MOP 6.00 Editor-in-chief Tiago Azevedo
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he Housing Bureau is to give preference to the 2,701 families that have joined a shortlist to buy about 1,500 affordable flats built by the government in a block at Seac Pai Van, Coloane. That’s despite the fact that most of the units there have only one bedroom. More than 15,000 applications for that tranche of affordable accommodation were made by the city’s permanent residents last summer, the Housing Bureau said yesterday. It includes
Macau Foundation grants MOP870 mln during 2013 Page 3
SCL websites ‘under maintenance’ as hackers strike
9,241 applications from individuals, plus 2,701 requests from “core families”, including more than one generation of family member. Separately, more than 9,000 permanent residents have signed up for other affordable housing projects in Taipa, Ilha Verde and other units at Seac Pai Van, making them oversubscribed by almost five times. More on page 2
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Govt considering new curbs on property market Page 5
Year II
Number 475 Thursday February 13, 2014
Singles locked out of public housing
business daily 1
Friday April 19, 2013
SJM moving tables to Jockey Club
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Sociedade de Jogos de Macau SA has asked Macau’s gaming regulator for permission to re-stock its casino at Macau Jockey Club with tables and slots. The facility already has authorisation as a casino but has spent a decade in mothballs. The Gaming Inspection and Coordination Bureau told Business Daily the exact number of tables and slots involved would only be decided after the completion of renovations. Angela Leong On Kei, vice chairman of the club and an executive director of SJM Holdings Ltd, said on Sunday the reopening was spurred by the arrival of fresh infrastructure in Taipa including the Light Rapid Transit railway. The Jockey Club is expected to post its ninth consecutive yearly loss up to December 31. Page 3
Macau Legend gets circa HK$4.6 bln loan
MOP-yuan credit cards up 30 pct plus
Restaurant chain eyes expansion here and in HK
Casino services firm Macau Legend Development Ltd has secured a five-year syndicated bank loan for up to HK$4.6 billion. Industrial and Commercial Bank of China (Macau) Ltd – a unit of China’s state-owned ICBC – will be the lead arranger and book runner according to a filing with the Hong Kong Stock Exchange. The loan would be used toward the cost of redeveloping Macau Fisherman’s Wharf added the announcement.
More credit cards are on issue here than ever before, and the banks are allowing consumers to spend more with them, the Monetary Authority of Macau has said. Dual-currency cards denominated in patacas and the mainland’s currency the yuan drove much of the growth. The number of such cards on issue was 140,029 by the end of December, up by 31.2 percent from a year earlier.
Shanghai-based caterer Xiao Nan Guo Restaurants Holdings Ltd plans to open new outlets in Macau and Hong Kong. The Hong Kong-listed company closed nine restaurants in mainland China last year, eight of which were under its Shanghai Min brand. The group is focusing on expanding ‘The Dining Room’ brand, which appeals more to the mass market, the group’s senior director of investor relations Louisa Wong told Business Daily.
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Hang Seng Index 22292
22245
22198
22151
22104
22057
February 12
HSI - Movers Name
%Day
CHINA OVERSEAS
7.47
WHARF HLDG
4.73
CHINA RES LAND
4.70
NEW WORLD DEV
3.62
SWIRE PACIFIC-A
3.43
WANT WANT CHINA
-0.19
KUNLUN ENERGY CO
-0.45
TINGYI HLDG CO
-0.60
CHINA MOBILE
-1.00
HENGAN INTL
-1.64
Source: Bloomberg
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2013-2-13
2014-2-14
2014-2-15
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February 13, 2014 Friday April 19, 2013
Macau opinion
Up in smoke
José I. Duarte Economist
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he government commenced a public consultation on controlling air pollutants from the so-called fixed sources in the middle of last month. In a previous column, I expressed my surprise that the consultation document had been released but was conspicuously absent from the website of the Environmental Protection Department. I am pleased to say that the perplexing omission has been corrected and a link now features in the top left corner of the department’s homepage. The text in the link is not the most legible, but there it is, in a prominent location. That is great news and well worth highlighting. The report itself, however, seems to suffer from some common shortcomings and misunderstandings present in previous consultation exercises. The report’s introduction reassures the reader that controlling air pollution is a high priority for the government. The fact that a consultation process is only now underway to enact standards that were explicitly called for in the environment framework law adopted in 1991, does not lend much support to that assertion but, as is often said, better late than never. The report also says the department asked a consulting company to carry out a study of the “emission norms of the main sources of air pollution”. It is not clear if the study’s purpose was just to produce a compilation of regulations that are currently enforced in other jurisdictions or if the research is also aimed at creating an inventory of the sources of pollution and their characterisation. Unfortunately, the study’s authors are not identified, nor are its main findings made available. I have to assume that the consultation document is based on that study, whatever its content actually turns out to be. The second section of the document undertakes a very short review of legislation in other parts of the world – namely, the mainland, Hong Kong, Taiwan, Europe and the United States. It identifies the type of organisations targeted by the law in each of those countries and makes a passing reference to the underlying aims and principles. Regrettably, when it comes to the rationale behind the approaches followed or the analysis of concrete norms, footnotes instruct us “to consult the electronic pages” of the appropriate department. This highlights the first misunderstanding about the study. Most people would assume that this summary would be one of the outcomes of the study. A preliminary study must look into legislation existing in other parts of the world - but it should also go further. Any research must look critically at the assumptions, principles and specific rules of the regulations elsewhere. And it should also assess how much they will fit into the city’s legal and political circumstances, and how they will be enforced. Otherwise, this is no more than a search and summary of legislation that any undergraduate student could do as part of their coursework; and is certainly a lesser standard than most legal advisers to the government would be able to produce. The usefulness of such limited results in a consultation process will inevitably be reduced. The report’s third section mainly states that the principles adopted in the 1991 law were not properly regulated by subsequent norms – as the law itself, we should remember, expressly called for. That fact does not suggest any further comment or thought. The fourth section is a pillar of the document, containing a list of the economic activities that are subject to observation. In one of the few quantified statements in the document, the advisers are quoted saying that industrial and commercial establishments are responsible for 60 percent of all emissions. No further details are provided. Nothing about the level of pollution and their variation over time, nor the quantity of each category of pollutants associated with each economic activity. Nothing about the methods used in measuring each pollutant, or if some kind of composite indicator was used. That is odd. If such a study were carried out, surely additional data should be provided. What has been said so far implies that the provided information is insufficient to support sound judgements on the merit of the norms proposed. To further water down any expectations, it is not clear if more information will be released, or if there is a calendar of contacts with stakeholders, or what additional sources of information can be accessed. Another missed opportunity is brewing.
Residents survey the government’s shortlist for subsidised homes
Singles locked out of public housing Housing Bureau gives preference to the 2,700 families on a shortlist to buy about 1,500 affordable flats Tony Lai tony.lai@macaubusinessdaily.com
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here was nothing but relief on Mrs Wu’s face after she found her son’s name among the nearly 12,000 candidates for a one-bedroom public housing flat yesterday. “It is a big burden for him to rent a flat alone in this crazy property market. It costs him over HK$5,000 [US$644] a month,” said Mrs Wu, who would not give her first name. “I know the chance is slim as he applied as an individual but there wouldn’t have even been a chance if he hadn’t applied.” But the chances of the 20-year-old getting the keys to one of the 1,544 single bedroom, subsidised homes in the Ip Heng Building in Seac Pai Van is close to zero. The government says it will favour applications by the 2,700odd family households on the shortlist. The Housing Bureau published the shortlist of 11,942 applicants yesterday. More than 15,000 applications were made by the city’s permanent residents last summer, but only 11,942 were approved. There are 9,241 applications from individuals, with 2,447 requests from “core families”. The government considers core families as including an immediate relative, such as a grandparent, parent or partner. They will be ranked higher by the bureau, before other families and individuals, and have a better chance of buying one of the flats. In addition, there are another 254 applications from “non-core families”. The bureau’s public housing chief, Chan Wa Keong, said a final
ranking of the applicants would be ready by the end of the month. There was “basically no chance for individuals” to get a subsidised flat in the current batch because supply was so limited, he said.
Ready to wait “Based on the current resources we have, we think it is more appropriate to take care of the needs of the core families first,” he said. Core families with disabled and elderly members will most probably be eligible to buy a subsidised flat in Ip Heng Building, he said. More than 700 applicants fall into this category. But he said some families might give up their application for a onebedroom flat in the current allotment of flats and instead apply for a bigger home later. More than 300 applicants had scrapped their applications for the Ip Heng project as of last month, Mr Chan said. The government is taking applications for more than 1,900 subsidised homes ranging from one to three bedrooms until mid-March. Residents cannot apply for more than one public housing flat. Singles may have a chance if more families pass on the Ip Heng project. Lam Mei I said she intends to abandon her application in this round to enable her family a shot at a bigger flat. “But it will depend on where my application is placed in the final list as we do not want to wait further. Home rents here are so high now,” she said. Her family currently pays a
monthly rent of 6,500 patacas (US$814) for a two-bedroom home. There is no official data on home rents. Real estate agent Jones Lang LaSalle (Macau) Ltd forecast last month that the average rent could rise by 15 percent to 20 percent this year after an increase of up to 20 percent last year.
Affordable housing heavily oversubscribed More than 9,000 permanent residents have signed up for the government’s new affordable housing projects in Taipa, Ilha Verde and Seac Pai Van, making it oversubscribed by almost five times. Chan Wa Keong, the Housing Bureau’s public housing department chief, said on February 12 they had already received more than 9,000 applications by February 7. A total of 30,000 application forms were handed out, he said. The new round of applications is for 1,900 subsidised flats available in eight housing developments. Most are onebedroom or two-bedroom flats. Families submitted more than two-thirds of the applications, while the rest was from individuals, said Mr Chan. The three-month application window will end on March 17.
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Macau
SJM to move tables to Macau Jockey Club Horseracing facility hopes to reopen its casino after a decade spent ‘dark’, confirms regulator Tony Lai
tony.lai@macaubusinessdaily.com
casino would operate again, citing the need for government approval.
Renovation plans
Macau Jockey Club – what goes around comes around (Photo: Manuel Cardoso)
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ociedade de Jogos de Macau SA has asked Macau’s gaming regulator for permission to restock its casino at Macau Jockey Club with tables and slots. The facility already has authorisation as a casino but has spent a decade in mothballs. The Gaming Inspection and Coordination Bureau said the exact number of tables and slots involved would only be decided after the completion of renovations. The regulator told Business Daily via email: “The bureau has recently received an application from Sociedade de Jogos de Macau SA and its content is mainly about
arranging some of its tables to the Macau Jockey Club casino.” “Since the announcement of a gaming table cap in 2010, each [gaming] concessionaire or subconcessionaire can freely arrange its gaming tables among its casinos, via an application to the bureau, based on its own operation[al] and development needs,” the reply added. Under the government’s plan to control gaming expansion, the compound annual growth rate of live dealer gaming tables across the city is capped at three percent in the decade to the end of 2022. Macau Jockey Club Co Ltd
announced over the weekend it would reopen its casino at its horseracing track at Taipa. It had closed in 2004. Angela Leong On Kei, vice chairman of the club and an executive director of SJM Holdings Ltd, said on Sunday the reopening was spurred by the arrival of fresh infrastructure in Taipa including the Light Rapid Transit railway. An interchange between the LRT and bus routes is due to open in either late 2015 or early 2016 according to government announcements. But neither Ms Leong nor the club’s chief executive Thomas Li Chu Kwan would confirm when the
Macau Foundation grants surge by 14 pct last year Private universities among top beneficiaries of MOP869 mln of public money Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he city’s biggest sponsor of not-for-profit entities granted about 869 million patacas (US$108 million) last year, according to yesterday’s Official Gazette. The amount granted by the Macau Foundation last year was up by 14.2 percent from the 761 million patacas handed out in 2012. The foundation offered generous subsidies to grassroots, cultural
and artistic organisations, as well as educational institutes. Sizeable grants went to support construction and renovation at private universities. The biggest subsidies were paid in the second and third quarters of last year, when the foundation granted more than 300 million patacas in both periods. Among the leading beneficiaries
of the foundation’s grants was the Macau University of Science and Technology. In one grant, it received more than 54 million patacas last year for the upkeep of its football pitch and stadium. The University of Saint Joseph received about 49 million patacas to assist in the operation and construction of its new campus. Another private university, the City
A spokesperson for the gaming bureau told Business Daily by telephone yesterday: “As we are aware of some renovation works in the Macau Jockey Casino that are currently taking place, a final decision on the request will only be made after the works have been done.” The person added: “The number of gaming tables and slot machines on that premises is not decided yet as we still have to inspect the premises after the renovation…It is not like if they are asking for 100 gaming tables we will approve all of them… when [if] the venue does not fit [have space].” The spokesperson gave no timetable for the bureau to carry out such an inspection. This newspaper asked SJM for more information about the renovations and from where SJM will move the tables. There was no reply before press time yesterday. It is not the first time that SJM, founded by casino entrepreneur Stanley Ho Hung Sun, has rejigged gaming tables across its premises. SJM’s chief executive Ambrose So Shu Fai said last March it had moved “some 30 tables” from Casino Oceanus near the Outer Harbour Ferry Terminal to Casino Grand Lisboa in order to boost SJM’s gaming performance. In 2012 the latter casino also got 40 tables from Greek Mythology Casino on Taipa. According to Bloomberg News, SJM had around 1,750 gaming tables as of end-2012. The re-opening of the casino at the Jockey Club could provide a boost for the underlying racing business. The club is expected to post its ninth consecutive yearly loss up to December 31. The club’s Mr Li said on Sunday he anticipated the company had lost 50 million patacas (US$6.3 million) last year.
University of Macau, took 12 million patacas to go towards the renovation of its campus. Macau Foundation director Wu Zhiliang said in December that 2 billion patacas was budgeted for grants to applicants. About 40 percent of the nearly 4,000 projects applying for subsidies were related to education. The Macau Foundation has been the target of sustained criticism by members of the Legislative Assembly for the lenient administration of its grants. In June 2012, the Commission of Audit released a report which slammed the institution’s lax supervision of funding. Mr Wu has pledged to improve accountability and better monitor how grants were spent. Business Daily asked the Macau Foundation to explain its rationale to subsidise commercial activities or business operations, such as the Macau Shopping Festival, but had not received a reply late last night.
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Macau
Macau Legend gets circa HK$4.6 bln loan Syndicated facility arranged by ICBC (Macau) to help redevelop Macau Fisherman’s Wharf Michael Grimes
michael.grimes@macaubusinessdaily.com
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asino services firm Macau Legend Development Ltd has secured a five-year syndicated bank loan for up to HK$4.6 billion (US$593 million). Industrial and Commercial Bank of China (Macau) Ltd – a unit of China’s state-owned ICBC – will be the lead arranger and book runner according to a filing with the Hong Kong Stock Exchange. The loan would be used toward the cost of redeveloping Macau Fisherman’s Wharf, added the announcement. The development is a waterside entertainment complex on the territory’s peninsula held by Macau Legend unit Macau Fisherman’s Wharf International Investment Ltd. The bank facility will bear interest at a rate equivalent to the Hong Kong Interbank Offered Rate, plus 2.5 percent per annum.
Share offering Macau Legend had initially hoped to raise most of the money it wants for Macau redevelopment and expansion via a global share offering. The firm mentioned HK$6.11 billion as the gross target figure in a term sheet prior to its July share sale exercise. In the end it grossed
only about HK$2.2 billion – 36 percent of the target – as equities markets dipped globally on fears of a liquidity crisis in China’s formal banking system. A follow-up share offering in January was undersubscribed. It raised approximately HK$1.35 billion. That was only 58 percent of the US$300 million the firm’s co-chairman Carl Tong Ka Wing said in September the company planned to generate via selling new shares. Macau Legend – founded by its other co-chairman David Chow Kam Fai, a former Macau legislator – doesn’t have a casino licence of its own but relies instead on that of Stanley Ho Hung Sun’s Sociedade de Jogos de Macau. Macau Legend’s key assets include The Landmark Macau hotel, the Pharaoh’s Palace casino inside it, and the Macau Fisherman’s Wharf complex and its accompanying Babylon Casino and the Rocks Hotel. Macau Legend is currently building at Fisherman’s Wharf a third Macau casino hotel called Prague Harbor View. The company said in its IPO prospectus it would spend up to HK$1.59 billion on it and open the facility this year. The first version of Fisherman’s
Wharf – a collection of shops and restaurants housed in ersatz versions of architectural styles from around the world – was not a success. It cost HK$2 billion when it opened on December 31, 2005, but failed to draw crowds. The site was initially a joint venture between Stanley Ho on 51 percent, and Mr Chow on 49 percent. In 2010 a group of international backers – including investment bank Merrill Lynch, Och-Ziff Capital Management Group (a U.S. hedge fund) and TPG-Axon Capital Management – took a 68 percent haircut on US$390 million worth
SCL sites ‘under maintenance’ as hackers strike in U.S. American media linking cyber attack there with LVS chairman’s tough stance on Iran
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he corporate website of Macau casino investor Sands China Ltd was down yesterday. A message stated: “The website is undergoing maintenance”. It added: “We apologise for any inconvenience. Please check back shortly.” The same statement was found on the homepage of individual Sands China properties The Venetian Macao, Sands Cotai Central and Sands Macao. The website of the Four Seasons Hotel Macau – an associated Cotai property with a Sands China casino inside it – was operating normally yesterday. A request by Business Daily to the firm’s parent Las Vegas Sands Corp for more information – on the status of the Sands China websites and the reason for them being down – had not been answered by press time. The Associated Press had earlier reported that hackers had breached at least one associated website of LVS on Tuesday morning United States time (Tuesday night Macau time). U.S. media cited problems initially with the homepage of the Sands Casino Resort in Bethlehem, Pennsylvania. Sites for LVS properties in Las Vegas were also offline by Wednesday morning Macau time.
Message greeting visitors to Sands China websites yesterday
Before the Sands Bethlehem site went down visitors saw an image of LVS chairman Sheldon Adelson posing next to Israeli Prime Minister Benjamin Netanyahu, according to the Morning Call newspaper in Allentown, Pennsylvania. The page included a map of the world with locations of LVS’s U.S. casinos in flames, as well as scrolling personal information about Sands employees including email addresses and social security numbers, according
to the newspaper. It posted a video of the images on its own website. According to the newspaper the tampered-with website also included a text that read: “Damn A, don’t let your tongue cut your throat. Encouraging the use of weapons of mass destruction, under any conditions, is a crime.” That appeared to be a reference to comments in October attributed to Mr Adelson regarding Iran’s nuclear programme. The LVS chairman – speaking
of convertible bonds Mr Chow had raised from them on the strength of the story for Fisherman’s Wharf. Late last year Mr Chow charged 390 million shares, representing at that time approximately 6.26 percent of Macau Legend’s issued share capital – and one fifth of his then 30.83 percent total stake, to Credit Suisse AG, Singapore Branch, in what was described in a company filing as a “bona fide commercial loan”. Yesterday Macau Legend’s shares closed up 0.14 percent at HK$7.11. That’s a premium of 203 percent to their launch price of HK$2.35.
at a forum at Yeshiva University, a private institution in New York City – had suggested the U.S. should bomb Iran with a nuclear missile to deter that country’s nuclear ambitions, according to the New York-based Jewish Daily Forward newspaper. LVS spokesman Ron Reese later said the statements were “hyperbole,” according to the newspaper.
Hackers hunted Las Vegas-based LVS is working with law enforcement agencies to identify those responsible for that attack, Mr Reese told Bloomberg News yesterday via text message. The company is using internal and external experts to assess the damage and return the systems to full operation, he added. The Nevada State Gaming Control Board will work with LVS to determine the cause, according to A.G. Burnett, chairman of the regulatory body. “The risk of these things happening is certainly increased in this day and age and we will investigate it thoroughly,” he said in an email to Bloomberg. The U.S. Federal Bureau of Investigation is aware of the situation and is “addressing it as appropriate,” according to Bridget Pappas, a spokeswoman for the bureau. She wouldn’t say whether there was an active investigation. Mr Adelson was the largest individual donor to political action committees and other independent groups in the 2012 U.S. election cycle, according to OpenSecrets.org, which tracks spending. He is also a staunch supporter of Israel and is campaigning against the spread of online gambling. M.G. with Bloomberg News
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Macau Asian Film Awards ceremony finds a home here The City of Dreams casino-resort will host the eighth Asian Film Awards ceremony on March 27 at the Dancing Water Theatre. The awards were staged by the Hong Kong International Film Festival Society but will now be organised by the newly formed Asian Film Awards Academy. The chairman of the academy’s executive committee, Wilfred Wong Ying Wai, said the Macau government has been approached for sponsorship. City of Dreams is a property of Melco Crown Entertainment Ltd.
Twin currency cards swell by one-third Credit card issuance hits new records and credit limits ballooned last year Tony Lai tony.lai@macaubusinessdaily.com
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here are more credit cards on issue here than ever before, and the banks are allowing consumers to spend more with them, the Monetary Authority of Macau has said. The number of cards increased by more than 16 percent last year and there was a steep rise in the number of dual-currency cards, official data show. Macau’s banks issued 28,679 credit cards in the fourth quarter, taking the number on issue to 754,434 cards at the end of last year, the Monetary Authority said yesterday. That is a 16.3-percent increase over 2012. The increasing number of dualcurrency cards that can be used to pay for purchases in patacas and yuan have driven growth. Dualcurrency cards provide greater convenience and cheaper shopping in the mainland since currency exchange fees do not apply. The number of twin currency cards on issue was 140,029 by the end of December, up by 31.2 percent from a year earlier. Dual credit cards accounted for 18.6 percent of all credit cards in
Manuel Pires new CEO of public broadcaster M
anuel Pires, deputy director of Macau Government Tourist Office is to be the new chief executive of public broadcaster TDM. He will replace Leong Kam Chun on March 1. Mr Leong submitted his resignation on February 5. The precise reasons have not been made public. The changes were confirmed to the media yesterday by government spokesman Alexis Tam Chon Weng. Mr Pires has been a TDM board member since 2001. He is currently the board chairman of the public broadcaster on a part-time basis. Mr Tam did not mention who
MOP 13.96 bln Combined credit limit on the city’s credit cards
circulation last year, rising from 16.5 percent by the end of 2012. The banks are also allowing more latitude with their cards, with their combined credit limit rising to a record 13.96 billion patacas (US$1.75 billion) at the end of December – 28.8 percent more than in 2012. Credit card spending rose by 17.9 percent in the fourth quarter to 4.01 billion patacas, the highest quarterly figure since the monetary authority began publishing data in 2007.
would replace Mr Pires at MGTO. However Mr Tam admitted that Mr Leong’s departure from TDM was “sudden”, adding that the city’s Chief Executive Fernando Chui Sai On received Mr Leong’s resignation letter on February 5. Speaking to Business Daily, Mr Leong – an accountant by training – stressed that he was leaving mainly for personal reasons. He added he had not been subjected to any pressure from the government or from TDM’s board. “Before my [three-year] employment period is due, I’d already started to consider ending my engagement at TDM and return to my audit business,” Mr Leong told Business Daily. “I never intended to stay in the broadcasting business for long, and I always thought that I should leave when my tenure ends.” Mr Leong was appointed as the chief executive of TDM in 2011. His term was scheduled to end on March 1 this year. “I think in the past three years I already did my part,” Mr Leong told Business Daily. “I’ve straightened out the stature of our company and our employees’ morale has got better.” S.L.
More than 754,400 credit cards were in circulation throughout Macau at the end of last year
Credit card repayments grew to 3.8 billion patacas at the end of last year, 19.8 percent more than in 2012. Total debt rose by 13.3 percent in year-on-year terms to 1.95
billion patacas. The amount of credit rolled over – the debt card holders did not repay in full each month – increased by 9.5 percent.
Govt leaves door ajar on extra housing curbs T
improvement,” he said. Yesterday was not the first time Mr Lau has spoken about introducing new curbs to reduce inflated property prices. Just last Friday he said the government might add new controls. The price for an average home reached 82,776 patacas (US$10,362) a square metre last year, a 37.8-percent increase over the average price in 2012, according to official data. Mr Lau also said the government hopes to establish the urban planning committee “as soon as possible” when the urban planning bill comes into force next month.
he authorities say they have the scope to introduce additional controls to stabilise the city’s property market. “The government has closely paid attention to the development of the real estate market and does not rule out adopting any measure… for healthy development in the real estate market,” Secretary for Transport and Public Works Lau Si Io said yesterday. Mr Lau said the government would keep working to increase the supply of private homes by speeding up the review process for new developments. “There is still very large room for
T.L.
Secretary Lau Si Io
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Macau
Mainland chain dines outside comfort zone Faced with declining revenues from elite consumer base, Xiao Nan Guo prepares to roll out mid-priced restaurant brand Stephanie Lai
sw.lai@macaubusinessdaily.com
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eijing’s crackdown on extravagant spending by government officials is forcing mainland companies to look outside their established markets for better returns. Xiao Nan Guo Restaurants Holdings Ltd, for instance, will accelerate the expansion of its menu to appeal more to mass-market consumers in the mainland, Macau and Hong Kong. Shanghai-based Xiao Nan Guo is planning to open 12 new restaurants this year in Macau, Beijing, Shanghai, Hong Kong and Shenzhen. The group says it owns one of the biggest mid-market
and high-end, full-service Chinese restaurant chains in Greater China. The group is focusing on expanding The Dining Room brand, which appeals more to
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The new restaurants Xiao Nan Guo plans to open this year
the mass market, the group’s senior director of investor relations Louisa Wong said. The company also owns the Shanghai Min chain, an upscale option. There is a single Shanghai Min outlet here, at the City of Dreams casino-resort. The group said it was still considering the location for the first Dining Room in Macau. The Hong Kong-listed company closed nine restaurants in the mainland last year, eight of which were under the Shanghai Min brand. Most were located in commercial properties owned by state-owned companies or four-star hotels.
The group had 85 restaurants across 16 cities in Greater China at the end of last year. The impact of Beijing’s “three publics” spending policy has hurt business. The policy aims to promote more frugal spending by controlling mainland officials’ expenses on vehicle purchasing, overseas trips and receptions, such as banquets. “Aside from the influence of the ‘three publics’ policy, we’ve also noticed the increasing purchasing power of normal citizens as their disposable income is rising,” Ms Wong told Business Daily. “The Dining Room is a
more affordable option as most people can’t afford to eat at the Shanghai Min every day.” The average spending per head at The Dining Room is 70 yuan, while it is 220 yuan at Shanghai Min, Ms Wong said. In a profit warning issued on January 24, the group said it may record a “significant decline” in last year’s net profit. Net profit for the first half of last year fell by 43.3 percent to 31.83 million yuan (41.9 million patacas). Revenue rose by 4.6 percent to 677.55 million yuan, it said in September.
Mainlanders’ buying power ‘weaker’ at CNY: Sa Sa Cosmetics chain reports 3 percent rise in same store sales during holiday period Michael Grimes
michael.grimes@macaubusinessdaily.com
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ame store sales in Macau for cosmetics retailer Sa Sa International Holdings Ltd – trading as Sa Sa – rose by three percent year-on-year during Chinese New Year 2014 said the firm in a filing. In Hong Kong, same store sales were up six percent. The company didn’t give details of what either increase meant in money terms. But it did note that there had been a drop of nearly 10 percent in “average sales per transaction”. The firm added that “mainland Chinese tourists manifested a weaker purchasing power this year”. A number of luxury consumer brands have reported slower sales growth in Macau and Hong Kong in the second half of last year. Some analysts attributed that to the central government’s crackdown on extravagant gift giving to mainland officials. Sa Sa International described its guidance on Chinese New Year sales results in Macau and Hong Kong as being “on a voluntary basis to inform shareholders and potential investors”. It gave no indication as to whether the firm was in talks with any other parties regarding investment. On January 27 Sa Sa
International took the unusual step of filing a “clarification” with the Hong Kong Stock Exchange regarding an article in the Chinese-language Hong Kong magazine Next, about its business. Sa Sa said the report was “false, illogical and absurd”. Sa Sa International added at the time – without referring directly to the claims in the magazine: “All cosmetics products with usage period of less than six months, as well as health food and medicine products with less than one month of usage period must
be removed from shelves. As such, store supervisors and staff have no incentives for such wrongful behaviour.” According to its customer website, the firm has seven stores in Macau – including three in downtown Macau, and two at Cotai casino resorts.
Holiday timing In its latest filing on its Chinese New Year sales performance, the company compared January 31 to February 6, 2014 inclusive, with the period of February
10 to 16, 2013 inclusive. The latter was the 2013 Lunar New Year festival. Sa Sa International stated: “We believe that the one-day delay of the CNY holiday in mainland China [in 2014] when compared to the previous year adversely affected the sales performance at the start of the holiday.” But the company added: “…sales growth gradually picked up strength from the fourth day after CNY, leading to a retail sales growth and same store sales growth of 13 percent and 10 percent,
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shops in Greater China, Malaysia and Singapore
respectively, for the period covering the fourth to the tenth day of the CNY holiday.” Sa Sa International said in unaudited highlights for its fiscal third quarter results to December 31, 2013 – filed on January 9 – that the group’s turnover in the Hong Kong and Macau markets had risen by 17.4 percent, with same store sales growth of 15.8 percent. The group’s retail and wholesale turnover in other markets – including mainland China, Singapore, Malaysia, and Taiwan and online at sasa. com – grew by 3.8 percent during the fiscal third quarter. As of December 31, the group had 108 stores in Hong Kong and Macau, 66 in mainland China, 53 in Malaysia, 29 in Taiwan, and 23 in Singapore.
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Greater China HK firms fined for insider-trading claims Two Hong Kong-based asset-management firms agreed to pay about US$11 million to settle U.S. regulatory claims related to improper trades made before China-based Cnooc Ltd said it would acquire Canadian energy firm Nexen Inc. Citic Securities International Investment Management HK Ltd and China Shenghai Investment Management Ltd were the last two firms holding assets that were the subject of a 2012 Securities and Exchange Commission probe of illegal trades ahead of the merger announcement, the agency said in a statement. The SEC has collected almost US$30 million in illicit profits and penalties in the case. “The SEC’s swift action in this case ensured that traders located on the other side of the globe were not only deprived of their illegal insider trading profits but eventually paid steep penalties,” Sanjay Wadhwa, senior associate director in the SEC’s regional office in New York, said in a statement. Citic Securities agreed to pay US$6.6 million for purchasing shares of Nexen stock in the U.S. for the accounts of two of its affiliates, the SEC said. China Shenghai will pay US$4.3 million in disgorgement of illicit profits by the firm and eight clients, according to the statement. In settling the claims, the firms didn’t admit or deny wrongdoing.
Mexico, China to form infrastructure fund Mexico and China are discussing creating a joint fund for investments in infrastructure projects in Latin America’s No.2 economy, Mexican deputy finance minister Fernando Aportela said during a visit to New York. Mexican President Enrique Pena Nieto last year announced his government expected to see more than US$300 billion in public and private spending on infrastructure in Mexico between 2013 and 2018, around a third of it in telecoms and transport. The forecast spending was aimed at complementing a wider economic reform drive spanning energy to telecoms that Pena Nieto pushed through Congress last year and which is aimed at boosting long-lagging economic growth. Mexican newspaper Excelsior said on Tuesday Mexico and China were negotiating creating a US$2.5 billion fund for infrastructure spending, but gave no sourcing. Mr Aportela told Reuters the size of the fund was still being negotiated. Beyond investments by state-run energy and water companies, Pena Nieto’s infrastructure drive unveiled in July included putting two new satellites into orbit, tendering two new national television networks and building 15 new highways.
China trade growth beats Rise in exports and imports spark questions over numbers
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hina’s trade performance zoomed past forecasts in January as import growth hit a six-month high, confounding market expectations that the world’s second-largest economy is mired in a deepening slowdown. However, analysts who had expected the Lunar New Year holiday to drag on the month’s trade flows cautioned that the data may have been inflated by fake transactions, where traders forge deals so as to sneak cash into the country past capital controls. The value of China’s total exports climbed 10.6 percent in January from a year earlier, the Customs Administration said on Wednesday, more than five times market forecasts for a 2 percent rise. The value of imports jumped 10 percent from a year ago, a pace not seen since July and handily beating market predictions for a 3 percent gain. The country’s trade surplus rose to US$31.9 billion, well above forecasts of US$23.7 billion and December’s US$25.6 billion.
‘No comfort’ “This should allay some fears about a slowdown but I’m also not sure how much comfort we can take from these numbers,” said Louis Kujis, chief China economist at Royal Bank of Scotland for Hong Kong. “We know that a year ago there was some massive invoicing taking place. If you think about the incentives for over-invoicing, they are again very strong because of the interest rate differentials.” A run of underwhelming economic data from China in recent weeks had steeled investors for another disappointment yesterday, as markets
Value of exports climbed 10.6 percent in January
braced themselves for more signs that the economy is losing steam. Fears of a sharper-than-expected loss of momentum in China were believed to be one contributing factor in a fierce global financial market selloff in January, with emerging markets hit particularly hard.
Four separate purchasing managers’ indices had shown China’s factory and services sectors sliding to multi-month or multi-year lows in January as celebrations for the Lunar New Year, China’s biggest annual holiday, reduced the number of work hours. Many factories and
Shadow-bank product defaults Jilin Trust products worth US$126 mln have defaulted: report
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Bright Food working on Tnuva acquisition Bright Food Group Co, the dairy and consumerproducts group backed by the Shanghai government, is working with Citigroup Inc on its planned purchase of Israel’s Tnuva Food Industries Ltd, according to a person with knowledge of the matter. A deal could value Tnuva, Israel’s largest food manufacturer and distributor, at as much as 9 billion shekels (US$2.6 billion), said the person, who asked not to be identified as the information is private. Bright Food is performing due diligence on Tnuva, the person said. Chinese companies from Bright Food to pork producer WH Group Ltd have been making acquisitions overseas as rising incomes spur demand for consumer goods. Bright Food, whose domestic brands include White Rabbit candy, bought a 60 percent stake last year in British cereal maker Weetabix Ltd for US$1.2 billion. Bright Food has not decided on any acquisition for Tnuva and hasn’t set a valuation for the company, Shanghai-based spokesman Pan Jianjun said in a telephone interview yesterday. Citigroup is among several investment banks Bright Food works with when making overseas acquisitions.
high-yield investment product backed by a loan to a debtridden coal company failed to repay investors when it matured last Friday, state media reported yesterday, in the latest sign of financial stress in China’s shadow bank sector. The product, which raised 289 million yuan (US$47.7 million) from wealthy clients of China Construction Bank (CCB), China’s second-largest lender, was created by Jilin Province Trust Co Ltd and backed by a loan to a coal company, Shanxi Liansheng Energy Co Ltd. “It matured on February 7, but CCB passed on an announcement from Jilin Trust saying ‘We currently can’t be certain when [Liansheng] funds will be returned,’” the official Shanghai Securities News quoted an unnamed investor in the trust product as saying. Though the maturity date has already passed, producing a technical default, Jilin Trust appears to be working to recover investor funds. “Restructuring isn’t bankruptcy. As far as we know, there is no problem with the firm’s assets. The firm is in negotiations with investors,” the paper quoted an unnamed Jilin Trust official as saying.
Jilin did not immediately respond to requests seeking comment. Chinese markets were on edge last month when a similar product created by China Credit Trust Co Ltd warned investors that it might not pay off on time when it matured on January 31. That product was also based on a loan to an indebted coal producer in Shanxi. In the end, however, investors in China Credit Trust’s “Credit Equals Gold” product recovered their principal when an unnamed investor stepped in to purchase collateral assets. In this case, default has already occurred, the paper said.
Rising bad debts The popularity of investment trusts and other so-called wealth management products has exploded in recent years, with banks and trust firms marketing them as a highyielding alternative to traditional bank deposits. Analysts warn that default risk from such off-balance-sheet loans is rising. Funds raised through the sale of these products typically flow to weak borrowers that struggle to access bank loans, especially property
Products sold through China Construction Bank
developers, local governments and firms in industries plagued by overcapacity. The fourth tranche of Jilin Trust’s product named “Songhua River #77 Shanxi Opulent Blessing Project” raised 289 million yuan from investors
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Danone to bolster stake in China Mengniu Dairy French group to double holding in dairy company to 9.9 percent
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Commodities imports hit record highs Imports of crude oil, iron ore and copper hit record highs in January, though some of the unexpected strength was put down to stockpiling ahead of the Lunar New Year holidays rather than underlying strength in consumption. Mark Keenan, head of commodities research in Asia at Societe Generale, said the data on commodities imports underpinned strength across the board at a time when the world was very focused on China after the recent emerging markets rout. “If China retains an element of stability, it will calm sentiment toward the rest of the emerging markets,” he added. China’s imports of iron ore surged to a record 86.84 million tonnes in January, defying expectations for a fall and rising more than 18 percent compared to the previous month, data from China’s customs authority showed yesterday.
offices close for long periods during the festivities. A resilient Chinese economy is good news for the world, particularly for major commodity exporters such as Australia. Already the world’s biggest exporter, China may overtake the
United States to be the world’s largest importer this year, HSBC Bank has predicted. Economists expect China’s economy to grow at its slackest pace in 14 years this year at 7.4 percent. But even them, it is still expected to add twice as much demand to the world economy than the United States, HSBC said. Reuters
as firm can’t repay
in February 2012, promising a 9.8 percent annualised return. The previous three tranches, launched in late 2011, totalled 474 million yuan and also matured late last year without paying investors as planned. The final two tranches,
amounting to a further 209 million yuan will mature in the coming weeks, the paper reported. China’s coal industry has been battered by overcapacity and falling prices. China’s bank regulator recently warned lenders to guard against the risk of rising bad debts from the sector. In late November, Liansheng petitioned a court in the coal-rich central Chinese province of Shanxi for debt restructuring. At a press conference at the time, the court said the firm and its affiliates had financial liabilities totalling 30 billion yuan and had lost their ability to service their debts. Technical defaults caused by repayment delays have occurred before, but market watchers say that China’s shadow bank sector is still waiting for a precedent-setting default in which investors are forced to absorb substantial losses. Such an event could shatter the widespread assumption that even high-yielding investments carry an implicit guarantee from state banks. But Jilin Trust is apparently still looking for ways to recover investors’ funds. Reuters
rance’s Danone SA will spend US$665 million to lift its effective stake in China’s top dairy firm, China Mengniu Dairy Co Ltd as it seeks to boost its presence in one of its most important markets. The 486 million euro investment by the world’s biggest yoghurt maker will see its effective holding in Mengniu rise to 9.9 percent from 4 percent, making it the Chinese company’s second‑biggest shareholder. Mengniu’s shares rallied as much as 9.5 percent to an all-time high of HK$40.35 before much of those paring gains. The stock was changing hands at HK$37.95 at the close in Hong Kong trading. Booming Chinese demand for dairy products has sparked a raft of M&A and IPOs in China’s dairy sector. Food-safety scares have also boosted demand for foreign baby milk formula, pushing local dairy firms to increase ties with foreign makers. Sales of dairy products are expected to nearly double from 2012 to 2017 to about US$89 billion, according to estimates by business consulting firm Frost & Sullivan. Danone, the maker of Bledina baby food and Volvic water, formed an alliance with Mengniu in May 2013, under which the companies agreed to produce and sell chilled yoghurt products in China. Under the new agreement, Danone and COFCO Dairy Investment, a venture with China’s state-owned COFCO, will subscribe to a reserved rights issue by Mengniu at HK$42.5 per share, a 15.3 percent premium to Mengniu’s previous close. COFCO, Danone and dairy
cooperative Arla Foods, Mengniu’s three core shareholders, will combine their stakes within COFCO Dairy Investments, Danone said in a statement. COFCO owns 16.3 percent of Mengniu and Arla owns 5.3 percent. Danone has long aimed to establish a major presence in China. Its first joint venture with China’s largest beverage company, Hangzhou Wahaha Group Co, fell apart in 2009 after 13 years. China’s dairy industry is dominated by local companies including Modern Dairy, China Huishan Dairy Ltd and YST Dairy. Foreign players have taken a significant role in niche markets such as milk powder after a 2008 food safety scandal. Mengniu plans to use the proceeds to cut down debt. Deutsche Bank AG advised China Mengniu, the Chinese company said. Reuters
PBOC singles out industries most at risk T he singling out of three debt types most at risk by the People’s Bank of China has prompted Nomura Holdings Inc to warn that rising borrowing costs will make it even harder to avoid a default by these issuers. The PBOC will enhance monitoring of local government financing vehicles, industries with overcapacity and property developers to prevent default risks from spreading, according to its fourth-quarter policy report issued on February 8. “The three industries singled out by the PBOC are the most likely to have defaults this year,” Zhang Zhiwei, Nomura’s Hong Kong-based chief China economist, said in an e-mail interview. “Individual LGFV defaults will happen this year, but are unlikely to lead to a systemic financial crisis as the central government is expected to intervene.” The cost of potential bailouts is escalating, with an official audit estimating regional liabilities alone jumped 67 percent from the end of 2010 to 17.9 trillion yuan (US$2.95 trillion) as of June 30 last year. The PBOC has allowed money-market
rates to surge to deleverage debt in the world’s second-largest economy that the Chinese Academy of Social Sciences estimates accounts for 215 percent of gross domestic product. The first credit events in China will probably occur in industries with excess capacity because demand is weak and the government is seeking to curb expansion, said Mr Zhang. China has ordered more than 1,400 companies in 19 industries such as steel, ferroalloys and cement to slim down as part of a drive to refocus the economy on domestic demand and cut air pollution. “In many commodities, especially steel and coal, there is a structural surplus,” Gary Lau, managing director for corporate finance at Moody’s, told a press briefing in Hong Kong on January 23. China’s central bank signalled in the report that volatility in moneymarket interest rates will persist until debt is tamed. The seven-day repurchase rate jumped to a record 10.77 percent on June 20 and averaged 4.09 percent last year, from 3.50 percent in 2012. The benchmark was 5.21 percent yesterday. Bloomberg News
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Taiwan dollar could depreciate because of the slowdown in China
Taiwan dollar emerging as Asia funding favourite Central bank holding borrowing costs down to spur growth Lilian Karunungan
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looser monetary policy by Taiwan’s central bank is helping the local dollar provide the best returns for funding carry trades in Asia, generating profits during the worst slump in emergingmarket currencies since 2008. Traders who sold the Taiwan dollar against a basket including Indonesia’s rupiah and China’s yuan have earned 1.7 percent in 2014, compared with a 3 percent loss for deals funded with the yen, data compiled by Bloomberg show. Carry traders buy high-yielding assets financed by currencies with lower borrowing costs. A decline in the funding currency adds to the return from the interest-rate differential. Taiwan’s central bank Governor Perng Fai Nan has said he favours an “adequately loose” policy, which weakens a currency, while developing nations including India, Turkey and South Africa raised interest rates as the U.S. pared stimulus. That’s enhancing the Taiwan dollar’s appeal to fund carry trades at a time when an emerging-market exodus caps gains on currencies the
KEY POINTS Central bank helping to cap currency’s gains Currency likely to end 2014 at NT$30 per dollar Strategists lowering forecasts for Taiwan’s dollar
deals tend to purchase. Taiwan’s 10year bonds pay 1.6 percent compared with 4.5 percent in China and 8.7 percent in India. “Given the poor sentiment in the market, using the Taiwan dollar as a regional funding currency has been challenging,” Perry Kojodjojo, a strategist in Hong Kong at Deutsche Bank AG, the world’s biggest currency trader, said yesterday. Now, though, “we’re looking for tactical opportunities,” he said.
Best returns As Federal Reserve policymakers taper stimulus, their Taiwanese counterparts are holding borrowing costs down to spur growth. Taiwan’s gross domestic product grew a better than forecast 2.92 percent in the fourth quarter as a recovery in Europe and the U.S. boosted the island’s exports. Taiwan’s dollar tumbled to NT$30.549 per dollar on February 5. It has fallen 1.8 percent this year, adding to a 2.7 percent drop in 2013. Carry trades using Taiwan’s dollar to purchase nine of the 10 mosttraded Asian currencies have made money this year, compared with three for all of 2013, data compiled by Bloomberg show. Among the continent’s emerging currencies, buying the rupiah has given the best return at 2.8 percent, followed by 2 percent for India’s rupee. Funding these deals with the yen, traditionally favoured because of Japan’s near-zero interest rates, became less feasible as investors bought the currency as a safe haven. The yen has strengthened 2.6 percent this year, more than in any quarter since mid-2012.
The carry trade is rebounding after suffering its worst returns since 2008 last year, and then generating losses amid January’s emerging-market rout. Bloomberg’s Financial Conditions Asia Carry Trade Index, which measures transactions funded in U.S. dollars, has gained 0.9 percent from a fivemonth low reached January 27. Returns slipped last month as evidence of a slowdown in Chinese manufacturing coincided with the Fed tapering its monetary stimulus programme, prompting investors to dump developing-nation assets. The carry trade gauge fell 7.3 percent in 2013 after Ben S. Bernanke, then the chairman of the Fed, first announced a reduction in the bond purchases that have driven investment around the world.
‘No incentive’ A Bloomberg index of 20 emergingmarket exchange rates has fallen 9.7 percent the past 12 months, more than in any year since 2008, and dropped this month to its lowest level since 2009. As well as keeping the benchmark discount rate at 1.875 percent since June 2011, the longest-ever period without a change, Taiwan’s central bank has sold the local dollar in the run-up to the close of most days since March 2012, according to traders who asked not to be identified. Taiwan has “no incentive to have too strong a currency,” Desmond Soon, a Singapore-based portfolio manager at Western Asset Management Co, which oversees US$452 billion globally, said. “We’re underweight Taiwan dollar in our portfolio.” The central bank is helping cap the
currency’s gains and keep it stable, both important for getting reliable returns in carry trades, strategists including Siddharth Mathur, the Singapore-based head of Asian foreign-exchange and rates strategy at Citigroup Inc, said in a report.
Price swings Not everyone agrees Taiwan’s dollar is suitable for funding carry trades. The currency will withstand a reduction in Fed stimulus better than its peers because of the surplus in the island’s current account, according to Credit Agricole SA. The surplus in the broadest measure of trade rose to US$14.91 billion in the three months through September, from US$14 billion in the second quarter. “With a current-account surplus and little reliance on bond inflows, Taiwan’s dollar won’t suffer as much from the Fed tapering as other currencies,” Frances Cheung, a Hong Kong-based strategist at Credit Agricole, said. “As the Taiwan dollar is expected to appreciate, it won’t make a good funding currency.” Strategists are lowering their forecasts for Taiwan’s dollar, suggesting most think the French lender is wrong. The currency will end 2014 at NT$30 per dollar, according to the median of 28 forecasts compiled by Bloomberg, compared with an estimate of NT$29.2 on December 27. Credit Agricole sees the local dollar rallying to NT$28.9 to the greenback by year-end compared with NT$30.406 yesterday. As well as central-bank policy, the Taiwan dollar may also depreciate – and therefore be more suited to funding carry trades – because of the slowdown in China, its biggest export market. Taiwan’s trade surplus with its cross-strait neighbour reached US$116 billion in 2013. “The Taiwan dollar cannot rally in an environment where China is slowing,” Thomas Harr, the Singapore-based head of local-market strategy at Standard Chartered Plc, said in an interview. “What’s the risk using it as a funding currency? I would say it’s quite limited. Taiwan is a very managed currency.” Bloomberg News
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Central banks predicting hard times in Asia Regulators having to step in to shore up weak economies Tomasz Janowski and Rieka Rahadiana
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sia’s central bankers are being forced to juggle their day jobs with what their governments have failed to do – steeling their economies for the hard times. Critics say many governments have done too little to remove barriers to domestic and foreign business investment, cut red tape, upgrade infrastructure and develop deep, well-functioning financial markets when the region was flush with cheap money. Now that economic rocks are emerging as the tide of the U.S. Federal Reserve’s easy cash recedes, central banks are having to step in, detouring from their price and financial stability mandates, to shore up weak economies. India and Indonesia were first in the firing line of investors last year when the Fed’s plans to scale back its US$85 billion in monthly cash injections started to take shape. Both took emergency steps, intervened in markets and raised interest rates to shore up battered currencies. Since then the Fed has started winding down its stimulus in earnest, putting emerging markets on the back foot once again as investors look to target the most vulnerable economies. Indonesian and Indian authorities have improved their defences against rapid outflows but their governments have failed to tackle supply bottlenecks and market rigidities that fuel inflation and limit room for policy manoeuvre, economists say. Both face national elections this year that could lead to populist measures and further delay reforms. In Thailand, months of political turmoil have paralysed government, leaving the central bank as the mainstay of economic support. “Government and monetary policies should be fairly balanced,” says Rob Subbaraman, chief Asia economist at Nomura Holdings Inc in Singapore. “In India, and increasingly Thailand, the governments have not done their part. There’s a risk Indonesia goes this way as the elections draw closer,” said Mr Subbaraman, who since mid-2013 has been warning of emerging Asia’s growing exposure to market turmoil.
Heavy lifting Even in Japan and China, with their strong and stable political leaderships, central banks appear to be doing most of heavy lifting. In Japan, a blast of central bank
Central banks appear to be doing most of heavy lifting
money has boosted the economy and markets, but Prime Minister Shinzo Abe’s economic reforms have disappointed. China’s central bank is trying to rein in an explosion of off-balance sheet and risky lending as cautious government regulators resist speedier financial reform that would force markets to price risk more realistically. Asian central bankers rarely air their frustrations in public. India’s former central bank governor Duvvuri Subbarao was an exception, regularly sparring with New Delhi over economic reforms and rates. Sometimes though, their concerns do bubble to the surface. After a series of rate hikes by Indonesia’s central bank, an official there in October voiced his vexation that the government was not tackling the root cause of a widening trade and current account gap – its own spending. “We need to address the cause of illness when running a fever,” Dody Budi Waluyo, executive director of Bank Indonesia economic and monetary policy department told Reuters at the time. “The medicine should not only be Panadol to lower the fever.”
New risks In picking up the reins from government, the risk is that central banks will deliver neither the stability they seek, nor the economic support
Too loose for too long C
entral bankers in Asia may have contributed to their own predicament by keeping monetary policies too loose for too long after the global financial crisis, either because of political pressure or fear of more turmoil. Nomura Holdings Inc estimates that taken as a whole, real interest rates
measured as a difference between official rates and inflation in Asia’s 10 biggest economies excluding Japan were negative for more than half the time since 2008 – a recipe for rapid debt buildup and property and stock market bubbles. By contrast rates were negative for only 16 percent of the 19962007 period.
that is needed. In Japan, for example, the concern is that optimism spurred by the Bank of Japan’s massive cash injections will fade without reforms to unshackle the economy’s untapped growth potential and help overcome the problems of a fast ageing society. The Chinese central bank’s attempts to curb risky lending by calibrating supply of money market funds have triggered repeated cash crunches that threaten to ignite market panic. Indonesian and Indian central banks may be forced to tighten
Government and monetary policies should be fairly balanced (…) In India, and increasingly Thailand, the governments have not done their part Rob Subbaraman, chief Asia economist at Nomura
“By over accommodating the Fed’s easing, central banks allowed asset price inflation to occur, causing an intoxicating party in full swing,” said Thirachai Phuvanatnaranubala, former Thai finance minister and deputy central bank governor. “With tapering, the party is over. Some emerging markets will now have to deal with the bubbles that crept up while everybody dreamily enjoyed himself.” There are also some signs of change. India is
monetary policy more than their slowing economies would otherwise have warranted because of fragile market sentiment and sticky inflation that remains high even when growth cools. In an ominous sign for India, foreign investors have been net sellers of the country’s stocks this year. Thailand’s central bank is under pressure to fill the void left by stalled infrastructure spending and provide the struggling economy with stimulus, but is well aware of the risks. “Maintaining monetary policy in an accommodative mode for a long period of time runs the risk of delays in reforms as they may seem less pressing and the risk of financial imbalances build up,” Bank of Thailand spokeswoman Roong Mallikamas told Reuters. In Japan, one concern is that without fundamental reforms promised as part of Mr Abe’s revival plan, markets will reverse and Japan lurch back into its deflationary equilibrium or “stagflation” – a spell of tepid growth and rising prices. Japan Risk Forum, which groups risk managers from Japan’s major financial institutions, sees nearly a 50-50 chance of that happening. “We cannot rely solely on monetary policy forever and the time will come when the government’s resolve will be tested by markets, likely around summer,” said Hiroshi Watanabe, head of state-run lender JBIC and Japan’s former top financial diplomat. Reuters
embarking on an ambitious monetary policy overhaul that would make it harder for the government to lean on the central bank, while the government has curbed gold imports and secured US$34 billion in overseas financing to try to close its current account deficit. Indonesia’s ban on ore exports drew fire, but it is a sign Jakarta at least recognises the need to reduce its reliance on raw commodities exports. It has also taken steps to shore up public finances.
Still, central bank efforts can easily unravel once elections are in motion, said Toru Nishihama, senior emerging markets economist at Dai-ichi Life Research Institute in Tokyo. “As elections are looming in many emerging countries this year, no matter how central banks tighten policy to control inflation, their governments are tempted to loosen fiscal policy, offsetting central banks’ efforts,” Mr Nishihama said. Reuters
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Asia Lufti named Indonesia’s new trade minister Indonesia named yesterday the U.S.-educated former head of its investment agency, Muhammad Lutfi, as trade minister, with the government entering its last few months before a presidential election set for July. Mr Lutfi replaces Gita Wirjawan who stepped down last month to focus on his campaign to become the presidential candidate for the ruling Democratic Party. “My priorities will be one, to stabilise prices and reduce inflation ... and two, to boost exports,” he told reporters.
South Korea to make oil payment to Iran South Korea is set to become the second Asian nation to make a payment to Iran for crude imports under an interim nuclear deal that has provided limited sanctions relief, a banking source told Reuters yesterday. The Iranian central bank has a total of about US$4.7 billion to US$5.6 billion in South Korea in two won-denominated accounts, one at Woori Bank and the other at Industrial Bank of Korea as of late 2013, according to a second source. The first source said the payment to Tehran was expected to be made in early March, but did not specify the amount.
Core machine orders falling in Japan Japan’s core machine orders fell in December the most since 1998, signalling business investment growth could slow in coming months and weigh on a recovery in the world’s third-biggest economy. Core orders fell 15.7 percent from the previous month, the Cabinet Office said in Tokyo yesterday. The fall partly reflected a pullback from a gain in November, when there was a big order that exceeded 10 billion yen (US$97.6 million), according to the Cabinet Office.
SoftBank profit beats estimates SoftBank Corp, the wireless carrier led by billionaire Masayoshi Son, posted third-quarter profit that beat analyst estimates as new Japanese subscribers limited the impact of losses at Sprint Corp. Net income was 93.3 billion yen (US$910 million) in the three months ended December 31, the company said in a statement yesterday. Sprint yesterday posted a net loss of US$1.04 billion for the December quarter.
India falling towards zero Disappointing data could influence polls due by May Jeanette Rodrigues and Andrew MacAskill
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omura Holdings Inc predicts a raft of disappointing Indian economic data just as the ruling Congress party coalition enters national elections. The Nomura Economic Surprise Index for India is likely to move toward zero in coming weeks after touching an eight-month high of 0.28 in January, which suggests figures are likely to trail estimates, according to Japan’s biggest brokerage. Indian sovereign bonds have gained 1.4 percent this year, Asia’s best performance, HSBC Holdings Plc indexes show, as inflation slowed more than forecast and growth surpassed predictions. “Economists tend to push up their forecasts after being positively surprised, which then lowers the extent of further surprises,” Aman Mohunta, a Nomura economist in
9.87 %
Growth in consumer prices in December
About 800 million voters are eligible to vote this year
New slump expected on Thai rice prices Government short of funds to pay farmers
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hai rice farmer Pakasit Jamjaras usually spends his days tilling soil, just like his forefathers. Now he’s been harvesting signatures instead of grain, with a petition to King Bhumibol Adulyadej because the government hasn’t paid for his crop in five months. “We are heavily indebted,” Mr Pakasit, a 47-year-old father of three, said by telephone from Phichit province, about 350 kilometres (217 miles) north of Bangkok. “We need to repay suppliers of fertilizers and others.” Thailand, once the world’s biggest exporter, is short of funds to help growers under Prime Minister Yingluck Shinawatra’s 2011 programme to buy the crop at abovemarket rates. After the government built record stockpiles big enough to meet about a third of global import demand, exports and prices have dropped, farmers aren’t being paid, and the programme
is the target of anti-corruption probes. Political unrest may contribute to slower growth in Southeast Asia’s second-largest economy. Selling the government inventory to pay farmers would flood the market with rice, eroding prices that in 2013 fell by the most in at least five years, and would escalate competition for shippers in Asia, including India, Vietnam and Cambodia. “The programme is simply unsustainable and hurting the finances of the country,” said Concepcion Calpe, a senior economist in Rome for the United Nations’ Food & Agriculture Organisation. “The suspension of the rice-pledging programme will exacerbate the decline in Thai market prices as farmers enrolled in the programme increasingly fail to be paid.” Protests against Ms Yingluck by farmers, who blocked roads in the provinces, added to opposition in Bangkok that led to deadly conflicts.
Months of demonstrations led by Suthep Thaugsuban, a former opposition-party power broker, paralysed parts of the capital and disrupted a national election on February 2. Ms Yingluck heads a caretaker administration until a new government is formed. Thailand, a constitutional monarchy since 1932, had nine coups since 1946, when King Bhumibol assumed the throne. The price of Thai 5-percent broken white rice, a benchmark grade, tumbled 23 percent last year and was at US$456 a metric ton on February 5. A slump to US$370 by March is possible as more grain is offloaded from state granaries, according to Chareon Laothamatas, president of the Thai Rice Exporters Association. It may take about five years for the state stockpiles to be sold off, Mr Chareon said. 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 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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Asia
growth
Mumbai who formulated the index, said in a February 10 interview. “Factors such as inflation and job prospects do play an important role in an electorate’s mind.” Disappointing data could influence polls due by May, where a record 15 percent of about 800 million voters will be eligible to cast ballots for the first time in the world’s largest democracy. Moody’s Investors Service said that while a strong mandate for any major political party won’t immediately improve an economy growing at near the slowest pace in a decade, a fragmented coalition is the biggest threat to India’s credit quality.
Economists tend to push up their forecasts after being positively surprised, which then lowers the extent of further surprises Aman Mohunta, Nomura economist in Mumbai
Congress prospects Faster-than-expected increases in consumer prices, already the highest in Asia, as well as industrial production and exports falling short of expectations could further hurt the Congress party’s prospects. Opinion polls show the main opposition Bharatiya Janata Party winning the most seats while falling short of a majority. The Nomura gauge tracks surprises in India’s gross domestic product, factory output, inflation and purchasing managers’ index. The identification of very bullish or bearish consensus estimates helps to pick turning points in equity, currency and debt markets, Mr Mohunta said. India’s rupee fell to a record low of 68.845 per dollar in August after the index peaked last year in May. The measure bottomed on September 6, and the currency strengthened 4.9 percent that month, the most in a year. The rupee gained 0.1 percent to 62.1425 per dollar yesterday and the yield on the 10-year benchmark government bond rose five basis
points, or 0.05 percentage point, to 8.79 percent. Consumer-price increases slowed to 9.87 percent in December from a year earlier, latest official figures show, compared with a 10.06 percent median estimate in a Bloomberg survey, and wholesale price inflation eased to 6.16 percent versus the consensus forecast of 6.99 percent. The two gauges of living costs likely slowed further in January, according to separate surveys before data due this week.
Toyota announces big Prius recall
T
being driven, Toyota said. Toyota, the world’s topselling automaker, does not disclose cost estimates for recalls. While Toyota is headed for record profit this fiscal year, driven by the weaker yen, the company continues to face recalls. Toyota recalled more vehicles than any automaker in the U.S. each of the last two years, according to the National Highway Traffic Safety Administration. The number of vehicles called back for a single defect has ballooned over the years as carmakers increasingly use common parts across multiple models to save development and procurement costs.
‘Determining factors’ The main opposition BJP is set to win 188 seats in the 545- member lower house, surpassing the 182 seats it won in 1999, according to a C-Voter poll for India Today magazine published last month. Congress may get as few as 91 seats versus 210 now, dropping to its lowest on record, the poll indicated, without giving a margin of error. “Economic issues will be the main determining factors at this election,” N. Bhaskara Rao, chairman of Centre for Media Studies, a New Delhi-based research group, said. “Employment prospects and the price of food affect everyone.” A record 120 million Indians between 18 and 22 years of age will vote for the first time this year, according to calculations based on the official 2011 census data. Credit-default swaps insuring the debt of State Bank of India, considered by some investors a proxy for the sovereign, against non-payment for five years have climbed eight basis points this year to 288, according to data provider CMA. Prime Minister Manmohan Singh, an economist credited with helping India open up to foreign investment in the early 1990s, said he won’t seek another term. Bloomberg News
Vodafone faces prolonged India tax dispute I
Recall covering 1.9 million cars worldwide oyota Motor Corp, the world’s largest automaker, will recall more than half of the Prius vehicles it’s ever sold to update software. The recall involves about 1.9 million vehicles globally produced since March 2009, spokesman Brian Lyons said. As of last year, global deliveries of the Prius line of vehicles exceeded 3.6 million units since its release in 1997, according to the carmaker. Toyota said the problem was in the software used to control the boost converter in a module that is part of the hybrid system. “The setting of the software could cause higher thermal stress in certain transistors within the booster converter, and these transistors could deform or become damaged as a result,” Toyota said. “This will result in various warning lights being illuminated, and will probably cause the vehicle to enter a failsafe mode,” it said, noting that the car can be driven but with reduced driving power. In limited cases, the hybrid system could shut down, causing the vehicle to stop, possibly while it is
The government’s February 7 estimate that Asia’s third-largest economy will expand 4.9 percent in the 12 months through March was faster than the 4.7 percent pace seen by economists. Nomura expects GDP growth of around 4.5 percent to 5 percent in the coming quarters and any resurgence will depend on a pickup in investments, which is likely only after the elections, according to Mr Mohunta.
It took President Akio Toyoda years to restore the company’s reputation for quality after Toyota recalled more than 10 million vehicles for problems related to unintended acceleration in 2009 and 2010. Toyota forecast this month that profit for the year ending March 31 will surge to a record 1.9 trillion yen (US$18.5 billion). The company has set a target of selling an unprecedented 10.32 million vehicles in 2014 after leading General Motors Co and Volkswagen AG in global auto deliveries for a second straight year in 2013. Reuters
ndia’s government is considering scrapping conciliation talks with Vodafone Group Plc over a US$2.2 billion tax dispute that has tarnished the country’s allure as a destination for foreign investment. The Cabinet will consider a proposal to end the talks, D.S. Malik, a spokesman for the Finance Ministry, said in New Delhi yesterday. He didn’t elaborate on why or when it would be taken up. The negotiations may fail because the world’s second-largest mobilephone carrier had sought to include a separate tax clash in the discussions, CBNCTV18 channel reported on Tuesday, citing sources it didn’t identify. Companies from Nokia OYJ to Royal Dutch Shell Plc are grappling with Indian tax demands, fuelling concern the nation’s tax laws have become more hostile even as Prime Minister Manmohan Singh seeks foreign investment to help revive economic growth. Vodafone’s dispute dates back to the carrier’s 2007 acquisition of the Indian unit of Hong Kong-based Hutchison Whampoa Ltd, a deal on which it says no tax
is payable. “India could have done better and taken into consideration the signals this decision sends to foreign investors,” said Mukesh Butani, a partner at New Delhi-based BMR Legal, who advises multinational companies on tax disputes. “This isn’t a pragmatic or holistic decision. I don’t think either side has budged since day one of these negotiations.” Vodafone’s India spokesman Suresh Rangarajan declined to comment on the company’s position on the tax dispute when reached by telephone today. The company has argued it didn’t owe taxes on the purchase of Hutchison Whampoa’s local unit because the deal took place between two overseas companies, and the target asset was registered in the Cayman Islands. Bloomberg News
14 14 business daily
February 13, 2014 Friday April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
110.2
72.75
Max 59.40
Min 71.45
average 58.733
Last 73.15
Min 58.05
Last 59.40
71.40
Max 110.5
average 109.887
PRICE
59.05
25.1
58.70
25.0
58.35
24.9 Max 25.20
average 24.966
DAY %
YTD %
(H) 52W
100.58
0.640394301
2.059868087
104.5199966
84.87999725
BRENT CRUDE FUTR Mar14
108.94
0.23923445
-1.438523478
112.4399948
96.31999969
GASOLINE RBOB FUT Mar14
276.14
0.31969774
-1.092446005
287.3600006
244.6799994
GAS OIL FUT (ICE) Mar14
921.75
0.244698206
-2.123705867
954.5
840
4.913
1.844941957
17.17147627
5.737000465
3.469000101
303.44
0.208051253
-0.635274085
314.9999857
278.9799929
Gold Spot $/Oz
1285.52
0.0911
6.8826
1653.65
1180.57
Silver Spot $/Oz
20.1236
-0.317
2.894
31.2349
18.2208
1391
-0.0632
2.6
1734.5
1294.18
NATURAL GAS FUTR Mar14 NY Harb ULSD Fut Mar14
Platinum Spot $/Oz
721.38
-0.2241
1.4599
786.5
629.75
1707
0.352733686
-5.179836134
2174
1671.25
LME COPPER 3MO ($)
7076
-0.267794221
-3.858695652
8280
6602
LME ZINC
2002
-0.39800995
-2.579075426
2230
1811.75
Palladium Spot $/Oz LME ALUMINUM 3MO ($)
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar14
14160
-0.281690141
1.870503597
18495
13205
15.495
-0.225370251
1.440261866
16.77000046
15.12000084
440.75
-0.169875425
4.443127962
582.75
406.25
WHEAT FUTURE(CBT) Mar14
591.75
0.254129606
-2.230483271
786
550
SOYBEAN FUTURE Mar14
1338.5
0.280951489
3.558994197
1377.75
1174
COFFEE 'C' FUTURE May14
139.45
0.722282412
23.46170872
161.1499939
106.3499985
15.73
-1.255492781
-5.012077295
20.04999924
14.92000008
Mar14
SUGAR #11 (WORLD) May14 COTTON NO.2 FUTR May14
89.11
-0.100896861
5.58056872
89.51000214
77.18000031
World Stock Markets - Indices NAME
Min 24.80
Last 24.95
(L) 52W
WTI CRUDE FUTURE Mar14
CORN FUTURE
109.0
Last 110.5
24.8
Max 31.00
average 30.758
Min 30.60
Last 30.75
30.6
34.9
34.8
34.7
Max 34.90
average 34.775
Min 34.65
Last 34.70
34.6
Currency Exchange Rates
NAME
METALS
Min 109.0
25.2
Commodities ENERGY
30.7
109.3
59.40
58.00
30.8
109.6
71.85
average 72.279
30.9
109.9
72.30
Max 73.20
31.0
110.5
73.20
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15994.77
1.221254
-3.510301
16588.25
13784.01
NASDAQ COMPOSITE INDEX
US
4191.045
1.033491
0.3460976
4246.553
3105.365
FTSE 100 INDEX
GB
6677.32
0.06983722
-1.063403
6875.62
DAX INDEX
GE
9511.36
0.343821
-0.4271265
9794.05
NIKKEI 225
JN
14800.06
0.5552257
-9.153654
HANG SENG INDEX
HK
22285.79
1.469791
CSI 300 INDEX
CH
2291.246
TAIWAN TAIEX INDEX
TA
KOSPI INDEX
SK
COUNTRY MAJOR
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.9056 1.6454 0.8979 1.3636 102.53 7.9879 7.7552 6.0627 62.1512 32.573 1.2647 30.315 44.83 12084 92.854 1.22437 0.82871 8.2669 10.8925 139.81 1.03
0.3101 0.201 -0.245 -0.256 -0.1561 0.0175 0.0193 -0.0412 0.1088 0.5219 0.2451 0.1517 0.5242 0.5296 -0.4696 0.0114 0.4561 0.2988 0.2708 0.1001 0
1.5019 -0.2848 -0.735 -0.93 2.3993 -0.0163 -0.0168 -0.1386 -0.5651 0.6201 -0.0474 -1.6757 -0.9703 0.72 0.8562 0.1911 0.6564 0.8963 0.9208 3.3617 0
1.0582 1.6668 0.9839 1.3893 105.44 8.0179 7.7678 6.2492 68.845 33.148 1.2862 30.426 45.485 12281 105.433 1.265 0.88151 8.4133 11.0434 145.69 1.0327
0.866 1.4814 0.88 1.2746 90.88 7.9818 7.7514 6.0393 53.605 28.56 1.2268 29.293 40.555 9625 86.41 1.21196 0.81683 7.8281 10.195 118.73 1.0289
Macau Related Stocks NAME
PRICE
ARISTOCRAT LEISU CROWN RESORTS LT
DAY %
YTD %
(H) 52W
(L) 52W
VOLUME CRNCY
4.86
3.404255
3.624732
5.12
3.49
5185584
16.94
0.5938242
0.5341224
18.22
11.45
2646765
AMAX INTERNATION
1.65
-1.197605
-4.069769
2.12
0.75
526350
BOC HONG KONG HO
23.75
0.8492569
-4.426561
28
22.85
7826680 2042500
CENTURY LEGEND
0.5
6.382979
16.27907
0.68
0.26
CHEUK NANG HLDGS
7.5
0.1335113
6.382976
7.5
5
27000
CHINA OVERSEAS
22.3
7.46988
2.293582
25
17.7
54526398
CHINESE ESTATES
17.16
-3.050847
-28.79668
24.7
10.384
1500
CHOW TAI FOOK JE
12.8
1.748808
10.72664
13.2
7.44
8720200 5170000
EMPEROR ENTERTAI
4.36
4.30622
9
5.4
1.95
FUTURE BRIGHT
4.77
-1.649485
1.705756
5.3
1.758
4404000
GALAXY ENTERTAIN
73.15
1.386001
5.176128
84.5
30
12860318
6023.44
HANG SENG BK
121.3
0.9991674
-3.500395
132.8
110.6
1377361
7418.36
HOPEWELL HLDGS
26.65
0.3766478
1.52381
35.3
23.2
880500
16320.22
11065.06
HSBC HLDGS PLC
81
1.631117
-3.743317
90.7
77.85
23042878
-4.379063
24111.55078
19426.35938
0.2486916
-1.66435
2791.303
2023.171
8510.87
0.9526058
-1.168664
8668.95
1935.84
0.1956461
-3.753716
2063.28
HUTCHISON TELE H
2.84
1.067616
-3.401362
4.66
2.5
2476800
LUK FOOK HLDGS I
27.15
-1.451906
-7.966102
34
16.88
1583000
MELCO INTL DEVEL
28.45
0
-0.1754386
32.5
11.52
6439773
7663.23
MGM CHINA HOLDIN
30.75
0
-7.099694
36.15
15.798
2892037
1770.53
MIDLAND HOLDINGS
3.53
1.729107
-5.361931
3.82
2.68
1918600
NEPTUNE GROUP
0.305
-1.612903
-10.29412
0.4
0.131
29330000
NEW WORLD DEV
9.72
3.624733
-0.7150149
14.48
9.16
16180415
SANDS CHINA LTD
59.4
3.125
-4.958608
66.248
33.05
15248296
S&P/ASX 200 INDEX
AU
5310.052
1.057304
-0.7876785
5457.3
4632.3
JAKARTA COMPOSITE INDEX
ID
4489.883
0.4405406
5.046728
5251.296
3837.735
FTSE Bursa Malaysia KLCI
MA
1822.96
-0.06633154
-2.356772
1882.2
1599.94
SHUN HO RESOURCE
1.72
4.242424
4.242426
1.92
1.33
70000
NZX ALL INDEX
NZ
1024.517
0.3902859
2.565029
1048.998
904.128
SHUN TAK HOLDING
4.63
1.758242
1.535089
5.18
3.27
3703333
PHILIPPINES ALL SHARE IX
PH
3703.1
-0.1943234
2.456341
4571.4
3440.12
SJM HOLDINGS LTD
24.95
-0.3992016
-4.038462
28
17.04
6683470
8.3
0.8505468
-6.320538
14.46
7.38
801957
WYNN MACAU LTD
34.7
1.166181
-1.280232
38.25
19.6
7647838
SMARTONE TELECOM
Euromoney Dragon 300 Index Sin
SI
585.66
0.75
-4.23
NA
NA
STOCK EXCH OF THAI INDEX
TH
1307.16
0.8416586
0.6506513
1649.77
1205.44
ASIA ENTERTAINME
#N/A N/A
#N/A N/A
#N/A N/A
#N/A N/A
#N/A N/A
0
HO CHI MINH STOCK INDEX
VN
564.25
1.868568
11.8146
564.61
459.64
BALLY TECHNOLOGI
67.75
-0.01475797
-13.63926
82.67
47
870663
Laos Composite Index
LO
1255.91
0.5419729
0.2058578
1446.66
1218.84
BOC HONG KONG HO
3.07
0.9868421
-4.658386
3.6
2.93
21894
GALAXY ENTERTAIN
9.41
4.90524
4.439509
10.81
3.8975
57950
14.37
-0.8281573
-20.87004
21.2
13.91
5647755
JONES LANG LASAL
118.08
0.2632249
15.32376
118.42
80.86
360363
LAS VEGAS SANDS
78.32
2.998422
-0.6973535
82.48
47.95
5696562
MELCO CROWN-ADR
42.51
4.524219
8.388574
45.4799
17.76
5042569
MGM CHINA HOLDIN
3.81
0
-11.60093
4.66
2
6800
MGM RESORTS INTE
25.25
2.475649
7.35544
26.7
11.72
10782267
SHFL ENTERTAINME
#N/A N/A
#N/A N/A
#N/A N/A
23.25
14.54
0
SJM HOLDINGS LTD
3.26
2.515723
-2.395207
3.6
2.2
30420
224.29
0.8634258
15.48838
224.94
111.3456
1633405
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
AIA GROUP LTD
37.5
1.351351
31634045
ALUMINUM CORP-H
2.81
0.3571429
9780110
BANK OF CHINA-H
NAME CHINA UNICOM HON CITIC PACIFIC
3069387
2380480
TENCENT HOLDINGS
538
1.509434
5506581
22.4
1.587302
5977815
TINGYI HLDG CO
19.88
-0.6
4737100
121.3
0.9991674
1377361
WANT WANT CHINA
10.48
-0.1904762
16946325
WHARF HLDG
55.3
4.734848
8271819
3430324
HANG SENG BK
CHEUNG KONG
HENDERSON LAND D
0.9259259
35148107
1.323251
2746146
CHINA MOBILE
5092706
0.8368201
0.8894536
26.8
5260459
0.3147954
14.46
15.88
21.8
1.167315
95.6
ESPRIT HLDGS
CATHAY PAC AIR
CHINA MERCHANT
10.4
SUN HUNG KAI PRO
3.431668
HANG LUNG PROPER
CHINA LIFE INS-H
SINO LAND CO
85.9
7826680
323440663
15248296
SWIRE PACIFIC-A
0.8492569
1.685393
3.125
5178738
23.75
5.43
59.4
2.424242
BOC HONG KONG HO
CHINA CONST BA-H
SANDS CHINA LTD
10.14
12000594
4083935
5000652
7143402
COSCO PAC LTD
0.8383234
27017868
0.2074689
42.7
3.140097
3804375
HENGAN INTL
83.85
-1.642229
1773500
HONG KG CHINA GS
15.96
2.176697
13563920
124
0.4862237
2819501
81
1.631117
23042878
HONG KONG EXCHNG HSBC HLDGS PLC
73.95
-1.004016
24225740
HUTCHISON WHAMPO
102.5
3.430878
12983241
CHINA OVERSEAS
22.3
7.46988
54526398
IND & COMM BK-H
4.82
1.473684
250091262
CHINA PETROLEU-H
6.02
2.033898
104893189
LI & FUNG LTD
10.7
1.325758
39804433
CHINA RES ENTERP
23.6
1.070664
3348409
27.65
1.841621
3629405
CHINA RES LAND
VOLUME
3521522
8.42
2.012248
0.08084074
113310768
2465240
0.2457002
DAY %
61.9
2.208202
1.877133
4.08
PRICE
POWER ASSETS HOL
0.4194631
29.85
116.6
9.66
NAME
59.85
28128937
CHINA COAL ENE-H
32027785
12.96
396808195
1.394422
BELLE INTERNATIO
VOLUME
0.5725191
CLP HLDGS LTD
1.538462
BANK EAST ASIA
DAY %
10.54
CNOOC LTD
3.3 5.09
BANK OF COMMUN-H
PRICE
MTR CORP
MOVERS
45
5
0 22292
INDEX 22285.79 HIGH
22291.65
LOW
21541.16
19.16
4.699454
16995334
NEW WORLD DEV
9.72
3.624733
16180415
52W (H) 24111.55078
CHINA RES POWER
18.6
1.086957
4342806
PETROCHINA CO-H
7.94
2.056555
153825576
(L) 19426.35938
CHINA SHENHUA-H
21.35
0.9456265
12048245
PING AN INSURA-H
64.4
1.178319
22698096
21541
10-February
12-February
business daily 15 15
February 13,19, 2014 Friday April 2013
Opinion Business
wires
The ECB’s bridge too far
Leading reports from Asia’s best business newspapers
The Age Australians are increasingly less confident about the future, despite low interest rates that are pushing up the value of their houses. A private monthly gauge of consumer sentiment has to its lowest levels since July. Westpac-Melbourne Institute’s consumer sentiment slipped for the third-straight month for its February reading, as Australians’ expectations about the economy over the next year fell to the lowest level since March 2012. Consumers’ expectations for the next five years along weakened to levels not seen since February 2009, the survey found. The Westpac gauge fell from 103.3 in January to 100.2 in February.
Myanmar Times Rice exports this year are set to fall to less than half of the government target of 3 million-tonnes as traders are withholding stock from its trading partners in an attempt to secure more favourable prices being offered by illicit Chinese importers, officials said. U Lu Maw Myint Maung, joint secretary general of the Myanmar Rice Federation, said that Myanmar exported nearly 1 million tonnes of rice through the first nine months of the fiscal year at the end of January, falling short of the 1.01 million tonnes of rice exported during the same period last year.
Korea Herald Financially troubled South Korean construction firms are expected to refinance a large sum of debts due in March and April, industry data showed yesterday, raising concerns that their already shaky footing could further worsen. According to the data, a total of 5.23 trillion won (US$4.9 billion) in debts sold by 24 local construction companies are due this year, around 2.04 trillion won, or 39 percent. The data showed that 11 builders have to refinance 783 billion won worth of debts due in March with eight construction firms facing 1.26 trillion won worth of maturing debts in April.
Ashoka Mody
Former mission chief for Germany and Ireland at the International Monetary Fund, is currently visiting professor at Princeton University
T
he German Constitutional Court’s recent decision to refer the complaint against the European Central Bank’s so-called “outright monetary transactions” to the European Court of Justice (ECJ) leaves the scheme’s fate uncertain. What is clear is that the economics behind OMT is flawed – and so is the politics. The OMT programme arose in August 2012, when months of relentlessly rising risk premiums on Spanish and Italian sovereign bonds were threatening the eurozone’s survival and endangering the world economy. To restore confidence and buy time for governments to reduce borrowing, ECB President Mario Draghi pledged to do “whatever it takes” to preserve the eurozone – and that meant potentially unlimited purchases of distressed eurozone members’ government bonds. Draghi’s declaration worked, prompting a sharp decline in risk premiums across the eurozone’s troubled economies. But Bundesbank President Jens Weidmann, a member of the ECB’s Governing Council, immediately challenged OMT, asserting that the programme exceeded the ECB’s mandate and violated Article 123 of the Lisbon Treaty, which bars monetary financing of distressed sovereigns.
Rather than constituting a great success, OMT may well be remembered as an error born of expediency
Taipei Times The state-run Taiwan Business Bank is aiming to achieve a record pre-provision profit of NT$10.6 billion (US$348.62 million) this year, which would be a 31.88 percent increase from last year, driven by higher-yielding loans to small and medium-sized enterprises (SMEs), company chairman Liao Tsan Chang said. The lender posted pre-provision income of NT$8.04 billion last year, an increase of 10.45 percent from 2012, thanks to its strategy of courting SME clients, Mr Liao said.
Before OMT was ever activated, Weidmann took his case to the German Constitutional Court. OMT supporters were aghast at Weidmann’s attempt to overturn the arrangement. After all, the mere announcement of the programme had provided relief to struggling governments and may well have saved the monetary union, at least temporarily. Draghi audaciously described OMT as “probably the most successful monetary-policy
measure undertaken in recent time”.
OMT diluted But the German Constitutional Court remains dubious. While it has withheld a final judgment in deference to the ECJ, it has upheld the Bundesbank’s view that OMT, in its current form, violates the Lisbon Treaty. OMT may still survive; but, if it does, it will likely be diluted, allowing the problems that inspired it to re-emerge. However problematic this might be for OMT’s supporters, it should not have come as a surprise. The programme was ill-conceived and sold by sleight of hand. The court was right to question the factual basis of the ECB’s claim that the risk premiums reflected an unfounded market fear – a claim that was based on cherry-picked evidence. Indeed, the programme’s public defence rests shakily on a presumption of baseless speculative pressures. The programme’s design, however, conceded that the market’s assessments of creditworthiness reflected a real default risk. As a lender of last resort to sovereigns, a central bank must stand ready to purchase sovereign debt unconditionally, in order to neutralise the effects of temporary market disruptions. But OMT is intended to operate more like the International Monetary Fund’s lending – that is, to rescue a particular government
conditional on its pursuit of fiscal belt-tightening. If the ECB were truly convinced that risk premiums were unreasonably high, and that distressed countries’ debt was sustainable, conditionality would have been unnecessary.
buying unlimited quantities of peripheral sovereign bonds”. This test will be all the more severe if, as the ECB has conceded to the German Constitutional Court, the bond purchases would actually be limited.
New problem
Selective default
Moreover, by tackling default risk, the OMT programme created a new problem: private creditors, assured that the ECB would prevent governments from defaulting, were encouraged to lend with greater abandon. Reading the decline in risk premiums as a sign of renewed market confidence in distressed sovereigns’ creditworthiness was another self-serving misinterpretation. A similar situation has unfolded before. In the preeuro era, propping up the Italian lira invited unrelenting speculative pressure. With the lira eliminated, holding down yields on sovereign debt can be a fool’s errand. Just as untenably high exchange rates must ultimately depreciate, default is necessary in cases of unsustainable sovereign debt. This is all the more important in view of the ECB’s disinclination to reverse near-deflationary conditions, which raise the effective debtrepayment burden further. Sovereign-debt attorneys Lee Buchheit and Mitu Gulati warn that markets could “mercilessly test the ECB’s willingness to persist in
The eurozone must allow for selective default on sovereign debt, with the ECB acting as a lender of last resort for solvent governments. Of course, solvency can be difficult to assess during a crisis. But pretending that sovereigns are never insolvent serves only to compound the problem. As the German court pointed out, the prospect of default will help to maintain financial-market discipline. By attempting to create a quick fix for the eurozone’s deep-rooted problems, the ECB has stepped into a political quagmire. Even if the ECJ gives OMT the benefit of the doubt, the programme’s legitimacy will remain plagued by qualms, leaving the ECB – if only behind the scenes – locked in political jockeying with distressed sovereigns. The line between audacity and hubris is a fine one. Rather than constituting a great success, OMT may well be remembered as an error born of expediency. Worse, it could undermine the ECB’s hard-won independence and credibility. That is an outcome that the eurozone might not survive. © Project Syndicate
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February 13, 2014 Friday April 19, 2013
Closing SJM not joining Hang Seng Index – yet
Thai court rejects bid to annul poll
Casino operator SJM Holdings Ltd’s shares will not – for now – be added to Hong Kong’s benchmark Hang Seng Index. Yesterday Hang Seng Indexes Co Ltd announced instead that dairy manufacturer China Mengniu Dairy Co Ltd would be added to the 50-stock roster. China Coal Energy Co Ltd will leave the index on March 10. HSBC Securities said last week SJM could be a potential candidate for inclusion as its market capitalisation and liquidity were more than sufficient. SJM’s market rivals Sands China Ltd and Galaxy Entertainment Group Ltd joined the index in June 2012 and June 2013 respectively.
Thailand’s constitutional court has rejected an opposition request to annul the February 2 election, citing insufficient grounds. The Democrat Party had argued that the poll violated the constitution for several reasons, including that it was not completed in one day. The government blamed the delay on the opposition blocking polling stations. Thailand has been in a political crisis since mass antigovernment protests kicked off in November. Millions were prevented from voting because anti-government protesters forced the closure of hundreds of polling stations in Bangkok and in the south on election day.
Beijing to crack down on fake data China will step up efforts to investigate and punish any cases of falsified statistics, the country’s chief statistician said in remarks published yesterday, highlighting the issue of reliability of Chinese data. The accuracy of economic statistics in general in China has come under the spotlight in recent years as some growth-obsessed local governments published false economic data. “In the area of statistics, falsification can be considered as the biggest form of corruption,” Ma Jiantang, head of the National Bureau of Statistics told a meeting, in a reference to the Chinese government’s broader crackdown on corruption. “We must seriously investigate and punish such corruption cases,” Mr Ma was quoted as saying in a statement on the agency’s website. The comments were published on the same day as official figures showed a surge in exports in January far above expectations.
Barroso urges unity to counter anti-EU vote Says structural reforms laid path to return to growth
House passes U.S. debt limit increase The U.S. House of Representatives has passed an increase in the government’s debt limit, after the Republicans gave up on their attempt to win concessions from the Democrats in return. The House voted 221-201 to waive the US$17.2 trillion debt limit for just over a year, with only 28 Republicans joining most of the Democrats. Officials had said the U.S. could breach the debt limit by the end of February. The White House and others had warned of calamity if the U.S. defaulted. The bill, when signed into law by President Barack Obama, will enable the government to borrow money to fund its budget obligations and debt service. The U.S. government will run a budget deficit of about US$514 billion in its 2014 fiscal year.
Malaysia’s economic growth accelerates Malaysia’s economy beat expectations and picked up speed in the last quarter of 2013, with strong exports expected to shield the country from volatile emerging markets and an expected moderation in domestic demand this year. Gross domestic product climbed 5.1 percent in the three months through December 31 from a year earlier, after gaining 5 percent in the third quarter, the central bank said. The economy grew 4.7 percent last year after a 5.6 percent expansion in 2012. Malaysia’s currentaccount surplus widened to 16.2 billion ringgit (US$4.9 billion) in the fourth quarter from 9.8 billion ringgit in the preceding three months. The central bank said domestic demand also drove Malaysia’s economic expansion although it expected consumer spending to slow with the government cutting subsidies of petrol and other essential items.
Barroso urges pro-EU parties to make new case for integration
T
he EU’s centrist parties will retain a substantial majority in the European Parliament after May elections and must unite to reenergise the bloc, European Commission President José Manuel Barroso said. Some pundits predict a group of far right eurosceptical parties could capture 20 percent or more of the seats. That has fuelled concern that further measures to integrate the euro single currency area could falter. But Mr Barroso disagreed. “A very clear majority will be from the proEuropean parties so I don’t expect major difficulties in terms of passing legislation,” he said in an interview for a Reuters Euro Zone Summit with policymakers, economists and market players. But that majority would count for little if the centre-left, centre-right, liberals and Greens did not come together and make a stronger public case for more integration which too often has been take for granted by EU politicians. “They have to leave their comfort zone,” Mr Barroso said. “They have to make the case for Europe.” Mainstream parties should resist the temptation to ape the eurosceptics’ stance against a backdrop of high unemployment, austerity fatigue and paltry growth that is fuelling support for fringe parties. “I hope the lesson the mainstream parties draw from this is not to try to
incorporate some of the arguments of the extremes,” Mr Barroso said. The head of the EU’s executive said growth was returning to Europe, albeit timidly. Deficit-cutting measures had been crucial to assuage market pressure during the eurozone’s debt crisis, he said, but far more important were structural reforms to make the bloc’s economies more competitive. Ireland, Spain and Portugal – which he expects to exit its bailout in May – had all done their homework and would reap the benefits. “They are much more fit for global competition,” Mr Barroso said. He forecast that Europe would grow faster than expected from now on. The Commission chief played down economists’ concerns that Italy and France were falling short but acknowledged that countries which had not required bailout programmes had not felt the same sense of urgency to reform. “They are perfectly aware and they want to do it. There is resistance ... but I believe they are basically going on the right track,” he said. Changes to the EU treaty would be required in due course to bind the eurozone closer together but that was not something to discuss in the run-up to elections, Mr Barroso said. “Very often the discussion in Europe is about institutions ... That’s not the way to get people to come out
and vote,” he said. Growth, jobs and prosperity were the keys.
Industry tumbles Eurozone industrial output fell more than expected in December, data showed yesterday, but probably not by enough to have stopped economic growth from picking up slightly in the last three months of the year. Industrial output in the 17 countries sharing the euro in December fell 0.7 percent on the month, after a downwardly revised 1.6 percent rise in November, Eurostat, the European Union statistics agency, said. Analysts polled by Reuters expected only a 0.3 percent fall in December. But economists said that on average in the last three months of 2013 euro zone industrial production was 0.3 percent higher quarter-on-quarter than in the previous three months. This meant that eurozone gross domestic product growth – to be reported in an initial reading tomorrow – was likely to have picked up to 0.2 percent quarter-on-quarter from 0.1 percent in the previous three months. “Today’s disappointing industrial production has no impact on our eurozone growth forecasts,” said Marco Valli, chief euro zone economist at UniCredit, who forecast 0.2 percent quarterly growth in fourth quarter euro zone GDP. Reuters