Macau Business Daily, Oct 28, 2014

MOP 6.00 Closing editor: Luís Gonçalves Year III

Number 654 Tuesday October 28, 2014

Publisher: Paulo A. Azevedo

Sky-high minimum bets under scrutiny

W

e read it a lot. Macau revenues are seven times bigger than Las Vegas. But where do we stand in terms of minimum bet? Industry-watcher CLSA says Macau’s entry fee is ‘astronomical’.

According to their report, the minimum bet here is HK$2,100 or US$270. That’s ten times more than Las Vegas or Australia. Gambler satisfaction is at risk. ‘Trees do not grow to the sky and going forward it should be very difficult to increase minimum bet further,’ says the report Page

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Global Tourism Forum kicks off

Three-quarters of Macau population employed

GTEF kicked off here today. The first Asia Tourism Trends report will be one of the highlights of this year’s Global Tourism Economy Forum. The trend report was conducted by the United Nations World Tourism Organization (UNWTO) and the Global Tourism Economy Research Centre (GTERC). The theme of this year’s edition is ‘Maritime Silk Road - From Macau We Begin’. Local and international heavyhitters are in attendance

Macau-Phnom Penh flights start

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50 interlopers caught on UM Hengqin campus PAGE 2

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Junk SMS blitz under fire

HSI - Movers October 27

Name

Junk messages. The bane of modern life. The Office for Personal Data is now investigating. Tourists and local residents are complaining about being bombarded as they arrive at the Macau border. Illegal gambling ads head the list

www.macaubusinessdaily.com

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Power Assets Holding

0.96

China Unicom Hong Ko

0.90

China Resources Powe

0.72

Cathay Pacific Airwa

0.57

HSBC Holdings PLC

0.45

Tingyi Cayman Island

-2.43

Sands China Ltd

-2.44

Galaxy Entertainment

-3.09

Sino Land Co Ltd

-4.17

Hong Kong Exchanges

-4.70

Source: Bloomberg

HK-Shanghai sidelined We live in unsettled times. The stalled link-up between the Hong Kong and Shanghai bourses hit financial stocks on both exchanges yesterday.

Investors remain in the dark about the scheme’s future.

With more questions raised than answered

%Day

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Construction boom

Brought to you by

Inflation isn’t just for consumers. The cost of construction projects in Macau has doubled in one year, official statistics reveal. Overall, the cost of private construction projects increased 101.6 percent. To MOP37.9 billion in 2013 compared to the previous year. Hotels and gaming facilities totalled MOP24 billion, jumping more than half

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October 28, 2014

Macau

GTEF releases first Asia Tourism Trends Report The 2014 Global Tourism Economy Forum is being held in Macau.

The theme of this year’s edition is ‘Maritime Silk Road - From Macau We Begin’.

Joanne Kuai

joannekuai@macaubusinessdaily.com

O

ne of the highlights of this year’s Global Tourism Economy Forum (GTEF) was the release of the Joint Annual report on Asia Tourism Trend, conducted by the United Nations World Tourism Organization (UNWTO) and the Global Tourism Economy Research Centre (GTERC).

According to the report, Asia and the Pacific has seen strong growth in inbound tourism across the region, receiving some 248 million international tourist arrivals in 2013, about 23% of the world’s total. According to UNWTO’s long-term forecasts, this share is expected to reach 30% by 2030, a percentage equivalent to 535 million international tourists.

The two entities leading the research also hope to promote tourism as an economic driver, promoting discussions and debates, and effectuate reform in policies and practices.

In his address at the opening ceremony of GTEF yesterday, the Chairman of the Forum, also the Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference, Edumud Ho Hau Wah, said “Tourism is defined as the fifth strategic pillar industry of the Country’s Twelfth Five-Year Plan and an indispensable element for building the new MSR Economic Belt. Global elites in tourism and related industries will leverage on the Forum as a platform for collective discussions and highlevel dialogue, discussing tourism as a driving force for building the new Maritime Silk Road and exploring new directions for the new growth momentum of the global economy.

This can extend the influence of the tourism economy to various regions and aspects for achieving reciprocal benefits.”

Chief Executive Chui Sai On said in his speech that the theme of this year’s edition of GTEF is meaningful and contemporary.

“Looking back into our history, Macao was one of the major coastal

ports along the Maritime Silk Road; it also functioned as an exchange channel for different civilizations in the past,” he said. ”This latest edition of the Forum will unfold a series of profound discussions on the Maritime Silk Road in response to the demand for a greater realm for international trade and commerce.

It also meets the trend of the times in fostering cooperation across Asia and promoting global peace and development.”

A series of topical panels will begin today, including the ‘Face to Face, Ministers and Private Sector CEOs’ session and the ‘Dialogue with Travel & Tourism Leaders by China Daily’ session. A Tourism Presentation and Scenery Pictures Exhibition by Jiangxi and Shandong are also on display at The Venetian Macao.

A presentation by Kazakhstan, Fujian Province Dance Drama – ‘Dreams Seeking the Silk Sea Route’, GTE-Forum 2015 Partner Country Presentation and the Networking Reception organised by Macao Trade and Investment Promotion Institute (IPIM) comprise some of the other programmes.

The event is hosted by the Secretariat for Social Affairs and Culture of the Macao SAR Government with support from

the Liaison Office of the Central People’s Government in the Macao SAR, Office of the Commissioner of the Ministry of Foreign Affairs of the People’s Republic of China in the Macao SAR, China National

Tourism Administration (CNTA), World Travel and Tourism Council (WTTC), Pacific Asia Travel Association (PATA) and Macau Government Tourist Office (MGTO).

49 interlopers caught on UM Hengqin campus

T

he Hengqin campus of the University of Macau (UM) has recorded a total of 24 cases of illegal immigration and repatriated 49 persons to the Mainland as at September, the Security Office claimed in response to an interpellation by legislator Si Ka Lon. Macau assumed control of the operation in July.

Mr. Si queried if the Hengqin campus of UM had become an “open door which is convenient for illegal workers, as well as for those [wishing] to gamble illegally and sell drugs”.

He questioned what measures the government will take to prevent illegal immigrants.

The Office responded that the university has improved its enclosing walls following meetings with the mainland authorities. In addition, it had installed closed-circuit televisions and infrared security systems on the walls to enhance supervision.

Meanwhile, mainland authorities had also improved and consolidated the fencing on the mainland part.

The Office also stressed that it had been cooperating with mainland authorities and that the two parties had established a cooperation scheme to maintain the security of the borders.

The legislator also raised the issue that some Macau residents had been street racing on the campus at night, causing safety problem and noise pollution.

The Security Office replied that the police have assigned policemen to patrol the campus around the clock and would prosecute car drivers breaking the law. The Office also claimed that the police have been exchanging information with campus security guards.

In addition, it will adjust the deployment of police as well as take more flexible measures based on the situation, such as increasing stop actions by the police in order to combat the situation of street racing and ensure the safety of the campus.

K.L.

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October 28, 2014

Macau Macau’s minimum bet tenfold Vegas or Australia As casinos focus on increasing profits, the minimum bet value in Macau has reached an astronomical HK$2,100 (US$270). Bet tables accepting HK$500 are a fading memory João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he amount of Macau’s minimum bets has reached a value that is 10 times greater than in Las Vegas or Australia, according to a report by CLSA. However, the good news for players is that the value is likely to remain stable for the foreseeable future.

‘Minimum bets have now reached an astronomical level (US$270), more than 10 times higher than those in Las Vegas and Australia’, the report says.

‘Trees do not grow to the sky and going forward it should be very difficult to increase minimum bet further’.

According to the CLSA document, while the minimum bet in Las Vegas and Australia is as much as US$20 (HK$155) in Macau it is US$270 (HK$2,094) which accounts for a difference of close to HK$2,000.

From the different markets studied by the Hong Kong-based brokerage, Singapore is the place where minimal bets are closer to Macau. However, the gap still accounts for US$220 (HK$1707) as the minimum bet value in the sovereign city state is US$50 (HK$388).

The increase in the minimum bet value has led to the exclusion in Macau of tables with a minimum

of less than HK$500. According to the CLSA report, in May 2013, 10 percent of tables were permitting players to bet HK$500. But since April 2014 there are practically no tables permitting less than this figure.

Another major change has been the reduction in the number of tables accepting less than HK$1,000 at a very fast pace. In May 2013, some10 percent of tables accepted a minimum of less than HK$500 and around 57% a minimum of over HK$1,000. However, as at August this year only 13 percent of tables accepted a minimum bet of less than HK$1000. By contrast, some 85 percent of the tables in Macau casinos have a minimum bet value of more than HK$1,000.

Risking gamblers satisfaction While this change can boost casinos revenues, the effects on the satisfaction of gamblers is negative. To increase the speed of gaming by raising the minimum bet means that customers are receiving less value for money.

‘Increase in win rate improves the efficiency of the gaming table but it affects the entertainment experience

Mass gaming minimum bet Philippines

US$10

Las Vegas

US$20

Australia

US$20

South Korea

US$20

Singapore

US$50

Macau

US$270

of the player, as it might be fun to lose US$1,000 in two to three hours, but it is definitely not enjoyable to lose your entire gaming budget in one hand of baccarat’, it wrote. In other words, customers are ‘not getting the same value for money they received in the past’, it is added.

CLSA also says that the recent trend in increasing the minimum bet value is part of the strategy of casinos to increase revenues. As the operators cannot increase the volume of players, given that the hotel occupancies are running very close to 100 percent, they have to focus on larger table yields.

‘Hence, most operators are focused on increasing the speed of play. The launch of new products like noncommission bacarat, fast-action baccarat or electronic table games are ways to improve the speed of game, which in turn increases the number of games that can be played in a fixed timeframe and subsequently the gaming revenue’, it said.

In fact, the brokerage says that some operators are going even further and adopting what seem to be counterproductive actions like reducing the number of positions per table to increase speed of play.

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October 28, 2014

Macau Brands

Trends

Fendi in Fur Raquel Dias newsdesk@macaubusinessdaily.com

R

emember the old ‘fur is not fashionable, it’s controversial’?

Well, probably not; and with good reason. Despite the growing concern and awareness of animal rights, fur is coming back. It started two years ago, slowly making its appearance on runways, and now it seems to be official: it’s O.K. to wear it again. In celebration of the reopening of the Landmark boutique in Hong Kong, Fendi is launching an exclusive collection in limited quantities, including the iconic Peekaboo bags, women’s fur creations, men’s leather jackets, Crazy Carats limited edition fur watches and a special edition Bag Bug fur charm.

The collection includes impressive pieces like the lynx fur jacket, with extraordinarily soft hand and vibrant colour, worn with croc belt to further flatter the feminine figure. The silhouette is highly calibrated to mimic a shawl at the back, which can be turned up to form a stylish hooded jacket.

Priced at HK$2,414, it is a happening all of its own.

Should you prefer something simpler, don’t worry. The limited edition Crazy Carats watch is a statement piece whose croc leather strap is adorned with colour blocking mink. The watch features a creamy or black dial against which gemstone indices are set.

Construction projects double in value in 2013 Sara Farr

sarafarr@macaubusinessdaily.com

T

he value of overall private construction projects increased by 101.6 percent to MOP37.9 billion over that of the previous year.

Of these, the value of construction of hotels and gaming facilities totalled MOP24 billion, up 105.5 percent.

The value of construction of private residential buildings posted a notable 135.1 percent increase to MOP11.8 billion in 2013. These figures were released by the Statistics and Census Service (DSEC) yesterday.

While the value of private construction work increased two-fold, that of public construction decreased by 37.8 percent to MOP7.3 billion.

This, according to the survey, is primarily due to a ‘notable decline of 71.4 percent in public housing (MOP2.17 billion) as the construction of major public housing complexes neared completion.’ The value of construction of public infrastructure has increased year-on-year by 46.5 percent to MOP3.7 billion. The Light Rapid Transit (LRT) and roads accounted for MOP1.9 billion of the total, up 70.4 percent over that of a year earlier, while that of piers increased by 149.7 percent to MOP1.35 billion.

Official data shows that 2,769 establishments were engaged in the construction sector, employing a total of 34,007 workers. The overall value of construction and other receipts

amounted to MOP48.5 billion at the end of last year. Of these, MOP10.4 billion was gross value added that contributes directly to the economy here.

Some 1,261 construction projects were carried out in 2013, 118 more than the year before, while the value of these increased 48.1 percent to MOP45.2 billion.

The majority of these construction works were carried out in the Peninsula

alone, where the value for construction decreased 12.7 percent year-on-year to MOP5.7 billion. Of the 959 projects built, the Parish of Se accounted for 370 of all construction projects, with its value declining 21.5 percent to MOP2.5 billion. The reason for the decline, according to the survey, was the ‘completion of the expansion project of Centro Hospitalar Conde S. Januario, and a decrease in hotel renovation works.’

MOP50mln boost Mark Brown resigns for Cultural Fund from NagaWorld

T

he government has allocated a second supplementary budget for the Cultural Fund in a total value of MOP50 million for the remainder of the year.

According to a government dispatch signed

by Chief Executive Chui Sai On and published yesterday in Macau’s Official Gazette, the itemised description of where the money will be allocated shows that MOP12 million will be in ‘several constructions,’ while MOP670,000 has been spent on promotion, of which MOP170,000 was in Macau and MOP500,000 in ‘external markets’.

Macau’s cultural fund is for the financial assistance of individuals and private institutions.

The cultural fund totalled MOP53.9 million in 2013.

A MOP1 million subsidy was awarded to the Association of Prosperity Culture and Arts of Macau for the expenses of producing the film ‘I love Macau’, and accounted for the largest portion of the cultural fund in the first quarter of 2014.

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agaWorld Ltd CEO Mark Brown has resigned from his post, the parent company has announced in a filing with the Hong Kong Stock Exchange.

According to the filing, Mr. Brown ‘resigned to pursue other opportunities, having successfully completed the job assignments in accordance with the terms of his employment contract with NagaWorld.’

Lien Trung Phat will take over Mr. Brown’s responsibilities as MD of business development in Macau and China, while Mike Ngai will assume the duties of MD of business development in Southeast Asia.

‘Mr Lien is an acknowledged expert in casino marketing, including VIP gaming promotion, junket relations and player development,’ the filing reads. He has a 25-year long career and has worked in Vietnam, South Korea, the United States, Taiwan, Macau and mainland China. He has worked for hotel brands such as Trump Resorts, Venetian Macao and Resorts World Sentosa.

Mr. Ngai also previously worked with the Venetian and has a ‘diversified professional experience in financial planning and business analysis towards solving marketing initiatives and objectives,’ the filing reads.

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October 28, 2014

Macau

Three-quarters of population employed Macau has a labour force participation rate of 74 percent, while the SAR’s unemployment rate and underemployment rate remain the lowest on record Sara Farr

sarafarr@macaubusinessdaily.com

S

ome 3,400 people entered the job market between July and the end of September, bringing up Macau’s total employment to 392,100.

The latest figures released yesterday by the Statistics and Census Service (DSEC) show that the Special Administrative Region’s labour force participation rate reached 74 percent, while the labour force increased to 398,700.

While the territory’s overall unemployment rate has remained unchanged at 1.7 percent since the first quarter of the year, Macau residents alone account for 2.3 percent of the unemployed.

This figure has also remained stable since the beginning of the year, and is down from 2.5 percent at the end of the fourth quarter last year.

The underemployment rate also remained unchanged

at 0.3 percent in the months between July and the end of September compared to the June-August period.

The Statistics and Census Service surveys the city’s unemployment rate on a monthly basis but group results together in threemonth periods, which are usually the last three months for which there is data available over the three months prior to the latest figures.

According to the data, the number of unemployed decreased by 200 to 6,600, with first-jobseekers accounting for 26.6 percent of the total unemployed, up slightly by 3.5 percentage points.

Trade on demand The sector employing the largest number of workers was gaming at 81,500 and

accounts for 23.5 percent of the total, followed by the construction sector, accounting for 56,000 of the SAR’s labour force, and retail trade at 34,800.

This latter registered the biggest increase of 3.7 percent in the JuneSeptember period over that of the previous one.

LRT: Hong Kong company receives MOP18.9 million

U

RS Hong Kong Limited will be paid MOP18.9 million to drill a tunnel for the first phase of the Light Rail Transit in the C230 sector, that runs along Nam Van e Sai Van lakes, it was announced yesterday in the government’s Official Gazette.

The payment is scheduled in three instalments, to be paid until 2020.

The first instalment, to be paid this year, totals MOP11.3 million. The second, to be paid next year, amounts to MOP5.7 million. Finally, in 2020, the Hong Kong-based company

will receive MOP1.9 million for its services.

The dispatch was signed by the Chief Executive of Macau, Fernando Chui Sai On.

Property management subsidy expands target beneficiary group

T

he revised property management subsidy scheme, to take effect on 27 November, was announced by the Housing Bureau at a press conference yesterday.

The new measure will provide more subsidy and expand the beneficiary group.

The Bureau said that from August 2009 to 15 October 2014, it had approved 167 cases and granted subsidies amounting to around MOP460,000.

The scheme is aimed at encouraging apartment owners to elect their own managing committee and set up a collaborative reserve fund.

The Bureau said that as buildings and facilities age in Macau the SAR Government has revised the subsidy scheme. Restrictions will be loosened and the procedures simplified in order to encourage property owners to organise meetings to fulfil the obligations of property management and maintenance.

The number of workers in the construction sector also increased by 5,100, while that of the hospitality industry (including restaurants) rose by 2,600.

The real estate business accounted for 7.9 percent of the SAR’s total employment, while civil servants made up 6.5 percent and domestic

workers 5.5 percent. At the end of September there were 20,850 domestic workers in Macau, the majority of whom are from the Philippines at 10,093, followed by Vietnam at 7,390. Some 103 domestic workers, or domestic helpers, are from mainland China, according to information released last week by the Human Resources Office.

Monthly salaries remained basically unchanged in the third quarter of the year compared to the previous quarter. The overall median monthly earnings recorded was MOP13,000, while Macau residents pocketed MOP15,600, up MOP600 from the third quarter of the year.

Official figures show that median earnings in the gaming industry had reached MOP17,000, while those of the construction sector were MOP13,000.

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October 28, 2014

Macau

GPDP investigating junk messages promoting gambling The Office claims it is keeping its eye on junk messages promoting gambling and other commercial services. In addition, it denied once more that it had abused its power during the recent referendum Kam Leong

kamleong@macaubusinessdaily.com

T

he Office for Personal Data is investigating complaints by tourists and local residents about junk messages promoting gambling as they arrive at the Macau border, the coordinator of the Office, Chan Hoi Fan, said yesterday on the sidelines of a seminar introducing data security and credit card crime.

Ms. Chan said the numbers of such cases total fewer than 10. The users who receive these junk messages are usually those with Chinese SIM-cards using the global roaming network in Macau. “We did not exclude the possibility that such junk messages are spread by nonlocal companies,” she said.

However, she declined to say if the Office is able to pursue legal actions against such nonlocal companies once finding that such companies had really spread the junk messages, only

saying that the investigation into the issue had not yet finished.

In addition to the junk texts, the coordinator said that the Office had dealt with more than 10 complaints from local users about social application WhatsApp in 2012.

According to Ms. Chan, these users primarily complained that they had received junk promotion messages on the app.

“WhatsApp took some technical measures to track down these users who spread

junk commercial messages to other users and it was also able to block such users who were breaking the terms of using WhatsApp,” Ms. Chan said, claiming the Office had contacted the American company through other members of an international data protection organisation.

Yet, the Office did not punish any local companies on the issue as Ms. Chan claimed it is hard to prove the relationship between these companies and the users that spread the junk messages.

In addition, she indicated that the Office had not received any more complaints since 2013, after the tracking down exercise in 2012.

“What we can do now is to communicate with WhatsApp,” she said, claiming the first consideration of the Office regarding such cases is to protect the personal data of residents and their rights, in order to avoid such cases recurring.

According to data from the Office, it investigated 149 cases regarding personal data in the first nine months of the year, a jump of 33 percent year-onyear, compared to the 112 cases for the same period last year.

Denial of ‘abuse of power’ Regarding the accusation by local pan-democracy

associations that the Office had abused its power during the unofficial referendum on the Chief Executive election in August, Ms. Chan stressed that the decision of the Office – calling the referendum’s purpose of collecting personal data ‘inappropriate’ and violating the data protection law – was made according to the law and the spirit of the Court of Final Appeal.

Claiming she could not offer more comments on the allegation, she introduced reporters to one of the Articles of data protection [prepared by] a working party of the European Union, which claims that data protection authorities ‘have effective powers of intervention, including the ordering of blocking, erasure or destruction of data, or imposing a ban on processing.’

Mainland developer Agile secures loan extension The Guangzhou-based developer has won some respite for its loan repayment schedule for now but will meet challenges in achieving its yearly sales target Stephanie Lai

sw.lai@macaubusinessdaily.com

T

roubled Chinese developer Agile Property Holdings Ltd has announced that it has agreed an extension with three overseas banks on its existing loan repayment, although the company still has to contend with sufficient sales in the coming months to generate cashflow.

Standard Chartered Bank (Hong Kong) Ltd, Hang Seng Bank Ltd and the Hongkong and Shanghai Banking Corporation Ltd (HSBC) have agreed to give Agile Property an extra 12 months to pay back part of a loan facility due in December, the Guangzhou-based company informed the Hong Kong Stock Exchange in a filing on Sunday.

Agile Property borrowed US$475 million (HK$3.68 billion) from the

three banks in April this year. Under the latest agreement with the banks, Agile Property will use the proceeds from a recent rights issue to pay off US$210 million of the loan, while the remaining US$265 million will come due in December next year.

The Chinese developer, popular amongst local and Hong Kong investors for its residential projects on the mainland, has seen its management team embroiled in trouble following the house arrest of company chairman Chen Zhuo Lin since September 30. Days later the company said that it had lost contact with one of its directors, who was responsible for overseeing property projects in Yunnan Province.

In Agile Property’s latest filing, it also notes an amendment made in

another lending facility agreement, which was originally signed between the company and Hang Seng Bank, HSBC, BNP Paribas Hong Kong Branch and China Construction Bank (Asia) Corporation Ltd in June of this year. Pursuant to this agreement, the term loan facility was in the amount of HK$2.67 billion with a greenshoe option of HK$3 billion granted to the company for 36 months.

Madam Luk, the wife of Chen Zhuo Lin, was designated as Agile Property’s acting co-chairperson on October 10, following his house arrest.

As at June 30 this year, Agile Property’s total borrowings amounted to 44.7 billion yuan (US$7.19 billion, or HK$55.8 billion), the company said in its interim report. The developer’s

revenue stood at 17.3 billion yuan for the first half of this year, 13.6 percent higher than a year before; but its profit slipped by 5 percent to 2.45 billion yuan for the period.

Agile Property’s management had noted in a telephone conference with investors earlier this month that the company was targeting to realise monthly property sales of at least 5 billion yuan in the fourth quarter.

But for the first nine months of this year the accumulated pre-sales of Agile Property amounted to just 28.6 billion yuan, less than 60 percent of the company’s annual sales target of 48 billion yuan. Even if the company can meet the fourth quarter sales target of 5 billion yuan per month, it will still be struggling to achieve the annual sales target.

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October 28, 2014

Macau Macau-Phnom Penh flight officially commenced Bassaka Air, a new start-up Cambodian charter airline, officially commenced its flights between Macau and Phnom Penh in Cambodia yesterday afternoon. In the current stage, the airline will provide solely charter flight services, while regular twice weekly flights between the cities are to be launched mid-November. Bassaka Air is the third new carrier launched at Macau International Airport (MIA) this year. The airline is based at Phnom Penh International Airport. The launching ceremony of the new route was held yesterday afternoon at MIA, when the first flight from Phnom Penh by Bassaka Air landed in Macau.

I.T interim profit up 9 percent in Macau Sales at The Venetian have risen. Company to ‘seek more growth opportunities’ here Stephanie Lai

sw.lai@macaubusinessdaily.com

C

lothing retailer I.T Ltd has seen increased retail sales here and an improved profit for the six months ended August 31, while eyeing ‘more growth opportunities’ in the city, the company said in its interim results filed with the Hong Kong Stock Exchange yesterday.

I.T’s retail sales in Macau increased by 5.1 percent yearon-year to HK$95.1 million (US$12.2 million) for the six months ended August 31, with its earnings before interest, taxation, depreciation and amortisation (EBITDA) standing at HK$34.8 million,

the interim report noted.

The operating profit I.T saw in the Macau market in the period amounted to HK$31 million, some 9 percent more than the same period last year.

I.T currently runs a network of 11 stores in the Grand Canal Shoppes at The Venetian Macao, including CHOCOOLATE, Duvetica, French Connection and izzue.

In the filing, the clothing retailer said it would ‘continue to seek growth opportunities’ in Macau.

The Hong Kong and Macau market remains the major contributor to the clothing retailer’s earnings, as the

combined retail sales in Hong Kong and Macau occupy 54 percent of its total sales in the period.

The total turnover generated by the sale of fashion wear and accessories in the period reached HK$3.2 billion, an increase year-on-year of 9.8 percent, I.T announced in the filing.

Although Hong Kong is a major pillar of I.T’s income, the retail sales in the city increased a moderate 3.8 percent to HK$1.63 billion for the six months ended August, while same store sales growth rate was 3.5 percent against the backdrop of weaker spending

THERE ARE THINGS WE DON’T DO BUT WE DO • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design

momentum in the city.

In the filing, the company joins the chorus of worried retailers operating in districts impacted by the political demonstrations of Occupy Central in Hong Kong, saying that it saw ‘weak performance’ in the National Day Golden Week holiday in the first week of October. The company also expressed concern about a possible drag in the recovery of Hong Kong’s consumer retail market should Occupy Central demonstrations persist.

Compared to Hong Kong and Japan, I.T saw the most rapid retail sales growth in mainland China in the period,

surging 20 percent year-onyear to HK$1.12 billion – making it the second major contributor to the company’s earnings.

The company’s net profit in the period increased 30.3 percent to HK$36.6 million when excluding the nonrecurring gain of HK$15.3 million from the repurchase of senior notes in March and June this year plus related tax provision.

I.T declared an interim cash dividend of 1.0 HK cent, representing a total payout of HK$12.3 million. Basic earnings per share increased 73.9 percent to 4.0 HK cents.

There are men and women who give human kind their perseverance, their genius, their generosity and, in some cases, their own life.

Those people and their actions are our inspiration.

•••

info@goldfishmacau.com +853 2833 1258

8

October 28, 2014

Greater China BoC to begin clearing in Australia

Singapore joins yuan’s internatio

The move is expected to help Singapore in its bid to become a renm

Bank of China Ltd’s Sydney branch is set to win regulatory approval to begin clearing trades in Chinese yuan, according to sources with direct knowledge of the issue, paving the way for Australia to become an offshore hub for the Chinese currency. The sources said China’s central bank will award the mandate to Bank of China, the country’s fourth-largest bank by market capitalisation and the world’s biggest player in cross-border yuan transactions. Yuan clearing banks not only make cross-border yuan payments more timely and convenient, but increase the awareness of yuan usage.

Auditing to become essential in policies China will strengthen auditing to ensure public funds are not misused amid major policy shifts, a guideline from the National Audit Office (NAO) released yesterday said. The NAO will strengthen audits of major projects concerning people’s livelihood, such as disaster relief, affordable housing construction, poverty elimination and environmental protection, Sun Baohou, deputy auditor general of the National Audit Office (NAO), said. Auditing work will also be intensified to detect potential problems in sectors such as finance, state assets, energy and resources, the guideline wrote.

Singapore to send biz delegation to Jiangsu Singapore Education Minister Heng Swee Keat and Minister of State for Trade and Industry Teo Ser Luck will lead a 74-member delegation to Changzhou, China’s Jiangsu province to explore cooperation and business opportunities, International Enterprise (IE) Singapore, also the organizer of the visit, said in a press release yesterday. IE said the business delegation comprises 27 companies from the finance, education, logistics, environmental and infrastructure solutions sectors.

Half of the companies are SMEs. The will have a two-day visit from Tuesday to Wednesday.

Singapore’s financial heart

C

hina on Monday announced direct trading between the renminbi and Singapore dollar beginning today, marking another step toward internationalizing the Chinese currency.

The announcement by China Foreign Exchange Trading System

(CFETS) extended the yuan’s list of direct onshore trade to more major currencies, including the U.S. dollar, the euro, British sterling, Japanese yen, Australian dollar, New Zealand dollar, Malaysian ringgit and Russian ruble.

The move aims to boost bilateral

trade and investment, facilitate the use of the two currencies in trade and investment settlement and reduce exchange costs for market players, the CFETS said in a statement on its website.

According to the arrangement, China’s interbank foreign exchange market will

30 robot factories under construction China is now the world’s largest industrial robot market with over 30 robot factories under construction, authorities said. Qu Daokui, deputy director of the State Engineering Research Centre for Robotics said that robotics and the Internet will transform global manufacturing, and China is entering a golden decade for the development of domestically produced robots. Before 2008, there was no robot industry in China, he said. However, with the disappearance of the demographic dividend and a growing labour shortage, the country became the world’s largest industrial robot market in 2013, he said.

Support expanded to sue government China’s top legislature aims to expand the people’s right to sue the government if authorities fail to fulfil contracts signed with citizens over land issues.

The courts will launch administrative proceedings if the government is sued for violating agreements on land and house compensation and commercial operations franchised by the government, according to a draft amendment to the Administrative Procedure Law submitted yesterday to the Standing Committee of the National People’s Congress for a third reading.

Overseas investment schemes set to fres

The yuan pool expanded much more slowly this year than market p Michelle Chen

C

hina is studying pilot schemes that will allow domestic investors to make overseas investments using the Chinese currency, a move that could pump fresh oxygen into the stagnant offshore yuan pool.

“The central bank is designing RQDII (Renminbi Qualified Domestic Institutional Investor) and QDII2 schemes to enable investment in offshore markets,” said Wang Dan, deputy director general in the monetary policy department at the People’s Bank of China.

Yuan deposits in Hong Kong, the biggest offshore yuan hub, stood at 937 billion yuan (US$153 billion) at the end of August, the lowest level since February.

The yuan pool expanded much more slowly this year than market

participants expected, mainly because of new ways for foreign investors to use yuan in China to buy highyielding assets, as well as yuan being cheaper in offshore markets.

As an example of foreign investors’ interest in onshore yuan assets, the 270 billion yuan Renminbi Qualified Foreign Institutional Investor (RQFII) quota granted to Hong Kong was exhausted in less than three years.

The accumulation of yuan deposits outside of China has for years relied heavily on crossborder trade settlement, with some additional flows from Renminbi overseas direct investment (ODI) and Chinese travellers converting currency overseas.

It worked well in the first few years of the offshore yuan market, given the premium the so-called CNH enjoyed

over its onshore CNY counterpart, encouraging companies to bring yuan funds to the former British colony.

However, as the premiums have reversed in the past few months, the measure that allows Chinese investors to use yuan to buy shares and other investment products abroad will no doubt open a crucial new channel for the “redback” to flow into offshore markets.

Offshore yuan reserves will have to reach 11 trillion yuan for the currency to achieve one-third of the US dollar’s international status within 15 years, based on the experience of internationalising the dollar, the Hong Kong Financial Services Development Council said in a report.

It is also expected to help balance international payments for the world’s second-largest economy, which has

9

October 28, 2014

Greater China

onalization process

Vanke’s margins shrink as property slump deepens

minbi offshore centre

kick off direct trading between the yuan and the Singapore dollar via spot, forward and swap contracts.

With direct trading of their currencies, China and Singapore will be less dependent on the U.S. dollar to settle bilateral trade and investment deals.

Previously, the exchange rate between the two currencies was calculated based on the yuan-U.S. dollar central parity rate and the Singapore dollar-U.S. dollar rate.

Now that the two currencies can be directly traded, the yuan-Singapore dollar rate will be set based on the average prices offered by market makers before the opening of the interbank foreign exchange market.

The CFETS will publish its yuan/ Singapore dollar central parity rate at 9:15 a.m. each trading day. The exchange rate on the spot market will be allowed to trade 3 percent higher or lower from parity.

The People’s Bank of China (PBOC), the central bank, authorized and welcomed the CFETS announcement, saying it is an important measure between the Chinese and Singaporean governments to jointly push forward bilateral and economic relations.

“The direct yuan-Singapore dollar trade is good for forming a direct exchange rate between the two currencies and reducing exchange costs,” the PBOC said in a statement on its website.

Vowing to “actively support” yuan-Singapore dollar direct trade, the PBOC said the move will also help boost financial cooperation between the two countries.

To boost the use of the yuan internationally, China has also signed multiple currency swap agreements totalling 2.9 trillion yuan (US$472 billion) with 26 overseas monetary authorities.

The PBOC has also authorized offshore renminbi clearing and settlement arrangements in Singapore, London, Frankfurt, Seoul, Paris and Luxembourg, as well as Taiwan, Hong Kong and Macao.

The Chinese government is gradually relaxing its hold over the yuan and making it a global reserve currency.

China is also under pressure to diversify its foreign exchange reserves, which stood at US$3.89 trillion at the end of June.

Xinhua

shen offshore yuan pool

participants expected

recorded surpluses in its current and capital accounts for years.

The surplus in the two accounts amounted to US$80.5 billion and US$77.8 billion, respectively, for the first half of the year, the State Administration of Foreign Exchange (SAFE) said.

Clare Jim

C

hina’s largest residential property developer, China Vanke Co Ltd, posted a 2.8 percent rise in third-quarter net profit yet margins shrank in a sign of the country’s slowing property sector and economy.

Chinese developers are battling excess supply, tight liquidity and home prices which fell for a fifth straight month in September.

Property accounts for about 15 percent of China’s economy, which grew at its slowest rate since the 2008 global financial crisis in the September quarter. New home prices fell month on month in a record 69 of the 70 major cities.

China Vanke said its gross margin fell 1.1 percentage points to 23.8 percent from a year earlier, squeezed by sliding home prices and expensive land costs.

Net profit for the July-toSeptember quarter was 1.65 billion yuan (US$270 million), compared with 1.60 billion yuan a year earlier, the company said.

For the first three quarters of the year, net profit rose 4.8 percent to 6.46 billion yuan.

Due to higher inventory and intensified market competition in some cities, Vanke delayed preparatory work on some projects and said it expected that the floor area of new starts for the whole year would be less than that designated at the beginning of the year.

On last Tuesday, China Overseas Land & Investment Ltd, the country’s fifth-largest developer, reported its operating profit plummeted nearly 50 percent in the third quarter and warned that future downside risks remained.

Chinese tycoon reveals foray into space

A

“The size of overseas assets that mainland China holds is not only smaller than developed countries and some emerging economies, but these assets are highly concentrated in foreign reserves,” said Nathan Chow, an analyst at DBS in Hong Kong.

Reuters

mysterious Chinese tycoon who plans to dig a US$40 billion canal linking the Caribbean and the Pacific is spreading his reach into space with ambitions for a network of satellites, reports said yesterday.

Wang Jing, who won a 50-year concession to build and operate the canal from Nicaragua last year, announced that one of his companies launched a test orbiter last month.

The move made Xinwei Telecom Enterprise Group first private firm to invest in China’s tightly controlled and mostly military-run space industry, the Beijing News said.

Wang, in his early 40s, ranked 224th on the Forbes’ world’s billionaires list this year with wealth estimated at US$6.1 billion.

He has denied any connections with the Chinese government, but reportedly owns a car with military licence plates, broadcasts army songs twice a day in one of his companies, where the lobby is decorated with pictures of Chinese leaders visiting the firm.

The satellite, jointly developed with the elite Tsinghua University, was expected to provide a cheaper alternative

The results reflect a property slump which has major ramifications for sectors ranging from steel to cement and furniture.

China’s gross domestic product grew by 7.3 percent in the third quarter from a year earlier, official data showed on last Tuesday, its weakest rate since the first quarter of 2009.

With house prices falling and new construction tumbling, the government last month cut mortgage rates for some home buyers for the first time since the global financial crisis, although analysts said it may take some time for these measures to take effect.

Developers are also turning to new marketing techniques to lure buyers without sacrificing margins.

Discounts can still run into the hundreds of thousands of dollars but increasingly property marketing looks to simply to create a buzz around new projects, analysts said.

“Consumers are too used to price cuts and promotions like ‘buy one get one free’, so they want new gimmicks,” real estate consultancy Knight Frank senior director Thomas Lam said.

China Vanke is using social media in a series of quirky campaigns. It plans to offer free accommodation for a year in some of its new apartments, as long as its guests share their experiences on social media.

Mid-sized developer China Merchants Property Development Co has launched a three-month campaign to allow customers who shop with the company’s affiliated credit card to earn discounts of up to 300,000 yuan on property purchases.

Reuters

to foreign satellite communication providers in China’s sea and desert areas, the Beijing News said, citing Tsinghua professor Lu Jianhua.

Wang said Xinwei planned to develop four more satellites with the university and build a telecommunication “constellation” over the next 10 years, the report said.

“The cost of building the satellites with home-grown technology is very low and so we have high expectations on the return on investment in the future,” Wang was quoted as saying.

He did not disclose the value of the company’s investment in the business, but said that “no financial rewards” were expected in the short term, the paper added.

Wang owns more than 30 percent of Beijing-based Xinwei, which was formally controlled by state-owned Datang Telecom Technology & Industry Group, according to the Beijing News.

In December, another company of his -- Beijing Interoceanic Canal Investment Management Co. -- announced that with a Ukrainian partner it would pour a total of US$10 billion into building a port, oil reserves and an economic development zone in Crimea.

The peninsula has since been annexed by Russia, and Wang’s firm said in May that the project had been suspended indefinitely “for reasons publicly known”, according to a report by the China Business News.

AFP

10

October 28, 2014

Greater China

Delay of Shanghai-HK connect scheme casts doubts Pete Sweeney

G

lobal equity index provider MSCI Inc. said it is unlikely to add shares of mainland China listed companies to its emerging markets index if there was a considerable delay in the launch of a pilot scheme linking the Shanghai and Hong Kong stock markets.

“In the end we have a timetable in this process,” MSCI Hong Kong’s Managing Director Chin Ping Chia said in an interview with Reuters on Monday. “If nothing happens by the end of this year, stretching to June of next year, you can expect that we are not going to make any change.”

Chia said the January-toJune date range reflected the need for MSCI to observe the operation of the pilot and for investors to have enough time to get operationally ready for the new environment.

Industry insiders had speculated that the launch of the programme, which would potentially make it much easier for foreign capital to move in and out of mainland stock markets, would mark a key reform that would allow MSCI to include yuan-denominated “A” shares in its index.

However, Hong Kong regulators said on Sunday that the connecting pilot programme would not launch this week as originally

expected as it had not won regulatory approval.

“If the programme is not launched, we are back to square one, looking at QFII and RQFII, and given we are fresh off the consultation I think we pretty much know the view of our investors,” Chia said.

Chia was referring to other qualified institutional investor (QFII) programmes that allow foreign investors to buy shares in mainland Chinese companies through fund management companies which are granted investment quotas.

MSCI said in March that it planned to include China “A” shares in its benchmark emerging markets index as early as next May, a move which would have ploughed billions into Chinese stock markets as investment funds tracking the index adjusted their holdings by buying up “A” shares.

But in June MSCI said it had decided not to do so due to resistance from its client base, who were concerned about the risks presented by liquidity and regulations, in particular a lack of clarity on how profits would be taxed.

China, the world’s largest emerging market, is already the biggest component of the MSCI emerging market index, which is benchmarked by more than US$1.3 trillion global assets under management.

China’s current share of the index, however, is mostly

Industry insiders had speculated that the launch of the programme would mark a key reform that would allow MSCI to include yuan-denominated “A” shares in its index

The bourse ox of the Hong Kong Exchange Square

KEY POINTS Shanghai-HK scheme does not have regulatory approval Concerns include liquidity, tax issues MSCI declined to include “A” shares in June

composed of shares listed overseas or denominated in foreign currency.

Chia said that even if the programme launched within that time frame, MSCI would not automatically include “A” shares, given restrictions in the programme on what shares foreign investors can buy, as well as quota and tax issues.

“It is an interesting programme but it has its limitations, so I don’t want to put too much weight on the launch,” he said.

But Lin Yong, chief executive officer at Haitong International brokerage based in Hong Kong, said

pro-democracy protests in Hong Kong had made it too risky for China to launch the stock connect scheme.

“This kind of environment is not suitable to roll out new policies and (the authorities) can’t take a risk doing so,” he said in a Reuters Summit interview. On Monday through Wednesday, Reuters journalists will interview some of the region’s leading business figures and decision makers on a range of crossborder investment issues, generating exclusive stories available first to Thomson Reuters clients.

Chinese overseas mergers, acquisitions surge In the first three quarters of 2014, the total value of overseas M&A transactions

by Chinese enterprises reached US$40.8 billion

C

hinese enterprises completed a record 176 mergers and acquisitions (M&A) overseas in the first nine months of 2014, up 31 percent year on year, according to a report released by accounting firm PwC yesterday.

Among them, private enterprises completed 120 M&A transactions, more than doubling the number carried out by state-owned enterprises and making them the major force in the M&A market, according to the report.

In the first three quarters of 2014, the total value of overseas M&A transactions by Chinese enterprises reached US$40.8 billion. There were 14 transactions valued at more than US$1 billion each.

The total outbound value of M&A deals by private companies was up more than 120 percent year on year, while the value of transactions by state-owned enterprises dropped for

the first time, with a decline of 37 percent, it said.

“With private firms becoming the major force, it is becoming clear that Chinese enterprises are seeking diversification in outbound M&A,” said Andrew Li, PwC China Advisory Services Leader in Central China.

“Chinese companies, especially private enterprises, are actively seeking quality M&A targets in North America and Europe, aiming to introduce advanced technology, IP and strong brands to China,” he said.

In the meantime, they are transferring manufacturing bases from China to other countries in Asia and developing emerging markets, he said.

Due to the weakness of the global economy and the slowdown in China’s economy, PwC estimates that Chinese enterprises will generally remain active in overseas M&A activities in 2015.

Xinhua

Getting access to news products and technologies that can be imported to China is one of the main reasons for mergers and acquisitions

Reuters

11

October 28, 2014

Asia

Technocrats populate Indonesian economic ministries Widodo names a 34-member cabinet in which 18 are seen as technocrats

I

ndonesia’s new president named professional technocrats to lead the top economic ministries and implement much-needed reforms that address costly fuel subsidies, cooling investment and creaky infrastructure in Southeast Asia’s biggest economy.

President Joko Widodo named a 34-member cabinet in which 18 were seen as technocrats. The rest of the cabinet jobs went to members of the four political parties supporting him, and included the appointment of the daughter of former President Megawati Sukarnoputri to a senior position.

Widodo, who was sworn in last Monday, appointed former stateowned enterprises minister Sofyan Djalil as coordinating minister for economics and vice minister Bambang Brodjonegoro, who was promoted to head the finance ministry. “(Djalil) is an expert of economic strategy and finance and I trust him to be the captain at the helm of economic teams,” Widodo told reporters at a news conference where he announced his cabinet.

E conomis t s we lc ome d th e appointments of the two and markets could find some support when they open Monday.

“They know the problems and have high integrity and track records,” said Destry Damayanti, chief economist at Bank Mandiri . “I expect them to lead structural and fiscal reform in Indonesia

to accelerate economic growth.”

Baradita Katoppo, Indonesian country head of Fitch Ratings, said he had “high hopes” for the two ministers, both of whom served under Widodo’s predecessor, President Susilo Bambang Yudhoyono.

Djalil and Brodjonegoro take the helm at a time when Indonesia faces strong economic headwinds. Gross domestic product grew by 5.1 percent on an annual basis in the second quarter, the slowest pace for five years.

Indonesia’s inadequate roads, ports, electricity and other basic services, along with its corruption and daunting bureaucracy, have begun to disenchant foreign investors, who are essential for the resource-based economy to grow.

At the same time, Indonesia’s commodity-dominated exports have slumped and high interest rates are weighing on domestic consumption and investment.

One of the first decisions facing Widodo and his cabinet is whether to press ahead with politically-sensitive rises in fuel prices, needed to slash costly subsidies.

The president named the chief executive of state-owned defense firm PT Pindad, Sudirman Said, as energy and mineral resources minister, and a former head of auto-assembler PT Astra International Rini Soemarno Soewandi

as state-owned enterprises minister.

Puan Maharani, Megawati’s daughter, was named coordinating minister for human development and culture. Megawati is the head of the Indonesian Democratic Party-Struggle, of which Widodo is a member.

The cabinet will be sworn-in and hold their first meeting on Monday.

Widodo, elected president in July after a stunning rise through the ranks of local government, is popular for his clean image in a country that has consistently scored low marks among investors for widespread corruption. He sought to ensure the credibility of his cabinet by taking

Indonesian President Joko Widodo (C) accompanied by his Vice President Jusuf Kalla (C-R) and some of his new ministers attend a press conference to announce his new cabinet at the State Palace in Jakarta, Indonesia, 26 October 201

the unprecedented step of having the country’s main anti-graft agency vet each candidate.

“The process of defining the ministers were done carefully and cautiously as this is a priority,” Widodo said.

Reuters

STATE-OWNED TRADE MINISTER COORDINATING MINISTER FINANCE MINISTER FOR ECONOMICS Bambang Brodjonegoro ENTERPRISES MINISTER Rahmat Gobel Rini Soemarno Soewandi Sofyan Djalil Gobel, 52, is the son of an IndoneBrodjonegoro, 48, has been a senior ofDjalil, 61, who Widodo called his “captain at the helm” for economics, was stateowned enterprise minister from 2004-2007 and communications minister in 20072009, during President Susilo Bambang Yudhoyono’s first of two terms. He holds a doctoral degree on international financial and capital market law and policy from the Fletcher School of Law and Diplomacy at Tufts University in Boston. He has been on the law faculties at Padjajaran University and University of Indonesia.

FOREIGN MINISTER Retno Marsudi Marsudi, 51, has been Indonesia’s ambassador to the Netherlands since 2012 and is the first woman to become Indonesia’s foreign minister. She is a career diplomat.

sian businessman, Thayeb Gobel, who founded a joint venture in Indonesia with Japan’s Matsushita Electric Industrial co., Ltd, now Panasonic Corporation. Rahmat Gobel is currently the chairman of the venture. He is vice-chairman of the board of advisers at Indonesia’s Chamber of Commerce and Industry.

ficial in the Finance Ministry since 2011, first heading its fiscal policy office and promoted to vice minister in 2013. His late father was energy and education minister in the late 1960s and early 1970s. Brodjonegoro was director-general of the Islamic Development Bank’s research and training institute and is a former dean of the economics faculty at the University of Indonesia. Widodo said Brodjonegoro is an expert in fiscal decentralisation and poverty eradication.

After Widodo was confirmed as winner of the July 9 presidential election, he appointed the former chief of auto assembler PT Astra International Rini Soemarno as the head of his transition team.

The U.S.-educated Soemarno, 56, was industry and trade minister during the administration of Megawati Soekarnoputri, who was president from 2001 to 2004.

ENERGY AND MINERAL RESOURCES MINISTER Sudirman Said

AGRICULTURE MINISTER INDUSTRY MINISTER Amran Sulaiman Saleh Husin

Said, 51, in June was appointed the chief executive officer of state-owned defense firm PT Pindad. Before joining Pindad, he was a vice president director at construction company PT Petrosea.

He has worked with other energy-related companies including PT Pertamina and PT Indika Energy.

Sulaiman, 46, is the current chief executive of Makassar-based company Tiran Group, which has plantation, mining and other businesses. He is also a lecturer on agriculture at Hasanuddin University in Makassar.

Husin, 51, is a senior member of People’s Conscience Party (Hanura), one of the political parties that backed Widodo’s election. He was a former commissioner at drinking water company PT Ades Alfindo Putra Setia and director at several other companies. Husin has been involved in politics since 2001. He was a member of National Mandate Party (PAN) before joining Hanura.

Reuters

12

October 28, 2014

Asia

S.Korea risks economic own goal Third-quarter GDP data on Friday showed that South Korean exports posted their first quarterly fall in a year

S

outh Korean households are piling on debt at the fastest rate in eight years thanks to big-bang stimulus launched by the new finance minister - but as global growth cools the government risks scoring an economic own goal and inflaming deflationary pressures.

That would be particularly ironic as Finance Minister Choi Kyunghwan has repeatedly warned that Asia’s fourth-largest economy is in peril of slipping into Japan-style deflation, which kept growth in the land of the rising sun stagnant for two decades.

Choi, however, wouldn’t have expected the chill that’s enveloped the global economy since he took office in July, analysts say, and immediately set about re-energising the economy with an US$11-billionplus stimulus package.

The impact has been seen in the debt binge by South Korean households, which boosted borrowing from banks by a net 9.32 trillion won (US$8.83 billion) during the August-September period mainly to buy homes, central bank data showed. The debt build-up is the most since the November-December period of 2006.

Home purchases and retail sales have grown sharply since August, with the pickup aided by two interest rate cuts, widely seen to have been made under pressure from the government.

Third-quarter GDP data on Friday showed that South Korean exports posted their first quarterly fall in a year, taking the gloss off a rebound in growth from a weak second quarter.

Some analysts, including ANZ bank and Barclays, continue to count on a steady pick up in consumption over the shorter term.

But the worsening in the global

South Korean President Park Geun-hye (L) meets with visiting US Secretary of Commerce Penny Pritzker

economic outlook and persistent underlying weakness in South Korea’s property market could end up saddling households with heavier debt loads and undermining Choi’s strategy to boost growth, analysts say.

High debt, deflation risks Worse still, it could add to deflation pressures, especially if households start paying back debt rather than spend - the very thing Choi is trying to avoid under his policies dubbed ‘Choinomics’ by markets.

To be sure, deflation is not an imminent risk for South Korea but concerns are growing. This year’s consumer inflation is set to stay below 1.5 percent for a second consecutive year - the first in the country’s modern history and compares with an average of 3.3 percent for the previous five years.

Warning of deflation risks, Choi has eased mortgage borrowing limits and offered some US$40 billion in public spending and financial support that includes the US$11 billion stimulus.

In some urban apartment blocks, flyers from consumer finance firms such as Hyundai Capital Co are informing homeowners that after Choi’s measures they can now borrow tens of millions of won more.

South Koreans already carry debt that is 1.6 times annual disposable income, among the heaviest loads among major economies and even higher than the 1.4 times ratio in the United States in 2007, before the housing bubble burst triggered the global financial crisis.

Reuters

Vietnam to accelerate privatization The state IPOs have been criticized for lacking disclosure

V

ietnam plans to set up a working group to help spur share sales of state enterprises as the government takes steps to bolster a flagging privatization program and drive economic growth.

“It will help state companies sell stakes more successfully,” Dang Quyet Tien, deputy general director of the finance ministry’s corporate finance department, said in an interview on October 24.

Prime Minister Nguyen Tan Dung had outlined a revamp of state enterprises to spur growth in an economy on course to expand below 7 percent for a seventh straight year.

The privatization plan has lagged the government’s target, with only

71 state-owned companies selling shares in the nine months through September, compared to a goal of 200 by year-end.

The working group will comprise members from the finance ministry, the State Securities Commission and the two stock exchanges in Hanoi and Ho Chi Minh City, Tien said in his office in Hanoi. It will be established “in the near future,” he said, without giving a specific time frame.

Vietnam’s economy expanded 5.62 percent in the nine months through September from the same period a year earlier, data showed last month. The government aims to boost full-year growth to 5.8 percent in 2014 and 6.2 percent

next year.

Officials announced a plan in February to sell shares in as many as 432 state enterprises by the end of 2015. Of the 36 companies that have held initial public offerings through September 22, trading is yet to start in any of them. Vietnam has raised 3.14 trillion dong (US$148 million) from these sales, compared to a target of 4.74 trillion dong.

Dung last month issued a regulation compelling state companies to list shares more quickly following their IPOs. It also requested State Capital Investment Corp., a government investment arm, to buy stakes in firms with failed offers.

There are a lot of problems with IPOs for the working group to focus on. I am sceptical.

Perhaps the government needs to hire professional securities firms to take charge of IPOs Michel Tosto Viet Capital Securities head of institutional sales

Bloomberg News

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13

October 28, 2014

Asia

Pacific trade talks progress despite US-Japan gap

S.Korea not to hurry in reaching FTA

While all sides hailed the progress made during the latest round of talks, no breakthrough was forthcoming on the thorniest questions

N

egotiations for an ambitious trade pact among Pacific countries made significant progress over the weekend but there is still a gap between Japan and the United States over market access and other hurdles, trade representatives said on Monday.

The 12-nation Trans-Pacific Partnership (TPP) is central to President Barack Obama’s policy of expanding the U.S. presence in Asia and the president has expressed hopes of concluding a deal by the end of the year.

An agreement between Tokyo and Washington is crucial to securing the broader pact as other partners are reluctant to commit until they see how those two resolve their differences, particularly over access to each other’s markets in sectors such as agriculture and automobiles.

Australian Trade Minister Andrew Robb, who hosted the meeting, said the shape of an “ambitious, comprehensive, high-standard and balanced deal” was forming.

The United States insists that Japan

should lower barriers to agricultural imports, but Japan wants to protect sensitive products, including pork, beef, dairy and sugar.

U.S. Trade Representative Michael Froman said that by definition the issues left at the end of any negotiation are those that are the most difficult to solve.

Anti-trade agenda?

Other major outstanding issues include intellectual property rights, particularly on products such as pharmaceuticals, environmental protection and country-specific issues around state-owned enterprises.

Opposition over those issues was visible in Australia, with anti-TPP protesters gathering on Saturday outside the hotel in Sydney where the negotiations were taking place.

Concerns that the agreement would help to drive up pharmaceutical prices must be taken as seriously as any potential trade benefits, Australian Medical Association President Brian

Owler said on Sunday.

“I think it’s very important that the interests of the Australian government but also of patients and individual consumers in Australia are protected through trade agreements,” he told the Australian Broadcasting Corporation.

But Robb dismissed those concerns and similar worries that provisions for investor-state dispute settlement, or ISDS, in the agreement could see Australian laws such as its tobacco packaging legislation overturned by global business giants.

“The fact is that for 30 years now Australia has progressively engaged with now 28 countries with investment agreements which include an ISDS ... and the sun is still coming up every morning,” Robb told reporters.

“I think a lot of the statements that have certainly been made in Australia amount to deliberate scaremongering - not all of them, but a lot of them amount to deliberate scaremongering by those who have fundamentally an anti-trade agenda.”

South Korea’s trade minister said Monday that the country will not hurry to reach the free trade agreement (FTA) with China to ensure an internal stability in the bilateral trade pact. Asked by a ruling party lawmaker why the ministry is in a hurry to reach the FTA with China, Trade Minister Yoon Sang-jick told the parliamentary audit that the country will not get pressed for a deadline while seeking to ensure an internal stability of the negotiations. Asked whether Seoul has a plan to sign a preliminary FTA with Beijing during the upcoming APEC summit.

Vietnam to reduce import of electricity Vietnam’s electricity imports from China will continue to be reduced in 2015 with new power supply in northern Vietnam, said a Vietnamese official yesterday. Ngo Son Hai, director of National Load Dispatch Centre under Vietnam’s national electricity group, made the announcement during an interview with local Bao Dau Tu (Vietnam Investment Review), an online newspaper under Vietnam’s Ministry of Planning and Investment. Hai said in 2015, many coal-fired thermal power plants in Vietnam will come into operation.

Reuterts

S.K. department sales decline

Australian Minister for Trade and Investment Andrew Robb, (3-L), and US Trade Representative Michael Froman (C) attend a trade ministers and heads of delegation for the Trans-Pacific Partnership Agreement negotiations

Sales at South Korea’s top department stores were worse than initially expected, revised data showed yesterday, as they fell together with sales at discount-store chains for the first time since June due to holiday spending occurring earlier this year. Combined sales last month at department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae Co fell 6.3 percent in September from a year earlier, the trade ministry said in a statement. This was worse than a 5.5 percent decline estimated by the finance ministry earlier this month.

Canon Q3 profit slides

Life after smartphones is robot cars for Panasonic In March, Panasonic reported its first fullyear profit since 2011 and projected net income to jump 16 percent to 140 billion yen

P

anasonic Corp.’s ratings upgrade shows that its investment in self-driving autos and car batteries has breathed new life into the company as it scales back on consumer electronics.

Japan’s Rating & Investment Information Inc. raised its ranking on the company one level to A on October 20, the assessor’s first increase for the manufacturer. The price of Panasonic’s bonds maturing in 2018 rose to a record high on October 24.

President Kazuhiro Tsuga is pouring tens of billions of yen into its battery

venture with Tesla Motors Inc. as the company develops new businesses while cutting back on TVs, smartphones and circuit boards. Panasonic forecasts its highest annual profit since fiscal 2007, coming back from losses just two years ago, and is due to report first-half results this week.

Tsuga halted production of moneylosing plasma TVs and stopped offering mobile handsets in Europe as part of his strategy of targeting businesses and reducing reliance on consumer goods. The company set up a manufacturing unit at Tesla’s battery “gigafactory” in Nevada and

is developing self-driving technologies including parking assistance.

Panasonic is betting on increasing demand for optical lenses and sensors that allow cars to react to traffic situations without driver input, Laurent Abadie, who heads the Japanese manufacturer’s operations in Europe, said in an interview last month. The technology, adapted from consumer cameras such as its Lumix series, will probably also find buyers in the airline industry, he said.

In March, Panasonic reported its first full-year profit since 2011 and projected net income to jump 16 percent to 140 billion yen (US$1.3 billion) for the current year. The company’s most recent earnings results are due October 31.

The manufacturer’s probability of debt non-payment in the coming year has fallen to 0.11 percent from about 0.21 percent a year earlier, according to the Bloomberg defaultrisk model, which considers factors such as share performance and debt.

Total debt dropped to 1.635 trillion yen from more than 2.1 trillion yen during the period, the data show.

Bloomberg News

Japan’s Canon Inc. reported a 21 percent drop in operating profit for the July to September quarter as a slump in the global digital camera market outweighed a boost from a weaker yen.

The consumer shift to smartphones for casual photo taking has pummelled demand for compact cameras, while the growing popularity of lighter mirror less cameras has taken away market share from higher margin single-lens reflex cameras. Operating profit came in at 71.8 billion yen (US$665 million), down from 90.6 billion yen for the same period a year ago.

Samsung Electronics scaling down LED lighting business South Korean tech giant Samsung Electronics Co Ltd said yesterday it was discontinuing its light emitting diodes lamp business in all markets except South Korea. Samsung Group had identified the LED market as a new growth business back in 2010 after Lee Kunhee, patriarch of the owner Lee family, returned as the chairman of Samsung Electronics. Samsung Electronics is the flagship affiliate of South Korea’s biggest conglomerate.

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October 28, 2014

International Eurozone loans weaken Loans to the private sector in the euro area, a gauge of economic health, fell year-on-year in September, but by slightly less than in August, the European Central Bank said yesterday. The volume of loans to private businesses and households declined by 1.2 percent in September compared with the same month in 2013, a slightly lower rate than the minus 1.5 percent recorded in August, the ECB said in a statement. The long and deep financial crisis in the 18 countries which share the euro has squeezed lending, thus dampening economic activity.

Goldman slashes 2015 oil price forecast

The bank has slashed its 2015 oil price forecasts, making it the most bearish among major financial institutions, following a near 25 percent fall in crude prices over the past five months. The firm said rising output will outstrip demand as forecasters generally pare back estimates for oil due to slowing global growth, a strengthening dollar and ample supplies. Goldman analysts said in a report that they expect U.S. benchmark West Texas Intermediate (WTI) crude to fall to US$75 a barrel and Brent to US$85 a barrel in the first quarter of 2015.

German business confidence at lowest Germany’s Ifo business confidence indicator fell to the lowest level for nearly two years in October, data showed yesterday, as the outlook for Europe’s biggest economy continues to cloud over. The Ifo economic institute’s closely watched business climate index fell to 103.2 points in October from 104.7 points in September, the think-tank said in a statement. That is the lowest level since December 2012. Ifo calculates its headline index on the basis of companies’ assessments of current business and the outlook for the next six months.

Saab finalises Brazil order Swedish aerospace firm Saab has finalised a US$5.4 billion order to sell 36 fighter jets to Brazil, one of the most valuable defence contracts up for grabs in an emerging market. Saab said in a statement the total order value for the NG Gripen jets, to be delivered between 2019 and 2024, was around 39.3 billion Swedish crowns (US$5.4 billion).

The company in December 2013 won a long bidding war for the delivery of new fighter jets for the Brazilian air force against France’s Dassault Aviation SA and Chicago-based Boeing Co.

New Russian cenbank intervention Russia’s central bank said yesterday it had conducted 113.64 billion roubles (US$2.72 billion) worth of forex interventions to defend the rouble on October 23. The central bank releases its interventions data with a time lag. The rouble has been sliding on falling oil prices and broad risk aversion towards Russia because of its role in the Ukraine crisis.

ECB test may fail to give German banks catalyst for mergers The tests are at the root of the ECB’s effort to rekindle confidence in Europe’s banking system six years after the global credit crunch, which subsequently spiralled into a sovereign debt crisis

T

he European Central Bank’s health checks on euro-area lenders may provide a shortterm boost for Deutsche Bank AG and Commerzbank AG. They may also remove an immediate incentive for Germany to consolidate its patchwork of co-operative and local savings banks.

The only one of 24 German banks scrutinized in the ECB’s asset quality review and stress test to fail -- Muenchener Hypothekenbank eG -- plugged its 229 million-euro (US$290 million) shortfall with 408 million euros of capital, regulatory filings show. Shipping lender HSH Nordbank AG, deemed by Barclays Plc. credit analysts to be at risk of failing, also pulled through as a 10 billion-euro state guarantee sheltered it from the crisis- ridden maritime industry.

With German banks achieving an average common equity Tier 1 ratio of 12.9 percent in an asset quality review and a 9.1 percent score in the ECB’s adverse scenario, which stressed banks’ balance sheet against simulated shocks, the result may give capital markets reason to reward Deutsche Bank and Commerzbank, according to analysts at JPMorgan Chase & Co. Still, the outcome also leaves the country’s three-pillar system of savings, co-operative and private banks with even less impetus to consolidate than before.

Rekindle confidence Italian banks showed the largest combined capital shortfall in the ECB’s review as 25 lenders in the euro area, including Banca Monte dei Paschi di Siena Spa, were deemed to have failed. Monte Paschi said it hired UBS AG and Citigroup Inc. to explore strategic options as it considers how to replenish capital.

Germany, which was forced to add 287 billion euros in debt to

The facade of Muenchner Hypothekenbank headquarters in Munich, Germany, 26 October 2014. The Muenchner Hypothekenbak is the only German bank that failed in the banking tests by the European Central Bank (ECB)

keep its financial system afloat in the wake of the 2008 crisis, remains marked by a banking industry in which competition from state-backed lenders squeezes profit margins at investor-owned banks.

Yet, four of the six German banks with the lowest capital ratios after the more severe of the ECB’s two stress test scenarios are owned by their clients or Germany’s federal states.

Banks had to show their capital ratios would remain at 5.5 percent or more in that scenario.

WestLB collapse Deutsche Bank, the country’s largest commercial bank, scored 8.8 percent, while second-biggest Commerzbank had 8 percent.

Even after the federal government took a stake in Frankfurt-based Commerzbank in a 2009 bailout and state-owned WestLB AG collapsed under a tumult of collateralized debt, international real estate and U.S.

subprime markets, Germany’s threepillar system of thousands of small banks is intact.

Consolidation would boost the competitiveness of German banks, Andreas Dombret, an ECB supervisory board member, said in a speech in Frankfurt.

Most consolidation between banks will take place in countries where lenders were shown to have capital shortfalls, according to Barney Reynolds, global head of the Financial Institutions Advisory & Financial Regulatory Group at law firm Shearman & Sterling.

German banks are more pessimistic about their prospects this year than lenders elsewhere in Europe, according to a study by consultancy EY. Forty percent of German banks expected their business to improve in the second half of the year while 60 percent of their European competitors said conditions would improve, EY said in a study published in July.

Bloomberg News

London’s finance firms hiring habits changing Chinese workers now account for 5 percent of City staff

L

ondon’s financial services industry is leaving its “old boy’s club” image behind, after sharply increasing recruitment of women and overseas staff over the last year, research showed yesterday.

Over the past year the number of women working in London’s the City and Canary Wharf financial districts shot up by nearly a half to 29 percent of the total workforce of nearly 520,000, according to financial services recruitment firm Astbury Marsden.

Chinese workers now account for 5 percent of City staff, compared to 3.8 percent last year, while 12 percent are Indian, 1 percentage point higher year on year. That compares to just 0.7 percent of the wider population that are ethnically Chinese and 2.5 percent that are Indian.

The increase has been partly

driven by the growing importance of Chinese and Indian firms and London’s attempts to become a regional hub for those companies, Astbury Marsden said.

Many companies see that there is value in having a diverse workforce: varied backgrounds and experience can encourage people to think differently and help organisations to compete while recruiting from wider groups broadens the talent pool.

Astbury Marsden said that there is some evidence to show companies’ efforts to promote diversity are bearing fruit, particularly programmes to attract and retain female workers.

While women are over-represented in back-office functions, such as administrative and support roles, there has been a 15 percent rise in the proportion of female staff at analyst

and associate level, with women now making up 40 percent of workers in these roles, Astbury Marsden said.

Progress has also been made to boost the ethnic and religious diversity of the London’s financial sector.

Almost 70 percent of City workers are white compared to 86 percent of the UK’s overall population, while 9 percent are Hindu versus 5 percent in London as a whole, the figures showed.

The figures did not include numbers on staff with disabilities, a minority population which advocates say is often overlooked by corporate diversity schemes.

The Astbury Marsden survey was carried out in August and September.

More than 1,000 workers replied to the survey.

Reuters

15

October 28, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

THE STAR Those who earn more than RM10,000 per month will not enjoy any fuel subsidy under the subsidy rationalisation scheme to be implemented next year. In announcing this yesterday, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the programme would be divided into three tiers. “Those earning below RM5,000 per month will receive full subsidy while those earning between RM5,000 and RM10,000 will get a partial subsidy,” he told reporters after officiating the Bank Rakyat International Islamic Banking Conference here.

Markets’ rational complacency Nouriel Roubini

Chairman of Roubini Global Economics and a professor at New York University’s Stern School of Business

THE JAKARTA GLOBE President Joko Widodo’s inclusion of Rini Soemarno in his cabinet is likely to be seen as his most controversial appointment, as her presence justifies criticism from some political rivals.

Joko stuck to his guns on Sunday to name Rini, a former Astra International chief, as state-owned enterprises minister to oversee companies such as energy firm Pertamina and national flag carrier Garuda Indonesia. The woman who led Joko’s transitional team — which was responsible for drawing up his administration’s policies and short-listing members of his cabinet — had a stint as minister in the government of former president Megawati Soekarnoputri.

The more generalized contagion to global financial markets that geopolitical tensions typically engender has failed to materialize

THE TIMES OF INDIA RBI is keen that all large financial institutions lend themselves to greater regulation by turning into a bank as, globally, non-bank players in finance are seen to be engaged in shadow banking. The last of non-government financial institutions is HDFC, the largest housing finance company. But unlike other institutions that received a bank licence — ICICI, IDBI and now IDFC — HDFC is neither constrained for resources nor for growth opportunities. To make a merger more attractive, RBI had offered HDFC a sop by recognizing home loans on a par with infrastructure lending.

THE AGE One of the most hawkish forecasters of the economy, Commonwealth Bank, has delayed the timing of its prediction for the RBA’s first interest rate rise this cycle to August 2015 from February.

CBA’s new forecast still has the RBA tightening in advance of the U.S. Federal Reserve by just one month. The RBA’s acceptance of macroprudential regulation to cool the housing market has also weighed on CBA’s forecasts, in that targeting house prices will in effect buy the RBA time, suggesting rates will be on hold at a record low 2.5 per cent for longer.

A

n increasingly obvious paradox has emerged in global financial markets this year. Though geopolitical risks – the Russia-Ukraine conflict, the rise of the Islamic State and growing turmoil across the Middle East, China’s territorial disputes with its neighbours, and now mass protests in Hong Kong and the risk of a crackdown – have multiplied, markets have remained buoyant, if not downright bubbly.

Indeed, oil prices have been falling, not rising. Global stock markets have, overall, reached new highs. And credit markets show low spreads, while longterm bond yields have fallen in most advanced economies.

Yes, financial markets in troubled countries – for example, Russia’s currency, equity, and bond markets – have been negatively affected. But the more generalized contagion to global financial markets that geopolitical tensions typically engender has failed to materialize.

Why the indifference? Are investors too complacent, or is their apparent lack of concern rational, given that the actual economic and financial impact of current geopolitical risks – at least so far – has been modest?

Global markets have not reacted for several reasons. For starters, central banks in advanced economies (the United States, the eurozone, the United Kingdom, and Japan) are holding policy

rates near zero, and long-term interest rates have been kept low. This is boosting the prices of other risky assets such as equities and credit.

Second, markets have taken the view that the Russia-Ukraine conflict will remain contained, rather than escalating into a fullscale war. So, though sanctions and counter-sanctions between the West and Russia have increased, they are not causing significant economic and financial damage to the European Union or the US. More important, Russia has not cut off natural-gas supplies to Western Europe, which would be a major shock for gas-dependent EU economies.

Third, the turmoil in the Middle East has not triggered a massive shock to oil supplies and prices like those that occurred in 1973, 1979, or 1990. On the contrary, there is excess capacity in global oil markets. Iraq may be in trouble, but about 90% of its oil is produced in the south, near Basra, which is fully under Shia control, or in the north, under the control of the Kurds. Only about 10% is produced near Mosul, now under the control of the Islamic State.

Finally, the one Middle East conflict that could cause oil prices to spike – a war between Israel and Iran – is a risk that, for now, is contained by on-going international negotiations with Iran to contain its nuclear program.

So there appear to be good reasons why global markets so far have reacted benignly to today’s geopolitical risks.

What could change that?

Several scenarios come to mind.

First, the Middle East turmoil could affect global markets if one or more terrorist attack were to occur in Europe or the US – a plausible development, given that several hundred Islamic State jihadists are reported to have European or US passports. Markets tend to disregard the risks of events whose probability is hard to assess but that have a major impact on confidence when they do occur. Thus, a surprise terrorist attack could unnerve global markets.

Second, markets could be incorrect in their assessment that conflicts like that between Russia and Ukraine, or Syria’s civil war, will not escalate or spread. Russian President Vladimir Putin’s foreign policy may become more aggressive in response to challenges to his power at home, while Jordan, Lebanon, and Turkey are all being destabilized by Syria’s on-going meltdown.

Third, geopolitical and political tensions are more likely to trigger global contagion when a systemic factor shaping the global economy comes into play. For example, the mini-perfect storm that roiled emerging markets earlier this year – even spilling

over for a while to advanced economies – occurred when political turbulence in a few countries (Turkey, Thailand, and Argentina) met bad news about Chinese growth. China, with its systemic importance, was the match that ignited a tinderbox of regional and local uncertainty.

Today (or soon), the situation in Hong Kong, together with the news of further weakening in the Chinese economy, could trigger global financial havoc. Or the US Federal Reserve could spark financial contagion by exiting zero rates sooner and faster than markets expect. Or the eurozone could relapse into recession and crisis, reviving the risk of redenomination in the event that the monetary union breaks up. The interaction of any of these global factors with a variety of regional and local sources of geopolitical tension could be dangerously combustible.

So, while global markets arguably have been rationally complacent, financial contagion cannot be ruled out. A century ago, financial markets priced in a very low probability that a major conflict would occur, blissfully ignoring the risks that led to World War I until late in the summer of 1914. Back then, markets were poor at correctly pricing low-probability, high-impact tail risks. They still are.

Project Syndicate

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October 28, 2014

Closing Gold imports increase to five-month record

Xi says China to found more FTZs

China’s gold imports from Hong Kong in September rose to the highest in five months as retailers and fabricators boosted purchases ahead of a holiday sales season, Bloomberg News said. Net imports totalled 61.7 metric tons last month, the most since April, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department yesterday. That compares with 25.6 tons in August and 109.4 tons a year earlier. Exports to Hong Kong from China rose to 30.1 tons in September from 12.4 tons in August, the statistics department said in a separate statement.

The experience gained at China’s Shanghai Pilot Free Trade Zone (Shanghai FTZ) can be copied to more places “as soon as possible”, President Xi Jinping said yesterday. The experience gained at Shanghai FTZ can be compared to “seeds cultivated from an experimental plot”, said Xi at the sixth meeting of the Leading Group for Overall Reform. “We should plant these seeds in more land so that flowers will blossom and fruits be harvested as quickly as possible,” Xi said. According to the reform blueprint adopted last November, China plans to build several FTZs in suitable places other than Shanghai.

China-Vietnam officials meeting to ease tensions Both countries agreed to implement provisions related to land borders and quickly resolve border management problems

China’s State Councillor Yang Jiechi (L) poses for a photo with Vietnam’s Deputy Prime Minister and Foreign Minister Pham Binh Minh at the International Convention Centre in Hanoi yesterday

C

hina’s State Councilor Yang Jiechi met Vietnamese officials yesterday on his second visit to Hanoi in four months, as leaders of the nations work to patch up ties amid escalating tensions over new territorial disputes.

Vietnam opposes Chinese airstrip and airport projects in the disputed Paracel and Spratly islands, while Vietnamese fishing boats have clashed with Chinese law enforcement vessels in contested waters in the South China Sea. In July, a Chinese company removed an oil rig

off Vietnam’s coast after skirmishes between boats and deadly anti-Chinese riots in Vietnam.

Yang’s visit, under the auspices of a Chinese steering committee for bilateral relations with Vietnam, comes as Prime Minister Nguyen Tan Dung yesterday begins a two-day visit to India to meet Prime Minister Narendra Modi. The premier’s trip underscores Vietnam’s strategy of forging closer relations with other powers as a balance to China.

“After the oil rig crisis, the perception of China

Private clubs in historical buildings banned

in Vietnam has eroded,” Alexander Vuving, a security analyst at the Asia-Pacific Center for Security Studies in Hawaii, said by phone. “One element of Vietnam’s strategy to deal with the South China Sea is to get powerful third parties involved with the issue.”

Bilateral relations Yang met with Vietnamese Deputy Prime Minister Pham Binh Minh, who is also foreign minister, in Hanoi yesterday. The two sides agreed that the proper

One element of Vietnam’s strategy to deal with the South China Sea is to get powerful third parties involved with the issue Alexander Vuving, U.S. security analyst

handling of maritime issues has “important implications for bilateral relations,” according to an e-mailed statement from Vietnam’s foreign affairs ministry.

Both countries agreed to implement provisions related to land borders and quickly resolve border management problems as well as establish collaborative working groups on infrastructure and monetary cooperation.

“The two sides will jointly endeavour to strictly implement the agreements and the common understanding of senior leaders of the two countries, to constantly consolidate and promote the Vietnam-China comprehensive strategic partnership,” according to the statement.

China claims about 90 percent of the South China Sea under a 1940s map, including the Paracels off Vietnam’s coast and the Spratlys to the south. On June 21, three days after his last visit to Hanoi, Yang said his country “will never trade our core interests or swallow the bitter fruits that undermine our sovereignty, security and development interests.”

Vietnam will strongly protest unilateral actions to change the status quo in the islands, Vietnamese Foreign Ministry Vice Spokeswoman Pham Thu Hang said, Vietnam News reported October 24.

Trade between Vietnam and China surged 84 percent to o US$50.2 billion last year from US$27.3 billion in 2010, according to government data.

“Once the weather is good, the Chinese will send something back to the area and they will continue to ban Vietnamese fishing boats from a big area of the ocean,” Vuving said. “China will continue to build up its capacity in the region so it can be better prepared for conflict and Vietnam will do the same thing -- buying weapons from the U.S., submarines from the Russians.”

Bloomberg News

HK’s exports up in September GF Intl to expand overseas

C

hina’s central authority issued a decree prohibiting private clubs in historical buildings, parks and other public facilities yesterday in the latest crackdown against hedonism and extravagance among officials.

Private clubs set up in historical buildings and parks have damaged public interests, fanned corruption and triggered strong discontent among society, according to the guideline forwarded by the general offices of the Communist Party of China Central Committee and the State Council.

The joint decree was originally made by 10 different ministries.

High-end restaurants, gymnasiums, spas and hotels were among those listed as not allowed to open in historical buildings or parks. Membership-only clubs inside historic buildings and parks not open to the public must be shut down, according to the decree.

Officials will be held accountable for their negligence and misconduct in the crackdown, it said, adding the public resources of historical sites and parks must be put under public supervision.

Xinhua

T

he value of Hong Kong’s total exports of goods grew 4.5 percent in September, 2014, compared with the same period of last year, the Census and Statistics Department announced yesterday.

In September, the exports value, comprising re-exports and domestic exports, reached HK$332 billion, the department said. Within this total, the value of re-exports increased by 4.6 percent to HK$327.8 billion, whereas the value of domestic exports decreased by 5.5 percent to HK$4.2 billion.

The value of the territory’s total imports of goods recorded a year-on-year increase at 6.3 percent to HK$382.4 billion.

A Hong Kong government spokesman noted that the value of merchandise exports grew further in September over a year earlier, though somewhat slower than in the past few months.

While the performance of major advanced markets was still weak, exports to the Mainland grew steadily, and many Asian and Middle East markets attained visible growth, thereby rendering the key drivers of the further export growth in September.

Xinhua

A

sset manager GF International Investment Management said yesterday that it plans to set up offices in New York and London next year, the latest Chinese financial institution to expand overseas to tap growing demand for yuan assets.

“We’ll also sell the first China bond ETF (exchange-traded fund) in the U.S. within four weeks,” Nathan Lin, chief executive officer at the firm told Reuters in an interview, adding the U.S. market has advantages in depth and liquidity.

Chinese asset managers, including GF International, are making efforts to expand beyond Hong Kong to attract more foreign investors as China accelerates the opening up of its domestic markets.

China CSOP Asset Management told Reuters earlier on Monday that it was looking to expand business in the US. Lin said demand for yuan assets will increase over time and he expected more offshore yuan clearing banks to be set up globally to facilitate yuan settlement.

Reuters