Macau business daily, Dec 24th by Business Daily

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

New Century seized over debts to travel agency boss

April 19, 2013

Trade with mainland1 doubles growth on infrastructure boom Page 2

Gaming bosses predict revenue up 15 pct for 2014 Page 5

Prada bags slower growth on Wynn revamp

Year II

Number 442 Tuesday December 24, 2013

Editor-in-chief Tiago Azevedo

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The next edition of Macau Business Daily will be on Friday, December 27. Season’s Greetings to all our readers and thanks for your support.

Greek Mythology Casino, which operates under the gaming concession of Stanley Ho Hung Sun’s Sociedade de Jogos de Macau SA. In a notice published in Chinese- and Portugueselanguage media earlier this month the lower court ordered the seizure of the hotel and asked other creditors to come forward within 15 days. The notice did not mention the size of the debt involved.

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Hang Seng Index 22994

Govt planning biggest hiring spree in a decade

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Macau’s civil service will grow by the most in a decade next year, a government report shows, amid plans to hire more than 4,800 workers – an increase of 16 percent judged year-on-year. According to the 2012 Public Administration Human Resources Report published by the government in June, the public workforce has grown by an average of 4.9 percent each year from 2003 to 2012.

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HSI - Movers Name

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Chicken sales immune ‘Half’ MGM Cotai to bird ‘flu lockdown floor is for say traders entertainment: CEO

%Day

WANT WANT CHINA

2.82

GALAXY ENTERTAIN

2.58

TINGYI HLDG CO

1.78

PING AN INSURA-H

1.71

LENOVO GROUP LTD

1.43

CITIC PACIFIC

-0.84

CHINA RES LAND

-1.14

CHINA RES ENTERP

-1.17

CHINA OVERSEAS

-1.35

HENGAN INTL

-1.57

Source: Bloomberg

I SSN 2226-8294

Live poultry markets in Guangdong province shut for a day yesterday for major disinfection. The clean up will be repeated on December 31 and January 30, the eve of the Chinese New Year. Sales of live chicken – still legal in Macau wet markets but banned in Hong Kong – have suffered little disruption this year despite regular reports in China of humans infected by the H7N9 influenza virus, say industry sources.

“In excess” of 50 percent of the floor space at MGM Cotai – a new US$2.6 billion (20.76 billion patacas) casino resort being built in Macau by MGM China Holdings Ltd – would be for non-gaming entertainment said the firm’s chief executive Grant Bowie. “Our Cotai project is more like a series of theatres or a series of galleries, where people – and we – can actually bring things,” he stated.

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December 24, 2013

Macau

Govt planning for biggest hiring spree for a decade The proportion of civil servants with tertiary education has increased steeply in the past 10 years Stephanie Lai

sw.lai@macaubusinessdaily.com

This year almost half of civil servants have higher education. The steep increase in the number with higher education is due in part to the recruitment of workers with postgraduate degrees. The number of civil servants with postgraduate degrees was 2,160 last year, almost seven times the number in 2003. The government had 151 employees with doctorates at the end of last year, almost 15 times more than in 2003.

Somebody call a doctor

The average civil servant made 24,000 patacas a month last year

he government intends to recruit over 4,800 employees next year in the biggest expansion of the civil service for a decade. A government human resources report published in June says the public sector workforce grew at an average annual rate of 4.9 percent from 2003 to last year. The report says the government has plans to increase the strength of the civil service by 16.4 percent

to 34,438 next year. The plans are reflected in the government’s budget for next year, which the Legislative Assembly passed last week. However, representatives of some government departments have told a committee of the assembly that the government may fail to bring the civil service up to the desired strength because their departments have difficulty recruiting and retaining employees.

The human resources report does not say what kind of employees the government will need in the next two years. But it does say that the proportion of civil servants with tertiary education has increased since 2003. In that year almost one civil servant in four had only primary education – more than the number with higher education. Nine years later one civil servant in 10 had only primary education.

The human resources report paints a picture very different from that painted by the government departments that complained of difficulty in finding recruits. Representatives of the Policy Research Office, a government think-tank, told the Legislative Assembly’s second standing committee this month that it was short-staffed, in particular because it had difficulty in finding recruits that met its requirements, which usually included a doctorate. The office said many staff had left because they had been poached by other government departments or big companies. The human resources report says the average age of civil servants was 40.3 years at the end of last year. The average age was 38.8 years in 2003. The report says 60.8 percent of civil servants have been working for the government for 15 years or less and that the rest have been in the civil service for up to 25 years. The average monthly pay of civil servants was 24,043.20 patacas (US$3,014) last year. Almost half of civil servants were paid between 19,900 patacas and 39,600 patacas, and the other half were paid under 19,800 patacas. Men made up 58 percent of the civil service last year, having made up almost two-thirds in 2003. Most of the heads of department last year were men, just as in 2003, the report says.

Goods passing through Gongbei crossing worth more than ever Tony Lai

tony.lai@macaubusinessdaily.com

rowth in the value of goods traded by Macau and the mainland that cross the border at Gongbei has been twice as fast this year as it was a year earlier. The value of goods that went through the main border crossing was US$2.01 billion (16.1 billion patacas) in the first 11 months of this year, 24.3 percent more than in the equivalent period last year, customs service data show. In the first 11 months of last year the value of goods that went through the Gongbei crossing was 12.7 percent more than in the equivalent period of 2011. The customs service website says about two-thirds of the merchandise that Macau and the mainland trade goes through the Gongbei border crossing. Ministry of Commerce data show the value of trade between Macau and the mainland was US$2.94 billion in the first 10 months of this year, 27.8 percent more than a year earlier.

Two-thirds of the goods that Macau and the mainland trade go through the Gongbei border crossing

The customs service says Macau’s imports of construction materials from the mainland have “grown rapidly” as more infrastructure is built in the city. The value of Macau’s imports of steel in the first 11 months of this year was US$49 million, almost double the value a year earlier. The value of the city’s imports of cement increased by 94.3 percent to US$12.1 million. Its imports of furniture were worth US$75.4 million, 41.1 percent more. The customs service expects trade to increase as Hengqin Island develops and the construction of the Hong Kong-Zhuhai-Macau Bridge proceeds. The bridge is due to open in 2016. The value of goods that went through the Gongbei crossing between the handover in 1999 and last month was US$18.98 billion. Mechanical and electrical equipment has replaced clothes as Macau’s main import from the mainland.

December 24, 2013 April 19, 2013

Macau Indonesia’s telecom plans to reach Macau Indonesia’s largest telecommunications company is planning to start providing services in Macau early next year, president director Arief Yahya said on Friday, quoted by Jakarta Globe. Earlier this year, Mr Arief said the company would focus on the wholesale traffic business in Macau – handling international telecommunications between the city and Indonesia. The expansion to Macau and Taiwan is part of Telekomunikasi Indonesia Tbk’s plans to become Southeast Asia’s biggest telecommunications firm. Telkom recently set up a subsidiary in the United States and entered East Timor in January.

New Century seized over debts to travel agency boss Separately, Ng Man Sun’s attempt to regain controlling BVI shares rejected by another court Vítor Quintã and Michael Grimes newsdesk@macaubusinessdaily.com

he New Century Hotel, Taipa, has been seized for unpaid debts that were due the owner of a Macau-based travel agency, according to a judgement of the Court of First Instance. Hoi Cheng Nga, head of Macaubased Energy Travel Agency Ltd, had sued Empresa Hoteleira de Macau Lda – the Macau-registered operator of New Century. Within the grounds of the hotel is Greek Mythology Casino, which operates under the gaming concession of Stanley Ho Hung Sun’s Sociedade de Jogos de Macau SA. In a notice published in Chineseand Portuguese-language media earlier this month the lower court ordered the seizure of the hotel and asked other creditors to come forward within 15 days. The notice did not mention the size of the debt involved. Business Daily was unable to contact Mr Hoi for comment. This newspaper also separately asked the local gaming regulator the Gaming Inspection and Coordination Bureau and SJM Holdings Ltd, for comment on the status of the casino operation inside the New Century. No comment was available by press time. In August last year, Business Daily reported that SJM had taken back 40 of Greek Mythology’s then 120 gaming tables along with 200 staff. It followed a slump in Greek Mythology’s casino business – which relies on junket operations – after a public battle for control of the hotel and casino between Mr Ng and his former girlfriend Chan Mei Fun – also known by her Putonghua-derived name Chen Mei Huan. In June last year Mr Ng needed hospital treatment after being beaten at the hotel by six masked men. There have been no reports of any arrests in connection with that incident.

Fraud arrest In October a Macau police spokesman said Ms Chen had been arrested in the city on allegations of fraud. Soon afterwards Business Daily several times asked the gaming bureau for information on the status of Greek Mythology’s remaining 80 tables, but received no response. This newspaper has also asked the Land, Public Works and Transport Bureau for information on whether the New Century’s government land concession is also at risk of forfeiture following the Macau court’s judgement. It too has not responded. Separately another court – in the British Virgin Islands – has rejected a bid by veteran junket operator Mr

End of an era? New Century Hotel, Taipa

Ng to wrest control of the Taipa hotel from Ms Chen. The finding of the trial judge, British-born Edward Bannister QC, gives some insight into the convoluted world of Macau business dealings. Mr Ng had argued in the High Court in the BVI – where Empresa Hoteleira de Macau Lda’s owner Peckson Ltd is registered – that the transfer to Ms Chen in 2011 of Peckson shares was meant only as a temporary measure. The reason – the court was told by Mr Ng’s side – was that the couple had made a play to build a casino resort on Cotai. Ms Chen was said to be in good standing with

influential people on the mainland. But in order for the venture to be approved, Ms Chen needed to show she was independently wealthy. The shares in Peckson were said to have a face value of only US$40,000, but represented at least HK$720 million (US$93 million) in value relative to the HK$900 million Mr Ng had paid to acquire Empresa Hoteleira de Macau in 1996. The judge was however scathing in his assessment of Ms Chen’s character. He described her as an “unreliable witness”. “Argumentative and evasive, she failed to inspire any confidence that it would be wise to rely on anything

that she said unless it was against her interests or corroborated,” he stated. Nevertheless, the judge rejected Mr Ng’s claim, saying it was clear from documentation presented to the court that the transfer had taken place. “I have no idea why Mr Ng sold the shares to Madame Chen, but he has failed to establish a case why she should be ordered to retransfer them,” stated the judge. An advertisement published on Saturday in the Chinese-language newspaper Macao Daily News, said that Mr Ng planned to appeal against the judgement of the British Virgin Islands court.

December 24, 2013

Macau Shun Tak pushes back Harbour Mile deal Shun Tak Holdings Ltd’s long awaited Harbour Mile scheme – on a waterside plot linking its part-owned One Central development to its Macau Tower complex – could have to wait one more year to be launched. Shun Tak has extended the deadline to buy part of the plot from another company until the end of 2014, in a filing sent to the Hong Kong Stock Exchange yesterday. The company said it agreed on the extension because “the Macau government requires additional time for finalising the master plan” for the Nam Van Lake area.

Chicken sales immune to avian influenza flap Importers say no cases of H7N9 bird flu have been found among live poultry from Macau’s main sources Stephanie Lai

sw.lai@macaubusinessdaily.com

Demand for live chickens in Macau’s wet markets is stable

eports of people being infected with the H7N9 avian influenza virus in the mainland have done little to reduce sales of live chickens in Macau, importers and retailers say. They also say the supply of live chickens is unaffected, even though

live poultry wholesale markets in Guangdong were closed yesterday for sanitisation. The provincial authorities said on Sunday that Guangdong’s live poultry markets would be cleaned up again on December 31 and on January 30, the eve of the Lunar New Year.

The managing director of Macau importer of live poultry Nam Kwong Kok Fong Distribution and Transportation Ltd, Chiang Kun Man, said: “The breeding farms supplying live poultry to Hong Kong and Macau are run in accordance with a separate set of strict quarantine and inspection

procedures, and the authorities are now being even more cautious.” Mr Chiang told Business Daily that the supply of live poultry to Macau had so far been unaffected by the growing number of avian flu cases in the mainland. He said his company had seen little change in demand for live chickens in Macau’s wet markets since the first case of H7N9 infection had been reported in Guangdong in August. “The avian flu cases may weigh on the minds of some consumers,” he said. “But, overall, we haven’t seen much impact on local sales of live poultry, because there are no cases of infection reported at our sources of imports.” Mr Chiang’s company says most of Macau’s imports of live poultry come from 10 farms in Guangdong – in Zhuhai, Zhongshan and Jiangmen. About 2 million live chickens were sold in Macau last year. Nam Kwong Kok Fong thinks the number sold here this year will be similar. “The selling price of a live chicken is now about 60 patacas [US$7.50] to 70 patacas, which is similar to last year,” Mr Chiang said. “Vendors have not had to adjust their prices to boost sales.” The director of Guangdong’s disease control centre, Zhang Yong Hui, said on Sunday that the province had recorded six cases of humans being infected with the H7N9 influenza virus since August. Mr Zhang said there was no risk of a widespread outbreak of avian flu in the mainland. But he said the authorities there would pay close attention to influenza cases because this was the peak season for flu.

December 24, 2013

Macau

Gaming chiefs see revenue rising 15 pct or so in 2014 SJM’s chief executive expects visitors from the mainland to drive next year’s growth Tony Lai

tony.lai@macaubusinessdaily.com

Ambrose So Shu Fai, chief executive of SJM

aming bosses seem confident that growth in Macau’s casino revenue will be somewhere in the middle of the range of 10 percent to 20 percent next year because mainlanders will keep coming here to gamble. The chief executive of SJM Holdings Ltd, Ambrose So Shu Fai, expects casino gross gaming revenue

to expand fast next year even though the base for comparison this year will be high. Hong Kong’s Chinese-language Apple Daily quoted Mr So as saying many mainlanders had yet to visit Macau, so mainland money would continue to be the principal driver of gaming revenue growth. “There will still be double-digit

Corporate Macau airport launches WeChat platform The Macau International Airport has recently launched a WeChat public platform. It could provide convenient and easy access to flight and destination information for visitors and residents. Airport operator Macau International Airport Co Ltd (CAM) said the new platform represent “an easier away” to get your latest departure flight information than to call the airport hotline. The WeChat platform could be even more useful with the airport “heading into the annual peak tourism season,” CAM said in a statement published on its website. Travellers can simply open WeChat, add the Macau International Airport as a ‘friend’ and enter their flight number. The application will automatically display the real time flight status and, by entering the destination name, the current weather conditions of the city will also be shown as well. WeChat is a text and voice messaging application for smartphones very popular in mainland China.

The Star chief to take up Wynn Macau job Frederic Luvisutto, the managing director of Sydney’s The Star casino has resigned “to pursue a new career opportunity overseas,” casino operator Echo Entertainment Group Ltd said yesterday. Australian media says the executive will become president of Wynn Macau Ltd’s property division once he leaves Echo Entertainment on January 24. Echo has commenced an international search for Mr Luvisutto’s permanent replacement. In the meantime, Echo managing director and chief executive officer John Redmond will oversee the management of The Star. “Frederic has contributed significantly to both Jupiters Gold Coast and The Star during an important period of establishment and transition for the Group,” Mr Redmond said. “We wish him well in his new role.” Mr Luvisutto joined Echo Entertainment in May 2011 as managing director of Jupiters Gold Coast before moving to The Star after former managing director Sid Vaikunta was fired for sexual harassment.

With the continuous growth of the mainland economy and improvement of [Macau’s] infrastructure, I believe the Macau gaming industry will perform well Lawrence Ho Yau Lung, Melco Crown Entertainment co-chairman

growth, roughly in the mid-teens,” he said. The newspaper quoted the co-chairman of Melco Crown Entertainment Ltd, Lawrence Ho Yau Lung, as saying: “With the continuous growth of the mainland economy and improvement of [Macau’s] infrastructure, I believe the Macau gaming industry will perform well in both the mass and VIP markets.” Apple Daily quoted the chief financial officer of Galaxy Entertainment Ltd, Robert Drake, as saying he expected gaming revenue growth of between 15 percent and 17 percent next year. Gross gaming revenue in the first 11 months of this year was 327.29 billion patacas (US$40.9 billion), 18.6 percent more than in the equivalent period last year, official data show. The director of the Macau Government Tourist Office, Maria Helena de Senna Fernandes, said last week that the number of visitors would grow by fewer than 5 percent next year as the city focused on attracting big spenders. Macau had more than 24.3 million visitors in the first 10 months of this year, 4.7 more than in the equivalent period of last year, official data show. The city had 15.5 million visitors from the mainland, 11.2 percent more. Fitch Ratings Inc said last week that casino gross gaming revenue would grow by 12 percent next year. “The supply gap in Macau will limit revenue growth in 2014, but will allow demand to build in the interim period and allow concessionaires to generate cash to help fund project spending, which will ramp up in 2015,” Fitch said.

December 24, 2013 April 19, 2013

Macau

‘Half’ MGM Cotai floor for entertainment: CEO US$2.6 bln venue, due to open in 2016, will have ‘series of galleries’ Michael Grimes

michael.grimes@macaubusinessdaily.com

Computer-generated image of MGM Cotai

“I

n excess” of 50 percent of the floor space at MGM Cotai – a new casino resort being built in Macau by MGM China Holdings Ltd – would be for non-gaming entertainment said the firm’s chief executive Grant Bowie. “Our Cotai project is more like a series of theatres or a series of galleries, where people – and we – can actually bring things,” he stated. “It’s probably in excess – just for the entertainment pieces – of 50 percent of the floor space. But the way we’re going to do that is it’s going to be interspersed with other activities,” Mr Bowie added.

Market position It was the first time a senior executive from MGM China – 51 percent owned by MGM Resorts International – had given any colour on how its under-construction US$2.6 billion (20.76 billion patacas) Cotai venue – due to open in 2016 –planned to compete with market rivals on the Cotai Strip. Cynics in the analyst community say privately that no matter how much lip service is paid by the industry to non-gaming activities and industries, senior casino managers would be judged on how they manage gaming table ‘yield’ from casino betting. That in turn has an impact on the operators’ share prices and the ease with which they can borrow against future earnings to fund expansion regionally. Nonetheless, Macau watchers know that after

years locally of ‘motherhood and apple pie’ speeches on the benefits of diversifying Macau’s economy away from hardcore casino gambling, this time the central government in Beijing appears to be really serious about achieving it. President Xi Jinping mentioned it again last week when he met Macau’s Chief Executive Fernando Chui Sai On. So did Bai Zhijian, director of the Liaison Office of the Central People’s Government, at the anniversary celebrations on Friday marking Macau’s 1999 handover from Portuguese administration. Simply putting an art gallery in a casino won’t in itself achieve Beijing’s goal. But the Macau government is likely to reward those casino operators that show greatest willingness to assist it in the diversification drive. Casinos already create a multiplier for the local economy in terms of the ancillary services – such as floristry – they consume daily. But additionally they can use their strong free cash flow to make bets on supporting or directly sponsoring other areas of activity such as creative and media industries. That’s also being seen in the junket business, where gaming promoters such as Suncity Group Ltd have been not only diversifying their investment asset base in mainland China, but have also been acting as venture capital partners for start up businesses in Macau. “As we make it clear we’re interested in creative works,

we’re now finding that the creative people are coming to us,” says MGM China’s Grant Bowie. Such investment could also have practical benefits for the gaming operation. Lawrence Ho Yau Lung, cochairman of MGM China’s market rival Melco Crown Entertainment Ltd, said in the firm’s third quarter earnings call in November, and speaking of the plans for a fifth hotel tower at his City of Dreams resort: “They [the government] have been telling us that they would reward operators for contributing to the diversity of Macau and, at the same time, for iconic buildings.” Mr Ho went on to spell out that the “reward” might include extra live dealer gaming table quota. The market is currently capped – in theory at least – at three percent compound annual growth until 2022. Extra tables on Cotai could significantly aid casino operators’ bottom lines.

‘Real’ diversity Las Vegas Sands Corp – developer and operator of The Venetian Macao on Cotai – has argued it is the first and only casino operator so far to address some of the fundamentals of diversification by spending billions of U.S. dollars on convention space and shopping malls. The Cotai Strip – a Las Vegas-style six-lane avenue of modern casino resorts across the water from Macau peninsula

It’s not how much you spend, it’s the level of the thinking, the level of the creativity, the innovation

Grant Bowie, CEO MGM China Holdings Ltd

is becoming increasingly important to the earnings of the six concessionaires and sub-concessionaires. By the end of November, Macau casinos as a whole had grossed nearly 327.29 billion patacas (US$41 billion). That’s nearly US$3 billion more than the whole of 2012. Much of the Cotai contribution was driven by the so-called ‘premium mass’ segment with cash bets of as much as HK$4,000 per hand of baccarat rather than the traditional rolling of the VIP junket rooms according to a recent Deutsche Bank report. MGM China has made a point of trying to integrate some of the ‘softer’ aspects of

the gaming industry – such as spectacle and entertainment – close to the casino floor at its original downtown property MGM Macau. That’s arguably harder to achieve in spacelimited downtown properties than it is in Cotai ones. The MGM Macau property – which opened in December 2007 at an original cost of US$1.25 billion – has a large public area for non-gaming built into the basic design. Its Grande Praça space – an atrium near the main hotel lobby resembling a Europeanstyle city square – has hosted events including the Hong Kong and Macau auditions for the reality television show China’s Got Talent. On Wednesday last week MGM Macau launched its HK$10 million (US$1.3 million) ‘MGM Art Space’ on level two of the property. Its first exhibition features a painting by Italian Renaissance artist Sandro Botticelli loaned from a gallery in Turin, Italy. MGM China spent nearly as much during the third quarter on refurbishing MGM Macau (US$27 million) as it did on pilings and site work for MGM Cotai (US$31 million), according to the parent firm’s earnings call. “It’s not so much how much you spend, it’s the level of the thinking, the level of the creativity, the innovation, the newness,” states Grant Bowie. “It’s relatively easy to go and buy someone else’s work. What we’re most interested in is how do we get the creative juices running in Macau?”

December 24, 2013 April 19, 2013

Macau

Prada feels sales pinch from Wynn shop revamp Slowing sales in Greater China for Italian luxury fashion house Vítor Quintã

vitorquinta@macaubusinessdaily.com

see a lot of Chinese shoppers in other places like New York, for example.”

Below expectations

Prada doubled the space of its flagship store in Wynn Macau

talian luxury fashion house Prada SpA reported slower sales growth in Greater China in the third quarter, partly because its flagship stores in Hong Kong and Macau were undergoing renovation work. The Hong Kong-listed retailer doubled the space of its outlet in Wynn Macau to 540 square metres, where it sells women’s and men’s ready to wear as well as accessories and footwear collections. The revamped store opened at the end of October. Along with other luxury groups like LVMH Moet Hennessy Louis Vuitton SA and Kering SA, Prada has had to

contend this year with a crackdown on conspicuous spending by government officials in China, where the company normally generates almost a quarter of total sales. Prada chief executive Patrizio Bertelli said on a conference call the group had still seen good demand from Chinese shoppers abroad. Despite the third quarter slowdown, Prada’s posted net sales of 592.6 million euros (6.47 billion patacas) in Greater China in the first nine months of 2013, up by 14.8 percent year-on-year. “The Chinese consumers tend to be strong travellers and they shop a bit everywhere,” Mr Bertelli said. “We

KEY POINTS Nov, Dec sales in Europe could be down Q3 net profit up 8.6 pct, misses forecasts Sales growth in China market moderates

The maker of luxury leather goods and Miu Miu brand dresses posted a lower-than-expected rise in quarterly profits, as solid performance in the Americas and Japan made up for slowing growth in Europe and Greater China. Prada posted an 8.6 percent rise in net profit to 132.64 million euros for the three months ended October 31 Three analysts polled by Reuters had given a median forecast for net profit of 154 million euros. Net profit in the same period last year was up 30 percent on the previous year at 122.2 million euros. Revenue in the quarter increased 7.1 percent to 848 million euros. Prada said the strength of the euro against other currencies, in particular the Japanese yen and United States dollar, had weighed on its reported growth. Mr Bertelli also said the company was going to do more to promote its Miu Miu ready-to-wear label, named after chairwoman Miuccia Prada. The group’s reliance on its flagship brand has been a concern for analysts. “We are going to invest more in communications and marketing for the Miu Miu brand,” Mr Bertelli said. “We are confident that the results will show next year.” Sales of the Prada brand rose 10 percent in the third quarter, but Miu Miu lagged with a 2 percent sales decline. “The development of Miu Miu is an important plank to extend growth dynamic into the future,” said Exane BNP Paribas analyst Luca Solca after the results were announced. With Reuters

December 24, 2013 April 19, 2013

Greater China

Cash squeeze persists even amid central bank pledges Traders see unofficial shift in People’s Bank of China monetary policy Gabriel Wildau

KEY POINTS Benchmark cash rate rises to 8.9pct Little impact from PBOC’s effort to calm market PBOC insists liquidity is ample; traders disagree

hina’s cash market squeeze showed little sign of easing yesterday, reinforcing the view the central bank has shifted to tighter monetary policy. The central bank appears to be trying to force banks to curb risky lending practices in the shadow banking system amid rising concerns about excessive debt. Rapid growth in the

world’s second-largest economy over the last four years has also fanned fears about a property market bubble. The key seven-day bond repurchase rate initially opened lower but then spiked to 8.9 percent on a weighted-average basis by mid-morning yesterday, up from 8.21 percent on Friday. The central bank

announced after market close on Friday that it had injected 300 billion yuan (US$49.41 billion) via shortterm liquidity operations from December 18 to 20. The seven-day rate reached as high as 10 percent on Friday, the highest level since June. The People’s Bank of China (PBOC) also emphasised that excess cash reserves in

the banking system – a key measure of liquidity – stood at more than 1.5 trillion yuan, a high level by historical standards. But market players took a different view. “The PBOC appeared to stress that cash reserves are abundant in comparison to previous years, but the market has expanded sharply in recent years and demand in the interbank market has far exceeded the previous years’ levels,” said a money market trader at a major state-owned commercial bank in Shanghai.

Tiered power pricing for aluminium smelters Beijing orders local governments to end power subsidies

Power tariffs account for about 40 percent of a smelter’s operating costs

hina will impose tiered power pricing on all aluminium smelters starting from January in an attempt to weed out inefficient plants and tackle severe overcapacity in the sector. The aluminum industry has been suffering from overcapacity for years, depressing prices and forcing many producers, including Aluminum Corp of China Ltd (Chalco), the country’s top aluminium maker, to suffer heavy losses.

The move to revise power tariffs, which account for about 40 percent of a smelter’s operating costs, is the latest in a series of measures to slim the bloated sector and comes as Beijing has vowed to let market forces play a decisive role in the allocation of resources. Power p r i ces wi l l r em a i n unchanged for smelters that do not use more than 13,700 kilowatts (KWs) for each tonne of aluminium produced, while those that use

between 13,700-13,800 KWs will be charged an additional 0.02 yuan per KW, the National Development and Reform Commission (NDRC) said in a statement. Smelters that consume more than 13,800 KWs of power for each tonne of aluminium produced will be charged an additional 0.08 yuan per KW, the NDRC said. Plants that exceed the 13,700 KWs/tonne threshold will also be barred from direct negotiations

A suspiciously low opening trade yesterday may also reflect the central bank’s attempt to calm the market. The sevenday repo opened sharply lower at 5.57 percent. In recent days traders have expressed suspicion that such low opening quotes on benchmark rates reflect intervention by the central bank in an effort to guide trading. The unusual timing of yesterday’s opening trade bolstered such suspicions. The opening trade on the seven-day repo came unusually early at 9.01am, but the next trade, at 7.60 percent, did not occur until nearly an hour later and, according to data from the National Interbank Funding Center. Rates continued to rise further. Traders say that a large volume of maturing debt near the year-end, which banks need to roll over, have contributed to the spike in rates. The market is interpreting the PBOC’s tough stance as an unofficial shift towards tighter monetary policy. “I think the PBOC understands the situation, but it is still eager to force banks to cut their leverage in the face of high property prices, which ignores official cooling steps,” said the money market trader. The market will be watching closely to see if the central bank injects cash at regular open market operations today. The PBOC has skipped such operations for five straight sessions. Reuters

with power companies for lower energy prices.

Overcapacity curbs The NDRC said local governments must not arbitrarily reduce power prices for aluminium companies and must stop all previously offered subsidies. Local governments must also stop giving fee deductions and other incentives to smelters that are equipped with their own power generators, the NDRC said. China currently has about 30 million tonnes of primary aluminium smelting capacity annually, but less than 24 million tonnes of yearly capacity operated in November, based on official production data. Beijing has been issuing broadbrush rules aimed at reining in overcapacity in sectors such as aluminium and steel for about a decade, but plans have usually faltered due to resistance from local governments anxious to boost growth. But China’s new leaders appear to be getting more serious over the issue with the government in July setting stricter limits on power consumption and emissions on operating smelters. The State Council, China’s cabinet, also issued a slew of development guidelines for sectors facing overcapacity: new projects expanding capacity are forbidden, projects under construction should be reappraised, illegal capacity should be cleared up and outdated capacity should be eliminated in an orderly way. The commission said it was working with relevant departments on ways to restructure other sectors that are also plagued by overcapacity. Reuters

December 24, 2013 April 19, 2013

Greater China

Apple, China Mobile sign deal to sell iPhones Tie-up could provide much-needed boost and billions of dollars in revenue to Apple

China Mobile will begin registering orders for iPhone from tomorrow

pple Inc said it has signed a long-awaited agreement with China Mobile Ltd to sell iPhones through the world’s biggest network of mobile phone users. In a deal that could add billions of dollars to its revenue, Apple said its smartphones will be available to China Mobile customers starting January 17. Pricing and availability details for the iPhone 5S and 5C lines will be disclosed at a later date, it said in a statement. China Mobile, which has about

760 million customers, will begin registering orders for iPhone from tomorrow, the company said on its account on the Sina-Weibo micro‑blogging service. The tie-up between the pair, in the United States company’s secondlargest market after its home turf, provides a for Apple in a market where it is trailing rivals. It will also give Apple extra firepower in its increasing global rivalry with South Korea’s Samsung Electronics Co Ltd. Apple did not disclose financial

Yuan trades near 20-year high As China’s central bank strengthens reference rate Fion Li

he yuan traded within 0.02 percent of its highest level in 20 years as the People’s Bank of China raised the currency’s reference rate by the most in two weeks. The PBOC boosted the daily fixing yesterday by 0.06 percent, the most since December 9, to 6.1161 per dollar. The International Monetary Fund is raising its United States economic growth forecast as a budget deal in Washington and the Federal Reserve’s plan to taper its stimulus ease doubts about the outlook for the world’s largest economy, managing director Christine Lagarde said in an interview broadcast Sunday on NBC’s “Meet the Press.” “The yuan will continue with its appreciation trend as better economies in the US and Europe will be favorable for Chinese exports,” said Liu Dongliang, a senior analyst at China Merchants Bank Co in Shenzhen. “Yuan trading is likely to be light toward the end of this year.” The yuan traded at 6.0710 per dollar as of 9.54am in Shanghai, China Foreign Exchange Trade System prices show. The currency reached 6.0703 on December 10, the

strongest since the government unified the market and official exchange rates at the end of 1993. It can diverge a maximum 1 percent from the PBOC’s daily fixing. In Hong Kong’s offshore market, the yuan rose 0.04 percent to 6.0676 per dollar, data compiled by Bloomberg show. Twelve-month non-deliverable forwards climbed 0.02 percent to 6.1375, a 1.1 percent discount to the spot rate in Shanghai. according to data compiled by Bloomberg. The offshore yuan may weaken to 6.1225 per dollar and “potentially beyond” following a drop in Chinese equities, Bank of America Corp technical strategist MacNeil Curry wrote in a note. Local stocks fell for the ninth day on December 20, the longest losing streak in 19 years, as the central bank’s targeted fund injections failed to alleviate the worst cash crunch since June. One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, declined one basis point, or 0.01 percentage point, to 1.76 percent. Bloomberg News

terms of the agreement. Tim Cook, Apple’s chief executive, said in its statement that China is an extremely important market for the Cupertinobased company. In a smartphone market that’s booming, Apple’s sales have trailed those of its competitors. Shipments of iPhones in the country grew 32 percent year-onyear for the third quarter, about half of

China’s Lenovo Group Ltd, which had the next slowest growth at 64 percent year-on-year.

Samsung battle China Mobile could gain 17 million new iPhone activations in 2014 alone, according to research firm Forrester – more than double the 16.8 million iPhones Apple sold in mainland China for the 12 months ended September, according to Forrester data. But after an expected initial surge, Apple is likely to find itself back in a costly marketing battle with Samsung Electronics. The deal has been years in the making, with numerous visits by Apple to the state-owned carrier’s Beijing headquarters. Negotiations have been tricky, in part because of disagreements over details like revenue-sharing, analysts have said. China Mobile was the only Chinese carrier not to offer customers the iPhone up to now due to compatibility issues with the carrier’s 3G wireless technology, known as TD-SCDMA. On December 4, Chinese regulators awarded 4G wireless licences to China Mobile Ltd, China Unicom Hong Kong Ltd and China Telecom Corp Ltd, removing the final stumbling block to a deal that industry observers had long expected. The latest iPhone models support 4G technology known as TD-LTE. China Mobile estimates it does already have about 45 million iPhone users on its network. But these subscribers can only use the company’s slower 2G wireless speeds because of the incompatibility with its proprietary 3G technology. Reuters

10 10

December 24, 2013 April 19, 2013

Greater China

The Shanghai Composite Index has lost 7.7 percent this year

China could repeat Russia meltdown: Deutsche Bank Chinese expansion being fueled by high-risk corporate borrowing, says John-Paul Smith Lyubov Pronina

hina’s push to open up its economy is winning praise from Goldman Sachs Group Inc to Morgan Stanley and Jefferies Group LLC, which predicted last month a “massive” multiyear bull run for stocks. John-Paul Smith doesn’t share the enthusiasm. When the Deutsche Bank AG equity strategist looks at the country, he says he detects some of the same signs of a financial meltdown that led him to predict Russia’s 1998 stock market crash months in advance. China’s expansion is being fueled by soaring corporate borrowing, a high-risk model that needs to be replaced by the kind of free-market measures and budget cuts that fed Russia’s growth in the aftermath of the country’s default and subsequent 44 percent monthly tumble in the Micex Index, Mr Smith said. “There is potential for a debt trap in industrial companies which can trigger an economy-wide financial crisis as early as next year,” Mr Smith said in an interview from London on December 12, a day after he issued a report predicting China’s slowdown will lead to a 10 percent decline in emerging-market stocks next year. “If I am wrong on China, I am wrong on everything.” Mr Smith’s 2013 call for a drop of at least 10 percent in developingcountry stocks has proven prescient. The MSCI Emerging-Markets Index has slid 6.1 percent, trailing the 22 percent rally in MSCI’s developedmarkets measure. The Shanghai

Composite Index, the benchmark equity gauge in the world’s secondbiggest economy, has lost 7.7 percent, heading for its third annual decline in four years.

Goldman, Jefferies The selloff in Chinese stocks has eased since mid-November, when the government’s top policy makers pledged the biggest expansion of economic freedoms in at least two decades. Measures included encouraging private investment in state-controlled industries, accelerating convertibility of the currency and liberalising interest rates, an initiative that helped drive interbank borrowing costs to a sixmonth high last week. Morgan Stanley said the freemarket push will boost consumption, technology and health-care stocks while Jefferies Group said companies in industries including auto and insurance will do the best amid the bull market rally. Goldman Sachs upgraded Chinese equities to overweight in part because of the country’s “commitment to reform, which seems quite palpable.” Mr Smith, who has been bearish on China since he joined Deutsche Bank in 2010 from Pictet Asset Management, said he wants to see how the government carries out the policy changes. The economy is at risk of expanding less than 5 percent annually over the next few years, he said. Gross domestic product has grown less than 8 percent in each of the past

six quarters, down from a high of 14 percent in 2007. “The proof will be in the implementation,” said Mr Smith, who’s the global emerging markets equities strategist at the Frankfurtbased bank.

Russia call “It will be very interesting to see if they really intend to go down the same ‘hard state liberal economic’ path that Russia did from 1999 to the autumn of 2003. So far, there is no indication they are prepared” for that. Mr Smith, 52, joined Morgan Stanley in 1995 as a Russian equity strategist. It was at Morgan Stanley that Mr Smith made the call that he’s still best known for today, on the growing financial crisis that would lead Russia to devalue the ruble and default on US$40 billion of domestic debt in August 1998. In a June 1997 report, he wrote that investors may not have begun to “really focus on the possible fallout” from companies’ growing financial struggles. Mr Smith reiterated in a January 1998 note that investors were too optimistic. Two months later, he wrote that Russia had to “sort the situation out” that year or its financing burden would become unsustainable and trigger a devaluation.

Too early In the aftermath of the collapse, Mr Smith joined Pictet.

Stephen Barber, a managing director at parent company Pictet & Cie, wrote in a farewell note about Mr Smith in June 2010 that even though he had an ability to avoid getting caught up in the market euphoria, he often made his calls too early. Mr Smith wrote an article for the Financial Times in December 2007 saying he sensed that the worst in the subprime mortgage crisis was over and that the United States market was poised to rally. The worst financial crisis since the Great Depression followed. The analyst says he learned to never take a strong view without obtaining detailed understanding of the underlying fundamentals, such as what types of instruments were being held in the financial industry. Mr Smith’s China call is another strong view. His colleagues at other banks are underestimating the risks, he said. China’s total credit, including items off bank balance sheets, climbed to about 190 percent of the economy by the end of 2012 from 124 percent in 2008, according to Fitch Ratings Ltd. That was faster lending growth than in Japan during the late 1980s that foreshadowed two decades of deflation, and in the U.S. before the financial crisis of 2008. “It is really at the corporate level and at the micro level in China that the fate of the financial market and the economy there is going to be determined,” Mr Smith said. “China is not such a safe haven as most market commentators appear to believe.” Bloomberg News

11 11

December 24, 2013 April 19, 2013

Asia

Asian bonds set record but demand may slow Issuers took advantage of rock-bottom interest rates this year Umesh Desai

top spot in 2013. Among the key deals was helping the Asian Development Bank raise US$2.5 billion through a three-year bond. Deutsche Bank jumped from fourth to second place, helped by such deals as Indonesia’s US$1.5 billion sukuk. Coming in third was Citigroup. One factor that Asia’s debt bankers hope will override the United States taper is the need for Asian corporates to repay bonds issued five years ago when bumper volumes of debt were raised. The five-year tenor is the most-preferred debt maturity among Asian issuers.

Volatile treasuries

HSBC retained the top spot in 2013 in Asia’s debt capital markets

sia had a record year in 2013 for dollar, euro and yen bond issuance with borrowers scrambling to raise debt and anticipating a rise in global interest rates. The record volumes came despite volatility in United States Treasuries, which serve as benchmarks for pricing these bonds. That volatility, and doubts about the United States Federal Reserve’s US$85 billion a month bond buying programme, prolonged the deal execution cycle as windows of

opportunity opened and shut rapidly. The volatility however, did not prevent issuance hitting a new high with issuers determined to take advantage of rock-bottom interest rates and investors hungry for rising yields on investments. Deal volumes rose to a peak of US$143.8 billion in 2013, eclipsing the previous high of US$133.8 billion last year, with HSBC and Deutsche Bank leading the league tables. Asia’s debt demand is expected to moderate, with the United States

central bank’s plan to trim its monthly purchases among the key factors behind the likely pullback. “It will be difficult for 2014 to register another record year for new issuance,” said Thomas Kwan, Hong Kong-based head of fixed income at Harvest Global Investments, who expects outflows in retail funds to continue in 2014, reversing a trend from early last year. In the debt capital markets league table standings, HSBC retained the

According to Societe Generale, Asian issuers are faced with a record US$43 billion in redemptions next year, which compares with this year’s figure of less than US$25 billion. The sustained yield gap between dollar and domestic currency assets would also provide the impetus to new borrowers. But waning volumes of liquidity and the availability of other funding options lead most in the Asian debt markets to predict a slowdown. “Overall we see a marginal pullback in supply as the bank-loan market has re-emerged as a highly competitive alternative for issuers,” said Jacob Gearhart, Deutsche Bank’s Singaporebased head of syndicate desk. Volatility in United States Treasuries resulted in longer execution time for primary deals in Asian bonds this year. “We had a lot of investor marketing and assessment of markets. One had to be nimble as windows of opportunity opened and closed quickly. Deal cycles were longer this year,” said Devesh Ashra, Hong Kong-based bond syndicate banker with BofA Merrill Lynch. But that did not deter a jump in the number of transactions with 286 deals completed in 2013, up from 253 a year ago and boosting the 7.5 percent volume growth, according to Thomson Reuters data.

Thai baht falls to 3-year low on political unrest Country’s main opposition party plans to boycott February election Justina Lee

hailand’s baht fell to a three-year low and stocks dropped on concern prolonged political unrest will damp investment and hurt the economy.

More than 1,000 antigovernment protesters have surrounded prime minister Yingluck Shinawatra’s home in Bangkok, as she criticised the opposition Democrat

The Thai currency has lost 4.9 percent in the past two months

party’s plan to boycott a February 2 election. Suthep Thaugsuban, who is leading the demonstrators, has vowed to thwart the polls, which were announced after

Ms Yingluck dissolved the parliament on December 9 amid mass protests. The Thai currency has lost 4.9 percent in the past two months as the main stock index dropped 9.1 percent. “Investors aren’t buying the Thai baht if this political situation continues,” said Kozo Hasegawa, a foreign-exchange trader at Sumitomo Mitsui Banking Corp in Bangkok. The baht may gradually weaken toward 32.9 per dollar as the political conflict threatens the economy, he said. The baht depreciated 0.4 percent yesterday to 32.748 per dollar as of 12.05pm in Bangkok, according to data compiled by Bloomberg. The currency touched 32.773 earlier, the weakest level since June 7, 2010. Thailand’s SET Index of shares dropped 1.4 percent, heading for the biggest decline since November 21,

Reuters

to 1,323.60. The gauge lost 3 percent in the past two weeks. Yesterday’s drop in local stocks was led by financial companies including Bank of Ayudhya PCL, which slid 9.7 percent. The nation’s Election Commission secretary-general Puchong Nutrawong said December 21 the boycott won’t affect the vote. Southeast Asia’s secondbiggest economy expanded 2.7 percent in the third quarter, the least in more than a year.

Volatility, bonds As the effectiveness of the election to end the street protests is now in doubt, the baht will come under more pressure, Credit Agricole CIB’s Hong Kong-based analyst Anthony Lam wrote in a research note yesterday. One-month implied volatility in the baht, a measure of expected moves in the exchange rate used to price options, fell eight basis points, or 0.08 percentage point, to 6.16 percent. Government bonds gained. The yield on the 3.625 percent notes due June 2023 declined three basis points to 4 percent, data compiled by Bloomberg show. The rate has dropped 13 basis points so far in December. Bloomberg News

12 12

December 24, 2013 April 19, 2013

Asia

Hedge funds eye troubled Australian mines, HK, US hedge fundseeking investment opportunities with high returns Cecile Lefort

nternational hedge funds are increasingly targetting troubled firms in Australia, from cotton or macadamia farms to cattle stations and vineyards, expecting a nascent distressed debt market to generate double-digit returns. Agriculture and mining, which combined account for around 12 percent of Australia’s A$1.5 trillion (US$1.35 trillion) economy, are two sectors particularly targetted by distressed debt investors – sometimes known as vulture funds. “There are many opportunities in investing in distressed debt in both sectors,” said Vince Smith, leader of corporate restructuring at Ernest & Young in Sydney. “In agriculture, it’s seasonal, it’s based on geography and environmental conditions, whereas mining is a lot more subject to global pressure like commodities prices.”

Funds active in Australia include Oaktree Capital, Fortress Investment, Apollo Global Management, and Bain Capital’s Sankaty Advisors. An Ernst and Young report said around half of Australian listed companies in mining services issued profit downgrades in the first half of the year and more pain is expected as a long boom in resource investment fades. Parts of the farming sector have also been hit hard by declining property values, drought and natural disasters, with insolvency experts forecasting further distress. Lactanz Dairy, one of Western Australia’s largest dairy enterprise, and Murrawee Farms, a large fruit grower, are among a growing list of embattled companies that could interest hedge funds, particularly from Hong Kong and the United States, which are sitting on piles of cash and looking for high returns.

Half of all listed mining firms issued profit downgrades in first half 2013

Bangladesh charges garment factory owners for fatal blaze South Asian nation seeks to rebuild its image after worst industrial disaster Arun Devnath

The April crash of the Rana Plaza factory complex killed over 1,100 people

angladesh police filed the first charges against the owners of a garment factory for a fire that killed more than 100 workers last year as the South Asian nation seeks to bolster its workplace safety image. Delwar Hossain and his wife, owners of Tazreen Fashion Ltd, and the company’s engineer were among 13 people charged under two sections of the law including homicide, A.K.M. Mohsinuzzaman Khan, an inspector of police, said. If convicted, they could face a maximum punishment of life in prison or minimum seven years in jail, he said. Two calls made to Mr Hossain’s mobile phone seeking comment on the charges weren’t answered yesterday. A series of fires and the April crash of the Rana Plaza factory complex that killed more than 1,100 people has increased pressure on international retailers buying from Bangladesh and the government to improve workplace safety. The country’s US$20 billion apparel industry, which supplies

clothes to companies including WalMart Stores Inc and Hennes & Mauritz AB, is trying to rebuild its image after the building collapse, the country’s worst industrial disaster. “It’s good to know that the police are finally charging those who are responsible; this is something new in Bangladesh,” Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity, said by phone. “The prosecutors will have to make sure the factory owners do not find a way out of court by putting all the blame on managers.” At least 124 people were killed in the blaze in November last year at Tazreen Fashion, which made clothes for companies including Hong Kongbased Li & Fung Ltd. The factory, in the outskirts of capital Dhaka, had no emergency exits and some workers were burnt alive as they were unable to get out, while some jumped out of the eight-story building to escape the flames. Bloomberg News

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

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13 13

December 24, 2013 April 19, 2013

Asia

farms

Ernest & Young’s Smith says interest is mostly in struggling small to mediumsized companies with turnovers of A$25 million to A$200 million, with a view to taking controlling stakes. The new investors create value by restructuring balance sheets in riskier ways than banks would usually consider – including loanto-own deals where impaired debt is converted to equity. “Once they have debt or equity in the company, they can start to influence the management of the company,” said Ernst & Young’s Mr Smith. Distressed debt investors typically look for returns in the range of 10 to 15 percent if performance of the assets improves as expected. Turnover in Australia’s distressed debt market amounted to around A$8

KEY POINTS Australian distressed debt turnaround at A$8 bln Mining, farms heavily hit, more distress coming Hedge funds stalking impaired loan portfolios

billion at face value this year, a trader estimated. While tiny by international standards it accounts for 85 percent of the trading activity in Asia where distressed debt is less common, according to John Nestel, the chair of the Turnaround Management Association. The relative lack of distressed debt business in Asia is one reason an increasing number of hedge funds are setting up operations locally, but another attraction is Australia’s stable political and economic environment and transparent legal framework, said Scott Atkins, a partner at law firm Henry Davis York.

Bad loans Hedge funds are also eyeing a potentially far larger slice of the market here – portfolios of impaired loans held by banks. Analysts estimate between A$20 billion and A$40 billion of distressed debt is held by Australian banks. There is growing talk that Australia’s major lenders could start offloading distressed loans as early as next year to free up capital due to the implementation of stricter global capital and liquidity rules. “If one starts, others are expected to follow,” said Mr Nestel. Reuters

Hyundai, Kia expect to beat 2013 sales goal But South Korean brands predict tough year of 2014

outh Korea’s Hyundai Motor Co and affiliate Kia Motors Corp said yesterday that they are on track to sell more than 7.5 million vehicles globally this year, higher than their earlier target of 7.41 million vehicles, after overseas sales growth offset lackluster domestic shipments. Hyundai and Kia, which rank fifth in global vehicle sales, expect a tough year in 2014 as Japanese and European automakers are seen accelerating competition and the United States and Chinese markets face moderating growth. In South Korea, German carmakers are forecast to aggressively boost sales next year and erode the home market dominance of Hyundai and Kia, driven by a free trade deal. Hyundai and Kia said they saw their combined global sales rise 6 percent to 6.9 million vehicles from

January to November this year from a year earlier. Their overseas sales rose 8 percent during the period, while South Korean shipments dipped 3 percent. Solid sales gains in emerging markets like China and Brazil outweighed slowing sales in the United States and South Korea where Hyundai and Kia have underperformed rivals partly due to aging models. Last year, Hyundai and Kia sold a combined 7.1 million vehicles. Hyundai next year plans to launch a new Sonata sedan, its bread-and-butter model, while Kia Motors is expected to roll out the Sorento sport utility vehicle and Carnival minivan. Chung Mong-koo, chairman of Hyundai Motor Group, is expected to announce the automakers’ 2014 sales target in his New Year speech on January 2. Reuters

Vietnam’s growth quickens as exports offset bad debts Economy recovering also thanks to rising foreign investment

ietnam’s economic growth accelerated as exports climbed, even as banks struggled to meet the government’s lending target. Gross domestic product rose 6.04 percent in the fourth quarter from a year earlier, quickening from a 5.54 percent gain in the three months through September, according to data released by the General Statistics Office in Hanoi yesterday. For the full year, the economy grew 5.42 percent, faster than a 5.25 percent pace in 2012, and the median estimate of 5.3 percent in a Bloomberg survey. Manufacturers from Samsung Electronics Co to Nokia Oyj have boosted Vietnam’s exports, which grew 15.4 percent this year from a year earlier. That has helped offset faltering bank lending, as the government takes steps to resolve bad debt and overhaul the financial system. “The economy is steadily recovering,” said Fiachra MacCana, managing director of Ho Chi Minh City Securities Corp. “Exports are still the main driver, especially for Vietnam’s manufacturing industries, but there’s a little bit of domestic backup there. It’s a broad-based recovery.” The benchmark VN Index has gained more than 22 percent this year, the biggest advance among major Southeast Asian indexes. The dong has slipped more than 1 percent in 2013. Vietnam’s growth is being supported by exports and foreign investment, the International Monetary Fund said this month.

Vietnam’s economy rose 6.04 percent in the fourth quarter

The country’s exports-to-GDP ratio increased to 75 percent last year from 56 percent in 2009, according to IMF data. Vietnam received US$11.5 billion in disbursed foreign direct investment this year, a 10 percent increase from last year, the Statistics Office said today. Pledged FDI was US$21.6 billion, a gain of 55 percent from a year earlier, it said. Higher costs and wages in China are prompting some companies to set up manufacturing in neighboring Asian economies. Samsung, the world’s biggest smartphone maker, is building a US$2 billion plant in Vietnam that may make 120 million handsets a year by 2015, according to two people

familiar with the company’s plans who asked not to be identified because the matter is private. “The Mekong region, led by Vietnam, is evolving into a strategic manufacturing destination for multinational corporations,” said Eugenia Victorino, a Singapore-based economist at Australia & New Zealand Banking Group Ltd. “We see foreign direct investment as supportive of the export industry.”

Services rise Still, year-to-date retail sales growth in December was slower than a year earlier. The central bank said on December 16 that bank lending

may rise about 9 percent this year, lower than an earlier target of 12 percent. It has cut the refinancing rate to 7 percent from 15 percent at the beginning of 2012. Prime minister Nguyen Tan Dung plans to complete a revamp of state-owned enterprises by 2015 and has set up an asset management company to clear bad debt at lenders. The economy may grow 5.4 percent in 2014, the World Bank said this month, slower than a government target of 5.8 percent. Services grew 6.6 percent in 2013 from a year earlier, while industry and construction expanded 5.4 percent, yesterday’s data showed. Bloomberg News

14 14

December 24, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 68.5

100.0

31.5

67.9

99.7

31.3

67.3 66.7

30.9 99.1

66.1 Max 68.20

average 67.414

Min 65.55

Last 67.65

65.5

31.1

99.4

Max 99.9

average 99.081

Min 98.8

98.8

Last 99.1

62.3

25.2

61.6

25.0

60.9

24.8

30.7 Max 31.45

average 31.275

Min 30.80

Last 31.30

30.5

34.8 34.6 34.4 34.2 34.0

Max 62.30

average 61.591

Min 60.25

Last 61.40

60.2

Max 25.20

average 25.031

Commodities PRICE

DAY %

99.01

WTI CRUDE FUTURE Feb14

YTD %

-0.312122433

6.439475382

(H) 52W 106.2200012

(L) 52W 85.56999969

BRENT CRUDE FUTR Feb14

111.6

-0.152098059

7.225211376

112.5

GASOLINE RBOB FUT Jan14

277.41

-0.323380403

9.414688018

287.259984

243.1999922

GAS OIL FUT (ICE) Jan14

946.5

0.132240148

5.166666667

968

838.75

NATURAL GAS FUTR Jan14

4.514

2.172928927

11.45679012

4.825000286

3.464999914

NY Harb ULSD Fut Jan14 METALS

Gold Spot $/Oz

307.1

-0.230661772

3.015665358

320.0099945

278.0799866

1197.78

-0.4538

-28.0379

1696.2

1180.57

19.408

-0.0103

-35.543

32.46

18.2208

Platinum Spot $/Oz

1336.74

0.2708

-11.9262

1742.8

1294.18

Palladium Spot $/Oz

Silver Spot $/Oz

701.23

0.3549

0.2244

786.5

629.75

LME ALUMINUM 3MO ($)

1785

0.676818951

-13.89290883

2184

1736.25

LME COPPER 3MO ($)

7238

0.520797167

-8.737864078

8346

6602

LME ZINC

2040

2.538326213

-1.923076923

2230

1811.75

14420

1.62085976

-15.47479484

18770

13205

15.38

-0.388601036

#N/A N/A

16.77000046

15.12000084

433

-0.057703405

-28.95816243

618

418.5

613

-0.081499593

-26.29996994

845

607.25

SOYBEAN FUTURE Mar14

1335.5

0.33809166

1.578246815

1377.75

1174

COFFEE 'C' FUTURE Mar14

115.55

0.216825672

-27.93888369

172.25

104.1499939

16.38

-0.425531915

-20.40816327

20.71999931

15.85999966

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar14 CORN FUTURE

Mar14

WHEAT FUTURE(CBT) Mar14

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

81.87

-1.539386651

3.097846619

90.61000061

76.65000153

World Stock Markets - Indices NAME

Last 25.00

24.6

Max 34.75

average 34.472

Min 33.80

Last 34.60

33.8

Currency Exchange Rates

NAME ENERGY

Min 24.65

COUNTRY MAJOR

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

ASIA PACIFIC

CROSSES

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.8931 1.6357 0.8961 1.3681 103.96 7.9866 7.7538 6.0708 61.8575 32.677 1.2656 29.98 44.34 12195 92.85 1.226 0.83645 8.305 10.9267 142.23 1.03

0.0897 0.1286 0.0112 0.0585 0.1347 0.0063 0.009 -0.0033 0.295 -0.205 0.0395 -0.1034 0.3608 0.1558 -0.0054 -0.0587 0.0478 -0.3588 -0.1574 0.0633 0

-13.943 1.1189 2.1538 3.7225 -17.1797 -0.0426 -0.0413 2.6323 -11.094 -6.4174 -3.4924 -3.1588 -7.5214 -19.6966 -3.7943 -1.5106 -2.5142 -1.0536 -3.6269 -20.1505 -0.0097

1.0599 1.6484 0.9839 1.3832 104.64 8.0111 7.7664 6.2492 68.845 32.773 1.2862 30.228 44.82 12260 105.433 1.265 0.88151 8.4957 11.0434 142.9 1.032

0.8821 1.4814 0.8833 1.2746 84.22 7.9818 7.75 6.0681 52.89 28.56 1.2195 28.913 40.54 9603 86.41 1.2064 0.80817 7.8281 10.195 110.94 1.0289

Macau Related Stocks NAME

PRICE

ARISTOCRAT LEISU CROWN RESORTS LT

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.58

1.327434

45.39682

5.12

3.05

1375373

16.66

0.8474576

56.13871

17.38

10.45

843135

AMAX INTERNATION

1.59

8.90411

13.57143

2.12

0.75

11394700

BOC HONG KONG HO

24.55

0.2040816

1.867218

22.85

4309645

CENTURY LEGEND

0.435

3.571429

64.15095

0.68

0.26

868000

7.07

0.7122507

18.03005

7.28

4.95

10219

21.85

-1.354402

-5.411257

25.6

17.7

15387276

CHEUK NANG HLDGS CHINA OVERSEAS CHINESE ESTATES

23.2

1.310044

106.3039

23.8

10.334

57000

CHOW TAI FOOK JE

11.24

0.7168459

-9.646299

13.4

7.44

8128194

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16221.14

0.2599653

23.78638

16287.83984

12883.89

NASDAQ COMPOSITE INDEX

4104.741

1.148459

35.94048

4111.926

2951.036

FTSE 100 INDEX

6632.93

0.3988448

12.46429

6875.62

5873.43

HANG SENG BK

DAX INDEX

9435.37

0.3743545

23.94754

9439.62

7418.36

NIKKEI 225

15870.42

0.07062138

52.67096

15942.6

9924.42

HANG SENG INDEX

22921.56

0.4794807

1.168034

24111.55078

19426.35938

CSI 300 INDEX

2284.602

0.2838285

-9.447261

2791.303

2023.171

TAIWAN TAIEX INDEX

8456.46

0.5700164

9.831287

8501.769531

KOSPI INDEX

1996.89

0.6826833

-0.008013529

2063.28

EMPEROR ENTERTAI

3.359173

111.6402

4.66

1.79

2671000

3.96

4.761905

226.7256

4.13

1.172

4008000

67.65

2.57771

122.8995

70.4

29.5

8917048

125

0.08006405

5.307501

132.8

110.6

470287

HOPEWELL HLDGS

25.85

0.5836576

-22.25564

35.3

23.2

786200

HSBC HLDGS PLC

82.55

0.6707317

1.537512

90.7

77.85

7001334

FUTURE BRIGHT GALAXY ENTERTAIN

HUTCHISON TELE H

2.89

2.120141

-18.82022

4.66

2.5

19929000

LUK FOOK HLDGS I

28.8

-0.5181347

18.03279

31.5

16.88

1197000

MELCO INTL DEVEL

27.4

3.201507

204.1065

29.15

8.9

2287954

7520.62

MGM CHINA HOLDIN

31.3

2.791461

135.7233

33.3

13.146

3088900

1770.53

MIDLAND HOLDINGS

3.7

1.092896

4.29

2.68

9460000

NEPTUNE GROUP

0.3

1.694915

97.36843

0.4

0.131

34382000

NEW WORLD DEV

9.7

-0.6147541

-19.30117

15.12

9.67

10184218

SANDS CHINA LTD

61.4

1.153213

80.85419

65.9

33.5

9576340

S&P/ASX 200 INDEX

5291.949

0.5077094

13.83106

5457.3

4611.2

JAKARTA COMPOSITE INDEX

4189.608

-0.1417691

-2.943904

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1832.86

-0.2812794

8.52068

1851.94

1597

SHUN HO RESOURCE

1.57

12.14286

1.92

1.33

NZX ALL INDEX

995.368

0.8322933

12.84673

1048.998

875.665

SHUN TAK HOLDING

4.56

-0.2188184

8.830547

4.8

3.27

2364786

PHILIPPINES ALL SHARE IX

3592.96

0.08551794

-2.866196

4571.4

3440.12

SJM HOLDINGS LTD

5566482

1.832994

40.86366

17.04

SMARTONE TELECOM

8.89

0.908059

-36.8608

14.46

7.38

9128536

WYNN MACAU LTD

34.6

2.215657

65.15513

36.9

4489418

Euromoney Dragon 300 Index Sin

595.56

0.8

-4.11

STOCK EXCH OF THAI INDEX

1325.51

-1.281727

-4.771795

1649.77

1260.08

ASIA ENTERTAINME

#N/A N/A

HO CHI MINH STOCK INDEX

508.68

0.838537

22.94975

533.15

394.27

BALLY TECHNOLOGI

76.01

2.260191

70.00671

78.03

43.57

726018

Laos Composite Index

1261.58

0.1619639

3.853399

1455.82

1199.5

BOC HONG KONG HO

3.18

1.597444

3.583064

3.6

2.99

159093

GALAXY ENTERTAIN

8.538

-2.977273

115.063

9.15

3.8

9022

INTL GAME TECH

17.44

1.101449

23.07692

21.2

13.58

4222359

JONES LANG LASAL

100.2

0.3806852

19.37098

102.14

80.86

407082

LAS VEGAS SANDS

76.57

-0.6745363

65.87955

78.13

44.444

4923879

MELCO CROWN-ADR

37.85

-1.174935

124.7625

39.42

16.13

5314011

MGM CHINA HOLDIN

3.97

-1.732673

126.8194

4.2

1.7651

16000

MGM RESORTS INTE

22.72

0.4865104

95.189

22.82

11.32

11529372

SHFL ENTERTAINME

23.19

#N/A N/A

59.93103

23.25

13.64

344231

SJM HOLDINGS LTD

3.16

-1.557632

38.74156

3.6

2.2

157800

185.35

0.1296526

67.79554

187.35

106.966

1534641

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

AIA GROUP LTD

38.2

1.058201

13258077

ALUMINUM CORP-H

2.69

5654733

3.5

245608123

BANK OF COMMUN-H

5.34

-0.1869159

14363952

BANK EAST ASIA

32.5

0.4636785

633193

BELLE INTERNATIO

8.86

0.3397508

12613411

BANK OF CHINA-H

NAME

PRICE

DAY %

VOLUME

11.5

0.3490401

12223433

11.78

-0.8417508

5107390

SANDS CHINA LTD

60.6

0.4142502

2021416

CNOOC LTD

14.24

0.7072136

45063192

COSCO PAC LTD

10.52

0.1904762

ESPRIT HLDGS

15.1

CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD

PRICE

DAY %

VOLUME

61.15

0.2459016

2745414

61.4

1.153213

9576340

SINO LAND CO

10.48

2901955

SUN HUNG KAI PRO

97.05

1926904

4082078

SWIRE PACIFIC-A

90.35

-0.2759382

909952

-0.3957784

2592183

TENCENT HOLDINGS

467.2

0.7765315

2937185

TINGYI HLDG CO

3263473

BOC HONG KONG HO

24.55

0.2040816

4309645

HANG LUNG PROPER

23.8

-0.8333333

3349769

CATHAY PAC AIR

16.12

0.8760951

3308625

HANG SENG BK

125

0.08006405

470287

CHEUNG KONG

120.4

-0.4958678

1211604

HENDERSON LAND D

43.9

0.4576659

1976524

CHINA COAL ENE-H

4.43

0.2262443

24453955

CHINA CONST BA-H

5.82

-0.1715266

187112934

HENGAN INTL

90.7

-1.573521

2687389

HONG KG CHINA GS

17.5

0.3440367

6624311

HONG KONG EXCHNG

128.8

0.233463

1703983

HSBC HLDGS PLC

82.55

0.6707317

7001334

14377589

HUTCHISON WHAMPO

103.4

1.174168

3637365

15387276

IND & COMM BK-H

5.19

199544214

LI & FUNG LTD

9.98

0.9100101

17133361

29.05

0.8680556

921540

CHINA LIFE INS-H

23.55

0.4264392

25882466

CHINA MERCHANT

27.85

0.9057971

1632365

CHINA MOBILE

80.55

0.8135169

CHINA OVERSEAS

21.85

-1.354402

CHINA PETROLEU-H

6.21

0.3231018

48849584

CHINA RES ENTERP

25.35

-1.169591

2627066

MTR CORP

NAME POWER ASSETS HOL

WANT WANT CHINA WHARF HLDG

MOVERS

22.9

1.777778

10.92

2.824859

9389452

59.5

-0.7506255

2397808

5 23405

INDEX 22921.56 HIGH

23404.45

LOW

22728.15

CHINA RES LAND

19.02

-1.143451

4774404

NEW WORLD DEV

9.7

-0.6147541

10184218

52W (H) 24111.55078

CHINA RES POWER

17.74

-0.4489338

2576069

PETROCHINA CO-H

8.45

0.1184834

39870453

(L) 19426.35938

CHINA SHENHUA-H

23.8

0.4219409

8151543

PING AN INSURA-H

68.25

1.71386

18086859

22728

19-December

23-December

15 15

December 24, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Malaysia Star Malaysia’s plastic packaging industry expects strong orders from Japan in the first quarter of 2014, as the country prepares to increase consumption tax to 8 percent from the current 5 percent. SLP Resources Bhd managing director Kelvin Khaw said the group had already secured close to 20 million ringgit worth of orders from Japan, about 20 percent more than the orders in the corresponding period a year earlier. “The wholesalers in Japan are buying more from us to stock up now. This should have positive impact on our sales revenue for 2014,” he said.

Jakarta Post Indonesia’s Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) predicts that oil and condensate production in 2014 will reach 830,000 barrels per day. “This production level is far lower than the state budget target of 870,000 barrels per day,” acting SKKMigas head J. Widjonarko said as quoted by Antara news agency. He also said that in 2014, investments were targeted to reach US$26 billion, up from US$23 billion in 2013. “The investment increases are aimed primarily at supporting the development of the Banyuurip and Kepodang oil fields,” Mr Widjonarko said. Gas production is estimated to reach 6.7 billion cubic feet per day, according to the WPB.

Straits Times The cargo arm of Singapore Airlines (SIA) has agreed to settle over the issue of price fixing in the United States, without admitting to any wrongdoing or liability. Numerous airlines, including SIA Cargo, saw class actions taken against them in 2006 following investigations by various competition authorities on price fixing in air cargo services in the United States. After consulting its legal advisors and weighing its options, SIA Cargo decided to accept an amicable resolution to settle the class action with the payment of US$62.8 million or about 78.5 million Singapore dollars.

Plugging in green tech Edward Jung

Former Chief Architect at Microsoft, is chief technology officer at Intellectual Ventures

y most measures, solar energy should be a resounding success. Technical breakthroughs and continuous improvements in efficiency have driven the price of solar panels from US$100 per watt in the 1970’s to less than US$1 per watt today. Yet solar technology still accounts for less than 1 percent of global energy consumption. For solar energy, as for many other promising green technologies, technical progress has not translated into widespread adoption. The problem lies in the structure of the market. To understand why, green-energy advocates could take a lesson from a far less glamorous technology: used cars. The slow adoption of solar energy is usually blamed on its expense. Outfitting a single house with solar panels costs roughly US$30,000. And, thanks to those lauded efficiency gains, a new installation will quickly become outmoded. But Americans routinely spend US$30,000 on cars that they trade in every four or five years or so. They can afford to do so because of the used‑wcar market.

Green tech is poised to become the next big player in the global market. It just needs a place to plug in

Thanh Nien McDonald’s, the world’s largest fast food restaurant chain, will open its first eatery in Vietnam after Tet, Vietnam’s lunar New Year, complete with 24-hour drive-through service. Travel and food service provider Good Day Hospitality Co, representative of the chain in Vietnam, announced on Friday the restaurant will open in downtown Ho Chi Minh City, Vietnam News Agency reported. The restaurant is expected to be Vietnam’s first drive-through eatery. Nguyen Huy Thinh, managing director of McDonald’s Vietnam, said their targeted customers ranged from kids to night workers. He said 80-90 percent of ingredients will be imported to guarantee the foods’ quality and safety.

The used-car market helps consumers to finance their next car purchase, while making older, still-serviceable models available at a deep discount. The ongoing utility and value of used cars creates a vast, stratified marketplace with many options in both features and purchase price. For next-generation technologies, then, the barrier to entry is not so much the initial cost but rather the absence of a market for the last generation. The market for solar power would almost certainly expand if consumers had the option of

purchasing less efficient solar panels (last year’s model) that cost, say, half as much. Government planners would have no trouble justifying a large expenditure for a longlasting technology – even one that quickly becomes outmoded – if they knew that they could recoup some part of their outlay in just a few years. Likewise, investors would be more likely to finance a major deployment of solar panels if the technology’s value persisted beyond the next tweak in solar-cell design. Call it the moral of secondary markets: If you are trying to introduce an expensive new technology, make sure that people can buy it used, too.

Upgrade woes The demand for used solar panels is already apparent in the repeated calls for cheaper solar technology. And the idea of recycling a green technology has intrinsic appeal. But the secondary market for solar-power technology will not emerge until another issue is addressed: what could be called the “velocity of upgrade.” Consider how quick and easy it is to trade in an old car for a newer one. You can drive into the dealer’s lot in one vehicle and leave in another, because all cars run on the same road infrastructure. Upgrading solar panels, by contrast, is agonisingly slow. Like so many green technologies, solar requires its own dedicated infrastructure, and each manufacturer designs systems with unique mechanical layouts, mounts, and electrical interfaces. As a result, old solar panels cannot simply be swapped out for new ones. To upgrade, solar

customers do not just have to buy the car; they have to rebuild the roads. Needless to say, this kind of upgrade is expensive – and not just for the consumer. Because each panel infrastructure is unique, each solar-tech company has to train, maintain, and equip a dedicated crew of employees to install and uninstall its products. That is a significant financial burden for any company, let alone a startup in a new market sector. Both the velocity of upgrade and the secondary market for solar power could be improved by lowering the transaction costs associated with adopting new solar technology. These costs – one-time outlays that are independent of the core technology’s cost – are the real barrier to widespread adoption of green technologies. The lower these transaction costs, the more rapidly early adopters can upgrade to nextgeneration technologies, and the more readily a secondary market can develop.

Innovation vital For example, the cost of adopting solar energy could be greatly reduced by standardising solar-panel sizes and mount configurations. Such standardisation would make it much easier to trade old panels for new ones, decreasing the transaction costs of each upgrade from 40 percent of system cost to nearly zero. Both primary and secondary markets for solar panels would expand, stratify, and become more liquid. More generally, governments should invest in infrastructure that facilitates the deployment of solar and other green technologies at lower costs. Such investment would

create platforms for innovation and commerce that yield returns far greater than any single technology or industry can deliver. Government investment in roads, traffic signals, and parking infrastructure built the platform that engendered a global auto industry, and that today supports continuous upgrades in gas, diesel, electric, and hybrid vehicles. In terms of value for money, such investment was much more effective than subsidising any one automaker or technology. A green-tech platform would enable innovators to plan for the long term. As it stands, green entrepreneurs have to choose a single technology in which to invest; if they do not win enough installations using that technology, they are out of the game. They have no opportunity to try another technology, offer discounts on last year’s model, or provide service contracts on old equipment – strategies that, in the auto industry, help to smooth out the dips in revenue caused by fluctuating new-car sales. Many solar-energy start-ups have already fallen victim to this “one-and-done” dynamic. Continued innovation is vital to the future of green technologies, because all of them, including solar, still have technical problems that need to be solved. But many are already good enough to spark consumers’ appetite. Infrastructure that enables faster and cheaper upgrades would accelerate their adoption and further development. Green tech is poised to become the next big player in the global market. It just needs a place to plug in. © Project Syndicate

16 16

December 24, 2013 April 19, 2013

Closing UK market manipulation reports soar

Qatar plans first IPO since 2010

Reports of suspected market manipulation soared by 43 percent this year as the United Kingdom financial regulator investigated the rigging of multiple benchmark rates. The Financial Conduct Authority received 117 reports of suspected “distortion and manipulation” of markets in the 12 months to August, compared with 82 in 2012, according to Bovill Ltd, a financial services consultant in London. The FCA has opened investigations into currency-rigging, issued a second wave of fines for manipulation of the London interbank offered rate, and levied its first fine against a high-frequency trader for manipulating commodities markets.

Mesaieed Petrochemical Holding Co, a unit of state-owned energy giant Qatar Petroleum, will conduct a 3.2 billion-riyal (US$880 million) initial public offering (IPO) of its shares in the local market next month, officials said on Sunday. It would be the first IPO since 2010 in Qatar’s stock market, after the global financial crisis froze issuance. Authorities want to revive IPOs as a way to develop Qatar, the world’s top exporter of liquefied natural gas, into a regional financial hub. The government also aims to use IPOs to spread wealth among its citizens.

Adelson’s European dream reawakened Wants to build casino resorts in either Madrid, Barcelona, Rome, Milan, Athens or Paris

nly 10 days after abandoning a plan to construct a US$30 billion (240 billion patacas) collection of gaming resorts in Spain, Las Vegas Sands Corp chairman Sheldon Adelson says he wants to build one or more of so-called integrated resorts in major European cities. “I’m looking at a different model of doing Singapore-like or Japan-like or Korea-like individual IRs in individual cities,” Mr Adelson (pictured) said in an interview in Herzliya, Israel on Sunday. “We will just take the major cities in Europe and see whether or not there is a possibility to pursue that.” Madrid, Barcelona, Rome, Milan, Athens and Paris are possible sites for new resorts, Mr Adelson said. Only cities with tourism infrastructure, including hotels, restaurants, transportation and exhibition facilities, would be considered, he added. On Friday December 13, the Spanish government announced that LVS’s existing plan for Alcorcón – a largely commercial district to the southwest of the Spanish capital Madrid – contained requests that were “irreconcilable” with European Union law. EU legislation and regulation places an emphasis on creating equal conditions for all investors across the various EU markets. The company had said in an

announcement on September 25 that a decision to proceed with Spain depended on “guarantees that there will be an adequate legal framework, which will not change with time”. Soraya Sáenz de Santamaría, Spain’s deputy prime minister, on December 13 told reporters that LVS had been seeking a compensation deal in case of any losses related to future changes in Spanish laws. In Asia, it “looks like” Japan, South Korea, possibly Vietnam, Taiwan, and Thailand would allow the establishment of integrated resorts, said Mr Adelson. “If they do, I’ll have a lot to keep me busy for the next five to ten years,” he stated. His comments came before a ceremony to mark the inauguration of the Adelson School of Entrepreneurship at the Interdisciplinary Center Herzliya, a university north of Tel Aviv. Mr Adelson – who with his family owns a controlling stake in LVS – is ranked 12th globally in the Bloomberg Billionaires Index. In October Business Daily reported that Joe Greff – one of investment bank J.P. Morgan’s managing directors in New York – had listed dropping Spain as one of eight possible positive catalysts for LVS’s share price.

Swiss banks hire advisers to weigh US amnesty plan Switzerland faces broadest assault in crackdown on offshore tax evasion

witzerland’s 300 banks have enlisted an army of auditors, lawyers and in-house workers as they race to meet a December 31 deadline on whether to seek a United States amnesty for helping American clients evade taxes. Banks in Switzerland, the largest cross-border financial center with US$2.2 trillion of assets, are closely examining accounts before joining a disclosure program that’s the broadest assault in a five-year United States crackdown on offshore tax evasion. “The hard work is getting to the right data and cutting through complex systems to get all the facts on the table,” said David Fidan,

a partner in Deloitte LLP’s forensic services practice in Switzerland. “That’s very expensive and involves lawyers, forensic accountants and bank employees. It can take 20, 30 or 40 people over four or five months for bigger banks.” Banks with “reason to believe” they violated tax laws can ask the Justice Department to forgo prosecution. In turn, banks must disclose how they helped Americans hide assets, hand over data on undeclared accounts and pay penalties. Those that don’t apply could face criminal probes like those against 14 banks, including Credit Suisse Group AG and HSBC Holdings Plc.

The Swiss government encourages banks to join the program, announced August 29. Yet the Swiss Bankers Association criticises the program’s cost and vexing questions, such as who qualifies as a United States client and what assets are considered untaxed. The answers could determine how much a bank pays in penalties. “It’s necessary for the banks to do a deep analysis of their clients and the history of those relationships,” said SBA spokeswoman Sindy Schmiegel. “That’s really expensive, and that’s why the program is at the limit of tolerability for the banks.” Bloomberg News

M.G. with Bloomberg News