Business Daily #1270 April 7, 2017

ANZAC Day observance in Macau Tue, 25 April 2017 │ 7:30am - 9:30am │ MGM Macau C DAY ANZA

Followed by breakfast from 8:30am

Global spending on green energy shrinks Environment Page 16

Friday, April 7 2017 Year VI Nr. 1270 MOP 6.00 Publisher Paulo A. Azevedo Closing Editor Oscar Guijarro Growth

Gaming

Asia Development Bank forecasts regional evolution for 2017 Page 12

Gaming providers IGT and Aruze sign patent cross-licensing agreement Page 6

Tax

New electronic notification system to ditch double taxation Page 4

www.macaubusinessdaily.com Real estate

Strategy

Domestic property fund bullish about luxury property market Page 2

Success Dragon to abandon machine management biz in MSAR Page 6

Commercial Leads Property Rebound Property

A strong performance by the commercial real estate sector at the beginning of the year. But realtor Centaline also notes a strong finish to 2016 impacted residential figures in the first three months.

The company is optimistic about the rest of the year.

Anticipating a rebound in residential property in 2Q. Page 3

SJM inks mega agreement

Think of a number

Anyone’s guess. The final cost of the Hong KongZhuhai-Macau Bridge remains unknown. As official figures have not yet been analysed. The Infrastructure Development Office said advisors had been appointed to evaluate additional costs.

Grand Lisboa Palace SJM has signed a HK$25 bln syndicated loan facilities agreement. With 19 financial institutions acting as lenders. The project in question is budgeted at an estimated HK$36 bln. With Grand Lisboa Palace likely to open in the first half of 2018 operating 400 gaming tables. Page 6

Mainland service sector loses steam

Delta bridge Page 4

HK Hang Seng Index April 6, 2017

24,273.72 -127.08 (-0.52%) Worst Performers

China Overseas Land &

+1.78%

Sands China Ltd

+0.95%

Want Want China Holdings

-4.79%

Industrial & Commercial

-1.57%

China Resources Land Ltd

+1.62%

China Resources Power

+0.86%

Geely Automobile Holdings

-4.03%

Lenovo Group Ltd

-1.32%

Hengan International Group

+1.10%

Cheung Kong Property

+0.75%

China Unicom Hong Kong

-3.87%

China Life Insurance Co Ltd

-1.25%

China Mengniu Dairy Co Ltd

+1.03%

Henderson Land Develop-

+0.51%

China Merchants Port Hold-

-2.20%

AAC Technologies Holdings

-1.09%

Power Assets Holdings Ltd

+0.95%

China Petroleum & Chemical

+0.47%

China Construction Bank

China Shenhua Energy Co

-1.08%

-1.73%

21° 25° 21° 24° 22° 24° 22° 25° 21° 25° Today

Source: Bloomberg

Best Performers

Sat

Sun

I SSN 2226-8294

Mon

TUE

Source: AccuWeather

PMI China’s service sector continued to slow in March. With a private survey revealing the sector had fallen to a six-month low. The Caixin indexes for March contrast with the official PMIs released by the National Bureau of Statistics. Partly due to the companies included in the surveys. Page 10

2 Business Daily Friday, April 7 2017

Macau Real estate

MPO Fund anticipating ‘steady’ recovery The firm saw occupancy at its luxury residences go up last quarter, forecasting leasing demands will increase further after the opening of MGM Cotai and Grand Lisboa Palace Kam Leong kamleong@macaubusinessdaily.com

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ondon-listed Macau Property Opportunities Fund Ltd. (MPO), managed by property investment manager Sniper Capital Limited, is bullish about the recovery of the city’s luxury property market, while it saw occupancy in its highend residential projects in the MSAR increase during the first quarter of this year triggered by the comeback of high rollers.

According to the Fund’s latest investor update, its adjusted net asset value grew 1.3 per cent for the last quarter of 2016, amounting to US$231.2 million (MOP1.85 billion) for its third consecutive quarterly increase. Meanwhile, the value of its portfolio rose by 1.7 per cent quarter-on-quarter to US$405 million.

As at the end of March this year, the occupancy level at The Waterside the Tower Six of high-end residential project One Central Residences on the Macau Peninsula - rose 10 percentage points quarter-to-quarter to 59 per cent, the company said.

‘The improvement was aided primarily by a revival in the VIP junket market and attractive commission packages introduced to incentivise third-party property agents,’ it explained.

Despite the increase in occupancy, the average monthly rental rate of the residence dropped by three per cent quarter-to-quarter to HK$17.42 per square foot.

Nevertheless, the company believes the upcoming openings of two more casino-resorts in the MSAR may help turn the situation around.

‘We believe the soon-to-open MGM Cotai in Q3 2017 and the Grand Lisboa Palace in 2018 will draw more senior level expatriates to Macau, which in turn is likely to drive leasing demand for high-end residential properties,’ the company wrote in the report.

According to the Fund, it also sold one of its four remaining individual units at One Central residences for US$5 million during the first quarter of the year, with a sale return amounting to 65 per cent.

For another project on Penha Hill - The Fountainside - the company said residential sales continued on ‘an upward trend’ during the first three months of the year, noting customer viewings of the project had surged 40 per cent in the period.

‘Sales of mid to high-end properties, however, remained quiet due to the continued imposition of a 50 per cent loan-to-value cap by the government on properties valued at more than US$1 million,’ it said.

Recovery amid uncertainty

‘We continue to expect a slow but steady recovery in Macau’s property values, which should lead to the strengthening of the luxury segment as confidence improves,’ the company notes in its report.

However, it is worried that global uncertainties, such as further U.S. Fed rate hikes, appreciation of the U.S. dollar, and tightening capital outflow

controls by China, will ‘lead to higher borrowing cost for homebuyers and weigh on gaming revenues . . . Nevertheless, we believe the upcoming infrastructure developments, favourable Chinese central government policies and stable fundamentals will continue to support the attractiveness of Macau as an investment destination.’

Meanwhile, the company said its receipt of approval to proceed to the final stage of the planning process for its ‘Senado Square’ project ‘has increased the attractiveness of the site to potential buyers.’

‘We are progressing to the detailed planning application stage and will continue to engage with the relevant authorities to ensure smooth progress in obtaining approvals,’ the firm wrote.

The new development will offer 67,800 square feet of space for retail and food and beverage businesses.

Intellectual property

Business

Applications for intellectual property rights surge

Huarong Macau buys Carnival’s secured convertible bonds

Macao Economic Services (DSE) received a total of 1,272 applications for intellectual property registration in the MSAR last month, up 38.7 per cent from 917 applications a month earlier, as more people requested to register trademarks.

According to the official information of DSE, a total of 1,210 applications were filed for trademark registration in the month of March, which represents an increase of 37.8 per cent year-on-year from 878 applications in February.

Meanwhile, the government bureau received 24 requests to register

invention patents, and 20 others for extension of current invention patents.

Some other 14 applications were submitted to DSE for registering industrial design or models, while only one applicant applied to register a utility patent, and three others applied for name and emblem of establishment registration.

Accumulatively, some 2,998 applications for registering intellectual property rights in the territory were submitted to the economic department in the first quarter of the year.

The number, compared to 3,158 applications for the fourth quarter of 2016, represents a decrease of 5.1 per cent although total applications for registering invention patents quadrupled to 40 quarter-to-quarter.

During the three-month period, the number of applications for trademark registration fell by 4.6 per cent year-on-year to 2,834, while that for extending current invention patents fell 21.9 per cent quarter-to-quarter to 82.

The number of applications for utility patent registration and for industrial design or models both went down by 40 per cent quarter-to-quarter, amounting to 3 and 36, respectively; registrations of name and emblem of establishment decreased by 57.1 per cent quarter-to-quarter to three.

The subsidiary of China Huarong Asset Management Co., Ltd. – Huarong Macau – is to purchase 6.5 per cent secured convertible bonds due 2020 issued by Mainland Chinese tourism developer Carnival Group, according to the latter’s filing with the Hong Kong Stock Exchange on Wednesday.

The subscription of Huarong Macau is worth HK$390 million (US$48.6 million).

The filing reads that the bonds can be fully convertible at the initial conversion price of HK$0.946 per share of Carnival Group, and the issued bonds will be convertible into some 412.2 million conversion shares, representing 2.44 per cent

of the existing issued share capital of Carnival Group.

Huaron Macau was set up last December by its parent in the MSAR for developing a locally- based integrated financial services platform, with registered capital of Huarong Macau amounting to MOP233 million.

It provides business financial services in investment holdings, asset restructuring, mergers and acquisition advisory, corporate management as well as economic trade and risk management consulting.

Carnival Group is the only publicly listed operator from Mainland China which engages in large-scale integrated tourism, hospitality and retail attractions. C.U.

Business Daily Friday, April 7 2017 3

Macau

Real estate

Centaline Macau: 2016 Q4 transactions for commercial property surged Local real estate agent reports transactions in the fourth quarter of 2016 for commercial property reached two-year high Cecilia U cecilia.u@macuabusinessdaily.com

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ong-Kong based real estate agency Centaline (Macau) Property Agency Ltd. reported yesterday in a press conference that last year’s fourth quarter transactions for commercial properties had reached a two-year high, with last December’s transactions alone reaching MOP2.6 billion (US$230 million).

Centaline Macau Director Roy Ho Siu Hang explained that the significant rise had resulted from improved confidence in the market by big enterprises.

He cited Statistics and Census Bureau (DSEC) data and estimated that some 120 commercial properties would be transacted in the first three months of this year, generating in excess of MOP2 billion.

In terms of street store rentals, Mr. Ho perceived that the market would rebound in the second half of the year.

Positive performance is also anticipated by the real estate agent for office units, given that the agent had recorded transactions for more than 20 office units, amounting to over MOP200 million earlier this year.

Referencing official DSEC data, Centaline anticipates over 60 office unit transactions for the first quarter of 2017, which would generate over MOP600 million.

“According to our estimates, a one-fold increase would be expected when compared to the same period last year,” said Mr. Ho. Regarding the prices of the office units, Centaline recorded growing patterns for regions in NAPE and Nam Van, up three to 10 per cent year-on-year.

Although an upward trend is evident for the prices of office units during the first three months, prices in the leasing market remain unchanged.

Ho cited the decrease in numbers of new companies being established causing stagnant leasing prices for offices.

Nevertheless, Centaline expressed a positive outlook for the office units market in the coming second quarter.

“Owing to the active market response in neighbouring regions and also [because] many enterprises will make purchases during the current low prices […] we expect a growth of some 15 per cent by the end of this year,” said the realtor.

Residential transactions down in Q1, to rebound in Q2

Jacky Shek Po Tak, Senior Director of Centaline Macau, disclosed yesterday that housing transactions – for both new and secondhand properties - for the first quarter of this year had decreased by 40 per cent quarter-on-quarter.

The drop in the first three months, according to the realtor, had resulted from the weak consumption power of some potential buyers.

Mr. Shek explained that dwindling consumption power was caused by the booming housing transactions of the last quarter of 2016.

Citing Financial Service Bureau (DSF) figures, the realtor expected approximately 900 housing transactions to be made in March and some 2,100 transactions for the entire first quarter of this year.

In addition, prices for residential units would generally stand at MOP90,000 per square metre.

With consumption power requiring time to re-accumulate and also the supply of secondhand properties

remaining inactive if market prices persist at the same level, Mr. Shek said transactions would reach 700 to 800 per month.

Mr. Shek remarked that an upward trend will be evident in housing prices for the second quarter, noting that new properties such as Nova City will be rolled out later this year.

“We can see that the price per square metre for new properties is in line with secondhand prices,” said Shek, adding that housing prices would remain moderate.

Rocketing Hengqin property transactions

In 2016, some 5,986 transactions were recorded in the Chinese city of Hengqin – double vis-à-vis 2015, as cited by Centaline from official Zhuhai data.

According to Centaline figures, 30.22 per cent of last year’s transactions involved local buyers.

Mr. Ho reported that 68 units in the R&F Centre, costing MOP240 million,

were being transacted with a Hong Kong-based enterprise earlier this year.

Given the permit of one licence entry to Hengqin as well as the strengthening policies made by the Chinese city, the realtor perceived that more investors from the two SARs would be attracted.

Gloomy industrial property market

Of all segments, expectations for industrial property units is the most pessimistic.

“For 2017, our outlook for industrial units remains bleak,” said Mr. Ho, observing that transaction has been declining since 2015, with the total number of transactions in that year amounting to just a quarter of those of 2014.

In addition, the stringent regulations for industrial properties in neighbouring cities have led investors to exercise cautious in this market sector.

4 Business Daily Friday, April 7 2017

Macau Opinion

Infrastructure

GDI: Additional costs for super bridge remain unknown

Pedro Cortés*

Oh, Carrie!

Ms. Carrie Lam was elected Chief Executive of Hong Kong in the elections that took place two weeks ago.

As a public servant, she has served in many offices and departments. The role that deserves a highlight is the one in which she played Director-General of the Hong Kong Economic and Trade Office in London. The experience she had in this office and, before, while studying at Cambridge, may have given her a helicopter view of society and of what a CE of Hong Kong must be. It may also give a new boost to our noisy neighbour.

Taking into consideration her campaign slogan – ‘We connect’ - one may believe that after some years of disturbance of the population a more peaceful region may be her goal and that the connection to our common motherland would be less impaired.

Hong Kong plays a decisive role in the integration of the Great Pearl River Delta Region – Macau, Hong Kong and Guangdong Province.

After this, and assuming that Ms. Lam will be in office for two terms (which, unlike Macau, is something difficult to achieve in Hong Kong), we will be entering upon a new and mature stage of a Special Administrative Region in the onward march of the People’s Republic of China.

In what concerns to Macau, and despite what may appear to be contradictory, we have experienced integration within the referred Great Pearl River Delta Region but, at the same time, we have seen the former administered territories separating themselves and following each path without sometimes looking to each other.

From a suburb city of Hong Kong, Macau has evolved into an international destination where gaming fuels the economy. There are, of course, close links, but in my humble opinion such links are no longer dependence.

There is already a full independent local class of entrepreneurs who do not need to have as mother companies those connected or incorporated in Hong Kong. In terms of utterance of the autonomy of Macau, it seems quite important. Ms. Lam will also be – we all expect – the CE who will inaugurate the new bridge which, after all the delays, shall be operational before she leaves office. This landmark and strong step, will change forever the face of Macau and its integration within the People’s Republic of China.

We all wish that Ms. Lam is successful and able to make Hong Kong not great again but to continue to be great. *lawyer and frequent contributor to this newspaper.

The government department said it is awaiting the amount of total overrun for the main bridge to be tallied up Kam Leong kamleong@macaubusinessdaily.com

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he MSAR Government’s budget for the main section of the Hong Kong-Zhuhai Macau-Bridge remains at RMB1.98 billion (MOP2.3 billion/US$287.5 million) at the moment, although the total amount for the overrun is still under analysis.

According to Tomás Hoi, acting co-ordinator of the Infrastructure Development Office, the three governments have already appointed an advisor to evaluate the additional costs for the main sector of the delta bridge.

The official revealed the information in his reply to legislator Au Kam San’s written interpellation enquiring into the construction costs of the super infrastructure.

The main bridge, including a 29.6 kilometre dual 3-lane carriageway, runs from the artificial island off Gongbei in Zhuhai to the eastern artificial island for the tunnel section west of Hong Kong’s boundary facilities for the bridge. The project was initially estimated to cost a total of RMB15.73 billion, underwritten by the three governments in a mutually agreed ratio.

In February, Hong Kong’s Secretary for Transport and Housing, Anthony Cheung Bing-leung, admitted the

main sector of the bridge had overrun its budget. “The final cost for the main bridge will be higher than the original estimate due to some construction and manpower challenges,” the Hong Kong official said as quoted by South China Morning Post.

He added then that the three governments will make up the difference on a proportional basis.

On the other hand, the GDI acting head said the Macau Government is pushing Mainland authorities to speed up the construction progress

of the city’s border facilities for the bridge located on an artificial island.

“We strive to complete the project with the completion date of the whole Hong Kong Zhuhai Macau Bridge,” the official wrote, adding that the total budget for this project is still under negotiation with the Mainland authorities.

The government also expects the city’s two links – namely, the one connecting the Peninsula to the reclamation area of Zone A, and the other connecting Zone A to the artificial island - to be completed in the third quarter and fourth quarter of this year, respectively.

The super bridge linking the three cities is expected to be completed by the end of this year.

Fiscal Affairs

Electronic notification regime to help avoid double taxation The Portuguese Secretary of State for Fiscal Affairs, Fernando Rocha Andrade, said yesterday in Macau that the electronic notification regime, which could replace tax agents, is a “very important [measure] for the communities.”

Mr. Andrade met with the Councillors of the Portuguese Communities of the China, Macau and Hong Kong Circles on Monday during a visit to the two Special Administrative Regions of China.

“Nowadays, one of the obstacles concerning people who have property interests in Portugal but reside abroad is the requirement for a tax agent when they change residential address, which sometimes creates a series of bureaucratic difficulties,” he said after the meeting.

“By the end of this year, under the terms of legislation already approved, people will be able to opt for a simpler regime of email notification,” he added.

Following this change, the problem of sending letters to the other side of the world disappears, and

people can forgo having a tax agent, which represents both an important simplification and a saving in what regards the case of professional tax agents.”

“It seemed to us that this is a very important measure for the communities. In fact, these were the comments we received and this was a central issue in the discussions,” noted Fernando Rocha Andrade.

The authorisation from the parliament to the government to create the public service of electronic notifications associated with a single digital address, making the electronic address the only digital address in relation to public entities, was published in the Diário da República on March 3.

The authorisation is valid for 180 days, until the end of August. It stipulates that the use of the electronic address for the purpose of creating the single digital address as well as adhesion to the public service of electronic notifications “is voluntary for all individuals and entities, public and private, national and foreign.” It

thus excludes the possibility of being voluntary only for individuals and mandatory for companies.

The authorisation is also intended to enable legally competent entities to prosecute misconduct and to impose fines or ancillary sanctions, and entities providing essential public services (such as water or electricity supply), to join the distribution of notification through the public service for electronic notification associated with the single digital address.

José Pereira Coutinho said that yesterday’s meeting between the Secretary of State for Fiscal Affairs and the Councillors of the Portuguese Communities of the China, Macau and Hong Kong Circles was “very productive.”

“The Secretary of State for Fiscal Affairs has shown great openness to make life easier for retirees and pensioners who have to produce proof of life every year, in addition to a declaration for exemption from IRS in Portugal,” said the counsellor who is also a local lawmaker.

Pereira Coutinho considered that “when making the IRS tax exemption, (a person) already demonstrates that he or she is alive, therefore there is no need that proof of life be made or vice versa.”

On the other hand, he admitted that it is necessary to “allow time” for Fernando Rocha Andrade “to return to Lisbon and make the proposal” so that “documents can reach a standardised level.”

The idea is to reach two objectives based in one single document, Coutinho explained: “On the one hand, (proving) that the person is alive and, on the other, that he resides in Macau and should not pay, under the convention to avoid double taxation, the IRS in Portugal.” LUSA

Business Daily Friday, April 7 2017 5

Macau Gaming SJM signs HK$25 billion loan agreement with 16 financial entities

A budget fit for a Palace SJM chairman Ambrose So expects the cost of the Grand Lisboa Palace to reach HK$36 billion; the property is still slated to open in the first half of 2018 with possibly 400 gaming tables Nelson Moura nelson.moura@macaubusinessdaily.com

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he budget for the development of Grand Lisboa Palace is estimated at HK$36 billion (US$4.6 billion) Sociedade de Jogos de Macau (SJM) chairman Ambrose So Shu Fai announced yesterday.

According to the SJM chairman, Grand Lisboa Palace will likely open in the first half of 2018 with an anticipated 400 gaming tables, with the estimated cost taking into account “land costs, financial charges, preliminary and opening expenses.”

“We’re trying to catch up with the construction progress the best we can. In fact, we expect basic construction to be completed in 2017, not yet including internal construction works or that for other facilities.

In addition, we need to obtain an operating licence from the government and occupancy permits,” Mr. So stated.

The businessman considered the property a “safe bet” since SJM was

the last gaming operator to “complete [a gaming property]” without having much “pressure on cost escalation.”

A HK$25 billion loan

The statements were made on the sidelines of the signing ceremony for HK$25 billion-worth of syndicated loan facilities agreement - offered by a group of lenders to a single borrower - between SJM and 19 leading financial institutions.

The proceeds are to be mainly used to finance the construction of the Grand Lisboa Palace, with the agreement comprising a HK$15 billion term loan facility with final maturity in 2022 and a HK$10 billion revolving credit facility with final maturity in 2020.

The agreement involves 19 financial institutions from Mainland China, Hong Kong and Macau, with the Industrial and Commercial Bank of China (Macau) Limited serving as Global Mandated Lead Arranger and Bank of China Macau Branch as Senior Mandated Lead Arranger.

“The [Syndicated Loan Facilities] are oversubscribed by 1.2 times and are the largest syndicated loan facilities in Macau in recent years which will help boost the confidence in Macau’s economy after the economic contraction of the past few years,” the CEO of ICBC (Macau), Wu Long, said at the event.

With the loan agreement having been first announced in 2014, Mr. So refused to consider that the dwindling

of gaming revenues in the following two years had affected the loan negotiations, saying three major issues led to the delay.

“There was a necessary revision of economic forecasts until the involved parties were satisfied with the figures (plus) the technical issues arising from the translation of legal documents to three languages and thirdly awaiting for government approval,” Mr. So said.

The SJM chairman said that the recovery of the MSAR gaming economy “not just gave him and the company confidence” in the future but also the banks, claiming secondary banks are “chasing” the participating entities in the loan agreement to participate in the agreement.

6 Business Daily Friday, April 7 2017

Gaming

Gaming

Success Dragon to sell gaming service business In addition to its management business of gaming machines, the company only wants to retain its new energy business after one year

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aming service firm Success Dragon International Ltd. will drop its gaming machine management business in the MSAR and betting business in Vietnam within one year in order to focus on the energy field, reported Hong Kong Chinese language newspaper Ming Pao. The news outlet quoted the company’s Executive Director and Chief Executive Officer Jiang Dan as saying

that the disposal of the company’s current businesses of gaming service provision, product packaging and betting will be completed within one year; the total value of the three segments is expected to be less than HK$100 million (US$12.5 million).

At the end of last month, Mr. Jiang replaced Carlos Luis Salas Porras as CEO of the firm. The new company executive previously served as chief investment officer of Sinochem

Europe Capital Limited and Sinochem Hong Kong Group Limited – companies which engage in the production and trading of chemicals and fertilizer, and the exploration and production of oil.

One day following news of the appointment, the company announced it had completed the purchase of 20.82 per cent of the shares in Primus Power Corporation for a total of US$20 million. The latter specialises in the provision of electrical energy storage system solutions.

In fact, Success Dragon has already terminated its agreement with two slot clubs in Vietnam for the provision of electronic gaming machine

management this year, citing ‘unexpected difficulties in obtaining the requisite business certificates for operation of electronic gaming machine business’ in the Southeast Asian country.

For the first half of its fiscal year ended September 30, 2016 the company posted a net loss of HK$30.2 million, an improvement of 78.5 per cent from HK$140.3 million for the same period of 2015.

In the MSAR, the company provides electronic gaming management to Pharaoh’s Palace Casino and Casino Casa Real on the Macau Peninsula, in addition to Casino Grandview in Taipa.

Gaming

Gaming

IGT and Aruze, the beginning of a profitable partnership

Thumbs up from Bahamas for Baha Mar Resort

Sheyla Zandonai sheyla.zandonai@macaubusiness.com

International Gaming Technology (IGT) PLC, a provider of lottery technology and interactive gaming solutions, has signed a patent cross-licensing agreement with Aruze Gaming, a slot machine and gaming devices developer, according to a press release.

The terms of the agreement stipulate that Aruze can offer games, including patented game features from IGT’s portfolio, by paying licensing fees to IGT. According to Michael Prescott, IGT Senior Vice-President and General Counsel, North America Gaming Interactive, the agreement builds upon “IGT’s positive momentum toward investing in the growth of the gaming industry while protecting (the

Kazuo Okada

company’s) intellectual property.”

A cross-licensing agreement is an agreement pursuant to which two or more licence holders exchange licences so that each party may benefit from the other’s patent. Overall, the patents that each party owns cover different essential aspects of a given commercial product.

Under the current IGT-Aruze agreement, this would mean, for instance, that IGT games will feature in Aruze’s gaming devices.

Aruze has not replied to Business Daily’s enquiries about the terms of the agreement (e.g.) licensing fee percentage and amount and the types of games from IGT’s portfolio it would be offering, as at the closing of this story.

U.S.-based IGT supplies products to gaming operators across a hundred countries, according to the company.

It posted a US$211 million (MOP1.68 billion) net income for the whole year of 2016.

Aruze is a subsidiary of Japan-based Universal Entertainment Corp., owned by Kazuo Okada, a Japanese tycoon who is developing the US$2.4 billion Manila Okada Integrated Resort in the Philippines.

Aruze’s local subsidiary, Aruze Macau Gaming Limited, focuses on the distribution of mass-floor Electronic Gambling Machines (EGM) and Electronic Table Games (ETG), according to information previously provided by the company to Business Daily.

The Bahamas authorities have approved the gaming licence for casino-resort complex Baha Mar Resort, Bahamas newspaper Tribune242 reported.

The Chow Tai Fook Enterprises (CTFE) property’s soft opening is scheduled for April 21 of this year, with the gaming licence received by its Sky Warrior Bahamas Ltd. subsidiary.

According to Obie Wilchcombe, the Bahamas Minister of Tourism, the application received a ‘comprehensive probity investigation’ based upon eligibility criteria for licensing in the country’s Gaming Act, with the country’s Gaming Board recommending its approval and the granting of ‘associated certificates of suitability.’

The Bahamas Attorney General,

Allyson Maynard-Gibson, has also assured that the sealed documents containing the details of the deal that saw the complex being purchased

by CTFE last year would be released in April, without specifying if they would be released before the property’s opening.

In December 2016, CTFE signed a US$3.5 billion (MOP28 billion) purchase agreement for the project through its subsidiary Chow Tai Fook Holdings.

The Hong Kong conglomerate acquired Baha Mar Resort by purchasing Perfect Luck Assets Limited (Perfect Luck), a special purpose vehicle (SPV) held by Chinese state-owned Export-Import Bank of China, which according to the newspaper requested the deal documents be sealed.

Business Daily Friday, April 7 2017 7

Gaming Gaming

Kinmen proposes casino development referendum The Taiwan island may decide if it wants a casino as soon as October Nelson Moura nelson.moura@macaubusinessdaily.com

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new referendum on whether to permit gaming development on the Taiwanese island of Kinmen will be held again as early as October, newspaper Taiwan News reported.

According to the news report, an official from the country’s right-wing political party Kuomintang had gathered 6,207 signatures for a petition requesting the Kinmen regional government hold a referendum to vote on the matter.

The plebiscite proposal is now awaiting approval from the Taiwan Central Election Commission, while voting is expected to take place in

October at the earliest if it gets the nod from the authorities.

The outcome of the referendum is unpredictable as the number of reg­ istered residents in Kinmen -140,000 - is more than double the number of residents actually living on the island, the news outlet noted.

Gaming is forbidden in Taiwan although its parliament approved an amendment to the Offshore Islands Develop­ment Act in 2009 allowing offshore islands to hold referendums on casino development.

According to the Taiwanese Referendum Act, similar plebiscites cannot be held in less than a threeyear period, meaning that a new referendum can only be held after 2020 if Kinmen residents reject casino development.

In October 2016, residents of the Taiwanese island of Penghu vetoed casino development for the second time in seven years, with 81 per cent of voters saying ‘no’ to the proposal.

In 2012, residents of the Matsu

Islands approved gaming development in a referendum, although Taiwan’s parliament has yet to approve a Tourism Casino Administration Act that would effectively enforce regulations for the establishment and management of casinos.

The country ’s ruling party, the Democratic Progressive Party (DPP), opposes the development of casinos, as its leader, Taiwan’s President Tsai Ing-wen, favours developing tourism on the offshore islands by promoting their natural resources.

Gaming

Paradise Co. gaming revenues stumble in March South Korean gaming operator Paradise Co. Ltd. registered 39.26 billion won (MOP278 million/ US$34.9 million) in March of this year, a 10.8 per cent decrease from the 44.03 billion won registered in the same month in the year prior, according to a company release on

the Korean Stock Exchange.

The group’s table revenue in March 2017 decreased by 11.9 per cent year-on-year to 36.36 won billion, while machine revenue increased 5.2 per cent yearly to 2.89 billion won.

With regard to the first three

months of the year, Paradise Co. revenues fell by 9.5 per cent to reach 124.93 billion won, while the casino drop fell by 2.8 per cent to reach 1.20 trillion won.

The information provided by Paradise Co. involved the group’s properties ‘casino business division’

including Walkerhill in Seoul, the Jeju Grand on Jeju Island, and a property in Incheon and Busan, which in all represented 86 per cent of consolidated sales.

There are currently 17 casinos in South Korea, of which five are operated by Paradise Co., with the majority not allowing Korean nationals to gamble, apart from one property in Gangwon Province. N.M.

8 Business Daily Friday, April 7 2017

Consigliere

Liquid Luxury New Bordeaux vintage looks great, will politics affect prices?

Elin McCoy

The latest big wine story took place in Bordeaux last week, where flags flew over turreted stone chateaus to welcome several thousand enthusiastic

merchants and journalists. They were swooping in from around the globe for en primeur, the region’s famous annual spring ritual. (Some call it a circus.)

From Monday to Friday we sipped

and spitted hundreds of red, white, and sweet wines from the new 2016 vintage, still aging in oak barrels, to evaluate how the wines are turning out. The weather last year was, as they say, complicated but ended well.

So far, local Bordeaux wine whisperers claim the quality of the 2016s is as exceptional, possibly even better, than the superb 2015s I reported on last year.

Based on a few quick chateau visits

Jay-Z’s new A2 champagne costs US$850 a bottle Kate Krader

If a soundtrack invariably accompanies a big celebration—an engagement, say, or winning a division championship, or the closing of a monster deal—it’s the popping of Champagne corks.

Here comes a bottle for the most major celebration: Armand de Brignac’s Blanc de Noirs Assemblage Two, aka A2, from the centuries-old house owned by the rapper Jay-Z, which hits the market on April 18.

The release of its predecessor A1, in its eye-catching gun-metal-coated bottle with a hand-hammered pewter label, generated serious buzz in 2015.

People noted its US$760 price tag, one of the costliest for a non-vintage Champagne, and wondered how much Jay-Z and his friends and family might hype it. Would it feature in a video the way the brand’s blanc de blancs figured in the bathtub of the Beyoncé and Nicki Minaj Feeling Myself music video? Would he continue building US$100,000 Champagne towers, which he did with Armand de Brignac’s Brut Gold for a Barack Obama fundraiser at his 40/40 Club in 2008?

Yet mere prop it was not; the rich, fruit-forward A1 was named the No. 1 Blanc de Noirs in the world in a blind tasting by Fine Champagne

magazine in the summer of 2016.

Wine writer Mark Oldman admires the wine’s complexity and nuance: “It holds its own against the world’s best Champagnes,” he maintains. He cautions, however, that it doesn’t necessarily taste like US$750 and that many other sparklers are as delicious for one-10th the price. “Those finer details are often lost on the casual drinker,” he says. Our own wine critic, Elin McCoy, called the A1 “full, rich, and tangy—and way better and more elegant than it has to be for a wine that may end up more status symbol than collectible.”

We haven’t tasted the A2 yet—it hasn’t yet arrived in the U.S. We do know that it features pinot noir grapes picked from the 2008, 2009, and 2010 vintages, almost exactly the same as the fruit used in A1. It’s said to taste quite similar to its predecessor, except for a subtle flavor of peppermint, a refreshing undertone on the finish. And that the bottle looks almost exactly the same as A1’s—a status symbol for a certain kind of celebrant. “I know people who buy just one bottle so they can show it off whenever someone comes to their home,” says Oldman. “It’s bling bling for the Frigidaire.”

Extravagant Look

Therein lies a key to the success of

Armand de Brignac. Fine wine drinkers love it, and so do people who are in it for the flash, as Champagne is one wine whose packaging counts for a lot. Every inch of an Armand de Brignac bottle is coated in metallic gold and silver or shiny pink, as with the rosé. It looks like no other wine you can find.

“Champagne is a wine that historically is associated with quality, uniqueness, and celebration; Armand de Brignac embodies that in its product and design,” says Jordan Salcito, founder of Bellus wines and Ramona wine cooler. “They understand that their consumer is interested in luxury. They have five sizes of large format bottles. If a regular size A1 bottle is good at creating a moment, imagine how show-stopping a magnum or a jeroboam is.”

Numbered plaques

Yet even with the flash, Armand de Brignac is turning to a subtler sort of signaling with A2: The only thing that announces the bottle as different than its predecessor is a discreet label on the back with its number stamped on it. Only 2,333 bottles of A2 are being released onto the market at a price of US$850, the cost of a new Samsung Galaxy S8. (If you can score a case, it will cost a little more than US$10,000.)

Numbering the A2 bottles responds to a demand from collectors.

“We hadn’t thought about numbering them originally. But customers and collectors were requesting specific numbers: 888, or their birth date,” said Chief Executive Officer Sebastien Besson over the phone.

Does it have anything to do with the rise in counterfeit wine? No. “We haven’t found counterfeit wines.

With the pewter bottles and the boxes, it’s tough to do. Anyway, it’s harder to counterfeit champagne than it is to fake a red wine.

It’s just too complicated.”

Besson maintains that even though the new version is US$100 more than the original release, A2 is “accurately priced.” He compares it with the value of a great red wine and points out that the cost is much lower than that of many DRCs. Many of the bottles have already been preordered from Armand de Brignac’s top clients. “We anticipate they may only

Business Daily Friday, April 7 2017 9

Consigliere

a couple of weeks ago, I’d say maybe they’re right. Here’s my sneak preview.

I stopped by a handful of top estates, including Château Calon-Ségur, Château Palmer, Château Pichon Baron, Château Montrose, and Château La Conseillante. The wines were all luscious to taste, with expansive floral aromas, plenty of plump fruit, freshness, and even more succulence and vibrancy than the 2015s. The second wines and estates’ other labels, such as Calon-Ségur’s Château Capbern, were also delicious. All the wines were vivid and dynamic; those from the Saint-Estèphe appellation are definitely better than their 2015s.

Is the vintage consistent at both top and less-prestigious estates? Will there be some super values? After sampling 500 or so wines next week, I’ll report in detail.

A surprising harvest

Meanwhile, I heard plenty of 2016 gossip from winemakers at an annual event in the gigantic Bordeaux warehouse of negociant Millesima. Around us, stacks of thousands of wooden cases of older vintages reached the high ceiling, reminding us that selling Bordeaux is big, big business.

Nicolas Glumineau, who runs Château Pichon Lalande in Pauillac, told me, “2016 was a miracle, it’s like a mix of two great vintages, 2009 and 2010.” Others harkened back to the great twin years of 1989 and 1990, a

be available for a few months,” he said.

Armand de Brignac won’t release its sales figures, but it produces about 100,000 bottles of its six Champagnes annually, “a drop in the ocean of the 300 million bottles of Champagne produced annually,” said Besson.

As for the celebrity ownership, Besson says Jay-Z’s influence has been understated since he took ownership in 2014, leaving development up to the house’s venerated winemakers. Three new Champagnes have been released since then—the A1 Blanc de Noirs, A2, and a sweet prestige cuvée Demi Sec. “Jay is a very strong businessman, certainly one that likes to understand what consumers want and here to build the business for the long term,” said Besson. “He always has a few bottles on hand for a celebration, I know that for sure.” Bloomberg News

pretty good recommendation. This, actually, is a surprise; Philippe Dhalluin of Mouton Rothschild, who had just flown in from London, explained, “The quality of 2016 was completely unexpected because of the year’s weather.”

Meaning: The growing season wasn’t exactly a slam dunk.

In his annual weather report, Bordeaux merchant Bill Blatch described 2016 as “a year of two long extremes, totally wet for the first half, then totally dry for the second.”

Yes, the region was lucky compared with Burgundy, which was plagued by frost and hail, but constant rain and then record-breaking summer drought and heat waves stressed the grapes.

A thunderstorm on Sept. 13 saved the day, writes Blatch, and breathed new life into the vines. A long sunny autumn with cooler temperatures resulted in such good grapes at some estates they barely had to sort them during harvest in early to mid-October.

And there will be lots and lots of wine. The 2016 harvest is the largest in more than a decade, the equivalent of about 770 million bottles, according to official figures.

How that will affect prices is one of the questions merchants will be asking themselves, as they assess quality and decide what their clients might buy.

In case you’ve forgotten how the

futures game works, it goes like this: The chateaus offer a portion of their wines while still in barrel to negociants, the 300 or so brokers who sell about 70 percent of all the wine produced in Bordeaux. The negociants tack on a margin of profit before selling them on to retail merchants, who then sell to customers, who finally pick up their bottled wines in 2019. The wines are aged in barrels for anywhere from 12 to 24 (or more) months and bottled at the chateau, and then released about six months later.

Many chateaus now hold back a big percentage of their wine, reckoning they can sell it for more later, especially in China, where wine lovers prefer to buy it only in bottle.

But quality is only one of the factors merchants consider when pondering which wines to snap up.

Global politics

This year there’s plenty of global uncertainty, with the upcoming French elections, the falling British pound, and the triggering of Brexit this week.

All could make it difficult to hawk wine outside of France.

“A new, hugely important variable in the U.S,” Shaun Bishop of JJ Buckley emailed, “is what kind of impact the proposed border-adjustment tax being debated on Capitol Hill might have.”

Happily, sales of 2015 futures were a qualified success compared with

the previous lacklustre four years— though still nothing where barrel sales were for the great 2009 vintage.

In the U.S., though, the dollar is strong and Bordeaux appears to be back, after a hiatus with very little wine-lover interest. “We sold thousands of cases of good values like Tour St. Christophe futures last year,” emailed Chris Deas of Westchester, N.Y.-based Zachy’s. “En primeur is now a hot trend to follow.” A couple of merchants I spoke to sold about same amount stateside as they did of the 2009s.

No one, though, unloaded a lot of first growths like Château Lafite Rothschild; 2015 futures are now selling for about US$550 a bottle.

The sweet price spot, explains Dan Snook of negociant Joanne USA, is less than US$100.

Price—and the exchange rate—will be very, very important. Clyde Beffa of the Bay Area’s K & L Wine Merchants, cautions, “The second vintage of back-to-back great vintages always falter if prices are the same or higher.”

So far, so good. On Monday, March 27, sweet Sauternes estate Château Guiraud was the first to announce its release price, even before buyers tasted it, and pitched it at €30 (US$32.40), the same as for the 2015.

All these merchants said they’ll be looking for values. Hey, me too.

Bloomberg News

Cheval Blanc 1947 Double Magnum fetches US$105,000 at Sotheby’s Guy Collins

A three-litre double magnum of Chateau Cheval Blanc 1947 from the Saint-Emilion region of Bordeaux sold for 84,600 pounds (US$105,000) at a Sotheby’s sale in London March 29, above the top estimate, while a 4.5 litre jeroboam of Pauillac first growth Chateau Latour 1961 fetched 30,550 pounds, according to the auction house.

The sale also featured 12 bottles of Cros Parantoux 1995 Henri Jayer Burgundy, which fetched 58,750 pounds, and five bottles of Romanee Conti 2001 Domaine de la Romanee-Conti, which sold for 47,000 pounds.

Fine wine prices are rising after a 40 percent drop in many top Bordeaux wines since 2011, hurt by slower demand from China and a run of difficult harvests. Following improved quality in the 2014 and particularly 2015 vintages, a recent survey by the London-based Liv-ex market showed members expect the benchmark Liv-ex 100 Index to extend last year’s 25 percent rally.

“Bidding saw prices soar for rare Bordeaux” and also top-label Burgundy, “with bottles through to large formats all hitting the heights,”

Stephen Mould, Head of Wine, Sotheby’s Europe, said in a statement.

The sale also included four bottles of Chateau Lafleur 1961 Pomerol, which sold for 30,550 pounds, and six bottles of Echezeaux 1990 Jayer Burgundy, which fetched 28,200 pounds, according to Sotheby’s. Five magnums of Chateau Haut Brion

Chateau Latour

1961 fetched 22,325 pounds.

The London sale was the second in a three-part series of wine auctions which started in New York on March 25 and finishes in Hong Kong Saturday. The New York sale totalled US$1.89 million and the London sale a similar amount of 1.66 million pounds. Bloomberg News

10 Business Daily Friday, April 7 2017

Greater China Caixin PMI

Services activity expands at weakest pace in 6 months Retail sales growth was well below expectations in the first two months of the year as auto sales dipped

A

ctivity in China’s service sector expanded at its weakest pace in six months in March, hurt by slower growth in new orders and intensifying cost pressures, a private survey showed, painting a less rosy picture of a sector that Beijing is counting on to maintain economic momentum.

The Caixin/Markit services purchasing managers’ index (PMI) for March fell to 52.2 from February’s 52.6, but remained above the 50-level that separates expansion from contraction.

The survey of largely mediumand small-sized firms showed activity at its lowest since September 2016.

The result contrasted with official surveys showing services PMI growth for March accelerating at the fastest pace in almost three years, and manufacturing activity unexpectedly expanding at the quickest rate in nearly 5 years last month.

In yesterday’s private services survey subdued business demand pulled down the headline PMI index. There are concerns China’s real estate sector - a big growth-driver for sectors from construction to banking - could become a drag on the broader economy as they were hit with fresh waves of housing policy curbs in mid-March.

The new business sub-component slipped 1.1 percentage points to 52.2 in March, the weakest demand for China’s service providers since September 2016.

“Weaker increases in new business have clouded the economic outlook, and investors should watch closely for signs of a turning point in the second quarter,” Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said in a note.

Lukewarm growth may also suggest consumers in the world’s second-largest economy are cutting back on spending, highlighted by disappointing revenue reports at some of the nation’s top consumer firms.

Retail sales growth was well below expectations in the first two months of the year as auto sales dipped.

Cost pressures also rose sharply as input prices soared to their highest point in more than four years, although firms were able to pass on part of the costs to customers with a modest increase in prices charged.

A number of companies linked rising cost to higher salary payments, the survey said.

While the overall readings in the private survey were far from alarming, the underlying results backed analysts’ cautious view on the outlook for the economy.

In particular, economists believe the construction rally, largely driven by a furious property boom since last year, may have peaked. Indeed, official data on Friday showed new construction orders dropped to the lowest since August 2016.

On top of the stepped-up curbs on the property sector, Beijing has also started to tighten policy settings to temper risks from a rapid build-up in debt.

Caixin’s composite manufacturing and services PMI, also released on Thursday, reinforced the patchy growth underpinned by weaker demand in March, with the index falling to 52.1 from the previous month’s 52.6.

“The Chinese economy continued to expand in March, but growth in both manufacturing and services slowed,” CEBM Group’s Zhong said, referring to the private survey.

Both the Caixin services and composite readings showed service providers and manufacturers continued to add jobs last month, but the pace was moderating. Reuters

Cash injections

Beijing tipped to boost liquidity again as bank tax payments loom Skipping reverse-repo auctions is part of the PBOC’s campaign to reduce leverage in China’s financial system China’s central bank is expected to resume cash injections to the financial system this month as tax demands on commercial lenders spur another round of tight liquidity.

“The liquidity won’t be loose in April, but it’d also be difficult to see persistent tightness as well” Analysts led by Tang Yue at Industrial Securities wrote in a note

The need for lenders to park corporate tax payments with the central bank could drain hundreds of billions of yuan in the second half

of April, ending a period of relative calm in China’s money markets. The People’s Bank of China has refrained from adding cash to the system for nine days, the longest stretch since it started daily open-market operations at the beginning of last year, citing a relatively high level of liquidity.

“The central bank will probably have to resume the reverse-repurchase operations in the middle of this month on a cash shortage,” said Shen Bifan, an analyst in Shenzhen at First Capital’s fixed income department.

“Of course it can now tolerate a more volatile funding market, but when it really tightens, it will respond to it to avoid a cash crunch.”

Skipping reverse-repo auctions is part of the PBOC’s campaign to reduce leverage in China’s financial system. The pause in adding cash covered the quarter-end period a time when interbank liquidity usually tightens as lenders hoard

funds to meet regulatory checks.

That said, China’s seven-day repo rate has fallen 57 basis points over the first two trading days in April, after surging to an almost two-year high on March 31.

“The liquidity won’t be loose in April, but it’d also be difficult to see persistent tightness as well,” analysts

led by Tang Yue at Industrial Securities wrote in a note yesterday.

Since March 24, when the PBOC stopped injecting cash, policy makers have withdrawn a net RMB420 billion (US$60.9 billion) from the system, data compiled by Bloomberg show.

China’s markets were closed April 3-4 for a holiday. Bloomberg News

Business Daily Friday, April 7 2017 11

Greater China Visa fraud

In Brief

US authorities torpedo scheme for wealthy Chinese Several of those who benefitted from the program were fugitives on China’s 100 most wanted list Federal agents in California on Wednesday raided two homes and a business allegedly connected to a US$50 million visa fraud scheme that benefited up to 100 Chinese nationals.

Authorities said the key suspects in the case helped wealthy Chinese obtain residency visas in the United States in exchange for bogus investments.

According to an affidavit by an FBI agent involved in the probe, Victoria Chan, a California attorney, and her father, Tat Chan, beginning in 2008 convinced more than 100 Chinese nationals to invest upwards of US$50 million in the California Investment Immigration Fund (CIIF) and related companies in order to obtain visas under the so-called EB-5 program.

The program offers foreign nationals permanent US residency -- commonly known as a green card -- in exchange for investments of at least US$500,000 in a US business that must also create 10 American jobs.

“As a result of the fraudulent scheme, many foreign nationals were able to improperly obtain US green cards through the EB-5 visa program, even though those foreigners did not in fact truly invest in US businesses, nor were new American jobs created,” FBI special agent Gary Chen wrote in the affidavit.

Chen said several of those who benefitted from the program were fugitives on China’s 100 most wanted list, charged with crimes such as bribery and abuse of power.

Nevertheless, at least three of the bogus investors were able to obtain green cards even though their applications contained false information, Chen said.

Victoria Chan and her father allegedly promised investors a full refund on their funds but kept some of the money to buy multi-million-dollar homes for themselves and for Tat Chan’s female companion, Fang Zeng, a Chinese national.

They also submitted plans to federal authorities for various development

projects that never got off the ground.

Officials said no arrests have been made yet in the case and no formal charges have been filed.

The EB-5 program was created in 1990 to help stimulate the US economy through job creation and capital investment from foreign nationals.

Nearly 90 per cent of EB-5 visas were issued to Chinese nationals in 2014, when the program reached its quota of 10,000 visas and had to stop accepting applications. AFP

Seven arrested in new economic zone Seven people have been arrested in China for unspecified real estate violations in an area slated to become the country’s newest special economic zone, the China Daily newspaper reported yesterday. A government committee formed to prepare for the Xiongan New Area, in northern Hebei province, found 765 cases of real estate violations and had shut down 71 sales offices, the newspaper quoted a statement from the body as saying. It did not give details of the violations. Average apartment prices in the region had almost doubled one day after the news were unveiled.

Environment

Authorities launch new inspection into air pollution China’s environment ministry said it will send 5,600 inspectors on a yearlong investigation into the sources of air pollution in major northern cities. The Ministry of Environmental Protection (MEP) said in a notice posted late on Wednesday on its official website that inspections into 28 northern cities in and around the BeijingTianjin-Hebei region will focus on improving the way the country’s standards and laws are enforced. The 28 cities have already pledged to draw up detailed action plans to address smog, promising to shut small polluting enterprises and halve coal and steel production in the winter.

Results

Yum China posts positive Q1 on takeout sales, tax break The company saw operating profit grow 22 per cent for the quarter Yum China Holdings Inc posted a slight rise in first-quarter same-store sales, helped by a jump in takeout demand and improvement at its flagging Pizza Hut brand as the newly spunoff firm looks to revive growth in the world’s second-biggest economy.

The operator of fried chicken outlet KFC, Pizza Hut and Taco Bell in China saw same-store sales rise one per cent in the quarter, ahead of analyst forecasts of a 0.7 per cent decline, according to researcher Consensus Metrix. That helped lift the firm’s shares 10 per cent after market close.

The small bump, compared with flat same-store sales in the last quarter of 2016, is a positive note for the fast-food giant which started trading as a stand-alone company in November and has been battling to turn around sluggish growth.

Yum China, previously the Chinese unit of Yum Brands Inc, has seen food safety scares and changing consumer tastes drag on growth.

Prior to the spin-off, China had been the main profit and sales driver for Yum Brands.

“We expect to face many exciting opportunities and also challenges in the market place,” said Yum China Chief Executive Micky Pant in an analyst call on Thursday, adding the result marked a “solid start” to the year helped by delivery sales that were up around 40 per cent.

Yum China saw operating profit grow 22 per cent for the quarter, helped by a reduced tax bill brought about by local reforms, but hit by currency exchange losses and rising

Xiongan

labour and food costs.

That growth helped the chain amass US$1.25 billion in free cash, which it said it would look to invest in new or overhauled stores, potential opportunities outside its core business, or to pay back shareholders through dividends or buying back shares.

“We are examining cash deployment opportunities right across the spectrum from growing our core business, to growing beyond our core and finally returning excess cash to shareholders,” Pant said.

The chain, which has 7,663 outlets in the country, said it remained

on track to open 550 to 600 restaurants this year while delivering double-digit growth in operating profit, excluding adjustments for foreign exchange.

Same-store sales in its Pizza Hut casual dining business rose 2 per cent, their first rise in over two years, although Pant noted this was against a weak comparative quarter in 2016.

Sales at KFC outlets rose 1 per cent, helped by increased promotions celebrating the Lunar New Year and 30th anniversary of KFC in China.

Analysts had expected a fall of 2.4 per cent.

Key Points Q1 SSS up 1 pct vs estimated 0.7 pct fall Q1 profit jumps 20.7 pct helped by tax reform Total revenue fell 1.5 per cent to US$1.28 billion, but beat the average analyst estimate of US$1.27 billion.

Pant added 2017 was a “very significant” year for the firm - its first full year as a standalone company as well as marking three decades since the first KFC outlet in Beijing.

The anniversary was behind a planned year-long “back to 1987” campaign, aiming to evoke the brand’s history in China where as an aspiring, imported brand it saw stellar sales growth for many years until a sharp slowdown in 2013.

“This is a great way to make a nostalgic connection with consumers across China many of whom cherish the memory of their first visit to a KFC,” Pant said. Reuters

M&A

Shandong firm in advanced talks to buy mine China’s Shandong Gold Mining Co Ltd is in advanced talks to buy a 50 per cent stake in Barrick Gold Corp’s Veladero gold mine in Argentina, people familiar with the process told Reuters even as the Canadian miner grappled with a pipe rupture at the site. Barrick is no longer in discussions with China’s Zijin Mining Group Co Ltd about the Veladero mine stake sale, the sources said.

A sale could fetch more than US$1 billion, they added. Veladero, one of Barrick’s five core mines, was the site of a pipe rupture last week.

Auto industry

Ford to launch plug-in car in Mainland next year Ford Motor Co said it would launch a plug-in hybrid car in China in 2018 and a fully electric sport-utility vehicle in the next five years, as it works toward electrifying most of its line-up in the world’s biggest auto market by 2025. This comes at a time when Beijing is urging automakers to sell more electric vehicles, laying out strict fuel economy targets and subsidizing certain new energy vehicle models, in a bid to cut air pollution and promote technological innovation.

12 Business Daily Friday, April 7 2017

Asia In Brief New Zealand

Company tax revenue drives surplus A higher than expected corporate tax take helped give the New Zealand government an operating surplus almost triple what had been forecast in the eight months ending February, the Treasury said yesterday. The operating surplus of NZ$1.41 billion (US$982.91 million) compared with a surplus of NZ$498 million forecast in December last year, said a statement from the Treasury.

Core tax revenue was 1 per cent higher than forecast for the eight months, driven mainly by corporate tax. Core expenses at NZ$50.3 billion were 0.8 per cent lower than forecast.

Consumer Law

Australian regulator sues Apple

ADB

Developing Asia’s 2017 growth seen as weakest in 16 years Economies in South Asia are projected to expand by 7.0 per cent in 2017 and 7.2 per cent in 2018

D

eveloping Asia is on track to post its slowest annual growth in 16 years this year as it adjusts to China’s rebalancing and possible spillovers from global policy uncertainty, the Asian Development Bank said.

The Manila-based lender kept at 5.7 per cent this year’s growth forecast for developing Asia, which groups 45 countries in the Asia-Pacific region. That would be the region’s weakest expansion since it grew 5.0 per cent in 2001.

Next year, developing Asia should again grow by 5.7 per cent, the ADB

said in its 2017 Asia Development Outlook report.

“Developing Asia continues to drive the global economy even as the region adjusts to a more consumption-driven economy in China and looming global risks,” said Yasuyuki Sawada, the ADB’s chief economist.

Sawada said the region faces “risks from uncertain policy direction in the advanced economies, including the pace of interest rate normalisation in the United States”.

“While short-term risks seem manageable, regional policymakers should remain vigilant to respond

Australia’s consumer watchdog has sued Apple Inc alleging it used a software update to disable iPhones which had cracked screens fixed by third parties. The U.S. technology giant “bricked” - or disabled with a software update - hundreds of smartphones and tablet devices, and then refused to unlock them on the grounds that customers had had the devices serviced by non-Apple repairers, the Australian Competition and Consumer Commission said in a court filing.

“Consumer guarantee rights under the Australian Consumer Law exist independently of any manufacturer’s warranty and are not extinguished simply because a consumer has goods repaired by a third party,” ACCC Chairman Rod Sims said.

“Developing Asia continues to drive the global economy even as the region adjusts to a more consumptiondriven economy in China and looming global risks” Yasuyuki Sawada, the ADB’s chief economist

With nearly all economies in Southeast Asia showing an upward trend, the region should expand by a faster 4.8 per cent this year and pick up to 5.0 per cent next year, the ADB said.

Economies in South Asia are projected to expand by 7.0 per cent in 2017 and 7.2 per cent in 2018.

Strong consumer demand and rising global commodity prices could cause the inflation pace in developing Asia to quicken to 3.0 per cent this year and to 3.2 per cent in 2018, the ADB said. Reuters

South Korea

C.bank says rising debt may be capping consumption South Korea’s central bank yesterday said elevated household debt could be restraining private consumption, especially as borrowing costs are rising. “Looking at research papers on household finances, welfare, and other related studies at home and abroad, its possible household debt may already be capping consumption,” the Bank of Korea said in a statement prepared for a parliamentary subcommittee meeting. South Korea’s household debt grew at its fastest pace in over a decade in the fourth quarter as borrowers continued to take advantage of record-low interest rates.

M&A

7-Eleven operator to buy U.S. stores from Sunoco Seven & i Holdings Co yesterday said it would buy convenience stores and petrol stations from Texas-based Sunoco LP for about US$3.3 billion, as the Japanese retailer closes in on its goal to reach 10,000 North American outlets. The operator of the 7-Eleven chain of convenience stores has been aggressively opening stores in Japan as well as the United States, where it has been acquiring stores from local retailers. Its latest purchase comes as operators of traditional big-box retailers including Seven & i have been suffering weak sales.

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to possible spillover through capital outflows and exchange rate movements,” Sawada said.

The Federal Reserve hiked U.S. rates a notch in mid-March, its second tightening in three months.

Forecasts from Fed officials suggest a median of two more increases before year-end.

China, which is rebalancing its economy to growth led by consumption rather than exports, is expected to grow 6.5 per cent this year, the ADB said. That is better than its December forecast of 6.4 per cent, but weaker than the 6.7 per cent expansion in 2016.

Growth in China is seen slowing further to 6.2 per cent in 2018.

The ADB reduced its 2017 growth forecast for India to 7.4 per cent from 7.8 per cent and it expects growth there to pick up to 7.6 per cent in 2018.

Multinational law

Corporate giants hit with US$2.2 bn Australian tax bill Canberra has vowed to crack down on tax avoidance by multinationals Australia yesterday said it had slapped seven large multinationals with a multi-billion-dollar tax bill as it pursued global firms shifting profits offshore to minimise liabilities.

The companies hit with the A$2.9 billion (US$2.2 billion) bill were not named although miner Rio Tinto said late Wednesday it was required by the Australian Tax Office (ATO) to pay additional tax of A$447 million including interest.

The government said four of the firms were involved in e-commerce and three in the energy and resource sectors. Companies including Apple, Google and BHP Billiton were grilled at parliamentary hearings on their tax structures in 2015.

“Our multinational tax laws are

having an impact and we now have one of the toughest, if not the toughest, anti-avoidance tax regimes in the world,” Treasurer Scott Morrison said in a statement.

“Multinational companies are being put on notice.”

Canberra has vowed to crack down on tax avoidance by multinationals, introducing new laws that included stronger protections for whistle-blowers and harsher penalties for failure to meet compliance or disclosure requirements.

The ATO was currently carrying out 71 audits in 59 global firms, with some 1,000 officers part of a taskforce investigating companies’ tax arrangements, the government said.

It expects some of the seven companies issued with tax bills to settle their accounts, while others were likely to take the claims to court.

Rio said it would challenge the amended tax assessments, which relate to the pricing of transactions between the firm’s entities in Australia and its marketing hub in Singapore, “but will pay 50 per cent of the total amount to the ATO this month”.

“The amended assessments do not relate to any tax avoidance schemes as confirmed by the Australian Tax Office. No penalties are payable,” the Anglo-Australian firm added in a statement.

“Rio Tinto considers that its pricing is in accordance with the internationally recognised OECD (Organisation for Economic Co-operation and Development) guidelines and Australian domestic law.” AFP

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Business Daily Friday, April 7 2017 13

Asia Constitution

Thai elections a step closer as king endorses new charter A drafting committee will have eight months to draft 10 so-called organic laws governing the new political system Supunnabul Suwannakij and Yumi Teso

Thai King Maha Vajiralongkorn ratified a military-backed constitution in a televised ceremony in Bangkok yesterday, paving the way for an election in late 2018.

The promulgation of Thailand’s 20th charter had been delayed after the king requested changes following the death of his father in October. It allows the return of some form of representative democracy after the military seized power in a 2014 coup that deposed former leader Yingluck Shinawatra.

“Everything is in line with the road map,” Prime Minister Prayuth ChanOcha, who also leads the junta, said on Tuesday in announcing the promulgation. “The government will continue to enforce the law, reform and solve the country’s problems to ensure the country is peaceful and orderly.”

The new constitution enhances the power of appointed soldiers, judges and bureaucrats to block moves by elected politicians, the culmination of a decade-long fight by the royalist establishment to curb the influence of former Prime Minister Thaksin Shinawatra. Allies of the exiled billionaire who introduced cheap health care and bolstered price support for farmers have won the past five elections, only to be ousted by either the courts or military.

Foreign investors have been pouring money back into Thailand as political risk seems minimal now, Brown Brothers Harriman & Co. strategists including Marc Chandler wrote in research note received on April 5.

About US$3.4 billion has poured into Thai stocks and bonds so far in 2017,

contributing to a climb of about 3.6 per cent in the baht against the dollar in the same period.

“The constitution basically guarantees a controlling stake for the military in any future governments, as the entire 250-seat Senate will be appointed by the military,” Chandler said. “As such, we see very little in the way of policy shifts under the incoming government.”

Approved by Thai voters in a referendum last August, the constitution outlines the path back to an election once its formally promulgated. Meechai Ruchupan, head of the junta’s constitutional drafting committee who served the same role after a 1991 coup, told reporters this week that an election would be held in about 19 months.

The drafting committee will have eight months to draft 10 so-called organic laws governing the new political system. The National Legislative Assembly will then have two months to consider those laws, with Vajiralongkorn having another three months to sign off. Fresh elections must be held within five months of the organic laws taking effect.

Cremation, coronation

The promulgation signals that the election will likely take place in the fourth quarter of 2018, according to Kan Yuenyong, executive director of the Siam Intelligence Unit. The timing also hinges on the royal cremation of late King Bhumibol Adulyadej and the formal coronation of Vajiralongkorn, he said.

“The constitution reflects the power structure among Thai elites more than anything else,” Kan said. “Old elites

Former Prime Minister Thaksin Shinawatra (pictured) and allies won the past five elections, only to be ousted by either the courts or military

and bureaucrats” are trying to decrease the political power of politicians, and gain more power for themselves, he said.

Yingluck, the former prime minister, said the Thai people were looking forward to a normal situation with an

elected government in an interview posted Wednesday on the Facebook page of publisher Khaosod English.

She was hit with a US$1 billion fine last year over allegations of criminal negligence related to her signature rice-purchasing policy. Bloomberg News

Real estate

BlackRock sees Singapore office market improving as supply tapers The company is looking to buy more office properties in Japan and retail assets in Australia Aradhana Aravindan and Anshuman Daga

BlackRock said the worst was over for Singapore’s office property market with supply tapering off, and that elsewhere in Asia Pacific, the world’s largest asset manager was looking to raise its real estate exposure in Japan and Australia.

Prime office rents in Singapore’s financial district dropped by more than 10 per cent in the past two years due to oversupply, making it one of the worst performing major Asian markets. But the outlook is improving with analysts expecting limited new developments until 2021 after some constructions this year.

“You get short supply and demand

holds up, then all of a sudden rents start going up. We are already past that inflection point in Singapore,” John Saunders, Asia-Pacific head at BlackRock Real Estate, told Reuters yesterday.

“We are starting to see it become more of a landlord’s market and we are starting to see rents move again and that makes it very attractive,” he said, adding the firm was mulling investments in malls and industrial assets in Singapore.

He said a tighter Chinese grip on capital outflows was not having a major impact on real estate investments, as most purchases from the mainland were outside Asia.

BlackRock is looking to buy more office properties in Japan and retail assets in Australia, where it recently invested in an office complex, he said.

Asia Pacific accounts for about 30 per cent of the US$21 billion in assets under management at BlackRock

Real Estate. The office segment is top ranked in its portfolio, followed by retail, residential and industrial sectors.

In Singapore, BlackRock last year sold its 43-storey office building, Asia Square Tower 1, for US$2.5 billion to Qatar Investment Authority in what was the city state’s largest ever office transaction. The U.S. firm hailed the deal as indicating gloomy views about the market were likely overdone.

But others have been less optimistic, with Singapore ranked 21st out of 22 Asia Pacific real estate markets for

investment prospects in a recent survey by PwC and Urban Land Institute.

Saunders, however, highlighted strong investment interest in Singapore from funds and corporates.

“There’s competition from all around - funds, domestic capital and there’s also non-domestic Asian capital,” he said.

He said BlackRock’s remaining tower, also in the Asia Square development and nearly 95 per cent occupied, was “a very sought after asset”, but declined to comment on a potential sale. Reuters

14 Business Daily Friday, April 7 2017

International In Brief Monetary coordination

BIS says central banks need joint plans Major central banks need to plan ahead and work more closely together to ensure the world’s bank funding markets do not freeze up again in future financial crises, the Bank for International Settlements said yesterday.

A new report from the BIS, known as the central bank for the world’s central banks, identified eight areas it believed needed attention to help reduce market turmoil, with six of them focusing on closer co-operation and communication. The first was that central banks needed to decide which of them was responsible for banks with operations in multiple countries.

Brexit

Eurogroup chief asks to minimise damage Britain and the remaining 27 members of the European Union should stay away from the cliff edge of Britain falling back on World Trade Organization terms at the end of Brexit negotiations, Eurogroup chairman Jeroen Dijsselbloem said. “Let’s try to minimise the damage,” he said of Brexit, speaking at a banking conference in Berlin yesterday. Dijsselbloem, who said he would discuss Greece with German Finance Minister Wolfgang Schaeuble while in Berlin, said the more he thought about Brexit, the more worried he became. He singled out financial stability as one area of particular risk.

Labour market

U.S. weekly jobless claims post largest drop in almost two years A survey on Wednesday showed a measure of services sector employment slipping in March Lucia Mutikani

N

ew applications for U.S. unemployment benefits recorded their biggest drop in nearly two years last week, pointing to a further tightening in the labour market.

Initial claims for state unemployment benefits declined 25,000 to a seasonally adjusted 234,000 for the week ended April 1, the Labour Department said on Thursday. The drop was the largest since the week ending April 25, 2015.

The prior week’s data was revised to show 1,000 more applications received than previously reported.

Claims have now been below 300,000, a threshold associated with a healthy labour market for 109 straight weeks. That is the longest stretch since 1970 when the labour market was smaller. The labour market is currently near full employment.

Economists polled by Reuters had forecast first-time applications for

jobless benefits falling to 250,000 last week.

A Labour Department analyst said there were no special factors influencing last week’s claims data. Claims for Louisiana were estimated.

The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 4,500 to 250,000 last week.

Last week’s claims data has no bearing on March’s employment report, which is scheduled for release on Friday. Claims rose during the survey week for March’s nonfarm payrolls, suggesting some moderation in the pace of job growth after two straight months of employment gain in excess of 230,000.

Also pointing to some pullback in job gains, global outplacement consultancy Challenger, Gray & Christmas, reported yesterday that U.S.based employers announced 43,310 job cuts in March, up 17 per cent from February. Most of the layoffs were in retail, telecommunications and education sectors.

A survey on Wednesday showed a measure of services sector employment slipping in March, but remaining at a level consistent with growing payrolls. Another report, however, showed private payrolls surged by 263,000 jobs in March.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs last month after rising 235,000 in February. The unemployment rate is seen steady at 4.7 per cent.

‘The unemployment rate is seen steady at 4.7 per cent’ Yesterday’s claims report also showed the number of people still receiving benefits after an initial week of aid decreased 24,000 to 2.03 million in the week ended March 25.

The four-week moving average of the so-called continuing claims fell 7,750 to 2.02 million, the lowest level since 2000. Reuters

Fed

Central banker says could unwind stimulus this year It would make sense if the U.S. economy continues to grow for the Federal Reserve to begin trimming its US$4.5 trillion balance sheet towards the end of this year, unwinding extraordinary stimulus deployed during the crisis, a Fed policymaker said yesterday.

John Williams, president of the San Francisco Federal Reserve Bank, said this process would take several years and run in parallel, albeit for longer, to increases in the Fed’s interest rates.

“It would make sense to take the next step in terms of starting the normalisation process of our balance sheet,” Williams said.

Portugal

BlackRock owns more than 2% of bank BCP The U.S. BlackRock fund has more than a 2 per cent stake in Portuguese bank BCP the bank told the Portuguese Stock Exchange Commission (CMVM) yesterday.

Following a sequence of transactions on Tuesday BlackRock has a qualified stake of 2.04 per cent in the bank and currently holds 15,113,989,952 voting rights.

On 10 February, BlackRock said its stake in the bank had dropped to below the 2 per cent barrier after saying on 2 February it had increased its investment to 3.01 per cent of the bank’s share capital.

Chinese company Fosun owns 24 per cent.

Oil industry

Traders clear Europe’s tanks by shipping more gasoline to U.S. The exports have helped clear stock levels in the Amsterdam-Rotterdam-Antwerp hub Ron Bousso and Libby George

Traders are shipping more gasoline from Europe to the U.S. East Coast ahead of the summer driving season as a steady reduction in inventories there props up prices.

At least 16 tankers carrying some 600,000 tonnes of gasoline blending components including naphtha have been booked in recent days by traders including Glencore, ExxonMobil, Mercuria, Repsol and Total, shipping data shows.

That compared with an average of around 300,000 tonnes per week booked throughout March. The exports are helping to clear Europe’s tanks of oil products and boosting profits for refining gasoline from just under US$6 per barrel at the end of March to more than US$13 per barrel yesterday.

“Europe looks better and better all the time,” one oil trader said.

“Demand is good and stocks are

drawing.”

Benchmark U.S. East Coast gasoline refining margins have steadily risen in recent weeks as stocks in the region are gradually reduced, even though they remain seasonally high.

However, because much of the gasoline in storage was winter grade it can no longer be used as the market shifts to summer quality.

The New York Harbor has traditionally been a major destination for European gasoline, which is produced in excess of the region’s demand.

But the arbitrage from Europe was closed for weeks, leading to building stocks, including in tankers waiting for a chance to sail to other markets.

The exports, along with some 2.2 million tonnes of clean products booked to sail to West Africa in March, have helped clear stock levels in the Amsterdam-Rotterdam-Antwerp hub.

Gasoline, blending component and naphtha stocks in the region fell by

more than 6 per cent in the week to March 31, according to industry monitor Genscape, to 2.9 million tonnes.

There are millions of tonnes yet to clear from Europe, and while one tanker with stored gasoline, the Hamburg Star, had set sail for the United States, several others filled weeks ago were still floating offshore ARA, including the Hafnia Europe, the Amorea and the Clio.

New York Harbor demand is expected to remain strong as Latin America, particularly Venezuela, pulls in more gasoline from the U.S. Gulf Coast and space on the Colonial pipeline - the key artery from the refining hub to the East Coast -- remains limited.

Key Points More than half a million tonnes booked Europe-U.S. Stocks of gasoline, light ends slide in ARA - Genscape More bookings could follow in May While the April arbitrage is only narrowly open, one U.S. broker said the economics looked far better in May, meaning there could be more bookings to come. Reuters

Business Daily Friday, April 7 2017 15

Opinion Business Wires

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Viet Nam News The State Bank of Việt Nam (SBV, headquarters pictured) will issue regulations on guiding commercial banks to implement a VNĐ100 trillion (US$4.4 billion) credit package with preferential interest rates for high-tech agriculture projects. The regulations will be issued in April. According to the SBV, interest rates of the loans will be some 0.5-1.5 per cent per year lower than the current average lending rates. Currently, lending interest rate for short-term loans averages at 6-9 per cent per year and 9-11 per cent for medium- and long-term loans.

per cent increase in hotel rooms over two years

The Korea Herald South Korea’s economy is showing clear signs of picking up pace helped by surging exports, improved consumer sentiment and a rise in stock prices, although some lingering uncertainties could limit a full-fledged recovery, at least for the time being, observers said yesterday. It will take several months for rising exports to lift domestic consumption, a major obstacle to the fullscale economic recovery of Asia’s fourthlargest economy, experts said as they predicted some lag time before results start to really show. “It takes time for the improving exports to raise wages and consumption,” said Joo Won, a researcher at Hyundai Research Institute.

Macau rolls the dice on China’s luxury renaissance

Taipei Times Last month’s official manufacturing purchasing managers’ index (PMI) rose to 65.2, the highest figure since its inception in July 2012, benefitting from strong worldwide demand and February’s fewer working days which led to a low base, the Chung-Hua Institution for Economic Research (CIER) said yesterday. “The latest PMI data reflected a solid increase in new business and production among local manufacturers,” CIER president Wu Chung-shu told a news conference in Taipei. The economist shrugged off concerns raised by reporters that the nation’s economy might be overheating and in danger of crashing, saying that Taiwan remains on course for a stable and modest recovery.

Inquirer.net Investment pledges registered by the Philippine Economic Zone Authority (Peza) went up 50.51 per cent in the first quarter, driven mainly by Filipino investors opening up new economic zones as well as expansions in the manufacturing industry. Peza started the year on a positive note, recording P51.34 billion worth of investment pledges from January to March, up from P34.11 billion in the same period a year before.

The boost in first-quarter pledges was attributed to members of the private sector developing more lands into ecozones on top of locators in the IT and manufacturing industry.

T

he days of President Xi Jinping’s austerity drive in China are rapidly fading.

Homes in Shenzhen now cost more, per square meter, than they do in Japan.

Kweichow Moutai Co., maker of the most-prized brand of baijiu sorghum liquor, looks set to overtake Diageo Plc soon as the world’s biggest distiller by market value, despite having less than one-third the revenue of the maker of Smirnoff and Johnnie Walker: Sales of luxury cars hit a record last September, and high-end brands in Europe have noticed a surge in domestic spending as Chinese start doing more of their conspicuous consumption in local stores and online, rather than opening their wallets only when traveling to Japan, South Korea or Hong Kong.

Sales in China rose 14 percent in the six months through December, LVMH Moet Hennessy Louis Vuitton SE Chief Financial Officer Jean-Jacques Guiony said on an investor call in January.

There’s been “a much higher appetite for our industry generally since the second half,” Hermes International SCA Chief Executive Officer Alex Dumas told reporters in February.

That’s hard to square with an austerity drive. A crackdown on lavish spending by Chinese officials might drive consumption toward less visible products, such as overseas real estate and private wine cellars -- but it’s hard to conceal your ownership of Louis Vuitton luggage or Birkin bags.

The new gilded age has been making its presence felt in Macau in the nick of time for the territory’s casinos. Just 18 months ago, the industry was in turmoil. After spending billions building resorts to service a wave of high-rolling mainland gamblers, moguls were told that Macau wanted to develop a mass-market clientele of families and conference delegates instead, and would be approving fewer table games as a result.

Steve Wynn, whose Bellagio hotel helped drive Las Vegas to new heights of luxury, was driven to impolitic rage by the situation, describing the activity of the territory’s regulators as “outrageous

“

David Fickling a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies

and ridiculous.”

“The table cap is the single most counterintuitive and irrational decision that was ever made,” he told investors on an October 2015 call. “The reason that these extraordinary non-gaming attractions exist is because the damn casino is the cash register.”

That hasn’t altogether changed. Macau had 30 percent more hotel rooms at the end of December than it did two years earlier, but only 10 percent more gaming tables.

Still, the money has come flooding back. Revenue from casino games in March rose 18.1 percent from a year earlier, the fastest pace since February 2014, when Lunar New Year wagers drove it to an alltime record of 38 billion patacas (US$4.75 billion).

The top end of town is outperforming, too. After tracking close to mass-market revenues for the past two years, highrolling VIP gamblers are pulling ahead, according to Bloomberg Intelligence estimates. Shares of Wynn Macau Ltd. are trading HK$1.55 above analysts’ target price, the biggest such premium since January 2014.

All six of Macau’s casino companies are now among the top 10 most richly valued large casino businesses on a price-earnings basis, and Macanese businesses take the top four places if you adjust for indebtedness by comparing Ebitda to enterprise value.

That leaves Wynn Macau little scope for slipups when it reports first-quarter earnings. Those who heeded Gadfly’s prediction of a revival last July have done pretty well over the past nine months, but every good gambler knows to quit while they’re ahead.

The territory’s future looks more sustainable now than it has in three years. For astute players, that’s probably a good time to trim positions. Bloomberg Gadfly

All six of Macau’s casino companies are now among the top 10 most richly valued large casino businesses on a priceearnings basis

”

16 Business Daily Friday, April 7 2017

Closing Work meeting

Macau discusses regional co-operation

Macau can have a big share of the Chinese mainland tourism market and promote its development into world tourism and leisure center, China’s tourism administration vice chief said in a work meeting held here yesterday.

Representatives from Macau Social Affairs and Culture authorities, China National Tourism Administration (CNTA) and other related departments from the Chinese mainland and Macau attended the 2017 annual work meeting of the Joint Working Committee on Tourism to Support Macau’s Aspirations to Build a World Tourism and Leisure Centre.

In the meeting, CNTA vice chairman Li Shihong said

the tourism industry has become one of the backbone industries in China’s economy. Macau should grasp the opportunity with the Chinese mainland and deepen the tourism cooperation to explore the global market.

During the meeting, the two sides reviewed the tourism situation and work completed in 2016, and discussed major projects for 2017, including deepening regional co-operation between Guangdong and Macau, strengthening collaboration under the Belt and Road Initiative, further reinforcing co-operation on tourism industry management, and continuing support for the development of the meeting and exhibition industry in Macau. Xinhua

Renewable energy

World investment in green power down The average capital expenditure for solar photovoltaics and wind dropped by over 10 per cent year-on-year Vera Eckert

R

ecord levels of renewable energy capacity were added across the world in 2016 but the falling costs of green power equipment led to a 23 per cent decline in money spent on investments, UN-backed research showed yesterday.

Wind, solar and other renewables capacity totalling 138.5 gigawatts (GW) was added to global power generation capacity last year, 8 per cent more than in 2015, a Frankfurt School of Finance report said.

report’s authors, told reporters.

“Investors received more capacity for less money.”

The average capital expenditure for solar photovoltaics and wind dropped by over 10 per cent year-on-year and the unit cost of producing power from onshore wind turbines dropped by 15 per cent and that from turbines offshore by 25 per cent.

“Wind and solar energy have arrived at costs that would have seemed inconceivably low a few years ago,”

Moslener said.

Investment in new renewables capacity, which avoids emitting carbon dioxide when being operated, was roughly double that in fossil fuel generation, he also noted.

Investors were keen to build new installations, or acquire existing ones, borne out by acquisition activity rising by 17 per cent to a record US$110.3 billion.

But a dent in the positive trends comes from the still small proportion of electricity actually being derived from weather-dependent renewables.

Excluding large hydro projects for their questionable environmental role, it rose to just 11.3 per cent of

world power generation, up from 10.3 per cent a year earlier.

The lower investment sum, apart from the better cost effectiveness per dollar spent, also resulted from a slowdown in China, Japan and other emerging markets, mainly due to slower than expected growth in demand for power.

China broke an 11-year rising trend, seeing investments drop by 32 per cent to US$78.3 billion, Japan’s slumped by 56 per cent to US$14.4 billion and those in the United States slipped by 10 per cent to US$64.4 billions as developers lengthened construction periods to benefit from a five-year extension of tax credits.

Europe saw a 3 per cent rise to US$59.8 billion, led by Britain and Germany.

The report was prepared by the Frankfurt School-United Nations Environment Programme (UNEP) Collaborating Centre and Bloomberg New Energy Finance. Reuters

Key Points New capacity up 8 per cent at 138.5 gigawatts Spending down by nearly a quarter due to efficiency, policy China breaks positive trend due to slower demand growth But investments to achieve this totalled US$241.6 billion, compared with US$312.2 in the previous year, mainly due to falling equipment costs as technologies mature, and economies of scale.

“There is no let-up in the clean energy investment drive,” Ulf Moslener, professor for sustainable energy finance at the school and one of the

Commerce

Patent case

Football

EU raises import duties on Chinese steel

Mainland court orders Samsung to pay Huawei

Hisense to sponsor 2018 World Cup

The European Commission said yesterday it had set ‘anti-dumping’ duties on imports of hot-rolled flat steel products from China at a higher rate than those already in place, angering Beijing.

The Commission, acting on behalf of the 28 EU countries, set final duties of between 18.1 and 35.9 per cent for five years for producers including Bengang Steel Plates Co, Handan Iron & Steel Co and Hesteel Co. This compared with provisional rates imposed from October of 13.2 to 22.6 per cent following a complaint lodged by European steel association Eurofer on behalf of EU producers ArcelorMittal, Tata Steel and ThyssenKrupp.

China’s commerce ministry said it was highly concerned by the decision and urged the EU to “correct its mistake”, adding it would take “necessary measures” to protect its companies.

The EU has already imposed duties on a wide range of steel grades to counter what EU steel producers say is a flood of steel sold at a loss due to Chinese overcapacity.

China, the world’s top producer and consumer of steel, said early last year it would shut as much as 150 million tonnes of annual production capacity over the next five years, although capacity actually rose in 2016. Reuters

A Chinese court has ordered Samsung Electronics’s mainland subsidiaries to pay RMB80 million (US$11.60 million) to Huawei Technologies for patent infringement, the China firm’s first victory against Samsung on its legal challenges over intellectual property.

Three units of Samsung have been ordered by the Quanzhou Intermediary Court to pay the sum for infringing a patent held by Huawei Device Co Limited, the handset unit of Huawei, the Quanzhou Evening News, a government-run newspaper, said on its website yesterday.

The verdict is the first on several lawsuits of Huawei against the South Korean technology giant.

Huawei filed lawsuits against Samsung in May in courts in China and the United States - the first by it against Samsung - claiming infringements of smartphone patents. Samsung subsequently countersued Huawei in China for IP infringement.

A spokesman for Huawei said it welcomed the court’s decision. Samsung said it will decide on the response to the court’s decision after reviewing the ruling.

Samsung sought compensation for the more than 30 million products that sold for US$12.7 billion, including the Galaxy S7, according to the media report. Reuters

Consumer electronics giant Hisense has become an official sponsor of the 2018 World Cup, becoming the second Chinese company to join hands with FIFA as it looks for new sponsors after the scandals of the Sepp Blatter era.

Hisense, a television and white goods manufacturer, follows Chinese conglomerate Wanda in becoming a sponsor of football’s world governing body.

Hisense advertising will appear pitchside and on screens at the 2018 tournament in Russia, while its televisions will be the official TVs for the competition.

Hisense will also be associated with the Confederations Cup in Russia this summer, FIFA said in its announcement yesterday, which did not reveal the sums of money involved.

Hisense also sponsored the Euro 2016 football championship in France and is a backer of the Australian Open tennis Grand Slam in Melbourne.

“Over the years, Hisense has gained a lot of experience and seen strong brand growth through sports sponsorships,” group president Liu Hongxin said in the FIFA statement.

Wanda last year became the first top-level sponsor signed by FIFA following the departure of longtime leader Blatter. AFP