MOP 6.00 Closing editor: Joanne Kuai Number 713 Thursday January 22, 2015
Publisher: Paulo A. Azevedo
31.5 million visitor arrivals post new record
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Year III
GTO has plenty to celebrate. But much to do. Macau Government Tourist Office has announced a record-breaking 31.5 million visitor arrivals in 2014. But the mix of visitors and length of stay need fine tuning. MGTO director Maria Helena de Senna Fernandes says diversification will top this year’s agenda. And that the gov’t is to conduct a large scale study, costing up to 20 million patacas. This ‘scientific’ blueprint will lay out medium and long-term tourism plans for the MSAR, said the MGTO head PAGE 3
Rental pain to continue
Wynn Resorts slash Steve Wynn’s annual salary PAGE 5
L’Occitane sees fastest growing market in Hong Kong PAGE 6
China becomes capital exporter for first time PAGE 10
HSI - Movers January 21
Name
Family heirloom It’s been a tempestuous ride. And the storm still hasn’t subsided. Novo Banco Asia (New Bank Asia), formerly known as BESOR, has a mighty task ahead. Essentially trying to reassure investors and the market that its financial soundness was never in danger. Sources tell Business Daily that the bank is facing a “pre-break and was driving itself towards ungovernability”
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PAGES
Macau’s residential and office sectors continued to grow in 2014. On the back of limited supply and the increasing number of new corporations registering in the city. Meanwhile, the retail property market showed signs of slowdown amid a fall in the city’s gaming revenue. Property agency JLL expects Macau’s real estate market to grow at a good clip in 2015. But believes mass renters will be driven over the border
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Freefall
Long term options
Comparisons are sometimes odious. But there’s no escaping this one. Wells Fargo says it expects Macau’s gaming revenue to drop a record 35 per cent in February y-o-y. Credit Suisse says some HK$2 bln in casino profits evaporated in the last quarter. Wynn Macau is expected to take the biggest hit
In just one month. China will launch its first stock option. Authorities, however, reveal that stricter trading conditions may mean slower development in the short term. But predict a brilliant future in the long run
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%Day
China Merchants Hold
5.95
China Resources Land
4.41
China Mobile Ltd
4.02
Tencent Holdings Ltd
3.71
Ping An Insurance Gr
3.59
Hutchison Whampoa L
-0.31
Power Assets Holding
-0.32
MTR Corp Ltd
-0.60
Hong Kong & China Ga
-1.01
Swire Pacific Ltd
-1.45
Source: Bloomberg
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2 | Business Daily
January 22, 2015
Macau Melco Crown: Industrial accident will not affect expansion The casino operator running City of Dreams in Cotai, Melco Crown Entertainment Ltd., said yesterday that the fatal industrial accident that occurred on Tuesday at the property’s retail arcade expansion site would not affect the progress of the construction works. ‘We are aware that the contractor is closely working with local authorities for the investigation. The temporary suspension of construction will not affect progress,’ Melco Crown said in its statement. On Tuesday morning, a 29-year-old local construction worker operating a lifting appliance on the second floor of the expansion site fell to his death, which was due to alleged overlifting of the appliance he had been using at the time, the Labour Affairs Bureau and local police reported.
Rental prices threaten to drive mass market renters out of Macau In 2014, mass and medium residential rental prices increased 7.1 per cent, according to Jones Lang LaSalle. The Managing Director of the company in Macau, Gregory Ku, says whether they like it or not these consumers will soon have no option but to live in Zhuhai or Hengqin João Santos Filipe
Jsfilipe@macaubusinessdaily.com
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ast year, the rental prices of mass and medium residences in Macau increased 12.3 per cent and according to the prediction of Jones Lang LaSalle (JLL) will increase a further 5 to 10 per cent this year. The Managing Director of JLL in Macau, Gregory Ku, said yesterday this will drive this segment
of consumer out of Macau into the waiting arms of Zhuhai and Hengqin. “Macau cannot accommodate the demand that is coming in. In the following years, at least 45,000 workers will be brought to Macau. So if you ask me, the only solution is Zhuhai and Hengqin Island. Even if you [mass market consumer] do not like it, you
cent, the mass and medium segment increased 12.3 per cent. In terms of capital value, high end residential increased 19.7 per cent, while mass and medium jumped 17.4 per cent. Another solution for people that can be included in the mass and medium sector is to share residences with more people. “There is a trend in the market for people to share the same place. For instance, a two-bedroom house in Source: JLL Macau Property Market Data Taipa will have three to four people sharing it to make it more affordable. Residential Market Probably someone could develop a mobile application for people to share High End Residential 2013 Y-o-Y 2014 Y-o-Y 2015 Prediction homes in Macau”, Mr. Ku added. Rental Index 17.70% 7.10% 5% In relation to the office market, Capital Value Index 31.90% 19.70% Stable rental prices for overall offices in Mass and Medium Residential 2013 Y-o-Y 2014 Y-o-Y Macau increased 61.5 per cent, while the capital value jumped 54.1 per cent. Rental Index 20.60% 12.30% 5% to 10% Concerning Grade A offices, rental Capital Value Index 37.50% 17.40% Stable prices jumped 46.6 per cent, while Retail Property Market capital value climbed 54.2 per cent. “The market in terms of rental High Street Shops 2013 Y-o-Y 2014 Y-o-Y value and capital value has been growing very strongly due to many Rental Index 6.20% -3.30% -10% reasons and the number one is Capital Value Index 31.30% 1.40% -15% to -20% demand”, Oliver Tong, Senior Office Market Manager of JLL at Macau, explained. “On the other side supply is highly 2013 Y-o-Y 2014 Y-o-Y 2015 Prediction limited. The vacancy rate is still very Grade A offices Overall Grade A offices Overall low, only 6 per cent”, he said. Looking at this year, JLL expects Rental Index 17.70% 20.20% 46.60% 61.50% 5% to 10% the capital value of all segments but Capital Value Index 47.80% 68.40% 54.20% 54.10% Stable retail – which is expected to drop 15 to 20 per cent – to remain stable. In relation to rent prices in the residential mass and medium segment and for basket used to calculate inflation here offices they are forecast to grow 5 with a combined weight of 57 per cent. to 10 per cent. Residential highA price hike in on of those components end rents will increase slowly at a 5 drives overall inflation value up. per cent rate. On the other side, the Housing and fuel prices increased retail rental market is seen by JLL 11.93 per cent in 2014, while food and as dropping 10 per cent. non-alcoholic beverages went up 6.11 Gregory Ku also commented on per cent. These were the two biggest the impact of a cap on the increase rices in Macau increased stood at 6.05 per cent, versus 5.5 increases of the eleven categories of of rental prices, which is going to be 6.05 per cent last year, the per cent in 2013 and 6.11 per cent goods and services tracked by the proposed at the Legislative Assembly biggest jump since 2012 after in 2012. statistics bureau. The only drop last by members Si Ka Lon, Song Pek rent costs went up by almost 12 per The main drivers for this growth year was in communication services as Key and Gabriel Tong. cent and restaurants charged clients were ‘higher rentals for dwellings prices fell 0.3 per cent. In December “JLL supports a free market. This more. According to data revealed and rising charges for eating out’, the alone, overall prices rose 0.79 per cent kind of cap will seriously harm the by the Statistics and Census Service report said. Food and housing costs compared to November and 5.72 per market making people unwilling to yesterday, the inflation rate for 2014 are the largest components of the cent since a year ago. invest in Macau”, he said.
Rents and restaurants drive inflation to 2-year high
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will have to go there. There is not a chance for you to get a home in Macau”, Mr. Ku said after being asked about the prospects for mass market consumers in the Special Administrative Region. JLL presented yesterday its Macau Year-end Property Review, which claims that while in 2014 the rentals for high end residences increased 7.1 per
Business Daily | 3
January 22, 2015
Macau
2014 visitor arrivals top Fading casino 32 mln, growth foreseen freshness cited by MGTO head for fewer The city welcomed some 31.5 million visitors last year. The Tourist Office says the recordbreaking number may keep growing, indicating that diversification is the key work for the year Kam Leong
kamleong@macaubusinessdaily.com
Hong Kong visitors
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ourists from Hong Kong have been losing interest in Macau since 2011. The latest data from the Macau Government Tourist Office reveals that visitor arrivals from Hong Kong declined by 5 per cent year-on-year in 2014, which director Maria Helena de Senna Fernandes indicated was due to the freshness of Macau’s casino projects for Hong Kong people losing its lustre. “They might have fresh interests in coming to Macau a few years ago when many big [casino] projects were opened thus so many of them have come. [However,] they may be thinking currently what [in Macau] can still attract them,” Ms. Fernandes
said. In 2014, the total number of visitors from Hong Kong reached only 6.43 million, the lowest on record since 2011, when the visitor numbers from there topped more than 7 million. However, numbers have started falling off since then. In 2013, visitor arrivals from Hong Kong had already posted a decrease of nearly11 per cent compared to 2011, reaching only 6.8 million visitors. “Now we’re trying to promote in Hong Kong that Macau still has many places worth going to in addition to hotels,” she said, claiming the difficulty for Hong Kong people to book hotel rooms in Macau is another factor driving the continuous drop. K.L.
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acau received a record-breaking number of visitors in 2014 – more than 31.5 million visitor arrivals, which is a year-on-year jump of 7.5 per cent, director of Macau Government Tourist Office (MGTO) Maria Helena de Senna Fernandes said in an annual review of the sector yesterday, claiming the city may welcome yet more tourists this year. The director of MGTO indicated that the growth of 7.5 per cent registered exceeded her expectations; nevertheless, she still believes the city will receive 5 per cent more per cent tourists this year. Asked by reporters whether the number of tourists had exceeded the caoacity of the city, Ms. Fernandes said that the government is aiming to increase the length of stay of tourists and the number of international visitors rather than solely chasing for big growth in tourist numbers, despite given the fact that the capacity of the city may expand in tandem with the rise of hotel rooms in the city.
Mainlanders dominating In fact, in 2014, the rise of 7.5 per cent in the total number of tourist visitations was again attributable to mainland visitors, who surpassed 28 million with a
year-on-year rise of 8.5 per cent, remaining the biggest source of tourists to Macau. Hong Kong and Taiwan, meanwhile, remained the second and third biggest source markets for the city, although the total number of visitors both registered drops by some year-on-year 5 per cent and 4.7 per cent, amounting to 6.43 million and 953,000, respectively. On the other hand, the city saw fewer international visitors last year, with the number dropping 1.1 per cent year-on-year last year. Meanwhile, nearly half of the tourists last year – some 14.5 million - stayed overnight for 1.9 days, an increase of 2.1 per cent yearon-year. In addition, some 12 million visitors arrived in Macau on group tours in 2014, representing a growth of 26 per cent year-on-year.
Diversification necessary For 2015, the director indicated that diversification will be one of the chief tasks of the Office. “Diversification is definitely the key work for us in terms of developing the tourism source market, and on the other hand diversifying the products that we can offer. You can’t ask visitors to stay longer without [offering] new things for them,” Ms.
Fernandes said. She also said that the Office will develop more tourism spots for tourists to push the economy of different communities in Macau, as well as to change the structure of the city’s tourists.
CNY visitor arrivals to increase by 5 pct
Macau Tourism Industry Development Master Plan Meanwhile, Ms. Fernandes said the government is to conduct a large scale study on the city’s tourism this year, costing up to 20 million patacas. The study - titled Macau Tourism Industry Development Master Plan will be a ‘scientific’ blueprint for the medium and long-term tourism plans for the Special Administrative Region, according to the MGTO head. “There will be many fields included in such a master plan, such as re-evaluating our current conditions, [studying] what products or facilities that we have to develop in the future. In addition, we will study the problem of capacity,” Ms Fernandes said. According to her, more than 10 companies from Macau, Hong Kong and overseas had already purchased the bidding documents. The deadline for placing bids is March 2; MGTO will start evaluating the bids the following day.
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n the sidelines of yesterday’s annual review of the tourism industry, Maria Helena de Senna Fernandes, director of the Macau Government Tourist Office (MGTO), anticipated that the tourist volume during the coming Chinese New Year will increase by 5 per cent year-on-year. Last year, total visitor arrivals during the 7-day Chinese New Year reached nearly 1 million, of which mainland tourists accounted for between 70 and 80
per cent, according to Ms. Fernandes. If the estimation of the MGTO head holds true some 105 million visitors will come to the city in the seven days starting February 19. She stressed, however, that this is only a preliminary estimation by MGTO, saying that more confirmed data will only be known once the Office meets with Guangdong Province, which accounted for 42.4 per cent of total mainland visitors last year. K.L
4 | Business Daily
January 22, 2015
Macau
Secretary: Amended budget law approval by April, 2016 The new budget law, which seeks to list clearer infrastructure expenses, could apply to the budget-making for 2017 if the Assembly pass it by next year Stephanie Lai
sw.lai@macaubusinessdaily.com
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ecretary for Economy and Finance of Macau Lionel Leong Vai Tac said yesterday that he hoped that the amendment to the law governing budget-making for the local administration could be passed before April, 2016. The legal discussion over the amendment of budget framework law, which aims to list all budgeted expenditure on major infrastructure projects and investment plans, started last year between the Legislative Assembly and the former Secretary for Economy and Finance Francis Tam Pak Yuen. Speaking to local media on the sidelines of a sub-committee meeting at the Assembly yesterday, the new Secretary noted that the “ideal” schedule for the approval of the bill is before April, 2016. If such a schedule can be realised,
the amended budget law can apply to the closing of budget for the financial year 2016 and the forming of the public finance plan for 2017, Mr. Leong said. The Secretary added that a review of the amendment content of the bill should be finalised in the first quarter of this year, followed by a collection of opinions from the legal affairs departments and other government bodies in the subsequent quarter. Currently, the official disclosure of the annual budget plan only includes regular and capital expenditure without a detailed description of the cost of major infrastructure projects – a problem that the amendment of the budget framework law is set to fix. Another major direction that the government would like to pursue for the amendment is that it may stipulate that 1 to 3 per cent of the annual budgeted expense be reserved
Studio City yet to apply for hotel licence, MGTO head reveals
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acau Government Tourist Office (MGTO) director Maria Helena de Senna Fernandes has revealed that Melco Crown Entertainment Ltd.’s new project – Studio City - has not yet submitted an application for a hotel licence, despite the fact that the project is slated to open during the second half of this year. “Studio City announced their plans last week but they have not officially submitted their licence application. However, obviously, we know about this plan. I believe they are waiting until their construction [is] more or less prepared before they hand in their application for licences,” the MGTO head said yesterday. According to Ms. Fernandes, MGTO has received applications for hotel licences from 13 establishments, which will provide a total of 2,700 rooms to the city in the future but she said that not all of these establishments are big projects. “We aren’t expecting a huge
number of rooms but a few thousand rooms will be added this year. We’re expecting most of the bigger institutions or bigger facilities will come probably only in 2016 and 2017,” she added.
Hotel rooms rate up 8.6 pct y-o-y In fact, last year, although the city did not see a great increase in the number of hotel rooms the average cost of a room jumped 8.6 per cent year-on-year. According to MGTO, the average room rate of 3 to 5-star hotels in the city cost US$199 per night last year, while there were a total of 28,892 rooms in 103 hotel establishments, which is only a slight increase of 0.3 per cent year-on-year. Meanwhile, the average occupancy rate of hotel establishments was at 86.5 per cent in 2014, a growth of 3.4 per cent year-on-year. K.L.
for any “sudden” adjustments of major public project costs or other emergency expenses. The pressure on the incumbent leading officials is the speedy drafting of the budget bill as Chief Executive Fernando Chui Sai On pledged on Tuesday that the government was studying the possibility of the Legislative Assembly having the power to monitor the costs of largescale public infrastructure works here. Mr. Chui’s remarks follow a scathing report released by the Audit Commission on Monday which disclosed that the city’s estimate of the light rapid transit projected cost at MOP4.2 billion in 2007 had ballooned to MOP14.3 billion five years later. The report also criticised the Transportation Infrastructure Office’s failure to keep the budget for the project up to date.
MdME inks partnership with Employment Law Alliance
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he Macau Law Firm MdME has become a member of the Employment Law Alliance (ELA), a network of labour, employment and immigration lawyers. The announcement was made yesterday by ELA. “The Employment Law Alliance has developed a global reputation as the premier management-side labour and employment law firm network,” said Rui Pinto Proença, partner at MdME, in the statment. “Providing our clients access to global resources is critical. In turn, we welcome the opportunity to offer a seamless, high level of service to clients of our fellow member firms.” Besides operating in the Special Administrative Region, the law firm also has associated offices in Angola, Portugal and Mozambique. “Having a presence in Macau is critical to our objective of providing gaming and hospitality companies along with other important business sectors with first class legal services around the globe. As the world’s largest gaming market, we felt it was imperative to have a go-to law firm based in Macao who can assist our clients,” said Stephen J. Hirschfeld, Chief Executive Officer of ELA. “From the moment I first met with the folks at MdME, I knew they would be perfect for us. Their lawyers are incredibly smart, creative and innovative, and they have vast experience working with sophisticated multinational companies”, he added. ELA, which is represented in more than 135 countries, expects with this partnership to tackle the future challenges of Macau’s labour market, which is expected to increase substantially with the second wave of casino openings in Cotai. J.S.F.
Business Daily | 5
January 22, 2015
Macau
Profits to drop 22 pct in 4Q, February revenue down 35 pct Some HK$2 billion was wiped off casino operators’ profits in the last quarter, with Wynn Macau expected to suffer the biggest hit, Credit Suisse says. Wells Fargo predicts gaming revenues will plummet 35 per cent in February Luís Gonçalves
Luis.goncalves@macaubusinessdaily.com
terms of revenue performance, Melco Crown is likely to emerge the winner of the quarter, while Wynn Macau will register more losses. According to Credit Suisse, Melco Crown will be the only operator in Macau to register growth in revenues (up 3 per cent) on a quarterly basis. ‘More favourable luck at City of Dreams (4Q14E: 3.03%, versus 3Q14: 2.70%); ramping up of VIP business (VIP volume +4% Q-o-Q in 4Q, versus industry’s -8%) and continuous focus on improving customer yield’, are the main reasons. With revenues expected to remain weak in the upcoming months and casino operators still struggling with more costs on staff and the new properties being built, profit margins will continue to be under pressure at least until mid2015. ‘In our view, operators only started revisiting their cost structure aggressively towards end-2014 and the benefit of better cost control would take time to flow through into margin’.
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he next earning season will be a tough one for casino operators as companies will probably show investors a performance miles away from previous quarters. Even if historically fourth quarter results (released around March and April) are overshadowed by the year figures, this time the market will assuredly take a closer look, in particular at the impact of 2014’s second half downturn with its diminishing revenues and increasing staff costs. According to a report released yesterday by Credit Suisse, the current gaming crisis here has already cost billions in profits and revenues. In the fourth quarter, the six Macau operators made a total of HK$15.6 billion in profits, according to the
bank’s estimations. That’s a 22 per cent drop year-on-year and a 12 per cent decline compared to the third quarter. In the last three months of last year casinos in Macau ‘lost’ HK$2 billion in profits compared to the previous quarter. On a year-on-year basis, Wynn Macau and Melco Crown are set to take the biggest hit. Credit Suisse estimates profits of the former to go down 34 per cent and the latter by 31 per cent. On the other hand, Sands Macau will register the lowest decline, with earnings down 10 per cent.
Margins pressured This performance is linked to a record decrease in revenues and
upward pressure in costs for casinos. Gaming revenues went down in the fourth quarter 25 per cent from a year ago, almost four times more than in the third quarter (7 per cent drop). In sequential terms, revenues diminished 9 per cent. ‘Overall, we estimate the industry EBITDA to fall by 12% Q-o-Q or -22% Y-o-Y in 4Q14 as a result of the less favourable revenue mix and operating deleverage on sharp revenue deceleration’, wrote Credit Suisse. The industry uses as benchmark for profits the EBITDA or earnings minus interest, taxes, depreciation, amortization. EBITDA is known as the operational profit of a company. The Swiss bank says that in
February record In a note to clients, Wells Fargo says it expects gaming revenues to drop a record 35 per cent in February due to the comparisons with last year, one of the best months ever for the industry here. The Chinese New Year will generate a jump in February revenues in monthly terms but not on a year-on-basis. The US bank estimates revenues will go up 12 per cent from January based on past seasonal trends. For this month, Wells Fargo is predicting a decline of 17 to 18 per cent in gaming revenues. January daily revenues today stand at MOP740 million, one per cent less compared to December.
Steve Wynn’s salary slashed US$1.5 million
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ynn Resorts shareholders have agreed to renew the contract with its CEO, Steve Wynn, offering him a twoyear extension, less money and US$250,000 to use in personal expenses with the company’s aircraft. In a filing lodged with the New York Stock Exchange, where the parent company of Wynn Macau is listed, Wynn Resorts says it has made its seventh amendment to Steve Wynn’s contract, prolonging it for two more years until October 24, 2022. The new agreement will mean less base salary for the gaming tycoon, which will be reduced to US$2.5 million per year from the previous
US$4million,meaning a 37.5 per cent cut. That’s US$1.5 million less every year or US$125,000 each month. Other terms of the new contract stipulate the end of the current aircraft time-sharing agreement between the company and Mr. Wynn, an agreement that dates from 2002. Starting this year, the Wynn CEO will have to reimburse some expenses for any of his personal use of the company’s aircraft. But, the compensation committee of Wynn Resorts ‘approved a $250,000 credit per calendar year that Mr. Wynn may use to offset his reimbursement obligations, starting with the 2015 calendar year’.
6 | Business Daily
January 22, 2015
Macau Brands
Trends
Sexy shades of grey Raquel Dias newsdesk@macaubusinessdaily.com
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ur times have been accused of nearly everything. Most of all, they has been accused of being a shallow, imagedbased era. Gone are the days of true insight, the long rainy afternoons with a book on your lap. The time when women were not sexual objects, and when old people were valued for their knowledge and wisdom. Who hasn’t heard that speech? Whether it’s true or not, something’s changing. Major brands are now using considerably older women in their advertising. Is it for the shock and impact the images cause or merely because, let’s face it, you need to be approaching your 60’s to be able to purchase some of the designers’ fashion whims? Maybe something’s changing, after all. 1- Dolce & Gabbana chooses three unknown old girls to showcase their ever-growing love of florals in their 2015/16 Spring collection. 2- Saint Laurent (former Yves Saint Laurent) goes for celebrity musician Joni Mitchell to show that style really is ageless. 3- Celine shows that fashion doesn’t have to be shallow by featuring 80-year-old French writer Joan Didion as the new face of the house. So ladies, it appears we’re reaching a brave new world. A few more years and grey hair will be as sexy for us as it is for the gentlemen.
China, Hong Kong fastest growing L’Occitane market
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rench cosmetics retailer L’Occitane International S.A. has posted net sales increases of 9.8 per cent for the second through fourth quarters of last year, compared to a growth of 0.3 per cent in the same period a year earlier. In a filing with the Hong Kong Stock Exchange, the company said its biggest growth markets were Hong Kong, China, Japan and the United States, all of which boosted growth.
In Hong Kong – which strategically includes Macau – sales went up 11.1 per cent to 97.8 million euros (MOP903.9 million, US$113.2 million) from 82.3 million euros a year earlier. Four new stores were opened in Hong Kong last year, bringing the total number of own retail stores to 36, three of which are in Macau. Japan was the company’s single fastest growing market with total net sales up 15.2 per cent to 133.9
million euros in the nine months ended December 31, from 128.9 million euros in the same period a year earlier. In the United States, net sales increased 13.4 per cent to 117.8 million euros, while in France, net sales totalled 71.7 million euros, an 8.1 per cent increase. Overall company net sales totalled 882.3 million euros for the nine months ended December 31. S.F.
Ultra Vision buys 70pct of Gilman Group
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ltra Vision Investments Ltd. is to acquire 70 per cent share of Gilman Group Ltd. for HK$295.3 million, parent company Dah Chong Hong Holdings Ltd. (DCH Holdings) announced in a filing yesterday with the Hong Kong Stock Exchange. Both companies – Ultra Vision and Gilman Group – are whollyowned subsidiaries of DCH Holdings. DCH Holdings said the acquisition would ‘strengthen the
group’s market position and expand its penetration as a leading electrical and home appliance distributor in Hong Kong as well as in [mainland] China,’ according to the filing. Gilman Group Ltd. is one of the leading distributors of electrical and home appliances in Hong Kong with footprints in mainland China and Macau as well as Southeast Asia. The agreement is also subject to an upward adjustment of HK$10
Corporate A Journey of True Love From ‘The first date…’ to ‘Everlasting…’, all romantic journeys reign supreme at MGM MACAU. This Valentine’s Day, lovers can savour a perfect 6-course, candlelight Valentine’s Dinner at Aux Beaux Arts and an intimate spa treatment at Six Senses Spa – a complete and truly enthralling experience begins here. Chef de Cuisine Elie Khalife and his team at Aux Beaux Arts recreates that mood through exceptional gastronomy with a special menu of Parisian delicacies, creatively named after the different stages of the love journey. Also pamper your loved one and yourself with a purely sensual and tranquil getaway at Six Senses Spa. Begin with a soothing foot care ritual and a body polish to restore the skin’s naturally healthy glow, and enjoy a holistic massage afterwards to relax tightened muscles. Next, hydrate and rejuvenate with a Six Senses Spa facial. Complete the journey with a glass of champagne and chocolates, followed by an invigorating dip in the Vitality Pool.
million, according to the filing, and the agreement is to be fully completed by February 27. ‘With the growing demand for quality electrical and home appliances, especially in the premium and luxury sector, the [company’s] directors believe the transaction is a strategic move for the group [DCH Holdings] to accelerate the growth of its electrical and home appliances business,’ the filing added.
Business Daily | 7
January 22, 2015
Macau
Esprit 2014 H2 net profits down Footwear retailer S. Culture also expects a significant drop in its 2014 net profit Sara Farr
sarafarr@macaubusinessdaily.com
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lobal clothing retailer Esprit Holdings Ltd. expects net profit for the second half of last year to drop between 42 and 52 per cent, the company said in a filing with the Hong Kong Stock Exchange after trading hours Tuesday night. The preliminary review of the company’s unaudited results shows that in the six months ended December 31 net profit is expected to range between HK$40 million and HK$50 million, compared to HK$95 million in the same period a year earlier. Esprit says the two primary reasons for these results are the ‘special return agreements in China to address aged inventory in the wholesale channel, which although completed in the first quarter, also impacted the top line performance,’ and ‘prolonged unusually warm weather in Europe… resulting in much lower than expected sales of Autumn/Winter products.’ Despite the drop in net profit, the company said it is devoting ‘maximum efforts’ to improve Esprit products ‘by implementing faster and more cost efficient product development and supply chain processes as part of a vertical business model.’ ‘The Spring/Summer 2015 collections, the first that have been entirely developed under the New
Business Model, will arrive at stores from February onward,’ the filing reads.
More net profit decrease Meanwhile, footwear retailer S. Culture International Holding has announced it expects a significant decrease of 45 per cent in net profit for the whole of 2014. The reason
for the drop in net profit, according to a company filing with the Hong Kong Stock Exchange, is due to an ‘unexpected deterioration of the general atmosphere of the consumer market in Hong Kong commencing in the third quarter of 2014 leading up to the Occupy Central event and its negative lingering effect until the fourth quarter of 2014.’
The company also increased the number of retail outlets to its existing markets, which now total 122. This is 10 more than the company had in the same period a year earlier. Last year, these outlets had yet to break even. Despite the decrease in net profit, the company did record a 1.3 per cent growth in same-store sales in the fourth quarter of last year, the filing added.
8 | Business Daily
January 22, 2015
Macau
The new life of New Bank Asia A victim of the collapse of its mother company in Portugal, Macau’s Banco Espírito Santo do Oriente (BESOR) lost billions in deposits and will have residual operational profits in 2014. Renamed Novo Banco Asia, it is now trying to reassure investors and the market that its financial solidity was never in danger Paulo A. Azevedo and Alex Lee
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anco Espirito Santo do Oriente (BESOR), headquartered in Macau, now renamed Novo Banco Asia (New Bank Asia), has a huge task ahead trying to recover from the collapse of its parent company in Portugal. Victim of one of the biggest financial scandals in Portuguese history, due to the collapse of Banco Espírito Santo (BES) in Lisbon, a lack of confidence by Macau Government departments including from the banking regulator Macau Monetary Authority (AMCM), and an unsuccessful attempt to change its Governance Board, Novo Banco Asia is facing a “pre-break and was driving itself towards ungovernability”, sources told Business Daily newspaper. Novo Banco Asia is now part of ‘Novo Banco’ following the split of what used to be BES in two (see other text in these pages). Novo Banco Asia was owned almost in its entirety by BES and has been operating in Macau since 1995, where it primarily serves as a commercial and industrial bank.
From small and solid profits to almost zero The last few years had seen a comfortable profit for Novo Banco
José Morgado
Asia (former BESOR), which does not have any branches. It posted a net profit of MOP39.4 million in 2012 and MOP44.8 million in 2013. From its total income, it paid MOP5.4 million in taxes. The better performance was due to its corporate banking and trade finance segments. But with the problems in Portugal the nightmare started for the Macanese institution, even if last June the president of the executive commission, José Morgado, told
Business Daily that changes in BES were not going to affect Macau’s financial institution owned by the Portuguese group. Quite the opposite has transpired: the bank has been strongly affected. Results for 2014 “will show just a few patacas and Novo Banco will need to continue to inject money, some 30 to 50 million euros more, which we don’t know is possible since the Portuguese Central Bank might not allow it in the current situation”, our
sources told this newspaper. In recent months, Novo Banco sent over 40 million euros (MOP400 million) to Macau. A strong blow to the aspirations of Novo Banco Asia to try to escape unharmed from the financial storm in Lisbon was given when three Macau institutions – the Monetary Authority, Social Security Fund and the Pension Fund - withdraw all their deposits, totalling around MOP4 billion (US$500 million), sources told Business Daily. Yesterday, a member of the board from Novo Banco in Lisbon, who was in Macau for meetings and to reassure the market the bank has ridden the storm even if its image needs rebuilding, confirmed to this newspaper the money sent to Macau. “But it was not a capital injection”, said Vítor Fernandes. “Just financial aid which is normal in similar situations”, he told us. According to him, Novo Banco Asia has MOP200 million of social capital and over another MOP200 million “in accumulated results”. Speaking to reporters recently, Macau Monetary Authority (AMCM) President Anselmo Teng Lin Seng said that the collapse of Portugal’s Banco Espírito Santo (BES) will in no
Business Daily | 9
January 22, 2015
Macau Franco and João Rato, from BES commercial and international areas, respectively. From Hong Kong, William Mok, a former executive with Macau’s troubled Delta Asia bank. However, AMCM seems unwilling to accept the changes. The regulator, who needs to approve the names, told BESOR on December 12 that it would not consider the new governance and advised the bank to maintain the old structure. A week later, on December 19, AMCM sent a more incisive letter signed by one of the regulators directors, William Vong, declaring that the bank should “withdraw the application for change of management”. The message couldn’t be more clear. This week, now arrived in Macau a Vítor Fernandes, to “feel the pulse and find a way to dissipate any doubts related to the future of the bank and its commitment to its clients in Macau”, another source explained to Business Daily. As far as this newspaper understands, José Morgado and Carlos Freire are to maintain their positions, while a third element is to join them in the Executive Counsil. Vítor Fernandes, Novo Banco administrator and representative of Lisbon’s Resolution Fund, travelled to Macau to ensure a smooth path until the Portuguese Bank is bought by one of the 17 contenders, later this year. “I do not comment on those matters of the bank’s governance, neither the past nor the future”, Vítor Fernandes told this newspaper. “What I can say is that the governance has always to have the natural agreement from the supervisory authorities”, he said.
Here to stay way affect Macau. Teng commented that there was nothing for customers to worry about since assets of BESOR will become part of Novo Banco Asia. According to the media, Teng did not elaborate on whether the government bureaux or relevant public entities have had financial dealings with BES. Several attempts by Business Daily to speak to Mr. Teng to explain, then, the need to withraw money from BESOR were consecutively rejected.
AMCM rejects new board BESOR’s new Governance Board is another “hot topic”. Last October, the bank’s General Assembly decided to change its Executive Commission. Its leading man, José Morgado, was to step down and administrator Carlos Freire to retire. From Lisbon arrived Paulo
Anselmo Teng
Business Daily newspaper sources say the transformation ratios (total of loans divided by total of deposits) is way above the 120% advised by the European Union. “It’s over 280 per cent”, we were told. Which means a “clear sign of alert”. Vítor Fernandes and José Morgado play down these numbers, without confirming any percentage, saying it’s natural that those ratios go up when institutional investors withdraw their cash – in this case as a consequence of lack of confidence with the Lisbon situation – but everything will return to normal. “Not only is the bank in Portugal solid but also the one here in Macau; both are institutions that protect well the resources that are entrusted to them and have a group of professionals that continue to give the best service to all their clients”, concluded Vítor Fernandes.
Nightmare in Lisbon
B
anco Espirito Santo’s collapse in Lisbon came after it unveiled losses on loans made to an assortment of companies run by its founding family. The broader Espirito Santo group, which included tourism, health and agriculture companies, sought bankruptcy protection and began liquidating last year. Portuguese prosecutors have since launched an investigation into the company’s collapse. New management put in place at Banco Espirito Santo by the central bank has said they suspect the lender engaged in illegal behaviour. With the bankruptcy of Banco Espirito Santo and the creation of another financial institution with the good assets (without toxic assets) of BES emerged Banco Novo (New Bank) that will be sold to the highest bidder. There are 17 contenders. Chinese brokerage Haitong Securities Ltd. is in talks to buy BES investment banking unit as Chinese finance firms snap up more overseas
assets to try to offset slowing growth at home. A purchase of the bailed-out Portuguese lender’s unit would be Haitong’s first acquisition outside China and Hong Kong as Chinese financial companies scoop up assets of Western banks hammered by bad debts. The Bank of Portugal has said it wants to sell Novo Banco in the second quarter of this year, allowing for the quick recovery of the 4.9 billion euros (US$6.1 billion) of public funds used to rescue BES last August after it nearly collapsed under the huge debts of its founding family. Novo Banco was carved out as a ‘good bank’ from BES, while BES itself has retained the toxic debts from the Espirito Santo family that sparked the collapse of the family’s business empire. The collapse has led to an investigation into how the family amassed such huge debts and how it contributed to the near collapse of BES. Reuters
Expensive software
Novo Banco Asia
BESOR Strategic Plan proved to be quite expensive and consumed most of the bank’s operational profits in 2014. The changes on its new Atlas core system for its computers, from the previous Oracle system, cost more than MOP20 million. The new system, Business Daily sources say, created “innumerable errors”, with problems in areas such credit limits, contracts reversals, reporting, etc. A high 40 per cent personnel rotation last year and its MOP5 million headquarters renovation will bring the last results in to “almost nothing”, sending “unwitting messages to outside that the bank is in trouble”, the sources say. Once again, Vítor Fernandes sees no evil. Quite the opposite, he says. “I believe that those investments decided before the problem in Portugal last Summer were to face the predictable growth here in Macau”. Timing was far from ideal, he concedes, but “what we need to do now is to develop the bank to take advantage of the investment already made”.
Specialised trade support: between Novo Banco areas and Asia, especially in China and Macau. Networking and knowledge: Experienced professional team in the Asian market. BESOR product and service offer includes:
business in Asia:
P.A.A./A.L.
• Corporate Banking, through credit facilities supporting short-term as well as long-term investment activities • Trade Finance, namely Letters of Credit (e.g.) issuing, confirmation, discount, etc. and documentary remittances • Forfeiting • Term deposits in several maturities and currencies, namely RMB • Debt instruments placement • Private Banking • Companies internationalisation support in Asia
10 | Business Daily
January 22, 2015
Greater China Premier Li puts trust in economic base China’s sound economic fundamentals have not changed and the government will put more focus on structural reforms this year, Premier Li Keqiang was quoted yesterday as saying. The Xinhua news agency quoted Li as saying that the government will maintain keep macro-policies appropriate, as China’s economy faces a complex environment this year. Data on Tuesday showed China’s economy grew at its slowest pace in 24 years in 2014 as property prices cooled and companies and local governments struggled under heavy debt burdens, keeping pressure on Beijing to roll out more support measures to avoid a sharper downturn.
Cheung Kong to sell US$593 mln shares Cheung Kong Infrastructure Holdings Ltd (CKI) said yesterday it planned to raise HK$4.6 billion (US$593 million) in a share sale. CKI said it had agreed to sell 80 million new shares to a unit of Hutchison Whampoa Ltd at HK$58 each after the unit completes its sales of the same amount of existing shares to third-party investors. The new shares represent 3.18 percent of the enlarged share capital, and the net proceeds to be raised will be for general funding purposes, CKI said in a filing to the Hong Kong bourse.
Alibaba seeking stake in New China Life The world’s biggest e-commerce company is planning to buy shares in the state-run New China Life Insurance Co Ltd, Shanghai Securities News said yesterday, citing unnamed sources. The newspaper reported that Central Huijin Investment Ltd, the investment arm of the Chinese government and the largest shareholder in the insurer, plans to sell some of its stake to Alibaba. It did not give any details on the size of the deal. Central Huijin currently owns 31.34 percent of the insurer, according to the paper. New China Life Insurance has a market capitalisation of US$24 billion.
Dalian Wanda to buy football club stake
China seeks balanced growth as
National investors are buying real estate, businesses and other asset
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hina has become a net capital exporter for the first time, with outbound direct investment outnumbering capital inflows in 2014. Chinese investors channelled capital into 6,128 overseas firms in 156 countries in 2014, with outbound investment reaching US$102.89 billion, up 14.1 percent from a year earlier, according to a press conference by the Ministry of Commerce (MOC) yesterday. Growth was much faster than the 1.7 percent gain recorded in foreign direct investment, which was US$119.6 billion. This is the first time the two-way nominal capital flows have been near a balance.
It marks the rise of new growth engines amid a slowing economy in China. “If the Chinese firms’ investment through third parties were included, the total ODI (overseas direct investment) volume would reach about US$140 billion, which means
The fundamentals for ODI growth are promising and China’s capital outflows will accelerate faster than FDI in the next few years Shen Danyang, Ministry of Commerce, spokesman
Budget strategy helps Spring Air stocks surge on debut The firm reported an average load factor of 95 percent last year
Property giant Dalian Wanda Group Co said on Wednesday it would buy a stake in Spanish soccer champions Atletico Madrid for 45 million euros (US$52 million), becoming the first Chinese company to invest in a premier European football club. Dalian Wanda said it had agreed to buy a 20 percent share in Atletico, as China’s biggest property group seeks to expand overseas and diversify its business away from a weak domestic real estate market. Atletico are last year’s La Liga champions, and the investment marks Dalian Wanda’s latest push into entertainment.
Tibet spends millions protecting forests The Tibetan authorities handed out 2.9 billion yuan (US$466 million) last year as rewards for environmental protection, the regional assembly was told yesterday. The funds went to those who stopped or reduced herding in areas prone to deforestation and on subsidies for grass seed and farming equipment, said Cai Bin, a director of the Tibet agriculture and animal husbandry department. The scheme has greatly improved the quality of grasslands in Tibet. The fresh grass reserve has increased by 20 percent from 2007, according to the department.
China is already a net outbound investor now,” said Shen Danyang, spokesman with MOC. Chinese investors are buying real estate, businesses and other assets overseas while growth at home is slowing. The country registered its slowest expansion pace in 2014 in
S
hares in China’s Spring Airlines surged more than 40 percent on their debut yesterday as investors scrambled to buy into China’s biggest budget carrier, encouraged by its costcutting and innovative strategies. Spring Airlines is the first Chinese carrier to list on a domestic stock exchange since the 1999 trading debut of Hainan Airlines Co Ltd. Spring raised US$400 million via an initial public offering that was more than 160 times oversubscribed. The stock rose 44 percent, or limitup, on the Shanghai stock exchange to 25.15 yuan.
“I don’t think airlines shares overall are good investment for the longer term given their high operating cost and the cyclical nature of the industry,” said Gao Liangyu, an analyst with Huatai Securities. “However, Spring’s no-frills model and flexibility has helped to differentiate itself from others just like Southwest Airline had done in the United States.” Analysts also put down Spring’s strong debut to the scarcity of new share offerings in China, where all IPOs are subject to stringent regulatory approvals.
Spring offered via its IPO up to 100 million shares, or 25 percent of its enlarged equity. The airline said it plans to use the IPO funds to double its number of aircraft to 100 by 2018. Spring has managed to undercut rivals such as state-owned China Eastern and its subsidiary Shanghai Airlines, largely due to stringent cost controls and workarounds. It reported an average load factor of 95 percent last year - the highest among Chinese carriers - and has been profitable since its first full year of operation in 2006. When it was restricted to unprofitable early-morning or latenight landing slots at Beijing’s main airport, Spring shifted flights a small airport about 300 km away, and gave passengers free high-speed rail tickets to get them into the capital in an hour. It has since used a similar strategy in Tokyo and Osaka. To keep costs down, all employees must fly with heavily discounted tickets or take trains for business trips, and no one leaves the office without turning off the lights. In 2013, Spring reported a 17 percent rise in net profit to 732.2 million yuan. For the same year, net income of larger rival China Eastern fell 25 percent to 2.4 billion yuan. Reuters
Business Daily | 11
January 22, 2015
Greater China
s net capital exporter Li Ka-shing buys
ts overseas while growth at home is slowing 24 years, according to the GDP data released on Tuesday. “The booming ODI is mainly driven by Chinese firms’ growing ambition and hunger for new opportunities, pulled by countries’ worldwide thirst for investment and facilitated by the government’s supportive policies,”
Shen said. “Therefore, this is not the speculated government-pushed ‘Marshall Plan’,” Shen added. Mergers and acquisitions are more diversified in investment projects and fields in 2014, with energy and mining sectors still being hot spots and with active acquisitions in manufacturing. Breakthroughs were also made in the agricultural sector, according to Shen. Meanwhile, a better industrial investment structure is taking shape, with leasing and commercial service, mining and retail and wholesale business the top three key overseas investment sectors. Chinese firms also did a better job balancing stakeholder interests and honouring corporate social responsibility by boosting local employment and helping solve pollution problems. The State Council, China’s cabinet, released a much shorter list of ODI projects needing government approval to encourage enterprises to enter the international market last November. Chinese offshore investment will reach US$1.25 trillion over the next decade, Chinese president Xi Jinping said at the opening ceremony of the APEC CEO summit last November in Beijing. That would almost triple Chinese outbound direct investment in the next ten years. With four trillion U.S. dollars in foreign exchange reserve and continuous supportive policies, the potential for a much larger flow of investment outbound is enormous. Xinhua
British train firm
The deal will see Cheung Kong Infrastructure Holdings (CKI), and its parent Cheung Kong Holdings take 50 percent each in the train company
C
heung Kong, the business empire of Hong Kong tycoon Li Ka-Shing, announced that it is buying Britain’s Eversholt Rail Group for £2.5 billion (US$3.8 billion). Eversholt is one of Britain’s three main rail rolling stock companies, owning around 28 percent of the country’s passenger trains. British private equity fund 3i Infrastructure confirmed that it and Eversholt’s other investors, including Morgan Stanley, had all sold their stakes to Cheung Kong. “We are very happy to enter into this new industry,” said Cheung Kong Holdings’ managing director Victor Li, the elder son of Li KaShing. “The rolling stock leasing business adds a new facet to our transportation business portfolio,” he added. Eversholt is CKI’s third acquisition in the past six months, following investments in Canadian off-airport car park business Park’N Fly in July and the acquisition of Australian gas distribution company Envestra in October.
Cheung Kong said it expected the deal to be finalised in March. The company said there were strong growth prospects in the British rail industry, with “more people and more goods than ever... being moved by train in the country”. Eversholt owns some 3,500 passenger trains along with more than 80 freight locomotives and nearly a thousand freight wagons. It was set up in 1994 as part of the privatisation of British Rail. Billionaire Li announced a sweeping re-arrangement of his vast business empire earlier this month. Cheung Kong Holdings, his flagship firm, will take over its separately quoted subsidiary Hutchison Whampoa and the combined entity will be split into two, creating a focused property firm and an international conglomerate, including interests in telecoms, utilities and ports. The revamp is also expected to pave the way for Li’s retirement and comes amid speculation of a handover to his son Victor. AFP
Stock option launch may boost blue chips Brokerages and futures companies trading financial derivatives will be the main beneficiaries of the options market, as they have the needed qualifications
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hina’s first stock options will launch next month with limited access to investors due to their risky nature, but their gradual rollout may benefit the real market. Investors wanting to use options to hedge or speculate will likely build up their holdings in index heavyweight stocks, which regulators have long wanted to develop. The China Securities Regulatory Commission (CSRC) will allow investors to trade only options that track the SSE50 index of the 50 biggest firms on the Shanghai bourse in the trial that begins on February 9. An option is a contract to buy or sell a stock at a predetermined price at a predetermined time in the future. The Shanghai Stock Exchange further laid out strict rules under which individual investors can trade options, relying on rarelyused progressive qualification requirements. Meanwhile, investors will likely raise holdings of SSE50 heavyweights such as top oil producer, PetroChina, and the biggest lender, the Industrial
either direction for both put and call options, the rules say.
Gradualism is the watchword
and Commercial Bank of China. Regulators are essentially guiding investors into blue chips, which retail investors have avoided in favour of smaller firms. This has pushed up the valuation of smaller companies. Components in the SSE50 index have average price-toearnings ratio of 10 times, compared with 17 times for the broader market.
High threshold Options will allow investors to hedge their
investments but may also expose speculators to heavy losses. The Shanghai exchange requires individual investors to hold at least 500,000 yuan (US$80,445) in cash and shares in a single trading account in order to trade options, its website said. Fewer than 5 percent of China’s roughly 50 million active stock trading accounts meet the standard as small retail investors account for 80 percent of stock trading by value. Participants then face three progressive exams:
Those who pass the first test may use options to hedge their existing holdings, those who pass the second test can take long positions via options and only those who have passed the most difficult test can carry out comprehensive trading, including shorting. The tests will involve knowledge of securities markets, in particular about hedging tools including options, and will involve simulated trading, among other things. The bourse will also set a daily limit of 10 percent in
Traders point out that other Chinese derivatives have also been developed slowly as officials prefer a gradualist approach. The China Financial Futures Exchange established in 2006 exclusively for the development of financial derivatives - did not launch its first product, stock index futures, until 2010. It only launched a second product, government bond futures, in 2013. But more than a year into trading, they are off limits to banks who most need futures to hedge interest rate risks as the authorities remain wary about lenders’ safety nets. “For a period of time, say one or two years, options may only be a gesture to show that the government is determined to continue market reforms, instead of a real product,” said a trader at a major Chinese brokerage. Bloomberg News
12 | Business Daily
January 22, 2015
Asia Myanmar seeks Japanese loan Myanmar is seeking 10.5 billion yens’ (US$105 million) loan from Japan for upgrading the country’s telecommunication infrastructure, parliament sources said yesterday. The loan for upgrading internet connection in six different categories to be sought from the Japan International Cooperation Agency (JICA) was discussed in the parliament session this week. The six categories to be upgraded cover installation of equipment for Yangon-Nay Pyi Taw-Mandalay fibre network, extension of the network in Yangon, setting up metro fibre equipment, expanding bandwidth of national gateway for international communication and establishment of telecommunication infrastructure at Thilawa Special Economic Zone.
Jasmine says Thai regulators approve IPO Thai telecoms group Jasmine International PCL said yesterday it had received regulatory approval for an initial public offering (IPO) of its broadband Internet infrastructure fund. The fund is expected to worth up to 58 billion baht (US$1.78 billion), with Jasmine holding 33.33 percent in the first three years, it said in a statement. Bualuang Securities is a financial adviser for the listing.
BHP iron ore output up BHP Billiton said yesterday iron ore output climbed 16 percent to 56.35 million tonnes in the December quarter, fuelling concerns big mining houses would continue to saturate an already over-supplied global market. The world’s third biggest iron ore miner also said it would boost annual output by 11 percent in fiscal 2015 to a total 225 million tonnes. The sharp quarterly increase over the year-ago period comes a day after Rio Tinto unveiled a 12 percent rise in quarterly output. Iron ore prices have dropped to around US$68 a tonne from US$135 a year ago.
Malaysia’s inflation eases
Japan firms struggle to lift prices two years into Abenomics A survey shows that roughly two thirds of Japanese companies see their business conditions largely unchanged this year Tetsushi Kajimoto
T
wo thirds of Japanese companies plan to hold back on raising prices of products and services this year, a Reuters poll showed, underscoring the difficulty of defeating deflation despite two years of bold monetary policy and economic stimulus. But in a sign that Prime Minister Shinzo Abe’s policies have gained some traction, 42 percent of firms said they plan to raise wages as least as much as last year. Still, many are cautious with 44 percent undecided. Price rises and wage hikes are seen as key to boosting consumer spending under “Abenomics” which, despite initial success with aggressive monetary easing, has seen the economy slide into recession in the wake of a sales tax increase. Several high-profile firms, including those emblematic of Japan’s deflationary mind-set like Fast Retailing Co Ltd , the operator of casual clothing chain Uniqlo, have over the past year moved to lift prices.
KEY POINTS 68 pct don’t plan to raise prices of goods, services in 2015 42 pct to lift wages at least as much as 2014, 44 pct undecided Two thirds see business conditions unchanged this year But the Reuters Corporate Survey, conducted January 5-15, showed that overall Japan Inc’s pricing power remains weak. Of the third which do plan to lift prices, the vast majority say they are passing on a surge in the costs of materials that has come with the yen’s
South Korean firm signs Aussie LNG deal with Chevron The U.S. giant owns a 64 percent stake in the Wheatstone LNG project under construction in Australia
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Malaysia’s consumer price index in December rose 2.7 percent from a year earlier, as soaring domestic food prices from the worst flood in decades offset the effects of falling fuel prices, data from the Statistics Department showed yesterday. A Reuters poll had forecast an annual inflation rate of 2.8 percent last month, down from 3 percent in November.
35 percent drop against the dollar since Abe took office in December 2012. Only 8 percent cited steady demand as a reason. “Considering companies were cutting prices until just a while ago, Japan is making progress towards ending deflation,” said Taro Saito, director of economic research at NLI Research Institute, who reviewed the survey results. “But we are still far from Abenomics’ ultimate goal of stronger demand driving up prices and wages in a virtuous cycle.” The survey also showed that roughly two thirds see their business conditions largely unchanged this year. Twenty-one percent see improvement while 13 percent believe things are getting worse. “We’ve not been able to pass on higher materials costs created by the weak yen,” wrote a manager at a chemicals company. “Crude oil prices slid as we were negotiating price hikes, causing a situation where our
hevron Corp, which has been struggling to lock in longterm sales contracts for its Australian liquefied natural gas, said it has lined up South Korean conglomerate SK Group as a new customer from its US$54 billion Gorgon LNG project. Chevron said SK LNG Trading, a subsidiary of SK Group, has agreed to buy 4.15 million tonnes of LNG over five years starting in 2017 from Gorgon. “This agreement is an important step in the commercialization of Chevron’s significant natural gas holdings in Australia,” Pierre Breber, president of Chevron gas and midstream, said in a statement. With this deal, Chevron said over the five years from 2017, more than three-quarters of its share of LNG from Gorgon would be going to customers in Asia. Gorgon is due to start producing this year.
This agreement is an important step in the commercialization of Chevron’s significant natural gas holdings in Australia Pierre Breber, President of Chevron gas and midstream
A Chevron spokeswoman in Australia declined to comment on pricing terms on the contract or whether terms had changed relative
to other Gorgon contracts in the wake of a 60 percent slide in oil prices over the past seven months. Asian buyers have been reluctant to sign up to the more traditional 20 year contracts, with competition from LNG exports from the United States due to begin in 2015, creating uncertainty for Australia’s mega projects. Australian LNG contracts to Asian customers have typically been linked to oil prices, which has raised doubt about the profitability of nearly US$200 billion worth of Australian LNG projects set to start exporting between late 2014 and 2017. Chevron is 47.3 percent owner and operator of the massive Gorgon project. Its partners are ExxonMobil Corp, Royal Dutch Shell Group, Osaka Gas, Tokyo Gas and Chubu Electric Power. Reuters
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, Joanne Kuai 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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Business Daily | 13
January 22, 2015
Asia
The survey showed 30 percent of firms in the auto sector are looking to raise wages less than last year or not at all
demands could not be met.” Of the firms that do plan to raise prices, more than 60 percent will seek increases of less than 5 percent, while 27 percent aim to raise prices between 5 and 10 percent. The survey, which is conducted for Reuters by Nikkei Research, polled 483 firms and about 260 answered the questions on prices. Managers respond to the poll anonymously. Abe is also urging companies to accept higher prices from their
subcontractors. Some 79 percent of firms said they will cooperate, suggesting their profits will be crimped as they aren’t raising their own prices.
Wage caution Japan’s major firms and labour unions agreed to an average hike of 2.19 percent in annual wage negotiations last spring - a 15-year high. But wages in real terms have declined as consumers have had to
grapple with a 3 percentage point increase in the national sales tax. Thirty-six percent of companies polled said they plan wage hikes of about the same size as last year while 6 percent said they plan bigger increases. Another 6 percent saw smaller wage hikes than last year and 8 percent saw no increase at all. Hidenobu Tokuda, a senior economist at Mizuho Research Institute who reviewed the survey, said companies appeared cautious
and the trend would be determined by the 44 percent who are undecided. “I’m a little concerned about car makers who are wary after being hit hard by the sales tax hike.” The survey showed 30 percent of firms in the auto sector, which often sets the standard in the nation’s annual wage talks, are looking to raise wages less than last year or not at all - twice the amount of Japan companies in general. Reuters
New Zealand prices fall again after three years Excluding gasoline, consumer prices rose 0.1 percent in the quarter, the agency said Tracy Withers
N
ew Zealand consumer prices fell for the first time in two years as fuel slumped, giving Reserve Bank Governor Graeme Wheeler scope to keep borrowing costs on hold for an extended period. The consumers price index fell 0.2 percent in the fourth quarter from the previous three months, the first decline since the final quarter of 2012, Statistics New Zealand said in Wellington yesterday. The median forecast of 15 economists surveyed by Bloomberg was for no change. From a year ago, prices rose 0.8 percent. Benign inflation adds to signs Wheeler can keep the official cash rate unchanged at 3.5 percent as fuel prices tumble and economies in Japan and Europe remain under pressure. The Reserve Bank of New Zealand, which in December said it will eventually need to raise borrowing costs further, faces an extended period of inflation below the bottom of its 1 percent- to-3 percent target range.
Rate pause Annual inflation slowed from 1 percent in the third quarter and was less than the 0.9 percent forecast by economists. The Reserve Bank last month predicted a 1 percent increase. Wheeler on December 11 signalled an extended rate pause and lowered his inflation forecasts as oil prices
prices will fall in the year through March, the first deflation in 15 years. New Zealand joins other nations in experiencing benign inflation. U.S. prices fell 0.4 percent in December from November, the biggest decline in six years. Consumer prices in the U.K. rose 0.5 percent last month from a year earlier, matching a record low.
Gasoline falls
New Zealand Reserve Bank Governor Graeme Wheeler
tumbled and signs of deflation emerged in some major economies. The RBNZ predicted inflation will accelerate slowly this year and next, reaching 2 percent in the fourth quarter of 2016. ASB’s Tuffley says that by the time inflation gets toward 2 percent indicators such as economic growth, immigration and housing will be slowing, making a rate rise less necessary. Other economists at ANZ Bank New Zealand Ltd., Bank of New Zealand, JPMorgan Chase & Co. and Deutsche Bank AG this month forecast Wheeler won’t raise rates until 2016. BNZ forecasts consumer
Gasoline prices have continued falling in New Zealand and at January 16 were 17 percent less than the average in the fourth quarter, the statistics agency said. If prices remain at that level for the first quarter that would detract 0.8 percentage point from the CPI, the agency said. Vegetables, mobile phones and computers were cheaper. Airfares for both international and domestic travel led the gains. Non-tradable inflation, a core measure of prices not influenced by the currency and fuel, was led by increases in rents, tobacco, electricity and the cost of building new homes. The gauge rose 0.3 percent in the quarter from the previous three months. The gains were offset by cheaper telephone services and equipment. From a year ago, non-tradables prices rose 2.4 percent, less than the 2.5 percent gain projected by the RBNZ.
The RBNZ will want to be confident inflation is heading to around 2 percent before lifting interest rates again. We’re not explicitly forecasting any more rate increases Nick Tuffley, chief economist, ASB Bank
Tradables prices, which are influenced by currency movements, dropped 0.8 percent from the third quarter -- the biggest decline in three years -- led by fuel, vegetables and computers, today’s report showed. From a year ago, tradables prices fell 1.3 percent. The RBNZ forecast a 0.9 percent decline. Bloomberg News
14 | Business Daily
January 22, 2015
International Russia may see oil output fall Russia may see a natural decline in oil output by around 1 million barrels per day (bpd) at most but has no plans to cut production in coordination with OPEC, Deputy Prime Minister Arkady Dvorkovich said yesterday. Russia is the world’s biggest oil producer and output hit a post-Soviet high at an average 10.58 million bpd last year, but Western sanctions over Ukraine and low prices pose a threat to the development of what is the country’s key source of revenue.
Junk replaces government debt as most-disdained The junk bond market has doubled from US$1 trillion in January 2010
Total cuts shale spending French oil and gas company Total will cut spending in ageing North Sea fields and in U.S. shale production after the recent plunge in oil prices, its chief executive said yesterday. Speaking at a panel session at the World Economic Forum in Davos, Switzerland, Patrick Pouyanne said he expected oil prices to remain low in the first half of 2015 after falling almost 60 percent since June to below US$50 a barrel. Pouyanne told that Total planned to reduce capital spending by 10 percent this year from 2014’s total of US$26 billion.
UBS Chairman states eurozone weakness Regardless of the measures that European Central Bank (ECB) President Mario Draghi unveils, euro zone inflation levels will not return to target levels for years, UBS Chairman Axel Weber said yesterday. The former Bundesbank president told a panel at the World Economic Forum in Davos that a pickup in European growth was also unlikely for quite some time. “I wouldn’t subscribe to the view that we are in a deflationary scenario,” Weber said, describing the environment as one of persistently low inflation.
Venezuela says oil exports fell Exports fell to 2.33 million barrels-perday in 2014, from 2.43 million the previous year, Oil Minister Asdrubal Chavez said. Production averaged 2.9 million bpd last year, he added during an investors’ conference in Caracas. OPEC member Venezuela, which is reeling from the plunge in global crude prices since mid-2014, is counting on joint ventures in the heavy-crude Orinoco region to boost output in future years. Production from the Orinoco Belt should rise to 1.37 million bpd by the end of 2015 from an average of 1.25 million last year, Chavez said.
135 pct return from junk bonds market February 2009 to mid-2014
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unk bonds have supplanted sovereign debt as the asset investors would most like to bet against amid concern that a slowdown in global economic expansion will make it harder for the world’s neediest borrowers to meet their obligations. With both the International Monetary Fund and World Bank lowering their world growth forecast this month, 18 percent of the respondents to a quarterly Bloomberg Global Poll chose speculative-grade debt as the favoured asset class to short, or set up trades that would profit from a decline in prices, given the chance. That exceeds the 13 percent that would bet against government securities from the Group of Seven nations. Money managers are striking a more cautious tone toward bonds of the riskiest borrowers as the Federal Reserve moves closer to raising interest rates from near zero and away from extraordinary monetary policies that fuelled the market’s growth. The IMF trimmed its global-growth outlook yesterday by the most in three years. “If this ends up as a bad year for the economy, that would be very negative for high yield and
Big gains Selzer & Co., a U.S. firm, conducted the survey of 481 Bloomberg subscribers January 14-15. It has a margin of error of plus or minus 4.5 percentage points. In the previous survey conducted in November, 20 percent of the respondents picked government bonds sold by the G-7 countries as securities they’d most like to short, with 17 percent selecting junk-rated securities. That debt is rated below Baa3 by Moody’s Investors Service and less than BBB- at Standard & Poor’s. Between February 2009 and mid2014, the US$2.1 trillion market for junk bonds returned about 135 percent, according to the Bank of America Merrill Lynch Global High Yield Index. The gains came as the central banks led by the Fed enacted
polices that suppressed benchmark rates in an attempt to revive economic growth after the financial crisis, prompting investors to pile into securities with high relative yields.
Losses mount Since June, high-yield bonds have lost 3.45 percent as investors saw little incentive to own the securities after the rally compressed the difference between yields on the debt and those on U.S. Treasuries to about record lows, according to Cribari. Yields stand at about 7 percent, up from a record low of 5.6 percent in June, according to the Bank of America index. Even with the increase, that’s still below the five-year average of 7.5 percent. Central bank efforts have failed to stimulate the economy the way policy makers had hoped, with a slowdown in inflation threating to curb spending and investment. The world economy will expand 3.5 percent in 2015, down from the 3.8 percent pace forecast in October, the IMF said in its quarterly global outlook released late Monday in Washington. Bloomberg News
CEOs less confident about global growth
17 percent think SpaceX raises funding the outlook will from Google worsen, more than Space Exploration Technologies twice as many (SpaceX), founded by Elon Musk, said it has raised about US$1 billion in a as last year financing round with two new investors, Google and Fidelity. Google and Fidelity will collectively own just under 10 percent of SpaceX, the company said in a statement. SpaceX said the funding will help it continue research in space transport, reusability, and satellite manufacturing. Google and Fidelity join existing investors Draper Fisher Jurvetson, Founders Fund, Valor Equity Partners and Capricorn. Google has already a presence in the aerospace sector with satellite maker Skybox Imaging.
you could see people running out of the sector,” Mario Cribari, the head of asset management at Lugano, Switzerland-based Veco Invest SA, said in a telephone interview. Cribari, who participated in the poll, picked high-yield, high-risk bonds as the asset class he’d short.
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he Chief Executive Officers around the world are less confident about global economic prospects than one year ago, according to the result of a survey released by PricewaterhouseCoopers (PwC). According to the result of 18th annual global CEO survey, which was unveiled by the PwC here at the World Economic Forum, 37 percent
of the CEOs involved in the survey think the outlook will improve over the next 12 months, compared with 44 percent last year. It is worth mentioning that 17 percent think the outlook will worsen, more than twice as many as last year. Meanwhile, 39 percent of CEOs are very confident of their business growth prospects in the coming year and 37 percent of CEOs are confident that global economic growth will improve. CEOs in different parts of the world have different views about the growth prospects. CEOs in Asia Pacific, North America and the Middle East see more growth opportunities today in the past. Those in Latin America and Africa are more likely to see more threats today than previously.
“In general, the economic and business climate isn’t giving CEOs any great cause for celebration,” said a PwC report on the survey. The survey also found 78 percent of CEOs are concerned about over regulation and 56 percent of them think cross sector competition is on the rise. The survey was conducted on the basis of 1,322 interviews with CEOs in 77 countries and regions. The sample is selected based on the percentage the total Gross Domestic Product of countries and regions included in the survey, to ensure CEOs’ views are fairly represented across all major countries and regions of the world. The interviews were also spread across a range of industries. Xinhua
Business Daily | 15
January 22, 2015
Opinion Business
wires
What are we betting on?
Leading reports from Asia’s best business newspapers Mohamed A. El-Erian
Chief Economic Adviser at Allianz and a member of its International Executive Committee
THE TIMES OF INDIA India’s economic growth is expected to overtake China’s by 2016, the International Monetary Fund (IMF)’s projection showed on Tuesday as the multilateral agency revised down global growth due to new risks. IMF’s World Economic Outlook update showed India’s economy is expected to grow 6.5% in 2016-17, outpacing China’s 6.3% expansion. India is estimated to grow 5.8% in 2014-15 and 6.3% in 2015-16. The government expects the growth to pick up to 5.5% in the current fiscal and then accelerate to 6-6.5% in 2015-16.
THE STAR The (Malaysian) government announced new growth and fiscal deficit targets for this year, budget cuts to operating expenditure as well as various stimulus measures to bolster the resilience of the economy amid the steep fall in oil prices, volatile capital flows and fragile global outlook. In a note yesterday, CIMB Research said the revised deficit targets were no surprise as it expected the government to manage the deficit within a tight range through various means of revenue enhancements and expenditure cuts. It added that Petronas’s dividend contributions were likely to be maintained at around RM27bil.
TAIPEI TIMES Ting Hsin International Group and Malaysia-based IOI Properties’ subsidiary Strategy Assets have submitted the supplementary documents required for a preliminary review of the group’s plan to sell its 37.17 percent stake in Taipei Financial Centre Corp, the Investment Commission said. “We will review the documents and send them to other government agencies soon for further examination,” commission acting executive secretary Emile Chang said. The first formal meeting over the case is to be held within two months at the earliest, Chang added.
THE JAKARTA GLOBE Prosecutors have demanded three years’ imprisonment for Dharmadas Narayanan for allegedly falsifying documents that caused the company he worked for at the time, Wismakarya Prasetya, known as WKP, losses of nearly Rp 600 billion (US$48 million). The case centres around accusations from tycoon Marimutu Sinivasan — owner of Texmaco Group and former owner of WKP — that Dharmadas had used letters with Sinivasan’s forged signature to make at least three illegal deals with several companies in 2006.
“The eurozone would have to deepen integration”, Mohamed A. El-Erian
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hen I consider the prospects for the global economy and markets, I am taken aback by the extent to which the world has collectively placed a huge bet on three fundamental outcomes: a shift toward materially higher and more inclusive global growth, the avoidance of policy mistakes, and the prevention of market accidents. Though all three outcomes are undoubtedly desirable, the unfortunate reality is that they are far from certain – and bets on them without some hedging could prove exceedingly risky for current and future generations. The first component of the bet – more inclusive global growth – anticipates continued economic recovery in the United States, with a 3% growth rate this year bolstered by robust wage growth. It also assumes China’s annual growth rate will stabilize at 6.57%, thereby enabling the risks posed by pockets of excessive leverage in the shadow-banking system to be gradually defused, even as the economy’s growth engines continue to shift from exports and public capital spending toward domestic consumption and private investment. Another, more uncertain assumption underpinning the bet on more inclusive growth is that the eurozone and Japan will be able to escape the mire of low growth and avoid deflation, which, by impelling households and businesses to postpone purchasing decisions, would undermine already weak economic performance. Finally, the bet assumes that oil-exporting countries like Nigeria, Venezuela, and especially Russia will fend off economic implosion, even as global oil prices plummet.
These are bold assumptions – not least because achieving these outcomes would require considerable economic reinvention, extending far beyond rebalancing aggregate demand and eliminating pockets of excessive indebtedness. While the US and China are significantly better placed than others, most of these economies – in particular, the struggling eurozone countries, Japan, and some emerging markets – would have to nurture entirely new growth engines. The eurozone would also have to deepen integration. That adds up to a tough reform agenda – made all the more challenging by adjustment fatigue, increasingly fragmented domestic politics, and rising geopolitical tensions. In this context, a determined shift toward markedly higher and more inclusive global growth is far from guaranteed. The second component of the collective bet – the avoidance of policy mistakes – is similarly tenuous. The fundamental assumption here is that the untested, unconventional policies adopted by central banks, particularly in advanced countries, to repress financial volatility and maintain economic stability will buy enough time for governments to design and deliver a more suitable and comprehensive policy response. This experimental approach by central banks has involved the conscious decoupling of financial-asset prices from their fundamentals. The hope has been that more buoyant market valuations would boost consumption (via the “wealth effect,” whereby asset-owning households feel wealthier and thus more inclined to spend) and
The fact is that central banks do not have the tools to deliver rapid, sustainable, and inclusive growth on their own
investment (via “animal spirits,” which bolster entrepreneurs’ willingness to invest in new plant, equipment, and hiring). The problem is that the current economic and policy configuration in the developed world entails an unusual amount of “divergence.” With policy adjustments failing to keep pace with shifts on the ground, an appreciating dollar has assumed the role of shock absorber. But history has shown that such sharp currency moves can, by themselves, cause economic and financial instability. The final element of the world’s collective bet is rooted in the belief that excessive market risk-taking has been tamed. But a protracted period of policyinduced volatility repression has convinced investors that, with central banks on their side, they are safe – a belief that has led to considerable risk-positioning in some segments of finance. With intermediaries becoming reluctant to take on securities that
are undesirable to hold during periods of financial instability, market corrections can compound sudden and dramatic price shifts, disrupting the orderly functioning of financial systems. So far, central banks have been willing and able to ensure that these periods are temporary and reversible. But their capacity to continue to do so is limited – especially as excessive faith in monetary policy fuels leveraged market positioning. The fact is that central banks do not have the tools to deliver rapid, sustainable, and inclusive growth on their own. The best they can do is extend the bridge; it is up to other economic policymakers to provide an anchoring destination. A bridge to nowhere can go only so far before it collapses. The nature of financial risks has morphed and migrated in recent years; problems caused by irresponsible banks and threats to the payment and settlement systems have been supplanted by those caused by risk-taking among non-bank institutions. With the regulatory system failing to evolve accordingly, the potential effectiveness of some macro-prudential policies has been undermined. None of this is to say that the outlook for markets and the global economy is necessarily dire; on the contrary, there are notable upside risks that could translate into considerable and durable gains. But understanding the world’s collective bet does underscore the need for more responsive and comprehensive policymaking. Otherwise, economic outcomes will remain, as former US Federal Reserve Chairman Ben Bernanke put it in 2010, “unusually uncertain.” Project Syndicate
16 | Business Daily
January 22, 2015
Closing Thailand sees 5.6 pct rise in 2016 expenditure budget Outdoor warning as HK pollution soars Thailand’s expenditure budget for fiscal 2016 was set at 2.72 trillion baht (US$83.5 billion), up 5.6 percent from fiscal 2015, the country’s Prime Minister Prayut Chan-o-cha announced yesterday. The projected deficit would be 390 billion baht, an increase of 140 billion baht, or 56 percent, from that of fiscal 2015, according to the prime minister. He said that the budget was intended to help low-income earners and farmers. Despite a bigger budget for fiscal 2016, government agencies will have to find ways to cut fixed expenses, Prayut noted.
Government said air pollution reached the highest level on its gauge at more than half of its monitoring stations, as light winds in the city failed to disperse pollutants. The pollution index reached 10+ at monitors in Central, Mong Kok and Causeway Bay, the city’s main business and entertainment districts, at 5:00 p.m. local time, according to the Environmental Protection Department. Other general stations recorded the highest or second-highest levels of pollution severity. The index scales from 1 to 10+, which is marked as “serious.”
Chinese stocks rally most since 2009 Fifty-eight percent of a survey’s 481 respondents said the Shanghai Composite will either decline or remain little changed over the next six months and three other companies jumped 44 percent in their first day of trading. The Shanghai Composite Index rallied 4.7 percent to 3,323.61 at the close, adding to Tuesday’s 1.8 percent advance. The gauge plunged 7.7 percent on Monday after regulators suspended three brokerages from lending to new equity-trading clients. The stocks reversal drove a measure of 10-day volatility to the highest level since 2008. “It looks like some new investors are taking advantage of the big decline on Monday to buy,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. The CSI 300 Index surged 4.5 percent. Hong Kong’s Hang Seng China Enterprises Index advanced 2.4 percent. The Hang Seng Index gained 1.7 percent. Trading volumes in the Shanghai index were six percent below the 30-day average, according to data compiled by Bloomberg.
Financial rally
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hinese stocks posted the biggest two-day rally since 2009, led by financial companies, as investors speculated Monday’s rout was overdone given prospects for further monetary stimulus. China Life Insurance Co., Bank
of China Ltd. and Haitong Securities Co. soared more than 9 percent. Poly Real Estate Industry Group. led a rally for developers, surging 6.8 percent. PetroChina Co., the biggest oil company, jumped 7.3 percent. Budget carrier Spring Airlines Co.
China gets tough on online extortion
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Stocks rebounded after China’s securities regulator said it isn’t trying to curb equity trading. Citic Securities Co., Haitong Securities and Guotai Junan Securities Co. were suspended from lending money and stocks to new clients for three months, the China Securities Regulatory Commission said on January 16. The regulator punished nine other brokerages for offenses including allowing unqualified investors to open margin finance and securities lending
accounts, it said. A gauge of financial companies in the CSI 300 surged 6.5 percent, the most among 10 industry groups. The measure had fallen 11 percent in the previous two days. Citic Securities gained 7.7 percent, paring this year’s loss to 15 percent. Haitong Securities climbed 10 percent, trimming the 2015 decline to 14 percent. Outstanding margin loans on both the Shanghai and Shenzhen exchanges surged more than tenfold in the past two years to a record 1.1 trillion yuan as of January 16, or about 3.5 percent of the nation’s market value. The Shanghai Composite has gained 65 percent over the past year, making it the best performer among 93 global indexes tracked by Bloomberg. The index is valued at 12.7 times 12-month projected earnings, compared with a multiple of 8 for the H- shares gauge. China’s world-beating stock rally is over, according to the latest Bloomberg Global Poll. Fifty-eight percent of the survey’s 481 respondents said the Shanghai Composite will either decline or remain little changed over the next six months after posting a 55 percent advance since June. Only 30 percent said the gauge will extend gains. The one thing China’s bulls and bears can agree on is that swings in the world’s most-volatile major stock market are only going to get bigger after equity traders took on record amounts of debt. Bloomberg News
E-commerce transactions hit US$2 trillion
SGX posts first profit growth since 2013
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yberspace Administration announced yesterday a campaign against extortion, targeting Internet regulators and companies who take fees for deleting posts.Online extortion and paid post deletions break the law, damage the orderly flow of information on the Internet and disrupt market order. They harm the image of regulators and the media, said Peng Bo, the administration’s deputy head. Peng said the campaign would concentrate on illegal websites, Wechat accounts, PR companies and intermediaries. “We will show zero tolerance to illegal acts,” he said. Websites publishing favourable stories in return for money have become commonplace, and some PR companies have made paid deletions their major business. They usually fabricate rumours and hype up events, taking money to delete unfavourable posts, Peng said. Some Internet regulators have abused their power and sought profits for doing exactly the same thing, harming the image of the watchdog, he added. More than 25 media practitioners were arrested last year for allegedly extorting “fees” in return for favourable reporting.
hina’s e-commerce boomed in 2014 with transactions reaching around 13 trillion yuan (US$2.09 trillion), the government said Wednesday, as Beijing looks online for new drivers of growth. The commerce ministry did not define transactions, beyond saying that the term included both business-to-business and retail transactions. Spokesman Shen Danyang said in a statement that they grew 25.0 percent year-on-year in 2014. China’s National Bureau of Statistics said yesterday that online retail sales alone were at 2.8 trillion yuan in 2014, up 49.7 percent. China has the world’s biggest online population -- 632 million last year -- and online shopping has exploded in recent years as consumers turned to the Internet for cheaper products and overseas goods that are believed to be safer than domestic options, such as baby formula. During its 24-hour shopping promotion Singles Day on November 11, the country’s e-commerce giant Alibaba said consumers spent a record US$9.3 billion, up 60 percent on 2013.
Xinhua
AFP
ingapore Exchange Ltd. posted its first quarterly profit growth in more than a year after a world- beating rally in Chinese stocks spurred demand for derivatives. SGX’s profit in the three months through December 31 rose 16 percent to S$86.6 million (US$65 million), Southeast Asia’s biggest exchange operator said in a filing today. That was in line with analyst estimates compiled by Bloomberg. Revenue from derivatives jumped 46 percent, spurred by a 183 percent surge in volume on FTSE China A-50 futures, according to the exchange. The Singapore bourse is benefiting from efforts to attract investors across a broader range of asset classes as appetite for trading shares in the city-state stagnates. Derivatives accounted for 39 percent of revenue in the quarter, up from 32 percent a year earlier. “The outlook for the global economy remains uncertain with continued volatility,” Magnus Bocker, chief executive officer of SGX, said in the statement. Bloomberg News