Macau Business Daily, Nov 3rd, 2014

Year III

Number 658 Monday November 3, 2014

Publisher: Paulo A. Azevedo

Closing editor: Luís Gonçalves

MOP 6.00

Gov’t recruitment at crossroads

I

t started as a good idea. But the recruitment scheme for public administration jobs has hit a wall.

So says legislator Chan Meng Kam. The legislator says the recruitment process is too long and unwieldy. Mr. Chan said “they know there are problems [but] don’t know how to improve it”. In 2012, central recruitment meant negotiating 34 procedures over three years. The Mainland takes three months Page 4

Imports reach all-year high

Macau’s transportation chaos continues

The demand for goods is booming. Watches, mobile phones and construction materials are highly sought after. Macau imports increased in September at an allyear record of 23 percent. Twice the rate of growth of exports. Macau’s trade deficit is growing by the month

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Hengqin’s Hello Kitty theme park unrelated to SJM

4

City of Smoke The Health Bureau is serious.

Deputy director Cheang Seng Ip announced yesterday that the City of Dreams casino could face a smoking-related fine. Up to MOP100,000 for not displaying a smoking ban notice at the site in question. Other penalties may apply

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PAGE 5

MGM profits up 12 pct in Macau PAGE 8

Brought to you by

5

HSI - Movers October 31

Name

Rollercoaster growth

Yellow taxi ends operation on Thursday

There have been some good results. But another batch of data has confused analysts. Factory growth reached a 5-month record, accompanied by weak internal and external demand

Local car rental and seller Vang Iek Group is to cease its taxi business, known as the yellow taxis, as both the company and the government failed to achieve consensus on additional charges to the on-call taxi service

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www.macaubusinessdaily.com

Interview

%Day

Galaxy Entertainment 5.16 Want Want China Hol

3.73

Hengan International

3.22

Sands China Ltd

2.99

Hang Lung Properties

2.98

Swire Pacific Ltd

0.00

CITIC Ltd

-0.15

Lenovo Group Ltd

-0.52

China Resources Ente

-0.54

Tingyi Cayman Island

-1.23

Source: Bloomberg

US investors ponder diversification It’s life after gambling. The chairman of the American Chamber of Commerce in Macau says US investment in the territory is at a turning point. Mass market gaming growth and necessary economic diversification are the catalysts. Charles Choy says some AmCham members are already exploring non-gaming opportunities. Culture and entertainment – plus SME goods and services – top the list PAGE 6&7

I SSN 2226-8294

Brought to you by

2014-11-03

2014-11-04

2014-11-05

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2

November 3, 2014

Macau

Open skies pact with Taiwan presents possibilities

Jan-Sep commercial air traffic up 7%

Low-fare carrier Tigerair Taiwan has approached the Macau Civil Aviation Authority (AACM) with regard to operating direct flights between Taiwan and Macau once the open skies pact comes into effect, AACM president Simon Chan Weng Hong has disclosed Joanne Kuai

joannekuai@macaubusinessdaily.com

T

he open skies agreement between Macau and Taiwan came into effect last Thursday.

Macau Civil Aviation Authority (AACM) president Simon Chan Weng Hong said they have already been approached by Tigerair Taiwan with regard to opening new routes between Macau and the island. No formal application has yet been received due to ongoing legal procedures on Taiwan’s side.

Air Macau’s new aircraft

Mr. Chan said Macau’s aviation market is quite stable, usually with one third from Taiwan, one third from Mainland China and one third from elsewhere in Asia. Currently, Taiwan’s market share suffers a little decrease, to below 30 percent, but he believes that with the new open skies pact more diversified services will emerge, including regular air charter.

Tigerair Taiwan is a low-cost airline based at Taiwan’s Taoyuan International Airport. The airline has plans to expand its fleet to 12 aircraft by 2018. It was formed as a joint venture between China Airlines Group and Tigerair Holdings. China Airlines holds 80 percent of the share while Tigerair Holdings and Mandarin Airlines each

hold 10 percent. Mr. Chan added that before Taiwan operated direct flights to Mainland China, Macau mainly served as a transit hub. Ever since 1998, however, Macau’s role as a destination point has improved.

Currently, only 6 percent of passengers use Macau purely for transit. The other 94 percent pass through immigration and come into the SAR.

Macau International Airport to expand Local airport operator Macau International airport Company Ltd (CAM) said the Airport expansion is underway.

Currently, the expansion of the north

Information from the Statistics and Census Service (DSEC) reveals that Macao International Airport facilitated 35,484 commercial flights in the first three quarters of 2014, an increase of 7 percent year-on-year.

The major routes were Mainland China (40 percent of total) and Taiwan (25 percent). Flights to and from the Republic of Korea increased by 51 percent to 1,903 in the first three quarters, surpassing the annual total in 2013. Helicopter flights between Macao and Hong Kong and between Macao and Mainland China totalled 10,956, down 11 percent year-on-year.

side of the passenger terminal is under construction. It is expected to add a floor area of 90 metres by 40 metres. Another hangar is also being built.

The Executive Director of CAM, Tsui Wai Kwan, also said that the new open skies pact will enhance communication between the two regions for both passenger and cargo transportation.

They were speaking to reporters on the sidelines of the welcoming ceremony for Air Macau’s new aircraft ‘Prosperous’.

The aircraft baptism ceremony featured cultural overtones, being hosted by Dom Jose Lai Hung Seng and Masters from Kun Iam Tong at the same time. The Chairman of the Board of Directors of Air Macau, Zheng Yan, said the layout of the cabin comprises 24 seats in Business Class and 155 seats in Economy. The livery of the aircraft has a special meaning.

“Air Macau cooperated with the Tourist Office and had the landmarks of Macau painted on the aircraft,” said Mr. Zheng. “We have just celebrated the 20th anniversary of the company and we’re about to celebrate the 15th anniversary of the Macau SAR. The new aircraft ‘Prosperous’ will bring the tourism image of Macau to all destinations of the carrier, presenting goodwill and blessings to all passengers and the motherland.”

Designer Edith Lam told Business Daily that she was inspired by the dragon whisker leaping from bottom to top and applied the idea to the front of the aircraft body.

Landmarks of Macau, such as the Ruins of St. Paul’s, Temple of A Ma, Macau Tower, etc. are represented in silhouette. The purpose of the design is to promote Macau as a tourism destination and enable more people to appreciate Macau.

‘Prosperous’ departed from the Airbus manufacturer’s base in Hamburg, Germany, flew over Athens, Dubai and Yangon, and landed in Macau on 29th October 2014.

The baptism ceremony took place last Friday in the hangar of Macau International Airport.

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3

November 3, 2014

Macau

Gridlock Central In the first nine months of the year, the tempo of transportation in the city has increased significantly – the number of vehicles on the roads, plus accidents, cross border traffic, flights and ferries as well as freight transportation have all registered increases. In addition, the number of mobile phone-users and Internet subscribers has increased Kam Leong

kamleong@macaubusinessdaily.com

D

uring the first three quarters of the year, more than 15,000 vehicles were newly registered, increasing the total number of licensed motor vehicles in the city to 236,334, up 5 percent year-on-year. Meanwhile, the number of traffic accidents also increased 5 percent, totalling 11,737 incidents.

According to the latest data of the Statistics and Census Service (DSEC) more than half of the vehicles in Macau are motorcycles - some 52 percent - while light private cars accounted for some 41 percent, during the nine months. Traffic accidents in these three quarters cause 3,969 casualties, ten of which were fatal.

Meanwhile, the data shows that

the number of cross-border vehicles, flights and ferries all posted increases, of 6 percent, 7 percent and 1 percent, respectively, during the nine months.

Regarding cross-border vehicle traffic, 80 percent of the total 3.65 million trips used the Border Gate, while nearly three-quarters of ferry trips - 70,708 from a total of 105,635 trips - used the Terminal in the Outer Harbor. The major routes of the ferry trips were between the city and Hong Kong or the Mainland.

On the other hand, a total of 35,484 commercial flights used Macau International Airport during the three quarters. In particular, flights between the city and South Korea soared 51 percent to 1,903 flights; flights

between Macau and the Mainland or Taiwan still remained as the major routes, accounting for 40 percent and 25 percent of the total, respectively.

Although the major methods of transportation all recorded increases in the number of trips, helicopter flights, by contrast, posted an 11 percent year-on-year drop during the first nine months, with nearly 11,000 flights.

Freight Transportation In addition, air cargo posted slight increases, of 1 and 2 percent yearon-year, respectively, in inbound and outbound air cargo. Taiwan was the major origin and destination of the cargos, accounting for 52 percent of inbound cargo total and 43 percent of outbound cargo. Moreover, transit air cargo grew 13 percent year-on-year, of which 26 percent used Taiwan as a stopover.

Seaborne containers throughout

the period also recorded 102,887 TEU – twenty foot equipment unit (container) - in the first three quarters, up 14 percent year-on-year.

Mobile phone users increasing In addition to transportation trends, the data also plots figures for communications in the city – the number of mobile phone users has increased to more than 1.7 million, an increase of 8 percent year-on-year.

By contrast, the number of fixedline telephone users dropped slightly by 3 percent year-on-year to some 154,696.

In addition, the number of subscribers to Internet services totalled some 296 million users, compared to the 251 million users in the same period of last year.

Meanwhile, the cumulative duration of usage reached 703 million hours, jumping 18 percent year-on-year.

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November 3, 2014

Macau

Central recruitment scheme at dead-end; Gov’t lacks solutions The government itself realised the flaws but it could not provide any means of redress, at least for now. With its 34 procedures, the recruitment is ‘too complicated’ and too long, complain legislators Kam Leong

kamleong@macaubusinessdaily.com

L

egislator Chan Meng Kam, the president of the followup committee for the Public Administration Affairs of the Legislative Assembly, slammed the Public Administration and Civil Service Bureau last Friday because it had not come up with measures to improve the central recruitment scheme, despite admitting the scheme has ‘problems’, particularly in term of efficiency.

“They know there are problems [with the scheme] but they don’t know how to improve it,” Mr. Chan fumed, after the committee met with the Bureau last week regarding the operation of the central recruitment scheme, the results of which are “contrary to the expectations of society”.

Indicating the meeting was to study the existing flaws of the scheme and to resolve them, the legislator expressed dissatisfion with the Bureau’s preparation for the meeting. According to Mr. Chan, the government department only admitted the shortcomings of the scheme and claimed that there

was room to review the scheme and improve its procedures.

Too slow In fact, Mr. Chan reckons the process of central recruitment, with its 34 procedures, is “too complicated” and too long. He took the first central recruitment concept in 2012 as an example, indicating that the whole process of the recruitment occupied a three-year timeframe, from the government posting the notice of job vacancies to actual appointment, compared to the three months required on the mainland for the same process.

The recruitment in 2012 offered

a total of 128 vacancies for assistant officers for more than 30 departments, of which 97 vacancies offered permanent contracts, while 31 were fixed-term contracts.

Although the first written examination of the recruitment took place in 2012, with permanent positions allocated to qualified candidates, only 17 of them were working for the government on August 14 this year, while 46 had to wait until the middle of next year to begin their careers as public servants. Some 32 of these candidates may have start working for the government in the recent two months, according to Mr. Chan.

He perceives that the scheme was focused too much on how to avoid departments appointing candidates through favouritism, suggesting that the government should simplify administration procedures when hiring public servants.

Examination questions too complicated?

On the other hand, the secretarygeneral of the committee, legislator

Macau imports post largest growth of year in September Luís Gonçalves

Luis.goncalves@macaubusinessdaily.com

T

he growth of merchandise imports reached the highest value of the year in September, setting a 10-month record, after Macau bought more watches, cars, mobile phones and food from outside, especially Mainland China and Europe. Macau’s trade deficit continues to widen as the territory imports ten times more today than it exports.

According to data released on Friday by the Statistics and Census office, merchandise imports totalled MOP7.865 billion in September, 23 percent higher than one year ago.

That’s not only the highest increase of the year but also a 10-month record. The growth rate recorded in September was also twice the average of the first nine months of the year, the report said. Merchandise imports went up 12 percent between January and September (MOP65.1 billion) compared to the same period last year. In the Summer months, between June and August, the average growth of imports was only 4 percent.

The September record occurred after Macau companies and residents demanded more watches, food, mobile phones or construction materials.

Since the beginning of the year, imports of watches have skyrocketed by 42 percent leading the gains and amounting to MOP6 billion. Imports of food and beverages increased by 23 percent, cars and motorcycles by 19 percent and construction materials by 32 percent, as new Cotai casinos rise out of the ground.

With more demand for foreign products, Macau’s trade deficit continues to widen as the territory’s exports lag. In September alone, merchandise exports grew 12 percent to MOP762 million, half of the rate of imports. In the first three quarters, Macau sold MOP7.2 billion in merchandise to foreign markets, an increase of 8 percent from a year ago.

Since the beginning of the year, the trade deficit of Macau reached MOP57.9 billion as imports (up 12 percent) grew 50 percent faster than exports (8 percent).

On the export side, the textile sector continues plummeting, with sales dropping 12 percent in the first three quarters. On the other hand, exports of machines and watches increased by 42 and 69 percent, respectively. The statistics office also said that merchandise exports to Hong Kong topped MOP4.30 billion and for the European Union MOP218 million in the first three

Vong Hin Fai, revealed that the committee had discussed with the Bureau the recently released results of the examination for senior officers in the law field, of which only one of some three hundred candidates had passed.

Mr. Vong said some committee members suggest the government should sum up previous experiences, and consider asking examination questions in the form of multiple choices or true-false, instead of the current case study method.

Since 2012, a total of five recruitment [campaigns] have been conducted for vacancies of senior officers specialising in Information and Technology, Law, and Psychology as well as those of senior advisers on law affairs, respectively, in addition to the assistant officers.

However, similar to the recruitment of assistant officers, only 17 of the total 45 recruited candidates in the IT field were working on August 14.

Meanwhile, the actual installation of [successful candidates] of the other three recruitment [campaigns] can only be completed in the middle of next year, according to Mr. Chan.

Demand for merchandise products increased by 23 percent in September, widening the trade deficit of Macau, as the territory imports 10 times more than it exports

quarters of 2014, an increase of 20 percent and 5 percent year-on-year.

Exports to Mainland China reached MOP1.13 billion and the US MOP241 million), a decrease of 7 percent and 11 percent, respectively.

Merchandise imports from Mainland China increased by 10 percent to MOP21.14 billion, while from those from the EU went up by 22 percent (MOP16.48 billion).

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November 3, 2014

Macau CoD faces MOP100,000 Leong: Hengqin’s Hello Kitty smoking ban notice fine theme park unrelated to SJM

R

eiterating that the City of Dreams casino resort’s conversion of a non-smoking area into a smoking area without the Health Bureau’s authorization constituted an offence, the Bureau’s deputy director Cheang Seng Ip announced yesterday that the casino could face a fine of MOP10,000 (US$1,252) to MOP100,000 for not posting a smoking ban notice at the problem site.

The Health Bureau issued a statement on the night of October 29 saying that the casino, operated

by Melco Crown Entertainment Ltd, had converted a non-smoking area on the mass gaming floor into a smoking area without receiving due authorisation from the Bureau. The statement followed a site check jointly conducted by the Bureau with casino regulator Gaming Inspection and Coordination Bureau. This followed complaints about the smoking area conversion.

Speaking to media on the sidelines of an event on Saturday, Mr. Cheang said that the area in question – one that had not been designated by his Bureau as a smoking area – was still found to have people smoking in

C

it when the Bureau conducted site checks on October 30.

For not posing a smoking ban notice at the site, which the Bureau has not approved as a smoking zone, a fine of 10,000 patacas to 100,000 patacas would be applicable, Mr. Cheang said.

The official said his department had yet to analyse the other penalties to apply to City of Dream’s case of unauthorised smoking. Since October 6, smoking has only been permitted in the enclosed smoking lounges installed on mass gaming floors. The lounges may not contain any gaming tables or slot machines.

S.L.

Yellow taxi company to cease operation Nov 6

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ocal car rental and seller Vang Iek Group is to cease its taxi business - the yellow taxis – at midnight on November 6 as both the company and the government failed to achieve consensus on introducing additional charges to the on-call taxi service.

The government has decided not to renew the concession contract to run an on-call taxi service with Vang Iek Radio-Taxi Co Ltd, when the current contract expires at 12:00 midnight on November 6, Transport Bureau director Wong Wan broke the news whilst attending an event yesterday afternoon. Mr. Wong also noted that the government would prepare a tender for the on-call taxi service but did not elaborate on the timeframe.

The current contract signed with Vang Iek was an extension deal which has been in effect since February this year, under which the company was required to have 60 out of the 100 yellow taxis operate a phone-up system instead of being hailed on the streets during the ensuing 9-month period, while the rest should gradually transit to a purely on-call service.

The 9-month operation has been a

struggle for Vang Iek with continuing losses and a high turnover rate of drivers, the company noted in an adhoc press briefing yesterday evening following Mr. Wong’s statement.

Gilbert Cheng, an executive director of Vang Iek, explained that a major reason for his company’s planned cessation of service was that they have not reached a consensus with the government on its proposal to introduce additional charges to its fares, an important means of rewarding and helping retain its taxi drivers.

“We requested a timeframe for when the consultation [on introducing additional charges] could be done and when it could be implemented,” said Cheng. “But that question was never responded to. As a responsible operator, if this issue is not clear at all, it really makes us hesitate.”

Vang Iek Group is the only company in the city that provides and manages a taxi service. The over 1,000 ‘conventional’ taxis here, known as black taxis, are not managed by any company but leased to taxi drivers from individual taxi licence holders.

S.L.

asino operator SJM Holdings Ltd has “no relation” to a recent investment plan announced by a Macau company to build a Hello Kitty theme park on Hengqin island, the company’s executive director and legislator Angela Leong On Kei told local media on the sidelines of the opening of a photography exhibition on Friday.

Ms. Leong, also the fourth consort of SJM founder Stanley Ho Hung Sun, already has a land concession gazetted by the government for a 180,000-square metre plot near Macau Dome on Cotai. The plot, abutting SJM’s Cotai project is held by a firm called Macau Theme Park and Resort Ltd, and is where Ms. Leong previously mentioned in 2010 would be the site for a family-focused nongaming resort, reportedly featuring a Hello Kitty theme park element.

Details of the project held by Macau Theme Park and Resort have not been explained by Ms. Leong even when she was asked by reporters on Friday whether her non-gaming resort would still include a theme park featuring the once-popular Japanese cartoon character.

On October 23, the Hengqin Administrative Committee announced that a Macau-registered firm has partnered with a Japanese investor to build a Hello Kitty theme park – comprising hotel, amusement facilities and an office building – in one of the plots located in the GuangdongMacau Cooperation Industrial Park, a collection of different zones scattered across the island designated for the tourism and leisure sector, cultural and creative sector, information technology and other trade services.

The theme park investment project in Hengqin is costed at 800 million yuan (US$130 million) the Committee noted at the time.

Speaking to local media on Friday, Ms. Leong only clarified that SJM “had no relation” to the Hello Kitty theme park project in Hengqin, although adding that she would continue to observe the progress of the Hengqin theme park.

Macau Theme Park originally said it intended to spend 10.4 billion patacas on building 6,000 hotel rooms, an indoor beach, two theme parks and a ‘4-D theatre’. Since then, there has been no news about how it would be financed, and what changes, if any, have been introduced to the project.

S.L.

Ambrose So: 10 more tables for Grand Lisboa SJM is preparing for 10 more tables to be assigned to the casino operator’s flagship property Grand Lisboa, SJM chief executive Ambrose So Shu Fai said on Friday whilst attending the photography exhibition with Ms. Leong. The 10 additional tables are part of SJM’s request from the Macau Government for a total of 45 new tables; the remaining 35 tables are designated for Macau Legend Development Ltd’s Macau Fisherman’s Wharf.

As at the end of June, the casino operator had an average of 178 VIP gaming tables in Casino Grand Lisboa and 260 mass market gaming tables, the company said in its interim report released on September 1. The company mentioned in the report that it was adding up to 14 more premium mass market tables on the mezzanine floor of Grand Lisboa within the second half of this year.

6

November 3, 2014

Macau

US investors now looking for culture and entertainment In an interview with Business Daily, the chairman of the American Chamber of Commerce in Macau (AmCham) says that we’re arriving at a crossroads for American investment in the territory, considering the growth of mass market gaming and the necessary diversification of the economy. Charles Choy says that some of the Chamber’s members are already exploring possibilities other than gaming, citing culture and entertainment Luciana Leitão

leitao.luciana@macaubusiness.com

Photos by Manuel Cardoso

This is a new era for American investment in Macau. Why? First of all, we can see Macau’s economy is undergoing adjustment right now. Macau depends on the gaming industry and many of these companies are working very hard to diversify into anything that can enhance or facilitate the hotel-resort business and primarily cultural input into the complex we will be seeing in 2016.

AmCham deals with a lot of colleagues from different companies and different members have been working not only in the core business - gaming - but have also been investing a lot of time into exploring possibilities in cultural and entertainment shows, animation and how to apply them to the complex, how to make people stay longer and how to cater services to children.

We can go back a little bit on

the transformation of the business.

We can see that the mass market is on the fast track and it is what the Macau Government and a lot of the industry stakeholders have been trying to do for many years.

Yes, we’re decelerating – we’re not accelerating revenue growth as fast as before – and it’s growing slower because of many reasons [many of which] are very legitimate. In this slowdown, our mass market, by comparison, is growing faster, and this is very healthy for Macau, long term.

This reverse trend will bring changes in the type of investment from American companies?

Yes. Originally, as a citizen, I could see people coming here for heavy gambling - they were very serious about this - but now we can see that mass market is growing; of course, with effort

Macau economy is under adjustment right now

We want Macau to have a chance to diversify and it seems the chance is here

by some members and with the economic atmosphere changing you can bring a lot more and different types of tourists. It could bring family tourists, children, young people coming here not for gambling.

The important thing is that companies are not forcing themselves to do it, they see a need. This is something that could grow. We’ve stopped growing as fast as before but there’s a new sector, which is growing. We can see demand is getting bigger and bigger.

From what you’re saying, does Macau risk becoming more like Las Vegas?

I’m not sure whether we should use Las Vegas as a model because obviously Macau and Las Vegas are still different in many ways.

Macau is definitely heading

7

November 3, 2014

Macau

Macau is definitely heading towards a more diverse model, the so-called tourism and leisure platform that the Macau Government has been promoting

ways of doing business and a lot of new ways of looking at how to deal with the market, a lot of perspectives that we never had before. These are contributions and this is very important. The government can see that, and it’s an invaluable part of what Macau is. Yes, concerned, but I wouldn’t say worried.

We’re all looking into a very stable and justifiable progress.

The goal is a world tourism and leisure platform. So far, the American sectors of Macau have been contributing a lot of elements, so these elements are being appreciated by local citizens and also observed positively by the Macau Government.

The path for diversification

In this slowdown, our mass market, by comparison, is growing faster, and this is very healthy for Macau, long term

towards a more diverse model, the so-called tourism and leisure platform that the Macau Government has been promoting.

I believe we’re definitely going into that one. Plus Hengqin island is seriously reinventing itself - we have a big theme park in Hengqin and also we could see the Hong Kong, Zhuhai, Macau Bridge ready in 2016. We do see that Macau will be a very critical part of this integration and we’re focusing on entertainment - gaming is part of entertainment. In the long run, this is good for Macau.

This might all change if there is any change in government policy regarding the renewal of gaming licences. Are the American operators concerned about this?

Concerned, definitely. But I’ve learned from members that so far the companies have been following the laws and orders of Macau. I do believe that these American companies are contributing a large amount of effort. I wouldn’t even put it as monetary - a lot of new

This year has been strange for gaming, with growth decreasing for the past months. Is this a normal phenomenon?

There are a couple of factors here, well covered by the media.

There are some anti-graft actions in Mainland China and it’s one thing that affects business. It exists and we have to face it, there’s nothing to hide. The Chinese Government is taking a very responsible action doing something about it, for a better future for the country. Also, we can see in China itself the economy is also adjusting and it’s a very healthy adjustment.

China has been growing very fast for the past 30 years so it’s undergoing some adjustment. That also affects Macau and also I would say that the world is changing.

I know some businessmen in China, and in the past some businessmen were more aggressive and tended to like gaming but in recent years I’ve met quite a few of the new class of businessman in China. These people are doing very well and they also like gaming but their pattern of gaming is different. They’re educated; a lot of these people are in IT and you’d be amazed how even China is changing. Also, the smoking ban in the casinos will have a shortterm effect; no-one knows whether it will affect [the situation] or not but I know operators have been doing their utmost to comply with the government’s initiatives and instructions.

All these things, when you add them up, you see something changing. Also, one thing we have to remember is that this is what we want to happen - we want Macau to have a chance to diversify and it seems the chance is here. We have to put more efforts and thoughts into what else [we can do] to make Macau a better place to be.

With this change in trend and Cotai expansion, do you see new types of company interested in coming here?

Yes. There is, for instance, one American company selling a very unique type of ice cream, very chic, vegetarian/certified organic. These types of companies, smaller, are coming here. Yes, Macau is a big market for them and it’s also the right market for them, and they are coming here, because Macau is changing. Kids like ice cream and we can see there’s a children’s market in Macau. I’m very upbeat about this.

We’ve been approached by many companies - cards, which is very traditional, and also some advisors. In the old model, we had gaming companies, but then we had companies like Jones Lang LaSalle, we have Bally, supporting.

But now we have this large entertainment complex - more F&B, of course.

More cooperation The US Consul mentioned he wanted to improve the cooperation between the US and Macau. What could be the potential areas of cooperation?

Many. Of course, economics.

We have seen American companies help shaping, diversifying and enhancing the quality of Macau services in this industry. Education is definitely one strong part of the US and I believe a lot of kids here in Macau went to the US, if not other countries, to study. We do have, according to the Consul General, money laundering.

I can see the Macau Government and the US Consulate, in Hong Kong, have been working very closely in combating these kinds of illegal activity. Culture, of course: we’re doing a lot of cultural exchanges through the American Corner, at the UMAC, and also at the University of Saint Joseph, we have that. As I’ve learned from the Consulate, they would be paying a lot of attention to it, to make sure we have enough points of contact with local students [and others] who are interested in cultural exchanges with the United States.

Also, one new area, maybe not directed to Macau, but I do believe that it’s a very important milestone for Macau: Massachusetts General Hospital will set up in Hengqin Island. It might not be cost effective to have two large worldclass hospitals in Macau and in Hengqin but now we have Hengqin and we do see a lot of integration of the two places. There are various [areas of cooperation].

Will the changes ahead for Macau and American companies here change AmCham’s role in the territory?

AmCham is a general business platform for our members and our motto is to promote American investment and trade and activities here in Macau. In this sense, there won’t be any revolutionary changes in what we’ve been doing.

We’re a demand-oriented society, so we’ll see. If there are requests from our members, definitely we’ll consider them very seriously, as we always do.

Regarding gaming companies here in Macau, some are involved in suspiciously corrupt behaviour.

Considering the tight control there is in the US and the differences in the territory, is this an area that American firms are not very comfortable handling in Macau?

First of all, the Nevada Commission is nothing new and this is part of the reason why American companies are more acceptable in different countries.

American companies are being favoured in this sense. In terms of Macau, first of all, it has been doing a lot in [terms of] improving.

The ultimate goal is to have a very sustainable healthy environment for business, especially if we’re diversifying from a junket corebased business model.

With these changes, this might also mean less risk of potentially illicit behaviour by gaming companies?

Yes. As a citizen, I see the mass market itself as usually less of a worry. In that sense, yes.

8

November 3, 2014

Gaming

MGM Resorts reports unexpected loss, Macau profits up 12 percent Revenues in the 3Q were down 2 percent in Macau, after the VIP segment declined 19 percent. MGM China outperformed the market on mass, with revenues up 34 versus 16 percent. MGM Cotai will open in Autumn 2016

M

GM Resorts International has reported a thirdquarter loss as gambling revenue declined in the U.S. MGM, the largest owner of casinos on the Las Vegas Strip, said its net loss shrank to US$20.2 million, or 4 cents a share, from US$22.3 million, or 5 cents, on a year earlier. Excluding one-time items, the loss was 2 cents a share. Analysts had projected profits of 6 cents, the average of 17 estimates.

The company incurred expenses for remodelling its Mandalay Bay and Monte Carlo hotels on the Strip, while the percentage of bets the casino retained from table games in Las Vegas declined, Chief Financial Officer Dan D’Arrigo said in a telephone interview. The company’s addition of the Delano brand at Mandalay has been a hit, according to D’Arrigo.

“We continue to invest in our properties and our people going forward, that caused some incremental expenses and some revenue and cost in terms of disruption,” he said.

Casino revenue at wholly owned domestic resorts declined 4 percent, with both table games and slots performing worse than a year earlier, MGM Resorts said.

MGM Resorts’ total revenue rose less than 1 percent to $2.49 billion, beating analysts’ estimates of $2.47 billion.

The Las Vegas-based company’s shares climbed 0.4 percent to $22.98 at the New York close. They have dropped 2.3 percent this year.

In Macau, revenues

dropped by 2 percent yearon-year in the third quarter to US$794 million. The VIP segment declined by 19 percent in line with the rest of Macau’s market, while mass revenues went up by 34 percent, outperforming the market by double (16 percent).

MGM China’s profits (given by the adjusted EBITDA or profits minus interest, taxes, appreciation and depreciation) increased 12 percent in the

third quarter from a year ago to US$214 million.

In a conference call with investors, Grant Bowie, MGM China’s Executive Director, said that MGM Cotai is scheduled to open in the “fall of 2016” adding that “our increased profit – in 3Q - was driven primarily by our main floor table games”. Regarding the long term future of the company here, Mr. Bowie stated that “we believe that

MGM China has the greatest potential for growth in the market with our second property in Cotai. MGM Cotai will nearly quadruple our room base and triple our gross floor area, which will allow us to expand our reach into retail and entertainment.”

MGM Resorts, founded by billionaire Kirk Kerkorian, relies less on its current Macau operations than some of its peers, according to Cameron

McKnight, an analyst at Wells Fargo Securities. Chief Executive Officer Jim Murren said in September that the company was considering investing in fantasy sports leagues.

Wynn Resorts Ltd., also based in Las Vegas, reported earnings on 28th October that beat analysts’ estimates, as a surge in revenue at the company’s Las Vegas properties offset a drop in Macau.

L.G. with Bloomberg

Berjaya seeks casino ventures Berjaya is trying its luck by pitching for a casino licence in Malaysia. If successful, it would be the second in the country. The company is already involved in lotteries, as well as a range of other businesses from cars to shopping malls

B

erjaya is considering selling shares in a unit in Singapore and seeking joint ventures in casinos in North Asia as the Malaysian conglomerate expands outside its home market.

Listing its environment services division will spur growth in the business, without depending on funds from the parent, founder Vincent Tan said in an interview in Singapore yesterday. Berjaya’s interests range from shopping malls to lotteries, and it’s looking for a partner for a South Korean gaming project; it also wants to join a consortium in Japan should that country legalise casinos.

Japan’s Prime Minister Shinzo Abe sees casinos as a way to bolster the

economy as backers of a bill to permit them say gambling resorts would boost tourism. Casino operators are considering investing billions of dollars in what could become Asia’s second largest gaming hub after Macau.

Casinos are “no longer a very lucrative business unless you go to some countries like Japan,” Tan, 62, said. “Lots of casinos still focus on high rollers but the mass market is still very big.”

Berjaya has 100 acres of land in Okinawa prefecture and it can be used for a gaming resort should the government decide to open one there, Tan said.

Shares of Berjaya fell about 18 percent this year. The benchmark

FTSE Bursa Malaysia KLCI Index dropped 1.3 percent in the same period.

Kuala Lumpur-based Berjaya has spun off at least three units since the start of 2013, including convenience store operator 7-Eleven Malaysia Holdings Bhd. (SEM) and Berjaya Auto Bhd., a distributor of Mazda Motor Corp. vehicles and auto parts.

Its environmental services division operates sanitary landfills in Malaysia and China, according to the company’s website. It has also been granted a 25-year concession to develop and operate a wastewater treatment plant in China’s Guangdong Province.

Tan didn’t give a timeframe for the planned listing.

Tan, who holds a majority stake in

Welsh soccer club Cardiff City, said he will invest in a Los Angeles-based Major League Soccer club, Channel NewsAsia reported yesterday. The investment will be announced in the next few days, the report said.

Berjaya is still keen on getting Malaysia’s second casino licence, having submitted an application in the past, Tan said. For decades, Genting Malaysia Bhd. (GENM) has run the country’s only gaming resort, located on a hilltop near Kuala Lumpur.

The government hasn’t given any indication it will grant another permit.

“We’re interested in Malaysia,” Tan said. “We will still try. We don’t have a habit of giving up, so we will wait.”

Bloomberg

9

November 3, 2014

Greater China

Factory growth unexpectedly hits 5-month low

C

hina’s factory activity unexpectedly fell to a fivemonth low in October as firms fought slowing orders and rising costs in the cooling economy, reinforcing views that the country’s growth outlook is hazy at best.

The official Purchasing Managers’ Index (PMI) eased to 50.8 in October from September’s 51.1, the National Bureau of Statistics said on Saturday, but above the 50-point level that separates growth from contraction on a monthly basis.

Underscoring the challenges facing the world’s second-largest economy, the PMI showed foreign and domestic demand slipped to fiveand six-month lows, respectively, with overseas orders shrinking slightly on a monthly basis.

“There remains downward pressure on the economy, and monetary policy will remain easy,” economists at China International Capital Corp said in a note to clients after the data.

Noting that inventory levels of unsold goods rose last month even as factories cut output levels and drew down on stocks of raw materials,

KEY POINTS Oct official PMI dips to 50.8, vs f’cast 51.2, Sept 51.1 Growth in domestic, export orders cools Manufacturers also facing high borrowing costs

the investment bank argued that the economy still faced tepid demand.

It has been a tough year for China’s economy. Growth fell to 7.3 percent in the third quarter, its lowest level since the 2008/09 global financial crisis, as the housing market sagged and domestic demand and investment flagged.

The cool-down, expected to be China’s worst in 24 years this year

according to a Reuters poll, came despite a flurry of government support measures.

Saturday’s PMI suggested no imminent recovery in demand.

An index for new orders - a proxy for foreign and domestic demand retreated to 51.6 in October from September’s 52.2. New export orders edged down to 49.9 in October, pointing to a contraction, from 50.2 in September.

Better off big The PMI followed warnings from China’s industrial ministry on Friday that factories were under pressure from high borrowing costs, which were further exacerbating the sector’s slowdown.

Like other economies around the world, smaller-sized companies in China are often ignored by banks when they need financing, forcing them to turn to pricier alternatives for funds.

More costly funding, up 13.5 percent in the first nine months of this year compared with a year ago, according to the government, adds

Analysts polled by Reuters had forecast a reading of 51.2 to the burden of factories which are already battling shrinking profit margins.

Still, the PMI showed big Chinese factories were weathering the downturn better than their smaller counterparts, as banks prefer to lend to larger state-owned firms, assuming the government will bail them out to prevent any defaults.

Large manufacturers grew last month with their PMI little changed at 51.9, data showed, while business shrank for small- to medium-sized factories.

The PMI for mid-sized factories fell to 49.1 in October from September’s 50, and the index for small manufacturers was little changed at 48.5.

“There is a need to carry out more quickly the policy measures related to ‘stabilising growth’”, said Chen Zhongtao, an official at the China Logistics Information Centre, which helps publishes the PMI. Chen was referring to recent government announcements aimed at supporting the economy.

To encourage more growth, China has cut taxes, quickened some investment projects, lent shortterm loans to banks, instructed local governments to spend their budgets and reduced the amount of deposits that some banks hold as reserves to spur lending.

It said on Friday that it would invest at least 200 billion yuan (US$32.7 billion) on three new railway lines to move goods and passengers across the country.

But the raft of measures - which were issued over a space of a few months - have failed to sustain momentum in the economy, prompting authorities to take one of their most drastic policy actions this year by cutting mortgage rates in September.

And even lower mortgage rates have not revived the housing market as quickly as some had hoped.

Home prices in China dropped for a sixth consecutive month in October, a private survey showed on Friday, a trend that should continue to weigh on the Chinese economy, which derives about 15 percent of its growth from the real estate sector.

Reuters

Auto quality gap between domestic, foreign brands narrows J.D. Power released the findings earlier this week in its 2014 China Initial Quality Study

T

he initial quality of new domestic-made vehicles continued to improve “significantly” and the quality gap between Chinese and international brands have narrowed, a study showed.

Global marketing information services firm J.D. Power released the findings earlier this week in its 2014 China Initial Quality Study.

Now in its 15th year, the study examined problems experienced by new vehicle owners within the first two to six months of ownership in two distinct categories -- designrelated problems, and defects and malfunctions.

The gap in quality between domestic and international brands

continued to narrow for the fourth consecutive year in 2014, the company noted in a report.

“The domestic brands are focused on and have been successful in improving initial quality,” said Tony Zhou, automotive research director at J.D. Power China operations.

“However, more marketing actions should be taken to build brand image and influence, which are other critical elements for the Chinese brands, especially in tier-2 and tier-3 cities,” Zhou added.

J.D. Power polled some 21,000 new vehicle owners in 51 Chinese cities from April to August. The survey involved 212 vehicle models belonging to 62 brands.

Xinhua

10

November 3, 2014

Greater China

Yuan plan tested by sole gain versus dollar China’s global ambitions for its currency are encouraging investment from overseas Ye Xie and Lilian Karunungan

T

he yuan’s best rally since 2011 is testing China’s resolve to take a less controlling approach to its exchange rate.

The yuan is the only major currency to strengthen versus the dollar since mid-year, making exports less competitive at a time when growth is slowing. It’s only been seven months since the People’s Bank of China engineered a record slide in the currency to deter speculators, and analysts say it may need to reprise the strategy if the yuan keeps climbing.

“The central bank appears committed to currency and financialmarket reforms,” Eswar Prasad, a former International Monetary Fund economist and now professor of trade policy at Cornell University in Ithaca, New York, said by e-mail on October 28. Present circumstances “are testing that resolve,” he said.

China is performing a balancing act. While it wants a weaker currency for the sake of the economy, its central bank has signalled it wants to move toward a market-determined exchange rate as it seeks to promote the yuan in international trade. The PBOC allows the yuan to fluctuate as much as 2 percent on either side of a daily reference rate.

The Chinese monetary authority’s press office didn’t return phone calls seeking comment yesterday.

Boosting investment China’s global ambitions for its currency are encouraging investment from overseas, making it harder for the authorities to curb the yuan’s gains. Its share of the money transferred around the globe rose to a record 1.72 percent in September, making it the world’s

seventh most-used currency, the Society for Worldwide International Financial Telecommunications said.

China’s currency strengthened 1.5 percent versus the dollar since June, the only one of 31 major exchange rates to rise versus the greenback.

The yuan reached an eight-month high of 6.1083 per dollar on Friday, before trading at 6.1130 at the close in Shanghai. It’s climbed for six straight months, the longest winning streak since August 2011.

“China will likely allow some weakening of the yuan” to relieve pressure on the economy, Hamish Pepper, a strategist at Barclays Plc in Singapore, said by e-mail on October 28. “Cuts in benchmark interest rates as well as targeted easing” are likely, he said.

Barclays sees the yuan falling about 2 percent to 6.23 per dollar

by December 31. Median estimates of strategists in a Bloomberg survey predict levels of 6.12 by the end of this year and 5.99 by the end of 2015.

If the exchange rate moves in a direction that’s inconsistent with the fundamentals, it will be tested Sue Trinh senior foreign-exchange strategist Royal Bank of Canada

Record slide Any determined attempt to stem the yuan’s gains would recall the events of the first quarter. To stop investment from causing an asset bubble and speculators from viewing the yuan as a one-way bet, China started lowering in January the reference rate that determines the band in which the yuan floats versus the dollar. By the end of March, the currency had tumbled 2.6 percent, the biggest drop in a quarter since 1994.

China has taken its foot off the brakes since then. Policy makers have reduced currency intervention to “almost zero,” and are getting

“closer and closer” toward the goal of a market-set exchange rate, PBOC Deputy Governor Yi Gang said October 11 at the IMF meeting in Washington.

Net purchases of dollars by the PBOC, generated by selling the yuan to weaken it, amounted to about US$21 billion in the six months through September, down from US$106 billion in the first quarter,

Nomura Holdings Inc. estimates.

China has signed agreements with overseas authorities to allow direct trading between the yuan and the euro, dollar, pound and yen, and appointed yuan clearing banks in Frankfurt, Paris and Luxembourg.

China’s attempts to make the yuan a truly global trading currency are a strong incentive not to step in to weaken it. Anyway, says investor TCW Group Inc., a lower exchange rate isn’t going to boost the domestic economy, where much of the slump is the result of a real-estate downturn.

“A weaker currency isn’t going to help the part of the economy that is hurting,” David Loevinger, a former U.S. Treasury Department official who’s now a Los Angeles-based analyst at TCW, which manages US$144 billion in assets, said by phone on October 28. “Exports look relatively strong,” so China “had better stick to the reform path.”

Exports from China rose 15.3 percent in September from a year earlier, topping the 12 percent forecast of economists surveyed by Bloomberg. That doesn’t tell the whole story because of speculation the figure was boosted by short-term fund flows -- a sign speculators may have already returned to China’s currency markets.

Export competitiveness The yuan’s inflation-adjusted exchange rate against the currencies of China’s major trading partners rose 7 percent since May to a record earlier this month, according to Barclays data. That suggests China’s currency is becoming uncompetitive for exports. Gross domestic product expanded 7.3 percent in the third quarter from a year earlier, on pace to miss the government’s 7.5 percent 2014 target.

That’s why the nation’s tolerance of a stronger yuan is wearing thin, said Sue Trinh, a senior foreign-exchange strategist at Royal Bank of Canada, which predicts a decline to 6.2 per dollar by the end of 2015.

“If the exchange rate moves in a direction that’s inconsistent with the fundamentals, it will be tested,” Hong Kong-based Trinh said by e-mail on October 29. “We cannot rule out anything from the PBOC when it comes to managing the yuan.”

Bloomberg News

11

November 3, 2014

Greater China

Lenovo won’t stop at no.3 in phones Lenovo boosted global smartphone shipments by 38 percent in the third quarter to 16.9 million units, ranking it fourth worldwide

L

enovo Group Ltd. said its US$2.91 billion purchase of Motorola Mobility from Google Inc. will help the company boost global smartphone sales and challenge market leaders Samsung Electronics Co. and Apple Inc. “Lenovo will be number three in the global smartphone market, but definitely we will not stop here,” Chief Executive Officer Yang Yuanqing said in a telephone interview yesterday.

The Motorola name will help Lenovo win sales in mature markets such as the U.S. and Europe, where its own handsets have made little headway, and serve as a premium brand in emerging markets, Yang said. The acquisition, completed on Thursday, also gives Lenovo a new weapon in its battle for market share with Xiaomi Corp., which surpassed the Beijing-based company in thirdquarter smartphone sales.

Lenovo boosted global smartphone shipments by 38 percent in the third quarter to 16.9 million units, ranking it fourth worldwide, International Data Corp. said October 29. Its market share expanded to 5.2 percent, from 4.7 percent a year earlier.

Beijing-based Xiaomi surged to third place after more than tripling shipments to 17.3 million units, taking 5.3 percent of the global market, IDC said.

Samsung, based in Suwon, South Korea, remained the world’s largest smartphone vendor, with 23.8 percent, followed by Cupertino, Californiabased Apple with 12 percent, IDC said. Motorola wasn’t among the top

five vendors in IDC’s ranking.

Lenovo declined 0.5 percent to HK$11.42 at the close of trade in Hong Kong. The stock has advanced 21 percent this year, compared with a 3 percent gain for the city’s Hang Seng Index.

Sales boost Motorola’s sales in Asia, Latin America and the U.S. would have boosted Lenovo’s global ranking to third in the period, Kiranjeet Kaur, a Singapore-based analyst at IDC, said.

Their combined market share would have been 8 percent, Neil Mawston, executive director of researcher

We want to become the leader in the smartphone and mobile devices area Yang Yuanqing Lenovo’s CEO

Strategy Analytics, wrote in an e-mail.

Lenovo has made inroads beyond China, with international markets accounting for 20 percent of thirdquarter smartphone shipments, compared with 9 percent a year earlier, IDC said.

The payment for Motorola included US$1.41 billion in cash and Lenovo stock at the completion of the purchase, and US$1.5 billion in a three-year promissory note, Lenovo said.

Cash and Capital Lenovo also paid Google about US$228.5 million to account for cash and working capital remaining at Motorola at the close of the acquisition.

The transaction leaves most of Motorola’s patent portfolio with Google with Lenovo getting an intellectual-property license.

Motorola had operating losses of more than US$1 billion last year, according to data compiled by Bloomberg. Lenovo can turn the unit around in four to six quarters, Yang reiterated. In the first year after the purchase, Lenovo will sell 100 million devices, he said.

With rising industry competition and continued losses at Motorola, integrating the two companies may not be as easy or smooth as Lenovo expects, Strategy Analytics’ Mawston said.

Acquisitions have become a strength for Lenovo, said Yang, who expressed confidence that Lenovo can help Motorola be more efficient and competitive.

Including Motorola, the CEO has closed US$5 billion of acquisitions announced in January, following the October 1 completion of the US$2.1 billion purchase of International Business Machines Corp.’s low-end server unit.

While Lenovo can’t rule out further acquisitions if there is an opportunity, the company has its work cut out for now, Yang said.

“If we want to spend more, we must make more first,” Yang said.

“In the short term, we need to focus on integration.”

Bloomberg News

Access cards market next August Chinese regulators will allow foreign firms access to the yuan-denominated credit card clearing business from August next year, Hong Kong’s South China Morning Post newspaper reported on Saturday. The paper quoted a source from China’s largest credit card supplier, Goldpac Group, saying People’s Bank of China (PBOC officials had informed them of the date in September. “When the central bank gives a date, they always follow through with that,” the source, an unidentified department head, was quoted as saying.

China ratifies national Constitution Day China’s top legislature decided to designate December 4 as national Constitution Day amid efforts to enhance the document’s implementation and advance the rule of law. Nationwide activities to promote the Constitution will be held on the day, according to a decision adopted at the bi-monthly session of the Standing Committee of the National People’s Congress which ran from Monday to Saturday. China’s top legislature adopted the Constitution on December 4, 1982 based on a previous version enacted in 1954.

More coalbed gas in Jan-Sept Coalbed methane extracted by China in the first nine months of the year rose 9 percent from a year earlier to 12.6 billion cubic meters, new data showed Saturday.

The country put 5.5 billion cubic meters of coalbed gas into use during the same period, accounting for 42.65 percent of the total output, the National Energy Administration (NEA) said in a statement on its website. Gas production from drilling stood at 2.7 billion cubic meters, while the remaining 9.9 billion cubic meters were extracted from coal mines.

China Eastern Airlines launches ShanghaiKatmandu China Eastern Airlines will launch the first route from Shanghai to Nepal’s capital Katmandu on December 2, the company said Saturday. The new daily flight will use Boeing 737 aircraft and flights in both directions will be via Kunming, capital city of southern China’s Yunnan Province. Nepal is attracting more and more Chinese visitors in recent years with its natural landscape, as well as cultural and religious heritages.

Data showed that Chinese people visiting Nepal at their first stop stood at 51,400 in the first half of 2014, up by 22.41 percent from a year ago.

Legislature confirms dismissal of Su Rong

Yang Yuanqing, Lenovo’s CEO

The Standing Committee of China’s National People’s Congress (NPC) confirmed Saturday that Su Rong, a former senior political advisor, has been dismissed from his post as an NPC deputy. Su, former vice chairman of the Chinese People’s Political Consultative Conference (CPPCC) National Committee, was disqualified as a deputy to the country’s top legislature by the Jiangxi Provincial People’s Congress Standing Committee on September 25.

In late June, Su was removed from his post as the CPPCC National Committee vice chairman after being probed for suspected disciplinary violations.

12

November 3, 2014

Asia

S.Korean exports rise

G20 Summit to boost global growth This resulted in a trade surplus of a record US$7.5 billion, Prime Minister Tony Abbott said compared to a US$3.4 billion surplus in September yesterday the upcoming G20 Summit in Brisbane will focus on achieving economic growth. “At this G20 Summit, our focus will be on building a stronger world economy,” he said in a video speech released online. “Because economic growth means more jobs, higher living standards and governments that are better able to reduce tax and fund better services,” he added. Abbott stressed that during the world’s most important economic forum, the focus of discussion will be placed on the fundamentals of the economy: trade, infrastructure, tax and banking.

Christine Kim

Modi vows to bring back “black money”

India’s Prime Minister Narendra Modi said yesterday he was committed to bring back funds illegally deposited in banks outside the country to avoid tax, widely referred to as “black money”. In his second radio address to the nation since coming to power in May, Modi said the money stashed abroad illegally belonged to the poor of the country. “The issue is an article of faith for me,” Modi said in his speech that was aired live by various public and private radio channels.

ADCB to open Singapore office Abu Dhabi Commercial Bank will open a representative office in Singapore this year as part of its plans to expand in southeast Asia, the bank said on Saturday. The fourth-largest lender in the United Arab Emirates by assets has obtained approval for the office from the Monetary Authority of Singapore, it said. ADCB launched a representative office in London five months ago, and has two branches in India. Several other UAE banks are also expanding in Asia as trade and investment flows with the region increase.

Malaysian Airlines hit by lawsuit Two children of a passenger on Malaysian Airlines Flight MH370 have sued the company and the Malaysian government for damages, the first lawsuit to be filed over the aircraft which disappeared in March. The two Malaysian boys, aged 13 and 14, filed the suit at the High Court registry, also naming the heads of the Department of Civil Aviation, the Immigration Department and the country’s air force, The Star newspaper reported on Saturday. Nearly eight months of searching by various parties has failed to find any trace of the missing Boeing 777 aircraft.

S

outh Korean exports rose slightly faster than expected in October but imports saw their sharpest drop in 13 months, dragged down by softer demand for raw materials and capital goods, data showed on Saturday.

Shipments were mainly propped up by demand from the United States and China, while consumer goods imports gained, easing concerns over a slow recovery in domestic spending.

Exports grew 2.5 percent to US$51.8 billion in October from a year earlier and imports fell 3.0 percent to US$44.3 billion, the Ministry of Trade, Industry and Energy said on Saturday. Imports fell by the sharpest annual pace since a 3.5 percent decline in September 2013.

The median forecasts from a Reuters survey were for exports from Asia’s fourth-largest economy to grow 1.9 percent in October from a year earlier and imports to rise by 0.6 percent.

“In the case of November, there will be a few negative factors like fewer working days, slowed recovery in Europe and Japan and conflict in the Ukraine area but if this trend carries on we expect trade volume this year to surpass US$1 trillion towards the end of the month,” said the trade ministry in a statement.

“We forecast South Korea will post record trade volume and exports this year.”

The trade ministry data showed imports of consumer goods had risen 7.6 percent in the first 20 days of

October on-year, compared to 3.4 percent and 9.0 percent drops in raw materials and capital goods over the same period, respectively.

KEY POINTS Oct exports +2.5 pct y/y (Reuters poll: +1.9 pct) Oct imports -3.0 pct y/y (Reuters poll: +0.6 pct) Imports fall at fastest clip in 13 months Exports to U.S., China gain while shipments to EU fall

The average export value per working day stood at US$2.25 billion in October, compared with a revised US$2.27 billion in September, Thomson Reuters calculations showed.

Breakdowns on export figures by destination showed shipments

to China rose for a second straight month, gaining 3.7 percent on-year in October from a 6.5 percent gain in September.

Exports to the U.S. continued to grow strongly, jumping 25.0 percent in October, the fastest gain seen since March 2012.

But demand from the European Union slumped as its economy sputtered, with exports falling 8.6 percent last month on annual terms in the sharpest decline since September last year.

China is South Korea’s largest export market, taking about onequarter of total shipments by the smaller neighbour, followed by the United States and the European Union.

By product, electronics goods account for more than one-fifth of South Korea’s total exports, followed by chemical products and industrial machinery.

South Korea is the world’s seventhlargest exporter and the first major exporting economy to report foreign trade data each month, making its trade figures a useful guide on the current strength of global demand.

Last week, data showed the economy expanded by 0.9 percent in the third quarter from the previous quarter, rebounding from a 0.5 percent rise in the second quarter.

But industrial output was almost flat in September, and was well short of market expectations, adding to uncertainties over its tentative economic recovery.

Reuters

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13

November 3, 2014

Asia

“Abenomics” insecure about tax hike Abe is expected to wait for final data on third quarter gross domestic product, due out on December 8, before deciding on the tax

W

hen Prime Minister Shinzo Abe raised Japan’s sales tax from April, he was betting he could break a jinx that has doomed leaders who raised the levy to losing their jobs.

Now, wounded by cabinet scandals and growing doubts about his radical “Abenomics” prescription to revive an economy scarred by years of deflation, Abe must decide whether to roll the dice again.

A shock move by the Bank of Japan on Friday to expand its massive assetbuying stimulus programme - in the hope it will stoke inflation - could boost the chances of a rise in the unpopular levy from October, especially if followed by promises of added fiscal stimulus to help offset the pain.

But concerns that his popularity has peaked and worries about the election calendar are certain to weigh as heavily as economic data when Abe decides in coming weeks whether to press ahead with a planned rise to 10 percent.

“The government is indicating it is focusing on the economy ... but the truth is that after all, Abe will weigh political loss and gain in making a final decision,” said Hiroshi Watanabe, a senior economist at SMBC Nikko Securities.

Raising the sales tax requires a strong nerve and reserves of political capital - the issue has been regarded as the “third rail” of Japanese politics ever since it was first promoted in 1979, and a previous increase in 1997 was blamed by many for killing an incipient recovery.

So for proponents of the hike, who argue it is vital to curb Japan’s huge public debt and fear delay would

trigger a sell-off in government bonds and a spike in long-term interest rates, the timing for a decision is hardly auspicious.

For 20 months after taking power with pledges to reboot Japan’s economy with a mix of hyper-easy monetary policy, spending and reform, Abe’s team was mostly unscathed by the scandals that dogged his first, troubled term from 2006 to 2007.

But since a September cabinet reshuffle meant to boost his ratings, two ministers have quit over fundingrelated misdeeds, others face scrutiny and talk persists about fresh disclosures.

To be sure, the scandals themselves have not sent Abe’s ratings plunging.

Support remains around 50 percent, although some polls showed it falling to slightly below that for the first time since July, when Abe’s cabinet took the controversial step of easing

constitutional constraints on the military.

But the scandals coincide with growing concerns about Japan’s long-sought economic recovery after the 3-point rise in the sales tax to 8 percent in April pushed the economy into its deepest quarterly slump since the 2009 global financial crisis.

“I don’t think the scandals are doing all that much damage,” said a ruling Liberal Democratic Party lawmaker who declined to be identified so he could speak freely.

“The problem is the economy.”

Triple moves, election calendar Abe has already faced pressure from some aides, including architects of Abenomics, to delay the tax rise.

Implicitly admitting that not all was going according to plan, the BOJ

said on Friday it would accelerate its purchases of Japanese government bonds, even as the government signalled a willingness to boost fiscal spending if needed and the government pension fund announced it would buy more shares.

The moves pushed Tokyo share prices, closely watched by Abe as a barometer of economic sentiment, up more than 5 percent. But how much the actions will impress voters, especially those in regions feeling neglected by Abenomics, is unclear.

Despite the scandals and economic doubts, there is little talk that Abe’s grip on his own job is in immediate danger.

The LDP trounced the main opposition Democratic Party of Japan in the 2012 election, and the opposition has been in disarray since.

Strong rivals are scarce inside Abe’s own party.

“As the economy slows, hopes for Abe are declining but there is little sense among the public that Abe should be dumped because there is no viable alternative either inside or outside the LDP,” said veteran political analyst Minoru Morita.

But much of Abe’s voter support rests on hopes he can lead the world’s third-biggest economy back to sustainable growth, so signs that isn’t happening are likely to erode his ratings.

In addition, many voters oppose not only a second sales tax hike but other key policies, such as restarts of atomic reactors that went offline after the 2011 Fukushima nuclear disaster.

Reuters

S. Korea stresses turning yen threat into opportunity The yen tumbled globally on Friday after the Bank of Japan shocked financial markets by expanding its massive stimulus spending

South Korea relies heavily on Japan for imports of machinery and other production equipment for use in its domestic plants

S

outh Korea expressed its concern yesterday about the possible impact on its export industries from the yen’s renewed weakness but stopped short of promising any action aimed at pulling the won’s value down.

Ahn Chong-bum, a top presidential economic policy aide, said in his monthly briefing that South Korean companies should turn the yen’s weakening into an opportunity to boost capital investment at home

and strengthen their competitiveness.

“Companies need to actively utilise the ‘low-yen situation’ as an opportunity to increase investment, banking on the falling prices of Japanese-made capital goods and to strengthen competitiveness through structural improvement,” a presidential office statement quoted Ahn as saying.

South Korea relies heavily on Japan for imports of machinery and

other production equipment for use at its domestic plants and Ahn was referring to the falling cost of Japanese products when converted into the dollar or won.

The yen tumbled globally on Friday after the Bank of Japan shocked financial markets by expanding its massive stimulus spending in a stark admission that economic growth and inflation have not picked up as much as expected.

South Korean companies and currency traders pay especially close attention to the yen’s movements as policymakers used to intervene and sell the won to keep the local currency from strengthening against the yen.

But Ahn made no specific comment on whether the government will take action toward that effect, saying instead that it was no longer an era of price competition.

South Korea’s exporters and some media have warned that the weaker yen would seriously hurt the country’s economy, but policymakers have showed a relatively cautious response to such arguments.

The won has risen 4 percent in value against the yen - set by each currency’s change against the dollar - on top of a whopping 24 percent gain in 2013.

Reuters

Companies need to actively utilise the ‘lowyen situation’ as an opportunity to increase investment, banking on the falling prices of Japanese-made capital goods and to strengthen competitiveness through structural improvement Ahn Chong-bum top presidential economic policy aide

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November 3, 2014

International U.S. probing Standard Chartered U.S. authorities are investigating London-based Standard Chartered Plc. for potential U.S. sanctions violations connected to its banking for Iraniancontrolled entities in Dubai, according to people familiar with the probe. The latest investigation involving the bank is based, in part, from evidence that emerged during a separate probe of BNP Paribas, the French bank that pleaded guilty this summer to charges related to sanctions-busting and agreed to pay US$8.9 billion in penalties, the people said.

ECB set to sit tight on rates Investors will be watchful Thursday for any comments by ECB president Mario Draghi Benoit Toussaint

possibly deciding on new action”.

Expanding bank’s balance sheet

Denmark considers phasing out coal Denmark should ban coal use by 2025 to make the Nordic nation a leader in fighting global warming, adding to green measures ranging from wind energy to bicycle power, Denmark’s climate minister said on Saturday. Denmark has already taken big steps to break reliance on highpolluting coal - wind turbines are set to generate more than half of all electricity by 2020 and 41 percent of people in Copenhagen cycle to work or school, higher than in Amsterdam. Ministry is studying details of how it would work before unveiling a formal plan.

Auditor refuses to sign off Petrobras’ results Brazil’s Petrobras failed to get its third-quarter earnings approved by PriceWaterhouseCoopers as the auditing firm demanded wider investigation into a corruption scandal plaguing the staterun oil company, newspaper O Estado de S.Paulo said on Saturday. Directors of Petroleo Brasileiro SA, as the oil firm is formally known, halted a Friday board meeting before making any decisions and rescheduled it for Tuesday, a source told Reuters without providing details.

A possible fuel price increase was expected to be discussed on Friday.

Mexico helps in Central America economic plan Mexico and its main construction companies could help carry out a plan to spur economic growth and jobs in Central America to stem illegal immigration to the United States, a senior Mexican government official said on Friday.

Struggling to stop a record flood of child migrants to the United States earlier this year, Guatemala, Honduras and El Salvador have drawn up a plan to improve energy supply and infrastructure in the impoverished and violent region. How the plan could be funded is due to be discussed between the nations and U.S. Vice President Joe Biden.

Exxon, Chevron results boosted A surge in refining profits boosted quarterly results at Exxon Mobil Corp and Chevron Corp , helping to offset declining oil and gas production and falling crude oil prices. Both companies reported better-than-expected thirdquarter profits on Friday, with executives touting the importance of owning massive refineries alongside oil and gas wells. Refining profits tend to rise when oil prices fall, though low prices dent the profitability of wells. Having both in a company stable can allow for a bit of insurance during price swings.

Mario Draghi, head of the ECB

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he European Central Bank is likely to hold fire on new policy moves Thursday and leave a series of radical recent measures to take their course, despite pressure over a weak economic recovery, analysts say.

Unlike moves by the US Federal Reserve to end its stimulus spree and a surprise monetary easing plan by the Bank of Japan, ECB policymakers are expected to sit tight at their monthly meeting.

The week looks set to be particularly busy for the ECB, which on Tuesday takes on its role as Europe’s banking watchdog in a historic shake-up to help ward off another financial crisis.

Howard Archer, of IHS Global Insight, said no new ECB decisions were likely for the time being, adding that “the bank will very probably remain in ‘wait and see’ mode into the New Year”.

Interest rates are currently at their

all-time lows anyway -- 0.05 percent for its main “refinancing” rate -- and a rate hike seems unlikely at a time when the ECB is seeking to boost inflation from its stubborn lows.

Inflation in the 18-nation eurozone edged up to 0.4 percent in October, official data showed Friday, far below the 2.0 percent target set by the Frankfurt-based ECB, which has a core mission of ensuring price stability.

Current low inflation levels have stoked fears of deflation -- when prices actually fall -- which, if it takes hold, can trigger a vicious spiral where businesses and households delay purchases, throttling demand and causing companies to lay off workers.

Nevertheless, Carsten Brzeski, of ING-DiBa, said the latest “betterthan-feared” economic eurozone data was one of several factors likely to allow the ECB to “to wait, at least until the December meeting before

In addition to cutting interest rates, deflationary fears have prompted the ECB to pull out other tools, such as a series of liquidity programmes to inject cash into the economy.

After its TLTRO, or targeted longterm refinancing operations scheme, to make cheap liquidity available to banks on condition they lend it on to companies, and a programme to buy covered bonds, its latest move to kick-start credit in the euro area begins this month.

The ECB is launching purchases of asset-backed securities (ABS), or bundles of individual loans such as mortgages, car loans and credit-card debt sold on to investors, to allow banks to share the risk of default and free up funds to offer more lending.

But the central bank’s target of boosting the size of its balance sheet by one trillion euros (US$1.25 trillion) has made little headway through the first TLTRO or the initial covered bonds purchases.

Analysts have suggested that some banks may have preferred to hold off until after the results of the ECB’s most stringent-ever audit were published. Last week, that audit awarded a clean bill of health to a large majority of eurozone banks.

Investors will be watchful Thursday for any comments by ECB president Mario Draghi on the possible purchase of corporate bonds following speculation this could be on the horizon.

But Jennifer McKeown, of Capital Economics, said government bond purchases -- along the lines of the US Federal Reserve’s programme -- may well “ultimately be needed to ensure an expansion of the bank’s balance sheet large enough to exert meaningful upward pressure on inflation”.

However some ECB board members are vehemently opposed, especially Germany’s Bundesbank chief Jens Weidmann.

AFP

Egypt signs power financing deals with Saudis Saudi Arabia sent Egypt US$3 billion worth of refined oil products between April and September of this year

E

gypt signed US$350 million worth of financing agreements with Saudi Arabia on Saturday aimed at upgrading its power grid and securing imports of petroleum products as it seeks to end its worst energy crisis in decades.

Power cuts have become common in Egypt as the cash-strapped government struggles to supply enough gas to its power stations let alone upgrade a grid suffering from decades of neglect.

The energy crunch has become a political hot potato in the Arab world’s most populous country, which has turned from a gas exporter into a net importer in recent years as it diverts

gas once destined for export to meet burgeoning domestic demand.

Lines at petrol stations and a shortage of gas were among the main public grievances against former President Mohamed Mursi of the Muslim Brotherhood. But oil-producing Gulf allies have come to Egypt’s aid since the army, prompted by mass protests, ousted Mursi last year.

Two loan agreements signed on Saturday worth a total of about US$100 million will be invested in two electricity stations that are expected to boost the capacity of the national grid. A further US$250 million in assistance will come in the form of petroleum products.

Saudi Arabia sent Egypt US$3 billion worth of refined oil products between April and September of this year, according to an Egyptian oil official, while the total value of Saudi oil aid since July 2013 amounted to about US$5 billion.

Egypt has also turned to the United Arab Emirates for oil products, signing deal in September that commits it to purchasing about 65 percent of its needs from its Gulf ally in the next year.

Egypt introduced deep cuts to energy subsidies in July, which have resulted in price rises of more than 70 percent, as it seeks to curb public spending and fuel waste.

Reuters

15

November 3, 2014

Opinion Business

The single-engine global economy

Leading reports from Asia’s best business newspapers

Nouriel Roubini

wires

TAIPEI TIMES

Chairman of Roubini Global Economics and Professor of Economics at the NYU’s Stern School of Business

While the public might welcome Thursday’s request from the Changhua County District Prosecutors’ Office for a 30year prison term for Ting Hsin International Group executive Wei Ying-chun for his role in the cooking oil scandal, observers said the diminished punitive measures during a previous case concerning Chang Chi Foodstuff Factory Co demonstrate that the final ruling could fail to meet public expectations. The Changhua County Prosecutors’ Office sought heavy penalties for then-Chang Chi president Kao Chen-li: 30 years in prison and the confiscation of what they called illegal gains amounting to NT$1.85 billion (US$60.69 million).

GLOBAL TIMES China’s quality watchdog demanded joint-venture FAW-Volkswagen submit new materials to verify the effectiveness of a latest recall due to defective rear axles.

On October 17, the company announced a recall of more than 581,000 cars, including its New Sagitar and Beetle vehicles, as the trailing arm of the rear axles could rupture in certain scenarios. It offered to place a metal plate in the trailing arm to ensure the proper operation in case of a rupture. Protests were held by car owners in major cities, including Shanghai and Shenzhen.

THE STRAITS TIMES Five hundred years after the Portuguese became the first Europeans to establish sea trade with China, a town in northern Portugal is counting on its youth to secure a new foothold in the Asian giant. The small industrial town of Sao Joao da Madeira, Portugal’s shoe capital which specialises in luxury models, has now made Mandarin compulsory for its eight and nine-yearolds. The aim is to give their youth the competitive tool to help sell its footwear to China. And the government is watching the experiment closely to see if it can be replicated.

PHILSTAR Six more companies have expressed interest in the Light Rail Transit Line 2 (LRT-2) operation and maintenance (O&M) Public-Private Partnership (PPP) project of the Department of Transportation and Communications (DOTC).

The PPP Centre said the new prospective bidders include Miescorrail of electricity giant Manila Electric Co. (Meralco), Hyundai Rotem Co., TUV Rheiland, Aboitiz Equity Ventures, SMRT International and MTR Hong Kong. This brought to 12 the number of companies eyeing the bidding of the O&M PPP project. The concession period for the operation and maintenance of LRT-2 would be between 10 years and 15 years.

Major emerging countries are also in trouble. Of the five BRICS economies (Brazil, Russia, India, China, and South Africa), three (Brazil, Russia, and South Africa) are close to recession

T

he global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom).

The second engine – the eurozone – has now stalled after an anaemic post-2008 restart.

Indeed, Europe is one shock away from outright deflation and another bout of recession.

Likewise, the third engine, Japan, is running out of fuel after a year of fiscal and monetary stimulus. And emerging markets (the fourth engine) are slowing sharply as decade-long global tailwinds – rapid Chinese growth, zero policy rates and quantitative easing by the US Federal Reserve, and a commodity super-cycle – become headwinds.

So the question is whether and for how long the global economy can remain aloft on a single engine. Weakness in the rest of the world implies a stronger dollar, which will invariably weaken US growth. The deeper the slowdown in other countries and the higher the dollar rises, the less the US will be able to decouple from the funk everywhere else, even if domestic demand seems robust.

Falling oil prices may provide cheaper energy for manufacturers and households, but they hurt energy exporters and their spending. And, while increased supply – particularly from North American shale resources – has put downward pressure on prices, so has weaker demand in the eurozone, Japan, China, and many emerging markets. Moreover, persistently low oil prices induce a fall in investment in new capacity, further undermining global demand.

Meanwhile, market volatility has grown, and a correction is still underway. Bad macro news

can be good for markets, because a prompt policy response alone can boost asset prices.

But recent bad macro news has been bad for markets, owing to the perception of policy inertia.

Indeed, the European Central Bank is dithering about how much to expand its balance sheet with purchases of sovereign bonds, while the Bank of Japan only now decided to increase its rate of quantitative easing, given evidence that this year’s consumption-tax increase is impeding growth and that next year’s planned tax increase will weaken it further.

As for fiscal policy, Germany continues to resist a much-needed stimulus to boost eurozone demand. And Japan seems to be intent on inflicting on itself a second, growth-retarding consumption-tax increase.

Furthermore, the Fed has now exited quantitative easing and is showing a willingness to

Much-touted reforms to rebalance growth from fixed investment to consumption are being postponed until President Xi Jinping consolidates his power

start raising policy rates sooner than markets expected. If the Fed does not postpone rate increases until the global economic weather clears, it risks an aborted take-off – the fate of many economies in the last few years.

If the Republican Party takes full control of the US Congress in November’s mid-term election, policy gridlock is likely to worsen, risking a re-run of the damaging fiscal battles that led last year to a government shutdown and almost to a technical debt default.

More broadly, the gridlock will prevent the passage of important structural reforms that the US needs to boost growth.

Major emerging countries are also in trouble. Of the five BRICS economies (Brazil, Russia, India, China, and South Africa), three (Brazil, Russia, and South Africa) are close to recession. The biggest, China, is in the midst of a structural slowdown that will push its growth rate closer to 5% in the next two years, from above 7% now. At the same time, much-touted reforms to rebalance growth from fixed investment to consumption are being postponed until President Xi Jinping consolidates his power. China may avoid a hard landing, but a bumpy and rough one appears likely.

The risk of a global crash has been low, because deleveraging has proceeded apace in most advanced economies; the effects of fiscal drag are smaller; monetary policies remain accommodative; and asset reflation has had positive wealth effects. Moreover, many emerging-market countries are still growing robustly, maintain sound macroeconomic policies, and are starting to implement growth-enhancing structural reforms. And US growth, currently exceeding potential output, can provide sufficient global lift – at least for now.

But serious challenges lie ahead.

Private and public debts in advanced economies are still high and rising – and are potentially unsustainable, especially in the eurozone and Japan. Rising inequality is redistributing income to those with a high propensity to save (the rich and corporations), and is exacerbated by capital-intensive, labour-saving technological innovation.

This combination of high debt and rising inequality may be the source of the secular stagnation that is making structural reforms more politically difficult to implement. If anything, the rise of nationalistic, populist, and nativist parties in Europe, North America, and Asia is leading to a backlash against free trade and labour migration, which could further weaken global growth.

Rather than boosting credit to the real economy, unconventional monetary policies have mostly lifted the wealth of the very rich – the main beneficiaries of asset reflation. But now reflation may be creating asset-price bubbles, and the hope that macro-prudential policies will prevent them from bursting is so far just that – a leap of faith.

Fortunately, rising geopolitical risks – a Middle East on fire, the Russia-Ukraine conflict, Hong Kong’s turmoil, and China’s territorial disputes with its neighbours – together with geo-economic threats from, say, Ebola and global climate change, have not yet led to financial contagion. Nonetheless, they are slowing down capital spending and consumption, given the option value of waiting during uncertain times.

So the global economy is flying on a single engine, the pilots must navigate menacing storm clouds, and fights are breaking out among the passengers. If only there were emergency crews on the ground.

Project Syndicate

16

November 3, 2014

Closing Beijing enforces traffic restriction for greener APEC

Branson to slow down on space flight after crash

Beijing is committed to managing the flow of traffic, even banning certain government vehicles, in an effort to improve air quality during the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting, authorities said yesterday. According to the Beijing Municipal Environmental Protection Bureau, starting Monday, 70 percent of the municipal government’s vehicles, around 19,000 of its fleet, will face driving restrictions. An odd-even license plate policy for cars, including those from outside Beijing, will be put in place from November 3 to 12. Depending on the license plate, cars will only be able to drive on alternating days throughout that period.

Billionaire Richard Branson vowed “not to push on blindly” with his quest to rocket tourists into space as U.S. investigators started their first probe into a fatal commercial-space accident. “To do so would be an insult to all those affected by this tragedy,” a subdued Branson, often seen in public pulling off flamboyant marketing stunts, said at a press conference in California yesterday. The SpaceShipTwo craft operated

by Branson’s Virgin Galactic Ltd. crashed on a test flight over California’s Mojave Desert, killing the co-pilot and seriously injuring the pilot. It was the week’s second accident involving a private spacecraft.

China’s house price declines expected to moderate

C

hina’s housing market will continue on a downward trend in the fourth quarter, but at a slower rate, analysts said.

The average price of a new home in 100 major cities in October fell for the sixthstraight month, reaching 10,629 yuan (US$1,738) per square meter, down 0.4 percent from September, statistics from China Index Academy (CIA) showed.

Prices in the surveyed cities fell 0.52 percent in October from the same month last year, ending 22 straight yearon-year increases, CIA said.

“Housing price depreciation will continue throughout the year as developers continue to offer price discounts to unload stock faster. But the declines will be moderate due to increased sales and liquidity boosted by preferential credit policies,” said CIA chief analyst Du Bingguo.

China’s property sector, once regarded as a key growth engine for the world’s second largest economy, has seen falling prices and sluggish sales since the beginning of 2014.

Property dropped by 8.9 percent year on year during the Jan.-Sept. period, with residential property slumping 10.8 percent, data from the National Bureau of Statistics

(NBS) showed.

To avoid a sharp slowdown in the property market, an easing of mortgage rules was announced on September 30 to expand the pool of potential homebuyers and the amount they can borrow.

According to the rules, mortgages on second homes will be treated as a first mortgage if the buyer has no other outstanding mortgages.

Data from the CIA revealed that, from October 19-25, residential property sales in most of the 21 monitored first- and second-tier cities rose, with sales growth in Beijing and Shenzhen hitting 17.78 percent and 36.13 percent, respectively, compared with last month.

In the second-hand housing market, fallout from the eased mortgage measures was even more obvious.

Statistics from Homelink, China’s largest chain real estate broker, showed that transactions in Beijing from October 1-26 had doubled compared with last month.

“These policies helped market sentiment and sales, and will continue to have a positive impact on the property market in the fourth quarter, but it is not likely that the transactions will surpass the same period

Apple Pay to fuel chatter

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hey can’t stop talking about Apple Pay. The mobile-payment service announced

by Apple Inc. last month will probably drive discussions and new-product announcements at tech-industry conference Money20/20, which kicked off yesterday in Las Vegas, said Richard Crone, chief executive officer at researcher Crone Consulting LLC. “They might as well call it Apple Pay20/20,” Crone said in an interview. “It will dominate the conversation and have an honourable mention in every presentation.”

Representatives of technology companies, retailers, banks and payment networks attend the four-day conference. A crowd of about 7,500 is expected, including more than 750 CEOs, according to the event’s website.

The conference will be ground zero for competing mobile-payment firms, many of them rolling out new products and features. CU Wallet, operator of a mobile-payments platform for credit unions, will announce that its service due out next year can work the same way Apple Pay does -- with consumers tapping a phone on an in-store terminal, Chief Executive Officer Paul Fiore said in an interview.

Bloomberg News

Property dropped by 8.9 percent year on year during the Jan.-Sept. period

last year due to excessive inventory,” Du added.

The housing inventory in 35 Chinese cities hit a 5-year high of 280.13 million square meters by the end of September, up 23.8 percent year on year, according to data released by property consultancy E-House China.

A series of measures announced by Premier Li Keqiang after an executive meeting of the State Council last week, to boost and upgrade domestic consumption, were also considered by experts as signals of property-market stabilization.

The premier highlighted major areas that offered the potential to boost consumption, including the stabilization of housing consumption and relaxing terms for withdrawing housing provident funds to pay rent.

Zhang Dawei, chief analyst at real estate agent Centaline Property, believed that the effect of these measures will help ease the pace of home price depreciation in the fourth quarter.

“This round of property readjustment will last until at least early 2015, and the effectiveness depends on the scope and implementation of these policies,” said Zhang.

Xinhua

Greater integration expected at APEC

SHG mayor pledges to speed up FTZ reform

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S

he upcoming Asia-Pacific Economic Cooperation (APEC) meeting in Beijing is expected to produce tangible outcomes and achieve greater regional economic integration, says a U.S. expert on Asia affairs. With the theme of “Shaping the Future through Asia-Pacific Partnership,” China has laid out several areas to focus on during this year’s APEC gathering, including trade and investment integration, innovation, inclusive growth and connectivity.

“These efforts would help promote economic and interconnected development in the region,” Matthew Goodman, who holds the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies, a think tank in Washington, told Xinhua in a recent interview. In terms of infrastructure development, Goodman said China’s proposal of establishing the Asian Infrastructure Investment Bank is “very understandable,” as there are large infrastructure needs in the region and China has great capacity to potentially help bridge the financing gap in the area. APEC should continue to bring diverse economies togethertodeepeneconomicintegrationintheregion,hesaid.

Xinhua

hanghai’s mayor promised yesterday to speed up development of China’s first free trade zone (FTZ) a year after it opened, as a chorus of foreign companies expressed disappointment over the pace of pledged reforms.

The FTZ was set up in China’s commercial hub Shanghai last September with the promise of a range of financial reforms, including full convertibility of the yuan currency and free interest rates -- which remain unfulfilled.

Mayor Yang Xiong said the government would work towards making the yuan -- also known as the renminbi (RMB) -- freely convertible, among other financial liberalisation plans for the FTZ, but gave no timetable.

“We will gradually put in place an institutional and regulatory framework to enable the convertibility of the RMB under the capital account... so that the financial sector can better serve the real economy,” he told business leaders in a speech.

China keeps a tight grip on its currency fearing unpredictable inflows or outflows of funds could harm the economy and reduce its control over it.

AFP