MOP 6.00 Closing editor: Luís Gonçalves
Macau Legend tops up tables
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Publisher: Paulo A. Azevedo
t last, the green light. Hotel-casino operator Macau Legend Development says regulators have approved the addition of gaming tables. However, Secretary of Economy and Finance Francis Tam Pak Yuen noted yesterday that the procedure for granting gaming tables has not been completed yet, but confirmed that 35 of the 45 gaming tables requested by SJM will be allotted to Macau Legend’s Fisherman’s Wharf. Macau Legend is adding three hotels to its waterfront property, currently under reconstruction. It says the overhaul will boost its gaming tables to 500 6
Year III
Number 656 Thursday October 30, 2014
Page
It’s all relative Lots of headwinds in 2014. But Macau’s casino story is still a huge success. Total gaming receipts amounted to MOP363.7 billion in 2013 alone. That’s 18 percent more than in 2012 and three times more than in 2008
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‘New normal’
More competition round the corner. The Zhuhai International Convention & Exhibition Centre starts its trial operation today. Macau MICE industry representatives say they are up for the challenge. But some convention business will inevitably be diverted. The government takes a more sanguine view
The World Bank agrees. Chinese growth will become Premier Li Keqiang’s ‘new normal’. Restrained numbers for an evolving economic model. Plus an expanding services sector. Nevertheless, the World Bank asks for reforms to sustain growth
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Page 10
The Zhuhai factor
Three licences for Triple Play services
www.macaubusinessdaily.com
PAGE 4
China’s bubble worsening, says Jim Chanos PAGE 7
ZAPE-Guia pedestrian walkway PAGE 2
From Porto with love Portugal comes calling. The mayor of Porto was recently here on an official visit. He said Porto’s creative, tourism and infrastructure industries presented good investment opportunities. He also invited Chui Sai On to visit Porto next year. Portugal’s second biggest city needs bigger and better promotion to the Chinese market, he says
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Smoking ‘imbroglio’ PAGE 5
HSI - Movers October 29
Name
%Day
Galaxy Entertainment
6.29
Sands China Ltd
5.03
Belle International
3.86
Want Want China Hol
3.58
Ping An Insurance Gr
2.87
China Merchants Hold
+0.21
CITIC Ltd
0.00
Hong Kong & China Ga
-0.22
Kunlun Energy Co Ltd
-0.39
Power Assets Holding
-0.67
Source: Bloomberg
I SSN 2226-8294
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2014-10-30
2014-10-31
2014-11-01
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2
October 30, 2014
Macau
Macau MICE industry faces Zhuhai competition The Zhuhai International Convention & Exhibition Centre starts its trial operation today. Macau MICE industry representatives say they are up for the competition but voice concerns about losing some convention business, while Secretary for Economy and Finance Francis Tam sees more opportunities in cooperation Joanne Kuai
joannekuai@macaubusinessdaily.com
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he Zhuhai International Convention & Exhibition Centre (Zhuhai CEC) - with an initial investment of 7 billion yuan - starts its trial run today. For the occasion, the first Zhuhai International Automobile Exhibition will debut, along with the opera ‘Turandot’ in its grand theatre; the Prague Philharmonic will strike up in its concert hall. Inside, Zhuhai CEC, Huafa Sheraton Hotel and Huafa Place is scheduled to
open in mid-November, while St Regis Zhuhai Hotel is due to open in 2016. The fast developing Zhuhai MICE industry is going to bring opportunities and challenges to its Macau counterparts, said Harry Wu, President of the Macau Federal Commercial Association of Conventions & Exhibition Industry. Mr. Wu said Macau enjoys the advantage of being a free port, hence the exhibition business would progress as usual. But since some people, including mainlanders, still need a visa to enter
the territory some conventions business focusing on the Mainland China market might be diverted. He also disclosed that despite the Huafa Sheraton opening, Zhuhai still suffers from a shortage of hotel rooms. Mr. Wu added that some cooperation was possible in the convention area, saying some sessions could be conducted in Zhuhai and the rest in Macau. Harry Wu spoke to Business Daily on the sidelines of a press conference announcing the opening of the first
edition of Creative Cultural Playground which is going to take place from this Saturday to next Monday at Fisherman’s Wharf.
Govt. to subsidise cultivation of MICE talent At a plenary meeting that took place yesterday, the Committee for the Development of Conventions and Exhibitions announced the launch of the MICE Professionals Training Subsidy Scheme. Through the scheme, the Industrial and Commercial Development Fund will provide financial support to MICE entities to cultivate talent for the industry. A maximum of MOP3 million will be allocated to organising courses; a maximum of MOP2 million will be used for employers or groups to send their full-time staff on training courses or to take relevant exams. Macau Economic Service said they would hold a briefing for the industry and the public with regard to the details of the subsidy scheme. The host of the meeting, Secretary for Economy and Finance Francis Tam, said he believes that with Zhuhai putting a lot of effort into developing its MICE industry and more large-scale facilities being accomplished, the two regions would have more opportunities to cooperate in the convention and exhibition industry.
ZAPE-Guia pedestrian walkway to fully open in 2016 The government suggested the plan to shorten the distance between ZAPA-Guia a few years ago. Now the first two phases of the project are done, with parts in use. However, residents still have to wait for some two years more to enjoy the ‘shortened distance’ between the areas as the core phase of the project has not yet started Kam Leong
kamleong@macaubusinessdaily.com
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he construction of the first two phases of the government’s plan to beautify Rua da Encosta and shorten the distance between ZAPE area and Guia Hill are basically completed. The two phases cost MOP90 million (US$ 1.12 million). However, the core phase connecting ZAPE and Guia, will only be completed in 2016, the Land, Public Works and Transport Bureau (DSSOPT) said yesterday. The Head of Transport Planning and Development Department, Martin Kuong Vai Cheok believes that the whole project will improve the pedestrian system of Macau, which will encourage green travel. In addition, following the full completion of the project, residents will no longer have to detour between ZAPE-Guia, probably reducing the time needed from the current 20 minutes to 10 minutes. Meanwhile, the third part of the project is seen as the core
phase, creating two new tunnels for pedestrians to Guia Hill Trail and Calçada da Vitória, respectively. The tender for the construction will be opened shortly, the head of the Infrastructure Department of the Bureau, Kuok Chi Cheong, said. He also announced that the expense of 90 million patacas on the first two phases of the plan came in under budget.
First & second phase The first phase of construction includes a new turret with both stairs and lifts between the Pátio do Túnel, a junction with Avenida do Dr. Rodrigo Rodrigues, and Estrada de S. Francisco, which is on the hillside. Currently, the stairs of the turret are under use already while the lifts are expected to be opened before the start of the Macau Grand Prix on November 13. This phase of the project also opens up Rua da Encosta and the
gentrification of the nearby areas. Rua da Encosta, which is behind Pooi To Middle School and Santa Rosa de Lima English Secondary School, will lead pedestrians to the second phase of the project, located behind the Liaison Office of the Central People’s Government. Meanwhile, the second phase of the project includes a green park of 1,200 square metres as well as a 6-storey high pedestrian bridge. The footbridge will connect three spots -
the park, Check Kun Pavilion and the two tunnels of the third phase of the project. Residents can also access this area from Avenida do Dr. Rodrigo Rodrigues. Currently, the footbridge is not open to the public. However, Mr. Kuok claims the Bureau is considering whether they would open it, as well as the elevators to Check Kun Pavilion for the public in advance, prior to the construction of the third phase to be completed two years later.
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October 30, 2014
Macau
Porto much to offer Macau, says city mayor The Mayor of the Portuguese city of Porto was in Macau and Shenzhen for an official visit and said that SAR investors could find good opportunities in Porto’s creative, tourism and infrastructure industries. He also invited Chui Sai On to visit Porto next year João Santos Filipe
jsfilipe@macaubusinessdaily.com
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orto’s creative industries, tourism and infrastructure are the most attractive investments for Macau, the Mayor of the Portuguese City, Rui Moreira, said following his visit to Macau and Shenzhen that started on Friday and ended yesterday. “The creative industries that are using the hightech resources developed at the University of Porto are the best opportunities for investment from Macau”, he said. “But the tourism industry and investment in infrastructure, as demonstrated by the example of the Chinese investment in the Portuguese electric companies EDP and REN, can also be very beneficial”. Other investment opportunities mentioned by Mayor Moreira were related to
property in Porto and the use of the Golden Resident Visa scheme, which grants residence permits to non-EU citizens if they purchase real estate valued at at least €500,000 in Portugal or transfer capital to the country in the amount of at least €1 million.
“In relation to the Golden Resident Visa we feel that the city of Porto has been left behind. The programme has focused more on Lisbon and the Algarve. Our role now is to reverse this trend and show people that there are a lot of opportunities in the city”,
he said. “Hotels are growing faster and the industry has been developing in recent years. Buying hotels may be a good investment. And we would welcome Chinese investors because we know that they will be able to attract different customers to the ones we are [currently] attracting”. The Mayor of Porto also told journalists that the People’s Republic of China wants Macau to be the facilitator between China and the Portuguese-speaking countries and that he sees no better territory than Macau for the task. Rui Moreira revealed as well that during the visit to the former Portuguese colony he had been approached by the representative of a charter flight company. The topic discussed was the possibility of the municipality paying
subsidies in order to create a route for direct flights from Macau or Hong Kong to Porto. The Chief Executive of Macau, Chui Sai On, is considering visiting Portugal in Spring next year. The trip has yet to be confirmed but Fernando Chui Sai On was invited to visit Porto. “We invited the Chief Executive of Macau when he received us on the day of our arrival. I [invited him] to visit our city”, Mr. Moreira said. “Porto and Macau signed a twin tower agreement in 1997, which hasn’t been best explored, largely because of us. But we now have the opportunity for the first time to establish many contacts and we would like to have the opportunity to show our city to the Chief Executive”.
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October 30, 2014
Macau
Wynn profit beats estimates on Las Vegas betting revival In Macau alone, net revenues generated totalled US$942.3 million, down 5.6 percent year-on-year
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ynn Resorts Ltd posted third-quarter results that beat analysts’ projections, paced by stronger revenue in Las Vegas. Profit, excluding some items, of US$1.95 a share exceeded the US$1.83 average of 17 estimates compiled by Bloomberg. Revenue slipped 1.4 percent to US$1.37 billion, the Las Vegas-based company said yesterday, while surpassing estimates of US$1.35 billion. A 9 percent surge in revenue at Wynn’s two casinos on the Las Vegas strip helped offset a 5.6 percent drop in Macau, from which Wynn derives more than two-thirds of its sales and casino operators are struggling to maintain profits after four consecutive months of declining revenue. High-rollers have been shunning Macau, the only place in China where gambling is legal, due to a crackdown on corruption on the mainland. In addition, pro-democracy protests in Hong Kong have tied up commerce in that feeder market. A smoking ban that went into place this month could further crimp gambler enthusiasm, Wynn said in a conference call yesterday. The 72-year-old casino executive and CEO, Steve Wynn, said the percentage of bets that the casino keeps in Macau in October, known as the hold, has been the company’s lowest ever. “With all the things that are going on in Hong Kong, in smoking, I’m confused at the moment,” Mr. Wynn
Things happen in China at their own pace and in their own time… we are on target, we are on budget, we are on time Steve Wynn, CEO
said when asked about the current climate. He also said changes to a new casino under construction in Macau had increased costs. “Things happen in China at their own pace and in their own time and for those of us who are lucky enough to be in business there you have to sit there and go along with the programme and adjust to it as best you can as that’s what we do and as far as construction goes… we are on target, we are on budget, we are on time,” Mr. Wynn added. The company is building the Wynn Palace, a US$4.1 billion resort in Cotai that is scheduled to open in the first half of 2016 and is “proceeding”, according to the company founder and CEO.
Mr. Wynn said he remained confident long term in the company’s China business, and bullish about the Macau market despite the decrease in gaming revenues for four straight months. Analysts at Sterne, Agee & Leach, Inc said that “recent strides in premium mass will show as impressive,” because around 8 percent of Wynn Macau tables remain out of service “as it optimises its floor in the US$60 million project scheduled for completion in the first half of 2015.” Wynn Resorts increased its quarterly dividend by 20 percent to US$1.50 a share and declared US$1 per share special dividend payable November 25.
‘Favourable return’ Analysts were unanimous in saying that Wynn results beat expectations. Analysts at Telsey Advisory Group (TAG) said that “overall commentary on Macau give Wynn, like other operators, a very positive long-term outlook, while acknowledging they were ‘confused’ over current events in the region and looked forward to more stable times.” Sterne, Agee & Leach, Inc analysts said in their latest note to clients that “in the weeks following [Wynn’s] earnings call, we believe the company will also issue a special dividend at least in-line with last year’s US$3 per share.” Meanwhile, Beijing’s anticorruption drive and economic
slowdown remain negative factors affecting the near-term VIP and premium mass gross gaming revenues of Macau. ‘Investors have maintained myopic focus on this for several months now,’ the brokerage firm wrote. Gross gaming revenues for this month are expected to reflect a 21 percent decrease year-on-year, according to analysts’ expectations, to close to MOP28.9 billion. In 2013, October marked the year’s best year-on-year results, analysts say, adding that this month this year will be difficult to make comparisons “with a peninsula/island VIP hold rate of around 3.3 percent versus the trailing 24-month average of around 3.1 percent and theoretical win-rate of 2.85 percent.” Between October 1 and 26, Las Vegas Sands Corp was leading the table-only market share with 23.8 percent, SJM at 22.9 percent, Galaxy at 22.1 percent, Melco Crown at 14 percent, MGM China at 9 percent and Wynn at 8.2 percent, according to analysts’ calculations. Telsey analysts, however, say they are maintaining their market performance rating, lowering full-year 2014 EBITDA estimate to US$1.7 billion from US$1.8 billion, “with better than expected third quarter results being offset by downward revisions to our fourth quarter Macau estimate, given the confirmation of hold challenges in the important month of October.” S.F. with Bloomberg
UM: At least 3 ‘Triple play’ licences should be issued
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he final report by the University of Macau (UM) on television services suggests that the number of licences for the ‘Triple play’ network issued in the future should be no fewer than three. The network means that in one single access subscription, telephone, television and Internet services are all provided. The report, released yesterday, indicates that if the government limits the number of such licences or even those of the double or single-
play licences - the scenario of a few corporations dominating the industry may reemerge. However, an imbalance in the three markets may also appear for a short period of time if one single operator is able to offer all the services. The report also recommends the government establish an independent supervisory department, or crossdepartmental working group, to reach the unified management of the television service. K.L.
Subsidies for science projects & activities reach MOP63mln in Q3
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he Science and Technology Development Fund (FDCT) granted a total of MOP62.6 million (US$7.8 million) in subsidies for scientific projects and activities to popularise scientific knowledge in the third quarter of this year. During this period, a total of 48 scientific projects from 11 different higher education institutes, associations and companies were able
to obtain subsidies from the Fund. Higher education institutes were subsided the most. According to the subsided list of the Fund posted in the Official Gazette yesterday, 19 projects were conducted by the University of Macau (UM), of which subsidies amounted to more than MOP33.2 million. Meanwhile, Macau University of Science and Technology (MUST) Foundation was
allocated some MOP23.3 million for its 19 scientific projects. Another high education institute, the University of Saint Joseph, gained MOP1.59 million for one project. Meanwhile, a total of MOP3.12 million patacas was awarded to 63 activities popularising science. Most of the parties which received the subsidies were local high schools. The 57 activities of 16 high schools
were allocated subsidies totalling MOP2.2 million. In addition to the scientific projects, the UM and M.U.S.T. Fund were given subsidies of some MOP228,346 and MOP166,784 patacas, respectively, for their activities in promoting science. Macao Polytechnic Institute received MOP38,898 for one related activity. K.L.
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October 30, 2014
Macau
Melco Crown violating smoking ban, say Health Bureau The Health Bureau has accused Melco Crown Entertainment of breaking the law by permitting smoking in some areas of its mass gaming floors, while the gaming operator said all their smoking areas had been approved since 2012 by a dispatch of the Chief Executive and comply with the most recent regulations Joanne Kuai
joannekuai@macaubusinessdaily.com
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elco Crown Entertainment (MCE) is breaking the law by turning some nonsmoking areas in mass gaming floors into smoking areas, said the Health Bureau in a statement issued late last night. Having received complaints from local labour groups, the Health Bureau and Gaming Inspection and Coordination Bureau paid a joint visit to the casinos in the City of Dreams. The Health Bureau said that during the inspection they were able to confirm that the gaming operator had permitted smoking in some areas on its mass gaming floors without authorisation. The two bureaus collected the evidence and deposition, and will make a report to pass to legal departments for advice. Meanwhile, Melco Crown Entertainment denied the allegation, saying that their casinos ‘are operated in compliance with Macau’s legal requirements and with government approvals’.
In a statement also issued last night, the gaming operator claimed ‘all gaming areas that MCE operates as smoking areas in the context of the tobacco control laws and regulations have been approved for smoking since 2012 by a Dispatch of the Macau SAR Chief Executive.’
It stresses that none of the gaming operations where smoking is allowed are located in the common gaming areas. It said its smoking areas ‘comply with every operational and technical requirement to qualify as Restricted Access Gaming Areas, as defined by the most recent regulations.’
Macau banned smoking in casinos from October 6 this year, except for in smoking lounges that are free of gaming facilities and in separate VIP rooms. In its clarification, the Health Bureau emphasised that premium mass segments were included in the ban.
Gaming receipts increase three-fold in five years Total receipts from the gaming sector amounted to MOP363.7 billion in 2013 alone, an 18 percent increase from a year ago and 227 percent increase from that first registered in 2008 Sara Farr
sarafarr@macaubusinessdaily.com
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he gaming industry in Macau may be witnessing its slowest growth in the last few years, with gross gaming revenues registering a steady drop for four consecutive months, but when it comes to total receipts generated by the sector, the territory fares wells. Total receipts from the gaming sector here increased by 18 percent to MOP363.1 billion in 2013 year-on-year, the latest gaming survey released by the Statistics and Census Service (DSEC) shows. Historical data indicates that last year’s figure is a three-fold or a 227 percent increase over that of 2008, when the first gaming survey was conducted. At the time, the gaming sector generated MOP111 billion in total receipts. Of the overall receipts generated last year, that of food and beverage totalled MOP564 million, up 28
percent last year over that of 2012. Gross value added – which equals receipts from gaming and related services in addition to changes to inventories but excludes purchases of goods and commission paid – measures the sector’s contribution to the economy. According to the survey, gross value added totalled MOP225.9 billion in 2013, a 21 percent increase
over that of the previous 12 months. In addition, compensation to employees registered a 12.9 percent increase to MOP16.2 billion from MOP14.3 billion in 2012. Of this, remuneration in cash accounted for the biggest spending at MOP14.8 billion (up 12.2 percent from 2012) followed by paymentsin-kind accounting for MOP698 million (up 31.1 percent). Welfare packages
- namely contributions to pension funds, provident funds and social security took up MOP636 million (up 17.4 percent), while ‘other benefits’ accounted for MOP32 million (down 35.2 percent). When breaking down complimentary goods and services into different segments, hotel accommodation took up the biggest slice at 51 percent of
the total. Food and beverage accounted for 37 percent of all complimentary goods and services offered by Macau’s gaming sector in 2013, followed by ferry and air tickets that accounted for 10 percent and entertainment tickets 2 percent. Overall, complimentary goods and services totalled MOP9.6 billion of the sector’s expenditure, with hotel accommodation registering a 22 percent increase to MOP5 billion from that of a year earlier, and food and beverage increasing 28 percent to MOP3.5 billion year-on-year. Also worth noting is the 63 percent increase registered in expenditure on ‘other contractual services’ that includes car rental with driver plus security and cleaning. These alone accounted for MOP1.5 billion, of which ‘payments abroad’ amounted to MOP342 million, the survey shows.
6
October 30, 2014
Macau Brands
Trends
File of Facts Raquel Dias newsdesk@macaubusinessdaily.com
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his column is entitled ‘Brands and Trends’. As such, it might be strange that we are, for today, talking about Filofax. The brand known for making personal organisers has outlived the PDA, has survived portable computers and is dealing pretty well with the rise of the smartphone and tablet. The name was suggested by a typist, when in 1921 the brand was first being launched and it is short for ‘file of facts’. British Army Officer Colonel Disney came across a Lefax personal organiser in the US and suggested that his friend, London printer William Rounce, launch the product in England. It was a success that has lasted, surprisingly, to this day. The secret is perhaps in the innovation and expansion that the brand was always careful to achieve. From acquiring rival brands to innovating in the type of products available, Filofax managed to become a stable, reliable brand that has its own loyalty base across a number of sectors. Many argue that the process of writing notes down makes you remember them better and that smartphones are not reliable substitutes for good old paper organisers and planners. The leather Filofax also makes for a great accessory. Nothing says business like a leatherbound pad that is both shiny and pretty. Nowadays, the company produces a number of other leather items - iPad and laptop covers and carriers are but a few.
35 additional gaming tables for Macau Legend Secretary of Economy and Finance Francis Tam Pak Yuen confirms that 35 of the 45 gaming tables requested by SJM will be allotted to Macau Legend’s Fisherman’s Wharf Stephanie Lai
sw.lai@macaubusinessdaily.com
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otel and casino operator Macau Legend Development Ltd told the Hong Kong Stock Exchange after trading hours on Tuesday that the casino regulator here has already confirmed that 35 additional gaming tables will be granted to the company although Secretary of Economy and Finance Francis Tam Pak Yuen noted yesterday that the procedure for granting gaming tables has not been completed yet. Macau Legend currently operates two casinos in the city: Pharaoh’s Palace Casino in the Landmark Hotel and Babylon Casino in Macau Fisherman’s Wharf. Both Pharaoh’s Palace Casino and Babylon Casino are operated under a so-called service agreement with Sociedade de Jogos de Macau S.A. (SJM). Macau Legend is adding three hotels to the waterfront property in Fisherman’s Wharf, currently undergoing a revamp. The overhaul of Fisherman’s Wharf is expected by Macau Legend to boost its gaming tables to 500; at the end of September, the company had 150 gaming tables in operation. Speaking to media on the sidelines of a conventions and exhibitions committee meeting yesterday, Francis Tam confirmed that the government had received a formal application from SJM seeking an additional 45 gaming tables, of which 35 would be placed in Fisherman’s Wharf. In view of the revamp currently taking place at Fisherman’s Wharf, Mr. Tam noted that the government
had given “positive consideration” to SJM’s application for the additional table grant. But the Secretary noted at the same time that the formal approval for SJM’s request was still being processed. Noting that the government has not received any requests for additional gaming tables apart from casino operator SJM, the Secretary reiterated that the grant of gaming tables would always be governed by the policy of controlling the gaming business scale – namely, a reference to the table cap of three percent compound annual growth from December 2012 (counting from a base of 5,485 tables) to the end of 2022. Given Mr. Tam’s remarks, it remains uncertain how Macau Legend can achieve its goal of guaranteeing 350 extra tables for its operation. In its prospectus for a global share offering in 2013, Macau Legend says it had applied to the Gaming Inspection and Coordination Bureau on October 8, 2012 – in consultation with SJM – to increase the company’s tables to 500. ‘…DICJ advised us and SJM in writing on 7 December 2012 that the measures taken by the Macau government to limit the number of gaming tables in September 2011 [sic] will not be an obstacle to the request…for operating up to 500 tables in total,’ Macau Legend says in the prospectus. Mr. Tam told media yesterday that the government has not received any applications from other gaming
operators asking to add gaming tables apart from SJM. The Secretary added that the grant of the additional gaming tables for the new casino-resort projects in Cotai would be left for the consideration of the next government, which assumes office when Chief Executive Fernando Chui Sai On begins his second term on December 20.
Higher earnings After trading hours on Tuesday, Macau Legend told the Hong Kong Stock Exchange that it had seen gaming revenue rise 10 percent year-on-year to HK$323.9 million (US$41.76 million) for the third quarter, with the revenue figure including that generated by New Legend VIP Club Ltd. But the company did not mention a profit figure for its third quarter earnings. The total revenue for the period reached HK$452 million, an increase of about 7.3 percent compared to a year before. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by about 27.4 percent year-on-year to HK$247.4 million for the third quarter.
7
October 30, 2014
Gaming
Macau building costs evidence China’s bubble worsening, warns Jim Chanos Speaking at a Reuters summit on Tuesday, the prominent short seller pointed to overbuilding in residential housing and the increasing cost of building gaming properties in Macau as evidence that the China property bubble was worsening
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edge fund manager Jim Chanos, who has a longrunning bet against China, said that the country’s credit bubble was starting to cause capital outflows to accelerate and may ultimately lead to weakness in the nation’s currency. Speaking at a Reuters summit on Tuesday, the prominent short seller pointed to overbuilding in residential housing in China and the increasing cost of building gaming properties in nearby Macau as evidence that the bubble was worsening. He believes investors are starting to take notice. “It’s safe to say it’s accelerating,” said Chanos, speaking of capital flight out of China, and said China’s quarterly drop in foreign exchange reserves was “noticeable.” Chanos also said he is betting against Macau, a Chinese territory that is home to the world’s largest legal gambling and casino business. He likened Macau to the overbuilding in Las Vegas and warned that Macau businesses were putting up more capital than ever for less in return. Chanos said Macau’s capacity is about to increase by 30 to 40 percent over the next 18 months and 100 percent over the next two to three years. “The stuff that’s being built, as that’s happening, the revenues have now turned down due to the credit
crunch, corruption, all the things we’ve been talking about. Take your pick . . . I think the estimates are going to come down huge,” Chanos said about Macau casino companies. Chanos said Macau is following a pattern seen decades earlier in Las Vegas, when hotels and casinos elected to put more capital into amenities to draw customers - thus hurting profits. “Well, that’s Macau now. Macau is what Vegas was in the 60s and 70s until it was changing,” he said. One of Macau’s more prominent investors is Wynn Resorts, which reported operating income of US$234.9 million from its Macau operations in the third quarter. Casino mogul Steve Wynn is suing Chanos for slander, saying Chanos told several people in April that Wynn and his company had violated the federal Foreign Corrupt Practices Act. Chanos declined to comment on the lawsuit on Tuesday. Chanos is known for having shorted Enron Corp stock many months before the energy trader’s December 2001 bankruptcy. China’s foreign exchange reserves fell in the third quarter by US$105.5 billion, the first quarterly fall since 2012 and the largest dollar decline on record, according to People’s Bank of China data. The 2.6 percent decline was the biggest percentage drop since
Sport Development Fund disburses MOP53.2 million Macau Bodybuilding and Fitness Association received the largest share with two different payments totalling MOP6 million to organise the Asian Bodybuilding and Physique Sports Championships and Annual Congress João Santos Filipe
jsfilipe@macaubusinessdaily.com
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acau Sport Development Fund handed MOP6 million to the Macao Bodybuilding and Fitness Association for the organisation of the Asian Bodybuilding and Physique Sports Championships and Annual Congress that took place in Macau from 26 August to 1 September. The Bodybuilding and Fitness Association was the entity to receive more money from the Fund during the third quarter, Macau Official Gazette revealed yesterday. In all, the Fund awarded MOP53.2 million for the development of sport in the Special Administrative Region of Macau. Other entities assisted by the government include the Athletic
Association of Macau, which paid MOP1.87 million for the support of Galaxy Entertainment International Marathon, and Macau Judo Association, which paid MOP2.5 million for organising the Macau International Cadets and Junior Judo Tournament. The Macau Squash Association received MOP2.4 million to organise the Open Squash Tournament. The largest amounts handled by the Fund involved the organisation of international events in Macau. But there were subsidies disbursed for other purposes related to the promotion of sport on TV. For example, public broadcaster TDM was paid MOP1.5 million.
Jim Chanos
1993. Massive capital inflows have fuelled money supply growth that has underwritten heavy investment in the country, and a prolonged outflow would be seen as a sign that investors were worried about China’s ability to keep growing and servicing its debt. Chanos, the founder of Kynikos Associates, specialises in making money when stock prices decline. China’s CSI300 Index hit 13-month highs earlier this month but the index is still nearly 60 percent below a peak hit in October 2007. He said the weak quarterly results from U.K.-based Standard Chartered
Plc underscored the negative impact of China’s overheated credit market. The bank said Tuesday that operating profits fell 16 percent on a year-onyear basis in the third quarter. “We always watch foreign banks in other markets, because they’re usually always late to the party,” Chanos said in reference to Standard Chartered. He said that the bank’s mention on Tuesday that it was watching its exposure to commodity markets and China suggests they may have been hit by the country’s credit bubble. Standard Chartered warned investors Tuesday that profits would fall in the second half of this year, after quarterly earnings were hit by a surge in bad loans and higher regulation and compliance costs. Its London-listed shares tumbled more than 8 percent to their lowest level for five years. Chanos estimated Tuesday that China was building about 20 million condominiums each year while selling just 4 to 5 million, a sign of overinvestment. He said that he would advise investors to avoid Asian financial institutions. Reuters
8
October 30, 2014
Greater China Taiwan warns against lending to Ting Hsin Taiwan’s finance minister said yesterday that Ting Hsin International Group has become a high-risk enterprise and lending to the embattled food maker should be restricted. Ting Hsin is at the centre of a major food safety scandal in Taiwan for allegedly selling tainted oil meant for animal and industrial use as fit for human consumption. Prosecutors in Taiwan have been investigating Ting Hsin and earlier this month detained Wei Ying-chun, a key member of the family that controls Ting Hsin International Group over the alleged sale of tainted cooking oil.
HK 3rd in business facilitation A World Bank report ranked Hong Kong the world’s no. 3 on ease of doing business, a government spokesman said here yesterday. It compared the “ease of doing business” of 189 economies across 10 indicators. Hong Kong’s overall score edged up to 84.97 from last year’s 84. 45, indicating an improvement in the city’s overall business environment, the spokesman said. Among the 10 indicators, Hong Kong ranks first in dealing with construction permits, second in both protecting minority investors and trading across borders, fourth in paying taxes, sixth in enforcing contracts and eighth in starting a business.
New registration for sugar imports China will require sugar importers to register out-of-quota imports of the sweetener from November 1, allowing it to better monitor a flow of cheap imports that has hurt the domestic industry, traders said. The rule requires importers to submit details of out-of-quota imports through an ‘automatic import licensing administration’ system, the commerce ministry and customs bureau said in a notice published online last week. No details were given on the reasons for the introduction of the new system, which would give the ministry advance notice of out-of-quota imports.
Pro-democracy protesters represent a main concern for Hong Kong-Shanghai exchange link
Hong Kong-Shanghai stock link-up ready to proceed Its launch had been widely expected this week but senior officials announced over the weekend that it had been delayed
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delayed watershed scheme to allow cross-trading between Hong Kong and Shanghai’s stock markets will go ahead, the president of the Hong Kong bourse has said, adding on-going democracy protests have not derailed the project’s progress. The Shanghai-Hong Kong Stock Connect platform will enable international investors to trade selected stocks in Shanghai’s tightly-restricted exchange and allow mainland investors to buy stocks in Hong Kong. In an interview with AFP in Paris on Tuesday Chow Chung-kong,
president of the Hong Kong Stock Exchange, insisted the project “will be set up, but you’ll just have to wait a little longer”. “We do not know when it will be introduced, as we have no control over the proceedings,” he said on the side-lines of a conference in the French capital to boost economic cooperation with Hong Kong. “This is a major decision for the Chinese government and must take into account a range of factors” to “select the best time,” he added. Chow insisted that more than a month of mass rallies and roadblocks calling for full democracy in the
former British colony were not behind the delay. “From a technical point of view, it is not possible to connect the two,” he said, adding that on the whole Hong Kong’s market was “functioning normally” throughout the unrest. On the wider economic impact of the protests on the city, he said: “I would not say that there is absolutely no impact, but it is mostly limited to the occupied areas.”
Tax a key sticking point Chow’s comments are in direct contrast to earlier remarks by the
HK yuan deposits rise Yuan deposits in Hong Kong, the world’s biggest offshore yuan centre, rose 0.8 percent to 944.5 billion yuan (US$154.51 billion) in September from the previous month, the Hong Kong Monetary Authority said yesterday. Cross-border trade settlement surged to 605.6 billion yuan for the month, up 22 percent from August. The city’s de facto central bank also said outstanding yuan loans amounted to 166.8 billion yuan in September, up 44 percent from the end of last year. Daily turnover for the Chinese currency on the RTGS (real time gross settlement) system reached 781.9 billion yuan.
China, Argentina to tighten ties Chinese President Xi Jinping and his Argentine counterpart Cristina Fernandez exchanged views yesterday on bilateral ties and cooperation in a telephone conversation. Xi said China attaches great importance to the development of its comprehensive strategic partnership with Argentina. In the next stage, the two sides should do a good job in implementing the joint action plan approved by the two governments, launch the intergovernmental permanent committee at an early date, carry out major cooperation programs, and push for stable and balanced development of bilateral trade, said Xi.
London Stock Exchange eyes China equ
The LSE is central to wider plans to make London a leading offsho for trading in the Chinese currency
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ondon Stock Exchange Group (LSE) is aiming to list Chinese equity futures in London in the next stage of its plans to tap the world’s second-largest economy, the bourse’s chief executive told Reuters. To date the LSE’s expansion into China has been achieved through intellectual property, a cornerstone of the group’s overall growth strategy. Its FTSE index business has been particularly successful, with about US$18 billion of assets under management against exchange-traded funds (ETFs) that track FTSE China indices. ETFs are baskets of securities that are similar to mutual funds but trade on exchanges in much the same way as company shares. Speaking at the Reuters China Summit on Tuesday, LSE Chief Executive Xavier Rolet said that a natural evolution of its strategy would be to develop futures products based on its China indices.
“Having an A50 (China) futures index listed over here would be a way to help grow liquidity and trading that can ultimately go back into the Chinese economy,” Rolet said during the London leg of the event, without giving a timetable for the initiative. The plan was conceived after a recent round of the economic and financial dialogue between China and Britain, during which both sides said that they welcomed the introduction of internationally tradable futures contracts and pledged to work together to see the process through - something the French former investment banker described as a “seminal development”.
Renminbi hub The LSE is central to wider plans to make London a leading offshore centre for trading in the Chinese currency, in the hope that it could
provide a significant boost to the city’s financial sector. It faces stiff competition from Luxembourg, Frankfurt and Paris, all of which have expressed similar ambitions, but London has stolen a
KEY POINTS CEO says bourse seeking more Chinese listings Aims for financial boost from becoming renminbi hub
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October 30, 2014
Greater China
If (the protest) drags on, it’s impossible for it not to be affected. This is important for Hong Kong
ICBC plans to grow yuan clearing business In the first nine months of this year, ICBC’s overseas units saw profits surge by nearly 50 percent compared with the same period in 2013 grow the yuan into a global currency to temper the dollar’s dominance and reduce the foreign exchange risks faced by Chinese companies, worldwide usage of the renminbi has spiked in recent years. It overtook the euro to become the second-most-used currency in trade finance in 2013, spurring big Chinese banks to fight for a bigger share of the booming trade.
Charles Li Hong Kong bourse’s chief executive
Hong Kong bourse’s chief executive Charles Li who said on Monday that the on-going protests could impact the future of the scheme. “If (the protest) drags on, it’s impossible for it not to be affected. This is important for Hong Kong,” Li told reporters. China’s premier Li Keqiang announced plans for the project in April and Chinese and Hong Kong authorities issued a statement that month saying it would take “approximately six months” to launch. But in a statement issued late Sunday, the Hong Kong stock exchange said no start date had been set for the scheme, and it had yet to receive regulatory approval. Chow said on-going uncertainty over how trading via the scheme will be taxed was partially behind the delay. Media reports last week said that the Asia Securities Industry and Financial Markets Association (ASIFMA), representing some of the world’s biggest banks and asset managers, had written to Hong Kong regulators asking for a delay because of uncertainty over the scheme’s rules. Plans for a similar tie-up in 2007 sparked a surge in share prices in both bourses but they were eventually scrapped as the global financial crisis unfolded. Reuters
Venturing abroad
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he Industrial and Commercial Bank of China Ltd (ICBC), China’s largest bank by market capitalisation, plans to expand in emerging markets and wants to be the authorised bank for clearing yuan trades in more countries, it said on Tuesday. With global use of yuan exploding in trade and investment in recent years, ICBC hopes to be the bank that clears yuan trades in the Americas, said Wu Bin, general manager at ICBC’s International Banking Department. “The overseas renminbi business cannot be overlooked,” Wu said in
an interview at the Reuters China Summit. “We will try to be selected as the yuan clearing bank in more countries.” Already the authorised bank for clearing yuan trades in Luxembourg and Singapore, ICBC plans to set up new branches in about another 10 countries in regions including north Africa, southeast Asia and central and eastern Europe, Wu said. Underscoring the rising importance of the yuan, business related to the currency accounted for more than a fifth of ICBC’s overseas profits so far this year, Wu said. Driven by China’s ambitions to
Wu said ICBC would focus on providing financing support and services to Chinese companies looking to venture abroad and to multinational firms that want to do business in China. “One of our main priorities is to follow Chinese firms and venture abroad,” he said. China’s non-financial direct outbound investment jumped about 22 percent to US$75 billion in the first nine months this year compared with the year-ago period, and is projected to rise at least 10 percent annually for the next five years. While there are barriers today with regards to global usage of the yuan, which cannot be freely transferred in and out of China, Wu was confident that things would change over time. Reuters
Steel exports reinforced by rebate By adding boron, mills can get a 9 percent export rebate for alloy steel coil, while steel plates enjoy a 13 percent rebate of the value-added tax
uity futures
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ore centre
march on its rivals. The London exchange has signed partnership agreements with three of China’s four biggest state-owned banks - Bank of China, Agricultural Bank of China and China Construction Bank - to help it to build its renminbidenominated products and clear the currency. It also raised 3 billion renminbi (US$491 million) this month from an oversubscribed renminbi bond issued by the British government, the first Western government to do so. London could eventually become an extension to the soon-to-launch Hong Kong-Shang Hai connect scheme, which will link the two cities’ equity markets. About 60 Chinese companies are listed on its markets and LSE executives recently travelled to China to drum up more in what Rolet said was a successful initiative. Reuters
hina has boosted exports of steel qualifying for a generous tax exemption to some Asian countries, triggering accusations that mills in the world’s biggest producer are taking advantage of the rebate to sell surplus steel cheaply. The steel in question contains boron, an element that can harden steel for uses ranging from agricultural tools to mining, and receives less export tax under China’s efforts to promote higher-value steel. But steel makers in countries such as India say that a minimal amount is being added to the steel to benefit from the rebate and have urged their governments to take action, concerned cheap imports could force some mills out of business. “It’s yet another big loophole and people are grumbling, rightly so,” said Jeremy Platt, an analyst at steel consultancy MEPS. Chinese mills can get an export rebate that is five times greater than the cost of adding just 0.0008 percent of boron to a tonne of steel. Adding such a tiny amount did not alter the use of the steel but classed it as a special or alloy steel that could be sold more cheaply because of the rebate, said Platt.
Sensitivity has increased as China’s overall steel exports last month hit a record high. In the first half of 2014, boron alloy steel exports were 11.58 million tonnes, or nearly 30 percent of total, according to a government report. Steel exports were likely to reach a record high of more than 80 million tonnes this year, the China Iron and Steel Association (CISA)
There are countries around the world that are very unhappy, but the customers are very happy Li Xinchuang China Iron and Steel Association vice-secretary general
said yesterday, while domestic steel consumption was down nearly 1 percent in the first nine months. Li Xinchuang, vice-secretary general at CISA, said that Beijing was not subsidising the steel industry, but further jumps in exports risked creating problems so there was a need to find a reasonable resolution. Reuters
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Asia
World Bank backs China’s “new normal”… with reforms Beijing is not expected to announce its 2015 target until next March Jake Spring
China’s slowing housing market is one of the main concerns about the economy
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hina can cut its economic growth target to 7 percent next year without hurting its labour market, the World Bank said yesterday even as it urged Beijing to get rid of rigid growth objectives. At its thrice-yearly review of the Chinese economy, the World Bank warned China against carrying its “ambitious” 2014 economic growth target of 7.5 percent into next year, saying that such a move would detract from the government’s reform plans. After 30 years of breakneck, double-digit economic expansion that lifted millions of Chinese from abject poverty but also polluted the nation’s air, land and waterways, China wants to retool its economy to generate slower but betterquality growth. But the quest to let market forces supplant state planning in running the world’s second-biggest economy would require China to live with less frenzied economic growth rates and income rises, a point stressed by the World Bank. “Our policy message is the focus should be on reforms rather than meeting specific growth targets,” Karlis Smits, a senior economist at the World Bank office in Beijing, told reporters at a
media briefing. “In our view, an indicative target of around 7 percent for 2015 would meet ... the kind of indicative growth that is needed to maintain stability in the labour market,” he said. The bank’s message on employment would appeal to its audience in Beijing, where Communist Party leaders who are wary of social unrest have said that having a healthy job market is a top policy priority. Hurt by softening domestic demand as China’s property market sags and investment growth wanes, the Chinese economy has had a rough ride this year, even though the government and the central bank have rolled out a series of support measures to avert an even sharper slowdown. The economy grew at its slowest pace since the global financial crisis in the September quarter and is expected by analysts to miss China’s official growth target for the first time in 15 years. The World Bank and other analysts expect the economy to expand by 7.4 percent this year, the slackest in 24 years, and a hair’s breadth from the 7.5 percent target. And the World Bank made clear that it would not welcome a similar growth target from China next year. “A prevalent concern
is that a policy focused on meeting an ambitious growth target, similar to one set for 2014, would require macroeconomic policies to remain oriented to support domestic demand rather than on reforms,” it said in a report. The World Bank’s comments echoed those of the International Monetary Fund, which said in July that Beijing should set a growth target of 6.5-7 percent for 2015 and refrain from stimulus measures unless the economy threatens to slow sharply from that level.
More property weakness On China’s slowing housing market, judged by many economists to be the biggest risk to the economy, the World Bank predicted that property prices could fall further in coming months due to an over-supply of homes. In China’s biggest cities - Beijing, Shanghai, Guangzhou and Shenzhen home inventory levels have more than doubled since the start of 2013, the bank said. For every square metre of homes sold in those cities, there are 13 square metres of unsold property. The ratio of housing inventory to sales was even
higher in smaller, “second- the last few decades,” the tier”, cities at around 17, World Bank said. though off a peak of about A calculation made by 20 seen earlier this year, the the World Bank and the World Bank said. Development Research Centre “Excess inventory will - a think-tank linked to the depress housing prices over the Chinese cabinet - showed next few quarters,” the bank that reforms would increase said, adding that any policy China’s potential growth by response is constrained by about 0.8 percentage points the fact that China’s housing in the first year, the bank said. market needs to undergo Spread over five years, some structural adjustment that is not temporary. Smits eluded to speculation and lack of other investment avenues driving China can lower 2015 excess investment economic growth target to in certain cities in the past. However, 7 pct-World Bank housing starts shifted in the first half of the Says lower growth target year to correspond would not hurt labour to areas of highest market population growth, indicating market Says home prices to fall in forces are taking hold. next few quarters on excess W h i l e s o m e supply analysts have argued that only by advancing reforms can China reforms would raise China’s power its future economy, the growth potential by a total of World Bank cautioned that 3.5 percentage points, it said. any growth impetus derived “Implementing such a from reforms would not be coordinated reform plan can as potent as those in the past. accelerate China’s economic “’Second generation’ growth potential, but it will reforms are likely to have not reverse a moderation of a smaller impact on growth growth over the next decade,” than the ‘first generation’ the bank said. Reuters reforms implemented over
KEY POINTS
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October 30, 2014
Asia
Factory output eases Japanese economy concerns The fragile economic recovery has fuelled speculation about additional stimulus by the government and central bank
KEY POINTS Sept factory output +2.7 pct vs f’cast +2.2 pct Output seen down 0.1 in Oct, up 1.0 in Nov Mixed data cast clouds over planned tax hike in 2015 BOJ to stick to rosy price outlook at Oct 31 review
A Kobe Steel factory
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apan’s industrial output rose in September at the fastest pace in eight months in a tentative sign of recovery in factory activity, offering some relief for Prime Minister Shinzo Abe as he moves closer to making a decision on a second sales tax hike. The 2.7 percent rise in factory output topped economists’ median estimate of a 2.2 percent increase in a Reuters poll, the Ministry of Economy, Trade and Industry
data showed. That followed a 1.9 percent drop in August. The upbeat data follows a run of weak economic reports after a sales tax hike in April drove the world’s third-biggest economy into its deepest quarterly slump since the 2009 global financial crisis in the second quarter, casting doubt about a planned second tax increase in October 2015. Some analysts think the third quarter growth figures
would be robust enough to allow Abe to proceed with the tax hike - a key plank in Tokyo’s strategy to curb Japan’s mammoth debt load. “It is safe to say that the declines in industrial output are over,” said Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting Co. The Bank of Japan is in no mood to ease policy again at its policy review on Friday when it is expected to slash
its growth projections but stick to its rosy view that the economy is on track to meet a 2 percent inflation target sometime next year. On Tuesday, policy makers received more welcome news on consumption when government data showed retail sales rose for the third straight month in September. The rare bright spots, however, fail to mask the painfully slow economic recovery.
Malaysian PM backs idea of creating Islamic mega bank
Bernardo Vizcaino
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Such consolidation would be positive for Malaysia’s banking sector, although the government will not press for a deal and will leave the decision entirely up to the shareholders, Razak said in an interview on the side-lines of an Islamic finance conference in Dubai. Islamic finance is centred mainly in Southeast Asia and the Gulf, but in the past year some other economies such as Britain and Hong Kong have sought to develop their shariacompliant bond markets as a way to lure investment from
cash-rich Islamic funds. “We don’t want Islamic finance to be only well-received in the Muslim world, but also beyond in the non-Muslim world,” said Razak, who is also finance minister. The concept of a mega Islamic bank has been discussed in the industry for years, but previous efforts have failed to take off partly because of scant interest in the private sector. However, strong growth has now left sharia-compliant banks accounting for over a quarter
Reuters
“We are keen to integrate, penetrate into the wider market so that Islamic finance will be seen as a real alternative to conventional finance”
Islamic finance is centred mainly in Southeast Asia and the Gulf, but in the past year some other economies such as Britain and Hong Kong have sought to develop their sharia-compliant bond markets
alaysia’s Prime Minister Najib Razak said that he backed the idea of creating a large stand-alone Islamic bank, in order to develop a global footprint for Islamic finance and position it as an alternative to conventional banking. A proposed merger between Malaysia’s CIMB Group Holdings Bhd and two smaller peers would create a sharia-compliant bank with the financial clout and regional scope that has so far been absent in the industry.
The ministry data showed output rose due to increase production of cars, flat panel displays and solar panels. Factory activity has been languishing since April’s tax hike to 8 percent from 5 percent, which dampened demand for cars and housing construction, leaving companies saddled with a pile of inventories of unsold goods. Indeed, the outlook was mixed as manufacturers surveyed by the ministry said they expected output to fall 0.1 percent in October but increase 1.0 percent in November, the data showed. Other key indicators for September due this week are also likely to show falling household spending, slowing consumer inflation and a rising jobless rate. The government plans to raise the sales tax to 10 percent in October 2015 in a bid to fund bulging welfare costs and rein in mammoth public debt that at twice the size of the economy is by far the worst ratio in the industrial world. But there are lingering concerns the economy may not be able to withstand another tax hike impact, fuelling speculation Abe may delay the second tax hike. Analysts polled by Reuters forecast the economy would grow an annualised 2.9 percent in the third quarter, after an annualised 7.1 percent slump in the prior three months. The BOJ is preparing to roughly halve its 1 percent economic growth forecast for this fiscal year at a meeting on Friday but stand by its prediction that inflation will hit its 2 percent target in the year that begins April 2015. Many private economists are sceptical that the BOJ will meet its inflation target and see it easing policy further.
Najib Razak (pictured) said the industry was addressing issues helping to develop links among Islamic finance centres
of Malaysia’s banking sector. Razak said the industry was addressing issues as improving governance, standardising financial products, and improving human capital, helping to develop links among Islamic finance centres.
Meger talks between CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd started in July, aiming to sign a definitive agreement early next year and to complete the deal by mid-2015. Reuters
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Asia
S.Korea’s president warns of long-term stagnation
Bank of Korea seen under pressure to cut rates, the fourth time it would do so since the middle of last year
South Korean President Park Geun-Hye addresses the National Assembly in Seoul yesterday. Park spoke about the government budget
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outh Korean President Park Geun-hye warned the economy is at risk of falling into longterm stagnation and urged for speedier handling of economic law bills in parliament. Low growth, low inflation and a weak Japanese yen, along with a fastageing population, were key economic risks, Park said in a televised speech in parliament, noting that the country was at a crossroads between growth and stagnation. Park’s remarks come as indicators underline worsening consumer
confidence and weak global demand. Finance Minister Choi Kyung-hwan has held a similarly bleak assessment of the economy since introducing a series of stimulus measures in July. “We are at the crossroads between achieving another leap forward and falling into a stagnation, and this is the golden time to rebuild the economy,” Park said, while the government submitted next year’s budget bill to parliament. Asia’s fourth-largest economy will probably pick up to grow around 3.5 percent this year from 3.0 percent
in 2013, Park said, but she added the economy was still in crisis as the outlook remained uncertain both locally and globally. The won pared losses while bond futures rose as Park’s renewed warning of long-term stagnation reinforced the market’s view the central bank could loosen monetary policy.
Rate cut chances rise The government is seeking parliamentary approval for next year’s budget bill, including plans to
increase fiscal spending by 5.7 percent to 376.0 trillion won (US$359.4 billion) from this year - a bigger increase in spending than previously projected. The country’s fiscal year starts on January 1 and parliament is due to finalise the budget plans by December 2, although it has frequently missed the deadline. “On the surface, I think her comments were mainly aimed at arousing public pressure over the main parties to finalise next year’s budget bill in time, but these remarks
Philippines could keep current policy if inflation persists The central bank will hold its last policy-setting meeting this year on December 11
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he head of the Philippine central bank said yesterday it could leave current policy settings on hold if inflation remains favourable and the U.S. Federal Reserve takes its time in raising interest rates. Bangko Sentral ng Pilipinas Governor Amando Tetangco was speaking at a forum organised by the Foreign Correspondents Association of the Philippines, a day after he said inflation will probably ease further on lower food and fuel prices. “If the inflation situation and the forecasts remain favourable and manageable... the market can expect the BSP (central bank) to maintain the current stance of policy,” Tetangco said. In determining its next policy move, the central bank will take into account inflation expectations,
the impact of changes in monetary policies of advanced economies on financial markets and growth in the country’s major trading partners, Tetangco said. The Fed is widely expected to announce on Wednesday it will end its two-year-old bond-buying stimulus, known as quantitative easing three, as the U.S. economy continues to recover. Still Fed officials have also stressed they are in no hurry to take policy tightening a step further by raising rates from near zero levels due to subdued inflation and the poor quality of a recovery in labour markets. Fears of Fed tightening have sparked heavy selling of emerging market currencies, stocks and bonds several times over the past year. “With latest Fed communications pointing to more dovish approach,
Bangko Sentral ng Pilipinas Governor Amando Tetangco
BSP may be able to buy some time to allow these adjustments to work their way into the economy,” Tetangco said referring to previous policy actions by the Bangko Sentral ng Pilipinas (BSP). Last week, the BSP left policy rates
unchanged after it raised in September both the overnight borrowing rate and the rate on its special deposit accounts by 25 basis points to curb inflation amid buoyant economic growth. Reuters
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October 30, 2014
Asia helped reinforce expectations among traders for a fresh rate cut,” said Park Sang-hyun, chief economist at HI Investment and Securities. The Bank of Korea cut its benchmark interest rate by a total of 75 basis points in three steps since May last year and traders were almost equally split over the likelihood of another rate cut, Park of HI said. President Park reiterated her commitment to transforming the economy into a more balanced one between manufacturing and service sectors and between exports and domestic operations. South Korea’s economy is heavily influenced by a few big manufacturingbased business conglomerates, such as Samsung Electronics and Hyundai Motor, and Park has pledged to change the structure. But her government has not taken any bold steps toward weakening the power of the conglomerates, known as chaebol, but is instead trying to encourage the creation of smaller companies and expand financial support for smaller enterprises. Government data shows the combined annual sales of the country’s top five chaebol amounted to 831 trillion won in 2013, equivalent to 58 percent of the country’s annual gross domestic product - up from 40 percent in 2004. Reuters
KEY POINTS Low growth, low inflation, weak yen are risks to economy President Park says “golden time” to rebuild economy Park wants speedier handling of law bills
Singapore still best place to do business
S.Korea current account surplus lower
Jeanna Smialek
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ingapore is the best country to do businesses in, topping for a ninth straight year a World Bank ranking that showed improvements by the U.K. and China while Japan declined. The U.K. edged up one position to No.8 and Finland slipped to ninth, the only changes among the top 10 in the poverty- reduction institution’s 2015 “Doing Business” report. The World Bank’s analysis showed it’s getting easier to do business around the world, from developed economies including New Zealand, the second-ranked nation, to emerging markets such as Nigeria, which rose five places to 170th. The report covers policies implemented in the 12 months through June. The index takes into account metrics such as the time it takes to start a business, pay taxes and gain construction permits in a nation’s largest city or cities. The least- hospitable countries have converged toward better nations’ practices over the past decade, according to the report. “The countries with the worst business practices, with the most difficult and costly procedures, with the weakest institutions” are gaining on the top performers, Augusto LopezClaros, director of global indicators and analysis at the World Bank, said on a conference call last week. “This is most encouraging.” Japan slid two spots to 29th, the report showed. Sub-Saharan African countries
accounted for five of the 10 top improvers, the report found. The region also carried out the largest number of total regulatory reforms facilitating business, as more than 70 percent of sub-Saharan economies implemented at least one change. Even with regional improvements, sub-Saharan African countries such as Eritrea, the Central African Republic and South Sudan still rank at the bottom of the list. Hong Kong ranked third, followed by Denmark and South Korea in the top five, the report showed. The ranking expanded this year to include the second-largest business city in 11 nations with populations exceeding 100 million. For all other countries, the assessment is based on the largest business city. Bloomberg News
Top ten places to do business in the World 1 Singapore 2 New Zealand 3 Hong Kong 4 Denmark 5 South Korea 6 Norway 7 U.S.A 8 U.K. 9 Finland 10 Australia
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A Myanmar industrial official has called for developing chemical industries in the country, especially petrochemical industry, saying that the country has potential for such large-scale undertakings. Myanmar has no large chemical factory or multinational enterprises so far due to its lack of investment and technical know-how. Addressing the 8th Regional Chemical Management Forum in Yangon, U Ye Mon, managing director of the Paper and Home Utility Industries of the Ministry of Industry, stressed the need for mutual cooperation, investment, technology exchange, policies of standardization procedure and chemical management for the development of petrochemical industry in Myanmar.
South Korea’s central bank views the country’s exports as faring well despite the won’s relative strength to currencies of its trading partners, an official at the Bank of Korea said yesterday. Jung Joon, head of the central bank’s financial statistics team, made the remarks to reporters while explaining the current account performance for September.
Int’l textile expo kicks off in Vietnam
In a sign of their popularity, more than half of the A$6 billion (US$5.3 billion) of Tier 1 capital sold by Australian lenders this year was taken up in a matter of weeks in the third quarter managers to see good reason to buy hybrid debt now. “Hybrids issued by ANZ and Westpac earlier in the year look very cheap with margins well above their initial spread,” said Campbell Dawson, a portfolio manager at Elstree Investment Management Ltd, which manages A$180 million in fixed income and credit. The margin of Australia and New Zealand Group Ltd’s Tier 1 securities climbed to 341 basis points over bank bill swaps, from 325 bps in February when they were issued. The spread on Westpac Banking Corp’s hybrids similarly rose to 345 basis points from 305 bps in May, when they were sold. Some fund managers caution that margins may slip further, but they are confident that if this happens, prices will bounce back due to underlying demand. “Banks will have a good reporting season and this will push hybrid prices back to above par,” said a private wealth manager, who asked not to
Myanmar wants chemical industries
S.Korean exports faring well
Funds bullish on Aussie banks’ hybrid performance
und managers have turned bullish on Australian bank hybrid securities due to expected strong earnings from lenders and a thin pipeline of supply, defying concerns about near-term market indigestion and the prospect of further price declines. Banks issue relatively high-yielding hybrid securities - a mix of bonds and equities - to bolster their Tier 1 capital requirements, with investors ranging from funds to individuals. The rush for hybrid yields has worried regulators. The Australian Securities and Investments Commission (ASIC) said some retail investors may not fully understand the complex instruments, especially self-managed retirement funds, the largest growing segment of the pension fund market. The demand seen in the last quarter has since retreated as the market continues to digest the new issuances, sending prices much lower across the board. The fall was the largest since the 2008/09 global financial crisis, leading several fund
South Korea’s current account surplus fell to US$5.20 billion in September on a seasonally adjusted basis from a revised US$7.51 billion surplus in August as exports dropped, central bank data showed yesterday. This was the smallest current account surplus seen since a US$5.15 billion surplus in November last year. Exports in September fell by 3 percent to a seasonally adjusted US$50.32 billion while imports edged down 0.03 percent to US$44.15 billion, resulting in a goods account surplus of US$6.17 billion, the Bank of Korea data showed.
World Bank headquarters
be named for sensitivity reasons. Convertible debt is currently trading between A$96 to A$98, from A$100 when they were initially sold. Also helping is a thin issuance pipeline with regional lender Bendigo and Adelaide Bank being the only lender with a preference share issue maturing next year, according to Damien Williamson, a research analyst at brokerage firm Bell Potter. Williamson also pointed to the strong capitalisation of Australian banks, which he said makes them less likely to raise additional hybrid securities, which would create more supply and push prices lower. With more than 8 percent in Tier 1 capital, the nation’s four largest banks stand well above their international peers. Moreover, the search for yield is seen as an extra pillar of support for a rebound in prices. Reuters
The Vietnam International Garment and Textile Exhibition 2014 (VGT 2014) kicked off in Ho Chi Minh City yesterday, attracting domestic and foreign exhibitors from 10 countries and regions, organizers announced. During the four-day event, which will run through Saturday, the latest machinery, equipment and technologies will be displayed by exhibitors, including those from Chinese mainland, China’s Hong Kong, India, Japan, South Korea, Singapore, China’s Taiwan, Turkey, the United States and Vietnam, with worldrenowned companies such as ARTREND, Da Kong, EKSOY, TAJIMA, WELLTEX, among others.
LG operating profit doubles South Korean tech giant LG Electronics said yesterday that its third-quarter operating profit more than doubled from a year earlier due to record smartphone sales. Operating profit was 461.3 billion won (US$440 million) in the third quarter, up 111.8 percent from a year ago, the company said in a statement. From three months ago, the profit declined 23.9 percent. Revenue increased 7.4 percent from a year earlier to 14.92 trillion won in the quarter, and net income surged 86.7 percent to 202.6 billion won. The solid earnings stemmed from strong performance in its mobile business.
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International SEC probing private performance figures The U.S. Securities and Exchange Commission is examining how private equity firms report a key metric of their past performance when they market new funds to investors, as the regulator boosts its scrutiny of the industry, according to people familiar with the matter. At issue is how private equity firms report how they calculate average net returns in past funds in their marketing materials, the sources said. Net returns deduct private equity fund investors’ fees and expenses from a fund’s gross profits. Private equity fees are not standard and different investors in the same fund can pay different fees.
Global consumer confidence improves The index has been steadily rising since the first quarter of 2012 Susan Fenton
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onsumer confidence in the United States jumped in the third quarter and improved globally, although people were more
optimistic about job prospects than their personal finances, a survey showed yesterday. India remained the most bullish
Total chief to visit key oil contacts The new head of Total will embark on a tour to meet crucial contacts at oil-rich countries in the next few. Europe’s second-largest oil company elevated former refining head Patrick Pouyanne to the CEO position following the sudden death of its charismatic chief executive Christophe de Margerie earlier this month in a plane crash in Russia. In a statement unveiling a 2 percent drop in net profit in the third quarter on Wednesday, the new CEO said he would carry out de Margerie’s plan to reduce capital expenditure and operating costs, aimed at returning more cash to shareholders.
Air France-KLM sees more belt-tightening The airline said it would limit investments and accelerate cost controls next year to mop up the remaining impact of a recent pilots’ strike that helped slash its operating profit by more than half in the third quarter. Europe’s second-largest network carrier by revenues said the interim measures were needed to secure a smooth transition between two successive turnaround plans. The Franco-Dutch airline group said yesterday its revenue fell 6.7 percent in the third quarter to 6.695 billion euros, while operating profit fell by 394 million euros to 247 million.
NY regulator seeks millions from tax probe New York state’s financial regulator is seeking more than US$300 million from Bank Leumi as part of a probe of whether the Israeli bank assisted U.S. citizens in evading taxes, according to a person familiar with the matter. Bank Leumi, Israel’s second-largest bank, has been negotiating with U.S. authorities for months to settle an investigation of possible tax evasion by the bank’s American clients. The penalty from New York state’s Department of Financial Services, which regulates certain banks in the state, is separate from demands by federal authorities.
Protesters occupy Peru oil airport Hundreds of indigenous community members took control of a small Amazonian airport inside Peru’s biggest oil block, tribal leaders said on Tuesday, part of a dispute with Argentine energy firm Pluspetrol and the government over pollution and use of local resources. The airport mainly hosts planes used by privately held Pluspetrol, which operates the nearby oil block 1-AB. The field produces between 15,000 and 17,000 barrels per day, or about a quarter of Peru’s relatively small output.
Nielsen Global Consumer Confidence Index third quarter 2014 (change from Q2 survey in brackets) India Indonesia Philippines Thailand UAE China United States Hong Kong Saudi Arabia Denmark
Top 10 index readings
126 (-2) 125 (+2) 115 (-5) 113 (+8) 112 (+3) 111 (0) 108 (+4) 107 (+4) 105 (+3) 104 (-2)
Bottom 10 index readings
Finland 64 (-3) France 59 (-1) Slovenia 58 (+9) Ukraine 57 (-4) Hungary/Greece 56 (0,+1) Portugal 53 (+5) S. Korea 52 (-1) Serbia 51 (0) Croatia 49 (-1) Italy 47 (-4)
Global consumer confidence average Germany UK Japan Australia
98 (+1) 97 (+1) 93 (+3) 77 (+4) 97 (+12)
consumer market, while Italy became the most pessimistic, according to the survey by global information and insights company Nielsen. The survey showed that concerns about the economy and job prospects had eased globally from the second quarter, but in North America and Europe that had been replaced by rising worries about war and terrorism. European countries generally were the most pessimistic, reflecting the conflict in Ukraine, faltering growth and the risk of deflation in the euro zone. Britain and Germany, however, saw consumer confidence improve. The Nielsen Global Consumer Confidence Index rose 1 point in the third quarter to 98, according to the survey, conducted between August 13 and September 5. The index has been steadily rising since the first quarter of 2012 and the latest reading headed closer to the 100 mark that signals optimism among consumers. U.S. consumers were the seventh most upbeat globally, with their score rising 4 points to 108 as optimism about job prospects continued to surge. Americans were also slightly more upbeat about the outlook for their personal finances than they were in the second quarter, unlike Europeans, who were more pessimistic, reflecting persistently low wage growth. “U.S. consumers are now feeling far more confident than in previous years of the recovery due to consistently good job market trends, reflected in steady payroll growth and falling unemployment over the course of 2014,” said Louise Keely, a senior vice president at Nielsen. “They are also benefiting from lower gasoline prices and a gradually improving housing market. In the coming months, as we start to see more people re-entering the workforce and meaningful wage growth, this is likely to translate into broad-based gains in consumer spending.” Australia saw the biggest increase in confidence from the previous quarter, by 12 points, followed by Slovenia with a 9-point increase and Thailand with 8 points. Chile posted the sharpest drop in confidence, by 7 points, followed by the Philippines with a 5-point decline and 4-point decreases for Italy and Ukraine. The Nielsen survey was conducted online and covered more than 30,000 consumers across 60 markets. Reuters
Studies find fast traders get data earlier The studies focus on the SEC’s Electronic Data Gathering, Analysis and Retrieval system, or Edgar, which is used to disseminate earnings reports and other documents filed to the regulator
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edge funds and other rapid-fire investors get access to marketmoving documents before other users of the Securities and Exchange Commission’s system for distributing company filings, giving them a possible edge on the rest of the market, the Wall Street Journal reported, citing two independent studies. The two sets of researchers have been examining when paying subscribers receive SEC filings compared with when they become available on the agency’s website, the newspaper reported. They found a wide variation in the lag time, from no delay to one lasting
more than a minute. The ability to get the information before it is on the SEC website can give traders extra seconds to act on the news, WSJ said. The studies focus on the SEC’s Electronic Data Gathering, Analysis and Retrieval system, or Edgar, which is used to disseminate earnings reports and other documents filed to the regulator. Representatives for the SEC were not immediately available to comment on the report outside regular U.S. business hours. However, an SEC spokeswoman told the Journal that the agency has reviewed the working paper and was
conducting a thorough assessment of the dissemination process to make necessary systems modifications. A book by best-selling author Michael Lewis that asserted equities markets are rigged by high-frequency traders - who can dip in and out of markets in fractions of a second triggered renewed regulatory scrutiny earlier this year. The SEC for the past few years has been investigating high-speed traders and others for potential concerns about manipulation or other practices that may give some market players an unfair advantage. Reuters
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October 30, 2014
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Leading reports from Asia’s best business newspapers
THE TIMES OF INDIA In a bid to take advantage of the bullish stock market sentiment, the finance ministry has kicked off the exercise to cut government stake in public sector banks to 51% and enable them to raise fresh capital to meet their growth requirements. Sources told TOI that the ministry has moved a cabinet note as the government is keen that banks are well capitalized to meet the funding requirement. With government finances already stretched, the BJP administration has decided that Centre’s holding be cut to 51% against the UPA-decided level of 58%.
THE JAKARTA POST The Corruption Eradication Commission (KPK) urged President Joko Widodo not to appoint a politician as attorney-general for the 20142019 term, fearing a failure to restore public trust in an institution widely deemed one of the country’s most corrupt judicial agencies. “Candidates for the attorney-general post must be clean, with no links to legal problems, because he or she should be a role model [for other agencies],” KPK chairman Abraham Samad told reporters at the KPK headquarters. Abraham also urged Jokowi to submit the names of candidates for the attorney-general position to the commission for a background check.
THE JAPAN NEWS Japan came in 104th in the World Economic Forum’s gender equality rankings for 2014, up from 105th the previous year but still far behind other major industrialized nations, the Geneva-based group said. The WEF, organizer of the annual Davos meeting of business and political leaders, compiled the rankings based on its survey on gaps between men and women in four categories. Japan ranked 37th in the health and survival category, 93rd in educational attainment, 102nd in economic participation and opportunity, and 129th in political empowerment.
THE STRAITS TIMES Companies with diverse boardrooms that include women and a range of ethnic groups tend to generate far better financial returns, a new study has concluded. The study also found that female representation in the boardrooms of Singapore-listed companies has barely improved over the past year, and still lags the region. The annual study is produced by the National University of Singapore Business School’s Centre for Governance, Institutions and Organisations (CGIO) and the group, BoardAgender. The latest study looked at 676 listed companies here, and for the first time examined ethnic and age diversity, as well as gender diversity.
Last chance for Japan?
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Stephen S. Roach
Faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China
apan is the petri dish for the struggle against the secular stagnation that is now gripping most major developed economies. And, notwithstanding all of the fanfare surrounding “Abenomics,” Japan’s economy remains moribund. In the six quarters of Shinzo Abe’s latest stint as prime minister, annualized real GDP growth has averaged just 1.4% – up only slightly from the anaemic post-1992 average of 1%. Abenomics, with its potentially powerful combination of monetary and fiscal stimulus, coupled with a wide array of structural reforms, was supposed to end Japan’s “lost decades.” All three “arrows” of the strategy were to be aimed at freeing the economy from a 15-year deflationary quagmire. Unfortunately, not all of the arrows have been soaring in flight. The Bank of Japan seems well on its way to delivering on the first one – embracing what it calls quantitative and qualitative easing (QQE). Relative to GDP, the BOJ’s monetary-policy gambit could actually far outstrip the efforts of America’s Federal Reserve. But the flight of the other two arrows is shaky, at best. In recent days, Abe has raised serious questions about proceeding with the second phase of a previously legislated consumer-tax hike that has long been viewed as the linchpin of Japan’s debt-consolidation strategy. Abe has flinched because the economy remains weak, posing renewed risks of a deflationary relapse. Meanwhile, the third arrow of structural reforms – especially tax, education, and immigration reforms – is nowhere near its target. Abenomics, one might conclude, is basically a Japanese version of the failed policy combination deployed in the United States and Europe: massive unconventional liquidity injections by central banks (with the European Central Bank apparently now poised to follow the Fed), but little in the
way of fundamental fiscal and structural reforms. The political expedience of the short-term monetary fix has triumphed once again. Such a gamble is especially problematic for Japan. With an aging – and now declining – working-age population, it has limited scope for reviving growth. Japan must either squeeze more out of its existing workforce by boosting productivity, or uncover new sources of demand at home or abroad. At home, that could mean adding workers, either by boosting female participation in the work force, which, at 63%, is among the lowest in the developed world, or relaxing immigration restrictions. Unfortunately, there has been little progress on either front. Moreover, even if the political will to launch third-arrow structural reforms were suddenly to strengthen – a dubious proposition – any productivity payback would most likely take a long time to materialize. That leaves external demand, which underscores what is perhaps Abenomics’ most serious strategic flaw: It does not take into consideration some of the biggest changes that are likely
to occur in the global economy. That is a great pity, because Japan is well positioned to take advantage of one of the most powerful global trends – the coming rebalancing of the Chinese and US economies. China appears to be more committed to restructuring than the US – at least for the foreseeable future. Its Third Plenum reforms provide a cohesive framework for a pro-consumption transformation. Though America currently remains intent on resurrecting a tired growth model, there is good reason to hope that it, too, will eventually rebalance. Japan cannot afford to squander these opportunities. As the main driver of Chinese growth shifts from external to domestic demand, who could benefit more than Japanese exporters? China is already Japan’s largest export market, leaving it ideally situated to capture additional market share in the coming surge of Chinese demand for consumer products and services. Likewise, Japan stands to benefit from its technological prowess in environmental remediation – an urgent priority for China in the years ahead. Japan already has great expertise in
In the 1970s and 1980s, Japan was the envy of the world, owing to an all-powerful export machine that tapped the demand of a rapidly growing global economy. “Japan, Inc.” still has a good institutional memory of what it takes to draw support from external demand
many of the solutions to some of China’s toughest problems. Japan is also likely to gain from a long-overdue rebalancing of the US economy. A shift in the US – from excessive consumption of goods largely sourced in lowwage developing countries to the capital equipment that an increasingly investment-led economy will require – would play to Japan’s greatest strengths. As a global leader in sophisticated machinery and the earth-moving equipment needed for infrastructure investment, Japan should be able to seize these opportunities. In looking to external demand, Japan should not lose sight of its earlier achievements. In the 1970s and 1980s, Japan was the envy of the world, owing to an all-powerful export machine that tapped the demand of a rapidly growing global economy. “Japan, Inc.” still has a good institutional memory of what it takes to draw support from external demand. It is time to recapture that memory. Failure to do so would leave Japan, the world’s third largest economy, at risk of being further marginalized by transformations in the world’s two largest, the US and China. There is one obvious and important caveat: Poor Sino-Japanese relations, owing to unresolved historical grievances, could prevent Japan from realizing the economic benefits implied by China’s economic rebalancing. The interplay between economics and politics lies at the heart of the rise and fall of great powers. In a rapidly changing world, underscored by likely shifts in the economic structure of China and the US, Japan cannot afford to lose sight of that fact. Just as the US and China have much to gain by transforming their economies, Japan is running out of time. In the grip of two lost decades and counting, this could be Japan’s last chance. Project Syndicate
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October 30, 2014
Closing China’s new regional jet starts domestic test flights
BoCom Q3 profit increases but misses estimates
A regional airliner built by Commercial Aircraft Corporation of China, Ltd. (COMAC) started domestic test flights yesterday, a key step for its expected commercial debut at the end of this year. A twin-engine ARJ21-700 completed a round trip at 10 a.m. between airports in Chengdu, capital of southwest China’s Sichuan Province, and Guiyang, capital of neighbouring Guizhou Province. Take-off and landing were smooth and stable, according to a Xinhua reporter aboard the plane. The jet, China’s first home-grown commercial regional aircraft, completed a 30,000-km flight test around the world in April.
China’s Bank of Communications Co Ltd, the country’s fifth-largest listed bank, reported a 6.3 percent rise in third-quarter net profit, missing analysts’ forecasts. Net profit rose to 14.7 billion yuan (US$2.41 billion) in the quarter, according to the bank’s unaudited financial statements filed yesterday. The bank’s profit for the quarter was below the average forecast of 16.4 billion yuan in a Reuters poll of analysts. Its non-performing loan ratio had increased to 1.17 percent by the end of September from 1.13 percent at the end of June.
China could “punish” Hong Kong over protests Joseph Yam, of the China Society for Finance and Banking, said the city’s financial integrity and stability of its currency were at risk Clare Jim
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member of China’s central bank’s advisory body warned yesterday that Beijing will punish Hong Kong if pro-democracy protests that have paralysed parts of the Chinese-controlled financial centre for a month are allowed to continue. Joseph Yam, executive vice president of advisory body China Society for Finance and Banking and a former Hong Kong central bank chief, said the city’s financial integrity and stability of its currency were also at risk. “Hong Kong’s economic prosperity was built on its intermediary role between the mainland and overseas, especially in the financial realm,” said Yam, who urged student protesters to return to their homes. His warning came hours before China’s top parliamentary advisory body expelled Hong Kong lawmaker James Tien Peichun for calling on the city’s embattled chief executive, Leung Chun-ying, to step down. Tien said after the news
Demonstrators sit on barricades in a blocked Nathan Road during the mass civil disobedience campaign Occupy Central in Mongkok district
that he would resign as leader of Hong Kong’s Liberal Party. Tens of thousands took to the streets at the height of the demonstrations to demand greater democracy in the former British colony, although their numbers have dwindled to hundreds in recent weeks, with tents scattered across the main protest site. The protests were triggered by China’s imposition of a highly restrictive framework for a city-wide vote for its next
Singapore group wins bid for Myanmar airport
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leader in 2017, which would only allow candidates prescreened by a 1,200-strong committee stacked with Beijing loyalists. The city’s powerful tycoons had warned prior to the protests that demonstrations could threaten the city’s financial stability, although they have remained largely silent since. Yam’s statement came as Hong Kong Secretary for Financial Services and the Treasury K.C. Chan told a Legislative Council session that
the city’s financial system had functioned normally during the protests. “The linked exchange rate system is robust, interest rates remain steady, and there is no evidence of abnormal fund outflow,” Chan said. “As for the medium and long-term impact on Hong Kong’s financial industry, we do not have sufficient data yet to make an accurate assessment. However, any prolonged protests would inevitably affect the confidence
of local and overseas investors, which would in turn increase the potential risk to our financial market,” he added. Hong Kong returned to Chinese rule in 1997 under a “one country, two systems” formula that allows it wide-ranging autonomy and freedoms and specifies universal suffrage as an ultimate goal. But Communist Party rulers in Beijing are wary about copycat demands for democracy on the mainland eroding their grip on power. China’s ambassador to Brazil said the protests, which have broken out on both sides of the famous harbour, did not enjoy popular support and were “a farce that is doomed to failure”. China’s Foreign Ministry published an interview Ambassador Li Jinzhang gave to the Brazilian newspaper, Folha de Sao Paulo. “At this stage today, (we) have reached a point where there is no choice but to clear the places,” Li was quoted as saying.
Volkswagen recalls Audi cars in China
190 mln-euro prize unclaimed
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Singaporean-led group has won a US$1.4 bn bid to build a second international airport in Myanmar’s commercial hub Yangon, authorities said yesterday, as the long-isolated nation gears up for a dramatic increase in foreign arrivals. The winning consortium, which includes Singapore-based engineering and construction group Yongnam and a subsidiary of Singapore’s Changi airport, will build and run Hanthawaddy International on the outskirts of Yangon by December 2019, according to Myanmar’s civil aviation department. Hanthawaddy International, about 80 kilometres northeast of downtown Yangon, is projected to handle around 12 million passengers a year -- a huge leap from the 3.7 million arrivals at the existing Yangon International Airport last year. “We intend it to become the primary gateway for transit routes and also for cargo,” Win Swe Tun, director general of Myanmar’s civil aviation department, told a press conference.
AW-Volkswagen Automobile Ltd, a Chinese joint venture of Volkswagen AG, will recall 270,635 Audi cars in China due to an air bag software issue, China’s quality watchdog said yesterday. A spokeswoman at Audi China said the airbags were from a German supplier, and that the recall has nothing to do with Takata Corp - the embattled Japanese company whose potentially defective airbags have led to the recall of millions of vehicles. The Audi recall comes less than two weeks after Volkswagen said it would call back more than 580,000 cars in China to fix a possible suspension defect. The latest recall involves 4,692 imported Audi A4 all-road cars and 265,943 China-made Audi A4L cars produced between May 25, 2012 and October 22, 2014, China’s General Administration of Quality Supervision, Inspection and Quarantine said in a statement on its website. Some of the cars to be recalled have software configuration problems in the airbag control systems, so in certain circumstances of collision, air bags cannot open, according to the statement.
AFP
Reuters
Reuters
he 190-million-euro jackpot prize from the Euromillions lottery drawn last Friday was won by a Portuguese-registered ticket, but has yet to be claimed by whoever bought it, according to local reports. The four-euro bet on the Euromillions lottery was placed at a newsagent in the Castelo Branco area, 220 km northeast of Lisbon. According to the Gambling Department of Santa Casa da Misericordia (SCML), the body responsible for all bets placed in Portugal, said that the prize was won by a single bet and, if the winner comes forward he or she stands to receive a total of 158 million euros after tax. The ticket holder has 90 days to claim the prize - by 15th January, 2015 - or lose the entire amount, which after that date will be handed over to SCML. SCML is a charitable institution that uses the funds it raises through betting and gambling for a variety of social projects, including orphanages and care homes for the elderly. Xinhua