Macau Business Daily, Sept 18, 2014

MOP 6.00 Closing editor: Luis Gonçålves Publisher: Paulo A. Azevedo

Macau’s textile implosion

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acau’s textile exports have halved in two years. The sector doesn’t see any light at the end of the tunnel. A recent government survey discovered all textile companies are expecting a “strong drop” in sales in the next six months. Since 2011, sales to foreign markets have tanked. From MOP260 billion to MOP130 billion last year. In 2014, exports may struggle to reach MOP100 million

High stakes, low profile

PAGE 3 Number 628 Thursday September 18, 2014

China’s high-spending gamblers are spooked.

Betting away from Macau seems a prudent move. The government onslaught on corruption and extravagance is biting. Boosting the fortunes of casinos from the Philippines to Las Vegas

Super-stimulus

Year III

After series of weak economic data People’s Bank of China has announced an injection of US$81.35 billion for the top 5 national banks. By these means the liquidity injection does have the effect of easing overall credit conditions

www.macaubusinessdaily.com

Page 8

Louis XIII buys 30 Rolls Royces for Cotai PAGE 3

Macau tours unaffected by Philippines warning PAGE 2

Tourism Activities Centre to undergo renovation PAGE 3

HSI - Movers September 17

IBIS takes first step Mixed messages High hotel prices are a hot issue. Not surprisingly, economy hotel chain Ibis has registered its trademark in Macau. The French hotel group may be doing more than protecting its brand name. So far, no international or mainland Chinese economy hotel chain has planted its flag here. And there’s been a lot of local debate about offering real options

Name

Not so long ago it would have been deemed impossible. But the largest players in the luxury sector are struggling in Asia. Demand from Macau and Hong Kong is weak. Cartier has admitted lower sales here. Chow Sang Sang reports a drop of 32 percent in revenues. Mass market Bossini, on the other hand, grew sixfold in the last six months

%Day

PetroChina Co Ltd

3.88

Lenovo Group Ltd

3.62

China Resources Pow

2.79

Tencent Holdings Ltd

2.48

Bank of Communicati

2.32

China Mengniu Dairy

-0.55

Hang Lung Properties

-0.82

Tingyi Cayman Island

-1.91

Galaxy Entertainmen

-2.57

Sands China Ltd

-3.85

Source: Bloomberg

I SSN 2226-8294

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September 18, 2014

Macau Macau tours unaffected by Philippines travel alert A travel warning has been issued for the Philippines but the travel industry does not anticipate much effect on its business Kam Leong

kamleong@macaubusinessdaily.com

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esterday evening, the Tourism Crisis Management Office (GGCT) issued a travel warning urging Macau residents not to travel to the Philippines for the time being, following China’s announcement last week claiming that the safety situation in the Southeast Asian country was worsening.

The Office cited the warning of the Chinese Ministry of Foreign Affairs, which said that the Philippines police

had proven that criminal gangs there were planning to attack the Chinese Embassy, Chinese-funded organisations and local malls. The Ministry warned all Chinese citizens that they should not go to the country during this period of time.

According to GGCT, no tour from Macau is currently in the Philippines.

In addition, the Office had received only one inquiry so far but no request for assistance.

FSS president appointed to another term

T

he President of the Social Security Fund, Ip Peng Kun, has been appointed by Secretary of Administration and Justice Florinda Chan for another one-year term as the executive of the Pension Fund Council Commission, the Official Gazette announced

yesterday. According to the bulletin, Mr. Ip will execute the position on a part-time basis. His salary for the position will equated to 20 percent of that of the president of the Council Commission. Mr. Ip’s new term will commence from November 1 of this year to October 31, 2015.

The warning by the Chinese Government was issued on Friday after an 18-year old Chinese teenager was kidnapped in Manila, the capital of the country; government agents arrested a gang of suspects whom they said planned to attack the Chinese embassy in the city.

The teenager, known as Li Peizhi, was kidnapped on Thursday by unidentified gunmen in Zamboanga Sibugay province’s Kabasalan township from a family-run store he worked in.

Not affecting Macau tours Although the government issued the advisory warning, the territory’s travel industry believes that the warning will not overly affect Macau residents as their average interest in travelling to the Philippines is not high.

In fact, no travel agency has organised any tours to the Philippines in recent years, influenced by the Manila Hostage Crisis of 2010, according to the president of the Travel Industry Council of Macau, Andy Wu Keng Kuong. He told Business Daily that the attraction of the country itself is also another

reason that not many Macau residents travel there.

In August 2010, a tourist bus carrying 20 tourists and a tour guide from Hong Kong and four locals was hijacked by a former Philippines National Police officer. The incident eventually led to the death of eight Hong Kong citizens.

A travel consultant for a local travel agency, Mars Kong, also told us that the Philippines is not a popular destination for Macau residents, who have many other options for short distance trips such as Thailand and Malaysia.

According to data released by the Civil Aviation Authority of Macau, some 190,910 passengers travelled between Macau and the Philippines last year, a year-on-year decline of 7.6 percent from 206,600 passengers in 2012.

In mid-August, the Philippine low-cost carrier AirAsia Zest, which operates flights between Macau and Manila, adjusted its daily schedule to three flights. The carrier announced on Tuesday, however, that they had temporarily suspended flights to and from Kalibo, a city in the northwest Philippines, Shanghai and Beijing.

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September 18, 2014

Macau Tourism Activities Centre to undergo renovations

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Descending hopes All Macau’s textile companies are bracing for a ‘strong drop’ in exports in the next six months. Last year, sales decreased almost 20 percent Sara Farr

sarafarr@macaubusinessdaily.com

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here is a strong negative expectation of the future of textile exports. All surveyed exporters from the textile industry predict a ‘strong drop’ in exports in the next six months.

According to the latest industrial exports survey for the second quarter of the year, the overall sentiment from all industry exporters is that business will remain fairly much the same for the next six months as it was in the second quarter. Sixty percent said they didn’t expect much change, while 19.9 percent said they expected an increase in exports and 8.9 percent expect a slight drop.

However, when analysed by industry, all textile exporters expect business to drop drastically over the next six months.

The value of exports of textile products dropped 39 percent to MOP164.2 million in 2012 against that of the previous year. Last year alone, exported textile products totalled MOP133.9 million, down 18.5 percent year-on-year.

In addition, one third of garment industry exporters expect the same strong drop at 36.6 percent, while

31.4 percent expect a slight drop and 28.4 percent expect a slight increase in exports. Only one percent of garment exporters said they expect a strong increase in business, while 2.6 percent said they expect business to remain unchanged from the second quarter of the year.

Like textiles, the overall export of garments dropped 19.8 percent to MOP713 million last year against 2012, when the value of garment exports totalled MOP889.3 million, also down by 16.9 percent from a year earlier.

In July alone, the value of exported garments dropped slightly by 1.1 percent to MOP60.1 million over that of the previous month, while the value of textile exports dropped 35.9 percent to MOP8.2 million.

Strong markets The markets of Hong Kong, mainland China and other Asia Pacific countries offer the best prospects for exporters here. Those Macau exporters surveyed said they were optimistic about the markets in Hong Kong and mainland China,

Rollin’ in style

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ouis XIII Holdings Ltd is spending as much as US$20 million (MOP160 million) on the purchase of 30 new Rolls Royce cars, the company announced in a filing with the Hong Kong Stock Exchange yesterday.

The car models will be ‘ExtendedWheel-Base’ Rolls Royce Phantoms that will be customised to the company’s specifications. ‘The vehicles will be used to transport guests of the hotel,’ the filing reads.

And the reason for choosing this type of model is because ‘it best fits with the standard of luxury the company is targeting for its hotel in Macau.’

Under the agreement between Louis XIII and Rolls Royce, the company will pay US$2 million, or 10 percent, of the total amount payable before the end of this month.

Another 15 percent, equivalent to US$3 million, is set to be paid before the end of the year, while payment for the remaining 75 percent, or US$15 million, is expected to be made within the first half of 2016.

Earlier this year the boutique casino hotel developer reported a group-wide loss attributable to owners for the year ended March 31, 2014, although its major Hong Kong-based subsidiary - Paul Y. Engineering Group Ltd (PYE) - had generated significant contributions via strong growth in its thriving construction business in both SARs. Louis XIII is currently building a luxury hotel and entertainment complex on a 65,000 square foot site in Coloane close to Cotai, which is expected to be completed within the first half of 2016.

S.F.

whilst Japan has worsened because of weaker export demands.

Although exporters remain positive on the outlook of the Hong Kong and mainland Chinese markets, their overall positive outlook lowered to 20.6 percent in the second quarter of the year, a drop of 2.7 percentage points compared to the previous quarter (23.3 percent) and a 7.5 percentage points decrease from the same period a year ago (28.1 percent).

Of the surveyed companies, 0.7 percent said they expected a strong demand for exports, while 19.9 percent said they expected export demand to increase slightly.

50%

Drop in Macau’s textile exports between 2011 and 2013

he Tourism Activities Centre, located right across the road from Golden Lotus Plaza on the Macau Peninsula, will undergo a “series of renovations and maintenance works”, Macau Government Tourist Office told Business Daily when asked if the Activities Centre will be used following the relocation of local products display centre Macao Ideas on October 1.

Without specifying when the renovation works will begin, the Tourist Office noted that the Centre will retain its core function as an “integrated centre for tourism and culture, meetings and exhibitions”.

Macao Ideas, currently operated

by Macao Trade and Investment Promotion Institute, is to be relocated to China Civil Plaza in ZAPE district on October 1. The product display centre located on the ground floor of the Tourism Activities Centre came into operation in May, 2011.

Once maintenance works at the Activities Centre are finished, the Wine Museum and Grand Prix Museum will remain in their current site in the Centre, MGTO added.

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September 18, 2014

Macau

Giordano profits down by half, Bossini up sixfold Giordano saw sales decrease by 6 percent in Hong Kong, Macau and Taiwan for the first half of this year, while its competitor Bossini had a different fate Stephanie Lai

sw.lai@macaubusinessdaily.com

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ong Kong-listed clothing retailer Giordano International Ltd, which also runs stores here, posted a groupwide first-half sales drop with profit declining nearly 50 percent, its latest interim report filed with the Hong Kong Stock Exchange on Tuesday reveals.

Giordano’s profit attributable to shareholders for the first six months this year dropped by 49 percent yearon-year to HK$174 million (US$22.4 million), a result of weak gross profits coupling with only a slight decrease in operating expenses, the filing noted.

The clothing retailer added that its cost control in the period had also been offset by rental increases in Hong Kong and the expansion of shops in Southeast Asian markets.

Giordano’s total sales for the first half were HK$2.67 billion, down 6 percent on a year earlier, a performance that the company called reflective of slowing retail demand in mainland China and macro-economic challenges emerging in Southeast Asian countries.

Sales in the Hong Kong market (which also includes Macau for accounting purposes) and Taiwan dipped 6 percent year-on-year to HK$786 million in the period. These markets account for 29 percent of Giordano’s total sales.

Giordano operates a whole block of retail outlets in the tourist attraction district of S. Domingoes on the Macau Peninsula, along with two other outlets in the Grand Canal Shoppes at Venetian Macau and Shoppes at Cotai Central in Sands Cotai Central, respectively.

Giordano’s Hong Kong segmental

results have been affected by reduced growth in the apparel sector and high rental expenses, the company noted in the interim results. In the first half, Macau’s retail garments in the market at large still saw a 22 percent growth at nearly 3.46 billion patacas (US$433 million).

In the report, Giordano mentioned that it had launched a new store format – ‘Concepts’ - in its S. Domingoes store in June. The format of the store, which features multi-brands that Giordano has, will be used by the group to ‘penetrate shopping malls’ in Hong Kong if proved successful.

Under the Giordano brand, 73 percent of sales were accounted for by menswear, of which the group saw sales dip 6 percent in the first half; in the period, the group registered an even bigger drop in women’s apparel of 14 percent, the report noted.

Giordano’s gross profits declined by a year-on-year 11 percent to HK$1.57

billion in the period, to which the group attributed a combination of local currency weakness in Southeast Asia and the effect of strong price discounting across all markets in response to intense competition pressures.

Meanwhile, Giordano’s competitor Bossini International Holdings Ltd – whose global sales network is not as extensive as Giordano – registered a nearly sixfold increase in profit at HK$127 million for the year ended June 30, Bossini informed the Hong Kong Stock Exchange yesterday.

The results have been partly boosted by a record 12 percent same store sales growth in the Hong Kong segment, which also includes three shops in Macau. Bossini runs 41 stores in Hong Kong and Macau, the core contributor to the group’s results, which translates into as much as 69 percent of the group’s total revenue.

Sara Farr

sarafarr@macaubusinessdaily.com

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Flat revenue growth in Asia Pacific region after sales in Macau and Hong Kong dropped between March and August

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Chow Sang Sang Macau, HK sales drop 32pct

ewellery retailer Chow Sang Sang Holdings International Ltd has announced a 32 percent drop in same store sales in its Macau and Hong Kong stores for the first six months of the year. According to the company’s interim report filed with the Hong Kong Stock Exchange, the drop was ‘primarily due to reduced gold sales.’

While same store sales dropped here and in the neighbouring SAR, the sale of jewellery also dropped by 2 percent between January and June.

Rental prices increased by 17 percent, with the company saying that the ‘average rental increase for leases renewal was 33 percent.’ In addition, the company spent HK$29 million (US$3.7 million) in fitting out and refurbishing shops.

Global Cartier sales slowdown; weak Macau, HK demand

The company’s overall turnover decreased by 34 percent to HK$9.3 billion in the first six months of the year, while overall profit attributable to equity holders dropped 15 percent to HK$520 million.

Turnover for its jewellery retail segment alone reached HK$8.2 billion in the first half of the year, down 25 percent from HK$10.9 billion in the same period a year earlier.

‘The anti-corruption drive and the tight money situation on the mainland, as well as the political disputes in Hong Kong, all took their toll on consumer sentiments,’ the filing reads, adding that ‘high-priced gifts and luxury items became slow moving.’

Nonetheless, the company remains positive on the future outlook,

and expects ‘modest growth’ in its mainland China and Hong Kong markets – the latter of which includes Macau. ‘The gold rush of 2013 is now history and business appears to be back to where it was before.

Top-end luxury goods have slowed, as spending on gifts has become more rational,’ the company said in its interim report.

Last year, the company owned 37 jewellery store outlets in Hong Kong and nine in Macau. This year, however, the company opened another two stores – one in Hong Kong and one here. Its Emphasis store in Macau is located in Galaxy.

The company is planning to open 32 new stores and the fitting out of another 24 stores in mainland China alone in the second half of the year.

artier owner Richemont said that weakness in Asia Pacific, its biggest market, weighed on sales growth in the five months to August.

Luxury watchmakers are grappling with political instability in Hong Kong, the leading market for Swiss watches, and weak demand in China, where the government’s fight against illegitimate gifting has hurt sales of expensive timepieces.

“In the Asia Pacific region, sales were lower in Hong Kong, Macau and mainland China, offsetting positive developments in other markets,” the Geneva-based maker of luxury watches and jewellery said on Wednesday ahead of its annual general meeting.

The overall pace of sales growth slowed to 4 percent in the five months to August on a constant currencies basis, against 9 percent in the same period last year. Sales were up one percent at actual exchange rates.

Analysts in a Reuters poll had expected sales to grow 6 percent on a constant currencies basis and 3.2 percent at actual exchange rates.

Sales in Asia Pacific were flat at constant currencies, while in Europe and the Middle East they were up 6 percent. The company’s fastest growing region was the Americas, where sales rose by 12 percent.

Growth at Richemont’s jewellery houses Cartier and Van Cleef & Arpels, which include Cartier watches, rose 2 percent, while specialist watchmakers including brands such as IWC and Jaeger-LeCoultre recorded a 4 percent sales increase.

“This should put pressure on Richemont shares ... and on the sector as a whole as Richemont is the first company to report all the way to August,” an analyst at JP Morgan wrote in a note.

Shares in Richemont were seen opening 2 percent lower on Wednesday, according to premarket indications by bank Julius Baer.

U.S. jeweller Tiffany raised its full-year profit forecast last month after strong sales and higher prices for its high-end jewellery in the Americas boosted profits but Richemont is more exposed to Europe and Asia. (Reporting by Joshua Franklin and Silke Koltrowitz; Editing by Edwina Gibbs and David Goodman).

Reuters

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September 18, 2014

Macau

Ibis registers brand in Macau Economy hotel brand Accor has registered its trademark in the local market ahead of its major peers Stephanie Lai

sw.lai@macaubusinessdaily.com

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conomy hotel chain Ibis has registered its trademark in Macau, indicating interest by the French hotel group in the local market which has so far seen no international or mainland Chinese economy hotel chain established here.

An Official Gazette notice published yesterday reveals that Ibis applied to register its trademark in Macau on July 17; the hotel group had yet to confirm to Business Daily whether that means Ibis is intending to set foot in the city by the time the story went to press.

As Macau is not a member of the Madrid system companies may decide to register their trademarks in order to prevent other parties from using them.

The Madrid system allows trademarks to be registered at an international level that includes 91 countries or independent ruling bodies, a legal expert told Business Daily in a story published on August 22.

Ibis - a member of international hotel operator Accor - runs two hotels in Macau’s neighbouring city Hong Kong, an hour’s ferry ride away.

Meanwhile, Hong Kong also has three Novotel hotels, a mid-scale hotel brand and member of the Accor group.

French luxury hotel brand Sofitel in Macau’s Ponte 16 is also a member of the Accor group.

Macau remains a city dominated by 4 and 5-star hotels serving robust casino-resorts operations but its average room rate may not appeal to budget travellers.

The July average room rate here was 1,537.7 patacas (US$192) a night, a 10 percent growth compared

to a year before, the latest statistics released by the Macau Hotel Association shows. The Association compiled data from 41 hotels here, nine of which are 3-star hotels.

With no major economy hotel chain established in the city, the bargain choice for tourists often boils down to 2-star guesthouses dotting the old neighbourhoods of Macau Peninsula.

‘Scoring system’ dissected by vice head of Housing Bureau

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he vice president of the Housing Bureau, Kuoc Vai Han, claimed yesterday that resuming the previous scoring system to evaluate applicants for public housing may not be advantageous for individual applicants or young applicants.

The vice president said in a TDM radio programme - Macau Forum that such a scoring system involves certain standards when marking, and while it may certainly benefit core families it may not do so for individual applicants.

“Supposing we do not dismiss the waiting line as under the scoring system, the situation will develop into having demands before we [can] supply the public housing. However, when we cannot satisfy [such waiting demands] in a short period of time, will it [the scoring system] also be able to resolve the problem?” She claimed that the supply of public housing not meeting all the demands was due to the lack of land resources in the city.In addition, she said the waiting system will not resolve the demands of families most in need as the situation in every family keeps changing.

On the other hand, she believes that one of the suggested amendments to the Subsidised Housing Law – allocating a certain proportion of public housing to different groups of applicants – will offer opportunities for individual applicants to get flats.

K.L.

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September 18, 2014

Gaming Brands

Trends

The Gems of Bvlgari Raquel Dias newsdesk@macaubusinessdaily.com

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n times gone by owning a perfume was a luxury in itself. No-one thought of the little glass bottles as a regular commodity.

Nowadays, with the advent of chemistry most perfumes are quite cheap to make and quite affordable for the general public. When things like these happen the crème de la crème need a special product for themselves. Chanel was the first to understand everyone was smelling like their exclusive No 5 and launched Les Exclusives. Dior and Guerlain followed suit.

It was time for Bvlgari to do likewise and they took their job seriously. Le Gemme, a new collection of luxury perfumes inspired by semiprecious stones, will set the bar for all other collections.

Developed by perfumer Daniela Andrier, the six fragrances include Ashlemah, inspired by amethyst and including notes of lavender, iris, violet and heliotrope; Lilaia, drawing its symbolic essence from peridot and containing essences of mastic, peppermint, orange and mate; the exotic Noorah, inspired by turquoise and featuring galbanum, cardamom, iris, benzoin resin, tobacco, oak, patchouli oil, and vanilla; the tourmaline Amarila, with tuberose and powdery rose notes; Maravilla, of citre, containing citrus, peach, jasmine, patchouli, and acethyvenol; and finally Calaluna, epitomising moonstone, includes sandalwood, cardamom, ambrette, pear, and heliotrope.

The Bvlgari Le Gemme fragrances are packaged in bottles inspired by Roman urns, which give them a strange yet appealing look.

Wynn Resorts picks up Boston-area casino licence Steve Wynn celebrates a first victory but Massachusetts voters may still reject casino gambling in a November 4 election

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ynn Resorts, the casino company founded by Steve Wynn, has been awarded the sole licence to operate a casino in the Boston area, beating a rival plan from the Mohegan Tribal Gaming Authority.

The Massachusetts Gaming Commission voted 3-1 at a public hearing yesterday, having deliberated since September 8. The US$1.6 billion resort will be built on the site of a former chemical plant in the Boston suburb of Everett. Plans include low-profile boats ferrying guests across the harbour and a glass exterior in a colour the founder calls “Wynn bronze.”

Commissioner Enrique Zuniga said Wynn Resorts’ level of capital investment, commitment to clean up the site and history of operating in competitive markets swayed him.

“We’re not the first ones to come to gaming in the region,” Zuniga said yesterday. Wynn Resorts was “the one who can fare better in a competitive market because they’ve done it elsewhere.”

The award ends a threeyear contest that saw Caesars Entertainment Corp. run afoul of state investigators, Mohegan Sun take over their site in Revere, and Wynn Resorts lose an earlier referendum in Foxborough. However, Massachusetts voters may still reject casino gambling in a November 4 election.

In 2011, Massachusetts legislators authorised three casinos in separate regions of the state, and one slot machine-only facility.

MGM Resorts International won the contest for a casino in Springfield, in the western region. Penn National Gaming is building the slot-machine parlour in Plainville.

Deliberations are under way to select a licensee for the third casino in the southeastern region.

Caesars dropped out of the Boston-area casino race last year

after being told by state regulators it might not be approved for a licence.

The company sued commission Chairman Stephen Crosby, saying he was biased because of his friendship with an owner of Wynn Resorts’ land. Crosby recused himself from the past week’s deliberations.

Las Vegas-based Wynn Resorts scored highly in the finance and economic-development categories evaluated by the panel, while Mohegan Sun ranked better in building design and traffic mitigation, according to the Commission website.

Best known for his fanciful resorts in Las Vegas and Macau, Wynn, 72,

pitched the project as his version of a European grand hotel, a strategy he calls Urban Wynn.

“A blackjack table or a slot machine is the same in all 37 states or any country where they exist,” Wynn said in a presentation on the project’s website. “It’s the non-casino stuff that’s the energy. That’s what gets people to come back again and again.”

As the process of awarding the casino licences dragged on, opposition to gambling grew. A measure was placed on the November ballot that would end all of the projects.

Bloomberg

Genting Malaysia to sell 1.5 billion Ringgit of bonds in debut

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enting Malaysia, a unit of Southeast Asia’s largest casino operator by market value, plans to raise 1.5 billion ringgit (US$466 million) in its debut bond sale, two people familiar with the matter said.

The notes will be sold by GENM Capital, a company set up by Genting Malaysia to sell debt, and is part of a 5 billion ringgit programme, said the people who asked not to be named because the information hasn’t been made public. Five and 10-year paper will be offered in the week beginning September 29 and there will be an option to increase the sale amount, they said.

Genting Malaysia, ranked at the highest investment grade of AAA by RAM Rating Services Bhd., will use the proceeds of the sale for working

capital, the people said. The Kuala Lumpur-based company is tapping the market at a time when corporate borrowing costs in the Southeast Asian nation are at near a four-year high after Malaysia’s central bank raised its benchmark interest rate in July.

The average yield on Malaysian top-rated company bonds due 2019 climbed 27 basis points, or 0.27 percentage points, this year to 4.23 percent, according to a Bank Negara Malaysia index. It reached 4.29 percent on August 14, the highest since April 2010.

Parent Genting - which owns leisure, gaming and plantations companies including Resorts World Sentosa in Singapore and Star Cruises in Hong Kong - last sold bonds in June 2012. The yield on its 4.42 percent notes due 2022 was 4.65 percent on

August 6, the last available figure, down 13 basis points this quarter, data compiled by Bloomberg show.

Genting’s 4.86 percent securities due 2027 yielded 5.10 percent on September 15, a decline of 29 basis points from June 30.

Genting Malaysia, which bought 6.6 hectares of land in the Bahamas for $25 million last week, has a market capitalization of 24.2 billion ringgit, according to data compiled by Bloomberg. Its shares dropped 1.8 percent to 4.27 ringgit as of 11:31 a.m. in Kuala Lumpur today, compared with a 0.1 percent decline in the benchmark FTSE Bursa Malaysia KLCI Index. Genting Malaysia’s stocks have fallen 8.6 percent since closing at a record high on August 27.

Bloomberg

7

September 18, 2014

Gaming

Las Vegas casinos thrive at expense of Macau Escaping anti-graft campaigns here, high rollers from Mainland China are flying to Las Vegas and the Philippines

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hina’s high-spending gamblers are betting away from Macau in the face of a government onslaught on corruption and extravagance, boosting casinos from the Philippines to Las Vegas.

Visitors from China are boosting gambling growth in Las Vegas while casinos in Melbourne and Manila are fighting over Chinese VIPs with frills from private jets to suckling pigs.

That’s while Macau, the one place in China where casinos are legal, has suffered three straight months of declining gambling revenues as the anti-graft crackdown shows no signs of abating.

MGM Resorts International (MGM), the largest owner of casinos on the Las Vegas Strip, and Wynn Resorts Ltd. (WYNN) both posted recent results that beat analysts’ estimates. That was enabled by strong growth in baccarat, a card

game favoured by Chinese gamblers, even as their Macau businesses suffered weaker growth.

“Since the scrutiny has intensified, gamblers are instead spending time away from Macau,” wrote Praveen Choudhary, an analyst at Morgan Stanley in Hong Kong, in a September 15 report. “Rich and famous gamblers are lying low and junkets have turned cautious in extending credit to worthy people.”

Renowned brand Casino revenues on the Las Vegas Strip have gained 3.7 percent to $3.7 billion in the year to end-July, driven mainly by a 14.4 percent jump in baccarat revenue, according to Robert Shore, a Las Vegas-based analyst at Union Gaming Group. This indicates ’’an inverse correlation’’ with the weaker performance from

high rollers in Macau, he said in an e-mail.

“Las Vegas is a brand that is clearly world-renowned and that people continuously want to come to,” Dan D’Arrigo, Chief Financial Officer of MGM, said via telephone when asked about Chinese gamblers.

Macau remains the world’s biggest gambling hub despite the recent declines, generating $45.2 billion of casino revenue for the city in 2013, seven times more than the Las Vegas Strip and dwarfing the $36.5 billion for the U.S. as a whole.

Nevertheless, revenue from VIPs in the Chinese city could continue to contract for a further six to nine months, according to Morgan Stanley’s Choudhary. “The impact on Macau gaming lagged the decline of other industries like lodging, food and beverage, events,

and luxury retail.”

Chinese hotel growth was immediately affected by China’s anti-extravagance campaign that started in the last quarter of 2012, he said.

Macau casino operators dropped in Hong Kong trading today, as Nomura Holdings Inc. analysts led

by Louise Cheung said the city’s gross gaming revenue could contract one percent, and that “consensus estimates are too high.” Nomura’s “bear case” is that VIP revenue could drop 12 percent next year, according to a research note dated yesterday.

Gambling mogul Stanley Ho’s SJM Holdings plummeted as much as 6.6 percent, the most in three months, while MGM China Holdings , co-chaired by his billionairess daughter Pansy, plunged 6 percent.

Sands China Ltd., the Macau unit of billionaire Sheldon Adelson’s Las Vegas-based company, slumped as much as 5.9 percent, Wynn Macau Ltd. retreated 4.9 percent, Galaxy Entertainment Group lost 4.6 percent and Melco Crown Entertainment fell 3 percent.

Sensitive situation Junket operators, which organise casino trips for wealthy Chinese VIPs, are bringing those gamblers to other locations such as Australia, Europe or the U.S., according to Credit Suisse analysts Kenneth Fong and Isis Wong. That allows the players “to avoid frequent appearance in Macau in light of the current sensitive political situation,” they said in a research note on Sept.

12, after meeting with junket and casino companies.

Those junkets are also being lured away by regional competitors including Bloomberry Resorts Corp.

(BLOOM)’s Solaire resort in Manila, which offers bigger commissions than Macau, according to Anthony Wong, a Hong Kong-based analyst at UBS AG, in a September 2 report.

Macau also faces the possibility of greater labour unrest, with union leaders saying they’re planning more protests including possible industrial action during the annual week-long China National Day public holiday that starts October 1.

Galaxy, which runs six casinos in the former Portuguese enclave, said Macau will continue to benefit from being a bus or ferry ride away for many mainland Chinese.

“High-stakes Chinese gamblers go to overseas casinos for a new experience,” Francis Lui, Galaxy’s deputy chairman, told reporters last month. “Macau will continue to benefit from its close proximity to China.”

Wider margins To fight the decline in revenue from high-stakes bettors, Macau casinos are allocating more resources to luring so-called mass market gamblers, who bet in cash.

Mass market gamblers tend to provide wider margins than highrollers as VIP customers typically rely on credit from junket operators, who in turn collect commissions from casino companies.

Sands China reduced VIP table capacity by 28 percent and increased mass tables by 14 percent in the second quarter. The aim is to cut its reliance on high-rollers, said Adelson, according to a Bloomberg transcript of an earnings call.

The mass market shift “is turning out to be quite lucrative and less volatile than the VIP business,” Mark Mobius, Chairman of Templeton Emerging Markets Group, said in an e-mail.

Bloomberg

8

September 18, 2014

Greater China

Big injection into major banks

Singaporeans can use e-Channel to enter HK The liquidity injection does have the effect Singapore passport holders aged 11 and of easing overall credit conditions above will be able to clear immigration faster in Hong Kong, Singapore’s Immigration and Checkpoints Authority (ICA) announced on yesterday. Singaporeans that have visited Hong Kong three times or more in the past year will be able to use Hong Kong’s automated clearance gates, or e-Channel. Eligible citizens can do so at Hong Kong International Airport or Macau Ferry Terminal, ICA said. However, those aged 11 to 17 must be accompanied by a parent or guardian and present documentary proof of relationship, ICA noted.

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hina’s central bank is injecting a combined 500 billion yuan (US$81.35 billion) of liquidity into the country’s top banks, according to media reports, a sign that authorities are stepping up efforts to shore up a faltering economy.

The Wall Street Journal, citing an unnamed Chinese bank executive, said the People’s Bank of China (PBOC) is pumping in 100 billion yuan each into China’s top five banks via standard lending facility in the form of 3-month loans. Officials at

the PBOC could not be reached for comment.

“We think the latest SLF is mainly aimed at providing liquidity to preempt potential liquidity shortages in the banking system in the coming weeks,” Jian Chang, China economist

Xi kicks off Sri Lanka port city project Chinese President Xi Jinping yesterday launched the construction of a US$1.4 billion port city in Sri Lanka’s capital that will give Beijing a firmer foothold in the Indian Ocean region. Xi wrapped up his two-day visit to Sri Lanka by visiting Colombo harbour to kick off building of the port city, before heading to neighbouring giant India. The new city, Sri Lanka’s largest single foreign investment, is being built alongside an already existing Chinese-built container terminal, the only mega port in South Asia.

Farm machinery reaps profits in ASEAN China’s top farming equipment manufacturers are seeking investment opportunities in Southeast Asia at the on-going 11th China-ASEAN Expo held in Nanning in south China’s Guangxi Zhuang Autonomous Region. China National Machinery Industry Corporation (SINOMACH), the country’s first Fortune 500 company in the machinery sector, has launched an investment program in Vietnam and Thailand in an effort to break into the local market using its advantages in capital and research and development.

Foxconn to tap Internet-enabled cars market The world’s largest electronics contractor is building an operation centre to help link 300,000 cars to the Internet by January 2015. The centre, based in Nanchang City in east China’s Jiangxi Province, is a joint venture between the Taiwanese technology giant and Gosun Guard Security Service Technology Co. Ltd, a local security service provider. The two companies signed a strategic cooperation agreement on Tuesday to develop a leading operation centre for Internet-enabled cars. A 4G module embedded in the car will integrate a variety of services.

Outbound investment expected to exceed FDI in 2015 China’s outbound investment is expected to continue to increase and could soon exceed foreign direct investment (FDI), an official said Tuesday. The statement was made by Ministry of Commerce (MOC) spokesman Shen Danyang after the MOC released the investment figures for the first eight months this year. From January to August, FDI, which excludes investment in the financial sector, stood at 78.34 billion U.S. dollars, down 1.8 percent from the same period last year, the ministry said. In contrast, China’s outbound direct investment by non-financial firms surged 15.3 percent to US$65.17 billion in the same period.

People’s Bank of China headquarters in Beijing

Alibaba’s IPO spurs voices for reforming securities rules The Chinese securities regulator ended a 14-month IPO freeze in January, promising market-based reforms to revive one of the world’s worst-performing stock markets

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hinese investors are disappointed in the country’s lukewarm stock market losing another potentially high-quality stock as e-commerce giant Alibaba prepares for a spectacular initial public offering in the U.S. on Friday.

Investors blame cumbersome rules, such as banning companies registered overseas from listing in China and retaining lengthy listing procedures, for forcing competitive domestic firms like Alibaba to list abroad.

Other notable companies listing abroad for similar reasons include instant messaging service provider Tencent, search engine giant Baidu and the country’s top 10 Internet firms ranging from Sina to Sohu.

Qiu Yanying, an investment officer for China Fortune Securities Co. Ltd., said China will lose more innovative firms like Alibaba if it retains the approval-based stock regulation system, which selects IPO applicants based on records of financial data and restricts ownership structure in line with share proportions.

Alibaba on Monday raised its initial offering share price to US$68 and is on the verge of making the world’s largest IPO on Friday.

Ni Zhengdong, CEO of finance firm Zero2IPO, said expatiatory

Shenzhen Stock Exchange wants to become China’s Nasdaq-style board

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September 18, 2014

Greater China at Barclays Capital in Hong Kong, said in a research note.

Still, a liquidity injection of this scale does have the effect of easing overall credit conditions and helps to stabilise a shaky economy after a weak start to the year. Some analysts believe the reported move shows the PBOC’s continued willingness to use targeted steps, rather than largescale stimulus or interest rate cuts, to support growth.

“This (SLF) is consistent with our view that targeted easing measures will be used in view of the deceleration in economic activities as reflected by recent data,” Credit Agricole said in a research note.

The reports come after a series of soft data underlined the headwinds confronting the economy, which suffered its weakest growth rate in 18 months in the first quarter. A sharp slowdown in the housing market, which accounts for more than 15 percent of China’s annual economic output, has also become an increasing drag on the broader economy.

KEY POINTS Comes after series of weak economic data Liquidity expected to tighten ahead of end-quarter, IPOs Money rates largely flat, stocks slip after initial gain

listing regulations have consumed patience of many innovative entrepreneurs.

More than 200 companies are currently queuing for approval to be listed on Shenzhen’s start-up board, which has ambitions to become China’s Nasdaq-style board.

The Chinese securities regulator ended a 14-month IPO freeze in January, promising market-based reforms to revive one of the world’s worst-performing stock markets. The long-term waiting has spurred a new wave of new IPOs, but the pace of approval is still slow.

The company’s venture capital market analysis showed Chinese and foreign venture capital institutions raised 199 funds in China last year, down by 21 percent year-on-year.

The funds boast combined capital worth 6.9 billion dollars, down by 25.7 percent from the year-ago volume, representing the lowest since 2010.

The Standing Committee of the National People’s Congress (NPC), China’s top legislature, announced in April a plan to examine an amendment to the securities law in December of this year.

Xiao Gang, chairman of the China Securities Regulatory Commission, said the securities law should be aimed at protecting public investors’ interest. It should focus on fostering and strengthening market mechanisms to stimulate market vitality.

Securities and legal experts cautioned some crucial steps must be taken, including building a “social credit system” to assess the behaviour of citizens as well as companies and organizations, which can help maintain the market order once the system becomes market-oriented.

Xinhua

China’s leaders have repeatedly said they would use a period of anticipated slower growth to carry out structural shifts, including efforts to wean the economy off dependence on external demand and investment spending. Still, the drumbeat of weak data has heightened speculation that Beijing would be forced to do more to keep the economy on an even keel.

Stocks briefly rose but had lost much of their gains by midday.

The CEI300 index of top Chinese companies was flat while the Shanghai Composite Index edged down 0.2 percent.

PBOC reluctant to employ big-bang measures The PBOC launched Standing Lending Facility in 2013 to supplement other monetary policy tools such as open market operations.

SLFs are mainly used to provide one- to three-month loans to directly to commercial banks to smooth out volatility in rates and its impact on the economy is seen limited compared with cuts in banks’ required reserve ratios (RRR) nor interest rate.

Analysts also note that Beijing is wary of offering big-bang stimulus - as it did following the 2009 global financial crisis - due to worries of exacerbating China’s debt problem and knocking the economy hard.

In response to slower growth, Beijing this year has rolled out a number of policy support measures targeting specific sectors, such as agriculture and small- medium-sized enterprises.

Money markets rates have remained fairly steady but traders have predicted they will rise in the next few weeks due to seasonal demand as well as the slew of upcoming IPOs. Reuters

Top Ultrasonic executives disappear with cash Its German holding company still had a “relevant six-figure amount” at hand to meet its payment obligations

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ltrasonic AG, a Chinese footwear maker listed in Germany, said most of its cash reserves in China and Hong Kong had disappeared and it had lost trace of its chief executive and chief operating officer.

The mystery is likely to fuel concerns about corporate governance in the world’s secondbiggest economy, at a time when short sellers are targeting smaller Chinese companies with claims of falsified statements to auditors and dubious management practices.

Ultrasonic’s Frankfurt-listed shares plunged 72 percent on Tuesday to close at 1.798 euros in heavy volume, after it revealed that almost all of its cash in China and the two top executives had vanished.

“Most of the company’s cash funds at PRC (People’s Republic of China) and Hong Kong levels have been transferred, being no longer in the company’s range of influence,” Ultrasonic said in a statement.

Chief executive Qingyong Wu and chief operating officer Minghong Wu have been missing since the weekend, Ultrasonic said.

Its German holding company still had a “relevant six-figure amount” at hand to meet its payment obligations.

In August, the company which is valued at US$29.5 million, said it had secured a US$60 million credit facility from Nomura International (Hong Kong) Ltd to help fund acquisitions.

The facility could be drawn within three months of the deal being signed, it added. It was unclear how much credit had been extended

by Tuesday. Nomura declined to comment when contacted by Reuters.

Finance chief Kwong Clifford Chan and the supervisory board were in talks with authorities and business partners, trying to clarify the situation.

Ultrasound said last week that Chan would step down on September 30 for family-related reasons.

Another Germany-listed Chinese manufacturer, Youbisheng Green Paper, initiated insolvency proceedings earlier this year after its CEO went absent without explanation.

Reuters

Jamaica open to Chinese business culture The Jamaican Minister of Transport, Works and Housing said the two countries have been offering constant support to each other on issues concerning their respective core interests

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hina, a rising emerging economy, is an opportunity for Jamaica that is seeking to boost economic development, Omar Davies, Minister of Transport, Works and Housing has said.

Davies told Xinhua in a recent interview that friendship between Jamaica and China could date back to 42 years ago when the two countries established diplomatic ties and since then, the two countries have been offering constant support to each other on issues concerning their respective core interests.

Speaking highly of the wide-range cooperation with China in recent years especially in infrastructure, the minister said “Concessionary loans and direct investments from China not only brought changes into Jamaica’s infrastructure landscape, but also provided opportunities for further development in other economic sectors.”

The north-south link highway, funded and constructed by China Harbour Engineering Company, would integrate tourism resources across the island by shortening the travel time from the north coast to the south, he said.

“Infrastructure renovation will improve the logistic conditions within Jamaica. An easier flow of people and goods will further enhance the country’s industrial productivity and business capability, which are crucial to the

Jamaica is in need of great infrastructures reform

economic development,” he added.

Davies also said the world economic pattern was undergoing profound changes as traditional western powers were crippled by their inner problems while emerging markets led by BRICS that groups Brazil, Russia, India, China and South Africa were growing very fast and would play a more important role in the world economic system.

Chinese enterprises’ overseas expansion provided a new opportunity for countries looking for foreign investment to stimulate their own economy, he added. Davies said those treating the rise of China as a threat were out of lacking “self-confidence.”

“We see no imperial desires in

loans and investments from China.

Negotiations with the Chinese government and companies are always principled and on equal terms. What we need to do is to be able to benefit from China’s increasing economic power,” he added.

Based on mutual trust and mutual benefit, the minister said he welcomed more investors from China and other parts of the world to be better involved in Jamaica’s infrastructure construction, to make full use of the country’s geographic advantages, and most importantly, to witness the development of Jamaica along with their own business.

Xinhua

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September 18, 2014

Greater China

Indian Prime Minister Narendra Modi speaks during a function in Ahmedabad. Modi’s election has helped lift the stock market to record highs

China deceleration drags down Asian business sentiment The ThomsonReuters/INSEAD index surveyed 200 of the Asia-Pacific region’s top companies in 11 economies

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usiness sentiment among Asia’s top companies fell sharply in the third quarter, weighed down by worries about China’s slowing economy, a possible end to the U.S. Federal Reserve’s stimulus policy and a decline in the outlook for regional economic hubs like Singapore, a ThomsonReuters/INSEAD survey showed.

The ThomsonReuters/INSEAD Asia Business Sentiment Index fell to 66 in the third quarter from 74 in the previous quarter, its steepest decline in three years. A reading above 50 indicates an overall positive outlook.

Companies in India were the most positive with a maximum score of 100 for the second consecutive quarter after pro-business leader Narendra Modi was elected prime minister.

In contrast, Taiwanese businesses were the most negative, with a score of 33.

“While growth is still robust across Asia, businesses are grappling with a number of challenges, including worries about rising interest rates as the Fed begins to press the brakes,” said Frederic Neumann, the Hong Kong-based co-head of Asian economic research at HSBC. He also said business conditions in China had become more uncertain amid a softening real estate market.

Chinese companies polled were neutral about their prospects, which led China’s score in the third quarter to drop to 50 from 67. China’s economy is expected to grow 7.3 percent this year, its weakest pace in 24 years, a Reuters poll of analysts shows.

Singapore also turned in a thirdquarter reading of 50, a sharp drop from the previous quarter’s score of 67.

The index surveyed 200 of the Asia-Pacific region’s top companies in 11 economies across sectors including financials, property, resources and technology.

Companies participating in the survey included Australian construction materials firm James Hardie Industries Plc, Japan’s Fast Retailing Co Ltd and Indian drugmaker Lupin Ltd, among others.

The poll, conducted by ThomsonReuters in association with INSEAD, a global management and business school, was compiled from Sept. 1-12.

It showed global economic worries, rising costs and other risks including currency volatility and regulatory uncertainty were the key business concerns.

Of the 120 companies that responded, 64 percent reported a neutral outlook, while 34 percent said they had a positive outlook and 1.67 percent were negative.

KEY POINTS Sentiment Index falls to 66 in Q3 from 74 in Q2 Indian companies most positive, Taiwan outlook most negative China, Singapore sentiment slips to neutral from positive Autos, drugs sectors positive, property and shipping down

India bullish, China slips Business sentiment in key Asian economies India and Thailand benefitted from political change.

In India, Prime Minister Modi’s election has helped lift the stock market to record highs, while the end of months of political unrest in Thailand and the establishment of a military government has eased businesses concerns.

All 15 Indian firms surveyed were positive about their outlook. Thailand was the second-most positive, with a score of 90.

“One hundred-plus days into the Modi government and sentiment seem to be improving, albeit gradually,” said Girish Vanvari, co-head of tax at KPMG in India. “We are certainly in for a period of gradual sustainable growth.”

Indian drug maker Lupin also said it was positive about the domestic business environment.

“The new government’s affirmative and positive stand on important issues like economic policy, manufacturing

reforms and easing of foreign investment norms has reaffirmed confidence in India’s growth story,” said Shamsher Gorawara, director of corporate communications at Mumbai-based Lupin.

Politics also helped businesses in Indonesia, Southeast Asia’s largest economy, to achieve an overall positive score of 75 in the third quarter. Indonesians recently elected President Joko Widodo, who is believed to be more business friendly than his predecessor.

Slowing growth in Asia’s largest economy China, however, weakened business sentiment in the third quarter.

All companies polled from China were neutral about their outlook and most listed global economic uncertainty as their greatest risk.

Apart from China, sentiment in South Korea and Singapore also

slipped to neutral from positive in the second quarter. Taiwan was the only country in the region in negative territory with a score of 33.

Sentiment in the Philippines, which had posted a maximum score of 100 in the second quarter, dropped sharply to 83 as some companies lowered their bullish views on the outlook and employment levels.

Corporate sentiment among Australian companies also fell to 75 from 79 in the second quarter, while Japan edged higher to 59 from 56. Export-driven South Korea maintained its neutral reading of 50, the same as the second quarter.

Autos positive, property down By sector, autos, resources, pharmaceuticals and food were the most positive across the region with readings of 75.

Sentiment among Asian automakers improved for the third consecutive quarter, while the shipping, building and financials sectors were the least optimistic, each with a neutral reading of 50.

The property sector recorded a sharp decline in sentiment, with the sector’s score falling to a more than two-year low of 63 from 79 in the second quarter. Many companies lowered their outlook to neutral as China’s property sector faces a deepening slowdown.

“Property is central to the Chinese economy. The softening real estate market primarily impacts construction activity, with businesses directly involved in the sector feeling the biggest pinch,” HSBC’s Neumann said.

Asian builders also showed lower optimism with all respondents reporting a neutral outlook, compared with a 75 reading in the second quarter.

Reuters

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September 18, 2014

Asia

‘Forced labour’ rampant in Malaysian electronics factories The study comes three months after Malaysia was downgraded to Tier 3 in the U.S State Department’s annual Trafficking in Persons report Trinna Leong

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early a third of some 350,000 workers in Malaysia’s electronics industry - a crucial link in the international consumer supply chain - suffer from conditions of modern-day slavery such as debt bondage, according to a study funded by the U.S. Department of Labour.

The survey by Verite, an international labour rights group, found that abuse of workers’ rights - particularly the tens of thousands from low-wage countries like Nepal, Myanmar and Indonesia - was rife in a US$75 billion sector that is a mainstay of the Southeast Asian country’s export-driven economy.

Several U.S., European, Japanese and South Korean multinationals have operations in Malaysia, including Samsung Electronics Co Ltd, Sony Corp, Advanced Micro Devices, Intel, and Bosch Ltd. Some big brands use suppliers such as Flextronics, Venture Corporation, Jabil Circuit, and JCY International to make parts for smartphones, computers and printers.

The U.S. government funding adds credibility to a report which is likely to come as a surprise to many consumers.

Malaysia is a middle-income country where labour standards have been seen as better than in some of its Asian neighbours such as China, where questionable labour practices have drawn scrutiny in recent years.

Verite did not single out any companies in its report, released yesterday, but blamed a system in which government and industry policies have given Malaysian recruitment firms increasing control over workers’ pay and other conditions.

An Intel spokesman said most of the chipmaker’s 8,200 employees in the country were Malaysian and it did not use contractors. Flextronics

said it was aware of issues related to foreign workers and had “rigorous” policies to prevent abuses.

The study comes three months after Malaysia was downgraded to Tier 3 in the U.S State Department’s annual Trafficking in Persons report, which cited a lack of progress in protecting the rights of about four million foreign workers.

The report, based on interviews with 501 workers, found that 28 percent of employees were in situations of “forced labour”, where work is coerced through factors including indebtedness from excessive fees charged by recruiters.

That figure rose to 32 percent for foreign workers, who are often mislead about salary and other conditions when they are recruited in home countries, and are commonly charged excessive fees that lead to indebtedness.

Verite said the numbers were based on conservative definitions.

It found that 73 percent of workers displayed “some characteristics” of forced labour.

Stability, low costs Malaysia’s electronics and electrical industry made up 33 percent of exports in 2013. In 2011, foreign investment in the sector accounted for US$2.68 billion, or 86.5 percent of the total.

Malaysia has benefited in recent years from a reputation for stability and low costs, gaining fresh investment after floods in Thailand in 2011 crippled factory operations there.

On average, workers in the survey were found to have paid 2,985 ringgit (US$925) to brokers in their home country and in Malaysia as payment for their passage and jobs. That is more than the average per-capita annual income in Nepal.

These results suggest that forced labour is present in the Malaysian electronics industry in more than isolated incidents, and can indeed be characterized as widespread Verite report

Unable to afford a lump sum upfront, more than two thirds of workers who paid broker fees had to borrow money.

One in five immigrants were working more than the suggested 60 hours of overtime a week - the industry’s international standard limit - the group said. Malaysian law allows employees to clock up to 72 hours of overtime.

Malaysian laws have been amended in recent years to encourage the growth of recruitment companies that provide workforce services to multinationals, including paying, accommodating and disciplining employees.

“Liability over violations of worker rights is obscured, creating vulnerability on the part of the worker to exploitation and abuse,” the group said.

The group found workers’ passports were often confiscated by recruitment firms, which is illegal in Malaysia.

Some firms were found to charge more than US$1,000 for a worker to “borrow” his or her own passport.

Reuters

Dairy prices boost NZ current account deficit The latest deficit was NZ$2.1 billion (US$1.71 billion) down from that of the year ended June 2013, which was 3.7 percent of GDP

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alling dairy prices helped New Zealand’s current account deficit to almost treble in the quarter to the end of June, the government statistics agency announced yesterday.

The current account deficit in the June quarter was NZ$2 billion (US$1.63 billion), up

by NZ$1.4 billion (US$1.14 billion) from the March quarter deficit, according to Statistics New Zealand.

“The value of goods exports fell over a range of commodities, with dairy the most significant contributor this quarter,” international statistics manager Jason Attewell said in a statement.

A current account deficit means New Zealand’s earnings from the rest of the world were less than its overseas expenditure.

New Zealand’s annual current account deficit to the end of June was NZ$5.8 billion (US$4.74 billion), or 2.5 percent of GDP, down from NZ$6 billion (US$4.9 billion), or 2.7 percent of GDP, for the year ended March.

The latest deficit was NZ$2.1 billion (US$1.71 billion) down from that in the year ended June 2013, which was 3.7 percent of GDP. New Zealand’s net international liability position, which measures

the value of overseas assets less overseas liabilities, was NZ$149.7 billion (US$122.41 billion), or 65.3 percent of GDP, at the end of June, down by NZ$1.4 billion (US$1.14 billion) from the end of March.

“This is the smallest net liability position as a percentage of GDP in almost 13 years,” Attewell said.

New Zealand’s net external debt position, which measures overseas lending less overseas borrowing, increased by NZ$2 billion (US$1.63 billion) to NZ$142.3 billion (US$116.36 billion), or 62.1 percent of GDP. Xinhua

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September 18, 2014

Asia Myanmar, Brunei companies to search for oil Myanmar’s state oil and gas enterprise will jointly conduct inland crude oil exploration in the country with a Brunei company on production sharing basis, according to the Myanmar enterprise Wednesday. Under the contract signed between the Myanmar Oil and Gas Enterprise (MOGE), Brunei National Petroleum Company Sdn Bhd and IGE Ptd Ltd of Myanmar in Nay Pyi Taw, the oil exploration will be done at inland oil block EP-1 in Kyaukkyi-Mindon area in Magway region, central part of the country.

Semiconductor Summit kicks off in HCM City The 2nd Vietnam Semiconductor Strategy Summit (SEMI Vietnam) kicked off yesterday in Ho Chi Minh City, bringing together executives of the world’s leading microelectronics companies and domestic representatives in the field.

Participants discussed key strategies, challenges and opportunities facing Vietnam semiconductor industry, according to organizers. The event, which brings together key decision-makers shaping the future of the industry in Vietnam, helped forge connections and relationships that will drive growth over the next decade and beyond. This year’s SEMI Vietnam featured discussions vital to the future of the industry, from water supply infrastructure to device designs.

Indonesia’s loan growth continues down Indonesia’s loan growth in July slowed to 15.7 percent on a yearly basis, compared with 17.2 percent in June, the country’s financial services authority, Otoritas Jasa Keuangan (OJK) said yesterday. Loan growth has been on a slowing trend since the central bank tightened monetary policy from June to November last year by raising the benchmark interest rate 175 basis points to 7.5 percent. Indonesia’s broad money supply (M2) growth rose 11 percent in July from a year earlier.

Vietnam holds int’l industrial expo The Vietnam International Supporting Industries Exhibition 2014 (VSI EXPO 2014) kicked off yesterday, attracting more than 200 domestic and foreign companies, organizers said. VSI EXPO is the largest scale and specific event in supporting industries held in Vietnam where domestic and foreign made products of engineering, electronics, information technology (IT), automobile assembly and other industries are showcased. According to Deputy Minister of Industry and Trade (MoIT) Do Thang Hai, VSI EXPO 2014 would provide a venue for participants to tighten business connectivity and set up value added industrial production chains as well as expand markets for their products.

Japan’s negative yields show Banks holding debt to dress up their quarter-ending accounts partly

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he Bank of Japan has begun paying banks for the privilege of lending them cash in a sign the central bank is reaching the limits of its power to reflate the economy, although it may soon be forced to pump yet more money into the financial system.

Negative yields are more than a footnote in the BOJ’s unprecedented “quantitative and qualitative easing” (QQE) policy. They show that Governor Haruhiko Kuroda’s 18-month-old monetary experiment is struggling barely halfway to its 2 percent inflation goal.

“Practically, this is not a policy that you can maintain for a long time,” said Tomohiro Miyasaka, fixed-income strategist at Credit Suisse. “The BOJ is absorbing bills and bonds from markets so much that one day there could be no bills and bonds left to buy.”

The BOJ already buys most of the government’s issuance of debt. Last week, it paid financial institutions more for three-month, and then sixmonth, government debt than it will receive when the bills are redeemed, traders said. This force-feeding of cash into the banking system pushed the three-month yield as low as -0.015 percent and the six-month to -0.020 percent.

KEY POINTS Three and six-month yields negative 1-yr bill yields could turn negative soon as Wednesday Sign BOJ reaching limits of power to reflate economy Comes as expectations rise for further easing

Banks holding debt to dress up their quarter-ending accounts partly explains the swing in rates. But the fact that a seasonal factor can have such an impact shows just how little appetite there is for the cash the central bank is injecting into the economy, traders said.

Debt specialists say it is highly unlikely negative rates could spread to ordinary savers’ bank deposits, but the BOJ’s pursuit of assets at any price could feed criticism it is

Bank of Japan Governor Haruhiko Kuroda

subsidising banks and bankrolling the government’s massive debt.

Early success Kuroda launched the wave of monetary stimulus in April 2013,

Sony blames annual loss on mobile unit In May the firm posted a bigger-than-expected loss of 128.37 billion yen in the fiscal year to March

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he company said yesterday said it would lose US$2.14 billion this fiscal year, more than four-times its earlier forecast as the Japanese electronics giant blamed a downturn in its mobile phone business.

The estimated net loss of 230 billion yen in the fiscal year to March 2015 came as a surprise only months after it tipped a loss of just 50 billion yen, citing a turnaround in its hardhit television business.

Sony has cut expectations for sales in the smartphone business, which has been reporting operating losses as it faces off against global rivals including Apple and South Korea’s Samsung.

The announcement, which came after Japanese markets had closed, is likely to resurrect fears that the once world-leading electronics company has a lot more work ahead to cast off years of losses.

It also said it would not pay a year-end dividend for the first time since it started trading in Tokyo in 1958, according to the leading Nikkei business daily.

Former headquarters of the mobile division in Sweden

Yesterday, the company said it had “modified” its mid-range business plan (MRP) to “address the significant change in the market and competitive environment of the mobile business”.

“Under the new MRP, the overarching strategy for the (mobile) segment has been revised to reduce risk and volatility, and to deliver more stable profits,” it said in a statement.

“This revision includes changing the strategy of the (mobile) segment in certain geographical areas, concentrating on its premium line-up,

and reducing the number of models in its mid-range line-up.”

The new estimate will see Sony post a 40 billion yen operating loss -reversing earlier expectations for a 140 billion yen profit- on previously forecast sales of 7.8 trillion yen.

In May the firm posted a biggerthan-expected loss of 128.37 billion yen in the fiscal year to March. That came several months after announcing 5,000 job cuts at its struggling computer and television units.

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September 18, 2014

Asia SAI gets no bids for whole firm

BOJ’s limits explains the swing in rates

pledging to double Japan’s base money via aggressive asset purchases to stoke 2 percent inflation in about two years.

Early results looked promising.

The yen it printed pushed down the currency’s value, helped arrest a 15-

year slide in consumer prices and boosted both corporate profits and the Tokyo stock market.

But even as the BOJ buys 70 percent of new government bond issuance, inflation is stuck around 1.3 percent, and the world’s third-biggest economy is sputtering after an April sales-tax increase hit consumption more than the authorities had expected.

The BOJ acknowledges achieving 2 percent inflation - rarely seen even during Japan’s bubble years - will be difficult.

BOJ officials will not confirm that the central bank accepted negative rates on some of its 750 billion yen ($7 billion) of market-funding operations last week. It says it can not disclose individual transactions.

But Kuroda said he saw no “serious problem”.

“We’re always watching markets carefully and I don’t see any signs that we’re having more difficulty buying (debt). We’re looking at markets calmly,” Kuroda told a news conference on Tuesday.

He has maintained that policy is on track and the central bank has the financial ammunition it needs if it decided to expand the stimulus programme, although now was not the time to discuss adjusting policy.

Reuters

Currently led by Executive Chairman Andrew Dutton, it has been without a CEO since the last one was ousted just four months into his contract

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ustralia’s SAI Global Ltd, a compliance advisory firm that put itself in play after a US$1 billion private equity approach, said it had received no final bids for the whole company, sending its shares tumbling.

SAI opened its books to interested parties after Pacific Equity Partners (PEP), Australia’s biggest private equity firm, made an indicative offer of up to A$1.1 billion (US$1 billion) in May. It later said it was talking to multiple parties although PEP and KKR & Co LP, a partner PEP later brought in, were the only publicly named suitors.

While talks for the full company have fallen through, SAI said it would look at proposals from a number of interested parties to acquire one or more of its underlying businesses.

It did not name those parties or the businesses.

SAI shares slid 8 percent to trade at A$4.08 in mid-session, a 22 percent discount to PEP’s initial indicative offer of up to A$5.25 per share. The

stock was headed for its lowest close since March 3.

Talks with PEP/KKR broke down over the valuation of its industry standards publishing business, SAI said in a statement. The division currently has the rights to publish and distribute guidelines for a wide range of business sectors issued by Standards Australia, but that contract is due for renewal in 2018.

Australian media have reported that Carlyle Group participated in the bidding. Carlyle has declined to comment on the reports.

In addition to its contract with Standards Australia, SAI sells compliance advice to some two dozen business sectors globally ranging from aerospace to medical equipment.

In the past financial year, it returned to a net profit. Excluding one-off costs, annual net income rose 6.3 percent to A$45 million and SAI expects to improve its performance this financial year as new management pushes ahead with restructuring.

Reuters

Thailand rice scheme loses US$9.9 bln The government has offered indirect intervention to support farmers, including cheap fertiliser and soft loans to cut production costs Apornrath Phoonphongphiphat

T

hailand has so far lost 320 billion baht (US$9.9 billion) from a 16-month rice support scheme and the final cost will rise substantially, the state bank that helped manage the scheme said yesterday, citing Finance Ministry estimates.

The estimated loss was as at end-May, Bank of Agriculture and Agricultural Cooperatives (BAAC) President Luck Wajananawat told Reuters. The figure would rise as the rice had been bought by the former government at well above market prices, but was now being sold for much less as it was deteriorating in quality, he said.

“The total losses will be estimated later since we need to compare the price the government paid when it bought rice from farmers and the prices the government sells the rice at,” he said.

Luck estimated the government still owed BAAC about 750 billion baht in debt related to the scheme.

“The government plans to set aside money from the central budget and the money it gets from selling rice stocks to repay the bank, but it could take around seven years for

KEY POINTS Govt may take 7 years to clear up debt state bank Losses at estimated at 320 bln baht at end-May, set to rise PM rules out similar scheme, prices set to fall

the government to pay it all back,” he said.

The 750 billion baht was the money the government had borrowed from the bank to buy rice from farmers at 15,000 baht per tonne, about 60 percent above market rates, from October 2011 to February 2014.

The rice support scheme helped bring former prime minister Yingluck Shinawatra to power in a landslide election in 2011 due to support from farmers mostly in the remote areas of the country’s northeast.

However, the scheme backfired when the government failed to sell rice to pay arrears to angry farmers, leading to months of protests that ended in a military coup in May. The government has given no official estimate of losses from the scheme, but critics have put the figure at between 300 billion and 500 billion baht.

General Prayuth Chanocha, the coup leader and current Prime Minister has ruled out any similar schemes to assist farmers due to the

burden on the country’s finances.

However, rice prices are still falling due to weak demand and rising supply, with major rice producing countries preparing to harvest bumper crops.

The Thai government was estimated to have built up as much as 18 million tonnes in rice stocks through the support scheme, about double annual production, although some of the rice has since been sold and some has spoiled.

Reuters

14

September 18, 2014

International Eurozone inflation revised to 0.4% Inflation stood at 0.4 percent in August, official data showed on yesterday, slightly higher than an original estimate which had pushed the European Central Bank to open up the cash floodgates. With the adjustment from 0.3 percent, inflation in August remained unchanged from the July level, but still much lower than 1.3 percent a year ago and way off the ECB’s target of just under 2.0 percent. The latest twist downwards, against a background of worryingly sluggish eurozone growth, was driven by falls in the prices of food and energy, the European Union’s statistical arm Eurostat said.

OECD unveils proposals to curb corporate tax avoidance The proposals would make amendments to its model treaty so that cross-border transactions would not benefit from the reliefs in tax treaties, if a principal reason for engaging in the transactions was to avoid tax

KEY POINTS

USDA urges Buffett to ready BNSF

New OECD measures part of wider overhaul of tax rules Draft proposals agreed by all G20, OECD members

U.S. Agriculture Secretary Thomas Vilsack met with Warren Buffett last week to urge the billionaire investor to make sure his BNSF railroad is ready for an expected record corn and soy harvest this year.

Vilsack said yesterday that Buffett, who heads the sprawling conglomerate Berkshire Hathaway, recognized the challenge and indicated his company was taking steps.

“I said, ‘Warren, you’ve got to make sure that your railroad understands what’s going on here,’” Vilsack said he told Buffett during a 45-minute conversation.

“There is pressure now, but as soon as this crop is harvested, there will be more pressure.”

Rules aim to end “double non-taxation”

Credit Suisse loans under U.S. Fed scrutiny The U.S. Federal Reserve has asked Credit Suisse to address problems relating to the bank’s underwriting and sale of leveraged loans, the Wall Street Journal reported, citing a source familiar with the matter. The use of these high-interest loans by private equity firms to finance deals has attracted the scrutiny of the Federal Reserve and the Office of the Comptroller of the Currency, with officials planning to take action firm by firm if banks do not rein in relaxed underwriting and debt-laden deals, the WSJ reported.

Rosneft calls Khodorkovsky comments “absurd” Russia’s top oil producer Rosneft said comments by ex-Yukos chief Mikhail Khodorkovsky linking the house arrest of a the owner of Sistema to Rosneft’s interests in the conglomerate’s oil assets as “absurd”, RIA news agency reported. “I don’t understand why Rosneft has something to do with that? This is absurd,” the news agency quoted a Rosneft spokesman as saying yesterday. Khodorkovsky, in an interview with Vedomosti business daily, alleged that Rosneft’s head, Igor Sechin, was behind the house arrest of Sistema’s owner Vladimir Yevtushenkov.

Ukraine cb sees economy growing 1% Ukraine’s economy should pick up next year and grow 1.0 percent, the central bank said yesterday, after a sharp contraction this year due mainly to the impact of the crisis in eastern Ukraine. The bank did not say what would drive growth but the government has said the economy will expand next year if a package of tax laws, including changes to income and corporate taxes, is adopted, making the country more attractive to investors.

Parliament is expected to discuss the package soon, possibly next week.

Secretary-General of the Organization for Economic Co-operation and Development (OECD) Angel Gurria

N

ew international tax rules proposed could eliminate structures that have allowed companies such as Google Inc. and Amazon.com Inc. to shave billions of dollars off their tax bills.

The Organisation for Economic Cooperation and Development (OECD) announced a series of measures that, if implemented by members, could stop companies from employing many commonlyused practices to shift profits into tax havens.

Corporate tax avoidance has become a hot political topic following media coverage and parliamentary investigations into the arrangements many big companies use to cut tax bills.

Amazon and Google say they pay all the taxes they should. Analysts say competitive pressures force companies to seek to minimise all costs, including tax.

Last year, the Group of 20 leading economies asked the OECD to develop an action plan to tackle the problem.

Big U.S. technology companies could be those most affected by the OECD’s plans but others could also be hit, including pharmaceuticals and branded consumer goods firms, as well as many European companies.

Chris Morgan, Head of Tax Policy at accountants KPMG in London, said the proposals were “balanced” and while some firms would pay more tax, big business accepted the need for change.

Anti-poverty charity ActionAid criticised the plans saying some of the measures envisaged would be too expensive for developing countries to implement.

The draft proposals announced have been agreed by all G20 members and OECD members, which include

most major industrialised countries, the OECD said in a statement.

But the measures form part of a larger “(tax) base erosion and profit shifting” programme that will conclude next year. Only then will countries look at enshrining the results of the programme in law.

Treaty misuse For more than 50 years, the OECD’s work on international taxation has been focused on ensuring companies are not taxed twice on the same profits. The fear was that this would hamper trade and limit global growth.

Over the years, the OECD has formulated a standardised model tax treaty that allows countries to split taxation rights and avoid double taxation, partly by providing reliefs from measures intended to stop tax avoidance, such as withholding taxes.

But companies have been using such treaties to ensure profits are not taxed anywhere.

For example, search giant Google takes advantage of tax treaties to channel more than US$8 billion in untaxed profits out of Europe and Asia each year and into a subsidiary that is tax resident in Bermuda, which has no income tax.

Google Executive Chairman Eric Schmidt has said changes to rules that increase its tax bill would hit innovation.

The think tank, which also advises members on economic policy, also wants curbs on how much profit companies can report in centralised intra-company lending and purchasing arms, which are often based in tax havens.

Where such subsidiaries generate large profits on the back of intra-

company trade, the OECD said the profits should be shared across the group.

This could hit UK telecoms provider Vodafone Group Plc., which has a Luxembourg subsidiary that buys telephone equipment for the group.

Vodafone Procurement Company’s 200 staff generated profits of more than 400 million euros (US$518.5 million) last year, making it one of the group’s smallest but most profitable divisions. An unusual Luxembourg tax rule allowed the subsidiary to pay no tax on that profit.

Vodafone said businesses across Europe already benefited from savings achieved by the Luxembourg operation and that it did not expect a significant impact on its business from the OECD measures.

Tax residence The OECD has also proposed changes in the rules on tax residence that allow U.S. tech giants to generate billions of dollars in sales in many countries but not have those revenues assessed for tax by those countries’ tax authorities.

A long-standing rule that allows a company to operate a warehouse in a country without creating a tax residence there should be reconsidered, the OECD said.

This would potentially hit Internet retailer Amazon as the warehouse exclusion allowed Amazon to channel 15 billion euros last year in European sales to a subsidiary in Luxembourg, where it can build up profits tax free.

A raft of companies which sell online including Apple Inc’s iTunes service, software provider Adobe Systems Inc. and e-commerce group eBay Inc. could also be forced to report revenues in the countries where they are generated, if the OECD’s proposal that having a “significant digital presence” in a country would also create a tax residence.

A Reuters investigation last year found that three quarters of the 50 biggest U.S. technology companies channelled revenues from European sales into low tax jurisdictions such as Ireland and Switzerland, rather than reporting them nationally.

The companies all say they comply with tax rules in all the countries where they operate.

Reuters

15

September 18, 2014

Opinion Business

wires

The G-20 to the rescue?

Leading reports from Asia’s best business newspapers Wayne Swan

Former deputy prime minister and treasurer of Australia, is a regular participant in the G-20 Finance Ministers Meeting

THE NEW ZEALAND HERALD More New Zealanders are set to head to the United States with 56,000 more airline seats next year and predictions fares will fall on increasingly competitive routes across the Pacific. Air New Zealand is putting on extra services from Auckland to Los Angeles and to Vancouver next northern summer to meet growing demand and provide better connectivity from Australia and to other parts of the US. The airline’s general manager of networks, Richard Thomson, said fares would “inevitably” fall as a result of the extra flights.

THE JAPAN NEWS The percentage of women at ages associated with child-rearing who are actively participating in the workforce has been increasing and recently hit a record high, according to a monthly survey by the Internal Affairs and Communications Ministry. Among women in the child-rearing age group aged 25 to 44, the rate of labour force participation comprising those working or seeking jobs stood at 74.2 percent at the end of July — a record high on a single-month basis. Meanwhile, the employment rate stood at 71 percent for women in the same age bracket, up 0.2 percentage points from a year earlier.

THE MYANMAR TIMES Prominent businessperson U Serge Pun said Myanmar has given a mixed scorecard on job creation, and is not seeing the employment growth it could achieve.

While the government has clearly place employment on the agenda, the amount of jobs being added over the last two years had fallen short of the desired results, he said at Euromoney’s Myanmar Global Investment Forum in Nay Pyi Taw on September 16. A focused effort to bring in manufacturers who employ large numbers of people differs from attracting other types of FDI, he said.

THE PHNOM PENH POST Continued instability in the garment sector has led the Garment Manufacturers Association in Cambodia (GMAC) to forecast a bleak outlook for the rest of 2014. According to a sample of survey results supplied to the Post, 50 per cent of GMAC’s 247 members said they did not have enough orders to fill production for the remainder of the year.

About 160 factories said orders had been reduced on average by 40 per cent, and 26 per cent said they had been forced to close lines or partially suspend operations due to a lack of orders.

T

he G-20’s upcoming meeting in Brisbane, Australia, comes at a time when a precarious global economy requires big decisions to be made. But it is far from clear who will provide the decisive voice needed to set a bold agenda – and then shepherd its implementation.

Economic data reveal that the global economy is shakier than at any time in the past two years. Capitalism is struggling to generate adequate demand.

Wealth and income have become increasingly concentrated, while middle-class incomes in the developed world have stagnated. Tax avoidance by multinational companies is draining developing-country incomes, limiting their ability to invest in education and infrastructure. And much more action is needed to address the largest and most urgent structural weakness of all – climate change.

Many leading economists and policymakers are forecasting continued economic gloom.

Stephen Roach has suggested that in the post-crisis global economy “relapse is the rule”; economist Brad DeLong, speaking of the “consequences of our lesser depression,” argues that the pretence of a eurozone recovery has collapsed; and European Central Bank President Mario Draghi has acknowledged the need not only for structural reform, but also fiscal expansion to boost aggregate demand.

At the heart of their concerns is the lack of sustained demand needed to drive growth. While structural reforms – particularly on the supply side – are required in developed and developing countries, they are not sufficient to

The G-20’s central task … must be to establish a framework for strong and sustainable growth

address what former US Treasury Secretary Larry Summers has called “secular stagnation” – that is, the difficulty of sustaining sufficient demand to permit normal levels of output.

The G-20’s central task, therefore, must be to establish a framework for strong and sustainable growth. Member states need to introduce reforms aimed at achieving a 2% annual growth target, as agreed earlier this year by finance ministers.

One structural reform that could drive global growth is substantial infrastructure investment in developing and developed countries alike.

Unfortunately, no G-20 leader has seriously articulated this need, let alone lobbied for a solution. Apart from a World Bank presentation for a possible pilot infrastructure program, there is little to suggest how the 2% target could be met over the medium term.

G-20 governments, especially those with strong balance sheets, should be calling for large-scale public and private infrastructure investment to expand the productive capacity of member economies. In the area of tax avoidance, discussion needs to broaden beyond developed economies; as the International Monetary Fund recently pointed out, developing economies’ budgets are disproportionately affected by multinational companies’ savvy accounting strategies.

Unfortunately, judging by the initiatives already on the Brisbane agenda, the summit looks set to take a businessas-usual approach. If the G-20 fails to put policy meat on its rhetorical bones, it will risk looking weak and irrelevant. Its very credibility is on the line.

Indeed, some in the developed world would prefer a smaller, more exclusive body – a G-14 or even a new G-7. Such a move would hurt the developing world, especially the Asia-Pacific region, including Australia.

One reason why some want a tighter group is that the G-20 struggles to achieve consensus.

But this misses the point: It is harder to reach agreement precisely because all of the key leaders (representing around two-thirds of the world’s population and 80% of global GDP), whose support is needed for any truly global decision, are in the room.

The Brisbane Summit therefore needs to rediscover the activism that it displayed in 2008 and 2009, during the height of the financial crisis. It must be led by the United States and other advanced economies, and backed up by major emerging economies.

Australia, as host, also has a role to play. The country is respected by developed and developing countries alike, often bridging the interests of both, and is widely viewed as an honest broker.

Unfortunately, the current government has had little to say about the big structural problems that underlie the world’s economic malaise. The modest initiatives on the table reflect the government’s antipublic-sector rhetoric. Worse, as developed and developing countries are starting to take climate change seriously, Australia is moving in the opposite direction.

The Brisbane summit will be a crucial test for Australia, the G-20, and the possibility of truly global policy coordination.

Project Syndicate 2014

16

September 18, 2014

Closing Xi starts India visit in Modi’s home state

Malaysia’s annual inflation above forecast

Chinese President Xi Jinping arrived in the western Indian city of Ahmedabad in Prime Minister Narendra Modi’s home state of Gujarat yesterday, starting his three-day visit to the South Asian neighbour. It is Xi’s first trip to India since he took office in March 2013, and also the first state visit in eight years by a Chinese president to the country.

Xi is scheduled to attend a few joint events with Modi in Ahmedabad yesterday afternoon before flying to the capital New Delhi in the evening.

Malaysia’s consumer price index in August rose 3.3 percent from a year earlier, marginally above market expectations, data from the Statistics Department showed on yesterday. The index rose 3.2 percent in July. A Reuters poll of 14 economists had forecast the annual inflation rate in August would hold steady at 3.2 percent. Inflation is gradually moderating after picking up sharply in the fourth quarter of last year through early 2014.

However, economists expect temporary spikes in inflation if the government withdraws more fuel subsidies later this year.

Asia’s billionaires see fastest wealth growth Relative to population, Hong Kong topped the list in Asia with 11.2 billionaires per one million people

A

sia’s billionaires led

by Chinese tycoons enjoyed the fastest increase in their wealth this year compared to their peers

in the rest of the world, a report said yesterday.

The combined wealth of Asia’s billionaires grew 18.7 percent from last year

to US$1.41 trillion, said the report by Wealth-X, a research firm specialising in ultra-high net worth individuals, and Swiss bank UBS. Li Ka-shing, the richest man in Asia

The rise of Asia as a global economic powerhouse has already started, and the performance of the region’s billionaires illustrates just how strong the region is and how many opportunities for wealth accumulation it offers Wealth-X report

Vietnam’s trade confidence index rises

Asia added 52 new USdollar billionaires so far this year, bringing the region’s total to 560, with China accounting for 33, or 63.5 percent, of the new entrants to the exclusive club.

Although Asia was in third place behind Europe and North America in terms of the total number of billionaires, those from Asia recorded the fastest growth in wealth of any region in the world.

Asia accounted for 30 percent of the net increase in global billionaire wealth in 2014, the report said.

It said the number of billionaires worldwide rose 7.0 percent from the previous year to a record 2,325 - an increase of 155.

Their combined wealth reached US$7.3 trillion, up 12 percent.

Europe topped the rankings with 775 billionaires, followed by North America with 609, while the Middle East with 154 billionaires came in fourth place behind Asia.

“The rise of Asia as a global economic powerhouse has already started, and the performance of the region’s billionaires illustrates just how strong the region is and how many opportunities for wealth accumulation it offers,” the report said.

India’s state fund urges to buy stocks

V

ietnam’s trade confidence rose sharply, by 13 points in six months, according to the Hong Kong and Shanghai Banking Corporation (HSBC).

In its “Trade Confidence Index” the bank showed that Vietnam’s score increased to 120 points in the first half of 2014, a three-and-a-half-year high rise, yet it was still lower than the record of 132 points set in the second half of 2010.

With this positive rise, Vietnam’s economy is believed to make strong growth in a couple of years, said the report.

The report revealed that Vietnam’s garment and textile exports have set a firm position in the world market due to their low labour cost added to advantage of the country’s favourable geographic position in Asia.

Exports of telecoms and IT ranked second among the country’s top export groups.

The export values of these two groups would help Vietnam’s export value to rise by more than 11 percent annually during the 2014-2020 period, according to the report.

Xinhua

T

he head of India’s state social security fund says it has “no option” but to change its rules and put money into riskier investments by buying stocks for the first time to seek higher returns.

K.K. Jalan, chief of the Employees’ Provident Fund Organisation (EPFO), said that to get better returns, the fund with about US$125 billion in assets needs to diversify investments, the bulk of which are in government debt.

Prime Minister Narendra Modi’s government also wants the 80 million-member EPFO, the world’s ninth largest by assets in 2012, to invest in stocks, which could support buoyant Indian markets.

India’s broad NSE index has been a star performer so far in 2014, rising more than 26 percent.

But EPFO’s 43-member investment committee has blocked share-purchases. Jalan did not say how he planned to overcome the opposition, but said change was inevitable at a time of bond yields are down due to lower inflation.

Reuters

Most of Asia’s billionaires made their fortune from within the region mainly from real estate and industrial conglomerates.

Only 11 percent of them have amassed their wealth through finance, banking and investment, a percentage “much lower than in other regions,” the report added.

Asian billionaires are also the youngest worldwide, with the average age at 61, with only 13 percent having fully inherited their wealth.

Within Asia, China has the most number of billionaires at 190, followed by India (100), Hong Kong (82), Japan (33) and Singapore (32).

Taiwan was in sixth place with 29, followed by South Korea (21), Indonesia (19) and Thailand (17).

The Philippines rounded up Asia’s top 10 with 13 billionaires.

Relative to population, Hong Kong topped the list in Asia with 11.2 billionaires per one million people, followed

by Singapore with 5.8 billionaires per one million people, the report said.

Hong Kong and Singapore were ranked fourth and sixth, respectively, worldwide in terms of the number of billionaires relative to population.

AFP

Jack Ma denies emigration ahead

J

ack Ma, expected to become China’s richest man this weekend after Alibaba’s initial public offering (IPO) in New York, said on yesterday he will not emigrate.

The Alibaba founder said on the company’s official microblog that he has no plans to emigrate, despite rumours spreading online that he intends to move to Hong Kong.

“I never thought I would emigrate anywhere,” said Ma. “I was born in Hangzhou, studied in Hangzhou and started my business in Hangzhou.”

Ma said he has always been a Hangzhou resident and he has not planned to change his status in the past, at present or in the future.

Ma started Alibaba in 1999 in Hangzhou, capital of east China’s Zhejiang Province.

Alibaba is set to raise more than US$20 billion through its IPO, the largest ever in U.S. history.

Alibaba began its road show last week and kicked off its Asian road shows in Hong Kong on Monday.

Xinhua