MOP 6.00 Closing editor: Luís Gonçalves
T
ime will tell. An isolated incident or a new trend triggered by plunging gaming revenues. Regardless, companies are adapting to the new (lower) normal. Casino operator Wynn Macau saw net profits plunge 49.4 pct Y-o-Y in 4Q. And is texting workers suggesting they take unpaid leave. According to former Forefront of Macau Gaming activist Cloee Chao. The first time there’d been such ‘encouragement’ at the company since the financial tsunami of 2008, she maintains PAGE 7
Year III
Number 743 Friday March 6, 2015
Publisher: Paulo A. Azevedo
Belt-tightening time
Package tours to Macau double in five years
The thin red line
Page 3
Non-residents’ deposits up 28 pct in January
“Strictly by the Basic Law”. China’s Premier Li Keqiang said Beijing is handling Hong Kong and Macau issues accordingly. And “firmly” upholds the principle of “One Country, Two Systems”. He said China will adhere to letting Hong Kong people govern Hong Kong and Macau people govern Macau. It is the first time Li Keqiang has said, in his work report, however, that Hong Kong affairs should be handled according to the Chinese constitution
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Gov’t pledges ‘urban renewal’ policy Page 2
Cultural industries fund grants MOP110 mln for 86 projects Page 4
HSI - Movers March 5
Name
4G Force
www.macaubusinessdaily.com
It’s just celebrated its 15th anniversary. Hutchison Telephone Macau operates under the brand 3 Macau here. The company says increasing sales via mobile phone subscribers and data usage is the way ahead. For this strategy, 4G services are crucial to gaining market share
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Shorter concessions Easing off the pedal The economic favoured downturn has A third of the public says so. A short-term five-year gaming concession is favoured over the current system. This, according to a recent poll by Business Daily on how the gov’t should handle the renewal of gaming concessions in 2020
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been officially acknowledged. The Chinese government is shooting for 7 pct GDP growth for this year. Greener power, corruption and greater internationalisation of the yuan were also discussed in Beijing’s recent round of major policy meetings
%Day
China Unicom Hong Ko
2.79
China Mengniu Dairy
1.70
China Mobile Ltd
1.68
Hengan International
0.68
Lenovo Group Ltd
0.34
AIA Group Ltd
-2.56
Galaxy Entertainment
-2.57
HSBC Holdings PLC
-2.72
China Shenhua Energy
-2.94
Want Want China Hol
-2.96
Source: Bloomberg
I SSN 2226-8294
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2 | Business Daily
March 6, 2015
Macau Macau Airport passenger traffic increases 14 pct Passenger traffic volume in February increased 14 per cent from 420,000 to over 480,00 with an average daily passenger load of 17,000, Macau International Airport has announced. This period includes the Chinese Lunar New Year Golden Week. In terms of routes, Southeast Asia accounted for 22 per cent of the market with 170,000 passengers, while the Taiwan market recorded 120,000 passengers, some 13 per cent of market share. The company also stressed that the Northeast Asia market had maintained a good growth tendency, with Korea registering a 27 per cent increase in passenger volume, whilst Japan recorded a 5 per cent increase. Aircraft movements increased 6 per cent to over 4,000, while in February 2013 some 3,900 were recorded.
Chui pledges ‘urban renewal’ policy for MSAR Stephanie Lai
sw.lai@macaubusinessdaily.com
The pledge, with no details announced yet, presents a refreshed attempt following the rejection of the bill proposing old neighbourhood reform
F
ollowing the dismissal of the city’s advisory body for old neighbourhood regeneration, Chief Executive Fernando Chui Sai On has pledged to introduce the policy of ‘urban renewal’ to the city soon – although no details on the policy are yet forthcoming. Speaking to media in Beijing on Wednesday, the Chief Executive stated that he has already requested Secretary for Public Transport and Public Works Raimundo Arrais do Rosário to work on the ‘urban renewal’ policy, which would be introduced to the public soon. The term was mentioned by Mr. Chui when he was campaigning for a second term of office in August last year, but even at that time no policy details were introduced. Mr. Chui made the remarks on Wednesday when confirming to media that the city’s consultative committee for old neighbourhoods regeneration had already been dismissed. The latest three-year term of the committee, which expired in November last year, has not undergone any renewal process, Business Daily has learnt from the committee’s former members. Formed in 2005, the committee was responsible for offering opinions and conducting surveys for the drafting of the bill regarding the gentrification of old neighbourhoods. But the bill - the drafting process of which began in 2006 - was eventually scrapped by the Legislative Assembly in August 2013.
The scrapping of the bill has taken place against the backdrop of the Assembly having approved the city’s first-ever urban planning law, heritage protection law and amended land law. “Actually, some functions of the consultative committee already overlapped with that of our urban planning committee,” one of the advisory body’s former members, Larry So, told Business Daily, “For instance, the issue of demolishing old
residences and the restructuring of the district is now already under the scope of the urban planning committee rather than us.” Mr. So added that his advisory body has not been active since the scrapping of the old neighbourhood reform bill. In addition, the consultative committee has also apparently not been informed by the government of any ‘urban renewal’ policy. Under the enactment of the urban planning law, the Macau Government
has yet to roll out an urban master plan, which the then Transport and Public Works Secretary Lau Si Io mentioned in April last year, saying that the formation could take 3-5 years. “I think government is still trying to see how it can adjust its plan to restructure the city’s old neighbourhoods while coming up with the city’s urban plan,” another former member of the consultative committee, Leong Keng Seng, remarked to us.
Non-resident deposits up 28 pct in January
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ank deposits by non-residents here grew in January four times faster than those of residents, official data revealed yesterday. That month, nonresidents had a total of MOP240.7 billion deposited in Macau banks, 27.3 per cent more than a year ago. From the previous month (December), non-resident deposits climbed 9.7 per cent or MOP20
billion, the Monetary Authority of Macau said. Non- resident customers are also outperforming locals in terms of deposits. The latter saw their deposits reach a total of MOP482.2 billion in January. That’s a 7.1 per cent hike from a year ago and a marginal increase of only 1.2 per cent from December. Deposits by residents are today double those of non-residents.
Regarding government deposits, it registered a monthly drop of 25 per cent from MOP340 billion in December last year to 254 billion in January. However, compared on a year-on-year basis (January), deposits by public institutions increased 3.8 per cent. Banking activity here continued to be sound, as deposits and credit continue to grow at a double-digit
rate. Domestic loans to the private sector went up 28 per cent year-onyear in January to MOP344 billion and 1.7 per cent from December. Of these, MOP93.9 billion was MOPdenominated, MOP223.7 billion was denominated in Hong Kong dollars, MOP1.4 billion was denominated in yuan and MOP24.9 billion was denominated in USD. L.G.
Business Daily | 3
March 6, 2015
Macau
Double the package tours Some 984,000 tourists visited Macau on package tours at the end of January, a figure that is two times that of only five years ago Sara Farr
sarafarr@macaubusinessdaily.com
F
rom 458,900 to 984,000 - that’s how much the number of visitors on package tours has grown since 2010. Comparing only the month of January for the past five years, this number has doubled, according to the latest figures released yesterday by the Statistics and Census Service (DSEC). Official data shows that the number has grown steadily, with the last increase being of 24 per cent when compared to that of January last year. The same is true for Macau residents travelling outbound on package tours over the last five years. Figures show that since 2010, the number of Macau residents using such travel arrangements increased to 121,400 in January this year from 41,300 in January 2010. Mainland China remains the main origin of these visitors, accounting for 794,100 of January’s total and representing a 31 per cent year-on-year increase. However, it was Malaysia that
registered the biggest growth, with the number of visitors on package tours skyrocketing 148.7 per cent from January 2014 to January this year. While the total number of these visitors was 14,300, it still represented a major increase from the 5,700 registered last year. Neighbouring Hong Kong residents are increasingly opting not to visit this Special Administrative Region on package tour terms. The numbers dropped 16.2 per cent to 31,200 in January 2015 from 37,200 in January 2014. Visitors from Taiwan, Thailand and Japan are also opting to steer clear of package tours, with numbers decreasing 5.1 per cent, 3.7 per cent and 3.9 per cent, respectively. However, the number of visitors from South Korea has increased by 14.8 per cent to 37,500 in the first month of the year. In addition, more Macau residents travelled on package tour arrangements in
January. The total reached 121,400, up 4.8 per cent compared to 2014’s 115,900. Largely unchanged, Mainland China continued to be the primary destination of Macau residents travelling outbound on package tours, increasing by 10.3 per cent year-on-year to 77,200 from 70,000 in January 2014. Japan, however, became a popular destination for Macau resident package tour travellers, with numbers rising by 27.3 per cent to 2,300 compared to 1,800 a year ago. South Korea lost a little of its glitz for Macau travellers, with numbers dropping by 34.5 per cent to 3,000 in January over 4,600 recorded in the same month last year. As did Malaysia. The number of Macau visitors to the country decreased by 12.6 per cent to 2,100 from 2,400 a year earlier. While Macau has been recording a steady increase in the number of visitors on package tours, these tourists aren’t staying in the numerous hotels here. The average occupancy rate of hotels and guesthouses dropped 1.5 percentage points to 79.4 per cent, with 5-star hotels feeling the brunt with a 2.5 percentage points drop to 80.6 per cent. However, 2-star hotels fared well with a 9.7 per cent increase in occupancy rate to 76.2 per cent in January from 66.5 per cent in the same month a year earlier.
4 | Business Daily
March 6, 2015
Macau
Hutchison Macau focus on 4G to gain share market The telecommunication company celebrated its 15th anniversary and is targeting increasing the number of mobile phone subscribers in the coming years. For this strategy, 4G services are seen to be essential João Santos Filipe
jsfilipe@macaubusinessdaily.com
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utchison Telephone Macau, which operates under the brand 3 Macau, is betting on expanding the smartphone handset market in order to increase the number of mobile phone subscribers. “For the coming years we expect to push our mobile phone subscriptions, mainly on smartphone handsets. We also want to keep pushing customers to use more mobile data. That is
the main area for growth”, the Chief Executive Officer of the telecommunications company, Ho Wai Ming, said yesterday on the sidelines of a media Spring luncheon at MGM Macau. In order to achieve this goal, the CEO is counting on the impact of the introduction of 4G services in Macau. However, the company is waiting for the results of the tender organised by the government to allocate
Cultural industries fund grants MOP110 mln for 86 projects Last year, the government set up a MOP200-million fund for local cultural creative businesses. It announced yesterday that it is to award MOP110 million for 86 of the 321 projects applied for Kam Leong
kamleong@macaubusinessdaily.com
T
he government announced yesterday that some MOP110 million will be granted to 86 ‘cultural and creative’ businesses that applied for the Cultural Industries Fund last year, expecting these subsidised companies will generate revenues of some MOP40 million after two years. Last April, the government
put MOP200 million into the fund in order to support the development of local cultural and creative industries. Local companies which meet the government’s categories for ‘creative design’, ‘cultural exposition and performance’, ‘art collection’ and ‘digital media’, can apply for either subsidies or interest-free loans from the fund.
The head of the Fund, Executive Council spokesman Leong Heng Teng, told reporters at a press briefing yesterday that a total of 358 local companies had applied for the fund during June and August of last year. Mr. Leong said that the 86 approved projects will invest a total of MOP60 million and create 627 jobs. However, the list of
approved applicants will only be announced in the Official Gazette later this month, prior to the start of this year’s application. These applicants were selected by seven judges, who scored the proposals of the applicants independently after analysing the development and prospects of the proposed projects,
Temporary logistics centre to facilitate HK-Zhuhai-Macau Bridge Joanne Kuai
joannekuai@macaubusinessdaily.com
A
t the first general meeting of 2015 of the Logistics Industry Development Committee that took place yesterday, members discussed the possibility of extending the operating hours of the borders for goods transport as well as other measures to help the development of the industry.
Currently, the 24-hour border crossing at the Lotus/ Hengqin border doesn’t include light vehicles or cargo-carrying goods vehicles but individual passengers. Representatives of a local logistics centre have voiced their hope that the SAR Government will extend the beneficiary terms.
Wong Wan, Secretary of the committee, told reporters after the meeting, that the SAR government fully understands the industry’s concerns and has been in talks with Mainland authorities regarding the issue. For the time being, however, their counterpart across the border would like
to prioritise passenger flow before handling the shipment of commodities. He indicated that the members of the committee also hope that Macau companies involved in cross-border logistics would be able to have simpler procedures in terms of getting their licences for Mainland China and an easier
four 4G licences. “The results of the tender are expected to be known by the end of March and so we don’t have any information about it. But we’re confident that we’re going to get a licence”, he said. “Definitely, we hope that with 4G the number of clients will be boosted because they’ll have a better experience.” Concerning last year’s results, the CEO of Hutchison Macau said he was happy and hoped the company could continue to grow during this year. Also yesterday, Hutchison Macau launched a Wi-Fi Internet service for Macau clients to use in Hong Kong as part of its 15th anniversary celebrations. This includes more than 16,000 Wi-Fi hotspots in Hong Kong in shopping malls, coffee chains, fast food outlets and restaurants. “We’re not introducing this service because of the growing competition but because we want to provide a better service to our clients”, Ho Wai Ming said of the new service.
in addition to how much profit they could generate, according to Mr. Leong. The government spokesman also claimed that there is no cap on the subsidy amount, revealing that one approved project will be granted as much as MOP5 million. He explained that projects with higher marks will get higher subsidies; for example, a project scoring at least 70 marks will be subsidised to 30 per cent of their investment amount, while those scoring between 50 and 70 marks will be subsidised to 20 per cent. Other projects, reaching 50 marks, will be granted interest-free loans. Of the 86 approved projects, those involving creative design accounted for 35 of the total, while projects involving cultural exposition and performance, art collection and digital media accounted for 18, 4 and 6 of the total, respectively. Six of the approved projects are not related to the above four fields.
application process for drivers. Regarding the Hong KongZhuhai-Macau Bridge that is being built and reportedly delayed, Wong Wan didn’t disclose the process of the construction as he is not in charge of that. But he revealed that a 7,000 square metre plot of land on the artificial island would be designated for a logistics centre and hopefully put into use as soon as the bridge opens. The logistics centre is proposed to better facilitate commodities shipments between Macau and Hong Kong SAR, in particular, in addition to enabling some preparation and examination works to be undertaken before the goods enter Macau.
Business Daily | 5
March 6, 2015
Macau
Li Keqiang: China handling HK, Macau issues ‘strictly by the Basic Law’ Premier Li Keqiang has delivered the government work report. Regarding Hong Kong and Macau, he reiterated that the Chinese constitution and Basic Law are fundamental in handling the SARs Joanne Kuai
joannekuai@macausbusinessdaily.com
D
uring the opening meeting of the third session of China’s 12th National People’s Congress (NPC) at the Great Hall of the People in Beijing yesterday Li Keqiang said China will “firmly” uphold and implement the principle of “One Country, Two Systems”. He said China will adhere to the policy of letting Hong Kong people govern Hong Kong and Macau people govern Macau. The two Special Administrative Regions will enjoy a “high degree of autonomy.” He said China will handle the issues of Hong Kong and Macau “strictly in accordance with the Chinese constitution and the Basic Law”. It is the first time Li Keqiang in his work report has said Hong Kong affairs should
be handled according to the Chinese constitution. In the past, the Premier has only mentioned the Basic Law the city’s mini-constitution. He said China will fully support the Chief Executives of Hong Kong and Macau to govern the two SARs in accordance with the law. The central government will help the two cities develop their economy, improve people’s livelihood, and promote democracy and social harmony. He said Mainland China will expand exchanges with Hong Kong in “all areas”. A Member of the Standing Committee of the Chinese People’s Political Consultative Conference (CPPCC), Ngan In Leng, said Premier Li Keqiang’s remarks regarding Hong Kong and Macau is different than before mainly
because of recent incidents that have taken place in Hong Kong. Li had to stress that without the ‘one country’ there wouldn’t be ‘two systems’ and people can’t focus on the ‘two systems’
Macau exporters cautious on H1 outlook Labour shortages and associated rising costs, and price competition with industry players remain the greatest challenges for local exporters, an official survey finds Stephanie Lai
sw.lai@macaubusinessdaily.com
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majority of local exporters have adopted a cautious outlook for the prospects of their export business for the first six months of this year, where labour shortages still dog the industry, according to an excerpt from the Industrial Exports Survey conducted by the government in the fourth quarter of last year. According to the excerpt, published on Tuesday ahead of the release of a full report, 66.9 per cent of surveyed exporters here say they expect business to remain fairly much the same for the first six months of this year as it was in the fourth quarter; while as many as 18.2 per cent of surveyed companies expressed optimism in the export market for the first six months of this year. The surveyed exporters also reckon that Mainland China and Hong Kong are the markets that perform better, while Japan has
remained a relatively worse market due to weaker demands. When asked about the issues affecting the export business, 40.9 per cent of the surveyed companies reckon the lack of staff is the biggest challenge in running an export business, followed by higher labour costs (10.6 per cent) and competition with fellow exporters abroad (7.7 per cent). These three factors remain the major concerns for export business prospects for March to May this year. About half of the surveyed companies said they still had insufficient staff in the fourth quarter of last year, a proportion that has dropped from the 63.4 per cent in the previous quarter and 67 per cent in the same period a year ago. While the demand for more employees has slightly eased in the past quarter, the excerpt noted that the pharmaceutical industry still expressed a relatively urgent demand compared to other exporters here.
without keeping ‘one country’ in mind. Ngan In Leng also revealed that when Chairman of National People’s Congress Standing Committee Zhang Dejiang met with the Hong Kong and Macau CPPCC delegation Zhang had a
harsher tone when speaking about the Occupy Central movement in Hong Kong, while towards Macau the tone was mild. Member of the CPPCC Macau delegation Ambrose So Shu Fai said the premier’s report mentioned the economic ‘new normal’ of Mainland China, and said that the Macau SAR should seize the chance of regional cooperation, taking advantage of the policies that the central government is promoting. Another member of the CPPCC Macau delegation, Ng Siu Lai, also commented that the premier’s report indicated that only with the country’s support for the SARs could the two regions enjoy longterm stability and prosperity, about which she said she was very confident.
6 | Business Daily
March 6, 2015
Macau
Poll: Gaming licences should be renewed every 5 years
Chui Sai On and Sheldon Adelson (Las Vegas Sands CEO)
A
third of the public says shortterm five-year gaming licences should be implemented instead of the current system. In a recent poll by Business Daily
on how the government should handle the renewal of the gaming concessions starting in 2020, 29 per cent of readers said the government and casino operators should negotiate short-term
contracts that are renewable every five years, while another one-third suggest a similar approach collectively with the issuance of new ones. The latter, the percentage for which
is 29, would like to see the government renew existing concessions while at the same time launching an open bid for new ones. If this were the case, instead of the 3+3 licensing system for the three concessions and three sub-concessions, Macau could have more than six gaming operators in the market, each with its own individual licence. Success Universe Group Ltd., which runs under SJM Holdings Ltd.’s licence, has expressed interest in bidding for its own gaming licence. In addition, 17 per cent of poll respondents were of the opinion that the government should renew the existing gaming licences along with the sub-concessions and concurrently increase gaming tax to more than the current 39 per cent, 35 per cent of which is on casinos’ gross gaming revenue. Meanwhile, one-quarter of Business Daily readers surveyed at 25 per cent said the government should not just renew the existing gaming licences but instead launch an ‘open auction’ for new and current gaming operators to enter the market. Chief Executive Fernando Chui Sai On’s former administration announced it would be reviewing the gaming licences renewal this year, confirming rumours widely speculated. However, so far this year, there has been no talk on the issue at hand.
Steve Jacobs Case: Sands China to learn of further sanctions next week The company controlled by Sheldon Adelson will learn next week if it is to be sanctioned for redaction of personal information on documents produced in order to avoid breaching Macau law João Santos Filipe
jsfilipe@macaubusinessdaily.com
S
ands China will learn next week if the company is to face sanctions for redacting personal information from about 2,600 documents produced in January 2013 out of Macau. These documents were written as part of the ongoing termination suit first filed in 2010 by Steven Jacobs, the former CEO of Sands China. The decision will be taken by Clark County Nevada District Judge Elizabeth Gonzalez who heard legal arguments on the topic for five hours last Tuesday. She said she was planning to have a written decision
Imperial Pacific mulls ‘temporary casino’ project in Saipan
I
mperial Pacific International Holdings Ltd. informed the Hong Kong Stock Exchange on Wednesday that it has entered into a written amendment to its
by early next week, according to Las Vegas Review-Journal. After firing Steven Jacobs, Sands China and parent company Las Vegas Sands Corp. moved documents from Macau to the United States without the prior authorisation of the Macau Government, according to a news report from U.S.-based ProPublica. org. These documents were believed to be kept in the computer of the former CEO of Sands China. After acknowledging the existence of such documents, Judge Gonzalez, in 2012, ruled that neither defendant could cite the Macau Personal Data
Protection Act as an excuse to refuse disclosure. Unable to avoid disclosure of documents, Sands China spent US$2.4 million to redact documents according to Macau law. In order to do that the company hired Macanese lawyers. In one of the hearings related to the case, David Fleming, general counsel for Sands China, said the documents had to be redacted because violating Macau’s data protection law carried the risk of civil and criminal penalties, including possible imprisonment for the company’s officers and directors. However, the judge ruled in March
casino licence agreement with the Commonwealth of the Northern Mariana Islands (CNMI), which would allow the company to establish and operate a ‘temporary casino’ in Garapan, on the Island of Saipan. Imperial Pacific’s current plan is to launch the temporary casino in 2015, the company told the stock exchange after trading hours on Wednesday. The company, also known as an investor in the profit stream of Macau junket operator Hengsheng Group, noted in the Wednesday filing that it would seek further legal advice before operating the temporary casino
project in order to comply with all applicable laws and listing rules of the Hong Kong Stock Exchange. The project is still subject to the supervision of the CNMI Casino Commission for ‘proper regulation of the temporary casino and the Saipan Casino Law’. In a circular filed with the stock exchange in late November, Imperial Pacific announced its business plan to construct and operate a casinoresort project on the Island of Saipan, which will comprise a town hotel plus integrated resort with gaming facilities in five phases.
2013 that by redacting the documents based on Macau law Sands China had violated her order of 2012, which declared that the Macau Personal Data Protection Act could not be used as an excuse to refuse disclosure. Next week, the judge will decide whether these documents will result in more penalties for Sands because of the use of personal information. After being fired in July 2010, Jacobs decided to sue Sands China. The former employee of the company claimed that he had been wrongfully fired for refusing to engage in unlawful acts, including promoting prostitution and spying on Chinese politicians in order to find potentially embarrassing information for use in obtaining favourable treatment for the casino.
The company said in the circular that it would invest US$7.1 billion (HK$55.1 billion) in the casino-resort project, whereby the first phase could be ready by 2016. The last phase of the project is expected to be ready by 2020, along with the eventual completion of 4,252 rooms, 300 villas and 1,600 gaming tables, according to the circular. In August last year, Imperial Pacific was granted a 25-year licence to build and operate a casino on Saipan, with an option to extend the licence for a further 15 years. SL.
Business Daily | 7
March 6, 2015
Macau
Net profits halved, Wynn Macau offers unpaid leave A Wynn worker says the corporation texted employees asking them to apply for unpaid leave, which is the first time since 2008 Kam Leong
kamleong@macaubusinessdaily.com
G
aming operator Wynn Macau, following its net profits year-onyear slump of 49.4 per cent during the previous quarter, is texting workers encouraging them to take unpaid leave, former secretary-general of local gaming union Forefront of Macau Gaming (FMG) Cloee Chao told Business Daily yesterday. According to Ms. Chao, who is also a gaming worker with Wynn Macau, the corporation sent a text message to all dealers and supervisors on Wednesday morning, reminding them that ‘there are a small number of day-off quotas available for applications for the morning, afternoon and night shifts on between March 9 and March 15.’ Ms. Chao told Business Daily that it was the first time Wynn Macau had encouraged workers to take unpaid leave since the
Steve Wynn
financial tsunami of 2008. Last month, Wynn Macau announced its fourth quarter results, in which net profits had plunged to US$139.7
million from US$275.9 million in the same quarter of 2013. In addition, its revenue had dived by 32 per cent, year-on-year, amounting to
some US$761.2 million. Nevertheless, despite the relatively poor company results and notification to employees regarding unpaid leave Ms. Chao said that workers are not really worried. “After all, there are not many quotas [for the unpaid leave] offered,” she said. “In fact, since the end of last year, almost all of the gaming corporations have started accepting workers’ applications for unpaid leave… For Wynn, you don’t even have to submit any excuse as to why you have to take unpaid leave.” she said. In February, gaming revenues dropped 48.6 per cent year-on-year, bringing in only some MOP19.5 billion. Following this drop, Chief Executive Fernando Chui Sai On said he will adjust the
monthly target for gaming revenues to MOP20 billion in the coming Policy Address.
Quitting FMG not due to political pressure Meanwhile, FMG announced recently that Ms. Chao, one of the former leaders of the Group, had quit the association. The ex-secretary-general told us yesterday that it is not related to any political pressure, claiming it was only because she found her former position in the gaming union conflicting with other social associations that she has joined. Last September, Ms. Chao and four other members of FMG - namely, president Ieong Man Teng, vice president Lei Kuok Keong, board members Ung Kim Ip and Loi Ngai Wai - were accused by local police (PSP) of ‘aggravated disobedience’ as they were suspected of breaking through a defensive police cordon during a protest against the six gaming corporations in August. According to an FMG announcement, board member Mr. Loi had also left the gaming group. On Wednesday, the corporation told Hong Kong Stock Exchange after a board meeting that it will issue a special dividend of HK$1.05 per share to its shareholders at the end of this month.
8 | Business Daily
March 6, 2015
Macau
Asian casinos woo Chinese as corruption drive hits Macau Asian casino operators from South Korea to Australia are pulling in China’s gamblers as the country’s corruption crackdown scares many away from Macau
Shanghai, he added. Companies are able to sidestep China’s ban on casino marketing by advertising non-gaming aspects such as a concert or entertainment show held on its venue, said Grant Govertsen, an analyst at Union Gaming Group in Macau. “Junket operators own restaurants, and nightclubs, they sponsor golf tournaments and other getaways,” Govertsen said in an interview. “There’s plenty of stuff a junket could advertise in a massmarket sort of format.” Still, foreign operators’ efforts to attract China’s gamblers have caught the notice of local authorities, which announced last month a crackdown on representative offices that “attract and recruit Chinese citizens” to casinos.
Peking Duck
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t the oceanfront Ramada Plaza hotel on South Korea’s Jeju Island, about a hundred Chinese gamblers huddle around felt-topped tables, wagering as much as 5 million won (US$4,500) at baccarat. Shouts in Mandarin “Beautiful!”, “Good!” - ring out as bettors with winning hands slam their cards on the green tabletops. Asian casino operators from South Korea to Australia are pulling in China’s gamblers as the country’s corruption crackdown scares many away from Macau, the world’s biggest gambling hub. They are capitalising on a downturn in the city’s gaming industry, which last month suffered its worst drop ever. Operators such as Paradise Co. in South Korea are hiring Mandarinspeaking staff and offering VIP treatment including free flights, limousines and hotel stays to big spenders. Echo Entertainment Group Ltd. of Sydney and NagaCorp Ltd. in Cambodia cater to the junket operators who organise trips for Chinese gamblers with perks such as higher commissions, lower taxes and private jets. “Premium mass players can be recognised as VIP players and treated better than in Macau,” said Lee Hyuk-Byung, vice chairman of Paradise, in an interview in Seoul. “And we have other attractions in
Korea such as culture, fashion, food.”
South Korea Growth Macau casino revenue fell last year for the first time and may decline another 8 per cent this year, according to analysts surveyed by Bloomberg. By contrast, South Korea and the Philippines will grow 16 per cent and 33 per cent, respectively, this year, gaining from the spillover of Chinese gamblers, Deutsche Bank analyst Karen Tang wrote in a note. President Xi Jinping has urged Macau, the only place in China where casinos are legal, to diversify from gambling. Macau’s government imposed more scrutiny of junket operators, as mass market gambling also weakened amid China’s economic slowdown, and new restrictions on visas and smoking. “The anti-corruption measures are discouraging some people from travelling to Macau, and as a result we are seeing a slight shift in travel from Macau to other destinations,” said Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd. “Vietnam and the Philippines will likely benefit as they are the closest. Korea will pick up people in the northern parts of China.”
Plastic Surgeons Gamblers who bet at least US$50,000 at Paradise’s casinos qualify for freebies usually available only to VIP players, Lee said. In Macau, the minimum needed to get similar perks from junket operators is about US$500,000, according to CLSA data. The company also draws Chinese gamblers to the celebrity-obsessed country by touting its pop culture and offering recommendations of top Korean plastic surgeons, Lee said. Operators have more risqué offerings too. A gambler who exchanges 300,000 yuan (US$48,000) worth of chips can receive free flights to Jeju, tours with a Mandarin-speaking guide, and the companionship of a ‘thirdtier’ Korean actress or model, according to an e-mailed brochure from Shanghai-based tour operator CNS. A CNS travel agent, who would only give her name as Xiao Qi, confirmed the services when contacted by phone. It’s illegal for foreign companies to advertise casino operations in China and Paradise avoids public solicitations, Lee said. Its staff reaches out to high-stakes gamblers recommended by existing customers and makes frequent trips to major Chinese cities including Beijing and
Manila’s members-only Signature Club in Melco Crown Entertainment Ltd.’s City of Dreams casino has entrance signs in both English and Chinese, while Mandarin-speaking staff direct guests to cashiers, shops and restaurants. The neighbouring Solaire Resort and Casino owned by Bloomberry Resorts Corp. has suckling pig and Peking duck on the menu, catering to Chinese palates. “There are a lot of excuses to go to the Philippines; we always promote the Philippines, not the casino but the whole package,” Cristino Naguiat, chairman at gaming regular Philippine Amusement & Gaming Corp., said in an interview. “Even with the crackdown in China, we still had higher volume in terms of gross gaming revenue and in terms of junket and VIPs,” he said last month in Manila.
Too many Chinese South Korea is preparing to welcome more Chinese gamblers after tourist arrivals from the country rose last year to 6.1 million, with new casinos planned including at Incheon Airport. On Jeju Island, junket operators have set up shop to offer gambling chips on loan, a service common in Macau that helps bettors sidestep China’s limits on taking currency out of the country. Competition between the island’s eight foreigner-only casinos has led to a flourishing of more than 100 unlicensed junket operators and their agents on the island, said Seo Won- Seok, a hotel and tourism management professor at Kyunghee University in Seoul. As Chinese gamblers become more important, there’s a need to better regulate the growth of the junket operators that bring them, he said. “Our casino industry may be too dependent upon the Chinese market and that means there’s always risk from China’s government policy,” Seo said. “I think that’s the downside - too many Chinese in Korea.” Bloomberg
Business Daily | 9
March 6, 2015
Greater China
“New normal” takes seat at National Congress Koh Gui Qing and Kevin Yao
Premiere Li said China aimed to create more than 10 million new jobs in 2015
Delegates and officials conduct the opening of the Third Session of the 12th National People’s Congress (NPC) at the Great Hall of the People in Beijing
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hina announced an economic growth target for 2015 of around 7 percent yesterday and said it would boost government spending, signalling that the lowest rate of expansion for a quarter of a century is the “new normal” for the world’s No.2 economy. Speaking at the opening of the country’s annual parliamentary meeting, Premier Li Keqiang vowed to fight corruption and pollution, and stressed the need for more painful reforms to put the economy on a more sustainable footing after three decades of breakneck growth. “The downward pressure on China’s economy is intensifying,” Li told around 3,000 delegates gathered at the Great Hall of the People to the west of Tiananmen Square in the heart of Beijing. “Deep-seated problems in the country’s economic development are becoming more obvious. The difficulties we are facing this year could be bigger than last year. The new year is a crucial year for deepening all-round reforms.” Outlining the government’s policy priorities for 2015 in a Chinese equivalent of the U.S. State of the Union address, Li said those priorities included pushing ahead with reforms of the giant state-owned enterprises that still bestride the economy, and moves to liberalise the banking system and financial markets. “In order to defuse problems and risks, avoid falling into the ‘middle income trap’, and achieve modernization, China must rely on development, and development requires an appropriate growth rate,” said Li. “At the same time, China’s economic development has entered
a ‘new normal’.” The annual full meeting of the largely rubber-stamp National People’s Congress is a colourful event, drawing delegates from all over China, some in traditional ethnic costumes, to the vast hall, a monument to 1950s Communist architecture. Its role is largely to endorse policy decisions already agreed by the Party hierarchy and provide top leaders with a platform to lay out their priorities for the coming year.
Fiscal boost In the short-term, China’s top policymakers are grappling to sustain an economy weighed down by a cooling property market, high debt levels and excess factory capacity. Over the longer run, they are seeking to restructure it to boost consumption at the expense of exports and investment. Underscoring the challenges faced in striking that balance, the People’s Bank of China cut interest rates at the weekend for the second time in three months. Adding a fiscal boost to the central bank’s monetary support, Beijing plans to lift government spending to 17.15 trillion yuan (US$2.74 trillion) in 2015, an increase of 10.6 percent on 2014. That will mean raising the budget deficit to 1.62 trillion yuan, or around 2.3 percent of GDP, compared with 2.1 percent last year, with some of the extra money being spent on railway and water projects and modernising agriculture. China’s economy grew 7.4 percent last year, roughly in line with the government’s growth target of around 7.5 percent and robust by global
KEY POINTS Growth target for 2015 around 7 pct, below 2014’s 7.5 pct goal Budget deficit will increase to 2.3 pct of GDP, from 2.1 pct China aims to create 10 million new jobs in 2015 Will push forward interest rate reform China to open up more sectors to foreign investment
standards, but still the slowest in 24 years. With deflationary pressures mounting in China - annual consumer inflation fell to a five-year low of 0.8 percent in January - Li said the government would also lower its 2015 inflation target to around 3 percent from 3.5 percent in 2014.
Market reforms, social stability A key plank of China’s reform agenda is overhauling its industrial sector by tackling overcapacity in polluting heavy industries and moving manufacturing up the
global value chain. “Manufacturing is traditionally a strong area for Chinese industry,” said Li. “We will implement the ‘Made in China 2025’ strategy, seek innovationdriven development, apply smart technology, strengthen foundations, pursue green development and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality.” Li promised a greater role for private business in the economy, which he said would be further opened up by halving the number of industries in which foreign investment is restricted. With Communist Party leaders ever mindful of social stability, Li said China aimed to create more than 10 million new jobs in 2015 and would ensure the jobless rate does not exceed 4.5 percent. China targeted a registered urban unemployment rate of 4.6 percent last year. The fight against pollution and corruption, consistent themes for Premier Li and President Xi Jinping, have contributed to the slowing economy as Beijing has clamped down on dirty industries, while fear of being caught in the anti-graft net has discouraged local officials from pressing on with reforms. But in the longer term, the Communist Party leadership regards tackling the twin side-effects of China’s decades-long dash for growth as vital to maintaining its grip on power. “Our tough stance on corruption is here to stay,” said Li. “Our tolerance for corruption is zero, and anyone guilty of corruption will be dealt with seriously.” Reuters
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March 6, 2015
Greater China
Exports seen roaring back
State Council The median forecast of 16 analysts showed appoints new officials annual export growth probably shot up to 14.2 percent The State Council, China’s cabinet, yesterday announced the appointment on an annual basis in February of several officials. Huai Jinpeng was appointed vice minister of the Ministry of Industry and Information Technology, replacing Yang Xueshan. Huai will no longer hold the position as president of Beihang University. Zhang Delin was appointed vice minister of the Ministry of Land and Resources, replacing Zhang Shaonong. Fan Yifei and Guo Qingping were appointed vice governors of the People’s Bank of China, replacing Hu Xiaolian and Li Dongrong. Wang Enge was appointed vice president of the Chinese Academy of Sciences.
AgBank chairman talks on bad loan Agricultural Bank of China Chairman Liu Shiyu said yesterday that China’s nonperforming loan risk is under control but pressure will remain intense in 2015. Liu, speaking to Reuters on the side-lines of the National People’s Congress, added that credit asset securitisation would be an effective tool to deal with the risk of bad debts and other financial risks. He made the statement after China’s Premier Li Keqiang said China would move forward on asset securitisation and expand the corporate bond market in his work report to the NPC yesterday.
Bigger role for HK expected China’s top economic planner said Thursday that Hong Kong was expected to play a bigger role in promoting the country’s development. Xu Shaoshi, minister in charge of the National Development and Reform Commission, told a press conference that he had met with Hong Kong Special Administrative Region (HKSAR) Chief Executive Leung Chunying in Beijing and they discussed issues relating to Hong Kong in the formulation of China’s 13th Five-year Plan (20162020). “We think that it could play an even bigger role in promoting economic cooperation, especially in fields of laws, talent and culture”, he said.
Free trade talks with Arabs, Israel China vows to advance talks on free trade zones with the Gulf Cooperation Council (GCC) and Israel, said the Chinese government work report distributed yesterday morning to the press. The GCC, a regional political and economic alliance, includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. China started free trade negotiations with the bloc in 2004. China is endeavouring to complete the talks on upgrading the Free Trade Zone between China and the Association of Southeast Asian Nations and on establishing the Regional Comprehensive Economic Partnership, the report said.
1.6 trillion yuan investment in infrastructure China will invest over 800 billion yuan (US$130 billion) in railway construction this year, and meanwhile, the investment in the major water conservancy projects under construction will exceed 800 billion yuan, according to a government work report to be delivered by Premier Li Keqiang at the annual parliamentary session.
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hina’s exports likely recovered in February after a grim January reading, a Reuters poll showed, but inflation remained anaemic, keeping pressure on policymakers to roll out more support measures to meet new economic targets. A cooling property market, excess manufacturing capacity, deflationary pressures and a continued crackdown on corruption are all expected to weigh on the economy in 2015, prompting further cuts in interest rates and bank reserve requirements. The median forecast of 16 analysts showed annual export growth probably shot up to 14.2 percent on an annual basis in February, recovering from a 3.3 percent contraction in January that surprised analysts. Imports are seen declining again, however, dropping 10.0 percent an improvement compared to a
plunge of 19.9 percent in January that shocked markets, but still highlighting stubborn weakness in domestic demand. The data will be released on Sunday. Data out of China during January and February is typically skewed by the timing and impact of the Lunar New Year holiday, making it hard to assess the trends in the world’s second-largest economy. The forecasts follow both official and private purchasing managers’ surveys earlier in March which showed February manufacturing activity recovering slightly but remaining weak. “Activity growth since the start of 2015 has likely been weak - weak enough that despite the low base from early 2014 year-on-year growth of most activity indicators will likely fall,” said Goldman Sachs analysts in a research note.
Inflation estimates suggested that Chinese companies continue to struggle with sliding prices even as the real cost of capital remains high, a further disincentive to investment. Annual consumer inflation is forecast to stay weak at 0.9 percent in February, up only slightly from February’s 0.8 percent, which was the lowest since 2009. Underscoring the mounting deflationary pressures, producer prices are forecast to have fallen 4.3 percent year-on-year, identical to the slide in January, marking the 36th consecutive monthly decline. Analysts saw new yuan loans falling back from January’s 1.4 trillion yuan spike to around 800 billion yuan (US$127.63 billion). Growth in broad M2 money supply was seen accelerating to 11.2 percent, up from a record low of 10.8 percent in January. To help smooth out distortions from the long Lunar New Year holiday, which fell in mid-February this year but in early February in 2014, the statistics bureau also will release combined data on retail sales, industrial output and investment (FAI) for January and February next week. The combined figures for all three indicators are expected to show a slower rate of growth than in December. Goldman Sachs expects output growth of 7.7 percent (Dec 7.9 percent), retail sales growth of 11 percent (Dec 11.9 percent) and FAI growth of 14 percent (Dec 15.7 percent). Reuters
All the power for cleaner energy Top state planning agency pledged yesterday to accelerate policies to promote cleaner and renewable sources of energy
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hina is trying to strike a balance between improving its environment, suffering from more than three decades of breakneck growth, and keeping its economy running at the pace required to maintain employment and stability. The National Development and Reform Commission (NDRC) in its annual report published at the opening of the full session of parliament said it would implement policies aimed at reducing coal consumption and controlling the number of energyguzzling projects in polluted regions. “We will strive for zero-growth in the consumption of coal in key areas of the country,” Premier Li Keqiang said in his government work report delivered to parliament yesterday. “Environmental pollution is a blight on people’s quality of life and a trouble that weighs on their hearts,” Li said. The NDRC also said it would take action to boost the proportion of cleaner fuels, encourage the development and utilisation of natural gas, and aggressively develop renewable wind, solar and biofuel energy sources. “For areas affected by severe smog, regions where conserving energy is difficult, and industries with overcapacity, we will strictly control the
number of energy-intensive projects and implement policies for reducing coal use, and for replacing coal with alternative energy sources,” the report said. While trying to cut the consumption of polluting fossil fuels to ease choking smog, the NDRC said it would take action to “turn the coal sector around”. Asian coal prices have strengthened this year but are still only about half levels of four years ago, and more than 70 percent of China’s miners are said to be facing losses. Beijing already implemented a series of measures last year aimed at propping up coal prices by curbing
KEY POINTS China to encourage wind, solar, biofuel and natural gas To cut coal use while also “turning around” the sector “Zero-growth” the aim for coal in key areas -Premier Li
imports and controlling output. China’s top energy official, Nur Bekri, said in comments published by the National Energy Administration yesterday that improving efficiency and environmental standards for coal would be a key component of China’s energy policy this year. He said the country would aim to raise wind power capacity to 200 gigawatts (GW) and solar to around 100 GW by 2020, up from 95.8 GW and 26.5 GW respectively at the end of last year. China is also aiming to raise natural gas output, including coalbed methane and shale gas, to more than 245 billion cubic metres a year by the end of the decade, he said. Overcapacity remains a problem in a number of sectors, such as steel and cement, and the NDRC said it would introduce more measures to encourage mergers and close out-dated capacity. According to Li’s government work report, China will aim to cut energy intensity - the amount of energy used per unit of GDP growth - by 3.1 percent in this year. The rate fell by 4.8 percent in 2014, and the government is on course to meet a 16 percent drop over the 2011-2015 period. Reuters
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March 6, 2015
Greater China Premier Li confirms Shenzhen link The Shenzhen exchange has dedicated boards for technology firms and smaller companies
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hina will link trading between its Shenzhen and Hong Kong stock markets as part of a push for financial reforms, Premier Li Keqiang said yesterday, following a similar scheme with Shanghai’s flagship bourse. The “Shenzhen-Hong Kong Stock Connect” trial will be launched “at an appropriate time”, Li told the opening of the annual session of the National People’s Congress, China’s Communist-controlled legislature. He gave no further details. In November, China’s main stock exchange in commercial hub Shanghai and the market in Hong Kong, a special administrative region of China, began allowing investors on each exchange to trade selected stocks on the other through their existing accounts. The Shenzhen exchange, located just across the border from Hong Kong in the southern province of Guangdong, has dedicated boards for technology firms and smaller companies, and daily trading volumes sometimes exceed those of Shanghai. Officials trumpeted the Shanghai link as the opening up of China’s closeted stock markets to the outside world, as it gives foreign investors access to Chinese companies not quoted elsewhere. But trading through the scheme has been lacklustre. The creation of the trading platform between Hong Kong and Shanghai was also seen as a key step towards making
China’s yuan currency freely convertible. But the scheme is still subject to strict limits in order to preserve capital controls in China, where Communist authorities keep a tight grip on the yuan. China granted an initial cumulative quota of 250 billion yuan (US$41 billion) for mainland investors to trade Hong Kong stocks, while 300 billion yuan was allowed for foreigners on the Shanghai market. But so far only a little over one third of the Shanghai quota has been taken up, while in the other direction only about 10 percent of Hong Kong’s has been used, the exchanges say. Most of China’s more than 175 million stock investors are individuals, and financial authorities have sought to entice more institutions -including foreigners- into the market for longerterm investment. AFP
This will accelerate the internationalisation of the A-share market, which will have significant longterm effects on liquidity and investment style Shen Jun BOC International analyst
HOW DID AMAL ATHIRA SUCCEED IN SUCH A SHORT TIME? COMMITMENT, EFFORT, WILL. THE NORMAL TRACK TO TRIUMPH. To organise the biggest Special Olympics golf tournament in the world is something that fills us with pride. More importantly, knowing that Macau gives to these athletes a unique cultural, social and sporting ethos is truly inspirational. Proving that more unites us than ever separates us. * Amal Athira Mohd Nordin, from Malaysia, plays at level 1+2
12 | Business Daily
March 6, 2015
Asia
South Korea’s wages reflect job market stalemate
The country added more than three million jobs in the past 10 years
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outh Korea’s legion of older workers has helped keep the jobless rate low but has exacerbated record low employment among the young - less than half of those aged 15 to 29 have jobs. It is also a cause of the decadelong stagnation in wage growth, dampening consumption. Given high household debt and a poor welfare system, older employees are willing to adapt to keep working. “Elderly people are so aggressive and desperate in seeking employment after losing jobs that they are willing to take low-wage jobs even at factories that young people avoid,” said Park Chang-in, head of the Korea Labour Foundation’s job transfer service team. As wages stagnate, households spend less. Consumption is lagging overall growth despite government efforts to ease the US$1.4 trillion economy’s reliance on exports. Household spending as a percentage of GDP has been declining since 2006, though domestic consumption has increasingly fuelled neighbouring economies. South Korea has added more than three million jobs in the past 10 years, keeping unemployment at an average of 3.5 percent for the decade through 2013, lowest among Organisation for Economic Co-operation and Development (OECD) countries and less than half the 7.1 percent OECD average. However, real wage growth averages less than 1 percent a year over the past decade even as the economy averaged brisk 3.7 percent growth after adjusting for inflation.
“Growth without wages” The trend is deepening, with wage growth falling to a real 0.6 percent last year from 2.5 percent in 2013 and the employment rate of those
Samsung Electronics and Hyundai Motor now create more jobs in lower-wage countries than at home
aged 50 or older rising to 55.5 percent from 54.8 percent. At the same time, the employment rate for those aged 15 to 29 fell to 41 percent in 2014 from 45 percent a decade ago as more young people opted to stay in school for longer or gave up looking for jobs. A recent OECD report showed South Korean men stop working at an average age of 71.1, the oldest after Mexico among the organisation’s 34 member countries and more than 10 years later than the country’s official retirement age - meaning many older people are actively in the job market. South Korea is the fastest aging country among the world’s major economies and expects its workingage population to start shrinking in 2017. Last year, the Korea Labour Foundation helped about 15,600
Strong employment growth used to be a result of strong economic growth but in recent years, job growth has been led by a strong supply of labour, especially of the elderly Kang Joong-koo economist LG Economic Research Institute
Reuters
NZ central bank eyes tighter investor lending rules
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ew Zealand’s central bank signalled it may tighten rules on lending to property investors in another attempt to cool a rampant Auckland housing market without raising interest rates. The local dollar fell. The Reserve Bank of New Zealand said yesterday it is seeking views on how best to define property investment loans, which banks would be required to put into an asset subclass and hold appropriate capital for those loans. The proposed rule amendment “is designed to ensure that banks hold adequate capital for the risks that they face from investment property lending,” the
RBNZ said in a statement. “It looks to me like this is the first and necessary step to implementing some macro-prudential tools for investors,” said Shamubeel Eaqub, principal economist at the New Zealand Institute of Economic Research Inc. in Auckland. “The key constraint is how do you define an investor?” The central bank, which introduced limits on low-deposit mortgage lending 17 months ago, has said it’s concerned about Auckland’s house market, where a shortage of properties saw prices soar 13 percent in the year through February. It is unwilling to raise borrowing costs because the slump
mostly elderly people find new jobs after losing their previous jobs, well past its target of 11,000. “Well-paying jobs that elderly people used to occupy are getting scarcer and elderly people are accepting positions even for very low wages,” said Park Jong-kyu, an economist at the Korea Institute of Finance, calling this a “growthwithout-wages” pattern. While companies such as Samsung Electronics and Hyundai Motor helped turn South Korea into an industrial powerhouse, they now create more jobs in lower-wage countries than at home. Samsung Electronics froze domestic wages this year after profits fell in 2014. The flipside of low wage growth is that companies can glean the benefits of cheap labour for now.
Auckland (skyline pictured) house market triggered the government reaction
in oil prices and a firm New Zealand dollar have pushed inflation below its 1 percent to 3 percent target band. The RBNZ previously indicated it was looking at defining an investor as someone with five or more properties. It is now consulting on three possible alternative definitions for an investor loan, it said yesterday. They are: if a mortgaged property is not owner-occupied; if servicing of
a mortgage loan is primarily reliant on rental income; or if servicing of a mortgage loan is at all reliant on rental income. Consultation closes April 7 and, once a definition is settled on, the RBNZ proposes to require banks to include such loans in a specific sub class, it said. While the proposal is not a macroprudential policy, creating consistent asset-class groupings to be used by all banks would help to implement targeted macro-prudential policies if necessary in the future, the central bank said. “It’s trying to say these investors are likely to face more stringent conditions when it comes to borrowing in terms of how much gearing they can have,” said Eaqub. “It’s heading in the right direction, but the underlying issue hasn’t changed. It’s still very much about supply and until we resolve that, these things are essentially just buying time.” Bloomberg News
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, 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 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
March 6, 2015
Asia
Thai consumer confidence at 7-month low
Japanese courts delay nuclear restart The fight over restarting Japan’s nuclear industry is moving to the courts, where power companies face the risk of further delays in firing up idled reactors if judges side with local residents worried about nuclear safety. Four reactors owned by two utilities cleared regulatory safety checks in recent months, potentially soon ending more than a year without atomic power in Japan, the first such spell in the four decades the nation has been using nuclear energy.
Consumer price index fell 0.52 percent in February from a year earlier Orathai Sriring and Kitiphong Thaichareon
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onsumer confidence in Thailand fell for a second straight month in February, according to a university survey, as low commodity prices and marginal economic growth kept down domestic demand. The consumer confidence index of the University of the Thai Chamber of Commerce fell to 79.1 last month from 80.4 in January and December’s 81.1, an 18-month high. The February reading is the lowest since July’s 78.2. While a reduction in retail oil prices from last year has given consumers more to spend, falling prices for rubber and rice have hurt demand in the provinces. “Consumers thought the economy had not recovered much,” the university said. “Although the political situation was more stable, worries about high
living costs and future income continued to dent consumer confidence.” Thanavath Phonvichai, an economics professor at the university,
KEY POINTS Consumers sense only small recovery - university Feb index at 79.1 vs 80.4 in Jan Spending might improve from May – economist
Thai consumers tend to buy the cheapest products
said confidence could fall further as gasoline prices increased recently and commodity prices keep declining. “But spending may improve in May or June as the government accelerates its spending,” he said. The economy grew only 0.7 percent last year, the weakest since devastating flooding in 2011. The junta aims for 4 percent growth this year. Private consumption, a big part of the economy, has been curbed by high household debt, one reason the Bank of Thailand (BOT) has held its policy interest rate at 2 percent for a year. Most analysts expect no change when it reviews policy on March 11. A deputy BOT governor said last month the benchmark rate was already low and any rate cut might not boost loan demand much. Thailand’s consumer price index fell 0.52 percent in February from a year earlier. In January, it declined 0.41 percent, the first fall since 2009. Nittaya Suwannarat, an employee with a processed food firm in southern Thailand, said the economy isn’t good in her area, where many people are rubber growers. “Low-income people spend a lot less or go for cheap food,” the Songkhla resident said. “What people buy is anything cheap.” The university’s confidence index began declining months before Thailand began to face political turmoil in late 2013. Through April 2014, it fell 13 consecutive months. Reuters
Natural rubber output to resume growth in 2015 Meanwhile, a slowdown in China’s economy could pull down the Asian giant’s imports for the first time in at least a decade, Thomas said Rajendra Jadhav
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lobal natural rubber output could jump over 5 percent this year after posting its first drop in a half-decade in 2014, as a price rebound prompts more tapping in key producers Thailand, Vietnam and India, a top industry official said. The Association of Natural Rubber Producing Countries (ANRPC) expects international output of 11.18 million tonnes in 2015, its secretary-general told Reuters. Despite rising production, natural rubber prices are likely to extend gains after climbing over a quarter since hitting their lowest in more-than five years in September last year, boosted by lower inventory and economic recovery in the United States. “Total world consumption didn’t fall last year. There was incremental growth, which depleted stocks,” Sheela Thomas said on the side-lines of industry conference India Rubber Meet. At the end of January, stocks in ANRPC
countries stood at 988,300 tonnes, down nearly a quarter from last year’s level. “In the next few weeks, wintering will affect production ... A moderate increase in prices has to happen.” Rubber is tapped year round but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand and Malaysia lasts from February to April. A sharp drop in prices had prompted some farmers in India, Thailand, Indonesia and Malaysia to suspend tapping last year. A moderate recovery in prices will encourage the resumption of tapping, especially in Thailand, where farmers do not have alternative sources of income, Thomas said. Output in Thailand, the world’s biggest natural rubber producer, is likely to rise 7.4 percent to 4.3 million tonnes, while production in second-biggest producer Indonesia could remain largely steady around 3.1 million tonnes. Vietnam, which became the world’s
No.3 producer in 2013, could see its output rising 4.9 percent to a record 1 million tonnes. Thomas estimated China’s 2015 imports at 3.7 million tonnes, down nearly 10 percent from the year before. Reuters
11.18 mln tonnes
2015 worldwide expected rubber output Association of Natural Rubber Producing Countries
Laos, Vietnam remove taxes The governments of Laos and Vietnam have agreed to eliminate tariffs on more than 95 percent of goods traded between the two countries, local media reported yesterday. Tariff-free status will be extended to some 9,000 listed goods under the agreement, state-run media Vientiane Times quoted Laos’ Foreign Trade Policy Department Deputy Director General Saysana Sayakone as saying. The deal was signed by Laos’ Minister of Industry and Commerce Khemmani Pholsena and her Vietnamese counterpart Vu Huy Hoang in Vientiane on Tuesday.
Bank Indonesia not worried over rupiah Indonesia’s central bank governor said yesterday that the rupiah is in good condition and Bank Indonesia is not worried about its decline, as the currency weakened past a psychological support level at 13,000 per dollar. “The rupiah is in good condition and we are always in the market to reduce volatility,” Bank Indonesia Governor Agus Martowardojo told reporters. “In general, there’s no need to worry,” he added. Earlier yesterday, the central bank’s deputy governor Mirza Adityaswara said onshore dollar demands contributed to the recent weakening in the rupiah.
India’s airwaves auction starts India’s latest auction of radio wave frequencies for telecoms networks got off to strong start, with the government receiving bids worth about 617 billion rupees (US$9.9 billion), according to bidding data. Market leaders Bharti Airtel and Vodafone Group local unit are among eight companies bidding to win the 20-year allocations in four different spectrum bands in an auction that the government reckons could raise US$13.3 billion. Data released by the Department of Telecommunications after six rounds of bidding on the first day of the auction showed strong interest in the premium 900 megahertz band.
Myanmar authorities disperse strikers Myanmar authorities have taken action to disperse striking garment workers with Yangon’s Shwepyitha Industrial Zone as negotiation with the striking workers made no progress on settling labour dispute, a semi- official report said yesterday. The workers from the foreign-owned E-Land Myanmar Garment Factory staging protest at the industrial zone were dispersed by the security force Wednesday near evening with about 15 protestors and two reporters including a foreigner being detained. During the incident, labour strike leaders, along with 30 workers, had been arrested.
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March 6, 2015
International Banks brace for U.S. Fed inspection The largest U.S. banks and their foreign rivals are facing a tough twostep check-up of their financial health by the Federal Reserve, forcing the firms to get a far better grip on how they measure risk. In its annual “stress tests”, the Fed gauges whether banks have enough shareholder capital to withstand a severe economic shock like that of the 2007-09 crisis, when taxpayers spent billions of dollars to keep the industry afloat. Yesterday, it will publish the first leg of the tests, announcing which of the 31 banks have dropped below the 5 percent minimum for top-tier capital.
Cerberus sees active role in Europe U.S. investor Cerberus Capital Management will play an active role in European banking consolidation, it said yesterday, sending the strongest signal yet it could soon exit its majority stake in Austrian lender BAWAG PSK. Cerberus executive and BAWAG deputy chairman Keith Tietjen was speaking after BAWAG boosted 2014 profit by 45 percent to 333 million euros and forecast it would earn more than 400 million this year. BAWAG Chief Financial Officer Anas Abuzaakouk said the lender aimed to keep its common equity tier 1 ratio above 12 percent of risk-weighted assets and would cut net costs by five to 10 percent this year.
Citigroup sells stake in Akbank Citigroup has sold its nearly 10 percent stake in Turkey’s Akbank for US$1.2 billion, the U.S. lender said yesterday, its latest disposal of overseas assets to cut costs and boost profits. New York-based Citi has been paring back in international markets in recent years, pulling out of retail banking in Turkey as well as long-established businesses such as Japan. Citi, which had been the second-largest shareholder in Akbank, said the sale would not have a material impact on its finances. It did not disclose the buyer.
Belarus plans to issue domestic bonds Belarus plans to issue at least US$700 million worth of domestic bonds denominated in foreign currency this year, Finance Minister Vladimir Amarin said yesterday. In 2014, Belarus placed US$800 million worth of bonds on the local market.
Brazil hikes interest rate Brazil raised interest rates to the highest level in six years, maintaining its aggressive pace of monetary tightening to fight inflation despite fears the economy is slipping into a deep recession. The bank’s monetary policy committee, known as Copom, voted unanimously to hike the benchmark Selic rate by 50 basis points for the third straight time. The move was expected by an overwhelming majority of economists and traders. Brazil is one of the few major economies raising rates, with peers such as China and India loosening monetary policy to prop up economic growth.
South Africa’s power crisis risks choking green drive The country is experiencing its worst blackouts since 2008
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outh Africa’s hopes of becoming one of the world’s top renewable energy hubs are dimming due to poor infrastructure and delays as cashstrapped state utility Eskom is distracted by a scramble to keep the lights on. Chronic electricity shortages are one of the biggest brakes on growth in Africa’s most developed economy as regular blackouts strangle industries from mining to manufacturing and pile pressure on President Jacob Zuma’s government. Zuma laid out ambitious goals last month to increase power generation capacity, including plans to boost installed renewable energy capacity to 9,600 megawatts (MW) by 2030 from just 1,600 MW now, out of a total capacity of 44,175 MW. Upgraded technology and lower costs have enhanced the appeal of clean energy in Africa, as firms such as Enel Green Power and E.ON eye the relatively untapped region to help offset lagging growth in mature European markets. With year-round sunshine and thousands of miles of windswept coast in South Africa, investors are warming to the renewable energy potential, with 66 projects completed or underway since the government launched a first bid round four years ago. Yet, developers are becoming impatient over delays and a lack of infrastructure to connect privately-run power stations (IPPs) to the national grid, with the risk that investors might switch to rival markets such as Mexico and Brazil. “There is a growing sense of frustration among developers as we negotiate with Eskom and government on grid upgrades and how it is financed,” said Jack Zhao, deputy general manager for Africa at Goldwind, a Chinese wind turbine maker. “If everybody has to wait for three to five years for a grid connection, South Africa will lose investment. The longer you wait the more expensive
KEY POINTS Chronic power shortages stem economic growth President Zuma promises green energy expansion Delays, weak infrastructure hold back renewable growth Cash-strapped Eskom distracted by power crisis
Darling Wind Farm in South Africa
it becomes,” he told Reuters.
Infrastructure gap Firms such as Spain’s Abengoa, which is building South Africa’s first two concentrate solar power stations, are ready to invest more, but the government needs to upgrade substations and install thousands of kilometres of high voltage transmission lines to deliver the new energy supplies, industry experts say. Sutherland, an inland mountainous region with huge wind power potential, does have existing transmission lines but the absence of a 200 million rand (US$17 million) substation is holding back the development of 1,000 MW of wind power. “There are a variety of challenges in the way of South Africa entrenching its place as one of the world’s top clean energy markets,” said Johan
Muller, energy analyst at Frost and Sullivan consultancy. Cash-strapped Eskom has other problems it may consider more pressing as it tries to limit power blackouts by repairing and building more coal-fired plants, which supply the bulk of South Africa’s electricity. The country is experiencing its worst blackouts since 2008 as Eskom regularly cuts power to preserve a national grid teetering on collapse. The Treasury said last month South Africans should brace for three years of power disruptions. The utility says it needs 149 billion rand through 2022 to upgrade its transmission network but the government said it had already “exceeded” its limit, and only allocated 2.3 billion rand to strengthen the network in the last bid round. Reuters
German industrial orders plunge Demand from the euro zone plummeted by 9.0 percent
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erman industrial orders fell far more than forecast in January, posting their largest drop since August, data showed yesterday, casting a shadow over what had previously looked like a strong start to 2015 for Europe’s largest economy. Bookings for goods made in Germany declined by 3.9 percent on the month after rising sharply in December, data from the Economy Ministry showed. The headline figure undershot the Reuters consensus forecast for a 1.0 percent decline and undercut even the lowest estimate for a 2.5 percent fall. The decrease was driven by sharp declines in contracts for capital and intermediate goods and a smaller drop in orders of consumer products. The Economy Ministry said fewer bulk orders played a role. Christian Schulz, senior economist at Berenberg Bank, said the drop was not as concerning as the big fall in orders last August, especially because the “Putin shock” had faded and confidence indicators had headed north.
It’s a reminder that Germany’s growth at the moment is driven by consumption and not by the manufacturing backbone of the economy Christian Schulz senior economist Berenberg Bank
The disappointing figures come after a string of data had pointed to robust expansion in the first quarter, with business and investor sentiment surveys improving, unemployment falling and retail sales surging. But other recent data on the industrial sector has been upbeat, with engineering orders climbing by 3 percent on the year in January thanks to strong demand from abroad while a survey showed manufacturing sector growth picking up due to the strongest rise in new orders in seven months. Private consumption drove 1.6 percent growth in Europe’s economic powerhouse in 2014 but Schulz said other sectors were likely to gain traction in the second half of this year. A breakdown of the data showed demand from the euro zone plummeted by 9.0 percent, while appetite in Germany and countries outside of Europe also weakened. The data for December was revised up to a 4.4 percent increase from an originally reported 4.2 percent gain. Reuters
Business Daily | 15
March 6, 2015
Opinion
Lessons for U.S. oil production wires from the gas industry Business
Leading reports from Asia’s best business newspapers
THE STRAITS TIMES Singapore is set to have the world’s fastest growth in the number of super rich individuals within the next 10 years, Knight Frank forecast in its latest annual wealth report. Between 2014 and 2024, the number of ultra-high-net-worth individuals (UHNWI) - who have a net US$30 million (S$41 million) in assets - will rise by another 1,752, the property consultancy firm said in its Wealth Report 2015 released on Thursday. This puts the Republic at the No. 1 spot in terms of growth of UHNWIs, ahead of Hong Kong, New York, London and Mumbai, in descending order.
John Kemp
Reuters market analyst
THE KOREA HERALD Exports of South Korean cosmetic products jumped more than 50 percent last year from a year earlier, buoyed by a surge in demand from Chinese consumers, data showed yesterday. Outbound shipments of cosmetics totalled US$1.87 billion last year, spiking 52 percent from the previous year, according to government and industry data. The on-year increase was mostly powered by surging sales of Korean cosmetics products in China, with exports to the country accounting for 31 percent, or US$581 million of the total. Among the top importers of Korean cosmetics products were Hong Kong, the United States and Taiwan.
TAIPEI TIMES Taiwan has snubbed a multimilliondollar funding pledge by China’s e-commerce giant Alibaba Group Holding Ltd designed to encourage the country’s young entrepreneurs, saying young talent should stay away from China. It comes after the Investment Commission on Tuesday ordered Alibaba to withdraw or transfer its holdings from its Taiwanese branch, saying that it registered as a Singaporean company when it was in fact a Chinese company. On Monday, Alibaba announced the NT$10 billion (US$316 million) funding scheme for young entrepreneurs to help them set up businesses and sell products in China.
BANGKOK POST Buoyed by a more upbeat economy and regional economic integration, Thai retailers are set to invest more than 300 billion baht in the next five years to tap a growing customer base. The investment plans come mainly from beverage tycoon Charoen Sirivadhanabhakdi and retail giants Central Group, The Mall Group and Siam Piwat Co. The expansion will see more outlets of strong retail brands in various formats, from shopping complexes to convenience stores, with the construction of at least 30 community malls.
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he United States produced a record 25.7 trillion cubic feet of natural gas in 2014 according to preliminary estimates published by the Energy Information Administration (EIA) on February 27. Gas production has risen 27 percent since 2008 even though the number of rigs employed drilling for gas has declined by more than 80 percent over the same period. Continued growth in output despite a sharp drop in rigs and depressed gas prices is often cited as a warning not to rely on rig counts to forecast future production. The gas industry’s experience is especially relevant now given the plunge in oil prices and new drilling since June 2014. But the real lessons from the gas industry are more complicated and underscore the complicated relationship between prices, drilling and production.
Lessons for oil The gas industry’s experience holds two lessons for oil production. First, gas production would have fallen since 2008 in response to lower prices and drilling had it not been for the boom in crude production and high prices for natural gas. Second, it is the combined value of all the products from a well (dry gas, natural gas liquids and crude) that determine the profitability of a well. Continued growth in gas production has been, in large part, a by-product of the oil boom. Oil producers will not be so fortunate. They cannot rely on natural gas sales to improve
the financial performance of their wells. Efficiency improvements and greater drilling selectivity will ensure the drop in oil production is proportionately smaller than the drop in rigs. But based on the gas industry’s experience there is every reason to believe oil output will level off, and maybe fall, unless oil prices and drilling pick up.
Mixed hydrocarbons Rig counts published by oilfield services company Baker Hughes and others make a simple binary distinction between rigs drilling for oil or gas. Drillers and petroleum producers must classify their wells as oil or gas-producing depending on the primary output and inform state authorities so they are treated appropriately for tax and regulatory purposes. In reality, however, most wells produce a range of hydrocarbons from dry gas (methane) to natural gas liquids (ethane, propane, butane and natural gasoline) and crude oil (molecules heavier than pentane). Since 2009, most drilling has targeted rock formations and plays that yield more natural gas liquids (NGLs) and crude rather than dry gas because they have been more valuable. An increasing share of gas production has therefore come from wells which are either listed as crude wells or listed as gas wells but produce a substantial volume of natural gas liquids and crude as well which improves their profitability. Simple correlations between prices, drilling and production
are therefore apt to mislead. Correlations between rigs and total gas output miss the growing amount of associated gas produced from crude oil wells. Correlations between prices and the number of wells miss the important role played by natural gas liquids and trace crude recoveries in making these wells profitable.
Casinghead gas Total U.S. gas production increased by roughly 4.2 trillion cubic feet between 2008 and 2013. Of this increase, 3.5 trillion, or 83 percent, came from just three states: Pennsylvania, Texas and North Dakota. In Texas and North Dakota, increased gas production has been a by-product of the growing number of crude oil wells. In Texas, the amount of associated
The gas industry’s experience is especially relevant now given the plunge in oil prices and new drilling since June 2014
or casinghead gas produced from oil wells has tripled from 674 billion cubic feet in 2008 to almost 2 trillion cubic feet in 2014. Casinghead production has grown from less than 9 percent of the state’s gas output to almost 25 percent between 2008 and 2014, according to the Railroad Commission of Texas. Casinghead production has grown even as gas-well gas has fallen from 7 trillion cubic feet to 6.2 trillion. North Dakota’s output of casinghead gas has also surged with the Bakken oil boom and the state’s efforts to curb flaring of associated gas produced from crude wells.
Wet gas wells In contrast to Texas and North Dakota, most of Pennsylvania’s increased gas production, which amounted to more than 3 trillion cubic feet between 2008 and 2013, has come from wells classified as gas producers. Pennsylvania’s shale gas wells drilled into the Marcellus formation have proved exceptionally productive. But those wells have also yielded a high and increasing proportion of natural gas liquids, helping them remain profitable despite depressed gas prices. The focus of drilling has gradually shifted from central Pennsylvania, where wells produce mostly dry gas, to more westerly counties, where the gas is wet and mixed with valuable NGLs and crude. Without high prices for NGLs and crude, the state’s gas boom would have been far smaller. Reuters
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March 6, 2015
Closing Malaysia central bank holds policy rate steady
China expects to issue taxi app regulations in H1 2015
Malaysia’s central bank kept its key interest rate unchanged at 3.25 percent yesterday, as expected, saying inflation is only expected to trend higher after the first quarter of 2015. “While the monthly headline inflation would be subjected to the volatility in global oil prices, underlying inflation is expected to remain contained amid the stable domestic demand conditions,” Bank Negara Malaysia’s (BNM) monetary policy committee said in a statement. A Reuters poll of 16 economists unanimously predicted that Bank Negara would keep its overnight policy rate steady.
Transport minister said yesterday he hopes to have regulations issued on using mobile apps to book private cars within the first half of 2015, state media reported, amid doubts on the legal status in China of Uber and similar services. In January, China’s Ministry of Transport banned taxi hailing apps such as Uber Technologies Inc and local rivals Kuaidi Dache and Didi Dache, who have since announced a merger, from using cars and drivers without taxi licences in a bid to regulate the rapidly growing sector.
Internet firms developing electric cars
Government will step up its efforts to build more charging stations for alternative-energy vehicles
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hina will encourage Internet companies like Leshi Internet Information & Technology Corp. to develop electric vehicles as they have the potential to create a new manufacturing model for the auto industry, according to the industry and information technology minister. “We’ll encourage them because they can totally outsource their production,” Industry Minister Miao Wei said yesterday in Beijing as he left a National People’s Congress session at the Great Hall of the People. “To cite one example, Foxconn, they don’t have their own mobile phone but they produce Apple’s mobile phones.”
The likely model is that they form joint ventures and seek mutual benefits Harry Chen analyst Guotai Junan Securities
China, which is promoting the use of electric vehicles to reduce the reliance on imported oil and to cut tailpipe pollution, is experimenting with allowing companies outside the manufacturing industries to develop EVs as a way to inject innovation and spur competition. The initiative is taking place at a time when Silicon Valley companies from Apple Inc. to Uber Technologies Inc. are getting into transportation from cars to drones to space ships and pioneering new business models. Miao’s comments are the clearest indication to date that technology companies will be allowed to develop electric vehicles. His ministry
China promises quicker investment approval
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jointly regulates the auto industry with the National Development and Reform Commission.
Production capacity The biggest hurdle for non-automakers entering the industry had been a stipulation that companies had to possess vehicle production capacity, in addition to experience in product research and development and vehicle design. They also needed at least 15 sample EVs that met national technical standards, according to the draft of the policy posted on the website of the National Development and Reform Commission
in November for public feedback. Leshi climbed 4.2 percent in Shenzhen trading for the biggest gain in two weeks. Shenzhen Desay Battery Technology Co. surged 10 percent. BYD Co., a maker of batteries and electric vehicles, climbed 6.1 percent in Hong Kong trading, while the benchmark Hang Seng Index slipped 1.1 percent. “The rally in battery makers and automakers like BYD is driven by speculation that these capital-intensive companies stand to gain from cooperating with cash-rich Internet companies,” said Harry Chen, an analyst with Guotai Junan Securities Co. in Shenzhen. “The likely model
is that they form joint ventures and seek mutual benefits.” Miao said yesterday that the policy will probably be finalized in a “couple of months.” After that, companies can apply for the licenses and relevant panels of experts will be convened to review the applications, he said. Miao also told reporters earlier yesterday that China will step up its efforts to build more charging stations for alternative-energy vehicles so as to resolve a bottleneck that’s holding back sales. He said he expects sales of alternative-energy cars, China’s term for plug-in hybrids and electric vehicles, to improve this year. Bloomberg News
LME’s 2014 trading fees revenue up 8 pct
Xiaomi forecasts revenue topping US$16 billion
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overnment yesterday promised to process investment applications in much shorter time by reforming its approval system. Currently a company will need stamps from more than 30 government departments before its investment project is officially approved and they have to go through the procedure one by one. By the end of this year, the number of such steps will reduce to two or three ones, said Xu Shaoshi, minister in charge of the National Development and Reform Commission (NDRC), at a press conference on the side-lines of the national legislative session. The rest of steps will be processed on government websites simultaneously, which will greatly shorten the time, Xu said. The NDRC is negotiating with other departments to realize this reform, he said. Chinese government eased investment approval procedure last year by cancelling 15 approvals and delegating 23 approvals from the central to local government. Together with what had been done in 2013, 76 percent of administrative approvals have been abolished or delegated, Xu said.
evenue from trading fees and tariffs at the London Metal Exchange rose 8 percent to HK$928 million (US$120 million) in 2014, boosted by new clearing fees from September, LME owner Hong Kong Exchanges and Clearing Ltd said yesterday. LME Clear, the new London-based clearing house of the LME, generated HK$187 million (US$24.11 million) in clearing fees after its launch in September 2014, HKEx said. Total revenue at the LME, the world’s oldest and biggest marketplace for industrial metals, grew by 5 percent to HK$1.274 billion (US$164.27 million). Operating expenses rose by 11 per cent to HK$568 million due in part to greater staffing, marketing expenses for the Hong Kong bourse’s mini metals contracts, and legal fees from class action lawsuits in the U.S. Legal and professional fees jumped by 20 percent to HK$175 million last year, mainly related to legal fees incurred in respect of U.S. class-action lawsuits. A U.S. judge dismissed antitrust litigation accusing HKEx as well as Wall Street banks and commodity merchants of conspiring to drive up aluminium prices.
Xinhua
Reuters
he company expects revenue this year to rise more than 50 percent as China’s biggest smartphone vendor diversifies its product line-up and expands to more overseas markets. The projection for more than 100 billion yuan (US$16 billion) in sales compares with last year’s total of 74.3 billion yuan, founder and Chief Executive Officer Lei Jun told reporters at the National People’s Congress in Beijing yesterday. The company’s revenue more than doubled last year. Xiaomi’s valuation has surged to US$45 billion just four years after releasing its first smartphone, with the company tapping the surging domestic demand for inexpensive devices packed with highend features. The closely held company has taken stakes in more than 20 start-ups in the past two years, adding products including air purifiers and light bulbs that can be controlled by smartphones. “There’s no doubt they will surpass 100 billion yuan this year, and sales growth will be more than 50 percent,” Lei said. Mobile Internet and other Internet businesses “maintain strong growth” amid weakening conditions in the Chinese economy. Bloomberg News