Page 1

MOP 6.00 Vitor Quintã

Waterleau bribe 1 to deliver more Ao deals: CCAC Page 4

No fears over Hengqin illegal entry: police Page 4

M

acau’s die-hard fans will get their hands on Apple Inc’s latest smartphone models later this month, even though a release date has not been announced. Apple announced its two new devices, the iPhone 5C and iPhone 5S, will be on sale in Hong Kong and the mainland on September 20. A 5C model with 16 GB of memory costs 4,488 yuan (5,860 patacas) in mainland China and HK$4,688 in Hong Kong.

Year II

Number 369 Thursday September 12, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

New iPhone rush could cost dearly

April 19, 2013

If Macau residents want to have the 5S and 5C at hand as quickly as possible, they will have to buy a parallel import and face a surcharge of up to 40 percent over the recommended price, mobile phone stores say. The launch of Apple’s two new models has disappointed analysts, who believe the price of the lower-cost 5C will be out of reach of most consumers in the mainland, the world’s biggest mobile market. More on page 3

Red-tape, high costs stifle urban rejuvenation

www.macaubusinessdaily.com

Layers of stamp duty and thorny flat ownership rules make any redevelopment of the city’s ageing stock of housing a tough sell. Developers and estate agents are calling on the government to reduce the tax burden on investors and permit urban regeneration projects to go ahead without the unanimous support of flat owners within a single building. Page 2

Brought to you by Zung Fu Motors (Macau) Limited

Hang Seng Index 23100

23052

23004

22956

22908

22860

Boutique cruise ship calling in March Next year’s arrival of the first international cruise ship in decades may help Macau stumble into a unique niche in the competition for Asia’s growing leisure cruise business. The luxury cruise ship SeaDream II will visit on March 14 during a 13-day Asian voyage. A Macau Government Tourist Office representative believes it will not be the last one. Page 6

September 11

HSI - Movers Name

%Day

CHINA RES POWER

7.05

CHINA COAL ENE-H

2.10

CHINA UNICOM HON

1.46

HANG LUNG PROPER

1.16

LI & FUNG LTD

1.05

HONG KG CHINA GS

-0.99

POWER ASSETS HOL

-1.11

SWIRE PACIFIC-A

-1.30

CHINA MERCHANT

-1.43

PETROCHINA CO-H

-2.60

Source: Bloomberg

Bumpy ride ahead for gaming stocks Macau gaming stocks are in for a bumpy ride as investors rush in and out of the market, Herald van der Linde, HSBC Holdings Plc’s head of equity strategy for Asia Pacific, said. Despite the mass-market growth, there is competition growing elsewhere in Asia and perhaps even in mainland China, he said. But the analyst believes Macau casinos “look like an interesting growth industry”. Page 7

I SSN 2226-8294

Brought to you by

2013-09-12

2013-09-13

2013-09-14

26˚ 32˚

26˚ 30˚

26˚ 30˚


2

September 12, 2013

Macau

Stamp duty, red tape The value in voting stifle urban overhaul opinion

Tweaking the rules and tax breaks would encourage housing renewal, investors say Stephanie Lai

sw.lai@macabusinessdaily.com

José I. Duarte Economist

I

t is difficult for most people, I suppose, to be carried away by Macau’s elections. Many ask what is the point in voting? Most voters understand the system is built to prevent undesirable outcomes for the powers that be. There is a kind of colonial anachronism about the set of Legislative Assembly members nominated by the Governor. Sorry, slip of the tongue. I mean the Chief Executive. There is no separation of powers. The executive has its private lobby at the assembly. There is also an echo of regimes from times past, whose representatives were elected – or, some would say, nominated – by corporate powers. The difference between the powers that be and corporate powers is a subject worthy of another column. And then we have those selected in direct elections, which are supposed to convey the actual feelings and desires of the population at large - but even there things are not the same as in other places. The unique tweaking of Hondt’s formula for proportional representation guarantees fragmentation among Macau’s directly elected legislators. The city’s revised methodology means it is virtually impossible for any political bloc that is not aligned with the government to take shape. Having devalued the meaningfulness of the direct vote, the system can easily breed apathy and encourage electoral corruption. It can attract flawed candidates and help promote political gibberish. So devalued is the meaningfulness of the direct vote that many question its purpose. Some may go so far as to ask why shouldn’t people be willing to sell their votes. That would mean getting something for nothing. At least it is an exercise in pure costbenefit analysis.

Nothing better But the world is never black and white, and not all shades of gray are the same. Despite the many institutional shortcomings and the failings of many, if not most, of the candidates, there is merit in keeping the process and pressing for its evolution. The current state of affairs is not set in stone. Any future development of the political system will have to rely on and spring from the consolidation of the means of expression of the popular will. Being exposed to a variety of ideas, even through such a limited framework, is not immaterial. Even if many of those ideas seem bad, inappropriate or simply silly, the community must ponder their merits and consider alternatives. Equally as important, voters have to assess the qualities of those they would like to choose to carry out those ideas. The elections also remind us that we are entitled to have our voices heard and to choose our representatives. We should also be fair. It is easy to highlight the shortcomings of some candidates and their proposals. Some of their proposals are morally reproachable, some are baloney and others are just hot air. People seem to take gratification, in life and in politics, from stories that mock, particularly when they bring with them a whiff of the absurd. But it would be unfair not to recognise there have been proposals presented by several candidates that are worth discussion. In some cases those ideas could make a difference to our way of life. They also express values that are relevant to politics and the community. That is worth preserving, consolidating and developing. Why vote? As an economist might tell you, because the alternative is worse.

L

ayers of stamp duty and thorny flat ownership rules make any redevelopment of the city’s ageing stock of housing a tough sell, Business Daily has found. A solution put forward by developers and real estate agents is to reduce the tax burden on investors and permit urban regeneration projects to go ahead without the unanimous support of flat owners within a single building. Hong Kong-based property developer Telok Real Estate Partners Ltd has three ongoing projects in Macau, all of which focus on the redevelopment of older, lowrise buildings. Partner Philip Pang said the company is “struggling” with a fourth redevelopment, a five-storey building, made more complex by the city’s stamp duty regime. “We have to pay the buyer’s stamp duty at 10 percent and another layer of stamp duty on the property transfer at the rate of 3.15 percent,” Mr Pang said. “When you add up other legal expenses, the tax cost could be up to 15 percent of the property value, and we do not find these conditions favourable.” Leong Keng Seng, the head of the committee that advises the government on the revitalisation of older districts, suggested earlier this week that tax exemptions would encourage redevelopment. “I agree with the opinion that there could be an exemption for redevelopment purposes or at least the government could offer a tax rebate,” he said on Monday. The government could

alternatively simplify the ownership transfer procedures to eliminate needless layers of stamp duty, he said.

Partial exemption Kou Fu Real Estate is a specialist real estate agency that converts older residential buildings into offices. The company’s sales general manger Leong Hou Weng says the stamp duty costs seem daunting but he cannot support a full exemption for selected developers. “I think it is impossible for the government to fully lift these layers of stamp duty required for redevelopment purpose,” Mr Leong said. “The stamp duty is a tool to prevent property speculation and that is a factor that the developer should include in their project costs. “At most, I think a partial exemption should be okay.” Another major obstacle is the need for each of the owners in a block of flats to agree to any redevelopment, even if grave structural problems make construction work necessary. Owners must form one legal entity to negotiate any deal with developers. Mr Leong said the red tape in redevelopments where several owners were involved was “just too timeconsuming and we will usually give up on those cases”. “Also, in many cases, the original owners are gone and hard to find.” Telok’s developments in Macau have involved only singleowner buildings. Mr Pang says it is a coincidence, rather than a preference. “Of course the developers will try to look for

There were about 3,600 buildings older than 30 years in 2011

easier options,” he said. When buildings have a single owner it makes the process of purchasing a building for redevelopment simpler and less time-consuming, he said. Mr Pang says developers could try to sweeten the deal by offering bank guarantees, which homeowners could fall back on if the redevelopment failed. “This should also encourage more redevelopment,” he said. There have been calls for the government to allow redevelopments to move forward if 80 percent of a building’s owners give their permission.

Elect for auction Mr Leong believes Macau could follow in Hong Kong’s footsteps where a compulsory auction among potential developers is triggered if the 80-percent threshold is reached. The changes could be included in the framework for rejuvenating older neighbourhoods. The outgoing Legislative Assembly dropped the bill last month because it needed amendments to bring it into line with land, urban planning and cultural heritage protection legislation. The city has waited for the law since 2006. During the delay, the cost of older, low-rise homes has surged. These types of buildings in central Macau could cost as much as HK$50 million (US$6.4 million) for a gross floor area of just 200 square metres, Mr Leong said. “The cost was only HK$10 million to 20 million two years ago. The owners got more aggressive in selling their buildings.”


33

September 12, 2013 April 19, 2013

Macau

Apple’s newest iPhone models could cost as much as 8,000 patacas on parallel import

A grey market iPhone will cost a lot of green With no release date for Apple’s latest smartphone, Macau fanboys will resort to pricey grey market imports Tony Lai

tony.lai@macaubusinessdaily.com

M

acau’s die-hard fans will get their hands on Apple Inc’s latest smartphone models later this month, even though a release date has not been announced. But they may be tempted to buy a parallel import and face a surcharge of up to 40 percent over the recommended price, mobile phone stores told Business Daily. In the United States on Tuesday, Apple announced its two new devices, the iPhone 5C and iPhone 5S, will be on sale in Hong Kong and the mainland on September 20. Original Technology Ltd, Apple’s authorised reseller here, said there was still no release date for the two new models here. Apple does not have its own shop in Macau. It usually takes “a week or more” after the Hong Kong launch for new products to hit the shelves, an Original Technology sales representative said.

Companhia de Telecomunicações de Macau, SARL and Hutchison Telephone (Macau) Co Ltd, the two mobile operators authorised to sell iPhones with service plans, said they did not have details on the release date. Last year it took more than a month after the Hong Kong launch for both companies to start selling the previous Apple smartphone model, the iPhone 5. The Original Technology sales representative, who asked not to be identified, said no price had been set for the newest models but they were likely to “be a little higher than in Hong Kong”. The retail price would be lower in Macau than in the mainland, he said. Mainland customers have reportedly criticised the latest two gadgets as pricey. The retail price for Apple

products varies wildly according to the selling jurisdiction.

New iPhone ‘too costly’ A

the United States. Analysts said that the launch of the two new models was “disappointing”. “It’s not worth the price,” said Wang Ying, a Beijing-based analyst with consultant firm iResearch, adding that other smartphone makers including South Korea’s Samsung Electronics Co Lt and China’s ZTE Corp and Huawei Technologies Co were now wellestablished as rivals of Apple. Many domestically made smartphones are priced as low as US$100. “It will be increasingly difficult for Apple to improve its market share or compete with other producers at this stage under the current market environment,” said Mr Wang. The iPhone 5C comes in five different colours. The high-end iPhone 5S with fingerprint-security features a speedier processor and better camera. Apple also revamped its mobile software with the introduction of iOS

7, which will be available for free starting September 18. The overhaul includes new sounds, picture-sharing features, and an iTunes radio feature. “It’s not cheap enough,” Tucker Grinnan, a Hong Kong-based analyst with HSBC Holdings Plc, said. “We are disappointed with the price point. It is a high-end phone in China.” Apple fell 2.3 percent to close at US$494.64 in New York after the announcement as investors expected a lower price. Apple is offering its newest iPhones through China’s smaller wireless carriers and has yet to announce a deal with China Mobile Ltd, which has a customer base more than twice the size of the U.S. population. The 5S and 5C models are being released for the networks of China Unicom (Hong Kong) Ltd and China Telecom Corp starting this month, Apple said after the handsets were unveiled by chief executive Tim Cook.

pple Inc’s lower-cost iPhone 5C will retail for more than US$700 (5,591 patacas) in mainland China, putting it out of reach of most consumers and raising questions over the firm’s ability to build sales in the world’s biggest mobile market. The iPhone 5C is seen as part of the U.S. tech giant’s bid to counter cheaper handsets from rivals, particularly in China where it has only a 5 percent share of the smartphone market. But the new phone is only marginally cheaper than the previous model, the iPhone 5. It is also well above the US$549 that an unlocked iPhone 5C will sell for in

Souring Apple A 5C model with 16 GB of memory costs 4,488 yuan (5,860 patacas) in the mainland and HK$4,688 in Hong Kong. The United States retail price was set at US$549 (4,385 patacas). “Even though Apple has a lowerend iPhone [5C] now, its price is still considered mid-end in China and not low-end,” said Sandy Shen, a Shanghai-based analyst for Gartner. And Macau residents will have to pay even more if they want to have the 5S and 5C at hand as quickly as possible, mobile phone stores say. “We can have the parallel products of 5S and 5C here a day after the Hong Kong launch [on September 20] but it depends on whether the Hong Kong supply is abundant,” said the owner

AFP/Bloomberg News

of Iat Yeung, a mobile phone shop in the northern district. “The price will probably be at some 8,000 [patacas] for 5S, just like the last time when iPhone 5 was launched,” said the owner, who identified himself as Mr Fok. Such a price would be about 40 percent more than the lowest retail price of HK$5,588 for iPhone 5S with 16 GB in Hong Kong. Mr Fok said there is “not much room” for the price to go any higher due to Apple’s decreasing popularity. “Since the iPhone 5 last year, the sales of Apple products have not been as good as a few years ago,” he said. “Many people, particularly young ladies, go for [Samsung’s] Galaxy Note but there are still some die-hard Apple fans.” According to research firm IDC, the South Korean brand Samsung Electronics Co Ltd accounted for 30.4 percent of the global smartphone market at the end of June, while Apple trailed at 13.1 percent. “Many investors were hoping for that one single atomic event where they [Apple] got aggressive on pricing,” said Gene Munster, an analyst at Piper Jaffray Cos. “Instead, in Apple’s own way they think they can accomplish their goal, gaining market share, without blowing up their margins.” With Reuters/Bloomberg News

New iPhone prices 5c U.S. Hong Kong China U.K France

$649 $720 $864 $868 $927

5s $749 $824 $995 $993 $1,060

Based on prices availbale in Apple’s online stores, for the 32GB Prices in U.S. dollars


4

September 12, 2013

Macau

Waterleau bribe to deliver more Ao deals: graft buster Belgian company pressured two consortium partners to bribe jailed official: graft watchdog Tony Lai tony.lai@macaubusinessdaily.com

A

corruption-hit wastewater plant operator expected a bribe to former government secretary Ao Man Long would win it more public tenders, a Commission Against Corruption investigator said yesterday. A corruption trial with links to contracts to operate sewage treatment plants in the ZhuhaiMacau Cross-Border Industrial Park and Coloane has resumed at the Court of First Instance.

Commission Against Corruption chief investigator Mak Chi Hung presented a letter to the court confiscated from the office of China Construction Engineering (Macau) Co Ltd. In the letter, wastewater plant operator Waterleau Global Water Technology NV asked ATAL Engineering Ltd and China Overseas Civil Engineering Ltd, part of the conglomerate that includes China Construction Macau, to “pay a client”

to secure the contract for the crossborder plant. Mr Mak told the court the “client” was Mr Ao. Waterleau chief executive Luc Vriens, ATAL managing director Fong Chun Yau and China Overseas manager Chan Ying Lun face corruption charges for bribing Mr Ao. They have denied all charges. Mr Ao was jailed for 29 and a half years for taking bribes. The consortium of Waterleau,

The Waterleau consortium won the contract for a cross-border wastewater plant in 2005 (Photo: Manuel Cardoso)

No fears over Hengqin illegal entry: police No illegal immigration case reported at UM’s new campus in last three weeks Stephanie Lai

sw.lai@macaubusinessdaily.com

D

The Hengqin campus was transferred to Macau authorities in July

aily security patrols from the Macau and Zhuhai police forces and perimeter surveillance will be enough to deter illegal immigrants from trying to enter the territory via the University of Macau’s (UM) Hengqin campus, Macau Customs told Business Daily. On August 21, mainland police officers arrested four people for allegedly attempting to climb over the fence surrounding the Hengqin campus. The suspects admitted they wanted to enter and work in Macau illegally, mainland Chinese media reported. Macau Customs says that, since that last episode, no more

ATAL and China Overseas was not the first choice for the contract, Mr Mak told the court. “Waterleau was finally able to convince the client to make a decision beneficial to Waterleau,” Mr Mak said. To persuade its consortium partners to pay the bribe, Waterleau wrote that it saw the chance to win other contracts in future, including for the Coloane wastewater plant, he said. Waterleau asked China Construction and ATAL to pay 3 percent of the value of their works in the cross-border contract. Waterleau would offer Mr Ao a 20-percent stake in its subsidiary Waterleau Macau Ltd. Mr Mak said there were documents, including bank records, that proved the bribe was paid. The three companies paid at least 7 million patacas (US$875,000) to Mr Ao for the cross-border and Coloane contracts, he said.

Fake or authentic? The investigator presented another document that he described as an explanation from Vriens sent in 2007 when the graft watchdog first investigated the case. In the document, Vriens asked the Infrastructure Development Office who would decide the cross-border plant contract, after the consortium submitted its bid. The office said Mr Ao was in charge and the Belgian executive arranged a meeting with the nowjailed official, Mr Mak said. Lawyers for the three defendants challenged the authenticity of the document and asked for it to be omitted from the trial. Presiding judge Mário Silvestre accepted the document but decided not to take its content into consideration. Assistant prosecutor-general Paulo Martins Chan appealed the decision. “So the court accepts the document but treats it like a blank sheet. It is illogical,” he said.

cases of illegal immigration have been discovered. Banners hanging on the fence read: “Unauthorised crossing of the University of Macau’s walls is strictly prohibited. Violators may face administrative punishments. Tip-offs will be rewarded.” “Macau Customs and Zhuhai border control officers have been patrolling the perimeter outside the campus against any acts of illegal immigration basically since the handover,” a spokesperson said. The Hengqin campus was transferred to Macau authorities on July 20. “At the fence surrounding the campus, there is also surveillance cameras that should act as an effective tool against any illegal entry attempt,” the spokesperson added. Official news agency Xinhua reported that the mainland authorities stopped 117 illegal immigration attempts during the three-year campus construction. The first 2,000 students will move into the campus dormitories this month, the vice-rector for the university’s academic affairs Simon Ho Shun Man told our sister publication Macau Business magazine. The new campus is designed to accommodate over 10,000 students and staff.


5

September 12, 2013

Macau

No ruling on Coloane tower before March

HK developer eyes Mong Ha housing tower A

Developer still to submit new environmental report, official says Vítor Quintã

vitorquinta@macaubusinessdaily.com

T

here will be no decision on a proposed high-rise housing project in Coloane before March, Land, Public Works and Transport Bureau director Jaime Carion said on Tuesday. Quoted by the Portuguese-language newspaper Jornal Tribuna de Macau, Mr Carion said the developer has not yet submitted a new environmental impact assessment report. The Environmental Protection Bureau director Cheong Sio Kei said in June the report was not good enough because it should have had “a much wider reach”. The developer, Win Loyal Development Ltd, was asked to assess the building’s impact on the quality of the air within 500 metres and on peace and quiet within 300 metres. The Transport Bureau, which handles the development of the city’s road network and traffic, has also asked for more measures to improve future traffic in the area, Mr Carion said. The Cultural Affairs Bureau

Jaime Carion says developer could get compensation for project changes

is looking into whether or not an 80-year-old Portuguese military bunker should be protected, he added. “It is very likely” that the decision on the project will only happen after the new urban planning law comes into effect, on March 1, the official said. Even though the law will not be enforced retroactively, Mr Carion said the new urban planning rules could

force changes in the project’s height, which could reach up to 100 metres. “Eventually it [Win Loyal] might be compensated,” he said. Win Loyal is controlled by Capital Estate Ltd chairman and Hotel Fortuna owner Sio Tak Hong, who is also a Macau representative at the Chinese People’s Political Consultative Conference.

12-storey residential building is set to rise at the foothill of Mong Ha Hill, in what will be Hong Kong developer Chan Chor Tung’s first project in Macau. Yesterday’s Official Gazette says the government has given Companhia de Fomento Predial e Desenvolvimento Kong Sing, Ltda permission to construct the building on a plot in Avenida do Coronel Mesquita. One of the directors of Kong Sing is Mr Chan, who is also a director of Hong Kong’s conglomerate Sun Fook Kong Group. Sun Fook Kong currently has no ongoing estate development project here, according to the company’s website. The other director of Kong Sing is Chum Pak Tak, member of the Macau Association of Building Contractors and Developers. Kong Sing will pay the government a premium of 23 million patacas (US$2.9 million) for 896 square metres of land, and pay an annual rent of 2,215 patacas. The company will have four years to finish the building with a floor area of 10,899 square metres.

HONOUR COMMISSION MEMBERS

José Braz-Gomes

Paul Tse

Henry Brockman Lionel Leong Vai Tac

Vong Kok Seng

Franklin Willemyns

ADVISORY BOARD

Paulo A. Azevedo

Lau Pak Hung Lionel Leong Vai Tac

Amber Li

Albano Martins

Frederico Rato

Filipe Cunha Santos

Paul Tse

Vong Kok Seng

Henry Brockman

Oscar Chan

James Chu Cheok Son

António Conceição Júnior

Alexandre Correia da Silva

Pedro Cortés

Lau Pak Hung Lionel Leong Vai Tac

Amber Li

Albano Martins

João Rodrigues Monteiro

João Francisco Pinto

Larry So Man Yum

Paul Tse

Vong Kok Seng

Franklin Willemyns

JUDGING PANEL MEMBERS

Bruno Ascenção

Paulo A. Azevedo

José Braz-Gomes

José I. Duarte

António Félix Pontes

Lucius Lai

Vandy Poon

Frederico Rato

Filipe Cunha Santos

Ricardo Siu

Jacky So Yuk-Chow

Meet the Honour Commission, Advisory Board Members, and the Judges! The 2013 Business Awards of the Year is supported by well-known and highly accomplished individuals, related to various economic sectors and with significant knowledge of the business environment in Macau.

Note : The list is sorted by alphabetic order, using last names GOLD SPONSOR

BRONZE SPONSERS

SUPPORTER

MEDIA PARTNERS

ORGANISED BY

PRODUCED BY

EXCLUSIVE AGENCY AND PARTNER

EXCLUSIVE OOH MEDIA PARTNER

For more information, please contact: info@awardsmacau.com | Tel: +853 2833 1258 | www.awardsmacau.com

V.Q.


66

September 12, 2013 April 19, 2013

Macau No light at the end of Delta Asia’s ban The United States are not reviewing the sanctions imposed in 2007 on Delta Asia Bank Ltd over alleged ties to North Korean money laundering, said Steve Hudak, a spokesperson for the Department of the Treasury’s Financial Crimes Enforcement Network. Quoted by the Portuguese-language newspaper Jornal Tribuna de Macau, he said a notice posted in June requesting comments on a “proposed renewal without change” of the ban was just an information collection procedure. The notice “does not address any other aspect of the final rule” on the Macau bank, Mr Hudak said.

The SeaDream II cruise liner carries just 112 passengers, cared for by 95 crew

Chips ahoy! A boutique cruiser docks in March The casino city may have a future catering for passengers from small, luxurious cruise liners Vítor Quintã vitorquinta@macaubusinessdaily.com

T

he arrival of a cruise ship next year may help Macau stumble into a unique niche in the competition for Asia’s growing leisure cruise business. The luxury cruise ship SeaDream II will visit on March 14 during its 13-day Asian voyage from Bangkok to Hong Kong, SeaDream Yacht Club says on its website. The city was chosen as a port of call due to its mix of Portuguese and Chinese culture, reflected in the World Heritage sites, the company says. Passengers can sign up to visit A-Ma Temple and enjoy an overnight

adventure into the casinos to complement the ship’s small onboard gambling facility. Unlike today’s mega cruise ships, the vessel can easily reach the city despite its shallow port. The SeaDream II carries no more than 112 passengers, 95 crew and weights 4,300 tonnes. The first cruise liner to dock at Hong Kong’s new terminal in June carried about 3,000 passengers and weighed 138,279 tonnes. SeaDream Yacht Club has two ships. They typically spend half of the year cruising the Mediterranean

Sea and the other half island hopping across the Caribbean Sea. “It is the first time that we are coming to Asia,” a SeaDream Yacht Club spokesperson said. “We believe there is an expanding market for cruise trips in Asia.”

Cultural appeal The Pearl River Delta has a significant casino cruise market. Th e b o a ts ta k e g a mb l e r s i n t o international waters where they can flout the mainland’s casino ban. SeaDream II, however, would be

Google indoor maps reach casinos here T he indoor map feature of search giant Google Inc has reached Macau on Tuesday, offering users a new way to find shops, ATMs and even restrooms in some of the city’s hotel-casinos. Google has launched this feature for Hong Kong and Macau, offering map users in more than 70 malls and hotels around both cities, Hong Kong media reported. Android and iOS device users can

now view floor plans for every level of the buildings through a “switch” function, while desktop users can see only main levels of the building. At first the indoor maps will only cover Las Vegas Sands Corp’s properties here: The Venetian Macao, Plaza Macao, Sands Macao and Sands Cotai Central. The company introduced three other features of its Maps services: a function to add buildings and

roads, one for businesses to display panoramic pictures of their interior, and an error-reporting function. Stella Cheung Man Sze, Google Hong Kong’s head of sales, noted that art galleries, restaurants or boutiques can hire Googledesignated photographers to take panoramic pictures of their interiors for display in Maps. Ms Cheung added that Googledesignated photographers were

the first international cruise ship to visit Macau in decades. The Marine and Water Bureau told Business Daily it has received SeaDream II’s application but it is still waiting for more information. It was the only cruise ship application submitted, it added. Helen Wong, representative of the Macau Government Tourist Office for Australia and New Zealand, believes it will not be the last one. “To have a cruise ship of SeaDream II’s calibre call on Macau speaks volumes for the appeal of the city as a genuine port of call, perhaps for future small cruise ships to visit,” she said, as quoted by eTravel Business News. The cost of the 13-day trip begins at US$7,699 (61,500 Patacas) and increases to US$19,299. Ms Wong believes the city should try its best to lure back high-income passengers on the cruise. “It will be our aim to ensure those who visit return to spend more time in what is a very special part of Asia,” she said. Business Daily asked for further information from the city’s tourist bureau but had not received a response last night.

Jigsaw pieces Marine and Water Bureau director Susana Wong Soi Man said last year that the city had ticked all the boxes as a port of call for cruise tours. Cruise ship operators “must submit an official letter stating the purpose of visit and time (...), a crew list and a passenger list,” as well as the ship certificates, the bureau said. Macau has no terminal for cruise ships but the authorities pledged to provide all vessels “with anchorage spaces and necessary facilities, according to the actual situation”. There are plans to build facilities for cruise ships in Nansha and Hengqin. Hong Kong turned the runway at its former Kai Tak airport into a cruise terminal in June. Xiamen is also building a new cruise ship harbour and is working with several cities, including Macau, to develop the cruise market, Su Zhijun, a resource planning official with Xiamen Tourism Bureau, told state news agency Xinhua yesterday.

required for such pictures because of technical issues, but they could be hired at “a reasonable price”. The feature enables users to view high-quality images of the business interior, while the operator can also link their website to the photos. Ms Cheung explained that the faces of any people captured in pictures taken for the new functions would be blurred in order to avoid privacy concerns. S.L.


77

September 12, 2013 April 19, 2013

Macau

HSBC expects ‘volatile’ ride for Macau stocks Gaming an interesting growth industry, says equity strategist Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

M

acau gaming stocks are in for a bumpy ride as investors rush in and out of the market, Herald van der Linde, HSBC Holdings Plc’s head of equity strategy for Asia Pacific, said. “In the longer term that’s a structural trend. Because it’s a relatively young industry and it’s geared towards [the] kind of monetary conditions in China as well, that sector has been very, very volatile,” Mr van der Linde told Reuters TV in an interview. The long-term factor driving Macau’s growth is the development of Asia’s gaming industry, “which of course Macau is leading,” he said. Despite the VIP predominance, “you see more development of mass-market products in Macau as well,” he added. Business Daily reported last week that mass-market table game revenue grew by around 44 percent year-onyear to 9.93 billion patacas (US$1.24 billion) in August, according to unofficial market data. Macau’s overall gaming revenue hit 30.74 billion patacas last month. But every growth story has risks.

“Chinese cities could eventually decide to build up their own casinos,” said Mr van der Linde. The drive to introduce casino-style gaming in southern holiday island Hainan has intensified. Business Daily has been told Jesters, a casino bar at Mangrove Tree Resort World on Sanya Bay, reopened

Mass-market products growing in Macau

Corporate CESL sells eco-bags for charity Eco-bags were all the rage in the Charity Sales 2013 held by CESL Asia Group in AIA Tower, with a percentage of the income donated to charity. On Friday the company set up a booth at the building’s entrance to sell its own environmentally friendly bags, encouraging the community to curb the use of plastic bags. A part of the money from the sales of the eco-bags went to Catholic charity Caritas Macau, which works to reduce poverty and promote social justice, but also to help those affected by natural disasters. As CESL Asia celebrates its 25th anniversary this year, “we wanted to reaffirm our goal of protecting the environment,” group chairman António Trindade said in a statement. “Through these initiatives we hope to encourage our staff, their families, our partners and the general public to help preserve our natural resources and thus help our next generations,” he added.

CAM offers MUST scholarships The Macau airport operator has offered scholarships to five outstanding students of the private Macau University of Science and Technology (MUST). Katy Lo, head of the Macau International Airport Co Ltd’s (CAM) Executive Committee Office, handed out the scholarships during the university’s opening ceremony held on Saturday. Each of the five students will get a scholarship worth 10,000 patacas (US$1,250), the same amount as in the previous academic year. CAM has been donating scholarships to MUST students since 2005 as a recognition “of their outstanding performance in both academic and moral achievements and encouragement to them to work hard,” the company said. The operator stressed in a statement that to support Macau’s educational institutions is to help with “the nurture of future pillars of the society”. The scholarship will help the five students pay their MUST tuition, which was raised this year.

as a so-called “special entertainment facility” and another such facility is poised to open soon. Jesters has around 40 gaming tables and 50 slot machines, with the first buy-in an entry fee paid in cash and the players getting points when they win. Other Asian regions have also

jumped on the gaming bandwagon. “We already see across the region: Manila, Singapore, Malaysia. I think Sri Lanka is now looking at it as well, trying to hop on this particular bus,” said Mr van der Linde. “So it will be quite a volatile ride, up and down” for Macau gaming stocks, he said. “Structurally it looks like an interesting growth industry,” the analyst added. Macau gaming stocks have surged about 84 percent on average in the 12 months to September 10. Melco Crown Entertainment Ltd soared 151 percent to HK$76.10 while SJM Holdings Ltd comes last, rising 26.2 percent. Allianz Global Investors, an asset management company, also favours Macau stocks. The four-year low that the Shanghai Composite index reached in June marked a bottom for Chinese shares and the rally will continue, said Raymond Chan, Allianz chief investment officer for Asia Pacific. “I don’t see much downside” in Chinese stocks, Mr Chan, who helps manage US$409 billion at Allianz, said in an interview to Bloomberg News. “China can continue to deliver the growth, maybe a slower growth, but it’s not going to crash.” Allianz is “significantly overweight” in Chinese equities, portfolio manager Kunal Ghosh said in the interview. The company favours China’s consumer-driven sectors including gaming in Macau, as the country shifts from an export-led economy to one focused on domestic consumption, Mr Chan said. With Reuters/Bloomberg News


88

September 12, 2013 April 19, 2013

Greater China Stock index up to 3-month high China’s benchmark stock index rose to a threemonth high after credit growth rebounded and brokerages from Deutsche Bank AG to UBS AG boosted their forecasts for the nation’s economic expansion. Aluminum Corp of China Ltd, also known as Chalco, surged 9.9 percent, driving a gauge of material stocks to the biggest gain among industry groups. China Shipping Container Lines Co advanced to a two-year high as a benchmark of commodity shipping rates surged to the highest since January 2012. Suzhou Anjie Technology Co, a supplier to Apple Inc, paced declines for technology shares and smaller companies. The Shanghai Composite Index rose 0.2 percent to 2,241.27 at the close, the highest level since June 6. China’s broadest measure of new credit almost doubled in August from the previous month, while M2 money supply growth accelerated to 14.7 percent, the fastest in three months. “The recent economic data are pretty strong and that reinforces investors’ expectations that the economic recovery is well on track,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co, which manages US$120 million. “That’ll boost demand for risk assets such as stocks.”

Shadow banking surges in threat to financial system Economic goals within reach even at the cost of financial risks

C

hina’s broadest measure of new credit almost doubled in August from the previous month in a sign leaders are committed to meeting economic goals. Aggregate financing was 1.57 trillion yuan (US$257 billion), the People’s Bank of China said in Beijing on Tuesday, topping the 950 billion yuan median estimate of 10 analysts surveyed by Bloomberg News. New yuan loans from banks accounted for about 45 percent of the total, down from July’s 87 percent, as nontraditional credit played a bigger role. The first pickup in credit growth

after an unprecedented four straight declines, the fastest gain in industrial output in 17 months and aboveforecast exports signal better odds that Premier Li Keqiang will achieve his 7.5 percent expansion target this year. The data also mark a resurgence in shadow banking that poses risks for the financial system after a record credit boom in the first quarter. “If credit growth picks up persistently from here, China’s current growth recovery may well last a bit longer and go a bit further,” said Yao Wei, China economist at Societe Generale in Hong Kong.

“However, that only adds to the downside risk afterwards, as the leverage of Chinese corporates and local governments keeps rising from the already alarmingly high level.” M2 money supply growth accelerated to 14.7 percent, the fastest in three months.

Growth estimates Deutsche Bank AG raised its estimate of third-quarter economic expansion to 7.9 percent from 7.7 percent, the second boost in a month, while UBS AG increased its projection

Chinese builder markets dollar junk debt Cifi Holdings Group Co, a Chinese builder, is marketing more of its existing bonds due April 2018, the first offering of Asian junk debt in the U.S. currency in almost two months. The developer plans to sell US$225 million more of the notes at 104 cents on the dollar, according to an e-mailed note from Nomura Holdings Inc. Indonesia’s PT Multipolar was the last company from the region to sell high-yield debt in dollars, pricing US$200 million of 9.75 percent securities on July 18, Bloomberg data show. Yields on speculative-grade dollar securities from Asian borrowers surged to a four-year high of 8.13 percent on September 6, and remain near that level at 8.06 percent, JPMorgan Chase & Co indexes show. The fall in junk-note prices means there are now good buying opportunities, according to Aviva Investors Asia Pte. Now is “an opportune time to invest or diversify in to Asian high-yield corporate bonds,” Tim Jagger, lead portfolio manager for Asian highyield at the money manager, said in an e-mailed media release yesterday. “Fundamentals are robust and valuations attractive.” High-yield bonds hold ratings lower than BBBfrom S&P and Fitch Ratings, or the equivalent Baa3 from Moody’s Investors Service.

PBOC relaxing its tight grip on liquidity

S&P warns defaults to mount China needs reforms for economic development, Li says China Shipbuilding to raise US$1.4 bln State-backed China Shipbuilding Industry Co Ltd plans to raise up to US$1.4 billion through a private share sale to buy assets used for building warships, the first time Beijing is tapping the capital market to fund its military expansion. The move comes as China creates its own military-industrial complex, with the private sector seen taking a key role, as the country gains a new sense of military assertiveness and deals with a growing budget to develop modern equipment including aircraft carriers and drones. China, whose military spending is now second only to the United States, has unveiled a double-digit rise in its 2013 military budget, with spending on the People’s Liberation Army set to rise 10.7 percent to 740.6 billion yuan (US$119 billion). “The thinking of those high-ranking officials is changing. Military asset securitisation, or tapping capital markets for military expansion, will be the future trend and the funding scale will also become bigger and bigger,” said Wang Hexu, a Shanghai-based analyst at Hwabao Securities. “Now aviation and weaponry may also be the next sectors for asset securitisation,” he said. China Shipbuilding Industry said it plans to raise as much as 8.48 billion yuan by selling up to 2.2 billion shares to as many as 10 selected investors.

C

hinese companies will miss more debt payments in the coming year as smokestack industry losses mount on Premier Li Keqiang’s plan to switch the economy’s focus toward services, according to Standard & Poor’s. The yield on Anyang Iron & Steel Co’s 2019 notes has jumped 386 basis points this quarter to 10.7 percent after China Chengxin Securities Rating Co reduced its ranking to AA- from AA in June. Industrial debt globally yields 3.4 percent, Bank of America Merrill Lynch indexes show. Rating cuts also drove up borrowing costs for Jiaozuo Coal Group Co, Yanzhou Coal Mining Co and Jiangxi Rare Earth & Rare Metals Tungsten Group Corp. Metal producers were the worst hit as corporate downgrades in China surged to 52 in the first seven months, more than in the last six years combined, according to Chengxin. Mining and metal companies face 259 billion yuan (US$42 billion) of bond payments by the end of 2014 just as industrial-profit growth has cooled to the least since December. That’s more than the total due on all

corporate notes in Thailand, Malaysia and Singapore combined. “The number of defaults in the corporate space will increase over the next six to 12 months,” Christopher Lee, managing director of corporate ratings at Standard & Poor’s in Hong Kong, said in reference to payments on all financial obligations. That “would increase the risk premium for the bonds and it could result in more selective lending and investments,” he added. The amount of outstanding corporate bonds in China, excluding quasi-sovereign paper and financial notes, rose to about 5.1 trillion yuan as of the end of August, up from 800 billion yuan in 2007, according to Deutsche Bank AG. A total of 29 Chinese companies, including PetroChina Co Ltd and Datang International Power Generation Co, are among the world’s 500 biggest long-term borrowers, up from nine in 2008, data compiled by Bloomberg show. “We will see further deterioration in financial strength this year,” said S&P’s Mr Lee. “Because the debt level is very high, that would mean

cashflow payback of debt is going to be even weaker.”

Reform pledge Premier Li said on Tuesday at a meeting with corporate representatives in Dalian, China, that August indicators have shown a trend of recovery. Monetary easing, adjusting macroeconomic policies and increasing the deficit may have an impact in the short run yet won’t necessarily be beneficial in future, he said, according to the official Xinhua news agency. Mr Li said China will have to rely on reforms to achieve long-term, sustainable and healthy development of its economy, while underscoring future reforms to be carried out in multiple fields. He added that the key to economic reforms is to “balance well the roles of the government, the market and society”. The government should let the market carry its roles in order to induce more vitality, Mr Li said quoted by official newspaper China Daily, adding the nation’s current achievements were due to reforms


99

September 12, 2013 April 19, 2013

Greater China to 7.7 percent from 7.5 percent. China’s lending spree in recent years has evoked comparisons to debt surges that tipped Asian nations into crisis in the late 1990s and preceded Japan’s lost decades. China’s ratio of credit to gross domestic product rose to 187 percent in 2012 from 105 percent in 2000, compared with Japan’s increase to 176 percent in 1990 from 127 percent in 1980, JPMorgan Chase & Co. said in a July report. Shadow lending, which allows banks to bypass controls and capital requirements, is flourishing in China because an estimated 97 percent of the nation’s 42 million small businesses can’t get bank loans, according to Citic Securities Co. The industry may be valued at 36 trillion yuan, or 69 percent of gross domestic product, JPMorgan estimated in May.

Cash squeeze A government-engineered cash squeeze in June sent money- market interest rates to record highs and helped curb shadow banking, reducing longer-term dangers while adding to forces slowing economic growth. Now it appears that the crunch in liquidity and credit is over, Wang Tao, chief China economist at UBS in Hong Kong, said yesterday. Bankers’ acceptance bills and entrusted loans, two of the categories within aggregate financing, are “highly correlated with shadow banking activities,” said Hu Yifan, chief economist at Haitong International Securities Group in Hong Kong. Tuesday’s figures showed entrusted loans of 293.8 billion yuan in August, a record in data going back to 2002, after 192.7 billion yuan in July. Bankers’ acceptance bills were 304.5 billion yuan in August, compared to a 178.3 billion yuan decline in July. “The sudden pickup is a bad signal we should be alert to and pay special attention to,” Ms Hu said. The increase in bankers’ acceptance bills, which represent

promises of future payments, shows lenders are helping the economy at a time of tight liquidity, said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. “When Beijing orders stimulus, funds will be found and growth will recover,” Mr Kowalczyk said. The government says debt risks are manageable. While the cabinet in July ordered a nationwide audit of government borrowing, Finance Minister Lou Jiwei last week called the scale of local government debt controllable and said the risk of default was “not great”. Vice Finance Minister Zhu Guangyao said last week at a Group of 20 nations summit that while China needs to strengthen supervision of shadow banking, officials are aware that smaller businesses need access to finance. “The tricky thing is, ultimately the PBOC is able to control the size of social financing and off-balancesheet lending at the money-supply end, which will then result in overall tight liquidity,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “Yet it needs to strike a balance and not be too tight in monetary policy.” Bloomberg News

KEY POINTS China closer to 7.5 pct expansion target Analysts raising growth estimates Shadow banking valued at 36 trillion yuan – JPMorgan Crunch in liquidity, credit over – analyst

Taiwan ruling party expels legislative speaker Wang accuses authorities of conducting one-sided investigation

T

aiwan President Ma Ying Jeou’s Kuomintang party removed the speaker of parliament over influence-peddling claims, seeking to stem turmoil in the government that’s hindered a bid to forge closer trade ties with China. Mr Ma said yesterday Wang Jin Pyng, 72, is no longer fit to lead the legislature and the Kuomintang Party should revoke his membership as a result of evidence showing he pressed the Justice Ministry to drop a case involving an opposition party lawmaker. Party disciplinary committee chairman Huang Chao Yuan said Mr Wang’s actions damaged the Kuomintang’s reputation in announcing his formal expulsion four hours later. “I have no choice but to take a stand,” Mr Ma said at a morning conference broadcast live by Taiwan television networks. He said Mr Wang’s disregard for judicial independence is unacceptable. The move reflects Mr Ma’s intent to move past a series of scandals that led to the resignations of his premier, two defence ministers and a justice minister this year. Battling record low approval ratings of 13 percent, he is looking to revive an agenda that includes lowering trade barriers with China and building a nuclear power plant. Mr Wang insists he did nothing wrong. He accused the authorities of conducting a one-sided investigation that has “misled” President Ma, Taipei Times reported. “I’m back now and ready to give my statement. Hopefully, the president will not be deceived by the unilateral and incorrect information

he has been given,” Mr Wang was quoted as saying.

Tapped phone Mr Wang’s expulsion may help facilitate the passage of the trade pact. In June, Mr Wang agreed to opposition demands for a detailed review of the cooperation pact, which would allow companies to take controlling stakes in join ventures across the Taiwan strait, as well as ease restrictions on Taiwanese businesses looking to set up in China. “Ma is anxious right now with several initiatives stuck in the legislature and an inability to raise his polling numbers,” Ting Jen Fang, a politics professor at National Cheng Kung University, said in a telephone interview. “In terms of overall direction, Wang was an asset for the Kuomintang but he didn’t push through the legislation that Ma cared about.” Mr Wang was heard on a tapped mobile phone line in June telling opposition Democratic Progressive Party whip Ker Chien Ming that prosecutors wouldn’t appeal a notguilty verdict on Mr Ker, who had been accused of breach of trust, according to a Supreme Prosecutors Office statement on September 6. Transcripts released by investigators show Mr Wang had told Mr Ker that the appeal was dropped after intervention from Justice Minister Tseng Yung Fu. Mr Tseng resigned on September 6 without admitting wrongdoing. Mr Wang said on Tuesday he made the phone calls to remind justice officials not to abuse the appeals process. Bloomberg News

Wang Jianlin becomes China’s richest person C Li Keqiang says government committed to financial reforms

more than 30 years ago. “The efforts have gradually paid off,” Mr Li said, citing August’s improving economic indicators. But the data also illustrate Mr Li’s challenge in shifting away from an economic model dependent on debt and overseas demand toward domestic consumption. Industrial output grew 10.4 percent from a year earlier in August, while retail sales for the month and fixed-asset investment for the January-August period also topped analysts’ estimates, data from the statistics bureau showed on Tuesday.

Customs figures released on Sunday showed exports rose more than estimated last month. “The stronger data over the last couple of months have settled nerves about a possible hard landing,” and credit growth should sustain investment spending, said Mark Williams, a former U.K. Treasury adviser on China who is now a London-based economist at Capital Economics Ltd. “The omens for the short term are good, but at the cost of making the economy’s structural problems worse.” T.A. with Bloomberg News

hina’s property industry reclaimed its spot as the number one source of income in the past year for the mainland’s wealthy, according to the China Rich List published annually by Hurun Report Inc. One in four members on the rich list made their money in China’s real estate industry, overtaking manufacturing as the most common source of wealth. Six out of the top 10 made their money in the construction sector. Land prices in China have hit record highs in recent weeks, reflecting strong demand for property and presenting a quandary to China’s leaders who are trying to prevent a housing bubble while supporting the sector, which is a key driver of economic growth. Real estate tycoon Wang Jianlin, chairman of Dalian Wanda Group, rose to the number

one spot as his fortune doubled to US$22 billion, overtaking beverage magnate Zong Qinghou. Mr Wang, the head of China’s largest commercial real estate developer, bought U.K. luxury yacht maker Sunseeker for US$1.6 billion and is planning billiondollar luxury hotel developments in London and New York. Mr Zong, chairman of privatelyheld Wahaha Group, China’s leading beverage maker, saw his personal fortune climb 48 percent, but still fell to second place with US$18.7 billion. The top five richest individuals, including new faces like Tencent Holding’s Pony Ma, real estate developer Yang Huiyan of Country Garden Holdings Co Ltd and auto maker Wei Jianjun of Great Wall Motor Co Ltd, saw their wealth climb a combined 80 percent against 2012. Reuters


10 10

September 12, 2013 April 19, 2013

Greater China

Govt debt may exceed 15 trln yuan Audit of local-government debt to be completed this month

C

hina’s government debt may exceed 15 trillion yuan (US$2.45 trillion), said a government researcher, amid an ongoing audit of total borrowing, state-controlled China Daily reported. Zhao Quanhou, head of financial research at the Fiscal Science Research Centre affiliated with the Ministry of Finance, suggested that the figure may even run up to 18 trillion yuan, the newspaper said. Although debt has expanded at a controllable pace, experts said that aggressive borrowing by local governments must be halted, while many of these entities are trying to raise more money right now.

On Monday, Shanghai began a three-day, 11.2-billion-yuan offering of independently issued bonds. The offering was divided into five-year debt with a 3.94 percent interest rate and seven-year debt at 4.01 percent, according to a statement on the website of the city’s finance department. “As requested by the State Council, these bonds will be used for major public projects,” the statement said. The rates on these bonds are much lower than the average for local government de b ts o f th e s a m e m a tu r i ti es , suggesting they are still popular among investors. Shandong issued the same

amount of bonds last month, and Guangdong will sell 12.1 billion yuan in debt on September 16. New direct debt issues by local governments are likely to reach 50 billion yuan this year, compared with 28.9 billion yuan in 2012. Nonetheless, all of this debt will eventually be paid by the central government. The government will this month complete an audit of localgovernment debt to assess risks to its financial system, ahead of a Communist Party meeting in November to set economic policy, a government official said. China’s finance ministry will wrap up its first full audit in more

than two years in September and release the results in October, Vice Finance Minister Zhu Guangyao said last week. The total volume of debt is expected to rise slightly, he said. China in July ordered a nationwide review of localgovernment debt, which the National Audit Office said in 2011 totalled 10.7 trillion yuan. Xia Bin, a counsellor for the State Council and a former advisor to China’s central bank, said at a recent conference the result would be “astonishing” and much larger than the last figure, China Daily reported. T.A.

China locks foreign investors out of bad-debt clean-up Outsiders worry they will not be able to enforce rights as creditors Stephen Aldred

C

hinese banks have a colossal mess of bad debts to clean up for the second time in as many decades, but they are unlikely to call in the financial world’s most efficient mop and broom. Foreign investors that specialise in buying up distressed debt are queuing outside the industry’s door, but bankers say China’s reluctance to pay the price of a privately funded clean-up means that door probably won’t open – to the cost of Chinese tax-payers and, ultimately perhaps, the wider economy. Some economists believe the current mess will need a bigger clean-up than was required after the late-1990s Asian financial crisis. From 1999 to 2007, about US$323 billion in bad loans were swept out of the banks, according to a PriceWaterhouseCoopers (PwC) review of media reports over the period, in what amounted to a taxpayer-funded bailout. “Sometimes the door is open for foreigners to come up and make money, and sometimes it’s closed,” said one veteran debt specialist who has bought and sold Chinese debt for global investment banks. He declined to be named due to the sensitivity of discussing China’s sovereign debt. “Our belief right now is that the door is closed.” There is no ban on foreign investors buying up bad loans, but veterans of the 1999-2007 clean-up say the environment is as hostile to outsiders now as it was back then. A decade ago, they played only a limited role due to time-consuming red tape and difficulties enforcing their rights as creditors, such as being able to seize assets pledged as collateral for a soured loan. By 2006, according to PwC’s own estimates, foreigners bought up US$26.5 billion, or around 18 percent of bad loans sold by four state-backed vehicles that had been created to clean them up at the

US$88.10 bln Value of nonperforming loans at end-June

country’s four biggest banks. From 2002 to 2007, investment banks like Goldman Sachs Group Inc, Morgan Stanley and UBS AG bought billions of dollars of bad loans from these four so-called asset management companies.

Bad debts rise Goldman Sachs now believes China’s credit losses, including among non-bank lenders, could reach up US$3 trillion. Officially, non-performing loans (debts overdue by 90 days) stood at 539.5 billion yuan (US$88.10 billion) or 0.96 percent of total bank loans at endJune, the seventh straight quarterly rise in bad debts. Without deep-pocketed foreigners, the public purse will again pick up a large part of the final bill – suggesting that the bailout this time could be another lengthy process which could keep the economy from rebounding as quickly as it might.

With bad debts gumming up the system, China’s big banks could slow the pace of lending. That, in turn, could hold back the growth of small and medium sized companies, which are China’s main economic engine and job-creator, and leave them struggling to finance expansion, or even daily operations. China has shown few signs that it is thinking of opening the door to foreigners. In August, Reuters reported that it was developing a new loans-trading platform that could enable banks to sell loans to a wider range of investors, raising speculation that it could one day be used to trade bad loans. But it remains to be seen whether foreign buyers would be allowed to use it. In the meantime, China’s banks are reporting a steady rise in overdue loans. Mainland banks are expected to raise a total of at least 210 billion yuan in capital by 2015, but there is a widespread expectation that the taxpayer will stump up heavily as well.

Apart from concerns over some smaller banks, there are an estimated US$5 trillion worth of loans sitting outside the formal banking system, putting stress on the financial system. No one has a clear idea of how heavy defaults in this shadow banking sector could rebound on the formal banking sector. Such a climate would be normally a good one for foreign institutions specialising in buying up bad debts. But in the case of China, either banks won’t sell their debts at a price foreigners would consider reasonable or the foreigners are worried they will not be able to enforce their rights as creditor when it comes time to collect a bad debt. “Historically it took more than twice as long for foreign buyers to do a deal in China compared to other Asia markets, and the returns were less than half,” said Ted Osborn, a Hong Kongbased partner at PwC and specialist in non-performing loans (NPLs). Reuters


11 11

September 12, 2013 April 19, 2013

Asia

Kaesong is a key source of revenue for Pyongyang

Koreas agree to re-open Kaesong next week Two sides set date for trial restart on September 16

N

orth and South Korea agreed to re-open their jointly run industrial complex next week, the latest step in reducing tensions between the two countries that flared after a nuclear test by the North earlier this year. The accord on a time-line to open Kaesong by Monday, September 16, will end a near six-month shutdown caused by Kim Jong-un’s regime pulling out its 53,000 workers as relations soured between the two countries. North Korea also agreed to exempt South Korean companies at

Kaesong from taxes this year. Shares of Korean companies operating at Kaesong gained yesterday. “Both sides’ determination to restore Kaesong through dialog contributed to this agreement,” Yang Moo-jin, a professor at the University of North Korean Studies in Seoul, said by phone. “This is a positive signal for President Park Geun-hye’s fledgling North Korea policy.” Kaesong, located north of the fortified border that divides the two countries, provides cheap labour for 120 South Korean companies

producing at the site and is a source of hard currency for the North. The Kim regime shuttered the park after the United Nations tightened sanctions against the country in response to North Korea’s third nuclear test in February, followed by threats of a pre-emptive attack against the South and the U.S. As part of yesterday’s accord, the two Koreas also agreed to hold a business fair at Kaesong next month in an effort to draw foreign investment, according to South’s Unification Ministry.

Japan exports must rise to sustain recovery: Ishida Slow growth in shipments weighing on factory output Leika Kihara

J

apan’s exports must strengthen more to maintain an economic recovery that is now driven mostly by domestic demand, a Bank of Japan policymaker said, signalling that global uncertainties remain a threat to the plan to escape deflation in two years. Board member Koji Ishida stuck to the central bank’s assessment that the economy was recovering moderately, pointing to the resilience in personal consumption. But he warned a slow increase in exports is discouraging companies from boosting capital expenditure and weighing on factory output. “Most of Japan’s past economic recoveries were driven by exports,” the former commercial banker told business leaders in Aomori, northern Japan, yesterday. “The recovery now is spurred by domestic demand such as personal consumption, housing investment and public works spending, but exports must start to act as driving force,” he said. J a pan’s econ omy e xpan d ed

“The institutional foundation has now been laid for Kaesong to develop into an internationally competitive and stable industrial complex,” the ministry said in a statement. “I doubt it’ll be successful because foreign companies won’t feel comfortable moving operations to Kaesong at a time North Korea is under sanctions,” Mr Yang said. Kaesong represented the only vestige of cooperation between the countries before the shutdown. Since the preliminary accord on August 14 to reopen the site, the two Koreas have also agreed to resume reunions of families separated by the Korean War and restarted a military hot-line to improve communication. Seoul had pushed for compensation for the companies hit by the closure, and the two sides appeared to reach a compromise – agreeing to waive taxes for the firms this year. Analysts, however, stressed that Kaesong would remain a vulnerable project whatever safeguards are reached. “This agreement offers no real guarantee that Kaesong will be insulated from political upheavals and military tensions in the future,” Mr Yang said. “Even the 1953 armistice is easily violated – that’s the reality on the Korean peninsula,” he added. Once Kaesong is reopened, observers say Pyongyang is likely to step up pressure on Seoul to revive another cross-border project – South Korean tours to the North’s Mount Kumgang resort. The South suspended the tours after a North Korean soldier in 2008 shot dead a female tourist from the South who strayed into a restricted zone. In response, Pyongyang scrapped a deal with the resort’s developer and seized its properties there. Seoul has agreed to discuss resuming the Kumgang tours but has delayed the date for talks to begin. Bloomberg News/AFP

not as strongly as policy makers initially expected as a result of the slowdown in emerging economies, particularly China. The BOJ hopes that overseas growth will accelerate and boost exports in time to make up for any slowdown in household spending after an expected sales tax hike next April. Mr Ishida said while inflation would accelerate as robust spending encouraged companies to raise prices, household incomes had to rise in tandem if the economy was to keep improving. And it was a rise in regular pay, which makes up about three-quarters of nominal wages, rather than bonuses that would drive the increase in consumption, he said. The BOJ launched an intense burst of monetary stimulus in April, pledging to double the base money via asset purchases to achieve its 2 percent inflation target in roughly two years. Reuters

KEY POINTS Auto manufacturers enjoying the benefits of a weak yen

at an annualised 3.8 percent in the June quarter, a third straight quarter of growth, as the feel-good mood generated by Prime Minister Shinzo Abe’s reflationary policies lift household and corporate spending. Big manufacturers’ business

sentiment hit a record high in JulySeptember, a government survey showed yesterday, as auto and electronic makers enjoy the benefits of a weak yen that gives them a competitive advantage overseas. Exports have been rising, but

Exports must start acting as driver of growth: Ishida Economy recovering moderately, consumption firm Govt survey shows business sentiment at record high


12 12

September 12, 2013 April 19, 2013

Asia

Malaysia risk tops Philippines on Najib budget gap Economists say more needs to be done on fiscal reforms

M

alaysia’s default risk climbed above that of the Philippines for the first time as Prime Minister Najib Razak seeks to avoid a debt-rating cut, while his counterpart pitches for upgrades. Contracts insuring Malaysian bonds against non-payment rose 63 basis points this year to 141, compared with an advance of 33 to 139 for its lower-rated neighbour, according to data provider CMA. Malaysia’s 10-year ringgit yield jumped 44 basis points to 3.92 percent, 16 basis points higher than the rate on similar-maturity Philippine notes, data compiled by Bloomberg show. Mr Najib announced fuel price increases on September 2 for the first time since 2010 to curb subsidies that have strained the budget, after Fitch Ratings cut its outlook on the nation’s A-rating to negative from stable on July 30. Philippine President Benigno Aquino is the only contender in Southeast Asia for an upgrade as Moody’s Investors Service placed its Ba1 ranking on review July 25, signalling an increase to investment grade. “Malaysia’s creditworthiness is deteriorating and the country needs to address its fiscal and structural problems,” Nicholas Spiro, Londonbased managing director of Spiro Sovereign Strategy and a former consultant at Medley Global Advisors LLC, said in an interview. “The

Philippines is a lower investmentgrade credit whose strengths have become more apparent.”

Rising debt The premium investors pay on Malaysia five-year credit-default swaps over those of the Philippines reached 10 basis points on August 23, the most in CMA data going back to 2004. The cost was lower as recently as three weeks ago. The Philippines

Malaysia’s creditworthiness is deteriorating and the country needs to address its fiscal and structural problems Nicholas Spiro, Spiro Sovereign Strategy

won investment-grade status this year from Fitch and Standard & Poor’s after cutting its budget deficit. Malaysian government notes handed investors a 0.3 percent return in 2013, compared with 7 percent for the Philippines, the best performance among Southeast Asia’s five-biggest economies, according to indexes compiled by HSBC Holdings Plc. Mr Najib is facing rising debt levels as he seeks to attain developed-nation status by 2020, in addition to slowing economic growth and a shrinking current-account surplus. Fitch cited the country’s indebtedness and lack of budgetary reform for the rating outlook cut in July, saying Malaysia risks a downgrade in 18 months to 24 months unless it improves the fiscal position. The prime minister is aiming to lower the budget deficit relative to gross domestic product to 4 percent in 2013, double President Aquino’s goal, while Malaysia’s debt-to-GDP ratio is 53.3 percent, compared with 51.5 percent in the Philippines. “I am more bullish on the Philippines,” Sacha Tihanyi, a Scotiabank strategist in Hong Kong, said in a September 4 interview. “The ratings agencies have been sending warning messages implying that without fiscal consolidation, Malaysia may be on the road to a ratings downgrade.” Mr Najib seems to be heeding those warnings with his decision to raise

Singapore tightens rules on unsecured loans Amid Asian household debt concerns

S

ingapore announced new rules yesterday to cap credit card and other forms of unsecured lending by banks, amid growing concerns about rising household debt in Asia by consumers once known for their thrift. Asia has seen consumer debt levels rise sharply in recent years due to low interest rates and aggressive lending by banks. For Singapore, the ratio of household debt to gross domestic product now stands at around 75 percent, up from 55 percent in 2010 and 45 percent in 2005, according to data compiled by Standard Chartered Plc. “The rise in household debt is a fairly generic trend across Asia,” said

Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. “From a macro-prudential point of view, you’d want to mitigate the increase in household debt, particularly with respect to unsecured loans.” In Asia, household debt levels are highest in South Korea and Malaysia, followed by Thailand, while Singapore is somewhere in the middle of the pack, she added. Bank of America Merrill Lynch estimated in a recent report that household debt in South Korea stood at around 88 percent of GDP at the end of March this year. The ratio for Malaysia was 80.5 percent, while Thailand’s is 77.5 percent. In Singapore, the changes to the rules on unsecured lending will

to be implemented in stages from December 1, and they include limiting the total amount of unsecured loans an individual can take to 12 times that person’s monthly income. Th e ch a n g es a r e “ a i m e d a t improving lending practices by financial institutions and enabling individuals to make better borrowing decisions”, the Monetary Authority of Singapore (MAS) said in a statement. Singapore, which has a population of 5.3 million, had 9.3 million credit cards in circulation at the end of 2012, up from 8.3 million at the end of the previous year. Banks wrote off S$226.6 million (US$178.64 million) in bad debt last year, an increase of 21 percent from S$186.7 million at end-2011.

fuel prices, which drew a positive response from bond investors. The yield on Malaysia’s 3.48 percent ringgit-denominated notes maturing March 2023 fell 12 basis points, or 0.12 percentage point, to 3.97 percent last week, according to data compiled by Bloomberg. He announced plans on September 2 to bolster the nation’s finances that included a delay in some state-building projects that have

Currently, it is relatively easy for banks to issue credit cards in Singapore, with lenders such as Citibank advertising that they are able to do so within 24 hours of receiving an application. But with the new rules, banks will be required to review a borrower’s total debt and credit limits before granting a new credit card or unsecured credit facility. Banks must also carry out such reviews before increasing the credit limit on such facilities, the central bank said. “Most borrowers of unsecured credit should aim to stay well within the 12-month limit, as such borrowings typically attract high interest costs,” MAS said, adding that it is monitoring the situation and will lower the limit if necessary. Reuters

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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com


13 13

September 12, 2013 April 19, 2013

Asia

Malaysia’s ringgit weakened 4.8 percent this quarter

high import contents in an effort to stem the current-account shrinkage. Strengthening the fiscal deficit position is vital to sustaining the economy’s resilience and enhancing public and investor confidence, he said, helping halt a selloff in 10-year debt over the past two weeks.

‘Bit overblown’ An improvement in fiscal balances should drive the 10-year yield lower,

Morgan Stanley said in a report written by a team led by Rashique Rahman, co-head of global emergingcurrency strategy in New York. The bank recommends clients bet on a narrowing gap between two- and 10-year yields. The spread widened 29 basis points this quarter to 70 basis points, compared with a narrowing of 42 to 63 for the Philippines, according to data compiled by Bloomberg. “Fiscal worries about Malaysia are a bit overblown,” Saktiandi Supaat, the Singapore-based head of foreign-exchange research at Malayan Banking Bhd, the nation’s largest lender, said in an interview. Still, he added, “Najib needs to really do something on fiscal reforms in addition to what he’s done.” The leaders of Malaysia and the Philippines are both having to contend with capital outflows from emerging-markets amid signals from the Federal Reserve that it may pare monetary stimulus, sending many Asian currencies lower. Malaysia’s ringgit weakened 4.8 percent this quarter, more than the 3.1 percent loss in the Philippine peso, data compiled by Bloomberg show. Indonesia’s rupiah dropped 11.2 percent, the Thai baht 4.2 percent and Singapore’s dollar 1 percent. Malaysia is more vulnerable to capital outflows than some of its regional peers, partly due to its high reliance on foreign ownership of debt and the deterioration in the current account, according to Credit Suisse Group AG. The ringgit faces the most pressure among Asian currencies after the Indian rupee and Indonesia’s rupiah, Santitarn Sathirathai, Singapore-based economist at Credit Suisse, wrote in a research note dated August 20. Bloomberg News

Glencore Xstrata halts US$7 bln Australian mine

N

ewly merged mining giant Glencore Xstrata Plc said on yesterday it had put its proposed US$7 billion Wandoan open-cut energy coal project in Australia on hold as oversupply drags on prices. The Switzerland-based commodities firm, which came into being with a mega-merger between Glencore and Xstrata in May, said the massive 30-million-tonnes-a year Queensland project was among several greenfield operations globally now on ice. “A considerable amount of capital and human resources have been invested in the project to date and we consider it a valuable asset and important future option,” a Glencore Xstrata spokesman told AFP. “However, as a result of the current over-supply, low prices and other challenges in the global coal market, we have placed the project on hold in the short-to-medium term.” It is the latest Australian coal project to be shelved as demand drops in slowing China and other economies and cheaper supply comes online from the Asian giant and countries such as Mozambique. Other major miners including BHP Billiton Ltd have reduced coal operations and laid off workers in a bid to find savings amid

plunging revenues and muted global conditions. BHP’s annual net profit slumped 29.5 percent to US$10.88 billion in the year to June, while rival Rio Tinto Plc was down 71 percent for the first half at US$1.72 billion. Prime Minister-elect Tony Abbott has vowed to rip up mining profits and corporate pollution taxes in a bid to improve the resources sector’s fortunes as Australia’s decade-long, Asia-led investment boom unwinds. Queensland Premier Campbell Newman, a vocal opponent of the outgoing Labor government, said he had asked Mr Abbott to “get out of the way” of the state’s mining industry and green-light major projects “as soon as possible”. Before losing Saturday’s national election Labor had been reviewing a number of port and other proposals in Queensland after the UN threatened to downgrade the Great Barrier Reef’s heritage status due to rampant coastal and resources development. Australia’s mining-powered economy faces an uncertain future as it transitions towards other drivers of growth, with the Reserve Bank of Australia forecasting a noticeable drop-off in resources project investment in coming years. AFP

Petronas proposes new Asian crude benchmark New price marker aim at reflecting fundamentals in region Florence Tan and Jessica Jaganathan

M

alaysia state energy firm Petroliam Nasional Bhd, also know as Petronas, is in talks with producers, buyers and traders on setting up a new mechanism to price oil produced in the Asia-Pacific to better reflect regional supply and demand, sources familiar with the matter said. The plan comes two years after the second largest oil producer in Southeast Asia switched to dated Brent pricing after dropping a more volatile Asian price marker. That move also prompted Vietnam and Brunei to change to the dated Brent benchmark published by pricing agency Platts. Petronas is studying several options including working with an exchange in Singapore to start a futures contract based on four Malaysian crude grades – Labuan, Miri, Kikeh and Kimanis, one source said. “It’s more to reflect regional supply and demand more accurately,” a second source said. “Dated Brent sometimes can be detached from the regional market.” The four Malaysian grades will have a total capacity of just over 300,000 barrels per day (bpd) next year when Kimanis comes onstream and this could rise to nearly 400,000 bpd in 2016 when a new field starts operation. Petronas officials were not available to comment on any talks about a new regional price benchmark. Dated Brent is underpinned by a dwindling pool of four North Sea crudes – Brent, Forties, Oseberg and Ekofisk (BFOE) – and often spikes whenever the main crude stream Forties suffers an outage. The marker weakens whenever demand falls in Europe such as during refinery maintenance seasons. Petronas has mooted the idea of the new price marker to other producers in the Asia Pacific as well

as refiners and traders, the sources said on the sidelines of a major oil gathering in Singapore. “They want to move away from dated Brent pricing as they feel it doesn’t accurately reflect the quality of their crudes,” said a source with an Asian oil firm involved in the talks. Petronas’ renewed interest in a new crude marker could also stem from a potential rise in its output when its new oil terminal in Sabah starts operation later this year, a fourth source said. Petronas has started talks with regional producers such as Indonesia and Vietnam to get them involved and provide a bigger basket of crudes to attract participants, another source said. A source from one of the regional oil producers said his company was waiting for more details from Petronas on the pricing mechanism. The Indonesia Crude Price (ICP) remains the only regional marker after Petronas dropped the Asia Petroleum Price Index (APPI) in 2011, two years after Australian producers moved to dated Brent. Asian crude markers suffer from low liquidity due to production declines at mature fields, with prices frequently diverging from global benchmarks. Buyers and producers remained cautious. Several exchanges have launched crude and oil products futures in Asia that have failed to attract traders. “It’ll be an uphill climb because so many other people also want to do their own benchmarks,” the second source said. In China, the Shanghai Futures Exchange has announced plans to launch crude oil futures, while Russia also nursed the ambition of making its ESPO crude the Asia benchmark.

Petronas moots idea of platform to trade basket of crudes

Reuters


14 14

September 12, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)

Max 53.5

average 53.179

Min 52.5

Last 52.6

53.50

79.00

23.8

53.25

78.75

23.7

53.00

78.50

23.6

52.75

78.25

23.5

52.50

Max 79

average 78.537

Min 78

Last 48.15

21.1

24.3

21.0

24.1

20.9

23.9

47.8

Max 21.15

average 20.964

PRICE

DAY %

YTD %

(H) 52W

Min 20.8

Last 21

(L) 52W

WTI CRUDE FUTURE Oct13

107.74

0.32591489

15.10683761

112.2399979

86.04000092

BRENT CRUDE FUTR Oct13

112.17

0.826966292

6.090986475

117.3399963

96.37999725

GASOLINE RBOB FUT Oct13

274.65

0.394780129

5.557477228

298.210001

246.6799974

GAS OIL FUT (ICE) Oct13

943.5

0.452488688

4.110344828

985.5

835.5

NATURAL GAS FUTR Oct13

3.588

0.111607143

-1.157024793

4.525000095

3.154000044

308.14

0.476066258

3.025845063

322.8999853

276.1999846

NY Harb ULSD Fut Oct13 Gold Spot $/Oz

1367.71

-0.3163

-17.8286

1796.08

1180.57

Silver Spot $/Oz

23.141

-0.6312

-23.1451

35.365

18.2208

Platinum Spot $/Oz

1482.6

0.2604

-2.3159

1742.8

1294.18

Palladium Spot $/Oz

701.25

2.2663

0.2273

786.5

587.4

LME ALUMINUM 3MO ($)

1797

-0.49833887

-13.31403763

2200.199951

1758

LME COPPER 3MO ($)

7170

-0.36131184

-9.59525911

8422

6602 1811.75

LME ZINC

3MO ($)

MAJOR

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

ASIA PACIFIC

CROSSES

1876

-0.582935877

-9.807692308

2230

-1.293103448

-19.46072685

18920

13205

15.47

0.22675737

0.356795329

16.65000153

14.77000046

468.5

-0.106609808

-21.88411838

662.5

445.75

648.5

0.309358082

-20.98690222

913

635.5

SOYBEAN FUTURE Nov13

1358.75

0.276752768

4.298599117

1409.75

1162.5

COFFEE 'C' FUTURE Dec13

117.05

0.342906129

-25.18376478

200

115.25

SUGAR #11 (WORLD) Oct13

17.14

-0.232828871

-14.55633101

21.82999992

15.92999935

ARISTOCRAT LEISU

COTTON NO.2 FUTR Dec13

84.41

-0.071031135

7.200914402

93.72000122

74.34999847

CROWN LTD

AGRICULTURE ROUGH RICE (CBOT) Nov13 Dec13

WHEAT FUTURE(CBT) Dec13

World Stock Markets - Indices NAME

20.8

COUNTRY

13740

LME NICKEL 3MO ($)

CORN FUTURE

23.4

Max 24.5

average 24.297

Min 23.75

Last 24.5

23.7

Currency Exchange Rates

NAME

METALS

Last 23.5

48.2

Commodities ENERGY

Min 23.4

24.5

47.9 Min 47.8

average 23.572

21.2

48.0

average 48.133

Max 23.75

48.3

48.1

Max 48.3

78.00

Last 78.35

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.931 1.5795 0.9344 1.3269 100.24 7.9876 7.7549 6.119 63.23 31.987 1.2678 29.735 43.8 11345 93.325 1.23985 0.84006 8.1205 10.5999 133.01 1.03

0.2909 0.5987 0.0428 0.1812 -0.0698 -0.0063 -0.0039 0.0245 0.9647 0.4471 0.1183 -0.0706 0.0457 -0.9696 -0.359 -0.1371 0.4143 -0.1305 -0.1981 -0.2556 0

-10.291 -2.3553 -2.0334 0.5989 -14.1061 -0.0551 -0.0554 1.8238 -13.0239 -4.3987 -3.6599 -2.3609 -6.3813 -13.68 -4.284 -2.6108 -2.9331 1.1945 -0.6557 -14.6154 -0.0097

1.0625 1.6381 0.9839 1.3711 103.74 8.0111 7.7664 6.333 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8848 1.4814 0.9022 1.2662 77.13 7.9818 7.7498 6.1064 51.3863 28.56 1.2152 28.913 40.54 9448 79.408 1.20302 0.79235 7.8281 10.1113 99.52 1.0289

Macau Related Stocks NAME

PRICE

DAY %

YTD %

4.585

-0.326087

15.26

-0.8447044

1.72

0.75

2338900

6.224065

28

22.85

14581557

CENTURY LEGEND

0.35

-2.777778

32.07548

0.42

0.23

2500

CHEUK NANG HLDGS

6.34

1.76565

5.843076

6.74

3.1

86640 17183529

CHINA OVERSEAS

23.85

0.210084

3.246752

25.6

17.7

CHINESE ESTATES

17.36

-0.6864989

54.3722

17.86

8.047

63572

CHOW TAI FOOK JE

10.88

-2.333932

-12.54019

13.4

7.44

9680700

EMPEROR ENTERTAI

2.99

-0.6644518

58.20106

3.19

1.41

980000

FUTURE BRIGHT

2.38

-3.643725

96.36541

2.76

1.053

2160000

GALAXY ENTERTAIN

52.6

-0.5671078

73.31137

53.55

22.25

13265019

HANG SENG BK

126

0.2386635

6.149961

132.8

110.6

940767

-24.3609

35.3

23.2

1452000 11034815

US

15191.06

0.8493592

15.92565

15658.42969

12471.49

NASDAQ COMPOSITE INDEX

US

3729.022

0.6162405

23.49744

3729.384

2810.8

FTSE 100 INDEX

GB

6571.48

-0.1900064

11.42237

6875.62

5605.589844

DAX INDEX

GE

8474.83

0.33493

11.32942

8557.86

6950.53

HOPEWELL HLDGS

25.15

1.207243

NIKKEI 225

JN

14425.07

0.01185577

38.76692

15942.6

8488.14

HSBC HLDGS PLC

HANG SENG INDEX

HK

22937.14

-0.1719572

1.2368

23944.74

19426.35938

CSI 300 INDEX

CH

2482.889

0.3230441

-1.587941

2791.303

2023.171

TAIWAN TAIEX INDEX

TA

8208.99

0.00268006

6.617186

8439.15

7050.05

KOSPI INDEX

SK

2003.85

0.4909581

0.3404986

2042.48

1770.53

MIDLAND HOLDINGS

S&P/ASX 200 INDEX

AU

5234.387

0.6387028

12.59289

5249.6

4316.7

ID

4309.721

-1.11107

-0.1613696

5251.296

3837.735

FTSE Bursa Malaysia KLCI

MA

1764.86

4.494511

1826.22

1590.67

SHUN HO RESOURCE

NZX ALL INDEX

NZ

982.228

-0.02798974

11.35703

998.487

827.802

SHUN TAK HOLDING

PHILIPPINES ALL SHARE IX

PH

3774.39

1.447643

2.038668

4571.4

3440.12

SJM HOLDINGS LTD

NA

STOCK EXCH OF THAI INDEX

TH

1386.14

-0.5046046

-0.415972

1649.77

1244.61

HO CHI MINH STOCK INDEX

VN

476.4

0.3940741

15.14755

533.15

372.39

Laos Composite Index

LO

1310.4

3.370751

7.872272

1455.82

1007.25

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.

2446370

-24.28571

DOW JONES INDUS. AVG

NA

11186158

8.9

0

(L) 52W

-3.89

2.545

15.49

0.9861933

(H) 52W

1.47

4.7

43.01781

1.06

YTD %

596.91

45.55555

25.6

DAY %

SI

VOLUME CRNCY

AMAX HOLDINGS LT

PRICE

HSBC Dragon 300 Index Singapor

(L) 52W

BOC HONG KONG HO

COUNTRY

JAKARTA COMPOSITE INDEX

(H) 52W

85.55

-0.4074505

5.227548

90.7

69.25

HUTCHISON TELE H

3.57

-2.724796

0.2809005

4.66

2.98

8710000

LUK FOOK HLDGS I

25.2

-3.632887

3.27869

30.05

16.88

3534545

MELCO INTL DEVEL

20.2

2.434077

124.1953

20.25

6.19

5117880

MGM CHINA HOLDIN

23.5

0.4273504

76.98076

24.2

11.668

5090700

3.03

0.6644518

-18.10811

5

2.68

1451000

NEPTUNE GROUP

0.198

4.761905

30.26316

0.23

0.131

94432000

NEW WORLD DEV

11.62

0

-3.327791

15.12

9.75

6863917

SANDS CHINA LTD

48.15

0.9433962

41.82621

48.5

26.35

16848242

1.79

-0.5555556

27.85715

1.92

1.13

0

4.32

-0.6896552

3.102624

4.65

2.78

7372000 13383080

SMARTONE TELECOM WYNN MACAU LTD

21

1.941748

18.32547

22.382

15.559

12.18

-1.615509

-13.49432

16.22

10.6

4682270

24.5

3.157895

16.9451

26.5

17.48

12422506

ASIA ENTERTAINME

4.09

-0.968523

45.30944

4.7647

2.4835

69202

BALLY TECHNOLOGI

74.07

1.299234

65.66764

75.61

43.16

372606

BOC HONG KONG HO

3.31

2.47678

7.817592

3.6

2.99

6700

GALAXY ENTERTAIN

6.9

3.603604

73.80353

6.94

2.98

17568

INTL GAME TECH

20.03

2.507677

41.35497

20.94

12.35

13021690

JONES LANG LASAL

87.52

1.167495

4.264948

101.46

72.56

282324

LAS VEGAS SANDS

63.01

2.455285

36.50347

63.29

37.8353

7238164

MELCO CROWN-ADR

30.36

3.511763

80.28503

30.63

12.15

5049346

MGM CHINA HOLDIN

2.98

0

70.25737

3.07

1.5327

5365

MGM RESORTS INTE

19.04

1.600854

63.57388

19.07

9.15

7063987

SHFL ENTERTAINME

22.77

0.1759789

57.03448

23.08

12.35

429997

SJM HOLDINGS LTD

2.69

2.671756

18.10595

2.9481

2.0311

36375

149.24

2.676299

32.66957

149.9

95.9127

1377467

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

35.25

0.5706134

20868668

CHINA UNICOM HON

12.5

1.461039

38141512

POWER ASSETS HOL

66.55

-1.114413

4977386

ALUMINUM CORP-H

2.88

0.6993007

41370491

CITIC PACIFIC

9.94

0.2016129

15054012

SANDS CHINA LTD

48.15

0.9433962

16848242

BANK OF CHINA-H

3.53

-0.8426966

343717830

BANK OF COMMUN-H

5.81

-0.3430532

34099186

BANK EAST ASIA

31.65

-0.1577287

1985253

BELLE INTERNATIO

11.26

0.1779359

27152283

AIA GROUP LTD

BOC HONG KONG HO

NAME

62.8

0.48

2754238

CNOOC LTD

CLP HLDGS LTD

16.22

-0.3685504

65033167

COSCO PAC LTD

11.04

-0.1808318

8362949

12

2.915952

21956632

26.15

1.160542

5573751

126

0.2386635

940767

47.25

-0.5263158

1928884

87.5

-0.6810443

1797812

-0.9857612

21017056

ESPRIT HLDGS

25.6

0.9861933

14581557

CATHAY PAC AIR

14.42

0.698324

3246251

HANG SENG BK

CHEUNG KONG

113.6

0.3533569

1985504

HENDERSON LAND D

CHINA COAL ENE-H

5.34

2.10325

109820443

HENGAN INTL

CHINA CONST BA-H

6.06

-0.6557377

374761899

HONG KG CHINA GS

18.08

CHINA LIFE INS-H

21.1

0

34858562

HONG KONG EXCHNG

126.9 -0.07874016

CHINA MERCHANT

27.6

-1.428571

3886903

HSBC HLDGS PLC

85.55

-0.4074505

CHINA MOBILE

87.15

-0.7968127

37084542

HUTCHISON WHAMPO

92.9

0.6500542

3891666

CHINA OVERSEAS

23.85

0.210084

17183529

IND & COMM BK-H

5.49

0

270993743

CHINA PETROLEU-H

6.13

-0.9693053

97559846

LI & FUNG LTD

11.6

1.045296

15003836

CHINA RES ENTERP

23.75

-0.8350731

3531986

MTR CORP

30.4

0.9966777

CHINA RES LAND

HANG LUNG PROPER

2839669 11034815

NAME

SINO LAND CO

10.88

0.1841621

7946655

SUN HUNG KAI PRO

102.6

-0.4849661

4700309

91.1

-0.2190581

2000145

402.2

0.802005

3892853

TINGYI HLDG CO

20.75

-0.7177033

14587276

WANT WANT CHINA

11.18

0

19168979

67.4

-0.4431315

3046824

SWIRE PACIFIC-A TENCENT HOLDINGS

WHARF HLDG

MOVERS

23095.86

2116753

LOW

22698.96

52W (H) 23944.74

22.5

0

6736459

NEW WORLD DEV

11.62

0

6863917

18.84

7.045455

27090965

PETROCHINA CO-H

8.6

-2.604757

153119514

CHINA SHENHUA-H

27

0.5586592

22835562

PING AN INSURA-H

59.5

0.08998043

16581840

20

25

5 23100

INDEX 22937.14 HIGH

CHINA RES POWER

VOLUME

(L) 19426.35938

22690

9-September

11-September


15 15

September 12, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China Daily China became the world’s third-largest investor, a government report said on Monday. China’s outbound FDI rose 17.6 percent year-onyear in 2012 to a record high of US$87.8 billion, according to the 2012 Statistical Bulletin of China’s Outward Foreign Direct Investment. China’s increase made the nation the world’s third-largest investor last year after the United States and Japan, for the first time since the country began to release the data a decade ago. China was the world’s sixth-largest investor in 2011.

Wall Street Journal A key group of Thai rubber farmers called off protests planned for this weekend after the Thai Cabinet agreed to double a subsidy aimed at helping them cope with weak prices. Amnuay Yuttitham, leader of one faction of rubber farmers, said his members accepted the government’s subsidy. “We decided to cancel the planned rally,” Mr Amnuay said a few hours after the Cabinet greenlighted the subsidy.

Inquirer Business After dropping to a fouryear low in August, inflation in the Philippines may accelerate in the months ahead due to rising global oil prices and depreciation of the peso. According to Socioeconomic Planning Secretary Arsenio Balisacan, rising prices of petroleum in the world market and the peso’s fall against the U.S. dollar will soon impact on overall domestic prices. But Mr Balisacan has expressed confidence that the impact of rising world oil prices and falling peso will not be enough to cause inflation to breach the ceiling set.

Korea Herald South Korea will provide its biggest financial assistance to Vietnam for the construction of a road connecting the Southeast Asian country’s regional industrial complex with Ho Chi Minh City. The Ministry of Strategy and Finance said that South Korea will help Vietnam build the 17.85 kilometre linking the Nhon Trach industrial complex with Vietnam’s biggest city. The US$430 million project will be financed by the state-run Export-Import Bank of Korea’s economic development cooperation fund and the private sector.

America’s bond-market blues Zhang Monan

Fellow of the China Information Centre and a researcher at the China Macroeconomic Research Platform

T

he market for United States Treasury securities is one of the world’s largest and most active debt markets, providing investors with a secure stock of value and a reliable income stream, while helping to lower the U.S. government’s debtservicing costs. But, according to the US Treasury Department, overseas investors sold a record US$54.5 billion in longterm U.S. debt in April of this year, with China slashing its holdings by US$5.4 billion. This dumping of U.S. government debt by foreign investors heralds the end of an era of cheap financing for the U.S. As it stands, the U.S. government holds roughly 40 percent of its debt through the Federal Reserve and government agencies like the Social Security Trust Fund, while American and foreign investors hold 30 percent each. Emerging economies – many of which use large trade surpluses to drive GDP growth and supplement their foreignexchange reserves with the resulting capital inflows – are leading buyers of U.S. debt. Over the last decade, these countries’ foreign-exchange reserves have swelled from US$750 billion to US$6.3 trillion – more than 50 percent of the global total – providing a major source of financing that has effectively suppressed long-term U.S. borrowing costs. With yields on U.S. ten-year bonds falling by 45 percent annually, on average, from 2000 to 2012, the U.S. was able to finance its debt on exceptionally favourable terms. But the ongoing depreciation of the U.S. dollar – which has fallen by almost half since the Bretton Woods system collapsed in 1971 – together with the rising volume of U.S. government debt, undermines the purchasing power of investors in U.S. government securities. This diminishes the value of these countries’ foreign-exchange reserves, endangers their fiscal and exchange-rate policies, and undermines their financial security.

For China, the benefits of holding large quantities of U.S. dollars no longer outweigh the risks, so it must begin to reduce the share of U.S. securities in its foreignexchange reserves

Largest creditor Nowhere is this more problematic than in China, which, despite the recent selloff, remains by far America’s largest foreign creditor, accounting for more than 22 percent of America’s foreignheld debt. Chinese demand for Treasuries has enabled the U.S. to increase its government debt almost threefold over the last decade, from roughly US$6 trillion to US$16.7 trillion. This, in turn, has fuelled a roughly 28 percent annual expansion in China’s foreign-exchange reserves. China’s purchases of American

debt effectively transferred the official reserves gained via China’s trade surplus back to the U.S. market. In early 2000, China held only US$71.4 billion of U.S. debt and accounted for 8 percent of total foreign investment in the U.S. By the end of 2012, this figure had reached US$1.2 trillion, accounting for 22 percent of inward foreign investment. But China’s reserves have long suffered as a result, yielding only 2 percent on U,S, ten-year bonds, when they

should be yielding 3-5 percent. Meanwhile, outward foreign direct investment yields 20 percent annually, on average. So, whereas China’s US$3 trillion in foreign-exchange reserves will yield only about US$100 billion annually, its US$1.53 trillion in foreign direct investment could bring in annual returns totalling around US$300 billion. Despite such low returns, China has continued to invest its reserves in the U.S., largely owing to the inability of its own under-developed financial market to generate a sufficient supply of safe assets. In the first four months of this year, China added US$44.3 billion of U.S. Treasury securities to its reserves, meaning that such debt now accounts for 38 percent of China’s total foreignexchange reserves. But the growing risk associated with U.S. Treasury bonds should prompt China to reduce its holdings of U.S. debt.

Inevitable sell-off The U.S. Federal Reserve’s announcement in May that it may wind down its quantitative easing (QE) programme – that is, large-scale purchases of long-term financial assets – by the end of this year has sparked fears of a 1994-style bond-market collapse. Concerns that a sharp rise in interest rates will cause the value of bond portfolios to

plummet have contributed to the recent wave of foreign investors dumping U.S. debt – a trend that is likely to continue to the extent that the Fed follows through on its exit from QE. Yields on ten-year U.S. bonds are now 2.94 percent, a 58 percent increase since the first quarter of this year, causing the interest-rate gap between two- and ten-year bonds to widen to 248 basis points. According to the Congressional Budget Office, the yield rate on ten-year bonds will continue to rise, reaching 5 percent by 2019 and remaining at or above that level for the next five years. While it is unlikely that this will lead to a 1994-style disaster, especially given that the current yield rate remains very low by historical standards, it will destabilise the U.S. debt market. For China, the benefits of holding large quantities of U.S. dollars no longer outweigh the risks, so it must begin to reduce the share of U.S. securities in its foreignexchange reserves. Given that China will reduce the overall size of its reserves as its population ages and its economic-growth model shifts toward domestic consumption, a substantial sell-off of U.S. debt is inevitable – and, with it, a large and permanent increase in America’s financing costs. © Project Syndicate


16

September 12, 2013

Closing Obama calls off vote on Syria action

India’s rupee at three-week high

U.S. President Barack Obama has postponed a congressional vote on military action in Syria, vowing to pursue diplomacy to remove the regime’s chemical weapons. Damascus has admitted for the first time that it has chemical weapons, and has agreed to abide by a Russian plan to hand over its arsenal. The U.S. threatened strikes after a gas attack killed hundreds last month. Mr Obama blames the regime and said the military would respond if talks failed. “It’s too early to tell whether it will succeed, and any agreement must verify that the Assad regime keeps its commitments,” he said.

India’s rupee rose to a three-week high against the dollar yesterday, after a string of record lows in recent months, as positive trade data boosted investor confidence and concerns over strikes on Syria eased. The rupee firmed against the dollar to 63.07 during trading yesterday and closed at 63.38, up from its previous close of 63.85. Just two weeks ago the rupee hit a record low of more than 68 to the dollar. “Some global tensions have eased. Exporters have been selling dollars expecting the rupee to be stable,” said Param Sarma, chief executive of NSP Forex.

Barroso warns on EU political instability EC president says leaders must not be complacent Claire Davenport

E

uropean Commission President José Manuel Barroso declared yesterday that economic recovery was within sight after nearly four years of Europe’s debt crisis and urged governments to move faster to complete a stalled banking union. In his last State of the Union speech before European Parliament elections next May, Mr Barroso offered no new policy proposals but appealed to member states to redouble efforts to quell financial turmoil that has led to a drawn-out recession and soaring unemployment. “What we can and must do first and foremost is deliver the banking union. It is the first and most urgent way to complete our union,” he told lawmakers in Strasbourg. His comments were an implicit challenge to Germany, the EU’s leading power, which has worked to limit the scope of a single banking supervisor and slow the drive for a single bank resolution authority and fund, citing legal constraints and the wish to spare its taxpayers from liabilities for others’ banks. The goal of creating a single framework and backstop for around 8,000 European banks, with mechanisms to wind down failed lenders and protect savers’ deposits, is one of the EU’s most ambitious and challenging projects. EU officials and many financial market economists say it is crucial to

strengthen a banking system shaken by the crisis and open the way for lending again to spur growth. But efforts to implement it have stalled in the run-up to German elections on September 22, and there are doubts about whether Berlin will add impetus to the project even after a new government is in place.

‘New normal’ “Make no mistake, there is no way back to business as usual,” Mr Barroso said. “Some people believe that after this everything will go back to the way it was before. They are wrong. We will not go back to the ‘old’ normal, we have to shape a ‘new’ normal.” Mr Barroso will finish his second five-year term as Commission president in November next year and is not expected to be re-appointed, so there was a strong dose of legacy in this address. The centre-right former Portuguese premier launched a strong defence of Europe’s crisis management ahead of pan-European elections that are expected to bring a surge in antiEU votes, potentially shifting the balance of power in Brussels. It was governments’ fiscal mismanagement and financial market excesses – not EU policies – that had caused the crisis, he said, decrying a tendency for successes

Barroso says investors still lack confidence in euro zone

to be “nationalised” and failures “Europeanised”. Europe should not be cast as the enemy, he said. He also urged leaders not to slacken in overhauling their economies and to introduce the structural reforms needed to put the euro zone and wider EU on a more stable footing. “The recovery is within sight. This should push us to keep up our efforts,” Mr Barroso said in an hour-long address that received lukewarm responses from political opponents. “We owe it to our 26 million unemployed.” The biggest risk to a sustained recovery, he said, was political – a lack of commitment by leaders towards the goals agreed among them

Indonesia central bank expects low inflation Government moved to rein in consumer prices, minister says

I

ndonesia is sharply cutting inflation and starting to trim its ballooning current account deficit, two top officials said, pointing to issues that are testing confidence in Southeast Asia’s biggest economy and have sent its currency sliding. Today the central bank will hold its second meeting in as many weeks to decide on its interest rate policy after 50 basis point hikes in both its main rates at a rare extra meeting on August

29. Most economists polled by Reuters expect it to hold rates unchanged. “We have seen deflation in the first week [of September]...this month [month-on-month] inflation will be very, very low,” Deputy Governor of Bank Indonesia, Perry Warjiyo, told Reuters in an interview yesterday. He cited subdued domestic demand as a major factor. However, annual inflation remains stubbornly high, hitting 8.79 percent in August,

driven up by June average 33 percent increase in fuel prices. Mr Warjiyo was also confident the current account deficit, which hit 4.4 percent of GDP in the second quarter, would trend down in the third quarter. Concern over the current account has sparked a sell-off in the rupiah, sending it down to 4-1/2-year lows. It has fallen more than 16 percent against the dollar since the start of

over the past three years. In what might be perceived as another veiled criticism of Germany, Mr Barroso said all 17 euro zone countries were in the same boat. While several – Greece, Portugal, Ireland and Cyprus among them – have required bailouts, that did not mean the rest had no work to do or couldn’t help. “When you are in the same boat, one cannot say: ‘your end of the boat is sinking’. We were in the same boat when things went well and we are in it together when things are difficult,” he said. “This kind of interdependence means only European solutions can work.” Reuters

the year and was down 2.35 percent alone yesterday. The government has instituted a range of policy measures since last month to try to head off more attacks on the currency, making it the worst performer in Asia. Trade Minister Gita Wirjawan, in a separate interview with Reuters yesterday, said a number of measures recently implemented would take a little time to filter through the economy. “The result won’t be instant but should be seen in 3-6 months,” he said. He pointed to measures to enforce more use of biodiesel and so cut into import of fuel by the former OPEC member and which has become a major drag on the country’s trade balance. Indonesia’s is the world’s largest producer of palm oil and thus will be the source of the biodiesel. Reuters

Macau Business Daily, September 12, 2013  

Macau Business Daily digital version

Read more
Read more
Similar to
Popular now
Just for you