Macau business daily, Dec 19th

MOP 6.00 Vitor Quintã Deputy editor-in-chief

as homes rush continues M

acau families saw their debt load rise rapidly in 2012 and it will get higher with demand for home mortgages set to remain strong, Fitch Ratings says.

Household leverage rose by 12 percentage points – “among the fastest in Asia” – to 32 percent of the city’s gross domestic product. It could reach 40 percent next year, the agency predicts.

Strong demand for domestic mortgages

Xi Jinping calls for economic diversification

would be the main factor, the report says – despite the rising value of homes already owned.

But household credit is still much lower than in other developed jurisdictions like Hong Kong adds the research house.

The report warns that the Monetary Authority’s “laid-back” supervision could pose risks to the city’s banks, as they take on more outside money and lending.

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Basic free channels would ruin market: Macau Cable TV Page 5

More on page 3

Japan loans ‘could hit’ casino ops’ ratings

www.macaubusinessdaily.com

Year II

Number 439 Thursday December 19, 2013

Editor-in-chief Tiago Azevedo

Household debt rises

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April 19, 2013

Page 7

Govt pays out to lure major MICE events

Brought to you by

The government will launch next year fresh incentives worth at least 100 million patacas (US$12.5 million) to lure new “international” meetings and trade fairs.

Event organisers hope the scheme will help the MICE industry grow in quality as well as in quantity. The initial response to the stimulus could be limited with just four or five existing conventions and fairs eligible under the rules to apply for aid.

Hang Seng Index 23218

23177

23136

23095

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23054

23013

December 18

‘Harmonious’ deal sought on smoking: Bowie Smokers need to be “part of the solution” when Macau decides how to tackle tobacco use in casinos said Grant Bowie, chief executive of MGM China Holdings Ltd yesterday. “…the ability for the smokers to be part of the solution is important,” stated Mr Bowie, who has operational oversight for the MGM Macau casino resort. “…some smokers don’t accept that they should be banned,” he added.

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HSI - Movers Name

%Day

HUTCHISON WHAMPO

3.29

BELLE INTERNATIO

2.79

PING AN INSURA-H

2.47

CHEUNG KONG

2.12

COSCO PAC LTD

1.89

CHINA MERCHANT

-0.71

HANG SENG BK

-0.73

CHINA RES ENTERP

-1.16

SANDS CHINA LTD

-1.93

KUNLUN ENERGY CO

-2.96

Source: Bloomberg

Pac On terminal delayed to 2015

I SSN 2226-8294

Taipa’s Pac On ferry terminal will start full operations by 2015, 10 years after the construction work first began, the government acknowledged yesterday. The Infrastructure Development Office said the work would be completed at the earliest by the second half of 2014. The Marine and Water Bureau said it would take a further six months to prepare the terminal for normal operation.

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December 19, 2013

Macau

Bigger subsidies planned for global MICE events New scheme to attract international events would apply to just five business trade events already held here Tony Lai

tony.lai@macaubusinessdaily.com

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he government will launch new incentives worth at least 100 million patacas (US$12.5 million) to entice “international” meetings and trade fairs to Macau.

The International Meeting and Trade Fair Support Programme will commence may help the “long-term development” of the events industry, organisers say.

From January 1, event organisers can apply for the new subsidy administered by the Industrial and Commercial Development Fund.

The money must be used to cover expenses in promotion, accommodation, transportation, food and beverage, rent and translation services.

The director of the Macau Economic Services’ conventions and

exhibitions and economic activities development department, Chan Weng Tat, said the scheme would elevate the industry’s competiveness and “help Macau evolve into a favoured destination” for business events.

The economic bureau has reserved 100 million patacas for the scheme next year, Mr Chan said yesterday.

“If, however, that is not enough, we will explore other means to allocate resources.”

The subsidies would cover about one-third of trade fair costs and up to half of the costs of an event considered to be globally significant.

For an international meeting of 1,100 people, the subsidy could reach 3.5 million patacas, for example.

A trade fair with an audience of

2,000 and 600 professional buyers in a 3,600-square-metre venue might receive 15 million patacas.

Initial indications are the scheme may not be as successful as would have been hoped for, with just five events in the pipeline suitable for additional funding.

“We have not forecasted how many [events] will apply… but there are four or five events in our existing subsidy scheme that have the potential to apply for this international meeting and trade fair scheme,” Mr Chan said.

He said the programme would not overlap with the Convention and Exhibition Stimulus Programme launched last year because companies may only apply to one fund.

The government would monitor

how the subsidies were used during site inspections.

“This scheme can help the industry capture growth in quality instead of just quantity as in the past,” said Macau Convention and Exhibition Association vice-chairman Alan Ho Hoi Ming.

The size of each subsidy provided was “comparatively high by international standards”, he said.

The president of the Macau Fair and Trade Association, Tony Lam Chong In, said the subsidies would definitely increase the number of business events and meetings held here.

It would also help the city develop into a centre for exhibitions that linked the mainland and Portuguesespeaking countries, he said.

He said a government committee was developing a blueprint that would establish “strategic goals” for the industry.

To meet the requirements for funding, a convention must have been held in at least three countries before coming to Macau and have participants from at least five countries.

Trade fairs qualify by having one professional buyer for every nine square metres of floor space.

MICE subsidies grow by more than two-thirds The Convention and Exhibition Stimulus Programme has offered 107 million patacas (US$13.4 million) in grants since its launch last year, Macau Economic Services said yesterday. Government subsidies to the meetings, incentives, conventions and exhibitions industry were 68.1 million patacas until December 15, a 74.1-percent increase over the 39.1 million patacas in grants made in the same period last year. There were 98 applications for financial help to December 15, up from 81 last year, said Economic Services official Chan Weng Tat. He said that just seven or eight applications were rejected.

About MOP100 million has been set aside for grants to international business events next year

Macau Foundation cuts back on expenditure after criticism Apparently stung by a damning audit report, leading charity gave out fewer grants last year Stephanie Lai sw.lai@macaubusinessdaily.com

The Macau Foundation’s president, Wu Zhiliang, has pledged to improve control of grants

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xpenditure by The Macau Foundation was less than forecast last year, despite an increase in the size of the war chest available for its grants to the city’s not-for-profit entities.

The city’s biggest sponsor of grassroots, cultural and artistic organisations seems to have been stung by criticism of wasteful spending.

The head of the Legislative Assembly’s second standing committee, Chan Chak Mo, said yesterday that the foundation had “followed a more cautious spending approach.”

“In 2012, 3.6 billion patacas (US$450.9 million) was budgeted for use for The Macau Foundation, while in 2011, the amount was 3.1 billion,” Mr Chan said.

“But the foundation spent less in 2012, 900 million patacas, than it spent in the previous year, 1.2 billion patacas.”

The Commission of Audit released a report in June last year which slammed the institution’s lax supervision of funding.

It said the foundation had granted too much to some associations, and cited cases of some groups receiving

more than one handout.

At the time, Macau Foundation president Wu Zhiliang pledged to improve accountability and better monitor how grants were spent.

Any institution that had not spent its grant in the area it was requested would be forced to return the unused amount, he said.

The bulk of the foundation’s funding comes from a levy of 1.6 percent on gross gaming revenue generated by gaming companies.

The assembly’s committee is currently considering the

government’s budget report for last year, which shows a surplus of 90.98 billion patacas, nearly 55 billion more than the forecast.

Mr Chan said the difference could be explained by the government’s conservative revenue estimates and poor spending projections.

“The gaming tax has seen a considerable rise, and the government made a conservative estimate on it,” Mr Chan said.

Last year’s expenditure was 27.9 billion patacas lower than the estimate, he said.

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December 19, 2013 April 19, 2013

Macau

Strong housing demand drives up families’ debts Monetary Authority ‘relatively laid-back’ on bank supervision, Fitch warns Vítor Quintã

vitorquinta@macaubusinessdaily.com

is well above 90 percent, she stressed.

Still, the Fitch report warns that China’s slower economic growth could lead to higher unemployment and make it more difficult for households to pay off their mortgage loans.

Cash drain

Household leverage rose from 20 pct to 32 pct of GDP last year

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acau families have seen their debt load rise fast last year and it will only get higher with demand for home mortgages set to remain strong, Fitch Ratings says.

Household leverage rose by 12 percentage points in 2012 – “among the fastest in Asia” – the agency wrote in an outlook report on Asia Pacific banks released on Monday.

“We expect that it will accelerate further,” Sabine Bauer, Hong Kong-based senior director of financial institutions at Fitch Ratings,

told Business Daily. “In 2014 it could be closer to 40 percent.”

Strong demand for domestic mortgages will be the main driver, the report says. “There has been no significant growth in personal loans,” Ms Bauer said.

The average home price was at 80,412 patacas (US$10,052) per square metre in October, almost twice as much as two years earlier, official data show.

But with families’ income also growing fast “amid strong domestic economic

growth” it is still affordable to buy a flat here, the Fitch report says.

Overall household credit remained low, at 32 percent of the city’s gross domestic product, the ratings agency wrote.

Macau’s ratio “is not that alarming,” said Ms Bauer, especially compared to other developed markets.

In Hong Kong household leverage is at about 60 percent of the territory’s wealth creation while in countries like South Korea or United Kingdom the ratio

The authority should implement capital requirements as in other developed countries, she said, as well as prudential regulation that would limit a bank’s risk-taking according to the quality of its assets.

The report stresses that the proportion of non-resident deposits – which may be withdrawn more quickly in case of stress – has risen to 29 percent at end-October.

Meanwhile lending to non-residents continues to increase, Ms Bauer said.

“We are not aware of any prudential regulation to restrict any of that.”

Outsiders could acquire loans worth 1.6 times the capital they put into Macau banks in October, official data show.

Rapid credit growth is one of the risks for Macau’s banks, which saw their lending rise by 26 percent year-on-year in the first three quarters of this year, said Fitch.

The ratings agency maintained a stable outlook for the sector but warned that the Monetary Authority of Macau could be doing more to tackle growing risks, namely those linked to mainland China.

The Monetary Authority’s “lenient supervision” is offset by stricter regulations enforced in Hong Kong or the mainland on the parent banks of Macau institutions, the report says.

The city’s de facto central bank is “relatively laidback,” said Ms Bauer, namely when it comes to allowing banks to have a larger loan exposure than the Sabine Bauer, senior director requirements. of financial institutions at Fitch Ratings

We expect that it [household credit] will accelerate further. In 2014 it could be closer to 40 percent [of GDP]

Xi urges govt to improve economic structure Chui Sai On says free trade zone could help economic growth Tony Lai tony.lai@macaubusinessdaily.com

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he Macau government should do more to “improve the city’s economic structure to solve the problems” arising from the recent rapid development, Chinese President Xi Jinping told Chief Executive Fernando Chui Sai On. Mr Li and Mr Chui met in Beijing yesterday during the chief executive’s annual official visit.

China’s president told Macau’s chief executive that Macau’s “overall situation” is good and praised the work done this year.

“Macau should continue to emphasise the need for long-term stability and in order to do this it has to be prepared for any adversity,” Mr Xi said.

Macau has to keep working to diversify its economy, said Mr Xi, urging more efforts to improve the city’s economic structure.

Speaking to reporters after the

meeting, Mr Chui said that the central government policies are beneficial to Macau.

The chief executive gave no details on such policies but he said the plan for establishing a joint free-trade zone with Guangdong province and Hong Kong would be good to support Macau’s growth and cooperation with the mainland.

Guangdong governor Zhu Xiaodan said last month the provincial government is yet to submit to Beijing a plan for the new integrated free trade zone.

Beijing is “particularly concerned” about the tasks that Macau will face next year, like the election for the chief executive and the transition to a new government, said Mr Chui, without saying if he would run for a second term.

Mr Chui also met with officials from the China National

Xi Jinping, right, says Macau moving in right direction

Tourism Administration and the Chinese Ministry of Foreign Affairs yesterday.

Hosting the Tourism Ministerial

Meeting of the Asia-Pacific Economic Cooperation here will be at the top of the agenda for next year, said the chief executive.

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December 19, 2013

Macau

Developers get more than bargained for at Patane site More flats, bus terminal are included in concession details published yesterday Tony Lai

tony.lai@macaubusinessdaily.com

A

Labour shortages and ‘inclement weather’ have been blamed for latest delay to the ferry terminal (Photo: Manuel Cardoso)

Fresh delays to Pac On ferry pier Nine years after work began, troubled project could start operating in 2015 Vítor Quintã

vitorquinta@macaubusinessdaily.com

W

ork at Taipa’s troubled Pac On ferry terminal will be finished by the second half of next year, the government said yesterday – nine years after construction commenced.

“We are now working hard with all departments in order to get this project done by the second half of 2014,” the Infrastructure Development Office said yesterday.

The staff of Secretary for Security Cheong Kuoc Va were the first to offer details of the latest delay to the project, which has been criticised for its ballooning budget and open-ended design process.

In reply to questions from Legislative Assembly member Chan Meng Kam, Mr Cheong’s staff said work would be completed by the second half of next year. The answer to the assembly did not offer any further explanation.

But the Infrastructure Development Office has blamed the hold up on “many unexpected conditions such as human resources and inclement weather”.

The office said it would take action, “if necessary”, to penalise contractor Zhen Hwa Harbour Construction Co Ltd. The new delay means the ferry terminal is likely to begin operating in 2015.

The Marine and Water Bureau said it would take “approximately six months” after it is handed the infrastructure to prepare the terminal for daily operations.

A trial period would be needed

to “install and test equipment and facilities, as well as complete all kinds of contingency exercises,” the bureau said.

Back in 2005, the government decided to build a modest but permanent Taipa ferry terminal costing 583 million patacas (US$73 million). Three years later, the scale of the project had grown, but no budget had been established.

Earlier this year, the cost of the project was estimated at 3.28 billion patacas.

The Commission of Audit was critical in its July report on the project’s progress. It said the terminal had been in the hands of public officials for nearly a decade, without an accurate description of the costs or scientific assessment of passenger volumes.

Zhen Hwa Harbour Construction is a joint venture by state-owned contractor China Harbour Engineering Co Ltd, which owns 51 percent, and gaming company SJM Holdings Ltd. The contractor also won the contract to build the city’s new prison.

Construction there is at least two years behind schedule and the budget has increased by 27 percent.

Meanwhile, the reply to Mr Chan’s inquiry said that more electronically operated immigration barriers, or e-channels, would be added to facilities at Gongbei border and the Outer Harbour.

Officials are also studying an electronic entry permit system for mainland tourists that can make use of the e-channel structure. There is no timeline for its introduction.

developer with ties to former member of the Legislative Assembly Ung Choi Kun and businessman Ng Fok has sealed a long-sought approval to build two, 34-storey towers on land in Patane.

But a government dispatch published in yesterday’s Official Gazette shows the land concession has been revised, and now includes a residential portion of the development that is 21.3 percent bigger than planned, at more than 46,000 square metres.

The dispatch, dated December 10, permits Companhia de Investimento e Desenvolvimento Focus Ltda to build a 14,842-square-metre public car park – an amendment to the original land grant made in 2004.

The company can build two residential towers, each 28 storeys high, linked by a six-storey podium on the 7,409-square-metre block.

The land concession was first granted in 1993 but the land has

since been idle.

The developer is linked to Mr Ung, president of Association of Property Agents and Realty Developers of Macau and a former running partner of legislator and Executive Council member Chan Meng Kam. According to asset declaration documents, Mr Ung was general manager of the company and owns a 9.9-percent stake.

Mr Ung could not be reached for comment yesterday.

The revised concession requires the project to include a bus terminal that will be run by public bus operator Sociedade de Transportes Colectivos de Macau, SARL (TCM).

In a written inquiry to the government in 2007, former legislator Paul Chan Wai Chi questioned the legitimacy of the land concession, saying that Mr Ng had served as chairman of the bus company and as a director of the developer at the time.

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December 19, 2013

Macau

BofA, Goldman, HSBC picked for Watson IPO Hutchinson’s retail arm generated US$19.2 bln in revenue last year

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Macau Cable TV’s monopoly to provide cable television ends in April (Photo: Manuel Cardoso)

More free-to-air would ruin market, says Cable TV Cable services would be a loss-maker if government dabbled in ‘unfair competition’, says monopoly holder Vítor Quintã

vitorquinta@macaubusinessdaily.com

A

government proposal to provide a basic, free-toair television service would distort competition and lead to poor quality pay-television services, says Macau Cable TV Co Ltd. That opinion was delivered yesterday in a report by the University of Macau, commissioned by the government to study the evolution of television services here.

The government says it intends to distinguish between pay television and “basic” free-to-air television and have “one or more third parties… which may either be a public or private institution” to provide broadcasts.

Macau Cable TV says it fears the government will broadcast “dozens” of commercial channels for free, including popular Hong Kong channels, cutting into its business.

That would be “unfair competition” and it would replace the current monopoly with a “de facto monopoly”, lawyer Jorge Menezes wrote in one of two reports provided by Macau Cable TV yesterday.

It would also make pay-television unprofitable, he said.

A loss-making operator would not be able to invest in the network, acquire the copyright to channels or “devices to provide the best quality services”.

In his opinion, users would pay the price, being saddled with

“poor quality services, a diminished range of international channels and technological ‘outdatedness’”.

“Macau, as a tourism and gaming centre, cannot afford not to have good quality pay TV services of international channels and programmes.”

Internet link The government’s proposed move may also create copyright problems at an international level, as well as eating up most of the spectrum available for cable broadcasts.

The government must not be an operator and a supervisor at the same time, Mr Menezes said.

Instead, it should stick to broadcasting Macau-made public channels provided by TDM. If the government wanted to reduce the cost of pay television to consumers, it should subsidise private-sector operators.

Any alternative compensation would raise the public’s suspicions about “under the table” deals.

Macau Cable TV also called on the government to allow companies to provide Internet services using their network – a proposal that was rejected earlier this year.

“It is a rational measure as it allows the use of basically the same infrastructure and network to provide three related services, as well as others” that might be developed

in the future, Mr Menezes said.

Macau Cable TV said all telecommunications operators should be able to use the land lines managed by Companhia de Telecomunicações de Macau SARL – a possibility raised by Secretary for Transport and Public Works Lau Si Io a fortnight ago.

Macau, as a tourism and gaming centre, cannot afford not to have good quality pay-TV services of international channels and programmes Jorge Menezes, Macau Cable TV lawyer

utchison Whampoa Ltd, controlled by Asia’s richest man Li Ka Shing, picked Bank of America Corp, Goldman Sachs Group Inc and HSBC Holdings Plc to work on an initial public offering of its retail arm, said two people with knowledge of the matter.

A.S. Watson & Co, which runs stores including groceries and pharmacies in 33 markets, would be valued at more than US$20 billion (159.7 billion patacas) in an IPO, said one of the people, who asked not to be identified because the details are private. The company plans to sell shares in Hong Kong and may pursue a secondary listing in London, the other person said.

Shares of Hutchison rose as much as 3.5 percent to the highest in almost 13 years on optimism a Watson IPO would free up money to invest in faster-growing industries. The stock closed up 3.29 percent at HK$103.6.

The stock has climbed 28 percent this year, outperforming the benchmark Hang Seng Index’s 2.5 percent gain.

“Hutchison is moving faster toward the A.S. Watson IPO,” Steven Leung, a director at UOBKay Hian Holdings Ltd, said by phone yesterday. “The spinoff would help unlock a much more attractive valuation for Hutchison.”

Hutchison in October scrapped plans to sell its ParknShop supermarket chain after failing to draw high enough offers. It will review options for Watson including a public offering, Hutchison said at the time.

The retail arm includes ParknShop, the Watsons, Superdrug and Kruidvat personal care stores, Fortress electronic appliance outlets, and chains selling food and wine and luxury and cosmetic products.

Bank of America and Goldman Sachs managed the attempt to sell ParknShop.

Jeremy Lau, a Hong Kong-based spokesman for Hutchison, said the company had not decided on the time and place for a possible Watson IPO and declined to comment on the choice of investment banks.

Watson runs more than 11,000 stores, including Superdrug pharmacies in the U.K. and Rossmann drugstores in Germany in addition to its namesake outlets in Asia, according to its website. It has eight stores in Macau, all on the peninsula.

The company posted sales of HK$148.6 billion (US$19.2 billion) last year, with revenue of US$19.2 billion, according to Hutchison’s annual report.

Bloomberg News/T.A.

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December 19, 2013 April 19, 2013

Macau

‘Harmonious’ deal sought on smoking: Bowie Many smokers don’t accept they should be banned, says MGM China CEO Michael Grimes

michael.grimes@macaubusinessdaily.com

‘Air quality often worse outside casinos’ – Grant Bowie

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mokers need to be “part of the solution” when Macau decides how to tackle tobacco use in casinos said Grant Bowie, chief executive of MGM China Holdings Ltd yesterday.

“I think the education of the smokers and the ability for the

smokers to be part of the solution is important,” stated Mr Bowie, who has operational oversight for the MGM Macau casino resort.

“Otherwise it becomes very difficult for our staff, because some smokers don’t accept that they should be banned. And I think it’s unfair to

put that pressure on individual people in our own teams,” he added.

“I think we need the help of everybody to make this transition successful and harmonious. I don’t think it’s constructive if it becomes a conflict or a challenge,” he stated.

It emerged last week that the six gaming concessionaires and subconcessionaires have petitioned the city’s Chief Executive Fernando Chui Sai On to be allowed to set up airport style smoking rooms – with no gaming equipment.

Gaming staff representatives have repeatedly complained about air quality under the current ‘half and half’ arrangements introduced in January. Under those rules, a maximum 50 percent of gaming floor space can be allocated for patrons to smoke in.

The Health Bureau had hoped that modern air extraction gear would reduce the effects of tobacco on casino staff and patrons that don’t smoke and don’t like to breathe it in. But in October it was announced 16 gaming venues had failed a second round of air quality checks that had been

mandated to monitor the effectiveness of the policy. Those venues had been warned they needed to reduce their smoking areas, and were given a deadline of December 10 to explain how they planned to do it.

“Clearly a number of our customers want to smoke,” said Mr Bowie yesterday, referring to patrons at MGM Macau.

“What we have to do is find the right balance to allow individuals to express their own position, while at the same time protecting the health and interests of others. It’s a very complicated issue, and one that takes time to resolve.

“We want to be part of that process. We want to increase the mechanical solutions [air extraction] in terms of improving air quality,” he added.

Mr Bowie said that often the air in the casinos was actually better than the air outside. Business Daily reported that during one particularly bad period in August, the outdoor roadside concentration of very fine polluting particles – the kind most damaging to human health – was 7.2 times higher than the exposure level regarded as safe by the World Health Organization for any 24-hour period.

“I think one of the greatest challenges in Macau is obviously the quality of the external air,” stated Grant Bowie yesterday. “And that’s one of the great challenges for China.

So the quality that we provide in our facilities, exceeds the quality of the outside air on many occasions,” added the MGM China CEO. He was speaking to the media on the day MGM Macau launched its own HK$10 million (US$1.3 million) art gallery complete with visiting exhibition of a Sandro Botticelli painting loaned from the Galleria Sabauda, Turin, Italy.

Melco Crown pledges US$10m to a Tokyo university Firm’s co-chairman said in Sept was interested in casino resort in Japanese capital Michael Grimes

michael.grimes@macaubusinessdaily.com

M

acau casino operator Melco Crown Entertainment said it has pledged about US$10 million (79.85 million patacas) for a cultural project in collaboration with the Tokyo University of the Arts.

The firm did not issue a press release on its website about the bequest, nor a stock market regulatory announcement.

Melco Crown spokeswoman Maggie Ma said the pledge marked a “long term commitment to collaborate with the university” and reflected the company’s interest in cultural development.

The firm has not so far made any formal regulatory announcement about pursuing a Japan casino project. But Lawrence Ho Yau Lung, Melco Crown’s co-chairman, said in an interview with Bloomberg in September that the developer was willing to invest more than US$5 billion (39.9 billion patacas) in Japan casino resorts if it receives

permission to build. Tokyo and Osaka are its preferred locations, Mr Ho said in the Tokyo interview.

At the Macao Gaming Summit in November, Kazuaki Sasaki, assistant professor at Nihon University College of Economics, said Japan’s central government planned to consult city and provincial administrations over the location of any casino resorts.

FCPA question It’s likely therefore that Melco Crown’s pledge in Japan – and the timing of the announcement – would need to have been cleared by the firm’s lawyers to ensure compliance with the Foreign Corrupt Practices Act in the United States. Melco Crown is regulated in the latter country via its listing on Nasdaq in New York.

The statute forbids U.S. or U.S.-regulated firms from making payments to foreign officials or attempting to influence decision-making

Lawrence Ho – ‘long standing’ link with Tokyo institution

by foreign officials. Japan’s parliament is likely to vote in the second quarter of 2014 on a bill to legalise casinos.

The U.S. Department of Justice said in April it was conducting an investigation into Melco Crown’s Macau

market rival Wynn Resorts Ltd and the latter’s 1.1 billion patacas (US$138 million at current prices) donation in May 2011 to the University of Macau Development Foundation. The bequest – spread across ten years – was

announced at a time when the firm was still seeking Macau government permission for a Cotai project.

Wynn has stressed it has “never received a target letter or subpoena with such an investigation”. The company added that the U.S. Securities and Exchange Commission disclosed in July “that it would not recommend any enforcement action in the matter”. There has been no further announcement so far from the DoJ on the status of its inquiry.

Lawrence Ho has a history of making cultural investments outside Macau. In October last year it emerged that his Hong Kong-listed firm Melco International Development Ltd – one half of the Melco Crown joint venture in Macau – was planning to invest in a 50 billion yuan (US$8 billion) entertainment complex in Beijing including a 5,000-seater theatre, in a deal between the Beijing government and Melco International.

With Reuters

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December 19, 2013 April 19, 2013

Macau

Loans for Japan could hit casino ops’ ratings: Fitch But cash flow from existing Asian venues will support good ratings for 2014, says new report

centres – this bolsters profitability” states the ratings house.

The Fitch report, with contributions from analysts based in Singapore, Australia and New York, says of Japan: “The credit profiles for winning bidders will benefit over the long term from increased diversification and participation in an attractive project, with a strong likelihood of generating solid returns on invested capital. Losing bidders will incur wasted development/ professional expenses and face potential increased competition.”

LVS chairman Sheldon Adelson said last Friday – in announcing his company’s decision not to pursue a US$30 billion (239.56 billion patacas) project in Spain – “right now our focus is on encouraging Asian countries, like Japan and [South] Korea, to dramatically enhance their tourism offering through the development of integrated resorts…”

Macau competition

Odaiba, Tokyo – possible site for one Japanese casino resort

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ebt-funded expansion into Japan could strain the existing Asian casino operators’ credit profiles, says a new report from Fitch Ratings Inc. That could apply “especially during the construction phase, depending on other concurrent projects,” states the credit research house.

It nonetheless expects existing gaming operators in Macau, Singapore, Australia, and Malaysia to maintain their credit profiles in 2014 “underpinned by strong free cash flow,” from current operations. It’s unlikely that project capital for Japan would be needed next year, given the current uncertain political timetable for market liberalisation there.

Fitch’s paper, titled ‘2014 Outlook: Asia-Pacific Gaming’, acknowledges that in common with other sectors, the gaming industry needs to find new markets as existing ones mature, and that a successful bid in Japan is likely to deliver good returns and an improved credit profile in the long term.

“Japan will have at least one casino in operation ahead of the 2020 Olympics should the bipartisan bill pass parliament and laws be enacted in 2015. All major global players, including Las Vegas Sands, Genting, and Melco Crown have expressed interest, either independently or with a joint venture partner, as have the local companies,” states Fitch.

It’s of the opinion that Singapore – with what Fitch calls “a duopolistic market with regulatory barriers to entry, and a strong regulatory environment” now falls into the mature category.

The ratings house expects Singapore gross gaming revenue to expand by between three percent and five percent annually, compared to 12 percent for Macau next year. Market consensus currently on Macau is for around 15 percent year-on-year growth in 2014.

Fitch stresses however that the projected “sluggish growth” in Singapore’s GGR is “not a cause for concern in the medium term”. It cites the fact of a 30-year concession period

For your events, we will always invite excellence, professionalism, quality and surprise, because we know that the most important thing your guests will take away is the memory of you and your brand.

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KEY POINTS Operators to maintain credit profiles in 2014 – Fitch Macau 2014 gaming revenue to grow 12pct Lack of new openings to act as a brake Casinos in other markets to have little impact

for LVS’s and Genting Singapore’s duopoly – with 10-year exclusivity until 2017 – as enabling them to consolidate their position.

The two have “consciously increased their non-gaming business, which include strategically located hotels, amusement parks, and convention

Fitch says that the new casinos opening in other Asian markets in the next decade – it cites Manila Bay in the Philippines, possibly Vietnam, Vladivostok in Russia and South Korea, plus possible legalisation in Taiwan – should have little if any negative effect on Macau, which is chiefly serving southern China.

“More than 53 percent of its 28.1 million visitors last year came from nearby Hong Kong and the adjoining Chinese province of Guangdong, indicating that Macau remains largely a day trip for a local market. This should to a degree insulate Macau from the competitive impact of new market development in the region,” states the ratings agency.

It says currently Macau operators are generating “around US$9 billion of cash” annually, which supports the more than US$20 billion in aggregate spending on new Cotai resorts, and the existing Macau operators’ credit profiles.

Fitch’s estimate of 12 percent gaming revenue expansion for 2014 is in line with its estimate for China gross domestic product growth of seven percent in 2014-15. The research house assumes a 20 percent yearon-year growth in the mass-market segment. The agency concurs with the consensus view that the absence of new casino openings in 2014 would be a brake on Macau growth.

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December 19, 2013 April 19, 2013

Greater China NWS to buy Beijing airport stake NWS Holdings Ltd, controlled by Hong Kong billionaire Cheng Yu Tung, agreed to buy a stake in the operator of China’s biggest airport from sovereign-wealth fund GIC Pte, betting on a surge in travellers.

NWS will buy 8.8 percent of Beijing Capital International Airport Co for about HK$2.36 billion (US$304 million), according to a Hong Kong Stock Exchange filing yesterday. The purchase of 383 million shares at HK$6.15 apiece will give the transportation unit of New World Development Co a 20.4 percent stake in the airport operator’s Hong Kong-listed H shares.

The acquisition, at a 2.1 percent discount to the stock’s closing price on Tuesday, gives NWS an exposure into the booming air travel market in Beijing, ranked the world’s second-busiest airport after handling 82 million passengers last year. As disposable incomes rise in China, there is “potential growth” in revenue at the airport from retail concessions, advertising and rentals, NWS said in its statement.

“Beijing Capital International Airport is a quality infrastructure asset with substantial stature and a key correlation to the continuous growth of China’s economy,” NWS said in the filing.

New bird flu strain linked to death in Jiangxi province An elderly woman from mainland’s Jiangxi province died after being infected with a strain of bird flu not known to kill people, Chinese authorities said.

China’s Centre for Disease Control and Prevention said the woman in Nanchang had been infected with the H10N8 bird flu virus, the Jiangxi province health department said on its website.

The 73-year-old woman, who was already ill and suffering a weakened immune system, was hospitalised on November 30 with pneumonia and died a week later. The woman had visited a local live poultry market.

Those sharing her home and her other close contacts, who are under medical surveillance, haven’t displayed symptoms so far.

“The CHP will follow-up with the World Health Organisation and the mainland health authorities to obtain more information on the case,” it said.

Timothy O’Leary, spokesman for the WHO’s regional office in Manila, said officials were working closely with Chinese authorities to better understand the new virus. He said it would not be surprising if another human case was detected.

Property prices rising by double-d Fastest pace of gains this year despite efforts to cool market

More curbs

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ew home prices in China’s four major cities rose, with the southern business hub of Shenzhen posting the biggest gain in almost three years, as property measures by local governments failed to deter buyers.

Shenzhen and Guangzhou posted increases of 21 percent from a year earlier, while prices climbed 18 percent in Shanghai and 16

AMC Entertainment Holdings Inc, the U.S. movie-theatre chain controlled by China’s thirdrichest man, raised about US$331.6 million in its initial public offering.

The company, which invited members of its customer loyalty plan to take part in the IPO, sold 18.42 million Class A shares for US$18 each, after offering them for US$18 to US$20 apiece, according to data compiled by Bloomberg. The shares, listed on the New York Stock Exchange under the symbol AMC, were due to start trading yesterday.

The IPO marks AMC’s return to the public markets after nine years. The company was acquired by a private-equity group in 2004 and then merged with Loews Cineplex Entertainment Corp. Dalian Wanda Group, led

by Wang Jianlin, purchased AMC last year for US$2.6 billion including debt.

At the IPO price AMC has a value of US$3.45 billion including debt.

Members of AMC’s customer loyalty programme, called Stubs, could buy US$100 to US$2,500 worth of stock in the IPO without paying fees, the company said in a regulatory filing.

percent in Beijing, data from the National Bureau of Statistics showed yesterday. Prices rose from a year earlier in 69 of 70 cities tracked by the government last month, it showed.

About 13 Chinese cities have tightened property policies in the past month and three of China’s four major cities raised mortgage down-payment requirements for

China’s leadership has changed its policy mindset from curbing demand to a more long-term focus on regulating the property market, as the government plans to separate the affordable housing and the private property market, Citigroup Inc analysts led by Oscar Choi wrote in a report last week.

“The data runs contrary to policy objectives and is likely to trigger a

Outbound investment up 28.3 pct in 11 months

Record US$

Foreign investment into China up 5.48 pct until November

P

C

AMC theatre chain raises US$331.6 mln

second homebuyers even as the central government refrained from introducing nationwide curbs.

The government did not mention “property curbs” in the annual Central Economic Work conference this month as part of its economic framework for next year.

“Home prices in major cities have already become unaffordable; the impact of the local-level property measures is not very strong, we’ve seen similar policies before,” Yao Wei, China economist at Societe Generale SA in Hong Kong, said yesterday.

“The central government is treating cities differently, but they will still take nationwide actions if home prices are rising too quickly.”

The pace of increases from last year were the same in November from October in all four cities except for Shenzhen, according to the data.

Shenzhen and Guangzhou leading increases

hinese overseas investment rose to US$80.2 billion in the first 11 months of 2013, the government announced yesterday.

It already exceeds the entire total for last year.

Outbound investment calculated on the basis of deals closed rose 28.3 percent in January-November from the same period last year, the ministry of commerce said, topping the US$77.2 billion recorded during all of 2012.

Investment to Russia surged 685 percent during the 11-month period, and also leaped 232.2 percent to the United States.

China has been actively acquiring foreign assets, particularly energy and resources, to power its fast expanding economy.

Ministry spokesman Shen Danyang explained the surge in investment to Russia by telling reporters there were “quite significant projects”, without giving any specifics.

Russia’s top oil producer Rosneft OAO announced in October it had signed a memorandum with China’s state-held China National Petroleum Corp creating the two nations’ first joint venture for developing remote East Siberian fields. The value of the deal was unspecified.

CNPC in June also struck a deal to acquire a 20 percent stake in a liquefied natural gas project in the Russian Arctic known as the

Majority of spending goin

Yamal LNG. “China currently is keen to invest abroad, leading to high investment growth rate,” Mr Shen said.

He added that in the future the ministry will “try as much as we can” to relax controls on outbound deals to “actively increase overseas investment by companies and individuals”.

Investment destined for Hong Kong and Japan fell 0.6 percent and 13.3 percent respectively.

The ministry also said that foreign investment into China rose 5.48 percent year-on-year in the first 11 months.

Foreign direct investment (FDI), which excludes financial sectors, totalled US$105.5 billion for JanuaryNovember, the ministry said. For November alone FDI increased 2.35 percent year on year to US$8.48 billion, it said.

Investment from the European Union jumped 17.36 percent to US$6.8 billion during the JanuaryNovember period from the year before, while that from the United States increased 8.6 percent to US$3.2 billion.

Most investment into China comes from a group of 10 Asian countries and regions including Hong Kong, Taiwan, Japan, Thailand and Singapore. FDI from those economies rose 7.45 percent to US$91.4 billion in the year to November.

AFP

resident Xi Jinping’s efforts to rein in local debt face an unprecedented challenge next year as US$49 billion in borrowing must be repaid to avoid defaults that could strain the financial system.

Local-government financing vehicles, used by regions to raise funds, must repay 299.5 billion yuan (US$49 billion) of bonds, according to Everbright Securities Co Ltd, the most since it started compiling the data in 2000 and up 56 percent from 2013.

The yield on five-year AA notes, the most common grade for the issuers, climbed 139 basis points this year to a record 7.41 percent.

That exceeds the 4.98 percent on company notes in emerging markets, Bank of America Merrill Lynch indexes show.

Leaders last week concluded it was an “important task” to curb regional liabilities that the Chinese Academy of Social Sciences estimates exceed 20 trillion yuan, topping government debt in Germany.

Central bank efforts to deleverage the economy pushed up moneymarket rates this month the most since June’s record cash crunch.

LGFV bond sales fell 15 percent in November.

“There will probably be defaults in some LGFVs’ bank loans and trust financings next year as the huge redemptions drain cash,” said Li Ning, a bond analyst in Shanghai at Haitong Securities Co, the nation’s second-biggest brokerage.

“The government’s control on local borrowings is good for LGFVs in the long term and bad in the short

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Greater China

digits

Beijing bans new Bitcoin deposits Exchanges barred from accepting fresh inflows of cash

fresh round of real estate market curbs,” Hong Kong-based Dariusz Kowalczyk, an economist and strategist at Credit Agricole CIB, wrote in an e-mailed reply.

“We expect higher down-payment ratios in the every near term and a hike in mortgage lending rates in coming months.”

Private data also have shown rising housing values. Home prices jumped 9.5 percent from a year earlier last month, the biggest gain since December last year, according to SouFun Holdings Ltd, the nation’s biggest real estate website owner.

The value of November home sales climbed to the highest in almost two years, to 720.4 billion yuan (US$119 billion), the statistics bureau said last week.

China’s home-price growth in the third quarter was the fastest after Dubai, rising 22 percent from a year earlier, broker Knight Frank LLP said in a report this month that tracked 55 markets.

Major cities will see more price increases next year on a supply shortage, while less affluent secondtier cities will have “relatively stable” prices, said Liu Ning, board secretary of China Merchants Property Development Ltd, the country’s third-biggest developer by market value, in an interview last week.

Bloomberg News

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TC China, China’s largest Bitcoin operator, can no longer accept new deposits, according to Bobby Lee, its chief executive.

YeePay, a third-party payment provider, gave notice yesterday to BTC China that it would no longer provide deposit services, Mr Lee said in a phone interview. Withdrawals are unaffected, according to BTC China’s official microblog. Bitcoin prices fell as much as 35 percent from yesterday’s high after the announcement.

Mr Lee’s comments came less than two weeks after China’s central bank barred financial institutions and payment companies from handling Bitcoin transactions.

The ban reflects concern about the risk the digital currency may pose to China’s capital controls and financial stability after a surge in trading this year made the country the world’s biggest trader of Bitcoin, according to BTC China.

“We’ve suspended customer deposits,” Mr Lee said. “It is unfortunate but we apologise for that inconvenience. We think this is due to government regulation. We have to play by the rules of the government of China.”

Chinese central bank officials told third-party payment service providers to stop offering clearing services to online Bitcoin exchanges, China Business News reported on Tuesday.

The newspaper is affiliated with the

Shanghai government, Companies currently offering services must end them by the Chinese New Year, a weeklong holiday that begins on January 31, the newspaper cited Zhou Jinhuang, deputy director of payment clearance at the People’s Bank of China, as saying at a meeting with more than 10 third-party payment service providers.

Prices plunge TenPay, another payment provider owned by Tencent Holdings Ltd, earlier halted service with BTC China by “mutual agreement,” Mr Lee said. People can’t transfer money into BTC China any more, said a YeePay employee who answered the company’s customer service hotline, declining to give her name.

“Nobody can put more money into BTC China for now,” Mr Lee said.

Bitcoin prices fell to as low as 2,551 yuan after BTC China posted a notice on its microblog about the payment service stoppage at 12.35pm. Bitcoin, which traded as high as 3,918 yuan yesterday morning, was at 2,780 yuan in the evening.

PBOC said on December 5 that financial institutions and payment companies can’t give pricing in Bitcoin, buy and sell the virtual currency or insure Bitcoin-linked products.

“The PBOC statement on

December 5 was somewhat vague and there is more clarity now,” Zennon Kapron, managing director of financial consultancy Kapronasia, said in an interview. “The way it’s reading now is that after the Chinese New Year, you won’t be able to get your money off the platforms.”

Bitcoin prices on the CoinDesk index have jumped as much as 11-fold since October, prompting former Federal Reserve chairman Alan Greenspan to call the market a “bubble”.

Bloomberg News

$49 bln debt bill risks local default

ng toward paying down debt term because they mainly rely on new borrowings to repay the old.”

Rising risks Regional governments set up more than 10,000 local financing units to fund construction projects after they were barred from directly issuing bonds under a 1994 budget law.

Note sales by the financing vehicles declined to 83 billion yuan last month, compared with 98.2 billion yuan in October, according to data compiled

by Everbright Securities.

“Default risks in LGFV bonds are rising,” said Zhang Yingjie, Beijingbased deputy general manager in the research and development department of China Chengxin International Credit Rating Co., Moody’s Investors Service’s joint venture in China. “If LGFVs don’t have stable cash flow to repay the rising maturing debt, they will have to get the money through refinancing.”

The majority of spending by the vehicles goes toward paying down debt, for which they rely on being able to roll over borrowing, data from China Chengxin International show.

About 66 percent of cash expenditure was for repayment of principal and interest in 2012, and new liabilities provided 69 percent of the funds for such debt servicing.

Many financing units depend on land sales by local governments for funds to repay debt, and current property policies may cool the market in smaller cities, reducing the value of LGFV assets there, according to China Chengxin’s Mr Zhang.

The China Banking Regulatory Commission reiterated on Tuesday

Financing units mostly depended on land sales by local governments

KEY POINTS Local govts set up more than 10,000 financing units LGFV must repay 299.5 billion yuan of bonds Default risks in LGFV bonds rising – analysts

that banks must not increase outstanding loans to the regional funding vehicles, which reached 9.7 trillion yuan as of the end of June.

The government probably won’t allow LGFV bonds to default next year because it would hurt financial stability, Haitong’s Ms Li said. There have been no defaults in China’s publicly traded domestic debt market since the central bank started regulating it in 1997, according to Moody’s.

Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc, said there may be a default on a local financing vehicle

note in the coming 12 months as authorities rein in borrowings.

“It’s been obvious that the government has become more and more concerned,” Nomura’s Zhang said. “It will be more and more difficult for LGFVs to sell bonds.”

China’s National Audit Office hasn’t released the results of a nationwide audit that the government said in July it had ordered for the first time in more than two years.

The audit bureau said in a 2011 report that local authorities owed 10.7 trillion yuan at the end of 2010.

Bloomberg News

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Greater China

Chinese equities seen overtaking India’s in 2014 MSCI China trading at a chunky discount to its 10-year median Clement Tan

better value in the middle term,” said Angelo Corbetta, Pioneer Investments’ London-based head of Asian equities.

But India’s potential is starting to look stretched on valuations already. Information technology and pharmaceutical companies, which led stock indices to record highs last week, are expensive.

The MSCI India IT sub-index trades at 21 times earnings forecasts for the year ahead, well above the 12 times for the equivalent index for AsiaPacific countries outside of Japan.

The MSCI health care sub-index is starting to look similarly stretched.

In comparison, China Inc’s earnings revision ratio – the pace of earning forecast upgrades against downgrades – has turned around, suggesting investors think Chinese companies’ earnings prospects are improving.

“For three years, markets have been betting on a hard landing in China. It is time to unwind some of those bets,” said the head of a Asian macro hedge fund in Hong Kong.

For the rally to last beyond early 2014, investors will expect clear steps to be taken to resolve Chinese banks’ bad debt problems. They will also want to see how the reform drive will impact corporate margins and earnings, especially for giant stateowned firms.

Indian shares – looking expensive

C

hinese shares may be poised to become an unlikely star of Asian emerging markets in 2014, outshining India, thanks to cheap valuations and optimism about reforms. Investors have been underweight China for years.

China-focused equity funds saw some net inflows in November, when the ruling Communist Party announced plans for far-reaching economic and social reforms, and analysts said once the government starts following through on those plans it would trigger a flood of money.

Foreigners have bought a net US$18.8 billion worth of Indian shares this year, according to the market regulator’s data.

Official statistics are not published for China, but data from fund tracker EPFR shows a net US$5.5 billion outflows for the year to December 11 for China-focused equity funds.

At 9.3 times forward 12-month earnings, the MSCI China is trading at a chunky discount to its 10-year median and at its widest gap to the MSCI Asia ex-Japan since the 2008 financial crisis.

And the Chinese market is trading at a 40 percent discount to MSCI India on a forward price-to-earnings basis, according to Thomson Reuters I/B/E/S data.

In contrast, benchmark indexes in India have hit record highs and valuations are on par with 10year averages.

Besides looking expensive, Indian

KEY POINTS Benchmark indexes in India hit record highs Foreigners bought US$18.8 bln of Indian shares Reform plan sparks rally in Chinese stocks Chinese banks’ bad debt problems a concern

shares could also be vulnerable to shocks that could come from the U.S. Federal Reserve winding down its stimulus, current account problems, and a general election due by May next year.

Reform plan At the very least, investors look unwilling to add more Indian risk and will look to make fresh allocations next year in other markets, with China firmly on their radar.

“Overall, we believe Chinese equities are just too cheap to be

ignored by investors in 2014,” said Desmond Tjiang, Greater China and Hong Kong equities portfolio manager at Pinebridge Investments LLC in Hong Kong.

“Despite reforms and the broad economic slowdown, there are still a lot of industries such as mass consumption, e-commerce and environment-related sectors that should continue to grow exponentially in the coming years.”

Beijing last month unveiled a bold reform plan, including pledging to free up markets, in a bid to put the world’s second-largest economy on a more stable footing.

The plan sparked a rally in Chinese stocks that saw the offshore Chinese market in Hong Kong gain more than 10 percent in four sessions, before levelling off.

Some brokers, such as CLSA, said the rally lacked conviction due to an absence of institutional investors. But while some may still be wary of a market that has been in a funk since 2007, there are signs things could be turning around.

In a November 21 report, Goldman Sachs Group Inc said funds focused on global emerging markets and Asia were underweight China by 290 and 582 basis points respectively, suggesting a return to equal weighting alone would trigger a powerful rally.

“India may have more upside potential in the short term because markets may rally into the elections due in May, but China represents

Overall, we believe Chinese equities are just too cheap to be ignored by investors in 2014 Desmond Tjiang, equities portfolio manager at Pinebridge

“We will be looking for a dramatic improvement at the operating cash flow level at the next earnings. Most Chinese companies have negative working capital, which means they are subsidising their clients,” Pioneer’s Mr Corbetta said. “It’s all about allocating capital more efficiently.”

If that happens, Chinese equities may well see a re-rating in the longer run.

“If China gets its reform right… we will move into an environment where we don’t just buy the dip and sell the bounce, but you actually just buy the dip because the long-term trajectory is positive as opposed to flat to down,” said Andrew Swan, Blackrock’s head of Asian equities, told the Reuters Investment Summit in late November.

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Reuters

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December 19, 2013 April 19, 2013

Asia

Asia business sentiment bearish in Q4 Biggest risk is global economic uncertainty, firms say Joyce Lee

B

usiness sentiment among Asia’s top companies dropped sharply in the fourth quarter, extending last quarter’s declines, with global economic uncertainty and rising costs weighing on the region’s firms, a Thomson Reuters/ INSEAD survey showed.

The Thomson Reuters/ INSEAD Asia Business Sentiment Index fell to 62 in the fourth quarter from 66 in the third quarter of 2013, the lowest reading since the third quarter of 2012. A reading above 50 indicates an overall positive outlook.

Sentiment in Southeast Asia’s US$1.5 trillion economy was undermined by political turbulence in Thailand and a typhoon in the Philippines, causing dismal readings of 40 and 58 respectively, which were the lowest for both countries since the poll was first compiled in 2009.

Although China and India’s bullish scores of 75 and 82 respectively supported the index, export-driven north Asian economies such as South Korea as well as regional trading hub Singapore also showed weaker readings, underscoring still-anaemic global business conditions.

“The global economic recovery is still very fragile,” Zhang Shiyuan, an economist at Shanghai-based Southwest Securities Co said. “There is a fundamental problem that there’s still too much debt. It’s a time bomb that may be detonated if monetary and fiscal policies don’t coordinate well.”

The survey showed that the auto sector was the most negative with a reading of 33, a sharp drop from 63 in the

KEY POINTS Sentiment index falls to 62 in Q4 from 66 in Q3 Southeast Asia hit by political crisis, typhoon Upbeat sentiment in China and India Defensive sectors concerned over rising costs

The auto sector was the most negative in Asia

previous quarter, followed by the food and resources sectors with fourth-quarter scores of 50.

The index surveyed more than 100 of the Asia-Pacific region’s top companies including Hyundai Heavy Industries Co Ltd, Fast Retailing Co Ltd and International Container Terminal Services Inc (ICTSI) in 11 economies, across sectors including property, financials and tech.

The poll, conducted

by ThomsonReuters in association with INSEAD, a global management and business school, was compiled between December 2-13.

Of the 128 companies that responded, two-thirds reported a neutral outlook while less than 30 percent were positive in their prospects.

Among ASEAN countries that had remained

comparatively upbeat earlier this year, Malaysia remained the only bright spot with a score of 75, up from 69 in the last quarter.

In contrast, companies in Thailand were the most negative in Asia with a 40-index reading, plunging from 71 in the previous quarter as signs of prolonged political uncertainty due to anti-government protests against Yingluck Shinawatra’s ruling party hit business sentiment.

Corporate sentiment in the Philippines tumbled to 58 from the maximum score of 100 in the previous quarter due to the devastating effects of Typhoon Haiyan in early November that killed more than 5,200 people and destroyed an estimated 24 billion pesos (US$543.60 million) in crops and infrastructure.

Among north Asian economies, Japan retreated to a fourth-quarter score of 55 from 63 in the previous quarter as the buzz around Abenomics deflated. The outlook in South Korea remained steady at a neutral 50.

A glimmer of hope came from China, the world’s second-largest economy, which showed an uptick in fourth-quarter sentiment to 75 after holding steady at 50 earlier this year.

“The companies appear to be upbeat on the expectation that overseas demand for Chinese exports will improve.

Hopes stemming from the government’s reform measures announced in Q3, and rising income levels that could drive spending, are also causes for positive sentiment,” said Cui

Hongmei, a China market analyst at Seoul-based Daewoo Securities Co. India’s bullish outlook also supported the index, with a fourth-quarter score of 82 compared to 67 in the previous quarter as improving manufacturing conditions in the 1.3 billion-strong country shrunk the trade deficit by 23 percent between AprilNovember 2013.

Broken down by sector, builders in Asia were the most bullish with a maximum reading of 100 for the second consecutive quarter, followed by pharmaceuticals and property sectors with readings of 75.

Defensive sectors such as food and retail were both down from the previous quarter to readings of 50, as companies cited rising costs as their biggest risk.

Reuters

Growth abroad may lift Asia economy: Pimco Emerging markets struggling to rebalance their economies

A

sian growth matching the lowest since 2009 this year may receive a boost in 2014 as developed markets from the U.S. to Europe accelerate, according to Pacific Investment Management Co, the world’s largest manager of bond funds.

Four of Asia’s five largest economies outside Japan are slowing as regional expansion stalls at 6.23 percent for a second year, economist forecasts compiled by Bloomberg show. Shipments from China to the U.S. are poised to increase at the slowest pace since 2008 this year, according to China’s Customs General Administration, while so-called G10currency markets are on track to grow a combined 1.96 percent in 2014, the most since 2010.

“Asia’s trajectory will continue to be shaped critically by the growth

path in the U.S. and Europe,” Ramin Toloui, the Singapore-based global co-head of emerging markets portfolio management at Pimco, wrote in a report published yesterday. “The upshot is an Asian outlook in which growth is stabilising but not stellar.

Prospects for an improved external environment offer the possibility of support on the upside.”

Countries from China to India and Indonesia are struggling to rebalance their economies as investors refocus on developed markets ahead of expected cuts to record U.S. stimulus.

Investors pulled more than US$1.6 billion from both emerging- markets equity and bond funds in the week to December 11, according to data provider EPFR Global. The Federal Reserve may start tapering its US$85 billion-a-month of bond purchases this month, 34 percent of analysts

Asia’s trajectory will continue to be shaped critically by the growth path in the U.S. and Europe Ramin Toloui, co-head of Pimco’s emerging markets portfolio

surveyed by Bloomberg News predict.

While India and Indonesia are tackling fiscal and current account deficits, China is trying to reduce its reliance on exports and investment as it endures the longest streak of sub-8 percent growth in at least two decades.

The nation, which set a 7.5 percent annual growth target this year, will try to expand at a rate that improves the quality and efficiency of development, according to a statement from the annual Central Economic Work Conference which ended last week.

“Growth in the next decade requires a rebalancing of the economy toward household demand,” Mr Toloui said in the report. “In the near term, China’s economic performance will be dominated by the dialling back and forth of the credit conditions by policymakers.”

Bloomberg News

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December 19, 2013

Asia Australia to boost iron ore exports Australia, the largest iron ore exporter, will ship more than previously forecast next year as miners including Rio Tinto Group and BHP Billiton Ltd boost output, adding to global supplies and pressuring prices. The country may ship a record 709 million metric tons in 2014, compared with 669 million tons predicted in September and 581 million tons in 2013, the Bureau of Resources and Energy Economics said in a report yesterday. Spot prices will average US$119 a ton next year from US$126 a ton in 2013, it said, leaving its 2014 estimate unchanged.

Japan exports rise but trade gap widens Central bank likely to keep policy steady on Friday Tetsushi Kajimoto

SK Hynix plans building chip factory SK Hynix Inc, the world’s second-largest maker of memory chips, plans to build a new factory in South Korea to meet the growing demand for mobile devices, according to two people familiar with the matter. The company plans to invest at least 4 trillion won (US$3.8 billion) next year on the plant and on maintenance and technology upgrades at existing facilities, the people said. Construction of the new factory will begin next year, with mass production of dynamic random access memory, or DRAM, chips starting as early as 2015, one of the people said.

NZ economy gallops into New Year New Zealand looks set to end the year with a roar as strong commodity prices, recovery from drought, and bubbling domestic activity drive the economy at its best pace in a year, backing expectations of central bank rate rises in the next few months. The agricultural-based economy is expected to have grown 1.1 percent in the three months to September 30, according to the median in a Reuters poll. The Reserve Bank of New Zealand last week made the same forecast in its quarterly monetary policy statement. That follows limp growth of 0.5 percent in the first six months of the year.

Exports climbed 18.4 percent as shipments to China bounced back

RBA sees policy stimulus working Central bank governor says monetary policy supporting higher spending Ian Chua

A Abbott announces fund for auto workers Australia is setting up a A$100 million (US$89 million) fund to support regions affected

by General Motors Co’s decision to stop production in the country by 2017, including directly supporting those workers affected by the decision. Prime Minister Tony Abbott is launching the fund and related programmes as a way to help transition the country from heavy industrial manufacturing to “higher value-added” production, other than just subsidies. “In the end, no government has ever subsidised its way to prosperity,” Mr Abbott told reporters yesterday.

ustralia’s central bank chief hinted yesterday that there was no pressing need to cut interest rates further in the near term, saying low borrowing costs were working to support the economy.

Reserve Bank of Australia governor Glenn Stevens also said that the recent decline in the local dollar was welcomed and that further weakness would help achieve a more balanced economic recovery.

“The Board has maintained an open mind about whether we may need to lower interest rates further.

At this point, however, there are few serious claims that the cost of borrowing per se is holding back growth,” Mr Stevens told lawmakers in his twice-yearly parliamentary testimony in Canberra.

“On the contrary, monetary policy is supporting higher spending by altering incentives as between spending and saving, and working to create an environment in asset and credit markets that eases the restraints on some sorts of activity.”

Since late 2011, the RBA has slashed 225 basis points off its cash rate, taking it to a record low 2.5 percent in August.

“The key message, as we see it, from the governor’s prepared text is that as far as policy easing is concerned the RBA has done its bit,” said Deutsche Bank chief economist Adam Boyton. “To the extent that the economy may require additional support, that increasingly needs to come from other policy levers.”

Indeed, the RBA has switched to a wait-and-see mode, repeatedly

saying it wanted a weaker dollar to spur a more broad-based recovery in the economy instead of lowering rates further.

In a rare media interview last week, Mr Stevens said he thought US$0.85 was a more reasonable level than US$0.95. Following his comments, the Aussie dollar has fallen below US$0.90.

Pressing home that point, Mr Stevens told lawmakers that an Australian dollar above 90 U.S. cents was not suitable for the economy. The Aussie last traded at US$0.8914.

“The exchange rate has also behaved, of late, more as might be expected in such circumstances: that is, it has declined,” he said.

“The Bank has described the exchange rate as ‘uncomfortably high’, and suggested that

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

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13

December 19, 2013

Asia

J

apan’s exports rose for a ninth consecutive month in November, led by car shipments to the United States and China, a sign the weak yen and a recovery in global demand are energising a major growth driver in the world’s third-biggest economy.

The 18.4 percent rise roughly matched the median estimate of a 17.9 percent increase from a Reuters poll of economists, and followed an 18.6 percent gain in October, Ministry of Finance data showed yesterday.

Exports to China increased 33.1 percent from a year earlier when the two nations were embroiled in a spat over islands in the East China Sea. Shipments to the U.S. rose 21.2 percent, while those to the European Union climbed 19.4 percent.

The weak yen, however, also inflated the cost of imported fuels resulting in a widening trade gap.

The persistent trade deficit could be a source of concern for Japanese policymakers who had hoped a weakening currency would be more of a boon for the economy by making Japanese goods cheaper overseas.

While the yen has fallen around 16 percent against the dollar this year, export growth has largely fallen short of early expectations, falling 0.2 percent in November from the previous month on a seasonally adjusted basis.

“The data confirmed a continued pickup in Japan’s exports reflecting a gradual recovery in global economy.

It was a positive reading although the pace is unlikely to accelerate as global recovery remains tepid,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Japan’s trade deficits will persist unless the nuclear reactors are restarted and global recovery accelerates suddenly, neither of which are likely

Packer wins govt approval US$12.6 for Sri Lankan resort bln

Japan’s biggest November trade deficit on record to happen anytime soon,” he said.

Imports rose 21.1 percent in the year to November, versus a 21.4 percent rise expected, due to the weak yen and imports of fossil fuel to make up for energy lost since the nuclear shutdown following 2011’s Fukushima disaster.

The resulting November trade deficit of 1.29 trillion yen (US$12.56 billion), against a 1.319 trillion yen deficit expected by economists, marked a record 17 straight months of deficits.

It was the widest deficit since January’s record 1.6 trillion yen.

Weak net exports were the main reason Japan’s economic growth slowed in July to September as growth faltered in Japan’s Asian trading partners.

Economists expect growth to pick up heading into the new year, but many warn Japan will have to rely more on domestic demand for growth as net exports could remain weak.

The Bank of Japan is expected to keep monetary policy steady at its meeting ending tomorrow, encouraged by an upbeat business sentiment survey that added to signs the BOJ’s stimulus campaign is spreading more broadly across the economy.

Reuters

But local partner will operate casino, minister says

S

ri Lanka has approved Australian Crown Resorts Ltd’s US$400 million complex along with two similar projects, but without any explicit permission to operate casinos at them, the island’s junior investment minister said.

However, Crown’s chairman James Packer, would still be able to operate a casino in his mixed-development project through his local partner, the minister said.

The government’s decision to alter the deal’s terms came after opposition politicians said Mr Packer – an investor in Macau casino developer Melco Crown Entertainment Ltd – was getting concessions not given to local entrepreneurs and Buddhist leaders said the casino could be detrimental to Sri Lanka’s culture.

Faizer Mustapha, the deputy investment promotion minister said a new gazette notification has been issued for Mr Packer’s joint venture and two similar requests by Sri Lanka’s top conglomerate John Keells Holdings and a leading local businessman Dhammika Perera respectively.

A gazette notification is issued after an approval by the cabinet of ministers before being presented to the parliament.

“The applications are for mixed development projects, which include convention centre, shopping malls, and five-star hotels,” Mr Mustapha told Reuters.

“This gazette notification has no mention about a casino anywhere. So it doesn’t deal with running a casino, operating a casino, or approving a casino.”

However, he said there was a separate mechanism for operating a casino in Sri Lanka and government policy was not to issue any new casino licences, but to allow existing approvals to operate under regulations passed in 2010.

Government officials have told Reuters that two Sri Lankan entrepreneurs have five casino approvals among them. Mr Packer’s Sri Lankan partner Ravi Wijeratne owns two and Dhammika Perera owns three, they have said.

The Crown resort-casino complex is planned for a two-acre plot in the heart of the Colombo commercial hub.

It has already been delayed once after the government asked Lake Leisure Holdings, the joint venture between Crown Ltd and its local partner, Rank Entertainment Holdings Pvt Ltd, to change its construction plans.

Reuters

India’s parliament approves anti-graft agency bill As political parties get ready to face national elections next year

I

balanced growth in the economy would probably require a lower exchange rate.”

Mr Stevens reiterated that the economy would continue to grow at a below-trend pace for a bit longer yet, but there were good grounds to think that growth could strengthen over the medium term.

“The corporate sector in aggregate has high reserves of cash, financial intermediaries and capital markets are willing to lend, and interest rates are low,” he said.

Reuters

At this point, there are few serious claims that the cost of borrowing per se is holding back growth Glenn Stevens, RBA governor

ndia’s parliament approved an anti-graft bill, more than four decades after it was first introduced and months before national elections in which discontent with official corruption will be a prominent issue.

The lower house of parliament yesterday passed the legislation, following Tuesday’s adoption by the upper house of the amended version after Prime Minister Manmohan Singh’s Congress-led coalition and the opposition agreed on the provisions.

Political parties in India were under pressure from social activists to finally pass the legislation, which has been stalled in parliament since 1968. Hunger protests by activists in 2011 spurred nationwide rallies, while a newly formed party used graft as its key electoral plank to win 28 out of 70 seats in Delhi in state polls this month.

“As political parties get ready to face national elections in another four months, they are in a hurry now to show they are clean and doing their best to eradicate corruption,” said N. Bhaskara Rao, chairman of the New Delhi-based Centre for Media Studies. “There’s a lot of public pressure on them and time has come to take it to a logical conclusion.”

India ranked 94th out of 177

countries in the 2013 Corruption Perceptions Index conducted by Transparency International.

Mr Singh’s government was keen to pass the bill as it seeks to limit the damage caused by graft scandals, including those linked to sales of mobile-phone airwaves and allocation of coal reserves. Public anger over corruption that spilled on to the streets has stalled most other pending legislation, derailing Mr Singh’s policy agenda, slowing growth in the US$1.8 trillion economy to a decade low and denting his image.

National elections must be held

by May 2014, and polls show the Congress coalition probably will lose power.

The Lokpal and Lokayuktas bill, as the legislation is formally known, would require each state to set up an anti-graft body within a year of its approval. The ombudsmen will probe complaints from any investigative agency, including the Central Bureau of Investigation.

“Lokpal Bill alone is not enough to fight corruption,” Rahul Gandhi, a member of parliament and vice president of the Congress party, said in the lower house yesterday. “What we need is a comprehensive anticorruption code.”

Bloomberg News

14 14

December 19, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 69.5

100.40

32.1

69.3

100.05

31.8

99.70

31.5

99.35

31.2

69.1 68.9 68.7 Max 69.50

average 69.027

Min 68.55

Last 69.45

68.5

Max 100.4

average 100.104

Min 99.1

Last 100.2

64.2

63.0

Max 26.20

average 25.743

Commodities PRICE

DAY %

YTD %

(H) 52W

97.47

0.257148735

4.592767464

BRENT CRUDE FUTR Feb14

108.59

0.138325341

4.333205227

112.5

96

GASOLINE RBOB FUT Jan14

265.98

0.475974615

4.906523625

287.259984

243.1999922

GAS OIL FUT (ICE) Jan14

918.75

-0.081566069

2.083333333

968

838.75

4.303

0.373221367

6.24691358

4.825000286

3.464999914

296.87

0.19575416

-0.415953843

320.0099945

278.0799866

1235.01

-0.1875

-25.8012

1699.9

1180.57

NY Harb ULSD Fut Jan14 Gold Spot $/Oz

107.9400024

85.45999908

Silver Spot $/Oz

19.9876

-0.0125

-33.6181

32.465

18.2208

Platinum Spot $/Oz

1356.88

-0.2866

-10.5992

1742.8

1294.18

Palladium Spot $/Oz

707.88

-1.1341

1.1749

786.5

629.75

1798

0.25090605

-13.26579836

2184

1736.25

LME COPPER 3MO ($)

7278

-0.164609053

-8.233514059

8346

6602

LME ZINC

2000

0.401606426

-3.846153846

2230

1811.75

LME ALUMINUM 3MO ($)

3MO ($)

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

14060

0.213827512

-17.58499414

18770

13205

15.525

0.258314498

0.713590658

16.80999947

14.91500092

426.5

-0.058582308

-30.02461034

634

418.5

WHEAT FUTURE(CBT) Mar14

616.25

-0.564743848

-25.90922753

867

615.75

SOYBEAN FUTURE Mar14

1331.75

-0.224761191

1.293021487

1377.75

1174

COFFEE 'C' FUTURE Mar14

114.15

-0.997398092

-28.81197381

172.25

104.1499939

16.02

0.37593985

-22.1574344

20.71999931

15.90999985

CORN FUTURE

Min 25.45

Last 25.55

(L) 52W

WTI CRUDE FUTURE Jan14

NATURAL GAS FUTR Jan14

METALS

Mar14

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

25.4

82.72

-0.277275467

4.168240776

90.61000061

76.65000153

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

36.1

35.8

35.5

Max 36.10

average 35.447

Min 35.20

Last 35.25

35.2

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.8915 1.6286 0.8856 1.3769 102.95 7.9849 7.7524 6.0709 61.8825 32.286 1.2587 29.713 44.257 12175 91.778 1.21934 0.84541 8.3581 10.9935 141.74 1.03

-0.0785 -0.1043 0.1581 -0.0073 0.0097 0.005 0.0026 0.0033 0.2222 -0.5296 -0.0477 -0.1481 -0.1288 -0.4107 0.0883 0.1698 -0.0911 0.067 0.0091 0.0212 0

-14.0971 0.68 3.365 4.3897 -16.3672 -0.0213 -0.0232 2.6306 -11.13 -5.284 -2.9634 -2.2886 -7.348 -19.5647 -2.6706 -0.9727 -3.5474 -1.6822 -4.2125 -19.8744 -0.0097

1.0599 1.6466 0.9839 1.3832 103.92 8.0111 7.7664 6.2492 68.845 32.48 1.2862 30.228 44.82 12181 105.433 1.265 0.88151 8.4957 11.0434 142.83 1.032

0.8848 1.4814 0.8833 1.2746 83.82 7.9818 7.7499 6.0681 52.89 28.56 1.2168 28.913 40.54 9603 86.41 1.2064 0.80817 7.8281 10.195 110.44 1.0289

Macau Related Stocks NAME

PRICE

DAY %

YTD %

ARISTOCRAT LEISU

4.38

-0.2277904

39.04761

5.12

3.04

1746498

CROWN RESORTS LT

15.8

-1.680149

48.07872

17.38

10.23

2113366

(H) 52W

(L) 52W

VOLUME CRNCY

AMAX INTERNATION

1.66

-5.142857

18.57143

2.12

0.75

6505900

BOC HONG KONG HO

24.5

-0.203666

1.659749

28

22.85

9794981 724000

CENTURY LEGEND

NAME

30.9

Currency Exchange Rates

NAME ENERGY

Last 31.05

25.6

63.3 Last 63.4

Min 30.95

25.8

63.6

Min 63.2

average 31.429

26.0

63.9

average 63.608

Max 32.05

26.2

64.5

Max 64.3

99.00

0.485

-3

83.01888

0.68

0.26

CHEUK NANG HLDGS

7.01

-1.267606

17.02839

7.28

4.58

64001

CHINA OVERSEAS

22.8

0.6622517

-1.298703

25.6

17.7

13332100

CHINESE ESTATES

22.9

-0.2178649

103.6361

23.8

10.231

46500

CHOW TAI FOOK JE

11.8

0.3401361

-5.144691

13.4

7.44

5016000

EMPEROR ENTERTAI

4.09

-3.080569

116.4021

4.66

1.68

1809545

FUTURE BRIGHT

3.85

3.217158

217.6499

4.13

1.172

4124500

GALAXY ENTERTAIN

69.45

1.239067

128.8303

70.4

29

8768200 961356

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

15875.26

-0.05861034

21.14691

16174.51

12883.89

NASDAQ COMPOSITE INDEX

US

4023.68

-0.1448809

33.25589

4081.784

2951.036

FTSE 100 INDEX

GB

6501.02

0.2286396

10.22769

6875.62

5873.43

HANG SENG BK

123.1

-0.7258065

3.706827

132.8

110.6

DAX INDEX

GE

9125.57

0.4452335

19.87786

9424.83

7418.36

HOPEWELL HLDGS

25.65

0.3913894

-22.85714

35.3

23.2

634062

NIKKEI 225

JN

15587.8

2.023545

49.95219

15942.6

9848.87

HSBC HLDGS PLC

82.2

0.1828154

1.107007

90.7

77.85

9995463

HANG SENG INDEX

HK

23143.82

0.3233311

2.149014

24111.55078

19426.35938

HUTCHISON TELE H

5161019

CSI 300 INDEX

CH

2357.226

0.03607234

-6.568727

2791.303

2023.171

TAIWAN TAIEX INDEX

TA

8349.04

-0.04657048

8.436133

8501.769531

KOSPI INDEX

SK

1974.63

0.452247

-1.122658

S&P/ASX 200 INDEX

AU

5096.102

-0.1389327

JAKARTA COMPOSITE INDEX

ID

4191.583

0.2208569

2.58

0

-27.52809

4.66

2.5

LUK FOOK HLDGS I

29

0.5199307

18.85246

31.5

16.88

1059240

MELCO INTL DEVEL

27.65

-1.25

206.8812

29.15

8.9

2645300

7491.52

MGM CHINA HOLDIN

31.05

-1.895735

133.8405

33.3

13.146

5517978

2063.28

1770.53

MIDLAND HOLDINGS

3.65

4.285714

-1.351353

4.29

2.68

9480000

9.61834

5457.3

4579.1

25910000

-2.898149

5251.296

3837.735

NEPTUNE GROUP

0.31

0

103.9474

0.4

0.131

NEW WORLD DEV

9.97

1.321138

-17.05491

15.12

9.75

8813909

SANDS CHINA LTD

63.4

-1.933488

86.74521

65.9

33.5

11183430

FTSE Bursa Malaysia KLCI

MA

1847.35

-0.1917986

9.37861

1851.94

1597

SHUN HO RESOURCE

1.58

0

12.85714

1.92

1.33

0

NZX ALL INDEX

NZ

985.397

-1.04906

11.7163

1048.998

858.3

SHUN TAK HOLDING

4.56

2.013423

8.830547

4.8

3.27

4855763

PHILIPPINES ALL SHARE IX

PH

3637.06

0.4166241

-1.673973

4571.4

3440.12

SJM HOLDINGS LTD

25.55

-2.480916

43.96266

28

17.04

8727322

7.67

1.994681

-45.52557

14.46

7.38

2268970

WYNN MACAU LTD

35.25

-2.489627

68.25775

36.9

19

6833207

ASIA ENTERTAINME

N/A

N/A

N/A

N/A

N/A

0

-1.376754

66.62939

78.03

43.57

349355 24210

SMARTONE TELECOM

Euromoney Dragon 300 Index Sin

SI

595.53

0.37

-4.12

NA

NA

STOCK EXCH OF THAI INDEX

TH

1350.28

0.9796736

-2.99225

1649.77

1260.08

HO CHI MINH STOCK INDEX

VN

505.25

-0.08305812

22.1207

533.15

392.34

BALLY TECHNOLOGI

74.5

Laos Composite Index

LO

1249.36

0

2.84745

1455.82

1197.46

BOC HONG KONG HO

3.15

0

2.605865

3.6

2.99

GALAXY ENTERTAIN

8.9

-1.657459

124.1814

9.15

3.8

7189

INTL GAME TECH

17.01

-0.7584597

20.04234

21.2

13.58

4628637

JONES LANG LASAL

98.57

-0.4544536

17.42911

102.14

80.86

192185

LAS VEGAS SANDS

77.34

-0.05169294

67.54766

77.96

44.444

3601749

MELCO CROWN-ADR

38.87

1.092328

130.8195

39.2

16.13

1992131

MGM CHINA HOLDIN

4.15

0.973236

137.1034

4.2

1.7503

21200

MGM RESORTS INTE

22.22

2.349148

90.89347

22.29

11.27

19782509

SHFL ENTERTAINME

23.19

N/A

59.93103

23.25

13.02

344231

SJM HOLDINGS LTD

3.33

-1.333333

46.2055

3.6

2.2

16179

182.48

-0.1859753

65.19736

185.41

106.966

1063627

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

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.2

1.003344

16574881

CHINA UNICOM HON

13.68

1.333333

22775492

ALUMINUM CORP-H

3.61

0

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

29

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

93

-0.4815409

2456828

265.6

1.45149

2048509

23.9

0

2206357

10

0.8064516

5926157

52.75

1.05364

3208615

POWER ASSETS HOL

65.6

0

1561243

CNOOC LTD

16.32

0.4926108

46287676

1260442

COSCO PAC LTD

11.76

0

3138217

SWIRE PACIFIC-A

0

7192500

ESPRIT HLDGS

12.44

-0.48

4211743

TENCENT HOLDINGS

24

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

57

2.059087

5880582

WHARF HLDG

75.55

0.1325381

701703

20

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

28

19

VOLUME

3 23282

INDEX 23143.82 HIGH

23281.38

LOW

23021.31

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

23021

16-December

18-December

15 15

December 19, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Straits Times More than a week after riots broke out in Singapore’s Little India district, police have largely completed their investigations and the authorities are proceeding with charges against 28 foreign workers and deporting another 53 of them. The 53 will be given stern warnings and banned from entering Singapore. Police said another 200 involved in the riot will be given advisories to obey the law but no further action will be taken against them. Their involvement was deemed “relatively passive based on the available evidence”, and they can keep working in Singapore, the police said.

Globalising European security Javier Solana

Former EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain.

essential to the survival of the European way of life.

This month’s Council will lay the foundations for the CSDP’s further development by addressing three main topics: operational efficiency, defence capabilities, and the state of the European defence industry.

If the EU’s defence and security policy is to be strong, global, and effective, it is imperative to take advantage of both the specialisation and pooling of member states’ technology and resources.

The Age

Resource use

Prime Minister Tony Abbott has announced a A$100 million (US$89.1 million) fund to help automotive workers in South Australia and Victoria to find new jobs, in the wake of Holden’s decision to stop manufacturing cars in Australia in 2017. Of the A$100 million, the federal government will contribute A$60 million and the Victorian government will give A$12 million. The rest will come from the South Australian government, and ‘’our expectation is that Holden will make a contribution’’, Mr Abbott said in a statement.

The Star Genting Malaysia Bhd is embarking on a 10-year master plan for the development, expansion, enhancement and refurbishment of hotels, infrastructure and a new 1 billion ringgit (US$301 million) Twentieth Century Fox World theme park at Resorts World Genting. The Genting Integrated Tourism Plan plan, totalling 5 billion ringgit, also includes a hilltop development of a three-star hotel with about 1,300 rooms next to First World Hotel and a show arena that can seat 10,000 people.

Chairman and chief executive Tan Sri Lim Kok Thay said that the group was embarking on change for both the tourism and integrated resort industry in Malaysia.

Asahi Shimbun Taiwan’s China Airlines Co will set up a budget carrier with Singapore’s Tigerair, a move that could hurt Japanese rivals serving Japan-Taiwan routes.

The airline said that Japan is among the likely destinations.

Service will start between October and December 2014, with three Airbus A320s. The fleet will be expanded to 12 aircraft in two to three years.

Japan is a popular destination for Taiwan travellers. In the first 10 months of this year, 2 million Taiwanese visited Japan, up 54 percent from a year earlier.

G

lobal security – a safe and peaceful environment free of conflict – is a public good. In other words, all of the world’s citizens and countries benefit from it, regardless of whether they contribute to supplying it.

Given this, free riders (those who enjoy the benefits of the good without investing in its provision) are likely to be plentiful. But, when it comes to global stability, the world simply cannot afford a freeriding Europe.

To be sure, given Europe’s violent past, the European Union’s greatest contribution to international security has been to ensure stability in its own region. Today, nearly a century after the outbreak of World War I, peace and stability are firmly entrenched in Europe.

Other regions, however, are volatile and unstable.

For example, strategic tinderboxes like the Middle East and Southeast Asia lack the regional security structures with which Europe is endowed.

The Middle East’s geographic proximity means that Europe cannot ignore it, while it would be folly to ignore Southeast Asia’s economic weight.

The EU is the world’s largest economy, with annual GDP of more than 15.5 trillion euros (US$21.3 trillion), and

its greatest trading power, accounting for 20 percent of world trade.

Clearly, the EU should aspire to increase its contribution to global security beyond maintaining peace among its member states. This is no time for Europe to rest on its laurels – particularly with the United States moving to extract itself from two wars and confronting isolationist urges.

Ambitious vision Enter this month’s European Council meeting: today and tomorrow, heads of state and government from the EU’s 28 member countries will convene to discuss the Common Security and Defence Policy (CSDP).

Throughout the discussions, a forward-looking, ambitious vision must be maintained in order to bring a truly global European security strategy into view.

Unfortunately, in national governments and EU institutions alike, the leadership needed to realise this strategic vision is lacking.

The summit will face several hurdles from the outset.

For starters, the ongoing consequences of simultaneous economic, political, and institutional crises

The objective must be to boost European security integration (in its broadest sense), lifting Europe to the forefront of global security

continue to determine the European agenda.

Realising a long-term vision is more difficult than ever when so many short-term imperatives – reviving growth and employment, winning elections, and re-engaging a distrustful public amid growing populist sentiment, to name just a few – materialise simultaneously.

In this environment, deepening Europe’s defence and security integration would appear to be low on the list of priorities. But the opposite is true: further development of the CSDP is

As national budgets shrink under the effects of austerity, the EU should review member states’ spending on security. It is senseless for each national government to invest limited resources identically.

This moment holds potential: spending cuts could be transformed into an opportunity to coordinate and integrate Europe’s defence industry, thus maximising overall efficiency.

The objective must be to boost European security integration (in its broadest sense), lifting Europe to the forefront of global security.

As member states advance along this path, propelled forward by technological and operational excellence and innovation, they will find avenues to eliminate unnecessary spending and optimise resource use.

Europe’s defence industry will not be able to make progress without a well-functioning market – open, transparent, and with equal opportunities for all European suppliers.

Advances in the defence industry lead to significant positive externalities, such as civil-military synergies and investment in research and development, which is fundamental to growth, innovation, and future competitiveness.

A critical component in the coordination and proper functioning of Europe’s security and defence policy is the European Defence Agency.

At the upcoming summit, leaders should reiterate the importance of the EDA, whose budget has remained frozen at the insistence of certain member states.

It would be irresponsible to treat December’s Council meeting as just another summit. Europe and an increasingly unstable world need a viable framework for global security. A fully developed CSDP – itself the cornerstone of further European integration – must be a fundamental component of such a system. © Project Syndicate

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December 19, 2013 April 19, 2013

Closing Over 80 apply for subsidised housing

Ukraine saved from bankruptcy, PM says

The Housing Bureau received 85 applications for the 1,900 subsidised flats on the first day of the three-month application window starting yesterday. The bureau handed out over 27,000 application forms – 14 times than the supply – by 5pm yesterday, it said in a press statement. The bureau also recorded 720 online bookings for applications and more than 1,740 enquiries via telephone or in person. The government had taken no new applications to buy all types of subsidised housing since 2005.

The flats will cost from 599,800 patacas (US$75,106) to 1.27 million patacas.

Ukraine’s decision to suspend a deal on closer EU ties and sign a Russian aid agreement instead has helped avoid bankruptcy, Prime Minister Mykola Azarov has told ministers in Kiev. The government’s surprise U-turn on an EU association agreement last month has sparked weeks of mass demonstrations. But Mr Azarov said the package from Russia would provide stability. Russia has agreed to buy US$15 billion of government bonds and slash the price of gas. Thousands of pro-EU protesters have been holding rallies in Kiev and other cities in western and central Ukraine.

Shares jump as India maintains rates Central bank keeps rates on hold despite higher inflation Swati Bhat

I

ndian government bonds rallied while stocks gained yesterday after the central bank surprised investors by keeping rates on hold, but it kept the door open to more rate increases should a recent surge in inflation fail to ease.

Governor Raghuram Rajan kept the repurchase rate at 7.75 percent, while financial markets had geared up for a quarter percentage point increase in key rates after record retail price inflation and a 14-month high reading on the wholesale price index.

The central bank kept talking tough on inflation despite unexpectedly holding its policy interest rate unchanged, saying it would be ready to act even if the country struggled

to raise its low growth rate.

“We won’t react to every spike in inflation that is temporary,” Mr Rajan told reporters in Mumbai after the decision. “It shouldn’t be taken that we are on hold. We are waiting for more data.”

The benchmark BSE share index and the broader NSE closed up 1.2 percent and 1.3 percent, respectively.

The benchmark 10-year bond yield fell as much as 15 basis points on the day to 8.76 percent after the policy review. It ended down 13 bps at 8.78 percent.

The partially convertible rupee closely mirrored moves in shares but weakened towards the end of trade. It closed at 62.09/10 per U.S. dollar, weaker than its previous

close of 62.01/02.

“We see stability at the current level in bonds with buying appetite given lower supplies in coming months,” said Shakti Satapathy, a fixed income strategist at AK Capital.

“The onus would now largely be towards the Fed announcement and the core CPI trajectory in the coming months. As both of the above triggers have been discounted in the market, we see a near-term chaos if the Fed announces something beyond expectations,” he added.

The benchmark 5-year overnight indexed swap rate closed down 10 bps at 8.40 percent while the 1-year rate ended 12 bps lower at 8.44 percent.

Many analysts were surprised by the RBI decision.

Eurozone agrees ‘backstop’ for failing banks Deal opens way to creating plan for handling failing lenders

E

urozone finance ministers have reached a tentative agreement to provide a common backstop, by at least 2025, to the EU’s new bank rescue system in case it runs out of money in an emergency and requires taxpayer support.

The deal, characterised as a “crucial breakthrough”, opens the way for an overall blueprint for dealing with failing lenders in Europe’s banking union. It makes no significant new common arrangements to cover funding gaps from a bank collapse

over the next decade, however.

The “common position”, reached after seven hours of talks that stretched into the early hours yesterday, will eventually provide an additional funding stream to recapitalise or wind down failing banks, should the bank-

“It is completely unexpected given the liquidity in the system as well as the inflation trajectory,” said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai. “I think it is just postponement of action, because the policy clearly says they may take action any time, even in the interim between two policies, if the situation warrants,” she added.

The Federal Reserve’s two-day meeting ended late yesterday in U.S. time amid fears globally that the central bank will soon move to cut its monetary stimulus.

Worries about tapering have sparked foreign investor sell-off in Indian markets since they emerged in May, hitting bonds in particular.

Reuters

paid resolution fund be overwhelmed.

This commitment to provide a backstop was a key demand by a Paris-led group of eurozone countries that was resisted by Germany.

Under the agreement, banks will provide the cash to pay for the closure of failed lenders, giving roughly 55 billion euros (US$76 billion) over 10 years accumulated in a Single Resolution Fund.

Until then, however, if there is not enough money from the fees, governments will be able to impose more levies on banks. If that does not suffice, they would help with public money.

If a government would not have enough money, it could borrow from the eurozone bailout fund ESM, according to the deal reached by eurozone finance ministers.

“In the transitional period, bridge financing will be available either from national sources, backed by bank levies, or from the ESM, in line with agreed procedures,” a draft statement by eurozone finance ministers said.

After the build-up phase in 2025, when the Single Resolution Fund (SRF) is full, additional money for emergency financing could be raised by the SRF itself through borrowing.

“A common backstop will be developed during the transition period.

Such a backstop will facilitate the borrowings by the SRF. The banking sector will ultimately be liable for repayment by means of levies in all participating Member States, including ex-post,” the statement said.

Reuters