Macau Business Daily, Jan 6, 2014 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Number 448 Monday January 6, 2014 Year II

April 19, ‘binding 2013 OCBC

bid’

made for Wing Hang Bank

Pre-sales of CNY notes ‘fraud’: banks

Mainland helps probe into fake HKD Page 4

Page 2

Page 4

Local wages to rise by up to 10 pct P

ay for local workers is likely to increase by between five percent and 10 percent this year as the labour supply remains tight, recruitment agencies say. The annual rate of consumer price inflation averaged 5.51 percent in the 12 months to November 30. The unemployment rate was only 1.9 percent in the three months to that date. Recruiters say the state of the labour market – with one of the world’s lowest jobless tallies – will make it hard for small and medium enterprises to keep employees. Casino operator Sociedade de Jogos de Macau SA announced last week a pay increase of five percent for its staff in 2014. Jiji Tu, managing director of MSS Recruitment Ltd, said SJM’s increase could serve as an indicator for other employers. More on page 3

Brought to you by

www.macaubusinessdaily.com

Hang Seng Index 23100

23038

22976

22914

Pansy Ho to run Grand Lapa hotel

22852

Gold standards to be set by new test centre

22790

January 3

HSI - Movers

Artyzen Hospitality Group Ltd, the hotel management subsidiary of Shun Tak Holdings Ltd, will take over the management of the Grand Lapa hotel on February 1. The Mandarin Oriental Group currently manages the property. Shun Tak, managed by Pansy Ho Chiu King, has made an arrangement to lease the Grand Lapa from Sociedade de Turismo e Diversões de Macau SA (STDM), a person with knowledge of the matter told Business Daily.

The gold and jewellery industry hopes a revamped gold testing centre can help standardise the quality of local products and boost especially visitors’ confidence in small retailers based in non-prime locations. The Macau Goldsmith’s Guild took over the testing centre from the government in November. In the past, guild members sent their products in batches to Hong Kong in order to have them tested.

Page 2

Page 5

Interview

Macau must grab chance to be creative centre Macau could have a distinctive offer in terms of culture and creative industries, but it has to think beyond achieving it via the tourism industry already built by casino gaming. Otherwise the creative mantle could be snatched by one of its regional neighbours, said Philippe Kern, founder of cultural consultancy KEA European Affairs, in an interview with Business Daily. Brussels-based KEA recently opened a regional office in Shenzhen. Pages 6 & 7

Name

%Day

GALAXY ENTERTAIN

0.21

SANDS CHINA LTD

-0.86

HENDERSON LAND D

-1.12

COSCO PAC LTD

-1.14

LI & FUNG LTD

-1.30

CHINA LIFE INS-H

-3.35

HANG LUNG PROPER

-3.88

CNOOC LTD

-3.89

CHINA SHENHUA-H

-4.39

BELLE INTERNATIO

-5.11

Source: Bloomberg

I SSN 2226-8294

Brought to you by

2014-1-6

2014-1-7

2014-1-8

14˚ 18˚

15˚ 18˚

January 6, 2014

Macau

Shun Tak unit to take over managing the Grand Lapa Artyzen is due to begin running the Grand Lapa Hotel next month Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

rtyzen Hospitality Group Ltd, the hotel management subsidiary of Shun Tak Holdings Ltd, will take over the management of the Grand Lapa Hotel on February 1. Mandarin Oriental Hotel Group currently manages the Grand Lapa. Shun Tak, managed by Pansy Ho Chiu King, has made an arrangement to lease the Grand Lapa from Sociedade de Turismo e Diversões de Macau SA (STDM), a source said. “Mandarin Oriental Hotel Group’s short-term management contract for the Grand Lapa will expire on January 31, 2014. From February 1, 2014 the Grand Lapa Hotel will come under the management of Artyzen Hospitality Group,” Grand Lapa director of communications Carmel Yeung told Business Daily in writing. Mandarin Oriental Holding Co Ltd agreed to sell its 50 percent interest in the hotel to STDM in 2009. Shun Tak has sold its own 50 percent interest to STDM. STDM is the flagship company of gaming tycoon Stanley Ho Hung Sun. According to Shun Tak’s website, the company owns 11.5 percent of STDM, which in turn owns an approximately 60 percent of SJM Holdings Ltd, the holding company of one of Macau’s casino operators. Shun Tak, a conglomerate that concentrates on shipping and property, set up its hotel management company in July.

“The hotel will be operated status quo and continue to be under the Grand Lapa brand,” said Artyzen’s vice president for marketing and distribution, Allan Yip. “Any future plans for the hotel will be announced accordingly.” Shun Tak executive director and hotelier Rogier Verhoeven heads Artyzen. The company’s president is Robbert van der Maas and its president for Greater China is Jerry Huang. Mr Van der Maas was the MGM Macau’s vice-president of hotel operations. Mr Huang was most recently Greater China president of InterContinental Hotels Group Plc.

Whither the Westin? Shun Tak has a stake in the Westin Resort Macau and the Macau Golf and Country Club on Coloane, held through Sociedade de Turismo e Desenvolvimento Insular SARL (STDI). STDI is a joint venture by STDM, the majority shareholder, Shun Tak and Hong Kong’s Harilela Group. The Westin Resort Macau is managed as part of Starwood Hotels & Resorts Worldwide Inc’s Westin chain, but the management contract ends in the middle of this year. The hotel is likely to be renamed and sources have told Business Daily that STDI may manage the property itself, although no decision

Photo by Manuel Cardoso

OCBC ‘binding’ bid for Wing Hang Bank: sources

ingapore-based Oversea-Chinese Banking Corp, Southeast Asia’s secondbiggest lender, has made a binding bid for Hong Kong’s family-run Wing Hang Bank Ltd, according to two people with knowledge of the matter. Banco Weng Hang SA, a unit of Wing Hang, has 12 outlets in Macau. In early December Business Daily reported that Anbang Insurance Group, a Beijing-based Chinese

insurer, was baulking at Wing Hang’s asking price. Anbang wanted to pay no more than 1.7 times the lender’s book value as calculated for 2013, while the proprietors wanted about two times book value. OCBC has also offered under two times book value, sources told Bloomberg yesterday. The companies are discussing if they can bridge the valuation gap, said the people, who asked not to be identified as the information is private.

The Grand Lapa Hotel will keep its name (Photo: Manuel Cardoso)

has been made. Mr Yip said: “As far as the Westin Macau is concerned, we are not able to comment on its future plans as we are not owners of the property, but from an Artyzen perspective, it is currently not in our plans.” Shun Tak has said before that it is interested in hotel markets here, but also in the mainland and beyond, and in developing its own hotel brands. The company said in July that it would pay 721 million yuan

The Hong Kong bank has a current market value of US$4.6 billion (36.74 billion patacas), which is 1.7 times its estimated 2013 book value, suggest data compiled by Bloomberg. Buying Wing Hang would be OCBC’s biggest acquisition. The Singaporean bank, which gets almost twothirds of its revenue from its home country, is stepping up overseas expansion plans as it seeks to offset the lowest lending margins in Southeast Asia. The family of Wing Hang chairman Patrick Fung Yuk Bun, its affiliates and Bank of New York Mellon Corp together hold about 45 percent of shares in the Hong Kong lender. OCBC and Wing Hang have so far declined to comment. In August, the Macau unit of Wing Hang reported first half profit up 38 percent year-on-year to 195.9 million patacas thanks to strong demand for loans here. The group’s nonperforming loans in Macau amounted to 25.5 million patacas at the end of the first half. M.G. with Bloomberg News

(951 million patacas) for 23,834 square metres of land on Hengqin Island near the bridge to Macau. It said last month it intended to start building a hotel and offices there this summer. Artyzen has also announced a joint venture with citizenM hotels to introduce the citizenM brand in Asia. CitizenM focuses on boutique hotels. It was founded by the former chief executive of fashion brand Mexx, Rattan Chadha.

Iao Kun VIP turnover up 5pct in Dec But rolling chip volume for all 2013 down 7 pct y-o-y

ao Kun Group Holding Co Ltd – a Nasdaq-listed investor in Macau casino junket rooms – says rolling chip turnover for December 2013 rose five percent to US$1.36 billion (10.86 billion patacas), compared to US$1.30 billion for the month of December 2012. Win rate for the month of December was 3.42 percent. For the whole year, the group’s chip turnover was US$17.04 billion – an average of US$1.42 billion per month. The 2013 total was however seven percent down on the US$18.23 billion achieved in 2012. Iao Kun has interests in five VIP rooms in Macau casinos. As of September 1, 2012, all the group’s VIP rooms are on a so-called

‘revenue sharing’ business model. “Compared to the fixed commission basis, the win/ loss split basis subjects the VIP room gaming promoter to the risk of losses from the gaming patron’s activity and greater volatility,” said the firm in its latest results filing. In November Iao Kun said it had hired Rothschild (Hong Kong) Ltd, part of global financial advisors Rothschild Group, as its new sponsor for a dual listing in Hong Kong. Iao Kun said last month in a press statement carried on the Nasdaq official website that the junket firm would complete the Hong Kong exercise “as soon as practicable”. It has previously said it would be early 2014. M.G.

January 2014 April 19,6,2013

Macau

Pay to increase by up to 10 pct Pay rises for this year announced by big employers may put greater pressure on smaller employers in the tussle for workers Tony Lai

tony.lai@macaubusinessdaily.com

ay is likely to increase by between 5 percent and 10 percent this year as the supply of labour remains tight, recruitment agencies say. They say the state of the labour market, with Macau’s unemployment rate one of the lowest in the world, will make it harder for small and medium enterprises to keep their employees. Casino operator Sociedade de Jogos de Macau SA announced last week a pay increase of 5 percent for its employees. The managing director of MSS Recruitment Ltd, Jiji Tu, said the increase could serve as an indicator for employers in other industries. “They will take the rate offered by gaming companies as a reference, as workers in the gaming industry account for a big part of the city’s labour force,” Ms Tu said. “And the increase is close to the inflation rate, which is similar to the pay increase last year.” The annual rate of consumer price inflation averaged 5.51 percent in the 12 months ended November 30. The managing director of EvolutionHR Consultancy Ltd, Jennifer Liao, believes bosses are unlikely to freeze pay. “Because of the strong demand for labour in the market, employers have to keep the pay they offer at a competitive level to hold on to workers,” Ms Liao said. She thinks this year’s pay rises will be similar to last year’s: between 5 percent and 10 percent, in line with inflation. Official figures show the employed population numbered 368,400 on November 30, and the unemployment rate was steady at 1.9 percent in the preceding three months.

Less exhausting Median monthly pay was 12,000 patacas (US$1,500) in the third quarter of last year, 2.6 percent more than a year earlier. The median earnings of Macau residents were 15,000 patacas, 15.4 percent more. Ms Tu said some SMEs might have to increase pay by more than the average to retain staff if their pay rates were low. The vice-chairman of the Macau Small and Medium Enterprises Association, Daniel Iong Ieng, said pay increases were almost certain as employers tried to hang onto their employees. “It is not a matter of whether there will be a pay increase, but of how much the increase should be,” Mr Iong said.

368,400

Employed population at the end of November

Pay will probably rise this year as employers compete for workers

“Many of our members have said they cannot retain their staff even if they raise pay twice a year,” he said. “They think working for the gaming companies will be less exhausting and earn them higher pay.” He predicts that SMEs will increase salaries by between 5 percent and 7 percent this year, like they did last year. Official data show the average earnings of gaming employees were 18,900 patacas last June, making them the highest-paid workers in Macau. Mr Iong said SMEs could not incessantly increase pay in their efforts to retain their staff. He urged the government to make the labour market “more open” by relaxing restrictions on taking on migrant workers. He said about 30 percent of the members of his association had closed because they were short-staffed and faced difficulty in operating.

Happy workplaces A survey commissioned by the association last year found that 90

percent of SMEs would start making losses if their labour costs rose by another 20 percent. Researchers surveyed over 540 enterprises, most of them with fewer than 100 employees. Legislative Assembly member Song Pek Kei said in a written inquiry she presented on Friday that the government should consider relaxing the restrictions on hiring migrant workers by lowering the minimum number of Macau residents a company must employ before it is eligible for a labour import quota. The government requires that construction companies employ one resident for every migrant worker they take on, but has divulged no equivalent ratios for other industries. The Human Resources Office sets labour import quotas case by case. Ms Tu thinks SMEs have one advantage over big employers in their struggle for labour, even though they pay less. “Some residents do not opt for gaming companies as they think human relationships there are complicated,” she said. “As long as SMEs can provide a good workplace – a company culture with close ties among colleagues and

bosses – they will have appeal, as Macau people put emphasis on a happy workplace.” Ms Liao forecasts that pay will keep rising. New or expanded casino-resorts are due to open in Cotai between next year and 2017, increasing demand for workers and probably pushing up pay. “Past experience shows there will be significant changes in pay when new resorts start operating,” she said.

KEY POINTS Pay rises of 5 pct to 10 pct predicted for this year Employers to use the gaming pay rise as reference Tight labour market to make life harder for SMEs Market may force SMEs to raise pay by up to 7 pct

January 6, 2014

Macau fees mentioned in other adverts seen by Business Daily went as high as 95 yuan per pair. “We request customers to pay a deposit first because we’re still not sure how much the [market] value for a pair is until the final product is launched,” a Beijing-based seller on Taobao.com told Business Daily. He declined to give his name. No transactions were recorded for his offer at the time this newspaper went to press. Another seller showed six deals since December. “The value of this zodiac note can fluctuate very rapidly,” said the person. “The Year of the Horse note could go up to 100 yuan to 300 yuan per pair, just as [did] the snake-year note,” the trader added, referring to the 2013 issue.

Pre-sales of zodiac notes ‘fraud’: banks

Crying fraud

Booming second- and third-hand market in souvenir banknotes in recent years Stephanie Lai

sw.lai@macaubusinessdaily.com

anknote issuers have denounced online advertisements offering pre-sales of Macau’s commemorative Chinese New Year paper money as “fraud”. A thriving second hand market – with prices of more than ten times the 10-pataca face value of the notes – has developed for the souvenirs in recent years. The special banknotes authorised by the Macau government as legal tender – this time marking the Year of

the Horse – aren’t officially available until after the Lunar New Year according to the Monetary Authority of Macau. This year the festival falls on January 31. But already China’s army of enthusiastic entrepreneurs is homing in. In several cases, traders using the online selling platform Taobao.com gave an ‘artistic impression’ of how the new notes would look, alongside offers to pre-sell them in pairs. It’s

not clear whether the pictures bear any resemblance to the official design of the notes. In a notice on the website, sellers stress that the picture is only an “assumed version” of how the final product would look. Customers are asked in some cases to make a deposit of at least 20 yuan (26 patacas) for a pair of notes – 30 percent of the combined face value of a pair of notes. Deposit

Mainland authorities join probe of fake banknotes The police have seized more than 150 bogus HK$1,000 notes, many of them found in casinos Tony Lai

tony.lai@macaubusinessdaily.com

acau and Hong Kong have asked the mainland authorities to help find the origin of dozens of well-counterfeited banknotes discovered in the two cities. Police investigating the forgeries have said they believe the bogus HK$1,000 notes were printed in the mainland. The chief of the Macau Judiciary Police information technology crimes division, Sou Sio Keong, said on Friday that no suspected counterfeiter had been arrested. “We are still following various leads, but our main focus is on finding the source of these banknotes,” Mr Sou told reporters. “We have also notified the mainland police.” He does not rule out the possibility that a criminal gang made the forgeries. “Several banks have contacted us,” Mr Sou said. “We are going to teach them how to identify the counterfeits.”

The issuing banks – Banco Nacional Ultramarino SA (BNU) and Bank of China Ltd Macau branch – on their official websites denounced such pre-sales as “fraud”, saying the sellers are presenting “counterfeit” banknote samples online. “We reserve the right to investigate and take appropriate legal action in this matter,” they both said. From 2012 until 2023, BNU and Bank of China are each authorised to issue each year a maximum of 20 million special notes with a Chinese zodiac theme for lunar year. In the past two years only Macau residents (permanent and nonpermanent) have been able to exchange normal notes for commemorative ones via online applications to the local banks. The monetary authority yesterday told this newspaper the special banknotes were still being printed, and would only be available for subscription “some time after” Chinese New Year.

series HK$1,000 notes and 28 purport to be HSBC HK$1,000 notes. The police in Hong Kong have said they believe the counterfeiters are putting the fakes into circulation in Hong Kong and Macau in their effort to exchange them for genuine cash. The authorities in Hong Kong had seized 97 forgeries by Friday. Investigators are still looking into whether the fake HSBC notes and the fake Bank of China notes were counterfeited by the same hand. Some Macau retailers have been refusing to accept any HK$1,000 notes since the fakes first turned up, particularly small shops that have no devices for detecting forgeries. The Hong Kong Monetary Authority estimates that Bank of China issued about 35 million banknotes in its 2003 series. The authority has urged banks to speed up the withdrawal of these notes from circulation. The regulators have also issued guidelines for identifying the fakes, which are slightly different in detail and colour from genuine notes.

The high-quality forgeries found are believed to have been printed in the mainland

He said bank machines that take deposits could identify the fakes. Most of the forgeries found in banks had been taken over the counter, he added. Between the fakes first coming

to light a fortnight ago and last Friday the authorities seized 152. Half were found in banks and the rest in casinos. Of the forgeries seized, 124 purport to be Bank of China 2003

152

Fake HK$1,000 notes seized in Macau

January 6, 2014

Macau Gongbei-Hengqin rail link starts construction soon Building work on the Gongbei to Hengqin Island branch line of the high-speed railway that links Macau to the rest of China is due to start by month-end. Guangzhou-based newspaper Southern Metropolis Daily gave the news, quoting a subsidiary of the investor, Guangdong Provincial Railway Construction Investment Group Co Ltd. The 17.18 kilometre-long section, starting at Gongbei and ending at Chimelong International Ocean Resort, will have seven stations, one of which will serve the Lotus Bridge immigration post between Macau and Hengqin. This branch line to the Guangzhou-Zhuhai Intercity Railway will take three-and-a-half years to build, reported the newspaper.

Gold testing expected to reassure shoppers The testing centre’s new way of working could benefit small retailers of gold, an industry chief says Tony Lai

tony.lai@macaubusinessdaily.com

he gold and jewellery industry hopes changes in the way the gold testing centre is run will play a part in setting standards for the gold sold in Macau and make visitors more confident about buying gold in small shops off the beaten track. The Macau Goldsmiths Guild took over the running of the testing centre from the government in November. The centre is in the northern district. “The centre has been physically established for some years but it has not been open to the public,” said the guild’s president, Lei Chi Fong. He declined to say why it was closed to the public. The guild has over 90 members among the city’s gold retailers. Mr Lei told Business Daily that the guild would take an active role in running the centre. He said the centre would offer “immediate services” to retailers. “In the past, the guild would help its members to send their products in batches to an authorised centre in Hong Kong for testing and certification,” he said. “It takes a long time to schedule and perform the testing there: like, one to two months.” Mr Lei said changes in the way Macau’s gold testing centre works would make a big difference. “Certification can give visitors more confidence while shopping for gold and jewellery here,” he said. “And it is particularly beneficial for small shops away from the main shopping streets,” he said. “Consumers can trust the products they sell.”

Certification can give visitors more confidence while shopping for gold and jewellery here Lei Chi Fong, Macau Goldsmiths Guild president

He said buyers could take their purchases for testing straight away if they had any doubts about the quality.

Step by step “Macau is a tourist city receiving millions of visitors a year, and a gold and jewellery testing centre can definitely improve its reputation,” Mr Lei said. Official data show the value of jewellery and watches retailed here in the first nine months of last year was 14.53 billion patacas (US$1.81 billion), 25 percent more than a year earlier.

Sales spiked in April and May when gold prices plunged, attracting many mainlanders who saw a good opportunity to buy gold here. The Macau Goldsmiths Guild has yet to make the changes in the way the gold testing centre works because it is still looking for laboratory technicians and training ancillary staff. “We hope to offer some gold testing and certification services in the beginning, and then we will expand the scope to cover other areas like jewellery, diamonds and jade,” Mr Lei said. “We will do it step by step, and we are working with other

jurisdictions to get our centre recognised outside Macau.” He declined to say how much the guild had invested in changing the way the centre is run. The centre has yet to set a tariff for its services. “Our guild is a non-profit organisation helping gold and jewellery retailers here,” Mr Lei said. The guild and the Macau Economic Development Promotion Association began this month surveying retailers and buyers to get a better understanding of the market here. Mr Lei said the results of the survey should help small jewellers become more competitive.

January 6, 2014 April 19, 2013

Macau

Macau must grab chance

Brought to you by

HOSPITALITY Slow rise The occupation rate of hotels is a critical indicator for the hospitality industry and the viability of hotels in different categories. In the last three years, that indicator is rising slower than might be expected. There was a significant rise in the number of both hotels and rooms in the period. So, even a stable occupation rate means more rooms and guests. But this is a sector where many suggested there was a huge unsatisfied demand and additional customers would always meet a rising supply. That may be the case for some hotel units, but the fact that the occupation rate has not risen further suggests such is not the case for the sector as a whole. We leave aside here the figures for guesthouses, which follow a noticeably different path, and would distract from the main point we are focusing here.

acau could have a distinctive offer in terms of culture and creative industries, but it has to think beyond achieving it via the tourism industry already built by casino gaming. Otherwise the creative mantle could be snatched by one of its regional neighbours, said Philippe Kern, founder of KEA European Affairs, in an interview with Business Daily. Brussels-based KEA is a European consultancy and research centre on cultural and creative industries. It has worked with several ministries of culture in Europe and government institutions in mainland China. It recently opened a regional office in Shenzhen, the special economic zone next door to Hong Kong. Macau could gain from specialising in performing industries to support a growing entertainment offer in the city, said Mr Kern. It could also position itself as an intellectual property-trading platform to attract international companies, he added. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

The first striking element is the similarity of the patterns of change. Two-star hotels diverge most from the average, while the plot paths for three- and four-star hotels follow each other very closely. Overall, the seasonal patterns are very evident and very similar across the board. That was to be expected, as the industry has strong seasonal elements. But, with exception made for two-star hotels – for which the rate is actually declining – the trend line for all the other categories in the period shows only a very slow rise. That means that demand is only rising marginally faster than supply, which puts into question the idea of limitless demand ready to fill in case of any additional supply. The strongest upward trend is the one for five-star hotels, where the rise in supply has also been bigger and where the competition to lure new customers will also be fiercer. J.I.D.

84.4 %

Occupancy rate for 5-star hotels in October

KEA has worked with several government institutions around the globe, including the European Commission. How does it regard Macau in terms of its culture and creative industries? I think Macau has something very distinctive, it’s a unique place in the world, and I would like to help the authorities to explore that distinctiveness, to position Macau as a creative city. I know Macau has been looking at the development of a creative economy for some years, I understand a fund is now being established. I would love to advise Macau [on how to] to contribute to its political development, because of my experience advising European cities. I see myself as a policy designer for creative and cultural industries.

rely on gaming, which might be a little bit dangerous.

Is the European heritage Macau’s distinctiveness? You can feel heritage is important here, the mixture of population and all these are ingredients that are cultural resources. If they are properly minded [regarded] [they] can bring enormous benefits to Macau, in addition to existent benefits of the gaming industry. Macau has to build a reputation that goes further than gaming, because it will give Macau an additional edge in the competition with Hong Kong, Shenzhen, Shanghai, Taipei. Macau needs to do this effort. If not it is going to be marginalised or [must] simply

In relation to intellectual property rights, does Macau have the right legislation? IP is a technical specification that needs to be there, as a way of giving confidence to artists, showing they will be rewarded and valued. I don’t think IP is key and Macau has probably the right legislative framework. Macau can become an IP trading platform in the same way that Hong Kong positioned itself and maybe compete with Hong Kong in this respect to attract European or international companies. Maybe, Macau can specialise in performing industries, because the

You’ve mentioned previously that for cultural and creative industries to grow you need political will. In Macau, we have it, but it is still taking time to develop the industry… It always takes its time, because you don’t want to impose things. You want to identify the right people and set up the right structure. I’m not sufficiently aware of the political landscape in Macau – there is money, but it is not essential. Second, you need good leadership. Leadership is entrusting people with a vision, and essentially creative people can create another vision of what Macau could be.

gaming industry is relying a lot on performing industries for shows, maybe there is a combination between gaming and performing. Should Macau follow in Las Vegas’ footsteps, developing entertainment within the casinos? It can do this or also it can become a city of congress, like Cannes, in France, organising a big music or cinema festival. Or something that relates to technology – the new media, technology, culture and arts, maybe something innovative that goes beyond festivals that already exist. Could there be a bigger cooperation between the European Union and Macau in this field? There could always be a bigger cooperation, the problem is the EU is now in a difficult situation, so I would not expect too much from the EU. Definitely, Macau is an Asian city, so it should benefit from the energy of what is going on here, but develop its own identity. What are the European Union’s most recent legislative developments in relation to IP? The most significant one is linked to digital shifts and the fact that consumers now want to access media and sometimes feel restrained by the copyright system. So, there is a big political movement in Europe. Now, the question is to find the balance between the incentives for creation without preventing people from making use of modern technology to share IP protected works. Another big issue in Europe now is that users are facing a lot of difficulties in obtaining licences for IP protected works, in music and cinema, because the market in Europe is divided into 28 different markets, 28 different legislations, a multitude of rights’ management companies. So, now Europe is looking into a way of harmonising the system of rights management in order to make the acquisition of licences easier. So, some kind of one-stop shop, avoiding have to negotiate country by country. It’s

Macau has to build a reputation that goes further than gaming, because it will give Macau an additional edge…

January 2014 April 19,6,2013

Macau

to be creative centre

an ongoing process. The European Commission started a new consultation process on copyright. One of the big issues, managed by former Portuguese commissioner, António Vitorino, is the issue of private copyright royalties. What should be the reward to authors, performers, producers, when consumers are actually copying works and reproducing these works? It’s likely that this year there will be some harmonisation proposals to deal with this issue. You’ve mentioned before that China has some of the most advanced legislation regarding IP protection, yet it seems to be still at a very different stage of development from Europe. Why? In terms of legislation, China is now a member of all the major international [IP] conventions. It has really updated its legislation and is really in the top league in terms of legislation. The problem with China is enforcement – they’re not equipped to deal with IP cases. Even if litigation has increased by 90 percent over 2012, they’re coming from far down. There is still no culture of IP in China, and this is a problem within the courts, the magistrates. Also, the culture of the rule of law is something that needs to be addressed in China. A contract has not the same importance in Chinese culture that it has in the European culture. But now with the development of the brands, of strong Chinese companies in the IT sector, I’m convinced the enforcement will come from the Chinese companies themselves, who would want to protect their creation and creativity. Also, China wants to develop its creative economy and they’re

realising that they cannot have a creative economy if they don’t have a strong IP regime. I always like to make the analogy with Japan at the end of the Second World War. In the 1950s, Japan was also accused of copying, and Japan developed an entire IT industry, car manufacturing industry. In terms of creativity [now] it has nothing to envy [in others]. China is going through the same process. It may take a few years. Maybe China is lagging behind in how to stimulate creativity. The Chinese system will have to review its education system to enable individuals to express themselves. Many Chinese artists say it’s not easy to fight copyright infringement because it is a cultural aspect of the society. What advice would KEA give to China in order to improve things? The Chinese government is now doing big campaigns in the media, shows on television. I attended a show two years ago with WIPO [World Intellectual Property Organization] and the International Federation of the Phonographic Industry, where they explained to people it’s not right to copy. So they’re building this awareness campaign, which probably is important. They [China] have big programmes with the European Union on training judges, on training courts, which is another step in the right direction. The biggest proponents of IP enforcement are going to be the companies themselves, so when the Chinese companies start litigating, it will be an economic challenge not only for foreign companies coming into China, but also for Chinese companies developing their own market in China. Then, things will start to improve.

We’ve seen in the past a big development on creative industries in China. Would you say the government is following the right strategy? What is certain is that the government understands that China cannot stand on one foot, which is cheap manufacturing costs. It is now competing with countries that have lower labour costs than China. It has to develop the internal demand, it has to develop companies that add value to their products, so there is a strong political will, even stronger than in Europe, on creative industries and developing a creative economy. In Europe, we’ve actually never considered that the competitive edge of Europe was its creative industries. These were always marginalised from a policy point of view. In Europe, we always think about the car industry, pharmaceutical, chemical companies. Creative industries, because they are small- and medium-size companies, are not really taken care of. So, China has realised creative economy is very important. Where maybe China needs to improve is that it still always thinks big, [i.e.,] ‘we want big companies, big brands, [a] creative district here’. They put money in real estate projects, put creative companies inside, but then there is no policy to make all those creative companies work together to become innovative together, because it is, as originally planned, a real estate investment. There is too much of a top-down approach, instead of a bottom-up approach. The best example is 789 in Beijing, which was the bottom-up approach and become a huge success, and now has become more of a commercial, almost a shopping mall than an artistic district. But I think this at least shows how creativity works. You need to create a space where creative professionals feel at ease, a nice environment you can listen to music and enjoy the nightlife, go to bars and meet people, socially mingle with different professionals and there you create an ecosystem. This is something I’m trying to advise the city of Shenzhen where we’ve opened an office. Shenzhen wants to internationalise itself, and Shenzhen knows that if it doesn’t have a strong cultural offer it will not be able to attract creative talents. They will not feel at ease in Shenzhen and will prefer to live in Hong Kong, and possibly in Macau. Still, is it really possible for creative people to feel at ease on the mainland? I’ve been working in China for seven years, and you find creative people, creative brands, young fashion designers. Very often they stay abroad and they are coming back to China because there is more work than abroad, there are more opportunities. I work a lot with the fashion business, and now you can meet fashion brands in China that were only focusing on manufacturing for Europe, but now are thinking on manufacturing to develop their own brands in China. And this means a shift from a management point of view. How can we be creative? How can we develop something that

doesn’t exist in the marketplace? Today, they [China] are faced with a system where they don’t find creative people locally, so they recruit abroad. Very often they contact me and say ‘I’m looking for a fashion designer, for a interior designer, for an architect’ and they want Europeans to come over to China. It is a question of one or two generations for things to happen. If China changes its education system to enable individual development, more free expression, these are also important conditions for creative people to feel at ease. At the moment, it’s not a problem in the creative industries, but in the cultural industries, because in cinema there is still a quota regime, which benefits only Hollywood – very strangely, you don’t see any European productions in China. There is probably more interest in working with European cinema than [with] Hollywood, in terms of diversity. Music is also a problem linked to piracy. Publishing is also a problem because of censorship. If not for those limits, could China’s cultural and creative industries be already at the level of the U.S., for instance? No, I don’t think so. Obviously, the systems are very different – in the U.S., they emphasise the individual; in Europe we emphasise on the culture, the cultural tradition is very important in the creative process. China is probably a mix of both, because at the moment they have a strong culture, but they still do culture like they did 1,000 years ago. They know they have to make their culture more contemporary. Their ceramic designers are doing design like they were doing 700 years before, because they copy the old masters. Now, they have to introduce the idea that the new master can also be disruptive from the old master, and accept that disruptiveness is good for creativity and innovation. This is maybe more a cultural issue than a political issue. You [do] see very strong contemporary artists from China, [and] they express themselves in complete freedom. But don’t most of them have to leave China to express themselves freely? No, a lot of them are still living on the mainland. What is happening is that, obviously as an artist, you should not confront the regime. So, you have to accept the political framework in which you are evolving, but what I can feel, especially in a city like Shenzhen, is that the Chinese are ready to experiment, to take risks, much more than actually in Europe. It’s an emerging economy, [a] young population with energy. In Europe, we are living on our past. I’m confident China will make it in its own way, in its own structure.

Macau needs to do this effort. If not it is going to be marginalised…

January 6, 2014 April 19, 2013

Greater China

HK home discounts rise as price

PBOC requires central clearing of IRS trades Prices may drop by as much as 30 pct by 2016, analysts say The People’s Bank of China will require interest rate swaps (IRS) to be conducted via a central clearing house, in a move to reduce counterparty risk in the over-the-counter derivatives market, it said. Shanghai Clearing House, one of two state-backed clearing houses for China’s interbank bond market, will handle clearing for IRS trades. IRS have been traded in China since 2005 but were previously settled bilaterally, with no central clearing.

Fox sells stake in Star China TV Rupert Murdoch’s 21st Century Fox Inc sold its minority stake in Star China TV, part of a strategy to divest businesses in which the company can’t gain majority ownership. China Media Capital and the management team of Star China, owner of three 24hour Mandarin-language TV networks, are buying Fox’s 47 percent stake in the venture, the companies said in a statement. Terms weren’t disclosed.

Li to test demand for electricity IPO Power Assets Holdings Ltd, controlled by Asia’s richest man Li Ka Shing, plans to start gauging demand this week for the initial public offering of its Hong Kong electricity unit, said two people with knowledge of the matter. Power Assets may raise more than US$5 billion selling as much as a 70 percent stake in Hongkong Electric Co, said the people, who asked not to be identified because the information is private. Hongkong Electric is expected to start trading on January 29, Power Assets said in a December 15 statement.

Govt aims to curb water use in cities China, the world’s most populous nation, called on cities to scale charges for water based on consumption by the end of 2015 to conserve the vital resource. The National Development and Reform Commission said local governments should set at least three tiers of water prices, according to a statement on its website. Areas facing water shortage should implement bigger price increases with usage, the NDRC said.

Kelvin Wong

ong Kong dwellings from one-bedroom apartments to 5,000 square-foot (465 square-metre) houses are on offer at discounts of as much as 20 percent as developers brace for a plunge in prices, which have more than doubled since 2009. Builders, including the city’s two biggest, Sun Hung Kai Properties Ltd and Cheung Kong Holdings Ltd, offered about 1,000 housing units in December, after selling 1,114, the most since March, in November, according to estimates from Centaline Property Agency Ltd. New home sales in 2014 will almost double to 15,000 from an estimated 8,500 in 2013, the lowest since data were first collected in 1996, said Wong Leung Sing, an associate research director at the city’s biggest closely held realtor. “Earlier this year, developers wanted to hold on to the units as they expected they could sell them for more in the future,” said Patrick Chau, director of residential development and investment at property broker Savills Plc in Hong Kong. “Obviously, they don’t see that’ll be the case anymore.” Analysts at Barclays Plc, UBS AG and Jefferies Group LLC are predicting that prices will drop by as much as 30 percent by 2016 amid an increase in the supply of properties and after the government introduced measures to curb price growth such as higher stamp duties and down payment requirements. Li Ka Shing, who controls Cheung Kong, said he is slowing land acquisitions because values are too high, and the central bank has repeatedly warned the property market is still in danger of overheating. The Hang Seng Properties Index, which tracks the city’s nine biggest builders, fell 9.2 percent in 2013,

compared with a 2.9 percent increase in the benchmark Hang Seng Index. The property index fell 2.09 percent on Friday. Buyers have backed away since the government imposed its toughest price curbs yet in February. About 46,000 homes changed hands in the city in the first 11 months of 2013, down from 78,000 deals over the same period a year earlier, according to Land Registry data. That hasn’t dented prices. They rose 2.8 percent in 2013 even as policymakers in February doubled stamp duties on all property transactions above HK$2 million (US$258,000) to as much as 8.5 percent. In October 2012, it slapped a 15 percent extra tax on home purchases by all non-Hong Kong residents. Given the penalties, developers are now offering sweeteners to entice buyers. At The Avenue, an apartment complex co-developed by Sino Land Co, Hopewell Holdings Ltd and the government about 1.5 kilometres from the city’s financial district, apartments were sold at an average of HK$20,000 a square foot after the discounts were applied, said Joseph Tsang, Hong Kong-based managing director at broker Jones Lang LaSalle Inc.

Offering discounts The developers have sold all of the more than 900 units they put on the market at the development in Wan Chai, a residential and commercial area, since sales began in November, according to transaction records posted on the project’s website. “Before the curbs, this project could’ve easily sold for HK$25,000 per square foot,” said Mr Tsang of Jones Lang LaSalle. “Many people would be attracted to buy because they think it’s a good price, but the

Government won’t withdraw measures until there is

market is a long way from getting heated again.” Builders New World Development Ltd and Wheelock & Co sold 576 units at The Austin, a luxury apartment project in the Kowloon West district between October and November at a discount of as much as 20.5 percent, according to its website. Sun Hung Kai, the city’s secondbiggest developer by market value, sold about 300 units at The Cullinan, a luxury high-rise in the same area, with discounts of about 20 percent, according to the website. “This is quite unusual,” said

Stocks slum

December services PMI f

H Wal-Mart adds DNA tests to meat Wal-Mart Stores Inc said it’s adding DNA tests of meat it sells in China after recalling donkey products from a local supplier that authorities said contained fox DNA. Wal-Mart withdrew all products from vendor Dezhou Fujude Food Company Ltd, the retailer said. Chinese authorities put Dezhou Fujude officials in “criminal detention,” and Wal-Mart is considering legal action. Wal-Mart said it’s offering compensation to customers and that the testing it’s adding goes beyond what is legally required.

Chinese conomy lost steam into the close of 2013

ong Kong stocks declined, with the city’s benchmark index sinking the most in six months, after a gauge of China’s services industries fell to a fourmonth low. The Hang Seng Index lost 2.2 percent to 22,817.28 at the close in Hong Kong on Friday, its steepest drop since July 3. All but one company on the index fell. Trading volume on the gauge was 38 percent higher than than the 30-day average. The Hang Seng China Enterprises Index of mainland shares traded in the city, also known as the H-share index, slumped 2.5 percent to 10,436.76. “The Hong Kong market may experience some pullback for the time being because the growth of China manufacturing and services is slowing,” Linus Yip, a strategist at First Shanghai Securities Ltd, said by phone. “The focus for Hong Kong now is whether the growth rate of China’s economy can still keep up.”

January 2014 April 19,6,2013

Greater China

es likely to fall

Offshore yuan posts best week in year

T KEY POINTS Houses on offer at discounts of as much as 20 pct Transactions down but prices up 2.8 pct in 2013 Developers offering sweeteners to entice buyers

s a steady supply of new housing

Centaline’s Mr Wong. “Normally developers would have their sales plan mapped out quite evenly over the course of the year, but the curbs in February really threw them off. So now they’re trying to accelerate sales to make up numbers.” Calls to developers about sales records were referred to the projects’ websites. The Hong Kong government requires developers to post transaction records of new units on the Internet within 24 hours of them being sold. Record-low mortgage rates, a shortage of new supply and an influx of mainland Chinese buyers have

propelled prices above levels reached in 1997, which marked the start of the city’s last major property crash. Hong Kong is the most expensive city to buy a home, according to a Savills survey published in September that included New York, London and Tokyo. The affordability ratio, which measures the proportion a homebuyer has to pay monthly on a mortgage relative to income, stands at just over 60 percent, close to a 14year high, according to calculations by London-based property broker Knight Frank LLP. Bloomberg News

mp on services data

falls to four-month low Shanghai shares broke below key technical support levels on Friday. The Shanghai Composite Index ended down 1.2 percent and fell below the 2,100 support level to 2,083.13 points. The CSI300 index of the leading Shanghai and Shenzhen A-share listings dropped 1.3 percent to its five-day low. China’s non-manufacturing purchasing managers’ index dropped to 54.6 in December, the lowest since August and down from 56 a month earlier, the National Bureau of Statistics and Federation of Logistics & Purchasing said on Friday morning. A reading above 50 indicates expansion. Two measures of factory output also decreased last month. Lu Ting, an economist at Bank of America-Merrill Lynch in Hong Kong, said another factor was the fading effect of China’s “mini” economic stimulus rolled out in mid-2013 to prop up slowing activity. “There was pent-up demand in the

third quarter and we don’t expect it to be sustained in the fourth quarter,” he said, adding he expected quarterly growth to ease to 2 percent in the December quarter, from 2.2 percent in the previous three months. A manufacturing purchasing managers’ index from HSBC Holdings Plc and Markit Economics fell to 50.5 in December from 50.8 the previous month, while a separate official gauge declined to 51 from 51.4, according to data released this week. The world’s second-biggest economy may expand 7.5 percent in 2014, Shanghai Securities News reported on Friday, citing an interview with Zhu Baoliang, head of the State Information Centre’s economic forecasting department. Chinese lawmakers last year unveiled the largest policy shift since the 1990s, pledging to encourage private investment in statecontrolled industries. Reuters/Bloomberg News

he offshore yuan had its best week in a year as signs of sustained economic growth and weakness in U.S. equities lured funds to Chinese stocks. China’s gross domestic product probably increased 7.6 percent in 2013, more than the 7.5 percent official target, according to the median estimate of economists surveyed by Bloomberg News before data due January 14. “Capital is turning to Chinese assets after a record year in U.S. equities, which seem to be in a sell-off right now,” said Stella Lee, president of Success Wealth Management Ltd in Hong Kong. “Investors think the economy will improve across 2014, especially with reforms announced during the third plenum. The Chinese stock market declined last year, but the fundamentals are still strong.” The offshore yuan rose 0.43 percent last week and 0.02 percent on Friday to 6.0471 against the greenback.

That’s the biggest weekly gain since the five days through January 11, 2013. In the onshore market, the yuan strengthened 0.28 percent last week, the most since October, to 6.0515 per dollar, China Foreign Exchange Trade System prices show. The currency dropped 0.01 percent on Friday as the People’s Bank of China lowered the reference rate by 0.08 percent to 6.1039. The yuan can trade a maximum 1 percent on either side of the fixing. The yuan’s exchange rate is gradually approaching its equilibrium level, which indicates the period of rapid appreciation may have ended, Sheng Songcheng, head of the central bank’s statistics and analysis department, wrote in an article published by Financial News. The currency’s modest appreciation can help China’s economic focus shift away from export reliance to domestic demand, Mr Sheng said. Bloomberg News

Beijing pledges support for solar industry C

hina pledged further support for its ailing solar power industry on Saturday as the government seeks to revive a sector struggling with overcapacity and falling prices. The State Council, China’s cabinet, said in July that the country aimed to more than quadruple solar power generating capacity to 35 gigawatts by 2015 in an apparent bid to ease a glut in the domestic solar power industry. The State Council, in a statement published on its website, said the Ministry of Industry and Information Technology was taking measures to “promote the healthy development of the photovoltaic industry”. The ministry, it said, was implementing the July directive by supporting consolidation in the industry, drafting guidelines for mergers and acquisitions and promoting standardisation. It said the ministry was encouraging technological innovation, especially related to decentralised solar power

installations not connected to the power grid. It was also supporting research and development efforts for batteries that can store solar electricity. The ministry sought to improve standardisation and ensure “orderly competition” in the industry, the statement said. The State Council said the solar industry had enjoyed a recovery in 2013. Total installed solar power generating capacity increased by around 8 GW, of which 6 GW were in power plants and 2 GW were in decentralised instillations, the statement said, citing preliminary estimates from the China Photovoltaic Industry Alliance. China’s support for its solar industry has been a source of trade friction. The United States and European Union have accused China of dumping underpriced solar panels on foreign markets and China has responded with anti-subsidy duties of its own. Reuters

Great opportunity Loft in Downtown 2 + 1 bedrooms, 2 living rooms and garden 140 sq metres with Mezzanine Price: HKD 12 million

advertisng@macaubusinessdaily.com

10 10

January 6, 2014 April 19, 2013

Greater China

Transparency the crux in struggle with rising debt Analysts doubt experiments with local bond market will go far Koh Gui Qing

financial markets work their magic. Underscoring the importance placed on restructuring the economy, state news agency Xinhua said President Xi Jinping will head a group that will lead reforms which include relaxing state control over the yuan.

hina’s quest to solve its US$3 trillion-and-growing public debt problem by starting a domestic municipal bond market hinges on the one thing its officials are most afraid of: transparency. As markets absorb the results of China’s latest audit of its state finances, Beijing’s long-standing vow to develop a municipal bond market to curtail rapid growth in other types of hidden public debt will take centre stage once more. By letting local governments sell bonds for cash, China wants to rely on nimble markets rather than inflexible regulations to keep spendthrift units in check. The stakes are high. A bond market is the centrepiece in China’s blueprint to mop up fiscal troubles and keep its economy growing at an even pace, giving it needed room to start other bold financial reforms. But analysts say China’s dreams of a municipal bond market are so far just that, as building one has been impeded by a lack of disclosure from local governments on how much money and assets they have, and how much they owe. “If you want to lend to a specific government, you need to have a clue as to what the financial conditions are like,” said Tan Kim Eng, a senior director of sovereign ratings at Standard & Poor’s in Singapore. “There’s still a lot of work to be done on the fiscal transparency front.”

Transparency needed Under China’s laws, local governments are not allowed to borrow from banks even though they are responsible for as much as 80 percent of all public spending, but take only around half of fiscal income. To get funds, local governments set up firms that borrow for them. When Beijing clamped down on this in 2011, governments changed tack and turned to shadow banks. Last week’s audit showed shadow banks accounted for at least 13 percent of all local government borrowings.

KEY POINTS Local debt seen as one of the biggest threats Govt mulling options for cleaning up debt

Increasing alarm In the meantime, some investors are increasingly alarmed by the speed at which local governments are piling on debt to pay for public works. China’s state auditor said in its report last week that local governments had total outstanding debt of 17.9 trillion yuan (US$2.96 trillion), including contingent liabilities and debt guarantees, at the end of June. Although the debt load shows China’s government to be far less indebted than fiscally-troubled Japan and Greece, it raised eyebrows among analysts for its 67 percent jump since the last state audit was published in 2011. The auditor did not say which provinces have the heaviest burdens or face the biggest risks, except to note “certain” dangers in some unnamed regions. “Any improvement to fiscal transparency will be limited unless

RMB17.9 trln

Local governments’ total debt at the end of June

To allow bond swaps in effort to avoid defaults Investors may be allowed to pay for public works

Local govts seek funds to build infrastructure

the central government regularly publishes similar audit reports,” Standard & Poor’s said separately in a note last week. “It’s also unclear whether China will disclose the debts of individual local and regional governments.” Investors have long viewed China’s mountain of local government debt as one of the biggest threats to its economy. Market fears that China’s banking system will be compromised if a portion of the government debt is not repaid were amplified by a dearth of information in the past year.

Casting sunlight Amid growing public scepticism about China’s fiscal health, Beijing in August ordered a comprehensive review of all government balance sheets. A delay in its release – publication had been expected by October – fed speculation the debttotal could top US$4 trillion. In China’s defence, the audit is a

massive task. The audit office said it deployed nearly 55,000 workers, who examined nearly 2.5 million loans and reviewed the books of 62,215 governments and organisations. The need for transparency is not lost on Beijing. In a plan published in November about China’s most ambitious road map for financial reforms in 30 years, Beijing said it would create a “standardised and transparent budget system” for local governments and the funding of public works. This was on top of frequent government pledges to “cast sunlight” on debt. To be sure, China is mulling other options for cleaning up its debt mess, including allowing private investors to pay for public works, and letting the central government absorb more spending responsibilities. But no plan resonates better with reform-minded officials than that for a municipal bond market, partly because it fits perfectly with China’s goal of reducing central planning to let

Facing savvy local officials quick to change financing strategies to evade rules, Chinese experts have championed creation of a municipal bond market. Such vehicles, they say, will decide which governments deserve funding, and spendthrift ones will be punished with higher borrowing costs. Beijing appears to like the idea, and is testing the ground for such a bond market in six prosperous cities including Shanghai and Guangzhou. But short of full disclosure of just how much governments take in and borrow, analysts doubt China’s experiments with its local bond market will go far. “Banks and rating agencies do not have easy access to local governments’ overall fiscal position, which includes not only budgeted revenue and expenditure but also extra-budgetary revenue and expenditure,” the International Monetary Fund said in October. “This lack of transparency prevents banks and rating agencies from pricing credit risk properly and prevents local governments from managing related risks prudently,” it said. Reuters

11 11

January 2014 April 19,6,2013

Asia

Mining in Goa was banned in September 2012

Stung by curbs, Indian iron ore firms throw in towel Bans have cut iron ore exports by about 85 percent in two years Krishna N Das and Manolo Serapio Jr

op Indian trader MMTC Ltd’s US$80 million iron ore export terminal, ready since 2010, has never handled a cargo. Now the company wants to spend US$16 million to convert the terminal to ship coal. Bans on iron ore mining and exports in India’s top producing states of Karnataka and Goa have choked the industry so hard that MMTC is one of many firms exiting. Even if efforts to fully lift the bans make it past the many bureaucratic and legal hurdles, iron ore miners do not expect complete resumption of production until late 2014. The bans, put in place as the government tried to clamp down on illegal mining, have cut India’s iron ore exports by about 85 percent, or 100 million tonnes, over the past two years. They have also reduced foreign exchange earnings by more than US$17 billion in the same period, according to the Federation of Indian Mineral Industries (FIMI). The structural shift in India’s iron ore industry could be a blessing for other suppliers, as demand growth from top market China slows and Australian miners Rio Tinto Group and BHP Billiton Ltd ramp up output. It will also make it harder for India to regain its spot as the world’s No.3 exporter of the steelmaking raw material. “It’s pretty evident that there’s lasting damage to the industry,” said R. K. Bansal, a secretary general at FIMI. “But if the government of the day at the state and central level, as well as other authorities, stick their neck out and take decisions then this paralysis can go.” Mining in Goa was banned in September 2012, freezing shipments that reached about 50 million tonnes in the 2010-11 fiscal year. In neighbouring Karnataka, where the ban started in 2011, exports

We think that at least in the next five to six years there will be no exports of iron ore SM Babu, general manager at MMTC’s Chennai office

Basant Poddar, owner of Mineral Enterprises Ltd, which has four mining leases in Karnataka but none operating currently. “For those willing, the issue is with forest clearances. The whole process goes through about 50 levels or officers for stage one clearance, and for stage two it’s cut down to about 20.” Last week, Vedanta Resources Plc, a London-based mining conglomerate controlled by Indian tycoon Anil Agarwal, said its Sesa Sterlite unit had resumed operations in Karnataka after clearance from a court-appointed panel.

Appetite waning remain frozen even though it was lifted in April.

Lower exports In both states, the bulk of mining was done by private companies, which were accused of mining outside lease areas and in excess of set limits. MMTC was banking on business from Karnataka when it invested along with Indian partners Sical Logistics Ltd and L&T Infrastructure Development Projects in an iron ore terminal in Ennore Port in the southern Tamil Nadu state. “We think that at least in the next five to six years there will be no exports of iron ore,” said SM Babu, general manager at MMTC’s Chennai office. Instead the joint venture company hopes to tap growing demand for coalfired power plants in Tamil Nadu. Only 16 out of 115 mines have resumed mining in Karnataka. For those keen on returning, the bureaucratic hurdles can be overwhelming. “There are about 30 or 40 companies whose quantities are so low that they will never restart,” said

Jiro Iokibe, analyst at Daiwa Securities in Tokyo, sees Indian iron ore exports of 15 million tonnes next year, rising to 20 million tonnes in 2015. This is well below the record of more than 117 million tonnes in 2009-2010. Lower Indian supply has eased pressure on a market seen moving to surplus given expansion by low-cost producers such as Rio Tinto, BHP Billiton and Brazil’s Vale while growth in Chinese demand eases. India’s exports to China reached just over 10 million tonnes in JanuaryNovember, down 68 percent from a year earlier. “Definitely people are not depending now on Indian material,” said a trader in Shanghai who is among a few left selling only Indian iron ore to Chinese mills. “Most traders have switched to mainstream cargoes from Australia and Brazil and cargoes from India are going at a discount of maybe up to US$4 a tonne.” India’s central and state governments, which put in place the various bans under direction from a Supreme Court determined to clamp

down on illegal mining, appear keen on getting the iron ore sector back on its feet. “We have placed all the regulatory measures we have undertaken in front of the Supreme Court so that we can resume mining operations,” Prasanna Acharya, mines director in Goa, said in November. The court has set up a panel that will determine a limit on Goa’s production. The panel is expected to submit an interim report by February 15, but Mr Acharya has said he does not expect a resumption in mining before October at the earliest.

Collateral damage When the iron ore miners give up, so do businesses relying on the raw material. Out of the 53 sponge iron making plants in Karnataka with annual production capacity of about 3 million tonnes, 19 have closed and 27 are operating at half their capacity due to a shortage of iron ore, said Deependra Kashiva, executive director of the Sponge Iron Manufacturers Association. India is the world’s top producer of sponge iron, an alternative steelmaking ingredient that is economically viable where natural gas is abundant and cheap. At Sesa Sterlite’s 7 milliontonnnes-per-year mine in Codli Village, about 50 kilometres east of Goa’s capital Panaji, machinery operator Lakshdeep Asrekar is among a few who still report to work. Mr Asrekar is lucky because many have lost their jobs, with industry group FIMI estimating job cuts at 200,000 across Goa and Karnataka. “We come and start our machinery and dumpers and keep them running for 15-20 minutes so that they are in working condition,” said Mr Asrekar. Reuters

12 12

January 6, 2014 April 19, 2013

Asia

Loans recover as borrowing costs slip most in decade Interest margins fell in eight of the 11 Asia-Pacific loan markets Foster Wong and Paulina Duran

yndicated lending in Asia rebounded last year as companies boosted borrowing to take advantage of the biggest drop in loan interest rates in a decade. Borrowers led by China National Offshore Oil Corp and Origin Energy Ltd pushed lending volumes in the AsiaPacific region outside Japan to US$423.6 billion last year from US$387.6 billion in 2012, according to data compiled by Bloomberg. The average interest margins charged for U.S. dollardenominated loans shrank 23 basis points, the most since at least 2003, to 267 basis points, the data show. After sliding 16 percent in 2012, the amount of loans jumped last year ahead of moves by the U.S. Federal Reserve to unwind record stimulus that had caused volatility in the bond market and helped lower loan prices. Dollar bond sales in the region fell almost 50 percent to US$44.9 billion in the second half of 2013 from US$82.6 billion in the first six months. “Price tightening in the loan market had a positive impact on overall volumes in 2013,” said Priscilla Lee, the Hong Kong-based head of northeast Asia loan syndications at Bank of Tokyo-Mitsubishi UFJ Ltd. “Spreads are unlikely to drop further this year.” Interest margins fell in eight of the 11 Asia-Pacific loan markets in 2013, according to Bloombergcompiled data. In Hong Kong, where

Rahul Gandhi

average margins narrowed by 55 basis points to 230, syndicated facilities surged 81 percent to a record US$63.4 billion, the data show. Volumes in Australia climbed 24 percent to US$103.7 billion after loan pricing dropped 62 basis points to 243 basis points.

Margin contraction “There’s still downward pressure on pricing, so we’ll continue to see margin contraction,” said Phil Lipton, Hong Kong-based head of syndicated finance for Asia-Pacific at HSBC Holdings Plc. “However, we do have upward pressures as well, as we’re getting closer to when Basel III comes into effect.” Basel III, a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk, is aimed at bolstering banks’ liquidity and levels of capital to prevent a repeat of the financial crisis that deepened with the collapse of Lehman Brothers Holdings Inc in 2008. Borrowers also took advantage of the fall in pricing last year to refinance debt and shore up working capital facilities. While high-grade borrowers helped push down Asia’s loan pricing, spreads for these credits may have bottomed, according to Phoebe Li, a senior vice president in the corporate finance group at Taipeibased Chinatrust Commercial Bank. That’s because regional

Gandhi rises in India ruling party R

ahul Gandhi is poised to lead India if the ruling Congress party wins the next election after

Cnooc Ltd and parent borrowed a total of US$9 billion last year

lenders such as Taiwanese banks have shunned these low-priced deals, Ms Li said. Borrowers from mainland China accounted for four of the top 10 deals in the region last year, the data show. Cnooc Ltd and parent

China National Offshore Oil Corp, raised the most money, borrowing a total of US$9 billion. Alibaba Group Holding Ltd, China’s largest e-commerce company, in July completed an US$8 billion facility, the third-

biggest syndication in Asia last year, while Shuanghui International Holdings Ltd in December sealed a US$4 billion loan backing its acquisition of U.S.-based Smithfield Foods Inc.

Prime Minister Manmohan Singh signalled his support for the next member of the country’s famed political dynasty. Mr Singh, who on Saturday announced he would step down after a general election that must be held before May, said Mr Gandhi has “outstanding credentials” to run the world’s largest democracy. His immediate task is reviving a party that has seen its popularity fall under Mr Singh on corruption

scandals, Asia’s fastest inflation and an economy struggling to expand. “If they had gone into the election with Singh as the prime minister, the party would have been dead on arrival,” said Brahma Chellaney, a professor at the Centre for Policy Research in New Delhi who worked on an economic task force led by Mr Singh. “Removing the dead wood was essential if there’s any hope of winning some degree of credibility

with the voters.” Mr Gandhi, 43, will seek to make up ground in opinion polls to stem the momentum of Narendra Modi, the prime minister candidate of the main opposition Bharatiya Janata Party. Mr Modi has trumpeted his management of a state that accounts for a fifth of India’s exports while fighting off criticism of his 2002 handling of anti-Muslim riots that has made him persona non grata in the U.S.

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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

AFP

13 13

January 2014 April 19,6,2013

Asia

Jakarta to supply land for Foxcoon factory T

Yen climbs from five-year low Japanese currency expected to depreciate further this year Julie Haviv

he yen bounced from a five-year low versus the dollar on Friday as investors shunned risk and opted to book profits, but a major snowstorm blanketing the Northeast of the United States kept trade thin. A heavy snowstorm and dangerously cold conditions gripped the northeastern United States, delaying flights, paralysing road travel and closing schools and government offices across the region. “You have a holiday week, which is always going to be pretty light on volume and with most of the Northeast digging itself out of the snowstorm, that has made activity especially light, even for a holiday week,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C. The dollar fell as low as 104.05 yen and last traded 0.3 percent lower at 104.42 yen, down from a five-year high of 105.44 yen set on Thursday. Japanese market players are out for New Year holidays until this week. Asian stock markets were under water after a sudden reversal in some very popular trades sparked a bout of global risk aversion. Investors tend to flock to the yen in times of market stress. “The rebound in the yen is carryover from yesterday’s sell-off in equities and we also saw U.S. bond yields pull back from the higher end

Yen rises from lows as investors take profits

of their ranges,” Mr Esiner said. “Both of those factors provided investors an excuse to book some profit on the yen’s decline.” “With U.S. 10-year Treasury yields back at 3 percent, we have already seen the yen pare some of its overnight gains and it is trading well off its overnight highs,” he said. The dollar index, which tracks the greenback against six major currencies, was up 0.1 percent at 80.718, having hit a two-week high on Thursday as a slew of generally positive U.S. economic data reinforced

expectations the Federal Reserve will continue to move away from its bond purchases. The euro, the topperforming major currency of 2013, shed 0.8 percent to 142.08 yen on Friday, extending losses in the wake of its 1.2 percent slide the previous day. The euro has retreated from a five-year peak of 145.67 yen set on December 27. “January is a bit of a messy month for foreign exchange,” said Simon Smith, head of research at FxPro. “Volumes are still thin ... things are very much driven by flows. I don’t

Cambodia protesters call off rally Decision follows dismantling of protesters’ camp, deadly clashes with police

nti-government demonstrators called off a mass rally they had planned to stage in the Cambodian capital yesterday after a bloody crackdown on garment workers allied with the protest movement. The decision to call off the rally came hours after security guards and city workers, watched over by riot police, dismantled a camp occupied by anti-government demonstrators. Friday’s clashes, during which police shot dead four people, have stoked a political crisis in which striking workers and supporters of the opposition Cambodia National Rescue Party (CNRP) are challenging a government they say cheated its way to power and is depriving them of a fair wage. CNRP leader Sam Rainsy had vowed earlier that Sunday’s mass march and

Tension has been mounting since the July disputed national election

rally would go ahead. He also condemned Friday’s violence and demanded a thorough investigation. “The Cambodia National Rescue Party would like to inform all national compatriots that the party will suspend the [planned] protest,” the CNRP said in a brief statement.

Hundreds of CNRP supporters had been camped since December 15 in tents around a stage in Freedom Park, the only place in Phnom Penh where protests are allowed. Unions representing garment workers want better pay and support the CNRP’s demands for a re-run of an election in July it says was

think the yen is a one-way bet in 2014. The easy wins have been had. Always the most run-over people in the markets are yen bears.” Mr Smith expects dollar/ yen to end the year at 109 yen per dollar. Betting on the dollar against the yen has been a big trade for hedge funds and other investors over the past year, who see the Bank of Japan’s ultra-loose monetary policy and potential for more stimulus this year as one of the clearer themes in tricky currency markets. Reuters

rigged to allow long-serving Prime Minister Hun Sen to remain in power. The CNRP has won the support of some 350,000 garment workers from nearly 500 factories across Cambodia by promising to nearly double the monthly minimum wage to US$160 if it wins a re-run of the July election, which Hun Sen is refusing to hold. The government is refusing to raise the wage beyond US$100 dollars a month and has ordered factories to reopen to prevent damage and job losses in an industry worth US$5 billion a year. On Saturday, many CNRP supporters grabbed their belongings and fled, some clutching babies, when they saw riot police approaching Freedom Park, Reuters witnesses said. Riot police, however, held back from the main site while security guards and city workers in plain clothes, some carrying axes and steel pipes, moved in to dismantle the stage and tents. Three helicopters flew low overhead, while riot police carrying batons kept journalists away from the site. Reuters

he governor of Indonesia’s capital said he is willing to provide up to 200 hectares (494 acres) of land to Taiwanese electronics giant Hon Hai Precision Industry Co Ltd to build a factory there as part of a bid to attract more high-tech investments. Jakarta Governor Joko Widodo told Taiwan’s Central News Agency (CAN) in an interview that other than land in Marunda in north Jakarta, he promised Hon Hai chairman Terry Gou that the capital will also provide necessary infrastructure and workers. There was no immediate confirmation from Mr Widodo’s office. The government sent the location proposal to the company a month ago and the area of land on offer would equal about 373 American football fields. Hon Hai, better known by its trading name Foxconn, has been in talks with the Indonesian government on an investment agreement for more than a year, but the negotiations have been stalled over tax issues. The world’s largest electronics contract maker told Reuters last month it expects an agreement with local authorities of Jakarta or Yogyakarta in February and it plans to set up joint ventures with local private firms to tap the Southeastern Asian market. In December, Foxconn and BlackBerry Ltd announced a deal to design and market phones in Indonesia, the world’s fourthmost populous country, but one that is considered an under-penetrated market. Before setting up a factory in Indonesia, Foxconn will make BlackBerry phones at its Chinese factories. Indonesian government officials have said Hon Hai wants to gradually invest as much as US$10 billion over five years with local partner Erajaya Swasembada, and Indonesia will offer the Taiwanese firm a tax package aimed at kick-starting the plan. Hon Hai has yet to confirm the details. Reuters

14 14

January 6, 2014 April 19, 2013

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

Max 71.3

average 70.466

Min 69.55

Last 70.65

71.30

103.8

34.00

70.85

103.6

33.65

70.40

103.4

33.30

69.95

103.2

32.95

69.50

Max 103.7

average 103.45

Min 103

Last 103.7

103.0

Max 33.95

average 33.614

Min 32.6

32.60

Last 33.85

25.5

64.40 64.05

35.50 35.35

25.4

63.70

35.20 25.3

63.35

Max 64.35

average 63.581

Min 63

Last 63.4

63.00

Max 25.45

average 25.268

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Feb14

95.62

0.188610665

-2.844950213

106.2200012

BRENT CRUDE FUTR Feb14

108.51

0.677305623

-2.066787004

112.7999954

GASOLINE RBOB FUT Feb14

271.04

0.571428571

-2.710075739

286.9299889

243.68999

924

0.108342362

-2.066772655

960.75

840

4.307

-0.323999074

1.820330969

4.770000458

3.476000071

GAS OIL FUT (ICE) Feb14 NATURAL GAS FUTR Feb14

85.56999969

300.85

0.729902568

-1.849797729

317.8399801

278.4999847

Gold Spot $/Oz

1231.48

0.8203

2.3895

1696.2

1180.57

Silver Spot $/Oz

20.1828

0.8021

3.1967

32.46

18.2208

Platinum Spot $/Oz

1407.13

1.1232

3.7898

1742.8

1294.18

Palladium Spot $/Oz

NY Harb ULSD Fut Feb14 METALS

731.35

1.1088

2.8622

786.5

629.75

LME ALUMINUM 3MO ($)

1803

0.166666667

0.152756562

2184

1736.25

LME COPPER 3MO ($)

7393

0.448369565

8346

6602

LME ZINC

2075

0.97323601

2230

1811.75

3MO ($)

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

14005

0.755395683

18770

13205

15.52

0.064474533

1.603927987

16.77000046

15.12000084

422.25

0.416171225

0.059241706

606.5

418.5

WHEAT FUTURE(CBT) Mar14

599.5

0.418760469

-0.950020653

845

595

SOYBEAN FUTURE Mar14

1276

0.472440945

-1.276595745

1377.75

1174

COFFEE 'C' FUTURE Mar14

112

0.538599641

1.174345077

172.25

104.1499939

16.25

-0.245549417

-0.975015235

20.71999931

15.85999966

CORN FUTURE

Mar14

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

83.4

-0.761542123

-1.465028355

90.61000061

76.65000153

World Stock Markets - Indices NAME

Last 25.3

25.2

Max 35.5

average 35.336

Min 34.9

Last 35.35

34.90

Currency Exchange Rates

NAME ENERGY

Min 25.2

35.05

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16441.35

-0.8162682

-0.8162714

16588.25

13293.13

NASDAQ COMPOSITE INDEX

4143.069

-0.8025925

4177.728

3076.596

FTSE 100 INDEX

6713.04

-0.07249278

-0.5341432

6875.62

6016.8

DAX INDEX

9408.51

0.090106

-1.503852

9620.929688

7418.36

NIKKEI 225

16291.31

0.6945449

16320.22

10374.85

HANG SENG INDEX

22817.28

-2.239798

-2.098615

24111.55078

19426.35938

CSI 300 INDEX

2290.779

-1.343639

-1.684394

2791.303

2023.171

TAIWAN TAIEX INDEX

8546.54

-0.7663245

-0.7544522

8647.24

KOSPI INDEX

1946.14

-1.070054

-3.241618

S&P/ASX 200 INDEX

5350.098

-0.3318423

JAKARTA COMPOSITE INDEX

4257.663

FTSE Bursa Malaysia KLCI

NZX ALL INDEX PHILIPPINES ALL SHARE IX

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

0.8983 1.6439 0.901 1.3635 104.36 7.9869 7.7544 6.0517 62.4275 33.02 1.2665 29.961 44.64 12180 93.744 1.22852 0.82938 8.2526 10.8908 142.29 1.03

1.3311 -0.6887 -0.4661 -0.6485 0.987 -0.0025 -0.0052 -0.0149 -0.2563 -0.1514 0.0869 -0.03 -0.448 -0.1642 -0.3424 0.1791 -0.0386 0.5853 0.6473 1.6516 0

0.6837 -0.3757 -1.0766 -0.9372 0.6037 -0.0038 -0.0064 0.043 -1.0052 -0.742 -0.1895 -0.514 -0.5488 -0.0739 -0.1013 -0.1473 0.5751 1.0712 0.9366 1.5602 0

1.0599 1.6603 0.9839 1.3893 105.44 8.0111 7.7664 6.2492 68.845 33.041 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 86.77 7.9818 7.7503 6.0492 52.89 28.56 1.2214 28.913 40.54 9603 86.41 1.20826 0.80932 7.8281 10.195 113.56 1.0289

Macau Related Stocks NAME ARISTOCRAT LEISU CROWN RESORTS LT

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.65

-0.2145923

-0.8528797

5.12

3.19

653894

17.14

1.240402

1.721066

17.38

10.87

737345

AMAX INTERNATION

1.67

-1.183432

-2.906978

2.12

0.75

3488650

BOC HONG KONG HO

24.4

-1.414141

-1.810867

22.85

10800665

CENTURY LEGEND

0.42

-2.325583

0.68

0.26

760000

CHEUK NANG HLDGS

7.05

7.28

564501

CHINA OVERSEAS

21.45

-2.054795

-1.605501

25.6

17.7

16333239

CHINESE ESTATES

23.2

-5.112474

-3.734441

24.7

10.334

98633

CHOW TAI FOOK JE

11.36

-2.068966

-1.730107

13.4

7.44

6285357 1524838

EMPEROR ENTERTAI

4.1

1.485149

2.5

4.66

1.86

FUTURE BRIGHT

4.6

-3.966597

-1.918978

4.9

1.192

9150308

GALAXY ENTERTAIN

70.65

0.212766

1.581592

71.7

10617615

HANG SENG BK

123.8

-1.823949

-1.511533

132.8

110.6

1375510

HOPEWELL HLDGS

25.85

-1.711027

-1.52381

35.3

23.2

407326

HSBC HLDGS PLC

82.95

-1.950355

-1.426027

90.7

77.85

17021155 7214000

2.9

-1.360544

-1.360546

4.66

2.5

LUK FOOK HLDGS I

29.25

-0.8474576

31.5

16.88

815000

MELCO INTL DEVEL

28.45

-0.3502627

-0.1754386

29.15

9.23

2140000

7603.27

MGM CHINA HOLDIN

33.85

1.651652

2.265866

34.05

13.525

5553956

2063.28

1770.53

MIDLAND HOLDINGS

3.61

-2.168022

-3.217159

4.29

2.68

1522000

-0.03927452

5457.3

4632.3

NEPTUNE GROUP

0.33

-1.492537

-2.941177

0.4

0.131

138890000

-1.608452

-0.3863591

5251.296

3837.735

NEW WORLD DEV

9.66

-1.327886

-1.327885

15.12

9.62

12165962

SANDS CHINA LTD

63.4

-0.8600469 0.07892901

65.9

33.5

7373371

1834.74

-0.9827572

-1.725799

1882.2

1597

SHUN HO RESOURCE

1.65

1.92

1.33

1004.785

0.5896516

0.5896469

1048.998

880.669

SHUN TAK HOLDING

4.5

-1.098901

-1.315788

4.8

3.27

3602507

3647.91

-0.2984561

0.9293544

4571.4

3440.12

Euromoney Dragon 300 Index Sin

611.19

-0.05

STOCK EXCH OF THAI INDEX

1223.93

-0.5557497

-5.758014

1649.77

1208.6

HO CHI MINH STOCK INDEX

505.37

0.1704624

0.1466402

533.15

413.68

Laos Composite Index

1251.31

-0.8242782

-0.1611625

1455.82

1222.9

HUTCHISON TELE H

SJM HOLDINGS LTD

25.3

-1.937984

-2.692308

17.04

7580083

SMARTONE TELECOM

8.53

-2.957907

-3.724601

14.46

7.38

2234000

WYNN MACAU LTD

35.35

0.5689857

36.9

5732436

ASIA ENTERTAINME

N/A

BALLY TECHNOLOGI

79.03

0.7393244

0.7393283

79.42

45.2926

509957

BOC HONG KONG HO

3.15

-2.173913

-2.173914

3.6

2.99

49150

GALAXY ENTERTAIN

9.06

0.554939

0.5549364

9.15

3.8975

23596

17.72

-2.422907

21.2

14.54

3115182

JONES LANG LASAL

101.95

-0.4297295

-0.4297289

103.2299

80.86

209374

LAS VEGAS SANDS

79.58

0.9002155

0.900212

47.95

3862780

MELCO CROWN-ADR

40.11

2.26925

2.269247

40.654

17.55

2864145

MGM CHINA HOLDIN

4.23

-1.856148

-1.856147

4.31

1.7651

5200

MGM RESORTS INTE

23.72

0.8503401

0.8503382

23.94

11.72

8408771

SHFL ENTERTAINME

23.19

#N/A N/A

23.25

13.88

344231

SJM HOLDINGS LTD

3.35

0.2994012

0.2994038

3.6

2.2

58420

197.94

1.920601

1.920598

199.88

111.3456

3056065

INTL GAME TECH

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

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.2

1.003344

16574881

CHINA UNICOM HON

13.68

1.333333

22775492

ALUMINUM CORP-H

3.61

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

23452.76

LOW

22796.29

CHINA RES LAND

17.16

1.179245

6849146

NEW WORLD DEV

12.98

1.564945

12528960

52W (H) 24111.55078

CHINA RES POWER

16.08

-0.618047

7490964

PETROCHINA CO-H

10.94

-1.263538

64234127

(L) 19426.35938

CHINA SHENHUA-H

33.35

-0.1497006

11160228

PING AN INSURA-H

63.35

1.198083

8338502

0 23460

INDEX 22817.28 HIGH

VOLUME

22790

31-December

3-January

15 15

January 2014 April 19,6,2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China Daily The National Development and Reform Commission, China’s top economic planner, will allow bond swaps in an effort to avoid defaults in the local government-created separate investment agencies. In a statement the commission said that as part of its latest debt-restructuring effort, it will let local government financing vehicles issue new bonds to replace old ones that may have matured but can’t currently be repaid due to lack of funds. China has more than 10,000 LGFVs, created by local governments to fund the building of roads and other infrastructure.

Taipei Times Manufacturing activity in Taiwan improved last month for the 10th straight month, with the official purchasing managers’ index (PMI) rising to its highest level since June, according to a report released by the Chung-Hua Institution for Economic Research. The official PMI reading stood at 53.6 last month, up 1.6 points from a month earlier, the Taipei-based think tank said. A PMI above 50 indicates expansion. The expansion, mainly driven by the rise in new orders and production, provided more evidence that the nation’s economy is gradually recovering, CIER president Wu Chung shu said.

Asahi Shimbun Sony Corp is planning another round of job cuts after failing to produce profits in its mainstream electronic equipment sector. No specific target has been set for the latest downsizing measure, but it will affect five plants operated by wholly owned subsidiary Sony EMCS Corp. Sony EMCS produces digital cameras, TV sets and computers. The factories together employ about 5,000 people. “Because there is insufficient demand in the electronic equipment sector to support the current work force, there is a need to reduce the sector to the appropriate level,” a Sony executive said.

Korea Herald The South Korean won gained 1.4 percent last year to the U.S. dollar, becoming the fourth-best performer among major 20 currencies, official data showed. Meanwhile, the won hiked by 23.6 percent to the Japanese currency last year, the data showed, raising concerns that its exports may lose ground in overseas markets. Key export items of the two countries overlap in overseas markets, which means that a weaker yen could hurt profitability of South Korean firms.

The world economy’s shifting challenges George Soros

Chairman of Soros Fund Management and of the Open Society Foundations

s 2013 came to a close, efforts to revive growth in the world’s most influential economies – with the exception of the eurozone – are having a beneficial effect worldwide. All of the looming problems for the global economy are political in character. After 25 years of stagnation, Japan is attempting to reinvigorate its economy by engaging in quantitative easing on an unprecedented scale. It is a risky experiment: faster growth could drive up interest rates, making debt-servicing costs unsustainable. But Prime Minister Shinzo Abe would rather take that risk than condemn Japan to a slow death. And, judging from the public’s enthusiastic support, so would ordinary Japanese. By contrast, the European Union is heading toward the type of long-lasting stagnation from which Japan is desperate to escape. The stakes are high: Nationstates can survive a lost decade or more; but the EU, an incomplete association of nation-states, could easily be destroyed by it.

Euro pain The euro’s design – which was modelled on the Deutsche Mark – has a fatal flaw. Creating a common central bank without a common treasury means that government debts are denominated in a currency that no single member country controls, making them subject to the risk of default. As a consequence of the crash of 2008, several member countries became over indebted, and risk premia made the eurozone’s division into creditor and debtor countries permanent. This defect could have been corrected by replacing individual countries’ bonds with Eurobonds. Unfortunately, German Chancellor Angela Merkel, reflecting the radical change that Germans’ attitudes toward European integration have undergone, ruled that out. Prior to reunification, Germany was the main motor of integration; now, weighed down by reunification’s costs, German taxpayers are determined to avoid becoming European debtors’ deep pocket. After the crash of 2008, Merkel insisted that each country should look after its own financial institutions and

government debts should be paid in full. Without realising it, Germany is repeating the tragic error of the French after World War I. Prime Minister Aristide Briand’s insistence on reparations led to the rise of Hitler; Angela Merkel’s policies are giving rise to extremist movements in the rest of Europe. The current arrangements governing the euro are here to stay, because Germany will always do the bare minimum to preserve the common currency – and because the markets and the European authorities would punish any other country that challenged these arrangements. Nonetheless, the acute phase of the financial crisis is now over. The European financial authorities have tacitly recognised that austerity is counterproductive and have stopped imposing additional fiscal constraints. This has given the debtor countries some breathing room, and, even in the absence of any growth prospects, financial markets have stabilised. Future crises will be political in origin. Indeed, this is already apparent, because the EU has become so inward-looking that it cannot adequately respond to external threats, be they in Syria or Ukraine. But the outlook is far from hopeless; the revival of a threat from Russia may reverse the prevailing trend toward European disintegration.

made some progress in deleveraging. Quantitative easing has boosted asset values. And the housing market has improved, with construction lowering unemployment. The fiscal drag exerted by sequestration is also about to expire. More surprising, the polarisation of American politics shows signs of reversing. The two-party system worked reasonably well for two centuries, because both parties had to compete for the middle ground in general elections. Then the Republican Party was captured by a coalition of religious and market fundamentalists, later reinforced by neoconservatives, that moved it to a far-right extreme.

A successful transition in China will most likely entail political as well as economic reforms

American strength As a result, the crisis has transformed the EU from the “fantastic object” that inspired enthusiasm into something radically different. What was meant to be a voluntary association of equal states that sacrificed part of their sovereignty for the common good – the embodiment of the principles of an open society – has now been transformed by the euro crisis into a relationship between creditor and debtor countries that is neither voluntary nor equal. Indeed, the euro could destroy the EU altogether. In contrast to Europe, the United States is emerging as the developed world’s strongest economy. Shale energy has given the U.S. an important competitive advantage in manufacturing in general and in petrochemicals in particular. The banking and household sectors have

The Democrats tried to catch up in order to capture the middle ground, and both parties colluded in gerrymandering Congressional districts. As a consequence, activistdominated party primaries took precedence over general elections. That completed the polarisation of American politics. Eventually, the Republican Party’s Tea Party wing overplayed its hand. After the recent debacle of the government shutdown, what remains of the Republican establishment has begun fighting back, and this should lead to a revival of the two-party system. The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise

has run out of steam. That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35 percent of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing. There are some eerie resemblances with the financial conditions that prevailed in the U.S. in the years preceding the crash of 2008. But there is a significant difference, too.

Economic growth In the U.S., financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises. Aware of the dangers, the People’s Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook. The Chinese leadership was right to give precedence to economic growth over structural reforms, because structural reforms, when combined with fiscal austerity, push economies into a deflationary tailspin. But there is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years. How and when this contradiction will be resolved will have profound consequences for China and the world. A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad. The other great unresolved problem is the absence of proper global governance. The lack of agreement among the United Nations Security Council’s five permanent members is exacerbating humanitarian catastrophes in countries like Syria – not to mention allowing global warming to proceed largely unhindered. But, in contrast to the Chinese conundrum, which will come to a head in the next few years, the absence of global governance may continue indefinitely. © Project Syndicate

16 16

January 6, 2014 April 19, 2013

Closing HTC posts second operating loss

Bernanke bows out with upbeat view

HTC Corp posted its second consecutive quarterly operating loss as a continued decline in sales dragged down earnings at the Taiwanese smartphone maker. Fourth-quarter operating loss was NT$1.56 billion (US$52 million), the Taoyuan-based company said in a statement yesterday. Net income, boosted by the sale of its remaining stake in Beats Electronics LLC, was NT$310 million, missing the NT$694 million average of analysts’ estimates. HTC’s release of its largest phone to date, called One Max, failed to halt a nine-quarter slide in sales even after commencing sales of 4G handsets through China Mobile Ltd.

Ben Bernanke is ending his tenure as U.S. Federal Reserve chairman with an upbeat assessment for the U.S. and global economy, declaring “some grounds for cautious optimism” for both advanced and emerging economies around the world. In what was likely to be his last big policy speech before handing over the reins of the U.S. central bank to Janet Yellen next month, Mr Bernanke said difficult reforms in Europe and Japan were “still in early stages” but “we have also seen indications of better growth”. He also said he thought that the factors that kept the U.S. economy from accelerating were finally easing.

Clashes in boycotted Bangladesh poll There have been violent clashes between opposition activists and police during Bangladesh’s general election, amid a boycott by the opposition. At least 11 people were killed during yesterday’s polling. Dozens have died in the run-up to the election. Scores of polling stations have been torched and voting was said to be thin. Results were expected to come in overnight. The opposition has boycotted the vote and called a two-day strike over what it termed a “scandalous farce”. The electoral authority suspended voting in about 100 polling stations out of a total of 18,208 due to arson attacks and vandalism, Muhammed Sadique, secretary of the Election Commission, said. At least 111 polling stations, mostly schools, were set ablaze by the attackers. However, Prime Minister Sheikh Hasina’s Awami League is assured of victory, with government candidates already declared victors by default in many seats. She had rejected opposition demands for her to step down and set up a neutral government to oversee the poll. Ms Hasina’s Awami League needs to win only 24 of the 147 seats up for grabs for a parliamentary majority after taking 127 of the 153 uncontested constituencies. Work began on the expansion of the shipping hub in 2009

Spain steps into Panama Canal row Consortium threatens canal expansion halt as costs overrun

Obama calls for restoring of benefits for unemployed U.S. President Barack Obama urged Congress to make the restoration of unemployment benefits a priority as both he and lawmakers return to work after a holiday break. The renewal of the “vital economic lifeline” provided by the aid should be lawmakers’ “first order of business” this week, Mr Obama said in his weekly radio and Internet address yesterday. “Republicans in Congress went home for the holidays and let that lifeline expire,” the president said, referring to the programme that provided supplemental payments to long-term unemployed workers. “And for many of their constituents who are unemployed through no fault of their own, that decision will leave them with no income at all.” Senate Democrats are searching for a compromise with Republicans to extend the programme for another three months to about 1.3 million people. The plan would cost about US$6.5 billion, according to the Congressional Budget Office. Republican congressional leaders say the spending should be offset with cuts elsewhere in the budget. The jobless benefits expired December 28 after the programme was left out of a deal to fund the government for two years that Democrats and Republicans hammered out before leaving Washington for their break.

pain stepped in to try to resolve a cost dispute over the expansion of Panama’s canal, which has triggered a sell-off in the shares of Sacyr SA, the Spanish builder leading the project. Spain’s Public Works minister, Ana Pastor, and Sacyr chairman Manuel Manrique travelled to Panama on the weekend, Panama’s president, Ricardo Martinelli, said. A Spanish-Italian consortium working on the project, which would widen the canal so that ships three times larger than at present could use it, has asked Panama to pay for US$1.6 billion in cost overruns on the US$3.2 billion plan to build a third set of locks for the canal. Panama rejected that demand, though it has hinted it could be willing to negotiate with the consortium. The massive infrastructure development aims to make it easier for example to move cargo between Asia and the eastern coasts of the Americas, potentially reducing the cost of transporting commodities and manufactured goods. The dispute with the consortium could bring the project to a halt. But a senior source from the consortium played down the dispute, saying negotiations on cost overruns were normal, albeit seldom played

out in the public eye. “To think a five-year project of the size and complexity of this one will not entail extra costs is absurd,” the senior source said, on condition of anonymity. The consortium includes Italy’s Salini Impregilo, Belgium’s Jan De Nul and Panama’s Constructora Urbana. Uncertainty over the outcome has wiped 263 million euros (US$358 million) off the market value of Sacyr in two days, while shares in Salini Impregilo were broadly flat.

2015 target On Thursday the spat seemed to escalate with President Martinelli accusing the companies of irresponsibility. But on Friday the parties said they were seeking a resolution. “We’re going to continue talking to get this work built because the governments of Panama, Spain and Italy have an interest in seeing this project built and that the problems between the interested parties are resolved,” Mr Martinelli told reporters after a meeting with Spanish and Italian diplomats. Spain’s ambassador to Panama, Jesus Silva, said minister Pastor would meet Mr Martinelli and canal

executives today after arriving with a team of Spanish officials. The building consortium had stressed that it was committed to finishing the job, Mr Silva added. “What it obviously can’t do just now is take on economic losses they’ve evaluated… that are beyond the consortium’s capacities and that of any company in the world,” he said. The project is more than twothirds complete and is scheduled to conclude in 2015. The consortium had said last week it would suspend the work unless the authorities came up with a solution within 21 days, and that overruns were due to unforeseen events during construction that it deemed normal on such large projects – a stance supported by some investors. The Panama Canal has requested additional information from the group as the “numbers change day by day” and any claims must be decided by an independent court, said Jorge Quijano, the waterway’s chief administrator. “We have been paying them better than anyone else in the world pays a contractor,” Mr Quijano said on a conference call with reporters. “It’s to everyone’s advantage to complete the work.” Reuters