Macau Business Daily, Sept 5, 2014

MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo Number 620 Friday September 5, 2014

Levelling the playing field S

Year III

MEs have felt left out in the cold for quite some time. The government has now announced a practical leg-up in the marketplace. Small and medium-sized enterprises can apply for website creation, maintenance and improvement subsidies. Web design companies can also benefit as suppliers. Macau Economic Service (DSE) anticipates 2,000 companies will take them up on the offer. The application period of the subsidy scheme will run from September 15 to March 16 PAGE

www.macaubusinessdaily.com

Market mix

3

HSI - Movers September 4

Name

Chinese juice-maker Huiyuan is expanding its distribution network. The company plans to start with Macau and Hong Kong this month. And will later expand to other parts of southern China and South Asia Page 2

Cancellation casting a shadow

%Day

China Life Insurance

2.82

China Mengniu Dairy

1.55

China Resources Lan

1.52

Ping An Insurance Gr

1.45

CITIC Ltd

1.20

China Overseas LanD

-0.87

China Mobile Ltd

-1.18

AIA Group Ltd

-1.25

Cheung Kong Holdin

-1.38

Hengan Internation

-1.61

Source: Bloomberg

I SSN 2226-8294

‘Setback regulations’ are causing a stir. So the government is preparing to consult the public. The issue at stake is not trivial. There’s concern that the cancellation of the regulations could blight living conditions in the territory’s buildings. The fear is that light and ventilation could be compromised.

Secretary for Transport and Public Works Lau Si Io said “It’s a complex issue . . . this is a topic that should be left for further discussion.”

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Timely transition

Paradise Entertainment revenue increases 51pct

US$320mln in notes

Amendments to the budget framework are progressing on schedule. Word is they will be finalised by the end of the year. The Financial Services Bureau is still drafting specific content on related regulations Page 4

Page 6

ICBC Macau has raised US$320 million in 10-year notes. Of the investors ICBC Macau attracted, 78 percent are Asian, with the balance from Europe. Fund managers purchased 53 percent of the notes, followed by insurers at 22 percent, financial institutions at 13 percent, private banks at 10 percent and corporates at 2 percent

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Iao Kun generates US$1.53bln in August Page 6

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September 5, 2014

Macau

Huiyuan eyes foreign markets The juice-maker is increasing its distribution network starting with Macau and Hong Kong still within this month

C

hina Huiyuan Juice Group Ltd. has stepped up its distribution network and started selling to locations in southern China which its distributors didn’t cover in the past. The company also plans to sell products outside mainland China, starting with Hong Kong and Macau at the end of this month and later in Southeast Asia, she said, without naming specific countries.

Business Daily tried to ask the company about its business strategy and distribution plan but did not receive any reply until the story went to press.

The juice-maker company also said it expects sales to rise at least 10 percent in the second half of the year as it expands in the domestic and overseas markets, and seeks to supply China’s 1.5 million-strong military.

“The meals of our vast Chinese army are very important, we need to supply our soldiers with nutritious drinks,” executive vice president Yu Hongli, who takes over as chief executive officer next month, said in an interview with Bloomberg.

“We have relevant sales people to expand into this channel.”

Huiyuan, China’s largest producer of pure juice, is competing with Coca-Cola Co., PepsiCo Inc. and Tingyi Cayman Islands Holding Corp. for Asia’s beverages market by widening its sales footprint. The company, which acquired Suntory Holdings Ltd.’s China assets in May, plans to add a production line in Malaysia, Yu said, declining to give details on its investment budget and production capacity.

The executive is expecting a “double-digit” sales growth in the second half after revenue rose 20 percent in May and June, and climbed further in the past two months, Yu said in a Sept.

1 interview in Hong Kong.

Revenue decline The company’s first-half revenue fell 5 percent to 1.97 billion yuan (US$321 million, MOP2.57 billion) from a year earlier, amid a shift by Chinese consumers to healthier beverages from

low concentrate juices, it reported on Aug. 31. Net income plunged 82 percent to 20.5 million yuan in the first six months ended June, as finance costs almost doubled following its acquisition of a puree business, the Beijingbased company said.

Sales of juice drinks, which made up 22 percent of total sales, declined 26 percent, while those from 100 percent fruit juice, which accounted for 20 percent of the total, fell 7 percent.

Other income including sales of raw materials and subsidies dropped 62 percent, it reported.

In addition to the military, Huiyuan will partner with hotels and railway operators in China to provide beverages to patrons, and it is already been supplying passengers on Air China Ltd. flights and to children in schools, according to Yu. The People’s Liberation Army is one of the world’s biggest armed forces, with 850,000 in the army, 235,000 in the navy, and another 398,000 in its air force, the official Xinhua News Agency reported last April, citing a

government-issued national defense white paper.

Oolong tea The company also plans to roll out Suntory’s non-juice products such as bottled oolong tea and coffee drinks, Yu said. Sales contribution from Suntory’s products will be recorded in Huiyuan’s book next year, the 45-yearold said.

Huiyuan is hoping to lift gross profit margins back to above 30 percent in the second half by cutting back on TV advertisements and using more social media, the incoming chief executive said.

Margins fell to 29.4 percent in the first half, from 31 percent in the preceding period.

Yu will take over as CEO on October 1, replacing Daniel Saw who joined the company in July last year. Saw will remain as a consultant to founder and chairman Zhu Xinli to develop Huiyuan’s international business, it announced on Aug. 29.

The company was the largest maker of 100 percentjuice and nectars in China last year with a market share of 37 percent and 23 percent, according to market researcher Euromonitor International Plc. Bloomberg

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September 5, 2014

Macau

Increasing interest in subsidy scheme for SME websites Suppliers reveal to Business Daily that enquiries about the scheme are increasing. The scheme, in addition to helping SMEs, may be helpful to web development businesses Kam Leong

kamleong@macaubusinessdaily.com

M

acau Economic Service (DSE) recently announced it will establish a subsidy scheme for small and medium sized enterprise websites in order to help the SMEs get their message out via e-commerce. Although the effect of the scheme will only be evident in the future, there is no doubt that the idea has sparked the interest of SMEs and will also benefit web developers.

Mr. Leong, the owner of a web development company, agrees that the scheme has raised the demand for website creation in the market. He told Business Daily that his company has received some 30 percent increase in enquiries from clients since the government announced the scheme last month.

Mr. Chan, the representative of another company, also said that there has been increased interest, up 20 percent, by potential clients enquiring

about the subsidy scheme.

These clients, according to Mr. Chan, are from different industries although he has noticed that a significant proportion are trading companies that want to introduce their products online.

The application period of the subsidy scheme will run from September 15 to March 16 and is open to all interested SMEs. Successful applicants, according to the scheme, will be granted a 70 percent subsidy of the cost - or up to a maximum 14,000 patacas (US$1,750) - to launch their own first website. Another maximum subsidy of 6,000 patacas will be offered for the maintenance of websites during the first three years of its operation.

For those SMEs that already have their websites up and running but would like to improve them a subsidy of up to 5,000 patacas is available.

ICBC Macau raises US$320mln

T

he Macau branch of Industrial & Commercial Bank of China Ltd (ICBC) has raised US$320 million (MOP2.56 billion) through the sale of U.S.-dollar denominated 10-year notes.

On Tuesday, ICBC Macau confirmed to Business Daily that the banking institution was already in talks with possible investors both in the neighbouring SAR and Singapore ahead of the U.S. dollardenominated subordinated 10-year note sales.

According to a report by Finance Asia, investors were interested in holding the old style of the offering, which does not come with a point of non-viability clause in which they risk losing all their money if the financial institution cannot survive.

According to an unnamed source quoted in the report, “the offering is also the first international bond from a Macau-based financial institution.”

Of the investors ICBC Macau found, 78 percent are Asian with

the remainder from Europe. ‘Fund managers purchased 53 percent of the notes, followed by insurers 22 percent, financial institutions 13 percent, private banks 10 percent and corporates 2 percent,’ the report reads.

The sale of the 10-year notes comes as Bank of China Ltd plans its first offshore sale of subordinated securities that will count as capital under the country’s new banking rules. For this, Bank of China has hired four banks to help.

In August, lenders including ICBC and China Construction Bank Corp (CCBC), sold the equivalent of US$27.5 billion of securities that can be counted toward capital. At least another US$63.3 billion, which includes preference shares, is in the pipeline, the Royal Bank of Scotland Group Plc said last week.

ICBC has selected seven banks for offshore perpetual securities offering as much as US$5.7 billion.

S.F.

Meanwhile, Mr. Lao’s technology company, which runs both software and website developments, has set up a dedicated team to work for successful scheme beneficiaries.

“Our company usually does tailor-made websites for our clients.

We design and write different systems for different companies to meet their needs,” he said.

He indicated, however, that the cost is quite expensive. He also said that the dedicated team would create a template that could be applied to most simple, informative websites, since the SMEs are unlikely to want to spend too much over and above the government subsidy.

These owners and representative said that a budget of around 10,000 to 20,000 patacas may only build a simple website that contains only informative text about the client’s products and company.

If clients are interested in upgrading the functions of their websites, such as creating a membership system, online orders or animation, the cost will jump to between 40,000 and 100,000 patacas.

Fruit to fall Mr. Lao also predicted that more people would join the industry only for the scheme as the simple informative website does not require complicated technical expertise. In fact, the numbers of newly registered companies will jump in these two years, he says.

He and the other two owners and representatives perceive that the scheme will certainly boost their businesses. “The government has [demonstrated] good will in initiating helping SMEs, which I think is helpful for Macau.” Mr. Lao said.

The subsidy scheme for SME websites, according to the Bureau, is to help small local businesses attract more international and local clients via modern ways at low cost.

DSE has approved a provisional budget of 30 million patacas.

According to the first seminar held for the scheme last month, the Bureau expects some 1,500 SMEs to apply for subsidies to create their first websites, while some 500 will seek to upgrade their existing websites.

Another seminar to introduce the scheme will be held at 3p.m. on Sunday on the 7th floor of the Luso International Building.

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September 5, 2014

Macau

Lau: Public consultation on cancelling ‘setback regulations’ The government has stressed that the public will be consulted on the proposed abolishment of setback rules amid concerns about the emergence of high-density buildings Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he possible cancellation of the ‘setback regulations’ - a by-law that determines the shadow cast by a building on the street – will first take into account public opinion, the Secretary for Transport and Public Works, Lau Si Io, told media yesterday. The government says it will amend the general regulation of urban construction next year.

“We see that there’s been social discussion on the issue [the possible cancellation of setback regulations],” Mr. Lau said on the sidelines of a Science & Technology Committee meeting yesterday. “I think this is a complex issue that cannot be simply described as regulations being substituted – this is a topic that should be left for further discussion.”

“We’re clear that when amending the technical parts of the [general regulation of urban planning] we’ll listen to opinions,” the secretary added. “By collecting opinions, we mean that they will not only be from the Urban Planning Committee but from the public as well.”

A ‘setback’ is the distance that a building is set back from a street or any other place to ensure that the daylight of an area is not impacted by the building. The ‘setback regulation’ - known as by-law No.42/80/M and comprising part of the general regulations for urban construction - is a set of rules that dates back to 1980 regulating the shadow cast by a building on a street, thereby also affecting the height limit and design of the building.

Speaking to media yesterday, Mr. Lau noted that the government targeted at having the amendment of the general regulation of urban planning begin its legislative process within the first half of next year; but he did not volunteer as to when the public consultation would be held on the ‘setback regulations’ issue.

Chief Executive Fernando Chui Sai On first mentioned that the next term of government would study the cancellation of setback rules

when meeting construction sector representatives during his political campaign for re-election in late August.

Although Mr. Chui guaranteed at the time that such a cancellation did not mean that buildings can be built higher or built beyond the legal floor area ratio, there were public concerns that the cancellation of the setback rule could result in extremely high buildings or worsen ventilation and block sunlight.

“The public might associate the setback rules with the plot ratio of a building, or think that without the rules, developers will build buildings very closely together,” veteran builder Lo Kai Jone remarked to Business

Daily. “But basically the setback rules and plot ratio are two different subjects.”

“The plot ratio – whereby the developer wants seven times or nine times – is strictly regulated by the government,” said Mr. Lo, the honorary chairman of the Macau Construction Association. “The height of the building is also regulated by the cultural heritage protection law and urban planning law.”

“The setback rules affect us much more in terms of the aesthetic outlook of a building or the ease of designing the building than the factor of construction cost,” Mr. Lo said, adding that he supported the cancellation of setback rules.

The Director of Land, Public Works and Transport Bureau, Jaime Carion, cited similar concerns to Mr. Lo’s when speaking to media following an Urban Planning Committee meeting on Wednesday evening, noting that the setback regulations have restricted flexible architectural designs, and were “outdated” techniques controlling building height.

Confirming that the government has already started working on the possibility of cancelling the setback rules, Mr. Carion stressed that the government would ensure sufficient sunlight and ventilation reached an area through the works of the Urban Planning Committee if the setback regulations are to be cancelled.

Amended budget draft law finalised this year

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draft of amendments to the budget framework law is expected to be finalised by year-end and as scheduled, the deputy director of the Financial Services Bureau (DSF), Iong Kong Leong, stated in a written reply to legislator Si Ka Lon’s enquiry about the progress of the amendment.

Mr. Iong said that the government has started the procedure of amending the budget framework law, as Secretary for Economy and Finance Francis Tam Pak Yuen said last year

at the Legislative Assembly. He said that the DSF is currently drafting the specific contents of the amendments to related regulations. The Bureau is also reviewing the economic categories for income and expenditure that have been used so far. In addition, the setting up of a new accounting computer system will also be followed up on, according to Mr. Iong.

The deputy director stressed that such a draft would be finished within this year according to the current process.

Meanwhile, Mr. Si questioned whether the government will establish an individual review mechanism on infrastructure to extend the government’s supervision of the invested projects, in order to deal with the over-budget problems that have blighted such projects as the Macau LRT. Mr. Iong responded that the Bureau would follow the principle of the new law when approving amended budgets.

In addition, he said that the government will submit in advance the

budgets of the different programmes as well as the total amount of the big projects in the framework for the Macau Special Region Administration Budget and Investment Plan (PIDDA) when it submits the 2015 fiscal budget.

Amendments to the budget framework law were initiated in July 2012. They will primarily focus on how to better control the budgets for public works, monitoring if such budgets are realistic and accurate.

CORRECTION: In yesterday’s edition, the page 3 story ‘SmarTone Macau posts HK$17 million operation loss’ featured a photo image of Hutchison rather than SmarTone. We apologise for any inconvenience caused.

K.L.

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September 5, 2014

Macau

Kam Pek Casino preparing for full smoking ban The chairman and managing director of Paradise Entertainment told Business Daily that the casino has already submitted its plans for the non-gaming smoking areas on the mass market floors. The new law demands that slot machines and gaming tables are moved João Santos Filipe

jsfilipe@macaubusinessdaily.com

F

rom October 6 the full smoking ban on mass market floors takes effect in Macau casinos.

Meanwhile, gaming operators are preparing for change by submitting their plans for the smoking rooms in these areas.

“We have already submitted the final project for the Health Bureau’s approval and are trying our best to have all the changes ready on time for October 6 when the rules come into effect”, Jay Chun, the chairman and managing director of Paradise Entertainment, told Business Daily. This company manages the Kam Pek Paradise casino under the licence of SJM. On Monday, the Health Bureau (SSM) announced

that of 41 casinos in Macau 39 had already submitted their plans on smoking rooms for approval. Jay Chun also explained how creating the smoking rooms will change the gaming area.

“In Kam Pek Casino we will have to move some slot machines and gaming tables

in order to comply with the new rules”, he said.

For the gaming industry one of the key questions is how the full smoking ban on mass-market is going to affect gaming revenues.

“We cannot predict the effects of the full smoking ban in terms of revenue from these

areas. This is a question that we will only be able to answer by the end of October when the new rules are already in effect”, Jason Chun said.

However, he explained that the effects will be dependent upon different factors. “Broadly speaking about the new rules, some casinos will be more affected than others. It depends on the type of player they have. For instance, most Hong Kong gamblers are non-smokers while on the other hand Mainland Chinese prefer to smoke while gambling.”

SJM more exposed In a report issued last Tuesday, Daiwa Capital Market analysts said that SJM

self-operated and satellite casinos are the ones more exposed to the smoking ban.

On the other hand, MGM Galaxy and Wynn face the least risk from this ban.

“We believe that SJM faces the biggest threat among its peers from the smoking ban, which is coming into effect in October, because its ageing properties (Hotel Lisboa and satellite casinos) are least likely to have the necessary infrastructure to support the new airflow requirements”, the Japanese bank analysts asserted.

Jason Chun told Business Daily that Kam Pek Casino is not facing such problems.

However, he explained that if a casino fails to have its nongaming smoking areas near gaming mass-market floors then it will likely impact gaming revenue.

“If a player has to go out of the building to smoke, obviously the revenue is affected. While he’s walking outside he’s not gambling”, he said.

According to Daiwa, works are already in hand in some casinos in order to comply with the new rules for mass-market areas.

“We observed airportstyle smoking lounges being built in casinos during our previous Macau site visit (including The Venetian, Wynn, and City of Dreams)”, they said.

6

September 5, 2014

Macau

Paradise Entertainment revenue increases 51pct

Brought to you by

Sara Farr

sarafarr@macaubusinessdaily.com

HOSPITALITY Rising higher Data on the organisation of MICE events (Meetings, Incentive, Conferences, Exhibitions) tell us that the level of attendance for these events changes significantly throughout the year. The second half of the year, and in particular the last quarter, is when the events attracting most of the participants occur. This is especially the case for exhibitions, the main contributors to overall attendance, often representing more than 90 percent of the total number of participants in MICE events. If we take the cumulative figures for the years 2010 to 2013, the attendance of exhibitions in the second semester was almost 66 percent percent higher than the corresponding figure for the first semester. If this proportion holds good for the current year, we can expect the average daily attendance of exhibitions in the second half of this year to climb past the 12,000-threshold for the first time. This is, admittedly, a fairly risky guess given the strong variability shown by the sector’s figures over time and its sensitivity to counting procedures; but this is the trend the figures are suggesting.

P

aradise Entertainment Ltd has reported revenues of HK$610.4 million for the first half of the year, up 50.7 percent from HK$405.1 million in the same period a year earlier.

The company said in its interim report that the increase in revenue was primarily due to ‘the growth in revenue from casino services, of which the revenue from Waldo casino was recognised and the revenue generated by casino Kam Pek Paradise for the six months ended 30 June 2014 increased by 20.6 percent.’ During the first six months of 2013, the company reported a growth rate of 12.6 percent of the gaming industry here, the report said, adding that casino Kam Pek Paradise ‘notably outperformed the overall gaming industry.’

Profit after income tax expenses

between January and July totalled HK$50.5 million, up from HK$45.4 million year-on-year.

Paradise Entertainment’s casino service accounted for the majority of its revenue at HK$530.4 million, while its gaming system accounted for HK$80 million of its overall revenue in the six months from January until the end of June.

In April, the company extended its casino services by providing casino Macau Jockey Club (MJC casino) such services as sales, marketing, promotion, player development and referral. In addition, this is the world’s first ever chipless casino with live multi-game terminals and chipless tables and slot machines.

‘With the brand new technology provided by the group, MJC casino is able to reduce its operating costs,’ Paradise Entertainment’s interim

report reads, adding that this arrangement ‘will help the group to capture the business opportunities in the growing mass-market segment.’

Last month, the group partnered with slot machine maker International Game Technology (IGT), which will see Paradise become IGT’s distributor of slot machines in Macau.

In exchange, IGT will distribute the games system of Paradise on ‘an exclusive basis’ in the United States and Canada.

‘To enhance the services provided as an innovative gaming equipment supplier, the group will provide an ‘all solution concept’ to Macau casinos which is a revolutionary idea that the group will supply all the equipment no matter they are spare parts or a terminal so as to generate diversified income,’ the report added.

remain committed to expanding our business presence in the Macau VIP gaming market and increasing our market share while prudently managing our capital to create longterm value for our shareholders”, Jim Preissler, director of Iao Kun, explained during a conference call about the first half of 2014.

The company’s VIP rooms are primarily focused on high stakes baccarat, which accounts for approximately 88 percent of total Macau casino winnings. Iao Kun’s VIP gaming rooms are located in StarWorld Hotel, Galaxy Macau, Sands Cotai Central, City of Dreams and Le Royal Arc Casino.

Iao Kun generates US$1.53bln in August

J These uncertainties aside, what the figures tell us is that the number of exhibitions has been rising slowly but steadily and that their average participation has noticeably grown.

In the first half of this year, the number of events was about 50 percent higher than in the same period in any of the previous years.

The average attendance for the full year in 2013 was more than three times higher than in 2010. And the same indicator - average attendance of exhibitions - stood in the first semester of the current year at a whopping 5.5 times above the corresponding value in 2010, and 40 percent above the figure for the same period last year.

J.I.D.

1.89 mln

participants in exhibitions, 2014H1

unket operator Iao Kun has announced that its rolling chip turnover increased 3 percent year-on-year in August to US$1.53 billion (MOP12.2 billion) from US$1.49 billion (MOP11.9 billion) in VIP rooms. Rolling chip turnover is the rate used by casinos to measure the volume of VIP business transacted. At the same time, the win rate in August was 2.5 percent.

As for the first eight months of the year, the rolling chip turnover was US$12.56 billion (MOP100.2 billion), while in 2013 it was US$11.53 billion (MOP92 billion).

This means an increase of 9 percent year-on-year.

However, the announcement was made following second quarter results when Iao Kun Holdings revenue dropped 22 percent to US$49.7 million (MOP397.6 million). During the same period, the Macau-based game promoter posted a net loss of US$56.7 million.

“Our performance in the second quarter of 2014 was clearly affected by the low win rate. However, we

7

September 5, 2014

Gaming

Cuomo under pressure to pick winners in saturated casino market

N

ew York Governor Andrew Cuomo is playing a game of chance with his plan to buoy the upstate economy with four Las Vegas-style casinos.

If a board named by a Cuomocontrolled gaming commission picks the right bids from a pool of 16 that includes Genting Bhd. and Caesars Entertainment Corp., jobs and tax money that the 56-year-old Democrat promised may come through. Choose wrong, and the casinos could crash in a market that was fatal to four gambling halls in the resort of Atlantic City, New Jersey.

The siting panel, which the state’s gambling chief said could award no licenses, will hear final pitches next week. It will then weigh Cuomo’s stated hope that casinos can add US$430 million to state and local coffers against the reality that there’s little room for growth. Operators say they can overcome that as they try to set themselves apart.

“No doubt there is a saturation issue in the Northeast,” said Stefan Friedman, a spokesman for Genting, which is proposing a US$1.5 billion resort-casino in Tuxedo about 45 miles northwest of New York City.

“What resorts like ours are trying to do is attract a new clientele.”

Genting, the largest casino operator in Malaysia, would tap a database of Asian customers. Caesars would draw on its list of 45 million gamblers and celebrity chefs including Gordon Ramsay and Bobby Flay to get attention for an US$880 million casino about 50 miles north of Manhattan, according to filings with the state. Mohegan Sun’s US$550 million casino about 90 miles northwest of the city would

build on a local tourism association’s efforts to attract the lesbian, gay, bisexual and transgender community to the Catskills.

Rejection power If those arguments don’t sway the panel, there may be no new casinos in the third-most-populous state, Rob Williams, acting director of the New York State Gaming Commission, said in a telephone interview.

“The regional market is being viewed by the members,” said Williams, speaking on behalf of the

siting board. “If they determine that the demand is not there or the model is not appropriate, they have the ability to reject every application.”

Voters in neighbouring Massachusetts will decide a referendum in November to overturn a 2011 law that allowed three casinos and a slots parlour. Like Cuomo and New York lawmakers, Massachusetts wanted to stem the tide of gamblers leaving the state and boost revenue slow to recover from the 18-month recession that ended in 2009. As the economy improves and the casino industry struggles, there’s less cause

Caesars bondholders open third front in battle over company

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group of Caesars Entertainment Corp.’s junior bondholders sued the company over what they called a “backroom deal” with another group of creditors, opening a third front in the widening court battle over the casino operator’s future.

Investors in the notes, including funds linked to MeehanCombs LP, Trilogy Capital Management LLC and Chicago Fundamental Investment Partners LLC, accused the Las Vegasbased company of paying the other group, which holds the same bonds, “a vast premium” over the market rate in exchange for a deal that makes their own investment “effectively worthless.”

“Caesars has engaged in a series of transactions to circumvent its obligations under the notes, indentures and guarantees and to effectively eviscerate plaintiffs’ unconditional right to receive principal and interest,” the investors claimed in a complaint filed yesterday in Manhattan federal court.

Caesars’ effort to reshuffle debt drew criticism from noteholders after the largest owner of casinos in the U.S. sought to remove guarantees on much of its US$23 billion in debt, in preparation for a wider reorganization. Talks with investors challenging efforts to restructure US$12.7 billion in debt spilled into

two courts last month. The company claimed hedge funds want to force a default, while bondholders said Caesars is squandering assets.

Abandoning guarantees The investors who sued yesterday own about $21 million of the company’s 6.5 percent notes due in 2016 and its 5.75 percent debt due 2017. They attacked Caesars’ alleged effort to amend the bond indentures and restructure the notes within six months. In the complaint, they called the plan part of a strategy to restructure Caesars’ operating unit debt “by transferring out valuable assets and abandoning CEC’s guarantees on the debt, and to leave the disenfranchised noteholders out in the cold.”

Stephen Cohen, a spokesman for Caesars at Teneo Holdings LLC, said the lawsuit by junior bondholders has “no merit.”

The operating company’s US$159 million of 6.5 percent unsecured notes due June 2016 fell less than a cent to trade at 34.4 cents on the dollar at 4:28p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority..

The notes traded at 64 cents before

Caesars announced August 12 it reached a deal to pay down some of the notes, according to Trace data.

Largest unit In May, Caesars sold a 5 percent stake in Caesars Entertainment Operating Co., its largest unit, to undisclosed investors. The sale meant some bond investors will no longer hold a claim to the parent company’s assets, leaving them with less bargaining power in talks over the debt.

Wilmington Savings Fund Society, a trustee for holders of some of Caesars 10 percent notes due in 2018, accused the casino operator of fraudulently transferring assets as part of the restructuring and wasting assets, according to a complaint filed Aug. 5 in Delaware Chancery court in Wilmington.

The operating company was insolvent at the time Caesars forced it to give up some of its most valuable assets, making the transfer an intentional fraud inflicted on creditors, according to the trustee’s complaint.

The same day, Caesars sued more than 30 bondholders in New York state court in Manhattan, including funds overseen by Appaloosa Management LP, Oaktree Capital Group Holdings

to move forward.

“What surprises me about New York and Massachusetts is that they got into this game so late,” said Gary Green, a casino consultant in Boca Raton, Florida, and a former executive for Donald Trump.

In June, Moody’s Investors Service changed to negative from stable its outlook on the U.S. gambling industry. A month later, Fitch Ratings said revenue for casinos “will remain challenging,” citing saturation in regional markets and the growth of Internet betting.

Bloomberg

LP and Elliott Management Corp.

Caesars claimed the companies sought to impede its restructuring with “disruptive appearances before gaming regulators” and “a baseless default notice.”

Latest lawsuit According to the latest bondholder lawsuit, Caesars agreed to repurchase US$155.4 million of notes as long as their holders assented to the removal of a guarantee by the parent company – a move that would apply to notes held by investors not privy to the deal. The agreement also required participating debtholders to approve a future restructuring of the operating company’s debt, according to court papers.

The company, and Caesars Entertainment Operating Co., which issued the debt, “rejected the fair and inclusive path where an issuer makes an offer available to all note holders in favour of cutting its separate deal with the select few,” according to the complaint.

The group, earlier represented by O’Brien LLP, sent Caesars a letter August 15 demanding it provide documents that were used to negotiate the transaction. The investors are seeking unspecified damages and an order from the court declaring the changes to the bond indentures invalid.

“Caesars has violated federal law and certain provisions of the indenture and we intend to pursue our rights,” James Millar, a partner at Drinker Biddle & Reath LLP, who represents the group, said in an interview.

Bloomberg

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September 5, 2014

Greater China Trainmakers halt trading after merger report China’s two biggest train manufacturers CSR Corp. and China CNR Corp. halted their shares from trading after Caixin magazine reported that the Chinese government wants to merge the two companies. CSR suspended trading pending clarification of a media report, the company said in a statement to the Shanghai Stock Exchange yesterday. Shares of both companies were halted in Hong Kong and in Shanghai. Zhuzhou CSR Times Electric Co., a CSR unit that makes railway equipment, also stopped trading of their stock in Hong Kong.

Leaders said to skip UN climate summit The top leaders of China and India aren’t planning to attend this month’s United Nations summit on climate change, signalling tepid support for a global pact to cut greenhouse gases among two of the largest emitters. President Xi Jinping of China and Indian Prime Minister Narendra Modi have told UN Secretary General Ban Ki-moon they won’t be at the day-long meeting of world leaders on Sept. 23, according to two UN diplomats, requesting not to be identified discussing the leaders’ plans. Their absence undercuts the summit, although it may not be fatal for negotiations set to wrap up by the end of 2015.

Oil firms to fix faulty pipelines China has ordered oil firms to fix faults in their oil and gas pipeline networks within three years, Sinopec Corp said yesterday, almost a year after a blast in the state-run refiner’s pipeline killed 62 people. This is the first time a deadline has been imposed on oil firms to rectify the long-standing safety problems in their pipelines, which could increase the costs to deliver oil and gas.

The next era Baidu builds largest computer brain for voice, image queries

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aidu Inc. is building the world’s largest and most powerful computer cluster to improve image recognition as online queries move away from text.

With about 100 billion digitally simulated neural connections, Baidu’s computing cluster will be 100 times more powerful than the 2012 Google Inc. project dubbed “Google Brain,” Andrew Ng, chief scientist at the operator of China’s biggest search engine, said in an interview. Engineers at a Baidu lab in Silicon Valley are designing the project, which will be built in Beijing and completed in about six months, according to Ng. Within five years, online searches based on voice and pictures will account for more than half the total as users of mobile devices seek easier ways to find information, Baidu Chief Executive Officer Robin Li said

on Wednesday. Better image recognition will require more computing power, according to Ng. “The bigger you build these things, the better they perform,” said Ng, who was hired by Baidu in May. “Our initial task is to recognize images better, to create computer vision.”

The Baidu system will be about 10 times more powerful than a 2013 computer cluster at the Stanford Artificial Intelligence Laboratory, Ng said. The chief scientist was involved in both the “Google Brain” and Stanford projects before joining Baidu.

The human brain has about 100 trillion neural connections.

Baidu’s network is using the same kind of more powerful servers with graphics process unit computing that was applied by Stanford researchers, rather than the central processing unit technology deployed for Google’s network, Ng said.

So-called deep learning capability

by computers configured to simulate human brain function has already reduced speech recognition error rates by 25 percent, Ng said.

Mobile technology is driving online searches, shifting demand for how users query for information, Li said at the company’s Baidu World conference in Beijing.

China had 632 million Internet users as of June, with 83 percent using mobile phones to access the Web, according to the China Internet Network Information Center.

About 10 percent of Baidu search queries are done by voice, Li said.

Within five years, voice and image searches will surpass text queries, he said.

“In the mobile era, consumer behavior is changing,” Li said. “For search, we can now use voice. Voice and speech is a more natural way to express our requests.”

Bloomberg

Huijin eyes European banks investment Central Huijin Investment Ltd., the stateowned holding company for China’s largest financial institutions, is seeking European bank investments to diversify its domestic holdings, vice-chairman Li Jiange said on Wednesday. Huijin, a unit of China’s US$653 billion sovereign wealth fund China Investment Corporation (CIC), is a major shareholder in China’s biggest banks. Huijin has periodically purchased listed shares of Chinese commercial banks and other financial firms on the secondary market.

Firm rejects book-doctoring claims China’s Shenguan Holdings Group Ltd rejected yesterday a report by an equities research firm accusing it of doctoring its books, the second Hong Kong-listed Chinese firm targeted by such allegations this week. Trading in the sausage-casing maker’s shares was halted on Wednesday after the publication of a report by Emerson Analytics accusing the company of understating costs and overstating revenues triggered a sharp fall in the share price. Shenguan issued a statement yesterday saying the report contained errors and misleading statements. It said it was aware that Shenguan had been the target of significant shortselling interest.

In the name of health Chinese firm serves up ‘smart chopsticks’ for food-wary diners

F

rom recycled cooking oil to fox meat and chemicals, a litany of food scandals have turned Chinese diners’ stomachs, but a new “smart chopsticks” concept by Internet search giant Baidu could put the answer in their hands.

The device, which the firm says can tell consumers whether the food in front of them is safe to eat, was born of an April Fool’s video, a spokesman said Thursday.

Baidu at the time had “no serious intention of actually pursuing this”, the spokesman told AFP of the stunt it released earlier this year. “But it generated a lot of excitement both internally and externally.”

The latest stage of development was revealed this week, with a new video released by the company showing a user placing the electronic chopsticks in three different cups of cooking oil.

Sensors in the implements detect the oil’s temperature and its fitness for consumption, with the findings

displayed on a smartphone app.

The chopsticks flash a red light when cooking oil has a higher than 25 percent level of TPMs, or total polar materials, an indicator of freshness, the spokesman said.

Poor food safety is a major concern in China, with one of the country’s worst food scandals seeing the industrial chemical melamine illegally added to dairy products in 2008, killing six children and making 300,000 people ill.

“Gutter oil” is a particular

concern cooking oil illegally made by reprocessing waste oil or by dredging up leftovers from restaurants and marketing it as new.

Health authorities last year launched a crackdown on the use and manufacture of such oil, with more than 100 people arrested and 20 imprisoned - two of them for life -as part of the campaign.

It was not clear whether the “smart chopsticks” would go into commercial production. The company has only made a limited run of prototypes, the spokesman said, and no release date or price has been set.

China’s social media users lauded the company’s innovation Thursday, but lamented the need for the device in the first place.

“Is it really a good thing that they invented these?” wrote one user. “Can we still enjoy our food?”

“If I carried these chopsticks around with me everywhere, I think I’d die of hunger,” wrote another.

AFP

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September 5, 2014

Greater China

Away from classes Hong Kong students plan week-long strike for democracy

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ong Kong students announced plans yesterday to hold a week long strike in response to Beijing’s refusal to grant the semi-autonomous city full universal suffrage.

Activists in the former British colony had their hopes for genuine democracy crushed after China announced on Sunday that the city’s next leader would be vetted by a pro-Beijing committee.

A coalition of pro-democracy groups have vowed to usher in a new “era of civil disobedience” against the decision, calling on the people of Hong Kong to blockade major thoroughfares in the city’s financial district.

Students plan to walk away from classes on September 22 in what they described as a final warning before wider civil disobedience action.

The proposal still needs to be approved by a coalition of student groups and unions tomorrow, leaders said.

“We strike as an ultimatum to warn the government to listen to our opinions,” president of the Hong Kong University (HKU) student union Yvonne Leung told AFP. “A civil disobedience movement is inevitable so we need some time to empower the students and other

sectors of society about what’s going on,” Leung added.

Students said the Hong Kong government had “surrendered and kowtowed” to Beijing on the issue of universal suffrage in a statement circulated on social media signed by the HKU union.

The statement said students would press for full public nomination for the city’s next leader, and rejected the idea of a “partial democracy enjoyed by only some people”.

“If they continue to act against the public’s will, we will step up to a stronger disobedient action,” the statement said.

The top committee of China’s rubber stamp parliament said Sunday Hong Kong citizens will be allowed to elect their next leader in 2017 -- but candidates must be approved by a pro-Beijing committee, with only two to three contenders allowed to stand.

Democracy activists have called the proposal a betrayal of Beijing’s promise to award Hong Kong universal suffrage by 2017.

Britain handed Hong Kong back to China on July 1, 1997 under a “one country, two systems” agreement which allows civil liberties not seen on the mainland, including free speech and the right to protest.

AFP

Away from ‘bad’ influences China said to limit foreign TV content on streaming websites

C

hina will limit the amount of foreign television programs allowed on Internet videostreaming sites, according to a person familiar with the matter.

The regulations, set to be announced as soon as today, will cap the number of foreign shows at 30 percent of content offered by the sites, according to the person, who asked not to be identified because the rules haven’t been made public.

A cap on foreign content is part of a broader government campaign to tighten Internet controls and limit content for China’s 632 million Web users. In April, China barred video websites from airing four U.S. television shows including “The Good Wife” and “The Big Bang Theory.”

Chinese video streaming sites, including those offered by Sohu. com Inc. and Youku Tudou Inc.,

have snapped up copyrights to licensed TV content, offering shows from th e U . S . , E u r o p e and South Korea to consumers for free -- often within hours of the episodes airing in their home countries.

In March, China responded to the exploding demand on video-streaming sites by stepping up regulations to block content deemed vulgar or having a “negative impact on society.”

Policies concerning video sites importing TV shows have been unclear, Sohu Chief Executive Officer Charles Zhang said in May. The company was working with the government to

clarify those practices, he said.

The new regulations will be issued by the State Administration of Press, Publication, Radio, Film and

Television, according to the person.

The agency didn’t immediately respond to an e-mailed request for comment.

Bloomberg

10

September 5, 2014

Greater China

Stocks are glorious, they say Chinese media tout equities with Citigroup to Morgan Stanley

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hina’s state-run media are trying to do something the securities industry has failed to accomplish for much of the past three years: get the world’s biggest population to buy more stocks.

The official Xinhua News Agency published at least eight articles this week advocating equity investing after similar stories appeared in the People’s Daily newspaper and on state- run television last month, part of what Everbright Securities Co. says is an increased government push to bolster the market. Authorities have also cut trading fees, made it cheaper to open new accounts and organized investor presentations by the biggest listed banks in the past two weeks.

Huang Shi got the message The media campaign “did influence my purchase,” Huang, a 26-year-old who works in the finance industry in the northeastern city of Harbin, said after shifting more than 20,000 yuan (US$3,257) into shares last week. “Also, our stock market had slumped for so long.”

Chinese policy makers are trying to rekindle interest in stocks after the Shanghai Composite Index lost US$460 billion of market value in the three years through May, the most worldwide, and investors liquidated almost 5 million trading accounts.

A shift toward equities may help the government reduce speculative investing in the property market and curb risks tied to lightly regulated wealth-management products, whose assets rose to a record US$2.1 trillion in the first half.

Bullish analysts The government’s promotion of shares, which follows forecasts for gains this year from brokerages including Citigroup Inc. and Morgan Stanley, may already be having an impact.

The Shanghai Composite rose to a 15-month high on Wednesday and has gained 12 percent since the end of May, fueled by speculation the world’s second-largest economy is weathering its real-estate slump. It climbed 0.3 percent to 2,294.51 at the midday break yesterday.

After shrinking for 12 straight weeks through Aug. 8 to the lowest level since March 2010, the number of equity accounts containing funds is rising while the pace of new account openings has doubled since May. China is also seeking a buoyant stock market as the country of 1.3 billion people opens up further to foreign investors through an exchange link with Hong Kong scheduled to start in October. The program will allow a net 23.5 billion yuan of daily purchases between Asia’s biggest equity markets after Japan.

Vibrant market’ “The government is indeed encouraging stock investment,” Zeng Xianzhao, an analyst at Everbright Securities, said by phone from Chongqing. “They need the market to be vibrant to encourage foreign funds into the country.”

Xinhua’s commentaries and news stories on equities included headlines such as “China needs a bull market with quality” and “How could the stock market be invigorated?”

A common view in China is that the country’s “new phase of economic and social development will certainly bring precious confidence and strong support to the stock market,” the news agency said on Aug. 31. Reports from the People’s Daily and China Central Television last month showed how money is flowing into stocks from the property market.

China said this month it will reduce fees by more than half for individuals and institutions opening share accounts, while the futures

exchange cut margin requirements for equity-index contracts last Monday.

Volatility risk Regulators also announced plans to allow investors to consolidate their accounts covering stocks, mutual funds and other securities. The Shanghai Stock Exchange said this week it’s hosting presentations by 14 listed banks to improve transparency and cultivate investor relationships.

“The government wants to change peoples’ outlook,” Ronald Wan, the chief China adviser at Asian Capital Holdings Ltd. in Hong Kong, said yesterday. “A strong equity market is a prerequisite for healthy capitalmarket reform in China.”

The China Securities Regulatory Commission didn’t immediately respond to a faxed request for comment. A Xinhua official said it doesn’t have an office that answers media enquiries.

The combination of bullish coverage from state media and surging demand from local investors didn’t prevent shares from tumbling five years ago. While the nation’s two largest financial newspapers published articles saying the rally would continue and new-account openings surged to an 18-month high in July 2009, the Shanghai Composite lost 23 percent over the next 12 months.

Cheap stocks Volatility in Chinese equities now may deter some investors from increasing holdings, according to Credit Suisse Group AG. The Shanghai Composite has posted average annual swings of 44 percent in the past decade, while wealth management products offer annualized returns of about 5 percent.

Yet Chinese stock valuations are still low relative to history, which gives the market room to rally further

as the economy improves, said Roxy Wong, a Hong Kong-based senior portfolio manager at Lombard Odier & Cie., which oversees about US$169 billion worldwide.

The Shanghai Composite trades at 11 times reported earnings, 24 percent below its five-year average and down from a multiple of 29 in July 2009, according to data compiled by Bloomberg. Data on Wednesday showed China’s service industries improved in August, fueling speculation the economy is strong enough to offset declining home prices and a pullback in manufacturing.

Asset allocation China’s real-estate slump is spurring local investors to shift more of their money into stocks, according to Chen Xingdong, the chief China economist at BNP Paribas SA in Beijing. Signs of increased risk in wealth management and trust products may also make shares an attractive alternative, said Kathy Xu, a Hong Kong-based money manager at Aberdeen Asset Management Plc. China’s new-home prices fell in July in almost all cities that the government tracks, according to the National Bureau of Statistics. At least 10 Chinese trusts struggled to meet payments in the three months through August, sparking protests by investors outside banks that distributed the products.

Equities comprised 4 percent of Chinese households’ total assets as of 2013, according to a June report from Credit Suisse. Bank deposits accounted for about 22 percent while property made up 55 percent.

“You might even start to see retail money re-directed to equities after years of chasing real estate,” said Michael Shaoul, the New Yorkbased chairman of Marketfield Asset Management LLC, which oversees about US$18.5 billion.

Bloomberg

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September 5, 2014

Asia

The return of Saigon Saigon beating Hanoi four decades after Vietnam war Jason Folkmanis and Nguyen Dieu Tu Uyen

A

lmost four decades after the Vietnam War ended, Saigon has turned the tables on Hanoi, outstripping its conqueror in investment and growth.

The former southern capital, renamed Ho Chi Minh City but still widely known by its prewar name, contributes almost a quarter of the country’s gross domestic product and the market capitalization of its stock index is seven times Hanoi’s. Now, Saigon is upping the ante with plans to build a new airport that would increase capacity as much as fivefold.

“By all measures, Ho Chi Minh City has moved into a more advanced place than Hanoi in terms of the sophistication of its economy and local companies,” said Edmund Malesky, an associate professor of political economy at Duke University in Durham, North Carolina, and the lead researcher for the Vietnam Provincial Competitiveness Index, compiled by the Vietnam Chamber of Commerce and Industry with U.S. aid.

It’s a long way from the chaotic day of April 30, 1975, when North Vietnamese tanks crashed through the gates of the presidential palace.

Replicas are now parked outside as a tourist attraction, while the renamed Reunification Palace is a favored venue for shareholder meetings.

Saigon’s population has more than doubled to 7.8 million, while its economy grew 9.3 percent last year, pushing the city’s per-capita GDP to US$4,513, more than twice the national average. In Hanoi, which has about 6.9 million residents, the economy grew 8.3 percent to increase its per-capita to US$2,985.

Malaysia and Singapore than it is to the Chinese border.

“Southern Vietnam was always a frontier area, and because it didn’t have that close contact with China and didn’t look north as Hanoi always had, people in the south looked outward instead and welcomed trade,” said Stuart-Fox. “Then, when the French moved in, they built drainage canals to increase rice production in the Mekong Delta and boost trade with France, and in general focused on exploiting the south economically.”

Vietnam’s post-1975 attempts to stifle enterprise misfired “abysmally” in Ho Chi Minh City, with many entrepreneurs sent to labor camps for “capitalist activities,” until a crumbling economy caused Marxist tenets to be diluted or scrapped, Stanley Karnow wrote in his book “Vietnam: a History.”

USD 4,513

Saigon’s GDP,more than twice the national average

Economic hub That makes the southern city key to Vietnam’s efforts to revive a national economy heading for its seventh straight year of sub-7 percent growth after averaging 7.3 percent in the previous seven years.

Ho Chi Minh City’s relative wealth makes it the entry point for many Western brands. McDonald’s Corp.

Chief Executive Officer Donald Thompson attended the opening of the company’s first branch in the country in February. A second opened in May near Ben Thanh market, a landmark where tourists slurp bowls of spicy beef noodles and shop for lacquer boxes and raw silk.

Hanoi got its first Starbucks Corp. store in July -- more than a year behind Ho Chi Minh City, which now has eight.

“Saigon is the dynamo, the city with more energy,” said Ray Burghardt, the Hanoi-based U.S. ambassador to Vietnam from 2001 to 2004, who lived in South Vietnam from 1970 to 1973.

Western influence Growth was boosted in 2000 with the signing of a bilateral trade agreement with the U.S. “The south has always had more U.S. influence on its business culture,” said Than Trong Phuc, managing director of technology-focused investment fund DFJ VinaCapital LP in Ho Chi Minh City. “Doing business here is more straightforward, whereas doing business in the north involves more government and a complex maze of relations.”

Saigon’s economy even may have benefited from being on the losing side of the war because it removed much of the government presence that existed when it was the southern capital, said Sesto Vecchi, managing partner of the Ho Chi Minh City office of U.S. law firm Russin & Vecchi. He arrived in South Vietnam in 1965 with the U.S. Navy and was in Saigon in the days before it fell.

Less government “Now there’s even less government impact on people’s decision making

Downtown airport Ho Chi Minh City’s advance is most evident at the airport, which saw some of the fiercest fighting during the battle for the city in 1975. A 20-minute drive from Reunification Palace, Tan Son Nhat is now in the heart of Saigon’s expanding sprawl of houses, shops and factories. Still coded SGN for Saigon, it’s almost at bursting point, with almost twice the number of passengers that fly in and out of Hanoi.

The planned new airport in neighboring Dong Nai province eventually is expected to handle 100 million passengers a year, compared with about 20 million at Tan Son Nhat.

The project needs approval from the National Assembly and its first stage, costing about $7.8 billion, wouldn’t be operational until at least 2020.

Meantime, the number of travelers coming to Vietnam keeps rising, climbing 11 percent last year to 7.6 million. Tourists heading to Hanoi are drawn to the scenic limestone islands of Ha Long Bay; in the south, it’s the beach resorts of Mui Ne and Phu Quoc island or the former emperor Bao Dai’s summer palace in the hills in Dalat.

The latest offering is a resort and casino at Ho Tram beach, with courtesy buses shuttling gamesters for the 2 1/2- hour drive to and from Saigon.

“The beaches in the north can only be used for half the year; the southern beaches are beautiful, and they are usable year-round,” said Paul Stoll, who helped set up the Vietnam Tourism Association and is chief executive of Celadon International Hotel Management Joint-Stock Co. “Ho Chi Minh City is Vietnam’s superhub.”

Bloomberg

Saigon’s economy even may have benefited from being on the losing side of the war because it removed much of the government presence that existed when it was the southern capital

Looking south Part of that dynamism is rooted in the city’s past. Southern Vietnam’s trading roots date back centuries, according to Martin Stuart-Fox, an emeritus history professor at Australia’s University of Queensland in Brisbane. While Hanoi’s history is tied to the presence of neighboring China, about 100 miles away, Saigon, next to the rich alluvial plain of the Mekong Delta, is 700 miles to the south and closer to Thailand,

After the so- called Doi Moi economic reforms in 1986, Saigon resumed its role as a commercial hub, with newly freed entrepreneurs quickly resuming their businesses.

here,” said Vecchi, who returned to live in the city in 1993. “A lot of the government influence in those days was directed toward the war, but even with that, Saigon always had a strong commercial environment.” Hanoi’s position as the nation’s capital is a double-edged sword. While it makes the city vital for businesses that must deal with the ministries, especially banks, it also creates a more restrictive regulatory environment.

“We need to see more progress in terms of the economic- reform policies coming out of Hanoi,” Burghardt said. “Ho Chi Minh City is a hostage to the speed of those reforms.”

Ho Chi Minh City ranked 10th last year and Hanoi 33rd among 63 Vietnamese provinces and cities in the country’s competitiveness gauge, which weighs measures such as entry cost, transparency and access to land.

Sesto Vecchi managing partner of U.S. law firm Russin & Vecchi

Saigon

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September 5, 2014

Asia

Next generation Samsung unveils wraparound note to fend off larger iPhones Cornelius Rahn and Jungah Lee*

S

amsung Electronics Co. unveiled a pair of Galaxy Note smartphones, including one with a display extending down the side, as the No. 1 seller tries to fend off Apple Inc.’s push into largescreen devices.

The screen of the 5.6-inch Note Edge extends beyond the front of the phone, allowing users to read messages, news and stock tickers from an angle. The Note 4, the latest version of Samsung’s marquee 5.7inch device, features an upgraded display and improved camera, Samsung said in Berlin yesterday.

The company also showed off a virtual-reality headset, developed with Facebook Inc.’s Oculus unit, and a new smart watch.

Samsung rose the most in seven weeks after the phones were announced as the company seeks a hit following a muted reception to the Galaxy S5 that triggered a slide in earnings and provided opportunities for low-cost producers to surpass its sales in China and India. Apple is set to introduce two new iPhones on Sept. 9: one with a 4.7-inch screen and another with a 5.5inch display, people with knowledge of the plans have said.

“Samsung is the creator of the bigger-sized smartphone market in the high-end space, and it did pretty well until now because there were no players who can possibly compete against it,” said Lee Jae Yun, a Seoulbased analyst at TongYang Securities Inc. “The prolonged concerns over the new iPhones are finally about to be realized.”

Shares of Samsung rose as much as 2.3 percent, headed for the biggest

gain since July 15, before trading 1.8 percent higher at 1,210,100 won as of 11:23 a.m. in Seoul. The stock has dropped 11 percent this year, wiping more than US$20 billion from Samsung’s market value, after a 9.9 percent decline in 2013.

Wearable devices The Note 4 that goes on sale next month features higher- definition resolution than previous devices, three microphones that can cancel noises during recording, and the ability to capture group self-images within a 120-degree view. It also includes a 16-megapixel camera.

The Note Edge will go on sale later this year.

“The Note Edge device has a pretty interesting display feature and Samsung has provided some improvement and advance in its design,” said Greg Roh, a Seoulbased analyst at HMC Investment Securities Co. “But the issue now is how much more user experience it can offer to be well received by consumers. I think it’s too early to be overly confident about its success.”

Samsung also announced its new 2-inch Gear S wristwatch device with a curved display and built-in network connectivity for users to make calls and get text messages. It also touts enhanced fitness features without the need for connection to a smartphone.

Virtual reality Apple will introduce a wearable gadget at next week’s briefing, a person familiar with the plan has said.

“Samsung clearly wants to capitalize on its lead in the smart watch space before Apple announces something,” Ben Wood, an analyst at industry researcher CCS Insight, said in a note.

Suwon, South Korea-based Samsung developed more functions to be used with a stylus, such as text marking, to set the devices apart from big-screen competitors. Apple has eschewed the use of styluses in favor of touch screens since the first iPhone debuted in 2007.

The user base for the Note has been broadening beyond businessoriented users, Samsung said. The Note 4 will be priced similarly to the Note 3, while the Note Edge will be more expensive, the company said.

The new virtual-reality headset, which connects to the Note 4, will sell for less than US$1,000. Samsung said it’s working with Hollywood studios and video-game makers, including Electronic Arts Inc., to deliver 360-degree shows and programs for the hardware.

Falling Earnings “We will never slow down,” Lee Don Joo, head of sales at Samsung’s mobile division, said on stage at the annual IFA consumer electronics show in Berlin.

Samsung is grappling with slumping earnings as Chairman Lee Kun Hee, South Korea’s richest man, remains hospitalized after a heart attack in May. The mobile unit accounts for more than half of the company’s profit.

The company posted the smallest

quarterly profit in two years during the three months ended June 30, mainly because of increased marketing costs for its cheaper smartphones amid competition from Chinese makers including Xiaomi Corp. and Lenovo Group Ltd. Samsung was the only producer in the world’s top five to post lower shipments in that period, according to data compiled by Bloomberg Intelligence from IDC.

Xiaomi, Micromax Xiaomi became the largest smartphone vendor in China, while Micromax Informatics Ltd. topped Indian mobile-phone shipments, according to data from research firms last month. In both cases, Samsung was overtaken as the largest vendor in the market.

The company may post its fourth straight drop in operating earnings in the quarter ending this month, according to analyst estimates.

“The problem in consumer electronics is if you lose scale, you have an impact on margins and Samsung’s brand is not as strong as Apple’s,” said Adnaan Ahmad, an analyst at Berenberg Bank who is the most accurate among the 49 analysts covering the stock for the past year, according to the Bloomberg Absolute Return Rank.

Both Apple and Samsung are facing a tougher environment in China, the world’s biggest market, as wireless carriers cut spending on phone subsidies that make devices more affordable and drive sales of new models.

Typically, Apple and Samsung sell their high-end phones to carriers for about US$600 to US$800 each. The operators then subsidize the price, with the biggest discounts usually offered in conjunction with the most expensive subscription plans.

China’s three state-run carriers may cut subsidies by as much as US$3.9 billion this year. *With Sharon Cho in Seoul Bloomberg

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September 5, 2014

Asia

Happy B’day Mazda unveils new Miata as top-selling two-seater turns 25 Ma Jie and Yuki Hagiwara

Roadster demand

M

azda Motor Corp. unveiled a new version of its iconic MX-5 Miata sports car for the first time in nine years, counting on the model to help sustain rising sales.

Mazda showed the car at an event yesterday to mark the Miata’s 25th anniversary in Japan, the U.S. and Spain. The fourth- generation model is the most compact so far and more than 100 kilograms (220 pounds) lighter than its predecessor, Mazda said in a statement. Sales will start globally next year.

Officially known as the Roadster in Japan and MX-5 elsewhere, the Miata became a hit after the first generation went on sale in 1989, rekindling interest in lightweight sports cars. In 2011, Guinness World Records declared it the best- selling two-seater sports car of all time.

Mazda forecasts record profit this fiscal year and is counting on the new model to help boost sales that grew at the second-fastest pace among Japanese carmakers in 2013, when its market value tripled.

“The Roadster’s light weight and drivability are unrivaled,” Hiroshi Matsushita, a car critic and longtime member of the panel that gives out Japan’s annual Car of the Year award,

Even with the new Miata, which will be built in Hiroshima, the market for roadsters isn’t expected to recover to the levels seen before the 2008 global financial crisis anytime soon, according to IHS Automotive.

said in a phone interview.

The new model will feature Mazda’s SkyActiv technology that’s designed to cut fuel use while boosting engine output, according to Mazda.

A weaker yen and demand for new models including the Mazda 6 sedan and the CX-5 crossover have helped the Hiroshima-based carmaker post two straight years of profit after four consecutive net losses from 2009 to 2012.

Leno’s garage Revenue for the fiscal year ended March jumped 22 percent,

the biggest gain among Japanese carmakers after Fuji Heavy Industries Ltd.’s 26 percent increase. Mazda is projecting net income of 160 billion yen (US$1.5 billion) in the year ending March 2015.

Mazda shares were unchanged at 2,513 yen as of 10:47 a.m. in Tokyo trading. They have declined 7.6 percent this year, compared with a 0.2 percent drop in Japan’s benchmark Topix index.

In February, Jay Leno, the U.S. television personality and car collector -- who owns a red 1996 Miata -featured the car in a segment of his NBC show “Jay Leno’s Garage.”

IHS projects U.S. deliveries of all roadsters may grow to about 77,000 cars annually by 2020 from 35,681 last year. That compares with a recent high of more than 124,000 deliveries in 2006, before the financial crisis and its aftermath sent annual U.S. sales plunging to fewer than 25,000 by 2011.

Sales of the Miata in the U.S., the model’s biggest market, declined last year to 5,780 cars from 6,305 in 2012, according to the company.

Total production volume of the car exceeded 940,000 units as of July, and the current generation of the vehicle was introduced in 2005.

As Mazda’s competitors have developed hybrid gasoline- electric and plug-in battery-powered vehicles, the company has focused on its SkyActiv cars, named for a suite of technology applications based on conventional diesel and gasoline engines, which include new automatic transmissions and lighter car frames.

The automaker opened a new plant in Mexico this year, producing Mazda 2 and Mazda 3 compact cars for North America, its biggest market. The factory will also produce vehicles for Toyota Motor Corp. from mid-2015.

Mazda will also produce a version based on the new Miata for Fiat SpA, the two carmakers said last year.

Bloomberg

14

September 5, 2014

International

Sponsorship wars

Manulife strengthens Under Armour CEO relishes bidding up hold on Canada Manulife Financial Corp., Canada’s Nike’s Durant sponsor deal largest life insurer, strengthened its hold on the market with a deal to acquire one of its biggest competitors while bolstering assets and returning capital to shareholders. Manulife agreed to buy Standard Life Plc’s Canadian business, the fifth-largest life insurer in the nation, for about C$4 billion (US$3.7 billion), the Toronto-based insurer said on Wednesday in a statement. It’s Manulife’s secondlargest acquisition, after the US$10.9 billion purchase of John Hancock Life Insurance Co. in 2004.

Matt Townsend*

Madoff son dies at 48 Andrew Madoff, convicted conman Bernard Madoff’s last surviving son, who insisted he had nothing to do with his father’s massive Ponzi scheme, has died. He was 48. He died at Memorial Sloan Kettering Cancer Center in New York after battling mantle cell lymphoma, his attorney, Martin Flumenbaum, said in an e-mailed statement. As heads of the trading desk at Bernard L. Madoff Investment Securities LLC, Madoff and his brother, Mark, led the market-making business of the once-respected firm while their father, based on another floor, invested client money.

Russia warns Ukraine

U

Ukraine’s renewed drive to join NATO risks derailing progress made towards reaching a ceasefire and peace deal to end the conflict in the east of the country, Russia’s foreign minister said yesterday. “Just when approaches are being explored to start resolving concrete problems between Kiev and the rebels, Kiev has called for ending its non-aligned status and beginning joining NATO,” said Sergei Lavrov.

Fiat investors exercise exit rights Fiat SpA’s investors exercised 463.6 million euros (US$610 million) in cashexit rights, 7.3 percent less than the limit set by the Italian carmaker to complete a merger with its U.S. unit Chrysler Group LLC. About 60 million shares were submitted by investors at the cash-exit price of 7.727 euros a share, Turin-based Fiat said today in a statement. Had the tally exceeded the company’s 500 million-euro spending cap, the combination with Chrysler would have been delayed.

LVMH, Google unite against fake goods French luxury products group LVMH and Internet search engine Google have agreed to work together to fight the sale of counterfeit goods online, the two firms said yesterday. The agreement ends nearly 10 years of litigation over complaints by LVMH -- owner of top luxury labels in everything from champagne to luggage -- that the Google Adwords key words service helped counterfeiters sell their products on the back of LVMH brands.

nder Armour Inc. Chief Executive Officer Kevin Plank isn’t deterred from pursuing major endorsement deals after being outbid by Nike Inc. for NBA star Kevin Durant -- quite the opposite.

“We wanted to send a message to every athletic director, to every president of every team club, to every league commissioner,” Plank said in an interview with Bloomberg TV’s Stephanie Ruhle yesterday. “If you have a deal, there’s no deal too big for us.”

With Durant’s previous contract with Nike set to expire, Under Armour made an offer that topped a US$200 million proposal from Nike, Plank said in a follow-up interview at Bloomberg’s offices in New York.

The sportswear giant then countered with a US$350 million deal, Plank said.

“Do I take pleasure in that they paid US$150 million more than they planned on paying?” Plank said.

“Absolutely.”

The Oklahoma City Thunder forward and reigning NBA Most Valuable Player re-signed as a Nike endorser with a contract worth US$300 million over 10 years, according to a person familiar with the negotiations. Including the retirement package and other elements, the deal could be worth US$350 million over 20 years, the

person said.

Nike, the world’s largest sportinggoods maker, hasn’t been challenged on many endorsement deals enabling it to pay below market rates, Plank said. Under Armour, buoyed by robust sales growth, is now willing to spend more on marketing and go after any team, league or athlete, he said.

Deal dpportunities The more Nike is bid up on deals like Durant’s, the less it has to deploy somewhere else, which will create more openings for Under Armour, Plank said. While Nike generates about 10 times the sales of Under Armour, in the past 12 months the Baltimore-based retailer has increased revenue at three times its rival’s pace.

“There will be opportunities created from that US$150 million,” Plank said. “We all have a finite amount of money.”

Greg Rossiter, a spokesman for Nike, based in Beaverton, Oregon, didn’t respond to an e-mailed request for comment.

Plank has the goal of growing the company he founded in 1996 into the largest sports brand in the world and getting its logo on more of the world’s best-known athletes is a part of that. The company, which originally sold clothes that go under football jerseys, has expanded into

shoes, yogawear and bags.

With endorsement deals, Under Armour is now going beyond sports stars. This week, the athletic apparel company signed a multiyear deal with supermodel Gisele Bundchen to promote its products and raise its appeal among women. Bundchen is married to New England Patriots quarterback Tom Brady, also an Under Armour endorser.

Manchester United Under Armour also made a bid to sponsor the English Premier League’s Manchester United, one of the most popular teams in the world, Plank said. The deal ultimately went to Adidas AG, the world’s secondlargest sports brand, for US$1.3 billion.

Up to this point, Under Armour has rarely tried to battle Nike or Adidas for the top athletes and teams, instead taking chances on lesser-known players like the NBA’s Brandon Jennings and mid-level clubs like the Premier League’s Tottenham Hotspur.

“Our world has changed,” Plank said. “We are the kids sitting at the Thanksgiving table saying ‘I don’t want sit at the little table anymore.

I want a chair at the big table.’” *With Stephanie Ruhle and Erik Matuszewski in New York Bloomberg

15

September 5, 2014

Opinion Business

wires

How money is made

Leading reports from Asia’s best business newspapers

NEW STRAITS TIMES Malaysia Airlines will offer travel packages to various international destinations in conjunction with the three-day MATTA fair which will begin tomorrow (Today). “During the three-day fair, customers would be spoilt for choice with various economy and business class offerings to Malaysia Airlines and oneworld destinations. Malaysia Airlines’ destinations include London from RM2,800, Paris or Amsterdam from RM2,700, Taipei from RM800, Tokyo from RM1,700, Incheon from RM1,200, Hong Kong from RM750 and Guangzhou from RM1,000.

BORNEO BULLETIN His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam yesterday urged the nation’s youth to be cautious about “negative” changes. The monarch said the nation’s youth are required to possess a clear, strong and robust identity before initiating any change and highlighted the importance of complementing changes with virtuous religious and cultural values so that it would not be shrouded in “unwanted elements” in the future.

THE STANDARD Frustration with MTR delays intensified, with the government saying it is deeply concerned at the latest incident and a lawmaker questioning the effectiveness of a HK$46 million electronic testing vehicle. A threehour disruption during the morning rush hour yesterday was apparently caused by cracks in the tracks of the Kwun Tong Line, two days after MTR Corp launched a services enhancement plan with 187 extra weekly trips on the line. It was the third disruption in a matter of weeks.

THE JAPAN TIMES The Tokyo Metropolitan Government closed part of Yoyogi Park on Thursday after confirming that mosquitoes caught in traps earlier this week were carrying the dengue virus, metropolitan officials said. The discovery confirmed the park as the site of infections for dozens of people over the past several weeks. Four traps out of the 10 placed by metropolitan officials contained mosquitoes carrying the virus, the officials said.

Karl-Theodor zu Guttenberg Richard Werner

Chairman of Spitzberg Partners LLC

Professor of International Banking and Director of the Center for Banking, Finance,

and Sustainable Development at the University of Southampton

This March, however, the Bank of England (pictured) acknowledged the observation that he and others had made – that, by extending credit banks actually create 97% of the money supply

R

ecently, the BRICS countries (Brazil, Russia, India, China, and South Africa) announced the establishment of their own development bank, which would reduce their dependence on the Western-dominated, dollar-focused World Bank and International Monetary Fund.

These economies will benefit from increased monetary-policy agency and flexibility. But they should not discount the valuable lessons offered by advancedcountry central banks’ recent monetary-policy innovation.

In June, the European Central Bank, following the example set by the Bank of England in 2012, identified “bank credit for the real economy” as a new policy goal. A couple of weeks later, the Bank of England announced the introduction of a form of credit guidance to limit the amount of credit being used for property-asset transactions.

Before the financial crisis hit in 2008, all of these policies would have been disparaged as unwarranted interventions in financial markets. Indeed, in 2005, when one of us (Werner) recommended such policies to prevent “recurring banking crises,” he faced vehement criticism.

This March, however, the Bank of England acknowledged the observation that he and others had made – that, by extending credit, banks actually create 97% of the money supply.

Given that a dollar in new bank loans increases the money supply by a dollar, banks are not financial intermediaries; they are money creators.

The growing recognition of banks’ true function will be a game-changer in areas like monetary policy and financial regulation, enabling officials to tackle effectively problems like recurring banking crises, unemployment, and underdevelopment. But it will take time to be fully accepted – not least because it challenges a fundamental tenet of traditional economics. Indeed, according to this new paradigm, savings, while useful, are not an essential

prerequisite to investment and thus to economic growth.

The United States, which experienced a prolonged period of growth without savings, is a case in point.

In general, economic growth depends on an increasing number of transactions and an increasing amount of money to finance them. Banks provide that finance by extending more credit, the impact of which depends on who receives it.

Bank credit for GDP transactions affects nominal GDP, while bank credit for investment in the production of goods and services delivers noninflationary growth.

Just as the BRICS have rejected Westernled economic institutions, developing economies would do well to expel foreign banks and allow local financial institutions to create money for productive purposes

The problem lies in bank credit-for-asset transactions, which often generate boombust cycles. By extending too much of this type of credit, banks pump up asset prices to unsustainable levels. When credit inevitably slows, prices

collapse. As the late-coming speculators go bankrupt, the share of non-performing loans on banks’ balance sheets rises, forcing banks to reduce credit further. It takes only a 10% decline in banks’ asset values to bankrupt the banking system.

With an understanding of this process, policymakers can take steps to avert future banking crises and resolve post-crisis recessions more effectively.

For starters, they should restrict bank credit for transactions that do not contribute to GDP. Moreover, in the event of a crisis, central banks should purchase non-performing assets from banks at face value, completely restoring banks’ balance sheets, in exchange for an obligation to submit to credit monitoring. Given that no new money would be injected into the rest of the economy, this process – which the US Federal Reserve undertook in 2008 – would not generate inflation.

In order to stimulate productive bank credit – and boost the effectiveness of fiscal policy – governments should stop issuing bonds, and instead borrow from banks through loan contracts, often available at lower rates than bond yields. This would bolster bank credit and stimulate demand, employment, GDP, and tax revenues.

Finally, a network of small notfor-profit local banks should be established to provide universal banking services, and loans to small and medium-size firms, like the scheme that has underpinned Germany’s economic strength and resilience over the last 200 years. Beyond making the banking sector more robust, such an initiative would boost job creation per dollar in bank credit.

Of course, large multinational banks, which have long benefited from the perception that economies need savings, are likely to resist such reforms.

For decades, these banks have been selling “foreign savings” to developing countries by lending at high interest rates and in a foreign currency,

fuelling the accumulation of massive amounts of foreign debt, which would often be converted into equity. In other words, they issued credit that contributed little to the local economy, and then drained local resources through interest and exploding foreign currencydenominated debt.

Just as the BRICS have rejected Western-led economic institutions, developing economies would do well to expel foreign banks and allow local financial institutions to create money for productive purposes. After all, successful economic development – in countries like the US, Germany, Japan, and China – has depended on domestic credit creation for productive investment.

During the Great Depression of the 1930s, Michael Unterguggenberger, the mayor of the Tyrolean town of Wörgl, performed an experiment. In order to reduce unemployment and complete much-needed public-works projects, he hired workers and paid them with “work receipts” that could be used to pay local taxes. With the local authority effectively issuing money for work performed, the local economy boomed.

The central bank, however, was not pleased, and decided to assert its monopoly over currency issuance, forcing Unterguggenberger to scrap the local public money and causing Wörgl to fall back into depression. Some 80 years later, the English city of Hull has begun to implement a similar scheme, using a digital crypto-currency that is, so far, not prohibited by law.

The unfettered creation of money by large private banks has generated overwhelming instability, undermining the fundamental principle that money creation should serve the public good. This does not have to be the case. By implementing safeguards that ensure that credit serves productive and public purposes, policymakers can achieve debtfree, stable, and sustainable economic growth.

Project Syndicate 2014

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September 5, 2014

Closing Michael Bloomberg returns

South Africa refuses Dalai Lama

Former New York Mayor Michael Bloomberg will return as head of Bloomberg LP, the data and financial news company he founded, replacing Daniel Doctoroff. The company, in which Bloomberg is the majority shareholder, said Doctoroff would step aside as president and chief executive at year-end.

South Africa has refused to grant a visa for the Dalai Lama to attend the World Summit of Nobel Peace Laureates in Cape Town next month, his representative said yesterday. The government “conveyed by phone to me they will not be able to grant the visa for the reason that it would disturb relations between China and South Africa,” Nangsa Choedon told AFP.

China spreads its wings Boeing says this year’s China orders already exceed 2013 total

B

oeing Co. received 13 percent more orders from China in the first eight months of the year than it got in all 2013 as regional and budget carriers drive growth in the world’s secondlargest economy.

Chinese airlines and lessors have purchased 260 planes so far in 2014, compared with 230 last year, Randy Tinseth, vice president of marketing for Boeing’s commercial airplane unit, said yesterday at a Beijing press briefing. The Chicagobased planemaker expects that clients from the country

will order 6,020 aircraft over the next two decades, he said, an 8 percent increase over last year’s estimate. Those deliveries would be worth about US$870 billion.

“We’ve seen a very strong domestic market for a number of years and that market will continue to be very strong,” Tinseth said, citing the emergence of new low-cost and regional carriers, as well as expansion efforts by major airlines. “For years the carriers have grown internationally at a fairly slow rate. They are starting to expand the rate of growth.”

Rare admission of naval near-miss

Asian air travel growth is lifting orders for planemakers, such as Boeing and Airbus Group NV, with China forecast to surpass the U.S. as the world’s largest market within the next 20 years.

The country’s economic expansion is making air travel affordable to more people, increasing demand for planes from carriers, such as Air China Ltd. and China Southern Airlines Co. Boeing estimates that smaller, single-aisle jets will account for about threequarters of future deliveries.

The company has received

orders for at least 210 737s and two 777s this year from a low-cost carrier set up by China Eastern, Shanghaibased Juneyao Airlines and BOC Aviation Pte, an aircraft sales and leasing unit of Bank of China Ltd.

New carriers Boeing has delivered 61 jets to Chinese clients this year through July, according to data on its website. China Southern, the country’s largest carrier by passenger volume, and Hainan Airlines have each taken delivery of

C

AFP

Bloomberg

Sony unveils new smartphones

Hong Kong benchmark pares losses

hina has honoured a submarine captain for averting an underwater “emergency” after his crew reportedly saved the vessel from sinking into waters thousands of metres deep, in a rare disclosure of a near-disaster.

Beijing has been increasing its naval might and reach in recent years, and it is an unusual admission for China’s military, which President Xi Jinping regularly urges to strengthen its ability to “win battles”.

Wang Hongli, commander of submarine 372, was praised by the Central Military Commission for “successfully dealing with a major sudden dangerous situation” during an underwater mission, the military’s official People’s Liberation Army Daily reported.

The crew “overcame various difficulties... and created a miracle in China’s and the world’s submarine history”, said the report posted on the defence ministry website Wednesday, without specifying any details.

Submarine 372 is reportedly a diesel-electric Kilo-class vessel that went into service in 2006 after Beijing bought it from Moscow.

two Dreamliner 787s this year, while Xiamen Airlines received its first last week.

China Eastern Airlines Corp., the country’s second-largest carrier by passenger volume, will get its first 777-300ER later this year.

Boeing expects to deliver about 140 planes to Chinese airlines and lessors by year’s end, close to the record 143 it handed over in 2013. The planemaker estimates that China will have a commercial fleet of 6,930 planes by 2033, more than triple the 2,310 it had at the end of 2013.

The number of Chinese carriers with at least 100 planes will increase to 13 by the end of the decade, compared to six now, the CAPA-Centre for Aviation, a Sydney-based airline consultant, said in May. The country will account for about 40 percent of the estimated 13,460 jets purchased in the Asia-Pacific region over the next 20 years, Tinseth had said July 10. The region will be the largest aircraft buyer over that period, trailed by North America with an expected 7,550 deliveries.

International travel from the country will grow 7.2 percent annually over that period, outstripping a 6.8 percent annual expansion in domestic travel.

H

ong Kong’s benchmark index slipped yesterday from its highest since May 2008, while the index of major China companies listed in the offshore market advanced to a near 9-month high.

The Hang Seng Index inched down 0.1 percent at 25,297.92 points, trimming earlier losses of 0.5 percent. The China Enterprises Index of the leading offshore Chinese listings in Hong Kong added 0.7 percent to close at its highest since Dec. 9.

Insurer AIA Group was the biggest drag on the Hang Seng, sinking 1.3 percent.

But Chinese insurers extended gains from Wednesday, helped by news that the government is making progress with an employee stock ownership plan in financial firms. China Life Insurance jumped 2.8 percent.

Chinese mobile carriers were buoyed by the coming launch of Apple Inc’s iPhone 6. China Telecom soared 3.8 percent and China Mobile edged up 0.3 percent.

The recently beaten-down Macau gaming sector has started to attract buyers. Sands China advanced 0.5 percent, its first gain in 12 sessions.

Reuters

S

ony Corp. unveiled new mobile devices which also function as displays for PlayStation games as it adds features to win sales in a market dominated by Apple Inc. and Samsung Electronics Co. The marquee Xperia Z3 smartphone is waterproof and comes with a battery that can stay charged for two days. The Tokyo-based company also announced the Z3 Compact smartphone with a 4.6 inch screen and an 8 inch tablet computer.

Chief Executive Officer Kazuo Hirai has been pushing his One Sony plan to better integrate the company’s electronics and entertainment assets to revive earnings. The PlayStation 4 has been one of the few bright spots for Sony, outselling Microsoft Corp.’s Xbox One, amid a decade of television losses and lackluster demand for Xperia smartphones.

“Allowing its latest smartphone and tablet remote access to its PS4 and games played on its PlayStation network is another huge step”, said Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. Bloomberg