MOP 6.00 Vitor Quintã
Macao Gaming 1 Show claims more visitors than G2E Asia Page 4
Business Awards of the Year to debut at Grand Lisboa Page 7
Number 419 Thursday November 21, 2013
Editor-in-chief Tiago Azevedo
33.7 sq. metres – and happy to get it April 19, 2013
t’s not much space by some people’s standards. But for one Macau family of four, a one-bedroom, government-built apartment of that size is a dream come true. It also means a first foot on a local property ladder that is getting harder and harder to climb.
Mrs Lei and her family are among 2,700 families to make a shortlist for 1,544 one-bedroom units in Seac Pai Van, Coloane. It’s not an ideal location for a young family, inconvenient for shops and a long ride by public transport from the peninsula. But it’s a chance.
“My husband’s income, which is around 20,000 patacas a month to support the whole family, is definitely not enough to afford a down-payment for a private home,” the mother-of-two told Business Daily. More on page 3
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Court rejects Reolian subsidy hike appeal
The Administrative Court has rejected a request filed by public bus operator Reolian Public Transport Co Ltd to force the government to fulfil the subsidy hike it announced last year. Two sources with knowledge of the case confirmed to Business Daily that the court agreed on Tuesday that Reolian was entitled to the increase. However, the verdict argued that Reolian did not prove that the failure to get this hike would greatly “aggravate” its financial situation. In June 2012 the government approved a 23.3 percent increase in the subsidy its pays the three public bus operators. However the hike was quickly suspended amid public outcry over service quality. The government finalised the increase in April – but not for Reolian. Page 2
‘Crazy’ rent hikes Big users to pay SHFL may need legal control: more for electricity ‘seek damages’ legislator come spring for trade show spat “Insane” rent increases are evidence that Macau’s property market needs legal controls – especially to protect small- and medium-sized enterprises – says Legislative Assembly member Ho Ion Sang. In an inquiry tabled to the government that was released yesterday, the deputy director of the General Union of Neighbourhood Associations proposed a cap on rent increases as part of broader bill to regulate rentals. Page 2
Large industrial and commercial enterprises, including big hotels and casino resorts, will pay more for their electricity by April or May next year. The new power tariff scheme creates a new category of users comprising large hotels and casino resorts that consume at least 3,001 kilowatthours per month, and charge them 0.963 patacas (US$0.12) per kilowatt-hour. Page 5
Casino equipment maker SHFL entertainment Inc says it’s prepared to go to law to “seek to recover any damages that it may have incurred” following action by Macau Customs on the final day of the Macao Gaming Show on Saturday. Meanwhile LT Game, the market rival that sparked the customs action, is claiming victory in a civil case brought by SHFL. Page 6
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November 21, 2013
Court rejects Reolian subsidy hike appeal Judge says hike suspension did not impact finances of bankrupt bus operator Vítor Quintã
he Administrative Court has rejected a request filed by public bus operator Reolian Public Transport Co Ltd to force the government to fulfil the subsidy hike it announced last year. Two sources with knowledge of the case confirmed to Business Daily that the court decided on Tuesday not to approve an urgent injunction filed by the bankrupt company. In June 2012 the government approved a 23.3 percent increase in the subsidy its pays the three public bus operators. However the hike was quickly suspended amid public outcry over service quality. The government finalised the increase in April – but only for Transportes Urbanos de Macau SARL (Transmac) and Sociedade de Transportes Colectivos de Macau SARL (TCM). The court agreed on Tuesday that Reolian was entitled to the increase, said the sources, who asked not be identified because they are not authorised to speak
to the media. However, the verdict argued that Reolian had to prove that the failure to get this hike would greatly “aggravate” its financial situation, the sources added. The judge said that was not proved, in part because Reolian had other means of income, one of the sources said. Reolian general manager Cédric Rigaud said in August that his company was owed “maybe” 50 million patacas (US$6.3 million) backdated to July last year. Reolian has accumulated losses of more than 120 million patacas and it was losing 6 million patacas per month, Mr Rigaud told Business Daily last month, right after the company filed for bankruptcy. The government seized the operations of Reolian on October 2. One of the sources said the bus operator would in all likelihood appeal to the Court of Second Instance from this decision. Reolian filed this urgent
The Administrative Court agreed that Reolian was entitled to a subsidy increase (Photo: Manuel Cardoso)
injunction – the first of its kind in Macau – five months ago. The process of dealing with an application such as Reolian’s “usually takes about a month and a half” a lawyer with no connection to the case told Business Daily
in September. Reolian has also filed a court claim in July seeking a final decision on the subsidy increase, as well as damages. There is still no verdict. Last week the Commission Against Corruption said the
bus system introduced in 2011 is illegal and should be scrapped. It said the law allows private companies to operate bus services only under public service concessions, not through service contracts.
Rent control law would save SMEs from ruin Pro-establishment politician Ho Ion Sang says government must introduce rent control law to protect small business Tony Lai email@example.com
nsane” rent increases are evidence that Macau needs laws to restrict the rental market, says Legislative Assembly member Ho Ion Sang. In an inquiry tabled to the government that was released yesterday, the deputy director of the General Union of Neighbourhood Associations proposed a cap on rent increases as part of broader bill to regulate rentals. Macau’s “robust economy” had fuelled “insane rises in property rents” for homes and shops, Mr Ho wrote. Small- and medium-sized enterprises were among the worst affected. “Many SMEs have already had difficulties in their operations or are even in danger of closing down amid rising rents,” he said. A pro-establishment assembly member, Mr Ho wants the government to draft a rental law to “further regulate the rental market
High rents are pushing many SMEs to the brink of closing down, says Ho Ion Sang
for its healthy and stable development”. “Laws on the rental market have failed to keep up with society’s development, leading to diverse rental disputes,” Mr Ho said.
The new law could include a mechanism for “appropriately limiting unreasonable rent rises”. Macau has no specific law to regulate rents, but there are some provisions included
in the Civil Code. Nor does the government keep official data on residential or commercial rents. Property consultancy firm Savills (Macau) Ltd said last month that shop rents in the central business district on the Macau peninsula were between 500 patacas (US$62.60) and 600 patacas a square foot. Shop rents will rise by 20 percent to 30 percent this year, particularly in touristy areas such as Senado Square, Savills says. Earlier this month, a report by the Macau SME Association found that more than two-thirds of the 500 small- and medium-sized enterprises surveyed said rises in rents and labour costs were their top headaches. After last week’s Policy Address for 2014, Chief Executive Fernando Chui Sai On rejected calls for rent control, saying the government would not
interfere with the city’s freemarket principles. But Mr Ho said government intervention in the rental market was not unheard of, citing a 1995 law that allowed the Portuguese administration to set up “some coefficients” to regulate the size of annual rent increases. Yesterday’s call for tighter control of the rental market is not the first time a member of the Legislative Assembly has demanded government action. José Pereira Coutinho, a directly elected member and Macau Civil Servants Association president, tabled a bill in May that would have imposed rent controls. His proposal did not permit rent increases during the first two years of a lease and limited any subsequent increase to no more than the annual inflation rate. There were just four votes in favour of the bill and it was turned down.
November 21, 2013 April 19, 2013
‘A tight squeeze into tiny flat is better than missing out’ Mrs Lei and her family of four are among 2,700 fmilies to make a shortlist for 1,544 one-bedroom units in Seac Pai Van Stephanie Lai firstname.lastname@example.org
queezing four people into a one-bedroom subsidised flat is a tight fit but for Mrs Lei and her family it is better than taking their chances in the open market. Mrs Lei is a Macau resident in her early 20s, who did not give her full name for fear it might prejudice her housing application. Although the flats in the Ip Heng building in Coloane may seem too small for a married couple with two sons, Mrs Lei and her husband are not prepared to wait any longer. Her family is among the nearly 2,700 families on the waiting list for 1,544 one-bedroom flats in the Ip Heng block in the Seac Pai Van housing project. The family made it onto the preliminary list released yesterday and they are now waiting for the winners to be drawn some time next year. The Housing Bureau has not said when the draw will happen. The flats have floor areas from 32.2 square metres to 33.7 square metres, and cost between 524,400 patacas (US$65,678) and 701,800 patacas. As with many of the families on the list, Mrs Lei and her family could not wait for the government to fulfil its
promise of completing 6,300 public housing units in the next few years. The Housing Bureau’s public housing department administrator Chan Wa Keong said procedures to restart applications for two-bedroom and three-bedroom flats would be announced next month. Mr Chan said yesterday the flats would be located in Ilha Verde, Fai Chi Kei and Taipa. The bureau also plans to announce how many flats will be available this round and the income limit for applicants.
Fierce competition The government has focused on allocating public flats to households that have been on a waiting list since 2005. Housing Bureau deputy director Kuoc Vai Han said last month the government wanted to recommence taking applications for all types of public home sales next month. Mrs Lei and other applicants Business Daily spoke to yesterday are afraid the government will not be able to supply as many flats as it has promised. The mother of two said she was not prepared to wait until bigger public
housing flats were available because competition would be too fierce. Mr Chan said the Housing Bureau accepted 12,098 of the more than 15,000 applications it received, most of which were filed by younger, single applicants. Under the subsidised housing law introduced in 2011, the Housing Bureau will group applicants in three categories before drawing lots. Priority will be given to “core [immediate] family”, which includes Mrs Lei’s household, followed by “non-core family”. “Individuals” are at the bottom of the list. Families with members older than 64 years or that have a disabled member are given priority. Mrs Lei’s chance of winning the ballot for a flat look promising. The bureau accepted about 2,400 applications from “core [immediate] family” and about 630 included elderly or people with disabilities. A flat bought in the open market remains unobtainable for Mrs Lei and her family, whose only income is the 20,000 patacas her husband earns each month. It “is definitely not enough to afford a down-payment for a private home,” she said.
Applicants at flat in the Ip Heng tower check to see if they have made a short list
My husband’s income, which is around 20,000 patacas a month to support the whole family, is definitely not enough to afford a down-payment for a private home Mrs Lei, public housing applicant
Mainlanders’ Q3 per capita spend up 0.8 pct y-o-y But overall Q3 tourism expenditure – excluding gaming – up 12 pct y-o-y Tony Lai
he Statistics and Census Service announced yesterday the per-capita spending of mainlanders – excluding gaming expenses – in the third quarter was 2,321 patacas (US$290), up only 0.8 percent from the equivalent period a year earlier. That was against the background of mainland visitor numbers actually rising 16.2 percent – or five million arrivals – in the same period. It suggests some of the new arrivals in the July to September period were spending very little while in the city, helping to bring down the average. Judged quarter-on-quarter, mainland visitors actually spent 7.6 percent less per head in the JulySeptember period than the 2,511 patacas per capita achieved in the second quarter, April-June period. That type of sequential quarterly decline hasn’t been seen since 2009. The spending decline was particularly steep among mainland
Shopping nearly half of tourist spending
Chinese staying overnight. Each person paid out on average 3,915 patacas in the third quarter, down by 11.7 percent from the previous quarter and 1.5
percent down on a year earlier. The spending figures relating to mainland tourists, who in the second quarter made up around 59 percent
of all visitors, contributed to a 3.4 percent decline quarter-on-quarter in the per capita spending of all visitors. That latter number averaged 1,905 patacas during the period. But the territory’s overall tourism spending – excluding gaming – still amounted to 14.8 billion patacas in the third quarter, up by 12 percent from a year earlier and 6.5 percent from three months earlier. The statistics bureau also said yesterday shopping accounted for nearly half – 48 percent – of tourist spending. Mainlanders travelling under the individual visit scheme used up 63 percent of their nongaming budget on shopping. Local food specialities were most favoured by tourists. Each visitor used nearly a quarter of his or her shopping budget on those items. Accommodation and meal costs accounted for 45 percent of the visitors’ expenditure in the third quarter, the data indicated.
November 21, 2013
Macau Govt extends Newpage consulting contract David Green, an Australian lawyer and former gaming regulator who has advised the Macau government on gaming regulatory policy since 2000, will have his firm’s contract renewed in 2014. Yesterday’s Official Gazette authorises the Gaming Inspection and Coordination Bureau to sign a “service provider contract for a consultancy and study of the gaming industry” with Mr Green’s company Newpage Consultadoria Ltda. It does not specify the contract’s value. Mr Green was originally part of the Arthur Andersen consulting team hired by the government in 2000 to advise on the liberalisation of the Macau casino industry.
Deloitte to assess Macau money-laundering risks Deloitte Touche Tohmatsu Ltd, one of the world’s big four accountancy firms, will provide risk assessment services to the Financial Intelligence Office, yesterday’s Official Gazette shows. It does not specify the contract’s value. A risk assessment allows jurisdictions to identify and assess its money laundering and terrorist financing risks. Macau has frequently been criticised by international bodies for its weak money laundering controls, namely on the casino business. The United States CongressionalExecutive Commission on China last month urged the government to improve its supervision of hard currency flows in the gaming industry.
Shopping Festival begins next month The third edition of the Macau Shopping Festival starts next month, the organisers announced on Tuesday. The festival includes a lucky draw with 3 million patacas (US$375,000) in prizes. Tourists can enter by presenting a ferry ticket, airline boarding pass or immigration stamp at special counters after entering the city. Prizes have been offered by the 17 members of the organising committee and more than 1,000 retail outlets. Shopping centres and the small and medium enterprises taking part are offering a range of inducements to shop during the festival that ends on December 31.
Macao Gaming Show claims more visitors than G2E Asia New trade event also says more space than rival regional casino trade show Michael Grimes
acao Gaming Show – a new, locally run trade event for the casino industry – said in a press announcement yesterday that its first edition attracted 8,634 visitors. That’s nearly 48 percent more than the 5,851 attendees reported by Global Gaming Expo Asia 2013 – a regional casino trade show and conference – held in May and also at CotaiExpo at the Venetian Macao. The new event – which says it has received endorsement from government departments including the regulator the Gaming Inspection and Coordination Bureau – also claims to have had more show space than G2E Asia 2013. The organisers of MGS said in a statement it had 7,887 square metres (84,895 sq feet) of exhibition space, compared to the 7,087 sq ms reported by G2E Asia 2013. MGS did not claim more exhibitors than the rival event. It reported 102, compared to G2E Asia 2013’s 139. “The good news is we’re only going to get bigger and better from here and we’re already looking forward to next year’s show,” said Jay Chun, chairman of the Macau Gaming Equipment Manufacturers Association, the MGS organiser. Mr Chun is also chairman of Hong Kong-listed Paradise Entertainment Ltd, a supplier of casino equipment in Macau. He additionally operates Kam Pek casino in the city under a so-called service agreement with Sociedade de Jogos de Macau SA. Mr Chun said at the show he hopes
Macao Gaming Show on Friday (Photo: Manuel Cardoso)
to operate two more local casinos via service agreements, but didn’t give details. The exhibitors at MGS included some of Macau’s VIP gaming providers. The organisers said those present accounted for around 50 percent of the city’s high roller revenue. VIP revenue in turn accounted for around 65 percent of all casino revenue in the third quarter according to gaming bureau data. Macao Gaming Show didn’t detail in its post-show statement the method by which it counted visitors. But earlier this year Reed Exhibitions, one of the co-organisers of G2E Asia – held in Macau since 2007 – said in a press announcement
it was revising downward its own 2012 visitor numbers. Reed had originally stated the 2012 edition had 6,161 people, but later said the correct figure was 5,046 unique visitors. It said the error was due to some double counting of attendees. G2E Asia 2013 had an opening day by invitation-only, a two-anda-half day conference and a two-day trade show open to the trade and the public. MGS 2013 had a three-day exhibition and a two-day conference. At both G2E Asia and MGS, attendees are required to register and are issued with an identity tag with a barcode. Every time the visitor enters the conference area or exhibition area, the barcode is scanned by show staff.
Firms investing more on IT security One third of Macau’s running web servers could be outdated and vulnerable, says technology incubator Vítor Quintã
Sands tries to kick junket out over rents Gaming concessionaire Venetian Macau SA is asking the Court of First Instance to kick a VIP gaming operator out of Sands Macao casino for unpaid rents, says a court notice published yesterday. Venetian claims junket operator Amuca (Macau) Sociedade Unipessoal Ltda has failed to pay rents worth HK$450 million (US$58 million) since October 2012. Venetian, a subsidiary of United States firm Las Vegas Sands Corp, is also asking for interest on the overdue rents. The junket has 30 days to challenge the eviction proceedings. VIP gambling accounted for 71.1 percent of Sands Macao’s revenue so far this year.
acau firms are spending more of their information technology (IT) budget on security but many web servers used here are too vulnerable to cyber attacks, a survey shows. The Macau Information Security Survey 2013 Report shows about a third of the 119 respondents – private companies and public services – set aside 6 percent to 10 percent of their IT spending for security. In the first three editions of the annual survey the companies and services were more likely to spend just 2 percent to 5 percent on information security.
In just two years respondents spending less than one percent in information security fell from 17 percent to 8 percent. In contrast, firms and services allocating over a fifth of their IT budget on security has more than doubled from 6 percent last year to 13 percent. “It shows that the organisations are willing to spend more resources” to keep their data safe,” said survey coordinator Macau New Technologies Incubator Centre (Manetic). The trend comes as no surprise as companies and services are also employing more IT staff.
Almost half of the respondents said they now have full-time IT staff responsible for maintaining information security programmes and ensuring compliance. A further 15 percent have IT staff dedicated in exclusive to information security, up by more than double from 7 percent a year ago. Almost a third of Macau web servers are outdated and vulnerable to cyber attacks, the report adds. Manetic carried out a survey of 911 websites based in Macau servers and found out that at least 31 percent of those servers are no longer being updated.
November 21, 2013
Bigger users to pay Power consumption more for electricity up slightly in Q3 next year Resumption of natural gas supply Power utility announces reduced charges for households and most small businesses Stephanie Lai email@example.com
he city’s biggest industrial and commercial enterprises will pay more for their electricity by May, including the biggest hotels and casino-resorts. The confirmation came on Tuesday from Iun Iok Meng, an adviser to the executive committee of the city’s sole electricity distributor, Companhia de Electricidade de Macau SA (CEM). The new power tariff includes a category for hotels and casinoresorts consuming more than 3,001 kilowatt-hours a month, who will be charged 0.96 pataca (US$0.12) for each kilowatt-hour. For other industrial and commercial customers in tariff groups B and C, the government has proposed an average increase of about 8 percent. That would add between 2,000 patacas and 5,000 patacas a month to the bills of these heavier users. The Office for the Development of the Energy Sector will also raise the consumption thresholds for the next highest tariff group by about 20 percent. In April, the tariff clause adjustment increased by about 0.45 patacas a kilowatt-hour for big enterprises to account for increases in energy production costs. It remained unchanged for small users, which include all residential consumers, as well as small and medium enterprises such as shops
and restaurants. The new tariff is based on the concept of “use less, save more”, Mr Iun told media after a meeting of the utility company’s consultative committee. The government wants to reduce charges by at least 10 percent for more than 80 percent of the city’s households consuming less than 700 kilowatt-hours a month. The head of the Office for the Development of the Energy Sector, Arnaldo Santos, said last year that users consuming less than 500kWh of power a month would see their bills fall by about 15 percent. For consumers using more than 1,300 kilowatt-hours in a month, which includes about 60 percent of all small- and medium-sized enterprises, the cost saving will be about 5 percent. The energy office told Business Daily that it would aim to approve the new scheme by early next year. CEM will implement it by April or May, at the earliest. A spokeswoman for the electricity distributor told Business Daily the company expects little change to its revenue from the new tariff scheme. Households will continue to benefit from the government’s electricity subsidy of 200 patacas a month, Chief Executive Fernando Chui Sai On said in last week’s Policy Address.
Big hotels and casino-resorts will pay more for their electricity from the second quarter next year
not enough to lower electricity cost
lectricity consumption hit a new record in the third quarter, even though it grew just slightly from the same period of last year, official data show. Macau consumed 1,349.1 gigawatthour of power in the last quarter, up by 1.8 percent year-on-year, data from the Office for the Development of the Energy Sector show. Almost all of that electricity, nearly 93 percent or 1,251 gigawatt-hour, came from mainland China. And the energy office expects this trend to continue, predicting that 1,042 gigawatt-hour of power will be purchased from the mainland in the fourth quarter. The average purchasing cost reached 0.835 patacas per kilowatthour in the third quarter, 1.5 percent more than in the previous quarter. The city’s sole electricity distributor Companhia de Electricidade de Macau SA (CEM) has decreased its output because it was limited to burning fuel oil, which is more expensive than natural gas. Natural gas supplies from a new pipeline in Hengqin Island have only resumed in the third quarter after a two-year suspension. The amount of natural gas imported to the city has doubled
from the previous quarter to 168,680 cubic metres. CEM has spent 387 million patacas (US$48.5 million) in investments in the January-September period, mostly on the power grid expansion and maintenance. The firm intends to replace some of the existing power generating facilities in Coloane with more efficient combined cycles run on natural gas, a CEM spokesperson told Business Daily. The utility did not project an investment estimate. The Hengqin pipeline is now supplying natural gas to the Seac Pai Van public housing complex in Coloane and to University of Macau’s Hengqin campus. The overall import cost of natural gas in the third quarter was 5.14 patacas per cubic metre, 53 percent less than in the previous quarter. The average retail price of natural gas was 6.06 patacas per cubic metre. In contrast imported unleaded petrol, diesel fuel and liquefied petroleum gas all increased between 1.18 percent and 2.6 percent. According to the office’s data, unleaded petrol and liquefied petroleum gas are more expensive here than in Hong Kong and Guangzhou.
November 21, 2013 April 19, 2013
SHFL may ‘seek damages’ for trade show spat Casino supplier complains was never served notice or given ‘rationale’ for latest Macau Customs action Michael Grimes
vice president of investor relations and corporate communications at SHFL’s head office in Nevada said in an e-mailed statement: “No court of law has ruled that any of SHFL Asia’s products are in breach of any patents or other rights held by LT Game, any of its affiliates or related parties, or any other gaming supplier.” The U.S.–based firm added: “Any allegation to the contrary is unsubstantiated. Notably, in July of this year, SHFL Asia was acquitted of claims of patent infringement in which a Macau court found that a similar e-Table product did not infringe a gaming supplier’s patent.”
Closed for business – SHFL’s stand on Saturday
asino equipment maker SHFL entertainment Inc says it’s prepared to go to law to “seek to recover any damages that it may have incurred” following action by Macau Customs on the final day of the Macao Gaming Show on Saturday. Customs agents attending the trade stand of SHFL’s local unit SHFL Entertainment (Asia) Ltd on Saturday morning ordered the equipment on display – the SHFL Fusion Hybrid electronic multi-game product – to be switched off and covered. It was only uncovered again at around 4pm that day, the time the show was due to end. Officials had first visited the stand on Thursday, the opening day of the new trade event. They had stayed for around two hours, taking notes,
photographs and video footage of the equipment. At the time there was no official explanation of the reason for the visit. But it was later confirmed to Business Daily by a rival equipment maker – LT Game Ltd – that it had sought an injunction against SHFL’s local unit on Thursday. The injunction was reportedly granted on Friday, but then only acted upon during Saturday. The precise terms of the injunction were not explained to Business Daily. However, Betty Zhao, sales and marketing manager for LT Game, told us: “…we are trying to protect our patents and products,” indicating that the motivation for the action was fear or suspicion of patent infringement by SHFL of LT Game technology. But Julia Boguslawski,
No court of law has ruled that any of SHFL Asia’s products are in breach of any patents or other rights held by LT Game Julia Boguslawski, SHFL entertainment Inc
SHFL added, referring to Saturday’s events: “Customs communicated that it was carrying out an interim injunction purportedly filed with a Macau civil court; however SHFL Asia was never served notice of such proceedings nor did customs indicate the rationale for covering the SHFL Fusion Hybrid e-Table product.” The statement continued: “… SHFL Asia maintains that it has the right to commercialize all of the innovations that it exhibited at the show. SHFL Asia will seek to recover any damages that it may have incurred as a result of customs’ actions at the show.” SHFL – formerly known as Shuffle Master – has been in a long and at times bitter trade dispute with Macau-based LT Game and its Hong Kong-listed parent company Paradise Entertainment Ltd. It concerns a patent claimed in Macau for technology in a multi-game electronic table game product featuring a live dealer. SHFL said in relation to the Macao Gaming Show incident: “SHFL Asia also intends to investigate customs’ rationale for taking the actions it did at the show and to resolve any disputes in a court of law given that the SHFL Fusion Hybrid e-Table product does not infringe any patents of any gaming supplier.” LT Game is chaired by local businessman Jay Chun, who operates Kam Pek casino in Macau under a socalled service agreement with casino concessionaire Sociedade de Jogos de Macau SA. Mr Chun is also the chairman of the Macau Gaming Equipment Manufacturers Association, the organisers of last week’s trade event. On the first day of the show, Mr Chun said in an interview with Bloomberg News that he was aiming to operate two more casinos in Macau via ‘service agreements’.
LT Game claims victory in ‘monopoly’ row Says claims the equipment maker briefed outsiders it had exclusive rights in Macau ‘not proven’
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ate on Tuesday Paradise Entertainment Ltd – parent of LT Game Ltd – issued a statement saying Macau’s Court of First Instance had dismissed a separate civil action brought by SHFL Entertainment (Asia) Ltd. The lawsuit was against Paradise units Natural Noble Ltd and LT Game and Jay Chun. Paradise said the SHFL injunction had sought to prevent Paradise’s units “from claiming they own a monopoly
of the ‘multi-gaming system’ and of all and every technical solution of the ‘multi-gaming’ concept”. The filing with Hong Kong Stock Exchange added: “According to the court decision, SHFL Macau did not prove the existence of a right that was allegedly damaged. Moreover, it was not proved that any commercial conduct of LT Game Ltd (and of all the other respondents) infringed any potential rights of SHFL Macau.” M.G.
November 21, 2013 April 19, 2013
Macau Finalists selected for business awards gala Business Awards of the Year will acknowledge the contributions of less well-known firms and individuals Tony Lai
acau’s first business awards next Wednesday will hail the achievements of entrepreneurs and firms that are often out of the public’s eye. Nine categories will be recognised by the 2013 Business Awards of the Year, organised by Charity Association of Macau Business and De Ficção – Multimedia Projects, the publisher of Business Daily. “This is the first time Macau has held an event on such a scale that recognises individuals, companies and institutions that have contributed to the development of Macau,” De Ficção founder and publisher, Paulo Azevedo, said yesterday. Mr Azevedo said the event would “finally recognise so many people and some companies that are not normally in the newspapers, the magazines and on television”. Some award-winning firms had
been recognised outside the city but never in Macau, he said. Awards finalist EcoRite Environmental Products Ltd, a supplier of environmentally friendly products, said the event was significant. “This award can tell others that there are opportunities in Macau, particularly for those less wellknown companies,” said William Chu, EcoRite’s managing director. Increased publicity could also encourage more businesses to give Macau a shot. It would be “helpful for our products,” Mr Chu said.
Finalists unveiled The organisers unveiled the 42 finalists, culled from the 140 nominees. EcoRite, a firm established in 2009, is a finalist in the environmental
The 2013 Business Awards of the Year will be announced on Wednesday
performance category. Mr Azevedo said he was “fantastically happy” to have received “three times” the nominations he had initially expected. “Macau has so many possible candidates so this [award ceremony] is just a drop in the ocean,” he said. He said the event had “enormous potential” and could be held annually from now on. “These business awards are supposed to be Macau awards,” he said.
“We came up with the idea and we succeeded in getting the network and the project done. Hopefully others will join us to make this even bigger in the future.” The 42-strong nominee list includes gaming executive Angela Leong On Kei, payment system operator Macau Pass SA and Catholic charity Caritas Macau. A 27-member jury will select the winners who will be announced at a gala in the ballroom of the Grand Lisboa next Wednesday.
Corporate DHL appoints director for Hong Kong, Macau DHL Supply Chain Ltd, a contract logistics solutions provider, has appointed Dave Lim as managing director for Hong Kong and Macau, the company announced last week. Mr Lim will be in charge of “accelerating the strategic growth” of DHL in the two cities, the firm said in a statement. The executive will manage 220,000 square metres of warehousing space and 900 employees, its transportation network and value added supply chain services. Victor Mok, DHL chief executive for North Asia, said he is confident Mr Lim “will drive operations excellence at the Supply Chain MegaHub in Hong Kong and our facilities in Macau”. “We will continue to offer innovative solutions to support the strategic business and logistics needs of our customers,” said Mr Lim, whose appointment became effective October 1. The executive joined DHL in 1999 and was previously the firm’s country manager for Taiwan.
Airport launches luggage wrapping Passengers flying out via the Macau International Airport now have a new service to increase the protection of their luggage ahead of their trip. The Macau International Airport launched a new customer-oriented service on Monday. Luggage wrapping service is available at the Left Luggage Counter, located in the departure public hall. Passengers are able to wrap their luggage ahead of their trip for a fee of 50 patacas (US$6.3) per piece, Macau International Airport Co Ltd (CAM) said in a statement. This service comes as an addition to the existing luggage storage, luggage banding and sale of carton boxes, all services provided at the Left Luggage Counter for a “reasonable fee,” CAM adds. Over 3.7 million travellers have gone through the Macau International Airport in the first nine months of this year, up from 3.3 million in the same period of 2012, according to CAM data.
November 21, 2013 April 19, 2013
Greater China Guinea leads hidden shark fin shipments to HK Guinea led in shipping unreported catches of shark fins to Hong Kong, where the fish parts are sold for as much as US$700 a kilogram, according to a report by conservation group Oceana. Hong Kong imported 49.7 metric tons of dried and frozen fins, which are used in shark fin soup, from the west African country last year, the report showed, citing revenue data from the Chinese territory. Mauritania with 28.4 tons and the Philippines with 24.5 tons were the second- and third-biggest shippers of unreported shark fins. Hong Kong accounts for half of world demand for shark fins, according to Washington-based Pew Charitable Trusts.
Official warns of ‘high’ chance of small bank failure Funding mismatch could lead to bankruptcies, Fang Xinghai says
ne or two small Chinese banks may fail next year as they face pressure from their reliance on short-term borrowing, a Communist Party economic official said. Small banks get about 80 percent of their funding from interbank markets and deposits in savings vehicles known as wealth management products, Fang Xinghai, a bureau director at the Central Leading Group for Financial and Economic Affairs, said at a conference in Beijing yesterday. They face risks from the mismatch with their long-term loans to borrowers such as local government financing vehicles, he said. “Sometime next year, there may be one or two small lenders reporting a bank run or bankruptcies,” said Mr
Fang, a former head of Shanghai’s municipal Financial Services Office, whose current organization reports to the Central Committee of China’s ruling party. “That possibility is very high.” His warning follows efforts by Premier Li Keqiang to stem a US$6.6 trillion credit binge from the past five years and give the forces of supply and demand a bigger role in allocating resources in the world’s second-largest economy. The seven-day repurchase rate, a gauge of funding costs in the banking system, marked a high for the month at 5.4 percent on November 18 after the central bank drained money from the financial sector. The Communist Party this month signalled a bigger focus on
fiscal concerns, setting the scene for a clampdown on the finances of indebted local authorities. The scale of regional debt woes is set to be shown in an audit that the Finance Ministry said was due last month. The China Banking Regulatory Commission supervised 3,747 institutions at the end of last year, including more than 3,350 lenders at the municipal or rural level, according to the watchdog’s annual report. In addition to the threat to lenders from the funding mismatch, failures of investment trust companies may lead them to sell assets, causing a “snowball” effect of falling prices that could spread the risks of the shadow financing system to the banks, Mr Fang said.
Non-performing loans at China’s lenders rose for a seventh straight quarter through the end of June, extending the longest streak in at least nine years, official data show. The increase was the smallest since the first quarter of last year and the ratio of bad loans to total credit was unchanged from three months earlier, at 0.96 percent. China cleaned up its banks over the past decade, setting up assetmanagement companies in 1999 that initially took over 1.4 trillion yuan (US$230 billion) of bad loans from the four biggest lenders. Decades of government-directed lending to unprofitable enterprises had pushed the financial system to the brink of bankruptcy, with bad-loan ratios reaching as high as 40 percent. The government may publish rules for a deposit-insurance system before the end of this year, the Economic Information Daily reported today, citing an unidentified person. Bloomberg News
Firms delaying bond sales show Li Postponed sales could take further toll on economy, analyst says
hinese companies pulled more than twice the amount of bond sales in November than last month, an unintended casualty of Premier Li Keqiang’s effort to reform the banking system. Issuers have postponed or scrapped 73.5 billion yuan (US$12 billion) of notes, up from 29.8 billion yuan last month, according to filings on the websites of Chinamoney, Chinabond and Shanghai Clearing House. China Yangtze Power Co Ltd, owner of the world’s biggest hydropower project, was among borrowers delaying offerings. Fiveyear AAA corporate yields in the country have surged 49 basis points this month to a record 6.11 percent. Globally, company debt yields 2.91 percent. Premier Li must balance efforts to stem a US$6.6 trillion credit binge during the past five years with steps to develop the bond market as an alternative to bank financing and so-called shadow lending. Overall corporate sales have slumped 25 percent this month from a year earlier to 230 billion yuan as leaders said they will move faster to free up interest rates. The reforms would aggravate the already tightening credit situation, according to Morgan Stanley. “The rising pulled bond sales may increase default risks in the near term,” said
US$12 bln Worth of bond sales were postponed or scrapped in Nov.
Xu Hanfei, a Shanghai-based bond analyst at Guotai Junan Securities Co, the nation’s third-biggest brokerage. “Interest-rate reform has magnified the effects of monetary policy on borrowing costs. It’s a good way to help restructure the economy by crowding out financing for inefficient companies.”
Costs rise China’s seven-day repurchase rate, a gauge of funding costs in the banking system, jumped 126 basis points last week and marked a high for the month at 5.4 percent on Friday after the central bank drained money from the financial sector. While cash injections yesterday prompted it to fall, it has still averaged 4.33 percent this month, up from 4.27 percent in October, according to a daily fixing rate
Central bank is reducing capital pumped into the financial system
announced by the National Interbank Funding Centre. The benchmark 10-year government bond yield has climbed 116 basis points this half to 4.67 percent, the highest in data going back to September 2007.
Market reform “presents a near-term challenge in that it reduces credit availability and raises the cost of funds for Chinese state-owned enterprises,” Jonathan Garner, Viktor Hjort and Kewei Yang, at Morgan
Stanley, wrote in a report. China Development Bank Corp, the biggest lender for affordable housing, said in a statement last week it would delay an offering initially planned for November 19 due to “market conditions”.
November 21, 2013 April 19, 2013
Greater China China joins Australia in FTA willingness China is willing to finish negotiations with Australia on establishment of the China-Australia Free Trade Agreement soon, a ministry spokesman said. Minister of Industry Ian Macfarlane said Australia expects to sign the free trade pact with China in the first half of 2014. He expressed hope that a comprehensive deal would be on the table by the time Prime Minister Tony Abbott visits China next year. China is also keen to see the signing of the free trade agreement as soon as possible on the principles of mutual benefits and balanced interests, Ministry of Commerce spokesman Shen Danyang (pictured) said.
Chalco vice president quits amid probe Baidu’s founder becomes 2nd-richest man in China A Shares of Internet giant
luminum Corp of China Ltd, the nation’s biggest producer of the metal, said vice president Li Dongguang has resigned amid an investigation. Mr Li is being probed by “relevant authorities for personal reasons,” the Beijing-based company, also known as Chalco, said yesterday in statements to the Hong Kong and Shanghai stock exchanges. The investigation is not related to the company and won’t affect its operations, Chalco said. The probe comes as China’s new leaders, under President Xi Jinping, are cracking down on corruption.
China Cosco Holdings Co, the nation’s largest shipping company, said on November 8 that executive director Xu Minjie resigned after announcing he was under investigation. Mr Li, who was president of Chalco’s international trading unit, couldn’t be reached on his mobile phone yesterday. Yuan Li, a Beijingbased spokesman for Chalco’s parent, Aluminum Corp of China, said he didn’t have any further information. Chalco shares declined 0.5 percent to close at 3.95 yuan in Shanghai trading. They have dropped 23 percent this year. The Hong Konglisted shares rose 0.35 percent
to HK$2.84. Mr Li, 52, was appointed vice president at Chalco in May, when the company said he also served as the general manager of Chinalco Metals Trading Co and of China Aluminum Supply and Marketing of Materials Co. PetroChina Co Ltd, the publicly traded unit of state-owned China National Petroleum Corp. said in August that four senior managers had been removed from their posts after allegations of corruption. The value of the company’s shares has declined 13 percent in Hong Kong trading this year. Bloomberg News
reform fallout While the reforms are negative for credit, there are some encouraging signs for the longer-term impact, according to the Morgan Stanley report. Companies trimming debt may eventually help reduce systemic risks, it said.
China Railway Corp, which took over operations from the disbanded Ministry of Railways in March, didn’t sell 15 billion yuan of bonds initially planned for November 13, according to two people familiar with
the matter. China Yangtze Power, which owns the Three Gorges Power Station, said on November 12 that it would delay a sale of 3 billion yuan of one-year bonds due to “big market fluctuations”.
Some companies may continue to pull note sales in the next three months as the central bank is expected to keep the availability of funds tight, according to Shi Lei, head of fixed-income research at Ping An Securities Co Ltd. The People’s Bank of China had been reducing capital pumped into the financial system after inflation accelerated to an eight-month high in October. “Companies that can’t sell bonds may revert to bank loans or trust financing,” said Mr Shi. “Because those financing channels require higher yields, the companies’ earnings may decline. But at least they can survive.” The delayed bond sales will take a further toll on the economy, said Yang Aibin, Beijing-based general manager at Pengyang Investment Management Co. “Chinese companies are facing a serious reduction in financing,” Mr Yang said. “If corporate liquidity continues to stay weak, the negative effects will be seen in the first quarter of next year.” Bloomberg News
have risen 63 percent this year
obin Li, founder of China’s top Internet search engine Baidu Inc, has become the country’s second-richest man after his shares rose 63 percent this year. Mr Li’s net worth advanced to US$11.9 billion, according to the Bloomberg Billionaires Index. He overtook Hangzhou Wahaha Group chairman Zong Qinghou, who is worth US$11.8 billion and was once China’s wealthiest individual just three months ago. Mr Li trails Dalian Wanda Group founder and developer Wang Jianlin. Nearly all of Mr Li’s wealth stems from his 20.8 percent stake in Baidu. The shares are owned directly by Mr Li and his wife Melissa Dongmin Ma and through Handsome Rewards Ltd, a British Virgin Islands-based holding company. The 45-year-old billionaire also owns 1 percent of 360buy Jingdong Mall, a closely held Chinese online retailer. Baidu has climbed more than 50 percent on the Nasdaq since July 16 when the Beijing-based company said it would acquire Chinese mobile app developer 91 Wireless Websoft Ltd. The US$1.9 billion purchase, together with four acquisitions Mr Li has made over the past year, helped Baidu sap its primary challenger Qihoo 360 Technology Co as more Internet users tap smartphones. “With aggressive investment and strong execution, the company has built a comprehensive product offering in mobile phones through both internal R&D and strategic acquisitions,” Fawne Jiang and Long Lin, analysts of Brean Capital LLC wrote in an October 30 report. They have a “buy” rating on the stock.
Baidu bought a stake in group-buying site Nuomi.com for US$160 million in August and Internet video business PPStream Inc in June for US$370 million. The company, whose name is derived from an ancient Chinese poem, is buying companies to accelerate its transition to mobile devices, where traffic is at least doubling annually, Mr Li said in a televised interview with “Bloomberg West” last month. Baidu is China’s secondlargest Internet company by market value after Hong Kong-listed Tencent Holdings Ltd. Tencent Chairman Ma Huateng has a net worth of US$10.8 billion and is China’s fourth-richest man, according to the Bloomberg Billionaires Index. The Bloomberg Billionaires Index is a daily ranking of the world’s richest people. Each Bloomberg Billionaire profile contains a detailed analysis of how that person’s fortune is tallied. The index measures the world’s wealthy based on changes in markets, the economy and Bloomberg reporting. Bloomberg News
November 21, 2013 April 19, 2013
Chinese steer billions abroad in quest for safety Developers prepared to settle for lower rate of return elsewhere companies this year, up from US$321 million in all of 2012, according to New Yorkbased research firm Real Capital Analytics Inc. The data include both completed and pending transactions. Manhattan and other New York City boroughs were the two biggest areas for deals, with Los Angeles third. The Chinese are adding to a wave of investment in top markets by buyers including sovereign wealth funds, real estate investment trusts and private-equity firms.
Atlantic Yards Stake in Atlantic Yards project makes Greenland Holding one of the largest Chinese investors in the U.S.
ore than a dozen Chinese developers gathered for breakfast at a Los Angeles hotel one Sunday earlier this month before taking off for meetings with property brokers, attorneys and potential business partners. The visitors, none of whom have invested in U.S. real estate development before, would then catch an evening flight to San Jose, California, and meet with more property executives there and in nearby San Francisco. In all, they would stop in six cities over 14 days, including New York and Washington. “We like the stable and mature investment market in the U.S. relative to the Chinese market,” Jianrong Qian, chairman of Shanghaibased Chiway Holding Group Co Ltd, said through an interpreter. “We were encouraged by the pace of the recovery here in the U.S. after
the financial crisis. It shows the resilience of this market.” Developers from China are committing billions of dollars to projects around the world, from apartment towers in Brooklyn, New York, and a new business district in the U.K. to a residential redevelopment in Sydney and mixed-use buildings in downtown Los Angeles. Regulatory restrictions at home and concerns that the Chinese property market is overheating are spurring companies to venture outside their country for the first time and look far afield for construction opportunities. “Chinese companies are getting bigger, so they want to diversify beyond their home base,” said Goodwin Gaw, co-founder and chairman of Hong Kong-based Gaw Capital Partners, which is raising as much as US$500 million for its first U.S.-
focused fund, to be used for real estate development and management. “They feel like it’s their time.”
Relative stability Major U.S. cities and parts of Europe and Australia are appealing to developers for their relative stability and predictable population growth, as well as their popularity among wealthy Chinese individual buyers that may be attracted to the properties. The safety offered is enough of a draw that the companies are tackling cultural differences and unfamiliar approval processes, and at times accepting lower returns. In the U.S., the six biggest metropolitan areas have attracted US$2.88 billion in commercial real estate investment by Chinese
In the six major U.S. metro areas, commercial-property prices reached a five-year high in August, the latest month for which figures are available, and are up 6.2 percent this year, according to Moody’s Investors Service and Real Capital Analytics. In exchange for relative safety, Chiway is prepared to settle for an internal rate of return of about 15 percent on U.S. projects, less than the 30 percent to 50 percent more common in China, Mr Qian said. “These types of returns are going to end in China too,” said Mr Qian, whose company has built about 12 million square metres of mostly residential buildings in eastern Chinese cities including Shanghai. “They will have to level out at some point. But it’s hard to predict, and it makes business-planning for the future difficult in China.” Greenland Holding Group Co Ltd, the Shanghai-based
builder of one of China’s tallest towers, has emerged as one of the largest Chinese investors in the U.S. In October, the company signed a memorandum of understanding to buy a 70 percent share of Brooklyn’s US$5 billion Atlantic Yards project. “The trend for Chinese companies going abroad has just started,” Greenland chairman Zhang Yuliang said in an interview last month in Shanghai. The company’s projects include four of the world’s 10 tallest buildings, and it has developments in more than 80 Chinese cities, according to its website. Greenland is providing funding for the Atlantic Yards project while Forest City Ratner Cos, the site’s original developer, will manage the day-to-day tasks. Such an arrangement is common for Chinese developers seeking U.S. partners to navigate the local building processes and cultural differences. The Chinese “realise it’s more efficient to have a local partner,” Mr Gaw said. “The ones who try to do it on their own will have the hardest time. It’s not financial but a cultural problem.” Foreign expansion by Chinese builders shows no signs of cooling. China Vanke Co Ltd plans to increase its overseas investments to 20 percent of development spending from 5 percent today, with a focus on cities that have been attractive to Chinese for decades, such as San Francisco, New York and Boston, according to chairman Wang Shi. Outside the U.S., the U.K. and Australia’s largest cities also are attracting Chinese developers, according to Meisheng Nie, founder of the China Real Estate Chamber of Commerce, a 5,000-member organisation focused on growth in the property sector.
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November 21, 2013 April 19, 2013
Japan trade deficit doubles in October Deficit widens as fossil fuel imports surge Keiko Ujikane
apan posted its biggest October trade deficit on record, as a revival in exports to the U.S. and China was overwhelmed by the nation’s soaring costs for imported fuel in the wake of the nuclear industry’s shutdown. The shortfall of 1.09 trillion yen (US$10.9 billion) extended a record run of deficits to 16 months, and was larger than all 28 forecasts in a Bloomberg News survey, a finance ministry report showed yesterday in Tokyo. Imports climbed 26.1 percent from a year earlier, while exports gained 18.6 percent, marking the fastest gain since July 2010. The yen’s slide has helped boost profit forecasts and pushed up stock prices of exporters such as Toyota Motor Corp, while at the same time raising the cost of imports. The deficits are likely to continue and may drag on growth in the world’s third-largest economy, according to economist Norio Miyagawa. “Exports are rebounding on a pick-up in the overseas economy, while imports are likely to expand further before a sales-tax increase” in April, said Mr Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co in Tokyo. “The deficits aren’t a good sign for Japan’s economy as they mean wealth is flowing out of Japan.”
Fuel imports Fossil fuels contributed to nearly half of the gain in imports, with the value of petroleum shipments to Japan soaring 67.8 percent from the previous year, and liquefied natural gas rising 39.4 percent. The large gain in October this year may partly reflect depressed imports a year earlier following a tax change for some fossil-fuel imports. Exports to China increased 21.3 percent from a year ago when the two nations were embroiled in a
Exports rose by 18.6 pct in October from a year earlier
KEY POINTS Exports rose at fastest pace since July 2010 Oct was the 8th consecutive month of rises Trade deficit at US$10.9 bln in Oct Record run of deficits extended to 16 months
row over islands in the East China Sea. Shipments to the U.S. rose 26.4 percent, while those to the European Union climbed 27 percent. The record stretch of 16 monthly deficits is the longest in comparable data back to 1979. Gross domestic product grew at an annualised 1.9 percent in the three months through September after a 3.8 percent expansion the previous quarter. The economy will contract in the second quarter of next year following the April increase in the consumption levy. The U.S., Japan’s largest export destination, is displaying signs of
picking up. The labour market in the U.S. has shown “meaningful improvement” since the start of the Federal Reserve’s bond-buying programme and the benchmark interest rate will probably stay low long after the purchases end, Fed chairman Ben S. Bernanke said on Tuesday in a speech in Washington. Data yesterday were forecast to show U.S. retail sales rose in October after a decline in the previous month, while U.S. consumer prices remained unchanged from a month earlier after a gain in prior period, according to surveys of economists.
Sale of assets via toshins hit highest since 2008 Investors selling ahead of a doubling of Japan’s capital gains tax
apanese retail investors’ weekly net selling of domestic assets through toshins, or investment trusts, climbed to the highest since 2008, as the benchmark Nikkei stock index banked its biggest weekly rise in four years last week. The cut in exposure to domestic assets came ahead of a doubling of Japan’s capital gains tax taking effect from January 1, which could shackle this year’s rally in the Nikkei – the best among major developed markets. Japan’s tax on capital gains and dividend will be 20 percent rather than 10 percent at the start of next year, as a special tax break given to support share prices will expire. With the Nikkei soaring 45 percent this year driven by massive fiscal and monetary
stimulus, investors could be tempted to lock in gains before the tax rate doubles. Last week, Japanese retail investors sold 77 billion yen (US$768.4 million) of domestic assets through toshins, with the most in Japanese equities, according to Nomura Holdings Inc. “Last week’s acceleration of domestic asset liquidation suggests to us that the profittaking may cap the upside of the USDJPY and Japanese equities by year-end,” Nomura said in a note. The Nikkei jumped 7.7 percent last week, buoyed by a slide in the yen against the dollar and robust company earnings. Nomura said its survey of individual investors showed 90 percent of respondents who have sold or plan to
sell equities before the tax hike said they would reinvest in shares. “Impact of capital gain tax hike is likely to be small and short-lived, even though the hike can slow the retail investment momentum by end of this year,” it said. In a separate report, Nomura said it expected the Nikkei to reach 15,250 by year-end, 0.8 percent above Tuesday’s closing level. “The October 1 decision to raise the consumption tax was the last of the key themes for 2013 Japanese equities that we had envisaged, and with the year-end fast approaching, we see little prospect of any further incentives that would boost policy expectations during 2013,” the report said. Reuters
The Nikkei jumped 7.7 percent last week
November 21, 2013 April 19, 2013
Kim voices concern about low Bank of Korea governor calls for more measures to lift domestic Choonsik Yoo
Samsung’s Gear shipments hit 800,000 in 2 months Samsung Electronics Co said yesterday its Galaxy Gear has become the world’s most popular smartwatch with shipments reaching 800,000 since its debut two months ago, defying some market concerns the accessory would fail due to a lack of compelling features. The company’s statement referred to sales of the smartwatch, but Samsung later clarified that it was basing its figures on shipments to retailers and mobile operators. The South Korean firm said Gear sales have been better than its own expectations and it would expand sales promotions for the wearable device for the crucial year-end holiday sales. Samsung has poured marketing resources into the Gear with heavy advertisements and collaborations with fashion shows to seize leadership in the wearable computer market after the device got off to a rocky start after being critically panned by reviewers. Priced at around US$300, the Gear works as an accessory to its market leading Galaxy smartphone, with a small OLED screen offering basic functions like photos, hands-free calls and message notifications. Market expectations on the device have been not so strong, as it has only around 70 dedicated applications. U.K. retailer Phones4U offered the Gear for free to consumers buying the Galaxy Note3 on contract earlier this month, while earlier media reports said that the device was suffering some 30 percent return rates in U.S. stores of Best Buy.
ank of Korea Governor Kim Choong-soo said yesterday that policymakers needed to work on raising the country’s low inflation rate, in the most explicit expression yet of his concern about the threat of deflation. Asia’s fourth-largest economy is showing signs of recovery on the back of government stimulus measures, but domestic demand remains a concern and inflation has stayed stubbornly below the central bank’s target. “Our inflation has not come up to the expected level and this is also the case in the United States and Europe,” Mr Kim said at a meeting with privatesector economists, noting the impact of weak commodities prices. “If you look at it closely, it is also because the global economy is failing to grow sufficiently,” he said. South Korea’s economic growth is expected to pick up to 2.8 percent this year from 2.0 percent last year, according to central bank forecasts. But annual consumer inflation has remained stuck below 2 percent for the past year, less than the central bank’s 2.5-3.5 percent target range for the 2013-2015 period. The central bank last week kept its policy rate unchanged at 2.50 percent for the sixth straight month as it monitors the economic recovery,
South Korea’s consumer inflation stuck below 2 percent
and most analysts expect it to stand pat until late next year. Finance Minister Hyun Ohseok stressed the need for greater effort to lift domestic demand, and said next year’s economic policy would be focused on helping job creation, corporate investment and consumer spending. “While the government sector took
the leading role in recovering from the slump this year, the government will aim to achieve a more balanced pattern of growth with job growth, investment and private consumption playing a [bigger] role,” Mr Hyun said in comments published yesterday. Separately on Wednesday, central bank data showed the ratio of South Korea’s short-term external debt to
CapitaLand to sell a third of Australand stake Qantas, Virgin row turns ugly Virgin Australia Holdings Ltd chief John Borghetti (pictured) yesterday lashed out at “offensive” allegations made by Qantas Airways Ltd in an escalating row over foreign ownership, with reports that lawyers had been called in. It follows Qantas chief Alan Joyce this week blasting what he called a “virtual takeover” of Virgin Australia by foreign airlines, claiming they were working to destabilise the national carrier. On Tuesday, Qantas launched an online campaign against a capital raising by Virgin that could leave 72 percent of the carrier in the hands of Singapore Airlines Ltd, Air New Zealand Ltd and Abu Dhabi-based Etihad Airways. Mr Joyce, who was in Canberra yesterday to lobby politicians, said it would result in an “unfair playing field”. He claimed the foreign backing allowed Virgin to run at a loss by setting low prices to win customers from Qantas, an allegation Mr Borghetti denied. “To say that Virgin Australia is driven by a strategy of uncompetitively low prices and irrational behaviour is offensive and absurd,” he told the company’s annual general meeting in Brisbane. “The airline is run rationally with good management and a view to creating a long-term sustainable and profitable business.” He added: “We have embraced change and competition and adapted our business to it.” AFP/Reuters
outheast Asia’s largest property developer CapitaLand Ltd plans to sell a third of its interest in Australand Property Group, just months after a strategic review concluded the stake was a “key investment”. Singapore’s CapitaLand at the beginning of the year said it would review its Australia presence, and that it regarded Australand as more a financial investment and as a company with a business model different from its own. During the review, several parties expressed an interest in all or part of Australand’s business. The Australian developer said on Tuesday that it expects impairments of about A$65 million in its commercial and residential development businesses. The sale “is in line with what CapitaLand said earlier about their non-core assets,” Wilson Liew, Singapore-based analyst at Maybank Kim Eng Holdings Ltd, said. “If they get a good price, they would look to sell.” CapitaLand, which owns 59.1 percent of the Australian developer, proposed the sale of 115.66 million
stapled securities at A$3.685 to A$3.75 each, valuing the deal at up to A$434 million (US$408.76 million), showed a term sheet seen by Reuters yesterday. Australand shares last traded at A$3.75, off an over five-year high of A$4.02 hit earlier in November, having rallied nearly 20 percent from a June trough of A$3.14. The stock has risen 10 percent so far this year, whereas that of CapitaLand has dropped 17 percent. Citigroup will underwrite the sale through an overnight accelerated book-build process, CapitaLand said in a statement. The stapled securities to be sold represent around 20 percent of Australand’s outstanding securities. Stapled securities are created when two or more securities are contractually bound so they cannot be bought or sold separately. After the sale, CapitaLand’s stake will be 39.1 percent. GPT Group, Australia’s thirdbiggest diversified property trust by market capitalization, in December offered to buy Australand’s commercial and development units.
CapitaLand could raise from Australand’s stake sale
The company dropped its pursuit in May after failing to agree on a price amid reports that rival Mirvac Group had also considered and decided against a bid. Home prices in Australia’s major cities climbed to all-time highs in October as historically low mortgage rates fuelled strong demand in Sydney and Melbourne, property consultant RP Data-Rismark said in a recent report. Reuters/Bloomberg News
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November 21, 2013 April 19, 2013
Thai court rejects Senate amendments
Global economy not growing sufficiently – C.bank chief Govt vows to focus policy on lifting domestic demand Economy further relieved from foreign debt burden
foreign reserves had fallen to the lowest in nearly eight years by the end of September, indicating the country was less vulnerable to global market turmoil. South Korea’s short-term external debt fell to US$111.5 billion by the end of September from a revised US$119.6 billion three months earlier, while its foreign reserves rose
to US$336.9 billion from US$326.4 billion over the same period. As a result, the ratio of shortterm external debt to foreign reserves fell to 33.1 percent at the end of September from 36.6 percent three months before, marking its lowest since the end of December 2005. The ratio of short-term external debt has fallen sharply on the back of measures South Korea has taken over the past several years, shocked by a heavy foreign selloff of its assets during the 2008-2009 global financial crisis. The ratio has fallen for five consecutive quarters and is down from as high as 79 percent seen in late 2008. Still, total external debt rose to US$411.0 billion at the end of September from a revised US$407.4 billion at the end of June on increased foreign investment in South Korean government and central bank debt, the central bank said in a statement. Reuters
Country’s ruling party escapes punishment
hailand’s ruling party yesterday escaped the threat of dissolution in a key court verdict that slammed a bill it had proposed as “unconstitutional”, as political rivals rallied in Bangkok. The Constitutional Court rejected proposals from the ruling Pheu Thai party to make the Senate fully elected. It also rejected an opposition petition to dissolve Pheu Thai. The verdict was welcomed by both sides of Thailand’s fractured political landscape, with both pro- and antigovernment figures claiming victory. “The judges dismissed the petition to dissolve the political parties,” Constitutional Court Judge Jaroon Intaracha said, reading the ruling. But he criticised the process of pushing through a proposal to amend the constitution – drawn up under the military junta that deposed divisive former premier Thaksin Shinawatra – to make the Thai senate a fully elected body. The court said the amendment “aimed to obtain power in an undemocratic way”, adding that some MPs had been found to have voted on behalf of others, a practice it said was “illegal”. It added the ruling party’s amendment bid was
“unconstitutional”. Judicial rulings have played an important role in politically turbulent Thailand. Two pro-Thaksin premiers were forced from office in 2008 by such rulings, making way for the opposition Democrat Party, which is backed by the military and Bangkok’s elite, to take power in a parliamentary vote. The pro-government Red Shirt rally group, which has gathered over 20,000 people in the capital ahead of the verdict, welcomed the court decision not to dissolve the ruling Puea Thai party. But the group slammed the court’s ruling against the amendment. “If we cannot amend one article, how about the whole constitution,” said Red Shirt leader Jatuporn Prompan. The government said it would respect the Senate’s decision. A lawyer for the opposition Democrat Party said the ruling should trigger the resignation of Prime Minister Yingluck Shinawatra, Thaksin’s sister. “The amendment, which was not based on rule of law, but to benefit of specific people, cannot go through,” said Virat Karlayasiri. AFP
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Australia spying row deepens Indonesia suspends people-smuggling cooperation
he Indonesian president yesterday suspended cooperation with Australia over the sensitive issue of people smuggling, denouncing Canberra’s “Cold War” behaviour following allegations its spies tapped his phone. Susilo Bambang Yudhoyono announced that cooperation with its southern neighbour in a number of areas would be temporarily halted, including military exercises and intelligence exchanges. But the most important for the Australians will be in the key area of people smuggling, as Canberra seeks to stem a flow of thousands of asylum seekers arriving by boat from Indonesia. Mr Yudhoyono said that “coordinated military cooperation” between Jakarta and Canberra, which includes joint work on people smuggling, would
Yudhoyono said he would demand for a letter to explain the alleged spying
be halted “until everything is clear”. “For me personally, and for Indonesia, the wiretapping by Australia… is difficult to comprehend,” an angry Mr Yudhoyono told reporters. “This is not the Cold War era.” Cooperation with Australia on exchanging intelligence and sharing information would also be suspended as well as joint military exercises, the president said. He was speaking after a meeting at the presidential palace in Jakarta with Indonesia’s ambassador to Australia who was recalled earlier this week over the scandal. It was the latest angry outburst from Indonesia over reports, based on documents leaked by U.S. intelligence fugitive Edward Snowden, that Australian spies tried to tap the phones of the president, his wife and ministers. On Tuesday, Mr Yudhoyono publicly lambasted Australian Prime Minister Tony Abbott on Twitter for what he said was a lack of remorse over the
allegations, first reported in Australian media. Foreign Minister Marty Natalegawa also yesterday said Indonesia would downgrade ties with Australia, telling reporters: “Like taps, we are closing off areas of cooperation one by one.” Mr Yudhoyono’s decision to suspend cooperation in several areas came after Mr Abbott again refused to apologise yesterday over the scandal. “I do understand how personally hurtful these allegations have been, these reports have been, for him and his family,” Mr Abbott told parliament. “I do note there have been allegations and even admissions in the past on this subject, people didn’t overreact then and I certainly don’t propose to overreact now.” Mr Abbott appeared to be referring to an admission by Jakarta’s former intelligence chief to similar spying operations by Indonesia in the past, reported in the Australian media yesterday. AFP
November 21, 2013 April 19, 2013
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-0.3398 0.2486 0.3293 0.2594 -0.2696 0.0075 0.0065 0.0016 -0.2439 -0.3125 -0.0723 -0.2336 -0.1718 -0.4292 0.0734 0.0754 -0.0095 -0.1164 -0.261 -0.5241 0
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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 135.95 1.032
0.8848 1.4814 0.8891 1.2736 81.26 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 84.47 1.20302 0.80059 7.8281 10.1705 104.08 1.0289
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November 21, 2013 April 19, 2013
Leading reports from Asia’s best business newspapers
Economic Times India’s largest integrated casino resort in Daman, with 60,000 square feet of gaming space, is likely to be operational early next year, Jaydev Modi, chairman of Delta Corp Ltd, told reporters. The 187-room property will up new markets for Delta Corp as it is near Mumbai and within convenient distance from cities in Gujarat, he said. The company, which has major stakes in the off shore casino business in Goa, has acquired land in Sri Lanka and is “exploring the emerging gaming market” there, said Mr Modi.
Actually, economists can predict financial crises Mark Buchanan
Theoretical physicist and the author of ‘Forecast: What Physics, Meteorology and the Natural Sciences Can Teach Us About Economics’
Taipei Times Taiwan citizens are less gloomy about the nation’s economy this month after leading economic indicators showed mild improvement, but sentiment remains generally weak, a Cathay Financial Holding Co survey showed. About 39 percent of respondents expect the economy to deteriorate in the coming six months, falling from the 48 percent in a poll conducted one month earlier, the survey found. Cathay’s Achilles Chen attributed the sentiment upturn to positive growth in export orders last month.
Inquirer Business The World Bank is preparing a US$500 million emergency loan to help the Philippine government’s reconstruction efforts in areas affected by super typhoon Haiyan earlier this month. “We are committed to supporting the government in its effort to recover and rebuild, and to help Filipinos strengthen their resilience against increasingly frequent extreme weather events,” World Bank Group president Jim Yong Kim said in a statement. The latest emergency loan matches a similar financing package announced by the Asian Development Bank last week.
Jakarta Post Investors in Indonesia account for only 0.2 percent of the country’s total population, the lowest in the region, an executive in capital market supervision says. “Compared to other Asian countries, Indonesia also has the lowest number of publicly listed companies,” Nurhaida, commissioner at the Financial Services Authority, said in Citibank’s 2014 capital market outlook seminar. She added that to date the Indonesia Stock Exchange had listed only 479 companies, followed by Thailand with 577 companies.
conomists have long argued that they shouldn’t be expected to predict crises, such as the one that almost sank the global economy five years ago. That depends on how you define the word “predict”. In recent years, an inconsistency has emerged in the economics profession. Many, including some Nobel Prize winners, maintain that crises are by their very nature unpr dictable. At the same time, others – aided by engineers, physicists, ecologists and computer scientists – are developing ways to detect and quantify systemic risks, including measures that regulators could use to identify imbalances or vulnerabilities that might result in a crisis. If prediction is impossible, what’s the point of all the activity? After all, there’s an obvious logic to how forecasts can subvert themselves. If, for example, someone could have convinced investors in 2005 that a financial crisis was coming in two years, markets would have reacted immediately, setting off the spiral of deleveraging and financial contraction that in reality came later.
Striking balance The answer is that predictions can be useful without being quite so precise. Scientists make valuable predictions all the time that have little to do with foreseeing the future, but
develop our understanding of cause and effect. A biologist might predict that knocking out a gene in a mouse will lead to obesity. If experiments bear that out, then we learn something about the genetic control of metabolism, and might get some hints about ways to help combat obesity in people. On a more mundane level, we know by experience, as well as from engineering theory, that failing to keep oil in a car’s engine will inevitably lead to trouble. No one can say precisely when or where, or even what will go wrong. That doesn’t prevent us from recognising the wisdom of regular auto maintenance. In this sense of a causal relationship, quite a few people did foretell the financial crisis. Consider the 1999 book “Debt and Delusion,” in which financier Peter Warburton warned that the decades-long orgy of rising corporate and individual debt would inevitably fuel asset bubbles and cause financial instability. This was another “if X, then Y” prediction: If we continue along current lines, then trouble will follow. Many others made similar predictions, to which very few paid attention. The challenge for economists is to find those indicators that can provide regulators with reliable early warnings of trouble. It’s a complicated task. Can we construct measures of
Increasingly, mainstream economists accept that markets routinely get out of balance, and that they require continual oversight
asset bubbles, or devise ways to identify “too big to fail” or “too interconnected to fail” institutions? Can we identify the architectural features of financial networks that make them prone to cascades of distress? Can we strike the right balance between the transparency needed to make risks evident, and the privacy required for markets to function? Work is racing ahead. In the U.S., the newly formed Office of Financial Research has published various papers on topics such as stress tests and data gaps – including one that reviews a list of some 31 proposed systemicrisk measures. The economists John
Geanakoplos and Lasse Pedersen have offered specific proposals on measuring the extent to which markets are driven by leverage, which tends to make the whole system more fragile.
‘Physics envy’ One problem has been “physics envy” – a longing for certainty and for beautiful, timeless equations that can wrap up economic reality in some final way. Economics is actually more like biology, with perpetual change and evolution at its core. This means we’ll have to go on discovering new ways to identify useful clues about emerging problems as finance changes and investors jump into new products and strategies. Perpetual adaptation is part of living in a complex world. The efforts to develop measures of systemic risk are encouraging. They suggest that the idea that “markets are always right,” which inspired much of the financial deregulation of the 1990s and early 2000s, has lost some of its credence. Increasingly, mainstream economists accept that markets routinely get out of balance, and that they require continual oversight. Now all they need to do is get a lot better at prediction before the stage is set for the next crisis. Bloomberg View
November 21, 2013 April 19, 2013
Closing Bank says U.K. in sustained recovery
Economy ‘still far’ from ideal: Bernanke
The United Kingdom is in a sustained recovery and does not face major inflation risks, Bank of England policymakers have said. Minutes from the Monetary Policy Committee’s November meeting showed the nine members all voted to leave interest rates at 0.5 percent. The committee also signalled that it was in no rush to raise interest rates and might not do so immediately even after unemployment had fallen to 7 percent. The Bank of England said: “There could be a case for not raising Bank Rate immediately when the 7 percent unemployment threshold was reached.”
United States Federal Reserve chairman Ben Bernanke said the economy remains far from where the Fed wants to see it and that the U.S. central bank is still committed to its stimulus policies. Mr Bernanke gave no hint as to when Fed policymakers might begin cutting back its US$85 billion a month in asset purchases, saying they remain “committed to maintaining highly accommodative policies for as long as they are needed”. Event if the bond-buying programme ends next year, the Fed is likely to hold interest rates ultra-low for longer, until it sees growth is firm and self-sustaining.
TransAsia to launch Taiwan’s first budget airline
Last year’s election brought Prime Minister Shinzo Abe to power
Japan top court says 2012 poll unconstitutional But stopped short of invalidating Shinzo Abe’s victory
apan’s Supreme Court ruled the election that propelled Prime Minister Shinzo Abe back to power last year was unconstitutional due to the excessive weight of votes cast in rural areas, news agency Kyodo reported. At the same time, the court didn’t overturn Mr Abe’s December 2012 election victory. “We have been carrying out these lawsuits on the election for a long time and we didn’t give up because we felt we were moving forward a little at a time,” said Kuniaki Yamaguchi, a lawyer and one of the plaintiffs in the case. “Looking at this ruling, it seems that we’ve gone into reverse.” Plaintiffs have been trying to force a revamp of an electoral system under which lawmakers in rural districts often represent fewer people than in urban regions, giving more weight to rural areas that are a key constituency of Abe’s Liberal Democratic Party. Yesterday’s decision came after 15 lower courts ruled voting in some constituencies was unconstitutional, including in two where courts declared the results invalid. “We will take this verdict very seriously,” Deputy Chief Cabinet
Secretary Hiroshige Seko told reporters in Tokyo after the ruling. The ruling comes as Mr Abe seeks to keep his focus on the third phase of his economic reforms and efforts to limit the potential effect on the economy of a sales tax increase next year. “He should be taking the lead in resolving the situation,” said Koichi Nakano, a professor of political science at Sophia University in Tokyo. “If he’s seen as uninterested or not sufficiently humbled by the verdict,” voters could start to see him as out of touch, he added.
Different priorities Rural and urban voters may have different policy priorities, and Mr Abe has touted his economic reform as the most important part of his strategy to revive growth, after the first two steps of monetary and fiscal stimulus. Japan’s gross domestic product grew at an annualised 1.9 percent pace in the three months ended September 30, slowing for the second straight quarter. Legal challenges to the voting system have been going on for years
and have been filed after elections won by both the LDP and the Democratic Party. Parliament passed a bill in July to cut the number of seats in rural prefectures by five to even out discrepancies in the value of each vote. “Election reform is a bedrock issue for Abenomics,” wrote Robert Feldman, chief economist at Morgan Stanley MUFG in Tokyo, ahead of the ruling. “Without electoral reform that ends the major disparities of voter weights, the election incentives that have created and preserved vested interests would not change. Hence, both economic and fiscal reform would remain extremely difficult.” More drastic reforms are needed to reduce the excess clout of vested interests such as farmers and the elderly and ease the way to reforms to generate economic growth, experts said. But some analysts said the outlook for meaningful change remained dim. “They continued the previous warning and didn’t push it up a notch. They are still leaving it to the legislature,” said Sophia University professor Koichi Nakano. Bloomberg News/Reuters
TransAsia Airways said yesterday it would spend around Tw$3 billion (US$100 million) to launch Taiwan’s first low-cost airline as it tries to tap into growing demand for cheap travel. “We have been preparing this for a long time and our goal is to design a budget airline completely catering to the needs and expectations of the Taiwanese people,” said chairman Vincent Lin, after the company secured government approval to set up the sofar unnamed budget subsidiary. TransAsia, Taiwan’s first private airline, plans initially to lease two to three Airbus A320/A321 planes and hopes to start flying within a year, Mr Lin said. “We will lease brand-new aircraft for a brandnew airline. We will use the best equipment possible,” he said. Mr Lin declined to say which routes the airline would serve or what fares it would charge. The company has launched a contest to name the new airline, with the winner entitled to unlimited free flights for 10 years, Mr Lin said. TransAsia – which flies to Japan, Singapore, South Korea and Vietnam – has been expanding as it benefits from increased revenues from new China routes that have opened up in recent years since relations between Beijing and Taipei improved. Demands for discount flying has been rising in Asia. Currently 12 foreign budget airlines, including Malaysia-based AirAsia Bhd and Japan’s Peach Aviation, offer services to and from Taiwan.
China state firms’ profit growth slows slightly Annual profit growth at China’s state firms moderated to 10.1 percent in the first 10 months of the year from 10.5 in the January-September period, official data showed yesterday, underlining a stabilisation in the economy. State-owned non-financial companies made combined profits of 1.97 trillion yuan (US$323.3 billion) for the January-October period, the finance ministry said in a statement published on its website. A reform document released by the Communist Party following a four-day conclave of its top leaders pledged to raise the proportion of dividends paid out by state companies to the public to 30 percent by 2020 to address income inequality. Firms owned by the central government posted an annual rise of 13.9 percent in profits in the first 10 months while companies owned by local governments reported an increase of 1.1 percent. Companies in electronics, power, property development, transport and automobile sectors reported strong year-on-year profit growth. In contrast, firms in the nonferrous metal, petrochemical, coal and mechanical industries suffered a drop in earnings, the ministry said. Total assets of state firms rose 13.4 percent in the first 10 months to 89.4 trillion yuan, while debts increased 14 percent to 58.4 trillion yuan, it added. State firms retain their dominance in China’s key industries even though the government has long promised to allow in private investment to boost economic growth. Reuters
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