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MOP 6.00 Publisher: Paulo A. Azevedo Number 514 Wednesday April 9, 2014 Year III

More to their credit

China Construction Bank Corp will convert its lender incorporated in Macau into a local branch in June. A move that will release the unit from credit restrictions, and enable the Beijing-based institution to extend much more credit. Other big four state-owned banks in the mainland have previously ploughed this path. Page

Employment confidence good, home purchase not so

No hurry to ban A complete casino smoking ban is still on the table but there’s no need to rush, says the government. Legislators debated the hot topic yesterday to kind of agree that sometimes slower is better. Page 3

On tenterhooks

Page 6

Public feedback is slowing down construction projects Page 7

Predicting local gaming results is becoming a weekly pastime. The first days of April did not put a smile on analysts’ faces, with revenues dropping 21 percent from March. Gaming stocks felt the pinch.

Count us in




Brought to you by

HSI - Movers April 8


Big names in the multibillion dollar pachinko industry in Japan do not intend to wait for foreign gaming companies to dominate the very appealing casino business in the country. Pachinko hall operator Dynam Japan Holdings is ahead of the curve and already holding talks with possible Asian partners. SJM, Melco Crown Ent. and Galaxy Entertainment are in the frame. Page



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Source: Bloomberg

Net result

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Macau Legend Development Ltd has secured a HK$ 4.2 billion syndicated loan and powers on with the HK$6 billion revamp of Macau Fisherman’s Wharf. Following the refurbishment, which includes three more hotels and gaming tables, businessman David Chow Kam Fai anticipates creating 5,000 new jobs. Page


Brought to you by




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April 9, 2014


The race is on Pachinko operator Dynam in talks to build Japan casino with Asian partner. The company has already held talks with Macau gaming operators Melco Crown Ent., SJM and Galaxy Farah Master and Nathan Layne

Yoji Sato, Dynam’s chairman

after Macau and the United States. “Dynam’s number one focus is on the casino opportunity in Japan,” Sato said, speaking to Reuters via video from his office in Hong Kong, where the Japanese company listed its shares in 2012. Sato said he would not necessarily seek majority ownership of a casino project in Japan, but would want to play a leading role in operating it. If it were able to secure a license, Dynam may look to raise funds in Japan, possibly through a listing or an issuance of shares, he added.

Glittering prize

business as usual

Faites vos jeux!

Pedro Cortés


nd they’re off! Despite the date not yet being set, it seems more or less consensual that Mr. Fernando Chui Sai On will be re-elected as Chief Executive in the election (?) later this year. Mr. Chui deserves it. Although more introverted and reserved than the previous Chief Executive, the current leader of Macau has gained in popularity and, for good or bad, heard – sometimes more than he should – the population’s aspirations, whatever they may be. We may or may not agree with some of his administration’s policies (or non-policies) but the point is whether we are going to adopt a different political approach in the coming 5 years. The choice of leader is, of course, of paramount importance. However, ‘Chinese whispers’ lead to the question: who are going to act as the Secretaries? Well, the erosion of the years cannot be halted and we might conclude that new faces will start to show up in our daily newspapers, on radio, on our television screens and in our social networks. Another point to be considered is that

one of these faces might well emerge as the new Chief Executive from the nottoo-distant 2019 elections. From Administration and Justice to Public Works, from Security to Social Affairs, without forgetting Finance and Economy, there are rumors to suit all tastes. Macau is a world of difference, particularly in the shadowy world of gossip. From those in office since 1999, we shall highlight the work of the Secretary for Security. Macau is probably one of the safest places to live in the world. Yes, friends, not just in Asia but on the entire planet. Notwithstanding, of course, the crimes perpetrated daily by the huge number of drivers on the streets of Macau and other minor underground crimes. Overall, one can feel pretty secure going about one’s daily business. But let’s wait and see: I’m sure Mr. Fernando Chui Sai On already has in mind who his successor is likely to be. Perhaps it is the appropriate time, now, in Macau, to use the expression Faites vos jeux!


achinko hall operator Dynam Japan Holdings Co is in talks with several Asian gaming operators to build a casino in Japan as the country’s parliament prepares to debate a bill that would legalise casino gambling for the first time. Yoji Sato, Dynam’s chairman and one of Japan’s wealthiest businessmen, said the company wants to announce a partnership with an Asian operator once an initial bill is passed that will start the process of legalizing gambling. Analysts say Japan could become the world’s third-biggest gambling market with annual revenue of over US$40 billion (320 billion patacas). Proponents of the bill expect debate to start next month, and aim to pass it before parliament session ends in June. They say casinos could be in operation by the time Tokyo stages the 2020 summer Olympic Games, boosting leisure industry spending. Sato said Dynam has already held talks with Macau-based operators Melco Crown Entertainment Ltd, SJM Holdings Ltd and Galaxy Entertainment Group, as well as South Korea’s Paradise Group and NagaCorp Ltd, which has a casino in Cambodia. His comments mark the first time a Japanese company has disclosed a short list of potential overseas partners. Paradise said it has looked at opportunities in Japan but for now has decided not to pursue them. The other companies named by Sato weren’t immediately available for comment. Japan’s pachinko industry, which involves a game that resembles a cross between slots and a pinball machine, has a huge foothold in the country where one out of six adults is said to play recreationally. Brokerage CLSA estimates Japan could become the world’s biggest market for gambling

Japan is widely viewed as a prize market for casino operators due to its wealthy population and proximity to China, home to some of the world’s most prolific, and wealthiest, gamblers. If parliament approves the initial bill in the coming months, bureaucrats can then start working on concrete laws that would be incorporated in a second bill proponents aim to pass in 2015. Non-Asian operators eyeing the Japanese market include Las Vegas Sands, MGM Resorts International and Wynn Resorts Ltd. Japan is expected to open casino resorts similar to those in Singapore. Politicians in Japan are keen to attract high-roller gamblers, as well as massmarket visitors who spend on dining, entertainment and retail.

KEY POINTS First bill to legalize casinos in Japan due within months Dynam plans to announce deal after first bill passes Japan could become world’s third-biggest gambling market

While the top global operators have for the most part focused on Tokyo and Osaka, Sato said he wanted to target regional markets outside big cities, such as potential sites in Hokkaido to the north and the southern Kyushu area. That would match Dynam’s strategy for the pachinko market. It has placed most of its 370 halls outside the city areas and has been trying to expand the number of players by offering a less expensive version of the game. “I think the local area is better. There you can run a stable operation targeting the mass market, with highrollers accounting for about 10 to 20 percent of your business,” Sato said. Reuters


April 9, 2014


Cigarette break There will be no change any time soon to the smoking ban currently implemented in casinos by Sara Farr


here is no urgency in changing the current smoking ban and implementing a full casino smoking ban. This was the government’s conclusion during yesterday afternoon’s debate with legislators on the issue. Secretary for Social Affairs and Culture Cheong U said that the government would continue addressing the issue and make relevant improvements, however “we’re in no rush to amend the legislation.” Legislators, on the other hand, for the most part are in favour of a full smoking ban in casinos. Currently, casinos and gaming venues are allowed to set up smoking areas of no more than 50 percent of their public space. “Casinos can ask for a smoking area of only 20 percent, or none at all [if they wish],” Mr Cheong said. Legislator Lei Cheng I tabled the motion and called on the government to implement a full casino smoking ban on the grounds that secondhand smoke affects the health of casino workers who have to deal directly with smokers. She said a full ban would help

protect the occupational safety of gaming employees. Health authorities said last month that they agreed with the move to ban smoking entirely. During yesterday’s legislature session, the director of the Health Bureau, Lei Chi Ion, reiterated this but added that the act of smoking is legal. Questions were raised on whether a full smoking ban would impact Macau’s gaming revenue. Nonetheless, legislators said workers’ health should be a priority given the dangers of secondhand smoke. Comparisons were also made between Macau and other regions where gambling is allowed and smoking banned in all but designated smoking areas, such as in Queensland, Australia. All six gaming operators suggested that a smoking room be installed in casinos and gaming venues similar to smoking areas in airports. Such rooms inside gaming venues would not have any gaming tables. The government, however, is still considering whether or not this is a feasible solution. For the VIP gaming floor, smoking is still permitted in most of half the floor space. Up until the end of last

month, health authorities received health reports on 16,000 casino workers, which were submitted by the workers’ respective companies. While these don’t comprise all of the workers in the gaming industry, authorities applaud the move and are encouraging gaming operators to continue conducting physicals and

submitting these to the Health Bureau. Authorities received a total of 778 complaints about illegal smoking, five of which were from shift workers and another five from pregnant women. The government reiterated that the latter and people with chronic diseases should not be assigned to designated smoking areas.

April gaming revenue loses some steam: broker Wells Fargo said the daily casino revenue in April 1-6 dropped by up to 21 pct from March, sending gaming stocks down Tony Lai


he growth of gaming revenue this month so far has lost some momentum due to the wet weather, down by up to 21 percent from the same period last month, estimates brokerage Wells Fargo Ltd. Almost all the stocks of gaming operators tumbled yesterday following the report with the exception of Melco Crown Entertainment Ltd. Senior analyst Cameron McKnight wrote in a client note

on Monday that the average daily casino revenue for the first six days of this month was between 900 million patacas (US$112.5 million) and 950 million patacas. These figures represent a drop of 17-21 percent from the average daily take-ins of 1.14 billion patacas in the period March 1-6, the note said. McKnight attributed such slowdown to “inclement weather”, expecting the revenue of this month

to grow in the low- to mid-teens, or about 15.5 percent. Official figures show Macau raked in 35.45 billion patacas from casinos in March, up 13.1 percent from a year earlier. A trough of low atmospheric pressure has hit Macau and nearby regions in the past few days, dumping more than 20 millimetres of rain recorded across the territory in the early morning of April 3, according to Macau Meteorological and

Earlier this year, 14 gaming venues failed the official air quality assessment, spurring legislators to voice their concerns on how air quality can be improved inside these premises. Legislators also asked for a MOP3,000 subsidy for each worker if a full smoking ban is not implemented.

Geophysical Bureau. Mr McKnight believes the growth of gaming revenues here will slow to 14.2 percent in the second quarter from the 19.8 percent of the first quarter. Shares for the city’s six gaming operators remained sluggish on the Hong Kong Stock Exchange yesterday following the note, while the benchmark Hang Seng Index went up by 0.98 percent to close at 22,596.97. Wynn Macau tumbled the most at 2.59 percent to HK$31.95 yesterday while Sands China Ltd suffered a decline of 2.24 percent to HK$58.90. MGM China Holdings dipped 1.57 percent to HK$28.20, Galaxy Entertainment Group Ltd dropped 1.55 percent to HK$66.90, and SJM Holdings Ltd declined by 0.67 percent to HK$22.25. Dual-listed Melco Crown Entertainment Ltd was the only gaming stock to increase yesterday, closing at HK$94.75 on the Hong Kong market yesterday, up 0.05 percent.


April 9, 2014


Fisherman’s Wharf revamp sets sail

Brought to you by

David Chow’s Macau Legend has the necessary capital on hand to fund the HK$6-billion project after securing a HK$4.2-billion syndicated loan


Tony Lai

Few bright spots Visitors from Asia represent almost the totality of travellers arriving in Macau on packaged tours. Since mid-2011, the combined share of Asian countries was slightly below the 99 percent threshold on only four occasions. In Asia, most visitors come from China or, more generally, from Greater China. Leaving aside Greater China and the other two main Asian economies, South Korea and Japan, the rest of tourist flows are comparatively very small. The case of India is one worth highlighting. The latest figures, for January and February, bring a hint of growth compared to last year. But last year was a particularly bad one. From its peak in 2011, the number of visitors has almost halved. Even with this slight recovery at the start of the year, the current figures are noticeably below what they were in 2011 or even 2010. Those were more hopeful times for the growth of Indian tourism in Macau, which the following years did not confirm. Packaged tour visitors, select sources

Budget for revamp of Fisherman’s Wharf now










Southeast Asian countries paint a more mixed picture. Overall, their numbers at the beginning of the year fell, compared with 2013. Thailand, however, has seen steady growth. The figures in the first two months of the year fit with that overall trend. Malaysia shows a more volatile profile, around what is, in practical terms, a flat average trend. However, the beginning of the year was weak, compared with the previous one. Other countries represent very little amounts of visitors. The pick-up seen in the first two months - with numbers jumping from monthly values below one thousand to values close to five thousand - reflect the inclusion of the Philippines and Vietnam in that category. Separate figures for those countries are no longer published. J.I.D.


HK$6 billion

drop in packaged tour visitors from SEA, January and February, on previous year

asino service firm Macau Legend Development Ltd has enough resources on hand to fund the revamp of Macau Fisherman’s Wharf, which is HK$1 billion (US$128.2 million) more expensive than the original forecast. The latest investment figure of HK$6 billion was unveiled yesterday, after the company controlled by veteran businessman David Chow Kam Fai signed a HK$4.2-billion syndicated loan deal with 10 banks. Mr Chow, co-chairman and chief executive of Hong Kong-listed Macau Legend, said on the sidelines of the ceremony that the wharf will require 5,000 more workers following the refurbishment, which should be completed by 2017. The government should have a “long-term vision” on the human resources policy to man the new mega resorts and control the pace of development, he added. The three-phase revamp will add three new hotels offering over 1,270 rooms and facilities like a pier and a dinosaur museum to the existing 72room Rocks Hotel and Babylon Casino. Post-revamp, the project is also expected to accommodate 350 extra gaming tables, if the government approves. “Right now the investment figure for the revamp is about [HK$]6 billion but it may cost a little more,” Mr Chow said yesterday. “We’ll try to keep it under [this figure].” But this is already 20 percent more than the HK$5 billion budgeted when Mr Chow first raised the redevelopment idea in 2012. The co-chairman did not give specific reasons yesterday for the increase but several on-going constructions of new mega casino-resorts in Cotai have also cost more due to the rising prices of construction materials and labour expenses.

Macau Legend has no worries about financing the project now, after its subsidiary Macau Fisherman’s Wharf International Investment Co Ltd secured a HK$4.2-billion loan from the Industrial and Commercial Bank of China (Macau) Ltd. “We have enough money now and there’s no need to have any other loans,” Mr Chow said, as the company has raised HK$3.55 billion via two rounds of share offering – despite lower-than-expected subscriptions - last July and in January.

Controlled pace The first phase of the redevelopment, or the addition of Prague Harbour View Hotel, can become operational in the summer, namely August, said the company’s co-chairman. Macau Legend is yet to get construction permits for the constructions of the latter two phases including two hotels and a dinosaur museum, Mr Chow admitted. But the former legislator is not worried, saying “I know the government will cooperate with us.” “If everything goes smoothly the overall project must be completed before 2017,” he noted, adding it only takes around a year to build hotels and the museum. Mr Chow expects the wharf requires 5,000 additional workers to man its hotels, casinos and other facilities after the completion of the entire plan. Talking about the possible labour shortage as the new Cotai resorts opening in 2015-17 may need as many as 40,000 workers, he said: “The government should study the [labour] policy in-depth with longterm vision of like 10-20 years.”

Asked about whether the localonly restriction for casino dealers should be lifted, he gave an indirect answer: “It depends on the number of gaming tables granted for the new [Cotai] projects. “If all the projects open in 2017, I really don’t know how they can operate. But if it is divided into different phases, I don’t think it is that difficult.” “The [gaming] development pace can be controlled by the government, not the enterprises,” Mr Chow said. Secretary for Economy and Finance Francis Tam Pak Yuen said in February the government will not grant all the gaming tables the new Cotai resorts have asked for at least until 2022. And the administration has stressed several times the positions of casino dealers will not open for non-residents at the moment. Mr Chow added yesterday he is confident the government will approve 350 additional gaming tables the company has requested for the wharf after revamp, as it will have many non-gaming elements. In total, Macau Legend hopes to have 500 gaming tables, including over 100 tables in its other premise, Pharaoh’s Palace Casino in the Landmark Hotel. ICBC Macau and Banco Nacional Ultramarino SA (BNU) are the lead arrangers of the HK$4.2-billion loan. There are eight other participating banks: Macau Branch of Bank of East Asia Ltd, Luso International Banking Ltd, China Construction Bank (Macau) Corp Ltd, Macau Branch of Wing Lung Bank Ltd, Banco Comercial de Macau, S.A., Macau Branch of Banco Comercial Português, S.A, Mega International Commercial Bank Co Ltd and Macau Branch of First Commercial Bank Ltd.


April 9, 2014

Macau Macau property fund declares 35 US cent dividend London-listed Macau Property Opportunities Fund will pay a dividend of 35 US cents (MOP2.80) a share – a dividend yield of about 8.6 percent.
Shareholders should receive the dividend by April 29, the fund manager says.
The fund invests in and develops property in Macau and elsewhere in the Pearl River Delta.

Branching out China Construction Bank becomes a branch in Macau. The Beijing-based lender will turn a firm incorporated here into a local branch for a greater presence in the lending business, suggests a banking source Tony Lai


hina Construction Bank Corp (CCBC) will turn its lender incorporated here into its local branch in June, allowing itself more credit for the loan business here, suggest observers. A dispatch published in Macau’s Official Gazette yesterday said that the Macau administration had authorised CCBC, one of the big four state-owned banks in mainland China, to set up a branch here, under the name of Macau Branch of China Construction Bank Corp. The bank’s existing local presence - China Construction Bank (Macau) Corp Ltd - will merge with this new Macau Branch, according to the dispatch dated April 1. All the operations and obligations under CCBC Macau Ltd, including the eight branches here, will transfer to CCBC’s Macau Branch, said the dispatch, adding that this will come into effect in 60 days following publication. Business Daily asked China Construction Bank (Asia) Corp Ltd, a wholly-owned subsidiary of CCBC controlling CCBC Macau Ltd, for the rationale behind this change. There was no reply before press time yesterday but a local banking

analyst, who declined to be named, told Business Daily that this move will release CCBC from credit restrictions here so that it has the capacity to lend more money. Local financial regulations mandate that lenders here can only lend up to 30 percent of their total capital, the analyst said. The local operation of CCBC in the past could only lend up to 30 percent of the capital of CCBC Macau Ltd.

Confidence By becoming a branch office, CCBC can extend more credit for the loans business here in the future with 30 percent of its capital – a much larger pool of money than CCBC Macau Ltd – said the analyst. Other big four state-owned banks in the mainland - Bank of China Ltd and Bank of Communications Ltd – have also opted to set up a branch here instead of being a lender company incorporated here, except Industrial and Commercial Bank of China Ltd, which incorporates ICBC (Macau) Ltd here. “It’s bad for the small banks but good for Macau because it reinforces banking competition,” the analyst

said, adding that this change of CCBC also expresses “confidence” in the growth of the banking sector here. Official figures from the Monetary Authority of Macau show that the total loans of the local banking sector expanded 31.4 percent from the previous year to 534.73 billion patacas (US$66.85 billion) last year. The profit of the banking sector here reached a record high of 8.44 billion patacas last year, up 34.2 percent from 2012.

The banking analyst also told this newspaper that the CCBC’s latest move can also help the lender cut costs because a lender incorporated here as a company has to have a full board of directors and a fiscal council, independent from the parent firm. CCBC Macau’s net profit reached 19.83 million patacas in 2012, down 34 percent from a year earlier due to intense competition, its latest annual report published in the Official Gazette shows.


April 9, 2014


Employment confidence through the roof Full employment prospects, however, do not compensate for residents’ qualms about home purchase, latest survey shows Stephanie Lai


espite residents expressing continued confidence in employment prospects, the latest survey finds that they still remain pessimistic about home purchase. The latest consumer confidence index survey compiled by Macau University of Science and Technology reveals that the sub-index on employment status for the first quarter of this year stands at 127.67 points, up 1.96 percent on the previous quarter and also a record-high level since the university published the consumer confidence survey for the fourth quarter in 2008. The university registers the subindex on the local economy at 114.63 points for the first quarter of this year, a dip of 2 percent on the previous quarter, showing that residents are generally optimistic about the economy but have a more cautious outlook at present. The sub-index on the local economy has remained above 100 points for 19 consecutive quarters. A score below 100 points suggests a negative outlook in consumer confidence, the university explains. Residents’ confidence in home purchase remains the weakest as in previous surveys, where the respective sub-index posted 40.38 points for the first quarter of this year, down 3.1 percent on the previous quarter and also a level with the second lowest 37.6 points registered for the first quarter of 2010.

FIGURES Confidence sub-index on unemployment Q1: 127.67 points Home purchase sub-index Q1: 40.38 points Overall consumer confidence index: 85.99 points

To compile the survey, the university telephoned 1,024 residents from March 15 to 22 and asked them for their perspectives on the city’s economy, employment status, price level, quality of life, home purchase and share purchase. The overall consumer confidence index for the city, which includes these six factors, was down by a year-on-

Corporate SJM Holdings awarded for outstanding performance SJM Holdings Limited (880:HK) was presented the Outstanding Performance Award (Hong Kong) by Yazhou Zhoukan magazine in their Global Chinese Business 1000 Awards Presentation held in Hong Kong. Among the leading 1000 listed companies owned by Chinese entrepreneurs based on stock market value as of 31 August 2013, Yazhou Zhoukan awarded Outstanding Performance Awards to the top 20 companies in each of mainland China, Hong Kong, Taiwan, Malaysia and Singapore. Selection criteria were based on average growth in revenue and profit as well as innovative strength over the past three years. SJM Holdings CFO Robert McBain (right) received the award from Editor-in-chief Yau Lop-poon.

BNU VISA and MasterCard awarded In March BNU VISA and MasterCard were awarded with international prizes on security, performance and innovation. The banks VISA card got recognition for the highest payment volume, cross border highest outbound volume and best fraud control. BNU MasterCard received the award for the first debit card programme in Macau.

year 2.2 percent to 85.99 points in the first quarter of this year, a level that also slightly dipped by 0.38 percent compared to the previous quarter, the survey found. The sub-index of the city’s price levels, usually the category with the second-lowest consumer confidence next to home purchase, stood at 55.03 for the first quarter of this year, a

rebound of 1.98 percent compared to the previous quarter but down 3 percent on a year ago, showing that residents are still very much pressured by inflation. The survey also notes the weakened confidence of residents regarding share purchase, which has dipped 2.42 percent from the previous period to 82.30 points for the first quarter.

Bauhaus sales enjoy further growth Stephanie Lai


lothing retailer Bauhaus International (Holdings) Ltd saw same- store-sales growth for its self-managed shops in Macau and Hong Kong increase in step with shop expansion, while a decline was registered for its mainland China shops, the company’s unaudited sales performance for the first three months of this year filed with the Hong Kong Stock Exchange reveals. For the three months ended March 31 this year, Bauhaus saw its samestore-sales here and in Hong Kong grow some 16 percent year-on-year, while the numbers of its self-managed shops in the two cities increased to 84 in this quarter from 79 shops in the corresponding period last year. This latest figure shows that Bauhaus’ same-store-sales growth has slowed from the previous quarter covering October to December last year, which saw a growth rate of 21 percent. Sales of Bauhaus here and in Hong Kong amounted to HK$880.1 million (US$113 million) for the financial year ended March 31, 2013, along with a

strong same-store-sales growth rate of about 21 percent. However, this growth rate has remained the same for the financial year ended March 31 this year, the company’s latest unaudited sales performance filing shows. Meanwhile, the company’s retail business in mainland China has seen a 5 percent year-on-year dip in samestore-sales for the three months ended March 31 this year. In the period, there were 26 Bauhaus stores in the mainland, four less than a year ago. Still, for the financial year ended March 31, 2014, the same-store-sales growth for Bauhaus stores in mainland China still managed to register a rise of 11 percent, the company’s filing noted. Sales in China have been the weaker segment for Bauhaus, with the company registering a 13.6 percent year-on-year decline in mainland China sales at HK$152.4 million for the last financial year ended March 31, 2013. The company’s brands include Bauhaus, Tough Jeansmith, Salad and 80/20.


April 9, 2014

Macau Ching Ming Festival visitors up 16.9 pct The number of visitors rose by 16.9 percent from the previous year for this year’s Ching Ming Festival last weekend, figures from the Public Security Police Force show. Police confirmed yesterday that Macau received some 412,630 travellers in the April 5-7 period, whilst more than 1.25 million people transited the territory at the same time.

Longer wait for construction plan approvals The legal spirit of having more public feedback on construction projects means a longer waiting process for developers to gain planning approval Stephanie Lai


evelopers here have to wait longer to gain government approval on their plans for construction projects in the city, as the urban planning law that came into effect on March 1 requires that such plans undergo public feedback and a review from the advisory organ of the urban planning committee. As required by the urban planning law, construction project developers have to apply for an “urban conditional plan” from the government, a document issued by the Land, Public

Works and Transport Bureau that determines the project’s construction area, building height limit and public facilities to be incorporated in the project site. The issuance of the urban conditional plan will have to undergo not only the bureau’s technical analysis: the government will also have to make announcements of the application of such plans in local newspapers and collect public opinion before passing the application case to the urban planning committee for review.

“The whole issuance process for the urban conditional plan, generally speaking, can take at least half a year,” an urban planning committee member and architect Ben Leong Chong In explains to Business Daily, “This is apparently a longer process than the past experience that the local [construction] sectors have to try to adapt.” According to the law, the issuance of the urban conditional plan for construction of low-rise buildings with a height of at least

20.5 metres, or those of 9 metres or less, can be exempted from the urban planning committee review; the same exemption rule also applies to projects already under review by the cultural heritage committee. As at April 4, the government has received 111 applications for an urban conditional plan, the head of the urban planning department from the public works bureau Lao Iong told media yesterday. He noted that many of these applications involve projects located on the Macau Peninsula.


April 9, 2014

Stocks Watch

Big ones smile Hong Kong H-shares climb fourth day Kana Nishizawa


gauge of Chinese stocks traded in Hong Kong rose for a fourth day as banks and automakers climbed. Tencent Holdings Ltd., Asia’s biggest Internet company, rebounded after buying back shares. Industrial & Commercial Bank of China Ltd., the nation’s largest lender, gained 2.5 percent as banks provided the biggest boost to the Hang Seng China Enterprises Index. Great Wall Motor Co. rose 6.8 percent to lead gains. Tencent advanced 1.6 percent after dropping 11 percent the past four trading days. Yanzhou Coal Mining Co. rose 4 percent after JPMorgan Chase & Co. reiterated its overweight rating on the stock. The Hang Seng China Enterprises Index, also known as the H- share index, added 1.6 percent to 10,321.82 at the close in Hong Kong. The gauge dropped 6.9 percent in the first quarter as Chinese data from manufacturing to retail sales fueled speculation the nation would miss its 7.5 percent growth target. The Hang Seng Index gained 1 percent to 22,596.97 yesterday, with volume 32 percent higher than

the 30-day average. Tencent rose 1.6 percent to HK$509.50 to halt its four-day drop after buying back HK$76.7 million (US$9.9 million) of shares on Monday, according to an exchange filing. ICBC rose 2.5 percent to HK$4.90, while China Construction Bank Corp., the nation’s secondlargest lender by market value, gained 2 percent to HK$5.56. Citic Securities Co., China’s biggest listed brokerage, gained 4.2 percent to HK$17.40. Great Wall, a mainland producer of sport-utility vehicles and pickups, rose 6.8 percent to HK$41.70. Dongfeng Motor Group Co., which makes vehicles with Nissan Motor Co., increased 3.8 percent to HK$11.50. Brilliance China Automotive Holdings Ltd. added 3.2 percent to HK$12.80. Yanzhou Coal climbed 4 percent to HK$6.17. There’s attractive risk-reward potential with nearterm catalysts likely from analyst upgrades and a seasonal recovery of coal prices, JPMorgan wrote in a report dated yesterday. Bloomberg News





Brand guidelines


May 26th to

May 31st 2014 Special Olympics Ad left side.indd 1

08.04.2014 15:14:09


April 9, 2014

Greater China

Chinese funds lose momentum News about slowdown in China’s economy spooks US investors


berweis’s benchmark fund ranks No. 1 in its peer group, delivering 24 percent annually over the past five years. The problem is the country. Having China in a fund’s name repels investors much the same way it attracted money over much of the past decade. Global investors pulled US$2.8 billion from funds focused on Chinese stocks this year after taking out US$5.9 billion in 2013, according to EPFR Global, a Cambridge, Massachusetts-based data provider. Assets in Oberweis’s China Opportunities Fund dropped by half since 2010 because of withdrawals, underscoring concern that growth in the world’s second-largest economy is slowing and a credit boom may be giving way to a bust. “Is it frustrating?” James Oberweis, president of Oberweis Asset Management Inc., which oversees US$1.4 billion in Lisle, Illinois, said in a March 26 telephone interview. “Sure, absolutely it is.” “A few years ago, people would buy anything that has the word China in it. The pendulum once again has swung the other way.” The Bloomberg index of the biggest Chinese stocks in New York fell 0.8 percent yesterday, extending this year’s slump to 7.9 percent.

Retail, software The 178 percent return in the Oberweis China fund tops that of all 22 U.S.-based funds investing in the Asian country’s stocks with at least five years of history, according to data compiled by Bloomberg. Oberweis, who took over the asset management firm from his father in 2001, has skirted much of the rout in Chinese equities by picking stocks that would largely be unaffected by the economic

slowdown. The China fund, which now has US$207 million, invests in small-capitalization companies, or stocks with a market value of US$2 billion or less. Among stocks that have fuelled the fund’s 45 percent gain over the past year are online retailer Vipshop Holdings Ltd., software developers Qihoo 360 Technology Co. and Kingsoft Corp. and casino operator Galaxy Entertainment Group Ltd., according to data compiled by Bloomberg. Investors are too fixated on the economy while ignoring the growth potential of individual companies, Oberweis said. China’s economy probably grew 7.4 percent last quarter from a year earlier, on track for the slowest annual expansion since 1990, according to analysts surveyed by Bloomberg News in March. “The frustrating part to me more than anything is institutions are not recognizing the size and opportunities of the China market,” said Oberweis. “If sentiment in China was better right now, we’d be seeing massive inflows.” China looked unbeatable in 2007 when its economy grew 14 percent and overtook Germany to become the world’s third largest economy. About US$6 billion poured to Chinese stock funds between 2006 and 2008 when the global financial crisis started, according to EPFR.

‘Just beginning’ The government outlined a package of stimulus last week from railway construction to tax relief on concern it won’t reach its 7.5 percent growth target. While the nation can’t ignore the “difficulties and risks” from increasing downward pressure on the economy, it is confident it

Galaxy Entertainment Group was one of the most successful companies to attract American funds

A few years ago, people would buy anything that has the word China in it. The pendulum once again has swung the other way James Oberweis, President of Oberweis Asset Management Inc.

will keep growth in a reasonable range, Premier Li Keqiang said in a statement on March 28. “The chaos is just beginning,” Hao Hong, chief China equity strategist at Bocom International Holdings Co., told Rishaad Salamat on Bloomberg Television’s “On the Move” on April 2. In this environment, “stocks tend to perform very badly in China,” he said. Some of Oberweis’s bigger competitors fared no better. Fidelity China Region Fund, the largest of its kind, lost US$1 billion of its assets since the peak of US$2.4 billion in 2009. Assets of Matthews China Fund have shrunk to US$1.2 billion from US$3 billion in December 2010, according to data compiled by Bloomberg. Bloomberg News

More oversupply challenges for developers Chinese developers will probably face more challenges this year because of an oversupply of housing in smaller cities, according to a Bloomberg News survey


New residences are mostly built in less prosperous cities

ourcing of financing, including from nonbanks, will narrow, according to 26 economists and analysts surveyed from March 24 to 31. Developers in regions where the housing market slowed and access to financing shrunk face rising default risks, Standard & Poor’s Ratings Services said in a January 17 report. “Oversupply remains the top concern of the real estate sector,” Qinwei Wang, London-based economist at Capital Economics Ltd., wrote in the survey. “Inventories have continued to rise, with the situation vulnerable in some third cities. Looking ahead, the increase of demand for new properties will probably be far weaker than over the last decade.” The pressure on Chinese developers as economic

growth slows and the government allows local cities to implement their own housing curbs was underscored by the collapse of a developer in a city south of Shanghai last month. About 67 percent of housing under construction in China last year was in less affluent cities, according to Nomura Holdings Inc. While most respondents didn’t expect China’s property market to collapse this year, four out of five respondents, who see a crash, expect it to happen in smaller third-tier cities, according to the survey.

Home-price growth Premier Li Keqiang last month said the government will regulate the housing market “differently in different cities” to take into

account local conditions. About 38 percent of respondents said China’s home prices will rise 5 percent to 10 percent this year, while 35 percent said they expected prices to be little changed. China’s home-price growth slowed for a third month in March. Prices last month rose 10.04 percent from a year earlier, according to SouFun Holdings Ltd., China’s biggest real estate website. Zhejiang Xingrun Real Estate Co., a closely held developer based in Fenghua, is insolvent, with 3.5 billion yuan (US$562 million) of debt. Its residential projects have been halted and authorities have detained its largest shareholder and his son, according to the city’s government. Bloomberg News


April 9, 2014

Greater China Brazilian corn to be imported China, the world’s second-largest corn consumer, has allowed imports of the grain from Brazil from the start of this month, Chinese quarantine authorities said yesterday. The government of Brazil, the world’s No. 2 corn exporter, flagged the move late last year, but the start date was not revealed at that time. China mainly imports corn from United States, but shipments from the country have been curbed after officials turned away about 1 million tonnes due to the presence of an unapproved genetically modified strain.

Insurance industry allowed to merge and buy Insurers in China, including Chinese-based foreign insurers, will be allowed to acquire and merge with each other for the first time in a step to strengthen the industry, according to new rules issued by the country’s insurance regulator. The rules will allow weaker players to be absorbed by stronger firms, according to a statement published on the China Insurance Regulatory Commission’s (CIRC) website. Rapid growth in China’s insurance industry and investment into risky local infrastructure and housing projects have weakened the position of smaller insurers in particular.

Curb on copper purchases Aurubis AG, the second biggest refined copper producer, agreed to cancel some shipments to China as buyers reduce stockpiles after prices slumped. Copper product makers are taking a “hand-to-mouth” approach and importers are adjusting positions on speculation prices may fall further, Stefan Boel, a member of Aurubis’ board, said yesterday. The slowdown since November is “a little bit of a pause” and also may be being driven by reduced demand for use as finance collateral, currency depreciation and seasonality, according to the Hamburg-based company. Suppliers were shipping copper to China as premiums for imported metal climbed to a record in August.

Beijing office rents rocket Rising demand and limited supply have doubled office rents in the Chinese capital since 2008, making its Finance Street the world’s third-most expensive


ohn Wong, who leases offices in downtown Beijing’s new, 61-story Fortune Financial Center, has filled 60 percent of the space in the tower completed in September. He said he’s confident the rest will be snapped up. Tenants at the tower, known as FFC, include financial companies such as HSBC Holdings Plc and DBS Group Holdings Ltd., according to Wong, head of asset management at HKI China Land Ltd., which built FFC. “It’s such a good time,” Wong said in an interview in his office on the second floor of Fortune Mall, which is connected to the FFC by an underground tunnel. “The companies in Beijing still have the urge to expand, the financial sector that we focus on remains healthy, and we face relatively small competition because supply is limited. We have the conditions to choose the clients we want.” Beijing Finance Street is only just behind Hong Kong’s Central and London’s West End, according to real estate broker CBRE Group Inc. The cost of renting offices in Beijing is set to rise further as only half the average annual supply over the past decade is projected to be added in the next three years. Office rents in the city will rise 3 percent to 5 percent

The sculpture’s 88 numeral on Finance Street in Beijing seems to bring luck to landlords

Top yuan forecasters predict a rebound The yuan is poised to recover from declines that have made it Asia’s worst performing currency, according to the most accurate forecasters

Cyber-warfare talks

US Defense Secretary Chuck Hagel will urge China to pursue a more open dialogue about cyber-warfare and other sensitive issues to avert potential crises between the two powers, officials said. Hagel was due to make the appeal in talks with his counterpart General Chang Wanquan in Beijing a day after Chinese officers allowed the Pentagon chief to tour the country’s first aircraft carrier in Qingdao, a rare move by the usually secretive People’s Liberation Army. US officials said the visit to the carrier marked a promising step by the Chinese.


omura Holdings Inc., which had the best estimates for the yuan over the past four quarters in data compiled by Bloomberg, predicts a 3.5 percent advance to 6 per dollar by Dec. 31, matching the median projection of analysts surveyed by Bloomberg. Japan’s biggest brokerage said the People’s Bank of China engineered the yuan’s 2.5 percent loss since the start of 2014 to help curb speculative

bets on appreciation. Second-ranked Scotiabank forecasts a year-end exchange rate of 5.98. “The last thing they want to do is create an environment where the market sees the yuan is going to depreciate over the medium term,” Craig Chan, Nomura’s Singaporebased head of currency strategy for Asia ex-Japan, said in an April 4 phone interview. “Capital flight could be very large and destabilizing for

the domestic market.” China is trying to ward off speculators as controls on the exchange rate and borrowing costs are loosened in a shift toward a more market-based economy. The yuan has strengthened 33 percent since a dollar peg ended in July 2005, trailing only the Singapore dollar among 24 emerging-market currencies tracked by Bloomberg, and expectations of one-way moves in the currency


April 9, 2014

Greater China in the next two years, CBRE’s Frank Chen estimates. “Beijing has more upside potential than Shanghai, particularly for the next two to three years,” said Chen, a Shanghai-based executive director at CBRE Research. “The rents are much higher, but they’re just not falling back because supply is so scarce.”

Slow development Only one project of 50,000 square meters near Beijing’s central business district is anticipated in the next six months compared with 3 million square meters of new space in Shanghai this year and next, according to CBRE. New office space in Beijing is set to average 270,000 square meters between 2013 and 2015, the broker said. New supply in the capital, which spreads across six concentric ring roads, hit a peak of 1.25 million square meters (13.45 million square

Beijing has more upside potential than Shanghai, particularly for the next two to three years Frank Chen, CBRE Research executive director

feet) in 2008. The construction boom was due to developers rushing to finish projects ahead of the 2008 Beijing Olympic Games. Development has been slow to restart while much of the new space has been taken by state-owned enterprises. Between 2009 and 2012, 2.2 million square meters of grade-A offices were completed with only half that amount for lease in the private market, according to an August report by broker Jones Lang LaSalle Inc. Grade A or prime refers to the most stable high- income producing properties.

High rents Corporations have rented an average 590,000 square meters a year in Beijing since the Olympics, more than double the 240,000 square meters of new workspace added in the period, according to CBRE. That pushed rents to 413 yuan (US$66) a square meter per month in the quarter ended Dec. 31, compared with 250 yuan in Shanghai, according to CBRE. The restricted supply contrasts with the rest of China, where new office space rose to a record 1.77 million square meters in the last quarter of 2013, CBRE said in a statement Jan. 16. Beijing doesn’t have a lot of spare commercial land in the city centre for buildings and many projects were completed in the lead up to the Olympics, CBRE’s Chen said. “The supply is very tight in the Beijing office market,” Zhang Xin, chief executive officer of Soho China Ltd., the largest developer in central Beijing, told Bloomberg Television March 5. Bloomberg News

Fundamentally, China’s capital account is still going to be in surplus, unless we see a significant amount of hot money outflows Sacha Tihanyi, Senior currency strategist, Scotiabank

spurred bets on continued gains. The reversal in the first quarter hurt holders of offshore yuan structured products known as Target Redemption Forwards. Morgan Stanley estimated last month that there were some US$150 billion of the contracts outstanding, held mainly by Chinese companies, and these were losing about US$3.5 billion at an exchange rate of 6.20 per dollar. A slide to 6.38 would increase the losses to US$7.5 billion, the U.S. bank said. The central bank reiterated last week that it plans to keep the yuan “basically stable,” saying it will closely monitor capital flows. It doubled the currency’s permitted divergence from a daily reference rate to 2 percent on March 17 and has since cut the fixing by 0.3 percent. The spot rate was 0.9 percent weaker than the reference rate yesterday.

“The most significant part of the move is done and 6.30 isn’t on the cards in my view,” said Sacha Tihanyi, senior currency strategist at Scotiabank in Hong Kong. “Fundamentally, China’s capital account is still going to be in surplus, unless we see a significant amount of hot money outflows. If that’s the case, I will be forced to revisit my forecasts.”

Slowing inflows Yuan positions at Chinese financial institutions accumulated from foreign-exchange sales, a barometer of capital flows, rose by 128.2 billion yuan (US$21 billion) in February, the smallest gain since September, official data show. Increases are a sign of inflows and the latest change followed a decline in exports for February, as well as slowdowns in industrial production and retail sales in the first two months of 2014. The Chinese currency has had greater price swings this year after the central bank said it would allow more two-way fluctuations. Onemonth implied volatility, a gauge of expected exchange-rate moves used to price options, raised 22 basis points to 2.12 percent yesterday. It touched 2.75 percent on March 17. “Things are no longer as stable as before,” said Tihanyi. “There is more volatility and upside for the dollar versus the yuan. I might have to tweak my interim forecasts a bit, but am still fairly comfortable with the year-end one.” China’s Purchasing Managers Index for manufacturing was 50.3 in March, higher than the previous month’s 50.2, according to official data on April 1. A reading of 50 signals expansion. A gauge by HSBC Holdings Plc and Markit Economics showed factory output contracted for the third month in a row. Bloomberg News

Auto sales rise 9% Passenger-vehicle sales in China gained 9 percent last month, as deliveries rose at General Motors Co. to Toyota Motor Corp.


etail deliveries of cars, multipurpose and sport utility vehicles climbed to 1.59 million units in March, the Passenger Car Association said today in a statement. The statebacked China Association of Automobile Manufacturers is scheduled to release monthly sales data on April 11. Hangzhou, the capital of eastern Zhejiang province, joined Beijing and Shanghai to became the sixth Chinese city to impose quotas on new vehicle purchases, as part of measures to alleviate traffic congestion and air pollution. Consumers are bringing forth purchases in anticipation more cities will roll out similar measures as local governments respond to Premier Li Keqiang’s call to wage war on smog. “People don’t want to risk their chances of owning a car and they would rather buy sooner than later given that it is unpredictable when purchase limits would be imposed,” said Han Weiqi, an analyst with Shanghai-based analyst at CSC International Holdings Ltd. Like many major cities in China, air quality has deteriorated in Hangzhou as the number of vehicles increased. Traffic has also slowed to under 20 kilometres per hour during morning and evening peak periods, according to the city government,

which plans to allocate car plates via lottery and auction.

City restrictions The China Association of Automobile Manufacturers in July 2013 identified eight cities that may impose car purchase restrictions. Two of the cities -Hangzhou and Tianjinhave since introduced such measures. The remaining six cities on the list are Shenzhen, Chengdu, Shijiazhuang, Chongqing, Qingdao and Wuhan. Premier Li said last month that fighting air pollution is one of the government’s top priorities. The World Health Organization said in March that air pollution contributed to 7 million deaths worldwide in 2012 -with 40 percent of those coming from the region dominated by China under the WHO’s classification system. Outdoor air pollution can cause lung cancer, a WHO agency said last year, ranking it as a carcinogen for the first time. Among foreign automakers, GM boosted sales in China by 7.8 percent last month to 313,283 units, helped by demand for Buick and Cadillac vehicles. Toyota’s March deliveries climbed 19 percent from a year earlier to 90,400 units. Bloomberg News

Taiwan March exports pushed by US demand Exports rise more than expected in March as stronger demand for high-tech gadgets from the United States and Europe outweigh slower demand from Asia


xports increased 2 percent year-on-year last month, beating the median forecast of 0.5 percent growth in a Reuters poll of economists. The rise was slower than the 7.9 percent jump made in February, when exports benefited from a relatively early start to the Lunar New Year holidays. Exports to China, Taiwan’s biggest market, inched down 0.3 percent from a year earlier, compared with a 17 percent jump in February. By contrast, those to the United States soared 10 percent, much faster than February’s 4.7 percent rise. “Handset exports to the U.S. market grew significantly in March,” the ministry said in a statement. “On China, its demand for optical products and LCD devices was hit by previously high inventory levels and the localisation of its industry supply chain.” The outlook for Taiwan’s exports, which are an indicator of global demand for technology products, faces uncertainty as a service trade pact with China has suffered a setback in the local parliament, some analysts said. “The biggest downside risk is the current deadlock regarding the trade services pact,” said Raymond Yeung,

a senior analyst at ANZ in Hong Kong. “The pact should be ratified as soon as possible in order to maintain its advantageous position in mainland trade. If it fails to move forward, some Taiwanese sectors could be severely affected.” A chaotic sit-in to protest the trade deal has shut down parliament for weeks and exposed deep divisions over the island’s identity after seven decades of living apart from its vast, undemocratic rival across the strait. Imports in March unexpectedly rose 7.5 percent from a year earlier, against expectations of a 0.75 percent drop. Major firms in Taiwan’s tech sector have reported a mixed bag of earnings recently. Hon Hai Precision Industry Co Ltd, the world’s largest contract assembler of electronic goods, reported fourth-quarter net profit that beat expectations on record sales of products from Apple Inc, its largest client. But Quanta Computer Inc, the world’s largest contract assembler of laptop PCs, reported softerthan-expected fourth-quarter profit amid continued weakness in the PC market. Reuters


April 9, 2014

Asia South Korea deficit worse than expected SK said yesterday that it ran a bigger fiscal deficit in 2013 than in the previous year on an extra budget passed last year that resulted in more debt being issued. The Ministry of Strategy and Finance said in a statement the government ran a fiscal deficit of 1.5 percent of annual gross domestic product (GDP) compared with a revised 1.3 percent figure for 2012. The fiscal deficit for 2013 was smaller than 1.8 percent initially forecast due to revisions made to GDP statistics by the Bank of Korea starting this year.

Genworth says profit to jump The company projected net profit will climb 29 percent this year at the Australian mortgage insurer that’s slated for an initial public offering. The profit may climb to A$231.1 million (US$214 million) this year, based on Australian accounting rules, as the country’s mortgage-origination market expands 10 percent, Richmond, Virginia-based Genworth said on Monday in a U.S. regulatory filing that included information distributed to institutional investors in Australia. Genworth is planning to sell as much as 40 percent of the unit in the first half of this year, according to the filing.

POSH seeks to raise over US$300 million via IPO PACC Offshore Services Holdings (POSH) is seeking to raise between US$304 million and US$334 million in a Singapore listing, according to a term sheet seen by Reuters. POSH, which is part of the empire of Malaysia’s richest man, Robert Kuok, operates a fleet serving offshore oilfields in Asia, Africa and Latin America. The company is also reserving the right to issue additional shares worth up to US$46 million under a greenshoe option, meaning the total amount raised could be as much as US$380 million.

Japan embraces Australia and Japan, fresh from clinching a basic trade deal with Australia after for a similar result with the United States and for a regional pact,


apan and the United States are pushing for a two-way trade deal, a crucial part of a broad U.S.-led Trans-Pacific Partnership (TPP) before U.S. President Barack Obama arrives in Japan later this month, with U.S. Trade Representative Michael Froman arriving for talks with Economy Minister Akira Amari. Australian Prime Minister Tony Abbott and Japanese Prime Minister Shinzo Abe confirmed a basic agreement on a deal on Monday, overcoming sticking points on beef and automobiles that had long stymied an agreement, and agreed to work towards signing it as soon as possible. The hurdles to a deal between Washington and Tokyo include access to Japan’s farm and car markets, and U.S. tariffs on imported cars and trucks. “We hope that the fact that we could reach an agreement on the (Australian) deal will have a positive impact on the TPP and other regional economic agreements,” Japanese chief cabinet secretary Yoshihide Suga told a news conference yesterday. He said the United States and Japan were making every effort on pending issues, adding: “The situation is very difficult, but we hope that a positive role can be taken towards a broad agreement on this.” Deputy U.S. Trade Representative Wendy Cutler began talks with Japanese counterparts on Monday.

Australia gets preferential treatment over the U.S., and America will be under pressure to strike a TPP deal short-term that puts it on a level playingfield with Australia Aurelia George Mulgan, Japanese politics professor, University of New South Wales

Abbot and Abe just before the meeting

Froman and Amari are likely to meet on Wednesday, Japanese media said. The deal with Australia, which will allow Japan to keep reduced tariffs on politically sensitive agricultural products such as beef, will give Japan ammunition against U.S. demands to scrap tariffs in the TPP deal, experts said. But others cautioned that an agreement before Obama’s visit was unlikely, noting that the United States

- which has said it wants a “highquality TPP” - was unlikely to favour an arbitrary deadline over results. The United States wants Japan to open its rice, beef and pork, dairy and sugar sectors - areas Abe has vowed to defend. Japan wants a timetable on U.S. promises to drop tariffs of 2.5 percent on imports of passenger cars and 25 percent on light trucks. The agreement between Japan and Australia comes as the United States

Japan takes a breather at current account Current account balance shifted to a surplus in February for the first time in five months but economists wary

Naver twice as expensive as Google The firm, whose Line messaging service propelled shares to levels twice as expensive as Google Inc., is getting sold by overseas investors faster than any other South Korean stock amid concern the rally went too far. Foreigners sold a net US$638 million of the shares during the past month, the most among Kospi index members, according to data compiled by Bloomberg. Naver sank 13 percent from a record on March 10, after a 99 percent surge during the previous year that left it trading at 43 times estimated 12-month profit.


he surplus stood at 612.7 billion yen (US$5.94 billion), slightly less than the median estimate for a 628.0 billion yen surplus, Ministry of Finance data showed, and marked a turnaround from a record deficit of 1.6 trillion yen in the previous month. The surplus should be welcome news for policymakers as a recent string of deficits had thrown the spotlight back on Tokyo’s ability to service its huge debt. Still, analysts don’t expect a sustained improvement in the current account balance as Japan continues to import more gas and oil to make up for the closure of its nuclear power industry after the March 2011 earthquake and nuclear disaster.

Moreover, income from exports has been crimped as many manufacturers have moved factories overseas in recent years. Compared to a year ago, the current account surplus fell 5.7 percent, the data showed yesterday. The balance returned to a surplus as imports grew an annual 14.1 percent, slower than a 30.3 percent increase in the year to January. Exports also slowed to 15.7 percent annual growth in February from a 16.7 percent annual rise in the January, showing that overseas demand is not strong. Japan’s current account balance came under pressure last year as the trade balance recorded a string of deficits due to the rising energy bill and disappointing exports.

These factors, including a structural shift in some manufacturing to overseas, have diminished Japan’s status as an export-led economy. A low current account surplus, or a return to deficit, would also show that Japan’s status as a net creditor to the world is in doubt, which could raise questions about how it will fund its outstanding government debts. Years of fiscal stimulus to revive a stagnant economy and surging social welfare costs for a rapidly ageing population have saddled Japan with the worst ratio of government debt to gross domestic product. Japan’s debt was at 1,017 trillion yen last year, cementing its ranking as the most indebted country in the industrialised world. Reuters

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April 9, 2014


waits for US

Samsung mobile results downhill

years of negotiations, said it hoped but cautioned that talks were “difficult”

The company will post its second straight quarter of profit decline as margins in the key smartphone business come under growing pressure from cheaper Chinese rivals

and Japan push for their own twoway trade deal - a key component of a broader U.S.-led Trans-Pacific Partnership (TPP) pact - before a visit this month by President Barack Obama. “The Japan-Australia EPA (economic partnership agreement) is an extremely important framework that promotes bilateral trade and investments,” Abe later told a news conference with Abbott.

“This basic agreement has historical significance for getting the two countries closer together.” The bilateral deal will be finalised when Abe travels to Australia in July. A deal with Australia that lets Japan keep even reduced tariffs on politically sensitive agricultural products such as beef gives Japan ammunition against U.S. demands to scrap tariffs in the TPP deal, which aims to remove import levies, experts said. Such a deal means “Australia gets preferential treatment over the U.S., and America will be under pressure to strike a TPP deal short-term that puts it on a level playing-field with Australia,” said Aurelia George Mulgan, a professor of Japanese politics at the University of New South Wales. Australia had a lower hurdle on tariffs for Japanese cars after Australia’s three remaining carmakers - Toyota Motor Corp, General Motors Corp and Ford Motor Co - decided to quit Australian domestic production by 2017 due to high costs and a strong Australian currency. Advocates say the TPP could accelerate global economic growth, boost U.S. exports and level the playing-field between emerging and rich nations in. The TPP talks, including Canada, Mexico, New Zealand, Malaysia and others, missed a deadline for an agreement by the end of last year. Reuters


amsung is counting on the fifth version of its flagship Galaxy S smartphone, which goes on sale globally from Friday, to right the ship and prove the firm’s staying power as a high-end innovator. But the Galaxy S5 has already got off to a weak start at home, with its South Korean debut marred by a temporary ban on mobile carriers selling handsets and criticism that it lacks eye-catching new features. Underscoring the challenges, Samsung priced the S5 about 10 percent cheaper than the S4 even though main rival Apple Inc is not widely expected to update its line-up until September. It also dialled back on marketing glitz to keep margins stable. Samsung estimated yesterday its January-March operating profit fell by 4.3 percent to 8.4 trillion won (US$7.96 billion), slightly below an average forecast of 8.5 trillion won by 40 analysts polled by Thomson Reuters I/B/E/S. The figure was better than 8.35 trillion won forecast by StarMine’s SmartEstimate, which gives greater weighting to more accurate analysts. Samsung estimated its first-quarter sales at 53 trillion won, compared with a market forecast of 54.58 trillion won. Full quarterly results are likely to be announced by April 25. The firm gave no breakdown of mobile earnings but the unit typically generates about 70 percent of total profit.

The stock is nearly 12 percent off the record high hit in January last year, weighed by worries over high-end market saturation and competition from low-end phones made by the likes of Huawei Technologies Co Ltd. Such headwinds may increase pressure on the company to use its cash holdings to boost languishing share prices. The firm said in January that it would raise dividend payouts after hiking them by 79 percent to a record 2.1 trillion won last year. A stockpile of 54.5 trillion won in cash and equivalents held at end-2013 suggests room for manoeuvre. Warren Lau, an analyst at Maybank Kim Eng brokerage, said in a report that as Samsung generated about US$24 billion in free cash flow each year, it could allocate US$5.2 billion in funds to repurchase shares and another US$2.8 billion for dividends. Reuters

Kami-sama replacing robots Toyota deploys more and more human manufacturing in a shift to improve products and results


nside Toyota Motor Corp.’s oldest plant, there’s a corner where humans have taken over from robots in thwacking glowing lumps of metal into crankshafts. This is Mitsuru Kawai’s vision of the future. “We need to become more solid and get back to basics, to sharpen our manual skills and further develop them,” said Kawai, a half centurylong company veteran tapped by President Akio Toyoda to promote craftsmanship at Toyota’s plants. “When I was a novice, experienced masters used to be called gods, and they could make anything.” These gods, or Kami-sama in Japanese, are making a comeback at Toyota, the company that long set the pace for manufacturing prowess in the auto industry and beyond. Toyota’s next step forward is counter-intuitive in an age of automation: Humans are taking the place of machines in plants across Japan so workers can develop new skills and figure out ways to improve production lines and the car-building process.

“Toyota views their people who work in a plant like this as craftsmen who need to continue to refine their art and skill level,” said Jeff Liker, who has written eight books on Toyota and visited Kawai last year. “In almost every company you would visit, the workers’ jobs are to feed parts into a machine and call somebody for help when it breaks down.” The return of the Kamisama is emblematic of how Toyoda, 57, is remaking the company founded by his grandfather as the CEO has pledged to tilt priorities back toward quality and efficiency from a growth mentality. He’s reining in expansion at the world’s-largest automaker with a three-year freeze on new car plants.

GM recalls The importance of following through on that push has been underscored by the millions of cars General Motors Co. has recalled for faulty ignition switches linked to 13 deaths.

“What Akio Toyoda feared the company lost when it was growing so fast was the time to struggle and learn,” said Liker, who met with Toyoda in November. “He felt Toyota got big-company disease and was too busy getting product out.” While the freeze and spread of manual work may bear fruit in the long run, it could come at the expense of near-term sales growth and allow GM to Volkswagen AG challenge Toyota by deepening their foothold in markets such as China. The effort comes as Toyota overhauls vehicle development, where the world’s largest carmaker will shift to manufacturing platforms that could cut costs by 30 percent. It also underscores Toyota’s commitment to maintain annual production of 3 million vehicles in Japan.

100 workspaces Learning how to make car parts from scratch gives younger workers insights they

Toyota views their people who work in a plant like this as craftsmen who need to continue to refine their art and skill level Jeff Liker, writer of eight Toyota story books

otherwise wouldn’t get from picking parts from bins and conveyor belts, or pressing buttons on machines. At about 100 manual-intensive workspaces introduced over

the last three years across Toyota’s factories in Japan, these lessons can then be applied to reprogram machines to cut down on waste and improve processes, Kawai said. In an area Kawai directly supervises at the forging division of Toyota’s Honsha plant, workers twist, turn and hammer metal into crankshafts instead of using the typically automated process. Experiences there have led to innovations in reducing levels of scrap and shortening the production line 96 percent from its length three years ago. Toyota has eliminated about 10 percent of materialrelated waste from building crankshafts at Honsha. Kawai said the aim is to apply those savings to the next-generation Prius hybrid. The work extends beyond crankshafts. Kawai credits manual labour for helping workers at Honsha improve production of axle beams and cut the costs of making chassis parts. Bloomberg News


April 9, 2014

International Dubai-Abu Dhabi bourse merger progressing The merger of the United Arab Emirates’ two main stock exchanges may take place “very soon,” according to a Dubai government official, a move that will create the Middle East’s second-biggest bourse. “I can see something will happen soon to clarify the way forward,” Mohammed Al Shaibani, chief executive officer of the Investment Corp. of Dubai, the emirate’s main state-owned holding company, said in an interview at a conference in London in Monday. The latest talks for the deal took place in November at the Dubai Airshow, a biannual global aviation fair, he said.

ECB concerned about Irish A deal struck by Ireland last year to ease the burden of its bank debt raises serious monetary financing concerns although they could be mitigated to some extent by bond sales tied to the debt swap, the ECB said on Monday. Ireland won European Central Bank approval last year to stretch out the cost of bailing out collapsed Anglo Irish Bank after nearly 18 months of talks to slice billions off Dublin’s borrowing needs, cut its budget deficit and help it exit an EU/IMF bailout.

Pakistan’s fashions sharia governance framework Central bank has published detailed rules on sharia governance, giving scholars greater independence from their banks’ managements, as regulators revamp Islamic finance in the world’s second most populous Muslim country. Pakistan was one of the first countries to introduce Islamic banking at a national level in the 1970s, but the industry has developed slowly partly because of consumer scepticism over its authenticity, an issue which regulators now seem keen to tackle. The central bank is rolling out a five-year plan to promote Islamic finance through proposed legislative changes, product incentives and instructions to market participants.

Colombia’s 1Q GDP close to potential Country’s economy probably grew “very close” to its potential in the first quarter as industry recovers and construction and mining continue to expand, Finance Minister Mauricio Cardenas said. “I’m extremely optimistic about the results of the first quarter,” Cardenas said in an interview in Bogota on Monday. Preliminary information suggests that growth is “going to come up strong and that means the output gap is closing and that we’re growing at rates which are very close to the potential.” The economy expanded 4.9 percent in the fourth quarter, beating the central bank’s 4.6 percent forecast.

Russia controls the gas switch While EU tries to resell gas to Ukraine, Gazprom says its eyes are set on the Eastern markets


ast events on Ukraine crisis are linked to the gas. Ukraine has made no payments to Gazprom despite a midnight deadline to reduce its US$2.2 billion debt for natural gas supplies, the Russian gas producer said on Monday. In the meantime reverse flows of natural gas from Europe to Ukraine to help it handle Russian price increases and supply cuts would be possible within hours once the infrastructure is in place, in spite the flows could require approval from Russia’s Gazprom first. Ukraine is in emergency talks with the EU on importing gas from the West, pumping gas in the opposite direction to the original design of the pipelines, following a leap in the price Gazprom charges it for supplies. Slovakia is the EU’s best-placed country to pump gas to Ukraine should Russia cut supplies, but reversing flows along any of the four pipelines that take Russian gas to Slovakia via Ukraine would breach the terms of its contracts with state-controlled Gazprom, a spokesman for Slovak pipeline operator Eustream said.

Dollar choice The company is the first in Russia’s oil sector to say it could potentially move away from dollar-based contracts in response to Western sanctions and marks the planning going on in Russian industry to anticipate possible further measures. But CEO Alexander Dyukov said Western banks were unlikely to stop cooperating with Gazprom Neft and that Western oil majors did not want geopolitical tension to affect their partnerships. He told reporters the company would step up contacts with Asian lenders and raise money in Russia if borrowing costs rose further in reaction to the sanctions, visa bans and asset freezes which the West imposed on allies of President Vladimir Putin. “As for sanctions, they have not affected the company’s business in any way,” Dyukov told reporters

Gazprom Neft CEO Alexander Dyukov

at a regularly scheduled briefing in Russia’s second city of St. Petersburg, where Gazprom Neft is based. He suggested Western companies did not want broader sanctions imposed on Russia, but Gazprom Neft would reduce its reliance on the dollar if the West shuts its doors. “Of course, I have had meetings, contacts with representatives of Western business circles ... In principle, they are not interested in escalation of tensions,” Dyukov said. With the United States seeking to punish Putin for the annexation of Crimea and deter him from seeking control over any more Ukrainian territory, he said the company had broached the idea of dropping the dollar, traditionally the currency of choice for the global energy sector.

Turning eastwards With the Kremlin keen to foster closer Asia ties, Rosneft , Russia’s biggest oil producer, was the first state-owned company to take the cue. Its CEO, Igor Sechin, did an Asian tour last month to boost cooperation.

Russia plans to double its oil flows to Asia over the next 20 years to some 32 percent of total oil exports via the East Siberia-Pacific Ocean pipeline and its spur to China. Both routes need expansion to ship additional volumes. But some analysts say Russian energy companies need partnerships with Western companies for help with the know-how and financing to extract unconventional or “hard to reach” oil and gas. Rosneft said last week its cooperation with ExxonMobil on a planned liquefied natural gas plant in Russia’s far east was not affected by the sanctions. Dyukov said Gazprom Neft could turn eastward and redirect some of the 5 million tonnes of oil that it ships to Europe annually. “This amount can be quite easily redirected to eastern markets. The situation with oil products is the same,” he said. He said Western banks were unlikely to stop cooperation with Gazprom Neft, which regularly raises cash abroad. Reuters

World’s biggest power complex in Congo The Public Investment Corp. plans to lead investment in energy projects in Africa by buying into South African shale gas projects


he continent’s largest money manager, Public Investment Corp., which is based in the South African capital of Pretoria and has 1.6 trillion rand (US$152 billion) under management, will buy stakes in energy companies operating in Africa, its chief executive officer, Elias Masilela, 49, said in an April 1 interview in Johannesburg. “We have taken the decision that we will play the lead in the energy space,” Masilela said. “Energy is one of the biggest barriers for the continent and if we don’t deal with it it is going to deal with us.” Africa’s two biggest economies, Nigeria and South Africa, are among countries on the continent suffering power shortages that are restraining economic growth. The PIC’s focus on

energy comes as South Africa explores developing shale projects in its arid Karoo area and attempts to develop the Inga hydropower complex on the Congo River are revived. The PIC, which mostly manages South African state workers’ pensions, is the biggest shareholder in Johannesburg-based Sasol Ltd., the world’s largest fuel-from-coal producer, as well as SacOil Holding Ltd. and Camac Energy Inc., oil explorers listed on South Africa’s stock exchange. South Africa’s state-owned power utility Eskom Holdings SOC Ltd. last month implemented the first rolling blackouts for the first time in six years, shutting shops and factories, after heavy rains disrupted coal supplies.

The potential for shale to transform South African energy supply means the PIC will probably invest in its production if “it makes commercial and sustainability sense,” Masilela said. The PIC defends Eskom’s use of coal, criticized for the pollution it causes, because it was investing in ways of cutting emissions as well, he said. “Are we going to do the same with shale?” Masilela said. “Most likely, because we’d like to think that shale is going to be a replacement for what Eskom is relying on as a source of power going forward.” Eskom, which supplies about 95 percent of South Africa’s power, currently burns coal for almost all of its electricity. Bloomberg News


April 9, 2014

Opinion Business

Obama’s Quiet Offensive

Leading reports from Asia’s best business newspapers

Samuel Charap Lee Feinstein


Senior Fellow for Russia and Eurasia Former US ambassador to Poland at the International Institute for Strategic Studies and senior fellow at the German Marshall Fund of the United States

The Straits Times Trade agency International Enterprise (IE) Singapore is organising a business mission to three major cities in China’s Shandong Province from Tuesday to Wednesday. The mission, which is aimed at helping Singapore companies expand into China, will be joined by Mr Teo Ser Luck, Minister of State (MOS) for Trade and Industry and co-chairman of the Singapore-Shandong Business Council (SSBC). The 20-member business delegation will visit the cities of Qingdao, Rizhao and Yantai. Led by Mr Seah Moon Ming, chairman of IE Singapore, the delegation is made up of company and association representatives.

Myanmar Times The Central Bank finalised the draft Financial Institutions Law in early 2014 and sent it to the Union Attorney. When passed, the law provides the regulatory apparatus to set up the country’s first credit bureau. A Singaporean credit corporation, select local banks and Myanma Insurance will support the bureau implementation, insiders said. “The scheme will hopefully allow banks to offer more loans, which will extend coverage for set-up capital for local industry,” an official from the Central Bank with knowledge of the plans told The Myanmar Times.

VietNam News The business environment of the banking and finance sectors improved in the first three months of this year compared with last year, according to the State Bank of Viet Nam. The central bank announced this on Thursday, citing its latest quarterly survey of the business trends of credit institutions and foreign bank branches in Viet Nam for the second quarter. About 53 per cent of the lenders said that their business situation was currently “good”, up from 29 per cent recorded in the previous survey.

The Phnom Penh Post The government-backed Rural Development Bank (RDB) will lend US$64 million to Cambodia’s agriculture sector in 2014, the bank’s top official said yesterday. Sun Kunthor, president of RDB, said most of the funding would be used to support growth in Cambodia’s rice sector as it strives to meet the government’s export target of one million tonnes by 2015. “The rice sector needs more than US$300 million to reach its full potential,” Kunthor said. Kunthor added that credit from Cambodia’s commercial-banking sector would also help to fund the remaining investment needed in the industry.


ASHINGTON, DC – The most significant outcome of US President Barack Obama’s visit to Europe last week was his announcement that the United States and its European allies would establish a “regular NATO presence” in the Eastern and Central European NATO member countries. The move – a response to these countries’ call for concrete reassurance from the US following Russia’s invasion and annexation of Crimea – sends a powerful message to Russian President Vladimir Putin. This is the first time that the US will place significant forces in the countries immediately surrounding Russia since they became NATO members almost 15 years ago. Similarly, this year – six years into his presidency – was the first time that Obama participated in a US-European Union summit meeting in Brussels. And NATO’s European allies have undeniably raised concerns about America’s strategic pivot from Europe toward Asia. Obama’s announcement of America’s intention to bolster US allies’ security is significant and builds on the process of enhancing strategic cooperation that Obama has pursued throughout his presidency. While perceptions are not irrelevant, actions matter more. And, over the last six years, the US administration has quietly built an infrastructure for NATO that enabled the bold steps that Obama has just announced.

The allegations that Obama had previously “abandoned” Europe focus largely on his 2009 decision to revise the missile-defence plans unveiled by his predecessor, George W. Bush. What critics overlook, however, is that the changes included new provisions for defending NATO members in Europe. And the system is already operational. Assets have been deployed off the coast of Spain, while others are under construction in Romania and will soon be introduced in Poland. Moreover, whereas the previous missile-defence system was implemented through bilateral agreements between the US and host countries, and was highly divisive within NATO, the Obama plan has been endorsed by all NATO member states, and has contributed to the Alliance’s cohesion. Indeed, territorial missiledefence has now been established as one of NATO’s core missions. The missile-defence system serves as a tangible manifestation of the transatlantic security commitment. The physical presence of US military personnel is at least as important as the system’s technical capabilities, which provide protection against short- and intermediate-range missiles from Iran. Tellingly, when Obama first assumed the presidency in 2009 and learned that contingency plans for the defence of some eastern NATO members did not exist, he pushed for NATO to begin

such planning for Poland and the Baltic states. This created the foundation for Obama’s recent declaration that such plans would be reviewed and bolstered.

While perceptions are not irrelevant, actions matter more. And, over the last six years, the US administration has quietly built an infrastructure for NATO that enabled the bold steps that Obama has just announced

Furthermore, the Obama administration and NATO leaders have taken steps to compensate for reductions in force numbers in Europe

(which began long before Obama assumed the presidency). For starters, when the American troop presence in Europe was cut from four Brigade Combat Teams to two in 2012, a US-based rapid reaction force – which would rotate across the Atlantic for joint training, without perpetuating unnecessary Cold War infrastructure – was added. This is the force that Obama is now calling upon to augment security for NATO’s eastern members. Obama also took steps to establish a security presence that could be built up when NATO allies needed additional military capacity. Perhaps the most significant step was the 2011 agreement establishing a US Air Force Aviation Detachment in Poland, the first full-time deployment of American forces in Eastern Europe. This facility – one of Europe’s most modern – has already proved its utility in the context of the present crisis. Before Obama’s trip, the US sent an additional 16 F-16 aircraft with 300 US airmen there, and statements from Europe this week indicate that other NATO allies and perhaps additional US forces could be rotated through the facility. Obama’s moves to bolster protection for US allies in Europe are a critical component of NATO’s broader response to Russia’s actions. And they are also in line with Obama’s long-term security strategy – the groundwork for which he has been laying for years. © Project Syndicate, 2014


April 9, 2014

Closing Greece raises 1.3 bn amid bond speculation Iran, world seek to intensify nuclear talks Iran and world powers embarked on a new round of nuclear talks yesterday hoping to make enough progress to move up a gear and start drafting a historic final deal next month. Iran and the five UN Security Council permanent members plus Germany want to transform a deal struck in November into a permanent agreement before this temporary accord lapses on July 20.

Greece raised yesterday 1.3 billion euros (US$1.8 billion) with a sale of six-month treasury bills, and looked set to return soon to borrowing for longer periods after being frozen out for four years. The interest rate fell to 3.01 percent from 3.6 percent in an equivalent sale in March, the agency said. There is strong speculation that Athens will later this week tap markets with a five-year bond sale.

Currency: hot diplomacy U.S. warns China over currency depreciation


he United States warned Beijing that the recent depreciation of the Chinese currency could raise “serious concerns” if it signalled a policy shift away from allowing marketdetermined exchange rates. Washington has been pressing China for years to allow its currency to trade at stronger values. Last month, U.S. Treasury Secretary Jack Lew welcomed a decision by

China to allow its currency to vary more against the dollar in daily trading. Monday’s comments by a senior official from the Treasury Department suggested the United States was not completely sold on China’s intention to reduce authorities’ interventions in exchange markets. “If the recent currency weakness signals a change in China’s policy away from

allowing adjustment and moving toward a marketdetermined exchange rate, that would raise serious concerns,” the official, who asked not to be named, told journalists in a phone call. A weak yuan makes Chinese exports cheaper for U.S. consumers at the expense of U.S. producers. A weaker yuan also makes Chinese consumers less able to buy foreign goods. In comments that outlined

U.S. positions before meetings later this week of the International Monetary Fund and between Group of 20 nations, the official noted the widening of China’s currency trading band came just after a drop in the yuan’s value that coincided with reports of “considerable intervention” in exchange markets by Chinese authorities. That is exactly the sort of behavior Washington wants Beijing to ditch. China’s foreign ministry, which has no say in currency policy but is the only government department to regularly answer foreign reporters’ questions, said Beijing was committed

to reform. “We will continue to resolutely push forward reform of the renminbi exchange rate mechanism,” ministry spokesman Hong Lei told a daily news briefing in Beijing yesterday, using the currency’s formal name. The United States also appears likely to pressure Europe at the meetings to act more decisively to fix its troubled banking sector. The Treasury official said recent economic data from Europe showed the region was experiencing “chronic low inflation and weak demand.” That appeared to be a nod to growing concerns that Europe’s economy is so weak it risks falling into deflation - a dangerous spiral of falling prices and wages. “More needs to be done to support growth,” the Treasury official said. The official had blunt words for other economic powers as well, saying that Japan should avoid engaging in too much fiscal austerity. He said U.S. sanctions on Russian officials were already having an impact on Russia’s economy. The official also chided emerging markets for going too slowly in adopting free-floating currencies. “Resistance in many emerging markets to moving more quickly to marketdetermined exchange rate regimes is hindering the rebalancing needed to ensure a lasting, strong global recovery,” the official said. Reuters

Billion dollar merger talks

China raises short term foreign debt quota

Oil market rises on resurgent Ukraine tensions

Baidu Inc.’s Qunar travel website is in discussions to merge with International Ltd., according to two people with direct knowledge of the talks. The companies are discussing a range of possibilities, from a full-blown merger to a partnership, the people said, asking not to be identified because the negotiations are private. The talks are in an early stage and may not result in a final deal, the people said. The ownership structure and financing methods haven’t been decided, the people said. Baidu, owner of China’s most-popular search engine, has been investing in and acquiring services that boost the search service and help it compete with Alibaba Group Holding Ltd. and Tencent Holdings Ltd. for the attentions of China’s 618 million Internet users. China’s online travel market is expected to reach 465 billion yuan (US$75 billion) by 2017, according to Shanghai-based consultant IResearch, as the growing middle class spends more money on leisure and entertainment.

China has set a quota for the total amount of short-term foreign debt banks and companies can borrow in 2014 at US$43.39 billion, the nation’s foreign exchange regulator said yesterday, implying a rise of 16 percent from last year. The State Administration of Foreign Exchange (SAFE) did not give a comparative figure, though it has previously said the quota was US$37.3 billion in 2013. Of the total, the quota for selected Chinese banks will be US$13.9 billion while that for qualified foreign banks operating in China will be US$16.54 billion, SAFE said in a statement on its website, SAFE said it would give preferential support to companies in China’s less developed central and western regions and smaller banks when it allocates the quota. China has long kept tight controls on short-term overseas borrowings by its companies for fear of attracting speculative inflows into the country. The foreign exchange regulator said last month it did not see any risk in China’s relatively high ratio of short-term foreign debt to total foreign debt, noting it had a large pile of foreign reserves to fall back on.

Global oil prices advanced yesterday on renewed Ukraine tensions after pro-Russian protesters seized government buildings in the eastern city of Donetsk. New York’s West Texas Intermediate (WTI) for delivery in May won 77 cents to $101.21 per barrel. Brent North Sea crude for May gained 50 cents to $106.32 a barrel in late morning trade in London. NATO’s chief yesterday warned Russia against further intervention in Ukraine, urging Moscow to “step back” after pro-Kremlin militants seized government buildings in several cities in the east. “Unsettling news continues to come out of east Ukraine, where pro-Russian separatists are becoming increasingly forthright in their demands for a split from Ukraine and an accession to Russia,” said Commerzbank analyst Carsten Fritsch. “Ukraine accuses Russia of fuelling these tensions. Any further escalation of the situation would intensify tensions between Russia and the West and could lead to tighter sanctions being imposed on Russia.




Macau Business Daily, April 9, 2014  

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