Macau Business Daily, March 25, 2014

Year II

Number 503 Tuesday March 25, 2014

Publisher: Paulo A. Azevedo

MOP 6.00

business daily 1

Friday April 19, 2013

Rocky road Transmac revenues rose by 22 percent in 2013 but profits have tumbled slightly. The company’s managing director blames a 20 percent surge in labour costs. In an interview with Business Daily, Chan Hio Leong defends service contracts for bus

operators but will accept the decision to change to public service concessions as argued by the Commission Against Corruption.

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www.macaubusinessdaily.com

Govt increases pensions and benefits

SCMP buys Destination Macau Page 6

The Social Security Fund will put more 162 million patacas to cover increased allowances.

But contributions remain deadlocked.

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Portuguese hotel group prepares investment Page 8

Brought to you by

HSI - Movers March 24

Name

Bears retreat

Fine print

Hong Kong stocks had a good day. Chinese Employment agencies will be able to charge a standard fee to shares rebound after entering a bear employers. The government is drafting the bill. The industry market last week. gives thumbs up.

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9

%Day

PetroChina Co

5.47

CITIC Pacific Ltd

4.80

China Unicom HK

4.28

China Mobile Ltd

4.19

China Life Insur

3.93

China Mengniu

-0.94

China Resources

-1.61

Tingyi Cayman Isl

-2.63

Li & Fung Ltd

-3.53

Hutchison Whampoa

-5.05

Source: Bloomberg

I SSN 2226-8294

Surprise, surprise Guess what, another increase in the number of visitors to Macau. And hotels have been packed. In the first two months of this year alone Macau already registered 5.1 million visitors.

Brought to you by

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March 25, 2014 Friday April 19, 2013

Macau More illegal workers probed The government has conducted more inspections, identifying more illegal workers this year on construction sites, and in commercial and industrial venues, latest data provided by the Public Security Police Force show. The police and the Labour Affairs Bureau detained 48 illegal workers via 784 inspections in the first two months of this year, 10 more illegal workers found than in the same period a year earlier. The government carried out 645 inspections in the January-February period of last year, and has inspected 467 locations probing 20 illegal workers this year alone.

Employment agencies under the microscope The government is drafting a bill to regulate a standard fee for employment agencies to charge employers, a move regarded as “positive” by the industry Tony Lai

tony.lai@macaubusinessdaily.com

T

he administration is finalising the draft of a bill standardising fees that employment agencies can charge employers for their services, the Labour Affairs Bureau has announced.

The employment agency sector concurs with the move but believes more discussions are necessary.

Bureau director Wong Chi Hong said yesterday that the bill can be up for discussion by the Standing Committee for the Coordination of Social Affairs in the second quarter, prior to review by the Legislative Assembly.

One of the tasks for the bill to accomplish is to “regulate the amount of charges [agencies] can impose upon employers for referred employees”, he said.

But he declined to reveal further details or timetable for tabling the bill to the Assembly. He did not clarify whether they are drafting amendments to the current bill or a new bill. A law regulating the agencies was promulgated in 1994.

Mr Wong’s remarks followed a closed-door meeting of the standing committee.

The president of Macau Overseas Employment Agency Association - Ao Ieong Kuong Kao - welcomed the uniform fee, saying: “We think this is a reasonable arrangement for every agency to follow the rules as many

other industries also have a standard charge for some of their services.

“This can minimise the chances of dispute, which is beneficial for us and the consumer. It is a positive move.”

But Mr Ao Ieong added that the government has yet to contact the industry about its latest proposal.

“There’s still much room for discussion. For instance, the training

Increased subsidies but not contributions . . . yet Social Security Fund will spend 162 million patacas more a year on increased welfare but no consensus has been reached on increased contributions Tony Lai

tony.lai@macaubusinessdaily.com

T

he Social Security Fund will fork out an extra 162.2 million patacas (US$20.3 million) a year to cover increased allowances but opinions on increases in monthly contributions remain deadlocked, says the Labour Affairs Bureau.

The Bureau’s latest comment came from a closed-door meeting yesterday of the Standing Committee for the Coordination of Social Affairs.

Wong Chi Hong, the Bureau’s director and committee coordinator,

announced after the meeting that the committee had approved an average rise of 6 percent in pensions and other allowances backdated to the beginning of this year.

For example, the pension will increase to 3,180 patacas from 3,000 patacas a month while the allowances for unemployment and for illness will increase to 127 patacas a day from 120 patacas. Economic aid for the poor will also increase to 2,083 patacas a month from 1,965 patacas.

Asked whether there will be

further adjustment in the allowances, Mr Wong said: “It depends on … like, the rise in the contribution amount as the employee and employer still hold different opinions on the proposal [for the contribution increase].”

Last month, both sides agreed that the minimum contribution to the fund per employee should be raised to 90 patacas from the current 45 patacas. Workers think employers should continue to pay two-thirds of the amount with onethird by the employee, but bosses

fees of domestic helpers right now are charged to the imported maids while we just charge employers administrative fees.

“Does the government want the employers to share part of the burden of the training fees, too?” he asked.

According to Mr Ao Ieong’s Association, agencies currently charge employers between 1,000 patacas (US$125) and 1,500 patacas.

In a 2012 newsletter, the Consumer Council complained that service charges paid to employment agencies for recruiting domestic servants are arbitrary and not linked to costs such as insurance coverage and medical checks.

The watchdog polled 81 employment agencies here during that year and discovered that charges ranged from 500 patacas to 2,800 patacas.

At the time, the Council also slammed the fact that not all agencies list all service details on the contract when making a deal with an employer, and that not all give the employer a copy of the contract. Some may only rely on oral agreement between the agencies and employers, the watchdog added.

Mr Wong of the Labour Bureau added yesterday that the law on agencies currently being drafted will also mandate that people running an agency take training and courses beforehand.

think contributions should be divided equally.

Employees currently pay 15 patacas a month for their contribution, while bosses contribute 30 patacas.

Mr Wong said both sides will submit their written opinions on the matter later this month, and they will then have meetings on further discussions.

But he declined to give a deadline for the end of the discussions, which started in 2012. He only added: “We hope this standing committee can serve as a platform for both employees and employers to have an in-depth discussion… and minimise their discrepancies of opinion.”

He added that the increased allowance will not impose temporary financial pressure upon the Social Security Fund, as the government will inject 37 billion patacas into the fund from 2013 to 2016.

The fund now relies on the government as less than 20 percent of fund money emanates from contributions.

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Macau

Transmac profits tumble Surge in labour costs erodes Transmac profit in 2013. The managing director says public concessions for bus operators do not mesh with transport policy Stephanie Lai

sw.lai@macaubusinessdaily.com

Bus drivers can earn up to 30,000 patacas a month

B

us operator Transportes Urbanos de Macau SARL (Transmac) was less profitable last year, even though an increase in what the government pays the company to run its services bolstered its revenue, according to its managing director, Chan Hio Ieong.

Ms Chan told Business Daily that Transmac’s profit after tax had fallen to 11.5 million patacas (US$1.44 million) from 11.9 million patacas the year before.

She said the fall had been due mainly to a surge of about 20 percent in labour costs.

“Our revenue for 2013 rose by 22 percent or 70 million patacas,” Ms Chan said. She declined to give the total. “Revenue was boosted by the government approving an increase of 23.3 percent in what it pays us.”

Transmac’s contract says that if it thinks the government should pay it more to run its bus services, it should say so before June 30 in any given year, and support its argument with figures for fuel cost inflation and labour cost inflation.

The government said last April that it would pay Transmac and Sociedade de Transportes Colectivos de Macau SARL (TCM) 23.3 percent more to run their bus services, and backdated the increase to the beginning of last year.

The government declined to increase what it paid the third bus operator, Reolian Public Transport Co Ltd. The increases for Transmac and TCM cost the government another 645.5 million patacas a year.

“The increase of 23.3 percent approved lagged behind the increases in our operating costs by 25 months,” Ms Chan said.

Legal opinion

about 2.4 percent.

We asked the Transport Bureau what progress the applications had made, but we had received no reply by the time we went to press.

Legal Affairs Bureau director André Cheong Weng Chon told the Legislative Assembly on January 9 that the government would replace the service contracts that the bus operators have with public service concessions.

The government will do so in response to the Commission against Corruption’s assertion in November that service contracts with bus operators were legally inappropriate.

Ms Chan disagrees with the Commission against Corruption’s opinion, but says Transmac will go along with the change the government is proposing.

She said that, in the first place, the government had switched from its old scheme for providing bus services to its new scheme 10 months late.

“The 23.3 percent increase should have come into in effect in June 2012, when we applied for it, but then it was only after six months that the increase came into effect,” she said.

“So actually the increase approved does not fully cover the increase in our operating costs in that period.”

Transmac applied last year for a further increase, of 8.3 percent, which the government has yet to approve.

And it applied this month for yet Chan Hio Ieong another increase, of Transmac Managing Director

Revenue was boosted by the government approving an increase of 23.3 percent in what it pays us

“If the government decides to switch back to public concessions, we’ll respect its decision and see how they are going to deal with the technical details,” she said.

Clarity awaited Ms Chan argues that service contracts for the bus operators would be more suitable in view of the government’s wish for the Light Rapid Transit elevated railway to play the leading role in the public transport system and for buses and taxis to play supporting roles.

“When the metro system takes the lead there will be fewer bus routes, and maintaining the public concessions format will be difficult because revenue for bus operators from fares will immediately be affected by this diminution or adjustment of their routes,” she said.

“In those circumstances, I personally think the service contract format is more appropriate.”

Transmac is waiting to hear more from the government about how it will replace the service contracts with public service concessions.

Mr Cheong said in January that the government would try to make the change “within three months”.

Ms Chan said: “What’s unclear at the moment is – when the government says

A senior bus driver can make up to 30,000 patacas a month, if bonuses and overtime pay are counted and the driver has only two days off a month, an executive of bus operator Transportes Urbanos de Macau SARL (Transmac) says.

Transmac deputy general manager Kuan Weng Kai told Business Daily that his company’s drivers had been earning basic salaries of 18,000 patacas (US$2,253) to 20,000 patacas even before it increased their pay by 5 percent in January.

Mr Kuan said the increase was necessary to retain employees, in view of intense competition for drivers in the labour market.

“We also have to have regular training of staff so that we can always have a pool of drivers ready to replace anyone that’s leaving,” he said.

He said the difficulty his company had in manning its buses would become more acute this year and next as the new casino-resorts in Cotai began to open, increasing demand for drivers – as the casinos sought to man their coaches – and so raising labour costs.

Mr Kuan said the retirement of many of his company’s drivers in the next 15 years would increase its manning problems.

The retirement age is 65. He said 75 percent of Transmac’s 400 drivers were over 50.

it is adopting the concession format – whether it will be the government or the bus operator that decides the frequency of bus services, the routes they take and where they stop.”

She added: “Also, the government also ought to make clear the rationale behind public concessions, when it allows casino coaches to run around the city picking up passengers and taking them to casinos for nothing.”

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Macau Brands

Trends

Back to the future

Tourist industry surprised by visitor numbers Macau had 2.56 million visitors in February, including 1.71 million mainlanders Tony Lai

Raquel Dias

tony.lai@macaubusinessdaily.com

newsdesk@macaubusinessdaily.com

T

hat’s right, the 90’s are officially now almost 20 years behind us. The fashion industry, taking advantage of the love for vintage that took the market a good six years ago is introducing a new decade to love.

After flirting with the 50’s, borrowing from the 60’s and reintroducing the neon colours and leggings of the 80’s, it’s time for the Naughty 90’s.

If there’s a fashionista lurking in you, you probably noticed the shift last year when crop tops were slowly introduced by the major brands. This year, the trend is growing even stronger.

Metallics - a big hit in the late 90’s - were present in most shows. Straighter lines and block black and white clothing are another clue.

The most telling giveaway has to be the chunky heels and platform shoes. The little backpack retains a small niche still, while the jelly shoe is here to stay.

We have seen this happening more with women’s clothing than menswear . . . but leather jackets and denim did make a huge comeback this winter, and the trend seems to be gathering momentum.

We still have some dignity left and as such, chokers and slip dresses are just making very, very small appearances.

Although I believe the trend will take a few more seasons to blossom, there’s still time to enjoy those outrageous stiletto heals and tight feminine dresses; it might not be long.

Time to dig deep into the wardrobe and bring out all those guilty pleasures. Yes, even that spice girl CD…

T

he number of visitors to Macau so far this year, swollen by day-trippers, has been greater than the tourism industry expected.

But the hotels have been packed, and a leading figure in the industry says more hotel rooms are needed so long-haul travellers can stay overnight.

The Statistics and Census Service announced yesterday that the number of visitors rose to over 2.56 million last month, 7.7 percent more than a year earlier. They included 1.71 million mainlanders, 13.7 percent more.

That meant the city had nearly 5.1 million visitors in the first two months of this year, 8 percent more than a year earlier. Mainlanders made up 67.2 percent, the greatest proportion since published records began in 1998.

The president of the Macau Travel Industry Council, Andy Wu Keng Kuong, said: “The growth so far this year is better than what we originally expected – which was around 4 percent to 5 percent – because, I think, Macau now has greater appeal to the outside world.”

He added: “But it is inevitable that we depend on the mainland market, especially the nearby province of Guangdong, at the moment.”

Guangzhou-Zhuhai high-speed trains now go to Gongbei, just the other side of the border, so shortening the journey from Guangzhou to Macau by half.

“As travel in Guangdong has been getting more convenient recently, taking one to two hours between there and here, more mainlanders come for a visit but do not stay overnight,” Mr Wu said.

Weekend rush The number of day-trippers in the first two months was 2.73 million, 10.9 percent more than a year earlier. They made up 54.3 percent of all visitors.

The number of day-trippers from the mainland rose by 17.1 percent to 1.85 million.

The average length of a visitor’s stay remained just 1.0 day last month.

The director of the Macau Government Tourist Office, Maria Helena de Senna Fernandes, has repeatedly said her office will try to

get visitors to stay longer.

Mr Wu expects little increase in the number of overnight visitors until Macau has more hotel rooms – which it will after the new casino-resorts in Cotai begin to open next year.

In January the city had 98 hotels and guesthouses, together containing over 27,800 rooms.

“There may still be space to take in tourists on weekdays, in terms of accommodation, but the hotels are packed from Friday to Sunday and during holiday periods,” Mr Wu said.

Macau Hotel Association figures issued show the occupancy rate of three-star, four-star and five-star hotels was 95.4 percent last month, 12.7 percentage points more than a year earlier.

Occupancy increased in spite of an increase in the average room rate to 1,843.40 patacas (US$230.40) a night from 1,636.30 patacas a year earlier.

On average, a night in a five-star hotel cost 2,115.20 patacas, a night in a four-star hotel cost 1,320.30 patacas and a night in a three-star hotel cost 1,555.20 patacas.

As travel in Guangdong has been getting more convenient recently, taking one to two hours between there and here, more mainlanders come for a visit but do not stay overnight Andy Wu Macau Travel Industry Council president

KEY POINTS Annual increase in February visitors 7.7 pct Visiting mainlanders increase by 13.7 pct Average hotel occupancy rate 95.4 pct Average hotel room rate 1,843.40 patacas This year 54.3 pct of visitors day-trippers Record dependency on mainland this year

In the first two months of this year the average occupancy rate of hotels was 89.8 percent, 5.4 percentage points more than a year earlier.

The average room rate was 1,693.60 patacas, 11.3 percent more.

The Macau Hotel Association compiles data from its 41 members, including 21 five-star hotels, 11 fourstar hotels, and nine three-star hotels.

The Statistics and Census Service says the number of South Koreans visiting Macau rose to 52,400 in the first two months, 21.2 percent more than a year earlier.

The number of Indians visiting rose by 14.7 percent to over 8,800.

The government is trying to get more Indians to visit.

The number of Japanese visiting rebounded by 7.5 percent to over 47,800. Last year the number of visitors from Japan fell by over one-quarter.

Macau had fewer visitors from its second-biggest source, Hong Kong, and its third-biggest, Taiwan.

The number of visitors from Hong Kong fell by 6 percent to 1.11 million and the number from Taiwan fell by 4.4 percent to just over 157,900.

Mr Wu echoes the government line that Macau should attract more long-haul tourists from sources such as Russia.

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Photo by Manuel Cardoso

Macau

Sing Fong residents decamp from street A

dozen former residents evacuated from Sin Fong Garden have given up occupying part of Rua da Ribeira do Patane following yesterday’s intervention by Chief Executive Fernando Chui Sai On. Despite cancelling a meeting between the residents and Mr Chui in the afternoon, Alexis Tam Chong Weng, chief of Mr Chui’s cabinet, visited

them yesterday evening and pledged that the government would hold the appropriate party culpable for the Sin Fong building situation.

The protestors were evacuated from Sin Fong in October 2012 as the building was in danger of collapse.

They are waiting for a report from the University of Macau, which the government said will be ready next month,

and which will further detail the cause of collapse and accountability.

A representative of the Sin Fong protestors said shortly after the meeting with Mr Tam that they would suspend the protest which has lasted since Sunday afternoon for over 30 hours. By the time this newspaper went to press, the protestors had not completely vacated the site.

Yesterday afternoon, Iong Kong Io, director of the Social Welfare Bureau, said the government was willing to arrange 80 flats for the residents to stay in, as an interim measure.

A Sin Fong resident surnamed Wong said he was satisfied with the arrangement of temporary accommodation while another resident complained that the

government had “dragged” the issue out for a year and a half.

On the sidelines of a public event yesterday afternoon, Mr Chui stressed that the government is always willing to talk to the residents. He did not comment on whether this will affect his bid to run for re-election once his five-year tenure ends in December.

T.L.

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Macau

Hong Kong newspaper enters Macau South China Morning Post Group acquires lifestyle magazine Destination Macau Stephanie Lai

sw.lai@macaubusinessdaily.com

L

ifestyle publisher Destination Macau Limited from Ignite Media Group Ltd is to be acquired by the Hong Kong-listed SCMP Group Ltd, both parties confirmed in a press statement released yesterday.

The acquisition will add to the SCMP Group’s growing portfolio of lifestyle magazines, which include Cosmopolitan, Elle, Esquire, Harper’s Bazaar, PEAK and STYLE. The group is best known for its flagship publication South China Morning Post.

“Ignite has built Destination Macau and Destination Macau Exclusive into Macau’s premier luxury publishing titles; and knowing SCMP Group’s capabilities, we are confident they will be able to take this business to the next level,” said Carrie Leung, general manager of Ignite Media Group.

Business Daily has approached Ignite Media Group for further comment on the acquisition of Destination Macau Ltd but the group has refused to comment.

The multimedia outlet Ignite Media Group owns online travel

and destination marketing platform Macau.com, local Chinese-language social media platform Qoos.com, online TV production company Aomen.tv, recruitment website MacauHR, ticketing company New Macau Box Offices, outdoor media EC-Ad and media agency & advisory services Ignition.

Ignite Media Group recently lost managerial staff from MacauHR, Macau.com, Qoos.com and Aomen. tv, a source familiar with the group told Business Daily.

Loss of staff or managing position is also seen in EC-Ad, Ignition and Tasting Kitchen magazine, where Ignite shows less dominance in these business segments, the source added.

Destination Macau Ltd will operate under SCMP Group management from late March onwards, while the magazine Destination Macau’s editorial direction as well as its distribution network within the city’s 5-star hotels and resorts, airlines, ferries and direct distribution to “high net-worth individuals” will be maintained, Ignite Media Group Ltd noted in its press statement.

You will remember.

@ : signature@macaubusiness.com tel : +853 2833 1258

welcome

success

Corporate MGM MACAU Launches “PRIDE Programme” MGM MACAU announced the official launch of the “PRIDE programme”, a leadership project tailored for local management employees, showcasing the company’s vision to support and develop local talent.

Under the programme, high-potential local management employees will be selected to undergo intensive training that will lead to further career prospects as well as personal advancements as the company gears up for the Cotai opening.

The training programme will be conducted from now until June 2015.

CEO and Executive Director of MGM China Holdings Limited, Grant R. Bowie, said: “MGM began preparing for the “PRIDE Programme” as early as 2012. Supporting our local talent to grow and excel is at the heart of what we do as an organization that is proud of and grateful for our presence in Macau.”

Grant R. Bowie (left) launches programme

CTM upgrades server facilities Galaxy Entertainment Group Garners Four Top Industry Hospitality Awards

CTM is currently in a data migrating phase, transferring and converging its entire traditional data centre in new systems. Overall storage capacity has now been multiplied by 2.5, and performance has doubled. This has resulted in “enhanced operational efficiency of 30%, lowered power consumption of 70% as well as a 20% reduction in Co2 gas emission”, says the company.

“The process includes prepaid and post-paid mobile, fixed lines and Internet data”, said Carlo Marcelo . All this information is expected to be terminated by mid-2015”, said Carlo Marcelo, Director of Information Technology.

The new NMC and IT data centre were established to cope with future network convergence services, while “offering increasingly stable, quality telecom services to its customers”. It also provides real time information displays and enables CTM’s technical team to comprehend the ‘current condition’ of the network operating system.

The NMC is able to forecast and evaluate network performance, effectively responding to abnormal situations such as Internet threats or malware intrusion.

The new facilities and equipment represent part of the 400 million patacas-worth (US$50 million) of investments in the CTM Network Modernization Project launched last year. So far, the tab for this new technology has run up 120 million patacas (US$15 million) and will increase in the coming months.

Galaxy Entertainment Group (“GEG”) garnered four accolades from two hospitality industry’s leading awards.

Galaxy Macau™ and StarWorld Hotel are named the “Best Service Resort Asia” and “”Best Service Hotel of Asia” respectively at the Golden Horse Award of China Hotel, and continue to hold the title of “Top Ten Resort Hotels of China” and “Top Ten Glamorous Hotels of China” respectively at China Hotel Starlight Awards.

Mr. Francis Lui, Vice Chairman of GEG, also received the award of “China’s Top 10 Hoteliers of the Year” at the Starlight Awards in recognition of his contributions to the hospitality industry.

Gabriel Hunterton (right), Deputy Chief Operating Officer of Galaxy Macau, and Charles So (left), Deputy Chief Operating Officer of StarWorld Hotel

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Macau opinion

Big Lau’s Macau land fiasco is the movie that never got made Shirley Yam

J

oseph Lau Luen-hung will not be going to jail in Macau even though he has been convicted there of bribery on a massive scale. Yet to describe him as “very sad and very upset”, as his lawyer did, is probably a gross understatement.

Money Matters recalls a chat with Lau years ago. He was then complaining about a woman who came to him asking for a loan, offering to pay an interest rate lower than what she had proposed to another person whom he described as “my disciple”.

“I almost had to stab my thigh with a knife to stop myself from throwing a chair at her,” Lau said. “How dare she offer me a lower rate!”

To be treated or seen as a fool is probably the worst insult, if not a crime, in the eyes of Lau, whose transformation from electric fan manufacturer to tycoon relied on his wits and guts.

The Macau land fiasco is one such insult.

In early 2005, businessman Steven Lo Kit-sing informed Lau of Macau’s plan to sell five plots of prime land near its airport. They decided to get the land by offering Macau’s then secretary for transport and public works, Ao Man-lung, a HK$20 million bribe, according to last week’s Macau court judgment.

On the eve of the land tender, Lo set up a company, Moon Ocean, to submit the bid.

Lau and his listed arm Chinese Estates had no holding in Moon Ocean. Instead, a Chinese Estates subsidiary provided Lo’s company with a HK$250 million loan to pay the deposit for the bid. In return, Lau got an option agreement to buy a 70.01 per cent shareholding in Lo’s company.

“Tycoons never want to get their hands dirty,” said a professional who has worked for tycoons conducting business in Macau.

“A handful of trusted subordinates take care of the dirty work,” he said.

“The structure allows the tycoon to take over if everything goes smoothly, while claiming no formal ties with anything.”

That was exactly what happened in January 2006, when Chinese Estates bought Moon Ocean from Lo for about HK$200 million after Ao got paid and the HK$1.3 billion land sale was signed.

However, Ao’s arrest in December 2006 and his subsequent imprisonment just over a year later for taking bribes threw every land deal in Macau into a deep freeze.

With the uncovering of Ao’s “directory of friends”, in which he listed names as well as bribes promised and put a tick against those who had paid, the buzz was about which tycoons would go down with Ao. All eyes were on the controversial land sale to Chinese Estates because Ao said he had opted for tender by invitation to make sure the land went to a developer with international reputation. Yet Lo, with zero expertise, got it in the end.

After four years of suspense, the whole thing took a surprising turn in March 2011.

Chinese Estates not only managed to secure approval for the land’s development but also a 37 per cent expansion in its gross floor area.

Chinese Estates took over the remaining 30 per cent of Lo’s company for HK$1.6 billion and sped ahead with its luxury apartment project.

In the early 2012 pre-sale, Chinese Estates

sold a third of the apartments, bringing in HK$3.8 billion in sales and HK$357 million in profit.

But it was too early to celebrate. In April 2012, Ao was brought to court again for taking bribes from Lau. A month later, Lau and Lo were charged with bribery and money laundering.

Within weeks, the Macau government declared the land sale invalid.

Lau put up a vigorous fight for the land. In September, as the hearing of his bribery charge was coming to an end, Lau met some journalists and complained that he was charged because someone wanted the land.

In the meeting, which was filmed and made its way onto YouTube, Lau said he wanted to make a movie in which a guy named Big Lau (which happens to be Lau’s nickname) was charged in May. “In June, someone told Big Lau: ‘If you agree to sell the land, I can guarantee you walk away free.’ Big Lau was very angry and refused ... We are talking about [a profit of] $50 billion to $60 billion here,” he said in the YouTube video.

The land was valued at HK$8.5 billion in 2011, five times the estimate in 2006, according to an independent appraisal commissioned by Chinese Estates.

Lau did not name anyone but said he would be very keen to show the movie to state leaders.

Of course, the movie was never made and Chinese Estates’ legal battle over the land continues.

In the meantime, the court found Lau guilty, even though no meeting between him and Ao could be proven and the well-designed deal structure showed no direct link to him.

There was, however, a tick next to Lau’s name in Ao’s “directory of friends” and no mention of Lo in it, the court said.

So in the end, his wits and guts have failed him. How is he going to swallow it?

This column first appeared in South China Morning Post.

Publishing rights were granted to Business Daily

Tycoons never want to get their hands dirty said a professional who has worked for tycoons conducting business in Macau

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Macau Portuguese hotel group readies war chest Portuguese tourism and leisure conglomerate Pestana Group is in talks to invest in Macau. “There are on-going negotiations. That is one of the goals of the group,” group director Florentino Rodrigues told Portuguese newspaper Sol. Pestana is Portugal’s biggest tourism and leisure group, with 51 hotels in 15 countries. It also owns and manages casinos. The group has previously said it would invest here.

EIU predicts 10.6 pct GDP growth up to 2015

crime Sticky fingers A 36-year-old female Hong Kong resident was arrested yesterday, suspected of committing a HK$ 1.3 million fraud

I

n 2010, Mrs Chan, a Hong Kong businesswoman, advised and proposed to five mainland businessmen that they invest over HK$10 million in a local Chinese restaurant, guaranteeing them a 45 percent share of the benefits and the procurement of a Macau resident identity card [BIR]. As at the end of 2013, the ID cards had still not been granted and the five men decided to look more deeply into all the financial statements of the restaurant during those three years. They discovered that the accounting was opaque and that nine cheques totalling HK$1.3 million had been signed by Mrs Chan for her own expenses and on behalf of another business she controlled.

Three of the five men filed a complaint with police, and the case is currently undergoing investigation P.F.M.

Macau’s gross domestic product will grow at an average annual rate of 10.6 percent this year and next, and annual inflation will be between 6 percent and 6.3 percent, the Economist Intelligence Unit predicts. Services exports – in other words, sales to tourists – and investment in new

casinos and hotels will drive the growth, the think tank says. It says gross fixed capital formation will rise to 12.2 percent this year and slow to 5.7 percent next year as construction work in Cotai slows. Government data show GDP grew by 11.9 percent last year.

Funds for health research From September 2004 to today the Science and Technology Development Fund (FDCT) has approved 58 biotechnological projects in excess of MOP40 million and 83 Chinese Medicine projects exceeding MOP144 million. In 2013 alone, the FDCT approved eight projects related to technology with more than MOP8 million funding and 24 Chinese medicine projects costing more than MOP47 million.

These figures were revealed yesterday during the first session to present the results from funded research projects related to Chinese medicine and biotechnology.

Cheang Kun Wai, a member of the Administrative Committee of the FDCT, says the increase in projects from these sectors reveal a commitment by workers in the field to promote healthcare services in Macau.

Reports on IT research will take place today, in Dynasty Plaza.

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March 2014 Friday 25, April 19, 2013

Stocks Watch

Rise in earnings Kana Nishizawa

H

ong Kong stocks rose on favourable earnings reports, with Chinese shares listed in the city extending a rebound after entering a bear market last week.

Companies rallied as mainland manufacturing missed estimates, spurring bets the government will act to stabilize growth.

The Hang Seng China Enterprises Index, also known as the H-share index, rose 2.8 percent to 9,694.96 at the close in Hong Kong. The gauge has climbed 5.3 percent since capping a 20 percent drop from a December peak on March 20. The Hang Seng Index added 1.9 percent to 21,846.45.

Yanzhou Coal Mining Co. surged 6.6 percent, the biggest daily advance since September, after profit beat estimates and Credit Suisse Group AG upgraded the stock. Great Wall Motor Co. added 7.7 percent after net income jumped from a year earlier. Citic Pacific Ltd., which was suspended from trading in the afternoon pending release of inside information, and PetroChina Co. led the Hang Seng Index higher.

Hutchison Whampoa Ltd. dropped the most in more than two years after agreeing to sell a stake in A.S. Watson & Co., with the valuation indicated for the retail unit lower than expected.

China Economy The H-share index lost 10 percent this year amid data that showed falling exports, weaker manufacturing and slower retail sales in China. The measure was valued at 1.1 times net assets, the biggest discount since September 2003 to the MSCI All-Country World Index of developed and emerging shares, which had a ratio of 2.

Chinese Premier Li Keqiang has set 7 percent as the bottom line for growth. The economy may expand at that rate this year, China Securities Journal reported, citing Wang Jian, a researcher for the National Development & Reform Commission.

The nation’s official 2014 expansion target is 7.5 percent after rising 7.7

percent last year.

Companies can issue preferred shares if they are included in the Shanghai Stock Exchange 50 A-Share Index, the China Securities Regulatory Commission said in a statement on its verified microblog account. Publicly traded companies can also issue the stock to pay for acquisitions and buy back shares, the agency said.

Hutchison Drops Hutchison slumped 5 percent to HK$101.60 yesterday, the biggest decline since Oct. 18, 2011. The company controlled by Li Ka- shing, Asia’s richest man, said Temasek Holdings Pte will pay HK$44 billion ($5.7 billion) for a 25 percent stake in Watson. The valuation indicated by the sale disappointed analysts at JPMorgan Chase & Co., Credit Suisse and Morgan Stanley.

Of 131 companies in the Hang Seng Composite Index that reported annual earnings this month for which Bloomberg had estimates, 53 percent exceeded profit projections. About 300 businesses on the gauge are scheduled to release results in March.

Yanzhou Coal surged 6.6 percent to HK$5.99 after Credit Suisse upgraded the stock to neutral from underperform. The energy producer reported fiscal-year net income of 777.4 million yuan, beating the 182.3 million yuan median estimate in a Bloomberg survey.

PetroChina rose 5.5 percent to HK$8.29 to lead gains on the Hang Seng Index. Barclays Plc said it prefers PetroChina to China Petroleum & Chemical Corp. based on higher earnings growth and a stronger balance sheet.

Futures on the Standard & Poor’s 500 Index rose 0.3 percent after the gauge dropped 0.3 percent on March 21.

Pipe-producer Hilong Holding Ltd. tumbled 19 percent to HK$4.25, its steepest decline on record, after full-year earnings trailed estimates.

Bloomberg

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March 25, 2014 Friday April 19, 2013

Greater China

Growing pains Purchasing managers’ index (PMI) fell to 48.1 this month

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hinese manufacturing activity contracted in March to its weakest rate in eight months, data showed yesterday, the latest indication of slowing growth in the world’s number two economy.

The data is the latest in a string of weak indicators out of Beijing, with analysts suggesting the government could announce a series of measures to inject life back into the Asian powerhouse.

HSBC’s preliminary purchasing managers’ index (PMI), which tracks manufacturing activity in China’s factories and workshops, fell to 48.1 from a final reading of 48.5 in February, the British bank said in a statement.

The figure is down from 49.5 in January and was the worst result since July’s 47.7, according to the bank.

The final figure is due out on April 1.

The index is a closely watched gauge of the health of the Asian economic powerhouse and key driver of global growth.

A reading above 50 indicates growth, while anything below signals contraction.

China’s National Bureau of Statistics said earlier this month that its own official PMI reading fell to an eight-month low of 50.2 in February.

The latest figure “suggests that China’s growth momentum continued to slow down” in March, Qu Hongbin, HSBC’s Hong Kongbased chief China economist, said in the statement.

“Weakness is broadly based with domestic demand softening further,” he added.

HSBC expects Chinese authorities to take policy steps to stabilise the economy, with actions including easing barriers to private investment, spending on urban railways, public housing and fighting air pollution, as well as “guiding lending rates lower”, Qu said.

Other economists also expressed concerns, pointing out that the March figure usually benefits from a cyclical boost.

“The weakness appears even more pronounced given that there is usually a seasonal rebound after the Chinese New Year holiday,” Capital Economics Asia economist Julian Evans-Pritchard said in research note.

The HSBC result came as concerns have been rising over the outlook

PetroChina joins Sinopec good results Domestic demand for oil and gas will likely maintain fixed growth

C

hina’s major onshore oil firms Sinopec and PetroChina said profits rose in 2013, despite weakness in the world’s second largest economy.

Sinopec -a listed unit of China Petrochemical Corp- saw net profit

Li Ning improve loss results The firm spilt red ink for a second straight year in 2013 but the loss was much smaller than the previous year as China’s best known sportswear company offered fewer retail discounts and replenished inventory faster.

China’s sportswear makers appear to be emerging from years of overzealous expansion that had been fuelled by Beijing Olympic Games fever. ANTA Sports Products Ltd, the country’s biggest player, this month reported a third straight quarter of order growth. Its shares were down 1.2 percent in early trade compared with a 0.7 percent rise for the broader market.

Tingyi net profit down Weakness is broadly based with domestic demand softening further

Tingyi Cayman Islands Holding Corp, China’s largest food and beverage maker by sales, saw annual 2013 net profit fall 10.9 percent, missing forecasts, as slower economic growth weighed on increasingly pricesensitive shoppers. Taiwan-based Tingyi, which has a broad-ranging partnership with PepsiCo Inc. and sells noodles in China, said net profit for 2013 fell to US$408.5 million from a restated US$458.6 million a year earlier, according to a filing to the Hong Kong stock exchange yesterday. The result lagged market expectations for a US$444.16 million profit.

Qu Hongbin HSBC China

for China’s economy this year on the back of a series of soft announcements.

A snap AFP poll of economists earlier this month saw a median forecast of 7.4 percent economic growth in China this year.

The government this month set its annual growth target at 7.5 percent, the same as that set last year. If the actual result comes in below it would be the first time in 16 years that the objective had not been reached.

Premier Li Keqiang said at his annual press conference this month that the economy was set to “confront serious challenges this year”.

The economy grew 7.7 percent in 2013, the same as in 2012 -- which was the slowest rate since 1999.

“The government needs to take quick action in view of its growth target of about 7.5 percent,” Barclays Capital said in an analysis of the PMI data.

Zhang Zhiwei, economist at

Nomura International in Hong Kong, expects leaders to cut the amount of funds banks must keep in reserve in the second half of the year -a step they have used in the past to boost liquidity.

He also expects fiscal policy to turn “expansionary” in the second quarter to prevent gross domestic product growth from falling below 7.0 percent.

Evans-Pritchard of Capital Economics, however, said authorities were unlikely to take significant stimulatory action.

“Today’s weak PMI reading is the latest sign that slowing credit and investment growth are weighing on domestic demand,” he wrote.

“That said, with no sign of stress in the labour market, the slowdown does not yet appear to warrant a significant stimulus response.” Li emphasised at his news conference Beijing has a flexible view of the annual target.

edge up 3.5 percent year on year to 66.1 billion yuan (US$10.6 billion), it said in a statement on Sunday, with revenue up 3.4 percent at 2.9 trillion yuan thanks to “stable” domestic demand.

“China’s economy kept turning for the better, so demand for oil and petrochemical products in the domestic market grew stably,” Sinopec chairman Fu Chengyu said in the statement.

This year “China’s industrialisation and urbanisation push will facilitate stable growth in demand from the oil and petrochemical markets, and provide room for development of the company,” Fu said.

Sinopec was held partly responsible for a deadly pipeline explosion that killed more than 60 people in the eastern city of Qingdao in November, and caused losses of more than US$100 million.

Fu said the company had learned “unforgettable painful lessons” from the incident and vowed to improve safety, but gave no details on how it

affected the bottom line.

Separately, PetroChina saw net profit jumped 12.4 percent year-onyear to 129.6 billion yuan in 2013 “despite the complex global and domestic economic environment”.

Revenue for PetroChina, a listed unit of China National Petroleum Corp., rose 2.9 percent from a year earlier to 2.3 trillion yuan, the company said.

“Domestic demand for oil and gas will likely maintain fixed growth as the long-term trend of the domestic economy improving remains unchanged,” PetroChina chairman Zhou Jiping said in a statement.

Both companies’ shares were down in Shanghai trading yesterday, with Sinopec dropping 1.34 percent and PetroChina 0.26 percent lower by midday.

But in Hong Kong, where they are also listed, Sinopec gained 1.96 percent while PetroChina jumped 3.69 percent.

AFP

Reuters

Hutchison shares drop following Watson’s sale Company shares fell as much as 6 percent yesterday after a US$5.7 billion deal to sell a stake in its health and beauty retailer to Singapore state investor Temasek Holdings disappointed investors hoping for a higher valuation. The stock saw its steepest drop in 2-1/2 years in the first trading session after Temasek on Friday agreed to buy just under a quarter of retailer A.S. Watson in a deal that valued the company at US$22.8 billion. Traders said shareholders believed A.S. Watson’s valuation would have been higher at around US$29 billion.

Top JPMorgan executive to quit Company chief executive for China investment banking Fang Fang has decided to leave the U.S. bank soon amid a probe of its Asian hiring practices, a source familiar with the matter said yesterday. Fang, who has been at the bank for more than a decade, has told the bank he wants to retire, the source said. It was not clear whether Fang’s departure is related to the probe of JPMorgan hiring practices in Asia. A spokesman for JPMorgan declined to comment.

The Wall Street Journal first reported Fang’s departure.

NEC to buy A123 battery systems from Wanxiang Japanese system integrator NEC Corp said on yesterday it would buy A123 Systems’ battery systems integration business from China’s Wanxiang Group for about US$100 million. NEC said it was aiming to strengthen its battery storage systems business through its purchase of the unit, A123 Energy Solutions. Wanxiang bought U.S.-based A123 Systems last year following a bankruptcy auction.

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Greater China

Taiwan evicts anti-China protesters Demonstrators demand cancellation of trade deal with China

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iot police cleared thousands of protesters from Taiwan’s cabinet compound by firing water cannons and striking people with batons, in clashes that began just after midnight and ended early this morning.

Bloodied protesters were dragged from the compound and scores were hospitalized after Taiwan Premier Jiang Yi-huah ordered the eviction.

The demonstrators, who demanded the cancellation of a trade agreement with China that the ruling Kuomintang party has advocated, overran the compound around 8 p.m. on Sunday.

Taiwan’s Legislative President Wang Jin-pyng invited lawmakers from the Kuomintang and the opposition Democratic Progressive Party to discuss ways to resolve the dispute over the trade deal, DPP caucus leader Ker Chien-Ming said by phone.

The occupation was the first time protesters have taken over the Executive Yuan, where the cabinet has its offices. It was the second government building occupied this month in demonstrations sparked by Kuomintang efforts to push through passage of the pact that would open services trade with China. Students have held the legislative chamber since March 18.

Stocks Gain

yesterday to 8,605.38. The Taiwan dollar strengthened 0.2 percent to NT$30.583 against the U.S. dollar at the midday break, according to prices from Taipei Forex Inc. “Over the long term, the impact is limited, as the pact will pass” the legislature, said Michael On, president at Taipei-based Beyond Asset Management Co. President “Ma Ying- jeou will push it through.

His government would collapse if he didn’t.”

Students charged into the building where Taiwan’s legislature met last week, alleging the Kuomintang party was bypassing proper procedures as it sought passage of the services trade pact. They’ve called on Ma, who is also head of the ruling party, to

The government can’t accept anyone impeding its ability to function by barging in and charging its buildings

A total of 110 people, including demonstrators and police, were injured yesterday, Premier Jiang said in a briefing broadcast live on ERA TV news station. About 60 were arrested for questioning, cabinet spokesman Sun Lih-chyun said yesterday by phone.

Taiwan’s benchmark Taiex stock index rose 0.3 percent

Ma Ying- jeou Taiwan President

apologize and to discuss the services trade deal.

Demands Rebuffed Ma spoke yesterday in an attempt to assuage concerns about the trade pact. “Regional economic integration is an unstoppable global trend,” he said in a televised briefing.

Ma also rebuffed the student protesters’ demands, saying an earlier meeting Jiang held with them wasn’t productive. A separate group of protesters overran the cabinet complex after Ma’s briefing by climbing over fences and breaching barricades.

“The government can’t accept anyone impeding its ability to function by barging in and charging its buildings,” Ma said yesterday, according to a Presidential Office statement.

Leaders from the opposition Democratic Progressive Party joined protesters at the cabinet compound to show support and urged restraint, local television footage showed. The best way to resolve the conflict is for the president to address the students’ criticism, the DPP said in a statement, rather than through a police eviction.

Military police were also summoned to bolster security at Ma’s presidential office and residence, according to CTV. The services trade agreement, which was signed in June, sparked anger after ruling party lawmakers allegedly reneged on a promise to conduct a line-by-line review of provisions signed by trade negotiators from China and Taiwan. The Kuomintang has a majority of seats in the legislature. The opposition says it wants to amend provisions related to the banking and e-commerce industries, among others.

Bloomberg News

PetroChina joins Sinopec’s good results Domestic demand for oil and gas will likely maintain fixed growth

C

hina’s major onshore oil firms Sinopec and PetroChina said profits rose in 2013, despite weakness in the world’s second largest economy.

Sinopec -a listed unit of China Petrochemical Corp- saw net profit edge up 3.5 percent year on year to 66.1 billion yuan (US$10.6 billion), it said in a statement on Sunday, with revenue up 3.4 percent at 2.9 trillion yuan thanks to “stable” domestic demand.

“China’s economy kept turning for the better, so demand for oil and petrochemical products in the domestic market grew stably,” Sinopec chairman Fu Chengyu said in the statement.

This year “China’s industrialisation and urbanisation push will facilitate stable growth in demand from the oil and petrochemical markets, and provide room for development of the company,” Fu said.

Sinopec was held partly responsible for a deadly pipeline explosion that killed more than 60 people in the eastern city of Qingdao in November, and caused losses of more than US$100 million.

Fu said the company had learned “unforgettable painful lessons” from the incident and vowed to improve safety, but gave no details on how it affected the bottom line.

Separately, PetroChina saw net profit jump 12.4 percent year-on-year to 129.6 billion yuan in 2013 “despite the complex global and domestic economic environment”.

Revenue for PetroChina, a listed unit of China National Petroleum Corp., rose 2.9 percent from a year earlier to 2.3 trillion yuan, the company said.

“Domestic demand for oil and gas will likely maintain fixed growth as the long-term trend of the domestic economy improving remains unchanged,” PetroChina chairman Zhou Jiping said in a statement.

Both companies’ shares were down in Shanghai trading yesterday, with Sinopec dropping 1.34 percent and PetroChina 0.26 percent lower by midday.

But in Hong Kong, where they are also listed, Sinopec gained 1.96 percent while PetroChina jumped 3.69 percent.

Reuters

129.6 bln yuan Taiwan student protesters occupy Cabinet building

PetroChina 2013 net profit

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March 25, 2014 Friday April 19, 2013

Asia

Sayonara to my dear (future) home Japan promotes hiring versus property for new workers generations

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omoko Suzuki quit her sales job in Tokyo and took a temporary position so she could pursue her film ambitions.

Suzuki’s employment change may force her to abandon another goal -owning a home.

“I am single and I am a temporary worker, which makes buying a home even more difficult,” said Suzuki, who makes 60 percent of the 4 million yen (US$39,000) a year she used to earn selling ferry trips.

The ranks of temporary and part-time workers are set to rapidly expand in Japan, jeopardizing a housing recovery that took hold in 2010. Prime Minister Shinzo Abe’s cabinet is pushing to open more of the economy to non-permanent employees as part of a package of policies to make Japanese companies more competitive and boost economic growth. While helping corporations, the shift to temporary workers, who lack the income and job stability to get mortgages, will hurt home sales.

“We are no longer in the era where workers have lifetime employment and go out to buy their own home,” said Hidetaka Yoneyama, a senior fellow at Fujitsu Research Institute in Tokyo who has written five books on Japan’s housing market.

“I don’t see the current housing demand continuing.”

Since housing starts in Japan fell to 788,410 units in 2009, the market has gradually expanded.

Housing starts rose to 980,025 units in 2013, the highest in five years, according to a land ministry report on January 31. The increase has been spurred by an anticipated boost in the consumption tax, which

Tokyo at night

homebuyers pay, to 8 percent from 5 percent. It takes effect in April.

Abe’s policies In the Tokyo metropolitan area, the average purchase price for new apartments rose 2.7 percent to 41.7 million yen in 2013 from a year earlier.

That’s the highest since 2001 when the survey started, Recruit Sumai Co. said in a report on March 12.

After Abe took office in December 2012, he introduced a strategy to loosen business regulations and increase government support in an effort to stem deflation and revive an economy that had been stagnant for two decades. The monetary and fiscal easing last year boosted business confidence to a six-year high. Economic growth rose for a fifth straight quarter in the three months ended December 31.

Since the 1960s, the government has been using temporary workers to get around labour practices that make it costly to fire employees. The cabinet on March 11 agreed to send a revision to parliament for approval to change the Dispatch Worker Law to allow non-permanent employees in all jobs, up from 26 currently, according to the Ministry of Health, Labour and Welfare.

Slowing the recovery The proposal would boost the ratio of non-regular workers to 50 percent by 2020 from 37 percent in 2013, Yoji Otani, an analyst at Deutsche Bank AG, said. If approved, the law would take effect in March 2015.

Otani said the law will put the brakes on the recovery of the housing market, which accounts for 15 percent of GDP in the world’s

Korea starts trading gold

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quarter of gross domestic product.

While Korea Exchange will reduce taxes on physical trades, smuggled gold is likely to remain as much as 7 percent cheaper, according to the Korea Precious Metals Distributors’ Association.

“It’s a big struggle for us to maintain our transparent business in an industry that’s tainted by illicit deals,” said Jeong Byung Nam, a director at Samduck Metals Co., a refiner from Incheon, west of Seoul.

“Companies like us have to go into this physical exchange with a sense of duty or patriotism because it hardly offers us any benefits.”

Samduck is among the 57 refiners, jewelers and securities firms that have joined the trading

Bloomberg News

We are no longer in the era where workers have lifetime employment and go out to buy their own home Hidetaka Yoneyama Fujitsu Research Institute

platform. Others include Samsung Securities Co., Hyundai Securities Co., Shinhan Investment Corp., Woori Investment & Securities Co., Daesung Metals Co. and Korea Gold Trading Center.

Purchasing gold bars is a common way to hide income in Korea outh Korea’s equity exchange started offering physical gold trades for the first time yesterday, as the government seeks to curb as much as US$3 billion of black-market transactions.

Korea Exchange Inc., which has had bullion futures since 1999, aims to gradually replace illegal sales that total as much as 70 metric tons annually and deprive the state of an estimated US$280 million in taxes. Customs officers intercepted 360 kilograms last year as the number of busts more than doubled from 2012.

Purchasing gold bars is a common way to hide income in Korea, where a shadow economy of unreported buying and selling accounts for a

third-largest economy.

“The government doesn’t seem to realize that these workers are also consumers,” Otani said. “The revision would further erode housing demand because people without a full-time job will have a hard time getting their mortgages approved.”

These part-time, contracted and temporary workers won’t be able to take advantage of Japan’s mortgage rates, which are among the world’s lowest, Otani said. Many temporary employees don’t earn enough on a consistent basis to qualify for a mortgage. A stable income is a requirement to apply for a mortgage in Japan, according to SBI Sumishin Net Bank Ltd., an online company owned by Sumitomo Mitsui Financial Group Inc. and SBI Holdings Inc.

Tax Payments

It’s a big struggle for us to maintain our transparent business in an industry that’s tainted by illicit deals Jeong Byung Nam Samduck Metals

While traders on Korea Exchange get a waiver on the 3 percent import duty for gold, they still pay a 10 percent value-added tax for taking physical delivery of bullion. Those who trade without taking possession of the metal will receive corporate tax deductions and a VAT exemption, according to the exchange.

“There’s no meaning to it if the exchange simply absorbs existing legal transactions,” said Yu Dong Soo, chairman of the Seoul-based distributors’ association. “Allowing investors who take physical delivery to benefit from tax exemptions would make it attractive for distributors.”

Korean Exchange is using 1-gram units of bullion of 99.99 percent purity to spur liquidity.

Bloomberg News

editorial council Paulo A. Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com GROUP SENIOR ANALYST José I. Duarte Newsdesk Cynthia Wong, Luciana Leitão, Michael Armstrong, Óscar Guijarro, Pierre-François Metayer, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Brands & Trends Raquel Dias 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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March 2014 Friday 25, April 19, 2013

Asia US$1 billion trade surplus for Vietnam

Indonesia’s ways to autarky

Vietnam could post a trade surplus of around US$1 billion in the first quarter of 2014, a state-run newspaper said yesterday, led by steady growth in exports. The Vietnam Economic Times, citing government statistics, said exports in the three months to March were estimated at US$33.35 billion, above imports of US$32.34 billion in the period. In March, exports were estimated to have raised a robust 26 percent from February to US$12 billion that helped close the gap with imports at US$12.3 billion in the month.

Several presidency candidates promote self-sufficient measures

Kiwi trusts country’s economy New Zealand consumer confidence was marginally softer in March but consumers remained strongly positive buoyed by the cheery economic outlook despite the prospect of higher interest rates, a survey showed on Friday. The ANZ-Roy Morgan consumer confidence index dipped to 132~ from 133 in February. The index touched a seven-year high in January. A reading above 100 shows optimism, while below indicates pessimism.

ANZ said sentiment was holding firm in the face of likely rate rises with stronger house prices, a better labour market, and reasonable income growth boosting consumers.

Singapore’s Tiger Airways orders new Airbus

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rabowo Subianto, a former general turned presidential candidate, is raising his own herd of cattle as he seeks to woo Indonesia’s farmers with a promise to make them the centrepiece of a push to revitalize the economy.

Prabowo, 62, would build a “people economy” and boost funding tenfold for the agriculture that 70 percent of Indonesians depend on for a living, he said in an interview with Bloomberg TV Indonesia at his ranch in Sentul, near the capital Jakarta, on March 19. The former chief of the army’s special forces wants to cut dependence on food imports and foster “Indonesian nationalism.”

An election in July for the presidency of the world’s third-biggest democracy is shaping up as a contest of personalities with Prabowo, leading the Great Indonesia Movement Party, or Gerindra, pledging to limit exports of natural resources. Golkar party chairman Aburizal Bakrie, another candidate, has also sought to tap a protectionist mood as Southeast Asia’s biggest economy seeks to cut dependence on imports.

Prabowo trails Jakarta Governor Joko Widodo in popularity, according to a survey by Indikator Politik Indonesia, with Widodo announcing his candidacy on March 14 for the Indonesian Democratic Party of Struggle.

Gerindra is unlikely to make the threshold in April, which means Prabowo will need to form an alliance to stand for the presidency, according to Mike Jakeman, a London-based analyst on Indonesia for the Economist Intelligence Unit. Indikator Politik surveyed 1,720 people from January 18 February 2. It found Widodo would win 41.5 percent of the vote, followed

by Prabowo with 16.3 percent.

Respondents scored Prabowo, once a son-in-law of former dictator Suharto, highest as a candidate who was firm and authoritative.

I see two sides of Indonesia, one that’s living in the 21st century, the other, in the villages that are left behind Prabowo Subianto Indonesia Presidential Candidate

Air company placed an order for 37 Airbus A320neo aircraft valued at US$3.8 billion at list prices, taking delivery of the planes from 2018 to 2025, the carrier said in a statement yesterday. Tiger said an existing order for nine Airbus A320 aircraft, part of a larger order agreed in 2007, would now be cancelled.

These aircraft were originally scheduled for delivery in 2014 and 2015. The long-term fleet renewal and expansion comes as Tiger, which is about 40 percent-owned by Singapore Airlines Ltd , takes steps to try to prevent a third straight year of losses.

Japanese banks raise an investment fund

Prabowo, the chairman of the Indonesia Farmers Association, said the nation needed to help farmers by giving them the right technology and techniques for seeds, irrigation and storage to be competitive. While this could take 10 years to achieve, a lack of action would see children avoid farming as they view it as a road to poverty, he said. Prabowo would lift spending on agriculture to 10 percent of the budget, from 1 percent now.

Self-sufficient “I see two sides of Indonesia, one that’s living in the 21st century, the other, in the villages that are left behind,” he said. “We must be selfsufficient especially when it comes to milk, it’s protein for our nation and our children don’t drink enough milk,” he said. “We must have a dream of a white revolution so I expect all kids to drink milk.” Indonesia relies on Australia for imports of fresh milk, beef and wheat, with demand for the goods rising from an emerging middle class. Indonesia, which has a policy of self- sufficiency in rice, has also been forced to import the staple grain at times in recent years from Thailand and Vietnam.

The country imports soy for tofu, a common protein source, from the U.S. Prabowo said he had no plan to nationalize foreign company assets and wanted to accommodate all interests.

Still, he would “hammer out” terms with foreign investors, he wrote in the Jakarta Post newspaper on January 28.

The current government is seeking to renegotiate tax and royalty terms with miners such as Freeport-McMoRan Copper & Gold Inc. Prabowo has previously been denied a visa to enter the U.S. for his involvement in violence following Suharto’s fall in 1998, when he was fired from the military for his role in the abduction of pro-democracy activists.

Corruption deprives government coffers of billions of dollars in revenue, Human Rights Watch said in a 2013 report on Indonesia.

Bloomberg News

Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Trust Bank said they have agreed to invest in CVC Capital Partners Ltd’s fourth Asian fund, which is seeking to raise around US$3 billion. The agreement is the first investment in a traditional private equity buyout fund for JBIC, and comes as Japanese banks and insurers increasingly look overseas for opportunities as they battle slow growth in their home markets. London-based CVC plans to invest the fund in companies across the region, in countries such as Indonesia, Malaysia, the Philippines and China.

Macquarie expects rocketing figures The bank is reaping the benefits of a cost-cutting program undertaken in the past three years

A

Hyundai forecasts for new Sonata South Korea’s Hyundai Motor aims to sell 228,000 new Sonata sedans globally this year, betting on the key model to regain market share and reverse a profit fall. The world’s fifth-biggest automaker, along with Kia Motors , aims to sell 63,000 redesigned Sonatas in Korea and 165,000 overseas this year, it said in statement yesterday. Next year, Hyundai is targeting global sales of 338,000 Sonata sedans - 89,000 in Korea and 249,000 overseas.

Hyundai launched the mid-sized sedan in South Korea yesterday in the model’s first makeover in nearly five years.

ustralia’s biggest investment bank, expects its full-year earnings to rise as much as 45 percent to the highest since 2008 as the outlook for its fixedincome, currencies and commodities uni improved.

The contribution to net profit in the year to March 31 will be broadly in line or up slightly from the previous year for the FICC unit, the group said in a statement to the Australian stock exchange yesterday. In February, Macquarie said the unit’s result would be down with the potential to be broadly in line.

Macquarie Chief Executive Officer Nicholas Moore is reaping the benefits of a cost-cutting program undertaken in the past three years.

The bank is also gaining from a revival in investor appetite for

riskier assets and its shift to less volatile businesses such as lending and fund management.

“Today’s presentation supports our thoughts and reflects stronger trading conditions and investor appetite,” Angus Gluskie, chief investment officer at White Funds Management, which manages US$550 million including Macquarie shares, said by phone. “Conditions continue to improve and we’d expect them to favour the bank’s earnings going forward.”

A 40 to 45 percent increase in earnings would take Macquarie’s 2014 profit to between A$1.19 billion (US$1.08 billion) and A$1.23 billion, the highest since a record A$1.8 billion in 2008. That compares with a profit estimate of A$1.18 billion for the full year, according to the

mean from a survey of 11 analysts

by Bloomberg.

“We are seeing the ongoing benefits of continued cost initiatives, our balance sheet is strong and conservative, and we have a proven risk management framework and culture,” Macquarie said in today’s statement.

The FICC unit has a growing presence in physical commodities including natural gas, power, oil, coal, base metals, iron ore, sugar and freight, Macquarie said in a presentation document. It also specializes in Asian and emerging markets, high-yield and distressed debt.

The expected profit contribution from the group’s other units is unchanged from its February 11 assessment, the presentation showed.

Bloomberg News

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March 25, 2014 Friday April 19, 2013

International

Russia turns towards China State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic metres (bcm) of natural gas per year to China

Human behaviour behind latest disasters Philippines’ devastating Typhoon Haiyan and drought in Australia were among recent weather extremes consistent with man-made climate change, the UN’s weather agency said yesterday.

“Many of the extreme events of 2013 were consistent with what we would expect as a result of humaninduced climate change,” Michel Jarraud, secretary general of the World Meterological Organization (WMO), said as he released his agency’s annual climate report. The WMO also pointed to data from Australia showing that the country’s record heat last year would have been “virtually impossible” without human emissions of heattrapping greenhouse gases.

Qatar nurtures Sudan archaeology Sudan’s rich but under-developed archaeological heritage has received an unprecedented US$135 million (98 million euros) in funding from the Gulf state of Qatar, Sudanese officials said on Sunday. The money will support 29 projects including the rehabilitation of ancient relics, construction of museums and study of the Meroitic language, said Salahaddin Mohammed Ahmed, the project coordinator. He said the funds will support archaeological work by several Western nations as well as Sudan over five years. “This is the biggest amount of money for Sudanese antiquities in their entire history,” Abdurrahman Ali, head of the country’s museums, told reporters.

Citigroup fraud drags in Oceanografia CEO Amado Yanez, CEO and majority owner of Oceanografia, presented himself voluntarily for questioning, the attorney general’s office said in a statement about the Citigroup case. Citigroup Inc said last month it uncovered at least US$400 million in bogus loans to Oceanografia at its Mexican subsidiary, Banamex. The bank said it discovered the fraud after reviewing invoices Oceanografia said it was owed by Pemex, but Citigroup found that the invoices were not valid. The attorney general had also requested a temporary detention order that would forbid Yanez from travelling.

Colombia holds interest rate The Central bank held its benchmark lending rate unchanged for a 12th straight month, as expected, as it seeks to maintain monetary stimulus whil e inflation remains benign.

Policymakers also decided to extend the bank’s dollar purchases and buy up to US$1 billion through June, as they prepare for an expected rise in demand for Colombia’s currency from a government push to increase international debt sales. The board maintained borrowing costs at 3.25 percent, as forecast by all 28 analysts in a Reuters survey earlier this week, a level that has held steady for a year.

BRICS leaders 2013

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hen President Vladimir Putin signed a treaty this week annexing Crimea to great fanfare in the Kremlin and anger in the West, a trusted lieutenant was making his way to Asia to shore up ties with Russia’s eastern allies.

Forcing home the symbolism of his trip, Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow’s seizure of the Black Sea peninsula from Ukraine would be counter-productive.

The underlying message from the head of Russia’s biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.

“The worse Russia’s relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you’re isolated,”

said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think thank.

Some of the signs are encouraging for Putin. Last Saturday China abstained in a U.N. Security Council vote on a draft resolution declaring invalid the referendum in which Crimea went on to back union with Russia.

Although China is nervous about referendums in restive regions of other countries that might serve as a precedent for Tibet and Taiwan, it has refused to criticise Moscow.

The support of Beijing is vital for Putin. Not only is China a fellow permanent member of the U.N. Security Council with whom Russia thinks alike, it is also the world’s second biggest economy and it opposes the spread of Western-style democracy.

Little wonder, then, that Putin thanked China for its understanding over Ukraine in a Kremlin speech on Tuesday before signing the treaty claiming back Crimea, 60 years after it was handed to Ukraine by Soviet leader Nikita Khrushchev.

Chinese President Xi Jinping showed how much he values ties with Moscow, and Putin in particular, by making Russia his first foreign visit as China’s leader last year and attending

the opening of the Winter Olympics in Sochi last month.

Many Western leaders did not go to the Games after criticism of Russia’s record on human rights. By contrast, when Putin and Xi discussed Ukraine by telephone on March 4, the Kremlin said their positions were “close”.

A strong alliance would suit both countries as a counterbalance to the United States.

But despite the positive signs from Beijing, Putin may find China’s embrace is not quite the bear hug he would like.

There is still some wariness between Beijing and Moscow, who almost went to war over a border dispute in the 1960s, when Russia was part of the Communist Soviet Union.

State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic metres (bcm) of natural gas per year to China from 2018 via the first pipeline between the world’s largest producer of conventional gas to the largest consumer.

“May is in our plans,” a Gazprom spokesman said, when asked about the timing of an agreement.

A company source said: “It would be logical to expect the deal during Putin’s visit to China.”

Reuters

Euro zone enjoys discreet results Positive growth figures contrast with deflation menace

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he pace of growth among euro zone private businesses has barely slowed from February’s 2-1/2 year high this month, but firms were forced to slash prices again to maintain the momentum, surveys showed yesterday.

With a solid expansion in both the manufacturing and services industries, and a return to growth in the bloc’s second-biggest economy of France, the recovery appears to be ever more broad-based.

“The recovery is gaining traction.

One of the particularly encouraging signs policymakers will take from this is that it has broadened out to encompass France,” said Chris Williamson, chief economist at survey compiler Markit.

Markit’s Composite Purchasing

Managers’ Index, which is based on surveys of thousands of companies across the continent and is seen as a good growth indicator, edged down to 53.2 from February’s 32-month high of 53.3.

That just missed expectations in a Reuters poll for it to hold at last month’s reading. But it marked the ninth month that the index has held above the 50-point line that divides growth from contraction.

Williamson said the latest data should indicate 0.5 percent economic growth this quarter, stronger than the 0.3 percent predicted in a Reuters poll earlier this month.

But worryingly for policymakers, firms have discounted prices to drum up business for two years now - and they did so in March at a steeper rate than last month.

The composite output price index sank to an eight-month low of 48.5 from 49.3.

Inflation across the currency union was just 0.7 percent in February, well below the European Central Bank’s 2 percent target ceiling, and the latest PMI will do little to allay fears of deflation in the region.

“These are more signs of deflation setting in. It wasn’t just in the periphery - in Germany we are seeing some downward pressure on output prices. Whether or not that justifies more stimulus is the big question,” Williamson said.

A significant number of economists have doubts about the ECB’s view that deflation is not a threat and that the recovery will take hold without any more action.

Reuters

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March 2014 Friday 25, April 19, 2013

Opinion Business

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Leading reports from Asia’s best business newspapers

The Asahi Shimbun

South Korea’s Feminine Future Lee Jong-Wha

Professor of Economics and Director of the Asiatic Research Institute at Korea University

The economic conditions are far from ideal for Prime Minister Shinzo Abe’s plan to raise the consumption tax rate from 5 percent to 8 percent on April 1. With his “Abenomics” economic revival program on the line, Japan has recently been hit by a sharp decline in stocks, low consumer confidence and sluggish exports. Although the Abe administration plans to spend 5.5 trillion yen to cushion the negative impact of the first consumption tax hike in 17 years, it is unclear if the stimulus package will be able to underpin the economy.

Myanmar Times “Investigative journalism and critical reporting backed by gov’t” – that was how the state media announced the enactment of the media law

by President U Thein Sein on March 14. Journalists, however, are less convinced, arguing that the law and an associated Printing and Publishing Law, contains vague clauses on “national security” and will give the government and parliament a level of control over a new press council. However, many are simply confused: Why are there two laws, and how will these two laws interact with – or contradict – each other in practice?

The Age Finance Minister Mathias Cormann has called a halt to the controversial watering-down of Labor’s financial advice laws, less than a week after besieged colleague Arthur Sinodinos stepped down from the portfolio. The move means the Abbott government’s amended legislation will not be introduced to parliament this week. “I have decided to pause the process on the FOFA regulation for the time being to enable me to consult in good faith with all relevant stakeholders before pressing the go button on our changes,” Senator Cormann told Fairfax Media.

The Star Online With its international operations delivering almost 20% production growth last year, success abroad has not come easy for Petroliam Nasional Bhd (Petronas). The national oil company has had to manage its portfolio delicately – especially in geo-politically charged countries, allowing it to come out ahead of many international oil companies in some of these challenging frontiers. Petronas was the first oil and gas firm to venture into conflict-fraught South Sudan following its independence from Sudan in 2011. But in 2011 its production plunged to 23,000 barrels per day (bpd) from 147,000 bpd.

Park Geun-hye, South Korea president

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ver the last halfcentury, South Korea has made considerable economic progress, with per capita income increasing from a mere $80 dollars in 1960 to more than US$22,000 last year. But its potential for sustained growth is faltering, owing to the imminent decline of its working-age population – projected to fall by 25% by 2050 – and rising competition from China and other emerging economies.

In order to improve its prospects, South Korea must pursue economic reform and restructuring, with an emphasis on maximizing its human-capital resources – especially women.

South Korea’s success over the last five decades owes much to the rapid growth of its well-educated labor force. From 1960 to 2010, the share of adults with a secondary education soared from 20% to an impressive 87%. By boosting productivity, increasing returns on investment, and facilitating technological adaption and innovation, South Korea’s abundance of well-educated workers has served as the foundation for its export-oriented development strategy.

But women remain underutilized, to the detriment of the entire economy. Indeed, any effective South Korean growth strategy must create more and better economic opportunities for women, in part by establishing more accommodating working environments and instituting a more diverse and flexible education system.

To its credit, South Korea has built a relatively gender-equal society. The gender gap in enrollment in both secondary and higher education is very small; and women’s access to elite positions

in law, medicine, and the civil service has increased considerably in recent years.

The country elected its first female president, Park Geunhye, in 2012.

But a significant gender gap remains in terms of the return on human capital. According to OECD data, only 55% of South Korean women aged 15-64 are in the labor force, compared to an average of 65% in the advanced economies. South Korea’s male labor-force participation rate, by contrast, stands at about 77% – close to the OECD average of 79%.

Women who have completed secondary or tertiary education are more likely to enter and remain in the labor market than their less educated counterparts. The laborparticipation rate for women with post-secondary education is 64%, far exceeding the 35% rate for those with only a primary or middleschool education.

But, even for South Korea’s most highly educated and capable female workers, child rearing is a major career obstacle. In fact, South Korean women participate in the labor force at roughly the average rate for the OECD while they are in their late twenties.

The problem is that the rate drops sharply from 71% to 57% among women in their 30’s, as inflexible working environments and a lack of affordable childcare undermine their ability to continue investing in their careers.

The good news is that Park’s government is working to change this. Indeed, its three-year plan for economic innovation, announced in February, aims to raise the female employment rate to 62% by 2017, through the provision of affordable, highquality childcare facilities and expanded paid parental leave, among other measures.

But it is less clear how the

Women remain underutilized, to the detriment of the entire economy. Indeed, any effective South Korean growth strategy must create more and better economic opportunities for women

government will create additional jobs for women.

It could, for example, split full-time jobs into multiple part-time positions, and offer incentives for workers to reduce their hours. But, given that South Korea’s workforce already includes a substantial share of nonregular workers, increasing temporary employment may not contribute to economic growth.

A better approach would entail creating high-quality jobs in modern service industries. As it stands, while the services sector accounts for more than 70% of employment in South Korea, its productivity-growth rate remains much lower than that of the manufacturing sector. Too many people are

working in traditional, lowproductivity service industries, such as wholesale, retail trade, and restaurants, leaving modern, high-productivity services like communications, health, financial intermediation, and business services underdeveloped.

It is also important to narrow the mismatch between women’s abilities and their career paths. The current system tends to reinforce gender roles, encouraging children to follow culturally framed paths, instead of nurturing their individual interests and potential.

For example, female university students are much more likely to study humanities than the so-called “STEM” subjects (science, technology, engineering, and mathematics) – key drivers of productivity gains, innovation, and economic growth. Efforts by primary and secondary schools could help to foster more diverse interests among female students, giving talented young women the tools they need to make important contributions to key economic sectors.

Of course, the potential of educated, empowered women to drive sustained economic growth is not limited to South Korea.

Japanese Prime Minister Shinzo Abe, too, has identified increased female labor-force participation as critical to efforts to revive his country’s long-dormant economy.

In South Korea, Japan, and elsewhere, developing and maximizing women’s potential will require comprehensive education and labor-market reforms, as well as structural change, particularly on the services side of the economy. The question is whether political leaders are ready to back their lofty pronouncements with decisive action.

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March 25, 2014 Friday April 19, 2013

Closing Portuguese bank fined by Spain

China’s yuan posts biggest daily gain

Portuguese financial institution Banco Espirito Santo (BES), was fined €1.1 million (12 million patacas) last year by Spain for “very serious” breaches of a rule preventing money laundering, it was announced yesterday. The fines, published in yesterday’s edition of the Boletim Oficial de Estado (Official State Bulletin), correspond to a resolution passed by the Money Laundering and Monetary Infringement Commission. BES said it had appealed against the fines.

China’s yuan rebounded sharply against the dollar yesterday with its biggest daily gain in nearly 30 months, boosted by speculation the Chinese government may soon unveil stimulus measures to support the faltering economy. The Chinese currency fell to a 13-month low last week with a 1.2 percent weekly loss, its biggest-ever weekly drop as investors fretted over the outlook on the world’s second-largest economy.

of about US$175,000 if the carrier can prove it wasn’t negligent or that a third party, such as terrorists or a manufacturer, was solely at fault. If it can’t mount such a defence, its liability could be much higher.

Survivors’ best chance for seeking more would be to find a way to sue in the U.S., where awards and settlements can be more generous than in the two Asian countries.

“The U.S. is always the best choice to file a lawsuit,” said Hao Junbo, a Beijingbased lawyer who specializes in aviation law. “The families may try and take a shot there.

The problem is we haven’t seen any evidence to link it to the U.S. to file a claim there.”

The guilty exercise Jet’s mystery disappearance leaves riddles over who is liable Andrea Tan, Bob Van Voris and Joe Schneider

Boeing Scenario

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s the final hours of Malaysian Air Flight 370 remain wrapped in mystery, the question of who bears full liability for the jet’s disappearance is also unresolved.

This much is clear: Families of the 227 passengers aboard the flight that vanished on March 8 can recover some compensation from Malaysian Airline System Bhd even if the plane isn’t found. The airline is liable under international treaty for

as much as US$175,000 per passenger, and possibly more.

For survivors to capture significantly greater damages, wreckage would probably have to be located and a narrative of the plane’s demise assembled. Several scenarios have been offered for the flight’s disappearance, including hijacking, intentional downing or an onboard fire. Evidence of any of these could open avenues for family members to sue.

“The disappearance

of Flight 370 remains a mystery. The legal claims against Malaysia Airlines -those are not a mystery,” said Robert Hedrick, a pilot and air-disaster lawyer in Seattle.

“If the wreckage is located, the evidence may establish liability of other parties.”

The Montreal Convention of 1999, an international treaty that covers air travel, requires carriers to pay damages for each passenger killed or injured in an accident, even if its cause is

unknown. By those rules, the airline’s liability could stand at more than US$40 million.

Damages Capped Under the convention, claims against the airline will probably be litigated in China and Malaysia, the home countries of most of the passengers on the Kuala Lumpur-Beijing route, and both signatories to the pact.

The treaty caps an airline’s damages at the equivalent

One such scenario, lawyers said, would be for plaintiffs to allege that the missing 777’s manufacturer, Chicago-based Boeing Co., was at fault. John Dern, a Boeing spokesman, declined to comment on any possible liability issues connected to Flight 370.

Should terrorism emerge as a possible cause, survivors’ lawyers could seek to recover funds from terrorist groups and their sponsors.

Malaysian Air said that while its insurers are studying the issue of compensation based on the Montreal Convention, it is considering an advance payment to all the families “in the coming weeks.”

Bloomberg

Investors pile into China smog is Greece and Portugal economic

Obama opens crisis talks in Europe

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ield-hungry investors are flocking back to Greek and Portuguese markets, shunned by international buyers for four years, as the outlook for the bailed-out countries improves and alternatives look more expensive or increasingly risky.

Portuguese and Greek shares and bonds have been the best performers in Europe in 2014, and funds invested in them are making a killing, Thomson Reuters data shows.

Investors say they are driven by economic improvement, which provides fresh impetus to an initial bounce triggered by the European Central Bank’s pledge in 2012 to save the euro.

Potential investment alternatives are also less tempting. Tensions between the West and Russia and global growth concerns cloud the outlook for similar-yielding emerging markets, while a 1-1/2 year rally has shrunk returns elsewhere in euro zone debt.

“It’s not so much an interest-rate-driven rally but much more a structural shift and a perception that the euro crisis is behind us,” said Franz Wenzel, chief strategist at AXA Investment Managers, which manages assets worth about 550 billion euros ($760 billion).

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hina’s air pollution is a regional health issue and impacts the economy in terms of foreign investment and talent retention, the United Nation’s health agency chief said.

“Talented people have actually talked to me, and they’ve changed their decision to settle in China because of the air pollution,” World Health Organization Director-General Margaret Chan said yesterday in an interview with Bloomberg TV in Hong Kong. “I think Chinese authorities understand this and they know what’s going on.”

Pollution in Beijing yesterday rose to more than 10 times levels considered safe by the World Health Organization. The concentration of PM2.5 -- the small particles that pose the greatest risk to human health -- hit 270 micrograms per cubic meter in the Chinese capital as of 12 p.m., a U.S. Embassy monitor said. The WHO recommends 24-hour exposure to PM2.5 levels of less than 25.

Smog produced by China affects not just the country, Chan said, as winds can carry pollutants across borders to neighbouring states and even further afield.

.S. President Barack Obama began crisis talks with his European allies yesterday after Ukraine announced the evacuation of its troops from Crimea, effectively yielding the region to Russian forces which stormed one of Kiev’s last bases there.

Obama, who has imposed tougher sanctions on Moscow than European leaders over its seizure of the Black Sea peninsula, will seek support for his firm line at a meeting with other leaders of the G7 - a group of industrialised nations that excludes Russia, which joined in 1998 to form the G8.

Since the emergency one-hour G7 meeting was announced last week, Putin has signed laws completing Russia’s annexation of the region.

In what has become the biggest East-West confrontation since the Cold War, the United States and the European Union have imposed visa bans and asset freezes on some of Putin’s closest political and business allies. But they have held back so far from measures designed to hit Russia’s wider economy.