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MOP 6.00 Vitor Quintã

TV market shake-up could begin in April

Number 417 Tuesday November 19, 2013 Year II

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Banks ready to fork out for deposit protection

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Wynn Resorts hires lobbyist on ‘U.S.-China’ issue Page 5

Sa Sa profit jumps nearly 27 percent

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

April 19, 2013

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acau’s television market could change as soon as April, the Telecommunications Regulation Bureau has said, even though new cable television licences will be auctioned only after September. A new market framework could be set up once Macau Cable TV Co Ltd’s exclusive, 15-year concession to supply cable television ends in April, the bureau said in a written reply to questions from Business Daily.

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The new arrangement would cover free-to-air television channels, such as those of public broadcaster TDM, which unlicensed public antenna companies relay. The bureau said the arrangement “may be operated by one or more third parties appointed by the government, which may either be a public or private institution”. It didn’t give more details. More on page 2

Old flats soar in price as new units scarce

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With home pre-sales now in limbo, would-be owner-occupiers are having to buy older homes at high prices as sellers drive hard bargains, official data show. Almost half of the units sold in the third quarter were flats over 20

UN’s concerns grow over World Heritage The United Nations Educational, Scientific and Cultural Organisation (UNESCO) is growing more worried about threats to Macau’s World Heritage sites. The ‘Threat Intensity Coefficient’ of the city’s protected sites rose from 36 percent last year to 41 percent this year, according to the agency’s website. The coefficient is a measure of how often UNESCO’s World Heritage Committee deliberates over designated sites. Macau’s were listed in 2005. Page 2

years old, up from 15.3 percent in the previous quarter, the Statistics and Census Service announced yesterday. Most of the older units sold from July to September were in the Areia Preta, Iao Hon and San Kio districts

on Macau peninsula. Measures introduced in October 2012 to curb property prices have had “some impact,” said Lao Pun Lap, head of the government’s think tank in a separate announcement. Page 3

La Scala height Cotai casino leap had little openings to boost to do with Ao slot demand Macau could need as many as 7,000 new gaming machines each year until 2017 to cater for the next wave of Cotai casino openings, says a new report commissioned from Macau Polytechnic Institute. The document ‘Research Report on Macao Gaming Industry’ was launched at the Macao Gaming Summit conference held during the Macao Gaming Show last week.

Disgraced secretary Ao Man Long had a “limited” role in relaxing the height cap for the land plots involved in the corruption trial of two Hong Kong tycoons, an official said in court yesterday. Jaime Carion, director of the Land, Public Works and Transport Bureau, said Mr Ao agreed to turn down a request from the developer for more time to develop the La Scala high-end residential project.

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HSI - Movers Name

%Day

PING AN INSURA-H

9.45

CHINA LIFE INS-H

8.71

HENGAN INTL

6.55

CHINA PETROLEU-H

6.31

BANK OF COMMUN-H

5.45

HSBC HLDGS PLC

0.76

MTR CORP

0.51

CLP HLDGS LTD

0.41

HANG SENG BK

0.40

SUN HUNG KAI PRO

-1.48

Source: Bloomberg

I SSN 2226-8294

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November 19, 2013

Macau

TV market shake-up could begin in April A new market framework could be set up once Macau Cable TV’s monopoly expires Vítor Quintã

vitorquinta@macaubusinessdaily.com

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he way Macau’s television market works could change as soon as April, the Telecommunications Regulation Bureau has said, even though new cable television licences will be auctioned only after September. A new market framework could be set up once Macau Cable TV Co Ltd’s exclusive, 15-year concession to supply cable television ends in April, the bureau said in a written reply to questions from Business Daily. The new arrangement will cover free-to-air television channels, such as public broadcaster TDM’s, which unlicensed public antenna companies relay. The bureau said the arrangement “may be operated by one or more third parties appointed by the government, which may either be a public or private institution”. Macau Cable TV will probably be one of the third parties. In August the director of the Telecommunications Regulation Bureau, Lawrence Tou Veng Keong, said he had begun talks with Macau Cable TV about a new contract for the company after next April. Last month the government replaced Mr Tou with one of his deputy directors, Hoi Chi Leong. The bureau’s reply said nothing about the future role of public antenna companies, which have 70 percent of the market. It did not say if the new framework would entail putting contracts out to

More choice and more stable services are expected Telecommunications Regulation Bureau

public tender. The government has commissioned the University of Macau to do a study of the development of television services. An interim report is due in January. The bureau said the report would propose “feasible” ways to change the television market.

Thorough plan The bureau said the government would base the new framework on the university’s report, “subject to public opinion”. The final report, including suggestions for the long-term development of the market, should be finished next September.

The bureau said it would then make “a thorough development plan” based on the findings of the study and “the actual situation of the market”. The aim was to re-establish market discipline, it said. The government’s failure to stop the unauthorised activities of public antenna companies led to a prolonged court battle with Macau Cable TV. In July public antenna companies began relaying copyrighted television programming provided by Macau Cable TV as part of a deal with the concessionaire. The stop-gap deal was struck after the Court of Second Instance gave the government 90 days to stop public antenna companies from illegally relaying cable pay-television. The government is contesting in the courts an arbitrator’s decision that Macau Cable TV should be paid 200 million patacas (US$25 million) in compensation. The Telecommunications Regulation Bureau said there was “no doubt” that the cable television market would be opened up for competition. The bureau said the University of Macau’s final report would cover the licensing of pay-television. New pay-television licences would be issued, which “may result in more investment and more diversified services”, the bureau said. “More choice and more stable services are expected,” it said. With T.A.

Macau Cable TV’s exclusive, 15-year concession to supply cable television ends in April (Photo: Manuel Cardoso)

Worry about threats to heritage growing T

he United Nations Educational, Scientific and Cultural Organisation (UNESCO) is increasingly worried about threats to Macau’s World Heritage sites. UNESCO’s website says its threat intensity coefficient for the city’s World Heritage sites has risen to 41 percent this year from 36 percent last year. The coefficient is based on how frequently UNESCO’s World Heritage Committee has deliberated on Macau’s sites since they were listed in 2005. The coefficient rose after UNESCO warned Macau anew in May about deficiencies in its efforts to preserve its World Heritage sites. The government reported to UNESCO in February on the status of the sites. UNESCO responded by acknowledging what it called “the progress made in addressing the continuing inadequacy of the current management system” for defending the sites against hazards. UNESCO said the government had succeeded in preserving the views from protected monuments that had been threatened by proposed highrise buildings. In 2008 the government limited the height of all buildings around the Guia Lighthouse to 52.5 metres, which froze the construction of a block of flats that would have been 126 metres tall. But UNESCO said in May that flaws remained in the government’s efforts. It called for the government to finish by February 2015 its plan for managing the World Heritage sites. UNESCO has been asking for a management plan since 2005. It said the plan must comply with the cultural heritage protection law and the urban planning law, which were passed in August. During debate on the cultural heritage protection bill in March, members of the Legislative Assembly asked the government to improve its planning for the buffer zones around heritage sites. Research by the Institute for Tourism Studies shows that, after shopping, seeing heritage sites is the main purpose of visitors to Macau. But the institute found that in the third quarter of this year visitors were less satisfied with the World Heritage sites than with casinos or events. The Portuguese-language Jornal Tribuna de Macau first reported the story. V.Q.


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November 19, 2013 April 19, 2013

Macau

Dearth of new homes lifts prices of old flats But fewer sales off the plan brings down housing prices in general Stephanie Lai sw.lai@macaubusinessdaily.com

Curbs are effective, think-tank believes M

Almost half of the homes sold in the third quarter were flats over 20 years old (Photo: Manuel Cardoso)

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ould-be owner-occupiers are having to buy older homes now that pre-sales are in limbo – and the sellers are making them pay high prices, official data show. Almost half the homes sold in the third quarter of this year were flats over 20 years old, the Statistics and Census Service announced yesterday. In the second quarter only 15.3 percent were that old. Most of the older homes sold in the third quarter are in the Areia Preta, Iao Hon or San Kio districts of the peninsula. The average price was 51,992 patacas (US$6,511) a square metre, 7 percent more than the average price of such housing in the second quarter and 46.6 percent more than a year earlier. Another 37.8 percent of homes sold in the third quarter were between

11 and 20 years old. Most are in central Taipa or newly reclaimed areas of Areia Preta. The average price was 63,352 patacas a square metre, 2 percent more than the average price of such housing in the second quarter. Housing built within the past five years was still the most expensive in the third quarter, the average price being 100,401 patacas a square metre, 7 percent more than in the second quarter. The average price of housing in general fell to 66,936 patacas in the third quarter, 25 percent less than in the second as new rules on pre-sales slashed the number of unfinished flats sold. Only 90 unfinished flats were sold. In the second quarter 1,946 were sold. Since June the law has allowed the sale of unfinished flats only once the foundations of the building containing

them are completed and each flat is registered with the government. Estate agents have said the new rules have greatly reduced sales off the plan. The average price of unfinished flats fell to 97,902 patacas a square metre in the third quarter from the record average of 108,903 patacas set in the second. Most of the pre-sold flats are in newly reclaimed areas of Areia Preta, where the average price was 119,748 patacas a square metre, the highest in Macau. The next most expensive presold flats are on Coloane, where the average price was 94,489 patacas a square metre. The average price of office space rose to nearly 80,000 patacas a square metre in the third quarter, 23 percent more than in the second and 62 percent more than a year earlier.

easures the government took last year to curb property prices have had “some impact”, according to the head of the Policy Research Office, Lao Pun Lap. “From the home sales statistics in the third quarter of this year we can see that housing prices have not risen relentlessly,” Mr Lao said in a written statement which the government think-tank issued on Sunday. The average price of housing in the third quarter was 25 percent lower than in the second, but 15 percent higher than a year earlier, the Statistics and Census Service announced yesterday. Mr Lao said the number of homes sold “has also seen a drastic decrease”. In the third quarter over 1,900 flats were sold. In the second quarter, 4,059 were sold. “Statistics show that 95.8 percent of homebuyers are residents, while the proportion of non-resident buyers has greatly shrunk from 11.14 percent in 2010 to 2.8 percent now,” Mr Lao said. “That shows our tightening of mortgage terms and special stamp duty expansion have had some impact in curbing the heated speculation in the market, and have limited outside speculative capital from coming in.” In October last year the government expanded the special stamp duty to cover sales of offices, shops and parking spaces and put tighter restrictions on mortgage lending, especially lending to buyers from outside Macau. S.L.

Banks ready to fork out for deposit protection Fund set to get contribution of over 328 million patacas in January Vítor Quintã

vitorquinta@macaubusinessdaily.com

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acau’s banks will begin setting aside 0.05 percent of their deposits into a fund aimed at protecting bank deposits here, the government confirmed yesterday. The city’s 27 financial institutions will make in January their first annual contribution to the deposit protection scheme fund, equivalent to 0.05 percent of their deposits at end-October. The minimum contribution is set at 10,000 patacas (US$1,250), according to a dispatch from Chief Executive Fernando Chui Sai On published in yesterday’s Official Gazette.

Bank deposits hit 656 billion patacas in September, official data show. That means banks will fork out more than 328 million patacas, Business Daily calculations show. Such an input would be more than enough to put the fund set up last year on a stable foot. Executive Council spokesperson Leong Heng Teng said last year that at least 300 million patacas would be required to ensure the normal operation of the fund. The government kick-started the fund, which is run by the Monetary Authority of Macau, with a contribution of 150 million patacas. Compensation of up to 500,000

patacas for each account will be paid if a bank collapses. The deposit protection scheme fund aims to cover 95 percent of all deposits in local banks. The fund turns a temporary scheme into a permanent fixture. It was set up during the global financial crisis in 2008, when Internet rumours started a run on Wing Hang Bank Ltd. Two years ago, the International Monetary Fund called on the government to introduce a scheme to compensate depositors in banks that fail. Three committees were set up to manage the fund: one for

administration, one for consultation and one for oversight – led by legislator and lawyer Leonel Alves.


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November 19, 2013

Macau

Abe allies divided on casino bill Party may not back submitting bill to Diet this year

D A visitor at the Macao Gaming Show

Cotai casino openings to boost slot demand New industry report by Macau Polytechnic Institute released at Macao Gaming Show Tony Lai

tony.lai@macaubusinessdaily.com

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acau could need as many as 7,000 new gaming machines each year until 2017 to cater for the next wave of Cotai casino openings, says a new report commissioned from Macau Polytechnic Institute. The document ‘Research Report on Macao Gaming Industry’ was launched at the Macao Gaming Summit conference held during the Macao Gaming Show last week. The 7,000 new-to-market estimate is likely to be a gross increase rather than a net increase. Underperforming machines regularly get pulled from the highly competitive Macau casino floors. The attrition rate last year was as high as 20 percent suggests the report. According to data from the local regulator, the Gaming Inspection and Coordination Bureau, the number of slot machines in Macau fell 10 percent sequentially in the nine months to September 30, from the 16,406 recorded in the first quarter to 14,775 in the third quarter. On November 26 two Mocha Clubs – part of a chain of parlours mainly marketed to local players – will close according to a company announcement. It’s not so far been stated if the machines there will be re-assigned to other Mocha venues or possibly to parent Melco Crown Entertainment Ltd’s casinos. The good news market-wide, is that judged year-on-year, slot revenue actually climbed nearly 13 percent in the third quarter, to approximately 3.56 billion patacas (US$446 million) from nearly 3.50 billion patacas in the equivalent 2012 period. Zeng Zhonglu, an associate professor at the institute and main author of the report, told Business Daily he sees “great potential” for new machine installations market in the city – especially as more mainland visitors start to see slot machines as

entertainment. His study was presented at the new trade event, organised by the Macau Gaming Equipment Manufacturers Association and held at the Venetian Macao. The document said the expansion by the territory’s six gaming operators on the Cotai strip – with the first wave of new properties opening between 2015 and 2018 – will create demand for a net increase in the market of up to 10,000 new machines. MGM China Holdings Ltd has said in regulatory filings it is seeking up to 2,500 slot machines on its new MGM Cotai site, which is due to open in 2016.

13 %

Year-on-year increase in slot revenue in Q3

Based on an annual market replacement rate of 20 percent applied to the 16,585 slots the gaming bureau recorded in Macau in the fourth quarter 2012, “Macau needs at least 5,700 gaming machines annually in the coming four years”, said Mr Zeng. In the nine months to September 30, slot revenue accounted for 4.1 percent – 10.61 billion patacas (US$1.33 billion) – of total casino gambling revenues. “Mainland tourists, major gamblers here, have a limited history of involvement in legal casino gambling,” the scholar told Business

Daily. “[They] gamble in casinos to ‘win big bucks’ so they prefer table games involving larger amount of bets to gaming machines.” He added: “[But] when the mainland tourists have more casino experiences they will have more accurate knowledge about gambling, changing to gambling for entertainment than gambling for winning big.” Mr Zeng said gaming jurisdictions in the United States and Australia had experienced similar shifting attitudes toward gambling.

New law Mr Zeng attributed the decline in number of the slots this year to a new regulation announced by the government last November. The new bylaw mandates that not only must Chinese be available as a player option at the player interface but also at the ‘back end’ of the machine – i.e., the programming. A six-month grace period starting this January was given for the machines and games to meet the new standards. “As there are changes in the law, the manufacturers have taken out some gaming machines from the market for adjustment but the number [of slots] will start to rebound soon as the companies are getting more used to the rules,” suggested Mr Zeng. He added the new bylaw “can also help to increase the popularity of the gaming machines” because it establishes a legal minimum return to player – in terms of prizes paid out – of between 80 percent and 98 percent of all monies bet. The scholar suggested that previously some machines had paid only 70 percent of wagers as prize money, and that had put some tourists off slots.

ifferences among members of Japanese Prime Minister Shinzo Abe’s coalition partner mean the party may not back submitting a bill to legalise casinos in the current session of parliament. “I don’t necessarily think we will reach consensus on submitting the bill to the current session and moving forward with it in the limited time we have,” Natsuo Yamaguchi, leader of the New Komeito party, said in an interview yesterday in Tokyo. A cross-party group of lawmakers has said it is preparing to submit the casino legalisation bill to parliament in the current session, ending on December 6. They hope this will boost tourism by leading to the development of “integrated resorts,” with gambling alongside other kinds of entertainment. Japan has long been touted as an attractive gaming market with a large and relatively rich population base. The country may generate US$10 billion (79.9 billion patacas) revenue a year if it opens up, Union Gaming Group LLC estimated. Mr Yamaguchi said the public lacked “full understanding” of the casino issue and said there were potential drawbacks, such as the effect on young people. If the bill is not submitted now, it would have to wait for the next parliamentary session starting in January. Galaxy Entertainment Group Ltd deputy chairman Francis Lui said the casino operator would consider investing at least US$5 billion in Japan and Taiwan if allowed. All Galaxy’s Macau market competitors have expressed an interest in Japan. Japan Restoration Party – founded by former Tokyo governor Shintaro Ishihara – is proposing its own parliamentary bill for integrated resorts, independent of the one drafted on behalf of the government. A cross-party parliamentary group plans to submit the JRP’s bill with “further modifications” as its version of the integrated resorts promotions bill. That will happen before the end of the current Diet session, Akiyoshi Tsuruoka, general manager of Tokyobased consultancy Gaming Capital Management Inc, told Business Daily last week. T.A./Bloomberg News

Yamaguchi says public lacks ‘full understanding’ of casino business


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November 19, 2013

Macau

Wynn Resorts hires lobbyist on ‘U.S.-China’ issue Congressional commission in June attacked Macau for ‘lax’ regulation of casino VIP rooms Michael Grimes

michael.grimes@macaubusinessdaily.com

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asino developer Wynn Resorts Ltd has hired a United States-based lobbying firm to represent it in Washington D.C. on a “foreign investment issue before the U.S.-China Economic and Security Review Commission”. In June the congressional body issued a transcript of its latest hearings that included strong criticism of Macau, saying it had “a lax regulatory system for its casinos, which has allowed traditional Chinese organized crime figures to operate in Macau with impunity”. Business Daily asked Wynn Macau Ltd for more information on what work the lobbying firm would be doing for the parent company, but no reply was available by press time yesterday. But a specialist website called Corporate Counsel reported that one of the lobbyists – Michael Levy – met with members of the congressional panel last month to discuss Wynn Resorts “very strong” approach to anti-money laundering and other law enforcement issues in Macau.

The U.S. Department of Justice said in April it was conducting an investigation into Wynn Resorts’ 1.1 billion patacas (US$138 million at current prices) donation in May 2011 to the University of Macau Development Foundation. The bequest – spread across ten years – was announced at a time when the firm was still seeking Macau government permission for a Cotai project. But Wynn Resorts reiterated in a press release last week it has “never received a target letter or subpoena with such an investigation”. The company added the U.S. Securities and Exchange Commission disclosed in July “that it would not recommend any enforcement action in the matter”. Lobbyist Mr Levy is a former senior advisor to the secretary at the U.S. Department of the Treasury, according to a filing made to the U.S. House of Representatives by his lobby firm Brownstein Hyatt Farber Schreck, LLP. Working with Mr Levy on the Wynn account is Marc Lampkin, a former counsel

Steve Wynn – defends Macau

to the House Education and Labor Committee – as it was called until 1995. During separate hearings on October 17 to discuss Wynn Resorts’ suitability for a Massachusetts casino licence, Mr Wynn appeared at times to be exasperated at some U.S. lawmakers’ and regulators’ approach

to the Macau issue and also to the media’s portrayal of the territory. Mr Wynn told the Massachusetts Gaming Commission: “Macau is a legitimate place. And if people that work for the state of Massachusetts want to use anecdotal information, I want to challenge them if I get the chance. And I will if it involves my company. But there are people saying things, printing things that are grossly irresponsible.” Mr Wynn went on to suggest the mainland authorities had a big role in keeping Macau clean. “The state security police of the People’s Republic of China is a mainland law-enforcement agency. They operate with enormous authority. And they are omnipresent in Macau. And they watch everybody and they question us about certain customers,” he stated. “Assiduously, relentlessly, they are looking for public officials who are gambling with the people’s money. It is a death penalty. And the victim, the family pays for the bullet,” Mr Wynn added.

Corporate Galaxy renews training deal with tech body Gaming operator Galaxy Entertainment Group Ltd (GEG) has renewed a bilateral agreement with the Macau Productivity and Technology Transfer Centre on Friday. Galaxy workers will have access to training courses in areas such as language skills, management skills, occupational skills and computer applications. The company is committed “to nurturing the professional and personal growth of our team members,” said Trevor Martin, senior vice president of Human Resources of Galaxy. The operator hopes the courses will “give our team members a strong enticement to pursue continuing education and professional qualifications,” he said in a statement. “We are very delighted that GEG is able to recognise the importance of its team members,” said Shuen Ka Hung, director-general of Macau Productivity and Technology Transfer Centre. Since signing a cooperation agreement in 2012, Galaxy and the technology centre have co-organised 1,400 hours of training courses for over 1,400 workers.

CTM won award on corporate strategy Companhia de Telecomunicações de Macau SARL (CTM), the city’s major telecommunications operator, has received the Outstanding Corporate Strategy Award 2013 conferred by Hong Kong’s Sing Tao Magazine Group Ltd. According to the election committee, CTM has been introducing innovative service concepts and elements to enable residents to experience intelligent customer services. The company has been promoting the growth of Macau’s telecom industry by applying the advantages of information technology in telecom service delivery, the committee added. CTM was the only telecom operator in Macau awarded the Outstanding Corporate Strategy Award. Only one other Macau company received this recognition, CTM said in a statement. The award acknowledges the company’s commitment in serving the community for more than 30 years, said Ebel Cham, CTM vice president of commercial. Speaking at the awards ceremony, Ms Cham said it proves the success of CTM’s branding and marketing strategies.

Barrier Gates Removal Schedule for the 60th Macau Grand Prix The Macau Grand Prix Committee began removal of the barrier gates immediately after the end of the event. The first stage of deconstruction has been completed early the next morning. We hope to minimize any inconvenience caused to the public. It is expected the entire circuit will re-open on 28th November.

Date

Hour

18-20/11/2013

08:00 to 22:00

Area (1) (2)

To remove all barrier gates To remove all barriers along the barrier gates

18-22/11/2013

08:00 to 22:00

To remove all barrier gates from Avenida da Amizade to Reservoir Bend

21/11/2013 28/11/2013

08:00 to 22:00

To remove all barrier gates from Rua dos Pescadores to Reservoir Bend

23/11/2013 28/11/2013

08:00 to 22:00

To remove all barrier gates at the lower part of the Guia Hill

The Committee seeks the understanding of motorists for the inconvenience caused by the construction, as well as to respect the temporary signage and instructions from the Traffic Authorities. For further information, please call 2872 8482.


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November 19, 2013 April 19, 2013

Macau MTR to study LRT ticket system The Hong Kong MTR Corporation Ltd will carry out a study on the ticket sales system to be used in Macau’s Light Rapid Transit railway, according to yesterday’s Official Gazette. MTR will be paid 3.71 million patacas (US$465,000) for the study, which would be ready next year, says a dispatch signed by Chief Executive Fernando Chui Sai On. The elevated railway was scheduled to open in 2015. However, the construction work for the Taipa section is six months behind schedule and the Macau section is more than a year and a half behind, government officials have said.

Ao had ‘limited’ role in La Scala: witness Land bureau boss denies pressure to benefit HK businessmen over plots Tony Lai

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isgraced secretary Ao Man Long had a “limited” role in relaxing the height cap for the land plots involved in the corruption trial of two Hong Kong tycoons, an official said in court yesterday. Joseph Lau Luen Hung and Steven Lo Kit Sing are accused of bribing Mr Ao, former secretary for transport and public works, with HK$20 million (US$2.58 million) to secure the land where high-end housing project La Scala was being built. Jaime Carion, director of the Land, Public Works and Transport Bureau, said the chief executive and the secretary for transport and public works have “a limited degree of participation” in land development procedures. “It is usually left for the government departments to carry out technical analysis and draft a report,” he told the Court of First Instance. Lei Tong Leong, investigative division chief of the Commission Against Corruption, claimed in July that Mr Ao helped the two Hong Kong businessmen in easing the height cap. The cap for that area near the airport was 90 metres but for some La Scala infrastructures it was eventually raised to 158 metres, said Mr Lei at the time. Mr Carion, whose bureau oversees

land development, said yesterday he “did not receive any direct or indirect orders” from Mr Ao on the issue. “The former secretary only asked me to discuss [the project] with the Infrastructure Development Office until the conditions for the execution of any development plan were met,” he said. Both departments carried out “numerous meetings” in 2006 and 2007 with other public bodies, such as the Civil Aviation Authority and the Civic and Municipal Affairs Bureau, the official said.

Photo by Jornal Tribuna de Macau

Tony.lai@macaubusinessdaily.com

I did not receive any direct or indirect orders [from Mr Ao] on the matter Jaime Carion, director of the Land, Transport and Public Works Bureau

Development window The original development plan could affect the airport’s radar system and reduce the dimension of public leisure area planned for the area, Mr Carion explained. His bureau only gave its opinion on the project in 2007, after listening to different government departments, he said. It “never had meetings with the land developer” Moon Ocean Ltd on the process. The report backing the construction of infrastructure as tall as 158 metres was then submitted for the approval of the new secretary, Lau Si Io, Mr Carion added. Mr Ao was arrested in December

2006. He has been sentenced to jail for 29 years and a half for corruption and money laundering in earlier trials. Mr Carion’s bureau turned down a request filed by the developer in early 2006, during the land grant procedures, to extend the development period. “At the time I thought they had enough time to develop the land,” said the director. “And the [former] secretary agreed.”

Mr Carion said the final decision allowing Moon Ocean – originally controlled by Mr Lo and later bought out by Mr Lau – to take over the La Scala land belonged to then chief executive Edmund Ho Hau Wah. The official said that during his “many years as a civil servant” Macau’s leader “has never turned down” a recommendation from the land secretary, he added. The trial will resume on December 2.

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77

November 19, 2013 April 19, 2013

Macau

Sa Sa H1 profit jumps 26.7 pct The cosmetics retailer says sales in Macau and Hong Kong benefited from resilient domestic demand Stephanie Lai

sw.lai@macaubusinessdaily.com

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osmetics retailer Sa Sa International Holdings Ltd’s sales in its core markets, Macau and Hong Kong, rose to HK$3.07 billion (US$396 million) in its financial first half ended September, 19.9 percent more than a year earlier. Sa Sa told the Hong Kong Stock Exchange yesterday that sales had benefited from resilient domestic demand and strong tourist demand. The company’s unaudited first-half results show a profit of HK$357.4 million, 26.7 percent more than a year earlier. Overall turnover in Macau and Hong Kong rose by 18.9 percent to HK$3.13 billion, and profit after tax in these markets rose to HK$374.8 million from HK$283 million. Sa Sa has seven shops in Macau. “Retail sales growth momentum in Hong Kong and Macau remained strong, with same-store sales and

operating costs. “The group was still subject to high rental increments for renewals,” the company said. “The rentals of several tourist area stores were still much higher in the first half of 2013 in new lease terms as compared to three years ago,” it said. “Front-line and backoffice staff costs also increased due to the strengthening of incentives to retain good and experienced staff in the midst of serious understaffing problems in the retail industry.”

Not so powerful Sa Sa’s retail sales in Hong Kong and Macau were HK$3.07 billion in its financial first half

[the] same-store number of transactions rising 13 percent and 5.7 percent in the period, respectively,” Sa Sa told the stock exchange. The company said

customers had spent more in its retail outlets. But it said high rents for its shops and increased staff costs in Hong Kong and Macau had added to

Sa Sa’s gross profit margin widened to 47 percent from 45.7 percent. The company’s basic earnings per share rose to 12.6 Hong Kong cents from 10 Hong Kong cents. It proposed an interim dividend of 4.5 Hong Kong

cents per share. Sa Sa said more mainlanders, especially people from second-tier and third-tier cities, were coming to Macau and Hong Kong, but added: “Their spending power is clearly less than visitors from first-tier cities.” The company expects the momentum of growth in its sales to be maintained in the coming year, supported by improved transport from the mainland to Hong Kong and Macau and the strength of demand for cosmetics among visiting mainlanders. It said it would try to sell more of its own brands to widen its gross profit margin and offset rising costs. Sa Sa increased the number of shops it has in Greater China, Singapore and Malaysia to 271 from 260 in its financial first half. The company increased the number of shops it has in Hong Kong and Macau to 103 from 97.


88

November 19, 2013 April 19, 2013

Greater China

Record surge in property prices Home prices jump as Guangzhou, Shenzhen lead advances Xiaoyi Shao and Natalie Thomas

halt as real estate is a major driver of the economy, supporting some 40 other industries and generating about 16 percent of the country’s US$8.5 trillion GDP. Property prices have climbed despite slower economic growth and government efforts to curb them in large part because of the view that property is one of the best investment options, and also due to local government land sales for much-needed revenues.

Tax scheme

New home prices jumped 21 percent from a year earlier in Guangzhou

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hina’s plans to stabilise its runaway property market face a stiff challenge after home prices surged to fresh record highs in October, with the measures likely to take a few years to have their desired impact. Home prices in large Chinese cities have continued to set records despite a four-year long government campaign to cool the market, adding to the threat of a price bubble and social unrest as housing becomes increasingly unaffordable. Responding to these concerns, the leadership pledged to push forward property tax legislation and allow farmers to sell their land more freely as part of its boldest set of economic and social reforms in nearly three decades. Analysts said timing is the key. While the measures in the reform plan are aimed at long-term stability for the property market, any delay in the implementation could be problematic. “The whole picture is that the central government is trying to transfer the property controlling mechanism from the short term to the long term,” said Edison Bian, property analyst with China Construction Bank International Securities Ltd

in Hong Kong. “Next year is crucial for them to introduce long term controlling policies. If that’s the case then there’s nothing to be worried about. If they miss these golden opportunities then we’re going to start to worry about a collapse on a wider scale,” Mr Bian said.

Guangzhou lead Average new home prices in China’s 70 major cities in October rose a record 9.6 percent from a year earlier, according to Reuters calculations from National Bureau of Statistics data yesterday. It was the tenth straight month of year-on-year increases. The latest data showed prices in the largest cities continued to charge ahead. Prices in the capital Beijing rose 16.4 in October from a year ago, with Shanghai up 17.8 and the southern cities of Guangzhou and Shenzhen up about 20 percent. All four cities posted the largest gains since the data series began in January 2011. Beijing, Shanghai and Shenzhen have already announced a number of tightening measures, including raising

KEY POINTS Home prices hit fresh record highs in October Long-term reform plans on the way Expanding property tax weighs on the market More details needed to gauge how far efforts would go

minimum down payments for secondhome buyers, making more land available and pushing forward the construction of affordable housing. Such measures seem to be having some effect, with home prices rising 0.6 percent from the previous month in October nationwide, easing from September’s gains of 0.7 percent. Month-on-month gains had topped 1 percent as recently as April. Policymakers are keen not to bring the market to a shuddering

Most analysts expect a broad implementation of the property tax is top of the agenda, though it would still take time due to a complicated legislation process. “The promised property tax, if implemented in a wide area, will likely discourage investment in properties as the carrying cost becomes more apparent and increase the supply of homes for the rental market,” UBS AG economist Tao Wang said in a note to clients. “But the legislation and the implementation will likely take quite some time. We think the earliest possible time for a widespread property tax would be in 2015,” Ms Wang added. Currently property tax is levied annually on owners of spacious and expensive homes in the two pilot cities, Shanghai and Chongqing. But the tax has had little effect due to its low rate and limited coverage. “The question over the property tax is whether they are going to increase the tax rate and cover more existing homes, there are still no details,” said Liu Yuan, a head of research at property consultancy Centaline Property Agency Ltd in Shanghai. Analysts said the proposal to allow rural construction land to be transferred to the urban land market is expected to increase land supply and eventually lead to lower land prices. “With land reform in the future local governments will no longer be the only ones selling the land, rural residents will be participating in the land market as well,” said Jinsong Du, property analyst with Credit Suisse in Hong Kong. “If local governments’ attitudes towards land sales change completely, then the whole dynamic of housing prices, housing supply and demand will change as well.” Reuters

Hong Kong stocks soar as China reforms cheered

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hinese shares listed in Hong Kong posted their biggest gain in nearly two years yesterday, led by non-banking financial and consumer counters as investors cheered Beijing’s announcement of its most sweeping economic and social reforms in decades. The China Enterprises Index of the top Chinese listings in Hong Kong soared 5.7 percent in its biggest daily

gain since December 1, 2011. The Hang Seng Index ended up 2.7 percent at 23,660.1 points, its highest close since February 4. Gains came in the strongest turnover also since February 4, totalling some US$14.5 billion. The Hang Seng A-H share index closed at its lowest since December 13, suggesting H-shares are now trading at their biggest premium

to the onshore markets in 11 months after yesterday’s outperformance. HSBC Global Asset Management expects emerging markets to play catch-up with stocks in the developed world, with Chinese shares well positioned to lead the rebound, its AsiaPacific chief investment officer told the Reuters Global Investment Outlook Summit in Hong Kong.

UBS Asia equity strategists upgraded their view on China H-shares to overweight from neutral, believing a Chinese re-rating is likely to steal the limelight after Beijing surprised on the scope and tone of the document containing details of reforms agreed to at this month’s party plenum. The document, released on Friday, relaxed China’s one-child policy and further

frees up markets in order to put the world’s secondlargest economy on a more stable footing. Citic Securities Co Ltd, China’s largest listed brokerage, surged 13 percent in a record gain in Hong Kong, while infant formula producer Yashili International Holdings Lt spiked 9.7 percent to a record high. Reuters


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Greater China

Policy bank sells ABS in securitisation push China Development Bank sells 8 bln yuan in asset-backed securities

Sale aims to securitise loans to China’s railway sector

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hina Development Bank (CDB) sold 8 billion yuan (US$1.3 billion) in securities backed by the bank’s loans to the state railway operator yesterday, traders said, leading the government’s latest push to develop the asset securitisation market. CDB, one of three Chinese policy lenders that support government-backed projects, issued the asset-

backed securities (ABS) in the Shanghai-based interbank market. CDB conducted the deal under an ABS pilot programme launched in 2005. The government announced in August that it would aggressively expand the pilot programme. Regulators have not yet officially announced new ABS quotas, but market participants expect them

to grant 300 billion to 400 billion yuan in quotas for banks and other companies to sell ABS in the coming years. After China launched the pilot in 2005, about a dozen firms, including CDB, floated a combined 67 billion yuan before the scheme was suspended in 2008 due to the global financial crisis. The scheme resumed in 2012 with firms given a total ABS quota of 50 billion yuan,

and about half of that has been used. CDB’s ABS were sold at a yield of 5.60 percent, the upper limit of its offered range of 0.55 to 0.85 basis points below the central bank’s benchmark lending rate of 6.15 percent for one- to three-year loans. The high yields were due to tight liquidity conditions in the interbank market, where the central bank has kept

cash relatively tight. In another sign of the impact of tight liquidity on demand, the ABS were only 1.1 times subscribed, with bids totalling 8.41 billion yuan, traders said. The relatively high yields occurred despite the fact that China Credit Rating Co gave the ABS a rating of AAA based on the credibility of the borrower, the state-owned giant China Railway Corp. Chinese policymakers see securitisation as a tool to shift risk away from the banking system to reduce the chances of a financial crisis as economic growth slows and the level of bad loans rises. Reuters reported last month that foreign banks have been invited to apply for permission to issue ABS for the first time since the pilot programme was launched in 2005. The government has often chosen CDB to take the lead in rolling out innovative financial products. The bank is likely to take up to 100 billion yuan in the new ABS quota mainly to securitise its loans to China’s railway sector, vital to the country’s growth. Reuters


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Greater China

ILFC bidders to add backers to group

analysis

Richard Tsai would assume central role in the group Cathy Chan and David Welch

pay US$4.2 billion for 80 percent of the unit. AIG had previously said it expected the deal to be completed in the second quarter. New China Trust Co pulled out of the bidding group in May, a person with knowledge of the matter said earlier.

Reforms to extend commodity boom, boost competition

Clyde Russell

Reuters market analyst

IPO option

AIG has sought to sell ILFC since 2008

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aiwanese tycoon Richard Tsai and Chinese financier Xiao Jianhua are in talks to help fund a US$4.2 billion bid for American International Group Inc’s aircraft-leasing unit, three people with knowledge of the matter said. The family of Mr Tsai would assume a central role in the group that has agreed to buy International Lease Finance Corp, said the people, who requested anonymity because the details are private. Mr Xiao would mainly be involved in providing financing, one person said. The involvement of both businessmen may help the group, which has been led by Hong Kong-based P3 Investments Ltd, bridge a funding gap that’s held up the deal for several months. AIG has sought to sell

ILFC since 2008 when it began divesting units to repay a U.S. bailout. Closing the deal, which was announced last year, would help AIG chief executive Robert Benmosche cut debt at the New York-based insurer. The makeup of the group has not been finalised and there are several parties considering taking part in the deal, the people said. Mr Tsai, the son of Taiwan’s second-richest man, is also a limited partner in P3 Investments, two people said. The Committee on Foreign Investment in the U.S. will only approve a sale of ILFC if there is no dominant shareholder in the consortium, one of the people said. The deal has suffered several missed deadlines by the original group of investors, who agreed last December to

The bidding group is seeking to borrow US$2.1 billion from lenders including Taiwan’s Mega International Commercial Bank Co and Bank of Taiwan for the ILFC purchase, two people said. Mr Tsai declined to comment on in an e-mail from his office, as did a representative for Mr Xiao and spokesmen for AIG and ILFC. Mr Xiao said in an interview with 21st Century Business Herald in May that he is interested in participating in the bid for ILFC, citing the potential to profit from an initial public offering of the company immediately after buying it. Fubon Financial Holding Co is also interested in the deal, Mr Xiao told the Chinese newspaper at the time. Mr Tsai is vice chairman of Fubon Financial. The insurer said in 2011 that it could cut its stake through an initial public offering, and CEO Benmosche said as recently as November 1 that AIG can pursue an IPO to divest ILFC if the China deal collapses. Bloomberg News

Greenland plans Sydney hotel

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reenland Holding Group Co, the builder of one of China’s tallest towers, plans to construct 1,000 apartments on a Melbourne site and expects to open a five-star, 180-room hotel in Sydney by 2015. The state-owned developer is seeking to finalise the purchase of the land from the Victoria Racing Club by the end of 2013, Sherwood Luo, managing director of Greenland Australia, its Sydney-based subsidiary, said. It will also convert one of the two buildings it agreed to buy in Sydney’s centre in March into a boutique fivestar hotel, he said. Greenland, which entered Australia this year to capitalise on rising home prices and growing demand

from Chinese buyers, plans to turn the other building on the site into Sydney’s tallest residential tower. The push into Melbourne, following a 7 percent increase in apartment prices in the nation’s biggest cities this year, is part of Greenland’s plan to invest more than A$1 billion (US$934 million) in Australia in two years. The Sydney tower “will attract both local and mainland buyers, because it’s the best location in town, it’s close to public transport and it’s an iconic building,” Mr Luo said in an interview in Sydney. “Australia is a great destination for investment and we’re looking for other sites.” The company expects to begin sales at the Sydney tower this month, and sell about half of them within

a month, chairman Zhang Yuliang told reporters in Shanghai in October. It will market the 500plus units – which start at A$528,000 for a studio apartment and could climb to “a few million” for the penthouses – in Sydney, Shanghai, Hong Kong and Singapore, Mr Luo said. A date for the start of construction depends on development approval, which it is in the process of obtaining, he said. In Melbourne, Greenland entered into talks with the Victoria Racing Club last month on two parcels of land next to the Flemington Racecourse, home of the Melbourne Cup Carnival. The company will build a tower that includes some retail, Mr Luo said. Bloomberg News

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hina’s planned economic and social reforms should have the effect of extending the decade-long boom in demand for commodities, while at the same time making that demand more price sensitive. While the 60-point reform plan still needs to be fleshed out, initial indications are that the appetite for resources by the world’s biggest commodity buyer is far from finished. From a longer-term perspective the most important parts of the plan include lifting the restrictions on rural migration to smaller cities and easing them for medium-sized cities. This alone should ensure that China’s demand for iron ore, copper and other base metals remains robust as housing and infrastructure is created across the country to cater for rising urbanisation. Much of this activity will also fly beneath the radar, as it will take place away from the mega-cities such as Beijing and Shanghai, but this doesn’t mean the commodity demand will be any less real. Although not one of the 60 points of the Communist Party plan, the overall effect is clearly aimed at raising the income levels for millions of people and moving them into a consumerled society. This has positive implications for overall commodity demand through increased buying of motor vehicles and white goods, but also for agricultural imports, particularly soybeans, as people move up the protein chain. Increased consumption of animal proteins means a boost in demand for soybean meal used as feed for most livestock. China’s output of soybeans has also been largely stagnant for the past 15 years as the nation concentrated on increasing production of grains like wheat. This means that China, already the world’s biggest soybean buyer, may have to increase imports at a faster rate in coming years. The proposed land reforms may result in more efficient farms, but much will depend on how much land is allowed to be sold, who is allowed to buy it and how the revenue from land sales is distributed. The other main element of the plan relates to allowing market pricing to play a greater role in pricing commodities. China has been moving in this direction in recent years, especially with relation to refined fuels, and continuing this path will help align its domestic markets more closely with those for the rest of the world. If oil products are priced according to global market signals, this will result in far quicker reactions to changes as demand adjusts to either higher or lower costs. While this may do little to alter the overall import demand for crude oil over the longer term, it will make

it more volatile and responsive to changes in global prices.

LNG role Perhaps the market with the biggest potential for change is liquefied natural gas, which is currently at a competitive disadvantage as its landed cost exceeds the regulated prices in China’s domestic market. Allowing natural gas prices to rise closer to the cost of supply may boost demand for LNG, although it’s likely that the government will maintain a role in regulating prices paid by the retail sector in order to help maintain social stability. There are also implications for global seaborne coal supplies, with the current trend of the price of Chinese domestic supplies capping the international price likely to be strengthened. In a deregulated market, Chinese power producers could buy coal from whoever offers the best price, meaning international producers will have to match domestic miners, especially since the availability of domestic supplies has been improved by better rail infrastructure. This is hardly bullish for global coal miners, given low domestic prices in China and efforts to curb the use of the fuel in order to cut pollution. Another plank of the reform plan is allowing more private competition with large state-owned companies and more joint ventures. This may serve to lessen the grip of energy majors such as PetroChina and Sinopec and in theory should make China’s market more efficient. More efficient markets may actually slow growth in demand by cutting subsidies, reducing wastage and increasing competition, but the main effect should be to make markets more price sensitive. For example, a flare-up of tensions in the Middle East resulting in a spike in oil prices should translate more quickly into a drop in Chinese imports than in the past. Another point in the plan is a commitment to financial reform and the hint of full yuan convertibility. This opens up the possibility that China will be able to establish commodity pricing benchmarks more aligned with its demand profile, which, in the case of oil, could challenge the global dominance of Brent and West Texas Intermediate contracts. Finally, it remains to be seen how these 60-points will be implemented, and much of the impact will depend on the details. For the time being it looks like China’s leadership is serious about moving to a more market-orientated and consumer-led economy, and importantly for commodities, one that still has a long way to travel down the road of industrial and urban development. Reuters


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Asia

Thailand cuts growth forecast Economy grows slower than expected in third quarter

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hailand cut its growth forecast for the year after the economy expanded less than analysts estimated last quarter and weakening exports damp the outlook for consumption and investment. Gross domestic product rose 1.3 percent in the three months through September from the previous quarter, the National Economic & Social Development Board said in Bangkok yesterday. That was up from a revised flat reading in the prior quarter but missed expectations for 1.7 percent growth in a Reuters poll of economists. Compared with a year earlier, third-quarter gross domestic product rose 2.7 percent, against 2.9 percent forecast in the Reuters poll and a revised 2.9 percent increase in the previous three months. Prime Minister Yingluck Shinawatra’s administration has tried to speed up budget disbursement and boost local demand as plans to spend 2 trillion baht (US$63 billion) on infrastructure and 350 billion baht on water manage­ ment projects have stalled. Consumer confidence in October fell to the lowest level in 20 months as protests grew against a bill that would have provided amnesty for political offenses stretching back to the nation’s 2006 coup, allowing the return of her exiled brother Thaksin. “Confidence appears to

Domestic consumption slowed in the third quarter

have taken a hit at least partly from the protests, and personal consumption looks to have weakened further in the fourth quarter so far,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd in Singapore. “We need to see if external demand picks up in 2014 and offsets some of the drag in the domestic economy. The government’s infrastructure spending is now more crucial than ever.” The state agency cut its full-year expansion forecast to 3 percent from a range of 3.8 percent to 4.3 percent projected in August, and said the economy may grow 4

percent to 5 percent in 2014. It said it expected no export growth this year, from an earlier estimate of 5 percent. Household consumption fell 1.2 percent last quarter from a year earlier, the NESDB said. Public investment slumped 16.2 percent from a year ago as both government construction and investment in machinery and equipment declined, it said. “The political-risk factor normally hurts tourism,” Arkhom Termpittayapaisith, secretary-general of the state planning agency, told a news conference yesterday. “So far we haven’t seen any impact on the economy.”

KEY POINTS GDP rose 2.7 pct in Q3 on-year 2013 growth forecast slashed to 3 pct Exports, domestic demand weak Economists expect no policy rate change

Demonstrations that have drawn as many as 30,000 people have already hurt tourism and investor confidence, central bank governor Prasarn Trairatvorakul said on November 10. The Bank of Thailand last month held its benchmark interest rate at 2.5 percent for a third meeting. It meets next on November 27 for its last review this year, and economists expect it will remain on hold for some months. Prolonged unrest could shave 0.5 percentage points from the nation’s GDP in 2014, according to a BNP Paribas SA research note. Reuters

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Haiyan to cost insurers sliver of estimated damage Total damage from the storm at US$14.5 billion, says AIR Worldwide

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uper Typhoon Haiyan, one of the strongest storms to hit land, may cost insurers as much as US$700 million in the Philippines, a fraction of estimated damage, because few people are covered, a catastrophe modeller said. Total damage to residential, commercial and agricultural properties from the storm will be as much as US$14.5 billion, AIR Worldwide said on Sunday in a statement. Insured losses will probably be at least US$300 million, AIR said. Haiyan slammed into central Philippines on November 8, knocking down buildings and trees, flattening crops and destroying an airport. The storm displaced more than 3.9 million people, authorities said, and foreign governments have been increasing

pledges of assistance as the scope of the destruction becomes clear. Soldiers were dispatched to prevent looting as survivors scoured for food. “Tacloban City was particularly hard-hit as storm surge depths as high as 4 metres destroyed every coastal home and left many inland

neighbourhoods inundated with floodwaters,” Peter Sousounis, senior principal scientist at AIR, said in the statement. “The storm maintained impressive wind speeds as it traversed the Philippines.” The storm killed at least 4,460

people, making it one of the deadliest in Philippine history, according to the United Nations. The storm left 18,175 people injured and 1,590 missing, according to the National Disaster Risk Reduction and Management Council. It’s difficult to accurately estimate insured losses in the Philippines as no known anemometers in the area of the storm’s landfall remain intact to provide the storm’s strength, AIR said. The Philippines is one of the countries most at risk of natural disasters, according to Maplecroft, a research company based in Bath, England. The Asian Development Bank estimates that losses from typhoons and earthquakes in the Philippines average US$1.6 billion annually, the highest in Southeast Asia. Bloomberg News


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Asia

Japan Inc profits up as CEOs Restructuring and weaker yen fuelling quarterly gains Anna Mukai

Australia ‘spied on Indonesia leader’ Australian intelligence agencies tried to listen to Indonesian President Susilo Bambang Yudhoyono’s phone conversations, the Australian Broadcasting Corp reported, citing documents leaked by U.S. whistle-blower Edward Snowden. Mr Yudhoyono’s mobile phone activity was tracked for 15 days in August 2009, the ABC said on its website. At least once, intelligence agencies tried to listen to a conversation but the call ran for less than a minute and couldn’t be tapped, it said. A spokesman for Australia’s Department of Foreign Affairs and Trade said the government doesn’t comment on intelligence matters. Indonesia, the world’s most populous Muslim nation, is a key transit point for asylum seekers attempting to enter Australia by boat, and Prime Minister Tony Abbott is seeking more Indonesian cooperation to stem the flow of arrivals. The relationship between the two nations, often fractious since World War II, has improved under Mr Yudhoyono’s leadership, although he can’t run for a third term in elections due next year. The Australian government “urgently needs to clarify on this news, to avoid further damage,” Mr Yudhoyono spokesman Teuku Faizasyah told reporters by mobile phone message yesterday. “The damage has been done.”

Walmart finds safety issues in Bangladesh Wal-Mart Stores Inc said it has found safety problems at some of the factories in Bangladesh with which it does business, and that most of those factories have since made improvements. The U.S. retail group tested the safety of more than 200 factories, a company spokesman said in an email late on Sunday. “Of these, 32 had failures in their initial inspections, but all but two have since addressed those issues.” Walmart has posted on its website the inspection reports of 75 factories, and will post the remainder as they are completed, the spokesman said. Of the 75 factories, two failed safety inspections because remediation was not possible, and one closed down because the owners are building a new facility, the spokesman said. Companies are pushing for improved safety in Bangladesh after 1,129 workers were killed in the collapse of a garment plant in April, and another 112 people perished in a factory fire in November last year.

Aquino criticises typhoon response Philippine President Benigno Aquino has criticised authorities in some areas for not being fully prepared for the devastation caused by Typhoon Haiyan. During a visit to the coastal town of Guiuan, he praised local officials for carrying out a proper evacuation, but said it was in contrast to other towns. Mr Aquino has been criticised for his own government’s response. The typhoon, which had some of the strongest winds ever recorded on land, also left about 500,000 people homeless. Guiuan, in Samar province, was the first town hit by the typhoon as it came ashore on November 8. Mr Aquino said the evacuation ordered by the mayor had limited deaths there to fewer than 100. But he suggested officials in other places had not been so well prepared. “As your president, I am not allowed to get angry even if I am already upset,” he told reporters. He said that he would have to “stomach” his anger. He also urged people to show patience. “Our main problem now is feeding 1.4 million people every day. But the government has the resources and we’re moving faster.”

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apanese companies that made tough decisions about exiting businesses, closing factories and revamping management led a doubling of corporate earnings last quarter to the highest level since 2007. Net income jumped to about 5.5 trillion yen (US$55 billion) at more than 1,280 of the largest listed nonfinancial firms, the most since a credit meltdown sparked a global recession six years ago, based on data compiled by Bloomberg. Profit climbed from 2.25 trillion yen a year ago, the fastest jump since 2010. Companies showing profit surges include Panasonic Corp, which has cut 71,000 jobs; Mazda Motor Corp, which is shifting car production to Mexico; and Toyota Motor Corp, which overhauled management and halted new factory construction. The gains, also fuelled by a weaker yen, contrast with disappointing results at firms such as Sony Corp, which resisted calls to spin off assets or close money-losing businesses. “Companies that made efforts to cut costs and restructure before the yen started to weaken are the ones really showing growth,” said Tetsuro Sugiura, chief economist at Mizuho Research Institute. “Japanese companies had fallen back in global competition because they weren’t able to cut businesses and cut people or were late in doing this.” Panasonic has undergone one of the more dramatic makeovers, shifting its focus from consumer electronics to alternative power products such as solar panels and batteries. The company, once a leading television maker along with Sony and Sharp

Companies like Nissan taking the opportunity to revamp operations

Corp, plans to stop making plasma TVs by March.

Panasonic transformed Kazuhiro Tsuga, who took over as Panasonic president in June 2012, has exited some unprofitable smartphone and plasma panel operations. Japan’s third-largest listed employer has been trimming its workforce since 2011 and last month raised its forecast for net income this fiscal year to 100 billion yen. “Panasonic is going forward in rebuilding its business, and their path to recovery is clear,” said Satoshi Yuzaki, general manager at Takagi

Securities Co in Tokyo. Operating income at Sharp beat estimates in the second quarter after cutting costs under a multiyear restructuring plan that included shutting some facilities and selling assets. The company last month reported its first net income since 2011 as a weaker yen and reduced costs helped its display business return to profit. Toyota President Akio Toyoda, 57, in March cleared out the remnants of top management inherited when he took the helm in 2009 in a move to restore the fortunes of the world’s biggest carmaker after years of turmoil.

Qantas chief slams Virgin deal Virgin Australia chief says airline ended monopoly in the air-travel market

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antas Airways Ltd chief executive Alan Joyce has demanded the government halt what he described as a “virtual takeover” of Virgin Australia Holdings Ltd by foreign airlines, saying they were working to destabilise the national carrier. Singapore Airlines Ltd, Air New Zealand Ltd and Abu Dhabi-based Etihad Airways already own 63 percent of Qantas’ main domestic rival and under a A$350 million (US$328 million) capital raising announced last week, that could increase to as much as 72 percent. In a searing letter to Prime Minister Tony Abbott and all state

Joyce demands stop to ‘virtual takeover’ of Virgin Australia

governments, seen by the Australian Financial Review, Mr Joyce charged it was the “final act” by “predatory” state-owned airlines to cripple Qantas both domestically and internationally. Mr Joyce’s ultimate fear is that the capital raising, “supported and largely underwritten by three foreign governments”, was part of a strategy of subsidising Virgin so it could continue to undercut Qantas on profitable domestic routes. The domestic sector is a key money spinner for the airline and it has helped prop up its underperforming international network. In his letter, Mr Joyce said the move by the three airlines had

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November 19, 2013 April 19, 2013

Asia

pace recovery

The carmaker, Japan’s largest manufacturer, raised its full-year net income forecast 13 percent to a record US$1.67 trillion yen. Profit in the three months ended September jumped 70 percent to 438 billion yen, more than that of the next five biggest Japanese carmakers combined.

Abenomics anxiety The profit increase comes as pressure mounts on Prime Minister Shinzo Abe and his so-called Abenomics. Monetary easing and fiscal stimulus haven’t been enough to accelerate the economic recovery, even as a weaker currency stokes

“all the characteristics of predator behaviour [to] substantially weaken a major competitor, Qantas Group, and recoup the costs at a later date”, the newspaper reported. Qantas confirmed in a statement yesterday that a letter had been sent “to express concerns, as the national carrier, about potentially damaging shifts in Australia’s aviation industry”. “Virgin Australia’s proposed capital raising could see its foreign ownership rise to more than 80 percent without the need for any further regulatory approval,” the statement said. “Despite this, the airline would retain all the traffic rights given to Australian carriers,” it added. The Australian and International Pilots Association backed Joyce, arguing the playing field has become skewed due to the rising influence of foreign government-controlled investment in the market. Treasurer Joe Hockey has not responded publicly to Qantas’ claims but Virgin chief John Borghetti hit back, saying the airline’s emergence had ended a monopoly in the Australian market. “Fundamentally the landscape has changed forever, and it is no longer a monopoly,” he told the Sydney Morning Herald. “’This is all about competition and the creation of more jobs, and helping the tourism sector, which in the current global climate certainly can use all the help it can get.” AFP

some exporters’ profit. Gross domestic product rose at an annualised 1.9 percent in the three months ended in September, down from 3.8 percent the previous quarter, the Cabinet Office reported in Tokyo. The growth slowdown draws attention to the lingering question of whether companies benefiting from Abenomics will return the favour by investing more to stimulate the broader economy. Cash per share for all companies on the Topix index climbed to 597 yen in the three months ended in September, 49 percent more than a year earlier, the fastest growth and the highest since at least 2004. A sustainable economic recovery requires automakers to increase capital spending, spreading new business from partsmakers to materials producers and construction companies, said Keiichi Ito, a quantitative strategist at SMBC Nikko Securities Inc. The increase in profit last quarter hasn’t been enough to spark such a surge across the economy. Japanese companies eased off on capitalspending growth in the second quarter and failed to step up exports. Corporate investment increased 0.7 percent, down from 4.4 percent. To add momentum to the recovery, the prime minister is backing legislation in the parliamentary session ending December 6 for tax incentives to encourage corporate investment and the establishment of strategic economic zones for reduced business regulation. Mr Abe needs to motivate companies that are still in cost-cutting mode, said Mr Ito of SMBC Nikko. Bloomberg News

Sony sells a million PS4 consoles on first day S

ony Corp sold more than 1 million PlayStation 4 consoles in North America during the first 24 hours of sales, though the company said some buyers reported having “issues” with the new gaming device. The record sales, which top initial results for the predecessor PlayStation 3 in 2006, come as chief executive Officer Kazuo Hirai tries to make the video-game console the centrepiece of a corporate turnaround strategy. Pressure has intensified on Mr Hirai after the company last month surprised investors by reporting a second-quarter loss. Some users said the machine’s power indicator light may have malfunctioned. Sony is getting a head start on competing for the attention of game players with Microsoft Corp, which is releasing the Xbox One later this week. The Tokyo-based electronics maker has priced its console at US$399, or US$100 less than the Microsoft machine, as it seeks an edge in the US$93 billion-a-year industry

before the Christmas shopping season. “PS4 sales are better than expected,” Koki Shiraishi, an analyst at SMBC Nikko Securities Inc. in Tokyo said by phone. “More importantly, I am watching the penetration into the market one month after its release.” Sony is aware some consumers have reported issues with their PS4 systems and is closely monitoring for additional reports, Satoshi Fukuoka, a Tokyo-based spokesman, said in an e-mail yesterday. Symptoms associated with the power indicator light issue include the console powering off and no video or audio output to television, according to the company’s website. “We think these are isolated incidents and represent a very small percentage of total units shipped to consumers to date,” Mr Fukuoka said, declining to elaborate on what the problems were. The company is still making and shipping the consoles, he said. Bloomberg News

Park offers few details in budget debut Vows to ‘respect’ agreement rival parties make on election scandal Choonsik Yoo

S

outh Korean President Park Geun-hye used her debut speech in parliament, nine months after taking office, to call a fresh start in Asia’s fourth largest economy as she urged legislators to pass her first budget. The country’s first woman president, elected in December last year and in office since February, again outlined her vision of a “creative” economy and a country “where every person can be happy” but failed to announce any meaningful measures. “In order to take advantage of the signs of economic recovery, we made economic stimulus and job creation as the highest priority of this year’s budget,” Ms Park told MPs. The budget numbers themselves were presented in September and spending will rise 2.5 percent in 2014 to 357.7 trillion won (US$336.36 billion) following a 7.2 percent increase in 2013. Ms Park appears to have made foreign visits rather than the domestic economy the focus of her first months

in office. She has visited China, the United States, Britain and France and last week received Russian President Vladmir Putin. Her domestic priorities are less clear. Her one major pledge – to boost pensions – was withdrawn and there are few signs she is tackling the regulation that shackles small businesses or the inability of graduates to find full-time jobs. While South Korea’s economy largely escaped the global financial crisis unscathed and grew at a respectable 2.4 percent so far this year, it remains heavily dependent on large export conglomerates to drive that growth. Ms Park’s budget comments came after China last week announced the most sweeping changes to economic and social policy in three decades in a bid to energise its sputtering economy, while Japan too is pushing ahead with reform. South Korea’s population is ageing more rapidly than any other and retirees are crowding out younger people from the job market

in response to poor social safety programmes. More than one in three South Koreans will be aged 65 or older in 30 years, versus one in eight now. “The public has yet to see a detailed roadmap on how this government will generate [longterm growth] momentum through its policies on the creative economy,” said Lee Sang-jae, an economist at Hyundai Securities in Seoul. Slogans promoting the “creative economy” and “national happiness” helped Ms Park win a closely-fought presidential poll. Ms Park is enjoying a stable and high approval rate of more than 50 percent but political analysts have said her popularity was attributable more to the disappointing performance of the opposition parties and tensions with North Korea. South Korea’s economy is expected to post annual growth of 3.8 percent next year up from a forecast 2.8 percent this year, according to the central bank. Reuters


14 14

November 19, 2013 April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 61.1 60.7 60.3 59.9

Max 61.1

average 60.689

Min 59.5

59.5

Last 60.4

Max 91.60

average 90.929

Min 89.85

Last 58.40

PRICE

27.7

90.16

27.6 Max 27.95

average 27.760

Min 27.50

Last 27.80

27.5

24.7

30.1

58.2

30.0

24.6

29.9 24.5

Max 24.80

average 24.622

DAY %

YTD %

(H) 52W

Min 24.45

Last 24.80

(L) 52W

93.52

-0.341005968

0.160651173

109.6999969

85.51999664

BRENT CRUDE FUTR Jan14

108.04

-0.423963134

3.456861055

113.3099976

96.13999939

GASOLINE RBOB FUT Dec13

264.82

-0.357451932

4.079547241

290.3199911

241.5999889

912

0.082304527

1.164725458

973

837

3.694

0.928961749

-6.433637285

4.744000435

3.378999949

GAS OIL FUT (ICE) Dec13 NATURAL GAS FUTR Dec13

293.63

-0.088468475

-1.595227722

321.1599827

276.4999866

Gold Spot $/Oz

1284.99

-0.4023

-22.7984

1754.46

1180.57

Silver Spot $/Oz

20.6431

-0.7782

-31.441

34.3838

18.2208

Platinum Spot $/Oz

1438.07

-0.1735

-5.2499

1742.8

1294.18

Palladium Spot $/Oz

NY Harb ULSD Fut Dec13

729.85

-0.4297

4.315

786.5

626.95

LME ALUMINUM 3MO ($)

1791

0

-13.60347323

2184

1758

LME COPPER 3MO ($)

7010

0.257437071

-11.61265919

8346

6602

LME ZINC

1899

0.689289502

-8.701923077

2230

1811.75

13830

1.318681319

-18.93317702

18770

13205

15.78

0.095147479

2.367823548

16.80999947

14.91500092

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14

427

-0.81300813

-29.94257588

654.75

426

657.5

0.458365164

-20.94980463

904.75

647.75

Mar14

WHEAT FUTURE(CBT) Mar14 SOYBEAN FUTURE Jan14

1281.25

0.058570871

-2.119938885

1406

1169

COFFEE 'C' FUTURE Mar14

109.1

3.26549929

-31.96133458

173.25

104.1499939

SUGAR #11 (WORLD) Mar14

17.61

0.341880342

-14.43148688

20.71999931

16.69999886

COTTON NO.2 FUTR Mar14

24.4

77.75

-0.57544757

-2.090416824

90.61000061

76.58999634

COUNTRY MAJOR

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

ASIA PACIFIC

CROSSES

29.8 Max 30.15

average 29.937

Min 29.70

Last 29.95

29.7

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9414 1.6138 0.9139 1.3499 99.98 7.9854 7.7528 6.092 62.5125 31.582 1.2465 29.547 43.63 11635 94.121 1.23374 0.83649 8.2244 10.7791 134.96 1.03

0.491 0.1241 0.0985 0.0222 0.21 0.01 0.0142 0.0082 0.9718 0.0253 0.016 0.1489 0.0688 -0.1031 -0.2805 0.0778 0.1112 -0.3453 -0.3562 0.1852 0

-9.2889 -0.2349 0.1641 2.3427 -13.8828 -0.0276 -0.0284 2.2751 -12.0256 -3.1727 -2.0136 -1.7396 -6.0165 -15.8315 -5.0934 -2.1285 -2.5189 -0.0839 -2.3072 -15.8491 -0.0097

1.0599 1.6381 0.9839 1.3832 103.74 8.0111 7.7664 6.2566 68.845 32.48 1.2862 30.228 44.82 11730 105.433 1.265 0.88151 8.4957 11.0434 135.51 1.032

0.8848 1.4814 0.8891 1.273 81.09 7.9818 7.7498 6.0732 52.89 28.56 1.2168 28.913 40.54 9590 83.979 1.20302 0.80059 7.8281 10.1705 103.26 1.0289

Macau Related Stocks NAME

PRICE

ARISTOCRAT LEISU

DAY %

YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

4.65

-1.691332

47.61904

5.12

2.6

830910

16.61

-0.5389222

55.6701

17.38

9.79

935368

AMAX INTERNATION

1.09

-2.678571

-22.14286

1.72

0.75

1220450

BOC HONG KONG HO

25.9

1.968504

7.468878

28

22.85

16426147

0.465

1.086957

75.47171

0.56

0.24

1440000

7

-0.8498584

16.86144

7.28

4.13

478316

CHINA OVERSEAS

24.3

3.404255

5.194803

25.6

17.7

31434531

CHINESE ESTATES

21.75

-0.6849315

93.40987

22.5

9.698

252500

CHOW TAI FOOK JE

12.8

-0.621118

2.893894

13.4

7.44

3576717

EMPEROR ENTERTAI

3.96

-1.980198

109.5238

4.66

1.6

1510000

FUTURE BRIGHT

3.23

0.310559

166.4959

3.41

1.103

1041000

GALAXY ENTERTAIN

60.4

3.513282

99.01153

63.75

27

16597108 1700193

CROWN RESORTS LT

CENTURY LEGEND

NAME

90.52

58.6

WTI CRUDE FUTURE Dec13

CORN FUTURE

27.8

Currency Exchange Rates

NAME

METALS

90.88

30.2

Commodities ENERGY

27.9

24.8

58.3 Min 58.20

91.24

58.7

58.4

average 58.452

28.0

89.80

Last 90.70

58.5

Max 58.65

91.60

CHEUK NANG HLDGS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

15961.7

0.5384153

21.80655

15962.98047

12471.49

NASDAQ COMPOSITE INDEX

US

3985.968

0.3329692

32.00695

3985.968

2810.8

FTSE 100 INDEX

GB

6694.61

0.0174798

13.5101

6875.62

5605.589844

HANG SENG BK

125.5

0.4

5.728731

132.8

110.6

DAX INDEX

GE

9158.62

-0.1098303

20.31202

9193.980469

6950.53

HOPEWELL HLDGS

25.95

0.1930502

-21.95489

35.3

23.2

1530882

NIKKEI 225

JN

15164.3

-0.01068184

45.87819

15942.6

8898.33

HSBC HLDGS PLC

86.25

0.7593458

6.088557

90.7

73.9

14930661

HANG SENG INDEX

HK

23660.06

2.726233

4.427524

23944.74

19426.35938

HUTCHISON TELE H

3.06

-2.547771

-14.04494

4.66

3.02

11772173

CSI 300 INDEX

CH

2428.903

3.325302

-3.72773

2791.303

2023.171

LUK FOOK HLDGS I

29.95

0

22.7459

30.5

16.88

3190648

MELCO INTL DEVEL

27.25

4.007634

202.4417

28.1

7.58

8008563

TAIWAN TAIEX INDEX

TA

8191.46

0.1753674

6.389505

8476.63

7061.87

MGM CHINA HOLDIN

27.8

2.018349

109.3645

30

12.426

3957520

KOSPI INDEX

SK

2010.81

0.2577731

0.6890168

2063.28

1770.53

MIDLAND HOLDINGS

3.27

1.552795

-11.62162

4.29

2.68

3460000

S&P/ASX 200 INDEX

AU

5384.657

-0.3149766

15.82523

5457.3

4334.3

NEPTUNE GROUP

0.285

-1.724138

87.50001

0.4

0.131

104820000

JAKARTA COMPOSITE INDEX

ID

4380.448

1.037955

1.477087

5251.296

3837.735

NEW WORLD DEV

10.88

1.872659

-9.484196

15.12

9.98

19339262

SANDS CHINA LTD

58.4

2.998236

72.01767

60.5

30.35

14873178

FTSE Bursa Malaysia KLCI

MA

1793.22

0.1871644

6.173659

1826.22

1590.67

SHUN HO RESOURCE

1.62

0

15.71429

1.92

1.22

0

NZX ALL INDEX

NZ

1031.244

-0.4678161

16.91407

1048.998

858.253

SHUN TAK HOLDING

4.49

0.6726457

7.159903

4.8

3.18

8185614

PHILIPPINES ALL SHARE IX

PH

3864.86

-0.1070044

4.484483

4571.4

3440.12

8489802

SJM HOLDINGS LTD

24.8

2.691511

39.73675

28

16.762

SMARTONE TELECOM

8.89

-1.002227

-36.8608

15

8.68

8130658

29.95

2.044293

42.95942

32.6

19

6984233

Euromoney Dragon 300 Index Sin

SI

622.58

0.51

0.24

NA

NA

STOCK EXCH OF THAI INDEX

TH

1426.14

0.3857362

2.457736

1649.77

1260.08

ASIA ENTERTAINME

N/A

N/A

N/A

N/A

N/A

0

HO CHI MINH STOCK INDEX

VN

506.48

1.025252

22.418

533.15

374.15

BALLY TECHNOLOGI

72.52

-0.1101928

62.20085

78.03

43.57

231679

Laos Composite Index

LO

1283.94

0

5.694075

1455.82

1196.44

BOC HONG KONG HO

3.24

-1.818182

5.537462

3.6

2.99

26800

GALAXY ENTERTAIN

7.57

1.107238

90.6801

8.11

3.471

6100

17.84

0.3374578

25.89979

21.2

12.63

2870880

WYNN MACAU LTD

INTL GAME TECH JONES LANG LASAL

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

96

0.5130353

14.3674

101.46

75.53

218901

LAS VEGAS SANDS

71.22

-0.2241524

54.28943

73.49

40.3151

4340917

MELCO CROWN-ADR

34.88

0.9113265

107.1259

37

13.95

2471996

MGM CHINA HOLDIN

3.54

2.608696

102.252

3.88

1.703

2600

MGM RESORTS INTE

19.45

-0.5623722

67.09622

20.98

9.47

5875879

SHFL ENTERTAINME

23.16

-0.08628128

59.72414

23.25

12.98

378846

SJM HOLDINGS LTD

3.14

0

37.86345

3.6

2.1494

12300

166.39

-1.258086

47.91537

173.38

104.92

1412047

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

39.3

1.813472

26635640

CHINA UNICOM HON

12.26

3.198653

29007821

POWER ASSETS HOL

ALUMINUM CORP-H

2.88

2.12766

21726198

CITIC PACIFIC

11.06

3.947368

12425000

SANDS CHINA LTD

BANK OF CHINA-H

3.72

3.62117

992767736

5.8

5.454545

81896494

34.25

1.481481

1964693

BELLE INTERNATIO

9.84

1.547988

BOC HONG KONG HO

25.9

1.968504

BANK OF COMMUN-H BANK EAST ASIA

NAME

CLP HLDGS LTD

NAME

3392102

58.4

2.998236

14873178

10.92

2.247191

8527467

100

0.9081736

6481259

91.85

2.225932

2515915

426

1.525262

6818974

4.816514

14916447

0.4068348

2841497

3.534031

82583621

COSCO PAC LTD

11.34

0.8896797

3842628

SWIRE PACIFIC-A

48057686

ESPRIT HLDGS

16.82

-0.2372479

8004701

TENCENT HOLDINGS

16426147

HANG LUNG PROPER

26.5

4.330709

5942608

TINGYI HLDG CO

22.85 11.06

2.02952

20168577

65.7

0.7668712

4184448

SINO LAND CO SUN HUNG KAI PRO

2

3356819

HANG SENG BK

125.5

0.4

1700193

WANT WANT CHINA

5065703

HENDERSON LAND D

46.05

1.320132

4338272

WHARF HLDG

CHINA COAL ENE-H

4.89

2.087683

108337995

HENGAN INTL

98.45

6.547619

5083772

CHINA CONST BA-H

6.2

3.852596

641783793

HONG KG CHINA GS

18.18

1.224944

8278236

CHINA LIFE INS-H

23.1

8.705882

167071397

CHINA MERCHANT

29.1

2.28471

13117556

HONG KONG EXCHNG

130.9

4.636291

13882282

HSBC HLDGS PLC

86.25

0.7593458

14930661

95.85

1.214361

5272762

5.53

3.752345

641071325

11.08

1.651376

36343437

29.8

0.5059022

1883042

83

2.469136

28641842

HUTCHISON WHAMPO

CHINA OVERSEAS

24.3

3.404255

31434531

IND & COMM BK-H

CHINA PETROLEU-H

6.91

6.307692

312054477

CHINA RES ENTERP

27.65

2.979516

8339745

CHINA RES LAND

VOLUME

61.7

2.477291

CHINA MOBILE

1.619433

15.82

15.3

CHEUNG KONG

DAY %

62.75

CNOOC LTD

124.1

CATHAY PAC AIR

PRICE

LI & FUNG LTD MTR CORP

22.5

5.140187

14174542

NEW WORLD DEV

10.88

1.872659

19339262

CHINA RES POWER

19.12

1.702128

5766000

PETROCHINA CO-H

9.26

4.869762

231289780

CHINA SHENHUA-H

25.6

4.489796

41311409

PING AN INSURA-H

69.5

9.448819

75077569

MOVERS

49

1

0 23662

INDEX 23660.06 HIGH

23661.5

LOW

22552.03

52W (H) 23944.74 22552

(L) 19426.35938 14-November

18-November


15 15

November 19, 2013 April 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Jakarta Globe Excluding state-owned enterprises from state assets and stripping the state audit body of its authority to conduct audits of the companies will destroy the firms and worsen corruption within the companies, experts and activists say. A group calling itself the State-Owned Enterprise Forum filed a judicial review with the Constitutional Court in June to revise a 2003 state financial law authorising the Supreme Audit Agency to carry out an audit into the state enterprises, thus treating the companies as separate entities from the state.

Wall Street Journal China’s family-planning agency is projecting a slow rollout for an easing of its one-child policy, underscoring reluctance by the government in moving too quickly to let some couples have two children. The Xinhua news agency quoted Wang Peian, deputy director of the National Health and Family Planning Commission, as saying that the change wouldn’t lead to a swell of new births. “China’s population will not grow substantially in the short term,” Xinhua quoted him as saying. The plan contains no timeline, and each of China’s 34 province-level administrations will need to revise its laws and to put the new policy into effect, Mr Wang said.

China Daily The “negative list” policy being tried out in the China (Shanghai) Pilot Free Trade Zone won’t be expanded nationwide immediately as expected, as modifications are needed. Liu Dianxun, director of the investment promotion agency at the Ministry of Commerce, said at a forum that China launched the FTZ in Shanghai to carry out activities in particular fields such as the services trade. Related policies will be disseminated gradually throughout the country, Mr Liu said. “The ‘negative list’ is just a pilot measure in the FTZ and won’t go nationwide in the short term,” he added.

Straits Times Singapore’s non-oil domestic exports expanded 2.8 percent in October after dipping 1.2 percent the previous month, boosted by an increase in nonelectronic shipments which outweighed a slide in electronic exports. Trade agency International Enterprise (IE) Singapore said that electronic exports fell 1.4 percent in October compared with the previous year, after declining 5.5 percent the previous month. The decrease was largely due to a slump in disk media products, telecommunications equipment and PCs parts.

A grand unified economic theory? Dambisa Moyo

Author, most recently, of Winner Take All: China’s Race for Resources and What it Means for the World

L

ast month’s U.S. government shutdown – the result of a partisan standoff in congressional budget negotiations – epitomises the polarisation that prevails in modern economic-policy debates. On one side, John Maynard Keynes’s cohort argues that government intervention can help any economy grow its way out of crisis by spurring aggregate demand and, in turn, raising the employment rate. A country’s government, Keynesians contend, has the capacity – and responsibility – to solve many, if not all, of its economic problems. On the opposite side, followers of the Austrian School of economic thought, especially the ideas of Friedrich Hayek, assert that limited government and free enterprise form the only viable path to liberty and prosperity. The market is the best arbiter of how to allocate scarce resources, and thus should serve as an economy’s main driver. In recent years, this longrunning debate has become increasingly contentious – and the costs of stalemate are mounting. In order to restore growth in developed economies, while sustaining strong GDP growth and reducing poverty in the developing world, a more unified approach to economic policymaking that draws from both traditions is needed. Official responses to the global economic crisis highlight the interventionist model’s merits, proving that decisive government action can help to enhance efficiency and clear unbalanced markets, thereby protecting the economy from the demand shortfall caused by falling investment and rising unemployment. But the free market also has a crucial role to play, with longerterm, incentive-based policies catalysing scientific and technological advancement – and thus boosting economies’ growth potential.

Lessons in physics In determining how to promote innovation without sacrificing social protection, economists and policymakers should take a lesson from the field of physics. For nearly a century, physicists have attempted to merge the competing ideas of the field’s titans, including Wolfgang Pauli, the first physicist to predict the existence of neutrinos (the smallest particles of matter), and Albert Einstein, who explained the curvature of space-time. The so-called “theory of everything” would reconcile

the inconceivably small with the unimaginably large, providing a comprehensive understanding of the universe’s physical properties. Policymakers should be working to unite seemingly disparate theories to align policy decisions with the business cycle and the economy’s level of development. Such an approach should seek to protect economies from the destabilising impacts of politically motivated policy changes, without impeding governments’ ability to correct dangerous imbalances. Officials must be at least as vigilant about reducing expenditure and withdrawing stimulus measures during periods of growth as they are inclined to introduce such policies during downturns. To the extent that this approach reflects the view that policymaking is an art, not a science, that is a good thing: the world needs more flexibility in economic policymaking. But some might consider it a cause for concern, especially given growing suspicion of incentive-based economic policies in the wake of the global economic crisis. Many blame the crisis on the decades-long ascendancy of a laissez faire approach to economic

policymaking, and rightly credit government intervention with facilitating recovery.

Productive discourse The tremendous economic success of countries like China, where hundreds of millions of people have escaped abject poverty in a single generation, has reinforced support for stateled systems. In developed countries, too, many advocate a greater role for the state, in order to ensure that promised social benefits are delivered to rapidly ageing populations. In fact, in many countries, the government’s capacity is already strained. As German Chancellor Angela Merkel has pointed out, though Europe is home to just 7 percent of the world’s population and produces 25 percent of the world’s wealth, it accounts for 50 percent of global welfare payments. When the United States is included, 11.5 percent of the global population receives 88 percent of the world’s welfare payments. But relegating free-market principles to the past would simply create a new set of imbalances. Rather than allow extremists to continue to hijack economic-policy debates, policymakers must

What is really preventing economists and policymakers from devising – or even seeking – a unified theory of economics?

work to bridge competing schools of thought. Only then will productive discourse – the kind that does not end in government shutdown – be possible. Keynes once wrote that he agreed with “almost all” of Hayek’s ideas. And Hayek found it “reassuring” to know that he and Keynes agreed “so completely”. This raises the question: What is really preventing economists and policymakers from devising – or even seeking – a unified theory of economics? © Project Syndicate


16 16

November 19, 2013 April 19, 2013

Closing Boeing leads Dubai order books race

Hundreds of factories closed in Bangladesh

Airlines in the Gulf have placed a number of high-value plane orders on the first day of the Dubai Air Show, with U.S. giant Boeing Co a major winner. Dubai-based Emirates airline placed an order for 150 of Boeing’s new 777 mini-jumbos, in a US$76 billion deal. Other orders from Etihad Airways, Qatar Airways and Lufthansa for some 109 of the new 777 brought its sales total to US$95 billion. Emirates has also ordered 50 Airbus A380s, in a deal worth US$23 billion. Rival Etihad Airways has also announced a firm order for 87 Airbus aircraft in a deal valued at US$19 billion.

Almost 140 Bangladeshi garment factories were shut yesterday as thousands of workers protesting at a new minimum wage clashed with police outside Dhaka, police and manufacturers said. The trigger for the new protests was worker unhappiness at the new minimum wage the government has announced for the country’s four million garment workers. Although the minimum monthly salary for entry-level workers has been raised by 76 percent to US$68 as of December, unions have complained that skilled employees have been deprived, while some bosses cut food and transport allowances.

HK seeks reforms to keep edge in yuan hub race Share of Hong Kong in global offshore yuan business declining Saikat Chatterjee

Draghi rate cut puts ECB into holding pattern Move this month took benchmark rate to record low of 0.25 percent

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become an international financial centre by 2020 and the recently established free trade zone, it indicates that some of the market liberalisation measures may be tested on the mainland than in Hong Kong, a marked change from the past. It also suggests Beijing is willing to let Hong Kong develop its own policies to sustain its first-mover advantage as it prepares to help its own cities capture a share of the offshore yuan business. “There is a big part in the decision of the third plenum talking about the Shanghai free trade zone, while only a sentence on Hong Kong, which shows that the central government is willing to let Hong Kong develop freely and make the most of its own advantages,” said Raymond Yeung, an analyst at ANZ in Hong Kong. To ensure Hong Kong’s first mover advantage, some of the recommended measures include relaxing remittance restrictions on Hong Kong residents for yuan trade, allowing onshore companies to lend yuan to their offshore counterparts and attracting more companies from emerging economies of Brazil and India to issue bonds in Hong Kong’s offshore yuan bond market.

ario Draghi won’t follow his unexpected interestrate cut with new liquidity injections into the financial system next month, economists say. While a majority in a Bloomberg survey say the European Central Bank’s most probable next move is a measure such as long-term loans, 77 percent of those see it happening in the first or second quarter of 2014. Just 9 percent see Mr Draghi taking action in December. The ECB’s surprise policy move this month, which most respondents in the survey said was warranted, took the benchmark rate to a record low of 0.25 percent. That’s sparked speculation among economists and investors how far policymakers are prepared to go if inflation, already less than half of the ECB’s target, slows further, or the economic recovery weakens. “The ECB wants to understand the effect the rate cut has had on liquidity, on credit growth and on monetary aggregates,” said Matteo Cominetta, European economist at HSBC Holdings Plc in London. “If the effects are not significant, they will go for a new LTRO. I think they will have to act again.” ECB officials are drawing up plans to keep money flowing to banks to head off a liquidity squeeze when the first round of emergency long-term loans comes due in early 2015. A technical committee asked by Mr Draghi to consider solutions met last month, according to two euro-region central bank officials familiar with the matter. New liquidity measures could comprise longer-term refinancing operations with fixed or floating rates, different maturities or rules on how banks must use the cash. Other possible measures include changes to reserve or collateral requirements or the suspension of liquidity-absorbing operations. The ECB already extended its policy to provide banks with as much liquidity as they need until mid-2015.

Reuters

Bloomberg News

Hong Kong remains China’s top offshore yuan hub

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government body called on Hong Kong’s regulators yesterday to step up reforms to maintain the city’s competitive edge as a premier offshore yuan hub and a global financial centre. The Financial Services Development Council set out various areas to promote the city’s role in the growing offshore yuan business as it faces stiff competition from other cities in a document titled, “Proposals to advance the development of Hong Kong as an offshore renminbi centre”. While Hong Kong has been at the forefront of the expanding offshore yuan business since mid2009, the rapid rise of global cities such as London and Singapore along with the homegrown challenges of Shanghai and Qianhai next door, have raised concerns over the city’s competitiveness in the long term. The renminbi in Hong Kong as a proportion of total renminbi in the offshore market declined to around 65 percent by September 2013 from a peak of nearly 90 percent in December 2011, indicating the sharp growth of yuan business in other cities. “The report recognises that Hong Kong is facing challenges arising

from evolving global macroeconomic forces and emerging local threats, and that Hong Kong’s leading position as an international financial centre is not entirely secure unless we work relentlessly to advance our competitiveness,” Laura Cha, chairman of the Financial Services Development Council, said. The release of the report assumes significance as it comes after China’s authorities unveiled ambitious plans to reform the economy and set it on a path of sustainable growth Despite the rise of other offshore cities, Hong Kong remains China’s top offshore yuan hub by far. Offshore renminbi deposits, including certificate of deposits, have reached approximately 1 trillion yuan (US$164.14 billion), while the outstanding balance of renminbi bonds issued offshore has exceeded 450 billion yuan.

Redefining roles But Hong Kong’s first mover advantage no longer gives it a comfortable lead, especially with the rising challenge of Chinese cities eyeing a piece of the international yuan business. With Shanghai earmarked to

Macau Business Daily, November 19, 2013  

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