Macau Business Daily, July 9, 2014

MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo Number 578 Wednesday July 9, 2014

Quotas needed

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Year III

he queues are getting longer. The subsidised homes system needs shaking up, legislators tell Business Daily. They suggest a system of quotas that ensures that every applicant group gets a fair shake. One proposal suggests 70 percent of units be allocated to ‘core family’ applicants, 20 percent to ‘non-core’ families and the remainder to individuals Page

www.macaubusinessdaily.com

Pessimism spreads in Macau Confidence is declining in Macau, according to a new survey. Purchasing a home and consumer prices top the worry list.

Local confidence in the economy suffered one of the biggest drops in the second quarter of this year, an index compiled

by Macau University of Science and Technology reveals PAGE 5

July gaming revenues to plunge Analysts aren’t holding out much hope. Estimated July revenue growth will range between flat and negative single digits. The VIP market could shrink 20 percent, says Wells Fargo PAGE 3

Mutual benefits

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HSI - Movers July 8

Name

No power to the people

Macau is facing threats to its runaway growth. Pansy Ho says that China’s slowing economy and increased foreign competition are signs to watch.

The bottom line is that gaming companies have to diversify from their traditional roots.

Because the modern traveller is increasingly switched on

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3.63

Lenovo Group Ltd

2.87

TChina Unicom H K

1.99

China Mengniu Dairy

1.99

China Petroleum & Ch

1.09

Kunlun Energy Co Ltd

-0.66

Belle International

-0.68

Li & Fung Ltd

-1.52

Sands China Ltd

-1.59

Galaxy Entertainm

-2.74

I SSN 2226-8294

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China and the U.S. will try to put their differences behind them. They hope to reach consensus on talks starting in Beijing today. The economy, security, and other pressing subjects are up for discussion

China Resources P

Source: Bloomberg

The administration resolutely opposes an upcoming civil referendum. Three local associations are responding to the Chief Executive Election 2014 process.

And want the public to have a say in choosing Macau’s next leader. Government spokesman Alexis Tam Chong Weng says such a referendum is ‘illegal’ and has no legal standing

New marketing model a must

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2

July 9, 2014

Macau

Legislators urge subsidised housing quotas The current waiting list system for subsidised homes needs urgent amendment, legislators say. The government should establish a system of quotas that assures that each group of applicants, ranging from immediate family to individuals, gets a home.

Stephanie Lai

sw.lai@macaubusinessdaily.com

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egislators are urging for an amendment in the current waiting list system for applying to live in a subsidised home. The government announced earlier that it was going reveal the suggestions over the subsidised housing law changes by mid-July.

The current waiting system, which has resulted in the unfair allocation of subsidised housing units to applicants seen in the two previous rounds of applications, needed urgent amendment, legislators told Business Daily.

The subsidised housing law, which has been in effect since October 1, 2011, stipulates that priority be given to ‘core [immediate] family,’ followed by ‘non-core family’ and, at the bottom of the list, ‘individuals.’

Families with members older than 64 year or those with disabled members are also given priority on the waiting list, the law states. Applicants will then draw lots for the flats on offer.

“Under the current rules, there’s no use for non-core families or those with no elderly [members] to queue up for a subsidised home,” legislator Kwan Tsui Hang from the Federation of Trade Unions said. “Basically they get squeezed out by the huge queue of core families, and there’s not sufficient housing supply for all these different types of housing applicant.”

The Housing Bureau’s website says that between December 18 and early January it had received over 2,000 applications for 1,900 subsidised flats available in eight housing developments in Ilha Verde, in Taipa and in Seac Pai Van in Coloane. Most are one-bedroom or two-bedroom flats.

The flats to be sold will cost between 599,800 patacas (US$75,106) and 1.27 million patacas, much less than their equivalent in the private market.

As at the end of 2013, there were 32,763 completed subsidised housing units and 12,810 social housing units.

Under the current rules, there’s no use for non-core families or those with no elderly [members] to queue up for a subsidised home Kwan Tsui Hang, Federation of Trade Unions

They occupy around 21.7 percent of the 209,868 housing units in Macau in the period, information from the reserved housing scheme consultation text reveals.

Limited housing Both Ms. Kwan and fellow legislator Ho Ion Sang, head of the special committee monitoring land affairs and public concessions in the Legislative Assembly, reckon that the government should reserve a proportion of subsidised homes for the different types of queueing applicant households.

“With the very limited public housing supply we have now, it’s hard for the government to introduce big changes to the current waiting system to distribute the flats,” Mr. Ho told us.

“But I think the government should, for instance, reserve 70 percent of the units of a subsidised residential building for core family applicants, 20 percent or so for non-core families and the remainder for individuals.”

But legislators from the prodemocrat New Macau Association, Au Kam San and Antonio Ng Kuok

Cheong, believe that the government should adopt a ‘points system’ for subsidised home application, a method that was adopted prior to the implementation of the subsidised housing law.

“Before, we could determine those that could be priorised in getting the home on offer based on the points they got according to their years of residence here, number of family members, income level and whether they had any disabled members in the household,” Mr. Au told Business Daily.

“The points can tell the urgency for the applying household, and I think that’s a more scientific system to distribute the housing units when compared with the current drawing lots system,” the pro-democrat legislator added.

Under the current rules, applicants in the waiting queue that cannot gain the subsidised home after drawing lots will not automatically be placed on the waiting list for the next round of subsidised housing application.

This rule ought to be scrapped, the legislators say.

“Now the problem is that when applicants cannot gain a home, they have to queue up for the next round,” Ms. Kwan said, “And the Housing Bureau staff will then have to register their application data all over again, which the residents find troublesome, and it’s also a waste of administrative resources.”

Speaking to media on the sidelines of a Legislative Assembly meeting last week, Secretary for Transport and Public Works Lau Si Io noted that the government would consult social opinions by mid-July on tweaking the subsidised housing law in light of the problems encountered since its enactment, although he did not elaborate upon the problems at the time, nor the time frame for when the amendment procedure would start.

In May, Mr. Lau announced that the government is planning to

The government should, for instance, reserve 70 percent of the units of a subsidised residential building for core family applicants, 20 percent or so for non-core families and the remainder for individuals Ho Ion Sang, head of the special committee monitoring land affairs and public concessions in the Legislative Assembly

build 4,400 public housing units located across the districts of Lam Mau Tong and Areia Preta on the Macau Peninsula, and Taipa. Overall, around 70 to 75 percent of these 4,400 public housing units will be subsidised flats, with the rest allocated as social housing catering to the housing needs of lower income groups.

Around 400 public flats of these 4,400 new units to be built will be located on four plots of land in Lam Mau Tong and central Taipa, which can be developed “within the short term,” said Francis Wong; but he did not detail the proportion of subsidised and social housing of these 400 new public flats.

Currently, some 7,005 public housing units are under construction, of which over 4,000, or around 60 percent, are subsidised housing, government data shows.

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July 9, 2014

Macau

July revenues to drop 5 percent Responsible Analysts estimate that July revenue growth will range between flat and negative single digits. The VIP market could shrink 20 percent, says Wells Fargo Sara Farr

sarafarr@macaubusinessdaily.com

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asinos raked in an average daily take of 783 million patacas in the first week of July, down 6 percent from that of a week earlier in June, leading analysts at Wells Fargo Securities, LLC to revise estimates on Macau’s gross gaming revenue for this month.

‘We estimate July Macau gaming revenue growth of flat to negative single digits [yearon-year],’ senior analyst at the brokerage firm Cameron McKnight said in a note to clients.

Estimates put growth at -5 percent, which implies a -20 percent year-on-year growth in the VIP segment and 25 percent in the mass market for this month. ‘This assumes average daily rate tracks at 783 million patacas through July 13 and then improves to between 925 million patacas and 1.07 billion patacas following the conclusion of

strongest casino operator this month, with Sheldon Adelson’s company down -1 percent year to date, versus Wynn Macau Ltd with +9 percent. ‘We prefer LVS given its higher-margin mass exposure,’ McKnight added in the note to clients.

the World Cup,’ the note reads.

In the week ended June 29, casinos here raked in some 836 million patacas.

The World Cup in Brazil continues to impact the VIP segment, which is only expected to ‘improve’ once the month-long soccer championship concludes on July 13. ‘Given weaker June and July growth, we expect downward revisions

to second and third quarter street Macau estimates and there could still be near-term downside in valuations for the group,’ Mr. McKnight said, adding that this is based on analysis from 2012.

Nevertheless, analysts at the American brokerage firm remain positive on the longterm secular growth story.

In addition, analysts at Wells Fargo picked Las Vegas Sands Corp as the

Estimated shares July 2014 (%) SJM 24.9 Sands 24.5 Melco 11.1 Wynn 9 MGM 8.9 Galaxy 21.9 Source: Wells Fargo Securities, LLC

Gaming Association requests less casino ads

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he Macau Responsible Gaming Association has asked the Macau Government to strengthen the regulations on casino advertising, as the president of the Association, Song Wai Kit, says that there is an excessive level of gambling related commercials.

According to Macau Daily Times, Song Wai Kit also stated that some of the ads in Macau do not even promote local casinos. The president of the MRGA revealed that he expects the government to set up a unit to review the contents of such commercials.

Under the current advertising law, it is strictly forbidden to directly promote gambling in a commercial or to show gambling equipment.

The chairman of the Association of Advertising Agents of Macau has also said that the current advertising regulations need to be changed. For Wong I Moon, however, it is essential to ensure that regulations do not choke creativity.

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July 9, 2014

Macau

U.S. trade union seeks details on Cotai land deal

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The International Union of Operating Engineers has requested the Chief Executive of Macau and the Secretary of Transport and Public Works to provide details on how a Beijing group secured rights to Cotai land before it was bought by Wynn

HOSPITALITY

Alex Lee

Alex.lee@macaubusinessdaily.com

Frequent travellers Data from travel agencies show that when residents travel, using their services, Greater China destinations encompassing the mainland, Hong Kong and Taiwan – account for 85 percent of the trips. Five Asian countries – Japan, South Korea, Thailand, Malaysia and Singapore - account for most of the remaining trips. We must note that the numbers below are approximate. In part of the period shown here, the aggregate data published by the statistics department uses slightly different country breakdowns and, sometimes, different regional categories for the two types of arrangements made: that is, trips included in packaged tours and trips individually arranged. In the case of packages, for example, we have data for Singapore and Malaysia, both as separate destinations and as a package. That distinction is not made for other trips arranged using the agencies’ services. For the purpose here, however, the estimated figures do not seem to noticeably impact the associated trends.

Since the beginning of 2010, up to the last week of May, more than 5,6 million trips were arranged by local travel agencies for residents. Over 653,000, amounting to 13 percent of the total, were related to the five top Asian destinations outside Greater China. In absolute values, the number of trips roughly doubled between 2011 and 2013. The same figure is currently standing below 11 percent of the total, and a simple extrapolation for the results in the first five months suggests that the final figures are stabilising. Of the five countries shown, South Korea is the only one where package tours this year outnumber, and by a significant margin, those individually arranged.

At the opposite extreme, less than 14 percent of trips to Thailand are related to travel packages.

J.I.D.

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he International Union of Operating Engineers (IUOE) has announced that it has submitted a public request to the Chief Executive of Macau, Chui Sai On, and to the Secretary of Transport and Public Works, Lau Si Io, requesting information regarding the commitment of land rights in Cotai to individuals from Beijing.

In two letters sent to the officials, IUOE representative Jeffrey Fiedler asked for documentation covering communications with and references to the Macau firms Tien Chiao Entertainment and Investment Company and Companhia de Entretenimento e Investimento Chinese Limitada. The American trade union also announced that it had asked for information on ‘several individuals’ such as Jose Cheong Vai Chi, Ho Ho, who according to Wall Street Journal owned 90 percent of Companhia de Entretenimento e Investimento Chinese Limitada, and Zhang Luchuan.

According to Steve Wynn’s explanation to Macau Business, in May 2012, in order to build Wynn Palace, the American company had to pay around 400 million patacas to obtain development rights in Cotai, as the land had already been committed to individuals from Beijing, for a Taiwan House.

Now IUOE is mainly focused on understanding the deal that ended

up with the land being committed to the Tien Chiao group.

“The Macau Government should provide an explanation about how this group from Beijing acquired this initial commitment for the land in Cotai,” Fiedler claims. “Frankly, it strikes us as deeply unfair to Wynn Resorts that they were required to negotiate with and ultimately pay a substantial sum to a group from Beijing with no documented rights to that land. All the more so because we believe that certain members of the Tien Chiao group were conducting business under aliases,” he added.

In the IUOE press release it is explained as well that the main concern of the union is to understand how much the Ho Ho group paid to the Macau Government for the rights to the land before selling it to Wynn.

“A key question we also hope to have answered,” Fiedler said, “is whether the Ho Ho group paid the Macau Government for these initial land rights, and if so, how much.”

The International Union of Operating Engineers also said that their request seeks to introduce more transparency to the Cotai land deal and to the Macau Government’s land granting process in general.

“The request may shed light on whether any other competing groups, aside from the Ho Ho group, sought these initial Cotai land rights from then-Macau Chief Executive Edmund

Ho Hau Wah, or whether the Ho Ho group had an exclusive commitment.”

Late ticket priced at 400 million patacas In a May 2012 interview with Macau Business, Steve Wynn explained that he had to pay 400 million patacas because he had expressed his interest in the Cotai land too late. “I came to Cotai late,” Wynn said. “In early 2006, I started asking, as a concessionaire, for consideration to acquire land in Cotai for future use.”

As Wynn staff started to search for appropriate land in Cotai that was committed but not yet developed they learned that it was possible to make a deal in order to acquire Tien Chiao’s lot.

According to Steve Wynn, he initially agreed to pay Tien Chiao US$35 million for 8.9 hectares and give the company a 12-percent stake in its Cotai property. Tien Chiao would keep 2 hectares to build a Taiwan House on the land, which had as its goal the fostering of relationships between Macau and Taiwan.

In the end, however, Wynn Resorts had the opportunity to buy out Tien Chiao’s rights to Cotai land by paying US$50 million, which the company did. Later, Wynn was able to secure a government commitment to expand the lot to 21 hectares.

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July 9, 2014

Macau

Dwindling confidence Macau residents lack confidence; particularly when it comes to purchasing a home and consumer prices, according to the latest Macau Consumer Confidence Index Sara Farr

sarafarr@macaubusinessdaily.com

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economy decreased to 112.56 points from 118.43 points in the previous quarter. There is little to no confidence at all in housing prices and consumer prices. The latter sub-index increased slightly by 1.2 points to 51.22 from that of the previous quarter, while the former decreased a further 0.7 points to 38.09 in the second quarter.

While purchasing cars is not a sub-index of the MCCI, survey respondents were still asked about their satisfaction levels. This number remained unchanged at 77.71 points in the second quarter of the year.

The sub-index in which the ‘highest’ level of confidence was recorded was that of employment. And even this was just slightly above the 100-point mark at 133.2.

However, when asked about their future expectations, the level dropped by 1.33 points to 121.85.

‘The latest and previous 22 consecutive MCCI surveys had all shown that consumer confidence increased significantly with education levels,’ the report states, adding that confidence levels of ‘consumers with a tertiary education was 4.39

f the confidence of Macau residents could be summed up in a single word it would be: employment.

While it is nowhere near satisfactory levels, with an index of 133.20 out of 200 in the second quarter of the year, this is the highest scoring sub-index in the latest Macau Consumer Confidence Index (MCCI) compiled by the Institute for Sustainable Development of the Macau University of Science and Technology (MUST).

The survey had 11,024 respondents rate their level of satisfaction with a number of different aspects of society; namely, the local economy, employment, consumer prices, living standards, housing purchase and stock investment. The scores range from zero to 200, with zero being ‘no confidence,’ 100 ‘natural’ or ‘no-feeling situation’ and 200 ‘full confidence’. Anything below 100 suggests ‘lack of confidence,’ the survey says.

More local, less confident In the second quarter of the year, Macau residents’ confidence in the local

Macau boosts Bauhaus sales Clothing retailer revenues in Macau and Hong Kong increased 24 percent in its first financial quarter (April to July) Sara Farr

and 10.38 points higher than those for consumers with only secondary and primary education, respectively.’

Deteriorating living standards Another sub-index in which points dropped from the first quarter to the second quarter was in living standards. A drop of 1.97 points now puts consumer confidence levels at 95.93 points, down from 97.90.

This level could still drop with consumers’ expectations lowering their level of satisfaction to 94.77.

‘Macau still needs to remove some uncertain factors affecting the local economy, to strengthen its anti-inflation policies, to relieve the price pressure on people’s livelihood, to promote the balance between housing supply and demand, to encourage and support citizens’ continuing education, training and personal development and to create more employment opportunities,’ the report concluded. However, it did not offer suggestions as to how the government could improve these factors.

Arbitrary system contributions payable via ATMs

sarafarr@macaubusinessdaily.com

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ame store sales growth for Bauhaus International increased by 24 percent in Macau and Hong Kong alone between April and July.

The company announced in a filing with the Hong Kong Stock Exchange that in the three months

ended June 30, also known as the company’s first quarter of 2014, overall same store sales registered a growth except for sales in mainland China, where same store sales dropped five percent.

In Macau and Hong Kong, Bauhaus has cut its stores by one

to a total of 83, while in Taiwan the number stands unchanged at 87; in mainland China, the number of stores decreased by 3 to 23.

According to the company’s filing with the Hong Kong Stock Exchange, same store sales growth represents a comparison of sales of each selfmanaged shop ‘having full month operations in the comparable period’.

These numbers for the first quarter of 2014 do not include sales of shops that were newly opened during the three months in question.

Bauhaus’ net profit for the 12 months ended March 31 reached about HK$125.1 million (US$16 million), up 26 percent from HK$99.3 million in the previous year. Last month, the company said it had also registered a record-high annual turnover of HK$1.427 billion.

Sales from retail in Hong Kong and Macau, which accounted for about 70 percent of Bauhaus’ turnover, topped HK$1 billion, which mainly resulted from strong same store sales growth of about 21 percent during the financial year.

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ince the beginning of the month, it has been possible to pay arbitrary system contributions through more than 700 automatic teller machines (ATMs) carrying the Jetco logo in six banks throughout Macau.

July is the contribution month for the second quarter of this year and all employers must pay the obligatory system contributions for their local employees this month. If they employ non-resident workers, they must also pay the employment fee for them as well.

The contributions can also be paid at the Social Security Fund (FSS) Headquarters, FSS China Civil Plaza Office in NAPE and Areia Preta Service Centre of MSAR (Area of Social Security and Employment) in cash or by cheque/cashier order (payable to ‘Fundo de Segurança Social’).

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July 9, 2014

Macau

Civil Referendum ‘illegal,’ says government

Sweet profits turn sour

Kam Leong

newsdesk@macaubusiness.com

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he Macau Government resolutely opposes the civil referendum to be held by three local associations in reaction to the Chief Executive Election 2014, and states that such a referendum is ‘illegal’ and has no legal standing, a statement made yesterday by government spokesperson Alexis Tam Chong Weng said.

“Macau is a city ruled by law.

Any form of so-called referendum has no basis in constitution or law.

It is illegal and has no effect,” said Mr. Tam. However, Mr. Tam could not indicate which regulations the referendum violates to make itself ‘illegal.’ He explained later that the official CE election is held based on the Basic Law hence the results from any referendum have no legal effect.

He also mentioned that the Macau Security Force (FSM) will follow up on the referendum.

Macau Conscience, Macao Youth Dynamics and Open Macau Society have jointly announced that they are holding an unofficial civil referendum from August 24 to 30. Participants will vote on whether the CE should

Alexis Tam

be elected by universal suffrage in 2019 and whether they believe in the only candidate in this year’s election

or would support someone else if there was a choice of more than one candidate.

Macau to host APEC tourism ministerial meetings Kam Leong

newsdesk@macaubusinessdaily.com

T

he eighth Tourism Ministerial Meeting of the Asia Pacific Economic Cooperation (APEC) and its 45th Tourism Working Group (TWG) meeting will be held between September 8 and 14 in Macau, government spokesperson Alexis Tam Chong Weng announced yesterday.

The theme of this year’s APEC is ‘Shaping the Future through Asia-Pacific Partnership’. The two meetings will be held primarily on September 12 and 13. The seven-day forum is estimated to cost around 75 million patacas (US$9.4 million) according to Mr. Tam. He remarked that APEC has been the highest form of forum of all the special meetings the region has held.

He believes China’s national leaders will attend APEC although it is too early to confirm which.

Representatives from some 21 tourism ministries from different countries will attend the forum, as

well as representatives from The Association of Southeast Asian Nations (ASEAN), the United Nations World Tourism Organization (UNWTO) and eight other international organizations, constituting a total of around 500 attendees.

Asked if the government is concerned that APEC will be affected by protests at the Financial Ministerial Meeting of APEC in Hong Kong, shifted to Beijing due to the Occupy Central group threatening protests, Mr. Tam stressed that the government is not fearful and perceives Macau as a city ruled by law, whose people know what they should and should not do.

The official website of the forum will be accessible from this Friday.

The website, however, will only host an English version, the official language for the forum, according to the Director of the Macau Government Tourist Office, Maria Helena de Senna Fernandes.

wo online stores on Taobao selling souvenirs from Macau’s stores to customers on the mainland were accused of evading tax to the tune of almost one million yuan (US$161,146).

The smuggling case was heard by Zhuhai Intermediate People’s Court earlier this month.

The owner involved, surnamed Fung, who owns both of the stores, had two men surnamed Wang and Zhuo buy souvenirs such as almond cakes and peanut brittles from major souvenir stores Koi Kei and Chui Heung Yuen in Macau.

Fong offered 2.5 yuan to 3 yuan to the purchasers for each product they bought for him. He then sold the products online at 2 yuan over cost, according to the Procurator’s department. The two purchasers would bring these souvenirs to Zhuhai themselves or offer 20 yuan each time to people going to Zhuhai from the Macau border gate.

Fong’s wife received the products in Zhuhai.

Fung, his wife Chen and Wang were accused of tax evasion involving 330,000, 270,000 and 29,000 yuan, respectively. Fung had paid back around 140,000 yuan before the case was heard, according to Southern Metropolitan Daily.

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July 9, 2014

Macau

Pansy Ho: Adventurous Chinese travellers threaten Macau growth

We’re already beginning to see that the customers coming through our doors are more demanding, they now know how to differentiate Pansy Ho

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acau is facing threats to its growth from China’s slowing economy and greater foreign competition, escalating the need for the world’s largest gambling hub to diversify from its casino gaming roots.

“I’d say the slowdown in the economy and the fact that now foreign destinations might become competitors” are the biggest risks to Macau’s growth, Pansy Ho, cochairman of MGM China Holdings Ltd (2282), said in an interview with Betty Liu on Bloomberg Television in Hong Kong.

As Chinese tourists travel more frequently and farther afield, the city could gradually lose its appeal, said Ho, nicknamed the ‘casino queen’ by local media. “We’re already beginning to see that the customers coming through our doors are more demanding, they now know how to differentiate.”

Chinese tourists have been powering the growth of Macau, which leapfrogged the Las Vegas Strip in 2006 to become the world’s largest gambling hub. Casino operators such as Ho’s MGM China and Sands China have added shops, restaurants and entertainment shows to draw mainland travellers as high stakes gamblers cut spending amid a cooling Chinese economy.

Ho, whose father Stanley held a 40-year gambling monopoly in Macau until 2002, is helping lead a drive to transform the city into a global tourism destination. The 51-year old

sees a need to reduce the territory’s reliance on gaming halls that raked in US$45 billion in casino revenues last year.

The city has been affected by a slowdown in gambling growth in recent months as punters cut spending amid a cooling economy and a nationwide crackdown on corruption in China.

China’s President Xi Jinping’s clampdown on lavish spending has hurt the sales of luxury goods such as Rolex watches and Prada bags.

Shares at MGM China dropped 3 percent to HK$27.75 and Sands China fell 1.7 percent to HK$58.90, while the benchmark Hang Seng Index lost 0.1 percent by 11:38 a.m. in Hong Kong trading. Macau’s July gross gaming revenue could decline as much as 11 percent from a year earlier, Bank of America Merrill Lynch analyst Billy Ng wrote in a report today.

Local Flair Macau’s casinos have borrowed from other cultures to re-create features in the past and now mainland customers can afford to travel overseas to experience the original “real thing” said Ho, who has a net worth of US$4.9 billion according to Bloomberg’s Billionaires Index.

To draw more Chinese patrons, MGM China, the Macau unit of MGM Resorts International (MGM), has been adding local flair by playing up the Macanese and Portuguese

influences in its properties, said Ho. Sands China competes with Italian singing gondoliers and rival Galaxy Entertainment Group Ltd. with Parisian cabarets.

Macau is the only place in China where casinos are legal. Mainland Chinese tourists accounted for twothirds of the total visitors to the former Portuguese enclave in the first quarter.

New Island Ho is now extending her family’s footprint to Hengqin in China, an island next to Macau that’s connected by a bridge and is earmarked for nongaming purposes. She will achieve that with Shun Tak Holdings, a property to transportation conglomerate set up by her father in 1972 and now run by her.

“We’re building hotels, serviced apartments and a shopping centre,” Ho said of the US$118 million project.

“We’re immediately connected to the Customs checkpoint, so we’re almost the first stop once you clear Customs.”

Stanley Ho, 92, held a gaming monopoly in Macau that helped build SJM Holdings into Asia’s biggest casino company. The Macau Government opened up the market in 2002 to foreign rivals such as Sheldon Adelson’s Las Vegas Sands and Steve Wynn’s Wynn Resorts Ltd. While Pansy is in charge at Shun Tak, her younger brother Lawrence, whom she describes as a

“friendly competitor,” has gone his own way, setting up Melco Crown Entertainment in a joint venture with Australian billionaire James Packer.

“For me, I try to step out of my father’s shadow and do something on my own,” Lawrence said in a separate interview at City of Dreams, Melco’s biggest casino in Macau. “I’ve been trying to prove myself.”

The company is building casinos in Macau and the Philippines, and is also keen on expanding into Japan, the world’s third-largest economy.

It plans to invest more than US$5 billion in Japan if the country legalises casinos, said the Melco Crown cochairman and chief executive officer.

Lawrence’s endeavour to push into Japan is part of his strategy to expand overseas as he sees constraints such as land and labour shortage at home.

Melco Crown, which currently operates two casinos in Macau, almost doubled its revenue to US$5.09 billion in 2013 from US$2.64 billion in 2010. SJM gleaned US$11.3 billion revenue last year from 20 casinos in Macau.

Melco Crown is trading 2.2 percent lower to HK$92.10, while SJM fell 2.2 percent to HK$20.05 at 11:37 a.m. local time.

“Lawrence really wants to grow his gaming enterprise beyond Macau and grow his portfolio,” said Pansy.

“In my case, I’d like to really do more for the general well-being of Macau, promoting Macau as a destination.”

Bloomberg

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July 9, 2014

Macau Hong Kong dragged down by casinos stocks Macau gaming counters were again the standout underperformers in Hong Kong, with Galaxy Entertainment Group , MGM China and Wynn Macau all down more than 3 percent during yesterday’s session

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ong Kong shares finished flat yesterday after the Macau gaming sector extended losses as revenue remained sluggish during the first week of July and with concerns that revenues would suffer as gamblers focused on the final week of the World Cup. China shares slipped on weakness in financial firms, but pared losses after some property developers rebounded.

The Hang Seng Index closed barely changed at 23,541.38 points. The China Enterprises Index of the leading offshore Chinese listings in Hong Kong was up 0.2 percent.

Among Macau gaming stocks, Galaxy Entertainment Group shed 2.7 percent and Wynn Macau 1.4 percent.

Macau gaming counters were again the standout underperformers in Hong Kong, with Galaxy Entertainment Group dropping 2.7 percent and Wynn Macau went down 1.4 percent.

Barclays said in a note yesterday it expects total gross gaming revenue in July to decline 6 percent from a year earlier.

Datang International Power Generation surged 20.1 percent to a 7-month high in Hong Kong and 7 percent in Shanghai as trade resumed on Tuesday, after the company announced a deal to restructure its coal-chemical business.

The CSI300 of the leading Shanghai and Shenzhen A-share listings inched down 0.1 percent, while the Shanghai Composite Index was off 0.2 percent at 2,056.84 points.

“More initial public offerings (IPOs) will come up later in July, and the upcoming economic data could hardly exceed expectations, so

such a small correction is normal,” said Wang Weijun, an analyst at Zheshang Securities in Shanghai, who added upbeat data no longer has a big positive effect on the market.

Guangdong Ellington Electronics Technology dropped 2.2 percent, after surging by its daily limit in all five sessions since it started

trading on July 1.

The company is the first to slide into negative territory among the nine hot new listings, six of which still jumped the maximum allowable 10 percent limit on Tuesday.

The Chinese property sector on the mainland was weaker in the morning session following recent strong gains, but recouped some losses by the lunch break. Poly Real Estate Group reversed losses with a rise of 0.2 percent.

Most of its Hong Kong-listed peers fell, with China Overseas Land & Investment and China Resources Land down 1.7 and 0.9 percent, respectively.

In Shanghai, Bank of China lost 0.4 percent, while China Life Insurance shed 0.5 percent.

Air China rose 1.2 percent after signing a partnership deal with Germany’s Lufthansa to set up a joint venture that will enable them to share revenue on certain routes by selling tickets for each others’ flights.

Beijing is due to post June inflation data on Wednesday, with annual consumer inflation expected to ease to 2.4 percent, well below the central bank’s 3.5 percent target for 2014, while the producer price index is likely to have dropped 1 percent.

Reuters

9

July 9, 2014

Greater China

China, U.S. start annual meeting The CPE will be co-chaired by Vice Premier Liu Yandong and U.S. Secretary of State John Kerry

President Xi Jinping will attend the opening ceremony

H

igh-ranking officials from China and U.S. will meet in Beijing from today for annual dialogue and consultation to increase mutual trust, reduce differences and boost the new model of major-country relationship.

Chinese Assistant Foreign Minister Zheng Zeguang made the comment at a press briefing ahead of the sixth China-U.S. Strategic and Economic Dialogue (S&ED) and the fifth ChinaU.S. High-Level Consultation on People-to-People Exchange (CPE)

on July 9 and 10.

Chinese President Xi Jinping will attend the opening ceremony of the events and deliver a speech. Xi and Premier Li Keqiang will then meet the U.S. delegations.

The CPE will be co-chaired by Vice Premier Liu Yandong and U.S. Secretary of State John Kerry while the S&ED will be co-chaired

by Vice Premier Wang Yang and State Councilor Yang Jiechi, as well as Kerry and Treasury Secretary Jacob Lew.

The two countries will further substantiate the new model of majorcountry relationship, Zheng said.

The strategic dialogue covers a wide range of topics of domestic and foreign policy, including climate change, science and innovation, Sudan and South Sudan, UN peacekeeping and the illegal trade in animals and plants, as well as interactions in the Asia-Pacific.

Prior to the talks, both countries will hold the fourth strategic and security dialogue, co-chaired by

Chinese Vice Foreign Minister Zhang Yesui and U.S. Deputy Secretary of State William Burns.

Top of the economic agenda is stability in China-U.S. relations, Vice Minister of Finance Zhu Guangyao told reporters.

Zhu said 18 economic and financial department chiefs from the U.S. and 17 Chinese counterparts will attend the dialogue, focused on the macro economy, trade and investment cooperation and transnational regulations.

Vice Minister of Education Hao Ping said both sides will summarize cooperation in education, science, culture, sports, women and youth exchanges and explore future cooperation potential.

Zheng said U.S. statements and deeds on maritime disputes and cyber security had a negative impact on bilateral ties, but China has made its stance clear to the U.S. and taken necessary action.

As this year marks the 35th anniversary of bilateral diplomatic relations, the interests of China and the U.S. are increasingly intertwined.

China is willing to cooperate with the U.S. on trade and investment, antiterrorism, climate change, energy security and regional hotspots, Zheng said.

“As long as both sides respect and treat each other equally and act in a constructive manner, the differences will be well managed and bilateral ties will be on the right track,” Zheng said.

Xinhua

CITIC initiates legal action against Qingdao port operator Under the legal action, CITIC is requiring the port operator to confirm its ownership of 223,270 tonnes of alumina and 7,486 tonnes of copper

C

hina’s CITIC Resources Holdings Ltd has begun court proceedings against the operator of a bonded warehouse at Qingdao port as legal action ramps up following an investigation into metals financing fraud at the world’s seventh busiest port.

CITIC Resources said last month it had been unable to secure around 120,000 tonnes of alumina, more than half of the alumina stocks it had title to that were stored at the port pending payment by buyers and delivery.

Under the legal action, CITIC is requiring the port operator to confirm its ownership of 223,270 tonnes of alumina and 7,486 tonnes of copper, and to release the metal to the group or to offer compensation, it said in a filing to the Hong Kong stock exchange yesterday.

“Until the status of the investigation is clarified and the group has conducted its own investigation, the company is not able to accurately assess the impact on the Group’s

alumina and copper stored at Qingdao port or on the Group itself,” CITIC said in the filing.

CITIC Resources, in which Singapore sovereign wealth fund Temasek Holdings has an 11.46 percent stake, is the commodities trading unit of China’s biggest and oldest state-owned financial conglomerate company, Citic Group Corp.

CITIC is the second company to say it has started legal action to recoup losses since Chinese authorities launched an investigation last month over the alleged duplication of warehouse receipts to obtain multiple loans secured against a single cargo of metal.

They are investigating the company at the centre of the fraud Decheng Mining and linked companies.

Decheng Mining has not commented on the probe.

Last month, China’s Shanxi Coal International Energy Group said it was suing Decheng and its parent for over US$177 million in missed

(Pictured) company’s headquarters at CITIC Tower in Hong Kong

payments the two had guaranteed.

But given multiple global and domestic banks and collateral managers have been hit by the potential fraud, each with their own tailored contracts, questions over jurisdiction, liability and length of the court process remain.

As details of the potential fraud become clearer, the possible exposure of various parties to Decheng and

its parent could amount to around US$2.8 billion, according to an aggregation of amounts contained in company statements and Chinese media.

Goldman Sachs estimated in March that commodity-backed deals account for as much as US$160 billion, or about 30 percent of China’s shortterm foreign-exchange borrowing.

Xinhua

10

July 9, 2014

Greater China

Korean FTA talks speeding up A China-ROK success may push Japan to be more involved or face losing the enormous Chinese market to ROK enterprises

C

hina and the Republic of Korea (ROK) are working to ensure a breakthrough in their negotiation on a bilateral free trade agreement (FTA), likely paving the way for a larger FTA between all three leading economies in East Asia.

During his first visit to the ROK last week, Chinese President Xi Jinping pledged more efforts to accelerate the FTA negotiation so that it concludes by the end of the year, a sentiment echoed by his counterpart Park Geun-hye.

If all goes well, talks lasting over two years will finally come to an end in the second half of 2014 and bilateral trade will then be boosted to the promised US$300 billion in 2015.

Trade expert Mei Xinyu of the Ministry of Commerce said, “The most important aspect of Xi’s visit will be promoting the negotiation.”

A series of cooperative documents covering trade and currency were signed in the two-day state visit, laying the foundation for the FTA. The move marked the two sides’ cooperation to deepen currency trading, which is good for the FTA, said Cai Hongbo of Beijing Normal University. Beijing and Seoul signed a currency swap agreement to bolster trade in 2008 and extended it in 2011.

Since May 2012, 11 rounds of talks have been conducted between the two countries on the FTA, with consensus reached on most of the issues, such as the proportion of merchandise enjoying a zero-tariff policy. The next round of talks is scheduled for later this month in the ROK. Wei Zhijiang, director of the ROK Research Institute under Sun Yat-sen University in south China’s Guangdong Province, said the

China-ROK FTA can push forward negotiation for a larger one that includes Japan in the plan.

In May, the China-Japan-ROK agreement for promotion, facilitation and protection of investment took effect, and this is widely believed to be a prelude to the foundation of an FTA between the three countries.

The FTA of the three countries was first envisioned in 2002 and the negotiation started two years ago, with the process dawdling partly due to political issues and partly due to a less interested Japan.

The situation is likely to change now, however, as a China-ROK success may push Japan to be more involved or face losing the enormous Chinese market to ROK enterprises.

In the first five months of 2014, investment from the ROK to China soared 87.9 percent year on year.

Xinhua

The most important aspect of Xi’s visit will be promoting the negotiation Mei Xinyu trade expert of the Ministry of Commerce

Chinese President Xi Jinping (L) and South Korean President Park Geun-Hye (R) attend the Korea-China Investment Forum at Shilla Hotel in Seoul, South Korea, 04 July 2014

Wing Hang Bank may fall if OCBC hindered S

hares of Wing Hang Bank Ltd., a Hong Kong lender being taken over by Oversea-Chinese Banking Corp., could fall as much as 40 percent if OCBC doesn’t garner enough stock to delist the company, Credit Suisse Group AG said.

Under Hong Kong rules, Singaporebased OCBC needs to own at least 90 percent of Wing Hang’s shares to delist the bank, analysts Sanjay Jain and Vineet Thodge wrote in a report yesterday. Failing to win acceptances to take it over that threshold before the takeover offer expires on July 29 means OCBC will have to pare its holdings to 75 percent, the analysts said.

The report came after a regulatory filing showed billionaire Paul Singer’s Elliott Capital Advisors LP had raised its stake in Wing Hang to 7.8 percent.

OCBC bid US$5 billion for Wing Hang in April, an offer that had been accepted by holders of 50.4 percent of the Hong Kong lender’s shares, the two banks said in a July 4 statement.

“Minority investors might be looking for higher valuations and delay submitting their shares into the tender offer to as late as possible,” Jain and Thodge wrote. “This would

make it difficult for OCBC to gauge the potential acceptance level and whether to increase the price or not.”

Sweeter deal Shares of Wing Hang rose 0.5 percent since July 2, when Elliott Capital bought 8.7 million shares at HK$125 (US$16), according to a July 3 disclosure posted on the website of Hong Kong’s Securities & Futures Commission. The price matched the per-share amount offered by OCBC on April 1.

“One reason to buy in at this point would be to put pressure on OCBC to sweeten the deal” for minority investors, Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., wrote in a note to clients yesterday.

Shareholders including the family of Wing Hang’s Chairman Patrick Fung and Bank of New York Mellon Corp. had accepted the bid, OCBC said in April.

The Singaporean bank will keep Wing Hang’s shares listed if it can’t buy at least 90 percent of it, Chief Financial Officer Darren Tan said yesterday in response to questions on

The entrance of a Hong Kong branch of Wing Hang Bank

Elliott Capital’s stake. With the start of the general offer to Wing Hang’s investors, it’s too early to comment on possible outcomes, he said.

Biggest takeover “OCBC has time on its side,” Antos wrote. While the lender can retain the Wing Hang listing indefinitely, minority shareholders may not be willing to hold on to their stakes because trading in the stock will be thin once the general offer is completed, he said.

The acquisition would give OCBC more access to China- related business in a city that is the biggest center for offshore yuan trading. The bid is the largest takeover of a Hong Kong bank since DBS Group Holdings Ltd., OCBC’s biggest competitor in Singapore, offered US$5.4 billion for Dao Heng Bank Group Ltd. in April 2001.

Connie Leung, a Hong Kong-based spokeswoman for Wing Hang, didn’t immediately respond to an e-mail seeking comment.

Bloomberg News

11

July 9, 2014

Greater China Last’s year BRICS meeting was held in Moscow

PBOC to drain 20 bln yuan China’s central bank will drain 20 billion yuan (US$3.22 billion) from the money markets through 28-day bond repurchase agreements yesterday, traders said. Maturing repos will inject a net 80 billion yuan into the banking system this week. The People’s Bank of China (PBOC) conducted a net injection of 55 billion yuan into the banking system last week.

Central banker wants no bailout for ailing firms

Big expectations from BRICS summit BRICS should put forward uniform solutions to improve global economic governance

C

hina expects positive results from the coming summit of BRICS leaders, Vice Foreign Minister Li Baodong said at a press briefing on Monday.

The sixth leaders summit of BRICS - Brazil, Russia, India, China and South Africa - will be held in Brazil from July 15 to 16. Chinese President Xi Jinping, Brazilian President Dilma Rousseff, Russian President Vladimir Putin, South African President Jacob Zuma and Indian Prime Minister Narendra Modi will attend the summit. They will also meet with leaders of South American countries.

Li expects the summit to focus on four areas: experiences of BRICS cooperation; developing BRICS by strengthening coordination; cooperation in the areas of trade, investment, finance, infrastructure

and people-to-people exchange; and expanded connection between the markets of BRICS and South America.

He said BRICS should play up the spirit of partnership and explore new avenues of cooperation. Speaking in one voice, BRICS should put forward uniform solutions to improve global economic governance.

China supports the early launch of BRICS Development Bank and Contingency Reserve Arrangement, Li said.

Emerging economies are a rising force in the international arena and dialogue between BRICS and South American leaders will demonstrate the political will to expand connections between the two markets, he said.

The recent slowdown of economic growth in BRICS countries is essentially different from the

financial crisis that hit Western countries, Li said.

BRICS economies enjoy sound basics, abundant policy tools and great growth potential. Nearly US$100 billion in the BRICS Development Bank and Contingency Reserve Arrangement and complementary agreements could be sound conditions for sustainable growth, Li said.

“BRICS will be an important driving force of the future world economy,” Li said.

On the relationship between BRICS and G7, Li said it is understandable that the G7 group has different views from BRICS and other developing countries on a number of major regional and international issues.

Xinhua

BRICS will be an important driving force of the future world economy Li Baodong Vice Foreign Minister

Finance ministry to auction local bonds China’s finance ministry will auction a total of 66.6 billion yuan (US$10.74 billion) of three-, five- and seven-year bonds on behalf of eight local governments on July 14 and 18. The finance ministry will issue 23.4 billion yuan each in three- and five-year bonds, and 19.8 billion yuan in seven-year bonds, according to a statement published on the website for China’s major bond issues. The finance ministry said in March that it would raise the quota for direct issuance of local government debt to 400 billion yuan for 2014.

WTO says China is right China urged the United States to respect the WTO’s latest ruling against U.S. measures on certain Chinese products and rectify its abuse of trade remedy measures, the Ministry of Commerce said late Monday. The World Trade Organization (WTO) on Monday unveiled the appellate body report concerning U.S. measures on Chinese products, concluding that the countervailing and anti-dumping measures of the United States on 24 kinds of Chinese products between 2006 and 2012 were against WTO rules. Chinese products involved in the case have an annual export value of more than US$7.2 billion, the statement showed.

HSBC cuts Hong Kong stocks outlook T he firm downgraded its investment outlook on Hong Kong, citing fears over a prodemocracy movement in the city but the banking giant later altered its report, severely toning down the emphasis on public unrest.

Discontent in Hong Kong is at its highest level in years, with tens of thousands of people taking to the streets last week against Beijing’s insistence that it vet candidates before a vote in 2017 for the southern Chinese city’s next leader.

The bank’s third-quarter global equity report on Monday cut the former British colony’s stock market, one of the region’s biggest, to “underweight”, a rating the it uses to describe underperforming stocks.

“We reduce Hong Kong to underweight on concerns about negative news flow. ‘Occupy Central’, a campaign for greater democracy, could sour relations with China and may hurt the economy,” the report said.

The Occupy Central campaign has pledged to stage a mass sit-in at the main business district, where HSBC’s Hong Kong offices are based, unless leaders commit to electoral reforms.

China should let more ailing firms go bankrupt to help improve economic mechanisms rather than allow them to get government-led bailouts, a deputy central bank governor said yesterday. The risk of corporate failures is rising as economic growth slows and the government tries to put a lid on high debt levels in the economy to help ward off financial risks. He urged companies in the coal, steel, machinery and shipbuilding sectors to find ways out of business difficulties, including using a bankruptcy law introduced in 2007.

Peaceful pro-democracy protestors demonstrate after the annual anti-Hong Kong government protest rally, Hong Kong, China, 02 July

U.S. pushes China on tech trade deal

However, HSBC’s report was later amended to put an emphasis other economic concerns about the city.

The updated report said the new rating was due to “the risk of weak residential real estate prices, the slowdown in mainland tourist arrivals, the market’s link to US interest rates...and weak earnings momentum”, before mentioning Occupy.

Beijing’s state-run media has called Occupy “illegal” and said it could damage the city’s economy, while

The United States on Monday urged China to give ground on a deal to eliminate duties on billions of dollars of technology products and said it would use talks in Beijing later this week to push to restart negotiations. The United States and Europe have blamed China, the world’s biggest exporter of IT products, for derailing talks on a pact on technology trade by asking for too many exemptions. U.S. Trade Representative Michael Froman said U.S. officials aimed to use talks with their Chinese counterparts in Beijing on July 9-10 to “make concrete progress.”

some local business groups -including several foreign business chambers and international accounting firmshave run newspaper advertisements opposing it.

The Wall Street Journal last month reported that the city’s liberal Chinese language newspaper Apple Daily, a regular critic of Beijing, had said HSBC and Standard Chartered pulled advertising in late 2013 after a request by Beijing. Neither bank has confirmed the report.

AFP

12

July 9, 2014

Asia

Japan’s current account surplus improves The economy is expected to grow 0.6 percent in the current quarter

J

apan’s current account logged a higher-than-expected surplus in May, government data showed yesterday, as the trade deficit narrowed due to a decline in imports.

But the improvement in the current account surplus could be temporary as export growth slowed in May, a sign that firms shifting manufacturing capacity overseas has made it difficult for exports to grow rapidly.

The current account data also highlighted the need to stimulate domestic demand and the services sector as exports are no longer enough to drive economic growth.

The surplus was 522.8 billion yen (US$5.14 billion), more than the median forecast for a 403.6 billion yen surplus. It was the fourth consecutive month of surpluses, the finance ministry said. In April, the surplus was 187.4 billion yen.

Exports rose 2.0 percent in May

from a year ago, slower than a 6.2 percent annual gain in April.

Imports fell an annual 0.4 percent, following a 6.6 percent annual increase in April. As a result, the trade deficit in May narrowed to 675.9 billion yen.

The income surplus was 1.5 trillion yen in May, down 3.2 percent from the same period a year earlier, due to a decline in earnings from overseas subsidiaries of Japanese firms.

Analysts expect the economy to contract in the second quarter after an increase in the sales tax, with a Reuters poll conducted in June projecting a 1.2 percent quarterly drop.

The economy is expected to grow 0.6 percent in the current quarter, however, as consumer spending recovers from the tax hike and as government stimulus spending supports domestic demand.

Reuters

KEY POINTS C/A balance +522.8 bln yen in May vs f’cast +403.6 bln yen Trade deficit narrows as imports decline Exports slow in worrying sign on external demand

Prime Minister Shinzo Abe

NZ business confidence drops in Q2 A net 32 percent of companies surveyed expected general business conditions to improve Gyles Beckford Pictured Reserve Bank of New Zealand

N

ew Zealand business confidence eased in the second quarter as economic growth shows signs of slowing, while inflation pressures look to be picking up pace, backing views that the central bank will carry on with a gradual tightening of interest rates, a private think tank said yesterday.

A net 32 percent of companies surveyed expected general business conditions to improve, compared with 52 percent in the previous quarter, the New Zealand Institute of Economic Research said in its quarterly survey of business opinion (QSBO).

“The Reserve Bank of New Zealand will be unlikely to change its mind

on the pace of tightening monetary conditions based on our survey results,” said Shamubeel Eaqub, principal economist at the NZIER. He said he expected at least one more rate rise this year, although his view was that the central bank could afford to stop raising rates now.

“This is because of the uneven impact both in terms of regions and industries ... I think we should hold here to see what’s happening with the economy.”

The Reserve Bank of New Zealand is expected to raise its official cash rate for a fourth consecutive review by 25 basis points to 3.50 percent on July 24.

However, the bank is then seen

pausing possibly until December as it assesses the impact of its tightening and watches the data and currency.

On a seasonally adjusted basis, a net 33 percent of companies expected general business conditions to pick up, down from a 10-year high of 51 percent in the previous survey.

The poll’s measure of capacity utilisation was 90.6 percent, compared with 89.4 percent in the first quarter.

The survey showed businesses were reporting fewer sales and softness in profits. Companies were expecting to invest less, but were planning to hire more staff.

The NZIER said cost pressures were contained for the time being,

but the pace of price increases was quickening and this would feed through into inflation, which was expected to head toward 2.5 percent by the end of the year.

Eaqub said activity around the country was solid, but in some regions, the slowdown happened sooner than in other locations, with rural areas slowing possibly because of the fall in commodity prices.

“The signs that the momentum is coming off are quite broad based,” he said.

Growth was seen slowing to an annual rate of about 2.8 percent in year from 3.8 percent in March.

Reuters

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13

July 9, 2014

Asia Elders confirms takeover interest Australian agribusiness Elders confirmed yesterday it has received a number of approaches about its business, pushing its shares to a more than 18-month high, but said its board was not currently considering any offer. Shares in Elders, which has a market capitalisation of about A$110 million (US$103 million) have rallied nearly 30 percent over the last three sessions amid rumours of takeover interest. The company said none of the approaches were definite and were not being considered by the board. Local media have cited private equity group Private Equity Partners and live export company Wellard as potential suitors.

S.Korea department, discount store sales fall

Sales at South Korea’s top department and discount store chains fell in June, adding to concerns that the country’s economic recovery is faltering.

Combined sales at department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae Co fell 3.4 percent last month from a year before, the finance ministry said in a report yesterday. It was the steepest fall since an 8.2 percent decline in January last year. Sales at major discount-store chains in June slipped 5.8 percent compared to a year ago, which was the fastest fall since a 23.1 percent drop in February.

New Zealand deficit exceeding forecast The New Zealand government operating deficit in the 11 months to the end of May was significantly above forecasts with tax takes lower than expected, according to Treasury figures out yesterday. The government, which is facing a general election in September, issued a warning against “big spending programs” promised by rivals and vowed to focus on achieving a surplus on target in the 2014-2015 fiscal year. The operating balance was in deficit by 1.1 billion NZ dollars (US$964.57 million), which was 332 million NZ dollars (US$291.12) more than forecast during the government’s Budget published in May.

India to speed up project to build first bullet train India will speed up a project to build its first bullet train from its financial capital Mumbai to Ahmedabad, Gujarat, in its railway budget to be presented yesterday, said local daily The Times of India. The high-speed train will run at a maximum speed of 320 km per hour and cover 534 km between the two cities in two hours, according to the plan. The report quoted railway officials in Mumbai as saying a lot of brainstorming has gone into taking the Mumbai-Ahmedabad train project forward as it involves Prime Minister Narendra Modi’s home state of Gujarat. target of 2 percent at the earliest possible time, and exit policies should be designed depending on the thenprevailing economic and inflation situation,” he told a seminar.

Myanmar to develop third special economic zone The project is part of plans to create a “mini-Singapore” on an island off Myanmar

M

yanmar has planned to develop its third special economic zone (SEZ) in western Rakhine state’s Kyaukpyu, assigning a Singapore-based consortium to develop a master plan for the move, state media reported yesterday.

CPG Consultancy Ltd, which leads the consortium, will serve as the key advisor for choosing and inviting international developers to the Kyaukpyu SEZ under an agreement signed with the Committee of Bid Invitation and Selection for the Kyaukpyu.

The Myanmar government and the consortium will select construction companies in December using an international bid process, the report said, adding that the chosen companies is to draw detailed plans in the first two months of 2015.

The US$227 million project, which is part of plans to create a “mini-Singapore” on an island off in Myanmar, will include a deep-sea port and an industrial park and residential development with education, healthcare and recreation facilities.

While CPG is building a new

(Pictured) Rakhine state in Myanmar, where the special economic zone is supposed to be developed

power plant and power lines for the project, Myanmar will also upgrade the existing road network in the SEZ project.

Upon the completion of the project, it will cover some 75 squarekilometres, CPG was quoted as saying.

According to other local media, the Kyaukpyu SEZ will be implemented in three phases with the first phase from 2014 to 2016, while the second phase be from 2017 to 2020 and the third phase from 2021 to 2025.

The planned Kyaukpyu SEZ, lying

at a location 6 kilometres southeast of Kyaukpyu township, will create 60,000 job opportunities by the end of 2016, local media predict.

The two other SEZs in Myanmar being developed are Thilawa SEZ in Yangon’s Kyauktan township and Dawei SEZ in southern Taninthayi region.

Development of Thilawa SEZ mainly involves Japanese investors, while that of Dawei SEZ comprises Thai entrepreneurs.

Xinhua

Samsung earnings fall dragged by phones While smartphones drove Samsung to record profits last year, the market is maturing

T

he firm yesterday issued unexpectedly weak quarterly earnings guidance which put it on track for its worst results in two years and cast doubt on the smartphone leader’s strategy against cheaper Chinese rivals.

Though the South Korean company said it saw better business conditions in the third quarter, it faces slowing market growth, intensifying price competition at the lower end and the looming threat of Apple’s next iPhone.

“The earnings deliver a harsh reality check to Samsung that it is not Apple, but Samsung. Its strategy of selling phones at expensive prices will not work anymore, as Chinese rivals also offer good enough phones at much cheaper prices,” Lee Seungwoo, a technology analyst at IBK Securities, said. “Samsung needs to review its smartphone strategy,” he said.

While smartphones drove Samsung to record profits last year, the market is maturing. Research firm IDC predicts global shipments growth will slow to 19.3 percent this year from 39.2 percent in 2013, while average sales prices will also drop.

Some analysts said Samsung may have no choice but to slash prices for mid-to-low tier devices, where growth is stronger, to go after Chinese rivals such as Huawei Technologies Co Ltd and Lenovo Group Ltd. While that would help defend market share it would also hurt margins, curbing its earnings recovery in the short term.

The company said it “cautiously expects” a better third-quarter outlook with the release of a new

A Samsung Galaxy device. In September the company will release Galaxy Note 4

smartphone line-up, lower marketing costs and a seasonal lift in demand for its memory business. Its flagship Galaxy Note 4 is expected to hit the market in September.

Samsung’s second-quarter guidance was well below the mean forecast of 8.3 trillion won from a Thomson Reuters I/B/E/S survey of 38 analysts.

CIMB analyst Lee Do-hoon, one of the few to accurately predict Samsung’s second-quarter guidance, said the company appeared to be taking longer to address challenges it is facing in the mid-to-low end of the market.

Sagging profits Samsung estimated yesterday that its April-June operating profit likely fell 24.5 percent from a year earlier to 7.2 trillion won (US$7.12 billion), the sharpest percentage drop since the first quarter of 2011 and the weakest level since a 6.5 trillion won profit in the second quarter of 2012.

The figure, which marks the

third straight quarter of annual profit decline, was far below market expectations as sales fell for the first time since the company adopted new accounting standards in 2009.

In a separate statement, Samsung said second-quarter earnings would be hit by slower global smartphone market growth, competition in China, inventory buildup in Europe and the strength of the won, which appreciated by around 9 percent on average against the dollar during the second quarter.

But analysts on average expect the streak of on-year profit declines to extend into the third quarter, with Apple widely tipped to launch a successor to the iPhone 5 to compete with Samsung’s high-end smartphones. The prior year’s record 10.2 trillion won profit could also be difficult to beat.

Reuters

KEY POINTS Q2 op profit likely fell 24.5 pct on year to 7.2 tln won Guidance misses analyst estimates, worst since Q2 2012 Samsung should cut prices for lower-end devices -analysts

14

July 9, 2014

International German exports and imports fall German exports and imports dropped much more than expected in May, data showed yesterday, coming on the heels of other soft indicators that have pointed to slower growth in Europe’s largest economy. Figures from the Federal Statistics Office showed seasonallyadjusted exports fell by 1.1 percent on the month, while imports dropped 3.4 percent, the steepest monthly drop since November 2012. Economists polled

by Reuters had expected exports to fall by 0.3 percent and imports to increase by 0.5 percent.

S.Africa’s Telkom to go to court over retrenchments The company has said it plans to cut out some layers of management but has given no target numbers Telkom Group Head Office, as seen from Church Square, Pretoria

Air France warns on profit decrease An Air France-KLM profit warning bruised European airline shares yesterday, as the latest evidence of overcapacity set the stage for possible further job cuts. Europe’s second-largest traditional network carrier warned its 2014 profits could be as much as 12 percent lower than previously predicted, mainly as a result of overcapacity and resulting weak prices in both the passenger and cargo sectors. Shares in the FrancoDutch group fell more than five percent to 8.9 euros in early trading, reaching their lowest level since late February and dragging the European airline sector lower.

U.K. manufacturing unexpectedly slumps Manufacturing unexpectedly slumped the most in 16 months in May, indicating the economy may have struggled to maintain momentum in the second quarter. Factory output plunged 1.3 percent from April, the most since January 2013 and the first decline in six months, the Office for National Statistics said yesterday in London. The median forecast of 25 economists in a Bloomberg News survey was for a gain of 0.4 percent. Industrial output fell 0.7 percent in May from the previous month, the biggest drop since August 2013.

Bittersweet results for M&S British retailer Marks and Spencer yesterday announced a rise in revenues during its first quarter on growth in food sales and a turnaround for its key women wear division. Total sales grew 2.3 percent during the 13 weeks to the end of June despite being impacted by the introduction of a new website, the company said in a trading update. The share price of M&S, which trades in Britain and abroad, was up 1.18 percent to 438.3 pence in early deals on London’s FTSE 100 index, which was 0.23-percent lower at 6,807.50 points.

Maersk to take write-down on Brazil oil assets Danish oil and shipping group is taking a US$1.7 billion write-down on some oil assets it bought in Brazil, saying the results of appraisal drilling had been at the low end of its expectations. The firm, which bought stakes in three Brazilian exploration blocks from SK Energy for US$2.4 billion in 2011, said yesterday it would take the charge in its second-quarter accounts. Maersk Oil bought the stakes at a time when the outlook for the oil industry and oil prices was more favourable than yesterday.

T

wo unions representing some of Telkom SA’s workers said yesterday they would take the South African landline provider to court over possible retrenchments.

The South Africa Communications Union (SACU) said it believed Telkom was about to let go of about 9,000 of its 19,000 employees over the next six months, a claim the company said was untrue.

“We are drawing up the papers so that we can refer the matter. We intend going to court on the issue of the company not consulting with us,” said Karriem Abrahams, SACU general secretary.

Telkom dismissed SACU’s claims as speculation and said it was “not targeting specific numbers of individuals.”

The company has said it plans to cut out some layers of management but has given no target numbers. It has said it plans to cut its costs by 1 billion rand (US$93 million) annually over the next five years.

Separately, the Solidarity union, which represents mainly white workers, said it would file a court petition yesterday to prevent the company from sacking its members

KEY POINTS Landline provider says unions’ claims are speculation Communications union says company to lay off 9,000 Solidarity union claims race may be a factor in lay offs

based on race, claiming Telkom might use race as a criteria for laying off staff.

“It is not lawful that you take that approach,” said Johan Kruger, deputy general secretary at Solidarity. “Race should be irrelevant when it comes to retrenching people.”

Under South African law on black economic empowerment (BEE) companies must increase black ownership and numbers of black workers, although quotas vary from

sector to sector.

Kruger, however, acknowledged that the company had not made any suggestion that race would be a factor in any retrenchment.

“It’s not been explicitly been stated, but the fact is that it is there,” he told Reuters.

“The reasons being put forward for taking race into account is that Telkom has to reach or maintain a certain BEE rating,” he said. “The other reason is that they have a duty to reflect the national racial demographic within their workforce.

So that is why they may take race into account and we are saying no, those two are not operational reasons when it comes to retrenching.”

Telkom said it would consider qualifications and experience in restructuring and underlined that employment equity - the racial mix of its workforce - was only “one of the four criteria that will be applied”.

Telkom shares have gained more than 70 percent this year after new management at the company, which is majority owned by the government, tightened its belt and posted a profit.

Reuters

US regulators to fine Commerzbank and Deutsche Bank

U

.S. state and federal authorities have begun settlement talks with Germany’s Commerzbank AG and Deutsche Bank over their dealings with countries blacklisted by the United States, a source with direct knowledge of the regulatory investigations said.

The settlement talks have just begun and the timing of the deal is unclear at this time, the person told Reuters.

Deutsche Bank and Commerzbank declined to comment.

The New York Times first reported that the settlement talks with Commerzbank were on and a deal could be struck as soon as this summer.

Commerzbank, accused by U.S. authorities of transferring money through its U.S. operations on behalf of companies in Iran and

Sudan, could pay at least US$500 million in penalties, the New York Times reported.

The No.2 German lender would likely face a so-called deferred prosecution agreement that would suspend criminal charges in exchange for the financial penalty and other concessions, the report said.

A potential deal with Commerzbank, which is expected to pave the way for a separate settlement with Deutsche Bank, would pale in comparison to the deal with France’s BNP Paribas SA, the NYT said.

Last week, French bank BNP Paribas pleaded guilty to two criminal charges and agreed to pay almost US$9 billion to resolve accusations it violated U.S. sanctions against Sudan, Cuba and Iran, a severe punishment aimed at sending a clear message to

other financial institutions around the world.

Commerzbank had 934 million euros (US$1.27 billion) at the end of 2013 as provision for litigation risks, including a possible U.S. probe into whether the bank breached sanctions.

Reuters reported last week that Deutsche Bank, Banamex USA, the U.S. arm of Citigroup Inc’s Mexican banking group Banamex, and two major French banks - Credit Agricole and Societe Generale, are among those being investigated for possible money laundering or sanctions violations.

Numerous other banks, including Standard Chartered, Lloyds Banking Group and Credit Suisse Group have previously settled with U.S. authorities over allegations they violated sanctions.

Reuters

15

July 9, 2014

Opinion Business

wires

The unity of water

Leading reports from Asia’s best business newspapers

PHILSTAR ThePhilippine Stock Exchange index (PSEi) broke through the 7,000-point level for the first time this year, fuelled by the continued optimism in global equity markets, analysts said. The Philippine Stock Exchange index gained 0.53 percent or 36.82 points to close at a fresh 13-month high of 6,999.10 despite retreating from an intraday high of 7,016.71. It marked the best closing of the main index since finishing at 7,021.95 on May 31, 2013. The broader all shares index rose 0.50 percent or 20.83 points to 4,180.32.

TAIPEI TIMES The Financial Supervisory Commission (FSC) is reported to be planning to lower primary listing thresholds for foreignregistered companies using Chinese capital, in the hope of attracting quality firms based in China and boosting local capital markets. The commission intends to grant easy review of foreign-registered companies seeking a primary listing in Taiwan, as long as Taiwanese shareholders have substantial control of the firms and Chinese capital is capped below 50 percent, from the current 30 percent, the Chinese-language Economic Daily News said, without citing sources.

THE STAR Seven years after Sime Darby Bhd went through a mega-merger of all plantation companies under the Permodalan Nasional Bhd group, the group is now looking to unlock the value of its assets which is close to RM3bil. Two weeks ago, Sime Darby did not discount the possibility of acquiring a real estate investment trust and its management company in a move that was seen as unlocking some RM1.4bil in its property division. The company has disclosed that a listing of its automotive arm is an option it is considering to enhance shareholder value.

THE JAKARTA GLOBE Coffee shipments from Sumatra, Indonesia, the world’s third-biggest grower of the robusta variety, dropped 41 percent in June, raising concerns about the size of the crop, according to Volcafe.

About 50 to 70 percent of the nation’s highland crops were harvested and production so far appears “considerably lower, in some areas up to 35 percent,” the unit of commodities trader ED&F Man Holdings said in a report e-mailed on July 4. Indonesian beans for shipment in July and August traded at a premium of US$60 a metric ton.

Mikhail Gorbachev

was the last head of state of the Soviet Union, and helped to bring about a peaceful end to the Cold War, for which he was awarded the Nobel Peace Prize in 1990

M

OSCOW – In May, Vietnam became the 35th and decisive signatory of the 1997 United Nations Convention on the Law of the Non-Navigational Uses of International Watercourses.

As a result, 90 days later, on August 17, the convention will enter into force.

The fact that it took almost 50 years to draft and finally achieve the necessary ratification threshold demonstrates that something is very wrong with the modern system of multilateralism.

Regardless of longstanding disagreements over how cross-border freshwater resources should be allocated and managed, and understandable preferences by governments and water professionals to rely on basin agreements rather than on international legal instruments, that half-century wait can be explained only by a lack of political leadership. So, though the world may celebrate the convention’s long-awaited adoption, we cannot rest on our laurels.

Roughly 60% of all freshwater runs within cross-border basins; only an estimated 40% of those basins, however, are governed by some sort of basin agreement. In an increasingly water-stressed world, shared water resources are becoming an instrument of power, fostering competition within and between countries.

The struggle for water is heightening political tensions and exacerbating impacts on ecosystems.

But the really bad news is that water consumption is growing faster than population – indeed, in the twentieth century it grew at twice the rate. As a result, several UN agencies forecast that, by 2025, 1.8 billion people will be living in regions stricken with absolute water scarcity, implying a lack of access to adequate quantities for human and environmental uses. Moreover, two-thirds of the world’s population will face water-stress conditions, meaning a scarcity of renewable freshwater.

Without resolute countermeasures, demand for water will overstretch many societies’ adaptive capacities.

This could result in massive migration, economic stagnation, destabilization, and violence, posing a new threat to national and international security.

The UN Watercourses Convention must not become just another ignored international agreement, filed away in a drawer. The stakes are too high. In today’s context of climate change, rising demand, population growth, increasing pollution, and overexploited resources, everything must be done

to consolidate the legal framework for managing the world’s watersheds.

Our environmental security, economic development, and political stability directly depend on it.

The convention will soon apply to all of the cross-border rivers of its signatories’ territories, not just the biggest basins.

It will complement the gaps and shortcomings of existing agreements and provide legal coverage to the numerous cross-border rivers that are under increasing pressure.

Worldwide, there are 276 cross-border freshwater basins and about as many crossborder aquifers. Backed by adequate financing, political will, and the engagement of stakeholders, the convention can help address the water challenges that we are all facing. But will it?

An ambitious agenda should be adopted now, at a time when the international community is negotiating the contents of the Sustainable Development Goals (SDGs), the successor to the UN Millennium Development Goals, which will expire in 2015. We at Green Cross hope that the new goals, which are to be achieved by 2030, will include a stand-alone target that addresses waterresources management.

Moreover, the international community will soon have to agree on a climate-change

framework to replace the Kyoto Protocol. Climate change directly affects the hydrological cycle, which means that all of the efforts that are undertaken to contain

Without resolute counter-measures, demand for water will overstretch many societies’ adaptive capacities.

This could result in massive migration, economic stagnation, destabilization, and violence, posing a new threat to national and international security

greenhouse-gas emissions will help to stabilize rainfall patterns and mitigate the extreme water events that so many regions are already experiencing.

But the UN Watercourses Convention’s entry into force raises as many new questions as existed in the period before its ratification. What will its implementation mean in practice? How will countries apply its mandates within their borders and in relation to riparian neighbours? How will the American and Asian countries that have largely ignored ratification respond?

Furthermore, how will the convention relate to the Convention on the Protection and Use of Transboundary Watercourses and International Lakes, which is already in force in most European and Central Asian countries and, since February 2013, has aimed to open its membership to the rest of the world? Similarly, how will the convention’s implementation affect existing regional and local cross-border freshwater agreements?

The countries that ratified the UN Watercourses Convention are expected to engage in its implementation and to go further in their efforts to protect and sustainably use their cross-border waters.

What instruments, including financial, will the convention provide to them?

Several legal instruments can be implemented jointly and synergistically: the Ramsar Convention on Wetlands, the UN Convention to Combat Desertification, and the UN Framework Convention on Climate Change, to name just a few. The UN Watercourses Convention’s long-delayed enactment should be viewed as an opportunity for signatory states to encourage those that are not yet party to cooperative agreements to work seriously on these issues.

Clearly, politicians and diplomats alone cannot respond effectively to the challenges that the world faces. What the world needs is the engagement of political, business, and civilsociety leaders; effective implementation of the UN Watercourses Convention is impossible without it.

This is too often overlooked, but it constitutes the key to the long-term success of cooperation that generates benefits for all. Inclusive participation by stakeholders (including the affected communities), and the development of the capacity to identify, value, and share the benefits of cross-border water resources, should be an integral part of any strategy to achieve effective multilateral collaboration.

The Project Syndicate 2014

16

July 9, 2014

Closing Japan service sector sentiment rises

Cross-Strait trade down 12.2 percent

Japan’s service sector sentiment index rose 47.7 in June, a Cabinet Office survey showed yesterday. The survey of workers such as taxi drivers, hotel workers and restaurant staff - called “economy watchers” for their proximity to consumer and retail trends showed their confidence about current economic conditions increased from 45.1 in May. The outlook index, indicating the level of confidence in future conditions, slipped to 53.3 from 53.8 in May. The Cabinet Office started compiling the data in comparative form in August 2001.

Trade between the Chinese mainland and Taiwan hit US$76.29 billion in the first five months of this year, down 12.2 percent from the same period in 2013, the Ministry of Commerce said yesterday. The mainland’s exports to Taiwan dropped 4.4 percent year on year to US$17.08 billion during the period.

Imports from Taiwan totalled US$59.21 billion, down 14.3 percent year on year, according to the ministry. Cross-Strait trade in May increased by 2.9 percent from the previous month to reach US$17.32 billion, the data showed.

Tianjin allowed to do yuan deals with Singapore The Tianjin Eco-City, launched in 2007, is a joint project of the Chinese and Singaporean governments that aims to develop a template for environmentally friendly cities

C

hina’s central bank will allow companies and individuals in Tianjin Eco-City to conduct cross-border yuan transactions with Singapore, following in the footsteps of the Suzhou Industrial Park where a trial scheme was approved last month.

The People’s Bank of China (PBOC) has released rules to banks to kick off the Tianjin trial, which will allow equity investment funds and individuals to make overseas investments in yuan. It will also let companies in the area take up yuan loans from banks in Singapore, three sources

told Reuters yesterday.

One of the sources close to Chinese regulators said the central bank would announce the trial scheme on Wednesday, aiming to facilitate offshore yuan repatriation and enhance Chinese companies’ competitive strength.

The Tianjin Eco-City, launched in 2007, is a joint project of the Chinese and Singaporean governments that aims to develop a template for environmentally friendly cities.

The initial quota for cross-border yuan lending between the Tianjin EcoCity and Singapore this year is 2 billion yuan (US$322 million), the source added.

“We have already started to cultivate Tianjin corporate clients actively for cross-border lending and bond issuance business,” said an official at a Chinese state-owned bank’s Singapore branch.

Companies that will be permitted to conduct crossborder yuan transactions with Singapore need to register in the Eco-City, while banks involved include lenders in Singapore and those set up by the Tianjin government.

An official from the Tianjin Eco-City confirmed it

would hold a news conference with the PBOC on innovative cross-border yuan business on Wednesday. The PBOC Tianjin branch could not be reached for comment.

The PBOC Nanjing branch announced last month it would let eligible companies and individuals in the Suzhou Industrial Park (SIP) conduct crossborder yuan transactions with Singapore.

Competition to become the next offshore yuan centre after Hong Kong has intensified as China accelerates efforts to promote its currency to regions beyond Asia.

It took almost 10 years for China to set up another yuan clearing bank after Hong Kong, but such banks have sprung up in the past year as Beijing has stepped up efforts to facilitate yuan usage in trade settlement and investment.

Beijing assigned yuan clearing banks for London and Frankfurt in June, followed by announcements it would set up yuan payment systems in Luxembourg, Paris and South Korea.

Singapore was granted a yuan-clearing bank in February 2013 and has an investment quota of 50 billion yuan to enter China’s domestic capital market under the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme.

Reuters

Experts urge lending innovation for SMEsw

Private investment for funding railway

Widodo hangs on to slim lead before poll

C

C

I

hinese economists have urged banks to be innovative in lending to capital-thirsty small firms to help them weather the economic downturn.

Banks and policy makers should make innovations to address the difficulties small firms always meet in raising capital because of inadequate guarantees, prominent economist Cheng Siwei said on Monday during a forum on small firms’ development.

He advised banks to consider whether they could “allow small firms to pledge their receivables or orders as securities for loans.”

Li Zibin, president of the Chinese Small and Medium-Sized Enterprise Association, said patent technology should be accepted for small firms to get the loans they so badly need in their start-up period, a practice used in some other countries.

There are around 11.7 million small firms in China, almost 77 percent of the country’s total companies. They contribute 60 percent of GDP, pay half of the nation’s tax bill and provide over 70 percent of new jobs.

Xinhua

hina will provide the initial money for a railway fund, which will be open to private investors to help better finance the sector’s expansion, according to rules published yesterday.

Under the rules drafted by the National Development and Reform Commission, Ministry of Finance and Ministry of Transport, the government will provide the initial capital through China Railway Corp, with the rest coming from private investors.

At least 70 percent of the fund would be invested in railway projects, with the rest invested in land development and other higher-yielding projects, according to the rules.

The national railway operator will be responsible for generating “reasonable returns” for investors.

In April, the government said it would create a fund worth 200 billion yuan to 300 billion yuan (US$32-US$48 billion) each year, as part of its policy measures to support the slowing economy.

China Railway Corp has said it would raise its annual investment by 20 billion yuan to 720 billion yuan in 2014 to increase the number of lines it plans to build.

Reuters

ndonesian presidential hopeful Joko Widodo has a lead of less than three percentage points over his rival, a poll showed yesterday, a day before the country’s tightest election since the downfall of dictator Suharto.

Jakarta governor Widodo, known by his nickname Jokowi, is 2.7 points ahead of ex-general Prabowo Subianto, according to the survey from Saiful Mujani Research and Consulting.

The pollster said that with the gap so narrow, the country’s third direct presidential election since the end of authoritarian rule in 1998 had become a test.

Widodo is from a new generation of political leaders without links to the authoritarian past, a stark contrast to Prabowo, who was a top military figure during Suharto’s three-decade rule.

Yesterday’s poll put him on 47.6 percent, to Prabowo’s 44.9 percent.

The pollster said that 7.5 percent of those questioned were undecided or refused to answer.

Around 2,000 voters were quizzed between June 30 and July 3 for the survey, which had a margin of error of 2.2 percent.

AFP