Macau Business Daily, July 24, 2014

MOP 6.00 Closing editor: Luís Gonçalves Publisher: Paulo A. Azevedo Number 589 Thursday July 24, 2014

Summer of discontent A

Year III

ccording to organisers, more than 2,000 gaming workers turned up. To stage an ‘Occupy Venetian’ protest yesterday. City of Dreams, SJM and Wynn employees joined their industry colleagues. Sands China’s promotion system is at the centre of discontent. Experienced employees say their sacrifices to help the company have been in vain; and that younger workers are reaping the benefits

www.macaubusinessdaily.com

PAGE

3

Bright prospects

Beijing a beacon

A 29-year-old legislator is the government’s delegate on the board of CEM. Ms. Song Pek Kei, a local Bachelor of Law, formerly served on the government’s consultative committee on community affairs

More local powers are a possibility. A new plan from Beijing will restructure almost every aspect of the capital. Plus surrounding Hebei province and Tianjin.

Page 8

PAGE 4

Brought to you by

Government supports 200 companies The Industrial and Commercial Development Fund has been busy. It distributed 19.3 million patacas in aid to 191 companies and associations during the second quarter of the year. The objective is to promote the region and different economic activities in the territory

McChickengate

July 23

Name

Only McDonald’s here has imported meat products from the troubled Shanghai Husi Food Co Ltd this year. Now the local quarantine authority has suspended imports. The Chinese-based food supplier is mired in scandal. It has allegedly knowingly sold expired meat to the biggest US fast food chains in Asia PAGE 2

Pimp my ride

Japanese visitors jump 25 percent

Chinese billionaires are pimping their planes.

They’re flying to Hong Kong, Macau and Singapore. For gambling and entertainment. But the more savvy are conscious about flaunting their wealth right now

The Japanese are returning.

Macau witnessed a 25 percent increase in visitor arrivals from Japan last month.

Comprising 24,208 of the total visitor arrivals in June.

That’s five times more than overall visitor growth of 5 percent that month

PAGE 7

PAGE 4

PAGE 5

HSI - Movers %Day

China Resources LanD

7.53

China Overseas Land

4.43

Ping An Insurance Gr

3.69

PetroChina Co Ltd

3.05

Wharf Holdings Ltd

3.02

China Mengniu Dairy

-0.52

Hengan Internation

-1.06

Hutchison Whampoa L

-1.44

Lenovo Group Ltd

-1.87

Want Want China H

-3.63

Source: Bloomberg

I SSN 2226-8294

Brought to you by

2014-7-24

28˚ 33˚

2014-7-25

27˚ 32˚

2014-7-26

26˚ 30˚

2

July 24, 2014

Macau

Meat food scandal reaches Macau via McDonald’s Only McDonald’s here has imported product from the troubled Shanghai Husi Food Co Ltd this year. The supplier is mired in a scandal concerning the sale of expired meat Stephanie Lai

sw.lai@macaubusinessdaily.com

L

ocal quarantine authority Civic and Municipal Affairs Bureau (IACM) has suspended imports from the Chinese-based food supplier Shanghai Husi Food Co Ltd amid allegations of supplying old and rotten meat to foreign fast-food chains.

According to Macau’s imports records for this year, the Civic and Municipal Affairs Bureau noted in a statement that the local branches of fast-food chain McDonald’s Corp have been the only ones here to source meat product from Shanghai Husi Food Co Ltd, a unit of U.S.-based OSI Group LLC accused of supplying expired meat to clients.

Not identifying the name of the local supplier of the Shanghai Husi products to the local branches of McDonald’s, the Bureau said that the supplier had imported Husi pacakges of ‘Frozen Fully Cooked Crispy Chicken’ from May to June this year.

The latest imports from Shanghai Husi to McDonald’s here were dated

June 17, whereby a batch of 576 kilograms of chicken products were supplied, the Bureau noted.

“We’ve already ordered all products of Shanghai Husi to be retained at the borders and not to be circulated in the market here,” a spokesperson from the Civic and Municipal Affairs Bureau told Business Daily.

Local importers and their clients have already been instructed not to sell the alleged tainted products from Shanghai Husi, the Bureau announced in its statement.

“Since the reports on Shanghai Husi on July 21, IACM has suspended the importation of all meat products from Husi China until further notice,” McDonald’s Macau told Business Daily in a written statement. “As McDonald’s Macau only serves chicken patties from Husi Beijing, this suspension will only affect the availability of the McCrispy Chicken Burger on our menu for the time being.”

Noting that the restaurants no longer use any Husi products since IACM suspended imports, McDonald’s Macau added that they would be sourcing alternative supplies from their network of suppliers.

The Chinese-based food supplier is being investigated by mainland authorities after reports that rotten meat had been reprocessed and repackaged with new expiry dates at its Shanghai plant.

McDonald’s and Yum Brands Inc, the parent company of KFC and Pizza Hut, and a number of other global brands, have pulled products from their outlets after it emerged that Shanghai Husi had supplied expired meat to clients in mainland China, as well as to Japan.

Meanwhile, Hong Kong’s Centre for Food Safety has already sent staff to check on the meat supplied to the fast food chains in the city and their storage but has not found any problem products so far,

Secretary for Food Health Ko Wing Man informed Hong Kong media yesterday afternoon.

The Hong Kong food safety watchdog has confirmed that the Hebei processing plant of Husi has been supplying McNuggets to the city’s branches of McDonald’s this year but has yet to identify any problems with the products.

‘Company-led’ Earlier, the official Xinhua news agency cited the Shanghai food and drug watchdog as saying that food safety violations at Shanghai Husi were company-led rather than the acts of individuals.

“We discovered that some of the company’s illegal behaviour was not the behaviour of individuals but rather an organised arrangement by the company,” Xinhua reported Gu Zhenhua, deputy head of the Shanghai Municipal Food and Drug Administration, as saying.

In a separate statement, the Shanghai food watchdog said it had sealed more than 1,000 tonnes of suspected meat products from OSI in China, and a further 100 tonnes of products from a range of its customers.

Xinhua also cited the Shanghai food watchdog’s deputy head Gu as saying that Shanghai Husi’s controls systems and records for suspected products violated Chinese regulations.

Shanghai police announced in an online statement yesterday that they have detained five people during the investigation, including the head of Shanghai Husi Food Co Ltd and the firm’s quality manager.

With Reuters

3

July 24, 2014

Macau

Two thousand gaming workers vilify Venetian According to host union Forefront of Macau Gaming, more than 2,000 workers from different gaming corporations joined yesterday’s protest demanding Sands China change its “unfair” promotion system Kam Leong

newsdesk@macaubusinessdaily.com

A

round 2,000 gaming workers chose to publicly voice their demands yesterday, primarily to complain about the promotion system practised by Sands China.

Many of the protestors - experienced workers who have worked for Sands for more than seven years – say the opportunities that they have had for advancement have been less than those with less experience.

An ‘Occupy Venetian’ protest was staged yesterday afternoon by local gaming labour union Forefront of Macau Gaming. Although the main body of protesters are employed

by Sands China the president of the union, Ieong Man Teng, said that many marchers from City of Dreams, SJM and Wynn had arrived to express solidarity with their industry colleagues.

When Business Daily talked to some protesters - all of whom joined the corporation before the financial tsunami in 2008 - they said that they had chosen to pass the hard times with the corporation as it had requested but believe that their

efforts had been forgotten once the corporation had got back on track.

“At the beginning, by which I mean the first three to four years after Sands’ opening in Macau, the promotion system was fair; at least, it was much better than now.

However, later, I don’t really know why such a system has turned into a mess, [such] that no-one knows what rules they base on to promote staff,” said a dealer who chose to remain anonymous. “Some of us have been transferred from Sands to Four Seasons. The reason then was that we were good dealers and could help the new business there.

However, we wonder that if they said we were such good dealers, why have we not gained any promotion all these years? Such a system makes us very unhappy, especially when we see dealers with less experience getting promotion”.

Another dealer who has worked for Sands China Corporation for nine years told Business Daily that the corporation once said that they randomly selected staff for

promotion by computer which she thinks is totally unfair and makes her and some friends feel “mentally uncomfortable”.

Besides the [inequities of the] promotion system, according to Ms. Chang, who has worked for Sands for 10 years, benefits were reduced during the financial crisis with no increase forthcoming afterwards.

“Before the financial tsunami, the company offered 45 days of paid sick leave. However, during the tsunami, it [the corporation] said it was having hard times. Besides asking us to take two days off each week to reduce our salaries it also reduced to 25 the days of paid sick leave. Until now, nothing has been done to increase the benefits. We old staff are getting old and our body is not as good as before. They should increase back our benefits especially as their performance is getting better each year,” she said.

Another dealer, Mr. Cheang, who has worked for Sands for seven years, said that many dealers are assigned to work as supervisors but according to

the “random promotion system”, their names cannot be listed as supervisors although they are qualified.

“This relates to our opportunities in the future. I’m working as a supervisor; however, all the official papers state I’m only a dealer. If I see some other chances in other companies, will they believe I am an experienced supervisor rather than a dealer?” Mr. Cheang asked.

According to the public police, the numbers of protesters numbered around 900 people, and the whole process of the protest was peaceful.

The protesters walked around The Venetian for a lap. According to Mr. Ieong, if there is no response from Sands China, the union does not preclude the possibility of taking further action next Monday, when the chairman of Sands Corporation, Sheldon Adelson, visits Macau. He told Business daily that they might go on strike.

Meanwhile, protesters said that they would support the union in further actions to fight for their benefits and rights.

4

July 24, 2014

Macau opinion

Blown out of proportion

Japanese visitor arrivals increasing The number of Japanese visitors to Macau increased by 25 percent in June over that of the same month last year

M José I. Duarte Economist

T

he government has just announced, one more time, that it is going to ponder the housing policy. More than that, it has published a document for public discussion on the subject. It will be open to contributions from residents for the next two months. In principle, the open discussion of most policy matters is welcome. In some cases, if properly prepared, these consultations pave the way for the design of better policies. Moreover, one can only be thankful for any government’s willingness to listen to its citizen’s opinions, provided they are genuine and properly conducted. That smoothes the way for voluntary compliance and lightens enforcement costs. We all win. But today it is not my purpose to discuss or comment that document or the process. Those issues will be left for another opportunity. It just happens that the most recent figures on the evolution of the real estate sector should give the administration some food for thought, with or without consultation.

The statistics department provides figures for the average price per square metre for both existing and pre-sale residential units. They complement and provide a welcome context to the average numbers. Just to give an example: the average value of transactions for Macau was, in the first quarter, close to 89,000 patacas. But the same price for pre-sale residential units stood at almost 126,000 patacas per square metre. That value is almost 60 percent higher than the corresponding price for existing residential units. On the Macau Peninsula, that gap stood at 75 percent; it was more moderate in Taipa, at 38.9 percent, and was close to 53 percent in Coloane. The most extreme value was registered in the Praia Grande and Penha areas, where pre-sale prices were 3.3 times higher than those for existing units.

These values highlight one major characteristic of our ‘de facto’ housing policy in recent years: first, to allow the private sector to build, on public land, massive luxury residential units aimed mostly at non-residents or bought for purely speculative operations; secondly, occasionally complement that with low quality public housing, less targeted at dealing with real poverty situations than at quelling some more restive sections of the population. That policy, whether declared or not, either fully intentional or just a side effect of other policies or aims, goes unabated.

These residential units are not for the residents; that is what these figures are telling us. Among the most recently published figures, the highest three prices per square metre could be found in the NAPE area (more than 172,000 patacas per square metre), Praia Grande and Penha (about 165,000 patacas) and downtown Taipa (almost 160,000 patacas). That is, an apartment with a relatively modest area of, say, 80 square metres, will cost somewhere between 13 and 14 million patacas. To put this in perspective, that is somewhere between 82 and 88 years of the full median income recorded for this region in the same first quarter. It would be tough even for those in the top income category, which comprise, as per the published statistics, ‘Legislators, government officials, leaders of associations, directors and managers of companies’. Their entire median income would still have them toiling 35 to 38 years just to pay for such a modest nest in town - if you can live off thin air and before interest payments, that is.

Overall average prices in the last quarter, compared with the same period in 2013, were up by 34 percent for existing residential units and 29.5 percent in the case of pre-sale residential units. At those rates, when the consultation period ends, in September, the average prices will have increased by some additional 5 percent. Is there anyone willing and able to stop this madness?

acau witnessed a 25 percent increase in visitor arrivals from Japan last month, accounting for 24,208 of the total visitor arrivals in June.

The latest data from the Statistics and Census Service shows that the overall number of visitor arrivals increased 5 percent year-on-year in June to 2.4 million. Of these, 1.3 million or 53 percent were same-day visitors.

While the number of visitors from mainland China increases steadily every quarter, the group that registered the biggest increase was that of Japan with a 25 percent jump over that of June 2013. A lot less Philippines, Canadian and Australian nationals visited the SAR last month compared to a year earlier.

Visitor arrivals from the Philippines decreased by 8.1 percent, as did those from Hong Kong, also by 8 percent.

Despite the drop, the latter accounted for almost a quarter of total visitor arrivals at 513,317. The number of Australians arriving in Macau in June dropped 5.2 percent, while arrivals from Canada decreased 6.5 percent year-on-year. These numbers when compared with the previous month show a 31.4 percent drop in Canadian visitors to 4,422 and 12.7 percent in Australians to 6,899.

The Bureau says that numbers slowed after Easter and Labour Day holidays in April and May, respectively. Mainland China continued to be the primary source of visitors at 1.6 million, an increase of 9 percent over that of the same month last year. The majority of these visitors were from Guangdong Province at 667,052, followed by Fujian Province at 72,061 and Hunan Province at 57,960.

2014 Visitor Arrivals (Y-o-Y) June

May

April

March

Feb.

Jan.

9.1%

14.0%

13.5%

23.6%

13.7%

14.6%

HONG KONG

-8.0%

-7.9%

8.8%

-14.7%

-8.4%

-3.1%

TAIWAN

12.5%

22.6%

-7.3%

-4.2%

-9.8%

1.3%

SOUTH KOREA

24.5%

20.2%

11.0%

10.4%

33.1%

12.3%

JAPAN

25.0%

18.0%

-3.9%

5.4%

22.6%

-4.3%

PHILIPPINES

-8.1%

-11.5%

-6.8%

-15.5%

-2.2%

-2.3%

MALAYSIA

5.0%

-16.0%

-21.2%

-6.6%

19.6%

-25.9%

US

2.7%

9.6%

1.3%

3.8%

2.5%

-1.0%

AUSTRALIA

-5.2%

-1.9%

15.8%

-10.4%

15.0%

-7.3%

CANADA

-6.5%

-1.6%

-13.4%

5.1%

1.6%

-4.0%

4.6%

7.8%

9.9%

10.0%

7.7%

8.3%

CHINA

TOTAL

Those travelling under the individual visit scheme registered an 11 percent increase, reaching 672,405.

The number of visitors from Taiwan totalled 85,350, representing a 12 percent increase, while South Korean visitors represented a 24 percent increase and accounted for 41,786 of the total.

Long-haul visitors from the United States totalled 15,317 in June, a 2.7 percent increase over the same month last year, while those from the United Kingdom dropped to 3,908.

The average length of stay of visitors stood unchanged at one day.

Same-day visitors stay on average 0.2 days, while overnight visitors stay 1.9 days.

In the first six months of the year, as many as 15.3 million people visited Macau, up 8 percent year-on-year.

Same-day visitors accounted for 54 percent of the total.

Just between January and the end of June, the number of visitors from mainland China increased 15 percent, while those from Taiwan increased 2 percent, and South Korea 18 percent.

Hong Kong visitor arrivals decreased 6 percent over the first six months of last year.

Young legislator appointed to CEM board

T

he 29-year-old legislator Ms. Song Pek Kei has been appointed as a delegate of the MSAR Government sitting on the board of the city’s sole power supplier Companhia de Electricidade de Macau (CEM), as the government is one of the company’s shareholders, the Official Gazette announced yesterday.

Ms. Song, a close ally of local veteran politician Chan Meng Kam serving in the Legislative Assembly, was picked as a delegate to CEM’s board as the government hopes to promote the strategy of the city’s power supply policy through different professionals assigned to the organ, the Office of the Secretary of Transport and Public Works briefly told Business Daily regarding the gazetted announcement.

Ms. Song, a local Bachelor of Law, has not held any official position before other than serving as a member

of the government’s consultative committee on community affairs.

Incumbent chairman of the stateowned conglomerate Nam Kwong (Group) Company Ltd Mr. Xu Kai Cheng was elected as the chairman of CEM’s board of directors at an extraordinary general meeting held

at CEM last Monday. At the same meeting, Mr. Bernie Leong, who has served in management positions at CEM for a long time, was also elected as a board member and chairman of the company’s executive committee, the organ responsible for overseeing day-to-day corporate affairs.

5

July 24, 2014

Macau

Some 191 enterprises benefit Manulife posts from government fund in 2Q MOP26.6 mln loss The government of Macau distributed 19.3 million patacas in aid to 191 companies and associations during the second quarter of the year in order to promote the region and the different economic activities in the territory Joao Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he government of Macau distributed around 19.3 million patacas to 191 companies and associations during the second quarter of the year using the Industrial and Commercial Development Fund, data published yesterday in the Official Gazette revealed.

According to the government information, Macao Convention & Exhibition Association (MCEA) received the largest share of the financial support provided. The Association was paid 8.4 million in order to organise the event ‘Week of Promotion’ in Chengdu, Sichuan. The annual event promoting the Special Administrative Region of Macau took place last June. This year’s edition occupied an area of 11,000 square metres.

The Industry and Commerce Federation of Macau Central and Southern District received the second

largest share of the fund for two different purposes. The Federation was paid 1.35 million patacas by the government to partially cover expenses related to the advertising strategy for street animation activities developed in Macau’s old districts.

The Federation received a further 976 million patacas to cover expenses related to the Small and Medium Enterprises Centre (SMEC).

The Industry and Commerce

Federation of the Islands of Macao was the third most funded association, receiving 600 million patacas. The Federation was paid as it is responsible for the development of the SME Centre in the Islands of Macau.

Although the fund aids many different activities in Macau, the enterprises involved in MICE and in the development of SME were the main bet of the government for the second semester.

Much of the aid received by the wmajority of the enterprises was provided through subsidised loans that aim to promote the development of the economy of Macau.

The Industrial and Commercial Development Fund was created in order to aid activities organised by private non-profit companies or associations that can be considered to share the goals of the government of Macau.

M

anulife (International) Ltd Macau branch registered a loss of 26.6 million patacas in 2013. According to the company’s annual report released yesterday, premiums amounted to a total of 199.1 million patacas last year.

In addition, the number of insurance agents increased by 22 percent in 2013 over that of a year earlier. ‘This means our presence in the Macau market increased,’ the company added in its annual report. ‘Quality products need to be promoted by insurance agents, and as such, last year we carried out several recruitments and hired people with talent to join our team,’ the annual report reads.

Manulife (International) Ltd provides individual and group insurance products and services.

The company offers life and health insurance, life protection and investment, critical illness protection, medical care, accident and disability protection, senior care and mortgage protection products.

The Canadian company was founded in 1984 and is primarily based in Hong Kong. Aside from branches in the neighbouring region, Manulife (International) Ltd has branches in Macau, mainland China, Japan and the United States.

6

July 24, 2014

Macau Brands

Trends

Accessorised Men

Eight casinos generate 75 pct of gross gaming revenue Galaxy Macau casino produced the highest revenue during the first sixth months of the year, while eight casinos account for three-quarters of the gross gaming revenue of the industry

Raquel Dias newsdesk@macaubusinessdaily.com

C

ontrary to what many may think, the growing trend for men to accessorise, wear make-up or even carry handbags is not a thing of our modern society’s making. Except for that brief period in history that went from the last years of the 19th century until recently, men accessorised just as much and in some periods, even more. They even wore corsets…

Nonetheless, like it or hate it, practically ever since Calvin Klein decided to make white cotton underwear sexy, that male image - once ignored - assumed importance. Men had to be sexy, too. In recent years the trend has grown stronger. You see them on the street with the ‘male purse’ and in shops shelves of skincare have been added and entire new lines created just to meet market demand.

Whereas before, few items were associated with male accessorising, the list is now growing. Not only did brands revive items that were once forgotten (like the silk scarf), they are producing new ones. The latest Montblanc collection is an example of this. You get the traditional watch, the cufflinks and a nice bracelet. Priced at HK$2,320, the Montblanc Heritage Collection leather bracelet with stainless steel and precious resin, has a little strap with no other utility than looking fetching.

You can stand on either side of the fence. You may love it or hate it, even get really annoyed by it. The truth is, however, that there is little you can do because male accessories are here to stay.

E

ight casinos out of 35 gaming salons are well in front of the pack making three-quarters of gross gaming revenue during the first half of the year. From January to June, the group formed by the casinos Galaxy Macau, Wynn, City of Dreams, MGM, Venetian, Grand Lisboa, Sands Cotai Central and StarWorld cashed almost 145.4 billion patacas, which represents 75.3 percent of the gross gaming revenue (193.08 billion patacas) of the gaming industry.

According to the information accessed by Jornal Tribuna de Macau, Galaxy Macau consolidated the first position in the ranking of gross gaming revenues. Year-on-year Galaxy registered an increase of 38.6 percent to roughly 24.9 billion patacas during the first six months of this year.

VIP gross revenue accounted for 17.9 billion patacas of the total amount of the main enterprise controlled by Lui Chee Woo. Galaxy Macau widened the gap with Wynn Macau in the leadership of the ranking. The American casino, which headed the ranking for several years, finished the first half of 2014 in second place, cashing in 20.3 billion patacas. Year-on-year, Wynn Macau revenue increased close to 8 percent.

Growth was affected by its dependence upon the VIP market (accounts for 70 percent of the revenues of the casino), a segment whose growth has been slower than that of the mass-market.

A larger increase was registered by City of Dreams. The casino run by Melco Crown Entertainment ranked third at the end of the first half of the year. The gross gaming revenue was 19.6 billion patacas, a year-on-year growth of 11.2 percent.

Five casinos that managed to register positive results during the

first half of this year occupy the top positions on the podium. MGM Macau ranks fourth: its revenues increased 10.5 percent compared to the same period of last year, to 18.8 billion patacas. The casino owned and operated as a 50-50 joint venture between MGM Resorts International and Stanley Ho’s daughter Pansy is in front of Venetian Macau. Sands China’s casino gross gaming revenue grew 26 percent year-on-year to 18.4 billion patacas.

The top five casinos in Macau are responsible for 52.9 percent of the gross revenue from games of fortune.

The group of ‘big’ eight casinos also includes Grand Lisboa, whose revenue increased by 5 percent to 16.7 billion patacas, Sands Cotai Central and StarWorld. Sands China registered an astonishing increase of 30.9 percent year-on-year in gaming revenues to 14 billion patacas, while StarWorld achieved 12.5 billion patacas with 6.5 percent growth.

The top 10 is completed by L’Arc, ranking 9th after cashing in 6.5 billion patacas, and Sands Macau, which achieved gross gaming revenue of 5.8 billion patacas. The Sands casino was the first casino to be opened that was not controlled by the empire built by King of Gambling Stanley Ho. The ‘old’ Lisboa ranked 14th as its’ gross gaming revenues decreases 7.9 percent year-on-year to 4.7 billion patacas.

Although the pace of the growth of gross gaming revenue from games of fortune fell in the first half of the year, only six casinos registered a decline in revenue. As well as the Lisboa, Altira (drop of 20.5 percent), Lan Kwai Fong (drop of 15.5 percent), New Century (drop of 4.9 percent), Rio (drop of 1.2 percent) and Emperor (drop of 0.7 percent) were in the red.

However, the data accessed demonstrates that all the concessionaires registered increases in gross gaming revenues during the first half of the year.

Sociedade de Jogos de Macau (SJM) cashed in more than 45.4 billion patacas and held the first position for concessionaires. The company has a market share of 23.5 percent.

Year-on-year, however, the company owned by Stanley Ho registered one of the slowest growths.

Sands China ranked second with 44 billion patacas in gross gaming revenues, with growth of 22.2 percent.

Sheldon Adelson’s company has a market share of 22.8 percent. Mass and slot machine markets accounted for 52 percent of the gaming results.

Sands China is the only operator whose market is not dominated by VIP revenues.

In terms of market share, Galaxy occupied third place with 20.4 percent.

The group registered gross gaming revenues of 39.4 billion patacas and growth of 24 percent.

Bally Gaming Sues App Developer

B

ally Gaming, a maker of casino equipment and technologies, has sued a developer of software applications for infringing upon patents covering card playing.

In a complaint filed July 21 in federal court in Los Angeles, Bally asserted that the developer had created apps that infringe upon patents 6,698,759 and 6,237,916.

The patents, which cover a threecard poker game and a method and apparatus for playing card games, are allegedly infringed upon by simulated casino gambling table card-game apps that the developer sells through Apple Inc.’s iTunes store and through its own website. Apple isn’t a party to the suit.

Bally, based in Las Vegas, said the apps at issue also infringe upon its copyrights and trademarks. The developer declined to comment on the suit.

The case is Bally Gaming Inc. v.

Carey Richardson, 2:14-cv-05634, U.S. District Court, Central District of California.

Bloomberg

7

July 24, 2014

Macau

Pimp my plane In their 20’s or 70’s, from real estate to investment, to oil & gas. Chinese billionaires are pimping their planes to fly to Hong Kong, Macau and Singapore for gambling and entertainment as jet market takes off

W

hen a Chinese customer asked for the interior of his new Bombardier Challenger 850 jet to be covered with pricey black carbon fibre, the designer was shocked - but happy to oblige.

“We’ll do whatever you want, as long as it’s within the realm of certification,” said Sean Gillespie, executive vice president for sales of Flying Colours, a North American aviation services firm.

“But carbon fibre; we’ve used it before, but usually it’s used as a trim.”

The market for private jets - sometimes called business or executive jets - is a small but fast growing aviation segment in China, where rapid economic development has created a surge of new wealth.

The first US Gulfstreams only arrived in the country in 2003 but a decade later there were 248 business jets in China, a 28 percent leap on 2012’s figure, according to consultancy Asian Sky Group.

Customers include Jack Ma of e-commerce giant Alibaba, in the process of a multi-billion dollar share

offering in the United States, and Wang Jianlin of Wanda Group, which has bought the US cinema chain AMC. “Buyers can be in their 20s, in their 70s. They can be in real estate, investment, oil and gas. They are from all over China,” said Jason Liao, head of consultancy China Business Aviation Group.

“There is no typical Chinese buyer,” he said.

One thing they do have in common, however: tens of millions of dollars available to buy their own planes.

European firm Airbus has just started offering an $80 million budget version of its corporate jet in China, with a pre-designed cabin instead of a fullycustomised one.

They can be swayed by the little details. So Gulfstream has a place for a rice cooker on board, Brazil’s Embraer can sync an iPad to adjust lights and climate control and Airbus offers a round table for playing mahjong.

Chinese billionaires’ most common destinations are nearby Asian cities such as Hong Kong, Macau and Singapore for gambling and

entertainment but they nonetheless prefer “long range, big cabin” aircraft with the ability to cross the Pacific and bring North America within reach, Airbus and Ledbury Research said in a report.

Even so, manufacturers are quick to promote planes as a business tool, rather than a toy of the rich.

There are some dark clouds on the horizon for the market: more moderate economic growth and limits on flight paths since most of China’s airspace is controlled by the military, along with a lack of infrastructure for private planes.

China has just 286 landing sites suitable for these types of aircraft, according to state media.

“There are some challenges with airspace, with airport take-off and landing restrictions,” said Scott Neal, senior vice president for sales and marketing at Gulfstream.

At the moment, potential buyers are also eager to keep a low profile amid an on-going government austerity campaign and anti-corruption drive launched after Chinese leader Xi Jinping took over as head of the ruling

Communist Party at the end of 2012.

“If you back up two years ago, this market was really happening very fast and was kind of electric,” said Stephen Taylor, president of Boeing Business Jets.

“It definitely has been less aggressive and a more subdued market ever since the new administration came in and started pushing against some of the luxury items.”

Asian Sky’s general manager Jeffrey Lowe added: “Maybe not getting into the biggest and flashiest airplane is certainly the best approach these days.”

But, he said, “other than that, they still have a definite need for the aircraft and most of them are finding ways to buy”.

At a recent air show in Shanghai a middle-aged man sat near a Gulfstream display but declined to give his name and attributed his presence to his tall companion, introducing her as a fashion designer.

“I only came along because my girlfriend wanted to look at planes,” he said.

Corporate DKSH extends SAP platform to Macau

DKSH Business Unit Healthcare, a market expansion services provider for healthcare companies seeking to grow their business in Asia, has announced full implementation of its globally standardised SAP platform for its Macau operations. The company said in a statement that its implementation of SAP here enables competitive advantages for the local healthcare operation, consolidating DKSH’s leading position in healthcare distribution. The company’s vice president, Richard Holloway, said “running SAP in our markets for many years has ensured reliability in handling our clients’ business. With the acquisition in Macau, DKSH saw the opportunity to align its IT platform in Hong Kong and Macau. This minimises complexity as we grow with some of the largest pharmaceutical and healthcare companies and support the growth of our clients.”

DKSH’s recent expansion into Macau and the full SAP implementation further strengthen the company’s market position and contribute to the group’s reputation in Asia, the statement added.

Business Awards judges announced The 30-member judging panel for this year’s Business Awards has been selected and named.

Some are returning judges from last year’s panel, while others are new additions to this year’s group. The panel members are: Lionel Leong, Vong Kok Seng, Paul Tse, José Braz-Gomes, Henry Brockman, Franklin Willemyns, Paulo A. Azevedo, Lau Pak Hung, Albano Martins, Frederico Rato, Filipe Cunha Santos, Alexandre Correia da Silva, António Conceição Júnior, James Chu, João Francisco Pinto, Jacky Yuk Chow So, Bruno Ascenção, José I. Duarte, Pedro Cortés, Larry Sou, Vandy Poon, Oscar Chan, António Felix Pontes, João Rodrigues Monteiro, Pawin Sriusvagool, Terry Sio, Anabela Ritchie, Mary Ho, Paula Ling, Manuela António and Alice Costa.

All 30 members represent different sectors - from politics to business to academia. In addition, Business Awards organisers have announced the Macau Government Tourist Office (MGT) as its platinum sponsor. The judging process will take place in September, with the judges’ scores combined and averaged to determine winners for each category.

Winners will be announced on November 21.

AFP

8

July 24, 2014

Greater China

Super-Beijing’s transformation Customs, tax, pollution and industry have been unified across local government areas

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hina is readying an assault on the “fortress economies” of local governments by creating a super region around Beijing, with proposals that sources suggest will be more aggressive than so far has been publicly revealed.

The plans will be the first time that standards for customs, tax, pollution and industry have been unified across local government areas, the sources say.

Combining bloated Beijing, the smog black spot of Hebei province and the port city of Tianjin will create a region with a population of 110 million and an economy the size of Indonesia’s in a move that encapsulates President Xi Jinping’s ambition to overhaul the world’s second-largest economy.

By challenging the power of local leaders, Xi wants to produce better allocations of wealth and investment, and get an environmental dividend.

A Beijing panorama where modern and ancient buildings mix

Officials think this is ‘our money’ that belongs to ‘our region’, and they are not going to think about investing Beijing’s money in Hebei or vice versa - this is quite a normal way of thinking Zhang Gui Centre of Beijing-Hebei-Tianjin Development Research deputy-director Hebei Technology University

Academics involved in the policy discussions said the government wants to improve the “layout” of the region by shifting industries such as car manufacturing and chemicals out of the capital, giving polluted Hebei an incentive to clean up and congested Beijing the breathing space it needs.

The integration will be driven by unified customs regulations, social service provisions, industrial standards and environmental rules across the three local governments, as well as cross-regional markets for labour, resources and investment, researchers and officials involved in drawing up the plans said.

They say China’s “every region for itself” approach to economic growth is a cause of a wide variety of problems, including over investment, pollution and corruption.

“Officials think this is ‘our money’ that belongs to ‘our region’, and they are not going to think about investing Beijing’s money in Hebei or vice versa - this is quite

Five arrested for fast food fraud The five detained include the head of the company - Shanghai Husi Food Co Ltd, a unit of U.S.-based OSI Group LLC - and the firm’s quality manager, the police said in an online statement

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hanghai police said yesterday they detained five people in an investigation into a Chinesebased supplier of foreign fast-food brands, including KFC, McDonald’s Corp and coffee chain Starbucks Corp., over allegations the firm supplied old and rotten meat.

McDonald’s and Yum Brands Inc., the parent company of KFC and Pizza Hut, and a number of other global brands have pulled products from their outlets after it emerged that

Shanghai Husi supplied expired meat to clients in China, as well as Japan.

Earlier, the official Xinhua news agency cited the Shanghai food and drug watchdog as saying that food safety violations at Shanghai Husi were company-led rather than the acts of individuals.

“We discovered that some of the company’s illegal behaviour was not the behaviour of individuals, but rather an organised arrangement by the company,” Xinhua reported

a normal way of thinking,” Zhang Gui, deputy-director at the Centre of Beijing-Hebei-Tianjin Development Research at the Hebei Technology University, said.

Manufacturing unity

city of Huanghua.

Zhang said the eventual aim was to move all of Beijing’s “non-capital functions”, including all primary and secondary industries, out to Hebei.

“Big City Syndrome”

Hebei, after years of defying central government edicts on issues such as industrial overcapacity, has been the prime target of a campaign to smash “fortress economies” and put an end to the growth fixations of local bureaucrats.

China has 34 provincial-level governments, including those that run the cities of Beijing, Tianjin and Shanghai.

The relocation of industries, already taking place, will help better distribute the spoils of growth. A number of car and chemical plants are scheduled to move, including those belonging to the Beijing Automotive Group, which said earlier this year that it was moving its plants to the

Gu Zhenhua, deputy head of the Shanghai Municipal Food and Drug Administration, as saying.

In a separate statement, the Shanghai food watchdog said it sealed more than 1,000 tonnes of suspected meat products from OSI in China, and a further 100 tonnes of products from a range of its customers.

Illinois-based OSI has said it was “appalled” and was investigating the matter after a Chinese TV report on Sunday showed staff at its Shanghai Husi facility using expired meat and picking up meat from the floor to add to the mix.

An official at OSI in China reached by telephone on Wednesday declined to comment further.

A factory worker at another of OSI’s food processing plants in the northern Chinese province of Hebei told Reuters yesterday that regulations were very strict at the plant, that all workers needed to wear special clothes, and that spot checks were often held unannounced.

Reuters

For Beijing residents, the payoff of spreading their wealth would be some relief from what policymakers call the “Big City Syndrome”, where its drive to be all things to everyone has generated a congested, chaotic, polluted industrial metropolis.

Beijing’s addiction to industrial growth has seen its output rise six fold and its population soar by twothirds in 14 years.

The plan would not only shift Beijing’s industry and some of its government functions, but could also involve the relocation of as many as 5 million residents, according to local media reports citing Beijing government officials.

Reuters

KEY POINTS Five Shanghai Husi staff detained include head and quality chief - police Food safety violations at Husi were company-led, not individual acts - watchdog Over 1,000 tonnes of suspect meat products sealed from OSI in China More Japanese firms withdraw Husi-supplied products

9

July 24, 2014

Greater China

More capital inflows in H2 However, capital flows could remain volatile in the second half as the economy still faces uncertainties, along with risks from monetary policy adjustments in major economies

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hina may see more capital inflows in the rest of 2014 after experiencing some money flight in recent months, the country’s foreign exchange regulator said yesterday, as the yuan recovers due to improved confidence in the economy.

Guan Tao, the head of the department of international payments at the State Administration of Foreign Exchange (SAFE), also said at a news conference that China’s rising foreign exchange reserves could stoke longterm inflationary pressures.

“The domestic economy is stabilising, which helps boost market confidence, and the foreign trade situation has started improving, and the interest rate differential remains.

These factors could lead to pressure on capital inflows,” he said.

China’s economy grew slightly faster than expected in the second quarter as a flurry of government stimulus measures kicked in, but analysts said Beijing will likely need to offer further support to meet its 7.5 percent economic growth target for 2014.

China was under pressures from capital inflows in the first quarter, but the tide turned in the second quarter as volatility in the yuan fuelled outflows, Guan said.

The central bank was seen intervening to weaken the yuan in February and March as a means to punish speculators. The PBOC was concerned about punters skirting China’s capital controls to bring foreign currency into the country and profit from expected yuan appreciation.

The yuan has shown some signs of stabilising in recent weeks but is still down 2.3 percent so far this year.

Traders are unsure when authorities

Australia is close to signing a deal with China that would allow the establishment of an official clearing bank for the renminbi, a step towards the more open flow of money and investment into and out of the Asian giant. Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe said the central bank was working with the People’s Bank of China (PBOC) on a memorandum of understanding that would allow a clearing bank to be chosen “over coming months”.

229 officials told to quit companies A total of 229 officials at provincial or ministerial level have been told to quit companies where they hold concurrent posts, according to government figures released yesterday. In a move designed to restrict conflicts of interest through such arrangements, the Organization Department of the Communist Party of China Central Committee issued a circular in October to ban leading government and Party officials from working for outside companies. Following the circular, a special inspection has been conducted and 40,700 leading officials, including 229 at provincial or ministerial level, were found to have extra jobs.

The bull in the Bund, Shanghai, a growing economy talisman and icon

will allow it to return to a gradual appreciation path.

China’s current account surplus may widen in the second quarter, but net inflows under its capital account may decline sharply, or even show a deficit, Guan said.

The SAFE is closely watching the country’s rapid rise in short-term foreign debt, but the level of foreign debt is manageable given China’s huge foreign exchange reserves.

Even though China’s capital account is not open, there are leaks in the system and illicit inflows and outflows are common in the world’s

second-biggest economy.

Worried that a surge in funds entering or leaving China may hurt its economy and complicate its monetary policy, the currency regulator said in January that authorities are considering introducing a Tobin tax.

The Tobin tax is in effect a tax on foreign exchange transactions.

Turning to China’s US$3.99 trillion foreign exchange reserves, the world’s largest, Guan warned that further rapid rises in the cash pile may stoke inflation in asset price rises, he said.

The city is pushing to boost electricity imports from mainland China to reduce pollution and the dominance of two local utilities backed by powerful families

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Lamma Power Station in Hong Kong

so-called “local generation” option, the people said.

Plugging Hong Kong into the Chinese grid would create competition for the city’s dominant local utilities CLP Holdings, backed by the wealthy Kadoorie family, and billionaire Li Ka-shing’s Power Assets Holdings and further strengthen Hong Kong’s ties with mainland China at a time when many query Beijing’s growing

Chinese and Cuban leaders pledge staunch friendship

Reuters

Hong Kong to depend more on Chinese electricity

geing coal-fired plants, which supply over half of the city’s electricity, are due to be shut from 2017 and Hong Kong is weighing whether to more than double its mainland imports or nearly triple the use of natural gas in local power generation to meet 60 percent of its power needs - roughly equivalent to demand in New Zealand.

The government recently wrapped up three months’ of public consultations and is expected to make a decision this year.

Some of those involved in the discussions between officials, power executives and other stakeholders said the government was leaning towards the import option. Officials from the Environment Bureau, Hong Kong’s energy policymaker, discussed at length the advantages of what they called the “grid purchase” option, while highlighting the downside of the

Australia close to currency clearing deal

influence in the semi-autonomous territory.

Hong Kong already meets over a fifth of its electricity demand via a dedicated line from the Daya Bay Nuclear Power Station in the southern Chinese province of Guangdong. Hong Kong’s grid is not interconnected with China Southern Power Grid (CSPG), which supplies electricity to Guangdong and four other southern provinces.

CSPG and State Grid Corp, China’s biggest electricity supplier, have acquired significant stakes in units of Hong Kong’s dominant power companies. CSPG last year bought a 30 percent stake in CLP’s power unit Castle Peak for US$1.6 billion, while State Grid spent about US$1.2 billion to buy into the local initial public offering of HK Electric, a spinoff of Power Assets, early this year.

Reuters

Visiting Chinese President Xi Jinping and Cuban leader Raul Castro pledged that the two countries will be long-term, staunch friends and partners for reciprocal cooperation. “We will resolutely deepen our friendship and treat each other with all sincerity, carry out mutually beneficial cooperation and forge our partnership in reform and development,” Xi said during talks with Castro, president of Cuba’s Council of State and the Council of Ministers. Xi pointed out that the socialist path with Chinese characteristics is consistent with the historical tide and wins the support of the people.

Venezuela sees China as development paradigm China’s socioeconomic model is a paradigm for Venezuela, as the Latin American nation sets out to build socialism for the 21st century, a Venezuelan expert said yesterday. In an interview with Xinhua, Jesús Silva, an international political analyst, said the Venezuelan government’s decision to look to China as its model was evident during Chinese President Xi Jinping’s recent visit to the country, during which a raft of cooperation agreements were signed by the two sides. He said Venezuela hopes to further expand exchanges and cooperation with China so as to sustain its economic growth in the coming decades.

10

July 24, 2014

Greater China

The housing control revolution A handful of Chinese cities are relaxing property controls to support a cooling house market and safeguard economic growth

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he unwinding of property controls is a turning point in China’s housing policy, which has been steadily tightened since 2009 to calm frothy home prices.

At least 10 regional governments, which earn a large chunk of their revenues by selling state land, have openly or quietly relaxed home purchase restrictions this year, according to data from CRIC, a unit of real

estate services firm E-House China.

But 36 out of the 46 governments have not budged, with higher down payment levels and limits on the number of homes that residents can buy still in place for the fifth year to temper house prices, CRIC said.

Below are the measures that have been taken to bolster the property market.

Reuters and Xinhua

TONGLING CITY, ANHUI PROVINCE, MAY 5 The supply of public housing will be increased, and eligible first-home buyers will receive state subsidies equivalent to 1 percent of the value of their homes.

The requirement for getting preferential mortgage rates from the government will be relaxed. Buyers now need to contribute to a social housing fund for just three consecutive months to qualify, down from six months previously. Maximum mortgage sizes will be raised to 300,000 yuan from 250,000 yuan for single-working parent families, and down payment levels for first-home buyers will be cut to 20 percent, from 30 percent.

Existing home owners can also buy a larger property using state loans, and those who want to buy public housing can enjoy a 50 percent discount on their borrowing rates.

The city will also make it easier for home buyers to get a hukou -- China’s registration system that ties residents to a city and which affects their access to public services such as education and pension plans.

Developers will also have easier access to sales revenues locked up as reserves and managed by the government.

WUXI CITY, JIANGSU PROVINCE, APRIL 18 Those who buy a house in Wuxi larger than 60 square meters in size will be eligible for a Wuxi hukou, down from 70 square meters previously.

JINAN CITY, SHANDONG PROVINCE, JULY 10 Residents can buy more houses, regardless of how many they already own, or whether they are registered as residents.

HOHHOT CITY, INNER MONGOLIA REGION, JUNE 27 Limits on home purchases have been dropped. Residents and non-residents can buy more than one home in the city.

SUZHOU CITY, JIANGSU PROVINCE, JULY 19 XIAOSHAN DISTRICT, ZHEJIANG PROVINCE, APRIL 28 NANNING CITY, GUANGXI PROVINCE, APRIL 29 Residents in an economic zone near Nanning now have the right to buy homes in the city, expanding the pool of potential buyers to beyond the city’s dwellers.

The down payments paid by developers when they purchase land will be capped at 10 million yuan (US$1.6 million) when the land worth is over 100 million yuan. Previously, developers had to pay a down payment worth 10 percent of the land value.

NINGBO, ZHEJIANG PROVINCE, MAY 6 Those who do not have a property in Ningbo can buy a house in the city.

Previously, buyers had to show that they do not already own a property in their hukou city, or primary place of residence.

People can buy homes larger than 90 square meters regardless of how many homes they already own or whether they are registered as residents, popularly known as having a hukou.

Residents were previously barred from owning more than two houses while nonresidents who have paid more than a year’s worth of taxes can buy no more than one property in Suzhou.

11

July 24, 2014

Asia

Harvesting rice in northern Thailand

Thailand rice dropping on drought Dry weather may also hurt rice output in India this season

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ice production in Thailand will probably shrink to a five-year low as drought hurts yields and farmers curb planting after the end of a subsidy program, according to the Thai Rice Packers Association.

Output in the largest shipper after India may drop 10 percent to about 34 million metric tons in 2014-2015, said Somkiat Makcayathorn, the group’s president. That would be the lowest level since 2009-2010, when the Southeast Asian nation produced 32.4 million tons, according to data from the Office of Agricultural Economics, the Bangkok-based state forecaster.

While a smaller harvest would curb farm incomes, a decline in supply may ease the challenge faced by the country’s military junta as it seeks to sell off record stockpiles that built up under the nowdefunct subsidy program.

“Production has been affected by both drought and the lack of a price subsidy,” Somkiat said in a phone interview in Bangkok on July 21. “The prospect of a production decline provides an opportunity for the junta to release stockpiles.”

Drought spread across 49 of Thailand’s 77 provinces since September, with rainfall in May 31 percent below the 30-year average,

according to government data. Yields may decline 20 percent to 50 percent because of below-normal rain and inadequate water supplies, according to a Bloomberg survey of 10 farmers in the biggest growing provinces.

El Niño An El Niño weather pattern, which can parch South and Southeast Asia and hurt farm production, remains likely later this year, Australia’s Bureau of Meteorology said July 15, while adding that odds of a strong event are increasingly unlikely.

Thai Prime Minister Yingluck Shinawatra, who was deposed by the junta in May, introduced the subsidy in 2011, spurring record output and reserves and ending the country’s 30-year reign as the biggest exporter.

The program -which paid farmers a guaranteed above-market rate for their crop- lapsed in February and the junta is now checking warehouses nationwide to assess the quantity and quality of the grain reserves.

Thai reserves increased from 5.62 million tons in 2011 to 12.8 million tons last year, as exports fell from 10.6 million tons to 6.72 million tons in the same period, according to

the U.S. Department of Agriculture.

Output may drop to 30.5 million tons in 2015 from 31 million tons, the U.S. agency predicts.

Biggest shippers Global ending stockpiles may contract 0.9 percent to 179.7 million

The prospect of a production decline provides an opportunity for the junta to release stockpiles Somkiat Makcayathorn president of Thai Rice Packers Association

tons in 2014-2015 on a milled basis, the United Nations’ FAO estimated in a quarterly report last week. The agency forecast a 1.2 percent drop in Indian supply to 157.5 million tons on a paddy basis.

Should India’s crop decline significantly from last year on a poor monsoon, it would play quite favourably for Thailand, according to Darren Cooper, senior economist at the London-based International Grains Council. Thailand may reclaim its position of the leading rice exporter, Cooper said.

Between July 3 and July 8, more than 100 teams checked 343 warehouses out of 1,787 in Thailand, junta leader Prayuth Chan- Ocha said on July 18. Irregularities, including rice missing from warehouses and quality deterioration, were found in 65 warehouses, Prayuth said in his weekly televised address.

The price of Thailand’s 5 percent broken white rice, a regional benchmark, rebounded after the junta suspended sales for the inspections.

The grade was at US$427 a ton on July 16, compared with US$384 on May 28, the lowest since at least 2008. The price slumped 23 percent last year.

Bloomberg News

Toshiba to seek more compensation from Hynix The firm filed a US$1 billion civil suit in March Cheng Leng and Takashi Amano

Hynix chips

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oshiba Corp. said it may increase the damages it is seeking from SK Hynix Inc. over claims the South Korean semiconductor maker wrongfully acquired information related to memory chips.

Toshiba filed a 109 billion yen (US$1 billion) civil suit in March with the Tokyo District Court after a former technician left a company it partners with to make

flash-memory chips in 2008 and joined SK Hynix. The technician was arrested in March in Japan under suspicion of leaking research data to the South Korean company.

The lawsuit comes amid intensifying competition among chipmakers and a push among companies to squeeze more money from technical innovations and the protection of patents through

litigation or the licensing of rights to third-party firms.

“The amount we are seeking now is 109.151 billion yen,” Tatsuro Oishi, a Tokyo-based spokesman for Toshiba, said by phone. “But this is not all.

The amount could increase in the process of the lawsuit.”

Son Hee Young, a Seoul-based spokesman for SK Hynix, declined to comment.

Toshiba, which helped pioneer technology to develop and produce memory chips, competes with Samsung Electronics Co. and others in the market for so-called Nand flash memory, chips that act as storage for data in phones, tablets and some personal computers.

Bloomberg News

12

July 24, 2014

Asia

Deputy Governor sees end of deflation Nakaso warned markets against focusing too much on monthly price moves, stressing that what was more important was that the mechanism for pushing up prices was falling in place

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ank of Japan Deputy Governor Hiroshi Nakaso said the country was eyeing an end to deflation as rising wages and inflation expectations allow companies to increase prices of their goods, signalling confidence over a sustained economic recovery.

But he voiced caution over sluggish exports and stressed that the world’s third-largest economy is only halfway to meeting the central bank’s 2 percent price target, suggesting that the BOJ is nowhere near to withdrawing its massive monetary stimulus.

“Japan’s economy is likely to achieve an inflation rate of around 2 percent in or around fiscal 2015,” Nakaso said in a speech to business leaders in Shizuoka, eastern Japan, yesterday.

“Therefore, the conquest of deflation in Japan is now in sight.

We are, however, only halfway toward achieving the price stability target of 2 percent,” he said, reiterating the BOJ’s stance that it will not hesitate to ease policy further if risks threaten its economic and price projections.

The BOJ has left policy unchanged since unleashing an intense burst of stimulus in April last year, when it pledged to pull Japan out of chronic deflation and push up consumer price inflation to 2 percent in roughly two years.

Core consumer inflation has gradually accelerated since then, hitting 1.4 percent in the year to May when excluding the effect of a sales tax hike in April.

Nakaso warned markets against focusing too much on monthly price moves, stressing that what was more important was that the mechanism for

KEY POINTS Japan only halfway in meeting price goal - Nakaso Adds post-tax hike spending slump within expectations Warns exports remain soft, warrant close attention

Head office of the Bank of Japan

pushing up prices was falling in place, such as a narrowing output gap and heightening inflation expectations.

He also said the decline in household spending after the sales tax increase had been within expectations, in line with the central bank’s baseline scenario that the economy continued to recover moderately mainly on robust domestic demand.

The comments came after a recent slew of weak data cast doubt on the BOJ’s scenario of an investmentdriven economic recovery.

Exports disappoint Japan’s economy clocked its fastest

pace of growth in more than two years in the first quarter as consumer spending jumped and business investment turned surprisingly strong ahead of a sales tax hike in April to 8 percent from 5 percent.

Some economists and politicians have argued the tax hike could dent the success achieved so far under premier Shinzo Abe through aggressive monetary easing and big fiscal spending.

Nakaso, however, acknowledged that exports continued to disappoint with the pace of recovery remaining sluggish due largely to soft demand in emerging Asian markets.

He cited structural factors that

may have weighed on exports, such as weak global capital expenditure and the lingering effect of a prolonged period of yen strengthening that pushed many Japanese companies to shift production overseas.

Exports are expected to rebound moderately ahead as global business investment picks up, Nakaso said, though he added that developments in external demand warranted close attention “without undue optimism.”

Nakaso, one of the BOJ’s two deputy governors and a career central banker, has toed the central bank’s official line on monetary policy and the economy.

Reuters

Prabowo challenges Indonesia’s new President President Jokowi starts by saying he wants to meet miners

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he ex-general who lost Indonesia’s closely-fought presidential election will challenge the result in the Constitutional Court, a spokesman said yesterday, after his team alleged that the winner Joko Widodo engaged in massive vote fraud.

“We are in the process of preparing our challenge to the Constitutional Court,” said Tantowi Yahya, a spokesman for the campaign team of Prabowo Subianto.

The move was a surprise after Prabowo angrily announced he was withdrawing from the race Tuesday just hours before the result was announced, and members of his

campaign team indicated he would not mount a legal challenge.

It will prolong the political uncertainty for several more weeks since the court will not issue a ruling until late August.

Official election results showed that Widodo, known by his nickname Jokowi, won a convincing victory in the July 9 election, beating Prabowo by 53 percent to 47 percent.

Miners meeting Widodo said he wants to sit down with mining companies and other parties in a bid to resolve a row over mining policies that has halted US$500

million of metal exports a month in Southeast Asia’s biggest economy.

The comment by the former Jakarta governor, who has a reputation for tackling entrenched interests, appeared to be a positive sign after an increasingly bitter dispute between the mining sector and the outgoing government.

Until this year, Indonesia was the world’s top exporter of nickel ore and a major supplier of copper, iron ore and bauxite. But a ban in January on exporting unprocessed ore and an escalating tax on metal concentrates have paralysed shipments.

Jokowi did not say specifically how he would handle the row over the ore ban, and when pressed on the

Indonesian President-elect Joko Widodo (L), accompanied by his Vice Presidentelect Jusuf Kalla

issue an aide stepped in to say “too much detail”.

But mining companies will be hoping the new president can help reanimate negotiations, which had run into trouble with the administration of outgoing President Susilo Bambang Yudhyono.

Reuters and AFP

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk Alex Lee, Luciana Leitão, Michael Armstrong, Sara Farr, Stephanie Lai International editor Óscar Guijarro GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari interns Aries Un, Kam Leong Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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13

July 24, 2014

Asia CIMB eyes banking licences in Vietnam, Myanmar

Malaysian members of Parliament stand during a moment of silence for the passengers and crew of the crashed Malaysian Airline flight MH17, at Parliament House in Kuala Lumpur yesterday

Brand Malaysia’s image severely damaged by airline tragedies

Malaysia’s second-largest lender plans to seek banking licences in Vietnam and Myanmar as part of its drive to expand in fast-growing Southeast Asian markets. CIMB, Southeast Asia’s fifthlargest bank by assets, is also keen to open a banking business in the Philippines and is studying regulations in the country, CIMB Group Chief Executive Nazir Razak told reporters yesterday. He was in Bangkok to announce that CIMB-Principal Asset Management Co has signed a deal to acquire Finansa Asset Management Ltd in Thailand from Finansa Pcl for 225 million baht (US$7.09 million).

CapitaMall distributable income rises

Tourism ministry said in a statement it is “monitoring the market situation closely”

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n unprecedented second major aviation disaster in four months could further associate Malaysia with calamity in the eyes of travellers, observers warn, putting the tropical destination’s vital tourism sector at risk.

Even before Malaysia Airlines flight MH17 was shot down on Thursday over rebel-held eastern Ukraine in an apparent missile strike, killing all 298 people on board, Malaysian tourism was under a cloud following the MH370 debacle.

Malaysia’s March 8 loss of a jumbo jet with 239 people aboard and its widely mocked response hurt the country’s image worldwide.

With most of the passengers on MH370 Chinese, tourist arrivals from China - a key source of visitors on which Malaysia has pinned much of its hopes for further development of the sector- dropped in the aftermath.

While the circumstances of the two disasters are markedly distinct,

perception is key in branding, and the latest tragedy is expected to complicate efforts to repair Brand Malaysia’s image.

“Malaysia’s competency and governance are not under the spotlight to the same degree as in MH370,” Bridget Welsh, a Malaysia researcher at National Taiwan University, told AFP. “This said, Malaysia Airlines and travel to Malaysia will be affected outside of Malaysia. The effects will not be as serious as MH370 but overall negative.”

Some in the tourism sector, however, say any impact may be short-lived as discerning travellers will continue to be drawn by Malaysia’s pristine rainforests and beaches, vibrant multiculturalism and food scene and an overall safe and friendly environment.

Malaysia drew 25 million visitors in 2013 and 65 billion ringgit (US$20 billion) in tourism receipts, according to official data.

Hopes were high for 2014, which the government declared “Visit

Malaysia Year” with plans to ramp up international promotional efforts centring on its years-long “Malaysia: Truly Asia” campaign familiar to many in the region.

Goals of 28 million visitors and 76 billion ringgit in receipts were set.

Most visitors are day-trippers from neighbouring Singapore but Malaysia is targeting bigger-spending arrivals from the Middle East, Europe and particularly China.

Chinese arrivals have soared, hitting nearly 2 million last year seven percent of the total.

But Chinese anger over MH370 caused arrivals from the country to drop 20 percent in April, according to the latest Malaysian figures.

“International tourists are definitely going to be thinking twice, thrice about flying on Malaysia Airlines,” said Jonathan Galaviz, a partner with the US-based travel and tourism consultancy Global Market Advisors.

AFP

Inflation jumps in Australia Markets had recently moved to price in a greater chance of a rate cut, given signs the economy was struggling to cope with a slowdown in mining investment after years of growth

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ustralian consumer prices rose only modestly last quarter but a surprisingly high reading for a key gauge of underlying inflation was enough to dent market speculation of future rate cuts and lift the local dollar.

The main offender was the trimmed mean measure of prices that jumped 0.8 percent in the quarter and 2.9 percent for the year, above analysts’ forecasts of 2.7 percent.

That could pose a challenge to the Reserve Bank of Australia’s (RBA) confidence that inflation would stay comfortably within its long-term target band of 2 to 3 percent.

“The underlying numbers look a fraction higher - they’re a warning

sign that the inflation backdrop is not as benign as markets want to price in at the moment,” said Michael Blythe, chief economist at Commonwealth Bank.

“The Reserve Bank is probably happy to leave rates where they are for quite a while yet, and market pricing for some chance of a rate cut looks misplaced.”

Investors were quick to pare back expectations, with interbank futures falling out to year end. The December contract now shows a probability of a cut at less than one-in-three, compared to evens a week ago.

That in turn sent the Australian dollar hopping almost half a U.S. cent to US$0.9435.

Markets had recently moved to price in a greater chance of a rate cut, given signs the economy was struggling to cope with a slowdown in mining investment after years of growth.

The big price increases in the month were health care, especially private health insurance, the purchase costs of new homes and a tax-driven spike in tobacco.

Price falls were seen for holiday travel and hotels, gasoline and telecoms gear such as mobile phones.

Helping restrain inflation is the strength of the local dollar that is suppressing import prices while also forcing domestic businesses to become more efficient to stay competitive.

Reuters

The largest shopping mall landlord in Singapore said in a report yesterday that its distributable income rose 6.5 percent year-on- year to 93.4 million Singapore dollars (US$74.7 million) in the second quarter. The good performance is driven by higher rents and occupancy levels, said Wilson Tan, CEO of CapitaMall Trust Management Limited. On the whole, CMT’s gross revenue grew 2.5 percent year-onyear to 164.3 million Singapore dollars (US$131.4 million) while net property income increased 4.4 percent for the second quarter compared to the same period last year.

Kia in talks to open Mexico plant South Korean automaker Kia Motors Corp is in talks with Mexico to open a new auto plant worth at least $US1.5 billion, officials from Nuevo Leon’s state government said. The plant, which sources say will have an annual capacity of some 300,000 cars, would be built on the northeastern fringe of the city of Monterrey, according to several people familiar with the matter who spoke on condition of anonymity. Sources told Reuters that the plant will initially begin producing two small cars.

Myanmar creates a development committee Myanmar has set up a national-level committee in an effort to move the country out of least developed country (LDC) category, state media reported yesterday. Presided by Vice President U Nyan Tun, the committee has been assigned to help Myanmar graduate from LDC category. U Nyan Tun stressed at a meeting at the President’s Office the need of a time frame to make systematic preparations in cooperation with UN organizations so as to make Myanmar move out of three criteria in line with the 2015 UN Millennium Development Goals.

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July 24, 2014

International Chipmaker STMicro predicts sales growth STMicroelectronics posted secondquarter revenue and profit that met expectations, driven by sales of chips for cars and industrial products, as it surfed on strong demand that is lifting the entire semiconductor sector. The chipmaker said it was targeting thirdquarter revenue growth of 3 percent - plus or minus 3.5 percentage points - and a gross margin of 34.4 percent - plus or minus 2 percentage points.

STMicro, along with larger rivals like Texas Instruments and Applied Materials, is benefiting from better orders this year as companies step up spending on a wide variety of chips.

Egypt files anti-dumping claim Egypt’s steel companies have filed a petition against rebar and wire rod imports from China, Turkey and Ukraine, one of its top steelmakers said yesterday, the latest move in a years-long quest to protect the fledging industry from lowpriced imports. Egyptian Steel and other major steelmakers have submitted a request for the government to re-introduce anti-dumping duties on imports of rebar and wire rod, used in the construction industry, Ahmed Abou Hashima, chief executive of Egyptian Steel said in an interview. The filing was made in May.

Argentina and creditors forced to reach deal A U.S. judge ordered Argentina and investors who did not participate in the country’s past debt restructurings to meet “continuously” with a court-appointed mediator until a settlement is reached, warning of the threat of a new default.

U.S. District Judge Thomas Griesa in New York told Argentina and lawyers for investors who declined to restructure their bonds after the country defaulted on about US$100 billion in 2002 that time was running out to reach a deal and avert a fresh default. “That is about the worst thing I can envision. I don’t want that to happen,” the judge said.

U.S. SEC poised to adopt reforms for money market funds The Securities and Exchange Commission is also likely to finalize a second provision that will permit fund boards to lower so-called redemption “gates” Sarah N. Lynch

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.S. regulators are expected to adopt rules that force “prime” money market funds used by large institutions to float their share price.

Proponents have suggested that moving from the current stable US$1 per share net asset value (NAV) to a floating NAV would help prevent investors from getting spooked by the prospect of funds “breaking the buck,” or falling lower than that amount.

The Securities and Exchange Commission is also likely to finalize a second provision that will permit fund boards to lower so-called redemption “gates” or charge fees in stressed market conditions, according to people familiar with the matter.

The reform will impact a wide variety of asset managers, from Blackrock Inc, Fidelity and Vanguard to Charles Schwab Corp, Pimco and Federated Investors Inc. The two-pronged reform for the US$2.6 trillion industry comes after a long battle between the SEC, the industry and federal banking regulators.

The industry and the U.S. Chamber of Commerce have warned that any rules that drastically change the structure of money market funds could cut off a major supply of shortterm funding for corporations.

Final rule is expected to carve out exemptions for a wide swath of

(Pictured) Former SEC Chair Mary Schapiro initially pushed two potential plans for money funds

money funds.

Funds used by retail investors, for instance, will still be permitted to maintain a stable US$1 per share net asset value because they are considered less likely than institutional investors to run on a fund if the market deteriorates.

The U.S. Treasury Department, which has been working to devise a way to relieve investors in funds with a floating NAV from burdensome tax rules, is also expected to unveil its plan soon, several people familiar with the matter said.

The Financial Stability Oversight Council, a panel of regulators charged with policing for risks, has been pressuring the SEC to bolster money market fund regulations since 2012.

In 2008, the Reserve Primary Fund’s heavy exposure to Lehman Brothers led panicked investors to yank out their money, causing the fund to break the buck when its net asset value fell below US$1 per share.

The Federal Reserve was ultimately forced to backstop the industry until the chaos subsided.

Former SEC Chair Mary Schapiro initially pushed two potential plans for money funds, including either a floating NAV or a capital buffer requirement.

The majority of the industry and three of the SEC’s fellow commissioners, however, rejected the ideas, saying they could kill the product and that more study was needed to justify new rules.

After the SEC completed a study and the agency assumed new leadership, sentiment toward a floating NAV softened.

While some funds and industry groups are still opposed to requiring a floating NAV, others say they are fine with it as long as it only applies to prime funds and as long as all of the tax and accounting issues associated with a floating share price are resolved.

Reuters

IMF sees Chile’s economy accelerating

German hard line monetary policy returns

The International Monetary Fund projected Chile’s economic growth will pick up pace in 2015 and broadly welcomed President Michelle Bachelet’s ambitious tax and education reforms. Gross domestic product in the world’s top copper exporter is seen expanding by 3.2 percent this year and 4.1 percent in 2015, the IMF said in a report. Chile’s economy grew by 4.1 percent last year. Chile’s central bank has cut its benchmark interest rate by 125 basis points since October in an attempt to stimulate the economy, as investment, particularly in the key mining sector, and consumption have cooled.

Germany’s intransigence is again in play as Draghi, the Italian president of the European Central Bank, mulls whether to enact quantitative easing to prevent deflation

G20 watchdog orders Libor alternatives Global regulators will implement a twintrack approach to ensuring interest rate benchmarks are less prone to manipulation, recommending safeguards to the current system as well as developing alternatives.

Ten banks and brokerages including Barclays and UBS have paid a total of around US$6 billion to date to settle U.S. and European regulatory allegations that they manipulated the London Interbank Offered Rate, or Libor, a benchmark against which around US$450 trillion of financial products from derivatives to home loans are priced worldwide.

(Pictured) Influential President of the Bundesbank, Jens Weidmann

T

he deutsche mark is dead.

Long live the deutsche mark.

That’s the view from Germany’s central bank, which is resisting a weaker euro, introduced in 1999, and opposing the most aggressive strategies Mario Draghi could deploy to ignite growth in

Europe, says Simon Derrick, chief market strategist at Bank of New York Mellon Corp.

Derrick sees parallels with the early 1990s when Germany refused to surrender its hard money dogma even as it transmitted pain elsewhere. The 18-member euro area’s emergence from a two- year recession is proving sluggish, with inflation about a quarter of the ECB target and unemployment above 20 percent in Spain and Greece.

Back in 1992, the U.K. was under German pressure to live with the high interest rates demanded by the Exchange Rate Mechanism, a slipway to the single currency, even if it punished the British economy. In the end -and under fire from billionaire investor George Soros- the U.K. buckled. It allowed sterling to slump and interest rates to decline, paving the way for a 15-year expansion.

In 1993, with France in recession, the Bundesbank was unwilling to

accelerate rate cuts for fear that would harm the deutsche mark. By July, the need for a weaker franc persuaded meant Europe’s leaders to allow their currencies to trade more flexibly as they sought to keep the euro project alive.

Fast forward to today: Germany’s intransigence is again in play as Draghi, the Italian president of the European Central Bank, mulls whether to enact quantitative easing to prevent deflation. He has cut interest rates to record lows and pledged fresh loans for banks last month to little effect so far.

Why the lack of response? To London-based Derrick, the answer lies in the ECB’s failure to press the bond-buying button and the reason for that lies at the feet of Bundesbank President Jens Weidmann, who recently spoke in favour of a strong currency and against the ECB purchasing assets.

Bloomberg News

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July 24, 2014

Opinion Business

wires

The Fed in denial

Leading reports from Asia’s best business newspapers

VIETNAM NEWS

Simon Johnson

Former chief economist of the IMF and a professor at MIT Sloan

The import of second-hand machinery will be allowed if its quality is 80 per cent as good as a new one, according to the Ministry of Science and Technology. The remaining quality is based on technical parameters of used machinery in comparison with that of a new one. The circular 20/2014/TT-BKHCN, issued last week, also regulates that the machinery, equipment and technology, if imported, must be in use for less than five years. The rule for machinery and equipment less than three years old is applied to those used for agricultural production, beverage manufacturing and post services.

THE STAR The Securities Commission (SC) has filed legal action against Kenneth Vun (pic) and six others for creating a false market in the trading of DVM Technology Bhd shares over a one-week period in March 2006. The SC is seeking a disgorgement of all profits earned by Vun from the DVM share trades and the others, as well as a civil penalty of RM1mil from each of them.

The SC is also seeking for the seven to be barred from being directors of public-listed companies and from trading on the stock exchange for a period of five years.

THE PHNOM PENH POST Corn farmers and dealers in the country’s north-western provinces fear a decline in sales this season as local storage facilities become increasingly scarce and demand from Thai importers declines. Khun Thorn, president of Ta Sdar Samky Farmer Community in Battambang province, told the Post on Tuesday that corn prices had sunk to 600 riel per kilogram this year, down 40 per cent from 1,000 riel last year. Thorn said the price slump was a result of importing processes in Thailand becoming stricter and fewer people operating storage facilities.

THE BANGKOK POST The SET-listed warehouse provider and food and restaurants operator Sub Sri Thai Plc (SST) has successfully acquired Greyhound fashion and restaurant brand worth 1.85 billion baht with plans to use the business to rapidly expand its food segment. SST together with its subsidiary Mudman have paid 1.26 billion baht cash along with a 15.67% stake in Mudman, which is valued at 588 million baht, to shareholders of Greyhound, according to a report filed to the Stock Exchange of Thailand on Tuesday.

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ASHINGTON, DC – The United States Federal Reserve System is one of the most powerful governmental organizations in the history of the world.

America’s central bank has control over the supply of dollars, and currently exerts great influence over interest rates, both for short-term and long-term borrowing. And, though the Fed was partly responsible for the regulatory failures that led to the global economy’s near-meltdown in 2008-2009, post-crisis reform has left it with even greater authority and more responsibility for overseeing the financial system.

That is a worrying outcome, because senior Fed officials seem to have slipped back into their pre-2008 ways, ignoring concerns about dangerous financial-sector behaviour – even when those concerns are expressed by members of the US Senate Banking Committee. This is not only unfortunate; it is also dangerous, because the Fed’s political position is much more precarious than its leadership seems to realize.

In many countries, people on the right of the political spectrum provide a bastion of support for the central bank. In northern Europe, for example, the European Central Bank’s independence is seen as essential for price stability – and politicians on the right typically attach a higher priority to this goal.

The situation is quite different in the US. Here, the right, represented by the Republican Party, has long been suspicious of the Fed, reflecting its opposition to a powerful federal government, as well as nostalgia for the

days of the gold standard (particularly the version that operated before the Fed was created in 1913). The Fed as it currently operates is being protected by the left (the Democratic Party).

For example, I recently testified at a hearing of the House Financial Services Committee on Republicanproposed legislation that would impose on the Fed greater limitations on both monetary policy and regulation. House Democrats oppose the bill and invited me to the hearing, where I explained that the proposed constraints would, in my view, greatly hamper the Fed’s effectiveness – including its ability to help the economy return to full employment and to prevent the financial

Senior Fed officials seem to have slipped back into their pre-2008 ways, ignoring concerns about dangerous financial-sector behaviour

system from spinning out of control again.

Under current circumstances, the Democrats are strong enough – with control of the Senate and of the presidency – to fend off these assaults.

Consequently, senior Fed and White House officials seem rather confident that nothing dramatic will happen that would undermine the Fed’s independence.

I would not be so sure. The main problem is that the Fed has not moved with alacrity to implement fully key provisions of the Dodd-Frank financial reforms, which were passed in 2010.

For example, the Dodd-Frank legislation specifies that all large financial institutions should draw up meaningful “living wills” – specifying how they could be allowed to fail, unencumbered by any kind of bailout, if they again became insolvent.

Creating such living wills is not an option; it is a requirement of the law.

Yet, in a recent speech that reviewed the landscape of financial reform, Fed Vice Chairman Stanley Fischer skipped over the requirement almost completely.

Fischer appears to prefer to rely on the resolution powers of the Federal Deposit Insurance Corporation, which is empowered to takeover failing financial institutions, with the expectation that it will impose losses on creditors in such a way that will not cause global panic. (I am on the FDIC’s systemic resolution advisory committee, but I am not responsible for the agency’s plans or potential actions.)

Unfortunately, as currently constructed, these resolution powers are unlikely to work.

They do not apply across borders, there is not enough loss-absorbing capital in large complex financial institutions, and the funding structure of big bank holding companies remains precarious.

Senior Fed officials emphasize that big banks fund themselves with more equity now than they did in the past. But the Global Capital Index constructed by Thomas Hoenig, the FDIC’s vice chairman, indicates that the largest US banks are still 95% debt-financed. With that much leverage, it does not take a lot to create fear of insolvency.

Yet, despite repeated and responsible expressions of concern – including from Senate Democrats – the Fed continues to ignore these profound problems. If anything, in his most recent speech, Fischer seemed to brush aside any such fears – assuring his audience that there is great social value in continuing to have extremely large financial firms that operate with so very little equity capital (and therefore a great deal of leverage).

This is more than disappointing. It is profoundly dangerous to the economy.

And it imperils the Fed’s future ability to take action as needed.

In recent interviews, including with The New Yorker, Fed Chair Janet Yellen has indicated at least general concerns about financial-sector behaviour and the vulnerability of big banks. But unless the Fed acts on such concerns – including by implementing the requirement that large financial institutions adopt meaningful living wills – its independence will come under even greater pressure.

The Project Syndicate 2014

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July 24, 2014

Closing Singapore tells airlines to review conflict zone

Melco Crown reacts to fast food fraud with certificates

Civil aviation authority has asked airlines based in the city-state to review their risk assessment of conflict zones following the shooting down of a Malaysia Airlines jetliner over Ukraine last week. Singapore Airlines Ltd (SIA) was one of the heaviest users of the route in the week before the crash, along with other international carriers such as Lufthansa, Thai Airways, Qatar Airways and KLM. “We note that following the MH17 incident, SIA had immediately re-routed their flights to avoid Ukrainian airspace,” said the Civil Aviation Authority of Singapore (CAAS) in an emailed response to questions from Reuters.

The company yesterday responded against the fast food scandal by issuing a press release stating that “all of its hotel properties in Macau have been awarded the Hazard Analysis and Critical Control Points (HACCP) certification

by Société Générale de Surveillance Limited (SGS). The Company’s flagship integrated resort City of Dreams was the first in Macau to have received the HACCP food safety certification in 2011. This summer, Altira Macau, its Forbes five-star hotel in Taipa has also been granted the certification.” The fraud showed that some fast food chains in China and Japan had used expired meat.

Lower mortgage rates on the horizon New home sales slumped 9.2 percent in the first half of the year from a year earlier amid tighter credit, forcing developers including China Vanke Co. to cut prices since March

C

hinese banks will probably offer discounted mortgage rates to their clients in the second half of 2014 as demand in the country’s housing market weakens, according to a Bloomberg News survey.

Banks will resume preferential mortgage rates, according to 74 percent of analysts and economists in a survey conducted from July 14 to July 17. Fiftysix percent forecast banks will lower minimum down payments, while 59 percent said they expected the central bank to ease its mortgage restrictions. A total of 29 economists and analysts responded to the survey.

The central bank in May called on the nation’s biggest lenders to accelerate the granting of mortgages, a sign that developers’ price cuts and incentives alone won’t boost a slumping market and economy.

“If mortgage restrictions really loosen, it removes the biggest factor restricting home sales,” said Dai Fang, a Shanghai-based analyst at Zheshang Securities Co.

Wen Jiabao to prevent a housing bubble.

More easing

Haikou, the capital city of Hainan island, is the last of the Chinese cities to have easy conditions for housing

“That will provide very good support to property stocks.”

Fewer mortgages A gauge tracking Shanghai-listed developers closed 0.4 percent higher, trimming this year’s decline to 0.3 percent. China Vanke, the nation’s biggest developer, gained 2.3 percent to 9.39 yuan in Shenzhen trading.

Tighter bank lending and expectations for further price declines are the main factors restraining market demand, according to Centaline

Group, the parent of China’s biggest real estate agency. A relaxation of home-purchase restrictions is yet to show any substantial impact, with sales in the seven cities that had eased the rules falling by a combined 11 percent in June from May, it said in an e-mailed report on July 18.

Chinese banks trimmed lending to developers and homebuyers in the first quarter as authorities kept liquidity tight to curb shadow financing.

New mortgages dropped 3.7 percent to 651.2 billion yuan (US$105 billion) in the

first half of this year from a year earlier, according to the National Bureau of Statistics.

The Chinese cities of Nanning, Hohhot and Jinan have announced a relaxation of local homepurchase restrictions, while another seven cities including Chengdu and Xiamen have loosened the implementation of such curbs without announcement, according to property data provider and consultancy China Real Estate Information Corp.

The moves unwind policies enacted under former Premier

In Haikou, the capital city of the southern island province of Hainan, a number of property development sales offices were told by the local housing regulator that a limit on the number of homes a person could buy had been scrapped, Sina.com reported, without saying where it got the information.

For the last four years, China enacted restrictions to cool its housing market as prices soared. The government increased the minimum down-payment requirement for second homes nationally to 60 percent in 2011 after suspending thirdhome mortgages in cities with excessive price gains in 2010.

Seventy-six percent of respondents said they expect China will probably roll out more measures to boost the property market after mainland cities have started to loosen their home purchase restrictions, the survey showed.

Vietnam-China border trade grows

Huatong avoids landmark bond default

Mongolia seeks gas deal with China

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C

M

he total revenue of border trade between Vietnam and China hit US$2.61 billion in the first half of 2014, up 13 percent year-onyear, according to Vietnam’s Border Trade Steering Committee. Statistics of the committee show that the bilateral border trade maintained uptrend with an average growth of 4 percent per month. During the six-month period, Vietnam enjoyed a surplus of US$800 million in border trade, up 126 percent yearon-year, local Tien Phong (Pioneer) online newspaper quoted the committee as saying on yesterday.

Rice was the item having the largest export revenue during the period. A total of 529,000 tons of rice worth some US$198 million was exported to China from January to June. Around 97 percent of the rice was exported to China through the border gate in northern Lao Cai province, some 354 km north of Hanoi, said the committee.

Vietnam exported nearly 96,400 tons of fresh litchi and over 152,600 tons of watermelon to China via border, earning US$62.2 million and US$9.1 million, respectively.

Xinhua

hina’s Huatong Road & Bridge Group Co Ltd managed to avoid a landmark bond default at the last minute yesterday, raising enough funds to pay off both principal and interest on a 400 million yuan (US$64.51 million) bond due by the end of the day, sources directly involved in the issue told Reuters.

However, the sources, who spoke on condition of anonymity, said that while the money deposited in an escrow account with Shanghai Clearing House would be sufficient to pay off the bondholders, the company might not make a formal announcement of the fact yesterday.

The sources told Reuters that aggressive fundraising by Huatong, combined with money contributed from local government bodies in Shanxi province where Huatong is based, managed to allow Huatong to dodge what would have been the first-ever public default in China’s interbank bond market, and the first time a Chinese company defaulted on a bond principal in China.

Reuters

Bloomberg News

ongolia is seeking to sign a gas project and supply accord with China next month, in a deal that would help the world’s second-largest economy expand energy supplies and potentially revive foreign investment in Mongolia.

The agreement will cover construction of two coalto-gas plants with 95 percent of output going to China through pipelines, Erdenebulgan Oyun, Vice Minister for Mining said in an interview in Ulaanbaatar. Gas production is expected to begin in 2019, he said.

A preliminary contract with China Petrochemical Corp., known as Sinopec Group, may be signed in August during an expected visit by Chinese President Xi Jinping, Chuluunbat Ochirbat, Mongolia’s Vice Minister for Economic Development, said today in an interview in Tokyo. Final details including cost, size and who will mine the coal needed for the plants, are yet to be agreed, he said.

Any deal with Mongolia would come after Russia in May reached a US$400 billion deal to supply natural gas to China as the Asian nation secures supplies abroad to meet rising domestic demand.

Bloomberg News