Macau Business Daily, March 26, 2014

Year II

Number 504 Wednesday March 26, 2014

Publisher: Paulo A. Azevedo

MOP 6.00

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Friday April 19, 2013

The three months the government had to solve the Reolian case is not enough. A time extension will be requested of the court, Business Daily can confirm. The new contracts that must change after criticism from the Commission Against Corruption and the business plan need three more months.

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www.macaubusinessdaily.com

MICE nibbles away The meetings and exhibitions industry has already carved out 1 percent of Macau’s GDP for itself. A study reveals growth potential but staff turnover of almost 90 percent is a daunting problem.

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7th MICEF goes green, and watches the pennies Page 4

Lawsuit overshadows CSR tender win Page 5

Larger than life

Brought to you by

China Life Macau had a 2013 to remember. By doubling its premium income it is now threatening AIA’s leadership.

The Macau life insurance market is worth almost 5 billion patacas.

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Aviation security satisfactory

HSI - Movers March 25

Name

%Day

Wharf Holdings Ltd

3.08

Hang Lung Propert

2.64

Tingyi Cayman Isl

2.21

Henderson Land Dev

1.88

China Merchants H

1.81

CNOOC Ltd

-1.97

China Overseas Land

-2.31

COSCO Pacific Ltd

-2.35

China Mengniu Dairy

-3.79

Tencent Holdings

-4.86

Source: Bloomberg

I SSN 2226-8294

Macau Security Company Ltd (SEMAC) has responded to a legislator’s barb that security is slipping at Macau International Airport. Low pay and ‘unsatisfactory welfare terms’ are cited as reasons. Supporting SEMAC’s rebuttal of declining standards, Macau International Everyone knows Hong Kong’s future is tightly linked Airport Co Ltd told Business Daily the company was to China’s currency but recent information shows how awarded the contract on the basis of its expertise. ingrained such exposure is and what risks it involves.

HK addicted to yuan

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March 26, 2014 Friday April 19, 2013

Macau Government increases welfare payments by 6 pct The government is increasing several allowances paid out of the Social Security Fund by an average of 6 percent. The increase is greater than last year’s rate of consumer price inflation, which was 5.5 percent. Labour Affairs Bureau director Wong Chi Hong has said the increases will be backdated to the beginning of this year. Among the allowances to be increased are the old age and disability pensions; hospital confinement and unemployment allowances; and birth, marriage and death allowances. The government forecasts that the increases will cost it an extra MOP162 million (US$20.2 million) a year.

Aviation security company well-staffed for airport safety Aviation security company, a subsidiary of Macau International Airport, dismisses legislator’s claims that pay issues might affect operation Stephanie Lai

sw.lai@macaubusinessdaily.com

It’s true that […] our salary level is not as high as other concessionaires working at the Airport but these remuneration terms do not affect the reliability of our security checks service He Ming General Manager of SEMAC

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taff turnover is not a factor affecting the reliability of the immigration checks service at Macau International Airport, which is under “constant supervision” by the local Civil Aviation Authority, the aviation security company working for the airport told Business Daily.

In a recent written enquiry, legislator José Maria Pereira Coutinho stated that the staff employed by the company responsible for aviation security services for Macau International Airport – Macau Security Company Ltd (SEMAC) – are “low-paid” and have “unsatisfactory

ANNUAL GENERAL MEETING Notice

In accordance with articles 24 and 25 of the Charter of Anima-Society for the Protection of Animals (Macau), the Annual General Meeting will take place on Saturday, 5th April 2014, at 4:00 p.m. in the Anima building located at Estrada do Altinho de Ká Hó – Coloane, with the following agenda: 1. Discussing and passing of the Report and the Statement of Accounts and the Written Opinion of the Supervisory Body for 2013 2. Elections of the Council members for the biennium 2014-2015.

3. Any other subjects In case it is not present in the first call at least half of the members of the Association, the General Assembly will meet in the same place half an hour later on second call with any number of members.

All lists of candidates to the election should be delivered to the head-office of Anima, until 5:00 pm of April 2.

All members attending the meeting should sign the attendance members list and produce evidence of their identity (through Anima ID card or any ID card or passport).

Luisa Bragança The Chairman Board of General Assembly

welfare terms”. He queried whether this would affect the performance of staff taking up frontline security checks against terrorist or other criminal activities.

Mr He Ming, General Manager of SEMAC, did not concede the legislator’s claims.

“It’s true that the monthly salary for new entrants to our company is less than 10,000 patacas (US$1,251),” said Mr He, “and our salary level is not as high as other concessionaires working at the Airport, plus the fact that our salary hike in the past two to three years cannot keep up with the surging inflation rate.”

“But these remuneration terms that the legislator has mentioned, or the turnover problem that we encounter - just like others in the local human resources market - do not really affect the reliability of our security checks service,” Mr He stressed. “For old and new staff in our company, all have to undergo rigorous training on aviation security know-how to fulfil the post, and they also have to pass the assessment of our Civil Aviation Authority.”

Macau International Airport Co Ltd (CAM) holds 75 percent of shares in SEMAC, which currently has 540 personnel working for the company.

The remaining shares in SEMAC are owned by state-owned aviation

security service of China Wah O Company, CAM said.

SEMAC is responsible for the screening of outgoing passengers and their luggage and air cargo, as well as surveillance of the Airport operation; local police departments back up the company with criminal intelligence.

“Of our 540 staff, about 68 percent are employed from mainland China,” said Mr He Ming. “Most of them have a tertiary education background.”

“It’s been hard to recruit local people to take up our jobs, even with three to four advertisements a year,” the SEMAC general manager added. “Some employees leave after working in the company for two to three years. But overall we have a steady pool of staff working for the company, with about 100 staff already working in their security checks positions for 7 to 8 years.”

Speaking to Business Daily, legislator Coutinho also queried whether the security service outsource format could be totally replaced by a law enforcement unit.

A spokesperson from CAM stressed that SEMAC was appointed to take up aviation security services right from the beginning of the Airport operation because the company has the requisite specialist knowledge in the aviation security field.

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March 2014 Friday 26, April 19, 2013

Macau

Pleading for time The government will request three more months to wrap up the Reolian case Alex Lee

alex.lee@macaubusinessdaily.com

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he Macau Government will request three more months from the courts in order to arrive at a solution regarding bankrupt bus operator Reolian Public Transport Co Ltd. Sources contacted by Business Daily defend the request saying the first three months granted by the court was “clearly not enough for the tasks at hand”.

According to our sources, the business model on the table already takes into consideration the strong criticism by the Commission Against Corruption, which defends the existence of public service concessions rather than service contracts with the bus operators.

“The changes in the contracts is a long process, thus the need to request extension of the time to three more months”, the source told Business Daily.

The process, falling within the sphere of Secretary Lau Si Io’s cabinet, might present to the court the scope of a viable business

solution so it could get the green light to continue.

In essence, three options are on the table: close Reolian, the less

interesting one for the government which would mean layoffs; find a new investor to replace the previous owner; or invite one of the existing operators to assume control. The court is expected to accede to the government’s request. In that case, we are told, the service will continue running without change.

Reolian serves about two-fifths of the city’s bus routes.

The government took over Reolian’s operations when the company applied for bankruptcy last October. Reolian was declared bankrupt on December 4.

A court declared bus operator Reolian Public Transport Co Ltd bankrupt after the government and two Macau banks failed to agree on a rescue package.

Staff turnover hinders MICE progress But a study finds the meetings and exhibitions industry is already making an appreciable contribution to the economy Tony Lai

tony.lai@macaubusinessdaily.com

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mployee turnover in meetings and exhibitions enterprises ranges up to nearly 90 percent, a study has found – highlighting another symptom of Macau’s shortage of suitable labour.

The results of the study, commissioned by the Macau Convention and Exhibition Association, indicate that the meetings, incentives, conventions and exhibitions (MICE) industry contributed just over onehundredth of Macau’s gross domestic product in 2012.

The Macau Management Association did the study. Researchers surveyed 75 MICE enterprises last October and November.

Exactly two-thirds of the enterprises said their employee turnover rate had been over 20 percent in the preceding 12 months.

“The reasons for staff leaving their jobs are the high pressure of the work and desire for a better working environment,” the management association’s project consultant, Chan Kio Man, told a press conference yesterday.

Mr Chan said that one of the enterprises surveyed had an employee turnover rate of almost 90 percent.

“They say that in the next 12 months they will need to recruit a lot, showing the supply of human resources for the industry is really tight,” he said.

The study report estimates that

MICE industry was worth 3.53 billion patacas (US$441.3 million) in 2012

the 300 enterprises in the MICE industry need to double the industry’s workforce in the next five years as business develops.

Mr Chan said the industry had about 3,000 employees now and would need 2,800 more in the next five years.

The study report proposes that the government offer Macau people short and medium-length training courses to prepare them to work in the industry, and allow some outsiders studying at Macau’s universities to work here after they graduate.

MOP3.53 bln contribution Chief Executive Fernando Chui Sai On raised last year the possibility of allowing outsiders studying at

universities here to stay and work after they graduate, provoking objections from trade unions and Macau students.

20+ pct Annual rate of staff turnover in two-thirds of MICE companies

The government later said it would consider the idea when drafting its population policy.

The government consulted the public about its population policy proposals last year, but has yet to publish the results of the consultation.

Mr Chan suggested that the government make arrangements for the certification of people qualified to work in the MICE industry, to shore up their self-confidence and make them feel more secure in their occupation.

The study found that the MICE industry was worth 3.53 billion patacas (US$441.3 million) in 2012, accounting for 1.01 percent of Macau’s GDP that year.

The Macau Management Association did not say exactly how it had arrived at that figure.

But it did say that it had taken into account the effect of MICE events on the revenue of 13 other industries, including the hotel, restaurant, security, advertising, and transport industries.

Mr Chan said studies in Germany had found that US$1 of revenue for the MICE industry there could mean US$10 of revenue for ancillary industries.

He declined to say if the proportion was the same in Macau.

The Macau study report says the government should set up a statutory authority to develop the MICE industry here and vie to bring big, international events to the city.

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Macau Sterne Agee cuts March gaming revenue forecast Sterne Agee has reduced its forecast of annual growth in gross gaming revenue in Macau this month to between 10 percent and 12 percent from between 14 percent and 17 percent. The stockbroker says table-only gross gaming revenue was MOP24.8 billion (US$3.1 billion) in the first 23 days of this month. It says the daily average rose to MOP1.03 billion last week from MOP911million a week earlier.

Green MICEF broadens networking scope MICEF’s seventh edition seeks to assign business matching opportunities to associations as well as companies Tony Lai

tony.lai@macaubusinessdaily.com

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25-million-pataca exhibition about environmental cooperation will kick off later this week. It will seek to not only promote business exchange between companies but associations, too, for the first time.

The annual Macau International Environmental Co-operation Forum and Exhibition (MICEF) will be held in the The Venetian Macao from March 27 to March 29 and will focus this year on green businesses.

Renewable energy, waste treatment, and environmentally-friendly facilities are some of the fields addressed.

Irene Lau Kuan Va, executive director of Macau Trade and Investment Promotion Institute, said in a press conference yesterday that 25 million patacas (US$3.1 million) has been allocated to hosting the event – the same budget as the past two years. The trade institute is the organiser for the event.

“We are grateful we can get assistance from our partners… that their exhibit designs are as thrifty as possible,” said Mrs Lau. “So you may find the designs [in the venue] this year are similar to last year’s.”

She added that they have also simplified ceremony procedures to minimise costs.

“So our budget is maintained unchanged,” she said, “despite the rise in consumer prices.”

Latest official data show that annualised inflation was 5.57 percent as at last month.

Mrs Lau added: “This year’s edition will continue to feature

The event has already scheduled 490 business matching sessions in advance

business matching between companies but we will also arrange matching between associations, responding to requests from the industry and the global trend.”

Michael Dreyer, vice president of Asia-Pacific of Koelnmesse Pte Ltd, explained further that they are bringing two recycling and green associations from Singapore and Malaysia here to “put them together with relevant institutions in the Pearl River Delta region to talk about joint activities and to exchange experiences.”

The Macau trade institute has outsourced Koelnmesse to manage this edition of MICEF.

The institute said in a press statement that it has already scheduled 490 business matching sessions in advance this year compared with 430 last year.

But Mrs Lau yesterday did not forecast the number of visitors and professional audiences for this year’s event, saying they did not strive for relentless growth in numbers but “quality of audience”.

She did reveal, however, that there were already 4,000 online bookings for visits this year compared with 2,000 bookings in 2008 when the event was first held.

This year’s edition will include 430 exhibitors from 22 jurisdictions

exhibiting products and services in an area occupying more than 16,000 square metres. Gaming operator Melco Crown Entertainment Ltd will also be one of the prime exhibitors in the event.

Apart from the exhibits and business matching, the event will feature nine company presentations, seven panel discussions and two seminars this year. The organiser also invited Nobel Prize winner for economics Joseph Stiglitz to deliver the keynote speech.

Paulo Lemos, secretary of the State of the Environment of Portugal, will also lead a delegation to participate in the event to deepen bilateral exchanges.

New Taipa promenade project open to bidders soon T

he Land, Public Works and Transport Bureau plans to build an observatory and promenade area in Taipa. Bidding for this project will open April 9th, with construction slated to start in the third quarter of this year.

The project comprises two parts:

a pedestrian trail divided into four mountain accesses plus a 180-degree observatory. It is estimated that the construction of the promenade will take 23 months and the mirador 17 months.

The walking project is also divided into two. Some 400m-long pedestrian trails will snake

around the hillside slope, with the construction an oblique lift and flyovers. The observatory will occupy three areas. The first zone will feature a 600-square metre plaza, with an elevator to the observation tower plus a tourist centre, bus and sanitary facilities.

The second part - occupying 4,700 square metres - will be dedicated to nature preservation and protection.

Finally, the third area features the observatory, with elevators to panoramic sightseeing paths on top of the hill, totalling some 1,400 square metres.

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Macau

China Life snaps at AIA’s heels China Life Macau gets 1.3 billion patacas in premium income in 2013 and takes over one-quarter of the market Tony Lai

tony.lai@macaubusinessdaily.com

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he Macau branch of China Life Insurance (Overseas) Co Ltd more than doubled its premium income last year, breathing down the neck of life insurance market leader American International Assurance Co (Bermuda) Ltd’s Macau branch.

Preliminary figures issued by the Monetary Authority of Macau also show China Taiping Insurance (Macau) Co Ltd kept its lead in the non-life insurance market.

The authority’s data show China Life Macau had gross premium income of 1.3 billion patacas (US$162.5 million) last year, taking 26.3 percent of the life insurance market, which was worth 4.96 billion patacas.

AIA Macau – the market leader since the authority’s published records began in 2003 – had life insurance premium income of 1.83 billion patacas, taking 36.9 percent of the market.

The gap between the market shares of the two leading life insurers has therefore narrowed to about 10 percentage points from 25 percentage points in 2012. AIA Macau’s share was 39.8 percent in 2012 and China Life Macau’s was 14.9 percent.

Business Daily asked AIA Macau and China Life Macau to comment yesterday but neither had replied by the time we went to press.

China Life Macau’s premium income grew by 133.3 percent last year, outpacing the life insurance market as a whole, which grew by 32.8 percent, and AIA Macau’s life insurance premium income, which grew by 23.2 percent.

China Life Macau is part of state-owned China Life Insurance

(Group) Co. The Macau branch of another state-owned company, China Taiping Insurance Group Ltd, kept its lead in the non-life insurance market here last year, with a share of 26.9 percent.

China Taiping Macau’s gross premium income was 500.2 million patacas, 11.4 percent more than the year before.

This week AM Best Co Inc, which specialises in rating insurers, affirmed its financial strength rating of A for China Taiping Macau, two notches

below the best rating, AAA. AM Best kept its issuer credit rating of a for China Taiping Macau, two notches below the best rating, aaa.

The rating agency said the branch had a record of operating profitably in the past few years.

“The performance was mainly driven by the continued improvement in the underwriting profits, which reflected the company’s strengthened underwriting risk selection and pricing capability as a result of its leading market position in Macau,” the agency said.

It added that China Taiping Macau’s “positive retained earnings, albeit with a relatively high dividends payout ratio, will gradually improve its risk-adjusted capitalisation”.

The Monetary Authority of Macau’s data show losses from claims as a proportion of income from premiums among the city’s 11 life insurers averaged 31.9 percent last year, having averaged 35.7 percent the year before.

The loss ratio among the city’s 12 non-life insurers averaged 25.9 percent, having averaged 29.8 percent the year before.

Lawsuit still clouds waste contract The govt’s 10-year waste management contract with CSR takes effect next month despite on-going lawsuit

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lawsuit still hangs over the 10-year waste management contract for the territory won by Macau Waste Systems Co Ltd - known as CSR - as one of the bidders continues to appeal the result, a government official admits.

Cheong Sio Kei, director of the Environmental Protection Bureau, spoke yesterday after his bureau announced last week that the 2.07 billion patacas (US$258.8 million) contract will come into force next month, following the delay.

“As far as I know there is one more appeal to the court from that company [Urbaser SA] but there is no verdict yet on that case,” he confirmed to reporters on the sidelines of a public event.

The Spanish firm Urbaser appealed to the court last year against the contract awarded to CSR as the bidding process was faulty, it claimed.

It filed an injunction request over the signing of the deal.

But the Court of Second Instance had already ruled against the injunction last month.

Asked whether the government is prepared for the lawsuit outcome to affect the contract in the future, Mr Cheong responded: “I can’t estimate the impact as there is yet to be a verdict on the appeal.”

“But from the government perspective, we have to continue the process [of letting the contract come into force],” he added.

The 10-year contract was originally due to take effect in October but the injunction request delayed the process for half a year.

Yesterday night’s attempt to reach Urbaser for comment was not successful.

Mr Cheong also assured yesterday that they will introduce a service evaluation mechanism to assess the performance of CSR over the next decade.

Such mechanism can be implemented “within this year”, he said. The evaluation will be conducted annually and public opinions on CSR services might be considered one of the criteria, he added.

“This evaluation mechanism can let us see through data in what ways the service can be improved and in what areas we can strengthen our supervision,” he said.

But the director declined to reveal further details at the moment, namely penalties for CSR if it failed to pass the evaluation. He also did not reveal details on the evaluation scope, saying the government has already outsourced a third-party to establish the standards.

T.L.

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Macau crime

Cash Vs Chips Five arrested for exchanging chips for less than face value

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Assembly to debate full smoking ban in casinos

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he Legislative Assembly yesterday gave a unanimous nod to debating amendments to the tobacco control law next month, urging the government to immediately implement a full smoking ban in casinos.

Assembly member Ella Lei Cheng I, who tabled the motion, said that the partial smoking ban implemented last year was unsatisfactory, given “the lenient supervision by the government”.

The workspace for casino employees was even “worse” than before the partial ban, she added.

The Assembly should therefore debate “whether there should be

immediate revision to the law to implement a full smoking ban in gaming venues in order to protect the occupational safety of gaming employees”, Ms Lei said.

Smoking is currently permitted in areas occupying no more than half the floor space of the gaming venues. But the Health Bureau said earlier this month that they would pilot a scheme that will ban smoking on the mass-market gaming floor except for smoking rooms which do not accommodate gaming tables or slot machines. For the VIP gaming floor, smoking is still permitted in at most half the floor space, the latest proposal says.

Legislator Ng Kuok Cheong said yesterday that he agreed with the debate, and that now is “the appropriate timing” to enforce a full smoking ban in casinos.

The Assembly yesterday also approved discussion of the route and budget of the Light Rapid Transit railway, as well as the contract for on-call taxi services.

The legislators also gave a green light to the first reading of the bill to raise the salaries of civil servants by 5.71 percent in May. The rise will cost an extra 550 million patacas (US$68.8 million) in this year’s government expenditure.

T.L.

Paradise Ent. persists with patent case G aming equipment supplier Paradise Entertainment Ltd says the courts have yet to dismiss its case that competitor SHFL Entertainment (Asia) Ltd infringed patents held by Paradise Entertainment subsidiary LT Game Ltd. SHFL’s parent company, Bally

Technologies Ltd, said on Friday the Macau Public Prosecutor’s Office had told it that there was no evidence to support allegations by LT Game and Paradise Entertainment that SHFL had infringed two LT Game patents. A spokeswoman for Paradise Entertainment told

Macau Business: “Our injunction preventing SHFL from displaying, promoting or marketing their product in Macau still stands.” The dispute is about an SHFL product, SHFL Fusion Hybrid, which combines live dealers with electronic betting terminals.

Corporate BNU donates to UMAC and Tung Sin Tung BNU donated MOP 812,500 to the University of Macau in a ceremony chaired by Prof. Wei Zhao, Rector of UM and Mr. Pedro Cardoso, President of the Executive Committee of BNU. With around 1,200 staff, 8,600 registered students and more than 22,700 alumni, the University of

Macau (UM) is the largest educational institution in Macau.

The bank also donated MOP 1,420,000 to Tung Sin Tong in a ceremony chaired

by Mr. Chui Sai Cheong, President of the charity institution that has been providing in Macau free medical services and education for citizens in need.

hree men and two women from Guangxi province aged between 22 and 48 years old were reported by a casino in the Cotai area yesterday for exchanging cash for chips at less than face value at gambling tables.

The five were arrested. While the victim, a Taiwanese businessman, was gambling and winning, the suspects proposed changing HK$10,000 cash for chips but each stack only contained banknotes amounting to HK$8,000. Some HK$350,000 was exchanged in this way by seven different people within ten minutes, a fraudulent loss of HK$84,000 for the victim. The five arrested are friends and three are from the same family.

Two other suspects remain at large in this case, which is undergoing further investigation. According to Judiciary Police, this type of barter is very common in casinos, especially on winning tables as players have theories about the gambling process or trends and don’t like the game to be interrupted because someone wants to exchange cash for chips.

Players therefore propose transactions between themselves so that the game never stops.

P.F.M.

market watch

New GM at Banyan Tree

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anyan Tree Hotels and Resorts has announced the appointment of Jerry John as General Manager of Banyan Tree Macau.

In his role as GM, Mr. John will “primarily be accountable for leading the team to ensure delivery of expected financial and operational results and that the group’s standards are complied with. He is also accountable for maintaining effective relations with the owning company”, says a press release.

Prior to joining Banyan Tree Macau, Mr. John held the position of General Manager at Angsana Laguna Phuket in Thailand since 2011.

A veteran hotelier with over 20 years of experience in the hospitality industry, Jerry John is from Melbourne, Australia.

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Stocks Watch Stocks fall after biggest gain of year Hong Kong stocks fell, with the city’s benchmark index sliding after Monday rallying the most since November Kana Nishizawa

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he Hang Seng Index lost 0.5 percent to 21,732.32 at the close in Hong Kong, with Tencent the biggest drag on the gauge.

The Hang Seng China Enterprises Index, also known as the H-share index, was little changed at 9,690.86.

The measure jumped 5.3 percent since capping a 20 percent drop from a December peak on March 20. Shares around the region fell after data on Monday showed slowing growth in U.S. factory output.

“There’s profit-taking pressure because yesterday’s rise was driven by inflows of hot money,” said Francis Lun, chief executive officer of Geo Securities Ltd. “The slowdown in U.S. manufacturing data is adding another negative for the market.”

Tencent dropped 4.9 percent after surging 5.2 percent the past two trading days. Cosco Pacific Ltd. and Yashili International Holdings Ltd. slid after their earnings missed estimates. Tongda Group Holdings Ltd. fell 9.4 percent after the maker of casings for notebook computers sold 600 million new shares.

China’s private companies are now a bigger risk to investors as valuations surge, said John-Paul Smith, a Deutsche Bank AG strategist who’s been writing about the dangers of buying state-owned mainland stocks since 2010.

Non-state companies from Tencent to milk-powder maker Biostime International Holdings Ltd. have rallied on bets they will be among the biggest beneficiaries from the economy’s transition from exports toward services and consumer spending. Tencent, Asia’s biggest Internet company, fell 4.9 percent to HK$558.50 yesterday. It surged 19 percent this year through Monday, when it traded at 41 times estimated earnings compared with a multiple of 22 for Google Inc.

Stimulus Speculation Hong Kong shares advanced the past two days amid speculation China’s government is loosening funding restrictions for developers and banks, and after data Monday showing weakening factory activity fuelled optimism for stimulus.

“When there’s good news announced in China we have an adrenalin shot and become hyper for two to three days, but if there is nothing concrete to follow, it just fades away,” said Jackson Wong, vice president of Tanrich Securities in Hong Kong. “Chinese financials’ earnings are the key focus.”

Agricultural Bank of China Ltd. and China Life Insurance Co. are among companies reporting results yesterday after the close. Of 150 companies on the Hang Seng Composite Index that posted annual earnings this month and for which Bloomberg had estimates, half beat profit projections.

Cosco, Yashili Cosco Pacific dropped 2.4 percent to HK$9.96 after the port operator’s full-year profit rose to $702 million, missing estimates for a $710.1 million gain. Yashili tumbled 10 percent to HK$3.66, the biggest slide in more than nine months. The dairy’s shares plunged after reporting net income of 437.6 million yuan ($70 million), falling short of average analyst projections for 520 million yuan.

Tongda retreated 9.5 percent to HK$1.15. after selling 600 million new shares at HK$1.12 each to Landmark Worldwide Holdings in a top-up placement.

The H-share index lost 10 percent this year as falling exports, weaker manufacturing and slower retail sales fueled bets China would miss its 7.5 percent growth target. 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.

The pace of economic growth won’t go into a free-fall decline and will continue in a tight range, according to a China Securities Journal commentary. China may face “serious” cash- flow problems and needs good management of liquidity for the next two years, according to a transcript of former China Banking Regulatory Commission Chairman Liu Mingkang’s remarks in today’s Shanghai Securities News.

Bloomberg

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Greater China Harbin Bank’s Hong Kong plan

Hong Kong’s exposure ordeal

Chinese commercial lender Harbin Bank Co Ltd is set to raise US$1.13 billion through its Hong Kong initial public offering (IPO) after pricing the deal at HK$2.90 each share, near the bottom of a marketing range, IFR reported yesterday.

The bank, based in the northeastern Chinese city of Harbin, had offered 3.02 billion shares in the HK$2.89 to HK$3.33 range, said IFR, a Thomson Reuters publication. Harbin Bank plans to use the proceeds from the deal to improve its balance sheet and support its business growth, including expanding into other regions of China.

Recent figures have awakened fears about HK’s dependency on China

Investment less rewarding Investment has become less effective in generating growth in China, World Bank Managing Director Sri Mulyani Indrawati told a conference in Beijing yesterday. She did not elaborate in a speech in advance of the release of a report on China’s urbanisation due later yesterday. Official data showed China’s economy slowed markedly in the first two months of the year, with growth in investment, retail sales and factory output all falling to multi-year lows.

ICBC approved

by Cambodia Industrial and Commercial Bank of China (ICBC), the world’s largest bank by assets, said yesterday it has been approved by National Bank of Cambodia as a clearing bank for the Chinese yuan currency in the country. It marks an incremental step to accelerate the yuan internationalisation process and to expand China’s offshore yuan business beyond Hong Kong, where more than 80 percent of yuan trade settlement transactions are handled. ICBC said in a statement its Phnom Penh branch will provide comprehensive yuan clearing services, including renminbi account management, interbank clearing, cross-border clearing and liquidity support.

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n just a few years, Hong Kong banks have ramped up lending to China from near zero to US$430 billion, fuelling concerns about their credit exposure to the mainland at a time when sliding economic growth and defaults are making investors nervous.

Even a modest increase in nonperforming loans would have a significant impact on Hong Kong bank profits, suggesting the sector will be a sensitive indicator of China’s debt markets in the year ahead.

A landmark domestic bond default earlier this month and headlines of bankruptcies - highlighted last week

by Zhejiang Xingrun Real Estate Co - have underscored concerns that an unprecedented surge in company debt in China is now showing signs of unravelling.

“The quality of these loans extended by Hong Kong banks to Chinese companies has not been tested,” said Mirza Baig, head of foreign exchange and interest rate strategy at BNP Paribas in Singapore.

“That is a concern in the backdrop of the rapid rise in exposure.”

Foreign bank claims on China hit US$1 trillion last year, up from nearly zero 10 years ago, and the biggest portion was provided by Hong Kong, Bank of International Settlements data shows. The US$430 billion in loans outstanding represents 165 percent of Hong Kong’s GDP, BIS figures show.

Data from the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, showed a similar astonishing rise. By the

end of 2013, Hong Kong banks’ net claims on China as a percentage of their total loan book was nearing 40 percent, compared with zero by 2010.

The rival financial centre of Singapore has also ramped up its China loans as well, but its exposure is the equivalent of 15 percent of its GDP, figures from its monetary authority show.

Local banks in both these centres have taken over lending that foreign banks once dominated, drawn by cheap funding rates following the global financial crisis, a voracious appetite from Chinese borrowers and healthy growth in the world’s secondbiggest economy.

“Hong Kong banks have pounced on arbitrage opportunities between on-and offshore renminbi funding rates,” said Cathy Holcombe, a strategist at Gavekal Dragonomics in Hong Kong.

Currency exposure There is no breakdown of the type of loans behind the US$430 billion figure. But Stephen Long, managing

US$1 tln 2013 foreign bank claims on China

director of financial institutions at Moody’s Investor Services, said “a substantial part” is in lower-risk categories such as trade finance. This would include loans to Hong Kong blue-chip companies operating on the mainland or loans supported by guarantees from Chinese banks.

However, trade finance may also hide speculative flows that bet on a rise in the yuan - a popular trade encouraged by the currency’s 2.9 percent rise against the dollar last year. In this trade, investors and companies falsify trade receipts to convert foreign currency into yuan and avoid capital controls.

This year’s slide in the yuan may also pinch debtors’ ability to service their loans. The yuan has dropped nearly 3 percent, wiping out its 2013 gains, putting it on track for its worst March quarter since 1992.

Analysts said Bank of East Asia and Bank of China (Hong Kong) have the biggest exposure to China among the lenders based in the territory, at 46 percent and 27 percent of their loan books, respectively. The latter is also the clearing bank for all yuanrelated transactions appointed by China’s central bank.

Hong Kong’s non-performing loans (NPLs) ratio is currently a record low of 0.5 percent. But if it returned to the long-term average of 3.5 percent, it would cut nearly 20 percent off current expectations for local bank pretax profits for the financial year starting this April, Barclays Capital said.

Reuters

U.S. seeks China’s support against Russia Xi Jinping remarkes that China is firmly committed to a new model of international relations

U.S. transgenic corn rejected China has turned away more U.S. corn after detecting an unapproved genetically-modified strain in shipments, with buyers waiting for sales from the country’s huge state reserves or shifting to cheap grain from Ukraine. China’s quality watchdog in the northern city of Tianjin turned away 21,800 tonnes of U.S. corn after detecting MIR 162, a GMO strain developed by Syngenta AG that Beijing has not approved for import, the official Xinhua news agency reported late on Monday. That brings the total amount of corn that China has rejected from the United States to 908,800 tonnes since November.

Steel industry consolidation plan abandoned China has dropped a long-standing target to bring 60 percent of its steel sector under the control of its 10 biggest enterprises by 2015, a goal that has been criticised by companies such as Baosteel for causing a build-up of unprofitable capacity. A new industry consolidation plan published on the website of the Ministry of Industry and Information Technology (www.miit.gov.cn) late on Monday said China would continue to simplify approval procedures and also make it easier for firms in bloated sectors like steel, cement and aluminium to finance acquisitions.

P

resident Barack Obama sought to encourage Chinese criticism of Russia on Ukraine, while Chinese President Xi Jinping pressed Obama about a reported U.S. breach of the servers of China’s largest phone-equipment maker, as the leaders met yesterday.

During their talks in the Netherlands while attending the Nuclear Security Summit, Obama also raised concerns about China holding up visas for U.S. news organizations and told Xi he wants the U.S., China and other Asian nations to resolve competing claims in the South China Sea to ease tensions there.

The focus of the conference has been overtaken by the crisis in Ukraine. Obama arrived yesterday for the talks in The Hague with world leaders seeking to mobilize opposition to Russia’s incursion into Crimea.

U.S. Deputy National Security Adviser Ben Rhodes said China “has always put front and centre this notion of sovereignty and territorial integrity” in terms of its national security interests even as it historically has allied with Russia on other issues.

That Russia can’t count on support from such a “traditional” ally when it comes to Ukraine shows how isolated it is on the issue, Rhodes said.

As the U.S. works to isolate Russia and present a united front with

Xi Jinping at Nuclear Security Summit

European and other world leaders, administration officials have pointed to the United Nations Security Council resolution that declared the March 16 referendum supporting Crimea’s secession from Ukraine illegal. Russia was the lone member that vetoed the resolution while China, which usually follows Russia’s lead at council, abstained. However Xi said through an interpreter that China is “firmly committed” to a “new model of international relations.”

Yesterday’s talks between Xi and Obama were complicated by renewed tensions over the National Security

Agency’s surveillance programme and revelations by former contractor Edward Snowden. China’s Foreign Ministry today asked for a “clear explanation” from the U.S. after the New York Times and the German magazine Der Spiegel reported that the NSA breached the servers of Huawei, the Chinese phone-equipment maker.

Obama made clear that the U.S. “does not engage in espionage to gain a commercial advantage,” Rhodes said, making a distinction between intelligence activities with a national security versus a commercial purpose.

Bloomberg News

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March 2014 Friday 26, April 19, 2013

Greater China

Migration plans predict acute deceleration Li asks arm of China’s cabinet to work with World Bank on urban planning strategy

Shanghai urbanization in progress

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he pace of migration of rural Chinese to cities, a dynamic hailed by Premier Li Keqiang as key to the nation’s development, is set to slow by a third in coming years, deepening economic-growth concerns.

A government report released this month projected a 6.3 percentagepoint rise in the share of people living in cities from 2013 to 2020 -down from a 9.4-point gain the previous seven years. Nomura Holdings Inc. estimates that slower urbanization will slice as much as half a percentage point from annual gross domestic product growth over the next half decade.

“In the past 30 years we turned farmers into factory workers, triggering massive gains in productivity and hence growth,” said Ken Peng, Asia Pacific investment strategist at Citigroup Inc.’s privatebank business in Hong Kong. “Now those gains are diminishing.”

Li, who asked an arm of China’s cabinet to work with the World Bank on an urban-planning strategy released yesterday, is under increasing pressure to take steps to address weakening economic expansion. A private report yesterday indicated a fifth straight slowdown in manufacturing in the world’s second-largest economy.

The premier, who has advocated an urbanization-growth strategy for two decades, is up against a shrinking pool of rural workers, rising local-government debt and unhealthy air pollution in almost all big cities. Diminishing returns from urbanization make it tougher to achieve economic goals including this year’s 7.5 percent expansion target.

China has shifted more than 300 million people into cities since 1995 -about twice the population of Russia- and Li must find a way to accommodate almost as many again from the countryside without further wrecking the environment.

The nation’s 731 million metropolitan dwellers, already 1/10 of the world’s population, use three times more energy than their countryside peers, according to the World Bank.

The government plans to steer city migration onto a more environmentally friendly and people-

focused path, saying the “greatest potential for expanding domestic demand lies in urbanization.”

The urbanization blueprint, issued by the Communist Party and State Council on March 16, targets having 60 percent of the population in urban areas by 2020, up from 53.7 percent in 2013 and 44.3 percent in 2006.

UBS AG says migration won’t act as a stimulus for expansion. A broader deceleration in urbanization is “part and parcel of China’s slowdown in trend growth,” said Wang Tao, UBS’s chief China economist in Hong Kong, who previously worked at the International Monetary Fund. “There is less surplus labour in rural areas.”

A slowing pace of urbanization could reduce average annual growth by 0.5 percentage point in the next five years from gains in the previous decade, according to Zhang Zhiwei, Nomura’s Hong Kong-based chief China economist.

Strict control Gains may also be constrained by the plan’s emphasis on smaller cities over capitalizing on economies of scale in bigger ones. The government plans to remove restrictions on obtaining household registration permits in small cities and towns, while strictly controlling populations of cities with more than 5 million urban residents.

“I can’t think of any country except North Korea that basically tells people where they can live,” said Yukon Huang, a former World Bank country head for China. “It actually goes against the principles they have espoused” of giving markets a decisive role, said Huang, now a senior associate at the Carnegie Endowment for International Peace in Washington.

Not all the projections indicate a slowdown. City residents with household registrations known as hukou, which give access to benefits including education and health care, are targeted to increase by about 20 million annually in the next seven years, up from 13 million a year in the past decade, UBS estimates.

Bloomberg News

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March 26, 2014 Friday April 19, 2013

Greater China

All IPO’s banks Alibaba public offering uncovers Chinese banks and IT biz deployment

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very big bank in town wanted a piece of the Alibaba Group Holding Ltd initial public offering, set to be the biggest technology listing ever.

So much so that, according to Thomson Reuters data, major banks skipped an estimated US$100 million in combined fees they could have made from work for other clients over the past year.

People familiar with the matter say that’s because the banks didn’t want to irk the Chinese e-commerce giant by working for its rivals or acquisition targets, and risk losing out on business in an IPO expected to be bigger than Facebook Inc’s US$16 billion listing in 2012.

Alibaba’s giant IPO comes amid a wave of deals in China’s tech sector, putting banks in a tricky situation when it comes to backing clients in the industry. In a sector that’s redhot, companies are sensitive about letting advisors work on deals that run parallel to those of competitors for fear of confidential information leaking out.

Another concern for companies is that a financial advisor already supporting one IPO in the space can’t give its undivided attention to a rival’s deal. As the major investment banks operating in the region remained on standby over the past year for Alibaba’s IPO, they kept their distance from the giant’s peers in hopes of winning a role in the mega-deal, the people familiar with the matter said.

Reuters

An estimated US$300 million in fees are up for grabs in a listing that Alibaba said on March 16 will take place in the United States. Tuesday marked the first meeting of the bankers, lawyers and accountants helping the company on the deal, getting together in Hong Kong, which houses part of Alibaba’s corporate finance team.

Citigroup, Credit Suisse, Deutsche Bank , Goldman Sachs, JP Morgan and Morgan Stanley are the banks working on the IPO, Reuters previously reported.

All six banks are existing lenders to Alibaba, putting them in good position to win the coveted mandates, the people familiar with the matter said.

The estimated fees from Alibaba’s IPO would make it the biggest Chinese

fee payer to global investment banks in a decade.

“Because Alibaba is a very big transaction, people are very keen, the process is so competitive,” said Ronald Wan, chief China advisor at financial services firm Asian Capital Holdings. “So you have the view that if you’re not a friend, you’re an enemy. And there’s nothing in between,” Chan said.

Battle lines A recent unsolicited bid by Alibaba to buy out a Chinese Internet company exposed the battle lines. Alibaba, which already owns 28 percent of digital mapping company AutoNavi Holdings Ltd, last month offered to buy the rest of the company in a deal

There’s tremendous room for the central government to fix the problems in local government debt Li Daokui Former PBOC monetary policy committee member

Debt mini crisis looms China’s towns and cities took on debt to pay for subways, sewage works and roads

C

Because Alibaba is a very big transaction, people are very keen, the process is so competitive Ronald Wan Asian Capital Holdings advisor

and roads to help finance a 4 trillion yuan (US$646 billion) stimulus package unveiled by the government at the height of the global financial crisis in November 2008, two months after Lehman Brothers Holdings Inc. collapsed. Those borrowings are still climbing and refinancing is growing costlier as default risk builds amid slowing growth in the world’s secondlargest economy.

The amount owed by local governments jumped 253 percent since 2008, Nomura Holdings Inc. estimated in a February 25th report, and official figures indicate the total increased to 17.9 trillion yuan by June 30 from 10.7 trillion yuan at the end of 2010. The nation recorded its first onshore bond default this month and a private Purchasing Managers’ Index released yesterday suggested factory output is shrinking in March at the fastest pace since July.

No Lehman

Former PBOC committee member Daokui Li

hina is headed for a “mini crisis” in its local-government debt market as economic reforms lead to the first defaults, according to a former adviser to the People’s Bank of China.

“It will be a partial, controllable and mini crisis,” Li Daokui told

valuing the target at US$1.6 billion.

When AutoNavi tapped advisors to organise its defence, some investment banks passed on the business to avoid potential conflicts with the mega-IPO, people familiar with the matter said.

In the end, AutoNavi’s independent committee hired Lazard Ltd as its financial advisor.

Banks usually pounce on defence mandates like this. These are lucrative roles for mergers and acquisitions departments that can command a fee of nearly 2 percent of the total deal value.

In February 2012, well before Alibaba launched its IPO process, IFR reported that at least five banks, including Credit Suisse, Goldman Sachs and Morgan Stanley, were in the running for mandates to underwrite an IPO by JD.com, the number two e-commerce company in China. When the Alibaba competitor filed for a US$1.5 billion U.S. IPO last month, only two underwriters were in: Bank of America and UBS.

reporters on the sidelines of the Credit Suisse Asian Investment Conference in Hong Kong yesterday. “There’s tremendous room for the central government to fix the problems in local government debt. Defaults must be allowed to restructure the debt, which will definitely happen as part of

the reform measures in the second half of this year.” Li is a former member of the PBOC’s monetary policy committee and is director of Center for China in the World Economy at Tsinghua University.

China’s town and cities took on debt to pay for subways, sewage works

Defaults by local governments won’t have knock-on effects on the overall economy, Li said in a Bloomberg Television interview yesterday with Betty Liu. There is no chance of a “Lehman episode” as China has a high savings rate and the central government’s debt is low as proportion of gross domestic product, he said.

China will focus on allowing more access for private capital and carrying out expansionary reforms earlier than scheduled to combat the current slowdown, Li said at the conference. There will be no repeat of large-scale stimulus seen in the financial crisis, he added.

Bloomberg News

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March 2014 Friday 26, April 19, 2013

Asia

Singapore bank targets Greater China OCBC intends to enter China through raising its stake at Bank of Ningbo

C

hinese Banking Corp Ltd (OCBC) aims to expand in Greater China which it sees as the engine of Asian economic activity, rather than in another market in Southeast Asia where Singapore’s second-biggest lender is already well entrenched.

OCBC, No. 2 to DBS Group Holdings Ltd by assets, is trying to expand outside its core markets of Singapore, Malaysia and Indonesia, which together accounted for 90 percent of the bank’s pre-tax earnings last year.

In China, OCBC wants to raise its stake in Bank of Ningbo to the maximum permitted, and in Hong Kong, OCBC is in talks to buy family-owned Wing Hang Bank Ltd for what could be a record amount for the Singaporean player.

“From our perspective, I think we would be more interested to go into the Greater China market rather than go into another ASEAN market at the present time,” Chief Executive Samuel Tsien said at the Reuters ASEAN Summit on Monday.

ASEAN, or the Association of Southeast Asian Nations, is made up of OCBC’s three core markets plus Brunei, Cambodia, Laos, Myanmar, the Philippines, Thailand and Vietnam.

“China’s economic activity is really driving the economic activities of Asia right now plus the fact that Chinese companies’ desire to move offshore has also created additional opportunities for us,” Tsien said at the summit, held at the Reuters office in Singapore.

Greater China -or China, Taiwan and Hong Kong- accounted for 6 percent of OCBC’s pre-tax earnings last year, compared with 2 percent four years ago, Tsien said.

OCBC sought to increase that amount in January when it proposed raising its stake in Ningbo in Zhejiang province from 15 percent to 20 percent -the maximum a foreign investor can hold in a bank in China. OCBC is

From our perspective, I think we would be more interested to go into the Greater China market rather than go into another ASEAN market at the present time Samuel Tsien OCBC Chief Executive

awaiting Chinese regulatory approval.

“In the event that they are willing to relax it (the 20 percent limit) we are quite interested to increase our involvement,” Tsien said.

China’s banking system, like the country’s broader economy, has undergone a series of reforms in recent years as the government increasingly leans toward market forces and away from state control.

Tsien did not say whether he is expecting an increase in the ownership cap soon, but said he does not expect foreigners to be able to own majority stakes in Chinese lenders.

OCBC faces no such restrictions in Hong Kong, where the bank has been in talks to buy Wing Hang for what sources close to the deal estimated at US$5.3 billion.

The pair has twice extended the deadline for any agreement, and with

Combustible polls India’s Election Commission requests gas price hike to be put on hold until after ballot

A

n unexpected request by India’s Election Commission for the government to defer a raise in gas prices until after a looming general election hit shares in Reliance

India’s Supreme Court building

Industries Ltd and Oil and Natural Gas Corp yesterday.

A price increase had been due to come into effect on April 1, just days before India starts voting in an

OCBC headquarters in Singapore

the latest deadline of March 31 looming, OCBC on Friday said the two have still not reached a deal. Tsien declined to comment on the deal on Monday.

Beyond geography, Tsien said OCBC is interested in expanding its wealth management business, provided any potential deal is not merely incremental given the decent size of its current business.

“At the present time unless there is a market opportunity that is able to bring us to a significantly higher plateau then I think we will rely on what we currently have,” Tsien said.

OCBC more than tripled the size

of its wealth management business in 2009 when it bought ING Groep NV’s Asian private banking business for US$1.5 billion, sparking broader industry consolidation.

Last week, rival DBS said it would buy Societe Generale’s Asian private banking business for US$220 million.

At home in Singapore, government and central bank measures to curb the rise of property prices have slowed growth in mortgages and lending to property companies, which account for about a third of bank loans in Singapore.

election that starts on April 7 and will end on May 12.

The Election Commission gave no reason for its decision late on Monday.

But India’s Supreme Court yesterday resumed a hearing on two petitions to strike down the cabinet’s June 2013 approval of a doubling in the gas price on grounds that it favoured a corporate house and was against the interests of the nation.

The government told the court yesterday that it would comply with the Commission’s request.

Arvind Kejriwal, the head of India’s new anti-corruption Aam Aadmi Party (AAP), which briefly controlled the state government in New Delhi, last month called for a criminal investigation into government officials and Reliance Industries Chairman Mukesh Ambani over the matter. Kejriwal had also called for the Election Commission to stall the price rise.

Reliance Industries is India’s second most valuable company, and Ambani is its richest man.

The cabinet last year approved a near-doubling of gas prices from the current US$4.20 per million British thermal units to spur investment in exploration for gas.

Following the Election Commission’s action, shares in Reliance fell as much as 3.8 percent to 872.50 rupees, on a day when the Mumbai share markets were trading

broadly flat. ONGC was also down 3.8 percent and state-run Oil India Ltd was trading down 2.5 percent.

“It sends a very bad signal to the outside world. In this country, due to elections even the commercial decisions can be postponed,” said Deven Choksey, managing director at Mumbai brokerage K.R. Choksey Securities.

Many brokerages had upgraded earnings estimates for Reliance and ONGC after the cabinet approved the price hike last year.

Reuters

Reuters

KEY POINTS Govt last year approved near doubling of gas price from April 1 Move seen negative for energy conglomerate Reliance Industries Decision on price hike now expected to be taken by next government Reliance, ONGC shares fall more than 3 percent

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Asia

Is Korea on the road to reunification?

China calls for six-nation talks on denuclearization of the Korean peninsula to resume as soon as possible

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orth Korea called on the U.S. to stop isolating it politically, militarily and economically, citing the totalitarian regime’s recent engagement with South Korea as proof of a commitment to relieving tensions.

In dealings with neighbouring countries starting last month, North Korea participated in the first high-level talks with South Korea since 2007, allowed family reunions between the two Koreas and made plans to hold talks next week with Japan for the first time since November 2012.

“The DPRK did not hesitate to accept the request from South Korean authorities on holding the separated families’ reunion,” even though “in view of the harsh conditions of the political environment,” the situation “was not mature yet,” Ri Tong Il, a top North Korean diplomat at the United Nations, told reporters on Monday in New York. He referred to his country by the acronym of its official name, the Democratic People’s Republic of Korea.

The U.S. must “roll back” its “hostile policies” and stop raising tensions through continued military drills with South Korea and orchestrating “conspiracies” on the North’s human rights situation, Ri said.

His country’s relations with the U.S. have remained tense since 2012, when North Korea announced plans for long-range missile testing that led the U.S. to scuttle a food-aid deal.

The Obama administration has since enlisted China, North Korea’s biggest trading partner, as its interlocutor, refusing to engage in direct talks until the North takes credible steps toward denuclearization.

Chinese President Xi Jinping on Monday called for six-nation talks on denuclearization of the Korean peninsula to resume as soon as

Conference Row seen from the northern side of the Korea Joint Security Area

possible, China’s state-run Xinhua news agency reported.

In a meeting with U.S. President Barack Obama on the sidelines of the Nuclear Security Summit in The Hague, Xi cited the need to implement goals set out in a 2005 agreement -a condition the U.S. has set for resumption of any direct engagement.

China is the host and convenor of the six-party talks, which include the U.S., Russia, Japan and the two Koreas. The negotiations began in 2003 and were last held in 2008.

North Korea officially quit the process a year later, and revealed a new uranium enrichment facility in 2010.

Ri’s comments on Monday were part of a campaign waged by North Korean diplomats in Beijing, London, Moscow and Geneva, aimed at shifting

the focus of discussion away from denuclearization, said Scott Snyder, senior fellow for Korea studies at the Council on Foreign Relations in Washington.

Public relations “We can presume that DPRK is not satisfied with the way Washington handles its approach to Korean peninsula issues,” Snyder said in an e-mail. “However, DPRK is not responding to U.S. calls for a return to denuclearization, nor has DPRK provided a viable solution to the Kenneth Bae case, which needs to be settled before one can imagine serious talks moving forward.”

The North has held Bae, a KoreanAmerican missionary, since 2012, and

India’s middlemen feed inflation Government targets middlemen’s secret bids to hold back inflation

I

ndia’s top political parties are taking aim at a six-decade old practice of collusion among traders at produce markets that policy makers say helps fuel Asia’s highest inflation.

The ruling Congress party put trader rackets on its priority list after surging prices for onions -an Indian diet staple- contributed to localelection losses late last year. With a nationwide ballot looming next month, the opposition Bharatiya Janata Party (BJP) also is pledging to chip away at the middleman’s margin.

“Secret bidding fuels inflation as there is collusion between the middlemen and wholesalers: They pay lower prices to farmers and sell it at higher price to retailers,” said A. V. Manjunatha, who co-authored a report for the government on onion price manipulation in 2012.

The central bank in January cited agriculture market cartels for exacerbating price spikes as Governor Raghuram Rajan raised the benchmark rate to 8 percent. India’s consumer-price inflation of 8.1 percent

is the fastest among 18 Asia-Pacific economies tracked by Bloomberg.

A central bank panel in January called for consumer-price gains to slow to 6 percent by January 2016. Food prices make up 50 percent of the CPI basket, compared with 14 percent in the U.S. and 24 percent in Brazil. Government officials accused middlemen of hoarding as prices quadrupled while heavy rains crimped supplies.

The BJP will change the current system to benefit farmers more than middlemen, spokesman Prakash

in February rescinded an invitation for a U.S. human-rights envoy to travel to Pyongyang to discuss his release.

Investors are starting to bet that South and North Korea are heading toward reunification.

Shinyoung Asset Management this month opened the first South Korean fund focusing on equities that would benefit from a unified peninsular.

The benchmark Kospi index rose to a two-week high on Monday, even after North Korea fired 46 short-range rockets over the weekend, and the Kospi 200 Volatility Index, a gauge of demand for protection against plunging shares, is trading near its record low in December, about half the level when the North detonated its first nuclear device in 2006.

Bloomberg News

Javadekar said by phone. Narendra Modi, the party’s prime minister candidate, said in January he’d establish a real-time database to track agriculture prices. The current system dates back to the 1950s, when state governments sought to prevent farmers in remote areas from exploitation. Over time, the licensing system turned into a monopoly in many states, with traders organizing to prevent new entrants and stifle competition.

While some of India’s 28 states have already changed laws to allow farmers to directly sell fruits and vegetables to retailers, others have resisted Gandhi’s proposed changes.

Even if the laws change, farmers will have few immediate options. The state should have more than four times as many markets as it has now, according to the 2012 Competition Commission of India report.

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 26, April 19, 2013

Asia

Bright future for black gold Asia-Pacific represents a great opportunity for selling oil as region’s projects delay

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il producers from Africa to the Americas have a growing opportunity to supply crude to the Asia-Pacific, as the region’s output stagnates and massive refining capacity comes online in China and India.

Asian refiners import - mostly from the Middle East - more than twice the volume of crude produced regionally, and have been taking more shipments from West Africa since 2009. The last two years they have also been buying more from Europe, Canada and South America whenever prices and shipping costs allow.

Now, with regional producers struggling to hold supply steady as mature fields decline, Kazakhstan, Nigeria and Mexico are looking to ship more crude to Asia as the U.S. shale oil boom slashes the need for imports there.

Asia will require an additional 300,000 barrels per day (bpd) of low-sulphur or sweet crudes in 2014 compared with last year, to meet demand from new refineries and for blending with cheaper, low quality oil, according to an oil company analyst.

The Asia-Pacific, which produces mainly sweet crudes, had been expecting a boost this year from higher output in Indonesia and Malaysia. But project delays in the Southeast Asian nations highlight challenges in meeting the broader region’s growing demand, especially given a lack of big oil discoveries.

Still, the volume of the additional imports depend not only on how fast regional oil demand grows versus flattening output growth, but also on how desperate suppliers from other regions become as export opportunities slump in other markets.

Asia-Pacific oil demand overall is forecast to grow 500,000 bpd, or 1.5 percent, to 30.6 million bpd this year, with China’s oil use rising 3.4 percent

500,000 bpd

Asia-Pacific oil demand overall forecast growth for 2014

and India’s 2.4 percent, according to the International Energy Agency.

That is measured against Asian oil output that is expected to rise just 110,000 bpd, or 1 percent, to reach 8.35 million bpd in 2014, according to consultancy Wood Mackenzie.

Potential substitutes to fill the gap are not only sweet crude grades from Africa, but also high-sulphur grades from the Middle East and Latin America, Vautrain said.

Both Indonesia and Malaysia have

delayed projects to ramp up output from producing fields to next year.

Output from Malaysia’s deepwater Gumusut-Kakap field will rise to 70,000 bpd only next year, from the current 25,000 bpd, due to work to complete a new semi-submersible platform linking the oilfields to the Sabah Oil and Gas Terminal in Kimanis bay.

The joint venture between Petronas and Royal Dutch Shell started production in 2013.

In Indonesia, a rise in output at ExxonMobil Corp’s Cepu block has been delayed again, pushed back by up to six months from September 2014, said an official with the country’s upstream oil and gas regulator.

The Cepu block, which currently produces 26,000-27,000 bpd, is expected to reach peak production of 165,000 bpd in 2015, SKKMigas Deputy of Operations Muliawan had told reporters.

ExxonMobil’s Banyu Urip discovery in the Cepu block was one of the largest in Asia in the last 15 years, but disagreements between the U.S. oil major and state oil company Pertamina have slowed the field’s development.

A couple of new fields in Australia and Vietnam will also start production later this year.

To wring the most out of decadesold fields such as Duri in Indonesia and Tapis in Malaysia, Exxon Mobil, Chevron Corp and Royal Dutch Shell -along with Petronas and Pertaminaare spending billions of dollars on oil recovery projects to boost output well down from national peaks.

Indonesia’s crude output is down about half from its peak of 1.6 million-1.7 million bpd in the mid1990s; Malaysia’s is running about 600,000 bpd, down from around 750,000 bpd in 2004.

Reuters

Philippine government to demand more revenue from ore mines

U.S. and Japanese advance in trade talks Trade negotiators will meet this week and next for further talks over farm tariffs and auto exports in the lead-up to President Barack Obama’s planned trip to Asia. The U.S. trade representative said Japanese deputy chief negotiator Hiroshi Oe would visit Washington on March 27-28 for another round of talks on market access, the fourth round of bilateral meetings in a little over a month. They will be followed by separate talks on motor vehicle trade on March 31 and April 1, as the United States and Japan attempt to break an impasse over sensitive issues that is holding up completion of the Trans-Pacific Partnership among 12 Pacific Rim nations.

TPG Telecom announces healthy results TPG Telecom Ltd shares jumped as much as 10 percent to all-time highs of A$6.35 yesterday after the telecommunications and IT company reported healthy first half earnings and upgraded its guidance for the year. TPG posted a first-half net profit after tax of A$90.1 million, an increase of 15 percent over the previous corresponding period. The company also updated its FY14 EBITDA from A$290 million-A$300 million to A$325 million-A$330 million.

Vietnam Q1 growth at 4.96% Vietnam’s economy grew an estimated 4.96 percent in the first quarter from a year ago, the fastest quarterly pace since 2011, and above a 4.76 percent rise in the same period last year, a state-run newspaper reported yesterday.

The annual growth in the January-March period compared with a 4.75 percent rate in the first quarter of 2012 and 5.9 percent in the same period in 2011, the Vietnam Economic Times newspaper cited government statistics as saying. Vietnam’s gross domestic product growth this year is forecast to accelerate to an annual 5.8 percent, from 5.42 percent in 2013.

Finance Secretary told that the government should be getting Idemitsu restarts naphtha crackers one-half of gross revenue from mining

T

he Philippine finance minister said he will push mining companies to pay bigger shares of their revenue to the government even though the industry maintains that taxes are already too high and higher ones could kill the business.

Taxation of Philippine miners is a thorny issue that has delayed development of the country’s vast mineral resources. President Benigno Aquino, seeking to raise revenue from mining, has met stiff resistance.

Philippine Finance Secretary Cesar Purisima told the Reuters ASEAN Summit yesterday that the government should be getting onehalf of gross revenue from mining.

Last year, according to a government agency, direct state revenue from mining was worth only 2 percent of total output, though miners also pay corporate income tax of 32 percent and other fees to different agencies.

“Where I start is 50-50,” Purisima told the summit, held at the Reuters

office in Manila. “The return of the government must be two-fold -as owner of the mineral, and two, as a taxing authority.”

Still, Purisima said it is the Philippine Congress that will decide the revenue-sharing formula, taking into account the industry’s position.

Within the next year, he said, the

KEY POINTS Purisima open to ‘win-win’ formula Miners oppose additional tax burden Taxes in 2013 only 2 pct of output

government is committed to getting tax legislation passed that features “a fair sharing where both the one who took risk, the mining company, and the one who owns the assets, are fairly rewarded.”

Current mining laws, including income tax holidays for start-up projects, have not created a winwin situation for the government and industry, Purisima said.

Government statistics show mining has been declining as a source of revenue. Taxes, fees and royalties from mining in the first nine months of last year came to 1.55 billion pesos (US$34.2 million), only about 8 percent of the 18.8 billion pesos collected in all of 2012, according to the Mines and Geosciences Bureau (MGB).

With nine million hectares of highly mineralised areas, the Philippines is believed to have some of the world’s biggest reserves of nickel, gold, and copper.

Reuters

Japanese oil refiner Idemitsu Kosan Co began restarting the naphtha crackers, with a total capacity to produce 687,000 tonnes of ethylene a year, at its Tokuyama refinery in western Japan on March 23, the company said on its website yesterday. Operations at all units at the Tokuyama plant were shut on March 14 following a strong earthquake. The company also said it will not restart the 120,000-barrelsper-day crude distillation unit (CDU) at the complex. The CDU was originally slated to cease operations on March 31 as part of a government efficiency mandate.

SapuraKencana Q4 triples profits Malaysian oil and gas services firm SapuraKencana Bhd said profits nearly tripled in the fourth quarter, driven by strong contributions from its newly acquired tender rig business from Norway’s Seadrill last year.

The firm said in a statement that profits in three months to January 31 stood at 337.23 million ringgit (US$101.93 million), against 123.89 million rinngit in the same period a year ago.

SapuraKencana said it expected future earnings to grow on the back of full year contributions from the tender rig business after purchasing Seadrill in April 2013.

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International S&P cuts Brazil credit rating Standard & Poor’s cut Brazil’s sovereign debt rating closer to speculative territory in a blow to President Dilma Rousseff, whose efforts to stir the economy from a years-long slump have eroded the country’s finances. Brazil had its longterm debt rating downgraded to BBB minus, the agency’s lowest investmentgrade rating. S&P changed its outlook to stable from negative, meaning further downgrades are unlikely for now, which will come as a relief for both politicians in Brasilia and financial markets. The move was widely expected but the timing surprised some investors.

Africa platinum strike harms deeply Platinum producers Anglo American Platinum, Impala Platinum and Lonmin said yesterday a strike now in its ninth week at their South African mines was causing irreparable damage to the sector and local economy. Wage talks have broken down between the companies and the striking AMCU union, which is demanding a doubling of basic wages, although the world’s top three platinum producers said they were open to talks “within a reasonable settlement zone”. In a joint statement, the companies said they had lost nearly 10 billion rand (US$921 million) in revenues.

Bundesbank let EU CB attack deflation Germany’s central bank President Jens Weidmann said it was not ‘out of the question’ for the European Central Bank to buy bank assets to fight deflation, in a softening of the German central bank’s strict stance on the issue.

Quantitative easing (QE) is when a central bank buys loans or other assets from banks and would represent a radical departure for the ECB, which has so far, not least under pressure from Germany, refused to make such a move. “This does not mean that a QE programme is generally out of the question,” Weidmann said.

Islamic charity funds are underused Lack of professional management and poor book-keeping are keeping idle billions of dollars worth of assets held

by Muslim charitable organisations which could support efforts to reduce poverty, a study released yesterday.

Islamic alms-giving (zakat) and endowments (awqaf) have been in existence for centuries, but have yet to develop efficient use of their assets, a report by the Islamic Research and Training Institute (IRTI) and Thomson Reuters said. These asset pools include vast real estate portfolios that are often poorly managed, which could otherwise help reduce poverty across Muslim communities.

Kenya’s growing middle-class boosts 2014 results The country’s racing to alleviate infrastructure bottlenecks by constructing new roads and a modern railway line

S

tandard Chartered Bank of Kenya expects east Africa’s burgeoning middle class to drive growth in 2014 after it recorded a 16 percent rise in 2013 pretax profit, its chief executive said.

The lender, which is controlled

by Standard Chartered Plc., said its net interest income jumped by 18 percent to 16.8 billion shillings (US$194.00 million), driving pretax profits to 13.4 billion shillings (US$154.73 million).

Lamin Manjang, who took over the leadership of the bank this year after running its business in Oman, attributed the positive outlook to a range of opportunities across personal, corporate and project financing.

“On the consumer banking side, the growing middle class clearly is an area that plays into our focus in terms of strategy, therefore we see the outlook for 2014 as being quite positive,” the chief executive told Reuters.

He said the bank would also benefit from a range of planned infrastructure and energy investment projects by the government, as well as the country’s nascent oil and gas sector, that would bring it new business.

Kenya is racing to alleviate infrastructure bottlenecks by constructing new roads and a modern railway line. It is also expanding its main airport in the capital Nairobi.

It is also building new power plants and electricity lines to meet growing demand for energy and to cut the cost per unit of electricity, which is viewed as too high.

Manjang said bad loans, which rose to 3.8 billion shillings, representing 3 percent of gross loans, from 2.2 billion shillings in the previous year or 2.2 percent of total loans, had started to improve this year.

Standard Chartered plans to open only two new branches this year, 50 percent fewer than last year, and instead make “significant”

Middle-class residential houses in Nairobi, Kenya

investments in mobile phone and Internet banking.

“We will give more focus on the digital channels because we see this as the wave of the future. This is what

KEY POINTS Sees opportunities in consumer, wholesale banking Net interest income up 18 percent in 2013 Pretax profit rises to 13.4 billion shillings Shares rise by as much as 2.2 percent

Poisonous air menace Research suggests outdoor air pollution exposure levels have risen significantly in some parts of the world, such as China and India

A

ir pollution killed about 7 million people in 2012, making it the world’s single biggest environmental health risk, the World Health Organisation (WHO) said yesterday.

The toll, a doubling of previous estimates, means one in eight of all global deaths in 2012 was linked to polluted air and shows how reducing pollution inside and outside of people’s homes could save millions of lives in future, the United Nations health agency said.

Air pollution deaths are most commonly from heart disease,

strokes or chronic obstructive pulmonary disease. It is also linked to deaths from lung cancer and acute respiratory infections.

“The evidence signals the need for concerted action to clean up the air we all breathe,” said Maria Neira, head of the WHO’s environmental and social public health department.

“The risks from air pollution are now far greater than previously thought or understood, particularly for heart disease and strokes,” she said.

Poor and middle-income countries in southeast Asia and the Western Pacific region had the largest air

our clients want,” Manjang said.

Mobile phone-based financial services have helped the east African nation of 40 million people to raise its financial inclusion to 70 percent of the population in recent years.

Kenyan banks including the largest lender by depositors, Equity Bank, and the biggest by assets, KCB, posted double-digit earnings growth last year, though rising bad debts curbed earnings.

Standard Chartered raised its dividend per share to 14.5 shillings from 12.5 shillings in the prior year.

Its shares rose by as much as 2.2 percent to 315 shillings each, after the results, before giving up some of the gains to trade at 310 shillings each in mid-morning.

The bank launched Islamic banking earlier this month to take advantage of a low reach in that area.

Islamic banking accounts for about 2 percent of the market, in a country where the Muslim population makes up 15 percent of the population.

Reuters

pollution-related burden in 2012, with 3.3 million deaths linked to indoor air pollution and 2.6 million deaths to outdoor air pollution.

Indoor pollution is mostly caused by cooking over coal, wood and biomass stoves. The WHO estimates that around 2.9 billion people worldwide live in homes using wood, coal or dung as their primary cooking fuel.

Flavia Bustreo, a WHO family health expert, said women and children - especially those living in poor countries - often bear the brunt of the risks from indoor pollution “since they spend more time at home breathing in smoke and soot from leaky coal and wood cooking stoves.”

Outdoors, air is mainly polluted by transport, power generation, industrial and agricultural emissions and residential heating and cooking.

Research suggests outdoor air pollution exposure levels have risen significantly in some parts of the world, particularly in countries with large populations going through rapid industrialisation, such as China and India.

Reuters

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Opinion Business

wires

Leading reports from Asia’s best business newspapers

China Daily China will launch unified national property registration this year to regulate the real estate market and push forward urbanization.

Registration rules will be drafted and submitted by June to the State Council, China’s Cabinet, and are expected to take effect this year, Hu Cunzhi, vice minister of land and resources, said on Saturday at the China Development Forum in Beijing. The land registration system will be a more specific following of a guideline in the urbanization plan released on March 16. The ministry is working on a state land market for construction purposes.

The Jakarta Post Toyota Indonesia has launched the mobile Toyota Home Service (THS), using motorbikes to cater to the needs of its customers in Jakarta. “With the city’s heavily congested traffic, not all customers manage to visit our repair shop.

They want to be visited and receive the service [at home],” chief executive of Auto2000 Suparno DJ Jasmin said on a TMS media gathering in Jakarta on Tuesday, as quoted by state news agency Antara. Services that can be delivered through the THS include regular internal and external checks, which take around two hours each.

Putin the Great Dominique Moisi

professor at L’Institut d’études politiques de Paris (Sciences Po) and Senior Adviser at The French Institute for International Affairs (IFRI)

O

ne day, monuments to Vladimir Putin may stand in Russian cities, bearing the inscription: “The man who returned Crimea to Mother Russia.”

But perhaps monuments will be erected on many European squares as well, acclaiming Russia’s president as “The Father of United Europe.”

Indeed, Putin’s swift move to annex Crimea has done more to harmonize European governments’ views on Russia than dozens of bilateral or multilateral meetings.

In Berlin last week, I heard French and German elites speak with one voice in discussing how to respond to Russia’s aggression in Ukraine.

Of course, words are not deeds. Yet, thanks to Putin, the European Union may have found the new narrative and momentum that it has sought since the fall of the Berlin Wall.

Europe badly needs that momentum. Confronted with a neo-imperial Russia’s desire to revise the post-Cold War order in Europe, the EU must speak with a single voice if it wants to appear strong and credible. And it must speak as one with the United States, just as it (mostly) did during the Cold War.

The Bangkok Post The Industry Ministry will inspect 1,700 waste sorting and recycling plants nationwide following claims that some are operating illegally. The move was part of a series of measures proposed by the ministry yesterday after a meeting with industrial offices in 20 provinces and four major waste disposal companies.

A fire that ravaged a garbage dumping site has prompted officials to beef up actions against illegal industrial waste disposal, with measures including the registration of vehicles transporting waste and the use of radio frequency identification in tracking waste.

The New Zealand Herald One of the main shareholders of the company Mega that plans to achieve a listing on the stock exchange is facing market manipulation charges in Australia. The online-storage company Mega -launched by Kim Dotcom last year- is doing a back-door listing on the New Zealand stock exchange. The deal was unveiled this morning and will see Mega merge with NZX-listed TRS Investments.

One of TRS major shareholders is Paul Choiselat, who is facing charges relating to concealing his interests in listed companies and alleged market manipulation.

The alliance of democracies is back, and the facile quip that America comes from Mars and Europe from Venus no longer makes sense

The US, for its part, also seems newly galvanized by the crisis in Ukraine. It is as if the Americans’ familiarity with their new/old enemy – an adversary whom they understand in a way that they do not understand Afghans, Arabs, or Persians – has provided a renewed sense of purpose. The alliance of democracies is back, and the facile quip that America comes from Mars and Europe from Venus no longer makes sense.

Confronted with a Russia that really does come from Mars and seems to understand and respect only force, the firmness of the world’s democracies must prevail, underpinned by a unity of

purpose that was lost in Iraq and Afghanistan.

As events have taken their course in Ukraine, historical analogies have multiplied.

According to some, we are in 1914, on the eve of a world war that few want but that no one can prevent. Or we are in 1938, in the aftermath of Nazi Germany’s annexation of the Sudetenland, confronted with an aggressor who will not be appeased. Or we are in 1945, on the eve of a decades-long cold war. We could also be in 1991, in the midst of Yugoslavia’s implosion, watching a multiethnic society divide into warring camps. Or we could be in August 2008, in Georgia, when Putin’s Russia redrew a map by force for the first time.

All of these analogies contain an element of truth, even if none applies perfectly.

But to understand Putin’s current attitude and behavior, another analogy is probably more important: the 1853-56 Crimean War, in which more than 800,000 people died, including 250,000 Russians.

The pretext for the war, which pitted the Russians, under Czar Nicholas I, against the British, French, and Ottomans, was Russia’s self-declared responsibility to protect

Jerusalem’s holy places.

Nicholas’s reign combined imperial ambition and religious fervor (directed against both the Ottoman Empire and the Catholic Church), and Russia’s defeat was glorious. During the long siege of Sevastopol, more than 120,000 Russian soldiers lost their lives. Leo Tolstoy, who took part in the war, found in it a source of inspiration for his novel War and Peace.

Putin used to present himself as the political heir of Peter the Great. He may instead be remembered as a new Nicholas I (whose portrait hangs in his office): an ultraconservative czar who was in power too long and lost touch with reality. Combining nationalism, orthodoxy, and the mental habits of his KGB years, Putin constitutes an explosive mixture that must be handled with care, but above all with firmness.

This implies the need to stand behind Ukraine both politically and economically. The general election on May 25 must not only take place as planned, but must do so under the best possible conditions, even as Putin does his utmost to derail them. Preventing that outcome requires containing

Ukraine’s small but loud farright parties, whose antiRussian chauvinism makes them Putin’s closest ally in escalating the conflict.

Sanctions against Russia, such as its ejection from the G-8, or against Putin’s closest allies will not suffice. The goal should be to convince Putin that Europe (including Italy and Germany) has alternatives to its gas and oil: Nigeria and Brazil, for example, not to mention the possibility of US shale energy. Indeed, Putin may have given Europe an unexpected opportunity to create, at long last, a common energy policy, one that would be more rational and much less costly in the long run.

Of course, the far-reaching reappraisal of international relations that now confronts Europe (the rest of the world’s democracies) will have a cost. Sacrifices will have to be made. But in this game of attrition, despotic Russia has more to lose than democratic Europe. One thing is certain: Putin did not stop with Georgia, and he will not stop with Crimea. Unless the limits to his ambitions are set now, the scariest historical analogies will become the most accurate.

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Closing Births: Portugal on “super-red alert”

Fly in the gold visa pot

University professor Joaquim Azevedo, coordinator of a work team into questions of birth rates said yesterday that Portugal is on a “super-red alert” in terms of new births. “We are going to have to work for at least 20 years if we want to invert the trend. But first we have to stabilise it”, Azevedo said at the PSD (ruling party) conference in Viseu, warning that the number of Portuguese would “rapidly” return to what it was in the “middle ages” if nothing was done to stop the falling birth rate.

Xiaodong Wang, the Chinese citizen granted a Portuguese gold investment residency visa and subsequently the target of an Interpol arrest warrant, is to appeal against extradition to China, Lusa learned from an official at the Lisbon court hearing the case. According to the same official, Wang was remanded in custody with China set an 18 day timeframe to submit a formal extradition request following the Interpol arrest warrant that alleges Wang has a 10-year prison sentence to serve following a fiscal fraud conviction.

When hope is gone Flight 370 passengers’ kin Demonstrate at Malaysian embassy

conclusion to the families first before making a statement to the media. The carrier is providing support to more than 900 relatives, it said.

“Right now, the understandable anguish appears to be not evolving into full and widespread anger,” Russell Leigh Moses, dean of academics at the Beijing Center for Chinese Studies, said by e-mail. “The real critical point will be in a few more days, if there’s a sense that the Chinese government isn’t pushing Malaysia harder.”

Xie Hangsheng, a vice Chinese foreign minister, summoned the Malaysian ambassador to demand that Malaysia provide the data on which it based its conclusion, the state-run Xinhua News Agency said.

Expressing Anguish

F

amily members and friends of passengers on the missing Malaysian jet protested in front of the country’s embassy in Beijing as anguish gave way to anger upon learning there’s no hope their loved ones are alive. About 200 people marched to the Malaysian embassy, which was protected by guards and paramilitary police. Many protesters wore white T-shirts with “Pray for MH370” printed on them.

“Give us our families back,” they chanted in unison. Some held up

placards addressed to the missing plane’s passengers such as: “Mom, you cook the best food in the world.” One man’s sign read: “The wedding ring is purchased.

I want to put it on your finger.”

The relatives were in the previous night brought to the hotel ballroom to watch on television as Malaysian officials concluded the Boeing 777-200ER disappeared into the southern Indian Ocean, leaving no hope of survivors.

Wails and screams punctuated that meeting, and at least two relatives were carried away on stretchers while police

guarded the entrance.

They yesterday accused Malaysian Airline System Bhd. and the southeast Asian nation’s leaders of a coverup. Confusing information about Flight 370, which disappeared March 8, “misled and delayed the rescue, wasting tremendous manpower and resources as well as the most precious rescuing time,” said one man reading from a statement while surrounded by about 30 family members at 2 a.m. in Beijing’s Metropark Lido Hotel.

Malaysian Air said it revealed its

That’s proven elusive for Li Bo, 40, a Heilongjiang native whose cousin -- an only child -- was on the missing plane. He lashed out at photographers who clamored to take his picture outside the ballroom, cutting his arm in the melee.

“There is no evidence,” Li said after watching televised statement in the Lido ballroom. “If you have evidence of something floating on the sea we can accept it. But now there is nothing.”

The conclusion that the plane was lost at sea, drawn from a new analysis by satellite operator Inmarsat Plc and British air safety regulators, isn’t credible, Li said in an interview.

“You can’t make a judgment based on Malaysia’s data.”

Steve Wang, who participated in the protest, echoed Li’s comments.

“I just can’t accept that they simply concluded that it crashed based on a theory,” he said outside the embassy.

Bloomberg News

Hong Kong net gold Mozambique to commence ceasefire exports to China up

China to reform money market pricing

Mozambique’s government announced yesterday that the “end to (military) hostilities” with Renamo, the main opposition party, would be declared in Maputo, the capital, by the Country’s president, Armando Guebuza, and Renamo leader, Afonso Dhlakama.

Although he has stated many times during telephone interviews that he was in Serra de Gorongosa, in the centre of the country, Afonso Dhlakama has not been seen in public since last October, when he was evicted from the base where he had been living by the Mozambican army.

“Only the president and the leader of Renamo are in a position to tell the people about a ceasefire declaration”, said José Pacheco, he head of the government’s negotiating team.

José Pacheco said that the announcement of the end to hostilities between the army and armed Renamo fighters will be followed by an agreement on the presence of international observers to supervise the cease-fire.

Hong Kong’s net gold exports to China jumped 25 percent in February after a drop in the previous month, data showed, but demand in March could be curbed by a weaker yuan and the discounted prices on the mainland, dealers said.

Net gold exports to China from Hong Kong rose to 112.314 tonnes from 89.745 tonnes in January, data e-mailed to Reuters by the Hong Kong Census and Statistics Department showed.

Total gold exports rose to 125.004 tonnes in February from 102.637 tonnes in the previous month, the data showed.

China, the world’s biggest gold consumer, does not publish trade data for the metal. The numbers from Hong Kong, a main conduit for gold into China, give the best picture of Chinese trade in the precious metal.

Hong Kong’s January net gold exports to China were down 5.4 percent from the 94.847 tonnes exported in December.

The regulator for China’s interbank money market will change the way it calculates the opening price for two benchmark interest rates, sources told Reuters yesterday, in a bid to reduce the ability of individual banks to manipulate key rates.

The National Interbank Funding Center, which is controlled by the central bank, will use a new method to calculate the opening quote for the overnight and seven-day bond repurchase rates.

These rates, which measure the cost that banks charge for lending to each other, are considered key benchmarks for domestic liquidity conditions.

The plan could eventually be expanded to include other tenors, the sources said.

Rather than simply publishing the rate for the first trade, the centre will use the so-called “call auction” method to calculate the official opening rate, which often serves as a key reference for pricing in the broader bond market.

Lusa

Reuters

Reuters