MOP 6.00 Vitor Quintã Deputy editor-in-chief
‘La Scala trial’ looks at other Ao ‘corruption’
High rents raise restaurants’ bill Page 4
ales of Hengqin Island’s first highend housing project have been heavily oversubscribed, with Macau investors betting that a future 24-hour border crossing will make the flats’ value boom. The first two rounds of pre-sales for the Sea of Dreams residential development have been oversubscribed by nine times. Hengqin, as a special economic zone of mainland China, is not covered by Macau’s new curbs –
introduced in June – on sales off-plan. Macau buyers made up for about one-third of the buyers for the Hengqin units, Lao Ngai Leong, a businessman and the local sales agent for the project, told Business Daily. Even at prices of up to 30,000 yuan (39,309 patacas) per square metre, the Hengqin units are about one-third the cost of unfinished units in Macau.
Junket aggregator owes Amax HK$468 mln Page 7
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Number 427 Tuesday December 3, 2013
Editor-in-chief Tiago Azevedo
Open border hopes lure buyers to Hengqin homes April 19, 2013
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November casino revenue up 21 pct
Casino smoking areas ‘not good enough’
Macau casino revenue for November came in at the high-end of analyst estimates, reaching 30.18 billion patacas (US$3.78 billion) – the fourth highest monthly tally this year – according to government data released yesterday. It means the November tally expanded 21 percent year-on-year. Analysts had forecast median growth of 20 percent. Yearto-date revenue has risen 19 percent from 2012.
The enforcement of the indoor smoking restrictions in casinos has been “unsatisfactory,” Secretary for Social Affairs and Culture Cheong U said yesterday. During his Policy Address for 2014 he pledged to look into replacing casino smoking areas with smoking rooms. However, he said the tobacco control law does not have to be reviewed at present.
Gaming drives record FDI inflow to Macau
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Macau received more foreign direct investment last year than ever before, as gaming operators put part of their profits into development instead of issuing dividends to shareholders. The Statistics and Census Service announced yesterday that new foreign direct investment here reached 27.46 billion patacas (US$3.43 billion) last year, highest since it began compiling data in 2001. New investment rose nearly five-fold from 2011. Page 6
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December 3, 2013
Macau Junket firm Dore shifts to financial services Dore Holdings Ltd – an investor in the Macau casino VIP business – said in its interim results for the six months to September 30 it’s shifted focus to financial services. “In view of the intense competition in the gaming section in Macau following the opening of more casinos and VIP gaming rooms the group has always been seeking investment opportunities to diversify the business of the group and to broaden the revenue base,” it said in a Hong Kong filing. Earlier this year it bought a mainland pawnshop business. “With the acquisition of 51 percent equity interests of the Ability Wealth Group completed in July 2013, the group has now put its main business focus on the provision of pawn and entrusted loans, financial consultancy services and other financing related businesses. The directors believe that the financing services business will generate strong and stable revenue for the benefit of the shareholders,” Dore said. Nonetheless in the reporting period Dore’s revenue from Macau gaming was 81 percent of total group revenue. Junket profit streams brought approximately HK$15.50 million – up 42 percent year-on-year. Consolidated group revenue was HK$19.04 million – up 73 percent.
CY Foundation revenue up on property sale C Y Foundation Group Ltd, a Hong Kong-listed company that in September acquired a slot machine manager with operations in Macau, saw group revenue increase by nearly half in the six months ended September 30. Group revenue rose 49 percent to HK$57.2 million (US$7.4 million) from HK$38.5 million a year earlier. The gain was mostly from the sale of property interests in Beijing and a settlement following some successful litigation said the company. “Upon the completion of the disposal, the group has ceased its operation in property investment and digital entertainment business,” it said in the latest filing. The acquisition of another business, Weike (G) Management Macau Ltd – for a total consideration of HK$69 million from Poh Po Lian, the controlling shareholder of CY Foundation Group – came near the end of the reporting period. Weike (G) Management Macau manages 205 slots and electronic table games at Pharaoh’s Palace Casino in Macau according to previous filings. The latter venue is operated by Macau Legend Development Ltd, led by local businessman David Chow Kam Fai, using the gaming licence of casino concessionaire Sociedade de Jogos de Macau SA.
November gaming revenue up 21 pct Number at upper end of analyst predictions, with some citing sport events as catalysts Michael Grimes
acau casino revenue for November came in at the high end of analyst estimates, reaching 30.18 billion patacas (US$3.78 billion) – the fourth highest monthly tally this year – according to government data released yesterday. It means the November tally expanded 21 percent year-on-year. Analysts had forecast median growth of 20 percent. Year to date revenue has risen 19 percent from 2012 to 327.3 billion patacas. The government’s data on November visitors hasn’t been released yet. But one possible factor in the November revenue number this year is a strong roster of non-gaming events during the month.
KEY POINTS November revenue up 21 pct y-o-y Revenue up 19 pct year to date Month at top end of analyst estimates
It included two weekends of motor racing on the city’s famous street circuit to mark the 60th anniversary of the Macau Grand Prix, and a strongly promoted boxing match at The Venetian Macao between Filipino former world champion Manny Pacquiao and Brandon Rios for the WBO international welterweight title. In the past Hong Kong-based gaming analysts have suggested there isn’t necessarily a positive correlation in Macau between big non-gaming events and casino gross revenue. Some have gone so far as to say the Grand Prix in particular can put off the high minimum bet mass-market Chinese baccarat players that generate a significant portion of the casino revenue. The analysts – citing conversations with casino executives – have suggested the noise from the racing and the increased cost of hotel rooms as negative factors. But last week Cameron McKnight, senior analyst at Wells Fargo Securities LLC in New York, suggested in a note that the Pacquiao fight “likely boosted results” adding that market share for Sands China Ltd – operator of The Venetian Macao – was up 70 basis points compared with the week prior to the event. Separately, Kenneth Fong of J.P. Morgan in Hong Kong, said Macau’s
daily run rate for casino revenue was higher during the week of the fight. Union Gaming Research Macau said in a note linked to the November numbers, it expected a 14 percent year-on-year rise market wide in gaming revenue for 2014. “Given the higher profitability associated with mass market GGR, our 14 percent GGR [gross gaming revenue] growth forecast should translate into at least 18 percent EBITDA [earnings before insurance, taxation, depreciation and amortisation] growth on a marketwide basis,” said Union Gaming’s Grant Govertsen.
Market Share Per Operator (2012-2013)
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
28% 26% 26% 26% 27% 26% 23% 25% 24% 24% 25% 26% 23%
Sands China 21% 21% 20% 21% 21% 22% 21% 21% 23% 23% 22% 20% 22% Galaxy
16% 18% 19% 19% 18% 18% 19% 19% 20% 17% 19% 21% 19%
12% 10% 11% 12% 11% 9% 12% 10% 10% 12% 11% 10% 11%
14% 14% 14% 13% 14% 16% 14% 15% 13% 14% 14% 13% 14%
10% 11% 9% 10% 9% 9% 11% 11% 10% 10% 10% 9% 11%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
* Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total
David Chow charges shares for bank loan Five months after a corporate exercise raising approximately HK$2.04 billion (US$263 million) net via a global share offering, one of the bosses of casino and hotel services firm Macau Legend Development Ltd has charged a fifth of his shares in the business to a bank as security for a borrowing facility. David Chow Kam Fai (pictured), co-chairman, has charged 390 million shares, representing approximately 6.26 percent of Macau Legend’s issued share capital – and one fifth of his 30.83 percent total stake, to the bank. The arrangement is described as a “bona fide commercial loan”. The lending institution is Credit Suisse AG, Singapore Branch. It is described in the filing as an independent third party and “not a connected person” as defined by the listing rules of the Hong Kong Stock Exchange. Macau Legend’s shares launched at HK$2.35 each. Yesterday they reached HK$7.13. Gaming revenue at Macau Legend’s two casino venues increased by 1.2 percent year-on-year to HK$294.4 million in the third quarter, the firm said in late October in unaudited highlights. Market-wide, casino gaming revenue in Macau rose by 19.6 percent in the same period. M.G.
Melco Crown’s fifth month of Nasdaq gains Stock on Friday U.S. time closed 87 percent above 2006 launch price
he New York-listed shares of Melco Crown Entertainment Ltd, the Macau casino venture of entrepreneur Lawrence Ho Yau Lung and billionaire James Packer, have risen for a fifth month. The Nasdaq stock of Hong Kongbased Melco Crown rallied 7.3 percent to end the final trading day of November on Friday at US$35.59 (284.19 patacas). That boosted their
rally to 111 percent this year. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York jumped 5.6 percent to 108.23, capping the longest rally since 2009. Melco Crown’s shares listed on Nasdaq on December 19, 2006, raising more than US$1.14 billion. The stock’s price at launch was US$19.00. Following a brief postlaunch spike, the firm traded at below
launch price until December 2012, data from Nasdaq show. The rapid growth of massmarket gambling on Cotai, where Melco Crown has most of its Macau investment, has supported the rapid gains in its stock price. Last week a Melco Crown unit said in a Hong Kong filing – where the parent has a dual listing – that Studio City, Melco Crown’s majority owned new casino resort being built on Cotai, is expected to open in “mid-2015”. Days earlier it was announced that construction work has also begun for a fifth hotel tower at MCE’s City of Dreams casino-resort on Cotai. “There’s been a shift in play from the [Macau] peninsula, where the older casinos are, to Cotai, where Melco Crown is a major player,” said Bryan Maher, an analyst at Craig-Hallum Capital Group LP in New York. Bloomberg News
December 3, 2013 April 19, 2013
The buyers … are residents that already own a flat in Macau or non-resident, well-paid workers for state-owned companies here Chong Sio Kin, Macau Real Estate Association chairman Macau has asked for the Lotus Bridge border crossing to be open around the clock
Open border hopes entice buyers to Hengqin homes Macau people are rushing to invest in the island’s first upmarket housing project Stephanie Lai
pace in Hengqin Island’s first upmarket housing project is heavily oversubscribed as Macau investors bet that the border will eventually be open 24 hours a day and so boost the value of the flats. The first two rounds of pre-sales of flats in the Sea of Dreams development were nine times oversubscribed. A sales agent, Lao Ngai Leong, told Business Daily that about onethird of subscribers were from Macau. Mr Lao said that by last week at least 3,500 people had expressed interest in buying one of the 386 flats in five Sea of Dreams tower blocks. The first flats should be ready for occupation in 2016. The floor area of the flats ranges from 87 square metres to 200 square metres.
The prices quoted for them range from 26,000 yuan (34,056 patacas) to 30,000 yuan a square metre – much less than the prices of comparable flats in Macau. The average price of unbuilt flats in Macau was 108,667 patacas (US$13,608) a square metre in October, official data show. But the prices asked for Sea of Dreams flats are up to three times higher than the prices of unbuilt flats that Macau people are keen on elsewhere in Zhuhai. Zhuhai estate agents told Business Daily that in Tangzhou, for instance, the price of unbuilt flats was about 10,000 yuan a square metre. Mr Lao said the belief that the Lotus Bridge border crossing would eventually be open around the clock
was the main reason that Macau people bought homes in Hengqin. Mr Lao is also a customs supervisor at the Gongbei border crossing, a Macau deputy in the National People’s Congress and chairman of property developer Chong Sai Com Enterprise (Group) Co Ltd.
Wealth required In January Chief Executive Fernando Chui Sai On put to the central government his case for keeping the Gongbei and the Lotus Bridge border crossings open around the clock. How soon he would like to see this is unknown. The Zhuhai authorities announced last month that from January the Lotus Bridge crossing will be open
Imports hit record as exports rebound M
The value of gold jewellery imports rose to 853.2 mln patacas in Oct
acau bought more goods from outside in October than ever before, as companies splurged on gold jewellery and watches to feed the city’s growing retail business. Meanwhile the value of exports rebounded after two months of yearon-year decline. The Statistics and Census Service announced that imports were worth 7.15 billion patacas (US$894.9 million) in October, 23 percent more than a year earlier. It is the highest amount since the service began collecting monthly data
from 8am to 10pm each day, two hours longer than now. Sea of Dreams is about 500 metres from the border, lying to the northwest of the University of Macau campus and to the south of the Shizhimen business district. Hengqin is a special economic zone which will have a Chinese traditional medicine industrial park. Mr Lao said the prospect of the island developing was also driving sales of flats in the Sea of Dreams. He said it was the first purely residential project on Hengqin to be offered to the high end of the market. “This has made the project popular amongst investors and users from both the mainland and Macau,” he said. The chairman of the Macau Real Estate Association, Chong Sio Kin, believes Macau people are interested in flats in the Sea of Dreams principally as investments. Mr Chong told Business Daily there was no transport serving the site yet. “Also, mainland regulations say a buyer has to pay a lump sum down payment for an unfinished flat, right after confirming the purchase,” he said. “So the buyers should be quite wealthy. I think they are residents that already own a flat in Macau or non-resident, well-paid workers for state-owned companies here.” The Sea of Dreams website says state-run developer Huarong Real Estate Co Ltd will build 16 blocks of flats and a number of two-storey houses on the site.
on imports in 2000. The new record was mainly due to sky-high purchases of luxury goods. Gold jewellery imports were worth 853.2 million patacas in October, up by half from the same month of last year. The value of watches imported soared by 61 percent to 619 million patacas. Most of these goods will be showcased at the city’s retail shops, where sales of watches and jewellery rose by a fourth to 14.53 billion patacas in the first three quarters of this year. But the fastest growth was recorded in the imports of construction materials, which almost doubled yearon-year to 285.8 million patacas. Demand for construction materials is growing as construction of the new wave of Cotai resorts picks up steam. The value of exports rebounded to 700 million patacas, 10 percent more than a year earlier, after stumbling in September and August. The biggest improvement was in re-exports, which grew by 13 percent to 533 million patacas. Domestic exports grew by 1 percent to 167 million patacas. V.Q.
December 3, 2013
Scepticism greets testimony Restaurants in sewage plant bribery trial fork out A witnesses professes ignorance about a consultancy alleged to have been an Ao Man Long front Tony Lai
he presiding judge in the trial of executives accused of paying bribes for government contracts expressed incredulity yesterday about a witness’s professed ignorance of the identity of consultants engaged by the consortium that won the contracts. The prosecution alleges that the consultancy was a front used by the secretary for transport and public works at the time, Ao Man Long, to collect bribes in exchange for the contracts. The contracts were to build and operate the sewage treatment plants in the Zhuhai-Macau Cross-Border Industrial Park and on Coloane. A consortium of Waterleau Global Water Technology NV, ATAL Engineering Ltd and China Overseas Civil Engineering Ltd won both contracts. The Court of First Instance resumed yesterday the trial of ATAL Engineering managing director Fong Chun Yau and three executives of other companies, including Waterleau chief executive Luc Vriens, who are charged with bribing Mr Ao. The court heard testimony from the project manager of ATAL Engineering, Lee Chi Hong. Mr Lee said the consortium, led by Waterleau Global, had lacked information about the Macau market which it needed to tender for the contracts. He said Waterleau Global had found consultants to help the consortium. The prosecution alleges that the consultancy, Best Choice Asset Ltd, was ultimately controlled by Mr Ao, that it rendered no consultancy services and was a vehicle used by Mr Ao to collect bribes clandestinely. The courts have already convicted Mr Ao of corruption and sent him to prison him for 29 and a half years.
The Cross-Border Industrial Park sewage plant is one of the focuses of the corruption trial (Photo: Manuel Cardoso)
Mr Lee said the consultants had helped the consortium understand aspects of the market here, including the law, taxation, and which suppliers were reputable. “To carry out a public infrastructure project requires a lot of local suppliers, 30 or 40,” he said. The consultants
You even drafted an agreement to pay for the consultancy services … but who was paid? Presiding judge Mário Silvestre
helped find out “which supplier is trustworthy”, he said. Mr Lee said a bidder needed such information for its tender. “The government needs to know clearly how you will be able to carry out the project,” he said. The consultants had contributed to the success of the consortium’s bids, he said. But Mr Lee said he had never met the consultants and was unaware of their identity. He said all he knew was that one or more companies had been working in support of Waterleau. The prosecution and presiding judge Mário Silvestre expressed scepticism about Mr Lee’s professed ignorance. “You even drafted an agreement to pay for the consultancy services,” said Judge Silvestre, “but who was paid – the third party?” Mr Lee gave no straight answer. The trial continues on Wednesday.
for soaring rents S
urging rents was the fastest growing expense for the city’s more than 1,600 restaurants and eating venues last year amid a 14.8-percent jump on revenue. Macau’s restaurants spent a combined 561.5 million patacas (US$70.2 million) in rents last year, up by 16.1 percent from a year earlier, according to an annual survey on the sector released by the Statistics and Census Service. The survey did not include restaurants operated inside hotels. Rents were the fastest growing of all types of spending reported by restaurant operators. Their overall spending grew by 11 percent year-on-year to 6.31 billion patacas last year. Despite the surge in rents, goods remained the biggest expense for the sector, accounting for 41 percent of the total or 2.6 billion patacas. Nonetheless, it was still a good year for the sector because revenue grew faster than spending. It rose by 14.8 percent to 6.97 billion patacas. But the gap between popular restaurants and small eateries is increasing, data show. Half of the revenue recorded by the sector last year – 3.58 billion patacas – came from less than 10 percent of the restaurants, said the statistics service. Most establishments, 1,526, earned less than 10 million patacas each last year. Over 95 percent of the territory’s restaurants were small-scale companies with fewer than 50 employees, data show. The sector had nearly 22,000 employees last year, up by 3.7 percent from a year earlier. Restaurants are paying higher wages, with staff expenses rising faster: 10.5 percent to 2.12 billion patacas. T.L.
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December 3, 2013
Casino smoking control not good enough: govt Cheong U said gamblers could be restricted to casino smoking rooms Stephanie Lai
he enforcement of the indoor smoking restrictions inside casinos has been “unsatisfactory,” Secretary for Social Affairs and Culture Cheong U said yesterday. However, he stressed during his Policy Address for 2014 that the tobacco control law, in effect since January 1, 2012, does not have to be reviewed at present. Legislative Assembly members questioned the effect of the partial smoking control being enacted inside casinos, which allows them to set up a smoking zone of up to 50 percent of the gaming floor space. Legislators from the traditionalist group Federation of Trade Unions and Angela Leong On Kei, executive director of gaming operator SJM Holdings Ltd, asked for a full smoking ban to be adopted inside casinos to protect gaming workers’ health. The secretary rejected the appeal.
“The key with the smoking control law is that we are not enforcing a full smoking ban in casinos immediately. We allow them a three-year exclusion from the full smoking ban,” said Mr Cheong. “But when the casinos fail to comply with the air quality tests, we have reduced their smoking area by 10 percent and they should make further air quality improvements,” he added. The Health Bureau announced on November 7 that 16 gaming venues that failed a second round of air quality tests in their smoking zones will each have to reduce those areas by 10 percent next month. “What the government thinks is that we will act according to the law,” the secretary stressed. “Of course we will also listen to various opinions regarding any future review.” For instance, he said, “There are suggestions that say smoking rooms should be set up inside casinos
to replace the smoking areas,” Mr Cheong said. This idea “could be considered,” he noted without providing further
details. David Chow Kam Fai, head of Macau Legend Development Ltd, a company operating casinos under a so-called ‘service agreement’, suggested last month that closed smoking rooms – with no gaming tables or machines – should be created. To reduce smoking areas will only restrict smokers to a smaller part of the gaming floor, which will not help improve air quality, Mr Chow told media at the time. Mr Chow’s Club VIP Legend is one of the 16 gaming operators that failed the second round of air quality tests. The other failing casinos are Golden Dragon, StarWorld, Jimei, Emperor Palace, Lan Kwan Fong, Kam Pek, Diamond, Grandview and the seven Mocha clubs.
The indoor smoking ban will not be reviewed at present, said Cheong U (Photo: Manuel Cardoso)
Corporate SJM named to Forbes Asia ‘Fabulous 50’ Macau gaming developer SJM Holdings Ltd has been included on the Forbes Asia’s “Fabulous 50” list for 2013, which cites Asia’s top listed companies. Robert McBain, chief financial officer of SJM Holdings, received the award on behalf of the company in a ceremony honouring the 50 recipients held in Beijing last month. The Fabulous 50 were selected among 1,220 Asian companies that had at least US$3 billion (24 billion patacas) in annual revenue or market capitalisation, and were further evaluated for revenue, profits, return on capital, share-price movements and outlook. Ambrose So Shu Fai, chief executive of SJM Holdings, said the company is “pleased and honoured” to be “recognised for our performance and financial strength”. “We face the future with confidence as we undertake the development of a major integrated resort in Macau’s Cotai area,” he said in a press statement.
Infinitae wines shine in Guangzhou awards Three wines of the Infinitae brand won awards at the last edition of the China (Guangzhou) International Wine and Spirits Exhibition, held from November 28 to 30. The Touriga Infinitae wine won a gold medal at Interwine China’s blind wine tasting event with 97 points out of 100, according to a press release by Portuguese firm Justwine Import Export Lda. The Syrah Infinitae and the Infinitae Reserva Alentejo 2009 wines also won silver medals. The latter wine had previously received a gold medal in another event held in France. Macau-based Unidos Comércio Geral Lda represents the Infinitae brand here. Justwine launched a project to promote the Infinitae brand abroad since 2006, with particular emphasis on Macau, Hong Kong and mainland China. Interwine China was launched in 2005, when the country reduced tariffs on imported wine from 43 percent to 14 percent as part of its World Trade Organisation commitments.
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December 3, 2013 April 19, 2013
Macau Subsistence index up in January The government’s minimum subsistence index will be up by 6.3 percent from January, according to a dispatch from Chief Executive Fernando Chui Sai On published in yesterday’s Official Gazette. The index for a single individual will be 3,670 patacas (US$460) and 6,760 patacas for two-member households. For families with at least eight members the index is set at 17,160 patacas. Poverty allowances are calculated on the minimum subsistence index, which indicates the amount of income it estimates is necessary to maintain a minimum standard of living. It was last adjusted in January.
Gaming drives record FDI inflow into Macau Companies prefer to reinvest profits rather than pay dividends Tony Lai
acau received more foreign direct investment last year than ever before as casino operators reinvested their profits in further development instead of paying dividends to shareholders. Official figures announced yesterday show new inward FDI grew to 27.46 billion patacas (US$3.43 billion) last year, the most since the government began compiling FDI data in 2001. The Statistics and Census Service said new FDI had increased nearly five-fold since 2011 owing to foreign enterprises reinvesting part of their operating profits. The gaming industry was the main investor as it prepared for the next wave of casino-resort development in Cotai. New FDI in gaming was 15.48 billion patacas last year, in contrast to the net outflow of 4.65 billion patacas of the industry’s money in 2011 due to what the Statistics and Census Service said at the time were higher dividend payments. Galaxy Entertainment Group Ltd, founded by Hong Kong tycoon Lui Chee Woo, was one of the casino operators that paid no final dividend for last year. Galaxy Entertainment vicechairman Francis Lui Yiu Tung said in March that his company preferred to offer investors long-term value by reinvesting its earnings in the
North West faces liquidation H
ong Kong government has filed a liquidation petition against indebted ferry operator Hong Kong North West Express Ltd over unpaid rent at a public pier. A writ filed by Hong Kong’s secretary for Justice Rimsky Yuen last month at the High Court of Hong Kong said North West still owed over HK$4.71 million (US$610,000) including interest in rent for using the Tuen Mun pier in May and June last year. The government asked for the liquidation of North West and the berths at Tuen Mun to be seized, said the writ quoted by Hong Kong media over the weekend. The troubled operator used to run
than doubled to 3.95 billion patacas. It said the increase in the number of visitors had encouraged investment in wholesaling and retailing. FDI in wholesaling and retailing rose by 19 percent to 4.5 billion patacas. The British Virgin Islands, a tax haven, remained the biggest source of new FDI, accounting for 11.88 billion patacas worth or 43.3 percent. Hong Kong was the next-biggest source, accounting for 3.82 billion patacas worth. In 2011 there had been a net outflow of 8.96 billion patacas to Hong Kong. At the end of last year outside investors held 17.78 billion patacas worth of equity in 2,115 Macau enterprises. Money from outside made up 81 percent of the capital of those enterprises, on average. Money from outside made up 68 percent of the capital of gaming enterprises, having made up 56 percent a year earlier. The proportion of foreign capital was highest in the banking and securities industry and in retailing, the proportion being 91 percent in both cases. Accumulated FDI amounted to 151.28 billion patacas at the end of last year, over one-quarter more than year earlier. But investment is becoming less of a one-way street. The value of outward FDI by Macau enterprises more than tripled to 3.64 billion patacas last year.
FDI in gaming is increasing as new casino-resorts rise in Cotai
third and fourth phases of its Galaxy Macau resort. The Statistics and Census Service said income earned from outside investment in gaming had risen constantly since 2009 to 34.6 billion patacas last year, 12 percent more than in 2011. Casinos accounted for almost twothirds of all income from FDI last
ferry services between Tuen Mun and Macau from 2011 until July last year. At the time it suspended the route claiming there were safety concerns over its two vessels. North West later admitted it was facing financial troubles, namely in paying rent for the pier. The Macau authorities have previously said North West does not owe them any money. No company has expressed interest in resuming the Tuen Mun-Macau route so far. The court is scheduled to analyse the petition on February 26, 2014. The majority shareholder of North West was Chan Mei Fun, also known as Chen Mei Huan, said Hong Kong media, quoting the city’s Company Registration Information. Ms Chan is an executive connected with the New Century Hotel and Greek Mythology Casino. She was arrested in October on suspicion of fraud. T.L.
year, which rose by 18.5 percent to 55.41 billion patacas.
Banking on Macau The Statistics and Census Service said the banks, which are mainly foreign-owned, had kept expanding as the economy grew. FDI in the banking and securities industry more
MOP 27.46 bln Inward FDI in 2012
December 3, 2013 April 19, 2013
Junket aggregator owes Amax HK$468 mln Casino VIP room investor made loss of HK$16 mln in half year to Sept 30 Michael Grimes
Greek Mythology casino, Taipa (Photo: Manuel Cardoso)
unket investor Amax International Holdings Ltd is owed HK$468.29 million (US$60.4 million) by junket aggregator AMA International Ltd according to an interim filing by Amax to the Hong Kong Stock Exchange. The debts are more than one year old, according to results for the halfyear to September 30. AMA grew rapidly after it teamed with Crown Macau (now Altira Macau)
to supply high rollers to the Melco Crown Entertainment Ltd property in exchange for a record-making 1.35 percent rolling chip commission back in late 2007. But AMA’s business fell back after the government indicated in the third quarter of 2009 that it would cap rolling chip commission at 1.25 percent – though the administration never actually legislated such a move. Amax was entitled to profit streams stemming from the aggregator AMA.
Amax International said in the six months to September 30 this year, its loss widened by just under seven percent year-on-year, to HK$16 million, from HK$15 million in the equivalent 2012 period. The company said in its filing: “… the first six months of the financial year remained a challenging period for the group as it was still struggling to restore normal business order from the aftermath of a series of unforeseeable and unfortunate events originated in the past few years.” The document added: “The loss was mainly attributable to the fact that relevant financial information of Greek Mythology (Macau) Entertainment Group Corporation Ltd, (an associate of the group which operates and manages Greek Mythology Casino and in which the group owns 24.8 percent equity interest) for the period under review was not yet concluded. “The group is taking every step to address this issue. It will maintain an open communication channel with Greek Mythology and will be continuing with the communication on obtaining the financial accounts,” stated Amax. Business Daily reported in October that an executive connected with the New Century Hotel and Greek
Mythology Casino – which operated under the gaming licence of Sociedade de Jogos de Macau SA – had been arrested in Macau on suspicion of fraud. Chen Mei Huan – also known as Chan Mei Fun – was held over the allegations, which involved 35 Macau and mainland Chinese investors and more than HK$300 million (US$38.7 million), according to a police statement. SJM had previously stripped Greek Mythology of a third of its then 120 tables in August 2012 following a dramatic and bizarre series of events. They included an attack the previous June by masked men on Ms Chen’s former boyfriend and business partner, the Macau junket veteran and Amax International chairman Ng Man Sun. Business Daily asked the local gaming regulator the Gaming Inspection and Coordination Bureau whether Greek Mythology’s remaining allocation of 80 tables is being reviewed following Ms Chen’s arrest but has not received any reply. Hong Kong-listed Amax had losses for the 12-months to March 31 of approximately HK$39.38 million. It has been pursuing casino projects in Northern Cyprus and Vanuatu according to filings.
December 3, 2013 April 19, 2013
U.K. PM to push for EU free trade deal w Cameron expects opposition from European powers Andrew Osborn and Ben Blanchard
ritish Prime Minister David Cameron arrived in Beijing yesterday saying he wanted to lay the ground for a multi-billiondollar free trade deal between Beijing and the European Union, despite growing unease about his own country’s membership of the bloc. On a three-day visit with about 100 business people, the largest British mission of its kind ever, Mr Cameron said he wanted his country to play an important role in China’s expansion as it talks about opening up its markets. “China’s transformation is one of the defining facts of our lifetime ... I see China’s rise as an opportunity, not just for the people of this country but for Britain and the world,” Mr Cameron told reporters after meeting Premier Li Keqiang at the Great Hall of the People. “Some in Europe and elsewhere see the world changing and want to shut China off behind a bamboo curtain of trade barriers. Britain wants to tear those trade barriers down.” Mr Cameron’s push for an EUChina trade deal will irritate the European Commission, which is understood to oppose such a move on the grounds that it risks flooding the 28-nation bloc with cheap Chinese imports and comes as the bloc is embroiled in a dispute with Beijing over solar panel exports. It is also likely to be seized upon by rivals as he has put a question mark over Britain’s EU membership by promising a referendum on leaving the bloc if re-elected in 2015.
Business focus “I’ve said to Premier Li that I will champion an EU-China trade deal with as much determination as I’m championing the EU-U.S. trade deal,” Mr Cameron said. Mr Li said both sides agreed to
British PM David Cameron calling for more liberal trade rules
fight protectionism and push for trade and investment liberalisation. China welcomed Britain’s open attitude to Chinese investment, especially in the nuclear power sector, he said. China, he added, wanted its nationals to go to Britain for economic activity and tourism. “This will be good for China and bring even more employment opportunities for Britain.” Mr Li added that there had been a “breakthrough” between companies on both sides on high speed rail, but gave no details. Mr Cameron’s office said he was the first European leader to champion such a deal and had discussed the issue with other EU member states. Such a deal would address services
liberalisation and better intellectual property rights protection. Mr Cameron told reporters on the plane to Beijing he knew the idea was not popular in all EU member states, but said it could be a chance to tackle Beijing on intellectual property rights and trading standards. “It’ll be the normal thing in the EU which will be a discussion where there will be some sceptics. There will be some enthusiasts and I think the enthusiasts have the wind in our sails.” British finance minister George Osborne opened the door to further Chinese investment during a visit to Beijing last month. He announced less stringent rules for Chinese banks operating in London, in a push to
Dagong sees lower U.S. rating Rating firm says economic fundamentals haven’t improve Kevin Yao
he United States may see further sovereign rating downgrades if it fails to improve its debt service capability, although a nearterm cut looks unlikely, the head of Chinese credit rating firm Dagong Global Credit Rating Co Ltd said. Beijing-based Dagong grabbed the media spotlight in October by cutting the U.S. rating by one notch to A-minus from A, despite a deal by Congress to raise the government’s borrowing ceiling. “Our rating could be effective for some time. We won’t cut the rating at will,” Guan Jianzhong, chairman of Beijing-based Dagong, told Reuters in an interview. “We are very worried about the U.S. economy. The Federal
government hasn’t unveiled any strategic measures to fundamentally resolve the [debt] problem.” Mr Guan did not say how far the U.S. rating could be cut, but he cited an earlier prediction by an unnamed American analyst that Dagong may slash the rating to B by 2020. “We don’t hope this will happen. But I think the trend of rating cuts does exist if the U.S. debt level continues to rise and its economic fundamentals don’t improve,” he said. Dagong sparked controversy in July 2010, when it commenced its sovereign rating research by giving the United States a rating - AA for both local and foreign currency debt – lower than China’s AA+ for yuan debt and AAA for its foreign currency debt that has
been maintained until now. It downgraded the U.S. rating on concerns over quantitative easing in November 2010, and cut again in August 2011. Dagong’s ratings are barely watched outside of China, and major international credit agencies classify most countries very differently from the Chinese agency. Mr Guan called for Beijing to stop channelling the country’s foreign currency reserves – the world’s largest at US$3.66 trillion at the end of September – to avoid suffering from further losses as the U.S. dollar falls. “The United States will not openly default, but it will print huge amounts of dollars to help repay its debt, which is risky,” he added.
make the British capital the main offshore hub for trading in China’s currency and bonds. He also paved the way for Chinese investors to take majority stakes in future British nuclear plants.
Diplomatic relations Campaigners have often accused Mr Cameron of putting trade before human rights. On this trip, activists want him to raise what they describe as rights abuses in Tibet. A senior source in his office said before the trip that Britain had turned the page on a rift with China over Tibet, adding that Mr Cameron had no plans to meet the Dalai Lama, Tibet’s
In a rare move earlier this year, Dagong downgraded bonds issued by three financing vehicles wholly owned by Chinese cities in provinces of Jilin, Hubei and Jiangxi. “That was a warning sign on local debt. Their debt payment ability declined and we saw no sign of any quick recovery,” he said, without saying whether more of such cuts are in the pipeline. Mr Guan said the company had paid a price for breaking ranks with local rivals as it lost some customers in a highly competitive market. Most local government financing firms are set up by local governments to borrow funds to finance local investment projects. Domestic corporate debt defaults are rare with banks or the government stepping in to cover potential losses if a firm gets into trouble. Mr Guan said the chances of debt defaults by Chinese provinces and cities remain slim as Beijing may flex its fiscal muscle to bail them out, despite growing market fears that slower economic growth could push some to the brink. “A default could be disastrous. Other local governments may help and the central government will not
December 3, 2013 April 19, 2013
2014 inflation seen at lower end of range
China’s consumer price inflation is likely to be at the lower end of a 3-5 percent range next year, the country’s top economic planner said in a research report yesterday. That will be higher than the 2.7 percent forecast for 2013 by the National Development and Reform Commission (NDRC), researchers Xu Lianzhong and He Xiaoying said in a report published in the official China Securities Journal. “Prices will face relatively heavy pressure to rise next year,” they said in the report, saying prices of agricultural products, especially pork, will rise faster next year than this year. “Generally speaking, CPI [consumer price index] will rise 3 to 5 percent next year, remaining in a mildly upward range.” China’s annual inflation hit an eight-month high of 3.2 percent in October on rising food costs, fanning market worries about policy tightening as factory output and investment data pointed to signs of stabilisation in the economy. The central bank has set an official inflation target of 3.5 percent for 2013. The NDRC report also forecast that China’s economy is likely to grow nearly 8 percent next year from an estimated 7.7 percent this year.
Cameron in first China trip in three years Priority is to deepen economic ties U.K. PM says to push EU-China trade deal spiritual leader-in-exile, again after their meeting last year angered Beijing. U.K.’s prime minister was noncommittal on the plane about raising Tibet, but said nothing was “off limits” in relations with China. As permanent members of the U.N. Security Council, Mr Cameron said the two countries would also discuss Iran and North Korea. Mr Cameron visited a training academy for Jaguar Land Rover sales staff on Monday to mark its opening as the carmaker unveiled a deal worth 4.5 billion pounds (US$7.38 billion) to provide 100,000 cars to the National Sales Company in China. England’s Premier League also announced an agreement with the Chinese Super League to develop football in China. Xavier Rolet, the chief executive of the London Stock Exchange, is travelling with Cameron. The delegation also includes Andrew Witty, the chief executive of GlaxoSmithKline Plc. The company was drawn into a bribery case this year which resulted in police detaining four Chinese GSK executives. Peter Humphrey, a Briton running a risk advisory group, was also detained and is still being held. Reuters
ICBC led a rally for lenders as move could ease banks’ funding
Move to end IPO halt hammers small-caps Financial stocks up as investors bet the measures will boost fees for brokerages
hina’s stocks fell, with a gauge of smaller companies posting the biggest drop on record, amid concern the government’s plan to restart initial public offerings will divert funds from existing equities. The ChiNext Index of companies with a median market value of US$1 billion sank 8.3 percent to 1,253.93 at the close, paring this year’s gain to 76 percent, as technology shares plunged. The Shanghai Composite Index slid 0.6 percent, trimming a loss of as much as 2.2 percent after data showed manufacturing topped estimates in November while PetroChina Co and China Petroleum & Chemical Corp rallied in the last 15 minutes of trading. China’s securities regulator, which has banned IPOs for more than a year to reduce fraud and prevent a flood of supply from dragging down the market, said on Saturday that 50 companies will be ready for new share sales by the end of January. Policymakers are lifting the ban amid a 12 percent rally in the Shanghai Composite from this year’s low in June, signs of a pickup in economic growth and pledges by the ruling Communist Party to increase the role of markets. “The IPO plan is dragging stocks down, especially the small-cap shares,” said Xu Shengjun, an analyst at Jianghai Securities Co. “With new stocks coming that are going to be much cheaper and more attractive, it’s ridiculous to want to buy the expensive small-caps.”
Guan Jianzhong, Dagong’s chairman
allow it to default.” The National Audit Office is widely expected to publish the latest data on local debt piles soon amid market fears of a sharp increase from the 10.7 trillion yuan (US$1.76 trillion) recorded in 2010. Reuters
The ChiNext trades at 31 times projected earnings for the next 12 months, while the Shanghai Composite is valued at 8.7 times and the Hang Seng China Enterprises Index has a multiple of 7.9, according to data compiled by Bloomberg. The CSI 300 Index lost 0.8 percent yesterday, while the Hang Seng China index climbed 0.8 percent. Software maker Neusoft Corp declined 9.2 percent as a gauge of technology companies dropped the most among industry groups. Leshi Internet Information & Technology Co retreated the most in more than a month. Suning Commerce Group led declines for consumer companies,
slumping 10 percent. China, the world’s largest IPO market in 2010, with a record US$71 billion raised, hasn’t had an initial public offering since October 2012 as the CSRC cracked down on fraud and misconduct among advisers and companies. Communist Party leaders pledged last month to change the system as part of a package of reforms to allow markets to play a “decisive” role in setting prices and allocating resources.
Cash needs There are more than 760 companies in the queue for approval and it will take about a year to complete an audit of all the applications, the CSRC said. “Restarting the IPO market is really following this mantra,” said Hao Hong, chief China strategist at Bocom International Holdings Co in Hong Kong. “But doing it at a time when liquidity is tight makes it difficult to interpret this as good news and it suggests that Chinese companies really need an injection of cash.” The CSRC also proposed drafting rules for a trial programme to allow companies to sell preferred stock, based on guidance issued November 30 by the State Council. Banks will be able to include preference shares in calculations of Tier-1 capital, giving them a new financing avenue to meet requirements for risk buffers, while helping reduce corporate debt levels, CSRC spokesman Deng Ge said in a separate statement. Goldman Sachs Group Inc said financial companies such as banks and brokerages will benefit from IPO reform. “Resuming IPOs will be a big boost to brokerages’ investment banking business,” Zhang Yanbing, a Shanghai-based analyst at Zheshang Securities Co, said. “Some investors believe that China’s stock market will enter a bull market soon.” Industrial & Commercial Bank of China Ltd led a rally for lenders, adding 1.8 percent to 3.87 yuan. Agricultural Bank of China Ltd rose 1.9 percent to 2.67 yuan. Citic Securities Co, the biggest-listed brokerage, jumped 5.1 percent to 13.56 yuan. Haitong Securities Co, the second largest, advanced 5.5 percent to 12.41 yuan. Bloomberg News
State Shipbuilding plans dollar notes China State Shipbuilding Corp, a builder of warships, oil rigs and bulk carriers, is considering a sale of dollar-denominated notes as the yield premium on the country’s bonds in the U.S. currency tumbles to a six-month low. The ship manufacturer is planning to meet investors in Hong Kong and Singapore from today, according to a person familiar with the matter who asked not to be identified because the matter is private. Agricultural Bank of China Ltd has hired banks for a proposed offering in the currency. Spreads on China’s dollar securities have narrowed to 300.97 basis points more than Treasuries, the least since May 29, according to HSBC Holdings Plc indexes. Borrowers from China including Hong Kong account for 52.4 percent of all dollar issuance in Asia outside Japan this year, poised to be the biggest proportion for a single country for any previous full year. The country’s Communist Party is trying to develop the bond market as an alternative to bank financing and pledged to give markets a “decisive” role in the allocation of resources after a summit last month.
Southern airlines says four executives under graft probe China Southern Airlines said it reported four middle-ranking executives to authorities after an internal audit uncovered irregularities as China steps up its anti-corruption campaign. A spokesman for China’s biggest airline by fleet size declined to identify the executives, now under investigation by the police. The spokesman told Reuters yesterday he couldn’t comment on the nature of the irregularities. The airline’s comments came after China’s official Xinhua news agency reported on November 30 that as many as 10 executives at China Southern were taken away by police last week as part of the anti-graft drive. China Southern’s spokesman said yesterday only four company executives are currently under investigation. China’s new leadership has made fighting corruption a top theme and has vowed to pursue what it called high-flying “tigers” as well as “flies” to assuage rising public anger over the scale of graft in the world’s secondbiggest economy. The Xinhua report on China Southern identified executives involved in sales and marketing positions as being the subject of the probe.
December 3, 2013 April 19, 2013
Greater China Zao painting sets record at Sotheby’s auction Sotheby’s first mainland sale earns US$37 million
US$14.7 mln Price paid for Zao’s painting titled ‘Abstraction’
Sotheby’s has only begun selling inside China this year
otheby’s first commercial auction in mainland China raised US$37 million and set a record for Chinese-French artist Zao Wou-ki in Beijing on Sunday. The 1958 oil-on-canvas painting titled “Abstraction” by Mr Zao sold to Zhang Xiaojun, a collector from Shanxi province in the room, for 89.68 million yuan (US$14.7 million), smashing the previous auction record of US$11 million set on October 5 at Sotheby’s Hong Kong, according to the auction house.
“This shows that there are strong buyers on the mainland,” said Pascal de Sarthe, a Hong Kong-based dealer. “Five years ago, they wouldn’t have been buying at the top end.” China is the fastest-growing source of clients for international auction houses as increasing affluence is driving demand for art and collectibles as alternative investments. The auction was held in conjunction with three private sales of western old masters, modern paintings, furniture and jewellery
offered by the New Yorkbased auction house, with an estimated combined value of US$212 million. “You get this explosion of wealth,” said David Norman, head of the impressionist and modern art department at Sotheby’s New York. “They seem not to really have fear or reticence to chase paintings to record prices.” Bidding for Mr Zao’s work, sold by the Art Institute of Chicago, which acquired it in 1961, attracted fierce bidding from eight bidders in the room and on the telephone
during a battle lasting almost five minutes.
Precious wine A Chinese buyer also set an auction record for a case of wine on November 23 when he paid US$474,000 for 12 bottles of RomaneeConti 1978 at Sotheby’s in Hong Kong. On November 5, China’s richest man, Wang Jianlin, paid US$28.2 million for a Picasso painting at Christie’s in New York. While Chinese buyers account for about half of all
Shanghai air pollution hits dangerous peak Authorities advise children to stay indoors after smog warning
hanghai warned children and the elderly to stay indoors as the level of the most harmful pollutants exceeded more than 10 times the level deemed safe by the World Health Organisation. The air pollution index in the nation’s commercial hub exceeded 300 yesterday afternoon, placing it in the “severe” range and the highest of six levels, the Shanghai Environmental Monitoring Centre said on its website yesterday. PM2.5 pollutants – particles smaller than 2.5 microns in diameter that pose the biggest health risk – reached 288.9, more than 10 times the WHO threshold, before falling to 211.5. Heavy pollution may undermine Shanghai’s plans to attract foreign investment and multinational firms, as the city implements a free-trade zone as part of a broader goal to become a global financial and logistics centre by 2020. Yesterday’s smog warning comes a day after about 35,000 runners from 84 countries turned out for the 2013 Shanghai International Marathon, according to the People’s Daily newspaper.
Smog shrouded the skyline of China’s financial hub
Pollution levels began rising on the day of the Shanghai marathon, with the air quality index surpassing 200 at 1pm, according to the centre. In October, the Shanghai government announced a plan to cut 2012 PM2.5 readings by 20 percent by 2017. “The sky was pretty bad,” said Bridget O’Donnell, a U.S. citizen living in Shanghai who ran in the
race. “It didn’t really affect me during the race but toward the end of the race I started to feel a little sick. After the race and today my lungs are really hurting.”
Face masks Ms O’Donnell, who also ran in the race last year, said that she noticed
international auction sales in Hong Kong, Sotheby’s and Christie’s have only begun selling inside China this year. They are taking advantage of new regulations that allow them to sell art, wine and collectibles within virtual free-trade zones by treating imported works brought in temporarily as bonded goods, thereby allowing buyers to avoid paying customs duty of 6 percent and value added tax of 17 percent on art. Wine and jewellery are subject to consumption tax as well. The most lucrative part of the Chinese art and antiques market valued at 10.6 billion euros (US$14.4 billion) in 2012 by the European Fine Art Foundation is off-limits to foreign auction houses under a law to protect cultural relics. Highlights of the items on offer in the private sales included a Rembrandt valued at 347 million yuan, a 48.5 million yuan Picasso oil painting and a bronze-cast Rodin for 10.23 million yuan. Unlike auctions, private sales have fixed prices, do not charge buyers fees and results are not released. At least eight lots, including two paintings and several pieces of furniture, were sold. Though the 141-lot auction was modest by international standards, the event was as much about marketing and gaining access to the growing ranks of high-net-worth Chinese, Kevin Ching, chief executive officer of Sotheby’s Asia said. Twenty-nine lots in the auction failed to sell. Bloomberg News
other runners wearing face masks for the first time. The marathon started at the city’s historic riverside Bund and wound through the city centre. Air pollution isn’t the only environmental concern in Shanghai, home to the larger of China’s two stock exchanges and country headquarters for multinational companies including General Motors Co. Authorities found more than 10,000 hog carcasses floating in the Huangpu River in March, likely dumped by farmers wanting to avoid disposal fees. A Shanghai government report in August found more than half of the city’s rivers and lakes are “severely polluted,” boosting concerns about water quality. Chengdu, the capital of southwestern Sichuan province, also registered air quality index readings exceeding 300 yesterday, while Beijing had readings above 150, in the “unhealthy” category, according to aqicn.org, a website that compiles air pollution data. Chinese Premier Li Keqiang pledged in March to clean up pollution including cutting coal consumption, shutting steel plants and controlling the number of cars. Pollution has become the top cause of social unrest in China, Chen Jiping, a former leading member of the Communist Party’s Committee of Political and Legislative Affairs, said that same month. Bloomberg News
December 3, 2013 April 19, 2013
Japan corporate capex up but GDP seen little changed Data casts some doubt on strength of capital spending Tetsushi Kajimoto
apanese companies raised spending on factories and equipment in the JulySeptember quarter, but the slow pace of increase casts some doubt on the strength of capital spending that is needed to help sustain economic growth. The 1.5 percent year-on-year rise in capital spending followed a flat reading in the prior quarter and marked the first gain in four quarters, Ministry of Finance data showed yesterday, but the result disappointed some economists who were expecting stronger gains. The reading suggests that Japan’s gross domestic product growth for July-September is likely to be little changed, after preliminary data showed a 0.5 percent expansion from the previous quarter, or an annualised rate of 1.9 percent. The capital spending data
Capital spending rose 1.5 percent year-on-year in Q3
will be used to calculate revised third-quarter GDP data, which is scheduled for release on Monday. “There is not likely to be much
change to GDP data,” said Shuji Tonouchi, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. “There are
some worrying signs, as capital expenditure in the services sector is losing some momentum.” Excluding software, corporate capital spending declined 0.5 percent on a seasonally adjusted basis in July-September from the previous quarter, down for the first time in four quarters, the Ministry of Finance data showed. Capital spending has been a weak spot in Japan as Prime Minister Shinzo Abe struggles to spur business investment and wage increases at many companies, which remain unconvinced that his reflationary policies will have a lasting impact. Yesterday’s data also showed that companies’ recurring profits rose 24.1 percent in July-September from the same period last year, up for a seventh consecutive quarter. Companies’ sales rose 0.8 percent in the third quarter from a year earlier, the first rise in six quarters. Japan’s economic growth has outpaced that of its G7 peers this year, but the pace slowed in JulySeptember as private consumption and exports moderated. Economists expect growth to pick up pace again in the current quarter as consumers rush to buy goods before a national sales tax hike to 8 percent from the current 5 percent next April. Reuters
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Sumitomo Life buys BNI insurance unit Insurer gets 40 percent stake for US$354 million
Sumitomo Life being lured by Southeast Asia’s growth outlook
umitomo Life Insurance Co, Japan’s fourth-biggest life insurer, agreed to buy a stake in PT Bank Negara Indonesia’s life insurance unit for about 36.2 billion yen (US$354 million) as it expands abroad. Sumitomo Life will buy about 40 percent of the Bank Negara Indonesia unit, according to a statement on the insurer’s website. BNI Life Insurance will issue new shares to Osaka-based Sumitomo Life, according to the statement. Japanese insurers, including Sumitomo Life’s bigger competitor Dai-ichi Life Insurance Co, are being lured by Southeast Asia’s growth outlook as they grapple with an ageing society and shrinking population at home. Since the start of 2012, US$7.6 billion of insurance deals have been announced into Southeast Asia, more than twice the US$3.6 billion between 2009 and 2011, according to data compiled by Bloomberg. Sumitomo Life last December said that it agreed to buy an 18 percent stake in Bao Viet Holdings, Vietnam’s biggest insurer, for about 7.1 trillion dong (US$336 million) from HSBC Holdings Plc.
The 10-member Association of Southeast Asian Nations, or Asean, has a combined gross domestic product of more than US$1 trillion. Asean nations are expected to expand 5.6 percent in 2013, compared with 0.6 percent shrinkage in the euro area, the International Monetary Fund forecast on July 9. Japan’s 2010 population of 127 million was the world’s oldest and will shrink 17 percent by 2055, the fastest decline among developed economies, according to United Nations data. Dai-ichi Life, Japan’s biggest publicly traded life insurer, in June agreed to buy a 40 percent stake in PT Panin Financial Tbk’s life insurance unit for about 3.3 trillion rupiah (US$278 million). Dai-ichi plans to spend about US$3 billion on overseas purchases in the next two years, Hideo Teramoto, the insurer’s managing executive officer said in May. Meiji Yasuda Life Insurance Co, Japan’s third-biggest life insurer, in July agreed to buy a 15 percent stake in privately owned Thai Life Insurance Pcl to meet rising demand in the country. Bloomberg News
December 3, 2013
Asia New CEO for Singapore casino regulator The head of Singapore’s anti-terrorist training is to become chief executive of the city’s Casino Regulatory Authority. Jerry See will succeed Lau Peet Meng on January 6. Mr See is currently CEO of the city-state’s Home Team Academy – a department under the Ministry of Home Affairs that trains Singapore officials in intelligence gathering on terrorism, counter-terrorism work, crisis management and emergency preparedness. Mr Lau returns to the Singapore Police Force as its director of operations. CRA chairman Richard Magnus said: “…since the casinos opened in Singapore, Peet Meng has helped establish CRA as a well-referenced regulatory agency internationally.”
Ratings agencies SGX equity trading plummets worried about Singapore’s brokerages making it harder for clients to invest debt limit: Hockey Jonathan Burgos
ustralian Treasurer Joe Hockey said he had been contacted by credit ratings agencies concerned about Australia’s debt ceiling, ramping up pressure on the opposition to agree to a new, higher ceiling before the existing one is breached. His comment came yesterday, 10 days before the current debt ceiling is expected to breached. In October, Mr Hockey proposed raising the federal government’s debt limit to A$500 billion (US$457 billion) from A$300 billion, but the move has been blocked by the opposition Labor Party, which wants a A$400 billion limit, and the Greens, which favours scrapping the ceiling all together. “Ratings agencies have for the first time contacted us, concerned about Australia possibly reaching the debt limit in the next few days,” Mr Hockey told parliament. “I’d say to the Leader of the Opposition, and I say to the Greens as well, this is unprecedented territory.” Both Standard & Poor’s and Fitch Ratings declined to comment on whether they had raised concerns about Australia’s debt ceiling with Mr Hockey. Australia is one of just a small number of countries with a AAA credit rating and stable outlook from all three major ratings companies. Reuters
he value of equities traded on Singapore Exchange Ltd sunk to a two-year low last month, threatening to slow the bourse’s earnings growth, as brokerages restricted investments in so-called penny stocks after three commodity companies plunged. The average value of shares transacted daily on Southeast Asia’s biggest exchange fell to S$914 million (US$728 million) in November from S$1.3 billion a year earlier, according to data compiled by Bloomberg. That’s the lowest since December 2011. Trading sank 36 percent in the past two months after a slump in Asiasons Capital Ltd, Blumont Group Ltd and LionGold Corp erased US$6.9 billion in market value over three days in early October, the data show. Singapore’s brokerages are making it harder for clients to invest in dozens of stocks even after SGX removed restrictions on trading Blumont, LionGold and Asiasons shares. The nation’s securities regulator is investigating the plunge and all three companies have said they don’t know what precipitated the decline. Interactive Brokers Group Inc and AmFraser Securities Pte, a unit of Malaysian lender AMMB Holdings Bhd, face combined potential losses of US$105.8 million from providing margin loans to affected investors,
Indonesia’s trade balance moves into small surplus October exports rose by 2.59 percent from a year earlier
ndonesia posted a small and unexpected trade surplus in October after the central bank tightened monetary policy to slow the economy and imports, a policy likely to remain in place to stem the risk of outflows once U.S. tapering kicks in. The trade surplus was US$50 million in October, data from the statistics bureau showed yesterday,
compared with an expected deficit of US$650 million in a Reuters poll of economists. News of the small surplus helped strengthen the rupiah, which has fallen more than 19 percent against the dollar this year over worries about a widening current-account deficit. Export growth was 2.59 percent year-on-year in October, helping to push the trade balance into surplus – the
first since August, which itself came after five consecutive deficits. Exports fell a revised 7.55 percent in September. Inflation quickened slightly in November, partly due to pass-through costs from a depreciation in exchange rates, but was below Bank Indonesia’s target of 9-9.8 percent this year. Annual inflation picked up to 8.37 percent in October and was up 0.12 percent on a
monthly basis. Core inflation, which excludes administered prices and volatile foods, picked up to 4.80 percent from 4.73 percent the previous month. “It seems like there is a slightly more positive momentum in export growth going into 2014,” said Gundy Cahyadi, a Singapore-based economist at DBS Group Holdings Ltd “On the other hand, imports had been rath-
er weak in August and September and we had expected a sequential rebound in October. This data showed that this didn’t happen,” he said. “It remains to be seen if this will continue in the coming months - probably as investment growth continues to moderate, taking the brunt from the turn in sentiment and the still weak confidence in the rupiah.” Inflation risks and a large current-account deficit, coupled with tight dollar liquidity, had forced Bank Indonesia to change its currency policy to “stabilisation” from “finding a new equilibrium”. Reuters
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December 3, 2013
Asia Kookmin Bank to close 55 branches Kookmin Bank, South Korea’s largest lender by assets, said it will close 55 branches in January as the country’s lenders struggle with the lowest lending margins in four years. The closures will cut costs and help the Seoul-based bank, a unit of KB Financial Group Inc, better serve Korean customers who are using Internet banking more frequently, Kookmin Bank said in an e-mailed statement yesterday. Employees at the shuttered branches will be moved to other outlets, the lender said, without providing an estimate for cost savings. “Smaller branch networks will be a trend for Korean banks,” Yoo Sang-ho, an analyst at HI Investment & Securities Co, said.
on penny-stock curbs
Average value of shares transacted daily in November the brokerages said in separate announcements. “The trading curbs were done to protect brokers’ interests,” Jimmy Ho, president of the Society of Remisiers in Singapore, said by telephone. “However, imposing such restrictions is killing the market. The measures look overdone and SGX should intervene.”
‘Prudent intervention’ SGX suspended trading on the three stocks on October 4 then declared them “designated securities” on October 6, meaning investors were prohibited from selling unless they held the same quantity of stock and buyers had to pay in cash. The exchange removed its curbs
from October 21, saying trading had become more stable. UOB-Kay Hian Holdings Ltd, Singapore’s largest brokerage with about 800 brokers, has 53 stocks in its restricted trading list, including Asiasons, Blumont and LionGold, according to a document obtained by Bloomberg. Shares on the list cannot be traded online and upfront cash payments are required for transactions above S$30,000, according to UOB‑Kay Hian. Lim & Tan Securities Pte has restrictions on 58 stocks, while Maybank Kim Eng Securities has 26 stocks on its list, documents show. The FTSE Straits Times Fledgling Index of Singapore’s smallest listed stocks by market value has 319 members. “Investor sentiment in Singapore was severely affected by the collapse of the penny-stock bubble in October,” UOB-Kay Hian said when it reported its third-quarter results on November 12. “While our timely and prudent intervention averted significant baddebt losses, we expect lower trading volume and hence brokerage income in the next quarter or two.”
‘Confidence affected’ Stock trading remains the biggest source of income for Singapore Exchange and the slump will curb earnings for the bourse, according to Macquarie
Abe support falls below 50pct amid secrecy drive
Group Ltd and Phillip Securities Pte. “Market confidence was affected,” said Ken Ang, an analyst at Phillip Securities. “Some of the retail investors may have been hit by the recent pennystock saga, and they may be slightly more apprehensive about re-entering the market at this moment.” SGX is expected to report a 7.3 percent increase in net income to S$360.4 million in the year ending June 2014, according to the average estimate of 14 analysts compiled by Bloomberg. That compares with 15 percent growth in the previous year. Bourse spokeswoman Loh Wei Ling didn’t respond to an e-mailed request for comment. “It’s a big deal when the value of stock trading falls,” said Matthew Smith, an analyst at Macquarie in Kuala Lumpur. “That’s the primary bread and butter for SGX still.” An increase in derivatives trading will help the exchange offset the slump in stock transactions, Mr Smith said. The equities business accounted for 67 percent of SGX’s revenue in the year ended June 30, 2013, while derivatives made up the rest, according to data compiled by Bloomberg. The Southeast Asian bourse has been seeking to revive equity trading volume, while at the same time promoting index, currency, commodity and fixed-income products.
rime Minister Shinzo Abe’s public support dropped below 50 percent for the first time amid a campaign to strengthen Japan’s secrecy laws, a decline that risks eroding his political capital to enact economic reforms. The cabinet’s approval rating fell to 49 percent, according to a November 30 to December 1 survey by the Asahi newspaper, down 4 percentage points from a month earlier. It showed 50 percent of those surveyed opposed a bill passed by the Diet’s lower house last week that boosts penalties for leaking confidential government information. The upper house may vote this week. Unease over the bill accompanies an emergence of inflation in the world’s third-largest economy that threatens to damage further Mr Abe’s public backing unless companies begin to raise base wages. The drop in support precedes action on the reforms that economists say would give businesses the biggest incentive to increase spending at home: freer labour laws and lower taxes. “If the support rating continues to fall and touches 30 percent, past patterns show the government will collapse within a year,” said Shogo Fujita, a strategist at Bank of America Merrill Lynch in Tokyo.
Park stimulus beating Abenomics As prospects for growth in the two economies diverge
he extra yield investors demand to hold South Korea’s localcurrency bonds over those of Japan climbed to the widest in two years. The premium on South Korea’s 10-year government notes reached 307 basis points on November 29, the highest since August 2011, data compiled by Bloomberg show. The won strengthened 4.4 percent against the yen in November, the best performance among Asia’s biggest economies, and fund managers said the currency’s yield advantage will keep attracting investment. South Korea’s gross domestic product increased 3.3 percent in the third quarter, the fastest pace since 2011, spurred by President Park Geun-hye’s 17.3 trillion
won (US$16 billion) extra budget. She also ordered state companies to cut debt and urged businesses to boost investment. In comparison, Japan’s economy expanded 1.9 percent, slowing for a second straight quarter, even amid Prime Minister Shinzo Abe’s unprecedented monetary and fiscal stimulus aimed at ending 15 years of deflation. “Korea’s bond yields are reflecting healthy growth fundamentals,” Choi Jin‑young, a Seoul-based fund manager at Mirae Asset Management Co, which oversees US$59 billion, said in a telephone interview. “Super-loose monetary policy, coined as Abenomics, is keeping Japanese yields low. The effect of such a policy remains in doubt until we see
a bounce-back in yields with a recovery in growth.”
Bank rates Consumer confidence in South Korea rose in November to the highest since February 2011, official data shows. Exports climbed 0.2 percent, slowing from a 7.2 percent increase in October, the Ministry of Trade, Industry and Energy reported in an e-mailed statement yesterday. The median forecast in a Bloomberg survey of economists was for a 3 percent gain. The economy will expand 3.8 percent in 2014, compared with this year’s 2.8 percent estimate, Bank of Korea forecasts. A pickup in growth in Asia’s fourth-largest economy will prompt the central bank
to raise interest rates by 25 basis points in both the third and final quarter of 2014, the first increases since June 2011, Kwon Goohoon, an economist at Goldman Sachs Group Inc in Seoul, told reporters at a briefing. South Korea’s Kospi stock index, which climbed 1.9 percent this year to 2,034.87, may rise about 15 percent to an all-time high of 2,350 by the end of 2014, he forecasts. “Market yields tend to
price in the future course of policy rates,” Mr Kwon said. “Long-term yields are rising before the policy action. The trend of higher yields is being pronounced across the globe as the global economy recovers and the Federal Reserve is on course to cut its stimulus.” A jump in South Korean yields, which is partly being driven by the prospect of Fed tapering, provides an incentive for overseas investors, according to Western Asset Management Co. Japanese bonds are “firmly anchored” by a loose monetary policy and an expansive asset-purchase programme, causing the spread with Korean sovereign notes to widen, Kim Wontae, a Singapore-based analyst at Western Asset, said. Bloomberg News
December 3, 2013 April 19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
BRENT CRUDE FUTR Jan14
GASOLINE RBOB FUT Dec13
GAS OIL FUT (ICE) Jan14
NATURAL GAS FUTR Jan14
Gold Spot $/Oz
Silver Spot $/Oz
NY Harb ULSD Fut Dec13
Platinum Spot $/Oz
Palladium Spot $/Oz
LME ALUMINUM 3MO ($)
LME COPPER 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan14
WHEAT FUTURE(CBT) Mar14
SOYBEAN FUTURE Jan14
COFFEE 'C' FUTURE Mar14 SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Mar14
World Stock Markets - Indices NAME
WTI CRUDE FUTURE Jan14
30.7 30.6 30.5 30.4 Max 30.70
Currency Exchange Rates
DOW JONES INDUS. AVG
NASDAQ COMPOSITE INDEX
FTSE 100 INDEX
HANG SENG INDEX
CSI 300 INDEX
TAIWAN TAIEX INDEX
S&P/ASX 200 INDEX
JAKARTA COMPOSITE INDEX
FTSE Bursa Malaysia KLCI
NZX ALL INDEX
PHILIPPINES ALL SHARE IX
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
0.9111 1.6347 0.9053 1.3612 102.33 7.9852 7.7527 6.094 62.5725 32.107 1.255 29.634 43.76 11965 93.233 1.23233 0.83265 8.2896 10.8691 139.29 1.03
-0.2736 0.0367 0.0552 0.1471 -0.0977 0.0025 -0.0013 -0.0246 -0.2597 0.0498 -0.0319 0.0304 -0.0457 0.443 0.1813 -0.0917 -0.1069 -0.006 -0.1564 -0.2441 0
-12.2085 1.0571 1.1157 3.1994 -15.8605 -0.025 -0.0271 2.2415 -12.11 -4.756 -2.6773 -2.0281 -6.2957 -18.1529 -4.1895 -2.0165 -2.0693 -0.8698 -3.1162 -18.4651 -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 12028 105.433 1.265 0.88151 8.4957 11.0434 139.71 1.032
0.8848 1.4814 0.8891 1.2746 81.72 7.9818 7.7498 6.0773 52.89 28.56 1.2168 28.913 40.54 9590 85.389 1.20362 0.80331 7.8281 10.195 105.98 1.0289
Macau Related Stocks NAME
CROWN RESORTS LT
BOC HONG KONG HO
CHEUK NANG HLDGS
CHOW TAI FOOK JE
FUTURE BRIGHT GALAXY ENTERTAIN
HSBC HLDGS PLC
HUTCHISON TELE H
LUK FOOK HLDGS I
MELCO INTL DEVEL
MGM CHINA HOLDIN
HANG SENG BK HOPEWELL HLDGS
NEW WORLD DEV
SANDS CHINA LTD
SHUN HO RESOURCE
SHUN TAK HOLDING
SJM HOLDINGS LTD
WYNN MACAU LTD
Euromoney Dragon 300 Index Sin
STOCK EXCH OF THAI INDEX
HO CHI MINH STOCK INDEX
Laos Composite Index
BOC HONG KONG HO
INTL GAME TECH JONES LANG LASAL
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
LAS VEGAS SANDS
MGM CHINA HOLDIN
MGM RESORTS INTE
SJM HOLDINGS LTD
WYNN RESORTS LTD
Hang Seng Index NAME
CHINA UNICOM HON
POWER ASSETS HOL
SANDS CHINA LTD
BANK OF CHINA-H
BANK OF COMMUN-H
AIA GROUP LTD ALUMINUM CORP-H
BANK EAST ASIA BELLE INTERNATIO
CLP HLDGS LTD
SINO LAND CO
COSCO PAC LTD
TINGYI HLDG CO
WANT WANT CHINA
HANG LUNG PROPER
CATHAY PAC AIR
HANG SENG BK
BOC HONG KONG HO
HENDERSON LAND D
HONG KG CHINA GS
HONG KONG EXCHNG HSBC HLDGS PLC
CHINA COAL ENE-H
CHINA CONST BA-H
CHINA LIFE INS-H
IND & COMM BK-H
CHINA RES ENTERP
LI & FUNG LTD MTR CORP
CHINA RES LAND
NEW WORLD DEV
CHINA RES POWER
PING AN INSURA-H
SUN HUNG KAI PRO
INDEX 24038.55 HIGH
52W (H) 24014.81 (L) 19426.35938
December 3, 2013 April 19, 2013
Leading reports from Asia’s best business newspapers
Jakarta Globe A series of economic policy packages introduced in August has yielded positive results for the economy, according to the Indonesia’s top economic minister. Coordinating Minister for the Economy Hatta Rajasa said the increase in the use of biodiesel saved the nation US$200 million in imports. The government expects a much greater impact from the program next year when all related stakeholders are ready to fully commit to the programme, the minister said. The biodiesel programme aims to reduce oil imports by as much as US$3.9 billion in 2014.
The Age Another month of benign inflation and a contraction in the manufacturing sector is not forecast to increase the low odds of an interest rate cut by the Reserve Bank of Australia. Despite the strength of the Australian dollar, economists are expecting the RBA to keep rates on hold at a record low of 2.5 percent at its last board meeting of the year, after a strong rise in house prices this year. In the year to November, inflation lifted by 2.4 percent, above previous 2.1 percent annual readings.
China Daily Chinese companies are thriving in the U.K. and making a significant contribution to the economy there, according to the Grant Thornton Tou Ying 25 tracker 2013. The tracker monitors U.K. businesses with Chinese parent companies to identify the fastest-growing 25 companies by year-onyear change in turnover. The 25 companies are making heavyweight contributions to the U.K. economy, having employed more than 2,600 people and generated more than 17 billion pounds (US$27.83 billion) in revenue in 2012, a 27 percent year-onyear increase.
Wall Street Journal Prices of home durable goods in Tokyo rose in November for the first time in two decades and at their fastest pace in 30 years, government data showed, further evidence that Japanese Prime Minister Shinzo Abe is making progress toward his goal of overcoming 15 years of deflation. Prices of goods such as TV sets and refrigerators rose 4 percent in November from a year ago, the Ministry of Internal Affairs and Communications said. Prices in this category had fallen every month since April 1993, and hadn’t risen by more than 4 percent since May 1982.
Xi Jinping overreaches in the East China Sea William Pesek
Bloomberg View columnist
A tiny accident or miscalculation in the skies above the disputed islands could easily spiral out of control
he Communist Party summit that recast Xi Jinping as a reformer extraordinaire has produced its first foreign-policy initiative: poking Japan in the eye. That seems to be the point of China’s declaration of a vast “air defence identification zone,” in which Beijing has essentially claimed the airspace around disputed islands administered by Japan. The provocation came just two weeks after the party called for a new national security council to coordinate military, domestic and intelligence operations in China. Political analysts who worried that the body might herald a deepening Asian Cold War weren’t being entirely paranoid. There’s nothing particularly shocking about establishing such a council, state-run media says. The U.S. and Russia both have one, after all, and even Japan is talking about creating its own. Besides, as the Xinhua News Agency was kind enough to inform readers in a November 22 explainer piece, “China is a stabiliser for world peace and security, and the new commission is like a performance guarantee for the stabiliser and will in turn bring benefits to the whole world.” Tell that to Itsunori Onodera, Japan’s minister of defence, who’s working frantically to decode what China means when it warns that its military may take “defensive emergency measures” if planes don’t identify themselves in the new air defence zone. Or Onodera’s South Korean counterpart, Kim Kwan-jin: Some of China’s zone overlaps
with waters off Jeju Island. Or Chuck Hagel, the U.S. defence chief, who got dragged into the controversy and responded, boldly, by flying two unarmed B-52 bombers into the area as a warning to Beijing to back off. When he visits Japan, China and Korea next week, U.S. Vice President Joe Biden can expect some pretty testy exchanges.
Playing provocateur China’s move belies all the talk of its peaceful, magnanimous rise as a world power. A tiny accident or miscalculation in the skies above the disputed islands – called the Senkakus by Japan and Diaoyu by China and Taiwan, which separately claim them – could easily spiral out of control, dragging Washington into a clash that would shake the global economy. Instead of being a stabiliser, China is proving to be a provocateur. It’s hard not to wonder if political testosterone has gone to Xi’s head. He emerged from China’s recent four-day plenum as the most powerful Chinese leader since Deng Xiaoping. Xi may be especially willing to risk a confrontation with Japan right now in order to distract opponents of his proposed reforms, as well as ordinary Chinese who are growing restless over pollution, income inequality and official corruption. Nothing brings China’s 1.3 billion people together so easily as hating the Japanese. China doesn’t deserve all the blame for the precarious state of northeast Asian affairs, of
course. That dubious honour must be shared, and owned, by the region’s other two newish leaders: Shinzo Abe of Japan and Park Geun-hye of South Korea. It was Tokyo’s imprudent decision in September 2012 to buy the disputed islands from a private owner that truly incensed Beijing. The purchase may turn out to be the most expensive US$26 million investment a government has ever made. Abe is an unapologetic revisionist who remains intent on whitewashing Japan’s World War II aggression, including the government’s role in keeping military sex slaves; flexing Japan’s muscles in Asia; and perhaps revising its pacifist constitution. Park rarely misses a chance to hammer Japan about the sins of the past, though the points she scores at home come at the expense of a critical bilateral relationship.
Military blows Yet it is China’s actions that most risk sparking conflict. They also contradict the spirit of reform and “opening up” repeatedly hailed at the Communist Party’s recent plenum. In addition to Japan and Korea, China’s air zone is sure to worry officials in Brunei, Indonesia, Malaysia, the Philippines and Taiwan, all of which are embroiled in territorial disputes with Beijing. A group of Chinese scholars want Beijing to claim Okinawa, too. However powerful Xi has become, he’s not adding to China’s store of “soft power”
with such behaviour. The country took a big hit abroad for its chintzy US$100,000 aid offering to the typhoondevastated Philippines (international press coverage shamed Beijing into upping the donation to $1.6 million). Its inflammatory new policy will only further alienate neighbours in a region it’s seeking to woo away from the U.S. Biden should take advantage of this dust-up to advance a U.S. “pivot” to Asia that until now has lacked both carrots and sticks. In Tokyo, he should prod Abe to lead his people toward more enlightened engagement with Asia rather than follow his base nationalist instincts. In Seoul, Biden should encourage Park to work with Abe, even if just on trade, the environment, North Korea and the challenges of governing a fast-aging population. The U.S. also should push the case for regular threeway summits between the leaders of Japan, China and Korea no matter what’s afoot. Face-to-face meetings can create momentum toward deeper ties. But Biden’s sternest conversation should be with Communist leaders in Beijing. China says its global ambitions are peaceful and war isn’t in the national DNA. Great. It says it believes in mutual respect for other countries’ domestic affairs. Fine. It says it wants to “make Chinese culture go global.” All sounds good. Beijing’s recent actions, however, inspire little confidence in its words. Bloomberg View
December 3, 2013 April 19, 2013
Closing StanChart to provide yuan services in U.K. Hilton to raise up to US$2.37 bln in IPO Standard Chartered Plc said yesterday it will cooperate with Agricultural Bank of China Ltd to provide yuan clearing services in the U.K., helping financial institutions and corporates execute yuan transactions. With Agricultural Bank of China’s extensive distribution network and abundant yuan funds in China’s onshore market, the cooperation will inject sufficient yuan liquidity into the market in London. “The opportunity to boost RMB liquidity in London could be used to fund large investment projects and support the development of other financial activities,” Peter Sands, Group CEO of Standard Chartered, said in a statement.
Hotel operator Hilton Worldwide Inc, controlled by private equity firm Blackstone Group LP, said its initial public offering would raise up to US$2.37 billion, valuing the company at about US$20.7 billion. Hilton said it expected to price the offering of 112.8 million shares at between US$18 and US$21 per share, according to a filing with the U.S. Securities and Exchange Commission yesterday. Hilton is selling 64.1 million shares in the offering, while the selling shareholder will offer 48.7 million. The company could raise US$2.72 billion if underwriters exercise their rights to buy another 16.9 million shares.
Global factory growth up but Europe diverging Eurozone PMIs highlight diverging economies
ncreasing demand for manufactured goods drove global factory activity higher last month but the spurt in the eurozone masked a widening disparity among some of the bloc’s key members. As year-end approaches, the global economy is showing signs of a more solid recovery, with encouraging signs from some economies, particularly
Britain, of an acceleration. But growth in Europe’s 17-nation currency union remains weak and Markit Economics, compiler of the monthly Purchasing Managers’ Indexes, said yesterday that there was evidence of a renewed downturn in France and Spain. Markit’s Eurozone Manufacturing PMI rose to 51.6 last month from
October’s 51.3, a two-year high, just piping an earlier flash reading of 51.5, and the fifth consecutive month showing growth. The output index nudged up to 53.1 from 52.9. “It is coming from a pretty low level,” said Ben May at Capital Economics. “Signs of weakness in France is clearly a worry and suggests that the divergence between it and
Germany remain firmly in place. It would raise more concerns if it were to continue or intensify.” France’s PMI fell to a five-month low of 48.4 from 49.1, chalking up its 21st month below 50, while Spain’s sank back below the 50 break-even mark after spending the last three months in growth territory. By contrast, data from Germany, Europe’s biggest economy, showed factories there had their best month since mid-2011. Italian figures showed manufacturing there also picked up speed. The eurozone escaped from its longest-ever recession earlier this year, supported by better-thanexpected growth in Germany, but a Reuters poll last month suggested the bloc’s economy will grow only moderately though next year. A similar indicator for Britain, outside the eurozone, was much stronger. At 58.4, it easily topped the highest forecast and is showing the strongest growth in nearly three years. Chinese PMIs suggested resilience that augurs well for Beijing’s plans to gear the economy more towards domestic consumption and away from investment-led growth. The HSBC Holdings Plc/Markit China PMI edged down to 50.8 in November from a seven-month high of 50.9. China’s official PMI released at the weekend, which focuses more on bigger firms, held at 51.4 in November, unchanged from October’s 18-month high. Japan’s PMI, released on Friday, pointed to the quickest manufacturing growth in more than seven years as new export orders reached their highest level in over three. Reuters
Eurozone factory orders rose for a fifth consecutive month in November
Thai PM rejects resignation demand T hai Prime Minister Yingluck Shinawatra said yesterday she would “open every door” to find a peaceful solution to a political crisis gripping Bangkok as police used rubber bullets against protesters seeking to topple her government. “The protesters’ demands are impossible to meet under the framework of the constitution,” she told a news conference. The violence is the latest twist in a conflict pitting Bangkok’s middle class and royalist elite against the mostly poor, rural supporters of Ms Yingluck and her brother, Thaksin Shinawatra, a populist former prime minister who was ousted in a military coup in 2006 and lives in self-imposed exile. Ms Yingluck told the news
conference that police would not use force, but the national security chief later said rubber bullets were being used as protesters threatened to advance on Ms Yingluck’s office, the focal point of the demonstrations since the weekend. The number of protesters was well down on the 30,000 dispersed around various sites on Sunday, but hard-core elements had broken through concrete barriers set up around Government House, Ms Yingluck’s office in the heart of Bangkok. After using round upon round of teargas to repel them on Sunday, police stepped up their response yesterday. Three people were shot dead at the weekend. Reuters
EU watchdog sees failings in debt ratings process T he “Big Three” credit rating agencies that score European Union government debt could be fined after failing to fix poor practices from the past, the sector’s regulator said yesterday. Credit ratings are a key part of the financial system because investors use them to judge how likely they are to get their money back. But the financial crisis led to unease that the market is relying on them too much. The European Securities and Markets Authority (ESMA) published yesterday results of its investigation into how Moody’s, Standard & Poor’s and Fitch compiled ratings on sovereign bonds between February and October
this year. It criticised delays in the publication of ratings changes and poor confidentiality controls at the agencies. Sovereign ratings became politically charged at the height of the eurozone crisis when S&P infuriated Greece in 2011 by cutting the rating of its debt while the country’s EU bailout was being renegotiated. “ESMA’s investigation revealed shortcomings in the sovereign ratings process which could pose risks to the quality, independence and integrity of the ratings and of the rating process,” ESMA chairman Steven Maijoor told reporters. “They should speed up their processes and make sure they get their house in order.” Reuters
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