Year II
Number 500 Thursday March 20, 2014
Publisher: Paulo A. Azevedo
MOP 6.00
Breath of fresh air
business daily 1
Friday April 19, 2013
W
hite smoke has finally wafted out of the long and have floor to ceiling separation from the remaining gaming meetings between government and gaming areas. Trade unions are sceptical, while some in the industry operators. And an agreement has been reached: say it is the “less bad” of the options on the table. smoking lounges without gaming, and private smoking rooms Pages 6 & 7 on the gaming floor as long as they are independently ventilated
Sweet refund
www.macaubusinessdaily.com
Galaxy on a roll Galaxy Entertainment Group Ltd announced yesterday a solid 36 percent income rise in 2013 to HK$10.1 billion, with revenue up by 16 percent to HK$66 billion. Results, however, missed estimates which led to yesterday’s drop in Hong Kong trading. The casino operator announced the first payout of a special dividend. Page 3
Credit crunch casualties Mainland investors are selling luxury property in Hong Kong for less than they purchased. All because of the credit tightening imposed by mainland authorities. Macau, however, marches to a different drum, say estate agents.
The government will refund 100,000 taxpayers to the tune of 390 million patacas. The refunds intend to lessen the financial burden on middleincome earners. Page 4
Brought to you by
HSI - Movers March 19
Name
%Day
China Merchants H
3.84
Want Want China H
2.83
Cathay Pacific Airw
2.41
Hutchison Whampoa
2.06
china shenhua en
1.82
Tingyi Cayman Isl
-1.17
HK & China Gas
-1.33
Tencent Holdings
-1.82
Galaxy Entert
-2.83
China Mengniu
-3.68
Source: Bloomberg
I SSN 2226-8294
Page
2
Brought to you by
Pan-democrats want urban details Page 5
Not a good day for Asian stocks
China Mobile profits go south Page 9
Page 10
2014-3-20
2014-3-21
2014-3-22
20˚ 25˚
15˚ 20˚
15˚ 20˚
22 business daily
March 20, 2014 Friday April 19, 2013
Macau
Selling in Hong Kong, keeping in Macau Estate agents see no sell-off of high-end flats in Macau as Hong Kong have been reporting Stephanie Lai
Photo by Luís Almoster
sw.lai@macaubusinessdaily.com
E
state agents expect no selloff in Macau like the recent sell-off in Hong Kong of big, expensive flats owned by mainland investors because, they say, Macau’s housing market is different from Hong Kong’s. The Money.163.com news website has reported that at least 12 high-end flats in Hong Kong have been sold so far this month. Most were sold by investors from the mainland, who sold them at a loss. In one case a mainland investor sold a flat with a floor area of 100 square metres in the Imperial Cullinan housing complex in Kowloon for 20 percent less than the HK$22 million (US$2.83 million) he paid for it three years ago. The Chinese-language newspaper Beijing Business Today has reported that mainland investors are also selling off high-end homes in the mainland cities of Hangzhou and Nanjing. The chief executive of Midland Realty (Macau) Ltd, Ronald Cheung Yat Fai, said: “Cases of this sort of selling have been occurring in Hong Kong since the end of last year, and the sales are most commonly of luxury flats in West Kowloon or Mid-levels.” Mr Cheung explained: “The investors are in urgent need of cash, as the tightening of credit imposed by the mainland authorities to rein in excessive borrowing is putting them under financial strain.” At least 10 mainland cities took
20%
Reported accepted loss by mainland property sellers
measures to rein in their property markets at the end of last year. The People’s Bank of China says mainland aggregate financing was 938.7 billion yuan (MOP1.21 trillion or US$151.48 billion) in February. The median estimate of mainland aggregate financing in February given by analysts surveyed by the Bloomberg news agency had been 1.31 trillion yuan.
Getting out “Also, there is a downward trend in the second-hand home market in Hong Kong due to the effect of strict measures to curb property prices, and an increase in the supply of housing,” Mr Cheung said. So mainland investors were getting out of the market there, he said. “They do not wish to have Hong Kong property on their hands.” Midland Realty Macau and the Macau arms the Ricacorp and Jones Lang LaSalle estate agencies told Business Daily that they had seen no sign of mainland investors in Macau selling off high-end flats. “A major reason for that is that Macau’s market is not like Hong Kong’s,” said Jones Lang LaSalle (Macau) Ltd’s head of residential sales, Jeff Wong Chi Wai. “For all types of residence here, we see that only about 2 percent of buyers are non-locals. Even before the imposition of the special stamp duty on housing sales here, the proportion of non-local buyers in the city was only around 10 percent, which is much less than is the case in Hong Kong,” Wong said. “We’ve not yet seen any cases of luxury flats here being sold off,” he said. “Macau has sufficient liquidity, and the purchasing power of local buyers remains strong. Unless there is a reversal of the robust economic trend we see now, I don’t see that a sell-off will occur here.”
business daily 33
March 2014 Friday 20, April 19, 2013
Macau
Galaxy announces bullish results for 2013 The casino operator has also announced the first payout of a special dividend resulting from the group’s strong cash flow this year Stephanie Lai
sw.lai@macaubusinessdaily.com
C
asino operator Galaxy Entertainment Group Ltd has reported a record figure for its revenue and earnings for 2013, and declared a special dividend. Galaxy Entertainment saw its net income rise 36 percent to HK$10.1 billion in 2013, with revenue up 16 percent to HK$66 billion, the company said in a filing to the Hong Kong stock exchange yesterday. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to HK$12.6 billion, an increase of 28 percent for 2013. The group has also posted a net profit attributable to shareholders at HK$10.1 billion, which grew by 36 percent for the year; and 41 percent on an adjusted basis to HK$10.4 billion, thanks to more Chinese visitors throughout the year. The revenue and earnings figure has “achieved historic highs” as all parts of the business performed ahead of last year, Galaxy Entertainment’s chairman Lui Che Woo remarked in a press briefing for the results yesterday.
Galaxy “willing to do more” G
alaxy Entertainment Group Ltd, a major casino operator here, is willing to take up more social responsibility, according to its vice-chairman Francis Lui Yiu Tung, in response to the government’s call. He told a press conference yesterday that they “are willing to consider doing more” for society. His comment follows Secretary for Economy and Finance Francis Tam Pak Yuen’s remark earlier this month that it is “reasonable” for society to require casinos to promote more locals and better support local businesses.
However, Galaxy Entertainment fell the most in more than a week in Hong Kong after reporting earnings that missed estimates. Galaxy dropped 2.8 percent to close at HK$72 in Hong Kong trading, the most since March 10, while the benchmark Hang Seng Index was little changed. Nevertheless, the stock advanced 6.8 percent this year, beating the 7.5 percent loss on the benchmark Hang Seng Index. Fourth-quarter adjusted EBIDTA of HK$3.5 billion is up 41 percent year-on-year but still lagged the HK$3.67 billion average estimates compiled by nine analysts for Bloomberg. “The fourth-quarter result was a slight miss mainly due to an unfavourable luck factor,” D.S. Kim, a Hong Kong-based analyst at BNP Paribas Securities Asia Ltd., told Bloomberg yesterday. “It’s temporary and nothing structural.” VIP turnover, or bets by highstake gamblers, rose 11 percent to HK$774.1 billion in 2013. Mass gaming revenue climbed 44 percent to HK$10.5 billion in the period. Elec-
The government will start talks on the renewal of the city’s six gaming concessions in 2015-16. Mr Lui said he “is not worried” about the renewal despite media reports that the government may shorten the renewal period from 20 years to five years. His company’s continuous investments here is the proof that they are not anxious, he asserted. Galaxy aims to spend as much as HK$60 billion for the third and fourth phases of its Cotai operation, which will start construction by the end of this year and begin operating from 2016 through 2018. Refitting works for the Grand Waldo complex opposite Galaxy Macau resort are under way and details of the Waldo plan will be revealed in the middle of the year, Galaxy said in a statement. T.L.
tronic gaming revenue was HK$1.5 billion, up 25 percent year-on-year. VIP turnover at StarWorld Macau rose 5 percent, while mass gaming revenue jumped 59 percent in 2013. For StarWorld Macau, the full year adjusted EBITDA for 2013 was HK$3.7 billion, an increase of almost 14 percent; the fourth quarter EBITDA posted HK$1 billion, up 60 percent.
Special dividend Galaxy Entertainment has also declared a special dividend at HK$0.70 per share, payable on or about July 31 this year. The group has declared the payment of a special dividend for the first time since listing as a casino stock on the Hong Kong stock exchange in 2005. “I’m pleased to announce that Galaxy Entertainment Group will pay a special dividend. We continually evaluate our capital management strategy as we consider our robust development plans,” said Mr Lui Che Woo. “We have recently reinvested in the Group by repaying our debt as well as generating significant cash flow from our operations and continue to invest in our development pipeline. Further, we have confidence in the future of Macau and believe that we have the capacity to also pay this special dividend,” he added. Galaxy Entertainment has paid down nearly its entire outstanding debt load; at the end of 2013, the company had only HK$450 million in debt while the company had HK$10.3 billion in cash on hand plus a net cash position of HK$9.9 billion, with zero gearing. “The company announced a special dividend of HK$0.70 per share. We would not be surprised to see this turn into a modest regular dividend going forward,” research house Union Gaming wrote in a note on Galaxy’s result yesterday. However, Francis Lui Yiu Tung, vice-chairman of Galaxy Entertainment and son of Lui Che Woo, told media yesterday that the group would remain cautious in its dividend payout policy.
Francis Lui also stressed that the group currently had no plan for any financing and share placement, saying that its cash flow and financial status could cope with the investment input for its Cotai expansion and the resort project on Hengqin Island. With Bloomberg News
Galaxy opens 10-bil yuan Hengqin project in 2016 Galaxy Entertainment Group Ltd aims to open part of its 10-billionyuan (US$1.6 billion) resort project on Hengqin Island by 2016, vicechairman Francis Lui Yiu Tung said. The gaming operator said in a press release yesterday it had “entered into a framework agreement” with the Hengqin administration to develop a resort on a plot of land occupying 2.7 square kilometres. Mr Lui told a press conference on the annual results yesterday that project construction can start this year after submitting more documents. It will “strive” to open part of the project in 2016 when the Hong KongZhuhai-Macau bridge is also expected to become operational, he said. Union Gaming Research Macau Ltd said in a research note yesterday it expects the project to supply “several thousand additional hotel rooms”. “We believe the true power of product on Hengqin will be to drive incremental visitation to Galaxy’s Macau properties,” the note said, as well as consolidating its leading supply position in the region in terms of hotel rooms and table games. Mr Lui stressed Macau will be its “major base”, while the company will also explore overseas development opportunities. His father, Galaxy chairman Lui Che Woo, told Bloomberg News in January that Japan and Taiwan are their potential targets. T.L.
44 business daily
March 20, 2014 Friday April 19, 2013
Macau Brands
Trends
Finest Portuguese Raquel Dias newsdesk@macaubusinessdaily.com
Y
ou don’t have to be Portuguese to know about Bacalhao and egg tarts. If you’ve been in town long enough, you might even have switched to Portuguese wine and worship a good glass of Port. What you probably don’t know is that Portugal has been exporting some of its finer products to Hong Kong. Yes that’s right; there are Portuguese luxury brands as well. I.F.C’s Lane Crawford arguably the most stylish place to shop in our neighbouring city - has opened a Home Place. The new area aspires to house the works of the best designers (rather than well known brands) in home décor. A quick browse through the place enables the customer to find Vista Alegre porcelain, paired with Cutipol cutlery and even one or two pieces of Atlantis Crystal. And Vista Alegre has been positioning itself in the international market well. Just last year the 19th brand to pair with French designer Christian Lacroix launched a comprehensive line of modern tableware. In the shower department you will find handmade Portuguese soap - the traditional Ach Brito, also known as Claus Porto – and at HK$300 a bar, these are pricier than Chanel soap. If Portuguese brands are hitting Lane Crawford shops this means you cannot go wrong in buying them. Quality, sophistication and originality are the three guarantees of the outlet. It seems that Portugal finally understands that exporting products is hardly as rewarding as exporting brands, a trend that other European countries embarked upon centuries ago.
Middle-income taxpayers to get refund The government will return to 100,000 taxpayers some 390 million patacas worth of tax they paid for 2012 Tony Lai
tony.lai@macaubusinessdaily.com
T
he government will begin this month giving out refunds of up to 12,000 patacas (US$1,500) each to about 30 percent of taxpayers. A Financial Services Bureau official said yesterday that the government would give back an estimated total of 390 million patacas in salaries tax paid for 2012. The bureau’s deputy director, Iong Kong Leong, told a press conference that Chief Executive Fernando Chui Sai On had said in his Policy Address for 2013 that taxpayers would be refunded up to 60 percent of their salaries tax for 2012, with a view to lessening the financial burden on middle-income earners. It will be the first refund of salaries tax since 1999. Salaries tax is levied on the incomes of residents, including bonuses
and allowances, if they amount to over 144,000 patacas (US$18,006) a year. The Financial Services Bureau says the government will refund 60 percent of the salaries tax paid for 2012, or up to 12,000 patacas per taxpayer. “They can get a full refund of 12,000 patacas if only their annual salaries exceeded some 570,000 patacas,” Mr Iong said. He estimates that about 100,000 taxpayers will get refunds. Some 300,000 people paid salaries tax for 2012. The government is to give back about one-third of the 1.2 billion patacas in salaries tax it received for 2012. Official data show the median earnings of residents in 2012 were
13,000 patacas a month, or 156,000 patacas a year. Mr Iong said the government would begin refunding at the end of this month about 68 percent of the taxpayers eligible. He said the remainder, most of them civil servants, would have the money put in their bank accounts next month. Mr Chui said in his Policy Address for 2014, delivered in November, that the government would also give refunds of salaries tax paid for last year. Mr Iong said he did not immediately know how many taxpayers would be eligible for refunds of salaries tax they paid for last year, or when they would get the money. He said his bureau would be certain of the amount of money involved only in August.
Driving classes fine-tune fees Increase of 10 pct due to increase of commodity prices, legislator Cynthia Wong
T
he cost of driving classes will increase an average 10% starting from next month. Wilcox Lai, president of the Car Driving Instructors Association, told Business Daily that “the fine-tuning is definitely not related to the upcoming Continuing Education Development Plan that will be launched. The main factors prompting the current price
readjustment are the shortage of driving instructors and the constant increase in operating expenses, such as vehicle maintenance costs, fuel and driving school rentals.” “The increase can be understood because inflation is influencing commodity prices in Macau,” said Au Kam San, a member of the Legislative Assembly of Macau, although
the Consumer Council should look further into the issue, he added. According to an Education and Youth Affairs Bureau spokesperson, the total budget for the second phase of the plan will be 700 million patacas, funding Macau citizens aged 15 or above who would be entitled to a maximum 6,000 patacas in the next three years. During the first phase of the plan, said Mr. Lai, there was about 10% increase in applications for the driving licence examination.
business daily 55
March 2014 Friday 20, April 19, 2013
Macau
Urban plan shrouded in fog Pan-democrat group pressures government to release details of the city’s urban planning programme, while authorities release names of urban committee members Pierre-François Métayer
pf.metayer@macaubusinessdaily.com
Artificial island for Hong Kong bridge
T
he New Macau Association complained yesterday about the government’s “lack of information” on the Urban Planning law which came into force this month. Jason Chao Teng Hei, president of the New Macau Association, lamented that the government has yet to release details of the urban planning committee and the master plan covering the whole city. The Urban Planning Committee is a government-appointed committee that proffers opinions on land usage and urban planning in Macau. “[But] there’s no information about the members of the urban planning committee and no public consultation about the background of those members”, Mr Chao told Business Daily after delivering a petition to the government yesterday. “Citizens should have the right to know who they [the committee members] are,” he said. “Professionals and environmental specialists should be appointed.” He criticised the government’s
T
reluctance to inform the public. On the same day, however, the government revealed the names of the 35-strong urban planning committee in its Official Gazette. According to a dispatch of the chief executive dated March 12, the committee includes 27 members of society, while eight additional members are government officials from departments like the Land, Public Works and Transport Bureau, the Macau Government Tourist Office
and the Cultural Affairs Bureau. Mr Chao’s group also urged the government to draw up an urban plan for the city’s five new reclaimed land plots by the fourth quarter of this year. The government previously said it may take several years to draw up a master urban plan for the city and subsequent plans for specific areas. But it has said it will prioritise the laying out of the master plan and plans for specific areas like the five new reclaimed plots.
he bridge linking Macau to Hong Kong and Zhuhai might accommodate another iconic feature: a resort comprising hotels, dining outlets and other traveller services built on an artificial island. However, this is just a possible final outcome of a HK$61.9 million study gauging the real chances of realising such an enormous project. According to information provided by Eddie Luk, a journalist with Hong Kong-based The Standard, the 130-hectare island will be just a stone’s throw from Chek Lap Kok Airport in Hong Kong. The spokesperson providing information to Mr. Luk claimed that the project would produce synergy between the airport, AsiaWorld-Expo and Lantau island. The provided information indicates that the study will run from August this year to 2016 and will focus on feasibility, scope and scale of the project. The 55-kilometre long bridge is slated to open in 2016.
66 business daily
March 20, 2014 Friday April 19, 2013
Macau
No cigar yet for smoking gamblers
The government likes the idea of smoking rooms in casinos, but the trade unions are sceptical and a complete ban on smoking is still on the cards Tony Lai
tony.lai@macaubusinessdaily.com
T
he government has accepted a proposal by the six gaming concessionaires that their casinos should have smoking rooms without gaming tables or slot machines, instead of smoking areas that take up half their gaming floors. Health Bureau director Lei Chin Ion says no schedule for changing to the new arrangement has been set. But he says the new arrangement will be tried out first in the 14 gaming establishments found last year to have had substandard air in their smoking areas. A source in the gaming industry told Business Daily that if the new arrangement worked well it might ward off the imposition next year of a ban on smoking anywhere in casinos. But casino employees have expressed concern about the substitution of smoking rooms for smoking areas, saying smoking should be banned everywhere in their workplaces. The Chinese-language Macau Daily News quoted Mr Lei as saying yesterday that the new arrangement would ban smoking on mass-market gaming floors, but allow it in smoking rooms – “similar to the smoking rooms at airports” – which would not contain gaming tables or slot machines. The casinos also proposed in December that VIP gaming rooms be allowed to have smoking areas
containing tables and slots machines, as long as the smoking areas take up no more than half the floor space. At present smoking areas are allowed to take up no more than half the floor space of mass-market gaming floors and VIP gaming
KEY POINTS Smoking ban in mass floor except designated rooms VIP rooms still enjoy smoking area up to 50 percent New change can replace full smoking ban: source Unions already vow concerns and worries No Impact on gaming revenue here
rooms alike. The present arrangement has been criticised for failing to improve the quality of the air in casinos.
Least bad The Macau Daily News quoted Mr Lei as saying of the new arrangement: “Apart from improving the air quality in gaming venues, it could reduce the exposure of casino employees and players to tobacco smoke, and so benefit their health.” Our source in the gaming industry said the new arrangement was “the least bad” option. Our source said the gaming industry had an agreement with Secretary for Social Affairs and Culture Cheong U and the Health Bureau that if the new arrangement worked well it would be allowed to continue after next year. The government has said it will review next year the arrangement that allows smoking in designated areas of casinos, and the review may result in a ban on smoking anywhere in casinos. Legislative Assembly member Ella Lei Cheng I of the Macau Federation of Trade Unions says the new arrangement “still has many loopholes”. “The first problem is: why will the government still allow smoking
Apart from improving the air quality in the gaming venues, [this new proposal] can reduce the tobacco exposure to casino employees and participants, more beneficial for their health. Lei Chin Ion, director of Health Bureau
in VIP rooms?” Ms Lei said. “The smoke can still somehow seep from VIP rooms onto the mass-market gaming floor,” she said. “If places like airport smoking rooms are set up, the government
business daily 77
March 2014 Friday 20, April 19, 2013
Macau should ban smoking in both VIP rooms and on mass-market gaming floors. Otherwise, I don’t see there is much difference from simply reducing the size of smoking areas,” she said. “One of the aims of the casino tobacco ban is to better protect the health of employees, but the latest change will not take care of employees staffing VIP rooms.”
Ventilation problems The president of the Forefront of Macau Gaming trade union, Ieong Man Teng, said: “The only solution now is a full smoking ban in gaming venues.” He said of the new arrangement: “I am worried that this will push gamblers from the mass-market gaming floors into the VIP rooms to smoke.” The casino operators have said they will consider requiring any gambler wishing to play in a VIP room to belong to a club, to prevent smokers crowding into VIP rooms. “But there are already similar arrangements which cannot stop gamblers moving from mass-market gaming floors into VIP rooms,” Mr Ieong said. “I am also doubtful about whether older casinos can set up smoking rooms with adequate ventilation, as they have had problems adequately ventilating their smoking areas.” The chief executive of casino operator SJM Holdings Ltd, Ambrose So Shu Fai, said last year that some of his company’s gaming establishments found it hard to meet the standards for air quality because their facilities were old. Last year 14 gaming establishments failed a second round of tests of the quality of the air in their smoking areas. Eight of the 14 are run under the SJM Holdings gaming licence. The Health Bureau said last year it would order the 14 erring casinos and slot machine parlours to reduce the size of their smoking areas by 10 percent. But the Macau Daily News yesterday quoted the bureau’s director as saying the 14 establishments would instead be the first to test the substitution of smoking rooms for smoking areas.
No suffering Mr Lei said he hoped the new arrangement could be tested this year. He said the government was drafting guidelines for smoking rooms. The Macau Daily News did not say when the new arrangement might be put into effect in other gaming establishments. We asked the Health Bureau for
The only solution now is a full smoking ban in gaming venues. Ieong Man Teng, president of Forefront of Macau Gaming
more information but we had received no reply by the time we went to press. Melco Crown Entertainment replied to Business Daily saying it is “glad that the Macau SAR Government accepted the joint proposal from the Macau Gaming Operators”. The company added “we will continue to support the Macau SAR Government in implementing this proposal to help accelerate the growth, prosperity and sustainable development of Macau and, at the same time, guarantee efficiently the protection of our workers and patrons’ health”. SJM Holdings, Galaxy Entertainment Group Ltd, operators of some of the 14 erring casinos and slot machine parlours – failed to reply by the time we went to press. Union Gaming Research Macau Ltd commented on the prospect of smoking being banned anywhere on mass-market gaming floors. “We do not expect Macau’s gross gaming revenue to suffer,” says a research note it issued yesterday. The note says that the ban on smoking in casinos except in designated smoking areas has had no effect on the performance of the casinos since it was imposed last year. “We believe that even under the scenario where mass-market customers can only smoke in designated (and adjacent) smoking rooms, the impact on gross gaming revenue growth should be minimal (and perhaps not even measurable),” the note says. Official data show Macau had 360.75 billion patacas (US$45.11 billion) of gaming revenue last year, 18.6 percent more than the year before. “We, the employees, have conveyed our opinions numerous times to the Health Bureau since last year, but the government has not responded,” said Mr Ieong, the trade unionist. “The government immediately responds to the operators’ suggestions, though.”
Amax plans Pacific Island casino operation M
acau junket investor Amax Holdings Ltd intends to purchase major interests in a company to operate a gaming business in the Republic of Vanuatu, the junket has informed Hong Kong Stock Exchange. The company, linked to veteran local junket operator Ng Man Sun, said in a filing it had “entered into a non-legally binding letter of intent” to buy a 60 percent stake in a firm called Forenzia Ltd on March 18.
Forenzia held “an interactive gaming licence from the Ministry of Finance and Economic Development of the Republic of Vanuatu for a term of 15 years to conduct interactive gaming business”, the filing said. The filing did not disclose the amount of the possible transaction. In addition to the Pacific island off the east coast of Australia, Amax also revealed in previous filings last year that it plans to pursue running a casino in the Turkish Republic of Northern Cyprus in the Mediterranean.
88 business daily
March 20, 2014 Friday April 19, 2013
Macau
Expensive leased lines affect 4G development: operator
T
he high charges that the telecommunication operators have to pay for leased line services will affect the local development of the 4G standard mobile network, an operator laments. Samuel Chan, assistant general manager of China Telecom (Macau) Co Ltd, told media yesterday: “The industry has complained that the charges for the lease lines are high for a while, and that the service has not been stable recently.” Companies here, like China Telecom, have to use the leased lines – controlled by Companhia de Telecomunicações de Macau SARL (CTM) - to run their operations. CTM
crime
Telephone terror
holds a monopoly on the city’s fixed landline network. The development of the 4G standard network requires more from the leased line services, he said, adding he is “worried” about the future prospects of local 4G when costs are prohibitive for operators renting the leased lines. CTM reduced the leased line price for both international and local markets last year by up to 42 percent. The company has constantly denied it over-charges other operators. The government says it will introduce a proposal for issuing 4G mobile licences this year.
market watch
T.L.
Since the beginning of this week, three similar “pranks” have been reported Pierre-François Métayer
pf.metayer@macaubusinessdaily.com
E
verything started last Monday, when a woman received a call on her home line. After the usual “Wai?”, a man pretending to be her son told her he had been kidnapped – After speaking these words to the ‘mother’, the suspect passed the phone to another person that told her that her son owed money and that if she wanted to see him again she must deposit 250,000 patacas in a certain account. After hanging up,
she called her son’s cell phone to discover that he was alright and that nothing untoward had happened. On Tuesday, the same type of call was reported. This time there was a slight change in the script: A grandmother answered the phone and the “prankster”, pretending to be her son, said that he had been assaulted by two men. Immediately after, his accomplice grabbed the phone and explained to the elderly lady that her son’s friend had borrowed money from a fund company but that he had “disappeared” and her son had to reimburse 260,000 patacas. The woman panicked and gave her daughter’s number to the suspect. He called the daughter and told her that because her husband had raped his wife, he wanted 260,000 patacas compensation. The victim confronted her husband to find out that everything was a lie. Yesterday, a retired 66-year old woman, unmarried and with no children, received a call on her land line and heard a voice shouting for help. “Dad, dad, help!!” A second accomplice quickly came on the line and said, “If you want to see your son alive, you must pay 300,000 patacas”. Since she didn’t have a son, she simply hung up the phone and reported the call to the police. According to Judiciary Police, so far it is not possible to say if these cases are related or not. They are being investigated.
Robert J. DeSalvio joins Wynn UK creative
W
ynn Resorts announced it has hired Robert J. DeSalvio to assist with the company’s development activities. An experienced resort developer and operator, Mr. DeSalvio will primarily focus on the company’s proposed resort in Everett, Massachusetts. The company plans to build a US$1.6 billion resort, featuring a five-star hotel and spa, luxury shopping and dining esplanade, winter garden and casino. Mr. DeSalvio has held executive positions in sales, marketing, resort operations and strategic planning. He served as an Executive Vice President for both Sands Atlantic City and Foxwoods Resort Casino. Most recently, Mr. DeSalvio was President of Sands Casino Resort Bethlehem in Bethlehem, Pennsylvania.
FUND RAISING FOR STRAY ANIMALS Anima will launch in April and May its first fund raising activity for 2014 for supporting stray animals. This fund raising activity will coincide with the beginning of operations of its mobile clinic, which’s major function is, on a regular and systematic basis, to inventory and take care of the animals that live in streets, including neutering, feeding and vet care. The head of the campaign will be Gina Rangel, Anima founder member. All documents must have the logo of the organization and all volunteers involved should be properly authorized for such activity. Albano Martins, President
companies have designs on SARs
M
anchester Evening News reports that several creative companies from the northern English city have signed up for the UK Trade & Investment (UKTI) business trip to Macau and Hong Kong. Cornerhouse – Manchester’s epicentre of independent film and visual arts - will attend the event, as will fantasy and horror film specialist Grimm Up North. The trip, according to the source, will facilitate a meeting of minds between British creatives and Asia’s leading industry players. It will also provide the opportunity to tap directly
into business trends currently on the horizon. Hong Kong will host the Filmart premiere film event, a very interesting activity for the film sector’s professional agenda. Last year, UKTI Mission facilitated an agreement between the UK and China to create opportunities for companies willing to screen their films in China.
business daily 99
March 2014 Friday 20, April 19, 2013
Stocks Watch
Negative sentiment Asian stocks drop before Fed news as investors weigh earnings Jonathan Burgos
A
sian stocks fell, with the regional gauge retreating after yesterday posting its biggest advance in almost two weeks, as investors weighed company earnings and awaited the Federal Reserve’s policy statement. Uni-President China Holdings Ltd. slumped 7.9 percent in Hong Kong after the instant-noodle maker’s 2013 profit missed analyst projections. Country Garden Holdings Co. slumped by most since November 2008 after the Chinese developer’s chief financial officer resigned. Kingsoft Corp. jumped 8.7 percent to a record close after the computer-software maker posted earnings that beat estimates. Fanuc Corp. rose 3.2 percent in Tokyo after Credit Suisse Group AG said it’s a good time to buy the industrialrobot manufacturer’s shares. The MSCI Asia Pacific Index lost 0.2 percent in Hong Kong, after falling and rising as much as 0.4 percent earlier. The U.S. and Europe pledged more sanctions against Russia while President Vladimir Putin, pushing to annex Crimea, said his country didn’t intend to further split Ukraine. “Investors still remain highly cautious,” Matthew Sherwood, who helps manage about $25 billion as the Sydney-based head of investment markets research at Perpetual Ltd., said by phone. “Risk assets have recovered most of their lost ground since the Ukraine crisis was sparked a few weeks ago but there’s still a lot of volatility. The Fed will probably water down their forward guidance and keep U.S. interest rates low for at least another 18 months.”
Stimulus outlook The Fed will press on with cuts to its asset-purchase programme and switch to qualitative guidance for assessing interest rates, according to economists surveyed by Bloomberg. The FOMC will further scale back its bond-buying at the meeting, reducing purchases for the third time by $10 billion to a $55 billion monthly rate, according to the survey done March 14-17. China’s Shanghai Composite Index lost 0.2 percent, declining for the first time in three days, as the yuan weakened to near an 11-month low and money-market rates rose. “We are still seeking a bottom for the market,” Zhang Yanbing, an analyst at Zheshang Securities Co., said in Shanghai. “The economy is not doing well and it’s being exacerbated
by property debt problems. Yuan depreciation is adding to the negative sentiment.” South Korea’s Kospi index and Hong Kong’s Hang Seng Index slipped 0.1 percent. Singapore’s Straits Times Index dropped 0.4 percent, while Taiwan’s Taiex index slid 0.5 percent. Australia’s S&P/ASX 200 Index advanced 0.2 percent, while New Zealand’s NZX 50 Index increased 0.4 percent.
Ukraine standoff Russia cemented its claim to Crimea as Putin showed no sign of backing down in the standoff over Ukraine’s breakaway Black Sea region, prompting Western leaders to vow further sanctions this week. Leaders of Poland and Estonia, two of the countries on the front line of turmoil in Ukraine, told U.S. Vice President Joe Biden they want a more aggressive stance toward Russia. Biden is on a two-day trip to the region aimed at assuring North Atlantic Treaty Organization allies that the U.S. will support them against any attempt by Russia to encroach on their territory. Uni-President China sank 7.9 percent to HK$7.24 after reporting full-year net income of 916.4 million yuan (US$148 million), missing the average estimate of 966.8 million yuan by analysts tracked by Bloomberg.
Galaxy Drops Galaxy Entertainment Group Ltd. dropped 2.8 percent to HK$72 after the Macau casino operator reported fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, of HK$3.5 billion (US$451 million), lagging the HK$3.67 billion average of nine analyst estimates compiled by Bloomberg. Country Garden tumbled 12 percent to HK$2.85, the lowest close since September 2012, after saying CFO Estella Ng will resign April 30 for personal reasons. Among shares that rose, Kingsoft jumped 8.7 percent to a record close of HK$30.70. Chief Executive Officer Zhang Hongjiang said on Bloomberg Television that the company is loking for acquisitions after reporting fullyear profit of 670.7 million yuan. That compares with 432.6 million yuan a year ago and the average estimate of 630.4 million yuan. Bloomberg News
10 10 business daily
March 20, 2014 Friday April 19, 2013
Greater China
China Mobile profits decline Forecasts talk about 8.8 percent net income drop for the coming year
T
he company faces a triple whammy of apps, iPhone subsidies and regulations that likely will cost the world’s largest carrier as much as US$1.8 billion in profit this year. The state-run phone company is contending with falling income as customers flock to free messaging applications like Tencent Holdings Ltd.’s WeChat and buy Apple Inc. devices at a subsidized discount. The government also will impose a new telecommunications tax as part of an effort to lower prices and improve customer service. The headwinds come as China Mobile commits an estimated US$34.8 billion to capital expenditures, primarily to build a faster network for consumers who use smartphones to shop, watch videos and play games instead of just making calls. The carrier is on track to post an 8.8 percent decline in profit in the year ending December 31, according to analyst estimates compiled by Bloomberg. “There’s just no positive catalyst for China Mobile in the medium-term,” said Neil Juggins, a Hong Kong-based analyst at JI Asia Research Ltd. who rates the company neutral. “It’s hard to make a positive case to invest in China Mobile right now.”
Alibaba benefits Companies including Alibaba Group Holding Ltd., the nation’s biggest e-commerce company, and Youku Tudou Inc., owner of its biggest video websites, are benefiting as more Chinese go online to shop and find entertainment. Yet China’s carriers have to build the Internet infrastructure that gives consumers access to those sites. In the coming year, China Mobile is projected to report an 8.8 percent drop in net income to 114.2 billion yuan, according to the average of
subscribers as of January. To lure new high-end users into data plans, China Mobile in December reached agreement with Apple to offer the iPhone after six years of negotiations. Sales began at retail outlets on Jan. 17. China Mobile’s costs for subsidizing smartphones, including the iPhone, will rise at least 20 percent to 36 billion yuan this year from 30 billion yuan last year, estimates Juggins at JI Asia. It was becoming increasingly difficult for the carrier, which brought the mobile phone to rural China and the majority of its population, to not offer the iPhone.
Teddy bears
China Mobile NanoSIM card
23 analysts surveyed by Bloomberg. Costs to build a faster, fourth-generation network will increase China Mobile’s capital expenditures by 13 percent to 215.7 billion yuan this year, Wang Jinjin, a Hong Kongbased analyst with UBS AG, wrote in a March 11 report.
IPhone subsidies “The hardest challenge is yet to come,” Wang said. “We expect capex to raise, competition to increase, and margins to decline further. In short, incremental returns might not improve during the 4G era.” That’s not the only new expense for a company with about 772 million
It’s hard to make a positive case to invest in China Mobile right now Neil Juggins JI Asia Research analyst
As the last of the three state operators to sell the device, China Mobile’s share of the nation’s 1.24 billion wireless users was 62 percent at the end of January, down from about 75 percent when competitor China Unicom (Hong Kong) Ltd. introduced the iPhone in October 2009. China Mobile’s profit from subscriber data plans hasn’t kept pace with costs as Internet companies like Tencent use new business models to expand services that compete with traditional carriers. Tokyo-based Line Corp.’s free messaging app, which has more than 370 million subscribers, sells teddy bear icons and games with cute cookies and wicked witches to generate revenue. China Mobile earned more than 7 percent of its mobile service revenue, or more than 40 billion yuan, from traditional text messages last year, according to estimates from Wang at UBS. Premier Li Keqiang this month said China will impose a value-added tax on telecommunication services to replace an existing business levy. Bloomberg News
Textile jobs effort in Xinjiang One million people to work in Xinjiang’s textile industry by 2020
C
hina plans to more than double the number of people working in the textile industry in the far western region of Xinjiang to help maintain social stability by drawing people away from extremism, a state newspaper reported yesterday. Xinjiang, home to the Muslim Uighur people and strategically located on the borders of central Asia, has been beset by violence for years, blamed by the government on Islamist militants and separatists who want to establish an independent state called East Turkestan. Exiles and many rights groups though say the real cause of the unrest is China’s heavy-handed policies including restrictions on Islam and the Uighur people’s culture and language. The government strongly denies such accusations but it has begun to recognise the economic roots of some of the upheaval, especially underdevelopment and a lack of jobs in heavily Uighur areas like rural southern Xinjiang, and it has poured
money in to rectify the problem. In the last plan, the government wants to increase to one million people the number of people working in Xinjiang’s textile industry by 2020, up from the current 200,000, the official China Daily said. “Textiles is labour-intensive with a long production chain. The best option is to create a large number of jobs in southern Xinjiang,” Liang
US$10.17 billion extra funds into Xinjiang this year
Capital of Xinjiang, Urumqi
Yong, deputy head of a Xinjiang economic development body, told the newspaper. More than half of China’s cotton is grown in Xinjiang, much of it by a commercial arm of the country’s military. The government says young people with little education and few job prospects can be drawn to militancy. “High school graduates who are under 28 and unemployed are much more easily manipulated by reli-
gious extremism,” the paper quoted Guilistan Azez, the deputy headmaster of a school in the old Silk Road city of Kashgar, as saying. The southern Xinjiang city of Aksu will be one of the focus hubs for textile production, the report added. The government said last month it would pump 61.66 billion yuan (US$10.17 billion) in extra funds into Xinjiang this year to improve housing and employment. Reuters
business daily 11 11
March 2014 Friday 20, April 19, 2013
Greater China Nu Skin stop promotion activities while investigated Nu Skin Enterprises Inc., the skincare product seller that’s under investigation by China’s government, is suspending some promotional meetings and won’t accept new applications for sales jobs in the Asian nation. Product refund and return policies will be extended in China in response to the scrutiny, too, the Provo, Utah-based company said yesterday in a filing with the U.S. Securities and Exchange Commission. The Chinese government said it would investigate a report in the People’s Daily newspaper that Nu Skin is a “suspected illegal pyramid scheme.”
Taiwan legislature occupied against China trade deal About 200 Taiwan students opposed to a trade pact with China, which they fear gives the mainland too much economic influence, have occupied Taiwan’s legislature, media reported yesterday. The protesters burst into the legislative chamber late on Tuesday and repulsed police efforts to evict them, media said. The occupation comes after the ruling Nationalist Party said this week an initial review of the pact had been completed despite opposition party concern about the mainland’s growing influence on the Taiwanese economy. In recent years, the two sides have built up extensive economic ties.
Anti-corruption measures served up in canteens Officials may need to tighten their belts after authorities ordered official canteens to serve “smaller portions” in a crackdown on overindulgence, the Xinhua state news agency reported. Authorities in China have been on a drive against official corruption and excess, which has seen gift-giving, banquets and the fiery liquor baijiu come under the spotlight. The aim is to calm public anger over graft and extravagance by some officials. President Xi Jinping, who has made the campaign against graft one of his priorities, urged officials to “sweat” corruption out of the system on Tuesday.
China Telecom 2013 profit rises China Telecom Corp Ltd., the smallest of China’s three mobile phone network operators, matched analyst estimates by reporting a 17.4 percent on-year rise in net annual profit, which hit its highest in six years. Net income reached 17.5 billion yuan (US$2.83 billion) in 2013, China Telecom said on releasing its full-year earnings yesterday. That compared with a 17.6 billion yuan SmartEstimate of 32 analysts surveyed by Thomson Reuters. Operating revenue rose 13.6 percent to 321.6 billion yuan, a record high for the company.
MMG in talks to buy copper mine China’s MMG Ltd confirmed on Wednesday it was in talks with Glencore Xstrata to buy the Las Bambas copper mine in Peru, an acquisition expected to cost more than US$5 billion, but said there was no guarantee a deal would be agreed. MMG, the Australia-based offshore arm of Chinese state-owned Minmetals, said it was bidding alongside China state-owned giant CITIC Group and Hong Kong-registered Guoxin International Investment Corp. “No binding agreement has been reached in connection with the acquisition as of the date of this announcement,” MMG said in a statement yesterday.
Yuan starts direct trading with NZ dollar RMB is the second-most widely used currency in global trade finance
C
hina will start direct trading between the yuan and New Zealand’s dollar starting yesterday as the world’s second-largest economy promotes usage of its currency in global trade and finance. The move will help reduce foreign-exchange transaction costs between the two nations, the People’s Bank of China said on its website. Yuan moves were limited to 3 percent on either side of the fixing, according to a separate statement on the China Foreign Exchange Trading System website. The announcement coincides with a visit to Beijing by New Zealand Prime Minister John Key. The kiwi will become the fourth currency to be convertible into yuan, joining the Australian dollar, the Japanese yen and the U.S. dollar. The U.K. and Singapore announced deals with China in October to start direct trading between their currencies and the yuan, which overtook the euro to become the second-most widely used currency in global trade finance. “Direct trading with New Zealand will help boost the global usage of yuan through trade settlement and invoicing,” said Tommy Ong, executive director of treasury and markets at DBS Bank Hong Kong Ltd. “It will also contribute to lower transaction costs for companies since there’s no need to go through two currency pairs but one.”
as market makers for the currency pair, the banks said in statements yesterday. Chinese demand for New Zealand’s exports helped drive the kiwi up almost 20 percent against the dollar in the past three years, the biggest advance among 16 major currencies. It reached 86.06 U.S. cents on March 13, the strongest since April 2013. New Zealand’s merchandise shipments to China jumped to NZ$9.97 billion in 2013, more than doubling since 2010 and accounting for about 20 percent of the smaller nation’s overseas sales, according to Statistics New Zealand. South Korea, which also counts China as its biggest export market, is considering seeking direct trading links between its currency and the yuan. Vice Finance Minister Choo Kyung Ho said on February 18 that the government will support the implementation of direct trading if needed as demand for yuan expands in the financial markets and for trade. China doubled the yuan’s trading band against the U.S. dollar this week to 2 percent on either side of a daily reference rate set by the central
bank, a step toward giving market forces a greater role in determining its exchange rate. The PBOC also keeps its currency within 3 percent of fixings against the euro, the British pound, the yen and the Hong Kong dollar, while a 5 percent limit applies to the Malaysian ringgit and the Russian ruble. “Direct convertibility marks another milestone in the internationalization of the renminbi,” HSBC said in a statement on yesterday’s New Zealand dollar announcement. “Coupled with China’s recent move to widen the daily trading band of the renminbi, it further demonstrates the country’s determination to speed up its financial market reform.” The yuan has retreated 2.4 percent from its 20-year high of 6.0406 per dollar reached on Jan. 14, after strengthening 2.9 percent in 2013. At least five banks including Barclays Plc and Bank of America Corp. have trimmed their yuan projections this week, citing concern economic growth is slowing and higher currency swings under a broader band. Bloomberg News
Surging Trade Two-way trade between New Zealand and China surged 29 percent to NZ$18.86 billion (US$16.3 billion) in the 12 months through January, government data show, with the Asian nation overtaking Australia to become New Zealand’s largest trading partner. HSBC Holdings Plc and Westpac Banking Corp. were among banks to receive approval from the PBOC to act
New Zealand Prime Minister John Key
Richest Russian moves to Alibaba Company’s estimated valuation rose to an average of US$153 billion last month
B
illionaire Alisher Usmanov sold shares in Apple Inc. and Facebook Inc., focusing on technology investments in China such as Alibaba Group Holding Ltd. and may expand stakes in Russian assets, an executive said. “Chinese companies account for about 70 percent to 80 percent of the portfolio of our foreign Internet investments,” Ivan Streshinskiy, head of Usmanov’s asset-management company USM Advisors LLC, said in an interview on March 14 in Moscow. Most of the investment is in “Alibaba, JD.com and some other companies with great potential,” Streshinskiy said. Usmanov, 60, built his Metalloinvest Holding Co. iron ore business by acquisitions and is Russia’s richest man, according to the Bloomberg Billionaires Index. He bought a stake
of about US$100 million in Apple last year and sold it recently this year, according to Streshinskiy. The sale follows a gradual reduction of Usmanov’s stake in Facebook, he said. “We hope that our investments in China’s Internet companies may show the same and even better returns as we had with the American companies,” Streshinskiy said. China is Russia’s largest trading partner. Alibaba’s estimated valuation rose to an average of US$153 billion last month after the Chinese e-commerce company reported surging sales. The Hangzhou-based company is starting the process for what may be the biggest U.S. initial public offering in two years. Chinese online retailer JD.com may start an IPO next quarter and be valued at more than US$20 billion, according to co-owner Tencent
Holdings Ltd. China has refrained from criticizing the Kremlin on Crimea crisis and voted together about Syria and Iran at United Nations, while President Xi Jinping was the most prominent foreign leader to attend the Winter Olympics in Sochi this year, as U.S. and most European Union leaders stayed away. When Usmanov acquired a Facebook stake in 2009, his fund persuaded founder Mark Zuckerberg to sell by giving up its voting rights. Usmanov, with a partner, bought about 10 percent of Facebook when the company was valued at US$6 billion to US$10 billion and sold some shares in the IPO, which valued the company at US$104 billion. Bloomberg News
12 12 business daily
March 20, 2014 Friday April 19, 2013
Asia
Bad-debt cleaning shift in Vietnam Prime Minister askes the monetary authority to lower lending rates
State Bank of Vietnam
V
ietnam’s central bank is stepping up efforts to resolve soured loans and create favourable conditions for foreign investors as it draws up regulations to auction bad-debt assets at lenders. The State Bank of Vietnam and the Ministry of Justice are trying to “quickly” complete legislation that will be a “crucial legal basis” for a government-backed asset management company, enabling lenders and investors to buy and sell bad-debt assets and collateral at banks, Governor Nguyen Van Binh told to Bloomberg News. Vietnam’s government set up the asset-management company, known as VAMC, last July, and allowed foreign investors to take bigger stakes in the nation’s lenders
earlier this year. The nation’s gross domestic product is forecast to rise 5.8 percent in 2014, a seventh straight year of growth below 7 percent as the highest level of bad debt among Southeast Asia’s biggest economies curbs lending and hurts businesses. “The government and the central bank encourage and want to create favourable conditions for foreign investors to participate in the sale and purchase of bad debt,” Binh said. The monetary authority and finance ministry will also soon create a legal framework to establish a regulated market to trade bad debt in Vietnam, Binh said, without giving a timeframe. The central bank lowered its refinance rate to 6.5 percent from 7 percent and the discount rate to 4.5 percent from 5 percent, effective
yesterday. The repurchase rate was also reduced to 5 percent from 5.5 percent. The cuts were aimed at spurring credit growth and helping
Investors are more comfortable with the macro picture Tony Diep Indochina Capital director
Bloomberg News
Communication breakdown at Bank of Korea T he man nominated to be South Korea’s next central bank chief emphasised yesterday the need to improve communication with financial markets, effectively accepting broad criticism of the bank’s credibility. Nominee Lee Ju-yeol, who had worked at the Bank of Korea for 35 years, made the admission before a parliamentary confirmation hearing. “I think there was a communication problem,” said Lee, commenting on a surprise decision last May to cut interest rates. Outgoing Governor Kim Choong-
soo, who was a close aide of former President Lee Myung-bak and had no previous work experience at the central bank, has been criticised for giving in too easily to pressure from the government. Kim raised the policy interest rate by 125 basis points between July 2010 and June 2011, while cutting it by 75 basis points between July 2012 and May 2013. He was criticised for being too slow when raising it and too slow when cutting it. Little is known of his voting record at the Bank of Korea, but
businesses, it said. Lending dropped 1.05 percent as of March 13 from the end of 2013, according to the central bank. The government targets credit growth of 12 percent to 14 percent this year, and Prime Minister Nguyen Tan Dung asked the monetary authority to step up measures to lower lending rates last month. Moody’s Investors Service estimated bad debt at Vietnamese banks comprised at least 15 percent of total assets in a note last month. The central bank disputed the assessment, saying non-performing loans in the banking system had dropped to 3.63 percent at the end of 2013. The VAMC bought 39.3 trillion dong (US$1.9 billion) worth of bad debt from 35 banks as of the end of 2013 and “will accelerate purchasing and resolving loans and collateral in the next few years,” Binh said. The governor had said in December the entity might purchase as much as 150 trillion dong of non- performing loans by the end of 2014. In the case of borrowers who don’t have the ability to revive their businesses or pay back their loans, the VAMC will sell their debt and collateral, Binh said. The VAMC will also consider buying bad debt at market value when conditions mature, he added. There is growing interest in a market for the bad debt as Vietnam’s macroeconomic picture improves, said Tony Diep, Hanoi- based managing director at Indochina Capital, a fund manager and property developer. “There is more appetite now than there was before, given the stability of the currency,” Diep said. “Investors are more comfortable with the macro picture. If the government uses that money to invest in infrastructure growth, investors would like that.” Vietnam’s inflation last month eased to 4.65 percent from a year earlier, the slowest pace since November 2009. Exports climbed 12.3 percent in the first two months of the year from the same period in 2013. Vietnam’s central bank will weaken the dong when “truly needed” as pressure on the currency will be eased by a balance of payments surplus this year, Binh said.
Lee is widely perceived to be more assertive in upholding the orthodox central bank policy stance of focusing on curbing inflation. A Reuters poll conducted ahead of the March 13 policy meeting showed analysts have priced in a slightly higher chance of an interest rate increase during this year since Lee’s nomination, which was announced on March 3. A recent legal change means that a nominees will have to testify at a confirmation hearing. Although the parliament has no right to block Lee’s appointment, the hearing could still
sway public opinion. South Korea’s economy, the fourth-largest in Asia, has been on a solid recovery track and inflation is expected to pick up later this year, suggesting interest rates will be raised rather than cut when the Bank of Korea next changes its policy. Young Sun Kwon, economist at Nomura in Hong Kong who worked at the Bank of Korea for several years together with Lee, said chances of the Bank of Korea cutting interest rates again were extremely slim. Lee is expected to chair his first monthly policy meeting on April 10, with a follow-up news conference that day potentially providing more clues to his policy stance. Reuters
editorial council Paulo A. 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 Cynthia Wong, Luciana Leitão, Michael Armstrong, Óscar Guijarro, Pierre-François Metayer, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
business daily 13 13
March 2014 Friday 20, April 19, 2013
Asia
Analysts retract on Australia credit rate predictions Unemployment rate will peak at 6.5 percent according to the NAB
G
oldman Sachs Group Inc. and National Australia Bank Ltd. are among a dwindling band of forecasters sticking with predictions the Reserve Bank of Australia will resume cutting its record-low interest rate. Bank of America Merrill Lynch and JPMorgan Chase & Co. have also refrained from capitulating to the majority view, even as Governor Glenn Stevens flags an extended period of policy stability. Westpac Banking Corp., the first to predict the current easing cycle in July 2011, retracted on March 17 its forecast for more reductions. Only six of 32 economists surveyed by Bloomberg News now expect a cut. Australia’s currency climbed against 15 of 16 major peers this month as two-year bond yields rose by the most in the developed world after the U.K. While the RBA sees signs record-low rates are boosting growth, according to minutes of this month’s meeting, National Australia predicts further cuts as sagging resource industry investment fuels unemployment. “Mining investment has peaked and it remains questionable whether the growth in the non-mining part of the economy can take up the inevitable slack,” said Peter Jolly, National Australia’s Sydney-based head of research. “Particularly from an employment perspective, the risk remains the RBA will need to cut again later this year.”
Confidence Falls NAB is looking past a March 13 report showing 80,500 full-time jobs were added last month in the biggest surge for more than 22 years. The bank forecasts Australia’s unemployment rate will peak at 6.5 percent, from a decade-high of 6 percent reached in February. The lender’s monthly business survey released March 11 showed confidence deteriorated in February following a gain in the previous month, with
Australian Dollars
an employment gauge pointing to a “jobless recovery.” The RBA is “leaning on” improvements in sentiment which reports since their March 4 meeting show are already being unwound, said Ben Jarman, a Sydney-based economist at JPMorgan. “In terms of a more sustainable upswing, we think you would need to see a genuine change in corporate attitude toward both hiring and investment,” he said. “To us, the business confidence theme still doesn’t add up to much of significance.”
Comfort Zone The RBA minutes noted broad improvement in sentiment across industries, signs of some non-mining investment as well as a stabilization in forward-looking indicators of labour demand. Sharp declines in resource spending for the 12 months through June 2015 were expected and have been in the bank’s forecasts for some time, according to the minutes. Policy makers also pointed to strength in house prices and the outlook for increases in residential construction.
Imports have exceeded exports for 20 straight months
L
Business sentiment among Asia’s top companies edged up in the first quarter as solid improvement in the Philippines and South Korea outweighed weakness in China, India and Australia amid persistent concerns over the global economy, a ThomsonReuters/ INSEAD survey showed. The index snapped two consecutive quarterly declines and rose to 64 in the first quarter of this year from 62 in the fourth quarter of 2013. A reading above 50 indicates an overall positive outlook. Uncertainty about the global economic outlook and rising costs remained the biggest risk factors for the region’s firms.
Toyota reaches settlement of U.S. probe
Japan’s trade deficit sharpens atest data exceeded analysts’ estimates in February, underscoring drags on the nation’s recovery ahead of a salestax increase in April that will weigh on domestic demand. The 800 billion yen (US$7.9 billion) shortfall reported by the finance ministry in Tokyo yesterday was more than the 600 billion yen median estimate in a Bloomberg News survey of 31 economists. Imports expanded 9 percent from a year earlier, and exports rose 9.8 percent. Sustained trade deficits and limited gains in exports after the yen’s decline make it harder for Prime Minister Shinzo Abe to steer the nation through the economic turbulence that’s likely
Asia business sentiment improves
after the tax increase. Gross domestic product will contract in the coming quarter and the Bank of Japan may be forced to add to stimulus this year, according to Bloomberg News surveys of analysts. “The trend of a moderate expansion in trade deficits remains intact,” said Long Hanhua Wang, an economist at Royal Bank of Scotland Group Plc in Tokyo. “In the near-term the rise in imports will moderate as the temporary effect fades of imports being pushed higher by demand ahead of the sales-tax increase.” Imports have exceeded exports for 20 straight months. The yen’s 18 percent slide against the dollar over the past two years has driven
Gross domestic product rose 0.8 percent in the fourth quarter, beating the median forecast, and retail sales surged the most in almost a year, separate reports since the RBA’s last meeting showed. “The Bank is setting a very high hurdle for any further policy stimulus,” Westpac’s Chief Economist Bill Evans wrote yesterday. While some headwinds remain for the labour market, “we do not expect the type of growth profile emerging over the course of the next 12 months that would shock the bank out of its current comfort zone.” The RBA began to lower its benchmark November 2012, cutting by 225 basis point over two years to 2.5 percent. Swaps traders are now betting policy makers will add 11 basis points to the cash rate over 12 months, according to a Credit Suisse Group AG index. Bloomberg’s survey of economists predicts an increase in the first quarter of 2015 with 25 basis points added on in each subsequent three-month period for a 3.5 percent cash rate by December 31, 2015. Bloomberg News
up energy import costs as nuclear reactors remain shuttered, while exports have seen limited gains.
Last-Minute Demand “Imports probably will peak around this time due to last-minute demand ahead of the sales-tax increase,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Co. “Exports remain weaker than expected.” Import volumes fell 0.5 percent from a year earlier, the first decline since September, yesterday’s report showed. At the same time, inward shipments of motor vehicles rose 81 percent in value with purchases from the European Union jumping 109 percent. The trade deficit widened to a record in January, boosted by the effects of Asia’s Lunar New Year and the slowdown in US economic activity because of cold weather, Takuji Aida, chief economist at Societe General Securities Ltd. in Tokyo, said in a note. Bloomberg News
The settlement ends a U.S. criminal probe of sudden unexpected acceleration of its vehicles, three people familiar with the matter said. The agreement, which isn’t final, may be announced as early as tomorrow and will be for US$1.2 billion, said two of the people. The carmaker recalled more than 10 million vehicles for problems related to unintended acceleration in 2009 and 2010, starting with a September 2009 announcement that it was recalling 3.8 million Toyota and Lexus vehicles because of a defect that might cause floor mats to jam accelerator pedals.
Abe aide tests debt taboo A government adviser called on the Bank of Japan to double its limit for raising debt holdings to spur the economy, testing restrictions that help stop the central bank underwriting all fiscal borrowing. The BOJ should double the size of annual increases in its debt assets to 100 trillion yen (US$987 billion) should indicators show next month’s 3 percentagepoint tax gain is damaging growth, Koichi Hamada, who advises Prime Minister Shinzo Abe, said in an interview last week in Tokyo.
Toshiba to sign LED agreements Toshiba Corp. plans to sign at least three partnerships in the next 12 months to manufacture lighting fixtures in Europe as it seeks to become the region’s third-biggest supplier of light-emitting diodes. The expansion plans by Tokyo-based Toshiba, which until 2009 only sold LEDs in Japan, threaten the dominance of European leaders Royal Philips NV and Osram Licht AG in a global market that is forecast to reach US$42 billion by 2019. Toshiba currently only ranks among the 20 largest LED companies in Europe by unit sales.
Palm oil prices impacted by drought Palm oil prices have potential to rise because of drought in Indonesia, Malaysia and Thailand, the top three producers, Oil World said. Dry weather for the past 50 to 60 days has resulted in moisture shortages for some plantations and water rationing, the Hamburg-based researcher said in a report. Further dryness in the next two weeks may spur “an even more bullish supply scenario” in the next year, according to the report. “Every additional day of dryness will increase the stress and result in yield losses and correspondingly lower-than- expected production,” Oil World said. “Additional downward potential of vegetable oil prices is limited, considering the bullish palm oil outlook.”
14 14 business daily
March 20, 2014 Friday April 19, 2013
International Spent crisis squeezes Norway’s bills Norway is unwinding the last of the measures put in place to help banks at the height of the financial crisis in 2008, boosting demand for bills and short-term notes over the next four months. The nation’s lenders received 46.3 billion kroner (US$7.8 billion) in covered bonds yesterday, which they had been allowed to exchange for Treasury bills to ease liquidity as part of the 350 billion kroner programme. The last swap accord will end in June when 31.8 billion kroner in bills mature.
Brazil to drop Internet bill Brazil will drop a controversial provision that would have forced global Internet companies to store data on Brazilian users inside the country to shield them from U.S. spying, a government minister affirmed. The rule was added last year to proposed Internet governance legislation after revelations that the U.S. National Security Agency had spied on the digital communications of Brazilians, including those of their President Dilma Rousseff and the country’s biggest company Petroleo Brasileiro SA. Instead, the legislation will say that companies such as Google Inc and Facebook Inc are subject to Brazilian laws in cases involving information on Brazilians.
Zara profits less than expected Inditex SA, the Spanish owner of the Zara clothing chain, reported its slowest profit growth in five years, as global currency fluctuations weighed on sales. Net income rose less than 1 percent to 2.38 billion euros (US$3.31 billion) in the 12 months through January, Europe’s biggest clothing retailer said in a statement yesterday. Sales advanced 8 percent at constant rates of exchange while comparable revenue rose 3 percent. Inditex has been capturing growth by expanding its online operations and adding stores in countries like Brazil, China and Russia.
World Cup risks bribes to referees Soccer’s governing body increased the risk of World Cup referees being approached with bribes by naming the officials five months before this year’s event in Brazil, FIFA’s former head of security said. The organizers in January identified the referees for the tournament, which starts June 12. Revealing their identities early gives time for criminal approaches by match-fixers, said Chris Eaton, who’s now the director of sports integrity at the Doha-based International Centre for Sport Security. “Of course it carries a risk,” Eaton said by e-mail. “In fact every referee should be individually vetted for corruption risk and threat before selection.”
Android smartwatches on the horizon Many believe wearable computers represent the next big shift in technology
V
oice-controlled smartwatches that track heart rates and connect to phones and tablets will debut later this year as Google Inc. partners with electronics, technology and fashion companies to take consumers to the next promised frontier in computing. Google unveiled plans to help develop the watches and other wearable computers based on its Android mobile operating system, which already runs more than three out of four smartphones sold worldwide. The Android Wear project is open to software makers to create apps for the watches, putting Google at the forefront of efforts to jumpstart the nascent wearable computing market. The news comes as speculation swirls around iPhone-maker Apple Inc’s plans for wearable computers, including a smartwatch of its own. Apple Chief Executive Tim Cook has promised new “product categories” later this year. A video posted on Google’s blog showed people speaking into their watches to check sports scores, control music, send replies to text messages and even open their home garages. By aligning itself with a broad spectrum of partners to develop the smartwatches, Google is hoping to replicate the success that helped make its free Android software the most popular smartphone operating system, analysts said. LG Electronics said on Tuesday it would introduce its first Android watch, the G Watch, in the second quarter. Motorola said its Moto 360 Android watch would be available this summer. Fossil Group Inc., which makes watches, handbags and other accessories, also announced that it was working with Google on Android devices. Many believe wearable computers represent the next big shift in technology, just as smartphones evolved from personal computers, but efforts by various companies so
Spying on the whole wide world NSA can store a nation’s phone call recordings for a month
T
he National Security Agency has developed a surveillance system that can record 100 percent of a foreign country’s telephone calls, The Washington Post reported late Tuesday. The system allows the agency to review conversations up to a month
Motoactv smartwatch
far have had mixed results. Samsung was among the first to sell a smartwatch for consumers, but its maiden effort, the Galaxy Gear, was widely panned by reviewers. Google’s announcement “definitely gives wearables a status that it’s a market in its own right and it needs to be treated with the respect that a separate operating system branch gives it,” said Carolina Milanesi, an analyst with Kantar World Panel.
Fitness trackers Android smartwatches will connect wirelessly to a mobile phone and can be outfitted with a variety of sensors, Google said. That means that apps developed for Android watches will be able to monitor fitness and health information such as a wearer’s heart rate or distance jogged. Google released an Android Wear Developer Preview on Tuesday, saying it would allow software makers to begin creating specialized apps for the watches.
after they take place, the Post said. It quoted people with direct knowledge of the effort and documents supplied by former intelligence contractor Edward Snowden. The newspaper said that, at the request of US officials, it would not reveal details that could be used to identify the country where the system is currently being used or other countries where its use is envisioned. The voice interception programme, called MYSTIC, began in 2009, the Post said. Its “retrospective retrieval” tool and related projects reached full capacity against the first target nation in 2011. Planning documents two years later anticipated similar operations elsewhere, the Post said. In the initial deployment, collection systems are recording “every single” conversation nationwide, storing billions in a 30-day rolling buffer that clears the oldest calls as new ones arrive, according to a classified summary the Post said it has seen. In the deluge of US intelligence
Smartwatches have a better chance of catching on with the general public than Google Glass, said Ramon Llamas, an analyst with industry research firm IDC. “It’s a really cool idea, but there’s something that creeps people out about it,” Llamas said of Google Glass. The success of smartwatches will depend on the device’s price, battery life and the appeal of the watches’ designs, he said. Juniper Research expects more than 130 million smart wearable devices will ship by 2018. Moreover, global shipments of wearable “smart glasses” alone will reach 10 million each year by 2018, compared with an estimated 87,000 in 2013, according to the research firm. Among the more than 10 companies that are partnering with Google on Android watches are Samsung Electronics Co , HTC Corp, Asustek Computer Inc, Intel Corp, Qualcomm Inc, Broadcom Corp and Mediatek Inc. Reuters
monitoring methods disclosed so far by Snowden, no other NSA programme has been known to monitor the entirety of a nation’s phone network. NSA collection of phone meta data -who is called and how long a conversation lasts, but not the content of the call- was among the first of the Snowden disclosures. In a statement, Caitlin Hayden, spokeswoman for the National Security Council, declined to comment on “specific alleged intelligence activities,” the Post said. Speaking generally, she said that “new or emerging threats (are) often hidden within the large and complex system of modern global communications, and the United States must consequently collect signals intelligence in bulk in certain circumstances in order to identify these threats.” Snowden is a now a fugitive who has been granted asylum in Russia. The United States has charged him with crimes including espionage. AFP
business daily 15 15
March 2014 Friday 20, April 19, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Misleading Indicators Edward Jung former Chief Architect at Microsoft, is Chief Technology Officer at Intellectual Ventures
FINANCIAL REVIEW The heads of Australia’s top companies are being paid more than their annual reports suggest, with share schemes quietly pushing up their takehome pay by more than A$1 million in many cases, a report says. Governance group ISS said the way large companies calculated long-term bonuses was resulting in “materially higher pay-outs’’ to some executives than what was suggested by the “sticker price” of their award. “In some cases, the aggregate value of awards at the point of vesting are worth millions of dollars more than initially intended,’’ ISS said.
THE PHNOM PENH POST The European Union’s top trade official said that while a delegation from the European Parliament will look at landdispute claims on sugar farms later this month, an investigation into the country’s duty-free access to the EU market is, at the moment, unwarranted. Speaking to reporters at Raffles Hotel Le Royal in Phnom Penh, Trade Commissioner Karel De Gucht sidestepped demands by rights groups and from within the EU that the country’s trade preferences under the Everything But Arms agreement be revoked in light of scathing allegations tied to thesugar industry.
CHINA DAILY Recent economic weakness in China hasn’t deterred foreign direct investment, with inflows maintaining robust growth in the first two months of this year, figures from the Ministry of Commerce indicated. During January and February, FDI (excluding the financial sector) rose almost 10.5 percent yearon-year to US$19.31 billion, the ministry said. In February alone, inbound FDI went up 4 percent to US$8.55 billion. Analysts said that global investors’ confidence was strengthened by the nation’s planned reforms and opening-up initiative. Recent economic data have suggested weakened growth momentum in the world’s second-largest economy.
The Jakarta Post The World Bank has revised its projection of Indonesia’s current-account deficit (CAD) as it estimates that the country’s mineral ore export ban will squeeze exports this year. In its latest quarterly report, launched on Tuesday, the World Bank set Indonesia’s CAD target at 2.9 percent of gross domestic product (GDP), from 2.6 percent, the previous estimate made in December. With the new projection, this year’s total deficit is expected to stand at US$24.4 billion, down from the US$28.5 billion that Indonesia posted in 2013.
B
E L L E V U E , WASHINGTON – “If you can’t measure it, you can’t manage it.” That is the wisdom behind metrics like gross domestic product and other aggregate indicators that signal the health of national economies around the world. Policymakers and planners have used these numbers for decades to help them understand how to guide domestic economic growth. But reliance on GDP and other traditional indicators may be sabotaging a keenly sought goal: the development of thriving innovation economies. Today, some vital parts of the information-technology sector barely register in the national accounts. While GDP measures the market value of all goods and services produced within a country, many stars of the digital age (think Wikipedia, Facebook, Twitter, Mozilla, Netscape, and so on) produce no goods and provide free services. These same star players also tend to undercut the productivity of traditional businesses. Free navigation apps have shrunk sales for Garmin, the GPS pioneer that was once one of the fastestgrowing companies in the United States. Skype is killing the international phone call “one minute at a time.” These developments point to the need for new growth metrics that recognize new kinds of enterprise. And, because these metrics concern innovation, they should be forward-looking as well. Policymakers need to understand how to establish, manage, and thus measure the conditions that encourage innovators to flock to a region and forge a prosperous future there. Innovation metrics must capture the value of new ideas years before those ideas become profitable in traditionally measured ways. The need for such metrics is especially urgent in the developing world. Emerging economies commonly use
foreign direct investment (FDI) as a yardstick to measure progress. That metric makes sense in the early stages of development: poor economies need foreign capital to build factories, train workers, and put money in the pockets of ordinary citizens. But foreign investment most often goes to low-risk, lowmargin projects: iron foundries, cement plants, and so forth. Innovation, by contrast, is a high-risk, high-reward effort. Even big multinationals do not put a lot of money into a new idea at first. Tomorrow’s most disruptive innovation may have no effect on FDI or GDP today. Thus, for countries like China, India, and Brazil that are trying to jump-start their domestic innovation cultures, FDI targets actually prevent government planners from reaching out to the people and companies that are most likely to take creative approaches to problems. So what does valuable innovation look like, in terms of macroeconomic data, years before it gives rise to the next Google, Bayer, Porsche, or Alibaba? What numbers best characterize a thriving innovation ecosystem in its birth stages? We already know some of the essential ingredients. They include top-level talent, serial entrepreneurs with good track records, start-ups backed by reputable capital, and breakthrough products protected by intellectualproperty rights. Analysts at my company recently investigated whether these ingredients could be quantified. Our preliminary results suggest that they can. For example, we learned that five of today’s most successful start-ups in the informationtechnology sector had two attributes in common by the end of their third year in business: they had filed more than one patent and been funded by more than one top venture-capital firm. In subsequent years, these
five companies’ cumulative revenue was six times higher than that of start-ups chosen at random. Economists could extend such analyses to develop a set of key performance indicators for young innovation economies. Governments could then use these innovation metrics to identify start-ups, talent, and products with the strongest potential for future success. This approach could be applied to any high-tech incubator project – within or beyond the developing world – that currently measures success only in dollars. Of course, such metrics would merely improve the odds of succeeding, not point to a sure thing. Innovation economies will always require investments in a multitude of prospects to produce the few big winners that will ultimately anchor the mature ecosystem. But even a
“While GDP measures the market value of all goods and services produced within a country, many stars of the digital age (think Wikipedia, Facebook, Twitter, Mozilla, Netscape, and so on) produce no goods and provide free services.”
modest improvement in odds will deliver outsize results if it means landing two Apples or Samsungs rather than one – or none. Changing how we think about economic value will not be easy. Yet countries where GDP has been flagging – an ever-increasing cohort – might welcome new metrics that can show signs of real progress. And there is a growing awareness among policymakers and planners that virtual assets like creative talent and entrepreneurial skill make up an increasing portion of a country’s wealth. The US Bureau of Economic Analysis acknowledged as much last summer when it changed the definition of GDP to represent better the contributions of intellectual property and research and development to productivity and economic vitality. Broader efforts to reform GDP, including initiatives sponsored by the Organization for Economic Cooperation and Development and the European Commission, seek to encompass sustainability, living standards, and other important aspects of a country’s wellbeing. Groups like the Institute for New Economic Thinking are championing the study of innovation economics to provide data and analyses for these efforts. As former US Federal Reserve Chairman Ben Bernanke noted in a 2011 speech, “We will be more likely to promote innovative activity if we are able to measure it more effectively and document its role in economic growth.” In fact, metrics that help countries drive innovation could change our very understanding of economic growth. Governments want them, economies need them, and the global community will benefit from them. It is time for macroeconomics to measure up to the ambitions of twenty-firstcentury innovators.
16 16 business daily
March 20, 2014 Friday April 19, 2013
Closing Stiglitz to speak at Macau event
Portugal: ‘No return to 2011’ - minister
Nobel Prize-winner Joseph Stiglitz, formerly the World Bank’s chief economist, will make a keynote speech at this year’s Macao International Environmental Cooperation Forum and Exhibition. The forum will bring together experts and academics from around the world to present their knowledge and views on environmental issues. The topic of Mr Stiglitz’s speech will be “Growing Together for a Green Future: Why Solving the Inequality Issue is Crucial for Environmental Protection”. The event is scheduled for March 27 to March 29.
The Portuguese finance minister, Maria Luís Albuquerque, told parliament yesterday that the country “is not going to return to the wages and pensions of 2011”, but there would be “prospects of progress” and “there won’t be more pay freezes”. “Gradually we are going to have to get back to the pay levels that existed before (…) but not instantly. We are better, we are going to continue to improve, but there are no miracles. We haven’t discovered oil, so we are going to have to continue on this difficult path”, she warned.
“Dark path” to isolation, U.S. Russian forces storm Ukraine base in Crimea, US sees Aleksandar Vasovic and Maria Kiselyova
T
he United States warned Moscow it was on a “dark path” to isolation, yesterday, after Russian troops backed by unarmed volunteers stormed Ukraine’s naval headquarters in the Crimean port of Sevastopol and raised their flag. The dramatic seizure came as Russia and the West dug in for a long confrontation over Moscow’s annexation of Crimea, with the United States and Europe groping for ways to increase pressure on a defiant Russian President Vladimir Putin. “As long as Russia continues on this dark path, they will face increasing political and economic isolation,” said U.S. Vice President Joe Biden, referring to reports of armed attacks against Ukrainian military personnel in Crimea. Biden was in the Lithuanian capital Vilnius, part of a quick trip to reassure Baltic allies worried about what an emboldened,
aggressive Russia might mean for their nations. Lithuania, along with Estonia and Latvia, are NATO members. “There is an attempt, using brutal force, to redraw borders of the European states and to destroy the postwar architecture of Europe,” Lithuanian President Dalia Grybauskaite said. The United Nations said Secretary General Ban KiMoon will push for a peaceful solution to the crisis when he meets Putin in Moscow on Thursday and when he travels to Kiev on Friday. Russian lawmakers raced to ratify a treaty making the Ukrainian region part of Russia by the end of the week, despite threats of further sanctions from Washington and Brussels. The Russian military moved swiftly to neutralise any threat of armed resistance in Crimea. “This morning they stormed the compound. They cut the gates open, but I heard
no shooting,” said Oleksander Balanyuk, a captain in the navy, walking out of the compound in his uniform and carrying his belongings. “This thing should have been solved politically. Now all I can do is stand here at the gate. There is nothing else I can do,” he told Reuters, appearing ashamed and downcast. Ukrainian military spokesman Vladislav
H.K. police charge two on attack on journalist
U.S. says Toyota to pay US$1.2 b
T
T
he Hong Kong police charged two men for an attack that left the former chief editor of the Ming Pao Daily News critically hurt. The two men, both 37, will appear in court today, the police said in a statement. They were charged with wounding and theft, the police said. Kevin Lau, 49, was attacked with a meat cleaver as he got out of his car near a restaurant in Sai Wan Ho in the eastern part of Hong Kong Island on Feb. 26. The attack led thousands of people to take to the streets on March 2 to protest what they argued were erosions to the city’s press freedoms. Lau was removed from the top editorial role at Media Chinese International Ltd.’s Ming Pao in January. The police have said there’s no evidence linking the attack to Lau’s journalism, though they haven’t ruled out any motives. Ming Pao, a Chinese-language newspaper founded in 1959, is one of the main dailies in Hong Kong. Bloomberg
Seleznyov said the commander of the Ukrainian navy, Admiral Serhiy Haiduk, was driven away by what appeared to be Russian special forces.
Mixed feelings Russia sent thousands of soldiers to Crimea in the buildup to a weekend referendum in which the Russian-majority region
voted overwhelmingly to leave Ukraine and join Moscow, reflecting national loyalties and hopes of higher wages. But there is unease among pro-Ukrainian Crimeans who have complained about the heavy armed presence across the region. “I was born here, my family is here, I have a job here and I am not going anywhere unless there is an all-out military conflict,” said Viktor, a 23-year-old salesman. “It is my home but things will not be the same any more.” A few hundred metres away, the local authorities attached new, Russian letters spelling “State Council of the Crimean Republic” on the building of the local assembly. Putin said his move to annex Crimea was justified by “fascists” in Kiev who overthrew pro-Moscow president Viktor Yanukovich after deadly street protests last month. Reuters
Google won’t face email privacy action
G
oyota Motor Corp will pay US$1.2 billion to resolve a criminal probe into its handling of consumer complaints over safety issues, the U.S. Justice Department said yesterday. Toyota admitted it misled American consumers by concealing and making deceptive statements about two safety issues, each of which caused a type of unintended acceleration, the Justice Department said. The settlement resolves a four-year investigation by U.S. authorities. Toyota faces hundreds of lawsuits over acceleration problems that gained public attention after the deaths of a California highway patrolman and his family, which were reportedly caused by the unintended acceleration of his Toyota-made Lexus. The faulty acceleration prompted Toyota to recall millions of vehicles, beginning in 2009. Last year, Toyota received approval on a settlement valued at US$1.6 billion to resolve claims from Toyota owners that the value of their cars dropped after the problems came to light.
oogle Inc won a significant legal victory as a U.S. judge decided not to combine several lawsuits that accuse the Internet search company of violating the privacy rights of hundreds of millions of email users into a single class action. In a decision released on Tuesday evening, U.S. District Judge Lucy Koh in San Jose, California, said the plaintiffs’ claims were too dissimilar to justify combining them in a single lawsuit, which could have added pressure on Google to settle. Users of Google’s popular Gmail service accused the company of violating federal and state privacy and wiretapping laws by scanning their messages so that it could compile secret account profiles and enable them to receive targeted advertisements. Claims were also raised on behalf of students at schools that use Gmail and people who do not use Gmail but communicate by email with people who do.
Reuters
Reuter