Budget committee1 won’t get veto on public finance
April 19, 2013
Business Awards of the Year holds inaugural event
Local banks must merge to compete on mainland L
ocal banks are still too small to compete on the mainland and only a wave of consolidation would allow them to expand across the border, Stephen Ieong Chi Kuong, director of banking business at Bank of China’s Macau branch, told Business Daily. Macau banks have yet to begin setting up consumer finance operations even in Guangdong. The regulator is already getting ready to open the consumer finance market
in 10 other places in mainland China. Qualified Macau and Hong Kong financial institutions have been allowed to enter the consumer finance market across the border since January. But the Monetary Authority of Macau told Business Daily yesterday that no Macau bank had expressed interest in taking up the challenge.
Number 424 Thursday November 28, 2013
Editor-in-chief Tiago Azevedo
Going concern fears for Carson Yeung firm: auditor
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Food wholesalers gripe as casinos shop direct
Wholesalers of food products face harder times as casinos and hotels increasingly buy directly from Hong Kong and mainland China says the Macau Union of Suppliers Associations. It’s in breach of a promise at the start of the gaming concessions that operators would give local wholesalers priority says the body. But Victor Lei, managing director of Macau logistics firm Victor Pacific Service Ltd, calls the union’s stance sour grapes. Page 2
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City’s junkets eye overseas bets
Labour market tightens as part-timers trade up
Macau junket operators are scouting opportunities overseas. Many emerging casino destinations in Southeast Asia have lower overheads than Macau and greater privacy for VIPs, a key advantage for wealthy players wary of China’s anti-corruption drive. “…in the Philippines, due to the lower tax rate, junkets can receive a bigger commission,” said Peter Lok, a former advisor to Macau junket investor Jimei Group.
It’s become even harder for Macau employers to find staff in the past three months, according to government figures released yesterday. Workers previously registered as part-timers have apparently been tempted into the full-time labour market. The number of people underemployed – those either overqualified for their post or that can find only part-time work – fell to 1,495 by the end of last month, official data show.
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November 28, 2013
Food wholesalers gripe as casinos shop direct Up to local middlemen to become more competitive, says logistics operator Stephanie Lai
José I. Duarte Economist
nformation from the Statistics and Census Service indicated that purchase and sale of building units plummeted after the laws regulating pre-sale of buildings under construction… and intermediary activity of real estate agents… took effect”. So starts a recent press release from the government’s statistics department on the state of the housing market. This statement cannot be just a simple declaration of a fact, that one thing happened and then another. The statement has just one meaning: government action to tame the real estate market has produced immediate effects. If that seems too good to be true, not to mention too immediate a change, it is. The statement raises technical and political issues. From a technical perspective, the self-assured declaration does not seem to be supported by the experience most people have with real estate, and the conclusion cannot be drawn from the data provided by the city’s statistics bureau. There has been a careful selection of a few data points to justify the assertion. That can be viewed as an attempt to convey a political message that is, in the end, inaccurate. It proclaims the government’s policy to control runaway housing prices has been a success, which is not borne out by the facts. Facts are stubborn, statistics are more flexible. Overall, home prices and rents are still going up and that is a feature that cannot be changed by the occasional oscillation in one indicator or another. An isolated drop in the number of transactions, or variations in price in selected areas of town, deserve attention and require analysis. But even if there was a reason or indication that prices were falling – and there is none – the relationship has to be explained and justified, not merely asserted as being self-evident. When commenting on specific figures, government departments must go beyond folk economics.
Foolish comments I am being slightly unfair. I don’t believe anyone at the statistics bureau really buys the fact that the government has tamed the real estate market. The press release serves a political purpose. Whether that was volunteered or imposed, I cannot say, but it is ultimately a disservice to the department. It concerns me that an impartial arm of the civil service and its staff are involved in a political debate that does not belong to them, in which they should not be involved. Worse still, it weakens the trust we must all have in the reliability and truthfulness of the data published by the statistics department. It is not the first time the actions of the department have been brought into question. About two years ago, a press release presenting the real estate market numbers for the third quarter, opened with: “Information from the Statistics and Census Service indicated that purchase and sale of property decreased significantly in the third quarter of 2011 on account of the measures introduced by the government to curb the soaring property prices”. The release went onto infer that changes in the stamp duty regulations were linked to the change. The reality showed how unjustified that claim was and it is clear, in hindsight, that it was foolish. It is not the role of the statistics department to comment on or present judgments on the merits of the government’s policies. For that purpose, the government has its own mechanisms: its members, the government speaker and its press office. There are also several solid supporters in and outside the Legislative Assembly. This kind of commentary is hardly compatible with the independence and credibility of the statistics bureau. That department produces information that is vital not only for government but also for all economic and social agents. It cannot be expected to act as the propaganda department for the government, any government, when it is deemed convenient. In this business, one cannot be trustworthy on average or only occasionally. These press releases start dryly most of the time: “Information from the Statistics and Census Service indicated that a total of [number] building units and parking spaces were purchased…”. That is the kind of statement you expect: adequately matter-of the-fact, grey, even boring. And that is how it should be. The statistics service would be well advised to revert to that style and stick to it. And it should do so promptly. Its purpose is to introduce us to numbers we need to know, which we must be able to trust.
holesalers of food products are facing hard times as casinos and hotels are increasingly buying directly from Hong Kong and mainland China it’s claimed. “The orders for food products or other goods used in resorts here are now basically placed directly from the point of purchase in Hong Kong, Zhuhai or Zhongshan,” Ip Sio Man told Business Daily. The president of the Macau Union of Suppliers Associations says the resorts’ logistic partners here handle the delivery process, bypassing local wholesalers. “This business pattern is actually imposing a big impact on suppliers [wholesalers] and the situation has been going on for at least two years,” said Mr Ip. The businessman claims some gaming operators have abandoned their pledge to prioritise Macau
companies when sourcing food products for their resorts. “This promise was made when the gaming concessions for outside firms began,” Mr Ip recalled. “At the time they agreed that, unless they could not find the right type of products or food here, they would give local suppliers the priority.” Small- and medium-sized suppliers are hurting because they pay proportionally higher costs for warehousing and staff than their bigger competitors in the neighbouring cities, the union said in a statement. Victor Lei, managing director of Macau logistics firm Victor Pacific Service Ltd, calls the union’s stance sour grapes and says suppliers must become more competitive. “Suppliers have to re-examine their business and think why they cannot make their way to the end-
users,” Mr Lei told Business Daily. “The core issue is whether the pricing, range of products and their quality, as well as the delivery service, can fulfil what the users require,” he added. Mr Lei acknowledged, however, that Macau wholesalers are at a disadvantage because their power to negotiate discounts with producers is not as strong as that of Hong Kong rivals buying in greater volume and serving a much bigger market of around seven million consumers. “There is a roughly 10 percent gap between the Hong Kong and Macau [import cost] when you check the quotation for the clearance documents of products,” he said. “Even with our population and big number of tourists, there is still a distance to go when we compare it [the local market] to the size of the Hong Kong market,” the logistics operator added.
Public finance panel to stay a paper tiger Greater transparency promised for special oversight committee but no more influence Stephanie Lai email@example.com
he Legislative Assembly’s special committee on public finance has promised greater transparency by releasing an annual report but is to remain a strictly advisory body. The committee met behind closed doors yesterday, the first time it has sat this legislative term. Members agreed to issue an annual report on its proceedings and analysis of major public finance policies. The report would also include analysis of budget overruns on public infrastructure works. “Our follow-up tasks can range from public finance policy, such as offering opinions on the budget framework law that will be amended soon, to the execution of fiscal plans,” said committee chairman Mak Soi Kun. “Our scope could also cover any major incidents like budget overruns in projects such as the construction of the Light Rapid Transit or ferry terminals.” No project will be off-limits, as long as it is approved by a majority of the committee members, Mr Mak said after the meeting. The committee will only decide which issues to tackle this legislative term in the next meeting, to be held in January.
The assembly’s monitoring committee on public finance will issue an annual report
In the previous term, the assembly set up three monitoring committees to oversee land and public concessions, public finances and public administration. Since their establishment the committees for public finance and public administration have seldom met. Pro-democrat legislator Ng Kuok Cheong left the meeting halfway through in protest against the changes to the special committee’s oversight role. “Clearly what the assembly wants
is an evolution as tiny as possible in its functions,” Mr Ng said. “The status quo is not altered at all.” According to the assembly rules, the make-up of the monitoring committees is the same as the three standing committees in charge of reviewing law proposals. But legislators are able to elect a different president for the monitoring committees. The president of the monitoring committee for public finances in the previous legislative term was businessman Chan Chak Mo.
November 28, 2013 April 19, 2013
Macau Profit jumps at Stanley Ho’s Portuguese casinos Estoril-Sol, SGPS, SA, the group controlled by Stanley Ho Hung Sun that operates three casinos in Portugal, reported profit of 1.26 million euros (13.7 million patacas) in the first nine months of this year, up by 865 percent from a year earlier. Gaming revenue from casinos operated by the group fell by 4.3 percent to 131.4 million euros in the January-September period, the company said in a filing to Portugal’s Securities Market Commission on Tuesday. Estoril-Sol said it still holds a market share of 63.6 percent in the Portuguese casino sector. The company posted losses of 8.9 million euros last year.
Banks still too small for mainland brawl The bar to entry to the mainland’s consumer finance market is set too high for outsiders Stephanie Lai
acau banks have yet to begin setting up consumer finance operations even in Guangdong, although the regulator is already getting ready to open the consumer finance market in 10 other places in mainland China. High asset requirements are not the only obstacle, Stephen Ieong Chi Kuong, director of banking business at Bank of China’s Macau branch, told Business Daily. Local banks are still too small to compete in the mainland and only a wave of consolidation would allow them to expand across the border, the executive added. Qualified Macau and Hong Kong financial institutions have been allowed to enter the consumer finance market across the border since January. But the Monetary Authority of Macau told Business Daily yesterday that no Macau bank had expressed interest in taking up the challenge. The law here says any lending institution incorporated in Macau must get the chief executive’s permission to open any subsidiary or branch outside the city. The China Banking Regulatory Commission regulator requires the largest shareholder in a consumer finance company to have assets of at least 60 billion yuan (78.6 billion patacas).
KEY POINTS No interest in China’s consumer finance Only 3 banks big enough for trial Banks unfamiliar with mainland market Consolidation could help, executive says
At the end of September only three Macau banks had that much in assets: Banco Nacional Ultramarino SA and the Macau branches of Standard Chartered Bank and Bank of China.
Merger call The asset requirement “is normal and understandable,” said Mr Ieong. “While they form this macro-policy for China’s market, it is impossible for them to consider some exclusive terms for such a small economy like Macau.” The regulator has reduced the
minimum stake that the largest shareholder in a consumer finance company must own to 30 percent from 50 percent. The regulator will also require the largest shareholder in a consumer finance company to have five years of experience of running a consumer finance business. The shareholder must also have made a profit for two financial years in a row. The rules say any financial institution seeking to take part in the experiment must have had a representative office or branch in the mainland for at least two years. The requirements are not the only thing stopping banks from moving in, said Mr Ieong. “It is quite hard for locally registered banks to compete in the fierce mainland market with their assets, technology and [lack of] familiarity with the market,” he said. “Unless the local banks strengthen their regional coverage through some M&A [mergers and acquisitions], it is not quite possible to see them simply expand their services in the mainland or elsewhere,” the executive said.
Rules are rules The regulator announced on Friday that from January 1 its experiment in opening up the mainland consumer
finance market would be expanded to cover 10 cities, including Guangzhou and Chongqing. But the expansion will probably do little to whet the appetites of Macau banks. Financial institutions in Macau and Hong Kong will be allowed to do consumer finance business only in Guangdong, including Shenzhen. The China Banking Regulatory Commission will allow Chinese nonfinancial enterprises to take part in the experiment, but not Macau or Hong Kong non-financial enterprises. An individual will be allowed to borrow up to 200,000 yuan from a consumer finance company. At present an individual is allowed to borrow up to five times his or her monthly income. The ban on consumer finance companies from taking deposits from the public or lending money to buy property or cars will remain. “What the mainland is trying to achieve now is to have their own private banks to be able to complement the services that are not covered by the big banks,” Mr Ieong said. The experiment in opening up the mainland consumer finance market began in 2009 in four cities, including Beijing and Shanghai. One company was allowed to set up a consumer finance business in each city.
November 28, 2013
City’s junkets eye overseas
Ken Jolly ‘will have role’ following Bally-SHFL deal Lower gaming tax rates and sometimes-lighter scrutiny Ken Jolly, executive vice president make casinos outside China attractive to VIP players Asia for SHFL entertainment Inc, “will have a role” with Bally Technologies Inc following the latter’s buy out of the rival casino equipment maker. The confirmation came in an e-mail to Business Daily from Mike Trask, corporate communications manager for Bally at its Las Vegas, Nevada, headquarters. Mr Trask added in response to another question from the newspaper that “SHFL names will likely be retained at the product level”. A US$1.3 billion (10.4 billion patacas) leveraged buy out of SHFL by casino systems and slots maker Bally was confirmed on Monday United States time.
Iao Kun hires Rothschild to sponsor HK listing Rothschild (Hong Kong) Ltd, part of global financial advisors Rothschild Group, is the new sponsor for Macau junket investor Iao Kun Group Holding Co Ltd’s bid to list in Hong Kong. Iao Kun said on Tuesday United States time – in a statement to Nasdaq in New York where it has its main listing – it would complete the Hong Kong exercise “as soon as practicable”. It said earlier this month that’s likely to be early next year. Iao Kun is entitled to receive all of the profits of VIP gaming promoters in five Macau VIP rooms.
n the second floor of Solaire’s plush oceanfront casino in Manila, the dealers speak Mandarin, the players are Chinese and revenue from high-roller gamblers is rising rapidly. “It’s almost not in the Philippines. It’s more like you’re in Macau,” says Francis Hernando, vice president for licensed casino development at the Philippine Amusement and Gaming Corporation, the country’s casino regulator. Wealthy Chinese gamblers are a growing presence in Asia’s emerging casino hubs as Macau’s junket operators use their home base as a springboard to grow their high-roller business across the region. “The junkets are very aware and are looking all over Asia to expand. It’s the biggest expansion phase ever right now,” said Ben Lee, Asian gaming consultant at Macau-based consultancy IGamiX. Offshore expansion is just one way the junket operators – which earn commissions from casinos to attract “big whale” gamblers – are responding to pressures at home as Beijing strives to turn Macau into a mass-market tourist destination. Caps on the supply of gaming tables that Macau’s casinos can install
Suncity Group – one of the current junket stars
‘Material uncertainty’ on Carson Yeung firm: auditor Football club owner had HK$119 mln loss for year to June 30 and capital shortfall of HK$99 mln Michael Grimes
Cantor Gaming supplier to mainland lottery club U.S.-based sports and mobile betting company Cantor Gaming says it supplied technology and support services for an upmarket new lottery club that opened in Tianjin on the Chinese mainland this week. The Cantor Club (pictured) is a partnership with the Tianjin Welfare Lottery, provincial operation of the state-run Welfare Lottery, and Beijing-based Global Entertainment Investment & Management Co. The three-storey club with 7,430 square metres (80,000-plus sq. feet) of floor space offers lottery games and mahjong, entertainment lounges and private dining rooms. It is unclear whether the club will pay out winnings in cash or prizes.
Veteran CEO leaves WMS parent firm Lottery provider Scientific Games Corp, which completed the US$1.5 billion (11.98 billion patacas) buy out of casino slot machine maker WMS Industries Inc last month, says its long serving chief executive has left the merged operation. A. Lorne Weil had been Scientific Games’ chairman since 1991 and was CEO from 1992 to 2008. He returned to the CEO job in November 2010. WMS said in its fiscal 2013 second quarter results it shipped 2,080 new units, or 43 percent of total global new unit shipments, to international customers in the December 2012 quarter.
n independent auditor of Birmingham International Holdings Ltd has warned of a “material uncertainty” about the group’s “ability to continue as a going concern”. The firm on Tuesday announced a HK$118.76 million (US$15.3 million) loss for the year ended June 30. It also had net current liabilities of nearly HK$158.64 million and a “capital deficiency” of around HK$99.27 million as of the reporting date. BIHL controls an English professional football club, Birmingham City F.C., currently playing in the second tier Football League Championship. The holding firm’s chairman Carson Yeung Ka Sing is currently on trial in Hong Kong accused of laundering HK$721 million. Evidence has emerged in court that some of the funds disputed by the prosecution flowed to and from Macau casino junket operations. Mr Yeung denies any wrongdoing. BIHL has previously said in filings that the allegations do not relate to the football club’s business. But the independent auditor for BIHL declined to express an opinion on whether the latest results “give a true and fair view of the state of affairs of the group and of the company as at 30 June 2013”. It said the reason was because of an approximately HK$5.20 million
St Andrews, home of Birmingham City F.C.
debt listed in company accounts as due to Vico Hui Ho Leuk, a former BIHL director. “We were unable to obtain sufficient information to verify the amount and repayment terms of this amount,” stated the auditor. It added: “There were no other satisfactory audit procedures including direct confirmation that we could perform to satisfy ourselves as to whether this amount was fairly stated in the statements of financial position as at 30 June 2013.” In the period, the group recorded a consolidated turnover of approximately HK$294 million,
representing a decrease of 40 percent compared to consolidated turnover of approximately HK$490 million in the year ended June 30, 2012. “Such decrease was mainly due to the significant dwindling of the revenue from Birmingham City Plc due to Birmingham City Football Club being relegated from [the] Premier league to [the] Championship football league,” said the results filing. Closing arguments by lawyers in Mr Yeung’s money laundering case are scheduled to start on December 12, with a verdict expected early next year.
November 28, 2013
and new rules that make it harder for wealthy punters to remain anonymous are two of the regulatory changes prompting the junkets to alter their business model. As a result, the proportion of Macau’s gaming revenue from VIPs has fallen to its lowest share since 2006, while spending by middle-class, mass-market gamblers – who do not rely on Macau’s idiosyncratic junket system – is surging. Armed with extensive customer networks and deep pockets thanks to monthly turnover the equivalent of up to US$9 billion (71.87 billion patacas), the junkets are now trying to repeat the Macau formula in countries such as Cambodia, the Philippines and Vietnam.
Suncity Group, Hengsheng Group, David Group, Tak Chun, Jimei Group, Golden Group, Mega Stars and Golden Dragon are some of the Macau junket operators scouting opportunities overseas. Emerging casino destinations in Southeast Asia have lower overheads than Macau and can promise higher incentives to wealthy gamblers. They also offer greater privacy, a key advantage for wealthy players who drop one million yuan (US$164,000) a bet and are wary of China’s anticorruption drive. Hengsheng, one of Macau’s youngest junket outfits, which is aiming to go public in the near future, has cooperation agreements with Danang’s Crown Casino in Vietnam and at Walkerhill casino in South Korea.
Aristocrat group profit up 17 pct for year Holding slot share in Asia Pacific despite ‘some slowing’ in Macau machine replacement cycle
lot maker Aristocrat Leisure Ltd said group profit after tax rose nearly 17 percent yearon-year to A$107.2 million (780.61 million patacas) in the year ended September 30. The firm’s directors authorised a final dividend for the period of 7.5 Aus cents per share, equalling A$41.4 million. Aristocrat said in an earlier commentary on the earnings that in the casino slots segment – known as Class III machines – revenues in Asia Pacific were down 7.1 percent due to “lower buying activity in Macau during the second half, influenced by anticipated regulatory change”. Matthew Ryan and Richard Szabo, analysts at JP Morgan Securities Australia Ltd, said in a research note on the results: “Management cited market weakness in Macau, where the replacement cycle slowed ahead of a regulatory change which imposes new standards on slot machines including continuing play and note insertion (machines need to be compliant by the end of April 2014)…” But Aristocrat added in its own commentary: “Despite lower buying activity in Macau, the group continued to hold share in this key market and across the Asia Pacific region. Excluding new openings, revenues outside of Macau and Singapore grew over 20 percent as the group continued to broaden its presence in the region.”
The firm also reported a “circa 50 percent share of the floor” in the gaming machine segment at Solaire Resort & Casino, a new venue from Bloomberry Resorts Corp, and which opened in March at Manila Bay in the Philippines. Aristocrat recently launched in Manila a linked jackpot slot product themed around Philippines boxer Manny Pacquiao. It has some of Aristocrat’s most popular games – 5 Dragons Legends, 5 Koi Legends, 50 Dragons Deluxe and Fortune King Deluxe – supporting the main theme and is performing “really well” says the gaming supplier. M.G.
“Hengsheng this year started its international expansion,” the company’s assistant director, Luke Lu, said. “Right now we have agreements in place overseas, gradually we’ll move to open VIP rooms and then take stakes in the casinos.” Suncity operates VIP rooms around Asia, including in Australian billionaire James Packer’s Crown casino in Melbourne and in Philippine tycoon Ricky Razon’s Solaire casino in Manila. The group, which is headed by 39-year-old Macau businessman Alvin Chau Cheok Wa, also has a joint venture operation at the Cagayan Holiday and Leisure resort in the north of the Philippines. Jimei, run by Guangzhou-born junket tycoon Jack Lam Yin Lok, operates two resorts in the Philippines as well as a gambling ship that does
…in the Philippines, due to the lower tax rate, junkets can receive a bigger commission Peter Lok, former advisor to junket investor Jimei Group
daily cruises out of Hong Kong. “The terms the junkets get overseas are typically much better than in Macau. For instance, in the Philippines, due to the lower tax rate, junkets can receive a bigger commission,” said Peter Lok, a former executive of Macau casino operator SJM Holdings Ltd and Jimei Group. Casinos in Macau pay close to 40 percent of gaming revenues in taxes, compared with just 15 percent for VIP gambling revenue in the Philippines. Another way Macau junkets are adapting their business is to appeal more to middle-class gamblers and leisure travellers. “More junkets are looking at the cash and premium mass player for business opportunities,” said Chien Lee, former chairman and chief executive of Iao Kun Group a Nasdaqlisted junket investor that is planning a Hong Kong listing. Junkets are also sponsoring cultural events and investing in the media. Hengsheng is sponsoring the Macau International Movie Festival in December while Suncity is launching its own quarterly magazine about lifestyle and business at the end of this year. Yu Yio Hung, a Macau junket operator of 27 years standing, said rapid growth has raised new challenges for the industry. “The gaming concessionaires [casinos] want to promote the mass market business which is increasing very fast. The concessionaires are raising the bar for VIP club operators and they need to meet higher and higher targets,” he told a Macau Gaming conference in November. Reuters
November 28, 2013 April 19, 2013
Macau Pass wins big at inaugural awards gala
List of Winners
Two awards recognise innovation and environmental care; Sofitel’s Michel Molliet wins highest personal award for leadership Staff reporter firstname.lastname@example.org
Corporate Social Responsibility Melco Crown Entertainment Ltd Environmental Performance Macau Pass SA Innovation Macau Pass SA Leadership Michel Molliet
here was no red carpet but there were rising stars at the first edition of the Business Awards of the Year last night. The big winner was Macau Pass SA. It was the only nominee to receive two awards, a trophy for innovation and the prize for environmental performance. The highest individual award on offer last night was for leadership. It went to Michel Molliet, Sofitel’s vicepresident for Greater China and the general manager of Sofitel Macau. The awards gala at the Grand Lisboa ballroom was designed to hail the achievements of entrepreneurs and firms that are often out of the public’s eye. The event is organised by the Charity Association of Macau Business Readers and De Ficção – Multimedia Projects, the publisher of Business Daily. There were 140 nominees in nine categories that were reduced to a shortlist of 42 finalists ahead of final judging by a 27-member jury with members from throughout the community. Macau Pass was the first company to sell, issue and manage a contactless electronic smart card here, which is widely used to pay bus fares or shop in convenience stores. Almost 1.1 million Macau Pass cards had been issued by April, the company says. Earlier this year the company launched the first stored-value card to be used on both sides of the border and it is now planning to introduce technology to allow people to use their mobile phones as a stored-value card. Sofitel’s Mr Molliet, a French national, has been based in Greater
Non-profit Organisation Association of Rehabilitation of Drug Abusers of Macau Research Achievement U Seng Pan Small and Medium Enterprise Chessman Entertainment Production Co Ltd Woman Entrepreneur Angela Leong On Kei Young Entrepreneur Norris Man
Michel Molliet took home the individual award for leadership
China since 2004 and has won dozens of international awards. He re-joined Sofitel in 2010 to be part of the brand’s repositioning effort. Casino operator Melco Crown Entertainment Ltd was distinguished among most of its peers for its corporate social responsibility efforts. And SJM Holdings Ltd executive director Angela Leong On Kei was recognised as the woman entrepreneur of the year.
Community development Chessman Entertainment Production Co Ltd, a company devoted to developing the music industry here, won the award for the small and medium enterprises category.
Chessman has successfully created a sustainable network for fulltime singers and music production directors. Since its inception 12 years ago, the firm has organised more than 1,000 events. The award for the young entrepreneur category was won by Norris Man, founder of the Centroid Group (International) Co Ltd. Centroid operates in different fields but it is mostly focused on retail of food and beverages. The company has introduced well-known international brands to Macau including Subway and Dairy Queen. Ben U Seng Pan, professor at the University of Macau, was recognised for his high-technology research.
Mr U is a cofounder of Chipidea Microelectronics (Macau) Ltd, a designer of integrated circuits used in computing. The award for non-profit organisation of the year went to The Association of Rehabilitation of Drug Abusers of Macao. The association has provided treatment and relapse prevention services for substance abusers in Macau for 20 years. De Ficção founder and publisher Paulo Azevedo said the event acknowledged individuals, companies and institutions “that continue to contribute to the development of Macau”. The Business Awards of the Year also recognise the contributions of lesser known firms and individuals “that play an important role in the city’s development,” he said. The event has “enormous potential” and should become an annual event, he added.
For your events, we will always invite excellence, professionalism, quality and surprise, because we know that the most important thing your guests will take away is the memory of you and your brand. To do this, you can count on our team to provide solutions that go beyond your expectations, and always focus on your marketing needs.
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November 28, 2013 April 19, 2013
Labour market tightens as part-timers vanish Higher wages are tempting more part-time workers into full-time jobs, observers say Vítor Quintã firstname.lastname@example.org
utilised to the maximum because there are just no more workers to be found,” he said. As a result, the workload for staff is increasing, he said. Almost 70 percent of employees worked more than 45 hours a week in the third quarter, up by 2.6 percentage points from the previous quarter, official data show. Mr Siu says workers outside the casinos are not necessarily enduring more hours at the office. “In the casino industry we hear about frontline staff facing heavier workloads and more pressure. But working hours have remained the same in the banking and retail sectors, for instance,” he said. The unemployment rate for the August-October period was stable at 1.9 percent. Mr Siu says the recordlow underemployment rate is further evidence that Macau needs more migrants, no matter the opposition from labour groups. In the past two months these groups have rallied against the possibility of allowing migrants to work as casino dealers or drivers.
Part-time attraction The underemployment rate is not a sign that parttime work is becoming a lastresort option, said Loh Seow Yuen, managing partner at employment agency MSS Recruitment Ltd and hello-jobs.com. The city’s retailers are a major employer of part-time workers
he labour market has grown tighter in the past three months, with few people still unable to find a full-time job that matches their qualifications. The number of underemployed – those performing jobs for which they are overqualified or working part time but keen to go full-time – fell to 1,495 people at the end of last month, official data released yesterday shows.
The Statistics and Census Service said the underemployment rate fell by 0.2 percentage points to 0.4 percent. That is the lowest rate since the statistics bureau began collecting employment data in 1992. The underemployment peak was set in May 2001 at 3.8 percent. Part-time workers are moving into full-time jobs because the salaries on offer
have become too attractive to pass up, Ricardo Siu Chi Sen said. The University of Macau associate professor of business and economics says firms are being forced to pay more to attract staff. The underemployment rate is one more sign of how tight Macau’s labour market has become, economist Albano Martins said. “It means there are more workers that are being
KEY POINTS Underemployment rate at new lows Wage earners working longer hours Part-time pay 60 pct higher than Hong Kong
There are more workers that are being utilised to the maximum because there are just no more workers to be found Albano Martins, economist
Ms Loh said part-time work was “very attractive” with wages that “can be 60 percent higher” than in Hong Kong. There were always acute shortages of parttime workers and workers “always have their pick of the cherries”, she said. Regulating part-time work would not help increase the pool of available workers because they receive mandatory benefits, including employers’ contributions to the Social Security Fund. A government-sponsored proposal to regulate parttime work remains stuck at the Standing Committee for the Coordination of Social Affairs. There are deep rifts between labour representatives and employer groups. The government’s proposal would identify parttime work as 24 hours a week or less than 96 hours every four weeks. Labour representatives say the definition is unfair and that part-timers do not enjoy the same rights as fulltime employees – even on a pro-rata basis – especially when it comes to holidays. Employees have little interest in pushing forward with a law on part-time work, said Mr Siu. “It may take time” to implement it, he said.
Macau growth boosts Moiselle profits
lothing retailer Moiselle International Holdings Ltd has seen its sales improve in Macau during the six months ended September, helping to offset a slump in mainland China. Turnover increased by 6 percent to HK$193.2 million (US$24.9 million) from the same period last year, the group told the Hong Kong Stock Exchange on Tuesday. Most of that growth came from Hong Kong, where revenue rose by 12 percent to HK$98.6 million. The city accounted for over half of Moiselle’s sales. Revenue from outside Hong Kong fell by 0.2 percent to HK$94.5 million despite “the continued significant
improvement of the Macau market,” the firm said in a filing. The main reason for the slump was “the continued deterioration of the mainland China market,” Moiselle said. The retailer has closed 11 mainland stores since September 2012. The group has four stores in Macau: two for the Moiselle brand, one for casual brand Mademoiselle and another for Italian accessory label Coccinelle. With sales growing and operating expenses rising just 0.8 percent to HK$150.3 million despite higher shops rents and staff wages, Moiselle’s profit doubled to HK$7.8 million. V.Q.
Unique opportunity The Fountainside
Apt. on Top Floor Approx. 180 square meters HKD 19.9 million
November 28, 2013 April 19, 2013
Japanese airlines snub China air rules Tokyo says new air defence identification zone ‘not valid at all’
apan’s airlines have bowed to Japanese government pressure to ignore new Chinese flight restrictions, opening up a new front in an increasingly bitter territorial dispute between Asia’s two largest economies. The change came after the U.S. ignored the Chinese restrictions and flew a pair of B52 bombers across the zone without asking Beijing’s permission in what appeared to be a direct challenge to the Chinese claim. Washington said that the flights on Tuesday were a long-planned training mission and insisted that the U.S. would continue to operate in what it considers to be international air space. China “monitored” the bomber flights in its newly-declared air defence identification zone, the defence ministry said yesterday, in an assertion of its authority that stopped short of threatening direct action. In a statement, Beijing’s defence ministry spokesman Geng Yansheng said: “The Chinese military monitored the entire process, carried out identification in a timely manner, and ascertained the type of U.S. aircraft.” “China is capable of exercising effective control over this airspace,” Mr Geng added. On Saturday China’s civil aviation authority put out an order for all flights planning to pass through a new “air defence identification zone” to submit flight plans, or risk unspecified “emergency defensive measures”. Japan, the United States and several other governments rejected the zone, and the U.S. State Department reiterated on Tuesday that China’s action appeared to be an attempt to “unilaterally change the status quo in the East China Sea”. Japan says that China’s new air defence identification zone is “not valid at all” and should be disregarded.
Peach flight Peach Aviation Ltd, a low-fare carrier affiliated with ANA Holdings Inc, said it flew safely through a new Chinese air-defence zone after Japan
ANA, Japan Air fly through new zone without notice
KEY POINTS ANA, Japan Airlines to stop filing flight plans U.S. flies B52s through contested airspace New zone covers disputed East China Sea waters asked carriers to stop giving flight information to China. The flight from Osaka touched down in Taipei yesterday morning, Naoto Domeki, a spokesman for the carrier, said. ANA and Japan Airlines Co, the country’s two biggest carriers, said they are reversing an earlier decision and would stop reporting flight plans for planes traveling through the
Chinese zone that Japan rejects. Japan told its domestic airlines to stop providing flight information to China when flying through the new zone, which includes a chain of islands in the East China Sea that are disputed by Asia’s two largest economies. ANA and JAL said they would halt the sharing of the flight-plan data starting yesterday, spokesmen said by phone. The carriers shifted their stance on instructions from Japan’s airline trade group, which acted as an intermediary between the airlines and Japan’s Civil Aviation Bureau, Maho Ito, an ANA spokeswoman, said by phone. The disputed islands, known as Diaoyu in Chinese and Senkaku in Japanese, lie inside the new air defence zone. Both nations claim sovereignty over the area, whose waters are rich in oil, natural gas and fish. The dispute comes as China and Japan seek a greater role in the region, courting nations in Southeast Asia.
Other countries’ carriers are awaiting government guidance. “There has been no change to our operations,” Lee Hyo-min, a spokeswoman for Seoul-based Asiana Airlines Inc, said. “We have not yet provided any flight plans to China on services that pass through the zone because there has been no guideline from the government. We will make change if and when the government revises this guidelines.” Cathay Pacific Airways Ltd, the Hong Kong-based carrier, said its flight operations are normal. The creation of the zone hasn’t affected operations of commercial flights so far, the International Air Transport Association said in an e-mailed response to Bloomberg News. “Some airlines have had to take some extra steps at the moment, such as filing flight plans manually,” IATA said. “We are trying to get more details from the Chinese authorities to clarify ongoing operational requirements.” AFP/Bloomberg News
Mainland gold imports from HK rise to 7-mth high Retailers build up inventories ahead of a peak-demand season
There’s preparation for demand that always ramps up in the fourth quarter Wang Xinyou, Agricultural Bank of China
he mainland’s net gold imports from Hong Kong hit the highest in seven months in October as the country bought more than 100 tonnes of gold for a sixth straight month to meet unprecedented demand for bullion. China’s net purchases from Hong Kong totalled 131.19 tonnes in October, up from 110.914 tonnes in September, according to data e-mailed to Reuters by the Hong Kong Census and Statistics Department. The purchases from Hong Kong were the strongest since March when China, set to overtake India as the biggest gold consumer this year, bought a record 136.185 tonnes. Total imports – including purchases later re-sold to Hong Kong – rose to 147.922 tonnes in October from 116.306 tonnes a month ago.
Imports jumped as banks and retailers were stocking up to meet peak seasonal demand ahead of the Chinese New Year in late January, traders said. “There’s preparation for demand that always ramps up in the fourth quarter,” Wang Xinyou, head of precious metals division at Agricultural Bank of China in Beijing, said before the announcement. China does not publish any gold trade data. The numbers from Hong Kong, a main conduit for gold into China, give the best picture of the country’s trade in the precious metal. Global trade data, however, shows that a considerable amount of gold is entering China directly through routes such as Shanghai. Chinese demand has hit record highs this year as gold prices have fallen about
25 percent – their first decline in 13 years. Gold is a popular investment option in China, where it is bought in jewellery, bar and coin forms. Chinese demand is expected to top 1,000 tonnes this year, according to the World Gold Council. China’s October imports puts it strongly ahead of India as the largest consumer of bullion. Its net gold imports from Hong Kong have totalled about 986 tonnes for the first ten months of the year. India’s total imports for the same period stand at a little over 600 tonnes. China’s demand for jewellery, bars and coins rose 30 percent to 996.3 tons in the 12 months through September, while usage in India gained 24 percent to 977.6 tons, according to the London- based WGC. Reuters
November 28, 2013 April 19, 2013
Greater China Guangdong carbon market to start in Dec One of seven pilot markets as China strives to cut emissions
uangdong, China’s most populous province with more than 100 million people, is to launch a carbon permits market next month that will be the world’s second biggest after the European Union. China, the world’s biggest emitter of greenhouse gases, has pledged to reduce its carbon dioxide emissions per unit of GDP by up to 45 percent by 2020. Shanghai launched a carbon market on Tuesday and Beijing follows today. The scheme in heavily industrialised Guangdong will cap carbon dioxide emissions from 202 companies at 350 million tonnes for 2013, according to a statement on the website of the provincial Development and Reform Commission. Most permits, including 97 percent of what emitters get, will be handed out free on December 10, but the local government will also auction 29 million permits for this year from mid-December, it said, without giving a specific date. The Guangzhou-based China Emissions Exchange will then launch a secondary market for permits by the end of December. Among the firms covered by the scheme, which will dwarf the markets in Australia and California, are state-owned power companies Datang, Huaneng and Shenhua, along
with manufacturers and petrochemical firms. Opening bids for the auctioned permits should be made at 60 yuan (US$9.85), the government said, but the Guangdong emissions trading scheme does not have a formal floor price. Carbon permits on the Shenzhen market, China’s first, ended at 72.76 yuan on Tuesday while those in Shanghai made their debut the same day at 27 yuan. Beijing’s market will be around a quarter the size of the Guangdong scheme in terms of CO2 covered. Further markets are due to open in Hubei province and the cities of Chongqing and Tianjin in 2014. The permits auctioned in Guangdong will include 10.5 million for the quotas of the 202 emitters. The rest are from a reserve of 38 million permits set aside to cover new entrants and various “adjustments”, the local government document said, without offering further detail. In total, the seven pilot markets in China will regulate around 700-800 million tonnes of carbon dioxide annually, roughly equal to the annual emissions of Germany, and will cover areas accounting for nearly a third of China’s gross domestic product. Reuters
British Airways in talks with Chinese airlines Services to Chengdu exceeding expectations, executive says Robert Wall
ritish Airways has held talks with airlines in China aimed at boosting connections there while looking to add more destinations of its own in the world’s fastest-growing major economy. British Airways has had discussions with discount carrier Spring Airlines Co, China Eastern Airlines Corp and Sichuan Airlines Co, among others, Willie Walsh, chief executive of parent company IAG SA, said yesterday. BA has been “very late into China” due to relatively poor U.K. trade links and a lack of flight slots at its London Heathrow hub, Mr Walsh said. Services to Chengdu, added after the purchase of BMI freed up 42 slots, are exceeding expectations, the CEO said at the CAPA World Aviation Summit in Amsterdam. “It is a huge market,” he said. “There is a long list of cities in China we see with opportunities.” The Asian country has also been a weakness for the Oneworld airline grouping, which counts only Hong Kong-
based Cathay Pacific Airways Ltd as a full member there, with Cathay’s regional subsidiary Dragonair as an affiliate. Shanghai-based China Eastern is a member of the rival SkyTeam alliance led by Air France-KLM Group and Delta Air Lines Inc, which also includes China Southern Airlines Co, Asia’s biggest carrier by traffic, and Xiamen Airlines Co.
Bilateral ties The Star Alliance that includes Deutsche Lufthansa AG counts Beijing-based Air China Ltd and its Shenzhen Airlines Co unit as members. It’s not uncommon for carriers to share flight codes even when they’re in different global pacts. “We will continue to talk to carriers there with a view
to developing a bilateral relationship outside of the Oneworld alliance,” Mr Walsh said. The U.K. government should also press on with planes to ease visa rules for Chinese visitors, he said. Chancellor of the Exchequer George Osborne said last month that Britain would start a pilot programme to allow some Chinese travel agents to apply for visas with the same form they use for a visit to the European Union’s Schengen Zone, where a single entry permit is good for access to multiple states. British Airways currently serves Beijing, Shanghai and Chengdu directly, together with Hong Kong, where it has boosted capacity by deploying the second of its Airbus SAS A380 superjumbos to enter its fleet.
PBOC to create deposit insurance system
Chinese bank to sell ‘Formosa’ bonds
hina’s central bank intends to introduce a deposit insurance system as soon as possible, a senior People’s Bank of China official was reported as saying, in a move seen as paving the way for the liberalisation of deposit rates. “Related departments are busy drawing up the plans and we will lose no time in launching the deposit insurance system,” vice governor Yi Gang said in the interview published by the official Xinhua news agency late on Tuesday. Hu Xiaolian, another vice governor of the central bank, has also pledged to speed up the establishment of the new scheme to push forward market-
based interest rate reforms. Beijing is concerned some smaller lenders could come under pressure as banks compete for deposits in a more open regime, and a deposit insurance scheme would help protect depositors. China began relaxing its cap on interest rates since 2012, and earlier this year removed controls on banks’ lending rates. A reform document released by the Communist Party following a four-day conclave of its top leaders this month vowed to push interest rate liberalisation, including setting up a deposit insurance regime. Reuters
ank of Communications Co Ltd has applied to sell 1.2 billion yuan (US$197 million) of yuan-denominated bonds in Taiwan in the first such issue by a mainland Chinese company, its book runner HSBC Holdings Ltd said yesterday. The Chinese bank joined global rivals such as Deutsche Bank to issue yuan bonds, or so-called “Formosa” bonds in Taiwan, highlighting Taiwan’s efforts to compete with Hong Kong by establishing an offshore yuan market. Financial ties across the Taiwan Straits have strengthened since early this year when China and Taiwan
signed a yuan clearing agreement. “It means a lot to Taiwan’s goal to be an offshore yuan market… It marks a further push to get close to that goal,” HSBC said in a statement. Taiwan’s financial regulators would allow mainland financial institutions to issue Formosa bonds as soon as this week, sources said earlier this week. The bond to be issued by the Bank of Communications is in two parts. It will pay a yield of 3.4 percent on its three-year tranche and 3.7 percent on its five-year tranche, the statement said. Reuters
November 28, 2013 April 19, 2013
HKMEx adds private equity director New investment could help revive the exchange Eleni Himaras and Michelle Yun
comment, saying the company would “make the appropriate announcement when necessary”. HKMEx began trading gold futures in May 2011 and silver contracts in July that year, both denominated in U.S. dollars. Revenue wasn’t sufficient to cover the company’s costs, the exchange said in a May 18 statement.
The HKMEx surrendered its trading licence in May
private equity firm backed by the China Development Bank Corp is studying the Hong Kong Mercantile Exchange Ltd, a commodities market that suspended operations this year, for investment opportunities. “I’m going in as a director to simply get an understanding,” said Jianrui Xiong, a Hong Kong-based venture partner at Infinity Group, which manages 10 billion yuan (US$1.6 billion) in assets. “I want to understand whether this company can solve its previous issues and whether it’ll be a clean company going forward. If it is clean, then we may have some investment opportunities.” An investment by Infinity could help revive the exchange, which surrendered its trading licence in
May after failing to attract enough revenue to support operations. Barry Cheung, the largest shareholder and chairman, is seeking to raise funds to repay debts and unpaid wages. Police investigated Hong Kong Mercantile Exchange, also known as HKMEx, after the regulator said it found suspected financial irregularities. Mr Cheung said the bourse is a victim, having been provided with financial documents it didn’t know were false.
Legal proceedings Mr Cheung didn’t return calls for comment on Infinity yesterday. He earlier declined to comment on how many employees remained at the exchange, any legal proceedings or plans for the business, which had traded gold futures and silver contracts. Infinity’s Mr Xiong was appointed director on October 21, according to a company filing. In addition to China Development Bank, which is a stateowned policy lender, Infinity is backed by Clal Industries, an investment company based in Israel.
Stephen Yiu Keung Liu, a managing director in corporate restructuring and insolvency at Ernst & Young Transactions Ltd in Hong Kong, was appointed a director on the same day as Mr Xiong, according to company filings. Mr Liu confirmed his appointment and declined further
I want to understand whether this company can solve its previous issues and whether it’ll be a clean company going forward Jianrui Xiong, Infinity Group
China Gas profit jumps 60 pct Company sees net income rise as demand for cleaner fuel increases
hina Gas Holdings Ltd, which supplies natural gas to 208 cities in Asia’s biggest economy, said half-year profit gained 59 percent as demand for the cleanerburning fuel rose. Net income climbed to HK$1.28 billion (US$165 million), or 26.14 cents a share, in the six months ended September 30 from HK$808.2 million, or 17 cents, a year ago, according to
The exchange had struggled to get a foothold in the Asian commodities market, which is dominated by regional exchanges and the London Metal Exchange. IntercontinentalExchange Group Inc this month agreed to buy Singapore Mercantile Exchange Pte for US$150 million. Like its Hong Kong counterpart, the Singapore Mercantile Exchange lists futures of gold and silver, and was loss-making. A comeback by the HKMEx “depends on the products,” said Felix Man, a Hong Kong-based director at Huatai Financial Holdings Hong Kong Ltd, as previous offerings weren’t tailored for the global financial markets. “It’s still quite difficult for companies from mainland China to do hedges in Hong Kong or overseas. Even when they do, they would still go to bigger, more liquid markets such as the LME in London.” The HKMEx’s landlord said last month that unpaid rent had been settled, allowing it to remain in its offices. Data service provider Equinix Hong Kong Ltd has also sued the exchange in Hong Kong for US$1 million for non-payment of services rendered, according to court documents. William Barkshire, who quit as co-president of the Hong Kong Mercantile Exchange in August and is now managing director at consultancy Agora Partners Ltd, said he won a HK$3.3 million (US$430,000) Hong Kong Labour Tribunal award for unpaid salary and expenses last week. “I expect Barry Cheung to honour all his significant debts,” Mr Barkshire said. Mr Cheung said he hoped to be able to pay off his remaining debts within a few weeks, the South China Morning Post reported on October 30.
a statement to the Hong Kong Stock Exchange. Revenue rose 46 percent to HK$10.5 billion. Air pollution in major Chinese cities including Beijing and Tianjin exceeded hazardous levels several times this year, prompting the government to take measures to curb the burning of coal and encourage the use of natural gas. China Gas may sell as much as 40
billion cubic metres of natural gas in 2020 from an estimated 8 billion cubic metres this year, chief financial officer Eric Leung said last month. China Gas shares have advanced 60 percent this year, compared with a 4.5 percent gain in the city’s benchmark Hang Seng Index. Revenue from piped gas sales rose to HK$4.3 billion in the six months from HK$3.04 billion a year earlier, according to the statement. Revenue from gas connections increased to HK$2.01 billion from HK$1.23 billion. China Gas expects to supply gas to 300 cities by 2015, Mr Leung told reporters in Hong Kong yesterday. The company will pay an interim dividend of 2.2 cents per share, according to the statement. Reuters
November 28, 2013 April 19, 2013
Fall in Thai exports adds to woes Export machine still sputtering as political tension rises Orathai Sriring
hai exports fell again in October, showing that a cornerstone of the country’s economy remains weak at a time political tension in Bangkok is spooking some foreign investors. The trade data comes as protesters trying to oust Prime Minister Yingluck Shinawatra have occupied several government ministries. Protests spread outside the capital yesterday as opposition demonstrators predicted a victory within days in their bid to overthrow the crisis-hit government The Commerce Ministry reported yesterday that exports in October were 0.7 percent below a year earlier, compared with a Reuters poll for a gain of 0.7 percent last month. In September, exports were 7.1 percent lower than a year before. Exports account for more than 60 percent of the Thai economy, and since May, only one month has seen an increase from the previous year – August’s 3.9 percent gain. For the first 10 months exports have slipped 0.02 percent. The Commerce Ministry blamed a weak yen, low commodities prices and weak demand for electronics due to changes in computer technologies. Exports can still rise 1 percent this year and in 2014 “we hope to get 5 percent growth as other major countries are expected to improve,” Urawee Ngowroongrueng, deputy permanent secretary of the Commerce Ministry, told reporters. At the start of this year, Thai officials had hoped for a 9 percent
October exports drop 0.7 pct year-on-year
rise this year, but forecasts have been whittled down as global demand remained weak. In October, imports fell 5.37 percent from a year earlier, less than the 8.17 percent drop forecast in the poll. Among the ministries that protesters have occupied or surrounded are the Finance Ministry. The prime minister is facing a no-confidence vote in the parliament that she is expected to
BOJ’s Shirai warns inflation target uncertain
easily survive. Rising political tension has hurt Thai financial markets as foreigners sell stocks and bonds. Yesterday, the baht eased slightly to 32.03, after touching an 11-week low of 32.090 on Tuesday. But there are few signs so far that the political tension is impacting the broader economy. This year’s weak exports have
significantly dented growth. The economy contracted earlier this year. Last week, the National Economic and Social Development Board cut its 2013 GDP estimate to 3 percent from 3.8-4.3 percent. On October 25, the central bank lowered its growth forecast for this year to 3.7 percent from 4.2 percent and its 2014 projection to 4.8 percent from 5.0 percent. Reuters
Consumer activity may change due to slow wage growth, says bank’s official Leika Kihara
ank of Japan board member Sayuri Shirai said prospects for achieving the bank’s inflation target were uncertain, warning that soft exports may discourage firms from boosting wages and capital expenditure enough to sustain an economic recovery. But Ms Shirai – among the growing number of pessimists in the nine-member board – dismissed calls to water down the 2 percent inflation target such as by replacing it with a range for desirable price growth, saying that doing so now would erode confidence in the BOJ’s monetary policy. “Setting a range … may be one option but only when consumer inflation stably exceeds 1 percent and long-term inflation expectations can be projected to move around 2 percent,” the former IMF economist said in a speech to business leaders in Tokushima, western Japan, yesterday. “Unless such conditions are met,
adopting a range … could give the impression the BOJ’s determination to achieve 2 percent inflation has waned,” she said. Ms Shirai was among the three board members who surprised markets last month by dissenting to the rosy projections made in the BOJ’s semi-annual report, exposing a rift in the bank over prospects for meeting its pledge to accelerate inflation to 2 percent in roughly two years. The two other dissenters proposed, unsuccessfully, to water down the BOJ’s commitment, with one saying the target should be considered in a range cantering on 2 percent inflation.
Wage concern Ms Shirai stuck to the BOJ’s view the Japanese economy is recovering moderately. But she said risks to the outlook were tilted to the downside given the delay in pickup in exports
and global growth – a point she made in dissenting last month. She was also gloomy on the outlook for domestic demand, warning that any pickup in capital expenditure may be moderate and personal consumption – so far a key driver of economic growth – may have peaked. There was uncertainty on whether wages will rise enough to make up for rising costs of living for households, she said. “If wages don’t rise that much, the momentum for consumer activity may change even when excluding the effect of [next year’s] sales tax hike,” she said. The BOJ has kept monetary policy steady since delivering an intense burst of stimulus in April, under which it pledged to double base money via aggressive asset purchases to accelerate inflation to 2 percent in roughly two years. The views expressed by pessimists
KEY POINTS Export, overseas pickup slower than expected – Shirai Warns personal consumption may have peaked Shirai dismisses calls to water down price target like Ms Shirai are in contrast to the optimism voiced by BOJ governor Haruhiko Kuroda, who has repeatedly said Japan is making steady progress towards achieving the BOJ’s price target. Many economists doubt the BOJ can reach its inflation goal so soon. Reuters
November 28, 2013
Vietnam tests investors with tighter state Slow reforms may cause unease among foreign investors
ietnam’s leaders are set to tighten their grip on the economy, affirming the central role of the ruling Communist Party and the dominance of state companies in a revised constitution to be approved this week. After indicating in January they could use the charter revamp to edge toward a more market-oriented system and lift growth from its slowest rate in 13 years last year, leaders have opted to retain state-owned enterprises as the economy’s anchor. State firms have contributed to Southeast Asia’s highest bad debt ratio. Further entrenching the regime raises the risk of stalling needed reforms such as more transparency, said investors including Mark Mobius, at a time when social unrest over issues such as land rights has mounted. Dissatisfaction with economic progress led parliament this year to subject leaders to an unprecedented confidence vote and some party members to suggest an alternative charter allowing “political competition”. “It’s battening down the hatches to ride out the storm,” said Carlyle Thayer, an emeritus professor at the
Australian Defence Force Academy in Canberra. “The economy is not getting the 7 percent growth they wanted. Anytime there is turbulence, the default is to maintain control.” Government officials forecast the economy will grow 5.4 percent this year and 5.8 percent in 2014, which would mean 7 straight years below 7 percent growth. Vietnam’s bad debt, estimated by economists and ratings firms to be higher than the 4.62 percent of outstanding loans reported at the end of September, has crimped credit growth and hurt businesses.
Investor unease Stalling reforms could cause unease among foreign investors frustrated with Vietnam’s opaque system, said Mr Mobius, who oversees US$53 billion in assets as executive chairman of Templeton Emerging Markets Group. “If you are doing business in Vietnam, the role of the government is very, very big,” he said by phone. “We have to read the tea leaves to see what is happening. You have a
Economy expected to grow 5.4 pct this year
one-party state and decisions are made behind closed doors. We need to see more transparency.” Vietnam exports increased 13 percent in October from a year earlier, more than twice China’s pace, and
pledged foreign direct investment surged 54 percent to US$20.8 billion in the first 11 months of the year. The government will want to sustain that, Mr Mobius said. “I am sure there is a group within
Abbott calls for Indonesia talks Official meeting shows tensions over spying claims easing
rime Minister Tony Abbott said Australia wants to create a “security round table” with Indonesia as its neighbour pledged to assign a senior official for talks. The Australia-Indonesia relationship “does depend on a great deal of intelligence-sharing and I want to deepen and extend that in the weeks and months ahead,” Mr Abbott told reporters in Melbourne yesterday. The dispute could ultimately create ways of deepening the nations’ friendship, he said. Indonesian President Susilo Ba mbang Yudh oyono halted cooperation with Mr Abbott’s government on asylum seekers and military operations after withdrawing his ambassador from Canberra last week, as tensions between the two countries reached their highest point in 14 years. Mr Abbott has written to Mr Yudhoyono as he seeks to repair relations after claims the phones of Indonesia’s leaders were tapped. Indonesia wants to discuss establishing a code of conduct with Australia on intelligence and Mr Abbott’s government still needs to clarify some issues, Mr Yudhoyono told reporters in Jakarta on Tuesday night. He said he will assign Foreign Minister Marty Natalegawa or a
special envoy for talks with Australia in the wake of the tensions. “Both sides are now looking for ways to defuse the issue while saving face after realising it’s in their national and economic interests not to be at loggerheads,” said Andrew Hughes, who conducts political-marketing research at Australian National University in Canberra. “Abbott will be hoping there are no more revelations on his nation’s intelligence activities to come.”
‘Regain trust’ Talks are a precondition to drafting a code of ethics for cooperation, Mr Yudhoyono said. Once that’s in place, “bilateral cooperation that is mutually beneficial can be resumed, including cooperation in the military and police of both countries,” he said. “Trusted envoys” from the nations should meet in the next few days, Mr Abbott said yesterday. Trade links shouldn’t be damaged by the dispute, he said. Mr Yudhoyono’s mobile phone activity was tracked for 15 days in August 2009, the Australian Broadcasting Corp said on its website on November 18, citing documents leaked by U.S. whistle blower Edward Snowden. At least
Yudhoyono wants conduct agreement between the two countries
once, intelligence agencies tried to listen to a conversation though the call lasted less than a minute and couldn’t be tapped, it said. Mr Abbott’s comments come as the fallout from the spying allegations spreads throughout Southeast Asia. Malaysia yesterday summoned
Singapore’s high commissioner after the Sydney Morning Herald reported, again citing documents leaked by Mr Snowden, that the citystate had helped Australian and U.S. intelligence gathering on Indonesia and Malaysia since the 1970s. Bloomberg News
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November 28, 2013
increase foreign ownership limits of listed companies.
the party that wants to see more reform,” he said. Mr Mobius and other stock investors have helped fuel the benchmark VN Index’s 24 percent rise this year on expectations the government will
The latest draft of the constitution calls for a “socialist-oriented market economy with many forms of ownership and economic sectors,” in which “the state economic sector assumes the leading role”. It preserves language that all economic sectors will operate equally under the law. Foreign companies and investors “will see that the constitution doesn’t have significant changes and they may take it that we don’t really want to change and that will be a wrong signal,” said Le Dang Doanh, an independent economist who has advised two prime ministers, including Nguyen Tan Dung. “Some investors may call this stability but others may see it as stagnation.” Chinese leaders have rolled out economic changes in response to slowing growth, and shown greater willingness to reform state companies, he added. “We are missing a great chance to really make some changes,” said Mr Doanh, who was among 72 main signatories to the alternative charter proposed to parliament. “We may suffer costs from this new constitution. It won’t boost economic growth when you have the inefficient state sector leading the economy.” Bloomberg News
Investment in Australian resources slips Investment pipeline falls to A$28 bln in six months
he number of resources projects set for construction in Australia has slipped to its lowest in nearly a decade as the end of the resources boom curbs new investment in minerals and oil and gas. And just five projects worth a combined A$1.7 billion (US$1.6 billion) were approved for construction in the past six months, official figures showed yesterday, the lowest by number and value for a six-month period in more than a decade. Australia, which prospered while larger economies buckled under the weight of the global financial crisis thanks to a surge in raw materials demand from China, is now seeing many projects reach completion while
new projects are being put on hold. “Lower commodity prices and rising costs have created a more challenging investment environment and contributed to a decline in the number of projects moving through the investment pipeline,” the Bureau of Resources and Energy Economics said in its half-yearly report. Mining investment has soared in Australia over the past decade, peaking this year at about 8 percent of gross domestic product, more than four times its historical average. As of October, there were 63 mineral, oil and gas and infrastructure projects at the committed stage – those preparing to start construction – down from 73 six months ago, the bureau said. Overall investment in new resource projects also declined, but still stood at A$240 billion, down from A$268 billion six months ago. “The sector is now in a period of belt-tightening that has followed years of rapid growth. There are projects still going ahead but its getting tougher,” said Keith Goode, of Eagle Mining Research. The bureau said 71 projects in the planning stages have been delayed by a year or more in the past six months. The value of committed projects was also expected to decline rapidly over the next four years as a number of multi-billion dollar liquefied natural gas (LNG) projects are completed. Reuters
S&P cuts outlook on Malaysian banks Rating agency warns against rising household debt Chong Pooi Koon
tandard & Poor’s cut its credit outlook for four Malaysian lenders on concern that rising home prices and household debt are contributing to economic imbalances in the country. The credit ratings company revised its outlook to negative from stable for CIMB Group Holdings Bhd, AmBank (M) Bhd, RHB Bank Bhd and sister company RHB Investment Bank Bhd. It also lowered its long-term Asean regional scale rating on CIMB to axBBB+ from axA-, S&P said in an e-mailed statement yesterday. “The negative outlook recognises the potential for deterioration in the banks’ asset quality and financial profile, if the consumer debt burden proves excessive in an unfavourable economic scenario,” S&P analysts Ivan Tan and Deepali V. Seth wrote in the report. Ratings companies have sent mixed signals on Malaysia’s credit worthiness as Prime Minister Najib Razak seeks to rein in the budget deficit. Fitch Ratings lowered its outlook on the nation’s A- sovereign rating to negative in July on public debt concerns. Moody’s Investors Service raised the outlook on the country’s A3 debt to positive this month, citing improved prospects for fiscal consolidation and macroeconomic stability.
The negative outlook recognises the potential for deterioration in the banks’ asset quality and financial profile S&P analysts Ivan Tan and Deepali V. Seth
RHB Bank had its outlook revised to negative
S&P rates Malaysia A-, its fourth-lowest investment grade. Mr Najib cut state subsidies and set a date to introduce a goods and services tax in April 2015 during his October 25 budget address. “The banks do face an increased risk, but it may be premature to view it negatively,” Yeah Kim Leng, chief economist at local ratings company RAM Holdings Bhd, said by phone in Kuala Lumpur yesterday.
“In view of the improving economic outlook, all those risks emanating from high household leverage and high property prices may not warrant such a negative view.”
Property curbs Malaysia’s economy is projected to expand by 5 percent next year, up from an estimated 4.5 percent in 2013, according
to economists’ forecasts compiled by Bloomberg. The nation’s central bank shortened the maximum length on mortgages in July, saying household indebtedness had risen by an average 12 percent per annum in the past five years. Last month, the government said it will stop developers from helping home buyers by absorbing some interest payments on
loans. It also raised the capital gains tax to 30 percent on homes sold within five years to curb speculation. “The negative outlook reflects the possibility that we may lower the ratings on these financial institutions if the growing economic imbalances lead us to a more negative view of the environment in which Malaysian banks operate,” S&P said in its report. Bloomberg News
November 28, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 61.0
27.8 27.7 27.6
BRENT CRUDE FUTR Jan14
GASOLINE RBOB FUT Dec13
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AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
0.9108 1.6224 0.9062 1.3584 101.66 7.9845 7.752 6.0927 62.2775 32.157 1.2525 29.659 43.69 11886 92.594 1.23103 0.83724 8.2762 10.8453 138.09 1.03
-0.3937 0.2534 0.309 0.2435 -0.2262 0.0075 0.0064 -0.0131 0.3814 -0.2643 -0.0319 -0.1214 0.103 -1.018 0.1663 0.0642 0.0167 -0.168 -0.2231 -0.4635 0
-12.2374 0.2967 1.0152 2.9871 -15.3059 -0.0163 -0.0181 2.2634 -11.6936 -4.9041 -2.483 -2.1107 -6.1456 -17.609 -3.5283 -1.913 -2.6062 -0.7093 -2.9036 -17.7565 -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 11886 105.433 1.265 0.88151 8.4957 11.0434 138.19 1.032
0.8848 1.4814 0.8891 1.2746 81.69 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 85.24 1.20302 0.80331 7.8281 10.195 105.28 1.0289
Macau Related Stocks NAME ARISTOCRAT LEISU CROWN RESORTS LT
BOC HONG KONG HO
CHOW TAI FOOK JE
CHEUK NANG HLDGS
DOW JONES INDUS. AVG
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HANG SENG BK
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HSBC HLDGS PLC
HANG SENG INDEX
HUTCHISON TELE H
CSI 300 INDEX
LUK FOOK HLDGS I
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TAIWAN TAIEX INDEX
MGM CHINA HOLDIN
NEW WORLD DEV
SANDS CHINA LTD
S&P/ASX 200 INDEX
JAKARTA COMPOSITE INDEX
FTSE Bursa Malaysia KLCI
SHUN HO RESOURCE
NZX ALL INDEX
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PHILIPPINES ALL SHARE IX
SJM HOLDINGS LTD
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Euromoney Dragon 300 Index Sin
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BOC HONG KONG HO
INTL GAME TECH
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SJM HOLDINGS LTD
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Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
Hang Seng Index NAME
BANK OF CHINA-H
BANK OF COMMUN-H
AIA GROUP LTD
BANK EAST ASIA BELLE INTERNATIO
CHINA UNICOM HON
CLP HLDGS LTD
COSCO PAC LTD
HANG LUNG PROPER
CHINA CONST BA-H
CHINA LIFE INS-H
SINO LAND CO
SUN HUNG KAI PRO
TINGYI HLDG CO
WANT WANT CHINA
HENDERSON LAND D
HONG KG CHINA GS
HONG KONG EXCHNG
HANG SENG BK
SANDS CHINA LTD
26.05 16.52 122.7
POWER ASSETS HOL
BOC HONG KONG HO CATHAY PAC AIR CHINA COAL ENE-H
HSBC HLDGS PLC
IND & COMM BK-H
LI & FUNG LTD
CHINA RES ENTERP
52W (H) 23944.74
CHINA RES LAND
NEW WORLD DEV
PING AN INSURA-H
INDEX 23806.35 HIGH
CHINA RES POWER
November 28, 2013 April 19, 2013
Leading reports from Asia’s best business newspapers
Inquirer Business Philippine imports climbed in September as manufacturers purchased more in preparation for a Christmas seasoninduced increase in demand. Merchandise imports rose year-on-year by 7.2 percent to US$5.71 billion during the month, the National Statistics Office reported. This brought total imports for the first three quarters to US$46.36 billion, up by only 0.03 percent from a year ago. “The rise of imports in September mirrored the buoyant outlook of firms on the volume of business activities,” Economic Planning Secretary Arsenio Balisacan said in a statement.
Yomiuri Shimbun Japan’s House of Representatives passed a bill intended to strengthen the protection of specially designated secrets Tuesday with the ruling coalition of the Liberal Democratic Party and New Komeito approving it during the lower house’s plenary session amid strong resistance from the opposition camp. Earlier the same day, the controversial bill was approved by the majority of lawmakers of the ruling parties and one opposition party at the lower house’s Special Committee on National Security. Except Your Party, major opposition parties oppose the legislation.
China Daily Tianjin municipality and Guizhou province led GDP growth in the first three quarters, while Beijing and Shanghai were at the bottom of the 31 province-level regions, according to figures released by the National Bureau of Statistics. The coastal city of Tianjin posted GDP of 1.02 trillion yuan (US$167.76 billion) and Guizhou province posted GDP of 511 billion yuan in the first three quarters of this year. Both of the two regions led the country with a year-on-year GDP growth rate of 12.6 percent. Chongqing municipality ranked third with a year-on-year growth rate of 12.4 percent.
The Age The amount of construction work done in Australia rose 2.7 percent in the September quarter, according to official data. Over the year to September, the volume of construction work done was up 1.3 percent, the Australian Bureau of Statistics said on Wednesday. The ABS said total building work done in the September quarter, including homes and non-residential buildings like offices and shops, rose 1.5 percent from the June quarter. The median forecast among economists was for total construction work done to have risen 0.5 percent in the quarter.
U.S. should go all in with online gambling Bloomberg Editors
n a victory for fun, liberty and sound fiscal policy, New Jersey yesterday let most of its residents gamble online. All Americans should be so (dare we say it?) lucky. New Jersey is the third state, after Delaware and Nevada, to permit online gambling within its borders, and a dozen or so others will consider doing so next year. By 2023, according to a forecast by Bloomberg Industries, annual online gambling revenue could reach US$23 billion nationwide. In a just world, it would be legal nationwide, too. Practical problems abound with a state-by-state approach. For one thing, a game such as poker requires significant pools of liquidity – also known as “a big pot” – to work well, which is a challenge in small states. Joining forces in regional gambling blocks, as some states are considering, would expand the market, but it could quickly become a mess if they all have conflicting regulations. Banks and payment processors are turning down perfectly legal gambling transactions for fear that they’d be enabling out-of-state or underage bettors. These are symptoms of a larger incoherence. Online gambling, like everything else on the Internet, is inherently interstate commerce. That makes federal regulation more sensible. Two bills in Congress are on the right track. One would legalise all forms of online
gambling, except sports, and create an oversight office at the Treasury Department. It would also allow states to opt out. The other proposes a 4 percent federal tax on operators, and allows states to collect an additional 8 percent. Combined, they offer the outline of rational federal approach.
New revenue Of course, there will be plenty of objections. Sheldon Adelson, chairman and chief executive of Las Vegas Sands Corp, who made his zillion-dollar fortune separating casino-goers from their money, has recently
Casinos could capitalise on their brands, regulatory knowledge and customer-service skills to compete for online action
discovered moral objections to gambling (online, anyway). He should stop whining. Casinos – like every other industry, from music to media to retail – will have to adjust to the Internet’s ruthless disruption. Casinos could capitalise on their brands, regulatory knowledge and customerservice skills to compete for online action, and they could use loyalty programmes and promotions to lure their new Web-savvy patrons to the house. They can also offer benefits the Internet can’t: cash transactions, anonymity, exotic entertainment, free cocktails. Some states may not like the idea, either. They might depend on tax revenue from casinos to shore up their budgets, for instance, or they might object on moral grounds. Neither is a good reason to oppose these laws. States will be able to raise substantial new revenue from online wagering, and traditional casinos will still be producing cash for a long time to come. If state officials find gambling sinful, they could always opt out.
Decent trifecta At any rate, problem gambling and other harmful side effects will probably be easier to prevent online. If would-be punters are required to open an account
and have their identities verified, imposing loss limits should be fairly easy from a technical perspective. (As with most things digital, convenience comes at the expense of privacy.) Compulsive gamblers might still get around such safeguards, but doing so would certainly be harder than at a casino, where you can plough through chips as long as you like. Online operators could also more easily comply with antimoney-laundering laws and prohibitions against underage gambling. Again, it wouldn’t be foolproof, but neither are real-life casinos. Finally, a federally regulated system would help move the online gambling action away from the shady offshore shops that currently prevail and toward licensed – and taxed – domestic operators. Gamblers could be assured that their financial transactions are safe and legal, and that the games aren’t rigged. Public officials, meanwhile, would be rewarded with a windfall: Taxing online wagers could lead to as much as US$41 billion in new revenue over 10 years. People clearly like gambling. Letting them do so where they want would make them happy. Regulating it properly would keep them safe. And taxing it all will make lawmakers smile. A decent trifecta, you might say. Bloomberg View
November 28, 2013 April 19, 2013
Closing Global trade deal faces collapse: WTO
Monte Paschi wins approval for bailout
The head of the World Trade Organization Roberto Azevedo has warned global trade deal talks face collapse. Mr Azevedo’s comments came after WTO members failed to agree on a text to be presented to trade ministers next month to reach a deal. A potential global deal, first since the WTO was formed, could add nearly US$1 trillion to the world economy. Mr Azevedo said that negotiations had been hurt as members “stopped making the tough political calls”. “This prevented us from getting to the finish line,” he added. The trade ministers of the member countries are scheduled to meet in Bali, Indonesia early next month.
Banca Monte dei Paschi di Siena SpA won European Union approval to get a 3.9 billion-euro (US$5.3 billion) recapitalisation and 13 billion euros in guarantees from the Italian government. The European Commission said it was satisfied that the bank’s plans to raise at least 2.5 billion euros from the market and redeem the full share of state bonds within five years would help restore the bank to long-term viability. “Our decision should ensure that the state capital will be repaid to the benefit of the Italian taxpayers,” EU Competition Commissioner Joaquin Almunia said in an e-mailed statement yesterday.
Merkel secures German coalition deal Minimum wage, retirement age and new citizenship rights agreed
hancellor Angela Merkel’s conservatives and the centreleft Social Democrats (SPD) clinched a coalition deal early yesterday that puts Germany on track to have a new government in place by Christmas. The agreement was struck roughly two months after Mrs Merkel was the clear winner in national elections but fell short of a parliamentary majority, forcing her into talks with the archrival SPD, with whom she ruled in an awkward “grand coalition” during her first term as Chancellor from 2005-2009. The deal, spelled out in a detailed 185-page policy document, will not be final until approved over the coming weeks by a postal ballot of the 474,000 card-carrying SPD members, many of them sceptical about partnering with Mrs Merkel again. But the agreement will be greeted with a sigh of relief in other European capitals. The lengthy talks have delayed movement on major European reforms, including the creation of a “banking union”, an ambitious project designed to prevent a recurrence of the eurozone’s crippling debt crisis. “The result is good for our country and has a conservative imprint,” said Hermann Groehe, secretary general of Mrs Merkel’s Christian Democrats (CDU). “No new taxes and no new debts.” Martin Schulz, president of the European Parliament and a senior SPD negotiator, called it an “excellent result” for his party. To clinch the deal, Mrs Merkel agreed to SPD demands for a minimum wage of 8.50 euros per hour, which
some economists have warned could push up unemployment, particularly in eastern Germany. In order to prevent that, the wage will be phased in over a period of years, with sector-specific exceptions allowed until 2017, when the wage formally kicks in nationwide. Parties also reached settlements on issues including a lower retirement age and changes to dual citizenship rules.
Continuity in Europe On European policy, Mrs Merkel’s insistence on painful economic reform in struggling euro states will continue, despite SPD promises during the election campaign to take a more pro-growth approach in a single currency bloc ravaged by high unemployment. A closely watched compromise on banking union between the parties makes clear that the 17 member states have primary responsibility for dealing with their own stricken banks, and can only turn to a common taxpayer-financed European fund for help when all other avenues have been exhausted. Although the cabinet posts have not yet been announced, Wolfgang Schaeuble, Mrs Merkel’s trusted 71-year-old finance minister, is widely expected to keep his job. Frank-Walter Steinmeier of the SPD may return as foreign minister after holding the post in the last “grand coalition” government. SPD chairman Sigmar Gabriel, who was also a member of that cabinet, could get a beefed-up economy ministry. Reuters
Merkel could form her third government by Christmas
U.K. economic growth quickens on investment Revival in property demand also helping to boost housing activity
ritain’s economic recovery accelerated in the third quarter as investment and house building helped to offset the biggest drop in exports in more than two years. Gross domestic product increased 0.8 percent, matching an initial estimate, the Office for National Statistics said in London yesterday. Business investment rose 1.4 percent,
while exports dropped 2.4 percent, with net trade knocking 0.9 percentage point from GDP. The Bank of England raised its growth forecasts this month and brought forward the expected timing for unemployment to reach the 7 percent threshold for policymakers to consider raising the key interest rate. Governor Mark Carney affirmed officials’ guidance
that they won’t rush to raise rates while there’s still slack in the economy. “The further improvement in many of the timely business surveys suggests that the economy will continue to grow strongly in the fourth quarter,” said Samuel Tombs, an economist at Capital Economics Ltd in London. “With firms now showing signs that they are willing to spend their cash
stockpiles and the pound still at a relatively weak level, it seems likely that the recovery will become betterbalanced soon.” Growth is primarily being driven by domestic factors as the euro area, Britain’s biggest trading partner, struggles to recover. The increase in business investment helped to lift gross fixed capital formation by 1.4 percent in the third quarter, and it added
1.1 percentage points to GDP. Within business investment, the ONS said there were increases in transport equipment and new buildings including construction of homes. A revival in property demand, in part fuelled by a government programme, is helping to boost housing activity. Investment in private-sector dwellings jumped 5.9 percent in quarter through September, the most in two years, the ONS said. Consumer spending rose 0.8 percent, an eighth consecutive quarterly increase, while government spending increased 0.5 percent. Imports rose 0.4 percent. Bloomberg News