Macau business daily, Feb 14, 2014 by Business Daily

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Greenland Holding chases Oz casino site suggests report Page 6

Melco Crown announces special dividend

MOP 6.00 Number 476 Friday February 14, 2014

Editor-in-chief Tiago Azevedo

Cotai to cost SJM HK$30 bln

Bonjour sees daily 1 business same store sales fall at CNY

Friday April 19, 2013

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Year II

Brought to you by

www.macaubusinessdaily.com

asino operator SJM Holdings Ltd has raised the budget for its maiden project in Cotai by another HK$5 billion (US$645 million), saying it will add another luxury branded hotel but also citing construction and labour costs. Ambrose So Shu Fai, SJM’s chief executive, announced the updated HK$30-billion forecast yesterday during the project’s ground breaking ceremony. It’s branded as Lisboa Palace. The operator will also seek to finalise a cooperation deal this year to integrate a nearby land plot owned by SJM’s

Hang Seng Index executive director Angela Leong On Kei. It will complement the project with more non-gaming elements, said Mr So. On the sidelines of the ceremony, the SJM CEO also urged the government to study letting non-residents be casino dealers. A recent report by Morgan Stanley suggested the city’s current labour market squeeze could see some of the six new Cotai projects opening with as few as 100 tables. That’s unless the ban on non-resident dealers is lifted. More on page 3

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February 13

HSI - Movers

Economy to go on steady growth path: Tam

Name

Secretary for Economy and Finance Francis Tam Pak Yuen said the city’s economy will grow steadily this year on the back of a “low double-digit” percentage increase in gaming revenue. He also said major changes to the territory’s existing human resource policy are unlikely. Mr Tam dispelled concerns that a slowdown in mainland China and uncertainties about the global economy could hurt Macau.

%Day

WANT WANT CHINA

6.49

CITIC PACIFIC

5.38

CHINA RES POWER

1.94

COSCO PAC LTD

1.78

TINGYI HLDG CO

1.36

CNOOC LTD

-2.31

CHINA OVERSEAS

-2.69

CHINA SHENHUA-H

-2.81

CATHAY PAC AIR

-2.90

CHINA COAL ENE-H

-3.92

Source: Bloomberg

I SSN 2226-8294

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Brought to you by

VIP share of casino at historic low: analyst

Housing application rules should change: experts

VIP gaming gross revenue as a proportion of all Macau casino gross revenues fell to its lowest-ever recorded level in January, says a note from United States-based Telsey Advisory Group LLC. It could indicate that the role of high stakes VIP live dealer baccarat in Macau may finally to be slipping – about 10 years after its decline was first predicted following the opening of Las Vegas-style massmarket casinos.

The government should make the current rules for subsidised home allocation fairer and easier say experts. Under the city’s subsidised housing law, applicants not granted a home in round one will not automatically be put on the waiting list for the next round. The administration’s answer – a lucky draw – “actually blurs what the actual demand for a subsidised home project is,” academic Rose Lai told Business Daily.

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February 14, 2014 Friday April 19, 2013

Macau editorial

Moving on Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

Dear readers,

have no idea what most of you look like. I thought I would get that out of the way first, for the sake of clarity. Not knowing what you look like does not really matter, however, because we know that you are real. You are not fictional, even if we do imagine versions of you looking over our shoulders every day as we report what is happening in Macau. To report what is happening in Macau was the commitment we made two years ago, and it is a principle that must live on, even as the editorial team of the newspaper changes. In 2012 we took on the challenge of launching Business Daily, giving birth to a new publication. At the time many asked us if there was room for a new title in Macau, especially one dedicated to business and finance. Our answer was: Yes. Looking back from the vantage point of 2014, the answer remains, unquestionably, yes. Though two years is insufficient time to assess any project accurately, we believe we have made a difference. Business Daily struck a chord, resonating well beyond what we imagined. We dug up information that went underreported and showed how business trends impact people’s lives. Despite our best efforts, as I write my last editorial as editor-in-chief, a lot remains to be done. The city remains vibrant and there will be much to say about its growth story. Leading this newspaper has been among the most rewarding experiences of my professional life. Even with the angry phone calls, email messages and pressing deadlines, I cannot think of anything else I have done that had the potential to make so great a difference in the media market here while also bringing professional satisfaction. It gave me a chance to build something from scratch, which I had never done before. For that, I will always be grateful. There has been a great deal of ground covered in the past two years, but plenty more lies ahead, so I see no reason for this newspaper not to grow in tandem with the city’s growth. So what may seem like a farewell editorial is actually one that announces renovation. Business Daily will keep feeding the flames of its burning desire to report Macau’s business and political scenes accurately and engagingly, strengthening its determination to keep the promise it made in 2012: to forge a bond with every reader, a relationship based on trust and dependability. I must thank the people that I have worked with during the past two years: my colleagues, collaborators and columnists. Our work during this time revolved around teamwork, integrity and doing right by our readers. It was a joy to witness every stage of Business Daily’s early evolution. Thank you for accompanying me on this journey and for being such a big part of the newspaper’s growth.

What may seem like a farewell editorial is actually one that announces renovation

Tam predicts economic growth will stay steady The economy secretary says the government has no intention of changing labour policy Stephanie Lai

sw.lai@macaubusinessdaily.com

ecretary for Economy and Finance Francis Tam Pak Yuen has said economic growth will be steady this year, propelled by further but slower growth in gaming revenue. He also said the government was unlikely to make any big changes in labour policy. Mr Tam, speaking after a meeting yesterday of the Advisory Committee for Economic Development, dismissed worry that slower economic growth in the mainland and uncertainty about the global economy will hurt Macau. He said the government expected the economy to grow steadily this year. Growth in gaming revenue would slow this year to a “low double-digit” percentage, he said. Gaming revenue in January rose to 28.7 billion patacas (US$3.6 billion), less than expected, growing at the slowest annual rate for 15 months. Mr Tam said the government hoped a “gradual change in the composition of gamblers” would turn out to be a good thing. Analysts have pointed out that recently mass-market gaming has been generating a greater proportion of gaming revenue than before, and VIP gaming a lesser proportion. “In the past one or two years growth in mass-market gaming revenue has been more rapid than growth in VIP gaming revenue,” Mr Tam said. “These mass-market gamblers, they are middle-class visitors that not only gamble in the casinos but spend freely on shopping or dining in the city,” he said. “VIP players come here only to gamble for a day, and then leave without spending much on anything else.”

Firmer footing Mr Tam said the change in the proportions of mass-market and VIP

gaming revenue would mean slower growth in gaming revenue. “But this change can also put our economic development on a firmer footing,” he said. He expects a slowing of growth in the number of visitors this year to keep the consumer price inflation rate near last year’s rate in the coming months. “Macau’s inflation has been fuelled mainly by internal demand, in other words robust spending by tourists in the past few years,” he said. “Though visitor arrivals reached nearly 30 million last year, this growth in arrivals has slowed in recent years, and this is likely to remain the case this year,” Mr Tam said. “So we could expect the annual inflation rate to be steady at 5 percent or 6 percent.” The average annual rate of inflation last year was 5.5 percent. Mr Tam said the government had no intention of making big changes in labour policy. He had nothing to say about the Advisory Committee for Economic Development’s deliberations on the matter. The committee’s chairman is Chief Executive Fernando Chui Sai On and its members include prominent businessmen and academics. It has had few meetings since it was set up in 2010.

Show of confidence “The government does not argue that its present policy on human resources has achieved a great deal,” Mr Tam said. “But at least up to now our human resources policy has fitted the city’s economic needs,” he said. “We’ve struck a balance that has secured employment for residents and kept the unemployment rate low,” he said. “People’s salaries have been on a growth track.” A Morgan Stanley research note says the labour market will be able

We’ve struck a balance that has secured employment for residents and kept the unemployment rate low Francis Tam Pak Yuen, Secretary for Economy and Finance

to supply at most 25 percent of the 18,500 resident employees that will be needed by the six new casino-resorts that are due to open in Cotai. Mr Tam seems unworried. “In the past two or three years the labour force has increased by about 20,000 to 30,000 people every year,” he said. “If this pace of growth can be maintained until 2016, we’ll have at least 80,000 to 90,000 more workers in the market.” He said the government was confident that the supply of resident labour would match demand by the casino-resorts that are due to open in Cotai next year and in 2016.

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February 14,19, 2014 Friday April 2013

Macau

SJM Cotai project cost jumps SJM Holdings now intends to pay HK$30 billion for its Cotai casino-resort, named the Lisboa Palace Tony Lai

tony.lai@macaubusinessdaily.com

KEY POINTS SJM Holdings unveils Lisboa Palace concept Budget for project raised by HK$5 bln Development to have one more branded hotel

The Lisboa Palace ground breaking ceremony yesterday (Photo: Manuel Cardoso)

asino operator SJM Holdings Ltd has increased the budget for its first casino-resort in Cotai by HK$5 billion (US$645 million) to HK$30 billion to cover the cost of another branded hotel and higher construction and labour costs. SJM Holdings chief executive Ambrose So Shu Fai announced the increase yesterday during the ground-breaking ceremony for the company’s Cotai development, to be called the Lisboa Palace. Mr So said the company intended to put the finishing touches this year to a deal to develop land nearby owned by SJM Holdings executive director Angela Leong On Kei as part of the project. Casino mogul Stanley Ho Hung Sun founded SJM Holdings. Ms

Leong is Mr Ho’s fourth consort. The company last increased the budget for its Cotai project in September, to HK$25 billion from HK$20 billion. “Prices and labour costs have increased in the past year,” Mr So said. “The construction area for our project now totals some 500,000 square metres and the cost is about HK$60,000 a square metre, which is a normal figure.” SJM Holdings also intends to build another branded hotel as part of the project. “There will be two brand-name hotels here,” Mr So said. “We are still in talks about the second.” The company and Italian fashion house Gianni Versace SpA signed

last September a deal that will allow one of the Cotai project’s hotels to use the Versace brand name. Ms Leong said the second branded hotel would have a brand name of a stature similar to Versace’s. The Lisboa Palace will occupy nearly 75,000 square metres of land. The development will have three hotels together containing up to 2,000 rooms. The third hotel will be the Lisboa Palace Hotel, to be managed by SJM Holdings itself. The development will have up to 700 gaming tables and 1,200 slot machines. Mr So said over 90 percent of the space in the development would be for non-gaming facilities. It will include a wedding pavilion and a

multi-purpose theatre. Ms Leong said her 180,000 square metres of land nearby would complement the Lisboa Palace with “family-oriented elements” such as cheaper hotels and a theme park. Mr So said SJM Holdings and Ms Leong are “finalising the details for cooperation”, making sure their deal complied with Hong Kong’s rules on connected transactions, with a view to completing it this year. “This can make our project better or, if not, we will only have a very small presence in Cotai,” said Mr So. He said his company would have no trouble funding its Cotai project because it had over HK$20 billion in cash in hand and annual cash flow of HK$7 billion to HK$8 billion. But he said it might borrow to keep its finances healthy. SJM Holdings expects to complete the project in 2017. Mr So does not expect people to confuse the Lisboa Palace and the Wynn Palace casino-resort, which Wynn Macau Ltd is building nearby. “We wish to preserve our traditions, so that’s why we called it the Lisboa Palace, because all our brands have ‘Lisboa’,” he said. A note issued yesterday by Union Gaming Research Macau Ltd says: “We believe that the Lisboa name has exceptionally high name recognition with mainland visitors to Macau and should result in a natural attraction to the site.” The note adds: “While Lisboa Palace is certainly not the only new project with a French theme being constructed on Cotai, we think the theme resonates well with mainland consumers.”

Consider importing croupiers, says So SJM Holdings boss Ambrose So says letting migrant workers become croupiers could push resident workers up the career ladder

JM Holdings Ltd chief executive Ambrose So Shu Fai has urged the government to consider letting casinos employ migrant workers as croupiers. Mr So said changing the policy of reserving croupier jobs for Macau permanent residents could even help the careers of residents. “We, the industry, certainly think it best if croupier positions are open to migrant workers,” he said. He said casinos faced a shortage of labour. He said the SJM Holdings casinoresort in Cotai would need about 8,000 employees, including croupiers. Mr So was speaking after the ground-breaking ceremony for the company’s Cotai casino-resort. “Casino operators wish to

We, the industry, certainly think it best if croupier positions are open to migrant workers Ambrose So, SJM Holdings chief executive

promote development, but if the human resources are not there we cannot have any development,” he said. “If all croupiers must be Macau residents, they cannot move upward as we cannot hire people to replace them as they are promoted.” The government encourages casinos to

promote resident employees. Mr So called for the government, politicians and the public to consider the problem and together work out “a feasible solution”. A research report issued by Morgan Stanley last month says the new casino-resorts due to open in Cotai may require 12,600 employees just

to man their gaming tables. Official data show the gaming industry employed 54,554 people halfway through last year, 17,600 of them as croupiers. The mere mention of the idea of letting casinos employ migrant workers as croupiers drew thousands of protesters out into the streets on two occasions in October. Senior officials including Chief Executive Fernando Chui Sai On have time and again said the government has no intention of changing its policy on croupiers. On another matter, Mr So said the development of Hengqin Island could help the development of Macau, and that SJM Holdings had not ruled out investing in Hengqin. T.L.

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Macau

Birmingham Intl selling 12 pct of soccer club Buyer is mainlandbased advertising firm according to HK filing

Premium mass claims to have better margins than VIP

VIP share of casino gross at historic low: analyst Trend of relative decline likely to continue this year, suggests Telsey Advisory Group Michael Grimes

michael.grimes@macaubusinessdaily.com

IP gaming gross revenue as a proportion of all Macau casino gross revenues fell to its lowest-ever recorded level in January says a note from United States-based Telsey Advisory Group LLC. What that means in practical terms is that the role of high stakes VIP live dealer baccarat in Macau may finally to be slipping – about 10 years after its decline was first predicted following the opening of Las Vegasstyle mass-market casinos. “VIP gaming revenues dropped to 60.6 percent of total gaming win in January, the lowest level ever seen,” says the note from Christopher E. Jones and his colleagues in New York City. Casino revenue data published online by Macau’s regulator, the Gaming Inspection and Coordination Bureau, only dates back to 2005. But pre-2005 figures seen by Business Daily clearly indicate the dominant influence on Macau gaming revenues of the VIP rolling chip model featuring middleman junket operators introduced in the 1980s – the midpoint of Stanley Ho Hung Sun’s 40-year casino monopoly under Sociedade de Turismo e Diversões de Macau SA. At that time the VIP baccarat system was mainly to enable Hong Kong, Taiwan and Japanese VIP players to gamble on credit in the city. It has been heavily criticised subsequently by Western regulators concerned that it allows in elements

that have no business being anywhere near a licensed casino operation. Since the opening up of mainland China and the rapid growth of the country’s economy, a growing proportion of the high rollers have been mainland Chinese. For years after the expansion of the market – via new Las Vegas-style casinos – the mainland rich helped to keep VIP play at 65 percent plus of all casino gaming in the city.

Crackdown ordered But a crackdown starting in late 2012 on official corruption in China – coupled with the growth of the Chinese middle class – appears to have channelled increasing numbers of players toward the so-called ‘premium mass’ segment of table games offering high stakes betting but on a cash rather than credit basis. Telsey Advisory Group says the recent trend of proportional decline in the VIP segment’s influence is likely to continue during the year, but adds that could help Macau’s casino operators in building their margins. “While we expect the number to rebound slightly, VIP as a percentage of total revenues will continue to decline in 2014 as we are aware of several operators that are looking to reallocate VIP table capacity to mass market in 2014,” state the authors. “This as operators look to maximise the yield of their most valuable asset, their gaming tables.

So we look forward to a positive margin momentum from this market dynamic,” adds Telsey Advisory. Elsewhere, Citi Research said the revenue contribution in January from the mass-market segment improved to 39.4 percent from 36 percent in December. In 2013, Macau casinos’ VIP revenue represented about twothirds of all gross gaming revenue but only 35 percent of the gaming earnings before interest, taxation, depreciation and amortisation, industry data compiled by Nomura Securities indicate. In a speech at the Global Gaming Expo Asia conference last year, Praveen Choudhary, managing director of Morgan Stanley in Hong Kong, suggested casino investors should focus on operators with a strong mass-market offer if they wanted clarity on the future earnings direction of the operator’s stock. “Stick with the mass market because you can actually see people coming to the gambling table and gamble. You can actually feel it,” said Mr Choudhary. He added: “If I come to Macau every week and see it’s busier, I know it’s good business, and if it’s sparse, it’s bad business. But if you’re relying on VIP business, you can’t get in to the VIP room [to check]. And it’s at the whims and fancies of the middleman [junket operator] who can have problems because of [capital] liquidity or financial situations.”

irmingham International Holdings Ltd – controller of English professional football club Birmingham City Plc – has agreed to sell a 12 percent stake in the club for HK$45 million (US$5.8 million) to a mainland Chinese firm. The buyer is a Beijing-based advertising company, according to a Hong Kong stock exchange filing from Birmingham on Wednesday. It gave the purchaser’s name only in Chinese. It translates as Beijing Liangzhu International Media & Advertising Co. “The company can raise further capital from the disposal and will be able to collaborate with the new Chinese partners to enter into the China market through their connections in the People’s Republic of China,” Birmingham International said in the filing, without explaining what that meant. “The board believes that the terms of the disposal are reasonable and in the interests of shareholders as a whole,” added the document. An Internet search turned up no English- or Chinese-language website for Beijing Liangzhu nor any news media mention of a company by that name before the sale filing. Birmingham International said it was in talks to sell as much as a 24 percent stake in the soccer club. Birmingham International, then called Grandtop International Holdings Ltd, bought a 94 percent stake in the soccer club in 2009 for 81.5 million pounds (US$130 million at the time, and 1.08 billion patacas today). The company now owns 96.6 percent of BCFC, according to Wednesday’s filing. Birmingham City – based in the United Kingdom’s third most populous metropolitan area in the English Midlands – won the English League Cup in 2011, beating Arsenal at Wembley. But The Blues were relegated from the elite Premier League to the second-tier Championship in the same season. Carson Yeung Ka Sing, Birmingham International’s largest shareholder and former chairman, stepped down from the role in February 4. He is awaiting a verdict, due on February 28, in his trial in Hong Kong on five charges of money laundering. He pleaded not guilty. M.G. with Bloomberg News/Reuters

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February 14,19, 2014 Friday April 2013

Macau NagaCorp opening marketing office in Macau Cambodian casino operator NagaCorp Ltd has set up a marketing office in Macau to bolster its relationships with junket operators here, company chairman Tim McNally has said. Mr McNally told Bloomberg News that the purpose of the office was to lure more high rollers from the mainland to the company’s NagaWorld complex, the only licensed casino in the Cambodian capital, Phnom Penh. He added that NagaCorp’s casino development in Primorye – near Vladivostok in the Russian Far East – should open in 2018. NagaCorp is also interested in opening casinos in Thailand and Myanmar if local laws allow it.

Bonjour sees same store sales fall at CNY But beauty products retailer says mainland visitors’ spending power staying strong

eauty and healthcare products retailer Bonjour Holdings Ltd saw its same store sales in Macau and Hong Kong fall four percent year-on-year during the Chinese New Year holidays. It said so in a filing to the Hong Kong Stock Exchange. It added that on an absolute basis, sales for CNY 2014 were flat in the territories. Bonjour didn’t give the hard numbers. To make the overall assessment, the chain’s management contrasted the first seven days of Lunar New Year 2014 (January 31 to February 6) with the sales performance for the lunar holiday period last year (February 10 to 16, 2013). Bonjour has only two Macau stores – both located in downtown areas of Macau peninsula popular with lower spending day-trippers from the mainland. The retailer said the flat

performance this year “was mainly attributed to the high base number of last year, which affected the performance of sales growth of this Chinese New Year.” Bonjour added: “ Besides, the

arrival pattern of mainland travellers has been changing. Some visitors have progressively changed to visit Hong Kong during normal days which disperse[s] the peak season of visiting and dilute[s] the peak effect from

holiday seasons.” But the retail chain added: “…the spending power of visitors remains strong,” with sales volume in January of this year recording a low doubledigit growth, compared with the same period of 2013. “The group is still cautiously optimistic in respect of the sales growth of the whole year,” it stated. That contrasts somewhat with market rival Sa Sa International Holdings Ltd – which has seven outlets in Macau – including two in high traffic Cotai casino resorts. Although it reported said same store sales in Macau rose by three percent year-on-year during Chinese New Year 2014, Sa Sa also noted a drop of nearly 10 percent in “average sales per transaction”. The firm added: “…mainland Chinese tourists manifested a weaker purchasing power this year”. M.G.

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February 14, 2014 Friday April 19, 2013

Macau Brought to you by

HOSPITALITY Ferry services cast off In the past couple of years ferry operators have consolidated their services to Macau. Since 2009 the operators have reduced the number of ports in the Pearl River Delta they sail from. New ferry services to Macau from Tuen Mun in Hong Kong and from Guangzhou in the mainland did not last two years. A service from Shekou in the mainland to the Inner Harbour did not last long, either. Services from other places to the Taipa ferry terminal were quickly abandoned. So what remains are principally the ferry services from Hong Kong Island, Kowloon and Chek Lap Kok airport in Hong Kong, and from Shekou in Shenzhen, Shenzhen proper and Wanchai in the mainland. The service to the Inner Harbour from Wanchai, in Zhuhai, is peculiar in that it is the alternative to coming or going by land for travellers that wish to avoid the crowds at the main border crossing, so we will ignore it.

Regeneration – William Street area of Brisbane

Greenland chases Queensland casino site Chinese real estate specialist already planning major expansion Down Under: report Michael Grimes

michael.grimes@macaubusinessdaily.com

Over 62,000 ferry sailings to Macau departed from Hong Kong and Shenzhen last year. The Outer Harbour is the only port in Macau served by ferries from Hong Kong Island, Kowloon, Chek Lap Kok airport, Shekou and Shenzhen proper alike. About three quarters of services from those places come to the Outer Harbour. Hong Kong Island was the point of departure of over 87 percent of sailings to Macau last year. The most frequent sailings – over 27,300 – were between Hong Kong Island and the Outer Harbour. The number of ferry sailings to Macau that depart from Hong Kong has been decreasing, while the number that depart from the mainland has been increasing. J.I.D.

38.9 %

Increase in ferries from Shenzhen, 2009-2013

THERE ARE THINGS WE DON’T DO

hinese state-owned enterprise Greenland Holding Group is reportedly competing with Macau casino investor Crown Resorts Ltd and Crown’s Australian market rival Echo Entertainment Group Ltd for the right to redevelop a docklands zone in Brisbane, Australia. Attempts by Business Daily to contact Greenland Holding Group for comment were unsuccessful yesterday. But the Brisbane site comes complete with 700 metres (0.43 miles) of river frontage and the right to a so-called integrated resort casino licence according to statements from the Queensland government. Queensland – Australia’s mostindebted state, in part thanks to reconstruction demands following devastating floods in 2010 and 2011 – designated the Brisbane site an urban regeneration zone in November last year. At the end of 2013 it invited expressions of interest from developers. Bidding for the site is likely to run into many tens of millions of Australian dollars, plus development costs. It’s previously been reported by The Australian newspaper that casino operator Echo – demerged from Australian racetrack betting firm Tabcorp Holdings Ltd in June 2011 – wants to build a socalled ‘super casino’ on the site. It’s unlikely that Shanghai-based state firm Greenland would be able to have its own directly held casino investment in Brisbane.

Analysts have told Business Daily however that – depending on the terms of the land deal available from the Queensland government – it might be possible for Greenland to act as landlord for other parties operating a casino.

Possible bidders Crown – via its Macau gaming joint venture partner Melco International Development Ltd – already has extensive contacts in gaming and politics within China. Echo has earmarked A$350 million (2.50 billion patacas) for refurbishment of one of its existing Queensland casinos – Jupiters Hotel & Casino – on the state’s Gold Coast. It has only spent A$20 million so far, so could possibly divert funds to any bid it might seek to make for the regeneration area around the William Street area and known as Queen’s Wharf.

US$480 mln

Amount Greenland Holding is spending on Sydney real estate

BUT WE DO•••

Greenland should have no trouble accessing capital for acquisition and development. In January Bloomberg Businessweek reported that Greenland Holding Group had launched a US$480 million property project in Sydney, New South Wales as part of a US$1 billion expansion into Australia. The Greenland Centre in Sydney’s CBD includes a boutique luxury hotel and a residential tower constructed on a site formerly held by Sydney Water Board. The property was acquired from Canada’s Brookfield Asset Management for about US$100 million. That project is expected to be completed in 2017. Greenland’s new interest in Brisbane was reported on Thursday by The Australian. Greenland Holding Group – a real estate specialist with diversified interests – was set up in 1992 and is now on the Fortune Global 500 list. It has ambitions to join the Fortune 200 list by 2015 by breaking the 500 billion yuan (659 billion patacas or US$82.5 billion) revenue barrier according to its corporate website. Chinese entrepreneurs have been courting Queensland as a possible casino investment target for some time. In October last year Business Daily reported that U.S. dollar billionaire Tony Fung Wing Cheung – a former chairman of the Hong Kong-based real estate developer Sun Hung Kai & Co Ltd – had proposed a 3,750-room, A$4.2 billion casino scheme called Aquis Great Barrier Reef Resort, near the city of Cairns on Queensland’s coast.

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February 14,19, 2014 Friday April 2013

Macau

Housing application rules should change Current system unfair, scholar and advisory committee member say Stephanie Lai

sw.lai@macaubusinessdaily.com

he government should make the current rules for subsidised home allocation fairer and easier says a scholar and also a Public Housing Affairs Committee member. As the Housing Bureau announced on Wednesday, 11,942 applicants were shortlisted as the eligible candidates for 1,544 singlebedroom flats at a subsidised development – the Ip Heng Building – at Seac Pai Van on Coloane. The government said it would favour applications by the 2,700-odd family households on the shortlist. More than 9,000 of the applicants on the list were single people. The city’s subsidised housing law, in effect since October 1, 2011, says priority in allocation of subsidised flats should be given to “core [immediate] family”, followed by “noncore family” and only then to “individuals”. A family with members

see what types of applicants the homes put on offer will suit,” added Ms Lai. “If the flats only suit families, then they should reserve them just for family applicants,” she stated.

Lucky draw

older than 64 years or with a disabled family member, are also given priority in the waiting list, the law says. University of Macau academic Rose Lai Neng and Public Housing Affairs Committee member Leong Keng Seng told Business Daily they had doubts about the current allocation rules. “For a [subsidised]

building, there should be different proportions of homes reserved for family applicants and individuals respectively,” said Ms Lai, professor of finance and a real estate specialist at University of Macau. “Whenever the government is starting a round of subsidised home applications, they should

“After two or three rounds of subsidised housing applications, we’ll collect people’s opinions on it to see how we should amend the current home allocation rules,” Mr Leong told Business Daily. “For any round of application, it’s true that the government should not just offer a single type of subsidised home for people to apply, like the case of Ip Heng’s single-bedroom flats,” he added. Under the subsidised housing law, applicants not granted a home will not be automatically put on the waiting list for the next round of subsidised housing application.

“When applicants are [automatically] put on the waiting list, it is actually more useful for the government to have an idea of how many people need the subsidised home,” said Rose Lai. “Now the government will conduct [a] lucky draw to pick the final candidates for a subsidised home,” Ms Lai added. “This mechanism looks fair in appearance, but it actually blurs what the actual demand for a subsidised home project is,” she added. Head of the Secretary for Transport and Public Works’ cabinet Wong Chan Tong told media in December that there would be about 5,600 public housing units supplied in the coming years. But to date the government is yet to announce the proportion of subsidised and social housing for the public home projects, and when applications for these 5,600 public housing units could begin.

Corporate Jerry John new GM at Banyan Tree Macau

Michelin chef is guest at Vida Rica

Jerry John (pictured) is joining Banyan Tree Macau as general manager. The hotel, with 246 suites and 10 pool villas, is part of Galaxy Entertainment Group Ltd’s Galaxy Macau casino resort on Cotai. Mr John previously spent three years as general manager at the Angsana Laguna Phuket. That 404room hotel is owned by Banyan Tree Group, which took it over from Sheraton Hotels and Resorts and renovated the property at the time Mr John joined. During his stint, the hotel – along with others in the Laguna group – took part in the largest corporate incentives event in Phuket’s history, catering for 15,000 delegates from Amway China over a four-week period. Prior to that, he was hotel manager of the Banyan Tree Phuket for two years. Mr John has had 27 years in the hospitality industry, for the past 20 years mostly in hotels and resorts across Asia and Australia.

Richard Ekkebus (pictured) is to be guest chef at Vida Rica restaurant at Mandarin Oriental, Macau on March 15 and 16. His day job is culinary director of two-Michelinstar Amber restaurant at The Landmark Mandarin Oriental, Hong Kong. He is also chef consultant of Fifty 8̊Grill at the recently opened Mandarin Oriental Pudong, Shanghai. Under his direction, Amber has won two Michelin stars for six consecutive years and received a ‘World’s 50 Best Restaurants’ award sponsored by mineral water brands San Pellegrino and Acqua Panna. In 2013, Amber also claimed the fourth spot in the inaugural ‘Asia’s 50 Best Restaurants’ award organised by Restaurant magazine in the United Kingdom. Mr Ekkebus began his career in his native country The Netherlands under Michelin-starred chefs Hans Snijders and Robert Kranenborg. There, he won the Golden Chef’s Hat for ‘Young Chef of the Year’. He then went to study under some of the greatest three-Michelin-star chefs in France, including Pierre Gagnaire, Alain Passard and Guy Savoy.

Unique opportunity

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Greater China Billionaire Kwok brothers face new charges Sun Hung Kai Properties Ltd, Hong Kong’s second-largest developer, said co-chairmen Thomas and Raymond Kwok face additional charges in a bribery case involving a former chief secretary. Raymond Kwok faces two more charges including for conspiracy to commit misconduct in a public office and Thomas Kwok faces one additional charge, Sun Hung Kai said yesterday in a statement. The case has not and will not affect the company’s operations, it said. The trial is scheduled to start May 8. Hong Kong’s anti-graft agency opened one of the city’s most high-profile corruption cases in 2012 when it charged the Kwok brothers and two other men for conspiring to provide payments, loans, and property use to Rafael Hui, a former No. 2 official in the city. All five defendants have pleaded not guilty to charges including misconduct in public office and furnishing false information. The brothers will be added to the charge of conspiring, with two other men, to offer advantage to a public servant, Kit Hung, a spokeswoman for the Department of Justice, said earlier yesterday. Previously, only Mr Hui and the two men were charged with the offence.

China, Sri Lanka seen concluding FTA in 2014 China and Sri Lanka could sign a free trade agreement by the end of the year, state news agency Xinhua cited Sri Lanka’s foreign minister as saying. Sri Lankan Foreign Minister G.L. Peiris, who is on a four-day visit to China, said “the feasibility study is on the verge of completion”. Mr Peiris told Xinhua in an interview on Wednesday it would be the most significant bilateral achievement since the 1952 RubberRice Pact, when rubber and rice was bartered between China and Sri Lanka. China has increasingly tight ties with Sri Lanka, funding airports, roads, railways and ports. Those ties have unsettled India, traditionally Sri Lanka’s closest economic partner. The island of 21 million people just off India’s southern tip is at the forefront of competition between Asian giants China and India. China has consistently defended Sri Lanka’s rights record, which came under fire at a Commonwealth summit in November, saying Colombo had made big strides in promoting human rights and achieving national reconciliation over the years. On Tuesday, China’s Foreign Minister offered support for Sri Lanka after the United States said it would table a U.N. resolution against Colombo over its human rights record.

Trust assets surge amid Most products sold to provide finance for borrowers

hina’s trust assets surged 46 percent in 2013 to a record 10.9 trillion yuan (US$1.8 trillion), underscoring investor interest in products that pay more than bank deposits even as default risks mount. About 20 billion yuan of trust products had repayment difficulties in 2012, accounting for 0.27 percent of the industry’s assets at that time, the China Trustee Association said in a statement on its website yesterday. Asset quality is “quite sound and systemic risks are impossible” with 9.06 billion yuan of reserves set aside, the association said. China averted its first trust default in at least a decade last month as investors in a 3 billion-yuan highyield product issued by China Credit Trust Co were bailed out days before it matured. About 5.3 trillion yuan of trust products will be due this year, up from 3.5 trillion yuan in 2013, Haitong Securities Co estimated last month, warning that firms can no longer shoulder all the risks tied to offering implicit guarantees. “The rapid expansion of trust assets over the past few years is unlikely to be sustained because the government is stepping up oversight of the sector,” Wei Tao, a Beijingbased analyst at China Securities Co, said by phone. “Systemic risk is manageable because the economic situation will remain under control and regulators won’t let the situation get out of hand.”

Overtook insurance With the help of guarantees on investments, trusts have overtaken

ICBC distributed the Jilin Trust product

Beijing to target slower export growth Recover could take longer amid unstable global recovery

Alibaba share sale values firm at US$128b A rare sale of a stake in Alibaba Group Holding Ltd values China’s dominant e-commerce company at around US$128 billion, Reuters calculations show. Alibaba is expected to go public later this year in the world’s biggest listing since Facebook Inc’s debut in 2012 and the potential value of the firm and its IPO are a key focus for investors keen to cash in on China’s booming online retail market. Chinese video game company Giant Interactive Group said it is selling a stake in Alibaba to a Tiger Global fund for roughly US$199 million but did not disclose further details. Giant Interactive bought a US$50 million stake in Alibaba in 2011 through Yunfeng Capital, a China-based private equity firm co-founded by Alibaba executive chairman Jack Ma. Around that time, Alibaba was valued at around US$32 billion after a private equity consortium led by Silver Lake, Yunfeng Capital and DST Global bought a 5 percent stake for US$1.6 billion. Assuming that Giant’s stake has not changed since 2011, it is now worth roughly four times its original amount and Alibaba’s value would have correspondingly increased to US$128 billion.

he Chinese government is targeting export growth of about 7.5 percent in 2014, three people with direct knowledge of the matter said, setting sights lower than last year’s pace. The goal, based on the U.S. dollar value of sales, has been distributed to economy-related ministries and local governments to serve as an internal guideline for planning, said the people, who asked not to be named as they aren’t authorised to speak to the media. Overseas shipments rose 7.9 percent in 2013, according to official data, as the government targeted 8 percent growth in exports and imports combined. The target may reflect Ministry of Commerce concerns last month that trade growth won’t be faster than in 2013 amid an unstable global recovery. The strength of exports will help determine the pace of expansion in the world’s second biggest economy that analysts see slowing to a 24-year low of 7.4 percent this year. “As the European and U.S. economies show signs of warming up, uncertainties remain for China’s export outlook, such as the recent turmoil in emerging markets,” said Liu Xuezhi, a Shanghai-based analyst with Bank of Communications Co, China’s fifth-largest lender.

Concern about the U.S. Federal Reserve’s stimulus cuts, China’s slowdown and volatility in developing markets spurred a global rout that wiped as much as US$3 trillion from equities this year. China’s exports grew a fasterthan-estimated 10.6 percent in January from a year earlier, customs administration data showed on Wednesday, a pace that may be distorted by false invoices and the Lunar New Year holiday. The State Council Information Office didn’t immediately respond to faxed questions from Bloomberg News.

Inflated numbers China doesn’t normally publish a target for export growth alone. Instead, the government provides the goal for combined exports and imports at the annual gathering of the National People’s Congress in March. The legislature’s meeting also typically sees the release of the year’s national expansion target. Caixin, a Chinese financial news provider, reported in December that government plans a 7.5 percent growth target for 2014, which would be the same goal as in 2012 and 2013.

The export goal contrasts with the view of UBS AG economists led by Wang Tao in Hong Kong, who said in a report yesterday that they see export gains “accelerating modestly” to 10 percent this year, propelled by recoveries in the U.S. and Europe. Shen Danyang, a Commerce Ministry spokesman, said at a briefing last month that while the trade situation is grim and complicated, he’s also “cautiously optimistic” about the outlook. Some small and mediumsized exporters face difficulties from rising costs, Shen said. Export figures last year were exaggerated as companies falsified documents to disguise capital flows, and the customs administration hasn’t publicly revised any data. Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, estimated last month that the practice inflated China’s 2013 export gains by about 2 percentage points. Hua Changchun, an economist with Nomura Holdings Inc in Hong Kong, said the 7.5 percent target may take into consideration an “inflated base” from 2013. “In general, it shows the government’s willingness to see a stable export sector this year,” Mr Hua said. Bloomberg News

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Greater China

default risks insurance to become China’s biggest financial segment after banks. Their assets under management surged more than fourfold from the beginning of 2010 even as policymakers sought to curb money flows outside the formal banking system. About 48 percent of the trust products were sold to provide finance for borrowers, according to yesterday’s statement. A quarter of the assets went to the infrastructure sector at the end of 2013, an increase of 1.6 percentage points from the beginning of the year, while 10 percent were for real estate. “The lack of defaults over the past five years has further exacerbated China’s debt and capital allocation problems,” Mike Werner, a Hong Kong-based analyst at Sanford C. Bernstein & Co, wrote in a note yesterday. “Credit continued to be channelled to unproductive and risky entities.” Since 2012, more than 20 trust products totalling 23.8 billion yuan have run into payment issues, according to UBS AG. About half of these cases are still in legal process,

RMB5.3 trln

Trust products that will be due this year

UBS’s Hong Kong-based economist Wang Tao wrote in a January 27 note.

Recouped investment Investors in the China Credit Trust product recouped their principal after selling their rights to unidentified buyers days before the January 31 maturity. China Credit Trust sold the investment in February 2011 with an indicated annual return of 9.5 percent to 11 percent for different tranches, sales documents show. Industrial and Commercial Bank of China Ltd distributed the product, which was structured to raise funds from wealthy investors for a coal miner that later collapsed. A 973 million-yuan product issued by Jilin Province Trust Co missed four batches of payments since November as the borrower is going through a restructuring, Shanghai Securities News reported on Wednesday. Jilin Trust issued the product called Songhuajiang River No. 77 in six batches from November 2011 to March 2012 at an annual return of 9.8 percent to finance mining projects of Shanxi Liansheng, according to the report. The borrower is in talks with investors and the company’s financial condition “has no problem,” the newspaper said, citing Jilin Trust. The local government began a restructuring agreement that needs approval signatures from a few banking creditors, according to the report. China Construction Bank Corp is the custodian of the product. “Even as non-performing financial assets increase amid the economic slowdown, so far only some individual trust products have run into problems and it’s not a widespread phenomenon,” the trustee association said in yesterday’s statement. The group is a non-profit organisation overseen by the China Banking Regulatory Commission. Bloomberg News

Auto market growth slows sharply Commercial vehicle sales, holiday timing blamed

Passenger vehicle sales up 7 percent from year ago

rowth in China’s auto market slowed to 6 percent in January, a third of the rate seen in December, partly weighed down by sluggish sales of commercial vehicles likes trucks and buses. The relatively slow growth in the world’s biggest auto market was also due to the week-long Chinese New Year holiday, or Spring Festival, starting at the end of January that resulted in fewer working days compared with 2013, analysts said. Most dealers close during the holiday, which fell in February last year. The China Association of

Automobile Manufacturers (CAAM) said yesterday passenger vehicle sales rose 7 percent from a year earlier while commercial vehicle sales, which make up around 15 percent of the entire auto market, were virtually flat. “Companies typically don’t invest much on commercial vehicles at the start of a year, and that was much more evident in January this year due to the timing of the Spring Festival,” said Wan Dong, analyst at Capital Securities. The overall market grew 17.9 percent in December last year and ended the calendar year with a growth rate of 13.9 percent.

CAAM last month said the auto market would likely grow 8-10 percent in 2014, echoing views from industry experts and analysts that 2014 would be another strong year for China’s auto market. Foreign carmakers like General Motors Co, Ford Motor Co and Toyota Motor Corp reported doubledigit growth in January, but some local players like Geely Automobile Holdings Ltd, posted sharp declines. CAAM, whose members include China’s biggest automakers like SAIC Motor Corp Ltd and FAW Group, reiterated its opposition against any relaxation of foreign investment rules in the auto industry as indicated by several policymakers. The Ministry of Commerce told a media briefing in November that the government would likely relax foreign investment restrictions soon in areas including auto manufacturing. Currently, foreign ownership in a Chinese joint venture is capped at 50 percent. “If China relaxes foreign ownership rules, it would be devastating to China’s indigenous brands,” CAAM, one of China’s biggest industry associations, said in a statement. “Chinese local brands would be killed in the cradle.” Reuters

Peugeot, Dongfeng reach outline deal MoU to be finalised by February 18, sources say

SA Peugeot Citroen has reached an outline deal with Dongfeng Motor Group Co Ltd and France to raise up to 4 billion euros (US$5.5 billion) in fresh capital and deepen cooperation with the Chinese carmaker, sources familiar with the matter said. The agreement is due to be presented to the Peugeot board on February 18 and likely signed as a non-binding memorandum of understanding the same day, according to three sources with direct knowledge of the situation. Peugeot, battered by Europe’s prolonged auto demand slump and sustained by 7 billion euros of state guarantees, needs a cash infusion to stay afloat. The planned share sale to Dongfeng and the French government may be its last survival hope after the failure of earlier deal talks with U.S.-based General Motors Co. The accompanying industrial plan would see Peugeot and Dongfeng retain and expand their existing joint venture, increasing research and development cooperation with a view to expanding into South East Asian markets, according to the sources, who declined to be named because the talks were confidential. Peugeot has been in talks with Dongfeng for months over a rescue plan that would see the Chinese automaker and French government take matching stakes of about 14 percent each. With most details now agreed – including a heavily discounted 7.50 euro issue price for the two new shareholders – the choice of a new independent chairman is the main outstanding point to be resolved, several sources said. The French government is pushing Louis Gallois, a senior civil servant who joined the Peugeot board on a nominally independent ticket as a condition of the existing state guarantee in place since 2012, the sources said. But Dongfeng is resisting his nomination and rooting instead for prominent French businesswoman Patricia Barbizet, another independent Peugeot director. Peugeot declined to comment on the deal talks with Dongfeng. Reuters

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Greater China the documents. Kexiang was contracted to mould accelerator pedal arms by a Hong Kong company, Fast Forward Tooling, which in turn was contracted by a U.K.-based manufacturer, Precision Varionic International, according to Aston Martin documents filed with NHTSA.

Counterfeit protection

Aston Martin recall highlights risk parts supply Carmaker recalling 17,590 cars because of faulty parts James Pomfret, Norihiko Shirouzu and Laurence Frost

ston Martin’s sweeping recall of its high-end sports cars last week raises larger questions about the risk to global automakers of sourcing key parts thousands of miles away in China without implementing adequate quality control measures. Executives from several major foreign automakers said they either shun Chinese-owned suppliers or help them establish sound production processes and train workers to avoid quality problems. And some traders in one of China’s largest plastics supply hubs told a Reuters reporter during a recent visit that counterfeit plastic material of the kind found in an accelerator pedal supplied to Aston Martin was widespread as manufacturers face increasing cost pressures. The China Association of Automotive Manufacturers, which represents many of the country’s vehicle and parts makers, declined to comment. The British maker of the exotic sports cars featured in a string of James Bond spy movies was forced last week to recall most of the vehicles it has built since 2007. It discovered Chinese subcontractors were using counterfeit plastic material in parts supplied to Aston Martin. A spokeswoman for Aston Martin, controlled by Kuwaiti and private equity investors, said on February 7 that the Chinese sub-suppliers of accelerator pedal arms are being replaced “as soon as possible” by a U.K.-based supplier.

Quality control The source of Aston Martin’s recall “is precisely why we don’t procure much in China”, especially from Chinese-owned component makers, a China-based senior Toyota Motor Corp executive told Reuters. He declined to be named because of the

sensitive nature of the issue. Toyota, which has extensive manufacturing activities in China, buys most critical components from China-based units of Japanese and other global parts producers. In some cases it brings in materials directly from Japan, the Toyota official said. “There is risk in expanding our procurement reach within China,” the official said. “When we do buy from Chinese suppliers, we do so only after starting small with a simpler component and taking time to nurture them.”

KEY POINTS Aston Martin recalls 75pct of post-2008 cars Global automakers face quality control issues Counterfeit material led to defective pedals

A Toyota spokeswoman in Tokyo declined to comment on issues related to the Aston Martin recall. One company aggressively expanding purchases of parts from what it calls “pure Chinese-owned” parts producers is Japan’s Nissan Motor Co, an affiliate of French automaker Renault SA. To prevent the kind of issue Aston Martin has faced with defective accelerator pedals, Nissan routinely sends engineers into supplier factories to reinforce quality control, its

purchasing executives and engineers in China have told Reuters. Nissan declined to comment on the Aston Martin recall and its implications for other carmakers. Germany’s Daimler AG, which holds a minority stake in Aston Martin and operates several joint ventures with Renault-Nissan, said it was not affected by the Aston Martin recall and does not share the British company’s Chinese suppliers of accelerator pedals.

Supply chain Jaguar Land Rover Ltd in the UK said it had “never used” Aston Martin’s Chinese suppliers. Now owned by India’s Tata Group, JLR was part of Ford Motor Co’s Premier Automotive Group, along with Aston Martin. Ford sold Aston Martin in 2007 and JLR in 2008. Even Chinese-owned Covpress, a U.K.-based supplier of pedal assemblies and other parts to automakers including General Motors Co, Renault and Jaguar Land Rover, said it avoids manufacturing in China altogether to “allay fears” about supply chain security. “We buy the tooling to make things over there, but that’s it – we don’t actually make anything over there,” chief executive Kit Halliday told Reuters. “There is no product that we have in the U.K. that we would consider making in China.” According to documents filed with the U.S. National Highway Traffic Safety Administration, Aston Martin found that Shenzhen Kexiang Mould Tool Co Ltd, a southern China-based subcontractor that moulds the affected accelerator pedal arms, was using counterfeit DuPont plastic material. The material was supplied by another southern China-based firm, Synthetic Plastic Raw Material Co Ltd of Dongguan, according to

Plastics supplier DuPont said it is working with Aston Martin to help ensure the material used to manufacture the pedals is genuine DuPont product. “The best protection that customers and end-users have against counterfeit products and the potential consequences of their use in highly engineered systems is to ensure that they and their supply chains buy only from DuPont and their authorized distributors,” it said in a statement. A Precision Varionic official, Ursula Aldridge, said PVI had no comment. Quality management chief John Penman and manufacturing and purchasing director Roger Osborn did not respond to requests for comment. Calls to the listed number for Kexiang’s small factory in Shenzhen went unanswered. People seen inside the factory during a recent visit by Reuters declined to answer questions. Zhang Ronghui, a Kexiang factory manager absent from the site but contacted by Reuters on his mobile phone, said he was aware of the recall of Aston Martin parts, but denied any direct involvement with the British carmaker. “We’re fine. We don’t make things [for Aston Martin]. Another company does it,” said Mr Zhang, who declined a request for a meeting. Attempts to contact Fast Forward Tooling and Synthetic Plastic Raw Material weren’t successful. A visit to the Hong Kong address for Fast Forward cited in Aston Martin’s document found it to be that of a small legal and secretarial firm where the company had registered its business but had no actual presence. Aston Martin spokeswoman Sarah Calam said the Chinese sub-suppliers Fast Forward and Kexiang are being replaced, with production shifting to the U.K. The automaker will continue working with Precision Varionic. In the meantime, she said, both Aston Martin and DuPont have sent people to China to directly supervise the production of all pedal arms, including verifying that each bag of DuPontbranded plastic material is genuine.

Complicated nature As a widely practiced protocol, upper-tier suppliers such as Precision Varionic have responsibility to verify the quality of so-called subassemblies provided by lower-tier subcontractors, according to Matteo Fini, senior supply chain consultant with IHS Automotive in London. “The more one goes down the chain, the less transparent and visible the chain becomes,” Mr Fini said. Aston Martin purchasing director Gary Archer told Reuters on February 7 that “supply chain management is a big challenge for all car makers”, but said the company has a robust quality-control system to monitor its suppliers. The carmaker’s Ms Calam acknowledged the complicated nature of managing an extensive automotive supply chain. “It does become more difficult when you think we have over 200 tier-one suppliers, and they each have their own networks of suppliers,” she said. “Obviously it gets harder to control the tier-three and tier-four [suppliers] down the chain.” Reuters

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Malaysia budget deficit shrinks in 2013 As government cuts spending and state subsidies Chong Pooi Koon

alaysia trimmed its fiscal deficit to 3.9 percent of gross domestic product last year, after cutting government spending and state subsidies to avert a credit-rating downgrade. Prime Minister Najib Razak narrowed the shortfall from 4.5 percent of GDP in 2012, beating the government’s 4 percent deficit target for last year. The central bank released the updated budget deficit estimate in a quarterly bulletin, citing preliminary government finance data. Malaysia wants to further reduce the budget gap to 3.5 percent this year and to 3 percent in 2015, before

Achieving the government’s goal of a 3 percent deficit in 2015 still looks challenging without additional consolidation measures Andrew Colquhoun, Fitch’s head of Asia-Pacific sovereigns

achieving a balanced budget by 2020. Fitch Ratings lowered its outlook on Malaysia to negative from stable in July, citing public finances as the country’s “key rating weakness”. Mr Najib cut subsidies on essential items including fuel and sugar, trimmed ministers’ entertainment budgets and froze proposals to renovate government offices. “Achieving the government’s goal of a 3 percent deficit in 2015 still looks challenging without additional consolidation measures,” Andrew Colquhoun, Fitch’s head of Asia-Pacific sovereigns, said by e-mail yesterday. Mr Najib unveiled a plan in 2010 to attract US$444 billion of local and foreign private sector-led investment in Malaysia by the end of this decade, ranging from oil storage to a subway in Kuala Lumpur. Foreign direct investment into the country climbed more than 24 percent in 2013 to a record 38.8 billion ringgit (US$11.7 billion) from a year earlier, the Ministry of International Trade and Industry said in a statement yesterday.

Economic growth “A key question for the ratings, amid ongoing shifts in investor attitude towards emerging markets, remains whether a re-acceleration of investment spending under the Economic Transformation Programme risks emergence

Najib Razak cut subsidies last year on essential items

of a twin public and external deficit later in the year,” Mr Colquhoun said. Malaysia’s economy expanded at the fastest pace in four quarters in the three months ended December as a recovery in advanced nations including the U.S. boosted demand for the country’s goods. GDP climbed 5.1 percent in the period from a year earlier, the central bank said on Wednesday. “ T h e t i m e l y implementation of fiscal and structural reforms will boost investors’ confidence and enhance private- sector investment,” Lee Heng Guie,

an economist at CIMB Group Holdings Bhd, said in a report yesterday. “We believe the government is on track to meet its fiscal-deficit targets.” The ringgit was little changed at 3.3235 against the dollar in Kuala Lumpur and has fallen 7 percent over 12 months, according to data compiled by Bloomberg. Capital flight risk has weakened emerging-market currencies as the U.S. Federal Reserve pares stimulus. Rebounding exports have countered Mr Najib’s spending squeeze. Inflation risks are rising following subsidy cuts and the central

bank may be moving closer to an interest-rate increase after keeping borrowing costs unchanged since mid-2011, according to Barclays Plc. Inflation accelerated to 3.2 percent in December, the fastest pace in two years. Overseas shipments picked up in the second half of 2013, after a “lacklustre” first six months of the year, the trade ministry said last week. Southeast Asia’s thirdlargest economy is projected by the government to expand 5 percent to 5.5 percent in 2014. Bloomberg News

Singapore Q4 GDP likely to be revised upwards S

ingapore’s economy likely expanded at a faster year-onyear pace in the fourth quarter of 2013 than was earlier estimated, helped by a surge in manufacturing output late last year. According to the median forecast of 13 economists polled by Reuters, gross domestic product (GDP) in October-December likely grew 5.3 percent from a year earlier, faster than the advance estimate of 4.4 percent released in January. The poll also showed that

Singapore’s fourth-quarter GDP is likely to have shrunk by 0.1 percent compared to the third quarter on a seasonally-adjusted annualised basis, a much smaller decline than the 2.7 percent contraction in the advance estimate. The data will be released on Thursday, February 20. Expectations for an upward revision to fourth-quarter GDP have grown after Singapore reported a surprise 6.2 percent jump in December manufacturing output from a year

earlier, and also revised up its figures for November output. The expected upward revision to fourth-quarter economic growth is unlikely to have any direct impact on monetary policy, said Song Seng Wun, an economist for CIMB, adding that the Monetary Authority of Singapore (MAS) will probably maintain its current policy stance at a policy review due in April. “I think their main focus still remains on the tightening labour market, on inflation,” he said,

adding that the economy’s growth momentum is probably within the comfort zone of the MAS, Singapore’s central bank. At its previous policy decision in October, the MAS stuck to its stance of allowing a “modest and gradual” appreciation of the Singapore dollar to curb inflationary pressures. Singapore conducts monetary policy by managing the rise or fall of the local dollar against the currencies of its main trading partners. Reuters

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Asia

India consumer inflation, factory output fall Higher rates have taken a toll on consumer demand Unni Krishnan

ndia’s consumer-price growth eased more than analysts estimated in January and factory output fell in December following an increase in interest rates as central bank governor Raghuram Rajan fights Asia’s fastest inflation. The consumer-price index rose 8.79 percent from a year earlier, compared with 9.87 percent in December, the Statistics Ministry said in New Delhi yesterday. The median estimate in a Bloomberg News survey of 37 analysts was 9.2 percent. The latest rate was the lowest since January 2012. Mr Rajan pledged to fight inflation and preserve the value of the rupee when he boosted borrowing costs last month along with nations from Brazil to Turkey as the U.S. reduced monetary stimulus. Higher rates have taken a toll on consumer demand, with another report yesterday showing industrial output shrank 0.6 percent in December. “There is no relief until the inflation rate reaches 8 percent,” said Indranil Pan, a Mumbai-based economist at Kotak Mahindra Bank Ltd. “The RBI will look at inflation on the whole, and this fall does not impact their stated position.” The rupee, down about 13 percent versus the dollar in the past year, strengthened 0.2 percent to 62.11 per dollar in Mumbai yesterday. U.S. Federal Reserve chairman Janet Yellen on February 11 pledged

to maintain her predecessor’s policies by scaling back stimulus in “measured steps” in comments to a congressional committee.

Inflation target The MSCI Emerging Markets Index has lost about 5 percent this year. India, Brazil, Indonesia, South Africa, and Turkey are “among the economies that appear to have been the most affected” by the sell-off, according to a report presented to the congressional committee. Curbing inflation is crucial to attaining faster growth rates,

There is no relief until the inflation rate reaches 8 percent Indranil Pan, Kotak Mahindra Bank

Mr Rajan said last month while unexpectedly raising the repurchase rate to 8 percent from 7.75 percent, the third increase since September. Consumer-price inflation will exceed 9 percent in the three months ending March 31, and range between 7.5 percent and 8.5 percent in the same period next year, the RBI said in January. Inflation in food, beverages, and tobacco, which account for about half of the consumer-price index’s basket of goods and services, exceeded 12 percent in December. It was 9.9 percent in January, the Statistics Ministry report showed. A central bank panel in January proposed reducing CPI to 8 percent within one year and 6 percent by 2016, and that the RBI should then adopt a 4 percent target with a band of plus or minus two percentage points. Further tightening isn’t anticipated in the near term if consumer inflation slows to 8 percent by early 2015, the central bank said on January 28. India forecasts its economy will expand 4.9 percent in the 12 months through March 31, faster than the decade-low expansion of 4.5 percent last year, the statistics ministry said last week. If inflation slows, Asia’s thirdbiggest economy can grow between 5 percent and 6 percent in the fiscal year starting April 1, the RBI predicts. Bloomberg News

Kerry seeks to defuse Asia maritime tensions U

.S. Secretary of State John Kerry is in Asia for a threenation visit where he will pressure China to restrain its maritime claims and do more to rein in North Korea’s nuclear ambitions. Mr Kerry arrived yesterday in South Korea, before moving onto China and Indonesia. He travels to the region at a time when tensions are rising between Japan and China over a territorial dispute in the East China Sea and North Korea continues to defy international calls to halt its nuclear weapons development. This trip is his fifth to Asia and the second to Seoul since becoming the top U.S. diplomat last year. Mr Kerry’s departure for the region coincided with a White House announcement of President Barack Obama’s own trip to Asia in April. Obama made no mention of his socalled “pivot” to the Asia-Pacific, outlining little in the way of foreign policy priorities in his January 28 State of the Union address. A senior State Department official said Mr Kerry’s trip reflects the Obama administration’s focus on Asia as a strategic priority. The U.S. will seek China’s cooperation on efforts to convince the North Korean leadership to abandon its pursuit of nuclear missile capability, said the official who asked not to be named according to department policy. Mr Kerry will also use his visit to Beijing to reinforce the U.S. position that it is unwise for China to take actions that disrupt the status quo in in the region, said the official. Alongside its territorial claims in the East China Sea, China is embroiled in disputes with a number of Southeast Asian nations over a large part of the South China Sea, through which some of the world’s busiest shipping lanes run. Mr Kerry arrived in Seoul a day after the two Koreas held their highest-level talks in six years. An official in Seoul said Wednesday’s talks had failed to narrow differences between North and South Korea.

Consumer-price index rose 8.79 percent last month

AFP

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com CLOSING 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 Graft busters eyes Indonesian ‘Big Fish’ Indonesia’s anti-corruption agency predicted an increase in graft in the run-up to elections this year, with its vice chairman anticipating the rise will land major cases on the authority’s books. Corruption usually escalates around elections as officials take advantage of their posts by trading favours and candidates seek to fund campaigns, Adnan Pandu Praja, vice chairman at the Corruption Eradication Commission, said. Parliamentary elections are scheduled for April and a presidential ballot in July.

Vietnam’s Vingroup turns to online Vingroup JSC, Vietnam’s largest property developer and mall operator, will set up an e-commerce website offering a range of products as it looks to win online customers. Vingroup vice chairwoman Le Thi Thu Thuy left her position as chief executive to lead the new subsidiary, VinE-com. The website will sell products ranging from food to furniture, Ms Thuy said. “After five years, we hope to be the biggest e-commerce player here,” she said. Annual e-commerce transactions in Vietnam may increase to as much as US$15 billion in six year from about US$700 million now, she said.

SingTel signals Optus expansion Singapore Telecommunications Ltd, Southeast Asia’s biggest phone company, posted third-quarter profit that gained 5.4 percent as improving domestic and Australian units offset the effect of a weaker Singapore dollar. Net income rose to S$872 million (US$689 million) in the three months ended December from S$827 million a year earlier, SingTel said in a statement. “Going forward, we will focus on driving customer growth in Australia,” chief executive Chua Sock Koong said in the statement.

Australia’s economy loses 3,700 jobs Another very disappointing report highlights the ‘jobless recovery’ Wayne Cole

ustralia’s jobless rate unexpectedly jumped to a decade high in January, intensifying concerns about the future of the manufacturing sector as global carmakers prepare to pull out. The Australian dollar dropped nearly one U.S. cent on speculation interest rates might have to be eased again. Yesterday’s data from the Australian Bureau of Statistics showed unemployment rose to 6.0 percent in January, the highest level since July 2003 and well above forecasts of 5.8 percent. A net 3,700 jobs were lost in January, a huge disappointment as

it followed a sharp 23,000 drop in December and meant no new jobs had been created at all in the past 12 months. The poor report puts the Reserve Bank of Australia (RBA) in a tough spot as only last week it shut the door on more easing, citing signs past cuts were boosting activity along with an unwelcome pick-up in inflation. The central bank has repeatedly said that it expected unemployment to rise gradually this year, so the numbers would not be a total shock. Yet were the jobless rate to move much above 6 percent, pressure would surely grow for a further cut in the

2.5 percent cash rate. “Overall, a poor start to 2014 and while some may argue that employment is a lagging indicator, we would also suggest this print will be a negative for household income, sentiment and thus spending,” said Justin Smirk, a senior economist at Westpac Banking Corp. “We are closely watching this space.” The report will add to the media gloom that followed Toyota Motor Corp’s decision this week to join other carmakers in ceasing manufacturing in Australia by 2017. Government figures show that carmakers have not made a profit since 2003, instead running up combined losses of A$4.4 billion. Domestically produced cars comprise little more than a tenth of the 1.1 million vehicles sold annually in Australia. ABS estimates around 45,000 people are employed in vehicle and parts manufacturing. Alan Oster, chief economist at NAB, also noted the layoffs will come as a number of major resource projects are set to be completed with a resulting loss of construction jobs. “The demise of the automotive construction industry can be expected to represent an additional headwind for the Australian labour market over the next twelve to eighteen months,” he says. Reuters

BOK chief unfazed by yuan deposit spike Central bank kept rates steady on firming recovery

Rio Tinto bounces back with strong annual profit Rio Tinto Group, the world’s secondlargest mining company, said profit rose 10 percent last year, beating analyst estimates as a US$2 billion cost-cutting plan bolstered profitability. Underlying profit was US$10.2 billion from US$9.3 billion a year earlier Rio said yesterday. Net income was US$3.7 billion after a loss of US$3 billion last year. Chief executive Sam Walsh has cut costs after investor criticism that the world’s biggest mining companies had overspent on acquisitions and expansions.

outh Korea’s central bank chief said yesterday that a recent spike in domestic deposits of Chinese yuan in South Korea was not a major cause for concern, suggesting that no serious measure was planned to limit local yuan accounts. South Korean policymakers have been monitoring the surge in yuan holdings, which became popular as domestic investors sought the comparatively higher yields offered by the currency. Yuan deposits by local residents stood at an equivalent US$7.56 billion at end-January, compared with US$880 million at end-September. “I don’t think this is a cause for concern,” Bank of Korea governor Kim Choong-soo told reporters at a briefing following the central bank’s monetary policy meeting. “There has been an increase in arbitrage trade because of the deleveraging in the Chinese financial system.” The central bank stood pat for a ninth straight month. The South Korean won is not directly convertible into the yuan. And unlike Hong Kong, London, Singapore and Taiwan, South Korea is not an authorised offshore trading centre for the yuan, contributing

to the complexity of local yuan deposit transactions. The yuan deposits were built through a structured product scheme in which a local brokerage sold assetbacked commercial paper to raise won from local institutions. The proceeds were then swapped into dollars, which were in turn converted to yuan through dollaryuan swaps in Hong Kong’s offshore yuan market. The funds were then deposited in the Korean branches of Chinese

US$7.56 bln Yuan deposits by South Korean residents at end-January

banks. The Chinese lenders, in turn, sent the money back to China to make loans there. “Though there are risks related to credit or an increase in foreigncurrency liabilities, there is an ample amount of dollars in the local system so I think [the increase in yuan deposits] is an appropriate utilisation of this,” Mr Kim told reporters. The Financial Supervisory Service, a South Korean financial regulator, instructed Chinese bank branches in Korea late last year to slow their yuan deposit-building. Yuan deposits by local residents rose by US$890 million in January from the previous month, slowing substantially from a US$2.5 billion rise in December. Regulators have so far ruled out any new measures to curb the yuan deposit build-up, though the complex series of transactions required for such deposits does pose some risks. A finance ministry official told Reuters last week that it will discuss the matter with the central bank and financial regulators to determine whether the current instructions for Chinese banks’ local branches to slow down their yuan borrowing should continue. Reuters

14 14 business daily

February 14, 2014 Friday April 19, 2013

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

110.5

72.95

Min 72.3

Last 72.55

72.20

30.4

109.5

72.45

average 72.743

30.6

110.0

72.70

Max 73.1

30.8

111.0

73.20

30.2

109.0 Max 111

average 109.029

Min 108.5

108.5

Last 108.8

Max 30.75

average 30.479

Min 30.15

Last 30.35

24.9

60.60 60.15

34.4 34.3

24.7

59.70

34.2 24.5

59.25

Max 60.5

average 59.375

Min 58.8

Last 59

58.80

Max 24.85

average 24.581

Commodities PRICE 99.68

WTI CRUDE FUTURE Mar14

DAY %

YTD %

(H) 52W

-0.687456411

1.146626078

104.5199966

84.87999725

108.3

-0.450409045

-2.017551796

112.4399948

96.31999969

GASOLINE RBOB FUT Mar14

274.63

-0.608012739

-1.633296322

287.3600006

244.6799994

GAS OIL FUT (ICE) Mar14

917.25

-0.244698206

-2.601539687

954.5

840

4.946

2.571547076

17.95850227

5.737000465

3.469000101

NY Harb ULSD Fut Mar14 Gold Spot $/Oz

300.91

-0.112863071

-1.463750082

314.9999857

278.9799929

1287.23

0.0117

7.0248

1653.13

1180.57

20.17

-0.1451

3.1313

31.1756

18.2208

Platinum Spot $/Oz

1394.82

-0.2275

2.8818

1734.5

1294.18

Palladium Spot $/Oz

Silver Spot $/Oz

725.75

0.3665

2.0745

786.5

629.75

LME ALUMINUM 3MO ($)

1735

1.640304628

-3.624496598

2174

1671.25

LME COPPER 3MO ($)

7155

1.116449972

-2.785326087

8280

6602

LME ZINC

2021

0.949050949

-1.654501217

2230

1811.75

3MO ($)

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

14395

1.65960452

3.561151079

18495

13205

15.625

0.611719253

2.291325696

16.77000046

15.12000084

440

4.265402844

582.75

406.25

WHEAT FUTURE(CBT) Mar14

588.5

0.255536627

-2.767451466

786

550

SOYBEAN FUTURE May14

1316.5

0.515365528

3.093187157

1349

1175.5

COFFEE 'C' FUTURE May14

143.15

2.653280746

26.73749447

161.1499939

106.3499985

16.11

2.415766052

-2.717391304

20.04999924

14.92000008

CORN FUTURE

Mar14

SUGAR #11 (WORLD) May14 COTTON NO.2 FUTR May14

88.55

-0.337647721

4.917061611

89.66999817

77.18000031

World Stock Markets - Indices NAME

Last 24.55

(L) 52W

BRENT CRUDE FUTR Mar14

NATURAL GAS FUTR Mar14

METALS

Min 24.35

24.3

34.1 Max 34.35

average 34.187

Min 34.05

Last 34.25

34.0

Currency Exchange Rates

NAME ENERGY

30.0

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

0.8953 1.6633 0.8971 1.3627 102.22 7.9893 7.7562 6.0645 62.25 32.583 1.2672 30.363 44.87 11988 91.52 1.2225 0.81927 8.2638 10.8872 139.29 1.0301

-1.0718 0.5805 0.078 -0.0807 0.2054 -0.0188 -0.009 -0.0297 -0.2329 -0.135 -0.1657 -0.1581 -0.0891 0.8342 1.2893 0.1521 0.6591 0.0375 0.0634 0.2872 -0.0194

0.3475 0.8 -0.6465 -0.9954 2.7098 -0.0338 -0.0297 -0.1682 -0.7229 0.5893 -0.2446 -1.8312 -1.0586 1.5265 2.3263 0.3444 1.8163 0.9342 0.9699 3.7476 -0.0097

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 9635 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

4.91

1.028807

4.69083

5.12

3.49

4309538

16.85

-0.5312869

18.22

11.45

1337431

AMAX INTERNATION

1.63

-1.212121

-5.23256

2.12

0.75

417000

BOC HONG KONG HO

23.65

-0.4210526

-4.828975

22.85

5371536

CENTURY LEGEND

920500

0.495

-1

15.11628

0.68

0.26

CHEUK NANG HLDGS

7.55

0.6666667

7.092196

7.55

30588

CHINA OVERSEAS

21.7

-2.690583

-0.4587121

17.7

31096250

CHINESE ESTATES

17.28

0.6993007

-28.29876

24.7

10.384

38500

CHOW TAI FOOK JE

12.82

0.15625

10.89965

13.2

7.44

7611200

EMPEROR ENTERTAI

4.16

-4.587156

5.4

1.95

3515000

FUTURE BRIGHT

4.66

-2.30608

-0.6396601

5.3

1.758

4246000

72.55

-0.8202324

4.313439

84.5

9561754 1246035

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15963.94

-0.1927505

-3.69628

16588.25

13784.01

NASDAQ COMPOSITE INDEX

4201.288

0.2444021

0.5913495

4246.553

3105.365

FTSE 100 INDEX

6652.64

-0.3354292

-1.429077

6875.62

6023.44

HANG SENG BK

122

0.5770816

-2.943514

132.8

110.6

DAX INDEX

9523.24

-0.1756813

-0.3027579

9794.05

7418.36

HOPEWELL HLDGS

26.6

-0.1876173

1.333333

35.3

23.2

1078613

NIKKEI 225

14534.74

-1.792695

-10.78225

16320.22

11065.06

HSBC HLDGS PLC

81.35

0.4320988

-3.327393

90.7

77.85

17349305

HANG SENG INDEX

22165.53

-0.5396264

-4.895058

24111.55078

19426.35938

GALAXY ENTERTAIN

HUTCHISON TELE H

2.81

-1.056338

-4.421771

4.66

2.5

9440000

LUK FOOK HLDGS I

26.7

-1.657459

-9.491525

16.88

2011321

CSI 300 INDEX

2279.554

-0.51029

-2.166153

2791.303

2023.171

MELCO INTL DEVEL

27.95

-1.757469

-1.929825

32.5

11.52

1762000

TAIWAN TAIEX INDEX

8467.7

-0.5072337

-1.669969

8668.95

7663.23

MGM CHINA HOLDIN

30.35

-1.300813

-8.308153

36.15

15.798

4870847

KOSPI INDEX

1926.96

-0.4587156

-4.195213

2063.28

1770.53

MIDLAND HOLDINGS

3.42

-3.116147

-8.310992

3.82

2.68

998000

NEPTUNE GROUP

0.3

-1.639344

-11.76471

0.4

0.131

17625643

NEW WORLD DEV

9.62

-1.028807

-1.736465

14.48

9.16

6277652

-0.6734007

-5.598617

66.248

33.05

15269131

S&P/ASX 200 INDEX

5308.103

-0.03670397

-0.8240882

5457.3

4632.3

JAKARTA COMPOSITE INDEX

4496.247

-0.000867383

5.195628

5251.296

3837.735

FTSE Bursa Malaysia KLCI

1817.64

-0.4382025

-2.641725

1882.2

1599.94

SHUN HO RESOURCE

1.76

2.325581

6.666668

1.92

1.33

104000

NZX ALL INDEX

1025.732

0.1185925

2.686672

1048.998

904.128

SHUN TAK HOLDING

4.63

1.535089

5.18

3.27

7794250

PHILIPPINES ALL SHARE IX

3698.69

-0.1190894

2.334322

4571.4

3440.12

SJM HOLDINGS LTD

24.55

-1.603206

-5.576923

17.04

6857726

8.38

0.9638554

-5.417604

14.46

7.38

927100

WYNN MACAU LTD

34.25

-1.29683

-2.560459

38.25

19.6

8312055

SANDS CHINA LTD

SMARTONE TELECOM

Euromoney Dragon 300 Index Sin

588.04

0.41

-3.84

STOCK EXCH OF THAI INDEX

1313.13

-0.07077302

1.110336

1649.77

1205.44

ASIA ENTERTAINME

#N/A N/A

HO CHI MINH STOCK INDEX

570.18

1.050953

12.98971

570.68

459.64

BALLY TECHNOLOGI

67.14

-0.900369

-14.41682

82.67

958024

Laos Composite Index

1257.85

0.1544697

0.3606408

1446.66

1218.84

BOC HONG KONG HO

3.03

-1.302932

-5.900622

3.6

2.93

20481

GALAXY ENTERTAIN

9.37

-0.4250797

3.995558

10.81

3.8975

4975

INTL GAME TECH

14.51

0.9742519

-20.09912

21.2

13.91

4692268

JONES LANG LASAL

118.7

0.5250678

15.92929

119.8

80.86

468312

LAS VEGAS SANDS

78.78

0.587334

-0.1141153

82.48

47.95

4435698

MELCO CROWN-ADR

42.36

-0.3528582

8.006116

45.4799

17.76

3959552

MGM CHINA HOLDIN

3.75

-1.574803

-12.99304

4.66

10000

MGM RESORTS INTE

25.32

0.2772277

7.653059

26.7

11.72

7706943

SHFL ENTERTAINME

#N/A N/A

23.25

14.54

SJM HOLDINGS LTD

3.22

-1.226994

-3.592812

3.6

2.2

27558

221.12

-1.413349

13.85613

225.9999

111.3456

1415175

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

37.1

-1.066667

22779892

ALUMINUM CORP-H

2.81

9693396

BANK OF CHINA-H

3.25

-1.515152

263119293

BANK OF COMMUN-H

5.08

-0.1964637

21791001

BANK EAST ASIA

29.7

-0.5025126

BELLE INTERNATIO

8.46 23.65

BOC HONG KONG HO

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

CHINA UNICOM HON

10.42

-1.13852

15360471

NAME POWER ASSETS HOL

0.1615509

2623710

CITIC PACIFIC

10.18

5.383023

17119469

SANDS CHINA LTD

-0.6734007

15269131

10.34

-0.5769231

3897761

95.7

0.1046025

3759386

86.95

1.222352

2836941

540

0.3717472

5266191

20.15

1.358149

7114112

CLP HLDGS LTD

59.45

-0.6683375

2503815

CNOOC LTD

12.66

-2.314815

65229919

SUN HUNG KAI PRO

1727966

COSCO PAC LTD

10.32

1.775148

12013414

SWIRE PACIFIC-A

0.4750594

8345039

ESPRIT HLDGS

14.26

-1.383126

1913255

TENCENT HOLDINGS

-0.4210526

5371536

HANG LUNG PROPER

22.15

-1.116071

4010783

TINGYI HLDG CO

SINO LAND CO

VOLUME

CATHAY PAC AIR

15.42

-2.896725

3754527

HANG SENG BK

122

0.5770816

1246035

WANT WANT CHINA

11.16

6.48855

33817962

CHEUNG KONG

117.4

0.6861063

3952179

HENDERSON LAND D

42.5

-0.4683841

1118845

WHARF HLDG

54.55

-1.356239

3566847

CHINA COAL ENE-H

3.92

-3.921569

47529748

HENGAN INTL

82.3

-1.848539

3673349

CHINA CONST BA-H

5.36

-1.289134

223245232

15.94

-0.1253133

11250969

CHINA LIFE INS-H

21.5

-1.376147

20190307

CHINA MERCHANT

26.65

-0.5597015

1434438

CHINA MOBILE

HONG KG CHINA GS HONG KONG EXCHNG

123.2

-0.6451613

1603564

HSBC HLDGS PLC

81.35

0.4320988

17349305

73.05

-1.217039

21987104

HUTCHISON WHAMPO

102.3

-0.195122

8204112

CHINA OVERSEAS

21.7

-2.690583

31096250

IND & COMM BK-H

4.76

-1.244813

229208297

CHINA PETROLEU-H

5.95

-1.162791

62011280

LI & FUNG LTD

10.6

-0.9345794

10121407

CHINA RES ENTERP

23.25

-1.483051

1708366

MTR CORP

27.2

-1.627486

MOVERS

22300

INDEX 22165.53 HIGH

22297.7

2849099

LOW

21623.79

CHINA RES LAND

18.86

-1.565762

6702586

NEW WORLD DEV

9.62

-1.028807

6277652

52W (H) 24111.55078

CHINA RES POWER

18.96

1.935484

5436225

PETROCHINA CO-H

7.81

-1.63728

73135461

(L) 19426.35938

CHINA SHENHUA-H

20.75

-2.810304

9297773

PING AN INSURA-H

63.7

-1.086957

9668632

21620

11-February

13-February

business daily 15 15

February 14,19, 2014 Friday April 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The Star Malaysia’s government is upbeat on private investment outlook in Malaysia this year, which is considered as one of the key drivers of the country’s economic growth, amid moderate global economic recovery. “We are bullish on private investment, moving forward,” said Minister in the Prime Minister’s Department, Datuk Seri Idris Jala. Bank Negara announced that growth in private investment expanded 16.5 percent in the fourth quarter last year compared with 15.2 percent in the third quarter, on account of higher capital spending in the services and manufacturing sectors.

China Daily Antitrust authorities are expected to launch more investigations this year in dozens of industries after expanding their teams nationwide, insiders have said. Huang Yong, deputy head of the expert advisory group of the State Council’s anti-monopoly committee, told China Daily that more investigations will be in the pipeline after new hands are added to price supervision offices. “The shortage of personnel is believed to be a major difficulty local price supervision offices face,” said Mr Huang, also a professor at the University of International Business and Economics.

Economic Times India said it was investigating U.S. policies supporting solar panel makers, the latest move in an escalating row over renewable energy that has worsened already strained ties between the two countries. Washington said on February 10 it was filing a second case at the World Trade Organisation over the domestic content requirements in India’s solar programme, which aims to ease chronic energy shortages in Asia’s third-largest economy. Indian Trade Secretary Rajeev Kher said India was also probing possible dumping of solar equipment as well as China and a few other countries.

The Age Australia’s jobless rate has shot up to 6 percent, its highest level in more than a decade, as 3,700 jobs were removed from the economy, official figures show. There were 7,100 fulltime positions lost and 3,400 part-time jobs added, the Bureau of Statistics data for January showed. The participation rate remained stable at 64.5 percent. “There’s no spinning it, Australia’s labour market is weak,” Moody’s Analytics associate economist Katrina Ell said. “Businesses are not confident in future economic conditions so are trimming jobs and working their existing staff harder.”

Market failure and political failure Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

arkets can fail. But, as has been demonstrated in areas like air pollution, traffic congestion, spectrum allocation, and tobacco consumption, market mechanisms are often the best way for governments to address such failures. So why are such mechanisms now in retreat? Consider markets for emissions allowances, in which firms that can cheaply cut air pollution trade with those that cannot. A decade ago, the idea that such markets could achieve desired environmental goals at relatively low cost was widely recognised and implemented. Today, however, politics is killing “cap and trade”. In the United States, the highly successful cap-and-trade system for sulphur-dioxide emissions has effectively vanished. In Europe, the Emissions Trading System (ETS), the world’s largest market for carbon allowances, has become increasingly irrelevant as well. On both sides of the Atlantic, market-oriented environmental regulation has in effect been superseded over the last five years by older “commandand-control” approaches, by which the government dictates who should use which technologies, in what amounts, to reduce which emissions. Cap and trade was originally supposed to be a Republican idea in the U.S.: its backers were those who considered themselves pro-market, not those who considered themselves pro-regulation. Most environmental organisations initially opposed it, with many believing it immoral for corporations to be able to pay for the right to pollute. Indeed, it was Ronald Reagan’s administration that pioneered

the use of cap and trade to phase out leaded gasoline in the 1980’s. George H. W. Bush’s administration used it to reduce SO2 emissions from power plants in the 1990’s, and his son’s administration sought to use it to reduce SO2 and other emissions further in the 2000’s.

Policy dismay The problem is not that cap and trade is an ivory-tower theory that cannot work in the real world; on the contrary, its performance surpassed expectations.

In general, the best government interventions target failures precisely while letting market forces do the rest more efficiently than bureaucrats can

In the 1980’s, it enabled lead to be phased out more rapidly than predicted and at an estimated annual savings of US$250 million relative to the command-and-control approach. Similarly, emissions of SO2 were curbed at a much lower cost than even capand-trade proponents had predicted before 1995.

As recently as 2008, the Republican candidate for U.S. president, Senator John McCain, had sponsored legislative proposals to use cap and trade to address emissions of carbon dioxide and other greenhouse gases. But Republican politicians now seem to have forgotten that this approach was once their policy. In 2009, they worked to defeat climatechange legislation by relying on anti-regulation rhetoric that demonised their own creation. This left only less marketfriendly alternatives – especially after court cases upheld the validity of the 1970 Clean Air Act. Though such alternatives are less efficient, they are again the operative regime. Likewise, the European Union adopted the ETS in 2003 as a cost-effective way to achieve the commitments it had made under the 1997 Kyoto Protocol. The ETS rapidly became the world’s largest system for putting a market price on environmental damage. But now it has been pushed aside by other kinds of regulation.

Expensive choices European directives require that 20 percent of energy must come from renewables by 2020. But, while policymakers have helped drive down the price of emissions permits in the ETS by mandating and subsidising renewable energy, the supply of permits has not been reduced. As a result, demand now falls short of any binding constraint. Indeed, the price of permits fell below three euros a ton in April 2013, rendering the emissions-trading market almost irrelevant. This, in turn, has encouraged greater reliance on highly polluting coal – the worst energy source, from the standpoint of global

warming. That would not have happened if the price mechanism still underpinned climate-change policy. Moreover, the EU’s renewables policy has also proved to be ruinously expensive. All of this should give pause to the European Council when it meets in March to consider how to extend the 2020 goals to 2030. There is a fascinating parallel between the evolution of American political attitudes toward market mechanisms in environmental regulation and Republican hostility to “Obamacare” (the 2010 Affordable Care Act). The core of Obamacare is an attempt to ensure that all Americans have health insurance, via the individual mandate. But it is a marketoriented programme insofar as health insurers and health-care providers remain private and compete against one other. This was originally a conservative approach. The two major alternatives to it are much further removed from the marketplace: a “single payer” system, as in Canada (or America’s Medicare system for the elderly), with the government providing health insurance, or “socialised medicine,” as in the United Kingdom (or the U.S. Veterans Health Administration), with the government providing health care directly. The approach taken by Obamacare was proposed in conservative think tanks such as the Heritage Foundation and enacted in Massachusetts by Republican Governor Mitt Romney. But, by the time Obama adopted it, it had become anathema to Republicans, forcing Romney, the party’s presidential candidate in 2012, to run against his own record.

Market failures The market failure in the case of air pollution is what economists call an “externality”: those who pollute do not bear the entire cost. The market failure in the case of health care is what economists call “adverse selection”: insurers may not provide insurance, especially to patients with pre-existing conditions, if they fear that healthy customers have already taken themselves out of the risk pool. But, again, government attempts to address market failures can themselves fail. In the case of the environment, command-andcontrol regulation is inefficient, discourages innovation, and can have unintended consequences (like Europe’s growing reliance on coal). In the case of health care, a national monopoly can forestall innovation and provide inadequate care with long waits. In general, the best government interventions target failures precisely – using cap and trade to put a price on air pollution, for example, or relying on the individual mandate to curtail adverse selection in health insurance – while letting market forces do the rest more efficiently than bureaucrats can. © Project Syndicate

16 16 business daily

February 14, 2014 Friday April 19, 2013

Closing Comcast to acquire Time Warner Cable

IMF signs off latest review of Portugal’s bailout

Comcast Corp agreed to acquire Time Warner Cable Inc for US$45.2 billion, combining the two largest U.S. cable companies in an all-stock transaction. Investors of New York-based Time Warner Cable will receive 2.875 new Comcast stock for each of their shares, the companies said in a joint statement yesterday. Based on Philadelphia-based Comcast’s closing price on Wednesday, the deal values each Time Warner Cable share at US$158.82, or about 17 percent more than last close. Comcast will extend his lead in the U.S. cable-TV market after trouncing Charter Communications Inc, which had courted Time Warner Cable since June.

The International Monetary Fund’s board said Portugal was on track with the conditions of its bailout programme, and gave the euro zone country about 910 million euros (US$1.2 billion). Portugal has so far gotten about 25 billion euros of the 26.9 billion euros the Fund pledged over three years to help Lisbon deal with a debt crisis, the IMF said. Portugal plans to exit from its international bailout this June, just as its economy is expected to post the first year of growth since 2010. The biggest threats to exiting the loan programme are potential decisions by the constitutional court that could challenge austerity measures required under the bailout.

Melco Crown announces special dividend Adjusted EBITDA up 49 pct in Q4, while net revenue rises 27 pct Michael Grimes

michael.grimes@macaubusinessdaily.com

asino firm Melco Crown Entertainment Ltd is to pay a special dividend to shareholders totalling US$191.2 million (1.53 billion patacas) it will also introduce a new recurring dividend policy. The first move will be put to all shareholders and the second to the company’s board for approval on February 25. “We believe our capital management strategy balances the key objectives of pursuing growth opportunities while returning excess capital to shareholders, thereby maximising long term shareholder value,” stated MCE’s co-chairman Lawrence Ho Yau Lung during the firm’s fourth quarter 2013 earnings call yesterday evening. Geoffrey Davis, MCE’s chief financial officer, added the dividend announcements were evidence of a “proactive approach” to managing the firm’s balance sheet and

a “strong commitment” to redistributing capital that was surplus to the business’s needs. MCE reported net revenue for the fourth quarter of approximately US$1.39 billion – an increase of around 27 percent from the US$1.10 billion generated in the comparable period in 2012.

The company said the increase was mainly due to “improved group-wide revenues across all gaming segments, particularly in the mass-market table games segment”. Adjusted EBITDA – earnings before interest, taxation, depreciation and amortisation – reached US$369.0 million for the

MCE’s City of Dreams, Cotai

Greece jobless rate hits new record

fourth quarter, a 49 percent year-on-year improvement on the US$247.5 million EBITDA recorded in the fourth quarter of 2012. “Importantly for Melco Crown Entertainment, the highly profitable mass market segment continues to deliver above-market growth, reaffirming our focus on this key segment,” stated Mr Ho.

he jobless rate in Greece reached a record high of 28 percent in November, according to newly released government figures. The rate increased from 27.7 percent in the previous month. For those under the age of 25, unemployment hit 61.4 percent. Harsh austerity measures have led the Greek economy to shrink by a quarter in four years. However, other economic indicators have suggested that there are signs of recovery. Slight growth is expected this year and the deficit now wiped out, apart from interest payments on the bailout. Greek unemployment is more than twice the average rate in the eurozone. The number of people out of work in the single currency bloc in

There was however some criticism from several analysts during the earnings call about the performance of Altira, MCE’s VIP-focused property at Taipa. Praveen Choudhary, managing director of Morgan Stanley in Hong Kong, described the EBITDA per table at Altira as “dramatically low” compared to its industry peers. Lawrence Ho replied: “On an apples to apples basis comparison is hard because Altira is in a standalone location. It is not in the peninsula cluster [of casinos] and also not in the Cotai cluster.” But he added: “It does have a strong junket following from the early days. I think the metric we continue to look at is the EBITDA generation per table and the VIP segment at Altira and use it to grow in the right direction. It’s a business we continue to monitor and improve on as well.”

BNP Paribas hit by US$1.1b provision

December was 19 million, with the jobless rate at 12 percent, according to official EU figures. Other economic figures such as retail sales, manufacturing activity and construction, have pointed to signs that Greece’s recession has bottomed out. However, Greece’s unemployment rate is expected to rise further in the first three months of 2014 as firms continue to restructure and cut jobs. “As expected, the labour market showed a lagging reaction to other positive signs in the economy, said economist Nikos Magginas at National Bank in Athens. “The increase in unemployment is also due to a loss of support from tourism which was seen in the previous months.” AFP

NP Paribas SA, France’s biggest listed bank, reported a 76 percent drop in quarterly profit yesterday after booking a US$1.1 billion litigation provision in case it faces fines for breach of U.S. sanctions. The setback is the latest in a banking industry struggling with a string of investigations and new regulations in the wake of the 2008 financial crisis. Credit Suisse Group AG and Deutsche Bank AG have both also announced hefty legal charges recently. BNP said it had set aside the funds after negotiations with the U.S. authorities, which have already imposed big fines on other banks for breaching sanctions against U.S. dollar payments involving Iran and other countries. The provision – which was also accompanied by restructuring costs

and writedowns on the acquisition value of BNP’s Italian unit BNL – offset a rise in group revenue and gross operating profit, dragging fourth-quarter net income down to 127 million euros (US$173 million) from 519 million a year earlier. Excluding the charge, gross operating income was up 2.4 percent at 2.7 billion euros. BNP proposed a 2013 dividend of 1.50 euros a share, unchanged from 2012, which Citigroup analyst Kinner Lakhani said was below expectations. “We expect modest low single-digit consensus downgrades,” Mr Lakhani said in a note to clients, referring to future profit expectations and noting that fourth-quarter earnings were also held back by costs and loan-loss provisions. Reuters