Macau Business Daily, Nov 24, 2014

MOP 6.00 Year Year III III Number Number638 673Monday MondayOctober November 6, 2014 24, 2014 Publisher: Publisher: Paulo Paulo A. Azevedo A. Azevedo Closing Closing editor:editor: Luis Gonçalves Sara Farr

Build and they will come

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he pile-drivers never stop. Neither, apparently, do the calculators. There were 21 hotel projects under construction by Q3. Some 14,400 more hotel rooms are slated to come on-stream soon. Seven projects are in Cotai, 10 on the Peninsula, three in Taipa and one in Coloane. Meanwhile, 27 hotel projects are in the planning stages, which could add an additional 11,377 rooms. Operators are rolling the dice on the record numbers of visitors, greater choice and better infrastructure Page

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Fearsome rate cut

Macau’s got talent Friday was a big night out. Particularly for everyone nominated for this year’s Business Awards. SMEs got in the swim, and most victors spoke about team effort.

Tomorrow’s leaders and innovators were recognised in 10 different categories

Chinese banks will see profits growth reduced. The People’s Bank of China cut interest rates on Friday.

Some Chinese banks reacted by increasing interest to the max

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Pages 9 & 10

HSI - Movers November 21

Name

Louis XIII on track

Buyer beware

The most expensive hotel suite in the world? That would be the US$1.1 billion Louis XIII being built on the fringes of Cotai. The suite will set you back a cool US$130,000 a night.

Opening day is slated for mid-2016. The property will feature 200 hotel rooms, 66 gaming tables and 75 slot machines

They seem to be everywhere. Real estate ads for properties in neighbouring Zhuhai and Hengqin. But legislators here are concerned about their legality.

The huge demand for properties next door leaves the unwary vulnerable, particularly pre-sales

www.macaubusinessdaily.com

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Rollin’ in style

%Day

Galaxy Entertainment

4.17

China Resources Land

3.58

CNOOC Ltd

3.48

China Resources Ente

2.57

Hong Kong & China Ga

2.18

Hang Seng Bank Ltd

-0.54

Belle International

-0.74

China Mengniu Dairy

-0.95

Tencent Holdings Ltd

-1.19

New World Developm

-3.35

Source: Bloomberg

I SSN 2226-8294

So far, so good. Rolls Royces are selling in Macau. The plan is to parallel the expansion of casinos. They grow, we grow, says Paul Harris, regional director for Rolls Royce. He tells Business Daily that it’s about after sales care at the moment. That there are subtle differences between buyer profiles. And that the definitive drophead or convertible is in the works Pages 6 & 7

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November 24, 2014

Macau Border hour extension won’t fuel visitor arrivals The imminent extension of hours at three inland Zhuhai-Macau checkpoints on December 18 will not overly stimulate the number of visitor arrivals in the short term, Macau Government Tourist Office director Maria Helena de Senna Fernandes said. While mainland Chinese visitors travelling on package tours and individual visit schemes would not be entering or exiting Macau during late night hours, the more important factor affecting their stay here remains tourism attractions offered by the city, she said

Zhuhai property sales: Caveat emptor

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eal estate ads in Zhuhai, especially in Hegnqin, can be seen in Macau newspapers every day and on mammoth billboards at the border crossings. But legislator Ho Ian Song has reminded Macau residents that such advertising might be illegal and fraudulent, and urges the government to regulate the business.

In a written enquiry to the authorities, Mr. Ho said that according to Mainland property sales law developers that do not have a certificate to pre-sell property cannot conduct such activities.

Real estate agents in Macau should

be regulated by the real estate agent law but such legislation only applies to properties in Macau. Given the escalation of local real estate in recent years, investing in properties elsewhere, especially in neighbouring Zhuhai City, has become increasingly popular. Consequently, Mr. Ho urged authorities to control local agents’ activities.

According to him, the neighbouring Guangdong authorities’ apartment presale regulation states that buildings of less than seven storeys can only be sold once construction of the main structure has been finished, while

China Telecom and Hutchinson bids accepted

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egislator Kwan Tsui Hang questioned the legality and fairness of the decision enabling City University of Macau to be the only privately owned college of four to apply for space in the old campus of the University of Macau (UM) in Taipa.

The government recently announced that the City University of Macau and public tertiary unit Polytechnic Institute have landed the largest slices of the Taipa campus site, a plot occupying some 140,000 square metres that has been specifically reserved for higher education purposes following the relocation of UM to Hengqin.

Legislator Kwan Tsui Hang said in her written enquiry that the nontertiary education sector of Macau is facing a bigger problem of shortage of resources, especially in space, due to the rapid growing pains of Macau in recent years. She urged the authorities to consider sparing some space for a sector that has more urgent need of land and facilities.

Ms. Kwan also pointed out that the government has never consulted the public on the decision despite the fact that it was known a long time age that the university would relocate to Hengqin. She questioned the transparency of the decision and asked the government to explain its criteria and standards as well as the process of land grant.

Legislator and Executive Council member Chan Meng Kan chairs the council of City University.

Seac Pai Van transportation remains problematical

João Santos Filipe

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jsfilipe@macaubusinessdaily.com

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he bids for providing 4G wireless services to Macau by China Telecom and Hutchinson were accepted unreservedly last Thursday, a spokesperson for the Telecommunications Regulation Bureau (DSRT) has told Business Daily.

The DSRT opened the bids for the open tender for the 4G licences on Wednesday but at that time China Telecom’s and Hutchinson’s bids were lacking information that was provided last Thursday. In total, six companies are contesting four licences, which include bids by CTM, Smartone, China Mobile Hong Kong and U Hong.

The results of the tender are expected to be known during the

buildings over seven storeys may only start selling once two thirds of the structure is complete. However, Macau residents have reported to him that some real estate in Zhuhai available for sale is just land, which obviously doesn’t comply with the official regulation.

The legislator is concerned about the risks that local buyers may bear, such as signing contracts without getting the whole picture or making payments but the real estate project remains unfinished, requiring the relevant authorities in Macau to follow up on the situation.

Legislator questions apportioning of UM old campus

first quarter of next year. The 4G wireless services will be available to Macau people during the last quarter of 2015.

The four companies awarded the licences will have to cover 50 percent of Macau territory once operational in 2015. By the end of 2016, they are required to provide full coverage of the Special Administrative Region.

Initially, four licences are up for grabs but the Vice-Director of DSRT, Hoi Chi Leong, did not exclude the possibility of an extra licence being awarded depending on the bids.

eople keep complaining and legislators keep questioning but the supporting facilities for the Seac Pai Van public housing project remain a problem. Legislator Si Ka Lon handed in a written enquiry criticising the unreasonable design of the road system in the neighbourhood and the lack of public transportation.

Mr. Si said many residents have complained that even though there are six normal bus routes and two express buses passing by the area, they are far from enough to satisfy the need for public transportation during rush hours.

The legislator questioned why the government made such an arrangement and what kind of measures would the authorities launch to improve the situation since currently the government is the party that regulates bus routes and shifts, with bus operators having little freedom to call the shots.

Recently, drivers for Transmac, one of the three bus operators in Macau, issued a public notice saying that their drivers and station chiefs were harassed and even assaulted by passengers due to the rising discontent about services. Transmac Deputy General Manager Kuan Weng Kai told Business Daily that such incidents often occurred at the Border Gate and near Seac Pai Van public housing especially during rush hours because of the low frequency of bus shifts and overwhelming demand.

The bus operator also complained that it does not have the liberty to adjust bus shifts frequency for fear that the operation cost will not be covered by the government. The Transport Bureau issued statements following the incident, reiterating that the authorities have to review the change of any bus routes or shifts as it’s public money that they are spending.

Business Daily | 3

November 24, 2014

Macau

Over 14,400 hotel rooms under construction in Q3

Grand Prix generated MOP50 million in revenues

Stephanie Lai

sw.lai@macaubusinessdaily.com

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s at the third quarter of this year, the city had 21 hotel projects under construction, putting another 14,434 hotel rooms in the pipeline, latest data released yesterday by the Land, Public Works and Transport bureau shows.

Of these, seven are Cotai projects that are expected to deliver about 11,900 hotel rooms; another 10 hotel projects are on the Macau Peninsula with a potential supply of about 1,100 rooms, while in Taipa three construction projects currently underway will provide 1,000 hotel rooms. A hotel project in Coloane could deliver about 200 rooms.

When these 21 projects are completed, it will represent a 52 percent rise in the existing number of hotel rooms available here at 27,900 by September from a total of 98 operating hotels and inns. There have been no new openings of hotel projects in the city so far this year.

By the third quarter, the Bureau recorded another 27 hotel projects in the planning stage that could deliver 11,377 rooms in total. Twenty-one of these are on the Macau Peninsula with a potential supply of 3,200 hotel rooms.

The highest number of hotel rooms in the pipeline is expected from Cotai,

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where the government says there are three hotel projects under planning that would provide 7,400 hotel rooms in all.

In addition, it has issued occupation permits to only five private housing projects – all low rise residences – supplying 32 flats.

In the period, 21 other private housing projects comprising a total of 1,462 flats, the majority on the Macau Peninsula, had already been completed but were still being inspected by the government.

In the third quarter, some 88 private housing projects were under construction, providing 13,110 units.

While a majority of these projects are located on the Macau Peninsula, 9,754 units are two-bedroom homes.

In addition, 49 percent of these 13,110 units are of a saleable area ranging from 75 square metres to 150 square metres; another 41 percent are small-sized flats of less than 75 square metres.

During the third quarter, the government processed applications for the construction of 227 private residential projects, mostly on the Macau Peninsula, for a total of 23,798 units. Nearly 49 percent of these would occupy between 75-150 square metres, while 30 percent would be less.

he revenue of the Macau Grand Prix will be higher than MOP50 million.

This includes revenues from ticket sales, sponsorship and outdoors on the race track”, the Coordinator of the Grand Prix Committee, João Costa Antunes, has told newspaper Plataforma de Macau.

The revenues generated by the races account for roughly 25 percent of the overall budget, which for the 61st edition of the Grand Prix was MOP200 million. The revenue is a new record for the event.

“This is an investment in the promotion of Macau. It’s not realistic to think that there will be direct profit from the money invested”, Antunes explained. “The money for the budget comes from the Tourism Fund of Macau”.

The 61st Grand Prix of Macau started on 13th November and ran until the 16th. In total, some 79,500 spectators watched the races over the four days, while Macau’s biggest event attracted 1,000 journalists from 300 different media organisations.

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November 24, 2014

Macau

Business Awards ceremony illuminates local talent

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Jubilant winners claimed their prizes at the Business Awards of Macau

HOSPITALITY

Joanne Kuai joannekuai@macaubusinessdaily.com

Falling expenses Since 2010, the figures for visitor expenditure in any given quarter were consistently above those registered in the same period of the preceding year. Results in the third quarter this year show an unprecedented feature in recent history: they are below the figure for the prior year by about 1.5 percent. More worryingly, perhaps, if that if this feature is repeated in the fourth quarter the overall decrease will mainly be due to losses in the territory’s two main markets, mainland China and Hong Kong.

The other region in the top three sources of visitors, Taiwan, posted a rise of 3.5 percent.

One must be careful, though, as a lot of Taiwan expenditure arose in the last few years from a significant change in the average profile of visitors. With the opening of direct flights to the mainland, many of short-stay visitors disappeared so that the majority of current visitors are overnighters that naturally spend significantly more. The other most relevant source markets - the countries located in the arch extending from Japan to Southeast Asia - all display rising figures in the latest quarter.

The trends for the major markets are shown in the chart. The strongly seasonal features of the indicator were smoothed using a fourperiod moving average in order to highlight the dominant trends.

The other noticeable feature displayed by these figures is that they point to nonincreasing real expenditure. If we use the Tourist Price Index to make a rough calculation of real expenditure changes, we find that the figure for China, compared to what it was in the same period four years ago, has hardly changed. In the case of Hong Kong, however, the figure has declined by almost 20 percent.

J.I.D.

1878 mop average visitor expenditure, Q3

The jury of 2014 Business Awards of Macau

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he Business Awards chalked up its second edition this year. The programme – which honours leadership, talent, innovation, corporate social responsibility and strategic accomplishments provides an opportunity for the local business community to showcase its achievements to society in general.

The finalists were recognised and the winner in each category announced during the Business Awards ceremony and a gala dinner last Friday in the Grand Ballroom of Grand Lisboa.

For the first time, the awards added a category recognising new talent. The winner of this category - Austin Ao said it was an honour whose inspiration he would share with his team.

“It came as a real surprise. I think this kind of award is really encouraging.

Actually, I’m nothing special. I just fulfil my duty. But certainly I will share the joy and my award-winning working philosophy and attitude with my team,” the senior technical sales manager of the United States Playing Card Company Ltd. said.

Mr. Ao’s boss, who submitted the nomination, also praised the ini ti a ti v e o f th e ev en t.

“Austin is definitely a role model for all of us. I’m very glad that he can be recognised as New Talent at the Business Awards. For sure, we will continue to join this event that helps us to promote our corporate culture,” said Scott A. Madding, United States Playing Card Company director.

Annabella Lam, chief operating officer of the Bondi Enterprise Ltd., who claimed the Youth Entrepreneur prize, said this award is not the achievement of an individual.

“Currently, we have around 280 staff

who work really hard to establish our reputation. This award belongs to all of us. I’m glad we can get recognised and hopefully it will help us reach more and bigger clients,” said Ms. Lam. The best small and medium sized enterprise award went to KPM Project Management Ltd. The recipient, managing director and company partner Rui Barbosa, told Business Daily that he was glad to receive the award with so many strong contenders.

“Here, we have not only companies run by ‘foreigners’ but also a lot of local ones,” he said. “It’s a perfect opportunity for us to see what our counterparts are doing and to exchange some ideas. It’s a long way for us SMEs to be a big firm but I believe that here in Macau there is this possibility, and we are heading towards that”.

Long-waited recognition “Some partners told me we should have been doing this 10 years ago. But it’s never too late. This is a project that rewards companies for their fantastic job and it’s a way for us to say to all of them: thank you and keep up the good work,” said principal organiser Paulo Azevedo at the awards ceremony.

The event is jointly organised by De Ficção Multimedia Projects and the Charity Association of Macau Business Readers with the purpose of highlighting the entrepreneurial spirit of the city.

The director of the event, Magarida Luz, said: “The awards programme provides the ideal platform for building knowledge, increasing brand awareness, reliability and client retention through high exposure, recognition and prestige. This

establishes a valued resource that can be used to create opportunities for marketing within the respective industries of Macau. We appreciated the participants that joined us this year and of course our partners in holding the event. We hope to continue this effort in the future.”

2014 Business Awards Winners Corporate Social Responsibility Louis Vuitton Co, Ltd

Environmental Performance

Oasis Electric Motorcycle Factory (Macau)

New Talent Austin Ao

Innovation

Sheraton Macao Hotal, Cotai Central

Leadership

Royal Supermarket

Non-Profit Organization

Cradle of Hope Association

Most Valuable Brand

“Lisboa” Brand by SJM

Small and Medium Enterprises

KPM Project Management Ltd.

Entrepreneur John Ho

Young Entrepreneur Annabella Lam

Business Daily | 5

November 24, 2014

Macau

Louis XIII confirms Cotai opening for mid-2016 The Group has suffered a 12 percent decrease in turnover but with gross profit going up 4 percent the US$1.1 billion Luis XIII hotel in Coloane has made substantial progress in its development, says the company run by Stephen Hung Luís Gonçalves

luis.goncalves@macaubsuinessdaily.com

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ouis XIII has confirmed that its US$1.1 billion hotel on the fringes of the Cotai Strip will be ready to open its doors mid2016. The property - featuring 200 rooms, 66 tables and 75 slots - is one of the ten big projects currently being built in here in the territory to turn it into a US$100 billion gaming market by 2020.

‘The Group is building an exclusive luxury hotel and entertainment complex, expected to be completed in the middle of 2016, on a site of some 65,000 square feet located on the Cotai Strip in Macau (the ‘Hotel’)’, wrote the company in its interim results released Friday. The operator, run by Stephen Hung, says it expects the property to generate ‘strong cash flow’ when fully operational.

In the six months ended September 30, Louis XIII reported a turnover of HK$3.7 billion, a decrease of 12 percent compared to a year ago

(HK$4.1 billion). The company justified this drop with its ‘cautious tendering approach’.

Gross profit accelerated 4 percent from HK$128 million last year to HK$133 million in 2014 boosted ‘primarily to higher margin from the group’s Macau projects’, Louis XIII management said. Local projects enabled the company’s gross profit margin to increase 0.6 percentage points to 3.7 percent in the six months ended September (3.1 percent in 2013). The higher profit margin and increased saving in operating costs also enabled the loss attributable to the owners of Louis XIII to diminish by 65 percent from HK$52 million to HK$18 million.

Still in its investment and construction phase, the Louis XIII property is perceived as one of the underdogs of the ten casino integrated resorts that will comprise Cotai 2.0.

While not the biggest, it will surely

be one of the most talked about.

Although the current renderings of the company’s Cotai project are geographically distant from the others Mr. Chung described the property as an “unprecedented, luxurious hotel and entertainment destination”. With a billion US dollar investment for a 200-room hotel, that’s by far the largest investment per room in Macau.

Macau Studio City from Melco Crown, for example, will cost three times more (US$2.9 billion) but offers ten times more rooms (2,000).

The company recently made the headlines after placing the single largest order ever for a fleet of luxury Rolls Royce motorcars. Mr. Hung will pay US$20 million to acquire 30 customised Rolls Royce Phantoms – already the most expensive model offered by the famous luxury marque – for guests of the Louis XIII in Macau.

The fleet is expected to arrive in Macau at the beginning of 2016,

the interim report said. But that’s not all. According to Financial Times, the Cotai hotel is set to offer the most expensive suite in the world at a cool US$130,000 a night.

Louis XIII secured a HK$3 billion credit line to build its Cotai property last June from a mainland bank. The company also informed investors the construction is ongoing and that design work for the hotel is almost finished. ‘We have made substantial progress in the development of the Hotel during the six months ended 30 September 2014. In June 2014, the Group completed the foundation works and commenced aboveground works’, the interim results report says. ‘Detailed design work for the Hotel is now approximately 85 percent completed. The Group is well positioned to hit its target of completing approximately 75 percent of the tender process by the end of 2014’.

Meanwhile, the company said in a separate filing that it is seeking to raise HK$1.6 billion through the placing of shares and convertible bonds. Of these, HK$1.4 billion will go towards ‘contemplated design upgrades related to the fit out of the interiors of the hotel development in Macau,’ the filing reads.

6 | Business Daily

November 24, 2014

Macau

Rolls Royce business tracks casino expansion, says regional director Business in Macau for Rolls Royce has been growing apace. In a recent phone interview, regional director for Asia Pacific Paul Harris says he expects that with the expansion of the casinos in the territory the luxury brand should continue to grow since the majority of its customers are hotel-casinos. Even so, with a showroom here, Mr. Harris says they aren’t targeting an expansion of the sales department, only after-sales care, which should grow three to fourfold in the next year as a result of the high concentration of Rolls Royces on the streets of Macau.

Luciana Leitão

Lucianaleitao@macaubusiness.com

Over the years, what has been the sales evolution of Rolls Royce in Macau?

In terms of individual numbers, we never disclose individual markets — we give general trends. What I can tell you exactly is that the showroom opened in Macau in 2012; it hasn’t really got an old track record yet but since we’ve opened sales have developed and grown steadily, as we expected.

We’re pleased with the response from the local business community and the local private entrepreneur community in terms of their response to Rolls Royce.

Percentage-wise, what has been the growth of Rolls Royce in the territory?

I can’t give you any percentage, as that would be incredibly misleading. All I can say is it’s maybe slightly ahead of what our global growth for Rolls Royce has been and our brand has grown consistently year-on-year since 2010.

Are Macau and Hong Kong very different markets for Rolls Royce?

Yes and no. Our Macau business entrepreneur is the same business entrepreneur that exists in Hong Kong, so they are shared business.

So, of course, they’re very close and always have been very close, but the markets are different.

Hong Kong has a very long traditional history with Rolls Royce and Macau has a more modern history with Rolls Royce.

Of course, Macau is slightly smaller from the point of view of the opportunity that we have in terms of sales. Also, the structures are different. Macau is very much driven by corporate or corporate business, particularly the hotelcasino business, and Hong Kong is predominantly driven by successful entrepreneurs/private entrepreneurs. So, Hong Kong and Macau are different from that perspective, although proximitywise they’re very close.

Are hotel-casinos the only customers of Rolls Royce in Macau?

No, they’re not. We have entrepreneurial businessman who live in Macau or that have multiples addresses and that happen to live in Macau as well, and hotels as well. But at the moment the predominant business is the casino business.

Still, these entrepreneurial businessmen that are clients in Macau are all related to gaming or come from different sectors?

It varies. The only thing they have in common is that they’re successful in whichever business line they’re in and they buy

the cars as a celebration of that success.

The future What are the future prospects of the market in Macau?

Our business will track the expansion of casinos. If casinos continue to expand, our business will expand considerably, and then we’ll get in the cycle of change.

We’re targeting sustainable steady growth and that may spike in a

year or a couple of years higher than anticipated. We’re expecting about average growth in the next couple of years.

Who would you say are your competitors in Macau?

From a Rolls Royce perspective, our main competitors, particularly regarding private entrepreneurs, isn’t so much other automated products — it’s more if there’s a discerning decision on how they spend their luxury wealth.

Will they spend that on another apartment in Macau, Hong Kong or another place, maybe Mainland China or the US? Or will they have a luxury yacht or a boat?

Something of that magnitude.

It’s more a question of where else will they divert their luxury expenditure.

The other biggest issue we have as a competitor is time because it takes quite a bit of time to inspire and commission a Rolls Royce.

Sometimes our clients don’t have

Business Daily | 7

November 24, 2014

Macau At the moment, the predominant business [in Macau] is the casino business

going to make a new drophead Rolls Royce in the near future and that’s still on the cards. There will be a new drophead Rolls Royce or a convertible in the future.

When, in the future?

Not next year but probably the year after [2016].

that — they have the desire, understand what Rolls Royce is all about, but they just haven’t really got around to commissioning a car with us just yet.

Given the expected growth, do you see a possibility of Macau having a different type of customer other than the resorts like you have in the neighbouring region?

I do; I see the market evolving beyond the casino business into the more regular entrepreneurial business. So, yes, we expect a more steady growth across a lot of business sectors.

There has been talk about the possibility of recognising Mainland China’s driving licences in Macau.

Do you expect that to have any effect on Rolls Royce business?

That will be difficult to say.

All I would say is that if we look at our global experience, we’re quite used to other markets allowing cars to be used across the border, it’s not anything that we’re not used to. I don’t necessarily think it would change the Macau market particularly for us. If you’re going to live in Macau and you use the car regularly in Macau you will want to have a car in Macau.

That’s really what we feel. So, it’s too early to say, but we doubt it.

What I can tell you exactly is that the showroom opened in Macau in 2012; it hasn’t really got an old track record yet but since we’ve opened there sales have developed and grown steadily, as we expected

All I can say it’s maybe slightly ahead of what our global growth of Rolls Royce has been and our brand has grown consistently yearon-year since 2010

You’ve recently had an order for the largest fleet of Rolls Royce Phantoms ever by entrepreneur Stephen Hung’s Louis XIII hotel in Macau. Do you have other orders, in the territory, on the way?

I can’t tell you anything specifically because we’re working on various deals. We are quite busy with the requests we’re getting from Macau at the moment.

Cotai expansion Other than the resorts, are you dealing with businessmen that are coming to Macau, following the next phase of expansion?

Not that I’m aware of, but that’s not to say that they’re not ongoing with our local business. We’re open to those discussions, so if any of those are thinking of Rolls Royce, then please come and speak to us. I don’t know, because the negotiations may be happening at a dealership level, so they may not have got to us yet. It wouldn’t surprise me.

Regarding the future, do you expect Rolls Royce to grow much more than it has?

If we get a large order from a large hotel, it does tend to spike the development quite significantly. It’s difficult to predict. Internally, we’re targeting steady and consistent growth but it may surprise us and we may get exceptional growth. I don’t know — I would welcome either, as long as it is growth.

Will Rolls Royce launch any new products in Macau?

We’ve just in the last few months

brought our Ghost series II. It’s a reinterpretation of Ghost — it’s the model that we brought to the market in 2010 and that car has had a significant technical upgrade and a new face, and a variety of other [improvements]. We’ve improved the driveability of the car and the overall effortless way you drive the Rolls Royce. That’s new in the market and that will be available in Macau from the end of November. Of course, we already announced a while ago that we’re

Is there any possibility of expanding your existing showroom in Macau?

We have a showroom in Macau, at the back of Wynn, so we have one there already with two cars and three sales guys. For us, it’s big enough to be present in that format. Beyond that, there isn’t anything on the sales department.

But because we have such a concentration of Rolls Royces on the roads in Macau at the moment and the hotels want to use these cars regularly and have them maintained to the highest quality, we’re significantly expanding our commitment to after-sales care.

So, our service and maintenance department will probably grow from its current size by three or four times in the next 12 months.

8 | Business Daily

November 24, 2014

Gaming

MelcoLot and Taiwan partner to open casino in Georgia

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elcoLot has teamed up with Taiwanese company Firich Enterprises Co., Ltd to open a casino in the Republic of Georgia, according to a filing the company made last Thursday with the Hong Kong Stock Exchange after trading hours.

A subscription agreement has been reached for a company called SPV, Express Wealth Enterprises Limited, wholly-owned by MelcoLot, to obtain

a gaming licence and undertake the casino project in Tbilisi, capital of Georgia.

Pursuant to the agreement, Firich has agreed to subscribe for the 5,530 new SPV shares at a consideration of US$50 million (399 million patacas) while Oz Gaming Georgia has agreed to subscribe for 200 new SPV shares at a consideration of US$200.

‘It is intended that SPV will utilise the net proceeds from the

subscription of approximately US$49,890,000 to fund the costs and expenses related to securing the lease arrangements in respect of the project site of the casino project and payments under that lease, and the general development, implementation and running of the casino project,’ read the filing.

The gaming licence in Georgia is expected to enable SPV to conduct gaming business in respect of the

Brookfield Property drops plan to buy Revel Casino

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rookfield Property Partners LP dropped plans to buy the shuttered Revel Casino in Atlantic City, New Jersey, in a new setback for the state’s shrinking gambling industry.

The Toronto-based investment company announced the decision in an e-mail. Brookfield was unable to win a reduction in electricity payments, according to two people with knowledge of the matter who weren’t authorized to speak publicly and asked not to be identified.

Brookfield, which owns the Atlantis resort in the Bahamas and the Hard Rock Hotel & Casino in Las Vegas, had planned to reopen Revel as a casino. The company outbid Florida developer Glenn Straub who later challenged the auction process. The Toronto-based investment company won bankruptcy-court approval to buy the resort for US$110 million last month. The property, built at a cost of US$2.4 billion, closed in September.

“I am sorry to hear that the Brookfield transaction was not completed,” Mayor Don Guardian said in a statement. “Although Brookfield would have been a good fit for Atlantic City, we will continue

to attract new investors.”

Revel had a contract to purchase power and other utility services for US$3 million a month from ACR Energy Partners LLC, a joint venture between South Jersey Industries Inc. and DCO Energy LLC that built a plant at the site.

Don Lockwood, a spokesman for South Jersey Industries, said ACR Energy Partners had no involvement in talks between Brookfield and bondholders of the joint venture.

More competition Stuart Moskovitz, an attorney for Straub, said it was too early to say if his client would maintain his offer for Revel. The developer is continuing with his appeal of the auction.

The real estate company’s departure from the deal was reported earlier by the Press of Atlantic City.

Casinos in Atlantic City have been closing with the decline in gambling in the seaside resort town and competition from neighboring jurisdictions. The win for casinos in Atlantic City fell 4.4 percent in October and is down 3.3 percent for the year to date, the state Division of Gaming Enforcement said on its

website on November 13.

This week, Cordish Cos. and Greenwood Gaming & Entertainment Inc., two closely held real estate developers, won a license to open a casino in Philadelphia, within sight of the homes of the city’s professional sports teams.

The award spells more competition for Atlantic City and other casinos in the northeastern U.S. Live! Hotel & Casino will be the fifth in the greater Philadelphia area and the 13th in Pennsylvania, a state, which passed New Jersey in 2012 to become the second-largest U.S. gambling hub after Nevada.

Taj Mahal The Trump Taj Mahal has said it will close on December 12 unless union workers drop their appeal of a bankruptcy court ruling that let the casino terminate their contract.

It would become the fifth Atlantic City casino to close this year.

Stockton College recently reached an agreement to buy the former Showboat casino, which closed earlier this year, and reopen the property as a satellite campus.

Bloomberg

casino project for a minimum period of 15 years.

According to Firich, the casino project is expected to be complete by the end of next year, becoming operation in the first quarter of 2016. It has been converted from a site of historical interest with future customers expected to be gamblers from the Middle East, Turkey and Europe, based on Taiwan media reports.

MelcoLot Limited, of which the CEO is Henry Ko Chun Fung, is a company incorporated in the Cayman Islands, while its mother company Melco International Development Limited’s shares are listed on the main board of the Hong Kong Stock Exchange and is chaired by Lawrence Ho Yan Lung.

Wynn Resorts receives U.S. gov’t request for information

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ynn Resorts Ltd. said it received a government request for information, though the company is unaware of any criminal investigation.

The Internal Revenue Service sent a letter to Donald Campbell, an outside attorney representing Wynn Resorts, asking for information about the Las Vegas-based casino operator’s top 100 customers from North America and top 50 in each of Asia, Europe and Latin America, the Wall Street Journal reported earlier.

The letter asked for dates of birth, Social Security numbers and other information, as well an organizational chart of Wynn Resorts senior management and specifics about internal money-laundering safeguards, the newspaper said.

Michael Weaver, a spokesman for Wynn Resorts, said the company has “serious doubts” a criminal investigation is taking place.

“No agency has notified the company that it is under any investigation,” Weaver said in an e-mail. “The fact that information is requested from us by a governmental agency in no way implies the accusation of any wrongdoing by the company.”

Grant Williams, a spokesman for the IRS, said the agency is prohibited from discussing specific taxpayers. Campbell, the outside lawyer for Wynn, didn’t respond to a request for comment.

Federal regulators have called on casino operators to more closely scrutinize customers, out of concern for illegal activity. Las Vegas Sands Corp. agreed to forfeit US$47.4 million to end a federal money-laundering probe

by Andre Birotte, the U.S. Attorney in Los Angeles, last year, without admitting any wrongdoing.

Macau’s anti-corruption agency has said it is examining a land deal by Wynn Resorts in that region’s Cotai Strip.

Wynn Resorts has said it is cooperating with investigators there and doesn’t believe it did anything wrong.

Bloomberg

Business Daily | 9

November 24, 2014

Greater China

Rate cut likely to hurt banks The measure will curb new loans to small borrowers Engen Tham

tougher for lenders to raise capital to meet new international rules designed to protect depositors from banking collapses. Retained profits are one way in which banks can build up regulatory capital.

“In the past when Chinese banks disburse loans, they mainly relied on profits from their own capital to replenish their capital,” Jiang Jianqing, chairman of China’s biggest commercial bank, the Industrial and Commercial Bank of China Co Ltd, told a conference in Beijing on Saturday.

‘We won’t start lending now’

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hina’s latest interest rate cut is set to dent the profitability of domestic lenders, especially mid-sized banks, which are already suffering from higher bad loans and a slowdown in profit growth.

The central bank unexpectedly cut rates late on Friday, stepping up efforts to support small and mediumsized enterprises (SMEs), which are struggling to repay loans and access credit, as the economy slides to its slowest growth in nearly a quarter

of a century.

It slashed the one-year benchmark lending rate by 40 basis points to 5.6 percent while lowering the one-year benchmark deposit rate by 25 basis points to 2.75 percent.

The narrowing of interest rate margins will eat into lenders’ profitability, with Cinda Securities’ chief strategist, Jiahe Chen, predicting it will cut profits by up to 5 percent.

Interest margins generated from lending have already been shrinking

for second-tier lenders, which have been squeezed by competition from online financiers and a rise in funding costs stemming from an industry tussle for deposits.

Fitch Ratings downgraded its credit rating of China Guangfa Bank, a medium-sized lender, two days before the rate-cut announcement, and said the level of off-balance-sheet lending among second-tier banks was a concern.

The squeeze on profits will make it

The People’s Bank of China said in announcing the rate cut that it wanted to help smaller firms gain access to credit.

While the measures may ease the financing costs of these firms’ existing loans, it is unlikely to encourage banks to write new loans to lower-rung borrowers, bankers said.

Smaller companies are considered high risk and banks do not want to increase their exposure to weaker borrowers, they said.

“At the moment banks have a lot of problems with them, they have higher rates of default ... we’re suspicious of their creditworthiness, so we’re very careful about lending to them,” said a senior loan officer at a top-10 bank.

He declined to be identified because he was not authorised to speak to the media.

Among China’s five largest banks, lending will continue to favour China’s state-controlled companies, state-invested enterprises and those involved with large projects overseen by the government, bankers added.

In the third-quarter, China’s banks reported rising bad loans and slowing profit growth, amid fears that a credit crunch could spread further.

“We’ve been moving away from SME lending over the last two years in my department. We won’t start lending now,” said another senior loan officer at one of the country’s top five banks.

Reuters

China, S. Korea, Japan ready for new FTA talks The next round of talks comes after Chinese President Xi Jinping and his South Korean counterpart Park Geun-hye confirmed a bilateral agreement early this month

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hina, South Korea and Japan will hold the sixth round of talks for a trilateral free trade agreement (FTA) next week, after Beijing and Seoul concluded the substantive negotiations for a bilateral FTA, the trade ministry said yesterday.

The sixth round will be held on November 24-28 in Tokyo, according to the Ministry of Trade, Industry and Energy. Negotiations for the trilateral FTA were launched in November 2012.

In the past two years, the three sides discussed various areas, including goods, services, investment, competition, intellectual property rights, e-commerce and environment, under the principle of achieving a comprehensive and high-level FTA, the ministry said.

During the upcoming round, delegates from the three countries will focus mainly on discussing modality, or basic guideline, goods liberalization and how to liberalize services and investment. Differences have lasted over the issues among

Talks’ 6th round November 24-28 Tokyo

Xi Jinping(R) and Park Geun-hye(L), presidents of China and South Korea respectively, sealed a Free Trade Agreement on November 10

the three nations, the ministry said.

The next round of talks comes after Chinese President Xi Jinping and his South Korean counterpart Park

Geun-hye confirmed in Beijing the conclusion of substantive negotiations on the China- South Korea FTA on November 10.

All negotiations for the bilateral FTA will be wrapped up by the end of 2014, and the agreement is expected to be signed 2015 and take effect in the second half of next year.

The South Korean trade ministry said it will seek to maintain consistency in talks for the trilateral trade deal with the China- South Korea FTA, which was effectively agreed. It noted that it will also actively participate in the Regional Comprehensive Economic Partnership (RCEP).

South Korea has sought to join the negotiations for the RCEP, a multilateral FTA that will include China, South Korea, Japan and 10 members of the Association of Southeast Asian Nations (ASEAN) as well as India, Australia and New Zealand.

Xinhua

10 | Business Daily

November 24, 2014

Greater China No to year-end IPO rush China’s stock regulator said that there would not be a rush of initial public offerings at the year-end although the number of deals so far falls short of its target. The China Securities Regulatory Commission (CSRC) said in June that it would let about 100 companies launch IPOs by the end of this year, but only 66 firms have so far floated shares, raising the question whether it would push firms to quicken the pace to meet the target.

Leverage ratio could be raised China may raise the leverage ratio for its commercial banks, in a move to bring lenders in line with international capital adequacy standards, according to draft rules published by the banking regulator. The China Banking Regulatory Commission (CBRC) began phasing in new higher capital adequacy requirements last year, in line with the Basel III standards, as Chinese policymakers aim to fortify banks against the risks from a slowing economy. The leverage ratio is the broadest of capital requirements and a way to measure whether a company can meet its financial obligations.

US$33 million for a blue diamond A Hong Kong buyer has paid US$32.6 million for a near 10-Carat blue diamond at an auction held by Sotheby’s in New York, underlining the rising demand for the sparkling gems from increasingly muscular Chinese buyers.

The unnamed Hong Kong collector saw off six other bidders to set a new record price-per-carat for any diamond, Sotheby’s said in an announcement sent to Reuters on Friday. The price was around double pre-auction estimates. China, the fastest growing diamond market, is driving global demand in the sector.

Joint bid for Club Med Chinese conglomerate Fosun said on Friday it was in talks with Brazilian investor Nelson Tanure about a possible joint bid for Club Med, the latest twist in a long-running battle for the holiday resort company. The Financial Times, which first reported the negotiations, said Tanure was prepared to invest about US$90 million through his Costa do Pero real estate investment company. The takeover battle for Club Mediterranee, which has been hit by the weak economy in its core European market and a stalled attempt to move upmarket, dates back to May 2013.

Reconstruction plan for quake zone China yesterday unveiled a three-year reconstruction plan for a quake zone in southwest Yunnan, promising to lift living conditions and economic development to the levels higher than those before the quake. The reconstruction projects aim to lay a solid foundation for building a moderately prosperous society in the quake zone with Ludian of Yunnan Province as its centre, according to the plan.

A 6.5-magnitude earthquake struck Ludian County on August 3, killing more than 600 people and destroying about 80,000 homes.

World’s top bank set interest to 3 percent

Five of 16 listed banks raise rates to ceiling The central bank’s latest asymmetric cuts of 40 basis points in its one-year lending rate and 25 basis points in the deposit rate are set to narrow profit margins at banks

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ive of 16 listed Chinese banks raised their one-year deposit rates to the ceiling of the regulatory benchmark, in a mixed response by lenders to China’s latest interest rate liberalization.

China Citic Bank Corp., Ping An Bank Co., Huaxia Bank Co., Bank of Nanjing Co. and Bank of Ningbo Co. are offering 3.3 percent to one-year deposit holders, according to their websites. The five biggest listed lenders -- Industrial & Commercial Bank of

China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd., Bank of China Ltd. and Bank of Communications Co. -- are offering 3 percent, compared with the 2.75 percent benchmark.

The central bank’s latest asymmetric cuts of 40 basis points in its one-year lending rate and 25 basis points in the deposit rate are set to narrow profit margins at banks.

Banks have the option of offering depositors as much as 120 percent

of the benchmark rate, up from a previous ceiling of 110 percent.

Offering the maximum could narrow a bank’s interest rate margin, a key source of profit, by 40 basis points, according to JPMorgan Chase & Co. The asymmetric nature of the central bank’s move is “unusual,” and the smaller deposit rate cut “will be offset by the upward adjustment to the deposit rate ceiling to a certain extent,” Qu Hongbin, chief China economist at HSBC Holdings Plc in

Nuclear delays pose threat to climate goals Government-backed think tanks have said China should aim for at least 200 GW of nuclear capacity by 2030

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hina’s efforts to curtail coal consumption and bring spiralling greenhouse gas emissions under control by 2030 could be stymied by the slow pace of its nuclear reactor programme, with safety concerns still holding back new approvals.

President Xi Jinping last week promised to bring China’s greenhouse gas emissions to a peak by around 2030 and double the share of nonfossil fuels in the country’s total energy mix to 20 percent over the same period.

The new target could require 1,000 gigawatts (GW) of new clean generating capacity, but with renewables like wind subject to technical constraints and hydropower also nearing its peak, nuclear stands to play a decisive role, government officials and policy researchers say.

“Nuclear power is China’s only scalable replacement energy and is a vital choice in China’s energy strategy,” said Guo Chengzhan, vicehead of China’s National Nuclear Safety Administration, at a briefing

in early November.

Teng Fei, a Tsinghua University researcher who studies China’s emissions targets, told Reuters that without nuclear, “peak carbon” could be delayed by as long as a decade.

Government-backed think tanks have said China should aim for at

KEY POINTS Renewables not enough to replace coal China unlikely to meet 2020, 2030 nuclear targets Success of world’s first Westinghouse AP1000 could be decisive

least 200 GW of nuclear capacity by 2030, up from 18 GW now, but while state nuclear firms are capable of building more than 10 GW a year, they have been held back by regulators - especially after the 2011 Fukushima crisis in Japan.

Before Fukushima, Chinese nuclear executives said they could raise capacity to more than 100 GW by the end of 2020 and to 200 GW over the following decade, but the disaster forced a year-long halt to all construction, pending nationwide safety checks.

The official 2020 target now stands at 58 GW, which would still require around 40 reactors to go into operation in the next six years - a task already thought to be beyond China.

Assuming the 28 GW now under construction is completed in time, China would need to approve and build another 12 reactors quickly if it is to have any hope of hitting 58 GW by 2020, said Li Ning, nuclear expert and dean of the School of Energy Research at China’s Xiamen University.

Reuters

Business Daily | 11

November 24, 2014

Greater China Hong Kong, wrote in a note. “This will likely further squeeze banks’ margins.”

China Everbright Bank Co. and China Merchants Bank Co. also set the one-year deposit rate at 3 percent, while Bank of Beijing Co., China Minsheng Banking Corp., Shanghai Pudong Development Bank Co., and Industrial Bank Co. set their rates at 3.025 percent.

Bad loans

Creditors ask Beijing to speed up metal fraud probe Some creditors said the slow progress of the investigation was already interrupting their operations Polly Yam

As China heads toward its weakest economic expansion since 1990, the nation’s banks are grappling with smaller profit margins and rising bad loans. Soured lending jumped by the most since 2005 in the third quarter, according to the country’s bank regulator.

Giving banks more room to set deposit rates “is another important step towards the ultimate goal of interest rate liberalization,” Jiang Jianqing, the chairman of ICBC, the country’s largest bank, said at a financial forum yesterday. It will “inevitably squeeze the profit margins of banks, and the narrower margin is a long-term trend,” he said.

Bloomberg News

3.3-2.75 percent 16 listed banks interest rate range

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reditors frustrated at the slow pace of the investigation into an alleged metal financing scam at China’s Qingdao port have asked Beijing to step in to speed up progress as civil lawsuits pile up, sources with knowledge of the situation said.

The probe, at the world’s seventh largest port, centres around a private metals trading firm, Dezheng Resources Group, suspected of duplicating warehouse certificates in order to use a metal cargo multiple times to raise financing.

Police in Qingdao have been questioning Dezheng Resources Chairman Chen Jihong since late July, but have not made any comment on when their investigation will conclude.

That is critical for the creditors of Dezheng Resources and its related companies, because civil lawsuits cannot proceed until the criminal investigation has been wrapped up.

Total potential losses from the alleged fraud are estimated at more than US$1.2 billion, based on disclosed figures.

Two sources said a small group of creditors had asked Beijing to assign the public security department, a powerful national body, to take over the investigation from local police in Qingdao.

In response, national investigators had been sent to join the Qingdao police’s special case team, the sources said.

One source, who works at Dezheng Resources, said the investigation team was still trying to identify assets of Chen, Dezheng Resources and its companies, as well as any outstanding loans other companies owed to them.

At least one large state-owned firm was looking to file a civil lawsuit against Chen’s companies on completion of the investigation, he said.

Credit tightened The fallout from the Qingdao scandal has caused local and foreign banks to tighten credit for metals

US$1.2 bln total potential losses from the alleged fraud

imports and triggered a flurry of lawsuits. The metal stocks used in the alleged fraud were mostly stored in Qingdao and Penglai ports in China’s northeastern province of Shandong.

Dezheng’s creditors include Standard Bank, Standard Chartered Bank, ICBC and Citic Resources .

ICBC has said its loss was estimated at less than US$200 million, while Citic Resources said in late October there had been two hearings but no determination by courts in China.

One of the sources, an executive at a firm that has filed a lawsuit against Dezheng, said the company was unlikely to recover its loss of more than 200 million yuan (US$32.67 million), but wanted to end the case soon.

“We need to tell where we have made losses to our shareholders and to the tax authorities. But now it looks like the case will drag on two to three years,” the executive said.

He added that his firm had been requested by the Qingdao police to provide information to help the investigation and to relocate the firm’s lawsuit to a Qingdao court from Shanghai.

A third source, a senior executive at a medium-sized trading firm that is involved directly and indirectly in claims against Dezheng, said banks had been holding up more than US$20 million in its accounts pending the outcome of the lawsuit.

Reuters

China commits to economic corridor with Pakistan Major Chinese companies investing in Pakistan’s energy sector will include China’s Three Gorges Corp

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he Chinese government and banks will finance Chinese companies to build US$45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to new details of the deal seen

by Reuters on Friday.

The Chinese companies will be able to operate the projects as profit-making entities, according to the deal signed by

Prime Minister Nawaz Sharif during a visit to China earlier this month.

At the time, officials provided few details of the projects or the financing for the deal, dubbed the China-Pak Economic Corridor (CPEC).

The deal further cements ties between Pakistan and China at a time when Pakistan is nervous about waning U.S. support as troops pull out of Afghanistan.

Documents seen

by Reuters show that China has promised to invest around US$33.8 billion in various energy projects and US$11.8 billion in infrastructure projects.

Two members of Pakistan’s planning commission, the focal ministry for the CPEC, and a senior

Pakistan will not be taking on any more debt through these projects Khawaja Asif Pakistan’s minister for water and power

official at the ministry of water and power shared the details of the projects.

The deal says the Chinese government and banks, including China Development Bank, and the Industrial and Commercial Bank of China Ltd (ICBC), one of China’s ‘Big Four’ state-owned commercial banks, will loan funds to Chinese companies, who will invest in the projects as commercial ventures.

Sharif signed more than 20 agreements during his trip to China earlier this month, including US$622 million for projects related to the deepwater, strategically important Gwadar port, which China is developing.

The port is close to the Strait of Hormuz, a key oil shipping lane. It could open up an energy and trade corridor from the Gulf across Pakistan to western China that could be used by the

Chinese Navy - potentially upsetting rival India.

Pakistan sees the latest round of Chinese investments

as key to its efforts to solve power shortages that have crippled its economy.

Three Gorges dam construction. The company in charge of the construction will join Pakistan projects

Reuters

12 | Business Daily

November 24, 2014

Asia Myanmar to get int. loan Myanmar will get a US$50 million loan from Singapore and Vietnam for the development of its small- and medium-sized enterprises (SMEs), Myanmar authorities said yesterday.

The loan, to be obtained in the next fiscal year starting April 2015, will be 30 million dollars from Vietnam and US$20 million from Singapore, according to a loan agreement signed with the loan providers. The loan will be distributed to the SMEs through Myanmar’s Small and Medium Industrial Development Bank at an interest rate of 4 percent, according to the SME administration.

S.K. household income growth rises South Korean household disposable income in July-September grew for the 14th consecutive quarter on a year-on-year basis, government data showed on Friday, with the pace picking up slightly from the second quarter. Average household income in real terms grew 1.6 percent in the third quarter compared to a year earlier, marginally quicker than the 1.1 percent rise seen in April-June.

Growth in real household spending also quickened, rising 2.0 percent in the July-September period compared to 1.3 percent in the second quarter.

Indonesian sugar sector “at critical point” Indonesia’s government must issue 2015 raw sugar import permits this month or face further closures of refineries and shutdowns at food and drinks businesses, an industry group in the world’s top importer said, warning the situation was at crisis point. Last week, Indonesia’s sugar-refining association said it expected a third of the country’s plants to shut temporarily by the end of the month after the government cut import quotas for the sweetener this year despite rising demand. A prolonged shortage of raw sugar may dent revenue at refinery owners.

JBS buys Primo to boost Asian sales Brazil’s JBS SA, the world’s largest beef exporter, said on Friday its US$1.25 billion purchase of Australian processed foods producer Primo Smallgoods would increase its presence in Asia. JBS hopes to increase sales to South Korea, Singapore, Hong Kong and China, where it is already the biggest protein supplier, Chief Executive Officer Wesley Batista said on a conference call. “Acquisitions have been a tremendous strategy for JBS,” Chief Executive Officer Wesley Batista said on a conference call. “The main benefit of this operation is probably to serve the Asian market.”

South Korean export muscle sapped by weak yen In the past two years, the yen has lost around 33 percent of its value against the US dollar and 35 percent against the Korean won Jung Ha-Won

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s Japan slips into recession, South Korea is keeping an increasingly wary eye on its export rival’s free-falling currency, which is honing a lasting competitive edge over Korean products in a number of key markets.

The massive fiscal stimulus and flood of easy money unleashed by “Abenomics” has sent the Japanese yen plunging to multi-year lows against a basket of major currencies.

In the past two years, the yen has lost around 33 percent of its value against the US dollar and 35 percent against the Korean won -a depreciation that has triggered public expressions of concern in Seoul from industrialists, politicians and monetary policy-setters.

A weaker yen makes Japanese exports cheaper, which impacts countries such as South Korea that are direct competitors in a number of key sectors.

Bank of Korea (BOK) governor Lee Ju-Yeol promised earlier this month that it would not “sit idle” despite the limited tools it can deploy to counter the falling yen.

At its monthly monetary meeting on November 18, the BOK kept its key interest rate unchanged at 2.0 percent, but Lee underlined the “worrisome situation” regarding the Japanese currency.

If Japanese companies up the ante still further by slashing export prices, then South Korean companies in the auto, steel, machinery and shipbuilding sectors are “bound to suffer”, Lee said.

South Korea’s vast dollar reserves allow the central bank to intervene in the currency market to curb any volatile swings in the won-dollar rate.

But the won-yen exchange rate is calculated not by direct trade but by their relative value against the greenback, leaving the BOK little room to manoeuvre.

The BOK can, in theory, sell the won heavily to weaken it against the dollar and eventually the yen, but that causes problems for businesses importing raw materials.

“And a weak won will lead foreign investors to pull money out of the stock and bond markets, making them more unstable,” said Shin SeDon, economics professor at Seoul’s Sookmyung University.

Korean companies such as Hyundai, the world’s fifth largest automaker.

“The biggest risk for us now is eroding price competitiveness due to the weak yen,” Hyundai’s chief financial officer Lee Won-Hee said last month after the firm announced a 30 percent plunge in third-quarter net profit.

For years, Hyundai Motor and its smaller affiliate Kia had eaten into the overseas market share of Japanese giants like Honda and Toyota.

Between 2005 and 2012 they almost doubled their combined US market share to 8.7 percent, but that fell back to 8.1 percent last year.

In October, the share had further fallen to 7.4 percent -- the lowest so far this year.

Japanese carmakers, meanwhile, have hammered home the advantage of the weaker yen by boosting sales incentives to new buyers in the United States.

Lee Keun-Tae, an economist at LG Economic Research Institute, said many Japanese firms -- unconvinced

by Tokyo’s stimulus campaign -- were still holding off on any major cut to export prices.

But he said the Bank of Japan’s surprise announcement last month to further ramp up monetary easing may convert the sceptics.

“If these companies start slashing prices in earnest, it’s going to be a nightmare for many Korean manufacturers,” Lee said.

For South Korean firms it is a double blow at a time when they are already facing increased competition from China.

“Korean exporters are no match for Chinese firms in price competitiveness, and now they are being cornered by

Japan, too,” Lee said.

“So they’re being sandwiched harder than ever.”

Shipbuilders feel heat South Korean shipbuilders, who had been racing neck and neck with China to top the list of global orders, are also feeling the heat.

In April, they were beaten into third place by their Japanese competitors for the first time in 15 months, according to data from the industry tracker Clarkson, which also had Japan ahead in June and September.

The portfolios of South Korean and Japanese shipbuilders overlap significantly in the merchant ships and liquefied natural gas (LNG) carrier sector.

According to the Korea International Trade Association, more than half of all South Korean exports are in direct competition with made-in-Japan goods.

Concerns about the yen are not helped by the fact that South Korea-Japan diplomatic relations are currently at their lowest ebb for years, dogged by historical disputes that show no sign of waning.

During the recent G20 summit, South Korean President Park Geun-Hye offered a thinly veiled critique of Prime Minister Shinzo Abe’s efforts to reinvigorate Japan’s flagging economy.

Monetary policies by advanced nations only in consideration of their own domestic condition could spark “negative spillover effects”, Park said.

“I could no longer see the situation go on like this so I was determined to speak out,” she later told reporters.

Auto woes The advantage Japanese exports gain from the falling yen makes life particularly difficult for South

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Luciana Leitão, Luis Gonçalves, Michael Armstrong, Sara Farr, Stephanie Lai, Óscar Guijarro, Kam Leong GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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AFP

Business Daily | 13

November 24, 2014

Asia

Australia raises A$5.7 billion selling Medibank in IPO Prime Minister Tony Abbott is cutting spending and selling assets as he seeks to rein in a budget deficit that swelled to A$48.5 billion in the year through June

Malaysia to cut fuel subsidies to shore up finances Malaysia narrowed the fiscal deficit to 3.9 percent of gross domestic product in 2013, and the Prime Minister wants to further trim the gap to 3.5 percent this year and 3 percent in 2015, heading toward a balanced budget by 2020

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Abbott’s (pictured) government in April hired Macquarie Group Ltd., Deutsche Bank AG and Goldman Sachs Group Inc. to manage the Medibank IPO

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ustralia raised A$5.68 billion (US$4.9 billion) selling shares of Medibank Private Ltd. in the country’s second-largest initial public offering.

The government sold about 2.7 billion shares in the country’s biggest health insurer at a price of A$2.15 apiece for institutional investors, Finance Minister Mathias Cormann said on a conference call yesterday.

All the Medibank shares offered were sold, he said in a separate statement.

Australia’s benchmark stock index has slipped 5.7 percent since August 29, when some details of the IPO were announced, amid increasing signs that economies from Japan to Europe are losing momentum.

Asset sales The government had raised the indicative IPO price range to A$2 to A$2.30 a share, citing strong demand from institutional investors.

The shares were previously marketed at A$1.55 to A$2 apiece. The price for individual investors was capped at A$2.

The new price range valued Medibank at 21.3 times to 24.5 times estimated earnings for the year ending June 2015, according to data compiled by Bloomberg. NIB Holdings Ltd., the nation’s only other

listed health insurer, trades at 19.8 times profit on that basis.

Abbott’s government in April hired Macquarie Group Ltd., Deutsche Bank AG and Goldman Sachs Group Inc. to manage the Medibank IPO. It has also assigned advisers to scoping studies on other asset sales including Defence Housing Australia, the Royal Australian Mint and the

The offer has generated a very high level of demand both from domestic and offshore institutional investors Mathias Cormann Australia’s Finance Minister

Australian Securities and Investments Commission’s registry business.

Telstra offering The Medibank offering surpassed the A$4.3 billion raised when the government of Queensland state sold a stake in rail operator Aurizon Holdings Ltd. in 2010, according to data compiled by Bloomberg. It is Australia’s biggest IPO since Telstra Corp.’s sale in 1997.

Medibank Private will list on the ASX at 12 p.m. Sydney time on Nov. 25 with the code MPL, according to the minister’s statement. The benchmark index has retreated 0.9 percent in 2014 as the Australian dollar lost 2.8 percent.

Medibank, led by Chief Executive Officer George Savvides, forecasts a fully-franked dividend of 4.9 cents per share for the seven months through June 2015, according to the listing prospectus. Retail investors were allocated 60 percent of the shares on issue, according to Cormann.

Australia provides its citizens with free or subsidized health care at clinics and hospitals through Medicare. It also encourages people through tax benefits to take out private health insurance through companies like Medibank.

Bloomberg News

alaysia will abolish subsidies for petrol and diesel from December 1, the government said on Friday, taking a bold step that could potentially save the government some 20 billion ringgit (US$5.97 billion) annually.

Malaysia joins Indonesia and India in cutting fuel subsidies amid a sharp decline in oil prices, ending decadeslong policies of cheap fuel that have contributed to fiscal deficits.

Prime Minister Najib Razak has pledged to beef up Malaysia’s public finances by cutting expenditure and subsidies, as well as expanding the tax base by implementing a 6 percent goods and services tax from April next year.

The price of the widely used RON95 grade of petrol and diesel will be fixed according to an automatic managed float - a system that adjusts prices according to the market rate, the same mechanism as for the price of premium petrol RON97, the Domestic Trade, Cooperatives and Consumerism Minister Hasan Malek said on Friday.

Economists have said a window has opened up for Southeast Asia to consider dismantling generous subsidies as global crude prices sink to multi-year lows.

“It’s very positive for the (Malaysian) budget,” Edward Lee, Standard Chartered’s Regional Head of Research for Southeast Asia, told Reuters. “Then the fiscal deficit will fall to 1 percent of gross domestic product in 2015, from 3 percent.

And that’s quite impressive.”

In recent years, Malaysia has shielded its citizens from the full brunt of surging crude oil prices with fuel subsidies of around 24 billion ringgit (US$7.34 billion) annually. That had exacerbated the government’s budget deficit, one of the region’s biggest as a proportion of gross domestic product.

Economists said the government’s decision could drive up inflation next month but this would likely be capped due to the slump in global oil prices.

“Inflation might pick up in December but gains are likely to be transient,” ANZ said in a note.

Reuters

KEY POINTS Malaysia to save an estimated 20 bln rgt a year Fiscal deficit of GDP seen falling to 1 pct in 2015 RON95, diesel prices to be fixed on managed float mechanism

14 | Business Daily

November 24, 2014

International Russia has no plan to cut oil output The world’s biggest energy exporter, does not plan to cut oil production to shore up prices, Rossiya 24 television quoted Energy Minister Alexander Novak as saying on Saturday. Russia, which relies on oil and gas exports for about half its federal budget, has been hit this year by a fall in global oil prices as well as by Western sanctions over its role in the Ukraine’s crisis. The Energy Ministry confirmed Novak’s quote to Reuters, adding that it was part of an interview with state-run Rossiya 24, the full version of which has yet to be aired.

Fed vows review of commodity arms The central bank is considering an increase in capital and insurance requirements for banks with physical commodity arms

Belarus cuts 2015 economic growth Belarus has cut its 2015 economic growth forecast to 0.2-0.7 percent from the previous 2.0 percent because of the economic slowdown in Russia, state news agency Belta quoted Economy Minister Nikolai Snopkov as saying.

In recent years, Belarus has received tens of billions of dollars in loans and rebates for energy prices from Russia, hit this year by a fall in global oil price and Western sanctions over the Ukraine crisis. The Belarussian government also cut its 2015 oil price forecast to US$83 per barrel from US$100 per barrel.

Banker to be named Brazil finance minister Brazilian President Dilma Rousseff will name banker Joaquim Levy as her new finance minister, three leading newspapers reported on Friday, signalling a shift toward more market-friendly policies that could breathe life into a stagnant economy. Levy’s appointment was reported by Valor Economico, Folha de S.Paulo and Estado de S.Paulo, which cited unnamed sources. Reuters was not immediately able to confirm the reports and the presidential palace declined to comment on them. Rousseff will announce her finance minister and other cabinet members as of Wednesday, government sources told Reuters.

Telecom Italia to get closer to Oi Telecom Italia will examine a possible tie-up between its Brazilian unit Tim Participacoes and local group Oi, it said as it announced the sale of mobile phone masts for more than 900 million euros (US$1.1 billion). Brazil’s telecom market is in the process of consolidating as growth in mobile telephony slows and operators bulk up to fund hefty investment in broadband networks. Telecom Italia, which owns 66.5 percent of TIM Participacoes, said after a board meeting on Friday it had mandated its management to “examine in-depth the options for a possible integration” of Tim Participacoes and Oi.

RBS admits data error in stress test Royal Bank of Scotland admitted on Friday it submitted erroneous data for European bank stress tests in October and had in fact only just scraped through, calling into question whether it can pass a tougher British test. The revised result means that RBS, which is 80 percent-owned by the British government, was the worst performing UK bank in the European stress test, which assessed whether banks have enough capital to weather another economic crash. The bank has been fined in the past two weeks for failing to stop its traders attempting to manipulate foreign exchange rates.

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top Federal Reserve official on Friday pledged to a Senate investigative subcommittee that the U.S. central bank would broaden its review of gaps in its regulation of the physical commodity operations of U.S. banks.

In response to questioning at a hearing on Friday, Fed Governor Daniel Tarullo said the bank would look into filling those holes; that was in addition to a vow in his written testimony to produce new rule proposals on banks’ commodity

holdings by the first quarter of 2015.

“It may be worthwhile taking a look at those merchant banking guidelines for all activities, not just commodities,” Tarullo said in response to a question from subcommittee Chairman Carl Levin about a bank’s ability to manage conflicts of interest while owning and trading the same commodity.

Tarullo, the Fed’s point person for bank regulation, sat on the final panel of a two-day hearing called by the Senate’s Permanent Subcommittee on Investigations.

The hearing followed the release of a two-year, 403-page subcommittee investigation into Wall Street’s physical commodities business.

The report alleged that U.S. banks manipulated commodity prices and gained unfair trading advantages at the expense of consumers.

In his testimony, Tarullo said the Fed will in early 2015 announce the results of its much-anticipated review of how it regulates banks in commodities, after starting the process earlier this year.

The central bank is considering an increase in capital and insurance requirements for banks with physical commodity arms, limiting the size of the operations and prohibiting certain commodities held by the firms.

“I wonder whether there is a gap in regulations and more generally, I wonder whether there are some things that at present no government regulatory jurisdiction has no oversight over,” Tarullo said during questioning.

After Friday’s hearing ended, Levin said he was satisfied with Tarullo’s responses but raised concerns that a big portion of alleged pricing manipulation detailed in the report was on the London Metal Exchange, which is regulated by Britain.

He plans to meet with the Commodity Futures Trading Commission (CFTC) to discuss the scope of its oversight of the world’s biggest and oldest metal market in the United States.

“Something has to be done here ... So the question is, how then do we protect the American consumer from all these metal trades on the LME?” the Michigan Democrat asked after the hearing.

“Does the CFTC have the authority? I’m going to meet with the CFTC on this issue.”

Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co built huge inventories of aluminium, oil, jet fuel and other commodities, the report said, and not only failed to properly insulate themselves from potential losses, but in the case of Goldman and JPMorgan, manipulated prices.

The subcommittee report pointed the finger at the Fed, saying the central bank has taken insufficient steps to address the risks taken by financial holding companies gathering physical commodities. The Fed in some cases was unaware of the growing risk, the report said.

Reuters

EU mulls breaking up Google Europe’s new antitrust chief said she would take some time to decide on the next step of the four-year investigation into the Internet search leader

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he European Parliament is preparing a non-binding resolution that proposes splitting Google Inc’s search engine operations in Europe from the rest of its business as one possible option to rein in the Internet company’s dominance in the search market.

European politicians have grown increasingly concerned about Google’s and other American companies’ command of the Internet industry, and have sought ways to curb their power. A public call for a break-up would be the most far-reaching action proposed and a significant threat to Google’s business.

The draft motion does not mention Google or any specific search engine, though Google is by far the dominant

provider of such services in Europe with an estimated 90 percent market share. Earlier on Friday, the Financial Times described a draft motion as calling for a break-up of Google.

The motion seen by Reuters “calls on the Commission to consider proposals with the aim of unbundling search engines from other commercial services as one potential long-term solution” to levelling the competitive playing field.

Parliament has no power to initiate legislation and lacks the authority to break up corporations, and while the draft motion is a non-binding resolution, it would step up the pressure on the European Commission to act against Google.

Google already faces stern criticism

in Europe about everything from privacy to tax policies, and has been wrestling with a European court’s ruling that requires it to remove links from search results that individuals find objectionable.

The company has grown so large as to inspire distrust in many corners, with a chorus of public criticism from politicians and business executives.

“It’s a strong expression of the fact that things are going to change,” said Gary Reback, a U.S. attorney who has filed complaints on behalf of companies against Google over fair search. “The parliament doesn’t bind the commission for sure, but they have to listen.”

Reuters

Business Daily | 15

November 24, 2014

Opinion Business

wires

China’s monetary-policy surprise

Leading reports from Asia’s best business newspapers

THE TIMES OF INDIA As he gets down to prepare the 2015-16 Union Budget, finance minister Arun Jaitley said on Saturday that he does not favour burdening the salaried and middle class with more taxes, but would go after the evaders in widening the net. He also said he was against reducing the exemptions to widen the tax net. “Then that’s not my approach,” Jaitley told PTI. “So I am quite willing, if I had my way and I had more money in my pocket, I would like to expand. But today the revenue position is challenging,” he said

PHILSTAR Philippine economic growth likely slowed in the third quarter from an uptick in the previous three months, research firm Moody’s Analytics said. “The flow of new government infrastructure projects slowed, which may weigh on GDP (gross domestic product) growth,” Moody’s Analytics said in a research note. At the same time, the firm said “Industrial production, the best monthly gauge of overall growth, slowed in the three months to September.” Moody’s Analytics said economic output is seen at 5.9 percent for the third quarter, slower than the 6.4 percent growth in the second quarter.

THE JAPAN NEWS Skymark Airlines plans to start code-sharing with Japan Airlines, Skymark President Shinichi Nishikubo told reporters. Skymark, ranked third in the Japanese airline industry, aims to apply the code-sharing from February to 36 round-trip flights a day connecting Tokyo’s Haneda Airport with Shinchitose, Kobe, Fukuoka, Kagoshima and Naha airports, Nishikubo said. Nishikubo said the deal is only a trade between the two companies, indicating Skymark has no intention to receive any capital support from JAL. Skymark will apply by the end of this month to the transport ministry for approval of the code-sharing plan.

THE NEW ZEALAND HERALD There’s no easy way to say this: You’re eating too much chocolate, all of you.

Those are, roughly speaking, the words of two huge chocolate makers, Mars and Barry Callebaut. Chocolate deficits, whereby farmers produce less cocoa than the world eats, are becoming the norm. Last year, the world ate roughly 70,000 metric tons more cocoa than it produced.

By 2020, the two chocolatemakers warn that that number could swell to 1 million metric tons, a more than 14fold increase; by 2030, they think the deficit could reach 2 million metric tons.

I

Stephen S. Roach

Faculty member at Yale University and former Chairman of Morgan Stanley Asia

n economic policy, as in most other areas, actions speak louder than words. By cutting its benchmark policy interest rates, the People’s Bank of China (PBOC) has underscored the tactical focus of the government’s stabilization policy, which aims to put a floor of around 7% on GDP growth.

Achieving this goal will be no small feat. China’s economy is facing structural headwinds arising from the shift to a new model of services- and consumer-led growth, and cyclical pressure, as a tough global environment puts downward pressure on the old export and investment-led model.

The cyclical challenges, in particular, are proving to be more severe than anticipated. Though exports have declined considerably from their pre-crisis peak of 35% of GDP, they continue to account for about 24%, leaving China exposed to the global growth cycle – especially to markets in the developed world, where demand is exceptionally weak.

Indeed, 42% of Chinese exports go to Europe, the United States, and Japan – three economies that are flirting with secular stagnation. And Europe, China’s largest export market, has struggled the most.

Given that development strategies begin to fail when economies reach middle-income status – a threshold that China is rapidly approaching – China cannot afford to allow mounting cyclical risks to undermine its structural transformation. Modern history shows that the best way for a developing country to become ensnared in the dreaded “middle-income trap” is to cling to its old model for too long.

The fact is that only structural transformation can lift a middle-income developing country to high-income developed status.

Fortunately, China’s leaders rec-

ognize this, and are committed to achieving it.

President Xi Jinping has been spearheading the effort to press ahead with reform and rebalancing. A year ago, at the Third Plenary Session of the 18th Central Committee of the Chinese Communist Party (CCP), Xi and his team created the country’s most ambitious economic-reform agenda in 35 years. This, together with the 12th Five-Year Plan of 2011, highlights the authorities’

Moreover, unlike major developed economies, most of which have used up all of their conventional monetary-policy ammunition by reducing their policy interest rates to zero, China has plenty of monetary stimulus on reserve to address cyclical disruptions

commitment to bolstering the services sector and domestic consumption.

At the same time, China has been shifting responsibility for implementing reform from its antiquated planning apparatus (the National Development and Reform Commission) to a more effective market-based mechanism embedded in the CCP’s structure (the Leading Small Group for Comprehensively Deepening Reforms).

Add to that Xi’s unprecedented anti-corruption campaign, and there is no turning back on China’s road to rebalancing and structural change.

But the risk of cyclical disruptions, such as an unexpected decline in global economic growth, remains.

This raises an important tactical challenge for China. How can it stay the reform course without suffering a significant growth slowdown in the short term?

This is not the first time that China has confronted this challenge; indeed, the Great Recession of 2008-2009 pushed China to the brink of recession. With global trade collapsing and Chinese export demand having plummeted from 26% annual growth in mid2008 to a 27% contraction by early 2009, the government moved aggressively to inject CN¥4 trillion (US$586 billion) into the economy. Though this enabled growth to recover by the end of 2009, it also contributed to new problems, including excessive debt, a property-market overhang, and mounting local-government financial risk.

The last thing China needs is more fiscal stimulus. Today’s cyclical disruption pales in comparison to that of 2008-2009, and, unlike the fiscally reckless developed economies, China recognizes excessive debt as a threat to sustainable growth and development.

Moreover, unlike major de-

veloped economies, most of which have used up all of their conventional monetary-policy ammunition by reducing their policy interest rates to zero, China has plenty of monetary stimulus on reserve to address cyclical disruptions. In these circumstances, it makes sense for China to lean more on monetary policy than on fiscal expansion.

Nonetheless, the PBOC’s tactical decision is not without potential pitfalls – not least because it encourages the extension of more credit at a time when China is trying to wean itself from debt-intensive growth. A key challenge will be to avoid escalating credit risk, which could undermine the process of reform and rebalancing.

From the start, China’s leaders knew that the interaction between structural transformation and the business cycle would be complicated. As former Premier Wen Jiabao noted nearly eight years ago, China’s economic growth had become increasingly “unstable, unbalanced, uncoordinated, and unsustainable.” The longer China delayed addressing its problems, the more intractable the solution became.

Xi and his colleagues are resolute in remaining on course to rebalance the Chinese economy, while remaining acutely aware of the near-term cyclical risks. After all, China’s vulnerability to such risks is rooted in its old growth model, which was allowed to remain in place for far too long.

With the recent monetary easing, the Chinese authorities seem to be drawing a line in the sand to prevent an excessive drop in growth, suggesting that they view a cyclical disruption as a real threat to the country’s longerterm structural-reform agenda.

To the extent that those fears persist, additional monetary easing can be expected.

Project Syndicate

16 | Business Daily

November 24, 2014

Closing Indian minister pledges “second-generation” reforms

China seen reducing rates again after first cut

India’s Finance Minister Arun Jaitley (pictured in the centre) promised yesterday to unveil a whole series of “second-generation” reforms to try to kick-start the stuttering economy. Jaitley said the reforms that would be unveiled in the budget early next year would help the country cross the six percent growth mark in 201516. “The country needs a larger opening out in more sectors... I think we have a lot of exciting times ahead of us and I do see investments coming into India,” he said.

China is poised to deliver deeper interest rate cuts after Friday’s unexpected decision to reduce borrowing costs for the first time since 2012. With the world’s secondlargest economy on track to record its weakest annual growth since 1990, economists at JPMorgan Chase & Co., Barclays Plc. and UBS AG all said the People’s Bank of China will act again to shore-up demand. Global stocks, oil and metal prices all rose as China sided with the euro-area and Japan in delivering fresh stimulus.

OPEC divided on oil output before crucial meeting Ahead of the meeting, the world’s top oil producer Saudi Arabia has cut what it charges US customers Ben Perry

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he OPEC oil producers cartel will hold one of its toughest and most significant meetings in recent years as, faced with sliding prices, its members must contemplate whether to cut output.

Ahead of Thursday’s meeting of the Organization of Petroleum Exporting Countries in Vienna, home

to the cartel’s headquarters, its dozen member countries are split on what direction to take after a 30 percent drop in crude prices since June has slashed revenues.

OPEC’s poorer members, led

by Venezuela and Ecuador, have called publicly for a cut in output, while Iran has hinted at a need to

reduce production.

But the cartel’s Gulf members, led by kingpin Saudi Arabia, are rejecting calls to pump out less oil unless they are guaranteed market share in the highly competitive arena, according to analysts.

Separately, Russia -- which is not a member of OPEC but is nevertheless a major crude producer -- declared Friday that it was considering cutting its oil production in a bid to revive falling prices.

OPEC produces about one third of global crude at more than 30 million barrels per day.

According to the International Energy Agency, which advises on energy policy, OPEC pumped out 30.6 million barrels per day in October -- above its 30 million bpd target.

“The next meeting of the Organization of Petroleum Exporting Countries... should be the most interesting since the change from individual quotas to a group target in early 2012,” said Tom Pugh, an analyst at Capital Economics research group.

“The key driver (behind tumbling prices) has been increasing supply, although other triggers for Brent’s slump from US$115 in June have included weak demand, particularly from Europe and China, and the strength of the US dollar. The decline

has probably also been compounded by panic selling by producers and investors.”

On Friday, the price of benchmark Brent North crude oil traded at US$79.56 a barrel.

US output surge Rather than cut its official output ceiling, OPEC could decide to reduce the amount it is over-producing.

“The minimum consensus that appears likely to be reached at OPEC’s meeting is a commitment to better comply with the official production target of 30 million barrels per day,” Commerzbank analysts said in a note to clients.

Ahead of the meeting, the world’s top oil producer Saudi Arabia has cut what it charges US customers, in a move seen aimed at maintaining its market share as it is faced with increasing competition from oil extracted from shale rock in the United States.

Pugh said that “any cut in the cartel’s production target will simply be as a response to lower demand for its oil, rather than a concerted attempt to push up prices”.

Faced with surging US output -crude production in the world’s biggest economy is set to hit a 45-year high of 9.5 million barrels a day in 2015 -- Venezuela has called for a meeting of OPEC and non-OPEC countries to address the slide in oil prices.

Venezuela depends on crude exports for 96 percent of its foreign currency, and the price crunch has added to the headaches of a government struggling to halt rampant inflation and ease severe shortages of food and medicine.

“What is for certain is that the price is currently trying to find a new equilibrium after a number of years with crude oil trading above 100 dollars,” said Saxo Bank analyst Ole Hansen.

AFP

Enhancing connectivity crucial for SAARC

Shopping malls mark Angola’s middle class rising

Enhancing connectivity is crucial to allow a smooth cross-border flow of goods, services, capital and people within the South Asian Association for Regional Cooperation (SAARC) region, a Nepalese official said yesterday.

Shanker Das Bairagi, acting foreign secretary, made the remarks at the 41st session of the Standing Committee of the SAARC which began here yesterday.

The official said, “This (enhancing connectivity) can be a game- changer in realizing structural transformation in South Asia’s social-economic landscape.”

The two-day session will ratify the agenda for the 18th SAARC Summit, endorsed by the Programming Committee of the Joint- Secretary-level that met on Saturday. Any undecided issues will be finalized following deliberations at the SAARC Council of Ministers slated for November 25.

At the Standing Committee, delegates will review significant issues concerning trade, information technology, poverty alleviation, energy security and regional connectivity in the context of South Asia.

SAARC countries agreed that to move ahead, the region needs low cost, energy efficient and environmentally sustainable transportation.

“It’s a great joy for Angolans,” says Luciano Manuel, nudging his trolley through a huge supermarket in the Angolan capital of Luanda.

During almost 30 years of civil war, “we’ve never had a supermarket like this - it’s a undeniable gain, and another sign of Angola’s development,” he said, combing the aisles of Kero, a local hypermarket chain.

Supermarkets and shopping malls are signs of Angola’s rising middle class as the southwest African nation’s economy has grown rapidly in the last decade thanks to its large oil resources.

Retailer Kero has jumped on the burgeoning prosperity, opening a dozen branches in the past four years with two more set to open soon, bolstering a local workforce of 5,000.

Domestic products make up 30 percent of total sales, creating more local jobs, according to a recent study by consultancy firm Deloitte.

Not far from the polished floors and well-lit aisles of the supermarket, at the far end of the parking lot, a group of women sit back in plastic chairs under a tree.

China’s top legislator Zhang Dejiang and his Peruvian counterpart, Ana Maria Solorzano, vowed Friday to boost relations between their countries’ legislatures.

Zhang, chairman of the Standing Committee of the National People’s Congress (NPC), said exchanges between legislatures are an important part of China-Peru relations.

Zhang said the NPC would like to work with the Peruvian Congress to strengthen communication and exchanges on state governance and the rule of law, promote practical cooperation in all fields and consolidate the foundation for bilateral relations.

For her part, Solorzano agreed with Zhang’s proposal on developing legislative ties, saying Zhang’s visit is significant for deepening bilateral friendship and ushers in a new stage of legislative cooperation between the two countries.

The Peruvian Congress would like to enhance regular consultations and information sharing with the NPC, expand exchanges at all levels and pave the way for bilateral practical cooperation, she said.

After the talks, Solorzano, on behalf of the Peruvian Congress, awarded Zhang a decoration.

Xinhua

AFP

Xinhua

China, Peru vow to boost ties