Closing editor: Alex Lee
MOP 6.00
Profitable exercise
Year III
Number 534 Thursday May 8, 2014
Publisher: Paulo A. Azevedo
Macau Foundation gave 153 million patacas in subsidies to 300 private individuals and institutions in the first quarter. A group of twelve received half of the chunk, while Macau University of Science and Technology’s football pitch and sports pavilion netted 27 million Page 2
Prez predicament
FREE for all
Macau ranks 29th freest economy in the world, dropping 10 places in the last two years alone. But its overall score is well above world and regional average, according to an American think tank. Fiscal freedom dropped 2.1 points, putting Macau in 132nd place in the world in this freedom index. But on a brighter note, the SAR ranks right at the top being number one in trade freedom Page
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Macau on the podium www.macaubusinessdaily.com
While the former IACM president awaits the court decision on his alleged disobedience, a new president moves from temporary replacement to a more permanent posting. Alex Vong gets a two year mandate
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Moody’s has upgraded Macau’s rating to Aa2, the third highest investment level due to its booming economy and largest fiscal reserves. Macau now sits above China and Japan and only one notch behind Hong Kong. It’s the fourth upgrade since 2002
HSI - Movers May 7
Name
%Day
China Unicom Hong K
2.83
Tingyi Cayman Islan
1.41
CLP Holdings Ltd
1.15
Hot seat
Bank of East Asia Lt
0.93
Cheung Kong Holdin
0.40
Galaxy Entertainme
-3.46
Sands China Ltd
-3.50
Macau’s government is in Geneva for an ‘oral’ examination on individuals’ rights. United Nations Committee on Economic, Social and Cultural Rights wants to know more about migrant workers, trade unions and the right to strike. Several NGO’s have already opposed a first written defence by the government
Tencent Holdings Ltd
-3.82
China Overseas Land
-4.52
China Resources Lan
-4.74
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Paradise casino A Macau junket with business in seven VIP rooms wants to invest up to 16 billion patacas (US$2 billion) in a casino-hotel resort in Saipan. HK listed First Natural Foods Holdings Ltd aims to build four luxury hotels and villas to secure an exclusive gaming licence in the Pacific paradise Page 6
Source: Bloomberg
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May 8, 2014
Macau Cultural Fund Increases 275.2pct in 2014 Q1 Macau’s cultural fund for the financial assistance of individuals and private institutions increased by 275.2 percent to 10.68 million patacas in the first quarter of 2014, from the same period in 2013. The cultural fund totalled 53.9 million patacas in 2013. Official figures were published in the official gazette yesterday by the president of the Cultural Fund Administrative Committee, Mr Ung Vai Meng. The 1 million-pataca subsidy awarded to the Association of Prosperity Culture and Arts of Macau for the expenses of producing the film ‘I love Macau’ accounts for the largest portion of the cultural fund in the first quarter of 2014.
Alex Vong appointed head of IACM Vong is to assume the Civic and Municipal Affairs Bureau’s presidency for two years, following the unfinished trial regarding Raymond Tam’s alleged disobedience Stephanie Lai sw.lai@macaubusinessdaily.com
A
lex Vong Iao Lek is to assume tomorrow the position of president of the Civic and Municipal Affairs Bureau (IACM) for a tenure of two years, as the Court of First Instance is still hearing the alleged disobedience of the Bureau’s former president Raymond Tam Vai Man. The case revolves round the perpetual lease of burial plots to a legal adviser of Secretary for Public Administration and Justice Florinda Chan. A statement issued by the Government Spokesperson’s Office yesterday announced that Mr Tam’s term of office as IACM president ends on May 8. Meanwhile, Mr Alex Vong, originally head of the Sports Development Board, is to assume the president’s post for the Bureau starting on May 9. Alex Vong was appointed
to lead IACM as the Bureau’s vice-president after Mr Tam’s ‘preliminary suspension’ had been announced. Mr Vong was appointed to assume the IACM’s presidency due to ‘a post vacancy’ and was ‘of professional capacity for the position’, the official gazette signed by the Chief Executive and published yesterday shows without further elaboration. Raymond Tam has been put under ‘preliminary suspension’ from his position as IACM head for 90 days starting on June 18. The suspension was imposed by Chief Executive Fernando Chui Sai On following a probe led by Luciano Correia de Oliveira, a legal adviser for Secretary for Security Cheong Kuoc Va that concluded that the official had ‘violated civil servant discipline’. In June last year, the Court
Alex Vong
of First Instance confirmed that Mr Tam, along with IACM vice-president Lei Wai Long and two other Bureau workers, had been charged with disobedience. The four are accused of stonewalling a Public Prosecutor’s Office investigation by delaying the delivery of documents linked to the perpetual lease of burial plots to a legal adviser of Secretary for Public Administration and Justice
Florinda Chan. On September 10 last year, however, the government announced in a press briefing that the internal disciplinary probe against Mr Tam would be suspended as his alleged disobedience case was about to be heard by the Court of First Instance. The court began hearing the case, which still continues, on December 5. The internal disciplinary probe remains suspended
until the court announces its judgement on Mr Tam’s case, the Government Spokesperson’s Office told Business Daily. The official gazette published yesterday noted that José Maria da Fonseca Tavares, the incumbent vice-president of the Sports Development Board, is to be appointed to the president s position for the tenure of one year commencing May 9.
Football field scores fifth of Macau Foundation subsidies In the first quarter of this year, the public institution granted a total of 153 million patacas to almost 300 private individuals and institutions in Macau. Twelve of them got half of the budget, while a football pitch was the quarter’s winner Alex Lee
Alex.lee@macaubusinessdaily
T
he football field and sports pavilion of Macau University of Science and Technology was the main recipient of financial support awarded by Macau Foundation in the first quarter, accounting for almost a 20 percent chunk of the total budget. According to the official gazette yesterday, the public foundation allocated 27.3 million patacas to the university’s foundation as a ‘special subsidy’ for the football field and sports pavilion of the education campus. This payment to one of the faculties of Macau University
was by far the biggest by Macau Foundation in the first three months of the year. During that period, financial support to private individuals and institutions totalled 153 million patacas, official data revealed. In the end, the university’s sports centre received 18 percent of the total budget of the Foundation. In the first quarter, Macau Foundation supported almost 300 institutions and individuals in the territory, with twelve netting more than a million patacas each. This ‘million patacas club’ amassed a total 63 million patacas, around 45 percent
of all subsidies. The second biggest beneficiary was St. Paul School, which was awarded 9.9 million patacas to help finance the main building renovation and school supplies and equipment. The Amateur Centre for Permanent Studies of Macau followed with a subsidy of 4.4 million patacas for the institution. Macau Foundation also gave financial support exceeding a million patacas to finance this year’s Macau Food Festival (2.4 million patacas as a first instalment) and the Deusa-a-Má Cultural Festival (first instalment).
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May 8, 2014
Macau Zhejiang-Macau flights as early as 2015 Hangzhou-based Zhejiang Loong Airlines will initially offer international services to destinations including Hong Kong, Macau and Taiwan as early as 2015. This is aimed at creating a ‘4-hour nationwide and 12-hour global roundabout, with Hangzhou as the centre’, mainland Chinese state-owned media Zhejian Online is quoted as saying. It will be the first aviation company to offer flights directly from Zhejiang to Macau. Loong Air, formerly a cargo airline, officially launched its passenger operations on December 29, 2013, and the newly purchased 20 A320 aircraft will be fully operational by 2020.
Less freedom, most freedom Macau’s ranking in the 2014 Index of Economic Freedom has been lowered to 29, while just two years ago it sat comfortably in the top 20. But the SAR ranks first in the world when it comes to trade freedom Sara Farr sarafarr@macaubusinessdaily.com
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here’s less fiscal freedom, less monetary freedom and less freedom from corruption in Macau. That now places Macau as the 29th freest economy in the world with an overall score of 71.3, down 0.4 points from last year. At the top of the list for the last two decades remains Hong Kong with a score of 90.1, followed by Singapore with a score of 89.4. A United States think tank, the Heritage Foundation, released its latest report on economic freedom worldwide, classifying Macau’s economy as mostly free. The index ranges from zero to 100, with 100 denoting maximum economic freedom. The Heritage Foundation bases the index on 10 aspects of the economy in each of the 178 countries it ranks, the main aspect being the degree of supremacy of the rule of law, the degree of government interference, regulatory efficiency and the openness of its markets. While Macau’s score and ranking has dropped over the last couple of years, ‘its overall score is well above the world and regional average’ the think tank said. In the Asia Pacific region, Macau also dropped a spot to 7th place amongst 42 economies. Again, Hong Kong, Singapore, Australia, New
Zealand and Taiwan led the ranking as the freest economies in the region. It was only in 2009 that Macau was first ranked in the index, and according to the Heritage Foundation the SAR’s progress in implementing more targeted reforms to advance economic freedom ‘has been stagnant at best.’
Improvements and retrogression Throughout the last six years, there have been modest declines in around half of the territory’s score in the 10 economic freedoms in the index. These include freedom from
corruption, government spending, and labour freedom. This has resulted in a score loss of a little less than one point. According to the 2014 Index of Economic Freedom, only investment freedom has advanced, which has led to the enhancing of market openness. The report also describes Macau’s entrepreneurial environment as ‘generally efficient and streamlined,’ in which property rights are ‘relatively well respected.’ Of the ten economic freedoms in the index, freedom of corruption scored 1.3 points less than last year with a total of 49.7, monetary freedom also scored 1.5 points less giving it a
2014 Index of Economic Freedom
total of 79.8 points, and fiscal freedom 2.1 points less for a total of 71.4 in overall economic freedom. This latter ranking puts Macau in 132nd place in the world when it comes to fiscal freedom. That’s almost at the very bottom of the 179 countries ranked. On the other hand, the SAR ranks first in the world when it comes to trade freedom. Labour freedom remains unchanged with 55.0 points, lower than the world average of 61.7. This ranks Macau 116th of the economies in the index. According to the American think tank, ‘the lack of a broad-based labour market is due in part to the absence of serious reform.’
‘[Macau’s] overall score is well above the world and regional average Heritage Foundation
Macau
World average
Rule of law
Regulatory efficiency
Limited government
Open markets
Property rights
Business freedom
Fiscal freedom
Trade freedom
42.6
60.0
Freedom from corruption 49.7 39.3
60.0 64.6
71.4 77.6
74.8
Government spending
Labour freedom
55.0 61.7
Monetary freedom
79.8 73.9
62.5
91.7
Investment freedom
85.0
54.9
Financial freedom 48.7
90.0
70.0
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May 8, 2014
Macau Moody’s rates Macau ahead of China and Japan Moody’s has decided to upgrade Macau’s credit rating to the third highest level putting the territory only one notch behind Hong Kong but above China and Japan. With a booming economy and large fiscal reserves, a downgrade ‘is very unlikely’ Alex Lee
Alex.lee@macaubusinessdaily.com
and subsequent rating upgrade, the excessive dependency on the gambling industry is also a barrier to future upgrades, Gambling Compliance wrote citing Moody’s. Issues like industry regulation, the softening VIP segment, junket volatility and the looming labour crisis for new resorts on Cotai plus strong union opposition to increasing foreign labour imports were surprisingly absent from the rating agency analysis. “Domestically, although there have been demonstrations to voice some discontent that the ongoing economic boom does not benefit all sectors of the population, authorities have made efforts to address these concerns,” the report said, without giving any details. Moody’s figures indicate that annual income per capita was US$77,195 in 2012, or about US$6,400 per month. Macau Government figures for the fourth quarter of 2012, however, show median monthly employment earnings for residents was 13,000 patacas ($1,600), or one quarter of the per capita figure.
T
he burgeoning economy, the booming gaming industry, the lack of public debt and the government’s huge fiscal reserves has prompted Moody’s, the world’s second largest rating agency, to upgrade Macau’s rating to the third highest level in terms of credit and investment quality, Gambling Compliance reported yesterday. The Moody’s Investors Services upgraded Macau’s rating to Aa2 with a stable outlook, meaning that a downgrade is unlikely in the next three months. The Aa2 is the third highest level in Moody’s ranking credit quality with investments classified as ‘high quality and subject to very low credit risk’, according to the rating agency’s website. The top grade is AAA, which developed economies like the US, Canada, Australia and Germany
enjoy. Since 2002, Moody’s has upgraded Macau’s ratings four times. Countries with higher ratings have in theory more possibility of paying back debts to investors and finance themselves under much better conditions than others with lower grades.
Gaming against shocks The upgrade ‘was supported by [Macau’s] continued rapid economic growth, the continued large fiscal surpluses and increasing fiscal reserves of its government, and its very strong balance of payments and external financial position’, wrote Gambling Compliance citing the ratings agency from a report dated April 30. With an annual growth of 13.9 percent, Macau is supported by a booming casino industry that provides the government with large fiscal and
current account reserves that work as protection against external shocks like financial crises or downturns in the economy. ‘If there were to be an unforeseen shock that caused revenues to fall drastically, the government would be able to finance itself without relying on borrowing for some time to come due to the size of its assets’, the report concluded. This safety net is one of the main reasons Moody’s has upgraded Macau’s rating. The territory now sits only one notch behind Hong Kong (Aa1) but above China and Japan (Aa3), the two biggest regional powers in Asia. Moody’s warns, however, that the territory’s close ties with China could put Macau on the line for a future downgrade if pressure is exerted on Beijing’s ratings. If the casino revenues were vital for the economic boom
If there were to be an unforeseen shock that caused revenues to fall drastically, the government would be able to finance itself without relying on borrowing for some time to come due to the size of its assets Moody’s
Securities trader Kaiser fined for unauthorised sales in Macau T wo member companies of Hong Kong-based securities and futures trader Kaiser Financial Services were fined a total of HK$1.7 million (US$219,307) and reprimanded by Hong Kong’s Securities and Futures Commission (SFC) for their unauthorised sales activities in Macau, following sanctions imposed on the companies last year by the local government. Kaiser Securities Ltd and
Kaiser Futures Ltd were fined by Securities and Futures Commission in the amount of HK$1 million and HK$700,000, respectively, for conducting unauthorised securities business in Macau on the premises of a company named Unified Securities (Macau) Ltd, via which the two Kaisers provided services to clients in respect of their trading in securities, futures and options in the Hong Kong market between 2004 and 2011,
the Commission stated in its official website yesterday. As the behaviour of the two Kaiser companies has violated the Financial System Act of Macau, the Monetary Authority of Macau has announced the decision of the Secretary for Economy and Finance in July last year to sanction the companies: Kaiser Securities Ltd was fined 1.5 million patacas (US$187,868) and Kaiser Futures Ltd was fined 150,000 patacas.
The Hong Kong-based Kaiser Financial Services also comprises two other member companies engaged in the trade of bullion products and credit plans. The Securities and Futures Commission also noted in its statement that: ‘the contravention of the laws of Macau has called into question the reputation, character and reliability’ of Kaiser Securities and Kaiser Futures. S.L.
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May 8, 2014
Macau
Local firm manoeuvres to assume Reolian services Government in close touch with company with local transportation experience regarding taking over bankrupted Reolian’s services and staff Tony Lai
tony.lai@macaubusinessdaily.com
T
he government confirms it is actively negotiating with a company with local transportation experience to take over the services and staff of bankrupted bus operator Reolian Public Transport Co Ltd. Transport Bureau Director Wong Wan said yesterday more information on the matter could be unveiled this month. Business Daily revealed in March that local bus operator Sociedade de Transportes Colectivos de Macau SARL (TCM) and its state-owned conglomerate parent Nam Kwong (Group) Company Ltd were interested. Mr Wong’s comment comes after a dispatch published in the official gazette yesterday announcing that the government will exempt the public tender process for the bus services of bankrupted Reolian. This means the government can directly grant the services of running two-fifths – amounting to 27 - of the city’s bus routes to a new firm. “As our period to manage the Reolian’s assets expires on June 30, the
government has to adopt the means for exempting public tender, considering the public interest, continuation of bus services and smooth transition of [Reolian’s] employees,” the director said. He believes that a public tender process would take at least nine to 12 months to find a new operator. Since Reolian was deemed bankrupted by the courts in December, the government temporarily assumed the company’s assets, including employees and vehicles, to ensure normal bus services continued, while seeking interested parties for the aforementioned services. The court has permitted the administration to use Reolian’s assets until the end of next month. The Transport Bureau said in a press statement yesterday that there were ‘a few local and overseas potential investors in contact with the government in the past period’ on Reolian. “But there are not many companies that have local operating experience and a sense of responsibility towards local society,” Mr Wong told media on the sidelines of an event yesterday, describing the background of the interested investors. The government is now actively negotiating with “a company with local operating experience” for the deal and the situation will be “clarified more” within this month, he pledged, whilst declining to reveal further information at the moment. This newspaper reported on March 28 that TCM is interested in the deal, quoting sources who are knowledgeable about the matter. It is unclear at the moment, however, whether the deal will be made under the name of TCM, its parent Nam Kwong, or Nam Kwong’s other subsidiary China Travel Service (Macao) Ltd.
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May 8, 2014
Macau Brands
Trends
Fendi 2Jours to be sure Raquel Dias newsdesk@macaubusinessdaily.com
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lot has been said about handbags in this still young column. It seems unavoidable to talk about one of the main assets of the luxury industry: the handbag. Arguably its importance is for women what high quality timepieces are for men. A symbol of elegance, power and status, the market is overflowing with choices, and people in Asia actually queue up to get one. I’m no economist but isn’t it true that that’s what one’s supposed to do with commodities? With this in mind, we introduce yet another beautiful example of a great coveted piece: the Fendi 2Jours. In every colour you can imagine, this high-end bag has conquered the heart of many. The brand describes it as a shopping bag with detachable shoulder strap and customizable nametag with enamel details. The clean lines and the many special editions it has enjoyed since first launched make it a good option for the ‘investment’ piece. It’s also quite roomy so mums are a good target as well. If you’re a fan or know a special someone who is, a not to be missed opportunity has arrived. The Fendi boutique at One Central Macau is holding a Fendi & Me event where ladies can customise their own 2Jours bag with their initials. The monogramming opportunity got underway May 1st and concludes May 11th.
Junket investor bids US$2 bln for Saipan casino licence An investor in seven Macau VIP rooms has bid for the exclusive casino licence of a Pacific Ocean island with an investment of no less than US$2 billion Tony Lai
tony.lai@macaubusinessdaily.com
L
ocal junket investor First Natural Foods Holdings Ltd will invest at least US$2 billion (16 billion patacas) in a casino-hotel resort in a Western Pacific Ocean island, if it acquires an exclusive casino licence there. The listed firm told the Hong Kong Stock Exchange yesterday in a filing that its wholly-owned subsidiary, Best Sunshine International Ltd, had submitted a business plan on Monday to the authorities of the island of Saipan in the Northern Mariana Islands bidding for the sole gaming licence. First Natural said it aims to build ‘four luxury hotels and villas in four stages’ on the island, which is a commonwealth territory of the United States. The firm will make an ‘initial investment of at least US$2 billion… to include a casino and an integrated resort which will include the construction of 2,000 guest rooms’ as the statutory requirements of acquiring the gaming licence. It is not the first time First Natural Foods has set its sights on the gaming industry; in March, the firm completed
the HK$400-million acquisition of a firm which has a 5 percent profit interest in Macau junket company Hang Seng Sociedade Unipessoal Ltda. Hang Seng operates 86 VIP gaming tables in seven VIP rooms in StarWorld Casino, Wynn Casino, Galaxy Casino, Sands Cotai Central Casino, MGM Casino, and Venetian Casino, according to a filing of First Natural Foods in November.
The junket raked in profits of over HK$462 million in the first ten months of last year, the November filing added. First Natural Foods said yesterday that the Saipan authorities will announce whether it can acquire the casino licence before June 20. Island newspaper Saipan Tribune reported last month that two companies have so far applied to the authorities for the licence, including First Natural. Marianas Stars Entertainment Inc, 25 percent of which is owned by Hong Kong-based Mega Stars Overseas Ltd, is another applicant, the newspaper reported. The Saipan Tribune quotes island governor Eloy Inos as saying that because their casino project targets the Chinese market they will hire experts from Macau to review the bids. The governor added that the casino resort can provide “an economic future for many families” on the island. First Natural Foods is also pending approval from its board to change its name to Imperial Pacific International Holdings Ltd to better reflect the new business focus of the firm.
Iao Kun rolling chip turnover up 17pct in April T he rolling chip turnover for Iao Kun Group Holding Company Ltd, which operates as a junket in Macau casinos VIP rooms, reached US$1.72 billion (13.76 billion patacas) for the month of April, up 17 percent from the same month last year. This, the company said in a statement, represents a win rate for the month of April of 1.9 percent. In addition, the company’s rolling chip for the first four months of the year was US$6.49 billion, also up 17 percent from a year ago, compared to US$5.55 billion in the
first quarter of 2013. The company in Macau primarily focuses on VIP Baccarat. According to Gaming Inspection and Coordination Bureau figures, VIP Baccarat raked in 65.1 billion patacas in the first quarter of this year, a 12.6 percent growth from 57.8 billion patacas over that of the same period in 2013. For the whole of 2013, VIP Baccarat raked in 238.5 billion patacas, up from 210.9 billion patacas in 2012. The group’s chip turnover was US$17.04 billion in 2013 – an average of US$1.42 billion per
month. The total in 2013 was, however, 7 percent down on the US$18.23 billion achieved in 2012. Last November, Iao Kun said it had hired Rothschild (Hong Kong) Ltd, part of global financial advisors Rothschild Group, as its new sponsor for a dual listing in Hong Kong. Iao Kun said in a press statement carried on the official Nasdaq website that the junket firm would complete the Hong Kong exercise ‘as soon as practicable’. It had previously said it would be in early 2014. S.F.
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May 8, 2014
Macau
Analysts pore over implications of Labour Day revenue growth Analysts are divided on how casinos benefited by the one-fifth rise in visitor figures for the Labour Day holiday, with one investment bank saying the performance was ‘softer’ Tony Lai
tony.lai@macaubusinessdaily.com
and Hong Kong. Brokerage Barclays Capital noted in a client note yesterday, however, that it is difficult to make year-onyear comparison for the May 1-May 4 period gaming revenue, as last year’s holiday lasted from April 29 to May 1. Adjusted growth for this year’s May 1 holiday against last year’s should reach the ‘mid-teens’, the bank added. The client note further revealed that Sands China, controlled by US billionaire Sheldon Adelson, reclaimed the leading position against rivals with a market share of 24.2 percent in the May 1-May 4 period. This represents a growth of Sands’ market share to 22.2 percent last month. Galaxy Entertainment, controlled by Hong Kong tycoon Lui Chee Woo, took second position with a market share of 21.4 percent, Barclays estimated, up from 18.8
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aming analysts are divided on how the territory’s gross gaming revenue benefited from the influx of one-fifth more visitors in the Labour Day holiday period, with Sands China Ltd and Galaxy Entertainment Group Ltd leading the market. Investment bank Credit Suisse Group AG said the casinos took in 1.4 billion patacas (US$175 million) a day on average in the period May 1 to May 4, up 9 percent from a year earlier.
Bank analyst Isis Wong, however, wrote in a client note released this week that the performance was ‘softer than the recent Golden Week holidays’. The Public Security Police Force announced this week that there was a solid growth in the number of visitors during the May 1-4 period, rising by 20.3 percent to 551,957 travellers, amid recent Hong Kong media reports that the crackdown on corruption in mainland China had affected visitations to Macau
Giordano shares plunge after threadbare profits warning T
he shares of apparel retailer Giordano International Ltd hit a three-year low yesterday after its issue of a profit warning over weaker consumer demand in the Greater China markets. Giordano closed at HK$4.31 (US$0.54) on the Hong Kong Stock Exchange yesterday, declining by 16.63 percent. The shares went down as much as 16.83 percent yesterday, while the city’s benchmark Hang Seng Index dipped 1.05 percent. The downslide performance of the retailer came after it said in a filing on Monday night that the previous trading day the company said it ‘is expected to record a significantly lower profit’ in this year’s first half.
The firm raked in profits of HK$340 million in the first six months of last year. ‘Consumer demand in Greater China markets continues to weaken’ and the recent depreciation of the yuan has affected the company’s performance, the filing said. The firm will release this year’s first quarter earnings today. In a client note yesterday, brokerage Credit Suisse Group AG reiterated the rating of the retailer as ‘sell’ with a target price of HK$4.61. Giordano operates two major stores in Macau through its Giordano (Macau) Ltd subsidiary. It also operates three outlets in Macau under the BSX youth fashion brand. T.L.
percent last month. Last month’s market leader SJM Holdings Ltd, headed by gaming tycoon Stanley Ho Hung Sun, dropped to third place with a share of 19.1 percent, the bank said, down from 24.5 percent in April. According to the Gaming Inspection and Coordination Bureau, the casinos took 133.5 billion patacas in the first four months of the year, up 17.5 percent year-on-year, having risen by 10.6 percent last month. Barclays said yesterday that the daily revenue for casinos for the remainder of this month can maintain form at 1 billion patacas, bringing May revenue growth to 17 percent and 33.6 billion patacas. Wells Fargo & Co also said in a note on Monday, US time: ‘Following strong results from the first four days of May, we could expect mid-teens year-on-year growth for May, versus our 15 percent estimate.’
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May 8, 2014
Macau Tightening visas could dampens revenue by 5pct The territory’s gaming revenue could be dampened by 3-5 percent, in the worst scenario, if authorities tighten the visa procedures of mainlanders visiting Macau, Bank of America Merrill Lynch posited yesterday in a research note. The bank’s forecast follows comments from the cabinet of the Secretary for Security saying that they are considering shortening the stay period that mainland visitors can enjoy whilst transiting Macau. The Cabinet said last week that 80 percent of mainlanders visiting Macau last year using a visa for overseas trips did not continue their itineraries, bypassing normal visa application procedures to visit Macau.
UN puts Government in witness box The Government is to be questioned today about a report on the rights of individuals in Macau sent to the Committee on Economic, Social and Cultural Rights (CESCR) on 31st March. Despite criticism of the document by some NGOs the initial position of the Executive should stand during the hearing Alex Lee
Alex.lee@macaubusinessdaily.com
M
acau’s government will be heard today by the United Nations Committee on Economic, Social and Cultural Rights (CESCR) in Geneva (Switzerland). In the meeting, Macau’s representatives are to be questioned about the political expedients adopted to address issues such as the equal rights of men and women in the labour market, rights to just and favorable conditions of work for migrant workers, rights to join trade unions and to strike, and also the steps that have been taken by authorities to tackle domestic violence. The hearing will run from 9:00am to 6:00pm (3:00pm to midnight, Macau time) and the Macau team will be questioned after Mainland China and Hong Kong, who will also be represented in the meeting. As requested by the United Nations, prior to the hearing the government sent to the Committee a written report responding to the issues. NonGovernmental Organizations (NGOs) were invited to study the document and to give their feedback on it. Macao Anti-Domestic Violence Coalition (MADVC), New Macau Association (NWA), Rainbow of Macau (RM) and PEDULI Indonesian Migrant Workers Concern Group participated in this process. Furthermore, according to the Portuguese-language newspaper Hoje Macau, Juliana Devoy, representing Macao Anti-Domestic Violence Coalition, was heard by the Committee
for three minutes last Monday in Geneva. In spite of some criticism of the document by the NGOs related to the policies adopted on domestic violence criminalization, public housing supply and workers rights, Business Daily understands that the government will stand by its initial position.
The Government’s written report Before the meeting, the Executive Government, led by Fernando Chui Sai On, was requested to send a written report on the topics to be discussed. In the document, dated 31st March, the government highlights ‘both male and female workers of public departments have similar income’. But it conceded that ‘there is still a pay gap in private institutions due to difference in physical ability’. About CESCR’s concern to ensure that migrant workers have formal contracts and are paid equal to local workers it can be read in the document that ‘non-resident workers enjoy rights, obligations and work conditions not inferior to local workers’. According to the Executive ‘both non-resident workers and local workers are basically protected by the same laws’. It was also explained that ‘normal working hours should not exceed eight hours a day and forty-eight hours a week’. However, it is added in the document that if the employer and
employee reach an agreement then working hours can be extended to a maximum of 12 hours. But if an employer is facing great loss or an unpredictable increase in the amount of work he can demand 16 working hours per day from the employee, as long as the employee is remunerated accordingly. As for the introduction of a statutory minimum wage, the government informed the Committee that ‘both employers and employees have agreed to set a minimum wage’ for cleaning and security staff. Furthermore, the Executive conducted a public survey between 30th September and 15th November in 2013 to solicit public opinion on this issue.
Domestic violence and Public Social Housing On the topic of domestic violence, the government explained to the committee that a draft text for the Domestic Violence Prevention Act ‘has already been drawn up’. It is also mentioned that ‘the draft law is basically finished at the present and there are conditions for the draft to enter into the legislation process within a short period of time’. According to the government, the new act will strengthen the protection and support of victims of domestic violence. A special focus for the CESCR was the increase in the supply of public housing. According to Fernando Chui
Sai On’s Executive, it has already provided 45,200 public houses and sponsored nearly 18,600 units. The Macau SAR Government is also planning to build 19.000 public housing units on five plots of newly reclaimed land that were illegally occupied.
New Macau Association: Public Housing a priority “Public housing should be a priority in the meeting. It is one of the biggest concerns for Macau citizens as prices of housing are too high. So far the government has failed to address this matter properly”, Jason Chao, president of New Macau Association, told Business Daily. For NWA the other priorities should be the definition of a minimum wage and the rights of migrant workers. Concerning the document sent by the government to the Committee, Mr. Chao considered it “very misleading” as there is a “lack of transparency”. As for the meeting, Chao hopes that at least some of the UN recommendations are adopted by the government.
The public crime of domestic violence “I focused on trying to change domestic violence to a public crime when it reached the Legislative Assembly”, said Juliana Devoy, who was heard by the Committee on the representation of the NGO Macao Anti-Domestic Violence Coalition, reports Hoje Macau newspaper. The meeting that took place last Monday lasted for three minutes. The objective of the NGO is that domestic violence is considered a public crime instead of a semi-public crime so that authorities are able to prosecute perpetrators if victims decide not to press charges.
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Greater China
“Hummer” tycoon probed The Chengdu public security bureau and financial regulators are concerned that the local financial system may face instability if Li’s companies fail to repay their debt
The Hummer H1, the only model of the joint venture between GM and Sichuan Tengzhong Heavy Industrial Machinery, was built between October 2009 and February 2010
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hinese authorities are investigating the finances of companies controlled by a mining tycoon who once sought to buy the now-defunct Hummer brand, said two people familiar with the matter. Li Yan’s companies in western China’s Sichuan province have amassed 10 billion yuan (US$1.6 billion) in debt and may not repay all of it, said the people, who asked not to be identified because the case hasn’t been made public. Li, also known as Suolang Duoji, controls companies including Chengdu-
based Sichuan Tengzhong Heavy Industrial Machinery Co., which was set to buy the Hummer line of sportutility vehicles from General Motors Co. in 2009. The deal collapsed after failing to win approval from Chinese regulators, which stymied Tengzhong’s bid to tap China’s expanding market for passenger vehicles. Li also founded Chengdu-based Sichuan Huatong Investment Holding Co. and is the major shareholder in Hong Kong-listed China Lumena New Materials Corp., a miner of sulphates used in laundry detergent and glass.
Trading of Lumena was suspended March 25 after short-seller Glaucus Research Group published a note alleging that Lumena’s sales are 90 percent less than what it reported in stock exchange filings. Lumena Chairman Zhang Zhigang denied the Glaucus report, according to an April 4 statement on the company’s website. Investigators are looking into all of those companies as part of the probe, the people said. The Chengdu public security bureau and financial regulators are concerned that the local financial system may face instability if Li’s companies fail to repay their debt, according to the people. Several billion yuan of the 10 billion yuan debt accumulated by Li’s company are bank loans, the people said.
492nd richest Li was ranked the 492nd richest person in China with wealth of 4 billion yuan, according to the 2013 Hurun Report. After reports on Sina, Phoenix and other China media said yesterday that Li had disappeared, Lumena issued a statement denying he had vanished. Zhang, the company chairman, contacted Li the same day and was told everything was normal, according to the statement. Hours later, an article on the website of the Communist Party-controlled
People’s Daily newspaper repeated the claim that Li had disappeared. The report cited two unidentified officials, one from the Sichuan financial regulator’s office and the other from the Chengdu Economic and Information Commission. China Lumena issued a statement to the Hong Kong stock exchange today repeating Zhang’s statement that he had been in contact with Li.
Exercise caution “Shareholders of the company and potential investors are advised to exercise caution when dealing in the shares of the company,” Lumena said in the statement. A man who answered a call yesterday to a phone number provided on Sichuan Tengzhong’s website and asked not to be identified said the company was operating normally. Asked about Li’s whereabouts, he said he had no information and suggested calling the Chengdu city government. Three phone calls to the same number today rang unanswered. An official from the Chengdu Economic and Information Commission declined to comment when reached by phone, while a man who answered the phone at the Chengdu public security bureau also declined to comment. Bloomberg News
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Greater China Gold bar consumption slumps in Q1 Demand for gold bars fell nearly 44 percent in the first quarter of 2014 from year ago, even as total gold consumption edged up about 0.8 percent during this period, the China Gold Association said yesterday. Total gold consumption was 322.99 tonnes in the January to March period, up 2.45 tonnes from year ago. Out of this total, gold jewellery purchases jumped 30.2 percent from year ago to 232.53 tonnes, but consumption of gold bars dropped 43.56 percent to 67.95 tonnes, the association said in a statement on its website.
HK April PMI contracts The latest PMI figure showed a contraction for the second consecutive month in April and was the lowest since August 2013, signalling a slight deterioration in operating conditions in Hong Kong’s private sector. Output shrank for the second consecutive month in April while new orders received by private sector companies expanded fractionally in April, following a slight contraction in March. Private sector firms cut their employment levels for the first time in three months due to subdued client demand. Lower production requirements led to a second monthly fall in purchasing activity in Hong Kong’s private sector.
Anti-pollution steps slows steel production China’s steel production has plateaued and mills are focusing on complying with tougher anti-pollution measures instead of expanding capacity, a senior official of the China Iron and Steel Association (CISA) said yesterday. The fight against pollution has led to the shutdown of some steel mills in China, the world’s biggest producer of the alloy, where output reached a record high of 779 million tonnes last year. Tighter credit has similarly increased their costs. The squeeze in credit lines has led to a 22 percent jump in steelmakers’ financial costs in the first quarter from a year ago.
Alibaba starts IPO journey More than 80 percent of its revenue comes from its three main online marketplaces: Taobao, Tmall and Juhuasuan
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he firm gave investors a closer look at the scale and growth of the Chinese e-commerce juggernaut in an initial public offering prospectus filed on Tuesday, the first step in what could be the largest technology debut in history. Alibaba Group Holding Ltd, which powers 80 percent of all online commerce conducted in the world’s second-largest economy, is expected to raise more than US$15 billion, potentially surpassing the US$16 billion that Facebook Inc raised when it went public in 2012. While the Alibaba brand name is hardly as well known among U.S. consumers as Internet companies Amazon.com or Facebook, the Chinese company’s IPO has stirred the most excitement in Silicon Valley and Wall Street since Facebook’s record-breaking IPO. It will become the largest Chinese corporation to have sought a home on U.S. exchanges. Alibaba will debut in a market where high-flying stocks like Twitter and Amazon have in past weeks been brought back to earth, in a selloff that has divided Wall Street while reviving doubts about soaring tech valuations. Still, estimates of Alibaba’s market value have soared in recent months, to even beyond US$200
billion. That underscores Wall Street’s eagerness to take a crack at a massive Chinese company that is growing vigorously. Alibaba handled more than 1.5 trillion yuan, or about US$248 billion, of transactions for 231 million active users across its three main Chinese online marketplaces in 2013, more than Amazon Inc and eBay Inc combined. That is with 20,884 full-time workers, fewer than eBay. “If it is able to transport that kind of power to outside China, it has the potential to become a true global ecommerce powerhouse,” said Roger Entner, lead analyst and founder of Recon Analytics. “Everybody thought Amazon could do it but now we have to rethink Amazon in the light of being the most successful company in that field in the U.S. but not in the world.” Alibaba did not provide any hints in its prospectus about potential plans for the U.S. e-commerce market. Analysts said it was unlikely that Alibaba would adopt the model favored by Amazon, which sells goods directly to consumers using a sprawling network of warehouses.
and controlled by a 28-member partnership, boasts of building a company that will last “at least 102 years.”
Jack Ma, founder of Alibaba, owns a US$13 billion fortune excluding the possible IPO earnings
At least 102 years Alibaba, founded 15 years ago in a Hangzhou apartment
Deflating property market increases debt dangers
The PBOC will strengthen monitoring of credit extended to LGFVs, real estate companies and industries with Senior official stresses easy business registration overcapacity to minimize risks to the financial system Chinese State Councilor Wang Yong on Tuesday urged implementation of business registration reform, designed to cut obstacles to starting a business. China lifted restrictions on minimum registered capital, payment deadlines, down payment ratio and cash ratio of registered capital on March 1. An annual inspection system was also replaced by one based on self-reporting. These measures should be fully carried out so as to further lower market threshold and invigorate social investment, said Wang during his tour of Guangdong Province. Wang also asked authorities to streamline registration procedures and clean up administrative approvals.
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hina’s weakening property market poses an increasing danger to local governments, threatening to strain their finances and intensify an economic slowdown. Land sales in 20 major cities
fell 5 percent in March from a year earlier, the biggest drop in at least a year, according to China Real Estate Information Corp. data compiled by Bloomberg. The value of land sales in third-tier cities declined 27 percent
Demolition manager detained for Shanghai building collapse The manager of the company in charge of the demolition of a residential building in Shanghai which collapsed on Sunday killing two people has been detained, authorities said on Tuesday. The collapsed building was a three-storey brick and wood private structure, scheduled to be demolished in 2002. In March 2006, the demolition stopped due to lack of funds. An initial investigation showed the accident was caused by a Calor gas explosion, which also damaged a second building.
Land sales fell 5 percent in March reflecting a weak housing market
last month, according to SouFun Holdings Ltd., the nation’s biggest real-estate website owner. Failure to find other revenue sources increases the risk of defaults and financial turmoil that
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Greater China US$200 billion
Alibaba’s estimated market value
After the IPO, Alibaba said, the partnership will have the exclusive right to nominate a simple majority of the members of its board of directors. Alibaba operates an online messaging service as well as a cloud computing business, but more than 80 percent of its revenue comes from its three main online marketplaces: Taobao, Tmall and Juhuasuan. Top items sold on Taobao include prepaid phone and game cards as well as lottery tickets, home furniture and baby products, the company said. Some analysts point out that Alibaba’s rapid pace of revenue growth may be unsustainable. “They got into the e-commerce space when there weren’t any other players in China,” said Forrester analyst Kelland Willis, adding that Alibaba has been “losing market share year over year.” By 2020, online retail sales in China will reach between US$420 billion and US$650 billion, as much as the United States, Japanese, UK, German and French markets combined, according to a recent analysis by McKinsey Global Institute. Alibaba said the Chinese mobile Internet arena, where it is battling Tencent Holdings for supremacy, is the next growth industry. Roughly one-fifth of all purchases in the last three months of 2013 were made on a mobile device, up from 7.4 percent a year earlier. But Alibaba added that for now these sales were less profitable than those made on its website. Reuters
curb economic expansion already projected this year at the slowest pace since 1990. Some cities plan to reverse controls implemented to make home prices more affordable or give residency benefits to out-oftown buyers, a state-run newspaper reported this week. “As the housing market is cooling off, we expect land-sale revenue will decline and this will add pressure on the funding capacity for local governments,” said Zhu Haibin, chief China economist with JPMorgan Chase & Co. in Hong Kong. Land sales will drop more in areas where oversupply in property is more severe, said Zhu, who previously worked at the Bank for International Settlements. The weakness adds to the urgency of expanding China’s municipal-bond market so regional governments can sell debt directly to the public instead of through off-budget corporations called local-government financing vehicles. A sample of provincial, municipal and county administrations shows they have guaranteed repayment of about 37 percent, or 3.5 trillion yuan (US$560 billion) of debt with land sales, according to a national audit report released in December.
Default monitoring The People’s Bank of China said on Tuesday it will strengthen monitoring of credit extended to LGFVs, real estate companies and industries with overcapacity to minimize risks to the financial system. The central bank will maintain a “prudent” monetary policy, according to a quarterly report. A worsening market downturn would increase pressure on national leaders to ease monetary policy for the first time since 2012. Premier Li Keqiang and other officials have outlined plans for railway spending
and tax breaks to support growth while pledging to avoid any shortterm, large-scale stimulus that could exacerbate debt risks. The government budgeted for an 11.8 percent drop in land- sales revenue in 2014, according to the Finance Ministry’s annual work report in March. Nationwide, land sales in 2013 were equivalent to about 61 percent of local-government revenue, according to figures from the Ministry of Land and Resources and the Finance Ministry.
Snowball risk “More policy easing in the next few months will be critical, as the property correction could snowball,” Nomura economists led by Zhang Zhiwei in Hong Kong wrote in a May 5 report. “Local governments are likely to be under even more pressure to help the property sector as their fiscal revenue generation is so highly dependent on land sales.” Developers may have less incentive to buy land as a 25 percent plunge in new-building construction helped drag economic growth in the first three months of this year to 7.4 percent, the weakest in six quarters. Without stimulus, property- investment expansion may slow enough to push down expansion to as low as 5.8 percent, Nomura said. “Just as happened before the property bubbles burst in the U.S. and Japan, monetary policy tightening” is playing an important role in the property downturn’s timing and pace, Zhang wrote. HSBC Holdings Plc economists said in a May 5 report that “now is the right time” for the central bank to help private investment. Longterm interest rates “have stayed stubbornly high,” wrote analysts led by Qu Hongbin in Hong Kong. Bloomberg News
Services sector expansion subdued The expansion, albeit muted, mirrors a similar slow improvement shown in China’s official services PMI, released on May 3
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xpansion in China’s services industry slowed slightly in April, with employment growth slipping to a seven-month low, a private survey showed yesterday, adding to an increasingly cloudy outlook for the world’s second-largest economy. The Markit/HSBC services Purchasing Managers’ Index (PMI) stood at 51.4 in April from March’s 51.9, but holding above the 50 level that separates expansion from contraction. The survey found that input prices index eased to their weakest in 10 months, and while the new and outstanding business sub-indexes remained stable, the sub-index of business expectations fell to a sevenmonth low. The data showed “that the service sector is still a relatively resilient part of the economy, but it is not expanding at a fast enough pace to offset the manufacturing slowdown,” said Qu Hongbin, chief economist for China at HSBC. “We think that the economy will continue on a modest path of expansion over the next few months.” The expansion, albeit muted, mirrors a similar slow improvement shown in China’s official services PMI, released on May 3. That index rose to 54.8 in April from March’s 54.5.
Services made up 46.1 percent of gross domestic product in 2013, having overtaken manufacturing as China’s biggest employer in 2011. The fall in employment noted in the survey could be a concern as the government has said job creation is its top priority this year. The official PMIs are weighted more towards bigger and stateowned enterprises and tend to paint a rosier picture than the HSBC/Markit surveys, which focus more on smaller private firms. China’s growth engine has lost steam in the past year, squeezed by lacklustre demand for exports and the government’s push to cut its own investment in a bid to reshape the economy. Markit/HSBC’s manufacturing sector PMI, released on May 5, showed that activity contracted for a fourth consecutive month in April, with the index at 48.1. However the official manufacturing PMI rose to 50.4 from March’s 50.3, indicating a slight expansion. To prove China has the mettle to enact painful reforms, Premier Li Keqiang has repeatedly said policy would not be loosened drastically to counter any short-term dips in activity. Reuters
Commerce Minister promotes business in Nigeria Nigeria is China’s third largest investment destination in Africa
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hina encourages more Chinese enterprises to expand investment in Nigeria’s manufacturing sector, transfer technologies and train personnel to increase local job opportunities, Chinese Commerce Minister Gao Hucheng said yesterday. Nigeria has a huge population and consumer market, while China has an edge in the processing industry, Gao told Xinhua. The two countries can further deepen bilateral cooperation in areas like textile, garment and household appliance industries on the basis of their current economic and trade cooperation zones, while gradually expanding the scale and level of cooperation, Gao said. Nigeria is China’s third largest investment destination in Africa and China’s accumulated investment in Nigeria has reached US$1.95 billion by the end of 2012. In recent years, investment from China’s private enterprises in Nigeria has increasingly been active as over 40 Chinese private firms have entered Nigeria with a total investment of US$800 million in the fields of agriculture, textile industry, construction materials, mining and others, Gao said. Chinese enterprises invest in Nigeria’s seed cultivation and have become the Nigerian government’s seed providers, which helps boost local
self-support in grain, he said. Chinese and Nigerian enterprises have joined hands in operating satellite networks, with digital television signals covering 84 percent of the African country, which promoted cultural exchanges of both countries, Gao said. Within the framework of the ChinaAfrica Cooperation Forum, Chinese enterprises and the Nigerian government have worked together to build two economic and trade cooperation zones in Nigeria and to open chinaware, furniture and household appliance manufacturing factories, which have created more than 4,000 jobs in the country, Gao said. Nigeria currently has become China’s third largest trade partner and second largest export market in Africa, while China is Nigeria’s third largest trade partner. Trade value between China and Nigeria reached US$13.6 billion in 2013, almost five times the figure in 2005, Gao said. Nigeria is a country where Chinese enterprises undertook most infrastructure projects in Africa, Gao added. Chinese enterprises have repaired an accumulated length of 4,500 km of railway in Nigeria since 1995, as they currently are building railways and metropolitan light rails there, he said. Xinhua
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Asia Vietnam-NZ tax agreement A new double tax agreement (DTA) between Vietnam and New Zealand that came into force yesterday should help boost bilateral trade, said New Zealand Revenue Minister Todd McClay. “The new agreement will give businesses greater certainty over the tax treatment of cross-border investment income, reduce compliance costs for both New Zealand and Vietnamese investors, and will lower withholding tax rates on dividends, interest and royalties,” McClay said in a statement. The agreement, which was signed in August last year, brought New Zealand’s network of DTAs to 39 and increased its DTA coverage among trading partners in the ASEAN region.
Mitsubishi and Siemens to set up joint venture Japan’s Mitsubishi Heavy Industries Ltd. (MHI) said yesterday that it signed an agreement with Germany’ s Siemens to form a joint venture for steel and metal production machinery, local media reported. They aim to provide “plants, products and services for the iron, steel and aluminium industry” and to accelerate globalization, Mitsubishi Heavy said in a statement released earlier the day. The joint venture will be 51-percent owned by Mitsubishi-Hitachi Metals Machinery Inc., an MHI group company, while Siemens will hold a 49 percent stake.
RBNZ might intervene New Zealand’s currency reflects the country’s better economic strength but is over-valued and unsustainable at current levels and might prompt the central bank to intervene, the governor of the Reserve Bank of New Zealand said yesterday. Central bank Governor Graeme Wheeler said the currency, which struck a 2-1/2 year high of US$0.8779 overnight, could be expected to weaken if the Chinese economy were to slow, dairy prices fall and the U.S. economy improved.
Consumer spending resilient Bank of Japan board members agreed that consumer spending remains buoyant following an increase in the sales tax rate in April, due to a tight labour market and improving wages, minutes of the central bank’s April 7-8 meeting showed yesterday. One member added that inflation could quicken from April as companies use the tax hike as an opportunity to pass on higher input costs, the minutes showed. One member also said the front-loading of demand before the sales tax increase in April was larger than what preceded the last sales tax hike in 1997.
Asian banks use diplomacy as Banks are building up their own regulatory or government affairs’
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tung by regulatory probes into allegations ranging from the hiring of the offspring of senior state officials in China to rate manipulation in Singapore, and grappling with reams of new rules brought in after the global financial crisis, firms are going on a charm offensive with the region’s regulators and governments. Executives brought in to head banks’ businesses in major Asian financial centres are now expected - by management and regulators themselves - to devote more time to building their relationships with financial watchdogs.
Regulators have become major stakeholders as important as big corporate clients - so firms are recognising how key they are for business Judy Vas, Ernst & Young’s
UBS had to hire a former Wall Street Journal journalist Peter Stein as its head of group governmental affairs for Asia Pacific
“Regulators have become major stakeholders - as important as big corporate clients - so firms are recognising how key they are for business,” said Judy Vas, regulatory leader for Ernst & Young’s financial services business in Asia. Barclays recently promoted its Asia head of tax, Li Li Kuan, to become country head for Singapore, stressing one of her primary duties was to manage “regulatory relationships” in the city-state. Her appointment was relatively unusual, given country head roles are
more often filled by “rainmakers” corporate or investment bankers there to close deals and look after major clients. But priorities are starting to shift. JPMorgan brought in former DBS Vickers boss Edmund Lee as its Singapore head last year, replacing Philip Lee, who had been more focused on investment banking clients, noting one of his key duties would be to manage relationships with the government and regulators. Thomson Reuters Cost of Compliance survey found compliance
Australian retail sales lose momentum Sales rise for the 11th straight month in March
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etail sales could only inch higher in March as the brisk spending momentum of the start of the year waned, an unwelcome development given the damage being done to consumer confidence ahead of next week’s federal budget. Retail sales rose just 0.1 percent in March, short of forecasts of a 0.4 percent increase and a further step down from 0.3 percent in February and 1.1 percent in January. And the outlook for consumption has darkened further in recent weeks as the Liberal-National government softened up the electorate for a pennypinching budget. Treasurer Joe Hockey is set to announce a mix of spending cuts, increased charges and, maybe, higher taxes on May 13 and consumer sentiment has already taken a blow because of it. “The one major risk to the healthy lift in retail activity is clearly centred on the upcoming Federal Budget,” warned Savanth Sebastian, an economist at CommSec.
KEY POINTS Retail sales rise 0.1 pct in March, short of forecasts Cloud over consumption as government touts tough budget Sales volumes still strong for Q1, bodes well for GDP
“It is admirable to see the Government looking to improve the medium-term outlook for national finances, however cutting to deeply in the short term can have a detrimental impact on sentiment and, in turn, spending.” A sustained revival in sales is important as the A$270 billion retail
sector accounts for 17 percent of Australia’s A$1.5 trillion annual gross domestic product (GDP) and is the second-biggest employer, providing 10 percent of all jobs. Still, yesterday’s data from the Australian Bureau of Statistics was not without its bright spots. Sales did rise for the 11th straight month in March, the longest run of gains since 2006 that took annual growth in sales to a healthy 5.7 percent. Spending for the whole first quarter increased by a robust 1.2 percent to an inflation-adjusted A$67.5 billion (US$63 billion), suggesting household consumption made a useful contribution to economic growth. “If you step back from the monthly volatility the trend in sales is still solid,” said Paul Bloxham, chief economist for Australia & New Zealand at HSBC. “Sales volumes are rising strongly and that’s what matters for growth. The first quarter looks like it was a good one for the economy.” Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk Alex Lee, Luciana Leitão, Michael Armstrong, Sara Farr, Stephanie Lai, Tony Lai International editor Óscar Guijarro GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari interns Cynthia Wong, Yvonne Wong Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Asia
defence
Europe, most firms have a very nascent function or none at all in the Asia Pacific region,” said Chris Cook, a head-hunter for Executive Access in Hong Kong.
offices
Talent pool
teams at finance firms in Asia saw the biggest rise in 2013, compared with other regions, in the amount of time they spend preparing reports for their management boards. More than a third of teams in Asia spent at least one day a week on this work, compared with around 20 percent in 2012. Banks are also building up their regulatory or government affairs’ offices, an area they’ve previously put less focus on in Asia. “Although many firms have established regulatory policy and strategy functions in the U.S. and
That presents a tall order for headhunters such as Cook, who says his firm is currently trying to fill several such positions, since there’s not an established pool of talent in the region to tap from. JPMorgan in January turned to former Asia IMF head Anoop Singh to become its Asia head of regulatory affairs, while Goldman Sachs brought in former U.S. ambassador to Singapore David Adelman as head of government relations. UBS in January 2012 hired former Wall Street Journal journalist Peter Stein as its head of group governmental affairs for Asia Pacific. “You will see front office staff made redundant in order to ramp up these areas,” said Marc Baloch, the Asia Pacific head of Harvey Nash Executive Search. He notes how HSBC, which increased its number of compliance staff by 54 percent between 2012 and 2013, is looking to hire people into this function with a “diplomatic” skill set. The challenge for these roles in Asia is the sheer number of regulators that banks in the fragmented and diverse region must handle. JPMorgan interacts almost daily with more than 30 Asian banking regulators, a spokeswoman for the firm in Hong Kong said. The bank, in common with its global peers in Asia, reports to more than 100 regulators in the region across the full range of its businesses including banking, insurance and commodities. Reuters
Vietnam arrests railway officials in Japan aid graft scandal The country is still rated one of the world’s most corrupt nations
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olice in Vietnam have arrested four railway officials in a probe into allegations a Japanese firm paid massive kickbacks to win a railway contract for Hanoi, state media said yesterday. Deputy director general of Vietnam Railways Tran Quoc Dong was arrested for “failure to carry out responsibilities causing serious consequences”, Tuoi Tre newspaper said. Three other senior railway officials were taken into custody for abusing their power, the report said without specifying when they were detained. In March Japan’s leading Yomiuri newspaper reported that the head of Japan Transportation Consultants (JTC), Tamio Kakinuma, admitted to prosecutors that an 80 million yen (US$790,000) bribe was paid to officials at Vietnam Railways for Hanoi’s over ground rail link worth 4.2 billion yen. The amount was part of 130 million yen his company had paid to civil servants in Vietnam, Indonesia and Uzbekistan to win work tied to projects funded by Japan’s Official Development Assistance (ODA). Vietnamese authorities vowed to investigate the issue thoroughly and punishment for anyone found guilty.
Japan remains communist Vietnam’s largest ODA donor with a pledge of US$2.6 billion last year. In December 2008, Japan suspended ODA to Vietnam for four months during a similar scandal that led to a 20-year jail term for Ho Chi Minh City’s transport department’s deputy head. Sy was accused of taking up to US$262,000 in 2003 from Tokyobased Pacific Consultants International company in connection with a major infrastructure project -a highway linking the east and west of the citybacked by Japanese aid money. Vietnam is still rated one of the world’s most corrupt nations. Communist party leader Nguyen Phu Trong on Monday urged for a serious punishment over corruption, as it remained “a challenge and the society’s most urgent problem”. To defuse public anger over the issue the nation’s leadership is desperate to show it is tackling graft. The one-party state has been rocked by a number of high-profile corruption scandals in recent years, with graft and huge debts at giant state-run companies accused of fuelling the country’s economic woes. AFP
NZ employment rate marks a 5-year record Governor warned the bank may have to intervene to weaken the currency
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ew Zealand’s jobless rate remained at its lowest in five years in the first quarter and a record number were in the workforce, maintaining expectations for another interest rate increase next month. The jobless rate was unchanged at 6.0 percent in the three months to March, Statistics New Zealand said yesterday. This was higher than economist forecasts for a 5.9 percent print, but the rate stayed at its lowest since the June 2009 quarter and points to a growing labour market as the economy strengthens. Employment growth was driven by the jobs in the construction industry, helping to boost the labour participation rate to 69.3 percent, the highest on data going back to 1986. The number of people employed rose by a seasonally adjusted 22,000. The New Zealand dollar slipped to US$0.8693 after the data from around US$0.8723 beforehand, as investors sold the currency on the slightly higher-thanexpected jobless rate. The currency had earlier tumbled in early trade after Reserve Bank of New Zealand Governor warned the bank may have to intervene to
weaken the currency. Wheeler said if the currency stayed high in the face of worsening fundamentals, such as continuing weakening in export prices, “it would become more opportune for the Reserve Bank to intervene in the currency market to sell NZ dollars.” Wheeler also said a high currency would contain tradable inflation pressures and would be a factor in its rate-raising decisions. Still, Tuesday jobs report pointed to on-going growth in the labour market, suggesting the RBNZ will raise official interest rates by 25 basis points to 3.25 percent at its next review in June, following two similar hikes in March and April. “This is a pretty strong report and this is how the RBNZ will see it. For interest rates, it doesn’t change the move to 4.5 percent by next year,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Sydney. “I see the RBNZ tightening in June, then rest for a couple of months.” Annual inflation rose 1.5 percent in the first quarter, staying near the mid-point of the RBNZ’s 1 percent-3 percent target range and keeping the central bank on its monetary tightening
The RBNZ (headquarters pictured) is expected to raise rates to 3.25 percent in June
track after it began raising rates in March. More New Zealanders are finding jobs as the country’s $180 billion economy continues to grow at a solid pace on the back of earthquake reconstruction projects in the Canterbury region, a booming housing market and increasing dairy exports. Employment gains were led by job opportunities in construction in the Canterbury region, along with retail and other services industries in Auckland, the country’s largest city.
Private sector wages edged up 0.3 percent in the latest quarter, maintaining a rising trend albeit at a slower pace than economist forecasts for a 0.5 percent rise. Some analysts said that a further slowing in wage growth as strong labour demand is met by increasing participation may quell overall inflation pressures, taking pressure off the RBNZ to raise rates down the line. “Rising cyclical potential growth should ... go some way to containing inflationary pressure in forthcoming quarters,” JPMorgan analysts
said in a note. “And the fact that wages grew a very benign 0.3 percent in Q1 underscores the point that measures of slack across the New Zealand are well behaved, and argue against the magnitude of tightening currently implicit in RBNZ forecasts.” A Reuters poll of 17 economists shows that all but one expect the RBNZ to raise rates to 3.25 percent in June, with most economists anticipating rates to rise to 3.75 percent by the end of the year. Reuters
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International
Cancer doctors to investigate drug prices
Caesars sells stake to reduce debt Caesars Entertainment Corp. is selling a minority interest in its largest unit, a step that removes guarantees by the casino company on much of its US$23 billion of debt and sets the stage for a wider restructuring. The Las Vegas-based company is selling a 5 percent stake in Caesars Entertainment Operating Co. to undisclosed investors, according to a statement yesterday. Caesars has agreed to pursue a stock exchange listing for the unit.
Doctors are in the process of creating a way to measure the value of the drugs they prescribe
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he backlash over surging drug prices is starting to take hold. With the average cost of branded cancer drugs doubling over the past decade to about US$10,000 per month in the U.S., doctors, insurers and politicians are all moving in different ways to pressure drug makers on pricing. Cancer doctors are in the process of creating a way to measure the value of the drugs they prescribe, the first step in a drive to give patients affordable options. Insurers are increasingly paying only a percentage of the cost of high-priced drugs, forcing drug makers to step into the breach for consumers who can’t afford their products. Politicians, meanwhile, have begun asking drug makers to explain the cost of their products. “This is a moral imperative,” said Clifford Hudis, president of the American Society of Clinical Oncology, the nation’s largest group of cancer doctors. “I don’t think any of us want to look back and say we turned away and didn’t lead while this was happening.” Global spending on cancer drugs alone rose 28 percent to US$91 billion in 2013 from US$71 billion in 2008, according to a report by the IMS Institute for Healthcare Informatics, the group that also reported the monthly cost rise. Those findings support a Bloomberg review of drug prices reported on May 1 that found dozens of medicines for ailments ranging from cancer to multiple sclerosis, diabetes and high cholesterol have doubled or more in price since late 2007. The Bloomberg review used data supplied by DRX, a Los Angeles-based company that provides drug comparison information.
Rising ceiling Increases among cancer drugs come about in two ways, through price boosts on older cancer pills, as well as a rising ceiling for medicines
This is a moral imperative. I don’t think any of us want to look German factory back and say we turned orders fall away and didn’t lead Orders unexpectedly fell in March, while this was happening signalling that growth in Europe’s Clifford Hudis, president of the American Society of Clinical Oncology Six bottles of chemotherapeutic agents for injection as marketed in the United States in 1993
newly on the market. “We are looking at a drug pricing bubble,” said Leonard Saltz, chief of the gastrointestinal oncology service at Memorial Sloan Kettering Cancer Center, who in 2012 led a rebellion at his hospital against an expensive cancer drug, refusing to put it on the formulary because of its price. “At what point do we say this is more than society can afford?” An upcoming study of BristolMyers Squibb Co.’s Yervoy for skin cancer underscores how drug costs may spiral upwards as doctors explore how to use higher doses of an expensive drug in larger groups of patients. The drug, approved for advanced melanoma in the U.S. in 2011, costs US$120,000 for a standard four-dose regimen, according to Bristol-Myers.
Oncology meeting Academic researchers will report on a study of an experimental high-dose regimen of Yervoy in earlier-stage melanoma patients at the American Society of Clinical Oncology’s annual meeting.
The new regimen would use more than triple the current dose of Yervoy and, if approved, may cost far more for each patient if the drug’s base price remains the same. “We do not speculate about potential pricing of our investigational compounds or doses,” Melanie Brunner, a Bristol-Myers spokeswoman, said in an e-mail. “It is premature for us to discuss possible plans for a regulatory filing” for approval of the potential new use, she said. At the cancer meeting, which starts May 30 in Chicago, doctors discussing clinical results for certain studies have been instructed to also examine the value of the treatments, said Hudis, who is also chief of the breast cancer medicine service at Memorial Sloan Kettering Cancer Center, in an interview at Bloomberg News in New York. In addition, education sessions focusing on value will look at the cost issue from the perspective of patients, insurers, the drug industry and other countries with more cost constraints, Hudis said. Bloomberg News
US changes visa rules to keep foreign talent This administrative change comes with further easing of restrictions for researchers seeking a green card
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he United States said it will soon start issuing work visas to the spouses of some foreign workers as part of a drive to retain highly skilled people. The change will affect the spouses of people with so-called H-1B visas, a limited-term working visa that employees obtain when they are sponsored by their companies. As it stands now, their spouses only get a “dependent” H-4 visa which allows them to live in the US but not to work. When spouses cannot work foreign families tend not to settle in the United States, depriving it of many workers highly skilled in science and technology. Under the changes, spouses of people with H-1B visas who have applied for permanent residency ‘green
cards’ can also apply for permission to work. “The proposals announced today will encourage highly skilled, specially trained individuals to remain in the United States and continue to support US businesses and the growth of the US economy,” said Deputy Secretary of Homeland Security Alejandro Mayorkas. “The fact is, we must do more to retain and attract world-class talent to the United States and these regulations put us on a path to doing that,” said US Commerce Secretary Penny Pritzker. Silicon Valley welcomed the news. The US information technology hub has for years been pushing for changes in immigration rules. But a more ambitious immigration reform, which would go beyond a
mere administrative tweak and for example raise the total number of visas available for foreign workers, has been stuck in Congress for nearly a year. “By sensibly improving these rules, we can help ensure that the most talented foreign innovators conduct their break-through research right here at home,” said Bruce Mehlamn, head of the Technology CEO Council, a business group bringing together major tech firms like IBM, Dell and Intel. “Of course these administrative improvements cannot substitute for the bipartisan, common-sense immigration reforms that Congress alone can advance,” he added. This administrative change comes with further easing of restrictions for researchers seeking a green card. AFP
largest economy remains uneven. Orders, adjusted for seasonal swings and inflation, fell 2.8 percent from February, when they increased a revised 0.9 percent, the Federal Statistics Office in Wiesbaden said yesterday. Economists forecast a gain of 0.3 percent, according to the median of 37 estimates in a Bloomberg News survey. The German economy is set for “dynamic, broad-based” growth, the European Commission said in its quarterly forecast, even as the Bundesbank warned that expansion will slow “noticeably” after a very strong first quarter.
SocGen books write-down on Russia Societe Generale, France’s second largest listed bank, said it had booked a 525 million euro (US$731 million) write-down on the value of its Russian unit Rosbank after months of political crisis in Ukraine. The goodwill charge marks yet another blow to SocGen’s ambitions in Russia, where it has poured billions into restructuring Rosbank in the face of tough competition from local state-owned players and the arrest last year of its top Russian executive on bribery charges. SocGen blamed heightened uncertainty as well as the decline in the Russian rouble for the write-down.
Siemens Q2 profit disappoints German engineering giant Siemens posted a weaker-than-expected 16 percent increase in operating profit yesterday, hit by charges in its power transmission business. The Munich-based firm, which released details of a long-awaited corporate reorganisation late on Tuesday, said total sector profit, or operating profit, for the quarter ending March 31 came in at 1.57 billion euros (US$2.18 billion) on revenues of 17.45 billion. According to a Reuters consensus, analysts had expected profit of 1.7 billion euros on revenues of 18.1 billion.
ING profit misses estimates Dutch financial group ING made underlying profits of 988 million euros (US$1.38 billion) in the first quarter of the year, slightly missing expectations, as loan losses remained high despite a better outlook for the Dutch economy. A Reuters poll of ten analysts predicted underlying net profits of 1.103 billion euros for the group, which said yesterday it would inject 850 million euros of fresh capital into the insurance arm it is selling later this year.
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May 8, 2014
Opinion
Leading reports from Asia’s best business newspapers
The techno-political transformation
THE JAKARTA POST
Klaus Schwab
Business
wires
Founder and Executive Chairman of the World Economic Forum
National flag carrier Garuda Indonesia president director Emirsyah Satar says that the airline aims to sell 40 percent of its shares in its low cost carrier subsidiary Citilink in the near future. Emirsyah said that there were two credible investors that had shown interest to purchasing Citilink’s shares. He refused to provide further details regarding the potential investors. “Our advisers are still discussing the price of the shares,” he said at State Owned Enterprises Ministry office in Central Jakarta yesterday morning as quoted by kontan.co.id.
THE KOREA HERALD South Korea’s major companies reported weaker earnings than expected for the first quarter of the year, data showed yesterday, which could further exacerbate the already-slowed local stock market. The data compiled by market researcher FnGuide show that 25 out of 72 firms that released their first-quarter earnings missed market estimates, most of them construction, shipbuilding and petrochemical firms. Samsung Heavy Industries Co., a major shipbuilder, reported an operating loss of 363 billion won (US$354 million) during the first quarter, as it set aside a large amount of reserves.
THE PHILSTAR The House of Representatives has approved on second reading a bill that would allow the full entry of foreign banks into the country. House Bill 3984 seeks to amend Republic Act 7721, that law allowing foreign banks to acquire, purchase and own 60 percent of the voting stock of an existing bank. But under the pending proposed law, foreign banks may be authorized to operate in the Philippines by owning up to 100 percent of the voting stock. Foreign banks would also be allowed to establish branches and invest.
THE PHNOM PHENH POST The next stage of Grand Twins International’s (GTI) listing on the Cambodia Stock Exchange – public subscriptions – has had a positive response, according to the head of one of the country’s brokerage firms. Svay Hay, CEO of Acleda Securities, a registered broker for GTI, said the subscription process had attracted interest from Taiwanese and Chinese investors over the past five days. “We expect it to be over-subscribed, both with unsuccessful book-building applicants and new applicants,” he said.
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ENEVA – It would be an understatement to say that our world is undergoing rapid and farreaching change. The global economy, the geopolitical landscape, the environment, and technology are subject to constantly shifting conditions that reinforce and transform one another in a web of complex interactions. In such an unpredictable and interconnected setting, effective leadership must be based on a radical outlook, a multifaceted skillset, and an understanding of technology and talent. The trends that are shaping the twenty-first-century world embody both promise and peril. Globalization, for example, has lifted hundreds of millions of people out of poverty, while contributing to social fragmentation and a massive increase in inequality, not to mention serious environmental damage. Likewise, big data offers untold benefits to companies and consumers, but poses a real threat to privacy and personal freedom. A similar dichotomy applies to many other critical issues, including adaptation to climate change, efforts to improve resource management, urbanization and the rise of megacities, increased labour mobility, and human-capital expansion. The scale and complexity of the challenges that lie ahead are undoubtedly daunting. But rapid, far-reaching change can also present great opportunities. To make the most of them, the world needs technologically literate
leaders – call them “technopoliticians” – who have an intuitive understanding of how to shape progress in this new, unpredictable environment. Within the framework of techno-politics, economic growth and technological innovation are the two most important factors shaping the global landscape. How we adapt to and guide their trajectories will determine our collective future. In economic terms, the world is entering an era of diminished expectations. If, as predicted, average annual GDP growth amounts to 3% in the foreseeable future, it will take 25 years for the world economy to double in size – ten years longer than it took before the global economic crisis, when average GDP growth stood at 5%. Learning to live with slower growth will not be easy. Given that debt-fuelled consumption has run its course, productivity gains will become an increasingly critical driver of economic growth. But, at a time when rising inequality is undermining social cohesion, it is far from certain that the conditions required to support such gains – that is, improved education and stronger incentives to innovate – can be met. Perhaps most important, even as economic growth slows, technological change continues at a breakneck pace, raising seemingly unanswerable questions about its potential impact on the global economy. While some warn that technological progress will leave many unemployed, others remain
convinced that displaced workers will find new jobs that do not yet exist, as has occurred in the past. All that is certain is that technology and innovation are disrupting virtually every aspect of life. How can we adapt to such a world? What underpins success in this new and challenging environment?
While some warn that technological progress will leave many unemployed, others remain convinced that displaced workers will find new jobs that do not yet exist, as has occurred in the past
In a techno-polity, two inextricably linked factors are crucial: talent and innovation. Talent is now the key factor driving competitiveness (or the lack thereof) for companies
and countries alike. Indeed, “talentism” will be the prevailing economic credo, with human or intellectual capital becoming the most critical asset – and the one most difficult to acquire and retain. Innovation, spurred by talent, will determine success. In the future, the distinction between high- and lowincome countries, or between emerging and mature markets, will no longer matter. The question will be whether or not an economy can innovate. A techno-polity also recognizes the critical role of cooperation, strategic thinking, and adaptation. The biggest challenges nowadays are global in nature, and thus can be addressed only by engaging decision-makers and interest groups from various spheres. New partnerships must be forged, even among actors with seemingly disparate interests. Those who struggle to cope with change must be supported, not scorned. But effective techno-politicians must go beyond fire fighting to think about the long term. They must be able to respond to new and impending developments without delay, constantly experimenting with new ideas and processes. Moreover, they must to be able to understand and react simultaneously to multiple competing realities. The role of the techno-polity is to steer the world toward positive outcomes. It will demand that decision-makers use their heads and hearts – and it will also test their nerves. The Project Syndicate 2014
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May 8, 2014
Closing Taiwan exports outperform
Toyota’s April’s sales increase
Taiwan’s exports in April rose faster than expected boosted by record tech shipments, a development that bodes well for its key electronic firms and underpins the island’s growth prospects. The tech industry, the main driver of Taiwan’s export machine, has been facingupheavalfromchangingconsumertastes worldwide but local companies have lately benefitted from the roll-out of new models of smartphones and tablets. The Ministry of Finance said that exports of electronic goods in April reached UA$8.16 billion, a record high, as firms moved up the value chain producing high-margin devices.
The firm and its two local joint-venture partners sold about 85,800 automobiles in China in April, up 12.4 percent from a year earlier, the automaker said yesterday. That followed a 19 percent year-on-year rise in March and a 43.1 percent rise in February. In the first four months of the year, Japan’s biggest automaker sold 313,800 vehicles, up 20.2 percent from a year earlier. Toyota this year aims to sell more than 1.1 million vehicles in China. If accomplished, the company would meet the objective originally targeted for 2010.
Premier Yingluck ousting to extend Thai unrest Red Shirts supporting Yingluck government will rally in Bangkok on May 10 in order to strengthen their commitment to the current Constitution
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ingluck Shinawatra was removed from office after the Constitutional Court ruled she abused her position by transferring a top security official, deepening the nation’s political crisis. Yingluck “violated the constitution,” Judge Udomsak Nitimontree said today in a nationally-televised ruling. She transferred the secretarygeneral of the National Security Council in 2011 in a process that “indicates an abuse of power,” the judge said. The nine judges in their unanimous decision invalidated Yingluck’s ministerial status, creating doubt about her caretaker government’s ability to continue until an election the Election Commission has agreed to hold July 20. The verdict risks prolonging a crisis that began with antigovernment protests last October and has its roots in the removal of Yingluck’s brother, former prime
Thai anti-government protest leader Suthep Thaugsuban celebrates with anti-government supporters following the Thai Constitutional Court decision
minister Thaksin Shinawatra, in a 2006 coup. The ruling could prompt a backlash from Yingluck’s mainly rural supporters called the Red Shirts, with leaders across the political spectrum, as well as the army chief, warning a politicallydivided Thailand is at risk of civil war. Political violence
has killed at least 25 people in the past eight months. Yingluck has not made any statement on the court order. The ruling is a coordinated attempt to “destroy” her ruling Pheu Thai Party, deputy party leader Phokin Palakul said at a briefing carried on local television. “We urge people who love
democracy to express their opposition to the ruling in peaceful ways,” he said. Continuing with the July vote is “a way to end the political crisis in a democratic way.”
Change quickly Opponents of Yingluck have demanded she make
way for an unelected government that would rewrite the nation’s political rules to remove her family’s influence. The protesters have said a verdict removing Yingluck would create the political vacuum needed to install an interim government. “The question is will the current government without Yingluck be able to hold it together,” Verapat Pariyawong, a Harvard-trained lawyer and independent political analyst, said by e-mail. “If she is gone, the situation can change very quickly for the worse.” Red Shirt leader Jatuporn Prompan said on Tuesday that government supporters would rally in Bangkok on May 10 “to show our power that we don’t accept any move against the constitution.” About 10 members of Yingluck’s 36-member Cabinet who were involved in the 2011 transfer will also step down, including Finance Minister Kittiratt Na-Ranong, Foreign Minister Surapong Tovichakchaikul and Labor Minister Chalerm Yoobamrung, according to the court ruling. The court said it didn’t have the authority to order the appointment of a new prime minister, meaning Pheu Thai will have the opportunity to choose an acting premier from among the remaining members of Cabinet.
Taiwan 4G market battle spirals
HK Tribunal recommends banning Tiger Asia
Wii U sales send Nintendo into red
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ing Hsin International Group, parent of Chinese noodle maker Tingyi Holding, and Foxconn Technology Group have launched rival bids for small Taiwanese mobile telecoms operator Asia Pacific Telecom Co., a source with direct knowledge of the matter said yesterday. The bids highlights the growing battle among newcomers like Ting Hsin and Apple Inc. supplier Foxconn to compete in Taiwan’s developing 4G mobile services sector with current leaders, Chunghwa Telecom, Taiwan Mobile and Far Eastone Telecommunications. “Ting Hsin eagerly wants to merge with Asia Pacific,” the source told Reuters. “Such a merger would create bigger synergies than one between Foxconn and Asia Pacific.” Ting Hsin already owns a small telecoms business, while Foxconn has a 4G operating licence but no telecoms network of its own. Foxconn’s flagship unit and Apple iPhone maker, Hon Hai Precision, is in talks to buy 22 percent of Asia Pacific Telecom, local media reported this week, citing unidentified sources. Asia Pacific Telecom has a market capitalisation of about US$1.8 billion. Reuters
iger Asia Management LLC and founder Bill Hwang, who admitted illegally using inside information to trade Chinese bank stocks, should be banned from dealing in Hong Kong for as long as five years, an inquiry was told. Raymond Park of the New York-based hedge fund should also be banned, Simon Westbrook, a lawyer for Hong Kong’s Securities and Futures Commission, told Hong Kong’s Market Misconduct Tribunal today. Tiger Asia, which has been renamed Archegos Capital Management LLC and turned into a family office, agreed to pay HK$45.3 million (US$5.8 million) to Hong Kong investors affected by the trades and US$60.3 million in U.S. criminal and civil settlements after a legal battle that began in 2009. The fight with Hong Kong’s regulator included a failed bid to challenge the commission’s power to sue to recover investors’ losses. Hwang and Park are with Archegos. The ban, known as a cold shoulder order, is intended to protect the investing public, not to punish persons for misconduct, Peter Duncan, the lawyer for the Tiger Asia parties said. Bloomberg News
Bloomberg News
apanese videogame giant Nintendo yesterday booked a US$229 million annual loss, reversing a year-earlier profit as dismal sales of its Wii U console during the crucial Christmas holiday period dented results. Lacklustre demand for the unit saw the firm move 2.72 million units globally during the year, less than a third of its earlier prediction for 9.0 million and dealing a blow to hopes it would match the blockbuster success of the original Wii. Nintendo said yesterday it saw an annual net loss of 23.2 billion yen (US$229 million) -reversing a net profit of 7.1 billion yen a year ago- on sales of 571.7 billion yen, which were down 10.0 percent. However, it said it expected to creep back into the black with a 20 billion yen net profit in the current fiscal year. The maker of the Donkey Kong and Pokemon franchises has fallen on hard times in recent years, piling up losses as rivals Sony and Microsoft outpaced it in console sales. AFP