Michelin has defined five criteria for awarding stars: quality of products; mastering of flavours; mastering of cooking; ‘personality’ of the cuisine; value for money and consistency across the menu and across the year. Jade Dragon and The Tasting Room ranked sixth and seventh respectively in the Top 20 Best Restaurants list in the 2014 edition of Hong Kong Tatler Best Restaurants guide. Tam Kwok Fung, executive Chinese chef at City of Dreams, previously launched Ying at Altira Macau, which gained one Michelin star in 2009.

December 9, 2013 April 19, 2013

Greater China

U.S., EU demand boosts China trade Exports rise faster than expected in November Biden downplays impact of China’s new air zone China’s new air defence zone won’t affect U.S. military operations in the region even as it increases the risk of “miscalculations,” U.S. Vice President Joe Biden said. Mr Biden spoke in Seoul after a visit to Beijing where he pressed Chinese leaders to take practical steps to avoid conflict over the air zone, which covers a large swathe of the East China Sea including islands also claimed by Japan and a submerged rock that Seoul considers its own. “I was absolutely clear on behalf of my President: We do not recognise this zone,” Mr Biden said. “It will have no effect on American operations.”

There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high income countries, and China’s exporters are benefiting from that

HK quarantines 19 after second H7N9 case Hong Kong health officials have quarantined 19 people who had contact with an 80-year-old man confirmed to have the city’s second case of H7N9 influenza, which has killed 45 people in China this year. The patient is a long-term resident of mainland China who was hospitalised in Shenzhen. He moved to Hong Kong on December 3 and was admitted to Tuen Mun Hospital, where he tested positive for the new strain of bird ‘flu after developing a fever, the government said. The government said it will transfer the patient, who is in stable condition, to the isolation ward at Princess Margaret Hospital.

Shanghai air pollution disrupts flights Shanghai’s air pollution dropped over the weekend as some flights were still disrupted after an air quality gauge reached “beyond index” level on Friday, causing a heavy fog. The PM2.5 index monitored by the U.S. consulate in the city fell by two categories to a “very unhealthy” level. Shanghai’s meteorological station maintained an orange-level haze alert and said visibility in some regions was less than 200 metres. Shanghai had ordered vehicles off the road and factories to cut production and warned children and elderly people to stay indoors.

Carlsberg ups stake in Chongqing Brewery Danish brewer Carlsberg upped its stake in China’s Chongqing Brewery to 60 percent, strengthening its foothold in the world’s largest beer market by volume, and hopes to increase its holding further, the Chinese company said. Carlsberg bought an additional 30.3 percent for 2.9 billion yuan (US$476 million). “With this purchase agreement Carlsberg is taking a step towards strengthening its strategic investment in Chongqing Brewery, based upon its positive outlook for the Chinese beer market,” Chongqing Brewery said in a statement.

Louis Kuijs, Royal Bank of Scotland

November exports up 12.7 percent

hina’s exports handily beat forecasts in November, adding to recent evidence of a stabilisation in the world’s secondlargest economy as its leaders embark on an ambitious restructuring plan. Exports rose 12.7 percent from a year earlier, the Customs Administration said yesterday, against a median forecast in a Reuters poll of a 7.1 percent rise. Imports rose 5.3 percent, below a forecast of 7.2 percent, leaving a trade surplus of US$33.8 billion against forecasts for US$21.7 billion. The export figures reflect pickups in shipments to the U.S., Europe and South Korea, according to customs data. “There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high income countries, and China’s exporters are benefiting from that,” Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, said in a note. The strong export figure comes as a boost after exports have been a drag on the economy so far this year, subtracting 1.7 percent from growth in the first three quarters. Weak global demand, a stronger yuan currency and rising labour

costs have taken their toll on sales of Chinese goods abroad. But there are hopes of a sustained pick-up in global demand. Exports directly create about 30 million jobs and add another 100 million in related industries, according to official estimates. Some economists noted, however, that the figures may have been influenced by hot money inflows disguised as trade deals, a problem that had distorted trade figures earlier in the year. “As China’s economic fundamentals stabilise and reform pushes on, the better prospects are attracting massive hot money back,” said Li Huiyong, analyst at Shenyin Wanguo Securities. “Generally, hot money flows are seen through lower imports and higher exports, and the less than expected imports in November and higher than expected exports precisely illustrate this point.”

Restructuring efforts On Saturday, the official Xinhua news agency reported that regulators would clamp down on banks’ and companies’ use of foreign currency for trade finance by ensuring that trade deals are authentic.

China’s leaders want the traditional growth drivers of heavy investment and brisk export sales to make way for a more sustainable expansion in consumption and have unveiled the boldest economic and social reforms in nearly three decades to pursue that goal. “November turned out to be a pretty blockbuster month for Chinese exporters,” said Steve Wang, chief China economist in Hong Kong at Reorient Financial Markets Ltd, an investment bank backed by the Chinese government. It remains to be seen if the momentum will continue, with a previous purchasing managers’ survey showing new export orders are “not as strong as what people had hoped,” Mr Wang said. Recent data has shown a stability in the economy, creating the base needed for the reforms to go ahead. Four separate purchasing managers’ indices (PMIs) last week had pointed to growth in the factory and services sectors, with export orders showing resilience. Attention is now on inflation and economic activity figures due today and tomorrow, which will give a fuller picture of the overall health of the economy in November. Reuters

Baidu stops accepting bitcoins

aidu Inc, China’s biggest search engine, stopped accepting bitcoins after the nation’s central bank barred financial institutions from handling transactions, triggering a drop in the virtual currency. Bitcoin fell more than 20 percent to 4,800 yuan (US$790) on BTC China, the most active online exchange where it’s traded for the Chinese currency. A Baidu website-hosting venture started accepting the digital money on October 14 as bitcoins gained popularity in China, fuelling a global

rally. Prices topped US$1,000 last week, compared with about US$138 two months ago on Bitstamp, an online exchange. The People’s Bank of China said Bitcoin isn’t a currency with “real meaning” and can’t be accorded the same legal status. “Baidu’s website-acceleration platform decided to suspend bitcoin payment acceptance from Friday as recent large fluctuations in bitcoin’s value makes it unable to safeguard users’ interests,” the company said in a statement on its website. The decision follows the Chinese

government’s announcement, according to the Beijing-based company. China’s central bank said the public is free to participate in Internet transactions provided they take on the risk themselves. The ban on financial institutions handling bitcoins signals concerns that the digital currency may threaten capital controls and financial stability. The country became the world’s biggest bitcoin trader this year, according to BTC China. Bloomberg News

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December 9, 2013 April 19, 2013

Greater China

Plenum to add less than half point to growth: survey

an annual economic work conference this month. The government usually publishes the target each March at the annual meeting of the National People’s Congress in Beijing. While Citigroup Inc and Barclays Plc also say the government may set the 2014 growth goal at 7 percent, Louis Kuijs at Royal Bank of Scotland Group Plc says he wouldn’t be surprised if it remains at 7.5 percent. November data due this week are projected to show a cooling of domestic demand. Consumer inflation may have decelerated to 3.1 percent, the statistics bureau will likely say today, staying below the government’s 2013 goal of 3.5 percent for an 11th month, according to another survey. Data the next day may show gains in industrial production and retail sales eased from a year earlier.

Reforms seen as positive but may take time to gain traction

The economy is slowing gradually because stimulus has begun to be withdrawn Dariusz Kowalczyk, Credit Agricole CIB

Xi Jinping trying to sustain long-term expansion

eijing’s broadest economic reforms since the 1990s will add less than half a percentage point to annual growth this decade, a survey showed, underscoring the likelihood of a cut in the nation’s expansion target. Fourteen of 19 economists see policies from a Communist Party summit last month boosting gross domestic product either by a negligible amount or less than 0.5 percent a year compared with their previous outlook, according to the Bloomberg News survey. Ten analysts

say China will need at least a small amount of monetary, fiscal and credit stimulus to meet the government’s “bottom line” of 7 percent growth in the next five years. The forecasts dovetail with increasing speculation that policymakers will set the lowest annual growth target since 2004 at a gathering this month, after leaders pledged to give markets a bigger role in setting prices for capital and resources such as energy. “The reforms are going to be incrementally positive for growth as capital and resources are used more

efficiently and wastage is cut,” said Kevin Lai, an economist at Daiwa Capital Markets in Hong Kong who responded to the survey conducted November 22 27. “But some state-owned enterprises will have to pay as they lose their old monopoly status and over one to two years there’s a significant risk that the debt issue deteriorates.” The State Information Centre, a government research institute, says China can set the 2014 GDP growth target at 7 percent, the Economic Information Daily

reported last week, citing an annual report from the organisation. The state-run Chinese Academy of Social Sciences also believes the goal will be set at 7 percent, the newspaper said.

Slower growth The report “suggests that a 7 percent target has become a more likely choice,” Zhang Zhiwei, chief China economist at Nomura Holdings Inc in Hong Kong, said in a note. Mr Zhang said leaders will decide on the goal at

Regulators join hands to reform pilot zone C

hina’s top financial regulators will establish a joint coordinating committee to manage implementation of trial reforms in Shanghai, a move to address widespread concerns that financial liberalisation will be hamstrung by bureaucratic squabbles. The official Shanghai Securities News, quoting statements made by Shanghai executive vice mayor Tu Guangshao during a conference last week, said that the central bank, along with securities, banking and

insurance regulators, would together form a joint coordination group to manage reform implementation in the recently established Shanghai free trade zone (FTZ). The zone is intended to test profound reforms to the country’s economic and financial system, including liberalisation of China’s currency regime and interest rates, but the multitude of regulators managing different aspects of policy implementation has already engendered turf wars over who will

manage what. Concerns about the degree of political commitment behind the zone had led many multinational banks and corporations to hold off from moving into the zone – where property prices have already spiked on speculation – but Beijing appears to be moving to reinvigorate confidence. Earlier last week the People’s Bank of China issued a detailed 30-point list providing additional details on areas of reform, including allowing Chinese individuals working in the zone to

“The economy is slowing gradually because stimulus has begun to be withdrawn,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. He cited an increase in moneymarket rates as a sign that the central bank is “keeping tight liquidity.” In the longer run, China will need a significant amount of stimulus to achieve 7 percent expansion, Mr Kowalczyk said. That’s because China’s potential growth rate is now 5 percent to 6 percent a year, requiring policymakers to generate 1 to 2 percentage points of growth annually “for the foreseeable future” via stimulus, he said. Bloomberg News

freely invest overseas and allowing foreign companies and individuals to buy into Chinese stock markets, both long-awaited reforms to the capital account. The document also said the yuan would be allowed to float freely in the zone. The PBOC followed up on Wednesday by publishing a timeline for implementation, saying it would complete implementation of most of the reforms in the 30-point document within the next 12 months. The aggressive timeline surprised some economists, who noted that such changes risk introducing destabilising cross-border capital flows and arbitrage if not implemented properly. Reuters

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December 9, 2013 April 19, 2013

Asia

Rupee offers India budget relief Rise in the rupee to help cut the amount of subsidy spending Manoj Kumar

recovery in the rupee is giving India’s Finance Minister P. Chidambaram rare relief in his battle against a threatened credit rating downgrade to junk status by reducing pressure on the government’s subsidy bill. Still, the minister can only meet his fiscal deficit target of 4.8 percent of GDP by rolling over a substantial amount of subsidy spending into next year’s budget and by finding big savings elsewhere, two senior finance ministry officials said. But a 10 percent rise in the rupee – which slumped to a record low late in August – means Mr Chidambaram can at least reduce the amount of subsidy spending that gets pushed into next year’s budget to US$12 billion from a previous estimate of US$15 billion, these officials said. Other budget headaches mean he will have to find about US$8 billion in savings from budgeted spending plans to meet the deficit target, they said. The sources, who have direct knowledge of the budget issues or have been briefed on them, declined to be identified because the revised budget numbers are not yet public. “Chidambaram wants to put the house in order before the 2014 election campaign kicks off and the U.S. Federal Reserve begins cutting its monetary stimulus,” said one of the officials. National elections have to be called by May 2014 and emerging markets are on edge as investors speculate on when the U.S. central

Chidambaram trying to find savings elsewhere

bank might reduce its economic stimulus, which could prompt capital to shift into U.S. assets. A finance ministry spokesman declined to comment on the budget estimates other than saying revised figures are still being worked out.

Missing targets Mr Chidambaram has said the fiscal deficit target is a line that will not be crossed as he seeks to fend off the threat from Standard & Poor’s

Australia takes steps to warm Indonesia ties Canberra not to let dispute damage exports

ustralia said it will follow the steps demanded by Indonesia to improve trust after spying allegations left ties at their lowest level in 14 years and threatened trade between the two neighbours. Australia regrets the events that led Indonesia to downgrade the relationship and agreed to meet regularly to build it, Foreign Minister Julie Bishop said in Jakarta after meeting counterpart Marty Natalegawa. The two have yet to talk about a commitment to end unlawful data collection, which is the most important element of Indonesia’s demands, Mr Natalegawa told reporters. The comments by Ms Bishop, her first official visit to Jakarta since protesters burned flags last month, show Canberra is keen not to let the dispute damage exports and investment after Indonesia said it will review its dependence on cattle imports from Australia. Two-way trade, including wheat and oil, reached A$14.6 billion (US$13.2 billion) last year. “The Indonesians have certainly

demonstrated to the Australians how the pecking order stands in Asian diplomacy,” said Keith Loveard, head of risk analysis at Jakarta-based Concord Consulting. “Indonesia seems to be embarking on what could be called nanny diplomacy, insisting on a six-step process and a code of ethics over an issue that everyone knows has been going on forever.” “We note the steps set out by President Yudhoyono that must be taken in order to normalise the relationship and of course, we agree to adhere to those steps,” Ms Bishop said yesterday. Her visit follows Indonesian anger over Australian Prime Minister Tony Abbott’s refusal to apologise in the wake of media claims that Indonesian President Susilo Bambang Yudhoyono’s phone was tapped. Several hundred people protested outside the Australian embassy in Jakarta last month, calling for a break in ties, while a person claiming to be from the Anonymous Indonesia group said it carried out a cyber attack on Australia’s central bank. Bloomberg News

to downgrade India’s sovereign credit rating, currently clinging to the bottom rung of investment grade. The budget is under pressure on a number of fronts; subsidy

spending on fuel, food and fertiliser has blown out, economic growth has slumped to its weakest level in a decade and a programme to sell state assets is in tatters. The government had initially budgeted spending of about US$36 billion for subsidies, but that swelled to US$52 billion when the rupee hit its record low. Reflecting the economy’s weakness, net tax receipts in the first seven months of the fiscal year are about 7 percent higher than the year-earlier period, the slowest pace in four years and well below the full-year budget target of 19 percent. This could create a budget hole of some US$2.4 billion, said the second official. “We will need savings of up to 50,000 crore (US$8.1 billion) if the shortfall in tax receipts is between 10-15,000 crore (US$2.4 billion),” this official said. Expected income of US$8.8 billion from the sale of government stakes in state-run companies looks increasingly out of reach. “The disinvestment numbers are there in the budget. But it appears that we are going to miss them by a wide margin, like every year,” said the second senior official. Reuters

December 9, 2013

Asia Japan pension fund needs to cut bond holdings: Ito The world’s biggest retirement fund needs to cut bond holdings now because Japan’s government will follow an advisory panel’s recommendation that the wealth manager seek higher returns, the panel’s head said. The 124 trillion yen (US$1.22 trillion) Government Pension Investment Fund should reduce domestic bonds immediately to 52 percent of assets, the lower limit under current allocations, while boosting local stocks to the upper limit of 18 percent, said Takatoshi Ito, chairman of the group. Japanese debt comprised 58 percent of the fund’s assets as of September 30, while the nation’s equities accounted for 16 percent. GPIF should take advantage of the Bank of Japan’s stimulus program to offload bonds while there’s a ready buyer, said Mr Ito. “The Ministry of Health has given an OK to everything that was said in the report,” he said in an interview. “GPIF needs to start reducing bonds as soon as possible to its lower limit of 52 percent. Now is the right time to sell, while the BOJ is buying.” The fund should consider investing more in overseas assets, private equity, commodities, infrastructure and real-estate investment trusts, the panel said.

Abe secures passage of Government prioritised the secrecy bill over economic reform Opposition revolts as thousands protested outside parliament

Cardiff City IPO hits snag in Malaysia Malaysian billionaire Vincent Tan could list British football team Cardiff City in Singapore next year after plans for a Malaysian IPO hit a regulatory snag over the team’s weak cash flow, people with direct knowledge of the matter said. The Welsh team, which is now in 15th place out of 20 in the current Premier League season, may list on Singapore’s small-cap Catalist exchange, the sources told Reuters. The deal – the size of which has not been determined – would follow Manchester United’s US$233.2 million listing on the New York Stock Exchange in 2012, the largest sports team initial public offering ever. “They are appealing to Malaysia’s Securities Commission but it seems they are not proceeding anymore,” one of the people said, declining to be identified as details of the deal remain confidential. Mr Tan, who owns 36.1 percent of the club, had initially planned for an IPO this year on the Kuala Lumpur Stock Exchange, but Cardiff City’s negative operating cash flow has fallen short of the exchange’s minimum requirements, the sources said. Local bank CIMB Group Holdings Bhd is expected to lead the listing.

S’pore StanChart client data stolen Standard Chartered Plc said data from some of its private banking clients were stolen in Singapore after the city-state’s police found bank statements on a laptop seized from an alleged hacker. The monthly statements of 647 clients for February 2013 were stolen from Fuji Xerox Co, which prints them for the bank, according to a statement from Standard Chartered and Fuji Xerox. The bank is contacting the affected clients and hasn’t found any unauthorised transactions resulting from the incident, according to the statement. The security breach follows efforts by Singapore to build its private-banking industry. The city is Asia’s largest wealth management centre, with about US$800 billion of offshore holdings, according to Boston Consulting Group. About 8.2 percent of Singapore households have assets of US$1 million or more, the fifth-largest proportion behind Qatar, Switzerland, Kuwait and Hong Kong. “We don’t think it will affect” Singapore’s efforts to develop its wealth-management industry, said Song Seng Wun, an economist at CIMB Group Holdings Bhd in Singapore. “It shouldn’t be allowed to repeat, or else that could put at risk the reputation of the system, especially when we have so many cities around that are trying to emulate” the financial hub.

Bangladesh growth to slow to 5.5 pct on unrest: IMF

angladesh’s economic growth is expected to slow to 5.5 percent in the year to June 2014 from 6 percent in the previous year as political unrest ahead of elections takes a toll, the International Monetary Fund said. The country has been rocked by violent protests and a series of shutdowns and transport blockades led by the main opposition party, which is demanding the prime minister step down and next year’s election be held under a non-party administration. Violence also gripped the country throughout the year as the government began war crimes trials dating back to the 1971 independence war to break away from Pakistan. “Since early 2013 political events and uncertainty in the run-up to national elections have affected economic activity and curbed investment appetite, thereby slowing private credit growth and imports,” according to the IMF’s executive board assessment report. “Looking ahead, a slowdown in growth associated with unrest and

political uncertainty, as well as an expected transition in the garment sector to higher costs and upgraded labour and safety standards, pose important challenges.” The government raised wages for garment workers from this month after a string of fatal factory accidents thrust poor working conditions and pay into the international spotlight. Rock-bottom wages and trade

deals with Western countries have helped make Bangladesh the world’s second-largest apparel exporter after China, with 60 percent of its clothes going to Europe and 23 percent to the United States. The IMF has approved a US$140.4 million fourth tranche of a three-year, US$975.9 million loan deal with Bangladesh. 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 9, 2013

Asia

secrecy law P

rime Minister Shinzo Abe secured final passage of a bill granting Japan’s government sweeping powers to declare state secrets, a measure aimed at shoring up defence ties with the U.S. that prompted a public backlash and revolt by the opposition. The upper house of the Diet gave final approval of the measures in Tokyo on Friday after opposition parties first forced a no-confidence vote in Mr Abe’s government in the lower house. The wrangling over the bill forced the government to extend the parliamentary session, due to end on Friday, for two more days. The bill, which forms part of Mr Abe’s broader push to strengthen Japan’s defence policy in the face of China’s military assertiveness, stiffens penalties for bureaucrats who leak secrets and journalists who publish them. It gives government officials the power to define what constitutes a state secret under categories from defence to diplomacy, terrorism and safety threats. “There is rationale in the secrecy bill, but the government has been too hasty and has lacked efforts to provide a framework for information disclosure which is the flip side of secrecy,” said Hidenori Suezawa, a financial market and fiscal analyst at SMBC Nikko Securities Inc. Mr Abe offered to create additional oversight boards to try to

Japan PM calls for China talks

address criticism that the law would allow the government to potentially hide any type of information from public scrutiny. The measure, criticised by much of Japanese media, has prompted rare public protests. Thousands of demonstrators gathered outside parliament last week, while the ending of debate on the law sparked an outcry from opposition lawmakers. The approval rating of Mr Abe’s government fell 4 percentage points from a month ago to 49 percent, the first time it dropped below 50 percent since his election almost a year ago, according to a recent poll by the Asahi newspaper. Mr Abe prioritised the secrecy bill over pending economic measures aimed at ending 15 years of stagnation, reflecting growing regional tensions as China asserts itself. With the Diet not reconvening until January, it will take weeks or months for Abe to advance the “third arrow” of his economic plan after the monetary easing and fiscal stimulus that revived growth and drove stock market gains. “Abe must offset the negative impact of the secrecy bill on his approval rating by sticking to economic policies,” said SMBC Nikko Securities’ Mr Suezawa. “I expect a deeper commitment to the three arrows next year.”

Japanese Prime Minister Shinzo Abe called for a summit with Chinese President Xi Jinping to reset relations after an escalation in bilateral tensions, invoking a 2006 visit to Beijing during his first administration. “Since there are issues, it is all the more important to have a leaders’ meeting,” Mr Abe said in an interview in the prime minister’s official residence in Tokyo. “I visited China as prime minister and met with Hu Jintao and we shared the view that we should develop our ties based on a strategic, mutually beneficial relationship. Now is the time to go back to that starting point.” Mr Abe’s call is his most explicit yet for a summit since China’s declaration last month of an airdefence zone that overlaps with Japan’s over the East China Sea. U.S. Vice President Joe Biden, on a trip to Japan, China and South Korea this week, urged the two nations to establish crisismanagement communication. Mr Abe highlighted the value of ties between Asia’s two largest economies, with China benefiting from job gains stemming from Japanese investment, and Japanese companies profiting from earnings on their Chinese business.

KEY POINTS S&P cuts credit rating after shock H1 loss warning Moody’s reviewing rating on carrier, downgrade possible PM hints at flexibility on Qantas foreign ownership

on the carrier to BB+, one rank below investment grade, could make it harder for debt-loaded Qantas to borrow funds. The airline could also lose some shareholders whose rules on investment prevent them from retaining stock in companies rated at junk level.

Profit warning Qantas warned on Thursday it expects a pre-tax first-half loss of between A$250 million (US$226 million) and A$300 million in the six months to December 31. S&P said that warning caused the carrier’s financial risk profile to deteriorate, adding it may cut Qantas’s rating again. The airline has long complained

that Virgin Australia’s access to foreign funding, via its major shareholders Gulf carrier Etihad, Singapore Airlines and Air New Zealand, has created an unfair playing field. Qantas’ Mr Joyce had hinted that subsidies would help, while analysts had speculated the government might consider a share purchase. Though formerly state-owned, the government owns no shares in the carrier now. “In the end businesses have to operate profitably, and in the end they have to operate profitably because of their own decisions and from their own resources,” Mr Abbott said. “They can’t expect government to do anything other than create the best possible market conditions for them to operate.” Mr Abbott did suggest amending the 1992 Qantas Sale Act, which limits foreign ownership of the airline to 49 percent, could be a possibility. “The preference always would be to have the company in majority Australian hands,” Mr Abbott said. “But if it’s a choice between a greater foreign stake in Qantas and taxpayer subsidy, I ask the people of Australia, ‘What do you prefer?’” he said. “Do you prefer to be paying through your taxes for Qantas or do you prefer to have it slightly more in foreign hands than it is?” Reuters

Bloomberg News

Airline relegated to junk status after shock loss warning

Government raising electricity prices to attract investment ietnam’s success in attracting investment, generating growth and adding jobs is under threat from looming shortages of what keeps modern economies running: electricity. The risk of shortages took a turn for the worse last week when stateowned Vietnam Oil & Gas Group said talks with Chevron Corp to develop a natural gas field had failed due to price disputes, which will delay supply of the fuel to electricity generators. Consultant IHS Energy said last month that demand in the country may exceed gas supply by 2015. “The main problem is that Vietnam has a cumbersome consensus-based decision-making system that slows down the whole process of getting new power projects up and running,” said Graham Tyler, the Singaporebased manager of Southeast Asian gas and power at energy consultant Wood Mackenzie. While the government is raising electricity prices to make power projects a more attractive investment, they may not be in time to prevent shortages in southern Vietnam. The region is home to the country’s largest city, more than half of the biggest listed companies, and industries from garments to oil. Part of the problem is retail electricity prices are not attractive enough to draw investors to the power industry, said Minister of Planning & Investment Bui Quang Vinh. Vietnam is looking to foreign investment to help revive the country’s US$153 billion economy, which grew last year at the slowest pace since 1999. “When you have such low retail power prices, it will lure investment into industries that consume lots of electricity, such as cement and steel plants,” said Mr Vinh. “So we are in a situation in which we can’t attract electricity producers while there are more and more power consumers coming in, and that has worsened our power shortage.” Failure of the deal with Chevron more than a decade after plans to develop the field were announced is emblematic of the hurdles Vietnam faces in tapping its gas fields, the biggest in East Asia after China, Indonesia and Malaysia. “What we offered Chevron is the highest we could give, under Vietnam’s regulations,” said PetroVietnam chairman Phung Dinh Thuc. “They wanted to increase the price but due to limits in the Vietnamese rules, that’s impossible and that’s why the deal didn’t work out.”

Australia PM spurns Qantas plea for help ustralia’s prime minister Tony Abbott spurned a plea for help from Qantas Airways Ltd, saying subsidising the embattled airline would be “a bottomless pit” as its credit rating was relegated to junk status. The downgrade by Standard & Poor’s followed a shock loss warning from the carrier on Thursday that sent its shares plummeting to their biggest one-day loss in almost 18 months. Moody’s also said it may cut its rating on Qantas below investment grade. Mr Abbott’s comments suggested chief executive Alan Joyce had cut little ice with calls to government ministers on Thursday seeking urgent action to assist Qantas, claiming its aggressive rival Virgin Australia Holdings Ltd has an unfair advantage. “The point I make is that if we subsidise Qantas, why not subsidise everyone?” Mr Abbott said in an interview on Melbourne radio station 3AW. “If we subsidise everyone, that’s just a bottomless pit into which we will descend.” The Australian flag carrier had been one just four airlines with investment grade ratings from Moody’s or S&P. The remaining three are Deutsche Lufthansa AG, Air New Zealand and Southwest Airlines Co. S&P’s move to cut its main rating

Vietnam faces growing threat of blackouts

14 14

December 9, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 63.9 63.7 63.5 63.3

Max 63.85

average 63.568

Min 63.10

Last 63.55

63.1

Max 96.0

average 95.597

Min 94.5

Last 95.5

96.0

29.2

95.7

29.1

95.4

29.0

95.1

28.9

94.8

28.8

94.5

62.3

25.4

62.1

25.3

61.9

25.2

Max 29.15

average 28.912

Min 28.75

Last 28.85

28.7

32.5 32.2 31.9

Max 62.25

average 62.012

Min 61.70

Last 61.90

61.7

Max 25.35

average 25.231

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.277264325

4.785921236

107.9400024

85.45999908

WTI CRUDE FUTURE Jan14

97.65

BRENT CRUDE FUTR Jan14

111.61

0.56766985

6.875418941

113.3099976

96.13999939

GASOLINE RBOB FUT Jan14

272.69

0.523463708

7.553048829

287.259984

243.1999922

GAS OIL FUT (ICE) Jan14

942.25

-0.317376355

4.694444444

968

838.75

4.114

-0.435624395

1.580246914

4.825000286

3.464999914

NY Harb ULSD Fut Jan14

305.65

0.226259182

2.52926772

320.0099945

278.0799866

Gold Spot $/Oz

1229.1

-0.5615

-26.1562

1723.45

1180.57

Silver Spot $/Oz

NATURAL GAS FUTR Jan14

METALS

19.5098

-0.1183

-35.2049

33.765

18.2208

Platinum Spot $/Oz

1359.5

-0.6939

-10.4266

1742.8

1294.18

Palladium Spot $/Oz

734.35

1.0805

4.9581

786.5

629.75

LME ALUMINUM 3MO ($)

1779

1.194539249

-14.18234443

2184

1736.25

LME COPPER 3MO ($)

7122

0.74975244

-10.20047913

8346

6602

LME ZINC

1905

0.421718503

-8.413461538

2230

1811.75

13760

0.072727273

-19.34349355

18770

13205

15.545

-0.70265091

0.843334415

16.80999947

14.91500092

434.25

0.173010381

-28.75307629

653.5

418.5

651

-0.153374233

-21.73128945

895

647.75

SOYBEAN FUTURE Jan14

1325.5

-0.188253012

1.260504202

1406

1169

COFFEE 'C' FUTURE Mar14

106.4

0.377358491

-33.64515123

172.25

104.1499939

SUGAR #11 (WORLD) Mar14

16.59

-0.599161174

-19.3877551

20.71999931

16.54999924

3MO ($)

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

Mar14

WHEAT FUTURE(CBT) Mar14

COTTON NO.2 FUTR Mar14

80.41

1.978440076

1.259287243

90.61000061

76.65000153

World Stock Markets - Indices NAME

Last 25.10

25.1

Max 32.50

average 32.064

Min 31.30

Last 32.25

31.3

Currency Exchange Rates

NAME ENERGY

Min 25.10

31.6

COUNTRY MAJOR

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

ASIA PACIFIC

CROSSES

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9102 1.6349 0.8919 1.3706 102.91 7.9869 7.7545 6.0827 61.415 32.155 1.2494 29.623 43.948 11964 93.663 1.22251 0.83833 8.3067 10.9129 141.03 1.03

0.8308 -0.0245 1.11 0.7868 -0.8746 -0.0063 -0.009 0.148 0.5699 0.3887 0.4002 0.0743 -0.2457 0.0084 -1.689 0.3166 -0.804 -0.1541 -0.4847 -1.645 0

-12.2952 1.0695 2.6348 3.9121 -16.3347 -0.0463 -0.0503 2.4315 -10.4535 -4.8981 -2.2411 -1.9917 -6.6966 -18.1461 -4.6294 -1.2294 -2.7328 -1.0738 -3.505 -19.471 -0.0097

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 12075 105.433 1.265 0.88151 8.4957 11.0434 141.05 1.032

0.8848 1.4814 0.8891 1.2746 82.12 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9603 86.05 1.20625 0.80331 7.8281 10.195 105.98 1.0289

Macau Related Stocks NAME

PRICE

ARISTOCRAT LEISU CROWN RESORTS LT

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.46

-1.762115

41.5873

5.12

3.04

1844032

16.47

0.2434571

54.35801

17.38

10.08

2028294

AMAX INTERNATION

1.74

24.28572

2.12

0.75

99254370

BOC HONG KONG HO

25.55

-0.5836576

6.016596

22.85

8644339 35374970

CENTURY LEGEND

0.54

5.882353

103.7736

0.68

0.255

CHEUK NANG HLDGS

7.17

-0.4166667

19.6995

7.28

4.5

191000

23.05

-0.6465517

-0.2164519

25.6

17.7

15368061

CHINESE ESTATES

23.3

1.525054

107.1931

23.8

9.853

137500

CHOW TAI FOOK JE

11.56

1.048951

-7.073952

13.4

7.44

8788356

EMPEROR ENTERTAI

4.31

0.4662005

128.0423

4.66

1.65

4280000

FUTURE BRIGHT

3.75

-1.315789

209.3993

3.96

1.103

1526000

GALAXY ENTERTAIN

63.55

0.3157064

109.3904

63.95

6409233

126.1

-0.0792393

6.234207

132.8

110.6

684964

-0.1919386

-21.80451

35.3

23.2

595387

3.567032

90.7

77.85

45297286

CHINA OVERSEAS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16020.2

1.255822

22.25297

16174.51

12883.89

NASDAQ COMPOSITE INDEX

4062.521

0.7278651

34.54223

4069.864

2951.036

FTSE 100 INDEX

6551.99

0.8257506

11.09192

6875.62

5873.43

HANG SENG BK

DAX INDEX

9172.41

0.962691

20.49317

9424.83

7418.36

HOPEWELL HLDGS

NIKKEI 225

15299.86

0.8062598

47.18226

15942.6

9487.95

HSBC HLDGS PLC

84.2

HANG SENG INDEX

23743.1

0.1287503

4.794031

24111.55078

19426.35938

CSI 300 INDEX

2452.287

-0.6446001

-2.800878

2791.303

2023.171

TAIWAN TAIEX INDEX

8367.72

-0.09336711

8.678741

8476.63

7491.52

KOSPI INDEX

1980.41

-0.2196728

-0.8332297

2063.28

1770.53

HUTCHISON TELE H

2.76

-2.816901

-22.47191

4.66

2.76

12088000

LUK FOOK HLDGS I

28.6

-0.3484321

17.21312

31.5

16.88

1680150

MELCO INTL DEVEL

27.5

0.5484461

205.2164

28.2

8.2

4201000

MGM CHINA HOLDIN

28.85

-2.20339

117.2721

13.013

8298536

MIDLAND HOLDINGS

3.3

-0.6024096

-10.81081

4.29

2.68

830000

NEPTUNE GROUP

0.34

-1.449275

123.6842

0.4

0.131

495458000

NEW WORLD DEV

10.18

0.3944773

-15.30782

15.12

9.98

10684735

SANDS CHINA LTD

61.9

0.405515

82.32695

62.4

32.05

6600982

S&P/ASX 200 INDEX

5186.019

-0.2296863

11.55248

5457.3

4515.6

JAKARTA COMPOSITE INDEX

4180.788

-0.8562226

-3.148223

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1826.95

0.1145293

8.170757

1840.12

1597

SHUN HO RESOURCE

1.56

11.42857

1.92

1.33

76000

NZX ALL INDEX

989.267

-0.1112717

12.15506

1048.998

858.253

SHUN TAK HOLDING

4.57

-1.508621

9.069211

4.8

3.27

2733015

PHILIPPINES ALL SHARE IX

3688.47

-0.3939985

-0.2841326

4571.4

3440.12

SJM HOLDINGS LTD

25.1

-1.375246

41.42711

16.781

7002339

SMARTONE TELECOM

8.47

-1.396973

-39.84375

14.52

8.37

1725545

WYNN MACAU LTD

32.25

3.365385

53.93794

32.6

23509125

ASIA ENTERTAINME

N/A

75.38

-0.1192527

68.59763

78.03

43.57

308879

Euromoney Dragon 300 Index Sin

607.02

-0.78

-2.27

STOCK EXCH OF THAI INDEX

1361.57

-1.093976

-2.181152

1649.77

1260.08

HO CHI MINH STOCK INDEX

510.12

0.01764602

23.2978

533.15

383.53

BALLY TECHNOLOGI

Laos Composite Index

1265.63

0.3234117

4.1868

1455.82

1196.44

BOC HONG KONG HO

3.28

6.840393

3.6

2.99

2970

GALAXY ENTERTAIN

8.25

1.226994

107.8086

8.25

3.65

11134

INTL GAME TECH

17.87

0.9034444

26.1115

21.2

13.58

3125450

JONES LANG LASAL

99.35

1.418947

18.35835

101.46

80.86

202630

LAS VEGAS SANDS

75.77

0.4108137

64.14645

76.295

43.5

4397853

MELCO CROWN-ADR

36.77

-1.155914

118.3492

37.45

14.99

2644826

MGM CHINA HOLDIN

3.75

-2.34375

114.25

3.88

1.703

23439

MGM RESORTS INTE

20.17

2.437786

73.28178

20.98

10.81

11146316

SHFL ENTERTAINME

23.19

#N/A N/A

59.93103

23.25

12.98

344231

SJM HOLDINGS LTD

3.236

-2.53012

42.07838

3.6

2.1494

7100

WYNN RESORTS LTD

173.16

1.020944

56.76005

174

106.9562

1383832

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

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.2

1.003344

16574881

CHINA UNICOM HON

13.68

1.333333

22775492

ALUMINUM CORP-H

3.61

15433022

CITIC PACIFIC

10.12

0.1980198

6468988

BANK OF CHINA-H

3.15

1.286174

329406866

BANK OF COMMUN-H

5.87

0.8591065

37793438

0.1727116

14.5

BANK EAST ASIA BELLE INTERNATIO

NAME

CLP HLDGS LTD

NAME

PRICE

DAY %

64.4

0.625

2568679

SANDS CHINA LTD

28.75

-0.1736111

6213954

SINO LAND CO

14.28

0.990099

7686664

SUN HUNG KAI PRO

109.1

1.018519

8616634

-0.4815409

2456828

265.6

1.45149

2048509

23.9

2206357

0.8064516

5926157

52.75

1.05364

3208615

POWER ASSETS HOL

65.6

1561243

CNOOC LTD

16.32

0.4926108

46287676

1260442

COSCO PAC LTD

11.76

3138217

SWIRE PACIFIC-A

7192500

ESPRIT HLDGS

12.44

-0.48

4211743

TENCENT HOLDINGS

0.2087683

10140777

HANG LUNG PROPER

26.55

-0.1879699

7812341

TINGYI HLDG CO

CATHAY PAC AIR

13.78

0.2911208

3140232

HANG SENG BK

119.7

0.167364

1690249

WANT WANT CHINA

CHEUNG KONG

114.9

1.23348

3918568

HENDERSON LAND D

2.059087

5880582

WHARF HLDG

75.55

0.1325381

701703

1.112235

6329376

125.6

3.54493

9625332

76.5 -0.06531679

9291476

BOC HONG KONG HO

CHINA COAL ENE-H

7.7

-0.1297017

40174849

CHINA CONST BA-H

5.87

1.206897

202072100

CHINA LIFE INS-H

22.9

0.4385965

30126882

CHINA MERCHANT

25.6

0.3921569

4209584

CHINA MOBILE

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

85.45

1.064459

16569813

HUTCHISON WHAMPO

CHINA OVERSEAS

20.2

-0.2469136

19374736

IND & COMM BK-H

CHINA PETROLEU-H

8.36

0.9661836

101198904

CHINA RES ENTERP

25.2

0.8

77.35

1.243455

6697663

5.17

1.372549

317570965

LI & FUNG LTD

12.84

-0.9259259

17517410

4219717

MTR CORP

29.85

1.530612

4880670

MOVERS

23974.58

LOW

23576.29

CHINA RES LAND

17.16

1.179245

6849146

NEW WORLD DEV

12.98

1.564945

12528960

52W (H) 24111.55078

CHINA RES POWER

16.08

-0.618047

7490964

PETROCHINA CO-H

10.94

-1.263538

64234127

(L) 19426.35938

CHINA SHENHUA-H

33.35

-0.1497006

11160228

PING AN INSURA-H

63.35

1.198083

8338502

3 23828

INDEX 23743.1 HIGH

VOLUME

23576

4-December

6-December

15 15

December 9, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Korea Herald

The rise of an insecure giant

Shlomo Ben Ami

Former Israeli foreign minister, serves as Vice President of the Toledo International Centre for Peace

South Korea and Australia have reached a free trade agreement after resolving controversial issues over beef and an investor-state dispute settlement clause, trade officials said. The FTA will be the Park Geun-hye administration’s first trade deal. If effectuated, the FTA will be South Korea’s 11th such deal. “After a thorough legal review of the draft agreement, we will initialise a provisional version hopefully in the first half of next year,” Trade Minister Yoon Sang-jick told reporters. On the premise that the parliament ratifies the agreement, the final pact is expected to take effect in early 2015.

China Daily China plans to build a highlevel network of free trade agreements while pledging to act as a firm supporter of the multilateral trade system under the WTO. “China has basically established a platform of free trade agreements covering neighbouring regions and FTA networks radiating the continents,” Yao Jian, spokesman of the Ministry of Commerce, said. “High-standard means more facilitation of goods trade, trade in services as well as investment,” said Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation, a think tank of the ministry.

Asahi Shimbun Tokyo Electric Power Co plans to enter the turfs of other electricity suppliers in fiscal 2014, a move that could lead to full-scale competition in an industry long monopolised by regional utilities, sources said. The success of TEPCO’s plan, however, depends on whether the operator of the stricken Fukushima No. 1 nuclear plant gains approval to restart reactors in Niigata Prefecture. TEPCO plans to first sell electricity to corporate users outside its usual service areas, and then to individual households when the government fully liberalises the electricity retailing business in fiscal 2016, the sources said.

Wall Street Journal Chinese telecom equipment supplier ZTE Corp will get a crack at the promising 4G technology in its home market, following China’s decision to issue licences for fourthgeneration mobile services. The new 4G licences will allow China’s state-owned telecom carriers to accelerate their network buildout. “China’s 4G network investment is estimated to be around 100 billion yuan [US$16.4 billion] in both 2014 and 2015. This would be positive for our earnings,” ZTE president Shi Lirong said.

y the time China overtakes the United States as the world’s largest economy sometime in the next few years, it will have cemented its status as a major military power – one whose drive to assert itself strategically already is inspiring serious anxiety among its neighbours. But the truth is that China is a solitary, vulnerable rising power – one that faces potentially crippling domestic challenges. China is currently encircled by U.S. military installations and allies. While Asian countries are largely willing to maintain and even expand their economic ties with China, none (except North Korea, which depends on Chinese aid) is prepared to accept it as the region’s primary power. In fact, U.S. allies like Indonesia and India have emerged as global players largely in response to China’s rise. For its part, the U.S. has shifted substantial military power toward Asia – with highprofile military deployments in Australia and the Philippines, and 60 percent of America’s naval capabilities now deployed in the region – and has enhanced its defence ties with Japan and South Korea. Moreover, it is helping to spearhead the Trans-Pacific Partnership, an economic and trade agreement that excludes China but includes many of its regional neighbours. Against this background, U.S. claims that its strategic rebalancing is not about containing China are not particularly convincing. Indeed, the U.S. is pursuing a strategy of primacy in Asia, not a partnership between equals, and this, together with China’s own internal tensions, is undermining China’s ability to participate productively in regional and global forums. As it stands, China lacks the confidence and experience needed to navigate the

international arena. For example, it will not consider resolving in an international forum its dispute with Japan in the East China Sea over the Diaoyu Islands (called the Senkaku Islands in Japan). International law, China understands, is a doubleedged sword that can be used against China in other territorial disputes, or even in its domestic affairs.

Strategic trap Similarly, China’s miserly initial offer of US$100,000 in aid following the recent typhoon in the Philippines demonstrates how far the country is from being a mature member of the international community. As a Chinese official admitted at a recent seminar in Seoul, concepts like “regional order” have never been a part of the country’s political vocabulary. With regard to Japan, China faces a conundrum. It is relatively content with Japan being a U.S. security protectorate, because it fears the alternative: a Japan that expands its independent military reach. But U.S. efforts to avoid precisely such an outcome cannot be good news for the Chinese, either, given that they entail a deepening of the bilateral defence relationship and support for upgrading Japan’s military capabilities. In short, China’s regional exceptionalism has landed it in a strategic trap. It is unwilling to accept American leadership in Asia; but it is also reluctant to assume a more prominent role in promoting regional integration, fearing the concomitant pressure for more economic liberalisation, adherence to international norms and rules, and a more transparent approach to its military build-up. Even the proliferation of China’s economic ties in Africa, the Middle East, and South America may reflect

vulnerability rather than imperial ambition. China’s voracious quest for new energy sources has already caused it to overstretch its limited ability to protect its sea lanes. Despite bold reform plans – outlined at the recent Third Plenum of the 18th Central Committee of the Chinese Communist Party – China’s prospects remain compromised by deep-rooted contradictions.

Despite bold reform plans… China’s prospects remain compromised by deep-rooted contradictions

For example, the inherent tension between the social change that development demands and the imperative of political stability required by authoritarian rule makes the current situation unsustainable in the long run. Likewise, if the reform outline’s promise of a “decisive role” for the market ends up raising wages for poor Chinese, domestic demand might increase, but China will lose its main competitive advantage in international markets. This kind of dilemma has contributed to the fall of other developing-country dictatorships.

Vulnerable power China understands that, for now, U.S. strategic primacy is an immutable reality. Even so, its leaders’ strategic anxiety was on display at President Xi

Jinping’s June meeting with U.S. President Barack Obama, where he demanded, with the vagueness characteristic of Chinese officials, “mutual respect” and recognition of China’s “territorial integrity”. The ostensibly trivial expression “mutual respect” actually modulates China’s true desire: a return to the Westphalian principle of non-interference in states’ domestic affairs, particularly their human-rights records. China has staunchly opposed Western efforts, whether in Syria or in North Korea, to circumvent this principle with doctrines like the “Responsibility to Protect”. Similarly, Xi’s call for the U.S. to respect its “territorial integrity” carries a specific and pointed message. In China’s view, the U.S. has increasingly been encroaching on its rights with regard to Taiwan, while refusing to recognise China’s many other territorial and maritime claims against U.S. allies in the South China Sea. Experience demonstrates the dangers that can arise when vulnerable powers act independently. One need look no further than Israel, with its penchant for overreaction on security matters, or Iran, with its insistence on enriching uranium, to see what can happen when an isolated power bases its actions on a sense of existential vulnerability. China’s rise is fraught with fear and uncertainty. Encirclement by a foreign power that threatens to encroach on what it considers to be its inalienable sovereign rights is bound to drive it to become a revolutionary power bent on upending the status quo. Before China and the U.S. overstep each other’s boundaries, they should abandon the concepts of “primacy” and “containment” in favour of a concert of Asian powers capable of resolving their differences. © Project Syndicate

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December 9, 2013 April 19, 2013

Closing Chui Sai On pledges to fix bus system

South Korea expands air defence zone

Macau Chief Executive Fernando Chui Sai On has pledged to mend the flaws in the bus system, which the Commission Against Corruption has described as illegal. Speaking on the sidelines of a public event yesterday, Mr Chui said the priority is to keep the bus services running to serve the public. He also said any fix would have to be done “in compliance with the existing legal provisions” and to improve the public bus system. Mr Chui made no mention of any disciplinary action, but said the government will launch an investigation to find what went wrong and who should be held accountable for the legal flaws.

South Korea has announced it is expanding its air defence zone, which will now partially overlap with a similar zone announced by China. The two zones will now both include a rock claimed by both countries and controlled by South Korea. The defence ministry said it would coordinate with “related countries”. China announced a new Air Defence Identification Zone last month, in a move that raised regional tensions. As well as Ieodo rock, South Korea’s Defence Ministry also said the new military air defence zone would cover the airspace above Marado and Hongdo islands controlled by Seoul in waters south of the Korean peninsula.

Thai PM offers election to end political crisis Thailand’s embattled premier said yesterday she was willing to call an election to end the political crisis gripping the country – but only if protesters seeking her overthrow accept the result. Bangkok is bracing for another major antigovernment demonstration today, with protest leaders vowing a final showdown in efforts to topple Prime Minister Yingluck Shinawatra and curb the political influence of her brother Thaksin. Thailand’s main opposition party announced also yesterday that all of its lawmakers would resign en masse, deepening the political crisis. Democrat Party spokesman Chavanond Intarakom told AFP the MPs would formally step down “as soon as possible”. The country has been rocked by several episodes of political bloodshed since Thaksin, a billionaire tycoon-turned-premier, was ousted by royalist generals in a coup seven years ago. His sister’s government has been shaken by more than a month of rolling rallies by demonstrators, sometimes numbering in their tens of thousands, who want to suspend the country’s democracy in favour of an unelected “People’s Council”. Ms Yingluck yesterday renewed her offer of elections if the protesters agree to respect the democratic process. “The government is ready to dissolve the house if the majority wants it,” she said in a televised address, noting that under the law an election would have to be held within 60 days. “If protesters or a major political party do not accept that or do not accept the result of the election, it will just prolong the conflict,” she said.

Greek parliament approves budget plan Greece’s parliament approved a budget plan filled with over 3 billion euros (US$4.1 billion) of austerity cuts that sees the debt-laden country emerging from a six-year recession next year. After nearly going bankrupt and almost crashing out of the euro zone last year, Greece expects growth of 0.6 percent in 2014 and hopes to secure more leeway on its debts to the European Union and the International Monetary Fund. “This is an historic day,” Prime Minister Antonis Samaras told lawmakers on Saturday, calling the 2014 plan a budget of recovery and hope. “People’s sacrifices bore fruit and changed the course of the country.” Outside parliament, an anti-austerity rally called by the country’s largest labour unions drew only a few hundred people, a shadow of former demonstrations where tens of thousands took to the streets of Athens to protest the belt-tightening. A total of 153 lawmakers voted in favour of the 2014 budget plan in the 300-seat house. Mr Samaras’ conservative-led coalition controls 154 seats in parliament. Athens sees a budget surplus before interest payments at 812 million euros in 2013 thanks to higher than expected tax revenues. Posting a primary surplus is key as it would open the way for Greece to pursue debt relief from the EU and IMF.

The deal was finally agreed after marathon talks in Bali

WTO agrees global trade deal worth US$1 trln Deal buys trade talks time to craft elusive broad agreement

he World Trade Organisation reached its first ever trade reform deal to the roar of approval from nearly 160 ministers who had gathered on the Indonesian island of Bali to decide on the makeor-break agreement that could add US$1 trillion to the global economy The approval came after Cuba dropped a last-gasp threat to veto the package of measures. “For the first time in our history, the WTO has truly delivered,” WTO chief Roberto Azevedo told exhausted ministers after the talks which had dragged into an extra day on the tropical resort island. “This time the entire membership came together. We have put the ‘world’ back in World Trade Organisation,” he said. “We’re back in business… Bali is just the beginning.” The talks, which had opened on Tuesday, nearly came unstuck at the last minute when Cuba suddenly refused to accept a deal that would not help pry open the U.S. embargo of the Caribbean island, forcing negotiations to drag into Saturday morning. Cuba later agreed on a compromise with the United States. But there was scepticism how much had really been achieved. “Beyond papering over a serious dispute on food security, little progress was made at Bali,” said Simon Evenett, professor of international trade at the University of St Gallen in Switzerland. “Dealing with the fracas on food security sucked the oxygen out of the rest of the talks.”

The talks had begun under a cloud because of an insistence by India at the outset that it would only back an agreement if there was a compromise on food subsidies because of its massive programme for stockpiling food to feed its poor. India, which will holds elections next year, won plaudits at home for taking a stand on behalf of the world’s poor. An eventual compromise was greeted with jubilation by Trade Minister Anand Sharma. While India had insisted on a permanent exemption from the WTO rules, the final text aimed to recommend a permanent solution within four years.

Reviving confidence But the agreement is a milestone for the 159 WTO members, marking the organisation’s first global trade agreement since it was created in 1995. It also rescues the WTO from the brink of failure and will rekindle confidence in its ability to lower barriers to trade worldwide, after 12 years of fruitless negotiations. The deal would lower trade barriers and speed up the passage of goods through customs. Analysts estimate that over time it could boost the world economy by hundreds of billions of dollars and create more than 20 million jobs, mostly in developing countries. It still needs to be approved by each member government. “It is good for both developed

and developing members alike,” U.S. Trade Representative Michael Froman said. A study by the Washington, D.C.-based Peterson Institute of International Economics estimated the agreement would inject US$960 billion into the global economy and create 21 million jobs, 18 million of them in developing nations. The deal slashes red tape at customs around the world, gives improved terms of trade to the poorest countries, and allows developing countries to skirt the normal rules on farm subsidies if they are trying to feed the poor. The ministers had gathered with a clear warning that failure to reach agreement in Bali would turn the WTO into an irrelevance and trigger a rush towards regional and bilateral trade pacts. The accord may help extend talks on the Doha Round of trade negotiations, which have dragged on for 12 years and stalled over agriculture, industrial tariffs and services. “A successful Bali buys the WTO time to prove that multilateral trade talks can be productive on a regular basis and in a timely manner,” said Terence Stewart, a trade lawyer based in Washington. “The risk is that members will not address the underlying issues that have crippled the organisation’s ability to respond to the changing business environment.” Reuters