Year II
Number 348
Wednesday August 14, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Vitor Quintã
MOP 6.00
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April 19, 2013
No bid for casino on golf course…yet N
o approach for a change of use to gaming has so far been made to the government by the purchaser of Caesars Golf Macau, Business Daily has been informed. In Macau it’s not unknown for entrepreneurs at least to canvas government opinion on land use before a site changes hands. A well placed source told us yesterday: “There has been no application for change of use to gaming – as of yet.” Some analysts expressed surprise that the plot had sold – subject to contract – for US$438 million (3.5 billion patacas), only 24 percent below the US$577 million United States-based casino operator Caesars Entertainment Corp (then known as Harrah’s) paid for it in 2007.
www.macaubusinessdaily.com
More on page 3
Govt dampens hopes for housing price cap Page 2
China credit squeeze ‘not hitting casinos’ Page 3
Subsidy bill for public bus system falls in Q2 Page 4
Estate agents don’t want to move
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Real estate agents have been protesting outside government headquarters near Nam Van lake against new rules – in force since last month – that bar them from running businesses from home or in relatively cheap industrial businesses. The new rules could push many to shut down, they warn. George Lao, a representative of the group, told Business Daily about 100 agencies were in non-office premises. Page 2
Hang Seng Index 22550
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Football channel back ‘soon’, say officials
Easy credit not tempting local savers There are more credit cards issued here than ever before and banks are also allowing consumers to spend more on them, the Monetary Authority of Macau said. But most card owners are not racking up large credit bills because they have access to other forms of liquidity, a banking executive here told Business Daily. Local banks issued a further 24,519 credit cards in the second quarter, taking the total to 693,485. Pages 4 & 5
Macau residents receiving television signals from public antenna firms will be able to watch two channels from public broadcaster TDM after all. TDM HD and TDM Sports – showing English Premier League soccer – were originally cut from the list of channels Macau Cable TV Ltd had pledged to relay to the antenna firms following an agreement last week. The new EPL season starts at the weekend. Page 6
22320
August 13
HSI - Movers Name
%Day
CHINA COAL ENE-H
6.85
CHINA RES LAND
5.97
CHINA SHENHUA-H
4.49
NEW WORLD DEV
4.12
BANK EAST ASIA
3.72
HONG KG CHINA GS
-0.49
CHINA RES ENTERP
-0.77
LENOVO GROUP LTD
-0.92
CITIC PACIFIC
-0.95
CHINA RES POWER
-1.08
Source: Bloomberg
Brought to you by
2013-08-14
2013-08-15
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August 14, 2013
Macau
Protesters urge change in law on estate agents Estate agents say making them work out of commercial premises means many agencies will close Tony Lai
tony.lai@macaubusinessdaily.com
A
bout one dozen estate agents gathered outside government headquarters yesterday to demonstrate their opposition to a provision of the law that requires them to do business from commercial premises before they can be licensed. Defying rain brought by the approach of Typhoon Utor, the demonstrators held up banners saying “Help, chief executive”, “Nowhere to complain” and “Let us survive”. A representative of the demonstrators, George Lao, told Business Daily: “We are not against this legislation, but it makes it very difficult for us to operate,
particularly the provision on the place of business.” Mr Lao closed his own estate agency, which was in a factory building, when the new law on estate agents came into force last month. He estimates that before the law came into force about 100 estate agencies were in premises other than commercial premises, such as industrial or residential buildings. “Some have closed down now, or sought other ways to acquire a licence,” Mr Lao said. “So this leaves about 50 of us left without a licence,” he said. “We are now fighting over this
problem – for permission to continue running our businesses in our original places of business.” The Housing Bureau had received 1,649 applications for temporary licences for estate agencies by the end of June, and had granted 1,180. The bureau had received 4,728 applications for temporary licences for individual estate agents, and had granted 3,959. Another of the demonstrating estate agents, Alice Lei, said: “It is a historical problem, and we have operated like this for some 20 to 30 years.” Ms Lei argued: “The government still allows some clinics to operate in
residential buildings. Why can’t we?” She said the government could ban newly established estate agencies from doing business from premises other than commercial premises, but that it should make transitional arrangements for estate agencies already operating. The demonstrators handed the government a letter, and said they would continue their protest today. “If the government is still unresponsive, we do not rule out more action,” Mr Lao said. He declined to elaborate. Estate agents arranged a demonstration by over 1,000 people last month to voice their dissatisfaction with the new law. Mr Lao said estate agents had not been consulted about the provision on the sort of premises they must work out of until the legislative process had been drawing to a close. Business Daily asked the Housing Bureau to comment but had received no reply by the time we went to press. Ms Lei also said it was “unreasonable” to make an estate agent that failed to carry identification when working liable to a fine of 5,000 patacas (US$625). “Do you have to wear working ID all the time?” she asked reporters. And she had a dig at the Housing Bureau director. “Even Tam Kuong Man did not have ID with him when he met us,” she said.
We are not against this legislation, but it makes it very difficult for us to operate, particularly the provision on the place of business George Lao, a representative of the group
Estate agents are holding a demonstration outside government headquarters
Govt dampens hope of housing price cap A cap would be hard to impose, says the cabinet of the Secretary for Transport and Public Works Tony Lai
tony.lai@macaubusinessdaily.com
T
he government has shown little enthusiasm for a proposal by a Legislative Assembly member to cap housing prices, saying it would be difficult to do. “If there was a ceiling on the selling price of residential units in a free market, it would involve very difficult and complex implementation,” the head of the Secretary for Transport and Public Works’ cabinet, Wong Chan Tong, said in a written reply to an inquiry by assembly member Ho Ion Sang. “This would involve many issues like regulation of home prices, sales targets, selling procedures, transaction amounts and limits on resales.”
Last month Mr Ho called for the government to put an experimental cap on prices of homes in certain housing projects to cool the red-hot market for residential property. The average price of housing was 75,448 patacas (US$9,431) per square metre of floor space in June, 28 percent more than a year earlier, Financial Services Bureau data show. The average price reached over 98,000 patacas a square metre in May, right before restrictions on sales of unfinished flats came into force. Mr Wong did not reject Mr Ho’s proposal, saying a price cap deserved “consideration in a scientific and
deliberate manner”. But Mr Wong said any new measure had to “match the actual situation of Macau’s development and pay attention to the overall interests of Macau residents”. He did not say whether the government would look into Mr Ho’s proposal. This year the government commissioned the University of Macau and the Macau Polytechnic Institute to study the idea of allowing only Macau residents to buy homes in some areas. The study report will be ready next month, the government has said.
Macau’s neighbours have attempted to curb increases in housing prices. In November 2011 the Zhuhai government capped the price of homes in Xiangzhou district at 11,285 yuan (14,719 patacas) a square metre. Last September the Hong Kong government began an experiment of allowing only Hong Kong residents to buy homes built on two designated plots of land. Mr Wong told Mr Ho that the Macau government would not hesitate to impose more curbs on the housing market if it thought they were needed.
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August 14, 2013 April 19, 2013
Macau
No bid for gaming on golf course – yet The 76 US cents on dollar achieved by Caesars on the sale probably driven by competition, site’s potential Michael Grimes
michael.grimes@macaubusinessdaily.com
N
o approach for a change of use to gaming has so far been made to the government by the purchaser of Caesars Golf
Macau, Business Daily has been informed. In Macau it’s not unknown for entrepreneurs at least to canvas government opinion on land use
Golf course buyer shares office with San You Development
before a site changes hands. A well placed source told us yesterday: “There has been no application for change of use to gaming – as of yet.” Some analysts expressed surprise that the plot had sold – subject to contract – for US$438 million (3.5 billion patacas), only 24 percent below the US$577 million United States-based casino operator Caesars Entertainment Corp (then known as Harrah’s) paid for it in 2007. Their surprise was because Steven Tight, president international development for Caesars, went on the record to Business Daily a fortnight ago confirming the site only currently has permission for a golf course. But the strong pricing – equivalent to 76 U.S. cents on the dollar on Caesars’ original outlay – is probably the result of more than one bidder being involved, and the site’s potential for other use. Gary Loveman, Caesars’ chief executive, referred during a conference call with analysts in late July this year to the firm being in negotiation with “interested parties” over the golf course, although he added: “…it’s not an auction, there’s no specified date or tender”. Grant Govertsen of Union Gaming Research Macau said in a note this week: “The 175-acre golf course represents the last significant parcel of land suitable for large-scale development in the whole of Macau (perhaps apart from Macau’s second golf course, which isn’t nearly as geographically favourable as Caesars Golf Macau from a gaming/tourism perspective).” Mr Govertsen added: “Even in
Credit tightening in China not hitting casinos J.P. Morgan says even accounting for August holiday bounce, Macau gaming demand stays strong Michael Grimes
michael.grimes@macaubusinessdaily.com
R
ecent reports of credit tightening within the mainland economy have had no discernible negative effect on the Macau gaming industry, suggests a note from J.P. Morgan in Hong Kong. “We believe the strong run rate at the beginning of August is the result of the summer holiday peak season. Also, it seems more obvious that the liquidity tightening in China has no material impact on Macau,” wrote analyst Kenneth Fong. Mr Fong adds that based on the first 11 days of August, monthly gaming revenue is tracking 17 percent
year-on-year growth, or 30.60 billion patacas (US$3.83 billion). Cameron McKnight of Wells Fargo in New York, said in another note that from daily revenue estimates for Macau complied by his bank, he was adjusting August expansion estimates to 14 percent to 18 percent year-on-year, versus an earlier 12 percent to 17 percent estimate. RBC Capital Markets puts August gross gaming revenue as likely to rise 14 percent to 16 percent yearon-year. Citi estimates an increase of 13 percent to 16 percent. Mr Fong of J.P. Morgan said
that the daily run rate for the seven days to August 11 was 1.016 billion patacas which if sustained for the month would take year-on-year expansion for the period to well over 17 percent. But he said more conservative estimates were probably appropriate. Typhoon Utor had been expected to make landfall south of Macau in southern Guangdong province this morning. “…normally [in] the last two weeks of August the weekly run rate will tail off as the summer holiday ends [and] Typhoon Utor is expected
a worst-case scenario, whereby the government says ‘no’ to carving out a small portion of the parcel for gaming development, it is likely that the investment (or most of it) could have been recouped via residential/ mix-use development.” The fact that Pearl Dynasty Investments Ltd – the entity mentioned in Caesars’ filing on Friday as the purchaser – shares a fax number and office address with Macau real estate developer San You Development Co Ltd – the firm behind the luxury developments Residencia, The Manhattan and The Greenville – has led to speculation that the new owners will indeed seek a change of use on the site to allow at the very least some housing. When Business Daily visited the office of San You on Macau peninsula, a person seemingly an employee – but declining to identify herself – said, “I have to check up with my colleagues on Pearl Dynasty – whether it is related to us.” “They are all out [of office] in these few days so I cannot answer your questions now,” she added. According to Macau’s Commercial and Movable Goods Registry, Timothy Cheong Lok Tin, Tan Zhenwei and Li Zhaoguang founded San You in 1997. In 2005, Mr Cheong bought Mr Tan’s stake. He also bought most of Mr Li’s stake, with the rest acquired by Hercules Sky Ltd, a British Virgin Islands company, according to the registry. Who precisely is party to the Caesars Golf Macau deal on the purchaser side is not clear from publicly available information. With T.A, T.L. and V.Q.
to land in Macau around Wednesday and may hurt revenue for this week,” wrote Mr Fong. The Macao Meteorological and Geophysical Bureau ordered warning Signal No. 3 to hoisted at 1.30pm yesterday. The summer is typically typhoon season on southern China’s coast and can reduce casino revenue of ferries and other transport is cancelled due to high winds and swelling seas. “We note August has an additional Sunday versus 2012 and gaming revenues grew just 5.5 percent year-on-year in August 2012, likely a result of Typhoon Kaitak,” wrote Wells Fargo’s Cameron McKnight. Several analysts noted that Galaxy Entertainment Group Ltd and MGM China Holdings Ltd had both experienced significant swings in market share in the first 11 days of August when judged month-onmonth. J.P. Morgan says in Galaxy’s case it was down by 3.9 percent, and in MGM China’s case up 3.2 percent. “We believe the market share change is mainly due to luck factor fluctuations,” said Kenneth Fong, referring to casino hold rates for baccarat, the high rollers’ game of choice in Macau.
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August 14, 2013
Macau
Easy credit fails to tempt consumers rich in cash
Brought to you by
HOSPITALITY
But credit card holders really take a shine to cards billed in patacas and yuan
Air and sea For many years most visitors came by sea, mainly because Macau had limited exchanges with the mainland, was served by flights from only a few places, and concentrated on bringing in gamblers from Hong Kong. So most visitors arrived at the Outer Harbour Ferry Terminal. Things have changed considerably in the past 10 years. Increasing numbers of tourists from the mainland meant more visitors crossed the land border. Huge improvements in the customs and passport control facilities were required to accommodate fast-rising flows of visitors through the Border Gate. The overland routes have become wellestablished ways to get to Macau and will remain so. The picture is not so clear with the other ways to get to Macau – by air and by sea. The advent of direct flights between Taiwan and the mainland meant travellers between the island and the mainland no longer had to use Macau or Hong Kong as a staging post. This entailed a decline in the relative importance of air travel as a way to get to Macau, making the airport less busy in the past few years – although it may be getting busier now. Arrivals by sea seem to have been declining slowly for the past couple of years.
Vítor Quintã
vitorquinta@macaubusinessdaily.com
M
ore credit cards are on issue here than ever before, and the banks are allowing consumers to spend more with them, the Monetary Authority of Macau has said. But as most credit card holders have a fair amount of cash, they are not so quick to flash the plastic, a bank executive says. Banks here issued 24,519 more credit cards in the second quarter of this year, taking the number on issue to 693,485, the Monetary Authority announced yesterday. The issuers are also allowing the holders to spend more with their cards, their combined credit limit rising to a record 12.29 billion patacas (US$1.54 billion) in the second quarter, 7.9 percent more than in the first. Despite the banks being more generous, credit card spending rose by just 2.6 percent to 3.26 billion patacas. On average, card holders used
26.5 percent of their credit, the lowest percentage for three years, Business Daily’s calculations indicate. A bank executive who asked to not be identified told Business Daily that the economic boom meant most people had the money to pay for most purchases. “If you have money, you pay for it. You do not use a credit card,” the executive said. He said credit cards had become “the ultimate means of payment” in shops in Macau, instead of just an everyday way of using credit.
Eden for borrowers Unlike consumers in other places, including mainland China, consumers here are not allowed to pay with debit cards, only credit cards. The bank executive said there was little interest in changing this arrangement. He said credit card holders could get “generous” credit limits, many
banks setting a limit of 20,000 patacas for first-timers, and that they felt secure in the knowledge they had 50 days to begin paying back the debt. Banks are happy to keep the status quo, as most of the profit they make from credit cards comes not from the annual fees but from the interest charged.
MOP 12.29 bln Macau’s combined credit card limit
Govt spending less on public buses
T The chart shows growth indexes, based on January 2010, for the number of passenger flights and passenger ferry sailings arriving in Macau. Having grown fast early in 2010, the number of ferry arrivals has been declining slowly but steadily, and is now about what it was at the beginning of 2010. The number of flight arrivals was still declining in 2010, but then recovered a bit and stabilised in 2011, and has been growing for the past 12 months. J.I.D.
19.4 %
Increase in flight arrivals in June from a year earlier
he government announced it made a smaller loss from the new public bus system even though it approved payment hikes for two of the city’s three bus operators. The Transport Bureau said it lost 90.6 million patacas (US$11.3 million) in the second quarter. The bureau received about 72.4 million patacas from bus charges paid by commuters, up by 2.7 percent from the previous quarter. On the other hand it paid 163 million patacas to bus operators for their services in the second quarter of this year, down by 4.1 percent. The bureau said that the loss was mostly due to subsidised fees the government provided for the elderly, students and people with disabilities. Those subsidies cost 78.6 million patacas, according to a press statement released yesterday. The government announced in April it would pay a further 23.3 percent to Transportes Urbanos de Macau SARL (Transmac) and Sociedade de Transportes Colectivos de Macau SARL (TCM). The payments will be backdated to January.
The increase means the government has to pay 645.5 million patacas more every year, or 161.4 million patacas per quarter. The third operator, Reolian Public Transport Co, also requested more money last June but its application has been put on hold. Reolian has sued the government over the delay.
The transport regulator also said the number of bus trips inched up by 3.2 percent from the previous quarter to over 272,000 per month in average. There was a smaller growth of 2.4 percent in the number of passengers, which topped 450,000 each day in average. V.Q.
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August 14, 2013
Macau The only losers from the arrangement are retailers. The president of the Macau Travel Industry Council, Andy Wu Keng Kuong, said in December that businesses usually paid the banks about 2 percent of the value of every credit card transaction. The administrator of the Macau Small and Medium Enterprises Association, Kenneth Lei Chi Leong, said this cost was one reason for many smaller enterprises refusing to accept credit cards. In December the Consumer Council said some businesses, particularly travel agencies, were still illegally charging customers extra for paying by credit card. A merchant that demands extra for paying by credit card is liable to a fine of up to 100,000 patacas.
No lack of interest The amount of credit card repayments fell to 18 billion patacas in the second quarter, 9 percent less than in the first. That meant more card holders were repaying their credit in monthly instalments instead of all at once, so more debt was outstanding for longer, allowing the banks to collect more interest. The amount of credit card debt rose by 8.8 percent to 1.62 billion patacas. The amount of credit rolled over – or the amount of debt card holders did not repay in full each month – increased by 5.6 percent. The bank executive said that meant fewer card holders were having trouble repaying their debt.
Almost 693,500 credit cards were in use in Macau at the end of June
Payments overdue for more than three months increased, but made up just 0.64 percent of total credit card debt. As more people cross the border to shop, 8,690 of the credit cards newly issued in the second quarter are billed in patacas and yuan. The
number of such cards on issue was 121,221 on June 30. In contrast, fewer than 5,500 of the newly issued credit cards are billed in patacas only. The number of such cards on issue was nearly 376,900. A Macau consumer shopping in
the mainland with a credit card billed in patacas and yuan does not have to pay currency conversion fees. The bank executive said banks liked issuing such cards because they used both the Visa and China UnionPay payment systems, making it easier for card holders to spend more.
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August 14, 2013 April 19, 2013
Macau Brought to you by
Financial Monitor Tide of liquidity The amount of money in the economy is an important indicator. Usually, when people think of money, they think of coins and notes. However, anything that can be used to make payments is money. So money has different guises, each distinguished mainly by its liquidity, or the ease with which it can be converted into coins and notes. The amount of liquid or immediately available means of payment is designated by M1. This includes coins and notes in circulation and the value available from current accounts in the bank. The deposits in current accounts can be used to make payments easily – meaning instantly and without cost – or converted into coins and notes. So M1 is the amount of means of payment available for immediate use. Put simply, M1 measures the liquidity of the economy.
The pataca is the only legal tender in Macau, but deposits can be made in other currencies. As the pataca tracks the Hong Kong dollar, deposits in Hong Kong dollars are common – so common that often more of M1 is denominated in Hong Kong dollars than in patacas. In April, 55 percent of M1 was in Hong Kong dollars and 43 percent in patacas. Deposits in other currencies seem to be losing their importance in M1 in absolute value and relative weight. Last year and in the opening months of this year 2 percent or less of M1 was in currencies other than patacas or Hong Kong dollars, a smaller proportion than before.
Residents will be able to see TDM channels: govt But public broadcaster’s chief executive says it’s still seeking legal opinion on the copyright issue Tony Lai
tony.lai@macaubusinessdaily.com
M
acau residents that get their television signal from public antenna firms will be able to watch two channels produced by public broadcaster TDM after all. TDM HD and TDM Sports were cut from the list of channels that Macau Cable TV Ltd had agreed to relay to the antenna firms in an agreement signed last week. Amid mounting public criticism the government announced it has solved the copyright issues, just a week after warning they were “too complicated” to solve quickly. Lawrence Tou Veng Keong, director of the Bureau of Telecommunication Regulations, said yesterday they had already cleared all copyrights doubts with the Legal Affairs Bureau. On the sidelines of a public event, he said the bureau has ordered Cable TV to resume the broadcast of the two channels as soon as possible, hopefully “in the next one or two days”. Cable TV signed a deal last week allowing 14 antenna firms to relay its television signals through their networks, after the courts ruled in June the antennas had to stop their illegal activities. The agreements, however, only allowed the residents to watch onethird of the channels they had in the
past. TDM Sports and TDM HD were among the channels removed. André Cheong Weng Chon, director of the Legal Affairs Bureau, explained last week this was due to the copyright on English Premier League football matches that are usually shown on the two TDM channels. TDM bought free-to-air broadcast rights of the matches while Cable TV bought the cable broadcast rights. The government did not know whether the English Premier League would be happy with the matches being broadcast in the antenna networks, said Mr Cheong at the time. Mr Tou now believes the problem is solved. “We have already explained clearly to TDM,” he explained yesterday, that the antenna networks “will now only be used for broadcasting free-to-air and open channels.” The matches would not cause any copyright issue, Mr Tou assured. However, he added, it was a “commercial decision” of TDM whether or not to broadcast the matches in those two channels.
Hold position Leong Kam Chun, TDM’s chief executive, said he only knew of the government’s stance “by watching
J.I.D. The content of this column is the work of Business Daily’s journalists.
12.5 %
Rise in M1 in the first four months
TDM HD and TDM Sports will be available again soon, says Lawrence Tou
the news”. He told Business Daily they were still in the process of seeking legal advice on the copyright issue, adding the broadcaster was “in a passive role”. “Whether [those two channels] should be broadcast or not, that is all arranged by the government,” Mr Leong said. He added: “TDM is a government-financed broadcaster. I can’t go out and contradict official comments every single time.” He declined to make any further comments. Business Daily asked Cable TV for a comment but received no reply before press time. Cable TV told TDM Radio they had just received a verbal instruction from Mr Tou’s bureau on the matter. The company said it was preparing the necessary technical works but would only do so after receiving a formal written instruction clearly detailing the legal liabilities, said Cable TV. Mr Tou also said yesterday the government had to be “very cautious” in tackling the copyright issues. The authorities would try to solve the copyright issues of other unavailable channels, he added.
August 14, 2013 April 19, 2013
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Greater China HK banker Lee Quo Wei dies Lee Quo Wei, the former chairman of Hong Kong’s Hang Seng Bank Ltd who fended off a bank run, helped peg the local currency to the U.S. dollar and rebuilt the reputation of the city’s stock exchange, has died, aged 95. Mr Lee died on August 10 at Prince of Wales Hospital in the city’s Shatin district, the unit of HSBC Holdings Plc said in an e-mailed statement, without giving a cause of death. He was part of the team that created the Hang Seng Index, the city’s benchmark stock gauge. Mr Lee helped steer Hong Kong through several periods of financial and political upheaval, receiving the Grand Bauhinia Medal in 1997.
Beijing cuts fees for some services
HK factories get facelift on offic
China will reduce service fees charged by 14 government departments, the country’s top economic planning agency said yesterday, as part of Beijing’s efforts to cut red tape and promote reforms. Chinese Premier Li Keqiang vowed in March, when he formally took office, to massively reduce red tape to revitalise the economy and give markets a bigger role. The National Development and Reform Commission (NDRC) said charges would be cut for 20 services, effective October 1. The moves should save companies and individuals about 200 million yuan (US$32.7 million) a year, the NDRC estimated in a statement issued jointly with the Finance Ministry and published on its website. As examples, the NDRC said the fee for filing a trademark application will be 800 yuan instead of 1,000 yuan, while the examination cost for translators and patent agents will be cut by 25-50 percent.
New office supply to fall about a third short of demand by 2020
Yum drops as sales tumble Yum! Brands Inc, owner of the KFC and Pizza Hut chains, fell after posting July same-store sales in China that declined 13 percent, more than in June, as diners remained reluctant to eat chicken amid an outbreak of avian ‘flu. Shares in Yum fell US$2.86, or 3.8 percent, to US$71.61 in after-hours trading. Analysts estimated a 7.1 percent drop in sales last month, according to the average of four projections compiled by Consensus Metrix. Sales at stores open at least 12 months fell 16 percent at KFC and rose 3 percent at Pizza Hut in the Asian nation, the Louisville, Kentuckybased company said in a filing. Yum gets about 50 percent of its revenue from China, where it has about 5,980 KFC and Pizza Hut stores. The company has faced a backlash there after an outbreak of H7N9 bird ‘flu earlier this year scared KFC diners away from poultry. China same-store sales decreased 10 percent in June and 19 percent in May. Sales at KFC were hurt by “residual effects of adverse publicity surrounding the December poultry supply incident,” Yum said in the filing.
Jiangsu says bank debt ‘manageable’ Government debt in China’s eastern Jiangsu province is under control and at an manageable and “appropriate” level for its economy, the 21st Century Business Herald yesterday quoted a senior local official as saying. Yesterday’s newspaper report, citing unidentified sources, said outstanding bank loans of 752 local government financing vehicles in Jiangsu reached 770.6 billion yuan (US$125.87 billion) by the end of June, up 2.7 percent from the beginning of this year. Aside from bank loans, Jiangsu government financing vehicles have also raised a total of 576.8 billion yuan via alternative channels such as wealth management and trust products by June, according to the paper. In the first six months of 2013, local authorities borrowed 135.4 billion yuan through these channels, it said, without citing sources. “The debt scale of Jiangsu province is matched by the size of its economy and supported by real demand, and the level is appropriate,” Liu Handong, head of the Jiangsu Provincial Department of Finance, was quoted by the Guangdong-based paper as saying. “The risks of local government debt in Jiangsu are manageable,” Mr Liu said.
Kelvin Wong
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ong Kong investors are turning run-down factories and warehouses into offices to fill a space shortage in the city with the world’s second-highest rents. Pamfleet Group and Gaw Capital Partners are among real estate funds that bought more than HK$54 billion (US$7 billion) of the city’s industrial properties in the year ended June 30, according to data compiled by Centaline Property Agency Ltd. That’s the highest for any 12-month period on record, the Hong Kongbased realtor’s data shows. Redevelopment of vacant industrial spaces has accelerated since 2009 as investors lured by surging office rents seek to exploit the gap between the cost of acquiring the buildings and the potential
HK$54 bln
Invested in industrial properties in the year ended June 30 return from converting them for use by banks, insurers and other business tenants. The government has implemented policy changes since the 1980s to encourage the
transformation of unused properties after manufacturing shifted to cheaper locations in mainland China and Southeast Asia. “It’s been a slow start, but things have picked up over the past few years,” said Simon Lo, Hong Kong-based head of Asia research at property broker Colliers International. “Buyers are coming in with the expectation their returns will go up multiple times because of the redevelopment potential.” Demand for offices in Hong Kong has been swelling as the city cemented its place as a regional financial hub over the past decade. Average prime office rents have risen 54 percent to June from mid-2009, according to government figures. Average vacancy rates fell to 6.1 percent at the end of 2012 from 11.5 percent in 2009. Prime refers to the most stable highincome producing properties. New office supply in Hong Kong will fall about a third short of demand by 2020, according to CBRE Group Inc. An estimated 88 percent of the 1,500 industrial buildings in Hong Kong are eligible for conversion under the government’s plan, according to Colliers.
Prices tripled The makeovers of industrial p r o p er ti es wi l l p r o vi d e a b o u t 800,000 square feet (74,300 square metres) of new office space in Hong Kong next year, according to Colliers. Excluding conversions, developers will add about 456,000 square feet of new space in 2014, the broker said. Increasing investor demand has
pushed up prices of warehouses and factories almost threefold since early 2009, according to broker CBRE. At the end of the second quarter, warehouses fetched about HK$2,680
Tencent puts at one-year high Shares rose 48 percent this year through Monday
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raders are speculating that Tencent Holdings Ltd’s record rally may falter, pushing bearish options bets to a one-year high before China’s biggest Internet company reports quarterly earnings. There were 1.73 puts giving the right to sell Tencent stock for every call to buy as of August 6, the highest in a year, data compiled by Bloomberg show. The put-to-call ratio surged from a January 18 low of 0.85. Shares of the Shenzhen, Chinabased company rose 48 percent this year through Monday and closed at a record HK$375.60 on August 6, valuing Tencent at US$90 billion. Tencent will boost profit by
27 percent in 2013, down from a 54 percent average increase over the past five years, according to analysts’ forecasts and data compiled by Bloomberg. It’s investing the most since 2009 on research and development, building games and other mobile applications to lure customers who are spending more time on their smartphones and tablets. “People are worried about two things – the first is earnings growth momentum,” said Benjamin Tam, a Hong Kong-based portfolio manager at IG Investment Ltd. “Second, the company is doing a lot of product development, so costs could go up.” Tencent has been developing
offerings for its mobile-messaging service WeChat, known as Weixin in China. R&D expenses rose 28 percent to 1.2 billion yuan (US$196 million) in the first quarter, the highest since the same period four years earlier, chief financial officer John Lo said in May. The stock swung between gains and losses in Hong Kong trading yesterday, adding 0.71 percent to HK$370 at the close. Online gaming accounted for 52 percent of Tencent’s 43.9 billion-yuan revenue in 2012, while sales from mobile applications contributed 8.5 percent, according to data compiled by Bloomberg. More than 84 percent of China’s Internet users regularly access instant
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Greater China China Merchants to announce share sale China Merchants Bank Co Ltd may give terms of a 35 billion-yuan (US$5.7 billion) share sale on Friday when it publishes earnings, Apple Daily reported yesterday, as the lender prepares this year’s second-largest equity offering. The bank will offer 1.74 shares for every 10 existing shares, for at least 9.29 yuan each in Shanghai and HK$11.77 in Hong Kong, the Chinese-language newspaper reported, citing unidentified people. Zhang Fan, a Shenzhenbased press officer at the bank, declined to comment on what she called market speculation.
ce shortage
Buyers are coming in with the expectation their returns will go up multiple times because of the redevelopment potential Simon Lo, property broker, Colliers International
per square foot while factories were getting HK$3,540 per square foot. Higher prices drove down the average investment yield to below 3 percent at the end of June, Colliers said.
messaging, making it the most popular online application in the country, followed by search engines with about 80 percent usage. “A lot of companies are targeting mobile Internet users because it’s a growth sector,” Tsoi Ho, an analyst at First Shanghai Securities in Hong Kong, said. “It’s difficult to see how companies will generate revenue from these services. Consumers just want to use these services for free. Advertising may not be the main revenue generator for mobile Internet because the monitors are too small.” Tencent is planning to list WeChat separately in Singapore, China Daily reported yesterday, citing an unidentified person familiar with the matter. The company has “no idea where this market rumour originates from,” Jerry Huang, a director of investor relations at Tencent, said in an email. The report of the planned spinoff is untrue, he said. Bloomberg News/Reuters
By contrast, prices of prime offices in Central have doubled to more than HK$35,000 a square foot in the first half, according to government figures. Yields have fallen to about 2.8 percent, according to Colliers. Goodman Group, whose funds own about 40 percent of Hong Kong’s prime warehouse space, is taking advantage of rising values to exit some properties. In the past year it has sold some of its older and smaller assets to buyers that plan to convert them for office use, said Philip Pearce, Greater China managing director of the Sydney-based company. “What we have been able to do is redeploy that money to other acquisitions and upgrade existing properties,” Mr Pearce said in an interview in Hong Kong. “And when you’ve taken supply out of the market, it clearly has an impact” on rents, he said. Monthly rents for logistics buildings climbed to HK$8.80 per square foot at the end of June and reached HK$9.50 per square foot for factory space, CBRE said. Both have risen about 80 percent since 2009. Prime office rents in the Central business district, where HSBC Holdings Plc and Goldman Sachs Group Inc have their regional headquarters, were the highest in the world after London’s West End at the end of 2012, according to broker Cushman & Wakefield Inc. Central’s average monthly office rent fell 1 percent to HK$103.30 a square foot in the first half of 2013 as banks and brokers sought cheaper locations to cut costs, the New York-based Cushman said. Rents in Kowloon East rose 7.2 percent to HK$32.60 per square foot, while in Kowloon West, another area of office towers converted from industrial buildings, they increased 6.7 percent to HK$41.30 a square foot. The average office vacancy rate across Hong Kong stood at 4.6 percent at the end of June, compared with 4 percent at the end of 2012, according to Cushman. Bloomberg News
RMB43.9 bln Tencent’s revenue in 2012
Regulator fines Shanghai gold stores
C
hina has fined five Shanghaibased gold retailers and a local trade association for manipulating jewellery prices, as the government steps up scrutiny of business practices. Shanghai Laofengxiang Co, Shanghai Yuyuan Tourist Mart Co’s two units and an industry body were among those given a combined fine of 10.59 million yuan (US$1.7 million), the official Xinhua News Agency said yesterday. Chow Tai Fook Jewelery Group Ltd, the world’s largest listed jewellery chain, and Chow Sang Sang Holdings International Ltd, which were listed by People’s Daily last month as among companies under investigation, weren’t included in the Xinhua report. China’s new leadership is expanding an anti-corruption drive and cracking down business practices that has driven up consumer prices. The government last week fined six dairy companies for fixing the prices of infant formula products, and has also detained some senior GlaxoSmithKline Plc executives on suspicion of economic crimes.
The gold stores manipulated the retail prices of their bullion and platinum jewellery with a scheme created with the Shanghai Gold & Jewellery Trade Association, hurting consumers’ interests, Xinhua said, citing the country’s top economic planner. Laofengxiang and Shanghai Yuyuan’s units have been fined 3.23 million yuan and 5 million yuan respectively, or 1 percent of their 2012 revenues, they said in stock exchange statements late yesterday. The industry body was also given a 500,000 yuan penalty, the maximum fine possible for this type of offence, as it played a “leading role in formulating and executing the monopoly agreement,” Xinhua said. Chenghuang Jewelry and Tianbao Longfeng were also fined, it said. The two companies declined to comment. Chow Tai Fook and Chow Sang Sang had denied any involvement when the probe was first reported. Chow Tai Fook said last month that the company was pulled into the investigation because of its membership in the trade association, and that sales in Shanghai were unaffected. Bloomberg News
Sina posts loss on Alibaba charge
S
ina Corp, owner of China’s largest Twitter-like service, posted a second-quarter loss on a charge related to an asset sale as it boosted spending on new services on mobile applications to contend with Tencent Holdings Ltd. The net loss was US$11.5 million in the three months ended June 30 after taking a US$27.1 million charge related to a sale of a stake in its Weibo service to Alibaba Group Holding Ltd, the New York-listed company said in a statement on Monday U.S. time. Sales rose 20 percent to US$157.5 million. Sina boosted spending on mobile development as more of its 536 million Weibo account-holders access the microblogging service from wireless devices. The company sold an 18 percent stake in Weibo to Alibaba for US$586 million in April as the companies work to compete with Tencent on social e-commerce. “Revenue was better than expected but a rise in operating costs hurt Sina’s profit,” Ricky Lai, an analyst at Guotai Junan International Holdings Ltd said by phone. “Working with Alibaba could help improve its financials in the second half and compete with Tencent.” Operating expenses, including costs on sales and marketing, product development and staff, rose 46.9
percent to US$102.5 million in the second quarter. Alibaba, China’s biggest e-commerce company, is allowing shoppers to log on to its Taobao Marketplace using their Sina Weibo accounts, after it disabled sellers’ access to Tencent’s instant messaging app WeChat. The two companies are also developing mobile payment systems, mobile gaming and videos. “We are going to create new advertising formats or marketing campaign formats for Taobao,” Charles Chao, chairman and chief executive of Sina said during an earnings call yesterday. “There’s a bunch of opportunities that we are going to explore, we are working on all these fronts.” The company forecast thirdquarter non-GAAP revenue of US$176 million to US$180 million, including advertising sales of US$151 to US$153 million. Sina’s ad sales increased 17 percent in the second quarter to US$120.6 million, according to the statement. Advertising from the Weibo unit more than tripled to US$30 million. Weibo value-added services revenues, which include revenue share from web games and membership fees, grew 186 percent to US$7.7 million. Bloomberg News
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August 14, 2013 April 19, 2013
Greater China
Shipyard shakeout looms in China Government to control capacity and regain control Jasmine Wang and Kyunghee Park
C
hina grew into the world’s leading shipbuilder over the last decade as hundreds of private yards opened to compete with state-run companies. Now, the government is poised to regain control as the industry heads for consolidation. The number of shipyards in China has swollen to 1,647, contributing to a global capacity glut. To stabilise the industry, one third to a half of the yards will probably have to disappear through acquisitions and closings, according to executives and analysts. State-run companies are at an advantage because they have easier access to credit to pay workers, buy raw materials and provide financing for clients. China State Shipbuilding Corp, China Shipbuilding Industry Corp and other government-backed companies won three-quarters of all orders in the first half of this year. Though state companies may buy some private yards, many will likely have to close since their capacity isn’t needed. “It’s a lost cause for most of the private shipyards,” said Park Moo-hyun, an analyst at E*Trade Securities Korea in Seoul. “The government and even the banks seem to have given up on trying to save some of the troubled private shipyards. What innovations can they come up with when they can’t pay to keep their workers?” China’s State Council announced on August 4 a three-year plan for the industry that included control of capacity. Ship owners ordering China-made vessels, engines and some main parts should get better access to funds from financial institutions and some key companies will be allowed to issue corporate bonds, according to the State Council statement. Last month, China Rongsheng Heavy Industries Group Holdings Ltd, the country’s biggest private shipyard, sought financial assistance after failing to win a single vessel order this year. “China has realised it’s better to have a few big yards under its control and help them become more
competitive than have too many,” said Mr Park. “The government is looking for quality now, not quantity.”
Idled workers More than half of China’s yards will have to be wound down to cut capacity, according to Ren Yuanlin, chairman of Yangzijiang Shipbuilding Holdings Ltd, the country’s second-largest private vessel maker. Of the remainder, only 20 percent will be profitable, he said. China Association of the National Shipbuilding Industry said last month a third of the nation’s yards face the danger of closure in about five years after failing to win orders.
1,647
Shipyards are currently operating in China
“It’s very difficult to conduct mergers and acquisitions in the shipbuilding industry in the current market,” said Sarah Wang, an analyst at Masterlink Securities Corp in Shanghai. “Big companies can’t win new orders. How would they be willing to do acquisitions?” The State Council stepped in with its plan a month after Rongsheng said it had a first-half loss and sought government support. Some idled contract workers surrounded the entrance of its main factory in Jiangsu province, the company said on July 3. The yield on a Rongsheng unit’s 2015 onshore bonds rose to 6.9 percent on August 9 even after the State Council’s pledge. Rongsheng on July 31 sold three-year offshore
convertible notes at 7 percent to help repay borrowings. By comparison, bonds due 2015 for South Korea’s Hyundai Heavy Industries Co, the world’s largest builder of vessels, yielded at 2.91 percent. “Compared with shutting down of companies, mergers and acquisitions will less likely cause social unrest,” said Xu Minle, an analyst at Bank of China International Ltd. Consolidation may help the government achieve a target that the nation’s top-ten yards should account for 70 percent of the total output by 2015. China also aims to have more than 50 brands of different types of ships in that period, according to a five-year plan released last year. In comparison to that goal, the nation’s top-ten builders accounted for 48 percent of the total output in 2011, according to the latest available data from the industry group. Chinese yards had an order book of 218 million deadweight tons in 2008, overtaking South Korea as the world’s largest shipbuilding nation, according to Clarkson Plc.
‘Less hope’ “The Chinese government wants to support its big stateowned shipyards because they are strategically important,” said Kim Hong-gyun, an analyst at Dongbu Securities Co in Seoul. “That means less hope for private yards.” Global ship orders reached a peak in 2007, helped by China’s demand for raw materials. To support the yards, the government also provided low-cost financing for new vessels. Yards in China won orders to make vessels with a capacity to carry 27.8 million deadweight tons, or 47 percent of global contracts, in the seven months through July, according to Clarkson, the world’s largest shipbroker. State-backed builders won almost three-quarters of those deals, helping the nation gain a 7.8 million-ton lead over South Korea. Chinese shipyards and related companies employed about 671,564 people in the country in 2012, down
from 681,339 in the previous year, according to data provider Beijing Compass-info Consulting Co. Most of the builders are based in Yangtze River Delta, Pearl River Delta and northeastern China. South Korea has 138,248 people working at 65 shipyards, according to its Ministry of Trade, Industry & Energy. China’s government hasn’t had much success in its efforts to encourage mergers and acquisitions in the steel industry, Mr Wang at Masterlink said. Benxi Iron & Steel Group, owned by a provincial government, and Anshan Iron & Steel Group, controlled by the central government, failed in their bid to merge in 2010, at least five years after authorities initiated the process. Shipbuilders should be confident as “the potential in the domestic market remains relatively large,” the State Council said. The government also pledged to study securitisation of shipbuilders’ loans and authorities will encourage development of offshore engineering equipment such as drilling platforms and large LNG ships. “Shutting down yards is a hard landing, while mergers and acquisitions is a soft landing,” said Li Yanqing, president of Shipbuilding Information Centre of China. Bloomberg News
KEY POINTS State-run companies with easier access to credit Govt-backed firms won 75 pct of all orders in H1 China now the largest shipbuilding nation – Clarkson More than half of yards to be wound down – industry
11 11
August 14, 2013 April 19, 2013
Asia
Thunderbird are gone Boutique casino operator sells up in the Philippines Michael Grimes
michael.grimes@macaubusinessdaily.com
T
hunderbird Resorts Inc has sold all investment and management rights in its Philippines casino and hotel operations to Magnum Leisure Holdings Inc for about US$26.5 million it said in a statement. Magnum Leisure Holdings Inc is an affiliate of Philippines pay television operator Solar Entertainment Corp, chaired by Filipino-Chinese businessman William Tieng Thunderbird, listed on NYSE Euronext in Amsterdam, is a Panama-based company with core operations in Latin America. Its Philippines investments represented however 45 percent of the group’s global property earnings before interest, taxation, depreciation and amortisation. It operated two small casino resorts under the Fiesta brand at Poro Point on the outskirts of San
Fernando City about 65 kilometres (40 miles) north of the capital Manila and in Rizal, just east of the capital. Thunderbird put a positive gloss on the deal. “With the sale of the Philippines, the group now has fresh capital to
US$26.5 mln Thunderbird will get for selling Philippines casino interests
further reduce debt and to invest in building cash flows in Peru, Costa Rica and Nicaragua. We will continue to focus on gaming as our core business,” it stated in a release. Thunderbird said it had US$57.2 million debt based on preliminary results to June 30 and net of the Philippines sale. Industry sources told Business Daily the sale price amounted to a significant discount on what Thunderbird thought the Philippines business was worth.
Running dispute The company had been in dispute with the Philippine Amusement and Gaming Corporation – the country’s gaming regulator as well as operator of state-owned casinos – since at least 2011. On June 23 that year, the
Philippine Regional Trial Court issued a preliminary injunction directing Pagcor to “cease and desist from initiating and completing cessation or other similar proceedings” against the business operations of Thunderbird’s local units. Pagcor claimed it was taking action because Thunderbird had failed to meet its investment commitments. “From 2006 to 2010, Thunderbird invested a total of 2.4 billion pesos [currently US$55 million] in both of their Philippine properties. That represents only 69 percent of the amount they originally undertook to invest during the period,” said Pagcor in a statement at the time. Thunderbird said in a statement after the June 2011 injunction: “The group reiterates that we take seriously our responsibilities to our employees, to the communities where we operate, and to the provincial economies of those communities.” Shortly afterwards, in August 2011, Thunderbird announced it was entering into a joint venture with Solar Entertainment to co-own the Philippines operations. At that time Thunderbird said its decision not to sell outright “was based on further strategic analysis and determined as the best decision to building [sic] shareholder value.” This week Thunderbird said the sale would reduce the group’s reported consolidated debt “by at least US$9.2 million”. “We thank the many dedicated employees and associates who helped Thunderbird to grow in the Philippines. We wish them and Magnum great success,” Thunderbird Resorts added.
New Zealand PM to apologise to consumers
N
enough to withstand the pain of the fiscal tightening. A decision on whether or not to raise sales tax is due in September or October. But Nobuyuki Nakahara, a former Bank of Japan board member and close confidant of Mr Abe, says Japan should delay the planned hike in order to ensure that the economy emerges from deflation. Mr Nakahara told Reuters the sales tax hike should wait until the autumn of next year, when inflation will likely have taken root. “[The scheduled tax hike] would have a serious negative impact similar to the Bank of Japan’s 2006 exit from quantitative easing and zero interest rates,” he said. He also warned that the pursuit of fiscal reform at this time could cause the yen to strengthen, reversing a weakening of the yen under Mr Abe’s policies that has boosted exports.
ew Zealand Prime Minister John Key said yesterday he will visit Beijing later this year to personally apologise to Chinese consumers over the Fonterra Cooperative Group Ltd milk botulism scare. China’s baby formula market is worth around NZ$3.0 billion (US$2.4 billion) a year to New Zealand and Mr Key said apologising was an important step in restoring trust in his country’s foodstuffs after the crisis, which resulted in global recalls. He acknowledged it was unusual for a national leader to say sorry on behalf of a private company but said the reputation of Fonterra was inextricably tied with that of New Zealand as a whole. “Fonterra are a private company owned by, largely, dairy farmers of New Zealand,” he told TV3. “But in reality they’re a really important part of the New Zealand economy and it’s just going to be important in their [Chinese] culture that I go up there and offer an apology.” Mr Key said he was not visiting Beijing immediately as he wanted to wait until a government inquiry into the botulism scare was completed so he had the answers to any questions from consumers in China. While no infants fell ill after consuming tainted product from Fonterra, the scandal dented New Zealand’s image and hurt its reputation for supplying premium infant formula.
Reuters
AFP
Fiesta Resort Casino, Poro Point
Abe considers cut to corporate tax Lower taxes could help lure foreign investment
J
apanese Prime Minister Shinzo Abe is considering a corporate tax cut as a way to offset the potential economic drag of a planned two-stage hike in the sales tax, the Nikkei economic daily reported on yesterday, citing government sources. Mr Abe has called for a study on lowering corporate tax, which at 38.01 percent is one of the highest in the industrial world, as a way of easing the burden on Japanese
companies and attracting foreign investment, the Nikkei reported. Lowering corporate tax could spark capital expenditure, an area that has lagged behind Japan’s economic recovery. However, supporters of fiscal discipline could oppose the tax cut. Some may also question such a move because around 70 percent of companies do not pay corporate tax due to accounting rules about how they book their losses. The prime minister, who is wavering on whether to proceed with a planned increase in the sales tax, has instructed the government to hold meetings with business leaders and academics this month to assess the impact on the economy. Under a multi-party agreement last year, sales tax is to rise to 8 percent from 5 percent next April and to 10 percent in October 2015. But the government must certify that the economy is strong
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August 14, 2013 April 19, 2013
Asia San Miguel reports second quarter loss San Miguel Corp, the largest Philippine company, posted its first quarterly loss since the period ended December 2008 as a weaker peso led to a foreign-exchange deficit. Net loss was 6.6 billion pesos (US$151 million) in the second quarter ended June 30, compared with a profit of 5.65 billion pesos a year earlier, according to figures derived from first-half results announced yesterday by the company. Sales fell 4.4 percent to 179.2 billion pesos. The strengthening of the dollar against the local currency resulted in an “unrealised” foreign-exchange loss in the first half, the company said.
Mizuho seeks stake in Bank Panin Mizuho Financial Group Inc has approached Australia and New Zealand Banking Group Ltd to buy ANZ’s 39.2 percent stake in PT Bank Pan Indonesia Tbk (Panin) valued at about US$570 million, sources familiar with the matter told Reuters. Mizuho, Japan’s second-biggest bank by assets, made the approach to ANZ last month and the discussions are at an early stage, one of the sources said. The potential sale comes nearly three years after ANZ tried unsuccessfully to buy an additional stake in the bank, known as Bank Panin, from the founding family.
N. Korea unveils smartphone North Korea has unveiled what it says is a domestically-produced smartphone. Industry analysts say the “Arirang”, built around Google’s Android OS, is likely manufactured in neighbouring China, however. The existence of the phone came to light during a factory inspection by North Korean leader Kim Jong-un at the weekend, official Korean Central News Agency reported. Some analysts suggest it is aimed at getting North Koreans to use an officially-approved phone that can be properly monitored. Cell phones were introduced in 2008 through a joint venture with the Egyptian telecom firm Orascom, which says there are now two million users.
Japan machinery orders fall in June Japan’s core machinery orders fell in June and companies expect them to fall further in the current quarter, another sign that government stimulus has yet to boost capital spending as debate intensifies over how to address massive and growing public debt. The 2.7 percent fall in core orders followed a 10.5 percent jump in May, official data showed. The data is a leading indictor of capital spending. In a worrying sign, companies forecast core orders would fall 5.3 percent in July-September from April-June, when they rose 6.8 percent to record the first increase in five quarters.
Kevin Rudd turning the heat on the opposition
Rudd presses Abbott on costings Australian PM says ‘D-day’ on economic costings
A
ustralian Prime Minister Kevin Rudd yesterday said it was ‘D-day’ for the opposition to reveal its election costings, as the Treasury confirmed the government’s A$30 billion (US$27 billion) budget deficit forecast. The independent Pre-Election Economic and Fiscal Outlook (PEFO) statement, designed to give all political parties a fair look at the nation’s finances before an election, was broadly in line with the Labor government’s forecasts. It said the economy was expected to grow 2.5 percent in 2013-14 and 3.0 percent in 2014-15, and there would be an estimated underlying cash deficit of A$30.1 billion (1.9 percent of GDP) for 2013-14. “It is D-day for Mr Abbott when it comes to announcing his own budget bottom line,” Mr Rudd said on the campaign trail in northern Queensland. “Mr Abbott has been preparing for this election for three years. He’s known
precisely that we would get to this point where the pre-election fiscal outlook document would be made public. “It is fundamental for the Australian people to know where Mr Abbott’s A$70 billion worth of cuts to health, education and jobs are going to fall.” Mr Abbott has repeatedly said Australian voters will know where a government led by his Liberal-National coalition will make savings well ahead of the September 7 national polls. But the conservative challenger, whom opinion polls show is likely to end six years of Labor government and take power, is expected to take some time to digest the PEFO figures before revealing his costings. The Labor administration released its economic statement on August 2, revealing its budget deficit had blown out to A$30.1 billion and revenues were shrinking as the mining-driven economy grapples with a slowdown in China. The result was that the government
announced A$17.4 billion in savings to ensure the budget was brought back to surplus in 2016-17. The PEFO statement, prepared by the departments of Treasury and Finance, noted uncertainty surrounding the global outlook, and said the Australian economy’s transition to new sources of growth beyond mining may not occur as smoothly as forecast. “A rebalancing of growth towards the non-resource sectors is needed to deliver sustained economic growth,” it said. “While this transition has commenced, it is now expected to take longer than at budget (predicted in May). Still, sustained low interest rates and the lower Australian dollar are expected to underpin a return to around trend growth in 2014-15.” Earlier this month, Australia’s central bank cut interest rates to a new record low of 2.5 percent, underscoring fears of a major economic slowdown. AFP
Westpac among banks bidding for Lloyds assets
W
estpac Banking Corp, National Australia Bank Ltd and Macquarie Group Ltd are among banks that made preliminary bids for Lloyds Banking Group Plc’s Australian assets, two people with knowledge of the matter said. The indicative offers for Lloyds International Pty, which includes its Capital Finance and BOS International units, were due on Monday and the sale may fetch more than A$1 billion (US$910 million), said the people, asking not to be identified because the details are private. Britain’s biggest mortgage lender, part-owned by the U.K. government, is off-loading assets it no longer considers essential as it shrinks its balance sheet after a government
bailout in 2008. Lloyds said on June 20 it was making “significant progress” in strengthening its capital position. European banks are bolstering their balance sheets through asset sales as they try to meet stricter capital rules. Supreet Thomas, a Sydney-based spokeswoman for Westpac, said the bank wouldn’t comment on market speculation, as did Meaghan Telford, a Melbourne-based spokeswoman for NAB. Lisa Jamieson, a Sydneybased spokeswoman for Macquarie, declined to comment. Lloyds International reported a loss of A$148.3 million in 2012, narrowing from a shortfall of A$1.2 billion the previous year, according to filings with the Australian Securities & Investments Commission. The division reduced assets by 24 percent
to A$12.2 billion last year, according to the documents. The Capital Finance unit, which provides retail, equipment and commercial financing services, has more than A$6 billion in assets and equity of more than A$2 billion, a person familiar with the matter said on July 5. Lloyds, based in London, was already selling a A$750 million package of about 12 to 14 loans it defines as “non-core” in Australia, people familiar with the matter said in July. It sold some distressed corporate loans to investors backed by KKR & Co in November, and 809 million pounds (US$1.2 billion) of real estate loans to a joint venture between Morgan Stanley and Blackstone Group LP in June. Bloomberg News
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August 14, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 68.5
43.6
68.4
43.4
Max 44.55
Min 42.8
average 44.072
Min 43.45
Last 44.4
Max 68.5
average 68.195
Last 68.4
PRICE
average 22.389
Min 22.15
Last 22.65
22.0
22.00
44.3
19.9
21.75
44.0
19.8
21.50
43.7
19.7
21.25
43.4
Max 19.98
average 19.806
DAY %
YTD %
(H) 52W
Min 19.62
Last 19.96
(L) 52W
106.82
0.669116954
13.97780623
108.9300003
86.23999786
BRENT CRUDE FUTR Sep13
109.63
0.605671286
3.161757787
114.3699951
96.65000153
GASOLINE RBOB FUT Sep13
291.68
0.437312765
6.534205048
309.1700077
260.2499962
GAS OIL FUT (ICE) Sep13
927.5
1.449275362
2.175709171
980
832.5
NATURAL GAS FUTR Sep13
3.324
0.422960725
-7.615341857
4.517000198
3.128999949
304.22
0.705087888
1.626858193
319.1699982
275.5500078
Gold Spot $/Oz
1336.64
0.8793
-19.6953
1796.08
1180.57
Silver Spot $/Oz
21.7545
4.0885
-27.7499
35.365
18.2208
Platinum Spot $/Oz
NY Harb ULSD Fut Sep13
19.6
COUNTRY MAJOR
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
ASIA PACIFIC
1509.27
0.618
-0.5587
1742.8
1294.18
Palladium Spot $/Oz
741.2
0.027
5.9372
786.5
572.7
LME ALUMINUM 3MO ($)
1885
0.748262961
-9.068982151
2200.199951
1758
LME COPPER 3MO ($)
7251
-0.329896907
-8.573950322
8422
6602
LME ZINC
1946
0.102880658
-6.442307692
2230
1779
14725
0.30653951
-13.6869871
18920
13205
15.025
0.066600067
-2.466731581
16.47500038
14.60000038
466.75
0.592672414
-22.17590663
665
446.5
WHEAT FUTURE(CBT) Dec13
655.25
0.963020031
-20.1644837
913
643
SOYBEAN FUTURE Nov13
1235.75
0.856967966
-5.142966801
1409.75
1162.5
126.2
0.079302141
-19.33525088
200
118.1499939
NAME
15.92999935
ARISTOCRAT LEISU
74.34999847
CROWN LTD
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep13 Dec13
COFFEE 'C' FUTURE Dec13 SUGAR #11 (WORLD) Oct13
17.27
COTTON NO.2 FUTR Dec13
90.23
0.641025641 0.16652977
-13.90827517
21.82999992
14.59232918
90.40000153
CROSSES
Max 22
average 21.466
Min 21
Last 21.9
21.00
World Stock Markets - Indices COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
US
15419.68
-0.03779454
17.67029
15658.42969
12471.49
NASDAQ COMPOSITE INDEX
US
3669.951
0.2689265
21.54113
3694.188
2810.8
FTSE 100 INDEX
GB
6613.57
0.5967139
12.13603
6875.62
5605.589844
DAX INDEX
GE
8430.13
0.847923
10.74222
8557.86
6871
DAY %
YTD %
(H) 52W
(L) 52W
0.9121 1.5448 0.9285 1.3283 97.88 7.9883 7.7556 6.122 61.2588 31.27 1.2644 29.963 43.772 10315 89.274 1.23342 0.85987 8.1318 10.611 130.01 1.03
-0.404 -0.2067 -0.1616 -0.1053 -1.1953 -0.0025 -0.0026 0.0016 0.0264 -0.1599 -0.1661 -0.04 -0.2102 -0.2133 -0.7886 -0.06 -0.1035 0.1426 0.1008 -1.0845 0
-12.1122 -4.5005 -1.4109 0.7051 -12.0351 -0.0638 -0.0645 1.7739 -10.2251 -2.2066 -3.4008 -3.1038 -6.3214 -5.0606 0.0594 -2.1031 -5.1694 1.0539 -0.7596 -12.6452 -0.0097
1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.3691 61.8063 31.62 1.286 30.228 44.181 10343 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032
0.8848 1.4814 0.9022 1.2256 77.13 7.9818 7.7498 6.1138 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20066 0.78128 7.8056 9.7946 96.54 1.0289
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
4.3
-0.6928406
36.50793
4.63
2.49
VOLUME CRNCY 1379835
13.52
0.8955224
26.7104
13.75
8.49
881720
AMAX HOLDINGS LT
1.13
-1.73913
-19.28571
1.72
0.75
922225
BOC HONG KONG HO
25.1
-0.1988072
4.149376
28
22.85
13813770
0.345
6.153846
30.18869
0.42
0.22
108000
6.44
-0.1550388
7.512525
6.74
3.07
15336
CHINA OVERSEAS
24.65
2.282158
6.709955
25.6
17.28
33267825
CHINESE ESTATES
16.98
0.7117438
50.99308
16.98
7.824
261000
CHOW TAI FOOK JE
10.24
2.60521
-17.68488
13.4
7.44
2936646
EMPEROR ENTERTAI
2.68
0.4497751
41.79894
3.07
1.35
340000
FUTURE BRIGHT
2.28
3.636364
88.11476
2.76
1.033
2244000
43.55
2.591284
43.49258
44.95
19.64
9948389
126
1.694915
6.149961
132.8
109
3024395
HOPEWELL HLDGS
25.05
0.804829
-24.66165
35.3
23.047
3316267
HSBC HLDGS PLC
86.15
0.4664723
5.965556
90.7
65.85
13757209
HUTCHISON TELE H
3.63
-0.2747253
1.966294
4.66
2.98
5290000
LUK FOOK HLDGS I
23.95
4.585153
-1.844261
30.05
16.88
3842100
MELCO INTL DEVEL
16.9
1.684717
87.56936
18.18
5.54
5543000 4479875
CHEUK NANG HLDGS
DOW JONES INDUS. AVG
PRICE
Macau Related Stocks
CENTURY LEGEND
NAME
Max 22.75
20.0
WTI CRUDE FUTURE Sep13
CORN FUTURE
68.0
Currency Exchange Rates
NAME
METALS
Min 68
44.6
Commodities ENERGY
22.2
68.1
42.8
Last 43.55
22.4
68.2
43.0
average 43.233
22.6
68.3
43.2
Max 43.6
22.8
GALAXY ENTERTAIN HANG SENG BK
NIKKEI 225
JN
13867
2.570892
33.39837
15942.6
8488.14
HANG SENG INDEX
HK
22541.13
1.21165
-0.5110539
23944.74
19076.78906
CSI 300 INDEX
CH
2359.068
0.2666617
-6.495716
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
7986.27
1.048792
3.724528
8439.15
7050.05
MGM CHINA HOLDIN
22.65
1.797753
70.57933
23.65
11.27
KOSPI INDEX
SK
1913.03
1.496156
-4.207207
2042.48
1770.53
MIDLAND HOLDINGS
3.19
0.3144654
-13.78378
5
2.68
670000
S&P/ASX 200 INDEX
AU
5157.701
0.9600965
10.94335
5249.6
4261.2
NEPTUNE GROUP
0.179
0
17.76316
0.23
0.131
11785000
ID
4632.699
0.7594752
7.320712
5251.296
3978.078
NEW WORLD DEV
11.62
4.121864
-3.327791
15.12
9.38
16848020
FTSE Bursa Malaysia KLCI
MA
1793.44
0.4970385
6.186684
1826.22
1590.67
SANDS CHINA LTD
44.4
3.376019
30.78056
44.6
23.7
12641762
SHUN HO RESOURCE
1.52
-0.6535948
8.57143
1.67
1.06
0
NZX ALL INDEX
NZ
965.529
0.04496967
9.463832
998.487
796.908
SHUN TAK HOLDING
3.89
2.368421
-7.159906
4.65
2.72
10360034
PHILIPPINES ALL SHARE IX
PH
3992.61
1.414558
7.938138
4571.4
3411.69
SJM HOLDINGS LTD
JAKARTA COMPOSITE INDEX
19.96
1.422764
12.46554
22.382
14.77
4809940
SMARTONE TELECOM
11.2
-1.060071
-20.45455
17.38
11.1
1858791
WYNN MACAU LTD
21.9
5.035971
4.534602
26.5
16.92
5980495
ASIA ENTERTAINME
4.09
0
45.30944
4.7647
2.4835
50324
74.26
43.16
520032 10370
HSBC Dragon 300 Index Singapor
SI
617.59
-0.06
-0.56
NA
NA
STOCK EXCH OF THAI INDEX
TH
1447.29
1.050096
3.977211
1649.77
1207.53
HO CHI MINH STOCK INDEX
VN
497.73
-0.3463741
20.3031
533.15
372.39
BALLY TECHNOLOGI
73.85
0.394236
65.17558
Laos Composite Index
LO
1339.93
1.307234
10.30319
1455.82
1003.17
BOC HONG KONG HO
3.28
3.797468
6.840393
3.6
2.99
GALAXY ENTERTAIN
5.52
3.370787
39.04282
5.77
2.5
5797
INTL GAME TECH
19.13
-0.9321595
35.00353
20.25
11.19
1387920
JONES LANG LASAL
87.44
-0.4553734
4.169642
101.46
69.56
325881
LAS VEGAS SANDS
56.43
0.5344735
22.2487
60.54
36.3606
2964799
MELCO CROWN-ADR
26.28
-0.3034901
56.05701
26.6
10.22
2290943
MGM CHINA HOLDIN
2.92
0
66.82937
2.98
1.4381
1000
MGM RESORTS INTE
17.23
-0.115942
48.02405
17.67
9.15
4606379
SHFL ENTERTAINME
22.8
0.1317523
57.24138
23.08
12.35
689573
SJM HOLDINGS LTD
2.57
-1.153846
12.83728
2.9481
1.9818
6400
138.43
0.2171867
23.05983
144.99
92.9122
627877
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
AUD HKD
USD
Hang Seng Index NAME
PRICE
DAY %
VOLUME
36.15
-0.1381215
20975519
CHINA UNICOM HON
2.7
2.272727
31178308
CITIC PACIFIC
3.34
3.08642
485430438
5.4
3.646833
54490621
BANK EAST ASIA
32.05
3.721683
5793801
BELLE INTERNATIO
12.04
0.6688963
25.1
CATHAY PAC AIR CHEUNG KONG
AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H
BOC HONG KONG HO
CHINA COAL ENE-H CHINA CONST BA-H
PRICE
DAY %
VOLUME
12.06
0.5
35855746
9.35
-0.9533898
17889328
CLP HLDGS LTD
64.15
-0.4654771
3642850
CNOOC LTD
14.56
1.392758
52389053
COSCO PAC LTD
11.22
0.1785714
18267608
ESPRIT HLDGS
13.66
-0.1988072
13813770
HANG LUNG PROPER
14.26
0.8486563
2013894
HANG SENG BK
115.6
0.5217391
6011532
HENDERSON LAND D
49.45
5.15
6.846473
134931598
HENGAN INTL
87.55
5.98
2.222222
351641301
CHINA LIFE INS-H
19.78
2.699896
66173699
CHINA MERCHANT
24.05
0.2083333
4627736
CHINA MOBILE
83.95
0.4787552
CHINA OVERSEAS
24.65
2.282158
5.88
0.8576329
105876126
CHINA PETROLEU-H
NAME
DAY %
POWER ASSETS HOL
70.3
0.5003574
2014522
SANDS CHINA LTD
44.4
3.376019
12641762
11.3
3.290676
6884428
1.538462
4267498
3597870
SWIRE PACIFIC-A
93.35
0.4303389
1415143
1.636905
5243440
TENCENT HOLDINGS
370
0.7076756
3058826
26.15
1.949318
7137759
TINGYI HLDG CO
19.5
1.5625
7393037
126
1.694915
3024395
WANT WANT CHINA
10.62
0.9505703
13194864
1.644399
3365265
WHARF HLDG
70.55
0.2842928
4048298
-0.284738
1846203
20.25
-0.4914005
7903469
126.3
1.527331
7287065
HSBC HLDGS PLC
86.15
0.4664723
13757209
15803314
HUTCHISON WHAMPO
92.85 -0.05382131
33267825
IND & COMM BK-H
SINO LAND CO
VOLUME
105.6
HONG KG CHINA GS
MOVERS
39
11
0 22550
INDEX 22541.13
7872623
5.28
2.923977
470348474
10.54
1.346154
39550779
CHINA RES ENTERP
25.75
-0.7707129
3967398
29.7
0.3378378
3256362
CHINA RES LAND
23.95
5.973451
12773261
NEW WORLD DEV
11.62
4.121864
16848020
CHINA RES POWER
18.38
-1.076426
10025788
PETROCHINA CO-H
9.33
1.413043
75237422
CHINA SHENHUA-H
25.6
4.489796
40855146
PING AN INSURA-H
54.4
2.351834
39928660
MTR CORP
PRICE
SUN HUNG KAI PRO
HONG KONG EXCHNG
LI & FUNG LTD
NAME
HIGH
22547.04
LOW
21723.89
52W (H) 23944.74 (L) 19076.78906
21720
9-August
13-August
14 14
August 14, 2013 April 19, 2013
Classifieds Mountain Villa For Sale in Koh-Samui
Bruno Beato Ascenção
Price: HK$ 16 million
3 x King Bed en-Suites, 1 x King Bed basement Suite, 2 x 2 Single Bed, Spacious Living area and fully furnished kitchen, Swimming pool - children / adult, 2 levels Maid’s quarter, Fully Furnished, Balcony, Terrace / Patio, 2 x Outside Salas, Barbecue, 2 x Parking Spaces, 7-seater SUV included. Contact Ms Chan - Sarah@clever-cloggs.com.hk Tel: 2861-3317
Lawyer
Avenida da Praia Grande, no. 409, China Law Building, 11th floor. Tel:28785795 Fax:28785797 Email:bascencao@gmail.com
Recruitment
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Translations
Duties
Inês Dias
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editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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15 15
August 14, 2013 April 19, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Straits Times
The ECB grows up Barry Eichengreen
Professor of Economics and Political Science at the University of California, Berkeley
The Singapore government intends to require all public officers who visit casinos frequently or who purchase the annual casino entry pass to declare these actions, Deputy Prime Minister Teo Chee Hean said in Parliament on Monday. The Public Service Division is reviewing the rules on casino visits by all public officers, Mr Teo said. There is currently no blanket rule prohibiting public officers from visiting the casinos, but agencies have imposed restrictions in cases where conflict of interests may arise.
Yomiuri Shimbun A majority of eligible voters believe the consumption tax hike to 8 percent is necessary but the timing should be flexible, according to a nationwide survey conducted recently by the newspaper. Responding to a question regarding the consumption tax hike scheduled to start in April, 56 percent of randomly selected 1,002 households said it was necessary but the timing should be flexible, representing a cautious stance toward the increase.
Wall Street Journal The family of the British businessman whose 2011 murder led to the downfall of Communist Party highflier Bo Xilai is seeking compensation of at least 30 million yuan (about US$5 million) for his death, according to people familiar with discussions on the matter. The compensation claim from the family of Neil Heywood threatens to complicate the Chinese leadership’s efforts to conclude the scandal surrounding Mr Bo, whose wife, Gu Kailai was convicted last year of poisoning the Briton to death with cyanide.
Times of India Dismal industrial output growth numbers raised apprehension that India’s first quarter economic growth may fall short of the 5 percent mark. Data released by the Central Statistics Office showed industrial output fell for the second consecutive month in June, declining by 2.2 percent, following declines in May and June. “The trend is very disturbing and it is a wake-up call. The slowdown is now well dispersed and if steps are not taken it will spread to services as well,” said D K Joshi, chief economist at rating agency Crisil.
A
ugust 2 marked the first anniversary of the European Central Bank’s “outright monetary transactions” programme, under which it stands ready to purchase government bonds on the secondary market. The ECB announced OMT in response to last summer’s panicked sales of southern European sovereign debt, which threatened to blow apart the euro zone. At one level, the anniversary was a happy one. Yields on Spanish and Italian bonds, which had risen to unsustainable heights over fears of a euro zone breakup, fell sharply after the announcement. They have remained at lower levels ever since, despite little visible improvement in the European economy. Perhaps best of all, the ECB has never had to activate the facility. It has not actually bought any bonds under the programme. Its promise to act was enough to calm markets. But the OMT scheme is also condemned for exceeding the ECB’s mandate. Critics view it as a devious attempt to circumvent the prohibition on the ECB’s direct purchases of euro zone governments’ bonds. It is thus a source of moral hazard, for it relieves pressure on spendthrift politicians to balance budgets and push ahead with reforms. In addition, it is seen as exposing the ECB’s principal shareholders, notably Germany, to the risk of losses on their holdings of southern European bonds. Earlier this summer, these issues were the subject of two days of hearings before Germany’s Constitutional
Court, which will issue its ruling shortly. If it finds that the OMT programme is inconsistent with the German Constitution, it could force the Bundesbank to withhold its participation. It might even force the ECB to abandon OMT. Now, more than 100 economists, half from Germany, half from abroad, have signed a letter in support of the programme. (Full disclosure: I am among them.) It might seem odd for foreigners to weigh in on a question of German law. But the stakes are too high to remain on the sidelines. A normal monetary union, which is what the euro zone aspires to be, requires a normal central bank to carry out the entire range of central-
The euro zone will never be a normal, well-functioning monetary union until it has a normal, wellfunctioning central bank prepared to act as a lender of last resort
banking functions. This starts with ensuring price stability. But, as is acknowledged in the ECB’s statute, it also means ensuring the “smooth operation of payment systems”. Moreover, it means preserving financial stability. Recent experience has provided a harsh reminder of the consequences of neglecting this responsibility. Specifically, the central bank must be ready to act as a lender of last resort when investor panic threatens financial markets.
Living document Americans learned these lessons the hard way. The founding governors of the Federal Reserve System interpreted their mandate narrowly, viewing the Fed as responsible for maintaining gold convertibility and a stable dollar. Embracing the “real bills doctrine,” they regarded their role as being to provide as much money and credit as was required for retail and wholesale transactions, and no more. In particular, they did not see the Fed as a lender of last resort. Emergency lending to distressed financial institutions and markets, they warned, would only encourage excessive risk taking and create bubbles, while exposing the Fed to losses on its investment portfolio. The result was a series of escalating banking and financial crises in 1930, 1931, and 1933, the last of which shut down the entire U.S. financial system. Obviously, this was no way to manage what was already the world’s largest economy.
The result was the Banking Act of 1933, which expanded the Fed’s powers to discount and purchase notes, drafts, and bills, thereby ensuring that retail banks would have the liquidity required to meet depositors’ needs. The Banking Act – and the experience that prompted it – made clear that the Fed had an obligation to use those powers. It is no coincidence that the U.S. has not had a 1933-style financial crisis ever since. The financial crisis of 2008 came close, but it was precisely the Fed’s readiness to step in as an emergency lender that prevented the worst. The lesson of this U.S. experience is unambiguous. The euro zone will never be a normal, well-functioning monetary union until it has a normal, well-functioning central bank prepared to act as a lender of last resort. The OMT programme is a step in this direction. The ECB has recently signalled that it is similarly prepared to take the other steps expected of a normal central bank, publishing its board’s minutes, for example, so that the public can understand its deliberations and hold its members accountable for their actions. The ECB statute was not engraved on stone tablets and handed down on Mount Sinai. It is a man-made charter, and it should be treated – by the German Constitutional Court and others – as a living document that is to be interpreted in light of current events. The rest of us should encourage this approach. The euro’s fate could well depend on it. © Project Syndicate
16
August 14, 2013
Closing Cultural heritage protection bill approved Typhoon Utor hit aviation, ferries The Legislative Assembly yesterday passed the first bill protecting the city’s cultural heritage. But the assembly members were still concerned that the exact composition and operation of an advisory body – the cultural heritage committee – would only be decided later on, in a bylaw. Secretary for Social Affairs and Culture Cheong U pledged the committee would be formed by public officials, academics and professionals, and that a system to avoid conflicts of interest would be set up. The law will come into effect in March.
At least 35 flights from Air Macau Co Ltd, Cebu Pacific Inc and Juneyao Airlines Co Ltd have been cancelled yesterday and today as severe typhoon Utor was edging towards the city. By the time the newspaper went to press, the Meteorological and Geophysical Bureau was thinking of hoisting typhoon signal 8 during the night. After typhoon signal 3 was hoisted at 1.30 pm yesterday, ferry operator Turbojet suspended or reduced its services. It was only travelling between the Macau Outer Harbour Ferry Terminal and Hong Kong’s Sheung Wan every half an hour.
Blackberry to explore sale of firm BlackBerry Ltd, the struggling Canadian smartphone maker, is considering putting itself up for sale. A special board committee will consider ways to enhance BlackBerry’s value and scale, including joint ventures, partnerships or a sale of the company, according to a statement yesterday. The announcement builds on a move last year when BlackBerry hired JPMorgan Chase & Co and RBC Capital Markets to advise the company on strategic alternatives. At the time, chief executive Thorsten Heins said a sale wasn’t the “main direction” he was considering. The company’s outlook has worsened since then, with the revamped BlackBerry 10 meeting scant demand. “What BlackBerry is doing is the appropriate course of action,” said Charlie Wolf, an analyst with Needham & Co in New York. The likelihood of a sale is at least 50 percent, he said. “The other options – much less likely.” Speculation about possible foreign bidders has focused on Lenovo Group Ltd, the Chinese maker of personal computers, which is looking to expand its mobile-devices business.
Sun Hung Kai sues HK’s former chief secretary Sun Hung Kai Properties Ltd’s financial services unit sued Rafael Hui, Hong Kong’s former chief secretary who faces a corruption trial in May, for HK$3.16 million (US$407,442) over a loan. Mr Hui, who has pleaded not guilty to bribery and misconduct charges related to payments and loans from Sun Hung Kai, is being asked by Honour Finance Co for an outstanding guaranteed sum that was lent to Top Faith Enterprises, according to the lawsuit filed at Hong Kong’s High Court on Monday. Thomas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai, have also pleaded not guilty to charges of conspiracy to commit misconduct in public office in Hong Kong’s highest profile corruption case. One of the charges is that Mr Hui failed to declare a loan from Honour Finance and another is that his company Top Faith received HK$4.125 million from Sun Hung Kai to be favourably disposed to Raymond Kwok.
Hon Hai Q2 profit beats forecasts Taiwan’s Hon Hai Precision Industry Co Ltd, a major manufacturer of Apple Inc products, posted a forecast-beating net profit in the second quarter as it attempts to diversify its business and client base. The Taiwanese company said its net profit rose 35 percent to T$16.98 billion (US$567.15 million) last quarter from a year earlier, compared with a median forecast of T$15.49 billion by 12 analysts polled by Thomson Reuters I/B/E/S. Margins are still under pressure, however. Hon Hai’s operating margin improved 4 basis points to 2.1 percent from the previous quarter but was still lower than 2.4 percent a year ago. Its operating margin was 3.7 percent in the fourth quarter last year. Shares in Hon Hai climbed 2.1 percent yesterday ahead of the earnings data. The stock has lost about 11 percent so far this year.
NDRC investigating if carmakers set prices for dealers
China probes carmakers over price-fixing Industry body collecting data on prices, profit margins Samuel Shen and Michael Martina
A
Chinese automotive association is collecting data on the price of all foreign cars sold in the country for a government agency that has fined companies for price-fixing in sectors ranging from milk powder to jewellery, officials at the industry body said. The China Automobile Dealers Association (CADA) has been doing the research for the National Development and Reform Commission (NDRC) since last year, said Luo Lei, deputy secretarygeneral of the association. Mr Luo said the NDRC was investigating whether carmakers were setting a minimum retail price for dealers in the mainland, which lawyers said could contravene the country’s 2008 anti-monopoly law. The world’s largest auto market is a key source of revenue for many foreign companies and such scrutiny would be unwelcome. The NDRC, which is responsible for enforcing anti-trust rules on pricing, declined to comment, but lawyers said it was common for the commission to seek information from industry bodies before launching a formal investigation. Executives at foreign carmakers said they were not aware of any research being conducted by CADA, which represents car dealers across China, or an investigation by the NDRC.
Mr Luo said the association was looking at imported cars along with vehicles produced by foreign companies in association with local partners. “We’re looking at all brands, including those imported and those made by domestic JVs,” Mr Luo told Reuters in a telephone interview, declining to say exactly when CADA began its research, when it might finish or why it had taken so long. “We see there’s a big difference in the prices of imported cars in China and their overseas prices. We’re looking into that.” Another CADA official, who declined to be identified because she was not allowed to speak to the media, said the association was collecting data on overseas and domestic prices of different brands of cars as well as information on profit margins, costs for carmakers and various taxes levied on vehicles.
Automakers surprised The official Xinhua news agency said in an editorial late last month that foreign carmakers were reaping exorbitant profits selling imported luxury cars in China and should face an anti-trust investigation. It said some imported cars were twice as expensive in China than in overseas markets. Among those it
singled out were Volkswagen AG’s luxury division Audi and BMW. BMW’s office in China declined to comment on any possible NDRC investigation. Audi’s office in the country did not respond to a request for comment on such a probe. Foreign carmakers and their local partners control around threequarters of the overall Chinese market. Imports are generally luxury vehicles, accounting for 5.7 percent of total car sales last year. China has become a key market for luxury carmakers, with 2.7 million expected to be sold each year by 2020, overtaking the United States as the world’s leader in the segment. “This news has come out of nowhere as far as I’m concerned,” said an executive at a global carmaker, who declined to be identified due to the sensitivity of the matter. “If it’s true, it could be that the investigation’s real target is just a few specific companies.” Tariffs on cars brought into China from abroad are 25 percent for any type of car. On top of that there is a value-added tax of 17 percent and a consumption tax, which depends on the engine size, something Luo acknowledged. “Of course, there are tax issues here … and high profit margins don’t necessarily mean a monopoly,” Mr Luo said. Reuters