Macau Business Daily, Jan 10, 2014 by Business Daily

Year II

Number 452 Friday January 10, 2014

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

Extra PRC holidays could boost city’s economy

Hang Seng Index 23045

f the central government restores the Labour Day golden week holiday previously falling in May, the likely rise in the number of mainlanders visiting Macau could boost the economy here, say experts on tourism. The State Council’s Chinese Academy of Social Sciences proposed this week the mainland restore the Labour Day holidays, beginning on May 1, to seven days. Since 2008 they have lasted only three days.

Shun Tak Holdings sets up JV for Hengqin project www.macaubusinessdaily.com

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The academy’s Tourism Research Centre also proposed extending the Lunar New Year break. The changes would add two to six more public holidays to the mainland’s calendar. Official data show Macau had 4.5 percent more visitors in the first 11 months of last year than in the equivalent period of 2012. More than 63.6 percent, about 17 million, were mainlanders. More on page 2

Telco SmarTone issues first half profit warning

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New Century Hotel rebranded as Imperial Palace Page 7

Bus services to be under public concessions: government

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HSI - Movers Name

%Day

CHINA RES POWER

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CHINA OVERSEAS

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NEW WORLD DEV

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-2.50

CHINA LIFE INS-H

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CHINA PETROLEU-H

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Source: Bloomberg

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The government’s service contracts with the three local bus operators will be replaced with public service concession agreements, the Legal Affairs Bureau’s director André Cheong Weng Chon said during a Legislative Assembly debate session yesterday. The Transport Bureau’s director Wong Wan admitted yesterday he should be the “first person” to be held accountable for the mistake. He didn’t respond to legislators when asked if he would be disciplined. Page 3

MTEL offers free relay of free TV

Casino conferences set to blossom this May

Fixed-line telecommunications operator Companhia de Telecomunicações de MTEL says it has signed an agreement to relay at no charge, free-to-air television signals to six public antenna firms. It made the promise even though it only won a telco licence in June and hasn’t yet built its own network. MTEL declined to comment on whether it would bid to replace Macau Cable TV Co Ltd as the city’s payTV concessionaire.

There’s the prospect this spring of three major casino conferences in East Asia in the space of a single month. The news emerged after the Washington D.C.-based casino industry lobby group the American Gaming Association and its partner Reed Exhibitions said they aim to hold a new event called ‘G2E Japan’ – or Global Gaming Expo Japan – with Union Gaming Group as organiser of an investment forum segment.

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January 10, 2014

Macau

Restoration of May Day golden week proposed Macau could benefit from more mainlanders visiting during the long holidays Tony Lai

tony.lai@macaubusinessdaily.com

f the central government restores the Labour Day golden week, the probable rise in the number of mainlanders visiting Macau could boost the economy here, experts on tourism say. An arm of the State Council’s Chinese Academy of Social Sciences proposed this week that the mainland once again extend the Labour Day holidays, beginning on May 1, to seven days. Since 2008 the Labour Day holidays have lasted only three days. The academy’s Tourism Research Centre also proposed making the Lunar New Year holidays longer than one week. The changes would add two to six more public holidays to the mainland’s calendar. Experts on tourism say the extra public holidays would probably benefit Macau by giving mainlanders more time off to visit the city, but that the economic benefits would be limited. “This will definitely bring more visitors to spend here,” the president of the Macau Travel Industry Council, Andy Wu Keng Kuong, told Business Daily. “There are usually about one-third more mainland visitors in the city during golden weeks than at other times of the year.” An assistant professor of international tourism at the City University of Macau, Gao Yan, said: “Longer holidays would mean the central government was encouraging the people to travel and consume abroad.”

crowds during peak periods for travel are a sign of insufficient long vacations.”

Give us more

Nearly 100 million mainlanders went travelling last year

Ms Gao said the three days off mainlanders had for the Labour Day holidays were enough for a visit to Macau or Hong Kong, but not both. “If there were seven days, they could visit both places on one trip.” But she added that the benefits to Macau would not be “huge” unless more mainland cities were covered by the Individual Visit Scheme. The scheme gives citizens of 49 mainland cities visas to travel to Macau as individuals rather than as members of tour groups, who travel on collective visas. The National Tourism Administration reported this week that over 97.3 million mainlanders went travelling

There are usually about one-third more mainland visitors in the city during golden weeks than at other times of the year Andy Wu, Macau Travel Industry Council president

last year, 16.8 percent more than a year earlier. The administration’s target for this year is for 110 million mainlanders to go travelling. The purpose of restoring the Labour Day golden week is to encourage mainlanders to travel at times other than the National Day Golden Week. Most mainlanders travel during the seven days of National Day holidays in October. Many mainland tourist attractions were overcrowded early in October last year, prompting calls to rearrange the public holidays. The Shanghai Daily quoted Chinese Academy of Social Sciences researcher Liu Simin as saying: “Excessive

Race heats for northerners’ cash Casino firms, junkets, eye new clients in Beijing and beyond

acau’s casino junket operators want to establish client networks in the north of mainland China to prepare for future casino openings in Russia’s Far East, said Hoffman Ma Ho Man, deputy chairman of Success Universe Group Ltd, speaking to our sister publication Macau Business magazine. Mr Ma is also deputy chief executive of Macau casino resort Ponte 16, a joint venture with SJM Holdings Ltd. In July 2013, fellow Macau casino investor Lawrence Ho Yau Lung announced he was planning – via his Hong Kong-listed interests Melco International Development Ltd and Summit Ascent Holdings Ltd – to invest initially up to US$130 million (1.04 billion patacas) in a casino resort near Vladivostok in the Primorsky Krai region of the

Russian Far East, an area also known as Primorye. The region shares a border with mainland China and North Korea and is accessible by air from Beijing in under three hours. The first phase of Mr Ho’s scheme would have about 119 hotel rooms, 800 slot machines, 25 VIP gaming tables and 40 mass-market gaming tables, according to a September filing by Summit Ascent. The casino is “targeted to open in the second half of 2014” said the filing. In September, Hong Kong-listed Cambodian casino operator NagaCorp Ltd announced it was planning to invest US$350 million to build its own casino, hotel and exhibition venue in the same Russian province. NagaCorp, which is aiming to fund its project using equity and or debt, said the complex would

have 100 gaming tables, 500 electronic machines. The company’s Russian project will take several years and may not begin operations before 2018, according to its September statement. Northern China is increasingly a target market for Macau itself. Factors including improved rail and air links mean the city is no longer simply a

10,000

Northern Chinese with RMB100 mln+ assets

The central government’s response to the proposal to restore the Labour Day golden week was not immediately apparent. The results of a public opinion poll posted on the mainland’s Sina.com news website show 96.9 percent of the 22,000 people polled would like longer Lunar New Year holidays, and that 86.8 percent hope the Labour Day holidays will once again be extended to seven days. The Chinese Academy of Social Sciences said restoring the Labour Day golden week would mean mainlanders would have a larger presence among visitors to Macau. The Macau Travel Industry Council’s Mr Wu said: “Even though we wish to tap markets for longhaul visitors such as India and Russia, that is still only an aspiration for now. The reality is that mainlanders will still be the major driver of the tourism industry in the near future.” Official data show that Macau had 4.5 percent more visitors in the first 11 months of last year than in the equivalent period of 2012. Over 63.6 percent or 17 million were mainlanders. The number of mainlanders that visited was 10.4 percent higher than a year earlier.

day trip destination for neighbouring Guangdong province. “There’s now a lot of newfound wealth inland and in northern China,” Pacificnet Ventures Ltd partner and founder Tony Tong told Macau Business. His company advises junket promoters and also invests in VIP rooms. “In northern China, in particular Beijing, nearly 200,000 people are millionaires and over 10,000 people have more than 100 million yuan [131 million patacas],” estimates Mary Mendoza, a former Macau casino marketing executive and now boss of casino marketing firm Platinum Ltd. “Guangzhou has slightly over 160,000 millionaires – and [counting] super-rich…almost 10,000 people, followed by Shanghai with nearly 150,000 millionaires and over 8,000 super-rich. These guys have a high propensity to play and travel frequently,” she adds. To read more about Macau and marketing to northern China, get the January edition of Macau Business magazine at newsstands or online via Magzter.com. M.G.

January 2014 April 19,10, 2013

Macau

The city’s bus system was introduced in August 2011

Bus services to be under public concessions: govt Administration to follow graft watchdog’s advice on the illegality of the current arrangements Stephanie Lai

sw.lai@macaubusinessdaily.com

he government’s service contracts with the three local bus operators will be replaced with public service concession agreements, the Legal Affairs Bureau’s

director André Cheong Weng Chon said during a Legislative Assembly debate session yesterday. Mr Cheong, along with Secretary for Transport and Public Works Lau Si Io and

head of Transport Bureau Wong Wan, attended the discussion. It considered whether the service contracts signed with the bus operators in January 2011 were against the public interest. A Commission

Against Corruption report in November last year said the service contracts were illegal. “There was a wrong adoption of laws when making the service contracts with the three bus companies, as pointed out by the Commission Against Corruption,” André Cheong told legislators yesterday. The Transport Bureau’s director Wong Wan admitted yesterday he should be the “first person” to be held accountable. However, Mr Wong did not respond to legislators when asked if he would be subjected to any disciplinary procedure. “Now the major direction is, as suggested by the commission, that we should turn the present service contracts into concession contracts,” Mr Cheong said.

“We will strive to do it within three months,” he added. The government in January signed a three-month lease contract with the courtappointed administrator of bankrupt bus operator Reolian Public Transport Co Ltd to continue using its assets, namely its buses. Reolian’s fleet operates 27 of the city’s bus routes, or about two-fifths of all the local bus routes, but it was declared bankrupt on December 4 last year. But the court warned the administration needed to find a longer-term solution. The Transport Bureau pledged it would find a new operator or “other viable solutions”. “Within these three months our first task is to solve the takeover of Reolian,” said Mr Cheong. “During this process the new operator will have to follow the public service concession system.” “After this system is practised, we’ll take it for [as a] reference for improving the present service contracts with the other two bus companies,” Mr Cheong said. The two bus companies referred to are Transportes Urbanos de Macau SARL (Transmac) and Sociedade de Transportes Colectivos de Macau SARL (TCM). Adjusting the format of the service agreements for the bus operators while maintaining the current bus service would be “a challenge”, Mr Cheong said without elaborating.

MTEL offers free relay of free TV But telco declines to say if will bid for Macau Cable TV’s concession Tony Lai

tony.lai@macaubusinessdaily.com

ixed-line telecommunications operator Companhia de Telecomunicações de MTEL says it has signed an agreement to relay free-to-air television signals to six public antenna firms. The deal is due to take effect after April 21, when Macau Cable TV Co Ltd’s pay television concession expires. Since August Macau Cable TV has been carrying out the role – on behalf of the government – of relaying free channels to all 14 public antenna firms. MTEL’s announcement was a surprise, because the government hadn’t yet publicly stated how it planned to organise distribution to the public of free-to-air TV channels once Macau Cable TV’s concession ends. MTEL’s “intention of cooperation” said it would reserve 150 megabits of bandwidth to transmit the signals on behalf of the Bureau of Telecommunications Regulation. MTEL said it would not charge for the service. Business Daily yesterday asked MTEL if it would bid to replace Macau Cable TV as the city’s payTV concessionaire. But Iu Veng Ion, a public relations spokesman for MTEL, told us: “Today is not the day to discuss that.”

Steve Lam of public antenna firm Tak Va Enterprise Co (Photo: Manuel Cardoso)

Steve Lam, a representative of one of the public antenna firms, said that as a single TV channel takes up approximately two to six megabits, the arrangement would allow MTEL to relay up to 75 channels.

Most coverage The six antenna firms involved in the deal control a distribution system serving 75 percent of local households, Mr Lam claimed at a

press conference yesterday. “The government has never discussed with us what will happen after April 21,” said Mr Lam. “Many of us are worried as we do not know which [business] path we can still walk on in the future.” Six of the antenna firms – including Mr Lam’s Tak Va Enterprise Co –have had talks with both MTEL and the city’s main telco – Companhia de Telecomunicações de Macau SARL – regarding relay of TV transmissions,

he stated. “But there is no result from CTM, which said it will only make a decision after the situation [of the future television market] becomes clearer,” said Mr Lam. The administration has so far only said the television market will be divided into paid and basic services after April. The latter would be transmitted by a “non-profit institute” to the antenna firms, Secretary for Transport and Public Works Lau Si Io said earlier this week. But there are no more details as a study by the University of Macau on the matter will only be finished in September, Mr Lau said. Business Daily asked the telecommunications bureau for comment on the MTEL-antenna deal but no reply was available by press time. Asked whether MTEL can lay its fixed network before April as it was only granted a licence last June, Francisco Lam, MTEL’s director, said yesterday it expected to have 30 percent of the network in place by November. He’s confident there will be no problem if the government can handle their construction application “as a special case”.

January 10, 2014

Macau

Shun Tak sets up JV for Hengqin project The company intends to start building on the island this summer Stephanie Lai

sw.lai@macaubusinessdaily.com

hun Tak Holdings Ltd and an arm of a Singapore property developer have formed a joint venture to develop the plot of land on Hengqin Island that Shun Tak bought last year. Shun Tak has told the Hong Kong Stock Exchange that it will own 70 percent of the joint venture and that Perennial Hengqin Investment Group Pte Ltd will own the rest. Perennial Hengqin will pay Shun Tak 263 million yuan (347 million patacas) for its shares in the joint venture and its share of the cost of a loan by Shun Tak Development (China) Ltd to Nation Mind Development Ltd. Nation Mind Development Ltd is a wholly owned subsidiary of Shun Tak Development (China) Ltd which is in charge of the Hengqin project.

MOP347 mln

Sum Shun Tak pockets immediately

One of the shareholders in Perennial Hengqin is Singapore’s Perennial Real Estate Holdings Pte Ltd. Perennial Real Estate Holdings and Shun Tak are partners in a project in the Tongzhou district of Beijing. Shun Tak, a conglomerate that concentrates on shipping and property, said in July that it would pay 721 million yuan for 23,834 square metres of land on Hengqin Island, near the bridge to Macau. Shun Tak is planning a mixed-use development on the site. The company said last month it intended to start building there this summer. It said in a statement on Wednesday that the maximum gross floor area of the development would be 131,088.7 square metres. Shun Tak managing director Pansy Ho Chiu King said she expected Perennial Real Estate’s “vast experience” in developing shops and letting property “to bring significant value on board”. A written statement issued by Shun Tak quotes Ms Ho as saying: “The Hengqin integrated development is a very unique project for us. We see it as an epitome of the synergistic relationship between Macau and Hengqin, representing the future of tourism development in this region.” She said in September that the development would contain office and commercial space, a hotel and serviced apartments.

Pansy Ho says Shun Tak’s Hengqin project represents ‘the future of tourism development’

High rise – top prices helped depress 2013 sales

Home sales down a third in 2013: agency Rental prices likely to rise in line with GDP this year as some priced out of buying market

hirty percent fewer home transactions were completed in Macau during 2013 compared to a year earlier according to unofficial estimates from a property agency. The official numbers for last year won’t be available from the government until the end of this month. But Jane Liu Zee Ka, managing director of Ricacorp (Macau) Properties Ltd, told our sister publication Macau Business

magazine that her firm thinks fewer than 12,000 homes were sold in the city last year. If accurate, that would be the lowest sales volume since 2009, when the international financial crisis helped depress the market and pushed transactions down to 11,300. This time however, the limiting factor appears to be a combination of limited supply – caused by a combination of cooling measures by

the government to prevent quick reselling, and new rules on off-plan sales – plus high prices. Ms Liu estimates that housing prices rose by 15 percent to 20 percent year-on-year during 2013. As more people are priced out of the buying market, and the non-resident population creeps up, it will provide support for the rental sector, agents say. Midland Realty (Macau) Ltd chief executive Ronald Cheung Yat Fai thinks rents are likely to rise by just

under 10 percent in 2014, shadowing growth in gross domestic product. But if prices continue to rise and money stays cheap under a modest tapering of the bond buying policy in the United States, then some owners may choose to release their buy-torent properties onto the sales market. That’s especially the case as buy-torent properties purchased prior to the special stamp duty rules imposed in October 2012 are released from the shackles of a 20 percent duty imposed on any re-sale within a twoyear period. “The rental yield in Macau is low relative to price,” says Rose Lai Neng, professor of finance at the University of Macau. Meanwhile Midland Realty’s Ronald Cheung thinks office transaction prices will rise by up to 20 percent this year. Commercial space should also rise, but more slowly, he says. Vacant shops are “not uncommon” in Macau, says Rose Lai. Small- and medium-sized enterprises have been priced out of the market, she adds, noting that only retailers with deep pockets can afford to do business in prime shopping areas. In some cases, marketing considerations rather than profitability impel retailers to do business in such areas, she says. To read more on this story, you can buy the January edition of Macau Business online at the digital newsstand Magzter.com, also available at selected newsstand outlets in Macau. M.G.

January 10, 2014

Macau

Casino conferences set to blossom in May New event called G2E Japan could be held in same month as G2E Asia in Macau Michael Grimes

michael.grimes@macaubusinessdaily.com

here’s the prospect this spring of three major casino conferences in East Asia in the space of a single month. The news emerged after the Washington D.C.-based casino industry lobby group the American Gaming Association and partner Reed Exhibitions said they aim to hold a new event called ‘G2E Japan’ – or Global Gaming Expo Japan – in that country once parliament there passes a bill to legalise casino resorts. That could happen in May. The official website for the pair’s Global Gaming Expo-branded events said they had “partnered with Union Gaming to bring a one-of-akind symposium to Japan as early as practical following passage of the legislation”. That was a reference to Las Vegasbased casino industry research house and financial advisor Union Gaming Group LLC, founded by several former Deutsche Bank executives. In December, Reed’s market competitor Clarion Events said it planned to hold a gaming conference in Japan in Tokyo on May 14, 15 and 16 – the week before Reed’s own G2E Asia regional casino industry event held annually in Macau. Clarion said Michael Leven, president and chief operating officer of Las Vegas Sands Corp, would be its main speaker. Union Gaming is understood to be the first Western company to have organised a major finance industry conference on the prospects for casino resorts in Japan. The Union Gaming Development Conference – Japan 2013 – took place in September only days after Tokyo’s successful bid to host the 2020 summer Olympics. It attracted significant media interest.

Bloom time – two new Japan casino conferences in prospect during May

Industry speakers included George Tanasijevich, chief executive Las Vegas Sands Corp’s Marina Bay Sands property in Singapore; Bill Hornbuckle, president of MGM Resorts International and also a director of its majority-owned Macau casino venture MGM China Holdings Ltd; and Gamal Aziz, president and chief operating officer of Wynn Resorts Development. This week it was announced Mr Aziz would be moving to Macau in a new role as president of Wynn Macau Ltd. All the Macau casino concessionaires and sub-concessionaires have

expressed an individual interest in building a casino resort in Japan. “Our September conference generated a significant amount of interest on the part of Japanese companies and legislators and other industry watchers,” Grant Govertsen, managing partner at Union Gaming Research Macau, told Business Daily yesterday. “I believe it also caught the attention of the big expo groups like Reed and the AGA, and after discussions we agreed to move forward with the concept of G2E Japan with them,

with Union Gaming responsible for the investment/financial elements,” said Mr Govertsen. “That means we would be responsible for any kind of investment related forums, much like the investment forums at G2E in the [United] States, which are probably the biggest two days of gaming-related conferences in North America on an annual basis,” he added. Business Daily approached Reed in the United States for more information on the dates for G2E Japan, but received no reply by press time.

Every day a holiday in Macau’s gaming boom But Lunar New Year welcome for ability to deliver extra visitors

hen mainly VIP gambling drove Macau gaming revenue, the Lunar New Year wasn’t always peak season for the casinos. The high rollers were often with their families and not in the junket rooms. But with the expansion of the so-called ‘premium mass’ cash play segment, and the growth of non-gaming facilities at the new Cotai resorts, any public holiday on the mainland is now a cause for celebration among the Macau casino operators for its ability to deliver extra volume of tourists. And public holidays in China don’t come much bigger than the Lunar New Year. Within a span of 10 days straddling

the festival last year, almost 1.28 million visitors came to Macau, 13.6 percent more than during the equivalent holiday period in 2012 according to government data. Carlos Siu Lam, associate professor with the Gaming Teaching and Research Centre at Macao Polytechnic Institute, says an upturn in casino gaming revenue during the Lunar New Year holidays will be replicated throughout the remainder of next year. “Gaming revenue will increase with the increasing number of visitors,” Mr Siu says. He says revenue from mass-market gaming will continue to propel the growth. Jane Tsai, vice president of marketing communications for

Crowds during Year of the Snake holiday, February, 2013

Galaxy Entertainment Group Ltd’s flagship Cotai resort Galaxy Macau, says its holiday-time customers are little different from those it entertains at other times of the year. The Year of the Horse begins on January 31, and Galaxy Macau expects more than 38,000 visitors a day in the first two weeks of next month, a “significant increase” from the number in the corresponding period last year. The increase should mean more gaming revenue, Ms Tsai says.

All three hotels at the resort should be fully booked during the holidays. The average occupancy rate of Macau’s hotels was 89 percent during the Lunar New Year ‘golden week’ last year (not to be confused with the Golden Week associated with China’s National Day celebrations in October). For more on Macau casinos and the Lunar New Year holiday, read the January edition of our sister publication Macau Business, on sale now. M.G.

January 10, 2014 April 19, 2013

Macau Brought to you by

SmarTone issues H1 profit warning Higher operating expense bites into profitability

HOSPITALITY Long view Mainland officials introduced a law banning “zero-fee tours” in October. The result was an immediate fall in package tourists, mostly same-day visitors. Data from the Statistics and Census Service showed the law’s impact was felt again in November. Although not directly comparable, observers might assume there was a high correlation between the two sets of data. The latest data confirms somewhat the impact of the new rules, but hints at a more complex dynamic. Comparing 2012 and 2011, there were six months where monthly totals for same-day tourists were smaller than in 2011. The pattern in 2013 is similar to 2011, but there are other factors at play here.

In 2011 and 2012, as well as in 2009 and 2010, the rate of growth in tourist arrivals between September and October was more than 20 percent. Last year, the comparable increase was just 7 percent, indicating the new rules were having an effect. For November, the picture is less straightforward. Typically, in the past, the number of tourists that month would be smaller than in October. That was not the case in the previous two years, which saw modest increases. Taken together, the number of visitors for October and November last year exceeds the figure from a year earlier and it is almost identical to 2011.

5.2%

Increase in same-day visitors in October and November, compared to one year earlier

marTone Telecommunications Holdings Ltd, the parent company of SmarTone Mobile Communications (Macau) Ltd, expects profits for the six months ended December 31 to decline compared with the same period last year. “While local mobile service revenue net of handset subsidy amortisation is expected to increase slightly when compared with the same period last year, such increase is not sufficient to offset lower handset business profits and the increase in operating expenses and depreciation arising from the launch of the 4G network as well as the general capacity upgrade,” the mobile operator told the Hong Kong Stock Exchange this week. The Hong Kong-based group posted a net profit of HK$459 million (US$59.2 million) in the second half of 2012 and proposed a dividend of 44 Hong Kong cents per share. SmarTone Macau reported an operating profit of HK$27.4 million for the six months ended December 31, 2012, which was down by 35.2 percent year-on-year. By then, the MSAR operations accounted for less than 4.6 percent of SmarTone’s overall revenues, which mostly come from neighbouring Hong Kong. For the year ended June 30 last year, the Macau subsidiary posted an operating profit of HK$23.2 million, down from HK$72.5 million a year earlier. The profit drop in SmarTone’s

Mobile services provider expects less profit from handset sales

operation here was affected by a “lower contribution from roaming business,” the company said in a filing last year. Roaming is the most profitable segment for telecommunications operators. Last year the city’s three telecommunication operators reduced roaming charges for voice calls and

text messages between mainland China and Macau. In February companies reduced tariffs between 11 percent and 24 percent, following by a second tariff reduction in August of no less than 13 percent. SmarTone plans to announce its interim results in mid-February. T.A.

HK gold trader loses fight over penalty Chung’s Financial fined for unlicensed financial intermediation Vítor Quintã

vitorquinta@macaubusinessdaily.com

Hong Kong company that trades in precious metals will have to pay a fine of 2.5 million patacas (US$310,000) for offering financial intermediation without a licence, a Macau court ordered. Chung’s Financial (Macau) Co and its controlling shareholder, Chan Yen Yee, learned in 2011 that the government would fine it on the orders of Secretary for Economy and Finance Francis Tam Pak Yuen. Mr Chan brought his case against the decision to the Court of Second Instance, but the judges did not take it up. Mr Tam’s office and the Public Prosecutions Office say that the

court is the wrong place to dispute a penalty that is in essence administrative. In a judgement made in November, the judges agreed with the government and sent the case to the Administrative Court. The Monetary Authority of Macau said in an advertisement published in Portuguese-language and Chinese-language local media earlier this week that the court had confirmed the fine. The verdict is yet to be published. Chung’s Financial can still appeal from this decision. The Monetary Authority of Macau decided in July 2011 that Chung’s

Financial had illegally offered financial intermediation services. Chung’s Financial “accepted and carried out clients’ orders to invest in assets traded in the foreign exchange and financial markets”, the authority said in a written reply to Business Daily questions in December. The authority believes the company broke the law, making it liable to a fine of between 10,000 patacas and 5 million patacas. Mr Chan is the manager of Chung’s Gold Dealer Ltd, a precious metals trading company founded in 1999 and licensed in Hong Kong, according to the Chinese Gold and Silver Exchange Society’s website.

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January 2014 April 19,10, 2013

Macau Li Gang appointed new liaison chief Li Gang (pictured) is officially the new head of the Central People’s Government Liaison Office in Macau, China’s State Council announced on its website yesterday. Mr Li replaces Bai Zhijian in the post. Mr Bai had been Beijing’s top representative here for over a decade. Mr Li, 58, arrived in Macau in December 2012 to serve as deputydirector of the liaison office. He was previously deputy director and spokesman of the central government’s liaison office in Hong Kong. Mr Li is also a member of China’s Central Commission for Discipline Inspection, the country’s corruption watchdog.

New Century Hotel now Imperial Palace Creditors have been chasing previous majority owner via the Macau and Hong Kong courts Tony Lai

tony.lai@macaubusinessdaily.com

Newly-branded Imperial Palace – formerly New Century Hotel (Photo: Manuel Cardoso)

he former New Century Hotel, Taipa, has been rebranded as Imperial Palace. It follows the court-ordered seizure last month of the property in lieu of an undisclosed debt owed to Hoi Cheng Nga. Mr Hoi, head of Energy Travel Agency Ltd, had sued Empresa Hoteleira de Macau Lda, the Macauregistered operator of New Century, via Macau’s Court of First Instance. The hotel venue contains Greek Mythology Casino, which operates under the gaming concession of Stanley Ho Hung Sun’s Sociedade de Jogos de Macau SA. On Wednesday the High Court in Hong Kong ordered the seizure of two bank accounts domiciled in Hong Kong and held by Chen Mei Huan – also known as Chan Mei Fun

– a mainland businesswoman and former majority partner in the hotel. The court said it was in lieu of debts – including interest – of HK$42 million (US$5.42 million) owed to another mainland businesswoman. The accounts were at Chong Hing Bank and China CITIC Bank International. According to the court, the unidentified mainlander and her husband Jia Xiaoping lent HK$100 million to Ms Chen in January 2012. Ms Chen later issued five HK$20million cheques to pay back the sum. But two of the cheques could not be cashed. In July 2012 the High Court ruled Ms Chen had to pay back the money. Separately, in October a Macau police spokesman said Ms Chen

had been arrested in the city on allegations of defrauding 35 Macau and mainland investors of more than HK$300 million. In August 2012, Business Daily reported that SJM had taken back 40 of Greek Mythology’s then 120 gaming tables along with 200 staff. It followed a slump in Greek Mythology’s casino business – which relies on junket operations – after a public battle for control of the hotel and casino between Macau junket veteran Ng Man Sun and his former girlfriend Ms Chen. In June that year Mr Ng needed hospital treatment after being beaten at the hotel by six masked men. There have been no reports of any arrests in connection with that incident. Macau junket investor Amax

International Holdings Ltd, which is chaired by Mr Ng and has an equity interest in Greek Mythology’s operations, said in a December 27 filing to the Hong Kong Stock Exchange that the casino was only a tenant of the hotel, and the gaming and hospitality operations were “separated”. “The company has discussed with a Macau lawyer and the legal advice from the Macau lawyer is that the judgement will not affect the continuous operation of Greek Mythology,” stated Amax. Last year a court in the British Virgin Islands heard Mr Ng paid HK$900 million to acquire the hotel in 1996, but that he later transferred a controlling share to Ms Chen. With Michael Grimes

January 10, 2014 April 19, 2013

Greater China Tencent invests in cab booking app Tencent Holdings Ltd, Asia’s largest Internet company, invested in Chinese cab reservation app Didi Taxi as part of plans to promote its payment service to users accessing the Web through mobile devices. Tencent was one of the investors for Didi Taxi’s US$100 million fundraising effort, Jerry Huang, a director of investor relations at Tencent in Shenzhen, said. Didi Taxi worked with 350,000 taxi drivers in 32 cities and had 22 million users that generated 350,000 daily bookings by December, the company said.

Qihoo 360 denies Alibaba talks Chinese Internet company Qihoo 360 Technology Co Ltd denied yesterday that e-commerce giant Alibaba Group Holding Ltd would take a stake in the company after its shares surged almost 10 percent on Wednesday on speculation the two were in talks. “These are rumours someone has made up,” said Qu Xiaodong, vice chairman of Qihoo, which has a market capitalisation of US$10.93 billion and specialises in security software and is China’s second-largest search engine by users. Alibaba said it does not comment on rumours or speculation.

LME approves first Chinese company The London Metal Exchange, the world’s largest metals bourse, accepted the first Chinese-owned broker to trade on its floor, alongside JPMorgan Chase & Co and nine other companies. GF Financial Markets (U.K.) Ltd was approved for a Category 1 membership, the exchange said in a statement yesterday. GF Financial Markets was created from the US$36.1 million acquisition of Natixis Commodity Markets last year by a unit of Guangzhou, China-based GF Securities. The floor team will be headed by Martin Woodall, who joined the company last week, according to two people with direct knowledge of the hire.

Hong Kong warns against pollution Hong Kong said it will probably experience elevated levels of air pollution “for a while” as light winds fail to disperse pollutants, prompting the government to warn residents to reduce outdoor activity. The index was 8 on a scale of 1 to 10+ at the roadside monitors in Central and Mong Kok. A reading of 8 or above triggers a government advice for people with heart or respiratory illnesses to reduce time spent outdoors, especially in areas with heavy traffic. “The elevated health risk recorded at the stations is due to high levels of suspended particulates and nitrogen dioxide,” the department said.

Sunac expects Producer prices drop Monetary tightening would not bode well for US$11 bln home sales in 2014

unac China Holdings Ltd, the Chinese developer in which buyout firm Bain Capital LLC has a stake, expects to sell 28 percent more homes this year than in 2013 even as property curbs in major cities are tightened. Sales at the luxury-home builder will be 65 billion yuan (US$11 billion) this year, chairman Sun Hongbin told reporters in Shanghai yesterday. The Tianjin-based company sold 50.8 billion yuan of properties last year, it said in a statement on Monday. That was a 61 percent jump from 2012. The target was “cautious” as demand from rich buyers for luxury homes in big cities remained resilient amid government curbs, Mr Sun said. China’s new-home prices in December had the biggest year-on-year gain in 2013, according to SouFun Holdings Ltd, the nation’s biggest real estate website owner. At least 10 cities have tightened local property policies since November. “Our target was set to make sure we could meet it amid government measures,” Mr Sun said. “In fact, government curbs will limit supplies of high-end homes, which will be positive for us. I’m confident in the purchasing power of Chinese buyers.” The developer, with high-end projects in cities including Beijing and Shanghai, has no plans to expand overseas, Mr Sun said. “I actually don’t really understand why some developers go abroad,” Sun said. “The biggest Chinese market is domestically. Why should we give up the much bigger market of 1.3 billion people?” Bloomberg News

December’s producer-price index fell 1.4 percent from a year before

roducer prices in mainland China, a measure of the cost of goods as they leave the factory, extended the longest slide since the 1990s in December, adding to evidence that the world’s second-largest economy weakened last month. The producer-price index fell 1.4 percent from a year before, the 22nd straight drop. Yesterday release follows declines in gauges of manufacturing

and services based on surveys of purchasing managers. China’s slowdown poses a challenge for the government as policymakers attempt to rein in credit expansion that has sparked concern at a build-up of bad loans. Applying stimulus would escalate the danger of excess leverage, while inaction boosts the odds of gross domestic product growth sinking closer to the official “bottom line” of 7 percent.

Austerity drive cuts into Chinese Price rises slow as anti-graft campaign bites Aileen Wang and Kevin Yao

hina’s annual consumer inflation slowed more sharply than expected to a seven-month low of 2.5 percent in December, easing market fears of monetary policy tightening although the central bank is tapping the brakes on bank liquidity. Food prices, the biggest driver of inflation in China, usually rise strongly at the end of the year as government agencies and state-owned companies throw banquets for staff and customers. But in his first year in office, President Xi Jinping has ushered in a new style of austerity, ordering officials to cut back waste. The consumer price index fell to 2.5 percent from 3.0 percent in November. It was a seven-month low, bucking the usual pattern of higher year-end inflation. Rising money market rates and bond yields indicate the People’s Bank of China (PBOC) is targeting

bank liquidity conditions to reduce debt levels and contain credit growth, but there is little sign of a sharp turnaround in its policy stance. The central bank has pledged to continue to maintain prudent monetary policy in 2014 and keep reasonable money and credit growth to support the real economy. “Inflation pressures remain modest, which will allow policymakers to continue focusing on policies to support growth while implementing structural reform measures in 2014,” said Xiaoping Ma, an economist at HSBC Holdings Plc in Beijing.

Price pressure Food prices rose 4.1 percent in December from a year earlier, slowing from November’s 5.9 percent rise, the National Bureau of Statistics said yesterday. Month-on-month, consumer prices

rose 0.3 percent versus 0.4 percent expected by economists. But analysts warn inflation may quicken in coming months as the government pushes market-oriented reforms to liberalise energy and utility prices. “While CPI inflation came in lower than expected, the January figure will likely exceed 3 percent again due to the Chinese New Year effect,” said Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd in Shanghai. “Inflation could exceed 3.5 percent in the second half of 2014, as upcoming pricing reforms could push up commodity and public utility prices. Therefore, we think that CPI inflation will be 3.2-3.4 percent on average this year.” China’s inflation was 2.6 percent over the whole of 2013, well within the government’s target limit of 3.5 percent, the bureau said. Analysts

January 2014 April 19,10, 2013

Greater China

in sign of weakness manufacturers

7.4 percent expansion in 2014. Policymakers are focusing on controlling financial risks and reining in debt. The broadest measure of new credit probably fell by a record US$154 billion in the second half of 2013, according to economists’ estimates and data compiled by Bloomberg ahead of figures due from the central bank in coming days. Leaders pledged last month after an annual economic work conference to “keep prices stable to provide a favourable environment for reforms and structural adjustment,” according to the official Xinhua news agency. The drop in producer prices was the same pace as November’s and compared with median estimate of 34 economists for a 1.3 percent slide. It marked the longest stretch of declines since a 1997-99 streak. Manufacturing overcapacity in some industries is exacerbating declines in producer prices. Companies such as Xi’an Shaangu Power Co have been told to halt some construction as the government seeks to rein in the steel industry. “A lot of the producer prices are falling partly because upstream oil prices and steel prices are falling as well, the iron ore price has come off,” Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong, said in a Bloomberg Television interview. “The overall numbers tell us this is an economy which is just about growing around potential but it’s not growing above potential.” Bloomberg News

“Producer-price deflation means manufacturing is still facing lots of challenges,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong. With manufacturers already burdened by higher interest rates, more monetary tightening wouldn’t be a good choice, Mr Shen said. China’s ruling Communist Party is trying to shift the investment-driven

economy more toward consumer demand while maintaining growth at what it says is a “reasonable” pace to sustain employment. The economy probably grew 7.6 percent in 2013, the State Council said last month. That would tie 1999’s pace as the lowest since 1990 and be just above the 7.5 percent growth goal for the year. Analysts surveyed by Bloomberg News last month see a

Producer-price deflation means manufacturing is still facing lots of challenges Shen Jianguang, Mizuho Securities Asia

Chinese firms flock to offshore markets C

inflation

believe the government will also stick with the 3.5 percent inflation target this year. Analysts expect the Chinese authorities to rein in the sprawling shadow banking sector under their long-term deleveraging drive in a bid to put the world’s second-largest economy on a more sustainable footing. Reuters reported earlier this week that the State Council, China’s cabinet, had issued new policies to strengthen regulation of off-balancesheet lending in an effort to contain the risk of a debt crisis. “Inflation is not a major concern at this stage, but the crackdown on shadow banking will likely intensify, and financial institutions may need to deleverage further,” Zhiwei Zhang, China economist at Nomura Holdings Inc in Hong Kong, said in a research note. Reuters

hinese companies flocked to offshore markets for funds immediately after the New Year holidays to take advantage of relatively sufficient liquidity at the start of the year and increased bets on yuan appreciation. The boom in the primary market also comes at a time when more than half of the outstanding amount of dim sum debt is set to mature this year, the highest level since the market came into being in 2007. The expected heavy dim sum supply is likely to pressure the offshore yuan bond yield curve higher, which in turn may push some yuan bond issuers to the dollar bond market for alternatives. Export-Import Bank of China (Chexim) is planning to issue up to 4 billion yuan (US$661.03 million) bonds in Hong Kong to institutional investors. Agricultural Development Bank of China, China Electronics and Peking University Founder Group are also in the market to sell yuan bonds. Analysts say it makes sense for

companies to collect funds early in the year before concerns over quickly mounting local government debt and risks related to financial market reforms in China worsen. The onshore market does not look appealing to raise funds at present with elevated money rates after two cash crunches engineered by the central bank last year. The ongoing interest rate reform is poised to further increase domestic funding costs. Liquidity in China is expected to remain tight as the People’s Bank of China is determined to make banks deleverage their interbank business to assure sustainable economic growth. As a result, more mainland companies may tap offshore funding pools. Some issuers are capitalising on dollar debt market for bigger bond sizes and better liquidity. Chinese property firms Kaisa and R&F Properties kicked off the emerging market issuance of dollar bonds on Monday. Reuters

IPOs headed for boards as investors eye valuations Signs of strong appetite already in evidence

he two Chinese companies that will kick off a new season of initial public offerings (IPOs) in China are set to attract strong investor interest, a good omen for dozens of others lined up to tap stock markets in January after a year-long hiatus. Signs of strong appetite were already in evidence during the book-building process, which analysts credited with reforms to the way new issues are priced on the mainland. Guangdong Xinbao Electrical Appliances Holdings Co and Zhejiang Wolwo Bio-Pharmaceutical Co Ltd, the first two firms to publish IPO pricing targets for planned listings in Shenzhen, were required by the new rules to discard the highest bids. IFR, a Thomson Reuters publication, reported on Wednesday that Guangdong Xinbao had been forced to toss out all orders over 10.52 yuan (US$1.7) per share, which had accounted for 44.5 percent of the total subscription volume. Regulators hope this new practice, combined with daily limits on IPO price increases, will help prevent the sort of distorted pricing that caused many new listings to open to triumphant rallies, only to quickly fall below the original IPO price and languish there. Economists have expressed concern that without fresh funds in the market, the looming flood of new IPOs may dilute overall valuations. Beijing appeared to address that concern as the China Insurance Regulatory Commission (CIRC) said it would permit insurance companies to invest premiums earned from older policies in blue-chip stocks in a trial programme, the official Shanghai Securities News reported yesterday. The move followed a similar announcement by the CIRC saying pension funds would be allowed to invest in the small-capitalisation ChiNext market, hosted on the Shenzhen exchange, where many of the new IPOs will take place. Many more IPOs are on the way. Around 50 firms are expected to launch IPOs this month and more than 750 are in the pipeline. A total of around 200 billion yuan (US$33.05 billion) is expected to be raised in 2014, twice the amount raised in 2012 prior to the freeze. The largest new IPO planned so far is the 9.8 billion yuan (US$1.62 billion) issuance announced by Shaanxi Coal Industry Co Ltd in Shanghai on Tuesday, which would be the largest IPO in China since 2011, but is half the amount originally planned. Reuters

US$1.62 bln The largest IPO currently planned for Shanghai

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Haitong flags risk as debt snowballs Default probability for Chinese companies rising, brokerage says tight, it will result in more debt defaults, starting from private enterprises or regional state-owned companies.” China’s Cabinet imposed new controls on the multitrillion-dollar shadow-banking industry with an order that targets off-the-books loans and shores up enforcement of current rules, three people familiar with the matter said this week. Chinese banks’ outstanding lending climbed 14 percent to 71.41 trillion yuan as of the end of November from a year earlier, central bank data showed. The pace of expansion is down from 34 percent for the same periods in 2009, 20 percent in 2010 and 16 percent in 2012. The moderating speed of bank credit growth helps mitigate against the risk of a crisis, according to Moody’s Mr Byrne. “Our concerns largely lie with the spillover effects of a deterioration in asset quality in the shadow-banking system on the banks’ balance sheets.”

Debt snowball may ‘turn into a crisis’ – Haitong

he mainland’s secondbiggest brokerage said record debt threatens to trigger a financial crisis as borrowing costs jump to unprecedented highs despite a cooling economy. Liabilities at non-financial companies may rise to more than 150 percent of gross domestic product in 2014, raising default risks, according to Haitong Securities Co. The ratio of 139 percent at the end of 2012 was already the highest among the world’s 10 biggest economies, according to the most recent data. That compares with 108 percent in France, 103 percent in Japan and 78 percent in the U.S., figures from the Bank for International Settlements and the World Bank show. “We are concerned that the debt snowball may get bigger and bigger and turn into a crisis,” Li Ning, a Shanghaibased bond analyst at Haitong Securities, said in an interview. “Default probabilities from next year may rise because more and more Chinese companies depend on new borrowings to repay old debt.” Premier Li Keqiang has driven up money market rates to help deleverage the economy, as Moody’s Investors

Service warned this week that credit expansion could spark a financial crisis. Companies must repay a record 2.6 trillion yuan (US$430 billion) of borrowings this year even after bond yields surged and economic growth slowed to the weakest in more than a decade. The rate on AA- rated five-year notes jumped 146 basis points in the past year to a record 8.3 percent. That compares with 3 percent on corporate notes of all grades globally, according to Bank of America Merrill Lynch indexes.

Crisis risk China’s aggregate financing, the broadest measure of new credit, climbed 14 percent to 16.1 trillion yuan in the first 11 months of last year from the same period in 2012, central bank data showed. Total debt of publicly traded companies in China and Hong Kong has surged to the equivalent of US$1.92 trillion from US$607 billion at the end of 2007, according to data compiled by Bloomberg. “What concerns us most is the sharp increase in credit

since the global financial crisis,” Tom Byrne, head of the sovereign risk group in Asia at Moody’s Investors Service, said. “If credit continues to grow at such a rapid pace, then what China faces is either a financial crisis or a bust, in which flows of credit will be disrupted and the trend of growth will be sharply reduced.” The seven-day repurchase rate, a gauge of interbank funding availability, has averaged 4.7 percent this month, the second highest since June, according to a daily fixing rate announced by the National Interbank Funding Centre. The yuan climbed 0.02 percent to 6.0512 per dollar yesterday. A total of 31.2 billion yuan of planned bond offerings were scrapped or delayed since the start of December, according to Bloomberg-compiled data. The People’s Bank of China suspended reverse-repurchase agreements, which it uses to inject money into financial markets, for almost three weeks in December, the longest pause since July. The central bank’s curb on money supply shows it is trying to slow debt expansion by pushing up borrowing costs,

according to Shi Lei, head of fixed-income research at Ping An Securities Co, a unit of the nation’s second-biggest insurance company.

Missed payments “It’s a deleveraging campaign led by the central bank,” Ms Shi said. “If monetary policy remains

Default probabilities from next year may rise because more and more Chinese companies depend on new borrowings to repay old debt Li Ning, analyst at Haitong Securities

Beijing tells banks to improve disclosures

hina’s banking regulator told lenders to publish data including off-balance-sheet assets and interbank liabilities as the government steps up scrutiny of the shadow-finance industry. Lenders with total assets of 1.6 trillion yuan (US$264 billion) or more must publish 12 indicators within four months of the end of each financial year, the China Banking

Regulatory Commission said in a statement yesterday. The requirement is in line with rules published by the Basel Committee on international banking regulation in July, the CBRC said. China’s State Council imposed new controls on the shadow-banking industry with an order that targets off-the-books loans and shores up enforcement of current rules, three

people familiar with the matter said this week. The Cabinet order highlights concern that lending outside the banking system, estimated by JPMorgan Chase & Co at 36 trillion yuan, or 69 percent of 2012 gross domestic product, may threaten the financial system’s stability. The CBRC requirement will apply to at least 12 of the 19 Chinese banks whose shares are publicly traded,

‘Blindly borrowing’ The National Development and Reform Commission, China’s top planning agency, said on December 31 that localgovernment financing arms that face funding shortfalls in construction projects will be allowed to issue bonds to help roll over their debt. “The NDRC statement may help prevent defaults in the short term, but on the other hand, it may encourage LGFVs or other companies to borrow more rampantly,” said Liu Dongliang, a senior analyst at China Merchants Bank Co, the nation’s sixth-biggest lender. “They may take it for granted that the government will provide support if they get into trouble.” Local-government debt swelled to 17.9 trillion yuan as of June, compared with 10.7 trillion yuan at the end of 2010, according to data compiled by the National Audit Office. “If the current model of blindly borrowing money and spending in low-efficient industries continues, there will be a debt crisis sooner or later,” said China Merchants’ Mr Liu. Bloomberg News

data compiled by Bloomberg show. The indicators, which include data on derivatives and cross-border assets and liabilities, are intended to show the importance of individual banks to the global financial system, not as an assessment of their management capabilities or risk levels, the CBRC said. Industrial and Commercial Bank of China Ltd, the nation’s largest bank by assets, was added to the Basel Committee’s list of global systemically important banks last year, joining smaller competitor Bank of China Ltd, which has been on the list since 2011. Bloomberg News

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S.Korea grows more confident on recovery Bank of Korea keeps benchmark interest rate unchanged Christine Kim and Se Young Lee

outh Korea’s central bank kept interest rates steady and expressed confidence that the economic recovery was on track, further dampening speculation of additional policy easing despite the risks of the U.S. Federal Reserve’s stimulus tapering. The Bank of Korea’s monetary policy committee held its base rate at 2.50 percent for an eighth straight month by a unanimous vote, the central bank said yesterday. A Reuters poll of 26 analysts had found that all but one expected policy to stay steady this month, as the central bank waits to see how the Fed’s reduction of its bond-buying programme affects global financial markets and capital flows in emerging economies. Policymakers are also keeping a cautious eye on the Japanese yen on concern that the currency’s weakness will hurt the competitiveness of South Korean exports. But most analysts expect the central bank to raise rates late this year from their lowest level since early 2011, amid growing signs that Asia’s fourthbiggest economy is strengthening and inflation is picking up. “Compared with the past, I believe a lot of uncertainties have cleared and I believe global growth forecasts will be raised in the future,” Kim Choong-

KEY POINTS Base rate kept at 2.50 pct Most analysts see rate hike in late 2014 BOK governor sees firm recovery in global economy Central bank keeps 2014 GDP forecast at 3.8 pct

Weak yen clouds South Korea’s export outlook

soo, the central bank’s governor, told a news conference. Mr Kim said the Fed’s decision to dial back its stimulus reflected an improving U.S. economy and this would eventually spell out better conditions for South Korea as well. The won and Seoul shares showed little reaction to the news but the lead three-year bond futures contract extended declines as investors that had been speculating about a possible rate cut unwound their bets. Bond futures had risen early this week after Goldman Sachs Inc predicted in a research report that the Bank of Korea would deliver a surprise rate cut.

Yen weakness The won hit its highest level in more than five years against the dollar and the yen last week, prompting talk

of possible government intervention in currency markets to help exportoriented firms. Underlining the angst of exporters, Hyundai Motor Co’s chairman warned that the carmaker and affiliate Kia Motors Corp expected their lowest annual sales growth since 2003, as the weak yen aids Japanese rivals like Toyota Motor Corp. Yet South Korean exports have so far been resilient. They rose a better-than-expected 7.1 percent in December from a year earlier, underpinning economic momentum into the new year. “We believe the weaker yen is being largely driven by better U.S. demand, which suggests better external demand for Korea, and is therefore neutral to Korean GDP growth,” Kwon Young-sun, an economist at Nomura Holdings Inc, said in a research note.

Consumer sentiment also held steady at its highest since early 2011 in December, reflecting increased confidence to among households to spend. Inflation remained at an average annual rate of 1.3 percent in 2013, far below the central bank’s inflation target band of 2.5 percent to 3.5 percent. But annual inflation is expected to reach within the target in the second half of this year, Mr Kim said. Mr Kim also released the central bank’s latest growth and inflation forecasts. South Korea’s economy is expected to grow 3.8 percent this year, unchanged from its previous forecast made in October, while inflation in 2014 is seen at 2.3 percent. In 2015, the economy is projected to grow 4.0 percent and inflation is seen at 2.8 percent. Reuters

Philippines offers U.S. dollar debt

he Philippines is marketing a sale of U.S. dollar-denominated bonds, adding to the busiest week for Asian sovereigns on record as slowing U.S. stimulus threatens to increase funding costs. The nation, Southeast Asia’s fastest growing economy, plans to sell 10-year bonds at about 4.5 percent, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. Indonesia and Sri Lanka sold US$5 billion of notes in the U.S. currency this week, the most in Bloombergcompiled data going back to 1999. Asian sovereigns are looking to borrow after the Federal Reserve announced it

would taper record stimulus, increasing the yield on benchmark U.S. government debt. Interest rates on 10year Treasuries have risen 1.36 percentage points since May, when the central bank indicated it was considering trimming bond purchases. The average cost of dollar funds for the region’s sovereigns rose as high as 5.83 percent in September, up from an average 4 percent in 2012, JPMorgan Chase & Co indexes show. Borrowers now pay 5.17 percent. “Philippine authorities are trying to lock in current yields,” said Desmond Soon, a Singapore-based fund manager at Western Asset Management Co, which oversees US$442.7 billion globally. “There is

expectation U.S. Treasury yields will go higher over the course of the year.” Federal Reserve officials saw diminishing economic benefits from their bond-

buying programme, cutting monthly note purchases to US$75 billion from US$85 billion. The Philippines, which won investment-grade ratings

from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings for the first time in 2013, last sold dollar debt in January 2012, data compiled by Bloomberg show. The country shunned the market last year after the peso become the second-best performing currency in Asia in 2012. The country will use proceeds from its latest sale to buy back foreign-currency bonds and for budgetary support, among other general purposes. It bought US$1.2 billion of its foreign-currency bonds in November 2012 for almost US$1.5 billion to cut annual interest costs. In 2011, the Philippines spent US$1.7 billion buying back global notes. Bloomberg News

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Asia Novartis faces Japan criminal probe

Inflation goal may take more

Japan’s health ministry filed a criminal complaint against Novartis AG’s local unit yesterday after the pharmaceuticals company promoted its best-selling blood pressure drug Diovan using manipulated data. The complaint, filed with the Tokyo District Public Prosecutor’s Office, is the first in Japan brought solely on the basis of exaggerated advertising, banned under the pharmaceutical affairs law, a ministry official said. Several Japanese hospitals stopped offering Diovan last year after two universities retracted papers on the drug’s efficacy for preventing strokes and heart disease. The government’s move follows months of on-site investigations at Novartis Pharma, the Swiss drug giant’s local arm. The company admitted last year that an employee who assisted in the drug’s clinical trials had acted inappropriately, promising improved training and oversight procedures. Japan is an important market for Novartis, accounting for about a quarter of Diovan’s global sales before the scandal. Annual sales of Diovan in Japan have topped 100 billion yen (US$954 million) since 2005, according to Novartis Pharma.

Bank of Japan faces open rift on policy board over inflation target

Singapore to double airport capacity Singapore plans to almost double the capacity of its airport over the next decade with two terminals as the economic growth in the AsiaPacific region makes it more affordable for people to travel by air. Changi airport, Asia’s second-busiest for international travel, is expected to handle about 5 percent more passengers each year through the next decade, Singapore’s Transport Minister Lui Tuck Yew said yesterday. A fourth terminal, which will be built by 2017 at a cost of S$1.28 billion (US$1 billion), will handle 16 million passengers annually. A fifth will be added in the middle of the next decade to handle 50 million travellers, he said. “We need to have capacity ahead of demand,” Mr Lui said in an interview with Bloomberg. “You see rising income levels in Southeast Asia and Asia. You see aviation being increasingly within the reach of a larger segment of the population.” Changi, which serves more than 100 carriers, currently has a capacity to handle of 70 million passengers in the existing three terminals, he said.

Samsung, Apple CEOs agree to mediation in U.S. patent fight Apple Inc and Samsung Electronics Co Ltd have agreed to attend a mediation session to be held on or before February 19, as they prepare to clash in court in March over smartphone patents. Apple CEO Tim Cook and Samsung CEO Oh-Hyun Kwon will attend the session with in-house lawyers only, according to a court filing. Their legal teams had met on January 6 to “discuss settlement opportunities,” the filing read. Apple and Samsung are embroiled in a legal battle over smartphone patents across several countries that mirrors their global battle for supremacy in the mobile device market. The technology rivals are facing a March trial date in the United States over Apple’s claims that Samsung infringed its patents. In the last two years, Apple and Samsung have gone to trial twice in San Jose, California federal court, and juries have awarded Apple a total of roughly US$930 million. Apple said in court documents filed in December that its has paid its leading outside law firm approximately US$60 million to wage patent litigation against Samsung.

Stanley White

Households less upbeat on economy Japanese households are less optimistic about the economy, a quarterly central bank survey showed, underscoring deep-rooted doubts over whether Prime Minister Shinzo Abe’s stimulus policies will boost wages enough to make up for the rising cost of living. The ratio of households who do not favour price rises remained stubbornly high at about 80 percent, according to the survey, boding ill for the Bank of Japan’s efforts to heighten inflation expectations with its pledge to achieve 2 percent inflation in a country mired in deflation for decades. Japan’s economic growth outpaced its G7 counterparts in the first half of last year, thanks largely to investor hopes for Mr Abe’s stimulus policies, before slowing in the third quarter due to soft exports. Sayuri Shirai expresses concern about Europe’s growth

Danone to sue Fonterra over recalls French food group cancels existing contract with Fonterra

anone, the world’s biggest yogurt maker, cancelled its supply contract with New Zealand’s Fonterra Cooperative Group Ltd and said it’s seeking compensation for last year’s product recall over a contamination scare. Danone said it sued in the New Zealand High Court in Auckland and is seeking arbitration in Singapore after it estimated it lost 300 million euros (US$407 million) of free cash-flow as a result of the recall, triggered when Fonterra warned some milk powders may have contained botulism-causing bacteria. Total damages are still to be determined, the Paris-based company said. Fonterra, the world’s biggest dairy exporter, said in August that a whey protein used in baby formula may have been tainted with a potentially fatal botulism-causing bacteria. The incident prompted product recalls across Asia, and nations including China temporarily halted imports of some Fonterra milk powders.

“This affair caused serious damage to the Danone business,” spokeswoman Eliza Newton said from Sydney. In addition to the direct losses, “the recall had a significant impact in terms of brand reputation and Danone will be seeking a fair compensation for that,” she said.

Shares decline A Fonterra spokesman declined to disclose the value of the contract with Danone, citing confidentiality. Shares in the Fonterra Shareholders’ Fund, a publicly traded trust that tracks the cooperative’s dividend payout and earnings, fell 1.28 percent to NZ$5.40 in Wellington. Auckland-based Fonterra on December 11 lowered its dividend forecast to 10 New Zealand cents per share from 32 cents and predicted full-year earnings would decline from NZ$1 billion last financial year as high milk prices erode returns on products such as cheese and casein.

At the same time, it said it can’t keep up with surging demand for milk powder from China and other emerging economies. Fonterra’s dispute with Danone “is a concern because it will probably affect the payout,” said Willy Leferink, chairman of the dairy division of Federated Farmers, who predicted it will end with an out-ofcourt settlement. “All the industries will be damaged if we’re going to relive all the issues around botulism. I hope an amicable agreement will be reached.” Fonterra said on September 25 it had booked only a NZ$14 million (US$12 million) provision for fallout from the contamination incident. The company has taken a range of measures to improve food safety and quality assurance in the wake of the scare, which raised concerns over New Zealand’s international reputation and export earnings. Bloomberg News

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

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than 2 years: Shirai Uniqlo operator boosts profit

ank of Japan board member Sayuri Shirai said it may be desirable to take more than two years to achieve the central bank’s inflation target if the burden on households and the corporate sector proves to be excessive, according to the text of a speech released yesterday. Ms Shirai also said there is a lot of uncertainty about the time frame for the BOJ’s 2 percent inflation target and that the central bank has yet to anchor inflation expectations around 2 percent, according to the text. A rift has already emerged among the BOJ board as Ms Shirai and two other members objected to the central bank’s timeframe for its inflation target, reinforcing concerns that it is unrealistic and could complicate monetary policy in the future. “There could be instances where it may be appropriate to conduct monetary easing aimed at achieving 2 percent at a pace slower than about two years – provided that the pace of inflation is judged to be creating an excessive burden on households and firms,” Ms Shirai said in the speech text. If downside risks to the economy

and prices emerge, the BOJ should not hesitate to ease policy further, she said. The BOJ aims to achieve its 2 percent price stability target at the earliest possible time, with a time horizon of about two years as a benchmark, to end 15 years of mild deflation. Doubts about the price target have lingered since the BOJ introduced it about a year ago with a greatly expanded its monetary easing with huge purchases of government debt. These doubts came to the fore in October when Ms Shirai, a former International Monetary Fund economist, and two other policymakers on the nine-person board dissented against the central bank’s rosy outlook for achieving its 2 percent inflation target. Turning to overseas economies, Ms Shirai said disinflation is somewhat of a concern in the eurozone, but it is less of a concern in the United States, according to the speech text. Economists have expressed concern that European countries could fall into deflation after the zone’s economic malaise lead to an unexpected slowdown in inflation. Reuters

apan’s Fast Retailing Co Ltd, operator of the Uniqlo casual clothing store chain, reported higher quarterly profits yesterday as shoppers spent more at its stores, encouraged by a strategy of offering luxury goods at affordable prices. Fast Retailing boosted spending per customer at its Uniqlo stores in Japan, where it earns nearly 80 percent of its operating profit, after shifting its strategy from discounting, which had increased customer traffic but weighed on margins. “Spending per customer was up as strong sales of ultralight down and cashmere boosted unit prices, while sales volume for heat tech (thermal underwear) increased,” the company said. Fast Retailing’s operating profit in its first fiscal quarter to end-November rose 13 percent to 64.0 billion yen (US$610.48 million). The company left its operating profit target for the full year to end-

Moody’s cuts Qantas’ credit rating to junk Domestic market dents prospects for Australia’s flag carrier

August unchanged at 156 billion yen, a gain of 17.4 percent. That is in line with analysts’ average estimate of 155.36 billion yen. Government data late last month showed Japan’s so-called core-core price index – which excludes food and energy and is similar to the U.S. core inflation index – rose 0.6 percent in the year to November, its biggest increase since August 1998. But wages, essential to achieving sustainable economic and price growth, remain a weak link. They rose a modest 0.5 percent in November and were up for only the first time in five months. Fast Retailing, the most heavily weighted stock in Tokyo’s benchmark Nikkei average, fell 3.8 percent on Thursday to close at 39,800 yen before the figures were announced. The stock has risen 82 percent since the start of last year compared with the Nikkei’s 53 percent gain. Reuters

Sean Fenton, who helps manage about A$4.7 billion in assets at Tribeca Investment Partners Pty, said. Mr Joyce’s decision to fight for Qantas’s 65 percent market share “is probably best in the long run, but they won’t make any money in the short term”.

Bond risk

Qantas credit rating downgrade sends a warning to investors

antas Airways Ltd, Australia’s largest carrier, had its debt rating cut to junk by Moody’s Investors Service after flagging a record first-half loss and 1,000 job cuts amid increased competition on domestic routes. Competition from Virgin Australia Holdings Ltd is causing a “sharp deterioration in the company’s core domestic business,” Moody’s senior

vice president Ian Lewis wrote in a rating opinion yesterday, lowering Qantas’s senior unsecured debt to Ba2 from Baa3. Standard & Poor’s cut the airline’s debt to non-investment grade last month. The downgrades may boost interest costs for Qantas, adding to challenges for chief executive Alan Joyce, who forecast a first-half loss of

as much as A$300 million (US$267 million) on December 5. The carrier, which had a nearmonopoly in Australia’s non-budget domestic aviation market for a decade after the 2001 collapse of Ansett Holdings Ltd, is struggling to defend its market share as Virgin buys smaller rivals, adds business-class seats and builds airport lounges to compete. “It’s a bit of a war of attrition,”

The cost of insuring the carrier’s debt through credit-default swaps has risen 69 basis points since the December 5 announcement to close at 263 basis points yesterday. Air New Zealand Ltd, Singapore Airlines Ltd, and Etihad Airways PJSC, which collectively own almost 70 percent of Virgin, are trying to “terminally weaken Qantas,” Mr Joyce wrote in a November 22 e-mail to staff. “They will be perfectly placed to take a domestic monopoly position.” The three airlines provided cash for the fight with Qantas by offering to spend as much as A$316 million on new shares under a capital raising that Virgin announced in November. Virgin’s actions and Qantas’s responses “have shifted the market dynamic against Qantas in a structural way,” Mr Lewis wrote. “As such, we expect that Qantas’ business risk and financial leverage will remain at elevated levels and inconsistent with an investment-grade rating.” The downgrade “was not unexpected,” Qantas chief financial officer Gareth Evans said in a statement after Moody’s announcement, adding that the company will cut costs and capital spending to improve cash flow. “Earnings conditions have deteriorated rapidly in recent months,” he wrote. “We now face some of the most challenging circumstances in our history, including an uneven playing field in Australian aviation.” Bloomberg News

14 14

January 10, 2014 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 77.9 77.3

112.5

34.6

111.8

34.4

111.1

34.2

76.7 76.1

Max 77.85

average 76.985

Max 67.05

Min 75.50

average 66.087

Last 76.15

Min 65.10

Last 65.90

75.5

Max 112.5

average 111.5

26.5

66.7

26.4

66.3

26.3

65.9

26.2

65.5

26.1

65.1

Max 26.45

average 26.260

PRICE

DAY %

YTD %

(H) 52W

92.59

0.281609475

-5.923592766

106.2200012

BRENT CRUDE FUTR Feb14

107.38

0.214652357

-3.086642599

112.7999954

GASOLINE RBOB FUT Feb14

266.44

0.304935437

-4.361247712

286.9299889

243.68999

909.5

-0.13724952

-3.603603604

960.75

840

4.16

-1.328273245

-1.654846336

4.770000458

3.476000071

GAS OIL FUT (ICE) Feb14 NATURAL GAS FUTR Feb14

85.56999969

295.37

0.145792365

-3.637609291

317.8399801

278.4999847

Gold Spot $/Oz

1227.03

0.044

2.0196

1696.2

1180.57

Silver Spot $/Oz

19.565

-0.0843

0.0378

32.46

18.2208

Platinum Spot $/Oz

1415.5

0.4114

4.4072

1742.8

1294.18

Palladium Spot $/Oz

735.9

0.2179

3.5021

786.5

629.75

LME ALUMINUM 3MO ($)

1777

-0.448179272

-1.291487293

2174

1736.25

NY Harb ULSD Fut Feb14

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

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

7344.5

-0.088423344

-0.210597826

8346

6602

2030

-0.587659158

-1.216545012

2230

1811.75

13525

0.073991861

-2.697841727

18770

13205

15.44

-0.675458347

1.080196399

16.77000046

15.12000084

415.75

-0.299760192

-1.481042654

606.5

414

WHEAT FUTURE(CBT) Mar14

590

0.212314225

-2.519619992

845

586.75

SOYBEAN FUTURE Mar14

1275

0.453023439

-1.353965184

1377.75

1174

COFFEE 'C' FUTURE Mar14

120.9

3.113006397

9.214092141

172.25

104.1499939

SUGAR #11 (WORLD) Mar14

15.68

-0.381194409

-4.448507008

20.61999893

15.67000008

CORN FUTURE

Mar14

COTTON NO.2 FUTR Mar14

83.43

0.348809237

-1.429584121

90.61000061

76.65000153

World Stock Markets - Indices NAME

Min 26.00

Last 26.10

(L) 52W

WTI CRUDE FUTURE Feb14

LME ZINC

110.4

26.0

Max 34.6

average 34.322

Min 34.0

Last 34.3

34.0

37.90 37.55 37.20 36.85 Max 37.85

average 37.241

Min 36.55

Last 36.70

36.50

Currency Exchange Rates

NAME

METALS

Last 111.2

67.1

Commodities ENERGY

Min 110.4

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

0.8877 1.6456 0.9085 1.3607 104.88 7.9868 7.7544 6.0554 61.9987 33.039 1.2712 30.167 44.67 12158 93.089 1.23607 0.82685 8.2389 10.8684 142.7 1.03

-0.549 0.2437 0.2752 0.1693 -0.1049 0.0075 0.0039 -0.071 0.1231 -0.0575 -0.0472 0.0099 0.0448 0.6333 0.4587 0.1108 0.0798 -0.0583 -0.1721 -0.2663 0

-0.5044 -0.2727 -1.8932 -1.1407 0.1049 -0.0025 -0.0064 -0.0182 -0.3205 -0.7991 -0.5585 -1.1934 -0.6156 0.1069 0.6016 -0.7572 0.8829 1.2392 1.1446 1.2684 0

1.0599 1.6603 0.9839 1.3893 105.44 8.0111 7.7664 6.2492 68.845 33.148 1.2862 30.228 44.86 12281 105.433 1.265 0.88151 8.4957 11.0434 145.69 1.032

0.8821 1.4814 0.88 1.2746 87.4 7.9818 7.7511 6.049 52.89 28.56 1.2223 28.913 40.54 9603 86.41 1.20856 0.81349 7.8281 10.195 114.05 1.0289

Macau Related Stocks NAME

PRICE

ARISTOCRAT LEISU CROWN RESORTS LT

DAY %

YTD %

(H) 52W

(L) 52W VOLUME CRNCY

4.53

-1.735358

-3.411515

5.12

3.265

1076899

17.17

-0.1744186

1.899107

17.38

11.07

961260

AMAX INTERNATION

1.75

-4.371585

1.744184

2.12

0.75

4238375

BOC HONG KONG HO

24.15

0.2074689

-2.816903

22.85

5497543

CENTURY LEGEND

0.425

-2.298851

-1.162792

0.68

0.26

488000

CHEUK NANG HLDGS

7.39

0.5442177

4.822692

7.45

185799

CHINA OVERSEAS

22.3

2.764977

2.293582

25.6

17.7

64957965

CHINESE ESTATES

-1.498929

-4.564317

24.7

10.334

41056

12.76

-1.23839

10.38062

13.38

7.44

14742451

CHOW TAI FOOK JE

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

16462.74

-0.4125597

-0.6872308

16588.25

13329.08

NASDAQ COMPOSITE INDEX

4165.611

0.2992645

-0.26287

4177.728

3093.324

GALAXY ENTERTAIN

-0.3827194

6875.62

6023.44

HANG SENG BK HOPEWELL HLDGS

25.9

HSBC HLDGS PLC

EMPEROR ENTERTAI

4.12

4.66

1.89

1847400

FUTURE BRIGHT

4.45

-1.982379

-5.117272

4.9

1.421

2382000

76.15

-2.496799

9.489571

78.7

11263658

122.7

-0.8885299

-2.386632

132.8

110.6

981178

-0.9560229

-1.333333

35.3

23.2

264044 22468146

FTSE 100 INDEX

6723.26

0.02201798

DAX INDEX

9489.31

-0.08980989

-0.6579725

9620.929688

7418.36

NIKKEI 225

15880.33

-1.495647

-2.522691

16320.22

10398.61

HANG SENG INDEX

22787.33

-0.909961

-2.227117

24111.55078

19426.35938

CSI 300 INDEX

2222.221

-0.8782686

-4.62677

2791.303

2023.171

TAIWAN TAIEX INDEX

8514.68

-0.4830523

-1.124426

8647.24

7603.27

KOSPI INDEX

1946.11

-0.6559603

-3.243111

2063.28

1770.53

MIDLAND HOLDINGS

S&P/ASX 200 INDEX

5324.41

0.1572973

-0.519408

5457.3

4632.3

JAKARTA COMPOSITE INDEX

4196.63

-0.09434382

-1.814311

5251.296

3837.735

85.25

-0.175644

1.307188

90.7

77.85

HUTCHISON TELE H

2.89

0.6968641

-1.700682

4.66

2.5

4650285

LUK FOOK HLDGS I

33.65

1.969697

14.0678

16.88

3629000

MELCO INTL DEVEL

29.1

-1.188455

2.105263

30.55

10.6

11470000

MGM CHINA HOLDIN

34.3

-2

3.625382

14.169

9445933

3.55

0.2824859

-4.825738

4.29

2.68

1110000 116440000

NEPTUNE GROUP

0.335

-2.898551

-1.470589

0.4

0.131

NEW WORLD DEV

9.75

2.523659

-0.4085798

15.12

9.35

20113772

SANDS CHINA LTD

65.9

-0.3025719

4.025259

67.15

33.5

12847226

FTSE Bursa Malaysia KLCI

1827.32

-0.2173319

-2.123239

1882.2

1597

SHUN HO RESOURCE

1.65

1.92

1.33

NZX ALL INDEX

1016.608

0.7836796

1.773255

1048.998

888.933

SHUN TAK HOLDING

4.42

-1.777778

-3.070174

4.8

3.27

6378250

PHILIPPINES ALL SHARE IX

3643.05

-0.6691042

0.7948931

4571.4

3440.12

Euromoney Dragon 300 Index Sin

604.8

1.05

-1.1

STOCK EXCH OF THAI INDEX

1263.81

0.4834106

-2.687274

1649.77

1205.44

HO CHI MINH STOCK INDEX

516.98

0.5993384

2.447333

533.15

440.48

Laos Composite Index

1266.25

1.030857

1455.82

1224.94

SJM HOLDINGS LTD

26.1

-2.247191

0.3846154

17.04

7616548

SMARTONE TELECOM

8.89

1.832761

0.3386043

14.46

7.38

7417516 4616374

WYNN MACAU LTD

36.7

-0.67659

4.409668

38.25

ASIA ENTERTAINME

N/A

BALLY TECHNOLOGI

78.42

0.05103343

-0.03823703

79.42

45.38

267773

BOC HONG KONG HO

3.07

-2.539683

-4.658386

3.6

2.99

1300

GALAXY ENTERTAIN

10.1

2.851324

12.09767

10.11

3.8975

45248 3871428

INTL GAME TECH

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

17.77

0.1126761

-2.147576

21.2

14.69

JONES LANG LASAL

103.56

-0.07719027

1.14269

104.33

80.86

338823

LAS VEGAS SANDS

81.18

2.785515

2.928867

81.24

47.95

5811017 3658951

MELCO CROWN-ADR

42.99

2.748566

9.612439

43.2

17.76

MGM CHINA HOLDIN

4.55

-2.360515

5.568447

4.66

1.9017

11886

MGM RESORTS INTE

24.73

0.8975928

5.144556

24.96

11.72

12722299

SHFL ENTERTAINME

N/A

23.25

13.88

SJM HOLDINGS LTD

3.46

3.903904

3.592817

3.6

2.2

20834

205.29

1.875837

5.705161

205.4

111.3456

1406668

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.2

1.003344

16574881

CHINA UNICOM HON

13.68

1.333333

22775492

ALUMINUM CORP-H

3.61

15433022

CITIC PACIFIC

10.12

0.1980198

6468988

BANK OF CHINA-H

3.15

1.286174

329406866

BANK OF COMMUN-H

5.87

0.8591065

37793438

0.1727116

14.5

BANK EAST ASIA BELLE INTERNATIO

NAME

CLP HLDGS LTD

NAME

PRICE

DAY %

64.4

0.625

2568679

SANDS CHINA LTD

28.75

-0.1736111

6213954

SINO LAND CO

14.28

0.990099

7686664

SUN HUNG KAI PRO

109.1

1.018519

8616634

-0.4815409

2456828

265.6

1.45149

2048509

23.9

2206357

0.8064516

5926157

52.75

1.05364

3208615

POWER ASSETS HOL

65.6

1561243

CNOOC LTD

16.32

0.4926108

46287676

1260442

COSCO PAC LTD

11.76

3138217

SWIRE PACIFIC-A

7192500

ESPRIT HLDGS

12.44

-0.48

4211743

TENCENT HOLDINGS

0.2087683

10140777

HANG LUNG PROPER

26.55

-0.1879699

7812341

TINGYI HLDG CO

CATHAY PAC AIR

13.78

0.2911208

3140232

HANG SENG BK

119.7

0.167364

1690249

WANT WANT CHINA

CHEUNG KONG

114.9

1.23348

3918568

HENDERSON LAND D

2.059087

5880582

WHARF HLDG

75.55

0.1325381

701703

1.112235

6329376

125.6

3.54493

9625332

76.5 -0.06531679

9291476

BOC HONG KONG HO

CHINA COAL ENE-H

7.7

-0.1297017

40174849

CHINA CONST BA-H

5.87

1.206897

202072100

CHINA LIFE INS-H

22.9

0.4385965

30126882

CHINA MERCHANT

25.6

0.3921569

4209584

CHINA MOBILE

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

85.45

1.064459

16569813

HUTCHISON WHAMPO

CHINA OVERSEAS

20.2

-0.2469136

19374736

IND & COMM BK-H

CHINA PETROLEU-H

8.36

0.9661836

101198904

CHINA RES ENTERP

25.2

0.8

77.35

1.243455

6697663

5.17

1.372549

317570965

LI & FUNG LTD

12.84

-0.9259259

17517410

4219717

MTR CORP

29.85

1.530612

4880670

MOVERS

VOLUME

3 23043

INDEX 22787.33 HIGH

23042.62

LOW

22666.04

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

22666

7-January

9-January

15 15

January 2014 April 19,10, 2013

Opinion Business

wires

China’s policy disharmony

Leading reports from Asia’s best business newspapers

Bangkok Post

Stephen S. Roach

Faculty member at Yale University and former chairman of Morgan Stanley Asian

Banks, bourses and brokerages in Thailand are bracing for the imminent mass rallies by anti-government protesters intent on occupying important areas of Bangkok. The institutions say they have contingency plans in place to ensure continuity in financial activities even if the city is paralysed. These were adopted after the devastating floods in late 2011 and are deemed sufficient to address the expansion of protest sites to occupy seven major intersections in the capital including Lat Phrao, Asok, Ratchaprasong and Victory Monument.

Taipei Times Taiwan Lottery Co, the subsidiary of CTBC Financial Holding Co and exclusive Public Welfare Lottery operator, set its ticket sales target for this year at NT$105 billion (US$3.47 billion), enough to break even in the first year after winning another 10-year contract. Taiwan Lottery president Joy Huang announced the revenue target on the sidelines of a promotion campaign in Taipei. Ticket sales totalled NT$123.35 billion last year, the highest since the issuance of the Welfare Lottery in 2002, Mr Huang said.

Jakarta Globe Indonesia raised US$4 billion from a sale of dollardenominated bonds, seeking to draw global capital and shore up Asia’s worstperforming currency as the Federal Reserve begins to cut stimulus. The nation issued US$2 billion of debt due in 10 years to yield 5.95 percent and US$2 billion of securities maturing in 30 years at 6.85 percent, according to a statement from the finance ministry’s debt management office. That compares with rates of 5.695 percent for existing notes due 2023 and 6.352 percent for notes maturing in 2043.

The Star The entry of developers from China into Iskandar Malaysia is increasingly being felt and will intensify the competition in the region, according to Maybank Investment Bank Research. The research house expressed its concern that the developers could flood the market with massive supply of high-rise mixed development projects, inducing price volatility. Meanwhile, Maybank has maintained an “underweight” on the property sector and expects the property market to be hit hard by the new cooling measures of Budget 2014 as well as by some state governments.

hina was hardly lacking in policy pronouncements in the final months of 2013. From the 60-point reform programme issued by the Central Committee’s Third Plenum in early November to the six core tasks endorsed by the Central Economic Work Conference a month later, China’s leaders proposed a raft of new measures to address the daunting challenges that their country faces in the years ahead. But, seen in their entirety, the risk of incoherence has become evident. The Third Plenum initiatives, for example, have a strategic focus: promoting the economy’s long-awaited pro-consumption structural rebalancing. While the Work Conference’s core tasks embody the spirit of these reforms, they also reflect a tactical focus: “keeping growth steady.” Given the likely tradeoffs between strategy and tactics – that is, between long-term reforms and short-term growth imperatives – can Chinese policymakers really accomplish all of their objectives? Of course, such tradeoffs have long been evident in most economies – developed and developing alike. What has separated China from the pack has been its strong inclination to place greater emphasis on strategic objectives in charting its economic-development path. Even so, new tensions between the Third Plenum’s policies and those of the latest Work Conference have raised the question of tradeoffs once again. The consumer- and services-led rebalancing initially proposed in the 12th Five-Year Plan and endorsed by the recently concluded Third Plenum implies slower GDP growth than the 10 percent average annual rate recorded from 1980 to 2010.

Yet slower growth need not be a bad thing. Employment in Chinese services is about 30 percent higher per unit of output than in the manufacturing and construction sectors, which means that an increasingly servicesled China can accomplish its critical labour-absorption objectives – namely, rapid job creation and poverty reduction – with 7 percent to 8 percent annual growth.

Slower growth For China, rebalancing and slower growth go hand in hand – and yield the additional benefits of less intensive resource demand, a more subdued rise in energy consumption, and related progress in addressing environmental pollution and income inequality. But the recent Work Conference failed to consider China’s growth slowdown in this strategic context, placing considerable weight instead on the macrostabilisation imperatives of “proactive fiscal and prudent monetary policies”. Since the Work Conference was concluded, investors have been debating the 2014 growth target. Will the 7.5 percent objective set for 2013 be maintained this year, as a recent leak from senior Chinese officials seems to indicate, or do the recent pronouncements indicate further deceleration toward 7 percent? The answer will be revealed at the National People’s Congress in March. But focusing on a near-term growth target, and fine-tuning fiscal and monetary policies in order to achieve it – to say nothing of yet another credit crunch roiling Chinese short-term funding markets – detract from the emphasis on strategic shifts that economic rebalancing now requires. Indeed, most of the six

What emerges from all of this is yet another example of… countless proposals, initiatives, and goals that are loosely connected at best

major economic tasks for 2014 set by the recent Work Conference – including efforts aimed at ensuring food security, containing local-government debt, and improving coordination of regional development – have little or nothing to do with China’s strategic rebalancing imperatives. Though laudable, they seem disconnected from proconsumption restructuring. In fact, only two of the six major economic tasks identified by the Work Conference fit neatly with the Third Plenum’s strategic agenda. The call for enhanced social security is consistent with the Third Plenum’s proposal to allocate 30 percent of stateowned enterprises’ profits to fund safety-net programmes such as pensions and health care. Likewise, the emphasis on markets’ “decisive role” in upgrading China’s industrial structure and eliminating excess capacity is compatible with the Third Plenum’s goal of achieving a market-based shift

to a consumer society. But what emerges from all of this is yet another example of the timeworn “kitchen sink” approach to Chinese economic policymaking – countless proposals, initiatives, and goals that are loosely connected at best, and that are often plagued by internal inconsistencies. A new approach is needed, and it will require three key changes to China’s economic-policy framework. First, in keeping with global best practice, Chinese authorities need to be far more explicit (that is, transparent) in prioritising, or ranking, their policy objectives. Setting different agendas on multiple platforms – Five-Year Plans, Third Plenums, and Work Conferences – is a recipe for confusion and potential conflict. Second, economy-wide growth targets should be downplayed. Such targets smack of the legacy of a state-directed economy – a legacy that runs counter to policymakers’ new emphasis on the “decisive role” of markets. Finally, there is a need to separate stabilisation objectives from strategic imperatives. The former should be handled by an independent central bank with primary responsibility for monetary and currency policies, whereas the latter should be the responsibility of the new Central Leading Group on Reforms, which has just been established by the Third Plenum. Chinese policymakers’ traditional emphasis on longterm strategy has enabled them to steer past the inevitable bumps on the road to economic development. Now, however, as the authorities set out on a new course aimed at sustaining China’s extraordinary progress, they should act quickly to achieve greater coherence in their policy agenda. © Project Syndicate

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January 10, 2014 April 19, 2013

Closing Taipa North plan has its ‘urgency’: govt

CY Foundation orders slots for two casinos

The controversial amendments to the urban planning of the northern district of Taipa “has its urgency”, Secretary for Transport and Public Works Lau Si Io (pictured) defended yesterday. Mr Lau said the plan aims to respond to residents’ needs. The plan, announced last month, “has been studied for a long time” and the government did not rush, he said. The pan-democrat New Macau Association was critical of the government proposal, saying the administration rushed to announce the plan ahead before March, when the city’s first bill on urban planning comes into force.

CY Management, a wholly owned subsidiary of CY Foundation Group Ltd, has paid US$1.9 million (15.18 million patacas) to acquire 58 gaming machines from casino equipment maker Weike Gaming Pte. A total of 34 machines will be installed at Casino Grandview, Taipa, and 24 at Casino Casa Real, on Macau peninsula. Both venues are controlled by Hong Kongbased Kingston Financial Group Ltd, led by Pollyanna Chu Yuet Wah, and both operate under the casino licence of Stanley Ho Hung Sun’s Sociedade de Jogos de Macau SA. CY Foundation’s core business is the management of electronic gaming equipment in Macau.

Euro-area confidence builds in December Euro-area economic confidence increased more than economists forecast in December, buoying up policymakers as they grapple with the legacy of the currency bloc’s longest recession. An index of executive and consumer sentiment rose to 100 from a revised 98.4 in November, the European Commission in Brussels said yesterday. That beats the median estimate of 99.1 in a Bloomberg News survey of 24 economists, and is the highest reading since July 2011. “The economic recovery is gradually gaining momentum,” London-based Barclays Plc analyst Apolline Menut said by phone. “The pace of growth will remain moderate in 2014 as the euro area lacks clear growth drivers and several downside risks remain, such as bank lending, while unemployment won’t improve significantly in the short term.” “This confirms that the economic recovery gathered some pace in the final three months of last year, which will surely be welcomed by the ECB’s Governing Council,” Martin van Vliet, an economist at ING Bank in Amsterdam, wrote in a note. The commission’s industrial confidence index rose to minus 3.4 from minus 3.9 in November. The gauge of consumer confidence improved to minus 13.6 from minus 15.4 in November, the commission said. Ford’s Focus was the best-selling car in China last year

China car sales accelerate in 2013 Passenger vehicle sales rose to nearly 18 million units

hina became the first country in which more than 20 million vehicles were sold in any given year as Toyota Motor Corp to General Motors Co and Volkswagen AG delivered a record number of cars there. Total deliveries rose 14 percent to 21.98 million units last year and may exceed 24 million in 2014, the state-backed China Association of Automobile Manufacturers said yesterday in Beijing. Last year’s sales of passenger vehicles, excluding buses and commercial trucks, climbed to 17.93 million – or 15 percent more than the U.S. auto industry – and may increase 9 percent to 11 percent this year, it said. While China’s motorisation has been a boon for foreign automakers – all the major ones saw record sales in the country in 2013 – pressure is building on the government to step in as pollution chokes residents and traffic congestion turns roads into parking lots. With air quality deteriorating so much that children and the elderly

are regularly warned to stay indoors, Beijing is tightening its vehicle quotas and Tianjin is capping the number of licences issued this year. “As more and more big cities put in place restriction measures, automakers will have to count on smaller cities and inland areas for growth,” said Harry Chen, a Shenzhen-based analyst with Guotai Junan Securities Co. “Local automakers will really need to bring on their A-game to compete with foreign joint ventures to survive.”

Year in review GM, which counts China as its biggest market, saw sales climb 11 percent to 3.16 million in the country last year. Though the Detroitbased carmaker outsold all foreign automakers in China for eight straight years, it may lose that lead when Volkswagen reports 2013 figures later this month. The German company surpassed its previous annual record by selling 2.96 million vehicles in the first 11 months.

Ford Motor Co, which got a late start in China, benefited from the popularity of its Focus car, helping the company post the biggest growth among major foreign automakers. China deliveries surged 49 percent to 935,813 units, outselling Toyota on annual basis for the first time. Toyota, the global leader in auto sales, fell to No. 6 among foreign automakers in China, though Japanese carmakers rebounded from the backlash of 2012, when a territorial dispute over a group of uninhabited islands led to violent protests that prompted Chinese consumers to shun Japanese-branded cars. By contrast, Chinese brands saw their combined market share at home shrink 1.6 percentage points to 40.3 percent, according to the auto group. Their exports dropped 7.5 percent, the first decline in five years, because of unstable overseas demand and insufficient competitiveness, it said. Ford’s Focus was the best-selling car last year, while Great Wall Motor Co.’s Haval topped SUV sales. Bloomberg News

India eases gold lending rules India’s central bank has increased the amount that finance companies can lend in return for gold deposits. Under the new rules, non-banking finance companies (NBFCs) can lend up to 75 percent of the value of gold, from 60 percent. The central bank revised the rules because their gold loan portfolios were showing only moderate growth. Lending against gold is a fast-growing business in the Indian economy, and the industry is valued at more than US$20 billion. India is placed 11th in the global ranking for gold holdings, with a 10 percent holding of the world’s gold reserves, according to the World Gold Council. Muthoot Finance Ltd, the biggest lender in India that uses gold jewellery as collateral, surged the most in more than four months in Mumbai stock trading after the central bank announcement. “Gold loan companies will be back on a growth track,” V.P. Nandakumar, Manappuram Finance Ltd’s chief executive and managing director, said in a telephone interview. “A higher cap on loans that can be given against gold means that the loan book will grow at a faster pace. The easing of rules show that the regulator is comfortable with gold loan companies.”