Macau Business Daily, Jan 2, 2014 by Business Daily

MOP 6.00 Vitor Quintã

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Airport passengers at five-year peak during 2013 Hong Kong readies for fake banknotes at home and Macau Page 16

Photo by Manuel Cardoso

Number 446 Thursday January 2, 2014 Year II

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www.macaubusinessdaily.com

Casino names are top stocks for Hang Seng

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

City’s shark fin trade faces extinction

April 19, 2013

acau sellers of shark’s fin products report a sharp decline in business volume last year, amid pressure from environmentalists and Beijing’s drive against conspicuous consumption by officials. Since January 2012, travellers returning to the mainland from Macau and Hong Kong have in theory been barred from carrying shark’s fin products across the border. Shark’s fin in dried form is traditionally a luxury

food – particularly in Guangdong and southern China – and commonly served at weddings or Chinese New Year dinners. But ‘definning’ – involving often the live shark being thrown back in the sea after removal of its distinctive curved dorsal fin – has been condemned by Chinese celebrities including basketball player Yao Ming. The trade has put some members of the shark group at risk of extinction. More on pages 4 & 5

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Hang Seng Index 23353

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December 31

Home price up for a fourth month

Three-month deadline to find Reolian solution

Housing prices rose for the fourth month in a row in November, the Financial Services Bureau announced on Tuesday. The average price of Macau housing was 85,331 patacas (US$10,683) per square metre in November, six percent more than in October and nearly 30 percent more than a year ago. Most transactions involved second hand flats located in Areia Preta and San Kio districts and downtown Taipa.

The government has three months to find a profitable business model for bankrupt operator Reolian Public Transport Co Ltd before its assets are seized by creditors and it services wrapped up. The court approved the government’s application to delay a premature end for Reolian, and will allow it to continue using the bus company’s assets for another three months, the Transport Bureau said on Tuesday.

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HSI - Movers Name

%Day

KUNLUN ENERGY CO

1.64

BANK OF COMMUN-H

1.30

HANG LUNG PROPER

1.24

CHINA RES POWER

1.21

SANDS CHINA LTD

1.20

PING AN INSURA-H

-0.36

CATHAY PAC AIR

-0.36

TINGYI HLDG CO

-0.44

HONG KONG EXCHNG

-0.54

CHINA UNICOM HON

-0.68

Source: Bloomberg

Interview

Hengqin property carries risk says expert With sustained high property prices in Macau, the Hengqin Island next door in mainland China has been mooted by legislators as a possible source of cheap housing. But Philip Wong, a manager with the Century 21 property agency

here, told Business Daily that property prices there are already double those of Zhuhai city. The United States is now a preferred property market for local investors he says. Pages 6 & 7

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January 2, 2014

Macau

Home price up for a fourth month Despite govt curbs and few off-plan sales, home price continues to recover Stephanie Lai

sw.lai@macaubusinessdaily.com

Most home transactions in November for second-hand flats

ousing prices rose for the fourth month in a row in November, the Financial Services Bureau announced on Tuesday, as buyers had to pay more for second-hand flats. The average price of Macau housing was 85,331 patacas (US$10,683) per square metre in November, 6 percent more than in October and nearly 30 percent more than a year ago.

The price has grown by 28.8 percent in the last four months but it is still far from the peak it reached in May: 98,187 patacas. Most home transactions in November involved finished flats located in Areia Preta and San Kio districts and downtown Taipa. The average price of second-hand homes rose for the third month in a row to 81,824 patacas per square metre.

The number of homes sold in November was up slightly month-onmonth. There were 798 transactions, five more than in October. But that figure is still way below the 1,272 transactions made a year earlier, mostly because off-plan sales remain in a slump. There were only 59 transactions of unfinished flats in November, a drastic drop when compared with

the 721 transactions in May this year. Estate agents and developers rushed to complete off-plan sales in May, before the new housing presales law set tighter control over unfinished flats transactions starting from June 1. Under the housing presales law, sales of flats off plan are legal only if the foundations of the development that will contain them are complete and each flat is registered with government. The average price of an unfinished flat in November was 114,574 patacas per square metre, down by 4.6 percent when compared to the off-plan sales peak in May. Most unfinished units sold in November came from housing projects in Coloane. The latest data raise doubts on the government’s optimistic analysis on the impact of its current curbs on the property market. Lao Pun Lap, head of the government’s think tank, said in November he believed that the measures enacted have achieved “some impact” in curbing property prices. The special stamp duty – equivalent to 20 percent of the selling price if a property is re-sold within a year, or 10 percent if re-sold within one to two years – was extended to sales of offices, shops and parking spaces in October 2012. That same month the government also imposed tighter restrictions on mortgage lending, especially to buyers from outside Macau.

Casino names are top Hang Seng performers

Neptune needs more time on junket deal

Sands China added in June 2012, Galaxy Entertainment in June 2013

First announced MOU in November regarding City of Dreams VIP room

he biggest gains in 2013 on the benchmark Hang Seng Index of Hong Kong stocks were seen in casino and technology names. Galaxy Entertainment Group Ltd, the Macau casino operator controlled by billionaire Lui Che Woo, rose 129 percent during the year to become the best performer on the Hang Seng Index. Sands China Ltd’s 87 percent surge pushed valuations to a three-year high in December, data compiled by Bloomberg reveal. Spending on gaming in Macau is expected to show yearon-year expansion of between 13 percent and 16 percent for December according to UOBKay Hian analyst Victor Yip based in Hong Kong. The official data for the final month of 2013 and for the whole year are expected today from the local regulator, the Gaming Inspection and Coordination Bureau.

By November 30, Macau’s accumulated gross gaming revenue had already reached nearly 327.29 billion patacas (US$41 billion), 7.6 percent more than the 304.14 billion patacas recorded for the whole of 2012. The gross had also grown year-on-year more quickly (18.6 percent) in the 11 months to November 30, compared to 2012, when annual expansion was measured at 13.5 percent. Prospects for sustained revenue growth in Macau have prompted investors including BlackRock Inc and Allianz

Global Investors to favour casino stocks, according to the two fund management firms. Macau casino investor Melco Crown Entertainment Ltd – with a main listing on Nasdaq in New York and a secondary listing in Hong Kong – has been one of the biggest gainers during 2013 on the Bloomberg China-US Index. Melco Crown shares rose 131 percent year-onyear, easily surpassing the 6.7 percent expansion recorded on average across the 55 stocks in the index. M.G.

acau casino junket investor Neptune Group Ltd says it needs more time in its efforts – announced in November – to acquire, via a wholly-owned subsidiary, the profit rights to local junket promoter Ocean Star Entertainment Co Ltd. The extension on talks runs to the end of this month. The November filing to the Hong Kong Stock Exchange said Ocean Star has a junket representative agreement at “COD Neptune Guangdong VIP Club” in Melco Crown Entertainment Ltd’s City of Dreams casino resort on Cotai. The original regulatory document added that “not less than 11” gaming tables are operated at the VIP club, “generating a rolling chip turnover which averages at approximately HK$6.43 billion (US$829.5 million) per month for the past

12 months”. The document added that “a certain percentage of the monthly rolling turnover at the VIP Club goes to the profit of Ocean Star,” whose sole owner is said to be a person called So Wai Chi. The Neptune subsidiary signing the MOU is Credible Ltd a British Virgin Islands company. Neptune’s latest filing on the deal, dated December 31 said: “As additional time is required for the proposed investor to conduct the due diligence review on the target, the proposed investor, Mr So and Ocean Star entered into a supplemental memorandum of understanding…” It says the new deadline for completion of due diligence is January 30, though that “may be extended by the parties by mutual agreement in writing”. M.G.

January 2014 April 19,2,2013

Macau

Three-month deadline to find Reolian solution PricewaterhouseCoopers gets MOP3.6 million to help Transport Bureau run failed bus operator Vítor Quintã vitorquinta@macaubusinessdaily.com

he government has three months to find a profitable business model for bankrupt operator Reolian Public Transport Co Ltd before its assets are seized by creditors and it services wrapped up. The court approved the government’s application to delay a premature end for Reolian, and will allow it to continue using the bus company’s assets for another three months, the Transport Bureau said on Tuesday. The Transport Bureau said it would “do all in its reach to buy time in order to find a new operator or other viable solutions”. It would work to ensure the stability of the public bus services, and the rights and benefits of Reolian’s staff. Reolian operates 27 of the city’s bus routes, about two-fifths of routes, and has more than 500 employees. Staff would continue receiving their wages and any new operator must keep the workers on the same package, the bureau said. On Monday, a spokesman for Secretary for Transport and Public Works Lau Si Io told Business Daily a lease would be signed with Reolian’s administrator “in the next few days”. The government took over Reolian’s operations when the

The bankrupt Reolian bus company controlled 27 of the city’s bus routes

company filed for bankruptcy in October. Reolian was declared bankrupt on December 4. The bureau hired the Macau unit of consulting firm PricewaterhouseCoopers LLP last month to help manage the bus operator, the bureau told

Business Daily. PricewaterhouseCoopers will receive 3.6 million patacas (US$450,740) as part of a twoyear contract. PricewaterhouseCoopers (Macau) Ltda would also help create “an adequate financial auditing

mechanism” that would allow the bureau to “effectively” control the financial records of all bus operators. The Commission of Audit released a report in July criticising the bureau’s work managing bus services and the payment of bus fares to the government.

Airport passengers hit a five-year peak Casino smoking penalties New flights bringing Southeast Asian passengers passed this month, help revert a decline experienced since 2008 says government Tony Lai

tony.lai@macaubusinessdaily.com

T T

he Macau International Airport has handled more than 5 million passengers for the first time in five years. An influx of tourists from Southeast Asia last year saw the airport recover from the blow dealt to it by the resumption of direct flights across the Taiwan Strait in 2008. The airport operator said yesterday that last month’s passenger volume was about 450,000 people, a 14-percent increase compared to the same time in 2012. The airport handled about 5 million passengers throughout the year, an 11-percent increase compared to 2012 and the greatest volume since 2008, the Macau International Airport Co Ltd said. Regular direct flights

between Taiwan and the mainland were resumed in July 2008. Since then, cross-strait travellers have not needed to transfer at Macau or Hong Kong. Transit passengers from Taiwan accounted for just 7 percent of last year’s volume, less than half of the proportion in 2004. Southeast Asia is now the airport’s biggest source of passengers, soaring from a 7-percent market share in 2004 to 39 percent last year,

the airport said. The launch of new lowcost airline routes led to the increase. The number of aircraft take-offs and landings increased by 16 percent to more than 48,000 plane movements last year. Meanwhile, Taipei Economic and Cultural Office director-general Lu Chang Shui said the bilateral aviation agreement should be updated this year. Mr Lu said yesterday that officials from Macau and Taipei were “at the final stage” of revising the deal, but did not offer further details. Mr Lu said a revision to the agreement would make it easier to travel between the two places. The deal was signed in 1995 and last modified in 2005.

he 14 gaming venues that failed a second round of air quality tests last year will be told by the end of the month if their plans to reduce smoking zones meet the government’s requests. Health Bureau deputy director Chan Wai Sin said yesterday the venues’ plans were being studied. “What we are analysing more closely is to whether the reduction ratio is correct, comparing the size of smoking areas against their previous size,” Mr Chan said. “Our timetable [to confirm the penalties] is within this month and I hope we can have the latest information ready for the public very soon.” Mr Chan said he would not estimate how long it could take for the process to run. Starting January 1 last year, gaming venues were allowed to set up smoking areas covering up to half of

their gaming floors. Two rounds of air quality tests identified 16 gaming venues with smokepolluted air, including two slot parlours that have already closed. The bureau said in November these venues would be penalised by a 10-percent reduction in their smoking areas. Mr Chan reiterated yesterday that all 14 gaming venues submitted their reduction plans “on time”. The bureau had previously said six gaming venues operating under the licence of Sociedade de Jogos de Macau SA had not submitted a plan to comply with the penalty before the deadline on 5.45pm on December 10. Mr Chan said the six venues had submitted their plans during working hours but the bureau had only been able to verify it had the plans after 5.45pm. T.L.

January 2, 2014

Macau

Shark’s fin trade faces extinction The growing volume of calls for a ban are constricting the shark’s fin business, sellers say Stephanie Lai

sw.lai@macaubusinessdaily.com

Photo by Manuel Cardoso

Sellers of preserved seafood are losing hope that the shark’s fin trade has a future

acau sellers of shark’s fin have felt a sharp decline in business volume last year, amid pressure from environmentalists and Beijing’s drive against conspicuous consumption by officials. “We felt that sales of shark’s fin begun to show a decline in 2012, but last year the decline is even more obvious,” said Judy Un, the owner of a souvenir and preserved seafood shop in San Ma Lou which has sold shark’s fin for about a decade. The main source of customers in Ms Un’s shop, like other shark’s fin shops in the city centre, is the mainland – the mainland being Macau’s main source of tourists. “We expect the sales volume to drop by 50 percent or more last year,” Ms Un told Business Daily. “Even though we are in the peak

KEY POINTS Sales and prices of shark’s fin falling Denunciation of finning plays its part Disapproval of extravagance contributes Delicacy’s appeal declines among young

season for seafood shopping, from November to January – a period in which people usually buy some shark’s fin for Chinese New Year – we now have only one or two customers buying shark’s fin per month,” she said. Three other well-established sellers of shark’s fin told Business Daily that their recent experience was much like Ms Un’s. They, too, expect much slower shark’s fin sales last year. Two of the sellers – who asked not to be identified – said the average retail price of shark’s fin had dropped by 20 to 30 percent last year. The price tags on shark’s fin sold in the city centre indicate that one catty (about 600 grams) of shark’s fin costs between 1,000 patacas (US$125) and 8,000 patacas. Fewer people were buying the delicacy for festive meals eaten at Christmas, New Year or Lunar New Year, the sellers said. Macau imported 93,038 kg of shark’s fin products in the first 11 months of last year, 16.4 percent less than in the equivalent period of 2012. The value of these products fell by 13.3 percent to about 45.5 million patacas, according to official data.

Dunking slammed Not all the products were sold here. The city re-exported 6,872 kg or 2.7 million patacas worth to Hong Kong. Australia, Indonesia, Spain, the mainland and Argentina have been the main sources of Macau’s shark’s fin in the past few years. The value of imports of shark’s fin

was 60.7 million patacas in 2011 – the most since the Census and Statistics Service began collecting data in 1998. But the value has decreased every year since then. The volume imported in 2012 was 120,418 kg, 3.6 percent more than in 2011, but its value was 6.1 percent lower because prices fell. Macau importers and retailers believe their trade is dwindling mainly because of campaigns by environmentalists against shark’s fin consumption in Greater China. One notable campaigner against shark’s fin is Chinese retired basketball superstar Yao Ming, who did a television advertisement for international conservation body WildAid in 2011. In the ad, Mr Yao said finning was cruel and wasteful and that it threatened shark species with extinction. Finning is the practice of cutting off a captured shark’s fin and then dunking the still living fish back in the sea to die. Preserved seafood retailer Ms Un said: “The central government’s denunciation this year of the culture of gift-giving amongst civil servants has also influenced sales.” At the end of 2012 Beijing warned government officials against spending public money on lavish banquets and gifts. The warning was part of President Xi Jinping’s crackdown on official extravagance and corruption – a crackdown which has reduced the business of retailers of other kinds of expensive merchandise.

Even though we are in the peak season for seafood shopping … we now have only one or two customers buying shark’s fin per month Judy Un, preserved seafood retailer

The mainland authorities are also enforcing more strictly than before quarantine rules that are meant to stop shark’s fin crossing borders. Shark’s fin sellers say the outlook for their trade is bleak, especially because more and more hotels and restaurants, their main customers, are buying less and less.

Youthful distaste “It is not an issue of affordability, because everyone has got richer now,” the president of the Traders Association of Macau Good Cuisine, Chan Wing Lam, told Business Daily. Mr Chan’s association represents about 100 small restaurants.

January 2, 2014

Macau Youth, he said, was an issue. People aged between 25 and 30 make up an increasing proportion of the diners in restaurants serving Chinese fare. “Unlike their parents or grandparents, they don’t really care much for shark’s fin,” he said. “Except for wedding banquets, where shark’s fin remains a conventional dish, we see more local associations – even including ours – no longer ordering shark’s fin for banquets and gatherings,” Mr Chan said. He said diners in restaurants not only opposed finning. “Some consumers are not comfortable with the process of preserving shark’s fin, which involves the use of lime powder,” he said. Lime powder is mildly toxic. Environmentalist Joe Chan Chon Meng helped the charity Shark Savers launch its “I’m FINished with Fins”

campaign here last month. Mr Joe Chan told Business Daily that Macau government departments had begun to drop shark’s fin from the menus of their feasts. “But it is still an unwritten rule,” he said. “The government should go further and take the lead in banning shark’s fin consumption at banquets and dinners.” Mr Joe Chan believes banning shark’s fin trade is essential if the marine ecology is to be kept in balance. A sales assistant in the Leong Chio Kei preserved seafood shop said: “Young people now know little about how to cook preserved seafood, including shark’s fin. We no longer have any local shark’s fin gourmets.” The shop assistant told Business Daily: “Within a decade, I think the sun will have set on the shark’s fin trade.”

Shark deaths number 100 mln annually: research

HK banned shark fin from official menus

he latest assessment to date of the impact of commercial fishing on sharks suggests about 100 million are being killed each year. The report was published in the Journal Marine Policy in March. The researchers say that this rate of exploitation is far too high, especially for a species that reproduces later in life. Researchers admit that establishing the true level of global shark fishing is extremely difficult, as the quality of the data is poor. Many sharks that are caught have their fins removed at sea with the body dumped overboard, a practice commonly known as “shark finning”. These sharks are often not included in official reports. However, the scientists estimate a mortality range of between 63 and 273 million sharks in 2010. While the number of sharks being caught has not changed substantially between 2000 and 2010, the authors of the research argue that the commercial fishing fleets are simply changing

location and the shark species they target in order to keep up with demand. The fear is that eventually these shark species will crash. Fuelling the concern is the fact that many of the species that are most threatened are very slow to reproduce. According to experts, a lot of the sharks that are prized in the trade take more than a decade to reach maturity. While fins are still being cut off sharks at sea, several countries and regions including Canada, the United States and the European Union have tried to restrict this by law. In June, the EU agreed to tighten up the existing ban on shark finning. The ban for EU fishing crews has existed since 2003, but with special permits they were still allowed to remove the fins from shark carcasses. “With its policy of fins remaining attached, the EU will also be in a better position to push for shark protection at international level,” the EU Council said in a statement. T.A.

ong Kong’s government announced in September it would stop serving shark fin at official functions, in a move lauded by conservation groups. The ban will extend to blue fin tuna and black moss and is part of the city’s plans to adopt sustainable food-consumption habits, the government said. “The government will keep in view local and international trends on green living in line with a sustainability-conscious lifestyle and update the list of items from time to time,” the statement cited a spokesman as saying. Hong Kong is the transit point for about half of the global shark fin trade, which largely goes to the Chinese market, Alex Hofford, executive director at MyOcean, a marine conservation group, had said in June. China said in July 2012 it would ban officials from consuming shark fin at state expense within three years.

Meanwhile, shark fins’ ride in plane bellies is beginning to end. Last week, Korean Air Lines said since March it had stopped moving the delicacy used in soups. The Seoul-based company joined Cathay Pacific Airways and Air New Zealand in saying no to transporting the commodity. The airlines’ ban on carrying the cargo may aid steps by environment lobbies to protect sharks, whose fins can cost as much as US$800 per kilogram. “The airlines know it’s good to be seen as doing the right thing as passengers become more environmentally aware,” Mr Hofford said. “Economically speaking, it doesn’t affect them one bit as it’s so tiny compared to all the other things they carry, electronics, phones or other cargoes.” About 10 percent of global sharkfin trade is freighted through air with the rest moving by ships, Mr Hofford said. Bloomberg News

FINNING FACTS Hong Kong is the world’s shark fin trading centre, accounting for 50-80 pct of fins traded worldwide Sharks’ life history makes them vulnerable to exploitation Wet fins typically represent less than 5 pct of a shark’s body weight Some Atlantic shark populations have declined by up to 90 pct in the last 15 years Sets of fins can sell for more than US$800/kg Hammerhead Shark fins among the most valuable by weight A single Whale Shark pectoral fin can sell for up to US$15,000 The numbers of sharks being fished has remained constant over the past decade

January 2, 2014 April 19, 2013

Macau Brought to you by

HOSPITALITY Many happy returns An increase in the amount of foreign direct investment in recent years has been a driving force for the economy. But we can expect the inflows to stabilise and even reverse, in some cases. More or less sustained flows of income will be generated if foreign investors get what they want from their investments. As the FDI stock grows, it is expected to generate more income. But different industries will give different returns. The information available is sufficient to allow only a rough measure of the income generated by FDI as a proportion of the stock of FDI in each industry. On average, the proportion increased in the past five calendar years from about 25 percent early on to nearer 40 percent in the past two years.

Hengqin property investment

he United States – with low pricing and steady capital growth – is now the preferred property market for local investors says Philip Wong, a manager with the Century 21 agency here. Some commentators have suggested that with sustained high prices in Macau, then Hengqin Island next door in mainland China would be an obvious place for locals to consider. But Mr Wong told Business Daily that property prices there are already double those of Zhuhai city. Macau’s monthly property transaction volumes have shrunk in 2013 when judged year-on-year. But prices have stayed high. Local land is scarce and interest rates in the global banking system are still low thanks to the U.S. government’s bondbuying policy. As a result, there’s a limit to what the government can do to cool the local market, says Mr Wong.

There has been a drop in the number of real estate transactions here. Is that a concern for Century 21? The transactions dropped for many reasons. One is that before there were more than 1,000 agencies doing business, but right now because of the new regulation, those agencies are shrinking down, maybe to half already. And because of the new stamp duty law from the government, you have to hold the property for two years, otherwise you have to pay a tax. That has slowed down people already. Also, if you are a foreign buyer, you have to pay 10 percent on top of the sales price. [But] A lot of high-end properties are bought by foreigners, mainland Chinese or Hong Kong people. It’s very hard for local people to afford property.

I believe everybody is entitled to have a place to live, but it doesn’t mean everybody should have his or her own property

Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso Commerce generated the greatest return on investment in the past five years. The income generated as a proportion of the stock of FDI in commerce averaged over 50 percent. Greater investment in retailing, especially retailing of upmarket merchandise with wide profit margins, may explain this percentage. Commerce generated a greater return on investment than gaming, which is the principal recipient of FDI. But gaming is closing the gap, and income generated as a proportion of the stock of FDI in the industry approached 50 percent in the past two years. The proportion for investment in financial industries, including banking and insurance, was between 10 percent and 20 percent most of the time. The proportion for investment in hotels and restaurants was much smaller – if the FDI generated any income at all – so the chart omits it.

62.8 %

Proportion of income from FDI generated by gaming, 2009-2012

What are the main issues concerning the real estate market here? Between the real estate licences and the agencies [local regulation of the property sales industry], it’s very confusing. Until today, I’m still confused about how they operate. Secondly, the government housing [stock] is part of the real estate issue. I believe everybody is entitled to have a place to live, but it doesn’t mean everybody should have his or her own property. Not everybody should own property. People with low income should have free rent. Everybody should have a cheaper living expense, but it doesn’t mean that it is now fair that [some] people maybe get two jobs and buy property, and people who only have one job and qualify for low income, have a government ownership subsidy housing.

Were the cooling measures were effective? They slowed down the transaction [rate]. But the price has not come down as everybody wanted. These [measures] are effective but slow. Macau’s economy is still strong. It’s growing [by] double digits annually, so this is also one of the ways [reasons] the real estate market does not go down, because the economy is good. Also, Macau does not have new property to release. The new property numbers are very low. Can government policies solve such supply and demand problems? The people that really complain are the low-income people and I don’t know if Asia ever heard of rent control. Right now, for commercial [property], when the new lease comes up they [landlords] can double the previous rent, so if there were some kind of regulation that you can only go up to 20 percent a year that would be good. But in the future we don’t know. In Macau, we are affected by the world. We cannot control our own destiny, because Macau is dependent on China; Hong Kong. Macau is a small territory.

So, there is nothing to be done, not even by increasing supply? There’s not much we can do. Macau properties [prices] go up naturally, because we have a small amount of land. We have 30 square kilometres and around 600,000 people, so density is very tight. Do you see your clients now investing overseas, instead of Macau? Yes, many people are buying in the U.S. We [our company] are originally coming from the U.S. For instance, you can buy in [Las] Vegas a 2,000 square feet villa brand new for HK$2 million (US$258,000). People started buying there, because some have kids that go to schools over there. Do you have clients interested in buying property in Hengqin Island? There is interest in Hengqin Island. Right now, it’s already 30,000 yuan [39,555 patacas] per square metre. Zhuhai is 15,000 yuan per square metre, but it is [still] lower than Macau. But don’t forget, you’re buying mainland China property, not Macau property. When you buy and sell the transaction fee is very high. Even if the crossing is easy, [so] you can drive there, it’s still Chinese property.

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January 2014 April 19,2,2013

Macau

carries risk, says expert

The government is doing enough already. We’re not China, we’re a capitalistic economy

Is Century 21 investing there? We are looking into what kind of opportunities there are, not only for people from Macau but also for our buyers around the world. Hengqin is going to be the future, but it takes time. So far, there is nothing going on and the rules – the rules for Macau people to go to Hengqin – are not clear yet. To drive there is there a need to pay? I think for China’s dual plate [car registration system] you need to pay. Also, for insurance, it’s land from mainland China. Do we have to buy extra insurance? If so, how much? If the Macau government builds more public housing here, will it have any positive impact on the prices of the private real estate? There are two types of situation: low-income people that want to own property and the ones that have low income and want rental property. In the future, the government should provide more free – or cheap – rental units for the locals. You’ve mentioned that, because of the government measures, the transactions dropped but the prices didn’t. Should the government avoid intervening? I know the government didn’t want to, but it had to intervene. In every country [jurisdiction], properties are related to government policies, so the government should intervene. But I hope the policy is very flexible and according to the market. If the Macau property [price] drops, then the regulations need to be removed. I hope it [the cooling policy] is not set forever, [as] that’s not very good. Macau’s number one business is gaming, so property will be [a] non-gaming [industry], which is also good for Macau. The government is doing enough already. We’re not China, we’re

a capitalistic economy. For a capitalistic government, it already has done enough to concern and regulate property already. Macau’s Chief Executive has stated publicly there “might” be a property bubble in Macau. What do you think? Yes, there is a bubble. Right now, the bank is not chasing the sales price anymore; they will give out the loan according to what is their business. So, obviously Macau has a bubble, because most people here cannot afford a property here, so that’s why I say more government housing will help the market. What will happen if this bubble bursts? I don’t know, but if it bursts, the high-end property will be really affected but the lower-end, say under HK$4 million to HK$5 million, will still be okay because local people can consume [it]. Are real estate agencies like yours concerned about a bust? We are right now more focused on selling U.S. property to locals, than selling local property to locals. To help my long-term investors, it’s better in the U.S.

There is interest in Hengqin Island. Right now, it’s already 30,000 yuan per square metre… Zhuhai is 15,000 yuan…

January 2, 2014 April 19, 2013

Greater China Land too polluted for farming: minister More than 2 percent of China’s arable land, or an area the size of Belgium, is too polluted to grow crops, the government said, offering new evidence of the environmental cost associated with 30 years of breakneck growth. About 50 million mu (3.3 million hectares) of farmland is too spoiled for planting, Vice Minister of Land and Resources Wang Shiyuan said at a press conference in Beijing, according to a transcript on the government’s website. The country has 135 million hectares of arable land, he said, citing a nationwide survey. Concerns that toxic soil is spoiling crops and making people sick join those about China’s polluted skies and water as issues that have highlighted the cost of economic expansion, which has averaged about 10 percent annually over three decades. Leaders including Xu Shaoshi, head of the country’s top economic planning agency, have said environmental degradation is challenging China’s traditional growth pattern. The government will spend “tens of billions of yuan” each year to repair land with heavy metal contamination and to restore over-exploited ground aquifers, Mr Wang said. The main areas with farmland pollution are the Yangtze River Delta, Pearl River Delta, northeast China and Hunan province, he said.

Home prices up in December Chinese property prices rose again in December, according to two private surveys, but are showing signs of stabilising following government measures aimed at cooling the housing market and averting the threat of a bubble. Prices of new homes in 288 cities in December rose 0.37 percent in December from November, when they had risen 0.77 percent, a poll by real estate services firm E-House China showed yesterday. House prices climbed 10.04 percent from a year earlier, little changed from November’s annual rise of 10.11 percent and a seventh consecutive month of double-digit annual gains. A separate survey by China Real Estate Index System (CREIS) on Tuesday showed average prices in the 100 biggest cities rose 0.7 percent in December from November, when they had risen 0.68 percent, to post a 19th straight monthly gain. On average, prices rose 11.5 percent in December from a year earlier, CREIS said in a statement, with prices in seven cities including Beijing and Xiamen increasing by 20 percent to 30 percent. “With the housing supply increasing in 2014, shortages are likely to be eased and developers will become more rational,” said CREIS, a consultancy linked to China’s largest online property information firm, Soufun Holdings Ltd. “But there might be increasing divergence between big and small cities,” it added.

Revlon to exit operations in China Revlon Inc, the maker of cosmetics under its namesake and Almay brands, will cease operations in China and eliminate about 1,100 positions, including 940 beauty advisers, as it restructures its struggling business. China makes up about 2 percent of Revlon’s net sales, and the restructuring will result in about US$22 million of pre-tax charges, the New York-based company said in a filing with the U.S. Securities and Exchange Commission. The changes are expected to reduce costs by about US$11 million a year, Revlon said. The company, which posted profit declines in 2011 and 2012, has been making acquisitions and introducing new products as sales in some of its larger brands slow. Earlier last year it bought Colomer Group, giving it Creative Nail professional and Shellac nail polishes, as well as American Crew men’s hair-care products. “Revlon was unable to gain scale and relevance in the important Chinese beauty market,” Connie Maneaty, an analyst at BMO Capital Markets in New York, wrote in a note. She rates the shares market perform, the equivalent of a hold. Colomer chief executive Lorenzo Delpani took over as Revlon’s CEO in November, replacing interim chief David Kennedy.

Ending China standoff to spur gr Taiwan president calls for ratification of cross-strait trade pact Cindy Wang

aiwan’s President Ma Ying Jeou said in a New Year’s address the government needs to end its political stalemate with China to spur economic growth. In order for Taiwan to take its economy to the “next level,” the island would need a breakthrough in the “cross-strait standoff” and “boost cross-strait economic and trade cooperation,” Mr Ma said in a speech posted on the presidential website yesterday. Chinese President Xi Jinping signalled at a regional summit last year that he wanted to resolve the political impasse that has existed with Taiwan for over six decades, saying the issue shouldn’t be passed from generation to generation. Taiwan has been self-governing since 1949, when the Kuomintang Party forces led by Chiang Kai Shek fled to the island during a war with Mao Zedong’s Communists for control of China. Mr Ma is seeking to bolster his approval ratings as he leads the Kuomintang into elections for the mayors of the capital Taipei and six other cities this year. His popularity fell to a record low last year after he failed to oust a rival from the legislature and the economy slowed. Taiwan in November trimmed its 2013 growth forecast to 1.74 percent from 2.31 percent as exports and industrial production decelerated. Exports, which made up about 60 percent of the island’s economy in the third quarter, fell in September and October from a year earlier and were unchanged in November on slower demand from China, its biggest overseas market. The Taiwan dollar slid 2.6 percent in 2013, the biggest decline since 2005, while the Taiex stock index

rose 12 percent. “This administration’s top priority is to do all that can be done to achieve economic growth,” Mr Ma said.

FTA agreements Taiwan must take part in regional economic integration in order to maintain economic growth, expand trade and investment, increase job opportunities and increase salaries, Mr Ma said.

The Taiwanese leader also called for the ruling and opposition parties to work together to pass bills that will spur economic development. The delayed ratification of the CrossStrait Trade in Services Agreement has made Taiwan’s trading partners less willing to sign FTAs with the island, Mr Ma said. “Currently, our most important task is to speed up the pace of trade liberalisation and market opening,” he added. The island signed free trade

Regulator approves new share sales Mainland markets haven’t had an IPO since October 2012

hina’s securities regulator approved the initial public offerings of five companies seeking to raise about US$353 million, paving the way for share sales to resume after a freeze of more than one year. The long-awaited move is a boon to the more than 750 companies whose IPO applications are pending with the regulator but will bring trepidation to equity investors, who fear that new listings will siphon off demand from existing shares. “This is within expectations. It had to happen sooner or later. But regulators seem to be doing their best to minimise the negative impact on the market,” said Yu Kai, chief analyst at Aerospace Securities in Shanghai. “Today is the last day of the year, so institutional investors have an incentive to maintain their positions in order to protect their rankings, which are based on market value,” he said. Neway Valve (Suzhou) Co received approval for a first-time sale in

Shanghai that could seek about 839 million yuan (US$138 million) and will start marketing its shares this month, the maker of industrial valves said in statements to the Shanghai Stock Exchange. Truking Technology Ltd, Guangdong Qtone Education Co, Guangdong Xinbao Electrical Appliances Holdings Co and Zhejiang Wolwo Bio-Pharmaceutical Co secured approval to list on the smaller Shenzhen exchange, separate filings by the companies showed. China, the world’s largest IPO market in 2010 with a record US$71 billion raised, hasn’t had an initial public offering since October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and issuers. Fifty companies are expected to be ready by the end of January, the China Securities Regulatory Commission said on November 30 after pledging to move toward a U.S.-style IPO registration system. EY, the accounting firm, has

estimated this initial group could raise around 40 billion yuan (US$6.6 billion), while fundraising could total 200 billion yuan overall in 2014. China’s leaders have said new IPOs will be more investor-driven, with the regulator focusing on ensuring adequate disclosure while leaving decisions about the viability of the business to investors. “People expected more approvals in the first batch,” Du Changchun, a Shanghai-based analyst at Northeast Securities Co, said. The regulator “will probably need to speed up the process, if the target of 50 is to be reached by end of January.” It will take about a year to clear the backlog of more than 760 companies waiting to go public, the CSRC said when announcing the changes to the IPO system. Another several companies will likely receive approvals in the next few days, the China Securities Journal reported yesterday, citing unidentified people at the companies. Reuters

January 2014 April 19,2,2013

Greater China

Mainland’s manufacturing activity weakens

rowth: Ma

PMI fell back month-on-month to 51 but resilient at year end

G This administration’s top priority is to do all that can be done to achieve economic growth Ma Ying Jeou, Taiwan’s President

agreements last year with Singapore and New Zealand, both of which have diplomatic relations with China, as ties with the mainland improved. Mr Ma’s administration has also said it plans to join the Trans-Pacific Partnership by 2020. “The Taiwan Strait is no longer a tense flashpoint,” Mr Ma said. “But rather, has become an avenue of peace, and a gateway through which other countries can enter the mainland Chinese market.” Bloomberg News

rowth in China’s factories slowed slightly last month as export orders and output weakened, official data showed yesterday, adding to views that while the world’s second-largest economy remains resilient, it lost some steam in late 2013. The Purchasing Managers’ Index was at 51, the National Bureau of Statistics and China’s logistics federation said yesterday. Economists polled by Reuters had expected the PMI to ease to 51.2 from November’s 51.4. The 50-point mark separates an expansion in activity from a contraction. Many economists have said China’s economy was likely to show weaker momentum in the final three months of 2013 after a rebound between July and September, due to slowing credit growth and a falloff in restocking demand. “Both domestic and overseas demand was weaker than expected. Domestically, tight liquidity is weighing on factory output and orders,” said Li Heng, an economist at Minsheng Securities Co Ltd in Beijing. “The economy is under some under downward pressures but the slowdown remains modest. We still need to observe on the trend next year. We think Q4 GDP growth should be 7.7 pct and the same for Q1 2014,” he said, adding that he saw economic growth for 2014 at about 7.5 percent. The government has said industrial output may have grown 9.8 percent in 2013, and economic growth could come in at 7.6 percent, just above the official target of 7.5 percent and slightly below the 7.7 percent pace in 2012.

Stable growth Sources at top government think tanks told Reuters this week that the government would likely set a 7.5

Xi vows reform in New Year address

i Jinping, delivering his first New Year’s address as China’s president, said the country must press ahead with reforms in 2014 to improve livelihoods and make the country “rich and strong”. China enters 2014 facing slowing economic growth, rising environmental concerns and higher tensions with Japan over a territorial dispute that has damaged a US$366 billion trade relationship. Tackling those challenges will be up to Mr Xi, who as head of the Communist Party, military and state has amassed the greatest individual sway over his nation since former paramount leader Deng Xiaoping. “In 2014 we will make new strides along the path of reform,” Mr Xi said in a speech broadcast on state radio on Tuesday.

“I firmly believe that new glories will be awaiting the Chinese people.” In his new year address, Xi said a key task will be overseeing the broadest economic reforms since the 1990s which were spelled out at the Communist Party Central Committee’s Third Plenum in November. Shifts include loosening the onechild policy, increasing property rights for farmers and encouraging private investment in more industries. China’s equities slumped last year amid concern economic growth will slow without structural reforms such as revamping the nation’s state-owned enterprises. The Shanghai Composite Index fell 6.8 percent in 2013, capping a third year of declines out of four and the worst-performing market in Asia. Bloomberg News

Manufacturing index slipped to a four-month low in December

percent growth target for this year. “The Chinese leadership has made it clear that they want stable growth this year – neither a sharp fall nor a quick rebound,” said Zhu Haibin, Hong Kong-based chief China economist at JPMorgan Chase & Co. “The central bank will remain neutral in its policy operations.” The PMI survey showed new export orders contracted in December for the first time since July, with the sub-index at 49.8 from November’s 50.6, pointing to weakness in overseas demand. Manufacturing employment contracted further in December, with the sub-index falling to 48.7 from November’s 49.6. “The decline in the December PMI points to some slowdown in economic growth, said Zhang Liqun, an economist at the Development Research Centre, which helps compile the PMI. “Industrial output growth is likely to slow in the future and export growth could also ease, showing the

KEY POINTS Official Purchasing Managers’ Index at 51 in Dec Economy showing weaker momentum in Q4 Growth ‘under downward pressures’ – analyst

economy still faces some downward pressure,” he said. The official PMI broadly mirrors a preliminary PMI survey released in mid-December by HSBC Holdings Plc and Markit Economics, which showed factory sector activity grew at the slowest pace in three months due to subdued output. Reuters

NDRC pledges to rein in local debt Local government debt surged by 70 percent

he mainland’s top planning agency pledged to curb local government debt while the central bank said it will keep monetary policy stable in 2014 as it pushes financial reforms. The promises come as China’s policymakers are looking to put the economy on a more sustainable footing. The National Development and Reform Commission (NDRC) said it would curb the “disorderly expansion” of local debt, remarks that came after the National Audit Office said local governments had run up total debt of 17.9 trillion yuan (US$2.95 trillion) as at the end of June. Leaders are looking for steady growth in the economy as they push through one of the country’s most ambitious

reform agendas, aiming to transform the economy into one driven by consumers rather than the traditional investment and exports. But policymakers faces a series of challenges, including weak demand for China’s goods overseas, over-capacity in industries at home and structural problems as well as the rise of debt at all levels of government. The NDRC said that, overall, debt levels were under control, but it would take measures to keep debt down, including allowing local government financial companies to issue bonds to replace some existing short-term debt that has high interest rates, and encouraging private capital into infrastructure projects. It will also step up spot checks on local government

financing vehicles. In a New Year message on the bank’s website, People’s Bank of China governor Zhou Xiaochuan said monetary policy would be more pre-emptive and coordinated next year. “We will vigorously promote financial reform, accelerate financial innovation to maintain financial stability, improve financial services and management to support the economic development and adjust the economic structure,” Mr Zhou said. His comments supplement earlier ones from the bank after its fourth-quarter monetary policy committee meeting that China will achieve reasonable growth in credit and social financing while keeping appropriate liquidity to support growth. Reuters

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Greater China

Regulators in uphill battle to boost blue chips Dominance of retail investors creates culture of speculation Lu Jianxin and Gabriel Wildau

New rules in place ‘Backdoor’ listings - Companies that buy listed shell companies must meet the same requirements as firms applying for initial public offerings - Purchases of shells on the ChiNext market, China’s Nasdaq-style start-up board, is banned due to the high risk of investment in small start-up companies

Cash dividend guidelines - At mature listed firm with no major shortterm cash needs, cash dividends should account for at least 80 percent of profit distribution - At mature listed firm with major short-term cash needs, cash dividends should account for at least 40 percent of profit distribution. - A growing listed firm with short-term major cash demand, cash dividends should account for at least 20 percent of profit distribution

Preferred shares - Preferred shares will offer companies a new fundraising channel. The number of preferred shares issued by a listed firm must not exceed 50 percent of the number of its ordinary shares Stocks unattractive compared with other investments

hina has adopted a slew of policies aimed at boosting its long-suffering blue-chip stocks, mired at depressed valuations, but analysts say it will take years to change an investment culture focused on speculation in small caps. Since late November, regulators have unveiled a series of measures aimed at raising the overall quality of listed firms and making blue chips more attractive. The measures include banning “backdoor” listings via the purchase of listed shell firms on the smallcap board; encouraging richer cash dividend payouts; raising penalties for initial public offering (IPO) applicants who exaggerate earnings forecasts; and setting limits on firstday price rises for new shares. But the dominant role of retail investors in China’s equity market, among other factors, will prevent a quick change in an investment culture that focuses on small caps, analysts say. Though many small cap shares have performed poorly for years, trade thrives on rumours of pending restructurings or bailouts, most of which never actually occur. Official data shows that 81 percent of China’s stock market turnover came from retail investors in 2012, an indication that years of regulatory efforts to increase participation of institutional investors have largely failed, analysts say. Low dividends are another problem. In theory, China’s GDP growth rate of 7 percent to 8 percent

should equal the long-term average return on assets across the economy. In this context, typical dividend yields of 3 percent to 4 percent for blue-chip Chinese stocks don’t look attractive. These factors help account for the unusually wide gap in valuations between large and small cap stocks in China. The average price/earnings (PE) ratio for the Shanghai Stock Exchange, which hosts the bulk of China’s blue chips, stands at only 11 times of 2012 historical earnings, while those for Shenzhen, dominated by small caps, at 28 times. By comparison, the average PE ratio for firms on the New York Stock Exchange is 13, compared with 21 for NASDAQ, according to Thomson Reuters Eikon. “There are still lots of factors to push investors to pursue quick profits in small caps,” said Guo Yanling, a senior analyst at Shanghai Securities. “You cannot expect this immature market, with a history of 20-plus years, to grow up to maturity overnight.”

Opposite direction While many of the new rules push investors towards blue chips, others may have the opposite effect. In particular, the resumption of IPOs which regulators suspended last October to support the sagging market, could hurt demand for them. Since the establishment of China’s stock market in 1990, IPOs have been suspended eight times as a way to support prices of existing shares.

- Listed banks are especially encouraged to issue preferred shares, since they need to raise capital to meet new capital adequacy requirements under Basel III

This time around, IPOs are expected to resume this month, and the market demand is likely to be strong, at least at first. “The market is very thirsty for new listings after a vacuum of over a year,” said a trader at a major Chinese brokerage in Shanghai. “Everyone is eager to seek opportunities from new listings. Such sentiment means no loss of enthusiasm.” In July 2009, when IPOs resumed after a 10-month hiatus, Sichuan Expressway’s shares more than quadrupled from their issue price in the first day of trading when they debuted in Shanghai. Similar examples abound. To prevent such a craze, the Shanghai and Shenzhen stock exchanges issued rules last month to cap first-day price rises for newlylisted shares at 44 percent above their IPO prices. Tight liquidity conditions in China’s money markets may also discourage investors from shifting to blue chips. Tight money tends to depress asset prices across the board, but large-cap stocks often suffer most, since more funds are needed to support a price rise. “Unless there is a super bull run, which is unlikely, to attract money from other assets such as properties into equities, I doubt there will be enough money for investors to shift their focus to large-capitalised blue chips for now,” said Chen Huiqin, analyst at Huatai Securities in Nanjing. Reuters

IPOs - Pre-IPO shareholders are permitted to sell a portion of their existing shares at an IPO offering if they have already held the shares at least for 36 months - If the owner of a stake worth more than 5 percent of a listed company wants to reduce his stake, he must disclose his intention three days in advance - Controlling shareholders and senior managers of listed firms who sell their holdings within two years after the lock-up period expires may not sell at a price lower than the IPO price - Any firm whose share price trades below its IPO price for 20 consecutive days within six months of its debut will have its share lock-up period automatically extended by six months

New listings - First-day rises for newly-listed shares on the Shanghai and Shenzhen stock exchanges will be capped at 44 percent above the IPO prices starting Jan 1, 2014 - Both exchanges will adopt a system in which the shares will be temporarily suspended if they rise 10 percent and again at 20 percent from their opening prices - The Shanghai bourse will also monitor accounts trading new shares and identify those engaged in unusual trading as “unqualified investors”

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January 2014 April 19,2,2013

Asia

Analysts bullish on Asian currencies Deutsche Bank sees comeback as Pimco positive Jeanette Rodrigues

aiwan’s dollar and the Indonesian rupiah are forecast to lead a recovery in Asian currencies this year as attention shifts to the region’s growth potential and away from the reduction in U.S. monetary stimulus. The Taiwanese currency will climb 2.6 percent by end-2014, while the rupiah will start reversing last year’s 20 percent loss by rising 1.7 percent, Bloomberg surveys of at least 18 analysts show. South Korea’s won is seen up 1.8 percent, China’s yuan 1.4 percent and the Thai baht 1 percent. The forecasts point to a rebound from the Bloomberg-JPMorgan Asia Dollar Index’s 2.2 percent drop last year, its biggest since 2008. Taiwan’s potential export gains from a global economic pickup and Indonesia’s yield advantage over most of Asia are adding to the appeal of their currencies as Deutsche Bank AG, the world’s biggest foreign-exchange trader, says the region offers the best growth prospects in 2014. The U.S. Federal Reserve’s decision last month to start cutting its monthly bond buying has mostly been priced into Asian exchange rates, setting the stage for advances, Societe Generale SA said. “We haven’t seen any toxic reaction to the Fed statement, there’s been no bloodbath,” Benoit Anne, the Londonbased head of emerging-market strategy at SocGen, said in a phone interview. “When investors come back to work in January, they’re going to realise there’s a huge window of opportunity to go long emerging-market assets.”

Pimco’s optimism Pacific Investment Management Co, the world’s largest manager of bond funds, and Deutsche Bank say Asia will receive a boost from a recovery in developed markets next year. The region’s emerging economies will grow 6.5 percent in 2014, outpacing the 5.1 percent expansion of developing nations around the world and 2 percent for advanced countries, the Washingtonbased International Monetary Fund forecast in October. Asian currencies will hand investors a 2 percent return in 2014, while counterparts in the Europe, Middle East and Africa region will gain 4.5 percent and Latin America’s will lose 1 percent, Deutsche Bank predicts. “Emerging markets are maturing,” Deutsche Bank analysts including New York-based Drausio Giacomelli, wrote in a December 19 report. For growth, “Asia remains best placed”. The Taiwanese dollar will strengthen to NT$29.3 by the end of this year, according to the median of 18 analyst estimates compiled by Bloomberg, after reaching a four-month low of NT$30.06 last month. The currency has lost 3.4 percent last year, its biggest decline since it fell 5.7 percent in 2001.

Indonesian rupiah The rupiah, last year’s worst performer among 12 Asian peers tracked by Bloomberg, will climb to 12,000 per dollar by the end of 2014, from 12,200, a separate survey predicts. The currency tumbled to a five-year low of 12,260 on December 23. China’s yuan and the South Korean won will probably perform better than peers in coming months,

Indonesian rupiah to lead recovery in Asian currencies

while the outlook for Malaysia’s ringgit is improving, according to Manik Narain, an emerging-market strategist at UBS AG. Concerns remain about India’s rupee, which fell to a record low of 68.845 per dollar in August, and the rupiah, he said. The rupee will end this year at 62 per dollar, from 61.99 in December, according to another poll. With the exception of China and South Korea, “we are not forecasting foreign-exchange appreciation in Asia,” London-based Mr Narain said in a phone interview. “We are particularly worried about India and Indonesia still.” India and Indonesia will be the only nations among Asia’s 10 biggest economies to run current-account deficits in 2014, Deutsche Bank estimated in report dated December 19.

Volatility falls Options are also signalling improved confidence in Asian currencies. Onemonth implied volatility, a gauge of expected moves in the exchange rate that’s used to price these contracts, fell

in the past six months for all except one of the region’s 11 most-used currencies, data compiled by Bloomberg show. The measure increased for the rupiah. Volatility had surged after Fed Chairman Ben Bernanke first signalled a reduction in the U.S. central bank’s stimulus programme in May. The Asia Dollar Index, which lost 3.5 percent in the four months through August, has rebounded 0.9 percent since as markets adjusted to the imminent removal of U.S. bond buying. After a year when strategy was dominated by expectations for when the Fed would taper stimulus, 2014 will focus on Asian governments’ economic reforms, according to UBS. China’s leaders pledged in November to accelerate interest-rate and foreignexchange reforms and to allow market forces a “decisive” role in the allocation of resources. India allowed foreign investors to buy more rupee debt last year and stepped up efforts to rein in its record current-account deficit. China’s yuan will add to its 2.7 percent gain last year by climbing to 5.99 per dollar by the end of 2014, from 6.0746 today, strategists surveyed

KEY POINTS Confidence in Asian currencies improving Asia offering the best growth prospects – Deutsche Emerging economies to grow 6.5 pct in 2014 – IMF India, Indonesia still a concern – analyst

by Bloomberg predict. The currency reached a 20-year high of 6.0702 on December 23. “The theme for 2014 is looking more at internal fundamentals and commitment to reforming,” UBS’s Mr Narain said. Bloomberg News

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January 2, 2014 April 19, 2013

Asia

S.Korea exports pick up but weak yen a Policymakers see continued recovery this year

Parliament belatedly ratifies govt budget South Korean lawmakers ratified early yesterday the government’s 2014 spending bill of 355.8 trillion won (US$337.14 billion), narrowly avoiding a budget crisis and the risk of undercutting the economy’s nascent recovery. Ratification of the spending bill, representing a 2 percent increase from 2013 and a slightly reduced version of the government’s 357.7 trillion won proposal, was delayed until New Year’s Day for the second consecutive year as the ruling Saenuri Party and the main opposition Democratic Party were locked in a bitter conflict over issues such as the reformation of the country’s national intelligence agency. Separately, lawmakers also voted to raise the minimum corporate income tax rate for companies with income exceeding 100 billion won to 17 percent from 16 percent previously to boost government income. The top personal income tax bracket was lowered to include those who earn more than 150 million won from more than 300 million won previously.

outh Korean exports grew by an annual 7.1 percent in December, beating forecasts and pointing to Asia’s fourth-largest economy sustaining momentum into the new year, though there are increasing concerns about the impact of a weak Japanese yen. Several of South Korea’s big industries – automobiles, ships and steel – compete fiercely with Japanese rivals, and authorities are worried that the Korean won’s rise to a fiveyear high against the yen will hurt their competitiveness. Shipments from South Korea, the world’s seventh-largest exporter, were US$48.1 billion last month, while imports grew an annual 3.0 percent to US$44.4 billion. That led to a trade surplus of US$3.7 billion, data from the Trade, Industry and Energy Ministry showed yesterday. Export growth was slightly stronger than the median forecast of 6.4 percent in a Reuters poll, and well above the 0.2 percent recorded in November. The data is another sign of economic momentum that should be maintained into 2014. The Bank of Korea expects quarterly economic growth of at least 0.8 percent in the fourth quarter, in seasonally adjusted terms, following growth of 1.1 percent in the two prior quarters. For the full year, exports grew 2.2 percent while imports shrank by 0.8 percent, resulting in a trade surplus

Shipments to U.S., China up sharply

of US$44.2 billion. The finance ministry expects exports to grow by 6.4 percent in 2014, benefiting from a gradual global recovery.

Yen weakness State-owned Export-Import Bank of Korea has said it expects exports in the first quarter to grow by about 10

percent from a year earlier because of better external conditions. That would be double the growth of 4.8 percent in the final quarter of 2013, which was best growth in two years, Reuters calculations show. Indeed, exports to the U.S. rose by an annual 13.2 percent in December, while exports to China rose by 8.4 percent. Shipments to the European

Malaysia to cut public spending Government to cut entertainment spending as budget curbs widen

alaysia will reduce the entertainment budgets of ministers and freeze applications to renovate government offices as Prime Minister Najib Razak widens efforts to cut public spending. Eleven measures to curb government expenditure came into force yesterday. Some civil servants will be asked to travel on economy class on domestic flights, while electricity utility costs at all government offices will be reduced by 5 percent, it said. “Markets will perceive this quite positively,” Vishnu Varathan, a Singapore-based senior economist at Mizuho Bank Ltd, said by phone. “It’s going to be construed as positive for fiscal consolidation.” Having earlier wooed voters with cash handouts for the poor and civil service pay increases, the prime minister is adjusting his focus to improve state finances and avert a credit-rating downgrade. After being re-elected in May, he has raised fuel prices, scrapped sugar subsidies and unveiled plans for a consumption tax

US$12.8 bln

The government will spend this year in subsidies in 2015. Electricity prices went up yesterday, while property rates are being increased in Kuala Lumpur. Officials will come up with new ideas to ease cost of living pressures, Mr Najib said in his New Year’s message. The government will still spend 42 billion ringgit (US$12.8 billion) this year subsidising essential items, almost as much as it has budgeted for development, he said. “We must accept that we have to

Najib Razak cuts subsidies in effort to plug Malaysia deficit

make changes to keep our finances in order,” said the prime minister. “People will say too many costs are rising, and populist measures will seem attractive. But the government has to take action now.”

Ratings risk Fitch Ratings cut its Malaysia outlook to negative in July, citing concern over deteriorating public

finances. Malaysia’s fiscal deficit will shrink to 3.5 percent of gross domestic product in 2014 from 4 percent in 2013, meeting targets set previously, the finance ministry said in October. The latest measures to cut spending include reducing entertainment allowances of ministers and deputy ministers by 10 percent and that of certain senior officials by 5 percent to 10 percent, the official Bernama news service reported. The government will scale back on using event-management companies, while decreasing the awarding of souvenirs and the amount of food and drinks at some government events, the official news service reported. It didn’t specify how much money these measures are expected to save. Mr Najib’s cutbacks come after former Prime Minister Mahathir Mohamad last week called on the government to review its own spending to ease the public burden of increased taxes and prices. 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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January 2014 April 19,2,2013

Asia

concern

Singapore economy rebounds in 2013 Prime minister sees need for foreign workers

Union rose 2.0 percent. However, Seoul is concerned about the impact on its exporters of the depreciation of the yen as Tokyo uses massive fiscal and monetary stimulus to try to escape deflation. This week, bid rates for the yen fell to a five-low under 10 won, and it has weakened by nearly 30 percent against the South Korean currency over the past 15 months. The deputy finance minister expressed concern about the yen’s rapid decline, and the trade ministry yesterday warned that the weak yen poses a threat to exports. Policymakers have said they will consider countermeasures, though they have declined to elaborate. Currency dealers suspect authorities could buy dollars to indirectly keep the won from rising further against the yen. Reuters

ingapore’s economy grew by 3.7 percent in 2013, Prime Minister Lee Hsien Loong said as he stressed the need for a balanced approach on foreign workers, whose presence has underpinned growth but riles some citizens. “Our economy has done well. It grew by 3.7 percent in 2013 – better than initially expected,” Mr Lee said. The 3.7 percent growth for 2013 cited by the prime minister is in line with the official forecast of 3.5 percent to 4.0 percent growth announced in November. In 2012, Singapore’s economy grew by 1.3 percent. Singapore’s manufacturing sector has lagged the rest of the region in the last few years, as its economy becomes increasingly reliant on areas such as trade and financial services as well as tourism and property development. The government will release advance estimates for the fourth quarter today. Singapore attracts international companies with its reliable legal system, skilled, English-speaking workforce and high living standards. Its low tax rates and generous tax incentive programmes are one of the biggest draws and have been a key driver behind the island’s economic success. Singapore’s economy also benefits from low-paid foreign workers, many from South Asia. But a riot on December 8 by foreign workers angry about a traffic accident forced Singapore to confront a stubborn, vexing question: how to treat low-paid foreign workers who underpin the economy but whose presence increasingly galls its citizens. “Whether we bring in more immigrants and foreign workers or fewer, whether we aim for higher growth or lower, there are no easy choices for Singapore,” Mr Lee said. “We are taking a balanced approach, reducing but not cutting off the inflow of foreign workers.”

He said Singapore would continue to treat foreign workers fairly but it expected them to obey the law and social norms. “The riot in Little India was inexcusable. We have taken firm action against the culprits,” Mr Lee said, referring to the melee in the city’s Little India neighbourhood. It was Singapore’s first major riot in four decades. “The riot reminds us that we can never take good order, peace and stability for granted,” Mr Lee said. Mr Lee’s dominant People’s Action Party (PAP), which has ruled Singapore for more than half a century, is facing discontent over the high cost of living and the reliance on foreign workers on the island of nearly 5.4 million people.

Whether we bring in more immigrants and foreign workers or fewer, whether we aim for higher growth or lower, there are no easy choices for Singapore Lee Hsien Loong, Singapore’s Prime Minister

Reuters

Rajan won’t boost rate if inflation eases: adviser

The rupee declined 11 percent last year

eserve Bank of India governor Raghuram Rajan will avoid further increases to the benchmark interest rate if inflation fell in December, and may even have room for a reduction, according to a central bank adviser. “If inflation softens or doesn’t rise more, we won’t see a rise in rates,” Ashima Goyal, a member of the RBI’s technical advisory committee, which makes recommendations to Mr Rajan on monetary policy, said in a phone interview. “If inflation falls, we could see a cut,” she said, without specifying how much prices need to drop in that scenario. Mr Rajan surprised economists last month by holding the benchmark rate at 7.75 percent instead of adding to increases totalling 50 basis points since taking over the RBI in September. Consumer-price inflation climbed to 11.24 percent in November, the highest among 17 Asia-Pacific economies tracked by Bloomberg, even as growth holds near a decade low.

The rupee declined 11 percent last year, adding to price pressures as the cost of imports such as crude oil increased. The currency is expected to stay around current levels with volatility constrained after the RBI built up reserves, said Goyal, one of five external members on the sevenperson RBI committee advising on monetary policy. The S&P BSE Sensex index increased about 9 percent in 2013. The yield on the 10-year government bond rose to 8.82 percent yesterday from about 8 percent at the start of last year. Consumer-price inflation probably softened in December as prices of onions and other vegetables fell, Ms Goyal said. Gains in consumer prices may average 8 percent in 2014, she said. “The current inflation surge is likely to be a temporary peak,” Ms Goyal said. “If inflation comes down, the tightening cycle will definitely be over because production is very low.” Bloomberg News

14 14

January 2, 2014 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 69.9 69.7 69.5 69.3

Max 69.90

average 69.336

Min 69.10

Last 69.55

69.1

Max 101.4

average 101.136

Min 100.9

Last 101.4

63.6 63.4 63.2

Min 62.6

Last 63.6

62.6

PRICE

Max 26.1

average 25.895

DAY %

YTD %

(H) 52W

99.2

-0.090643569

6.643732531

106.2200012

BRENT CRUDE FUTR Feb14

111.24

0.026975991

6.879323597

112.7999954

GASOLINE RBOB FUT Jan14

279.14

0.132725903

10.09702611

287.259984

243.1999922

942

-0.291082297

4.870581687

960.75

840

4.416

-0.248475265

9.144834404

4.770000458

3.476000071

GAS OIL FUT (ICE) Feb14 NATURAL GAS FUTR Feb14 NY Harb ULSD Fut Jan14 Gold Spot $/Oz

85.56999969

307.84

0.03899649

3.263895877

320.0099945

278.0799866

1200.52

-0.2716

-27.8733

1696.2

1180.57

19.477

-1.2067

-35.3138

32.46

18.2208

Platinum Spot $/Oz

1362.14

-0.0668

-10.2527

1742.8

1294.18

Palladium Spot $/Oz

712.45

0.4583

1.828

786.5

629.75

1822

0.662983425

-12.10805596

2184

1736.25

Silver Spot $/Oz

LME ALUMINUM 3MO ($) LME COPPER 3MO ($)

7375

-0.094825251

-7.010465263

8346

6602

LME ZINC

2086

-0.143609382

0.288461538

2230

1811.75

14125

-0.528169014

-17.20398593

18770

13205

15.31

0.065359477

#N/A N/A

16.77000046

15.12000084

423.25

-0.059031877

-30.55783429

614

418.5

602

0.24979184

-27.62248272

845

599.5

3MO ($)

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

WHEAT FUTURE(CBT) Mar14 SOYBEAN FUTURE Mar14

1308.25

-0.038204394

-0.494390569

1377.75

1174

COFFEE 'C' FUTURE Mar14

114.7

-1.418134938

-28.46897412

172.25

104.1499939

SUGAR #11 (WORLD) Mar14

16.34

-0.244200244

-20.60252672

20.71999931

15.85999966

COTTON NO.2 FUTR Mar14

84.76

0.118119537

6.737186752

90.61000061

76.65000153

World Stock Markets - Indices NAME

Min 25.7

Last 25.9

(L) 52W

WTI CRUDE FUTURE Feb14

CORN FUTURE

33.0

101.1

32.9

101.0

32.8

100.9

Max 33.15

average 32.913

Min 32.70

Last 33.15

32.7

26.1

35.3

26.0

35.2 35.1

25.7

34.9 Max 35.25

average 35.159

Min 34.85

Last 35.20

34.8

Currency Exchange Rates

NAME

METALS

101.2

35.0

Commodities ENERGY

33.1

25.8

62.8 average 63.168

33.2

101.3

25.9

63.0

Max 63.6

101.4

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16504.29

0.157054

25.94714

16529.01

12883.89

NASDAQ COMPOSITE INDEX

4154.199

-0.05761929

37.57842

4175.363

2953.518

14.13169

6875.62

5873.43

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

0.8926 1.6513 0.8882 1.3793 104.95 7.9866 7.7537 6.0533 61.8675 32.8 1.2651 29.845 44.395 12160 93.647 1.2251 0.83529 8.3493 11.0157 144.75 1.03

0.552 0.1942 0.2815 0.2107 0.2287 0.01 0.009 0.147 0.0768 0.0762 0.2767 0.4021 0 0.4112 -0.3214 0.071 -0.0192 -0.2371 -0.1852 0.0207 0

-13.9911 2.0833 3.0624 4.5716 -17.9609 -0.0426 -0.04 2.929 -11.1084 -6.7683 -3.4543 -2.7207 -7.636 -19.4655 -4.6131 -1.4382 -2.3788 -1.5786 -4.4055 -21.5406 -0.0097

1.0599 1.6578 0.9839 1.3893 105.41 8.0111 7.7664 6.2492 68.845 32.96 1.2862 30.228 44.82 12281 105.433 1.265 0.88151 8.4957 11.0434 145.69 1.032

0.8821 1.4814 0.88 1.2746 86.07 7.9818 7.7492 6.0492 52.89 28.56 1.2195 28.913 40.54 9603 86.41 1.2064 0.80817 7.8281 10.195 113.5 1.0289

Macau Related Stocks NAME

PRICE

ARISTOCRAT LEISU CROWN RESORTS LT

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.69

1.077586

48.88888

5.12

3.11

897749

16.85

-0.472534

57.9194

17.38

10.49

502507

AMAX INTERNATION

1.72

-1.149425

22.85714

2.12

0.75

3727500

BOC HONG KONG HO

24.85

0.2016129

3.112032

22.85

2001406 1592000

CENTURY LEGEND

0.43

1.176471

62.26416

0.68

0.26

CHEUK NANG HLDGS

7.05

-0.4237288

17.69616

7.28

147052

CHINA OVERSEAS

21.8

0.9259259

-5.627707

25.6

17.7

10811990

CHINESE ESTATES

24.1

114.307

24.5

10.334

CHOW TAI FOOK JE

11.56

1.403509

-7.073952

13.4

7.44

1830000

EMPEROR ENTERTAI

2.040816

111.6402

4.66

1.85

460000

4.69

1.735358

286.9554

4.8

1.182

4950000

GALAXY ENTERTAIN

69.55

0.8701958

129.1598

70.4

6227533

HANG SENG BK

125.7

0.1593625

5.897223

132.8

110.6

314405

FUTURE BRIGHT

FTSE 100 INDEX

6731.27

-0.2903329

DAX INDEX

9552.16

-0.3882416

25.48175

9594.35

7418.36

HOPEWELL HLDGS

26.25

0.9615385

-21.05263

35.3

23.2

360665

NIKKEI 225

16291.31

0.6945449

56.71984

16320.22

10374.85

HSBC HLDGS PLC

84.15

3.505531

90.7

77.85

3480895

HANG SENG INDEX

23306.39

0.2646605

2.866544

24111.55078

19426.35938

HUTCHISON TELE H

2.94

-1.672241

-17.41573

4.66

2.5

5679904

CSI 300 INDEX

2330.026

1.329357

-7.646837

2791.303

2023.171

LUK FOOK HLDGS I

29.5

1.37457

20.90164

31.5

16.88

993816

MELCO INTL DEVEL

28.5

0.5291005

216.3152

29.15

8.9

688000

TAIWAN TAIEX INDEX

8611.51

-0.1382281

11.84505

8647.24

7603.27

MGM CHINA HOLDIN

33.1

1.846154

149.2793

33.3

13.146

1691570

KOSPI INDEX

2011.34

0.4524842

0.7155513

2063.28

1770.53

MIDLAND HOLDINGS

3.73

2.191781

0.8108095

4.29

2.68

3366000

NEPTUNE GROUP

0.34

7.936508

123.6842

0.4

0.131

355754500

NEW WORLD DEV

9.79

0.1022495

-18.55242

15.12

9.67

4494305

SANDS CHINA LTD

63.35

1.198083

86.59793

65.9

33.5

5010874

S&P/ASX 200 INDEX

5352.2

-0.08585351

15.12707

5457.3

4632.3

JAKARTA COMPOSITE INDEX

4274.177

1.452582

-0.9847889

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1863.98

-0.4560699

10.36325

1872.52

1597

SHUN HO RESOURCE

1.65

17.85714

1.92

1.33

NZX ALL INDEX

998.895

-0.6074627

13.2466

1048.998

880.669

SHUN TAK HOLDING

4.56

-0.4366812

8.830547

4.8

3.27

1076000

PHILIPPINES ALL SHARE IX

3614.32

0.32727

-2.288737

4571.4

3440.12

SJM HOLDINGS LTD

Euromoney Dragon 300 Index Sin

606.52

0.01

-2.35

STOCK EXCH OF THAI INDEX

1298.71

-0.7451508

-6.697182

1649.77

1260.08

HO CHI MINH STOCK INDEX

505.17

0.9633257

22.10137

533.15

408.32

Laos Composite Index

1253.33

-0.7341993

3.174258

1455.82

1214.77

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

1.960784

46.4982

17.04

3959133

8.86

-0.2252252

-37.07386

14.46

7.38

2104100

WYNN MACAU LTD

35.15

0.8608321

67.78042

36.9

974588

ASIA ENTERTAINME

N/A

BALLY TECHNOLOGI

77.48

0.3887017

73.29457

78.5999

43.6

173660 4800

SMARTONE TELECOM

BOC HONG KONG HO

3.22

4.885996

3.6

2.99

GALAXY ENTERTAIN

8.98

1.58371

126.1965

9.15

3.89

550

INTL GAME TECH

17.9

1.359003

26.32322

21.2

13.5801

2505256

JONES LANG LASAL

102.8

0.4789366

22.46843

103.09

80.86

138758

LAS VEGAS SANDS

78.59

0.4473415

70.25563

79.25

44.45

2824304

MELCO CROWN-ADR

38.85

-0.205497

130.7007

39.42

16.15

1820701

MGM CHINA HOLDIN

4.23

3.676471

141.6741

4.23

1.7651

650

MGM RESORTS INTE

23.38

0.9935205

100.8591

23.5

11.32

4937829

SHFL ENTERTAINME

23.19

#N/A N/A

59.93103

23.25

13.88

344231

SJM HOLDINGS LTD

3.31

2.47678

45.32739

3.6

2.2

4000

193.29

1.066667

74.98355

194.385

107.165

1950055

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

15433022

CITIC PACIFIC

10.12

0.1980198

6468988

BANK OF CHINA-H

3.15

1.286174

329406866

BANK OF COMMUN-H

5.87

0.8591065

37793438

0.1727116

14.5

BANK EAST ASIA BELLE INTERNATIO

NAME

CLP HLDGS LTD

NAME

PRICE

DAY %

64.4

0.625

2568679

SANDS CHINA LTD

28.75

-0.1736111

6213954

SINO LAND CO

14.28

0.990099

7686664

SUN HUNG KAI PRO

109.1

1.018519

8616634

-0.4815409

2456828

265.6

1.45149

2048509

23.9

2206357

0.8064516

5926157

52.75

1.05364

3208615

POWER ASSETS HOL

65.6

1561243

CNOOC LTD

16.32

0.4926108

46287676

1260442

COSCO PAC LTD

11.76

3138217

SWIRE PACIFIC-A

7192500

ESPRIT HLDGS

12.44

-0.48

4211743

TENCENT HOLDINGS

0.2087683

10140777

HANG LUNG PROPER

26.55

-0.1879699

7812341

TINGYI HLDG CO

CATHAY PAC AIR

13.78

0.2911208

3140232

HANG SENG BK

119.7

0.167364

1690249

WANT WANT CHINA

CHEUNG KONG

114.9

1.23348

3918568

HENDERSON LAND D

2.059087

5880582

WHARF HLDG

75.55

0.1325381

701703

1.112235

6329376

125.6

3.54493

9625332

76.5 -0.06531679

9291476

BOC HONG KONG HO

CHINA COAL ENE-H

7.7

-0.1297017

40174849

CHINA CONST BA-H

5.87

1.206897

202072100

CHINA LIFE INS-H

22.9

0.4385965

30126882

CHINA MERCHANT

25.6

0.3921569

4209584

CHINA MOBILE

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

85.45

1.064459

16569813

HUTCHISON WHAMPO

CHINA OVERSEAS

20.2

-0.2469136

19374736

IND & COMM BK-H

CHINA PETROLEU-H

8.36

0.9661836

101198904

CHINA RES ENTERP

25.2

0.8

77.35

1.243455

6697663

5.17

1.372549

317570965

LI & FUNG LTD

12.84

-0.9259259

17517410

4219717

MTR CORP

29.85

1.530612

4880670

MOVERS

VOLUME

9 23354

INDEX 23306.39 HIGH

23353.54

LOW

23138.91

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

23138

27-December

31-December

15 15

January 2014 April 19,2,2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The Star Guocoland Bhd sees the rising cost of development a growing challenge that is facing many developers in Malaysia’s property sector. “The external market factors and Bank Negara’s stringent lending guidelines aside, the biggest factor will be the current rising cost of development,” said managing director Tan Lee Koon. “The trends and the chain effect of the recently announced electricity tariff hike [effective yesterday] are likely to cause another round of increase in the cost of construction materials”.

The age of sustainable development

Jeffrey D. Sachs

Professor of Sustainable Development, professor of Health Policy and Management, and director of the Earth Institute at Columbia University

Korea Herald North Korea has demanded that South Korean firms operating in a jointly run factory park pay taxes to Pyongyang, an official said, in an apparent breach of a September deal. The North said in a notice that the firms in Kaesong should pay taxes incurred between January 1 and April 8. Seoul said the North’s demand did not make any sense, and it was in talks with North Korea over the issue. The move comes three months after North Korea agreed not to collect taxes from the South Korean firms for 2013 to make up for their losses following its unilateral closure of the factory park on April 9.

Inquirer Business It is “extremely unlikely” for the Philippine Bureau of Customs to meet its 2013 revenue collection target of 340 billion pesos (US$7.7 billion), according to Customs Commissioner John Phillip Sevilla. “It’s impossible… We’re not going to meet our 2013 target,” said the former finance undersecretary for privatisation. January to November collections totalled only 280.74 billion pesos, which is 31.26 billion pesos short of the Department of Financeattached agency’s revenue goal for the 11-month period. Mr Sevilla also said he was “not satisfied” with the bureau’s collections for December.

Taipei Times The TAIEX is likely to climb higher ahead of the Lunar New Year holiday this month on the back of an improving global economy and regulatory easing at home, analysts said. The index advanced 1.5 percent last week to close at 8,535.04 on December 27, the highest close since August 2, 2011, when the index reached 8,545.72 points. Average daily turnover was modest at NT$74.99 billion (US$2.49 billion) last week. “The local bourse has mostly priced in the U.S. move to taper off its quantitative easing [QE] and focused instead on better economic data in developed nations,” said Doris Lee, a fund manager at Taishin Securities Investment Trust Co.

half-century ago, John F. Kennedy observed that, “man holds in his mortal hands the power to abolish all forms of human poverty and all forms of human life.” Those words speak to us today with special urgency. Our generation can indeed end the ancient scourge of extreme poverty. Yet it can also destroy the earth’s life-support system through human-induced environmental devastation. By necessity, then, we have entered The Age of Sustainable Development. So I am enormously excited to be launching a free, global, online university course by the same name in January 2014. (Those interested in joining the course can register here.) I hope that people all over the world will join the course – and then join the generation-long quest to achieve sustainable development. Sustainable development is both a way of understanding the world and a way to help save it. As a method of understanding the world, sustainabledevelopment practitioners study the interactions of the economy, the environment, politics, and culture and how they influence prosperity, social inclusion, and environmental sustainability. Students of sustainable development must therefore learn about a wide range of subjects, including economic development, education, health care, climate change, energy systems, biodiversity, and urbanisation, among others. As a method of helping to save the world, sustainable development encourages a holistic approach to human well-being, one that includes economic progress, strong social bonds, and environmental sustainability. The challenges are becoming more urgent as the large and rapidly growing world economy causes massive environmental

destruction, and as new technologies demand new skills. Young people without the appropriate training and skills are likely to find few opportunities for decent jobs and incomes.

Important changes I predict that sustainable development will become the organising principle for our politics, economics, and even ethics in the years ahead. Indeed, the world’s governments have agreed to place it at the very centre of the world’s post-2015 development agenda. They will soon adopt Sustainable Development Goals (SDGs), which will help guide the world to a safer and fairer twenty-first-century trajectory. Just as the Millennium Development Goals, adopted in 2000, have proved highly effective in the fight against poverty and disease, the SDGs (which will succeed the MDGs in two years) promise to address the global challenges that we face in areas including energy, food, water, climate, and jobs. I also believe that global, free, online teaching about sustainable development can

help to propel global solutions. Online global courses are part of the world’s ongoing information revolution – a revolution that is now fundamentally reshaping higher education, most importantly by creating new avenues of access for more people around the world. I know this from personal experience. For most of my years as a professor, the basic educational technologies did not change much. I stood in front of a class and gave a 57-minute lecture. Yes, the blackboard gave way to an overhead projector, and then to PowerPoint, but otherwise the basic classroom “technology” changed little. Yet, with the new information technologies, higher education (and of course education at other levels) is suddenly changing. Courses can now incorporate a lot more information – data, videos, and even live chats with experts halfway around the world. More and more people worldwide can access free, high-quality educational materials that previously were available only to a lucky few. This is especially important today, because the challenges of sustainable development will require knowledgeable and educated citizens everywhere.

Online boost

Sustainable development is both a way of understanding the world and a way to help save it

According to recent data, online university courses have already reached students in more than 190 countries, enabling them to watch lectures, take quizzes, and interact with fellow students and professors. Online education is transforming the classroom experience as well. Now, rather than watch me lecture for 57 minutes, my students at Columbia University can watch the online lectures ahead of time, permitting a much richer, in-depth discussion

in the classroom. In the years ahead, I believe that all of us will have to become leaders in sustainable development in our homes, communities, and countries. Millions of young people will soon have to help solve problems of climate change, water, energy, transportation, and education. Thousands of cities and 200 countries around the world will need to rally all stakeholders – government, communities, experts, business, and non-governmental organizations – to play their roles, and open online education will be key to disseminating the information they need. For these reasons, I am also pleased that my course will be part of a more general education programme of the Sustainable Development Solutions Network, an initiative under the auspices of UN Secretary-General Ban Ki-moon. The SDSN mobilises scientific and technical expertise from academia, civil society, and the private sector in support of sustainable-development problem solving at local, national, and global scales. One of the SDSN’s key objectives is to reach students all over the world by developing and disseminating online materials for sustainabledevelopment curricula. More than a dozen institutions have already committed to incorporating The Age of Sustainable Development into their own classes, tailored for their own local circumstances and issues. The SDSN will encourage the world’s universities to participate in the new era of global online teaching. The goal will be to equip today’s young people to use wisely the power that will soon pass into their own hands to help address the world’s great challenges. © Project Syndicate

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January 2, 2014 April 19, 2013

Closing Chui Sai On eyes long-term planning

Police probes officer caught gambling

The Macau government wants to draft long-term plans this year, namely for healthcare, housing and transportation, Chief Executive Fernando Chui Sai On said in his New Year address. “We are committed to drafting long-term plans in several areas,” Mr Chui said, highlighting also social security, education and environmental protection. The goal is to increase the population’s quality of life, he added. His remarks come after Legislative Assembly members called for a blueprint for Macau’s public housing policy. Meanwhile the city’s second public hospital and the Light Rapid Transit railway have been hit by delays.

The Public Security Police “has started internal disciplinary procedures” against an officer suspected of gambling in a Cotai casino last year. The police force said in a statement yesterday they would handle the case “in accordance with the law” regardless of the officer’s rank. The Chinese-language Hong Kong newspaper Oriental Daily reported yesterday that deputy superintendent António Manuel Oliveira Alves gambled in a VIP room in June last year. The city’s law only allows civil servants, including police officers, to gamble in casinos in the first three days of Chinese New Year, the police said.

HK regulator readies for fake banknote rush More people arrested after trying to deposit counterfeit banknotes Vítor Quintã

vitorquinta@macaubusinessdaily.com

ong Kong’s banking regulator introduced more measures to stem counterfeiting after fake HK$1,000 (US$129) banknotes were found in the city and Macau in the past two weeks. The Hong Kong Monetary Authority has asked banks to provide employees with training on features of counterfeits and to ensure they have sufficient manpower for screening banknotes, according to a statement on the government’s website. The authority asked banks to ensure they have enough banknotes and enough staff to meet increasing demand for banknote exchange before the Lunar New Year, which starts on January 31. Hong Kong police have found 60 counterfeit HK$1,000 notes with the 2003 Bank of China Hong Kong Ltd and HSBC Holdings Plc designs since December 23, a press officer said by phone on Tuesday, declining to be identified, citing police policy. Macau authorities found

Macau authorities found 121 fake HK$1,000 notes as of December 28

Stocks end the year in record territory Yen, gold and government bonds 2013’s big losers

ajor stock markets ended 2013 at record highs as they benefit from record low interest rates in the United States and Europe and a benign outlook for inflation. The FTSE All World Index ended the year on a new high. It advanced 0.15 percent to 268.69, a record close. It is up nearly 20 percent for the year – its biggest annual advance since 2009. Government bond prices, meanwhile, dropped and yields rose as investors sought higher returns on riskier assets. Gold also suffered heavy losses, recording the biggest falls for three decades. The yen headed for the biggest

annual drop versus the dollar since 1979. This year’s rally in stocks has sent the S&P 500’s valuation up more than 20 percent to 17.4 times reported earnings, the highest since 2010. “I don’t think the market is overvalued, but will it continue this nice smooth ascent with almost no volatility?” Tobias Levkovich, chief U.S. equity strategist at Citigroup Inc, said. “We will see a more volatile year that might scare off some investors, which might be good. Sentiment is getting way too positive. It’s beyond complacency. Right now, we’ve seen them get carried away and there could be some backup in the first

half of 2014.” Asset purchases by the Bank of Japan and the Federal Reserve have supported the global economy and helped to increase the market value of world stocks by US$9.5 trillion last year. Real-estate companies and travel and leisure stocks led gains by European equities on lower-thanaverage volume. The FTSE Eurofirst wrapped up the year with an annual gain of 16 percent, with Germany’s Xetra Dax finishing 26 percent higher, making it the best performer of the major European markets. London’s FTSE 100 closed up 0.3 percent at

121 fake HK$1,000 notes at several casinos and a bank as of December 28. The technologies used in counterfeiting notes from the two banks are “very similar” and the Macau police told media they do not rule out the possibility of one group being behind both batches. Some Macau retailers are refusing to accept any HK$1,000 notes. Long lines were seen at some banks in Hong Kong as residents sought to exchange their money, public broadcaster Radio Television Hong Kong reported on its website. HSBC employees are trained to identify counterfeit notes using standard procedures, Gareth Hewett, a spokesman for the bank in Hong Kong, said in an e-mailed response to a Bloomberg News query. Bank of China Hong Kong staff are trained to detect fake notes and it has set up hotlines to deal with queries, Angel Yip, a spokeswoman, said by phone. Hong Kong’s de facto central bank has organised five seminars in the past week to help retail and bank workers detect counterfeit banknotes. Around 1,000 bank employees have attended these seminars, the regulator said. Two people were arrested in Hong Kong on Monday after 19 forged HK$1,000 notes were found with the cash they were depositing in a bank in Tsim Sha Tsui district, police said in an e-mailed statement. One person has since been released unconditionally while the other is out on bail, it said. With Bloomberg News

6,749.09, taking its gains for this year to 14.4 percent. In Asia, Japanese stocks were the standout gainers, helped by Shinzo Abe’s first year in power and his drive to combat decades of deflation. Japan’s Nikkei 225 index notched up a 57 percent gain this year – its largest annual advance in four decades – to end at a six-year high of 16,291.13. Chinese stocks had tougher time, however, as reforms, including property market rules, hit some of the country’s biggest sectors. The Shanghai Composite, which climbed 0.9 percent to 2,115.98 on Tuesday, was down 7 percent on the year. Hong Kong’s Hang Seng index inched up only 2.9 percent in 2013. Among the worst performing assets this year were those of emerging markets, which suffered from investors’ worries about structural imbalances and the impact of any reduction in the U.S. Federal Reserve’s asset purchases programme. Bloomberg News