Macau Business Daily, Jan 9, 2014 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Number 451 Thursday January 9, 2014 Year II www.macaubusinessdaily.com

Macau Cable TV in talks with govt on ‘long-term’ contract

April 19, 2013

No brake on car park costs

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More banks drop fees for dormant accounts Page 3

Zhuhai Airlines plans sales office in Macau Page 7

ar users will probably pay more this year to get private car parking spaces. The property market value of such spaces to investors is likely to rise 20 percent this year. “There is not – for the foreseeable future – any large amount of [fresh] car-parking supply,” Chan Lik Ki, general manager of specialist property agency CarparKing Co Ltd, told Business Daily. Transport Bureau Director Wong Wan said

on Tuesday the administration would first improve public transport and the “parking environment” before considering any curbs on private motor vehicle numbers in the city. There are no official data on the number of private and public car parks. There were more than 226,000 licensed motor vehicles in the city by November, 4.9 percent more than a year earlier. More on page 3

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Questions, but few answers on e-games policy

Hang Seng Index

The Macau government has been considering for some time the possibility of curbing the growth of electronic gaming in the city’s casinos as well as in standalone slot parlours, according to several industry sources spoken to by Business Daily. On Monday in the Legislative Assembly, Francis Tam Pak Yuen, Secretary for Economy and Finance, didn’t specify whether the administration was mainly concerned with traditional slot machines or electronic table games.

High housing prices prove drag for consumer confidence

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January 8

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Macau residents remain pessimistic about the local housing market, a new survey suggests. A key concern is that there are no effective measures for cooling property prices. They also fret about future mortgage interest rates says the latest consumer confidence index compiled by Macau University of Science and Technology. The sub-index on housing dipped to 41.7 points out of 200 in the fourth quarter last year.

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City upscale since zero-cost tours banned, says report Macau tourism has moved upmarket in the fourth quarter – probably as a result of the mainland’s ban on zero-fare tours, says a report from Morgan Stanley Research Asia Pacific. “…in October and November, Chinese visitation growth slowed down to four percent year-on-year, yet mass [gaming] revenue grew at 37 percent, implying 33 percent growth in mass revenue per Chinese visitor, despite no incremental hotel space,” states the report. Page 5

%Day

BELLE INTERNATIO

12.94

CHINA OVERSEAS

6.63

GALAXY ENTERTAIN

3.38

PING AN INSURA-H

3.18

CATHAY PAC AIR

2.61

HONG KG CHINA GS

-0.23

WANT WANT CHINA

-0.72

SWIRE PACIFIC-A

-0.84

CITIC PACIFIC

-0.93

CHINA PETROLEU-H

-1.17

Source: Bloomberg

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January 9, 2014

Macau

High housing price drags M consumer confidence Uncertainty over mortgage rates fuels residents’ gloom over property, university researchers say Stephanie Lai

sw.lai@macaubusinessdaily.com

Flat mood – locals fret over housing market

acau residents remain pessimistic about the local housing market a new survey suggests. A key concern is that there are no effective measures for cooling property prices. They also fret about future mortgage interest rates says the latest consumer confidence index compiled by Macau University of Science and Technology. The sub-index on housing dipped to 41.7 points out of 200 in the fourth quarter last year. The index also reflected consumers’ expectation for the three months ahead of the measured quarter. The housing sub-index is down by 9.3 percent from the previous period. It is also the second lowest level since the first quarter of 2010 where the housing sub-index hit 37.6 points in that period. A score below 100 points suggest a negative outlook in consumer confidence, the university’s survey team explains. One of the leading researchers, Liu Cheng Kun, said in a press briefing yesterday that government housing policy was not solely to blame. “What the government did was to try curbing the housing price growth,” said Mr Liu. “But the price still climbs incessantly under the low interest rates, which is imposed under the U.S. quantitative easing policy. Though the tapering of the quantitative easing policy has started, we still don’t see when

the whole policy will end and what is going to happen with the interest rate.” The “low interest rates” Mr Liu referred to, which are currently close to zero, are in lockstep with the mortgage rates charged by banks here thanks to the indirect currency peg between the pataca and the U.S. dollar. To compile the survey, the university telephoned 1,012 residents and asked them for their outlook on the city’s economy, employment status, price level, quality of life, home purchase and share purchase. The overall consumer confidence index for the city, which includes those six factors, was up slightly – by 0.1 percent – to 86.3 points in the fourth quarter last year. Home prices aside, persistent high inflation is responsible for the only modest growth overall in the consumer confidence index, the research team stated. The sub-index on consumer price levels dropped by 5.6 percent quarter-to-quarter to 54 points in October to December. Just as the previous period, the sub-index on consumer price levels is the second lowest after the home purchase index. Residents were most confident about employment status, where the sub-index rose by 4.7 percent to 125.2 points, the third highest score reached since the university first published the survey in the fourth quarter of 2008.

Cable TV in talks for ‘long-term’ contract Company’s monopoly ends in April but research to shape market’s future will not be ready before September Tony Lai

tony.lai@macaubusinessdaily.com

acau Cable TV Co Ltd is in talks with the government for a new, “long-term” contract once its exclusive concession expires three months from now. “We are still in talks with the government, mainly about the details now,” the company’s chief commercial officer John Chiang Kwong Io told Business Daily yesterday. The firm’s 15-year exclusive contract ends in April and the government had said it wanted to end the monopoly. Members of the Legislative Assembly have expressed their concern of the government’s handling of the cable television market. Just this week, the government said a plan meant to chart a future for television services would be formed only after the University of Macau finished research in September. The government commissioned the study

last year. Secretary for Transport and Public Works Lau Si Io was reluctant to offer specifics to the Legislative Assembly on Tuesday, saying only that the government was working on a contract for Macau Cable TV. Mr Chiang discounted a delay until after September’s report, saying “both sides want to get it done as quickly as possible”. “Our discussion is about a long-term contract, not for a short period.”

Free-to-air Mr Lau’s office and the Bureau of Telecommunications Regulation were asked to comment. The bureau confirmed late yesterday that it was negotiating with Macau Cable TV but provided no more information. Most households receive free-to-air television rebroadcast by the city’s 14 antenna companies. Macau

Macau Cable TV’s exclusive concession to supply pay television ends in April (Photo: Manuel Cardoso)

Cable TV owns the copyright on that content. The rebroadcast deal, signed in August, sees the government pay Cable TV 980,000 patacas

(US$122,700) a month. Mr Lau said this week the government would find a “non-profit organisation” to replace Macau Cable TV in April in relaying free-to-

air signals. The government would have a major say in this “basic TV service”. Mr Chiang said the parties had discussed that idea but he did not say if the company would stop free-toair broadcasts. “The government has only laid out an idea but there is no detail. The government itself is not able to talk about details at the moment,” Mr Chiang said. He questioned if another company could offer a comparable service. “Is there any entity able to provide the service immediately?” Macau Cable TV said last month the government’s involvement in broadcast media would create “unfair competition”. The company was critical of the government proposal to provide a basic, free-to-air television service, saying it would distort competition and lead to poor quality paytelevision services.

January 2014 April 19,9,2013

Macau

No brake on car park values in 2014 Average selling price in November of single space was MOP1.35 million Tony Lai

tony.lai@macaubusinessdaily.com

ar users will probably pay more this year to get private car parking spaces. The property market value of such spaces to investors is likely to rise 20 percent this year driven by limited supply, according to the property agents. The likely price surge this year is not however as much as the territory experienced in the past 12 months. “The price will go up between 10 percent and 20 percent from last year as the Macau’s economy remains in a positive tone,” Chan Lik Ki, general manager of CarparKing Co Ltd, told Business Daily. “The Transport Bureau has also not laid out any major policy in curbing the number of motor vehicles,” said the manager of the firm specialising in such transactions. “There is not – for the foreseeable future – any large amount of carparking supply,” he added. Jennifer Un, district director of Ricacorp (Macau) Properties Ltd, forecast rises in car park space property values of “some 10 percent” due to “an imbalance of supply and demand”. Transport Bureau director Wong Wan said on Tuesday in a Legislative Assembly session that the administration would first improve the public transportation and the parking environment before considering any curbs on private motor vehicle numbers in the city. The bureau would also work on providing more carparking space to solve the

shortage, said Mr Wong. He did not go into specifics. Meanwhile CarparKing’s Mr Chan said this year’s transaction price increases “will not be as rapid as last year”, when supply tightened after government cooling measures. In October 2012 the administration extended its special stamp duty on homes to sales of commercial units and car parks. Data from the Statistics and Census Service said the average selling price in November of a parking space was 1.35 million patacas (US$168,750), doubling from a year earlier and 3.1 percent higher than a month earlier.

Watch this space – car park prices up again

Fewer sales Transaction records from CarparKing indicate the average transaction value of car parks last year grew by 75 percent. Prices jumped nearly 90 percent in Taipa and in NAPE district. A single car park space cost 1.4 million patacas in a Taipa residential project by the end of last year versus 750,000 patacas in previous years, according to CarParking. The price in a commercial centre in NAPE is about 1.2 million patacas compared with 640,000 patacas earlier last year. CaparKing’s Mr Chan explained the price level in the two districts were “relatively lower” in the past than places such as Nam Van. Therefore

The price will go up between 10 percent and 20 percent from last year as the Macau’s economy remains in a positive tone Chan Lik Ki, general manager of CarparKing

the 5,100 car parks transacted in 2012. Official data show the car park deals in the first 11 months of last year totalled approximately 4,300. Ricacorp predicted sales this year will stay flat. CarparKing expects there might be a “slight increase” as more car parks can be released to the market by November once they are no longer covered by the two-year lock-in period of special stamp duty. There are no official data on the number of private and public car parks. There were more than 226,000 licensed motor vehicles in the city by November, 4.9 percent more than a year earlier.

More banks drop fees on inactive accounts ICBC and Tai Fung remove fees on idle accounts, following the Bank of China’s lead Tony Lai tony.lai@macaubusinessdaily.com

Two more banks have joined the Bank of China Macau in wiping out some account fees (Photo: Manuel Cardoso)

t least three banks have stopped charging fees on bank accounts that are considered inactive. Industrial and Commercial Bank of China (Macau) Ltd and Tai Fung Bank Ltd told Business Daily yesterday they had abolished fees on inactive accounts. Both lenders said fees on dormant accounts were cancelled from the start of the month. The decision includes current and savings accounts. Yesterday’s announcement came after the Bank of China Ltd Macau Branch said it would scrap its fees on inactive accounts.

those districts experienced proportionally bigger surges last year. But the car park prices peaked in the densely populated Areia Preta district at between 1.6 million and 2 million patacas last year, according to Mr Chan and Ricacorp’s Ms Un. While the price surged last year, the number of carparking transactions dropped as the supply was tightened by the special stamp duty, which is 20 percent of the transaction price if sold on within a year, and 10 per cent if sold on within two years. Ms Un estimated there was a decline in sales volume of some 10 percent last year from

Dormant accounts, typically savings accounts in which there is no activity other than to pay interest, cost the bank more to administer than active accounts. The banks consider an account without any deposits or withdrawals for more than a year is inactive. The fee charged varies from bank to bank. Tai Fung Bank Ltd and BoC Macau charged 50 patacas (US$6.30) every six months until the account is drained or reactivated. ICBC Macau used to charge 100 patacas every six months. The decision was prompted by a move from 22 banks in Hong Kong that signed a pact to treat their customers fairly in October. ICBC Macau said it abolished the fees after “considering the social responsibility… and the bank’s principle of enacting a reasonable and transparent bank service charging scheme”. Tai Fung said the move was designed to “benefit the public”. Many bank customers operate several savings accounts, a practice though to be “spreading the risk”. Many of the accounts are used infrequently, and are often dormant for many years.

January 9, 2014

Macau

Questions, few answers on e-games policy ‘Slots so much different from past’ says Francis Tam as announces study into possible caps on new generation of equipment Michael Grimes

michael.grimes@macaubusinessdaily.com

Business Daily asked Mr Siu when such measures for electronic gaming might be introduced. He said: “I have no concrete base for estimation at this moment. My personal guess is that it won’t be introduced until late 2015 when the new properties in Cotai start to open.”

Poor relation

he Macau government has been considering for some time the possibility of curbing the growth of electronic gaming in the city’s casinos as well as in standalone slot parlours, according to several industry sources spoken to by Business Daily. A public statement of that intent – made on Monday in the Legislative Assembly by Francis Tam Pak Yuen, Secretary for Economy and Finance – didn’t specify whether the administration was mainly concerned with traditional slot machines or electronic table games. But local academic

Ricardo Siu Chi Sen of the University of Macau, told Business Daily: “According to Mr Tam’s words in Chinese and the related questions in the Legislative Assembly at that time, my understanding is that it is mainly concerned with the rapid growth of slot machines at this stage. However, his exact words in Chinese were actually ‘electronic gaming machines’, which does not exclude electronic tables.” Asked by this newspaper what kind of policies the government might adopt, Mr Siu – associate professor of business and economics, with a special interest in

gaming and tourism – told us: “My guess is either certain caps – e.g., for slots and e-tables [electronic tables] respectively – within a given period of time; or with certain references to the scale of nongaming facilities.” The latter hints at a policy already adopted by the government for traditional live dealer tables. They’ve been pegged to three percent compound annual expansion until end-2022. But the government said it might award more of the traditional live dealer tables to operators if they showed strong commitment to expanding their non-gaming offer.

Is it a slot, is it a table? Creating definitions a familiar problem for lawmakers in high-tech age

he local regulator, the Gaming Inspection and Coordination Bureau, has previously told Business Daily that it counts revenue from live dealer electronic games as table revenue. But such products have not been treated as live table games as far as the table cap policy is concerned. In fact, the gaming bureau has allowed casino operators to count as many as 50 hybrid seats as equivalent to one traditional table game with 14 or fewer seats according to analysts’ reports. “The government has always been ambiguous about the positioning of the electronic gaming tables and there is no clear definition under

the law,” claims Edmund Loi Hoi Ngan, a lecturer from the Gaming Teaching and Research Centre at Macao Polytechnic Institute. “The government should study this so that the gaming companies cannot utilise loopholes to have relentless expansion,” he added. Thanks to the dominance of traditional live table baccarat, the Macau government wasn’t in previous years very focused on the idea of controlling the electronic games – except in the case of some standalone slot parlours run by two of the operators, and which are mainly marketed to local players rather than tourists. The rapid growth of electronic

For years in Macau, electronic gaming has been the poor cousin to table games in terms of revenue generation. That’s the reverse of how it generally works in jurisdictions such as Nevada and New South Wales. In Macau total casino revenue has grown by 683 percent since 2005 according to government data. The tally for 2013 was 360.75 billion patacas (US$45.2 billion). In most years at least 95 percent of gambling revenue in the city comes from traditional table games, and mostly from the game of baccarat. It appeals to Chinese players because of its low house edge relative to most other casino games. In the period from 2005 to end-2012 (the most recent data available) Macau’s revenue from ‘slot machines’ has grown 960 percent, albeit from a much lower base. However during that time the definition of exactly what is a slot machine, has grown more hazy, thanks to the growth of electronic table games. Should such games be regulated in terms of their game play (i.e., whether they play like a traditional table game) or should they

table games in the casinos came partly in response to the commercial constraints imposed by Macau’s cap on traditional table numbers. Electronic table games in Macau could increase by 35 percent within five years, from nearly 4,800 seats, to “at least” 6,500 seats suggested a report in April by Union Gaming Research Macau. Some games – referred to variously as ‘live dealer electronic games’, ‘live multi-games’ or ‘hybrid table games’ – use a live dealer (a job only open to Macau permanent residents) to draw the cards or spin the roulette wheel, but the betting and bet settlement is done electronically. With these systems one dealer or a handful of dealers can serve many tens or even scores of players sitting at linked betting terminals. “Gaming tables may not play a major role in the casino resorts in the next 10 or 20 years and perhaps the electronic gaming machines [would have] accounted for a principal position instead,” said Secretary for Economy and Finance Francis Tam Pak Yuen on Monday.

be regulated in terms of their technology (e.g. whether they use bill acceptors, ticket-in-ticket out and electronic betting)? The picture is further confused because some use a live dealer and electronic betting – an arrangement sometimes referred to as a ‘hybrid’ table. “With these ‘hybrids’ the question is, are they really tables or should they be considered machines?” a senior industry executive told Business Daily. “This is an ongoing discussion across all jurisdictions,” It’s not limited to Macau,” the person added, asking not to be identified. Revenue from the hybrid table games segment expanded nearly 92 percent year-on-year in the second quarter last year albeit from a low base. It moved from 184 million patacas (US$23 million) to 351 million patacas.

My personal guess is that it won’t be introduced until late 2015 when the new properties in Cotai start to open Ricardo Siu Chi Sen, University of Macau

There were approximately 17,619 dealers – mostly at traditional tables – employed in Macau casinos as of June 30 according to data compiled by the city’s Statistics and Census Service. They were serving a total of 5,746 tables as of the end of the second quarter according to data from the gaming bureau. Last year concerns were raised that with only 1.9 percent local unemployment and eight new Cotai casino projects due to open by 2018, there would not be enough locals to serve the industry if the current live table game business model is to expand. There’s another issue. “The electronic table games and slots have a much lower price point in terms of the minimum bet than the tables, but a much higher game speed,” said an industry source. “Depending on the bet combinations you could be betting HK$100 per game every second. You can’t do that at a table, because the dealer has to calculate commission on winning bets,” added the person. M.G.

January 9, 2014

Macau City upscale since zero fare tour ban: report ‘Lower quality customers gave way to higher-end’ says Morgan Stanley Michael Grimes

michael.grimes@macaubusinessdaily.com

acau tourism has moved upmarket in the fourth quarter – probably as a result of the mainland’s ban on zerofare tours, says a report from Morgan Stanley Research Asia Pacific. “…in October and November, Chinese visitation growth slowed down to four percent year-on-year, yet mass [gaming] revenue grew at 37 percent, implying 33 percent growth in mass revenue per Chinese visitor, despite no incremental hotel space,” states the report ‘Macau Gaming & Property – Year Ahead Outlook: Paying for the Next Phase of Growth’. “The reason is a significant decline in tour groups (with new restriction in place from October 1). Thus, lower quality customers gave way to higherend customers, pushing up spending per capita,” says the document from Morgan Stanley managing director Praveen K Choudhary and his colleagues Alex Poon and Thomas Allen. But even as the report is being digested by the industry, the media in Macau’s neighbouring Guangdong province have been reporting that mainland operators of tours to Macau and Hong Kong are evading the new rules. One reported method is to

pressure travellers on cheap tours to sign compulsory shopping agreements even as they wait to cross the border. Low-income trippers may be no loss to the casinos, but they provide a livelihood for some in Macau. Andy Wu Keng Kuong, president of the Macau Travel Industry Council, predicted soon after the new tour rules came in that there would be double-digit fall year-on-year from October until the end of the year in the number of visitors to Macau on package tours. Separately this week, Wells Fargo Securities LLC in New York said it expected four of Macau’s gaming operators – Wynn Macau Ltd, Melco Crown Entertainment Ltd, MGM China Holdings Ltd and Sands China Ltd – to beat analysts’ estimates for fourth quarter property earnings before interest, taxation, depreciation and amortisation. “We remain positive on Macau gaming and are increasing estimates yet again, reflecting strong December trends,” wrote senior analyst Cameron McKnight. A report published this week by China International Capital Corporation Hong Kong Securities

Corporate Gamal Aziz president, Wynn Macau Ltd Gamal Aziz has been appointed Wynn Macau Ltd president a year after being hired by the parent firm Wynn Resorts Ltd to head a new division called Wynn Resorts Development LLC. He will take over the Macau presidency from Wynn Resorts’ chairman Steve Wynn. Mr Aziz will be based in Macau for his new role, Wynn Macau told Business Daily by e-mail yesterday. “I expect Aziz is going to dedicate more time and resources to oversee Wynn’s existing operations and upcoming projects in Macau,” Philip Tulk, a Hong Kong-based analyst at Standard Chartered Plc had said prior to that confirmation. Wynn Macau is building the US$4 billion (31.9 billion patacas) Wynn Palace casino resort at Cotai, scheduled to open in early 2016. Mr Aziz previously worked with Steve Wynn in Las Vegas at then Mirage Resorts. Before joining Wynn Resorts, Mr Aziz headed a division at MGM Resorts International that pursued hotel developments around the world.

Insurer MetLife gets new HK CEO Lennard Yong has joined insurer MetLife Inc as Hong Kong chief executive, subject to regulatory approval. He will report to Nirmala Menon, senior vice president and head of Designated Markets and Health, Asia. Mr Yong will be responsible for corporate strategy, diversification and operations for MetLife’s Hong Kong business. Mr Yong joins MetLife from FWD (formerly ING) where he was group chief commercial officer. He joined ING in 1999 in Australia, rising to become CEO of ING Hong Kong and Macau. Mr Yong has worked and lived in Hong Kong since 2005. “Lennard brings a wealth of experience and solid track record of delivery which will prove invaluable in leading the transformation and driving business growth in Hong Kong,” said Ms Menon. MetLife Inc is a global provider of insurance, annuities and employee benefit programmes serving 90 million customers. MetLife claims leading market positions in the United States, Japan, Latin America, Asia, Europe, the Middle East and Africa.

The great nicely washed – a better class of visitors

Ltd, suggested Macau casino market EBITDA for 2014 can beat analysts’ consensus by three percentage points. “With the sector having returned nearly 100 percent [stock growth] in 2013, maintaining strong buying conviction on Macau gaming names might be starting to look tenuous,” state the authors. But they add: “…we believe the sector is at least 25 percent

below fair value. That is, an implied equity value of US$232 billion [1.85 trillion patacas] is more than viable, in our view. Moreover, although we have conservative gross gaming revenue (GGR) growth expectations of 12 percent/13 percent for 2014/15E, we think sector EBITDA can beat consensus by three percent/five percent over the same period.”

January 9, 2014 April 19, 2013

Macau

Chow Tai Fook jumps on quarterly sales growth Revenue grew 26 pct in the three months to December 30

Newly opened stores boosting revenue

how Tai Fook Jewellery Group Ltd, the world’s largest jewellery chain, jumped the most in six months in Hong Kong trading after reporting 26 percent quarterly sales growth. Sales in mainland China rose 34 percent and sales in Hong Kong and Macau rose 18 percent in the three months ended December 31,

Chow Tai Fook said on Tuesday in a statement to the Hong Kong Stock Exchange. The shares rose yesterday as much as 11.8 percent to HK$13.08 (US$1.69), the biggest gain since July 10, before closing at HK$12.92 in Hong Kong trading. The benchmark Hang Seng Index climbed 1.3 percent.

18 %

Chow Tai Fook’s quarterly sales rose in Macau and Hong Kong

OCBC-Wing Hang raises spectre of DBS overpay Dao Heng acquisition in 2001 cost US$1.7 bln in writedowns

versea-Chinese Banking Corp’s talks to buy Wing Hang Bank Ltd are reminding investors of the decade of writedowns DBS Group Holdings Ltd went through to integrate its purchase of a Hong Kong-based lender. The biggest shareholders of Wing Hang agreed to “engage exclusively” with Singaporebased OCBC through to January 31 to complete terms of a possible offer, the Hong Kong-based family- run lender said in a statement to the city’s exchange on Monday. No financial details were disclosed. Wing Hang, which has 70 branches in Hong Kong, Macau and mainland China, has a market value of HK$36.2 billion (US$4.7 billion). Banco Weng Hang SA, a unit of Wing Hang, has 12 outlets here. OCBC, Southeast Asia’s second-biggest bank, saw its shares fall to a more than sixmonth low on Tuesday amid concern it may overpay. While the negotiations may lead nowhere, they stirred memories of DBS’s US$5.4 billion purchase of Dao Heng Bank Ltd in 2001, which has

cost the Singaporean lender at least S$2.1 billion (US$1.7 billion) in writedowns. DBS’s management at the time was more experienced running investment banks than commercial lenders, according to Macquarie Group Ltd’s Matthew Smith. OCBC’s prospects may be better, he said. “I don’t think it would be fair to make the comparison that since DBS and Dao Heng was so disastrously bad, this one is also going to be as bad,” he said. With DBS, “I don’t think they really went and tried in the first decade or so after the acquisition to try to manage it as a proper commercial bank,” said Mr Smith. “DBS in 2001 was run by investment bankers, which is not the case with OCBC today. These guys are proper commercial bankers.”

‘Long-term investors’ OCBC chief executive Samuel Tsien, who has headed the bank since April 2012, ran the lender’s global corporate bank from 2007. Before that, he spent 30 years with

Wing Hang has a market value of HK$36.2 billion

“Chow Tai Fook delivered impressive revenue growth of 26 percent in the third quarter thanks to newly opened stores, higher volume growth and more sales of gem sets,” Candy Huang, a Hong Kong-based analyst at Barclays Plc wrote in a research note yesterday. Ms Huang rates the stock the equivalent of a buy. The jewellery chain plans to open 200 points of sale in the fiscal year that starts in April, managing director Kent Wong said on a conference call on Tuesday. Chow Tai Fook yesterday also reported growth in same-store sales, or sales for stores opened more than a year, slowed to 11 percent in the three months ended December, compared with 33 percent in first half, as gold prices dropped. Gold products accounted for 57 percent of the company’s total sale in the third quarter, the company said. Chow Tai Fook gets more than 50 percent of its annual revenue from mainland China, but tourists from the mainland are also the single customer group for products in Macau and Hong Kong. Chow Tai Fook last month said its net profit rose by a forecast-beating 92.3 percent in the six months ended September, with same-store sales growing 33.2 percent. Net income almost doubled to HK$3.5 billion in the six months ended September 30, the retailer said. Chow Tai Fook’s filing shows that 59.6 percent of the jeweller’s total revenue in Macau and Hong Kong was settled through China UnionPay or yuan. “This implies that approximately 80.4 percent of the group’s total revenue was originated from mainland Chinese consumers,” the company said. T.A. with Bloomberg News

Bank of America Corp and associated companies. “It took DBS years to figure out what best to do with” Kevin Kwek, a Sanford C. Bernstein & Co analyst in Singapore, wrote in a note. For Wing Hang, “OCBC will have to communicate hard at the outset on how it is different and work equally hard to prove it in the years to come.” Wing Hang shares dropped 0.09 percent to HK$117.20 in Hong Kong. The stock surged 40 percent since September 16 when the company said its largest investors had been approached to sell their shares. Chairman Patrick Fung’s family, its affiliates and Bank of New York Mellon Corp own about 45 percent of the bank. Buying Wing Hang would give OCBC a good “toehold” to expand into China and allow it to expand its trade-financing capabilities, according to Aberdeen Asset Management Asia Ltd’s Christopher Wong. His company is OCBC’s second-biggest shareholder with a 7.7 percent stake, according to data compiled by Bloomberg. The acquisition “shouldn’t be looked at from a short-term perspective, but how they can develop the business over time,” said Mr Wong. “We are long-term investors, so we will evaluate it from a longer term perspective.” Bloomberg News

January 2014 April 19,9,2013

Macau

Zhuhai Airlines plans Macau sales office

We’re still talking with our parent company for this plan to happen and, at the moment, we cannot tell when exactly this office can be established Zhuhai Airlines

China Southern subsidiary to take advantage of mainland tourist domination Stephanie Lai sw.lai@macaubusinessdaily.com

huhai Airlines Co Ltd, a subsidiary of China Southern Airlines Co Ltd, will establish an office in Macau to handle ticketing and market research, the airline told Business Daily yesterday. China Southern Airlines is one of the mainland’s three main carriers under direct control of the Stateowned Assets Supervision and Administration Commission. The branch office should be opened before the end of the year, an airline spokesman said.

“The precise functions of this branch office in Macau are yet to be finalised. We’re still talking with our parent company for this plan to happen and, at the moment, we cannot tell when exactly this office can be established,” they said. Zhuhai Airlines general manager Peng Tie Shan said the airline had seen a rapid increase in passenger numbers travelling to Macau via Zhuhai Jinwan Airport. Those passengers would be an important source of clients for Zhuhai

Airlines’ future expansion, he said. The carrier’s growth strategy was outlined by Mr Peng on Tuesday. “In 2008, there were 218,000 passengers travelling from other provinces in China heading to Macau via Zhuhai Airport,” he said. “This figure has risen to 652,000 passengers in 2012, which represents an average annual growth of 31 percent, much higher than the average annual rise of 17 percent in the total passenger volume that the Zhuhai Airport handled.”

Zhuhai Jinwan Airport handled 2.9 million passengers last year, up by 38.7 percent from the 2.09 million passengers a year earlier, according to figures reported in mainland newspapers. China Southern Airlines’ network spans domestic and international routes, and it holds a 60-percent stake in Zhuhai Airlines. Zhuhai Airlines is studying how to provide a “seamless connection” for mainland passengers travelling between Zhuhai’s airport and the border gate, the company’s spokesperson said. The airline is researching options to connect the airport and Hengqin Island, and plans to launch flights to South Korea and Southeast Asia in November.

January 9, 2014 April 19, 2013

Greater China Beijing to allow foreign ownership in telco services China will open up some telecom and internet services to foreign ownership. Five areas, including call centres and home internet access, will be open to full foreign ownership, the state-owned Xinhua news agency has said. Firms providing online data and analysis services will have a cap of 55 percent foreign ownership. Foreign companies looking to offer these services will have to base their infrastructure in the Shanghai free trade zone, Xinhua said. However, overseas firms will be allowed to offer services across the country, the Xinhua news agency quoted Wen Ku, head of the telecom development department as saying. The only exception is home internet access, with foreign-owned firms allowed to offer the service only to consumers within the free trade zone. The Shanghai free trade zone was launched in September last year as part of efforts by China to open up parts of the economy. Policymakers said at the time of the launch that restrictions on foreign investment will be eased inside the area. The move is seen as an attempt by policymakers to spur a fresh wave of economic growth.

L’Oreal joins Revlon in pullback from China

Shanxi Coal Largest in two years but

Cosmetics group halts sales of Garnier beauty products

rench cosmetics group L’Oreal SA has halted sales of Garnier beauty products in China to focus on other brands, a week after U.S. rival Revlon said it would pull out from the slowing China market. The company will concentrate on its L’Oreal Paris and Maybelline New York product lines, a Chinabased spokeswoman said in an e-mail to Reuters yesterday. Those brands have been performing more strongly in China. China’s US$25.9 billion a year cosmetics market is the third biggest in the world, according to Euromonitor, the consumer research group. “To strengthen our leading position, we have decided to discontinue the sales of Garnier products in China and focus our efforts on our two leading brands – L’Oreal Paris, the number one beauty brand, and Maybelline New York, the number one make-up brand in China,” the spokeswoman said. L’Oreal has said the China market, its third biggest where it has a leading 17 percent market share according to Euromonitor, was “slowing,

although still dynamic”, according to its third quarter financial statement in October. “As growth in China slows brands are starting to evaluate their portfolios in China and to focus on where they see the biggest growth,” said Torsten Stocker, Hong Kong-based partner with consultancy AT Kearney. Revlon, owner of the Almay cosmetics brand and Sinful Colors nail polish, plans to exit China where sales of its cosmetics have been falling, the company said at the end of December. It will cut more than 1,000 jobs as part of a move aimed to save about US$11 million a year. The Chinese market is full of potential for Western brands. The Chinese cosmetics sector more than doubled in size between 2008 and 2012, according to a report last year by Fung Group that cited the National Bureau of Statistics in China. But China is also a complex market with many pitfalls for foreign companies, while a slowing economy and crackdown on extravagance has weighed on luxury brands sales. Reuters

Apple to open 10th store in mainland Apple Inc, which counted on China for more than 15 percent of sales last year, will open its 10th store in the country’s mainland this week. The retail space is set to open tomorrow at China Central Mall in Beijing’s Chaoyang district, the company said in a statement on its China website yesterday. Chief executive Officer Tim Cook has pledged to double outlets to 22 in Greater China to meet demand in the world’s most populous country. The new Beijing store brings the nationwide total to 13, including three in Hong Kong. Apple opened its first Chinese store in Beijing’s Sanlitun district in 2008. The new store will be its fourth in Beijing. Apple also has four stores in Shanghai, one in Chengdu and one in Shenzhen, according to its website. The company has trimmed its initial plan for adding stores. Former head of retail operations Ron Johnson, who left Apple in 2011, had set an earlier target of 25 stores in China by February 2012.

TCL doubles smartphone sales Chinese electronics manufacturer TCL Corp is poised to become the world’s 10th largest smartphone maker by sales after it reported on Wednesday it had sold more than twice as many handsets in 2013 than the previous year. The company sold 17,555,412 smartphones in 2013, a 169 percent increase over 2012. Overall cellphone sales also increased 30 percent, TCL said in a statement. TCL did not give a breakdown of its main markets. Analysts said TCL’s mid-to-low priced range of Alcatel One Touch smartphones are mostly sold in Latin America and Europe. Its phones are also available in the United States. “They have a very strong overseas distribution channel,” said Leping Huang, an analyst at Nomura Holdings Inc in Hong Kong. “Previously they don’t have a good enough product, but finally this year’s products match the channel.” TCL was the world’s 11th largest smartphone maker by sales in the third quarter of 2013, according to research firm Gartner, and the eighth largest cellphone maker. TCL is, however, lagging local rivals in China, the world’s biggest smartphone market, where its products are not as well established.

Cosmetic group to focus on L’Oreal Paris

Proceeds from the deal to be used to boost coal reserves

hinese coal miner Shanxi Coal Industry Co said yesterday it has received final regulatory approval to raise 9.8 billion yuan (US$1.6 billion) in an initial public offering ahead of a listing on the Shanghai Stock Exchange, becoming the country’s largest public share sale since approvals resumed late last year. The Shanxi province-based coal miner said it plans to sell 1 billion new shares, half of a target previously announced in 2011, when it first revealed plans for an IPO. The current fundraising target is 57 percent of the 17.3 billion yuan previous target. Still, the IPO is China’s largest since Sinohydro Group Ltd raised 13.5 billion yuan in 2011. The deal is among 11 already approved by the China Securities Regulatory Commission (CSRC) since the regulator ended a freeze on IPOs that started in late 2012. Shaanxi Coal will begin book-building from January 10-14 and wrap up subscriptions by January 17. More than 30 companies are already lined up to list in Shanghai and Shenzhen and Ernst & Young LLP estimates that total fundraising this year could top 200 billion yuan,

Ping An Bank boosts capital Chinese lenders under pressure to boost capital strength

hina’s Ping An Bank Co Ltd has raised 14.73 billion yuan (US$2.43 billion) by selling stock to its main shareholder, becoming the latest lender to raise funds to meet new banking standards and to absorb an expected rise in bad loans. Through the sale, Ping An Insurance Group raised its stake in the bank to 59 percent from 52 percent, the two firms said in exchange filings late Tuesday. The purchase price on December 30 of 11.74 yuan per share valued the bank at 1.12 times its book value on September 30, the end of its latest reporting quarter, according

to Reuters calculations. Chinese banks are under pressure to increase their financial strength to meet tough conditions that the banking regulator began implementing last year in line with new global standards known as Basel III. China’s rules require mid-sized lenders like Ping An to maintain tier-one capital ratios of at least 6.9 percent by the end of 2014 compared with 6.5 percent last year. Ping An Bank’s ratio will rise to above 8.5 percent as a result of the share issue, the bank said, from 7.43 percent at September-end. Many banks have announced fundraising plans aimed at boosting

January 2014 April 19,9,2013

Greater China

halves Shanghai IPO plans

Bitcoin banned by Alibaba’s Taobao

big IPOs restart with a whimper not a bang

nearly twice the amount raised in 2012. Shaanxi Coal, a state-owned giant based in China’s coal-rich northern province of the same name, plans to issue up to 10 billion shares, or 10 percent of its expanded capital base after the IPO, according to the IPO prospectus. The company said proceeds from the deal will be used to boost its coal reserves, increase production and for the construction of coal transport facilities. The firm will also use the funds to replenish its working capital.

Local brokerages “China’s economic growth will continue to drive its growing need for energy. Even though the government is moving to eliminate small mines and outdated capacity, the country’s coal demand growth will continue to stay robust,” Shaanxi Coal said in the prospectus. In the near term, however, Shaanxi Coal said domestic demand was still facing headwinds from slower economic growth and prices are unlikely to rebound soon. China’s two top coal miners,

KEY POINTS Coal producer to raise US$1.62 bln Listing biggest in China since Oct 2011 Deal comes after regulators end freeze More than 30 companies already lined up

Shenhua Group and China Coal Group have begun to cut spot thermal coal prices for January bookings as demand has begun to wane, trade sources said. The move by the country’s leading suppliers to slash prices by as much as 70 yuan a tonne is a clear sign that the coal market in top consumer China remains well supplied. It also heralds the end to a three-month rally in domestic prices.

Amid a slump in domestic coal prices last year, Shaanxi Coal saw its net profit for the first-half of 2013 fall 35.2 percent from the previous year to 2.7 billion yuan. The IPO resumption will be a boon to Citic Securities Co Ltd, Haitong Securities Co Ltd, China Merchants Securities Co Ltd and other mainland brokerages whose earnings were hit by a slump in investment banking revenue because of the freeze in listings since 2012. It would also give applicants, many of which are not state-owned, badly needed access to the capital markets and boost the private sector as it struggles with slowing economic growth in China. A number of Chinese companies, including city commercial lenders Huishang Bank Corp Ltd and Bank of Chongqing, decided to turn to the Hong Kong market for fundraising after getting impatient waiting for a mainland IPO. China International Capital Corp, BOC International (China) Ltd and Citic Securities will be the IPO’s lead underwriters, according to the prospectus. Reuters

libaba Group Holding Ltd, China’s largest e-commerce website, will ban the sale of Bitcoin and other virtual currencies after the country’s central bank tightened regulations in December. Taobao Marketplace, one of the main platforms that link buyers and sellers on Alibaba, will bar from January 14 the sale of Bitcoin and related products, including mining software and hardware for the virtual currency, the company said on its website yesterday. China’s central bank stopped financial institutions from handling Bitcoin transactions after the virtual currency’s value jumped 89-fold. Alibaba’s move to ban the sale of virtual currencies and related products will help protect users, according to the company. None of Alibaba’s platforms have accepted Bitcoin as a payment method in the past, and the company’s Alipay payment affiliate doesn’t support websites that use Bitcoin, Florence Shih, a spokeswoman for Alibaba in Hong Kong, said by e-mail. “Alibaba’s new rules might be a result of recent central bank regulations and concerns about risks associated with Bitcoin,” Wang Weidong, an analyst at Shanghai-based Internet consultant IResearch, said by phone yesterday. “The changes will have quite a big impact on Bitcoin trading in China.” A number of third-party payment systems have also stopped processing transactions for Bitcoin purchases. Payment provider YeePay gave notice last month to BTC China, the largest Bitcoin exchange in the country, that it could no longer provide payment services. TenPay, a payment provider owned by Tencent Holdings Ltd, also halted service with the exchange. Users can now buy vouchers from resellers recommended by BTC China, which will be credited into their accounts with the exchange for Bitcoin trading, according to the company’s website. Bloomberg News

with share sale capital adequacy and strengthening their capacity to absorb an expected rise in bad loans as the economy slows. China Merchants Bank Co Ltd raised more than US$5 billion last year by selling stock to existing shareholders in Shanghai and Hong Kong. At least 12 other listed banks have announced plans to raise about 425 billion yuan, largely through subordinate debt issues that count as capital under China’s new rules. Regulators have also started allowing banks to sell preferred shares, adding another fundraising option. Reuters

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Greater China the highest since October 24. Yingli has surged more than 40 percent this year after agreeing to form a venture with China’s Datong Coal Mine Group to develop solar plants in Shanxi province. The partners plan to build 100 megawatts of solar farms this year, according to Mr Wang, who said such tie-ups are a low-cost way to increase sales for manufacturers. Yingli also said yesterday it agreed to a venture with China National Nuclear Corp to develop 500 megawatts of distributedgeneration projects, or smallscale power production near the point of use.

Higher demand

Solar-panel makers recovering from a plunge in prices

Yingli expects return to profit as demand rises China to account for about 30 pct of Yingli’s panel shipments this year, executive says

ingli Green Energy Holding Co, the world’s biggest solarpanel maker, expects to post its first quarterly profit in three years as early as next quarter as demand climbs and cost controls show results. The Chinese company “will see a gradual rise each quarter” after reporting a “small loss” or breaking

even in the first three months of the year, chief financial officer Wang Yiyu said yesterday by phone. The forecast indicates increasing optimism that solar-panel makers are recovering from a plunge in prices caused by surplus manufacturing capacity. Trina Solar Ltd and JinkoSolar

Holding Co already have returned to profit. Canadian Solar Inc, the bestperforming stock among peers in the past year, posted its first quarterly net income in more than two years in November. Yingli’s American depositary receipts increased 8.4 percent to US$7.08 at the close in New York,

Rising demand for solar panels, along with improvements in research and development and tighter cost control, are responsible for the rebound at Baoding-based Yingli, Mr Wang said. Global solar-power installations may rise to 50 gigawatts this year from 40 gigawatts in 2013, led by sales in Japan, China and Southeast Asia, according to the CFO. Markets in South America, the U.S. and Africa also are picking up. China may install 14 gigawatts of panels in 2014, making it Yingli’s biggest market and surpassing Europe for the first time, Mr Wang said. Yingli, which last reported a quarterly profit in the three months through June 2011, expects margins to “recover to the levels of traditional or large-scale manufacturing industries,” he said. That means a gross margin of about 16 percent and a net income margin of 3 percent to 5 percent. The gross margin was 13.7 percent in the third quarter of 2013 and the net margin was minus 6.5 percent, according to data compiled by Bloomberg. Trina Solar, JinkoSolar and Canadian Solar all had wider gross margins than Yingli in the period. Mr Wang expects China to account for about 30 percent of Yingli’s panel shipments in 2014. While panel prices may rise, the advance won’t be “significant,” he said.

China Oilfield to raise US$758 mln in share sale Company surged 48 pct in Hong Kong trading last year

hina Oilfield Services Ltd, a unit of the nation’s biggest offshore energy company, said it plans to raise HK$5.88 billion (US$758 million) for general corporate purposes through a private sale of new shares. The company will sell 276.3 million Hong Konglisted shares at HK$21.30 each, a 7 percent discount to Tuesday’s closing price, according to a filing with the city’s stock exchange. The company let a planned sale of as many as 500 million Shanghai-listed A shares lapse in 2012. China Oilfield, a unit of China National Offshore Oil Corp, has surged 48 percent in Hong Kong trading in the past year, as its main customer Cnooc Ltd increased capital spending on offshore exploration. China

The completion of this deal will remove the share price overhang on the stock Gordon Kwan, Nomura Holdings

Oilfield owns the world’s largest offshore drilling fleet among state-owned firms and is well positioned to benefit from rising upstream capital spending, Gordon Kwan, the

Bloomberg News

regional head of oil and gas research at Nomura Holdings Inc, said in a January 3 note. “This is an attractive deal for investors, given the placement proceeds will fund the company’s expanded capital expenditures, a reflection of robust drilling rig demand from customers like CNOOC,” Mr Kwan said yesterday. “The completion of this deal will remove the share price overhang on the stock.” Mr Kwan has a ‘buy’ rating on the stock with a target price of HK$29.50. “The placing represents a good opportunity to broaden the shareholder base of the company and to raise capital for the company for its future business development,” Beijing-based China Oilfield said in the filing. The company said it expects net proceeds of HK$5.82 billion after commissions and expenses. The share sale will be conducted under the company’s general mandate from stockholders and so won’t need special approval from them, it said. Bloomberg News

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January 2014 April 19,9,2013

Asia

Cebu Air to buy Tiger Philippine business Deal is second consolidation among Philippine carriers in a year

Tiger Airways sells 40 pct stake in Philippine arm

iger Airways Holdings Ltd said yesterday it would sell its entire 40 percent stake in its Philippine business with the country’s largest budget carrier Cebu Air Inc taking over in a further consolidation in domestic airlines. Cebu Air, operator of Cebu Pacific, said in a statement it would pay US$15 million for Tiger Airways’ 40 percent in Tigerair Philippines and 60

percent held by the Singaporebased airline’s local partners. That would give Tiger US$6 million for its stake. The deal, the second consolidation among carriers in the Philippines in a year following AirAsia Bhd’s buyin of unlisted Zest Air, should bode well for the country’s airline sector, analysts say. “The aviation market in the Philippines is overcrowded and largely unprofitable,

except for market-leader Cebu Air. The deal will allow Cebu Air to solidify its market position,” Raymond Yap, analyst at SB Equities Inc, said in a research note. Cebu Air’s takeover of Tiger Philippines will allow it to raise its share of slots by about 10 percent in Manila’s crowded runways and limited terminal capacity, Mr Yap said. Cebu Pacific is the country’s largest airline,

US$15 mln

Cebu Air is paying for Tiger Airways

with a market share of about a third compared with Tiger’s estimated 4 percent. Tiger Airways has struggled to make headway because of its small operations locally and “irrational pricing” by rivals, Mr Yap said. Cebu Air’s shares are unlikely to gain much from the deal, with investors concerned higher fuel prices could hurt the airline’s margins and overall profitability, said Gregg Ilag, analyst at brokerage firm AB Capital Securities in Manila. Cebu Air said in a joint statement the alliance with Tiger will allow it to fly to high growth markets including Australia and India, with the two airlines to jointly operate and sell common routes between Singapore and the Philippines. However, the alliance will strengthen the two carriers’ domestic presence more than its regional market share, some say. “This alliance will be a threat only on the domestic front, particularly to Philippine Airlines. I think the international route is still more favourable for AirAsia given their network,” Mr Ilag said. Reuters

Analysts see rupee rally fizzling on growth Weaker currency good for India as it can boost exports

he top rupee forecasters see budget restraints and looming elections halting the currency’s rally from a record low even as India’s external finances improve. The rupee will end 2014 at 62.20 per dollar, little changed from 62.3050 yesterday, according to Nomura Holdings Inc, which had the most accurate estimates in the last four quarters according to data compiled by Bloomberg. Canadian Imperial Bank of Commerce, ranked third, predicts a drop to 64 this quarter before a return to 62 by the end of the year. The rupee surged 10.5 percent from a record 68.845 in August, the most among 24 emerging markets tracked by Bloomberg, as policymakers took steps to narrow India’s current-account deficit and attract foreign capital. Nomura said the economy could be buffeted by cuts in government expenditure to curb the budget shortfall, delays in corporate spending before national polls and increases in interest rates to cool inflation. “There are still some headwinds,” Craig Chan, Nomura’s Singaporebased head of foreign-exchange strategy for Asia excluding Japan, said on Monday. While a global economic recovery and an improving balance of payments supports the rupee, he said, there are risks “related to inflation, monetary policy and the budget deficit”. The rupee’s rebound from its August 28 low helped pare the currency’s 2013 decline to 11 percent. Indonesia’s rupiah slumped 20.8 percent last year in Asia’s

Global funds turned net buyers of Indian debt in December

worst performance. Nomura still recommends buying the rupee, noting this continued outperformance.

Debt purchases Global funds turned net buyers of Indian debt in December, after cutting holdings of the notes for the previous six months, exchange data show. The inflows helped finance the shortfall in the current account, which widened to a record in the fiscal year ended March. The Reserve Bank of India predicts the gap will narrow to about US$56 billion in the year through March

2014, down from US$88 billion. The government curbed gold imports in the largest bullion consuming nation to rein in the deficit and RBI governor Raghuram Rajan offered discounted swaps for dollars raised by banks to stabilize the rupee. Financing the shortfall in the broadest measure of trade may become harder should investors pull money from India as the Federal Reserve unwinds stimulus, according to Macquarie Bank Ltd. The forecaster, ranked fourth, predicts the rupee will weaken to 64 by end-March and 66 by end-June. “The market may have

overestimated India’s current-account healing process,” Nizam Idris, head of strategy for fixed income and currencies at Macquarie in Singapore, said. “While the deficit will ease, it will remain hard to finance when portfolio flows turn negative.” A weaker currency is good for India as it can boost exports, according to Canadian Imperial, which predicts the rupee will stay between 61 and 64 for the rest of 2014. The effects of the Fed’s taper will fade in the coming months and concerns about India’s budget deficit will pose the largest risk to the exchange rate, the lender said. Bloomberg News

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Asia

Indonesia may ease mineral export ban Mining ministry says miners may be given flexibility until 2017 Wilda Asmarini and Fergus Jensen

ndonesia’s mining ministry yesterday sought to ease a looming mineral export ban by proposing a regulation that would allow shipments of some mineral ore concentrates to continue until 2017. However, the proposal, which must be approved by President Susilo Bambang Yudhoyono, does not include nickel or bauxite concentrate, where shipments are still due to be banned from Sunday. Indonesian government officials are scrambling to pass regulations to ease a ban on unprocessed mineral ore exports from January 12. The ban aims to boost Indonesia’s long-term return from its mineral wealth, but officials fear a short-term cut in foreign revenue that could widen the current account deficit at a time when the economy is slowing. “The [mining] ministry proposed that miners will be given flexibility to export concentrate or processed minerals until 2017,” Sukhyar, director general of coal and minerals, told reporters. “After 2017, they will only be allowed to export metal or refined mineral,” he said. The proposal would allow U.S. giants Freeport-McMoRan Copper & Gold and Newmont Mining Corp to continue to ship copper concentrate. Sukhyar said the two companies, which account for 97 percent of the country’s copper production and currently refine only about a third of their copper output in Indonesia, would not be allowed to ship concentrate after 2017. Under the ban, mining companies must process their ore before shipping

Indonesia – trying to boost the value of exports

it overseas, a measure initially passed in 2009 to boost the value of exports from Indonesia, the world’s top exporter of nickel ore, thermal coal and refined tin. The ban is part of a 2009 mining law aimed at increasing the value of Indonesia’s natural exports, bolstering foreign revenue and narrow the current account deficit in the longer term. But companies have hesitated to

invest the hundreds of millions of dollars necessary to build smelters due to ample global refining capacity, low commodity prices, and Indonesia’s history of backing away from controversial policies. As a result, the ban could cause a significant decline in mineral exports for miners that do not have refining capacity. Indonesia’s central bank on Friday

said the current account deficit could exceed 3 percent of gross domestic product due to the risks from lower commodity prices and the mineral export ban. Southeast Asia’s largest economy reported a current account deficit of 3.8 percent in the third quarter of 2013, easing from a record high of 4.4 percent the previous quarter. Reuters

Thai lawmakers face Senate probe Protests continuing in Bangkok ahead of mass demonstration next week

hailand’s anti-corruption body says it will bring charges against more than 300 politicians, mostly from the governing party, for trying to change the constitution. A court ruled in November that the government move to make the Senate fully elected was unconstitutional. The graft body said Prime Minister Yingluck Shinawatra would not face charges. The move comes as Thailand heads for a general election on February 2, amid opposition protests. Ms Yingluck called the polls last month in a bid to end demonstrations by opposition

supporters in Bangkok. The protesters want Ms Yingluck’s government replaced with an unelected “People’s Council”. They say her government’s populist policies – which they allege are controlled by her brother, ousted former PM Thaksin Shinawatra – have created a flawed democracy. Ms Yingluck’s party draws considerable support from rural voters and would likely win the polls – which the opposition is now boycotting. The National Anti-Corruption Commission ruling will lead to another investigation and could potentially result in the 308 lawmakers being

banned from politics. The Constitutional Court last year ruled against the proposed amendment. The Senate was made partly appointed under a new constitution introduced in 2007, after the military removed Mr Thaksin in a bloodless coup. Mr Thaksin’s opponents see the constitution as a vital check against his influence, analysts say. The protesters, meanwhile, say they will prevent the election from going ahead in February. On Tuesday thousands marched through a district of the capital in a second preparatory march ahead of

a planned large-scale demonstration on January 13 that the protesters say will shut down Bangkok. National Security Council chief Paradorn Pattanatabut said Ms Yingluck was prepared to declare emergency rule “if the protests seem likely to escalate into violence”. The political unrest is the worst to hit Thailand since the protests of 2010, against a government led by the current opposition party, which left more than 90 people dead. Both sides have called on the military – which has not ruled out another coup – to support them.

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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Asia Japan’s Topix climbs to highest since 2008 Stocks to benefit from global recovery, weak yen

apanese shares rose, with the Topix index advancing the most since September to a 2008 high, as the yen weakened amid optimism about global economic growth and retailers climbed on earnings. The Topix added 1.8 percent to 1,306.23 in Tokyo, its biggest gain since September 19 and highest close since July 2008. The Nikkei 225 added 1.9 percent to 16,121.45. The U.S. trade deficit shrank more than forecast in November, while managing director Christine Lagarde said the International Monetary Fund plans to boost its global-growth outlook. “The U.S. trade figures and the IMF’s plans to raise its global economic growth forecasts show that the world economy is on a recovery path,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities, a unit of Japan’s second-biggest lender. “The outlook is for U.S. fourth-quarter earnings to be favourable, and the expectations are also strong for Japanese company earnings.” The JPX-Nikkei Index 400 climbed 1.8 percent to 11,800.26. The yen slipped 0.4 percent to 105.05 per dollar after weakening 0.4 percent on Tuesday. The U.S. trade gap narrowed 12.9 percent to US$34.3 billion, smaller than projected by any economist surveyed by Bloomberg and the least since October 2009, figures from the Commerce Department showed in Washington. “We expect to upgrade the global economic performance, but I cannot give actual figures now,” the IMF’s Ms Lagarde told reporters in the Kenyan

Topix to climb about 13 percent this year, analysts say

capital of Nairobi on Tuesday. Earnings season began this week in Japan, with about 90 companies listed on the Topix reporting through Friday, data compiled by Bloomberg show. The peak for announcing results is the first week of February, the data show. Profit per share for companies on the gauge is expected to surge more than 270 percent from the previous quarter, according to analyst estimates compiled by Bloomberg.

“The expectation is that the U.S. economy this year will be even stronger than last year, which is good for stocks and Japanese exporters,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd, which manages about US$47 billion. “Earnings so far are coming in better than expected. It looks like companies reliant on domestic demand and those dependent on overseas will both post good profits this year.”

The Topix advanced 51 percent in 2013, its third-biggest yearly gain on record, as Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda took steps to end 15 years of deflation. Strategists surveyed by Bloomberg expect the Topix to climb about 13 percent to 1,470 by the end of 2014, as the yen weakens amid prospects for further stimulus by the BOJ while the Federal Reserve cuts back. Bloomberg News

Nintendo surges as China lifts ban on game consoles Firms eye world’s third-largest video game market in terms of revenue

hares in Nintendo Co Ltd jumped 10.76 percent to a two and a half-year high yesterday after China temporarily lifted a 14-year-old ban on selling video game consoles. China reversed course on a nationwide ban of video-game consoles, implemented in 2000 to protect youths from perceived corrupting influence, as it drafts new rules governing sales of the machines. China’s ruling State Council temporarily suspended the ban and may allow consoles to be made in the Shanghai free-trade zone, it said in a statement on Monday. Hardware

KEY POINTS Nintendo is seventh mosttraded stock in Tokyo Console makers uncertain of China opportunities Price, piracy among hurdles for global console makers

manufacturers such as Nintendo, Microsoft Corp and Sony Corp could benefit from entering a US$10 billion market dominated by online and personal computer games. “Nintendo hasn’t had a catalyst for a long time, so if it can revive [via] the Chinese consumer market then it would be positive,” a Tokyo-based trader said. China took the step as computer games have proliferated well beyond consoles to smartphones and the Internet, so people who want to play games already can in many cases. China had announced last year that the ban would be lifted within the Shanghai free-trade zone, which opened in September. “The lifting of the ban is positive, but China is not such an easy market because it has some problems such as pirated games,” said Eiji Maeda, an analyst at SMBC Nikko Securities Inc in Tokyo. “Room for entertainment consumption in China is expanding.”

Expansion efforts Yasuhiro Minagawa, a spokesman for Kyoto, Japan-based Nintendo, said the company is studying what it can do in the Shanghai free-trade zone. “China mainland is an attractive market,” Satoshi Nakajima, a Tokyo-

Nintendo rose to the highest in more than two years

based spokesman for Sony’s game unit, said yesterday. The company, which sold 4.2 million of its PlayStation 4 units since it went on sale on November 15, “will seek to expand when there is an opportunity,” he said. Microsoft and BesTV New Media Co, a subsidiary of Shanghai Media Group, in September said they formed a US$79 million gaming venture to take advantage of the new rules. “Microsoft is honoured to be invited to participate in the Shanghai Free Trade Zone expansion efforts,” Joanna Li, a Beijing-based

spokeswoman for Microsoft, said in an e-mailed response to questions from Bloomberg News. “Our goal is to deliver a new generation of innovative family entertainment experiences for people in China.” China is the world’s third-largest market for video games and will generate revenue of about US$10 billion in 2015, according to data from PwC on the consultant’s website. The nation may overtake Japan to become the second-largest behind the U.S. by 2017, it said. Reuters/Bloomberg News

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Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 78.50 77.85 77.20 76.55

Max 78.45

average 77.222

Min 75.90

Last 78.10

75.90

Max 113.4

average 111.791

Min 110.5

Last 111.9

113.5

36.0

112.9

35.8

112.3

35.6

111.7

35.4

111.1

35.2

110.5

Max 36.0

average 35.266

Min 35.0

Last 35.0

26.9

66.9

38.0

66.5

37.7

26.7

66.1

37.4

65.7

26.5

37.1

65.3 Max 66.85

average 65.925

Min 64.90

Last 66.10

64.9

Max 26.9

average 26.631

Commodities PRICE

DAY %

YTD %

(H) 52W

0.277570193

-4.562080878

106.2200012

93.93

BRENT CRUDE FUTR Feb14

107.56

0.195621798

-2.924187726

112.7999954

GASOLINE RBOB FUT Feb14

267.43

-0.160531621

-4.005886787

286.9299889

243.68999

GAS OIL FUT (ICE) Feb14

910.5

0.165016502

-3.497615262

960.75

840

NATURAL GAS FUTR Feb14

4.329

0.697836706

2.340425532

4.770000458

3.476000071

Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz

85.56999969

295.64

-0.097996148

-3.549523685

317.8399801

278.4999847

1223.92

-1.2339

1.761

1696.2

1180.57

19.465

-3.1447

-0.4735

32.46

18.2208

1406.37

-0.5923

3.7337

1742.8

1294.18

Palladium Spot $/Oz

736.1

-0.3452

3.5302

786.5

629.75

LME ALUMINUM 3MO ($)

1785

0.140252454

-0.847104569

2174

1736.25

LME COPPER 3MO ($)

7351

0.354948805

-0.122282609

8346

6602

LME ZINC

2042

0.393313668

-0.632603406

2230

1811.75

13515

-0.331858407

-2.769784173

18770

13205

15.46

-0.129198966

1.211129296

16.77000046

15.12000084

426.25

0.058685446

1.007109005

606.5

417

604

0.248962656

-0.206526229

845

595

SOYBEAN FUTURE Mar14

1272.5

-0.274294671

-1.547388781

1377.75

1174

COFFEE 'C' FUTURE Mar14

117.25

-3.099173554

5.916892502

172.25

104.1499939

16.01

-0.311332503

-2.437538087

20.61999893

15.85999966

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar14 CORN FUTURE

Last 26.7

(L) 52W

WTI CRUDE FUTURE Feb14

NY Harb ULSD Fut Feb14 METALS

Min 26.3

Mar14

WHEAT FUTURE(CBT) Mar14

SUGAR #11 (WORLD) Mar14 COTTON NO.2 FUTR Mar14

84.56

-0.129916145

-0.094517958

90.61000061

76.65000153

COUNTRY MAJOR

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

ASIA PACIFIC

CROSSES

Max 38.00

average 37.281

Min 36.95

Last 36.95

36.8

World Stock Markets - Indices

NAME

-1.705758

5.12

3.265

1041665

2.077149

17.38

11.04

1698655

AMAX INTERNATION

1.83

5.172414

6.395347

2.12

0.75

16674600

BOC HONG KONG HO

24.1

-3.01811

22.85

9445137 2424000

-1.136364

1.162789

0.68

0.26

7.35

1.239669

4.255316

7.35

569991

CHINA OVERSEAS

21.7

6.633907

-0.4587121

25.6

17.7

67996831

CHINESE ESTATES

23.35

-1.890756

-3.112035

24.7

10.334

32808

CHOW TAI FOOK JE

12.92

10.42735

11.7647

13.38

7.44

40177400

16588.25

13293.13

NASDAQ COMPOSITE INDEX

4153.182

0.9602349

-0.5604504

4177.728

3076.596

-0.1903902

6875.62

6023.44

HANG SENG BK HOPEWELL HLDGS

26.15

NIKKEI 225

16121.45

1.941778

-1.042638

16320.22

10398.61

HANG SENG INDEX

22996.59

1.249561

-1.329252

24111.55078

19426.35938

CSI 300 INDEX

2241.911

0.1747095

-3.781717

2791.303

2023.171

TAIWAN TAIEX INDEX

8556.01

0.5134922

-0.6444863

8647.24

7603.27

KOSPI INDEX

1958.96

-0.0244968

-2.604234

2063.28

1770.53

S&P/ASX 200 INDEX

5316.048

-0.01766038

-0.6756482

5457.3

4632.3

JAKARTA COMPOSITE INDEX

4199.002

0.5554856

-1.758814

5251.296

3837.735

(L) 52W VOLUME CRNCY

0.435

-0.2758137

7418.36

(H) 52W

CHEUK NANG HLDGS

0.6443796

9620.929688

0.8821 1.4814 0.88 1.2746 86.83 7.9818 7.7507 6.049 52.89 28.56 1.2223 28.913 40.54 9603 86.41 1.20856 0.81342 7.8281 10.195 113.56 1.0289

2.137767

16530.94

-0.6558766

1.0599 1.6603 0.9839 1.3893 105.44 8.0111 7.7664 6.2492 68.845 33.148 1.2862 30.228 44.86 12281 105.433 1.265 0.88151 8.4957 11.0434 145.69 1.032

-0.6465517

-0.1755696

-0.056 -0.503 -2.0872 -1.1407 0.0191 -0.0088 -0.009 0.0529 -0.5151 -0.742 -0.5742 -1.2032 -0.6601 -0.5718 0.0481 -0.9711 0.6419 1.2983 1.1372 1.1691 0

4.61

DOW JONES INDUS. AVG

9489.51

-0.0112 -0.0122 -0.4065 -0.2566 -0.5049 -0.0075 -0.0039 0.0017 0.2978 0.2271 -0.0393 -0.3016 0.2685 -0.0245 -0.4882 -0.1671 0.2353 0.0887 0.2328 -0.252 0

17.2

(L) 52W

0.8917 1.6418 0.9103 1.3607 104.97 7.9873 7.7546 6.0511 62.12 33.02 1.2714 30.17 44.69 12241 93.604 1.23874 0.82883 8.2341 10.8692 142.84 1.03

ARISTOCRAT LEISU

(H) 52W

DAX INDEX

(L) 52W

CROWN RESORTS LT

YTD %

6736.24

(H) 52W

YTD %

DAY %

YTD %

DAY %

PRICE

FTSE 100 INDEX

DAY %

PRICE

COUNTRY

-0.284363

PRICE

Macau Related Stocks

CENTURY LEGEND

NAME

26.3

Currency Exchange Rates

NAME ENERGY

35.0

EMPEROR ENTERTAI

4.12

0.7334963

4.66

1.86

2226028

FUTURE BRIGHT

4.54

-0.6564551

-3.198295

4.9

1.421

4406902

78.1

3.375248

12.29331

78.7

16158903

123.8

0.487013

-1.511533

132.8

110.6

759468

0.965251

-0.3809524

35.3

23.2

501694 26505448

GALAXY ENTERTAIN

HSBC HLDGS PLC

85.4

1.787843

1.485441

90.7

77.85

HUTCHISON TELE H

2.87

2.135231

-2.380954

4.66

2.5

5186000

LUK FOOK HLDGS I

5.769231

11.86441

33.3

16.88

4340694

MELCO INTL DEVEL

29.45

1.376936

3.333333

30.55

10.6

7204300

-2.234637

5.740186

13.979

8526322

3.54

0.5681818

-5.093834

4.29

2.68

1232000

0.345

1.470587

0.4

0.131

199664000

MGM CHINA HOLDIN MIDLAND HOLDINGS NEPTUNE GROUP NEW WORLD DEV

9.51

1.277955

-2.860061

15.12

9.35

11582097

SANDS CHINA LTD

66.1

0.9160305

4.340965

66.95

33.5

15026393

FTSE Bursa Malaysia KLCI

1833.58

0.4640816

-1.787934

1882.2

1597

SHUN HO RESOURCE

1.65

1.92

1.33

NZX ALL INDEX

1008.703

0.4499171

0.9818833

1048.998

885.739

SHUN TAK HOLDING

4.5

1.123596

-1.315788

4.8

3.27

4312750

PHILIPPINES ALL SHARE IX

3667.59

0.6169927

1.47386

4571.4

3440.12

Euromoney Dragon 300 Index Sin

598.54

-0.35

-2.12

STOCK EXCH OF THAI INDEX

1257.81

-0.360436

-3.149271

1649.77

1205.44

HO CHI MINH STOCK INDEX

513.9

0.7410021

1.836993

533.15

437.15

Laos Composite Index

1266.25

0.6030223

1.030857

1455.82

1224.94

SJM HOLDINGS LTD

26.7

2.692308

17.04

12342904

SMARTONE TELECOM

8.73

0.5760369

-1.467265

14.46

7.38

11014907 8013350

WYNN MACAU LTD

36.95

-0.672043

5.120906

38.25

ASIA ENTERTAINME

N/A

BALLY TECHNOLOGI

78.38

-0.1146935

-0.08922492

79.42

45.38

287281

BOC HONG KONG HO

3.15

0.9615385

-2.173914

3.6

2.99

10500

GALAXY ENTERTAIN

9.82

6.162162

8.990008

9.84

3.8975

21855 3809133

INTL GAME TECH

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

17.75

0.967008

-2.257708

21.2

14.67

JONES LANG LASAL

103.64

0.8269287

1.220823

104.33

80.86

266326

LAS VEGAS SANDS

78.98

2.213019

0.1394665

47.95

4349275 4242789

MELCO CROWN-ADR

41.84

4.235177

6.680262

42.13

17.76

MGM CHINA HOLDIN

4.66

4.719101

8.120651

4.66

1.9017

33184

MGM RESORTS INTE

24.51

4.386712

4.209182

24.66

11.72

17965296

SHFL ENTERTAINME

N/A

23.25

13.88

SJM HOLDINGS LTD

3.33

2.461538

-0.2993986

3.6

2.2

15830

201.51

2.884714

3.758814

202.88

111.3456

1688085

WYNN RESORTS LTD

AUD HKD

USD

Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.2

1.003344

16574881

CHINA UNICOM HON

13.68

1.333333

22775492

ALUMINUM CORP-H

3.61

15433022

CITIC PACIFIC

10.12

0.1980198

6468988

BANK OF CHINA-H

3.15

1.286174

329406866

BANK OF COMMUN-H

5.87

0.8591065

37793438

0.1727116

14.5

BANK EAST ASIA BELLE INTERNATIO

NAME

CLP HLDGS LTD

NAME

PRICE

DAY %

64.4

0.625

2568679

SANDS CHINA LTD

28.75

-0.1736111

6213954

SINO LAND CO

14.28

0.990099

7686664

SUN HUNG KAI PRO

109.1

1.018519

8616634

-0.4815409

2456828

265.6

1.45149

2048509

23.9

2206357

0.8064516

5926157

52.75

1.05364

3208615

POWER ASSETS HOL

65.6

1561243

CNOOC LTD

16.32

0.4926108

46287676

1260442

COSCO PAC LTD

11.76

3138217

SWIRE PACIFIC-A

7192500

ESPRIT HLDGS

12.44

-0.48

4211743

TENCENT HOLDINGS

0.2087683

10140777

HANG LUNG PROPER

26.55

-0.1879699

7812341

TINGYI HLDG CO

CATHAY PAC AIR

13.78

0.2911208

3140232

HANG SENG BK

119.7

0.167364

1690249

WANT WANT CHINA

CHEUNG KONG

114.9

1.23348

3918568

HENDERSON LAND D

2.059087

5880582

WHARF HLDG

75.55

0.1325381

701703

1.112235

6329376

125.6

3.54493

9625332

76.5 -0.06531679

9291476

BOC HONG KONG HO

CHINA COAL ENE-H

7.7

-0.1297017

40174849

CHINA CONST BA-H

5.87

1.206897

202072100

CHINA LIFE INS-H

22.9

0.4385965

30126882

CHINA MERCHANT

25.6

0.3921569

4209584

CHINA MOBILE

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

85.45

1.064459

16569813

HUTCHISON WHAMPO

CHINA OVERSEAS

20.2

-0.2469136

19374736

IND & COMM BK-H

CHINA PETROLEU-H

8.36

0.9661836

101198904

CHINA RES ENTERP

25.2

0.8

77.35

1.243455

6697663

5.17

1.372549

317570965

LI & FUNG LTD

12.84

-0.9259259

17517410

4219717

MTR CORP

29.85

1.530612

4880670

MOVERS

VOLUME

23018

INDEX 22996.59 HIGH

23017.49

LOW

22616.7

CHINA RES LAND

17.16

1.179245

6849146

NEW WORLD DEV

12.98

1.564945

12528960

52W (H) 24111.55078

CHINA RES POWER

16.08

-0.618047

7490964

PETROCHINA CO-H

10.94

-1.263538

64234127

(L) 19426.35938

CHINA SHENHUA-H

33.35

-0.1497006

11160228

PING AN INSURA-H

63.35

1.198083

8338502

22616

6-January

8-January

15 15

January 2014 April 19,9,2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

China Daily The central government modified a series of regulations for the Shanghai Pilot Free Trade Zone, in a bid to allow greater involvement of foreign investors in formerly restricted areas such as telecommunications. Thirtytwo legal clauses from various FTZ laws and regulations were suspended in the zone, which is a test field for future economic reforms, according to a statement on the website of the State Council. Among them, 24 clauses, most of which are requirements for investment approval, will be replaced by the FTZ’s negative list, which covers the areas that are off-limits to foreign investors.

Slow growth and short tails

Slow changes

Nouriel Roubini

Chairman of Roubini Global Economics and Professor of Economics at the Stern School of Business, NYU

Inquirer Business The Philippines’ foreign exchange reserves slightly dipped in 2013, weighed down by the steep drop in the price of gold in the world market and efforts to temper the peso’s depreciation. The Bangko Sentral ng Pilipinas reported that the country’s gross international reserves as of the end of December amounted to US$83.75 billion, down by 0.1 percent from US$83.83 billion at the end of 2012. However, the BSP said the level of foreign exchange reserves as of the end of last year was still healthy and exceeded international benchmarks.

The Age An investigation by the NSW casino watchdog into whether it will grant James Packer’s Crown Resorts a licence for its Sydney casino will take less than three months, despite previous applications taking more than a year. Probity clearance is one of two remaining obstacles for Crown to clear after parliamentary approval for its proposed A$1.3 billion luxury hotel and casino in the Barangaroo precinct was granted last year. “It is expected that the investigation will be completed in March 2014,” a spokesman for the Independent Liquor and Gaming Authority said.

Yomiuri Shimbun Bank of Tokyo-Mitsubishi UFJ plans to open a branch in Shanghai’s free trade zone soon, it has been learned. The bank received the China Banking Regulatory Commission’s approval late last year. The branch will be the first Japanese bank in the free trade zone. According to informed sources, new branches of the Chinese units of HSBC Holdings Plc, Bank of East Asia and the Development Bank of Singapore have also been approved for the zone. China aims to promote financial, investment, trade and legal system reforms in the free trade zone.

he global economy had another difficult year in 2013. The advanced economies’ below-trend growth continued, with output rising at an average annual rate of about 1 percent, while many emerging markets experienced a slowdown to below-trend 4.8 percent growth. After a year of subpar 2.9 percent global growth, what does 2014 hold in store for the world economy? The good news is that economic performance will pick up modestly in both advanced economies and emerging markets. The advanced economies, benefiting from a half-decade of painful private-sector deleveraging (households, banks, and non-financial firms), a smaller fiscal drag (with the exception of Japan), and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9 percent. Moreover, so-called tail risks (low-probability, high-impact shocks) will be less salient in 2014. The threat, for example, of a eurozone implosion, another government shutdown or debt-ceiling fight in the United States, a hard landing in China, or a war between Israel and Iran over nuclear proliferation, will be far more subdued. Still, most advanced economies (the U.S., the eurozone, Japan, the United Kingdom, Australia, and Canada) will barely reach potential growth, or will remain below it. Households, banks, and some non-financial firms in most advanced economies remain saddled with high debt ratios, implying continued deleveraging. High budget deficits and public-debt burdens will force governments

hit hard in the spring and summer, after the Fed’s signal of a forthcoming exit from QE triggered a capitalflow reversal, exposing vulnerabilities stemming from loose monetary, fiscal, and credit policies in the boom years of cheap money and abundant inflows.

to continue painful fiscal adjustment. And an abundance of policy and regulatory uncertainties will keep private investment spending in check.

Secular stagnation The outlook for 2014 is dampened by longer-term constraints as well. Indeed, there is a looming risk of secular stagnation in many advanced economies, owing to the adverse effect on productivity growth of years of underinvestment in human and physical capital. And the structural reforms that these economies need to boost their potential growth will be implemented too slowly. While the eurozone’s tail risks are lower, its fundamental problems remain unresolved: low potential growth; high unemployment; still-high and rising levels of public debt; loss of competitiveness and slow reduction of unit labour costs (which a strong euro does not help); and extremely tight credit rationing, owing to banks’ ongoing deleveraging. Meanwhile, progress toward a banking union will be slow, while no steps will be taken toward establishing a fiscal union, even as austerity fatigue and political risks in the eurozone’s periphery grow. In Japan, Prime Minister Shinzo Abe’s government has made significant headway in overcoming almost two decades of deflation, thanks to monetary easing and fiscal expansion. The main uncertainties stem from the coming increase in the consumption tax and slow implementation of the third “arrow” of “Abenomics,” namely structural reforms and trade liberalisation.

Growth will remain anaemic in most advanced economies, and emerging-market fragility … could become a drag on global growth in subsequent years

In the U.S., economic performance in 2014 will benefit from the shale-energy revolution, improvement in the labour and housing markets, and the “reshoring” of manufacturing. The downside risks result from political gridlock in Congress (particularly given the upcoming midterm election in November), which will continue to limit progress on long-term fiscal consolidation; a lack of clarity about the Federal Reserve’s planned exit from quantitative easing (QE) and zero policy rates; and regulatory uncertainties. Emerging markets’ difficult year in 2013 reflected several factors, including China’s economic slowdown, the end of the commodity super-cycle, and a fall in potential growth, owing to delays in launching structural reforms. Moreover, several major emerging economies were

Emerging economies will grow faster in 2014 – closer to 5 percent year-on-year – for several reasons. Brisker recovery in advanced economies will boost imports from emerging markets. The Fed’s exit from QE will be slow, keeping interest rates low. Policy reforms in China will attenuate the risk of a hard landing. And, with many emerging markets still urbanising and industrialising, their rising middle classes will consume more goods and services. Still, some emerging markets – namely, India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela – will remain fragile in 2014, owing to large external and fiscal deficits, slowing growth, below-target inflation, and election-related political tensions. Some of these countries – for example, Indonesia – have recently undertaken more policy adjustment and will be subject to lower risks, though their growth and asset markets remain vulnerable to policy and political uncertainties and potential external shocks. The better-performing emerging markets are those with fewer macroeconomic, policy, and financial weaknesses: South Korea, the Philippines, Malaysia, and other Asian industrial exporters; Poland and the Czech Republic in Europe; Chile, Colombia, Peru, and Mexico in Latin America; Kenya, Rwanda, and a few other economies in SubSaharan Africa; and the Gulf oilexporting countries. Finally, China will maintain an annual growth rate above 7 percent in 2014. But, despite the reforms set out by the Third Plenum of the Communist Party’s Central Committee, the shift in China’s growth model from fixed investment toward private consumption will occur too slowly. Many vested interests, including local governments and state-owned enterprises, are resisting change; a huge volume of private and public debt will go sour; and the country’s leadership is divided on how quickly reforms should be implemented. So, while China will avoid a hard landing in 2014, its medium-term prospects remain worrisome. In sum, the global economy will grow faster in 2014, while tail risks will be lower. But, with the possible exception of the U.S., growth will remain anaemic in most advanced economies, and emergingmarket fragility – including China’s uncertain efforts at economic rebalancing – could become a drag on global growth in subsequent years. © Project Syndicate

16 16

January 9, 2014 April 19, 2013

Closing Gambling among youth growing: survey

Rainbow Group eyes retail outlet on Hengqin

About 2.2 percent of the youth respondents to an annual survey of problem gambling showed signs of addiction. That was an increase of one percentage point from the previous year, the Bosco Youth Service Network, a non-for-profit association, said. The result was also the highest in the five years since the survey began. The Social Welfare Bureau sponsors the survey. The association said the society should pay more attention to pathological gambling and called for more awareness campaigns to warn gamblers of the risks involved. The association polled 705 residents aged between 14 and 21.

Rainbow Group, Macau-based distributor of luxury brand products, aims to build an outlet of discounted, branded products on Hengqin Island. The company, headed by businesswoman Terry Siu, met yesterday members of a panel that assesses investment proposals by enterprises interested in doing business in the area of the island reserved for Macau companies. Leong Ka Kei, Rainbow’s general manager, said the project has an estimated cost of between 300 million yuan (396 million patacas) and 500 million yuan. The project will also include food and beverage outlets that can include Macau smaller firms, he added.

Taipa North plan ‘positive’ say developers But pan-democrats reject the idea saying ‘in bad faith’

he controversial amendment to the urban planning of the northern district of Taipa is “positive news” for developers, the president of the Macau Association of Building Contractors and Developers said. Tommy Lau Veng Seng said yesterday on the sidelines of the association’s annual meeting that the amendments “give a clearer prospect and positioning for the area”. The government announced the revised plan on December 30, indicating it can stimulate the supply of 6,400 new flats including 1,000 public homes in that area. Previously developers had been slow to act. The district is divided into 71 plots, but has only 12 completed developments according to data from the Land, Public Works and Transport Bureau. The revision in effect allows land concession holders to build higher buildings on their existing footprints – to a maximum gross floor space 20 percent bigger than previously allowed But the revised plan provoked criticism from the pan-democrat New Macau Association. It said the plan violated the “principle of good faith” because there was no public consultation despite the fact the city’s first urban planning bill was due to come into force in March. New Macau delivered a petition to the land bureau yesterday urging it to withdraw the revised plan. Meanwhile, Mr Lau expects property prices to rise by “moderate” amounts this year, thanks to continued demand and limited supply. T.L.

Euro area jobless rate holds at 12.1 pct

Euro jobless steady but retail booms Unemployment picture still mixed across the eurozone

uro area unemployment held at a record in November as policymakers struggled to bolster the recovery from the currency bloc’s longest recession. The jobless rate remained at 12.1 percent, the European Union’s statistics office in Luxembourg said yesterday. After several revisions of previous months’ data, unemployment has been stable at that level since April, Eurostat said. Europe’s fragile labour market remains a major concern for EU leaders as they try to foster the recovery. Last month, they acknowledged that the jobless rate remains “unacceptably high,” especially among young people, 18 months after they unveiled a 120 billion-euro (US$163 billion) package to jump-start the economy and create jobs. “It was to be expected that the unemployment rate remains unchanged at a high level,” Carsten Brzeski, an economist at ING Group NV in Brussels, said by telephone. “The labour market is lagging behind the economic recovery in the euro area and it will take at least until the middle of the year until we’ll see

significant improvement.” The European Central Bank estimates that the euro-area economy will expand 1.1 percent this year after contracting 0.4 percent in 2013. Unemployment will average 12.1 percent this year and 11.8 percent in 2015, economists forecast in a separate Bloomberg survey. Meagre growth has prompted European companies to shed jobs in a bid to cut costs and remain competitive. European Aeronautic, Defence and Space Co said last month that it would cut 5,800 jobs in Germany, France, Spain and the U.K.

Youth unemployment Unemployment varied widely across the euro area in November, from a low of 4.8 percent in Austria to a high of 26.7 percent in Spain. Greece, which last reported in September, had a jobless rate of 27.4 percent. Among people under the age of 25, unemployment in the then 17-nation eurozone stood at 24.2 percent. While unemployment remains resistant to policymakers’ attempts to boost the economy, positive signs are gradually accumulating, such

as improving economic confidence. The European Commission will publish the results of its December survey today, with the gauge forecast to rise to 99.1, the highest reading since July 2011, according to economists surveyed by Bloomberg. November retail sales increased 1.4 percent from the previous month, beating analysts’ estimates, and 1.6 percent year-on-year, Eurostat said yesterday in a separate report. The ECB, after cutting its main refinancing rate to a record-low 0.25 percent in November, sees ‘‘no immediate need to act’’ further on “encouraging signs” that the euro area’s crisis is easing, President Mario Draghi said on December 28 in an interview published in Der Spiegel. The Frankfurt-based central bank will leave its key rate unchanged today, according to all 51 economists in another Bloomberg survey. “The euro-area economy isn’t growing fast enough to significantly reduce unemployment,” said Evelyn Herrmann, an economist at BNP Paribas SA in London. “This isn’t going to change anytime soon, with annual growth rates of about 1 percent this year and in 2015.” Bloomberg News